United States
Securities and Exchange Commission
Washington, D.C. 20549
Form 10-K
X Annual Report Pursuant to Section 13 or 15 (d) of
the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1996
Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Commission file number 1-2944
Stokely-Van Camp, Inc.
(Exact name of registrant as specified in its charter)
Indiana 35-0690290
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Quaker Tower P.O. Box 049001 Chicago, Illinois 60604-9001
(Address of principal executive offices and Zip Code)
Registrant's telephone number, including area code: 312-222-7111
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on
Title of Each Class Which Registered
5% Cumulative Prior Preference New York Stock Exchange
Stock, $20 Par Value
Common Stock, $1 Par Value None
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.[X]
Registrant had 2,989,371 shares of common stock outstanding on December 31,
1996, all of which were owned by The Quaker Oats Company. There is no trading
market for the registrant's voting stock held by non-affiliates.
TABLE OF CONTENTS
PART I PAGE
ITEM 1. Business 1
ITEM 2. Properties 1
ITEM 3. Legal Proceedings 1
ITEM 4. Submission of Matters to a Vote of
Security-Holders N/A
PART II
ITEM 5. Market for Registrant's Common
Equity and Related Stockholder Matters 2
ITEM 6. Selected Financial Data 2
ITEM 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 3-5
ITEM 8. Financial Statements and Supplementary Data 6-16
ITEM 9. Changes in and Disagreements With Accountants
on Accounting and Financial Disclosure N/A
PART III
ITEM 10. Directors and Executive Officers of
the Registrant 17
ITEM 11. Executive Compensation 17-20
ITEM 12. Security Ownership of Certain
Beneficial Owners and Management 20-21
ITEM 13. Certain Relationships and Related
Transactions 21
PART IV
ITEM 14. Exhibits and Financial Statement Schedules
(a)(1) Financial Statements
Consolidated Financial Statements of Stokely-Van Camp,
Inc. and subsidiaries are incorporated under Item 8
of this Form 10-K
(a)(2)&(d) Financial Statement Schedules
Schedule X - Supplementary Income Statement
Information 22
(a)(3)&(c) Exhibits
3(a) Restated Articles of Incorporation of Stokely-Van
Camp, Inc. as of February 14, 1994 (incorporated
by reference to the Company's Form 10-K for the
year ended June 30, 1995, file number 1-2944)
3(b) By-Laws of Stokely-Van Camp, Inc. (incorporated
by reference to the Company's Form 10-K for the
year ended June 30, 1985, file number 1-2944)
10(a)(1) GATORADE Trust Agreement dated January 1, 1984
(incorporated by reference to the Company's Form
10-K for the fiscal year ended June 30, 1984,
file number 1-2944)
10(a)(2) First Amendment to GATORADE Trust Agreement
dated January 1, 1984, effective January 1, 1993
(incorporated by reference to the Company's Form
10-KT for the transition period ended December 31,
1995, file number 1-2944)
21 Subsidiaries of the Registrant 23
SIGNATURES 24
PART I
ITEM 1. BUSINESS
Stokely-Van Camp, Inc. and subsidiaries (the Company or Stokely) has been a
wholly-owned subsidiary of The Quaker Oats Company (Quaker) since 1983. The
Company was a processor, marketer and distributor of high-quality canned food
and beverage products to retail stores, institutional distributors and
industrial and athletic users. On June 8, 1995, the Company sold its Van
Camp's pork and beans business. Consequently, the majority of Stokely's
business is now comprised of the Gatorade thirst quencher business in the
United States. Gatorade thirst quencher is a beverage specifically developed
to quench thirst during periods of physical activity. Gatorade thirst quencher
is marketed through retail grocery stores, convenience stores, food service
distributors, warehouse clubs and wholesalers, and is also sold directly to
athletic, institutional and industrial users. This product is distributed
nationally and internationally and is primarily sold through Quaker sales
organizations and food brokers. The supply of raw materials for Gatorade
thirst quencher has been adequate and continuous. The Company's sales are
seasonal, with over 70 percent of sales occurring between April and September.
Export sales in 1996, 1995 and 1994 were $19.8 million, $45.2 million and $55.2
million, respectively.
Fee Agreement
In 1984, the Company entered a novation of a series of agreements with the
trustee of the Gatorade Trust, the contracting agent of the innovators of
Gatorade thirst quencher and their successors in interest, and renewed rights
to manufacture and sell certain beverage products in return for payment of fees
based on varying levels of sales. In the event of failure by Stokely to make
payments to the Gatorade Trust, the Trustee may cancel the Agreement and
purchase back from Stokely, for a reasonable value, all trademarks and foreign
patents connected with the Gatorade thirst quencher business. In 1993, the
Agreement was amended to provide certain alternatives to market and distribute
Gatorade thirst quencher and to clarify certain aspects of the 1984 Agreement.
Except for these changes, in all other respects the 1984 Agreement is
reaffirmed and remains in full force and effect.
Competition
Stokely's beverage business is highly competitive. Following the divestiture
of the Van Camp's business, the Company's two key competitors are Coca-Cola Co.
and PepsiCo Inc. The principal competitive factors affecting sales include
quality, price, brand image created by advertising, distribution effectiveness
and product availability.
Employees
The total number of Stokely employees as of December 31, 1996, was
approximately 1,300.
ITEM 2. PROPERTIES
On behalf of the Company, Quaker owns and operates five plants, including
manufacturing, filling and distribution facilities located in five states. A
facility in Puerto Rico is also leased. Quaker is currently building a new
plant near Atlanta, Georgia to replace the Newport, Tennessee plant which was
sold with the Van Camp's business. The majority of Gatorade thirst quencher
sales are shipped direct from the production sites. In addition, Quaker owns
or leases distribution centers, two of which are shared with the Company.
Other distribution centers are leased as needed throughout the year. Sales and
administrative office space is shared with Quaker. Management believes that
manufacturing, distribution and office space owned and leased is suitable and
adequate for the business and production capacity is appropriately utilized.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any pending legal proceedings or environmental
clean-up actions that it believes will have a material adverse effect on its
financial position or results of operations.
1
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Since October 31, 1983, all outstanding shares of the Company's common stock
have been held by Quaker. The stock is not listed on any stock exchange or
traded on any market. The Company did not pay any dividends on its common
stock in 1996, 1995 or 1994.
ITEM 6.
