<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 DECEMBER 28, 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.)
613 BALTIMORE DRIVE
WILKES-BARRE, PENNSYLVANIA 18702
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(717) 831-7500
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
FORMER ADDRESS: RYKOFF-SEXTON, INC., 1050 WARRENVILLE ROAD, LISLE, ILLINOIS
60532
(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 JANUARY 31, 1997
--------------------- ----------------
$.10 PAR VALUE 27,925,572 SHARES
<PAGE>
RYKOFF-SEXTON, INC.
INDEX
Page
No.
----
Part I. Financial Information
Item l. Financial Statements
Condensed Consolidated Balance Sheets
December 28, 1996 and April 27, 1996 1
Condensed Consolidated Statements of Income
Thirteen Weeks and Twenty-six Weeks ended
December 28, 1996 and January 27, 1996 2
Condensed Consolidated Statements of Cash Flows
Twenty-six Weeks ended December 28, 1996 and
January 27, 1996 3
Notes to Condensed Consolidated Financial
Statements 4-6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-11
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
December 28, April 27,
1996 1996
(Unaudited)
------------ ------------
Current assets:
Cash and cash equivalents $ 37,596 $ 10,825
Accounts receivable, net 128,694 182,312
Inventories 227,896 152,805
Prepaid expenses 36,244 19,893
Deferred income taxes 22,368 7,211
------------ ------------
Total current assets 452,798 373,046
------------ ------------
Property, plant and equipment, net 276,886 177,918
Goodwill, net 443,048 41,188
Deferred income taxes, net 28,035 4,881
Other assets, net 24,702 14,823
------------ ------------
Total assets $ 1,225,469 $ 611,856
------------ ------------
------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt $ --- $ 94,000
Accounts payable 234,896 120,828
Accrued liabilities 94,871 48,203
Current portion of long-term debt 15,196 19,708
------------ ------------
Total current liabilities 344,963 282,739
------------ ------------
Long-term debt, less current portion 494,695 135,081
------------ ------------
Other long-term liabilities 42,688 1,536
------------ ------------
Shareholders' equity:
Common stock, at stated value 2,818 1,513
Additional paid-in capital 299,085 95,236
Retained earnings 44,447 99,497
------------ ------------
346,350 196,246
Less: treasury stock, at cost 3,227 3,746
------------ ------------
Total shareholders' equity 343,123 192,500
------------ ------------
Total liabilities and shareholders' equity $ 1,225,469 $ 611,856
------------ ------------
------------ ------------
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)
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-six Weeks Ended
--------------------------- ---------------------------
December 28, January 27, December 28, January 27,
1996 1996 1996 1996
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Net sales $ 882,381 $ 452,379 $ 1,787,208 $ 892,924
Cost of sales 701,800 351,406 1,429,240 691,151
------------ ----------- ------------ -----------
Gross profit 180,581 100,973 357,968 201,773
Operating expenses 154,251 94,727 310,179 192,795
Amortization of goodwill and other intangibles 3,385 262 6,318 427
Reversal of restructuring reserves --- --- --- (6,441)
------------ ----------- ------------ -----------
Income from operations 22,945 5,984 41,471 14,992
Interest expense, net 11,534 5,093 22,806 9,306
Other expenses 3,821 --- 6,958 ---
------------ ----------- ------------ -----------
Income before income taxes 7,590 891 11,707 5,686
Provision for income taxes 3,673 347 5,744 2,265
------------ ----------- ------------ -----------
Net income $ 3,917 $ 544 $ 5,963 $ 3,421
------------ ----------- ------------ -----------
------------ ----------- ------------ -----------
Weighted average number of
shares outstanding 28,172 15,039 28,135 15,054
------------ ----------- ------------ -----------
------------ ----------- ------------ -----------
Earnings per share $ 0.14 $ 0.04 $ 0.21 $ 0.23
------------ ----------- ------------ -----------
------------ ----------- ------------ -----------
Cash dividends per share $ --- $ 0.03 $ 0.03 $ 0.03
------------ ----------- ------------ -----------
------------ ----------- ------------ -----------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
2
<PAGE>
RYKOFF-SEXTON, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Twenty-six Weeks Ended
-------------------------------------
December 28, 1996 January 27, 1996
