SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended Commission File Number
March 31, 1994 No. 0-13943
STOKELY USA, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
WISCONSIN 39-0513230
- ------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1055 Corporate Center Drive, Oconomowoc, WI 53066
- --------------------------------------------------
(Address of principal executive office)
Registrant's telephone number, including area code: (414) 569-1800
---------------
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.05 par value
----------------------------
(Title of Class)
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 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
-----
Page 1 of 91<PAGE>
State the aggregate market value of the voting stock held by non-affiliates
of the registrant as of June 15, 1994: $85,327,611
Common Stock, $.05 par value
Number of shares of Common Stock, $.05 par value, outstanding as of
June 15, 1994 - 8,324,645
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Registrant's Proxy Statement to be dated July 18, 1994 (Part
III).
Page No. 2 of 91 pages
----
Exhibit index located on pages 58-61
Page 2 of 91 <PAGE>
Part I
------
ITEM 1. BUSINESS
- -----------------
(a) General Development of Business
-------------------------------
Stokely USA, Inc. (herein referred to as "Stokely" or the "Company") was
established and incorporated in Wisconsin in 1920. The Company is engaged
principally in the business of processing, marketing and selling a broad
range of vegetables, fruits and tomato products under the nationally
recognized "Stokely Finest" and other brand labels; under customer private
labels; and to food service and industrial customers.
The Company reported a net loss of $2,215,000 in 1994, compared to a net
loss of $31,127,000 in 1993. This improvement was achieved primarily
through improved market pricing conditions in 1994, combined with reduced
operating costs resulting primarily from staff reductions and consolidation
of production at larger, more efficient facilities.
In addition, in 1993, the Company recorded a one-time, noncash charge of
$14,675,000 ($21,145,000 pretax) which related to the write-down of seven
plants to be sold, closed or downsized and the associated costs of the
downsizing. The Company believes that this restructuring, which is
expected to be completed in 1995, will eliminate marginally profitable
sales, reduce operating overhead and reduce debt requirements. The 1993
loss was attributable to the Company's adoption of SFAS 106 "Employers
Accounting for Post-Retirement Benefits Other than Pensions," which
establishes certain accounting standards for employers' accounting for
post-retirement health care benefits. By adopting SFAS 106, the Company
accrued an amount for future post-retirement health care benefits equal to
$1,650,000 ($2,500,000 pre-tax)
(b) Financial Information about Industry Segments
---------------------------------------------
Stokely's business is conducted in one industry segment: the processing,
marketing and selling of vegetables, fruits and tomato products. The
following table sets forth the approximate percentage of net sales
contributed by each of Stokely's principal raw product groups.
1994 1993 1992
---- ---- ----
Corn 35.8% 35.4% 33.2%
Beans 17.4 16.2 16.2
Peas 13.0 13.4 15.2
Fruits .8 1.5 2.7
Tomato Products 1.7 4.4 5.2
Beets 3.0 2.7 3.2
Carrots 4.8 4.9 4.8
Asparagus 2.1 2.8 2.9
Mixed Vegetables 5.6 2.3 3.2
Other 15.8 16.4 13.4
------ ------ ------
Total 100.0% 100.0% 100.0%
Page 3 of 91<PAGE>
(c) Narrative Description of Business
---------------------------------
Stokely processes, markets and sells a broad range of vegetables, fruits
and tomato products under the nationally recognized "Stokely's Finest"
label and other brand labels; under customer private labels; and to food
service and industrial customers. Stokely's retail sales are made to major
national and regional supermarket chains, to wholesale distributors and to
military commissaries. Food service and industrial sales are made to
restaurants, distributors and other food companies.
The wide consumer awareness of the "Stokely's Finest" brand name as a
premium quality product is viewed by the Company as a significant aspect of
its business. In addition, the breadth and mix of its product lines and
the fact that its products include both basic and specialty vegetables and
high and low price items, enable Stokely to appeal to many different
consumer markets.
The following table shows the sales and percentage of total sales,
contributed by the Company's brand label, private label and food
service/institutional market groups for each of the last three fiscal
years.
<TABLE>
Sales by Market Group
(dollars in millions)
<CAPTION>
1994 1993 1992
Sales Percent Sales Percent Sales Percent
<S> <C> <C> <C> <C> <C> <C>
Brand Label $ 49.4 19.3% $ 60.9 21.6% $ 75.8 27.0%
Private Label 94.9 37.1 110.5 39.3 101.3 36.1
Food-service/Industrial 111.8 43.6 110.0 39.1 103.3 36.9
------ ---- ------ ---- ------ ----
Total $256.1 100% $281.4 100% $280.4 100%
====== ==== ====== ==== ====== ====
</TABLE>
Products under Stokely's brand labels are marketed through independent food
brokers who sell on a commission basis and provide local marketing and
service to their distributors. Of the 19% of sales under Stokely's brand
labels, approximately 16% are under its major label, "Stokely's Finest,"
and approximately 3% are under other regional brand labels.
Page 4 of 91<PAGE>
Private label sales involve sales to major supermarket chains and other
food distributors of products who market under their own labels. These
sales are made through the Company's wholly-owned subsidiary, Oconomowoc
Canning Company, Inc. ("OCC"). Most private label sales are made through
commissioned brokerage representatives.
Food-service/industrial sales involve sales, generally in larger
containers, directly to or through food-service distributors, to purchasers
of food products such as the United States government, fast-food chains,
restaurants and hospitals. Sales of frozen products to food-
service/industrial customers are primarily to other food processors for
repackaging.
For the fiscal year ended March 31, 1994, no single customer accounted for
more than 10% of Stokely's sales.
Stokely supports its marketing efforts with regional media advertising
programs, including radio and television commercials, coupon circulation,
newspaper and magazine advertisements, in addition to strong emphasis on
in-store point-of-sale promotions.
Raw Products and Processing
- ---------------------------
Stokely acquires its raw agricultural products for processing from selected
growing areas in close proximity to each producing plant. This is
important since most products are "fresh-packed" within hours of harvest.
Most raw agricultural production is contracted before the growing season
with farmers who agree to plant and cultivate the crops. The price of the
crops is negotiated before the growing season as part of the contract.
This method of securing raw product has been satisfactory to the Company
and growers. Stokely has not experienced difficulty in obtaining
sufficient quantities of raw agricultural products to meet production
demands.
Stokely is intimately involved in all phases of crop production. Stokely
provides the varieties of seed, conducts periodic inspections of crops
during the growing cycle and performs the actual harvesting for the
growers. In addition, Stokely continually instructs the growers on when to
plant and how to grow its raw products. Approximately one-third of the
land on which Stokely's products are grown is irrigated, which, along with
the wide diversification of Stokely-supervised acreage throughout the
Midwest, and the Pacific Northwest, helps to minimize the risks posed by
unfavorable growing conditions.
Stokely purchases its can requirements from several can suppliers. Payment
for the cans is deferred as is customary in the industry. Stokely has good
working relationships with its can vendors and has not experienced any
difficulty in obtaining adequate supplies of cans for production.
Page 5 of 91<PAGE>
Trademarks
- ----------
"Stokely's Finest" is a registered United States trademark and is of
material importance to the Company since approximately 19% of sales are
attributable to products bearing this trademark. Stokely's ability to
compete in all segments of the market depends upon having a nationally
recognized trademark. "Singles," "Newport," "School Days," "Chef's Best,"
"Hart," "Our Favorite," "Shellie," "Teenie Weenie" and "Meeter's" are also
registered United States trademarks and, while important, are not as
significant to the Company's business as "Stokely's Finest." If
continuously used (and registered), United States trademarks may be held
exclusively by the owner for an indefinite period. With the exception of
the "Meeter's" and "Singles" labels, all the foregoing trademarks have been
continuously used by Stokely.
Competition
- -----------
All Stokely products compete with those of national and major regional food
processors under highly competitive conditions. The largest of these
competitors is Del Monte. The principal factors of competition in the
industry are product quality, availability of a broad line of products and
price. An additional competitive factor is consumer demand for Company
products as developed in advertising, sales promotion and maintenance of
retail shelf space. Stokely believes its products are competitive with
similar products of other food processors.
Industry Trends
- ---------------
Sales of canned and frozen vegetables and fruit products represent an
approximately $18 billion per year industry in the United States. Sales of
frozen vegetables (excluding potato products) now represent approximately
40% of total processed vegetable sales. A poor growing season during 1994
reduced inventory levels industry-wide, resulting in improved market
pricing and profitability. In general, consumption on canned vegetables
has been flat while consumption of frozen vegetables has shown slight
increases in recent years.
Page 6 of 91<PAGE>
Regulations
- -----------
The disposal of solid and liquid waste material resulting from the
preparation and processing of foods is subject to various federal, state
and local laws and regulations relating to the protection of the
environment. While Stokely cannot predict with certainty the effect of any
proposed or future environmental legislation or regulations on its
processing operations, Stokely believes the waste disposal systems which
are now in operation or which are being constructed and designed for
Stokely are sufficient to comply with all currently applicable
environmental laws and regulations. Expenditures for facilities related to
protection of the environment are made pursuant to Stokely's capital budget
and have not had, nor are they expected to have, a material effect on the
earnings of Stokely.
Stokely is subject to regulation by the Food and Drug Administration, the
United States Department of Agriculture, the Federal Trade Commission, the
Environmental Protection Agency and various state agencies with respect to
the production, packaging, labeling and distribution of its food products,
and believes it is in material compliance with all applicable rules and
regulations of such federal and state agencies.
Employees
- ---------
Stokely recognizes the importance of each employee to financial success,
and accordingly strives to maintain excellent employee relations. At peak
employment periods during the processing season, the Company employs
approximately 5,000 employees, of which approximately 4,900 are engaged in
harvesting and processing and the balance in management, sales and
administration. Approximately 50% of Stokely's regular hourly and some
seasonal employees belong to labor unions. Stokely's eight union contracts
are generally three years in length and provide for wage increases ranging
from 1% to 5.5% during fiscal 1995. During fiscal 1995, two union
contracts will expire on December 31, 1994 and March 31, 1995.
Employment Summary During Peak Processing
-----------------------------------------
Management, sales & administration 100
Full-time, year round production 700
Seasonal and part-time production 4,200
-----
Total peak production employment 5,000
=====
d) Foreign Operations
------------------
The Company has no foreign production facilities; however, export sales
constituted 7.4% of total Company sales in fiscal 1994.
Page 7 of 91<PAGE>
ITEM 2. PROPERTIES
- -------------------
Stokely's facilities are briefly described below:
Square
Location Footage Products Processed
- -------- ------- ------------------
Ackley, IA 199,000 Whole Kernel Corn; Bagged and
Canned Dry Pack Beans
Appleton, WI <F1> 121,000 Peas; Canned and Glass-packed
Beets; Potatoes; Carrots
DeForest, WI 450,000 Warehouse and Distribution Center;
Field Department Office; ANC
Express, Inc.
Cobb, WI 65,000 Warehouse
Grandview, WA 86,000 Frozen Sugar Snap Peas; Corn;
Asparagus
Green Bay, WI 76,000 Frozen Peas; Whole Kernel Corn;
Green Beans; Carrots
Hoopeston, IL 240,000 Asparagus; Golden Whole Kernel
Corn; Lima Beans; Pumpkin
Jefferson, WI <F1> 28,000 Frozen Vegetables repackaging
Merrill, WI 56,000 Green; Wax and Shellie Beans
Pickett, WI 145,000 Peas; Whole Kernel Corn
Poynette, WI 345,000 Green and Wax Beans; Sauerkraut,
Shellie Beans and Distribution
Center
Scottville, MI 238,000 Green Beans
Sun Prairie, WI 108,000 Peas; Peas and Carrots; Golden and
White Whole Kernel Corn; Lima
Beans; Succotash; Mixed Veg; Beets
Walla Walla, WA 199,000 Frozen Asparagus; Peas; Zucchini;
Carrots; Lima Beans; Onions; Squash
Waunakee, WI 181,000 Peas; Peas and Carrots; Whole
Kernel Corn; Beets; Carrots;
Potatoes; Mixed Vegetables
Wells, MN 103,000 Peas and Cream Style Corn
---------
2,640,000
Oconomowoc, WI 52,000 General Office
---------
2,692,000
=========
[FN]
<F1> Facility was closed during 1994 as part of the Company's
restructuring plan and is being held for sale.
Page 8 of 91<PAGE>
All of the facilities and related real estate are owned by Stokely, subject
to mortgages and collateral assignments under loan agreements with
Stokely's lenders. See Note F, to Notes to Consolidated Financial
Statements for the year ended March 31, 1994, presented in Item 8 of this
annual report. Stokely's facilities operate at or near capacity during the
processing season. Except for the Poynette sauerkraut, and Ackley plants,
which run year-round, and the general office facility in Oconomowoc,
Stokely utilizes its facilities principally from June through November, as
is customary in the food processing industry. Certain distribution and
repackaging facilities also operate year-round. Stokely believes these
facilities are adequate for current processing needs and with the ongoing
capital improvement program to increase capacity and modernize facilities,
will be able to meet presently anticipated future needs. Stokely believes
all of its plants are in good condition and cost efficient.
ITEM 3. LEGAL PROCEEDINGS
- --------------------------
There are no material legal proceedings pending.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------
No matters were submitted to shareholders during the fourth quarter of the
fiscal year.
Page 9 of 91<PAGE>
Executive Officers of the Company
---------------------------------
The following is a list of Stokely's officers, their ages and their
positions and office at June 15, 1994.
Name Age Office and Business Experience
- ---- --- ------------------------------
Frank J. Pelisek 63 Chairman of the Board since 1992; Chief
Executive Officer June 1992-93; Director
since 1983; Partner, Michael Best and
Friedrich (legal counsel to Stokely) since
1965.
Stephen W. Theobald 48 Vice Chairman and Treasurer since
June 1992; director since 1980;
Vice President Administration since
1985 when he joined Stokely.
Vernon L. Wiersma 44 Chief Executive Officer since August 1993;
President since June 1992; Executive Vice
President from 1985-92; Director since 1982;
Vice President Stokely Operations 1983-
85; Controller 1975-83; joined Stokely in
1973.
Robert M. Brill 46 Vice President, General Counsel and
Secretary since 1990; Vice
President and General Counsel since
1989; Senior Partner, Brill and
Eustice, 1986-89; joined Stokely in
1989.
Robert Cook 43 Vice President, Operations since
1990; Director of Operations since
1989; joined Stokely in 1985.
Eddie W. Foster 56 Vice President, National Sales
Manager since 1991; President,
Merchandise Warehouse, Inc. 1990-
91; President LVS Food Distributors
1989-90; Vice President of
Marketing and Sales Stokely USA,
Inc. 1983-89.
Robert J. Lenz 54 Vice President, Technical Services
since 1980; joined Stokely in 1966.
Michael A. Wilkes 39 Vice President Human Resource and
Development since August 1993; Director Total
Quality Management 1991-93; Manager,
Management and Organization Development 1983-
91; joined Stokely in 1991.
Page 10 of 91<PAGE>
Kenneth C. Murray 36 Vice President, Canned Sales and
Marketing since 1992. Director of
Marketing and Business Development
since 1990 when he joined Stokely.
Russell J. Trunk 53 Senior Vice President, Operations
since 1992; General Manager
Texas/Mexico Operations from 1991-
92; joined Stokely in 1991.
Leslie J. Wilson 50 Vice President, Finance and Chief
Financial and Accounting Officer
since June 1992; Vice President and
General Manager, Packaging
Specialties, Inc. 1990-92; Vice
President Finance and
Administration, Duetz-Allis Credit
1976-90; joined Stokely in 1992.
Family Relationships
- --------------------
There are no family relationships among the officers listed and there are
no arrangements or understandings pursuant to which any of them were
elected as officers. All officers hold office for one year and until their
successors shall have been duly elected and qualified.
Page 11 of 91<PAGE>
PART II
-------
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
SECURITY HOLDER MATTERS
-----------------------
(a) Market Information
------------------
Stokely common stock is traded on the NASDAQ National Market System. The
market symbol is STKY. Bank One, Indianapolis, NA, Bank One Center, 111
Monument Circle - Suite 1611, Indianapolis, Indiana 46277 serves as
transfer agent. The following table sets forth the range of high and low
sales price for the common stock for the periods indicated as reported on
the NASDAQ National Market System for the periods indicated. Quotations
represent the price between dealers and do not reflect retail markups,
markdowns or commissions.
