<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended April 29, 1995
OR
- --- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the transition period from _____________ to _______________
Commission file number 0-8105
RYKOFF-SEXTON, INC.
(Exact name of registrant as specified in its charter)
Delaware 95-2134693
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
1050 Warrenville Road, Lisle, Illinois 60532
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (708) 964-1414
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
Common Stock New York Stock Exchange
Preferred Stock
Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
- --
The aggregate market value of the voting stock of the registrant held by non-
affiliates of the registrant, based on the closing price at which such stock was
sold on the New York Stock Exchange on July 21, 1995 was $275,309,000. At July
21, 1995, the registrant had 14,614,158 shares of common stock outstanding.
Parts I and III incorporate information by reference from the registrant's
definitive Proxy Statement to be filed in connection with the registrant's 1995
Annual Meeting of Shareholders. Parts I and II incorporate information by
reference from the registrant's Annual Report to Shareholders for the fiscal
year ended April 29, 1995.
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PART I
ITEM 1. BUSINESS
GENERAL
Established in 1911, Rykoff-Sexton, Inc., (the "Company") is a leading
broadline distributor of high quality food and related non-food products for the
foodservice industry throughout the United States. The Company distributes its
product line of approximately 41,000 items to restaurants, industrial
cafeterias, healthcare facilities, hotels, schools and colleges, supermarket
service delicatessen departments and other establishments where food is prepared
or consumed away from home. It also offers design and engineering services for
all types of foodservice operations through its contract/design group. The
Company's products consist of a broad line of private label and national branded
food and foodservice equipment and supplies. The Company's proprietary private
label products accounted for approximately 56% of the Company's net sales in
fiscal 1995. The Company develops and manufactures many of its private label
products, and it also manufactures other products for certain customers under
their own brand labels.
The Company's principal operations are conducted through the Rykoff-
Sexton Distribution Division (the "Distribution Division"), the Rykoff-Sexton
Manufacturing Division (the "Manufacturing Division") and San Francisco
International Cheese Imports ("San Francisco International Cheese Imports").
DISTRIBUTION DIVISION
The Distribution Division is comprised of 25 distribution branches and
eight additional sales offices that are largely located in major metropolitan
areas throughout the United States. The Distribution Division also offers
design and engineering services for all types of foodservice operations through
its ten contract/design offices. In fiscal 1995, sales of the Distribution
Division (including products sold through this division by the Manufacturing
Division and San Francisco International Cheese Imports) generated approximately
99% of the Company's net sales.
MANUFACTURING DIVISION
At its four plants, the Manufacturing Division manufactures products
primarily under the Company's proprietary private labels and also manufactures
products for other manufacturers, distributors, restaurant chains and other
large users under their own brand labels. Approximately 90% of the
Manufacturing Division's products are sold through the Distribution Division,
and the remainder are sold directly to customers.
SAN FRANCISCO INTERNATIONAL CHEESE IMPORTS
The Company also has a smaller division, San Francisco International
Cheese Imports, which distributes domestic and imported cheeses and specialty
and gourmet products both through the Distribution Division and directly to
customers.
PRODUCTS
The Company offers to the foodservice industry a single source of
supply for approximately 41,000 private label and national branded items that
are distributed to approximately 100,000 foodservice establishments. The
principal product lines are:
FOOD PRODUCTS
The Company's food products include canned fruits and vegetables,
tomatoes and tomato products, juices, relishes and pickle products, dry package
foods, syrups, dressings and salad oils, baking supplies, extracts and colors,
spices, condiments, seasonings and sauces, jellies and preserves, coffee, tea
and fountain goods, prepared convenience entrees, meats, desserts and puddings,
dietary foods, imported and domestic cheeses and specialty and gourmet items.
Frozen foods include soups, prepared convenience entrees, bakery products,
fruits and vegetables, desserts, frozen meat, chicken and fish and other frozen
products customarily distributed to the foodservice industry.
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JANITORIAL AND PAPER PRODUCTS
The Company's non-food products include janitorial supplies such as
detergents and cleaning compounds; plastic products such as refuse container
liners, cutlery, straws and sandwich bags; and paper products such as napkins,
cups, hats, placemats, coasters and lace doilies.
EQUIPMENT AND SUPPLIES
The Company also distributes smallware restaurant equipment and supply
items, including cookware, glassware, dinnerware and other commercial kitchen
equipment.
The Company's products include approximately 1,400 food and 900 non-
food items that are manufactured, processed and packaged at its four plants
located in Los Angeles, California; Indianapolis, Indiana; Englewood, New
Jersey; and Brooklyn, New York. These products are primarily manufactured under
the Company's private labels. The Company also manufactures products for certain
customers such as other manufacturers, distributors, restaurant chains and other
large users under their own brand labels.
The Manufacturing Division's food products include mayonnaise and salad
dressings, oils, margarine and shortenings, gelatins and dessert powders,
vinegars, sauces, pancake and waffle mixes, biscuit and flour mixes, soup bases,
jams and jellies, canned and frozen soups, canned and frozen entrees, relishes
and tea. Its non-food products include detergents, cleaning compounds, refuse
container liners, cutlery, straws and sandwich bags, paper napkins, placemats,
chefs' hats, coasters, paper lace doilies and a line of low temperature
dishwashers.
In addition to its extensive product line, the Company's
contract/design group has ten offices that provide design and engineering
services and equipment installations for restaurants and other foodservice
establishments.
MARKETING AND DISTRIBUTION
The Company markets its products and contract/design services to
customers in the foodservice industry, including restaurants, industrial
cafeterias, healthcare facilities, hotels, schools and colleges, airlines,
clubs, supermarket service delicatessen departments and other establishments
where food is prepared or consumed away from home.
The following table sets forth the approximate customer base of the
Company for the fiscal year ended April 29, 1995:
<TABLE>
<CAPTION>
Approximate
Percentage
TYPE OF CUSTOMER of Net Sales
---------------------------- ------------
<S> <C>
Restaurants (including in-plant commercial and industrial food
centers, cafeterias and coffee shops, etc.) . . . . . . . . . 61.1%
Hospitals, nursing homes, sanitariums and other healthcare
facilities. . . . . . . . . . . . . . . . . . . . . . . . . . 12.7%
Hotels and motels. . . . . . . . . . . . . . . . . . . . . . . . . 8.2%
Schools and colleges (including fraternities and sororities) . . . 7.4%
Retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7%
Distributors . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5%
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4%
-----
100.0%
------
------
</TABLE>
No customer of the Company accounted for as much as two percent of the
Company's sales for the fiscal year ended April 29, 1995. No product
distributed by the Company accounts for a material part of the Company's sales
volume. The Company does not experience material seasonal variations in its
sales volume.
The Company believes that product quality, close contact with
customers, prompt and accurate delivery of orders, and the ability to provide
related services are of primary importance in the distribution of products to
the foodservice industry. Sales offices are maintained at each of the Company's
25 distribution branches and eight additional locations as listed in the table
below. The Company's sales force of approximately 1,600 employees includes
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foodservice specialists from the Distribution Division who are organized by
region and who are each assigned to a distribution branch. The sales force also
includes account executives who handle multi-unit accounts such as restaurant
chains and other large users. In addition to soliciting orders, sales personnel
are trained to advise customers on menu selection, methods of preparing and
serving food, merchandising techniques, unit cost controls and other operating
procedures.
Products are distributed to customers nationwide through the Company's
25 distribution branches listed in the table below, as well as through
independent distributors. With the exception of an equipment and supply branch,
each branch stocks a broad line of between 5,900 and 15,000 items for sale in
its marketing area. Customer orders are usually processed and shipped within 24
hours of receipt and are delivered directly to the customer. The Company uses
its warehouse facilities in Los Angeles, Indianapolis and Dorsey, Maryland to
store and consolidate product orders from vendors for subsequent shipment to the
distribution branches.
<TABLE>
<CAPTION>
The following table sets forth the Distribution Division's branches, sales offices and contract/design offices:
Distribution Additional Contract/Design
Branches Sales Offices* Offices
-------- ------------- -------
<S> <C> <C>
Phoenix, Arizona Cotati, California Los Angeles, California***
Fresno, California*** San Bernardino, California Sacramento, California
Los Angeles, California*** San Diego, California San Francisco, California
Sacramento, California** Hyannis, Massachusetts*** Chicago, Illinois***
San Francisco, California Missoula, Montana*** Boston, Massachusetts
Orlando, Florida Las Vegas, Nevada Minneapolis/St. Paul, Minnesota
Atlanta, Georgia*** Medford, Oregon*** Cincinnati, Ohio
Honolulu, Hawaii Seattle, Washington Portland, Oregon
Chicago, Illinois*** Seattle, Washington
New Orleans, Louisiana*** Spokane, Washington***
Baltimore, Maryland***
Boston, Massachusetts
Detroit, Michigan***
Minneapolis/St. Paul, Minnesota
St. Louis, Missouri***
Reno, Nevada***
Englewood, New Jersey***
Greensboro, North Carolina
Cincinnati, Ohio
Philadelphia, Pennsylvania
Pittsburgh, Pennsylvania
Portland, Oregon
Dallas, Texas***
Spokane, Washington***
<FN>
* These sales offices are in addition to sales offices maintained at each of the Company's distribution branches.
** A general distribution branch and an equipment and supply branch are located in this city.
*** Indicates facility owned by the Company; all other facilities are leased.
</TABLE>
International sales presently account for less than two percent of the
Company's total sales. However, the Company believes that the potential for
growth in sales to foreign markets is significant, and it is exploring selected
opportunities to further develop this segment of its business. The Company
currently exports products to the Pacific Rim countries, Micronesia, Canada, the
Caribbean, Mexico, Europe, South America and Australia.
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SOURCES OF SUPPLY
The Company purchases from approximately 7,500 suppliers. No supplier
represented more than two percent of the Company's purchases in fiscal 1995.
These suppliers, which include both large multi-line and smaller specialty
processors and packagers, are selected primarily on the basis of their ability
to meet the Company's quality standards. The Company has no significant long-
term purchasing obligations and believes that it has adequate alternative
sources of supply for almost all of the purchased items and raw materials used
in its manufacturing operations.
QUALITY CONTROL AND REGULATION
The Company maintains quality control laboratories in its Los Angeles,
Indianapolis and Englewood facilities. These laboratories are staffed by
chemists and food technologists who are trained to control product quality for
both self-manufactured and purchased private label products and to provide
research and development support for the Company's manufactured products.
Quality control procedures include the sampling and testing of raw materials,
purchased private label products and Company manufactured items for quality,
taste and appearance and the microbiological testing of Company manufactured
food items.
EMPLOYEES
As of April 29, 1995, the Company employed a total of approximately
5,400 people, of whom approximately 1,900 were covered by collective bargaining
agreements. These agreements expire at various times over the next several
years. The Company believes its labor relations are good.
COMPETITION
The Company operates on a nationwide basis and encounters significant
competition from a number of sources in each of its marketing areas. The
Company competes with two other large national distribution companies, Sysco
Corporation and Kraft Foodservice Group, both of which have substantially
greater financial and other resources than the Company. The Company also
competes with numerous regional and local distributors that offer broad lines of
products. In recent years, the foodservice distribution industry has been
characterized by significant consolidation and the emergence of larger
competitors, principally through acquisitions. There can be no assurances that
the Company will not encounter increased competition in the future, which could
adversely affect the Company's business.
The Company believes that although price is a consideration,
competition in the foodservice industry is generally on the basis of product
quality, customer relations and service. As one of the leading national
broadline distributors to the foodservice industry, the Company believes that it
carries a wider selection of food products of superior quality and value and a
greater variety of package sizes than most of its competitors. The Company
attributes its ability to compete effectively in its markets to this wider food
product selection and its broad line of related non-food products, which are
offered through a dedicated, highly skilled and customer-oriented sales force.
Further, the Company differentiates itself in part from its competitors by (i)
providing many specialty products that have been developed specifically for the
foodservice industry or for particular foodservice customers, (ii) maintaining
an extensive selection of imported and specialty products, equipment and
supplies and (iii) offering its design and engineering services for all types of
foodservice operations.
ITEM 2. PROPERTIES
The Company relocated its corporate headquarters from its owned
property in Los Angeles, California to a leased facility in Lisle, Illinois,
where the Distribution Division headquarters is also situated. Both the
corporate headquarters and executive offices of the Distribution Division
occupy approximately 54,500 square feet pursuant to a lease which expires in
November 2001.
The Company's owned property in Los Angeles, California continues to
house the Manufacturing Division headquarters, a large manufacturing plant and a
warehouse that is used to store and consolidate product orders from vendors.
The property consists of four buildings with approximately 1.4 million square
feet of space on 20.2 acres. In June 1995, the Company relocated the Los
Angeles distribution branch to a new facility of approximately 420,000 square
feet in La Mirada, California.
5
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In addition to the manufacturing plant located on the Los Angeles
property, the Company owns and operates manufacturing plants totaling 234,000
square feet in Indianapolis, Indiana and Englewood, New Jersey. The Company
also leases approximately 32,000 square feet in Brooklyn, New York for office,
warehouse and manufacturing facilities. The lease on this property expires in
August 1996.
Equipment and machinery owned by the Company and used in its operations
consist principally of electronic data processing equipment, food and non-food
processing and packaging equipment and chemical compounding, blending and
product handling equipment. The Company owns a fleet of approximately 870
vehicles consisting of tractors, trailers, vans and bobtails, which are used for
long hauls and local deliveries. In addition, the Company leases approximately
700 delivery vehicles under terms which expire at various dates through 2000.
During fiscal year 1995, the Company completed expansions of its
Greensboro, North Carolina, and Detroit, Michigan Branches, primarily with
new freezers and coolers, which doubled both of their capacities. At
present, the Company is completing the consolidation of its Capitol Branch
into the recently acquired 230,000 square foot Continental Foods facility in
Baltimore, Maryland and is also completing construction of a new 183,000
square foot distribution center in Cincinnati, Ohio. In addition, the
Company recently acquired an 86,400 square foot distribution center in St.
Louis, Missouri for relocation of its present St. Louis Branch. This will
allow the St. Louis Branch to more than double its capacity for growth. The
Company expects to complete the sale of the old facility at the time the St.
Louis Branch moves into the new facility in August 1995.
The Company considers that its office, warehouse and manufacturing
facilities are adequate to support present and immediately foreseeable future
operations. However, the Company continues to locate and occupy new facilities
because of its expanding business.
ITEM 3. LEGAL PROCEEDINGS
Reference is made to discussions with respect to legal proceedings in
which the Company is a party thereto, as set forth on page 20 of the Company's
1995 Annual Report to shareholders, and by such reference, such information is
integrated therein.
(THE REMAINDER OF THIS PAGE HAS BEEN LEFT BLANK.)
6
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
CORPORATE EXECUTIVE OFFICERS
The following are the corporate executive officers of the Company:
<TABLE>
<CAPTION>
Officer's
Name Position Age Since
- ---- -------- --- -----
<S> <C> <C> <C>
Mark Van Stekelenburg President, Chief Executive
Officer and Director 44 1991
Victor B. Chavez Vice President and Chief
Accounting Officer 50 1980
Gary L. Cooper President, Rykoff-Sexton 56 1994
Distribution Division
Harold E. Feather Executive Vice President,
Corporate Planning 56 1992
Alan V. Giuliani President, Rykoff-Sexton
Manufacturing Division 49 1990
Robert J. Harter, Jr. Senior Vice President, Human
Resources and General Counsel 50 1989
Richard J. Martin Senior Vice President and
Chief Financial Officer 49 1988
Neil I. Sell Secretary and Director 54 1985
Donald E. Willis, Jr. Senior Vice President and Chief
Information Officer 43 1994
</TABLE>
All of the executive officers serve in their capacities by approval
of the Board of Directors. Each executive officer has, as his principal
occupation, been employed by the Company in the capacities set forth or in
similar capacities for more than the last five years, except as follows: Mr.
