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
February 28, 1994; or
/ / Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the transition period
from _______ to _______.
Commission file number: 33-12173
AMERICOLD CORPORATION
(Exact name of registrant as specified in its charter)
Oregon 93-0295215
(State of Incorporation) (I.R.S. Employer Id. No.)
7007 S. W. Cardinal Lane, Suite 135,
Portland, Oregon 97224
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including
area code: (503) 624-8585
------------
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: 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.
/X/ Yes / / 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/
Aggregate market value of voting stock held by non-affiliates on
May 1, 1994: $6,971,244 based upon last known transaction in the
voting stock of the Company.
Number of shares outstanding of the registrant's common stock,
par value $.01 per share, as of May 1, 1994: 4,863,999 shares.
DOCUMENTS INCORPORATED BY REFERENCE
None
Exhibit Index located at page 83.
AMERICOLD CORPORATION
FORM 10-K
INDEX
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Part I Page
- - ------ ----
Item 1. Business. . . . . . . . . . . . . . . . . . . . 3
Item 2. Properties. . . . . . . . . . . . . . . . . . . 11
Item 3. Legal Proceedings . . . . . . . . . . . . . . . 13
Item 4. Submission of Matters to a Vote of
Security Holders. . . . . . . . . . . . . . . . 14
Part II
- - -------
Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters . . . . . . . . 15
Item 6. Selected Financial Data . . . . . . . . . . . . 16
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operation. . 17
Item 8. Financial Statements and Supplementary Data . . 26
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure. . . . . 26
Part III
- - --------
Item 10. Directors and Executive Officers of the
Registrant. . . . . . . . . . . . . . . . . . . 27
Item 11. Executive Compensation. . . . . . . . . . . . . 30
Item 12. Security Ownership of Certain Beneficial
Owners and Management . . . . . . . . . . . . . 40
Item 13. Certain Relationships and Related Transactions 41
Part IV
- - -------
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K . . . . . . . . . . . . . . 42
SIGNATURES
SUPPLEMENTAL INFORMATION
EXHIBIT INDEX
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PART I
ITEM 1. BUSINESS
GENERAL
- - -------
Americold Corporation ("Americold" or the "Company"), an Oregon
corporation, was founded in 1911, reincorporated in 1931 and
operated as Termicold Corporation until 1982. In December 1982,
Americold was acquired by Beatrice Companies, Inc. ("Beatrice"),
which combined its public refrigerated warehouse facilities,
operating under various names, with Americold. In December 1986,
Americold was purchased (the "Acquisition") by a private group
consisting of affiliates of Kelso & Company, Inc. ("Kelso"),
certain institutional investors, and certain key employees and
members of Americold's management (the "Management Group").
According to industry and government information on general
refrigerated warehouse storage capacity, Americold is the
nation's largest supplier of public refrigerated warehouse space,
with approximately a 16% share of total publicly-available
freezer storage capacity and approximately 14% of total publicly-
available refrigerated storage space in the United States. As of
the last day of February 1994, the Company's network of 54
refrigerated warehouse facilities in 15 states provided a total
storage capacity of approximately 231.8 million cubic feet.
Included in the Company's total of 231.8 million cubic feet of
storage capacity is approximately 3.2 million cubic feet of
storage capacity added as a result of the expansion of the
Fogelsville, Pennsylvania facility in September 1993.
The Company operates certain nonwarehousing businesses in
selected locations. These include transportation services and a
limestone quarry. The Company previously operated a vital
records center, which it closed during fiscal 1994.
As used herein, the terms "Americold" or the "Company" refer to
Americold Corporation and its subsidiaries unless the context
indicates otherwise. All references to fiscal 1994, 1993 and
1992 refer to the years ended the last day of February 1994, 1993
and 1992, respectively.
SERVICES
- - --------
Americold's principal service is food product preservation,
handling and distribution utilizing temperature-controlled
warehouse space. Approximately 94% of the storage space operated
by the Company is freezer space (0 degrees F. and below), with
the remaining space divided between cooler space (28 degrees F.
and above) and unrefrigerated dry storage space. The Company
also provides customers with a wide range of supplemental
services, including electronic data interchange, which provides
customers with
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electronic data communication services to expedite the exchange
of information regarding product storage and shipment; shipping
programs and transportation services provided through its
Americold Transportation Systems ("ATS") unit; and SUPERCOLD
[registered trademark symbol] freezer storage provided at 11 of
the Company's facilities for the preservation of products such as
ice cream, which requires storage at temperatures as low as -20
degrees F. The Company also provides product repacking and
preparation of products for shipment, and the leasing of
warehouse space.
Most of the Company's warehouses may be classified as combination
production and distribution facilities, although some provide
solely production or distribution services. Production
facilities differ from distribution facilities in that they
typically serve a relatively small number of customers located
nearby. These customers store large quantities of processed or
partially processed products in the facility until they are
further processed or shipped to the next stage of the production
or distribution process. Distribution facilities primarily serve
a larger number of customers who store smaller quantities of a
larger variety of finished products before they are shipped to
end-use customers, such as food retailers and food service
companies.
The Company's strategy calls for an increased emphasis in third
party logistics services. Logistics service offerings to
customers will include warehouse deployment decisions, network
optimization, carrier management, consolidated shipping, specific
load tendering with optimized carrier and route selection, and
freight payment and claims management. The Company is in the
process of selecting and installing customized computer hardware
and software to support these expanded logistics services. A
letter of intent has been signed with one customer to provide
such logistics services beginning in fiscal 1995.
In February 1994, Americold invested in Non-Stop Logistics
Corporation ("Non-Stop"), a corporation specializing in logistic
systems, to facilitate the adaptation of Non-Stop's full range of
just-in-time logistic technologies and physical services to the
distribution of refrigerated and frozen food grocery products.
This is a continuation of the Company's implementation of plans
to develop a system of technical resources to provide full-scope
logistic services.
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REVENUES AND CUSTOMERS
- - ----------------------
Americold's net sales for fiscal 1994, 1993 and 1992 are detailed
below by activity:
NET SALES (Dollars in Millions)
Fiscal 1994 Fiscal 1993 Fiscal 1992
---------------------------------------------
Amount % Amount % Amount %
---------------------------------------------
Storage $ 98.5 49.5% $101.0 51.5% $106.8 53.2%
Handling 65.3 32.8% 60.3 30.8% 62.3 31.0%
Freezing 6.5 3.3% 6.2 3.2% 6.4 3.2%
Leasing 7.4 3.7% 9.5 4.8% 10.0 5.0%
Other 3.4 1.7% 3.8 1.9% 5.8 2.9%
------------ ------------ ------------
Net warehousing sales $181.1 91.0% $180.8 92.2% $191.3 95.3%
Net nonwarehousing sales 17.8 9.0% 15.3 7.8% 9.4 4.7%
------------ ------------ ------------
Total net sales $198.9100.0% $196.1100.0% $200.7100.0%
============ ============ ============
Americold's customers consist primarily of national, regional and
local frozen food processing firms, traders, wholesalers,
retailers and food service organizations. Although the Company
provides services to approximately 3,200 customers, in fiscal
1994 the 10 largest customers accounted for approximately 55% of
total net sales. One customer of the Company, H. J. Heinz Co.
and subsidiaries, accounted for approximately 18.0% of the
Company's net sales in fiscal 1994. The Company believes that
the risk to the Company of losing such large customers has been
reduced in several cases through long-term storage and operating
agreements and by the fact that services are provided to certain
large customers in multiple locations.
Warehousing sales are seasonal, depending upon the timing and
availability of crops grown for frozen food production and the
seasonal build-up of certain products for holiday consumption.
The third quarter, ending each November 30, normally represents
the strongest sales quarter.
In several instances, the Company's production warehouses are
located adjacent to customers' processing facilities. At some of
these warehouses, customers guarantee a minimum quantity of
product to be stored in return for guaranteed space pursuant to
long-term contracts. At several locations, the Company leases
space to manufacturers or distributors on a long-term, fixed rate
basis.
At a number of facilities, particularly those located adjacent to
customers' processing facilities, a majority and in some cases
virtually all business is attributable to a single user of the
facility. However, management has observed in the past that, to
the extent products produced at locations adjoining the Company's
facilities are commodities grown in the surrounding area, demand
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for the products has been more significant to the long-term sales
and profitability of the facility than has been the viability of
a single producer.
COMPETITION
- - -----------
Americold operates in an environment in which location, customer
mix, warehouse size, service level and price are the principal
competitive factors. Since frozen food manufacturers and
distributors incur transportation costs which are typically
significantly greater than warehousing costs, location is a major
competitive factor. In addition, in certain locations, customers
depend upon shipping products in pooled shipments with products
of other customers going to the same markets. In these cases,
the mix of customers in a warehouse can significantly influence
the cost of delivering products to markets. The size of a
warehouse is important because large customers prefer to have all
of the products needed to serve a given market in a single
location and to have the flexibility to increase storage during
seasonal peaks at the same location. The Company believes that
customers generally will select a warehouse facility based upon
service levels and price, if there are several warehouse
locations which satisfy its transportation, customer mix and size
requirements.
Competition is national, regional and local in nature. There are
no significant barriers to entry into the market in which the
Company operates, permitting a relatively large number of smaller
competitors to enter the market. On the national level,
Americold competes with United Refrigerated Services, Inc.
("URS"), United States Cold Storage, Inc., Christian Salvesen,
Inc. and Millard Refrigerated Services, which, according to
industry information, accounted for approximately 6.4%, 4.2%,
2.7% and 2.7% of public freezer space, respectively, in 1992, the
latest year for which the information is available to the
Company. On the regional and local level, there are many smaller
warehouse operators that compete with the Company and, according
to industry information, warehouse operators who own or control
less than 25 million cubic feet each of refrigerated space or
freezer space accounted for approximately 72% of all public
refrigerated storage space in 1992. The Company believes that
competition from these local and regional competitors is more
significant because national competitors often do not compete in
the same markets as the Company. In addition, the Company's
customers may divert business from the public warehousing sector
by building their own refrigerated warehouse facilities.
In March 1993, Kelso acquired approximately 70% of the common
equity of URS. Kelso now owns a controlling interest in both the
Company and URS. Procedures have been implemented by all the
parties which are intended to address possible conflicts of
interest that might arise.
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Over the past several years, there has been a trend in the
domestic frozen food industry of increasing shipments of some
frozen fruits and vegetables from other countries due to lower
production costs and other economic factors. Such imports could
adversely affect the Company's food production-related business.
However, some of these imports will require domestic public
refrigerated warehouse services that the Company may provide.
The Company continues to look for opportunities to add warehouse
locations and to expand its existing locations. While the
Company added approximately 29 million cubic feet of freezer
space over the last six years, the public refrigerated warehouse
industry has grown at a faster pace, adding approximately 340
million cubic feet of freezer space between 1987 and 1993 based
on data prepared in October 1993 by the United States Department
of Agriculture. As a result, the Company's national market share
of freezer space during such period decreased from approximately
18% to approximately 16%. Although some of the freezer space
added by competitors has adversely affected the level of business
at certain of the Company's warehouses, the majority has been in
areas where the Company does not directly compete.
ORGANIZATION
- - ------------
The Company's operations are headquartered in Portland, Oregon,
and the Company maintains an office in Gloucester, Massachusetts.
The Company's warehouse facilities are organized into six
districts. Each district is managed by a District Manager to
whom the respective warehouse General Managers report. General
Managers are responsible for one to five warehouses and are
supported at the district and corporate levels by certain
accounting, marketing, logistics, engineering, data processing
and operational functions.
SALES AND MARKETING
- - -------------------
Sales responsibility at the Company resides primarily with
district and local management who are supported at the national
level by the Company's executive and sales and marketing staff.
Marketing is principally a corporate management function.
Each warehouse, or group of one to five warehouses, has a General
Manager. It is the responsibility of each warehouse or group's
management to understand and be responsive to the needs of its
individual marketplace and to adapt sales efforts accordingly.
Sales is a major activity of each General Manager. Though the
Company operates nationally, prices charged by the Company tend
to reflect local competition.
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Local sales efforts are supplemented by the corporate sales and
marketing department, which supplies sales support, national
account pricing guidance and national advertising, and monitors
relationships with large district and national accounts. The
Company employs two sales managers and a sales representative,
all reporting to a director of sales in Portland, Oregon. These
sales managers are located in California and Colorado, while the
sales representative is located in Massachusetts. In addition, a
primary sales development and pricing contact is assigned to each
of the Company's top 100 accounts. Certain customers storing
product in multiple facilities, but who are not among the
Company's top 100 accounts, are also offered a similar contact.
THIRD PARTY LOGISTICS
- - ---------------------
The Company hired a senior vice president of logistics to assist
in carrying out the Company's plan to offer expanded logistics
services to its customers. Located in Portland, Oregon, this
person has focused on the establishment of service offerings to
customers.
The primary responsibility for logistics services resides with
the senior vice president and the ATS staff. As of February 28,
1994, there were 21 ATS employees located at various warehouse
locations and at the Corporate Office in Portland, Oregon, who
work with customers and truckers to meet the customers'
transportation needs. As a result of the anticipated expansion
in logistics service offerings, the size of the ATS staff is
expected to increase during fiscal 1995.
EMPLOYEES
- - ---------
The Company had approximately 1,783 employees as of February 28,
1994. A breakdown of employees by function is set forth below:
EMPLOYEE BREAKDOWN BY FUNCTION
Number of
Function Employees
-------- ---------
Operations 1,401
Administration 382
-----
Total 1,783
=====
Approximately 692 of the Company's employees are covered by union
contracts. Currently, 27 facilities employ unionized labor while
27 facilities are non-unionized. Union contracts for individual
locations are with the local chapters of national unions,
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principally the International Brotherhood of Teamsters, and
generally have staggered expiration dates. During the past three
years, there have been no strikes at the Company's facilities,
and the Company believes its relationships with its employees are
satisfactory.
PATENTS, LICENSES AND TRADEMARKS
- - --------------------------------
The Company's operations are not dependent upon any single or
related group of patents, licenses, franchises or concessions.
The Company's operations are also not dependent upon a single
trademark or service mark, although the Company has registered
the Americold [registered trademark symbol] and SUPERCOLD
[registered trademark symbol] service marks with the United
States Patent and Trademark Office.
RESEARCH AND PRODUCT DEVELOPMENT
- - --------------------------------
The Company does not operate in an industry in which research and
development plays an important role. Although the Company has
not made any material expenditure with regard to Company-
sponsored research and development in the past three fiscal
years, the Company is expending resources in the expansion of
services into the logistics area through the hiring of a new
executive officer, purchasing new computer hardware and software,
and the investment in Non-Stop. The Company also continues to
pursue methods of reducing energy costs at its facilities.