----------------- ----------------
<S> <C> <C>
Cash flows from operating activities--
Net income $ 5,963 $ 3,421
Adjustments to reconcile net income to net
cash provided by (used in) operating activities --
Deferred gain on sale and leaseback transaction (265) (281)
Depreciation and amortization 21,672 9,515
Gain on sale of property, plant and equipment (2,141) (40)
Deferred income taxes 4,607 ---
Changes in assets and liabilities:
(Increase) in receivables (13,654) ( 6,874)
(Increase) decrease in inventories 9,698 (2,988)
(Increase) in prepaid expenses and
other assets (2,112) (3,934)
(Decrease) in accounts payable
and accrued and other liabilities (5,286) (1,947)
----------------- ----------------
Net cash provided by (used in) operating activities 18,482 (3,128)
----------------- ----------------
Cash flows from investing activities --
Capital expenditures (19,079) (24,153)
Proceeds from disposal of property, plant and
equipment 6,435 346
Cost of acquisition --- (8,542)
Other --- (1,361)
----------------- ----------------
Net cash used in investing activities (12,644) (33,710)
----------------- ----------------
Cash flows from financing activities--
Principal payments of long-term debt and capital
lease obligations (2,231) (2,638)
Increase (decrease) under revolving credit line (15,000) 41,000
Increase in long-term debt 25,900 ---
Issuance of common stock 1,876 2,354
Dividends paid (832) (446)
Other --- 19
----------------- ----------------
Net cash provided by financing activities 9,713 40,289
----------------- ----------------
Net increase in cash and cash equivalents 15,551 3,451
Cash and cash equivalents at beginning of period 22,045 3,177
----------------- ----------------
Cash and cash equivalents at end of period $ 37,596 $ 6,628
----------------- ----------------
----------------- ----------------
Supplemental disclosures of cash flow information --
Cash paid (refunds) during the period for:
Interest $ 22,609 $ 10,696
Income taxes, net (2,776) 1,509
----------------- ----------------
----------------- ----------------
</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. The foregoing financial information, not audited
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 June 28, 1997. 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.
The Condensed Consolidated Statements of Income include the results for the
thirteen and twenty-six weeks ended December 28, 1996, compared to the
thirteen and twenty-six week periods ended January 27, 1996. The Condensed
Statements of Cash Flows present the cash flows for the twenty-six weeks
ended December 28, 1996, compared to the twenty-six weeks ended January,
27, 1996. The Company believes it was not practicable to prepare financial
statements for the comparable periods in fiscal 1996, nor would such
statements be more meaningful than the reported results for the previously
reported thirteen and twenty-six week periods ended January 27, 1996, given
the inclusion of the results of US Foodservice Inc. ("US Foodservice") in
the thirteen and twenty-six week periods ended December 28, 1996.
2. In connection with the acquisition of US Foodservice, the Company changed
its fiscal year to the Saturday closest to June 30 from the Saturday
closest to April 30.
The financial statements for the prior periods reflect certain
reclassifications to conform with classifications adopted in the current
year, including the reclassification of certain items previously included
in operating expenses to cost of sales to conform the accounting treatment
of the Company and US Foodservice.
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 summarized as follows (amounts in thousands):
December 28, April 27,
1996 1996
--------------- ---------------
Finished Goods $ 221,288 $ 145,899
Raw Materials 6,608 6,906
--------------- ---------------
$ 227,896 $ 152,805
--------------- ---------------
--------------- ---------------
All inventories are stated at the lower of cost or market, with approximately
14% at December 28, 1996 determined by the last-in, first-out ("LIFO") cost
method and the remainder by the first-in, first-out ("FIFO") cost method.
4
<PAGE>
5. 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 provided for arbitration in the case of a
dispute and on April 16, 1995, Burns Philp filed a notice of arbitration in
which it claimed contract and fraud damages in excess of $57 million in
connection with the purchase of Tone.
