SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended February 28, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ______ to ________
Commission File Number
1-6699
INTERNATIONAL MULTIFOODS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 41-0871880
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
33 South Sixth Street,
Minneapolis, Minnesota 55402
(Address of principal (Zip Code)
executive offices)
(612) 340-3300
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock (par value $.10 per share) New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
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 No
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 the 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. [ X ]
The aggregate market value of Common Stock, par value $.10 per share,
held by nonaffiliates of the registrant (see Item 12 hereof) as of May 1,
1995 (based on the closing sale price of $20.25 per share as reported in
the consolidated transaction reporting system on such date) was
$359,747,123.
The number of shares outstanding of the registrant's Common Stock, par
value $.10 per share, as of May 1, 1995 was 17,995,362.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Annual Report to Stockholders for the
fiscal year ended February 28, 1995 are incorporated by reference into
Parts I and II.
Portions of the registrant's Proxy Statement for the Annual Meeting of
Stockholders to be held June 16, 1995 are incorporated by reference into
Part III.
PART I
Item 1. Business.
General
International Multifoods Corporation, incorporated in Delaware in 1969
as the successor to a business founded in 1892, operates in three
businesses: foodservice distribution in the United States, bakery products
in the United States and Canada, and bakery and agricultural products in
Venezuela. Unless indicated otherwise or the context suggests otherwise,
the term "Company," as used in this Report, means International Multifoods
Corporation and its consolidated subsidiaries.
In fiscal 1995, the Company acquired the limited-menu distribution
business of Leprino Foods Company, with annualized sales of approximately
$400 million, and combined that business with the Company's Pueringer
limited-menu foodservice distribution business. In fiscal 1995, the
Company divested its Frozen Specialty Foods and Meats businesses. In
addition, in fiscal 1995, the Company announced that it is exploring the
divestiture of its surimi seafood business, which the Company anticipates
divesting in fiscal 1996.
In the fourth quarter of fiscal 1995, the Company changed its segment
reporting to the following business segments: Foodservice Distribution,
Bakery, Venezuela Foods, and Divested Businesses. Financial information
for the last three fiscal years for each of the Company's business
segments, which is included in Note 19 to the Company's Consolidated
Financial Statements on page 31 of the Company's Annual Report to
Stockholders for the fiscal year ended February 28, 1995 ("1995 Annual
Report to Stockholders"), is incorporated herein by reference.
Foodservice Distribution
The Company's Foodservice Distribution segment includes the Company's
vending distribution business; the limited-menu distribution business,
which comprises the newly acquired limited-menu distribution business of
Leprino Foods Company and the Company's former Pueringer limited-menu
foodservice distribution business; and the food exporting business. No
single customer accounts for a significant portion of the segment's sales.
Vending Distribution. The Company is the largest U.S. vending
distributor, serving approximately 14,000 vending and office coffee service
operators and other concessionaires. The Company distributes and sells
more than 8,000 food products consisting primarily of candy, snacks, hot
beverages and juices. Most of the products are nationally advertised brand
products. The Company also sells certain products, such as premium ground
and whole-bean coffee, hot cocoa, creamer and sugar, under its own private
labels, Vendor's Select and GRINDSTONE CAFE. Deliveries are made directly
to vending and office coffee service operators from 20 distribution centers
located nationwide. The frequency of deliveries varies, depending upon
customer needs, but generally deliveries are made once a week. The Company
leases a fleet of approximately 200 tractor-trailers, most of which are
equipped with an on-board computer system from which drivers obtain
delivery performance and route information. The Company also operates 18
cash-and-carry locations from which customers can make purchases.
The vending distribution business is highly competitive. While the
Company is the only nationwide vending distributor, it encounters
significant competition from regional and local distributors. Price is a
significant competitive element in the vending distribution business,
however other important competitive factors are prompt and accurate
delivery of orders, availability of a wide variety of products and customer
service.
Limited-Menu Distribution. The Company is a leading distributor in
the United States to independent pizza restaurants and other select
limited-menu operators, including sandwich shops, Mexican restaurants,
bakery shops and movie theaters. The Company distributes a broad selection
of cheeses, meats, snacks, paper goods and other products, including pizza
ingredients sold under the Company's Ultimo brand as well as major national
brands. Deliveries are made directly to customers, generally once a week,
from 12 distribution centers located strategically around the country to
provide efficient and timely delivery to customers. The distribution
centers are linked by computer network to the distribution business'
headquarters. The Company maintains a fleet of more than 200 tractor-
trailers, approximately half of which are owned and half of which are
leased by the Company.
The limited-menu distribution business is highly competitive. The
Company competes with several national and regional broadline distributors
and numerous regional specialty foodservice distributors and local
independent distributors. The Company competes on the basis of product
quality and consistency, customer service and the availability of a wide
variety of products, as well as price and prompt and accurate delivery of
orders. The Company believes that its pizza expertise, which includes
providing customers with ideas on promotions, menu planning and baking,
differentiates the Company in part from its competitors. In addition, the
Company believes that it further distinguishes itself from broadline
distributors by providing more personalized customer service.
Food Exporting. The Company markets and exports a variety of
products, including the Company's bakery products sold under the Company's
Multifoods and ROBIN HOOD brand names. Export products account for less
than 2% of the Foodservice Distribution segment's net sales.
Bakery
The Company's Bakery segment comprises bakery products for
foodservice, retail bakery, in-store bakery and wholesale bakery customers
in North America and consumer products in Canada, which include primarily
home baking products and condiments. No single customer accounts for a
significant portion of the segment's sales.
North America Bakery. The Company's North America Bakery division
produces approximately 3,000 products for foodservice, retail bakery, in-
store bakery and wholesale bakery customers in the United States and
Canada. The Company produces bakery mix products, including mixes for
breads, rolls, bagels, donuts, muffins, danish, cakes, cookies, brownies,
bars and pizza crusts, as well as fillings and icings. Bakery mix products
are marketed under the Multifoods and JAMCO brands in the United States and
under the Robin Hood brand in Canada. In addition, the Company
manufactures and markets frozen desserts under its MULTIFOODS, Gourmet
Baker and Fantasia brands. In Canada the Company also produces wheat flour
and durum and oat products. Bakery products are marketed through the
Company's own sales organization and independent distributors and brokers.
The Company encounters significant competition in the bakery products
market. The Company is the leading producer of bakery mixes in North
America and it competes with several large corporations and regional
producers of bakery mixes. With respect to frozen bakery products, the
Company competes primarily in the foodservice and in-store bakery markets
with several large corporations and numerous regional suppliers that have
select product offerings. The Company competes primarily in Canada with
respect to its commercial flour products and its competitors include both
large corporations and regional producers. The Company competes on the
basis of product quality and uniqueness, product convenience, brand
loyalty, timely delivery and customer service as well as price.
Consumer Products. The Company's consumer products division is the
leading marketer in Canada of flour and specialty baking mixes sold to
consumers. More than 40 consumer baking mixes are sold under the Company's
Robin Hood brand, while consumer flour is sold under the Company's Robin
Hood and Brodie brands. The Company also sells hot cereals under its Robin
Hood and Old Mill brands. The Company also manufactures and markets
pickles, relishes and other condiments to consumers in Canada, where its
Bick's brand is the leading brand. The Company also sells condiments under
its Habitant, Gattuso, WOODMAN'S, ROSE and MCLARENS labels. Consumer
products are marketed primarily through the Company's own sales
organization, supported by advertising and other promotional activities.
The Company competes on the basis of product quality, product convenience,
the ability to identify and satisfy emerging consumer preferences, brand
loyalty, timely delivery and customer service as well as price.
Venezuela Foods
The Company's Venezuela Foods segment includes consumer products for
home baking, bakery products for food processors and commercial and retail
bakeries, and products for the agricultural sector. The Company's consumer
products include wheat flour, corn flour, whole grain rice, rice flour and
oat cereals, which are sold to grocery stores principally under the
Company's Robin Hood, Juana, Monica, Payara and Lassie brands. The
Company's bakery products include wheat flour, which is sold under the
Company's Polar, Gran Aguante, Goldrim and Elefante brands, and prepared
bakery mixes, which are sold under the Robin Hood brand. The Company's
animal feeds are sold principally under the Company's Super-S brand to
animal producers and farm distributors. The Venezuela Foods segment's
products are marketed through the Company's own sales organization and
independent distributors and brokers.
The Company's Venezuelan subsidiary is one of the largest food
companies in Venezuela and the second-largest producer of animal feeds for
the agricultural sector. The Company is the leading producer of consumer
wheat flour, flour for commercial food processors and retail bakeries, and
bakery mixes. No single customer accounts for a significant portion of the
Venezuela Foods segment's sales. The Company competes on the basis of
quality, price, uniqueness, timely delivery and customer service.
Operations outside the United States are subject to risks inherent in
operating under different legal systems and various political and economic
environments. In Venezuela, among these risks are inflation, currency
volatility, government price and foreign exchange controls, restrictions on
the exchangeability of currency, possible limitations on foreign investment
and dividend repatriation, and changes in existing tax laws. Certain of
these risks are currently affecting results. See "Management's Discussion
and Analysis of Results of Operations and Financial Condition," which is
included on pages 12 through 15 of the 1995 Annual Report to Stockholders
and is incorporated by reference in Part II, Item 7, hereof, and Note 7 to
the Company's Consolidated Financial Statements which are incorporated by
reference in Part II, Item 8, hereof.
Divested Businesses
The Company's Divested Businesses segment consists principally of the
Company's Frozen Specialty Foods and Meats businesses which were divested
in fiscal 1995 and the surimi seafood business which the Company
anticipates divesting in fiscal 1996.
Other Information Relating to the Business of the Company
Sources of Supply and Raw Materials. The Company's vending
distribution business purchases products directly from numerous
manufacturers, processors and independent suppliers. Several of these
sources are large corporations from which the Company purchases large
quantities of brand name candy and snacks. The Company believes that
adequate alternative sources of supply for other vending products are
readily available.
The Company's limited-menu distribution business purchases products
directly from numerous manufacturers, processors and independent suppliers.
The Company's limited-menu distribution business is not dependent upon any
single supplier and alternative sources of supply are readily available.
With respect to the Company's Bakery and Venezuela Foods segments, raw
materials generally are available from numerous sources and the Company
believes that it will continue to be able to obtain adequate supplies. In
Canada, the Company minimizes risks associated with wheat market price
fluctuations by hedging its wheat and flour inventories, open wheat
purchase contracts, and open flour sales contracts with wheat futures
contracts. See Note 7 to the Company's Consolidated Financial Statements
which are incorporated by reference in Part II, Item 8, hereof.
Wheat, oats and soybeans are not grown in Venezuela and adequate
quantities of sorghum are not grown in Venezuela. However, adequate
Venezuelan wheat, oats, soybean and sorghum requirements generally are
available and procured from sources primarily in the United States and
Canada. Exchange controls implemented by the Venezuelan government during
the Company's fiscal year 1995 have not had a material impact on the
Company's ability to obtain raw materials from sources outside of
Venezuela. However, the Company cannot be certain that this condition will
continue. Generally, adequate quantities of corn and rice, which are grown
in Venezuela, are available locally. In the event of a local shortage of
corn or rice, the Company has, from time to time, purchased corn and rice
from the world market.
Trademarks and Other Intellectual Property. The Company owns numerous
trademarks, service marks and product formulae which are important to the
Company's business. The most significant trademarks and service marks are
identified above. Most of the Company's trademarks and service marks are
registered.
Seasonality. The Company does not experience material seasonal
variations in its sales volumes.
Environmental Regulation. The Company's facilities in the United
States are subject to federal, state and local environmental laws and
regulations. Compliance with these provisions has not had, and the Company
does not expect such compliance to have, any material adverse effect upon
the Company's capital expenditures, net earnings or competitive position.
The Company has received notices from the U.S. Environmental
Protection Agency and the New York State Department of Environmental
Conservation that the Company has been identified as a potentially
responsible party ("PRP") under the Comprehensive Environmental Response,
Compensation and Liability Act and may be required to share in the cost of
cleanup of two environmentally contaminated sites. The Company recognizes
that its potential exposure with respect to each of these sites may be
joint and several. However, based upon several factors such as the volume
of material contributed to the sites, the number and financial viability of
other PRP's, allocations of volumetric waste contributions to other PRP's,
remediation cost estimates and the present status of the proceedings
involving such sites, the Company has concluded that its probable aggregate
exposure in regard to such sites is not material.
Employees. As of February 28, 1995, the Company and its subsidiaries
had 7,495 employees.
Item 2. Properties.
The Company's principal executive offices are located in Minneapolis,
Minnesota in leased office space. Several of the Company's subsidiaries
also own or lease office space. The Company operates numerous processing
and distribution facilities throughout the United States, Canada and
Venezuela. The Company believes that its facilities are suitable and
adequate for current production or distribution volumes.
Foodservice Distribution
The Company owns two and leases 18 distribution centers aggregating
approximately 1.6 million square feet for its vending distribution
business. These distribution centers are located in Commerce and Fremont,
California; Denver, Colorado; East Windsor, Connecticut; Orlando, Florida;
Austell, Georgia; Woodridge, Illinois; Shawnee, Kansas; Louisville,
Kentucky; Belleville, Michigan; Minneapolis, Minnesota; Greensboro, North
Carolina; Paulsboro and Parsippany, New Jersey; Twinsburg, Ohio; Memphis,
Tennessee; Dallas and Houston, Texas; Kent, Washington; and Pewaukee,
Wisconsin.
The Company's vending distribution business also operates 18 cash-and-
carry distribution locations, 11 of which are separate from the Company's
other distribution centers.
The Company owns eight and leases four distribution centers
aggregating approximately 900,000 square feet for its limited-menu
distribution business. These distribution centers are located in Phoenix,
Arizona; Anaheim and Livermore, California; Denver, Colorado; Kissimmee,
Florida; Atlanta, Georgia; Indianapolis, Indiana; Rice, Minnesota;
Springfield, Missouri; Middletown, Pennsylvania; and Dallas and Grand
Prairie, Texas.
Bakery
The Company owns 13 and leases four processing facilities. These
processing facilities are located in La Mirada, California; Bonner Springs,
Kansas; Malden, Massachusetts; Sedalia, Missouri; Lockport, New York;
Elyria, Ohio; Burnaby, British Columbia (2); Winnipeg, Manitoba;
Burlington, Dunnville, Port Colborne, Scarborough and Simcoe, Ontario;
Montreal, Quebec (2); and Saskatoon, Saskatchewan.
The Company also operates two research and development laboratories.
Venezuela Foods
The Company owns 13 processing facilities and leases three processing
facilities. These processing facilities are located in Barcelona,
Anzoategui; Puerto Cabello (3) and Valencia, Carabobo; Calabozo, Guarico
(3); Acarigua (3) and Araure, Portuguesa; Cumana, Sucre; and Maracaibo,
Zulia (3).
The Company owns four and leases 13 warehouse facilities. In
addition, the Company leases 16 agricultural distribution centers.
The Company also operates two Company-owned hatcheries and one leased
hatchery and operates four Company-owned and six leased poultry farms.
Item 3. Legal Proceedings.
Neither the Company nor any of its subsidiaries is a party to any
legal proceeding that is material to the business or financial condition of
the Company. See the information under the heading "Other Information
Relating to the Business of the Company-Environmental Regulation" in Item 1
above for a description of environmental matters in which the Company is
involved.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of security holders of the Company
during the fourth quarter of the fiscal year ended February 28, 1995.
EXECUTIVE OFFICERS OF THE COMPANY.
The information contained in Item 10 in Part III hereof under the
heading "Executive Officers of the Company" is incorporated by reference in
Part I of this Report.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters.
The Company's Common Stock is listed on the New York Stock Exchange.
The high and low sales prices for the Company's Common Stock as reported in
the consolidated transaction reporting system and the amount of the cash
dividends paid on the Company's Common Stock for each quarterly period
within the two most recent fiscal years, shown in Note 20 to the Company's
Consolidated Financial Statements on page 32 of the Company's 1995 Annual
Report to Stockholders, are incorporated herein by reference.
As of May 1, 1995, there were 5,089 holders of record of the Common
Stock of the Company.
Item 6. Selected Financial Data.
The information for fiscal years 1991 through 1995 in the "Six-Year
Comparative Summary" on page 33 of the Company's 1995 Annual Report to
Stockholders under the headings "Consolidated Summary of Operations,"
"Year-End Financial Position" and "Dividends Paid" is incorporated herein
by reference. The information contained in Note 2 ("Businesses Acquired")
and Note 4 ("Unusual Items") to the Company's Consolidated Financial
Statements on pages 21 and 22, respectively, of the Company's 1995 Annual
Report to Stockholders is also incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
The information under the heading "Management's Discussion and
Analysis of Results of Operations and Financial Condition" on pages 12
through 15 of the Company's 1995 Annual Report to Stockholders is
incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data.
The Independent Auditors' Report, the Company's Consolidated Financial
Statements as of February 28, 1995 and February 28, 1994, and for each of
the fiscal years in the three-year period ended February 28, 1995, and the
Notes to the Company's Consolidated Financial Statements on pages 16
through 32 of the Company's 1995 Annual Report to Stockholders are
incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Registrant.