Neil I. Sell's principal occupation has been as a partner in the law firm of
Maslon Edelman Borman & Brand, a Professional Limited Liability Partnership;
Mr. Mark Van Stekelenburg was elected Executive Vice President in 1991 and
President and Chief Executive Officer in 1992; Mr. Richard J. Martin was
elected Vice President in 1988 and Senior Vice President and Chief Financial
Officer in 1993; Mr. Robert J. Harter, Jr. was elected Vice President and
General Counsel in 1989 and Senior Vice President, Human Resources and
General Counsel in 1993; Mr. Alan V. Giuliani was elected Vice President in
1990 and President, Rykoff-Sexton Manufacturing Division in 1992; Mr. Harold
E. Feather was elected President, Rykoff-Sexton Distribution Division in 1992
and Executive Vice President, Corporate Planning in 1994; Mr. Donald E.
Willis, Jr. was elected Senior Vice President and Chief Information Officer
in 1994; and Mr. Gary L. Cooper was elected President, Rykoff-Sexton
Distribution Division in 1994.
7
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Mr. Van Stekelenburg joined the Company in March 1991 and was
previously, since 1986, President and Chief Executive Officer of G.V.A. and
Kok-Ede, the foodservice division of Royal Ahold, N.V., the largest food
retailer in the Netherlands which also has substantial holdings in food
retailing in the United States. Mr. Martin joined the Company in August 1988
and was previously a partner with the accounting firm of Arthur Andersen LLP;
he had been associated with that firm for twenty-one years. Mr. Harter
joined the Company in October 1989 and was previously Senior Vice President,
General Counsel and Secretary for Tiger International, Inc. He had been an
officer of Tiger International, Inc. for eleven years. Mr. Giuliani joined
the Company in August 1990. Previously, Mr. Giuliani was employed by Mars,
Inc., a food manufacturer, where he held various senior management positions
including Vice President-Research and Development/Engineering for the Dove
International Division, and Vice President-New Business Development and Vice
President-Plant Manager for the M&M/Mars Division. Mr. Harold E. Feather
joined the Company in 1983 when the Company acquired John Sexton & Co. He
has held various positions within the Company and was elected Executive Vice
President, Corporate Planning in 1994; his most recent previous position was
President, Rykoff-Sexton Distribution Division, which he held since 1992.
Mr. Donald E. Willis, Jr. joined the Company in January 1994, and previously
served in several management information systems positions with other
companies, the most recent of which was at HomeBase, a California-based
specialty retailer. Mr. Gary L. Cooper joined the Company in October 1994,
after thirty-two years with American Hospital Supply Corporation and Baxter
International. He was a corporate officer and President of the Baxter
Hospital Supply Division.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Reference is made to the information with respect to the principal
markets on which the Company's common stock is being traded, prices for each
quarterly period and dividend record for the last three years set forth on page
1 of the Company's 1995 Annual Report to shareholders, and by such reference,
such information is incorporated herein.
The Company estimates that there are approximately 8,300 shareholders
including those through nominees, as of June 1995.
ITEM 6. SELECTED FINANCIAL DATA
Reference is made to the financial data with respect to the Company set
forth on pages 6 and 7 of the Company's 1995 Annual Report to shareholders and
by such reference, such financial data is incorporated herein.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Reference is made to Management's Discussion and Analysis set forth on
pages 8 and 9 of the Company's 1995 Annual Report to shareholders, and by such
reference, such information is incorporated herein.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Reference is made to the consolidated financial statements set forth on
pages 10 through 21 of the Company's 1995 Annual Report to shareholders, and by
such reference, such information is incorporated herein.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
8
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PART III
Reference is made to the definitive proxy statement pursuant to
Regulation 14A, which involves the election of directors at the annual meeting
of shareholders to be held September 15, 1995 and will be filed with the
Commission within 120 days after the close of its fiscal year ended April 29,
1995, and by such reference said proxy statement is incorporated herein in
response to the information called for by Part III (Item 10. Directors and
Executive Officers of the Registrant; Item 11. Executive Compensation; Item 12.
Security Ownership of Certain Beneficial Owners and Management; and Item 13.
Certain Relationships and Related Transactions).
(THE REMAINDER OF THIS PAGE HAS BEEN LEFT BLANK.)
9
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1) The financial statements listed below are filed as part of this
Annual Report on Form 10-K:
Page Reference
--------------
Form Annual
10-K Report
---- ------
Data is incorporated by reference from
the attached Annual Report to shareholders
of Rykoff-Sexton, Inc. for the fiscal year
ended April 29, 1995. With the exception
of the information specifically incorporated
herein by reference, the 1995 Annual Report
to shareholders is not to be deemed "filed" as
part of this Annual Report on Form 10-K.
Consolidated statements of operations for
each of the three years in the period
ended April 29, 1995 10
Consolidated balance sheets as of April 29, 11
1995 and April 30, 1994
Consolidated statements of cash flows for
each of the three years in the period ended
April 29, 1995 12
Consolidated statements of shareholders' equity
for each of three years in the period ended
April 29, 1995 13
Notes to consolidated financial statements 14-21
Report of independent public accountants 22
Attachments incorporated herewith to Form
10-K:
Report of independent public accountants on
supplemental schedules to the consolidated
financial statements 17
10
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Page Reference
--------------
Form Annual
10-K Report
---- ------
(2) Supplemental Schedules incorporated herewith
to Form 10-K:
Schedule II - Valuation and qualifying
accounts for each of the three years in
the period ended April 29, 1995 18
(3) The following exhibits, as required by Item 601 of Regulation
S-K, are filed as part of this report:
3.1 Restated Certificate of Incorporation of Rykoff-Sexton,
Inc. (Incorporated by reference from the Company's report
on Form 10-K for the year ended May 1, 1993, as amended)
3.2 Rykoff-Sexton, Inc. By-Laws (Incorporated by reference
from the Company's report on Form 10-K for the year ended
May 1, 1993, as amended)
4.1 Indenture, dated as of November 1, 1993, between Rykoff-
Sexton, Inc. and Norwest Bank Minnesota, N.A., as trustee
(Incorporated by reference from the Company's report Form
10-Q for the quarter ended October 30, 1993)
4.2 Rights Agreement, dated December 8, 1986 between Rykoff-
Sexton, Inc. and Bank of America National Trust and
Savings Association (Incorporated by reference from the
Company's report on Form 10-Q for the quarter ended May 1,
1993, as amended)
4.2.1 Amendment, dated as of October 5, 1989 to Rights
Agreement, dated December 8, 1986, between Rykoff-Sexton,
Inc. and Bank of America National Trust and Savings
Association, as Rights Agent (Incorporated by reference
from the Company's report on Form 10-Q for the quarter
ended October 30, 1993)
10.1 Credit Agreement dated October 25, 1993 between Rykoff-
Sexton, Inc. and Bank of America National Trust and
Savings Association (Incorporated by reference from the
Company's report on Form 10-Q for the quarter ended
October 30, 1993)
10.1.1 First Amendment to Credit Agreement between Rykoff-Sexton,
Inc. and Bank of America National Trust and Savings
Association dated as of December 29, 1993; (Incorporated
by reference from the Company's report on Form 10-Q for
the quarter ended January 29, 1994)
10.1.2 Second through Fourth Amendments to Credit Agreement
between Rykoff-Sexton, Inc. and Bank of America National
Trust and Savings Association dated as of March 18, 1994;
April 15, 1994; and April 30, 1994 (Incorporated by
reference from the Company's report on Form 10-K for the
fiscal year ended April 30, 1994)
10.1.3 Fifth Amendment to Credit Agreement between Rykoff-Sexton,
Inc. and Bank of America National Trust and Savings
Association, dated as of August 29, 1994 (Incorporated by
reference from the Company's report on Form 10-Q for the
quarter ended July 30, 1994)
10.1.4 Sixth Amendment to Credit Agreement between Rykoff-Sexton,
Inc. and Bank
11
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of America National Trust and Savings Association dated as
of September 30, 1994 (Incorporated by reference from the
Company's report on Form 10-Q for the quarter ended
October 29, 1994)
10.2 Final Amendment to Employment Contract and Settlement
Agreement dated March 8, 1993 between Roger W. Coleman and
Rykoff-Sexton, Inc. (Incorporated by reference from the
Company's report on Form 10-K for the year ended May 1,
1993, as amended)*
10.3 1980 Stock Option Plan (Incorporated by reference from the
Company's report on Form 10-K for the year ended May 1,
1993, as amended)*
10.4 1988 Stock Option and Compensation Plan, as amended on
September 13, 1991 (Incorporated by reference from the
Company's report on Form 10-K for the year ended May 1,
1993, as amended)*
10.4.1 Form of Restricted Stock Agreement (Incorporated by
reference from the Company's report on Form 10-K for the
year ended May 1, 1993, as amended)*
10.4.2 Form of Non-Qualified Stock Option Agreement (Incorporated
by reference from the Company's report on Form 10-K for
the year ended May 1, 1993, as amended)*
10.4.3 Form of Converging Non-Qualified Stock Option Agreement
(Incorporated by reference from the Company's report on
Form 10-K for the year ended May 1, 1993, as amended)*
10.5 1989 Director Stock Option Plan (Incorporated by reference
from the Company's Report on Form 10-K for the year ended
April 28, 1990)
10.6 Junior Demand Promissory Note dated March 31, 1995 by
Mark Van Stekelenburg and Mirjam Van Stekelenburg
10.7 Form of Change in Control Agreements (Incorporated by
reference from the Company's Report on 10-K for the year
ended April 28, 1990)*
10.7.1 Change in Control Agreement for Mark Van Stekelenburg
(Incorporated by reference from the Company's report on
Form 10-K for the year ended May 1, 1993, as amended)*
10.7.2 Change in Control Agreement for Harold Feather
(Incorporated by reference from the Company's report on
Form 10-K for the year ended May 1, 1993, as amended)*
10.7.3 Amended and Restated Change in Control Agreement, dated
October 12, 1993 between Rykoff-Sexton, Inc. and Mark Van
Stekelenburg (Incorporated by reference from the Company's
report on Form 10-Q for the quarter ended October 30,
1993)
10.8 Form of Indemnity Agreement (Incorporated by reference
from the Company's report on Form 10-K for the year ended
May 1, 1993, as amended)
10.9 Form of Fiduciary Indemnity Agreement (Incorporated by
reference from the Company's report on Form 10-K for the
year ended May 1, 1993, as amended)
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10.10 Agreement between S.E. Rykoff and Co. and Food Drug and
Beverage Warehousemen and Clerical Employees Union, Local
No. 630, International Brotherhood of Teamsters,
Chauffeurs, Warehousemen and Helpers of America,
Independent dated as of April 30, 1992 (Incorporated by
reference from the Company's report on Form 10-K for the
year ended May 1, 1993, as amended)
10.11 Agreement between Rykoff-Sexton, Inc. and Union Local No.
630, International Brotherhood of Teamsters, Chauffeurs,
Warehousemen and Helpers of America dated as of October
23, 1992 (Incorporated by reference from the Company's
report on Form 10-K for the year ended May 1, 1993, as
amended)
10.12 Agreement between Rykoff-Sexton, Inc. and Union Locals
848, 14, 87, 381 and 542, International Brotherhood of
Teamsters, Chauffeurs, Warehousemen and Helpers of America
dated as of October 23, 1992 (Incorporated by reference
from the Company's report on Form 10-K for the year ended
May 1, 1993, as amended)
10.13 Agreement between Rykoff-Sexton, Inc. and Union Local No.
78, Teamsters Warehouse, Automotive and Miscellaneous
Employees dated as of April 1, 1991 (Incorporated by
reference from the Company's report on Form 10-K for the
year ended May 1, 1993, as amended)
10.14 Agreement between Rykoff-Sexton, Inc. and Union Local No.
85, Brotherhood of Teamsters and Auto Truck Drivers dated
as of April 1, 1991 (Incorporated by reference from the
Company's report on Form 10-K for the year ended May 1,
1993, as amended)
10.15 Rykoff-Sexton, Inc. 1993 Director Stock Option
(Incorporated by reference from the Company's report on
Form 10-Q for the quarter ended October 30, 1993)
10.16 Participation Agreement, entered into among Rykoff-Sexton,
Inc., as Lessee ("Lessee"), Tone Brothers, Inc., as
Sublessee ("Sublessee"), BAS Leasing & Capital
Corporation, as Agent ("Agent"), and BA Leasing & Capital
Corporation, Manufacturers Bank and Pitney Bowes Credit
Corporation, as Lessors (the "Lessors"), dated as of April
29, 1994 (Incorporated by reference from the Company's
report on Form 10-K for the fiscal year ended April 30,
1994)
10.16.1 Lease Intended as Security, among Lessee, Agent and the
Lessors, dated as of April 29, 1994 (Incorporated by
reference from the Company's report on Form 10-K for the
fiscal year ended April 30, 1994)
10.16.2 Sublease, between Lessee and Sublessee, dated as of April
29, 1994 (Incorporated by reference from the Company's
report on Form 10-K for the fiscal year ended April 30,
1994)
10.16.3 Lease supplement, among Lessee and the Lessors, dated as
of April 29, 1994
10.16.4 Lease supplement, among Lessee and the Lessors, dated as
of January 27, 1995
10.16.5 Lease supplement, among Lessee and the Lessors, dated as
of April 18, 1995
10.17 Employment Agreement between Harold E. Feather and Rykoff-
Sexton, Inc. as of June 20, 1994 (Incorporated by
reference from the Company's report on Form 10-K for the
fiscal year ended April 30, 1994)*
13
<PAGE>
10.18 Employment Agreement between Rykoff-Sexton, Inc. and Mark
Van Stekelenburg as of July 20, 1994 (Incorporated by
reference from the Company's report on Form 10-K for the
fiscal year ended April 30, 1994)*
10.19 Rykoff-Sexton, Inc. Supplemental Executive Retirement Plan
for Mark Van Stekelenburg as of July 20, 1994
(Incorporated by reference from the Company's report on
Form 10-K for the fiscal year ended April 30, 1994)*
13 1995 Annual Report to Shareholders
21 Subsidiaries of Rykoff-Sexton, Inc.
24.1 Power of Attorney of R. Burt Gookin
24.2 Power of Attorney of James I. Maslon
24.3 Power of Attorney of James P. Miscoll
24.4 Power of Attorney of Neil I. Sell
24.5 Power of Attorney of Bernard Sweet
24.6 Power of Attorney of Robert G. Zeller
27 Financial Data Schedule
* Management contract or compensatory plan
All other schedules have been omitted since the required information
is not present or not present in amounts sufficient to require submission of the
schedule, or because the information required is included in the consolidated
financial statements or the notes thereto.
(b) Reports on Form 8-K
During the fourth quarter of fiscal year 1995, the Company filed a
Form 8K dated February 21, 1995 reporting the following items:
Item 2. Acquisition or Disposition of Assets.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(THE REMAINDER OF THIS PAGE HAS BEEN LEFT BLANK.)
14
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, Rykoff-Sexton, Inc. has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: July 27, 1995 RYKOFF-SEXTON, INC.
By /s/ Mark Van Stekelenburg
----------------------------------
Mark Van Stekelenburg
President and Chief Executive
Officer
By /s/ Richard J. Martin
----------------------------------
Richard J. Martin
Senior Vice President and
Chief Financial Officer
By /s/ Victor B. Chavez
----------------------------------
Victor B. Chavez
Vice President and
Chief Accounting Officer
15
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following directors on behalf of the
Registrant on the date indicated.
R. Burt Gookin
James I. Maslon
/s/ Mark Van Stekelenburg
James P. Miscoll -------------------------------
Mark Van Stekelenburg, signing
Neil I. Sell personally as a director and as
attorney in fact for the directors
Bernard Sweet whose names appear opposite.
