SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 22, 1994
INTERNATIONAL MULTIFOODS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-6699 41-0871880
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
33 South Sixth Street, Minneapolis, Minnesota 55402
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (612) 340-3300
Not applicable
(Former name or former address, if changed since last report)
Item 7. Financial Statements and Exhibits.
(a) Financial statements of business acquired.
Financial statements of Leprino Foodservice Distribution
(a division of Leprino Foods Company) as of June 4, 1994,
October 30, 1993 and October 31, 1992 and for the 31 weeks
ended June 4, 1994 and the fiscal years ended October 30,
1993 and October 31, 1992, including notes thereto.
(b) Pro forma financial information.
Pro forma financial information reflecting the acquisition
of the specialty foodservice distribution business of
Leprino Foods Company, as described above in Item 2.
(c) Exhibits.
2.1 Asset Purchase Agreement among Multifoods
Distribution, Inc. (Buyer), International
Multifoods Corporation (Buyer's Parent) and Leprino
Foods Company (Seller) and James G. Leprino
(Seller's Shareholder) dated as of July 29, 1994.
LEPRINO FOODSERVICE
DISTRIBUTION
FINANCIAL STATEMENTS
June 4, 1994, October 30, 1993 and October 31, 1992
[Letterhead of Price Waterhouse L.L.P.]
Report of Independent Accountants
July 29, 1994
To the Board of Directors
and Stockholders of
Leprino Foods Company
In our opinion, the accompanying balance sheet and the related
statements of income and of cash flows present fairly, in all material
respects, the financial position of Leprino Foodservice Distribution
(a division of Leprino Foods Company) at June 4, 1994, October 30,
1993, and October 31, 1992, and the results of its operations and its
cash flows for the 31 weeks ended June 4, 1994 and for each of the two
years in the period ended October 30, 1993, in conformity with
generally accepted accounting principles. These financial statements
are the responsibility of the Division'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.
/s/ Price Waterhouse LLP
LEPRINO FOODSERVICE DISTRIBUTION
(A DIVISION OF LEPRINO FOODS COMPANY)
BALANCE SHEET
June 4, October 30, October 31,
Assets 1994 1993 1992
(in thousands)
Current assets
Cash $ 3 $ 3 $ 3
Receivables, net 22,726 20,142 15,054
Inventories 22,370 21,544 17,300
Total current assets 45,099 41,689 32,357
Property, plant
and equipment, net 19,083 17,748 18,735
Other assets 92 96 101
$64,274 $59,533 $51,193
Liabilities and
division equity
Current liabilities
Accounts payable $16,567 $13,411 $11,474
Accrued expenses
and liabilities 3,353 4,190 4,242
Total current
liabilities 19,920 17,601 15,716
Deferred liabilities 364 288 159
Interdivisional payable - 994 1,479
Commitments
Division equity 43,990 40,650 33,839
$64,274 $59,533 $51,193
The accompanying notes are an integral part of the financial statements.
LEPRINO FOODSERVICE DISTRIBUTION
(A DIVISION OF LEPRINO FOODS COMPANY)
STATEMENT OF INCOME
31 Weeks Year Ended
Ended --------------------------
June 4, October 30, October 31,
1994 1993 1992
(in thousands)
Net sales $244,040 $364,585 $330,624
Expenses
Cost of sales 214,909 319,098 289,288
Selling and distribution 17,889 26,826 24,088
General and administrative 7,801 11,644 12,313
240,599 357,568 325,689
Income before provision
for income taxes 3,441 7,017 4,935
Provision for income taxes 101 206 58
Net income $ 3,340 $ 6,811 $ 4,877
The accompanying notes are an integral part of the financial statements.
