ITEM 1. BUSINESS
The Company
Univar Corporation (Univar, the Registrant, or the Corporation) was incorporated in September, 1966 to become the successor corporation in the merger of Van Waters & Rogers, Inc. and United Pacific Corporation, both long established companies then doing business in the western United States and western Canada. For the fiscal year ended February 28, 1994, Univar Corporation and its three wholly or majority owned subsidiaries were involved in the distribution of industrial, agricultural and pest control chemicals and related products. Van Waters & Rogers Inc. conducts its operations throughout the United States. Van Waters & Rogers Ltd. conducts its operations throughout Canada. Univar Europe N.V. (Univar Europe) conducts its operations in the United Kingdom, Scandinavia, Switzerland and northern Italy.
Distribution is the process by which manufacturers, both large and small, get their products to many end users in the most economical way. As a distributor of industrial and agricultural chemicals and related products, the Corporation's role is to purchase chemicals from manufacturers in truck, railcar, or tankcar quantities and sell them in smaller quantities to various customers. Univar adds value to its products through superior service, selection, and delivery reliability.
The Corporation provides a hazardous waste management service in the U.S. called ChemCare(Registered Trademark). ChemCare is a service that allows the Corporation to maximize the use of existing equipment, facilities and chemical handling knowledge by assisting customers in the responsible collection and disposition of their chemical waste streams. It is in essence a reverse distribution process, developed in response to customer demand for help in coping with increasingly complex environmental regulations at the Federal, state and local levels.
The Corporation does not, under ChemCare or any other program, actually dispose of chemical waste streams. The Corporation has contracted with Environmental Protection Agency (EPA) permitted hazardous waste disposal sites for that disposal, through incineration, recycling or other means. ChemCare is a service providing its customers with logistics management, temporary waste storage, and access to various treatment and disposal technologies.
Financial Information About Industry Segments
The Corporation has operated in only one market segment, chemical distribution, through its wholly owned subsidiaries, Van Waters & Rogers Inc. in the United States, Van Waters & Rogers Ltd. in Canada, and its majority owned subsidiary Univar Europe N.V., in Europe, which will be 100% owned by the end of fiscal 1995. See the discussion of subsequent events in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations."
Operations in Canada and Europe for each of the last three years are reported in the Univar Corporation financial statements under the caption of Note 10. Such Industry Segment Information is incorporated herein by reference.
Raw Materials
Numerous sources of supply generally exist for nearly all raw materials essential to the business.
Patents, Trademarks and Tradenames
Univar and its subsidiaries own certain trademarks, servicemarks, and tradenames which are subject to renewal at various dates beginning in 1995 through 2009. These marks and names are important in the Corporation's current operations but not indispensable.
Seasonal Business
No material portion of the continuing operations of the Corporation or its subsidiaries is regarded as highly seasonal.
Principal Customers
No portion of the continuing operations of the Corporation is dependent upon a single customer or a few customers, the loss of any one or more of whom would have a material adverse effect on the Corporation.
Competitive Conditions
In the distribution of chemicals and related products, Van Waters & Rogers Inc., Van Waters & Rogers Ltd., and Univar Europe N.V. compete with local, regional and national distributors, as well as with manufacturers who sell direct. Although Univar is one of the largest industrial chemical distributors in North America and has expanded its operations to Western Europe, the Corporation faces significant competition from distributors who have a larger market share within local and regional markets as well as from other national distributors.
The Corporation competes on a variety of factors such as price, product quality, customer service, selection of available products, reliability, technical support, and delivery.
Research and Development
As a distributor, Univar and its subsidiaries do not engage in research activities relating to the development of new products or the improvement of existing products.
Environmental Matters
See "The Environment" section of Management's Discussion and Analysis in Item 7 of this filing and also Item 3 - Legal Proceedings below.
Employees
As of February 28, 1994, Univar and its subsidiaries had 3,250 full-time employees, of which 495 employees are members of various labor unions. At year end, the Corporation was in negotiations with one labor union in connection with renewal of a labor contract. The Corporation generally enjoys good relations with its employees.
Backlog
The Corporation records revenues as orders are shipped. Due to the nature of the Corporation's business, no record of the backlog of orders is maintained.
EXECUTIVE OFFICERS OF THE REGISTRANT
Name Age Business Experience Past Five Years Position Held
James H. Wiborg(1) 69 Chairman of Registrant 1990 - Chairman Chairman and Chief Strategist Director of Registrant 1986-1990
James W. Bernard 56 President and Chief Executive Officer President and Chief of Registrant 1986 - Executive Officer Director
James P. Alampi 47 Senior Vice President of Registrant 1991 - Senior Vice President President, Van Waters & Rogers Inc. 1992- President, Van Waters & (Distribution of chemicals and Rogers Inc. related products) Vice President of Administration, VWR Corporation 1988 - 1989 (Scientific equipment and supply distribution)
James L. Fletcher 50 Senior Vice President of Registrant 1989 - Senior Vice President
Paul Hough 55 Senior Vice President of Registrant 1992 - Senior Vice President Vice President of Registrant 1991 - 1992 President, Van Waters President, Van Waters & Rogers Ltd 1991 - & Rogers Ltd. V. President, Van Waters & Rogers Ltd. 1988 - 1991 (Distribution of chemicals and related products)
William A. Butler 43 Vice President, General Counsel, Vice President, General and Corporate Secretary of Registrant 1990 - Counsel and Corporate Partner, Preston Thorgrimson Shidler Secretary Gates & Ellis (attorneys at law) 1983 - 1990
Gary E. Pruitt 44 Vice President-Finance, Treasurer & Vice President-Finance, Assistant Corporate Secretary 1992 - Treasurer and Assistant V. President, Treasurer and Assistant Corporate Secretary Corporate Secretary of Registrant 1989 - 1992 Treasurer of Registrant 1987 - 1989
(1) Family Relationships: Robert S. Rogers and N. Stewart Rogers, directors of the Registrant, are brothers-in-law of James H. Wiborg.
No arrangement or understanding exists between any officer and any other person pursuant to which he was elected as an officer.
ITEM 2.
ITEM 2. PROPERTIES
The Corporation operates from 152 facilities; 105 in the United States, 20 in Canada, and 27 in Europe, with a total of approximately 4,928,000 square feet of office and warehouse space, (3,659,000 in the U.S., 684,000 in Canada, and 585,000 in Europe) of which 3,622,000 square feet is owned (84 facilities) and the remainder leased.
Listed below are the principal plants and physical properties of the Corporation and its subsidiaries used in the wholesale distribution of industrial, agricultural, and pest control chemicals. The Corporation believes its facilities are in good condition and adequate for its current operations.
VAN WATERS & ROGERS, INC. Principal Facilities
Bldg. Land Nature of Ownership Area Area Expiration Location (Sq. Ft.)(Acres) Owned Leased Date of Lease
Atlanta, GA 96,000 8.6 X Chicago, IL 55,000 2.8 X Cleveland, OH 47,000 5.6 X Dallas, TX 146,000 9.8 X Denver, CO 79,000 4.9 X Houston, TX 85,000 20.6 X Indianapolis, IN 58,000 8.8 X Jacksonville, FL 51,000 1.8 X Kent, WA 132,000 11.7 X Kirkland, WA 126,000 X August 2001 Lafayette, LA 60,000 5.1 X (Carencro) Los Angeles, CA 156,000 9.4 X (Bonnie Beach) Los Angeles, CA 140,000 7.0 X (Jillson Street) Omaha, NE 67,000 10.3 X Phoenix, AZ 66,000 10.0 X Portland, OR 95,000 9.5 X St. Paul, MN 88,000 9.0 X September 2002 Salem, MA 188,000 10.6 X December 2000 Salt Lake City, UT 76,000 4.6 X San Jose, CA 155,000 14.6 X
Other Van Waters & Rogers Inc. properties (owned or leased), which consist mainly of industrial warehouses and related office space:
Albany, NY Albuquerque, NM Altoona, PA Amarillo, TX Anchorage, AK Augusta, GA Beaumont, TX Birmingham, AL Bloomington, IL Buffalo, NY Burlington, IA Carlin, NV Casper, WY Charlotte, NC Chattanooga, TN Chicago Hts., IL Chippewa Falls, WI Cincinnati, OH Cincinnati (Evendale), OH Columbus, OH Corpus Christi, TX Delray Beach, FL Detroit, MI El Paso, TX Eugene, OR Fort Myers, FL Fort Wayne, IN Fresno, CA Geismar, LA Glendale (Phoenix), AZ Grand Rapids, MI Greensboro, NC Greenville, NC Harlingen, TX Harrisburg, PA Helena, MT Honolulu, HI Kansas City, MO Kingsport, TN Knoxville, TN Las Vegas, NV Lewiston, ME Little Rock, AR Longview, TX Louisville, KY Memphis, TN Miami, FL Milwaukee, WI Mobile, AL Nampa, ID Nashville, TN New Orleans, LA New Rochelle, NY Oak Brook, IL Odessa, TX Oklahoma City, OK Orlando, FL Oxnard, CA Pasco, WA Philadelphia, PA Pittsburgh, PA Pocatello, ID Pompano Beach, FL Reno, NV Richland, MS Richmond, VA Riverside, CA Rock Springs, WY Sacramento, CA San Antonio, TX San Diego, CA San Juan, Puerto Rico Sioux City, IA South Bend, IN Spartanburg, SC Spokane, WA Springfield, MO St. Louis, MO Tampa, FL Toledo, OH Tucson, AZ Tulsa, OK Wichita (Mead), KS Wichita (Mosley), KS Woodbridge, NJ
VAN WATERS & ROGERS LTD. Principal Facilities
Location Bldg. Land (all properties are Area Area Expiration located in Canada) (Sq.Ft.) (Acres) Owned Leased Date of Lease
Abbotsford, Br. Columbia 29,000 4.5 X Calgary, Alberta 53,000 4.6 X Downsview (Toronto),Ont 90,000 8.0 X Edmonton, Alberta 59,000 5.6 X Lachine (Montreal),Que 52,000 3.3 X London, Ontario 45,000 X October 1998 Richmond (Vancouver), British Columbia 82,000 8.7 X Valleyfield, Quebec 36,000 23.9 X Weston (Toronto), Ont 105,000 11.3 X Winnipeg, Manitoba 35,000 4.7 X
Other Van Waters & Rogers Ltd. properties in Canada (owned or leased) which consist mainly of industrial warehouses and related office space:
Brandon, Manitoba Dartmouth, Nova Scotia Fort St. John, British Columbia Grand Prairie, Alberta Kelowna, British Columbia Lethbridge, Alberta Quebec City, Quebec Red Deer, Alberta Regina, Saskatchewan Saskatoon, Saskatchewan
UNIVAR EUROPE N.V. Principal Facilities
Bldg. Land Area Area Expiration Location (Sq.Ft.) (Acres) Owned Leased Date of Lease
Birmensdorf, Switzerland 89,000 3.2 x Copenhagen (Provestenen), Denmark 8,000 x January 2004 Croydon, United Kingdom 19,000 x June 1996 Empoli, Italy 6,500 x January 1997 Gothenberg, Sweden 150,000 x September 2003 Grimsby, United Kingdom 78,000 x April 2068 Kista, Sweden 7,000 x December 1993 Malmo, Sweden 39,000 x December 2018 Manchester, United Kingdom 11,000 x April 2013 Milan, Italy 5,000 x December 1995 Milton Keynes, United Kingdom 45,000 3.3 x Scunthorpe, United Kingdom 12,000 x March 2076 Stockholm, Sweden 23,000 x December 1999 Queenborough, United Kingdom 9,000 x May 1994 Venizia Mestre, Italy 11,000 x December 1994 Zurich, Switzerland 28,000 x March 1996
Other Univar Europe properties (owned or leased) which consist mainly of industrial warehouses and related office space:
Asker, Norway Brighton, United Kingdom Christchurch, United Kingdom Exeter, United Kingdom Fredrikstad, Norway Gateshead, United Kingdom Glasgow, United Kingdom Heggedal, Norway Kerava, Finland Norrkiping (Fleminggatan), Sweden Tamworth, United Kingdom
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
Because of the nature of its business, the Corporation is involved in numerous contractual, product liability, and public liability cases and claims. The liabilities for injuries to persons or property are frequently covered by liability insurance, and the deductible and self- insured portions of these liabilities, where applicable, have been accrued in the financial statements set forth at Item 8 below. See also "The Environment" section of Management's Discussion and Analysis in Item 7 of this filing.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None during the fourth quarter of the fiscal year covered by this report.
