EXHIBIT 13
MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
Overview
Fiscal 1997 net earnings were $2.8 million, or 15 cents per share,
compared with $24.1 million, or $1.33 per share, in fiscal 1996. The
decline in net earnings was primarily the result of unusual charges
and an operating loss in the Company's vending distribution business.
The vending distribution loss resulted from lower sales volumes,
competitive pricing pressures and a changing customer mix. Excluding
unusual items, fiscal 1997 net earnings were $17.6 million, or 98
cents per share, compared with $23.6 million, or $1.31 per share in
fiscal 1996.
Unusual items in fiscal 1997 resulted in a $14.8 million after-tax
charge, or 83 cents per share. The Company estimates that the actions
associated with unusual charges will reduce future annualized
operating expenses by approximately $1 million. In fiscal 1996,
unusual items totaled a net benefit of $0.5 million after tax, or 2
cents per share. Further discussion of unusual items follows in
"Segment Results" and in Note 4 to the consolidated financial
statements.
Net sales for fiscal 1997 were up 3% to $2.6 billion, compared
with $2.5 billion last year. All of the Company's business segments
recorded sales increases.
Segment Results
The Company operates in three business segments: Foodservice
Distribution, North America Foods and Venezuela Foods. A description
of the business segments and summary of operating results are included
in Note 17 to the consolidated financial statements.
Fiscal 1997 compared with fiscal 1996
Foodservice Distribution: Net sales increased 3% to $1.8 billion.
This increase was primarily related to higher volumes in the Company's
limited-menu distribution business, which resulted from the addition
of several new customer accounts in fiscal 1997. The increase in
limited-menu distribution net sales was partially offset by a sales
decline in vending distribution as a result of lower volumes. The
Company is addressing the decline in sales volumes by restructuring
certain customer support functions as described below.
Operating earnings before unusual items declined 43% to $12.6
million as a result of the vending distribution operating loss. The
decline was partially offset by higher earnings in the limited-menu
distribution and food exporting businesses. Limited-menu distribution
earnings improved as a result of lower operating costs and the higher
volumes. Food exporting earnings increased on higher volumes to a
major customer that distributes food products in Russia. Earnings on
sales to this customer accounted for approximately 14% of the
Company's consolidated operating earnings before unusual items in
fiscal 1997, compared with 3% in fiscal 1996.
Fiscal 1997 unusual items included a $4 million charge for a
restructuring plan at vending distribution and a $1.1 million charge
to consolidate two limited-menu distribution facilities. The
restructuring plan is directed at improving customer service and
involves moving key customer support functions from a central location
to each of the Company's vending distribution centers. The charges
for the restructuring plan and facility consolidation cover losses on
lease commitments and employee termination benefits. Fiscal 1996
unusual items of $9.4 million included an $8.9 million charge for a
write-down of vending distribution software.
North America Foods: Net sales increased 4% to $476.7 million because
of price increases resulting from higher worldwide wheat costs, and
volume growth in consumer products. The increase was partially offset
by lower volumes in U.S. bakery mix, which resulted primarily from
softness in a large customer's business, and lower volumes in Canadian
frozen bakery products, which occurred because of increased
competitive pressures.
Operating earnings before unusual items were $20.8 million,
unchanged from the prior year. While higher consumer product volumes
increased earnings, lower U.S. bakery mix and Canadian frozen bakery
volumes adversely affected results. In addition, fiscal 1996 earnings
benefited from a 53-week reporting period.
In fiscal 1997, the Company recognized an unusual charge of $11.4
million for asset impairment in its Canadian frozen bakery operation.
The impairment resulted from a significant decline in operating
performance during fiscal 1997, which occurred because of increased
competitive pressures. The Company estimated the fair value of the
assets in accordance with Statement of Financial Accounting Standards
No. 121 by using discounted expected future cash flows. In estimating
future cash flows, considerable management judgment is necessary and
actual results could vary significantly from such estimates.
Venezuela Foods: Net sales increased 6% to $346.8 million on higher
sales prices and increased consumer corn flour volumes. The increase
was partially offset by lower volumes in commercial wheat flour and
animal feeds. Sales volumes were affected by substantially higher
local prices, which caused consumers to shift to lower-priced
products, such as corn flour, and away from higher-priced products,
such as meat and prepared food products. Sales in the prior year were
adversely affected by a significant devaluation in the free-market
exchange rate while the Company operated under government price
controls.
Operating earnings declined 3% to $18.6 million as a result of
significant prior year currency devaluation, which affected first
quarter results, competitive pricing pressures following the April
1996 implementation of economic reforms and a major increase in the
cost of locally grown grain. Prior year results were adversely
affected by a significant devaluation in the free-market exchange rate
and a $3.9 million charge associated with the December 1995 change in
the official exchange rate. When the official exchange rate was
changed, the Company had to settle certain U.S. dollar obligations at
a substantially higher cost.
During fiscal 1997, the Venezuelan government implemented major
reforms in order to address the country's economic problems. Economic
reforms included the removal of controls over foreign exchange,
interest rates and prices. The Venezuelan government also entered
into a loan agreement with the International Monetary Fund. The
Company believes the reforms are a positive development over the long
term.
Corporate: Fiscal 1997 corporate expenses included $2.2 million in
costs associated with the resignation of the Company's former chief
executive officer and $1.4 million principally for the cost of
business assessment studies. Fiscal 1996 corporate expenses included
a charge of $6.2 million for costs associated with reducing corporate
administrative operations.
Fiscal 1996 compared with fiscal 1995
Fiscal 1996 net earnings were $24.1 million, or $1.33 per share,
compared with net earnings of $57 million, or $3.16 per share, in
fiscal 1995. Fiscal 1995 results included a $1.61 per share benefit
from unusual items, principally from the gain on the sale of the
Company's frozen specialty foods business. Excluding unusual items,
fiscal 1995 net earnings were $28 million, or $1.55 per share.
Net sales for fiscal 1996 increased 10% to $2.5 billion, compared
with $2.3 billion in fiscal 1995. The increase was largely the result
of the full-year inclusion of a fiscal 1995 distribution business
acquisition.
Foodservice Distribution: Net sales increased 23% to $1.7 billion from
the full-year inclusion of the acquired limited-menu distribution
business of Leprino Foods Company. The increase was partially offset
by a slight sales decline in the Company's vending distribution
business as a result of lower volumes.
Fiscal 1996 operating earnings before unusual items increased 27%
to $22.3 million on the full-year earnings contribution of the
business acquisition, higher earnings in the Company's food exporting
business and the benefit of purchasing certain inventories before
suppliers increased prices. Earnings were adversely affected by the
lower volumes and from higher selling costs in vending distribution.
Fiscal 1995 operating earnings included an unusual charge of $6.2
million for costs associated with integration of the Company's
limited-menu distribution business.
North America Foods: Net sales were $459.7 million in fiscal 1996
compared with $459.2 million in fiscal 1995. Sales improved on higher
volumes in commercial bakery products in Canada but were offset by
lower volumes in U.S. bakery mix and North American frozen products.
Operating earnings declined 7% to $20.8 million from $22.4 million
in fiscal 1995. The earnings decline was the result of the lower
volumes partially offset by improved earnings in consumer and
commercial bakery products in Canada and the benefit of a 53-week
reporting period in fiscal 1996.
Venezuela Foods: Net sales increased 3% to $328.5 million on higher
volumes along with the benefit in the first half of fiscal 1996 of a
stable exchange rate as a result of government imposed foreign
exchange controls. The increase was partially offset by the impact of
a significant devaluation in the free-market exchange rate during the
second half of fiscal 1996. Higher volumes in commercial bakery
products resulted primarily on business obtained from the addition of
two wheat flour mills which the Company had leased beginning in
October 1994 and subsequently purchased in August 1995. Consumer
product volumes increased on higher market share and the benefit of a
corn flour business acquisition.
Fiscal 1996 operating earnings declined 4% to $19.1 million as a
result of the significant devaluation in the free-market exchange rate
and from a $3.9 million charge associated with the December 1995
change in the official exchange rate. The decline was partially
offset by the benefit of a stable exchange rate in the first half of
fiscal 1996 and the higher volumes.
Divested businesses: Fiscal 1996 results consisted of the Company's
surimi seafood business, which was divested in June 1995. In addition
to the surimi seafood business, fiscal 1995 results included the
frozen specialty foods and meats businesses, which were divested in
June and May 1994, respectively. The unusual gain of $9.9 million in
fiscal 1996 was from the divestiture of the surimi seafood business.
Unusual items of $34.2 million in fiscal 1995 were primarily from the
gain on the divestiture of the frozen specialty foods business.
Non-operating Expense and Income
In fiscal 1997, net interest expense declined to $16.8 million from
$17.9 million last year. The decline was the result of lower interest
rates in Canada and interest income earned on income tax refunds in
the United States.
In fiscal 1996, net interest expense increased to $17.9 million
from $11.4 million as a result of higher interest rates in the United
States and Canada, and lower interest income in Venezuela. Interest
expense also increased as a result of higher debt levels.
In fiscal 1996, net other income (expense) included foreign
exchange losses of $3.6 million from Venezuelan local currency cash
and cash equivalents.
Income Taxes
The effective tax rates on earnings before unusual items were 30% and
29.4% in fiscal 1997 and 1996, respectively. Including the impact of
unusual items, the Company's overall effective tax rate was 44.6% in
fiscal 1997, compared with 13.3% in fiscal 1996 and 20.5% in fiscal
1995. The low tax rate in fiscal 1996 was the result of a $5 million
benefit from a tax settlement. The fiscal 1995 effective tax rate was
affected by a low tax rate on the frozen specialty foods business
divestiture. The Company's overall tax rate in each fiscal year was
affected by low effective tax rates in Venezuela.
