-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PsCoPJmjqU0znwPx9y502/F+c+zoSyCDFQPPQlR/1f02/H4WEcs0mc6s8GZeAZFU RuIQTIifzuGQyPgA4kNGiQ== 0000950124-98-002920.txt : 19980515 0000950124-98-002920.hdr.sgml : 19980515 ACCESSION NUMBER: 0000950124-98-002920 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980514 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNIVERSAL FOODS CORP CENTRAL INDEX KEY: 0000310142 STANDARD INDUSTRIAL CLASSIFICATION: BEVERAGES [2080] IRS NUMBER: 390561070 STATE OF INCORPORATION: WI FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-07626 FILM NUMBER: 98621572 BUSINESS ADDRESS: STREET 1: 433 EAST MICHIGAN ST CITY: MILWAUKEE STATE: WI ZIP: 53202 BUSINESS PHONE: 4142716755 MAIL ADDRESS: STREET 1: PO BOX 737 CITY: MILWAUKEE STATE: WI ZIP: 53201 10-Q 1 FORM 10-Q 1 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: March 31, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 1-7626 UNIVERSAL FOODS CORPORATION ---------------------------------------------------------- (Exact name of registrant as specified in its charter) Wisconsin 39-0561070 ------------------------------- -------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 433 East Michigan Street, Milwaukee, Wisconsin 53202 ---------------------------------------------------- (Address of principal executive offices) Registrant's telephone number, including area code: (414) 271-6755 ------------------ NONE -------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for at least the past 90 days. Yes X No --- --- Indicate the number of shares outstanding of each of the issuer's classes of Common Stock as of the latest practicable date. Class Outstanding at April 30, 1998 ------- ------------------------------ Common Stock, par value $0.10 per share 25,693,102 shares ================================================================================ 2 UNIVERSAL FOODS CORPORATION INDEX
Page No. PART I FINANCIAL INFORMATION 3 Consolidated Condensed Balance Sheets - March 31, 1998 and September 30, 1997 4 Consolidated Condensed Statements of Earnings - Three and Six Months Ended March 31, 1998 and 1997 5 Consolidated Condensed Statements of Cash Flows - Six Months Ended March 31, 1998 and 1997 6 Notes to Consolidated Condensed Financial Statements 7 Management's Discussion and Analysis of Results of Operations, Financial Condition and Forward Looking Information 9 PART II OTHER INFORMATION 11 Item 6. Exhibits and Reports on Form 8-K 11 Signatures 12 Exhibit Index 13
2 3 PART I FINANCIAL INFORMATION 3 4 UNIVERSAL FOODS CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS ($000's Omitted)
March 31, 1998 September 30, ASSETS (Unaudited) 1997 - ------ ------------ ------------- CURRENT ASSETS: Cash and cash equivalents $ 1,720 $ 1,258 Trade accounts receivable 119,793 117,259 Inventory: Finished and in-process products 124,347 132,150 Raw materials and supplies 60,971 53,402 Prepaid expenses and other current assets 41,064 38,179 -------- -------- TOTAL CURRENT ASSETS 347,895 342,248 INVESTMENTS AND OTHER ASSETS 58,214 55,193 INTANGIBLES 192,042 181,309 PROPERTY, PLANT AND EQUIPMENT: Cost: Land and buildings 147,512 147,659 Machinery and equipment 428,227 388,402 -------- -------- 575,739 536,061 Less accumulated depreciation 250,114 227,082 -------- -------- 325,625 308,979 -------- -------- TOTAL ASSETS $923,776 $887,729 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Short-term borrowings $ 28,634 $ 7,971 Accounts payable and accrued expenses 110,339 135,522 Salaries, wages and withholdings from employees 12,013 13,978 Income taxes 14,927 16,151 Current maturities of long-term debt 4,948 4,905 ------- -------- TOTAL CURRENT LIABILITIES 170,861 178,527 DEFERRED INCOME TAXES 17,549 17,550 OTHER DEFERRED LIABILITIES 20,642 20,798 ACCRUED EMPLOYEE AND RETIREE BENEFITS 37,567 37,877 LONG-TERM DEBT 282,444 252,526 SHAREHOLDERS' EQUITY Common stock 2,698 2,698 Additional paid-in capital 77,254 76,774 Earnings reinvested in the business 390,539 371,444 -------- -------- 470,491 450,916 Less: Treasury stock, at cost 45,384 45,742 Other 30,394 24,723 -------- -------- 394,713 380,451 -------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $923,776 $887,729 ======== ========
