<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended January 27, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 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 or organization) Identification No.)
1050 Warrenville Rd.
Lisle, Illinois 60532
(Address of principal executive offices) (Zip Code)
(708) 964-1414
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
report)
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, AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS.
Yes ( X ) No ( )
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES
OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.
Outstanding at
Class of Common Stock March 5, 1996
--------------------- --------------
$.10 par value 14,800,032 shares
<PAGE>
RYKOFF-SEXTON, INC.
INDEX
-------
Page
No.
----
Part I. Financial Information
Item l. Financial Statements
Condensed Consolidated Balance Sheets
January 27, 1996 and April 29, 1995 1
Condensed Consolidated Statements of Income
Three Months and Nine Months ended
January 27, 1996 and January 28, 1995 2
Condensed Consolidated Statements of Cash Flows
Nine Months ended January 27, 1996 and
January 28, 1995 3
Notes to Condensed Consolidated Financial
Statements 4-7
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition 8-11
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
<PAGE>
RYKOFF-SEXTON, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands)
ASSETS
<TABLE>
<CAPTION>
January 27, April 29,
1996 1995
----------- ---------
<S> <C> <C>
Current Assets
Cash and cash equivalents $6,628 $4,959
Accounts receivable, net 176,785 151,379
Inventories 161,642 138,122
Prepaid expenses 27,692 24,979
----------- ---------
Total current assets 372,747 319,439
Property, plant and equipment, net 208,939 176,109
Goodwill, net 42,185 21,920
Other assets, net 7,860 6,600
----------- ---------
Total assets $631,731 $524,068
----------- ---------
----------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term debt $ 97,000 $ ---
Accounts payable 104,517 97,623
Accrued insurance expenses and other 13,882 17,748
Accrued liabilities 31,792 42,263
Current portion of long-term debt 18,888 189
--------- ---------
Total current liabilities 266,079 157,823
--------- ---------
Long-term debt, less current portion 137,891 146,536
--------- ---------
Deferred income taxes 11,073 11,073
--------- ---------
Other long-term liabilities 1,676 2,096
--------- ---------
Shareholders' equity
Common stock, at stated value 1,513 1,498
Additional paid-in capital 95,136 92,507
Retained earnings 122,343 117,161
--------- ---------
218,992 211,166
Less: treasury stock, at cost (3,980) (4,626)
--------- ---------
Total shareholders' equity 215,012 206,540
Total liabilities and shareholders' --------- ---------
equity $631,731 $524,068
--------- ---------
--------- ---------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
1
<PAGE>
RYKOFF-SEXTON, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
--------------------------- ---------------------------
January 27, January 28, January 27, January 28,
1996 1995 1996 1995
--------------------------- ---------------------------
<S> <C> <C> <C> <C>
Net Sales $452,379 $379,601 $1,314,695 $1,152,727
Cost of sales 365,697 300,685 1,053,727 908,300
--------- --------- ----------- -----------
Gross profit 86,682 78,916 260,968 244,427
Warehouse, selling, general
and administrative expenses 80,698 75,163 244,863 224,367
Reversal of restructuring reserves --- --- (6,441) ---
--------- --------- ----------- -----------
Income from operations 5,984 3,753 22,546 20,060
Interest expense 5,093 2,234 12,452 8,185
--------- --------- ----------- -----------
Income from continuing operations
before income taxes 891 1,519 10,094 11,875
Provision for income taxes 347 623 4,028 4,869
--------- --------- ----------- -----------
Income from continuing operations 544 896 6,066 7,006
Discontinued operations:
Income from discontinued operations,
net of income taxes --- --- --- 137
Gain on disposal of discontinued
operations, net of income taxes --- --- --- 23,359
--------- --------- ----------- -----------
Net income $ 544 $896 $6,066 $30,502
--------- --------- ----------- -----------
--------- --------- ----------- -----------
Weighted average number of
shares outstanding 15,039 14,668 14,965 14,663
--------- --------- ----------- -----------
--------- --------- ----------- -----------
Earnings per share (See Note 3):
Income from continuing operations $ 0.04 $ 0.06 $ 0.41 $ 0.48
Income from discontinued operations --- --- --- 0.01
Net gain on disposal of discontinued