LEPRINO FOODSERVICE DISTRIBUTION
(A DIVISION OF LEPRINO FOODS COMPANY)
STATEMENT OF CASH FLOWS
31 Weeks Year Ended
Ended --------------------------
June 4, October 30, October 31,
1994 1993 1992
Cash flows from
operating activities
(in thousands)
Net income $3,340 $6,811 $4,877
Adjustments to reconcile
net income to net cash
provided by operating activities
Depreciation 1,454 2,396 2,344
Provision for doubtful
accounts 98 (1,482) 138
Net (gain) loss on disposition
of property, plant and
equipment (36) (118) 47
Changes in asset and liabilities
Receivables (2,682) (3,605) (324)
Inventories (826) (4,244) (2,033)
Accounts payable and
accrued liabilities 2,395 2,014 1,009
Net cash provided by (used for)
Operating activities 3,743 1,772 6,058
Investing activities (2,749) (1,287) (2,970)
Financing activities (994) (485) (3,088)
Net increase in cash 0 0 0
Cash and cash equivalents
beginning of period 3 3 3
end of period $ 3 $ 3 $ 3
The accompanying notes are an integral part of the financial statements.
LEPRINO FOODSERVICE DISTRIBUTION
(A DIVISION OF LEPRINO FOODS COMPANY)
STATEMENT OF CASH FLOWS
(continued)
31 Weeks Year Ended
Ended --------------------------
June 4, October 30, October 31,
1994 1993 1992
Cash flows from
investing activities
(in thousands)
Capital expenditures $(2,938) $(1,842) $(3,111)
Proceeds from sales of
property, plant
and equipment 185 551 159
Other 4 4 (18)
Net cash used for
investing activities $(2,749) $(1,287) $(2,970)
Cash flows from
financing activities
Net change in
interdivisional payable $ (994) $ (485) $(3,088)
Net cash provided by
(used for) financing
activities $ (994) $ (485) $(3,088)
The accompanying notes are an integral part of the financial statements.
LEPRINO FOODSERVICE DISTRIBUTION
(A DIVISION OF LEPRINO FOODS COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 1:
General Information
Leprino Foodservice Distribution (FSD, a division of Leprino Foods
Company) serves customers in the foodservice industry through a full-
line foodservice distribution network which supplies primarily pizza and
select limited menu multi-unit establishments.
On June 17, 1994, Leprino Foods Company (LFC) and its principal
shareholder (Shareholder) signed an agreement in principle (Agreement)
providing for the sale of substantially all of the net assets of LFC's
foodservice distribution business to a wholly-owned subsidiary of
International Multifoods Corporation. The Agreement also calls for the
sale by the Shareholder of three distribution warehouses owned by the
Shareholder and currently leased by FSD. Additionally, the Agreement
provides for certain other definitive agreements which include a cheese
supply agreement that sets forth the buyer's minimum purchase
obligations for LFC's cheese products over a five-year period and a non-
compete agreement precluding LFC from re-entering the foodservice
distribution business in the United States for a minimum of five years.
Sales to a significant franchise concept represented 25.9% of FSD's
sales in 1994, 25.0% in 1993 and 22.9% in 1992. No individual
franchisee accounted for sales in excess of 10% in any period presented.
Basis of Presentation and Significant Accounting Policies
Basis of Presentation: The accompanying financial statements present
FSD as if it had existed as a company separate from LFC and includes the
historical assets, liabilities, revenues and expenses that are directly
related to LFC's foodservice distribution business.
FSD's financial statements include all the direct costs of operating the
business. General and administrative expenses specifically incurred by
LFC on behalf of FSD were included while costs which were not incurred
specifically for any of LFC's divisions were allocated to FSD based on
relative assets employed during each period. Management believes the
foregoing allocations were made on a reasonable basis. Nonetheless, the
financial information included herein may not necessarily reflect the
financial position and results of operations of FSD in the future or
what the financial position or results of operations of FSD would have
been as a separate, stand-alone company during the periods presented.