The section under the heading "Election of Directors" on pages 3
through 5 and the section entitled "Compliance with Section 16(a) of the
Exchange Act" on page 18 of the Company's Proxy Statement dated May 15,
1995 ("1995 Proxy Statement") are incorporated herein by reference.
Executive Officers of the Company
The following sets forth the name, age and business experience for at
least the past five years of each of the executive officers of the Company
as of May 1, 1995. Unless otherwise noted, the positions described are
positions with the Company or its subsidiaries.
Name Age Positions Held Period
Anthony Luiso 51 Chairman of the Board,
President and Chief
Executive Officer 1989 to
present
Frank W. Bonvino 53 Vice President,
General Counsel and
Secretary 1992 to
present
Vice President and
Associate General
Counsel 1991 to
1992
Associate General
Counsel 1986 to
1991
Duncan H. Cocroft 51 Vice President-Finance
and Chief Financial
Officer 1990 to
present
Jay I. Johnson 57 Group Vice President 1988 to
present
Robert F. Maddocks 64 Vice President-Human
Resources 1990 to
present
John E. Sampson 54 Vice President -
Corporate Planning
and Development 1992 to
present
Vice President -
Corporate Planning
and Development and
Treasurer 1990 to
1992
Vice President -
Corporate Planning
and Development 1984 to
1990
A. Harry Vis 63 Group Vice President 1993 to
present
President-Robin Hood
Multifoods Inc. 1989 to
present
The executive officers of the Company are elected annually by the
Board of Directors.
Item 11. Executive Compensation.
The section under the heading "Election of Directors" entitled
"Compensation of Directors" on pages 6 and 7 and the section entitled
"Executive Compensation" on pages 11 through 16 of the Company's 1995 Proxy
Statement are incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
The section entitled "Security Ownership of Certain Beneficial Owners
and Management" on pages 2 and 3 of the Company's 1995 Proxy Statement is
incorporated herein by reference.
For purposes of computing the market value of the Company's Common
Stock held by nonaffiliates of the Company on the cover page of this
Report, all executive officers and directors of the Company are considered
to be affiliates of the Company. This does not represent an admission by
the Company or any such person as to the affiliate status of such person.
All shares of the Company's Cumulative Redeemable Sinking Fund First
Preferred Capital Stock, Series A, C, D and E, par value $100 per share,
have been excluded from such computation of market value because such
shares are not actively traded.
Item 13. Certain Relationships and Related Transactions.
Not applicable.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K.
(a) Documents Filed as a Part of this Report
1. Financial Statements
The following consolidated financial statements of International
Multifoods Corporation and subsidiaries and the Independent Auditors'
Report thereon, included in the Company's 1995 Annual Report to
Stockholders, are incorporated by reference in Part II, Item 8, hereof:
Independent Auditors' Report
Consolidated Balance Sheets - February 28, 1995 and
February 28, 1994
Consolidated Statements of Operations - Years ended
February 28, 1995, February 28, 1994 and February 28, 1993
Consolidated Statements of Cash Flows - Years ended
February 28, 1995, February 28, 1994 and February 28, 1993
Notes to Consolidated Financial Statements
2. Financial Statement Schedules
The consolidated financial statement schedules of International
Multifoods Corporation and subsidiaries and the Independent Auditors'
Report thereon required to be filed as part of this Report are listed below
and are included at the end of this Report.
Independent Auditors' Report
Schedule II - Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable and, therefore,
have been omitted.
3. Exhibits
3.1 Restated Certificate of Incorporation of International Multifoods
Corporation, as amended to date (incorporated herein by reference
to Exhibit 3.1 to the Company's Annual Report on Form 10-K for
the fiscal year ended February 28, 1993).
3.2 Bylaws of International Multifoods Corporation, as amended to
date (incorporated herein by reference to Exhibit 3.2 to the
Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1994).
4.1 Indenture, dated as of January 1, 1990, between International
Multifoods Corporation and First Trust of New York, National
Association, successor to Morgan Guaranty Trust Company of New
York (incorporated herein by reference to Exhibit 4.1 to the
Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1993).
4.2 First Supplemental Indenture, dated as of May 29, 1992,
supplementing the Indenture, dated as of January 1, 1990, between
International Multifoods Corporation and First Trust of New York,
National Association, successor to Morgan Guaranty Trust Company
of New York (incorporated herein by reference to Exhibit 4.2 to
the Company's Annual Report on Form 10-K for the fiscal year
ended February 28, 1993).
4.3 Officers' Certificate, with exhibits thereto, establishing the
terms of the series of securities issuable under the Indenture,
dated as of January 1, 1990, as supplemented by the First
Supplemental Indenture, dated as of May 29, 1992, between
International Multifoods Corporation and First Trust of New York,
National Association, successor to Morgan Guaranty Trust Company
of New York (incorporated herein by reference to Exhibit 4.3 to
the Company's Annual Report on Form 10-K for the fiscal year
ended February 28, 1993).
4.4 Letter of Representations, dated May 29, 1992, among
International Multifoods Corporation, First Trust of New York,
National Association, successor to Morgan Guaranty Trust Company
of New York, and The Depository Trust Company (incorporated
herein by reference to Exhibit 4.4 to the Company's Annual Report
on Form 10-K for the fiscal year ended February 28, 1993).
The Company hereby agrees to furnish to the Securities and
Exchange Commission upon request copies of all other instruments
defining the rights of holders of long-term debt of International
Multifoods Corporation and its consolidated subsidiaries.
10.1 Rights Agreement, dated as of October 4, 1990, as amended as of
March 1, 1993, between International Multifoods Corporation and
Norwest Bank Minnesota, N.A., with exhibits thereto (incorporated
herein by reference to Exhibit 1 to the Company's Registration
Statement on Form 8-A dated October 11, 1990 and Exhibit 1 to
Amendment No. 1 on Form 8 dated March 1, 1993 to the Company's
Registration Statement on Form 8-A dated October 11, 1990).
10.2 Amended and Restated 1989 Stock-Based Incentive Plan of
International Multifoods Corporation (incorporated herein by
reference to Exhibit 10.1 to the Company's Quarterly Report on
Form 10-Q for the quarter ended August 31, 1993).*
10.3 1986 Stock Option Incentive Plan of International Multifoods
Corporation (incorporated herein by reference to Exhibit 4 to the
Company's Registration Statement on Form S-8 (Registration No.
33-6223)).*
10.4 1983 Stock Option Incentive Plan of International Multifoods
Corporation (incorporated herein by reference to Exhibit 4 to the
Company's Registration Statement on Form S-8 (Registration No. 2-
84236)).*
10.5 Award Agreement, dated as of August 18, 1989, as amended as of
November 16, 1990, between International Multifoods Corporation
and Anthony Luiso (incorporated herein by reference to Exhibit
10(c) to the Company's Annual Report on Form 10-K for the fiscal
year ended February 28, 1990 and Exhibit 10(b) to the Company's
Annual Report on Form 10-K for the fiscal year ended February 28,
1991).*
10.6 Irrevocable Waiver Agreement, dated as of August 17, 1989, as
amended as of November 16, 1990, between International Multifoods
Corporation and Anthony Luiso (incorporated herein by reference
to Exhibit 10(b) to the Company's Annual Report on Form 10-K for
the fiscal year ended February 28, 1990 and Exhibit 10(c) to the
Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1991).*
10.7 Non-Qualified Stock Option Agreement, dated as of March 31, 1994,
between International Multifoods Corporation and Anthony Luiso.*
10.8 Stock Option Award Agreements, dated as of November 16, 1990,
between International Multifoods Corporation and each of
Duncan H. Cocroft, Jay I. Johnson and Robert F. Maddocks
(incorporated herein by reference to Exhibits 10(d), 10(e) and
10(f), respectively, to the Company's Annual Report on Form 10-K
for the fiscal year ended February 28, 1991).*
10.9 Restricted Stock Award Agreement, dated as of December 11, 1992,
between International Multifoods Corporation and Anthony Luiso
(incorporated herein by reference to Exhibit 10.8 to the
Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1993).*
10.10 Management Incentive Plan of International Multifoods
Corporation, Amended and Restated as of September 17, 1993
(incorporated herein by reference to Exhibit 10.3 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
November 30, 1993).*
10.11 First Amendment to Management Incentive Plan of International
Multifoods Corporation, Amended and Restated as of September 17,
1993.*
10.12 Management Benefit Plan of International Multifoods Corporation,
Restated Effective September 17, 1993 (incorporated herein by
reference to Exhibit 10.4 to the Company's Quarterly Report on
Form 10-Q for the quarter ended November 30, 1993).*
10.13 Trust Agreement, dated July 30, 1987, between International
Multifoods Corporation and Bank of America NT and SA relating to
the Management Benefit Plan of International Multifoods
Corporation (incorporated herein by reference to Exhibit 10.11 to
the Company's Annual Report on Form 10-K for the fiscal year
ended February 28, 1993).*
10.14 Executive Employees' Pension Plan of Robin Hood Multifoods Inc.,
as amended to date (incorporated herein by reference to Exhibit
10.12 to the Company's Annual Report on Form 10-K for the fiscal
year ended February 28, 1994).*
10.15 Pension Trust Agreement, dated as of June 30, 1992, between Robin
Hood Multifoods Inc. and The Canada Trust Company relating to the
Executive Employees' Pension Plan of Robin Hood Multifoods Inc.
(incorporated herein by reference to Exhibit 10.13 to the
Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1994).*
10.16 Agreement, dated October 28, 1991, between International
Multifoods Corporation and A. Harry Vis regarding supplemental
pension benefits (incorporated herein by reference to Exhibit
10.14 to the Company's Annual Report on Form 10-K for the fiscal
year ended February 28, 1994).*
10.17 Compensation Deferral Plan for Executives of International
Multifoods Corporation, Amended and Restated as of September 17,
1993 (incorporated herein by reference to Exhibit 10.5 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
November 30, 1993).*
10.18 Deferred Income Capital Accumulation Plan for Executives of
International Multifoods Corporation, Amended and Restated as of
September 17, 1993 (incorporated herein by reference to Exhibit
10.6 to the Company's Quarterly Report on Form 10-Q for the
quarter ended November 30, 1993).*
10.19 Revised and Restated Employment Agreement, dated as of
September 17, 1993, between International Multifoods Corporation
and Anthony Luiso (incorporated herein by reference to Exhibit
10.1 to the Company's Quarterly Report on Form 10-Q for the
quarter ended November 30, 1993).*
10.20 Trust Agreement, dated February 25, 1991, between International
Multifoods Corporation and Bank of America NT and SA relating to
the Supplemental Retirement Benefit for Anthony Luiso
(incorporated herein by reference to Exhibit 10.14 to the
Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1993).*
10.21 Form of Revised and Restated Severance Agreement between
International Multifoods Corporation and each of the Company's
executive officers, other than Anthony Luiso (incorporated herein
by reference to Exhibit 10.2 to the Company's Quarterly Report on
Form 10-Q for the quarter ended November 30, 1993).*
10.22 Letter Agreement, dated August 31, 1994, between International
Multifoods Corporation and John E. Sampson regarding severance
arrangement.*
10.23 Form of Indemnity Agreement between International Multifoods
Corporation and each of the Company's executive officers
(incorporated herein by reference to Exhibit 10.19 to the
Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1993).*
10.24 Fee Deferral Plan for Non-Employee Directors of International
Multifoods Corporation, Amended and Restated as of September 17,
1993 (incorporated herein by reference to Exhibit 10.7 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
November 30, 1993).*
10.25 Deferred Income Capital Accumulation Plan for Directors of
International Multifoods Corporation, Amended and Restated as of
September 17, 1993 (incorporated herein by reference to Exhibit
10.8 to the Company's Quarterly Report on Form 10-Q for the
quarter ended November 30, 1993).*
10.26 Form of Indemnity Agreement between International Multifoods
Corporation and each non-employee director of the Company
(incorporated herein by reference to Exhibit 10.21 to the
Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1993).*
10.27 Asset Purchase Agreement dated November 15, 1991 between AGP,
L.P. (as the purchaser) and International Multifoods Corporation,
Multifoods Transportation, Inc., Lucan Feed Services, Inc. and
The Pickaway Grain Company (as the sellers) (incorporated herein
by reference to Exhibit 2(a) to the Company's Current Report on
Form 8-K dated December 2, 1991).
10.28 Share Purchase Agreement dated November 15, 1991 between AGP,
Inc. (as the purchaser) and Damca International Corporation and
Robin Hood Multifoods, Inc. (as the sellers) (incorporated herein
by reference to Exhibit 2(b) to the Company's Current Report on
Form 8-K dated December 2, 1991).
10.29 Stock Purchase Agreement between International Multifoods
Corporation (Seller) and Doskocil Companies Incorporated (Buyer)
dated as of March 17, 1994 (incorporated herein by reference to
Exhibit 2.1 to the Company's Current Report on Form 8-K dated
June 1, 1994).
10.30 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 (incorporated herein by
reference to Exhibit 2.1 to the Company's Current Report on Form
8-K dated August 22, 1994).
11 Computation of Earnings Per Share.
12 Computation of Ratio of Earnings to Fixed Charges.
13 1995 Annual Report to Stockholders (only those portions expressly
incorporated by reference herein shall be deemed filed with the
Securities and Exchange Commission).
21 List of significant subsidiaries of the Company.
23 Consent of KPMG Peat Marwick LLP.
27 Financial Data Schedule.
___________________
*Management contract or compensatory plan or arrangement required to be
filed as an exhibit to Form 10-K pursuant to Item 14(c) of this Report.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
February 28, 1995.
(c) See Exhibit Index and Exhibits attached to this Report.
(d) See Financial Statement Schedules included at the end of
this Report.
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.
INTERNATIONAL MULTIFOODS CORPORATION
Dated: May 12, 1995 By /s/ Anthony Luiso
Anthony Luiso
Chairman of the Board, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
/s/ Anthony Luiso Chairman of the Board, President May 12, 1995
Anthony Luiso and Chief Executive Officer
(Principal Executive Officer)
and Director
/s/ Duncan H. Cocroft Vice President - Finance May 12, 1995
Duncan H. Cocroft and Chief Financial Officer
(Principal Financial Officer)
/s/ Edgardo E. Rodriguez Vice President and May 12, 1995
Edgardo E. Rodriguez Controller
(Principal Accounting Officer)
/s/ William A. Andres Director May 12, 1995
William A. Andres
/s/ James G. Fifield Director May 12, 1995
James G. Fifield
/s/ Robert M. Price Director May 12, 1995
Robert M. Price
/s/ Nicholas L. Reding Director May 12, 1995
Nicholas L. Reding
/s/ Jack D. Rehm Director May 12, 1995
Jack D. Rehm
/s/ Lois D. Rice Director May 12, 1995
Lois D. Rice
/s/ Peter S. Willmott Director May 12, 1995
Peter S. Willmott
Independent Auditors' Report
The Board of Directors and Shareholders
International Multifoods Corporation:
Under date of April 12, 1995, we reported on the consolidated balance
sheets of International Multifoods Corporation and subsidiaries as of
February 28, 1995 and 1994 and the related consolidated statements of
operations and cash flows for each of the years in the three-year period
ended February 28, 1995, as contained in the 1995 Annual Report to
Stockholders. These consolidated financial statements and our report
thereon are incorporated by reference in the Annual Report on Form 10-K for
the fiscal year ended February 28, 1995. In connection with our audits of
the aforementioned consolidated financial statements, we also have audited
the related consolidated financial statement schedule listed in Item 14.
The consolidated financial statement schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion on the
consolidated financial statement schedule based on our audits.
In our opinion, such consolidated financial statement schedule, when
considered in relation to the basic consolidated financial statements taken
as a whole, presents fairly, in all material respects, the information set
forth therein.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Minneapolis, Minnesota
April 12, 1995
Schedule II
INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES
Valuation and Qualifying Accounts
Three years ended February 28, 1995
(in thousands)
<TABLE>
<CAPTION>
Additions
Balance at Net charges Balance
beginning to costs and at end
Description of year expenses Other Deductions of year
<S> <C> <C> <C> <C> <C>
Allowance deducted from assets
for doubtful receivables:
Year ended February 28, 1995 $5,219 $4,477 $1,190(a) $4,178(b) $6,708(c)
Year ended February 28, 1994 $5,611 $3,783 $ - $4,175(b) $5,219(c)
Year ended February 28, 1993 $5,153 $2,953 $ 91(a) $2,586(b) $5,611(c)
</TABLE>
Notes: (a) Acquired in purchase of businesses.
(b) Deductions include accounts charged off, net of recoveries, and
foreign currency translation adjustments which arise from changes
in current rates of exchange. Foreign currency translation
adjustments were $162,000, $116,000, and $90,000, in 1995, 1994,
and 1993, respectively.