operations --- --- --- 1.59
--------- --------- ----------- -----------
$ 0.04 $ 0.06 $ 0.41 2.08
--------- --------- ----------- -----------
--------- --------- ----------- -----------
Cash dividends per share $ 0.03 --- $ 0.06 ---
--------- --------- ----------- -----------
--------- --------- ----------- -----------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
2
<PAGE>
RYKOFF-SEXTON, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
<TABLE>
<CAPTION>
Nine Months Ended
-------------------------------
January 27, January 28,
1996 1995
---------- --------
<S> <C> <C>
Cash flows from operating activities-- $6,066 $30,502
Net income
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 13,959 12,720
Gain on disposal of discontinued operations ---- (23,359)
Gain on sale of property, plant and equipment (126) (329)
Net income from discontinued operations --- (137)
Other (421) (342)
Changes in assets and liabilities:
Increase in accounts receivable (15,034) (1,319)
Increase in inventories (15,311) (18,434)
(Increase) decrease in prepaid expenses (2,500) 347
Decrease in accounts payable
and accrued liabilities (17,822) (193)
-------- --------
Net cash used in operating activities (31,189) (544)
-------- --------
Cash flows from investing activities --
Capital expenditures (40,490) (42,695)
Proceeds from disposal of property,
plant and equipment 529 2,105
Proceeds from sale of discontinued operations --- 96,000
Cost of acquisition (8,542) ---
Other (1,361) (1,562)
Net cash (used in) discontinued operations --- (30,002)
-------- --------
Net cash (used in) provided by investing
activities (49,864) 23,846
-------- --------
Cash flows from financing activities--
Principal payments of long-term debt (2,684) (182)
Increase (decrease) under credit line 83,000 (21,000)
Payment of finance costs --- (164)
Issuance of common stock 3,290 580
Dividends paid (884) ---
-------- --------
Net cash provided by (used in) financing
activities 82,722 (20,766)
-------- --------
Net increase in cash and cash equivalents 1,669 2,536
Cash and cash equivalents at beginning of period 4,959 9,830
-------- --------
Cash and cash equivalents at end of period $6,628 $12,366
-------- --------
-------- --------
Supplemental disclosures of cash flow
information --
Cash paid during the period for:
Interest $17,491 $12,809
Income Taxes 1,715 20,416
-------- --------
-------- --------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
RYKOFF-SEXTON, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The condensed consolidated financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information
and footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the information
presented not misleading. It is suggested that these condensed
consolidated financial statements be read in conjunction with the financial
statements and notes thereto included in the Company's latest annual report
on Form 10-K.
2. The foregoing financial information, not examined by independent public
accountants, reflects, in the opinion of the Company, all adjustments
(which included only normal recurring adjustments) necessary to present
fairly the information purported to be shown and is not necessarily
indicative of the results of the operations for the entire year ending
April 27, 1996.
3. Primary earnings per share of common stock have been computed on the
weighted average number of shares of common stock outstanding and dilutive
common stock equivalents.
4. Inventories are carried at the lower of cost (first-in, first-out) or
market and are summarized as follows (amounts in thousands):
<TABLE>
<CAPTION>
January 27, April 29,
1996 1995
---------- --------
<S> <C> <C>
Finished Goods $154,529 $132,109
Raw Materials $ 7,113 $ 6,013
---------- --------
$161,642 $138,122
---------- --------
---------- --------
</TABLE>
5. During fiscal 1993 the Company recorded a restructuring charge of $31
million to cover costs associated with a planned business reorganization.
This reorganization was completed during the second quarter of the current
year. With the completion of the reorganization program, the Company
reversed the remaining unused portion of the original $31 million charge.
This unused portion, totaling $6.4 million, related primarily to over
estimates of facility closures and partly offsets expenses associated with
the relocation of the Los Angeles distribution center included in
warehouse, selling, general and administrative expenses.
6. In October 1994, the Company sold all of the stock of its then
wholly-owned subsidiary, 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.
