<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
/X/ Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the quarterly period
ended November 30, 1994; or
-----------------
/ / Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the transition period
from __________ to __________.
Commission File Number: 33-12173
AMERICOLD CORPORATION
(Exact name of registrant as specified in its charter)
OREGON 93-0295215
(State of Incorporation) (I.R.S. Employer
Identification Number)
7007 S.W. Cardinal Lane, Suite 135
Portland, Oregon 97224
(Address of principal executive offices) (Zip Code)
(503) 624-8585
(Registrant's telephone number, including area code)
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 / /
Number of shares outstanding of the registrant's common stock, par
value $.01 per share, as of December 31, 1994: 4,863,999 shares.
<PAGE>
AMERICOLD CORPORATION
Form 10-Q
INDEX
-----
Page
----
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets 3
Consolidated Statements of Operations 5
Consolidated Statements of Cash Flows 7
Notes to Consolidated Financial Statements 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 13
PART II OTHER INFORMATION
Item 1. Legal Proceedings 21
Item 6. Exhibits and Reports on Form 8-K 21
SIGNATURES 22
EXHIBIT INDEX 23
-2-
<PAGE>
PART I - Financial Information
Item 1. Financial Statements
AMERICOLD CORPORATION
CONSOLIDATED BALANCE SHEETS
Last day of February 1994 and November 1994
(In thousands, except share data)
<TABLE>
<CAPTION>
Last day of Last day of
February 1994 November 1994
------------- -------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents (note 6) $ 3,892 $ 21,064
Trade receivables, net 16,702 26,644
Other receivables, net (note 7) 8,351 742
Prepaid expenses 3,972 2,309
Other current assets 1,919 535
---------- ----------
Total current assets 34,836 51,294
Property, plant and equipment, less accumulated depreciation
of $138,681 and $153,150, respectively 375,772 372,101
Cost in excess of net assets acquired, less accumulated
amortization of $17,230 and $19,132, respectively 82,563 80,662
Other noncurrent assets 35,532 33,148
---------- ----------
Total assets $ 528,703 $ 537,205
========== ==========
LIABILITIES, PREFERRED STOCK AND COMMON STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 5,450 $ 7,593
Accrued interest 17,334 13,446
Accrued expenses 7,512 11,019
Deferred revenue 4,772 5,884
Current maturities of long-term debt 2,281 30,992
Other current liabilities 4,944 2,698
---------- ----------
Total current liabilities 42,293 71,632
Long-term debt, less current maturities 467,337 438,251
Deferred income taxes 104,558 107,191
Other noncurrent liabilities 11,744 10,134
---------- ----------
Total liabilities 625,932 627,208
---------- ----------
Preferred stock, $100 par value; authorized 1,000,000 shares;
issued and outstanding 49,672 and 55,384 shares,
respectively (note 5) 5,348 5,850
---------- ----------
Common stockholders' deficit (note 3):
Common stock, $.01 par value; authorized
10,000,000 shares; issued and outstanding 4,863,999 shares 49 49
Additional paid-in capital 49,082 49,082
Retained deficit (151,653) (144,929)
Equity adjustment to recognize minimum pension liability (55) (55)
---------- ----------
-3-<PAGE>
Total common stockholders' deficit (102,577) (95,853)
---------- ----------
Total liabilities, preferred stock and
common stockholders' deficit $ 528,703 $ 537,205
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
-4-
<PAGE>
AMERICOLD CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Three and nine months ended last day of November 1993 and 1994
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three months Three months Nine Months Nine months
ended ended ended ended
last day of last day of last day of last day of
November 1993 November 1994 November 1993 November 1994
------------- ------------- ------------- -------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net sales $ 53,645 $ 60,150 $ 152,540 $ 162,214
---------- ---------- ---------- ----------
Operating expenses:
Cost of sales 33,234 37,355 94,960 104,188
Amortization of cost in excess of
net assets acquired 633 633 1,899 1,902
Selling and administrative expenses 6,970 6,467 20,573 19,500
---------- ---------- ---------- ----------
Total operating expenses 40,837 44,455 117,432 125,590
---------- ---------- ---------- ----------
Gross operating margin 12,808 15,695 35,108 36,624
---------- ---------- ---------- ----------
Other (expense) income:
Interest expense (13,868) (13,760) (41,535) (41,318)
Gain on insurance settlement (note 7) - 16,953 - 16,953
Other, net 63 248 (49) 720
---------- ---------- ---------- ----------
Total other income (expense) (13,805) 3,441 (41,584) (23,645)