ENVIRONMENTAL COSTS
- - -------------------
The Company's capital expenditures, earnings and competitive
position are not materially affected by compliance with federal,
state and local provisions which have been enacted or adopted
regulating the discharge of materials into the environment, or
otherwise relating to protection of the environment.
KANSAS CITY, KANSAS WAREHOUSE FIRE
- - ----------------------------------
In December 1991, a fire occurred at the Company's Kansas City,
Kansas underground warehouse facility. As a result of the fire,
the Company's warehousing activities in Kansas City have operated
at a substantially reduced level. Although the quarry operations
were resumed in late January 1992, the vital records center was
located in the area damaged by the fire. The Company permanently
closed the vital records center during the first quarter of
fiscal 1994.
Subsequent to the end of fiscal 1994, the Company settled all of
the material lawsuits in connection with the record storage and
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warehouse receipt claims brought by third parties alleging
damages as a result of the Kansas City, Kansas warehouse fire.
The Company also has settled its first party claims with its
insurance carriers for business interruption, property damage and
other costs. However, the United States Department of
Agriculture's (USDA) claim submitted to the Company for
approximately $67.3 million for fire-related damage to commodity
food-stuffs stored and computer equipment utilized at the
Company's Kansas City, Kansas warehouse facility is still
pending. The Company has also reached an agreement in principle
for settlement of the lawsuits filed by tenants of the Kansas
City, Kansas facility and their insurers. This settlement
requires no cash payment by the Company, but only an assignment
of certain insurance coverage and other claims of the Company.
For more information about the circumstances and effects of the
fire, see "Legal Proceedings" and "Management's Discussion and
Analysis of Financial Condition and Results of Operation - Effect
of Kansas City, Kansas Warehouse Fire".
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ITEM 2. PROPERTIES
As of February 28, 1994, the Company owned or leased 54
facilities in 15 states. Although most of the facilities are
owned by the Company, 14 facilities comprising approximately
10.8% of the Company's total cubic feet of storage space are
leased or subleased by the Company under operating-type lease
arrangements. Four facilities with approximately 5.3% of the
total cubic feet of storage space are leased, in whole or in
part, under financing lease or capitalized-type lease
arrangements. Five facilities, or portions thereof, with
approximately 6.2% of the total cubic feet of storage space, are
situated on leased land.
The Company's facilities are typically single-story concrete
buildings constructed at dock height elevation, with very heavy
insulation and vapor barrier protection. Refrigeration is
typically supplied by screw-type compressors in ammonia-based
cooling systems. One of the six cooling systems at the Company's
Kansas City facility, however, is freon-based. The Company
expects this freon-based system will be converted to an ammonia-
based system by the end of fiscal 1995. Facilities are served by
truck as well as by rail in many instances. Buildings generally
have sufficient land space surrounding them to afford ample area
for truck parking and storage of unused pallets and equipment.
Many facilities also have room for expansion.
The following table lists the refrigerated warehouse facilities
owned or leased by the Company as of February 28, 1994. It also
shows the 32 facilities that presently secure the Company's first
mortgage bonds. As a result of the fire at Kansas City, Kansas,
the Company lost approximately 5.0 million cubic feet of dry
storage space. The Company plans to request a required consent
under the First Mortgage Bond Indenture to allow the Company to
use the net insurance proceeds allocable to real property
received as a result of the fire for the acquisition,
construction or improvement of any property or properties
securing the Company's first mortgage bonds. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operation - Liquidity and Capital Resources".
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REFRIGERATED WAREHOUSE FACILITIES
Total
Storage SpaceType ofOwned or
(Cubic Ft./Mil)Facility(*) Leased
--------------------------------
Burbank (W. Magnolia Blvd.), California0.8P/DOwned
Fullerton (S. Raymond Ave.), California4.0P/DLeased(1)
Los Angeles (Corona St.), California0.7D Leased(1)
Los Angeles (Jesse St.), California2.7P/D Owned(4)
Oakland (E. 11th St.), California1.9 D Leased(1)
Pajaro (Salinas Rd.), California0.8 P/D Leased(1)
San Francisco (Donner Ave.), California2.5DLeased(1)
Turlock (5th St.), California2.5 P/D Owned(4)
Turlock (S. Kilroy Rd.), California3.0P/D Owned(4)
Watsonville (W. Riverside Dr.), California5.2P/DOwned(2)(4)
Watsonville (Second St.), California1.5P/D Leased(1)
Watsonville (Hwy One), California3.6 P/D Leased(1)
Denver (E. 50th St.), Colorado2.8 P/D Owned(2)/Leased(3)(4)
Denver (N. Washington St.), Colorado0.5P/D Leased(1)
Denver (N. Bannock St.), Colorado1.5 P/D Leased(1)
Denver (Ivy St.), Colorado 0.7 P/D Leased(1)
Bartow (U. S. Highway 17), Florida1.2 P/D Owned(2)(4)
Plant City (S. Alexander St.), Florida0.9P/DOwned
Tampa (N. 50th St.), Florida 4.1 P/D Owned/Leased(3)
Tampa (S. Lois Ave.), Florida0.4 D Owned
Tampa (Shoreline Dr.), Florida0.8 D Owned(2)
Burley (U.S. Highway 30), Idaho5.5 P/D Owned(2)(6)
Nampa (4th St. N.), Idaho 8.0 P Owned(4)
Chicago (S. State St.), Illinois2.9 P/D Leased(1)
Chicago (S. Blue Island Ave.), Illinois2.9P/DLeased(1)
Bettendorf (State St.), Iowa 8.9 P/D Owned(4)
Fort Dodge (Maple Dr.), Iowa 3.7 D Owned(4)
Kansas City (Inland Dr.), Kansas38.4 P/D Owned(4)
Portland (Read St.), Maine 1.8 P/D Owned
Boston (Widett Ci.), Massachusetts3.1 P/D Owned(4)
Gloucester (E. Main St.), Massachusetts1.9P/DOwned(4)
Gloucester (Railroad Ave.), Massachusetts0.3P/DOwned(4)
Gloucester (Rogers St.), Massachusetts2.8P/DOwned(4)
Gloucester (Rowe Sq.), Massachusetts2.4P/D Owned(4)
Gloucester (State Fish Pier), Massachusetts0.6P/DLeased(4)
Watertown (Pleasant St.), Massachusetts4.7P/DOwned(4)
Brooks (Brooklake Rd.), Oregon4.8 P Owned(4)
Hermiston (Westland Rd.), Oregon4.0 P Owned(4)
Hillsboro (W. Washington St.), Oregon1.1P/DOwned(4)
Milwaukie (S. E. McLoughlin Blvd.), Oregon4.7DOwned(4)
Ontario (N. E. First St.), Oregon8.1 P Leased(4)
Salem (Portland Rd. N.E.), Oregon12.5 P/D Owned(4)
Woodburn (Silverton Rd.), Oregon6.3 P/D Owned(4)
Fogelsville (Mill Rd.), Pennsylvania14.0D Owned/Leased(3)(4)
Murfreesboro (Stephenson Dr.), Tennessee2.9P/DOwned(4)
Clearfield (South St.), Utah 8.6 P/D Owned(4)
Burlington (S. Walnut), Washington4.7 P/D Owned(4)
Connell (W. Juniper St.), Washington5.7P Owned(4)
Kent (S. 190th St.), Washington1.0 D Leased(1)
Moses Lake (Wheeler Rd.), Washington7.3P/D Owned(4)
Walla Walla (4-14th Ave. S.), Washington3.1POwned(4)
Wallula (Dodd Rd.), Washington1.2 P/D Owned(4)
Plover (110th St.), Wisconsin9.4 P/D Owned(4)
Tomah (Route 2), Wisconsin 2.4 P Owned(4)
-----
231.8
-----
____________________________
(*) "P" designates a production facility.
"D" designates a distribution facility.
"P/D" designates a facility that is used for both production and distribution.
(1) Operating lease.
(2) Building owned by the Company; land is leased.
(3) Capitalized lease.
(4) Security for Company's First Mortgage Bonds. See Note 7 to Consolidated Financial Statements.
(5) Financing lease.
(6) Security for mortgage payable.
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ITEM 3. LEGAL PROCEEDINGS
From time to time, the Company is named as a defendant in actions
arising out of the normal course of its business. As of May 1,
1994, the Company was not a party to any pending legal proceeding
that it believes to be material other than lawsuits filed in
connection with the Kansas City, Kansas warehouse fire. See
Item 1, "Legal Proceedings", Form 10-Q, dated October 14, 1993
for the quarter ended August 31, 1993, and Item 1, "Legal
Proceedings", Form 10-Q dated January 14, 1994 for the quarter
ended November 30, 1993. See also Part II, Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of
Operation - Effect of Kansas City, Kansas Warehouse Fire."
Subsequent to the end of the fiscal year, the Company settled all
of the material lawsuits in connection with the records storage
and warehouse receipt claims brought by third parties alleging
damages as a result of the Kansas City, Kansas warehouse fire.
The Company has also reached an agreement in principle for
settlement of the lawsuits filed by tenants of the Kansas City
facility and their insurers. This settlement requires no cash
payment by the Company, but only an assignment of certain
insurance coverage and other claims of the Company.
The Company previously settled Harcros Chemicals, Inc. versus
Americold Corporation and Americold Services Corporation (filed
in the District Court of Wyandotte County, Kansas, December 23,
1992) for an amount covered by the Company's insurance policies.
In addition, the Company settled the following eleven lawsuits,
described previously, in connection with the Kansas City fire
subsequent to the end of the fiscal year: (1) Principal Mutual
Life Insurance Company versus Americold Corporation and Americold
Services Corporation (filed in the United States District Court
for the District of Kansas, December 17, 1993); (2) Glenn Falls
Insurance Company and Metmor Financial, Inc. versus Americold
Corporation and Americold Services Corporation (filed in the
United States District Court for the District of Kansas, December
17, 1993); (3) Commerce Bank of Kansas City, N.A. versus
Americold Corporation and Americold Services Corporation (filed
in the United States District Court for the District of Kansas,
December 28, 1993); (4) Fidelity and Deposit Company of Maryland
versus Americold Corporation and Americold Services Corporation
(filed in the United States District Court of Wyandotte County,
Kansas, December 29, 1993); (5) Smith Frozen Foods, Inc., et al.
versus Americold Corporation and Americold Services Corporation
(filed in the District Court of Wyandotte County, Kansas, August
19, 1992); (6) Jianas Brothers Packaging Company versus Americold
Corporation (filed in the United States District Court for the
District of Kansas, September 25, 1992); (7) Magnolia Beef
International versus Americold Corporation (filed in the United
States District Court for the District of Kansas, September 25,
1992); (8) Meyners-
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Robinson Company, Inc. versus Americold Corporation and Americold
Services Corporation (filed in the District Court of Wyandotte
County, Kansas, September 25, 1992); (9) Earth Elements, Inc.,
dba Nature's Recipe Pet Foods Corporation versus Americold
Corporation and Americold Services Corporation (filed in the
United States District Court for the District of Kansas, November
9, 1992); (10) Savings and Loan Data Corporation, Inc., et al.
versus Americold Corporation and Americold Services Corporation
(filed in the United States District Court for the District of
Kansas, May 13, 1993); and (11) Butler Manufacturing Company,
Inc., et al. versus Americold Corporation (filed in the United
States District Court for the District of Kansas, April 1, 1992).
The settlement amounts are covered by the Company's insurance
policies. See Part I, Item 1, "Business - Kansas City, Kansas
Warehouse Fire". In addition, one of the previously described
suits, Mr. Dell Foods, Inc. versus Americold Corporation and
Americold Services Corporation (filed in the District Court of
Wyandotte County, Kansas, April 13, 1993) has been dismissed.
On February 18, 1994, the Company received notice from the United
States Attorney for the District of Kansas that a claim would be
filed on behalf of the USDA as a result of the December 1991 fire
at the Company's Kansas City, Kansas underground warehouse
facility. Although no lawsuit has been filed, the USDA has
submitted a claim in the approximate amount of $67.3 million for
fire-related damage to commodity food-stuffs stored and computer
equipment utilized at the Company's Kansas City, Kansas facility.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted by the Company to a vote of security
holders during the fourth quarter of fiscal 1994.
-14-
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
MARKET INFORMATION
- - ------------------
The Company's common stock is not listed on a securities exchange
or on NASDAQ. There is no established public trading market for
the Company's common stock. However, there are occasional trades
through certain broker/dealers.
HOLDERS
- - -------
As of May 1, 1994, there were 4,863,999 shares of the Company's
common stock outstanding, held by approximately 83 shareholders
of record. See also response to Item 12.
DIVIDENDS
- - ---------
No dividends have been declared by the Company on its common
stock since the Acquisition. The Company's credit agreements
restrict the payment of dividends on common stock, and it is the
present policy of the Board of Directors that all available cash
be used for the reduction of debt and for reinvestment in the
Company's business.
-15-
ITEM 6. SELECTED FINANCIAL DATA
The following table presents selected historical financial
information. The information should be read in conjunction with
the Company's Consolidated Financial Statements and related
Notes, and Management's Discussion and Analysis of Financial
Condition and Results of Operation as furnished below in Item 8
and Item 7, respectively. Dollars are in thousands, except per
share data.
Year EndedYear EndedYear EndedYear EndedYear Ended
last day last day last day last day last day
of of of of of
February February February February February
1994 1993 1992 1991 1990
---------------- ------------------------
Income Statement Data:
Net sales $ 198,887$ 196,130$ 200,680$ 196,927$ 173,631
Loss before extraordinary
item and cumulative
effect of accounting
principle change(11,039)(8,150)(5,493)(9,716)(12,367)
Extraordinary gain (loss),
net of income tax
expense (benefit)(1,848) - - 654 (408)
Cumulative effect of
accounting principle
changes (64,234) - - - -
Net loss (77,121) (8,150) (5,493)(9,062)(12,775)
Loss per share:
Loss before extraordinary
item (2.39) (1.80) (1.24) (2.06) (2.54)
Extraordinary item(.38) - - .13 (.08)
Cumulative effect of
accounting principle
changes (13.23) - - - -
Net loss per common share(16.00)(1.80)(1.24)(1.93)(2.62)
Cash dividends declared per
common share - - - - -
Balance Sheet Data:
Total assets $ 528,703$ 490,151$ 483,841$ 493,651$ 502,765
Long-term debt 467,337 443,003 435,133449,299 461,344
Preferred stock 5,348 4,773 4,204 3,208 2,072
Common stockholders'
deficit (102,577)(25,175) (16,882)(10,578) (330)
-16-
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
INTRODUCTION
- - ------------
The Company's operating results have been and will continue to be
materially affected by the transactions related to the
Acquisition. Operating results are affected by indebtedness
incurred to finance the Acquisition and by the amortization of
capitalized fees and expenses incurred in connection with such
financing. For fiscal 1994 and 1993, interest expense,
principally related to debt incurred to finance the Acquisition,
totaled $55.4 million and $51.9 million, respectively, and the
amortization of debt issuance costs totaled $1.2 million for each
fiscal year.
