-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, GY/uCX2anC2LTbxyAvrLKgz6OXKq2o2XyeIHRsbirJZYC1/OrPAnsHT5OBQ9vO/0 ZAb3pmUrd48jjoJ9FSGbVA== 0000048465-94-000002.txt : 19940615 0000048465-94-000002.hdr.sgml : 19940615 ACCESSION NUMBER: 0000048465-94-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940430 FILED AS OF DATE: 19940614 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HORMEL GEO A & CO CENTRAL INDEX KEY: 0000048465 STANDARD INDUSTRIAL CLASSIFICATION: 2011 IRS NUMBER: 410319970 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-02402 FILM NUMBER: 94534095 BUSINESS ADDRESS: STREET 1: 1 HORMEL PL CITY: AUSTIN STATE: MN ZIP: 55912 BUSINESS PHONE: 5074375737 MAIL ADDRESS: STREET 1: 1 HORMEL PLACE CITY: AUSTIN STATE: MN ZIP: 55912 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended April 30, 1994 Commission File Number 1-2402 GEO. A. HORMEL & COMPANY Incorporated Under the Laws of the State of Delaware EIN #41-0319970 1 Hormel Place Austin, Minnesota 55912-3680 Telephone - (507) 437-5737 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 for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES XXX NO Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date. Class Outstanding at April 30, 1994 Common Stock - $.1172 par value 76,620,167 Common Stock Non-Voting - $.01 par value -0- Pages: This report contains ten pages numbered sequentially from this cover page. FORM 10-Q PART I - FINANCIAL INFORMATION STATEMENTS OF FINANCIAL POSITION GEO. A. HORMEL & COMPANY April 30 October 30, 1994 1993 (Unaudited) (Thousands of Dollars) ASSETS CURRENT ASSETS Cash and cash equivalents $ 173,416 $ 157,558 Short-term marketable securities-- at cost which approximates market 14,720 14,862 Accounts receivable 187,491 218,487 Inventories 223,751 208,101 Deferred income taxes 12,212 12,393 Prepaid expenses 8,363 8,503 TOTAL CURRENT ASSETS 619,953 619,904 DEFERRED INCOME TAXES 82,142 79,872 INTANGIBLES 71,158 72,508 INVESTMENTS AND OTHER ASSETS 72,174 76,288 PROPERTY, PLANT AND EQUIPMENT Land 6,008 6,025 Buildings 146,033 143,222 Equipment 436,354 422,485 Construction in progress 23,717 13,589 612,112 585,321 Less allowance for depreciation (353,431) (340,334) 258,681 244,987 $1,104,108 $1,093,559 FORM 10-Q STATEMENTS OF FINANCIAL POSITION GEO. A. HORMEL & COMPANY April 30, October 30, 1994 1993 (Unaudited) (Thousands of Dollars) LIABILITIES AND STOCKHOLDERS' INVESTMENT CURRENT LIABILITIES Accounts payable $ 85,376 $ 98,357 Accrued expenses 31,814 30,212 Accrued advertising 27,704 24,587 Employee compensation 35,521 40,195 Taxes other than federal income taxes 14,549 14,011 Dividends payable 9,577 8,434 Federal income tax 6,021 11,262 TOTAL CURRENT LIABILITIES 210,562 227,058 LONG-TERM DEBT -less current maturities 5,700 5,700 ACCUMULATED POSTRETIREMENT BENEFIT OBLIGATION 233,326 233,326 ACCRUED PENSION COSTS 50,250 48,363 OTHER LONG-TERM LIABILITIES 10,580 8,224 STOCKHOLDERS' INVESTMENT Preferred Stock, par value $.01 a share--authorized 40,000,000 shares; issued - none Common stock, non-voting, par value $.01 a share--authorized 40,000,000 shares; issued - none Common Stock, par value $.1172 a share -- authorized 200,000,000 shares; issued 76,852,128 shares 9,007 9,007 Additional paid-in capital 14,895 14,513 Shares held in treasury. 5,080) ( 4,103) 18,822 19,417 Earnings reinvested in business 574,868 551,471 593,690 570,888 $1,104,108 $1,093,559 See notes to financial statements FORM 10-Q STATEMENTS OF EARNINGS (Unaudited) GEO. A. HORMEL & COMPANY (In Thousands of Dollars, Except Per Share Amounts) Three Months Ended Six Months Ended April 30, May 1, April 30, May 1, 1994 1993 1994 1993 Sales, less returns and allowances $767,018 $676,686 $1,483,187 $1,358,788 Cost of products sold 597,730 523,701 1,155,139 1,057,507 GROSS PROFIT 169,288 152,985 328,048 301,281 Expenses: Selling and delivery 117,478 106,012 230,185 210,666 Administrative and general 14,514 15,448 28,543 32,160 OPERATING INCOME 37,296 31,525 69,320 58,455 Other income and expenses: Other income-net 977 1,726 2,848 3,860 Interest expense ( 613) ( 350) (1,204) ( 658) EARNINGS BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING CHANGES 37,660 32,901 70,964 61,657 Provision for income taxes 14,634 12,240 27,388 22,717 EARNINGS BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES $ 23,026 $ 20,661 $ 43,576 $ 38,940 Cumulative effect of accounting changes: Accounting for postretirement benefits, net