Financial Condition
Capital Resources and Liquidity
The Company's short-term financing is provided by borrowings against
its U.S. and Canadian revolving credit agreements, uncommitted lines
of credit and, on a more limited basis, U.S. commercial paper.
Approximately $280 million in committed U.S. and Canadian revolving
credit agreements are maintained to ensure availability of funds.
Additionally, the Company's Venezuelan subsidiary has uncommitted
lines of credit totaling $135 million, which are not guaranteed by the
parent Company. As of February 28, 1997, approximately $200 million of
outstanding debt obligations were at variable interest rates. The
Company has a medium-term note program under its shelf registration
statement filed with the Securities and Exchange Commission that
provides for the issuance of up to $150 million in medium-term notes
in various amounts. As of February 28, 1997, $140 million was
available under the medium-term note program. See Notes 8 and 9 to
the consolidated financial statements for additional information on
capital resources.
In fiscal 1997, Standard and Poor's lowered its ratings on the
Company's long-term debt and commercial paper to BBB- and A-3,
respectively, and Moody's Investors Service, Inc. lowered its rating
on the Company's long-term debt and commercial paper to Baa3 and
Prime-3, respectively. The Company believes that the ratings
downgrades will not have a material impact on the Company's results of
operations or ability to obtain financing.
During fiscal 1997, the debt-to-total capitalization ratio
increased from 45% to 51%. The primary reason for the higher
percentage is an increase in operating working capital of
approximately $71 million, which occurred primarily because of higher
inventories and accounts receivable in Venezuela and the Company's
food exporting business. The increase in working capital was partially
offset by higher accounts payable, which resulted from the timing of
payments Companywide and higher prices in Venezuela. In Venezuela,
inventories were up as a result of the significantly higher costs of
locally grown grain, primarily corn, and accounts receivable increased
because of higher sales prices which resulted from local inflation.
Accounts receivable increased in the Company's food exporting business
because of delays in receiving payment from a major customer that
distributes food products in Russia and from the adoption of a new
accounting standard. The delay occurred because the Russian
government began to enforce a tariff on imported products. On January
1, 1997, the Company adopted Statement of Financial Accounting
Standards No. 125, which sets forth the accounting for transfers of
assets. As a result, the Company no longer transfers its food
exporting business receivables to a third party. As of
February 29, 1996, the outstanding balance of sold receivables from
the food exporting business was $10.8 million. The increase in working
capital was financed principally through short-term borrowings.
Capital expenditures for fiscal 1997 were $27.5 million compared
with $31.2 million in fiscal 1996. Approximately 30% of the fiscal
1997 capital expenditures was attributable to projects designed to
increase earnings through volume improvements, new business or cost
savings. The remaining capital expenditures were related to projects
required to maintain existing facilities and equipment.
The Company believes that cash flows from operations together with
available external financing will be sufficient to fund operations,
dividend payments and capital expenditures anticipated for fiscal
1998.
Business Concentrations
The Company's Venezuelan operations are subject to risks inherent in
operating under a different legal and political system along with a
difficult economic environment. Among these risks are inflation,
currency volatility, possible limitations on foreign investment,
exchangeability of currency, dividend repatriation and changes in
existing tax laws.
The Company's present strategies for managing Venezuelan currency
risk include product pricing strategies and active management of its
net monetary exposure, principally through U.S. dollar versus bolivar
denominated financing. With respect to product pricing strategies,
the Company is exposed to the risk of declines in gross profit margins
if the bolivar were to decline in value versus the U.S. dollar. With
respect to the Company's Venezuela monetary position (which includes
its bolivar denominated assets and liabilities, except for inventory
and fixed assets), the Company is exposed to the risk of foreign
exchange gains and losses if the bolivar were to change in value
versus the U.S. dollar. For example, if the bolivar were to decline
in value and the Company were in a net monetary asset position (i.e.,
bolivar denominated assets exceed liabilities), there would be foreign
exchange losses, the amount of which would depend upon the size of the
net monetary asset position and the magnitude of the currency
devaluation. Conversely, if the Company were in a net monetary
liability position (i.e., bolivar denominated liabilities exceed
assets) and the bolivar declined in value, there would be foreign
exchange gains. As of February 28, 1997, the Company's Venezuelan
operation was in a net monetary liability position of $18 million.
The Company's food exporting business has a major customer that
distributes food products in Russia. The Company's financial position
and results of operations could be adversely affected in the event of
economic or political instability in Russia or if the customer
experienced difficulty in meeting its commitments.
Commodity Risk Management
The Company's Canadian operations minimize risks associated with wheat
market price fluctuations by hedging its wheat and flour inventories,
open wheat purchase contracts and open flour sales contracts with
wheat futures contracts. The Company also enters into futures
contracts to reduce the risk of price increases on certain anticipated
raw material purchases. See Note 7 to the consolidated financial
statements for further discussion.
Independent Auditors' Report
The Board of Directors and Shareholders of
International Multifoods Corporation:
We have audited the accompanying consolidated balance sheets of
International Multifoods Corporation and subsidiaries as of February
28, 1997, and February 29, 1996, and the related consolidated
statements of earnings and cash flows for each of the years in the
three-year period ended February 28, 1997. These consolidated
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position
of International Multifoods Corporation and subsidiaries as of
February 28, 1997, and February 29, 1996, and the results of their
operations and their cash flows for each of the years in the three-
year period ended February 28, 1997 in conformity with generally
accepted accounting principles.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Minneapolis, Minnesota
April 8, 1997
Management's Responsibility for Financial Statements
The consolidated financial statements have been prepared by management
in conformity with generally accepted accounting principles and
include, where required, amounts based on management's best estimates
and judgments. Management continues to be responsible for the
integrity and objectivity of data in these consolidated financial
statements, which it seeks to assure through an extensive system of
internal controls. Such controls are designed to provide reasonable,
but not absolute, assurance that assets are safeguarded from
unauthorized use or disposition and that financial records are
sufficiently reliable to permit the preparation of consolidated
financial statements. It is recognized that estimates and judgments
are required to assess and balance the relative cost and expected
benefits of any system of internal controls.
The system of internal accounting controls is designed to provide
reasonable assurance that the books and records reflect the Company's
transactions and that its established policies and procedures are
carefully followed. The system includes written policies and
procedures, a financial reporting system, an internal audit department
and careful selection and training of qualified personnel.
/s/Gary E. Costley /s/ William L. Trubeck
Gary E. Costley William L. Trubeck
Chairman, President and Senior Vice President - Finance,
Chief Executive Officer and Chief Financial Officer
INTERNATIONAL MULTIFOODS CORPORATION and SUBSIDIARIES
Consolidated Statements of Earnings
Fiscal year ended the last day of February
(in thousands, except per share data) 1997 1996 1995
- ----------------------------------------------------------------------------
Net sales $2,595,873 $2,523,197 $2,295,119
Cost of sales (2,215,366) (2,135,707) (1,901,932)
- ----------------------------------------------------------------------------
Gross profit 380,507 387,490 393,187
Delivery and distribution (167,788) (162,870) (146,220)
Selling, general and
administrative (170,508) (168,825) (186,616)
Unusual items (20,107) (5,700) 26,240
- ----------------------------------------------------------------------------
Operating earnings 22,104 50,095 86,591
Interest, net (16,758) (17,908) (11,410)
Other income (expense), net (330) (4,433) (3,442)
- ----------------------------------------------------------------------------
Earnings before income taxes 5,016 27,754 71,739
Income taxes (2,236) (3,679) (14,718)
- ----------------------------------------------------------------------------
Net earnings $ 2,780 $ 24,075 $ 57,021
============================================================================
Net earnings per share of
common stock $ .15 $ 1.33 $ 3.16
============================================================================
Average shares of common
stock outstanding 17,982 17,965 17,974
============================================================================
See accompanying notes to consolidated financial statements.
INTERNATIONAL MULTIFOODS CORPORATION and SUBSIDIARIES
Consolidated Balance Sheets
February 28, 1997 and February 29, 1996
(in thousands) 1997 1996
- -----------------------------------------------------------------------
Assets
Current assets:
Cash and cash equivalents $ 8,753 $ 7,508
Trade accounts receivable, net of allowance 207,459 165,527
Inventories 283,948 230,626
Deferred income taxes 9,418 10,792
Other current assets 53,678 44,582
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Total current assets 563,256 459,035
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Property, plant and equipment, net 225,357 226,498
Goodwill, net 87,641 99,999
Other assets 39,034 36,725
- -----------------------------------------------------------------------
Total assets $915,288 $822,257
=======================================================================
Liabilities and Shareholders' Equity
Current liabilities:
Notes payable $ 88,201 $ 28,541
Current portion of long-term debt 6,790 11,000
Accounts payable 206,966 170,884
Other current liabilities 70,037 61,870
- -----------------------------------------------------------------------
Total current liabilities 371,994 272,295
- -----------------------------------------------------------------------
Long-term debt 202,328 202,937
Deferred income taxes 17,419 12,975
Employee benefits and other liabilities 33,969 34,487
- -----------------------------------------------------------------------
Total liabilities 625,710 522,694
- -----------------------------------------------------------------------
Shareholders' equity:
Preferred capital stock - -
Common stock, authorized 50,000 shares;
issued 21,844 shares 2,184 2,184
Capital in excess of par value 88,124 88,316
Retained earnings 393,335 404,813
Equity adjustment from foreign
currency translation (108,000) (108,170)
Equity adjustment from minimum
pension liability (2,309) (2,674)
Treasury stock, 3,835 and 3,864 shares, at cost (83,262) (83,948)
Unearned restricted stock (494) (958)
- -----------------------------------------------------------------------
Total shareholders' equity 289,578 299,563
- -----------------------------------------------------------------------
Commitments and contingencies
Total liabilities and shareholders' equity $915,288 $822,257
=======================================================================
See accompanying notes to consolidated financial statements.