---------- ---------- ---------- ----------
Income (loss) before income taxes, extraordinary
item and cumulative effect of accounting
principle changes (997) 19,136 (6,476) 12,979
(Provision) benefit for income taxes (note 4) 327 (7,731) 107 (5,754)
---------- ---------- ---------- ----------
Income (loss) before extraordinary item and
cumulative effect of accounting
principle changes (670) 11,405 (6,369) 7,225
Extraordinary item, net of income tax
benefit of $1,192 - - (1,848) -
Cumulative effect on prior years of accounting
principle changes for (note 8):
Income taxes - - (63,533) -
Postretirement benefits other than pensions,
net of income tax benefit of $1,490 - - (2,401) -
---------- ---------- ---------- ----------
Net income (loss) $ (670) $ 11,405 $ (74,151) $ 7,225
========== ========== ========== ==========
Income (loss) per common share (note 5)
Income (loss) before extraordinary item and
cumulative effect of accounting principle
changes $ (0.17) $ 2.31 $ (1.40) $ 1.38
-5-
<PAGE>
Extraordinary item - - (0.38) -
Cumulative effect of accounting principle
changes:
Income taxes - - (13.09) -
Postretirement benefits other than
pensions - - (0.50) -
---------- ---------- ---------- ----------
Net income (loss) per common share $ (0.17) $ 2.31 $ (15.37) $ 1.38
========== ========== ========== ==========
Weighted average number of shares
outstanding 4,853 4,864 4,852 4,864
========== ========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
-6-
<PAGE>
AMERICOLD CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months ended last day of November 1993 and 1994
(In thousands)
<TABLE>
<CAPTION>
Nine months Nine months
ended last ended last
day of day of
November 1993 November 1994
------------- -------------
(Unaudited) (Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (74,151) $ 7,225
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation 14,538 15,154
Amortization and other noncash expenses 4,306 3,874
Changes in assets and liabilities 9,657 (7,519)
Provision for deferred taxes (3,334) 2,634
Gain on insurance settlement - (16,953)
Cumulative effect of accounting principle changes 65,934 -
Write-off of unamortized issuance costs 3,040 -
Employee stock ownership plan expense 320 -
--------- ----------
Net cash provided by operating activities 20,310 4,415
--------- ----------
Cash flows from investing activities:
Net expenditures for property, plant
and equipment (7,559) (13,213)
Proceeds from insurance policies and other items, net (998) 24,590
--------- ---------
Net cash provided (used) by investing activities (8,557) 11,377
--------- ---------
Cash flows from financing activities:
Net payments under credit agreement (8,583) -
Principal payments under capitalized
lease and other debt obligations (1,909) (1,577)
Net proceeds, excluding escrowed amounts, from sale
of mortgage bonds 150,000 -
Retirement of mortgage bonds (150,000) -
Release of escrowed funds 4,233 2,957
--------- ---------
Net cash provided (used) by financing activities (6,259) 1,380
--------- ---------
Net increase in cash and cash equivalents 5,494 17,172
Cash and cash equivalents at beginning of period 2,449 3,892
--------- ---------
Cash and cash equivalents at end of period $ 7,943 $ 21,064
========== ==========
Supplemental disclosure of cash flow information:
Cash paid year-to-date for interest,
net of amounts capitalized $ 37,419 $ 44,196
========= ==========
-7-
<PAGE>
Capital lease obligations incurred to lease new equipment $ 957 $ 671
========== ==========
Cash paid during the year for income taxes $ 139 $ 28
========== ==========
Property sale proceeds placed in escrow $ - $ 463
========== ==========
Bond proceeds placed in escrow $ 22,284 $ -
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
-8-
<PAGE>
AMERICOLD CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. PRINCIPLES OF CONSOLIDATION
---------------------------
The consolidated balance sheet as of the last day of November
1994; the related consolidated statements of operations for
the three and nine months ended the last day of November 1993
and November 1994; and the related consolidated statements of
cash flows for the nine months ended the last day of November
1993 and November 1994 are unaudited. In the opinion of
management, all adjustments necessary for a fair presentation
of such financial statements have been included. Such
adjustments consisted of normal recurring items. Interim
results are not necessarily indicative of results for a full
year. The financial information presented herein should be
read in conjunction with the financial statements included in
the registrant's Annual Report on Form 10-K for the year ended
the last day of February 1994.
