<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED).........FEBRUARY 21, 1995
RYKOFF-SEXTON, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 0-8105 95-2134693
(STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER
OF INCORPORATION) IDENTIFICATION NUMBER)
</TABLE>
761 TERMINAL STREET
LOS ANGELES, CALIFORNIA 90021
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE........(213) 622-4131
NOT APPLICABLE
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On February 21, 1995 (the "Closing Date"), the Registrant,
Rykoff-Sexton, Inc., a Delaware corporation ("Rykoff"), together with John
Sexton & Co., a Delaware corporation and a wholly owned subsidiary of Rykoff
("John Sexton"), acquired substantially all of the assets of Continental Foods,
Inc., a privately owned Maryland corporation ("Continental"). Rykoff and John
Sexton simultaneously acquired all of the partnership interests of Duke
Associates, a Maryland general partnership and an affiliate (as such term is
defined under the Securities Act of 1933, as amended) of Continental.
Continental is a regional, full-line institutional foodservice distributor
serving Maryland, Delaware, the District of Columbia, northern Virginia,
southern Pennsylvania and eastern West Virginia. Rykoff and John Sexton intend
to continue the business of Continental within the mid-Atlantic region.
Rykoff and John Sexton together paid approximately $27,000,000, in
payment of the purchase price for the assets and partnership interests
acquired, subject to certain post-closing purchase price adjustments. The
aggregate consideration consisted of approximately $24,575,000 in cash,
Rykoff's issuance of an unsecured promissory note in the amount of $2,425,000
and John Sexton's assumption of certain Continental liabilities. The
promissory note accrues interest at a variable rate, requires quarterly
interest payments and matures on February 21, 1997. The terms of the sale are
more fully described in the asset purchase agreement by and among the parties
which is filed as an exhibit herewith.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired
1. Continental Foods, Inc. Financial Statements as of
April 30, 1994 and 1993 together with report of
independent public accountants.
(b) Pro Forma Financial Information
1. Pro Forma Financial Statements.
Introduction
The pro forma condensed financial statements present
the historical financial statements of Rykoff, adjusted to
give effect to the purchase along with the pro forma
adjustments necessary to arrive at the pro forma condensed
financial statements of Rykoff.
The pro forma condensed balance sheet is presented as
of January 28, 1995. The pro forma adjustments reflect the
preliminary allocation of the purchase price to the assets and
liabilities acquired along with the related goodwill and step-
ups to fair market value and borrowings used to finance the
purchase.
The pro forma statements of income are presented for
the year ended April 30, 1994 and the nine months ended
January 28, 1995. The pro forma adjustments reflect the net
effect of interest expense, the elimination of certain
expenses, increased depreciation and amortization and the tax
effect of these adjustments.
-2-
<PAGE> 3
The pro forma data is based upon various other
assumptions and includes adjustments as explained therein and
in the notes thereto. Pro forma information presented is for
informational purposes only and is not necessarily indicative
of future earnings and financial position or of what past
earnings and financial position would have been if the
purchase of Continental had been consummated at the beginning
of the respective periods or as of any date for which such pro
forma information is presented.
(c) Exhibits
--------
The following documents are filed as exhibits to this Form 8-K
and are incorporated herein by reference:
Exhibit No. Description
----------- -----------
2 Asset Purchase Agreement, dated
February 10, 1995, by and among Continental
Foods, Inc., John Guerriero, et al.
23 Consent of Independent Public Accountants
-3-
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RYKOFF-SEXTON, INC.
<TABLE>
<S> <C> <C>
Date: March 28, 1995 By: /s/ MARK VAN STEKELENBURG
--------------------------------
Mark Van Stekelenburg,
President and Chief Executive
Officer
Date: March 28, 1995 By: /s/ RICHARD J. MARTIN
--------------------------------
Richard J. Martin
Senior Vice President and Chief
Financial Officer
Date: March 28, 1995 By: /s/ VICTOR B. CHAVEZ
--------------------------------
Victor B. Chavez
Vice President and Chief
Accounting Officer
</TABLE>
-4-
<PAGE> 5
ITEM 7. FINANCIAL STATEMENTS AND PRO FORMA FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Page
Number
---------------------
<S> <C> <C>
7(a) Financial Statements of Business Acquired
Continental Foods, Inc.