(c) Classified in the balance sheets as follows:
1995 1994 1993
Trade accounts receivable $6,658 $5,187 $5,433
Miscellaneous receivables - current 50 32 178
$6,708 $5,219 $5,611
INDEX TO EXHIBITS
TO ANNUAL REPORT ON FORM 10-K OF
INTERNATIONAL MULTIFOODS CORPORATION
FOR THE FISCAL YEAR ENDED FEBRUARY 28, 1995
3.1 Restated Certificate of Incorporation of International Multifoods
Corporation, as amended to date (incorporated herein by reference
to Exhibit 3.1 to the Company's Annual Report on Form 10-K for the
fiscal year ended February 28, 1993).
3.2 Bylaws of International Multifoods Corporation, as amended to date
(incorporated herein by reference to Exhibit 3.2 to the Company's
Annual Report on Form 10-K for the fiscal year ended February 28,
1994).
4.1 Indenture, dated as of January 1, 1990, between International
Multifoods Corporation and First Trust of New York, National
Association, successor to Morgan Guaranty Trust Company of New
York (incorporated herein by reference to Exhibit 4.1 to the
Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1993).
4.2 First Supplemental Indenture, dated as of May 29, 1992,
supplementing the Indenture, dated as of January 1, 1990,
between International Multifoods Corporation and First Trust of
New York, National Association, successor to Morgan Guaranty Trust
Company of New York (incorporated herein by reference to Exhibit
4.2 to the Company's Annual Report on Form 10-K for the fiscal
year ended February 28, 1993).
4.3 Officers' Certificate, with exhibits thereto, establishing the
terms of the series of securities issuable under the Indenture,
dated as of January 1, 1990, as supplemented by the First
Supplemental Indenture, dated as of May 29, 1992, between
International Multifoods Corporation and First Trust of New York,
National Association, successor to Morgan Guaranty Trust Company
of New York (incorporated herein by reference to Exhibit 4.3 to
the Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1993).
4.4 Letter of Representations, dated May 29, 1992, among International
Multifoods Corporation, First Trust of New York, National
Association, successor to Morgan Guaranty Trust Company of New
York and The Depository Trust Company (incorporated herein by
reference to Exhibit 4.4 to the Company's Annual Report on Form
10-K for the fiscal year ended February 28, 1993).
The Company hereby agrees to furnish to the Securities and
Exchange Commission upon request copies of all other instruments
defining the rights of holders of long-term debt of International
Multifoods Corporation and its consolidated subsidiaries.
10.1 Rights Agreement, dated as of October 4, 1990, as amended as of
March 1, 1993, between International Multifoods Corporation and
Norwest Bank Minnesota, N.A., with exhibits thereto (incorporated
herein by reference to Exhibit 1 to the Company's Registration
Statement on Form 8-A dated October 11, 1990 and Exhibit 1 to
Amendment No. 1 on Form 8 dated March 1, 1993 to the Company's
Registration Statement on Form 8-A dated October 11, 1990).
10.2 Amended and Restated 1989 Stock-Based Incentive Plan of
International Multifoods Corporation (incorporated herein by
reference to Exhibit 10.1 to the Company's Quarterly Report on
Form 10-Q for the quarter ended August 31, 1993).*
10.3 1986 Stock Option Incentive Plan of International Multifoods
Corporation (incorporated herein by reference to Exhibit 4 to the
Company's Registration Statement on Form S-8 (Registration No. 33-
6223)).*
10.4 1983 Stock Option Incentive Plan of International Multifoods
Corporation (incorporated herein by reference to Exhibit 4 to the
Company's Registration Statement on Form S-8 (Registration No. 2-
84236)).*
10.5 Award Agreement, dated as of August 18, 1989, as amended as of
November 16, 1990, between International Multifoods Corporation
and Anthony Luiso (incorporated herein by reference to Exhibit
10(c) to the Company's Annual Report on Form 10-K for the fiscal
year ended February 28, 1990 and Exhibit 10(b) to the Company's
Annual Report on Form 10-K for the fiscal year ended
February 28, 1991).*
10.6 Irrevocable Waiver Agreement, dated as of August 17, 1989, as
amended as of November 16, 1990, between International Multifoods
Corporation and Anthony Luiso (incorporated herein by reference to
Exhibit 10(b) to the Company's Annual Report on Form 10-K for the
fiscal year ended February 28, 1990 and Exhibit 10(c) to the
Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1991).*
10.7 Non-Qualified Stock Option Agreement, dated as of March 31, 1994,
between International Multifoods Corporation and Anthony Luiso.*
10.8 Stock Option Award Agreements, dated as of November 16, 1990,
between International Multifoods Corporation and each of
Duncan H. Cocroft, Jay I. Johnson and Robert F. Maddocks
(incorporated herein by reference to Exhibits 10(d), 10(e) and
10(f), respectively, to the Company's Annual Report on Form 10-K
for the fiscal year ended February 28, 1991).*
10.9 Restricted Stock Award Agreement, dated as of December 11, 1992,
between International Multifoods Corporation and Anthony Luiso
(incorporated herein by reference to Exhibit 10.8 to the Company's
Annual Report on Form 10-K for the fiscal year ended February 28,
1993).*
10.10 Management Incentive Plan of International Multifoods Corporation,
Amended and Restated as of September 17, 1993 (incorporated herein
by reference to Exhibit 10.3 to the Company's Quarterly Report on
Form 10-Q for the quarter ended November 30, 1993).*
10.11 First Amendment to Management Incentive Plan of International
Multifoods Corporation, Amended and Restated as of September 17,
1993.*
10.12 Management Benefit Plan of International Multifoods Corporation,
Restated Effective September 17, 1993 (incorporated herein by
reference to Exhibit 10.4 to the Company's Quarterly Report on
Form 10-Q for the quarter ended November 30, 1993).*
10.13 Trust Agreement, dated July 30, 1987, between International
Multifoods Corporation and Bank of America NT and SA relating to
the Management Benefit Plan of International Multifoods
Corporation (incorporated herein by reference to Exhibit 10.11 to
the Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1993).*
10.14 Executive Employees' Pension Plan of Robin Hood Multifoods Inc.,
as amended to date (incorporated herein by reference to Exhibit
10.12 to the Company's Annual Report on Form 10-K for the fiscal
year ended February 28, 1994).*
10.15 Pension Trust Agreement, dated as of June 30, 1992, between Robin
Hood Multifoods Inc. and The Canada Trust Company relating to the
Executive Employees' Pension Plan of Robin Hood Multifoods Inc.
(incorporated herein by reference to Exhibit 10.13 to the
Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1994).*
10.16 Agreement, dated October 28, 1991, between International
Multifoods Corporation and A. Harry Vis regarding supplemental
pension benefits (incorporated herein by reference to Exhibit 10.7
to the Company's Annual Report on Form 10-K for the fiscal year
ended February 28, 1994).*
10.17 Compensation Deferral Plan for Executives of International
Multifoods Corporation, Amended and Restated as of
September 17, 1993 (incorporated herein by reference to Exhibit
10.5 to the Company's Quarterly Report on Form 10-Q for the
quarter ended November 30, 1993).*
10.18 Deferred Income Capital Accumulation Plan for Executives of
International Multifoods Corporation, Amended and Restated as of
September 17, 1993 (incorporated herein by reference to Exhibit
10.6 to the Company's Quarterly Report on Form 10-Q for the
quarter ended November 30, 1993).*
10.19 Revised and Restated Employment Agreement, dated as of
September 17, 1993, between International Multifoods Corporation
and Anthony Luiso (incorporated herein by reference to Exhibit
10.1 to the Company's Quarterly Report on Form 10-Q for the
quarter ended November 30, 1993).*
10.20 Trust Agreement, dated February 25, 1991, between International
Multifoods Corporation and Bank of America NT and SA relating to
the Supplemental Retirement Benefit for Anthony Luiso
(incorporated herein by reference to Exhibit 10.14 to the
Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1993).*
10.21 Form of Revised and Restated Severance Agreement between
International Multifoods Corporation and each of the Company's
executive officers, other than Anthony Luiso (incorporated herein
by reference to Exhibit 10.2 to the Company's Quarterly Report on
Form 10-Q for the quarter ended November 30, 1993).*
10.22 Letter Agreement, dated August 31, 1994, between International
Multifoods Corporation and John E. Sampson regarding severance
arrangement.*
10.23 Form of Indemnity Agreement between International Multifoods
Corporation and each of the Company's executive officers
(incorporated herein by reference to Exhibit 10.19 to the
Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1993).*
10.24 Fee Deferral Plan for Non-Employee Directors of International
Multifoods Corporation, Amended and Restated as of
September 17, 1993 (incorporated herein by reference to Exhibit
10.7 to the Company's Quarterly Report on Form 10-Q for the
quarter ended November 30, 1993).*
10.25 Deferred Income Capital Accumulation Plan for Directors of
International Multifoods Corporation, Amended and Restated as of
September 17, 1993 (incorporated herein by reference to Exhibit
10.8 to the Company's Quarterly Report on Form 10-Q for the
quarter ended November 30, 1993).*
10.26 Form of Indemnity Agreement between International Multifoods
Corporation and each non-employee director of the Company
(incorporated herein by reference to Exhibit 10.21 to the
Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1993).*
10.27 Asset Purchase Agreement dated November 15, 1991 between AGP, L.P.
(as the purchaser) and International Multifoods Corporation,
Multifoods Transportation, Inc., Lucan Feed Services, Inc. and The
Pickaway Grain Company (as the sellers) (incorporated herein by
reference to Exhibit 2(a) to the Company's Current Report on Form
8-K dated December 2, 1991).
10.28 Share Purchase Agreement dated November 15, 1991 between AGP, Inc.
(as the purchaser) and Damca International Corporation and Robin
Hood Multifoods, Inc. (as the sellers) (incorporated herein by
reference to Exhibit 2(b) to the Company's Current Report on Form
8-K dated December 2, 1991).
10.29 Stock Purchase Agreement between International Multifoods
Corporation (Seller) and Doskocil Companies Incorporated (Buyer)
dated as of March 17, 1994 (incorporated herein by reference to
Exhibit 2.1 to the Company's Current Report on Form 8-K dated
June 1, 1994).
10.30 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 (incorporated herein by
reference to Exhibit 2.1 to the Company's Current Report on Form
8-K dated August 22, 1994).
11 Computation of Earnings Per Share.
12 Computation of Ratio of Earnings to Fixed Charges.
13 1995 Annual Report to Stockholders (only those portions expressly
incorporated by reference herein shall be deemed filed with the
Securities and Exchange Commission).
21 List of significant subsidiaries of the Company.
23 Consent of KPMG Peat Marwick LLP.
27 Financial Data Schedule.
_
*Management contract or compensatory plan or arrangement required to be
filed as an exhibit to Form 10-K pursuant to Item 14(c) of this Report.
Exhibit 10.7
INTERNATIONAL MULTIFOODS CORPORATION
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, dated as of March 31, 1994, is entered into between
International Multifoods Corporation, a Delaware corporation (the
"Company") and Anthony Luiso, Chairman of the Board, Chief Executive
Officer and President of the Company ("Participant").
The Company, pursuant to its Amended and Restated 1989 Stock-Based
Incentive Plan (the "Plan"), wishes to provide opportunities for stock
ownership by Participant which will increase Participant's proprietary
interest in the Company and, consequently, Participant's identification
with the interests of stockholders of the Company by granting to
Participant stock options to purchase Common Stock of the Company, par
value $.10 per share (the "Common Stock"), on the terms and conditions
contained in this Agreement and the Plan.
Accordingly, in consideration of the premises and the agreements set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby
agree as follows:
1. Irrevocable Waiver of Bonus
Participant hereby irrevocably waives $100,000 of any cash bonus
which may be awarded to Participant under the Management Incentive Plan of
the Company or any other cash bonus plan of the Company for the Company's
fiscal year ending February 28, 1995.
2. Grant of Options
The Company, effective as of the date of this Agreement, hereby
grants to Participant, the right and option to purchase all or any part of
an aggregate of 20,513 shares of Common Stock (the "Shares") at the price
of $16.875 per share on the terms and conditions set forth in this
Agreement (the "Options"). The Options are not intended to be incentive
stock options within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended.
3. Vesting, Exercisability and Term of Options
(a) The Options shall vest on the date on which a cash bonus, if any,
is awarded to Participant under the Management Incentive Plan of the
Company or any other cash bonus plan of the Company for the Company's
fiscal year ending February 28, 1995 (the "Vesting Date"); provided,
however, in the event that the amount of the bonus awarded to Participant
under the Management Incentive Plan of the Company or any other cash bonus
plan of the Company for the Company's fiscal year ending February 28, 1995
is less than $100,000, the number of Options that shall vest shall be
equal to 20,513 multiplied by a fraction of which (i) the numerator shall
be the amount of the bonus awarded and (ii) the denominator shall be
$100,000, and the remaining Options that do not vest shall be forfeited at
such time.
(b) Any Options that vest pursuant to Section 3(a) hereof may be
exercised, in whole or in part, at any time, or from time to time, on or
after the Vesting Date and on or before the close of business on March 30,
2004 or such shorter period as is prescribed herein.
(c) Notwithstanding the provisions of Sections 3(a) and 3(b) above,
but subject to the other terms and conditions set forth herein, upon the
occurrence of a Designated Event (as defined in Part I of the Plan) prior
to the Vesting Date, Participant may make a payment to the Company of
$4.875 for each Option and upon such payment to the Company by Participant
each Option purchased shall become immediately vested as of the date of
the payment. Each Option that vests pursuant to this Section 3(c) may be
exercised, in whole or in part, at any time, or from time to time, on or
after the date the Option vests pursuant to this Section 3(c) and on or
before the close of business on March 30, 2004 or such shorter period as
prescribed herein.
4. Effect of Termination of Employment
(a) If Participant's employment is terminated for any reason
(including, without limitation, disability, death or voluntary
termination) other than Cause (as defined in Section 4(b) of the Revised
and Restated Employment Agreement, dated as of September 17, 1993, by and
between the Company and Participant), Participant or his legal
representatives may exercise the Options at any time within five years
after such termination, but not after the expiration of the term of the
Options, to the extent that the Options were exercisable by Participant on
the date of such termination of employment.
(b) If Participant's employment is terminated for Cause (as defined
in Section 4(b) of the Revised and Restated Employment Agreement, dated as
of September 17, 1993, by and between the Company and Participant),
Participant or his legal representatives may exercise the Options at any
time within one year after such termination, but not after the expiration
of the term of the Options, to the extent that the Options were
exercisable by Participant on the date of such termination of employment.
5. Method of Exercising Options
(a) Subject to the terms and conditions of this Agreement, the
Options may be exercised by written notice to the Company, to the
attention of the Secretary. Such notice shall state the election to
exercise the Options, the number of Shares as to which the Options are
being exercised and the manner of payment and shall be signed by the
person or persons so exercising the Options. The notice shall be
accompanied by payment in full of the exercise price for all Shares
designated in the notice. To the extent that the Options are exercised
after Participant's death, the notice of exercise shall also be
accompanied by appropriate proof of the right of such person or persons to
exercise the Options.
(b) Payment of the exercise price shall be made to the Company
through one or a combination of the following methods:
(i) delivery of a check payable to the Company or cash, in
United States currency; or
(ii) delivery of previously acquired shares of Common Stock
having a Fair Market Value on the date of exercise equal to the
exercise price of the Options. Participant shall duly endorse all
certificates delivered to the Company in blank and shall represent
and warrant in writing that Participant is the owner of the shares
so delivered, free and clear of all liens, encumbrances, security
interests and restrictions.
6. Adjustments
In the event of a reorganization, recapitalization, stock split,
stock dividend, combination of shares, merger, consolidation, distribution
of assets, or any other changes in the corporate structure or stock of the
Company, the Committee shall make such adjustments as it deems appropriate
in the number and kind of shares covered by the Options and in the
exercise price of the Options.
7. Income Tax Withholding
In order to provide the Company with the opportunity to claim the
benefit of any income tax deduction which may be available to it upon the
exercise of the Options, and in order to comply with all applicable
federal or state income tax laws or regulations, the Company may take such
action as it deems appropriate to ensure that all applicable federal or
state payroll, withholding, income or other taxes, which are the sole and
absolute responsibility of Participant, are withheld or collected from
Participant. Participant may, at Participant's election (the "Tax
Election"), satisfy applicable tax withholding obligations by (a) electing
to have the Company withhold a portion of the Shares of Common Stock
otherwise to be delivered upon exercise of the Options having a Fair
Market Value equal to the amount of such taxes or (b) delivering to the
Company shares of Common Stock having a Fair Market Value equal to the
amount of such taxes. The Tax Election must be made on or before the date
that the amount of tax to be withheld is determined; provided that if
Participant is subject to the reporting requirements of Section 16(a) of
the Securities Exchange Act of 1934, as amended, (i) the Tax Election may
not be made within six months of the date of grant of the Options (except
that this limitation does not apply in the event of death or disability of
Participant during such six-month period), (ii) the Tax Election is made
either at least six months prior to the date as of which the amount of tax
to be withheld is determined or during the ten-day period beginning on the
third business day and ending on the twelfth business day following the
date of public release of the quarterly or annual financial results of the
Company, (iii) the Tax Election is in writing and is irrevocable and (iv)
the Tax Election shall be approved or disapproved by the Committee.