PART II
ITEM 5.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
Univar Corporation common stock is listed for trading on the New York and Pacific Stock Exchanges under the trading symbol UVX. The high and low sales prices for the Corporation's common stock for each quarter during the last two years as reported on the New York Stock Exchange follows:
1994 1993 High Low High Low First Quarter $11.38 $9.50 $13.38 $10.63 Second Quarter $13.38 10.88 12.88 11.38 Third Quarter $14.25 10.00 12.88 10.00 Fourth Quarter $12.88 10.88 13.00 10.63
Security Holders
As of February 28, 1994, the Corporation estimated there were approximately 6,300 beneficial shareholders.
Dividends
Quarterly cash dividends of $0.075 per share have been declared during each of the last eight quarters.
Debentures
Effective May 1, 1993, the Corporation redeemed all of its outstanding 9- 3/4% Subordinated Sinking Fund Debentures. Approximately $1.8 million in principal amount was outstanding on the redemption date.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA For the Fiscal Years Ended February 28/29 (Thousands of dollars, except share data)
1994 1993 1992 1991 1990
Sales $1,802,464 $1,801,023 $1,558,496 $1,396,229 $1,378,864 Cost of sales 1,532,931 1,536,817 1,334,123 1,185,576 1,173,134 --------- --------- --------- --------- ---------- Gross margin 269,533 264,206 224,373 210,653 205,730 Operating expenses 242,388 243,008 212,783 168,848 158,662 Re-engineering and restructuring charges 4,507 --- 9,870 --- --- -------- ------- -------- -------- -------- Income from operations 22,638 21,198 1,720 41,805 47,068 Interest expense -12,921 -15,248 -11,358 -10,832 -13,109 Other - net 525 2,478 1,835 2,672 2,073 -------- -------- -------- -------- -------- Income (loss) before provision for (benefit of) taxes on income and minority interest 10,242 8,428 -7,803 33,645 36,032 Provision for (benefit of) taxes on income (loss) 4,403 2,811 -1,785 13,997 14,487 --------- --------- --------- -------- ------- Income (loss) before minority interest 5,839 5,617 -6,018 19,648 21,545 Minority interest's share in income (loss) 379 482 -392 --- --- --------- -------- -------- -------- -------- Net income (loss) $5,460 $5,135 $-5,626 $19,648 $21,545 ========= ======== ======== ======== ======== Weighted average common shares outstanding 19,703 19,698 19,247 17,796 17,728
Net income (loss) per share $0.28 $0.26 $(0.29) $1.10 $1.22 Cash dividends declared per share 0.30 0.30 0.30 0.30 0.30
Total assets 652,694 692,351 716,488 532,500 477,408 Total debt 177,685 208,300 216,005 151,659 130,223 Long-term debt 147,058 169,922 202,894 135,531 116,199 Working capital 83,545 93,858 114,724 89,140 71,940 Shareholders' equity 157,406 163,290 168,407 148,337 131,880 Book value per share 8.01 8.32 8.59 8.42 7.53 Return on beginning equity 3.3% 3.0% (3.8)% 14.9% 18.8%
(1) Results for fiscal 1992 were affected by acquisitions in Europe, Canada, and the United States. See Note 7 to financial statements incorporated herein.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Analysis of Operations The Corporation modestly improved its operating results and reported higher net income for the year, despite a continuing weak economy and the impact of substantial costs of a re-engineering program which is underway in the Corporation's U.S. operations. Net income totaled $5.5 million for fiscal 1994, compared to net income of $5.1 million for fiscal 1993 and a net loss of $5.6 million for fiscal 1992. Excluding the costs of the re-engineering, net income would have totaled $8.3 million for fiscal 1994.
FISCAL 1994 COMPARED WITH FISCAL 1993 Sales for 1994 totaling $1.8 billion are comparable to 1993, but are not reflective of the real growth experienced in each of the Corporation's continuing markets. In the United States, sales grew by 1.5% despite the Corporation's decision at the end of the second quarter to divest its textile chemical business and despite the impact of legislation that has resulted in a precipitous decline in the sales of chlorinated fluorocarbons and chlorinated solvents. Textile chemicals and chemicals impacted by legislative action accounted for 5.5% of total sales during 1994, down from 8.6% in 1993. Excluding these products, sales in the United States grew by 5.0%.
Foreign markets served by the Corporation continued to experience sales growth. When measured in local currencies, sales are up over 7% in Europe and more than 12% in Canada. However, due to unfavorable currency exchange rates, foreign sales expressed in U.S. dollars do not reflect this real growth. The Canadian dollar dropped approximately 6% against the U.S. dollar and the combination of European currencies in the markets served by Univar dropped approximately 19% against the U.S. dollar.
The Corporation's sales were affected by inflation rates estimated at 0.9% and 2.3%, for 1994 and 1993, respectively. Higher inflation in fiscal 1993 was caused in part by increasing prices for products such as chlorinated fluorocarbons and chlorinated solvents. The proportion of sales attributable to these products has declined by approximately 30% compared with fiscal 1993 and is expected to continue to decrease during fiscal 1995 as a result of the legislative actions described previously.
Gross margin dollars for the current year increased by $5.3 million compared with the prior year. Gross margin percentage for 1994 was 15.0%, up from 14.7% for 1993. The Corporation's business mix is not significantly changed compared with the prior year. Through-warehouse and direct sales accounted for approximately 76.9% and 21.3%, respectively, of total sales for the current year. Other sales, consisting primarily of ChemCare services accounted for the remaining 1.8% of sales. While the mix did not change, margin percentage on both through-warehouse and direct sales increased compared with the prior year. Margin percentage on ChemCare services was unchanged from the prior year.
Consolidated operating expenses, including re-engineering costs, as a percentage of sales were 13.7% for 1994 compared with 13.5% for 1993. In the United States, operating expenses, exclusive of re-engineering charges, as a percentage of sales, increased to 14.1% for 1994 compared with 13.8% for 1993. Increases in wages, depreciation, and environmental costs were partially offset by savings realized from management of health care costs and lease costs, and by continuing results from expense reduction programs. Canadian operating expenses dropped to 9.8% of sales for 1994 compared with 10.5% of sales for 1993. European operating expenses decreased to 14.6% of sales compared with 15.1% in the prior year. Reductions in operating expenses as a percentage of sales in both Canada and Europe are due primarily to increased sales volumes which did not require related increased fixed costs and realized benefits of continuing cost reduction programs.
During the third quarter the Corporation initiated an intensive re- engineering program which, when completed, should result in significant fundamental changes in business practices in our U.S. operations. The Corporation has retained a consulting firm which has broad experience assisting both chemical manufacturing and wholesale distribution clients to identify and implement the type of changes necessary in order for the Corporation to achieve a significant competitive advantage. Re- engineering costs to date total $4.5 million, consisting primarily of consulting fees and travel costs incurred in the study of current operations and preliminary designs for change. The Corporation expects this effort to continue throughout fiscal 1995. Consulting fees and related costs are expected to total approximately $12 million for fiscal 1995.
Interest expense decreased to $12.9 million for 1994 compared with $15.2 million for 1993. The decrease is due to a combination of reduced borrowings and reduced effective interest rates. The overall average interest rate was 7.7% for 1994 compared with 8.1% for 1993.
During the fourth quarter of fiscal 1993, the Corporation entered into certain interest rate swap agreements to manage its exposure to interest rate fluctuations. At February 28, 1994, the aggregate notional value of these agreements totaled $50 million, with a weighted average remaining life of approximately 7 years. These agreements effectively convert a portion of the Corporation's floating rate debt to fixed rate debt with rates ranging from 6.77% to 7.25%. (See Note 3 to the financial statements.)
Income tax expense was $4.4 million in fiscal 1994 compared with $2.8 million in fiscal 1993. The Corporation's effective income tax rate was 43.0 % in fiscal 1994 compared with 33.4% for 1993. The increase in the effective rate for fiscal 1994 was due to a change in the mix of domestic and foreign income coupled with higher Canadian tax rates compared with U.S. rates, and losses in certain European countries for which no benefit was recognized. During fiscal 1994, the portion of income before taxes provided by Canadian operations increased to 85%, up from 70% for fiscal 1993.
FISCAL 1993 COMPARED WITH FISCAL 1992 Sales for fiscal 1993 increased by 15.6% to $1.8 billion compared with $1.6 billion for 1992. Acquisitions made during fiscal 1992 accounted for substantially all of the increase. Sales were affected by inflation rates estimated at 2.3% for fiscal 1993 compared with an effect of approximately 1.0% for fiscal 1992 caused in part by increasing prices for products such as chlorinated fluorocarbons and chlorinated solvents.
Gross margin percentage for fiscal 1993 increased to 14.7% compared with 14.4% for fiscal 1992. The Corporation's business mix for fiscal 1993 changed modestly compared with fiscal 1992. Through-warehouse and direct sales accounted for approximately 76.1% and 21.9%, respectively, of total sales for fiscal 1993. Other sales, consisting primarily of ChemCare services, accounted for the remaining 2.0% of sales. Margins on each type of business were also up for fiscal 1993 compared with fiscal 1992.
Operating expenses as a percentage of sales were 13.5% for fiscal 1993 compared with 13.7% for 1992. In the United States, operating expenses, as a percentage of sales, decreased to 13.8% for 1993 compared with 14.1% for 1992. Canadian operating expenses decreased to 10.5% of sales for 1993 compared with 10.7% of sales for 1992. The major components of the change include reduced employee wage and benefit costs as a result of implementing an early retirement program during the last half of fiscal 1992. European operating expenses increased to 15.1% of sales compared with 14.6% in fiscal 1992, due primarily to reduced sales resulting from the impact of significant recessionary pressures and increased costs of computer system enhancements.
Interest expense for fiscal 1993 increased to $15.2 million compared with $11.4 million for fiscal 1992. The increase is due to a combination of: (1) the inclusion of a full year of European operations and related acquisition financing during 1993 compared with only six months during 1992; (2) increased effective interest rates in Europe; and (3) reduction in the amount of interest capitalized, totaling $1.0 million for fiscal 1993 compared to $4.0 million for fiscal 1992, primarily as a result of completion of the UVX2000(Registered Trademark) computer system. The effect of these changes was partially offset by a reduction in average interest rates in the United States. The overall average interest rate was 8.1% for fiscal 1993 compared with 9.2% for fiscal 1992.
SUBSEQUENT EVENTS
EXERCISE OF DOW PUT AGREEMENT On June 24, 1991, the Corporation and The Dow Chemical Company ("Dow") entered into an Agreement of Purchase and Sale of Stock (the "Dow Purchase Agreement"). In accordance with the Dow Purchase Agreement, Univar sold 1,900,000 shares of its common stock to Dow at a price of $15.84 per share. In addition, Univar reserved the right to put to Dow between approximately 2,500,000 and 2,900,000 additional shares of common stock at a price that escalated over time, but which reached a maximum price of $18.74 per share. The number of additional shares that could be sold depended on whether Pakhoed Investeringen B.V. ("Pakhoed") exercised its right to acquire shares from Univar at the same price as they were sold to Dow in order for Pakhoed to maintain its percentage share ownership in Univar. Pakhoed elected not to exercise its right to acquire additional shares. Therefore, based on the manner in which the calculation of the number of additional shares to be sold was made, the actual maximum number of shares that Univar could put to Dow was 2,509,371. In lieu of the unilateral right of Univar to put 2,509,371 shares of common stock to Dow, on May 13, 1994, Univar and Dow executed an Amended and Restated Agreement of Purchase and Sale of Stock (the "Amended Agreement").
Under the terms of the Amended Agreement, Dow purchased from Univar 2,000,000 shares of common stock at a price of $18.74 per share (a total purchase price of $37,480,000). Dow now holds 3,900,000 shares of common stock representing 18.02% of the issued and outstanding shares of Univar. In addition, Dow and Univar have agreed that, at any time within the three year period ending May 12, 1997, Univar can put to Dow, or Dow can call, up to 101,874 shares of Series A Convertible Preferred Stock. The price per share will be $93.70. Each share of Series A Convertible Preferred Stock is convertible, by either Dow or Univar, into five shares of common stock. In the event of a call or put, either all or half the 101,874 shares must be called by Dow or put by Univar. With respect to the conversion of the Series A Convertible Preferred Stock into Univar common stock, Univar has agreed that it will not convert the preferred shares if, following the conversion, Dow would own in excess of 19.9% of the issued and outstanding common stock of the Corporation. Dow has agreed that it will pay to Univar $350,000 per year for each of the three years ending May 12, 1997, in the event Univar does not elect to put the Series A Convertible Preferred Stock to Dow, or in the event Dow does not call the Series A Convertible Preferred Stock.
ACQUISITION OF UNIVAR EUROPE At the time of the organization of Univar Europe in 1991, Univar and Pakhoed entered into a Shareholder Agreement which gave Pakhoed a unilateral right to sell its 49% interest in Univar Europe to Univar Corporation. On May 18, 1994, Pakhoed gave notice to Univar that Pakhoed had elected to require Univar to purchase Pakhoed's interest in Univar Europe. Under the terms of the Shareholder Agreement, Univar may designate the date on which it will purchase Pakhoed's interest, so long as the actual date of purchase is not later than February 18, 1995. The date has not been set by Univar. Because most of the purchase price for Pakhoed's interest will be paid in various European currencies whose exchange rates fluctuate, the actual purchase price for Pakhoed's interest in Univar Europe cannot be determined until the date of purchase occurs. However, the anticipated purchase price is approximately $25 million.
