<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 August 31, 1996; 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 / /
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
Yes /X/ No / /
Number of shares outstanding of the registrant's common stock, par
value $.01 per share, as of September 30, 1996: 4,937,733 shares.<PAGE>
AMERICOLD CORPORATION
Form 10-Q
TABLE OF CONTENTS
-----------------
Page
----
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets 3
Consolidated Statements of Operations 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 10
PART II OTHER INFORMATION
Item 1. Legal Proceedings 20
Item 6. Exhibits and Reports on Form 8-K 20
SIGNATURES 22
EXHIBIT INDEX 23
<PAGE>
PART I - Financial Information
Item 1. Financial Statements
AMERICOLD CORPORATION
CONSOLIDATED BALANCE SHEETS
Last day of February 1996 and August 1996
(In thousands, except share data)
<TABLE>
<CAPTION>
Last day of Last day of
February 1996 August 1996
------------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents (note 6) $ 20,857 $ 7,942
Trade receivables, net 25,461 32,662
Other receivables, net 3,512 3,816
Prepaid expenses 4,286 3,115
Other current assets 4,181 4,061
----------- ----------
Total current assets 58,297 51,596
Property, plant and equipment, less accumulated depreciation
of $174,123 and $183,557, respectively 375,851 381,419
Cost in excess of net assets acquired, less accumulated
amortization of $22,138 and $23,391, respectively 77,255 76,002
Other noncurrent assets 15,589 15,123
----------- ----------
Total assets $ 526,992 $ 524,140
=========== ==========
LIABILITIES, PREFERRED STOCK AND COMMON STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 11,363 $ 12,299
Accrued interest 19,056 19,393
Accrued expenses 11,604 12,085
Deferred revenue 5,707 5,602
Current maturities of long-term debt 2,732 2,599
Other current liabilities 4,630 3,757
---------- ----------
Total current liabilities 55,092 55,735
Long-term debt, less current maturities (note 7) 461,667 465,573
Deferred income taxes 102,041 99,617
Other noncurrent liabilities 9,861 9,890
---------- ----------
Total liabilities 628,661 630,815
---------- ----------
Preferred stock, $100 par value; authorized 1,000,000 shares;
issued and outstanding 52,936 shares (note 5) 5,771 6,127
---------- ----------
Common stockholders' deficit (note 3):
Common stock, $.01 par value; authorized
10,000,000 shares; issued and outstanding 4,931,194 shares 49 49
Additional paid-in capital 50,173 50,173
Retained deficit (157,345) (162,707)
Equity adjustment to recognize minimum pension liability (317) (317)
---------- ----------
Total common stockholders' deficit (107,440) (112,802)
---------- ----------
Total liabilities, preferred stock and
common stockholders' deficit $ 526,992 $ 524,140
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
AMERICOLD CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Three and six months ended last day of August 1995 and 1996
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three months Three months Six months Six months
ended ended ended ended
last day of last day of last day of last day of
August 1995 August 1996 August 1995 August 1996
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net sales $ 59,862 $ 73,139 $ 113,045 $ 152,535
---------- ---------- ---------- ----------
Operating expenses:
Cost of sales 40,123 55,024 73,697 114,489
Amortization of cost in excess of
net assets acquired 887 626 1,520 1,253
Selling and administrative expenses 7,163 7,312 14,072 15,035
--------- --------- --------- ---------
Total operating expenses 48,173 62,962 89,289 130,777
--------- --------- --------- ---------
Gross operating margin 11,689 10,177 23,756 21,758
--------- --------- --------- ---------
Other (expense) income:
Interest expense (13,892) (13,721) (28,126) (29,256)
Reorganization expenses (note 2) (2,777) (403) (6,300) (403)
Other, net (513) (46) (176) 468
--------- --------- --------- ---------
Total other expense (17,182) (14,170) (34,602) (29,191)
--------- --------- --------- ---------
Loss before income taxes and extraordinary item (5,493) (3,993) (10,846) (7,433)
Benefit for income taxes (note 4) 1,807 1,320 3,658 2,424
--------- --------- --------- ---------
Net loss before extraordinary item (3,686) (2,673) (7,188) (5,009)
Extraordinary item, net of income tax
benefit of $1,157 (note 9) (1,793) - (1,793) -
--------- --------- --------- ---------
Net loss $ (5,479) $ (2,673) $ (8,981) $ (5,009)
========= ========= ========= =========
Loss per common share (note 5):
Loss before extraordinary item $ (0.79) $ (0.58) $ (1.55) $ (1.09)
Extraordinary item (0.37) - (0.37) -
--------- --------- --------- ---------
Net loss per common share $ (1.16) $ (0.58) $ (1.92) $ (1.09)
========= ========= ========= =========
Weighted average number of shares
outstanding 4,861 4,931 4,861 4,931
========= ========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
AMERICOLD CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended last day of August 1995 and 1996
(In thousands)
<TABLE>
<CAPTION>
Six months Six months
ended last ended last
day of day of
August 1995 August 1996
----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (8,981) $ (5,009)
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation 9,589 10,203
Amortization and other noncash expenses 2,830 2,086
Changes in assets and liabilities (4,673) (5,826)
Provision for deferred taxes (4,816) (2,424)
Write-off of unamortized issuance costs 962 -
Write-off of unamortized original issue discount 1,988 -
--------- ---------
Net cash used by operating activities (3,101) (970)
--------- ---------
Cash flows from investing activities:
Net expenditures for property, plant
and equipment (23,471) (15,220)
Other items, net 423 291
--------- ---------
Net cash used by investing activities (23,048) (14,929)
--------- ---------
Cash flows from financing activities:
Principal payments under capitalized
lease and other debt obligations (1,262) (1,457)
Retirement of mortgage bonds (10,000) -
Proceeds from sale of senior subordinated notes - 120,000
Retirement of senior subordinated debentures - (115,000)
Debt issuance costs - (5,379)
Release of escrowed funds 11,186 4,820
--------- ---------
Net cash provided (used) by financing activities (76) 2,984
--------- ---------
Net decrease in cash and cash equivalents (26,225) (12,915)
Cash and cash equivalents at beginning of period 33,163 20,857
--------- ---------
Cash and cash equivalents at end of period $ 6,938 $ 7,942
========= =========
Supplemental disclosure of cash flow information:
Cash paid year-to-date for interest,
net of amounts capitalized $ 29,138 $ 28,920
========= =========
Capital lease obligations incurred to lease new equipment $ 309 $ 231
========= =========
Cash paid during the year for income taxes $ 363 $ 24
========= =========
</TABLE>
See accompanying notes to consolidated financial statements. <PAGE>
AMERICOLD CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. PRINCIPLES OF CONSOLIDATION
---------------------------
The consolidated balance sheet as of the last day of August
1996; the related consolidated statements of operations for
the three and six months ended the last day of August 1995 and
August 1996; and the related consolidated statements of cash
flows for the six months ended the last day of August 1995 and
August 1996 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 1996.
2. PLAN OF REORGANIZATION UNDER CHAPTER 11
---------------------------------------
On May 9, 1995, the Company filed a prepackaged plan of
reorganization (the "Plan") under Chapter 11 of the United
States Bankruptcy Code (the "Bankruptcy Code") in the United
States Bankruptcy Court for the District of Oregon (the
"Court"). The principal purpose of the Plan was to reduce the
Company's short-term cash requirements with respect to
payments due on its subordinated indebtedness and to adjust
certain restrictive financial covenants and certain other
provisions contained in the Amended and Restated Investment
Agreement, dated March 2, 1993, between the Company and
Metropolitan Life Insurance Company. On June 19, 1995, the
Court approved the Company's Disclosure Statement dated April
14, 1995 and the Company's solicitation of votes to accept or
reject the Plan, and confirmed the Plan. On June 30, 1995,
the Plan became effective.
In addition, the Company has rejected certain lease agreements
relating to four warehouse facilities at Watsonville, Oakland
and San Francisco, California, and Chicago, Illinois. In
February 1996, the Company settled all lease rejection issues
with the lessor of three properties located in Watsonville,
Oakland and San Francisco, California. Such settlement did
not involve the payment of any damages by the Company.