Quarterly Common Stock Price Range
----------------------------------
(dollars per share)
Market Price
High Low
1994 ---- ---
First Quarter 10 1/8 5 3/4
Second Quarter 9 3/4 7 3/4
Third Quarter 9 5/8 7 3/4
Fourth Quarter 8 3/4 7
1993
First Quarter 9 5 1/4
Second Quarter 7 1/2 6 1/8
Third Quarter 8 3/4 6 1/8
Fourth Quarter 11 3/8 6 5/8
(b) Holders
-------
At June 15, 1994, there were 1,158 holders of record of the shares of
common stock.
Page 12 of 91<PAGE>
(c) Dividends
---------
The Company's long-term debt agreements contain certain conditions and
provisions which restrict the Company's payment of dividends. At March 31,
1994, all of the retained earnings are restricted as to the payment of cash
dividends.
For information regarding restriction of the payment of cash dividends, see
Note F to Notes to Consolidated Financial Statements for the year ended
March 31, 1994, in Item 8 of this annual report.
Page 13 of 91<PAGE>
<TABLE>
ITEM 6. SELECTED FINANCIAL DATA
- --------------------------------
(Dollars in thousands except per share data)
<CAPTION>
Years Ended March 31,
SUMMARY OF OPERATIONS 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Net Sales $256,145 $281,382 $280,368 $257,520 $271,963
Other Income 4,691 2,145 676 1,090 (436)
-------- -------- -------- -------- ---------
Total net revenues 260,836 283,527 281,044 258,610 271,527
Cost of product sold 216,392 249,982 238,804 204,922 193,454
Selling, general and
administrative expenses 36,476 42,139 48,481 40,902 44,461
Nonrecurring charge 21,145 <F3>
-------- -------- -------- ------- --------
Operating earnings(loss) 7,968 (29,739) (6,241) 12,786 33,612
Interest expense 12,710 12,721 8,592 7,082 4,721
-------- -------- -------- -------- --------
Earnings (loss) before
income taxes and cumulative
effect of change in
accounting principle (4,742) (42,460) (14,833) 5,704 28,891
Income taxes (credit) (2,527) (12,983) (4,931) 1,888 11,156
-------- -------- -------- ------- --------
Earnings (loss) before
cumulative effect of
change in accounting
principle (2,215) (29,477) (9,902) 3,816 17,735
Cumulative effect of change
in method of accounting
postretirement benefits(net
of income taxes of $850) (1,650)
--------- --------- --------- ------- -------
Net earnings (loss) $ (2,215) $(31,127) $ (9,902) $ 3,816 $17,735
========= ========= ========= ======= =======
COMMON STOCK DATA
Net earnings (loss)
per share $(0.27) $(3.75)<F2> $ (1.19) $ .46 $ 2.15
Dividends per share 0.20 0.20 0.26<F1>
Stockholders' equity
per share 3.92 4.18 7.93 9.33 9.07
Average shares out-
standing (thousands) 8,320 8,302 8,288 8,287 8,260
Shares outstanding at
year-end (thousands) 8,325 8,316 8,291 8,282 8,279
<FN>
<F1> Includes $0.10 per share special dividend.
<F2> Includes $0.20 per share loss due to post-retirement benefits accounting method change.
See Note E to Notes to Consolidated Financial Statements.
<F3> See Note B to Notes to Consolidated Financial Statements.
</TABLE>
Page 14 of 91<PAGE>
<TABLE>
ITEM 6. SELECTED FINANCIAL DATA (CONTINUED)
- --------------------------------------------
<CAPTION>
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
BALANCE SHEET AND FINANCIAL DATA
March 31,
Working capital $ 42,071 $ 40,626 $ 80,064 $ 84,584 $ 70,631
Current ratio 2.03 1.38 2.39 2.60 3.20
Property, plant and
equipment (net) 67,356 68,419 90,794 72,078 64,620
Total assets 158,535 232,843 233,737 213,067 169,892
Long-term debt 80,438 <F4> 82,854 <F4> 96,466 70,604 50,603
Stockholders' equity 32,640 34,777 65,761 77,266 75,100
Years ended March 31,
Capital expenditures (net) 5,174 12,871 21,713 18,033 15,927
Depreciation 7,230 9,286 8,461 6,835 5,099
Cash dividends declared 1,658 1,658 2,150
<FN>
<F4> See Note F to Notes to Consolidated Financial Statements.
</TABLE>
Page 15 of 91<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
The information provided below with respect to financial condition and
results of operations is intended to assist in understanding the Company's
operations and condition as set forth in the Consolidated Financial
Statements.
During the fourth quarter of 1994, the Company changed its method of valuing
inventories from the last-in, first-out (LIFO) method to the average cost
method. In accordance with Generally Accepted Accounting Principles, the
prior year financial statements have been retroactively adjusted to reflect
this change. See Note C to Financial Statements.
FINANCIAL CONDITION
Working Capital
- ---------------
Working capital and current ratio are two financial measurements which
provide an indication of the Company's ability to meet its short-term
obligations. These measurements at March 31, 1994, 1993 and 1992 were as
follows:
1994 1993 1992
- ----------------------------------------------------------------
Working capital (in thousands) $42,071 $40,626 $80,064
Current ratio 2.03 1.38 2.39
In 1994 major improvements were made in the Company's working capital and
current asset position. Working capital improved $1,445,000 to $42,071,000
and the ratio of current assets over current liabilities improved from 1.38
to 2.03. These improvements were the result of a combination of factors,
including a decrease in accounts receivable, inventory reduction programs
designed to reduce short-term debt and the favorable resolution of technical
defaults of financial covenants of certain Industrial Revenue Development
Bonds classified as short-term debt in 1993. Accounts receivable decreased
$20,983,000 from $41,515,000 at March 31, 1993 due primarily to lower fourth
quarter sales caused by inventory shortages at March 31, 1994.
Inventory levels at March 31, 1993, were unusually high due to two
consecutive years of highly favorable growing conditions. The Company's
aggressive inventory reduction programs in the first fiscal quarter of 1994
combined with the elimination of certain product lines and the adverse
growing and harvesting conditions during 1994 reduced inventories by
$45,335,000 to $55,256,000 at March 31, 1994 from $100,591,000 at March 31,
1993.
Page 16 of 91<PAGE>
During 1993, certain long-term Industrial Revenue Development Bond issues
were classified as current liabilities because the Company was in technical
default of certain financial ratio covenants. This resulted in a decrease in
working capital from 1992 to 1993. During 1994, financial covenants in all
affected issues except a $1,400,000 Paulding, Ohio bond were amended by the
bondholders, such that the Company was again in compliance. Accordingly, the
amended bonds were again classified as long-term debt at March 31, 1994,
resulting in an increase in working capital of $26,195,000.
Current assets declined $65,848,000 to $82,933,000 at March 31, 1994 from
$148,781,000 at March 31, 1993, facilitating a reduction in notes payable of
$31,266,000, (including the reduction of $18,000,000 in notes payable
classified as long-term debt) and accounts payable by $25,292,000 in fiscal
1994. Overall current liabilities decreased $67,293,000 to $40,862,000 at
March 31, 1994 from $108,155,000 at March 31, 1992.
Assets
- ------
Total assets decreased by $74,308,000 to $158,535,000 at March 31, 1994 from
$232,843,000 at March 31, 1994, primarily as a result of reduction in current
assets discussed in the preceding review of working capital, combined with a
$6,941,000 reduction in net property, including property held for
disposition. Property held for disposition was reduced by the sale of
various plants during 1994 as a part of the restructuring of the Company.
Cash Flows from Operating Activities
- ------------------------------------
During 1994, the Company realized significant improvements in cash flow from
operating activities, using these proceeds primarily to reduce short term
debt, including accounts payable. Net cash provided by operations improved
$36,624,000 in 1994 from $1,443,000 provided in 1993. The increase in cash
provided by operations is attributable in part to an improvement of
$13,320,000 in cash generated from net earnings in 1994. Earnings provided
cash of $6,050,000 in 1994, compared to a use of cash of $7,270,000 in 1993.
Additionally, cash provided by changes in operating assets and liabilities
increased $23,305,000 primarily from the benefits of inventory and accounts
receivable reductions of $45,335,000 and $20,983,000 respectively, offset in
part by a reduction in accounts payable of $25,292,000.
Page 17 of 91<PAGE>
Cash Flows from Investing Activities
- ------------------------------------
Net cash provided by (used in) investing activities in 1994, 1993 and 1992
were $3,793,000; ($7,278,000); and ($33,531,000), respectively. Purchase of
property, plant and equipment was $5,174,000; $12,871,000; and $21,713,000 in
1994, 1993 and 1992, respectively.
Capital expenditures in 1994, financed through short-term debt, were focused
on improved plant efficiency and on-going compliance with environmental
regulations. Expenditures in 1994 included capacity consolidation and
operation efficiency projects at the Pickett, Wisconsin and Waunakee,
Wisconsin facilities, and improvements to a wastewater disposal system in
Walla Walla, Washington. These capital expenditures were financed through
cash flow from operations. There were also capital expenditures to complete
the reconstruction of the Hoopeston, Illinois facility that was damaged by
fire in 1993, which were financed with insurance proceeds.
Capital expenditures in 1993 included expansion of corn capacity at the
Wells, Minnesota, facility, wastewater disposal systems at the Paulding,
Ohio, and Scottville, Michigan, facilities and completion of the corporate
offices in Oconomowoc, Wisconsin. The capital expenditures were financed
through short-term debt. Capital expenditures were also made to begin
rebuilding the Hoopeston, Illinois, facility that was damaged by fire. These
expenditures were financed by insurance proceeds. In 1992 the Company
acquired the assets of Americana Packing and Distribution (APD) of McAllen,
Texas for $9,260,000.
Cash Flows from Financing Activities
- ------------------------------------
The following table sets forth the Company's capitalization for the past
three years:
(Dollars in Thousands)
1994 1993 1992
Amount % Amount % Amount %
Current maturities on
long-term debt $ 3,868 3.2 $ 2,259 1.5 $2,138 1.2
Long-term debt classi-
fied as a current
liability 26,195 17.1
Long-term debt 80,438 66.2 82,854 54.1 96,466 55.3
-------- ---- -------- ---- ------- ----
Total long-term debt 84,306 69.4 111,308 72.7 98,604 56.5
Other liabilities 4,595 3.8 7,057 4.6 10,219 5.9
Stockholders' equity 32,640 26.8 34,777 22.7 65,761 37.6
-------- ---- -------- ---- -------- ----
Total capitalization $121,541 100% $153,142 100% $174,584 100%
Page 18 of 91<PAGE>
The Company has a multi-year revolving credit facility with various lenders.
At March 31, 1994, the Company had $34,992,000 of borrowings under the
facility of which $17,000,000 was classified as long-term and $17,992,000 was
classified as short-term as it is expected to be repaid within the next year.
At March 31, 1993, the Company had $66,258,000 of borrowings under the
facility, of which $35,000,000 was classified as long-term and $31,258,000
was classified as short-term. During 1994 the Company decreased short-term
borrowings by $31,266,000 through planned cash flow improvements from the
reduction in accounts receivable and inventories.
In 1993, $26,195,000 of the Company's Industrial Revenue Development Bonds
were classified as short-term due to the Company being in technical default
of certain financial ratio covenants. Amendments to these financial
covenants were approved by the bondholders in 1994 and the related bond
issues have been reclassified at March 31, 1994 as long-term debt.
Additional information on the rate and maturity of long-term debt is
discussed in Note F of Notes to the Consolidated Financial Statements.
In 1992 the Company issued new long-term debt consisting of a $20,000,000
private placement and a $3,000,000 Industrial Revenue Bond. In 1992
$20,000,000 of commercial paper borrowings were classified as long-term debt.
Liquidity and Capital Resources
- -------------------------------
Due to the seasonal production nature of the canned and frozen vegetable
processing business, the Company must maintain substantial inventories of
processed vegetables throughout the year. These inventories are generally
financed through seasonal borrowings. The maximum borrowed for such purposes
in 1994 was $68,872,000 as compared to $97,495,000 in 1993 and $87,975,000 in
1992. The decrease of approximately $29,000,0000 in maximum seasonal
borrowings from 1993 to 1994 was due primarily to the Company's initiatives
to lower inventory levels and lower operating costs. Improved operating
results and reduced inventories in 1994 have expanded the credit availability
under the existing financing facility. The increase in maximum seasonal
borrowings from 1992 to 1993 was due to capital expenditures for property,
plant and equipment and higher inventories.
The Company maintains a long-term seasonal borrowing facility with a
commercial lender and various banks which provides borrowings up to
$100,000,000 as revolving credit loans maturing on May 31, 1995. The Company
believes that the facility is adequate to meet the Company's needs. The
maximum borrowings projected under the facility for fiscal 1995 are less than
$60,000,000. Completion of the Company's planned restructuring is expected
to further reduce the Company's borrowing needs in fiscal 1995 due to the
sale of idle property, plant and equipment and related inventory reductions.
A detailed discussion of the Company's debt facilities is in Note F to Notes
to Consolidated Financial Statements.
Page 19 of 91<PAGE>
Profitability
- -------------
Operating results improved significantly during fiscal 1994. The Company
concluded the year with fourth quarter net earnings of $2,826,000 following
modestly profitable second and third quarters of $118,000 and $226,000,
respectively, but contrasted by a first quarter loss of $5,385,000.
The first quarter loss was due primarily to severely depressed market pricing
caused by industry-wide excess inventory levels. Gradual market price
increases were seen in the second and third quarters as industry inventory
levels declined due to sharply lower production. The impact of planned
reductions in planted acreage on production volume was amplified by adverse
growing and harvesting conditions.
In addition the Company's cost and expense reduction programs began to have a
greater impact as the year progressed. The sale or closing of various plants
identified in the restructure plan reduced fixed manufacturing expenses while
staff reductions affecting most all other areas of the Company reduced
general and administrative expenses. The increasing impact of cost reduction
programs and the upward trend in selling prices is evident in the improvement
in gross margin (sales less cost of goods sold) by quarter. Gross margin
increased from less than 10% in the first quarter to 12% in the second, 17%
in the third and 23% in the fourth. Cost and expense reductions are expected
to continue to improve the cost structure of the Company in 1995.
The improved second quarter net income of $118,000 compared to the first
quarter loss of $5,385,000 also was attributable to the recognition of other
income of $3,644,000, net of taxes, relating to the property loss insurance
recovery from the fire damage at the Hoopeston, Illinois plant. By contrast,
the third quarter net income of $226,000 was adversely affected by a non-
recurring pre-tax charge of $2,050,000 ($1,107,000 after tax) for settlement
of a product liability claim against the Company's D&K Frozen Food
subsidiary, which pre-dates the acquisition of D&K.
The fourth quarter net income of $2,826,000 results from reductions in cost
combined with improved market pricing due to reduced industry-wide inventory
levels strengthening pricing and improving gross margins to 23%.
Sales of $256,145,000 for 1994 declined $25,237,000 due to lower production
levels and the elimination of certain unprofitable product lines. However,
gross margins for the entire year ended March 31, 1994 improved 4.3
percentage points to 15.5%, despite record low pricing in the first quarter.
Selling, general and administrative expenses decreased $7,713,000 to
$34,426,000 at March 31, 1994, excluding the $2,050,000 product liability
settlement, from $42,139,000 at March 31, 1993, reflecting reduced sales
promotions, due to limited product availability and improved pricing, and
administrative expense reductions.
Pre-tax operating results for 1994 improved $16,573,000 to a loss of
$4,742,000. This compares to a loss of $21,315,000 excluding the non-
recurring charge of $21,145,000 for restructuring in 1993.
Page 20 of 91<PAGE>
The progress made during 1994 toward completion of the restructuring plan
resulted in significant reduction in inventories and a $40,268,000 reduction
in total debt. Because much of this reduction in debt occurred in the latter
part of 1994, the resulting interest expense reduction benefit is not
expected to be realized until 1995. Management believes that upon completion
of the restructuring plan in 1995, the Company will have improved it's
strategic focus and reduced operating costs and interest expense in a way
that will facilitate consistently profitable operations.