2. RECLASSIFICATIONS
-----------------
Certain prior year financial data have been reclassified to
conform with the current year presentation.
3. COMMON STOCKHOLDERS' DEFICIT
----------------------------
The Company has reserved 300,000 shares of common stock for
issuance under a stock option plan established in 1987. Under
the plan, options are granted by the compensation committee of
the Board of Directors to purchase common stock at a price not
less than 85% of the fair market value on the date the option
is granted.
Information with regard to the plan as of the last day of
November 1994 follows:
Number of Shares Exercise Number of Shares Expiration
Subject to Option Price Exercisable Date
----------------- -------- ---------------- ----------
93,795 $10.00 93,795 May 1998
100,000 $18.95 80,000 June 2000
30,000 $21.88 6,000 May 2003
30,000 $20.40 0 December 2003
-9-<PAGE>
AMERICOLD CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company had reserved 500,000 shares of common stock for
issuance under a Stock Incentive Plan effective March 1, 1991.
Under the terms of the plan, officers and key management
employees can receive either common stock or cash in specified
amounts depending upon the financial performance of the
Company measured over a four-year period ending February 28,
1995. As of the last day of November 1994, no shares had been
issued. Since inception of the plan, the Board has approved
a total award of approximately 106,000 shares. The Board
suspended the Stock Incentive Plan effective February 28,
1994, with the shares previously awarded to be paid in March
1995.
4. PROVISION FOR INCOME TAXES
--------------------------
The provision for income taxes was computed using a tax rate
of 39.2%. The tax rate was applied to income or loss before
taxes, after adding back amortization of cost in excess of net
assets acquired.
As a result of the Omnibus Budget Reconciliation Act of 1993,
the Company's tax rate increased from 38.3% to 39.2%. The
Company recognized a charge to earnings during the quarter
ended the last day of August 1993 of approximately $2.6
million as a result of the increase in tax rates.
5. INCOME (LOSS) PER COMMON SHARE
------------------------------
Income (loss) per common share is computed by dividing net
income (loss), less preferred dividend requirements, by the
weighted average number of common shares outstanding. See
Exhibit (11), Statement re Computation of Per Share Earnings.
6. CASH AND CASH EQUIVALENTS
-------------------------
Cash and cash equivalents includes investments, with original
maturities of three months or less, in commercial paper
totaling approximately $17.9 million as of the last day of
November 1994.
-10-<PAGE>
AMERICOLD CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company has made a proposal to the Trustee under the
Indenture related to its First Mortgage Bonds to substitute
approximately $4.8 million in cash as collateral for the
property lost at the Kansas City, Kansas warehouse facility,
although no agreement has been reached for such substitution.
The Company has not reclassified any cash balance for the
possible payment.
