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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Fiscal Year Ended September 30, 1994
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 No.)
433 East Michigan Street
Milwaukee, Wisconsin 53202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(414) 271-6755
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT
Name of each exchange
Title of each class on which registered
Common Stock, $.10 par value New York Stock Exchange, Inc.
Associated Common Share Purchase
Rights
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT
None
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 by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. X
Indicate the number of shares outstanding of each of the
issuer's classes of Common Stock as of December 2, 1994: 26,977,437
shares of Common Stock, $.10 par value, including 898,562 treasury shares.
Aggregate market value of Universal Foods Corporation Common
Stock, excluding treasury shares, held by non-affiliates as of December 2,
1994 was $723,688,781.
Documents Incorporated By Reference
1. Portions of Universal Foods Corporation 1994 Annual Report
to Shareholders (Parts I, II and IV of Form 10-K)
2. Portions of Universal Foods Corporation Notice of Annual
Meeting and Proxy Statement dated December 16, 1994 (Parts II and III of
Form 10-K)
PART I
ITEM 1. BUSINESS - Food
Universal Foods Corporation (the "Company") was incorporated in 1882
in Wisconsin. Its principal executive offices are located at 433 East
Michigan Street, Milwaukee, Wisconsin 53202, telephone (414) 271-6755.
The Company engages in the international development, manufacture and
distribution of value-added ingredients and ingredient systems to food
products and other items. Principal products of the Company include food,
beverage and dairy flavors; certified and natural colors for foods,
cosmetics and pharmaceuticals; dehydrated vegetable products; a diverse
line of yeast products; and flavor enhancers, secondary flavorings and
other bioproducts. The Company exited the frozen potato business during
Fiscal 1994.
The following material from the Universal Foods Corporation 1994
Annual Report to Shareholders is incorporated by reference:
"Management's Analysis of Operations and Financial Condition" on
Pages 18 through 22.
Note A of Notes to Consolidated Financial Statements - "Summary
of Significant Accounting Policies" on Page 27.
Note I of Notes to Consolidated Financial Statements - "Foreign
Operations" on Page 32.
Description
Flavor
The Company conducts its food flavor business through its wholly-
owned subsidiary Universal Flavor Corporation ("Universal Flavor").
Universal Flavor manufactures and supplies flavors and ingredient systems
to the dairy, food processor and beverage industries worldwide and is a
recognized leader in the dairy and beverage flavor markets. It operates
plants located in Kearny, New Jersey; Amboy, Illinois; Indianapolis,
Indiana; and Fenton, Missouri. Universal Flavor has eleven additional
plants in Canada, Mexico, Belgium, Great Britain, Italy, Spain, Australia,
New Zealand, Hong Kong and the Philippines. Products are sold primarily
through employee sales representatives with some assistance from food
brokers.
Strategic acquisitions have expanded Universal Flavor's product lines
and processing capabilities. In April 1990, the Company acquired the
international flavor business of Felton Worldwide, a subsidiary of
Harrisons and Crosfield, PLC, of Great Britain. This acquisition
strengthened Universal Flavor's position as a major flavor producer in
Great Britain and gave Universal Flavor a larger presence on the European
continent and in the Pacific Rim. In September 1991, the Company acquired
Fantasy Flavors, Inc. Combining Fantasy's product lines with the
Company's existing BlankeBaer operation positions Universal Flavor as the
premier dairy ingredient systems supplier in North America. The January
1992 acquisition of Curt Georgi Imes, S.P.A. brought particular strength
in the Italian bakery and dairy flavor markets, as well as experienced
research and development and sophisticated analytical capabilities. The
January 1994 acquisition of Destillaciones Garcia de la Fuente, S.A.
(DGF), based in Granada, Spain, provided a depth of expertise for
expanding into aroma chemicals and essential oils, both of which are used
to create flavors as well as fragrances. In July 1994, Universal Flavors,
through its international subsidiary, purchased its partner's 51% interest
in Azteca en Ambesco de Mexico. This purchase brought beverages and dairy
flavor technology to the Company's other existing Mexican flavor business.
Color
The Company, through its subsidiary Warner-Jenkinson Company ("W-J"),
is the world's leading manufacturer of certified food colors. It also has
a growing share of the international natural color market. Its products,
sold under such brand names as RED SEAL and SPECTRACOAT, are used by
producers of soft drinks, bakery products, processed foods, confections,
pet foods, alcoholic beverages and pharmaceuticals. W-J is headquartered
in St. Louis, Missouri, the site of its major manufacturing facilities.
Latin American customers are served by W-J de Mexico, S.A. de C.V., a
manufacturing and sales subsidiary located just outside of Mexico City.
W-J Canada (formerly Dyeco Ltd.) operates out of Kingston, Ontario. Other
manufacturing facilities are located in King's Lynn, Norfolk, England;
Amersfoort, The Netherlands; and Tullamarine, Victoria, Australia.
Domestically, the W-J product line is sold principally by the Company's
own sales force. International sales are made through distributors and
directly by the Company.
