<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-K/A
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 3, 1994
------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 1-1210
------
CULBRO CORPORATION
(Exact name of registrant as specified in its charter)
Amendment No. 1
This filing hereby amends Culbro Corporation's Form 10K filed
on April 12, 1995, to include the financial statements of The Eli
Witt Company, an equity investee of Culbro Corporation.
NEW YORK 13-0762310
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
387 Park Avenue South, New York, New York 10016-8899
----------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(Registrant's Telephone Number, Including Area Code) (212) 561-8700
--------------
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- ---------------------
Common Stock, $1 par value New York Stock Exchange, Inc.
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
State the aggregate market value of the voting stock held by non-affiliates
of the registrant. The aggregate market value shall be computed by reference to
the price at which the stock was sold, or the average bid and asked prices of
such stock, as of a specified date within 60 days prior to the date of filing:
$29,000,000 approximately, based on the closing sales price on the New York
Stock Exchange on February 20, 1995.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date: Common Stock:
4,308,513 shares as of February 20, 1995.
The following documents, or portions thereof as indicated in the following
report, are incorporated by reference in the Parts of Form 10-K indicated:
Part Document
---- --------
I Annual Report to Shareholders for the fiscal year ended December 3,
1994
II Annual Report to Shareholders for the fiscal year ended December 3,
1994
III Proxy Statement in connection with the 1995 Annual Meeting of
Shareholders
IV Annual Report to Shareholders for the fiscal year ended December 3,
1994 (such Annual Report is referred to hereinafter as the "Annual
Report")
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CULBRO CORPORATION AND SUBSIDIARY COMPANIES
INDEX TO FINANCIAL STATEMENTS AND ADDITIONAL FINANCIAL DATA
The financial statements together with the report thereon of Price
Waterhouse LLP dated April 3, 1995, appearing on Pages 5 to 19 of the
accompanying 1994 Annual Report to Shareholders, are incorporated by reference
in this Form 10-K Annual Report. With the exception of the aforementioned
information, and such other information specifically incorporated by reference
herein, the 1994 Annual Report to Shareholders is not to be deemed filed or
incorporated by reference as part of this report.
The following additional financial data should be read in conjunction with
the financial statements in such 1994 Annual Report to Shareholders. Schedules
not included with this additional financial data have been omitted because they
are not applicable or the required information is shown in the financial
statements or notes thereto.
PAGE
Report of Independent Accountants on Financial
Statement Schedules and Consent of Independent
Accountants C-1*
Consent of Independent Accountants C-2
Summarized Financial Information of Equity Investee -
Centaur Communications, Ltd. F-1*
Financial Statements of Equity Investee -
The Eli Witt Company F-2
Schedules:
V - Property and Equipment S-1*
VI - Accumulated Depreciation and
Amortization of Property and Equipment S-2*
VIII - Valuation and Qualifying Accounts
and Reserves S-3*
XI - Real Estate and Accumulated Depreciation S-4/S-5*
* Previously included in Form 10K filed April 12, 1995.
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 2 - 94202) of Culbro Corporation of our report
dated April 21, 1995 appearing on page F-2 of this Form 10-K/A.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Tampa, Florida
May 9, 1995
C-2
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders
of The Eli Witt Company
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of cash flows and of changes in
stockholders' equity present fairly, in all material respects, the financial
position of The Eli Witt Company and its subsidiaries at December 3, 1994 and
November 27, 1993, and the results of their operations and their cash flows for
each of the three years in the period ended December 3, 1994, in conformity with
generally accepted accounting principles. 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 of these statements in accordance with generally accepted auditing
standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
The Eli Witt Company is a subsidiary of Culbro Corporation and, as disclosed in
the consolidated financial statements, has had extensive transactions and
relationships with Culbro Corporation. Because of these relationships, it is
possible that the terms of these transactions are not the same as those that
would result from transactions among wholly unrelated parties.
As discussed in Note 5 to the financial statements, the Company changed its
method of accounting for income taxes in fiscal year 1994 to conform with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes".
Price Waterhouse LLP
Tampa, Florida
April 21, 1995
F-2
<PAGE>
<TABLE>
<CAPTION>
THE ELI WITT COMPANY
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
CONSOLIDATED STATEMENT OF OPERATIONS
- ----------------------------------------------------------------------------------------------
1994 1993 1992
<S> <C> <C> <C>
NET SALES AND OTHER REVENUE $ 1,521,796 $ 1,197,346 $ 984,679
COSTS AND EXPENSES
Costs of goods sold 1,422,446 1,112,264 914,573
Selling, general and administrative expenses 106,003 75,048 55,786
Restructuring charges 3,696 - 3,500
----------- ----------- ----------
OPERATING PROFIT (10,349) 10,034 10,820
Interest expense, net 7,298 6,998 3,637
----------- ----------- ----------
Income (loss) before income taxes (17,647) 3,036 7,183
Income tax (benefit) provision (3,236) 702 1,435
----------- ----------- ----------
Net Income (loss) $ (14,411) $ 2,334 $ 5,748
----------- ----------- ----------
----------- ----------- ----------
NET INCOME (LOSS) PER COMMON SHARE $ (7.40) $ .25 $ 3.38
----------- ----------- ----------
----------- ----------- ----------
AVERAGE COMMON SHARES OUTSTANDING 2,359,245 1,930,769 1,700,000
----------- ----------- ----------
----------- ----------- ----------
See Notes to Consolidated Financial Statements.