Subsequent to the end of the quarter, in September 1996, the
Company settled all lease rejection issues with the lessor of
the Chicago, Illinois property. Such settlement, representing
one year's rent recovery by the lessor as provided by the
Bankruptcy Code, required a payment of approximately $0.4
million.
The Company has expensed the settlement payment and all
professional fees and similar expenditures incurred related to
the prepackaged bankruptcy as "reorganization expenses."
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
August 1996 follows:
Number of Exercise
Shares Price
--------- --------
Outstanding, March 1, 1996 249,656 $10.00 to $21.88
Granted (fair value of
options, $12.00) 160,000 $12.30
Cancelled (160,000) $18.95 to $21.88
--------
Outstanding, August 31, 1996 249,656 $10.00 to $12.30
========
Exercisable, August 31, 1996 89,656 $10.00
========
The outstanding options expire from May 1998 through April
2006.
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 loss before income
taxes, after adjusting for amortization of cost in excess of
net assets acquired.
<PAGE>
5. LOSS PER COMMON SHARE
---------------------
Loss per common share is computed by dividing net loss, less
preferred dividend requirements, by the weighted average
number of common shares outstanding. See Exhibit 11,
Statement Regarding Computation of Per Share Earnings.
6. CASH AND CASH EQUIVALENTS
-------------------------
Cash and cash equivalents includes highly liquid instruments,
with original maturities of three months or less when
purchased. There were cash equivalents totaling $15.4 million
and $5.0 million as of the last day of February 1996 and
August 1996, respectively.
7. LONG-TERM DEBT
--------------
On April 9, 1996, the Company sold $120.0 million aggregate
principal amount of the Company's 12.875% Senior Subordinated
Notes due 2008. The Company used $115.0 million of the
proceeds to redeem at par on May 9, 1996 the Company's 15%
Senior Subordinated Debentures due 2007. The remaining
proceeds were used to pay transaction costs. The interest
rate on the notes could be increased to 13.875% if the notes
are not rated B3 or higher by Moody's Investors Service and B-
or higher by Standard & Poor's by November 1, 1997.
8. NEW ACCOUNTING STANDARDS
------------------------
Effective March 1, 1996, the Company adopted Financial
Accounting Standards Board Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed Of."
This statement generally requires assessment of recoverability
of an asset after events or circumstances that indicate an
impairment to the asset and its future cash flows. Any
impairment loss would be recognized as a one-time charge to
earnings affecting results of operations, but would not affect
the cash flow of the Company. There was no impairment loss to
report upon adoption.
Effective March 1, 1996, the Company adopted Financial
Accounting Standards Board Statement No. 123, "Accounting for
Stock-Based Compensation" ("SFAS No. 123"). SFAS No. 123
requires that, except for transactions with employees that are
within the scope of Accounting Principles Board Opinion No. 25
("APB No. 25"), all transactions in which goods or services
are the consideration received for the issuance of equity
instruments are to be accounted for based on the fair value of
the consideration received or the fair value of the equity
instrument issued, whichever is more reliably measurable.
However, it also allows an entity to continue to measure
compensation costs for those plans using the intrinsic value
based method of accounting prescribed by APB No. 25. Entities
electing to follow the accounting methods of APB No. 25 must
make pro forma disclosures of net income and, if presented,
earnings per share, as if the fair value method of accounting
defined in SFAS No. 123 had been applied.
Pro forma disclosures required for entities that elect to
continue to measure compensation cost using APB No. 25 must
include the effects of all awards granted in fiscal years that
begin after December 15, 1994. The Company has elected to
continue using APB No. 25 and make the necessary SFAS No. 123
pro forma disclosures.
9. EXTRAORDINARY ITEM
------------------
In June 1995, in conjunction with the exchange of the senior
subordinated debentures and the repurchase of the $10.0
million of First Mortgage Bonds due 2002 as part of the
prepackaged bankruptcy, unamortized original issue discount of
approximately $2.0 million and unamortized issuance costs of
approximately $1.0 million were written off, resulting in an
extraordinary loss, net of taxes, of approximately $1.8
million.<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
-------------------------------------------------------
RESULTS OF OPERATIONS
- ---------------------
INTRODUCTION - Americold provides integrated logistics
services for the frozen food industry consisting of
warehousing and transportation management. These services are
provided through the Company's network of 49 refrigerated
warehouses and its refrigerated transportation management
unit. The Company's fiscal year ends on the last day of
February.
DEVELOPMENT OF TRANSPORTATION MANAGEMENT SERVICES - Over the
past year, the Company has experienced increased interest by
customers in procuring transportation management services from
the Company. In this regard, the Company entered into
arrangements in the first half of fiscal 1996 pursuant to
which it is providing such services to three subsidiaries of
one large customer. Transportation management services
provided to these three customers account for substantially
all of the increase in the Company's transportation management
revenues. The Company has made proposals to offer similar
services to certain other potential customers by emphasizing
its full-service logistics expertise and warehouse industry
position which enable customers to obtain services in support
of distribution of frozen food products from a single
provider.
As the Company does not invest in or own transportation
equipment, the Company has entered into contracts with
independent carriers to provide freight transportation at
negotiated rates. Accordingly, the margins that the Company
earns in providing transportation management services are
lower than for its warehousing services.
DEVELOPMENT OF WAREHOUSE PROPERTIES - The Company continually
evaluates the need for warehouse space and intends to pursue
growth of its refrigerated warehouse business both by
expanding its network of warehouses and by expanding existing
facilities in response to customer requirements. The Company
has added capacity at both the Burley, Idaho (completed
October 1, 1996), and Pasco, Washington (completed September
1, 1996) facilities, which resulted in a total of 5.9 million
cubic feet of new space. The Company is currently adding
capacity at the Fogelsville, Pennsylvania facility, which will
result in 7.6 million cubic feet of new space. In addition,
the Company, together with a joint venture partner, has under
construction a new warehouse facility in Park Rapids,
Minnesota which, when completed, will total 2.0 million cubic
feet. Americold will act as the operator of the facility.
The Company intends to finance such expansions primarily
through operating leases pursuant to an existing commitment,
through mortgage financing from its principal bank, and from
other financing sources. See "--Liquidity and Capital
Resources--Capital Resources" and "--Capital Expenditures."
SECOND QUARTER RESULTS - Net sales increased 22.2% from $59.9
million for the second quarter of fiscal 1996 to $73.1 million
for the same quarter in fiscal 1997. The increase is
primarily related to transportation management sales as
transportation management sales in the quarter increased
145.0% from the corresponding quarter in fiscal 1996 due to an
increase in transportation management responsibilities.
Warehousing sales have decreased 3.5% from $48.6 million for
the second quarter of fiscal 1996 to $46.9 million for the
corresponding quarter in fiscal 1997. The decrease in
warehousing sales for the second quarter of fiscal 1997 is due
primarily to closure of the Company's operations at the four
warehouse locations during the third quarter of fiscal 1996 as
a result of the rejection of leases. These closings accounted
for approximately $2.9 million of the sales decrease. See
Part II, Item 1. - "Legal Proceedings." In addition,
warehousing sales at the continuing locations decreased
approximately $0.9 million as a result of decreased volume due
to the wet spring weather which reduced or delayed the receipt
of certain fruit and vegetable products and unanticipated
extended downtime by certain potato processors. These
decreases were offset in part by the approximately $2.1
million of sales from new facilities added subsequent to the
second quarter of fiscal 1996.
Cost of sales increased 37.1% from $40.1 million for the
second quarter of fiscal 1996 to $55.0 million for the same
quarter of fiscal 1997. The increase is primarily related to
the increased expense of providing a larger volume of
transportation services. Warehousing cost of sales decreased
approximately $2.5 million as a result of the warehouse
closures, but cost of sales increases at the continuing
locations and cost of sales added at new facilities more than
offset the decrease. The increase at the continuing locations
was due to increased handling volume which required increased
labor, and due to operational difficulties at two of the
Company's facilities which resulted in increased labor
expense. The Company believes such difficulties are
temporary.