4
<PAGE>
The Company believes it has substantial legal and factual defenses to the
Burns Philp claims and is defending itself vigorously in the matter. The
evidentiary hearing was concluded on February 13, 1996 and the Company and
Burns Philp are briefing the issues addressed during the evidentiary
hearing. Final arguments have been set for April 5, 1996 by the
arbitration panel. 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 adverse effect on
the Company's consolidated financial position or its result of operations.
7. In November 1995, the Company acquired substantially all of the assets of
H&O Foods, Inc., a privately owned Nevada corporation ("H&O"). H&O is a
regional, full-line institutional foodservice distributor serving Nevada,
California and Arizona.
For financial statement purposes the acquisition was accounted for as a
purchase and, accordingly, H&O's results are included in the consolidated
financial statements since the date of acquisition. The aggregate purchase
price was approximately $32,277,000, which includes costs of acquisition.
The aggregate purchase price, which was financed through available cash
resources and issuance of promissory notes, has been allocated to the
assets of the company, based upon their respective fair market values. The
excess of the purchase price over assets acquired approximated $18,560,000
and is being amortized over forty years.
In connection with the acquisition, liabilities were assumed as follows
(amounts in thousands):
<TABLE>
<CAPTION>
<S> <C>
Fair Value of Assets Acquired $42,657
Unsecured notes issued at acquisition date (26,480)
Cash paid (5,797)
--------
Liabilities assumed $10,380
--------
--------
</TABLE>
The following unaudited pro forma consolidated results of operations have
been prepared as if the acquisition of H&O had occurred at the beginning of
fiscal 1996 and 1995 (dollars in thousands except per share data):
<TABLE>
<CAPTION>
Pro Forma Period Ended
-----------------------------
January 27, January 28,
1996 1995
------------ -----------
<S> <C> <C>
Net Sales $1,381,570 $1,241,142
Net income from continuing operations 6,240 7,056
Net income per share from continuing
operations $ 0.42 $ 0. 48
---------- ----------
---------- ----------
</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.
5
<PAGE>
8. On December 5, 1995, the Company announced that it had entered into a
letter of intent with US Foodservice, Inc. ("US Foodservice") regarding a
possible acquisition of US Foodservice. On February 2, 1996, the Company,
USF Acquisition Corporation, a wholly-owned subsidiary of the Company and
US Foodservice signed a definitive agreement and plan of merger pursuant to
which US Foodservice will merge with and into USF Acquisition Corporation
and US Foodservice will become a wholly-owned subsidiary of the Company.
The merger, which has been unanimously approved by the board of directors
of both companies, is valued at approximately $230 million, exclusive of
amounts to be paid to preferred stockholders of US Foodservice and debt of
US Foodservice to be refinanced in the transaction. The merger is expected
to close in the second calendar quarter of 1996.
US Foodservice, with 1995 net sales of approximately $1.7 billion, is a
distributor of food and related non-foods to the foodservice industry,
serving more than 35,000 customers in over 30 states, primarily in the
Southeastern, Southwestern and Mid-Atlantic regions.
Under the merger agreement, upon consummation of the merger, each share of
US Foodservice common stock would be exchanged for $25 in value of the
Company's common stock, subject to a maximum of 1.457 and a minimum of
1.244 shares, based on a dollar range of $17.16 to $20.10, of the Company's
common stock. A maximum of approximately 12.9 million and a minimum of
approximately 11.0 million shares of the Company's common stock would be
issued in the transaction. Options and warrants to acquire approximately 1
million shares of US Foodservice will be converted into options and
warrants to acquire the Company's common stock according to the merger
conversion terms. The redemption price for preferred stock of US
Foodservice outstanding as of February 2, 1996 is expected to total
approximately $48.6 million in cash.
The proposed merger is subject to the approvals of shareholders of both the
Company and US Foodservice, and appropriate regulatory reviews and
approvals. The consummation of the transaction is also subject to the
execution of definitive documentation relating to the refinancing of the
existing debt of the combined companies.
