<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
/X/ Annual report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the fiscal year ended
February 29, 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 Id. No.)
7007 S. W. Cardinal Lane, Suite 135,
Portland, Oregon 97224
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including
area code: (503) 624-8585
------------
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
/X/ Yes / / No
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. /X/
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.
/X/ Yes / / No
Aggregate market value of voting stock held by non-affiliates on
May 1, 1996: $10,855,593 based upon the last known transaction in
the voting stock of the Company.
Number of shares outstanding of the registrant's common stock, par
value $.01 per share, as of May 1, 1996: 4,931,194 shares.
DOCUMENTS INCORPORATED BY REFERENCE
None
Exhibit Index located at page 83.<PAGE>
AMERICOLD CORPORATION
FORM 10-K
TABLE OF CONTENTS
-----------------
Part I Page
- ---------- ----
Item 1. Business 4
Item 2. Properties 13
Item 3. Legal Proceedings 15
Item 4. Submission of Matters to a Vote of 16
Security Holders
Part II
- -------
Item 5. Market for Registrant's Common Equity 16
and Related Stockholder Matters
Item 6. Selected Financial Data 17
Item 7. Management's Discussion and Analysis of 18
Financial Condition and Results of Operations
Item 8. Financial Statements and Supplementary Data 30
Item 9. Changes in and Disagreements with Accountants 30
on Accounting and Financial Disclosure
Part III
- --------
Item 10. Directors and Executive Officers of the 31
Registrant
Item 11. Executive Compensation 34
Item 12. Security Ownership of Certain Beneficial 41
Owners and Management
Item 13. Certain Relationships and Related Transactions 43
Part IV
- -------
Item 14. Exhibits, Financial Statement Schedules and 43
Reports on Form 8-K
SIGNATURES 51
SUPPLEMENTAL INFORMATION 52
EXHIBIT INDEX 83
<PAGE>
PART I
Item 1. Business
GENERAL
- -------
Americold Corporation ("Americold" or the "Company"), the nation's
largest supplier of public refrigerated warehouse space, provides
integrated logistics services for the frozen food industry. These
services, consisting of warehousing and transportation management,
are provided through the Company's network of 49 refrigerated
warehouses in 16 states and through the Company's refrigerated
transportation management unit.
Americold, an Oregon corporation, was founded in 1911,
reincorporated in 1931 and, prior to 1984, operated as The Terminal
Ice and Cold Storage Company and, subsequently, Termicold
Corporation. In December 1982, Americold was acquired by Beatrice
Companies, Inc., which combined its public refrigerated warehouse
facilities, operating under various names, with Americold. In
December 1986, Americold was purchased (the "Acquisition") by a
private group consisting of affiliates of Kelso & Company, Inc.
("Kelso"), certain institutional investors, and certain key
employees and members of Americold's management (the "Management
Group").
On May 9, 1995, the Company filed a prepackaged plan of
reorganization (the "Plan") under Chapter 11 of the Bankruptcy Code
(the "Prepackaged Bankruptcy"). The principal purpose of the Plan
was to reduce the Company's short-term cash requirements with
respect to payments due on its senior subordinated indebtedness by
extending the maturity of such indebtedness and to adjust certain
restrictive financial covenants and other provisions contained in
an agreement with one of its principal lenders. The bankruptcy
court approved the Plan as filed and it became effective on June
30, 1995. See Part I, Item 3. - "Legal Proceedings," and Part II,
Item 7. - "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital
Resources."
As used herein, the terms "Americold" or the "Company" refer to
Americold Corporation and its subsidiary unless the context
indicates otherwise. All references to fiscal 1994, 1995 and 1996
refer to the years ended the last day of February 1994, 1995 and
1996, respectively.
COMPANY SERVICES
- ----------------
The Company provides frozen food manufacturers with refrigerated
warehousing and transportation management services. Integration of
these services allows frozen food manufacturers to contract on an
outsource basis with a single entity, the Company, for the
following services to coordinate and manage the distribution of
frozen food products:
Americold's Logistics Services
<TABLE>
<CAPTION>
Refrigerated Warehousing Services
Transportation Management Services
- --------------------------------- -------------
- ---------------------
<S> <C>
Storage Dispatching
Handling Freight Rate
Negotiation
Order Assembly Backhaul
Coordination
Order Management Freight Bill
Auditing
Blast Freezing/Tempering Network Flow
Management
Facility Leasing Local/Store
Door Delivery
Facility Operation Order
Consolidation
Inventory Status Information Truck Routing
Product Assembly/Packaging Distribution
Channel Assessment
Product Recalls
</TABLE>
The Company offers these services both on a separate and an
integrated basis. The Company also provides services such as
electronic order processing, order status information and freight
payment to its customers as part of its integrated services,
although such services are not billed separately.
REFRIGERATED WAREHOUSING SERVICES
---------------------------------
Since its founding in 1911, the Company has grown to become the
largest owner and operator of refrigerated warehouses in the United
States. The Company believes it supplies approximately 15% of the
total publicly-available freezer storage space in the country,
based on the most recent data (October 1995) published by the
United States Department of Agriculture and the data most recently
prepared by the International Association of Refrigerated
Warehouses (the "IARW"). As of the last day of February 1996, the
Company's network of 49 refrigerated warehouse facilities in 16
states provided a total storage capacity of approximately
228.9 million cubic feet (compared to approximately 230.3 million
cubic feet of storage capacity as of the last day of February
1995). Included in the Company's total storage capacity at
February 29, 1996 is approximately 2.5 million cubic feet of
storage capacity added in Pasco, Washington in July 1995; 5.9
million cubic feet of storage capacity added in Rochelle, Illinois
in August 1995; and 2.2 million cubic feet added in Grand Island,
Nebraska in November 1995. As part of the Prepackaged Bankruptcy,
the Company rejected certain operating lease agreements relating to
four underperforming warehouse facilities at Watsonville, Oakland
and San Francisco, California; and Chicago, Illinois. These
warehouses totaled approximately 12 million cubic feet of storage
capacity. Approximately 94% of the storage space operated by the
Company is freezer space (zero degrees Fahrenheit and below), with
the remaining space comprised of cooler space (28 degrees
Fahrenheit and above) and unrefrigerated dry storage space.
Most of the Company's warehouses may be classified as combination
production and distribution facilities, although some provide
solely production or distribution services. Production facilities
differ from distribution facilities in that they typically serve
one or a small number of customers located nearby. These customers
store large quantities of processed or partially processed products
in the facility until they are further processed or shipped to the
next stage of production or distribution. Distribution facilities
primarily serve customers of the Company's production warehouses
and other customers who store a wide variety of finished products
to support shipment to end-users, such as food retailers and food
service companies, in a specific geographic market.
During the past four years, the Company has implemented new
management operating systems and performance standards in its
warehouses. The installation of the IBM AS400 warehouse management
information system was completed in December 1992 to tie together
into a single network with common services all of the Company's
locations. To further integrate the Company's services, the
Company, using upgraded computer hardware and a combination of
purchased and internally developed software, completed in March
1995 a transportation management system which has been fully
integrated with the Company's warehouse management system. The
Company also offers electronic data interchange to receive customer
orders and to transmit product flow and status information to its
customers.
The Company has developed several services ancillary to its
warehouse freezer operations and intends to continue developing and
promoting such services as well as adding incremental freezer,
cooler or dry space. Ancillary services include product assembly/
packaging, palletizing, labeling and SUPERCOLD [registered
trademark symbol] freezer storage provided at 11 of Americold's
facilities for the preservation of products, such as ice cream,
which require storage at temperatures as low as 20 degrees below
zero (Fahrenheit).
TRANSPORTATION MANAGEMENT
-------------------------
The Company has recently expanded its focus to provide integrated
warehousing and transportation management services to the frozen
food industry.
To expand its transportation management business, the Company has
consolidated its transportation management functions, added staff
resources and improved its transportation management information
systems capabilities, including integrating these systems with the
Company's warehouse information systems. Utilizing its network of
IBM AS400 computers, its transportation management and
communications software and its multiple warehouse locations, the
Company is currently providing integrated warehousing and
transportation management services to certain of its customers.
Transportation management services offered by the Company include
dispatching, freight rate negotiation, backhaul coordination,
freight bill auditing, network flow management, local/store door
delivery, order consolidation, truck routing and distribution
channel assessment. The Company also offers services that enable
customers to assess the most economical means to store and ship
frozen food products. The Company believes that its temperature-
controlled logistics expertise and access to both frozen food
warehouses and distribution channels will enable its customers to
respond quickly and efficiently to time-sensitive orders from
distributors and retailers using the Company's systems.
In fiscal 1996, the Company began providing a broad range of
transportation management services to three subsidiaries of H. J.
Heinz Co. ("Heinz"). For each of the subsidiaries, the Company
manages the distribution of frozen food products from manufacturing
plants through distribution channels to the subsidiaries'
customers. In addition, for one of these subsidiaries, the Company
also manages the in-bound transportation of over 200 non-frozen
ingredients to the subsidiary's manufacturing plants.
In providing transportation management services, the actual freight
transportation is performed by carriers who have negotiated rates
with the Company. The Company does not own and does not intend to
own significant transportation equipment.
REVENUES AND CUSTOMERS
- ----------------------
Americold's net sales for fiscal 1994, 1995 and 1996 are detailed
below by activity:
<TABLE>
<CAPTION>
NET SALES (Dollars in Millions)
Fiscal 1994
Fiscal 1995 Fiscal 1996
---------------
--------------- ---------------
Amount %
Amount % Amount %
---------------
--------------- ---------------
<S> <C> <C>
<C> <C> <C> <C>
Logistics
Warehousing
Storage $ 98.5 49.5%
$103.4 48.0% $107.6 38.5%
Handling 65.3 32.8%
70.7 32.9% 76.2 27.2%
Leasing 7.4 3.7%
7.0 3.3% 7.0 2.5%
Freezing and other 9.9 5.0%
11.4 5.3% 10.6 3.8%
------ ------
------ ------ ------ ------
181.1 91.0%
192.5 89.5% 201.4 72.0%
Transportation management services 12.6 6.4%
18.0 8.3% 74.2 26.5%
------ ------
------ ------ ------ ------
Total logistics 193.7 97.4%
210.5 97.8% 275.6 98.5%
Other non-logistics 5.2 2.6%
4.7 2.2% 4.2 1.5%
----- -----
----- ----- ----- -----
Total net sales $ 198.9 100.0%
$ 215.2 100.0% $ 279.8 100.0%
====== ====== ====== ======
====== ======
</TABLE>
Americold's customers consist primarily of national, regional and
local frozen food manufacturers, distributors, retailers and food
service organizations. Although the Company provides services to
approximately 2,800 customers, in fiscal 1996 the ten largest
customers accounted for approximately 65% of total net sales. One
customer of the Company, Heinz and subsidiaries, accounted for
approximately 39% of the Company's net sales in fiscal 1996. The
Company believes that the risk to the Company of losing such large
customers has been reduced in several cases through long-term
storage and operating agreements and by the fact that services are
provided to certain large customers in multiple locations.
At several locations, the Company's production warehouses are
located adjacent to customers' processing facilities. Certain of
the Company's customers guarantee a minimum quantity of product to
be stored in return for guaranteed space pursuant to long-term
contracts. At several locations, the Company leases space to
manufacturers or distributors on a long-term, fixed-rate basis. At
a number of facilities, particularly those located adjacent to
customers' processing facilities, a majority of, and in some cases
virtually all, business is attributable to a single user of the
facility.
Management has observed in the past that to the extent products
produced at locations adjoining the Company's facilities are
commodities grown in the surrounding area, demand for the products
has been more significant to the long-term sales and profitability
of the facility than has been the viability of a single producer.
SEASONALITY
- -----------
Warehousing sales are seasonal, depending upon the timing and
availability of crops grown for frozen food production and the
seasonal build-up of certain products for holiday consumption. The
third quarter, ending each November 30, normally represents the
strongest sales quarter. Capacity utilization at the Company's
facilities varies from season to season, with an average annual
capacity utilization of approximately 72%. The Company generally
keeps sufficient space available at individual warehouses to meet
peak season demand. The Company has experienced similar
seasonality in its transportation management business.
COMPETITION
- -----------
Americold operates in an environment in which breadth of service,
warehouse locations, customer mix, warehouse size, service
performance and price are the principal competitive factors. Since
frozen food manufacturers and distributors incur transportation
costs which typically are significantly greater than warehousing
costs, breadth of total logistics services and warehouse location
are major competitive factors. In addition, in certain locations,
customers depend upon pooling shipments, which involves combining
their products with the products of others destined for the same
markets. In these cases, the mix of customers in a warehouse can
significantly influence the cost of delivering products to markets.
The size of a warehouse is important because large customers prefer
to have all of the products needed to serve a given market in a
single location and to have the flexibility to increase storage at
that single location during seasonal peaks. The Company believes
that customers generally will select a warehouse facility based
upon the types of services available, service performance and
price, if there are several warehouse locations which satisfy its
transportation, customer mix and size requirements.
Competition is national, regional and local in nature. There are
no significant barriers to entry, permitting a relatively large
number of smaller competitors to enter the Company's markets. On
the national level, Americold competes with United Refrigerated
Services, Inc. ("URS"), United States Cold Storage, Inc., Millard
Refrigerated Services and Christian Salvesen, Inc., which,
according to statistics compiled by the IARW, accounted for approx-
imately 7.5%, 5.5%, 5.1% and 3.0% of public freezer space,
respectively, in 1995. On the regional and local level, there are
many smaller warehouse operators that compete with the Company.
According to data prepared by the IARW, warehouse operators who own
or control less than 35 million cubic feet each of refrigerated
space or freezer space accounted for approximately 71% of all
public refrigerated storage space in 1995. The Company believes
that competition from these local and regional competitors is
significant because national competitors often do not compete in
the same markets as the Company.
The Company believes that if its strategy of providing fully
integrated warehousing and transportation management services is
successful, the ability to reduce customer's distribution costs
resulting from the economies of scale attendant to the movement of
large quantities of diverse products through its national network
of warehouses will create a marketing advantage not available to
smaller competitors. Other companies, such as GATX Corporation and
Exel Logistics, Inc., provide transportation management services to
shippers, but the Company is not aware of another company's ability
to provide such transportation services in conjunction with full
service refrigerated warehousing capabilities.
Kelso holds approximately 57% of the common equity of URS and,
therefore, owns a controlling interest in both the Company and URS.
Kelso has implemented procedures intended to address possible
conflicts of interest that might arise from its investment in both
URS and the Company. Kelso had considered on a preliminary basis
the possibility of a business combination between the Company and
URS. Although Kelso continues to have discussions concerning such
a combination, there currently are no discussions between Americold
and URS.
ORGANIZATION
- ------------
The Company's operations are headquartered in Portland, Oregon.
The Company's warehouse facilities are organized into four
districts. Each district is managed by a District Manager to whom
the respective General Managers report. General Managers are
responsible for one to five warehouses and are supported at the
district and corporate levels by certain logistics, accounting,
marketing, engineering, data processing and operational functions.
The Company's transportation management services are managed from
the Company's headquarters.
SALES AND MARKETING
- -------------------
Sales responsibility at the Company resides primarily with district
and local management who are supported at the national level by the
Company's executive and sales and marketing staff. Marketing is
principally a corporate management function.
Local sales efforts are supplemented by the national corporate
sales, marketing and logistics departments, which supply sales
support, logistics analysis, account pricing guidance and
advertising, and monitor relationships with large district and
national accounts. The Company employs two sales managers and a
sales representative, all reporting to a director of sales in
Portland, Oregon. The sales managers are based in California and
Colorado, while the sales representative is based in Massachusetts.
The Company also employs a Senior Vice President, Logistics, based
in Portland.
In addition, a primary account manager and pricing contact is
assigned to each of the Company's top 100 accounts in order to
facilitate services for such customers. Certain customers storing
product in multiple facilities, but who are not among the Company's
top 100 accounts, are also offered similar contacts. It is the
responsibility of each warehouse's or group's management to
understand and be responsive to the needs of its individual
marketplace and to adapt sales efforts accordingly. Each General
Manager actively engages in the sales effort. Although the Company
operates nationally, prices charged by the Company tend to reflect
local market conditions.
The Company has promoted its logistics services to existing and
potential customers through consultations during which the Company
presents a range of potential logistics services to that customer.
Although the Company has primarily focused on its existing large
frozen food manufacturer customers, the Company is also currently
approaching retailers, distributors and smaller manufacturers to
offer the Company's network of warehouses and transportation
management services, which such customers may find more attractive
than maintaining or developing their own logistics resources. The
Company intends to continue to emphasize integrated warehousing and
transportation management services and to pursue other customers
who may wish to outsource significant logistics responsibilities to
Americold.
The majority of the Company's customers are billed on a monthly
basis for warehousing charges. Handling and first period storage
is billed upon receipt of the product. Recognition of one-half of
the handling revenue is deferred until the product is released.
Transportation management customers are generally billed on a
shipment by shipment basis.
EMPLOYEES
- ---------
The Company had approximately 2,021 employees as of February 29,
1996. A breakdown of employees by function is set forth below:
Employee Breakdown by Function
Number of Percentage
Function Employees of Total
- -------- --------- ----------
Warehousing Services 1,564 77.4%
Transportation Management Services 48 2.4%
Sales and Marketing 4 0.2%
Non-Logistics 27 1.3%
Administration (Warehouse and
Corporate) 378 18.7%
----- -----
Total 2,021 100.0%
===== =====
Approximately 663 of the Company's employees are covered by union
contracts. Currently, 23 facilities employ unionized labor, while
26 facilities are non-unionized. Union contracts for individual
locations are with the local chapters of national unions,
principally the International Brotherhood of Teamsters, and
generally have staggered expiration dates. During the past three
years, there has been one strike at one warehouse which lasted for
approximately four days. The Company believes its relationships
with its employees are satisfactory.