<PAGE>
COMPARISON OF SIX-MONTH PERIODS ENDED AUGUST 31, 1995 AND 1996
--------------------------------------------------------------
NET SALES - The Company's net sales increased 35.0% from
$113.0 million for the first six months of fiscal 1996 to
$152.5 million for the first six months of fiscal 1997,
reflecting a substantial increase in transportation management
sales as well as a 0.6% increase in warehousing sales.
Americold's net sales for the first six months of fiscal 1996
and the first six months of fiscal 1997 are detailed in the
table below, by activity:
NET SALES
(Dollars in Millions)
Six Months Ended Six Months Ended
August 31, 1995 August 31, 1996
------------ ------------ % Change
Amount % Amount % FY96 to FY97
------ --- ------ --- ------------
Logistics
Warehousing
Storage $ 50.0 44.2% $ 49.1 32.2% (1.8)%
Handling 36.0 31.9% 37.9 24.9% 5.3 %
Leasing 3.3 2.9% 3.3 2.2% 0.0 %
Freezing
and other 5.5 4.9% 5.1 3.3% (7.3)%
------ ----- ------ ----- ------
Total warehousing 94.8 83.9% 95.4 62.6% 0.6 %
Transportation
management
services 16.1 14.2% 54.1 35.4% 236.0 %
----- ----- ----- ----- -----
Total logistics 110.9 98.1% 149.5 98.0% 34.8 %
Other non-
logistics 2.1 1.9% 3.0 2.0% 42.9 %
----- ----- ----- ----- -----
Total net sales $113.0 100.0% $152.5 100.0% 35.0 %
====== ===== ====== ===== =====
Warehousing sales increased from $94.8 million for the first
six months of fiscal 1996 to $95.4 million for the first six
months of fiscal 1997, principally due to a 5.3% increase in
handling revenue. Storage revenue decreased 1.8%, as storage
volume decreased from approximately 1.44 billion pounds stored
on average per month for the first six months of fiscal 1996
to approximately 1.38 billion pounds for the first six months
of fiscal 1997. Storage volume decreased 0.06 billion pounds
stored on average per month for the first six months of fiscal
1997 due to the closure of the Company's operations at four
warehouse locations during the third quarter of fiscal 1996 as
a result of lease rejections in the prepackaged bankruptcy.
The increase in storage volume at the three facilities that
were added in fiscal 1996 helped offset a decrease at the
continuing locations. As mentioned above, the Company's
storage levels were affected by the wet spring weather which
reduced or delayed the receipt of product, especially fruits
and vegetables. In addition, due to the price of fresh
potatoes in late spring, potato processors extended their
downtime which reduced warehouse receipts and holdings at
certain warehouses.
The 5.3% increase in handling revenue resulted primarily from
a 4.3% increase in volume of product handled, further affected
by price increases and changes in product mix. For the first
six months of fiscal 1996, 9.9 billion pounds of product were
handled by the Company compared with 10.4 billion pounds
during the same period in fiscal 1997. The three new
facilities handled approximately 0.4 billion pounds of product
during the first six months of fiscal 1997, which helped
offset the approximately 0.3 billion pounds of product handled
during the first six months of fiscal 1996 at the four closed
facilities.
The Company anticipates that vegetable processors will
continue to have lower inventories for the balance of fiscal
1997. Expected storage levels for potatoes and other items
for the balance of the year are uncertain. Overall, the
Company anticipates that revenues and storage volumes will
increase in the third quarter compared to the first and second
quarters, but is uncertain whether levels in the corresponding
periods last year will be exceeded. New warehouse properties
and properties currently under development are expected to
contribute to sales and storage volumes during the third and
fourth quarters.
Transportation management sales increased 236.0% from $16.1
million for the first six months of fiscal 1996 to $54.1
million for the first six months of fiscal 1997 due to the
outsourcing to the Company of additional transportation
management responsibilities by three customers.
Other non-logistics sales (quarry sales) increased 42.9% from
$2.1 million for the first six months of fiscal 1996 to $3.0
million for the first six months of fiscal 1997.
COST OF SALES - Cost of sales increased 55.4% from $73.7
million for the first six months of fiscal 1996 to $114.4
million for the first six months of fiscal 1997. The
increased volume of transportation management services, which
required increases in transportation capacity purchased from
carriers and the addition of new employees, resulted in an
approximately $38.2 million increase in cost of sales. In
addition, cost of sales increased by approximately $2.7
million as a result of increased warehouse labor and related
fringe benefits. A portion of the increased cost of sales was
due to the increased handling volume while approximately $0.7
million is the net result of warehouse openings and closings.
Also, during the first six months, the Company experienced
operational difficulties at two of the Company's warehouse
facilities due to higher than anticipated warehouse storage
volumes and due to changes in product mix which resulted in
increased labor. The Company believes such difficulties are
temporary.
Cost of sales as a percentage of net sales increased from
65.2% for the first six months of fiscal 1996 to 75.1% for the
first six months of fiscal 1997, as handling and
transportation management sales, which each have high variable
cost requirements, increased from 46.1% of net sales in the
prior period to 60.3% in the more recent period.
SELLING AND ADMINISTRATIVE EXPENSES - Selling and
administrative expenses increased 6.8% from $14.1 million for
the first six months of fiscal 1996 to $15.0 million for the
first six months of fiscal 1997. The increase primarily
reflects an increase of approximately $0.4 million in salaries
and related fringe benefits and approximately $0.3 million in
professional fees. Selling and administrative expenses as a
percentage of net sales decreased from 12.4% in the first six
months of fiscal 1996 to 9.9% in the first six months of
fiscal 1997 due to the increase in transportation management
sales which did not require a corresponding increase in
selling and administrative expenses.
GROSS OPERATING MARGIN - As a result of the increase in
transportation management sales along with increased handling
revenues, gross operating margin decreased 8.4% from $23.8
million for the first six months of fiscal 1996 to $21.8
million for the first six months of fiscal 1997.
INTEREST EXPENSE - Interest expense increased from $28.1
million for the first six months of fiscal 1996 to $29.3
million for the first six months of fiscal 1997 primarily as
a result of the defeasance requirements related to the
issuance in April 1996 of $120.0 million of the Company's
12.875% Senior Subordinated Debentures due 2008 which were
used in May 1996 to redeem at par all $115.0 million of the
Company's outstanding 15% Senior Subordinated Debentures.
Under the terms of the applicable indenture, both issues were
outstanding for thirty (30) days, accounting for a major
portion of the increase in interest expense. Interest expense
also increased due to higher overall interest rates
experienced by the Company and higher overall borrowings.
During the second quarter of fiscal 1996, the Company, through
the prepackaged bankruptcy, refinanced its then $115.0 million
of 11% Senior Subordinated Debentures due 1997 with the 15%
Senior Subordinated Debentures which in turn were refinanced
in April 1996.
REORGANIZATION EXPENSES - Reorganization expenses of
approximately $6.3 million for the first six months of fiscal
1996 reflect the expenses related to the prepackaged
bankruptcy incurred for professional services including
investment banking, accounting and legal fees through the
second quarter of fiscal 1996. For the first six months of
fiscal 1997, the approximately $0.4 million reflects the
settlement of the lease rejection issues related to the
Chicago, Illinois facility.
INCOME (LOSS) - The Company's loss before income taxes and
extraordinary item for the first six months of fiscal 1996 was
$10.8 million, compared to a loss of $7.4 million in the first
six months of fiscal 1997. The decrease in loss between the
two periods is due to the approximately $6.3 million of
reorganization expenses incurred during the first six months
of fiscal 1996, offset in part by the higher interest expense
and lower gross operating margin in fiscal 1997.
EXTRAORDINARY ITEM - In June 1995, in conjunction with the
exchange of the senior subordinated debentures and the
repurchase of the $10.0 million of first mortgage bonds as
part of the prepackaged bankruptcy, unamortized original issue
discount of approximately $2.0 million and unamortized
issuance costs of approximately $1.0 million were written off,
resulting in an extraordinary loss, net of taxes, of
approximately $1.8 million.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company believes it has sufficient liquidity and capital
resources to meet its short-term needs related to the payment
of interest expense, the continued operation and maintenance
of its warehouses, the continued operation and planned
expansion of its transportation management business and the
funding of limited growth in warehouse capacity. Anticipated
growth in the volume of transportation management services is
not expected to consume significant capital resources.