The Company's future operating results may also be affected by
the fire which occurred in the Company's Kansas City, Kansas
warehouse in December 1991. See "Effect of the Kansas City,
Kansas Warehouse Fire", below.
HISTORICAL INCOME STATEMENT INFORMATION
- - ---------------------------------------
The following table sets forth a statement of the Company's
consolidated operations, expressed as a percentage of net sales,
and the percentage changes in the dollar amount of such
consolidated operations as compared to the prior period.
Percentage of Net Sales Period-to-Period
Change
Last Day of February --------------------
------------------------ 1993 to 1992 to
1994 1993 1992 1994 1993
---- ---- ---- ---- ----
Net sales 100.0%100.0%100.0% 1.4% (2.3)%
Cost of sales 63.5% 60.6% 57.5% 6.2% 2.9%
Amortization of cost in excess
of net assets acquired1.3%1.3% 1.3% (0.1)% 0.2%
Selling and administrative
expenses 13.6% 13.9% 15.0% (0.4)% (9.6)%
Employee stock ownership
plan expense 0.0% 0.4% 0.4% (100.0)% 0.0%
Gross operating margin21.6%23.9% 25.8% (8.2)% (9.7)%
Interest expense 27.9% 26.5% 25.7% 6.7% 0.7%
Amortization of debt issuance
costs 0.6% 0.6% 0.6% 6.5% 3.9%
Loss before income taxes, extraordinary
item and cumulative effect of
accounting principle changes(6.2)%(2.9)%0.0%(114.6)%(66.0)%
Provision (benefit) for income taxes(0.6)%1.3%2.7%(148.2)%(54.6)%
Loss before extraordinary item
and cumulative effect of
accounting principle changes(5.6)%(4.2)%(2.7)%(35.4)%(48.4)%
Extraordinary loss, net
of income tax benefit(0.9)%0.0% 0.0% (100.0)% 0.0%
Cumulative effect of accounting
principle changes (32.3)% 0.0% 0.0% (100.0)% 0.0%
Net loss (38.8)%(4.2)%(2.7)% (846.3)% (48.4)%
-17-
RESULTS OF OPERATIONS
- - ---------------------
NET SALES - The Company's net sales for fiscal 1994 were
$198.9 million, an increase of 1.4% from $196.1 million for
fiscal 1993. The increase was primarily related to an increase
in nonwarehousing sales. Net sales for fiscal 1993 included $5.1
million of amounts disputed by customers or tenants. See "Effect
of Kansas City, Kansas Warehouse Fire", below.
Warehousing sales were $181.1 million for fiscal 1994, an
increase of .2% from $180.8 million for fiscal 1993, primarily
due to an 8.3% increase in handling revenues. This increase was
partially offset by a 2.5% decline in storage revenue and a 22.1%
decline in leasing revenue. The decline in storage revenue
resulted from a 2.7% decrease in storage volume, offset slightly
by price changes and other factors. The Company believes the
decreased storage volume is due to a reduction in certain frozen
vegetable stocks across several production warehouses. The
reduction in frozen vegetable stocks is principally attributable
to the flooding in the Midwest in 1993. For fiscal 1994, 17.9
billion pounds of product were stored compared to 18.4 billion
pounds of product stored in fiscal 1993. Storage revenue
increased approximately $.5 million in fiscal 1994 from fiscal
1993 at the Company's Kansas City, Kansas warehouse.
Approximately $1.9 million of the $2.1 million decline in leasing
activity is attributable to Kansas City.
The increase in handling revenue resulted primarily from a 7.8%
increase in volume of product handled. For fiscal 1994, 17.9
billion pounds were handled compared with 16.6 billion pounds
during fiscal 1993. Approximately $.5 million of the $5.0
million increase in handling revenue is attributable to Kansas
City.
The increase in handling volume relative to storage volume is
likely to continue as long as the Company's customers are able to
successfully operate with lower inventories. The trend among
customers is to increase inventory turnover, and the Company is
experiencing an increase in turns to an annual turn of 6.0 in
fiscal 1994 from 5.4 for fiscal 1993.
Nonwarehousing sales increased 16.3% to $17.8 million for fiscal
1994 from $15.3 million for fiscal 1993. The increase in sales
for fiscal 1994 over fiscal 1993 from ATS, the Company's
transportation division, of approximately $.5 million and the
increase in quarry sales of approximately $2.4 million helped
offset the loss of approximately $.4 million in sales due to the
closure of the vital records center. Due to the fire in Kansas
City, the vital records center ceased operations during the first
quarter of fiscal 1994. The closure is not expected to
significantly affect the results of operation of the Company.
-18-
Americold entered into a joint venture agreement in April 1990
forming ATS to provide transportation support services for the
Company's customers. In the first eight months of fiscal 1992,
joint venture sales of ATS were not consolidated with Americold
sales. The joint venture was terminated during the third quarter
of fiscal 1992, and the Company absorbed the operations of ATS.
Net sales for fiscal 1993 were 2.3% lower than fiscal 1992. The
decrease in net warehousing sales of 5.5% from fiscal 1992 was
primarily the result of a decrease in the Company's warehousing
business as a result of the Kansas City, Kansas fire.
Nonwarehousing sales in fiscal 1993 increased 62.7% from fiscal
1992 due primarily to inclusion of the sales from ATS as
discussed above.
COST OF SALES - Cost of sales for fiscal 1994 were $126.3
million, an increase of 6.2% from $118.8 million for fiscal 1993.
Excluding the approximately $4.1 million allowance for non-
collection of disputed billings and other expenses related to the
Kansas City, Kansas warehouse fire, cost of sales for fiscal 1993
would have been $114.7 million. Payroll costs and energy costs
increased approximately $3.9 million and $1.5 million,
respectively, as a result of increased handling volume at the
Company's facilities, including the quarry, and due to the new
warehouse facility added in January 1993. Approximately $.6
million of the increase in cost of sales was due to increased
activity at ATS. Certain other costs increased such as
insurance, equipment and real estate rental expense, and
operating supplies expense which increased $.5 million, $.6
million and $.4 million, respectively. Depreciation increased
approximately $1.7 million related to the adoption of Financial
Accounting Standards Board Statement No. 109, "Accounting For
Income Taxes".
Cost of sales as a percentage of net sales increased to 63.5% for
fiscal 1994 from 60.6% for fiscal 1993, primarily due to the new
warehouse facility added in January 1993 along with the increased
handling activity and the increased non-warehousing sales which
carries lower operating margins.
Cost of sales for fiscal 1993 was 2.9% higher than fiscal 1992 as
a result of the inclusion of ATS in fiscal 1993 and the
establishment of the allowance of $4.1 million for disputed
billings and for possible non-collection of expenses related to
the Kansas City, Kansas warehouse fire.
SELLING AND ADMINISTRATIVE EXPENSES - Selling and
administrative expenses for fiscal 1994 were $27.1 million, a
decrease of .4% from the $27.2 million for fiscal 1993. This
decrease primarily reflects a decrease of approximately $1.2
million in salaries and related fringe benefits. Certain other
costs declined, including office supplies, communications and
-19-
equipment rentals, while professional fees, due primarily to one-
time expenses for consulting services related to administrative
cost reduction efforts, and meeting and travel expenses
increased.
Selling and administrative expenses for fiscal 1993 were $27.2
million, a decrease of 9.6% from fiscal 1992. The decrease
primarily reflects a decrease in professional fees and
administrative payroll.
INTEREST EXPENSE - Interest expense increased to $55.4
million for fiscal 1994 from $51.9 million for fiscal 1993,
resulting from both the $26.25 million net increase in the
principal amount of mortgage bonds outstanding due to the
issuance of $176.25 million of first mortgage bonds in March 1993
and from the mortgage payable on the Burley, Idaho warehouse
facility. See "Financial Condition", below.
Interest expense increased slightly to $51.9 million for fiscal
1993 from the $51.6 million in fiscal 1992, as a result of a new
financing lease of the Ontario, Oregon facility, and the purchase
of the Burley, Idaho facility, which was offset by slightly lower
overall borrowings under the prior revolving credit agreement and
the bank credit agreement, along with moderately lower average
interest rates.
LOSS - The Company's loss before extraordinary item and
cumulative effect of accounting changes for fiscal 1994 was $11.0
million compared to a loss of $8.1 million for fiscal 1993. The
principal reasons for the increased loss includes the increase in
interest expense and the increase in cost of sales, discussed
above.
The Company's loss before extraordinary item for fiscal 1993 was
$8.1 million compared to a loss of $5.5 million for fiscal 1992.
The decline in gross operating margin for fiscal 1993 over fiscal
1992 is primarily due to the effects of the fire at the Kansas
City, Kansas warehouse.
EXTRAORDINARY LOSS - During the first quarter of fiscal
1994, the Company repurchased $150 million in face value of its
first mortgage bonds. The transaction resulted in an
extraordinary loss to the Company, net of taxes, of approximately
$1.8 million due to the write-off of unamortized issuance costs.
See "Financial Condition", below and Part I, Item 8, "Financial
Statements and Supplementary Data, Note 12 of Notes to
Consolidated Financial Statements".
-20-
INFLATION - The Company's operations have not been, nor are
they expected to be, materially affected by inflation or changing
prices.
NEW ACCOUNTING STANDARDS
- - ------------------------
Effective March 1, 1993, the Company implemented Financial
Accounting Standards Board Statement of Financial Accounting
Standard No. 106, "Employer's Accounting for Postretirement
Benefits Other Than Pensions", and Statement No. 109, "Accounting
for Income Taxes". See Part I, Item 8, "Financial Statements and
Supplementary Data, Note 1 of Notes to Consolidated Financial
Statements". As a result of the implementation of these
accounting standards, the Company's fiscal 1994 earnings were
reduced by approximately $64.2 million.
LIQUIDITY AND CAPITAL RESOURCES
- - -------------------------------
The Company relies primarily upon cash generated by operations to
service debt and fund capital expenditures. For fiscal 1994, net
cash flow from operating activities as reported in the Company's
consolidated financial statements increased to $18.5 million from
$17.7 million for fiscal 1993. Cash provided by operations and
the release of escrowed funds were, together with other items,
sufficient to reduce bank borrowings by $8.6 million, provide for
$8.9 million in expenditures for property, plant and equipment,
and increase the Company's cash balance to $3.9 million at the
end of fiscal 1994 compared to the $2.4 million at the end of
fiscal 1993.
On March 9, 1993, the Company sold $176.25 million aggregate
principal amount of the Company's 11.5% First Mortgage Bonds,
Series B, due March 1, 2005. The Company used $150 million of
the proceeds from the sale of the Series B Bonds to purchase at
par $150 million of outstanding 11.45% First Mortgage Bonds, due
2002. The remaining $150 million of such First Mortgage Bonds
have been redesignated Series A First Mortgage Bonds (together
with the Series B First Mortgage Bonds, the "First Mortgage
Bonds"). The remaining net proceeds of approximately $22.3
million were placed in escrow with a trustee (the "Trustee") and
will be released to fund construction or acquisition of warehouse
properties. As of the end of fiscal 1994, approximately $21.9
million was held in escrow.
On May 15, 1992, the Company entered into a sale and leaseback
transaction with respect to its Ontario, Oregon warehouse
facility. The transaction generated approximately $15 million in
cash. The Company received approximately $3 million at closing
and the remainder was placed in escrow with the Trustee. In
February 1993, in anticipation of substituting additional
collateral, the Company received $7.0 million of escrowed funds
which the Company used to
-21-
reduce its borrowings under the revolving credit agreement to a
level where remaining borrowings were refinanced with borrowings
under the bank credit agreement. During May 1993, the Company
contributed its Tomah, Wisconsin facility, valued at $7.0 million
to the collateral pool for the First Mortgage Bonds. The Trustee
released approximately $5.4 million as reimbursement to the
Company for construction costs associated with the new addition
at the Fogelsville, Pennsylvania facility as the Company
contributed the new Fogelsville, Pennsylvania facility to the
collateral pool during the fourth quarter of fiscal 1994.
Excluding accrued employee stock ownership plan expense, the
Company's working capital position as of the last day of February
1994 was a negative $7.5 million. This compares to a negative
$15.3 million at fiscal 1993 year end. The increase in working
capital was due primarily to an increase in cash of $1.5 million,
an increase of other receivables of $7.0 million and a decrease
in current maturities of long-term debt of $8.7 million which
were partially offset by an increase in accrued interest of $7.2
million and a decrease of trade receivables of $3.0 million. The
Company's historical negative working capital position has not
affected, and is not expected to affect, the Company's ability to
meet its operating commitments. Rather than accumulating and
investing excess cash, the Company pays down the balance owing on
its bank credit agreement on a daily basis when cash flow from
operations exceeds current needs.
The unused and available amount under the bank credit agreement
as of the last day of February 1994 and 1993 was approximately
$13.2 million and $5.8 million, respectively. The Company
borrows under the bank credit agreement primarily to fund
operating expenditures and to make interest payments.
The commitment level at the end of fiscal 1994 under the bank
credit agreement, as amended on October 1, 1993, was $27.5
million with a maximum of $20.0 million available for cash
borrowing and a maximum of $10.0 million available for letter of
credit borrowing. Any amount by which the letter of credit
borrowings exceeds $7.5 million reduces the available cash
borrowing amount under the agreement by a like amount. Based on
eligible accounts receivable as of February 28, 1994, the Company
had an available credit line of $13.2 million, of which no amount
was borrowed. The Company had approximately $4.2 million of
outstanding letters of credit, principally related to leasing
commitments and workers' compensation reserves, against the
available $10.0 million.
As a result of the offering of the First Mortgage Bonds and the
bank refinancing, as discussed above, certain long-term debt
repayment requirements after fiscal 1994 have been deferred.
However, significant debt reduction obligation remain for fiscal
years 1996 through 1998. The Company continues to recognize the
need to increase operating cash flow and, as circumstances allow,
to obtain
-22-
alternative sources of financing. Management expects to continue
to use additional outside borrowings and escrowed funds to invest
in new or expanded warehouse properties as long as investment
opportunities appear to add to the Company's long-term value.
The Company's present level of cash flow from operations and
escrowed funds is sufficient to cover all interest payments and
planned capital expenditures for fiscal 1995.
Funds provided from operations (gross operating margin plus
depreciation, amortization and employee stock ownership plan
expense) for fiscal 1994, 1993 and 1992 totaled $65.9 million,
$68.2 million and $74.6 million, respectively. Interest expense,
net of amortization of original issue discount, totaled $54.2
million, $50.9 million and $50.7 million, respectively.