As a result of the anticipated continued expansion in
transportation management services, the transportation management
staff is expected to increase in fiscal 1997.
PATENTS, LICENSES AND TRADEMARKS
- --------------------------------
The Company's operations are not dependent upon any single or
related group of patents, licenses, franchises or concessions. The
Company's operations are also not dependent upon a single trademark
or service mark, although the Company has registered the SUPERCOLD
[registered trademark symbol] service mark with the United States
Patent and Trademark Office.
RESEARCH AND DEVELOPMENT
- ------------------------
The Company believes that the refrigerated warehouse industry is
not one in which research and development has traditionally played
a significant role. The Company, however, has made significant
expenditures in developing its integrated warehousing and
transportation management services, including installing its new
computer data processing support system which integrates modern
transportation management systems with the Company's warehouse
management system. The Company also continues to pursue methods of
reducing energy costs at its facilities.
ENVIRONMENTAL COMPLIANCE
- ------------------------
In fiscal 1995, the Company completed its conversion of its last
remaining freon-based cooling system to an ammonia-based system.
The Company's capital expenditures, earnings and competitive
position are not materially affected by compliance with federal,
state and local provisions which have been enacted or adopted to
regulate or otherwise protect the environment.
ITEM 2. PROPERTIES
As of February 29, 1996, the Company owned or leased 49 facilities
in 16 states. Although most of the facilities are owned by the
Company, eight facilities comprising approximately 5.9% of the
Company's total cubic feet of storage space are leased or subleased
by the Company under operating-type lease arrangements. In
addition, four facilities representing approximately 5.4% of the
total cubic feet of storage space are leased, in whole or in part,
under sale-and-leaseback or capitalized-type lease arrangements.
Five facilities, or portions thereof, representing approximately
6.2% of the total cubic feet of storage space, are situated on
leased land.
Capacity utilization at the Company's facilities varies from season
to season, with an average annual capacity utilization of
approximately 72%. All but five of the Company's owned warehouses
are currently encumbered as security for the senior secured debt of
the Company.
The Company's facilities are typically single-story concrete or
insulated panel buildings constructed at dock height elevation,
with very heavy insulation and vapor barrier protection.
Refrigeration is generally supplied by screw-type compressors in
ammonia-based cooling systems. All facilities are served by truck
and all but seven are served by rail. Many facilities also have
room for expansion.
The following table lists the 49 refrigerated warehouse properties
owned or leased by the Company as of February 29, 1996. It also
shows the 32 facilities that presently secure the Company's first
mortgage bonds, and two facilities that presently secure the
mortgage payables.<PAGE>
<TABLE>
<CAPTION>
REFRIGERATED WAREHOUSE FACILITIES
Total
Storage Space
Type of Owned or
(Cubic Ft./Mil)
Facility<F1> Leased
---------------
- -------- --------
<S> <C>
<C> <C>
Burbank (W. Magnolia Blvd.), California 0.8
P/D Owned
Fullerton (S. Raymond Ave.), California 4.0
P/D Leased<F2>
Los Angeles (Corona St.), California 0.7
D Leased<F2>
Los Angeles (Jesse St.), California 2.7
P/D Owned<F5>
Pajaro (Salinas Rd.), California 0.8
P/D Leased<F2>
Turlock (5th St.), California 2.5
P/D Owned<F5>
Turlock (S. Kilroy Rd.), California 3.0
P/D Owned<F5>
Watsonville (W. Riverside Dr.), California 5.2
P/D Owned<F3><F5>
Watsonville (Second St.), California 1.5
P/D Leased<F2>
Denver (E. 50th St.), Colorado 2.8
P/D Owned<F3>/Leased<F4><F5>
Denver (N. Washington St.), Colorado 0.5
P/D Leased<F2>
Bartow (U. S. Highway 17), Florida 1.2
P/D Owned<F3><F5>
Plant City (S. Alexander St.), Florida 0.9
P/D Owned
Tampa (N. 50th St.), Florida 4.1
P/D Owned/Leased<F4>
Tampa (S. Lois Ave.), Florida 0.4
D Owned
Tampa (Shoreline Dr.), Florida 0.8
D Owned<F3>
Burley (U.S. Highway 30), Idaho 7.8
P/D Owned<F3><F6>
Nampa (4th St. N.), Idaho 8.0
P Owned<F5>
Chicago (S. Blue Island Ave.), Illinois 2.9
P/D Leased<F2>
Rochelle (Americold Drive), Illinois 5.9
D Owned<F5>
Bettendorf (State St.), Iowa 8.9
P/D Owned<F5>
Fort Dodge (Maple Dr.), Iowa 3.7
D Owned<F5>
Kansas City (Inland Dr.), Kansas 35.2
P/D Owned<F5>
Portland (Read St.), Maine 1.8
P/D Owned
Boston (Widett Ci.), Massachusetts 3.1
P/D Owned<F5>
Gloucester (E. Main St.), Massachusetts 1.9
P/D Owned<F5>
Gloucester (Railroad Ave.), Massachusetts 0.3
P/D Owned<F5>
Gloucester (Rogers St.), Massachusetts 2.8
P/D Owned<F5>
Gloucester (Rowe Sq.), Massachusetts 2.4
P/D Owned<F5>
Watertown (Pleasant St.), Massachusetts 4.7
P/D Owned<F5>
Grand Island (E. Roberts St.), Nebraska 2.2
P/D Leased<F2>
Brooks (Brooklake Rd.), Oregon 4.8
P Owned<F5>
Hermiston (Westland Rd.), Oregon 4.0
P Owned<F5>
Milwaukie (S. E. McLoughlin Blvd.), Oregon 4.7
D Owned<F5>
Ontario (N. E. First St.), Oregon 8.1
P Leased<F4><F6>
Salem (Portland Rd. N.E.), Oregon 12.5
P/D Owned<F5>
Woodburn (Silverton Rd.), Oregon 6.3
P/D Owned<F5>
Fogelsville (Mill Rd.), Pennsylvania 14.0
D Owned/Leased<F4><F5>
Murfreesboro (Stephenson Dr.), Tennessee 2.9
P/D Owned<F5>
Clearfield (South St.), Utah 8.6
P/D Owned<F5>
Burlington (S. Walnut), Washington 4.7
P/D Owned<F5>
Connell (W. Juniper St.), Washington 5.7
P Owned
Kent (S. 190th St.), Washington 1.0
D Leased<F2>
Moses Lake (Wheeler Rd.), Washington 7.3
P/D Owned<F5>
Pasco (Industrial Way), Washington 2.5
P Owned<F5>
Walla Walla (4-14th Ave. S.), Washington 3.1
P Owned<F5>
Wallula (Dodd Rd.), Washington 1.2
P/D Owned<F5>
Plover (110th St.), Wisconsin 9.4
P/D Owned<F5>
Tomah (Route 2), Wisconsin 4.6
P Owned<F5>
-----
228.9
=====
- ----------------------
<FN>
<F1> "P" designates a production facility.
"D" designates a distribution facility.
"P/D" designates a facility that is used for both
production and distribution.
<F2> Operating lease.
<F3> Building owned by the Company; land is leased.
<F4> Capitalized lease.
<F5> Security for Company's first mortgage bonds. See Note 7 to
Consolidated Financial Statements as of
the last day of February 1995 and 1996.
<F6> Security for mortgage payable.
/TABLE
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
On May 9, 1995, the Company filed the Plan under Chapter 11 of the
Bankruptcy Code in the United States Bankruptcy Court for the
District of Oregon (Case No. 395-33058elp11) in the Prepackaged
Bankruptcy. On the filing date, the Plan had received approval
from both of the classes of debtholders entitled to vote on the
Plan. A hearing was held on June 19, 1995 to consider the motion
of the Company requesting the Bankruptcy Court (1) to approve the
Company's Disclosure Statement dated April 14, 1995 and the
Company's procedure for solicitation of votes to accept or reject
the Plan, and (2) to confirm the Plan. The Bankruptcy Court
granted the motions and confirmed the Plan on June 19, 1995, and
the Plan became effective on June 30, 1995. As a part of the
Prepackaged Bankruptcy, the Company also 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. The outcome of any damage claim
resulting from the remaining lease rejection related to the Chicago
warehouse facility cannot be predicted at this time, but the
Company does not believe the resolution of such claim will be
material. In addition, the Company has commenced an action for
declaratory judgment in bankruptcy seeking certain rights to
software pursuant to a contract with Non-Stop Logistics Corporation
("Non-Stop"). In the proceeding, Non-Stop has asserted various
claims for damages to its business, lost business opportunities and
lost profits. Although the memorandum setting out the basis for
such claims is unclear as to whether certain damages are claimed
separately or in the aggregate, Non-Stop appears to allege 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. For additional
information with respect to the Plan, see "Management's Discussion
and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources."
The Company maintains property, liability and warehouseman's legal
liability insurance in amounts which it believes are consistent
with industry practice and adequate for its operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted by the Company to a vote of stockholders
during the fourth quarter of fiscal 1996.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
MARKET INFORMATION
- ------------------
The Company's common stock is not listed on a securities exchange
or traded through an inter-dealer quotation system. There is no
established public trading market for the Company's common stock.
However, there are occasional trades through certain
broker/dealers.
STOCKHOLDERS
- ------------
As of May 1, 1996, there were 4,931,194 shares of the Company's
common stock outstanding, held by approximately 83 stockholders of
record. See also Part III, Item 12.
DIVIDENDS
- ---------
No dividends have been declared by the Company on its common stock
since the Acquisition. The Company's credit agreements restrict
the payment of dividends on common stock, and it is the present
policy of the Board of Directors that all available cash be used
for the reduction of debt and for reinvestment in the Company's
business.
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The following table presents selected historical financial
information. The information should be read in conjunction with
the Company's Consolidated Financial Statements and related Notes,
and Management's Discussion and Analysis of Financial Condition and
Results of Operations as furnished below in Part II, Item 8 and
Item 7, respectively. Dollars are in thousands, except per share
data.
<TABLE>
<CAPTION>
Year Ended Year
Ended Year Ended Year Ended Year Ended
last day last day
last day last day last day
of of
of of of
February February
February February February
1992 1993
1994 1995 1996
-------- --------
-------- -------- --------
<S> <C> <C>
<C> <C> <C>
Income Statement Data:
Net sales $ 200,680 $
196,130 $ 198,887 $ 215,207 $ 279,788
Income (loss) before extraordinary
item and cumulative effect of
accounting principle change (5,493)
(8,150) (11,039) 5,564 (8,080)
Extraordinary loss, net of income
tax benefit -
- - (1,848) - (1,794)
Cumulative effect of accounting
principle changes -
- - (64,234) - -
Net income (loss) (5,493)
(8,150) (77,121) 5,564 (9,874)
Income (loss) per share:
Income (loss) before extraordinary
item (1.24)
(1.80) (2.39) 1.00 (1.76)
Extraordinary item -
- - (.38) - (.37)
Cumulative effect of accounting
principle changes -
- - (13.23) - -
Net income (loss) per common share (1.24)
(1.80) (16.00) 1.00 (2.13)
Cash dividends declared per
common share -
- - - - -
Balance Sheet Data:
Total assets $ 483,841 $
490,151 $ 528,703 $ 544,595 $526,992
Long-term debt 435,133
443,003 467,337 442,912 461,667
Preferred stock 4,204
4,773 5,348 5,789 5,771
Common stockholders' deficit (16,882)
(25,175) (102,577) (97,747) (107,440)
</TABLE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND 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.
DEVELOPMENT OF TRANSPORTATION MANAGEMENT SERVICES - In recent
quarters, 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 in fiscal 1996. 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 to support the distribution of frozen food products
from a single provider.
The maintenance and continued growth of transportation management
services revenues is dependent upon meeting customer expectations.
Due to the complexity of implementing and coordinating several
interrelated systems, the Company encountered start-up difficulties
in achieving agreed-upon service levels with respect to the
introduction of certain transportation management services for
certain customers in the latter part of fiscal 1996. In light of
remedial actions taken by the Company and based on discussions with
such customers, the Company believes that it has overcome such
difficulties. There can be no assurance, however, that the Company
will not encounter difficulties in the future or that such
difficulties, if encountered, would not adversely affect operating
income or customer relationships. The Company believes, however,
that its transportation management activities may lead to stronger
customer relationships and increased revenues in the higher-margin
warehousing business.
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 REFRIGERATED 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. Since August 1994
(mid-fiscal 1995), the Company has added approximately 15.1 million
cubic feet of storage capacity in five locations. Two of such
facilities became operational in fiscal 1995, and one in the second
quarter and two in the third quarter of fiscal 1996. The increase,
net of warehouse closures discussed below, represents a 1.4%
increase in available warehouse space. The Company is currently
working toward the development of several new warehouses which
include the acquisition of 2.1 million cubic feet and the
construction of 16.8 million cubic feet of new refrigerated
warehouse space. The Company intends to finance such expansion
primarily through lease financing pursuant to an existing
commitment and from other financing sources. See " - Liquidity and
Capital Resources - Capital Resources."
Since August 1994, the Company has reduced the amount of available
refrigerated warehouse space by approximately 12 million cubic feet
due to the sale of one property, termination of four operating
leases in the Prepackaged Bankruptcy in the third quarter of fiscal
1996 and the non-renewal of three other operating leases. The
Company expects that the effects of the closure or disposition of
such non-strategic facilities will have a positive effect on future
gross operating margin as a percentage of net sales.
PREPACKAGED BANKRUPTCY - During the first quarter of fiscal
1996, the Company solicited acceptance of the Plan in the
Prepackaged Bankruptcy. 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 by extending the
maturity on such indebtedness from May 1997 to November 2007 and to
adjust certain restrictive financial covenants and certain other
provisions contained in an agreement with one of its principal
lenders. Each holder of the Company's 11% Senior Subordinated
Debentures due 1997 ("11% Debentures") received a corresponding
amount of the Company's new 15% Senior Subordinated Debentures due
2007 ("15% Debentures") at par, plus accrued but unpaid interest.
The Company received approval from the classes of debtholders
entitled to vote on the Plan and, on May 9, 1995, filed the Plan as
approved with the United States Bankruptcy Court for the District
of Oregon. On June 19, 1995, the Court approved the Company's
Plan, and on June 30, 1995, the Plan became effective. The Company
was debtor-in-possession during the proceedings. See -"Liquidity
and Capital Resources - Capital Resources - Effect of Prepackaged
Bankruptcy."
For fiscal 1996, the Company incurred approximately $7.3 million in
reorganization fees and expenses related to the Prepackaged
Bankruptcy. In addition, the write-off of unamortized original
issue discount and unamortized issuance costs related to the
exchange of the 11% Debentures and the repurchase of $10.0 million
in principal amount of the Company's 11.45% First Mortgage Bonds,
Series A Bonds due 2002 ("Series A Bonds") in the Prepackaged
Bankruptcy resulted in an extraordinary loss, net of taxes, of
approximately $1.8 million in the same period.
OFFERING OF SENIOR SUBORDINATED NOTES - Subsequent to the end
of fiscal 1996, 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 all of the 15%
Debentures.
EFFECT OF THE ACQUISITION - In December 1986, Kelso, certain
institutional investors and the Management Group purchased the
Company. The Company's operating results and cash flow have been
and will continue to be materially affected by the indebtedness
incurred to finance the Acquisition. For fiscal 1995 and 1996,
interest expense, principally related to debt incurred to finance
the Acquisition, totaled $55.3 million and $56.6 million,
respectively.
EFFECT OF KANSAS CITY FIRE - In December 1991 a fire began at
the Company's Kansas City, Kansas underground warehouse, the
Company's largest warehouse facility. Due to its underground
location, the fire required an extended period to extinguish. As
a result of the fire, the Company's warehousing activities in
Kansas City have operated at a substantially reduced level due to
loss of public storage and lease customers. Although a substantial
portion of the Kansas City warehouse facility has been restored to
its pre-fire condition, the Company is unable to predict its
ability to return the facility to pre-fire operating volumes and
profits. The Company settled its first party claims with its
insurance carriers for business interruption losses, property
damage and out-of-pocket expenses with respect to the fire and
recognized in the third quarter of fiscal 1995 approximately $17.0
million as a gain on insurance settlement.
<PAGE>
HISTORICAL INCOME STATEMENT INFORMATION
- ---------------------------------------
The following table sets forth, for the fiscal years ended the last
day of February 1994, 1995 and 1996, respectively, certain
consolidated financial data for the Company, expressed as a
percentage of net sales, and the percentage changes in the dollar
amount as compared to the prior period.