See Accompanying Notes to Consolidated Condensed Financial Statements. 4 5 UNIVERSAL FOODS CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS ($000's Omitted Except Per Share Amounts) (Unaudited)
Three Months Six Months Ended Ended March 31, March 31, --------- --------- 1998 1997 1998 1997 ---- ---- ---- ----- Revenue $205,015 $204,826 $413,904 $398,310 Operating costs and expenses: Cost of products sold 132,574 138,259 269,581 265,891 Selling and administrative expenses 40,815 38,626 84,417 79,595 -------- -------- -------- -------- Total operating costs and expenses 173,389 176,885 353,998 345,486 -------- -------- -------- -------- Operating income 31,626 27,941 59,906 52,824 Interest expense 5,508 4,095 10,474 7,782 -------- -------- -------- -------- Earnings before income taxes 26,118 23,846 49,432 45,042 Income taxes 8,764 8,226 16,807 15,539 -------- -------- -------- -------- Net earnings $ 17,354 $ 15,620 $ 32,625 $ 29,503 ======== ======== ======== ======== Weighted average number of common shares outstanding: Basic 51,158 50,936 51,070 50,896 Diluted 51,902 51,266 51,724 51,234 Net earnings per common share: Basic $ .34 $ .31 $ .64 $ .58 Diluted $ .33 $ .30 $ .63 $ .58 Dividends per common share $.1325 $ .13 $ .265 $ .26
See Accompanying Notes to Consolidated Condensed Financial Statements. 5 6 UNIVERSAL FOODS CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS ($000's Omitted) (Unaudited)
Six Months Ended March 31, ------------------ 1998 1997 ---- ---- Net cash provided by operating activities $ 20,959 $ 25,105 -------- -------- Cash flows from investing activities: Acquisition of property, plant and equipment (29,160) (29,213) Acquisition of new businesses (net of cash acquired) (24,800) (44,492) Other items, net (3,674) (2,753) -------- -------- Net cash used in investing activities (57,634) (76,458) -------- -------- Cash flows from financing activities: Proceeds from additional borrowings 51,682 69,050 Reduction in debt (1,058) (3,472) Purchase of treasury stock (7,556) -- Dividends (13,530) (13,234) Proceeds from options exercised and other 7,599 1,454 -------- -------- Net cash provided by financing activities 37,137 53,798 -------- -------- Net increase in cash and cash equivalents 462 2,445 Cash and cash equivalents at beginning of period 1,258 3,395 -------- -------- Cash and cash equivalents at end of period $ 1,720 $ 5,840 ======== ======== Supplemental Disclosure of Cash Flow Information: Cash paid during the period for: Interest $ 10,474 $ 7,169 Income taxes 16,369 12,935
See Accompanying Notes to Consolidated Condensed Financial Statements. 6 7 UNIVERSAL FOODS CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 1. In the opinion of the Company, the accompanying unaudited consolidated condensed financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of March 31, 1998 and September 30, 1997, the results of operations for the three and six month periods ended March 31, 1998 and 1997 and cash flows for the six month periods ended March 31, 1998 and 1997. The results of operations for any interim period are not necessarily indicative of the results to be expected for the full fiscal year. 2. Refer to the footnotes in the Company's annual financial statements for the year ended September 30, 1997, for a description of the accounting policies, which have been continued without change (except as discussed in Note 7), and additional details of the Company's financial condition. The details in those notes have not changed except as a result of normal transactions in the interim. 3. Expenses are charged to operations in the year incurred. However, for interim reporting purposes, certain of these expenses are charged to operations based on an estimate rather than as expenses are actually incurred. 4. During the six months ended March 31, 1998, the Company repurchased 180,111 shares of common stock for $7,556,000. 5. For the six months ended March 31, 1998, depreciation and amortization were $18,970,000 and $2,940,000, respectively. For the six months ended March 31, 1997, depreciation and amortization were $17,673,000 and $2,869,000, respectively. 6. On December 23, 1997, the Company issued a $30,000,000 senior note bearing interest at 7.06% due December 2002. Proceeds were used to refinance existing indebtedness and for general corporate purposes. 