8. Taxation
This Agreement is entered into based upon the understanding of the
Company and Participant that (a) the grant of the Options is not subject
to federal or state income tax and (b) that the cash bonus irrevocably
waived by Participant hereunder will not be taxable income to Participant.
The Company and Participant agree to report the grant of the Options and
the waiver of the cash bonus in a manner consistent with such mutual
understanding. In the event that the Internal Revenue Service challenges
such tax treatment of the grant of the Options or of the waiver, the
Company will select and provide counsel, at its expense, to defend the
Company's and Participant's position with respect to the appropriate tax
treatment of the grant of the Options and the waiver. The Company agrees
to hold Participant harmless from and against any federal or state income
taxes and interest and penalties thereon that may be incurred by
Participant as a result of a successful challenge by the Internal Revenue
Service to the position taken by the Company and Participant regarding the
grant of the Options or the waiver, provided, however, that any such
indemnity payments shall be net of any federal or state income tax savings
to Participant calculated at Participant's tax rate for the calendar year
of the grant of the Options or the waiver, whichever is applicable, by
reason of basis adjustments, deductions, credits or other tax benefits
realized or to be realized by Participant.
9. General
(a) Nothing in this Agreement or the Plan shall confer upon
Participant any right with respect to continuance of employment by the
Company, nor shall this Agreement or the Plan interfere in any way with
the right of the Company to terminate the employment of Participant at any
time.
(b) It is the intention of the Company and Participant that the
amount of cash bonus waived pursuant to Section 1 hereof shall not be
taken into account for purposes of determining the benefits to which
Participant would be entitled under any employee benefit plan or other
arrangement of the Company in the absence of such waiver. The Company
agrees to make supplemental payments to Participant to the extent
necessary to compensate him for any reduction in such benefits arising
from such waiver.
(c) Neither Participant nor Participant's legal representatives shall
have any of the rights and privileges of a stockholder of the Company with
respect to the Shares of Common Stock subject to the Options unless and
until certificates for such Shares shall have been issued upon exercise of
the Options.
(d) The Options shall not be transferable other than by will or by
the laws of descent and distribution. During Participant's lifetime the
Options shall be exercisable only by Participant.
(e) The Company shall not be required, upon the exercise of the
Options, to issue or deliver any Shares until the requirements of any
federal or state securities laws, rules or regulations or other laws or
rules (including the rules of the New York Stock Exchange) as may be
determined by the Company to be applicable are satisfied.
(f) The Company shall at all times during the term of the Options
reserve and keep available such number of shares of Common Stock as will
be sufficient to satisfy the requirements of this Agreement.
(g) This Agreement is subject to the terms of Part I of the Plan.
Terms used herein which are defined in Part I of the Plan shall have the
respective meanings ascribed to such terms in Part I of the Plan, unless
otherwise defined herein. A copy of the Plan is attached hereto and made
a part hereof as Exhibit A. Participant hereby acknowledges receipt of a
copy of the Plan.
(h) This Agreement shall be governed by and construed under the
internal laws of the State of Delaware, without giving effect to the
conflicts of laws principles thereof.
IN WITNESS WHEREOF, the Company and Participant have executed this
Agreement as of the day and year first above written.
Attest: INTERNATIONAL MULTIFOODS CORPORATION
/s/ Frank W. Bonvino By /s/ Robert F. Maddocks
Secretary Robert F. Maddocks
Vice President - Human Resources
PARTICIPANT
/s/ Anthony Luiso
Anthony Luiso
6
Exhibit 10.11
FIRST AMENDMENT TO
MANAGEMENT INCENTIVE PLAN
OF
INTERNATIONAL MULTIFOODS CORPORATION
Amended and Restated as of September 17, 1993
Section 1 is hereby amended to include the following definition,
after the definition of "Participant" in Section 1:
"Restricted Stock" means shares of common stock, par value
$.10 per share, of Multifoods in which a Bonus Award may be payable, in whole
or in part, pursuant to Section 5 hereof, and which shall be issuable
pursuant to, and subject to the terms and conditions of, Part I of the
Amended and Restated 1989 Stock-Based Incentive Plan of International
Multifoods Corporation or such other plan of Multifoods which authorizes the
issuance of restricted stock.
Section 5 is hereby amended to read in its entirety as follows:
Section 5. Payment of Bonus Awards
All Bonus Awards shall be payable in cash or in Restricted
Stock, or both, as determined in the sole discretion of the Committee, and
the amount of all Bonus Awards paid shall be charged to the Incentive
Compensation Accrual.
Exhibit 10.22
[Multifoods Letterhead]
STRICTLY PERSONAL
August 31, 1994
Mr. John E. Sampson
Vice President - Corporate Planning and Development
Dear John:
This will confirm the verbal discussions you and Tony Luiso and I have
had regarding your continued employment with Multifoods. Please
interpret this letter as a letter of understanding rather than a
commitment since it needs to be reviewed by Tony when he returns from
vacation.
Your position as of September 16, 1994, will be Vice President, Corporate
Planning and Development, reporting directly to Tony Luiso. In this
reporting capacity, you will have the corporate responsibility for
strategic planning, including merger and acquisition activity. You will
also have the responsibility for the investment banking relationships
relating to the M & A activity. In this regard, however, since we are
trying to foster a strong team atmosphere, it is important to understand
that while you have the primary relationship with the investment bankers,
other corporate officers such as Frank Bonvino, Duncan Cocroft and myself
will also need to be appropriately involved in discussions with the
investment bankers.
You asked for a second clarification on the level of involvement you will
have in quarterly reviews, board meetings, etc. It will obviously be at
the same level as Frank, Duncan and myself. Tony wants the key officers
involved in quarterly reviews; however, it is important that
participation from the corporate staff be kept at a reasonable level and
all corporate officers cannot attend all quarterly reviews. Dennis Brown
will continue to report to you and will maintain his responsibility for
Purchasing and Transportation. This function will be under your
direction and will be transferred from Jay Johnson concurrent with the
announcement on September 16.
As appropriate, you will also have access to Kim Erickson and/or Tony
Brausen who we agreed should have some exposure to the planning
activities of the corporation.
As a senior corporate officer reporting to Tony, your bonus entitlement
at target level will be 50% with a threshold at 15% and a maximum of 70%.
Your compensation is under review and while you are paid high in the
range based on market data, we will propose an increase to the
Compensation Committee at the September or December meeting. We will
also propose stock option grants to the committee in September or
December at the same level which would be granted to other executive
officers. John, you should be aware, however, that no executive officer
this year has received a salary increase or a stock option grant.
Since we were prepared to provide one year's compensation and a
transition period to age 55 as of August 1, 1994, we will maintain this
commitment for a 24-month period with a 3-month notification period on
your part. We expect, however, that under normal operating circumstances
this would not be an election that you would make. However, it is being
maintained since we were prepared to offer this arrangement to you at
this time and it represents no additional cost to the company.
Finally, we know you have made commitments to other clients under the
assumption you were leaving Multifoods and we understand that you must
complete these commitments which would require no more than two or three
days a month. We support this, however, only under the condition that
there is no conflict of interest.
The above is meant to provide clarification to the question you raised as
to your status in the position reporting directly to Tony. While I have
discussed some aspects of this arrangement with Tony, there are other
aspects to confirm; and I understand you will have this discussion with
Tony on Tuesday morning, September 6.
I believe the above represents all the items which we discussed.
Sincerely,
/s/ Robert F. Maddocks
Robert F. Maddocks
Vice President, Human Resources
RFD:rg
cc: A. Luiso
INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES
Schedule of Computation of Earnings (Loss) Per Common Share
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Years Ended
February 28, February 28, February 28, February 29, February 28,
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Average shares of common
stock outstanding 17,974,156 18,910,748 19,281,578 19,493,251 19,363,947
Common stock equivalents 17,446 104,338 245,973 386,992 534,006
Total common stock and equivalents
assuming full dilution 17,991,602 19,015,086 19,527,551 19,880,243 19,897,953
Earnings (loss) before cumulative
effect of accounting change $57,021 $(13,438) $41,210 $ 39,100 $35,161
Less dividends on preferred stock 167 174 180 184 188
Earnings (loss) before cumulative effect
of accounting change applicable
to common stock $56,854 $(13,612) $41,030 $ 38,916 $34,973
Cumulative effect of accounting
change, net of taxes $ - $ - $ - $(17,133) $ -
Earnings (loss) per share of common stock:
Primary
Before cumulative effect of
accounting change $ 3.16 $ (.72) $ 2.13 $ 2.00 $ 1.81
Cumulative effect of accounting
change, net of taxes - - - (.88) -
$ 3.16 $ (.72) $ 2.13 $ 1.12 $ 1.81
Fully diluted
Before cumulative effect of
accounting change $ 3.16 $ (.72) $ 2.10 $ 1.96 $ 1.76
Cumulative effect of accounting
change, net of taxes - - - (.86) -
$ 3.16 $ (.72) $ 2.10 $ 1.10 $ 1.76
</TABLE>
Primary earnings (loss) per share have been computed by dividing
net earnings (loss), after deduction of preferred stock dividends,
by the weighted average number of shares of common stock outstanding
during the year. Common stock options and other common stock equivalents
have not entered into the primary earnings per share computations since
their effect is not significant.
Fully diluted earnings (loss) per share have been computed assuming
issuance of all shares for stock options deemed to be common stock
equivalents, using the treasury stock method.
Exhibit 12
INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES
Computation of Ratio of Earnings to Fixed Charges
(dollars in thousands)
<TABLE>
<CAPTION>
Years Ended
February 28, February 28, February 28, February 29, February 28,
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Earnings (loss) before income taxes and
cumulative effect of accounting change (1) $71,739 $(12,717) $64,331 $ 69,477 $66,227
Plus: Fixed charges (2) 25,490 22,604 24,550 32,228 34,681
Less: Capitalized interest (317) (746) (1,144) (1,294) (2,132)
Earnings available to cover fixed charges $96,912 $ 9,141 $87,737 $100,411 $98,776
Ratio of earnings to fixed charges (3) 3.80 .40 3.57 3.12 2.85
</TABLE>
(1) Earnings (loss) before income taxes have been adjusted to reflect income
received (but not undistributed amounts) from less-than-fifty-percent-
owned persons. Earnings (loss) before income taxes have also been
adjusted to exclude losses from less-than-fifty-percent-owned persons.
(2) Fixed charges consist of the following:
<TABLE>
<CAPTION>
Years Ended
February 28, February 28, February 28, February 29, February 28,
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Interest expense, gross $16,287 $13,181 $14,592 $21,573 $24,459
Rentals (1/3) 9,203 9,423 9,958 10,655 10,222
Total $25,490 $22,604 $24,550 $32,228 $34,681
</TABLE>
(3) For the year ended February 28, 1994, earnings were inadequate to cover
fixed charges. The resulting deficiency was $13,463 for fiscal 1994.
The deficiency was the result of unusual items which are described in
Note 4 to the consolidated financial statements. Exclusive of these
unusual items, the ratio of earnings to fixed charges would have been
3.50 for the year ended February 28, 1994.
Management's Discussion and Analysis of Results of Operations
and Financial Condition
Results of Operations
Overview
Fiscal 1995 net earnings were $57 million, or $3.16 per share, compared
with a net loss of $13.4 million, or $.72 per share, in fiscal 1994.
Exclusive of unusual items, fiscal 1995 net earnings were $28 million, or
$1.55 per share, compared with $35.5 million, or $1.86 per share a year
ago. Fiscal 1993 net earnings were $41.2 million, or $2.13 per share.
Unusual items in fiscal 1995 resulted in a net benefit of $29 million
after tax, or $1.61 per share. Included in unusual items was a gain from
the divestiture of the Company's Frozen Specialty Foods business, a charge
for the integration of two of the Company's limited-menu foodservice
distribution businesses, a benefit with respect to a tax settlement and a
benefit from adjustments related to previously divested businesses. The
integration of the limited-menu foodservice distribution business of
Leprino Foods Company, acquired by the Company in fiscal 1995, with the
former Pueringer limited-menu foodservice distribution unit is expected to
provide pre-tax benefits of up to $3 million in fiscal 1996 and $6 million
in fiscal 1997. Unusual items in fiscal 1994 reduced after-tax earnings
by $48.9 million, or $2.58 per share. Included in fiscal 1994 unusual
items were the disposition of certain underperforming assets and an
investment in an unconsolidated affiliate, the write-downs of certain
assets and the reorganization of remaining operations. Reorganization
activities included the consolidation and closing of certain facilities,
plant rationalization and organizational changes.
Segment Results
The Company has redefined its business segments and adopted a revised
allocation process that provides that corporate general and administrative
costs are reflected as corporate expenses unless such costs are associated
with a business segment. The three continuing business segments are
Foodservice Distribution, Bakery and Venezuela Foods. In addition, the
Company has defined as Divested Businesses its Frozen Specialty Foods and
Meats businesses, which were sold in fiscal 1995, and its surimi seafood
business, which the Company anticipates divesting in fiscal 1996.
Previously reported segment financial information has been reclassified to
conform with the fiscal 1995 presentation. A description of the business
segments along with segment net sales and operating results are included
in Note 19 to the consolidated financial statements.
Net Sales from Continuing Businesses
[Graphic Material Omitted]
(in billions) 1993 1994 1995
Foodservice Distribution $1.10 $1.11 $1.39
Bakery .43 .44 .46
Venezuela Foods .25 .27 .32
Total Continuing Businesses $1.78 $1.82 $2.17
Operating Earnings from Continuing Businesses*
[Graphic Material Omitted]
1995
Foodservice Distribution 29%
Bakery 38%
Venezuela Foods 33%
*Before unusual items
Fiscal 1995 compared with fiscal 1994. Net sales from continuing
businesses increased 19% to $2.17 billion. Exclusive of acquisitions,
sales from continuing businesses increased 5%. Consolidated net sales
increased 6% to $2.3 billion. Consolidated operating earnings before
unusual items declined 11% to $60.3 million from $67.8 million in fiscal
1994. As a result of unusual items, consolidated operating earnings were
$86.5 million in fiscal 1995 as compared to an operating loss of $2.2
million in fiscal 1994.
Foodservice Distribution sales increased 26% to $1.4 billion.
Excluding the effect of acquisitions, net sales increased 3% primarily on
higher volumes from the former Pueringer limited-menu foodservice
distribution unit (Pueringer). Operating earnings before unusual items
declined 2% to $17.5 million compared with $17.8 million in fiscal 1994.
A significant decrease in vending distribution earnings resulted primarily
from costs associated with delays in the implementation timetable of a
business information system. Vending distribution will continue to
experience added costs in fiscal 1996 as the system is rolled out to
distribution centers. Fiscal 1995 operating earnings benefited from the
earnings of the acquired Leprino distribution business and improved
earnings from Pueringer as a result of the higher volumes. Fiscal 1995
unusual items of $6.2 million were for costs associated with the
integration of the limited-menu distribution businesses and fiscal 1994
unusual charges of $9.1 million were for organizational changes in vending
distribution.
Bakery sales increased 4% to $459.2 million principally as a result
of higher volumes in frozen bakery products, bakery flour and consumer
flour, partially offset by a 3% impact from a decline in the average
Canadian exchange rate. Operating earnings before unusual items increased
15% to $22.4 million compared with $19.5 million in fiscal 1994. The
increase in operating earnings was primarily the result of the benefits
from the reorganization of operations and improved volumes. The earnings
improvement was partially offset by the unfavorable Canadian exchange rate
and costs related to the introduction of consumer salsa products in Canada
and consumer condiments in the southern United States. Unusual items of
$29.4 million in fiscal 1994 consisted of the closing and downsizing of
certain facilities and organizational changes, including streamlining
Canadian administrative functions.
Venezuela Foods sales increased 19% to $317.7 million primarily on
volume increases in bakery, consumer and agricultural products. Higher
volumes in bakery products resulted from increased market shares and
additional business obtained in connection with the lease of two wheat
flour mills beginning in October 1994. Improved volumes in consumer
products were primarily the result of increased demand for grain-based
products and the impact of the acquisition of a corn flour business in May
1994. Higher volumes in agricultural products were primarily attributable
to an increase in feed market share. Operating earnings declined 18% to
$19.9 million, compared with $24.3 million in fiscal 1994. The earnings
decline was primarily the result of difficult economic conditions
including rising inflation, which resulted in the change to the U.S.
dollar as the functional currency for translation purposes in the fourth
quarter of fiscal 1994. These unfavorable impacts were partially offset
by the effects of higher volumes and the near-term stability from
government-imposed foreign exchange controls, described below.
In June 1994, the Venezuelan government implemented price controls,
which affect most of the Venezuelan operations' products, and a foreign
exchange control system. The government generally has allowed reasonable
price increases for most of the Company's products; however, there can be
no assurance that the Company will continue to be able to obtain
reasonable price increases. In connection with the implementation of
exchange and price controls, the government has announced that sufficient
U.S. dollars will be made available at the controlled exchange rate for
basic food imports, which include the Company's raw material needs. The
government has allowed the exchange of Venezuelan bolivars to U.S. dollars
for payments by the Company for raw material imports. However, the
Company has experienced delays in obtaining U.S. dollars for such import
transactions.