<TABLE>
<CAPTION>
Percentage of Net Sales
Period-to-Period
Change
Last Day of February
-------------------
----------------------------
- - 1994 to 1995 to
1994 1995
1996 1995 1996
---- ---- ---
- - ---- ----
<S> <C> <C> <C>
<C> <C>
Net sales 100.0% 100.0%
100.0% 8.2% 30.0%
Cost of sales 63.5% 64.2%
69.7% 9.4% 41.1%
Amortization of cost in excess
net assets acquired 1.3% 1.2%
1.0% 0.2% 9.4%
Selling and administrative
expenses 13.6% 12.1%
10.2% (4.2)% 9.9%
Employee stock ownership plan
expense 0.0% 0.3%
0.3% N/M 0.0%
Gross operating margin 21.6% 22.2%
18.8% 11.3% 10.4%
Interest expense 27.9% 25.7%
20.2% (0.1)% 2.3%
Amortization of debt issuance
costs 0.6% 0.6%
0.3% 2.2% (24.5)%
Income (loss) before income taxes,
extraordinary item and cumulative
effect of accounting principle
changes (6.2)% 5.0%
(4.1)% 188.3% (206.6)%
Provision (benefit) for income taxes (0.6)% 2.4%
(1.2)% 541.8% (165.5)%
Income (loss) before extraordinary
item and cumulative effect of
accounting principle changes (5.6)% 2.6%
(2.9)% 150.4% (245.2)%
Extraordinary loss, net
of income tax benefit (0.9)% 0.0%
(0.6)% N/M N/M
Cumulative effect of accounting
principle changes (32.3)% 0.0%
0.0% N/M 0.0%
Net income (loss) (38.8)% 2.6%
(3.5)% 107.2% (277.5)%
N/M = Not meaningful
</TABLE>
RESULTS OF OPERATIONS
- ---------------------
NET SALES - The Company's net sales increased 30.0% from
$215.2 million for fiscal 1995 to $279.8 million for fiscal 1996,
reflecting a substantial increase in transportation management
sales as well as a 4.6% increase in warehousing sales.
Warehousing sales increased from $192.5 million for fiscal 1995 to
$201.4 million for fiscal 1996, principally due to a 4.1% increase
in storage revenue and a 7.8% increase in handling revenue. The
increase in storage revenue is primarily due to price increases and
changes in product mix, as storage volume remained stable at
approximately 1.56 billion pounds stored on average per month in
each of the two years.
The 7.8% increase in handling revenue resulted primarily from a
4.3% increase in volume of product handled, with the remaining
increase due to price increases and changes in product mix. For
fiscal 1995, 20.0 billion pounds of product were handled by the
Company compared with 20.9 billion pounds during fiscal 1996.
Although the Company has previously disclosed a customer's
intention to relocate by late fiscal 1997 a significant portion of
the customer's storage volume from one of the Company's warehouses
to a new warehouse to be constructed by a competitor closer to one
of the customer's production facilities, the Company has been
advised that the customer has reassessed such relocation. The
customer has notified the Company that it intends to maintain its
current levels of storage volume in the Company's warehouse through
at least the first quarter of fiscal 1998. Also, the Company
believes that the customer has not reached a final decision to
relocate such business. The Company believes that if the final
decision is made to relocate such business, the Company will be
allowed to participate in proposals to provide warehousing services
in such new location. If such storage volume is relocated, the
Company believes that it will secure replacement business to
recover a substantial portion of the gross operating margin
represented by such storage volume, but there can be no assurance
in this regard.
Transportation management sales increased 312.2% from $18.0 million
for fiscal 1995 to $74.2 million for fiscal 1996, due to the
outsourcing to the Company of significant additional transportation
management responsibilities by three subsidiaries of Heinz.
Other non-logistics sales (quarry sales) decreased 11.0% from $4.7
million for fiscal 1995 to $4.2 million for fiscal 1996. The
Company has terminated its previously disclosed discussions related
to the possible sale of the quarry and is currently considering its
options with respect to such operations.
Net sales increased 8.2% from fiscal 1994 to fiscal 1995. The
increase in warehousing sales was primarily the result of increases
in storage and handling revenue due to the increased storage of
vegetables attributable to the strong vegetable harvest in the
Midwest in fiscal 1995. Transportation management sales increased
42.9% in fiscal 1995 due to the start-up by one customer of a
distribution program during the year.
COST OF SALES - Cost of sales increased 41.1% from $138.1
million for fiscal 1995 to $194.9 million for fiscal 1996. 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 $54.7 million increase in cost of sales. In
addition, the cost of sales decreased as a result of warehouse
additions and closures in the net amount of $1.5 million. See " -
Introduction - Development of Refrigerated Warehouse Properties".
Cost of sales as a percentage of net sales increased from 64.2% for
fiscal 1995 to 69.7% for fiscal 1996, as handling and
transportation management sales, which each have high variable cost
requirements, increased from 41.2% of net sales in the prior period
to 53.8% in the more recent period.
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 its warehousing services. The
Company believes, however, that its transportation management
activities may lead to stronger customer relationships and
increased revenues in the higher-margin warehousing business.
Cost of sales increased 9.4% from fiscal 1994 to fiscal 1995 as a
result of the increased transportation management sales and
increased handling volume at the Company's facilities in the more
recent period.
SELLING AND ADMINISTRATIVE EXPENSES - Selling and
administrative expenses increased 9.9% from $26.0 million for
fiscal 1995 to $28.5 million for fiscal 1996. The increase
primarily reflects an increase of approximately $1.4 million in
salaries and related fringe benefits. Selling and administrative
expenses as a percentage of net sales decreased from 12.1% in
fiscal 1995 to 10.2% in fiscal 1996 due to the increase in
transportation management sales which did not require a
corresponding increase in selling and administrative expenses.
Selling and administrative expenses decreased 4.2% from $27.1
million for fiscal 1994 to $26.0 million for fiscal 1995. The
decrease primarily reflects a decrease of approximately $0.5
million in professional fees in the more recent period.
GROSS OPERATING MARGIN - As a result of the increase in
warehousing sales, along with the closures of the underperforming
warehouse facilities and the increase in transportation management
sales, gross operating margin increased 10.4% from $47.8 million
for fiscal 1995 to $52.8 million for fiscal 1996.
Gross operating margin increased 11.3% from $43.0 million for
fiscal 1994 to $47.8 million for fiscal 1995 as a result of the
increased warehouse business.
INTEREST EXPENSE - Interest expense increased from $55.3
million for fiscal 1995 to $56.6 million for fiscal 1996 as a
result of higher overall interest rates partially offset by
slightly lower overall borrowings. The increase in interest rates
resulted from the exchange in the Prepackaged Bankruptcy of the
Company's 11% Debentures for the new 15% Debentures. Subsequent to
the end of fiscal 1996, the Company refinanced the 15% Debentures.
See "Introduction - Offering of Senior Subordinated Notes," above.
Interest expense decreased from $55.4 million in fiscal 1994 to
$55.3 million for fiscal 1995 as a result of slightly lower average
borrowings.
GAIN ON INSURANCE SETTLEMENT - The one-time gain in fiscal
1995 reflects the gain on insurance settlement of approximately
$17.0 million related to the Company's settlement with its
insurance carriers of its first party claims for business
interruption losses, property damage and out-of-pocket expenses
incurred with respect to the Kansas City fire.
REORGANIZATION EXPENSES - Reorganization expenses of
approximately $7.3 million reflect the expenses incurred in fiscal
1996 for professional services related to the Prepackaged
Bankruptcy including investment banking, accounting and legal fees.
INCOME (LOSS) - The Company's income before income taxes and
extraordinary item for fiscal 1995 was $10.8 million, compared to
a loss of $11.5 million for fiscal 1996. The decrease in income
between the two periods is due to the approximately $7.3 million in
fiscal 1996 of reorganization expenses incurred during fiscal 1996
and the recognition by the Company of an approximately $17.0
million gain in fiscal 1995 from the insurance settlement related
to the Kansas City, Kansas fire. These two factors were offset in
part by improved earnings from operations in fiscal 1996.
The Company's loss before income taxes, extraordinary item and
cumulative effect of accounting changes for fiscal 1994 was $12.2
million compared to income of $10.8 million in fiscal 1995,
primarily the result of the insurance settlement referred to above.
EXTRAORDINARY ITEM - In connection with the exchange of the
Company's 11% Debentures for the 15% Debentures and the repurchase
of the $10.0 million of Series A Bonds in 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 in fiscal 1996.
INFLATION - The Company's operations have not been, nor are
they expected to be, materially affected by inflation or changing
prices.
NEW ACCOUNTING STANDARDS - 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."
The Company has not implemented the requirements of 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," although it
will be required to do so for fiscal years beginning March 1, 1996
and thereafter. SFAS No. 123 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. At this time, the Company does not
believe there will be an impairment loss to report.
The Company has not implemented the requirements of Financial
Accounting Standards Board Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS
No. 123"), although it will be required to do so for fiscal years
beginning March 1, 1996 and thereafter. 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 not implemented SFAS No. 123
nor has it determined whether to elect to continue using APB No. 25
and make the necessary SFAS No. 123 pro forma disclosures.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company believes it has sufficient liquidity and capital
resources to meet its 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 to fund limited growth in warehouse
investments. 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 facilities from a finance company (the "Lease Line").
See " - Capital Resources." 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 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 interim 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 decreased from $12.7
million for fiscal 1995 to $12.6 million for fiscal 1996. The
decrease is due to the reorganization fees and expenses associated
with the Prepackaged Bankruptcy and changes in certain working
capital items. The Company's operating cash flow would have been
$19.9 million for fiscal 1996 without reorganization fees and
expenses of $7.3 million. Funds provided from operations (gross
operating margin plus depreciation, amortization and employee stock
ownership plan expense) for fiscal 1994, 1995 and 1996 totaled
$65.9 million, $71.6 million and $76.6 million, respectively.
Interest expenses, net of amortization of original issue discount,
totaled $54.2 million, $54.0 million and $56.2 million,
respectively. As a result of increased taxable earnings and the
reversal of deferred tax liabilities, the Company anticipates that
cash tax payments will increase. See Note 11 of Notes to
Consolidated Financial Statements as of the last day of February
1995 and 1996.
WORKING CAPITAL - The Company's working capital position at
fiscal 1996 year end was $3.2 million. This position compares to
a negative $14.9 million at fiscal 1995 year end. Working capital
increased due to the effects of the Prepackaged Bankruptcy. Under
the Plan, approximately $28.8 million of senior subordinated debt
payments were postponed from May 1995 until fiscal 2008, which
reduced the current portion of long-term debt. Partially
offsetting this decrease in the current portion of long-term debt,
as part of the reorganization proceedings, the Company repurchased
for cash $10.0 million in principal amount of long-term Series A
Bonds.
The Company's typical negative working capital position has not
historically affected its ability to meet its cash operating needs.
The Company, however, in fiscal 1995 experienced a shortfall in
working capital necessary to make the fiscal 1995 and fiscal 1996
sinking fund payments required with respect to the 11% Debentures,
leading to the Prepackaged Bankruptcy. See "Capital Resources -
Effect of Prepackaged Bankruptcy" below.
CAPITAL RESOURCES
- -----------------
The existing credit agreement ("Bank Credit Agreement") with the
Company's principal bank provides an aggregate availability of
$27.5 million, which may be used for any combination of letters of
credit (not to exceed $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
letter of credit amounts 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, up to a maximum
of $27.5 million. The Company has not mortgaged any properties
under the Bank Credit Agreement. The Bank 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 Bank Credit Agreement also contains certain
restrictive covenants, including financial covenants.
Based on eligible accounts receivable as of February 29, 1996, the
Company had an available credit line of $21.2 million, of which
$7.2 million was used for letters of credit, principally related to
leasing commitments and workers' compensation reserves. No cash
borrowings were outstanding.
The Lease Line, for which the financing 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 terms of each lease financing will be
separately established. The Lease Line commitment expires
December 31, 1996. 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 $5.6
million closed in late fiscal 1996 with respect to the Company's
recently completed Grand Island, Nebraska facility.
CAPITAL EXPENDITURES - Expenditures for property, plant and
equipment for fiscal 1996 totaled $35.0 million, of which
approximately $26.7 million related to warehouse expansions. Of
the $26.7 million, all but approximately $.2 million of the
expenditures were funded from sources other than net cash flow from
operations. Two new warehouse facilities, in Pasco, Washington and
Rochelle, Illinois, were funded with approximately $18.6 million of
escrow funds established with the proceeds from the sale of the
Company's 11.5% First Mortgage Bonds, Series B due 2005 and
available under the indenture governing the Company's first
mortgage bonds ("Bond Indenture"); and the Grand Island, Nebraska
facility was funded from the Lease Line.
As a result of the expenditures described above, the Company has
exhausted substantially all of the escrowed funds under the Bond
Indenture, except for approximately $4.8 million from the insurance
proceeds from the Kansas City fire. In late fiscal 1996, the
Company submitted to the trustee under the Bond Indenture an
accounting of restoration expenses incurred to date at the Kansas
City warehouse facility. Based on such submission, the Company has
requested that the $4.8 million be released to the Company.
The projects the Company is currently exploring for fiscal 1997
would require the expenditure of up to $37.4 million, of which
$19.6 million is presently committed. 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 or mortgage financing. Certain capital
expenditures originally planned for late fiscal 1996 will be
deferred until early fiscal 1997, and certain capital expenditures
originally planned for early fiscal 1997 are expected to be
deferred until late fiscal 1997, resulting in corresponding delays
in the realization of benefits from such investments.
Expenditures, including capital leases, for property, plant and
equipment for fiscal years 1994, 1995 and 1996 totaled $9.9
million, $14.3 million and $35.0 million, respectively, as
summarized in the following table:
<PAGE>
Historical Capital Expenditures
(In Millions)
<TABLE>
<CAPTION>
Fiscal year
Ended Last
Day of
February
-----------------
- --------
1994 1995
1996
------ ------
------
<S> <C> <C>
<C>
Routine replacements/betterments $ 2.7 $ 5.5
$ 3.9
Revenue enhancements or cost reductions 1.9 1.9
4.5
Expansions 5.3 6.9
26.7
------ ------
------
Total $ 9.9 $ 14.3
$ 35.0
====== ======
======
Cash Portion of Capital Expenditures<F1> $ 8.9 $ 13.2
$ 34.2
====== ======
======
<FN>
<F1> The cash portion of capital expenditures for all periods
was funded from escrow funds available
under the Bond Indenture and net cash flow from operations.
The non-cash portion of capital
expenditures was funded from capital leases.
</TABLE>
EFFECT OF PREPACKAGED BANKRUPTCY - The Bankruptcy Court
approved the Plan on June 19, 1995 and the Plan became effective on
June 30, 1995. The Plan as approved provided, among other things,
that each holder of the Company's then outstanding 11% Debentures
was entitled to receive a corresponding amount of the Company's new
15% Debentures at par, plus accrued but unpaid interest; that the
holders of the Company's senior debt were not adversely affected by
the Prepackaged Bankruptcy; and that the prior investment agreement
was superseded by the Second Amended and Restated Investment
Agreement dated as of May 5, 1995 between the Company and
Metropolitan Life Insurance Company.
The Company rejected in the Prepackaged Bankruptcy certain
operating lease agreements relating to four warehouse facilities at
Watsonville, Oakland and San Francisco, California; and Chicago,
Illinois. Properties subject to the leases accounted for
approximately $11.7 million of sales and a minimal amount of gross
operating margin in fiscal 1995. In late fiscal 1996, the Company
settled all lease rejection issues with the lessor of three of the
facilities located in Watsonville, Oakland and San Francisco,
California. Such settlement did not involve the payment of any
damages by the Company. The outcome of any damage claim resulting
from the remaining lease rejection of the Chicago warehouse
facility cannot be predicted at this time, but the Company does not
believe that the resolution of such claim will be material.
The Company believes that the effect of the Plan has been to
improve the Company's financial position by postponing the maturity
of its subordinated debt and increasing the likelihood that the
Company will realize the benefits of its capital expenditures and
the continuing expansion of its transportation management
activities. The Company remains highly leveraged, however, and
will continue to be subject to substantial principal and interest
obligations with respect to its indebtedness.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's consolidated financial statements as of the last day
of February 1995 and 1996 and related information listed below, are
set forth on pages 54 through 82 of this report.
TITLE PAGE
--------- ----
Independent Auditors' Report 53
Consolidated Balance Sheets as of the last day
of February 1995 and 1996 54
Consolidated Statements of Operations for years
ended the last day of February 1994, 1995 and
1996 56
Consolidated Statements of Common Stockholders'
Deficit for years ended the last day 57
of February 1994, 1995 and 1996
Consolidated Statements of Cash Flows for years
ended the last day of February 1994, 1995 and
1996 58
Notes to Consolidated Financial Statements as
of the last day of February 1995 and 1996 60
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The directors and executive officers of Americold as of May 1, 1996
are as follows:
NAME AGE TITLE
---- --- -----
Ronald H. Dykehouse 54 Chairman of the Board, President
and Chief Executive Officer
Joel M. Smith 52 Senior Vice President, Chief
Financial Officer and Director
John P. LeNeveu 49 Executive Vice President,
Operations and Sales
F. Stanley Sena 47 Executive Vice President,
Transportation and Distribution
Logistics
J. Roy Coxe 55 Senior Vice President,
Logistics
Ronald A. Nickerson 59 Vice President, Operations
Lon V. Leneve 39 Vice President and Treasurer
Frank Edelstein 70 Director
George E. Matelich 39 Director
James C. Pigott 59 Director
William A. Marquard 75 Director
RONALD H. DYKEHOUSE was named President of Americold
Corporation in May 1990 and Chairman of the Board and Chief
Executive Officer in June 1990. From 1989 to 1990, Mr. Dykehouse
was a private investor and consultant. From 1986 to 1989, he was
Executive Vice President and Chairman of the Food and Distribution
Groups of Amfac Inc., a diversified holding company. Mr. Dykehouse
is a past director of the National Frozen Foods Association and
past Chairman of the American Frozen Food Institute.