During 1993, a two year pattern of declining prices continued, reducing
earnings substantially from 1992. In addition, a nonrecurring restructuring
charge, higher interest expenses, and a one-time charge for a change in
accounting for Postretirement Benefits further increased the 1993 net loss
compared to 1992.
Page 21 of 91<PAGE>
RESULTS OF OPERATIONS
Net Sales
- ---------
Net sales in 1994 were $256,145,000, an overall decrease of $25,237,000 from
1993 net sales of $281,382,000. Limited supplies of available canned
finished goods inventory caused by a poor growing season was the primary
reason for a 13.9% reduction in revenues or $38,993,000. This volume
shortfall was partially offset by a 4.9% improvement in pricing or
$13,756,000, as a result of a recovery in the last half of the year in market
pricing conditions caused by reduced inventory levels industry-wide.
Net sales in 1993 increased to $281,382,000 from $280,368,000 in 1992, an
increase of .4%. An increase of 4.8% in sales volume was offset by a 4.4%
decline in prices due to unusually high industry-wide inventory levels.
Other Income
- ------------
Other income of $4,691,000 in 1994 includes income of $4,118,000 resulting
from insurance claim proceeds related to reconstruction costs at the fire
damaged Hoopeston, Illinois facility. This insurance claim is further
discussed in Note L to the Financial Statements.
Other income of $2,145,000 in 1993 includes revenue of $1,635,000 relating to
costs recovered from an insurance claim for business interruption due to the
fire at the Hoopeston, Illinois facility. That revenue represents recovery
of lost margin due to a shortage of finished goods normally produced at that
plant and recovery of other related costs incurred as a result of the fire.
Cost of Products Sold
- ---------------------
Cost of products sold as a percentage of net sales declined to 84.5% in 1994,
compared to 88.8% in 1993 and 85.2% in 1992. Cost of products sold as a
percentage of net sales decreased in 1994 from 1993 primarily because of
improvements in average selling prices during the third and fourth quarters
of 1994, offset in part by higher average per unit fixed manufacturing costs
due to lower production volumes associated with the adverse growing and
harvesting conditions of 1994. Average variable manufacturing costs remained
relatively flat in 1994 compared to 1993 despite difficult production
conditions caused by the adverse 1994 growing season. The increase in cost
of sales as a percent of sales in 1993 as compared to 1992 was due primarily
to lower selling prices and an increase in frozen product sales, which carry
a lower margin, as a percentage of total sales.
Page 22 of 91<PAGE>
Selling, General and Administrative Expenses
- --------------------------------------------
Selling, general and administrative expenses as a percentage of net sales
declined to 14.2% in 1994, compared to 15.0% in 1993, and 17.3% in 1992. In
1994 the Company incurred a non-recurring charge of $2,050,000 relating to
the settlement of a product liability claim discussed earlier. Total
selling, general and administrative expenses decreased $7,713,000, excluding
the product liability claim, in 1994 compared to 1993. This decrease was in
part due to the decrease in sales promotions of $3,900,000 related primarily
to canned brand sales in 1994. Other administrative expenses were reduced
$3,813,000 in 1994 due to cost reduction and other expense control programs
instituted by the Company.
Restructure Program
- -------------------
In 1993 the Company faced continuing depressed market conditions caused by
oversupply and excess capacity. In response to these conditions the Company
identified restructuring measures designed to return the Company to
profitability by focusing on the Company's core competencies of Midwest and
Northwest vegetable processing. The restructuring initiatives included
consolidating production at larger, more efficient facilities, eliminating
marginally profitable product lines, reducing operating overhead and lowering
interest expense through debt reduction. As a result the Company recorded in
1993 a one-time, noncash charge of $21,145,000 relating to the writedown of
seven processing plants to be sold, closed or downsized and the costs
associated with disposing of them.
During fiscal year 1994, the Company completed the major portion of it's
restructure plan with the sale of four processing facilities and the closing
of two other facilities.
Canning plants in Hart, Michigan, processing fruit products; and Paulding,
Ohio, processing tomato products, were sold. In addition, frozen southern
vegetable processing plants in McAllen, Texas and Monterrey, Mexico were
sold. A root crop canning plant in Appleton, Wisconsin was closed and the
needed capacity was consolidated with the existing Waunakee, Wisconsin plant.
A re-pack freezing plant in Jefferson, Wisconsin was also closed as part of
the plan to exit the retail frozen and branded food service frozen vegetable
business. These closed plants are expected to be sold. The closing of the
corn processing facilities in the Hoopeston, Illinois canning plant was
deferred until completion of the 1995 production season because of the short-
term need to replenish the Company's corn inventory levels depleted by last
year's severe growing and harvesting conditions in the Company's Midwest
growing areas. Canning of pumpkin products will continue at the Hoopeston
plant. The restructured frozen vegetable business, consisting of facilities
in Grandview and Walla Walla, Washington and Green Bay, Wisconsin will
continue to be operated as an integral part of the Company's on-going
operations.
Page 23 of 91<PAGE>
Proceeds from the sale of idle plants and equipment exceeded the carrying
value of the facilities. However, the excess proceeds offset costs incurred
in disposing of related inventories and other costs associated with
discontinued product lines. The proceeds from the sale of plants and
liquidation of discontinued inventories was used to pay down short-term and
long-term debt.
At March 31, 1994, the Company had remaining restructure reserves aggregating
$7.2 million for the disposal of plant facilities and related inventories.
Based on the Company's current review and evaluation, these reserves are
considered adequate to complete the restructure plan in fiscal 1995, without
a significant cash outlay.
Interest Expense
- ----------------
Interest expense totalled $12,710,000 in 1994, $12,721,000 in 1993 and
$8,592,000 in 1992. Interest expense remained flat in 1994 despite a
reduction in average short-term debt because of an increase in short-term
interest rates and higher financing expenses resulting from the August 1992
refinancing agreement, as amended in June 1993. Prior to August 1992, the
Company was able to borrow at or below prime rate via revolving debt and
commercial paper. Higher than normal inventory levels in 1993 were carried
into 1994, resulting in higher borrowing levels early in 1994. Inventory
levels declined substantially during 1994, which had a favorable effect on
interest expense during the fourth quarter of 1994.
Income Taxes
- ------------
The effective tax rates were 53.3%, 30.6% and 33.2% for 1994, 1993, and 1992,
respectively. The effective tax rate was higher in 1994, because of
additional tax credit carrybacks and adjustment to prior year accruals. See
Note G, to Notes to the Consolidated Financial Statements.
Effective April 1, 1993, the Company adopted SFAS 109. This statement
requires the recognition of the tax consequences in future years of events
which have been recognized in the financial statements. There was no
material cumulative effect of adoption of SFAS 109 on the financial position
or results of operations of the Company.
Cumulative Effect of Change in Method of Accounting for Post-retirement
Benefits
- --------
In 1993 the Company adopted Statement of Financial Accounting Standard No.
106, "Employers' Accounting for Post-retirement Benefits Other Than
Pensions." The Company elected to recognize as expense during 1993 the
entire accumulated post-retirement benefit obligation (transition obligation)
aggregating $1,650,000, net of related tax benefits as of April 1, 1992.
Page 24 of 91<PAGE>
Net Loss
- --------
The net loss for 1994 was $2,215,000 or $.27 per share, compared to
$31,127,000 or $3.75 per share in 1993 and $9,902,000 or $1.19 per share in
1992. The 1994 loss was an improvement from the prior two years as a result
of lower operating costs due to the Company's restructuring plan, combined
with improved market prices in both the canned and frozen business segments.
The 1993 loss included a nonrecurring restructuring charge of $14,675,000
($21,145,000 pre-tax) and the cumulative effect of adoption of SFAS 106 on
post-retirement benefits of $1,650,000 ($2,500,000 pre-tax). The 1993 loss
was also increased due to higher interest costs and continued weak market
pricing. Operating losses in 1992 resulted from an industry-wide excess
supply of processed vegetables creating depressed market pricing conditions.
Change in Method of Accounting for Postemployment Benefits
- ----------------------------------------------------------
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits." This statement requires the accrual of postemployment benefits
during the years an employee provides services. The Statement must be
adopted during the year ended March 31, 1995. The impact of adopting this
Statement has not been determined.
Impact of Inflation
- -------------------
Current financial statements are prepared in accordance with generally
accepted accounting principles and report operating results in terms of
historical costs. They provide a reasonable, objective, quantifiable
statement of financial results but do not evaluate the impact of inflation.
Competitive conditions permitting, the Company modifies its selling prices to
recognize cost changes as incurred. Management believes the impact of
inflation does not distort the Company's financial statements since prices
are determined by supply and demand.
Page 25 of 91<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEPENDENT AUDITORS' REPORT
- ----------------------------
To the Stockholders and Board of
Directors of Stokely USA, Inc.:
We have audited the accompanying consolidated balance sheets of Stokely USA,
Inc. and subsidiaries as of March 31, 1994 and 1993 and the related
consolidated statements of operations, stockholders' equity and cash flows
for each of the three years in the period ended March 31, 1994. Our audits
also included the consolidated financial statement schedules listed in the
Index at Item 14. These financial statements and financial statement
schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedules 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
from 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, such consolidated financial statements present fairly, in all
material respects, the financial position of the companies as of March 31,
1994 and 1993 and the results of their operations and their cash flows for
each of the three years in the period ended March 31, 1994, in conformity
with generally accepted accounting principles. Also, in our opinion such
consolidated financial statement schedules, when considered in relation to
the basic consolidated financial statements taken as a whole, present fairly,
in all material respects the information set forth therein.
As discussed in Note C to the consolidated financial statements, the Company
changed its method of valuing inventories from the last-in, first-out method
to the average cost method in 1994 and, retroactively, restated the 1993 and
1992 consolidated financial statements for the change.
As discussed in Notes E and G to the consolidated financial statements, the
Company changed its methods of accounting for postretirement benefits other
than pensions effective April 1, 1992 and accounting for income taxes
effective April 1, 1993 to conform with Statement of Financial Accounting
Standards No. 106 and No. 109, respectively.
Deloitte & Touche
Milwaukee, Wisconsin
June 17, 1994
Page 26 of 91<PAGE>
STOKELY USA, INC. AND SUBSIDIARIES
- ----------------------------------
CONSOLIDATED BALANCE SHEETS
(dollars in thousands) March 31,
1994 1993
ASSETS - Note F
- ---------------
CURRENT ASSETS:
Cash and cash equivalents - Note A $ 2,898 $ 1,251
Accounts Receivable less allowance for
losses ($385 and $670, respectively)
Note L 20,817 41,515
Refundable income taxes - Note G 1,979 3,869
Inventories - Notes A and C 55,256 100,591
Prepaid expenses 1,983 1,555
------- -------
Total Current Assets 82,933 148,781
OTHER ASSETS:
Property held for disposition (net)
Note B 3,541 9,419
Trademarks - Note A 838 918
Other - Note A 3,867 5,306
------- -------
8,246 15,643
PROPERTY, PLANT & EQUIPMENT,
at cost - Note A
Land and land improvements 3,184 2,932
Buildings 27,386 24,370
Machinery and equipment 66,296 62,961
Construction in progress 562 1,637
------- -------
97,428 91,900
Less accumulated depreciation 30,072 23,481
------- -------
67,356 68,419
$158,535 $232,843
======== ========
See notes to consolidated financial statements.
Page 27 of 91<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
(dollars in thousands) March 31,
1994 1993
CURRENT LIABILITIES:
Notes payable - Note F $ 17,992 $ 31,258
Accounts payable 13,867 39,159
Accrued compensation and withholdings 3,065 3,462
Other accrued liabilities 1,840 5,291
Income taxes - Note G 230 531
Current maturities on long-term debt 3,868 2,259
------- -------
40,862 81,960
Additional long-term debt classified
as a current liability - Note F 0 26,195
------- -------
Total Current Liabilities 40,862 108,155
LONG-TERM DEBT, less current maturities
Note F 80,438 82,854
OTHER LIABILITIES - Note D 4,595 7,057
STOCKHOLDERS' EQUITY - Notes F and H:
Preferred stock-no par value, authorized
1,000,000 shares, none issued
Common stock-$.05 par value, authorized
20,000,000 shares, issued 8,435,195
shares 422 422
Additional paid-in capital 18,661 18,636
Retained earnings 14,181 16,396
------- -------
33,264 35,454
Less treasury stock at cost
(110,550 and 119,500 shares,
respectively) (624) (677)
-------- --------
32,640 34,777
COMMITMENTS AND CONTINGENCIES - Note I
$158,535 $232,843
========== ==========
Page 28 of 91<PAGE>
STOKELY USA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands except per share data)
YEARS ENDED MARCH 31
1994 1993 1992
REVENUES:
Net sales $256,145 $281,382 $280,368
Other - Note K 4,691 2,145 676
-------- -------- --------
Total Revenues 260,836 283,527 281,044
COSTS AND EXPENSES:
Costs of products sold 216,392 249,982 238,804
Selling, general and
administrative expenses 36,476 42,139 48,481
Nonrecurring charge - Note B 21,145
Interest 12,710 12,721 8,592
-------- -------- --------
Total Costs and Expenses 265,578 325,987 295,877
-------- -------- --------
LOSS BEFORE INCOME TAXES (CREDIT)
AND CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE (4,742) (42,460) (14,833)
INCOME TAXES (CREDIT) - NOTE G (2,527) (12,983) (4,931)
--------- --------- ---------
LOSS BEFORE CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING PRINCIPLE (2,215) (29,477) (9,902)
CUMULATIVE EFFECT OF CHANGE IN
METHOD OF ACCOUNTING FOR POST-
RETIREMENT BENEFITS - NOTE E
(net of income tax benefit
of $850) (1,650)
--------- --------- ---------
NET LOSS $ (2,215) $(31,127) $ (9,902)
========= ========= =========
PER SHARE AMOUNTS;
Loss per common share before
cumulative effect of a change
in accounting method $ (0.27) $ (3.55) $ (1.19)
Cumulative effect of a change
in method of accounting for
postretirement benefits - Note E (.20)
-------- -------- --------
NET LOSS PER SHARE OF COMMON STOCK $ (0.27) $ (3.75) $ (1.19)
======== ======== ========
WEIGHTED AVERAGE SHARES
OUTSTANDING 8,319,649 8,301,591 8,288,255
========== ========== ==========
See notes to consolidated financial statements.
Page 29 of 91<PAGE>
<TABLE>
STOKELY USA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED MARCH 31, 1994, 1993, AND 1992
(dollars in thousands)
<CAPTION>
Additional
Common Stock paid-in Retained Treasury Stock
Shares Amount Capital Earnings Shares Amount
------ ------ -------- -------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
BALANCES,
April 1, 1991
As previously
reported 8,435,195 $ 422 $18,628 $53,742 152,700 $(867)
Restatement for
change in method
of valuing
inventories (Note C) 5,341
--------- ------ ------- ------- -------- ------
BALANCES,
As restated
April 1, 1991 8,435,195 422 18,628 59,083 152,700 (867)
Net loss (9,902)
Cash dividends
declared $.20
a share (1,658)
Exercise of
stock options 6 (8,500) 49
--------- ------ ------- ------- -------- -------
BALANCES,
March 31,1992 8,435,195 422 18,634 47,523 144,200 (818)
Net loss (31,127)
Exercise of
stock options 2 (24,700) 141
--------- ------ ------- ------- --------- -------
BALANCES,
March 31,1993 8,435,195 422 18,636 16,396 119,500 (677)
Net loss (2,215)
Stock warrants
issued 23
Exercise of
stock options 2 (8,950) 53
--------- ------ ------- ------- -------- -------
BALANCES,
March 31,1994 8,435,195 $ 422 $18,661 $14,181 110,550 $(624)
========= ====== ======= ======= ======== =======
</TABLE>
See notes to consolidated financial statements.