</TABLE>
F-3
<PAGE>
The Eli Witt Company
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 3, November 27,
ASSETS 1994 1993
<S> <C> <C>
Cash $ 9,216 $ 7,840
Trade receivables, less allowance of $2,336
(1993 - $1,020) 64,576 50,832
Inventories 54,576 57,929
Other current assets 1,860 1,885
------------- -----------
Total current assets 130,228 118,486
Property and equipment, net 43,353 36,128
Other assets 15,535 10,311
------------- -----------
Total assets $ 189,116 $ 164,925
------------- -----------
------------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued expenses $ 69,058 $ 49,666
Current portion of long-term debt 8,151 4,772
------------- -----------
Total current liabilities 77,209 54,438
Long-term debt 97,248 80,491
Deferred income taxes - 2,163
Other noncurrent liabilities 10,141 9,904
Commitments and contingencies (Note 8)
Mandatorily redeemable Series B preferred stock 17,650 16,150
Series C preferred stock 1,464 -
Series A preferred stock 10,080 10,005
Common stock 23 17
Class C common stock 3 3
Capital in excess of par value 994 -
Retained earnings (dividends in excess of) (25,696) (8,246)
------------- -----------
Total liabilities and shareholders' equity $ 189,116 $ 164,925
------------- -----------
------------- -----------
</TABLE>
See Notes to Consolidated Financial Statements.
F-4
<PAGE>
The Eli Witt Company
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ (14,411) $ 2,334 $ 5,748
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization 7,332 4,553 3,431
Restructuring charge 3,696 - 3,500
Deferred income taxes (3,236) 428 1,189
Negative goodwill amortization - (623) (1,068)
Changes in assets and liabilities which increase
(decrease) cash, net of effects from acquisitions:
Trade receivables 6,950 (10,758) (8,324)
Intercompany receivable - 19,473 4,031
Inventories 19,876 61,838 (70,922)
Other current assets 2,467 1,300 (717)
Accounts payable and accrued expenses (5,025) (8,358) 3,969
Other, net 231 (769) (414)
----------- ---------- ---------
Net cash provided by (used in) operating activities 17,880 69,418 (59,577)
----------- ---------- ---------
INVESTING ACTIVITIES:
Payments in connection with acquisitions, net of
cash acquired (2,289) (2,762) -
Additions to property and equipment (2,629) (3,413) (3,725)
Dispositions of property and equipment 1,099 1,268 152
Other, net (36) (366) (107)
----------- ---------- ---------
Net cash used in investing activities (3,855) (5,273) (3,680)
----------- ---------- ---------
FINANCING ACTIVITIES:
Borrowings under bank financing, net 9,775 69,376 -
Proceeds from mortgages 8,000 10,000 -
Proceeds from issuance of convertible subordinated note 3,000 - -
Repayment of bank indebtedness assumed
in acquisition (23,904) (24,339) -
Repayment on mortgage (8,000) - -
Cash dividend to parent - (41,529) -
Principal payments (1,520) (3,100) (1,148)
(Decrease) increase in intercompany debt, net - (67,817) 61,640
----------- ---------- ---------
Net cash (used in) provided by financing activities (12,649) (57,409) 60,492
----------- ---------- ---------
Net change in cash 1,376 6,736 (2,765)
Cash at beginning of period 7,840 1,104 3,869
----------- ---------- ---------
Cash at end of period $ 9,216 $ 7,840 $ 1,104
----------- ---------- ---------
----------- ---------- ---------
</TABLE>
See Notes to Consolidated Financial Statements.
F-5
<PAGE>
The Eli Witt Company
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RETAINED
SERIES C SERIES A CAPITAL EARNINGS
PREFERRED PREFERRED COMMON CLASS C IN EXCESS (DIVIDENDS IN
STOCK STOCK STOCK COMMON STOCK PAR VALUE EXCESS OF)
---------- ------------ ----------- ------------ ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Balance November 30, 1991, as
previously reported $ - $ - $ 17 $ - $ 4,438 $ 37,927
Cumulative effect on prior years
of the change in accounting
for income taxes - - - - - (3,306)
---------- ------------ ----------- ------------ ----------- --------------
Balance November 30, 1991, as adjusted - - 17 - 4,438 34,621
Net income - - - - - 5,748
---------- ------------ ----------- ------------ ----------- --------------
Balance November 28, 1992 - - 17 - 4,438 40,369
Net income - - - - - 2,334
Dividend to parent company - - - - (7,435) (49,094)
Issuance of Class C common stock - - - 3 2,997 -
Issuance of Series A preferred stock - 9,300 - - - -
Accretion of Series A preferred stock - 705 - - - (705)
Dividends accrued on
Series B preferred stock - - - - - (1,150)
---------- ------------ ----------- ------------ ----------- --------------
Balance November 27, 1993 - 10,005 17 3 - (8,246)
Net loss - - - - - (14,411)
Issuance of Series C
preferred stock 1,321 (1,321) - - - -
Accretion of Series A
preferred stock - 1,396 - - - (1,396)
Dividends accrued on
Series B preferred stock - - - - - (1,500)
Accretion of Series C
preferred stock 143 - - - - (143)
Issuance of common stock - - 6 - 994 -
---------- ------------ ----------- ------------ ----------- --------------
Balance December 3, 1994 $ 1,464 $ 10,080 $ 23 $ 3 $ 994 $ (25,696)
---------- ------------ ----------- ------------ ----------- --------------
---------- ------------ ----------- ------------ ----------- --------------
</TABLE>
See Notes to Consolidated Financial Statements.
F-6
<PAGE>
The Eli Witt Company
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The consolidated financial statements reflect the accounts of The Eli Witt
Company (the "Company") and its wholly-owned subsidiaries. Prior to
February 19, 1993, the Company and Flaks, Inc. ("Flaks") were wholly-owned
subsidiaries of Culbro Corporation ("Culbro"), but were operated as a single
company. On February 19, 1993, in conjunction with the acquisition of
Certified Grocers of Florida, Inc. described in Note 2, Flaks became a
direct subsidiary of the Company in a transaction among related parties
which has been accounted for in a manner similar to a pooling of interests.
Accordingly, the accompanying consolidated financial statements reflect the
consolidated financial position, consolidated results of operations and
consolidated cash flows of the Company and Flaks after elimination of
intercompany accounts and transactions.
BUSINESS SEGMENT
The Company is a wholesale distributor of cigarettes, tobacco products,
candy, food, health and beauty aids and general merchandise. Cigarette
sales represent a significant percentage of the Company's total net sales
and other revenue.