JOEL M. SMITH has been Senior Vice President and a director of
the Company since December 1986. Mr. Smith has been the Chief
Financial Officer of Americold since 1978 and a Vice President
since 1984. In April 1996, Mr. Smith was elected a director of the
IARW.
JOHN P. LENEVEU was named Executive Vice President, Operations
and Sales of Americold in July 1995. From July 1991 to 1995, he
was Senior Vice President, Operations and Sales. From 1988 to
1991, he was a management consultant with the Institute of
Management Resources, an international management consulting
company.
F. STANLEY SENA was named Executive Vice President,
Transportation and Distribution Logistics of the Company in July
1995. From August 1991 to 1995, he was Senior Vice President,
Administration and Technical Services of the Company. From 1986 to
1990, Mr. Sena was Vice President, Operations, Western Region, and
from 1990 to 1991, Mr. Sena was Vice President, Operations of the
Company. Since 1994, Mr. Sena has been a board member of the
International Frozen Food Association.
J. ROY COXE was named Senior Vice President, Logistics, of
Americold in December 1993. From 1991 to 1993, he was a management
consultant with A. T. Kearney, Inc., an international management
consulting company. Mr. Coxe was a vice president of Drake Sheahan
Stewart Dougall and successors, a logistics and transportation
consulting firm, from 1983 to 1991.
RONALD A. NICKERSON has been Vice President, Operations since
1990. From 1987 to 1990, Mr. Nickerson was Vice President,
Operations, Eastern Region, of the Company.
LON V. LENEVE was named Vice President in September 1992 and
has been Treasurer of Americold since July 1988. Mr. Leneve joined
Americold in 1982 and was Controller from 1984 to 1988.
FRANK EDELSTEIN was elected a director of the Company in 1986.
He is currently a consultant to both Kelso and the Gordon+Morris
Group, Inc., an investment banking firm. Mr. Edelstein joined
Kelso in 1987 and held the position of Vice President at Kelso
until 1992. Mr. Edelstein is also a director of Ceradyne, Inc.,
IHOP Corporation and Arkansas Best Corporation.
GEORGE E. MATELICH has been a director of the Company since
December 1986. Mr. Matelich joined Kelso in 1985 as an Associate,
served as a Vice President of Kelso from 1986 to 1990 and is
currently a Managing Director of Kelso.
JAMES C. PIGOTT was elected a director of Americold in June
1987. He is President of Pigott Enterprises, Inc., a private
investment company. Mr. Pigott has been Chairman of the Board and
Chief Executive Officer of Management Reports and Services, Inc.,
an accounting consulting firm since 1987. Mr. Pigott's other
business activities include membership on the Board of Directors of
PACCAR, Inc.
WILLIAM A. MARQUARD was elected a director of Americold in
June 1987. Mr. Marquard is a director of Treadco, Inc., Mosler,
Inc., Earle M. Jorgenson Holding Company, Inc., Earle M. Jorgenson
Company, Arkansas Best Corporation and Best Holding Corporation.
He is also a director of Kelso.
All directors hold office until the next annual meeting of
shareholders of the Company or until their successors have been
elected and qualified. The executive officers of the Company are
chosen by the Board and serve at its discretion.
For their services on the Board of Directors of the Company,
Messrs. Pigott, Marquard and Edelstein are paid $16,000 per year.
Mr. Pigott receives $1,000 per year as Chairman of the Company's
Audit Committee. Messrs. Pigott, Marquard and Edelstein also
receive $600 per meeting attended. Directors who are also officers
of the Company and Mr. Matelich do not receive additional
compensation as directors of the Company. Directors are reimbursed
for out-of-pocket expenses incurred in connection with attendance
at meetings.
The Compensation Committee for fiscal 1996 consisted of Mr.
Matelich, Mr. Marquard and Mr. Pigott. The Audit Committee for
fiscal 1996 consisted of Mr. Matelich, Mr. Edelstein and Mr.
Pigott.
On December 23, 1992, Kelso and its chief executive officer,
without admitting or denying the findings contained therein,
consented to an administrative order in respect of a Securities and
Exchange Commission (the "Commission") inquiry relating to the 1990
acquisition of a portfolio company by a Kelso affiliate. The order
found that Kelso's tender offer filing in connection with the
acquisition did not comply fully with the Commission's tender offer
reporting requirements, and required Kelso and the chief executive
officer to comply with these requirements in the future.
STOCKHOLDERS' AGREEMENT
- -----------------------
Certain of the Company's shareholders have agreed, pursuant to the
Stockholders' Agreement dated as of December 24, 1986 (as amended,
the "Stockholders' Agreement"), that prior to the occurrence of an
initial public offering of at least 25% of the outstanding shares
of common stock of the Company pursuant to an effective
registration statement under the Securities Act, or December 24,
1996, whichever is earlier, sales of shares of common stock by a
member of the Management Group are subject to a right of first
refusal granted to the Company. See "Principal Shareholders."
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
- --------------------------
The following table sets forth information as to the compensation
of the Chief Executive Officer and each of the other four most
highly compensated executive officers of the Company as of the last
day of February 1996 for services in all capacities to the Company
for the years ended the last day of February 1994, 1995 and 1996.
<TABLE>
<CAPTION>
Long-Term
Annual Compensation
Compensation Awards
--------------------------------------
- ------------- -------------------
Other Option/
Name and
Annual SARs
Principal Position Year Salary Bonus
Compensation<F1> No.
- -------------------- ---- ------ --------
------------ -----
<S> <C> <C> <C>
<C> <C>
Ronald H. Dykehouse 1996 $300,000 $213,432
$ - $ -
President, Chairman 1995 300,000 231,000
- -
& CEO 1994 300,000 66,608
- -
Joel M. Smith 1996 162,373 93,243
- -
Sr. Vice President 1995 159,120 98,654
- -
and CFO 1994 159,120 29,920
- -
John P. LeNeveu 1996 166,373 92,961
- -
Exec. Vice President, 1995 159,120 98,654
- -
Operations & Sales 1994 159,120 29,920
- 30,000
F. Stanley Sena 1996 160,667 89,773
- -
Exec. Vice President, 1995 150,320 93,403
- -
Transportation and 1994 140,712 26,459
- -
Distribution Logistics
J. Roy Coxe<F2> 1996 150,000 80,558
- -
Sr. Vice President, 1995 150,000 93,000
- -
Logistics 1994 30,192 23,250
- 30,000
</TABLE>
_______________
[FN]
<F1> Consists of the cost of relocation, the value of automobiles,
and other miscellaneous fringe benefits. For fiscal years
1994, 1995 and 1996, the amounts did not exceed the lesser of
$50,000 or 10% of the named executive officer's annual salary
and bonus.
<F2> Mr. Coxe's employment commenced December 20, 1993.
AGGREGATED OPTION TABLE
- -----------------------
The following table sets forth information as to the options held
by the Chief Executive Officer and each of the other four most
highly compensated executive officers of the Company through the
end of fiscal 1996.
<TABLE>
<CAPTION>
Number
of
Unexercised Value of
Options
at Unexercised
Fiscal
In-the-Money
Shares Year-End
Options at
Acquired on Value
Exercisable/ Fiscal
Name Exercise Realized
Unexercisable Year-End
- ---- ------------ -------- ---------
- ---- -----------
<S> <C> <C> <C>
<C>
Ronald H. Dykehouse 0 $ 0
100,000/0 $ 0
Joel M. Smith 0 0
8,278/0 0
John P. LeNeveu 0 0
12,000/18,000 0
F. Stanley Sena 0 0
8,279/0 0
J. Roy Coxe 0 0
12,000/18,000 0
</TABLE>
BENEFIT PLAN AND ARRANGEMENTS
- -----------------------------
MANAGEMENT INCENTIVE PLAN - The Company has a Management
Incentive Plan (the "MIP Plan") to provide additional compensation
to participants, including executive officers, upon the achievement
of certain financial objectives of the Company and individual
personal objectives of the participants. The MIP Plan is
administered by the Compensation Committee of the Board of
Directors (the "Compensation Committee") and is applicable to
management employees of Americold and, at the option of the
President of the Company, other employees of Americold. The
financial objective award is 50% of the total award and is based on
attainment of actual operating results as compared to financial
targets. The financial targets were established and approved by
the Company based upon the annual business plan. The personal
objective award is 50% of the total award and is based on
attainment of both quantifiable and nonquantifiable goals
established at the beginning of the MIP Plan year. Incentive
compensation earned under the MIP Plan is computed as soon as
possible after the close of the Company's fiscal year and payment
is generally made following approval by the Board unless a deferred
payment election has been filed with the Company in accordance with
the terms of the Plan.
The Board of Directors authorized the payment of approximately $1.6
million in total fiscal 1996 awards pursuant to the MIP Plan.
These awards were paid in May 1996. Incentive compensation earned
by the Company's executive officers for the fiscal year ended the
last day of February 1996 is included in the Bonus column in the
above Summary Compensation Table.
In addition to the MIP Plan, between March 1, 1991 and February 28,
1994, the Company had a Stock Incentive Plan, a long-term incentive
plan which was intended to provide additional financial incentives
to key employees, including executive officers of the Company.
RETIREMENT PLAN - Americold has a noncontributory defined
benefit retirement plan for salaried employees, including executive
officers (the "Retirement Plan"). The Retirement Plan provides
retirement benefits based on credited years of service and average
monthly compensation for the highest five calendar years of the
final 15 calendar years of employment or, if higher, the highest 60
consecutive months in the last 120 months of employment. A
participant's retirement benefits vest after the participant has
completed at least five years of Vesting Service.
The following table shows the approximate annual retirement
benefits payable to employees for life from normal retirement date
pursuant to the Retirement Plan before reduction for Social
Security payments. The actual retirement benefit to employees is
offset by Social Security benefits. Service credited under a
retirement plan of the Company's former owners will be recognized
by the Retirement Plan for purposes of determining the pension
benefits payable under the Retirement Plan.
Estimated years of credited service to date under the Retirement
Plan for the individuals named in the Summary Compensation Table
are as follows: Mr. Dykehouse, 5 years; Mr. Smith, 17 years; Mr.
LeNeveu, 4 years; Mr. Sena, 26 years; and Mr. Coxe, 2 years.
Estimated years of credited service at normal retirement date (age
65) under the Retirement Plan for the individuals named in the
Summary Compensation Table are as follows: Mr. Dykehouse, 16
years; Mr. Smith, 26 years; Mr. LeNeveu, 20 years; Mr. Sena, 45
years; and Mr. Coxe, 12 years.
Years of Service
-------------------------------------
Average Annualized
Compensation 20 30 40 50
- ------------------ -------- -------- -------- ------
$100,000 $ 30,000 $ 45,000 $ 60,000 $ 75,000
125,000 37,500 56,250 75,000 93,744
150,000 45,000 67,500 90,000 112,500
175,000 45,000 67,500 90,000 112,500
200,000 45,000 67,500 90,000 112,500
300,000 45,000 67,500 90,000 112,500
In addition to the above, certain individuals named in the Summary
Compensation Table are entitled to a benefit calculated by using
additional years of service credited under supplements to the
Retirement Plan. Years of credited service under the supplements
for the individuals named in the Summary Compensation Table as of
the last day of February 1996 are as follows: Mr. Dykehouse, 0
years; Mr. Smith, 5 years; Mr. LeNeveu, 0 years; Mr. Sena, 0 years;
and Mr. Coxe, 0 years. The annual amount to be received at normal
retirement date pursuant to the supplements is estimated to be as
follows: Mr. Dykehouse, $0 per annum; Mr. Smith, $5,906 per annum;
Mr. LeNeveu, $0 per annum; Mr. Sena, $0 per annum; and Mr. Coxe, $0
per annum.
A participant's retirement benefits (excluding any incremental
benefit earned under any supplement) under the Retirement Plan plus
50% of Social Security benefits may not exceed 60% of his
compensation at retirement after 40 years of service, subject to
maximum dollar limitations. See Note 8 of Notes to Consolidated
Financial Statements as of the last day of February 1995 and 1996.
EMPLOYEE STOCK OWNERSHIP PLAN - Americold established,
effective March 1, 1987, an Employee Stock Ownership Plan, as
amended January 1, 1994 (the "ESOP"), in which all qualifying
employees of the Company not covered by collective bargaining
arrangements are able to participate. It is contemplated that
contributions on an annual basis will not exceed 15% of the
aggregate total compensation of any participating employee. The
Company may contribute cash as well as or in lieu of its stock.
The consent of the Company's Board of Directors is required to
authorize any contribution by Americold to the ESOP. Contributions
are allocated among participants based on the ratio of each
participant's compensation to the total compensation of all such
participants, subject to certain limitations. The ESOP is intended
to provide retirement funds to participants in addition to present
pension benefits.
Benefits under the ESOP vest based upon years of service as
follows: 20% after three years of service, increased by 20% for
each of the next four years with a maximum of 100% after seven
years of service. A participant is 100% vested if employed by the
Company on or after his 65th birthday, or if the participant incurs
a total and permanent disability or dies while employed by the
Company. The ESOP has the right to repurchase previously
distributed shares from employees terminating their ESOP
participation, using funds obtained through cash contributions by
the Company. Participant forfeitures are allocated pro rata to
remaining participants.
Participants are eligible for distribution of their capital
accumulation in the ESOP at the normal retirement age of 65. The
distribution will be made in whole shares of the Company's stock,
cash or a combination of both, as determined by the Compensation
Committee, provided the participant has not elected to be paid in
stock.
Upon termination of the ESOP, the ESOP's trust will be maintained
until the capital accumulations of all participants have been
distributed.
Management anticipates recommending, and the Board of Directors
approving, at the Annual Meeting of Shareholders in June 1996 a
$750,000 ESOP contribution for fiscal 1996.
KEY EMPLOYEE STOCK OPTION PLAN - In 1987, Americold
established a Key Employee Stock Option Plan (the "Option Plan").
The Option Plan permits the issuance of nonstatutory options to
purchase up to 300,000 shares of common stock of the Company to
directors, officers and other key employees of the Company. Of
these, options to purchase up to 150,000 shares were reserved for
issuance to the Management Group and options to purchase the
remaining 150,000 shares are reserved for issuance to all eligible
employees (including the Management Group) of the Company.
An individual exercising options under the Option Plan must become
a party to the Stockholders' Agreement. The Option Plan is
administered by the Compensation Committee. The Compensation
Committee determines the recipients of options granted, the
exercise price and the number of shares of common stock subject to
each option. Options to purchase common stock are granted at a
price not less than 85% of the fair market value on the day that
the option is granted. The Board of Directors may amend the Option
Plan from time to time. The maximum term of each stock option is
ten years. Options become exercisable at such time or times as the
Compensation Committee may determine at the time of grant.
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 Compensation 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 extent 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 Compensation Committee shall be
final and binding upon the Company, the optionee and all other
interested persons.
In the event of (i) dissolution or liquidation of the Company, (ii)
a merger in which the Company is not the surviving corporation or
(iii) a share exchange pursuant to which the outstanding shares of
common stock of the Company are acquired by another corporation,
then either (a) the Compensation 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 (b) in lieu of such adjustment, the Board
shall provide a 30-day period immediately prior to such an 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 or the vesting
schedule provided for in any option agreement entered into pursuant
to the Option Plan and all options not exercised shall expire at
the end of the 30-day period.
Information with regard to the grant of options as of the last day
of February 1996 under the Plan follows:
Number of Shares
Subject to Exercise Number of Shares Expiration
Option Price Exercisable Date
- ---------- ------- ----------- ----------
89,656 $10.00 89,656 May 1998
100,000 $18.95 100,000 June 2000
30,000 $21.88 12,000 May 2003
30,000 $20.40 12,000 December 2003
No options were exercised during fiscal 1996. See Note 9 of Notes
to Consolidated Financial Statements as of the last day of February
1995 and 1996.
OTHER ARRANGEMENTS - In calendar 1995, the Board of Directors
authorized employment agreements for certain executive officers of
the Company.
On November 1, 1995, the Company entered into an employment
agreement with Mr. Dykehouse. The agreement expires on December
16, 1998 and may be extended for one-year periods by mutual
agreement. Pursuant to the agreement, Mr. Dykehouse agreed to
serve as Chairman of the Board, President and Chief Executive
Officer of the Company for a minimum base monthly salary of $25,000
and the right to participate in the MIP Plan (or any other senior
management incentive program offered by the Company) and receive
all customary employee benefits ("Benefits"). The agreement
provides that if during the term of the agreement Mr. Dykehouse is
terminated "without cause", as defined, the Company will pay his
base compensation through December 16, 1998, employ him as a
consultant at his base salary for 24 months beginning January 1,
1999 and provide to him all Benefits through the earlier of the
date he obtains other employment and December 16, 2006. The
Company is not required to make any such payments if the
termination is "for cause," as defined. Among other termination
provisions, the agreement provides that Mr. Dykehouse may terminate
the agreement with 30 days' written notice if such termination is
for "good reason" (as defined), and in such case, Mr. Dykehouse
will receive the same treatment as if he were terminated "without
cause." The employment agreement contains other customary terms
and conditions.