Robert G. Zeller July 27, 1995
Powers of attorney authorizing Mark Van Stekelenburg, Richard J.
Martin and Victor B. Chavez, and each of them, to sign this Annual Report on
Form 10-K on behalf of the above named directors of Rykoff-Sexton, Inc. have
been filed as an exhibit to this report.
16
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of
Rykoff-Sexton, Inc.:
We have audited, in accordance with generally accepted auditing
standards, the consolidated financial statements included in Rykoff-Sexton,
Inc.'s Form 10-K and have issued our report thereon dated June 9, 1995. Our
audits were made for the purpose of forming an opinion on those statements taken
as a whole. The schedules listed in Item 14.(a)(2) are the responsibility of
the Company's management and are presented for purposes of complying with the
Securities and Exchange Commission's rules and are not part of the basic
consolidated financial statements. These schedules have been subjected to the
auditing procedures applied in the audits of the basic consolidated financial
statements and, in our opinion, fairly state in all material respects the
financial data required to be set forth therein in relation to the basic
consolidated financial statements taken as a whole.
/s/ ARTHUR ANDERSEN LLP
Los Angeles, California
June 9, 1995
17
<PAGE>
RYKOFF-SEXTON, INC.
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED APRIL 29, 1995
<TABLE>
<CAPTION>
1995 1994 1993
-------------- -------------- --------------
<S> <C> <C> <C>
Reserve for doubtful accounts: (1)
- ------------------------------
Balance, beginning of year $ 3,701,000 $ 4,353,000 $ 3,671,000
Add (deduct)-
Additions charged to income 1,310,000 2,524,000 4,207,000
Reserve balance of acquired company 479,000 - -
Accounts written off (1,494,000) (3,176,000) (3,525,000)
-------------- -------------- --------------
Balance, end of year $ 3,996,000 $ 3,701,000 $ 4,353,000
-------------- -------------- --------------
-------------- -------------- --------------
Restructuring reserve:
- ----------------------
Balance, beginning of year $14,936,000 $28,715,000 $ -
Add (deduct)-
Additions charged to income - - 31,000,000
Utilization (5,159,000) (13,779,000) (2,285,000)
-------------- -------------- --------------
Balance, end of year $ 9,777,000 $14,936,000 $28,715,000
-------------- -------------- --------------
-------------- -------------- --------------
Accrued insurance expenses and other:
- -------------------------------------
Balance, beginning of year $17,455,000 $14,220,000 $12,167,000
Add (deduct)-
Additions charged to income 20,812,000 21,975,000 $25,439,000
Employee contributions 5,482,000 4,222,000 3,599,000
Payments (26,157,000) (22,962,000) (26,985,000)
-------------- -------------- --------------
Balance, end of year $17,592,000 $17,455,000 $14,220,000
-------------- -------------- --------------
-------------- -------------- --------------
<FN>
(1) Balances restated to reflect sale of discontinued Tone Brothers, Inc.
subsidiary in October 1994.
</TABLE>
18
<PAGE>
Exhibit No. Description
- ----------- -----------
10.6 Junior Demand Promissory Note dated March 31, 1995 by
Mark Van Stekelenburg and Mirjam Van Stekelenburg
10.16.3 Lease supplement, among Lessee and the Lessors, dated as
of April 29, 1994
10.16.4 Lease supplement, among Lessee and the Lessors, dated as
of January 27, 1995
10.16.5 Lease supplement, among Lessee and the Lessors, dated as
of April 18, 1995
13 Selected Portions of 1995 Annual Report to Shareholders
21 Subsidiaries of Rykoff-Sexton, Inc.
24.1 Power of Attorney of R. Burt Gookin
24.2 Power of Attorney of James I. Maslon
24.3 Power of Attorney of James P. Miscoll
24.4 Power of Attorney of Neil I. Sell
24.5 Power of Attorney of Bernard Sweet
24.6 Power of Attorney of Robert G. Zeller
27 Financial Data Schedule
<PAGE>
EXHIBIT 10.6
JUNIOR DEMAND PROMISSORY NOTE
$350,000.00 North Barrington, Illinois
March 31, 1995
FOR VALUE RECEIVED, MARK VAN STEKELENBURG AND MIRJAM VAN STEKELENBURG
and their successors in trust, as Trustees of the VAN STEKELENBURG LIVING TRUST
dated September 4, 1992, as amended (the "Maker"), hereby promise to pay, on
demand, to the order of RYKOFF-SEXTON, INC., a Delaware corporation ("Payee") in
lawful money of the United States of America in immediately available funds, at
such place as the holder hereof may from time to time designate or in the
absence of such designation at the office of the Payee, 761 Terminal Street,
P.O. Box 21917, Los Angeles, California 90021, the principal sum of THREE
HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($350,000.00) (the "Principal Amount")
or so much thereof as shall be outstanding from time to time, with no interest.
1. The Principal Amount and all other sums due and owing
(collectively the "Indebtedness") pursuant hereto and pursuant to the Mortgage
(as defined in Section 5 hereof) shall be due and payable on demand.
2. The Maker may prepay all or any part of the Indebtedness
evidenced by this Note, without penalty or premium.
3. The Maker represents and agrees that this Note and the rights and
obligations of all parties under this Note shall be governed by and construed
under the applicable laws of the State of Illinois.
4. The parties hereto intend and believe that each provision in this
Note comports with all applicable local, state and federal laws and judicial
decisions. However, if any provision or provisions, or if any portion of any
provision or provisions, in this Note is found by a court of law to be in
violation of any applicable local, state or federal ordinance, statute, law,
administrative or judicial decision, or public policy, and if such court should
declare such portion, provision or provisions of this Note to be illegal,
invalid, unlawful, void or unenforceable as written, then it is the intent of
the parties hereto that such portion, provision or provisions shall be given
force to the fullest possible extent that they are legal, valid and enforceable,
that the remainder of this Note shall be construed as if such illegal, invalid,
unlawful, void or unenforceable portion, provision or provisions were not
contained therein, and that the rights, obligations and interest of the Maker
and holder hereof under the remainder of this Note shall continue in full force
and effect.
<PAGE>
5. This Note is secured by that certain Junior Mortgage dated of
even date herewith ("Mortgage") given by the Maker to the Payee and creating a
second lien on the Premises (as defined in the Mortgage).
6. An "Event of Default" under this Note shall be deemed to have
occurred upon:
(a) the failure of the Maker in the punctual payment of the
Indebtedness on demand and the continuance thereof for five (5) days;
(b) the failure of the Maker to make any payments or perform any
obligations required under the terms of the First Mortgage (as defined in
the Mortgage); and
(c) an Event of Default exists under the terms, conditions, and
provisions of the Mortgage.
It is agreed that at the election of the Payee or the holder or holders of this
Note, and in addition to any other rights or remedies set forth in this Note or
the Mortgage, upon the occurrence of an Event of Default, and without notice,
the indebtedness shall become at once due and payable at the place of payment
aforesaid. Failure of the Payee to exercise any such election shall not
constitute a waiver of the right to exercise the same at a later time or in the
event of any subsequent Event of Default. The rights or remedies of the Payee
herein or in the Mortgage shall be cumulative and concurrent and may be pursued
singly, successively or together against the Maker, the Premises and any other
funds, property, or security held by the Payee for the payment of the
Indebtedness or otherwise, at the sole discretion of the Payee.
6. The undersigned and all other parties now or hereafter liable for
the payment of this Note, whether as guarantor, endorser, surety, or otherwise,
jointly and severally (to the extent permitted by law) (a) waive valuation and
appraisement, demand, presentment for payment, notice of dishonor, diligence in
collection or enforcement, grace, protest and notice of protest, and consent to
all renewals, extensions, releases, restatements, rearrangements, or
substitutions of security, in whole or in part, with or without notice; (b)
waive any rule of law intended for its advantage or protection which would
enable its release or discharge from liability hereon, in whole or in part, for
any reason other than full and complete payment of all amounts due under this
Note; and (c) expressly agree that this Note, or any payment under this Note,
may be extended from time to time in the sole discretion of the Payee without in
any way without affecting the liability of the Maker or any other guarantors and
endorsers.
2
<PAGE>
7. Any notice, demand, request or other communication which any
party hereto may desire or may be required to give to any other party shall be
in writing, and the mailing thereof by registered or certified mail, postage
prepaid, return receipt requested, to the respective addresses of the parties
set forth below, or to such other place as any party hereto may by notice in
writing designate for itself, shall constitute service of notice hereunder on
the date of delivery or refusal to accept delivery:
If to the Maker:
Mark Van Stekelenburg and
Mirjam Van Stekelenburg, as Trustees
34 Deverell Drive
North Barrington, Illinois 60010
If to the Payee:
Rykoff-Sexton, Inc.
761 Terminal Street
P.O. Box 21917
Los Angeles, California 90021
Attention:
-----------------
Any such notice may be served by personal delivery thereof, which delivery shall
constitute service of notice hereunder on the date of such delivery or by
deposit with an internationally recognized overnight courier service, which
deposit shall constitute service of notice on the date of such delivery or
refusal to accept delivery.
8. The Maker agrees to pay all costs and out-of-pocket expenses
(including, but not limited to, reasonable attorneys' fees and expenses)
incurred by holder in connection with any collection and enforcement of this
Note or the Mortgage.
9. Time is hereby declared to be of the essence of this Note and of
every part hereof.
IN WITNESS WHEREOF, the Maker has executed and delivered this Note as
of the day and year first above written.
/s/ Mark Van Stekelenburg
----------------------------------------
Mark Van Stekelenburg, as Trustee,
as aforesaid
/s/ Mirjam Van Stekelenburg
----------------------------------------
Mirjam Van Stekelenburg, as Trustee
as aforesaid
3
<PAGE>
EXHIBIT B TO LEASE
LEASE SUPPLEMENT (Rykoff-Sexton, Inc. Lease)
LEASE SUPPLEMENT (Rykoff-Sexton, Inc. Lease) dated April 29, 1994 (this
"LEASE SUPPLEMENT") between RYKOFF-SEXTON, INC., a Delaware corporation (the
"LESSEE"), BA Leasing & Capital Corporation, Manufacturers Bank and Pitney Bowes
Credit Corporation (the "LESSORS") and BA LEASING & CAPITAL CORPORATION, not in
its individual capacity, but solely in its capacity as Agent for the Lessors;
W I T N E S S E T H :
WHEREAS, the Lessee, the Lessors and the Agent have heretofore entered into
that certain Lease Intended as Security dated as of April 29, 1994 (the
"LEASE"). Unless otherwise defined herein, capitalized terms used herein shall
have the meanings specified in the Lease; and
WHEREAS, the Lease provides for the execution and delivery of a Lease
Supplement on each Delivery Date substantially in the form hereof for the
purpose of confirming the acceptance and lease of certain Equipment, specifying
the Rent applicable to such Equipment and setting forth certain other matters,
all as required pursuant to the Lease;
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, the Agent, the Lessors and the Lessee hereby agree as
follows:
1. INSPECTION AND APPROVAL. The Lessee hereby acknowledges and confirms
that it has inspected and approved the Equipment set forth on SCHEDULE I hereto
for all purposes of the Lease and the other Operative Documents and, as between
the Lessors and the Lessee, such Equipment complies in all material respects
with the specifications for such Equipment, is in good working order, repair,
condition and appearance, and without defect therein with respect to design,
manufacture, conditions, operation and fitness for use or in any other respect,
whether or not discoverable by Lessee as of the date hereof. Lessee reaffirms,
as to the Equipment set forth in SCHEDULE I, each of the waivers,
acknowledgments and agreements of Lessee set forth in Section 4.1 of the Lease.
2. DELIVERY and Acceptance. The Lessors hereby confirm delivery and lease
to the Lessee, and the Lessee hereby confirms acceptance of delivery and lease
from the Lessors, under the
-1-
<PAGE>
Lease as hereby supplemented, of the Equipment listed on SCHEDULE I hereto.
3. FUNCTIONAL UNITS. The Equipment set forth on SCHEDULE I consists of
one or more of the Functional Units set forth or referred to on Schedule Y to
the Participation Agreement, PROVIDED that the Required Lessors may from time to
time, in their reasonable discretion, direct the Agent to allocate such
Equipment into different Functional Units so long as each Item of Equipment
subject to the Lease is at all times part of a Functional Unit.
4. WARRANTY. The Lessee hereby represents and warrants that no event
which would constitute a Casualty under the Lease has occurred with respect to
the Equipment set forth on SCHEDULE I hereto as of the date hereof. Lessee
hereby reaffirms each of the representations and warranties set forth at
Section 5.1 of the Participation Agreement as if made on the date hereof,
including that the Equipment set forth on SCHEDULE I hereto is free and clear of
all Liens other than Permitted Liens.
5. TERM, INTERIM PERIOD, INTEREST RATE AND SUPPLEMENT BALANCE. The term
of this Lease Supplement shall commence on the date hereof and end on the
Termination Date. The Interim Period, the Interest Rate, the Applicable
Percentage and the amount of Rent due on each Payment Date are set forth,
respectively, in the appropriate portions of SCHEDULE II hereto. SCHEDULE III
hereto sets forth the respective portion of each installment of Rent payable on
each Payment Date to be paid to each Lessor. SCHEDULE IV hereto sets forth the
Functional Unit Balance of each Functional Unit as of each Payment Date.
6. RENT.
(a) On the last day of the Interim Period, Lessee shall pay to Agent, for
the benefit of the Lessors, the amount of the Interim Rent set forth at
SCHEDULE II.
(b) On each Payment Date following the expiration of the Interim Period
during the Initial Term and during each Renewal Term, Lessee shall pay to Agent,
for the benefit of the Lessors, the amount of the Basic Rent and Renewal Rent as
set forth at SCHEDULE II hereto.
7. CONFIRMATION. The Lessee hereby confirms its agreement, in accordance
with the Lease as supplemented by this Lease Supplement, to pay Rent to the
Agent, for the benefit of the Lessors, for each Functional Unit leased
hereunder. Nothing herein shall reduce Lessee's obligation to make all other
payments required under the Lease, including those payments to be
-2-
<PAGE>
made on the last day of the Lease Term pursuant to Article XI of the Lease.
8. INCORPORATION INTO LEASE. This Lease Supplement shall be construed in
connection with and as part of the Lease, and all terms, conditions and
covenants contained in the Lease, as supplemented by this Lease Supplement,
shall be and remain in full force and effect and shall govern the Equipment
described in SCHEDULE I hereto.
9. REFERENCES. Any and all notices, requests, certificates and other
instruments executed and delivered concurrently with or after the execution and
delivery of this Lease Supplement may refer to the "Lease Intended as Security,
dated as of April 29, 1994", or may identify the Lease in any other respect
without making specific reference to this Lease Supplement, but nevertheless all
such references shall be deemed to include this Lease Supplement, unless the
context shall otherwise require.
10. COUNTERPARTS. This Lease Supplement may be executed in any number of
counterparts, each executed counterpart constituting an original but all
together one and the same instrument.
11. GOVERNING LAW. This Lease Supplement shall be governed by and
construed in accordance with the laws and decisions of the State of California
without regard to principles of conflicts of laws.
-3-
<PAGE>
IN WITNESS WHEREOF, the Agent, Lessors and the Lessee have caused this
Lease Supplement to be duly executed and delivered on the day and year first
above written.