Page 30 of 91<PAGE>
STOKELY USA, INC. AND SUBSIDIARIES
- ----------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
Years Ended March 31,
1994 1993 1992
OPERATING ACTIVITIES:
Net earnings (loss) $(2,215) $(31,127) $ (9,902)
Adjustments to net earnings:
Depreciation 7,230 9,286 8,461
Non-recurring charge 21,145
Deferred compensation and
postretirement benefits (36) 2,713 62
Deferred income taxes (9,833) 734
Amortization of trademarks 80 82 96
Amortization of deferred debt
issuance costs 1,637 887 131
Provision for equipment writedown 350
Provision for bad debts (285) 270 (70)
Gains on disposal of property,
plant and equipment (361) (693) (117)
------- ------- -------
6,050 (7,270) (255)
Changes in operating assets and
liabilities:
Accounts receivable 20,983 (14,824) 1,378
Refundable income taxes 1,890 1,831 (3,765)
Inventories 45,335 (2,526) (5,587)
Prepaid expenses (428) 769 725
Accounts payable (25,292) 23,739 2,914
Accrued compensation and
withholdings (397) 307 1,069
Profit sharing contribution (522)
Income taxes (301) (135) (79)
Other net (9,773) (448) 393
-------- -------- --------
32,017 8,713 (3,474)
-------- -------- --------
Net cash provided by (used in)
operating activities $38,067 $ 1,443 $(3,729)
======== ======== ========
Page 31 of 91<PAGE>
STOKELY USA, INC. AND SUBSIDIARIES
- ----------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
Years Ended March 31,
1994 1993 1992
INVESTING ACTIVITIES:
Purchases of property, plant
and equipment $ (5,174) $(12,871) $(21,713)
(Increase) decrease in
construction funds held by
trustee 1,362 (560)
Proceeds from sales of property,
plant and equipment 9,143 3,197 164
Acquisition of business (9,260)
Other-net (176) 1,034 (2,162)
-------- -------- --------
Net cash provided by (used in)
investing activities 3,793 (7,278) (33,531)
FINANCING ACTIVITIES:
Change in short-term debt (net) (31,266) 13,036 6,609
Proceeds from long-term debt 23,000
Payments of long-term debt (9,002) (2,296) (1,999)
Payments of cash dividends (415) (1,658)
Payments of deferred debt
issuance costs (3,436) (248)
Restricted stock plan
Exercise of stock options 55 143 55
-------- ------- -------
Net cash provided by (used in)
financing activities (40,213) 7,032 25,759
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 1,647 1,197 (11,501)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 1,251 54 11,555
-------- -------- -------
CASH AND CASH EQUIVALENTS,
END OF YEAR $ 2,898 $ 1,251 $ 54
======== ======== =======
See notes to consolidated financial statements.
Page 32 of 91<PAGE>
STOKELY USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 1994, 1993 AND 1992
A. DESCRIPTION OF COMPANY BUSINESS AND SIGNIFICANT ACCOUNTING
POLICIES
Stokely USA, Inc. and subsidiaries (the "Company") is engaged
primarily in the processing, marketing and distribution of both
branded and private label canned and frozen vegetables, which
management considers to be a single segment.
Consolidation
- -------------
The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated in
consolidation.
Cash Equivalents
- ----------------
The Company considers all highly liquid investments with
purchased maturities of three months or less to be cash
equivalents.
Inventories
- -----------
Inventories are stated at the lower of cost or market. Cost has
been determined using the average cost method (see Note C).
Deferred Debt Issuance Costs
- ----------------------------
Included in Other Assets in the consolidated balance sheets are
unamortized deferred debt issuance costs of $2,435,000 and
$3,268,000 at March 31, 1994 and 1993, respectively. The debt
issuance costs are being amortized by the straight-line or
interest method over the life of the related debt issue. The
accumulated amortization was $2,927,000 and $1,290,000,
respectively, at March 31, 1994 and 1993.
Depreciation
- ------------
Depreciation of plant and equipment is provided over the
estimated useful lives of the respective assets on the straight-
line method.
Trademarks
- ----------
Trademarks are being amortized on a straight-line basis primarily
over 20 years. Accumulated amortization was $771,000 and
$691,000, respectively, at March 31, 1994 and 1993.
Page 33 of 91<PAGE>
B. NONRECURRING CHARGE
During the fourth quarter of fiscal 1993 the Company recorded a
nonrecurring charge aggregating $21,145,000 related to its
decision to sell, close or downsize certain processing
facilities. The nonrecurring charge included the writedown of
such processing facilities and related equipment to their
estimated net realizable or salvage value. Also included in the
nonrecurring charge are provisions for severance, consolidation
costs, plant carrying costs and the writedown of certain
discontinued inventories to their estimated net realizable value.
C. INVENTORIES
Inventories (in thousands) consisted of the following:
Finished Manufacturing
Goods Supplies Total
-------- ------------ ---------
March 31, 1994 $50,256 $ 5,000 $ 55,256
March 31, 1993 93,656 6,935 100,591
During the fourth quarter of 1994, the Company changed its method
of valuing its inventories from the last-in, first out (LIFO)
method to the average cost method. Management believes that the
average cost method provides a more meaningful presentation of
the Company's financial position and related financial ratios.
In accordance with generally accepted accounting principles the
prior years financial statements have been retroactively adjusted
to reflect this change. The effect of this restatement was to
increase the net loss in 1993 by $784,000 or $.09 per share and
reduce the net loss in 1992 by $842,000 or $.11 per share. In
addition, the effect of the restatement was to increase retained
earnings at April 1, 1991 by $5,341,000.
D. OTHER LIABILITIES
Other liabilities (in thousands) consisted of the following:
March 31
1994 1993
Postretirement benefits $2,769 $2,719
Accrued disposition costs 0 2,426
Deferred compensation 1,826 1,912
------ ------
$4,595 $7,057
====== ======
Page 34 of 91<PAGE>
E. EMPLOYEES' RETIREMENT PLAN AND OTHER BENEFIT PLANS
The Company provides certain postretirement health care benefits and life
insurance benefits to retired employees. The benefits and eligibility
requirements vary by location and various union agreements.
Generally eligibility is attained at age 55 or 62 with minimum service
requirements. Employees hired currently by the Company are not entitled to
postretirement health care benefits. The medical benefits are generally
subject to lifetime maximum benefits of $750,000 and after age 65 are
coordinated with Medicare. During the year ended March 31, 1993, the
Company adopted, effective April 1, 1992, Statement of Financial Accounting
Standard No. 106 (SFAS No. 106), "Employers' Accounting for Postretirement
Benefits Other than Pensions." The Company had previously provided for
postretirement health care benefits on a pay-as-you-go basis. In
connection with the adoption of SFAS No. 106, the Company elected to
recognize as expense during 1993 the entire accumulated postretirement
benefit obligation (transition obligation) aggregating $2,500,000 as of
April 1, 1992, rather than amortizing such amount to expense over a 20-year
period. The Company continues to fund benefit costs on a pay-as-you-go
basis.
The following table sets forth the plan's status reconciled with amounts
recognized in the balance sheet:
(in thousands) March 31,
1994 1993
---- ----
Accumulated postretirement benefit obligation:
Retirees $ 1,377 $ 1,371
Fully eligible active plan participants 234 227
Other active plan participants 1,174 1,121
------ ------
2,785 2,719
Unrecognized net loss 16
------ ------
Accrued postretirement benefit cost 2,769 2,719
====== ======
Years ended March 31
1994 1993
---- ----
Net periodic postretirement benefit cost
included the following components:
Service cost - benefits attributed to service
during the period $ 131 $ 122
Interest cost on accumulated postretirement
benefit obligation 206 193
Curtailment gain (71)
----- -----
Net periodic postretirement benefit cost $ 266 $ 315
===== =====
The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation was 14% in 1993, gradually declining to
6% in 2001.
Page 35 of 91<PAGE>
The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 7.5% in 1994 and 8% in 1993.
If the health care cost trend assumptions were increased by 1%, the
accumulated postretirement benefit obligation as of March 31, 1994, would
increase by $230,000. The effect of this change on the aggregate of the
service cost and interest cost would be an additional charge to expense of
approximately $35,000 for the year ended March 31, 1994.
During 1994 the Company had a curtailment gain which represented the
accumulated postretirement benefit obligation of employees at operations
divested of during the year.
The Company has a profit sharing plan which covers substantially all full-
time employees who have completed one year (minimum of 1,000 hours) of
service and provides for Company contributions to a separate trust are
based upon 8% of the profit sharing income base as defined in the plan. No
profit sharing contributions were required during the three years ended
March 31, 1994.
In addition, the Company also has salary deferral profit sharing plans
(401(k) plans) and other defined contribution plans. Contributions under
these plans were $337,000, $670,000, and $661,000 in 1994, 1993 and 1992,
respectively.
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 112 Employers' Accounting for Postemployment
Benefits. This statement requires the accrual of postemployment benefits
during the years an employee provides services. The Statement must be
adopted during the year ended March 31, 1995. The impact of adopting this
Statement has not been determined.
Page 36 of 91<PAGE>
F. NOTES PAYABLE AND LONG-TERM DEBT
Long-term debt (in thousands) consisted of the following:
March 31,
1994 1993
9.37% senior notes due January 2000 $ 21,186 $ 25,000
9.74% senior notes due December 2001 16,071 19,500
Revolving credit notes 17,000 35,000
Industrial Development Revenue Bonds:
7.00% to 8.88% 26,569 27,748
5.28% (floating at 88% of prime) 600 850
4.32% (floating at 72% of prime) 180 360
4.05% Variable 2,700 2,850
------- -------
84,306 111,308
Less:
Current maturities on long-term debt (3,868) (2,259)
Additional long-term debt classified
as a current liability (26,195)
--------- --------
$ 80,438 $ 82,854
========= =========
On August 20, 1992, the Company entered into a loan and security agreement
with a commercial lender and various banks which provides for borrowings
under revolving credit loans and matures on May 31, 1995. The agreement
which was amended on June 15, 1993 provides for maximum borrowings under
revolving credit loans of $100,000,000. Borrowings under the revolving
credit loans bear interest at 2.25% over a specified bank's reference rate
on the first $40,000,000 of loans and 1.25% over the reference rate on any
borrowings in excess of $40,000,000. The amended agreement generally
restricts borrowings to an amount equal to 85% of eligible accounts
receivable plus 65% of eligible inventory subject to an inventory sublimit,
as defined in the agreement, reduced by the amount of any outstanding
letters of credit and $8,140,000.
The amended agreement requires an agent's fee of .25% per annum times the
average daily used portion of the commitment including outstanding letters
of credit. The amended agreement required the Company to pay a
restructuring fee of $600,000 in installments and provides for a fee equal
to .25% per annum of the unused portion of the commitment.
Covenants contained in the amended agreement require the Company to
maintain minimum levels of adjusted tangible net worth, net cash flow and
interest coverage. Other covenants place limitations on liens, capital
expenditures, leases, disposition of assets, dividends and the ability to
incur additional debt.
Page 37 of 91<PAGE>
In addition to the covenants under the amended loan and security agreement,
the Company also has similar covenants under its various other agreements.
At March 31, 1994, all of the retained earnings are restricted as to the
payment of future cash dividends.
On June 15, 1993, the Company issued warrants to the holders of the 9.37%
and 9.74% senior notes in consideration for amending the applicable loan
agreement. The warrants entitle the holders to purchase an aggregate of
90,000 shares of common stock at a price of $7.88 per share through
January 15, 2000. The estimated fair market value of the warrants at
June 15, 1993 aggregating $22,500 has been credited to additional paid-in
capital.
During 1993, certain Industrial Revenue Development Bond issues were
classified as current liabilities because the Company was in technical
default of certain financial ratio covenants. During 1994, all of the
Industrial Revenue Development Bond issues, with the exception of one issue
aggregating $1,400,000, were amended by the bondholders such that the
Company was in compliance with the related debt covenants and accordingly
such amounts have been classified as long-term debt at March 31, 1994. On
June 13, 1994, the trustee of the $1,400,000 Paulding, Ohio bond issue
declared these bonds immediately payable due to events of default under the
Indenture of Trust. Therefore, the bonds are included in current
maturities on long-term debt at March 31, 1994. The facility related to
the Paulding bond issue was sold during 1994 and proceeds from the sale
aggregating $1,400,000 were placed in a segregated cash account in
anticipation of the acceleration notice from the Trustee.
The amended loan and security agreement and the senior note agreements
contain cross-default provisions. Such cross-default provisions specify
that a default on any other debt agreement is also an event of default
under the agreement containing the cross-default provision. In addition,
the amended loan and security agreement and the senior note agreements
contain acceleration clauses which give the holders the right to accelerate
the maturity date of the obligation if any other obligation owed by the
Company is accelerated or payment is demanded other than in accordance with
the stated maturity dates. The Company has obtained waivers from the
holders of the revolving credit notes and the senior notes with respect to
the cross-default provision and acceleration clauses relating to the
Paulding issue.
Substantially all of the assets of the Company are pledged as collateral
under the various loan agreements.
At March 31, 1994, $17,992,000 of revolving credit loans payable were
classified as short-term reflecting the Company's intent to repay these
borrowings during 1994. Interest rates on the outstanding revolving credit
loans (including the amounts classified as long-term) at March 31, 1994,
ranged from 7.25% to 8.25%.
The stated aggregate amounts of scheduled maturities on long-term debt each
year for the five years subsequent to March 31, 1994, are as follows: 1995
- -$3,868,000; 1996-$19,536,000; 1997-$2,150,000; 1998-$2,650,000; and 1999-
$7,215,000.
Page 38 of 91<PAGE>
Revolving credit loans payable at March 31, 1994, under the Company's
amended loan and security agreement approximate estimated fair value as the
interest rate remained unchanged under the amended agreement on June 15,
1993. The 9.37% and 9.74% senior notes are estimated to have an
approximate fair value of $22,296,217 and $16,695,826, respectively, at
March 31, 1994, based on quoted prices for similar issues for debt of the
same maturities. Management of the Company has estimated the fair value of
the Industrial Development Revenue Bond issues to be approximately
$29,148,000.
G. INCOME TAXES
Effective April 1, 1993, the Company adopted SFAS 109. This statement
requires that deferred income taxes be calculated using an asset and
liability method which generally requires the recognition of the tax
consequences on future years of events which have been recognized in
financial statements. In addition, a valuation allowance is to be
recognized if it is more likely than not that some or all of a deferred tax
asset will not be realized. Due to recent history of operating losses, a
valuation allowance has been established which reduces the deferred tax
assets to zero after giving effect to deferred tax liabilities. There was
no material cumulative effect of adoption of SFAS 109 on the financial
position or results of operations of the Company for the year ended
March 31, 1994.
Income taxes (in thousands) consisted of the following:
Years Ended March 31,
1994 1993 1992
---- ---- ----
Currently payable (refundable)
Federal $(2,577) $(4,050) $(5,765)
State 50 50 100
Deferred - Federal (8,983) 734
-------- --------- --------
$(2,527) $(12,983) $(4,931)
======== ========= ========
Page 39 of 91<PAGE>
Total income tax credits differs from the amounts computed by applying the
Federal income tax rate to loss before income taxes. The following table
provides a reconciliation between the United States Statutory rate to the
effective tax rate reported:
Years Ended March 31,
1994 1993 1992
---- ---- ----
U.S. Statutory rate 34.0% 34.0% 34.0%
State income taxes net of federal
income tax benefits (1.1) (0.1) (0.6)
Effect of net operating
loss carryback 3.6 (4.0)
Tax rate differential on carryback
of product liability claim 5.2
Adjustment of prior years accrual 11.6
Other items - net 0.5 (0.2)
------ ------ ------
Effective tax rate 53.3% 30.6% 33.2%
====== ====== ======
Page 40 of 91<PAGE>
Deferred income taxes reflect the net tax effects of (a) temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes,
and (b) net operating loss and tax credit carryforwards. Significant
components of the Company's net deferred tax liability as of March 31, 1994
are as follows:
Deferred tax assets:
Reserves not currently deductible $ 1,325
Provision for nonrecurring charge 2,451
Post retirement benefits 942
Tax credit carryforwards 2,921
Net operating loss carryforwards 7,922
Valuation allowance (4,520)
--------
Total Deferred Tax Assets 11,041
--------
Deferred tax liabilities:
Change in method of inventory valuation 1,530
Deferred casualty gain 1,408
Tax over book depreciation 7,816
Other 287
-------
Total Deferred Tax Liabilities 11,041
-------
Net deferred tax liability $ 0
=======
Deferred income taxes for 1993 and 1992 resulted principally from
depreciation, provision for nonrecurring charges and inventory valuations.