After extensive investigation and discovery, the matter was presented to
the arbitration tribunal in February 1996 and final argument was presented
in April 1996. The arbitration proceeding concluded in October 1996 and
the arbitration award, which is final and binding, is not material and will
not impact the Company's financial results.
6. On May 17, 1996, the Company consummated a merger with US Foodservice, a
privately held broadline foodservice distribution company. As part of the
merger agreement, US Foodservice stockholders received 1.457 shares of
Rykoff-Sexton common stock for each outstanding share of US Foodservice
common stock. Options and warrants to acquire approximately one million
shares of US Foodservice common stock were converted to options to acquire
Rykoff-Sexton common stock on the same basis. The number of shares issued
in connection with the merger was 12,880,519. For financial reporting
purposes, the shares issued have been recorded at $15.40 per share, which
represents the closing market price as defined in the merger agreement. In
addition to the issuance of common stock, Rykoff-Sexton refinanced
substantially all of the outstanding debt of US Foodservice and purchased
all of the outstanding shares of the US Foodservice $15 cumulative
redeemable exchangeable preferred stock. The merger was treated as a
purchase transaction and, as such, the aggregate purchase price has been
preliminarily allocated to the assets and liabilities of US Foodservice
based upon their respective fair values. The excess of the purchase price
over assets acquired approximated $408 million and is being amortized over
the expected period of benefit of forty years.
In connection with the merger, Rykoff-Sexton entered into a new bank credit
facility providing for loans and other credit facilities equal to $485
million. Rykoff-Sexton also entered into an accounts receivable
securitization facility with two banks totaling $110 million and assumed an
existing $90 million accounts receivable securitization facility already in
place at US Foodservice. Proceeds under the new credit facility and the
accounts receivable securitization facilities were used to pay off existing
debt, repurchase outstanding US Foodservice preferred stock, provide for
initial and ongoing working capital needs and pay related fees and
expenses. In November, 1996, the company combined its two accounts
receivable securitization facilities into a single program.
5
<PAGE>
The following unaudited pro forma information presents a summary of
consolidated results of operations, assuming the US Foodservice acquisition
had been made on July 1, 1995, and Rykoff-Sexton results of operations had
been reported on a fiscal quarter basis assuming a June fiscal year end (in
thousands, except per share amounts):
Thirteen Weeks Ended Twenty-six Weeks Ended
December 30, December 30,
1995 1995
-------------------- ---------------------
Net sales $ 904,959 $ 1,796,355
Net income (1) $ 4,552 $ 7,607
Earnings per common share (1) $ 0.16 $ 0.27
(1) Includes the reversal of restructuring reserves of $6.4 million ($3.9
million after tax) equal to $.14 per common share.
These unaudited pro forma results have been prepared for comparative
purposes only and include certain adjustments, such as additional
amortization expense on increased goodwill and other intangible assets
and additional interest expense on acquisition debt. They do not purport
to be indicative of the results of operations which actually would have
resulted had the combination been in effect on July 1, 1995, or of
future results of operations of the consolidated entities.
7. In connection with the US Foodservice merger, the Company recorded a
restructuring charge of $57.6 million ($35.7 million after tax) in the
transition period ended June 29, 1996. Approximately $10.7 million related
to severance and termination benefit costs, $20.2 million related to lease
related costs and $26.7 million related to other exit costs, including the
closure of duplicate facilities and other integration activities. During
the current fiscal quarter, the Company charged $3.9 million against the
restructuring liability for such costs incurred. The estimated cash
outlays for the rest of fiscal 1997 for the above restructuring are
approximately $7.0 million, with the remainder estimated to be paid in
subsequent years (primarily related to non-cancelable operating lease
commitments).