Recent acquisitions have strengthened the business internationally
which operates as W-J International. In August 1991, the Company acquired
the international food and cosmetic color operations of Morton
International, Inc. which provided additional technology in cosmetic
colors and a worldwide distribution network. In June 1992, the Company
acquired Butterfield Food Ingredients, Ltd., a British food color
manufacturer with particular expertise in natural colors and
pharmaceutical applications and additional international distribution,
particularly in the Far East. During 1993, the Company acquired Spectrum
S.A., a Mexican food color distributor with approximately 20% market share
in that country.
Dehydrated Products
The Company's subsidiary, Rogers Foods, Inc. ("Rogers"), produces
dehydrated onion and garlic and the Company believes it to be the third
largest producer of these products in the United States. These items are
marketed under the trademark ROGERS FOODS and private labels. Rogers also
produces and distributes chili powder, chili pepper, paprika, dehydrated
vegetables such as parsley, celery and spinach, and oleoresin (a liquid
chili pepper used as a highly concentrated coloring agent) under the brand
name CHILI PRODUCTS. Rogers believes it is one of the largest producers
of these products.
Rogers sells dehydrated products directly and through brokers to food
manufacturers for use as ingredients and also for repackaging under
private labels for sale to the retail market and to the food service
industry. Rogers' processing facilities are located in Turlock,
Livingston and Greenfield, California.
During 1994, the Company acquired a leading European processor of air
and freeze-dried vegetables. The acquisition gives the Company a base
from which to expand its dehydrated products business internationally.
This acquisition in Ireland from Campbell Soup Company also expands the
Company's dehydrated technology base to include freeze drying and
"puffing," an air-steam process. Vegetables processed using these
technologies are premium products because they have a short reconstitution
time, a benefit in today's convenience foods such as soups, snacks and
other dry foods.
The Irish operation consists of two companies managed as a single
entity in Midleton, County Cork. The group employs about 120 people and
now operates as Mallow Foods Ltd.
Yeast
The Company specializes in the production of compressed, active dry
and nutritional yeast products for sale to industrial, institutional and
retail accounts under the RED STAR trademark. Compressed yeast and cream
yeast must be refrigerated and used soon after production. Active dry
yeast is a dehydrated product which has the advantages of longer shelf
life, lower shipping costs and ease of handling. Nutritional yeast is a
rich source of B-complex vitamins and proteins. Other yeast strains are
produced specifically for the wine industry, and the Company purchases a
number of allied products, including bakery mixes and baking powder, from
others and distributes them.
The largest market for yeast is the domestic baking industry. In
addition, active dry yeast is sold to food processors for inclusion in
bread, pizza and similar mixes. The compressed, active dry and
fast-acting dry yeast products of the Company bearing the RED STAR and RED
STAR QUICK RISE trademarks are sold in ready-to-use packages to retail
stores and in two pound packages for food service use. The Company
believes it is the largest North American supplier of yeast to the
commercial bakery market and the second largest supplier to the retail
market.
The business also exports yeast and allied products throughout the
world and manages investments in companies operating yeast and allied
product facilities in 12 offshore locations, two of which are wholly-owned
subsidiaries. The Company receives revenues in the form of dividends and
technical assistance fees from these foreign affiliates.
Company owned yeast plants are located in Milwaukee, Wisconsin;
Baltimore, Maryland; Dallas, Texas; and Oakland, California. The Company
distributes its fermentation products largely through its own sales force
from its distribution branches. In 1994, the Company purchased a 20%
stock interest in and entered an agreement with Minn-Dak Yeast Company,
Inc. for contract manufacturing by Minn-Dak under the Red Star label and
for Minn-Dak to supply molasses, a major raw material in yeast production,
to the Company.
BioProducts
During 1994, the Company created the Red Star BioProducts Division
from its existing Red Star Specialty Products Division and two
acquisitions. Red Star Specialty Products had been established as a
small, stand-alone profit center in 1989 out of the Company's Fermentation
group. With internally developed expertise, the group focused on highly
technical product development using extracts from brewer's and baker's
yeast. During 1993, Universal BioVentures, the Company's biotechnology
group, was integrated into Red Star Specialty Products. This group was
given the mission to develop new biotechnological products utilizing the
Company's extensive expertise in fermentation, and its research strengths
in the molecular biology of microorganisms.
The 1994 acquisitions of Champlain Industries Limited and the Biolux
Group expanded the division's product lines and international presence,
making the division a more significant part of the Company.
Champlain Industries Limited produces savory flavorings and flavor
enhancers from vegetable proteins, yeast, meats and milk protein. It is a
leading producer of hydrolyzed vegetable proteins (HVP) in North America.
The company has operations in Canada, the U.S., and the United Kingdom.
The Biolux Group is a leading European producer of food, nutritional
and feed ingredients derived from brewer's yeast. The acquisition makes
the Company a world leader in brewer's yeast extract technology,
production and sales. The Biolux Group consists of New Biolux in Belgium
and Vitalevor in France. Its products include flavor enhancers, health
foods, feed ingredients and nutrients for pharmaceutical and biotechnology
processes. The Biolux Group is a major purchaser and processor of
brewer's yeast in the European market.