Although the Company's internal resources for new warehouse
acquisition or construction are limited, the Company has
arranged for up to $25.0 million in lease financing for new
warehouse capacity from a finance company (the "Lease Line"),
of which approximately $19.3 million was still available at
August 31, 1996. See "--Capital Resources." Subsequent to
the end of the quarter, the Company also financed through a
mortgage the expansion of its Burley, Idaho facility. The
Company plans to finance its warehouse expansion program
principally through lease financing, and the Company believes
it has the ability to finance all of its fiscal 1997 expansion
projects from the Lease Line, similar lease financing,
available cash or mortgage financing. In light of the
significant debt obligations due between fiscal 2000 and
fiscal 2008, the Company continues to need to increase
operating cash flow and seek external sources for refinancing.
To the extent such operating cash flow growth will result from
warehouse capacity growth, the Company will also be required
to obtain additional sources of financing.
LIQUIDITY
---------
OPERATING CASH FLOW - Net cash flow from operating
activities, representing cash provided from operations, is
used to fund capital expenditures and meet debt service
requirements. Operating cash flow reported for any one period
is sensitive to the timing of the collection of receivables
and the payment of payables.
Net cash flow from operating activities as reported in the
Company's consolidated financial statements increased from a
negative $3.1 million for the first six months of fiscal 1996
to a negative $1.0 million for the first six months of fiscal
1997. The increase is due principally to the reduced loss due
to the reduction in reorganization expenses offset by changes
in certain working capital items. Net cash flow from
operating activities in fiscal years 1994, 1995 and 1996 was
$18.5 million, $12.7 million and $12.6 million, respectively.
Funds provided from operations (gross operating margin plus
depreciation, amortization and employee stock ownership plan
expense) was $35.2 million for the first six months of fiscal
1996 and $33.5 million for the first six months of fiscal
1997. Funds provided from operations in fiscal years 1994,
1995 and 1996 were $65.9 million, $71.6 million and $76.6
million, respectively.
WORKING CAPITAL - The Company's working capital position as of
the last day of the six-month period ended August 31, 1996 was
a negative $4.1 million. This position compares to $3.2
million at fiscal 1996 year end. Working capital was reduced
in the more recent period due to the decrease in net cash flow
from operations discussed above and the funding of
approximately $10.9 million of warehouse expansions.
Approximately $7.3 million of cash was received on the first
business day following the end of the quarter from accounts
receivable.
The Company's historical negative working capital position
generally has not affected its ability to meet its cash
operating needs. However, in fiscal 1995, the Company
experienced a shortfall in the working capital necessary to
make certain sinking fund payments, leading to the prepackaged
bankruptcy.
CAPITAL RESOURCES
-----------------
The credit agreement with the Company's primary bank provides
an aggregate availability of $27.5 million, which may be used
for any combination of letters of credit (up to $10.0 million)
and revolving cash borrowings for general working capital
purposes, subject to borrowing base limitations. The
borrowing base for both cash borrowings and letters of credit
equals 85% of eligible accounts receivable pledged to the bank
plus, at the option of the Company, 70% of the value of all
real property mortgaged to the bank. The Company has not
mortgaged any properties under the credit agreement. The
credit agreement, which matures on February 28, 1999, requires
a 30-day resting period (during which there may be no
outstanding borrowings) in fiscal 1997, and requires two such
periods during each of fiscal 1998 and fiscal 1999. The
Company has already satisfied the resting period required for
fiscal 1997. The credit agreement also contains certain
restrictive covenants, including financial covenants.
Based on eligible accounts receivable as of August 31, 1996,
the Company had an available credit line of $27.1 million, of
which $9.3 million was used for letters of credit, principally
related to leasing commitments and worker's compensation
reserves. No cash borrowings were outstanding.
The Lease Line, for which the Company signed a commitment
letter in November 1995, is available to finance, subject to
meeting certain conditions, the construction or acquisition of
new warehouses or the expansion of existing warehouses which
are not pledged as collateral security for senior debt. The
Company intends to finance several of the planned warehouse
additions with the new Lease Line. The Company is currently
arranging the financing of the Pasco, Washington facility
under the Lease Line. The terms of each lease financing will
be separately established. The Lease Line commitment expires
December 31, 1996, and the Company is discussing with the
lender the extension of the commitment level. The lease rate
will be fixed at the time of funding each property, and will
be based on a spread over seven-year Treasury Bills. The
first funding of approximately $5.7 million closed in late
fiscal 1996 with respect to the Company's recently completed
Grand Island, Nebraska facility.
Subsequent to the end of the quarter, the Company financed the
Burley, Idaho expansion through a mortgage with its principal
bank.
CAPITAL EXPENDITURES - Budgeted fiscal 1997 capital
expenditures total approximately $43.5 million, including
approximately $30.4 million for warehouse expansion.
Expenditures for property, plant and equipment for the first
six months of fiscal 1997 totaled $15.2 million, of which
approximately $10.9 million related to warehouse expansions.
The Company reached an agreement with the bond trustee under
the Indenture related to the First Mortgage Bonds under which
the Company received the entire $4.8 million of insurance
proceeds held in escrow. The reimbursement to the Company
resulted from fire-related restoration expenditures incurred
by the Company at its Kansas City, Kansas facility.
The projects the Company has developed or is currently
developing for fiscal 1997 would require the expenditure of up
to $29.3 million, of which all is presently committed. The
Company anticipates that it will use the Lease Line and
mortgage financing to finance all but one of such projects.
NEW ACCOUNTING STANDARDS
------------------------
Effective March 1, 1996, the Company adopted Financial
Accounting Standards Board Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed Of."
This statement generally requires assessment of recoverability
of an asset after events or circumstances that indicate an
impairment to the asset and its future cash flows. Any
impairment loss would be recognized as a one-time charge to
earnings affecting results of operations, but would not affect
the cash flow of the Company. There was no impairment loss to
report upon adoption.
Effective March 1, 1996, the Company adopted Financial
Accounting Standards Board Statement No. 123, "Accounting for
Stock-Based Compensation" ("SFAS No. 123"). SFAS No. 123
requires that, except for transactions with employees that are
within the scope of Accounting Principles Board Opinion No. 25
("APB No. 25"), all transactions in which goods or services
are the consideration received for the issuance of equity
instruments are to be accounted for based on the fair value of
the consideration received or the fair value of the equity
instrument issued, whichever is more reliably measurable.
However, it also allows an entity to continue to measure
compensation costs for those plans using the intrinsic value
based method of accounting prescribed by APB No. 25. Entities
electing to follow the accounting methods of APB No. 25 must
make pro forma disclosures of net income and, if presented,
earnings per share, as if the fair value method of accounting
defined in SFAS No. 123 had been applied.
Pro forma disclosures required for entities that elect to
continue to measure compensation cost using APB No. 25 must
include the effects of all awards granted in fiscal years that
begin after December 15, 1994. The Company has elected to
continue using APB No. 25 and make the necessary SFAS No. 123
pro forma disclosures.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
-----------------
As part of the prepackaged bankruptcy proceedings, the Company
rejected certain lease agreements relating to four warehouse
facilities. In late fiscal 1996, the Company settled all
lease rejection issues with the lessor of three properties
located in Watsonville, Oakland and San Francisco, California.
Such settlement did not involve the payment of any damages by
the Company. Subsequent to the end of the quarter, in
September 1996, the Company settled all lease rejection issues
with the lessor of the Chicago, Illinois property. Such
settlement required a payment of approximately $0.4 million,
representing one-year rent recovery by the lessor as provided
by the Bankruptcy Code. In addition, the Company has commenced
an action for declaratory judgment in the Court seeking
certain rights to software pursuant to a contract with Non-
Stop Logistics Corporation ("Non-Stop"). Non-Stop has filed
a counterclaim for unspecified damages alleging, among other
things, a cloud on its title to intellectual property rights
in the software, breaches of a confidentiality agreement, lost
business opportunities and lost profits. Non-Stop is seeking
an injunction against the Company's development of a
forecasting system. Counsel for Non-Stop has advised
Americold's counsel that Non-Stop claims damages in amounts
ranging from approximately $6.0 million to $33.0 million. The
Company believes these claims to be without merit and intends
to pursue such litigation vigorously. Subsequent to the end
of the quarter, certain of Non-Stop's claims were dismissed
from the case and certain issues were tried before the
Bankruptcy Court judge. As of October 11, 1996, no final
decision has been reached in the Non-Stop litigation.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits
(10.1) Nonstatutory Stock Option Agreement effective
April 24, 1996 between the Company and Ronald
H. Dykehouse.
(10.2) Nonstatutory Stock Option Agreement effective
April 24, 1996 between the Company and John P.