6
<PAGE>
RYKOFF-SEXTON, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
BASIS OF PRESENTATION
This report discusses the consolidated results of Rykoff-Sexton, Inc. (the
"Company") for the thirteen and twenty-six weeks ended December 28, 1996, the
second fiscal quarter in the Company's newly adopted fiscal year ending June 28,
1997. Due to the change in the Company's fiscal year and the combination with
US Foodservice Inc. on May 17, 1996, there are no directly comparable prior year
results. To aid in the analysis of the operating results, the discussion will
compare the current fiscal quarter to the thirteen and twenty-six weeks ended
January 27, 1996, the prior year's third fiscal quarter and the most comparable
reporting period. Management believes that it would not be practicable to
prepare financial statements for the comparable thirteen and twenty-six weeks in
fiscal 1996, nor would such statements be more meaningful than the reported
results for the previously reported thirteen and twenty-six weeks ended January
27, 1996. The operating results for the thirteen and twenty-six weeks ended
January 27, 1996 include certain reclassifications to conform with
classification adopted in the current year.
RESULTS OF OPERATIONS
In 000's:
<TABLE>
<CAPTION>
Thirteen Weeks Ended Thirteen Weeks Ended
December 28, 1996 % of Sales January 27, 1996 % of Sales
-------------------- ---------- --------------------- ----------
<S> <C> <C> <C> <C>
Net sales $ 882,381 100.0% $ 452,379 100.0%
Cost of sales 701,800 79.5% 351,406 77.7%
-------------------- ---------------------
Gross profit 180,581 20.5% 100,973 22.3%
Operating expenses 154,251 17.5% 94,727 20.9%
Amortization of goodwill and other
intangibles 3,385 0.4% 262 0.1%
Reversal of restructuring reserves --- 0.0% --- 0.0%
-------------------- ---------------------
Income from operations 22,945 2.6% 5,984 1.3%
Interest expense, net 11,534 1.3% 5,093 1.1%
Other expenses 3,821 0.4% --- 0.0%
-------------------- ---------------------
Income before income taxes 7,590 0.9% 891 0.2%
Provision for income taxes 3,673 0.4% 347 0.1%
-------------------- ---------------------
Net income $ 3,917 0.5% $ 544 0.1%
-------------------- ---------------------
-------------------- ---------------------
</TABLE>
7
<PAGE>
In 000's:
<TABLE>
<CAPTION>
Twenty-six Weeks Twenty-six Weeks
Ended Ended
December 28, 1996 % of Sales January 27, 1996 % of Sales
----------------- ---------- ----------------- ----------
<S> <C> <C> <C> <C>
Net sales $ 1,787,208 100.0% $ 892,924 100.0%
Cost of sales 1,429,240 80.0% 691,151 77.4%
----------------- -----------------
Gross profit 357,968 20.0% 201,773 22.6%
Operating expenses 310,179 17.4% 192,795 21.6%
Amortization of goodwill and other
intangibles 6,318 0.3% 427 0.0%
Reversal of restructuring reserves --- 0.0% (6,441) (0.7%)
----------------- -----------------
Income from operations 41,471 2.3% 14,992 1.7%
Interest expense, net 22,806 1.3% 9,306 1.0%
Other expenses 6,958 0.4% --- 0.0%
----------------- -----------------
Income before income taxes 11,707 0.6% 5,686 0.7%
Provision for income taxes 5,744 0.3% 2,265 0.3%
----------------- -----------------
Net income $ 5,963 0.3% $ 3,421 0.4%
----------------- -----------------
----------------- -----------------
</TABLE>
NET SALES. Net sales for the thirteen weeks and twenty-six weeks ended December
28, 1996 were $882.4 million and $1,787.2 million, respectively. This
represents an increase of $430.0 million for the thirteen weeks and $892.9
million for the twenty-six weeks ended December 28, 1996 over the thirteen and
twenty-six weeks ended January 27, 1996. This increase is primarily the result
of the merger with US Foodservice Inc. ("US Foodservice"), which occurred on May
17, 1996. This merger essentially doubled the Company's size, in terms of net
sales.
The Company is continuing its distribution center consolidation program, with
five consolidations completed, to date, and three other distribution centers
either closed or sold. These consolidations tend to temper overall sales
growth, as some customers elect not to be serviced by the new combined entity.
In addition, customers are reviewed periodically for profitability to the
Company and terms are often renegotiated or, absent successful renegotiation,
the Company may resign from the account. Excluding those distribution centers
affected by consolidations and closings and the Company's resignation from a
significant customer account, same-distribution center sales for the thirteen
and twenty-six weeks ended December 28, 1996, increased by approximately 6% and
7%, respectively, over the same period a year ago.