The expanded Red Star BioProducts Division serves the food
processing, fermentation, agriculture, aquaculture and chemical
intermediates industries as a diversified supplier of natural extracts and
specialty cultures. It supplies various natural extracts from brewer's
yeast, baker's yeast, vegetable proteins, meat, casein and other naturally
occurring materials. These specialty extracts function primarily as
flavor and texture modifiers and enhancers, and secondary flavorings in
the food processing industries. They also enjoy widespread use as
palatability enhancers in the pet food and animal foodstuffs markets. The
nutritional and functional properties of Red Star BioProducts extracts are
the basis for their use in cheese starter and pharmaceutical fermentations
and in personal care applications.
The Company believes Red Star BioProducts is the leading supplier of
yeast extracts and second in the supply of HVPs in the U.S. market. The
products are marketed under a number of Red Star and Champlain trademarks.
Commercial production and export of a new product named RED STAR Phaffia
Yeast began in 1993. The yeast Phaffia rhodozyma is a source of the red
carotenoid compound called astaxanthin which is the natural pigment found
in salmon, trout and shellfish. This product was developed for use as an
ingredient for feeds given to salmon produced by aquaculture. The
purchase of the technological properties of ZeaGen from ACX Technologies,
Inc in 1993 provides other processes for development.
The expanded division operates production facilities in Milwaukee and
Juneau, Wisconsin; Harbor Beach, Michigan; Clifton, New Jersey; and in
Canada, the United Kingdom, Belgium and France. More than half of the
Division's products are now produced outside of the United States. Its
products are marketed through technically trained sales personnel directly
to the customer and through distributors in some international markets.
Frozen Foods
On August 1, 1994, the Company completed the sale of Universal Frozen
Foods Company, a wholly owned subsidiary of the Company ("Frozen Foods"),
to ConAgra, Inc. for a base consideration of $163 million and an earnout
consideration of approximately $57 million, payable over a five year
period. The sale was a major step in Universal Foods' strategic
transition to a focus on value-added ingredients and ingredient systems
for foods and other products.
Frozen Foods produced frozen potato products for U.S. and
international markets, selling most of its product to the food service
industry. It did have a share of the retail market with branded and
private labeled products. It operated processing facilities in Twin
Falls, Idaho; Hermiston, Oregon; and Pasco, Washington.
Research and Development/Quality Assurance
The Company believes that its competitive advantage and ability to
develop and deliver value-added products is based on its technical
expertise in the processing and application of its technology for foods
and other products. Therefore, the Company provides an above-industry
average investment in research, development and quality assurance, and is
committed to the training and development of its people.
The Company employs approximately 300 people in research and quality
assurance. Over the past five years, research and development
expenditures have increased an average of 10.4%. Expenditures in fiscal
1994 increased 13.0% over fiscal 1993 to $32.2 million from $28.5 million.
Expenditures in fiscal 1993 increased 7.1% to $28.5 million from $26.6
million in fiscal 1992. The Company's commitment to research and product
development continues at a level significantly higher than the food
industry average. Of the aforesaid amounts, approximately $17.3 million
in fiscal 1992, $17.9 million in fiscal 1993 and $20.4 million in fiscal
1994, were research and development expenses as defined by the Financial
Accounting Standards Board.
To improve its research and development capabilities, the Company has
been upgrading its technical facilities. In 1991, the Company
refurbished much of its Technical Center located in Milwaukee, Wisconsin,
to enhance its capabilities in product and process areas related to
fermentation, including microbial genetics work carried out to develop
improved strains of bakers yeast and engineering development facilities
for process development and new product production scale-up activities.
In 1992, an $8 million Fermentation Development Facility was completed at
the Technical Center to scale-up new biotechnological products for the Red
Star BioProducts Division. Two 10,000-gallon pure culture fermenters in
this facility produce sufficient volumes to test market new products in
order to establish them as commercially acceptable prior to investment in
a full-scale production plant.
In 1992, the Company completed a new research center for seed
genetics and tissue culture at Livingston, California, for Dehydrated
Products, and the Company enlarged food flavor research laboratories in
Kearny, New Jersey. During 1993, beverage flavor laboratories in
Indianapolis were enlarged, new modern laboratories for research on color
products at W-J's production site in St. Louis, Missouri were completed,
and a new facility for quality assurance and technical customer services
was added to the Turlock, California complex. All of these facilities
are designed to meet the specialized, strategic needs of the Company's
operating units.
The Company has a massive training program designed to introduce all
personnel to team problem solving using statistical process control,
teamwork and communication procedures under a program named "The Universal
Way." This program promotes the Company's commitment to continuous
quality improvement of its products and services as a primary Company
objective.
As part of its commitment to quality as a competitive advantage, the
Company has undertaken efforts to achieve certification to quality
standards established by the International Organization for
Standardization in Geneva, Switzerland, through its ISO 9000 series. Red
Star BioProducts believes it was the first North American ingredients
supplier to receive ISO 9002 certification. Universal Flavor facilities
in Indiana and New Jersey in the United States and facilities in The
Netherlands and United Kingdom have also been certified.