Fiscal year: LFC and FSD utilize a 52 or 53 week convention, with each
year ending on the Saturday nearest October 31. Fiscal years 1992 and
1993 were both 52 weeks. Financial information presented for 1994 is
for the 31 week period ended June 4, 1994. Due to the seasonal nature
of FSD's business, the results of operations for the 31 weeks ended June
4, 1994 are not necessarily representative of such results for a full
fiscal period.
Accounts receivable and accounts payable: The carrying amount of the
accounts receivable and accounts payable balances approximate their fair
value.
Inventories: Inventories are stated at the lower of cost or market,
with cost determined using the first-in, first-out (FIFO) method.
Interdivisional payable: The interdivisional payable balance reflects
the interdivisional financing requirements necessary to reflect FSD as a
separate entity assuming no interdivisional balances were outstanding at
June 4, 1994. No provision for interest has been made on such
interdivisional balances.
Property, plant and equipment: Land, building, and equipment are
capitalized at cost. Depreciation is provided on the straight-line
method over the estimated useful lives of the assets. Ordinary repair
and maintenance are expensed as incurred.
Debt: None of the indebtedness of LFC has been secured or
collateralized by the assets employed in FSD, and accordingly, there
were no debt instruments or interest costs reflected.
Cash: The only cash allocated to FSD were the nominal petty cash
balances maintained at the distribution centers.
NOTE 2 - Receivables
Receivables consist of the following (in thousands):
June 4, October 30, October 31,
1994 1993 1992
Trade $23,076 $20,112 $17,412
Other 761 1,114 440
Allowance for
doubtful accounts (1,111) (1,084) (2,798)
$22,726 $20,142 $15,054
In 1991, FSD established a $2.4 million reserve for the possible bad
debt from a major customer. Due to improved circumstances, a portion of
this reserve was reversed in 1993, resulting in an increase to net
income of $1.9 million.
NOTE 3 - Inventories
Inventories consist of the following (in thousands):
June 4, October 30, October 31,
1994 1993 1992
Resale products $22,057 $21,249 $16,988
Supplies 313 295 312
$22,370 $21,544 $17,300
NOTE 4 - Property, plant and equipment
Property, plant and equipment consist of the following (in thousands):
June 4, October 30, October 31,
1994 1993 1992
Land $ 1,519 $ 1,519 $ 1,767
Building and improvements 8,787 8,656 8,199
Machinery and equipment 9,714 9,445 9,073
Furniture and fixtures 2,308 2,321 2,123
Transportation equipment 7,050 7,516 8,476
Construction in progress 2,212 47 479
31,590 29,504 $30,117
Less - accumulated
depreciation (12,507) (11,756) (11,382)
$19,083 $17,748 $18,735
NOTE 5 - Income taxes
LFC is taxed as an S Corporation under the Internal Revenue Code. As
such, it is not directly liable for federal and, with certain
exceptions, state income taxes. Rather, LFC's income, deductions,
losses and credits pass directly through to its stockholders and such
amounts are included in their individual income tax returns. The
provision for income taxes for FSD is based upon managements' estimate
of those state income taxes applicable to FSD.
NOTE 6 - Commitments
LFC leases certain transportation equipment, distribution warehouses,
and computer equipment applicable to FSD. These leases are accounted
for as operating leases. The transportation equipment leases expire at
various times over the next one to seven years and provide for month-to-
month renewals at the end of the primary terms. The facility leases
generally contain renewal options and escalation clauses and expire over
the next three years. Minimum gross rental commitments under these
leases at October 30, 1993 are as follows (in thousands):
1994 $2,905
1995 1,620
1996 1,142
1997 901
1998 503
Thereafter 109
$7,180
Three of the FSD warehouses are leased from the Shareholder. These
leases expire in 1994. Rental expense under these leases was $516,000
in 1994, $906,000 in 1993, and $988,000 in 1992.
Aggregate rental expense under all operating leases was $1,541,000 in
1994, $2,484,000 in 1993, and $1,960,000 in 1992.
NOTE 7 - Employee benefit plans
All full-time employees who have at least one year of continuous
employment are eligible to participate in the LFC's profit sharing plan.
