0000899243-95-000479.txt : 19950810 0000899243-95-000479.hdr.sgml : 19950810 ACCESSION NUMBER: 0000899243-95-000479 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950809 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: IMPERIAL HOLLY CORP CENTRAL INDEX KEY: 0000831327 STANDARD INDUSTRIAL CLASSIFICATION: SUGAR & CONFECTIONERY PRODUCTS [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: 95560143 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 June 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 August 7, 1995. 10,298,115 shares. Exhibit Index Appears on Page 12 Page 1 of 13 Pages ================================================================================ 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 4. Submission of Matters to a Vote of Security Holders 10 Item 6. Exhibits and Reports on Form 8-K 10
- 2 - PART I - FINANCIAL INFORMATION IMPERIAL HOLLY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED)
JUNE 30, 1995 March 31, 1995 ------------- ---------------- ASSETS (In Thousands of Dollars) CURRENT ASSETS: Cash and temporary investments $ 1,844 $ 1,686 Marketable securities 35,947 35,079 Accounts receivable 52,658 38,234 Inventories: Finished products 92,865 100,540 Raw and in-process materials 20,078 22,633 Supplies 11,396 11,990 Manufacturing costs prior to production 15,865 11,969 Prepaid expenses 3,520 4,394 -------- -------- Total current assets 234,173 226,525 NOTES RECEIVABLE 2,422 2,445 OTHER INVESTMENTS 6,506 6,450 PROPERTY, PLANT AND EQUIPMENT - net 128,307 128,952 OTHER ASSETS 6,986 9,752 -------- -------- TOTAL $378,394 $374,124 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable -- trade $ 63,209 $ 44,756 Short-term borrowings 55,300 61,092 Current maturities of long-term debt 18 51 Other current liabilities 28,956 33,421 -------- -------- Total current liabilities 147,483 139,320 LONG-TERM DEBT 95,303 100,010 DEFERRED TAXES AND OTHER CREDITS 24,488 24,817 SHAREHOLDERS' EQUITY Preferred stock - - Common stock 32,142 32,046 Retained earnings 73,589 72,854 Unrealized securities gains - net 5,947 5,635 Pension liability adjustment (558) (558) -------- -------- Total shareholders' equity 111,120 109,977 -------- -------- TOTAL $378,394 $374,124 ======== ========
See notes to consolidated financial statements. - 3 - IMPERIAL HOLLY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended June 30, ------------------------ 1995 1994 ----------- ---------- (In Thousands of Dollars) NET SALES $ 148,824 $ 149,324 ---------- ---------- COSTS AND EXPENSES: Cost of sales 134,307 134,732 Selling, general and administrative 13,906 13,621 ---------- ---------- Total 148,213 148,353 ---------- ---------- OPERATING INCOME 611 971 INTEREST EXPENSE (2,901) (2,633) REALIZED SECURITIES GAINS 2,457 1,622 OTHER INCOME -- Net 1,125 1,618 ---------- ---------- INCOME BEFORE INCOME TAXES 1,292 1,578 PROVISION FOR INCOME TAXES 526 582 ---------- ---------- INCOME BEFORE EXTRAORDINARY ITEM 766 996 EXTRAORDINARY ITEM -- NET OF TAX 380 -- ---------- ---------- NET INCOME $ 1,146 $ 996 ========== ========== EARNINGS PER SHARE OF COMMON STOCK: INCOME BEFORE EXTRAORDINARY ITEM $0.07 $0.10 EXTRAORDINARY ITEM -- NET OF TAX 0.04 -- ---------- ---------- NET INCOME $0.11 $0.10 ========== ========== WEIGHTED AVERAGE SHARES OUTSTANDING 10,287,090 10,256,331 ========== ==========
See notes to consolidated financial statements. -4- IMPERIAL HOLLY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended June 30, --------------------------- 1995 1994 ------------- ------------ (In Thousands of Dollars) OPERATING ACTIVITIES: Net income $ 1,146 $ 996 Adjustments for non-cash and non-operating items: Extraordinary item - net (380) - Depreciation 3,146 3,640 Other (2,942) (2,877) Working capital changes: Receivables (14,424) (3,365) Advances on raw sugar cargos - (7,112) Inventory 10,824 22,589 Deferred and prepaid costs (3,022) (2,817) Accounts payable 18,453 11,790 Other liabilities (5,168) (1,299) -------- -------- Operating cash flow 7,633 21,545 -------- -------- INVESTMENT ACTIVITIES: Capital expenditures (2,690) (1,790) Investment in marketable securities (3,475) (3,348) Proceeds from sale of marketable securities 5,528 3,191 Proceeds from sale of fixed assets 827 2,783 Other 2,604 6 -------- -------- Investing cash flow 2,794 842 -------- -------- FINANCING ACTIVITIES: Short-term debt: Bank borrowings - net (3,747) (9,941) CCC borrowings - advances 59,256 16,928 CCC borrowings - repayments (61,301) (27,708) Repayment of long-term debt (4,156) (5) Dividends paid (411) (410) Other 90 45 -------- -------- Financing cash flow (10,269) (21,091) -------- -------- INCREASE IN CASH AND TEMPORARY INVESTMENTS 158 1,296 CASH AND TEMPORARY INVESTMENTS, BEGINNING OF PERIOD 1,686 555 -------- -------- CASH AND TEMPORARY INVESTMENTS, END OF PERIOD $ 1,844 $ 1,851 ======== ========