FISCAL YEAR
The Company's fiscal year ends on the Saturday nearest November 30. Fiscal
1994, 1993, and 1992 ended December 3, 1994, November 27, 1993, and November
28, 1992, respectively. The fiscal year ended December 3, 1994, included 53
weeks, the 1993 and 1992 fiscal years included 52 weeks.
INVENTORIES
The Company's inventories are stated at the lower of cost or market using
the last-in, first-out ("LIFO") method. The inventories of Flaks of $3,948
(1994) and $5,255 (1993) are stated on the first-in, first-out ("FIFO")
method. Inventories consist mainly of cigarettes, tobacco, candy, food,
health and beauty aids and general merchandise.
PROPERTY AND EQUIPMENT
Property and equipment are carried at cost. Depreciation is determined on a
straight-line basis over the estimated useful asset lives for financial
reporting purposes and principally on accelerated methods for tax purposes.
Upon sale or retirement of property and equipment, the cost and related
accumulated depreciation are removed from the accounts and the difference
between book value and any proceeds realized on sale is charged or credited
to income. Expenditures for maintenance and repairs are charged to income
as incurred; renewals and improvements are capitalized.
F-7
<PAGE>
INTANGIBLES
Included in other assets are the excess of the costs of businesses acquired
over the fair value of their net tangible assets which are being amortized
on a straight-line basis over 25 years and $3 million related to Supply
Agreements which are being amortized over ten years. Accumulated
amortization of intangible assets resulting from business acquisitions was
$294 and $118, at December 3, 1994 and November 27, 1993, respectively.
POSTRETIREMENT BENEFITS
Effective at the beginning of the 1993 fiscal year, the Company adopted
Statement of Financial Accounting Standards ("SFAS") No. 106 "Employers'
Accounting for Postretirement Benefits Other Than Pensions," which requires
the Company to recognize postretirement benefits on the accrual basis. The
Company elected to amortize its accumulated liability for postretirement
benefits over twenty years. See Note 6.
REVENUE RECOGNITION
Sales are recognized when product is delivered and accepted by the customer.
Sales incentives are granted to customers based upon the volume of
purchases. These sales incentives are recorded at the time of sale as a
reduction of gross sales.
PROMOTIONAL AND INCENTIVE PROGRAMS
In general, promotional and incentive program amounts based on purchases are
recognized as received. Beginning in 1994, the Company records amounts
relating to incentive programs for cigarette purchases on an accrual basis.
This resulted in a reduction of accounts payable being recorded at December
3, 1994 of $3.4 million. Had the Company recorded such amounts on an
accrual basis in prior years, the resulting reduction in accounts payable
would have been approximately $2.3 million for the year ended November 27,
1993 and a reduction in cost of goods sold of approximately $1.1 million for
fiscal year 1993 and an increase in cost of goods sold of approximately $.6
million for fiscal year 1992.
INCOME TAXES
Effective at the beginning of the 1994 fiscal year, the Company
retroactively adopted Statement of Financial Accounting Standards ("SFAS")
No. 109, Accounting for Income Taxes. SFAS No. 109 uses the asset and
liability approach to accounting for income taxes and requires the
recognition of deferred tax liabilities and assets for the expected future
tax consequences of temporary differences between the financial reporting
and the tax basis of assets and liabilities. Income taxes were previously
recorded under the comprehensive basis of accounting prescribed by
Accounting Principles Board Opinion
F-8
<PAGE>
No. 11. Net income previously reported in the 1993 fiscal period was not
affected by the adoption of SFAS No. 109.
Prior to April 25, 1994, the Company joined with Culbro in filing
consolidated federal income tax returns. In connection with the acquisition
of the southern divisions of NCC L.P. on April 25, 1994, described in Note
2, the Company was disaffiliated as of that date from Culbro for purposes of
filing federal income tax returns. In subsequent periods, the Company will
file a separate consolidated federal income tax return.
EARNINGS (LOSS) PER SHARE
Earnings (loss) per share of common stock are based on the weighted average
number of shares of common stock outstanding during the year. Net income
(loss), applicable to earnings (loss) per common share, consists of reported
net income less dividend requirements and accretion on preferred stock.
2. ACQUISITIONS
ACQUISITION OF SOUTHERN DIVISIONS OF NCC L.P.
On April 25, 1994, the Company purchased the net assets of the southern
divisions of NCC L.P. ("NCC"), a limited partnership engaged in the
wholesale distribution business for 595,000 shares of common stock of the
Company. Concurrent with this acquisition, a partner of NCC purchased from
Culbro, for proceeds of $12 million, a 10% exchangeable note of Culbro with
a face value of $15 million and 400,000 shares of the Company's common stock
held by Culbro. The Culbro note is exchangeable into the Series B Preferred
Stock of the Company. The NCC partner also purchased for $3 million, a
newly issued $5 million convertible subordinated note of the Company
discounted to yield 12.5%. The note is convertible into Series D preferred
stock of the Company. In addition, the Company amended the terms of the
Series A preferred stock, provided for the issuance of the Series C
preferred stock and split the Series A preferred stock into Series A and
Series C preferred stock. See Note 7.
The acquisition was accounted for as a purchase. The accompanying financial
statements reflect a valuation of the fair value of the assets and
liabilities acquired. Goodwill of approximately $1.8 million, reflecting the
excess of the fair value of the common stock and other costs and expenses
related to the acquisition, over the fair value of the net assets acquired,
is being amortized over twenty-five years.
Prior to this acquisition, Culbro owned 85% of the outstanding common stock
of the Company and former shareholders of Certified Grocers of Florida, Inc.
("Certified Grocers") held 15% of the outstanding common stock of the
Company, which they received in connection with the acquisition of Certified
Grocers in 1993. In connection with the NCC acquisition, NCC and one of its
partners received a total of 995,000
F-9
<PAGE>
shares representing approximately 38% of the outstanding common stock of the
Company. Culbro retained a 50.1% ownership in the common stock of the
Company and the former shareholders of Certified Grocers now hold
approximately 12% of the outstanding common stock of the Company.