On August 1, 1995, the Company entered into two-year employment
agreements with Messrs. Smith, LeNeveu, Sena and Coxe. Each
employee agreed to serve in the position and at the minimum base
monthly salary as follows: Mr. Smith, Senior Vice President and
Chief Financial Officer, $13,666.66; Mr. LeNeveu, Executive Vice
President, $14,166.66; Mr. Sena, Executive Vice President,
$13,666.67; and Mr. Coxe, Senior Vice President, Logistics,
$12,500.00. The agreements provide, among other conditions, that
if during the term of the employment agreement the employee is
terminated "without cause," as defined, the Company will pay the
employee any unpaid base compensation, any benefits accrued to the
date of termination and, for 24 months, a monthly amount equal to
the last monthly salary amount received. The Company is not
required to make any such payment if the termination is "for
cause," as defined. The employee may terminate employment upon 30
days' written notice, and the Company will pay such employee an
amount equal to either 12 months' salary if such termination is
without "good reason," as defined, or 24 months' salary if such
termination is for "good reason." The employment agreements
contain other customary terms and conditions.
Concurrently with the entering into of the employment agreements,
Messrs. Dykehouse, Smith, LeNeveu, Sena and Coxe each also entered
into a covenant not to compete and consulting and non-disclosure
agreement with the Company. Under these agreements, each
individual has agreed not to compete with the Company during the
term of his employment with the Company, under the terms of an
employment contract or otherwise. Mr. Dykehouse has agreed not to
compete with the company for a period of 24 months following
termination of employment or until October 31, 2000, whichever is
earlier, while the other officers have agreed not to compete with
the Company (1) for a 24-month period following termination of his
employment or until July 31, 2000, whichever is earlier, if the
termination is "for cause," as defined in the employment agreement,
or (ii) for a 12-month period or until July 31, 2000, whichever is
earlier, if the employee terminates employment with or without
"good reason," as defined in the employment agreement. Subject to
certain exceptions, each individual has further agreed to be
available for employment as a consultant to the Company following
termination of employment.
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth information regarding the
beneficial ownership of common stock as of May 1, 1996 by (i) each
person known by the Company to own more than five percent of its
common stock, (ii) each director of the Company, (iii) each named
executive officer, (iv) all directors and officers as a group and
(v) the Management Group:
<TABLE>
<CAPTION>
Percent of
Number of Outstanding
Name and Address
Shares Shares
- ---------------- --
- ------- -----------
<S>
<C> <C>
KIA III-Americold, Inc., L.P.<F1>
2,000,000 40.6%
("KIA III")
c/o Kelso & Company
320 Park Avenue, 24th Floor
New York, NY 10022
Kelso Investment Associates II, L.P.<F1>
500,000 10.1%
("KIA II")
c/o Kelso & Company
320 Park Avenue, 24th Floor
New York, NY 10022
Kelso Equity Partners, L.P.<F1>
70,000 1.4%
("Kelso Equity")
c/o Kelso & Company
320 Park Avenue, 24th Floor
New York, NY 10022
Joseph S. Schuchert<F2>
2,593,600 52.6%
320 Park Avenue, 24th Floor
New York, NY 10022
Frank T. Nickell<F2>
2,593,600 52.6%
320 Park Avenue, 24th Floor
New York, NY 10022
George E. Matelich<F2>
2,593,600 52.6%
320 Park Avenue, 24th Floor
New York, NY 10022
Thomas R. Wall, IV<F2>
2,593,600 52.6%
320 Park Avenue, 24th Floor
New York, NY 10022
The Northwestern Mutual Life Insurance Company<F1>
500,000 10.1%
720 East Wisconsin Avenue
Milwaukee, WI 53202
New York Life Insurance Company<F1>
330,000 6.7%
51 Madison Avenue
New York, NY 10010
New York Life Insurance and Annuity Corporation<F1>
250,000 5.1%
51 Madison Avenue
New York, NY 10010
<PAGE>
Percent of
Number of Outstanding
Name and Address
Shares Shares
- ---------------- --
- ------- -----------
Ronald H. Dykehouse<F1><F3>
117,900 2.4%
7007 S. W. Cardinal Lane, Suite 135
Portland, Or 97224
Joel M. Smith<F1><F3>
38,278 0.8%
7007 S. W. Cardinal Lane, Suite 135
Portland, OR 97224
John P. LeNeveu <F3>
20,000 0.4%
7007 S. W. Cardinal Lane, Suite 135
Portland, OR 97224
F. Stanley Sena <F1><F3>
38,279 0.8%
7007 S. W. Cardinal Lane, Suite 135
Portland, OR 97224
J. Roy Coxe <F3>
12,000 0.2%
7007 S. W. Cardinal Lane, Suite 135
Portland, OR 97224
Frank Edelstein
-- --
The Gordon+Morris Group, Suite 1400
620 Newport Center Drive
Newport Beach, CA 92660
James C. Pigott
-- --
1405 - 42nd Avenue East
Seattle, WA 98112
William A. Marquard
-- --
Eaglestone Farm
2199 Maysville Road
Carlisle, KY 40311
All directors and officers as a group (11 persons)<F2><F3>
296,095 5.8%
Management Group (30) persons<F1><F3>
569,556 11.1%
</TABLE>
___________________
[FN]
<F1> These persons are party to the Stockholders' Agreement which
gives the Company a right of first refusal for shares of common
stock sold by these parties prior to an initial public offering of
at least 25% of the outstanding shares of common stock of the
Company. See Part II, Item 10, "Directors and Executive Officers
of the Registrant".
<F2> Messrs. Schuchert, Nickell, Matelich and Wall may be deemed
to share beneficial ownership of shares owned of record by KIA III,
KIA II, Kelso Equity and Kelso & Company (Kelso & Company owns
23,600 shares) by virtue of their status as the general partners of
Kelso Partners III, L.P. (the general partner of KIA III), Kelso
Partners II, L.P. (the general partner of KIA II), and Kelso Equity
and the controlling stockholders and officers of Kelso & Company.
Messrs. Schuchert, Nickell, Matelich and Wall share investment and
voting powers with respect to securities owned by the foregoing
entities. Messrs. Schuchert, Nickell, Matelich and Wall disclaim
beneficial ownership of such securities (other than the 23,600
shares owned by Kelso & Company).
<F3> Includes the following numbers of shares of common stock that
may be acquired within 60 days after May 1, 1996 through the
exercise of stock options granted pursuant to the Company's Option
Plan: 100,000 shares for Mr. Dykehouse; 8,278 shares for Mr.
Smith; 18,000 shares for Mr. LeNeveu; 8,279 shares for Mr. Sena;
12,000 shares for Mr. Coxe; 157,595 for all directors and officers
as a group; and 219,656 shares for the Management Group.
The shareholders of the Company listed above hold approximately 83%
of the voting power of the Company's common stock and are able to
elect all of the members of the Board of Directors and thereby
control the Company.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Subsequent to the end of fiscal 1996, in consideration for certain
assistance provided by Kelso in connection with the Prepackaged
Bankruptcy and the issuance of the 12.875% Senior Subordinated
Notes due 2008, the Company paid Kelso a financial advisory fee of
$500,000. Mr. Matelich and Mr. Marquard, directors of the Company,
are also directors of Kelso.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) The following documents are filed as part of this report.
1. FINANCIAL STATEMENTS PAGE
-------------------- ----
Reference is made to Part II, Item 8 30
for the listing of the required financial
statements filed with this report
2. FINANCIAL STATEMENT SCHEDULES
-----------------------------
Schedule II - Valuation and Qualifying 82
Accounts for years ended the last day of
February 1994, 1995 and 1996
All other schedules are omitted because they
are not applicable, or are not required, or
because the required information is included
in the Company's consolidated financial
statements as of the last day of February 1995
and 1996 or notes thereto.
3. EXHIBITS
--------
(2) Plan of Reorganization, dated April 14, 1995
(filed as Exhibit (2) to the Form 10-K, dated
May 30, 1995, for the fiscal year ended
February 28, 1995, and incorporated herein by
reference)
(3) Articles of Incorporation and Bylaws
(i) Second Restated Articles of Incorporation, as
amended (filed as Exhibit (3)(i) to the Form
10-Q, dated July 14, 1995, for the quarter
ended May 31, 1995, and incorporated herein by
reference)
(ii) Restated Bylaws, as amended (filed as Exhibit
(3)(ii) to the Form 10-K, dated May 30, 1995,
for the fiscal year ended February 28, 1995,
and incorporated herein by reference)
(4) Instruments defining the rights of security
holders, including indentures
(i) Articles IV, V and VI of the Second Restated
Articles of Incorporation as amended (see
Exhibit (3)(i))
(ii) Articles I, II, V, VII and X of the Restated
Bylaws as amended (see Exhibit (3)(ii))
(iii) Second Restated Stockholders' Agreement dated
as of December 24, 1986, as amended as of
April 15, 1987 and June 22, 1987 (filed as
Exhibit (4)(iv) to the Form 10-K, dated May
27, 1988, for the fiscal year ended February
29, 1988, and incorporated herein by
reference)
(iv) Third Amendment dated May 22, 1990 to
Stockholders' Agreement dated as of December
24, 1986, as amended as of June 22, 1987
(filed as Exhibit (4) to the Form 10-Q dated
July 12, 1990, for the quarter ended May 31,
1990, and incorporated herein by reference)
(v) Amended and Restated Indenture dated March 9,
1993, relating to the First Mortgage Bonds
(filed as Exhibit (4)(vi) to the Registration
Statement on Form S-1 (Registration No. 33-
53584) filed with the Commission on March 2,
1993, and incorporated herein by reference)
(vi) Stock Pledge Agreement dated as of February
28, 1989, between Registrant and The
Connecticut National Bank (filed as Exhibit
(19)(iii) to the Form 10-Q, dated October 14,
1992, for the quarter ended August 31, 1992,
and incorporated herein by reference)
(vii) Stock Pledge Agreement dated as of February
28, 1989 between Registrant and United States
National Bank of Oregon, acting as agent
pursuant to Article IX of the Credit
Agreement, as amended, dated as of April 30,
1987 (filed as Exhibit (19)(iv) to the Form
10-Q, dated October 14, 1992, for the quarter
ended August 31, 1992, and incorporated herein
by reference)
(viii) Form of Amended and Restated Security
Agreement relating to the First Mortgage Bonds
(filed as Exhibit (4)(xiv) to the Registration
Statement on Form S-1 (Registration No. 33-
53584) filed with the Commission on March 2,
1993, and incorporated herein by reference)
(ix) Form of Series A Bond (included as part of
Exhibit (4)(v))
(x) Form of Series B Bond (included as part of
Exhibit (4)(v))
(xi) Form of Amended and Restated Cash Collateral
Pledge Agreement relating to the First
Mortgage Bonds (filed as Exhibit (4)(xix) to
the Registration Statement on Form S-1
(Registration No. 33-53584) filed with the
Commission on March 2, 1993, and incorporated
herein by reference)
(xii) Form of Amended Stock Pledge Agreement
relating to the First Mortgage Bonds (filed as
Exhibit (4)(xx) to the Registration Statement
on Form S-1 (Registration No. 33-53584) filed
with the Commission on March 2, 1993, and
incorporated herein by reference)
(xiii) Form of Amended Mortgage, Assignment of Rents
and Security Agreement relating to the First
Mortgage Bonds (filed as Exhibit (4)(xxi) to
the Registration Statement on Form S-1
(Registration No. 33-53584) filed with the
Commission on March 2, 1993, and incorporated
herein by reference)
(xiv) First Supplemental Indenture relating to the
First Mortgage Bonds (filed as Exhibit 4.1 to
the Form 10-Q, dated July 14, 1995 for the
quarter ended May 31, 1995, and incorporated
herein by reference)
(xv) Indenture dated as of June 30, 1995 between
Registrant and United States Trust Company of
New York, as Trustee (filed as Exhibit 4.2 to
the Form 10-Q, dated July 14, 1995 for the
quarter ended May 31, 1995, and incorporated
herein by reference)
(xvi) Second Amended and Restated Investment
Agreement relating to the First Mortgage Bonds
(filed as Exhibit 4.3 to the Form 10-Q, dated
July 14, 1995 for the quarter ended May 31,
1995, and incorporated herein by reference)
(xvii) Form of 15% Senior Subordinated Debentures due
2007 (included as part of Exhibit 4(xv)
(xviii) Form of Indenture relating to the 12.875%
Senior Subordinated Notes due 2008, between
Registrant and Fleet Bank, as Trustee (filed
as Exhibit (4)(xviii) to the Registration
Statement on Form S-1 (Registration No. 333-
541) filed with the Commission on April 1,
1996, and incorporated herein by reference)
(xix) Form of 12.875% Senior Subordinated Notes due
2008 (included as part of Exhibit 4(xviii))
(xx) Fourth Amendment dated March 14, 1996 to
Stockholders Agreement dated as of December
24, 1986, as amended on April 15, 1987, June
22, 1987 and May 22, 1990
(10) Material Contracts
(i) Americold Corporation Key Employee Stock
Option Plan, as amended, effective July 12,
1988 (filed as Exhibit (4)(i) to the Form 10-Q
dated October 14, 1988, for the quarter ended
August 31, 1988, and incorporated herein by
reference)
(ii) Form of Nonstatutory Stock Option Agreement,
as amended, entered into between Registrant
and certain employees pursuant to the
Americold Corporation Key Employee Stock
Option Plan (filed as Exhibit (4)(ii) to the
Form 10-Q dated October 14, 1988, for the
quarter ended August 31, 1988, and
incorporated herein by reference)
(iii) Second Amended and Restated Investment
Agreement relating to the First Mortgage Bonds
(see Exhibit (4)(xvi))
(iv) Form of Amended and Restated Security
Agreement relating to the First Mortgage Bonds
(see Exhibit (4)(viii))
(v) Stock Pledge Agreement dated as of February
28, 1989, between Registrant and The
Connecticut National Bank (see Exhibit
(4)(vi))
(vi) Stock Pledge Agreement dated as of February
28, 1989, between Registrant and United States
National Bank of Oregon, a national banking
association, acting as agent pursuant to
Article IX of the Credit Agreement, as
amended, dated as of April 30, 1987 (see
Exhibit (4)(vii))
(vii) Americold Corporation Management Incentive
Plan (filed as Exhibit (10)(iii) to the Form
10-K, dated May 27, 1988, for the fiscal year
ended February 29, 1988, and incorporated
herein by reference)
(viii) Form of Indemnity Agreement entered into
between the Company and each of its officers
and directors (filed as Exhibit (4)(x) to Form
10-K dated May 29, 1992 for the fiscal year
ended February 29, 1992, and incorporated
herein by reference)
(ix) Second Restated Stockholders' Agreement, dated
as of December 24, 1986, as amended as of June
22, 1987 (see Exhibit (4)(iii))
(x) Third Amendment dated May 22, 1990 to
Stockholders' Agreement dated as of December
24, 1986, as amended as of June 22, 1987 (see
Exhibit (4)(iv))
(xi) Amended and Restated Indenture relating to the
First Mortgage Bonds (see Exhibit (4)(v))
(xii) Form of Amended and Restated Cash Collateral
Pledge Agreement relating to the First
Mortgage Bonds (see Exhibit (4)(xi))
(xiii) Form of Amended Stock Pledge Agreement
relating to the First Mortgage Bonds (see
Exhibit (4)(xii))
(xiv) Indemnification Agreement dated October 31,
1991 between the Company and The First Boston
Corporation (included as Exhibit (10)(xx) to
the Registration Statement on Form S-2
(Registration No. 33-41963) filed with the
Commission on July 31, 1991 and incorporated
herein by reference)
(xv) Master Lease Agreement dated February 28,
1989, between Registrant and Americold
Services Corporation (filed as Exhibit
(19)(vi) to the Form 10-Q, dated October 14,
1992, for the quarter ended August 31, 1992,
and incorporated herein by reference)
(xvi) Americold Stock Incentive Plan effective March
1, 1991 (filed as Exhibit(10)(xviii) to the
Form 10-K dated May 29, 1992 for the fiscal
year ended February 29, 1992, and incorporated
herein by reference)
(xvii) Americold Transportation Systems Purchase of
Joint Venture Interest, effective November 1,
1991, between Registrant and Superior
Transportation Systems, Inc. (filed as Exhibit
(19)(vii) to the Form 10-Q, dated October 14,
1992, for the quarter ended August 31, 1992,
and incorporated herein by reference)
(xviii) Lease dated May 15, 1992, between Registrant
and Oregon Warehouse Partners, a Texas general
partnership (lease agreement for Ontario,
Oregon facility) (filed as Exhibit (19)(viii)
to the Form 10-Q, dated October 14, 1992, for
the quarter ended August 31, 1992, and
incorporated herein by reference)
(xix) Form of First Amendment to Master Lease
Agreement between Registrant and Americold
Services Corporation (filed as Exhibit
(10)(xxxi) to the Registration Statement on
Form S-1 (Registration No. 33-53584) filed
with the Commission on March 2, 1993, and
incorporated hereby by reference)
(xx) Nonstatutory Stock Option Agreement dated May
19, 1993 between the Company and John P.
LeNeveu (filed as Exhibit (10)(i) to the Form
10-Q, dated January 13, 1994 for the quarter
ended November 30, 1993, and incorporated
herein by reference)
(xxi) Nonstatutory Stock Option Agreement dated
December 17, 1993 between the Company and J.
