-----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, WbDSmFi22fQNSVCfD86jD3jzw/X1ilHX5f8+L+8woiYTT9PBNYGGJw0BwEGP+fWL FOSDNysv2diGjObaLkPFmQ== 0000916641-97-000845.txt : 19970815 0000916641-97-000845.hdr.sgml : 19970815 ACCESSION NUMBER: 0000916641-97-000845 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ESKIMO PIE CORP CENTRAL INDEX KEY: 0000787520 STANDARD INDUSTRIAL CLASSIFICATION: ICE CREAM & FROZEN DESSERTS [2024] IRS NUMBER: 540571720 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-19867 FILM NUMBER: 97662105 BUSINESS ADDRESS: STREET 1: 901 MOOREFIELD PARK DR CITY: RICHMOND STATE: VA ZIP: 23236 BUSINESS PHONE: 8045608400 MAIL ADDRESS: STREET 1: 901 MOOREFIELD PARK DR CITY: RICHMOND STATE: VA ZIP: 23236 10-Q 1 ESKIMO PIE CORP. 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 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 June 30, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] Commission file number 0-19867 ------------------------ ESKIMO PIE CORPORATION (Exact name of registrant as specified in its charter) Virginia 54-0571720 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 901 Moorefield Park Drive Richmond, VA 23236 (Address of principal executive offices, including zip code) ------------ Registrant's phone number, including area code: (804) 560-8400 ------------ 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 X No ___ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of July 31, 1997. Class Outstanding at July 31, 1997 Common Stock, $1.00 Par Value 3,458,006 ESKIMO PIE CORPORATION Index Page Number Part I. Financial Information Item 1. Financial Statements (Unaudited) Condensed Consolidated Statements of Income Three and Six Months Ended June 30, 1997 and 1996 1 Condensed Consolidated Balance Sheets June 30, 1997; December 31, 1996 and June 30, 1996 2 Condensed Consolidated Statements of Cash Flows Six Months Ended June 30, 1997 and 1996 3 Notes to Condensed Consolidated Financial Statements 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 5 Part II. Other Information Item 4. Submission of Matters to a Vote of Security Holders 7 Item 6. Exhibits and Reports on Form 8-K 7 ESKIMO PIE CORPORATION Condensed Consolidated Statements of Income (Unaudited)
Three months ended Six months ended June 30, June 30, - ----------------------------------------------------------------------------------- ------------------------------------- 1997 1996 1997 1996 - ---------------------------------------------------------------- ------------------ ------------------- ----------------- (In thousands, except share data) Net sales $ 23,837 $ 25,324 $ 41,915 $ 45,093 Cost of products sold 13,542 15,136 24,131 27,144 ------------------ ------------------ ------------------- ----------------- Gross profit 10,295 10,188 17,784 17,949 Advertising and sales promotion expenses 6,005 4,346 10,487 7,616 General and administrative expenses 2,654 2,974 5,443 5,569 ------------------ ------------------ ------------------- ----------------- Operating income 1,636 2,868 1,854 4,764 Interest income 53 34 94 63 Interest expense and other - net 180 172 354 354 Gain on disposal of fixed assets 125 - 125 - ------------------ ------------------ ------------------- ----------------- Income before income taxes 1,634 2,730 1,719 4,473 Income tax expense 621 1,036 653 1,708 ------------------ ------------------ ------------------- ----------------- Net income $ 1,013 $ 1,694 $ 1,066 $ 2,765 ================== ================== =================== ================= Per common share Primary Weighted average number of common shares outstanding 3,457,923 3,471,601 3,454,324 3,473,911 Net income $ 0.29 $ 0.49 $ 0.31 $ 0.80 ================== ================== =================== ================= Fully diluted Weighted average number of common shares outstanding 3,620,490 3,634,168 3,616,891 3,636,478 Net income $ 0.29 $ 0.47 $ 0.31 $ 0.77 ================== ================== =================== ================= Cash dividend $ 0.05 $ 0.05 $ 0.10 $ 0.10 ================== ================== =================== =================
ESKIMO PIE CORPORATION Condensed Consolidated Balance Sheets (Unaudited)
June 30, December 31, June 30, As of 1997 1996 1996 - ---------------------------------------------------------- ------------------ ------------------ ---------------- (In thousands, except share data) Assets Current assets: Cash and cash equivalents $ 2,073 $ 2,143 $ 968 Receivables 11,787 4,051 12,037 Inventories 5,748 6,608 7,417 Prepaid expenses 1,078 3,262 2,060 ------------------ ------------------ ---------------- Total current assets 20,686 16,064 22,482 Property, plant and equipment - net 8,635 8,716 8,994 Goodwill and other intangibles 17,629 17,999 18,390 Other assets 1,610 1,661 1,545 ------------------ ------------------ ---------------- Total assets $ 48,560 $ 44,440 $ 51,411 ================== ================== ================ Liabilities and Shareholders' Equity Current liabilities: Short term borrowings $ - $ - $ 1,500 Accounts payable 4,679 5,283 4,454 Accrued advertising and promotion 4,427 2,026 2,830 Accrued compensation and related amounts 468 730 448 Other accrued expenses 1,204 723 533 Income taxes - - 530 Current portion of long term debt 1,202 500 - ------------------ ------------------ ---------------- Total current liabilities 11,980 9,262 10,295 Long term debt 5,876 5,500 6,000 Convertible subordinated notes 3,800 3,800 3,800 Postretirement benefits and other liabilities 3,589 3,408 3,584 Shareholders' equity: Preferred stock, $1.00 par value; 1,000,000 shares authorized, none issued and outstanding - - - Common stock, $1.00 par value; 10,000,000 shares authorized, 3,458,006 issued and outstanding in 1997, 3,447,573 at December 31, 1996 and 3,455,586 at June 30, 1996 3,458 3,448 3,455 Additional capital 4,283 4,168 4,267 Retained earnings 15,574 14,854 20,010 ------------------ ------------------ ---------------- Total shareholders' equity 23,315 22,470 27,732 ------------------ ------------------ ---------------- Total liabilities and shareholders' equity $ 48,560 $ 44,440 $ 51,411 ================== ================== ================