<TABLE>
<CAPTION>
SELECTED FINANCIAL DATA
Year Ended December 31,
(Dollars in Millions) 1996 1995(a) 1994(b) 1993 1992(c)
<S> <C> <C> <C> <C> <C>
Net Sales $1,090.5 $1,130.3 $1,081.4 $979.5 $882.6
Cost of Goods Sold 540.7 586.9 564.6 499.1 426.1
Income Before Income Taxes and
Cumulative Effect of
Accounting Changes $ 211.9 $ 215.6 $ 84.2 $123.4 $122.2
Provision for Income Taxes 87.0 79.2 35.3 49.5 48.6
Income Before Cumulative Effect
of Accounting Changes 124.9 136.4 48.9 73.9 73.6
Cumulative Effect of Accounting
Changes - Net of Tax -- -- 1.5 -- 14.0
Net Income $ 124.9 $ 136.4 $ 47.4 $ 73.9 $ 59.6
</TABLE>
As of December 31,
(Dollars in Millions) 1996 1995 1994 1993 1992
Property - Net $ 188.8 $141.7 $147.5 $137.4 $130.6
Total Assets $1,013.6 $877.5 $754.9 $689.2 $595.6
Long-term Debt $ 0.3 $ 0.5 $ 0.7 $ 0.7 $ 1.0
Redeemable Preference and
Preferred Stock $ 15.3 $ 15.3 $ 15.3 $ 15.3 $ 15.3
(a) 1995 results include a $44.9 million pretax gain for the divestiture of the
Van Camp's pork and beans business.
(b)1994 results include a $9.4 million pretax restructuring charge for Van
Camp's manufacturing consolidation and work force reductions.
(c) 1992 results include a $7.5 million reversal of a 1991 pretax charge for a
recall of certain Van Camp's products.
2
ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This report discusses the year ended December 31, 1996, which represents the
first calendar-year reporting cycle since the Company changed from a June 30
fiscal year.
The comparisons of the 1996 results to those of 1995, and of 1995 to 1994 are
affected by the divestiture of the Van Camp's business on June 8, 1995. (See
Note 2 to the Consolidated Financial Statements for further discussion of the
divestiture). As a result of the divestiture, comparative results are
difficult to analyze. To aid in the analysis of operating results, this
discussion will address the financial results as reported, then note the impact
of the divested business where applicable, and finally, review the results of
the ongoing Gatorade thirst quencher business.
1996 Compared with 1995
Operating Results
Consolidated net sales for 1996 were $1.09 billion, a decrease of 4 percent
from 1995 largely driven by the Van Camp's divestiture. Excluding the $76.2
million of Van Camp's net sales from 1995 results, net sales rose 3 percent.
This increase was primarily due to higher Gatorade thirst quencher sales in the
United States partly offset by lower export sales as compared to the prior
year. Gatorade thirst quencher net sales in the United States increased 6
percent on a volume increase of 5 percent, driven by successful new packaging
and flavors and retail shelf space gains. Price increases did not
significantly affect 1996 sales.
Gross profit margin increased to 50.4 percent of sales from 48.1 percent of
sales in 1995 partly due to product mix changes resulting from the Van Camp's
divestiture. Excluding the Van Camp's business, the gross profit margin in
1995 was 48.9 percent. The increase in the gross profit margin excluding the
divested business was primarily due to sales growth and lower manufacturing and
packaging costs for U.S. Gatorade thirst quencher. Selling, general and
administrative (SG&A) expenses decreased 6 percent to $377.9 million primarily
due to the absence of expenses associated with the divested Van Camp's
business. Excluding Van Camp's results, SG&A expenses decreased 1 percent,
primarily due to a decrease in advertising and merchandising (A&M) expenses,
partially offset by an increase in other operating expenses. A&M expenses were
23.6 percent and 24.6 percent of sales in 1996 and 1995, respectively.
Excluding Van Camp's results, A&M expenses were 25.0 percent of sales in 1995.
SG&A and A&M expenses were both lower as a percentage of sales as a result of
increased efficiency in A&M spending combined with increased sales.
Interest and Income Taxes
Net interest income of $40.0 million increased $9.0 million from 1995, the
result of higher average amounts due from Quaker. See Note 4 to the
Consolidated Financial Statements for further discussion of the Company's
investing and borrowing agreement with Quaker.
The effective tax rate for 1996 was 41.0 percent versus 36.7 percent in 1995.
The lower rate in 1995 was primarily due to favorable tax treatment of
operations in Puerto Rico.
3
1995 Compared with 1994
Operating Results
Consolidated net sales for 1995 were $1.13 billion, up 5 percent from 1994.
Excluding the Van Camp's business from both years, net sales for 1995 were up
12 percent from 1994. This increase was primarily due to a 14 percent sales
increase in U.S. Gatorade thirst quencher, partly offset by lower export sales.
U.S. Gatorade thirst quencher 1995 sales performance, reflecting a 13 percent
volume increase, was driven by successful new packaging and new flavors
combined with warmer weather as compared to 1994. This performance was
particularly notable, in that two major soft drink competitors broadened the
distribution of competitive beverage products throughout the United States.
Price increases did not significantly affect 1995 sales.
Gross profit margin increased to 48.1 percent of sales from 47.8 percent of
sales in 1994. Excluding the Van Camp's business from both years, gross profit
margin decreased to 48.9 percent of sales from 49.2 percent of sales in 1994.
The decrease in the gross profit margin was primarily due to increases in both
packaging material costs and costs associated with various capital projects for
U.S. Gatorade thirst quencher. SG&A expenses decreased 8 percent to $403.7
million primarily due to the absence of expenses associated with the divested
Van Camp's business. Excluding Van Camp's expenses from both years, SG&A
expenses decreased 4 percent, primarily due to a decrease in A&M expenses. A&M
expenses were 24.6 percent of sales and 28.1 percent of sales in 1995 and 1994,
respectively. Excluding Van Camp's results, A&M expenses were 25.0 percent and
29.3 percent of sales in 1995 and 1994, respectively, with the decrease due to
increased efficiency in A&M spending combined with increased sales.
Gain on Divestiture
In 1995, the Company realized a gain of $44.9 million on the divestiture of the
Van Camp's pork and beans business. See Note 2 to the Consolidated Financial
Statements for a further discussion of the divestiture.
Interest and Income Taxes
Net interest income of $31.0 million increased $13.6 million from 1994, the
result of higher average amounts due from Quaker and higher interest rates.
See Note 4 to the Consolidated Financial Statements for further discussion of
the Company's investing and borrowing arrangement with Quaker.
The effective tax rate for 1995 was 36.7 percent versus 41.9 percent in 1994.
Favorable tax treatment of operations in Puerto Rico resulted in the overall
rate decrease.