RECENT ACCOUNTING PRONOUNCEMENTS Effective March 1, 1993, the Corporation adopted FASB Statement No. l06, "Employer's Accounting for Postretirement Benefits Other Than Pensions," and FASB Statement No. 109 "Accounting for Income Taxes." Financial statements for prior years were not restated.
FASB Statement No. 106 requires employers to recognize the cost of certain health care and life insurance benefits provided to retirees and their dependents as a liability during the employees' active years of service. The Corporation elected to amortize the transition liability over twenty years, resulting in a net increase for the year in reported costs of retiree health and related costs of $0.6 million.
FASB Statement No 109 changes the method of accounting for income taxes. The favorable cumulative effect of implementation of this statement totaled $0.4 million which represents the impact of adjusting deferred tax balances to reflect current tax rates. Based on the insignificant amount of the cumulative effect, it was included in the current year's provision for taxes on income.
Beginning in the first quarter of fiscal 1995, the Corporation will adopt FASB Statement No. 112, "Employers' Accounting for Postemployment Benefits." Postemployment benefits are all types of benefits, other than retirement benefits, provided to former or inactive employees, their beneficiaries and covered dependents. These benefits include, but are not limited to, salary continuation, supplemental unemployment benefits, severance benefits, disability related benefits (including workers' compensation), job training and counseling, and continuation of benefits such as health care benefits and life insurance coverage. Under this statement, the cost of postemployment benefits will be recognized on an accrual basis. The Corporation does not expect the adoption of this statement to significantly impact the Corporation's results of operations.
LIQUIDITY AND CAPITAL RESOURCES Cash flows provided from operations totaled $35.4 million for the current year, compared with $39.9 million for fiscal 1993 and $53.3 million for fiscal 1992. Cash provided by operations was used to finance the Corporation's capital expenditures, pay dividends, and reduce debt.
The Corporation has domestic and foreign short-term credit lines totaling $85.6 million, of which $62.3 million was available at fiscal year-end 1994. The Corporation and its domestic and Canadian subsidiaries are parties to a medium-term revolving credit agreement with a group of banks which provide up to $210 million in available borrowings, of which $115 million was available at February 28, 1994. Total short, medium and long- term borrowings at fiscal year-end 1994 were $177.7 million, compared with $208.3 million at the end of fiscal 1993. (See Notes 2 and 3 to the financial statements.) The ratio of interest bearing debt (including non-interest bearing subordinated debt) to equity, which we have targeted at 1:1 historically, was 1.13:1 at the end of the current year, down from 1.28:1 at the end of the prior year. The increase over our target is due mainly to the subordinated debt owed to the minority shareholder by Univar Europe of approximately $20.1 million. Subsequent to year end, as described in a preceding section, Univar Corporation sold 2 million shares of stock at a price of $18.74 per share for a total purchase price of $37.5 million. Additionally, the Corporation announced it will acquire the minority shareholder's interest in Univar Europe. As a result of these transactions, the Corporation expects its ratio of interest bearing debt to equity to approximate its historical target.
The Corporation believes its internally generated cash together with its access to available worldwide bank lines will be adequate to cover anticipated liquidity requirements.
Working capital, excluding cash and cash equivalents and short-term borrowings, totaled $98.6 million at the end of fiscal 1994, compared with $102.7 million and $110.5 million at the end of fiscal 1993 and 1992, respectively. The decrease is due primarily to continuing emphasis on inventory management programs.
At fiscal year-end 1994, the ratio of current assets to current liabilities was 1.28:1 compared to 1.31:1 at fiscal year-end 1993 and 1.40:1 at fiscal year-end 1992. The change for the current year was due primarily to utilization of available cash to reduce debt and to reduction of inventories.
DIVIDENDS AND RETURN ON EQUITY Cash dividends declared and paid during the year totaled $0.30 per share, unchanged from the two prior years. Return on beginning equity was 3.3% for the current year compared with a return of 3.0% for the fiscal year ended 1993 and a negative return of 3.8% for fiscal 1992.
BUSINESS ACQUISITIONS AND DIVESTITURES During fiscal 1994, the Corporation completed small acquisitions in Canada and the U.S., which together are expected to add approximately $28 million in sales volume. The aggregate purchase price was $4.4 million, consisting of inventories and non-compete covenants.
During fiscal 1994, in a series of transactions, the Corporation sold its textile chemical distribution business. This business contributed approximately $21 million of sales for fiscal 1994 and $37 million in sales for fiscal 1993. Proceeds from the combined transactions totaled $2.8 million, resulting in a gain on the sale of $0.4 million. Assets sold consisted primarily of inventories and a small amount of fixed assets.
During fiscal 1992, the Corporation completed acquisitions which provided entry into the European market and enhanced its competitive market position in the northeastern United States and in Canada. The Corporation's European acquisition, described in Note 7 to the financial statements, resulted in the acquisition of a 51% owned subsidiary, Univar Europe N.V., a Netherlands corporation, and of four companies with operations in the United Kingdom, Scandinavia, Switzerland and northern Italy. Funding of the $59.1 million acquisition was provided in part by seller financing totaling approximately $8.9 million. The balance of the funding was provided proportionately by the Corporation (51%) and by Pakhoed (49%) in the form of interest and non-interest bearing debt and equity. The Corporation funded its contribution with proceeds from the sale of shares to Dow as described in Note 7 of the financial statements. On May 18, 1994, Univar acquired Pakhoed's 49% minority interest in Univar Europe. See the "Subsequent Events" discussion included above.
On December 13, 1991, the Corporation, through its Canadian subsidiary, Van Waters & Rogers Ltd., acquired substantially all of the working capital and selected fixed assets and real property of Harcros Chemicals Canada Inc., a Canadian corporation, for a purchase price of $30.4 million (U.S. Dollars). Funding for the acquisition was provided by a combination of available cash in the Canadian subsidiary and borrowings under existing Canadian bank lines.
During the fiscal 1992 year the Corporation also completed two other U.S. business acquisitions for an aggregate purchase price of $11.1 million.
See Note 10 to the financial statements for sales and other operations data by geographic area.
CAPITAL EXPENDITURES Capital expenditures for fiscal 1994 totaled $14.0 million. Capitalized expenditures include normal additions, upgrades, and expansions of offices, plants, delivery equipment, and similar items. Comparable capital expenditures during fiscal 1993 and 1992 totaled $16.6 million and $31.0 million, respectively. Capitalized expenditures related to the development of the UVX2000 computer system totaled $1.3 million for fiscal 1993 and $16.7 million for fiscal 1992. Capital expenditures for fiscal 1995 are projected to be $20 million.
THE ENVIRONMENT Because of the nature of its business, the Corporation is involved in numerous contractual, product liability, and public liability cases and claims. The liabilities for injuries to persons or property are frequently covered by liability insurance and the deductible and self- insured portions of these liabilities, where applicable, have been accrued in the financial statements set forth at Item 8
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended February 28/29 (Thousands of dollars, except per share amounts)
1994 1993 1992
Sales $1,802,464 $1,801,023 $1,558,496 Cost of Sales 1,532,931 1,536,817 1,334,123 ---------- --------- --------- Gross Margin 269,533 264,206 224,373 Operating Expenses 242,388 243,008 212,783 Re-Engineering and Restructuring Charges 4,507 --- 9,870 ---------- ---------- -------- Income from Operations 22,638 21,198 1,720 Other Income (Expense): Interest expense -12,921 -15,248 -11,358 Other - net 525 2,478 1,835 Income (Loss) Before Provision --------- --------- --------- for (Benefit of) Taxes on Income and Minority Interest 10,242 8,428 -7,803 Provision for (Benefit of) Taxes on Income (Loss) 4,403 2,811 -1,785 Income (Loss) Before Minority --------- --------- -------- Interest 5,839 5,617 -6,018 Minority Interest's Share in Income (Loss) 379 482 -392 --------- --------- --------- Net Income (Loss) $5,460 $ 5,135 $ -5,626 ========= ======== ========= Net Income (Loss) Per Share $.28 $.26 $-.29 ========= ======== =========
The accompanying notes are an integral part of these statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended February 28/29 (Thousands of dollars) 1994 1993 1992 Cash Flows Provided by Operating Activities Net income (loss) $ 5,460 $ 5,135 $-5,626 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 27,449 25,881 16,834 Deferred taxes on income -2,452 -3,310 5,180 Other liabilities and deferred credits -1,483 5,837 -931 Other-net -294 993 453 Change in assets and liabilities, net of effect of businesses sold and acquired: Accounts receivable -4,804 1,119 7,762 Inventories 6,212 7,861 6,978 Accounts payable -3,991 -1,194 7,251 Other current assets 5,226 565 9,945 Other current liabilities 4,063 -2,940 5,473 --------- --------- --------- Net Cash Provided by Operating Activities 35,386 39,947 53,319 --------- --------- --------- Cash Flows Used by Investing Activities Proceeds from investments 1,132 109 2,058 Additions to property, plant, and equipment -14,121 -11,667 -36,163 Acquisition of businesses -4,383 --- -88,971 Sale of business 2,812 --- --- Change in other assets -106 149 -1,583 --------- --------- --------- Net Cash Used by Investing Activities -14,666 -11,409 -124,659 --------- --------- --------- Cash Flows Provided (Used) by Financing Activities Short-term borrowing-net -6,813 26,069 -10,479 Common stock activity 286 45 30,375 Subordinated debt provided by minority shareholder --- --- 25,505 Long-term debt proceeds 20,000 163,500 118,465 Reduction in long-term debt -40,739 -198,840 -86,255 Payment of dividends -5,895 -5,883 -5,577 Net Cash Provided (Used) by --------- --------- --------- Financing Activities -33,161 -15,109 72,034 Effect of Exchange Rate Changes --------- --------- --------- on Cash -1,545 -1,259 --- -------- --------- --------- Net Cash Provided (Used) -13,986 12,170 694 Cash and Equivalents at Beginning of Year 29,516 17,346 16,652 Cash and Equivalents --------- --------- --------- at End of Year $ 15,530 $ 29,516 $ 17,346 Supplemental Disclosure of ========= ========= ========= Cash Flow Information Cash paid during the year for: Interest (net of capitalized interest) $13,325 $ 15,592 $ 10,547 Taxes on income 6,008 6,573 ---
The accompanying notes are an integral part of these statements.
CONSOLIDATED BALANCE SHEETS
February 28 (Thousands of dollars) 1994 1993
ASSETS
Current Assets Cash and equivalents $ 15,530 $ 29,516 Receivables- Trade accounts (less allowance for losses of $1,848 in 1994 and 				 $1,852 in 1993) 218,892 219,435 Other 7,708 10,646 Inventories 125,638 131,119 Prepaid expenses and other 9,486 8,467 -------- -------- Total current assets 377,254 399,183
Real Properties Held for Sale and Long-Term Receivables 29,590 30,878
Property, Plant, and Equipment Land 23,345 23,362 Buildings 105,530 101,539 Equipment 210,192 209,054 Leased property under capital leases 5,399 5,419 Construction in progress 5,895 8,200 -------- -------- 350,361 347,574 Accumulated depreciation and amortization -133,161 -115,179 -------- ---------
Net property, plant, and equipment 217,201 232,395
Other Assets 28,649 29,895 -------- --------
$652,694 $692,351 ======== =========
The accompanying notes are an integral part of these statements.