INTERNATIONAL MULTIFOODS CORPORATION and SUBSIDIARIES
Consolidated Statements of Cash Flows
Fiscal year ended the last day of February
(in thousands) 1997 1996 1995
- ------------------------------------------------------------------------------
Cash flows from operations:
Net earnings $ 2,780 $ 24,075 $ 57,021
Adjustments to reconcile net earnings
to cash provided by (used for) operations:
Depreciation and amortization 30,748 29,772 27,045
Provision for unusual charges 20,107 15,493 5,413
Gain on major business dispositions - (9,900) (33,581)
Deferred income tax expense 3,252 4,544 4,483
Provision for losses on receivables 2,862 5,783 4,477
Changes in operating assets and
liabilities, net of business
acquisitions and dispositions* (71,196) (43,456) (49,351)
Other, net (1,000) (730) 6,372
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Cash provided by
(used for) operations (12,447) 25,581 21,879
- ------------------------------------------------------------------------------
Cash flows from investing activities:
Acquisitions of businesses,
net of cash acquired - (29,904) (115,847)
Capital expenditures (27,507) (31,181) (30,776)
Proceeds from business dispositions - 48,009 156,367
Proceeds from other property disposals 623 1,707 823
- ------------------------------------------------------------------------------
Cash provided by (used for)
investing activities (26,884) (11,369) 10,567
- ------------------------------------------------------------------------------
Cash flows from financing activities:
Net increase (decrease) in notes payable 60,119 (12,203) (7,231)
Additions to long-term debt 20,000 85,945 4,973
Reductions in long-term debt (25,390) (65,165) (7,038)
Dividends paid (14,477) (14,471) (14,560)
Proceeds from issuance of common stock 546 1,470 355
Purchase of treasury stock (82) (2,877) (5,877)
Redemption of preferred stock - (3,732) -
Other, net (230) (712) (19)
- ------------------------------------------------------------------------------
Cash provided by (used for)
financing activities 40,486 (11,745) (29,397)
- ------------------------------------------------------------------------------
Effect of exchange rate changes
on cash and cash equivalents 90 (5,751) (2,764)
- ------------------------------------------------------------------------------
Net increase (decrease) in cash
and cash equivalents 1,245 (3,284) 285
Cash and cash equivalents at beginning of year 7,508 10,792 10,507
- ------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 8,753 $ 7,508 $ 10,792
==============================================================================
*Cash flows from changes in operating
assets and liabilities, net of
business acquisitions and dispositions:
Accounts receivable $(45,043) $(45,993) $ (441)
Inventories (53,086) 19,172 (47,866)
Other current assets (9,671) (4,759) (9,089)
Accounts payable 36,688 16,871 16,643
Other current liabilities (84) (28,747) (8,598)
- ------------------------------------------------------------------------------
Net change $(71,196) $(43,456) $(49,351)
==============================================================================
See accompanying notes to consolidated financial statements.
Notes to Consolidated Financial Statements
Note 1: Summary of Significant Accounting Policies
Basis of statement presentation
The accompanying consolidated financial statements include the accounts of
International Multifoods Corporation and all of its subsidiaries.
Intercompany accounts and transactions have been eliminated in
consolidation. Certain amounts in the prior year financial statements have
been reclassified to conform to the current year presentation.
Net sales
The Company reports the gross margin earned from commodity sales of its
food exporting business as net sales. If gross commodity sales had been
reported, net sales and cost of sales would have increased by $278.2
million in fiscal 1997, $227.2 million in fiscal 1996 and $150.3 million in
fiscal 1995.
Cost of sales
To more closely match costs with related revenues, the Company classifies
the inflation element inherent in interest rates on Venezuelan local
currency borrowings and the foreign exchange gains and losses, which occur
on certain Venezuelan borrowings, as a component of cost of sales.
Accordingly, cost of sales was increased by $2.6 million in fiscal 1997 and
was reduced by $7.8 million and $0.4 million in fiscal 1996 and 1995,
respectively.
Foreign currency translation and transactions
For the Company's Canadian operations, the functional currency is the local
currency. Assets and liabilities are translated at current exchange rates
and results of operations are translated using the weighted average
exchange rate in effect during the fiscal year. The gains or losses
resulting from translation are included as a separate component of
shareholders' equity.
The functional currency for the Company's Venezuelan operations is the
U.S. dollar. Nonmonetary assets and liabilities, principally inventory and
fixed assets, are translated at historical exchange rates while monetary
assets and liabilities are translated at current exchange rates. Results
of operations are translated using the weighted average exchange rate in
effect during the fiscal year, except that cost of sales and depreciation
are translated at historical rates. The gains or losses resulting from
translation are included in the determination of net earnings.
The Company recognized in its results of operations net foreign
exchange gains of $0.4 million in fiscal 1997, $2.4 million in fiscal 1996
and net foreign exchange losses of $3.0 million in fiscal 1995.
Stock-based compensation
The Company applies Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees" (APB 25), and related interpretations in
accounting for its stock-based compensation. The Financial Accounting
Standards Board issued Statement No. 123, " Accounting for Stock-Based
Compensation" (SFAS 123), which was effective in fiscal 1997. SFAS 123
provides the option either to continue the Company's current method of
accounting for stock-based compensation or to adopt the fair value method
of accounting. The Company elected to continue accounting for stock-based
compensation using APB 25.
Income taxes
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the expected future
tax consequences of temporary differences between the financial statement
carrying amount and tax basis of assets and liabilities.
Earnings per share
Earnings per share of common stock has been determined by dividing net
earnings, after deduction of preferred stock dividends, by the average
number of shares of common stock outstanding during the year. Common stock
options and other common stock equivalents are not included in earnings per
share computations since their effect is not significant.
Cash and cash equivalents
Included in cash and cash equivalents are cash on hand, time deposits, and
highly liquid short-term investments purchased with original maturities of
three months or less ("cash equivalents"). The Company's cash equivalents
are readily convertible to known amounts of cash and are near their
maturity. Accordingly, the risk of changes in value as a result of changes
in interest rates is insignificant.
Inventories
Inventories, excluding grain in Canada, are valued principally at the lower
of cost (first-in, first-out) or market (replacement or net realizable
value).
In Canada, inventories of grain are valued on the basis of replacement
market prices prevailing at fiscal year-end. The Company generally
minimizes risks associated with market price fluctuations by hedging those
inventories with futures contracts. Therefore, included in inventories is
the amount of gain or loss on open grain contracts, including futures
contracts, which generally has the effect of adjusting those inventories to
cost.
The Company also enters into futures contracts to reduce the risk of
price increases with respect to certain anticipated raw material purchases.
The futures contracts are accounted for as hedges, with gains and losses
deferred in inventory and subsequently included in cost of sales as the
inventory is sold.
Property, plant and equipment
Property, plant and equipment is stated at cost and depreciation is
computed using the straight-line method for determining financial statement
income. When permitted, accelerated depreciation methods are used to
calculate depreciation for income tax purposes.
Goodwill and other intangibles
Goodwill represents the excess of cost of businesses acquired over the fair
market value of net tangible and identifiable intangible assets. Such
excess costs are being amortized on a straight-line basis over various
periods not exceeding 40 years. Identifiable intangible assets represent
costs allocated to noncompete agreements, tradenames and other specifically
identifiable assets arising from business acquisitions. These assets are
amortized on a straight-line basis over their estimated useful lives.
Accumulated amortization of goodwill and other intangibles at February 28,
1997 and February 29, 1996 was $22.2 million and $19.4 million,
respectively.
The Company assesses the recoverability of goodwill and other long-
lived assets whenever events or changes in circumstances indicate that
expected future undiscounted cash flows may not be sufficient to support
the carrying amount of an asset. The Company deems an asset to be impaired
if a forecast of undiscounted future operating cash flows is less than its
carrying amount. If an asset is determined to be impaired, the loss is
measured as the amount by which the carrying value of the asset exceeds its
fair value. An estimate of fair value is based on the best information
available, including values for similar assets or the results of valuation
techniques such as discounting estimated future cash flows. The Company
generally measures fair value by discounting estimated future cash flows.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles 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 amount of revenues and expenses
during the reporting period. Actual results could differ from these
estimates.
New accounting pronouncement
In March 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share" (SFAS 128),
which is required to be adopted by the Company in the fourth quarter of
fiscal 1998. SFAS 128 simplifies the computation of earnings per share
(EPS) by replacing the presentation of primary EPS with a presentation of
basic EPS and requires dual presentation of basic and diluted EPS by
entities with complex capital structures. Basic EPS includes no dilution
as opposed to primary EPS that included common stock equivalents. Basic
EPS is computed by dividing income available to common stockholders, which
is net income less preferred stock dividends, by the weighted-average
number of common shares outstanding for the period. This new pronouncement
will not have an impact on the Company's reported EPS because its common
stock equivalents did not enter into historical primary earnings per share
computations since their effect was not significant.