Liquidity and Capital Resources
Net cash provided by operating activities was $137.3 million, $103.1 million
and $51.8 million for 1996, 1995 and 1994, respectively. The increase in cash
flows provided by operating activities in both 1996 and 1995 was due to
increased net income (excluding the gain on divestiture in 1995) and changes in
working capital. In particular, in 1995, Gatorade thirst quencher inventory
decreased due to more efficient inventory management during a period of high
sales. Capital expenditures for 1996, 1995 and 1994 were $68.9 million, $37.1
million and $30.9 million, respectively. Quaker is building a plant near
Atlanta, Georgia to replace the Newport, Tennessee plant which was sold with
the Van Camp's business. The project's cost will be approximately $50 million;
about $48 million was spent on this project in 1996, resulting in an increased
level of capital expenditures in 1996. Accordingly, capital expenditures are
expected to decrease in 1997. The Company expects that its future capital
expenditures and cash dividends will be financed through cash flows from
operating activities.
In November 1996, Standard & Poor's (S&P) lowered the rating on the Company's
preferred stock from A- to BBB+, reflecting the corresponding downgrade of
Quaker's long-term debt rating. The Company's preferred stock rating had been
previously downgraded by S&P in February 1996 from A to A-.
4
Current Accounting Change
In October 1995, the FASB issued Statement #123, "Accounting for Stock-Based
Compensation." The adoption of this new Statement does not have a significant
impact on the Company.
Cautionary Statement on Forward-Looking Statements
Forward-looking statements within the meaning of Section 21E of the Securities
and Exchange Act of 1934, are made throughout this Management's Discussion and
Analysis and in other sections of this annual report. The Company's results
may differ materially from those in the forward-looking statements. Forward-
looking statements are based on management's current views and assumptions, and
involve risks and uncertainties that could significantly affect expected
results. For example, operating results may be affected by external factors
such as: actions of competitors; changes in laws and regulations, including
changes in governmental interpretations of regulations and changes in
accounting standards; customer demand; effectiveness of spending or programs;
and fluctuations in the cost and availability of supply chain resources.
Continued growth in sales, earnings and cash flows from the Gatorade thirst
quencher operations is dependent on the level of competition from its two key
competitors, Coca-Cola Co. and PepsiCo Inc., and the projected outcome of
supply-chain management programs, capital spending plans, markets for key
commodities, especially PET resins and cardboard, and the efficiency and
effectiveness of A&M programs.
5
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
STOKELY-VAN CAMP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
AND REINVESTED EARNINGS
Year Ended December 31,
(Dollars in Millions) 1996 1995 1994
Net Sales $1,090.5 $1,130.3 $1,081.4
Cost of Goods Sold 540.7 586.9 564.6
Gross Profit 549.8 543.4 516.8
Selling, general and administrative
expenses 377.9 403.7 440.6
Interest income - net (40.0) (31.0) (17.4)
Gain on divestiture -- (44.9) --
Restructuring charge -- -- 9.4
Income Before Income Taxes and
Cumulative Effect of Accounting Change 211.9 215.6 84.2
Provision for Income Taxes 87.0 79.2 35.3
Income Before Cumulative Effect of
Accounting Change 124.9 136.4 48.9
Cumulative Effect of Accounting
Change - Net of Tax -- -- 1.5
Net Income 124.9 136.4 47.4
Dividends on preference and preferred stock (0.8) (0.8) (0.8)
Reinvested Earnings - Beginning Balance 687.7 552.1 505.5
Reinvested Earnings - Ending Balance $ 811.8 $ 687.7 $ 552.1
See accompanying notes to consolidated financial statements.
6
<TABLE>
<CAPTION>
STOKELY-VAN CAMP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
(Dollars in Millions) 1996 1995 1994
<S>
Cash Flows from Operating Activities: <C> <C> <C>
Net income $124.9 $136.4 $47.4
Adjustments to reconcile net income to net cash
provided by operating activities:
Cumulative effect of accounting change -- -- 1.5
Depreciation and amortization 15.9 17.8 17.5
Deferred income taxes (0.5) (1.0) (2.2)
Gain on divestiture -- (44.9) --
Restructuring charge -- -- 9.4
Loss on disposition of property and
equipment 1.7 0.9 1.1
Decrease (increase) in trade accounts receivable 2.3 6.4 (13.7)
(Increase) decrease in inventories (9.8) 22.3 (23.1)
(Increase) in other current assets (12.7) (9.9) (2.5)
Increase (decrease) in trade accounts payable 12.2 (2.8) (8.4)
(Decrease) in income taxes payable (2.3) (11.0) (7.8)
Increase (decrease) in other current liabilities 5.4 (10.1) 20.2
Other items 0.2 (1.0) 12.4
Net Cash Provided by Operating Activities 137.3 103.1 51.8
Cash Flows from Investing Activities:
Additions to property, plant and equipment (68.9) (37.1) (30.9)
Business divestiture -- 90.6 --
Net Cash (Used in) Provided by Investing
Activities (68.9) 53.5 (30.9)
Cash Flows from Financing Activities:
Change in amount Due from The Quaker Oats
Company (70.5) (159.9) (7.4)
Cash dividends (0.8) (0.8) (0.8)
Reduction of long-term debt (0.2) (0.2) --
Net Cash Used in Financing Activities (71.5) (160.9) (8.2)
Net (Decrease) Increase in Cash and Cash
Equivalents (3.1) (4.3) 12.7
Cash and Cash Equivalents - Beginning of Period 8.4 12.7 --
Cash and Cash Equivalents - End of Period $ 5.3 $ 8.4 $12.7
</TABLE>
See accompanying notes to consolidated financial statements.
7
STOKELY-VAN CAMP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of December 31,
(Dollars in Millions) 1996 1995
Assets
Current Assets:
Cash and cash equivalents $ 5.3 $ 8.4
Due from The Quaker Oats Company 715.3 644.8
Trade accounts receivable - net of allowance of $3.9
and $2.8, as of December 31, 1996 and 1995,
respectively 24.2 26.5
Inventories:
Finished goods 24.8 16.1
Materials and supplies 9.3 8.2
Total Inventories 34.1 24.3
Other current assets 39.9 27.2
Total Current Assets 818.8 731.2
Other Assets 6.0 4.6
Property, Plant and Equipment
Land 5.1 2.7
Buildings and improvements 67.9 48.7
Machinery and equipment 191.2 159.1
Property, plant and equipment 264.2 210.5
Less accumulated depreciation 75.4 68.8
Property - Net 188.8 141.7
Total Assets $1,013.6 $877.5
Liabilities and Shareholders' Equity
Current Liabilities:
Trade accounts payable $ 20.9 $ 8.7
Accrued payroll, benefits and bonus 9.7 13.7
Accrued advertising and merchandising 21.9 15.9
Income taxes payable 17.4 19.7
Other current liabilities 21.7 22.7
Total Current Liabilities 91.6 80.7
Long-term Debt 0.3 0.5
Other Liabilities 43.2 41.4
Deferred Income Taxes -- 0.5
Redeemable Preference and
Preferred Stock 15.3 15.3
Common Shareholders' Equity:
Common stock, $1 par value, authorized 10,000,000
shares; issued 3,591,381 shares 3.6 3.6
Additional paid-in capital 68.7 68.7
Reinvested earnings 811.8 687.7
Treasury common stock, at cost, 602,010 shares (20.9) (20.9)
Total Common Shareholders' Equity 863.2 739.1
Total Liabilities and Shareholders' Equity $1,013.6 $877.5
See accompanying notes to consolidated financial statements.
