SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended December 31, 1994 Commission File Number 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
--------------
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 the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date.
Class Outstanding at February 3, 1995
- - - ------------------------ -------------------------------
Common Stock, 11,324,645 Shares
$.05 par value per share
Page 1<PAGE>
STOKELY USA, INC. AND SUBSIDIARIES
INDEX
PAGE NO.
--------
PART I. Financial Information
Item 1. Financial Statements
Consolidated Condensed Balance Sheets - 3-4
December 31, 1994, December 31, 1993
and March 31, 1994
Consolidated Condensed Statements of 5-6
Operations - Three and Nine Ended
December 31, 1994 and 1993
Consolidated Condensed Statements of 7
Cash Flows - Nine Months Ended
December 31, 1994 and 1993
Notes to Consolidated Condensed Financial 8
Statements
Item 2. Management's Discussion and Analysis 9-16
of Financial Condition and Results
of Operations
PART II. Other Information
Item 1. Legal Proceedings 17
Item 2. Changes in Securities 17
Item 3. Default Upon Senior Securities 17
Item 4. Submission of Matters to a Vote of 17
Security Holders
Item 5. Other Information 17
Item 6. Exhibits and Reports on Form 8-K 18
Page 2 <PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
STOKELY USA, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
---------------------------------------
(Dollars in thousands)
December 31, December 31, March 31,
1994 1993 1994
(unaudited) (unaudited) (note)
ASSETS ------------ ------------ ---------
- - - ------
CURRENT ASSETS:
Cash and cash equivalents $ 1,023 $ 2,340 $ 2,898
Accounts receivable, less
allowance for losses of $412,
$531, and $385, respectively 24,081 24,248 20,817
Refundable income taxes 2,695 1,979
Inventories: Finished Products 111,256 84,674 50,256
Production Supplies 6,886 6,378 5,000
Prepaid Expenses 2,200 1,600 1,983
--------- --------- --------
Total Current Assets 145,446 121,935 82,933
OTHER ASSETS:
Property held for disposition (net) 2,986 5,510 3,541
Trademarks 779 857 838
Other 2,270 4,806 3,867
--------- --------- --------
Total Other Assets 6,035 11,173 8,246
PROPERTY, PLANT & EQUIPMENT, at cost 102,652 95,193 97,428
Less accumulated depreciation 35,704 29,429 30,072
--------- --------- --------
66,948 65,764 67,356
--------- --------- --------
TOTAL ASSETS $218,429 $198,872 $158,535
========== ========= ========
See accompanying notes to consolidated condensed financial statements
(unaudited).
Note: The balance sheet at March 31, 1994 has been condensed from the
audited financial statements at that date. The balance sheet at
December 31, 1993 has been reclassified for comparative purposes.
Page 3 <PAGE>
STOKELY USA, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
-------------------------------------
(Dollars in thousands)
December 31, December 30, March 31,
1994 1993 1994
(unaudited) (unaudited) (note)
----------- ----------- ---------
LIABILITIES & STOCKHOLDER'S EQUITY
- - - ----------------------------------
CURRENT LIABILITIES:
Notes payable $ 31,468 $ 30,967 $ 17,992
Accounts payable 40,993 28,336 13,867
Current maturities on long-
term debt 2,196 2,454 3,868
Other current liabilities 5,388 7,454 5,135
--------- --------- ---------
80,045 69,211 40,862
Additional long-term debt
classified as a current
liability 25,495
--------- --------- ---------
Total Current Liabilities 80,045 94,706 40,862
LONG-TERM LIABILITIES:
Long-term debt, less current
maturities 71,133 67,353 80,438
OTHER LIABILITIES: 4,813 7,031 4,595
STOCKHOLDER'S EQUITY:
Capital stock 572 422 422
Additional paid-in capital 43,605 18,636 18,661
Retained earnings 18,890 11,355 14,181
Treasury stock at cost (629) (631) (624)
--------- --------- ---------
Total Stockholder's Equity 62,438 29,782 32,640
--------- --------- ---------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $218,429 $198,872 $158,535
========= ========= =========
See accompanying notes to consolidated condensed financial statements
(unaudited).
Note: The balance sheet at March 31, 1994 has been condensed from the
audited financial statements at that date. The balance sheet at
December 31, 1993 has been reclassified for comparative purposes.