8
<PAGE>
GROSS PROFIT. Gross profit for the thirteen weeks and twenty-six weeks ended
December 28, 1996 was $180.6 million and $358.0 million, respectively. Gross
margin (gross profit as a percentage of net sales) for the thirteen weeks ended
December 28, 1996 was 20.5% compared to 22.3% for the thirteen weeks ended
January 27, 1996. Gross margin for the twenty-six weeks ended December 28, 1996
was 20.0% compared to 22.6% for the twenty-six weeks ended January 27, 1996.
The decline in gross margin is directly attributable to the merger with US
Foodservice, which on a combined basis yields a lower gross margin than the
pre-merger Rykoff-Sexton distribution centers, due to both its mix of products
sold and to its mix of customers. For the second quarter, gross margin improved
from 19.6% in the first quarter, reflecting purchasing synergies that are
developing as vendor programs are evaluated and negotiated on a consolidated
basis.
OPERATING EXPENSES. Operating expenses for the thirteen weeks and twenty-six
weeks ended December 28, 1996 were $154.3 million and $310.2 million,
respectively. As a percentage of net sales, operating expenses for the thirteen
weeks ended December 28, 1996 were 17.5% compared to 20.9% for the thirteen
weeks ended January 27, 1996 and 17.4% for the twenty-six weeks ended December
28, 1996 compared to 21.6% for the twenty-six weeks ended January 27, 1996. The
lower levels of operating expenses reflect the change in product and customer
mixes resulting from the combination with US Foodservice, as well as the
operating expense leverage resulting from US Foodservice's fewer, higher volume
distribution centers. The Company now services a higher percentage of chain
account customers than in the prior year, which typically have higher drop
(delivery) sizes and a consistent delivery schedule and, thus, a lower operating
expense ratio as a percentage of sales. Included in operating expenses are
gains totaling $0.9 million ($0.6 million after tax) for the second quarter and
$2.1 million ($1.3 million after tax) for the first six months related to sales
of certain assets during the current fiscal year.
AMORTIZATION OF GOODWILL AND OTHER INTANGIBLES. Amortization of goodwill and
other intangibles was $3.4 million for the thirteen weeks ended December 28,
1996 and $6.3 million for the twenty-six weeks ended December 28, 1996. This
amortization resulted primarily from the combination with US Foodservice, which
was accounted for as a purchase transaction.
INTEREST EXPENSE, NET. Net interest expense was $11.5 million for the thirteen
weeks ended December 28, 1996 compared to $5.1 million for the thirteen weeks
ended January 27, 1996 and $ 22.8 million for the twenty-six weeks ended
December 28, 1996 compared to $9.3 million for the twenty-six weeks ended
January 27, 1996. The increase in net interest expense is directly attributable
to the combination with US Foodservice, which increased the overall debt level
of the Company through a new bank credit facility.
OTHER EXPENSES. Other expenses were $3.8 million for the thirteen weeks ended
December 28, 1996 and $7.0 million for the twenty-six weeks ended December 28,
1996. Other expenses consist of the charges generated under the Company's asset
securitization program.
PROVISION FOR INCOME TAXES. Provision for income taxes was $3.7 million for the
thirteen weeks ended December 28, 1996 and $5.7 million for the twenty-six weeks
ended December 28, 1996. The effective tax rate for the twenty-six week period
is 49.1%, which approximates the expected effective tax rate for the year. This
effective rate is higher than the Federal statutory income tax rate primarily
because of non-deductible goodwill amortization of $5.9 million.
9
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
For the twenty-six weeks ended December 28, 1996, the Company increased its cash
and cash equivalents by $15.6 million from the beginning of the year. Net cash
flows from operations of $18.5 million were provided by net income of $6.0
million, increased for depreciation and amortization of $21.7 million, deferred
taxes of $4.6 million and a decrease in inventories of $9.7 million, offset by
gains on sales of assets of $2.1 million, increases in accounts receivable of
$13.7 million and other items totaling $7.7 million. Proceeds on asset sales
totaled $6.4 million, while capital expenditures amounted to $19.1 million.