Unaudited pro forma condensed consolidated financial information, assuming
the acquisition of NCC had taken place at the beginning of 1994 and 1993
fiscal years and the acquisition of Certified Grocers (as described below)
had taken place at the beginning of 1993, are as follows:
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Net sales and other revenue $1,739,000 $ 1,929,000
Net loss (21,000) (10,000)
Net loss per common share (9.39) (4.90)
</TABLE>
The unaudited pro forma condensed financial information is presented for
comparative purposes and does not necessarily reflect the results of
operations which would have occurred had the acquisitions been completed at
the beginning of the years presented.
ACQUISITION OF CERTIFIED GROCERS OF FLORIDA, INC.
On February 19, 1993, pursuant to an Agreement and Plan of Merger (the
"Agreement") dated November 3, 1992 the Company acquired Certified Grocers
of Florida, Inc., a full-service grocery wholesale distribution company for
approximately $12.9 million consisting of $9.3 million of Series A preferred
stock and the direct costs of the acquisition. Pursuant to the Agreement,
each share of Certified Grocers' common stock (except dissenters' shares)
was converted to one share of newly issued Eli Witt Series A preferred stock
and the shareholders of Certified Grocers who entered into three-year Supply
Agreements received newly issued Eli Witt Class C common stock (300,000
shares of $0.01 par value Class C Common). The holders of the Certified
Grocers' preferred stock and dissenting common shareholders had their shares
redeemed at their respective liquidation values, which was approximately
$600 in the aggregate. Culbro retained an 85% common equity interest in the
Company after issuance of the Class C common stock. In addition, as part of
the financing required to consummate the transaction, Culbro was issued $15
million of newly issued Eli Witt 10% Series B preferred stock which is
mandatorily redeemable in five and one half years from the date of issuance.
The acquisition was accounted for as a purchase and accordingly, the assets
and liabilities of Certified Grocers were recorded at their estimated fair
values and the accompanying financial statements include all activities
subsequent to the acquisition date. Goodwill of approximately $1.9 million,
reflecting the excess of the fair value of the Series A preferred stock and
other costs and expenses related to the acquisition over the fair value of
the net assets acquired, is being amortized over twenty-five years.
F-10
<PAGE>
In connection with the merger, the Company paid Culbro a Special Dividend,
calculated based on the net book value (on a FIFO basis, as defined) less
$25 million and other adjustments, and certain non-operating facilities of
the Company with a net book value of $.4 million were transferred to Culbro.
The Company's intercompany indebtedness to Culbro and Certified Grocers'
indebtedness that was assumed by the Company were repaid from the $125
million of bank financing (see Note 4).
Unaudited pro forma condensed consolidated financial information, assuming
the acquisition of Certified Grocers had taken place at the beginning of the
1993 and 1992 fiscal years, are as follows:
<TABLE>
<CAPTION>
1993 1992
<S> <C> <C>
Net sales and other revenue $1,262,000 $ 1,294,200
Net income (loss) 532 (2,800)
Net loss per common share (.95) (2.60)
</TABLE>
The unaudited pro forma condensed financial information is presented for
comparative purposes and does not necessarily reflect the results of
operations which would have occurred had the acquisition been completed at
the beginning of the years presented.
ACQUISITION OF TRINITY DISTRIBUTORS
In June 1993, the Company acquired certain assets and liabilities of Trinity
Distributors, Inc. ("Trinity") for approximately $4 million. Trinity was a
wholesale distributor of tobacco, candy, and other products servicing Texas
and Louisiana. The effect of the acquisition was not significant, the
transaction was financed through cash and notes payable and was accounted
for as a purchase.
3. Related Party Transactions
INTERCOMPANY DEBT AND INTEREST
Prior to the acquisition of Certified Grocers and separate financing of the
Company, the Company was financed under long-term debt and revolving credit
facilities maintained by Culbro on behalf of all of its subsidiaries.
Culbro charged the Company a 10% rate on the average monthly balance of the
intercompany debt. Intercompany interest expense charges were $1,787 in
1993 prior to the Company obtaining its separate financing and $3,371 in
1992 Such intercompany interest expense charges may not be indicative of
the level of interest charges the Company would have incurred if it were
separately financed. The average intercompany debt balance for fiscal 1992
was $34 million. See Note 4 for $2 million mortgage payable to Culbro and
Note 10 for $5 million subordinated note to Culbro.
F-11
<PAGE>
SALES OF TRADE RECEIVABLES
In 1991 the Company and another subsidiary of Culbro entered into a
three-year agreement with a major bank and General Witt Receivable
Corporation, a Culbro subsidiary, as seller and collection agent, to sell
without recourse, up to $35 million of undivided fractional interest in a
designated pool of trade receivables. As receivables were collected, new
receivables were sold to replace them. The receivables sales agreement was
terminated on February 19, 1993, in connection with the separate financing
of the Company. Culbro did not allocate any of the fees related to the sale
of the Company's trade receivables and the Company did not record interest
earned on the related intercompany receivables. Accordingly, there was no
effect on the Company's net income from the sale of its accounts receivable.
INVENTORY PURCHASES AND EXPENSE ALLOCATIONS FROM RELATED PARTIES
In connection with the establishment of its separate financing arrangement,
the Company and Culbro executed a Management Services Agreement under which
Culbro continues to provide the Company with certain administrative services
including legal, tax, internal audit, insurance and human resources. Prior
to the execution of the Management Services Agreement, Culbro provided such
services to the Company and the Company's results for the fiscal periods
prior to the Management Services Agreement reflect the estimated costs of
such services. In addition, the Company was charged its pro-rata share of
insurance coverage maintained by Culbro for all of its subsidiaries
including the Company. In July, 1993, the Company assumed responsibility
for its own insurance coverage. The Company purchases certain tobacco
products from a subsidiary of Culbro.