LeNeveu.
(10.3) Nonstatutory Stock Option Agreement effective
April 24, 1996 between the Company and J. Roy
Coxe.
(11) Statement Regarding Computation of Per Share
Earnings
(27) Financial Data Schedule
(b) Reports on Form 8-K
No Reports on Form 8-K were filed during the quarter for
which this report is filed.
<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: October 11, 1996
<PAGE>
FORM 10-Q
Exhibit Index
Exhibit Page
- ------- ----
(a) Exhibits
(10.1) Nonstatutory Stock Option Agreement
effective April 24, 1996 between the
Company and Ronald H. Dykehouse.
(10.2) Nonstatutory Stock Option Agreement
effective April 24, 1996 between the
Company and John P. LeNeveu.
(10.3) Nonstatutory Stock Option Agreement
effective April 24, 1996 between the
Company and J. Roy Coxe.
(11) Statement Regarding Computation of Per
Share Earnings
(27) Financial Data Schedule
<PAGE>
AMERICOLD CORPORATION
KEY EMPLOYEE STOCK OPTION PLAN
NONSTATUTORY STOCK OPTION AGREEMENT
THIS AGREEMENT is effective as of the 24th day of April,
1996 between AMERICOLD CORPORATION (the "Company"), and RONALD H.
DYKEHOUSE (the "Optionee").
To attract and retain able, experienced and trained
people and to provide additional incentives to key employees, the
Board of Directors adopted and the shareholders of the Company
approved the Company's Key Employee Stock Option Plan (the "Plan").
Pursuant to the Plan, the Compensation Committee of the Board of
Directors (the "Committee") has approved the grant to the Optionee
of an option to purchase shares of the Company's Common Stock, $.01
par value (the "Common Stock"), in the amount indicated below.
This option is a nonstatutory stock option and is not an Incentive
Stock Option as defined in Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the mutual covenants
contained in this Agreement, the Company and the Optionee agree as
follows:
1. The Company grants to the Optionee, upon the terms
and conditions set forth below and in the Plan, the right and
option (the "Option") to purchase up to one hundred thousand
(100,000) shares (the "Option Shares") of the Company's authorized,
but unissued or reacquired, Common Stock at a purchase price of
$12.30 per share.
(a) Subject to reductions in the Option term as
provided in subsections (d) and (g) of this Section, the
Option shall continue in effect until and including April 23,
2006 (the "Expiration Date"), at which time the Option shall
automatically terminate. Except as provided in subsections
(d) and (g) of this Section, the Option may be exercised from
time to time over the term of the Option by the purchase of
Option Shares in the following amounts:
(i) During the first year following the grant of
the Option -- none;
(ii) On and after April 24, 1997 -- one-fifth of the
Option Shares;
(iii) On and after April 24, 1998 -- an additional
one-fifth of the Option Shares;
(iv) On and after April 24, 1999 -- an additional
one-fifth of the Option Shares;
<PAGE>
(v) On and after April 24, 2000 --an additional
one-fifth of the Option Shares; and
(vi) On and after April 24, 2001 -- the remaining
one-fifth of the Option Shares;
provided, however, if the Optionee does not purchase in any
one year the full number of Option Shares to which the
Optionee is then entitled, the Optionee's rights shall be
cumulative, and the Optionee may purchase those Option Shares
in any subsequent year during the term of the Option.
(b) Except as provided in subsection (d) of this
Section, the Option may not be exercised unless the Optionee
is then an employee of or consultant to the Company or a
subsidiary (as defined in Section 424(f) of the Code) of the
Company ("Subsidiary") and has been an employee or consultant
continuously since the date the Option was granted. However,
a leave of absence under rules established by the Board of
Directors shall not be deemed an interruption of employment
for purposes of this Agreement.
(c) The Option shall not be transferable except by
will or by the laws of descent and distribution of the state
or country of the Optionee's domicile at the time of the
Optionee's death. Any such transfer of the Option or Option
Shares shall be subject to the terms and conditions of the
Stockholders' Agreement dated as of December 24, 1986, as
currently amended and as amended hereafter (the "Stockholders'
Agreement"), among the Company, Kelso Equity Partners, L.P.,
Kelso & Company, L.P., Kelso Investment Associates II, L.P.,
KIA III-Americold Inc., L.P., The Northwestern Mutual Life
Insurance Company, New York Life Insurance Company, New York
Life Insurance and Annuity Corporation and various other
shareholders of the Company. The Option shall be exercisable
during the Optionee's lifetime only by the Optionee or the
Optionee's guardian or legal representative.
(d) If the employment of the Optionee by the
Company or a Subsidiary terminates before the Expiration Date,
the following shall apply:
(i) If the employment of the Optionee terminates
for any reasons other than (1) for cause (as described in
Section 7 of the Employment Agreement dated as of
November 1, 1995 between the Company and Optionee), or
(2) a voluntary termination by the Optionee prior to
December 16, 1998, or (3) for the reasons set forth in
subsections (iv) and (v) of this Section, the Option
shall continue to vest in accordance with Section 1(a) of
this Agreement and may be exercised in accordance with
Section 1(a) at any time prior to the earlier of
<PAGE>
(A) the Expiration Date of the Option, or (B) the
expiration of five years after the date of termination.
(ii) If the employment of the Optionee terminates
for cause before April 24, 2001 (as described in Section
7 of the Employment Agreement dated November 1, 1995
between the Company and Optionee), or as a result of a
voluntary termination by the optionee prior to December
16, 1998, the then-unexercised portion of the Option
shall expire, and Optionee shall have no further right or
interest in the Option.
(iii) If the employment of the Optionee terminates
for cause (as described in Section 7 of the Employment
Agreement dated November 1, 1995 between the Company and
Optionee) on or after April 24, 2001, the unexercised
portion of the Option may be exercised at any time prior
to the earlier of (A) the Expiration Date of the Option
or (B) the expiration of three months after the date of
termination.
(iv) If the employment of the Optionee is terminated
because of permanent and total disability (as defined in
the Plan), the then-unexercised portion of the Option may
be exercised, to the extent that the Optionee was
entitled to do so on the date of termination, at any time
prior to the earlier of (A) the Expiration Date of the
Option, or (B) the expiration of one year after the date
of termination.
(v) If the employment is terminated because of the
Optionee's death, the then-unexercised portion of the
Option may be exercised, to the extent that the Optionee
was entitled to do so on the date of the Optionee's
death, at any time prior to the earlier of (A) the
Expiration Date of the Option, or (B) the expiration of
one year after the date of the Optionee's death.
However, in the event of the Optionee's death, the Option
may be exercised only as permitted under, and subject to
the terms and conditions of, the Stockholders' Agreement.
(e) Option Shares may be purchased only upon
receipt by the Company of written notice from the Optionee
specifying the number of Option Shares the Optionee desires to
purchase, accompanied by full payment in cash for the Option
Shares being purchased plus any required withholding tax. In
addition, the written notice shall contain a representation
that the Optionee intends to acquire the Option Shares for
investment and not for resale. Any required withholding tax
shall be paid in cash or, when applicable, through a payroll
deduction no later than the next payroll cycle. No Option
Shares shall be issued until full payment has been made. The
Optionee shall have none of
<PAGE>
the rights of a shareholder with respect to any Option Shares
until the Optionee becomes the holder of record of such Option
Shares.