Roy Coxe (filed as Exhibit 10 (xxvii) to the
Form 10-K, dated May 26, 1994 for the fiscal
year ended February 28, 1994, and incorporated
herein by reference)
(xxii) Second Amended and Restated Credit Agreement
between the Company and United States National
Bank of Oregon dated June 19, 1995 (filed as
Exhibit 10.1 to the Form 10-Q, dated July 14,
1995 for the quarter ended May 31, 1995, and
incorporated herein by reference)
(xxiii) Employment Agreement dated November 1, 1995,
between the Company and Ronald H. Dykehouse
(filed as Exhibit 10.1 to the Form 10-Q dated
January 16, 1996 for the quarter ended
November 30, 1995, and incorporated herein by
reference)
(xxiv) Form of Employment Agreement dated August 1,
1995, between the Company and certain named
executive officers, and schedule thereto
(filed as Exhibit 10.2 to the Form 10-Q dated
January 16, 1996 for the quarter ended
November 30, 1995, and incorporated herein by
reference)
(xxv) Form of Covenant Not to Compete and Consulting
and Non-Disclosure Agreement between the
Company and certain named executive officers,
and schedule thereto (filed as Exhibit 10.3 to
the Form 10-Q dated January 16, 1996 for the
quarter ended November 30, 1995, and
incorporated herein by reference)
(xxvi) Fourth Amendment dated March 14, 1996 to
Stockholders' Agreement dated as of December
24, 1986, as amended on April 15, 1987, June
22, 1987 and May 20, 1990 (see Exhibit
(4)(xx))
(xxvii) First Amendment to Americold Corporation
Management Incentive Plan, amended as of April
24, 1996
(11) Statement regarding computation of per share
earnings
(21) Subsidiaries of the Registrant
(23) Consent of KPMG Peat Marwick LLP
(27) Financial Data Schedule
(b) Reports on Form 8-K
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Company has duly caused this
report to be signed on its behalf by the undersigned, thereunto
duly authorized.
AMERICOLD CORPORATION
By: /s/ Ronald H. Dykehouse By: /s/ Joel M. Smith
Ronald H. Dykehouse Joel M. Smith
Chairman of the Board, Senior Vice President and
President and Chief Chief Financial Officer
Executive Officer (Principal Financial Officer)
By: /s/ Thomas R. Ferreira
Thomas R. Ferreira
Corporate Controller
(Principal Accounting Officer)
Dated: May 28, 1996
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed by the following persons on
behalf of the Company and in the capacities and on the dates
indicated.
/s/ Ronald H. Dykehouse
- ------------------------------- May 28, 1996
Ronald H. Dykehouse, Director
/s/ Joel M. Smith
- ------------------------------- May 28, 1996
Joel M. Smith, Director
- ------------------------------- May , 1996
Frank Edelstein, Director
/s/ George E. Matelich
- ------------------------------- May 28, 1996
George E. Matelich, Director
/s/ James C. Pigott
- ------------------------------- May 22, 1996
James C. Pigott, Director
/s/ William A. Marquard
- ------------------------------- May 22, 1996
William A. Marquard, Director
<PAGE>
Supplemental Information to be Furnished With Reports Filed
Pursuant to Section 15(d) of the Act by Registrants Which Have Not
Registered Securities Pursuant to Section 12 of the Act.
No proxy statement with respect to any annual or other meeting of
security holders has been sent to security holders. The Company
does not solicit proxies.
<PAGE>
KPMG Peat Marwick LLP Telephone 503 221 6500
Suite 2000 Telefax 503 796 7650
1211 South West Fifth Avenue
Portland, OR 97204
INDEPENDENT AUDITORS' REPORT
----------------------------
The Board of Directors and Stockholders
Americold Corporation:
We have audited the consolidated balance sheets of Americold
Corporation as of the last day of February 1995 and 1996, and the
related consolidated statements of operations, common stockholders'
deficit and cash flows for each of the years in the three-year
period ended the last day of February 1996. These consolidated
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial
position of Americold Corporation as of the last day of February
1995 and 1996, and the results of their operations and their cash
flows for each of the years in the three-year period ended the last
day of February 1996, in conformity with generally accepted
accounting principles.
As discussed in the notes to the consolidated financial
statements, Americold Corporation adopted the provisions of the
Financial Accounting Standards Board's Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" and No.
106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions" during the year ended the last day of February 1994.
/s/ KPMG Peat Marwick LLP
Portland, Oregon
April 29, 1996
Member Firm of Klynveld Peat Marwick Goerdeler
AMERICOLD CORPORATION
Consolidated Balance Sheets
Last day of February 1995 and 1996
(In Thousands, Except Share Data)
<TABLE>
<CAPTION>
Assets
1995 1996
------
---- ----
<S>
<C> <C>
Current assets:
Cash and cash equivalents
$ 33,163 $ 20,857
Trade receivables, less allowance for doubtful accounts
of $313 and $218, respectively (note 7)
20,510 25,461
Other receivables
2,105 3,512
Prepaid expenses
5,240 4,286
Tax refund receivable
279 3,336
Other current assets
695 845
--------- -------
Total current assets
61,992 58,297
Net property, plant and equipment (notes 2, 4 and 7)
367,248 375,851
Cost in excess of net assets acquired, less accumulated
amortization of $19,765 and $22,138, respectively
80,028 77,255
Debt issuance costs, less accumulated amortization
of $6,803 and $3,987, respectively (notes 7 and 12)
8,953 6,627
Other noncurrent assets (note 3)
26,374 8,962
-------- --------
$ 544,595 $ 526,992
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
Liabilities, Preferred Stock and Common Stockholders' Deficit
1995 1996
-------------------------------------------------------------
---- ----
<S>
<C> <C>
Current liabilities:
Accounts payable
$ 6,741 $ 11,363
Accrued interest
17,683 19,056
Accrued expenses (note 5)
11,345 11,604
Deferred revenue
5,914 5,707
Current maturities of long-term debt (note 7)
31,315 2,732
Other current liabilities (note 6)
3,912 4,630
--------- ---------
Total current liabilities
76,910 55,092
Long-term debt, less current maturities (notes 7 and 16)
442,912 461,667
Deferred income taxes (note 11)
106,098 102,041
Other noncurrent liabilities (note 8)
10,633 9,861
--------- ---------
Total liabilities
636,553 628,661
--------- ---------
Preferred stock, Series A, $100 par value. Authorized 1,000,000
shares; issued and outstanding 52,936 shares (note 10)
5,789 5,771
--------- ---------
Common stockholders' deficit (notes 7, 8 and 9):
Common stock, $.01 par value. Authorized 10,000,000 shares;
issued
and outstanding 4,860,934 and 4,931,194 shares, respectively
49 49
Additional paid-in capital
49,022 50,173
Retained deficit
(146,775) (157,345)
Adjustment for minimum pension liability
(43) (317)
--------- ---------
Total common stockholders' deficit
(97,747) (107,440)
Commitments and contingencies (notes 4, 7, 8 and 16)
--------- ---------
Total liabilities, preferred stock and common stockholders'
deficit $ 544,595 $ 526,992
========= =========
</TABLE>
<PAGE>
AMERICOLD CORPORATION
Consolidated Statements of Operations
Years ended last day of February 1994, 1995 and 1996
(In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ----
<S>
<C> <C> <C>
Net sales
$ 198,887 $ 215,207 $ 279,788
--------- --------- ---------
Operating expenses:
Cost of sales
126,273 138,132 194,936
Amortization of cost in excess of net assets acquired
2,531 2,535 2,773
Selling and administrative expenses
27,090 25,955 28,525
Employee stock ownership plan expense (notes 8 and 10)
- 750 750
--------- --------- ---------
Total operating expenses
155,894 167,372 226,984
--------- --------- ---------
Gross operating margin
42,993 47,835 52,804
--------- --------- ---------
Other income (expense):
Interest income
757 1,870 1,199
Interest expense
(55,403) (55,344) (56,610)
Amortization of debt issuance costs
(1,249) (1,276) (964)
Gain on insurance settlement (note 14)
- 16,953 -
Reorganization expenses (note 15)
- - (7,344)
Other, net
680 753 (591)
--------- --------- ---------
Total other expense
(55,215) (37,044) (64,310)
--------- --------- ---------
Income (loss) before income taxes, extraordinary item
and cumulative effect of accounting principle change
(12,222) 10,791 (11,506)
Provision (benefit) for income taxes (note 11)
(1,183) 5,227 (3,426)
--------- --------- ---------
Income (loss) before extraordinary item and cumulative
effect of accounting principle changes
(11,039) 5,564 (8,080)
Extraordinary item, net of income tax benefit of $1,192 and
$1,158, respectively (note 12)
(1,848) - (1,794)
Cumulative effect on prior years of accounting principle changes
for:
Income taxes (note 11)
(61,833) - -
Postretirement benefits other than pensions, net of income tax
benefit of $1,490 (note 8)
(2,401) - -
--------- --------- ---------
Net income (loss)
$ (77,121) $ 5,564 $ (9,874)
========= ========= =========
Income (loss) per share:
Income (loss) before extraordinary item and cumulative effect of
accounting principle changes
$ (2.39) $ 1.00 $ (1.76)
Extraordinary item
(.38) - (.37)
Cumulative effect of accounting principle changes:
Income taxes
(12.74) - -
Postretirement benefits other than pensions
(.49) - -
--------- --------- ---------
Net income (loss) per common share
$ (16.00) $ 1.00 $ (2.13)
========= ========= =========
Weighted average number of shares outstanding
4,855 4,864 4,867
========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
AMERICOLD CORPORATION
Consolidated Statements of Common Stockholders' Deficit
Years ended last day of February 1994, 1995 and 1996
(In Thousands, Except Share Data)
<TABLE>
<CAPTION>
Adjustment
for
Additional
minimum Total common
Common paid-in
Retained pension stockholders'
stock capital
deficit liability deficit
----- -------
------- --------- -------
<S> <C> <C>
<C> <C> <C>
Balance last day of February 1993 $ 49 $ 48,762
$ (73,957) $ (29) $ (25,175)
Issuance of common stock (13,333 shares) - 320
- - 320
13.25% preferred stock dividend - -
(194) - (194)
Undeclared cumulative preferred stock dividend - -
(381) - (381)
Adjustment for minimum pension liability - -
- (26) (26)
Net loss - -
(77,121) - (77,121)
-------- --------
-------- -------- --------
Balance last day of February 1994 49 49,082
(151,653) (55) (102,577)
Purchase of common stock (3,065 shares) -
(60) - - (60)
11.5% preferred stock dividend - -
(190) - (190)
Undeclared cumulative preferred stock dividend - -
(496) - (496)
Adjustment for minimum pension liability - -
- 12 12
Net income - -
5,564 - 5,564
-------- --------
-------- -------- --------
Balance last day of February 1995 49 49,022
(146,775) (43) (97,747)
Issuance of common stock (26,685 shares) - 436
- - 436
13.5% preferred stock dividend - 715
(219) - 496
Undeclared cumulative preferred stock dividend - -
(477) - (477)
Adjustment for minimum pension liability - -
- (274) (274)
Net loss - -
(9,874) - (9,874)
-------- --------
-------- -------- --------
Balance last day of February 1996 $ 49 $ 50,173
$(157,345) $ (317) $(107,440)
======== ========
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
AMERICOLD CORPORATION
Consolidated Statements of Cash Flows
Years ended last day of February 1994, 1995 and 1996
(In Thousands)
<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ----
<S>
<C> <C> <C>
Cash flows from operating activities:
Net income (loss)
$ (77,121) $ 5,564 $ (9,874)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation
19,938 20,140 19,682
Amortization of cost in excess of net assets acquired
2,531 2,535 2,773
Amortization of debt issuance costs
1,249 1,276 964
Amortization of original issue discount
1,205 1,369 430
Gain (loss) on sale of assets
8 (286) (555)
Gain on insurance settlement
- (16,953) -
Gain on termination of capital lease
(514) - -
Other amortization
408 302 570
Employee stock ownership plan expense
320 - -
Cumulative effect of accounting principle changes
64,234 - -
Write-off of unamortized issuance costs
3,040 - 962
Write-off of original issuance discount
- - 1,989
Write-off of long-term investment
- - 750
Change in assets and liabilities:
Receivables
(336) (6,952) (6,358)
Prepaid expenses
(1,067) (1,268) 954
Tax refund receivable
93 1,012 (3,057)
Other current assets
165 (67) (150)
Accounts payable
(890) 1,291 4,622
Accrued interest
7,166 349 1,373
Accrued expenses
(458) 3,833 259
Deferred revenue
(443) 1,142 (207)
Other current liabilities
906 (1,032) 718
Deferred income taxes
(1,375) 1,540 (4,057)
Other noncurrent liabilities
(583) (1,111) 772
-------- -------- --------
Net cash provided by operating activities
18,476 12,684 12,560
-------- -------- --------
See accompanying notes to consolidated financial statements.<PAGE>
AMERICOLD CORPORATION
Consolidated Statements of Cash Flows, Continued
(In Thousands)
1994 1995 1996
---- ---- ----
<S>
<C> <C> <C>
Cash flows from investing activities:
Proceeds from sale of assets
$ 26 $ 1,105 $ 6,169
Expenditures for property, plant and equipment
(8,925) (13,203) (34,183)
Purchase of long-term investment
(1,000) (447) -
Proceeds from insurance policies
- 26,343 -
Expenditures for logistics software
- (1,650) (230)
Other items, net
(994) 287 646
--------- -------- ---------
Net cash provided (used) by investing activities
(10,893) 12,435 (27,598)
--------- -------- ---------
Cash flows from financing activities:
Net repayments under credit agreement
(8,583) - -
Principal payments under capital lease and other
debt obligations
(2,496) (2,087) (2,752)
Proceeds from mortgage
- 13,475 -
Payoff of note
- (9,044) -
Net proceeds, excluding escrow amounts, from
sale of mortgage bonds
150,000 - -
Retirement of mortgage bonds
(150,000) - (10,000)
Release of escrow funds
5,809 2,714 20,083
Deposit of escrow funds
- - (4,768)
Debt issuance costs
(870) (846) (269)
Purchase of treasury stock
- (60) -
Issuance of stock
- - 438
--------- --------- ---------
Net cash provided (used) by financing
activities
(6,140) 4,152 2,732
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents
1,443 29,271 (12,306)
Cash and cash equivalents at beginning of year
2,449 3,892 33,163
--------- --------- ---------
Cash and cash equivalents at end of year
$ 3,892 $ 33,163 $ 20,857
========= ========= =========
Supplemental disclosure of cash flow information:
Cash paid during the year for interest, net of
amounts capitalized
$ 47,031 $ 53,626 $ 54,806
Cash paid during the year for income taxes
491 2,675 2,531
Supplemental schedule of noncash investing and
financing activities:
Capital lease obligations incurred to lease new
equipment
954 1,120 844
Net book value of assets included in other receivables
3,623 - -
Bond proceeds placed in escrow, net of debt issuance
costs of $3,966
22,284 - -
Sale proceeds placed in escrow
- 1,483 450
Exchange of senior subordinated debentures
- - 115,000
</TABLE>
<PAGE>
AMERICOLD CORPORATION
Notes to Consolidated Financial Statements
Last day of February 1995 and 1996
(1) Summary of Significant Accounting Policies
------------------------------------------
Accounting policies and methods of their application that
significantly affect the determination of financial position,
cash flows and results of operations are as follows:
(a) Business Description
--------------------
Americold Corporation (the "Company") 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 has a wholly-owned warehousing subsidiary,
Americold Services Corporation.
In addition, the Company operates a limestone quarry. This
business is not significant to the Company as a whole and is
not required to be reported as a separate industry segment.
(b) Principles of Consolidation
---------------------------
The consolidated financial statements include the accounts of
Americold Corporation and its wholly-owned subsidiary. All
significant intercompany transactions, profits and balances
have been eliminated.
(c) Property, Plant and Equipment
-----------------------------
Property, plant and equipment are stated at cost.
Depreciation is generally provided on the straight-line method
over the estimated useful lives of the respective assets
ranging from 3 to 45 years for financial reporting purposes
and on accelerated methods for income tax purposes where
possible. Property held under capital leases (at capitalized
value) is amortized on the straight-line method over its
estimated useful life, limited generally by the lease period.
The amortization of the property held under capital leases is
included with depreciation expense. Estimated remaining
useful lives are reviewed periodically for reasonableness and
any necessary change is generally effected at the beginning of
the accounting period in which the revision is adopted.
Maintenance and repairs are expensed in the year incurred;
major renewals and betterments of equipment and refrigeration
facilities are capitalized and depreciated over the remaining
life of the asset.
(d) Cost in Excess of Net Assets Acquired
-------------------------------------
On December 24, 1986, all the outstanding capital stock of the
Company was acquired by a private group consisting of
affiliates of Kelso & Company, Inc., certain institutional
investors and certain key employees and members of the
Company's management. The acquisition of the Company was
accounted for as a purchase. An allocation of the purchase
price was made to the acquired assets and liabilities based on
their estimated fair market values at the date of acquisition.
The unallocated purchase price is the Company's estimate of
goodwill associated with the acquisition and is being
amortized using the straight-line method over a period of 40
years.
On March 1, 1990, the Company acquired the warehousing
business of an unrelated third party. The goodwill associated
with the acquisition was being amortized using the straight-
line method over a period of 15 years. On October 1, 1995,
the Company returned the warehousing business acquired to the
seller. The Company expensed the remaining unamortized
goodwill.
The Company assesses the recoverability of the goodwill by
determining whether the amortization of the goodwill balance
over its remaining useful life can be recovered through
projected undiscounted future net income. The amount of
goodwill impairment, if any, is measured based on projected
discounted future net income using a discount rate reflecting
the Company's current average cost of funds.
(e) Debt Issuance Costs
-------------------
Debt issuance costs incurred are amortized over the term of
the related debt.