Report of Independent Public Accountants 6
Balance Sheets as of April 30, 1994 and 1993 7
Statements of Income and Retained Earnings for the years
ended April 30, 1994 and 1993 8
Statements of Cash Flows for the years ended April 30, 1994
and 1993 9
Notes to Financial Statements 10
7(b) Unaudited Pro Forma Financial Statements
Pro Forma Balance Sheet as of
January 28, 1995 together with
related notes 15
Pro Forma Statement of Income for the
nine months ended January 28, 1995 16
Pro Forma Statement of Income for the
twelve months ended April 30, 1994 17
Notes to Pro Forma Statements
of Income 18
</TABLE>
-5-
<PAGE> 6
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of Continental Foods, Inc.:
We have audited the accompanying balance sheets of Continental Foods, Inc. (a
Maryland corporation) as of April 30, 1994 and 1993, and the related statements
of income and retained earnings, and cash flows for the years then ended.
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 Continental Foods, Inc. as of
April 30, 1994 and 1993, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Baltimore, Maryland,
June 7, 1994
-6-
<PAGE> 7
CONTINENTAL FOODS, INC.
BALANCE SHEETS
AS OF APRIL 30, 1994 AND 1993
ASSETS
<TABLE>
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,410,216 $ 1,019,793
Accounts and notes receivable, net of
allowance for doubtful accounts of
$518,904 and $301,990, respectively
(Notes 1 and 4) 8,015,489 6,799,942
Inventory (Notes 1 and 4) 4,175,003 3,260,466
Prepaid expenses and other assets 455,083 269,176
----------- -----------
Total Current Assets 14,055,791 11,349,377
NOTES RECEIVABLE - NONCURRENT (Note 1) 240,511 364,437
PROPERTY, PLANT AND EQUIPMENT, net
(Notes 1 and 2) 840,321 832,147
CASH SURRENDER VALUE OF OFFICERS' LIFE
INSURANCE 146,586 134,024
INTANGIBLE ASSETS, net of accumulated
amortization of $45,050 and $41,200,
respectively - 3,850
----------- -----------
Total Assets $15,283,209 $12,683,835
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Demand notes payable (Notes 3 and 4) $ 843,075 $ 1,065,402
Revolving line of credit (Note 4) 1,250,000 975,000
Current portion of long-term debt
(Note 4) 26,669 72,125
Accounts payable 4,871,720 4,568,754
Accrued expenses and other 923,432 710,873
----------- -----------
Total Current Liabilities 7,914,896 7,392,154
LONG-TERM DEBT, net of current portion
(Note 4) - 26,062
COMMITMENTS (Note 5)
STOCKHOLDERS' EQUITY:
Capital stock - authorized 5,000 shares, no
par value, 60 shares issued and outstanding 18,000 18,000
Retained earnings 7,350,313 5,247,619
----------- -----------
Total Stockholders' Equity 7,368,313 5,265,619
----------- -----------
Total Liabilities and Stockholders' Equity $15,283,209 $12,683,835
=========== ===========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
-7-
<PAGE> 8
CONTINENTAL FOODS, INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE YEARS ENDED APRIL 30, 1994 AND 1993
<TABLE>
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
NET SALES $91,018,183 $69,889,503
COST OF GOODS SOLD 75,885,901 57,606,320
----------- -----------
Gross profit 15,132,282 12,283,183
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 13,148,957 10,833,532
INTEREST EXPENSE 78,012 107,957
OTHER INCOME, net 197,381 224,673
----------- -----------
Net income 2,102,694 1,566,367
RETAINED EARNINGS, beginning of year 5,247,619 3,681,252
----------- -----------
RETAINED EARNINGS, end of year $ 7,350,313 $ 5,247,619
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
-8-
<PAGE> 9
CONTINENTAL FOODS, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED APRIL 30, 1994 AND 1993
<TABLE>
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
CASH FLOWS PROVIDED BY
OPERATING ACTIVITIES:
Net income $ 2,102,694 $ 1,566,367
Adjustments to reconcile net income to
cash flows provided by operating activities-
Depreciation and amortization 179,760 176,504