(f) If the outstanding shares of Common Stock are
changed into or exchanged for a different number or kind of
shares of the Company or other securities of the Company by
reason of any merger, consolidation, recapitalization,
reclassification, stock split-up, stock dividend or
combination of shares, the Committee shall make an appropriate
and equitable adjustment in the number and kind of shares as
to which the unexercised portion of the Option shall be
exercisable, to the end that after such event the Optionee's
right to a proportionate interest in the Company shall be
maintained as if the Option had already been exercised and the
Option Shares were subject to such change or exchange. Such
adjustment shall be made without change in the total price
applicable to the unexercised portion of the Option and with
a corresponding adjustment in the exercise price per Option
Share. Any such adjustment made by the Committee shall be
final and binding upon the Company, the Optionee and all other
interested persons.
(g) In the event of (i) dissolution or liquidation
of the Company, (ii) a merger or other acquisition in which
the Company is not the surviving corporation, or (iii) an
exchange or other transaction pursuant to which the
outstanding shares of Common Stock of the Company are acquired
by another corporation, then either (i) the Committee, upon
authorization of the Board, shall make an appropriate and
equitable adjustment in the number and kinds of securities
covered by outstanding options, and such options shall be
expressly assumed by the successor corporation, if any; or
(ii) in lieu of such an adjustment, the Board shall provide a
30-day period prior to such event during which each Optionee
shall have the right to exercise the Optionee's outstanding
options, in whole or in part, without regard to the time the
options have been outstanding and without regard to any
vesting schedule provided for in any option agreement entered
into pursuant to the Plan. If the Board provides for such a
30-day period, options not exercised shall expire at the end
of such 30-day period.
2. The obligations of the Company under this Agreement
shall be subject to the approval of such state or federal
authorities or agencies as may have jurisdiction in the matter.
The Company shall use its best efforts to take such steps as may be
required by state or federal law or applicable regulations,
including rules and regulations of the Securities and Exchange
Commission and any stock exchange on which the Company's shares may
then be listed, in connection with the issuance of any Option
Shares, the listing of such shares on any such exchange, or the
sale of any Option Shares. The Company shall not be obligated to
issue or deliver any Option Shares if,
<PAGE>
upon advice of its legal counsel, such issuance or delivery would
violate state or federal law.
3. Nothing in the Plan or in this Agreement shall
confer upon the Optionee any right to continued employment with the
Company or any Subsidiary or shall interfere in any way with the
right of the Company or any Subsidiary by whom such Optionee is
employed to terminate the Optionee's employment at any time, either
with or without cause.
4. This Agreement shall be binding upon and shall inure
to the benefit of any successor or successors of the Company, but,
except as provided above, the Option shall not be assigned or
otherwise disposed of by the Optionee.
5. This Agreement replaces the Optionee's Nonstatutory
Stock Option Agreement entered into on June 26, 1990.
6. Except as modified by Section 1(d) of this
Agreement, the Option is subject to the terms and conditions of the
Plan.
IN WITNESS WHEREOF, the parties have executed this
Agreement in duplicate.
COMPANY: AMERICOLD CORPORATION
By: /s/ George E. Matelich
--------------------------------
George E. Matelich
Chairman of Compensation
Committee of the Board of
Directors
OPTIONEE:
/s/ Ronald H. Dykehouse
-----------------------------------
Ronald H. Dykehouse
Address: 22151 Antioch Downs Court
Tualatin, Oregon 97062
AMERICOLD CORPORATION
KEY EMPLOYEE STOCK OPTION PLAN
NONSTATUTORY STOCK OPTION AGREEMENT
THIS AGREEMENT is effective as of the 24th day of April,
1996 between AMERICOLD CORPORATION (the "Company"), and JOHN P.
LENEVEU (the "Optionee").
To attract and retain able, experienced and trained
people and to provide additional incentives to key employees, the
Board of Directors adopted and the shareholders of the Company
approved the Company's Key Employee Stock Option Plan (the "Plan").
Pursuant to the Plan, the Compensation Committee of the Board of
Directors (the "Committee") has approved the grant to the Optionee
of an option to purchase shares of the Company's Common Stock, $.01
par value (the "Common Stock"), in the amount indicated below.
This option is a nonstatutory stock option and is not an Incentive
Stock Option as defined in Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the mutual covenants
contained in this Agreement, the Company and the Optionee agree as
follows:
1. The Company grants to the Optionee, upon the terms
and conditions set forth below and in the Plan, the right and
option (the "Option") to purchase up to thirty thousand (30,000)
shares (the "Option Shares") of the Company's authorized, but
unissued or reacquired, Common Stock at a purchase price of $12.30
per share.
(a) Subject to reductions in the Option term as
provided in subsections (d) and (g) of this Section, the
Option shall continue in effect until and including April 23,
2006 (the "Expiration Date"), at which time the Option shall
automatically terminate. Except as provided in subsections
(d) and (g) of this Section, the Option may be exercised from
time to time over the term of the Option by the purchase of
Option Shares in the following amounts:
(i) During the first year following the grant of
the Option -- none;
(ii) On and after April 24, 1997 -- one-fifth of the
Option Shares;
(iii) On and after April 24, 1998 -- an additional
one-fifth of the Option Shares;
(iv) On and after April 24, 1999 -- an additional
one-fifth of the Option Shares;
<PAGE>
(v) On and after April 24, 2000 --an additional
one-fifth of the Option Shares; and
(vi) On and after April 24, 2001 -- the remaining
one-fifth of the Option Shares;
provided, however, if the Optionee does not purchase in any
one year the full number of Option Shares to which the
Optionee is then entitled, the Optionee's rights shall be
cumulative, and the Optionee may purchase those Option Shares
in any subsequent year during the term of the Option.
(b) Except as provided in subsection (d) of this
Section, the Option may not be exercised unless the Optionee
is then an employee of or consultant to the Company or a
subsidiary (as defined in Section 424(f) of the Code) of the
Company ("Subsidiary") and has been an employee or consultant
continuously since the date the Option was granted. However,
a leave of absence under rules established by the Board of
Directors shall not be deemed an interruption of employment
for purposes of this Agreement.
(c) The Option shall not be transferable except by
will or by the laws of descent and distribution of the state
or country of the Optionee's domicile at the time of the
Optionee's death. Any such transfer of the Option or Option
Shares shall be subject to the terms and conditions of the
Stockholders' Agreement dated as of December 24, 1986, as
currently amended and as amended hereafter (the "Stockholders'
Agreement"), among the Company, Kelso Equity Partners, L.P.,
Kelso & Company, L.P., Kelso Investment Associates II, L.P.,
KIA III-Americold Inc., L.P., The Northwestern Mutual Life
Insurance Company, New York Life Insurance Company, New York
Life Insurance and Annuity Corporation and various other
shareholders of the Company. The Option shall be exercisable
during the Optionee's lifetime only by the Optionee or the
Optionee's guardian or legal representative.
(d) If the employment of the Optionee by the
Company or a Subsidiary terminates before the Expiration Date,
the following shall apply:
(i) If the employment of the Optionee terminates
for any reasons other than (1) for cause before April 24,
2001 (as described in Section 7 of the Employment
Agreement dated as of August 1, 1995 between the Company
and Optionee), (2) or a voluntary termination by the
Option prior to July 31, 1997 "without good reason," as
defined in such Agreement or (3) for the reasons set
forth in subsections (iii) and (iv) of this Section, the
then-unexercised portion of the Option may be exercised,
to the extent that the Optionee was entitled to do so on
the date of
<PAGE>
termination, at any time prior to the earlier of (A) the
Expiration Date of the Option, or (B) the expiration of
three months after the date of termination.
(ii) If the employment of the Optionee terminates
for cause before April 24, 2001, (as described in Section
7 of the Employment Agreement dated August 1, 1995
between the Company and Optionee) or as a result of
voluntary termination by the Optionee prior to July 31,
1997 "without good reason," as defined in such Agreement,
the then-unexercised portion of the Option shall expire,
and Optionee shall have no further right or interest in
the Option.
(iii) If the employment of the Optionee is
terminated because of permanent and total disability (as
defined in the Plan), the then-unexercised portion of the
Option may be exercised, to the extent that the Optionee
was entitled to do so on the date of termination, at any
time prior to the earlier of (A) the Expiration Date of
the Option, or (B) the expiration of one year after the
date of termination.