Competition
All Company products are sold in highly competitive markets. Some
competitors have more product lines and greater resources than the Company
has. Since the Company and its competitors utilize similar methods of
production, marketing and delivery, the Company competes primarily on
technical product development, process expertise, quality and service.
The Company competes in many market niches where price is not the most
important variable.
With the evolution of food processing as a global business,
competition to supply the industry has taken on an increasingly global
nature. Universal Foods competes with only a few companies across
multiple ingredient lines, and is more likely to encounter competition
specific to individual businesses.
In the worldwide flavor market, the Company's principal competition
comes from other U.S. and European producers. Building an international
presence is a key goal for Universal Flavor as witnessed by the
acquisitions of the international flavor business of Felton Worldwide in
1990, Curt Georgi Imes, S.P.A. in 1992 and Destillaciones Garcia de la
Fuente, S.A. in 1994; and the completion of a new plant in Belgium in
order to meet increasing international flavor demands.
The Company believes W-J is a leading producer of certified colors in
North America and Western Europe; state of the art equipment, the latest
process technology, and the most complete range of synthetic and natural
colors constitute the basis for its market leadership position.
Acquisitions have resulted in product and process technology synergies,
particularly in the cosmetic color market, as well as a growing
international presence.
For Dehydrated Products, the acquisition in Ireland begins an
international expansion and strengthens export opportunities for U.S.
based operations. Some price competition has been evident in the United
States as a domestic competitor seeks to gain market share and a new
competitor is adding capacity to the industry. Red Star Yeast & Products
continues to experience pricing pressures as a result of industry
overcapacity. Competition in Red Star BioProducts comes primarily from
European producers.
New Product Activity
With the Company's strategic focus on value-added ingredients and
ingredient systems, the Company's emphasis has shifted from the
development of major new products to application activities and processing
improvements in the support of its customers' numerous new and
reformulated products.
These activities include a line of stable aqueous dispersion of
colors for foods and pharmaceutical products. Patents have been granted
on the products marketed under the SPECTRASPRAY label and applied for on
the SPECTRABLEND label. The development of natural food colors continues
to expand and is a growth opportunity for W-J.
A variety of activities at Universal Flavor focus on the development
of flavor solutions for low-fat and no-fat applications. The group has
developed a reaction flavor for imparting animal fat flavor to
nutritionally preferred vegetable oils. A new technology was installed
for production of aseptically processed fruits for frozen yogurt and other
products requiring fruit pieces. Emphasis has been placed on the
development of low-fat dairy flavor systems. In 1993, a low-fat,
cholesterol-free program was introduced for frozen desserts. New flavored
fruit pieces have also been developed to provide new textures, flavors and
unique performance properties in bakery items.
In 1992, Red Star BioProducts introduced RED STAR Phaffia Yeast.
This is the only commercially viable natural source of pink pigmentation
for farm-raised salmon which achieve their flesh color through dietary
supplements. Three other processes to provide natural coloring and
nutrients for aquaculture and agribusiness are currently under
development. In 1993 Red Star BioProducts introduced the FlavorMate 950
series, the most potent flavor enhancer on the market, and the SavoryMate
series, which are flavor enhancers designed for specific areas such as
beef, poultry, pork, etc.
In addition, the discussion of operational activities on Pages 6, 8,
10, 12 and 14 of the 1994 Annual Report to Shareholders is incorporated by
reference (but not any photographs or related captions included thereon).
Raw Materials
The principal raw material used in the production of yeast products
is molasses, which is purchased through brokers and producers under yearly
fixed-price contracts. Processes have been developed to permit partial
replacement of molasses with alternate, readily available substrates for
use if molasses supplies should become limited. In 1994, the Company
entered a supply agreement with Minn-Dak Yeast Company, Inc., a major
North American molasses supplier, to provide additional assurances of
adequate supplies.
Chili peppers, onion, garlic and other vegetables are acquired under
annual contracts with numerous growers in the western United States and
Ireland. Chemicals and petrochemicals used to produce certified colors
are obtained from several domestic and foreign suppliers. Raw materials
for natural colors, such as carmine, beta carotene, annatto and tumeric,
are purchased from overseas and U.S. sources. In the production of
flavors, the principal raw materials include essential oils, aroma
chemicals, botanicals, fruits and juices and are obtained from local
vendors. Flavor enhancers and secondary flavors are produced from spent
brewer's yeast, baker's yeast from the Company's own operations, and
vegetable materials such as corn and soybeans. The acquisition of the
Biolux Group in 1994 provides long-term contracts on supplies of spent
brewer's yeast for European production needs.
The Company believes that its required raw materials are generally in
adequate supply and available from numerous competitively priced sources.
Patents, Formulae and Trademarks
The Company owns or controls many patents, formulae and trademarks
related to its businesses. The businesses are not materially dependent
upon patent or trademark protection; however, trademarks, patents and
formulae are important for the continued consistent growth of the Company.