As of February 28, 1995, net monetary liabilities of the Company's
Venezuelan operations totaled the U.S.-dollar equivalent of $14 million.
The Company anticipates that its Venezuelan operations will generally be
in a net monetary asset position during fiscal 1996. Since June 1994, the
Venezuelan government has established the exchange rate at 170 bolivars
per dollar and has stated that exchange controls are temporary. However,
the Company is unable to determine the extent and timing of any changes in
the exchange controls and the potential impact on the exchange rate. If
the bolivar were to decline in value versus the U.S. dollar and the
Company was in a net monetary asset position, there would be foreign
exchange losses, the amount of which will depend upon the size of the net
monetary asset position and magnitude of the currency devaluation. In
addition, the Company may be unable to immediately increase selling prices
to maintain then-current gross profit margins. At the present time,
strategies for the management of currency risks consist of working capital
management techniques and product pricing strategies.
The Venezuelan government announced that companies intending to
repatriate dividends in U.S. dollars must obtain government approval. It
is unclear whether there will be limits imposed on such dividend
repatriations.
Divested businesses sales were $122.3 million in fiscal 1995 as
compared with $340 million in fiscal 1994. Operating earnings before
unusual items declined to $11.9 million compared with $18.5 million in
fiscal 1994. Sales and earnings declined as a result of the fiscal 1995
divestitures of the Frozen Specialty Foods and Meats businesses. Earnings
of the surimi seafood business, which the Company anticipates divesting in
fiscal 1996, were even with the year earlier. Unusual items of $34.2
million in fiscal 1995 were primarily from the gain on the divestiture of
the Frozen Specialty Foods business. Unusual items totaling $30.7 million
in fiscal 1994 included the write-down of the Company's Meats business net
assets to net realizable value and the loss on the sale of a regional
bakery distribution business.
Fiscal 1994 compared with fiscal 1993. Sales from continuing businesses
increased 2% to $1.82 billion while consolidated net sales declined 2% to
$2.16 billion. Consolidated operating earnings before unusual items
declined 10% to $67.8 million from $75.1 million in fiscal 1993. The
fiscal 1994 operating loss of $2.2 million was the result of $70 million of
unusual items.
Foodservice Distribution sales were $1.11 billion in fiscal 1994, up
slightly compared with fiscal 1993. Sales were impacted by the volume loss
of a major vending distribution customer which contributed to an overall
decline in sales and unit volume in vending distribution. Sales improved
on higher volumes from the Company's former Pueringer unit. Foodservice
Distribution operating earnings before unusual items declined 36% to $17.8
million compared with $28 million in fiscal 1993. The earnings decline
resulted from a significant decrease in vending distribution earnings,
which experienced lower sales and also lower gross margins resulting from
pricing pressures in a very competitive marketplace. Unusual items
totaling $9.1 million in Foodservice Distribution were primarily for
organizational changes in vending distribution.
Bakery sales increased 3% to $440.3 million principally as a result of
higher volumes in bakery mix, partially offset by a 4% impact from a
decline in the average Canadian exchange rate. Operating earnings before
unusual items declined 20% to $19.5 million compared to $24.5 million in
fiscal 1993. Operating earnings were impacted by lower margins in both
bakery and consumer products, which resulted from higher wheat costs and
competitive pricing pressures, and the unfavorable Canadian exchange rate.
Unusual items totaling $29.4 million in fiscal 1994 consisted of the
closing and consolidation of certain facilities and organizational changes,
including streamlining Canadian administration functions.
Venezuela Foods sales increased 7% to $267.8 million on volume
increases in consumer and agricultural product lines. Operating earnings
declined 5% to $24.3 million from the effects of rising inflation, which
resulted in the fiscal 1994 fourth quarter change to the U.S. dollar as the
functional currency for translation purposes, higher wheat costs and
competitive pricing pressures in animal feed products.
Divested businesses sales declined from $420.1 million to $340 million
as a result of the fiscal 1994 divestiture of a regional bakery
distribution business. Operating earnings before unusual items increased
from $9.9 million to $18.5 million on improved surimi seafood results which
benefited from more favorable raw material costs and higher volumes.
Unusual items totaling $30.7 million in fiscal 1994 included the write-down
of the Company's Meats business net assets to net realizable value and the
loss on the sale of the regional bakery distribution business.
Non-operating Expense and Income
In fiscal 1995, net interest expense increased from $10.7 million to $12.1
million primarily as a result of higher interest rates in the United States
and Canada, partially offset by higher interest income in Venezuela.
Increased interest income in Venezuela was the result of the temporary
build-up of local currency cash and equivalents which resulted from delays
in obtaining U.S. dollars to settle certain U.S. dollar-denominated
obligations as described above. The Company also recognized foreign
exchange losses of $2.7 million in fiscal 1995 from the Venezuelan local
currency cash and equivalents.
In fiscal 1994, interest expense declined from $11.8 million to $10.7
million, principally as a result of lower interest rates in the United
States and Canada and higher interest income in Venezuela.
In fiscal 1994, losses from unconsolidated affiliates were $12.2
million compared to earnings of $1.8 million in fiscal 1993. The fiscal
1994 loss included $12.5 million associated with the write-down of the
Company's investment in a Mexican animal feed affiliate and loss on
disposition of the Company's investment in a Mexican bakery mix affiliate.
Income Taxes
The effective tax rates on earnings before unusual items were 38.5% and
38.4% in fiscal 1995 and 1994, respectively. These rates reflect a low
effective tax rate in Venezuela in each of the fiscal years. The overall
effective tax rate was 20.5% in fiscal 1995 compared to 46.0% in fiscal
1994 and 37.6% in fiscal 1993. The fiscal 1995 overall effective tax rate
was impacted by the low tax rate on the Frozen Specialty Foods transaction
and a favorable tax settlement with respect to prior years' business
acquisitions.
Financial Condition
The Company's balance sheet and overall financial condition reflect the
impact of business acquisitions and divestitures during fiscal 1995.
Common shareholders' equity increased to $291.1 million while the debt-to-
total capitalization ratio decreased from 50% to 45%. Short-term financing
is provided by the use of commercial paper and short-term bank borrowings.
Approximately $263 million in U.S. and Canadian revolving credit agreements
and lines of credit are maintained to ensure availability of funds. As of
February 28, 1995, approximately $195 million of debt obligations were at
variable interest rates. The Company has a medium-term note program under
its shelf registration statement filed with the Securities and Exchange
Commission, which provides for the issuance of up to $100 million in
medium-term notes in various amounts. As of February 28, 1995, $70 million
remained available under the medium-term note program.
Debt to Total Capitalization
[Graphic Material Omitted]
(in millions) 1993 1994 1995
Total Debt $194 $258 $241
Total Capitalization $519 $511 $536
Ratio 37% 50% 45%
In fiscal 1995, operating working capital increased $49.4 million,
exclusive of the impact of acquisitions, dispositions and foreign exchange.
The increase was principally the result of higher inventories in Venezuela
from the effects of inflation and additional production capacity and, to a
lesser extent, the result of higher inventories in Bakery products. The
balance sheet impact from acquisitions is summarized in Note 2 to the
consolidated financial statements. The balance sheet impact from
divestitures includes a reduction of working capital of $40 million and a
reduction of property, plant and equipment of $55 million.
Capital Expenditures by Continuing Businesses (in millions)
[Graphic Material Omitted]
1993 1994 1995
Foodservice Distribution $12.2 $20.8 $ 8.4
Bakery 21.9 18.3 15.2
Venezuela Foods 5.7 8.7 5.5
Total Capital Expenditures
by Continuing Businesses $39.8 $47.8 $29.1
Capital expenditures and acquisitions of businesses are the Company's
principal investing activities. Capital expenditures by continuing
businesses totaled $29.1 million in fiscal 1995, down from $47.8 million in
fiscal 1994. Approximately 30% of the fiscal 1995 capital expenditures was
attributable to projects focused on increasing earnings through volume
improvements, new business or cost savings. The remaining capital
expenditures related to projects that were required to maintain existing
facilities and equipment.
During fiscal 1995, business acquisitions totaled $115.8 million. In
addition to the acquisition of the Leprino distribution business, the
Company acquired a corn flour business in Venezuela. The Company also
completed the divestitures of its Frozen Specialty Foods and Meats
businesses at an aggregate sale price of approximately $156 million. The
Company continues to pursue tactical and strategic business acquisitions in
order to enhance its market leadership positions in its Bakery and
Foodservice Distribution businesses.
The Company purchased approximately 0.4 million and 1.2 million shares
of outstanding common stock in fiscal 1995 and 1994, respectively,
primarily pursuant to a 2.5 million share repurchase program which was
initiated in fiscal 1994. The Company expects that future share
repurchases under this program, if any, will be funded by borrowings or
proceeds from any divestitures.
In Canada, the Company minimizes risks associated with wheat market
price fluctuations by hedging its wheat and flour inventories, open wheat
purchase contracts and open flour sales contracts with wheat futures
contracts. See Note 7 to the consolidated financial statements for further
discussion.
Independent Auditors' Report
The Board of Directors and Shareholders
International Multifoods Corporation:
We have audited the accompanying consolidated balance sheets of
International Multifoods Corporation and subsidiaries as of February 28,
1995 and 1994, and the related consolidated statements of operations and
cash flows for each of the years in the three-year period ended February
28, 1995. These consolidated financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion
on these consolidated financial statements based on our audits.
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
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
International Multifoods Corporation and subsidiaries as of February 28,
1995 and 1994, and the results of their operations and their cash flows for
each of the years in the three-year period ended February 28, 1995 in
conformity with generally accepted accounting principles.
/s/KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Minneapolis, Minnesota
April 12, 1995
Management's Responsibility for Financial Statements
The consolidated financial statements have been prepared by management in
conformity with generally accepted accounting principles and include, where
required, amounts based on management's best estimates and judgments.
Management continues to be responsible for the integrity and objectivity of
data in these consolidated financial statements, which it seeks to assure
through an extensive system of internal controls. Such controls are
designed to provide reasonable, but not absolute, assurance that assets are
safeguarded from unauthorized use or disposition and that financial records
are sufficiently reliable to permit the preparation of consolidated
financial statements. It is recognized that estimates and judgments are
required to assess and balance the relative cost and expected benefits of
any system of internal controls.
The system of internal accounting controls is designed to provide
reasonable assurance that the books and records reflect the Company's
transactions and that its established policies and procedures are carefully
followed. The system includes written policies and procedures, a financial
reporting system, an internal audit department and careful selection and
training of qualified personnel.
/s/Anthony Luiso /s/Duncan H. Cocroft
Anthony Luiso Duncan H. Cocroft
Chairman, President and Vice President-Finance and
Chief Executive Officer Chief Financial Officer
INTERNATIONAL MULTIFOODS CORPORATION and SUBSIDIARIES
Consolidated Statements of Operations
Fiscal year ended the last day of February
(dollars and shares in thousands,
except per share data) 1995 1994 1993
Net sales $2,295,119 $2,158,354 $2,199,158
Cost of sales (1,901,932) (1,743,892) (1,783,403)
Gross profit 393,187 414,462 415,755
Delivery and distribution (146,220) (141,838) (141,666)
Selling, general and
administrative (186,616) (204,852) (199,020)
Unusual items 26,240 (70,007) -
Operating earnings (loss) 86,591 (2,235) 75,069
Financing costs:
Interest, net (12,105) (10,685) (11,848)
Foreign exchange gains (losses)
on cash and equivalents (2,747) 203 1,110
Total financing costs (14,852) (10,482) (10,738)
Earnings (losses) from
unconsolidated affiliates - (12,187) 1,759
Earnings (loss) before income taxes 71,739 (24,904) 66,090
Income taxes (14,718) 11,466 (24,880)
Net earnings (loss) $ 57,021 $ (13,438) $ 41,210
Net earnings (loss) per share of
common stock $ 3.16 $ (.72) $ 2.13
Average shares of common
stock outstanding 17,974 18,911 19,282
See accompanying notes to consolidated financial statements.
INTERNATIONAL MULTIFOODS CORPORATION and SUBSIDIARIES
Consolidated Balance Sheets
February 28, 1995 and 1994
(dollars and shares in thousands) 1995 1994
Assets
Current assets:
Cash and equivalents $ 10,792 $ 10,507
Trade accounts receivable, net of allowance 142,474 146,455
Inventories 256,878 219,630
Deferred income taxes 18,506 27,266
Other current assets 43,047 35,432
Total current assets 471,697 439,290
Property, plant and equipment, net 228,025 245,891
Goodwill 108,636 72,672
Other assets 38,347 56,922
Total assets $846,705 $814,775
Liabilities and Shareholders' Equity
Current liabilities:
Notes payable $ 47,149 $ 58,651
Current portion of long-term debt 11,083 3,953
Accounts payable 167,114 150,221
Other current liabilities 90,646 88,909
Total current liabilities 315,992 301,734
Long-term debt, net of current portion 183,087 195,125
Deferred income taxes 15,767 22,462
Employee benefits and other liabilities 37,193 41,815
Total liabilities 552,039 561,136
Redeemable preferred stock, redemption value
$3,784 and $3,817 3,604 3,635
Shareholders' equity:
Preferred capital stock - -
Common stock, authorized 50,000 shares;
issued 21,844 shares 2,184 2,184
Capital in excess of par value 88,862 89,158
Retained earnings 395,406 349,298
Equity adjustment from foreign
currency translation (108,884) (107,364)
Equity adjustment from minimum
pension liability (1,641) (2,301)
Treasury stock, 3,835 and 3,507 shares, at cost (83,417) (78,364)
Unearned restricted stock (1,448) (2,607)
Total shareholders' equity 291,062 250,004
Commitments and contingencies
Total liabilities and shareholders' equity $846,705 $814,775
See accompanying notes to consolidated financial statements.
INTERNATIONAL MULTIFOODS CORPORATION and SUBSIDIARIES
Consolidated Statements of Cash Flows
Fiscal year ended the last day of February
(dollars in thousands) 1995 1994 1993
Cash flows from operations:
Net earnings (loss) $ 57,021 $(13,438) $41,210
Adjustments to reconcile net earnings (loss)
to cash provided by operations:
Depreciation and amortization 27,045 29,892 28,797
Provision for unusual charges 5,413 70,007 -
Equity in losses (earnings) of
unconsolidated affiliates - 12,187 (1,759)
Gain on major business disposition (33,581) - -
Deferred income tax expense (benefit) 4,483 (12,504) 12,350
Provision for losses on receivables 4,477 3,783 2,953
Changes in operating assets and
liabilities, net of business
acquisitions and dispositions* (49,351) (49,573) (29,886)
Other, net 6,372 (4,137) (1,529)
Cash provided by operations 21,879 36,217 52,136
Cash flows from investing activities:
Acquisitions of businesses,
net of cash acquired (115,847) (18,476) (29,016)
Capital expenditures (30,776) (51,904) (45,683)
Proceeds from business dispositions 156,367 4,862 -
Proceeds from other property disposals 823 1,482 966
Other, net - - (472)
Cash provided by (used for)
investing activities 10,567 (64,036) (74,205)
Cash flows from financing activities:
Net increase (decrease) in notes payable (7,231) 40,095 (15,374)
Additions to long-term debt 4,973 40,000 81,222
Reductions in long-term debt (7,038) (8,735) (19,503)
Dividends paid (14,560) (15,423) (15,562)
Proceeds from issuance of common stock 355 1,579 1,501
Purchase of treasury stock (5,877) (27,490) (1,810)
Other, net (19) (209) (18)
Cash provided by (used for)
financing activities (29,397) 29,817 30,456
Effect of exchange rate changes
on cash and equivalents (2,764) (2,535) (1,541)
Net increase (decrease) in cash
and equivalents 285 (537) 6,846
Cash and equivalents at beginning of year 10,507 11,044 4,198
Cash and equivalents at end of year $ 10,792 $ 10,507 $11,044
*Cash flows from changes in operating
assets and liabilities, net of business
acquisitions and dispositions:
Accounts receivable $ (441) $(18,410) $(19,119)
Inventories (47,866) (23,032) 17,482
Other current assets (9,089) (1,889) (15,590)
Accounts payable 16,643 1,989 27,936
Other current liabilities (8,598) (8,231) (40,595)
Net change $(49,351) $(49,573) $(29,886)
See accompanying notes to consolidated financial statements.
Notes to Consolidated Financial Statements
Note 1: Summary of Significant Accounting Policies
Basis of statement presentation. The accompanying consolidated financial
statements include the accounts of International Multifoods Corporation
and all of its subsidiaries. Intercompany accounts and transactions have
been eliminated in consolidation. The Company's fiscal year ends the last
day of February. To conform to the fiscal 1995 presentation, the net
margin from commodity sales of the Company's food exporting business for
fiscal 1994 and 1993 has been reclassified to net sales. As a result of
this reclassification, net sales and cost of sales decreased $66.4 million
in fiscal 1994 and $24.8 million in fiscal 1993 from the amounts previously
reported. In addition, certain other reclassifications have been made in
the accompanying consolidated financial statements in order to conform with
fiscal 1995 presentation.