CAPITAL RESOURCES - Expenditures, including capital leases,
for property, plant and equipment for fiscal years 1994, 1993 and
1992 totaled $11.0 million, $17.7 million and $9.2 million,
respectively. Fiscal 1994 capital expenditures included
approximately $4.8 million for the expansion of the Fogelsville,
Pennsylvania facility. The balance of the fiscal 1994 capital
expenditures included approximately $1.8 million in revenue
enhancement or cost reduction expenditures, and approximately
$2.2 million for routine replacements or betterments. The
Company also acquired $1.0 million of assets under capital leases
and $1.2 million under operating leases. Budgeted fiscal 1995
capital needs total approximately $26.5 million, including
approximately $15.6 million for property expansions. A portion,
related primarily to material handling equipment, is expected to
be leased on an operating or capital lease basis. The Company's
capital expenditures are substantially discretionary.
-23-
EFFECT OF KANSAS CITY, KANSAS WAREHOUSE FIRE
- - --------------------------------------------
In December 1991, a fire occurred at the Company's Kansas City,
Kansas underground warehouse facility. As a result of the fire,
the Company's warehousing activities in Kansas City have operated
at a substantially reduced level. The Company continues to be
unable to predict its ability to return the Kansas City facility
to normal operating volume or to attract new tenants. The
Company estimates that as of February 28, 1994, approximately 85%
of the remaining usable refrigerated warehouse space at the
facility had been restored to pre-fire conditions.
IMPACT ON OPERATING EARNINGS - As a result of the fire,
operating earnings at the Kansas City facility have been
adversely affected. Under its insurance policies, the Company
had received advances of $7.2 million as of February 28, 1994,
against pending claims. Subsequent to the end of the fiscal
year, the Company settled its first party claims with its
insurance carriers for business interruption, property and out-
of-pocket expenses. While the Company has received proceeds from
its insurance carriers, no allocation has been made to the
different coverages including business interruption. See
"Collectability of Amounts Owed", below.
POSSIBLE THIRD PARTY LIABILITY FOR STORED PRODUCT AND TENANT
CLAIMS - Lawsuits have been filed in connection with the Kansas
City fire. The lawsuits allege, among other things, various acts
of negligence on the part of the Company. Subsequent to year-
end, the Company settled all of the material lawsuits in
connection with the record storage and warehouse receipt claims
for amounts which were covered by the Company's insurance
policies. However, the claim submitted by the USDA to the
Company for approximately $67.3 million is still pending. The
Company has also reached an agreement in principle for settlement
of the lawsuits filed by tenants of the Kansas City, Kansas
facility and their insurers. This settlement requires no cash
payment by the Company, but only an assignment of certain
insurance coverage and other claims of the Company. See Part II,
Item 1, "Legal Proceedings".
COLLECTABILITY OF AMOUNTS OWED - Disputed receivables
associated with the revenues recorded for product stored as well
as expenses related to the fire at the Kansas City facility have
been recorded as "Other receivables" since the fourth quarter of
fiscal 1992. The amount of such receivables included in "Other
receivables" at the end of fiscal 1994 was $5.7 million, net of a
$4.1 million allowance and $7.2 million in insurance advances.
The components of "Other receivables" that relate to the fire are
shown below:
-24-
February 28, 1994
--------------------
(Dollars in Millions)
Disputed billings $ 5.9(*)
Fire-related expenses submitted to the
insurance carrier and real and
personal property lost 11.1
Advances received from insurance
carriers (7.2)
Allowance for non-collection of disputed
billings and other expenses (4.1)
---------
Other receivables $ 5.7
---------
___________________
(*) $5.9 million represents total disputed billings related
to the fire as of February 28, 1994; of this amount, $0.8
million reflects revenues recorded in the fourth quarter
fiscal 1992 and $5.1 million reflects revenues recorded
in fiscal 1993.
Subsequent to year-end, the Company settled its first party
claims with its insurance carriers for business interruption,
property damage and out-of-pocket expenses. The final allocation
of the settlement has not been made, and the Company cannot
predict the ultimate allocation at this time. The Company's
establishment of an allowance of $4.1 million is in consideration
of the possibility that the ultimate allocation will result in
the non-collection of disputed billings and other expenses
incurred at the Kansas City, Kansas facility. In addition, if a
portion of the settlement ultimately is not applied to business
interruption losses, the Company may be required to reduce
operating income for the period in which the final allocation is
determined. When the final allocation is made, the "Other
receivables" will be eliminated.
-25-
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's consolidated financial statements as of the last
day of February 1994 and 1993 and related information listed
below, are set forth on pages 50 through 80 of this report.
TITLE PAGE
--------- ----
Independent Auditors' Report . . . . . . . . . . 50
Consolidated Balance Sheets as of the last day
of February 1994 and 1993. . . . . . . . . . . 51
Consolidated Statements of Operations for years
ended the last day of February 1994, 1993 and
1992 . . . . . . . . . . . . . . . . . . . . . 53
Consolidated Statements of Common Stockholders'
Deficit for years ended the last day
of February 1994, 1993 and 1992. . . . . . . . 54
Consolidated Statements of Cash Flows for years
ended the last day of February 1994, 1993 and
1992 . . . . . . . . . . . . . . . . . . . . . 55
Notes to Consolidated Financial Statements as
of the last day of February 1994 and 1993. . . 57
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
-26-
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The directors and executive officers of Americold as of May 1,
1994, are as follows:
NAME AGE TITLE
---- --- -----
Ronald H. Dykehouse 52 Chairman of the Board, President,
Chief Executive Officer and
Director
Joel M. Smith 50 Senior Vice President, Chief
Financial Officer and Director
John P. LeNeveu 47 Senior Vice President,
Operations and Sales
F. Stanley Sena 45 Senior Vice President,
Administration and Technical
Services
J. Roy Coxe 53 Senior Vice President,
Logistics
Ronald A. Nickerson 57 Vice President, Operations
Lon V. Leneve 37 Vice President, Treasurer and
and Assistant Secretary
Frank Edelstein 68 Director
George E. Matelich 37 Director
James C. Pigott 57 Director
William A. Marquard 73 Director
RONALD H. DYKEHOUSE was named President of Americold
Corporation in May 1990 and Chairman of the Board and Chief
Executive Officer in June 1990. From 1989 to 1990, Mr. Dykehouse
was a private investor and consultant. From 1986 to 1989, he was
Executive Vice President and Chairman of the Food and
Distribution Groups of Amfac Inc., a diversified holding company.
Mr. Dykehouse is a past director of the National Frozen Foods
Association and past Chairman of the American Frozen Food
Institute.
-27-
JOEL M. SMITH has been Senior Vice President and a director
of the Company since December 1986. Mr. Smith has been the Chief
Financial Officer of Americold since 1978 and a Vice President
since 1984.
JOHN P. LENEVEU was named Senior Vice President, Operations
and Sales of Americold in July 1991. From 1988 to 1991, he was a
management consultant with the Institute of Management Resources,
an international management consulting company. Mr. LeNeveu was
a division manager for Fluorocarbon Company, PRP and FoMac
divisions, producing engineered rubber and plastic products, from
1986 to 1988.
F. STANLEY SENA has been Senior Vice President,
Administration and Technical Services of the Company since August
1991. From 1986 to 1990, Mr. Sena was Vice President,
Operations, Western Region, and from 1990 to 1991, Mr. Sena was
Vice President, Operations of the Company.
J. ROY COXE was named Senior Vice President, Logistics, of
Americold in December 1993. From 1991 to 1993, he was a
management consultant with A. T. Kearney, Inc., an international
management consulting company. Mr. Coxe was a vice president for
Drake Sheahan Stewart Dougall and successors, a logistics and
transportation consulting firm, from 1983 to 1991.
RONALD A. NICKERSON has been Vice President, Operations
since 1990. From 1987 to 1990, Mr. Nickerson was Vice President,
Operations, Eastern Region, of the Company.
LON V. LENEVE was named Vice President in September 1992,
has been Treasurer of Americold since July 1988 and has been
Assistant Secretary of the Company since December 1986. Mr.
Leneve joined Americold in 1982 and was Controller from 1984 to
1988.
FRANK EDELSTEIN was elected a director of the Company in
1986. He is currently a consultant to Kelso, an investment
banking firm, and Vice President of Gordon+Morris Group, Inc., an
investment banking firm. Mr. Edelstein joined Kelso in 1987 and
held the position of Vice President of Kelso until 1992. Mr.
Edelstein is also a director of Ceradyne, Inc., IHOP Corporation
and Arkansas Best Corporation.
GEORGE E. MATELICH has been a director of the Company since
December 1986. Mr. Matelich joined Kelso, an investment banking
firm, in 1985 as an Associate, served as a Vice President of
Kelso from 1986 to 1990 and is currently a Managing Director of
Kelso.
JAMES C. PIGOTT was elected a director of Americold in June
1987. He is President of Pigott Enterprises, Inc., a private
investment company. Mr. Pigott has been Chairman of the Board
and Chief Executive Officer of Management Reports and Services,
Inc.,
-28-
an accounting consulting firm since 1987. Mr. Pigott's other
business activities include membership on the Board of Directors
of PACCAR, Inc.
WILLIAM A. MARQUARD was elected a director of Americold in
June 1987. He is currently Chairman Emeritus of the Board of
Directors of American Standard, Inc., and Chairman of the Board
of Directors of Arkansas Best Corporation. Mr. Marquard is a
director of Treadco, Inc., Mosler, Inc., Earle M. Jorgenson
Company and Earthshell Container Corporation. He is also Vice
Chairman of the Board of Directors of Kelso.
All directors hold office until the next annual meeting of
shareholders of the Company or until their successors have been
elected and qualified. The executive officers of the Company are
chosen by the Board and serve at its discretion.
For their services on the Board of Directors of the Company,
Messrs. Pigott, Marquard and Edelstein are paid $16,000 per year.
Mr. Pigott receives $1,000 per year as Chairman of the Company's
Audit Committee, and Mr. Marquard receives $1,000 per year as
Chairman of the Company's Compensation Committee. Messrs.
Pigott, Marquard and Edelstein also receive $600 per meeting
attended. Directors who are also officers of the Company and Mr.
Matelich do not receive additional compensation as directors of
the Company. Directors are reimbursed for out-of-pocket expenses
incurred in connection with attendance at meetings.
The Compensation Committee for fiscal 1994 was Mr. Matelich, Mr.
Marquard and Mr. Pigott. The Audit Committee for fiscal 1994 was
Mr. Matelich, Mr. Edelstein and Mr. Pigott.
STOCKHOLDERS' AGREEMENT
- - -----------------------
The Company's Bylaws provide for one to twelve directors. The
Board of Directors of the Company currently consists of six
directors. Certain of the Company's shareholders have agreed,
pursuant to the stockholders' agreement dated as of December 24,
1986, as amended (the "Stockholders' Agreement"), that two
directors shall be designated by the Management Group, who may
continue to serve as directors so long as they continue to be
acceptable to Kelso, and that two directors shall be designated
by Kelso. The Stockholders' Agreement also provides for two
directors who are not affiliates of Kelso, the Management Group
or the Co-Investors, as defined in the Stockholders' Agreement.
In addition, one director may be designated by Northwestern
Mutual Life Insurance Company. Mr. Dykehouse and Mr. Smith have
been designated by the Management Group, and Mr. Edelstein and
Mr. Matelich by Kelso. Pursuant to the Stockholders' Agreement,
Mr.
-29-
Pigott and Mr. Marquard are deemed not to be affiliates of Kelso,
the Management Group or the Co-Investors. Northwestern Mutual
Life Insurance Company has not designated a director since May
1991. The Stockholders' Agreement also provides that prior to
the occurrence of an initial public offering of at least 25% of
the outstanding shares of common stock of the Company pursuant to
an effective registration statement under the Securities Act,
sales of shares of common stock by a member of the Management
Group are subject to a right of first refusal granted to the
Company and, in certain events, the non-management shareholders
who are parties to the Stockholders' Agreement.
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
- - --------------------------
The following table sets forth information as to the compensation
of the Chief Executive Officer and each of the other four most
highly compensated executive officers of the Company as of the
last day of February 1994 for services in all capacities to the
Company for the years ended the last day of February 1994, 1993
and 1992.
Long-Term Compensation
----------------------
Annual Compensation Awards
--------------------------------------------------------------
Other RestrictedOption/
Name and Annual Stock SARs
Principal PositionYearSalary Bonus<F1>Compensation<F2>Awards<F3> No.
- - --------------------------------------------------------------
Ronald H. Dykehouse1994$300,000$ -$ 10,500$ - -
Chairman & CEO 1993300,000 65,276 8,971 - -
1992300,000 - 30,938 169,359 -
Joel M. Smith 1994159,120 - 5,029 - -
Sr. Vice President1993159,12027,94644,009 - -
and CFO 1992159,120 - 74,650 72,833 -
John P. LeNeveu<F4>1994159,120- 2,309 - 30,000
Sr. Vice President,1993159,12027,94627,208 - -
Operations & Sales199297,920- 177 45,769 -
F. Stanley Sena 1994140,712 - 1,611 - -
Sr. Vice President,1993140,71224,71343,774 - -
Administration &1992140,712 - 71,045 64,407 -
Technical Services
J. Roy Coxe<F5> 199430,19223,250 - - 30,000
Sr. Vice President,
Logistics
_______________
[FN]
<F1> Awards for fiscal 1994 have not been finalized, but are
expected to be comparable to fiscal 1993. For Mr. Coxe, the
award in fiscal 1994 represents a bonus paid under an employment
agreement. For fiscal 1993, the Board of Directors authorized a
cash bonus award to participants of the Stock Incentive Plan.
Fiscal 1993 amounts were adjusted subsequent to filing of the
fiscal 1993 Form 10-K.
-30-
<F2> Consists of the cost of relocation, the value of
automobiles, payments made on behalf of the individuals to a bank
which made loans to facilitate acquisition of the Company's stock
by each individual, and other miscellaneous fringe benefits. The
value of such benefits is as follows:
1994 1993 1992
Mr. Dykehouse
Relocation $ - $ - $ 22,238
Other 10,500 8,971 8,700
Mr. Smith
Bank Loan - 40,291 69,055
Other 5,029 3,718 5,595
Mr. LeNeveu
Relocation - 25,999 -
Other 2,309 1,209 177
Mr. Sena
Bank Loan - 41,910 69,052
Other 1,611 1,864 1,993
Mr. Coxe
Other - - -
<F3> Awards under the Stock Incentive Plan.
<F4> Mr. LeNeveu's employment commenced July 15, 1991.