ESKIMO PIE CORPORATION Condensed Consolidated Statements Of Cash Flows (Unaudited)
Six months ended June 30, 1997 1996 - ------------------------------------------------------------------------------- -------------------------------------- (in thousands) Operating activities Net income $ 1,066 $ 2,765 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation and amortization 1,291 1,250 Gain on disposal of fixed assets (125) - Change in deferred income taxes and other assets (30) (216) Change in postretirement benefits and other liabilities 155 37 Change in receivables (7,737) (3,342) Change in inventories and prepaid expenses 3,029 (2,469) Change in accounts payable and accrued expenses 2,014 3,078 -------------------- ----------------- Net cash (used in) provided by operating activities (337) 1,103 Investing activities Capital expenditures (656) (441) Proceeds from disposal of fixed assets 125 - Other 65 62 -------------------- ----------------- Net cash used in investing activities (466) (379) Financing activities Cash dividends (346) (347) Borrowings 1,150 300 Principal payments on long term debt (71) - Repurchase of common stock - (426) -------------------- ----------------- Net cash provided by (used in) financing activities 733 (473) -------------------- ----------------- Change in cash and cash equivalents (70) 251 Cash and cash equivalents at the beginning of the year 2,143 717 -------------------- ----------------- Cash and cash equivalents at the end of the quarter $ 2,073 $ 968 ==================== =================
ESKIMO PIE CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE A - SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation: In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting of only normal recurring accruals) necessary for a fair presentation of the Company's financial position as of June 30, 1997 and its results of operations for the three and six months ended June 30, 1997 and 1996. The results of operations for any interim period are not necessarily indicative of results for the full year. These financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company's 1996 Annual Report. Accounting Change: In February 1997, the Financial Accounting Standards Board issued Statement No. 128, Earnings Per Share. Statement No. 128, which is effective for both interim and annual financial statements ending after December 15, 1997, establishes revised standards for computing and reporting earnings per share. The Company will change the method currently used to compute earnings per share and restate all prior periods in its December 31, 1997 Annual Report. The impact on earnings per share is not expected to be material. Reclassifications: Certain prior year amounts have been reclassified to conform to current year presentation. NOTE B - INVENTORIES Inventories are classified as follows:
- ------------------------------------------------ -------------------------- ------------------------ ----------------------- June 30, 1997 December 31, 1996 June 30, 1996 - ------------------------------------------------ -------------------------- ------------------------ ----------------------- (In thousands) Finished goods $ 3,818 $ 4,987 $ 4,912 Raw materials and packaging supplies 2,981 2,672 3,655 ------------ ---------- ---------- Total FIFO inventories 6,799 7,659 8,567 LIFO reserves (1,051) (1,051) (1,150) ------------ ----------- ----------- $ 5,748 $ 6,608 $ 7,417 ========== ========= ========== - ------------------------------------------------ -------------------------- ------------------------ -----------------------
NOTE C - GAIN ON DISPOSAL OF FIXED ASSETS During the third quarter of 1996, the Company recorded a number of special charges not identifiable with preceding interim periods. These charges included a loss of $725,000 relating to the disposal of certain equipment leased to one of the Company's licensees. During 1997, the Company identified buyers for certain components of the equipment previously written off. The $125,000 gain on disposal of fixed assets equals the proceeds received from the sale of the equipment which had no book value. ESKIMO PIE CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Company markets and manufactures through its own plants and licensed dairies a broad range of frozen novelties, frozen yogurt, ice cream and sorbet products under the Eskimo Pie, Welch's, Weight Watchers, SnackWell's, OREO and RealFruit brand names. The Company continues to manufacture ingredients and packaging for sale to the dairy industry and has recently begun to license the Eskimo Pie brand name in other product categories. RESULTS OF OPERATIONS Net Sales and Gross Profit Total Company sales decreased during both the quarter and six month period ended June 30, 1997 as the prior year included $8 million in sales of Nabisco brand products introduced in the first half of 1996. Repeat sales of the Nabisco items have not met expectations. Sales