Cost of sales. To more closely match costs with related revenues, the
Company classifies the inflation element inherent in interest rates on
Venezuelan local currency borrowings and the foreign exchange gains and
losses, which occur on certain Venezuelan borrowings, as a component of
cost of sales. Accordingly, a reduction of $0.4 million in fiscal 1995 and
increases of $2.8 million in fiscal 1994 and $3.6 million in fiscal 1993
are included in cost of sales.
Foreign currency translation and transactions. For the Company's Canadian
operations, the functional currency is the local currency. Assets and
liabilities are translated at current exchange rates and results of
operations are translated using a weighted average exchange rate during the
fiscal year. The gains or losses resulting from such translation are
included in a separate component of shareholders' equity.
Effective December 1, 1993, the functional currency for the Company's
Venezuelan operations changed from the local currency to the U.S. dollar.
In U.S. dollar functional currency operations, certain assets and related
earnings statement items are translated at historical exchange rates while
all other assets and liabilities are translated at current exchange rates.
Translation gains or losses are included in the determination of net
earnings.
Net foreign exchange losses of $3.0 million in fiscal 1995, $2.3
million in fiscal 1994 and $1.1 million in fiscal 1993 are included in
earnings.
Research and development expense. Research and development expense was
$1.6 million in fiscal 1995, $2.1 million in fiscal 1994 and $1.5 million
in fiscal 1993. Costs are charged to expense when incurred.
Income taxes. The Company adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" (SFAS 109), as of March 1,
1993 and has elected to apply its provisions prospectively as of that date.
Under SFAS 109, deferred tax assets and liabilities are recognized for the
expected future tax consequences of temporary differences between the
financial statement carrying amount and tax basis of assets and
liabilities. The cumulative effect as of March 1, 1993 of the accounting
change was insignificant.
Earnings per share. Earnings per share of common stock has been determined
by dividing net earnings, after deduction of preferred stock dividends, by
the average number of shares of common stock outstanding during the year.
Common stock options and other common stock equivalents are not included in
earnings per share computations since their effect is not significant.
Cash and equivalents. The Company considers all highly liquid short-term
investments purchased with a maturity of three months or less to be cash
equivalents.
Inventories. Inventories, excluding grain in Canada, are valued
principally at the lower of cost (first-in, first-out) or market
(replacement or net realizable value).
In Canada, inventories of grain are valued on the basis of replacement
market prices prevailing at fiscal year-end. The Company generally
minimizes risks associated with market price fluctuations by hedging those
inventories with futures contracts. Therefore, included in inventories is
the amount of gain or loss on open grain contracts, including futures
contracts, which generally has the effect of adjusting those inventories to
cost.
Property, plant and equipment. Property, plant and equipment is stated at
cost and depreciation is computed using the straight-line method for
determining financial statement income. When permitted, accelerated
depreciation methods are used to calculate depreciation for income tax
purposes.
Goodwill and other intangibles. Goodwill represents the excess of cost of
businesses acquired over the fair market value of net tangible and
identifiable intangible assets. Goodwill and other intangibles are
amortized on a straight-line basis over not more than a 40-year period.
Other intangibles are included in other assets on the consolidated balance
sheets. Accumulated amortization of goodwill and other intangibles at
February 28, 1995 and 1994 was $16.8 million and $29.0 million,
respectively.
In March 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of" (SFAS 121), which is required to be adopted by the Company on or before
the fiscal year ending February 28, 1997. The standard generally requires
recognition of impairment in the carrying value of goodwill and other long-
lived assets if the undiscounted expected future net cash flows is less
than the carrying amount of the assets. If SFAS 121 had been adopted in
fiscal 1995, management believes it would not have had a material effect on
the Company's financial condition or results of operations.
Note 2: Businesses Acquired
The Company acquired, with cash and notes, several businesses during the
three years ended February 28, 1995. All acquisitions have been accounted
for as purchases and, accordingly, their results of operations have been
included since their respective dates of acquisition. The most significant
acquisitions were as follows:
Fiscal
Year Business Segment Name Date Acquired
1995 Foodservice Distribution business
Distribution of Leprino Foods August 1994
1994 Foodservice
Distribution Bevmatic August 1993
Bakery JAMCO June 1993
1993 Bakery Gourmet Baker April 1992
Components of cash used for acquisitions, as reflected in the
consolidated statements of cash flows, were as follows:
(in thousands) 1995 1994 1993
Fair value of current assets,
net of cash acquired $ 46,298 $ 4,738 $ 8,062
Fair value of noncurrent assets,
excluding goodwill 39,003 12,276 11,557
Goodwill 51,478 5,778 12,493
Liabilities assumed, principally current (20,932) (1,816) (3,096)
Purchase contract liabilities - (2,500) -
Cash paid at closing,
net of cash acquired $115,847 $18,476 $29,016
The following unaudited pro forma financial information assumes the
Company's fiscal 1995 acquisition of the limited-menu foodservice
distribution business of Leprino Foods Company had been completed on March
1, 1993, the beginning of fiscal 1994. It includes the financing costs of
the acquisition as well as depreciation and amortization associated with
the allocation of the purchase price to net tangible and intangible assets
acquired. The pro forma information is not necessarily indicative of the
combined results of operations that would have occurred had the acquisition
been completed as of the beginning of fiscal 1994.
(in thousands, except earnings per share) 1995 1994
Net sales $2,495,000 $2,540,000
Net earnings (loss) 57,200 (13,800)
Net earnings (loss) per share of common stock 3.17 (.74)
Note 3: Financing Costs
Financing costs consisted of the following:
(in thousands) 1995 1994 1993
Interest expense $16,287 $13,181 $14,592
Capitalized interest (317) (746) (1,144)
Non-operating interest income (3,865) (1,750) (1,600)
Interest, net 12,105 10,685 11,848
Foreign exchange losses (gains) 2,747 (203) (1,110)
Total financing costs $14,852 $10,482 $10,738
Cash payments for interest, net of amounts capitalized, totaled $14.6
million in fiscal 1995, $12.0 million in fiscal 1994 and $17.1 million in
fiscal 1993.
Total interest income was $4.9 million in fiscal 1995, $2.3 million in
fiscal 1994 and $2.0 million in fiscal 1993.
Foreign exchange gains and losses which occur on cash and equivalents
of the Company's Venezuelan operations are included in financing costs in
order to match such gains and losses with the related interest income.
Note 4: Unusual Items
In fiscal 1995, the Company divested its Frozen Specialty Foods business
for a pre-tax gain of $33.6 million. The Company also recognized a pre-tax
charge of $6.2 million for the integration of the limited-menu foodservice
distribution business of Leprino Foods Company acquired by the Company in
fiscal 1995 with the Company's former Pueringer unit ("Business
Integration"), a pre-tax charge of $1.8 million for costs associated with
business acquisition activities, and a pre-tax benefit of $0.6 million
primarily related to previously divested businesses. The net tax benefit
from unusual items was $2.8 million which included the tax effect from
divested businesses and a benefit from a tax settlement with respect to the
proposed disallowance of certain deductions in connection with business
acquisitions. The total after-tax gain from these unusual items was $29.0
million, or $1.61 per share.
The Business Integration charge of $6.2 million included $1.1 million
for asset write-downs and $5.1 million of charges, which consisted of $1.4
million for severance benefits to approximately 125 warehouse, delivery and
administrative employees and $3.7 million primarily for the write-down of
lease commitments.
In fiscal 1994, the Company recognized unusual charges of $70.0 million
and a $12.5 million charge related to its investments in Mexican
unconsolidated affiliates. The total after-tax loss for these unusual
items was $48.9 million, or $2.58 per share. The $70.0 million in charges
included the disposition of certain underperforming assets and the
reorganization of remaining operations. The reorganization entails the
consolidation and closing of certain U.S. and Canadian facilities, plant
rationalization and organizational changes. Non-cash pre-tax charges
consisted of $19.1 million for asset write-downs and the loss on the sale
of a regional bakery distribution business and a $22.5 million charge
associated with the write-down of the Company's Meats business net assets
to expected realizable value. Remaining pre-tax charges of $28.4 million
include the cost of severance and related employee benefits and write-down
of lease commitments.
The following table summarizes the changes in the Company's
reorganization and integration reserves for the year ended February 28,
1995:
<TABLE>
<CAPTION>
Foodservice Distribution Bakery Corporate
------------------------- ------------------ ---------
Consoli-
Organi- Organi- dation/ Organi-
zational Business zational Closing zational
(in thousands) Changes Integration Changes Facilities Changes Total
<S> <C> <C> <C> <C> <C> <C>
Accrued costs
at February 28, 1994 $4,043 $ - $6,864 $7,443 $687 $19,037
Reserves additions - 5,120 - - - 5,120
Reserves utilized (3,251) (714) (2,405) (4,282) (547) (11,199)
Reserves reversals - - - - (140) (140)
Exchange rate effect - - (149) (164) - (313)
Accrued costs
at February 28, 1995 $ 792 $4,406 $4,310 $2,997 $ - $12,505
</TABLE>
Note 5: Income Taxes
Income tax expense was as follows:
U.S. Operations Non-U.S.
(in thousands) Federal Other Operations Total
1995:
Current expense $ 1,785 $ 2,340 $ 6,110 $ 10,235
Deferred expense (benefit) 603 (151) 4,031 4,483
Total tax expense $ 2,388 $ 2,189 $10,141 $ 14,718
1994:
Current expense (benefit) $ (2,571) $ 666 $ 2,943 $ 1,038
Deferred benefit (9,028) (2,021) (1,455) (12,504)
Total tax expense (benefit) $(11,599) $(1,355) $ 1,488 $(11,466)
1993:
Current expense $ 3,251 $ 1,739 $ 7,540 $ 12,530
Deferred expense 8,214 909 3,227 12,350
Total tax expense $ 11,465 $ 2,648 $10,767 $ 24,880
Temporary differences which give rise to deferred tax assets and
liabilities as of February 28, 1995 and 1994 were as follows:
1995 1994
Deferred Deferred Deferred Deferred
Tax Tax Tax Tax
(in thousands) Assets Liabilities Assets Liabilities
Depreciation and
amortization $15,154 $28,141 $15,441 $39,062
Accrued expenses 23,306 7,346 23,563 7,432
Inventory valuation methods 8,973 - 6,826 -
Reorganization and
divestiture reserves 8,723 - 20,041 -
Provision for losses
on receivables 2,738 12 3,214 5
Foreign net operating
loss carryforwards 9,383 - 4,792 -
Foreign earnings repatriation - 4,273 - 3,042
Alternative minimum tax - - 946 -
Other 3,537 1,865 3,877 2,471
Subtotal 71,814 41,637 78,700 52,012
Valuation allowance (31,760) - (24,904) -
Total deferred taxes $40,054 $41,637 $53,796 $52,012
At February 28, 1995, the Company's Venezuelan operations had net
operating loss carryforwards of approximately $30 million which will
expire in fiscal 1997 and 1998. The financial statement benefit of the
net operating loss carryforwards has been offset by the valuation
allowance due to the limited carryforward period. In fiscal 1995, the
valuation allowance increased $6.9 million, primarily as a result of the
aforementioned net operating loss carryforwards. The remainder of the
valuation allowance also relates to the Company's Venezuelan operations.
The effective tax rate varied from the U.S. federal statutory tax rate
as follows:
1995 1994 1993
U.S. federal statutory tax rate 35.0% (35.0)% 34.0%
Differences:
Effect of taxes on non-U.S. earnings (1.9) .1 (3.5)
State and local income taxes 2.0 (3.5) 3.1
Effect of intangibles (2.5) 1.7 3.0
Basis difference for business disposals (12.6) (12.2) -
Other .5 2.9 1.0
Effective tax rate 20.5% (46.0)% 37.6%
Provision was made for U.S. and non-U.S. income taxes applicable to
anticipated remittances of earnings from affiliates. At February 28,
1995, no provision was made on approximately $85 million of unremitted
earnings of non-U.S. affiliates which have been, or are intended to be,
permanently reinvested. Such earnings would become taxable upon the sale
or liquidation of the non-U.S. affiliates or upon the remittance of
dividends. It is not practicable to estimate the amount of the deferred
tax liability on such earnings. Earnings before income taxes resulting
from non-U.S. affiliates were $33.0 million in fiscal 1995, $3.5 million
in fiscal 1994 and $39.3 million in fiscal 1993.
The Internal Revenue Service (IRS) has completed examinations of the
U.S. federal income tax returns filed by the Company for the fiscal years
ended February 28, 1987 through February 28, 1991. As a result of the
examinations, the IRS has issued to the Company statutory notices of
deficiency covering the fiscal years ended February 28, 1987 and February
29, 1988 and a preliminary report covering the fiscal years ended February
28, 1989 through February 28, 1991, which are primarily related to the
proposed disallowance by the IRS of certain deductions claimed by the
Company in connection with acquisitions. In fiscal 1995, the Company
reached a settlement with the IRS on the proposed deduction disallowance
in connection with acquisitions, but the Company is still vigorously
pursuing its judicial remedies with respect to certain other issues
covering fiscal years 1988 to 1991. Management believes the final outcome
of the remaining matters will not have a material adverse effect on the
financial condition, results of operations or cash flows of the Company.
Net income taxes (refunded) paid totaled $5.9 million in fiscal 1995,
$(1.0) million in fiscal 1994 and $31.8 million in fiscal 1993.
Note 6: Supplemental Balance Sheet Information
(in thousands) 1995 1994
Accounts receivable, net:
Trade $149,132 $151,642
Allowance for doubtful accounts (6,658) (5,187)
Total accounts receivable, net $142,474 $146,455
Inventories:
Raw materials, excluding grain $ 25,683 $ 27,614
Grain 65,402 41,785
Finished and in-process goods 158,497 141,241
Packages and supplies 7,296 8,990
Total inventories $256,878 $219,630
Property, plant and equipment, net:
Land $ 11,635 $ 10,733
Buildings and improvements 87,739 107,741
Machinery and equipment 212,262 213,838
Transportation equipment 9,042 4,678
Improvements in progress 13,381 38,740
334,059 375,730
Accumulated depreciation (106,034) (129,839)
Total property, plant and equipment, net $228,025 $245,891
Accounts payable:
Trade $131,754 $111,061
Other 35,360 39,160
Total accounts payable $167,114 $150,221
Other current liabilities:
Wages and benefits $ 16,163 $ 16,520
Income taxes 18,177 12,328
Reorganization reserves 12,505 19,037
Other accrued expenses 43,801 41,024
Total other current liabilities $ 90,646 $ 88,909
Note 7: Financial Instruments
Fair value of financial instruments. The carrying value of cash and
equivalents, accounts receivable, accounts payable and debt approximate
fair value.
Concentrations of credit risk. The Company's Venezuelan operations
maintain deposits, primarily in local currency, in Venezuelan financial
institutions. As of February 28, 1995, these deposits totaled the
equivalent of $6.0 million. Due to foreign exchange controls implemented
by the Venezuelan government, the Company has experienced delays in
converting these deposits to U.S. dollars and, accordingly, paying down
U.S. dollar-denominated obligations of its Venezuelan operations.
Additionally, the Venezuelan government has assumed control of several
local banks due to their respective financial difficulties in order to
stabilize the banking system. The Company performs ongoing evaluations of
the relative credit standing of the Venezuelan financial institutions in
which it has deposits in order to minimize its credit risk.
Other financial instruments. In Canada, the Company minimizes risks
associated with wheat market price fluctuations by hedging its wheat and
flour inventories, open wheat purchase contracts, and open flour sales
contracts with wheat futures contracts. These futures contracts are
traded on U.S. exchanges and are denominated in U.S. dollars. Since the
inventories, purchase contracts and sales contracts are generally
denominated in Canadian dollars, the Company enters into foreign currency
forward contracts which have the effect of converting the U.S. dollar-
denominated futures contracts into Canadian dollar equivalents. At
February 28, 1995, the Company had entered into wheat futures contracts
with maturities that substantially coincided with the maturities of the
open wheat purchase contracts and flour sales contracts. These future
contracts hedged substantially all of the Company's Canadian wheat and
flour inventories and commitments as of February 28, 1995. At February
28, 1995, the foreign currency forward contracts relating to these wheat
futures contracts totaled approximately $3.2 million.
The U.S. exchanges on which the futures contracts are traded are the
counterparties to these transactions. The foreign currency forward
contracts are purchased through major Canadian banking institutions which
are counterparties to these transactions. Management believes the credit
risk of these futures and foreign currency forward contracts due to
nonperformance of the counterparties is insignificant.
Note 8: Accounts Receivable
As of February 28, 1995 and 1994, the Company had sold approximately $11.5
million and $11.8 million of accounts receivable, respectively.
Collections received on these accounts may be replaced by new receivables
in order to maintain the aggregate outstanding balance. The credit risk
of uncollectible accounts has been substantially transferred to the
purchaser. Fees associated with these transactions are included in
interest expense in the consolidated statements of operations.