Provision for doubtful accounts 981,947 274,042
Gain on the disposal of property,
plant and equipment - (2,677)
Changes in operating items (2,658,487) (1,586,922)
----------- -----------
Cash Flows Provided By Operating
Activities 605,914 427,314
CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchases of property, plant and equipment (184,084) (435,291)
Proceeds from sale of property, plant
and equipment - 24,000
Increase in cash surrender value of
officers' life insurance (12,562) (30,468)
Decrease in deposits - 13,481
----------- -----------
Cash Flows Used In Investing
Activities (196,646) (428,278)
CASH FLOWS (USED IN) PROVIDED BY
FINANCING ACTIVITIES:
(Decrease) Increase in demand notes
payable, net (222,327) 278,259
Increase in line of credit, net 275,000 125,000
Borrowings of long-term debt - 27,888
Payments on long-term debt (71,518) (74,087)
----------- -----------
Cash Flows (Used In) Provided By
Financing Activities (18,845) 357,060
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 390,423 356,096
CASH AND CASH EQUIVALENTS, beginning of year 1,019,793 663,697
----------- -----------
CASH AND CASH EQUIVALENTS, end of year $ 1,410,216 $ 1,019,793
=========== ===========
CHANGES IN OPERATING ITEMS:
Increase in accounts and notes receivable (2,073,568) (2,427,778)
Increase in inventory (914,537) (962,506)
Increase in prepaid expenses and
other assets (185,907) (144,861)
Decrease in due from affiliate - 510,000
Increase in accounts payable 302,975 1,434,770
Increase in accrued expenses 212,550 3,453
----------- -----------
Changes in Operating Items $(2,658,487) $(1,586,922)
=========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest $ 43,321 $ 107,957
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
-9-
<PAGE> 10
CONTINENTAL FOODS, INC.
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1994 AND 1993
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Inventory
Inventory consists primarily of dairy products, meat, canned and boxed foods,
tableware, cleaning supplies, and other institutional food service products.
Inventory is valued at the lower of cost or market using the last-in, first-out
(LIFO) method. If the first-in, first-out (FIFO) method of valuing inventory
had been used, net income would have been $133,344 and $77,104 higher in 1994
and 1993, respectively, and inventory would have been increased by
approximately $1,222,384 and $1,089,040 as of April 30, 1994 and 1993,
respectively.
Notes Receivable
Continental Foods, Inc. (the Company) lends money to many of its customers for
the purchase of inventory and capital expenditures. The notes mature through
February 1996 and generally bear interest at rates ranging from 12% to 18%.
The Company has a security interest in the assets of the customers' businesses
for the majority of these notes.
Concentration of Credit
Most of the Company's business is with customers in the food service industry
in the mid-Atlantic region. The Company is also a creditor for notes
receivable from businesses in this industry.
Property, Plant and Equipment
Property, plant and equipment is depreciated using the straight-line method
over useful lives of 5 to 10 years for delivery equipment, furniture and
fixtures and warehouse equipment, and 10 to 20 years for leasehold
improvements.
-10-
<PAGE> 11
Income Taxes
No provision for income taxes has been recorded in the accompanying financial
statements due to the Company's election to be taxed as an S Corporation under
the provisions of the Internal Revenue Code (IRC). In accordance with this
election, generally all profits and losses generated by operations flow through
to the shareholders, who are taxed at the individual level. The Company made
deposits with the Internal Revenue Service under IRC section 7519 totaling
$323,318 and $191,968 as of April 30, 1994 and 1993, respectively.