See notes to consolidated financial statements. - 5 - IMPERIAL HOLLY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY For the Three Months Ended June 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 1,146 1,146 Cash dividend (411) (411) Employee stock purchase plan and stock option exercises 12,336 96 96 Change in unrealized securities gains -- net 312 312 ---------- ------- ------- ------ ----- -------- BALANCE, JUNE 30, 1995 10,295,781 $32,142 $73,589 $5,947 $(558) $111,120 ========== ======= ======= ====== ===== ========
See notes to consolidated financial statements. -6- IMPERIAL HOLLY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED JUNE 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 June 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 June 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 outstanding at June 30, 1995 totaled $49.1 million. The increase in accounts receivable for the three months ended June 30, 1995 results from higher sales volumes 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 three months ended June 30, 1995 was primarily due to the seasonal production schedule of the Company's beet sugar operations. The increase in accounts payable, principally amounts due growers, result from the timing of the purchase of and payments for sugarbeets. Operating cash flow of $7.6 million as well as cash flow from investing activities totaling $2.8 million for the three months ended March 31, 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's marketable securities portfolio is reported at its market value of $35.9 million at June 30, 1995, $9.1 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 Net sales declined $.5 million or .3% for the three months ended June 30, 1995, compared to the same period of the prior year, as a 5% decrease in sugar volume sold was substantially offset by somewhat higher sales prices, as well as increases in beet pulp and molasses volumes. The lack of profitable sales opportunities, particularly in light of rising raw cane sugar costs was the primary factor in the volume reductions. Average sugar sales prices increased 3.4% from the year earlier period in part due to a shift in product mix, and increased only slightly from the immediately preceding fiscal quarter. Since October 1, 1994, the domestic sugar industry has been operating under marketing allotments imposed by the USDA, which are scheduled to expire September 30, 1995. The Company's current allotment has not had, and management does not expect that it will have, a significant restrictive effect on the Company's marketing plans. The Company is unable to predict if marketing allotments will be extended beyond September 30, 1995, or, if -8- extended, what the allotment level for the total market or the Company's share thereof would be, nor the effect of any such extension 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. Cost of sales as a percent of sales increased from 90.0% to 90.3% for the three months ended June 30, 1995. The unit cost of raw cane sugar purchased increased approximately 2.6% for the three month period and as a result, the Company experienced a decrease in its unit margins on cane sugar sales. A shortage of raw cane sugar available for delivery for the remainder of the import quota year which ends September 30, 1995, has caused increases in the domestic raw sugar market which will continue to adversely impact the Company's results of operations through at least the end of its second fiscal quarter. The Company believes it has adequate supplies of raw sugar committed under forward purchase contracts for delivery through this period. The Company purchases sugar