CONSOLIDATED BALANCE SHEETS
February 28 (Thousands of dollars) 1994 1993
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities Bank overdrafts $ 22,666 $ 17,896 Notes payable 23,331 31,445 Current portion of long-term debt 7,296 6,933 Accounts payable 201,857 210,483 Accrued payroll and other liabilities 38,559 38,568 -------- --------- Total current liabilities 293,709 305,325
Long-Term Debt, less Current Portion 147,058 169,922
Other Long-Term Liabilities Deferred taxes on income 26,088 25,220 Other liabilities and deferred credits 27,048 27,444 -------- --------- Total other long-term liabilities 53,136 52,664
Commitments and Contingencies --- ---
Minority Interest 1,385 1,150
Shareholders' Equity Preferred stock, no par value Authorized 750,000 shares --- --- Common stock, par value $.33 1/3 per share Authorized - 40,000,000 shares Issued - 22,018,502 in 1994 and 1993 7,339 7,339 Additional paid-in capital 69,798 69,555 Retained earnings 97,060 97,495 Cumulative translation adjustment -6,961 -1,041 Treasury stock, at cost, 2,370,915 shares in 1994 and 2,386,308 shares in 1993 -9,610 -9,633 Deferred stock compensation expense -220 -425 -------- --------- Total shareholders' equity 157,406 163,290 -------- --------- $652,694 $692,351 ======== ======== The accompanying notes are an integral part of these statements.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the Three Years Ended Additional Cumulative February 1994 Common Paid-in Retained Translation (Thousands of dollars) Stock Capital Earnings Adjustment
Balance, February 28, 1991 $6,706 $39,790 $109,596 $3,022 Net loss - - -5,626 - Sale of stock (1.9 million shares) 633 29,463 - - Exercise of stock options - 185 - - Stock awards (3,348 shares) - 34 - - Cash dividends at $.30 per share - - -5,727 - Purchase of treasury stock - - - - Foreign currency translation adjustment - - - 600 Stock compensation expense - - - - - - ------------------------------------------------------------------------- Balance, February 29, 1992 7,339 69,472 98,243 3,622 Net income - - 5,135 - Exercise of stock options - 83 - - Cash dividends at $ .30 per share - - -5,883 - Foreign currency translation adjustment - - - -4,663 Purchase of treasury stock - - - - Stock compensation expense - - - - - - ---------------------------------------------------------------------------- Balance, February 28, 1993 7,339 69,555 97,495 -1,041 Net income - - 5,460 - Exercise of stock options - 58 - - Cash dividends at $.30 per share - - -5,895 - Foreign currency translation adjustment - - - -5,920 Purchase of treasury stock - - - - Stock compensation expense - - - - Other - 185 - - - - ---------------------------------------------------------------------------- Balance, February 28, 1994 $7,339 $69,798 $97,060 $-6,961 ============================================================================
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY Continued Deferred Stock Total For the Three Years Ended Compen- Share- February 1994 Treasury sation holders' (Thousands of dollars) Stock Expense Equity
Balance, February 28, 1991 $-9,554 $-1,223 148,337 Net loss - - -5,626 Sale of stock (1.9 million shares) - - 30,096 Exercise of stock options 190 - 375 Stock awards (3,348 shares) 13 -47 - Cash dividends at $.30 per share - - -5,727 Purchase of treasury stock -44 - -44 Foreign currency translation adjustment - - 600 Stock compensation expense -107 503 396 - - ---------------------------------------------------------------------------- Balance, February 29, 1992 -9,502 -767 168,407 Net income - - 5,135 Exercise of stock options 233 - 316 Cash dividends at $ .30 per share - - -5,883 Foreign currency translation adjustment - - -4,663 Purchase of treasury stock -271 - -271 Stock compensation expense -93 342 249 - - ---------------------------------------------------------------------------- Balance, February 28, 1993 -9,633 -425 163,290 Net income - - 5,460 Exercise of stock options 85 - 143 Cash dividends at $.30 per share - - -5,895 Foreign currency translation adjustment - - -5,920 Purchase of treasury stock -44 - -44 Stock compensation expense -18 205 187 Other - - 185 - - ---------------------------------------------------------------------------- Balance, February 28, 1994 $-9,610 $-220 $157,406 ============================================================================
The accompanying notes are an integral part of these statements.
NOTE 1 - SUMMARY OF ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Corporation and all of its majority-owned domestic and foreign subsidiaries, after elimination of significant intercompany accounts and transactions.
The Corporation's 51% owned subsidiary, Univar Europe N.V. (Univar Europe), is consolidated using its financial year end December 31.
REVENUE RECOGNITION The Corporation records revenues as orders are shipped.
INVENTORIES Inventories consist primarily of finished goods. The methods of valuation of inventories at the balance sheet dates were as follows:
(Thousands of dollars) 1994 1993 At Cost (last-in, first-out method) $ 72,876 $ 79,552 At Lower of Cost or Market (average-cost method) 52,762 51,567 -------- -------- $125,638 $131,119 ======== ========
If the inventories valued on the last-in, first-out (LIFO) method had been valued at average costs, they would have been $28.9 and $29.1 million higher than reported at year end 1994 and 1993, respectively.
The Corporation had decreases in certain LIFO inventories that were carried at lower costs prevailing in prior years. The effect of these decreases was to increase earnings before income taxes by approximately $1.1 million in fiscal 1994.
PROPERTY, PLANT, & EQUIPMENT Expenditures for property, plant, and equipment and for renewals and betterments that extend the originally estimated economic lives of assets are capitalized at the related cost. Expenditures for maintenance, repairs, and other renewals are charged to expense. Gain or loss is recognized for dispositions. For financial reporting purposes, depreciation has been provided using the straight-line method over the estimated useful lives of the related assets. For income tax purposes, depreciation on certain assets is computed using accelerated methods. Interest costs of approximately $0.4 million, $1.0 million, and $4.0 million, for fiscal years 1994, 1993, and 1992, respectively, have been capitalized to the cost of new assets.
Costs incurred in developing or purchasing management information systems are capitalized and included in property, plant, and equipment. These costs are depreciated over their estimated useful lives from the date the systems become operational.
INTANGIBLE ASSETS Intangible assets which consist of covenants not to compete and goodwill, are amortized on the straight-line method over their estimated useful lives, typically no more than ten and twenty years, respectively.
ENVIRONMENT Accruals for costs which have the purpose of contamination removal are recorded when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated. Accruals for such environmental liabilities are included in the balance sheet caption "Other Liabilities and Deferred Credits." Accruals for insurance or other third- party recoveries for environmental costs are recorded when it is probable that the claim will be realized.
Environmental costs are capitalized if the costs extend the life of the property, increase its capacity, and/or mitigate or prevent contamination from future operations. Costs related to investigation of potential environmental matters are expensed as incurred.
SELF-INSURANCE RESERVES The Corporation retains certain exposures in its insurance plan under various deductible or self-insured programs. Reserves for claims made are recorded at estimated costs as current liabilities. Reserves for estimated claims incurred but not yet reported are recorded as other long-term liabilities.
INCOME TAXES Taxes on income are calculated using the asset and liability method which results in recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and tax bases of assets and liabilities, using enacted rates. The principal differences between financial and tax reporting arise from depreciation, self-insurance, environmental and other accruals and reserves, pension accruals, alternative minimum tax credits, and net operating loss carry-overs. Accumulated undistributed earnings after taxes for the Canadian subsidiary amounted to approximately $55.0 million at 1994. The European subsidiaries have accumulated undistributed earnings, net of the minority shareholder's interest, of $0.2 million. No provision for foreign withholding or United States federal income taxes is necessary, as it is management's intention that dividends will be paid only under circumstances which will not generate additional net tax cost.
MINORITY INTEREST The 49% shareholder's interest in the total equity of Univar Europe, after elimination of intercompany and consolidation adjustments, is shown as minority interest.
FAIR VALUE The carrying value of financial instruments approximates fair value, unless otherwise disclosed. Fair values have been estimated using available market prices for similar issues and maturities.
TRANSLATION OF FOREIGN CURRENCY Local currencies have been used as the functional currency throughout the world. The balance sheet accounts of foreign subsidiaries are translated using the exchange rates in effect at their respective years-end. Results of operations are translated using the average exchange rates prevailing throughout the periods. The effects of unrealized exchange rate fluctuations on translating foreign currency assets and liabilities into U.S. dollars are accumulated as the cumulative translation adjustment in shareholders' equity. Realized gains and losses from foreign currency transactions are included in net income for the period.
EARNINGS PER SHARE Net income (loss) per common share is based on the weighted average number of shares outstanding during each year (19,703,273 for 1994, 19,697,632 for 1993, and 19,247,260 for 1992). There is no material dilution due to outstanding stock options.
STATEMENTS OF CASH FLOWS The Corporation considers cash on hand, certificates of deposit, and short-term marketable securities with maturities of less than 90 days, as cash and equivalents for purposes of the statements of cash flows.
RECENT ACCOUNTING PRONOUNCEMENTS The Financial Accounting Standards Board issued SFAS No. 112, "Employers' Accounting for Postemployment Benefits" which the Corporation will adopt in fiscal 1995. Postemployment benefits are all types of benefits, other than retirement benefits, provided to former or inactive employees, their beneficiaries, and covered dependents. These benefits include, but are not limited to, salary continuation, supplemental unemployment benefits, severance benefits, disability related benefits (including workers' compensation), job training and counseling, and continuation of benefits such as health care benefits and life insurance coverage. Under this statement, the cost of postemployment benefits will be recognized on an accrual basis. The Corporation does not expect the adoption of SFAS No. 112 to significantly impact the results of operations.
NOTE 2 - NOTES PAYABLE
As of February 28, 1994, the Corporation has domestic and foreign short-term lines of credit totaling $85.6 million, with loans against these bank lines of $23.3 million. The approximate average aggregate short-term borrowing and weighted average short-term interest rates were $27.3 million and 5.8% in 1994, $35.8 million and 7.0% in 1993, and $30.5 million and 7.7% in 1992. The maximum amount of short-term borrowing during the year was $40.5 million in 1994, $53.1 million in 1993, and $51.1 million in 1992.
NOTE 3 - LONG-TERM DEBT AND REVOLVING CREDIT
Long-term debt consists of the following at February 28:
(Thousands of dollars) 1994 1993
Senior Debt: Revolving credit agreement $95,000 $106,000 Term credit agreements, 5.26% and 9.84%, unsecured, payable from 1995 to 1996 16,667 20,000 Note payable 90 Day STIBOR (Stockholm Interbank Offering Rate) plus 2.0%, payable contingently in 1995 through 1998 6,000 7,064 Industrial revenue bonds, 4.32% to 7.25%, secured by certain real property, payable in installments to 1999 4,400 7,050 Non-interest bearing, deferred consideration, payable in 1995 1,379 1,426 Non-U.S. term credit agreements, 6.25%, payable quarterly to fiscal 1995 164 3,683 Other 6,654 5,690 Subordinated Debt: Non-interest bearing notes payable, see below 13,600 14,081 Interest bearing notes payable, see below 6,502 7,573 Capitalized Lease Obligations: 8.51% to 11.75%, secured by certain real property, payable in monthly installments to 2020 3,988 4,288 ------- ------- 154,354 176,855 Current portion -7,296 -6,933 ------- ------- $147,058 $169,922 ======== ========
Maturities of long-term debt for the fiscal years ending 1996-1999 are as follows:
1996 $18,611 1997 678 1998 688 1999 6,722
The Corporation and its domestic and Canadian subsidiaries are parties to a revolving credit agreement with a group of banks. Under the terms of the agreement, the borrowers may borrow up to $210 million at the prime rate, certificate of deposit rate plus 7/8%, or LIBOR (London Interbank Offering Rate) plus 7/8%, at the Corporation's option. The credit commitment extends for three years, with annual one year renewals. In addition, the agreement requires fees of 3/8% on unused commitments, and compensating balances of not less than 5% of the outstanding loan amount, or the payment of fees in lieu thereof. Certain banks have elected, under provisions of the agreement, to waive the compensating balance requirements and instead charge an additional 1/8% on all loans made by such banks.
The long-term debt instruments include provisions specifying current ratio, interest bearing debt to equity ratios, and a minimum equity level, among other restrictions. Under the most restrictive of the financial covenants, the Corporation's current ratio, as defined, cannot fall below 1.20:1; the ratio of total interest bearing debt, as defined, to equity cannot exceed 1.40:1; and the Corporation's shareholders' equity cannot be less than $143.0 million. At year end, the Corporation was in compliance with all loan covenants.
The Corporation has entered into certain interest rate swap agreements to manage its exposure to interest rate fluctuations. At February 28, 1994, the aggregate notional value of these agreements totaled $50 million, with a weighted average remaining life of approximately 7 years. These agreements effectively convert a portion of the Corporation's floating rate debt to fixed rate debt with rates ranging from 6.77% to 7.25% The estimated aggregate fair value of the contracts, as measured by the amount required to terminate the agreements at the reporting date, was approximately $2.8 million. The Corporation is exposed to, but does not anticipate, credit loss in the event of counterparty nonperformance.
In 1992, Univar Europe executed a foreign currency denominated note (U.S. dollar equivalent of $6.0 million at February 28, 1994) in connection with its acquisition of certain subsidiaries (see Note 7). The due date of the note payable is June 1995, but may be deferred up to December 1998 if the seller has not achieved certain minimum net worth requirements by December 1994. In accordance with contract provisions, the seller has agreed to provide indemnification to Univar Europe for certain environmental and other undisclosed liabilities that existed as of the acquisition date. Univar Europe has the right to offset these liabilities against the note's principal balance. Payment of this note is reflected in the schedule of maturities of long-term debt for 1999 at the full amount although potential for reduction exists.