The largest shareholders of US Foodservice consist primarily of investment
partnerships managed by Merrill Lynch Capital Partners, Inc. or certain of
its affiliates. It is expected that, following the transaction, such
entities will own a substantial portion of the Company's common stock and
will have board representation.
6
<PAGE>
9. In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, ACCOUNTING FOR THE IMPAIRMENT OF
LONG LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF. This
statement establishes accounting standards for the impairment of long-lived
assets, certain identifiable intangibles, and goodwill related to those
assets to be held and used and for long-lived assets and certain
identifiable intangibles to be disposed of. This statement requires that
impairment losses for long-lived assets and identifiable intangibles to be
held and used be based on the fair value of the asset. Long-lived assets
and certain identifiable intangibles to be disposed of should be reported
at the lower of carrying amount or fair value less cost to sell. The
Company is required to adopt this statement by the first quarter of fiscal
1997.
The Company has yet to evaluate the impact, if any, that this new
accounting standard will have on the Company's results of operations and
financial position.
10. Certain amounts in the comparative prior year period have been reclassified
to conform to the current period's presentation.
7
<PAGE>
RYKOFF-SEXTON, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
A summary of the period to period changes in principal items included in the
condensed consolidated statements of income is shown below:
<TABLE>
<CAPTION>
Comparison of
---------------------------------------------------------------
Three Months Ended Nine Months Ended
January 27, 1996 January 27, 1996
and January 28, 1995 and January 28, 1995
-------------------- --------------------
Increases (Decreases)
(Amounts in Thousands)
<S> <C> <C> <C> <C>
NET SALES $72,778 19.17% $161,968 14.05%
Cost of sales 65,012 21.62 145,427 16.01
Warehouse, selling, general
and administrative expenses 5,535 7.36 20,496 9.14
Reversal of restructuring reserves --- --- 6,441 100.00
Income from operations 2,231 59.45 2,486 12.39
Interest expense 2,859 127.98 4,267 52.13
Income from continuing operations
before income taxes (628) (41.34) (1,781) (15.00)
Provision for income taxes (276) (44.30) (841) (17.27)
Income from continuing operations (352) (39.29) (940) (13.42)
Discontinued operations:
Income from discontinued operations,
net of income taxes --- --- (137) (100.00)
Gain on disposal of discontinued
operations, net of income taxes --- --- (23,359) (100.00)
Net income (352) (39.29) (24,436) (80.11)
</TABLE>
8
<PAGE>
THREE MONTHS ENDED JANUARY 27, 1996 COMPARED TO
THREE MONTHS ENDED JANUARY 28, 1995
The Company's key strategic objectives include becoming a top three broadline
distributor in each of its markets, and making selected acquisitions that
strengthen its market position and financial results. Consistent with this
strategy, the Company acquired substantially all of the assets of Continental
Foods ("Continental") during the fourth quarter in fiscal 1995 and substantially
all of the assets of H&O in the current quarter. Additionally, subsequent to
the third quarter ended January 27, 1996, the Company signed a definitive
agreement to acquire US Foodservice (see Note 8 to the Condensed Consolidated
Financial Statements on page 6 for further information). Operating results for
Continental and H&O have been included since the dates of their acquisitions,
which were February 21, 1995 and November 1, 1995, respectively. The three
months ended January 27, 1996 is the first quarter in fiscal 1996 that reflects
the operating results of both Continental and H&O.
Sales from continuing operations increased $72.8 million or 19.2% over the
comparable prior year quarter. Severe weather throughout the East and Midwest
negatively affected sales. Otherwise, sales would have increased approximately
20.6% over the same quarter last year. Excluding acquisitions, sales increased
2.8%.
Cost of sales increased $65.0 million or 21.6%, resulting in a decrease in the
gross profit margin to 19.2% from 20.8% in the comparable prior year quarter.
The acquired operations, which have a lower gross profit rate than the Company's
overall business, were a major reason for the margin decline. Excluding the
effect of these acquisitions, gross margin for the third quarter would have been
20.1%. The decrease in gross profit for the base business was caused by changes
in product mix from newer product lines, such as meats, poultry and seafood,
that typically carry lower gross margins and the implementation of new customer
programs.