A summary of these related party purchases and charges is as follows:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
COSTS OF GOODS SOLD
Tobacco products purchased $ 3,336 $ 2,334 $ 2,015
--------- -------- ---------
--------- -------- ---------
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Culbro general and administrative service
cost allocation $ 410 $ 462 $ 475
Insurance - workers' compensation and
property/liability - 72 3,069
Third-party administrative services - 82 481
--------- -------- ---------
$ 410 $ 616 $ 4,025
--------- -------- ---------
--------- -------- ---------
</TABLE>
Such intercompany charges may not be indicative of the level of charges the
Company would have incurred if the goods or services were obtained from an
unrelated third party.
F-12
<PAGE>
4. Long-Term Debt
<TABLE>
<CAPTION>
AMOUNT OUTSTANDING
---------------------------------
Loan DECEMBER 3, November 27,
Commitment 1994 1993
<S> <C> <C> <C>
Long-term debt includes:
Credit agreement:
Revolving credit agreement, expiring in 1998 $ 83,000 $ 57,000 $ 28,600
Term loan, payable quarterly in increasing
amounts through 1998 23,625 23,625 27,750
Cigarette revolver - - 14,500
---------- ---------- --------
$ 106,625 80,625 70,850
Mortgages payable, secured by warehouses 11,819 11,167
12.5% convertible subordinated note payable
to shareholder, due in 1998 3,231 -
Other indebtedness 2,309 1,300
Capital leases 7,415 1,946
---------- --------
105,399 85,263
Less amount due within one year 8,151 4,772
---------- --------
Long-term $ 97,248 $ 80,491
---------- --------
---------- --------
</TABLE>
On February 19, 1993, the Company entered into a Credit Agreement. The
credit agreement was amended in April 1994 in connection with the
acquisition of NCC. In accordance with the applicable amendment, interest
rates are at LIBOR plus 2-3/4% or the prime rate plus 1-1/2% (8.48% at
December 3, 1994). Unamortized deferred financing costs of $2.9 million at
December 3, 1994 related to the credit agreement are included in other
assets and are being amortized over the life of the credit agreement. The
credit agreement has a commitment fee of .5% for unused lines. Annual
payment requirements excluding the revolving facilities of the credit
agreement which expires in 1998 and capital leases for the years 1995
through 1999 are $5,861, $9,020, $9,073, $9,543, and $7,487.
The Credit Agreement is secured by accounts receivable and inventories and
places certain restrictions on the Company, including prohibition of common
stock dividends, limitations on capital expenditures, lease commitments,
ownership changes, and asset sales. The Company is also required to
maintain minimum earnings to fixed charges coverage, working capital and net
worth, as defined.
F-13
<PAGE>
On February 19, 1993, the Company obtained $10 million of mortgage financing
at 10% per annum from Culbro, secured by a warehouse in Ocala, Florida,
formerly owned by Certified Grocers. During the 1994 fiscal year, the
Company secured a 10% $8 million first mortgage from a third party with a
balloon payment in 1999, the proceeds of which were utilized to reduce the
mortgage due Culbro to $2 million.
In March 1993, the Company entered into interest rate swap agreements with
major banks as a hedge against interest rate exposure on variable rate
debt. The agreements range from two to three years and effectively
converted $60 million of variable rate debt under the Credit Agreement to
fixed rate debt at an average rate of 7.25%. The difference to be paid or
received on the interest rate swap agreements is charged or credited to
interest expense over the life of the swap agreements. The effect of the
swap agreements was to increase interest expense in 1994 and 1993 by $200
and $558, respectively, for payments made to the banks in excess of payments
received from the banks, when interest rates varied from the swap rates.
Management believes risk of loss due to non-performance by any of the banks
is minimal. The Company considers the fixed rate and variable rate
financial instruments, excluding the intercompany mortgage, to be
representative of current market interest rates and, accordingly, the
recorded amounts approximate their present fair market value.
The Company's bank accounts are reimbursed on a daily basis. As a result,
checks issued but not yet presented to the banks for payment are not
considered reductions of cash or accounts payable. Accordingly, $12,422 and
$7,466 were reclassified increasing cash and accounts payable and accrued
expenses in the accompanying consolidated balance sheets at December 3, 1994
and November 27, 1993, respectively.
5. INCOME TAXES
The Company adopted SFAS 109, Accounting for Income Taxes retroactively in
1994. The financial statements for prior periods have been restated.
Retained earnings at the beginning of 1992 was reduced by $3,306. Net
income in the 1993 fiscal period was not affected by the change in
accounting for income taxes. However, goodwill was decreased by $2,071 as
the result of recording a net deferred tax asset. Net income in the 1992
fiscal period was increased by $827 by the change in accounting.
F-14
<PAGE>
The provision (benefit) for income taxes charged (credited) to continuing
operations was as follows:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Current:
Federal $ 0 $ 204 $ 176
State 0 70 70
Deferred, principally federal (3,236) 428 1,189
--------- ------- -------
Total Provision (Benefit) $ (3,236) $ 702 $ 1,435
--------- ------- -------
--------- ------- -------
</TABLE>
Deferred tax liabilities (assets) are comprised of the following at December
3, 1994 and November 27, 1993:
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
LIFO inventory $ 6,955 $ 9,944
Depreciation 5,251 5,352
Other 928 638
-------- --------
Gross deferred tax liabilities 13,134 15,934
-------- --------
Tax net operating loss carryforward (9,646) (5,619)
Pension liability (3,355) (3,334)
Restructuring reserves (3,211) (1,471)
Insurance and compensation reserves (2,288) (1,595)
Other (2,470) (2,149)
-------- --------
Gross deferred tax assets (20,970) (14,168)
Valuation allowance 3,755 397
-------- --------
Net deferred tax (asset) liabililty $ (4,081) $ 2,163
-------- --------
-------- --------
</TABLE>
F-15
<PAGE>
The provision for income taxes differs from the amount of income tax
determined by applying the applicable U.S. statutory federal income tax rate
to pretax income from continuing operations as a result of the following
differences:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Federal tax expense at statutory rate $ (5,993) $ 1,032 $ 2,442
Increase in valuation allowance 3,358 - -
State and local income taxes, net (698) 66 112
Corporate management charge - - (1,481)
Consolidated net operating loss allocation - - 608
Negative goodwill - (212) (363)
Other 97 (184) 117
-------- ------- --------
$ (3,236) $ 702 $ 1,435
-------- ------- --------
-------- ------- --------
</TABLE>
The Company has net operating loss carryforwards of $25,400 including $9,400
related to Certified Grocers. The Internal Revenue code limits utilization
of the Certified Grocers' net operating loss carryforwards to $624 per year.