LFC's contribution is determined annually by its Board of Directors.
The portion of the contribution allocated to the employees supporting
FSD was $1,214,000 in 1993, and $839,000 in 1992. FSD has accrued
$510,000 in the 1994 results of operations. LFC's policy is to fund
amounts accrued. The Company may terminate this plan at any time.
LFC has a deferred compensation plan for certain key employees which
provides long-term incentives and an opportunity to participate in the
equity appreciation of LFC. Awards under the plan are based upon a
combination of measured individual performance and financial performance
of LFC. Vested benefits at the time of retirement, death, disability or
severance of employment are payable in ten annual installments at the
time of retirement. The expense for this plan associated with the
eligible employees engaged directly in FSD totaled $76,000 in 1994,
$129,000 in 1993, and $102,000 in 1992. Such amounts have not been
funded. The deferred compensation plan has specific provisions for the
sale of a division. Upon completion of the sale of FSD, the affected
key employees will no longer be participants of the plan and their
balances will be fully vested and the associated liability may be
funded. LFC has not determined the additional cost of this occurrence
but the amount is not expected to be significant.
LFC established a retirement savings plan (401(k) Plan) on January 1,
1993, under Section 401(k) of the Internal Revenue Code. Employees who
are at least 21 years old and who have completed one year of eligible
service may become "participants" in the 401(k) Plan. LFC matches 50%
of the participant's contribution to the 401(k) plan not to exceed 3% of
the participant's annual compensation or $1,500, if less. The amounts
expensed for LFC's matching contributions to the 401(k) Plan for
employees supporting FSD were $129,000 in 1994 and $173,000 for 1993.
The financial statements for the 31 weeks ended June 4, 1994 include
charges for the portion of LFC's annual budgeted expenses related to the
profit sharing plan, deferred compensation plan, 401(k) Plan and
employee bonuses applicable to this period.
In December 1990, the FASB issued Statement of Financial Accounting
Standards (FAS) No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions". There is no postretirement benefit
obligation associated with the foodservice distribution business.
In November 1992, the FASB issued FAS No. 112 "Employers' Accounting for
Postemployment Benefits". LFC does not believe that the amount of the
liability, if any, will be material.
NOTE 8 - Related party transaction
FSD purchases mozzarella cheese products from LFC. During 1994, 1993
and 1992 FSD purchased $17.9 million, $27.1 million and $30.6 million,
respectively, for resale to customers.
INTERNATIONAL MULTIFOODS CORPORATION
Introduction to Pro Forma Consolidated
Condensed Financial Information (Unaudited)
As described in Item 2, on August 22, 1994, the Company completed
the acquisition of substantially all of the assets of Leprino Foods
Company's specialty foodservice distribution business ("Leprino
Distribution Business").
As discussed in the Company's Form 8-K dated June 1, 1994, the
Company completed the divestiture of its Frozen Specialty Foods business
on June 1, 1994 and its Meats business on May 2, 1994. The divestiture
of the Frozen Specialty Foods business resulted in a net gain which will
be reported in the Company's results of operations in the quarter ended
August 31, 1994.
The following unaudited pro forma financial statements reflect the
impact of the transactions described above, in the manner described in
the accompanying notes, to the historical statement of earnings for the
three months ended May 31, 1994, the statement of operations for the
year ended February 28, 1994 and the balance sheet as of May 31, 1994.
The pro forma financial information is not intended to reflect the
results of operations or financial position of the Company which
actually would have resulted had these transactions occurred on the
assumed dates.
The pro forma financial information should be read in conjunction
with the accompanying notes which follow and the historical financial
statements of the Company included in its Annual Report on Form 10-K for
the year ended February 28, 1994 and its quarterly report on Form 10-Q
for the three months ended May 31, 1994.