8
STOKELY-VAN CAMP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation
The Consolidated Financial Statements include Stokely-Van Camp, Inc. and
Subsidiaries (the Company or Stokely). All significant intercompany
transactions have been eliminated. The Company is a subsidiary of The Quaker
Oats Company (Quaker). The divested business is included in the results of
operations until its divestiture date.
Fiscal-Year Change
The Consolidated Financial Statements and Notes to the Consolidated Financial
Statements for the year ended December 31, 1996, represent the first full
calendar year since the Company changed from a June 30 fiscal year. Previously
reported amounts have been restated to conform to the current presentation.
Commodity Options and Futures Contracts
The Company uses commodity options and futures contracts in its management of
commodity price exposures. Realized and unrealized gains and losses on
commodity options and futures contracts that hedge commodity price exposure are
deferred in inventory and subsequently included in cost of goods sold as the
inventory is sold.
Inventories
Inventories are valued at the lower of cost or market, using the last-in, first-
out (LIFO) cost method, and include the cost of raw materials, labor and
overhead. If the LIFO method of valuing these inventories was not used, total
inventories would have been $0.4 million and $2.2 million higher than reported
as of December 31, 1996 and 1995, respectively.
Property and Depreciation
Property, plant and equipment are carried at cost and depreciated on a straight-
line basis over their estimated useful lives. Useful lives range from 10 to 40
years for buildings and improvements and from three to 12 years for machinery
and equipment.
Current Accounting Change
In October 1995, the FASB issued Statement #123, "Accounting for Stock-Based
Compensation." The adoption of this new Statement does not have a significant
impact on the Company.
Income Taxes
The Company uses an asset and liability approach to financial accounting and
reporting for income taxes. Deferred income taxes are provided when tax laws
and financial accounting standards differ with respect to the amount of income
for a year and the bases of assets and liabilities.
9
Estimates and Assumptions
The preparation of financial statements in conformity with Generally Accepted
Accounting Principles (GAAP) requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
NOTE 2
DIVESTITURE
On June 8, 1995, the Company completed the divestiture of the Van Camp's pork
and beans business to Hunt-Wesson Inc., a subsidiary of ConAgra Inc., for $90.6
million and realized a gain of $44.9 million. Sales from the Van Camp's
business were $76.2 million and $140.0 million in 1995 and 1994, respectively.
The Van Camp's business had operating income of $6.9 million and $9.4 million
in 1995 and 1994, respectively. Operating income includes certain allocations
of overhead expenses and excludes the gain on the divestiture in 1995 and the
restructuring charge in 1994 (See Note 3).
NOTE 3
RESTRUCTURING CHARGE
In 1994, the Company recorded a restructuring charge of $9.4 million for Van
Camp's manufacturing consolidation and work force reductions. Net non-cash
asset write-offs amounted to $5.4 million of the charge. Severance and
termination benefits for the elimination of approximately 200 positions were
$3.0 million in cash expenses; the remaining amount of $1.0 million in cash
expenses was for other related costs. Cash outlays occurred primarily between
July 1994 and June 1995 and were funded through operating cash flows. All
restructuring activities were completed by the Van Camp's divestiture date.
Charges to the established reserve were consistent with management's original
estimate. With the divestiture of the Van Camp's business in 1995, there are no
remaining reserves and no recurring savings to be realized from these
restructuring activities.
NOTE 4
RELATED PARTY TRANSACTIONS
Stokely, through its parent company, Quaker, conducts the majority of its
operations as an integrated component of Quaker's U.S. and Canadian Foods and
Beverages business. Certain liabilities and expenses are commingled and are
charged or allocated to Stokely from Quaker. With the exception of cost of
sales and advertising and merchandising expenses, the majority of operating,
general and administrative expenses are allocated from Quaker to Stokely.
Stokely reimburses Quaker and its affiliates for services provided for its
benefit. Quaker's International Foods and Beverages business is licensed to
sell Gatorade thirst quencher in international markets. In exchange for these
licensing rights, Quaker pays the Company a royalty. The following summarizes
the significant related party transactions other than those described elsewhere
in the consolidated financial statements:
Income Taxes
Stokely is included in the consolidated Federal income tax return of Quaker.
Stokely provides for current and deferred taxes as if it filed a separate
consolidated tax return except that if any items are subject to limitations in
Stokely's tax calculations, such limitations are determined on the basis of the
Quaker consolidated group.
Employees
Current salaried and hourly employees whose services benefit the Stokely
business are employees of Quaker. Their compensation is paid by Quaker. These
employees also participate in certain Quaker employee benefit plans. Stokely is
directly charged for actual salary costs and allocated fringe benefit costs of
these employees.
10
Corporate Insurance Programs
Stokely participates in Quaker's consolidated insurance and risk management
programs for property and casualty insurance. Stokely is directly charged for
its related insurance costs.
Corporate Overhead Allocations
Quaker provides certain corporate general and administrative services to
Stokely including personnel, legal, finance, facility management and utilities.
These expenses are allocated to Stokely on a basis which approximates actual
services provided.
Shared Operating Expenses
Quaker's U.S. and Canadian Foods and Beverages business allocates a ratable
portion of shared operating expenses including sales force and brokers, certain
other marketing expenses, product research and general and administrative
services. These expenses are allocated to Stokely on a basis which
approximates actual services provided as determined by various measures.
International Licensing Agreements
Stokely has entered into a number of licensing agreements allowing the
international affiliates of Quaker to manufacture and sell certain beverage
products in return for payment of licensing fees. Fees received under these
agreements amounted to $5.5 million, $6.3 million and $4.1 million in 1996,
1995 and 1994, respectively.
Investing and Borrowing Arrangement
The Company has an investing and borrowing arrangement under which it loans its
available cash to Quaker or borrows its short-term cash requirements from
Quaker. Funds collected from operations which are remitted to Quaker increase
the amount due from Quaker; conversely, operating expenses paid by Quaker
reduce the receivable from Quaker or may result in a payable to Quaker. This
arrangement provides for an interest rate based on the yield of U.S. Treasury
Bills, as determined by the weekly U.S. Government auction. The Company may,
at any time, demand repayment of all or any part of the amount due from Quaker.