During the second quarter, the Company issued $25.9 million in Industrial
Development Bonds associated with its La Mirada, California distribution
facility. Proceeds from this issuance were used, in part, to repay outstanding
borrowings under the Company's revolving credit facility.
In connection with the merger with US Foodservice on May 17, 1996, the Company
entered into a new bank credit facility with a syndicate of financial
institutions providing for loans and other credit facilities equal to $485
million. The Company also entered into an accounts receivable securitization
program with two banks totaling $110 million and assumed the existing US
Foodservice accounts receivable securitization program totaling $90 million. In
November, 1996, these two asset securitization programs were combined into a
single $200 million facility. Term loans outstanding under the bank credit
facility at December 28, 1996 were $333 million. Availability under the
Company's revolving credit facility, net of outstanding letters of credit, was
$121 million. The Company also had $15 million invested in commercial paper
(cash equivalents) at December 28, 1996.
On July 23, 1996, the Company paid a regular dividend of $.03 per share of
common stock, or $832 thousand to shareholders of record at July 5, 1996. Under
certain provisions of the Company's current financing arrangements, the
Company's ability to pay dividends could be limited to a cumulative total of $5
million.
Management believes that the Company will continue to be able to generate cash
flows from operations and have sufficient capital resources to meet its
operating needs, as well as debt obligations and other cash outlays for the
foreseeable future. For the remainder of fiscal 1997, the Company has plans for
the expenditure of approximately $40 million of capital in the construction or
expansion of its distribution facilities. The Company may elect to finance up
to $35 million of these expenditures through industrial bonds or other mortgage
financing. In addition, ongoing maintenance capital expenditures are expected
to be approximately $12 million in the last six months of fiscal 1997.
10
<PAGE>
FORWARD-LOOKING STATEMENTS
From time to time Rykoff-Sexton may publish forward-looking statements about
anticipated results. The Private Securities Litigation Reform Act of 1995
provides a safe harbor for forward-looking statements. In order to comply
with the terms of the safe harbor, the Company notes that such
forward-looking statements are based upon internal estimates which are
subject to change because they reflect preliminary information and management
assumptions, and that a variety of factors could cause the Company's actual
results and experience to differ materially from the anticipated results or
other expectations expressed in the Company's forward-looking statements.
The factors which could cause actual results or outcomes to differ from such
expectations include the extent of the company's success in (i) integrating
all operations within the planned time frame; (ii) achieving increased sales
and marketing allowances from its enhanced purchasing leverage; and (iii)
achieving budgeted cost reductions, as well as gains or losses from sales of
the company's operations, along with the uncertainties and other factors,
including unusually adverse weather conditions, described from time to time
in the company's SEC filings and reports. This report includes
"forward-looking statements" including, without limitation, statements as to
liquidity and capital resources.
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
There were no reports on Form 8-K filed during the thirteen weeks
ended December 28, 1996.
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: February 11, 1997 /S/MARK VAN STEKELENBURG
-------------------------------------------
Mark Van Stekelenburg
Chairman and Chief Executive Officer
Date: February 11, 1997 /S/DAVID F. MCANALLY
-------------------------------------------
David F. McAnally
Senior Vice President and
Chief Financial Officer
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-28-1997
<PERIOD-START> JUN-30-1996
<PERIOD-END> DEC-28-1996
<CASH> 37,596
<SECURITIES> 0
<RECEIVABLES> 143,552
<ALLOWANCES> 14,858
<INVENTORY> 227,896
<CURRENT-ASSETS> 452,798
<PP&E> 428,552
<DEPRECIATION> 151,666
<TOTAL-ASSETS> 1,225,469
<CURRENT-LIABILITIES> 344,963
<BONDS> 494,695
0
0
<COMMON> 2,818
<OTHER-SE> 340,305
<TOTAL-LIABILITY-AND-EQUITY> 1,225,469
<SALES> 1,787,208
<TOTAL-REVENUES> 1,787,208
<CGS> 1,429,240
<TOTAL-COSTS> 316,497
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</TABLE>
