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 November 28, 2004
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 333-111710
United Agri Products, Inc.
(Exact Name of Registrant as Specified in Its Charter)
| Delaware | 47-0621017 | |
| (State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) | |
| 7251 W. 4th Street, Greeley, Colorado | 80634 | |
| (Address of Principal Executive Offices) | (Zip Code) | |
(970) 356-4400
(Registrant’s Telephone Number, Including Area Code)
Not applicable
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Indicate by check mark whether the company (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 company was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ¨ No x
Indicate by check mark whether the company is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨ No x
| Class |
Outstanding at January 10, 2005 | |
| Common Stock, par value $1.00 per share | 1,000 shares |
2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Stockholder and Board of Directors
United Agri Products, Inc.
We have reviewed the accompanying consolidated balance sheet of United Agri Products, Inc. (“Successor”) (the “Company”) as of November 28, 2004 and the related consolidated statements of earnings for the thirteen-week and forty-week periods ended November 28, 2004, and of stockholder’s equity and of cash flows for the forty-week period ended November 28, 2004. We have also reviewed the accompanying combined balance sheet of ConAgra Agricultural Products Business (a division of ConAgra Foods, Inc.) (“Predecessor”) as of November 23, 2003 and the related combined statements of earnings for the thirteen-week and thirty-nine week periods ended November 23, 2003, and of cash flows for the thirty-nine week period ended November 23, 2003. These interim financial statements are the responsibility of the Company’s management.
We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquires of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should be made to such interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.
We have previously audited, in accordance with the auditing standards of the Public Company Accounting Oversight Board (Unites States), the consolidated balance sheet of United Agri Products, Inc. as of February 22, 2004, and the related consolidated statements of earnings, stockholder’s equity and cash flows for the thirteen weeks ended February 22, 2004 (not presented herein); and in our report dated May 13, 2004 (November 17, 2004 as to Note 12), we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of February 22, 2004 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.
/s/ Deloitte & Touche LLP
Omaha, Nebraska
January 10, 2005
3
CONDENSED CONSOLIDATED AND COMBINED BALANCE SHEETS
(dollars in thousands)
(unaudited)
| Consolidated United Agri Products, Inc. |
Combined Predecessor Entity - ConAgra Agricultural Products Business |
|||||||||||
| November 28, 2004 |
February 22, 2004 |
November 23, 2003 |
||||||||||
| (Successor) |
(Successor) |
(Predecessor) |
||||||||||
| ASSETS |
||||||||||||
| Current assets: |
||||||||||||
| Cash and cash equivalents |
$ | — | $ | 171,985 | $ | — | ||||||
| Receivables, less allowance for doubtful accounts of $20,003, $27,328 and $45,918 |
531,171 | 170,769 | 487,095 | |||||||||
| Inventories |
490,649 | 641,009 | 475,049 | |||||||||
| Deferred income taxes |
27,228 | 2,681 | 21,912 | |||||||||
| Other current assets |
43,672 | 80,653 | 16,389 | |||||||||
| Current assets from discontinued operations |
— | — | 5,456 | |||||||||
| Total current assets |
1,092,720 | 1,067,097 | 1,005,901 | |||||||||
| Property, plant and equipment |
100,681 | 100,207 | 220,095 | |||||||||
| Less accumulated depreciation |
(12,209 | ) | (3,093 | ) | (122,676 | ) | ||||||
| Property, plant and equipment, net |
88,472 | 97,114 | 97,419 | |||||||||
| Goodwill |
27,873 | 43,465 | 5,074 | |||||||||
| Intangible assets, net |
29,527 | 7,077 | 5,116 | |||||||||
| Deferred income taxes |
— | 18,293 | 2,323 | |||||||||
| Debt issue costs, net |
19,198 | 20,074 | — | |||||||||
| Investment in nonconsolidated affiliates |
4,301 | 3,958 | 2,204 | |||||||||
| Other assets |
653 | 1,968 | 3,573 | |||||||||
| Long lived assets from discontinued operations |
— | — | 2,628 | |||||||||
| Total assets |
$ | 1,262,744 | $ | 1,259,046 | $ | 1,124,238 | ||||||
| LIABILITIES AND STOCKHOLDER’S NET INVESTMENT AND ADVANCES/STOCKHOLDER’S EQUITY |
||||||||||||
| Current liabilities: |
||||||||||||
| Checks not yet presented |
$ | 10,078 | $ | — | $ | 11,632 | ||||||
| Short-term debt |
211,556 | — | — | |||||||||
| Due to parent |
3,810 | — | — | |||||||||
| Accounts payable |
529,602 | 689,455 | 355,935 | |||||||||
| Other accrued liabilities |
99,976 | 144,509 | 103,119 | |||||||||
| Income taxes payable |
4,146 | — | — | |||||||||
| Deferred income taxes |
46 | 9,117 | — | |||||||||
| Current liabilities from discontinued operations |
— | — | 1,367 | |||||||||
| Total current liabilities |
859,214 | 843,081 | 472,053 | |||||||||
| Long-term debt |
225,000 | 225,000 | — | |||||||||
| Other non-current liabilities |
250 | 96 | 186 | |||||||||
| Deferred income taxes |
17,602 | 83 | — | |||||||||
| Commitments and Contingencies (note 7) |
||||||||||||
| Stockholder’s net investments and advances/stockholder’s equity: |
||||||||||||
| Common stock, $1.00 par value, 100,000 shares authorized, 1,000 shares issued and outstanding, respectively |
1 | 1 | — | |||||||||
| Additional paid-in capital |
175,842 | 179,999 | — | |||||||||
| Retained earnings (deficit) |
(19,836 | ) | 10,791 | — | ||||||||
| Accumulated other comprehensive income (loss) |
4,671 | (5 | ) | — | ||||||||
| Stockholder’s net investment and advances |
— | — | 651,999 | |||||||||
| Total stockholder’s net investment and advances/stockholder’s equity |
160,678 | 190,786 | 651,999 | |||||||||
| Total liabilities and stockholder’s net investment and advances/stockholder’s equity |
$ | 1,262,744 | $ | 1,259,046 | $ | 1,124,238 | ||||||
The accompanying notes are an integral part of the condensed and combined financial statements.