Net operating loss carryforwards expire substantially between 2006 and 2009.
Net operating losses are recognized to the extent of deferred tax
liabilities that will reverse in the carryforward period and certain tax
planning strategies identified by management. A valuation allowance has
been established for net operating losses that more than likely will not be
realized, resulting in an increase in the valuation allowance for deferred
tax assets of $3,358 during fiscal year 1994.
6. EMPLOYEE RETIREMENT BENEFITS
The Company maintained a noncontributory defined benefit pension plan under
which benefits were curtailed in 1992. The Plan provided benefits based on
employees' years of service and compensation. Contributions to the Plan are
made in accordance with the provisions of the Employee Retirement Income
Security Act of 1974.
In November 1992, in anticipation of the acquisition of Certified Grocers,
the Company curtailed benefits under the defined benefit pension plan. In
accordance with the requirements SFAS No. 88, "Employers' Accounting for
Settlement and Curtailment of Defined Benefit Pension Plans and for
Termination Benefits," the Company recorded a curtailment loss of $1,415.
F-16
<PAGE>
Pension expense, excluding the curtailment loss, included in the
consolidated statement of operations was as follows:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Administrative and service costs $ 161 $ 162 $ 483
Interest on projected benefit obligations 1,123 1,114 1,216
Actual return on plan assets (312) (955) (1,494)
Net amortization and deferral of (gains) losses (411) 271 1,102
--------- -------- ---------
Net pension expense $ 561 $ 592 $ 1,307
--------- -------- ---------
--------- -------- ---------
</TABLE>
At December 3, 1994 and November 27, 1993, the funded status of the Plan was
as follows:
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Plan assets as fair value, primarily equities
and insurance contracts $ 7,621 $ 8,082
Present value of benefits earned by participants,
including vested benefit of $13,567 and
$14,941 at December 3, 1994 and November 27,
1993, respectively 13,835 15,290
--------- ---------
Present value of benefit obligations in excess
of plan assets 6,214 7,208
Unrecognized net gain 1,218 -
--------- ---------
Net pension liability included in consolidated
balance sheet $ 7,432 $ 7,208
--------- ---------
--------- ---------
</TABLE>
Discount rates of 8.5% and 7.5% were used to compute the present value of
pension benefits at December 3, 1994 and November 27, 1993, respectively.
The expected rate of return on pension plan assets in 1994, 1993, and 1992
was estimated at 9% representing the average long-term rate expected from
investment of the Plan's assets.
The Company also maintains The Eli Witt Company Savings Plan which formerly
provided employer matching contributions at the rate of 60% of employees'
contributions. During fiscal 1994, the rate of employer matching was
reduced to 30%, and matching contributions were discontinued in November
1994. Such contributions
F-17
<PAGE>
when made are limited to 5% of such employee's eligible compensation. The
Company's matching contribution in 1994 was $499 (1993 - $384; 1992 - $208).
The Company also provides other postretirement benefits, principally health
and life insurance benefits, to certain of its retired employees. Effective
at the beginning of the 1993 fiscal year, the Company adopted SFAS No. 106,
"Employees' Accounting for Postretirement Benefits Other Than Pensions."
This statement required the Company to recognize postretirement benefits
other than pensions on the accrual basis and record a liability for the
present value of its unfunded accumulated postretirement benefit obligation.
Previously, the Company expensed the cost of postretirement benefits when
paid. The Company has elected to recognize the cumulative effect of the
change in accounting for other postretirement benefits by amortizing the
accumulated obligation over 20 years. The components of periodic expense
for other postretirement benefits were as follows:
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Service cost - benefits earned during year $ 53 $ 58
Interest cost on accumulated postretirement
benefit obligation 389 349
Amortization of unrecognized loss 14 -
Amortization of accumulated postretirement
benefit obligation $ 246 $ 246
----------- ----------
Total expense $ 702 $ 653
----------- ----------
----------- ----------
</TABLE>
At December 3, 1994 and November 27, 1993, the actuarial liability for these
postretirement benefits, was as follows:
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Retirees $ 4,136 $ 4,016
Active plan participants 822 780
------------ ---------
4,958 4,796
Less: Unrecognized transition obligation (4,426) (4,656)
Unrecognized experience gain (104) -
------------ ---------
Net liability included in consolidated
balance sheet $ 428 $ 140
------------ ---------
------------ ---------
</TABLE>
The accumulated postretirement benefit obligation was determined using a
discount rate of 8.5% and 7.5% at December 3, 1994 and November 27, 1993,
respectively. Because the Company's obligation for retiree's medical
benefits is fixed, any increase in the
F-18
<PAGE>
medical cost trend would have no effect on the accumulated postretirement
benefit obligation, service cost or interest cost.
In connection with the Certified Grocers' acquisition, the Company assumed
postretirement benefits for current and former management personnel. The
remaining obligation of $741 has been included in the accompanying
consolidated balance sheet.
7. CAPITAL ACCOUNTS
In April 1994, changes to the Company's Certificate of Incorporation were
authorized to provide for the issuance of Series C preferred stock,
splitting of the Series A preferred stock into Series A and Series C
preferred stock, and changes in the terms of the Series A preferred.