7. GAIN ON INSURANCE SETTLEMENT
----------------------------
Gain on insurance settlement of approximately $17.0 million
relates to the Company's settlement of its first party claims
with its insurance carriers for business interruption,
property damage and out-of-pocket expenses with respect to the
December 1991 fire at the Company's Kansas City, Kansas
warehouse facility.
No previous income recognition was determinable until the
Company had settled all of the lawsuits and claims related to
the fire. The settlement amounts have been used to reduce
other receivables recorded as of the last day of February 1994
by $5.7 million.
8. CUMULATIVE EFFECT ON PRIOR YEARS OF ACCOUNTING PRINCIPLE
CHANGES
--------------------------------------------------------
Effective March 1, 1993, the Company implemented Financial
Accounting Standards Board Statement of Financial Accounting
Standard No. 106, "Employer's Accounting for Postretirement
Benefits Other Than Pensions," and Statement No. 109,
"Accounting for Income Taxes."
9. SUBSEQUENT EVENTS
-----------------
In December 1994, the Company signed a contract with a major
customer to provide transportation management services. The
contract is expected to be fully implemented by mid-fiscal
1996. The Company therefore expects that revenue related to
Americold Transportation Systems activity may increase
substantially in fiscal 1996. The amount of such revenue
depends upon the transition process and other factors. In the
initial year, the Company does not expect the contract to have
-11-<PAGE>
AMERICOLD CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
a material effect on income.
Due to the debt service requirements with respect to the
Company's indebtedness payable in the first quarter of fiscal
1996, management, with the concurrence of the Board of
Directors, is developing a refinancing plan. See
"Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Debt Service Requirements."
-12-<PAGE>
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- ---------------------
THIRD QUARTER RESULTS
---------------------
Net sales increased 12.1% from $53.6 million for the third
quarter of fiscal 1994 to $60.2 million for the corresponding
quarter of fiscal 1995. The increase is primarily related to
an increase in warehousing sales. Warehousing sales in the
quarter increased 11.3% from the corresponding quarter in
fiscal 1994 due to a 15.7% increase in handling revenue and an
8.5% increase in storage revenue. Non-warehousing sales
increased 19.3% from the corresponding quarter in fiscal 1994.
The Company's net sales are seasonal. The third fiscal
quarter ending November 30 is typically the strongest sales
quarter.
Cost of sales for the third quarter increased 12.4% from $33.2
million in fiscal 1994 to $37.4 million in fiscal 1995. The
increase is primarily related to increased handling volume at
the Company's warehouse facilities and increased volume from
Americold Transportation Systems ("ATS"), both of which
businesses incur significant variable costs dependent upon
volume.
The Company also recognized a gain on insurance settlement as
discussed below of approximately $17.0 million.
NINE-MONTH RESULTS
-------------------
NET SALES - The Company's net sales increased 6.4% from $152.5
million for the first three quarters of fiscal 1994 to $162.2
million for the same period in fiscal 1995.
Americold's net sales for the first nine months of fiscal 1994
and the first nine months of fiscal 1995 are detailed in the
table below by activity:
-13-<PAGE>
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
NET SALES
(Dollars in Millions)
Nine Months Nine Months
Ended Ended % Change
November 30, 1993 November 30, 1994 1994 to 1995
----------------- ----------------- ------------
Amount % Amount %
------ --- ------ ---
Storage $ 75.0 49.2% $ 77.4 47.7% 3.2 %
Handling 49.5 32.4% 53.1 32.7% 7.3 %
Freezing 5.5 3.6% 6.6 4.1% 0.2 %
Leasing 5.6 3.7% 5.3 3.3% (5.4)%
Other 2.6 1.7% 2.8 1.7% 7.7 %
------ ----- ------ ----- -------
Net warehousing
sales $138.2 90.6% $145.2 89.5% 5.1 %
Quarry sales 4.5 3.0% 4.1 2.5% (8.9)%
Transportation
management
services 9.8 6.4% 12.9 8.0% 31.6 %
------ ---- ------ ----- ----
Total net sales $152.5 100.0% $162.2 100.0% 6.4 %
====== ===== ====== ===== ====
Warehousing sales increased 5.1% from $138.2 million for the
first three quarters of fiscal 1994 to $145.2 million for the
same period in fiscal 1995, primarily due to a 3.2% increase
in storage revenue and a 7.3% increase in handling revenue.