RYKOFF-SEXTON, INC., BA LEASING & CAPITAL CORPORATION,
as Lessee not individually, but solely
as Agent for the Lessors
By /s/ Victor B. Chavez By /s/ Cheryl J. Emerson
--------------------------- ----------------------------
Name Printed: Victor B. Chavez Name Printed: Cheryl J. Emerson
---------------- -----------------
Title: VP and Chief Title: Assistant Vice President
Accounting Officer
----------------------- ------------------------
By /s/ Christine Bennett
----------------------------
Name Printed: Christine Bennett
----------------
Title: Assistant Vice President
------------------------
LESSORS:
PITNEY BOWES CREDIT BA LEASING & CAPITAL CORPORATION
CORPORATION
By /s/ Russell D. Piper By /s/ Cheryl J. Emerson
--------------------------- ----------------------------
Name Printed: Russell D. Piper Name Printed: Cheryl J. Emerson
----------------- -----------------
Title: Region Credit Manager Title: Assistant Vice President
----------------------- ------------------------
By /s/ Christine Bennett
----------------------------
Name Printed: Christine Bennett
-----------------
Title: Assistant Vice President
------------------------
MANUFACTURERS BANK
By /s/ Mike Toomey
---------------------------
Name Printed: Mike Toomey
----------------
Title: Vice President
-----------------------
<PAGE>
THIS LEASE SUPPLEMENT IS "COUNTERPART
NO. 1 - LESSOR'S ORIGINAL COPY"
LEASE SUPPLEMENT
(Rykoff-Sexton, Inc. Lease)
LEASE SUPPLEMENT (Rykoff-Sexton, Inc. Lease) dated January 27, 1995 (this
"LEASE SUPPLEMENT") among RYKOFF-SEXTON, INC., a Delaware corporation (the
"LESSEE"), BA Leasing & Capital Corporation, Manufacturers Bank and Pitney Bowes
Credit Corporation (the "LESSORS") and BA LEASING & CAPITAL CORPORATION, not in
its individual capacity, but solely in its capacity as Agent for the Lessors.
W I T N E S S E T H :
WHEREAS, the Lessee, the Lessors and the Agent have heretofore entered into
that certain Lease Intended as Security dated as of April 29, 1994 (as amended,
the "LEASE"). Unless otherwise defined herein, capitalized terms used herein
shall have the meanings specified in that certain Participation Agreement, dated
as of April 29, 1994, originally entered into among Lessee, Lessors, Agent and
Tone Brothers, Inc. (as amended, the "PARTICIPATION AGREEMENT"); and
WHEREAS, the Lease provides for the execution and delivery of a Lease
Supplement on each Delivery Date substantially in the form hereof for the
purpose of confirming the acceptance and lease of certain Equipment, specifying
the Rent applicable to such Equipment and setting forth certain other matters,
all as required pursuant to the Lease;
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, the Agent, the Lessors and the Lessee hereby agree as
follows:
1. INSPECTION AND APPROVAL. The Lessee hereby acknowledges and confirms
that it has inspected and approved the Equipment set forth on SCHEDULE I hereto
for all purposes of the Lease and the other Operative Agreements and, as between
the Lessors and the Lessee, such Equipment complies in all material respects
with the specifications for such Equipment, is in good working order, repair,
condition and appearance, and without defect therein with respect to design,
manufacture, conditions, operation and fitness for use or in any other respect,
whether or not discoverable by Lessee as of the date hereof. Lessee reaffirms,
as to the Equipment set forth in SCHEDULE I, each of the waivers,
acknowledgments and agreements of Lessee set forth in SECTION 4.1 of the Lease.
<PAGE>
2. DELIVERY AND ACCEPTANCE. The Lessors hereby confirm delivery of and
lease to the Lessee, and the Lessee hereby confirms acceptance of delivery of
and leases from the Lessors, under the Lease as hereby supplemented, the
Equipment listed on SCHEDULE I hereto.
3. FUNCTIONAL UNITS. The Equipment set forth on SCHEDULE I consists of
one or more of the Functional Units set forth or referred to on Schedule Y to
the Participation Agreement, PROVIDED that the Required Lessors may from time to
time, in their reasonable discretion, direct the Agent to allocate such
Equipment into different Functional Units so long as each Item of Equipment
subject to the Lease is at all times part of a Functional Unit.
4. WARRANTY. The Lessee hereby represents and warrants that no event
which would constitute a Casualty under the Lease has occurred with respect to
the Equipment set forth on SCHEDULE I hereto as of the date hereof. Lessee
hereby reaffirms each of the representations and warranties set forth at
Section 5.1 of the Participation Agreement as if made on the date hereof,
including that the Equipment set forth on SCHEDULE I hereto is free and clear of
all Liens other than Permitted Liens.
5. TERM, INTERIM PERIOD, INTEREST RATE, RENT AND SUPPLEMENT BALANCE. The
term of this Lease Supplement shall commence on the date hereof and end on the
Termination Date. The Interim Period, the Interest Rate, the Applicable
Percentage and the amount of Rent due on each Payment Date are set forth,
respectively, in the appropriate in the appropriate portions of SCHEDULE II
hereto. SCHEDULE III hereto sets forth the respective portion of each
installment of Rent Payable on each Payment Date to be paid to each Lessor.
SCHEDULE IV hereto sets forth the Functional Unit Balance of each Functional
Unit as of each Payment Date.
6. RENT.
(a) On the last day of the Interim Period, Lessee shall pay to Agent, for
the benefit of the Lessors, the amount of the Interim Rent set forth at
SCHEDULE II.
(b) On each Payment Date following the expiration of the Interim Period
during the Initial Term and during each Renewal Term, Lessee shall pay to Agent,
for the benefit of the Lessors, the amount of the Basic Rent and Renewal Rent as
set forth at SCHEDULE II hereto.
7. CONFIRMATION. The Lessee hereby confirms its agreement, in accordance
with the Lease as supplemented by this Lease Supplement, to pay Rent to the
Agent, for the benefit of the Lessors, for each Functional Unit leased
hereunder. Nothing herein shall reduce Lessee's obligation to make all other
payments
-2-
<PAGE>
required under the Lease, including those payments to be made on the last day of
the Lease Term pursuant to Article XI of the Lease.
8. INCORPORATION INTO LEASE. This Lease Supplement shall be construed in
connection with and as part of the Lease, and all terms, conditions and
covenants contained in the Lease, as supplemented by this Lease Supplement,
shall be and remain in full force and effect and shall govern the Equipment
described in SCHEDULE I hereto.
9. REFERENCES. Any and all notices, requests, certificates and other
instruments executed and delivered concurrently with or after the execution and
delivery of this Lease Supplement may refer to the "Lease Intended as Security,
dated as of April 29, 1994", or may identify the Lease in any other respect
without making specific reference to this Lease Supplement, but nevertheless all
such references shall be deemed to include this Lease Supplement, unless the
context shall otherwise require.
10. COUNTERPARTS. This Lease Supplement may be executed in any number of
counterparts, each executed counterpart constituting an original but all
together one and the same instrument.
11. GOVERNING LAW. This Lease Supplement shall be governed by and
construed in accordance with the laws and decisions of the State of California
without regard to principles of conflicts of laws.
[remainder of page intentionally left blank]
-3-
<PAGE>
IN WITNESS WHEREOF, the Agent, Lessors and the Lessee have caused this
Lease Supplement to be duly executed and delivered on the day and year first
above written.
RYKOFF-SEXTON, INC., BA LEASING & CAPITAL CORPORATION,
as Lessee not individually, but solely
as Agent for the Lessors
By /s/ Victor B. Chavez By /s/ Cheryl J. Emerson
--------------------------------- ---------------------------------
Name Printed: Victor B. Chavez Name Printed: Cheryl J. Emerson
---------------------- --------------------
Title: VP and Chief Acctg Officer Title: AVP
----------------------------- ----------------------------
By /s/ Christine Bennett Lee
--------------------------------
Name Printed: Christine Bennett Lee
----------------------
Title: Vice President
-----------------------------
LESSORS:
PITNEY BOWES CREDIT BA LEASING & CAPITAL CORPORATION
CORPORATION
By /s/ Russell D. Piper By /s/ Cheryl J. Emerson
------------------------------ --------------------------------
Name Printed: Russell D. Piper Name Printed: Cheryl J. Emerson
------------------ ---------------------
Title: Region Credit Manager Title: AVP
------------------------- ----------------------------
By Christine Bennett Lee
--------------------------------
Name Printed: Christine Bennett Lee
---------------------
Title: Vice President
----------------------------
MANUFACTURERS BANK
By /s/ Mike Toomey
---------------------------
Name Printed: Mike Toomey
----------------
Title: V.P.
-----------------------
<PAGE>
Exhibit 10.16.5
THIS LEASE SUPPLEMENT IS NOT "COUNTERPART
NO. 1 - LESSOR'S ORIGINAL COPY"
LEASE SUPPLEMENT
(Rykoff-Sexton, Inc. Lease)
LEASE SUPPLEMENT (Rykoff-Sexton, Inc. Lease) dated April 18, 1995 (this
"LEASE SUPPLEMENT") among RYKOFF-SEXTON, INC., a Delaware corporation (the
"LESSEE"), BA Leasing & Capital Corporation, Manufacturers Bank and Pitney Bowes
Credit Corporation (the "LESSORS") and BA LEASING & CAPITAL CORPORATION, not in
its individual capacity, but solely in its capacity as Agent for the Lessors.
W I T N E S S E T H :
WHEREAS, the Lessee, the Lessors and the Agent have heretofore entered into
that certain Lease Intended as Security dated as of April 29, 1994 (as amended,
the "LEASE"). Unless otherwise defined herein, capitalized terms used herein
shall have the meanings specified in that certain Participation Agreement, dated
as of April 29, 1994, originally entered into among Lessee, Lessors, Agent and
Tone Brothers, Inc. (as amended, the "PARTICIPATION AGREEMENT"); and
WHEREAS, the Lease provides for the execution and delivery of a Lease
Supplement on each Delivery Date substantially in the form hereof for the
purpose of confirming the acceptance and lease of certain Equipment, specifying
the Rent applicable to such Equipment and setting forth certain other matters,
all as required pursuant to the Lease;
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, the Agent, the Lessors and the Lessee hereby agree as
follows:
1. INSPECTION AND APPROVAL. The Lessee hereby acknowledges and confirms
that it has inspected and approved the Equipment set forth on SCHEDULE I hereto
for all purposes of the Lease and the other Operative Agreements and, as between
the Lessors and the Lessee, such Equipment complies in all material respects
with the specifications for such Equipment, is in good working order, repair,
condition and appearance, and without defect therein with respect to design,
manufacture, conditions, operation and fitness for use or in any other respect,
whether or not discoverable by Lessee as of the date hereof. Lessee reaffirms,
as to the Equipment set forth in SCHEDULE I, each of the waivers,
acknowledgments and agreements of Lessee set forth in SECTION 4.1 of the Lease.
<PAGE>
2. DELIVERY AND ACCEPTANCE. The Lessors hereby confirm delivery of and
lease to the Lessee, and the Lessee hereby confirms acceptance of delivery of
and leases from the Lessors, under the Lease as hereby supplemented, the
Equipment listed on SCHEDULE I hereto.
3. FUNCTIONAL UNITS. The Equipment set forth on SCHEDULE I consists of
one or more of the Functional Units set forth or referred to on Schedule Y to
the Participation Agreement, PROVIDED that the Required Lessors may from time to
time, in their reasonable discretion, direct the Agent to allocate such
Equipment into different Functional Units so long as each Item of Equipment
subject to the Lease is at all times part of a Functional Unit.
4. WARRANTY. The Lessee hereby represents and warrants that no event
which would constitute a Casualty under the Lease has occurred with respect to
the Equipment set forth on SCHEDULE I hereto as of the date hereof. Lessee
hereby reaffirms each of the representations and warranties set forth at
Section 5.1 of the Participation Agreement as if made on the date hereof,
including that the Equipment set forth on SCHEDULE I hereto is free and clear of
all Liens other than Permitted Liens.
5. TERM, INTEREST RATE, RENT AND SUPPLEMENT BALANCE. The term of this
Lease Supplement shall commence on the date hereof and end on the Termination
Date. The Initial Term, the Interest Rate, the Applicable Percentage and the
amount of Rent due on each Payment Date are set forth, respectively, in the
appropriate portions of SCHEDULE II hereto. SCHEDULE III hereto sets forth the
respective portion of each installment of Rent Payable on each Payment Date to
be paid to each Lessor. SCHEDULE IV hereto sets forth the Functional Unit
Balance of each Functional Unit as of each Payment Date. Solely for purposes of
this Lease Supplement, payments of Rent have been calculated as if the word
"second" in clause (vii) of Section 3.1 of the Participation Agreement had been
replaced with the word "third".
6. RENT.
(a) On the last day of the Initial Term, Lessee shall pay to Agent, for
the benefit of the Lessors, the amount of the Basic Rent set forth at
SCHEDULE II.
(b) On each Payment Date during each Renewal Term, Lessee shall pay to
Agent, for the benefit of the Lessors, the amount of Renewal Rent as set forth
at SCHEDULE II hereto.
7. CONFIRMATION. The Lessee hereby confirms its agreement, in accordance
with the Lease as supplemented by this Lease Supplement, to pay Rent to the
Agent, for the benefit of the Lessors, for each Functional Unit leased
hereunder. Nothing herein
-2-
<PAGE>
shall reduce Lessee's obligation to make all other payments required under the
Lease, including those payments to be made on the last day of the Lease Term
pursuant to Article XI of the Lease.
8. INCORPORATION INTO LEASE. This Lease Supplement shall be construed in
connection with and as part of the Lease, and all terms, conditions and
covenants contained in the Lease, as supplemented by this Lease Supplement,
shall be and remain in full force and effect and shall govern the Equipment
described in SCHEDULE I hereto.
9. REFERENCES. Any and all notices, requests, certificates and other
instruments executed and delivered concurrently with or after the execution and
delivery of this Lease Supplement may refer to the "Lease Intended as Security,
dated as of April 29, 1994", or may identify the Lease in any other respect
without making specific reference to this Lease Supplement, but nevertheless all
such references shall be deemed to include this Lease Supplement, unless the
context shall otherwise require.
10. COUNTERPARTS. This Lease Supplement may be executed in any number of
counterparts, each executed counterpart constituting an original but all
together one and the same instrument.
11. GOVERNING LAW. This Lease Supplement shall be governed by and
construed in accordance with the laws and decisions of the State of California
without regard to principles of conflicts of laws.
[remainder of page intentionally left blank]
-3-
<PAGE>
IN WITNESS WHEREOF, the Agent, Lessors and the Lessee have caused this
Lease Supplement to be duly executed and delivered on the day and year first
above written.
RYKOFF-SEXTON, INC., BA LEASING & CAPITAL CORPORATION,
as Lessee not individually, but solely
as Agent for the Lessors
By /s/ Victor B. Chavez By /s/ Cheryl J. Emerson
---------------------------------- -----------------------------
Name Printed: Victor B. Chavez Name Printed: Cheryl J. Emerson
---------------------- ------------------
Title: VP & Chief Accounting Officer Title: Assistant Vice President
----------------------------- --------------------------
By /s/ Eileen S. Uyematsu
-----------------------------
Name Printed: Eileen S. Uyematsu
-------------------
Title: Vice President
--------------------------
LESSORS:
PITNEY BOWES CREDIT BA LEASING & CAPITAL CORPORATION
CORPORATION
By /s/ Russell D. Piper By /s/ Cheryl J. Emerson
---------------------------- -----------------------------
Name Printed: Russell D. Piper Name Printed: Cheryl J. Emerson
---------------- ------------------
Title: Region Credit Manager Title: Assistant Vice President
----------------------- -------------------------
By /s/ Eileen S. Uyematsu
-----------------------------
Name Printed: Eileen S. Uyematsu
------------------
Title: Vice President
-------------------------
MANUFACTURERS BANK
By /s/ Mike Toomey
-------------------------
Name Printed: Mike Toomey
-------------
Title: V.P.
---------------------
<PAGE>
RYKOFF-SEXTON, INC.