Univar Europe was capitalized, in part, with interest and non-interest bearing subordinated debt provided to Univar Europe by the Corporation and the minority shareholder. While the loans made by the Corporation to Univar Europe are eliminated in the consolidated balance sheet, the following subordinated loans, denominated in foreign currencies, made by the minority shareholder to Univar Europe are included in the Corporation's consolidated balance sheet:
Subordinated Notes (Thousands of dollars) 1994 1993
Non-interest bearing notes payable $13,600 $14,081 Interest bearing notes payable 6,502 7,573 -------- -------- $20,102 $21,654 ======== ========
The interest and non-interest bearing subordinated notes are denominated in Swedish Krona, British Pounds Sterling and Swiss Francs. The notes are payable at the mutual consent of the Corporation and the minority shareholder or in the event of a change in ownership of Univar Europe. Interest is payable quarterly at rates of 90-day STIBOR plus 0.5%, or Sterling LIBOR (Pound Sterling based London Interbank Offering Rate) plus 0.5%. The 90-day STIBOR and 90-day Sterling LIBOR were 7.6% and 5.4%, respectively, at Univar Europe's year end.
On May 18, 1994, in accordance with terms of the agreement between the shareholders, the minority shareholder notified the Corporation of its intention to sell its Univar Europe shares to the Corporation. The subordinated notes made by the minority shareholder to Univar Europe will be satisfied in conjunction with the sale of the shares. See Note 12 - Subsequent Events.
NOTE 4 - LEASES
Rental expense, net of amounts capitalized in connection with equipment used in the development of the UVX 2000 (REGISTERED TRADEMARK) U.S. computer system was $23.2 million, $25.8 million, and $26.3 million, for 1994, 1993, and 1992, respectively. The Corporation and its subsidiaries occupy certain leased premises and lease certain other equipment. Leases that qualify as capital leases have been capitalized. The amount of such capitalized leases included in property, plant, and equipment and the related accumulated amortization was $5.4 million and $3.1 million in 1994, and $5.4 million and $2.1 million in 1993. Lease amortization is included in depreciation expense.
Future minimum lease payments as of year end under capital leases and non-cancelable operating leases, having initial lease terms of more than one year, are as follows:
Capital Operating (Thousands of dollars) Leases Leases
1995 $ 735 $22,033 1996 707 16,361 1997 707 10,636 1998 707 9,721 1999 707 5,353 Thereafter 2,775 18,348 -------- -------- Total minimum lease payments 6,338 $82,452 Amounts representing interest (2,350) ======= ------- Present value of net minimum lease payments $ 3,988 =======
The present value of the capital lease payments is presented in the 1994 balance sheet as long-term debt.
NOTE 5 - TAXES ON INCOME
FASB Statement No. 109 "Accounting for Income Taxes," was adopted effective March 1, 1993, resulting in a change in the method of accounting for income taxes. The favorable impact of the change is not material and is included in the provision for taxes on income for the year.
Domestic and foreign components of income (loss) before taxes on income and minority interest consisted of the following:
(Thousands of dollars) 1994 1993 1992
Domestic $ -246 $ 1,618 $-12,659 Foreign 10,488 6,810 4,856 -------- -------- -------- $10,242 $ 8,428 $ -7,803 ======== ======== ========
Provision for (benefit of) taxes on income (loss) consisted of the following components:
(Thousands of dollars) 1994 1993 1992 Current Federal $ 889 $ 408 $-3,512 State and Local 140 498 -1,394 Foreign 5,261 1,900 2,492 -------- -------- -------- 6,290 2,806 -2,414 Deferred -------- -------- -------- Federal -1,770 358 12 State and Local 291 -770 44 Foreign -480 417 573 -------- -------- -------- -1,887 5 629 -------- -------- -------- $ 4,403 $2,811 $-1,785 ======== ======== ========
Deferred tax balances consisted of the following temporary differences:
(Thousands of dollars) February 28, 1994 March 1, 1993 Deferred Tax Deferred Tax Deferred Tax Deferred Tax Assets Liabilities Assets Liabilities
Alternative minimum tax $ 7,500 $ --- $ 6,312 $ --- Tax loss and credit carryforwards 480 --- 3,446 --- Self-Insurance Reserves 2,410 --- 2,271 --- Pension and other compensation accruals 1,266 --- 2,323 --- State Income Tax Accrual 1,268 --- --- --- Vacation accrual 1,268 --- --- --- Property --- 37,233 --- 39,424 Other 4,162 4,784 7,872 8,563 -------- ------- --------- -------- Total $ 18,354 $42,017 $22,224 $ 47,987 ======== ======= ========= ========
Deferred tax provisions result from timing differences in the recognition of certain items for income tax and financial statement purposes. The sources of these differences and the tax effect of each for fiscal 1993 and 1992, prepared according to APB Opinion No. 11, are as follows:
(Thousands of dollars) 1993 1992
Depreciation and amortization $ -788 $ 1,439 Net operating loss carry-over -798 -1,084 Self-insurance reserves 770 -413 Pension accrual 153 -3,017 Software development 529 5,649 Receivable valuation 173 40 Environmental reserves 313 682 Alternative minimum tax credit -399 -3,584 Container reserve - 1,068 Other - net 52 -151 ------ ------- $ 5 $ 629 ====== =======
The accompanying financial statements reflect effective tax (benefit) rates of 43.0% in 1994, 33.4% in 1993, and (22.9)% in 1992. An analysis of the differences between these rates and the Federal statutory rate is set forth below:
1994 1993 1992 (Thousands of Amount Percent Amount Percent Amount Percent dollars)
Federal tax at statutory rate $3,483 34.0% $2,866 34.0% $-2,653 -34.0% State taxes, net of Federal tax benefit 285 2.8 -179 -2.1 -891 -11.4 Rate differential for foreign income 1,099 10.7 328 3.9 876 11.2 Travel and entertainment limitation 210 2.1 190 2.3 160 2.1 Research and experimentation credit -787 -7.2 - - - - Non-deductible amortization 226 2.2 179 2.1 196 2.5 Other - net -113 -1.1 -573 -6.8 527 6.7 ------ ----- ------ ----- ------- ----- $4,403 43.0% $ 2,811 33.4% $-1,785 -22.9% ====== ===== ======= ===== ======= =====
The Corporation's federal income tax returns are closed for all years up to 1988. The Corporation has U.S. federal tax net operating loss carry-overs totaling $0.5, which expire in 2008. In addition, the Corporation has alternative minimum tax credit carry-overs totaling $7.5 million, which have no carry-over limitation period. Research and experimentation credit carry- overs total $0.5 million, expiring through 2007.
NOTE 6 - PENSION AND OTHER POSTRETIREMENT BENEFITS
PENSION BENEFITS The Corporation and its subsidiaries have defined benefit pension plans covering substantially all employees in the U.S., Canada, and the United Kingdom, excluding those employees covered by unions that operate plans independent of the Corporation or its subsidiaries. The Corporation's funding policy is to contribute annually amounts that provide for benefits attributed to service to date and benefits expected to be earned during the plan year, based on the projected final average compensation and where pension laws or economics either require or encourage funding.
The U.S. funded plan is the largest plan. Its benefits are based on length of service and the employee's highest five-year average compensation. The rate of increase in future compensation levels, and the expected long-term rate of return on plan assets used in determining the actuarial present value of the projected benefit obligations were 6% and 10%, respectively, for both 1994 and 1993. The weighted average discount rate used was 7.8% and 8.6%, for 1994 and 1993, respectively. The market value of assets, consisting primarily of cash equivalents and equity securities is as reported by the trustee bank serving the pension plan.
Employees of non-U.S. subsidiaries generally receive pension benefits from corporate sponsored plans or from statutory plans administered by governmental agencies in their countries. Corporate sponsored foreign plans have applied the provisions of Statement of Financial Accounting Standards No. 87 using assumptions that are similar to those utilized for the U.S. plans.
The status of the Corporation's funded defined benefit plans is as follows:
(Thousands of dollars) 1994 1993
Actuarial present value of benefit obligations Vested $84,544 $70,161 Non-vested 2,228 1,884 ------- ------- Accumulated benefit obligation $86,772 $72,045 ======= =======
Projected benefit obligation $109,866 $90,529 Plan assets at fair value 80,395 68,236 -------- ------- Projected benefit obligation in excess of plan assets 29,471 22,293 Unrecognized net transition obligation 327 396 Unrecognized prior service cost -244 -71 Unrecognized net loss (plan changes and actuarial losses) -26,251 -15,065 Accrued pension cost, included -------- -------- in current and long-term liabilities $ 3,303 $ 7,553 ======== ========
The status of the Corporation's unfunded defined benefit plans is as follows:
(Thousands of dollars) 1994 1993
Accumulated benefit obligation, all of which is vested $4,073 $2,027 ====== ====== Projected benefit obligation $4,742 $2,699 Unrecognized prior service cost -2,446 -1,035 Unrecognized net loss (plan changes and actuarial losses) -86 -8 Accrued pension cost, included in ------ ------ long-term liabilities $2,210 $1,656 ====== ======
Net periodic pension expense for all defined benefit plans sponsored by the Corporation and its subsidiaries includes the following components:
(Thousands of dollars) 1994 1993 1992
Service cost (benefits earned during the period) $ 4,214 $ 3,832 $ 3,128 Interest cost on projected benefit obligation 7,719 6,850 5,387 Actual return on plan assets -8,357 -6,508 -8,554 Net amortization and deferral 3,003 1,341 4,431 ------- ------- ------- $ 6,579 $ 5,515 $ 4,392 ======= ======= =======
Certain employees are covered under union-sponsored, collectively bargained, defined benefit plans. Expenses for these plans were $0.8 million in 1994 and 1993, and $0.7 million in 1992, as determined in accordance with negotiated labor contracts.
Provisions of the Multi-Employer Pension Amendments Act of 1980 require participating employers to assume a proportionate share of a multi-employer plan's unfunded, vested benefits in the event of withdrawal from or termination of such plan. Information concerning the Corporation's share of unfunded, vested benefits is not available from plan administrators. Provisions of the Act may have the effect of increasing the level of contributions in future years.
OTHER POST RETIREMENT BENEFITS In addition to providing pension benefits, in the United States, the Corporation provides certain health care benefits to its retired employees. Effective March 1, 1993, the Corporation adopted FASB Statement No. 106 "Employers' Accounting for Postretirement Benefits Other Than Pensions". The pre-tax increase in operating expense resulting from adoption of the statement was $0.7 million. Prior to the adoption of FASB Statement No. 106, the cost of providing these benefits was recognized as the benefits were paid. The Corporation continues to fund the cost of these medical benefits in the year incurred.
The plan provides health care benefits including hospital, physicians', dentists', and eye care services and major medical expense benefits. The plan provides benefits supplemental to Medicare after retirees are eligible for these benefits. The cost of the benefits provided are shared by the Corporation and the retiree, with the Corporation portion increasing as the retiree has increased years of credited service. The Corporation has the ability to change these benefits at any time.
For measurement purposes, a discount rate of 8.2% and weighted average health cost trend rates starting at 16% and declining to 7.5% over a ten year period were assumed for 1994. The health care cost trend rate assumed has a significant effect on the amount reported. To illustrate, increasing the assumed medical cost trend rate by 1 percentage point would increase the accumulated postretirement benefit obligation at February 28, 1994 by $1.8 million and the net periodic postretirement benefit cost for the year by $0.2 million.
Unfunded postretirement benefit obligations of the U.S. plan consisted of the following components at February 28, 1994 and March 1, 1993:
(Thousands of Dollars) February 28, 1994 March 1, 1993
Accumulated postretirement benefit obligation: Retirees $3,864 $3,525 Fully eligible active plan participants 1,821 1,503 Other active plan participants 3,699 2,588 Unfunded accumulated postretirement ------ ------ benefit obligation 9,384 7,616 Unrecognized transition obligation -7,235 -7,616 Unrecognized losses -1,522 -- ------ ------ Accrued postretirement benefit cost $ 627 $ 0 ====== ======
The net periodic benefit cost for fiscal 1994 includes the following components:
Service costs (benefits earned during the period) $ 276 Interest cost on accumulated post- retirement benefit obligation 675 Amortization and deferred amounts 381 ------- Net periodic postretirement cost $1,332 =======
NOTE 7 - BUSINESS ACQUISITIONS AND DIVESTITURES
During fiscal 1994, the Corporation completed small acquisitions in Canada and the U.S., which together are expected to add approximately $28 million in sales volume. The aggregate purchase price was $4.4 million, consisting of inventories and non-compete covenants.
During fiscal 1994, in a series of transactions, the Corporation sold its textile chemical distribution business. This business contributed approximately $21 million of sales for fiscal 1994 and $37 million in sales for fiscal 1993. Proceeds from the combined transactions totaled $2.8 million, resulting in a gain on the sale of $0.4 million. Assets sold consisted primarily of inventories and a small amount of fixed assets.