(f) Income Taxes
------------
Income taxes are computed using the asset and liability
method. Under the asset and liability method, deferred income
tax assets and liabilities are determined based on the
differences between the financial reporting and tax bases of
assets and liabilities and are measured using the currently
enacted tax rates and laws.
(g) Management Estimates and Assumptions
------------------------------------
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates.
(h) Revenue Recognition
-------------------
The Company's revenues are primarily derived from services
provided to customers in both handling and storing frozen
products and from freight services. Handling and storage
revenue is based primarily upon the total weight of frozen
product received into and held in storage and is recognized as
earned, not as billed. Differences between revenue earned and
revenue billed are recorded as deferred revenue.
Approximately 50% of the handling revenue is deferred until
the customer's products are released. The freight services
revenues and direct costs are recognized upon delivery of
freight.
(i) Income (Loss) Per Share
-----------------------
Income (loss) per common share is computed by dividing net
income (loss) less preferred dividend requirements, by the
weighted average of common shares outstanding.
(j) Major Customers
---------------
Consolidated net sales to H. J. Heinz Company and subsidiaries
amounted to approximately $35.8 million, $45.5 million and
$108.1 million in the years ended the last day of February
1994, 1995 and 1996, respectively. No other customer
accounted for 10% or more of consolidated net sales.
(k) Cash and Cash Equivalents
-------------------------
All highly liquid investments with a maturity of three months
or less when purchased are considered to be cash equivalents.
There were cash equivalents of $25.2 million and $15.4 million
as of the last day of February 1995 and 1996, respectively.
(l) New Accounting Standard
-----------------------
The Company has not implemented the requirements of Financial
Accounting Standard 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,"
although it will be required to do so for fiscal years
beginning March 1, 1996 and thereafter. 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. At this time, the Company does not believe there
will be an impairment loss to report.
The Company has not implemented the requirements of Financial
Accounting Standards Board Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation"
("SFAS No. 123"), although it will be required to do so for
fiscal years beginning March 1, 1996 and thereafter. 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 not
implemented SFAS No. 123 nor has it determined whether to
elect to continue using APB No. 25 and make the necessary SFAS
No. 123 pro forma disclosures.
(2) Net Property, Plant and Equipment
---------------------------------
Net property, plant and equipment consists of the following
(in thousands):
Last day
of February
-----------
1995 1996
---- ----
Land $ 31,087 $ 31,911
Refrigerated facilities, buildings
and land improvements 433,667 450,402
Machinery and equipment 59,300 67,661
------- -------
524,054 549,974
Less accumulated depreciation 156,806 174,123
------- -------
Net property, plant and equipment $367,248 $375,851
======= =======
(3) Other Noncurrent Assets
-----------------------
Other noncurrent assets consist of the following (in
thousands):
Last day
of February
-----------
1995 1996
---- ----
Restricted funds held by trustee
(note 7) $ 20,669 $ 5,037
Real estate owned 300 300
Security deposits 393 261
Other 5,012 3,364
------- -------
$ 26,374 $ 8,962
======= =======
(4) Leases
------
Assets under capital leases are included in net property,
plant and equipment and consist of the following (in
thousands):
Last day
of February
-----------
1995 1996
---- ----
Land, refrigerated facilities,
buildings and land improvements $ 7,140 $ 7,075
Machinery and equipment 4,249 4,635
------- -------
11,389 11,710
Less accumulated depreciation 3,575 4,108
------- -------
$ 7,814 $ 7,602
======= =======
Future minimum lease payments under noncancelable leases for
years ended after the last day of February 1996 are as follows
(in thousands):
Year ending the last Capital Operating
day of February leases leases
-------------------- ------- ---------
1997 $ 1,726 $ 4,840
1998 3,957 4,266
1999 710 3,464
2000 538 2,380
2001 485 1,303
Thereafter 1,050 7,677
------- -------
Total minimum lease payments $ 8,466 $ 23,930
=======
Less amounts representing
interest 1,746
-------
Present value of net minimum
lease payments $ 6,720
=======
Included in expenses for the years ended the last day of February
1994, 1995 and 1996 are approximately $9.1 million, $9.5 million
and $7.7 million, respectively, of rental expense net of sublease
rentals for operating leases.
The Company has arranged for up to $25.0 million in lease financing
of which approximately $5.6 million was used as of the last day of
February 1996.
(5) Accrued Expenses
----------------
Accrued expenses consist of the following (in thousands):
Last day
of February
-----------
1995 1996
---- ----
Accrued payroll $ 4,226 $ 3,565
Accrued vacation pay 2,504 2,462
Accrued taxes 1,043 1,022
Accrued employee stock ownership
plan contribution 750 750
Other 2,822 3,805
------- --------
Total accrued expenses $ 11,345 $ 11,604
======== =======
(6) Other Current Liabilities
-------------------------
Other current liabilities consist of the following (in
thousands):
Last day
of February
-----------
1995 1996
---- ----
Workers' compensation $ 1,227 $ 991
Pension 10 1,100
Other 2,675 2,539
-------- -------
$ 3,912 $ 4,630
======== =======
(7) Long-term Debt
--------------
Long-term debt consists of the following (in thousands) (see
note 16):
Last day
of February
-----------
1995 1996
---- ----
Capital lease obligations (9.5% and
9.3% weighted average interest
rate, respectively) $ 7,455 $ 6,720
Senior subordinated debentures - 11%
fixed, due May 1, 1997 112,581 -
Senior subordinated debentures - 15%
fixed, due May 1, 2007 - 115,000
First mortgage bonds, Series A - 11.45%
fixed, due June 30, 2002, interest
payments only to January 1, 1999 with
principal amortization commencing
July 1, 1999 150,000 140,000
First mortgage bonds, Series B - 11.5%
fixed, due March 1, 2005, interest
payments only to September 1, 2003
with a mandatory sinking fund payment
of $88,125 on March 1, 2004 176,250 176,250
Mortgage notes payable - various
interest rates ranging from 9.0% to
13.6% requiring monthly principal and
interest payments with maturities
ranging from 2004 to 2017 27,941 26,429
------- -------
Total long-term debt 474,227 464,399
Less current maturities of long-term
debt 31,315 2,732
------- -------
Total long-term debt, less
current maturities $ 442,912 $ 461,667
======== ========
<PAGE>
On July 2, 1987, the Company sold $300 million in first
mortgage bonds. On March 9, 1993, the Company sold $176.25
million of the Company's 11.5% First Mortgage Bonds, Series B,
due March 1, 2005. The Company used $150 million of the
proceeds from the sale of the Series B bonds to purchase at
par $150 million of outstanding first mortgage bonds. The
remaining $150 million of such first mortgage bonds have been
redesignated Series A First Mortgage Bonds (together with the
Series B First Mortgage Bonds, the "First Mortgage Bonds).
The remaining net proceeds of approximately $22.3 million were
placed in escrow with the Mortgage Bond Trustee (note 3). The
bonds are secured by mortgages or deeds of trust on 32 of the
Company's facilities.
On June 30, 1995, the Company exchanged the 11% Senior
Subordinated Debentures due 1997 for 15% Senior Subordinated
Debentures due 2008, repurchased $10.0 million of its 11.45%
Series A First Mortgage Bonds due 2002, and extended its
existing credit agreement with its principal bank (note 15).
The available amount under the bank credit agreement was $21.2
million as of the last day of February 1996, of which $7.2
million of letters of credit were outstanding. No cash
borrowings were outstanding.
The Company entered into an investment agreement in connection
with the issuance of the First Mortgage Bonds which, like the
bank credit agreement, requires the Company to meet certain
affirmative and restrictive covenants. Significant
restrictive items include, among others, limitations on
additional indebtedness, liens, dividends, capital
expenditures, asset dispositions, lease commitments and
investments. Also, certain "pro forma debt service" ratios,
net worth levels and senior debt to net worth ratios must be
maintained. The Company was in compliance with the covenants.
As of the last day of February 1996, aggregate annual
maturities of long-term debt are as follows (in thousands):
Year ended the last
day of February
-------------------
1997 $ 2,732
1998 5,310
1999 2,537
2000 32,635
2001 38,840
Thereafter 382,345
-------
$ 464,399
========
(8) Employee Benefit Plans
----------------------
(a) Defined Benefit Pension Plans
-----------------------------
The Company has defined benefit pension plans which cover
substantially all employees other than union employees covered
by union pension plans under collective bargaining agreements.
Benefits under these plans are based on years of credited
service and compensation during the years preceding retirement
or on years of credited service and established monthly
benefit levels.
Pension expense for all plans, including plans jointly
administered by industry and union representatives totaled
$1.4 million, $1.4 million and $1.7 million for years ended
the last day of February 1994, 1995 and 1996, respectively.
Actuarial valuations for defined benefit plans are performed
as of the end of the plan year. The most recent actuarial
valuations are as of the last day of February 1996.
The funded status of the Company's defined benefit pension
plans and the accrued pension expense amounts recognized in
the Company's consolidated financial statements, within other
noncurrent liabilities, as of the last day of February 1995
and 1996 are as follows (in thousands):
<TABLE>
<CAPTION>
Last day of
Last day of
February 1995
February 1996
---------------------
- ------ --------------------------
Plans with Plans
with Plans with Plans with
assets in
accumulated assets in accumulated
excess of
benefits in excess of benefits in
accumulated
excess of accumulated excess of
benefits
assets benefits assets
-------- ---
- --- -------- ------
<S> <C> <C>
<C> <C>
Actuarial present value of benefit
obligations:
Accumulated benefit obligations:
Vested benefits $ 18,025 $
6,000 $ 19,902 $ 7,382
Nonvested benefits 150
286 220 128
-------- -----
- --- -------- --------
18,175
6,286 20,122 7,510
Effect of assumed future
compensation increases 2,616
- 3,808 -
-------- -----
- --- -------- --------
Projected benefit obligations
for services rendered to date 20,791
6,286 23,930 7,510
Plan assets at fair value 18,489
5,636 20,644 6,005
-------- -----
- --- -------- --------
Projected benefit obligations in excess
of (less than) plan assets 2,302
650 3,286 1,505
Unrecognized prior service cost (153)
(50) (119) (108)
Unrecognized net gain (loss) from past
experience different from that assumed
and effects of changes in assumptions 1,915
212 1,323 (317)
-------- -----
- --- -------- --------
Accrued pension liability $ 4,064 $
812 $ 4,490 $ 1,080
========
======== ========= =========
</TABLE>
Net periodic pension expense for the years ended the last day
of February 1994, 1995 and 1996 includes the following
components (in thousands):
Last day of February
1994 1995 1996
---- ---- ----
Service cost - benefits earned
during the period $ 1,013 $ 1,107 $ 1,165
Interest cost on projected
benefit obligation 2,094 2,121 2,293
Actual return on plan assets (2,202) (2,554) (4,301)
Net amortization and deferral (233) (143) 1,541
-------- -------- --------
Net periodic pension
expense $ 672 $ 531 $ 698
======== ======== ========
Actuarial assumptions used for determining pension liabilities
were:
Last day of February
1994 1995 1996
---- ---- ----
Discount rate for interest
cost 8.0% 8.5% 8.0%
Rate of increase in future
compensation levels 4.0% 4.0% 4.0%
Expected long-term rate of
return on plan assets 10.5% 10.5% 10.5%
Plan assets are assigned to several investment management
companies and are invested in various equity and fixed fund
investments in accordance with the Company's investment
policy.
(b) Employee Stock Ownership Plan
-----------------------------
The Company established an employee stock ownership plan,
effective March 1, 1987, which is intended to provide
qualifying employees an equity interest in the Company, as
well as potential retirement benefits. The trust established
under the plan is designed to invest primarily in the
Company's stock. Contributions by the Company, in the form of
common or preferred stock of the Company, or cash, or a
combination thereof, may be made to the trustee on behalf of
eligible participants for each plan year as determined by the
Company's Board of Directors. Participating employees with
vested benefits, upon retirement or termination, have the
option of retaining the stock or selling it back to the
Company at its fair market value.
(c) Postretirement Benefits Other Than Pensions
-------------------------------------------
In addition to providing retirement benefits, the Company
provides certain health care and life insurance benefits for
retired employees. These benefits are provided to
substantially all employees other than certain union employees
who have elected not to participate.
Effective March 1, 1993, the Company adopted Financial
Accounting Standards Board Statement of Financial Accounting
No. 106 (Statement 106), which required that the expected cost
of providing such benefits be accrued over the years that the
employee renders service, in a manner similar to the
accounting for pension benefits. As permitted under Statement
106, the Company elected to recognize this change in
accounting principle on the immediate recognition basis. The
cumulative effect as of March 1, 1993 of adopting the standard
resulted in a decrease in deferred taxes of approximately $1.5
million, an increase in accrued postretirement benefits of
approximately $3.9 million, and a one-time non-cash charge to
fiscal 1994 earnings of approximately $2.4 million.
The total of accumulated postretirement benefits obligation
(APBO), which is an unfunded obligation, is as follows:
Last day of February
1994 1995 1996
---- ---- ----
Retirees $ 2,339 $ 2,314 $ 2,375
Active employees 1,573 1,511 1,832
-------- -------- --------
Total APBO $ 3,912 $ 3,825 $ 4,207
======== ======== ========
The components of net periodic postretirement expense for the
year ended the last day of February are as follows (in
thousands):
1994 1995 1996
---- ---- ----
Service cost benefits earned
in period $ 90 $ 104 $ 114
Interest cost on APBO 329 313 334
Amortization of unamortized
prior service cost - (22) (22)
------- ------- -------
$ 419 $ 395 $ 426
======= ======= =======
The discount rate used to determine the APBO and net periodic
expense as of February 28, 1994 was 8.5%, as of February 28,
1995 was 9%, and as of February 29, 1996 was 8.5%.
For fiscal 1996, an 11.0% increase in the medical cost trend
rate was assumed. This rate is projected to decrease
incrementally to 5.5% after nine years. A 1% increase in the
medical trend rate would increase the APBO by $.1 million and
increase the net periodic expense by a negligible amount.
9. Common Stockholders' Equity
---------------------------
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
February 1996 follows:
Number of Shares Exercise Number of Shares Expiration
Subject to Option Price Exercisable Date
----------------- ----- ----------- ----
89,656 $10.00 89,656 May 1998
100,000 $18.95 100,000 June 2000
30,000 $21.88 12,000 May 2003
30,000 $20.40 12,000 December 2003
No options had been exercised as of the last day of February
1996.
10. Preferred Stock
---------------
The Company has contributed shares of its Series A, variable
rate, cumulative preferred stock to the Americold Employee
Stock Ownership Plan (ESOP). The preferred stock is
redeemable by participants of the plan (note 8). As of the
last day of February 1995 and 1996, dividends not declared on
the Company's cumulative preferred stock total approximately
$496,000 and $477,000, respectively.
11. Income Taxes
------------
Effective March 1, 1993, the Company adopted Financial
Accounting Standards Board Statement of Financial Accounting
Standards No. 109 (Statement 109) which required a change in
the method of providing for income taxes. As permitted under
Statement 109, the Company elected to recognize this change in
accounting principle on the immediate recognition basis. The
cumulative effects as of March 1, 1993 of adopting Statement
109 were an increase in net fixed assets of approximately
$31.2 million (the amount of a previous write-down of assets
under APB No. 16 as a result of the purchase of the Company in
December 1986, net of subsequent depreciation), an increase in
deferred income taxes of $93 million, and a one-time, non-cash
charge of approximately $61.8 million in fiscal 1994.
The provision (benefit) for income taxes consists of the
following (in thousands):
1994 1995 1996
---- ---- ----
Federal:
Current $ 500 $ 2,867 $ -
Deferred (1,557) 1,494 (2,858)
-------- -------- --------
(1,057) 4,361 (2,858)
-------- -------- --------
State:
Current 68 820 -
Deferred (194) 46 (568)
-------- -------- --------
$ (1,183) $ 5,227 $ (3,426)
======== ======== ========
Following is a reconciliation of the difference between income
taxes computed at the federal statutory rate and the provision
for income taxes (in thousands):
1994 1995 1996
---- ---- ----
Computed income tax expense
(benefit) at federal
statutory rate $ (4,278) $ 3,777 $ (4,027)
State and local income taxes,
net of federal income tax
benefits (418) 563 (369)
Adjustment to deferred tax
assets and liabilities for
changes in enacted rates 2,627 - -
Amortization of cost in
excess of net assets
acquired 886 887 970
-------- -------- --------
Provision (benefit) for
income taxes $ (1,183) $ 5,227 $ (3,426)
======== ======== ========
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the related
amounts used for income tax purposes. Significant components
of the Company's deferred tax liabilities as of the last day
of February 1995 and 1996 are as follows (in thousands):
1995 1996
---- ----
Deferred tax liabilities:
Property, plant and equipment, due to
differences in depreciation and
prior accounting treatment $(113,457) $(110,574)
Other, net (400) -
-------- ---------
Total deferred tax liabilities $(113,857) $(110,574)
-------- --------
Deferred tax assets:
Receivables, due to allowance for
doubtful accounts 123 86
Employee compensation and other
benefits 1,742 1,879
Capital leases, net 1,936 1,714
Postretirement benefits other than
pensions, due to accrual for
financial reporting purposes 1,500 1,650
Alternative minimum tax credit
carryforwards 3,122 2,865
Other, net 656 1,659
--------- ---------
Total deferred tax assets 9,079 9,853
--------- ---------
Net deferred tax liability
before valuation allowance (104,778) (100,721)
Deferred tax asset valuation allowance (1,320) (1,320)
--------- ---------
Net deferred tax liability $(106,098) $(102,041)
========= =========
The valuation allowance for deferred tax assets as of March 1,
1994 was $1.3 million. The valuation allowance is required to
reduce the amount of deferred tax assets to an amount which
will more likely than not be realized.