<F5> Mr. Coxe's employment commenced December 20, 1993. His
annual base salary is $150,000.
OPTIONS GRANT TABLE
- - -------------------
The following table sets forth information as to the options
granted to the Chief Executive Officer and each of the other four
most highly compensated executive officers of the Company during
the fiscal year ended the last day of February 1994.
-31-
Individual Grants
----------------------------------------------------------
Percent of
total Potential realizable
Number ofoptions/ value at assumed
SecuritiesSARs annual rates of stock
Underlyinggranted to price appreciation
Options/employeesExercise or for option term(*)
SARs in fiscalbase price Expiration
Name Granted year ($/Share) Date 5% ($)10% ($)
- - ---- -----------------------------------------------------
Ronald H. Dykehouse- - - - - -
Joel M. Smith - - - - - -
John P. LeNeveu30,000 50% $ 21.88 May 20030 0
F. Stanley Sena - - - - - -
J. Roy Coxe 30,000 50% $20.40 December 20030 0
(*) The market price used was based on the last known transaction in the voting stock of the Company of
$6.50 per share.
AGGREGATED OPTION TABLE
- - -----------------------
The following table sets forth information as to the options held
by the Chief Executive Officer and each of the other four most
highly compensated executive officers of the Company through the
end of fiscal 1994.
Number of
Unexercised
Options atValue of
Fiscal Unexercised
Shares Year-End Options at
Acquired on Value Exercisable/ Fiscal
Name Exercise Realized UnexercisableYear-End
- - ---- ------------ -------- ------------------------
Ronald H. Dykehouse0 $ 0 60,000/40,000 0
Joel M. Smith 0 0 8,278/0 0
John P. LeNeveu 0 0 0/30,000 0
F. Stanley Sena 0 0 8,279/0 0
J. Roy Coxe 0 0 0/30,000 0
BENEFIT PLAN AND ARRANGEMENTS
- - -----------------------------
STOCK INCENTIVE PLAN - The Company has a Stock Incentive
Plan (the "Plan") that provides additional long-term financial
incentives to key employees, including executive officers, of the
Company. The Plan, which was adopted by the Board of Directors
on September 19, 1991, effective as of March 1, 1991, is
administered by the compensation committee of the Board of
Directors (the
-32-
"Compensation Committee") and was intended to replace the
Management Incentive Plan, which provides annual cash bonuses
based on attainment of specific financial and personal goals.
Although distribution is deferred until the end of the Plan,
awards under the Plan may be made over the four-year period
commencing in 1992. All awards will be made in common stock of
the Company. Participants may elect, for a limited period after
the end of the Plan, to receive cash in lieu of the stock
awarded, if they have not elected to defer receipt of their
award. Participants electing to receive cash will receive the
cash bonus that they would have been awarded during the four-year
period under the Management Incentive Plan, plus interest on such
amounts. Participants who receive stock will also receive an
amount of cash equal to the amount of any dividends declared and
paid, if any, with respect to such shares had they been issued on
the date the participant first received the award. As a
condition to, and contemporaneously with the issuance of
certificates for shares awarded under the Plan, the participant
will be required to enter into a stock transfer restriction
agreement which will limit the participant's ability to sell,
assign, transfer, hypothecate, pledge or in any manner alienate
the shares except as expressly provided for in the Stockholders'
Agreement.
The total amount of stock awarded under the Plan will be
determined by the difference between the actual financial results
in each year and the targeted financial results for such year.
Each participant's share of the total stock awarded under the
Plan is based upon the individual's proportionate interest in the
total cash bonus that would have been awarded to all participants
under the Management Incentive Plan. The Management Incentive
Plan cash bonus awards were based on a combination of the
financial performance of the participant's responsibility area
and the achievement of certain personal goals. A maximum of
500,000 shares of common stock may be issued under the Plan.
The Plan generally requires that a participant must be employed
at the end of the four-year period (March 1, 1995) in order for
the participant's awards to vest. However, participants awarded
stock shall be fully vested if their employment by the Company
terminates prior to March 1, 1995 because of death, disability,
retirement at age 65 or older or an involuntary termination by
the Company without cause. Awards will be distributed within 60
days of vesting unless the participant has elected to defer such
distribution.
Participants' stock awards are also fully vested if the
participant's employment with the Company has not previously
terminated and the shareholders of the Company approve any of the
following transactions: (1) any consolidation, merger, plan of
exchange, or other transaction involving the Company, in which
the Company is not the continuing or surviving corporation or
pursuant to which the common stock of the Company would be
converted into
-33-
cash, securities or other property, other than a merger involving
the Company in which the holders of the common stock of the
Company immediately prior to the merger have the same
proportionate ownership of common stock of the surviving
corporation after the merger; or (2) any sale, lease, exchange or
other transfer (in one transaction or a series of related
transactions) of all or substantially all of the assets of the
Company or the adoption of any plan or proposal for the
liquidation or dissolution of the Company; or (3) any transaction
whereby a person acquires, directly or indirectly, the beneficial
ownership (as defined in Rule 13d-3 promulgated under the
Exchange Act) or 50% or more of the Company's voting stock.
For fiscal year 1992, 106,123 shares of stock were awarded under
the Plan. Shares allocable to the individuals named in the
Summary Compensation Table are as follows: Mr. Dykehouse,
16,659; Mr. Smith, 7,164; Mr. LeNeveu, 4,502; Mr. Sena, 6,335;
and Mr. Coxe, 0.
No stock was awarded under the Plan for fiscal 1993 and fiscal
1994. The Board of Directors has authorized a separate $500,000
cash bonus award for fiscal 1993 payable under the former
Management Incentive Plan structure which will be payable in June
of 1994. It is anticipated that a comparable cash bonus award
will be authorized for fiscal 1994.
RETIREMENT PLAN - Americold has a noncontributory defined
benefit retirement plan for salaried employees, including
executive officers (the "Retirement Plan"). The Retirement Plan
provides retirement benefits based on credited years of service
and average monthly compensation for the highest five calendar
years of the final 15 calendar years of employment or, if higher,
the highest 60 consecutive months in the last 120 months of
employment. A participant's retirement benefits vest after the
participant has completed at least ten years of Vesting Service,
as defined, or after the participant has both attained age 55 and
completed at least five years of Vesting Service.
The following table shows the approximate annual retirement
benefits payable to employees for life from normal retirement
date pursuant to the Retirement Plan before reduction for Social
Security payments. The actual retirement benefit to employees is
offset by Social Security benefits. Service credited under a
former Beatrice retirement plan will be recognized by the
Retirement Plan for purposes of determining the pension benefits
payable under the Retirement Plan.
-34-
Estimated years of credited service to date under the Retirement
Plan for the individuals named in the Summary Compensation Table
are as follows: Mr. Dykehouse, 3 years; Mr. Smith, 15 years; Mr.
LeNeveu, 2 years; Mr. Sena, 24 years; and Mr. Coxe, 0 years.
Estimated years of credited service at normal retirement date
(age 65) under the Retirement Plan for the individuals named in
the Summary Compensation Table are as follows: Mr. Dykehouse, 16
years; Mr. Smith, 26 years; Mr. LeNeveu, 20 years; Mr. Sena, 45
years; and Mr. Coxe, 12 years.
Years of Service
--------------------------------------
Average Annualized
Compensation 20 30 40 50
- - ------------------ -------- -------- -------- --------
$100,000 $ 30,000 $ 45,000 $ 60,000 $ 75,000
125,000 37,500 56,250 75,000 93,744
150,000 45,000 67,500 90,000 112,500
175,000 52,500 78,750 105,000 118,800
200,000 60,000 90,000 118,800 118,800
300,000 90,000 118,800 118,800 118,800
In addition to the above, certain individuals named in the
Summary Compensation Table are entitled to a benefit calculated
by using additional years of service credited under supplements
to the Retirement Plan. Years of credited service under the
supplements for the individuals named in the Summary Compensation
Table as of the last day of February 1994 are as follows: Mr.
Dykehouse, 0 years; Mr. Smith, 5 years; Mr. LeNeveu, 0 years; Mr.
Sena, 0 years; and Mr. Coxe, 0 years. The annual amount to be
received at normal retirement date pursuant to the supplements is
estimated to be as follows: Mr. Dykehouse, $0 per annum; Mr.
Smith, $5,906 per annum; Mr. LeNeveu, $0 per annum; Mr. Sena, $0
per annum; and Mr. Coxe, $0 per annum.
A participant's retirement benefits (excluding any incremental
benefit earned under any supplement) under the Retirement Plan
plus 50% of Social Security benefits may not exceed 60% of his
compensation at retirement after 40 years of service, subject to
maximum dollar limitations. See Note 8 of "Notes to Consolidated
Financial Statements as of the last day of February 1994 and
1993."
EMPLOYEE STOCK OWNERSHIP PLAN - Americold established,
effective March 1, 1987, an Employee Stock Ownership Plan, as
amended January 1, 1994 (the "ESOP"), in which all qualifying
employees of the Company not covered by collective bargaining
arrangements are able to participate. It is contemplated that
contributions on an annual basis will not exceed 15% of the
aggregate total compensation of any participating employee. The
Company may contribute cash as well as or in lieu of its stock.
The consent of the Company's Board of Directors is required to
authorize any contribution by Americold to the ESOP.
Contributions
-35-
are allocated among participants based on the ratio of each
participant's compensation to the total compensation of all such
participants, subject to certain limitations. The ESOP is
intended to provide retirement funds to participants in addition
to present pension benefits.
Benefits under the ESOP vest based upon years of service as
follows: 20% after three years of service, increased by 20% for
each of the next four years with a maximum of 100% after seven
years of service. A participant is 100% vested if employed by
the Company on or after his 65th birthday, or if the participant
incurs a total and permanent disability or dies while employed by
the Company. The ESOP has the right to repurchase previously
distributed shares from employees terminating their ESOP
participation, using funds obtained through cash contributions by
the Company. Participant forfeitures are allocated pro rata to
remaining participants.
Participants are eligible for distribution of their capital
accumulation in the ESOP at the normal retirement age of 65. The
distribution will be made in whole shares of the Company's stock,
cash or a combination of both, as determined by the Compensation
Committee, provided the participant has not elected to be paid in
stock.
Upon termination of the ESOP, the ESOP's trust will be maintained
until the capital accumulations of all participants have been
distributed.
In November 1993, the Company funded the fiscal 1993 ESOP
contribution of $750,000. The contribution was in the form of
13,333 shares of the Company's common stock and $430,008 in cash.
Shares allocable to the individuals named in the Summary
Compensation Table as a result of the contribution are as
follows: Mr. Dykehouse, 112 shares; Mr. LeNeveu, 80 shares; Mr.
Smith, 94 shares; Mr. Sena, 83 shares; and Mr. Coxe, 0 shares.
No ESOP contribution has been declared for fiscal 1994.
KEY EMPLOYEE STOCK OPTION PLAN - In 1987, Americold
established a Key Employee Stock Option Plan (the "Option Plan").
The Option Plan permits the issuance of nonstatutory options to
purchase up to 300,000 shares of common stock of the Company to
directors, officers and other key employees of the Company. Of
these, options to purchase up to 150,000 shares were reserved for
issuance to the Management Group and options to purchase the
remaining 150,000 shares are reserved for issuance to all
eligible employees (including the Management Group) of the
Company.
-36-
An individual exercising options under the Option Plan must
become a party to the Stockholders' Agreement. The Option Plan
is administered by the Compensation Committee. The Compensation
Committee determines the recipients of options granted, the
exercise price and the number of shares of common stock subject
to each option. The Board of Directors may amend the Option Plan
from time to time. The maximum term of each stock option is ten
years. Options become exercisable at such time or times as the
Compensation Committee may determine at the time of grant.
If the outstanding shares of common stock are changed into or
exchanged for a different number or kind of shares of the Company
or other securities of the Company, by reason of any merger,
consolidation, recapitalization, reclassification, stock split-
up, stock dividend or combination of shares, the Compensation
Committee shall make an appropriate and equitable adjustment in
the number and kind of shares as to which the unexercised portion
of the option shall be exercisable, to the extent that after such
event the optionee's right to a proportionate interest in the
Company shall be maintained as if the option had already been
exercised and the option shares were subject to such change or
exchange. Such adjustment shall be made without change in the
total price applicable to the unexercised portion of the option
and with a corresponding adjustment in the exercise price per
option share. Any such adjustment made by the Compensation
Committee shall be final and binding upon the Company, the
optionee and all other interested persons.
In the event of (i) dissolution or liquidation of the Company,
(ii) a merger in which the Company is not the surviving
corporation or (iii) a share exchange pursuant to which the
outstanding shares of common stock of the Company are acquired by
another corporation, then either (a) the Compensation Committee,
upon authorization of the Board, shall make an appropriate and
equitable adjustment in the number and kinds of securities
covered by outstanding options, and such options shall be
expressly assumed by the successor corporation, if any; or (b) in
lieu of such adjustment, the Board shall provide a 30-day period
immediately prior to such an event during which each optionee
shall have the right to exercise the optionee's outstanding
options, in whole or in part, without regard to the time the
options have been outstanding or the vesting schedule provided
for in any option agreement entered into pursuant to the Option
Plan and all options not exercised shall expire at the end of the
30-day period.
-37-
Information with regard to the grant of options as of the last
day of February 1994 under the Plan follows:
Number of Option Number Expiration
Options Price Exercisable Date
- - ---------- ------- ----------- ----------
97,934 $10.00 97,934 May 1998
100,000 $18.95 60,000 June 2000
30,000 $21.88 - May 2003
30,000 $20.40 - December 2003
During fiscal 1994, the Company granted options totaling 60,000
shares of the Company's common stock to two of its officers.
No options were exercised during the most recent fiscal year.
See Note 9 of "Notes to Consolidated Financial Statements as of
the last day of February 1994 and 1993".
OTHER ARRANGEMENTS - The Company entered into a two-year
employment agreement with Mr. Dykehouse on May 14, 1990.
Pursuant to the terms of the agreement, Mr. Dykehouse agreed to
serve as the Chief Executive Officer of the Company. Further,
Mr. Dykehouse agreed not to compete with the Company for a 12-
month period following termination of his employment unless such
termination is "without cause", as defined in the employment
agreement. Although the agreement has not been extended, certain
provisions survive the expiration of the initial term of the
agreement. If before June 26, 1995, Mr. Dykehouse's employment
is terminated "without cause", the Company has the right to
purchase any shares of common stock acquired pursuant to the
exercise of any options granted on June 26, 1990 at the fair
market value of the shares, as determined in accordance with the
Stockholders' Agreement. If before June 26, 1995, Mr.