There were no bank lines of credit as of December 31, 1996 or 1995.
NOTE 5
LONG-TERM DEBT
As of December 31,
(Dollars in Millions) 1996 1995
Industrial Revenue Bond, 4.5%
due through October 1, 1999 $0.5 $0.6
Less current maturities 0.2 0.1
Long-term Debt $0.3 $0.5
Aggregate required payments of maturities on long-term debt for the next three
calendar years are $0.2 million in 1997 and 1998 and $0.1 million in 1999.
NOTE 6
FINANCIAL INSTRUMENTS
Financial instruments are primarily used to fund operating requirements and to
reduce the Company's exposure to commodity price fluctuations. The Company
uses commodity options and futures contracts to reduce the risk that raw
material purchases will be adversely affected as commodity prices change.
11
While the hedge instruments are subject to the risk of loss from commodity
price changes, the losses would generally be offset by lower costs of the
purchases being hedged. The Company does not use financial instruments with
the objective of earning financial gains on commodity price fluctuations alone,
and does not trade in commodities for which there are no underlying exposures.
Management believes that its use of financial instruments to reduce risk is in
the Company's best interest.
The Company primarily hedges purchases of corn sweetener. Approximately 3
percent of cost of goods sold in 1996 was in commodities that may be hedged.
The Company's strategy is to typically hedge certain production requirements
for various periods up to 12 months. As of December 31, 1996, approximately 75
percent of 1997 hedgeable production requirements were hedged. The fair values
of these commodity instruments as of December 31, 1996 and 1995, based on
quotes from brokers, were net (losses)gains of $(0.5) million and $0.3 million,
respectively. Realized gains charged to cost of goods sold were $1.2 million
in 1996, and were not material in 1995 and 1994.
The carrying value of cash and long-term debt approximates fair value. The
counterparties to the Company's financial instruments are major financial
institutions. The Company continually evaluates the creditworthiness of the
counterparties and has never experienced, nor does it anticipate,
nonperformance by any of its counterparties.
NOTE 7
CAPITAL STOCK
Since October 31, 1983, all outstanding shares of the Company's common stock
have been held by Quaker and the balances of common stock ($3.6 million;
3,591,381 shares issued), additional paid-in capital ($68.7 million) and
treasury common stock ($20.9 million; 602,010 shares) have remained unchanged.
The Company has three series of preferred stock: voting 5% Cumulative
Convertible Second Preferred Stock; non-voting 5% Cumulative Prior Preference
Stock; and Serial Preferred Stock. The voting 5% Cumulative Convertible Second
Preferred Stock is convertible at the holder's option, on a share for share
basis, into the non-voting 5% Cumulative Prior Preference Stock. As of
December 31, 1996, authorized shares were 500,000 and issued and outstanding
shares were 10,800 for the 5% Cumulative Convertible Second Preferred Stock.
As of December 31, 1996, 1,500,000 shares were authorized, 753,556 shares were
issued, 753,223 shares were outstanding and 10,800 shares were reserved for
conversion for the 5% Cumulative Prior Preference Stock. Both issues are
redeemable at the Company's option for $21 per share. No Serial Preferred
Stock has been issued, although 500,000 shares are authorized.
The following chart summarizes the changes in the outstanding preference and
preferred stock balances:
5% Cumulative 5% Cumulative
Prior Preference Convertible Second
Stock Preferred Stock
$20 Par Value $20 Par Value
Balance as of December 31, 1993 752,950 11,073
Shares Converted 5 (5)
Balance as of December 31, 1994 752,955 11,068
Shares Converted 208 (208)
Balance as of December 31, 1995 753,163 10,860
Shares Converted 60 (60)
Balance as of December 31, 1996 753,223 10,800
NOTE 8
PENSION PLANS
Salaried and hourly employees assigned to the Company are employees of Quaker
and are covered by the Quaker Retirement Plan (Plan). Plan benefits are based
on compensation paid to employees and their years of service. Quaker's policy
12
is to make contributions to the Plan within the maximum amount deductible for
Federal income tax purposes. Plan assets consist primarily of equity
securities and government, corporate and other fixed-income obligations.
Consistent with arrangements described in Note 4, the Company was allocated
pension costs of approximately $1.5 million, $3.5 million and $3.7 million in
1996, 1995 and 1994, respectively. The Company's allocated funded accrued
pension costs were approximately $8.7 million and $7.4 million as of December
31, 1996 and 1995, respectively.
NOTE 9
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
AND OTHER POSTEMPLOYMENT BENEFITS
Quaker provides certain health care and life insurance benefits to
substantially all retired U.S. employees and certain retired foreign employees
who meet service-related eligibility requirements. Consistent with
arrangements described in Note 4, the Company is allocated a portion of these
costs incurred by Quaker.
The Company was allocated postretirement benefit costs of $2.5 million, $3.3
million and $3.8 million in 1996, 1995 and 1994, respectively. The Company's
allocated unfunded accrued postretirement benefit costs were $33.4 million and
$33.7 million as of December 31, 1996 and 1995, respectively.
Effective July 1, 1994, the Company adopted FASB Statement #112, "Employers'
Accounting for Postemployment Benefits." The cumulative effect of adoption was
a $1.5 million after-tax charge in the third quarter of 1994. The adoption of
this Statement is not expected to have a material effect on operating results
or cash flows in future years.
NOTE 10
SUPPLEMENTAL CASH FLOW INFORMATION
Year Ended December 31,
(Dollars in Millions) 1996 1995 1994
Interest Paid $ 0.1 $ 0.1 $ 0.1
Income Taxes Paid $100.1 $80.1 $31.3
NOTE 11
LEASES AND OTHER COMMITMENTS
Certain operating properties are rented under non-cancelable operating leases.
Total rental expense under operating leases was $5.0 million, $4.7 million and
$5.2 million in 1996, 1995 and 1994, respectively. Future minimum annual
rentals on non-cancelable operating leases, primarily for sales and
administrative offices and distribution centers, are as follows:
(Dollars in Millions) 1997 1998 1999 2000 2001 Later Total
Total Payments $5.0 $5.0 $4.6 $2.4 $2.3 $4.6 $23.9
The Company enters into executory contracts to promote various products. As of
December 31, 1996, future commitments under these contracts amounted to $43.3
million.
13
NOTE 12
INCOME TAXES
The Company uses an asset and liability approach to financial accounting and
reporting for income taxes in accordance with FASB Statement #109, "Accounting
for Income Taxes."