Page 4 <PAGE>
STOKELY USA, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
-----------------------------------------------
(Dollars in thousands except per share amounts)
(unaudited)
Three Months Ended
December 31,
1994 1993
---- ----
REVENUE:
Net Sales $ 66,688 $ 71,983
Other 53 3
--------- ---------
Total Revenues 66,741 71,986
COSTS AND EXPENSES:
Cost of products sold 54,212 59,817
Selling, general & administrative expenses 8,354 10,360
Interest 3,047 3,325
--------- ---------
Total Costs and Expenses 65,613 73,502
EARNINGS (LOSS) BEFORE INCOME TAXES 1,128 (1,516)
INCOME TAXES (CREDIT) 177 (1,742)
--------- ---------
NET EARNINGS $ 951 $ 226
========= =========
NET EARNINGS PER COMMON SHARE $ .10 $ .03
====== =======
WEIGHTED AVERAGE SHARES OUTSTANDING 9,400,732 8,346,901
========= ==========
See accompanying notes to consolidated condensed financial statements
(unaudited).
Page 5 <PAGE>
STOKELY USA, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
-----------------------------------------------
(Dollars in thousands except per share amounts)
(unaudited)
Nine Months Ended
December 31,
1994 1993
---- ----
REVENUE:
Net Sales $163,819 $199,488
Other 152 4,603
--------- ---------
Total Revenues 163,971 204,091
COSTS AND EXPENSES:
Cost of products sold 128,360 173,408
Selling, general & administrative expenses 21,818 28,377
Interest 7,961 9,807
--------- ---------
Total Cost and Expenses 158,139 211,592
EARNINGS (LOSS) BEFORE INCOME TAXES (CREDIT) 5,832 (7,501)
INCOME TAXES (CREDIT) 1,123 (2,460)
--------- ---------
NET EARNINGS (LOSS) $ 4,709 $ (5,041)
========= =========
NET EARNINGS (LOSS) PER COMMON SHARE $ .54 $ (.60)
====== ========
WEIGHTED AVERAGE SHARES OUTSTANDING 8,684,645 8,342,194
========= ==========
See accompanying notes to consolidated condensed financial statements
(unaudited).
Page 6<PAGE>
STOKELY USA, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Nine Months Ended
December 31,
1994 1993
---- ----
Net cash provided by (used in) operating
activities $(24,952) $ 14,098
-------- --------
Cash flows from investing activities:
Purchase of property, plant and equipment (5,224) (4,475)
Proceeds from disposal of property, plant
and equipment 555 8,287
Decrease (Increase) in other assets - net 157 (572)
------- -------
Net cash provided by (used in) investing
activities (4,512) 3,240
------- -------
Cash flows from financing activities:
Change in short-term debt - net 13,476 ( 291)
Payments of long-term debt (10,977) (16,006)
Capital stock transactions - net 25,090 48
--------- --------
Net cash provided by (used in) financing
activities 27,589 (16,249)
--------- --------
Net increase (decrease) in cash and
cash equivalents (1,875) 1,089
Cash and cash equivalents at beginning
of period 2,898 1,251
--------- ---------
Cash and cash equivalents at end of period $ 1,023 $ 2,340
========= =========
See accompanying notes to consolidated condensed financial statements
(unaudited).
Page 7<PAGE>
STOKELY USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
----------------------------------------------------
(Unaudited)
1. In the opinion of management, the accompanying unaudited consolidated
condensed financial statements contain all normal and recurring adjustments
necessary to present fairly Stokely USA, Inc.'s consolidated condensed
balance sheets as of December 31, 1994 and 1993, and March 31, 1994, the
consolidated condensed statements of operations for the three and nine
month periods ended December 31, 1994 and 1993, and the consolidated
condensed statement of cash flows for the nine months then ended.
The results of operations for the three months and nine months ended
December 31, 1994 are not necessarily indicative of the results to be
expected for the full year. For interim reporting purposes, certain
expenses are based on estimates rather than expenses actually incurred.
The unaudited interim consolidated condensed financial statements should be
read in conjunction with the consolidated financial statements and notes
thereto for the fiscal year ended March 31, 1994, included in the Company's
Form 10-K filed with the Securities and Exchange Commission.
The accounting policies followed by the Company are described in Note A of
the financial statements, located on Page 33 of the Company's Form 10-K for
the year ended March 31, 1994.