Dykehouse's employment is terminated voluntarily or "for cause",
the Company has the right to purchase any such shares at the
price paid by Mr. Dykehouse, plus interest. The agreement also
provided that Mr. Dykehouse would participate in the Americold
Management Incentive Plan, subsequently replaced by the Stock
Incentive Plan. Pursuant to an Agreement of Assumption dated
June 26, 1990, Mr. Dykehouse has agreed to be bound by the
Stockholders' Agreement.
The Company entered into a two-year employment agreement with Mr.
LeNeveu on May 29, 1992. Mr. LeNeveu agreed to serve as the
Senior Vice President, Operations and Sales, of the Company.
Further, Mr. LeNeveu has agreed not to compete with the Company
for a 12-month period following termination of his employment
unless such termination is "without cause", as defined in the
employment agreement. The agreement provides, among other
conditions, that if during the term of the employment agreement
Mr. LeNeveu's employment is terminated "without cause", the
Company will pay him a lump sum amount equal to one year's base
compensation or the balance of the salary provided for through
the then remaining term
-38-
of the agreement, whichever is greater, plus any employee
benefits accrued to the date of termination. The Company is not
required to make any such payment if the termination is "for
cause", as defined. The employment agreement provides that Mr.
LeNeveu will participate in any incentive plan otherwise offered
to members of senior management.
The Company entered into a three-year employment agreement with
Mr. Coxe on December 6, 1993. Mr. Coxe agreed to serve as the
Senior Vice President, Logistics, of the Company. Further, Mr.
Coxe has agreed not to compete with the Company for a 12-month
period following termination of his employment unless such
termination is "without cause", as defined in the employment
agreement. The agreement provides, among other conditions, that
if during the term of the employment agreement Mr. Coxe's
employment is terminated "without cause", the Company will pay
him a lump sum amount equal to one year's base compensation, or
the balance of the salary, plus bonus, provided for through the
then remaining term of the agreement, whichever is greater, plus
any employee benefits accrued to the date of termination. The
Company is not required to make any such payment if the
termination is "for cause", as defined. The employment agreement
provides that Mr. Coxe will participate in any incentive plan
otherwise offered to members of senior management with a bonus of
$23,250 awarded March 1, 1994, and a minimum bonus of $55,000
awarded March 1, 1995.
-39-
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth information regarding the
beneficial ownership of common stock as of May 1, 1994 by (i)
each person known by the Company to own more than five percent of
its common stock, (ii) each Director of the Company, (iii) all
Directors and officers as a group and (iv) the Management Group:
Percent of
Number of Outstanding
Name and Address Shares Shares
- - ---------------- --------- -----------
KIA III-Americold, Inc., L.P.<F1>2,000,000 41.1%
("KIA III")
c/o Kelso & Company
350 Park Avenue
New York, NY 10017
Kelso Investment Associates II, L.P.<F1>500,00010.3%
("KIA II")
c/o Kelso & Company
350 Park Avenue
New York, NY 10017
Kelso Equity Partners, L.P.<F1> 70,000 1.4%
("Kelso Equity")
c/o Kelso & Company
350 Park Avenue
New York, NY 10017
Joseph S. Schuchert<F2> 2,593,600 53.3%
350 Park Avenue
New York, NY 10017
Frank T. Nickell<F2> 2,593,600 53.3%
350 Park Avenue
New York, NY 10017
George E. Matelich<F2> 2,593,600 53.3%
350 Park Avenue
New York, NY 10017
Thomas R. Wall, IV<F2> 2,593,600 53.3%
350 Park Avenue
New York, NY 10017
The Northwestern Mutual Life Insurance Company<F1>500,00010.3%
720 East Wisconsin Avenue
Milwaukee, WI 53202
New York Life Insurance Company<F1>330,000 6.8%
51 Madison Avenue
New York, NY 10010
New York Life Insurance and Annuity Corporation<F1>250,0005.2%
51 Madison Avenue
New York, NY 10010
-40-
Percent of
Number of Outstanding
Name and Address Shares Shares
- - ---------------- --------- -----------
Ronald H. Dykehouse<F1><F3> 97,900 2.0%
7007 S. W. Cardinal Lane, Suite 135
Portland, Or 97224
Joel M. Smith<F1><F3> 38,278 0.8%
7007 S. W. Cardinal Lane, Suite 135
Portland, OR 97224
Frank Edelstein -- --
The Gordon+Morris Group, Suite 1400
620 Newport Center Drive
Newport Beach, CA 92660
James C. Pigott -- --
1405 - 42nd Avenue East
Seattle, WA 98112
William A. Marquard -- --
Eaglestone Farm
2199 Maysville Road
Carlisle, KY 40311
All directors and officers as a group (11 persons)<F3>231,4954.8%
Management Group (32) persons<F1><F3>566,834 11.7%
___________________
[FN]
<F1> These persons are party to the Stockholders' Agreement which
controls the voting by these shareholders for directors of the
Company. See Part II, Item 10, "Directors and Executive Officers
of the Registrant".
<F2> Messrs. Schuchert, Nickell, Matelich and Wall may be deemed
to share beneficial ownership of shares owned of record by KIA
III, KIA II, Kelso Equity and Kelso & Company (Kelso owns 23,600
shares) by virtue of their status as the general partners of
Kelso Partners III, L.P. (the general partner of KIA III), Kelso
Partners II, L.P. (the general partner of KIA II), Kelso Equity
and Kelso & Company. Messrs. Schuchert, Nickell, Matelich and
Wall share investment and voting powers with respect to
securities owned by the foregoing entities.
<F3> Includes the following numbers of shares of common stock
that may be acquired within 60 days after May 1, 1994 through the
exercise of stock options granted pursuant to the Company's
Option Plan: 80,000 shares for Mr. Dykehouse; 8,278 shares for
Mr. Smith; 113,595 shares for all directors and officers as a
group; and 183,934 shares for the Management Group.
The shareholders of the Company listed above hold approximately
83% of the voting power of the Company's common stock and are
able to elect all of the members of the Board and control the
Company.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There are no reportable transactions or relationships.
-41-
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) The following documents are filed as part of this report.
1. FINANCIAL STATEMENTS PAGE
-------------------- ----
Reference is made to Part II, Item 8
for listing of required financial
statements filed with this report 26
2. FINANCIAL STATEMENT SCHEDULES
-----------------------------
Schedule V - Property, Plant and
Equipment for years ended the last
day of February 1994, 1993 and 1992 76
Schedule VI - Accumulated Depreciation,
Depletion and Amortization of Property,
Plant and Equipment for years ended the
last day of February 1994, 1993 and 1992 77
Schedule VIII - Valuation and Qualifying
Accounts for years ended the last day of
February 1994, 1993 and 1992 78
Schedule IX - Short-Term Borrowings for
the years ended the last day of February
1994, 1993 and 1992 79
Schedule X - Supplementary Income State-
ment Information for years ended the
last day of February 1994, 1993 and 1992 80
All other schedules are omitted because they are not
applicable, or are not required, or because the
required information is included in the Company's
consolidated financial statements as of the last
day of February 1994 and 1993 or notes thereto.
3. EXHIBITS
--------
(3) Articles of Incorporation and Bylaws
(i) Second Restated Articles of Incorporation,
as amended (filed as Exhibit (3)(i) to the
Form 10-Q, dated October 11, 1989, for the
quarter ended August 31, 1989, and
-42-
incorporated herein by reference)
(ii) Restated Bylaws, as amended (filed as
Exhibit (3)(ii) to the Form 10-Q, dated
October 11, 1989, for the quarter ended
August 31, 1989, and incorporated herein
by reference)
(4) Instruments defining the rights of security
holders, including indentures
(i) Articles IV, V and VI of the Second
Restated Articles of Incorporation as
amended (see Exhibit (3)(i))
(ii) Articles I, II, V, VII and X of the
Restated Bylaws as amended (see Exhibit
(3)(ii))
(iii) Second Restated Stockholders' Agreement
dated as of December 24, 1986, as amended
as of June 22, 1987 (filed as Exhibit
(4)(iv) to the Form 10-K, dated May 27,
1988, for the fiscal year ended February
29, 1988 and incorporated herein by
reference)
(iv) Third Amendment dated May 22, 1990 to
Stockholders' Agreement dated as of
December 24, 1986, as amended as of June
22, 1987 (filed as Exhibit (4) to the Form
10-Q dated July 12, 1990, for the quarter
ended May 31, 1990 and incorporated herein
by reference)
(v) Form of Amended and Restated Indenture
relating to the First Mortgage Bonds
(filed as Exhibit (4)(vi) to the
Registration Statement on Form S-1
(Registration No. 33-53584) filed with the
Commission on March 2, 1993 and is
incorporated herein by reference)
(vi) Stock Pledge Agreement dated as of
February 28, 1989, between Registrant and
The Connecticut National Bank (filed as
Exhibit (19)(iii) to the Form 10-Q, dated
October 14, 1992, for the quarter ended
August 31, 1992 and incorporated herein by
reference)
(vii) Stock Pledge Agreement dated as of
February 28, 1989 between Registrant and
United States National Bank of Oregon,
acting as agent pursuant to Article IX of
the Credit
-43-
Agreement, as amended, dated as of April
30, 1987 (filed as Exhibit (19)(iv) to the
Form 10-Q, dated October 14, 1992, for the
quarter ended August 31, 1992 and
incorporated herein by reference)
(viii) Indenture dated as of May 1, 1987 between
Registrant and United States Trust Company
of New York, as Trustee (included as an
exhibit to the Registration Statement on
Form S-1 (Registration No. 33-12173) filed
with the Commission on April 29, 1987 and
incorporated herein by reference)
(ix) Form of Amended and Restated Investment
Agreement relating to the First Mortgage
Bonds filed as Exhibit (4)(v) to the
Registration Statement on Form S-1
(Registration No. 33-53584) (filed with
the Commission on March 2, 1993 and
incorporated herein by reference)
(x) Form of Amended and Restated Security
Agreement relating to the First Mortgage
Bonds (filed as Exhibit (4)(xiv) to the
Registration Statement on Form S-1
(Registration No. 33-53584) filed with the
Commission on March 2, 1993 and
incorporated herein by reference)
(xi) Form of Senior Subordinated Debenture
(included as part of Exhibit (4)(viii))
(xii) Form of Mortgage, Assignment of Rents and
Security Agreement dated as of June 15,
1987 (included as an exhibit to the
Registration Statement on Form S-1
(Registration No. 33-12173) filed with the
Commission on April 29, 1987) and
incorporated herein by reference)
(xiii) Form of Series A Bond (included as part of
Exhibit (4)(v))
(xiv) Form of Series B Bond (included as part of
Exhibit (4)(v))
(xv) Form of Amended and Restated Cash
Collateral Pledge Agreement relating to
the First Mortgage Bonds (filed as Exhibit
(4)(xix) to the Registration Statement on
Form S-1 (Registration No. 33-53584) filed
with the
-44-
Commission on March 2, 1993 and
incorporated herein by reference)
(xvi) Form of Amended Stock Pledge Agreement
relating to the First Mortgage Bonds
(filed as Exhibit (4)(xx) to the
Registration Statement on Form S-1
(Registration No. 33-53584) filed with the
Commission on March 2, 1993 and
incorporated herein by reference)
(xvii) Form of Amended Mortgage, Assignment of
Rents and Security Agreement relating to
the First Mortgage Bonds (filed as Exhibit
(4)(xxi) to the Registration Statement on
Form S-1 (Registration No. 33-53584) filed
with the Commission on March 2, 1993 and
incorporated herein by reference)
(10) Material Contracts
(i) Americold Corporation Key Employee Stock
Option Plan, as amended, effective July
12, 1988 (filed as Exhibit (4)(i) to the
Form 10-Q dated October 14, 1988, for the
quarter ended August 31, 1988 and
incorporated herein by reference)
(ii) Form of Nonstatutory Stock Option
Agreement, as amended, entered into
between Registrant and certain employees
pursuant to the Americold Corporation Key
Employee Stock Option Plan (filed as
Exhibit (4)(ii) to the Form 10-Q dated
October 14, 1988, for the quarter ended
August 31, 1988 and incorporated herein by
reference)
(iii) Form of Amended and Restated Investment
Agreement relating to the First Mortgage
Bonds (see Exhibit (4)(ix))
(iv) Form of Amended and Restated Security
Agreement relating to the First Mortgage
Bonds (see Exhibit (4)(x))
(v) Stock Pledge Agreement dated as of
February 28, 1989, between Registrant and
The Connecticut National Bank (see Exhibit
(4)(vi))
(vi) Stock Pledge Agreement dated as of
February 28, 1989, between Registrant and
United
-45-
States National Bank of Oregon, a national
banking association, acting as agent
pursuant to Article IX of the Credit
Agreement, as amended, dated as of April
30, 1987 (see Exhibit (4)(vii))
(vii) Americold Corporation Management Incentive
Plan (filed as Exhibit (10)(iii) to the
Form 10-K, dated May 27, 1988, for the
fiscal year ended February 29, 1988 and
incorporated herein by reference)
(viii) Form of Indemnity Agreement entered into
between the Company and each of its
officers and directors (filed as Exhibit
(4)(x) to Form 10-K dated May 29, 1992 for
the fiscal year ended February 29, 1992
and incorporated herein by reference)
(ix) Second Restated Stockholders' Agreement,
dated as of December 24, 1986, as amended
as of June 22, 1987 (see Exhibit (4)(iii)
(x) Third Amendment dated May 22, 1990 to
Stockholders' Agreement dated as of
December 24, 1986, as amended as of June
22, 1987 (see Exhibit (4)(iv))
(xi) Indenture dated as of May 1, 1987 between
the Company and United States Trust
Company of New York, as Trustee (see
Exhibit (4)(viii))
(xii) Credit Agreement between the Company and
United States National Bank of Oregon
dated February 3, 1993 (filed as Exhibit
(10)(xxii) to the Registration Statement
on Form S-1 (Registration No. 33-53584)
filed with the Commission on March 2, 1993
and incorporated herein by reference)
(xiii) Form of Amended and Restated Indenture
relating to the First Mortgage Bonds (see
Exhibit (4)(v))
(xiv) Form of Amended and Restated Cash
Collateral Pledge Agreement relating to
the First Mortgage Bonds (see Exhibit
(4)(xv))
(xv) Form of Amendment to Stock Pledge
Agreement relating to the First Mortgage
Bonds (see Exhibit (4)(xvi))
-46-
(xvi) Indemnification Agreement dated October
31, 1991 between the Company and The First
Boston Corporation (included as Exhibit
(10)(xx) to the Registration Statement on
Form S-2 (Registration No. 33-41963) filed
with the Commission on July 31, 1991 and
incorporated herein by reference)
(xvii) Americold Stock Incentive Plan effective
March 1, 1991 (filed as Exhibit(10)(xviii)
to the Form 10-K dated May 29, 1992 for
the fiscal year ended February 29, 1992
and incorporated herein by reference)
(xviii) Employment Agreement dated May 14, 1990,
between the Company and Ronald H.