The increase in storage revenue resulted from an increase in
storage volume of 2.9%, assisted slightly by price increases
and other factors. The increase in storage volume is due
primarily to the increased storage of vegetables, primarily
attributable to a strong vegetable harvest in the Midwest in
1994.
The increase in handling revenue resulted primarily from an
11.0% increase in volume of product handled. For the first
nine months of fiscal 1994, 13.6 billion pounds of product
were handled by the Company compared with 15.1 billion pounds
during the same period in fiscal 1995. While handling volume
increased 11.0%, handling revenue increased 7.3% due to
decreased processing revenue (classified by the Company as
handling revenue), changes in product mix and other factors in
the New England and surrounding area warehouses.
-14-<PAGE>
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Nonwarehousing sales increased 18.9% from $14.3 million for
the first nine months of fiscal 1994 to $17.0 million in the
comparable period in fiscal 1995, due primarily to increased
sales from ATS.
COST OF SALES - Cost of sales increased $9.2 million or 9.7%
from $95.0 million for the first three quarters of fiscal 1994
to $104.2 million for the first three quarters of fiscal 1995.
Approximately $3.9 million of the increase was due to
increased volume at ATS, which requires corresponding
increases in transportation capacity purchased from carriers.
Another $3.8 million of the increase was primarily
attributable to increased warehouse payroll expense, resulting
from the increase in handling volume at the Company's
facilities. Approximately $0.7 million of the increase was
due to increased depreciation.
Cost of sales as a percentage of net sales increased from
62.3% in the first three quarters of fiscal 1994 to 64.2% in
the first three quarters of fiscal 1995, as handling and ATS
sales, which have high variable cost requirements, increased
from 38.9% of total sales in the prior period to 40.7% in the
more recent period.
Although management has observed over the past several years
a gradual shift in its warehousing business mix to reflect an
increasing percentage of lower-margin handling revenue,
management does not believe the rate of increase in such
revenue in the first three quarters of fiscal 1995 reflects an
acceleration of such trend, but rather reflects transient
factors such as a temporary increase in handling activity
resulting from the improved vegetable harvest in the Midwest
in 1994. While management expects the underlying trend toward
lower margins to continue due to the planned growth of the
refrigerated transportation management business, the increased
emphasis by customers on inventory turns and other factors,
the Company believes that such activity is likely to also
include related increases in higher-margin storage business
and a long-term increase in earnings due to higher volumes in
all lines of business.
SELLING AND ADMINISTRATIVE EXPENSES - Selling and
administrative expenses for the first three quarters of fiscal
1994 were $20.6 million, as compared to $19.5 million for the
first three quarters of fiscal 1995, a decrease of 5.2%. The
-15-<PAGE>
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
reduction primarily reflects a decrease of approximately $0.7
million in salaries and related fringe benefits and in
professional fees. The Company was able to reduce selling,
general and administrative expenses in an environment of
increasing sales due to an intensive program to reduce and
restructure administrative activities.
INTEREST EXPENSE - Interest expense decreased from $41.5
million for the first three quarters of fiscal 1994 to $41.3
million for the first three quarters of fiscal 1995 as a
result of slightly lower overall borrowings.
GAIN ON INSURANCE SETTLEMENT - This category reflects the gain
on insurance settlement of approximately $17.0 million related
to the Company's settlement of its first party claims with its
insurance carriers for business interruption losses, property
damage and out-of-pocket expenses incurred with respect to the
Kansas City, Kansas fire.