2. During the fourth quarter of fiscal 1994, the Company changed its
method of valuing 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, prior years' financial statements have been
retroactively adjusted to reflect this change. The effect of the
restatement was to increase inventories and retained earnings by $5,399,000
at December 31, 1993, from the previously reported amounts. The change in
accounting method had no effect on the previously reported net loss for the
nine months ended December 31, 1993.
3. Supplemental cash flow disclosures: Cash payments for interest were
$7.1 million and $10.0 million for the nine months ended December 31, 1994
and 1993, respectively. Net refunds of income taxes were $1.8 million and
$3.6 million for the nine months ended December 31, 1994 and 1993,
respectively.
Page 8<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
---------------------
The following is management's discussion and analysis of certain
significant factors which have affected the Company's operations during the
periods included in the accompanying (unaudited) consolidated condensed
statements of operations and balance sheets.
RESULTS OF OPERATIONS:
Three Months Ended December 31, 1994 Compared to Three Months Ended
- - - --------------------------------------------------------------------
December 31, 1993
------------------
Net Sales
- - - ---------
Net sales decreased $5.3 million, or 7.4%, to $66.7 million for the quarter
ended December 31, 1994 compared to $72.0 million for the quarter ended
December 31, 1993. The decline in sales reflects a decline in average
selling price as well as a decline in unit volume primarily attributable to
discontinued items, exiting cannels of distribution and timing differences
relating to certain frozen contract sales.
Total canned vegetable sales increased $6.5 million, or 13.8%, to $53.5
million for the quarter ended December 31, 1994 from $47.0 million for the
quarter ended December 31, 1993. The increase in total canned vegetable
sales was primarily the result of an $8.2 million increase in sales volume
due to higher available inventory resulting from much improved growing and
harvesting conditions in the summer of 1994. The volume increase was
partially offset by a $1.7 million decrease in sales due to lower average
selling prices. The decline in pricing in the third quarter ended
December 31, 1994 was due to unanticipated and significant competitive
market pressures which developed late in the third quarter. As expected,
selling prices had declined during the first half of the third quarter from
the levels experienced during the first half of fiscal 1995, in response to
last summer's record production, to levels the Company considered
sustainable. Given apparent industry inventory positions, the Company did
not anticipate the round of price cutting that began late in the third
quarter. Nevertheless, in order to maintain market share it was necessary
for the Company to respond to this new competitive environment which
resulted in a substantial decline in pricing late in the third quarter.
Should current prices and margins persist, they will have a significant
negative impact on fourth quarter operating results.
The processed vegetable markets are extremely depressed currently, with
pricing conditions in some key items at or below ten-year lows. The
Company believes this situation is temporary, having been caused by an
unlikely and unpredictable sequence of events that eventually led to
apparent industry inventory excesses and distribution imbalances. The
initial event was the Midwest flooding that occurred during the summer of
1993 and resulted in sharply curtailed yields and production.
Page 9<PAGE>
The industry responded to the shortfall with substantially increased
planted acreage in the summer of 1994. Due to excellent growing conditions
in the Midwest, the crop yields on that acreage surpassed previous records.
As a result, industry production exceeded the planned increases leading to
excess inventories which had a negative impact on selling prices early in
the third quarter. While it is difficult to explain the causes of the
price declines that occurred late in the quarter, it is reasonable to
conclude that inventory distribution imbalances played a part. Government
mandated label changes required by the NLEA may have resulted in a
disproportionate share of the late summer/early fall feature business going
to the brand market at the expense of the private label market
participants. While the Company's volume of canned brand and private label
sales increased during the third quarter compared to the third quarter a
year ago, syndicated market share data made available in December indicates
that, for the category in total, private label did lose market share to the
brand market during the fall. Further, the pricing strategies of some
industry participants were particularly aggressive during the same period.
These factors would tend to create an increasingly uneven distribution of
inventories as the third quarter progressed and a corresponding increase in
pressure to liquidate excesses. That pressure may have been one of the
reasons that certain competitors initiated the round of price cutting that
occurred late in the third quarter.
Sales of canned private label products increased $3.3 million or 9.3% to
$38.8 million for the quarter ended December 31, 1994, compared to $35.5
million for the quarter ended December 31, 1993. The increase in private
label sales was the result of a $4.6 million increase in sales due to
higher sales volume primarily due to higher available inventory, partially
offset by a $1.3 million decrease in sales due to lower pricing. Sales of
canned brand products increased approximately $3.2 million or 27.8%, to
$14.7 million for the quarter ended December 31, 1994 compared to $11.5
million for the quarter ended December 31, 1993. The increase in brand
sales was the result of a $3.6 million increase in sales volume, partially
offset by a $0.4 million decrease in pricing.