Warehouse, selling, general and administrative expenses as a percentage of sales
decreased to 17.8% from 19.8% a year ago. The two acquired locations have lower
expenses as a percentage of sales than the overall business. Excluding the
effect of acquisitions, operating expenses as a percentage of sales for the
quarter would have been 19.2%. The decline in operating expenses from the base
business is attributable to ongoing cost reduction efforts.
Interest expense increased by $2.9 million primarily due to increased borrowing
levels and a lower capitalized interest amount. Increased borrowings mainly
resulted from increases in working capital to support the higher level of sales,
as well as the purchases of H&O and Continental.
The decline in effective tax rate to 39% for the quarter from 41% for the
comparable prior quarter was primarily attributable to changes in the
distribution of income among various states.
Income from continuing operations for the third quarter, historically the
weakest period of the fiscal year, decreased by $0.4 million to $0.5 million.
This was primarily reflective of the severe winter weather and increased
interest expense.
9
<PAGE>
NINE MONTHS ENDED JANUARY 27, 1996 COMPARED TO
NINE MONTHS ENDED JANUARY 28, 1995
Sales increased $162.0 million or 14.1% over the same period last year.
Excluding acquisitions, sales advanced 3.8%. This sales increase resulted from
the continued introduction of new product lines and new sales and market
strategies.
Cost of sales increased $145.4 million or 16.0%. This resulted in a decrease in
the gross profit margin to 19.9% from 21.2% last year. The decline primarily
reflects the impact of the two acquisitions which have a lower margin than the
overall business, and the Company's continuing transition from a niche
distributor to a full line distributor, providing customers with an expanded
selection of product categories, including fresh meats, produce and seafood, and
the implementation of new customer programs. Excluding acquisitions, the gross
margin rate would have been 20.5%.
Warehouse, selling, general and administrative expenses, combined with the
reversal of restructuring reserves in the second quarter, as a percentage of
sales decreased to 18.1% from 19.5% a year ago. Without the effect of
acquisitions, operating expenses as a percentage of sales on a year to date
basis would have been 19.5%. The Company's progress to date in reducing costs
and improving operating efficiencies under its Project Results program were
offset by start up expenses associated with the move of the Los Angeles
distribution center and increased selling expenses arising from the
implementation of new ordering systems.
As more fully disclosed in Note 5 on page 4, income from operations includes the
reversal of restructuring reserves of $6.4 million which resulted from
finalization of the provision established in 1993. This reversal partially
offsets expenses associated with the Los Angeles distribution center move
included in warehouse, selling, general and administrative expenses.
Interest expense increased $4.3 million primarily due to increased borrowing
levels associated with the purchase of Continental and H&O, increased working
capital necessary to support increased sales, and interest associated with
payments made for capital expenditures, most notably the new Los Angeles
distribution center.
The effective tax rate on a year to date basis was 40% compared to 41% for the
comparable prior period, primarily reflecting the change in distribution of
income among various states.
On a year to date basis, income from continuing operations decreased by $0.9
million to $6.1 million. This resulted from slowdown in sales growth at various
locations throughout the country; severe weather also affected sales throughout
the East and Midwest in the third quarter. Other factors affecting the decline
in net income include: margin declines arising from changing customer mix, the
accelerated growth of newer product lines, such as meats, poultry and seafood,
that typically carry lower gross margins, and increased interest expense.
Realization of operating efficiencies at the new Los Angeles distribution center
has been slower than anticipated, primarily as a result of training issues with
respect to new operating systems.
In October 1994, the Company sold all of the stock of Tone Brothers, Inc.
("Tone") which resulted in a gain of $23.4 million, net of income taxes.