Provisions for income taxes on income before the cumulative effect of
accounting change were as follows:
Year Ended December 31,
(Dollars in Millions) 1996 1995 1994
Currently payable:
Federal $75.2 $68.7 $31.3
State 15.4 17.2 5.9
Foreign 0.5 0.8 0.3
Total currently payable 91.1 86.7 37.5
Deferred - net:
Federal (4.9) (6.5) (2.5)
State 1.1 (0.7) 0.3
Foreign (0.3) (0.3) --
Total deferred - net (4.1) (7.5) (2.2)
Provision for income taxes $87.0 $79.2 $35.3
The components of the deferred income tax provision (benefit) were as follows:
Year Ended December 31,
(Dollars in Millions) 1996 1995 1994
Accelerated tax depreciation $ 0.5 $(1.7) $(0.4)
Postretirement benefits (1.0) 0.5 (0.8)
Accrued expenses (0.6) (5.8) (0.1)
Other (3.0) (0.5) (0.9)
Deferred income tax (benefit) $(4.1) $(7.5) $(2.2)
Reconciliations of the statutory Federal income tax rates to the effective
income tax rates were as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
(Dollars in Millions) 1996 1995 1994
% of % of % of
Pretax Pretax Pretax
Amount Income Amount Income Amount Income
<S> <C> <C> <C> <C> <C> <C>
Tax provision based on the
Federal statutory rate $74.2 35.0% $75.5 35.0% $29.5 35.0%
State and local income taxes -
net of Federal income tax
benefit 10.7 5.0 10.6 4.9 4.0 4.8
Other 2.1 1.0 (6.9) (3.2) 1.8 2.1
Provision for income taxes $87.0 41.0% $79.2 36.7% $35.3 41.9%
</TABLE>
14
The sources of pretax income before the cumulative effect of accounting change
were as follows:
Year Ended December 31,
(Dollars in Millions) 1996 1995 1994
U.S. sources $211.3 $214.1 $82.8
Foreign sources 0.6 1.5 1.4
Income before income taxes and cumulative
effect of accounting change $211.9 $215.6 $84.2
Deferred tax assets and deferred tax liabilities were as follows:
<TABLE>
<CAPTION>
As of December 31,
(Dollars in Millions) 1996 1995
Deferred Deferred Tax Deferred Deferred Tax
Tax Assets Liabilities Tax Assets Liabilities
<S> <C> <C> <C> <C>
Depreciation and amortization $ 2.5 $15.4 $2.0 $14.9
Postretirement benefits 12.8 -- 11.8 --
Other benefit plans 7.9 3.5 3.5 3.3
Accrued expenses 10.5 0.8 9.1 0.1
Other 2.0 0.8 1.2 0.8
Total $35.7 $20.5 $27.6 $19.1
</TABLE>
Total income tax provisions (benefits) were allocated as follows: $87.0 million
for continuing operations in 1996; $79.2 million for continuing operations in
1995; and $35.3 million for continuing operations and $(1.0) million for the
cumulative effect of accounting change in 1994.
NOTE 13
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
(Dollars in Millions)
First Second Third Fourth
1996 Quarter Quarter Quarter Quarter
Net sales $187.1 $430.3 $358.2 $114.9
Cost of goods sold 99.7 200.6 169.1 71.3
Gross profit $ 87.4 $229.7 $189.1 $ 43.6
Net income (loss) $ 15.4 $ 60.4 $ 49.4 $ (0.3)
(Dollars in Millions)
First Second Third Fourth
1995 Quarter Quarter(a) Quarter Quarter
Net sales $218.5 $424.0 $373.3 $114.5
Cost of goods sold 118.9 213.8 176.7 77.5
Gross profit $ 99.6 $210.2 $196.6 $ 37.0
Net income (loss) $ 13.4 $ 83.2 $ 51.3 $(11.5)
(a) Includes a $44.9 million pretax gain for the divestiture of the Van Camp's
pork and beans business.
15
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of Stokely-Van Camp, Inc.:
We have audited the accompanying consolidated balance sheets of Stokely-Van
Camp, Inc. (an Indiana corporation and subsidiary of The Quaker Oats Company)
and subsidiaries as of December 31, 1996 and 1995 and the related consolidated
statements of income, reinvested earnings and cash flows for the years ended
December 31, 1996, 1995 and 1994. These financial statements and the schedule
referred to below are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule 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 Stokely-Van Camp, Inc. and
subsidiaries as of December 31, 1996 and 1995 and the results of their
operations and their cash flows for the years ended December 31, 1996, 1995 and
1994, in conformity with generally accepted accounting principles.
As indicated in Note 9, effective July 1, 1994, the Company changed its
accounting for postemployment benefits.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. Schedule X is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not a
required part of the basic financial statements. This schedule has been
subjected to the auditing procedures applied in our audit of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Chicago, Illinois
February 5, 1997
16
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth information concerning the directors and
executive officers of Stokely-Van Camp, Inc. as of March 1, 1997.
Name Principal Occupation Age
James F. Doyle Executive Vice President - Worldwide 44
Beverages of Quaker and
Director, Chief Executive Officer and
President of Stokely.
John G. Jartz Vice President - General Counsel and 43
Business Development of Quaker and
Director, Vice President and Secretary
of Stokely.
Janet K. Cooper Vice President and Treasurer of 43
Quaker and Stokely and Director
of Stokely.
Thomas L. Gettings Vice President and Corporate 40
Controller of Quaker and Stokely.
Mr. Doyle has served in his capacity since November 1994. Mr. Jartz has served
in his capacity since October 1996. Ms. Cooper and Mr. Gettings have served in
their capacities since July 1992. All of the above-named directors and
officers have been employed by Quaker in an executive capacity for more than
five years.
ITEM 11. EXECUTIVE COMPENSATION
The following table details annual and long-term compensation paid during the
Company's three most recent fiscal years and the six-month transition period
ended December 31, 1995 (transition period shown as "1995.5") to the Company's
Chief Executive Officer and President. No other executive officer of the
Company was paid in excess of $100,000 in salary and bonus relative to their
services for the Company.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-term
Annual Compensation Compensation
Other Restricted Securities All
Annual Stock Underlying Other
Fiscal Salary Bonus Compensation Awards Options Compensation
Name Year (1) ($) ($)(2) ($) ($)(3) (#)(4) ($)(5)
<S> <C> <C> <C> <C> <C> <C>
James F. Doyle - 1996 $351,778 $382,800 $942 -0- -0- $64,240
Chief Executive 1995.5 $173,004 -0- $592 $19,610 90,000 -0-
Officer and 1995 $332,760 $217,600 -0- $42,449 48,000 $70,764
President of Stokely 1994 $299,208 $254,800 -0- $25,247 48,000 $55,753
<FN>
(1) The transition period is identified as Fiscal Year 1995.5 for purposes of
this table.