of tax (140,823) Accounting for income taxes 13,294 NET EARNINGS (LOSS) $ 23,026 $ 20,661 $ 43,576 $ (88,589) Earnings (loss) per share: Before cumulative effect of accounting changes $0.30 $0.27 $0.57 $0.51 Cumulative effect of accounting changes (1.66) NET EARNINGS (LOSS) PER SHARE $0.30 $0.27 $0.57 $(1.15) See notes to financial statements FORM 10-Q STATEMENTS OF CASH FLOWS (Unaudited) GEO. A. HORMEL & COMPANY Six Months Ended April 30, May 1, 1994 1993 (Thousands of Dollars) OPERATING ACTIVITIES Net earnings (loss) $ 43,576 ($88,589) Adjustments to reconcile to net cash provided by operating activities: Depreciation 15,896 15,104 Amortization of intangibles 1,350 609 Cumulative effect of accounting change: Accounting for postretirement benefits, net of tax 140,823 Accounting for income taxes (13,294) Provision for deferred income taxes ( 2,089) ( 3,201) (Gain) loss on sales of property, plant and equipment 6 ( 24) Changes in operating assets and liabilities: Decrease (increase) in accounts receivable 30,996 38,645 Decrease (increase) in inventories and prepaid expenses (15,510) (28,629) Increase (decrease) in accounts payable and other liabilities (13,396) (32,776) NET CASH PROVIDED BY OPERATING ACTIVITIES 60,829 28,668 INVESTING ACTIVITIES Purchase of short term marketable securities 142 Purchases of property, plant and equipment (29,958) (25,759) Proceeds from sales of property, plant and equipment 363 512 Decrease in investments and other assets 4,114 2,941 NET CASH USED IN INVESTING ACTIVITIES (25,339) (22,306) FINANCING ACTIVITIES Principal payments on long-term debt ( 200) Dividends paid on Common Stock (18,021) (15,346) Other ( 1,611) ( 5,228) NET CASH USED IN FINANCING ACTIVITIES (19,632) (20,774) INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 15,858 (14,412) Cash and Cash Equivalents at at beginning of year 157,558 225,539 CASH AND CASH EQUIVALENTS AT END OF PERIOD $173,416 $211,127 See notes to financial statements FORM 10-Q NOTES TO FINANCIAL STATEMENTS (Unaudited) GEO. A. HORMEL & COMPANY NOTE A In the opinion of the Company, the accompanying unaudited financial statements contain all adjustments (consisting of only normal recurring accruals) necessary for a fair presentation. The accounting policies followed by the Company are set forth in Note A to the Company's Financial Statements in the 1993 Geo. A. Hormel & Company Annual Report to Stockholders, which is incorporated by reference on Form 10-K. NOTE B The results of operations for the six month periods ended April 30, 1994 and May 1, 1993, are not necessarily indicative of the results to be expected for the full year. NOTE C Fiscal 1993 has been restated to reflect the adoption of SFAS No. 106 and SFAS No. 109 effective as of the beginning of fiscal 1993. FORM 10-Q MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GEO. A. HORMEL & COMPANY RESULTS OF OPERATIONS Net earnings in the second quarter increased 11.4 percent to $23,026,000 from $20,661,000 during the same quarter of 1993 (1993 results have been restated for effect of accounting changes). Sales for the quarter increased to $767,018,000 from $676,686,000 last year. Both the earnings and sales represent record results for second quarter performance. The increase in earnings and sales dollars was the result of sales tonnage volume increasing 14.9 percent compared to last year, lower raw material costs, and changes in product mix, with volume increases in certain higher margin processed food products. Earnings for the first six months of 1994 were $43,576,000 compared to $38,940,000 for the same period last year. Net sales for the first half of 1994 increased $124,399,000 to $1,483,187,000. Tonnage volume also had a significant 7.8 percent increase over the same period of 1993. The Company's core Hormel Foods business continues to be the major contributor to earnings and sales results. The performance of the Prepared Foods Group was especially noteworthy with the Grocery Products Division experiencing excellent volume and market share growth. House of Tsang oriental sauces and seasoning oils, and the Herb-Ox brand of bouillon and dry soup mixes, two recent acquisitions, continue to grow sales and distribution according to plan. Jennie-O Foods, Inc. made a substantial contribution to Company results in the second quarter. This performance follows a record setting first quarter and the business plan for the third and fourth quarters projects