The consolidated capital accounts as of December 3, 1994 are comprised of
the following:
SERIES A PREFERRED STOCK
In April 1994, each share of Series A preferred stock was split into one
share of Series A preferred and one share of Series C preferred. The face
value of the Series A preferred was reduced by the face value of the Series
C preferred stock from $15,774 to $13,774. The revised terms of the Series
A preferred provide dividends which are cumulative and commence accruing
February 19, 1996 and will be payable quarterly. The dividend rate will be
8% through February 28, 1997, and thereafter the dividend rate will be
adjusted quarterly with a ceiling of 12% and a floor of 7%. Dividend
payments will be subject to certain restrictions of the credit agreement and
the priority of Series B and Series C preferred stock. The Series A
preferred stock is redeemable at the Company's option at the stated value,
plus all accrued dividends. An aggregate of $8 million of Series A and
Series C preferred stock is subject to mandatory redemption if there is a
change in control, as defined, or sale of 50% or more of the common stock of
the Company, as defined. Holders of the Series A preferred stock do not
have voting rights, however, they can appoint two non-voting representatives
to the Company's Board of Directors. Also, the holders of Series A
preferred stock may appoint a majority number of representatives to the
Company's Board of Directors if certain events occur. The face value of the
Series A preferred stock was discounted to its fair value at the date of
issuance. The difference between the fair value of the Series A preferred
stock and its stated value is being accreted using the interest method.
This stock has a $.005 par value per share, there are 788,199 shares
authorized and outstanding.
SERIES B PREFERRED STOCK
Dividends are cumulative and accrue at 10%. Under certain circumstances,
the credit agreement described in Note 4 restricts the payment of dividends.
The Series B
F-19
<PAGE>
preferred stock has liquidation preferences prior to all other classes or
series of preferred and common stock, except the Series C preferred stock.
The holder of the Series B preferred stock does not have voting rights.
This Series B stock including accrued dividends is mandatorily redeemable in
1998 subject to loan covenant restrictions. As of December 3, 1994, no
dividends on the Series B preferred stock had been declared or paid.
Dividends aggregating $2,650 have been accrued and included in the preferred
stock balance. The $17,650 recorded value approximates the redemption value
of the Series B preferred stock. This stock has a $.01 par value per share,
there are 15,000 shares authorized and outstanding.
Series C preferred stock
Dividends are cumulative and commence accruing February 19, 1996 and will be
payable quarterly. The dividend rate will be 8% through February 28, 1997
and thereafter the dividend rate will be adjusted quarterly with a ceiling
of 12% and a floor of 7%. Dividend payments and liquidation preferences of
the Series C preferred stock have priority to all other classes or series of
preferred and common stock. The Series C preferred stock is redeemable at
the Company's option at the stated value plus all accrued dividends. An
aggregate of $8 million of Series C and Series A is subject to mandatory
redemption if there is a change in control, as defined, or sale of 50% or
more of the common stock of the Company, as defined. Holders of Series C
preferred stock do not have voting rights. The face value of the Series C
preferred stock of $2,000 was discounted to its pro-rata fair value prior to
being split from the Series A preferred. The difference between the fair
value of the Series C preferred stock and its stated value is being accreted
using the interest method. This stock has a $.005 par value per share, and
there are 788,199 shares authorized and outstanding.
COMMON STOCK
There are 5,000,000 shares of common stock authorized and 2,295,000 shares
and 1,700,000 shares issued and outstanding at December 3, 1994 and November
27, 1993, respectively.
CLASS C COMMON STOCK
In connection with the acquisition of Certified Grocers, the Company issued
300,000 shares of $.01 par value Class C common stock in exchange for
three-year Supply Agreements. Holders of the Class C common stock may elect
two voting members of the Board of Directors of the Company. The Class C
common stock is convertible into ordinary common stock at any time at the
election of the holders, has anti-dilution protection, stock sale
participation rights, and piggy-back registration rights. There are 300,000
shares authorized, issued, and outstanding.
F-20
<PAGE>
8. COMMITMENTS AND CONTINGENCIES
LEASE COMMITMENTS
The Company has noncancelable leases relating principally to transportation
equipment, data processing, and warehouse and office facilities.
CAPITAL LEASES
Future minimum lease payments under capital leases and the present value of
such payments as of December 3, 1994 were:
1995 $ 2,965
1996 2,052
1997 1,803
1998 1,003
1999 638
Later years 342
-------
Total minimum lease payments 8,803
Less: Amounts representing interest 1,388
-------
Present value of minimum lease payments (a) $ 7,415
-------
-------
(a) INCLUDES CURRENT PORTION OF $2,290 AT DECEMBER 3, 1994.
At December 3, 1994, machinery and equipment included capital leases
amounting to $6,672 (1993 - $1,946), which is net of accumulated
depreciation of $6,533 (1993 - $5,964). Depreciation expense relating to
capital leases was $1,099 in 1994 (1993 - $824; 1992 - $1,120).
OPERATING LEASES
Future minimum rental payments under noncancellable leases as of December 3,
1994 were:
1995 $ 6,836
1996 5,561
1997 4,162
1998 3,780
1999 2,725
Later years 11,052
---------
Total minimum lease payments $ 34,116
---------
---------
Total rental expense for all operating leases in 1994 was $7,687 (1993 -
$3,375; 1992 - $1,998).
F-21
<PAGE>
LITIGATION
In May 1992, the State of Tennessee Department of Revenue (the "Department")
notified the Company of alleged violations of the Tennessee Unfair Cigarette
Sales Law (the "Law"). The Department seeks a revocation of the Company's
Tennessee wholesale tobacco license. Management of the Company believes the
Department is misinterpreting the Law. The Company must complete the
administrative proceedings before it can challenge the law in court.
Another wholesale distributor which continues to do business in Tennessee
has been defending a similar charge by the Department since 1989 upon
grounds that the Law is either unconstitutional or violates federal
anti-trust laws. The Company will argue those same grounds if it is
unsuccessful in its challenge to the Department's interpretation of the Law.
The Company believes the defenses described above are meritorious. The
Company is also subject to other legal proceedings and claims which arise in
the ordinary course of business.
While the results of the aforementioned litigation cannot be predicted with
any reasonable degree of certainty, in the opinion of management, the
ultimate resolution with respect to these actions will not have a material
adverse effect upon the consolidated financial position of the Company.