The Corporation and its then 31% shareholder, Pakhoed Investeringen B.V. (Pakhoed), entered into an agreement resulting in the formation of Univar Europe, which was incorporated in The Netherlands in 1990. Univar Europe was 51% owned by the Corporation and 49% owned by Pakhoed. On May 18, 1994, the Corporation acquired Pakhoed's 49% interest in Univar Europe. See Note 12 - Subsequent Events.
Univar Europe was capitalized with equity and with interest and non-interest bearing foreign currency denominated subordinated debt provided to Univar Europe by the Corporation and Pakhoed. Prior to 1991, Univar Europe had no operations.
Univar Europe acquired all of the capital stock of four companies which comprised the Beijer Industrial Distribution Group (BID Group). The transaction included the acquisition in June 1991 of K&K-Greeff (Holdings) Ltd., a British corporation with operations in the United Kingdom; and MB- Sveda AB, a Swedish corporation with operations in Scandinavia. In August 1991, the Corporation completed its acquisition of the BID Group by acquiring Scheller Handel AG, a Swiss corporation with operations in Switzerland; and Benfer-Scheller SpA, an Italian corporation with operations in northern Italy. The operations of the acquired companies are comparable to the Corporation's North American industrial chemical distribution activities.
The aggregate purchase price of $59.1 million consisted of cash consideration of $47.7 million, a foreign currency denominated note payable valued at $7.6 million, related expenses of $2.5 million and a foreign currency denominated contract for deferred consideration in an amount to be determined. The future amount of the deferred consideration to be paid (at current exchange rates) will be a minimum of $1.8 million and a maximum of $8.0 million. The exact future amount is to be determined based on earnings of the entities acquired. The deferred consideration is non-interest bearing, and is payable in 1995. The discounted future value of the minimum amount is included in long-term debt. Funding for the Corporation's 51% share of the aggregate purchase price was provided through the sale of 1.9 million shares of the Corporation's common stock to The Dow Chemical Company (Dow) as described in Note 12.
The acquisition was accounted for by the purchase method. Accordingly, the costs of the acquisition were allocated to the assets acquired and liabilities assumed based upon their respective fair values. The consolidated statements of operations include operating results of the subsidiaries acquired since the respective dates of acquisition. The Univar Europe minority shareholder's 49% proportionate interest in the net income (losses) of the acquired subsidiaries is separately stated.
The following unaudited pro forma summary combines the consolidated results of operations of the Corporation and those of the four acquired companies as if the acquisition had occurred at the beginning of 1992, after giving effect to certain adjustments, including the depreciation and amortization of the assets acquired based on their fair values, increased interest expense from seller financing and loans provided to Univar Europe by its 49% minority shareholder in connection with the acquisition, income tax effects, and the increase in common shares outstanding. This pro forma summary does not necessarily reflect the results of operations as they would have been if the Corporation and the acquired companies constituted a single entity during such periods and is not necessarily indicative of results which may be obtained in the future.
Pro Forma Results (unaudited) (Thousands of dollars, except per share data)
----
Net sales $1,735,237 Net loss -5,455 Net loss per share $ -0.28
In December 1991, the Corporation, through its Canadian subsidiary, Van Waters & Rogers Ltd., acquired substantially all of the working capital and selected fixed assets and real property of Harcros Chemicals Canada Inc., a Canadian corporation, for a purchase price of $30.4 million (U.S. Dollars). Funding for the acquisition was provided by a combination of available cash in the Canadian subsidiary and borrowings under existing Canadian bank lines.
During fiscal 1992, the Corporation also completed two other U.S. business acquisitions for an aggregate purchase price of $11.1 million.
NOTE 8 - COMMON STOCK TRANSACTIONS (See also Note 12 - Subsequent Events)
STOCK OPTIONS AND RESTRICTED STOCK AWARDS The Corporation's long-term incentive stock plans (the Plans) provide for the granting, to officers and key employees, of non-qualified stock options, incentive stock options, and restricted stock awards. For incentive stock options, the option price cannot be less than the fair market value of the common stock at the date of grant. Non-qualified stock options may be granted at less than the fair market value of the common stock. Under one program, options become exercisable, based on the Corporation's performance, beginning 3 years after the date of grant, and expire 10 years and 3 months after the date of grant. Under all other programs, options become exercisable at the rate of 20% per year beginning two years after the date of grant, and expire ten years after the date of grant. Options may be exercisable as determined by the committee of the Board of Directors that administers the Plans. Restricted Stock Awards (RSA's) may be granted or sold to officers and key employees. RSA's may not be sold or otherwise disposed of during the established restriction periods, presently five and six years.
Unamortized deferred stock compensation expense of approximately $220,000 and $425,000 is classified as such in the shareholders' equity section of the Corporation's balance sheet for 1994 and 1993, respectively.
The committee of the Board of Directors that administers the Plans may, at its discretion, determine the number of shares, the purchase price, applicable vesting periods, and any other terms of each option or award. Options and awards include provisions for acceleration of such applicable vesting periods in the event of certain transactions that may result in a change of control of the Corporation.
The following table summarizes activity in the Plans: NUMBER OF SHARES _ Restricted Available Under Stock for Future Option Awards Option or Award Price Range
Outstanding, year end 1992 339,797 185,814 1,284,916 $ 3.81 -$14.56 Granted 312,246 --- -312,246 11.00 - 13.88 Exercised -58,347 --- --- 4.19 - 11.20 Canceled or expired -32,139 -8,176 40,315 4.19 - 13.75 RSA's vested --- -69,488 --- ------- ------- --------- Outstanding, year end 1993 561,557 108,150 1,012,985 4.19 - 14.56 Granted 263,074 --- -263,074 10.63 Exercised -20,996 --- --- 4.19 - 11.20 Canceled or expired -9,076 -1,324 10,400 8.72 - 13.75 RSA's vested --- -27,819 --- ------- ------- --------- Outstanding, year end 1994 794,559 79,007 760,311 4.19 - 14.56 ======= ======= ========= Exercisable at year end 1994 167,810 =======
NOTE 9 - LITIGATION AND CONTINGENCIES
Because of the nature of its business, the Corporation is involved in numerous contractual, product liability, and public liability cases and claims. The liabilities for injuries to persons or property are frequently covered by liability insurance, and the deductible and self-insured portions of these liabilities, where applicable, have been accrued in these financial statements.
The Corporation or related entities have been contacted by various governmental agencies regarding potential liability for a share of the cost of clean up of independent waste disposal or recycling sites with alleged or confirmed contaminated soil and/or groundwater to which the Corporation or related entities may have taken waste products. With regard to many of these sites, the Corporation has denied liability because of an absence of any connection between the Corporation or related entities and the waste disposal or recycling site. The Corporation believes there are thirty sites in which the Corporation may be liable for a share of the cost of clean up. With the exception of two sites, those sites which show some alleged evidence of an association between the Corporation or related entities and the waste disposal or recycling site, the Corporation is considered a de minimis, or small quantity, "potentially responsible party." The Corporation estimates the probable liability for the remediation of independent waste disposal sites totals $1.5 million, which is included in the Corporation's environmental accrual. Possible costs for these sites could range up to $3.0 million.
Thirty-seven owned, previously owned, or leased sites of the Corporation are currently undergoing remediation efforts or are in the process of active review of the need for potential remedial efforts. Some of these efforts are being conducted pursuant to governmental proceedings or investigations, while others are being conducted voluntarily by the Corporation, with appropriate state or federal agency oversight and approval. The following table shows additions to and expenditures charged against the Corporation's environmental accruals during the past three fiscal years:
(Millions of dollars) 1994 1993 1992
Beginning balance $15.4 $ 5.1 $ 5.4 Expense provisions 4.0 .7 1.0 Insurance recoveries - 13.7 1.7 Expenditures -3.8 -4.1 -3.0 ------ ----- ----- Ending balance $ 15.6 $15.4 $ 5.1 ====== ===== ===== During fiscal 1993, the Corporation reached final settlements with its insurance carriers in its lawsuit which sought recovery for certain environmental expenditures. The settlements, which cover historical and ongoing cleanup costs at various sites in the U.S., were added to the Corporation's environmental accrual.
Annual cash expenditures for remedial, monitoring and investigatory activities have averaged approximately $3.6 million during the past three years. In addition, annual cash expenditures for environmental capital expenditures have averaged $0.7 million. While the Corporation does not anticipate a material increase in the projected annual level of its environmental related expenditures, there is the possibility that such increases may occur in the future. The precision of the Corporation's environmental estimates is affected by several uncertainties such as the developments at sites resulting from investigatory studies; the extent of required cleanup; the complexity of applicable government laws and regulations and their interpretations; the varying costs and effectiveness of alternative cleanup technologies and methods; the uncertainty concerning recovery of such costs from third-parties which may be jointly liable; and the questionable level of the Corporation's involvement at various sites at which the Corporation is allegedly associated. The Corporation adjusts its accruals as new remediation requirements are defined, as information relevant to reasonable estimates to be made becomes available, and to reflect new and changing facts.
Although the Corporation believes adequate accruals have been provided for environmental contingencies, it is possible, due to the uncertainties previously noted, that additional accruals could be required in the future that could have a material effect on the results of operations in a particular quarter or annual period. However, the ultimate resolution of these contingencies, to the extent not previously provided for, should not have a material adverse effect on the Corporation's financial position.
At year end 1994, the Corporation had letters of credit outstanding totaling approximately $13.6 million, which guaranteed various insurance and financing activities. Substantially all of these are automatically renewable each year.
NOTE 10 - INDUSTRY SEGMENT INFORMATION
Univar operates in only one industry segment (chemical distribution) in the United States, Canada, and Europe. For fiscal 1992, the European segment information includes partial year operating results for the Corporation's United Kingdom and Scandinavian subsidiaries acquired in June 1991 and Swiss and Italian subsidiaries acquired in August 1991.
(Thousands of dollars) UNITED STATES CANADA EUROPE
Sales $1,251,549 $295,564 $255,351 Income from operations 8,755 9,940 3,943 Identifiable assets 438,519 102,241 111,934 Depreciation and amortization expense 21,496 2,353 3,600 Capital expenditures 7,844 2,141 4,039
Sales $1,232,782 $277,439 $290,802 Income from operations 9,304 7,559 4,335 Identifiable assets 459,669 112,576 120,106 Depreciation and amortization expense 19,586 2,301 3,994 Capital expenditures 10,593 2,003 3,961
Sales $1,202,064 $224,197 $132,235 Income (loss) from operations -5,109 5,568 1,261 Identifiable assets 469,005 99,794 147,689 Depreciation and amortization expense 13,555 1,398 1,881 Capital expenditures 29,014 753 1,185
NOTE 11 - QUARTERLY FINANCIAL DATA (Unaudited)
(Thousands of dollars, except per share data) First Second Third Fourth
Sales $487,951 $474,118 $430,299 $410,096 Gross margin 70,399 70,022 64,224 64,888 Net income (loss) 3,273 1,957 458 -228 Net income (loss) per share .17 .10 .02 -.01
Sales $468,432 $464,094 $452,907 $415,590 Gross margin 68,299 68,246 64,904 62,757 Net income (loss) 2,455 2,940 -747 487 Net income (loss) per share .13 .15 -.04 .03
Sales $377,030 $367,442 $404,123 $409,901 Gross margin 50,004 51,493 58,333 64,543 Net income (loss) 1,073 -8,568 557 1,312 Net income (loss) per share .06 -.43 .03 .07
Significant items increasing income for the fourth quarter of 1994 include costing adjustments totaling $1.4 million, reductions in self insurance reserves for general liability totaling $0.9 million, and reductions in self insured health reserves of $1.0 million. The significant item which decreased fourth quarter 1994 net income was the cost of the Corporation's re-engineering effort of ($1.8 million).
Significant items increasing fourth quarter 1993 net income include costing adjustments totaling $2.0 million and reduction of reserves and accruals totaling $1.0 million.
The net loss in the second quarter of 1992 includes recognition of restructuring charges totaling $6.0 million relating to an early retirement program and associated costs.
Significant items increasing fourth quarter 1992 net income include costing adjustments totaling $2.5 million, reduction of reserves and accruals totaling $1.5 million, reduction of the LIFO reserve of $0.9 million, physical inventory adjustments totaling $0.7 million and reduction in incentive compensation accruals totaling $0.7 million.