a continued strong performance. Results at Dubuque Foods, Inc. and Farm Fresh Catfish were negative for the quarter and reflect product lines more susceptible to the fluctuations of the commodity markets for fresh pork and catfish. The heavy price competition in these two commodity markets is expected to continue throughout the remainder of the year, which could impact the ability of Dubuque Foods and Farm Fresh Catfish to accomplish their business plan for 1994. No plants or distribution centers were disposed of in the first half of either 1993 or 1994. Other income is primarily interest income from short term marketable securities. FORM 10-Q MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GEO. A. HORMEL & COMPANY RESULTS OF OPERATIONS The effective tax rate for the quarter and first half was 38.9 and 38.6 percent, respectively, compared to 37.2 and 36.8 percent last year. One percent of the increase is due to the increase in the statutory rate in August of 1993. During 1993, depreciation and amortization declined significantly compared to 1992 as the machinery and equipment purchased with the construction of the Austin, Minnesota plant became fully depreciated in the eleventh period of 1992. The relationship of changes in depreciation and plant and equipment additions returned to more normal levels when comparing 1994 and 1993 totals. Amortization of intangibles increased in 1994 with the acquisitions in the third quarter of 1993 of the FDL Foods trademarks and brands, and the Herb-Ox bouillon and dry soup product lines. Interest expense for the quarter and year to date increased compared to last year as several state income tax audits were settled. Advertising expenses for the quarter and first six months were $46,937,000 and $92,336,000 compared to $41,124,000 and $81,343,000 for the same period in 1993. The Company continues to introduce new products while promoting its older more mature product lines to increase market share. The importance of this strategy was highlighted in the second quarter with increased market share for HORMEL CHILI, SPAM luncheon meat, DINTY MOORE beef stew and MARY KITCHEN hash. This enabled the Company to offset the heavy price competition in its fresh pork commodity items. FORM 10-Q FINANCIAL CONDITION Ratio comparisons presented below as of the end of the second quarter reflect the continued strong financial condition of the Company: End of End of 2nd Quarter 2nd Quarter 1994 1993 Liquidity Ratios Current ratio 2.9 3.2 Receivables turnover 14.6 15.9 Days sales in receivables 23.1 days 20.3 days Inventory turnover 10.7 10.6* Days sales in inventory 35.4 days 37.1 days* Leverage Ratio Long-term debt to equity 1.0% 1.4%* Operating Ratios Pre-tax profit to net worth 24.4% 20.9%* Pre-tax profit to total assets 12.9% 13.0%* * Results reflect restatement for effect of accounting changes. Changes during the second quarter in current asset and liability balances followed normal seasonal patterns. Major sales campaigns scheduled during the last half of each year account for the rise in inventory that occurs during the second quarter. The Company continues to invest excess funds in short-term marketable securities as it examines possible acquisitions and investments that meet its long- term operating goals. The Company's investment in plant and equipment continues to emphasize productivity gains and improved ergonomics and safety for its employees. The Company began a major renovation and expansion of its Fremont, Nebraska plant which will continuethroughout most of 1994. The Company also is relocating the acquired Herb-Ox bouillon production to a newly acquired company owned facility in Aurora, Illinois, and will be starting an expansion of its gelatin facility at Davenport, Iowa later in 1994. The Company's long-term debt consists of Industrial Revenue Bonds with varying maturity dates. As shown by the leverage ratio, significant borrowing capacity is available if needed to take advantage of any business opportunity that may arise through acquisition or internal expansion. FORM 10-Q PART II - OTHER INFORMATION Item 4. Results of Votes of Security Holders. None. Item 6. Exhibits and Reports on Form 8-K. None. 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. GEO. A. HORMEL & COMPANY Date: By: D. J. HODAPP Executive Vice President & Chief Financial Officer Date: By: R. J. THATCHER Vice President and Treasurer -----END PRIVACY-ENHANCED MESSAGE-----