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QUAKER REPORTS RECORD SALES AND OPERATING INCOME FOR FISCAL 1993; STOCK REPURCHASE OF UP TO 5 MILLION SHARES AUTHORIZED

 CHICAGO, Aug. 5 /PRNewswire/ -- The Quaker Oats Company (NYSE: OAT) today reported record operating results for its fiscal year ended June 30, 1993 and a new stock repurchase program. Excluding the effects of adopting new accounting standards, gains on divestitures and restructuring charges, earnings per share were $4.25, up 31 percent from last year's $3.24. Earnings per share were $2.34, which includes a non-cash after-tax charge of $115.5 million, or $1.59 per share, for the cumulative effect of adopting Financial Accounting Standards Board (FASB) Statements No. 106 and No. 109.
 Fiscal 1993 sales were $5.73 billion, a 3 percent increase over $5.58 billion a year ago. Operating income for the year rose 7 percent to $575.2 million. Excluding the $14.8 million current-year charge of FASB Statement No. 106, restructuring charges and gains on divestitures, operating income was up 13 percent to $610.5 million.
 FASB Statement No. 106 requires companies to recognize the effect of post-retirement benefits other than pensions during employees' service with the company instead of at the time the costs are paid. The cumulative pretax effect of adopting FASB Statement No. 106 was a charge of $205.5 million. FASB Statement No. 109 changes the accounting treatment of income taxes. The cumulative effect of adopting FASB Statement No. 109 was income of $9.9 million.
 William D. Smithburg, chairman and chief executive officer, said, "Based on several key measurements, fiscal 1993 was a very successful year for Quaker. We grew our core businesses, our market shares are solid, we achieved excellent profitability improvements and cash flow remains strong."
 "In addition to earnings, there are several other positive indicators of company performance," Smithburg said. "Contrary to recent media articles about private label versus major brands, our portfolio of leading brands remains as strong as ever. Many of our key value-generating businesses -- Gatorade thirst quencher, hot and ready- to-eat cereals, Golden Grain products and European pet foods -- maintained or increased their market share during the year. Our Food Service business grew and continued to expand its margins.
 "We also began to reap the benefits of an important step we took in fiscal 1992 to increase operating efficiencies and enhance future returns, namely, changing the timing of our trade promotions to better align production and sales with consumer demand. Along with our focus on greater efficiency, this step contributed to record gross profit and operating income margins in fiscal 1993.
 "Free cash flow remained strong, allowing us to repurchase $323.1 million, or 4.8 million shares, of common stock while increasing total debt by less than $2 million. The five-million share repurchase program announced today is an indication that we anticipate strong cash flows and favorable invested capital trends to continue for some time, as a result of our Supply Chain initiatives and our focus on generating greater economic value through controllable earnings.
 "Controllable earnings, our internal benchmark for economic value creation, increased 59 percent, excluding gains on divestitures, restructuring charges and effects of FASB Statement No. 106," Smithburg noted. Controllable earnings is calculated as operating income (adjusted for certain financing costs) less a capital usage charge.
 FOURTH QUARTER RESULTS
 For the fourth quarter of fiscal 1993, earnings per share were $1.30 versus $1.38 last year. Excluding the current-year effect of FASB Statement No. 106, fourth quarter earnings per share would have been $1.33. Sales of $1.54 billion were even with a year ago. Operating income of $180.0 million was 15 percent below last year's $212.1 million, due primarily to increased levels of advertising and merchandising expenditures across most major product categories.
 U.S. AND CANADIAN GROCERY PRODUCTS (Full Year)
 Excluding unusual items, operating income for U.S. and Canadian Grocery Products in fiscal 1993 increased 15 percent to $500.4 million. Operating income was $447.0 million, an increase of 3 percent over last year's $435.0 million. Included in the comparative results is a $38.6 million charge in fiscal 1993 for consolidating production facilities at a pet foods plant, a $14.8 million charge for the current-year effect of FASB Statement No. 106, an $11.0 million gain in fiscal 1992 on the sale of the Ghirardelli Chocolate business and various restructuring charges in fiscal 1992 totaling $10.0 million.
 Sales of $3.93 billion were 2 percent above last year's $3.84 billion, while total unit volume was even with last year. There were volume increases in hot and ready-to-eat cereals, rice and grain cakes, granola bars, Gatorade thirst quencher, Food Service, corn goods, pasta side dishes, pancake mix and pizza. Advertising and merchandising expenditures of $983 million were 1 percent lower than last year.
 INTERNATIONAL GROCERY PRODUCTS (Full Year)
 Excluding unusual items, operating income for International Grocery Products increased 5 percent to $110.1 million. Operating income was $128.2 million, an increase of 22 percent over last year's $105.2 million. In fiscal 1993, two Italian businesses and a business in the United Kingdom were sold, resulting in gains on divestitures totaling $27.8 million. In the second quarter of fiscal 1993, Quaker-Europe recorded a charge of $9.7 million to implement planned overhead cost reduction projects.