At March 31, 1994, the Company had an alternative minimum tax credit
carryforward of approximately $1,916,000 which may be carried forward
indefinitely, and the Company also had a general business credit
carryforward of approximately $1,005,000 which expires in various years
through 2003 to 2008. At March 31, 1994 the Company had Net Operating Loss
carryforwards of approximately $23,300,000 which expire in the year 2009.
Page 41 of 91<PAGE>
H. CAPITAL STOCK
In June 1989, the Company amended its Articles of Incorporation to grant,
in the event any person ("Acquiring Person") becomes the beneficial owner,
as defined, of 50% or more of the Company's common stock, any of which was
acquired pursuant to a tender offer, each holder of common stock other than
the Acquiring Person the right to have their shares repurchased for cash by
the Company. The repurchase price will be the highest of (i) the highest
price paid by Acquiring Person for those shares acquired within the prior
18 months, (ii) the highest price on any trading day in the prior 18 months
or (iii) the per common share amount of stockholders' equity as reflected
in the previously completed quarter.
In 1985, the stockholders approved a 1985 Incentive Stock Option Plan
pursuant to which 320,000 shares of the Company's common stock were
reserved for the grant of options to executive officers and other key
employees. Under the Plan, stock grants may be made over a 10 year period
at not less than 100% of fair market value at the date of grant. One year
after date of grant, 50% of the options become exercisable with the
remaining options exercisable after the second year. No option granted
under the Plan may be exercised more than ten years after the date of
grant. Changes in shares as to options is as follows:
Shares
Outstanding
Reserved Options Available
BALANCES AT APRIL 1, 1991
($5.125 to $16.25) 266,700 159,500 107,200
Granted ($10.50) 53,500 (53,500)
Expired ($16.25) (4,000) 4,000
Exercised ($5.125 to $6.875) (8,500) (8,500)
-------- -------- --------
BALANCES AT MARCH 31, 1992
($5.125 to $15.875) 258,200 200,500 57,700
Granted ($6.25 to $10.625) 19,600 (19,600)
Expired ($5.125 to $16.25) (36,200) 36,200
Exercised ($5.125 to $10.50) (24,700) (24,700)
-------- -------- -------
BALANCES AT MARCH 31, 1993
($5.125 to $15.875) 233,500 159,200 74,300
Granted ($6.125 to $8.625) 6,500 (6,500)
Expired ($6.25 to $15.125) (14,750) 14,750
Exercised ($5.125 to $6.875) (8,950) (8,950)
-------- -------- -------
BALANCES AT MARCH 31 1994 224,550 142,000 82,550
======== ======== =======
At March 31, 1994, a total of 133,950 options were exercisable at $5.125 to
$15.875.
In addition, during 1990 the Company granted 17,500 options to purchase
common stock at $10 per share to certain employees. These options have
substantially the same terms as the Incentive Stock Option Plan. During
1993, 15,000 of these options expired.
Page 42 of 91<PAGE>
I. COMMITMENTS AND CONTINGENCIES
The Company has operating leases covering primarily equipment and land.
The majority of the equipment leases are for terms of one year or less.
The Company does, however, in the normal course of business continue to
lease the equipment after the minimum lease period. Certain leases require
payment of insurance and maintenance costs.
Aggregate minimum rental commitments at March 31, 1994, under
noncancellable leases with terms of more than one year are immaterial.
Total rent expense aggregated approximately $1,900,000; $2,850,000; and
$3,268,000, respectively, during the years 1994, 1993 and 1992.
The Company is involved in various legal actions and claims primarily
arising in the normal course of its business. In the opinion of management
of the Company, the liability, if any, would not have a material effect on
the Company's financial condition or results of operations.
J. SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash payments for (refunds of) interest and income taxes were as follows
(in thousands):
Years Ended March 31,
1994 1993 1992
Interest $11,854 $11,607 $ 7,246
Income taxes - net (4,118) (5,695) (1,821)
K. INSURANCE CLAIM
During fiscal 1993 the Company had a boiler explosion and ensuing fire at
its Hoopeston, Illinois processing facility. An initial claim was filed
with the insurance carrier relating to the property and equipment destroyed
and the estimated business interruption losses incurred. As of March 31,
1993, advances had aggregated $5,000,000, of which $1,250,000 was received
in cash and $3,750,000 was included in accounts receivable. This advance
was recorded to write off $2,500,000 of property and equipment destroyed in
the fire and to record a gain of $2,500,000 relating to recovery of
expenses incurred and lost margin resulting from the fire.
During fiscal 1994, the Company received additional insurance proceeds from
the final settlement of this claim, resulting in a gain included in other
revenues of $4,118,000.
Page 43 of 91<PAGE>
QUARTERLY FINANCIAL DATA (Unaudited)
(Dollars in thousands except per share data)
QTR 1 QTR 2 QTR 3 QTR 4 ANNUAL
1994
Net sales $56,357 $71,148 $71,983 $56,657 $256,145
Gross profit 5,205 8,708 12,166 13,674 39,753
Net earnings (loss) (5,385) 118 226 2,826 (2,215)
Net earnings (loss)
per share (0.65) 0.01 0.03 0.34 (0.27)
1993
Net sales $59,188 $62,798 $78,910 $80,486 $281,382
Gross profit 9,128 8,833 12,494 945 31,400
Loss before cumulative
effect of changes in
accounting principles (2,309) (2,370) (707) (24,091) (29,477)
Cumulative effect of
changes in accounting
principles (net of
income taxes) (1,650) (1,650)
Net loss (3,959) (2,370) (707) (24,091) (31,127)
Loss per share:
Before cumulative
effect of changes in
accounting principles (0.28) (0.28) (0.09) (2.90) (3.55)
Cumulative effect of
changes in accounting
principles (net of
income taxes) (0.20) (0.20)
Net loss per share (0.48) (0.28) (0.09) (2.90) (3.75)
Fiscal 1993 was restated to reflect a change in method of valuing
inventories from the LIFO method to the average cost method. The net
effect of the restatement was to decrease the previously reported fourth
quarter loss by $575,000 $.07 per share and to increase the previously
reported year-to-date loss by $784,000, $.09 per share.
During the fourth quarter of 1993, the Company recorded a one-time noncash
charge of $14,675,000 ($21,145,000 pre-tax), which related to the writedown
of seven plants to be sold, closed or downsized and the costs associated
with disposing of them.
The Company's operations are largely seasonal. The majority of its
production occurs during the second and third quarter of each fiscal year.
Net sales for the third and fourth quarter of fiscal 1994 and 1993 were 50%
and 57% of total sales respectively. Sales for processed vegetables are
greater in the fall, winter and early spring.
Page 44 of 91<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
-----------------------------------
Not Applicable.
Page 45 of 91<PAGE>
PART III
--------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
--------------------------------------------------
Information required by this item with respect to directors is included
under the heading "Matter (1) - Election of Directors" and with respect to
compliance with Section 16(a) of the Securities Exchange Act of 1934 is
included in the Company's definitive Proxy Statement, to be dated July 18,
1994, relating to the 1994 Annual Meeting of Shareholders currently
scheduled for August 26, 1994, which will be filed with the Securities and
Exchange Commission separately pursuant to Rule 14a-6 under the Securities
Exchange Act of 1934 and in accordance with General Instruction G(3) to
Form 10-K, not later than 120 days after the end of the Registrant's fiscal
year, and which section is hereby incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
----------------------
Information required by this item is included under the heading
"Compensation of Executive Officers and Directors" in the Company's
definitive Proxy Statement, to be dated July 18, 1994, relating to the 1994
Annual Meeting of Shareholders currently scheduled for August 26, 1994,
which will be filed with the Securities and Exchange Commission separately
pursuant to Rule 14a-6 under the Securities Exchange Act of 1934 and in
accordance with General Instruction G(3) to Form 10-K, not later than 120
days after the end of the Registrant's fiscal year, and which section is
hereby incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
----------
Information required by this item is included under the heading "Security
Ownership of Certain Beneficial Owners" in the Company's definitive Proxy
Statement, to be dated July 18, 1994, relating to the 1994 Annual Meeting
of Shareholders currently scheduled for August 26, 1994, which will be
filed with the Securities and Exchange Commission separately pursuant to
Rule 14a-6 under the Securities Exchange Act of 1934 and in accordance with
General Instruction G(3) to Form 10-K, not later than 120 days after the
end of the Registrant's fiscal year, and which section is hereby
incorporated by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
None
Page 46 of 91<PAGE>
PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
--------
(a) Financial Statements and Financial Statement Schedules
------------------------------------------------------
Form 10-K
Page Number
-----------
The following consolidated financial statements
of Stokely USA, Inc. and its subsidiaries are
included in Item 8 of this Annual Report:
Independent Auditors' Report 26
Consolidated Balance Sheets, March 31, 1994 and 1993 27-28
For the years ended March 31, 1994, 1993 and 1992:
Consolidated Statement of Operations 29
Consolidated Statements of Stockholders' Equity 30
Consolidated Statements of Cash Flows 31-32
Notes to Consolidated Financial Statements 33-44
The following consolidated financial statement
schedules of Stokely USA, Inc. and its subsidiaries
are included in Item 14 of this Annual Report:
Schedule V Property, Plant and Equipment 49
Schedule VI Accumulated Depreciation and
Amortization of Property, Plant
and Equipment 50
Schedule VIII Valuation and Qualifying Accounts
and Reserves 51
Schedule IX Short-term Borrowings 52
Schedule X Supplementary Earnings Statement
Information 53
All other schedules are omitted because they are inapplicable, not required
under the instructions, or the information is included in the Consolidated
Financial Statements or notes thereto.
Page 47 of 91<PAGE>
(b) Reports on Form 8-K:
--------------------
No reports on Form 8-K were filed by the Company during the three months
ended March 31, 1994.
(c) Exhibits
--------
A complete listing of exhibits required is given in the Exhibit Index on
pages 58 through 61 which precedes the exhibits filed with this report.
(d) Financial Statement Schedules
-----------------------------
Page 48 of 91<PAGE>
<TABLE>
SCHEDULE V
STOKELY USA, INC. AND SUBSIDIARIES
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
Years ended March 31, 1994, 1993 and 1992
Classification
-----------------------------------
<CAPTION>
Land and Construction
Land Machinery & In
Improv. Buildings Equipment Progress Total
<S> <C> <C> <C> <C> <C>
Balances,
April 1, 1991 $2,206,000 $24,822,000 $65,675,000 $4,017,000 $ 96,720,000
Additions <F1> 622,000 3,163,000 19,777,000 3,450,000 27,012,000
Retirements (3,000) (12,000) (1,880,000) (1,895,000)
---------- ----------- ----------- --------- ------------
Balances,
March 31, 1992 2,825,000 27,973,000 83,572,000 7,467,000 121,837,000
Additions 1,549,000 6,528,000 10,624,000 (5,830,000) 12,871,000
Retirements (3,000) (592,000) (9,758,000) (10,353,000)
Reclass & other
(deduct) <F2> (1,439,000) (9,539,000) (21,477,000) (32,455,000)
---------- ----------- ----------- --------- -----------
Balances,
March 31, 1993 2,932,000 24,370,000 62,961,000 1,637,000 91,900,000
Additions 283,000 1,316,000 3,422,000 153,000 5,174,000
Retirements (56,000) (50,000) (543,000) (649,000)
Reclass & other
(deduct) <F2> 25,000 1,750,000 456,000 (1,228,000) 1,003,000
---------- ----------- ----------- ---------- -----------
Balances,
March 31, 1994 $3,184,000 $27,386,000 $66,296,000 $ 562,000 $97,428,000
========== =========== =========== ========== ===========
<FN>
<F1> Additions include purchase of McAllen, Texas, and Monterrey, Mexico
facilities.
<F2> Includes reclassification of assets held for disposition.
</TABLE>
In general, the annual rates used for depreciation are as follows:
Land Improvements 10%
Buildings 2.50% to 5%
Machinery & Equipment 8.33% to 33%
Page 49 of 91<PAGE>
<TABLE>
SCHEDULE VI
STOKELY USA, INC. AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
Years ended March 31, 1994, 1993, and 1992
Classification
--------------------------------
<CAPTION>
Land
and Land Machinery &
Improv. Buildings Equipment Total
<S> <C> <C> <C> <C>
Balances,
April 1, 1991 $246,000 $3,489,000 $21,709,000 $25,444,000
Additions charged to
cost and expenses 73,000 765,000 7,623,000 8,461,000
Retirements (3,000) (12,000) (1,485,000) (1,500,000)
--------- ---------- ----------- -----------
Balances,
March 31, 1992 316,000 4,242,000 27,847,000 32,405,000
Additions 174,000 930,000 8,182,000 9,286,000
Retirements (3,000) (250,000) (7,596,000) (7,849,000)
Reclass and other
(deduct) <F1> (10,361,000) (10,361,000)
--------- ---------- ------------ ------------
Balances,
March 31, 1993 487,000 4,922,000 18,072,000 23,481,000
Additions 186,000 715,000 6,329,000 7,230,000
Retirements (56,000) (50,000) (1,071,000) (1,177,000)
Reclass and other
(deduct) (132,000) (530,000) 1,200,000 538,000
--------- ---------- ----------- -----------
Balances,
March 31, 1994 $485,000 $5,057,000 $24,530,000 $30,072,000
========= =========== ============ ============
<FN>
<F1> Includes reclassification of assets held for disposition.
</TABLE>
Page 50 of 91<PAGE>
SCHEDULE VIII
STOKELY USA, INC. AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
Years Ended March 31, 1994, 1993 and 1992
Description
-------------------
Valuation Assets
Deducted from Assets-
Allowance for Losses
on Receivables
--------------------
Balance April 1, 1991 $470,000
Additions charged to costs and expenses 152,000
Deductions (222,000) <F1>
---------
Balance March 31, 1992 400,000
Additions charged to costs and expenses 747,000
Deductions (477,000) <F1>
---------
Balance March 31, 1993 670,000
Deductions (285,000) <F2>
---------
Balance March 31, 1994 $385,000
=========
<F1> Write off Bad Debts
<F2> Uncollectible accounts written off, net of recoveries and reduction
in Bad Debt reserve.
Page 51 of 91<PAGE>
<TABLE>
SCHEDULE IX
STOKELY USA, INC. AND SUBSIDIARIES
SCHEDULE IX - SHORT-TERM BORROWINGS
Years Ended March 31, 1994, 1993 and 1992
<CAPTION>
Max. Amount Avg. Amount Weighted Avg.
Balance Weighted outstanding outstanding interest rate
at end of avg. int. during the during the during the
Period Rate Year Year Year
---------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
<F1> <F2>
March 31, 1994
Notes Payable $34,992,000 8.25% $68,872,000 $53,239,000 8.4%
March 31, 1993
Notes Payable $66,258,000 7.85% $97,495,000 $61,264,000 7.5%
Commercial Paper N.A. 40,271,000 4,261,000 4.5%
March 31, 1992
Notes Payable $46,408,000 5.58% $67,357,000 $33,325,000 5.8%
Commercial Paper 4.54% 34,045,000 21,784,000 5.8%
<FN>
<F1> Average amount outstanding during the year is computed by dividing the
total of daily outstanding principal by 360 days.
<F2> The weighted average interest rates were calculated by dividing the
interest expense for the year for such borrowings by the average
amounts outstanding during the period.
</TABLE>
Page 52 of 91<PAGE>
SCHEDULE X
STOKELY USA, INC. AND SUBSIDIARIES
SCHEDULE X - SUPPLEMENTARY EARNINGS STATEMENT INFORMATION
Years Ended March 31, 1994, 1993 and 1992
Charged to costs and expenses
-----------------------------
1994 1993 1992
---- ---- ----
Maintenance and repairs $5,363,000 $6,827,000 $7,844,000
Advertising $ 688,000 $1,206,000 $2,269,000
The amounts of royalties, taxes other than payroll and income taxes, and
amortization of intangible assets are not material.