-------------------
-------------------
1995 ANNUAL REPORT
[PHOTOGRAPH LOGO]
[RYKOFF SECTION LOGO]
<PAGE>
IN BRIEF
Established in 1911, Rykoff-Sexton, Inc. is a leading manufacturer and
distributor of high quality foods and related non-food products and services for
the foodservice industry throughout the United States. The Company's products
and services are sold wherever food is prepared and consumed away from home.
Customers include restaurants, industrial cafeterias, health care facilities,
schools and colleges, hotels, airlines, supermarket service delicatessen
departments and other segments of the travel and leisure markets.
Rykoff-Sexton manufactures a variety of food and non-food products specifically
developed to meet the requirements of foodservice customers. These products
include teas and sauces; extracts and colors; mayonnaise and salad dressings;
oils and shortenings; gelatins and dessert powders; beverage bases; canned and
frozen soups; cleaning compounds and detergents; low temperature dishwashing
machines; plastic products; and various paper items.
Approximately 41,000 products are distributed by the Company, including a full
line of private and national branded processed foods, produced both domestically
and imported directly or indirectly from 60 countries around the world. The
Company also distributes foodservice equipment and supplies, including
dinnerware, silverware, flatware, glassware and kitchen utensils; and a complete
line of paper, janitorial and other non-food items. In addition, the Company
offers restaurant design and engineering services.
Rykoff-Sexton has earned a leadership position in its industry by consistent
adherence to high standards of product quality and customer service, and by
meeting the continually changing needs of its customers who provide foodservice
to people away from home.
MISSION STATEMENT
- - Be the leader in our industry by providing the finest people, products and
services.
- - Assist our customers to be successful by building long-term business
relationships through our people, proven quality products, demonstrated
integrity and superior services.
- - Have a business environment, based on sincerity of purpose, for all of our
people that provides opportunity for growth and advancement as a reward for
excellence and individual accomplishments.
- - Achieve for our shareholders a premium return on investment through optimal
utilization of capital and human resources.
- - Continue our tradition: All who come here to trade fairly, whether to buy or
to sell, are always welcome.
<PAGE>
DIVIDEND RECORD
<TABLE>
<CAPTION>
Fiscal Year 1995 1994 1993
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH DIVIDENDS PER SHARE
First six months $ -- $ -- $ .20
Last six months .03 -- .06
-------------------------------------------------------
-------------------------------------------------------
</TABLE>
STOCK PRICE DATA
MARKET PRICE OF COMMON STOCK
The following table sets forth the closing high and low market prices per share
of Rykoff-Sexton, Inc.'s common stock.
The Company's common stock is listed on the New York Stock Exchange (Symbol
RYK).
<TABLE>
<CAPTION>
Fiscal Year 1995 1994 1993
Low High Low High Low High
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
First quarter 14 3/8 16 7/8 11 12 7/8 12 5/8 14 7/8
Second quarter 15 17 7/8 12 1/2 14 7/8 12 15 5/8
Third quarter 15 7/8 16 3/4 14 5/8 17 3/4 11 1/2 14 1/4
Fourth quarter 14 7/8 17 7/8 14 3/4 17 5/8 11 14 1/4
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
THE COMPANY ESTIMATES THAT THERE ARE APPROXIMATELY 8,300 SHAREHOLDERS, INCLUDING
THOSE THROUGH NOMINEES, AS OF JUNE 1995.
- PAGE ONE -
<PAGE>
<TABLE>
<CAPTION>
TEN YEAR SUMMARY OF OPERATIONS AND FINANCIAL HIGHLIGHTS
Fiscal Year 1995 1994 1993
(52 weeks) (52 weeks) (52 weeks)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) (Restated)(7) (Restated)(7)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $ 1,569,019 $ 1,444,226 $ 1,412,943
Gross profit 327,728 316,361 313,823
Warehouse, selling, general and administrative expenses 301,235 297,489 308,774
Interest expense, net of interest income 10,867 11,946 12,401
Income (loss) from continuing operations
before provision (benefit) for income taxes,
extraordinary item and change in accounting (5) 15,626 6,926 (38,352)
Provision (benefit) for income taxes
Federal (1) 4,828 2,175 (12,465)
State 1,422 630 (1,737)
Income (loss) from continuing operations before
extraordinary item and change in accounting (5) 9,376 4,121 (24,150)
Income (loss) before extraordinary item
and change in accounting (5) 32,872 7,362 (19,692)
Net income (loss) (5) (6) 32,872 5,918 (18,960)
Earnings (loss) per share (2)
Income (loss) from continuing operations
before extraordinary item
and change in accounting (5) $ .64 $ .28 $ (1.66)
Income (loss) before extraordinary item
and change in accounting (5) 2.24 .50 (1.35)
Net income (loss) (5) (6) 2.24 .40 (1.30)
Cash dividends 437 --- 3,771
Cash dividends per share (3) $ .03 --- $ .26
Average shares outstanding (2) 14,730 14,601 14,508
-----------------------------------------------------------------------
Total assets $ 524,068 $ 470,018 $ 448,411
Working capital 161,616 154,641 143,372
Current ratio 2.0:1 2.2:1 2.2:1
Long-term debt (4) 146,536 151,227 144,669
Shareholders' equity 206,540 173,307 166,704
Shareholders' equity
per share (2) $ 14.15 $ 11.91 $ 11.50
Common shares
outstanding (2) 14,598 14,547 14,490
-------------------------------------------------------------------
-------------------------------------------------------------------
<FN>
(1) INVESTMENT TAX CREDITS AND OTHER TAX CREDITS HAVE BEEN RECORDED AS
REDUCTIONS OF THE PROVISION FOR INCOME TAXES. IN THE 10-YEAR PERIOD ENDED
APRIL 29, 1995, SUCH CREDITS APPROXIMATED $893,000 IN 1986. NO SIGNIFICANT
AMOUNTS WERE AVAILABLE IN 1995 TO 1987.
(2) ADJUSTED TO REFLECT 5-FOR-4 STOCK SPLITS DISTRIBUTED ON JANUARY 24, 1995 AND
JANUARY 16, 1989. WHEN CONVERTIBLE SUBORDINATED DEBENTURES WERE
OUTSTANDING, FULLY DILUTED EARNINGS PER SHARE WERE $.72 IN 1987 AND $.78 IN
1986.
(3) THE CASH DIVIDENDS PER SHARE AMOUNTS HAVE BEEN ADJUSTED TO GIVE EFFECT TO
THE 5-FOR-4 STOCK SPLITS DISCUSSED IN NOTE (2). THE CASH DIVIDENDS PER
SHARE, BASED ON THE NUMBER OF SHARES OUTSTANDING AS OF THE DATES OF THE CASH
DIVIDENDS, WERE $.64 FOR 1988, $.60 FOR 1987, $.575 FOR 1986.
</TABLE>
- PAGE SIX -
<PAGE>
<TABLE>
<CAPTION>
RYKOFF-SEXTON, INC.
1992 1991 1990 1989 1988 1987 1986
(53 weeks) (52 weeks) (52 weeks) (52 weeks) (52 weeks) (52 weeks) (53 weeks)
(Restated)(7) (Restated)(7) (Restated)(7) (Restated)(7)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$1,447,305 $1,404,770 $1,356,561 $1,293,461 $1,143,275 $1,081,648 $1,037,272
337,163 329,113 325,014 307,789 278,021 261,009 245,113
313,646 299,131 295,773 266,351 240,798 232,582 218,924
10,301 8,512 9,706 7,175 8,001 11,920 10,425
13,216 21,470 19,535 34,263 29,222 16,507 15,784
4,083 6,635 6,036 10,382 9,644 6,759 5,668
1,203 1,953 1,778 3,314 3,214 1,747 1,465
7,930 12,882 11,721 20,567 16,364 8,001 8,651
10,006 13,823 11,293 20,567 16,364 8,001 8,651
10,006 13,823 11,293 20,567 16,364 8,001 8,651
$ .55 $ .89 $ .80 $ 1.40 $ 1.22 $ .73 $ .79
.69 .95 .77 1.40 1.22 .73 .79
.69 .95 .77 1.40 1.22 .73 .79
6,951 6,968 7,069 6,740 5,655 4,166 3,986
$ .48 $ .48 $ .48 $ .46 $ .42 $ .38 $ .37
14,521 14,515 14,739 14,735 13,371 10,929 10,906
- --------------------------------------------------------------------------------------------------------------------------------
$ 471,879 $ 397,536 $ 399,343 $ 392,386 $ 325,762 $ 307,175 $ 301,724
156,822 160,059 166,687 172,536 165,902 154,475 143,293
2.2:1 2.5:1 2.6:1 2.8:1 3.2:1 3.3:1 2.9:1
139,333 91,028 107,201 110,866 77,777 138,339 131,253
189,703 185,863 180,422 178,605 163,863 94,463 90,560
$ 13.09 $ 12.86 $ 12.39 $ 12.10 $ 11.14 $ 8.71 $ 8.35
14,498 14,450 14,561 14,760 14,713 10,851 10,843
_________________________________________________________________________________________________________________________________
<FN>
(4) INCLUDED IN LONG-TERM DEBT ARE CONVERTIBLE SUBORDINATED DEBENTURES IN THE AMOUNT OF $60,000,000 IN 1987 AND 1986, AND
OBLIGATIONS UNDER CAPITAL LEASES OF $944,000, $1,340,000, $1,744,000, $2,129,000, AND $2,791,000 FOR 1990, 1989, 1988,
1987 AND 1986, RESPECTIVELY.
(5) FOR 1993, THIS ITEM INCLUDES A ONE-TIME PRETAX RESTRUCTURING CHARGE OF $31 MILLION ($1.34 PER SHARE ON AN AFTER TAX
BASIS.)
(6) FOR 1994, THIS ITEM INCLUDES THE WRITE-OFF OF DEFERRED FINANCE COSTS OF $2,447,000 ($1,444,000, NET OF INCOME TAX
BENEFIT OF $1,003,000 OR $.10 PER SHARE,) FOR 1993, THE CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING FOR INCOME
TAXES FOR $732,000 OR $.05 PER SHARE AND, FOR 1992, A PROVISION FOR LITIGATION SETTLEMENT OF $4,350,000 ($2,610,000,
NET OF INCOME TAX BENEFIT OF $1,740,000 OR $.18 PER SHARE).
(7) AMOUNTS RESTATED TO REFLECT SALE OF DISCONTINUED TONE BROTHERS, INC. SUBSIDIARY IN OCTOBER 1994.
</TABLE>
- PAGE SEVEN -
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's discussion and analysis of the Company's results of operations and
financial condition includes the accompanying consolidated financial statements
and notes thereto and the following additional information.
RESULTS OF OPERATIONS For the fiscal year ended April 29, 1995, the Company's
sales were $1.569 billion, an increase of $124.8 million or 8.64% over the prior
year. This sales growth was attributable to the Company's sales and marketing
strategies combined with new product lines, and was achieved despite the impact
of severe weather in January and February 1995 throughout the West Coast region.
For the fiscal year ended April 30, 1994, sales increased $31.3 million or 2.2%
from fiscal 1993. This increase resulted from the introduction of new product
lines and new sales and marketing programs, and was achieved despite the adverse
effects of the closure of several inefficient operations, the Los Angeles
earthquake and severe winter weather in the Midwest and East.
The gross profit margin for fiscal 1995 declined to 20.9% from 21.9% in
fiscal 1994 primarily due to new product lines, changes in customer mix, the
implementation of new sales promotion programs and cost increases in certain
product categories. The gross profit margin for fiscal 1994 declined to 21.9%
from 22.2% in fiscal 1993 as a result of the introduction of new product
lines and new sales and marketing programs, as well as changes in customer
mix.
Warehouse, selling, general and administrative expenses as a percentage of sales
for fiscal 1995 decreased to 19.2% from 20.6% in fiscal 1994 and 21.8% in fiscal
1993, primarily resulting from increased vendor support programs and improved
operating efficiencies. The decrease in operating expenses was also impacted by
the effect of changes in actuarial assumptions affecting the determination of
the Company's annual pension contribution and expense. These changes increased
1995 pre-tax earnings by $0.77 million. For fiscal 1994, warehouse, selling,
general and administrative expenses decreased $11.3 million or 3.7% to
$297.5 million from 1993, primarily because of the Company's progress in
containing costs and improving operating efficiencies under its Project
RESULTS program.
Net interest expense for fiscal 1995 decreased by $1.1 million from fiscal
1994, primarily due to increased capitalized interest and interest income.
Net interest expense for fiscal 1994 decreased by $0.5 million over fiscal 1993
due to reduced borrowing levels and lower interest rates.
In fiscal 1993, the Company provided for a restructuring charge of $31.0 million
for a business reorganization. This charge included provisions for facility
closures, relocation of distribution centers into more efficient facilities,
consolidation of the Company's two distribution divisions, workforce reductions
and the implementation of new warehouse and transportation systems throughout
the Company. Management believes that these changes, which were part of the
Company's Project RESULTS program, improved the Company's operating performance
in both fiscal 1994 and 1995. In addition, on an ongoing basis, management
considers strategic actions that will allow it to enhance its core distribution
and manufacturing businesses.
Effective May 2, 1992, the Company adopted SFAS 109 "Accounting for Income
Taxes", which is more fully described in Note 1 to the accompanying financial
statements. The effective income tax rate for fiscal 1995 was 40% as compared
to the effective income tax rate of 40.5% in fiscal 1994, and the effective
income tax benefit rate of 37% in fiscal 1993. The difference between the
effective rates for 1994 and 1993 represents the impact of valuation
allowances that were set up under SFAS 109 to properly reflect the expected
future benefit from the deferred tax assets associated with the one-time
restructuring charge. The cumulative positive effect of the change in the
method of accounting for income taxes for fiscal 1993 was $0.7 million or
$0.05 per share.
Income from continuing operations increased in fiscal 1995 by $5.3 million to
$9.4 million from $4.1 million in fiscal 1994. The primary reasons for these
improvements were increased sales, reduced operating expenses as a percentage
of sales
- PAGE EIGHT -
<PAGE>
RYKOFF-SEXTON, INC.
and reduced interest expense as well as the operating results of Continental
Foods, Inc. from the date of acquisition (see Note 2). Income from continuing
operations rose to $4.1 million in fiscal 1994, from a loss of $24.2 million
in fiscal 1993. This improvement resulted from the sales gains and operating
expense reductions that were achieved in fiscal 1994 and also reflects the
impact of the restructuring charge in the prior year.
On October 27, 1994, the Company sold its Tone Brothers, Inc. subsidiary.
The Company received $96 million in cash in payment of the purchase price.
As a result of the sale, the Company recognized a net gain of $23.4 million.
The extraordinary item reported in fiscal 1994 of $1.4 million, net of tax
benefit, resulted from the write-off of deferred finance costs associated
with early retirement of the Company's 8.60% Senior Notes and its outstanding
senior indebtedness under a prior bank credit facility as more fully described
in Note 3 to the accompanying consolidated financial statements.
LIQUIDITY AND CAPITAL RESOURCES Cash provided from operations in fiscal 1995
was $12.0 million as compared to $21.5 million in fiscal 1994. This decrease
was primarily due to increases in accounts receivable, inventories and
prepaids, which were partially offset by increases in accounts payable and
accrued liabilities and net income.
For fiscal 1995, cash flows used in investing activities decreased from
the prior year by $2.0 million. The improvement resulted primarily from the
proceeds of $96 million on the sale of Tone Brothers, Inc. which was offset
by an increase of $35.4 million in capital expenditures, $24.8 million for
the acquisition of Continental, and cash used in discontinued operations
of $30.0 million. The increase in capital expenditures is mainly attributable
to the construction of the new Los Angeles distribution center. Cash flows
used in investing activities in fiscal 1994 decreased by $10.2 million to
$11.7 million mainly due to the proceeds from sale and leaseback transaction
of $6.8 million and a decrease of cash used in discontinued operations of
$3.7 million.