10
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Cash used in operations for the nine months ended January 27, 1996 was $31.2
million, compared to $0.5 million a year ago. This mainly resulted from changes
in working capital items, primarily accounts receivable, inventories and
accounts payable. The increases in accounts receivable and inventories
primarily reflect the higher level of sales. Working capital, excluding short-
term debt, at January 27, 1996 was $203.7 compared to $161.6 million at April
29, 1995. The current ratio, excluding short-term debt, was 2.2:1 at January
27, 1996 compared to 2.0:1 at April 29, 1995. Short-term debt represents the
amount outstanding under the Company's credit line which will expire on August
31, 1996. This credit line will be refinanced in connection with the proposed
acquisition of US Foodservice, as discussed below. As of January 27, 1996,
total current assets represented approximately 59.0% of the total assets of the
Company.
The Company used its credit line for capital expenditures, debt repayment,
payment of dividends, as well as paying for the acquisition of H&O. The
issuance of common stock resulted from employee stock option exercises. Going
forward, the Company expects that its future capital expenditures, debt payments
and cash dividends will be financed through a combination of cash flow generated
from operating activities and use of its credit line.
The Company has ongoing plans to incur capital expenditures which may include
construction of new and more efficient distribution centers and expansion of
freezer and cooler facilities.
In connection with the proposed acquisition of US Foodservice, the Company has
obtained bank commitments totaling approximately $485 million. This facility
will be used to refinance the Company's existing bank debt and other
indebtedness incurred in connection with acquisitions completed by the Company
within the last twelve months, substantially all of the debt of US Foodservice
(expected to total approximately $245 million, exclusive of US Foodservice's
existing trade receivable securitization facility of approximately $90 million),
the redemption of US Foodservice Preferred Stock, and to provide working capital
for the combined companies. The Company also intends to enter into a new trade
receivable securitization facility.
Management believes that the Company will be able to generate cash flows from
operations, and have sufficient capital resources to meet its obligations.
PENDING ACCOUNTING CHANGES
The Financial Accounting Standards Board recently issued Statement of Financial
Accounting Standards No. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG LIVED ASSETS
AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF. This statement establishes
accounting standards for the impairment of long-lived assets, certain
identifiable intangibles, and goodwill related to those assets to be held and
used and for long-lived assets and certain identifiable intangibles to be
disposed of. This statement requires that impairment losses for long-lived
assets and identifiable intangibles to be held and used be based on the fair
value of the asset. Long-lived assets and certain identifiable intangibles to
be disposed of should be reported at the lower of carrying amount or fair value
less cost to sell. The Company is required to adopt this statement by the first
quarter of fiscal 1997.
The Company has yet to evaluate the impact, if any, that this new accounting
standard will have on the Company's results of operations and financial
position.
11
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
During the quarter ended January 27, 1996, the Company filed Form
8-K and Form 8-K/A-1 dated November 1, 1995 reporting the following
items:
Item 2. Acquisition or Disposition of Assets.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RYKOFF-SEXTON, INC.
Date: March 12, 1996 /s/MARK VAN STEKELENBURG
------------------------
Mark Van Stekelenburg
Chairman, President and Chief
Executive Officer
Date: March 12, 1996 /s/RICHARD J. MARTIN
-------------------------
Richard J. Martin
Senior Vice President and
Chief Financial Officer
Date: March 12, 1996 /s/JAMES C. WONG
----------------
James C. Wong
Treasurer
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-27-1996
<PERIOD-START> APR-30-1995
<PERIOD-END> JAN-27-1996
<CASH> 6,628
<SECURITIES> 0
<RECEIVABLES> 176,785
<ALLOWANCES> 5,320
<INVENTORY> 161,642
<CURRENT-ASSETS> 372,747
<PP&E> 351,902
<DEPRECIATION> 142,963
<TOTAL-ASSETS> 631,731
<CURRENT-LIABILITIES> 266,079
<BONDS> 0
0
0
<COMMON> 1,513
<OTHER-SE> 215,012
<TOTAL-LIABILITY-AND-EQUITY> 631,731
<SALES> 1,314,695
<TOTAL-REVENUES> 1,314,695
<CGS> 1,053,727
<TOTAL-COSTS> 244,863
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,452
<INCOME-PRETAX> 10,094
<INCOME-TAX> 4,028
<INCOME-CONTINUING> 6,066
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,066
<EPS-PRIMARY> 0.41
<EPS-DILUTED> 0.41
</TABLE>