Page 53 of 91<PAGE>
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 behalf of the undersigned, thereunto duly authorized.
STOKELY USA, INC.
Date: June 29, 1994
BY:
------------------------
Vernon L. Wiersma
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
Director 6-29-94
- -------------------- ----------
Thomas W. Mount
Chairman of the Board 6-29-94
- -------------------- ----------
Frank J. Pelisek
President, Chief Execu- 6-29-94
- -------------------- tive Officer and Director ----------
Vernon L. Wiersma
Vice Chairman, Treasurer 6-29-94
- -------------------- and Director ----------
Stephen W. Theobald
Vice President and Chief 6-29-94
- -------------------- Financial and Accounting ----------
Leslie J. Wilson Officer
Director 6-29-94
- -------------------- ----------
Joseph B. Weix
Director 6-29-94
- -------------------- -----------
Orren J. Bradley
Director 6-29-94
- -------------------- ----------
Russell W. Britt
Page 54 of 91<PAGE>
Director 6-29-94
- -------------------- ----------
Ody J. Fish
Director 6-29-94
- --------------------- ----------
Dr. E. Michael Foster
Director 6-29-94
- --------------------- ----------
Charles J. Carey
Director 6-29-94
- --------------------- ----------
Carol Ward Knox
Page 55 of 91<PAGE>
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
EXHIBITS
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended Commission File
March 31, 1994 0-13943
STOKELY USA, INC.
(Exact name of Issuer as specified in its Articles of Incorporation)
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Page 56 of 91<PAGE>
STOKELY USA, INC.
File No. 0-13943
Exhibits to Form 10-K for
fiscal year ended March 31, 1994
Page 57 of 91<PAGE>
3 Restated Articles of Incorporation Exhibit 3 on the Companys
and By-Laws. Registration Statement on
Form S-1 (SEC File No.
33-339).
10(a) Revolving Credit and Term Loan Exhibit 10(a) to Form
agreement. 10-K Report for the year
ended March 31, 1990.
10(b) Loan Agreement with respect to Exhibit 10(u) to Form
$3,000,000 in principal amount 10-K Report for the year
of Industrial Development Bond ended March 31, 1989.
relating to Stokely's Green Bay,
Wisconsin, facility.
10(c) Loan and Mortgage Agreement with Exhibit 10(v) to Form
respect to $6,000,000 in principal 10-K Report for the year
amount to Industrial Development ended March 31, 1989.
Bond relating to Stokely's Poynette,
Wisconsin, sauerkraut facility.
10(d) Note agreement with respect to Exhibit 10 to Form 10-Q
$25,000,000 9.12% Senior Notes. ended December 31, 1989.
10(e) Revenue Agreement with respect to Exhibit 10(p) to Form
$1,400,000 in principal amount of 10-K Report for the year
Industrial Development Revenue Bond ended March 31, 1990.
relating to Stokely's Paulding,
Ohio, facility.
10(f) Revenue Agreement with respect to Exhibit 10(q) to Form
$1,600,000 in principal amount of 10-K Report for the year
Industrial Development Revenue ended March 31, 1990.
Bond relating to Stokely's Poynette,
Wisconsin, facility.
10(g) Loan Agreement with respect to Exhibit 10(r) to Form
$4,000,000 in principal amount of 10-K Report for the year
Industrial Revenue Bonds relating ended March 31, 1990.
to Stokely's Waunakee, Wisconsin,
facility.
10(h) Loan Agreement with respect to Exhibit 10(s) to Form
$3,000,000 in principal amount of 10-K Report for the year
Industrial Revenue Bonds relating ended March 31, 1990.
to Stokely's Ackley, Iowa, facility.
10(i) Executive Deferred Compensation Exhibit 10(t) to Form
Agreement. 10-K Report for the year
ended March 31, 1990.
10(j) Officer Stock Option Agreement. Exhibit 10(u) to Form
10-K Report for the year
ended March 31, 1990.
Page 58 of 91<PAGE>
10(k) Loan Agreement with respect to Exhibit 10(k) to Form
$3,000,000 Industrial Revenue 10-K Report for the year
Bond relating to Stokely's ended March 31, 1991.
Pickett, Wisconsin, facility.
10(l) Loan Agreement with respect to Exhibit 10(l) to Form
$4,000,000 Industrial Revenue 10-K Report for the year
Bonds relating to Stokely's ended March 31, 1991.
Walla Walla, Washington, facility.
10(m) Loan Agreement with respect to Exhibit 10(m) to Form
$3,000,000 Industrial Revenue Bonds 10-K Report for the year
relating to Stokely's Wells, ended March 31, 1992.
Minnesota, facility.
10(n) Loan Agreement with respect to Exhibit 10(n) to Form
$20,000,000 9.49% note. 10-K Report for the year
ended March 31, 1992.
10(o) Loan and Security Agreement with Exhibit 10(a) to Form
respect to $120,000,000 dated 10-Q for the quarter
August 18, 1992. ended September 30, 1992.
10(p) Restated Agreement for Purchase Exhibit 10(b) to Form
and Sales of Containers between 10-Q for the quarter
Stokely USA, Inc. and Heekin Can ended September 30, 1992.
Inc.
10(q) Supply Agreement between Stokely Exhibit 10(c) to Form
USA, Inc. and American National 10-Q for the quarter
Can Company. ended September 30, 1992.
10(r) Amendment to $25,000,000 original Exhibit 10(d) to Form
Principal amount of 9.12% Senior 10-Q for the quarter
Notes due January 15, 2000. ended September 30, 1992.
10(s) Amendment to $20,000,000 Exhibit 10(e) to Form
Promissary Note. 10-Q for the quarter
ended September 20, 1992.
10(t) Amendment to revenue agreement Exhibit 10(t) to Form
between Stokely USA and the City 10-K for the year ended
of Appleton, Wisconsin, dated March 31, 1993.
December 1, 1988.
10(u) First Amendment to Intercreditor Exhibit 10(u) to Form
and Collateral Agency Agreement. 10-K for the year ended
March 31, 1993.
10(v) Second Amendment to $20,000,000 Exhibit 10(v) to Form
Promissary Note. 10-K for the year ended
March 31, 1993.
Page 59 of 91<PAGE>
10(w) First Amendment to Collateral Exhibit 10(w) to Form
Security Agreement dated 10-K for the year ended
August 18, 1992, entered into by March 31, 1993.
D & K Frozen Foods, Inc.
10(x) First Amendment to Collateral Exhibit 10(x) to Form
Security Agreement dated 10-K for the year ended
August 18, 1992, entered into March 31, 1993.
by Stokely USA, Inc.
10(y) Second Amendment to Note Agreement Exhibit 10(y) to Form
dated January 1, 1990, in the 10-K for the year ended
amount of $25,000,000. March 31, 1993.
10(z) Warrant to purchase shares of Exhibit 10(z) to Form
Common Stock by Nationwide Life 10-K for the year ended
Insurance Company. March 31, 1993.
10(aa) Warrant to purchase shares of Exhibit 10(aa) to Form
Common Stock by EMPL and Co. 10-K for the year ended
March 31, 1993.
10(bb) Warrant to purchase shares of Exhibit 10(bb) to Form
Common Stock by West Coast Life 10-K for the year ended
Insurance Company. March 31, 1993.
10(cc) Notice of Redemption of $1,400,000 See Attachment.
County of Paulding, Ohio Industrial
Development.
10(dd) First Amendment to Loan Agreement, See Attachment.
dated as of March 31, 1994, between
Stokely USA, Inc. and Norwest Bank
Minnesota, N.A., as trustee.
10(ee) First Amendment to Loan Agreement, See Attachment.
dated as of March 31, 1994, between
Stokely USA, Inc. and Norwest Bank
Minnesota, N.A., as trustee.
10(ff) First Amendment to Loan Agreement, See Attachment.
dated as of March 31, 1994, between
Stokely USA, Inc. and NationsBank of
Virginia, N.A., as trustee.
10(gg) First Amendment to Loan Agreement, See Attachment.
dated as of March 31, 1994 between
Stokely USA, Inc. and NationsBank of
Virginia, N.A., as trustee.
10(hh) First Amendment to Loan Agreement, See Attachment.
dated as of June 17, 1994 between
Stokely USA, Inc. and NationsBank of
Virginia, N.A., as trustee.
Page 60 of 91<PAGE>
10(ii) First Amendment to Loan Agreement, See Attachment.
dated as of June 17, 1994 between
Stokely USA, Inc. and NationsBank of
Virginia, N.A., as trustee.
10(jj) First Amendment to Loan Agreement, See Attachment.
dated as of June 17, 1994 between
Stokely USA, Inc. and NationsBank
of Virginia, N.A., as trustee.
10(kk) First Amendment to Loan Agreement, See Attachment.
dated as of June 17, 1994 between
Stokely USA, Inc. and NationsBank
of Virginia, N.A., as trustee.
18 Letter regarding change in See Attachment.
accounting principles.
22 List of Subsidiaries. See Attachment.
23 Consent of Independent Auditors. See Attachment.
Page 61 of 91<PAGE>
EXHIBIT 10(cc)
June 13, 1994
Stokely USA, Inc.
Attn: Steve Theobald, Vice Chairman
1055 Corporate Center Drive
Oconomowoc, WI 53066
County of Paulding, Ohio
Attn: President, Board of County Commissioners
Courthouse
Paulding, OH 45879
Re: $1,400,000 County of Paulding, Ohio Industrial Development
Refunding Revenue Bonds (Stokely USA, Inc. Project) dated June 1,
1989
In accordance with Section 8.02 of the Indenture of Trust between County of
Paulding, Ohio (the "Issuer) and Trustcorp Bank, Ohio (kna Society National
Bank) (the "Trustee) dated as of June 1, 1989, the principal amount of all
Outstanding Bonds is hereby declared immediately due and payable due to the
occurrence of Events of Default under Section 8.01(e) of the Indenture of
Trust.
Pursuant to Section 2.02(a)(iv) of the Indenture of Trust, all Outstanding
Bonds shall be redeemed on July 6, 1994. The accelerated principal amount
of the bonds, and interest thereon, shall be immediately deposited with the
Trustee. Those amounts are:
Principal: $1,400,000.00
Accrued Interest: 10,038.19 (35 days @ 7.375%)
-------------
$1,410,038.19
Wire instructions for the immediate deposit of these monies are as follows:
Society National Bank
ABA #041001039
Acct: 5513001 (Trust, Toledo)
For Credit: Corporate Trust, Attn: Laurie Witt
Further Credit: Stokely Redemption
If you have any questions, please contact Laurie Witt, Corporate Trust
Administrator, at (419) 259-8953.
SOCIETY NATIONAL BANK, Trustee
Page 62 of 91<PAGE>
NOTICE OF REDEMPTION
$1,400,000 County of Paulding, Ohio
Industrial Development Refunding Revenue Bonds
(Stokely USA, Inc. Project)
NOTICE IS HEREBY GIVEN, that pursuant to the provisions of the
Indenture of Trust dated June 1, 1989 between the County of
Paulding, Ohio and Society National Bank, Trustee (fka Trustcorp
Bank, Ohio), and due to the covenant defaults referenced in a
previous notice dated December 16, 1993, the above captioned bond
issue will be called in its entirety, $1,400,000 in principal will
be redeemed on July 6, 1994. On said date, there will become due
and payable each bond maturing after July 6, 1994, to be redeemed
at par (100% of the principal amount thereof) together with accrued
interest to said date.
Interest Rate Maturity
------------- --------
7.375% June 1, 1999
Payment of the bonds to be redeemed will be made at the principal
office of the Paying Agent: Society National Bank, Corporate Trust
Services, 1900 Pacific Avenue, 16th floor, Dallas, Texas 75201 upon
presentation and surrender of said bonds. From and after the
redemption date interest on the bonds will cease to accrue.
SOCIETY NATIONAL BANK, Trustee
Page 63 of 91<PAGE>
EXHIBIT 10(dd)
FIRST AMENDMENT TO LOAN AGREEMENT
---------------------------------
This First Amendment to Loan Agreement, dated as of
March 31, 1994, is by and between Stokely USA, Inc. (the
"Borrower") and Norwest Bank Minnesota, N.A., as trustee (the
"Trustee").
WHEREAS, the City of Ackley, Iowa (the "Issuer") has
previously issued $3,000,000 City of Ackley, Iowa Industrial
Development Revenue Bonds (Stokely USA, Inc. Project) (the "Bonds")
pursuant to an Indenture of Trust dated as of July 1, 1989 (the
"Indenture"); and
WHEREAS, in connection with the issuance of the Bonds,
the Borrower and the Issuer entered into a Loan Agreement dated as
of July 1, 1989 (the "Loan Agreement") containing certain covenants
of the Borrower; and
WHEREAS, pursuant to the Indenture, the Issuer assigned
its rights under the Loan Agreement to the Trustee; and
WHEREAS, the Borrower has requested that the Loan
Agreement be amended to change the financial covenant(s) therein;
and
WHEREAS, Section 11.02 of the Indenture provides that the
Loan Agreement may be amended with notice and the consent of owners
of not less than a majority in aggregate principal amount of
outstanding Bonds; and
WHEREAS, the Trustee has provided notice to the owners of
the Bonds and owners of a majority in aggregate principal amount of
the outstanding Bonds have consented to the amendment of the Loan
Agreement to change the financial covenant(s) therein and have
directed the Trustee to enter into, execute, and deliver an
amendment to the Loan Agreement;
IN CONSIDERATION of the mutual covenants, conditions, and
agreements set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
ARTICLE I
---------
DEFINITIONS
When used herein, the following terms shall have the
meanings specified:
1.1 Amendment. "Amendment" shall mean the First
Amendment to Loan Agreement.
Page 64 of 91<PAGE>
1.2 Other Terms. The other capitalized terms used in
this Amendment shall have the definitions specified in the
Indenture.
ARTICLE II
----------
AMENDMENTS
2.1 Amendment of Loan Agreement. The Loan Agreement is
amended as follows:
(a) Section 7.12 (i) is amended by deleting
"$35,000,000" therein and replacing it with "$20,000,000"; and
(b) Section 7.12 (ii) is amended by deleting "2 to
1" therein and replacing it with "6.0 to 1."
2.2 Miscellaneous Amendments. The Loan Agreement, the
Indenture, and all other documents, instruments, and materials
executed and delivered heretofore or hereafter pursuant thereto are
deemed hereby to be amended so that any reference therein to the
Loan Agreement shall be a reference to the Loan Agreement as
amended by or pursuant to this Amendment.
ARTICLE III
-----------
MISCELLANEOUS
3.1 Ratification of Loan Agreement. Except as
specifically amended by this Amendment, the Loan Agreement and all
other documents, instruments, and materials executed or delivered
pursuant thereto, or to secure the same, shall remain in full force
and effect.
3.2 Expenses and Attorneys' Fees. The Borrower shall
pay reasonable fees and expenses incurred by the Trustee in
connection with the preparation, execution, and delivery of this
Amendment.
3.3 Survival. All agreements, representations, and
warranties made in this Amendment or in any document delivered
pursuant to this Amendment shall survive the execution of this
Amendment and the delivery of any such document.
3.4 Governing Law. This Amendment shall be governed by
the laws of the State of Iowa.
3.5 Counterparts; Headings. This Amendment may be
executed in several counterparts, each of which shall be deemed an
original, but such counterparts shall together constitute but one
Page 65 of 91<PAGE>
and the same agreement. The Article and Section headings of this
Amendment are inserted for convenience of reference only and shall
not constitute a part hereof.
3.6 Severability. Any provision of this Amendment which
is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions
of this Amendment or affecting the validity or enforceability of
such provision in any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have executed this
First Amendment to Loan Agreement as of the day and year first
above written.
STOKELY USA, INC.
By:
---------------------------------
Stephen W. Theobald, Treasurer
Attest:
-------------------------------------
Leslie J. Wilson, Vice President
NORWEST BANK MINNESOTA, N.A.
By:
---------------------------------
Title:
------------------------------
Page 66 of 91<PAGE>
EXHIBIT 10(ee)
FIRST AMENDMENT TO LOAN AGREEMENT
---------------------------------
This First Amendment to Loan Agreement, dated as of
March 31, 1994, is by and between Stokely USA, Inc. (the
"Borrower") and Norwest Bank Minnesota, N.A. as trustee (the
"Trustee").