International Multifoods Corporation and Subsidiaries
Pro Forma Consolidated Condensed Balance Sheet
May 31, 1994
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Pro Forma
--------------------------------------
Adjustments (a)(b)
-------------------------
Historical Divestiture Acquisition Results
<S> <C> <C> <C> <C>
Assets
Current assets:
Cash and equivalents $ 16,052 $ 0 $ 0 $ 16,052
Trade accounts receivable,
net of allowance 133,593 (9,525) 21,851 145,919
Inventories 203,266 (22,376) 22,370 203,260
Other current assets 66,443 1,190 323 67,956
Total current assets 419,354 (30,711) 44,544 433,187
Property, plant and
equipment, net 238,548 (43,598) 31,083 226,033
Goodwill 71,216 (10,977) 34,500 94,739
Other assets 55,744 (19,120) 21,092 57,716
Total assets $784,862 $(104,406) $131,219 $811,675
Liabilities and Shareholders' Equity
Current liabilities:
Notes payable $ 62,753 $(135,772) $110,000 $ 36,981
Current portion of
long-term debt 3,522 (172) 0 3,350
Accounts payable 138,446 (6,700) 16,567 148,313
Other current liabilities 80,869 22,088 4,652 107,609
Total current liabilities 285,590 (120,556) 131,219 296,253
Long-term debt, net of
current portion 188,939 0 0 188,939
Other liabilities 63,776 (13,488) 0 50,288
Total liabilities 538,305 (134,044) 131,219 535,480
Redeemable preferred stock 3,626 0 0 3,626
Shareholders' equity 242,931 29,638 0 272,569
Total liabilities and
shareholders' equity $784,862 $(104,406) $131,219 $811,675
</TABLE>
(a) The pro forma adjustments assume that the Frozen Specialty Foods
divestiture and the Leprino Distribution Business acquisition took place
on May 31, 1994. The Meats business divestiture was completed on May 2,
1994 and, accordingly, the historical balance sheet reflects the effects
of this transaction. The Frozen Specialty Foods divestiture adjustments
reflect the application of proceeds, the elimination of assets
transferred to and liabilities assumed by the buyer, and accruals for
estimated additional costs directly attributable to the divestiture. The
application of proceeds from the divestiture are assumed to reduce debt
obligations. The Leprino Distribution Business acquisition adjustments
reflect the purchase of assets and assumption of liabilities, the use of
the Frozen Specialty Foods divestiture proceeds to fund the purchase and
the recognition of goodwill and other intangible assets.
(b) Goodwill and other assets represent an estimate of the intangible
assets associated with the acquisition.
International Multifoods Corporation and Subsidiaries
Pro Forma Consolidated Condensed Statement of Earnings
Three Months Ended May 31, 1994
(Unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Pro Forma
--------------------------------------
Adjustments (a)
-------------------------
Historical Divestitures Acquisition Results
<S> <C> <C> <C> <C>
Net sales $579,730 $(58,345) $108,056 $629,441
Cost of sales (480,811) 41,942 (95,993) (534,862)
Delivery and distribution (34,553) 3,893 (6,039) (36,699)
Selling, general
and administrative (55,616) 10,989 (4,812) (49,439)
Interest, net (3,355) 1,401(b) (1,100)(c) (3,054)
Corporate (333) 0 0 (333)
Earnings (loss) before
income taxes 5,062 (120) 112 5,054
Income taxes (2,025) 130 (45) (1,940)
Net earnings $ 3,037 $ 10 $ 67 $ 3,114
Net earnings per share
of common stock $ .17 $ 0 $ 0 $ .17
Average shares of common
stock outstanding 18,107 18,107
</TABLE>
(a) The pro forma statement of earnings for the three months ended May
31, 1994 assumes that the Frozen Specialty Foods and Meats businesses
divestitures and the Leprino Distribution Business acquisition took
place on March 1, 1994. The pro forma divestitures adjustments include
the elimination of net sales and expenses of the businesses. The net
gain on the divestiture of the Frozen Specialty Foods business has not
been included. The pro forma acquisition adjustments include the net
sales and expenses of the acquired business for the three months ended
May 31, 1994, amortization of goodwill, depreciation and other
adjustments based on the allocated purchase price of net assets
acquired, and calculation of income taxes based on the Company's tax
rate. The pro forma adjustments do not include the benefits from
synergies the Company anticipates realizing in the future from the
integration of the acquired business and the Company's pizza restaurant
distribution business. The pro forma adjustments also do not include
charges the Company will report in the second quarter ended August 31,
1994 for integrating these businesses. The Company is currently in the
process of estimating the costs associated with the integration, which
will include the closing of duplicate facilities of the Company.