NOTE 12 - SUBSEQUENT EVENTS
EXERCISE OF DOW PUT AGREEMENT On June 24, 1991, the Corporation and The Dow Chemical Company ("Dow") entered into an Agreement of Purchase and Sale of Stock (the "Dow Purchase Agreement"). In accordance with the Dow Purchase Agreement, Univar sold 1,900,000 shares of its common stock to Dow at a price of $15.84 per share. In addition, Univar reserved the right to put to Dow between approximately 2,500,000 and 2,900,000 additional shares of common stock at a price that escalated over time, but which reached a maximum price of $18.74 per share. The number of additional shares that could be sold depended on whether Pakhoed Investeringen B.V. ("Pakhoed") exercised its right to acquire shares from Univar at the same price as they were sold to Dow in order for Pakhoed to maintain its percentage share ownership in Univar. Pakhoed elected not to exercise its right to acquire additional shares. Therefore, based on the manner in which the calculation of the number of additional shares to be sold was made, the actual maximum number of shares that Univar could put to Dow was 2,509,371. In lieu of the unilateral right of Univar to put 2,509,371 shares of common stock to Dow, on May 13, 1994, Univar and Dow executed an Amended and Restated Agreement of Purchase and Sale of Stock (the "Amended Agreement").
Under the terms of the Amended Agreement, Dow purchased from Univar 2,000,000 shares of common stock at a price of $18.74 per share (a total purchase price of $37,480,000). Dow now holds 3,900,000 shares of common stock representing 18.02% of the issued and outstanding shares of Univar. In addition, Dow and Univar have agreed that, at any time within the three year period ending May 12, 1997, Univar can put to Dow, or Dow can call, up to 101,874 shares of Series A Convertible Preferred Stock. The price per share will be $93.70. Each share of Series A Convertible Preferred Stock is convertible into five shares of common stock by either Dow or Univar. In the event of a call or put, either all or half the 101,874 shares must be called by Dow or put by Univar. With respect to the conversion of the Series A Convertible Preferred Stock into Univar common stock, Univar has agreed that it will not convert the preferred shares if, following the conversion, Dow would own in excess of 19.9% of the issued and outstanding common stock of the Corporation. Dow has agreed that it will pay to Univar $350,000 per year for each of the three years ending May 12, 1997, in the event Univar does not elect to put the Series A Convertible Preferred Stock to Dow, or in the event Dow does not call the Series A Convertible Preferred Stock.
UNIVAR EUROPE STOCK PURCHASE AGREEMENT At the time of the organization of Univar Europe in 1991, Univar and Pakhoed entered into a Shareholder Agreement which gave Pakhoed a unilateral right to sell its 49% interest in Univar Europe. On May 18, 1994, Pakhoed gave notice to Univar that Pakhoed had elected to require Univar to purchase Pakhoed's interest in Univar Europe. Under the terms of the Shareholder Agreement, Univar may designate the date on which it will purchase Pakhoed's interest, so long as the actual date of purchase is not later than February 18, 1995. The date has not been set by Univar. Because most of the purchase price for Pakhoed's interest will be paid in various European currencies whose exchange rates fluctuate, the actual purchase price for Pakhoed's interest in Univar Europe cannot be determined until the date of purchase occurs. However, the anticipated purchase price is approximately $25 million.
MANAGEMENT RESPONSIBILITY FOR FINANCIAL DATA
The management of Univar Corporation has prepared and is responsible for the integrity and fairness of the financial statements and other financial information presented in this annual report. The statements have been prepared in accordance with generally accepted accounting principles and, to the extent appropriate, include amounts based on management's judgment and/or estimates. In order to discharge its responsibilities for these financial statements and information, management maintains accounting systems and related internal controls. These controls are designed to provide reasonable assurance that transactions are properly authorized and recorded, that assets are safeguarded, and that financial records are reliably maintained. The concept of reasonable assurance, however, incorporates an acknowledgment that the cost of a control system must be related to the benefits derived. Management continually monitors the effectiveness of and compliance with its control systems. The Corporation maintains a strong internal auditing program that independently assesses the effectiveness of the internal controls and recommends possible improvements thereto. The Corporation's financial statements have been audited by Arthur Andersen & Co., independent public accountants. Management has made available to Arthur Andersen & Co. all the Corporation's financial records and related data, as well as the minutes of shareholders' and directors' meetings. Furthermore, management believes that all representations made to Arthur Andersen & Co. during its audit were valid and appropriate. Management has reviewed the recommendations of both the internal auditors and of Arthur Andersen & Co., and has responded in what we believe to be appropriate and cost-effective ways. The Audit Committee of the Board of Directors, which is composed solely of outside directors, meets periodically with management and with the internal and independent auditors to review the quality of financial reporting, the operation and development of the internal control systems, and the work of internal and independent auditors. The independent auditors and also the internal auditors each regularly meet with the Audit Committee without the presence of any other parties.
Gary E. Pruitt Vice President-Finance and Treasurer (Principal Financial Officer) (Principal Accounting Officer)
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of Univar Corporation:
We have audited the accompanying consolidated balance sheets of Univar Corporation (a Delaware corporation) and subsidiaries as of February 28, 1994 and 1993, and the related consolidated statements of operations, cash flows and shareholders' equity for each of the three years in the period ended February 28, 1994. These financial statements are the responsibility of the Corporation's management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements of the Corporation's wholly-owned Canadian subsidiary as of February 28, 1993, which statements reflect 16% of the 1993 consolidated assets and 15% and 14% of the 1993 and 1992 consolidated net revenues, respectively. Those statements were audited by other auditors whose report has been furnished to us and our opinion, insofar as it relates to the amounts included for those entities, is based solely on the report of the other auditors. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report of other auditors provide a reasonable basis for our opinion. In our opinion, based on our audits and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of Univar Corporation and subsidiaries as of February 28, 1994 and 1993, and the results of their operations and their cash flows for each of the three years in the period ended February 28, 1994, in conformity with generally accepted accounting principles. As explained in Note 5 and Note 6 to the consolidated financial statements, effective March 1, 1993, the Corporation changed its methods of accounting for income taxes and postretirement benefits other than pensions.
Arthur Andersen & Co. Seattle, Washington, April 22, 1994 (except with respect to the transactions discussed in Note 12, as to which the date is May 18, 1994).
ITEM 9.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
Identification of Directors, Identification of Executive Officers, Business Experience and Family Relationships
The information required of directors of the Corporation by this item is incorporated by reference to the Corporation's definitive Proxy Statement which the Corporation will have filed with the Commission pursuant to Regulation 14A within 120 days after the close of the fiscal year.
The information required of executive officers of the Corporation by this item is included in Part I of this Form 10-K.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
Cash Compensation, Bonuses and Deferred Compensation, Compensation Pursuant to Plans, Pension Table, and Stock Option Plans
The information required by this item is incorporated by reference to the Corporation's definitive Proxy Statement which the Corporation will have filed with the Commission pursuant to Regulation 14A within 120 days after the close of the fiscal year.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners, Security Ownership of Management, and Changes in Control
The information required by this Item is incorporated by reference to the Corporation's definitive Proxy Statement which the Corporation will have filed with the Commission pursuant to Regulation 14A within 120 days after the close of the fiscal year.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Management and Related Transactions, Certain Business Relationships and Indebtedness of Management
The information required by this Item is incorporated by reference to the Corporation's definitive Proxy Statement which the Corporation will have filed with the Commission pursuant to Regulation 14A within 120 days after the close of the fiscal year.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) Financial Statements
Consolidated Statements of Operations Consolidated Statements of Cash Flows Consolidated Balance Sheets Consolidated Statements of Shareholders' Equity Notes to Consolidated Financial Statements
(2) Financial Statement Schedules
(a) Selected Quarterly Data (b) The following financial schedules are submitted herewith. All other financial schedules are either not applicable or are fully disclosed in the applicable section of the Corporation's financial statements and Management's Discussion and Analysis. Schedule V Property, Plant, and Equipment Schedule VI Accumulated Depreciation and Amortization of Property, Plant, and equipment Schedule VIII Valuation and Qualifying Accounts Schedule IX Short-Term Borrowings
Report of Independent Public Accountants, Arthur Andersen & Co., dated April 22, 1994.
(b) Reports on Form 8-K
There have been no reports on Form 8-K filed, or required to be filed, during the fourth quarter of the year.
(c) Exhibits
The required exhibits are included at the end of the Form 10-K Annual Report and are described in the Exhibit Index immediately preceding the first exhibit.
SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT UNIVAR CORPORATION AND SUBSIDIARIES FOR THE YEARS ENDED FEBRUARY 28/29, 1994, 1993, and 1992 (Thousands of Dollars)
ADDITIONS Balance at Assets of Beginning of Additions Company Classification Year at Cost Acquired Retirements
Year ended Feb. 28, 1994: Land $ 23,362 $ 429 $ $ 0 Buildings 101,539 3,014 -340 Equipment 209,054 8,264 -5,953 Leased property under capital leases 5,419 318 -314 Construction in progress 8,200 1,999 0 ------- ------- ------- ------- $347,574 $14,024 $ 0 -6,607 ======== ======= ======= ====== Year ended Feb. 28, 1993: Land $ 22,601 $ 11 $ $ 0 Buildings 107,777 1,776 -291 Equipment 153,969 9,595 -7,457 Leased property under capital leases 5,582 -66 Construction in progress 62,886 5,175 -216 -------- ------- ------- ------- $352,815 $ 0 $ 0 $-8,030 ======== ======== ======= =======
Year ended Feb. 29, 1992: Land $ 17,261 $ 68 $ 5,449 $ -15 Buildings 82,717 737 18,511 -631 Equipment 115,421 9,892 24,355 -2,577 Leased property under capital leases 5,082 459 -- Construction in progress 51,634 20,255 206 92 ------- ------- ------- ------- $272,115 $30,952 $48,980 $-3,131 ======== ======= ======= =======
SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT - PAGE 2 UNIVAR CORPORATION AND SUBSIDIARIES FOR THE YEARS ENDED FEBRUARY 28/29, 1994, 1993, and 1992 (Thousands of Dollars)
Other Changes - Add (Deduct) Translation Balance at End Classification Adj (1) Other of Year
Year ended Feb. 28, 1994: Land $ -428 $ -18 $ 23,345 Buildings -1,312 2,629 105,530 Equipment -3,389 2,216 210,192 Leased property under capital leases -42 18 5,399 Construction in progress 0 - 4,304 5,895 ------- ------- -------- $ 5,171 $ 541 $350,361 ======= ======= ======== Year ended Feb. 28, 1993: Land $ -855 $ 1,605 (3) 23,362 Buildings -2,803 -4,920 (3) 101,539 Equipment -4,954 57,901 (2,3) 209,054 Leased property under capital leases -97 5,419 Construction in progress -10 -59,635 8,200 -------- ------- -------- $ -8,719 $-5,049 $347,574 ======== ======= ======== Year ended Feb. 29, 1992: Land $ -30 $ -132 (3)$ 22,601 Buildings 799 5,644 (2,3) 107,777 Equipment 1,226 5,652 (2,3) 153,969 Leased property under capital leases 41 5,582 Construction in progress 19 -9,320 62,886 ------- ------- -------- $ 2,055 $ 1,844 $352,815 ======= ======= ========
(1) Foreign currency translation adjustments. (2) Transfer from construction in progress. (3) Reclassification to/from other asset accounts.
SCHEDULE VI -- ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT UNIVAR CORPORATION AND SUBSIDIARIES FOR THE YEARS ENDED FEBRUARY 28/29, 1994, 1993, and 1992 (Thousands of Dollars)
Balance at Additions Beginning of Charged to Classification Year Expense Retirements
Year ended Feb. 28, 1994: Buildings $ 31,767 $ 4,689 $ -62 Equipment 81,218 19,112 -4,796 Leased property under capital leases 2,194 273 -51 -------- ------- ------ $115,179 $24,074 $-4,909 ======== ======= =======
Year ended Feb. 28, 1993: Buildings $ 26,862 $ 4,599 $ -55 Equipment 71,101 18,027 -6,668 Leased property under capital leases 1,976 234 -- -------- -------- ------- $ 99,929 $22,860 $-6,723 ======== ======= =======
Year ended Feb. 29, 1992: Buildings $ 23,516 $ 4,037 $ -276 Equipment 57,216 12,106 -2,210 Leased property under capital leases 2,980 267 -- -------- ------- ------- $ 83,712 $16,410 $-2,486 ======== ======= =======
SCHEDULE VI -- ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT - Page Two UNIVAR CORPORATION AND SUBSIDIARIES FOR THE YEARS ENDED FEBRUARY 28/29, 1994, 1993, and 1992 (Thousands of Dollars)
Other Changes - Add (Deduct) Translation Balance at End Classification Adj (1) Other of Year
Year ended Feb. 28, 1994: Buildings $ -312 $ -31 (2) $ 36,051 Equipment -1,026 208 (2) 94,716 Leased property under capital leases -22 -1 2,393 ------- ------- -------- $-1,360 $ 176 (2) $133,160 ======= ======= ========
Year ended Feb. 28, 1993: Buildings $ -258 $ 629 (2) $ 31,767 Equipment -822 -420 (2) 81,218 Leased property under capital leases -25 9 (2) 2,194 ------- ------- -------- $-1,105 $ 218 (2) $115,179 ======= ======= ========
Year ended Feb. 29, 1992: Buildings $ -84 $ -341 (2) $ 26,852 Equipment -131 4,120 (2) 71,101 Leased property under capital leases 4 -1,275 (2) 1,976 ------- -------- -------- $ -211 $ 2,504 (2) $ 99,929 ======= ======= ========
(1) Foreign currency translation adjustments. (2) Reclassification to/from other asset accounts. (3) The annual provisions for depreciation have been computed principally in accordance with the following depreciable lives:
Buildings 10-50 Years Equipment 3 - 40 Years Leased property under capital leases Lesser of asset or lease life
SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS UNIVAR CORPORATION AND SUBSIDIARIES FOR THE YEARS ENDED FEBRUARY 28/29, 1994, 1993, and 1992 (Thousands of Dollars)
Balance ADDITIONS Balance at Charged to Charged to at Beginning Costs and Other End of Description of Year Expenses Accounts Deductions Year
Allowance for losses on receivables for the year ended:
February 28, 1994 $1,852 $2,294 $ 0 $2,298 (1) $1,848 ====== ====== ===== ====== ======
February 28, 1993 $2,294 $1,800 $ 0 $2,242 (1) $1,852 ====== ====== ===== ====== ======
February 29, 1992 $1,636 $2,462 $528 $2,332 (1) $2,294 ====== ====== ==== ====== ======
(1) Uncollectible accounts written off, net of recoveries.
