-----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, Sk7CQUweDfYKSMm6ByDwtz5e07UWUB3YCeBOXa/n7cz755wZ4ANgfRtZi+ZFJUGg 78hFPG6EMbmX5vPxsBGvLw== 0000899243-95-000766.txt : 19951124 0000899243-95-000766.hdr.sgml : 19951124 ACCESSION NUMBER: 0000899243-95-000766 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: IMPERIAL HOLLY CORP CENTRAL INDEX KEY: 0000831327 STANDARD INDUSTRIAL CLASSIFICATION: 2060 IRS NUMBER: 740704500 STATE OF INCORPORATION: TX FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10307 FILM NUMBER: 95590037 BUSINESS ADDRESS: STREET 1: ONE IMPERIAL SQ STE 200 STREET 2: P O BOX 9 CITY: SUGAR LAND STATE: TX ZIP: 77487 BUSINESS PHONE: 7134919181 FORMER COMPANY: FORMER CONFORMED NAME: IMPERIAL SUGAR CO /TX/ DATE OF NAME CHANGE: 19880606 10-Q 1 FORM 10-Q ============================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________________ FORM 10-Q [ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1995 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 1-10307 ______________________________ IMPERIAL HOLLY CORPORATION (Exact name of registrant as specified in its charter) Texas 74-0704500 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Imperial Square, Suite 200, P.O. Box 9, Sugar Land, Texas 77487 (Address of principal executive offices, including Zip Code) (713) 491-9181 (Registrant's telephone number, including area code) 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 November 9, 1995. 10,306,590 shares. Exhibit Index Appears on Page 13 Page 1 of 14 Pages ============================================================================== 1 IMPERIAL HOLLY CORPORATION Index
Page PART I - FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets 3 Consolidated Statements of Income 4 Consolidated Statements of Cash Flows 5 Consolidated Statement of Changes in Shareholders' Equity 6 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 11
2 PART I - FINANCIAL INFORMATION IMPERIAL HOLLY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED)
September 30, 1995 March 31, 1995 ------------------- -------------------------- ASSETS (In Thousands of Dollars) CURRENT ASSETS: Cash and temporary investments $ 1,868 $ 1,686 Marketable securities 36,971 35,079 Accounts receivable 51,620 38,234 Inventories: Finished products 38,911 100,540 Raw and in-process materials 19,882 22,633 Supplies 13,193 11,990 Manufacturing costs prior to production 22,554 11,969 Prepaid expenses 4,422 4,394 -------- -------- Total current assets 189,421 226,525 NOTES RECEIVABLE 2,396 2,445 OTHER INVESTMENTS 6,848 6,450 PROPERTY, PLANT AND EQUIPMENT - net 127,619 128,952 OTHER ASSETS 6,817 9,752 -------- -------- TOTAL $333,101 $374,124 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable -- trade $ 41,400 $ 44,756 Short-term borrowings 29,851 61,092 Current maturities of long-term debt 17 51 Other current liabilities 30,991 33,421 -------- -------- Total current liabilities 102,259 139,320 LONG-TERM DEBT 95,300 100,010 DEFERRED TAXES AND OTHER CREDITS 24,705 24,817 SHAREHOLDERS' EQUITY Preferred stock - - Common stock 32,183 32,046 Retained earnings 72,059 72,854 Unrealized securities gains - net 7,153 5,635 Pension liability adjustment (558) (558) -------- -------- Total shareholders' equity 110,837 109,977 -------- -------- TOTAL $333,101 $374,124 ======== ========
See notes to consolidated financial statements. 3 IMPERIAL HOLLY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended Six Months Ended September 30, September 30, ----------------------------------- ------------------------ 1995 1994 1995 1994 --------------- ----------- ---------- ---------- (In Thousands of Dollars) NET SALES $ 165,786 $ 162,072 $ 314,610 $ 311,396 ----------- ----------- ----------- ----------- COSTS AND EXPENSES: Cost of sales 151,828 148,320 286,135 283,052 Selling, general and administrative 14,699 14,027 28,605 27,648 ----------- ----------- ----------- ----------- Total 166,527 162,347 314,740 310,700 ----------- ----------- ----------- ----------- OPERATING INCOME (LOSS) (741) (275) (130) 696 INTEREST EXPENSE (2,821) (2,554) (5,722) (5,187) REALIZED SECURITIES GAINS -- NET 705 116 3,162 1,738 OTHER INCOME -- Net 729 889 1,854 2,507 ----------- ----------- ----------- ----------- INCOME (LOSS) BEFORE INCOME TAXES (2,128) (1,824) (836) (246) PROVISION (CREDIT) FOR INCOME TAXES (598) (684) (72) (102) ----------- ----------- ----------- ----------- INCOME (LOSS) BEFORE EXTRAORDINARY ITEM (1,530) (1,140) (764) (144) EXTRAORDINARY ITEM - NET OF TAX - - 380 - ----------- ----------- ----------- ----------- NET INCOME (LOSS) $ (1,530) $ (1,140) $ (384) $ (144) =========== =========== =========== =========== EARNINGS (LOSS) PER SHARE OF COMMON STOCK: INCOME (LOSS) BEFORE EXTRAORDINARY ITEM $(0.15) $(0.11) $(0.08) $(0.01) EXTRAORDINARY ITEM - NET OF TAX - - 0.04 - ----------- ----------- ----------- ----------- NET INCOME (LOSS) $(0.15) $(0.11) $(0.04) $(0.01) =========== =========== =========== =========== WEIGHTED AVERAGE SHARES OUTSTANDING 10,298,298 10,262,336 10,292,725 10,259,350 =========== =========== =========== ===========