(2) Amounts include the cash awards that have been paid under the Management
Incentive Bonus Plan based on Quaker's financial performance for fiscal
1996, 1995 and 1994, respectively.
17
(3) Restricted stock award values reflect the fair market value of Quaker's
common stock on the date of each grant. The values reflect Quaker matching
awards of restricted stock under a broad-based long-term incentive program,
the Incentive Investment Program. Dividends on restricted shares were and
continue to be paid on an on-going basis at the same rate as paid to all
shareholders. The aggregate number and value of restricted shares for Mr.
Doyle, valued as of the last day of 1996 were 2,527 and $96,974,
respectively.
Upon a change in control of Quaker (see definition under Pension Plans),
restricted shares outstanding on the date of the change in control will be
cancelled and an immediate lump-sum cash payment will be paid which is
equal to the product of (1) the higher of (i) the closing price of common
stock as reported on the New York Stock Exchange Composite Index on or
nearest to the date of payment (or, if not listed on such exchange, on a
nationally recognized exchange or quotation system on which trading volume
in the common stock is highest) or (ii) the highest per share price for
common stock actually paid in connection with the change in control; and
(2) the number of shares of such restricted stock.
(4) All stock option awards in the transition period, 1995 and 1994 were
granted with an exercise price that was equal to the fair market value of
Quaker's common stock on the date of the grant. In the transition period
the Company made a larger than normal award of stock options in order to
provide a transition to the new calendar-based fiscal year. As a result,
no stock options awards were made to the Named Executives in 1996.
(5) For 1996, 1995 and 1994, amounts shown are the total of the value of the
stock allocations under The Quaker Employee Stock Ownership Plan ("ESOP"),
and cash awards based on earnings in excess of the Internal Revenue Code
limits on the amount of earnings deemed eligible for purposes of the annual
stock allocation made directly under the ESOP.
</TABLE>
The following table contains information covering the exercise of options by
the Chief Executive Officer and President during 1996 and unexercised options
held as of the end of 1996.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
Number of Securities Underlying Value of Unexercised, In-the-
Unexercised Options at Fiscal Year Money Options at Fiscal
End(#) Year End ($)(2)
Shares Value
Acquired On Realized
Name Exercise (#) ($)(1) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
James F. Doyle 15,204 $267,939 258,068 76,620 $1,373,930 $316,274
<FN>
(1) Represents the difference between the option exercise price and the fair
market value of Quaker's common stock on the date of exercise.
(2) Represents the difference between the option exercise price and the fair
market value of Quaker's common stock on the last day of 1996.
</TABLE>
18
Pension Plans
Quaker and its subsidiaries maintain several pension plans. The Quaker
Retirement Plan (Retirement Plan), which is the principal plan, is a
noncontributory, defined benefit plan covering eligible salaried and hourly
employees of the Company who have completed one year of service as defined by
the Retirement Plan.
Under the Retirement Plan, the participant accrues a benefit based upon the
greater of a Years-of-Service Formula and an Earnings/Service Formula. Under
the Years-of-Service Formula, participants accrue annual benefits equivalent to
credited years of service times $216. Under the Earnings/Service Formula, a
participant's benefit is the sum of two parts:
1. Past Service Accrual -- Benefits accrued through December 31, 1993 are set
at the greater of (a) those earned or (b) 1% of Five-Year Average earnings
to $22,700 plus 1.65% of earnings above $22,700, times credited years of
service; and
2. Future Service Accrual -- For each year beginning January 1, 1994 and
after, participants accrue benefits of 1.75% of annual earnings to 80% of
the Social Security wage base plus 2.5% of annual earnings above 80% of
the Social Security wage base.
Eligible earnings used to calculate retirement benefits include wages,
salaries, bonuses, contributions to The Quaker Investment Plan and allocations
under The Quaker Employee Stock Ownership Plan. Normal retirement age under
the Retirement Plan is age 65. The Retirement Plan contains provision for
early retirement benefits.
Benefit amounts payable under the Retirement Plan are limited to the extent
required by the Employee Retirement Income Security Act of 1974 ("ERISA"), as
amended, and the Internal Revenue Code of 1986, as amended. If the benefit
formula produces an amount in excess of those limitations, the excess will be
paid out of general corporate funds in accordance with the terms of The Quaker
415 Excess Benefit Plan and The Quaker Eligible Earnings Adjustment Plan. The
Quaker Eligible Earnings Adjustment Plan also provides for payment out of
general corporate funds, based upon benefit amounts which would otherwise have
been payable under the Retirement Plan and The Quaker 415 Excess Benefit Plan,
if the executive had not previously elected to defer compensation under the
Executive Deferred Compensation Plan.
The estimated annual retirement benefits that Mr. Doyle would receive under the
Retirement Plan, The Quaker 415 Excess Benefit Plan, and The Quaker Eligible
Earnings Adjustment Plan, if he retired at age 65, are $304,418. This amount
assumes that he will continue to work for Quaker until his normal retirement
date and that his earnings will remain the same as in year 1996 and that he
will elect a straight-lifetime benefit without survivor benefits. Payment
options such as a lump sum or other annuities are available.
The Retirement Plan assures active and retired employees that, to the extent of
sufficient plan assets, it will continue in effect for a reasonable period
following a change in control of Quaker without a reduction of anticipated
benefits, and under certain circumstances may provide increased benefits.
Generally, under the Retirement Plan, a change in control shall be deemed to
have occurred in any of the following circumstances:
(i) An acquisition of 30% or more of Quaker stock unless such acquisition is
pursuant to an agreement with Quaker approved by its Board before the acquirer
becomes the beneficial owner of 5% of Quaker's outstanding voting power;
(ii) A majority of Quaker's Board is comprised of persons who were not
nominated by its Board for election as directors;
(iii) A plan of complete liquidation of Quaker; or
(iv) A merger, consolidation or sale of all or substantially all of Quaker's
assets unless thereafter (a) directors of Quaker immediately prior thereto
continue to constitute at least 50% of the directors of the surviving entity or
purchaser; or (b) Quaker's securities continue to represent, or are converted
to securities which represent, more than 70% of the combined voting power of
the surviving entity or purchaser.
19
For a five-year period following a change in control of Quaker, the accrual of
benefits for service during such period cannot be decreased while there are
excess assets (as defined in the Retirement Plan). For a two-year period
following such a change in control, the accrued benefits of members who meet
specified age and service requirements and who are terminated will be
increased. For so long as there are excess assets during that five-year
period, if the Retirement Plan is merged with any other plan, the accrued
benefit of each member and the amount payable to retired or deceased members
shall be increased until there are no excess assets. If during that five-year
period the Retirement Plan is terminated, to the extent that assets remain
after satisfaction of liabilities, the accrued benefits shall be increased such
that no assets of the Retirement Plan will directly or indirectly revert to
Quaker.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
All of the outstanding common stock of Stokely is owned by Quaker whose
corporate offices are located at 321 North Clark, Chicago, IL 60610.