(iv) If the employment is terminated because of
the Optionee's death, the then-unexercised portion of the
Option may be exercised, to the extent that the Optionee
was entitled to do so on the date of the Optionee's
death, at any time prior to the earlier of (A) the
Expiration Date of the Option, or (B) the expiration of
one year after the date of the Optionee's death.
However, in the event of the Optionee's death, the Option
may be exercised only as permitted under, and subject to
the terms and conditions of, the Stockholders' Agreement.
(e) Option Shares may be purchased only upon
receipt by the Company of written notice from the Optionee
specifying the number of Option Shares the Optionee desires to
purchase, accompanied by full payment in cash for the Option
Shares being purchased plus any required withholding tax. In
addition, the written notice shall contain a representation
that the Optionee intends to acquire the Option Shares for
investment and not for resale. Any required withholding tax
shall be paid in cash or, when applicable, through a payroll
deduction no later than the next payroll cycle. No Option
Shares shall be issued until full payment has been made. The
Optionee shall have none of the rights of a shareholder with
respect to any Option Shares until the Optionee becomes the
holder of record of such Option Shares.
(f) If the outstanding shares of Common Stock are
changed into or exchanged for a different number or kind of
<PAGE>
shares of the Company or other securities of the Company by
reason of any merger, consolidation, recapitalization,
reclassification, stock split-up, stock dividend or
combination of shares, the Committee shall make an appropriate
and equitable adjustment in the number and kind of shares as
to which the unexercised portion of the Option shall be
exercisable, to the end that after such event the Optionee's
right to a proportionate interest in the Company shall be
maintained as if the Option had already been exercised and the
Option Shares were subject to such change or exchange. Such
adjustment shall be made without change in the total price
applicable to the unexercised portion of the Option and with
a corresponding adjustment in the exercise price per Option
Share. Any such adjustment made by the Committee shall be
final and binding upon the Company, the Optionee and all other
interested persons.
(g) In the event of (i) dissolution or liquidation
of the Company, (ii) a merger or other acquisition in which
the Company is not the surviving corporation, or (iii) an
exchange or other transaction pursuant to which the
outstanding shares of Common Stock of the Company are acquired
by another corporation, then either (i) the Committee, upon
authorization of the Board, shall make an appropriate and
equitable adjustment in the number and kinds of securities
covered by outstanding options, and such options shall be
expressly assumed by the successor corporation, if any; or
(ii) in lieu of such an adjustment, the Board shall provide a
30-day period prior to such event during which each Optionee
shall have the right to exercise the Optionee's outstanding
options, in whole or in part, without regard to the time the
options have been outstanding and without regard to any
vesting schedule provided for in any option agreement entered
into pursuant to the Plan. If the Board provides for such a
30-day period, options not exercised shall expire at the end
of such 30-day period.
2. The obligations of the Company under this Agreement
shall be subject to the approval of such state or federal
authorities or agencies as may have jurisdiction in the matter.
The Company shall use its best efforts to take such steps as may be
required by state or federal law or applicable regulations,
including rules and regulations of the Securities and Exchange
Commission and any stock exchange on which the Company's shares may
then be listed, in connection with the issuance of any Option
Shares, the listing of such shares on any such exchange, or the
sale of any Option Shares. The Company shall not be obligated to
issue or deliver any Option Shares if, upon advice of its legal
counsel, such issuance or delivery would violate state or federal
law.
3. Nothing in the Plan or in this Agreement shall
confer upon the Optionee any right to continued employment with the
Company or any Subsidiary or shall interfere in any way with
<PAGE>
the right of the Company or any Subsidiary by whom such Optionee is
employed to terminate the Optionee's employment at any time, either
with or without cause.
4. This Agreement shall be binding upon and shall inure
to the benefit of any successor or successors of the Company, but,
except as provided above, the Option shall not be assigned or
otherwise disposed of by the Optionee.
5. This Agreement replaces the Optionee's Nonstatutory
Stock Option Agreement entered into on December 17, 1993.
6. The Option is subject to the terms and conditions of
the Plan. In the event of any inconsistency between this Agreement
and the Plan, the Plan shall control.
IN WITNESS WHEREOF, the parties have executed this
Agreement in duplicate.
COMPANY: AMERICOLD CORPORATION
By:/s/ Ronald H. Dykehouse
--------------------------------
Ronald H. Dykehouse
Chairman, CEO and President
OPTIONEE:
/s/ John P. LeNeveu
-----------------------------------
John P. LeNeveu
Address: 4655 SW Chunut Court
Tualatin, Oregon 97062
AMERICOLD CORPORATION
KEY EMPLOYEE STOCK OPTION PLAN
NONSTATUTORY STOCK OPTION AGREEMENT
THIS AGREEMENT is effective as of the 24th day of April,
1996 between AMERICOLD CORPORATION (the "Company"), and J. ROY COXE
(the "Optionee").
To attract and retain able, experienced and trained
people and to provide additional incentives to key employees, the
Board of Directors adopted and the shareholders of the Company
approved the Company's Key Employee Stock Option Plan (the "Plan").
Pursuant to the Plan, the Compensation Committee of the Board of
Directors (the "Committee") has approved the grant to the Optionee
of an option to purchase shares of the Company's Common Stock, $.01
par value (the "Common Stock"), in the amount indicated below.
This option is a nonstatutory stock option and is not an Incentive
Stock Option as defined in Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the mutual covenants
contained in this Agreement, the Company and the Optionee agree as
follows:
1. The Company grants to the Optionee, upon the terms
and conditions set forth below and in the Plan, the right and
option (the "Option") to purchase up to thirty thousand (30,000)
shares (the "Option Shares") of the Company's authorized, but
unissued or reacquired, Common Stock at a purchase price of $12.30
per share.
(a) Subject to reductions in the Option term as
provided in subsections (d) and (g) of this Section, the
Option shall continue in effect until and including April 23,
2006 (the "Expiration Date"), at which time the Option shall
automatically terminate. Except as provided in subsections
(d) and (g) of this Section, the Option may be exercised from
time to time over the term of the Option by the purchase of
Option Shares in the following amounts:
(i) During the first year following the grant of
the Option -- none;
(ii) On and after April 24, 1997 -- one-fifth of the
Option Shares;
(iii) On and after April 24, 1998 -- an additional
one-fifth of the Option Shares;
(iv) On and after April 24, 1999 -- an additional
one-fifth of the Option Shares;
<PAGE>
(v) On and after April 24, 2000 --an additional
one-fifth of the Option Shares; and
(vi) On and after April 24, 2001 -- the remaining
one-fifth of the Option Shares;
provided, however, if the Optionee does not purchase in any
one year the full number of Option Shares to which the
Optionee is then entitled, the Optionee's rights shall be
cumulative, and the Optionee may purchase those Option Shares
in any subsequent year during the term of the Option.
(b) Except as provided in subsection (d) of this
Section, the Option may not be exercised unless the Optionee
is then an employee of or consultant to the Company or a
subsidiary (as defined in Section 424(f) of the Code) of the
Company ("Subsidiary") and has been an employee or consultant
continuously since the date the Option was granted. However,
a leave of absence under rules established by the Board of
Directors shall not be deemed an interruption of employment
for purposes of this Agreement.
(c) The Option shall not be transferable except by
will or by the laws of descent and distribution of the state
or country of the Optionee's domicile at the time of the
Optionee's death. Any such transfer of the Option or Option
Shares shall be subject to the terms and conditions of the
Stockholders' Agreement dated as of December 24, 1986, as
currently amended and as amended hereafter (the "Stockholders'
Agreement"), among the Company, Kelso Equity Partners, L.P.,
Kelso & Company, L.P., Kelso Investment Associates II, L.P.,
KIA III-Americold Inc., L.P., The Northwestern Mutual Life
Insurance Company, New York Life Insurance Company, New York
Life Insurance and Annuity Corporation and various other
shareholders of the Company. The Option shall be exercisable
during the Optionee's lifetime only by the Optionee or the
Optionee's guardian or legal representative.