See notes to consolidated financial statements. 4 IMPERIAL HOLLY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended September 30 -------------------- 1995 1994 --------- -------- (In Thousands of Dollars) OPERATING ACTIVITIES: Net income $ (384) $ (144) Adjustments for non-cash and non-operating items: Extraordinary item - net (380) - Depreciation 6,319 6,863 Other (3,550) (2,875) Working capital changes: Receivables (13,386) (7,219) Inventory 63,177 59,486 Deferred and prepaid costs (10,613) (9,691) Accounts payable (3,356) 10,402 Other liabilities (3,567) 595 --------- -------- Operating cash flow 34,260 57,417 --------- -------- INVESTMENT ACTIVITIES: Capital expenditures (5,175) (5,311) Investment in marketable securities (4,367) (3,901) Proceeds from sale of marketable securities 7,945 3,766 Proceeds from sale of fixed assets 838 2,800 Other 2,369 101 --------- -------- Investing cash flow 1,610 (2,545) --------- -------- FINANCING ACTIVITIES: Short-term debt: Bank borrowings - net 19,900 (1,582) CCC borrowings - advancements 81,674 16,928 CCC borrowings - repayments (132,815) (68,042) Repayment of long-term debt (4,160) (25) Dividends paid (411) (821) Other 124 88 --------- -------- Financing cash flow (35,688) (53,454) --------- -------- INCREASE IN CASH AND TEMPORARY INVESTMENTS 182 1,418 CASH AND TEMPORARY INVESTMENTS, BEGINNING OF PERIOD 1,686 555 --------- -------- CASH AND TEMPORARY INVESTMENTS, END OF PERIOD $ 1,868 $ 1,973 ========= ========
See notes to consolidated financial statements. 5 IMPERIAL HOLLY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY For the Six Months Ended September 30, 1995 (UNAUDITED)
Common Stock Unrealized Pension --------------------- Retained Securities Liability Shares Amount Earnings Gains Adjustment Total ----------- -------- -------- ----- ----------- ----- (In Thousands of Dollars) BALANCE, MARCH 31, 1995 10,283,445 $32,046 $72,854 $5,635 $ (558) $109,977 Net income (loss) (384) (384) Cash dividend (411) (411) Employee stock purchase plan and stock option exercises 16,974 137 137 Change in unrealized securities gains - net 1,518 1,518 ----------- ------- ------ ------ ----- --------- BALANCE, SEPTEMBER 30, 1995 10,300,419 $32,183 $72,059 $ 7,153 $ (558) $110,837 =========== ======= ======= ======= ====== ========
See notes to consolidated financial statements. 6 IMPERIAL HOLLY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SIX MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 Basis of Presentation -- The unaudited condensed consolidated financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission and reflect in the opinion of management, all adjustments, consisting only of normal recurring accruals, that are necessary for a fair presentation of financial position and results of operations for the interim periods presented. These financial statements include the accounts of Imperial Holly Corporation and its majority owned subsidiaries (the "Company"). All significant intercompany balances and transactions have been eliminated in consolidation. Certain information and footnote disclosures required by generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The financial statements included herein should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended March 31, 1995. Cost of Sales -- Payments to growers for sugarbeets are based in part upon the Company's average net return for sugar sold (as defined in the participating contracts with growers) during the grower contract years, some of which extend beyond September 30. The contracts provide for the sharing of the net selling price (gross sales price less certain marketing costs, including packaging costs, brokerage, freight expense and amortization of costs for certain facilities used in connection with marketing) with growers. Cost of sales includes an accrual for estimated additional amounts to be paid to growers based on the average net return realized for sugar sold in each of the contract years through September 30. The final cost of sugarbeets cannot be determined until the end of the contract year for each growing area. Manufacturing costs prior to production are deferred and allocated to production costs based on estimated total units of production for each sugar manufacturing campaign. Additionally, the Company's sugar inventories, which are accounted for on a LIFO basis, are periodically reduced at interim dates to levels below that of the beginning of the fiscal year. When such interim LIFO liquidations are expected to be restored prior to fiscal year-end, the estimated replacement cost of the liquidated layers is utilized as the basis of the cost of sugar sold from beginning of the year inventory. Accordingly, the cost of sugar utilized in the determination of cost of sales for interim periods includes estimates which may require adjustment in future fiscal periods. Extraordinary Item -- In June 1995, the Company purchased and retired $4,700,000 principal amount of its 8-3/8% senior notes due in 1999, resulting in a gain which is reported, net of related income tax expense of $204,000, as an extraordinary item. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITION The Company finances its working capital and capital expenditure requirements from a combination of funds generated by operations and short-term borrowing arrangements, including short-term, secured, non-recourse borrowings from the Commodity Credit Corporation ("CCC"). CCC loans mature each September 30, and, accordingly, no CCC loans were outstanding at September 30, 1995. The increase in accounts receivable for the six months ended September 30, 1995 results from higher sales volumes in the current quarter as compared to the quarter ended March 31, 1995, as well as the proceeds due from brokers for securities transactions. The decrease in finished product inventory during the six months ended September 30, 1995 was primarily due to the seasonal production schedule of the Company's beet sugar operations. Operating cash flow of $34.3 million as well as cash flow from investing activities totaling $1.6 million for the six months ended September 30, 1995 was used to reduce long and short-term debt. In June 1995, the Company purchased and retired $4,700,000 principal amount of its 8-3/8% senior notes due 1999; the remaining notes, with an aggregate principal amount of $95.3 million, require semi-annual interest-only payments prior to maturity. Management believes that existing internal and external sources are adequate to meet its financing requirements, including fiscal 1996 capital expenditures, estimated at $8.0 million. The Company has entered into a limited partnership agreement with a sugarbeet growers' cooperative in Washington state to build and operate a new sugarbeet factory. The Company's capital commitment primarily consists of certain production equipment which is not presently in use. The Company's marketable securities portfolio is reported at its market value of $36.9 million at September 30, 1995, $11.0 million in excess of its cost basis. In July 1995, the Board of Directors discontinued payment of dividends on the Company's common stock. RESULTS OF OPERATIONS The Company's results of operations continue to be adversely affected by a combination of low refined sugar prices and historically high raw cane sugar prices. Selling prices, which have been depressed by an oversupply of refined sugar from expanded beet sugar production in recent years, have increased modestly in the current fiscal year, but substantially less than the significant increases in raw sugar costs due to an overly restrictive import quota. Although reduced from the peak levels established during the summer months, domestic raw sugar prices continue well above previous years' levels. A significant portion of the Company's industrial sales are made under forward sales contracts; the Company enters into forward purchase contracts for raw cane sugar to reduce its exposure to future price changes. 8 The domestic sugar industry operated under marketing allotments imposed by the USDA for the year ended September 30, 1995. The Company is unable to predict if marketing allotments which expired September 30, 1995 will be re-imposed, or, if re-imposed, what the allotment level for the total market or the Company's share thereof would be, nor the effect of any such action on raw and refined sugar prices, margins and the Company's results of operations. Congress is currently formulating the 1995 Farm Bill which would be effective in October 1996. The Company is unable to predict whether the 1995 Farm Bill will include a sugar section, whether the sugar program under such a section, if any, would be similar to the current sugar program or the effects of such legislation on market prices for refined and raw sugar, the margins received by the Company on the sugar it sells or the results of operations of the Company. Net sales increased $3.7 million or 2.9% for the three months ended September 30, 1995, compared to the same period of the prior year, as an increase in sugar volume sold was combined with higher sales prices. Sugar sales volume increased somewhat as increases in beet sugar sales more than offset reductions in cane sugar sales. Average sugar sales prices increased from the year earlier period in part due to a shift in product mix and modest increases in selling prices. Average sugar sales prices decreased from the immediately preceding quarter. For the six month period ended September 30, 1995, net sales increased $3.2 million or 1.0% as an increase in average sugar sales price more than offset a decrease in sugar sales volume. Cost of sales as a percent of sales was virtually unchanged at 91.6% for the three months and 90.9% for the six months ended September 30, 1995. The unit cost of raw cane sugar purchased increased more than the average sales price resulting in a decrease in unit margins on cane sugar sales. Domestic raw cane market prices remain higher than the previous year, and absent similar increases in refined sugar prices, will continue to negatively impact the Company's results of operations for the remainder of the current fiscal year. The Company purchases sugar beets under participatory contracts which provide for a percentage sharing of the net selling price realized on refined beet sugar sales between the Company and the grower. Use of this type of contract reduces the Company's exposure to inventory price risk on sugarbeet purchases so long as the contract net selling price does not fall below the regional minimum support prices established by the USDA. Low refined sugar selling prices resulted