Employees
As of September 30, 1994, the Company employed about 4,100 persons
worldwide (which includes approximately 200 seasonal employees).
Approximately 821 employees are represented by one of 17 unions with whom
the Company has collective bargaining relationships. The Company
considers its employee relations to be good.
Regulation
Compliance with government provisions regulating the discharge of
material into the environment, or otherwise relating to the protection of
the environment, did not have a material adverse effect on the Company's
operations for the year covered by this report nor is such compliance
expected to have a material effect in the succeeding two years. As is
true with the food industry in general, the production, packaging,
labeling and distribution of the products of the Company are subject to
the regulations of various federal, state and local governmental agencies,
in particular the Food & Drug Administration.
ITEM 2. PROPERTIES
Domestically, the Company had seventeen manufacturing and processing
plants in nine states as of September 30, 1994. Four plants produced
bakers yeast, four facilities provided flavor enhancers and bioproducts,
three produced dehydrated products, two plants produced colors and four
plants produced flavors. None of these properties is held subject to any
material encumbrances. The Company also has investments in fifteen
companies operating yeast and allied product facilities located in twelve
offshore locations. The Company operates five color plants, eleven flavor
plants, five bioproducts facilities and one dehydrated vegetable plant in
thirteen foreign countries. For information regarding lease commitments,
see Note I of Notes to Consolidated Financial Statements - Commitments and
Contingencies, on Page 32 of the 1994 Annual Report to Shareholders, which
is hereby incorporated by reference.
ITEM 3. LEGAL PROCEEDINGS
The Company is a party to various legal proceedings of a character
regarded as normal to its business and in which, the Company believes,
adverse decisions, in the aggregate, would not subject the Company to
damages of a material amount.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during
the last quarter of fiscal 1994.
ITEM 4(a). EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the registrant and their ages as of
December 1, 1994 are as follows:
EXECUTIVE OFFICERS
Name Age Position
Guy A. Osborn 58 Chairman, Chief
Executive Officer and
Director
Richard Carney 44 Vice President - Human
Resources
Thomas J. Degnan 46 President, Red Star
Yeast & Products
Division
John E. Heinrich 50 Vice President and Chief
Financial Officer
Geoffrey J. Hibner 45 Vice President - Finance
Richard F. Hobbs 47 Vice President -
Administration and
Corporate Controller
Kenneth P. Manning 52 President, Chief
Operating Officer and
Director
Terrence M. O'Reilly 49 Vice President,
Secretary and
General Counsel
James F. Palo 54 President, Dehydrated
Products
Division
Dr. Gary W. Sanderson 59 Vice President,
Technologies
Kenneth G. Scheffel 58 Vice President, Red Star
BioProducts Division
Michael A. Wick 51 President, Color
Division
All of these individuals have been employed by the Company in an
executive capacity for more than five years, except Richard Carney.
Mr. Carney was elected Vice President - Human Resources in April,
1993. He joined the Company in 1981 as Treasury Manager and held various
positions in the Treasurer's Department until 1986 when he assumed the
Director of Benefits responsibilities which he performed until being
elected a Vice President.
Mr. Heinrich passed away on December 6, 1994.
Mr. Hibner will resign as Vice President-Finance effective January 2,
1995. Mr. Hobbs is currently serving as principal accounting and chief
financial officer.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
The principal market in which the common stock of the Company is
traded is the New York Stock Exchange. The range of the high and low
sales prices as quoted in the New York Stock Exchange - Composite
Transaction tape for the common stock of the Company and the amount of
dividends declared for fiscal 1994 appearing under "Quarterly Financial
Data" on Page 22 of the 1994 Annual Report of the Company are incorporated
by reference. Common stock dividends were paid on a quarterly basis, and
it is expected that quarterly dividends will continue to be paid in the
future. In addition to the restrictions contained in its Restated
Articles of Incorporation, the Company is subject to restrictions on the
amount of dividends which may be paid on its common stock under the
provisions of various credit agreements. On the basis of the consolidated
financial statements of the Company as of September 30, 1994, $27,258,000
is available for the payment of dividends on the common stock of the
Company under the most restrictive loan covenants.
The Company had a stock repurchase program, initially announced June
7, 1984, under which the authorization terminated in fiscal 1994.
Consequently, on January 27, 1994 the Board of Directors established a new
share repurchase program which authorizes the Company to repurchase up to
2.5 million shares. As of September 30, 1994, no shares had been
repurchased under the new authorization.
On September 8, 1988 the Board of Directors of the Company adopted a
common stock shareholder rights plan which is described at Note E of Notes
to Consolidated Financial Statements - Shareholders' Equity on Pages 29
and 30 of the 1994 Annual Report to Shareholders and which is incorporated
by reference.
The number of shareholders of record on December 2, 1994 was 6,351.
ITEM 6. SELECTED FINANCIAL DATA
Long-term obligations at September 30 were as follows: 1994:
$172,235,000; 1993: $171,907,000; 1992: $167,746,000; 1991: $152,213,000;
and 1990: $122,454,000. Remaining information in response to this item is
incorporated by reference from the "Five-Year Review" and the notes
thereto of the 1994 Annual Report to Shareholders on Page 34.
ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
Management's Analysis of Operations and Financial Condition is
incorporated by reference from Pages 18 through 21 of the 1994 Annual
Report to Shareholders.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The supplementary financial information and financial statements
required by this item are set forth on Pages 22 through 33 of the 1994
Annual Report to Shareholders and are incorporated by reference.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding directors and officers appearing under
"Election of Directors" (ending before "Committees of the Board of
Directors") and "Other Matters" on Pages 3 through Page 6 and Page 16,
respectively, of the Notice of Annual Meeting and Proxy Statement of the
Company dated December 16, 1994, is incorporated by reference.
ITEM 11. EXECUTIVE COMPENSATION
Information relating to compensation of directors and officers is
incorporated by reference from "Director Compensation and Benefits," and
"Compensation and Development Committee Report" and "Executive
Compensation" on Pages 7 through 14 of the Notice of Annual Meeting and
Proxy Statement of the Company dated December 16, 1994.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The discussion of securities ownership of certain beneficial owners
and management appearing under "Principal Shareholders" on Pages 8 through
9 of the Notice of Annual Meeting and Proxy Statement of the Company dated
December 16, 1994, is incorporated by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There are no family relationships between any of the directors,
nominees for director and officers of the Company nor any arrangement or
understanding between any director or officer or any other person pursuant
to which any of the nominees has been nominated. No director, nominee for
director or officer had any material interest, direct or indirect, in any
business transaction of the Company or any subsidiary during the period
October 1, 1993 through September 30, 1994, or in any such proposed
transaction. In the ordinary course of business, the Company engages in
business transactions with companies whose officers or directors are also
directors of the Company. These transactions are routine in nature and are
conducted on an arm's-length basis. The terms of any such transactions
are comparable at all times to those obtainable in business transactions
with unrelated persons.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Documents filed:
1. and 2. Financial Statements and Financial Statement
Schedules. (See following "List of Financial Statements and
Financial Statement Schedules.")
3. Exhibits. (See Exhibit Index on the last page of this
report.) (No instruments defining the rights of holders of long-term
debt of the Company and its consolidated subsidiaries are filed
herewith because no long-term debt instrument authorizes securities
exceeding 10% of the total consolidated assets of the Company. The
Company agrees to furnish a copy of any such instrument to the
Securities and Exchange Commission upon request.)
(b) Reports on Form 8-K: None
List Of Financial Statements and Financial Statement Schedules
Page Reference in
1994 Annual Report
to Shareholders
1. FINANCIAL STATEMENTS
The following consolidated financial
statements of Universal Foods
Corporation and Subsidiaries are
incorporated by reference to the Annual
Report to Shareholders for the year
ended September 30, 1994.
Independent Auditors' Report 33
Consolidated Balance Sheets - 24
September 30, 1994 and 1993
Consolidated Earnings - years ended 23
September 30, 1994, 1993 and 1992
Consolidated Shareholders' Equity - 25
years ended September 30, 1994, 1993 and
1992 26
Consolidated Cash Flows - years ended
September 30, 1994, 1993 and 1992 27 - 32
Notes to Consolidated Financial Statements
Page Reference
2. FINANCIAL STATEMENT SCHEDULES in Form 10-K
Independent Auditors' Report 15
Schedule V - Property, Plant and Equipment 16
Schedule VI - Accumulated Depreciation and 17
Amortization of Plant and Equipment
Schedule VIII - Valuation and Qualifying 18
Accounts
and Reserves
Schedule IX - Short-Term Borrowings 19
Schedule X - Supplementary Earnings 20
Statement
Information
All other schedules are omitted because they are inapplicable, not
required by the instructions or the information is included in the
consolidated financial statements or notes thereto.
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Directors
of Universal Foods Corporation
We have audited the consolidated financial statements of Universal Foods
Corporation as of September 30, 1994 and 1993 and for each of the three
years in the period ended September 30, 1994, and have issued our report
thereon dated November 10, 1994, which report expresses an unqualified
opinion and includes an explanatory paragraph relating to the change in
methods of accounting for postretirement benefits other than pensions and
postemployment benefits to conform with Statements of Financial Accounting
Standards No. 106 and No. 112, respectively; such consolidated financial
statements and report are included in your 1994 Annual Report to
Shareholders and are incorporated herein by reference. Our audits also
included the consolidated financial statement schedules of Universal Foods
Corporation, listed in Item 14. These consolidated financial statement
schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits. In our
opinion, such consolidated financial statement schedules, when considered
in relation to the basic consolidated financial statements taken as a
whole, present fairly in all material respects the information set forth
therein.