Note 2: Businesses Acquired
The Company acquired, with cash and notes, several businesses during fiscal
1996 and 1995. There were no acquisitions during fiscal 1997. All
acquisitions have been accounted for as purchases and, accordingly, their
results of operations have been included since their respective dates of
acquisition. The most significant acquisitions were as follows:
Fiscal
Year Business Segment Description Date Acquired
- ------------------------------------------------------------------------
1996 Venezuela Foods Two wheat flour mills
in Puerto Cabello, VZ August 1995
Foodservice
Distribution Alum Rock Foodservice July 1995
Venezuela Foods Corn flour business
in Ciudad Bolivar, VZ April 1995
- ------------------------------------------------------------------------
1995 Foodservice Distribution business
Distribution of Leprino Foods Co. August 1994
- -----------------------------------------------------------------------
Components of cash used for acquisitions, as reflected in the
consolidated statements of cash flows, were as follows:
(in thousands) 1996 1995
- -------------------------------------------------------------------------
Fair value of current assets,
net of cash acquired $ 7,252 $ 46,298
Fair value of noncurrent assets,
excluding goodwill 21,266 39,003
Goodwill 2,626 51,478
Liabilities assumed, principally current (740) (20,932)
Purchase contract liabilities (500) -
- -------------------------------------------------------------------------
Cash paid at closing,
net of cash acquired $29,904 $115,847
=========================================================================
Assuming the Company's acquisitions had been completed on March 1,
1994, the beginning of fiscal 1995, pro forma net sales of the Company
would have been approximately $2.55 billion for each of fiscal 1996 and
1995. The pro forma effect on net earnings and net earnings per share of
common stock is not significant. The pro forma information is not
necessarily indicative of the combined results of operations that would
have occurred had the acquisitions been completed as of the beginning of
fiscal 1995. Goodwill acquired in the acquisitions is being amortized
over 40 years on a straight-line basis.
Note 3: Interest, Net
Interest, net consisted of the following:
(in thousands) 1997 1996 1995
- ----------------------------------------------------------------
Interest expense $18,658 $19,613 $15,592
Capitalized interest (109) (128) (317)
Non-operating interest income (1,791) (1,577) (3,865)
- ----------------------------------------------------------------
Interest, net $16,758 $17,908 $11,410
================================================================
Cash payments for interest, net of amounts capitalized, totaled
$18.9 million in fiscal 1997, $20.7 million in fiscal 1996 and $13.9
million in fiscal 1995.
Total interest income was $3.4 million in fiscal 1997, $2.5
million in fiscal 1996 and $4.9 million in fiscal 1995.
Note 4: Unusual Items
Fiscal 1997
The Company recognized unusual items that resulted in pre-tax charges
of $20.1 million ($14.8 million after-tax or 83 cents per share), and
are comprised of the following:
(in millions) Segment
- ------------------------------------------------------------------------
Asset impairment $11.4 North America Foods
Restructuring plan 4.0 Foodservice Distribution
Severance and other costs 3.6 Corporate
Facility consolidation plan 1.1 Foodservice Distribution
- ------------------------------------------------------------------------
Total $20.1
======================================
In the fourth quarter, the Company recognized a charge of $11.4
million for asset impairment in its Canadian frozen bakery operation.
The impairment results in a $9.6 million reduction in goodwill and a $1.8
million reduction in fixed assets. Over the last several quarters, the
operation has experienced a significant increase in competition in
certain key markets. As a result, there has been a significant decline
in sales volume and operating results. The Company reviews its long-
lived assets and goodwill for impairment whenever changes in
circumstances indicate that the carrying amount of an asset or group of
assets may not be recoverable. In this situation, the Company believes
that the operating unit is the lowest level for which identifiable cash
flows could be determined. Accordingly, the Company estimated the fair
value of the operation's assets using discounted expected future cash
flows and determined that the carrying value of the business unit
exceeded the fair value. In estimating future cash flows, considerable
management judgment is necessary and actual results could vary
significantly from such estimates.
In the fourth quarter, management adopted a restructuring plan at its
vending distribution business directed at improving customer service.
The plan will include moving certain customer support functions from a
central location to the distribution centers. Accordingly, the Company
recorded a $2.8 million charge primarily from losses on lease commitments
and a $1.2 million charge for involuntary employee termination benefits
covering approximately 190 customer support employees. The restructuring
plan will be substantially complete by the end of fiscal 1998.
In the first quarter, the Company recognized $2.2 million in
severance and other costs resulting from the resignation of the Company's
former chief executive officer and $1.4 million principally for costs of
business assessment studies.
In the fourth quarter, management adopted a plan to consolidate two
limited-menu business distribution centers. As a result, the Company
recorded a $1.1 million charge for the loss on lease commitments and
employee termination benefits. Involuntary employee termination benefits
will cover approximately 40 warehouse, delivery and administrative
employees. The distribution center consolidation will be substantially
complete by the end of the second quarter of fiscal 1998.
Fiscal 1996
The Company recognized unusual items that resulted in a net pre-tax
charge of $5.7 million ($0.5 million after-tax benefit or 2 cents per
share), and are comprised of the following:
(in millions) Segment
- ------------------------------------------------------------------------
Write-down of software costs $8.9 Foodservice Distribution
Corporate restructuring plan 6.2 Corporate
Lease commitment loss .5 Foodservice Distribution
Gain on business divestiture (9.9) Divested Businesses
- ------------------------------------------------------------------------
Total $5.7
======================================
The Company recognized an $8.9 million charge for the write-down of
vending distribution computer software costs. The charge resulted from
the Company's decision to limit the scope of the software applications
being implemented. In addition, a $0.5 million charge for a loss on a
lease commitment was also recognized in the vending distribution
business.
The Company recognized charges of $2.0 million for asset write-downs
and $4.2 million for termination benefits in order to streamline
corporate administrative operations. All significant actions relating to
the plan were completed in fiscal 1997.
The Company divested its surimi seafood business in June 1995 for a
$9.9 million gain.
The Company recognized a $5.0 million tax benefit which resulted from
an agreement with the IRS regarding proposed disallowances of certain
deductions taken during fiscal years 1985 through 1991 and the benefit of
the closure by the IRS of its examinations of the Company's fiscal 1992
and 1993 tax returns.
Fiscal 1995
The Company recognized unusual items that resulted in a net pre-tax
benefit of $26.2 million ($29.0 million after-tax or $1.61 per share),
and are comprised of the following:
(in millions) Segment
- ------------------------------------------------------------------------
Business integration $ 6.2 Foodservice Distribution
Business acquisition activities 1.8 Corporate
Gain on business divestiture (33.6) Divested Businesses
Other (.6) Divested Businesses
- ------------------------------------------------------------------------
Total $(26.2)
======================================
A $6.2 million charge was recognized for the integration of the
Company's limited-menu foodservice distribution businesses ("Business
Integration"). The Business Integration charge included $3.7 million for
losses on lease commitments, $1.4 million for termination benefits and
$1.1 million for asset write-downs.
The Company divested its frozen specialty foods business for a $33.6
million gain. An additional $0.6 million benefit was recognized relating
to previously divested businesses.
The Company also recognized a benefit from a tax settlement on
proposed disallowances of certain deductions in connection with business
acquisitions.
Note 5: Income Taxes
Income tax expense was as follows:
U.S. Operations Non-U.S.
(in thousands) Federal Other Operations Total
- -----------------------------------------------------------------------
1997:
Current expense (benefit) $ (7,976) $ 57 $ 6,903 $ (1,016)
Deferred expense (benefit) 3,385 (440) 307 3,252
- -----------------------------------------------------------------------
Total tax expense (benefit) $ (4,591) $ (383) $ 7,210 $ 2,236
=======================================================================
1996:
Current expense (benefit) $ (4,336) $ (442) $ 3,913 $ (865)
Deferred expense (benefit) 2,501 (922) 2,965 4,544
- -----------------------------------------------------------------------
Total tax expense (benefit) $ (1,835) $(1,364) $ 6,878 $ 3,679
=======================================================================
1995:
Current expense $ 1,785 $ 2,340 $ 6,110 $ 10,235
Deferred expense (benefit) 603 (151) 4,031 4,483
- -----------------------------------------------------------------------
Total tax expense $ 2,388 $ 2,189 $10,141 $ 14,718
=======================================================================
Temporary differences which give rise to deferred tax assets and
liabilities as of February 28, 1997 and February 29, 1996 were as
follows:
1997 1996
-------------------- -------------------
Deferred Deferred Deferred Deferred
Tax Tax Tax Tax
(in thousands) Assets Liabilities Assets Liabilities
- --------------------------------------------------------------------------
Depreciation and
amortization $ 1,633 $28,256 $ 1,489 $25,884
Accrued expenses 21,429 11,055 21,913 10,131
Inventory valuation methods 974 - 2,175 -
Reorganization and
divestiture reserves 3,640 - 5,014 -
Provision for losses
on receivables 3,263 - 5,149 -
Net operating
loss carryforwards 4,591 - 3,521 -
Foreign earnings repatriation - 3,027 - 4,207
Other 2,983 2,558 2,961 2,479
- ------------------------------------------------------------------------
Subtotal 38,513 44,896 42,222 42,701
Valuation allowance (2,420) - (4,962) -
- ------------------------------------------------------------------------
Total deferred taxes $36,093 $44,896 $37,260 $42,701
========================================================================
At February 28, 1997, the Company's foreign operations had net
operating loss carryforwards of approximately $8.3 million of which
approximately $5.8 million will expire in fiscal 1998 and the balance
will expire in fiscal 2000 through 2004. The financial statement tax
benefit of the net operating loss carryforwards has been offset by a
valuation allowance because of the limited carryforward period.