WHEREAS, the Village of Poynette, Wisconsin (the
"Issuer") has previously issued $6,000,000 Village of Poynette,
Wisconsin Industrial Revenue Bonds (Stokely USA, Inc. Project)(the
"Bonds") pursuant to an Indenture of Trust dated as of August 1,
1988 (the Indenture"); and
WHEREAS, in connection with the issuance of the Bonds,
the Borrower and the Issuer entered into a Loan Agreement dated as
of August 1, 1988 (the "Loan Agreement") containing certain
covenants of the Borrower; and
WHEREAS, pursuant to the Indenture, the Issuer assigned
its rights under the Loan Agreement to the Trustee; and
WHEREAS, the Borrower has requested that the Loan
Agreement be amended to change the financial covenant(s) therein;
and
WHEREAS, Section 11.02 of the Indenture provides that the
Loan Agreement may be amended with notice and the consent of owners
of not less than a majority in aggregate principal amount of
outstanding Bonds; and
WHEREAS, the Trustee has provided notice to the owners of
the Bonds and owners of a majority in aggregate principal amount of
the outstanding Bonds have consented to the amendment of the Loan
Agreement to change the financial covenants(s) therein and have
directed the Trustee to enter into, execute, and deliver an
amendment to the Loan Agreement;
IN CONSIDERATION of the mutual covenants, conditions, and
agreements set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
ARTICLE I
---------
DEFINITIONS
When used herein, the following terms shall have the
meanings specified:
1.1 Amendment. "Amendment" shall mean this First
Amendment to Loan Agreement.
Page 67 of 91<PAGE>
1.2 Other Terms. The other capitalized terms used in
this Amendment shall have the definitions specified in the
Indenture.
ARTICLE II
----------
AMENDMENTS
2.1 Amendment of Loan Agreement. The Loan Agreement is
amended as follows:
(a) Section 7.12 (i) is amended by deleting
"$35,000,000" therein and replacing it with "$20,000,000"; and
(b) Section 7.12 (ii) is amended by deleting "2 to
1" therein and replacing it with "6.0 to 1."
2.2 Miscellaneous Amendments. The Loan Agreement, the
Indenture, and all other documents, instruments, and materials
executed and delivered heretofore or hereafter pursuant thereto are
deemed hereby to be amended so that any reference therein to the
Loan Agreement shall be a reference to the Loan Agreement as
amended by or pursuant to this Amendment.
ARTICLE III
-----------
MISCELLANEOUS
-------------
3.1 Ratification of Loan Agreement. Except as
specifically amended by this Amendment, the Loan Agreement and all
other documents, instruments, and materials executed or delivered
pursuant thereto, or to secure the same, shall remain in full force
and effect.
3.2 Expenses and Attorneys' Fees. The Borrower shall
pay reasonable fees and expenses incurred by the Trustee in
connection with the preparation, execution, and delivery of this
Amendment.
3.3 Survival. All agreements, representations, and
warranties made in this Amendment or in any document delivered
pursuant to this Amendment shall survive the execution of this
Amendment and the delivery of any such document.
3.4 Governing Law. This Amendment shall be governed by
the laws of the State of Wisconsin.
3.5 Counterparts; Headings. This Amendment may be
executed in several counterparts, each of which shall be deemed an
original, but such counterparts shall together constitute but one
Page 68 of 91<PAGE>
and the same agreement. The Article and Section headings of this
Amendment are inserted for convenience of reference only and shall
not constitute a part hereof.
3.6 Severability. Any provision of this Amendment which
is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions
of this Amendment or affecting the validity or enforceability of
such provision in any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have executed this
First Amendment to Loan Agreement as of the day and year first
above written.
STOKELY USA, INC.
By:
----------------------------------
Stephen W. Theobald, Treasurer
Attest:
-------------------------------------
Leslie J. Wilson, Vice President
NORWEST BANK MINNESOTA, N.A.
By:
----------------------------------
Title:
-------------------------------
Page 69 of 91<PAGE>
EXHIBIT 10(ff)
FIRST AMENDMENT TO LOAN AGREEMENT
---------------------------------
This First Amendment to Loan Agreement, dated as of
March 31, 1994, is by and between Stokely USA, Inc. (the
"Borrower") and NationsBank of Virginia, N.A., as trustee (the
"Trustee").
WHEREAS, the Village of Waunakee, Wisconsin (the
"Issuer") has previously issued $4,000,000 Village of Waunakee,
Wisconsin Industrial Revenue Bonds (Stokely USA, Inc. Project) (the
"Bonds") pursuant to an Indenture of Trust dated as of June 1, 1989
(the "Indenture"); and
WHEREAS, in connection with the issuance of the Bonds,
the Borrower and the Issuer entered into a Loan Agreement dated as
of June 1, 1989 (the "Loan Agreement") containing certain covenants
of the Borrower; and
WHEREAS, pursuant to the Indenture, the Issuer assigned
its rights under the Loan Agreement to the Trustee; and
WHEREAS, the Borrower has requested that the Loan
Agreement be amended to change the financial covenant(s) therein;
and
WHEREAS, Section 11.02 of the Indenture provides that the
Loan Agreement may be amended with notice and the consent of owners
of not less than a majority in aggregate principal amount of
outstanding Bonds; and
WHEREAS, the Trustee has provided notice to the owners of
the Bonds and owners of a majority in aggregate principal amount of
the outstanding Bonds have consented to the amendment of the Loan
Agreement to change the financial covenant(s) therein and have
directed the Trustee to enter into, execute, and deliver an
amendment to the Loan Agreement;
IN CONSIDERATION of the mutual covenants, conditions, and
agreements set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
ARTICLE I
---------
DEFINITIONS
When used herein, the following terms shall have the
meanings specified:
1.1 Amendment. "Amendment" shall mean this First
Amendment to Loan Agreement.
Page 70 of 91<PAGE>
1.2 Other Terms. The other capitalized terms used in
this Amendment shall have the definitions specified in the
Indenture.
ARTICLE II
----------
AMENDMENTS
2.1 Amendment of Loan Agreement. The Loan Agreement is
amended as follows:
(a) Section 7.12 (i) is amended by deleting
"$35,000,000" therein and replacing it with "$20,000,000"; and
(b) Section 7.12 (ii) is amended by deleting "2 to
1" therein and replacing it with "6.0 to 1."
2.2 Miscellaneous Amendments. The Loan Agreement, the
Indenture, and all other documents, instruments, and materials
executed and delivered heretofore or hereafter pursuant thereto are
deemed hereby to be amended so that any reference therein to the
Loan Agreement shall be a reference to the Loan Agreement as
amended by or pursuant to this Amendment.
ARTICLE III
-----------
MISCELLANEOUS
-------------
3.1 Ratification of Loan Agreement. Except as
specifically amended by this Amendment, the Loan Agreement and all
other documents, instruments, and materials executed or delivered
pursuant thereto, or to secure the same, shall remain in full force
and effect.
3.2 Expenses and Attorneys' Fees. The Borrower shall
pay reasonable fees and expenses incurred by the Trustee in
connection with the preparation, execution, and delivery of this
Amendment.
3.3 Survival. All agreements, representations, and
warranties made in this Amendment or in any document delivered
pursuant to this Amendment shall survive the execution of this
Amendment and the delivery of any such document.
3.4 Governing Law. This Amendment shall be governed by
the laws of the State of Wisconsin.
3.5 Counterparts; Headings. This Amendment may be
executed in several counterparts, each of which shall be deemed an
original, but such counterparts shall together constitute but one
Page 71 of 91<PAGE>
and the same agreement. The Article and Section headings of this
Amendment are inserted for convenience of reference only and shall
not constitute a part hereof.
3.6 Severability. Any provision of this Amendment which
is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions
of this Amendment or affecting the validity or enforceability of
such provision in any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have executed this
First Amendment to Loan Agreement on the day and year first above
written.
STOKELY USA, INC.
By:
----------------------------------
Stephen W. Theobald, Treasurer
Attest:
-------------------------------------
Leslie J. Wilson, Vice President
NATIONSBANK OF VIRGINIA, N.A.
By:
----------------------------------
Title:
-------------------------------
Page 72 of 91<PAGE>
EXHIBIT 10(gg)
FIRST AMENDMENT TO LOAN AGREEMENT
---------------------------------
This First Amendment to Loan Agreement, dated as of
March 31, 1994, is by and between Stokely, USA, Inc. (the
"Borrower") and NationsBank of Virginia, N.A. as trustee (the
"Trustee").
WHEREAS, the Village of Poynette, Wisconsin (the
"Issuer") has previously issued $1,600,000 Village of Poynette,
Wisconsin Refunding Revenue Bonds (Stokely USA, Inc. Project) (the
"Bonds") pursuant to an Indenture of Trust dated as of December 1,
1989 (the "Indenture"); and
WHEREAS, in connection with the issuance of the Bonds,
the Borrower and the Issuer entered into a Loan Agreement dated as
of December 1, 1989 (the "Loan Agreement") containing certain
covenants of the Borrower; and
WHEREAS, pursuant to the Indenture, the Issuer assigned
its rights under the Loan Agreement to the Trustee; and
WHEREAS, the Borrower has requested that the Loan
Agreement be amended to change the financial covenant(s) therein;
and
WHEREAS, Section 11.02 of the Indenture provides that the
Loan Agreement may be amended with notice and the consent of owners
of not less than a majority in aggregate principal amount of
outstanding Bonds; and
WHEREAS, the Trustee has provided notice to the owners of
the Bonds and owners of a majority in aggregate principal amount of
the outstanding Bonds have consented to the amendment of the Loan
Agreement to change the financial covenant(s) therein and have
directed the Trustee to enter into, execute, and deliver an
amendment to the Loan Agreement;
IN CONSIDERATION of the mutual covenants, conditions, and
agreements set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
ARTICLE I
---------
DEFINITIONS
When used herein, the following terms shall have the
meanings specified:
1.1 Amendment. "Amendment" shall mean this First
Amendment to Loan Agreement.
Page 73 of 91<PAGE>
1.2 Other Terms. The other capitalized terms used in
this Amendment shall have the definitions specified in the
Indenture.
ARTICLE II
----------
AMENDMENTS
2.1 Amendment of Loan Agreement. The Loan Agreement is
amended as follows:
(a) Section 7.12 (i) is amended by deleting
"$35,000,000" therein and replacing it with "$20,000,000"; and
(b) Section 7.12 (ii) is amended by deleting "2 to
1" therein and replacing it with "6.0 to 1."
2.2 Miscellaneous Amendments. The Loan Agreement, the
Indenture, and all other documents, instruments, and materials
executed and delivered heretofore or hereafter pursuant thereto are
deemed hereby to be amended so that any reference therein to the
Loan Agreement shall be a reference to the Loan Agreement as
amended by or pursuant to this Amendment.
ARTICLE III
-----------
MISCELLANEOUS
-------------
3.1 Ratification of Loan Agreement. Except as
specifically amended by this Amendment, the Loan Agreement and all
other documents, instruments, and materials executed or delivered
pursuant thereto, or to secure the same, shall remain in full force
and effect.
3.2 Expenses and Attorneys' Fees. The Borrower shall
pay reasonable fees and expenses incurred by the Trustee in
connection with the preparation, execution, and delivery of this
Amendment.
3.3 Survival. All agreements, representations, and
warranties made in this Amendment or in any document delivered
pursuant to this Amendment shall survive the execution of this
Amendment and the delivery of any such document.
3.4 Governing Law. This Amendment shall be governed by
the laws of the State of Wisconsin.
3.5 Counterparts; Headings. This Amendment may be
executed in several counterparts, each of which shall be deemed an
original, but such counterparts shall together constitute but one
Page 74 of 91<PAGE>
and the same agreement. The Article and Section headings of this
Amendment are inserted for convenience of reference only and shall
not constitute a part hereof.
3.6 Severability. Any provision of this Amendment which
is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions
of this Amendment or affecting the validity or enforceability of
such provision in any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have executed this
First Amendment to Loan Agreement on the day and year first above
written.
STOKELY USA, INC.
By:
----------------------------------
Stephen W. Theobald, Treasurer
Attest:
-------------------------------------
Leslie J. Wilson, Vice President
NATIONSBANK OF VIRGINIA, N.A.
By:
----------------------------------
Title:
-------------------------------
Page 75 of 91<PAGE>
EXHIBIT 10(hh)
FIRST AMENDMENT TO LOAN AGREEMENT
---------------------------------
This First Amendment to Loan Agreement, dated as of
June 17, 1994, is by and between Stokely USA, Inc. (the "Borrower")
and NationsBank of Virginia, N.A., as trustee (the "Trustee").
WHEREAS, the Town of Utica, Wisconsin (the "Issuer") has
previously issued $3,000,000 Town of Utica, Wisconsin Industrial
Revenue Bonds (Stokely USA, Inc. Project) (the "Bonds") pursuant to
an Indenture of Trust dated as of June 1, 1990 (the "Indenture");
and
WHEREAS, in connection with the issuance of the Bonds,
the Borrower and the Issuer entered into a Loan Agreement dated as
of June 1, 1990 (the "Loan Agreement") containing certain covenants
of the Borrower; and
WHEREAS, pursuant to the Indenture, the Issuer assigned
its rights under the Loan Agreement to the Trustee; and
WHEREAS, the Borrower has requested that the Loan
Agreement be amended to change the financial covenants therein; and
WHEREAS, Section 11.02 of the Indenture provides that the
Loan Agreement may be amended with notice and the consent of owners
of not less than a majority in aggregate principal amount of
outstanding Bonds; and
WHEREAS, the Trustee has provided notice to the owners of
the Bonds and owners of a majority in aggregate principal amount of
the outstanding Bonds have consented to the amendment of the Loan
Agreement to change the financial covenants therein and have
directed the Trustee to enter into, execute, and deliver an
amendment to the Loan Agreement;
IN CONSIDERATION of the mutual covenants, conditions, and
agreements set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
ARTICLE I
---------
DEFINITIONS
When used herein, the following terms shall have the
meanings specified:
1.1 Amendment. "Amendment" shall mean this First
Amendment to Loan Agreement.
Page 76 of 91<PAGE>
1.2 Other Terms. The other capitalized terms used in
this Amendment shall have the definitions specified in the
Indenture.
ARTICLE II
----------
AMENDMENTS
2.1 Amendment of Loan Agreement. The Loan Agreement is
amended as follows:
(a) Section 7.12 (i) is amended by deleting
"$35,000,000" therein and replacing it with "$20,000,000"; and
(b) Section 7.12 (ii) is amended by deleting "2 to
1" therein and replacing it with "6.0 to 1."
2.2 Miscellaneous Amendments. The Loan Agreement, the
Indenture, and all other documents, instruments, and materials
executed and delivered heretofore or hereafter pursuant thereto are
deemed hereby to be amended so that any reference therein to the
Loan Agreement shall be a reference to the Loan Agreement as
amended by or pursuant to this Amendment.
ARTICLE III
-----------
MISCELLANEOUS
-------------
3.1 Ratification of Loan Agreement. Except as
specifically amended by this Amendment, the Loan Agreement and all
other documents, instruments, and materials executed or delivered
pursuant thereto, or to secure the same, shall remain in full force
and effect.
3.2 Expenses and Attorneys' Fees. The Borrower shall
pay reasonable fees and expenses incurred by the Trustee in
connection with the preparation, execution, and delivery of this
Amendment.
3.3 Survival. All agreements, representations, and
warranties made in this Amendment or in any document delivered
pursuant to this Amendment shall survive the execution of this
Amendment and the delivery of any such document.
3.4 Governing Law. This Amendment shall be governed by
the laws of the State of Wisconsin.
3.5 Counterparts; Headings. This Amendment may be
executed in several counterparts, each of which shall be deemed an
original, but such counterparts shall together constitute but one
Page 77 of 91<PAGE>
and the same agreement. The Article and Section headings of this
Amendment are inserted for convenience of reference only and shall
not constitute a part hereof.
3.6 Severability. Any provision of this Amendment which
is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions
of this Amendment or affecting the validity or enforceability of
such provision in any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have executed this
First Amendment to Loan Agreement on the day and year first above
written.