Dykehouse (filed as Exhibit (10)(i) to the
Form 10-Q dated October 12, 1990 for the
quarter ended August 31, 1990 and
incorporated herein by reference)
(xix) Employment Agreement dated May 14, 1992,
between the Company and John P. LeNeveu
(filed as Exhibit (19) to the Form 10-Q
dated July 15, 1992 for the quarter ended
May 31, 1992 and incorporated herein by
reference)
(xx) Master Lease Agreement dated February 28,
1989, between Registrant and Americold
Services Corporation (filed as Exhibit
(19)(vi) to the Form 10-Q, dated October
14, 1992, for the quarter ended August 31,
1992 and incorporated herein by reference)
(xxi) Americold Transportation Systems Purchase
of Joint Venture Interest, effective
November 1, 1991, between Registrant and
Superior Transportation Systems, Inc.
(filed as Exhibit (19)(vii) to the Form
100-Q, dated October 14, 1992, for the
quarter ended August 31, 1992 and
incorporated herein by reference)
(xxii) Lease dated May 15, 1992, between
Registrant and Oregon Warehouse Partners,
a Texas general partnership (lease
agreement for Ontario, Oregon facility)
(filed as Exhibit (19)(viii) to the Form
10-Q, dated October 14, 1992, for the
quarter ended August 31, 1992 and
incorporated herein by reference)
-47-
(xxiii) Form of First Amendment to Master Lease
Agreement between Registrant and Americold
Services Corporation (filed as Exhibit
(10)(xxxi) to the Registration Statement
on Form S-1 (Registration No. 33-53584)
filed with the Commission on March 2, 1993
and incorporated hereby by reference)
(xxiv) Nonstatutory Stock Option Agreement dated
May 19, 1993 between the Company and John
P. LeNevue (filed as Exhibit (10)(i) to
the Form 10-Q, dated January 13, 1994 for
the quarter ended November 30, 1993, and
incorporated herein by reference)
(xxv) First Amendment, dated October 1, 1993, to
the Credit Agreement between the Company
and United States National Bank of Oregon
dated February 3, 1993 (filed as Exhibit
(10)(ii) to the Form 10-Q dated January
13, 1994 for the quarter ended November
30, 1993, and incorporated herein by
reference)
(xxvi) Employment Agreement dated December 6,
1993, between the Company and J. Roy Coxe
(filed as Exhibit (10)(iii) to the Form
10-Q dated January 13, 1994 for the
quarter ended November 30, 1993, and
incorporated herein by reference)
(xxvii) Nonstatutory Stock Option Agreement dated
December 17, 1993 between the Company and
J. Roy Coxe.
(11) Statement regarding computation of per
share earnings
(21) Subsidiaries of the Registrant
(23) Consent of KPMG Peat Marwick
-48-
(b) Reports on Form 8-K
The following Form 8-K was filed during the last quarter of
the fiscal year ended the last day of February 1994:
The Company filed a Current Report on Form 8-K,
dated February 18, 1994, disclosing the Company
had received notice from the United States
Attorney for the District of Kansas that a claim
would be filed on behalf of the United States
Department of Agriculture as a result of the
December 1991 fire at the Kansas City, Kansas
facility.
-49-
Independent Auditors' Report
----------------------------
The Board of Directors and Stockholders
Americold Corporation:
We have audited the consolidated balance sheets of Americold
Corporation as of the last day of February 1994 and 1993, and the
related consolidated statements of operations, common
stockholders' deficit and cash flows for each of the years in the
three-year period ended the last day of February 1994. 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 Americold Corporation as of the last day of
February 1994 and 1993, and the results of their operations and
their cash flows for each of the years in the three-year period
ended the last day of February 1994, in conformity with generally
accepted accounting principles.
As discussed in Note 1 to the consolidated financial statements,
Americold Corporation adopted the provisions of the Financial
Accounting Standards Board's Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" and No. 106,
"Employers' Accounting for Postretirement Other Than Pensions"
during the year ended the last day of February 1994.
Portland, Oregon
May 6, 1994
-50-
AMERICOLD CORPORATION
Consolidated Balance Sheets
Last day of February 1994 and 1993
(In Thousands, Except Share Data)
Assets 1994 1993
------ ---- ----
Current assets:
Cash $ 3,892 $ 2,449
Trade receivables, less allowance
for doubtful accounts of $298
and $327, respectively (note 7) 16,702 19,734
Other receivables, less allowance for
doubtful accounts of $4,100
(notes 14 and 15) 8,351 1,360
Prepaid expenses 3,972 2,905
Tax refund receivable 1,291 1,384
Other current assets 628 793
------- -------
Total current assets 34,836 28,625
Net property, plant and equipment
(notes 2, 4 and 7) 375,772 359,629
Cost in excess of net assets acquired,
less accumulated amortization of
$17,230 and $14,699, respectively 82,563 85,094
Debt issuance costs, less accumulated
amortization of $5,540 and $6,047,
respectively (notes 7 and 12) 9,371 8,824
Other noncurrent assets (note 3) 26,161 7,979
------- -------
Total assets $528,703 $490,151
======= =======
See accompanying notes to consolidated financial statements.
-51-
Liabilities, Preferred Stock and
Common Stockholders' Deficit 1994 1993
-------------------------------- ---- ----
Current liabilities:
Accounts payable $ 5,450 $ 6,340
Accrued interest 17,334 10,168
Accrued expenses (note 5) 7,512 7,970
Deferred revenue 4,772 5,215
Current maturities of long-term
debt (note 7) 2,281 10,950
Other current liabilities (note 6) 4,944 4,038
------- -------
Total current liabilities 42,293 44,681
Long-term debt, less current
maturities (note 7) 467,337 443,003
Deferred income taxes (note 11) 104,558 14,433
Other noncurrent liabilities 11,744 8,436
------- -------
Total liabilities 625,932 510,553
======= =======
Preferred stock, Series A, $100 par value.
Authorized 1,000,000 shares; issued and
outstanding 49,672 and 43,860 shares,
respectively (note 10) 5,348 4,773
------- -------
Common stockholders' deficit (notes 7, 8 and 9):
Common stock, $.01 par value.
Authorized 10,000,000 shares;
issued and outstanding 4,863,999
and 4,850,666 shares, respectively 49 49
Additional paid-in capital 49,082 48,762
Retained deficit (151,653) (73,957)
Adjustment for minimum pension
liability (55) (29)
------- -------
Total common stockholders'
deficit (102,577) (25,175)
Commitments and contingencies
(notes 4, 7, 8, 14 and 15) ------- -------
Total liabilities, preferred
stock and common stock-
holders' deficit $528,703 $490,151
======= =======
-52-
AMERICOLD CORPORATION
Consolidated Statements of Operations
Years ended last day of February 1994, 1993 and 1992
(In Thousands, Except Per Share Data)
1994 1993 1992
---- ---- ----
Net sales $ 198,887 $ 196,130 $200,680
--------- --------- --------
Operating expenses:
Cost of sales 126,273 118,846 115,452
Amortization of cost in excess of net assets acquired2,5312,5332,528
Selling and administrative expenses27,090 27,192 30,094
Employee stock ownership plan expense (notes 8 and 10)-750750
------- ------- -------
Total operating expenses 155,894 149,321 148,824
------- ------- -------
Gross operating margin 42,993 46,809 51,856
------- ------- -------
Other income (expenses):
Interest income 757 323 16
Interest expense (55,403) (51,943) (51,601)
Amortization of debt issuance costs(1,249) (1,173) (1,129)
Other, net 680 289 773
------- ------- -------
Total other expense (55,215) (52,504) (51,941)
------- ------- -------
Loss before income taxes, extraordinary
item and cumulative effect of accounting
principle changes (12,222) (5,695) (85)
Provision (benefit) for income taxes (note 11)(1,183)2,4555,408
------- ------- -------
Loss before extraordinary item and cumulative
effect of accounting principle changes(11,039)(8,150)(5,493)
Extraordinary item, net of income tax benefit of $1,192
(note 12) (1,848) - -
Cumulative effect on prior years of accounting principle
changes for:
Income taxes (note 11) (61,833) - -
Postretirement benefits other than pensions, net
of income tax benefit of $1,490 (note 8)(2,401)- -
------- ------- -------
Net loss $ (77,121)$ (8,150)$ (5,493)
======= ======= =======
Loss per share:
Loss before extraordinary item and cumulative
effect of accounting principle changes$ (2.39)$ (1.80)$ (1.24)
Extraordinary item (.38) - -
Cumulative effect of accounting principle changes:
Income taxes (12.74) - -
Postretirement benefits other than pensions(.49) - -
------- ------- -------
Net loss per common share$ (16.00) $(1.80)$ (1.24)
======= ======= =======
Weighted average number of shares outstanding4,8554,839 4,847
======= ======= =======
See accompanying notes to consolidated financial statements.
-53-
AMERICOLD CORPORATION
Consolidated Statements of Common Stockholders' Deficit
Years ended last day of February 1994, 1993 and 1992
(In Thousands, Except Share Data)
Adjustment
for
Additional minimumTotal common
Commonpaid-inRetained pensionstockholders'
stockcapitaldeficit liabilitydeficit
----- ------------------------------
Balance last day of February 1991$ 48$ 48,607$ (59,233)$ -$ (10,578)
Purchase of common stock (30,400 shares)-(275)- - (275)
15% preferred stock dividend- - (146) - (146)
Undeclared cumulative preferred stock
dividend - - (365) - (365)
Adjustment for minimum pension liability--- (25) (25)
Net loss - - (5,493) - (5,493)
-------------- ------- ------- -------
Balance last day of February 19924848,332(65,237) (25)(16,882)
Purchase of common stock (1,910 shares)-(19)- - (19)
Issuance of common stock (17,476 shares)1449- - 450
14.25% preferred stock dividend- - (183) - (183)
Undeclared cumulative preferred stock
dividend - - (387) - (387)
Adjustment for minimum pension liability--- (4) (4)
Net loss - - (8,150) - (8,150)
-------------- ------- ------- -------
Balance last day of February 19934948,762(73,957) (29)(25,175)
Issuance of common stock (13,333 shares)-320- - 320
13.25% preferred stock dividend- - (194) - (194)
Undeclared cumulative preferred stock
dividend - - (381) - (381)
Adjustment for minimum pension liability--- (26) (26)
Net loss - - (77,121) - (77,121)
-------------- ------- ------- -------
Balance last day of February 1994$ 49$ 49,082$ (151,653)$ (55)$ (102,577)
============== ======= ======= =======
See accompanying notes to consolidated financial statements.
-54-
AMERICOLD CORPORATION
Consolidated Statements of Cash Flows
Years ended last day of February 1994, 1993 and 1992
(In Thousands)
1994 1993 1992
---- ---- ----
Cash flows from operating activities:
Net loss $ (77,121)$ (8,150)$ (5,493)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation 19,938 17,725 19,171
Amortization of cost in excess of net assets
acquired 2,531 2,533 2,528
Amortization of debt issuance costs1,249 1,173 1,129
Amortization of original issue discount1,2051,068 938
(Gain) loss on sale of assets 8 (63) 49
Gain on termination of capital lease(514) - (482)
Other amortization 408 373 291
Employee stock ownership plan expense320 450 485
Cumulative effect of accounting principle changes64,234--
Write-off of unamortized issuance costs3,040 - -
Change in assets and liabilities:
Receivables (336) 1,963 (2,989)
Prepaid expenses (1,067) (1,569) 290
Tax refund receivable 93 (1,384) -
Other current assets 165 (42) 93
Accounts payable (890) 24 1,191
Accrued interest 7,166 (161) 316
Accrued expenses (458) (311) (453)
Deferred revenue (443) (479) (113)
Other current liabilities 906 989 1,003
Deferred income taxes (1,375) 1,533 4,552
Other noncurrent liabilities (583) 2,028 2,354
------- ------- --------
Net cash provided by operating activities18,47617,70024,860
------- ------- -------
Cash flows from investing activities:
Proceeds from sale of assets 26 16 879
Expenditures for property, plant and equipment(8,925)(7,661)(9,212)
Purchase of long-term investment (1,000) - -
Other items, net (994) (1,098) (517)
------- ------- -------
Net cash used by investing activities(10,893)(8,743)(8,850)
------- ------- -------
(Continued)
-55-
AMERICOLD CORPORATION
Consolidated Statements of Cash Flows, Continued
(In Thousands)
1994 1993 1992
------- ------- -------
Cash flows from financing activities:
Net repayments under credit agreement$ (8,583)$ (15,417)$ (18,203)
Principal payments under capital lease and other
debt obligations (2,496) (2,457) (1,814)
Sale of senior subordinated debentures- - 5,281
Net proceeds, excluding escrow amounts, from
financing lien - 3,950 -
Net proceeds, excluding escrow amounts, from
sale of mortgage bonds 150,000 - -
Retirement of mortgage bonds (150,000) - -
Release of escrow funds 5,809 7,000 -
Debt issuance costs (870) (905) -
Purchase of treasury stock - (19) (241)
Other items, net - - (144)
------- ------- -------
Net cash used by financing activities(6,140)(7,848)(15,121)
------- ------- -------
Net increase in cash 1,443 1,109 889
Cash at beginning of year 2,449 1,340 451
------- ------- -------
Cash at end of year $ 3,892 $ 2,449 $ 1,340
======= ======= =======
Supplemental disclosure of cash flow information:
Cash paid during the year for interest, net of
amounts capitalized $ 47,031 $ 51,036 $ 50,348
Cash paid during the year for income taxes491 2,415 606
Supplemental schedule of noncash investing and
financing activities:
Capital lease obligations incurred to lease new
equipment 954 1,217 1,885
Warehouse facility purchased by long-term debt-10,000 -
Net book value of assets included in other
receivables 3,623 1,008 -
Financing lease proceeds placed in escrow- 12,050 -
Bond proceeds placed in escrow, net of debt
issuance costs of $3,966 22,284 - -
See accompanying notes to consolidated financial statements.
-56-
AMERICOLD CORPORATION
Notes to Consolidated Financial Statements
Last day of February 1994 and 1993
(1) Summary of Significant Accounting Policies
------------------------------------------
Accounting policies and methods of their application that
significantly affect the determination of financial
position, cash flows and results of operations are as
follows:
(a) Business Description
--------------------
Americold Corporation (the Company) operates a nationwide
network of 54 owned or leased refrigerated warehouse
facilities in 15 states. The Company has a wholly-owned
trucking subsidiary, James J. Gallery, Inc. (ceased
operations in February 1993), and a wholly-owned warehousing
subsidiary, Americold Services Corporation.