Note 9: Notes Payable
Notes payable consisted of the following:
(in thousands) 1995 1994
Commercial paper $ - $26,154
Notes payable, principally to banks 47,149 32,497
Total notes payable $47,149 $58,651
Note 10: Long-term Debt
Long-term debt, net of current portion of $11.1 million in fiscal 1995 and
$4.0 million in fiscal 1994, was as follows:
(in thousands) 1995 1994
Commercial paper $ 50,455 $ 54,005
Notes payable to banks 49,545 100,000
Canadian Bankers Acceptances 57,504 -
Medium-term notes 20,000 30,000
Industrial revenue bond financing 3,500 8,434
Other, due in varying amounts through fiscal 1998 2,083 2,686
Total long-term debt $183,087 $195,125
The Company has a $150 million U.S. revolving credit agreement which
expires March 5, 1997, $52 million in U.S. and Canadian short-term lines
of credit which expire in fiscal 1996 and a $61 million Canadian revolving
credit agreement which expires March 15, 1997. The interest rate on
borrowings under these agreements is variable and based on current market
factors. There are no restrictions on the use of these facilities for
general corporate purposes and support for commercial paper issued by the
Company. The credit agreements and lines of credit contain certain
restrictive covenants that include maintenance of tangible net worth and
an indebtedness ratio. None of the restrictive covenants are expected to
affect the payment of dividends based on the Company's present dividend
guideline. At February 28, 1995, the Company had available $86 million
under the lines of credit and credit agreements. Related commitment and
facility fees were $0.6 million and $0.5 million during fiscal 1995 and
fiscal 1994, respectively.
The notes payable, commercial paper and Canadian Bankers Acceptance
amounts have been classified as long-term debt as a result of the
Company's intent to refinance this debt on a long-term basis and the
availability of such financing under the terms of the revolving credit
agreements.
Minimum principal and sinking fund payments totaling $183.1 million
are as follows: $7.0 million in fiscal 1997, $162.6 million in fiscal
1998, $10.0 million in fiscal 1999, and $3.5 million in fiscal 2004.
The weighted average interest rate on commercial paper, notes payable
and Canadian Bankers Acceptances outstanding at February 28, 1995 was 6.7%
and at February 28, 1994 was 3.9%. The outstanding balances include U.S.
dollar, Canadian dollar and Venezuelan bolivar obligations. The average
dollar amount of consolidated borrowings in fiscal 1995 was $239.9 million
which had a weighted average interest rate of 6.7%.
In fiscal 1993, the Company established a medium-term note program
under its shelf registration statement filed with the Securities and
Exchange Commission for $100 million of debt securities of the Company.
Under the program, the Company may issue the entire amount in medium-term
notes. Amounts outstanding under this program at February 28, 1995 mature
in fiscal 1996 to fiscal 1999 and had a weighted average interest rate of
5.4%.
The industrial revenue bond financing matures in fiscal 2004 and had
an interest rate of 6.75% in fiscal 1995.
At February 28, 1995, the Company had available uncommitted lines of
credit from banks in Venezuela of approximately $65 million. No
compensating balances were required for any of these credit lines.
Note 11: Redeemable Preferred Stock
The Company has authorized 200,000 shares of Cumulative Redeemable Sinking
Fund First Preferred Capital Stock, par value $100 per share, which is
redeemable at the option of the Company at $105 per share plus accrued
dividends. There is a semiannual sinking fund requirement equal to $1.00
for each share then outstanding which may be satisfied by repurchases not
in excess of the redemption price or by call for redemption. The holders
of outstanding shares are entitled to elect one-third of the Company's
directors in the event of default in the payment of eight quarterly
dividends or in providing four semiannual sinking fund installments.
The Company purchased 310 shares in fiscal 1995, 2,841 shares in
fiscal 1994 and 300 shares in fiscal 1993 for sinking fund requirements.
The amounts issued and outstanding were:
(dollars in thousands) 1995 1994
Par value:
4% Series A $1,114 $1,123
4 1/4% Series C 380 390
4 1/2% Series D 755 767
5 1/4% Series E 1,355 1,355
Total $3,604 $3,635
Number of shares 36,042 36,352
Note 12: Preferred Capital Stock
The Company has authorized 10,000,000 shares of Preferred Capital Stock,
par value $1.00 per share, which may be designated and issued as
convertible into common shares. The Company has created a series of such
Preferred Capital Stock, designated as Series 1990 Junior Participating
Capital Preferred Stock, consisting of 500,000 shares, par value $1.00 per
share.
No Preferred Capital Stock was outstanding during the three years
ended February 28, 1995.
Note 13: Leases
The Company leases certain plant, office space and equipment for varying
periods. Management expects that in the normal course of business, leases
will be renewed or replaced by other leases.
The following is a schedule of future minimum lease payments for
operating leases that had initial or remaining noncancelable lease terms
in excess of one year as of February 28, 1995:
Operating
(in thousands) leases
1996 $16,759
1997 14,232
1998 10,202
1999 7,394
2000 5,256
2001 and beyond 11,271
Total minimum lease payments * $65,114
*Minimum payments do not include contingent rentals or vehicle lease
payments based on mileage.
Total net rent expense for operating leases, including those with
terms of less than one year, consisted of the following:
(in thousands) 1995 1994 1993
Minimum rentals $27,608 $28,270 $29,873
Contingent rentals 246 1,009 2,643
Sublease rentals (44) (286) (7)
Total net rent expense $27,810 $28,993 $32,509
Note 14: Commitments and Contingencies
There were no contingencies or litigation as of February 28, 1995 that, in
the opinion of management, would have had a material adverse effect on the
Company's consolidated financial condition, results of operations or cash
flows.
At February 28, 1995, the estimated cost to complete improvements in
progress totaled approximately $13 million.
Note 15: Shareholders' Equity
The following summarizes the changes in shareholders' equity for the three
years ended February 28, 1995:
<TABLE>
<CAPTION>
Equity Adjustment from:
$.10 par value -----------------------
------------------ Capital in Foreign Minimum Unearned
Common Treasury Excess of Retained Currency Pension Restricted
(dollars and shares in thousands) Stock Stock Par Value Earnings Translation Liability Stock Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at February 29, 1992 $2,184 $(54,836) $88,700 $352,452 $(71,828) $(1,989) $(1,559) $313,124
Net earnings - - - 41,210 - - - 41,210
Translation adjustments - - - - (15,238) - - (15,238)
Dividends declared:
Common stock - - - (15,452) - - - (15,452)
Preferred stock - - - (180) - - - (180)
70 shares purchased for treasury - (1,810) - - - - - (1,810)
66 shares issued for
employee benefit plans - 1,496 180 - - - (149) 1,527
Amortization of unearned
restricted stock - - - - - - 465 465
Adjustment associated with
recognition of minimum
pension liability - - - - - (1,684) - (1,684)
Balance at February 28, 1993 2,184 (55,150) 88,880 378,030 (87,066) (3,673) (1,243) 321,962
Net loss - - - (13,438) - - - (13,438)
Translation adjustments - - - - (20,298) - - (20,298)
Dividends declared:
Common stock - - - (15,120) - - - (15,120)
Preferred stock - - - (174) - - - (174)
1,200 shares purchased for treasury - (27,490) - - - - - (27,490)
194 shares issued for
employee benefit plans - 4,276 278 - - - (2,844) 1,710
Amortization of unearned
restricted stock - - - - - - 1,480 1,480
Adjustment associated with
recognition of minimum
pension liability - - - - - 1,372 - 1,372
Balance at February 28, 1994 2,184 (78,364) 89,158 349,298 (107,364) (2,301) (2,607) 250,004
Net earnings - - - 57,021 - - - 57,021
Translation adjustments - - - - (1,520) - - (1,520)
Dividends declared:
Common stock - - - (10,746) - - - (10,746)
Preferred stock - - - (167) - - - (167)
366 shares purchased for treasury - (5,877) - - - - - (5,877)
37 shares issued for
employee benefit plans - 824 (296) - - - (222) 306
Amortization of unearned
restricted stock - - - - - - 1,381 1,381
Adjustment associated with
recognition of minimum
pension liability - - - - - 660 - 660
Balance at February 28, 1995 $2,184 $(83,417) $88,862 $395,406 $(108,884) $(1,641) $(1,448) $291,062
</TABLE>
The Company's 1989 stock-based plan permits awards of restricted stock
and incentive units to key employees subject to the provisions of the plan
and as determined by the Compensation Committee of the Board of Directors.
In fiscal 1994, grants include 78,000 shares of restricted stock which
were awarded to key employees under the Company's long-term incentive
program. The restricted stock has a ten-year vesting period which will be
accelerated only if specified financial performance objectives are
achieved over a three-year period. In addition, incentive units were
awarded to each such key employee in a number equal to the number of
shares of restricted stock awarded. These incentive units will be earned
only in the event the Company achieves stronger financial performance than
that which is required to accelerate vesting of the restricted stock.
Incentive units, if earned, will be paid in the form of restricted stock.
The market value of shares issued under the plan, as of the date of grant,
has been recorded as unearned restricted stock and is shown as a separate
component of shareholders' equity. Unearned restricted stock is expensed
over the period restrictions lapse.
The Company has a shareholder rights plan that entitles one preferred
share purchase right for each outstanding share of common stock. The
rights become exercisable only after a person or group (with certain
exceptions) becomes the beneficial owner of 10% or more of the Company's
outstanding common stock or announces a tender offer, the consummation of
which would result in beneficial ownership by a person or group of 10% or
more of the Company's outstanding common stock. Each right will entitle
its holder to purchase one one-hundredth share of Series 1990 Junior
Participating Preferred Capital Stock (consisting of 500,000 shares, par
value $1.00 per share) at an exercise price of $100, subject to
adjustment. If a person or group acquires beneficial ownership of 10% or
more of the Company's outstanding common stock, each right will entitle
its holder (other than such person or group) to purchase, at the then-
current exercise price of the right, a number of shares of the Company's
common (or, in certain circumstances, preferred) stock having a market
value of twice the then-current exercise price of the right. In addition,
if the Company is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earnings power
are acquired, each right will entitle its holder to purchase, at the then-
current exercise price of the right, a number of the acquiring company's
common shares having a market value of twice the then-current exercise
price of the right. Following the acquisition by a person or group of
beneficial ownership of 10% or more of the Company's outstanding common
stock and prior to an acquisition by any person or group of 50% or more of
the Company's outstanding common stock, the Board of Directors may
exchange the outstanding rights (other than rights owned by such person or
group), in whole or in part, for common (or, in certain circumstances,
preferred) stock of the Company. Prior to the acquisition by a person or
group of beneficial ownership of 10% or more of the Company's outstanding
common stock, the rights are redeemable for $.01 per right at the option
of the Board of Directors.
Note 16: Stock Options
A total of 505,081 common shares are available for grants of stock options
or restricted stock under the Company's 1986 and 1989 stock plans. Stock
options are granted to directors, officers and key management employees to
purchase shares of Company common stock at not less than fair market value
at dates of grant for incentive stock options and at not less than 75% of
fair market value at dates of grant for non-qualified stock options.
Options generally become exercisable one year after the date of grant and
expire ten years after the date of grant.
The following table contains information on stock options:
Option Price
Shares Per Share-Range
Outstanding at
February 29, 1992 1,739,532 $11.28 - 29.00
Granted 152,200 23.69 - 28.06
Exercised (79,100) 11.28 - 25.69
Expired or canceled (6,925) 22.75 - 29.00
Outstanding at
February 28, 1993 1,805,707 $11.28 - 29.00
Granted 85,019 19.25 - 25.75
Exercised (86,375) 11.28 - 23.21
Expired or canceled (82,236) 19.21 - 28.06
Outstanding at
February 28, 1994 1,722,115 $11.28 - 29.00
Granted 72,077 16.06 - 18.00
Exercised (26,100) 11.28 - 14.97
Expired or canceled (200,263) 11.28 - 29.00
Outstanding at
February 28, 1995 1,567,829 $14.97 - 29.00
Options exercisable at:
February 28, 1993 1,246,463 $11.28 - 29.00
February 28, 1994 1,443,027 $11.28 - 29.00
February 28, 1995 1,424,844 $14.97 - 29.00
Note 17: Retirement Plans
The Company sponsors two defined contribution plans and several defined
benefit retirement plans.
The defined contribution plans cover salaried, sales and certain
hourly employees in the United States and Canada. The Company makes
contributions equal to 50% of the employee's contribution subject to
certain limitations. Employer contributions were approximately $1.7
million in fiscal 1995, $2.1 million in fiscal 1994 and $1.8 million in
fiscal 1993.
In the United States and Canada, defined benefit plans cover
substantially all employees. Benefits are based on final average salary
for U.S. salaried employees, years of credited service for U.S. hourly
employees and career average pay for Canadian employees. These plans are
generally funded by contributions to tax-exempt trusts in amounts
sufficient to provide assets to cover the plans' benefits. Plan assets
consist principally of listed equity securities, fixed income securities
and cash equivalents.
Net pension cost for the defined benefit plans was as follows:
(in thousands) 1995 1994 1993
Service costs $ 2,483 $ 2,769 $ 2,381
Interest costs 12,102 12,277 11,936
Actual return on plan assets 2,337 (22,813) (7,790)
Net amortization and deferral (16,760) 8,272 (6,550)
Net pension cost (credit) $ 162 $ 505 $ (23)
The funded status of the defined benefit plans and the amounts
recognized in the balance sheets were as follows:
1995 1994
Assets Benefit Assets Benefit
Exceed Obli- Exceed Obli-
Benefit gations Benefit gations
Obli- Exceed Obli- Exceed
(in thousands) gations Assets gations Assets
Actuarial present value
of benefit obligations:
Vested $131,952 $ 8,183 $146,293 $ 8,332
Nonvested 4,142 1,014 5,105 1,107
Accumulated benefit
obligations 136,094 9,197 151,398 9,439
Effect of future
salary increases 3,185 810 5,130 1,041
Projected benefit
obligations 139,279 10,007 156,528 10,480
Plan assets at
fair value 157,284 - 174,826 -
Plan assets in
excess of (less
than) projected
benefit obligations 18,005 (10,007) 18,298 (10,480)
Unamortized prior
service cost 6,080 - 6,815 -
Unrecognized effect
from past experience
different from that
assumed 9,390 3,500 8,720 4,813
Unrecognized transition
(assets) obligations,
net of amortization (12,511) 802 (14,343) 1,203
Adjustment required
to recognize minimum
pension liability - (3,492) - (4,975)
Prepaid (accrued)
pension costs $20,964 $(9,197) $ 19,490 $(9,439)
The Company amortizes prior service costs and unrecognized gains and
losses on a straight-line basis over not more than 16 years. Other
assumptions used, which reflect weighted averages of the U.S. and Canadian
defined benefit plans, were as follows:
1995 1994
Average discount rate 8.6% 7.5%
Expected long-term return rate 9.5% 9.5%
Rate of increase in future compensation 4.0% 4.0%
In Venezuela, all employees are entitled to certain severance
indemnities based on compensation and cause of separation. This post-
employment arrangement qualifies as a defined benefit plan under the
provisions of Statement of Financial Accounting Standards No. 87,
"Employers' Accounting for Pensions." The Company has elected to define
the vested benefit obligation for this arrangement as the actuarial
present value of vested benefits the employee is entitled to if
immediately separated at the measurement date. This arrangement has not
been funded and the corresponding expense recognized was $3.8 million in
fiscal 1995, $3.7 million in fiscal 1994 and $3.1 million in fiscal 1993.
Note 18: Post-retirement Health and Life Insurance Benefits
The Company provides post-retirement health and life insurance benefits
for retirees in the United States and Canada who meet minimum age and
service requirements. The costs of the U.S. life insurance benefits are
funded over the employees' active working lives through contributions to
an insurance continuation fund maintained by an insurance company. Life
insurance benefits for Canadian retirees are funded on a pay-as-you-go
basis through an insurance company. Health care benefits for U.S. and
Canadian retirees are provided under a self-insured program administered
by an insurance company.
During fiscal 1993, certain of the Company's U.S. post-retirement
health benefit plans were amended resulting in a decrease in accumulated
benefit obligations and service and interest costs.
The net periodic post-retirement benefit cost was as follows:
(in thousands) 1995 1994 1993
Service costs $ 296 $ 458 $ 602
Interest costs 1,134 1,492 1,627
Net amortization and deferral (1,689) (1,944) (1,458)
Net post-retirement
benefits cost (credit) $ (259) $ 6 $ 771
The actuarial present value of benefit obligations and the amounts
recognized in the consolidated balance sheets were as follows:
(in thousands) 1995 1994
Actuarial present value of benefit obligations:
Retirees $11,718 $14,952
Fully eligible active plan participants 539 2,553
Other active plan participants 2,535 4,144
Accumulated benefit obligations 14,792 21,649
Unrecognized effect from past experience
different from that assumed 3,178 (2,840)
Unrecognized effect from plan amendments 3,747 6,949
Accrued post-retirement cost $21,717 $25,758
The assumed annual rate of future increases in per capita cost of
health care benefits ranged from 4% to 8% for each of the next 10 years
and 4% thereafter. These trend rates reflect the Company's prior
experience, plan provisions and management's expectation of future rates.