In fiscal 1997, the valuation allowance decreased approximately $2.5
million. The decrease primarily resulted from a decrease in Venezuelan
deferred tax assets and as such had no effect on tax expense.
Total income taxes differs from the amount computed by applying the
U.S. federal income tax rate because of the following items:
(in thousands) 1997 1996 1995
- ----------------------------------------------------------------------
Tax at U.S. federal statutory rate (35.0%) $1,756 $9,714 $25,109
Differences:
Effect of taxes on non-U.S. earnings 176 (2,049) (1,380)
State and local income taxes (249) (887) 1,416
Effect of intangibles 148 209 (1,794)
Basis difference for business disposals - 355 (9,003)
Resolution of tax examinations - (5,000) -
Other 405 1,337 370
- ----------------------------------------------------------------------
Total income taxes $2,236 $3,679 $14,718
======================================================================
Provision has been made for U.S. income taxes applicable to
anticipated remittances of earnings from non-U.S. affiliates. It is not
practicable to estimate the remaining deferred tax liability associated
with temporary differences related to investments in non-U.S. affiliates.
Earnings before income taxes from non-U.S. affiliates were $21.5 million
in fiscal 1997, $28.4 million in fiscal 1996 and $33.0 million in fiscal
1995.
Cash paid for income taxes totaled $6.7 million in fiscal 1997, $4.8
million in fiscal 1996 and $5.9 million in fiscal 1995.
Note 6: Supplemental Balance Sheet Information
(in thousands) 1997 1996
- ------------------------------------------------------------------------
Trade accounts receivable, net:
Trade $216,798 $179,504
Allowance for doubtful accounts (9,339) (13,977)
- ------------------------------------------------------------------------
Total trade accounts receivable, net $207,459 $165,527
========================================================================
Inventories:
Raw materials, excluding grain $ 15,776 $ 17,529
Grain 86,500 46,331
Finished and in-process goods 174,274 159,077
Packages and supplies 7,398 7,689
- ------------------------------------------------------------------------
Total inventories $283,948 $230,626
========================================================================
Property, plant and equipment, net:
Land $ 13,413 $ 12,045
Buildings and improvements 93,099 90,001
Machinery and equipment 228,514 217,567
Transportation equipment 7,194 9,188
Improvements in progress 15,019 13,157
- ------------------------------------------------------------------------
357,239 341,958
Accumulated depreciation (131,882) (115,460)
- ------------------------------------------------------------------------
Total property, plant and equipment, net $225,357 $226,498
========================================================================
Other current liabilities:
Wages and benefits $ 12,445 $ 10,524
Income taxes 12,946 10,890
Other accrued expenses 44,646 40,456
- ------------------------------------------------------------------------
Total other current liabilities $ 70,037 $ 61,870
========================================================================
Note 7: Financial Instruments
Fair value of financial instruments
The carrying value of cash and cash equivalents, accounts receivable,
accounts payable and short-term debt approximate fair value. The
Company's $95 million carrying value of medium-term notes, $5 million of
which is classified as current, had a fair value of $91.6 million as of
February 28, 1997.
Commodity risk management
The Company's Canadian operations minimize the risk associated with wheat
market price fluctuations by hedging its wheat and flour inventories,
open wheat purchase contracts, and open flour sales contracts with wheat
futures contracts. In the United States, the Company has entered into
futures and options on futures to reduce the risk of price fluctuations
on anticipated flour and soybean oil purchases. The U.S. dollar-
denominated futures contracts are traded on U.S. regulated exchanges.
The amount of deferred losses, measured by using quoted market prices, as
of February 28, 1997 was $0.7 million. At February 28, 1997, the Company
held futures and options on futures to purchase wheat and soybean oil
with an aggregate contract value of $8.8 million and to sell wheat and
soybean oil with contract values of $1.1 million. The open futures and
options on futures mature in the period from May 1997 through December
1997 and substantially coincide with the maturities of the open wheat
purchase contracts, open flour sales contracts and the anticipated timing
of flour and soybean oil purchases.
Since the Canadian operations' inventories, purchase contracts and
sales contracts are generally denominated in Canadian dollars, the
Company enters into foreign exchange forward contracts that have the
effect of converting the U.S. dollar-denominated futures contracts into
Canadian dollar equivalents. At February 28, 1997, the Company held
foreign exchange forward contracts to sell and buy U.S. dollars totaling
$7.4 million and $7.2 million, respectively. The foreign exchange
forward contracts are purchased through major Canadian banking
institutions.
Off-balance sheet risk
As of February 28, 1997 and February 29, 1996, the Company had sold with
limited recourse $14.6 million and $13.1 million of accounts receivable,
respectively, related to its Canadian operations. Collections received
on these accounts may be replaced by new receivables in order to maintain
the aggregate outstanding balance. The credit risk of uncollectible
accounts has been substantially transferred to the purchaser. Fees
associated with these transactions are included in other income (expense)
in the consolidated statements of earnings.
Concentrations of credit risk
Management believes the credit risk of exchange-traded futures contracts
and foreign exchange forward contracts due to nonperformance of the
counterparties is insignificant.
The Company extends credit on a regular basis under various terms to
customers that meet certain financial and other criteria. In general,
the Company does not require collateral or security. As of February 28,
1997, the most significant concentration of trade accounts receivable was
with a major customer of the Company's food exporting business which
accounted for approximately 20% of the Company's trade accounts
receivable. The Company reduces its credit risk on sales to its major
food exporting customer by requiring standby letters of credit, security
deposits and by maintaining title to a significant portion of the
inventory until payment has been made. The Company believes that its
remaining trade receivables do not represent significant concentrations
of credit risk due to the large number of customers and markets into
which its products are sold, as well as their dispersion across
geographic areas.
Note 8: Notes Payable
Notes payable consisted of the following:
(in thousands) 1997 1996
- ----------------------------------------------------------------------
U.S. commercial paper $ 1,200 $ 61,750
Canadian bankers' acceptances 43,854 58,003
Notes payable, principally to banks 154,077 15,332
Amounts reclassified to long-term debt (110,930) (106,544)
- ----------------------------------------------------------------------
Total notes payable $ 88,201 $ 28,541
======================================================================
The Company has a $200 million revolving credit agreement in the U.S.
and an $80 million revolving credit agreement in Canada which expire on
March 15, 2001. The Company had available $181 million under these
revolving credit agreements as of February 28, 1997. The interest rate
on borrowings under these agreements is variable and based on current
market factors. There are no restrictions on the use of these facilities
for general corporate purposes and support for commercial paper issued by
the Company. The credit agreements contain certain restrictive covenants
that include maintenance of minimum tangible net worth, a fixed charge
coverage ratio and an indebtedness to capitalization ratio. None of the
restrictive covenants is expected to affect the payment of dividends
based on the Company's present dividend rate. Related commitment and
facility fees were $0.4 million in fiscal 1997 and $0.6 million in fiscal
1996.
Notes payable totaling $110.9 million have been classified as long-
term debt as a result of the Company's intent to refinance this debt on a
long-term basis and the availability of such financing under the terms of
the revolving credit agreements.
The weighted average interest rate on notes payable outstanding at
February 28, 1997, and February 29, 1996, was 5.7% and 5.6%,
respectively.
At February 28, 1997, the Company had total uncommitted lines of
credit from banks in Venezuela of approximately $135 million, of which
$67 million was available. No compensating balances were required for
any of these credit lines.
Note 9: Long-term Debt
Long-term debt, net of current portion of $6.8 million in fiscal 1997 and
$11.0 million in fiscal 1996, was as follows:
(in thousands) 1997 1996
- ------------------------------------------------------------------------
Medium-term notes $ 90,000 $ 95,000
Other 1,398 1,393
Notes payable, reclassified 110,930 106,544
- ------------------------------------------------------------------------
Total long-term debt $202,328 $202,937
========================================================================
The Company maintains a shelf registration statement with the
Securities and Exchange Commission for the issuance of $150 million of
debt securities, of which $140 million remained available at February 28,
1997. The Company may issue up to the entire amount as medium-term
notes, Series B, in varying amounts, rates and maturities. Medium-term
notes outstanding at February 28, 1997 mature in fiscal 1998 to 2007 and
had a weighted average interest rate of 6.5%.
Minimum principal payments totaling $202.3 million are due as
follows: $23.1 million in fiscal 1999, $2.3 million in fiscal 2000,
$20.3 million in fiscal 2001, $111.4 million in fiscal 2002, $1.2 million
in fiscal 2003 and $44.0 million in fiscal 2004 and beyond.
Note 10: Preferred Capital Stock
The Company has authorized 10,000,000 shares of Preferred Capital Stock,
par value $1.00 per share, which may be designated and issued as
convertible into common shares. The Company has created a series of such
Preferred Capital Stock, designated as Series 1990 Junior Participating
Capital Preferred Stock, consisting of 500,000 shares, par value $1.00
per share.
No Preferred Capital Stock was outstanding during the three years
ended February 28, 1997.
Note 11: Leases
The Company leases certain plant, office space and equipment for varying
periods. Management expects that in the normal course of business,
leases will be renewed or replaced by other leases.
The following is a schedule of future minimum lease payments for
operating leases that had initial or remaining noncancelable lease terms
in excess of one year as of February 28, 1997:
Operating
(in thousands) Leases
- ------------------------------------------------------------
1998 $23,475
1999 20,539
2000 16,489
2001 10,838
2002 6,061
2003 and beyond 5,681
- -----------------------------------------------------------
Total minimum lease payments * $83,083
===========================================================
*Minimum payments do not include contingent rentals or vehicle lease
payments based on mileage.