SCHEDULE IX - SHORT-TERM BORROWINGS UNIVAR CORPORATION AND SUBSIDIARIES FOR THE YEARS ENDED FEBRUARY 28/29, 1994, 1993, and 1992 (Thousands of Dollars)
Maximum Weighted Amount Average Outstanding Balance At Interest During the Description End of Year Rate Year
Year ended February 28, 1994: Payable to Banks (1) $23,331 4.2% $40,479 ======= ==== ======= Year ended February 28, 1993: Payable to Banks (1) $31,445 6.8% $53,103 ======= ==== ======= Year ended February 29, 1992 Payable to Banks (1) $3,026 9.6% $51,134 ====== ==== =======
Commercial Paper (2) $25,000 4.8% $25,000 ======= ==== =======
(1) Notes payable to banks represent borrowings under line of credit borrowing arrangements which generally have no termination date but are reviewed annually for renewal.
(2) Commercial paper generally matures 30 - 90 days from date of issue with no provisions for the extension of its maturity.
(3) The average amount outstanding during the period was computed by totaling the average outstanding borrowings for each month and dividing by 12.
(4) The weighted average interest rate during the period was computed by dividing the actual interest expense by average short-term debt outstanding.
SCHEDULE IX - SHORT-TERM BORROWINGS UNIVAR CORPORATION AND SUBSIDIARIES - Page Two FOR THE YEARS ENDED FEBRUARY 28/29, 1994, 1993, and 1992 (Thousands of Dollars)
Average Weighted Amount Average Outstanding Interest Rate During the During Description Year (3) the Year (4)
Year ended February 28, 1994: Payable to Banks (1) $27,264 5.8% ======= ==== Year ended February 28, 1993: Payable to Banks (1) $35,793 7.0% ======= ==== Year ended February 29, 1992 Payable to Banks (1) $30,491 7.7% ======= ====
Commercial Paper (2) $25,000 5.9% ======= ====
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, thereunto duly authorized.
UNIVAR CORPORATION
Date: May 27, 1994 /s/ James W. Bernard James W. Bernard, President and Chief Executive Officer
Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated.
Date: May 27, 1994 /s/ Gary E. Pruitt Gary E. Pruitt, Vice President-Finance and Treasurer (Principal Financial and Accounting Officer) DIRECTORS
James W. Bernard Richard E. Engebrecht Curtis P. Lindley Roger L. Kesseler N. Stewart Rogers Robert S. Rogers Andrew V. Smith William K. Street Roy E. Wansik Nicolaas J. Westdijk James H. Wiborg
By: /s/ Willam A. Butler William A. Butler, Attorney-in-Fact Power of Attorney dated April 29, 1994
ARTHUR ANDERSEN & CO. 801 Second Avenue, Suite 800 Seattle, WA 98104 (206) 623-8023
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Univar Corporation:
We have audited in accordance with generally accepted auditing standards, the consolidated financial statements of Univar Corporation and subsidiaries included in this Form 10-K, and have issued our report thereon dated April 22, 1994. Our report on the consolidated financial statements includes an explanatory paragraph with respect to the change in the methods of accounting for income taxes and postretirement benefits other than pensions in 1994 as discussed in Notes 5 and 6 to the consolidated financial statements. Our audit was made for the purpose of forming an opinion on those financial statements taken as a whole. The schedules included in this Form 10-K are presented for the purposes of complying with the Securities and Exchange Commission rules and are not part of the basic consolidated financial statements. We did not audit the financial statements of the Corporation's wholly-owned Canadian subsidiary as of February 28, 1993, which statements reflect 16% of the 1993 consolidated assets and 15% and 14% of the 1993 and 1992 consolidated net revenues, respectively. Those statements were audited by other auditors whose report has been furnished to us and our opinion, insofar as it relates to the amounts included for those entities, is based solely on the report of the other auditors. These schedules have been subjected to the auditing procedures applied in the audit of the basic consolidated financial statements and, in our opinion, fairly state in all material respects, the financial data required to be set forth therein in relation to the basic consolidated financial statements taken as a whole.
Arthur Andersen & Co. Seattle, Washington, April 22, 1994
DELOITTE & TOUCHE
Suite 2000 Telephone: (604) 669-4466 1055 Dunsmuir Street Facsimile: (604) 685-0395 P.O. Box 49279 Four Bentall Centre Vancouver, British Columbia V7X 1P4
AUDITORS REPORT
To the Shareholder, Van Waters & Rogers Ltd.
We have audited the balance sheets of Van Waters & Rogers Ltd. as at February 28, 1993 and the statements of income and retained earnings and changes in financial position for the years ended February 28, 1993, and 1992. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards in Canada. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
In our opinion, these financial statements present fairly, in all material respects, the financial position of the Company as at February 28, 1993 and 1992 and the results of its operations and the changes in its financial position for the years ended February 28, 1993, and 1992 in accordance with generally accepted accounting principles in Canada applied on a consistent basis.
Deloitte & Touche Chartered Accountants
Vancouver, British Columbia April 14, 1993
EXHIBIT INDEX
EXHIBIT INDEX
Exhibit Number Description
Exhibits identified in parentheses below, on file with the Securities and Exchange Commission, are incorporated herein by reference as exhibits hereto.
(3.1) Restated Certificate of Incorporation of the Registrant, as amended August 21, 1987 (filed as Exhibit 3.1 to Form 10-K dated May 22, 1989, File No. 1-5858).
(3.2) By-laws of the Registrant, as amended October 26, 1990.
(4.1) Certificate of Designation of Series A Junior Participating Convertible Preferred Stock of Univar Corporation (filed as Exhibit 4(ii) to Form 8-K dated May 13, 1994, File No. 1-5858)
(10.1)Univar Corporation 1979 Executive Stock Purchase Agreement, as amended (filed with Registration Statement on Form S-3, File No. 33-3933).
(10.2)1981 Stock Option Plan (filed with Registration Statement on Form S-8, File No. 2-98329).
(10.3)Univar Corporation 1986 Long-Term Incentive Stock Plan (filed with Registration Statement on Form S-8, File No. 33-34700).
(10.4)Agreement for Exchange of Capital Stock, dated as of September 19, 1986, (filed as Exhibit 2(i) to Form 8-K dated November 1, 1986, File No. 0-2754).
(10.5)Asset Purchase and Sale Agreement, dated as of September 19, 1986, (filed as Exhibit 2(ii) to Form 8-K dated November 1, 1986, File No. 0-2754).
(10.6)First Amendment to Asset Purchase and Sale Agreement, dated as of October 21, 1986 (filed as Exhibit 2(iii) to Form 8-K dated November 1, 1986, File No. 0-2754).
(10.7)Addendum to Asset Purchase and Sale Agreement, dated as of October 31, 1986 (filed as Exhibit 2(iv) to Form 8-K dated November 1, 1986 (File No. 0-2754).
(10.8)Standstill Agreement between Univar Corporation and Pakhoed Investeringen B.V., dated as of September 19, 1986 (filed as Exhibit 4(i) to Form 8-K dated November 1, 1986, File No. 0- 2754).
(10.9)Shareholder Agreements relating to change of control of the Corporation with Messrs James W. Bernard; Richard E. Engebrecht; M. M. Harris; Curtis P. Lindley; N. Stewart Rogers; Nat S. Rogers; Robert S. Rogers; and James H. Wiborg, dated as of September 19, 1986 (filed as Exhibit 4(ii) to Form 8-K dated November 1, 1986, File No. 0-2754).
(10.10) Univar Corporation Supplemental Benefits Plan, dated August 24, 1990 (filed as Exhibit 10.10 to Form 10-K, dated May 27, 1991, File No. 1-5858).
(10.11) Agreements relating to compensation in the event of a change in control of the Corporation between the Corporation and Messrs. James W. Bernard; James P. Alampi; James L. Fletcher; and Bevan A. Cates, dated as of March 1, 1992 (filed as Exhibit 10.11 to Form 10-K dated May 28, 1992, File No. 1- 5858).
10.12 Agreements relating to compensation in the event of a change in control of the Corporation between the Corporation and Mr. Paul H. Hough, dated as of August 21, 1992.
(10.13) Univar Corporation Stock Purchase Plan (filed with Registration Statement on Form S-8, File No. 33-34697).
(10.14) Univar Corporation Uni$aver Tax Savings Investment Plan (filed with Registration Statement on Form S-8, File No. 33- 34511).
(10.15) Van Waters & Rogers Ltd./Univar Corporation Stock Purchase Plan (filed with Registration Statement on Form S-8, File No. 2-71255).
(10.16) Share Purchase Agreement by and between Univar Europe N.V., Univar Corporation, Pakhoed Investeringen B.V. and Kongsbo Industrier AB dated May 31, 1991 (filed as Exhibit 2(ii)A to Form 8-K, dated June 24, 1991, File No. 1-5858).
(10.17) Amendment Agreement by and between Univar Europe N.V., Univar Corporation, Pakhoed Investeringen B.V. and Kongsbo Industrier AB dated June 28, 1991 (filed as Exhibit 2(ii)B to Form 8-K dated June 24, 1991, File No. 1-5858).
(10.18) Second Amendment Agreement by and between Univar Europe N.V., Univar Corporation, Pakhoed Investeringen B.V. and Kongsbo Industrier AB dated August 30, 1991 (filed as Exhibit 10.18 to Form 10-K dated May 28, 1992, File No. 1-5858)..
(10.19) Shareholders Agreement between Univar Corporation, Pakhoed Investeringen B.V. and Univar Europe N.V. dated as of June 27, 1991 (filed as Exhibit 2(iii) to Form 8-K dated June 24, 1991, File No. 1-5858).
(10.21) Agreement on the Right of First Refusal - Univar Europe N.V. by and between Univar Corporation and the Dow Chemical Company dated as of June 24, 1991 (filed as Exhibit 2(iv) to Form 8-K dated June 24, 1991, File No. 1-5858).
(10.24) Pre-emption Agreement between Univar Europe N.V., K&K Greeff Limited and The Dow Chemical Company Limited dated as of June 24, 1991 (filed as Exhibit 2(v) to Form 8-K dated June 24, 1991, File No. 1-5858).
10.27 Univar Corporation 1992 Long-Term Incentive Plan as amended and restated as of April 28, 1994 (filed as Exhibit 10.27 to Form 10-K dated May 25, 1993, File No. 1-5858).
10.28 Van Waters and Rogers Ltd. Supplemental Benefits Plans dated June 25, 1993.
(10.29) Amended and Restated Agreement of Purchase and Sale of stock between Univar Corporation and The Dow Chemical Company dated as of May 13, 1994 (filed as Exhibit 4i to Form 8-K dated May 13, 1994, file no. 1-5858.)
(10.30) Amended and Restated Standstill Agreement between Univar Corporation and The Dow Chemical Company dated May 13, 1994 (filed as Exhibit 4(I) to Form 8-K dated May 13, 1994, File No. 1-5858)
22 Subsidiaries of Registrant.
24.1 Consent of Independent Public Accountants - Arthur Andersen & Co.
24.2 Consent of Independent Public Accountants - Deloitte & Touche.
24.3 Consent of Independent Public Accountants - Arthur Andersen & Co.
25 Power of Attorney
28.2 Form 11-K Annual Report for the Univar Corporation Stock Purchase Plan.
28.3 Form 11-K Annual Report for the Univar Corporation Uni$aver Tax Savings Investment Plan.
28.4 Form 11-K Annual Report for the Van Waters & Rogers Ltd./Univar Corporation Stock Purchase Plan.