STOKELY USA, INC.
By:
----------------------------------
Stephen W. Theobald,
Treasurer
Attest:
-------------------------------------
Leslie J. Wilson,
Vice President
NATIONSBANK OF VIRGINIA, N.A.
By:
----------------------------------
Diana L. Schnetzka,
Trust Officer
Page 78 of 91<PAGE>
EXHIBIT 10(ii)
FIRST AMENDMENT TO LOAN AGREEMENT
---------------------------------
This First Amendment to Loan Agreement, dated as of
June 17, 1994, is by and between Stokely USA, Inc. (the "Borrower")
and NationsBank of Virginia, N.A., as trustee (the "Trustee").
WHEREAS, the City of Green Bay, Wisconsin (the "Issuer")
has previously issued $3,000,000 City of Green Bay, Wisconsin
Industrial Revenue Bonds (Stokely USA, Inc. Project) (the "Bonds")
pursuant to an Indenture of Trust dated as of December 1, 1988 (the
"Indenture"); and
WHEREAS, in connection with the issuance of the Bonds,
the Borrower and the Issuer entered into a Loan Agreement dated as
of December 1, 1988 (the "Loan Agreement") containing certain
covenants of the Borrower; and
WHEREAS, pursuant to the Indenture, the Issuer assigned
its rights under the Loan Agreement to the Trustee; and
WHEREAS, the Borrower has requested that the Loan
Agreement be amended to change the financial covenants therein; and
WHEREAS, Section 11.02 of the Indenture provides that the
Loan Agreement may be amended with notice and the consent of owners
of not less than a majority in aggregate principal amount of
outstanding Bonds; and
WHEREAS, the Trustee has provided notice to the owners of
the Bonds and owners of a majority in aggregate principal amount of
the outstanding Bonds have consented to the amendment of the Loan
Agreement to change the financial covenants therein and have
directed the Trustee to enter into, execute, and deliver an
amendment to the Loan Agreement;
IN CONSIDERATION of the mutual covenants, conditions, and
agreements set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
ARTICLE I
---------
DEFINITIONS
When used herein, the following terms shall have the
meanings specified:
1.1 Amendment. "Amendment" shall mean this First
Amendment to Loan Agreement.
Page 79 of 91<PAGE>
1.2 Other Terms. The other capitalized terms used in
this Amendment shall have the definitions specified in the
Indenture.
ARTICLE II
----------
AMENDMENTS
2.1 Amendment of Loan Agreement. The Loan Agreement is
amended as follows:
(a) Section 7.12 (i) is amended by deleting
"$35,000,000" therein and replacing it with "$20,000,000"; and
(b) Section 7.12 (ii) is amended by deleting "2 to
1" therein and replacing it with "6.0 to 1."
2.2 Miscellaneous Amendments. The Loan Agreement, the
Indenture, and all other documents, instruments, and materials
executed and delivered heretofore or hereafter pursuant thereto are
deemed hereby to be amended so that any reference therein to the
Loan Agreement shall be a reference to the Loan Agreement as
amended by or pursuant to this Amendment.
ARTICLE III
-----------
MISCELLANEOUS
-------------
3.1 Ratification of Loan Agreement. Except as
specifically amended by this Amendment, the Loan Agreement and all
other documents, instruments, and materials executed or delivered
pursuant thereto, or to secure the same, shall remain in full force
and effect.
3.2 Expenses and Attorneys' Fees. The Borrower shall
pay reasonable fees and expenses incurred by the Trustee in
connection with the preparation, execution, and delivery of this
Amendment.
3.3 Survival. All agreements, representations, and
warranties made in this Amendment or in any document delivered
pursuant to this Amendment shall survive the execution of this
Amendment and the delivery of any such document.
3.4 Governing Law. This Amendment shall be governed by
the laws of the State of Wisconsin.
3.5 Counterparts; Headings. This Amendment may be
executed in several counterparts, each of which shall be deemed an
original, but such counterparts shall together constitute but one
Page 80 of 91<PAGE>
and the same agreement. The Article and Section headings of this
Amendment are inserted for convenience of reference only and shall
not constitute a part hereof.
3.6 Severability. Any provision of this Amendment which
is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions
of this Amendment or affecting the validity or enforceability of
such provision in any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have executed this
First Amendment to Loan Agreement on the day and year first above
written.
STOKELY USA, INC.
By:
----------------------------------
Stephen W. Theobald,
Treasurer
Attest:
-------------------------------------
Leslie J. Wilson,
Vice President
NATIONSBANK OF VIRGINIA, N.A.
By:
----------------------------------
Diana L. Schnetzka,
Trust Officer
Page 81 of 91<PAGE>
EXHIBIT 10(jj)
FIRST AMENDMENT TO LOAN AGREEMENT
---------------------------------
This First Amendment to Loan Agreement, dated as of
June 17, 1994, is by and between Stokely USA, Inc. (the "Borrower")
and NationsBank of Virginia, N.A., as trustee (the "Trustee").
WHEREAS, the Port of Walla Walla Public Corporation (the
"Issuer") has previously issued $4,000,000 Port of Walla Walla
Public Corporation Industrial Revenue Bonds, Series 1990 (Stokely
USA, Inc. Project) (the "Bonds") pursuant to an Indenture of Trust
dated as of September 1, 1990 (the "Indenture"); and
WHEREAS, in connection with the issuance of the Bonds,
the Borrower and the Issuer entered into a Loan Agreement dated as
of September 1, 1990 (the "Loan Agreement") containing certain
covenants of the Borrower; and
WHEREAS, pursuant to the Indenture, the Issuer assigned
its rights under the Loan Agreement to the Trustee; and
WHEREAS, the Borrower has requested that the Loan
Agreement be amended to change the financial covenants therein; and
WHEREAS, Section 11.02 of the Indenture provides that the
Loan Agreement may be amended with notice and the consent of owners
of not less than a majority in aggregate principal amount of
outstanding Bonds; and
WHEREAS, the Trustee has provided notice to the owners of
the Bonds and owners of a majority in aggregate principal amount of
the outstanding Bonds have consented to the amendment of the Loan
Agreement to change the financial covenants therein and have
directed the Trustee to enter into, execute, and deliver an
amendment to the Loan Agreement;
IN CONSIDERATION of the mutual covenants, conditions, and
agreements set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
ARTICLE I
---------
DEFINITIONS
When used herein, the following terms shall have the
meanings specified:
1.1 Amendment. "Amendment" shall mean this First
Amendment to Loan Agreement.
Page 82 of 91<PAGE>
1.2 Other Terms. The other capitalized terms used in
this Amendment shall have the definitions specified in the
Indenture.
ARTICLE II
----------
AMENDMENTS
2.1 Amendment of Loan Agreement. The Loan Agreement is
amended as follows:
(a) Section 7.12 (i) is amended by deleting
"$35,000,000" therein and replacing it with "$20,000,000"; and
(b) Section 7.12 (ii) is amended by deleting "2 to
1" therein and replacing it with "6.0 to 1."
2.2 Miscellaneous Amendments. The Loan Agreement, the
Indenture, and all other documents, instruments, and materials
executed and delivered heretofore or hereafter pursuant thereto are
deemed hereby to be amended so that any reference therein to the
Loan Agreement shall be a reference to the Loan Agreement as
amended by or pursuant to this Amendment.
ARTICLE III
-----------
MISCELLANEOUS
-------------
3.1 Ratification of Loan Agreement. Except as
specifically amended by this Amendment, the Loan Agreement and all
other documents, instruments, and materials executed or delivered
pursuant thereto, or to secure the same, shall remain in full force
and effect.
3.2 Expenses and Attorneys' Fees. The Borrower shall
pay reasonable fees and expenses incurred by the Trustee in
connection with the preparation, execution, and delivery of this
Amendment.
3.3 Survival. All agreements, representations, and
warranties made in this Amendment or in any document delivered
pursuant to this Amendment shall survive the execution of this
Amendment and the delivery of any such document.
3.4 Governing Law. This Amendment shall be governed by
the laws of the State of Washington.
3.5 Counterparts; Headings. This Amendment may be
executed in several counterparts, each of which shall be deemed an
original, but such counterparts shall together constitute but one
Page 83 of 91<PAGE>
and the same agreement. The Article and Section headings of this
Amendment are inserted for convenience of reference only and shall
not constitute a part hereof.
3.6 Severability. Any provision of this Amendment which
is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions
of this Amendment or affecting the validity or enforceability of
such provision in any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have executed this
First Amendment to Loan Agreement on the day and year first above
written.
STOKELY USA, INC.
By:
----------------------------------
Stephen W. Theobald,
Treasurer
Attest:
-------------------------------------
Leslie J. Wilson,
Vice President
NATIONSBANK OF VIRGINIA, N.A.
By:
----------------------------------
Diana L. Schnetzka,
Trust Officer
Page 84 of 91<PAGE>
EXHIBIT 10(kk)
FIRST AMENDMENT TO LOAN AGREEMENT
---------------------------------
This First Amendment to Loan Agreement, dated as of
June 17, 1994, is by and between Stokely USA, Inc. (the "Borrower")
and NationsBank of Virginia, N.A., as trustee (the "Trustee").
WHEREAS, the City of Jefferson, Wisconsin (the "Issuer")
has previously issued $6,500,000 City of Jefferson, Wisconsin
Industrial Development Revenue Bonds, (Stokely USA, Inc. Project)
(the "Bonds") pursuant to an Indenture of Trust dated as of
December 15, 1985 (the "Indenture"); and
WHEREAS, in connection with the issuance of the Bonds,
the Borrower and the Issuer entered into a Loan Agreement dated as
of December 15, 1985 (the "Loan Agreement") containing certain
covenants of the Borrower; and
WHEREAS, pursuant to the Indenture, the Issuer assigned
its rights under the Loan Agreement to the Trustee; and
WHEREAS, the Borrower has requested that the Loan
Agreement be amended to change the financial covenants therein; and
WHEREAS, Section 13.02 of the Indenture provides that the
Loan Agreement may be amended with notice and the consent of owners
of not less than a majority in aggregate principal amount of
outstanding Bonds; and
WHEREAS, the Trustee has provided notice to the owners of
the Bonds and owners of a majority in aggregate principal amount of
the outstanding Bonds have consented to the amendment of the Loan
Agreement to change the financial covenant therein and have
directed the Trustee to enter into, execute, and deliver an
amendment to the Loan Agreement;
IN CONSIDERATION of the mutual covenants, conditions, and
agreements set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
ARTICLE I
---------
DEFINITIONS
When used herein, the following terms shall have the
meanings specified:
1.1 Amendment. "Amendment" shall mean this First
Amendment to Loan Agreement.
Page 85 of 91<PAGE>
1.2 Other Terms. The other capitalized terms used in
this Amendment shall have the definitions specified in the
Indenture.
ARTICLE II
----------
AMENDMENTS
2.1 Amendment of Loan Agreement. The Loan Agreement is
amended as follows:
(a) Section 7.12 (i) is amended by deleting
"$35,000,000" therein and replacing it with "$20,000,000"; and
(b) Section 7.12 (ii) is amended by deleting "2 to
1" therein and replacing it with "6.0 to 1."
2.2 Miscellaneous Amendments. The Loan Agreement, the
Indenture, and all other documents, instruments, and materials
executed and delivered heretofore or hereafter pursuant thereto are
deemed hereby to be amended so that any reference therein to the
Loan Agreement shall be a reference to the Loan Agreement as
amended by or pursuant to this Amendment.
ARTICLE III
-----------
MISCELLANEOUS
-------------
3.1 Ratification of Loan Agreement. Except as
specifically amended by this Amendment, the Loan Agreement and all
other documents, instruments, and materials executed or delivered
pursuant thereto, or to secure the same, shall remain in full force
and effect.
3.2 Expenses and Attorneys' Fees. The Borrower shall
pay reasonable fees and expenses incurred by the Trustee in
connection with the preparation, execution, and delivery of this
Amendment.
3.3 Survival. All agreements, representations, and
warranties made in this Amendment or in any document delivered
pursuant to this Amendment shall survive the execution of this
Amendment and the delivery of any such document.
3.4 Governing Law. This Amendment shall be governed by
the laws of the State of Wisconsin.
3.5 Counterparts; Headings. This Amendment may be
executed in several counterparts, each of which shall be deemed an
original, but such counterparts shall together constitute but one
Page 86 of 91<PAGE>
and the same agreement. The Article and Section headings of this
Amendment are inserted for convenience of reference only and shall
not constitute a part hereof.
3.6 Severability. Any provision of this Amendment which
is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions
of this Amendment or affecting the validity or enforceability of
such provision in any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have executed this
First Amendment to Loan Agreement on the day and year first above
written.
STOKELY USA, INC.
By:
----------------------------------
Stephen W. Theobald,
Treasurer
Attest:
-------------------------------------
Leslie J. Wilson,
Vice President
NATIONSBANK OF VIRGINIA, N.A.
By:
----------------------------------
Diana L. Schnetzka,
Trust Officer
Page 87 of 91<PAGE>
EXHIBIT 18
Deloitte & Touche
411 East Wisconsin Avenue
Milwaukee, WI 53202-4496
June 27, 1994
Stokely USA, Inc.
1055 Corporate Center Drive
Oconomowoc, WI 53066
Dear Sirs:
We have audited the consolidated financial statements of Stokely
USA, Inc. as of March 31, 1994 and 1993, and for each of the three
years in the period ended March 31, 1994, included in your Annual
Report on Form 10-K to the Securities and Exchange Commission and
have issued our report thereon dated June 17, 1994, Note C to such
financial statements contains a description of the adoption during
the year ended March 31, 1994 of the change in the method of
valuing inventories from the last-in, first-out method to the
average cost method. In our judgment, such change is to an
alternative accounting principle that is preferable under the
circumstances.
Yours truly,
Deloitte & Touche
Page 88 of 91<PAGE>
EXHIBIT 22
SUBSIDIARIES OF STOKELY USA, INC.
OCONOMOWOC CANNING COMPANY, INC., incorporated in Wisconsin January 16,
1985.
President Vernon L. Wiersma
Vice President John R. McCormick
Secretary Robert M. Brill
Treasurer Stephen W. Theobald
Directors Vernon L. Wiersma
Frank J. Pelisek
Stephen W. Theobald
OCONO INTERNATIONAL, LTD., incorporated in U.S. Virgin Islands,
December 31, 1984.
President Vernon L. Wiersma
Secretary Robert M. Brill
Treasurer Stephen W. Theobald
Directors Vernon L. Wiersma
Stephen W. Theobald
Stuart Sonne
ANC EXPRESS, INC., incorporated in Iowa, July 1, 1967.
President Vernon L. Wiersma
Secretary Robert M. Brill
Directors Vernon L. Wiersma
Stephen W. Theobald
D & K FROZEN FOODS, INC., incorporated in Washington, August 22, 1977.
President Vernon L. Wiersma
Vice President James Beal
Treasurer Stephen W. Theobald
Secretary Robert M. Brill
Directors Vernon L. Wiersma
Stephen W. Theobald
Page 89 of 91<PAGE>
SUBSIDIARIES OF STOKELY USA, INC.
STOKELY MEXICANA S.A. DE C.V. (formerly ITI Proyectos S.A. de C.V.),
incorporated in Mexico.
President Vernon L. Wiersma
Directors Vernon L. Wiersma
Stephen W. Theobald
Robert M. Brill
Secretary Robert M. Brill
STOKELY U.K. LIMITED, incorporated in England on May 17, 1991.
President Vernon L. Wiersma
Vice President Stephen W. Theobald
Treasurer Stephen W. Theobald
Secretary Leslie J. Wilson
Directors Vernon L. Wiersma
Stephen W. Theobald
Kenneth C. Murray
Leslie J. Wilson
Page 90 of 91<PAGE>
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
-----------------------------
We consent to the incorporation by reference in Registration Statement
No. 33-18801 of Stokely USA, Inc. and subsidiaries, on Form S-8 of our
report dated June 17, 1994 appearing in the Annual Report on Form 10-K
of Stokely USA, Inc. and subsidiaries for the year ended March 31, 1994.
DELOITTE & TOUCHE
Milwaukee, Wisconsin
June 27, 1994
Page 91 of 91