4
CONDENSED CONSOLIDATED AND COMBINED STATEMENT OF EARNINGS
(dollars in thousands except earnings per share amounts)
(unaudited)
| Consolidated United Agri Products, Inc. |
Combined Predecessor Entity - ConAgra Agricultural Products Business |
Consolidated United Agri Products, Inc. |
Combined Predecessor Entity - ConAgra Agricultural Products Business |
|||||||||||||
| Thirteen Weeks Ended November 28, 2004 |
Thirteen Weeks November 23, |
Forty Weeks Ended November 28, 2004 |
Thirty-Nine Weeks Ended November 23, 2003 |
|||||||||||||
| Net sales |
$ | 267,157 | $ | 293,822 | $ | 2,229,627 | $ | 2,224,107 | ||||||||
| Costs and expenses: |
||||||||||||||||
| Cost of goods sold |
250,669 | 269,612 | 1,970,383 | 1,938,010 | ||||||||||||
| Gross profit |
16,488 | 24,210 | 259,244 | 286,097 | ||||||||||||
| Selling, general and administrative expenses |
53,917 | 54,587 | 207,036 | 208,670 | ||||||||||||
| Third party interest expense |
7,674 | 403 | 18,127 | 704 | ||||||||||||
| (Gain) loss on sale of assets |
642 | (10,522 | ) | (623 | ) | (10,522 | ) | |||||||||
| Other income, net |
(1,282 | ) | — | (6,406 | ) | — | ||||||||||
| Corporate allocations: |
||||||||||||||||
| Selling, general and administrative expenses |
— | 2,864 | — | 8,983 | ||||||||||||
| Finance charges |
— | 3,948 | — | 12,209 | ||||||||||||
| Income (loss) from continuing operations before income taxes |
(44,463 | ) | (27,070 | ) | 41,110 | 66,053 | ||||||||||
| Income tax expense |
(17,311 | ) | (10,273 | ) | 15,894 | 25,068 | ||||||||||
| Income (loss) from continuing operations |
(27,152 | ) | (16,797 | ) | 25,216 | 40,985 | ||||||||||
| Loss from discontinued operations, net of tax |
— | (1,681 | ) | — | (4,708 | ) | ||||||||||
| Net income |
$ | (27,152 | ) | $ | (18,478 | ) | $ | 25,216 | $ | 36,277 | ||||||
The accompanying notes are an integral part of the condensed and combined financial statements.
5
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
| Consolidated United Agri Products, Inc. |
Combined Predecessor Entity - ConAgra Agricultural Products Business |
|||||||
| Forty Weeks Ended November 28, 2004 |
Thirty-Nine Weeks Ended November 23, 2003 |
|||||||
| Operations |
||||||||
| Net income |
$ | 25,216 | $ | 36,277 | ||||
| Loss from discontinued operations |
— | (4,708 | ) | |||||
| Income from continuing operations |
25,216 | 40,985 | ||||||
| Depreciation |
9,541 | 9,845 | ||||||
| Amortization |
1,785 | 1,540 | ||||||
| Gain on sale of fixed assets |
(623 | ) | (10,522 | ) | ||||
| Other non-cash items |
— | 8,645 | ||||||
| Change in operating assets and liabilities |
(309,519 | ) | (155,067 | ) | ||||
| Net cash from operations |
(273,600 | ) | (104,574 | ) | ||||
| Investing |
||||||||
| Post-closing settlement to ConAgra Foods, Inc. |
(58,236 | ) | — | |||||
| Additions to property, plant and equipment |
||||||||