Cash used in financing activities was $7.1 million for fiscal 1995 compared to
$8.2 million for fiscal 1994 and $18.7 million for fiscal 1993. The decrease
in fiscal 1995 primarily reflects the repayments of 8.60% Senior Notes in
fiscal 1994 and 1993 as well as repayment of short-term borrowings in fiscal
1993. In November 1993, the Company issued $130 million in 8 7/8% Senior
Subordinated Notes, and obtained a $100 million credit line and $15 million
letter of credit facility, subsequently increased to $25 million, from its
bank (the "New Credit Facility"). The proceeds from the issuance of 8 7/8%
Notes, together with borrowings under the New Credit Facility, were used to
retire $128.1 million principal amount of 8.60% Senior Notes and outstanding
senior indebtedness under the prior bank credit facility. In fiscal 1993, the
Company used cash from operations, together with borrowings of $15.0 million
under its credit line, to make principal payments of $9.7 million on certain
of its 8.60% Senior Notes and other long-term debt, to repay short-term
borrowings of $20.0 million and to pay dividends of $3.8 million.
Working capital was $161.6 million with a current ratio of 2.0:1 at April 29,
1995 as compared to working capital of $154.6 million with a current ratio of
2.2:1 at April 30, 1994. On April 29, 1995, current assets were approximately
61% of the total assets of the Company.
The Company relocated its Los Angeles distribution branch to a new facility
in early fiscal 1996. The cost of this new facility is estimated to be
approximately $45.0 million.
As more fully discussed in Note 10 to the financial statements, the Company
is subject to arbitration proceedings arising from the sale of a former
subsidiary.
- PAGE NINE -
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS RYKOFF-SEXTON, INC.
Years Ended April 29, 1995 April 30, 1994 May 1, 1993
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) (52 weeks) (52 weeks) (52 weeks)
(Restated) (Restated)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales $1,569,019 $1,444,226 $1,412,943
Cost of sales 1,241,291 1,127,865 1,099,120
-------------------------------------------
Gross profit 327,728 316,361 313,823
Warehouse, selling, general and administrative
expenses 301,235 297,489 308,774
Restructuring costs -- -- 31,000
-------------------------------------------
Income (loss) from operations 26,493 18,872 (25,951)
Interest income 267 40 28
Interest expense, net 11,134 11,986 12,429
-------------------------------------------
Income (loss) from continuing operations
before provision (benefit) for income taxes,
extraordinary item and change in accounting 15,626 6,926 (38,352)
Provision (benefit) for income taxes 6,250 2,805 (14,202)
-------------------------------------------
Income (loss) from continuing operations before
extraordinary item and change in accounting 9,376 4,121 (24,150)
Discontinued operations:
Income from discontinued operations,
net of income taxes of $95, $2,207 and $2,624 137 3,241 4,458
Gain on disposal of discontinued
operations, net of income taxes of $15,687 23,359 -- --
-------------------------------------------
Income (loss) before extraordinary item
and change in accounting 32,872 7,362 (19,692)
Extraordinary item, net of income taxes -- (1,444) --
Cumulative effect of change in accounting
for income taxes -- -- 732
-------------------------------------------
Net income (loss) $ 32,872 $ 5,918 $ (18,960)
-------------------------------------------
-------------------------------------------
Earnings per share
Income (loss) from continuing operations
before extraordinary item and change in
accounting $ .64 $ .28 $ (1.66)
Income from discontinued operations .01 .22 .31
Gain on disposal of discontinued operations 1.59 -- --
-------------------------------------------
Income (loss) before extraordinary item
and change in accounting 2.24 .50 (1.35)
Extraordinary item -- (.10) --
Change in accounting for income taxes -- -- .05
-------------------------------------------
Net income (loss) $ 2.24 $ .40 $ (1.30)
-------------------------------------------
-------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
- PAGE TEN -
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS RYKOFF-SEXTON, INC.
April 29, 1995 April 30, 1994
(DOLLARS IN THOUSANDS) (Restated)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 4,959 $ 9,830
Accounts receivable, less reserves of
$3,996 in 1995 and $3,701 in 1994 151,379 138,675
Inventories 138,122 119,554
Prepaid expenses 24,979 16,008
-------------------------------------
Total current assets 319,439 284,067
-------------------------------------
Net assets of discontinued operations -- 42,502
-------------------------------------
PROPERTY, PLANT AND EQUIPMENT, AT COST
Land, buildings and improvements 149,395 108,526
Transportation equipment 35,602 43,804
Office, warehouse and manufacturing equipment 128,509 112,813
-------------------------------------
313,506 265,143
Less: accumulated depreciation and amortization 137,397 129,916
-------------------------------------
176,109 135,227
-------------------------------------
OTHER ASSETS, NET 28,520 8,222
-------------------------------------
$ 524,068 $ 470,018
-------------------------------------
-------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 97,623 $ 82,540
Accrued payroll 11,357 10,470
Accrued insurance expenses and other 17,592 17,455
Accrued liabilities 31,062 18,662
Current portion of long-term debt 189 299
-------------------------------------
Total current liabilities 157,823 129,426
-------------------------------------
NON-CURRENT LIABILITIES
Long-term debt, less current portion 146,536 151,227
Deferred income taxes 11,073 6,324
Other long-term liabilities 2,096 9,734
-------------------------------------
SHAREHOLDERS' EQUITY
Preferred stock, $.10 par value --
Authorized -- 10,000,000 shares;
Outstanding -- none -- --
Common stock, $.10 par value
Authorized -- 40,000,000 shares;
Outstanding -- 14,597,599
shares in 1995 and 14,546,825 shares
in 1994 1,498 1,194
Additional paid-in capital 92,507 92,008
Retained earnings 117,161 84,726
-------------------------------------
211,166 177,928
Less: treasury stock, at cost 4,626 4,621
-------------------------------------
206,540 173,307
-------------------------------------
$ 524,068 $ 470,018
-------------------------------------
-------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE BALANCE SHEETS.
- PAGE ELEVEN -
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS RYKOFF-SEXTON, INC.
Years Ended April 29, 1995 April 30, 1994 May 1, 1993
(52 weeks) (52 weeks) (52 weeks)
(DOLLARS IN THOUSANDS) (Restated) (Restated)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities --
Net income (loss) $ 32,872 $ 5,918 $ (18,960)
Adjustments to reconcile net income to net cash
provided by operating activities --
Extraordinary item -- 1,444 --
Cumulative effect of change in
accounting for income taxes -- -- (732)
Net income from discontinued operations (137) (3,241) (4,458)
Noncash restructuring costs -- -- 18,250
Depreciation and amortization 16,863 19,428 19,433
Gain on disposal of discontinued operations (23,359) -- --
Gain on sale of property, plant and equipment (597) -- --
Increase (decrease) in deferred income taxes (2,823) 552 (6,350)
Other (475) -- --
Changes in assets and liabilities, net of working
capital acquired --
(Increase) decrease in accounts receivable (4,717) (11,959) 10,371
(Increase) decrease in inventories (13,245) (7,079) 15,495
(Increase) decrease in prepaid expenses (1,287) 406 (5,911)
Increase in accounts payable and accrued liabilities 8,921 15,996 6,792
--------------------------------------------------------
Net cash provided by operating activities 12,016 21,465 33,930
--------------------------------------------------------
Cash flows used in investing activities --
Capital expenditures (53,891) (18,483) (18,219)
Proceeds from sale and leaseback transactions 2,955 6,786 --
Net cash used in discontinued operations (30,002) (29) (3,711)
Proceeds from sale of assets of discontinued operations 96,000 -- --
Cost of acquisition (24,836) -- --
--------------------------------------------------------
Net cash used in investing activities (9,774) (11,726) (21,930)
--------------------------------------------------------
Cash flows from financing activities --
Increase (decrease) under credit line (7,000) 6,000 15,000
Principal payments of long-term debt (226) (282) (320)
Issuance of 8 7/8% Senior Subordinated Notes -- 128,943 --
Repayment of 8.60% Senior Notes -- (137,500) (9,375)
Repayment of short-term borrowings -- -- (20,000)
Payment of finance costs (249) (6,000) --
Issuance of common stock 804 685 17
Dividends paid (437) -- (3,771)
Purchase of treasury stock (5) -- (285)
--------------------------------------------------------
Net cash used in financing activities (7,113) (8,154) (18,734)
--------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (4,871) 1,585 (6,734)
Cash and cash equivalents at beginning of year 9,830 8,245 14,979
--------------------------------------------------------
Cash and cash equivalents at end of year $ 4,959 $ 9,830 $ 8,245
--------------------------------------------------------
--------------------------------------------------------
Supplemental disclosures of cash flow information --
Cash paid during the year for --
Interest $ 13,220 $ 8,663 $ 13,434
Income taxes 26,830 1,852 1,626
--------------------------------------------------------
--------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
- PAGE TWELVE -
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY RYKOFF-SEXTON, INC.
Common Stock
----------------------
Number of Additional Treasury Retained
(DOLLARS IN THOUSANDS) Shares Amount Paid-in Capital Stock Earnings
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, May 2, 1992 11,597,960 $1,188 $91,583 $(4,607) $101,539
Net loss -- -- -- -- (18,960)
Cash dividends ($.325 per share) -- -- -- -- (3,771)
Stock options exercised 3,585 1 16 -- --
Treasury stock purchased (10,000) -- (272) (13) --
-------------------------------------------------------------------------
Balance, May 1, 1993 11,591,545 1,189 91,327 (4,620) 78,808
Net income -- -- -- -- 5,918
Stock options exercised 46,315 5 681 -- --
Treasury stock purchased (400) -- -- (1) --
-------------------------------------------------------------------------
Balance, April 30, 1994 11,637,460 1,194 92,008 (4,621) 84,726
Net income -- -- -- -- 32,872
Stock split 2,909,039 298 (305) -- --
Cash dividend ($.03 per share) -- -- -- -- (437)
Stock options exercised 58,037 6 804 -- --
Treasury stock purchased (6,937) -- -- (5) --
-------------------------------------------------------------------------
Balance, April 29, 1995 14,597,599 $1,498 $92,507 $(4,626) $117,161
-------------------------------------------------------------------------
-------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
- PAGE THIRTEEN -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS RYKOFF-SEXTON, INC.
APRIL 29, 1995
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
LINE OF BUSINESS The Company manufactures and distributes food and related
non-food products to various establishments in the foodservice industry.
PRINCIPLES OF CONSOLIDATION The consolidated financial statements include
the accounts of Rykoff-Sexton, Inc. and its wholly-owned subsidiaries. All
significant intercompany balances and transactions have been eliminated
in consolidation.
FISCAL YEAR The Company's fiscal year ends on the Saturday closest to April 30.
All fiscal years presented contain 52 weeks.
EARNINGS PER SHARE Earnings per share of common stock have been computed based
on the weighted average number of shares of common stock outstanding and
dilutive common share equivalents. The shares used in such calculations were
14,729,606 in 1995, 14,601,185 in 1994 and 14,507,188 in 1993.
STOCK SPLIT In December 1994, the Board of Directors declared a 5-for-4 stock
split payable January 24, 1995, to shareholders of record on December 21, 1994.
Earnings per share, weighted average shares outstanding, and stock option
information included in the accompanying financial statements and related notes
have been adjusted to reflect this stock split.
INVENTORIES Inventories are priced at the lower of cost (first-in, first-out)
or market, and include the cost of purchased merchandise and, for manufactured
goods, the cost of material, labor and factory overhead.
Inventories are summarized as follows:
<TABLE>
<CAPTION>
April 29, 1995 April 30, 1994
(DOLLARS IN THOUSANDS) (Restated)
- -------------------------------------------------------------------------------
<S> <C> <C>
Finished goods $132,109 $113,750
Raw materials 6,013 5,804
---------------------------------
$138,122 $119,554
---------------------------------
---------------------------------
</TABLE>
DEPRECIATION, AMORTIZATION, RETIREMENT AND MAINTENANCE POLICIES Depreciation is
provided using the straight-line method, based upon the following estimated
useful lives:
<TABLE>
<S> <C>
Buildings and improvements 15 to 40 years
Leasehold improvements Life of lease
Transportation equipment 3 to 8 years
Office, warehouse and manufacturing equipment 3 to 15 years
Software development costs 5 years
</TABLE>
Cost of normal maintenance and repairs are charged to expense when incurred.
Replacements or betterments of properties are capitalized. When assets are
retired or otherwise disposed of, their cost and the applicable accumulated
depreciation and amortization are removed from the accounts, and the resulting
gain or loss is reflected in income.
OTHER ASSETS Other assets are amortized on the straight-line or effective
interest method over the following periods:
<TABLE>
<S> <C>
Excess of cost over assets acquired 40 years
Noncompetition and consulting agreements Term of agreement
Leasehold interests Life of lease
Deferred finance costs Life of debt
</TABLE>
Accumulated amortization of other assets was $7,042,000 and $7,287,000 as of
April 29, 1995 and April 30, 1994, respectively.
INCOME TAXES The Company changed its method of accounting for income taxes from
the deferred method to the liability method required by "Statement of Financial
Accounting Standards No. 109 (SFAS 109), Accounting for Income Taxes",
effective May 3, 1992. Under SFAS 109, a deferred tax
- PAGE FOURTEEN -
<PAGE>
liability or asset is recognized for the estimated future tax effects
attributable to temporary differences and carryforwards. The measurement of
deferred income tax assets is adjusted by a valuation reserve, if necessary,
so that the net tax benefits are recognized only to the extent that they will
be realized.
The cumulative effect of adopting SFAS 109 as of May 3, 1992 was to increase
net income by $732,000 and has been recorded in the accompanying consolidated
statement of operations.
Deferred income taxes result from temporary differences in the recognition of
revenue and expense items for tax and financial statement purposes.
STATEMENT OF CASH FLOWS The Company considers all highly liquid investments
with an original maturity of three months or less to be cash equivalents.
DEFERRED GAIN ON LEASE TRANSACTIONS The difference between the proceeds received
and the net book value of assets sold is amortized over the term of the lease.
CAPITALIZED INTEREST The Company capitalizes interest costs as part of the cost
of major asset construction projects. Capitalized interest related to
continuing operations was $2,667,000 in 1995 and $66,000 in 1994. There was no
capitalized interest in 1993.
NOTE 2 ACQUISITION
On February 21, 1995, the Company acquired substantially all of the assets of
Continental Foods, Inc., (Continental), a privately owned Maryland corporation.
Continental is a regional, institutional foodservice distributor.
For financial statement purposes the acquisition was accounted for as a
purchase and, accordingly, Continental's results are included in the
consolidated financial statements since the date of acquisition. The aggregate
purchase price was approximately $27,000,000, which includes costs of
acquisition. The aggregate purchase price, which was financed through
available cash resources and issuance of a promissory note, has been allocated
to the assets of the company, based upon their respective fair market values.
The financial statements reflect the preliminary allocation of purchase price
as the purchase price allocation has not been finalized. The excess of the
purchase price over assets acquired approximated $21,200,000 and is being
amortized over forty years.
In connection with the acquisition, liabilities were assumed as follows:
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
- -------------------------------------------------------------------------------
<S> <C>
Fair value of assets acquired $ 39,647
Unsecured note issued at acquisition date (2,425)
Cash paid (24,836)
--------
Liabilities assumed $ 12,386
--------
--------
</TABLE>
The following unaudited pro forma consolidated results of operations have been
prepared as if the acquisition of Continental had occurred at the beginning of
fiscal 1995 and 1994:
<TABLE>
<CAPTION>
PRO FORMA YEARS ENDED April 29, 1995 April 30, 1994
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
- -------------------------------------------------------------------------------
<S> <C> <C>
Net sales $1,647,850 $1,535,244
Net income from continuing operations 10,456 4,645
Net income per share from continuing
operations $ .71 $ .32
---------------------------------
---------------------------------
</TABLE>
The pro forma consolidated results do not purport to be indicative of results
that would have occurred had the acquisition been in effect for the periods
presented, nor do they purport to be indicative of the results that will be
obtained in the future.