Frozen sales declined $11.8 million, or 47.2%, to $13.2 million for the
quarter ended December 31, 1994 compared to $25.0 million for the quarter
ended December 31, 1993. The reduction in frozen sales was due to the
elimination of certain low margin frozen products and exiting certain
channels of distribution as part of the Company's restructuring program and
timing differences for certain frozen contract sales.
Cost of Products Sold
- - - ---------------------
Cost of products sold decreased $5.6 million, or 9.4%, to $54.2 million for
the quarter ended December 31, 1994 from $59.8 million for the quarter
ended December 31, 1993. The decrease in cost of goods sold was due
primarily to lower sales volume. Cost of products sold as a percent of
sales decreased to 81.3% for the quarter ended December 31, 1994 compared
to 83.1% for the quarter ended December 31, 1993. The decrease of 1.8% in
cost of products sold as a percent of sales is due primarily to lower unit
manufacturing costs caused by higher production volume in fiscal 1995
partially offset by unfavorable, non-recurring cost variances related to
agricultural and processing operations due to the unusual nature of last
summer's processing season.
Page 10<PAGE>
Selling, General and Administrative Expense
- - - -------------------------------------------
Selling, general and administrative expense declined $2.0 million to $8.4
million for the quarter ended December 31, 1994 from $10.4 million for the
quarter ended December 31, 1993. This reduction was primarily the result
of the non-recurring charge of $2.1 million incurred in the third quarter
ended December 31, 1993 for settlement of a 1989 product liability claim.
Interest Expense
- - - ----------------
Interest expense decreased $0.3 million, or 9.1%, to $3.0 million during
the quarter ended December 31, 1994 compared to $3.3 million for the
quarter ended December 31, 1993. This reduction was primarily the result
of the pay down of revolving credit loans with the $25.1 million net
proceeds from the secondary stock offering completed in November, 1994.
Net Earnings
- - - ------------
Net income for the quarter ended December 31, 1994 was $1.0 million
compared to net income of $226,000 for the quarter ended December 31, 1993.
Page 11<PAGE>
Nine Months Ended December 31, 1994 Compared to Nine Months Ended
- - - -----------------------------------------------------------------
December 31, 1993
-----------------
Net Sales
- - - ---------
Net sales decreased $35.7 million, or 17.9%, to $163.8 million for the nine
months ended December 31, 1994 compared to $199.5 million for the nine
months ended December 31, 1993. The reduction in sales was the result of
lower sales volume due to lower available inventories at the beginning of
fiscal 1995 caused by a poor growing season during fiscal 1994 and the
elimination of certain low margin or unprofitable products and distribution
channels, partially offset by higher average canned prices during the first
nine months of fiscal 1995.
Total canned vegetable sales decreased $13.1 million, or 9.6% to $123.0
million for the nine months ended December 31, 1994 compared to $136.1
million for the nine months ended December 31, 1993. The decline in total
canned vegetable sales was the result of a $22.4 million reduction in sales
volume offset by $9.3 million increase in sales due to higher pricing. Of
the decrease in sales of $13.1 million, $4.0 million was due to a reduction
in sales of discontinued canned products and $9.1 million was due to a
decrease in sales of continued products due primarily to lower available
inventories during the first three quarters of the fiscal year. Average
pricing was 6.8% higher for the nine months ended December 31, 1994 due to
low industry inventories referenced above during the first six months of
the period. The pricing direction reversed itself in the final three
months of the period.
Sales of private label canned products declined $9.6 million or 9.8%, to
$88.5 million for the nine months ended December 31, 1994, compared to
$98.1 million for the nine months ended December 31, 1993. The decline in
private label canned sales was the result of an $18.6 million reduction in
sales volume due to lower available inventories, partially offset by a $9.0
million increase in sales due to improved pricing. Sales of brand label
canned products declined $3.5 million, or 9.2%, to $34.5 million compared
to $38.0 million for the nine months ended December 31, 1993.
Substantially all the decline in brand sales was due to lower sales volume
primarily caused by lower available canned inventories.