(d) If the employment of the Optionee by the
Company or a Subsidiary terminates before the Expiration Date,
the following shall apply:
(i) If the employment of the Optionee terminates
for any reasons other than (1) for cause before April 24,
2001 (as described in Section 7 of the Employment
Agreement dated as of August 1, 1995 between the Company
and Optionee), (2) or a voluntary termination by the
Option prior to July 31, 1997 "without good reason," as
defined in such Agreement or (3) for the reasons set
forth in subsections (iii) and (iv) of this Section, the
then-unexercised portion of the Option may be exercised,
to the extent that the Optionee was entitled to do so on
the date of
<PAGE>
termination, at any time prior to the earlier of (A) the
Expiration Date of the Option, or (B) the expiration of
three months after the date of termination.
(ii) If the employment of the Optionee terminates
for cause before April 24, 2001, (as described in Section
7 of the Employment Agreement dated August 1, 1995
between the Company and Optionee) or as a result of
voluntary termination by the Optionee prior to July 31,
1997 "without good reason," as defined in such Agreement,
the then-unexercised portion of the Option shall expire,
and Optionee shall have no further right or interest in
the Option.
(iii) If the employment of the Optionee is
terminated because of permanent and total disability (as
defined in the Plan), the then-unexercised portion of the
Option may be exercised, to the extent that the Optionee
was entitled to do so on the date of termination, at any
time prior to the earlier of (A) the Expiration Date of
the Option, or (B) the expiration of one year after the
date of termination.
(iv) If the employment is terminated because of
the Optionee's death, the then-unexercised portion of the
Option may be exercised, to the extent that the Optionee
was entitled to do so on the date of the Optionee's
death, at any time prior to the earlier of (A) the
Expiration Date of the Option, or (B) the expiration of
one year after the date of the Optionee's death.
However, in the event of the Optionee's death, the Option
may be exercised only as permitted under, and subject to
the terms and conditions of, the Stockholders' Agreement.
(e) Option Shares may be purchased only upon
receipt by the Company of written notice from the Optionee
specifying the number of Option Shares the Optionee desires to
purchase, accompanied by full payment in cash for the Option
Shares being purchased plus any required withholding tax. In
addition, the written notice shall contain a representation
that the Optionee intends to acquire the Option Shares for
investment and not for resale. Any required withholding tax
shall be paid in cash or, when applicable, through a payroll
deduction no later than the next payroll cycle. No Option
Shares shall be issued until full payment has been made. The
Optionee shall have none of the rights of a shareholder with
respect to any Option Shares until the Optionee becomes the
holder of record of such Option Shares.
(f) If the outstanding shares of Common Stock are
changed into or exchanged for a different number or kind of
<PAGE>
shares of the Company or other securities of the Company by
reason of any merger, consolidation, recapitalization,
reclassification, stock split-up, stock dividend or
combination of shares, the Committee shall make an appropriate
and equitable adjustment in the number and kind of shares as
to which the unexercised portion of the Option shall be
exercisable, to the end that after such event the Optionee's
right to a proportionate interest in the Company shall be
maintained as if the Option had already been exercised and the
Option Shares were subject to such change or exchange. Such
adjustment shall be made without change in the total price
applicable to the unexercised portion of the Option and with
a corresponding adjustment in the exercise price per Option
Share. Any such adjustment made by the Committee shall be
final and binding upon the Company, the Optionee and all other
interested persons.
(g) In the event of (i) dissolution or liquidation
of the Company, (ii) a merger or other acquisition in which
the Company is not the surviving corporation, or (iii) an
exchange or other transaction pursuant to which the
outstanding shares of Common Stock of the Company are acquired
by another corporation, then either (i) the Committee, upon
authorization of the Board, shall make an appropriate and
equitable adjustment in the number and kinds of securities
covered by outstanding options, and such options shall be
expressly assumed by the successor corporation, if any; or
(ii) in lieu of such an adjustment, the Board shall provide a
30-day period prior to such event during which each Optionee
shall have the right to exercise the Optionee's outstanding
options, in whole or in part, without regard to the time the
options have been outstanding and without regard to any
vesting schedule provided for in any option agreement entered
into pursuant to the Plan. If the Board provides for such a
30-day period, options not exercised shall expire at the end
of such 30-day period.
2. The obligations of the Company under this Agreement
shall be subject to the approval of such state or federal
authorities or agencies as may have jurisdiction in the matter.
The Company shall use its best efforts to take such steps as may be
required by state or federal law or applicable regulations,
including rules and regulations of the Securities and Exchange
Commission and any stock exchange on which the Company's shares may
then be listed, in connection with the issuance of any Option
Shares, the listing of such shares on any such exchange, or the
sale of any Option Shares. The Company shall not be obligated to
issue or deliver any Option Shares if, upon advice of its legal
counsel, such issuance or delivery would violate state or federal
law.
3. Nothing in the Plan or in this Agreement shall
confer upon the Optionee any right to continued employment with the
Company or any Subsidiary or shall interfere in any way with
<PAGE>
the right of the Company or any Subsidiary by whom such Optionee is
employed to terminate the Optionee's employment at any time, either
with or without cause.
4. This Agreement shall be binding upon and shall inure
to the benefit of any successor or successors of the Company, but,
except as provided above, the Option shall not be assigned or
otherwise disposed of by the Optionee.
5. This Agreement replaces the Optionee's Nonstatutory
Stock Option Agreement entered into on December 17, 1993.
6. The Option is subject to the terms and conditions of
the Plan. In the event of any inconsistency between this Agreement
and the Plan, the Plan shall control.
IN WITNESS WHEREOF, the parties have executed this
Agreement in duplicate.
COMPANY: AMERICOLD CORPORATION
By: /s/ Ronald H. Dykehouse
--------------------------------
Ronald H. Dykehouse
Chairman, CEO and President
OPTIONEE:
/s/ J. Roy Coxe
-----------------------------------
J. Roy Coxe
Address: 3501 SW Turner Road
West Linn, Oregon 97068
<PAGE>
Exhibit (11)
AMERICOLD CORPORATION
STATEMENT RE COMPUTATION OF
PER SHARE EARNINGS
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three months Three months Six months Six months
ended ended ended ended
last day of last day of last day of last day of
August 1995 August 1996 August 1995 August 1996
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<C> <C> <C> <C>
Net loss $ (5,479) $ (2,673) $ (8,981) $ (5,009)
Less: total accrued preferred dividend
(52.936 shares x 13.50% x 3/12 yr) (179) (179) - -
(52.936 shares x 13.50% x 6/12 yr) - - (357) (357)
------- ------- ------- -------
Net loss for per share calculation $ (5,658) $ (2,852) $ (9,338) $ (5,366)
======= ======= ======= =======
Weighted average number of shares
outstanding 4,861 4,931 4,861 4,931
======= ======= ======= =======
Net loss per share $ (1.16) $ (0.58) $ (1.92) $ (1.09)
======= ======= ======= =======
</TABLE>
<TABLE> <S> <C>
<PAGE>
<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 AUGUST
31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-END> AUG-31-1996
<CASH> 7,942<F3>
<SECURITIES> 0
<RECEIVABLES> 32,662
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 51,596
<PP&E> 564,976
<DEPRECIATION> 183,557
<TOTAL-ASSETS> 524,140
<CURRENT-LIABILITIES> 55,735
<BONDS> 465,573<F5>
<COMMON> 49<F2>
6,127<F1>
0
<OTHER-SE> (112,802)<F2>
<TOTAL-LIABILITY-AND-EQUITY> 524,140
<SALES> 152,535
<TOTAL-REVENUES> 152,535
<CGS> 114,489
<TOTAL-COSTS> 130,777
<OTHER-EXPENSES> (468)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29,256
<INCOME-PRETAX> (7,433)
<INCOME-TAX> 2,424<F4>
<INCOME-CONTINUING> (5,009)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,009)
<EPS-PRIMARY> (1.09)<F1>
<EPS-DILUTED> (1.09)<F1>
<FN>
<F1>See Note 5 to Notes to Consolidated Financial Statements
<F2>See Note 3 to Notes to Consolidated Financial Statements
<F3>See Note 6 to Notes to Consolidated Financial Statements
<F4>See Note 4 to Notes to Consolidated Financial Statements
<F5>See Note 7 to Notes to Consolidated Financial Statements
</FN>
</TABLE>