Cash and Cash Equivalents
Cash and cash equivalents consist of bank deposits and any highly liquid
investments with a maturity of three months or less.
Reclassifications
Certain reclassifications have been made to amounts reported in the prior year
to conform to the current year presentation.
2. PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment is stated at cost less accumulated depreciation
and consisted of the following as of April 30:
<TABLE>
<CAPTION>
1994 1993
---------- ----------
<S> <C> <C>
Leasehold improvements $ 187,658 $ 175,855
Furniture and fixtures 742,909 651,489
Delivery equipment 176,240 176,240
Warehouse equipment 598,448 525,575
---------- ----------
1,705,255 1,529,159
Less: Accumulated depreciation 864,934 697,012
---------- ----------
Property, plant and equipment, net $ 840,321 $ 832,147
========== ==========
</TABLE>
3. RELATED PARTY TRANSACTIONS AND BALANCES:
The Company leases its present facilities from entities owned by the
controlling stockholder. (See Note 5 for details of lease commitments). The
Company is a co-guarantor of the financing on these buildings.
As of April 30, 1994 and 1993, the Company had demand notes payable to its
stockholders, a partnership owned by a stockholder and a former stockholder
totaling $685,029 and $938,171, respectively.
-11-
<PAGE> 12
4 . DEBT:
Demand Notes Payable
Demand notes payable consisted of the following as of April 30:
<TABLE>
<CAPTION>
1994 1993
-------- ----------
<S> <C> <C>
Notes payable to the Company's majority
stockholder; interest at the bank's
prime rate plus .35% and 5%, respectively,
payable monthly $287,771 $ 610,068
Note payable to a stockholder; interest
at the bank's prime rate plus .35%,
payable monthly 170,573 160,006
Note payable to a partnership owned
by a stockholder; noninterest-bearing 139,500 98,500
Note payable to vendors; noninterest-
bearing 125,000 99,720
Note payable to a former stockholder of the
Company; interest at the bank's prime
rate plus .05%, payable monthly 87,185 69,597
Note payable to a relative of the Company's
majority stockholder; interest at the
bank's prime rate plus .35% 33,046 27,511
-------- ----------
$843,075 $1,065,402
======== ==========
</TABLE>
Revolving Line of Credit
The line of credit accrues interest at the bank's prime rate plus .35% and
expires on September 30, 1994. The note is secured by the accounts receivable
and inventory of the Company and is guaranteed by the stockholders. The loan
agreement contains covenants which require the Company to maintain: a minimum
current ratio, a minimum rate of cash flow to debt service and a minimum debt
to worth ratio. The Company was in compliance with all covenants as of April
30, 1994 and 1993.
-12-
<PAGE> 13
Long-Term Debt
Long-term debt consisted of the following as of April 30:
<TABLE>
1994 1993
------- -------
<S> <C> <C>
Deferred compensation contract payable
to the widow of a former key employee;
interest at 13%, principal and interest
payable monthly through October 1994 $26,669 $73,989
Notes payable; interest at 9.0%, principal
and interest due monthly through
April 1994 - 12,773
Note payable to an employee of the Company;
interest at 12%, principal and interest
payable annually through December 1993 - 11,425
------- -------
26,669 98,187
Less: Current portion 26,669 72,125
------- -------
$ - $26,062
======= =======
</TABLE>
All long-term debt matures during the year ended April 30, 1995.
5. COMMITMENTS:
Lease Commitments
The Company leases its main warehouse and office facility from an entity owned
by the Company's major stockholder (see Note 3). This lease required an annual
base rent of $365,000 through October 31, 1992. Effective November 1, 1992,
the annual base rent increased to $684,000 due to the additional warehouse
space. In addition, this lease contains renewal options covering nineteen
years and requires the Company to pay all property taxes, insurance and
maintenance on the property. Rent expense for this facility totaled $684,000
and $524,000 for the years ended April 30, 1994 and 1993, respectively.