Total frozen sales declined $22.6 million, or 35.6%, to $40.8 million for
the nine months ended December 31, 1994 compared to $63.4 million for the
nine months ended December 31, 1993. This reduction in sales volume was
due to lower available inventories during the first three quarters of the
fiscal year and the elimination of certain low margin or unprofitable
frozen products and exiting certain channels of distribution as part of the
Company's restructure program. Sales of discontinued frozen products
decreased $8.8 million, or 72.1%, to $3.4 million for the nine months ended
December 31, 1994 compared to $12.2 million for the nine months ended
December 31, 1993.
Page 12<PAGE>
Cost of Products Sold
- - - ---------------------
Cost of products sold decreased $45.0 million, or 26.0%, to $128.4 million
for the nine months ended December 31, 1994 from $173.4 million for the
nine months ended December 31, 1993. The decrease in cost of products sold
was due primarily to lower sales volume in both the canned and frozen
divisions. Cost of products sold as a percentage of net sales decreased
8.5% to 78.4% for the nine months ended December 31, 1994 compared to 86.9%
for the nine months ended December 31, 1993. Of the 8.5% decrease, 4.3%
was due to higher selling prices. The remaining decrease in cost of
products sold as a percent of sales is due to lower unit manufacturing
costs caused by higher production volume in fiscal 1995, partially offset
by unfavorable, non-recurring cost variances related to agricultural and
processing operations due to the unusual nature of last summer's processing
season.
Selling, General and Administrative Expense
- - - -------------------------------------------
Selling, general and administrative expenses declined by $4.5 million, or
17.1%, to $21.8 million for the nine months ended December 31, 1994 from
$26.3 million (excluding a charge of $2.1 million relating to the
settlement of a product liability claim) for the nine months ended
December 31, 1993. This reduction was primarily the result of lower
variable selling expenses related to lower sales volume. Selling, general
and administrative expenses as a percentage of net sales was 13.3% for the
nine months ended December 31, 1994 compared to 13.2% (excluding the
product liability settlement) for the nine months ended December 31, 1993.
Interest Expense
- - - ----------------
Interest expense decreased $1.8 million, or 18.4%, to $8.0 million for the
nine months ended December 31, 1994 compared to $9.8 million for the nine
months ended December 31, 1993. This reduction was primarily the result of
lower short-term borrowings resulting from lower working capital
requirements and the payment of long-term debt from the proceeds of sales
of closed plants and proceeds from the November 1994 stock offering,
partially offset by increases in short-term interest rates and higher
financing expenses associated with the June 1993 amendment of the Company's
revolving credit facility.
Income Taxes
- - - ------------
The effective income tax rate for the nine months ended December 31, 1994
was 19.3% compared to the 32.8% used for calculating tax credits for the
nine months ended December 31, 1993. Each of the effective tax rates
differ from the statutory rates due to recognition of allowable tax
benefits from net operating loss carryforwards.
Page 13<PAGE>
Net Earnings (Loss)
- - - -------------------
Net earnings for the nine months ended December 31, 1994 were $4.7 million
compared to the net loss of $5.0 million for the nine months ended
December 31, 1993.
Page 14<PAGE>
FINANCIAL CONDITION
Liquidity and Capital Resources
- - - -------------------------------
General
- - - -------
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. The working capital requirements
associated with producing and maintaining such inventories are financed
primarily through short-term borrowings and deferred payment terms with
major raw product and container suppliers. The Company's revolving credit
facility provides for borrowings up to $100.0 million as revolving credit
loans. The revolving credit facility matures on May 31, 1995. The Company
believes that the revolving credit facility is adequate to meet the
Company's seasonal borrowing needs. On November 25, 1994 the Company
issued 3,000,000 shares of common stock to the public with net proceeds to
the Company of $25.1 million being used to reduce debt under the revolving
credit facility. Borrowings under the revolving credit facility were $41.5
million at December 31, 1994 and are projected to decline for the remainder
of fiscal 1995.
The Company has received proposals from various lenders to provide funds
under a new revolving credit agreement, which it intends to enter into in
fiscal 1995. Due to the decreased working capital needs of the Company at
the present time, the Company anticipates that the new revolving credit
agreement will provide a smaller working capital facility, and also have a
lower interest rate and less restrictive financial and operating covenants
than the existing Revolver.