Total net rent expense for operating leases, including those with
terms of less than one year, consisted of the following:
(in thousands) 1997 1996 1995
- --------------------------------------------------------------------
Minimum rentals $28,181 $29,104 $27,608
Contingent rentals 29 79 246
Sublease rentals (2) (8) (44)
- --------------------------------------------------------------------
Total net rent expense $28,208 $29,175 $27,810
====================================================================
Note 12: Commitments and Contingencies
There were no contingencies or litigation as of February 28, 1997 that,
in the opinion of management, would have had a material adverse effect on
the Company's consolidated financial condition, results of operations or
cash flows.
At February 28, 1997, the estimated cost to complete improvements in
progress totaled approximately $8 million.
Note 13: Shareholders' Equity
The following summarizes the changes in shareholders' equity for the three years ended February 28, 1997:
Equity Adjustment from:
-----------------------
$.10 par value Capital in Foreign Minimum Unearned
Common Treasury Excess of Retained Currency Pension Restricted
(in thousands) Stock Stock Par Value Earnings Translation Liability Stock Total
- ----------------------------------------------------------------------------------------------------------------------------
Balance at February 28, 1994 $2,184 $(78,364) $89,158 $349,298 $(107,364) $(2,301) $(2,607) $250,004
Net earnings - - - 57,021 - - - 57,021
Translation adjustments - - - - (1,520) - - (1,520)
Dividends declared:
Common stock - - - (10,746) - - - (10,746)
Preferred stock - - - (167) - - - (167)
366 shares purchased for treasury - (5,877) - - - - - (5,877)
37 shares issued for
employee benefit plans - 824 (296) - - - (222) 306
Amortization of unearned
restricted stock - - - - - - 1,381 1,381
Adjustment associated with
recognition of minimum
pension liability - - - - - 660 - 660
- ----------------------------------------------------------------------------------------------------------------------------
Balance at February 28, 1995 2,184 (83,417) 88,862 395,406 (108,884) (1,641) (1,448) 291,062
Net earnings - - - 24,075 - - - 24,075
Translation adjustments - - - - 714 - - 714
Dividends declared:
Common stock - - - (14,408) - - - (14,408)
Preferred stock - - - (260) - - - (260)
137 shares purchased for treasury - (2,877) - - - - - (2,877)
108 shares issued for
employee benefit plans - 2,346 (277) - - - (311) 1,758
Amortization of unearned
restricted stock - - - - - - 532 532
Adjustment associated
with long-term incentive
program amendment - - (269) - - - 269 -
Adjustment associated with
recognition of minimum
pension liability - - - - - (1,033) - (1,033)
- ----------------------------------------------------------------------------------------------------------------------------
Balance at February 29, 1996 2,184 (83,948) 88,316 404,813 (108,170) (2,674) (958) 299,563
Net earnings - - - 2,780 - - - 2,780
Translation adjustments - - - - 170 - - 170
Dividends declared on
common stock - - - (14,258) - - - (14,258)
5 shares purchased for treasury - (82) - - - - - (82)
35 shares issued for
employee benefit plans - 768 (192) - - - (569) 7
Amortization of unearned
restricted stock - - - - - - 1,033 1,033
Adjustment associated with
recognition of minimum
pension liability - - - - - 365 - 365
- ----------------------------------------------------------------------------------------------------------------------------
Balance at February 28, 1997 $2,184 $(83,262) $88,124 $393,335 $(108,000) $(2,309) $ (494) $289,578
============================================================================================================================
The Company's 1989 stock-based plan permits awards of restricted
stock and incentive units to key employees subject to the provisions of
the plan and as determined by the Compensation Committee of the Board of
Directors. In fiscal 1997, grants of 41,610 shares of restricted stock
were awarded with varying performance criteria and vesting periods. At
February 28, 1997, the total number of restricted shares outstanding was
92,441. The market value of shares issued under the plan, as of the date
of grant, has been recorded as unearned restricted stock and is shown as
a separate component of shareholders' equity. Unearned restricted stock
is expensed over the period restrictions lapse.
The Company has a shareholder rights plan that entitles one preferred
share purchase right for each outstanding share of common stock. The
rights become exercisable only after a person or group (with certain
exceptions) becomes the beneficial owner of 10% or more of the Company's
outstanding common stock or announces a tender offer, the consummation of
which would result in beneficial ownership by a person or group of 10% or
more of the Company's outstanding common stock. Each right will entitle
its holder to purchase one one-hundredth share of Series 1990 Junior
Participating Preferred Capital Stock (consisting of 500,000 shares, par
value $1.00 per share) at an exercise price of $100, subject to
adjustment. If a person or group acquires beneficial ownership of 10% or
more of the Company's outstanding common stock, each right will entitle
its holder (other than such person or group) to purchase, at the then-
current exercise price of the right, a number of shares of the Company's
common (or, in certain circumstances, preferred) stock having a market
value of twice the then-current exercise price of the right. In
addition, if the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or
earnings power are acquired, each right will entitle its holder to
purchase, at the then-current exercise price of the right, a number of
the acquiring company's common shares having a market value of twice the
then-current exercise price of the right. Following the acquisition by a
person or group of beneficial ownership of 10% or more of the Company's
outstanding common stock and prior to an acquisition by any person or
group of 50% or more of the Company's outstanding common stock, the Board
of Directors may exchange the outstanding rights (other than rights owned
by such person or group), in whole or in part, for common (or, in certain
circumstances, preferred) stock of the Company. Prior to the acquisition
by a person or group of beneficial ownership of 10% or more of the
Company's outstanding common stock, the rights are redeemable for $.01
per right at the option of the Board of Directors.
Note 14: Stock Options
Stock options are granted to directors, officers and key management
employees to purchase shares of Company common stock at not less than
fair market value at dates of grant. Options generally become
exercisable one year after the date of grant and expire ten years after
the date of grant.
A total of 238,039 common shares are available for grants of stock
options or restricted stock under the Company's 1989 stock plan. The per
share weighted-average fair values of stock options granted were $4.40
during fiscal 1997 and $4.87 during fiscal 1996 on the dates of grant
using the Black Scholes option-pricing model with the following weighted-
average assumptions: fiscal 1997 - expected dividend yield of 3.8%,
expected volatility of 19.8%, risk-free interest rates ranging between
6.5% and 7.0%, and an expected life of 8.3 years; fiscal 1996 - expected
dividend yield of 3.5%, expected volatility of 19.9%, risk-free interest
rates ranging between 6.1% and 7.0%, and an expected life of 7.7 years.
The Company applies APB Opinion No. 25 in accounting for its plans
and, accordingly, no compensation cost has been recognized for employee
stock options in the financial statements. Had the Company determined
compensation cost based on the fair value at the grant date for its stock
options under SFAS 123, the Company's net earnings would have been
reduced to the pro forma amounts indicated below:
(in thousands, except per share data) 1997 1996
- ---------------------------------------------------------
Net earnings:
As reported $2,780 $24,075
Pro forma $2,370 $23,519
Net earnings per share:
As reported $ .15 $ 1.33
Pro forma $ .13 $ 1.30
- ---------------------------------------------------------
The following table contains information on stock options:
Option Price
Shares Per Share-Range
- ----------------------------------------------------------
Outstanding at
February 28, 1994 1,722,115 $11.28 - 29.00
Granted 72,077 16.06 - 18.00
Exercised (26,100) 11.28 - 14.97
Expired or canceled (200,263) 11.28 - 29.00
- ----------------------------------------------------------
Outstanding at
February 28, 1995 1,567,829 $14.97 - 29.00
Granted 220,513 18.69 - 22.69
Exercised (83,545) 14.97 - 20.17
Expired or canceled (137,975) 16.50 - 28.06
- ----------------------------------------------------------
Outstanding at
February 29, 1996 1,566,822 $16.06 - 29.00
Granted 273,509 16.00 - 20.81
Exercised (30,250) 16.63 - 19.21
Expired or canceled (285,050) 16.75 - 28.06
- ----------------------------------------------------------
Outstanding at
February 28, 1997 1,525,031 $16.00 - 29.00
==========================================================
Options exercisable at:
February 28, 1995 1,424,844 $14.97 - 29.00
February 29, 1996 1,383,422 $16.06 - 29.00
February 28, 1997 1,321,281 $16.06 - 29.00
- ----------------------------------------------------------
Note 15: Retirement Plans
The Company sponsors two defined contribution plans and several defined
benefit retirement plans.
The defined contribution plans cover substantially all salaried, sales
and certain hourly employees in the United States and Canada. The Company
makes contributions equal to 50% of the participating employee's
contributions subject to certain limitations. Employer contributions,
which are invested in shares of the Company's common stock, were $2.1
million in fiscal 1997, $1.8 million in fiscal 1996 and $1.7 million in
fiscal 1995.
In the United States and Canada, defined benefit plans cover
substantially all employees. Benefits are based primarily on years of
credited service and average compensation or stated amounts for each year
of service. These plans are generally funded by contributions to tax-
exempt trusts in amounts sufficient to provide assets to cover the plans'
obligations. Plan assets consist principally of listed equity securities,
fixed income securities and cash equivalents.