7. In 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128 (SFAS No. 128), "Earnings per Share." SFAS No. 128 replaced the previously reported primary and fully diluted earnings per share with basic and diluted earnings per share. Unlike primary earnings per share, basic earnings per share excludes any dilutive effects of options, warrants and convertible securities. Diluted earnings per share is very similar to the previously required fully diluted earnings per share. All earnings per share amounts for all periods have been presented, and where necessary, restated to conform to SFAS No. 128 requirements. The difference between basic and diluted earnings per share is the dilutive effect of employee stock options and restricted stock. 8. On January 6, 1998, the Company announced that it acquired the stock of Arancia Ingredientes Especiales, S.A. de C.V., a manufacturer of savory flavors and other food ingredients for cash of approximately $24.8 million. With annual revenue of approximately $16 million, this acquisition further improves access to certain markets and creates opportunities for synergies with existing flavor operations in North America. On April 1, 1998, the Company announced an agreement to acquire substantially all of the assets and business of Sundi GmbH, a German flavor manufacturer. The acquired business has sales of approximately $15 million. Sundi's broad product line emphasizes all-natural flavor ingredients, an important factor for the German market. The cash transaction should be completed in the third quarter. 7 8 UNIVERSAL FOODS CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued) On April 29, 1998, the Company announced that it acquired DC Flavours Ltd., a manufacturer of savory flavors and seasonings for cash of approximately $7 million. Annual sales are less than $10 million. On an unaudited pro forma basis the acquisitions are not significant to the Company's 1998 results of operations. 9. On April 9, 1998, the Company declared a 2-for-1 stock split in the form of a 100% dividend. The new shares will be distributed on May 22, 1998 to shareholders of record on May 6, 1998. Fractional shares will be paid out in cash. All references in the financial statements to per share amounts and average number of shares have been restated for the stock split. 10. The Financial Accounting Standards Board has issued statements No. 130 "Reporting Comprehensive Income" and No. 131 "Disclosures about Segments of an Enterprise and Related Information." These statements will be effective for the Company in fiscal 1999. The Company is currently evaluating the impact of adopting these new pronouncements. 8 9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS, FINANCIAL CONDITION AND FORWARD LOOKING INFORMATION RESULTS OF OPERATIONS: Revenue for the three and six months ended March 31, 1998, was $205,015,000 and $413,904,000, respectively, compared with $204,826,000 and $398,310,000 a year ago. Revenue for the three and six months ended March 31, 1998 increased by 0.1% and 3.9%, respectively, from the prior year periods. For the quarter, record domestic volumes for the Dehydrated division and solid revenue gains in the Flavor division were offset by decreases in the Color division due to lower sales throughout Asia and a planned shift toward higher margin products. All divisions reported revenue increases from last year for the six month period. Gross profit margins increased to 35.3% of revenues for the second quarter from 32.5% during the same period last year. Gross profit margins for the first six months increased to 34.9% of revenue compared to 33.2% of revenue during the same period last year. The increase in the gross profit margin is primarily the result of a shift in sales to higher margin products in the Color division. Selling and administrative expenses increased to 19.9% of revenue during the second quarter from 18.9% during the same period last year. For the first six months of fiscal 1998, selling and administrative expenses increased slightly to 20.4% of revenue from 20.0% last year. The change is due to increased goodwill amortization, market development activities in Color, Red Star and Asia Pacific