 Sales of $1.80 billion increased 4 percent over last year's $1.73 billion. European sales declined slightly due to the sale of the three European businesses and the negative impact of a stronger U.S. dollar in relation to most European currencies. Latin American sales increased significantly, reflecting gains in Gatorade thirst quencher and food products throughout Latin America.
 Total unit volume increased 6 percent in fiscal 1993, reflecting volume gains in pet foods in Europe and Gatorade thirst quencher in Latin America.
 STOCK REPURCHASE AUTHORIZATION
 The Quaker Oats Company also announced today that its board of directors has authorized the repurchase of up to five million shares of the company's common stock. Quaker recently completed a three million share repurchase program authorized by the board in January 1993. During fiscal 1993, the company repurchased a total of 4.8 million shares of common stock. Quaker had 69.5 million shares outstanding at June 30, 1993.
 The shares will be repurchased, from time to time, through open market purchases and privately negotiated transactions.
 William D. Smithburg, chairman and chief executive officer, said, "This share repurchase is consistent with our objective of enhancing shareholder value through the use of leverage, while maintaining a strong financial position. We are increasing our guideline for leverage with this share repurchase and believe it is appropriate given our strong cash flow."
 The Quaker Oats Company is an international marketer of foods, pet foods and beverages.
 THE QUAKER OATS COMPANY AND SUBSIDIARIES
 CONDENSED STATEMENTS OF CONSOLIDATED INCOME
 AND REINVESTED EARNINGS
 (Unaudited -- Millions of Dollars, Except Per Share Data)
 Three Months Ended June 30 1993 1992
 Net Sales $1,545.6 $1,542.6
 Cost of goods sold 772.7 757.6
 Gross profit 772.9 785.0
 Selling, general and
 administrative expenses 602.9 577.6
 Interest expense - net 9.2 14.6
 Other expense - net 11.8 20.2
 Income before income taxes
 and cumulative effect of
 accounting changes 149.0 172.6
 Provision for income taxes 55.6 68.7
 Income before cumulative effect of
 accounting changes 93.4 103.9
 Cumulative effect of accounting
 changes - net of tax -- --
 Net income 93.4 103.9
 Preferred dividends - net of tax 1.0 1.0
 Net Income Available for Common $ 92.4 $ 102.9
 Per Common Share:
 Income before cumulative effect
 of accounting changes $ 1.30 $ 1.38
 Cumulative effect of accounting
 changes -- --
 Net income $ 1.30 $ 1.38
 Dividends declared $ 0.48 $ 0.43
 Average Number of Common
 Shares Outstanding
 (in thousands) 71,137 73,546
 Reinvested Earnings:
 Balance beginning of period $1,132.8 $1,091.1
 Net income 93.4 103.9
 Dividends (34.6) (32.7)
 Common stock issued for stock
 purchase and incentive plans (1.5) ---
 Balance end of period $1,190.1 $1,162.3
 Twelve Months Ended June 30 1993 1992
 Net Sales $5,730.6 $5,576.4
 Cost of goods sold 2,858.4 2,817.7
 Gross profit 2,872.2 2,758.7
 Selling, general and
 administrative expenses 2,279.4 2,213.0
 Interest expense - net 55.1 67.4
 Other expense - net 70.1 56.8
 Income before income taxes
 and cumulative effect of
 accounting changes 467.6 421.5
 Provision for income taxes 180.8 173.9
 Income before cumulative effect
 of accounting changes 286.8 247.6
 Cumulative effect of accounting
 changes - net of tax 115.5 ---
 Net income 171.3 247.6
 Preferred dividends - net of tax 4.2 4.2
 Net Income Available for Common $ 167.1 $ 243.4
 Per Common Share:
 Income before cumulative effect
 of accounting changes $ 3.93 $ 3.25
 Cumulative effect of accounting
 changes (1.59) --
 Net income $ 2.34 $ 3.25
 Dividends declared $ 1.92 $ 1.72
 Average Number of Common
 Shares Outstanding
 (in thousands) 71,974 74,881
 Reinvested Earnings:
 Balance beginning of period $1,162.3 $1,047.5
 Net income 171.3 247.6
 Dividends (140.3) (132.8)
 Common stock issued for
 stock purchase and incentive
 plans (3.2) ---
 Balance end of period $1,190.1 $1,162.3
 (Millions of Dollars)
 Net Sales
 Three Months Percent
 Ended Increase
 June 30 1993 1992 (Decrease)
 U.S. & Canadian
 Grocery Products $1,082.4 $1,050.8 3.0
 International Grocery
 Products 463.2 491.8 (5.8)
 Total Sales $1,545.6 $1,542.6 0.2
 Operating Income
 Three Months Percent
 Ended Increase
 June 30 1993 1992 (Decrease)
 U.S. & Canadian
 Grocery Products $ 149.4 $ 170.4 (12.3)
 International Grocery
 Products 30.6 41.7 (26.6)
 Total Operating Income $ 180.0 $ 212.1 (15.1)
 Less: General corporate
 expenses 14.1 16.4
 Interest expense-net 9.2 14.6
 Foreign exchange
 loss-net 7.7 8.5
 Income before income taxes
 and cumulative effect
 of accounting changes $ 149.0 $ 172.6
 (Millions of Dollars)
 Net Sales
 Twelve Months Percent
 Ended Increase
 June 30 1993 1992 (Decrease)
 U.S. & Canadian
 Grocery Products $3,930.3 $3.842.3 2.3
 International Grocery
 Products 1,800.3 1,734.1 3.8
 Total Sales $5,730.6 $5,576.4 2.8
 Operating Income
 Twelve Months Percent
 Ended Increase
 June 30 1993 1992 (Decrease)
 U.S. & Canadian
 Grocery Products $ 447.0 $ 435.0 2.8
 International Grocery
 Products 128.2 105.2 21.9
 Total Operating Income $ 575.2 $ 540.2 6.5
 Less: General corporate
 expenses 37.4 38.2
 Interest expense-net 55.1 67.4
 Foreign exchange
 (gain) loss-net 15.1 13.1
 Income before income taxes
 and cumulative effect
 of accounting changes $ 467.6 $ 421.5
 -0- 8/5/93
 /CONTACT: Ronald G. Bottrell, director-public relations of The Quaker Oats Co., 312-222-7388/
 (OAT)


CO: The Quaker Oats Company ST: Illinois IN: FOD SU: ERN

PS -- NY024 -- 9761 08/05/93 09:43 EDT
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