Net pension cost (credit) for the defined benefit plans was as
follows:
(in thousands) 1997 1996 1995
- -------------------------------------------------------------------
Service costs $ 2,492 $ 1,946 $ 2,483
Interest costs 12,438 12,767 12,102
Actual return on plan assets (30,382) (39,431) 2,337
Net amortization and deferral 14,834 23,891 (16,760)
- -------------------------------------------------------------------
Net pension cost (credit) $ (618) $ (827) $ 162
===================================================================
The funded status of the defined benefit plans and the amounts
recognized in the balance sheets were as follows:
1997 1996
-------------------- ---------------------
Assets Benefit Assets Benefit
Exceed Obli- Exceed Obli-
Benefit gations Benefit gations
Obli- Exceed Obli- Exceed
(in thousands) gations Assets gations Assets
- ------------------------------------------------------------------------
Actuarial present value
of benefit obligations:
Vested $148,102 $ 11,169 $152,786 $ 10,022
Nonvested 2,753 1,926 5,522 1,844
- ------------------------------------------------------------------------
Accumulated benefit
obligations 150,855 13,095 158,308 11,866
Effect of future
salary increases 6,227 351 3,064 548
- ------------------------------------------------------------------------
Projected benefit
obligations 157,082 13,446 161,372 12,414
Plan assets at
fair value 202,131 - 185,095 -
- ------------------------------------------------------------------------
Plan assets in
excess of (less
than) projected
benefit obligations 45,049 (13,446) 23,723 (12,414)
Unamortized prior
service cost 5,217 - 5,601 -
Unrecognized effect
from past experience
different from that
assumed (13,899) 4,145 5,758 4,932
Unrecognized transition
(assets) obligations,
net of amortization (9,428) - (11,013) 428
Adjustment required
to recognize minimum
pension liability - (3,794) - (4,812)
- ------------------------------------------------------------------------
Prepaid (accrued)
pension costs $ 26,939 $(13,095) $ 24,069 $(11,866)
========================================================================
The Company amortizes prior service costs and unrecognized gains and
losses on a straight-line basis over not more than 16 years. Other
assumptions used, which reflect weighted averages of the U.S. and Canadian
defined benefit plans, were as follows:
1997 1996
- -----------------------------------------------------------------------
Discount rate 7.6% 7.4%
Expected long-term return rate on assets 9.5% 9.5%
Rate of increase in future compensation 4.0% 4.0%
- -----------------------------------------------------------------------
In Venezuela, all employees are entitled to certain severance
indemnities based on compensation and cause of separation. This post-
employment arrangement qualifies as a defined benefit plan under the
provisions of Statement of Financial Accounting Standards No. 87,
"Employers' Accounting for Pensions." The Company has elected to define
the vested benefit obligation for this arrangement as the actuarial
present value of vested benefits the employee is entitled to if
immediately separated at the measurement date. This arrangement has not
been funded and the corresponding expense recognized was $2.9 million in
fiscal 1997 and $3.8 million in each of fiscal 1996 and 1995.
Note 16: Post-retirement Health and Life Insurance Benefits
The Company provides post-retirement health and life insurance benefits
for retirees in the United States and Canada who meet minimum age and
service requirements. The costs of the U.S. life insurance benefits are
funded over the employees' active working lives through contributions to
an insurance continuation fund maintained by an insurance company. Life
insurance benefits for Canadian retirees are funded on a pay-as-you-go
basis through an insurance company. Health care benefits for U.S. and
Canadian retirees are provided under a self-insured program administered
by an insurance company.
The net periodic post-retirement benefit cost (credit) was as follows:
(in thousands) 1997 1996 1995
- ---------------------------------------------------------------------
Service costs $ 474 $ 222 $ 296
Interest costs 1,351 999 1,134
Net amortization and deferral (1,417) (1,785) (1,689)
- ---------------------------------------------------------------------
Net post-retirement
benefits cost (credit) $ 408 $ (564) $ (259)
=====================================================================
The actuarial present value of benefit obligations and the amounts
recognized in the consolidated balance sheets were as follows:
(in thousands) 1997 1996
- -------------------------------------------------------------------
Actuarial present value of benefit obligations:
Retirees $12,952 $ 8,740
Fully eligible active plan participants 1,640 1,242
Other active plan participants 3,930 2,719
- -------------------------------------------------------------------
Accumulated benefit obligations 18,522 12,701
Plan assets at fair value 535 -
- -------------------------------------------------------------------
Accumulated obligation in excess of plan assets 17,987 12,701
Unrecognized effect from past experience
different from that assumed (1,319) 3,894
Unrecognized effect from plan amendments 443 2,291
- -------------------------------------------------------------------
Accrued post-retirement cost $17,111 $18,886
===================================================================
The assumed annual rate of future increases in per capita cost of
health care benefits ranged from 4% to 9.5% for each of the next 8 years
and 4% thereafter. These trend rates reflect the Company's prior
experience, plan provisions and management's expectation of future rates.
Increasing the health care cost trend by 1% in each year would result in
an insignificant change to the accumulated benefit obligation and the
service and interest costs. The weighted average discount rates used were
7.6% and 7.5% in fiscal 1997 and 1996, respectively.
Note 17: Multifoods' Business Segments
The Company's business segments are Foodservice Distribution, North
America Foods and Venezuela Foods. The Company's North America Foods
segment was previously named Bakery.
The Foodservice Distribution segment includes the Company's vending
distribution business, the limited-menu distribution business and the food
exporting business. The Company is the largest U.S. vending distributor
of food products to vending and office coffee service operators. The
limited-menu distribution business is a leading specialty distributor in
the United States to independent pizza restaurants and other select
limited-menu operators, including sandwich establishments. The business
distributes a broad selection of items including cheeses, meats, snacks
and paper goods. The Company's food exporting business markets and
exports primarily branded and commodity food products to customers in
diverse geographic areas, including Eastern Europe, Asia and the Caribbean
region. The food exporting business has a major customer that distributes
food products in Russia. In fiscal 1997, earnings on sales to this
customer accounted for approximately 14% of the Company's consolidated
operating earnings before unusual items.
The North America Foods segment consists of two divisions, North
America Bakery and Consumer Products. The North America Bakery division
markets bakery products such as bakery mixes, frozen desserts and flour to
retail, in-store and wholesale bakeries and foodservice customers in the
United States and Canada. The Company's consumer products division sells
flour, bakery mixes and condiments to consumers primarily in Canada. As
of February 28, 1997, the Company had approximately $67 million of net
assets located in Canada.
The Venezuela Foods segment includes consumer products for home
baking, bakery products for foods processors and commercial and retail
bakeries, and products for the agricultural sector. Consumer products
include wheat flour, corn flour, whole grain rice and rice flour. The
Company's operations in Venezuela are subject to risks inherent in
operating under a different legal and political system along with a
difficult economic environment. Among these risks are inflation, currency
volatility, possible limitations on foreign investment, exchangeability of
currency, dividend repatriation and changes in existing tax laws. The
Company's Venezuelan operations are also dependent on raw material imports
for many of its products. As of February 28, 1997, the Company had
approximately $75 million of net assets located in Venezuela.
Divested Businesses consists principally of the frozen specialty foods
and meats businesses which were divested in fiscal 1995 and the surimi
seafood business which was divested in fiscal 1996.
Net Operating Unusual Operating
(in millions) Sales Costs Items Earnings
- ----------------------------------------------------------------------------
1997:
Foodservice Distribution $1,772.4 $(1,759.8) $ (5.1) $ 7.5
North America Foods 476.7 (455.9) (11.4) 9.4
Venezuela Foods 346.8 (328.2) - 18.6
Corporate Expenses - (9.8) (3.6) (13.4)
- ----------------------------------------------------------------------------
Total $2,595.9 $(2,553.7) $(20.1) $22.1
============================================================================
1996:
Foodservice Distribution $1,716.9 $(1,694.6) $ (9.4) $ 12.9
North America Foods 459.7 (438.9) - 20.8
Venezuela Foods 328.5 (309.4) - 19.1
Divested Businesses 18.1 (15.6) 9.9 12.4
Corporate Expenses - (8.9) (6.2) (15.1)
- ----------------------------------------------------------------------------
Total $2,523.2 $(2,467.4) $ (5.7) $ 50.1
============================================================================
1995:
Foodservice Distribution $1,395.9 $(1,378.4) $ (6.2) $ 11.3
North America Foods 459.2 (436.8) - 22.4
Venezuela Foods 317.7 (297.8) - 19.9
Divested Businesses 122.3 (110.4) 34.2 46.1
Corporate Expenses - (11.4) (1.8) (13.2)
- ----------------------------------------------------------------------------
Total $2,295.1 $(2,234.8) $ 26.2 $ 86.5
============================================================================
1997 1996 1995
--------------------------------- ----------------------------------- ------------------------------------
Depreciation Depreciation Depreciation
Capital and Capital and Capital and
(in millions) Expenditures Amortization Assets Expenditures Amortization Assets Expenditures Amortization Assets
- ------------------------------------------------------------------------------------------------------------------------------
Foodservice
Distribution $ 7.3 $12.9 $437.4 $13.9 $13.3 $415.9 $ 8.4 $10.2 $371.9
North
America Foods 14.0 10.7 234.7 12.0 10.0 241.8 15.2 9.1 251.0
Venezuela Foods 5.8 6.7 191.8 5.0 5.2 125.8 5.5 3.1 147.1
Divested
Businesses - - - .1 .8 - 1.5 3.9 39.6
Corporate .4 .4 51.4 .2 .5 38.8 .2 .7 37.1
- -----------------------------------------------------------------------------------------------------------------------------
Total $27.5 $30.7 $915.3 $31.2 $29.8 $822.3 $30.8 $27.0 $846.7
=============================================================================================================================
Amounts expended for business acquisitions are not considered as part
of capital expenditures. Assets are identifiable to business segments
either by their direct use or by allocations when used jointly by two
or more segments.