INCOME - The Company's loss before income taxes, extraordinary
item and cumulative effect of accounting changes for the first
nine months of fiscal 1994 was $6.5 million, compared to
income of $13.0 million in the first nine months of fiscal
1995. The income reported in the more recent period is
primarily the result of the insurance settlement referred to
above.
SUBSEQUENT EVENT - In December 1994, the Company signed a
contract with a major customer to provide transportation
management services. The contract is expected to be fully
implemented by mid-fiscal 1996. The Company therefore expects
that revenue related to ATS activity may increase
substantially in fiscal 1996. The amount of such revenue
depends upon the transition process and other factors. In the
initial year, the Company does not expect the contract to have
a material effect on income.
-16-<PAGE>
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
LIQUIDITY
---------
OPERATING CASH FLOW - The Company relies primarily upon cash
generated by operations to service debt and fund capital
expenditures. Net cash flow from operating activities as
reported in the Company's consolidated financial statements
decreased from $20.3 million for the first three quarters of
fiscal 1994 to $4.4 million for the first three quarters of
fiscal 1995. The decrease is due primarily to an increase in
trade receivables, resulting from increased sales and changes
in the timing of certain cash collections, and from changes in
the timing of the payment of interest and certain other items.
Cash and cash equivalents increased from $3.9 million at the
end of the last fiscal year to $21.1 million at end of the
third fiscal quarter of 1995 due primarily to the receipt of
the insurance proceeds relating to the Kansas City fire.
The Company's working capital position as of the last day of
the nine-month period ended November 30, 1994 was a negative
$20.3 million. This position compares to a negative $7.5
million at fiscal 1994 year end. The decrease in working
capital was due primarily to an increase in current maturities
of long-term debt of $28.7 million, which is approximately
equal to the amount of the mandatory sinking fund payment of
$28.75 million due on May 1, 1995 with respect to the
Company's 11% Senior Subordinated Debentures due 1997 (the
"Subordinated Debentures"), offset in part by the increase in
cash and cash equivalents of $17.2 million, due primarily to
the receipt of the insurance proceeds.
SHORT-TERM CAPITAL RESOURCES - The commitment level at
November 30, 1994 under the Company's bank Credit Agreement
was $27.5 million, with a maximum of $20.0 million available
for cash borrowing. Any amount by which letters of credit
outstanding exceed $7.5 million under the Agreement reduces
the available cash borrowings by a like amount. In addition,
the amount available for cash borrowings is subject to further
limitation by the amount of eligible accounts receivable
outstanding. Based upon letters of credit outstanding and
eligible accounts receivable as of November 30, 1994, the
Company had an available cash borrowing capacity of $20.0
million, of which no amount was borrowed. The Company had
approximately $6.3 million of outstanding letters of credit,
-17-<PAGE>
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
principally related to leasing and workers' compensation
requirements. The maximum amount of letters of credit
permitted to be outstanding under the Credit Agreement is
$10.0 million.
DEBT SERVICE REQUIREMENTS - Payments due on long-term debt in
the first half of fiscal 1996 include an interest payment of
$10.1 million due on March 1, 1995 with respect to the First
Mortgage Bonds, and a sinking fund payment of $28.75 million
and an interest payment of $6.3 million due on May 1, 1995
with respect to the Subordinated Debentures. As a result, the
Company estimates that it must have approximately $45 million
in available cash in the first quarter of fiscal 1996 to meet
its debt service requirements. The Company has available cash
to make the March 1, 1995 interest payment on the First
Mortgage Bonds and, subject to the timing of cash collections
and payments, believes it will have, in cash and available
borrowings under the bank Credit Agreement, approximately the
$35.0 million required as of May 1, 1995 to make the principal
and interest payments with respect to the Subordinated
Debentures.