DELOITTE & TOUCHE LLP
November 10, 1994
SCHEDULE V
UNIVERSAL FOODS CORPORATION AND SUBSIDIARIES
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
(In Thousands)
Years ended September 30, 1994, 1993 and 1992
Machinery and
Land Buildings equipment Total
Balances, September 30, 1991 $12,579 $ 97,995 $282,660 $393,234
Additions at cost 1,005 12,308 38,196 51,509
Retirements (95) (3,178) (14,085) (17,358)
------ ------- ------- -------
Balances, September 30, 1992 13,489 107,125 306,771 427,385
Additions at cost 220 14,238 39,535 53,993
Retirements (736) (2,627) (5,860) (9,223)
------ ------- ------- -------
Balances, September 30, 1993 12,973 118,736 340,446 472,155
Additions at cost 3,013 12,601 79,363 94,977
Retirements (1,590) (27,195) (109,962) (138,747)
------ ------- ------- -------
Balances, September 30, 1994 $14,396 $104,142 $309,847 $428,385
======= ======= ======= =======
The annual provisions to depreciation have been computed on the straight-line method using the following estimated useful
lives:
Buildings 15 - 40 years
Building additions 20 years
Machinery and equipment 6 - 20 years
Includes $39,906, $4,842 and $6,527 of additions in 1994, 1993 and 1992, respectively, obtained in the
acquisitions of businesses and additions relating to businesses previously accounted for on the equity method
which are now consolidated.
Includes adjustment of $12,788 relating to the adoption of Statement of Financial Accounting Standards No. 109
(SFAS No. 109) "Accounting For Income Taxes".
Includes foreign currency translation adjustments of $3,640 and $6,824 in 1994 and 1993, respectively. The
adjustments in fiscal year 1992 were not material.
Includes $135,637 of retirements relating to the disposition of the Frozen Foods Division.
SCHEDULE VI
UNIVERSAL FOODS CORPORATION AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION AND
AMORTIZATION OF PLANT AND EQUIPMENT
(In Thousands)
Years ended September 30, 1994, 1993 and 1992
Machinery and
Buildings equipment Total
Balances, September 30, 1991 $ 22,328 $118,101 $140,429
Additions charged to costs
and expenses 5,049 23,095 28,144
Retirements (700) (9,406) (10,106)
------ ------- -------
Balances, September 30, 1992 26,677 131,790 158,467
Additions charged to costs
and expenses 5,142 29,771 34,913
Retirements (279) (2,938) (3,217)
------ ------- -------
Balances, September 30, 1993 31,540 158,623 190,163
Additions charged to costs
and expenses 5,017 25,995 31,012
Retirements (4,148) (44,361) (48,509)
------ ------- -------
Balances, September 30, 1994 $ 32,409 $140,257 $172,666
======= ======= ========
Includes adjustment of $5,269 relating to the adoption of SFAS No. 109.
Includes foreign currency translation adjustments of $1,609 and $1,240 in 1994 and 1993, respectively. The
adjustments in fiscal year 1992 were not material.
Includes $4,883 of additions relating to businesses previously accounted for on the equity method which are now
consolidated.
Includes $49,459 of retirements relating to the disposition of the Frozen Foods Division.
SCHEDULE VIII
UNIVERSAL FOODS CORPORATION AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING
ACCOUNTS AND RESERVES
(In Thousands)
Years ended September 30, 1994, 1993, and 1992
Valuation accounts
deducted in the Additions
balance sheet from Balance at Charged to Balance at
the assets to which beginning costs and Net end of
they apply of period expenses acquired Deductions period
1992
Allowance for losses:
Trade accounts
receivable $3,754 $ 808 $ --- $1,205 (A) $3,357
====== ===== ====== ====== ======
1993
Allowance for losses:
Trade accounts
receivable $3,357 $ 988 $ --- $1,039 (A) $3,306
====== ===== ====== ====== ======
1994
Allowance for losses:
Trade accounts
receivable $3,306 $ 971 $ 637 $1,387 (A) $3,527
====== ====== ======= ====== ======
(A) Divestiture and accounts written off, less recoveries.
SCHEDULE IX
UNIVERSAL FOODS CORPORATION AND SUBSIDIARIES
SCHEDULE IX - SHORT-TERM BORROWINGS
(In Thousands)
Years ended September 30, 1994, 1993 and 1992
Maximum Average Weighted
amount amount average
Balance outstanding outstanding interest rate
at end during during during
of period(C) the period the period(A) the period (B)(C)
September 30, 1992 $32,229 $44,899 $25,940 9.6%
September 30, 1993 $14,945 $57,677 $38,545 6.6%
September 30, 1994 $4,527 $84,298 $45,349 4.8%
(A) Average amount outstanding during the period is computed by dividing the total of daily outstanding principal balance
by 365.
(B) Average interest rate for the year is computed by dividing the actual short-term interest expense by the average
short-term borrowings.
(C) Domestic borrowings are predominantly short-term money market loans and bankers' acceptances with terms of
approximately 30 days. Also included in fiscal 1994, 1993 and 1992 are short-term borrowings denominated in foreign
currency at interest rates higher than the average domestic rate.