A substantial portion of the Company's delivery equipment is leased under
leases expiring at various dates through March 2004. The full service leases
include all repairs, fuel and base rental charges. Rent expense for the
delivery equipment was $1,002,369 and $774,238 for the years ended April 30,
1994 and 1993, respectively.
-13-
<PAGE> 14
The Company is obligated under a 5-year lease for certain computer equipment
expiring February 1995. Rent expense related to computer equipment was
$165,838 and $130,888 for the years ended April 30, 1994 and 1993,
respectively.
Lease commitments are summarized as follows:
<TABLE>
<CAPTION>
Years Ending
April 30, Amount
------------ ----------
<S> <C>
1995 $1,378,961
1996 1,279,398
1997 1,046,482
1998 914,917
1999 873,540
2000 and thereafter 347,685
</TABLE>
Commitment Under Noncompetition Agreement
The Company has agreed to pay certain amounts to former principals of an
acquired company for a period of six years from the date of acquisition. In
return for this consideration, said principals have agreed not to compete with
the Company during that period.
Future commitments under these agreements of $120,225 will be paid in fiscal
year 1995.
6. EMPLOYEE BENEFIT PLAN:
The Company maintains a discretionary profit sharing plan covering
substantially all of its employees. Profit sharing plan expense was $229,332
and $161,515 during the years ended April 30, 1994 and 1993, respectively.
-14-
<PAGE> 15
RYKOFF-SEXTON, INC.
UNAUDITED PROFORMA COMBINED BALANCE SHEET
JANUARY 28, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
RYKOFF- CONTI-
SEXTON NENTAL PRO-
(Historical) (Historical COMBINED FORMA PRO-
(unaudited) (unaudited) TOTAL ADJ FORMA
---------- ---------- -------- --------- --------
<S> <C> <C> <C> <C> <C>
ASSETS
CASH AND CASH EQUIVALENTS $ 12,366 $ 1,651 $ 14,017 $(14,017)(A) $ -
ACCOUNTS RECEIVABLE, NET 139,994 7,624 147,618 147,618
INVENTORIES 137,988 4,423 142,411 1,222 (B) 143,633
PREPAID EXPENSES 15,661 492 16,153 (400)(C) 15,753
-------- ------- -------- -------- --------
TOTAL CURRENT ASSETS 306,009 14,190 320,199 (13,195) 307,004
-------- ------- -------- -------- --------
PROPERTY, PLANT AND EQUIPMENT, NET 165,789 928 166,717 4,000 (D) 170,717
GOODWILL - 20,781 (E) 20,781
OTHER ASSETS, NET 7,555 173 7,728 (156)(C) 7,572
-------- ------- -------- -------- --------
TOTAL $479,353 $15,291 $494,644 $ 11,430 $506,074
======== ======= ======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
ACCOUNTS PAYABLE $ 77,974 $ 4,386 $ 82,360 $ 7,300 (G) $ 89,425
(235)(H)
ACCRUED LIABILITIES 53,883 882 54,765 615 (I) 55,380
INCOME TAXES PAYABLE 507 53 560 560
-------- ------- -------- -------- --------
TOTAL CURRENT LIABILITIES 132,364 5,321 137,685 7,680 145,365
LONG-TERM DEBT, LESS CURRENT PORTION 130,089 - 130,089 13,720 (F,J) 143,809
DEFERRED INCOME TAXES 6,324 - 6,324 6,324
OTHER LONG-TERM LIABILITIES 6,187 - 6,187 6,187
-------- ------- -------- -------- --------
TOTAL LIABILITIES 274,964 5,321 280,285 21,400 301,685
SHAREHOLDERS' EQUITY
COMMON STOCK, AT STATED VALUE 1,497 18 1,515 (18)(K) 1,497
ADDITIONAL PAID-IN CAPITAL 92,289 - 92,289 92,289
RETAINED EARNINGS 115,228 9,952 125,180 (7,300)(G) 115,228
(2,652)(K)
-------- ------- -------- -------- --------
209,014 9,970 218,984 (9,970) 209,014
LESS: TREASURY STOCK, AT COST (4,625) - (4,625) (4,625)
-------- ------- -------- -------- --------
TOTAL SHAREHOLDERS' EQUITY 204,389 9,970 214,359 (9,970) 204,389
-------- ------- -------- -------- --------
TOTAL LIABILITIES AND EQUITY $479,353 $15,291 $494,644 $ 11,430 $506,074
======== ======= ======== ======== ========
</TABLE>
(A) Reflects the cash used to acquire Continental Foods, Inc.