in net selling prices falling below such minimum support levels in some contract areas during previous years, however net selling prices are currently above such minimum levels. Consequently, the increase in the unit selling price of refined beet sugar resulted in a modest increase in the unit cost of sugarbeets purchased. Improved manufacturing performances especially in the Company's Brawley, California factory, resulted in a slight decrease in the cost of beet sugar sold from the already low levels of the previous fiscal period. Selling, general and administrative expenses increased by $672,000 or 4.8% for the three months and $957,000 or 3.5% for the six months ended September 30, 1995 compared to the same period of the prior year, as increases 9 in advertising and warehousing costs were largely offset by reductions in general and administrative costs. In October 1995, the Company announced a cost reduction program in the sales, administrative and manufacturing overhead areas, including a reduction in force, which is expected to yield annual cost savings of $8,000,000. In connection with the reductions, which are expected to be substantially complete by March 31, 1996, the Company expects to record a charge to pre-tax earnings of $475,000 in the quarter ending December 31, 1995. Interest expense for the three and six month periods ended September 30, 1995 was higher than the comparable period of the prior year as a result of higher short-term interest rates on higher average short-term borrowings. Other income - - -- net for the six months ended September 30, 1995 includes gains on the sale of assets of $.6 million compared to $1.7 million of such gains in the prior year period. The extraordinary gain resulted from the purchase and retirement of $4.7 million principal amount of 8-3/8% senior notes in June 1995. 10 PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) The exhibits required to be filed with this report are listed in the Exhibit Index which immediately follows the signatures page of this report. Registrant is a party to several long-term debt instruments under which in each case the total amount of securities authorized does not exceed 10% of the total assets of Registrant and its subsidiaries on a consolidated basis. Pursuant to paragraph 4(iii) (A) of Item 601(b) of Regulation S-K, Registrant agrees to furnish a copy of such instruments to the Securities and Exchange Commission upon request. (b) No reports on Form 8-K were filed during the quarter ended September 30, 1995. 11 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. IMPERIAL HOLLY CORPORATION (Registrant) Dated: November 10, 1995 By: /s/ James C. Kempner ---------------------------- James C. Kempner President, Chief Executive Officer and Chief Financial Officer (Principal Financial Officer) 12 IMPERIAL HOLLY CORPORATION FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1995 Exhibit Index Exhibit 11 Computation of Income Per Common Share. 27 Financial Data Schedule EX-11 2 COMPUTATION OF INCOME PER COMMON SHARE EXHIBIT 11 IMPERIAL HOLLY CORPORATION AND SUBSIDIARIES COMPUTATION OF INCOME PER COMMON SHARE (UNAUDITED)
Three Months Six Months Ended Ended September 30, September 30, 1995 1995 ------------------------------ (In Thousands of Dollars) INCOME (LOSS) FOR PRIMARY AND FULLY DILUTED COMPUTATION: Income (loss) before Extraordinary Item: As reported $ (1,530) $ (764) Adjustments - none - - ----------- ----------- As adjusted (1,530) (764) =========== =========== Net Income (Loss): As reported $ (1,530) $ (384) Adjustments - none - - ----------- ----------- As adjusted $ (1,530) $ (384) =========== =========== PRIMARY EARNINGS (LOSS) PER SHARE: Weighted average shares of common stock outstanding 10,298,298 10,292,725 Incremental shares issuable from assumed exercise of stock options under the treasury stock method 28,320 32,378 ----------- ----------- Weighted average shares of common stock outstanding, as adjusted 10,326,618 10,325,103 =========== =========== Primary earnings (loss) per share: Before extraordinary item $ (0.15) $ (0.07) Net income (loss) (0.15) (0.04) =========== =========== FULLY DILUTED EARNINGS (LOSS) PER SHARE: Weighted average shares of common stock outstanding 10,298,298 10,292,725 Incremental shares issuable from assumed exercise of stock options under the treasury stock method 28,320 32,378 ----------- ----------- Weighted average shares of common stock outstanding, as adjusted 10,326,618 10,325,103 =========== =========== Fully diluted earnings (loss) per share: Before extraordinary item $ (0.15) $ (0.07) Net income (loss) (0.15) (0.04) =========== ===========
_______________________________________ This calculation is submitted in accordance with Item 601(b)(11) of Regulation S-K; the amount of dilution illustrated in this calculation is not required to be disclosed pursuant to paragraph 14 of Accounting Principles Board Opinion No. 15. EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS MAR-31-1996 APR-01-1995 SEP-30-1995 1,868 36,971 51,620 0 71,986 189,421 265,602 137,983 333,101 102,259 95,300 32,183 0 0 78,654 333,101 314,610 314,610 286,135 286,135 0 0 5,722 (836) (72) (764) 0 380 0 (384) (.04) (.04)
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