However, if the Company were able to and elected to make the
required May 1, 1995 principal and interest payments on the
Subordinated Debentures from available cash and borrowings
under the Credit Agreement, the Company believes that such
payments would create a default at the next measurement date
(May 31, 1995) under the pro forma debt service covenant (as
defined) contained in the Company's Amended and Restated
Investment Agreement with Metropolitan Life Insurance Company
(the "Institutional Investor"), holder of $150.0 million of
the Company's First Mortgage Bonds, and a default under the
bank Credit Agreement relating to an out-of-debt requirement
as of June 30, 1995. Under such circumstances, the
Institutional Investor and the Company's principal bank could
declare the principal of and accrued but unpaid interest on
all the First Mortgage Bonds and borrowings under the Credit
Agreement to be immediately due and payable. Upon such a
declaration, such principal and interest and a premium thereon
would be classified as a current liability. Management,
therefore, with the concurrence of the Board of Directors, is
developing a refinancing plan, and the Company has retained a
financial advisor to assist it in evaluating the Company's
alternatives.
-18-<PAGE>
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The elements the Company is evaluating as part of a
refinancing plan include (i) modifications of certain of the
Company's debt agreements, (ii) financing of a presently
unencumbered warehouse facility, and (iii) refinancing a
portion of its outstanding subordinated indebtedness by means
of a consensual agreement implemented either through an
exchange offer or pre-packaged reorganization proceeding. The
Company believes that implementation of the refinancing plan
will have a minimal impact on operations and will allow the
Company to continue normal relations with its customers and
suppliers. If completed as expected, the Company also
believes that the refinancing plan will improve the Company's
financial position and enhance its ability to pursue its long-
term business strategy.
If a refinancing plan is not completed on terms and conditions
acceptable to the Company, and the Company is able to and
elects to make the May 1, 1995 principal and interest payments
on the Subordinated Debentures from available resources, then
the Company will be required to request immediate covenant
relief from holders of senior debt. If such relief were not
granted, or if the May 1, 1995 payment is not made, the Board
of Directors and management would explore all other available
alternatives to preserve shareholder values and protect
creditors.
CAPITAL EXPENDITURES
- --------------------
Cash provided by operating activities, insurance proceeds
received related to the Kansas City fire and escrowed funds
available under the indenture related to the First Mortgage
Bonds were sufficient to provide for $13.2 million in
expenditures for property, plant and equipment during the
nine-month period ended November 30, 1994. The Company's
capital expenditures are substantially discretionary.
Budgeted remaining fiscal 1995 capital expenditures total
approximately $6.3 million, including approximately $3.5
million for property additions, and approximately $2.8 million
for revenue enhancement or cost reduction expenditures and
routine replacements or betterments. A portion of the $2.8
million, related primarily to material handling equipment, is
expected to be leased on an operating or capital lease basis.
The funding for the approximately $3.5 million of property
expansions will come from the funds held in escrow pursuant to
the indenture related to the First Mortgage Bonds or from
-19-<PAGE>
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
outside borrowings. As of November 30, 1994, the Company had
approximately $19.3 million in escrowed funds reserved for
capital expenditures. The Company continues to examine
opportunities for expansion of its locations and services.
Any escrowed funds not expended by March 1996 must be used to
redeem First Mortgage Bonds.
The Company has made a proposal to the First Mortgage Bond
trustee to substitute approximately $4.8 million in cash as
collateral for the property lost in the fire at the Kansas
City, Kansas warehouse facility, although no agreement has
been reached for such substitution. The Company has not
reclassified any cash balance for the possible payment. The
$4.8 million has been excluded from the Company's calculation
of cash reserves available for debt service.
The Company, as part of its Kansas City, Kansas location,
operates a limestone quarry. Subject to the completion of
certain remaining due diligence items, the Company expects to
sell this business during the second quarter of fiscal 1996.
Net proceeds of the sale must, in accordance with the
Company's existing debt agreements, be reinvested in warehouse
properties or used to satisfy, in part, the mortgage
obligation on the property.