(B) Reflects the step-up in inventory.
(C) Assets not acquired.
(D) Fair value of real estate assets acquired.
(E) Goodwill on acquisition.
(F) Borrowings used to pay for acquisition ($11,295).
(G) Dividend to sellers subsequent to balance sheet date for tax liability on
prior earnings.
(H) Continental historical notes payable not assumed.
(I) To accrue costs and expenses related to the acquisition.
(J) Note payable to seller ($2,425).
(K) Reflects elimination of historical equity of Continental.
-15-
<PAGE> 16
RYKOFF-SEXTON , INC.
UNAUDITED PROFORMA COMBINED INCOME STATEMENT
NINE MONTHS ENDED 1/28/95
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Nine Months Ended
---------------------------
RYKOFF- CONTI-
SEXTON NENTAL
(Historical) (Historical) PRO-
(unaudited) (unaudited) COMBINED FORMA PRO-
1/28/95 1/31/95 TOTAL ADJ FORMA
---------- ------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C>
SALES $ 1,152,727 $78,831 $1,231,558 $1,231,558
COST OF SALES 908,300 65,702 974,002 974,002
---------- ------- ---------- ------- ----------
GROSS PROFIT 244,427 13,129 257,556 - 257,556
WAREHOUSE, SELLING, G&A 224,367 10,642 235,009 81 (B) 234,216
52 (H)
(926)(C)
AMORTIZATION OF GOODWILL - - 390 (D) 390
---------- ------- ---------- ------- ----------
NET OPERATING EXPENSES 224,367 10,642 235,009 (403) 234,606
---------- ------- ---------- ------- ----------
OPERATING PROFIT 20,060 2,487 22,547 403 22,950
INTEREST EXPENSE 8,185 (58) 8,127 1,116 (E) 9,301
58 (G)
OTHER INCOME 57 57 57
---------- ------- ---------- ------- ----------
INCOME FROM CONT. OPERATIONS BEFORE
INCOME TAXES 11,875 2,602 14,477 (771) 13,706
PROVISION FOR INCOME TAXES 4,869 - 4,869 750 (F) 5,619
---------- ------- ---------- ------- ----------
INCOME FROM CONTINUING OPERATIONS 7,006 2,602 9,608 (1,521) 8,087
DISCONTINUED OPERATIONS:
INCOME FROM DISCONTINUED OPERATIONS,
NET OF INCOME TAXES 137 - 137 137
GAIN ON DISPOSAL OF DISCONTINUED OPERATIONS 23,359 - 23,359 23,359
---------- ------- ---------- ------- ----------
NET INCOME $ 30,502 $ 2,602 $ 33,104 $(1,521) $ 31,583
========== ======= ========== ======= ==========
Weighted Average Shares Outstanding 14,663 14,663
========== =========
Earnings per Share Data:
Income from continuing operations $ 0.48 $ 0.55
Income from discontinued operations 0.01 0.01
Gain on disposal of discontinued operations 1.59 1.59
---------- ---------
Net Income $ 2.08 $ 2.15
========== =========
</TABLE>
-16-
<PAGE> 17
RYKOFF - SEXTON , INC.