9. SUPPLEMENTARY CONSOLIDATED FINANCIAL STATEMENT INFORMATION
NET SALES AND OTHER REVENUE
Excise taxes paid on cigarette sales in 1994 were $180,000 (1993 - $130,000;
1992 - $99,849) and are included in net sales and other revenue and cost of
goods sold. Negative goodwill amortization in 1993 which relates to the
acquisition of the Company by Culbro was $623 (1992 - $1,068) and is
included in net sales and other revenue.
RESTRUCTURING CHARGES
Restructuring charges in 1994 principally relate to the closing of Eli Witt
facilities and corporate reorganization necessitated by the acquisition of
NCC as described in Note 2.
In anticipation of the 1993 acquisition of Certified Grocers, the Board of
Directors' of Eli Witt authorized curtailment of its pension plan and the
closing of certain facilities. In accordance with this action, the Company
recorded a restructuring charge of $3,500 in 1992's Statement of Operations
consisting of $1,415 related to the pension plan curtailment and $2,085
related to the closing of the facilities.
INVENTORIES
The cost of the Company's inventories at LIFO was $50,628 and $52,674 at
December 3, 1994 and November 27, 1993, respectively. On a FIFO basis, the
cost of the inventories would have been $64,803 and $65,975, respectively.
Cost of sales on a
F-22
<PAGE>
FIFO basis would have been lower by $875 and $1,725 in 1994 and 1992,
respectively, and higher by $2,090 in 1993. The Company believes that the
LIFO method generally results in a better matching of costs and revenues.
This supplemental information is presented for comparative purposes.
PROPERTY AND EQUIPMENT
Property and equipment, net, consist of:
<TABLE>
<CAPTION>
DEPRECIABLE DEC. 3 Nov. 27
LIVES 1994 1993
<S> <C> <C> <C>
Land $ 2,606 $ 2,039
Buildings 30 23,952 22,268
Machinery and equipment 4-10 32,789 25,507
---------- ------------
59,347 49,814
Accumulated depreciation (15,994) (13,686)
---------- ------------
$ 43,353 $ 36,128
---------- ------------
---------- ------------
</TABLE>
ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses include trade payables of $52,697
(1993 - $35,495) and various accrued expenses totaling $16,361 (1993 -
$14,171).
OTHER NONCURRENT LIABILITIES
Other noncurrent liabilities include pension liability of $7,432 (1993 -
$7,208).
SUPPLEMENTAL CASH FLOW INFORMATION
1994 1993 1992
Cash paid during the year for:
Interest - third party:
Bank debt $ 5,670 $ 4,086 $ -
Other indebtedness 1,539 940 184
------- --------- --------
$ 7,209 $ 5,026 $ 184
------- --------- --------
------- --------- --------
Intercompany interest and income tax charges were not settled in 1992 and
therefore were included in the intercompany debt balance.
F-23
<PAGE>
In addition, the Company had the following non-cash investing and financing
activities:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Capital lease assets and obligations $ 5,838 $ 388 $ 1,110
------- ------- --------
Dividend of Series B preferred stock to parent $ - $15,000 $ -
------- ------- --------
Dividend accrued on Series B preferred stock $ 1,500 $ 1,150 $ -
------- ------- --------
Class C common stock issued in exchange
for supply contracts $ - $ 3,000 $ -
------- ------- --------
Fair value of assets acquired, including
goodwill $ 50,770 $64,295 $ -
Liabilities assumed (47,437) (48,990) -
Series A preferred stock issued - (9,300) -
Long term debt issued - (2,467) -
Common stock issued (1,000) - -
-------- ------- --------
Payments in connection with acquisitions 2,333 3,538 -
Cash acquired (44) (776) -
------- ------- --------
Payments in connection with acquisitions,
net of cash acquired $ 2,289 $ 2,762 $ -
-------- ------- --------
-------- ------- --------
</TABLE>
10. EVENTS SUBSEQUENT TO THE DATE OF THE FINANCIAL STATEMENTS
On April 10, 1995, the Company sold the assets of its Denver and Albuquerque
Divisions to Coremark International, Inc. for $8,509, and capital lease
obligations of $269 and operating lease commitments with annual rental
payments of $458 were assumed by the buyer. The Company anticipates a gain
on the sale after all transaction costs of approximately $1 million.
On April 21, 1995 Culbro purchased from the Company a 10% subordinated note
in the amount of $5 million. The note matures in 1998. Proceeds of the
note were used for general working capital purposes.
On April 14, 1995 the Company entered into an amendment to the Credit
Agreement which effectively waived compliance requirements with certain
financial covenants as of December 3, 1994, and amended certain financial
covenants of the Credit Agreement through February 15, 1998. The total loan
commitment and terms thereof were not amended.
F-24
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Corporation has duly caused this amendment to its
1994 annual report to be signed on its behalf by the undersigned, thereunto
duly authorized.
CULBRO CORPORATION
By /s/ JAY M. GREEN
-----------------------------------------------
Jay M. Green
Executive Vice President-Finance and Administration
Dated: May 11, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this
amendment to its 1994 annual report has been signed by the following persons
on behalf of the Corporation and in the capacities indicated on February 23,
1995.
Signatures Title
* Director
- -------------------------
(Bruce A. Barnet)
* Director
- -------------------------
(John L. Bernbach)
* Chairman of the Board, Director and
- ------------------------- Principal Executive Officer
(Edgar M. Cullman)
* President, Director and
- ------------------------- Principal Operating Officer
(Edgar M. Cullman, Jr.)
* Director
- -------------------------
(Frederick M. Danziger)
* Director
- -------------------------
(John L. Ernet)
* Executive Vice President and
- ------------------------- Principal Financial Officer
(Jay M. Green)
* Director
- -------------------------
(Thomas C. Israel)
* Director
- -------------------------
(Dan W. Lufkin)
* Director
- -------------------------
(Graham V. Sherren)
* Director
- -------------------------
(Peter J. Solomon)
* Director
- -------------------------
(Francis T. Vincent, Jr.)
* Vice President and
- ------------------------- Controller
(Joseph C. Airo)
* By Power of Attorney dated April 13, 1995.