beets under participatory contracts which provide for a percentage of 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. Depressed refined sugar selling prices have resulted in net selling prices falling below such minimum support levels in some contract areas. Consequently, the increase in the unit selling price of refined beet sugar resulted in a modest increase in the unit cost of sugarbeets purchased. Additionally, higher sugarbeet freight costs offset improved manufacturing performances especially in the Company's Brawley, California factory, resulting in an increase in the cost of beet sugar sold of 1.6%. Selling, general and administrative expenses increased by $285,000 or 2.1% for the three months ended June 30, 1995 compared to the same period of the prior year, as increases in advertising and warehousing costs were largely offset by reductions in general and administrative costs. Interest expense for the three months ended June 30, 1995 was higher than the comparable period of the prior year as a result of higher short-term interest rates on somewhat lower average short-term borrowings. Other income -- net for the three months ended June 30, 1995 includes gains on the sale of assets of $.6 million compared to $1.4 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. -9- PART II -- OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. At the Annual Meeting of Shareholders on July 28, 1995, nominees for Class I Directors were elected to serve for terms of office expiring in 1998 by the vote totals as follows:
NUMBER OF VOTES BROKER FOR WITHHELD NON-VOTES John D. Curtin, Jr. 9,138,407 61,681 -- I. H. Kempner, II 9,137,103 62,985 -- James C. Kempner 9,138,564 61,524 -- Daniel K. Thorne 9,138,914 61,174 --
Class II Directors, whose terms of office continue until 1996 are Edward O. Gaylord, Robert C. Hanna, Roger W. Hill and Robert L. K. Lynch. Class III Directors, whose terms of office continue until 1997 are A. M. Bartolo, Ann O. Hamilton, Harris L. Kempner, Jr., H. E. Lentz and Fayez Sarofim. 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 June 30, 1995. -10- 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: August 8, 1995 By: /s/ James C. Kempner ------------------------- James C. Kempner President, Chief Executive Officer and Chief Financial Officer (Principal Financial Officer) -11- IMPERIAL HOLLY CORPORATION FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1995 Exhibit Index Exhibit Sequential Page Number 11 Computation of Income Per Common Share. Page 13 -12- EX-11 2 INCOME PER SHARE EXHIBIT 11 IMPERIAL HOLLY CORPORATION AND SUBSIDIARIES COMPUTATION OF INCOME PER COMMON SHARE (UNAUDITED)
Three Months Ended June 30, 1995 _________________________ (In Thousands of Dollars) INCOME FOR PRIMARY AND FULLY DILUTED COMPUTATION: Income before Extraordinary Item: As reported $ 766 Adjustments - none - ----------- As adjusted 766 =========== Net Income: As reported $ 1,146 Adjustments - none - ----------- As adjusted $ 1,146 =========== PRIMARY EARNINGS PER SHARE: Weighted average shares of common stock outstanding 10,287,090 Incremental shares issuable from assumed exercise of stock options under the treasury stock method 39,838 ----------- Weighted average shares of common stock outstanding, as adjusted 10,326,928 =========== Primary earnings per share: Before extraordinary item $ 0.07 Net income 0.11 =========== FULLY DILUTED EARNINGS PER SHARE: Weighted average shares of common stock outstanding 10,287,090 Incremental shares issuable from assumed exercise of stock options under the treasury stock method 44,944 ----------- Weighted average shares of common stock outstanding, as adjusted 10,332,034 =========== Fully diluted earnings per share: Before extraordinary item $ 0.07 Net income 0.11 ===========
_______________________________________ 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. -13- 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 three months ended June 30, 1995 and is qualified in its entirety by reference to such financial statements. 1,000 3-MOS MAR-31-1996 APR-01-1995 JUN-30-1995 1,844 35,947 52,658 0 124,339 234,173 263,207 134,900 378,394 147,483 95,303 32,142 0 0 78,978 378,394 148,824 148,824 134,307 134,307 0 0 2,901 1,292 526 766 0 380 0 1,146 .11 .11