Note 18: Quarterly Summary (unaudited)
Operating
Net Operating Unusual Earnings
(in millions) Sales Costs Items (Loss)
- -----------------------------------------------------------------------------
First Quarter - 1997
Foodservice Distribution $443.3 $(438.2) $ - $ 5.1
North America Foods 111.6 (109.5) - 2.1
Venezuela Foods 71.2 (69.1) - 2.1
Corporate Expenses - (2.7) (3.6) (6.3)
- ----------------------------------------------------------------------------
Total $626.1 $(619.5) $ (3.6) $ 3.0
============================================================================
First Quarter - 1996
Foodservice Distribution $416.4 $(410.8) $ - $ 5.6
North America Foods 108.0 (106.4) - 1.6
Venezuela Foods 96.7 (90.2) - 6.5
Divested Businesses 13.5 (11.9) - 1.6
Corporate Expenses - (3.2) - (3.2)
- ----------------------------------------------------------------------------
Total $634.6 $(622.5) $ - $ 12.1
============================================================================
Second Quarter - 1997
Foodservice Distribution $432.7 $(432.3) $ - $ .4
North America Foods 114.4 (110.8) - 3.6
Venezuela Foods 87.4 (78.5) - 8.9
Corporate Expenses - (2.6) - (2.6)
- ----------------------------------------------------------------------------
Total $634.5 $(624.2) $ - $ 10.3
============================================================================
Second Quarter - 1996
Foodservice Distribution $400.3 $(396.5) $ (9.4) $ (5.6)
North America Foods 110.1 (105.4) - 4.7
Venezuela Foods 106.3 (97.8) - 8.5
Divested Businesses 4.6 (3.7) 9.9 10.8
Corporate Expenses - (2.5) (6.2) (8.7)
- ----------------------------------------------------------------------------
Total $621.3 $(605.9) $ (5.7) $ 9.7
============================================================================
Third Quarter - 1997
Foodservice Distribution $461.5 $(456.9) $ - $ 4.6
North America Foods 139.7 (130.4) - 9.3
Venezuela Foods 95.9 (90.6) - 5.3
Corporate Expenses - (2.3) - (2.3)
- ----------------------------------------------------------------------------
Total $697.1 $(680.2) $ - $ 16.9
============================================================================
Third Quarter - 1996
Foodservice Distribution $440.8 $(432.9) $ - $ 7.9
North America Foods 126.1 (117.9) - 8.2
Venezuela Foods 65.2 (64.8) - .4
Corporate Expenses - (1.5) - (1.5)
- ----------------------------------------------------------------------------
Total $632.1 $(617.1) $ - $ 15.0
============================================================================
Fourth Quarter - 1997
Foodservice Distribution $434.9 $(432.4) $ (5.1) $ (2.6)
North America Foods 111.0 (105.2) (11.4) (5.6)
Venezuela Foods 92.3 (90.0) - 2.3
Corporate Expenses - (2.2) - (2.2)
- ----------------------------------------------------------------------------
Total $638.2 $(629.8) $(16.5) $ (8.1)
============================================================================
Fourth Quarter - 1996
Foodservice Distribution $459.4 $(454.4) $ - $ 5.0
North America Foods 115.5 (109.2) - 6.3
Venezuela Foods 60.3 (56.6) - 3.7
Corporate Expenses - (1.7) - (1.7)
- ----------------------------------------------------------------------------
Total $635.2 $(621.9) $ - $ 13.3
============================================================================
First Quarter Second Quarter Third Quarter Fourth Quarter Total Year
(in millions, --------------- ---------------- --------------- --------------- ----------------
except per share data) 1997 1996 1997 1996 1997 1996 1997 1996 1997 1996
- ----------------------------------------------------------------------------------------------------------------------------
Gross profit $89.3 $99.9 $94.8 $100.5 $104.6 $95.8 $91.8 $91.3 $380.5 $387.5
Net earnings (loss) (.4)(a) 4.6 4.0 7.0(b) 8.6 6.7 (9.4)(c) 5.8 2.8 24.1
Per share (.02)(a) .25 .22 .38(b) .48 .38 (.53)(c) .32 .15 1.33
Dividends paid per share
of common stock .20 .20 .20 .20 .20 .20 .20 .20 .80 .80
Market price of
common stock:
Close 19 7/8 21 1/8 16 5/8 22 1/2 15 3/4 22 3/8 21 1/8 18 5/8 21 1/8 18 5/8
High 21 3/8 21 7/8 20 3/8 23 17 1/2 23 7/8 22 23 7/8 22 23 7/8
Low 18 1/4 18 1/8 16 1/4 20 5/8 15 1/8 20 1/4 15 5/8 17 1/4 15 1/8 17 1/4
- ----------------------------------------------------------------------------------------------------------------------------
(a) Includes a net after-tax charge of $2.2 million, or 12 cents per share
from unusual items.
(b) Includes a net after-tax benefit of $0.5 million, or 2 cents per share from
unusual items.
(c) Includes a net after-tax charge of $12.6 million, or 71 cents per share
from unusual items.
Six-Year Comparative Summary
Fiscal year ended the last day of February
(dollars and shares in millions,
except per share data) 1997 1996 1995 1994 1993 1992
- --------------------------------------------------------------------------------------------------------------------------
Consolidated Summary of Operations
Net sales $2,595.9 $2,523.2 $2,295.1 $2,158.4 $2,199.2 $2,264.8
Cost of sales (2,215.4) (2,135.7) (1,901.9) (1,743.9) (1,783.4) (1,817.8)
Delivery and distribution (167.8) (162.9) (146.2) (141.8) (141.7) (138.0)
Selling, general and administrative (170.5) (168.8) (186.7) (204.9) (199.0) (224.1)
Unusual items (20.1) (5.7) 26.2 (70.0) - 3.4
Interest, net (16.8) (17.9) (11.4) (10.1) (10.9) (17.2)
Other income (expense), net (.3) (4.4) (3.4) (.4) .1 (1.6)
Earnings (losses) from unconsolidated affiliates - - - (12.2) 1.8 (2.1)
- --------------------------------------------------------------------------------------------------------------------------
Earnings (loss) before income taxes and cumulative
effect of accounting change 5.0 27.8 71.7 (24.9) 66.1 67.4
Income taxes (2.2) (3.7) (14.7) 11.5 (24.9) (28.3)
- --------------------------------------------------------------------------------------------------------------------------
Earnings (loss) before cumulative
effect of accounting change 2.8 24.1 57.0 (13.4) 41.2 39.1
Cumulative effect of accounting change, net of taxes - - - - - (17.1)
- --------------------------------------------------------------------------------------------------------------------------
Net earnings (loss) $ 2.8 $ 24.1 $ 57.0 $ (13.4) $ 41.2 $ 22.0
==========================================================================================================================
Earnings (loss) per share of common stock:
Before cumulative effect of accounting change $ .15 $ 1.33 $ 3.16 $ (.72) $ 2.13 $ 2.00
Cumulative effect of accounting change - - - - - (.88)
- --------------------------------------------------------------------------------------------------------------------------
Net earnings (loss) per share of common stock $ .15 $ 1.33 $ 3.16 $ (.72) $ 2.13 $ 1.12
==========================================================================================================================
Year-End Financial Position
Current assets $ 563.3 $ 459.0 $ 471.7 $ 439.3 $ 415.9 $ 413.3
Current liabilities 372.0 272.3 316.0 301.7 243.5 285.4
Working capital 191.3 186.7 155.7 137.6 172.4 127.9
Property, plant and equipment, net 225.4 226.5 228.0 245.9 245.7 221.3
Long-term debt 202.3 202.9 183.1 195.1 167.0 103.9
Shareholders' equity 289.6 299.6 291.1 250.0 322.0 313.1
Total assets 915.3 822.3 846.7 814.8 803.5 767.7
- --------------------------------------------------------------------------------------------------------------------------
Dividends Paid
Preferred stock $ - $ .1 $ .2 $ .2 $ .2 $ .2
Common stock 14.5 14.4 14.4 15.2 15.4 15.4
Per share of common stock .80 .80 .80 .80 .80 .80
- --------------------------------------------------------------------------------------------------------------------------
Other Financial Data
Current ratio 1.5:1 1.7:1 1.5:1 1.5:1 1.7:1 1.4:1
Equity per share of common stock $ 16.08 $ 16.66 $ 16.16 $ 13.63 $ 16.64 $ 16.19
Debt to total capitalization 51% 45% 45% 50% 37% 33%
Depreciation $ 26.6 $ 25.3 $ 22.8 $ 24.9 $ 23.8 $ 24.7
Capital expenditures, excluding acquisitions $ 27.5 $ 31.2 $ 30.8 $ 51.9 $ 45.7 $ 51.2
Average common shares outstanding 18.0 18.0 18.0 18.9 19.3 19.5
Number of common shareholders 5,087 4,930 5,234 4,939 5,097 5,113
Number of employees 7,176 7,115 7,495 8,390 8,341 8,231
Market price per share of common stock:
Close $ 21 1/8 $ 18 5/8 $ 18 5/8 $ 17 3/8 $ 25 3/4 $ 26 3/8
High $ 22 $ 23 7/8 $ 19 5/8 $ 26 3/8 $ 28 7/8 $ 31 1/2
Low $ 15 1/8 $ 17 1/4 $ 15 1/8 $ 16 3/4 $ 23 1/4 $ 23 7/8
- --------------------------------------------------------------------------------------------------------------------------