-20-<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company has settled all of the material lawsuits and
claims filed in connection with the Kansas City fire. The
aggregate amount of all settlement payments for the litigation
and claims related to the Kansas City fire did not exceed the
amount of the Company's applicable insurance coverage and
therefore no cash payment by the Company was required. After
resolution of the lawsuits and claims, the Company applied the
proceeds paid to the Company by the Company's insurance
carriers in the third quarter of fiscal 1995. See
"Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Results of Operations -- Nine-
Month Results."
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(11) Statement re Computation of Per Share Earnings
(27) Financial Data Schedule
(b) Reports on Form 8-K
A Current Report on Form 8-K, dated October 26, 1994, was
filed disclosing the settlement, subject to court
approval, of the claim submitted by the United States
Attorney for the District of Kansas on behalf of the
United States Department of Agriculture in connection
with the December 1991 fire at the Company's Kansas City,
Kansas warehouse facility.
-21-<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
AMERICOLD CORPORATION
/s/ Joel M. Smith
---------------------------------
JOEL M. SMITH, Senior Vice
President and Chief Financial
Officer
Date: January 17, 1995
-22-<PAGE>
FORM 10-Q
Exhibit Index
Exhibit Page
- ------- ----
(11) Statement re Computation of Per Share 24
Earnings
(27) Financial Data Schedule 25
-23-
<PAGE>
Exhibit (11)
AMERICOLD CORPORATION
STATEMENT RE COMPUTATION OF
PER SHARE EARNINGS
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three months Three months Nine Months Nine months
ended ended ended ended
last day of last day of last day of last day of
November 1993 November 1994 November 1993 November 1994
------------- ------------- ------------- -------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net income (loss) $ (670) $ 11,405 $(74,151) $ 7,225
Less: total accrued preferred dividend
(49.672 shares x 11.50% x 3/12 yr) (143) - - -
(55.384 shares x 13.50% x 3/12 yr) - (187) - -
(43.860 shares x 13.25% x 4/12 yr) - - (194) -
(49.672 shares x 11.50% x 5/12 yr) - - (238) -
(49.672 shares x 11.50% x 4/12 yr) - - - (190)
(55.384 shares x 13.50% x 5/12 yr) - - - (312)
------- ------- -------- -------
Net income (loss) for per share calculation $ (813) $ 11,218 $(74,583) $ 6,723
======= ======= ======= =======
Weighted average number of shares
outstanding 4,853 4,864 4,852 4,864
======= ======= ======= =======
Net income (loss) per share $ (0.17) $ 2.31 $ (15.37) $ 1.38
======= ======= ======= =======
</TABLE>
-24-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM AMERICOLD CORPORATION'S FINANCIAL STATEMENTS CONTAINED IN
ITS QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDING
NOVEMBER 30, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-28-1995
<PERIOD-END> NOV-30-1994
<CASH> 21,064<F1>
<SECURITIES> 0
<RECEIVABLES> 26,644
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 51,294
<PP&E> 525,251
<DEPRECIATION> 153,150
<TOTAL-ASSETS> 537,205
<CURRENT-LIABILITIES> 71,632
<BONDS> 438,251
<COMMON> 49<F2>
5,850<F3>
0
<OTHER-SE> (95,902)<F2>
<TOTAL-LIABILITY-AND-EQUITY> 537,205
<SALES> 162,214
<TOTAL-REVENUES> 162,214
<CGS> 104,188
<TOTAL-COSTS> 125,590
<OTHER-EXPENSES> (720)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 41,318
<INCOME-PRETAX> 12,979
<INCOME-TAX> 5,754<F4>
<INCOME-CONTINUING> 7,225
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,225
<EPS-PRIMARY> 1.38<F3>
<EPS-DILUTED> 1.38<F3>
<FN>
<F1>See Note 6 to Notes to Consolidated Financial Statements
<F2>See Note 3 to Notes to Consolidated Financial Statements
<F3>See Note 5 to Notes to Consolidated Financial Statements
<F4>See Note 4 to Notes to Consolidated Financial Statements
-25-
</FN>
</TABLE>