At February 29, 1996, the Company has an alternate minimum tax
credit carryforward of approximately $2.9 million available to
offset future regular taxes in excess of future alternative
minimum taxes.
12. Extraordinary Items
-------------------
In conjunction with the fiscal year 1994 retirement of the
$150 million of first mortgage bonds as discussed in note 7,
unamortized issuance costs of approximately $3.0 million were
written off, resulting in an extraordinary loss, net of taxes,
of approximately $1.8 million.
In conjunction with the exchange of the senior subordinated
debentures and the repurchase of the $10.0 million of first
mortgage bonds in fiscal 1996, as discussed in note 15,
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.
13. Disclosures About The Fair Value of Financial Instruments
---------------------------------------------------------
Cash, Trade Receivables, Other Receivables, Accounts Payable
and Accrued Expenses
------------------------------------------------------------
The carrying amount approximates fair value because of the
short maturity of these instruments.
Long-Term Debt
--------------
The fair values of each of the Company's long-term debt
instruments are based on (a) the amount of future cash flows
associated with each instrument discounted using the Company's
current borrowing rate for similar debt instruments of
comparable maturity or (b) in the case of the first mortgage
bonds - Series B and senior subordinated debentures, market
price (in thousands).
As of the last day
of February 1996
------------------
Estimated
fair
Carrying market
amount value
------ ------
Senior subordinated debentures $115,000 $116,150
First mortgage bonds - Series A 140,000 140,000
First mortgage bonds - Series B 176,250 179,334
Mortgage notes payable 26,429 26,429
Limitations
-----------
Fair value estimates are made at a specific point in time,
based on relevant market information and information about the
financial instrument. These estimates are subjective in
nature and involve uncertainties and matters of significant
judgment and therefore cannot be determined with precision.
Changes in assumptions could significantly affect the
estimates.
14. 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.
15. 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 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 ("MetLife"). On the filing date, the Plan had been
approved by both of the classes of debtholders entitled to
vote on the Plan.
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, pursuant to
which:
(i) each holder of the Company's 11% Senior Subordinated
Debentures due 1997 was entitled to receive a
corresponding amount of new 15% Senior Subordinated
Debentures due 2007, and an amount in cash equal to the
accrued but unpaid interest on the old Senior
Subordinated Debentures through June 29, 1995; and
(ii) the Company repurchased on June 30, 1995, $10.0 million
of its 11.45% Series A First Mortgage Bonds due 2002 at
par and paid an agreement modification fee of $2.25
million to MetLife in conjunction with amending the
Amended and Restated Investment Agreement, dated March 2,
1993, between the Company and MetLife.
In addition, the Company has:
(a) Amended on June 30, 1995, the existing credit agreement
with its primary bank, which provides an aggregate
availability of $27.5 million, to be used for any
combination of letters of credit (up to $10.0 million)
and revolving cash borrowings, subject to borrowing base
limitations. The new credit agreement is secured by the
Company's trade receivables and, at the Company's option,
mortgages on certain of the Company's warehouse
properties.
(b) Rejected certain lease agreements relating to four
warehouse facilities at Watsonville, Oakland and San
Francisco, California; and Chicago, Illinois.
In November 1990, the American Institute of Certified Public
Accountants issued Statement of Position 90-7, "Financial
Reporting by Entities in Reorganization Under the Bankruptcy
Code" (SOP 90-7). Under SOP 90-7, the financial statements
for periods including and subsequent to filing a Chapter 11
petition are structured to distinguish transactions and events
that are directly associated with the reorganization from the
ongoing operations of the Company. Since the Company was in
Chapter 11 proceedings for less than two months, and since the
Plan did not differentiate between prepetition and post-
petition liabilities and did not include any forgiveness of
liabilities, the Company has elected not to follow the
presentation proposed by SOP 90-7. The Company has expensed
all professional fees and similar types of expenditures
incurred through the last day of February 1996 directly
relating to the Chapter 11 proceedings as "reorganization
expenses." 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. The outcome of any damage claim resulting from the
remaining lease rejection related to the Chicago warehouse
facility cannot be predicted at this time, but the Company
does not believe the resolution of such claim will be
material.
16. Subsequent Events
-----------------
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.
<PAGE>
SCHEDULE II
AMERICOLD CORPORATION
Valuation and Qualifying Accounts
Years ended the last day of
February 1994, 1995 and 1996
(In thousands)
<TABLE>
<CAPTION>
Additions
Balance at
charged to Balance
beginning
costs and at end
of period
expenses Deductions of period
--------- --
- -------- ---------- ---------
<S> <C>
<C> <C> <C>
Year ended the last day
of February 1994 -
Allowance for doubtful accounts -
other receivables $ 4,100
$ - $ - $ 4,100
Year ended the last day
of February 1995 -
Allowance for doubtful accounts -
other receivables 4,100
- 4,100 -
Year ended the last day
of February 1996 -
Allowance for doubtful accounts -
other receivables -
- - -
</TABLE>
<PAGE>
AMERICOLD CORPORATION
FORM 10-K
EXHIBIT INDEX
Exhibit Page
- -------- ----
4.1 (1) Fourth Amendment dated March 14, 1996
to Stockholders' Agreement dated as of
December 24, 1986, as amended on April 15,
1987, June 22, 1987 and May 20, 1990
10.1 (1) First Amendment to Americold Corporation
Management Incentive Plan, amended as of
April 24, 1996
(11) Statement re Computation of Per Share
Earnings
(21) Subsidiary of the Registrant
(23) Consent of KPMG Peat Marwick LLP
(27) Financial Data Schedule
<PAGE>
(Exhibit 4.1)
FOURTH AMENDMENT
TO
STOCKHOLDERS' AGREEMENT
-----------------------
THIS AGREEMENT is dated as of March 14, 1996 among Americold
Corporation, an Oregon corporation (the "Company"), Kelso Equity
Partners, L.P., a Delaware limited partnership, Kelso Investment
Associates II, L.P., a Delaware limited partnership, KIA III-
Americold, Inc., L.P., a Delaware limited partnership, Kelso &
Company, L.P., a Delaware limited partnership, The Northwestern
Mutual Life Insurance Company, New York Life Insurance Company, New
York Life Insurance and Annuity Corporation and the Management
Shareholders of the Company listed in the Schedule of Management
Shareholders attached hereto.
WHEREAS, the parties hereto desire to amend in certain
respects the Stockholders' Agreement (the "Stockholder Agreement"),
dated as of December 24, 1986, as amended, among the Company and
the stockholders of the Company party thereto;
NOW, THEREFORE, the parties hereto agree as follows
(capitalized terms used herein without definition having the
respective meanings set forth in the Stockholder Agreement):
1. Amendments to Section 6 of the Stockholder Agreement.
(a) Section 6.1 is hereby amended by deleting all of clause
(i) of the proviso in the fourth sentence thereof, and by deleting
the word "and" and the number "(ii)" immediately following clause
(i).
(b) Section 6.4 is hereby deleted in its entirety.
(c) Section 6.5 is hereby restated as follows:
"6.5 Assignment. So long as a Shareholder owns an
equity investment in the Company such Shareholder shall have
the right to require the Company to assign to it the Company's
right of first refusal with respect to an Offer, provided that
all rights of the Company with respect to such Offer shall be
assigned in accordance with the following priorities: First,
to Kelso, and second, to the Co-Investors and the Management
Shareholders, on a pro rata basis based on the proportion that
the number of shares of Common Stock held by each such
Shareholder requesting such assignment bears to the total
number of shares of Common Stock held by all such Shareholders
requesting such assignment."
2. Amendment to Section 7.1 of the Stockholder Agreement.
Section 7.1 is hereby deleted in its entirety.
3. Amendment to Section 10 of the Stockholder Agreement.
Section 10 is hereby amended by changing the first sentence to read
as follows: "Each Shareholder agrees not to vote in favor of the
following actions unless Kelso votes in favor of such action:"
4. Effectiveness. The amendment contained in this Agreement
shall become effective upon the execution and delivery of this
Agreement by the Non-Management Shareholders and the Management
Shareholders owning a majority of the shares of Common Stock which
are owned by all the Management Shareholders.
5. Ratification. Except as amended hereby, the Stockholder
Agreement shall remain in full force and effect in all respects.
6. Governing Law. This Agreement and the rights and
obligations of the parties hereunder and the persons subject hereto
shall be governed by, and construed and interpreted in accordance
with, the law of the state of Delaware, without giving effect to
the choice of law principles thereof.
7. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all
of which taken together shall constitute one agreement.
<PAGE>
(Exhibit 10.1)
AMERICOLD CORPORATION
MANAGEMENT INCENTIVE PLAN
AMENDMENT NO. 1
-------------------------
WHEREAS, Americold Corporation ("Americold") maintains the
Americold Corporation Management Incentive Plan (the "MIP Plan")
to provide additional compensation to participants, including
executive officers, upon the achievement of certain financial
objectives of the Company and individual personal objectives of
the participants;
WHEREAS, under the Plan as written, the Financial Award
portion constitutes 75% of the total MIP Plan structure and the
Discretionary Award portion constitutes 25% of such award;
WHEREAS, it is desirable to amend the Plan to conform to the
current practice so that the Financial Award portion and the
Discretionary Award portion each constitute 50% of the total
award structure of the MIP Plan;
NOW, THEREFORE, the MIP Plan is hereby amended as follows:
1. Amendment of Section IV. The first sentence of Section
IV is hereby amended by substituting the following sentence in
its place: "The Financial Award portion encompasses 50% of the
total Management Incentive Plan structure."
2. Amendment of Section V.
a. The first sentence of Section V is hereby amended
by substituting the following sentence in its place: "The
Discretionary Award portion encompasses 50% of the total
Management Incentive Plan structure."
b. The second-to-last sentence of Section V is hereby
amended by replacing "25%" with "50%" in that sentence.
3. Amendment of Section VII. The third sentence of
Section VII is hereby amended by replacing the phrase "represent
75% and 25%, respectively," with "each represent 50%."
4. Amendment of Exhibit A. Three versions of Exhibit A
exist: one version for corporate level participants (the "105%
Exhibit A"), another for participants at the district level (the
"107 1/2% Exhibit A") and a third for participants at the
warehouse level (the "110% Exhibit A"). These are amended as
follows:
a. Amendment of 105% Exhibit A.
(i) The Section entitled "Composition of Bonus" is
hereby restated as follows:
"The bonus structure will be composed of two portions:
1) 50% - Financial Award, based on the financial
goals of Americold.
2) 50% - Discretionary Award, based on individual
goals.
Composition of the 50% financial portion is as follows:
Corporate Operating Earnings 50%"
(ii) The table entitled "Table II" is hereby
amended by replacing the "75%" in the formula for the
last three rows under the column entitled "Financial
Award Earned" to "50%."
(iii) The second sentence under the Section
entitled "Discretionary Award" is hereby amended by
replacing "25%" with "50%."
b. Amendment of 107 1/2% Exhibit A.
(i) The Section entitled "Composition of Bonus" is
hereby restated as follows:
"The bonus structure will be composed of two portions:
1) 50% - Financial Award, based on the financial
goals of Americold.
2) 50% - Discretionary Award, based on individual
goals.
If the participant is employed at Regional level only,
composition of the 50% financial portion is as follows:
Regional Operating Earnings 50%
If the participant is employed at both the Regional and the
Plant level, composition of the 50% financial portion is as
follows:
Regional Operating Earnings 25%
Plant Operating Earnings 25%"
(ii) The first sentence under the section entitled
"Range of Financial Performance" is replaced by the
following: "The range of financial performance is
established as 90% minimum to 107.5% maximum for the
regional component, and 90% minimum to 110% maximum for
the plant component."
(iii) The Table entitled "Table II" is hereby
amended by:
(a) adding an asterisk (*) after the number
107.5 as it appears twice in the middle column of
such table, and adding below the table a footnote
as follows: "* Participants whose awards have a
financial component composed of both regional
operating earnings and plant operating earnings
(see "Composition of Bonus," above) should
calculate one-half of their financial component
(the regional component) using the table as
presented, and one-half of their financial
component (the plant component) after substituting
"110" for "107.5"; and
(b) replacing the "75%" in the formula for
the last three rows under the column entitled
"Financial Award Earned" to "50%."
(iv) The second sentence under the Section
entitled "Discretionary Award" is hereby amended by
replacing "25%" with "50%."
c. Amendment of 110% Exhibit A. (i) The Section
entitled "Composition of Bonus" is hereby restated as
follows:
"The bonus structure will be composed of two portions:
1) 50% - Financial Award, based on the financial
goals of Americold.
2) 50% - Discretionary Award, based on individual
goals.
Composition of the 50% financial portion is as follows:
Plant Operating Earnings 50%"
(ii) The first sentence under the section entitled
"Range of Financial Performance" is amended by deleting
the phrase ", and 90% minimum to 105% maximum for the
corporate component."
(ii) The table entitled "Table II" is hereby
amended by replacing the "75%" in the formula for the
last three rows under the column entitled "Financial
Award Earned" to "50%."
(iv) The second sentence under the Section
entitled "Discretionary Award" is hereby amended by
replacing "25%" with "50%."
To record the adoption of this Amendment No. 1 to the MIP
Plan, Americold has caused it to be executed this day of
April, 1996.
AMERICOLD CORPORATION
By
---------------------------
President
By
----------------------------
Secretary
<PAGE>
(Exhibit 11)
AMERICOLD CORPORATION
STATEMENT REGARDING COMPUTATION OF
PER SHARE EARNINGS
(In thousands, except per share data)
<TABLE>
<CAPTION>
Year ended
last day of February
1994
1995 1996
---------- -
- --------- ----------
<S> <C>
<C> <C>
Net income (loss) $(77,121)
$ 5,564 $ (8,080)
Less: total accrued preferred dividend
(49.672 shares x 11.50% x 8/12 yr) (381)
- -
(43.860 shares x 13.25% x 4/12 yr) (194)
- -
(49.672 shares x 11.50% x 4/12 yr) -
(190) -
(55.384 shares x 13.50% x 7/12 yr) -
(436) -
(52.936 shares x 13.50% x 1/12 yr) -
(60) -
(52.936 shares x 13.50% x 12/12 yr) -
- (715)
-------
- ------- -------
Net income (loss) for per share calculation $(77,696)
$ 4,878 $ (8,795)
=======
======= =======
Weighted average number of shares
outstanding 4,855
4,864 4,867
=======
======= =======
Net income (loss) per share $ (16.00)
$ 1.00 $ (2.13)
=======
======= =======
</TABLE>
<PAGE>
(Exhibit 21)
AMERICOLD CORPORATION
List of Subsidiaries
Names
State of Under Which
Name Incorporation Does Business
- ---- ------------- -------------
Americold Services Delaware Americold Services
Corporation Corporation
<PAGE>
(Exhibit 23)
KPMG Peat Marwick LLP
Suite 2000
1211 South West Fifth Avenue
Portland, OR 97204
Consent of Independent Auditors
-------------------------------
The Board of Directors
Americold Corporation:
We consent to incorporation by reference in the Registration
Statement (No. 33-22556) on Form S-8 of Americold Corporation of
our report dated April 29, 1996, relating to the consolidated
balance sheets of Americold Corporation as of the last day of
February 1995 and 1996, and the related consolidated statements
of operations, common stockholders' deficit, and cash flows for
each of the years in the three-year period ended the last day of
February 1996, and related schedule, which report appears in the
February 29, 1996 Annual Report on Form 10-K of Americold
Corporation. As discussed in our report, the Company changed its
method of accounting for income taxes and postretirement benefits
other than pensions.
/s/ KPMG Peat Marwick LLP
Portland, Oregon
May 29, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM AMERICOLD CORPORATION'S FINANCIAL STATEMENTS
CONTAINED IN ITS ANNUAL REPORT ON FORM 10-K FOR THE PERIOD
ENDING FEBRUARY 29, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-END> FEB-29-1996
<CASH> 20,857
<SECURITIES> 0
<RECEIVABLES> 25,461<F1>
<ALLOWANCES> 0
<INVENTORY> 391
<CURRENT-ASSETS> 58,297
<PP&E> 549,974
<DEPRECIATION> 174,123
<TOTAL-ASSETS> 526,992
<CURRENT-LIABILITIES> 55,092
<BONDS> 461,667
<COMMON> 49<F2>
5,771<F3>
0
<OTHER-SE> (107,391)<F2>
<TOTAL-LIABILITY-AND-EQUITY> 526,992
<SALES> 279,788
<TOTAL-REVENUES> 279,788
<CGS> 194,936
<TOTAL-COSTS> 226,984
<OTHER-EXPENSES> 591
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 56,610
<INCOME-PRETAX> (11,506)
<INCOME-TAX> (3,426)<F4>
<INCOME-CONTINUING> (8,080)
<DISCONTINUED> 0
<EXTRAORDINARY> (1,794)
<CHANGES> 0
<NET-INCOME> (9,874)
<EPS-PRIMARY> (2.13)<F3>
<EPS-DILUTED> (2.13)<F3>
<FN>
<F1>See Note 7 to Notes to Consolidated Financial Statements
<F2>See Notes 7, 8 and 9 to Notes to Consolidated Financial
Statements
<F3>See Note 10 to Notes to Consolidated Financial Statements
<F4>See Note 11 to Notes to Consolidated Financial Statements
</TABLE>