(b) The pro forma adjustment to reduce interest expense from the
divestitures is the result of net proceeds which were used to reduce
debt obligations. Net proceeds represent the aggregate sales price
reduced by additional costs directly attributable to the divestiture
transactions, including taxes.
(c) The acquisition pro forma adjustment results in an increase to
interest expense as a result of debt obligations incurred to fund the
purchase price.
International Multifoods Corporation and Subsidiaries
Pro Forma Consolidated Condensed Statement of Operations
Year Ended February 28, 1994
(Unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Pro Forma
--------------------------------------
Adjustments (a)
-------------------------
Historical Divestitures Acquisition Results
<S> <C> <C> <C> <C>
Net sales $2,224,710 $(259,628) $368,947 $2,334,029
Cost of sales (1,810,248) 187,036 (325,399) (1,948,611)
Delivery and distribution (141,838) 16,491 (21,293) (146,640)
Selling, general
and administrative (203,797) 46,285 (18,075) (175,587)
Unusual items (70,007) (70,007)
Interest, net (10,685) 4,290(b) (3,630)(c) (10,025)
Corporate (852) (852)
Losses from unconsolidated
affiliates (12,187) (12,187)
Earnings (loss) before
income taxes (24,904) (5,526) 550 (29,880)
Income taxes 11,466 2,376 (256) 13,586
Net earnings (loss) $ (13,438) $ (3,150) $ 294 $ (16,294)
Net earnings (loss) per
share of common stock $ (.72) $ (.17) $ .02 $ (.87)
Average shares of common
stock outstanding 18,911 18,911
</TABLE>
(a) The pro forma statement of operations for the year ended February
28, 1994 assumes that the Frozen Specialty Foods and Meats businesses
divestitures and the Leprino Distribution Business acquisition took
place on March 1, 1993. The pro forma divestitures adjustments include
the elimination of net sales and expenses of the businesses. The impact
on the net loss per share from the write-down of the Meats business net
assets was $.67 which is included in the historical statement of
operations and has not been eliminated in the pro forma results. The pro
forma acquisition adjustments include the net sales and expenses of the
acquired business for the fiscal year ended November 30, 1993,
amortization of goodwill, depreciation and other adjustments based on
the allocated purchase price of net assets acquired, and calculation of
income taxes based on the Company's tax rate. The pro forma adjustments
do not include the benefits from synergies the Company anticipates
realizing in the future from the integration of the acquired business
and the Company's pizza restaurant distribution business. The pro forma
adjustments also do not include charges the Company will report in the
second quarter ended August 31, 1994 for integrating these businesses.
The Company is currently in the process of estimating the costs
associated with the integration, which will include the closing of
duplicate facilities of the Company.
(b) The pro forma adjustment to reduce interest expense from the
divestitures is the result of net proceeds which were used to reduce
debt obligations. Net proceeds represent the aggregate sales price
reduced by additional costs directly attributable to the divestiture
transactions, including taxes.
(c) The acquisition pro forma adjustment results in an increase to
interest expense as a result of debt obligations incurred to fund the
purchase price.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
INTERNATIONAL MULTIFOODS CORPORATION
Date: October 28, 1994 By /s/ Duncan H. Cocroft
Duncan H. Cocroft
Vice President - Finance and
Chief Financial Officer