UNAUDITED PROFORMA COMBINED INCOME STATEMENT
FOR THE TWELVE MONTHS ENDED 4/30/94
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
RYKOFF- CONTI-
SEXTON NENTAL PRO-
(Historical) (Historical) COMBINED FORMA PRO-
(audited) (audited) TOTAL ADJ FORMA
------------ ------------ ---------- ------- ----------
<S> <C> <C> <C> <C> <C>
SALES $1,444,226 $91,018 $1,535,244 $1,535,244
COST OF SALES 1,127,865 75,886 1,203,751 $ (133)(A) 1,203,618
---------- ------- ---------- ------- ----------
GROSS PROFIT 316,361 15,132 331,493 133 331,626
WAREHOUSE, SELLING, G&A 297,489 13,149 310,638 108 (B) 309,894
197 (H)
(1,049)(C)
AMORTIZATION OF GOODWILL - - - 520 (D) 520
---------- ------- ---------- ------- ----------
NET OPERATING EXPENSES 297,489 13,149 310,638 (224) 310,414
---------- ------- ---------- ------- ----------
OPERATING PROFIT 18,872 1,983 20,855 357 21,212
INTEREST EXPENSE 11,946 78 12,024 1,488 (E) 13,434
(78)(G)
OTHER INCOME - 197 197 (101)(G) 96
---------- ------- ---------- ------- ----------
INCOME FROM CONT. OPERATIONS BEFORE
INCOME TAXES 6,926 2,102 9,028 (1,154) 7,874
PROVISION FOR INCOME TAXES 2,805 - 2,805 424 (F) 3,229
---------- ------- ---------- ------- ----------
INCOME FROM CONTINUING OPERATIONS 4,121 2,102 6,223 (1,578) 4,645
EXTRAORDINARY ITEM NET OF INCOME TAXES (1,444) (1,444) (1,444)
DISCONTINUED OPERATIONS:
INCOME FROM DISCONTINUED OPERATIONS,
NET OF INCOME TAXES 3,241 - 3,241 3,241
---------- ------- ---------- ------- ----------
NET INCOME $ 5,918 $ 2,102 $ 8,020 $(1,578) $ 6,442
========== ======= ========== ======= ==========
Weighted Average Shares Outstanding 14,601 14,601
========== ==========
Earnings per Share Data:
Income from continuing operations $ 0.28 $ 0.32
Income from discontinued operations 0.22 $ 0.22
---------- ----------
Income before extraordinary item 0.50 0.54
Extaordinary item (0.10) (0.10)
---------- ----------
Net Income $ 0.40 $ 0.44
========== ==========
</TABLE>
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<PAGE> 18
RYKOFF SEXTON, INC.
NOTES TO UNAUDITED PROFORMA COMBINED STATEMENTS OF OPERATIONS
FOR THE TWELVE MONTHS ENDED 4/30/94 AND THE NINE MONTHS ENDED 1/28/95
(A) Eliminate Continental historical LIFO provision.
(B) Record depreciation on assets acquired.
(C) Eliminate Continental historical lease expense and owner salaries.
(D) Amortization of goodwill on Continental acquisition.
(E) Interest expense on borrowings to finance the acquisition.
(F) Tax provision on Continental's pre-tax income at the consolidated
corporate tax rate.
(G) Eliminates Continental's historical interest expense and income.
(H) Eliminate Continental's rental income.
-18-
<PAGE> 19
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
----------- ---------------------------------------------------------------------------
<S> <C>
2 *Asset Purchase Agreement, dated February 10, 1995, by and among Continental
Foods, Inc., John Guerriero, et al.
23 **Consent of Independent Public Accountants
</TABLE>
________________
*Previously filed
**Filed herewith
-19-
<PAGE> 1
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated June 7, 1994 covering the audited historical financial statements of
Continental Foods, Inc. as of April 30,1994 and 1993 and the statements of
income and retained earnings and statements of cash flows for the years then
ended included in or made a part of this form 8-K/A.
ARTHUR ANDERSEN LLP
Baltimore, Maryland,
March 28,1995