of Eskimo Pie and Welch's brand products have increased over the prior year and helped to mitigate the decline in Nabisco brand sales. Eskimo Pie brand sales increased by $1.2 million (15.7%) for the quarter and $1.9 million (13.9%) for the six months ended June 30, 1997. Welch's brand sales increased by $.5 million (10.4%) for the quarter and $.8 million (10.6%) for the six month period. According to Information Resources, Inc., recent consumer purchases of Eskimo Pie and Welch's brand products have increased over the prior year and are ahead of the overall frozen novelty category trends. The Company's flavors business continues to exceed prior year results. Gross profit, as a percent of sales, increased during both the quarter and six month period primarily as a result of an improved product mix which resulted from an increase in higher margined Eskimo Pie brand sales. Additional gross margin improvements were the result of management's recent initiatives to obtain more favorable pricing on several key materials and ingredients. Expenses and Other Income As planned, advertising and sales promotion expense increased by approximately 38% during the quarter and six month period as a direct result of the Company's increased focus on the marketing of Eskimo Pie and sublicensed brand products. The Company's previously announced 1997 marketing plan called for both an increased amount of spending commitments as well as an acceleration of those commitments to earlier periods in the year. As the Company completes its 1997 marketing program, advertising and sales promotion expense is expected to decline during the second half of the year in comparison with both the first two quarters of 1997 and the comparable periods in 1996. General and administrative expense decreased in comparison with the prior year primarily due to approximately $200,000 of severance accruals recorded in the second quarter of 1996. Interest income and expense, as well as the income tax rate, remains consistent with the prior year. LIQUIDITY AND CAPITAL RESOURCES The Company's financial position remains strong. Although the Company generated less cash from operations than in prior years (due primarily to lower earnings), the Company's cash and current ratio remained constant during the year due to improved inventory management, the recovery of $1.4 million in 1996 Federal income tax payments and $1,150,000 in borrowings related to 1996 technology purchases. The Company believes that the annual cash generated from operations and funds available under its credit agreements will provide the Company with sufficient funds and the financial flexibility to support its ongoing business, strategic objectives and debt repayment requirements. In June 1997, the Company announced that it will consolidate its flavors production in New Berlin, Wisconsin. In connection with the consolidation, the Company has entered into a contract for the sale of its Los Angeles plant facility. Cash flows generated from the sale are expected to more than offset the anticipated severance and other plant closing costs as well as necessary capital improvements required in New Berlin to support the consolidated operations. Assuming the satisfaction of standard closing requirements, the Company expects to close the sale of its Los Angeles plant by year end. The financial impact of the sale transaction and related consolidation is expected to be positive to earnings in 1997 and beyond. PART II, OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders (a) At the Company's Annual Meeting held on May 7, 1997; 2,375,842 of the Company's 3,457,573 shares were present in person or by proxy and entitled to vote, which constituted a quorum. (b) At the Annual Meeting, the following nominees were elected to serve until the 1998 Annual Meeting having received the following vote: FOR ABSTAIN Terrence D. Daniels 2,375,211 360,631 Arnold H. Dreyfuss 2,375,341 360,501 William M. Fariss, Jr. 2,375,241 360,601 Wilson H. Flohr, Jr. 2,375,341 360,501 F. Claiborne Johnston, Jr. 2,375,311 360,531 Judith M. McBee 2,685,711 50,131 (c) At the Annual Meeting, designation of Ernst & Young LLP as auditors for the Company was ratified having received the following vote: FOR 2,659,784 AGAINST 74,507 ABSTAIN 1,351 Item 6. Exhibits and Report on Form 8-K (a) Exhibits: 10.1 Eskimo Pie Corporation Savings Plan, as amended, incorporated herein by reference to Exhibit 4(c) (ii) to the Company's Registration Statement on Form S-8 (Registration No. 333-24893). 10.2 Eskimo Pie Corporation Employee Stock Purchase Plan, incorporated herein by reference to Exhibit 4(c) (iii) to the Company's Registration Statement on Form S-8 (Registration No. 333-24893). 27. Financial Data Schedules, filed herewith. (b) 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. ESKIMO PIE CORPORATION Date: August 12, 1997 By /s/ David B. Kewer -------------------------- David B. Kewer President and Chief Operating Officer Date: August 12, 1997 By /s/ Thomas M. Mishoe, Jr. --------------------------- Thomas M. Mishoe, Jr. Chief Financial Officer, Vice President, Treasurer and Corporate Secretary Date: August 12, 1997 By /s/ William T. Berry, Jr. ------------------------------ William T. Berry, Jr. Assistant Vice President, Controller EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS DEC-31-1997 JUN-30-1997 2,073 0 11,787 0 5,748 20,686 20,786 12,151 48,560 11,980 9,676 0 0 3,458 19,857 48,560 41,915 41,915 24,131 40,061 0 0 354 1,719 653 1,066 0 0 0 1,066 .31 .31
-----END PRIVACY-ENHANCED MESSAGE-----