Increasing the health care cost trend by 1% in each year would increase
the accumulated benefit obligation by $1.0 million at February 28, 1995
and the service and interest cost by $0.1 million for fiscal 1995. The
discount rates used, which reflect weighted averages of the U.S. and
Canadian plans, were 8.6% and 7.4% in fiscal 1995 and fiscal 1994,
respectively.
The fiscal 1995 divestitures of the Frozen Specialty Foods and Meats
businesses resulted in curtailment gains totaling $2.4 million. The
curtailment gains are reflected in the gain and loss, respectively, on
these transactions.
Note 19: Multifoods' Business Segments
The Company's business segments are as follows:
- Foodservice Distribution consists of U.S. vending distribution
and limited-menu foodservice distribution and food exporting
business.
- Bakery consists of U.S. and Canadian bakery products and consumer
products in Canada, which includes primarily home baking products
and condiments.
- Venezuela Foods consists of bakery products, consumer products for
home baking and agricultural products.
- Divested Businesses consists principally of the frozen specialty
foods and meats businesses which were divested in fiscal 1995
and the surimi seafood business which the Company
anticipates divesting in fiscal 1996.
In fiscal 1995 the Company redefined its business segments and also
adopted a revised allocation process that provides that corporate general
and administrative costs are reflected as corporate expenses unless such
costs are associated with a business segment. Fiscal 1994 and 1993
segment financial information has been reclassified to conform with the
fiscal 1995 presentation.
Operating
Net Operating Unusual Earnings
(in millions) Sales Costs Items (Loss)
1995:
Foodservice Distribution $1,395.9 $(1,378.4) $ (6.2) $ 11.3
Bakery 459.2 (436.8) - 22.4
Venezuela Foods 317.7 (297.8) - 19.9
Divested Businesses 122.3 (110.4) 34.2 46.1
Corporate Expenses - (11.4) (1.8) (13.2)
Total $2,295.1 $(2,234.8) $ 26.2 $ 86.5
1994:
Foodservice Distribution $1,110.3 $(1,092.5) $ (9.1) $ 8.7
Bakery 440.3 (420.8) (29.4) (9.9)
Venezuela Foods 267.8 (243.5) - 24.3
Divested Businesses 340.0 (321.5) (30.7) (12.2)
Corporate Expenses - (12.3) (.8) (13.1)
Total $2,158.4 $(2,090.6) $(70.0) $ (2.2)
1993:
Foodservice Distribution $1,103.2 $(1,075.2) $ - $ 28.0
Bakery 426.6 (402.1) - 24.5
Venezuela Foods 249.3 (223.8) - 25.5
Divested Businesses 420.1 (410.2) - 9.9
Corporate Expenses - (12.8) - (12.8)
Total $2,199.2 $(2,124.1) $ - $ 75.1
<TABLE>
<CAPTION>
1995 1994 1993
---------------------------------- --------------------------------- ----------------------------------
Depreciation Depreciation Depreciation
Capital and Capital and Capital and
(in millions) Expenditures Amortization Assets Expenditures Amortization Assets Expenditures Amortization Assets
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Foodservice
Distribution $ 8.4 $10.2 $371.9 $20.8 $ 6.1 $248.8 $12.2 $ 5.3 $220.8
Bakery 15.2 9.1 251.0 18.3 8.9 238.4 21.9 7.7 217.3
Venezuela Foods 5.5 3.1 147.1 8.7 2.3 104.3 5.7 1.9 98.3
Divested Businesses 1.5 3.9 39.6 3.6 11.9 183.9 5.5 13.0 214.2
Corporate .2 .7 37.1 .5 .7 39.4 .4 .9 52.9
Total $30.8 $27.0 $846.7 $51.9 $29.9 $814.8 $45.7 $28.8 $803.5
</TABLE>
Amounts expended for business acquisitions are not considered as part of
capital expenditures. Assets are identifiable to business segments either
by their direct use or by allocations when used jointly by two or more
segments.
Note 20: Quarterly Summary (unaudited)
Operating
Net Operating Unusual Earnings
(in millions) Sales Costs Items (Loss)
First Quarter - 1995
Foodservice Distribution $293.3 $(288.3) $ - $ 5.0
Bakery 104.1 (103.0) - 1.1
Venezuela Foods 76.7 (74.2) - 2.5
Divested Businesses 73.8 (69.3) - 4.5
Corporate Expenses - (2.6) - (2.6)
Total $547.9 $(537.4) $ - $ 10.5
First Quarter - 1994
Foodservice Distribution $280.0 $(274.6) $ - $ 5.4
Bakery 101.4 (99.4) - 2.0
Venezuela Foods 65.3 (60.0) - 5.3
Divested Businesses 97.0 (93.5) - 3.5
Corporate Expenses - (3.4) - (3.4)
Total $543.7 $(530.9) $ - $ 12.8
Second Quarter - 1995
Foodservice Distribution $275.2 $(272.3) $ (6.2) $ (3.3)
Bakery 113.8 (109.2) - 4.6
Venezuela Foods 70.2 (66.0) - 4.2
Divested Businesses 17.1 (14.4) 32.9 35.6
Corporate Expenses - (3.0) - (3.0)
Total $476.3 $(464.9) $ 26.7 $ 38.1
Second Quarter - 1994
Foodservice Distribution $248.8 $(245.2) $ (9.1) $ (5.5)
Bakery 108.0 (103.0) (29.4) (24.4)
Venezuela Foods 66.6 (59.6) - 7.0
Divested Businesses 87.5 (82.5) (8.2) (3.2)
Corporate Expenses - (2.8) (.8) (3.6)
Total $510.9 $(493.1) $(47.5) $(29.7)
Third Quarter - 1995
Foodservice Distribution $423.3 $(417.3) $ - $ 6.0
Bakery 132.7 (122.6) - 10.1
Venezuela Foods 81.0 (74.8) - 6.2
Divested Businesses 16.4 (14.2) - 2.2
Corporate Expenses - (3.3) - (3.3)
Total $653.4 $(632.2) $ - $ 21.2
Third Quarter - 1994
Foodservice Distribution $297.2 $(291.0) $ - $ 6.2
Bakery 123.4 (115.7) - 7.7
Venezuela Foods 64.5 (59.0) - 5.5
Divested Businesses 81.2 (75.6) - 5.6
Corporate Expenses - (3.3) - (3.3)
Total $566.3 $(544.6) $ - $ 21.7
Fourth Quarter - 1995
Foodservice Distribution $404.1 $(400.5) $ - $ 3.6
Bakery 108.6 (102.0) - 6.6
Venezuela Foods 89.8 (82.8) - 7.0
Divested Businesses 15.0 (12.5) 1.3 3.8
Corporate Expenses - (2.5) (1.8) (4.3)
Total $617.5 $(600.3) $ (.5) $ 16.7
Fourth Quarter - 1994
Foodservice Distribution $284.3 $(281.7) $ - $ 2.6
Bakery 107.5 (102.7) - 4.8
Venezuela Foods 71.4 (64.9) - 6.5
Divested Businesses 74.3 (69.9) (22.5) (18.1)
Corporate Expenses - (2.8) - (2.8)
Total $537.5 $(522.0) $(22.5) $ (7.0)
<TABLE>
<CAPTION>
First Quarter Second Quarter Third Quarter Fourth Quarter Total Year
(dollars in millions, --------------- --------------- ---------------- --------------- ----------------
except per share amounts) 1995 1994 1995 1994 1995 1994 1995 1994 1995 1994
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross profit $98.9 $100.9 $82.7 $99.0 $112.4 $111.8 $99.2 $102.8 $393.2 $414.5
Net earnings (loss) 3.0 6.4 31.4(b) (27.2)(c) 10.9 12.5 11.7(d) (5.1)(e) 57.0 (13.4)
Per share (a) .17 .33 1.74(b) (1.41)(c) .61 .66 .65(d) (.28)(e) 3.16 (.72)
Dividends paid per share
of common stock .20 .20 .20 .20 .20 .20 .20 .20 .80 .80
Market price of
common stock:
Close 16 1/8 25 3/8 16 3/4 21 7/8 15 7/8 22 5/8 18 5/8 17 3/8 18 5/8 17 3/8
High 18 3/8 26 3/8 16 7/8 25 3/4 18 3/8 24 19 5/8 21 1/8 19 5/8 26 3/8
Low 15 1/8 23 5/8 15 3/8 20 15 3/4 21 1/4 15 7/8 16 3/4 15 1/8 16 3/4
</TABLE>
(a) Earnings per share is computed independently for each period presented.
As a result of the effect of common shares purchased for treasury, the
total of the per share results for the four quarters do not equal the
annual net earnings (loss) per share in fiscal 1995 and 1994.
(b) Includes a net after-tax benefit of $25.9 million, or $1.44 per share
from unusual items. The net benefit is the result of a gain from the
divestiture of the Company's Frozen Specialty Foods business and a
charge for the integration of the Company's limited-menu
foodservice distribution businesses.
(c) Includes a $36.3 million after-tax, or $1.88 per share charge from
unusual items. Included in unusual items were the disposition of
underperforming assets, the write-down of certain assets and
reorganization of operations.
(d) Includes a net after-tax benefit from unusual items of $3.1 million,
or $.17 per share. Unusual items included a benefit from a tax
settlement and costs associated with acquisition activities.
(e) Includes a $12.6 million after-tax loss, or $.69 per share principally
from the write-down of Meats business net assets to expected realizable
value
Six-Year Comparative Summary
<TABLE>
<CAPTION>
Fiscal year ended the last day of February
(dollars and shares in millions, except per share data) 1995 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
Consolidated Summary of Operations
Net sales $2,295.1 $2,158.4 $2,199.2 $2,264.8 $2,175.7 $2,065.9
Cost of sales (1,901.9) (1,743.9) (1,783.4) (1,817.8) (1,744.2) (1,678.3)
Delivery and distribution (146.2) (141.8) (141.7) (138.0) (128.3) (106.4)
Selling, general and administrative (186.7) (204.9) (199.0) (224.1) (217.6) (207.5)
Unusual items 26.2 (70.0) - 3.4 1.0 (2.1)
Financing costs (14.8) (10.5) (10.8) (18.8) (20.7) (26.9)
Earnings (losses) from unconsolidated affiliates - (12.2) 1.8 (2.1) .3 .9
Earnings (loss) before income taxes and cumulative
effect of accounting change 71.7 (24.9) 66.1 67.4 66.2 45.6
Income taxes (14.7) 11.5 (24.9) (28.3) (31.0) (20.3)
Earnings (loss) before cumulative
effect of accounting change 57.0 (13.4) 41.2 39.1 35.2 25.3
Cumulative effect of accounting change, net of taxes - - - (17.1) - -
Net earnings (loss) $ 57.0 $ (13.4) $ 41.2 $ 22.0 $ 35.2 $ 25.3
Earnings (loss) per share of common stock:
Before cumulative effect of accounting change $ 3.16 $ (.72) $ 2.13 $ 2.00 $ 1.81 $ 1.30
Cumulative effect of accounting change - - - (.88) - -
Net earnings (loss) per share of common stock $ 3.16 $ (.72) $ 2.13 $ 1.12 $ 1.81 $ 1.30
Year-End Financial Position
Current assets $ 471.7 $ 439.3 $ 415.9 $ 413.3 $ 427.6 $ 474.1
Current liabilities 316.0 301.7 243.5 285.4 312.5 348.0
Working capital 155.7 137.6 172.4 127.9 115.1 126.1
Property, plant and equipment, net 228.0 245.9 245.7 221.3 239.2 218.7
Long-term debt, net of current portion 183.1 195.1 167.0 103.9 115.0 134.6
Shareholders' equity 291.1 250.0 322.0 313.1 320.6 303.0
Total assets 846.7 814.8 803.5 767.7 805.6 844.3
Dividends Paid
Preferred stock $ .2 $ .2 $ .2 $ .2 $ .2 $ .2
Common stock 14.4 15.2 15.4 15.4 15.2 15.2
Per share of common stock .80 .80 .80 .80 .79 .79
Other Financial Data
Current ratio 1.5:1 1.5:1 1.7:1 1.4:1 1.4:1 1.4:1
Return on beginning shareholders' equity 22.7% (4.2)% 13.1% 12.1%* 11.5% 8.5%
Equity per share of common stock $ 16.16 $ 13.63 $ 16.64 $ 16.19 $ 16.41 $ 15.68
Debt to total capitalization 45% 50% 37% 33% 34% 50%
Depreciation $ 22.8 $ 24.9 $ 23.8 $ 24.7 $ 24.1 $ 22.4
Capital expenditures, excluding acquisitions $ 30.8 $ 51.9 $ 45.7 $ 51.2 $ 57.3 $ 46.2
Average common shares outstanding 18.0 18.9 19.3 19.5 19.4 19.3
Number of common shareholders 5,234 4,939 5,097 5,113 5,008 5,273
Number of employees 7,495 8,390 8,341 8,231 9,140 9,172
Market price per share of common stock:
At year-end $ 18 5/8 $ 17 3/8 $ 25 3/4 $ 26 3/8 $ 25 5/8 $ 16 1/2
Range for year $ 19 5/8- $ 26 3/8- $ 28 7/8- $ 31 1/2- $ 26 1/2- $ 22 1/4-
15 1/8 16 3/4 23 1/4 23 7/8 16 3/8 16 1/8
</TABLE>
*Exclusive of cumulative effect of accounting change.
Exhibit 21
SUBSIDIARIES OF INTERNATIONAL MULTIFOODS CORPORATION
The following is a list of the Company's subsidiaries as of March 1,
1995, except for unnamed subsidiaries which, considered in the aggregate as
a single subsidiary, would not constitute a significant subsidiary.
Jurisdiction
of
Name of Subsidiary Incorporation
Damca International Corporation Delaware
Inversiones MONACA, C.A. Venezuela
Molinos Nacionales, C.A. (MONACA) Venezuela
Robin Hood Multifoods Inc. Ontario
Multifoods Inc. Ontario
Gourmet Baker Inc. Ontario
980964 Ontario Limited Ontario
Fantasia Confections, Inc. California
JAC Creative Foods, Inc. California
Multifoods Seafood (Canada) Inc. Ontario
MINETCO - Minnesota International Export Trading Company, Inc. Minnesota
Multifoods Bakery Distributors, Inc. Delaware
Multifoods Bakery International, Inc. Delaware
Multifoods Specialty Distribution, Inc. Delaware
Multifoods Seafood, Inc. Delaware
Northeast Bakery Company Delaware
VSA, Inc. Colorado
Vendors Supply of America Corporation Delaware
Exhibit 23
Independent Auditors' Consent
The Board of Directors
International Multifoods Corporation:
We consent to incorporation by reference in Registration Statements No. 33-
48073 on Form S-8 relating to the Employees' Voluntary Investment and Savings
Plan of International Multifoods Corporation, No. 2-99818 on Form S-8 relating
to the Stock Purchase Plan of Robin Hood Multifoods Inc., No. 2-84236 on Form
S-8 relating to the 1983 Stock Option Incentive Plan of International
Multifoods Corporation, No. 33-6223 on Form S-8 relating to the 1986 Stock
Option Incentive Plan of International Multifoods Corporation, No. 33-30979
relating to the Amended and Restated 1989 Stock-Based Incentive Plan of
International Multifoods Corporation and No. 33-6978 on Form S-3 relating to
certain debt securities of International Multifoods Corporation of our reports
dated April 12, 1995, relating to the consolidated balance sheets of
International Multifoods Corporation and subsidiaries as of February 28 1995
and 1994 and the related consolidated statements of operations and cash flows
and related financial statement schedule for each of the fiscal years in the
three-year period ended February 28, 1995, which reports appear or are
incorporated by reference in the Annual Report on Form 10-K for the fiscal
year ended February 28, 1995, of International Multifoods Corporation.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Minneapolis, Minnesota
May 12, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED BALANCE SHEET, STATEMENTS OF OPERATIONS AND CASH FLOWS
AND ACCOMPANYING NOTES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS AND NOTES.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1995
<PERIOD-END> FEB-28-1995
<CASH> 10,792
<SECURITIES> 0
<RECEIVABLES> 149,132
<ALLOWANCES> 6,658
<INVENTORY> 256,878
<CURRENT-ASSETS> 471,697
<PP&E> 334,059
<DEPRECIATION> 106,034
<TOTAL-ASSETS> 846,705
<CURRENT-LIABILITIES> 315,992
<BONDS> 183,087
<COMMON> 2,184
3,604
0
<OTHER-SE> 288,878
<TOTAL-LIABILITY-AND-EQUITY> 846,706
<SALES> 2,295,119
<TOTAL-REVENUES> 2,295,119
<CGS> 1,901,932
<TOTAL-COSTS> 1,901,932
<OTHER-EXPENSES> 146,220
<LOSS-PROVISION> 4,477
<INTEREST-EXPENSE> 15,970
<INCOME-PRETAX> 71,739
<INCOME-TAX> 14,718
<INCOME-CONTINUING> 57,021
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 57,021
<EPS-PRIMARY> 3.16
<EPS-DILUTED> 3.16
</TABLE>