offset by cost savings in the Flavor division. Interest expense in the second quarter increased to $5,508,000 from $4,095,000 in the same period last year and increased to $10,474,000 from $7,782,000 for the six months ended March 31, 1998 and 1997, respectively. The increase is primarily the result of additional debt related to acquisitions. FINANCIAL CONDITION: The current ratio increased slightly to 2.0 at March 31, 1998, from 1.9 at September 30, 1997 due to a decrease of $7,666,000 in current liabilities. Net working capital increased $13,313,000 to $177,034,000 at March 31, 1998 from $163,721,000 at September 30, 1997. The acquisition of Arancia accounts for approximately $2,186,000 of the increase in net working capital. Net cash provided by operating activities was $20,959,000 for the six months ended March 31, 1998, compared to net cash provided by operating activities of $25,105,000 for the six months ended March 31, 1997. The decrease in cash provided by operating activities in fiscal 1998 was primarily the timing of payments to fund fiscal 1997 contributions to benefit plans and an increase in income tax payments. Net cash used in investing activities was $57,634,000 for the six months ended March 31, 1998 as compared with $76,458,000 in fiscal 1997. The decrease is primarily due to the cost of acquisitions in 1997 compared to 1998. Included in investing activities are capital additions of $29,160,000 and $29,213,000 for the six months ended March 31, 1998 and 1997, respectively. The capital expenditure program reflects the Company's continuing commitment to maintain and enhance product quality, further automate and upgrade manufacturing processes, and expand the business through internal growth. 9 10 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS, FINANCIAL CONDITION AND FORWARD LOOKING INFORMATION (Continued) Net cash provided by financing activities was $37,137,000 for the six months ended March 31, 1998 as compared with $53,798,000 used in financing activities in the comparable period last year. Proceeds from additional borrowings of $51,682,000 were used primarily to fund capital expenditures, acquisitions and treasury stock purchases. Dividends of $13,530,000 and $13,234,000 were paid during the first six months of fiscal 1998 and 1997, respectively. FORWARD LOOKING INFORMATION: This document contains forward-looking statements that reflect management's current assumptions and estimates of future economic circumstances, industry conditions, Company's performance and financial results, in particular, earnings growth. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for such forward-looking statements. A variety of factors could cause the Company's actual results and experience to differ materially from the anticipated results. These factors and assumptions include the pace and nature of new product introductions by the Company's customers; execution of the Company's acquisition program; industry economic factors related to the Company's international business; and the outcome of various productivity-improvement and cost-reduction efforts. 10 11 PART II OTHER INFORMATION Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibit 27 Financial Data Schedule (b) No reports on Form 8-K were required to be filed during the quarter ended March 31, 1998. 11 12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. UNIVERSAL FOODS CORPORATION Date: May 14, 1998 By: /s/ John L. Hammond -------------------- John L. Hammond, Vice President, Secretary and General Counsel Date: May 14, 1998 By: /s/ Michael L. Hennen ---------------------- Michael L. Hennen, Corporate Controller 12 13 UNIVERSAL FOODS CORPORATION EXHIBIT INDEX TO QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENED MARCH 31, 1998
Exhibit Incorporated Herein By Filed Number Description Reference Herewith - ----------- -------------------------------- ----------------------- -------------- 27.1 Financial Data Schedule X
13 EX-27 2 EX-27
5 1,000 6-MOS SEP-30-1998 OCT-01-1997 MAR-31-1998 1,720 0 123,563 3,770 185,318 347,895 575,739 250,114 923,776 170,861 282,444 0 0 2,698 392,015 923,776 413,904 413,904 269,581 269,581 0 455 10,474 49,432 16,807 32,625 0 0 0 32,625 .64 .63
-----END PRIVACY-ENHANCED MESSAGE-----