Cash Flows from Operating Activities
- - - ------------------------------------
Cash used in operations during the nine months ended December 31, 1994
totaled $25.0 million. Of the total cash used, changes in operating assets
and liabilities used cash of $37.0 million primarily due to an increase in
inventory of $62.9 million and an increase in accounts receivable of $3.3
million, partially offset by an increase of $27.1 million in accounts
payable.
The increase of $62.9 million in inventory levels reflects the contrast of
the 1993 and 1994 summer processing seasons. Inventory levels of March 31,
1994 were unusually low due to the poor growing and harvesting conditions
of the summer of 1993 in contrast to inventory levels at December 31, 1994
which were higher due to favorable growing conditions during the summer of
1994. The increase in accounts payable of $27.1 million is due to expected
seasonal increases related to the summer processing season.
Page 15<PAGE>
Cash Flows from Investing Activities
- - - ------------------------------------
Net cash used in investing activities during the nine months ended
December 31, 1994 were $4.5 million. Purchase of property, plant and
equipment was $5.2 million during the nine months ended December 31, 1994.
Capital expenditures during the nine months ended December 31, 1994 were
primarily related to the capacity consolidation at the Waunakee, Wisconsin
facility and investment in product quality control equipment at several
processing plants.
Cash Flows from Financing Activities
- - - ------------------------------------
Cash provided by financing activities during the nine months ended
December 31, 1994 total $27.6 million, primarily from the $25.1 million
proceeds of the November 25, 1994 common stock offering.
Page 16 <PAGE>
PART II. OTHER INFORMATION
- - - ----------------------------
Item 1. Legal Proceedings
- - - ---------------------------
A class action lawsuit was filed on January 3, 1995, in the United States
District Court for the Eastern District of Wisconsin, by Philip D. Freeman,
a Minnesota resident, against Stokely USA, Inc. (the "Company"), all of the
individual members of the Board of Directors of the Company (in both their
capacity as a member of the Board of Directors and as an executive officer,
as applicable), William Blair & Company and Dain Bosworth, Inc. The
plaintiff has brought the action pursuant to Sections 11, 12(2) and 15 of
the Securities Act of 1933, as amended, and Sections 10(b) and 20 of the
Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated
thereunder. The plaintiff alleges that he sustained losses in connection
with his purchase of shares of Common Stock of the Company during the
period from October 17, 1994 to December 19, 1994, as a result of
defendants' alleged misleading statements and omissions to state material
facts. The complaint seeks rescission and/or compensatory damages, and
costs and expenses related to the bringing of the lawsuit. The Company
believes that the allegations are without merit or substance, and will
defend the action vigorously.
Item 2. Changes in Securities
- - - -------------------------------
Public offering of 3,000,000 shares of common stock. (See Item 6 reference
to report on Form 8-K filed November 18, 1994).
Item 3. Default Upon Senior Securities
- - - ----------------------------------------
None
Item 4. Submission of Matters to a Vote of Security Holders
- - - -------------------------------------------------------------
None
Item 5. Other Information
- - - ---------------------------
None
Page 17<PAGE>
Item 6. Exhibits and Reports on Form 8-K
- - - -----------------------------------------
(b) The following reports on Form 8-K were filed during the three months
ended December 31, 1994:
Date of Event: November 18, 1994
Items Reported: Item 5 - Other Events - Public Offering of 3,000,000
shares of Common Stock
Financial Statements Filed: None
Date of Event: December 19, 1994
Items Reported: Item 5 - Other Events - Adverse Change in Business
Conditions
Financial Statements Filed: None
Page 18<PAGE>
STOKELY USA, INC.
SIGNATURES
----------
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
STOKELY USA, INC.
-------------------------
Registrant
Date February 14, 1995 /s/ Stephen W. Theobald
----------------- -------------------------
Stephen W. Theobald
Vice Chairman
Date February 14, 1995 /s/ Leslie J. Wilson
----------------- -------------------------
Leslie J. Wilson
Vice President - Finance
(Principal Financial Officer)
Page 19<PAGE>
STOKELY USA, INC.
SIGNATURES
----------
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
STOKELY USA, INC.
-------------------------
Registrant
Date February 14, 1995
----------------- -------------------------
Stephen W. Theobald
Vice Chairman
Date February 14, 1995
----------------- -------------------------
Leslie J. Wilson
Vice President - Finance
(Principal Financial Officer)
Page 20
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-END> DEC-31-1994
<CASH> 1023
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