The following table presents information with respect to all persons known to
Stokely to own more than 5% of any other class of Stokely's voting securities
as of March 1, 1997. Each beneficial owner has, to the knowledge of Stokely,
sole voting power and sole investment power with respect to the shares listed
opposite such owner's name.
Amount and Percent
Name and Address Nature of of
Title of Class of Beneficial Owner Ownership Class
Second Preferred The William B. Stokely, Jr. 2,012 18.6
Stock (1) Foundation
620 Campbell Station Road
Station West, Suite 4
Knoxville, TN 37922
Marjorie M. Cochran 1,125 10.4
Wesley Woods Towers #808
1825 Clifton Rd NE
Atlanta, GA 30329-4047
Esther M. Minter 1,125 10.4
230 East College Street
Griffin, GA 30223-4348
Cooper N. Mills 926 8.6
666 Brook Circle
Griffin, GA 30223-4413
(1) Holders of common stock and Second Preferred Stock vote collectively and
not as a separate class. As of December 31, 1996, the outstanding shares
of Second Preferred Stock comprise less than 1% of the aggregate number of
outstanding shares of common stock and Second Preferred Stock.
20
The table below sets forth information with respect to beneficial ownership of
common stock of Quaker by the directors and named executive officers of Stokely
as of March 1, 1997, and by the directors and by the named executive officers,
and executive officers as a group. Shares subject to acquisition within 60
days through the exercise of stock options are included in the first column and
are shown separately in the second column. No director or officer and named
executive officers owns any equity securities of Stokely.
<TABLE>
<CAPTION>
Amount Shares Subject
of Beneficial to Acquisition
Ownership(a) Within 60 Days(a)
<S> <C> <C>
James F. Doyle 298,548(b)(c) 258,068
John G. Jartz 87,679(b)(c)(d) 72,774
Janet K. Cooper 73,976(b)(c) 66,250
All Directors and Officers as a group 518,540(b)(c)(d) 446,800
<FN>
(a) Unless otherwise indicated, each named individual and each person in the
group has sole voting power and sole investment power with respect to shares
shown. These shares represent less than 1 percent for every person, and less
than 1 percent for all directors and officers as a group, of the total shares
outstanding, including shares subject to acquisition within 60 days following
March 1, 1997.
(b) The figures shown for these directors and executive officers include an
aggregate of 21,449 shares (which includes 3,922 shares on the basis of the
conversion of 1,816 shares of Series B ESOP Convertible Preferred at the
conversion rate of 2.16) allocated to them in The Quaker Employee Stock
Ownership Plan. The directors each hold the following number of shares under
this plan: Mr. Doyle, 7,039; Mr. Jartz, 5,075; and Ms. Cooper, 5,370.
(c) The figures shown for these directors and executive officers include an
aggregate of 4,512 shares granted to them under The Quaker Long Term Incentive
Plan of 1990 for which the restricted period has not lapsed. The directors
each hold the following number of shares under this plan: Mr. Doyle, 2,527;
Mr. Jartz, 607; and Ms. Cooper, 388.
(d) The figures shown for these directors and executive officers include an
aggregate of 3,183 shares representing their proportionate interests in the
Quaker Stock Fund of The Quaker Investment Plan. The directors each hold the
following number of shares under this plan: Mr. Jartz, 2,130.
</TABLE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
For a description of related transactions with Quaker, reference should be made
to Part II, Items 7 and 8. See Notes 1, 4, 8 and 9 to the consolidated
financial statements.
21
STOKELY-VAN CAMP, INC. AND SUBSIDIARIES
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
Year Ended December 31,
(Dollars in Millions) 1996 1995 1994
ITEM
Depreciation $ 15.2 $ 15.1 $ 14.3
Advertising & Merchandising $257.1 $278.5 $303.9
22
SIGNATURES
Pursuant to the requirements of Sections 13 and 15 (d) of the Securities
Exchange Act of 1934, the Registrant has caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
STOKELY-VAN CAMP, INC.
(Registrant)
By: /s/ James F. Doyle
James F. Doyle
Chief Executive Officer,
President and Director
Date: March 26, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on the 26th day of March 1997, by the following
persons on behalf of the Registrant and in the capacities indicated.
Signature Title
/s/ James F. Doyle Chief Executive Officer,
James F. Doyle President and Director
/s/ Janet K. Cooper Vice President, Treasurer
Janet K. Cooper (Principal Financial Officer)
and Director
/s/John G. Jartz Vice President,
John G. Jartz Secretary and Director
/s/ Thomas L. Gettings Vice President and Corporate
Thomas L. Gettings Controller
24
EXHIBIT INDEX
Paper (P),
Electronic (E)
EXHIBIT or Incorporated by
NO. DESCRIPTION Reference (IBRF)
3(a) Restated Articles of Incorporation of Stokely-Van IBRF
Camp, Inc. as of February 14, 1994
(incorporated by reference to
the Company's Form 10-K for the fiscal year
ended June 30, 1995, file number 1-2944)
3(b) By-Laws of Stokely-Van Camp, Inc. IBRF
(incorporated by reference to
the Company's Form 10-K for the fiscal year
ended June 30, 1985, file number 1-2944)
10(a)(1) GATORADE Trust Agreement dated January 1, 1984 IBRF
(incorporated by reference to the Company's Form
10-K for the fiscal year ended June 30, 1984, file
number 1-2944)
10(a)(2) First Amendment to GATORADE Trust Agreement IBRF
dated January 1, 1984, effective January 1, 1993
(incorporated by reference to the Company's Form
10-KT for the transition period ended December
31, 1995, file number 1-2944)
21 Subsidiaries of the Registrant E
25
Exhibit 21
STOKELY-VAN CAMP, INC. AND SUBSIDIARIES
Subsidiaries of the Registrant
Subsidiary State or Country
of Incorporation
Beverages Gatorade (Chile) Limitada Chile
The Gatorade Company Delaware
Gatorade Puerto Rico Company Delaware
The Gatorade Company of Australia Pty. Ltd. Australia
Gatorade Portugal Servicos da Marketing S.A. Portugal
Foreign Joint Venture
Guangzhou Quaker Oats Food & Beverage Co. Ltd. The Quaker Oats Company 90%
Stokely-Van Camp, Inc. 10%
23
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000000
<S> <C>
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<PERIOD-END> DEC-31-1996
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0
15
<COMMON> 4
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</TABLE>