NOTE 3 EXTRAORDINARY ITEM
In November 1993, the Company refinanced its long-term debt through the
issuance of $130 million of 8 7/8% Senior Subordinated Notes. The proceeds,
together with borrowings under its new bank credit line, were used to retire
$128.1 million principal amount of 8.60% Senior Notes and outstanding senior
indebtedness under the prior bank credit facility. See Note 5 for further
details. The early retirement of the 8.60% Senior Notes and the outstanding
senior indebtedness under the prior bank credit facility resulted in an
extraordinary item of $1.4 million, net of tax benefit of $1.0 million,
associated with the write-off of deferred finance costs.
- PAGE FIFTEEN -
<PAGE>
NOTE 4 RESTRUCTURING COSTS
During 1993, the Company recorded a restructuring charge of $31,000,000, or,
on an after tax basis, of $19,530,000 or $1.34 per share. This charge was
established to provide for a business reorganization which included facility
closures, relocation and consolidation of distribution centers into more
efficient facilities including severance costs, elimination of redundancies
between the Company's two principal operating divisions, workforce reductions
and write down of facilities to their estimated net realizable value.
In fiscal 1995, the Company aggressively continued its plan to close and
consolidate its underperforming distribution centers and sublease space in
these centers with excess capacity. Additionally, severance and relocation
costs were paid in connection with the consolidation, relocation and
downsizing of several distribution centers.
As of April 30, 1994, the Company had a restructuring reserve of $14,936,000,
of which $7,936,000 was classified as currently payable. As of April 29, 1995
the Company had a restructuring reserve of $9,777,000 for actions that are
currently under way and expected to be completed in fiscal 1996. This reserve
is primarily for cash items. The remaining restructuring reserve includes
provisions for closures and disposition of facilities, including relocation
and severance costs and carrying costs associated with idle or excess capacity
at certain distribution centers.
The following table summarizes the activity in the restructuring reserve from
April 30, 1994 to April 29, 1995:
<TABLE>
<CAPTION>
Balance Balance
(DOLLARS IN THOUSANDS) April 30, 1994 Utilization April 29, 1995
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Costs associated with
various branch and sales
office closures, including
relocation, severance and
termination payments for
leases $ 8,054 $3,530 $4,524
Relocation costs associated
with the Los Angeles branch 2,435 -- 2,435
Provision to reduce the value
of the existing Los Angeles
facility and other closed
distribution facilities to
their net estimated realizable
value 2,835 1,136 1,699
Other provisions and write-downs 1,612 493 1,119
---------------------------------------------
$14,936 $5,159 $9,777
---------------------------------------------
---------------------------------------------
</TABLE>
NOTE 5 LONG-TERM DEBT AND BORROWING ARRANGEMENTS
The long-term debt of the Company as of April 29, 1995 and April 30, 1994 is
summarized as follows:
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS) 1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C>
8 7/8% Senior Subordinated Notes due in
2003, net of unamortized discount of $954
in 1995 and $1,024 in 1994 $129,046 $128,976
Bank credit agreement 14,000 21,000
Note payable 2,425 --
Mortgage notes 1,103 1,189
Other 151 361
------------------------
Total debt 146,725 151,526
Less-current portion 189 299
------------------------
Long-term debt, less current portion $146,536 $151,227
------------------------
------------------------
</TABLE>
In November 1993, the Company issued $130 million of 8 7/8% Senior Subordinated
Notes (the "8 7/8% Notes") due November 1, 2003 with interest payable
semiannually commencing
- PAGE SIXTEEN -
<PAGE>
May 1, 1994. The 8 7/8% Notes were sold at a discount for an aggregate price
of $128.9 million. Provisions of the 8 7/8% Notes include, without
limitation, restrictions of liens, indebtedness, asset sales, and dividends
and other restricted payments. The 8 7/8% Notes are redeemable at the option
of the Company, in whole or in part, at 104.44% of their principal amount
beginning November 1998, and thereafter at prices declining annually to 100%
on and after November 2001. In addition, upon the occurrence of an event that
constitutes a Change of Control (as defined in the indenture for such notes),
each holder of the 8 7/8% Notes may require the Company to repurchase all or
a portion of such holder's 8 7/8% Notes at a purchase price equal to 101% of
the principal amount thereof, together with accrued and unpaid interest, if
any, to the date of the repurchase. The 8 7/8% Notes are not subject to any
sinking fund requirements.
Concurrently with the sale of the 8 7/8% Notes, the Company obtained a $100
million credit line expiring on August 31, 1996 and a $15 million letter of
credit facility expiring on August 31, 1994 from its bank (the "New Credit
Facility"). The letter of credit facility has since been increased to $25
million (expiring on August 31, 1996) of which approximately $7.1 million was
available as of April 29, 1995. Under the New Credit Facility, the credit line
is unsecured and bears interest based on the bank's reference rate, the
interbank offshore rate, certificate of deposit rate or fixed rate at the
option of the Company. The provisions of the New Credit Facility include
restrictions on secured indebtedness, asset sales, acquisitions or mergers and
dividends. Under the New Credit Facility, the Company is also required to
meet certain financial tests which include those relating to the maintenance
of a minimum net worth, minimum net tangible assets, a minimum fixed charge
coverage ratio, a minimum tangible assets to funded debt ratio and a minimum
current ratio (each as defined in the New Credit Facility). In addition to
customary provisions relating to events of default, the New Credit Facility
provides that an event of default will occur upon a Change of Control (as
defined in the indenture for the 8 7/8% Notes).
The proceeds from the issuance of the 8 7/8% Notes, together with borrowings
under the New Credit Facility, were used to retire $128.1 million principal
amount of 8.60% Senior Notes and outstanding senior indebtedness under the
prior bank credit facility.
As part of the aggregate purchase price of the acquisition more fully
described in Note 2, the Company issued an unsecured promissory note in the
amount of $2,425,000. The promissory note accrues interest at a variable
rate, requires quarterly interest payments and matures on February 21, 1997.
Scheduled aggregate annual payments of long-term debt are $189,000 for 1996,
$16,472,000 for 1997, $47,000 for 1998, $52,000 for 1999, $57,000 for 2000
and $129,908,000 thereafter.
Based on the borrowing rates currently available to the Company for debt with
similar terms and maturities, the fair value of long-term debt is
$144,278,000 as of April 29, 1995.
NOTE 6 LEASE ARRANGEMENTS
The Company leases a substantial portion of its offices and warehouse
facilities under long-term operating leases. Rental expense under operating
leases for 1995, 1994 and 1993 was $23,714,000, $19,578,000 and $19,355,000,
respectively. The approximate minimum future rentals are payable as follows:
<TABLE>
<CAPTION>
FISCAL YEAR (DOLLARS IN THOUSANDS)
- ------------------------------------------------------------------------------
<S> <C>
1996 $ 21,815
1997 19,744
1998 16,760
1999 12,440
2000 10,853
Thereafter 37,050
--------
Total minimum lease payments $118,662
--------
--------
</TABLE>
NOTE 7 INCOME TAXES
Effective May 3, 1992, the Company adopted "Statement of Financial Accounting
Standards No. 109". Refer to Note 1, Accounting Policies, for a discussion of
the effect of adopting this statement. In 1993, a restructuring charge was
recorded, which, for tax purposes, will become deductible when paid. A
valuation allowance of $544,000 was recorded to offset the related deferred
tax asset.
-PAGE SEVENTEEN -
<PAGE>
Significant components of the Company's deferred tax assets and liabilities
are as follows:
<TABLE>
<CAPTION>
April 29, 1995 April 30, 1994
(DOLLARS IN THOUSANDS) (Restated)
- -------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Restructuring charges $ 7,434 $ 8,980
Accrued expenses 3,366 --
Self-insurance reserves 3,373 2,792
Allowance for bad debts 1,532 1,422
Accrued vacation pay 1,248 1,254
Food bank contributions -- 1,216
Other 3,080 1,073
Valuation allowance (544) (657)
----------------------------------
Total deferred tax assets 19,489 16,080
----------------------------------
Deferred tax liabilities:
Accelerated depreciation (11,875) (10,271)
Other -- (1,018)
----------------------------------
Total deferred tax liabilities (11,875) (11,289)
----------------------------------
Net deferred tax asset $ 7,614 $ 4,791
----------------------------------
----------------------------------
</TABLE>
In fiscal 1995, the net deferred tax asset is comprised of $18,687,000 in
prepaids and deferred income taxes of $11,073,000. In fiscal 1994, the net
deferred tax asset is comprised of $11,115,000 in prepaids and deferred
income taxes of $6,324,000.
The provision (benefit) for income notes before extraordinary item and
accounting change consists of the following:
<TABLE>
<CAPTION>
1993 1994 1993
(DOLLARS IN THOUSANDS) (Restated) (Restated)
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Current tax expense (benefit) --
Federal $3,851 $ 1,595 $ (3,982)
State 1,395 638 291
------------------------------------
5,246 2,233 (3,691)
Deferred tax expense (benefit) --
Restructuring charges 1,546 3,002 (10,616)
Accelerated depreciation (259) (79) 410
Fringe benefits (334) (1,107) (216)
Valuation allowance 113 204 (861)
Other, net (62) (1,448) 772
------------------------------------
$6,250 $ 2,805 $(14,202)
------------------------------------
------------------------------------
</TABLE>
The difference between the Federal income tax rate of 35% and the actual
effective tax rate of 40.0% for fiscal 1995, 40.5% for fiscal year 1994 and
37.0% for fiscal year 1993 is due to state taxes, net of the Federal tax
benefit, and the effect of the valuation allowance discussed above.
NOTE 8 STOCK OPTION PLANS
The 1988 Stock Option and Compensation Plan (the "1988 Plan") authorizes the
issuance of up to 1,406,250 shares of common stock. The 1988 Plan authorizes
the issuance of various stock incentives to officers and employees, including
options, stock appreciation rights, stock awards, restricted stock,
performance shares and cash awards. Stock options allow for the purchase of
common stock at prices determined by the Stock Option Committee except for
incentive stock options, which must be granted at prices not less than the
fair market value at the date of grant. These options expire 10 years from
the date of grant and are exercisable as defined by the Stock Option
Committee.
Stock appreciation rights (SARs), which may be issued in conjunction with the
grant of options, permit the optionee to receive shares of stock, cash or a
combination of shares and cash measured by the difference between the option
price and the market value of the stock on the date of exercise. Upon
exercise of an SAR, the option is canceled. As of April 30, 1995, there were
27,739 SARs outstanding.
-PAGE EIGHTEEN -
<PAGE>
Restricted stock grants for 6,250 shares, 53,094 shares and 7,500 shares, in
1995, 1994 and 1993, respectively, were issued under the 1988 Plan. All of
these shares vest ratably over a four-year period from their respective grant
dates, except that with respect to the fiscal 1994 restricted stock grants,
38,303 shares will vest in full four years from their respective grant dates.
Deferred compensation equivalent to the difference between the market value
at date of grant and the option price was charged to additional
paid-in-capital and is being amortized to compensation expense over the
vesting period. The amounts amortized in fiscal 1995, 1994 and 1993 were
$251,000, $286,000 and $371,000, respectively.
In fiscal 1994, the Stock Option Committee awarded converging stock options
of 75,000 to certain key members of management under the 1988 Plan at a
purchase price of $28 per share. At April 30, 1994, 325,000 options were
outstanding. In fiscal year 1995, these options were canceled and new
non-qualified stock options were granted to purchase 302,504 shares at a fair
market value of $15.40 at the date of regrant. These options have accelerated
vesting rights based upon the number of years the canceled converging options
had been outstanding.
In addition to the 1988 Plan, the Company's 1980 Stock Option Plan (the "1980
Plan") authorized awards of stock options and stock appreciation rights;
options expire 10 years from the date of grant and no further grants may be
made under the 1980 Plan. The Company also maintains the 1993 Director Stock
Option Plan (the "1993 Director Plan") and the 1989 Director Stock Option
Plan (the "1989 Director Plan") which authorizes the issuance of up to
125,000 and 62,500 shares of common stock, respectively. Under the 1993
Director Plan, each director who is not a full-time officer or employee of
the Company will receive annually a non-qualified option to purchase 1,250
shares of common stock. Under the 1989 Director Plan, each director who is
not a full-time officer or employee of the Company is eligible to receive a
non-qualified stock option in lieu of a portion of such director's
compensation for each plan year. Options under both plans expire 10 years
from the date of grant.
During fiscal years 1995, 1994 and 1993, the price range of options and
grants exercised was $.80 to $16.70 per share and the price of restricted
shares purchased was $.80 per share. As of April 29, 1995, the exercise price
of options and grants outstanding under all the Company's stock option plans
ranged from $.80 to $24.00. Changes in the number of shares under all such
stock option plans are summarized as follows:
<TABLE>
1995 1994 1993
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Outstanding at beginning of year 1,281,237 1,112,259 659,219
Granted 333,125 345,560 754,225
Exercised (50,537) (57,894) (4,481)
Canceled and SARs exercised (426,328) (118,688) (296,704)
--------- --------- ---------
Outstanding at year end 1,137,497 1,281,237 1,112,259
--------- --------- ---------
--------- --------- ---------
Exercisable at end of year 649,759 509,626 361,139
--------- --------- ---------
--------- --------- ---------
Available for grant at end of year 347,806 319,504 504,345
--------- --------- ---------
--------- --------- ---------
</TABLE>
NOTE 9 PENSION AND PROFIT SHARING PLANS
The Company maintains non-contributory pension plans for its salaried,
commissioned and certain of its hourly employees. Under the plans, the
Company is required to make annual contributions that are determined by the
plans' consulting actuary, using participant data that is supplied by the
Company. It is the Company's policy to fund pension costs currently. Pension
benefits are based on length of service and either a percentage of final
average annual compensation or a dollar amount for each year of service.
Net pension expense for fiscal year 1995, 1994 and 1993 are included in the
following components:
<TABLE>
<CAPTION>
1995 1994 1993
(DOLLARS IN THOUSANDS) (Restated) (Restated)
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost -- benefits earned
during the period $ 3,339 $ 3,965 $ 3,782
Interest cost on projected benefit
obligation 4,037 4,040 3,658
Actual return on plan assets (4,886) (4,626) (5,463)
Net amortization and deferral (71) 206 1,841
-------------------------------------
Net pension expense $ 2,419 $ 3,585 $ 3,818
------------------------------------
------------------------------------
</TABLE>
-PAGE NINETEEN-
<PAGE>
The following table reconciles the pension plans' funded status to accrued
expense as of April 29, 1995 and April 30, 1994.
<TABLE>
<CAPTION>
1995 1994
(DOLLARS IN THOUSANDS) (Restated)
- -------------------------------------------------------------------------------
<S> <C> <C>
Market value of plan assets in equities and bonds $51,318 $46,908
---------------------
Actuarial present value of accumulated benefits:
Vested 35,612 34,027
Non-vested 2,171 2,318
Additional benefits based on estimated future
salary levels 8,854 11,179
--------------------
Projected benefit obligation 46,637 47,524
--------------------
Plan assets more (less) than projected benefit
obligation 4,681 (616)
Unrecognized net obligation to be amortized over
10 years 1,788 1,757
Unrecognized net (gain) loss (8,298) (2,724)
---------------------
Accrued pension liability $(1,829) $(1,583)
---------------------
---------------------
</TABLE>
In fiscal year 1995, the Company changed certain of the assumptions
affecting the determination of its annual pension contribution and expense.