SCHEDULE X
UNIVERSAL FOODS CORPORATION AND SUBSIDIARIES
SCHEDULE X - SUPPLEMENTARY EARNINGS STATEMENT INFORMATION
(In Thousands)
Years ended September 30, 1994, 1993 and 1992
Charges to costs and expenses
Item 1994 1993 1992
Maintenance and repairs $16,352 $15,949 $15,200
======= ======= =======
Advertising $14,176 $13,562 $18,260
======= ======= =======
The amount of royalties, taxes other than payroll and income taxes, and amortization of intangible assets are not presented
as such amounts are less than one percent of net sales.
SIGNATURES
PURSUANT to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, duly authorized.
UNIVERSAL FOODS CORPORATION
/s/ T. M. O'Reilly
T. M. O'Reilly, Vice President
Secretary & General Counsel
Dated: December 16, 1994
PURSUANT to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on December 16, 1994, by the following
persons on behalf of the Registrant and in the capacities indicated.
/s/ Guy A. Osborn Chairman and Chief Executive Officer
Guy A. Osborn
/s/ Kenneth P. Manning President & Chief Operating Officer
Kenneth P. Manning Director
/s/ Richard F. Hobbs Vice President - Corporate
Richard F. Hobbs Controller
/s/ Michael E. Batten Director
Michael E. Batten
/s/ John F. Bergstrom Director
John F. Bergstrom
/s/ James L. Forbes Director
James L. Forbes
/s/ Dr. Olan D. Forker Director
Dr. Olan D. Forker
/s/ Dr. Carol I. Waslien Ghazaii Director
Dr. Carol I. Waslien Ghazaii
/s/ Leon T. Kendall Director
Leon T. Kendall
/s/ James H. Keyes Director
James H. Keyes
/s/ Charles S. McNeer Director
Charles S. McNeer
/s/ John L. Murray Director
John L. Murray
/s/ William U. Parfet Director
William U. Parfet
/s/ Essie Whitelaw Director
Essie Whitelaw
UNIVERSAL FOODS CORPORATION
EXHIBIT INDEX
1994 ANNUAL REPORT ON FORM 10-K
Incorporated
Exhibit Herein by Filed
Number Description Reference Herewith
3.1 Restated Articles of (Previouly filed at Exhibit
Incorporation 3.1 to the 1993 Annual
Report on Form 10-K)
3.2 Restated Bylaws (Previously filed at Exhibit
3.2 to the 1993 Annual
Report on Form 10-K)
4 Shareholders Rights (Previously filed on Form
Plan 8-A dated September 15, 1988
as amended by Exhibit 3 to
Form 8 dated December 22,
1988 and by Exhibits 4 and 5
to Form 8 dated September
14, 1990)
* 10 Material Contracts
(a) Executive (Previously filed at Exhibit
Employment 10(a) to the 1985 Annual
Contract Report on Form 10-K)
(b) 1981 Incentive (Previously filed with the
Stock Option Plan Notice of Annual Meeting &
Proxy Statement dated
December 5, 1981)
(c) 1985 Stock Plan (Previously filed with the
for Executive Notice of Annual Meeting &
Employees Proxy Statement dated
December 12, 1985)
(d) 1990 Employee (Previously filed with the
Stock Plan Notice of Annual Meeting &
Proxy Statement dated
December 18, 1989)
(e) Director Stock (Previously filed as Exhibit
Grant Plan, as 10(e) to the 1991 Annual
amended Report on Form 10-K)
(f) Management Income (Previously filed as Exhibit
Deferral Plan 10(f) to the 1991 Annual
Report on Form 10-K)
(g) Executive Income (Previously filed as Exhibit
Deferral Plan 10(g) to the 1991 Annual
Report on Form 10-K)
(h) Executive (Previously filed as Exhibit
Employment and 10(h) to the 1991 Annual
Severance Report on Form 10-K)
Agreement
(i) Trust Agreement (Previously filed as Exhibit
dated January 18, 18 to Amendment No. 1 of the
1988 between the Company's Schedule 14D-9
Company and filed December 9, 1988)
Marshall & Ilsley
Trust Company
(j) Trust Agreement (Previously filed as Exhibit
dated January 18, 19 to Amendment No. 1 of the
1988 between the Company's Schedule 14D-9
Company and filed December 9, 1988)
Marshall & Ilsley
Trust Company
(k) Trust Agreement (Previously filed as Exhibit
dated September 20 to Amendment No. 1 of the
18, 1988 between Company's Schedule 14D-9
the Company and filed December 9, 1988)
Marshall & Ilsley
Trust Company (Previously filed as Exhibit
10(i) to the 1991 Annual
(l) Management Report on Form 10-K)
Incentive Plan for
Major Corporate (Previously filed on Form
Executives S-8 dated September 12,
1994)
(m) 1994 Employees
Stock Option Plan
13 Portions of Annual
Report to Shareholders
for the year ended X
September 30, 1994 that
are incorporated by
reference
21 Significant
Subsidiaries of
Universal Foods X
Corporation
23 Consent of Deloitte &
Touche LLP X
27 Financial Data Schedule X
99 Notice of Annual (Previously filed on
Meeting and Proxy December 15, 1994 as the
Statement, dated Company's Schedule 14A)
December 16, 1994
* Indicates management contracts or compensatory plans.