The weighted average discount rate and rate of increase in future
compensation levels used in determining the actuarial present value of the
projected benefit obligations were 8.25 percent and 5 percent, respectively.
The expected long-term rate of return on assets was 9.5 percent. Changes in
the actuarial assumptions increased 1995 pre-tax earnings by $767,000.
For collectively bargained, multi-employer pension plans, contributions are
made in accordance with negotiated labor contracts and generally are based on
the number of hours worked. With the passage of the Multi-Employer Pension
Plan Amendments Act of 1980 (the "Act"), the Company may, under certain
circumstances, become subject to liabilities in excess of contributions made
under collective bargaining agreements. Generally, these liabilities are
contingent upon the termination, withdrawal, or partial withdrawal from the
plans. The Company has not taken any action to terminate, withdraw or
partially withdraw from these plans which would result in any material
liability. Under the Act, liabilities would be based upon the Company's
proportional share of each plan's unfunded vested benefits which have been
estimated by the trustees of the funds to be approximately $5,107,000. The
amount of accumulated benefits and net assets of such plans is not currently
available to the Company. Total contributions charged to expense under all
pension plans were $5,786,000, $5,325,000, and $5,583,000 for fiscal years
1995, 1994 and 1993, respectively.
The Company maintains an employees' savings and profit sharing plan under
Section 401(k) of the Internal Revenue Code for employees meeting certain age
and service requirements (the "Plan"). In fiscal 1994, the Plan was amended
to provide for a matching contribution by the Company. The Company's
contribution is determined based on established performance objectives and is
made in common stock in an amount equal to twenty-five percent (25%) of the
first four percent (4%) of the participant's deferral contributions made
during the Plan year. A matching contribution was provided for by the Company
in fiscal 1995.
NOTE 10 COMMITMENTS AND CONTINGENCIES
The Company has change in control agreements with various officers which
provide, among other things, that if, within two years after a change in
control (as defined), the Company terminates the employment of the officer,
other than for disability or cause, or if the officer elects to terminate his
employment for good reason (as defined), the officer will receive 2.99 times
the sum of the officer's base salary plus the amount that would otherwise be
earned under any executive compensation plan.
In October 1994, the Company sold all of the stock of Tone Brothers, Inc.
(Tone) to Burns Philp, Inc. (Burns Philp). The sale agreement provides for
arbitration in the case of a dispute and Burns Philp has filed a notice of
arbitration in which it claims contract and fraud damages in excess of $57
million in connection with the purchase of Tone. In management's opinion,
based on consultation with legal counsel, the sale agreement should limit
any claims for breach of representations under the sale agreement to a
maximum of $25 million.
The Company believes that it has substantial legal and factual defenses to
the claims and intends to defend itself vigorously in the matter. A tentative
arbitration date of February 5, 1996 has been established and investigation
by counsel is currently in progress. The outcome of this matter is currently
uncertain; however, in management's opinion, based on consultation with legal
counsel, the resolution of this matter will not have a material effect on the
Company's consolidated financial position or its results of operations.
- PAGE TWENTY -
<PAGE>
The Company or its subsidiary are defendants in a number of cases currently
in litigation or potential claims encountered in the normal course of
business which are being vigorously defended. In the opinion of management,
the resolution of these matters will not have a material effect on the
Company's financial position or results of operations.
NOTE 11 PREFERRED STOCK PURCHASE RIGHTS
At April 29, 1995, there were outstanding 14,597,599 rights to purchase
Series A Junior Participating Preferred Stock. The rights were issued as a
dividend on December 18, 1986 and as a result of the 5-for-4 stock splits
paid in January 1989 and January 1995, each outstanding share of common stock
is entitled to 0.64 rights. Each right entitles the holder to purchase from
the Company a unit (one two-hundredth of a share) of Series A Junior
Participating Preferred Stock, $.10 par value, at $100 per unit subject to
adjustment. The rights are not exercisable or transferable apart from the
common stock until 10 days after a person or group has acquired 25 percent or
more, or makes a tender offer for 30 percent or more, of the Company's common
stock. Each right will entitle the holder, under certain circumstances (a
merger, acquisition of 25 percent or more of common stock of the Company by
an acquiring person, self-dealing transactions by an acquiring person, or
sale of 50 percent or more of the Company's assets or earning power), to
acquire, at half the value, either common stock of the Company, a
combination of cash, other property, common stock or other securities of the
Company, or common stock of the acquiring person. Any such event would also
result in any rights owned beneficially by the acquiring person or its
affiliates becoming null and void. The rights expire December 18, 1996 and
are redeemable prior to the time an acquiring person acquires 25 percent or
more of the Company's common stock at one cent per right. At April 29, 1995,
50,000 shares of Series A Junior Participating Preferred Stock were
authorized but unissued and were reserved for issuance upon exercise of the
rights.
NOTE 12 QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The unaudited results of operations by quarter for each of the two years in
the period ended April 29, 1995 are summarized below:
<TABLE>
<CAPTION>
First Second Third Fourth
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA) (Restated)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995
Net sales $380,378 $392,748 $379,601 $416,292
Cost of sales 298,912 308,702 300,685 332,992
Income from continuing operations 2,123 3,987 896 2,370
Income (loss) from discontinued operations (173) 310 -- --
Gain on disposal of discontinued operations -- 23,359 -- --
Net income 1,950 27,656 896 2,370
------------------------------------------
Earnings per share from continuing operations $ .15 $ .27 $ .06 $ .16
Earnings (loss) per share
from discontinued operations (.01) .02 -- --
Earnings per share from gain on disposal
of discontinued operations -- 1.59 -- --
Earnings per share .14 1.88 .06 .16
------------------------------------------
------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
First Second Third Fourth
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA) (Restated) (Restated) (Restated) (Restated)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1994
Net sales $348,434 $367,731 $352,892 $375,169
Cost of sales 268,974 284,817 276,310 297,764
Income (loss) from continuing operations 711 2,283 (383) 1,510
Income from discontinued operations 426 1,502 744 569
Extraordinary item -- (1,444) -- --
Net income 1,137 2,341 361 2,079
-----------------------------------------
Earnings (loss) per share
from continuing operations $ .04 $ .16 $ (.02) $ .10
Earnings per share
from discontinued operations $ .04 $ .10 $ .04 $ .04
Loss per share from extraordinary item -- (.10) -- --
Earnings per share .08 .16 .02 .14
-----------------------------------------
-----------------------------------------
</TABLE>
NOTE 13 RESTATEMENT
As disclosed in Note 10, the Company disposed of its Tone Brothers, Inc.
(Tone) subsidiary in October 1994. The accompanying prior year financial
statements have been restated to exclude Tone's net assets and operating
results from the Company's continuing operations.
- PAGE TWENTY-ONE -
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF RYKOFF-SEXTON, INC.:
We have audited the accompanying consolidated balance sheets of
Rykoff-Sexton, Inc. (a Delaware corporation) and its subsidiaries as of
April 29, 1995 and April 30, 1994, and the related consolidated statements
of operations, shareholders' equity and cash flows for each of the three
fiscal years in the period ending April 29, 1995. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these 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 financial statements referred to above present fairly, in
all material respects, the financial position of Rykoff-Sexton, Inc. and its
subsidiaries as of April 29, 1995 and April 30, 1994, and the results of
their operations and their cash flows for each of the three fiscal years in
the period ended April 29, 1995, in conformity with generally accepted
accounting principles.
As discussed in Note 1 to the financial statements, the Company changed its
method of accounting for income taxes in 1993.
/s/ Arthur Andersen LLP
Los Angeles, California
June 9, 1995
- PAGE TWENTY-TWO -
<PAGE>
EXHIBIT 21
Subsidiaries of Rykoff-Sexton, Inc.
1. John Sexton & Co.
2. RSI, Inc.
<PAGE>
Exhibit 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of RYKOFF-
SEXTON, INC., a Delaware corporation (the "Company"), hereby constitutes and
appoints MARK VAN STEKELENBURG, RICHARD J. MARTIN and VICTOR CHAVEZ (with full
power to each of them to act alone) his true and lawful attorney-in-fact and
agent, for him and on his behalf and in his name, place and stead, in any and
all capacities, to sign, execute and file the Annual Report of the Company on
Form 10-K for the year ended April 29, 1995 to be filed pursuant to Section 13
or 15(d) of the Securities and Exchange Act of 1934, including any amendment or
amendments, with all exhibits and any and all documents required to be filed
with respect thereto with any regulatory authority, granting unto said
attorneys, and each of them, full power and authority to do and perform each and
everything requisite and necessary to be done in and about the premises in
order to execute the same as fully to all intents and purposes as he, himself,
might or could do if personally present, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or each of them, may be lawfully do or
could cause to be done by virtue hereof.
IN WITNESS HEREOF, the undersigned has caused this Power of Attorney to be
executed this July 24, 1995.
By: /s/ R. Burt Gookin
--------------------------
R. Burt Gookin
<PAGE>
Exhibit 24.2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of RYKOFF-
SEXTON, INC., a Delaware corporation (the "Company"), hereby constitutes and
appoints MARK VAN STEKELENBURG, RICHARD J. MARTIN and VICTOR CHAVEZ (with full
power to each of them to act alone) his true and lawful attorney-in-fact and
agent, for him and on his behalf and in his name, place and stead, in any and
all capacities, to sign, execute and file the Annual Report of the Company on
Form 10-K for the year ended April 29, 1995 to be filed pursuant to Section 13
or 15(d) of the Securities and Exchange Act of 1934, including any amendment or
amendments, with all exhibits and any and all documents required to be filed
with respect thereto with any regulatory authority, granting unto said
attorneys, and each of them, full power and authority to do and perform each and
everything requisite and necessary to be done in and about the premises in
order to execute the same as fully to all intents and purposes as he, himself,
might or could do if personally present, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or each of them, may be lawfully do or
could cause to be done by virtue hereof.
IN WITNESS HEREOF, the undersigned has caused this Power of Attorney to be
executed this July 24, 1995.
By: /s/ James I. Maslon
--------------------------
James I. Maslon
<PAGE>
Exhibit 24.3
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of RYKOFF-
SEXTON, INC., a Delaware corporation (the "Company"), hereby constitutes and
appoints MARK VAN STEKELENBURG, RICHARD J. MARTIN and VICTOR CHAVEZ (with full
power to each of them to act alone) his true and lawful attorney-in-fact and
agent, for him and on his behalf and in his name, place and stead, in any and
all capacities, to sign, execute and file the Annual Report of the Company on
Form 10-K for the year ended April 29, 1995 to be filed pursuant to Section 13
or 15(d) of the Securities and Exchange Act of 1934, including any amendment or
amendments, with all exhibits and any and all documents required to be filed
with respect thereto with any regulatory authority, granting unto said
attorneys, and each of them, full power and authority to do and perform each and
everything requisite and necessary to be done in and about the premises in
order to execute the same as fully to all intents and purposes as he, himself,
might or could do if personally present, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or each of them, may be lawfully do or
could cause to be done by virtue hereof.
IN WITNESS HEREOF, the undersigned has caused this Power of Attorney to be
executed this July 24, 1995.
By: /s/ James P. Miscoll
--------------------------
James P. Miscoll
<PAGE>
Exhibit 24.4
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of RYKOFF-
SEXTON, INC., a Delaware corporation (the "Company"), hereby constitutes and
appoints MARK VAN STEKELENBURG, RICHARD J. MARTIN and VICTOR CHAVEZ (with full
power to each of them to act alone) his true and lawful attorney-in-fact and
agent, for him and on his behalf and in his name, place and stead, in any and
all capacities, to sign, execute and file the Annual Report of the Company on
Form 10-K for the year ended April 29, 1995 to be filed pursuant to Section 13
or 15(d) of the Securities and Exchange Act of 1934, including any amendment or
amendments, with all exhibits and any and all documents required to be filed
with respect thereto with any regulatory authority, granting unto said
attorneys, and each of them, full power and authority to do and perform each and
everything requisite and necessary to be done in and about the premises in
order to execute the same as fully to all intents and purposes as he, himself,
might or could do if personally present, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or each of them, may be lawfully do or
could cause to be done by virtue hereof.
IN WITNESS HEREOF, the undersigned has caused this Power of Attorney to be
executed this July 21, 1995.
By: /s/ Neil I. Sell
--------------------------
Neil I. Sell
<PAGE>
Exhibit 24.5
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of RYKOFF-
SEXTON, INC., a Delaware corporation (the "Company"), hereby constitutes and
appoints MARK VAN STEKELENBURG, RICHARD J. MARTIN and VICTOR CHAVEZ (with full
power to each of them to act alone) his true and lawful attorney-in-fact and
agent, for him and on his behalf and in his name, place and stead, in any and
all capacities, to sign, execute and file the Annual Report of the Company on
Form 10-K for the year ended April 29, 1995 to be filed pursuant to Section 13
or 15(d) of the Securities and Exchange Act of 1934, including any amendment or
amendments, with all exhibits and any and all documents required to be filed
with respect thereto with any regulatory authority, granting unto said
attorneys, and each of them, full power and authority to do and perform each and
everything requisite and necessary to be done in and about the premises in
order to execute the same as fully to all intents and purposes as he, himself,
might or could do if personally present, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or each of them, may be lawfully do or
could cause to be done by virtue hereof.
IN WITNESS HEREOF, the undersigned has caused this Power of Attorney to be
executed this July 21, 1995.
By: /s/ Bernard Sweet
--------------------------
Bernard Sweet
<PAGE>
Exhibit 24.6
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of RYKOFF-
SEXTON, INC., a Delaware corporation (the "Company"), hereby constitutes and
appoints MARK VAN STEKELENBURG, RICHARD J. MARTIN and VICTOR CHAVEZ (with full
power to each of them to act alone) his true and lawful attorney-in-fact and
agent, for him and on his behalf and in his name, place and stead, in any and
all capacities, to sign, execute and file the Annual Report of the Company on
Form 10-K for the year ended April 29, 1995 to be filed pursuant to Section 13
or 15(d) of the Securities and Exchange Act of 1934, including any amendment or
amendments, with all exhibits and any and all documents required to be filed
with respect thereto with any regulatory authority, granting unto said
attorneys, and each of them, full power and authority to do and perform each and
everything requisite and necessary to be done in and about the premises in
order to execute the same as fully to all intents and purposes as he, himself,
might or could do if personally present, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or each of them, may be lawfully do or
could cause to be done by virtue hereof.
IN WITNESS HEREOF, the undersigned has caused this Power of Attorney to be
executed this July 23, 1995.
By: /s/ Robert G. Zeller
--------------------------
Robert G. Zeller
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-29-1995
<PERIOD-START> MAY-01-1994
<PERIOD-END> APR-29-1995
<CASH> 4,959
<SECURITIES> 0
<RECEIVABLES> 155,375
<ALLOWANCES> 3,996
<INVENTORY> 138,122
<CURRENT-ASSETS> 319,439
<PP&E> 313,506
<DEPRECIATION> 137,397
<TOTAL-ASSETS> 524,068
<CURRENT-LIABILITIES> 157,823
<BONDS> 146,536
<COMMON> 1,498
0
0
<OTHER-SE> 92,507
<TOTAL-LIABILITY-AND-EQUITY> 524,068
<SALES> 1,569,019
<TOTAL-REVENUES> 1,569,019
<CGS> 1,241,291
<TOTAL-COSTS> 301,235
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,134
<INCOME-PRETAX> 15,626
<INCOME-TAX> 6,250
<INCOME-CONTINUING> 9,376
<DISCONTINUED> 137
<EXTRAORDINARY> 23,359
<CHANGES> 0
<NET-INCOME> 32,872
<EPS-PRIMARY> 2.24
<EPS-DILUTED> 2.24
</TABLE>