In addition, the Company operates certain businesses in
selected locations which are unrelated to the basic public
refrigerated warehousing business; these include a limestone
quarry, a vital records center (ceased operations in
April 1993) and a transportation broker service. These
businesses are not significant to the Company as a whole and
are not required to be reported as separate industry
segments.
(b) Principles of Consolidation
---------------------------
The consolidated financial statements include the accounts
of Americold Corporation and its wholly-owned subsidiaries.
All significant intercompany transactions, profits, and
balances have been eliminated.
(c) Property, Plant and Equipment
-----------------------------
Property, plant and equipment are stated at cost.
Depreciation is generally provided on the straight-line
method over the estimated useful lives of the respective
assets ranging from 3 to 45 years for financial reporting
purposes and on accelerated methods for income tax purposes
where possible. Property held under capital leases (at
capitalized value) is amortized on the straight-line method
over its estimated useful life, limited generally by the
lease period. The amortization of the property held under
capital leases is included with depreciation expense.
Estimated remaining useful lives are reviewed periodically
for reasonableness and any necessary change is generally
effected at the beginning of the accounting period in which
the revision is adopted.
Maintenance and repairs are expensed in the year
incurred; major renewals and betterments of equipment
and refrigerated facilities are capitalized and
depreciated over the remaining life of the asset.
(Continued)
-57-
AMERICOLD CORPORATION
Notes to Consolidated Financial Statements
(d) Cost in Excess of Net Assets Acquired
-------------------------------------
On December 24, 1986, all the outstanding capital stock of
the Company was acquired by a private group consisting of
affiliates of Kelso & Company, Inc., certain institutional
investors and certain key employees and members of the
Company's management. The acquisition of the Company (the
Acquisition) was accounted for as a purchase. An allocation
of the purchase price was made to the acquired assets and
liabilities based on their estimated fair market values at
the date of acquisition. The unallocated purchase price is
the Company's estimate of goodwill associated with the
acquisition and is being amortized using the straight-line
method over a period of 40 years.
On March 1, 1990, the Company acquired the warehousing
business of an unrelated third party. The goodwill
associated with the acquisition is being amortized using the
straight-line method over a period of 15 years.
The Company assesses the recoverability of the goodwill by
determining whether the amortization of the goodwill balance
over its remaining useful life can be recovered through
projected undiscounted future net income. The amount of
goodwill impairment, if any, is measured based on projected
discounted future net income using a discount rate
reflecting the Company's current average cost of funds.
(e) Debt Issuance Costs
-------------------
Debt issuance costs incurred are amortized over the term of
the related debt.
(f) Income Taxes
------------
In February 1992, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" (Statement 109). Statement
109 requires a change from the deferred method of accounting
for income taxes of APB Opinion 11 to the asset and
liability method of accounting for income taxes. Under the
asset and liability method of Statement 109, deferred tax
assets and liabilities are recognized for the future tax
consequences attributable to differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or
settled. Under Statement 109, the effect on deferred tax
assets and liabilities of a change in tax rates is
recognized in income in the period that includes the
enactment date.
Effective March 1, 1993, the Company adopted Statement 109
and has reported the cumulative effect of that change in the
method of accounting for income taxes in the 1994
consolidated statement of operations (note 11).
Pursuant to the deferred method under APB Opinion 11, which
was applied in 1993 and prior years, deferred income taxes
are recognized for income and expense items that are
reported in different years for financial reporting purposes
using the tax rate applicable for the year of calculation.
Under the deferred method, deferred taxes are not adjusted
for subsequent changes in tax rates.
(Continued)
-58-
AMERICOLD CORPORATION
Notes to Consolidated Financial Statements
(g) Postretirement Benefits Other Than Pensions
-------------------------------------------
In December 1990, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 106,
"Postretirement Benefits Other Than Pensions" (Statement
106). Statement 106 requires the recognition of a liability
for obligations for postretirement benefits expected to be
provided to or for an employee to be accrued during the
service lives of the employees. The Company previously
expensed the cost of such benefits, which are principally
health care, as claims were received.
Effective March 1, 1993, the Company adopted Statement 106
and has reported the cumulative effect of that change in the
method of accounting for postretirement benefits other than
pensions in the 1994 consolidated statement of operations
(note 8).
(h) Revenue Recognition
-------------------
The Company's revenues are primarily derived from services
provided to customers in both handling and storing frozen
products. Handling and storage revenue is based primarily
upon the total weight of frozen product received into and
held in storage and is recognized as earned, not as billed.
Differences between revenue earned and revenue billed are
recorded as deferred revenue. Approximately 50% of the
handling revenue is deferred until the customers' products
are delivered.
(i) Loss Per Share
--------------
Loss per common share is computed by dividing net loss, less
preferred dividend requirements, by the weighted average
number of common shares outstanding.
(j) Major Customers
---------------
Consolidated net sales to H.J. Heinz Co. and subsidiaries
amounted to approximately $35.8 million and $26.6 million in
the years ended the last day of February 1994 and 1993,
respectively. For the year ended the last day of February
1993, consolidated net sales to ConAgra, Inc. and
subsidiaries amounted to approximately $21.3 million. No
other customers accounted for 10% or more of consolidated
sales.
(k) Reclassifications
-----------------
Certain reclassifications have been made in the accompanying
financial statements for 1992 and 1993 to conform with the
1994 presentation.
(Continued)
-59-
AMERICOLD CORPORATION
Notes to Consolidated Financial Statements
(2) Net Property, Plant and Equipment
---------------------------------
Net property, plant and equipment consists of the
following (in thousands):
Last day
of February
---------------------------------
1994 1993
---- ----
Land $ 31,476 $ 31,737
Refrigerated facilities, buildings
and land improvements 426,275 386,604
Machinery and equipment 56,702 56,376
-------- --------
514,453 474,717
Less accumulated depreciation 138,681 115,088
-------- --------
Net property, plant
and equipment $375,772 $359,629
======== ========
(3) Other Noncurrent Assets
-----------------------
Other noncurrent assets consist of the following (in
thousands):
Last day
of February
---------------------------------
1994 1993
---- ----
Restricted funds held by trustee
(note 7) $ 21,899 $ 5,063
Real estate owned, less allowance
for loss of $43 and $91,
respectively 440 519
Security deposits 424 399
Non-compete agreement, less accumulated
amortization of $280 and $210,
respectively 70 140
Other 3,328 1,858
-------- --------
$ 26,161 $ 7,979
======== ========
(Continued)
-60-
AMERICOLD CORPORATION
Notes to Consolidated Financial Statements
(4) Leases
------
Assets under capital leases are included in net property,
plant and equipment and consist of the following (in
thousands):
Last day
of February
---------------------------------
1994 1993
---- ----
Land, refrigerated facilities, buildings
and land improvements $ 7,140 $ 8,231
Machinery and equipment 4,255 4,955
------- -------
11,395 13,186
Less accumulated depreciation 3,540 3,917
------- -------
$ 7,855 $ 9,269
======= =======
Future minimum lease payments under noncancelable leases for
years ending after the last day of February 1994 are as
follows (in thousands):
Year ending the last Capital Operating
day of February leases leases
-------------------- ------- ----------
1995 $ 1,821 $ 7,756
1996 1,546 6,321
1997 1,217 5,655
1998 3,435 5,400
1999 341 4,561
Thereafter 1,659 7,786
-------- --------
Total minimum lease payments 10,019$ 37,479
========
Less amounts
representing interest 2,428
--------
Present value of net minimum
lease payments $ 7,591
========
Included in expenses for the years ended the last day of
February 1994, 1993 and 1992 are approximately $9.1 million,
$8.7 million and $8.2 million, respectively, of rental
expense net of sublease rentals for operating leases.
(Continued)
-61-
AMERICOLD CORPORATION
Notes to Consolidated Financial Statements
(5) Accrued Expenses
----------------
Accrued expenses consist of the following (in thousands):
Last day
of February
--------------------------
1994 1993
---- ----
Accrued payroll $ 1,498 $ 1,461
Accrued vacation pay 2,345 2,480
Accrued taxes 837 1,048
Accrued employee stock
ownership plan contribution - 750
Other 2,832 2,231
-------- --------
Total accrued expenses $ 7,512 $ 7,970
======== ========
(6) Other Current Liabilities
-------------------------
Other current liabilities consist of the following (in
thousands):
Last day
of February
---------------------------
1994 1993
---- ----
Workers' compensation $ 2,527 $ 2,434
Other 2,417 1,604
-------- --------
$ 4,944 $ 4,038
======== ========
(Continued)
-62-
AMERICOLD CORPORATION
Notes to Consolidated Financial Statements
(7) Long-term Debt
--------------
Long-term debt consists of the following (in thousands):
Last day
of February
------------------------------
1994 1993
---- ----
Capital lease obligations (10.8% and 9.3% weighted
average interest rate, respectively)$ 7,591$ 9,823
Senior subordinated debentures - 11% fixed, due
May 1, 1997 with mandatory sinking fund payments
of $28,750 on May 1, 1995 and 1996111,212 110,002
First mortgage bonds, Series A - 11.45% fixed, due
June 30, 2002, interest payments only to January 1,
1999 with principal amortization commencing
July 1, 1999 150,000 300,000
First mortgage bonds, Series B - 11.5% fixed, due
March 1, 2005, interest payments only to
September 1, 2003 with a mandatory sinking fund
payment of $88,125 on March 1, 2004176,250 -
Mortgage notes payable - various interest rates ranging
from 8.5% to 13.6% requiring monthly principal and
interest payments with maturities ranging from
2003 to 2017 24,565 25,545
Bank credit agreement - option of prime plus 1% or
Eurodollar market rates plus 2%. Mandatory facility
resting requirements are scheduled each June 30
and December 31 with the agreement terminating
February 29, 1996 (7.0% and 6.59% weighted average
interest rate, respectively) - 8,583
-------- --------
Total long-term debt 469,618 453,953
Less current maturities of long-term debt2,28110,950
-------- --------
Total long-term debt, less current maturities$ 467,337$ 443,003
======== ========
(Continued)
-63-
AMERICOLD CORPORATION
Notes to Consolidated Financial Statements
On July 2, 1987, the Company sold $300 million in first
mortgage bonds. On March 9, 1993, the Company sold $176.25
million of the Company's 11.5% First Mortgage Bonds, Series
B, due March 1, 2005. The Company used $150 million of the
proceeds from the sale of the Series B bonds to purchase at
par $150 million of outstanding first mortgage bonds. The
remaining $150 million of such First Mortgage Bonds have
been redesignated Series A First Mortgage Bonds (together
with the Series B First Mortgage Bonds, the "First Mortgage
Bonds"). The remaining net proceeds of approximately $22.3
million were placed in escrow with the Mortgage Bond Trustee
(note 3). The bonds are secured by mortgages or deeds of
trust on 32 of the Company's facilities.
On February 3, 1993, the Company entered into a bank credit
agreement with its principal bank and terminated its
revolving credit agreement. The bank credit agreement is
secured by the Company's trade receivables. The bank credit
agreement has an aggregate availability of $27.5 million
consisting of $20 million maximum cash borrowings and $10
million of letter of credit funding. Any amount by which
the letter of credit borrowings exceed $7.5 million reduces
the available cash borrowing amount under the agreement by a
like amount. Availability for cash borrowings is limited by
a defined borrowing base advance formula established on the
basis of reviews of trade receivables. The unused and
available amount under the bank credit agreement was $13.2
million as of the last day of February 1994. There were
$4.2 million of letters of credit outstanding as of the last
day of February 1994.
The senior subordinated debentures are presented as of the
last day of February 1994 and 1993 net of the original issue
discount of approximately $9.4 million and accumulated
accretion of approximately $5.6 million and $4.4 million,
respectively.
The Company entered into an investment agreement in
connection with the issuance of the First Mortgage Bonds
which, like the bank credit agreement, requires the Company
to meet certain affirmative and restrictive covenants.
Significant restrictive items include, among others,
limitations on additional indebtedness, liens, dividends,
capital expenditures, asset dispositions, lease commitments
and investments. Also, certain "earnings to fixed charges"
ratios, net worth levels and senior debt to net worth ratios
must be maintained.
On May 15, 1992, the Company entered into a sale/leaseback
transaction of its Ontario, Oregon facility which it had
formerly owned. Of the approximately $15 million of net
proceeds, the Company received approximately $3 million at
closing and the remaining $12 million was placed in escrow
with the trustee under the Indenture, dated as of June 15,
1987, as amended, relating to the issuance of the Company's
11.45% First Mortgage Bonds, due 2002. In February 1993,
the Company received $7 million of escrowed funds which the
Company used to reduce its borrowings under the revolving
credit agreement to a level where remaining borrowings were
refinanced with borrowings under a bank credit agreement
with its principal bank. With respect to the remaining
escrowed funds, the Company substituted unencumbered
property prior to its release. All escrowed amounts are
included in other noncurrent assets (note 3). The Ontario
lease was treated as a financing lease, as the Company has
an option to repurchase the warehouse at a later date. The
amount of debt outstanding related to this financing lease
of approximately $15.3 million as of the last day of
February 1994 is included in mortgage notes payable.
(Continued)
-64-
AMERICOLD CORPORATION
Notes to Consolidated Financial Statements
As of the last day of February 1994, aggregate annual
maturities of long-term debt are as follows (in thousands):
Year ended the last
day of February
-------------------
1995 $ 2,281
1996 31,002
1997 30,914
1998 62,135
1999 1,935
(8) Employee Benefit Plans
----------------------
(a) Defined Benefit Pension Plans
-----------------------------
The Company has defined benefit pension plans which cover
substantially all employees other than union employees
covered by union pension plans under collective bargaining
agreements. Benefits under these plans are based on years
of credited service and compensation during the years
preceding retirement or on years of credited service and
established monthly benefit levels.
Pension expense for all plans, including plans jointly
administered by industry and union representatives totaled
$1.4 million, $1.5 million and $1.7 million for years ended
the last day of February 1994, 1993 and 1992, respectively.
Actuarial valuations for defined benefit plans are performed
as of the end of the plan year. The most recent actuarial
valuations are as of the last day of February 1994.
(Continued)
-65-
AMERICOLD CORPORATION
Notes to Consolidated Financial Statements
The funded status of the Company's defined benefit pension
plans and the accrued pension expense amounts recognized in
the Company's consolidated financial statements as of the
last day of February 1994 and 1993 are as follows (in
thousands):
Last day of Last day of
February 1994 February 1993
----------------------------------------------
Plans withPlans withPlans withPlans with
assets inaccumulatedassets inaccumulated
excess ofbenefits inexcess ofbenefits in
accumulatedexcess ofaccumulatedexcess of
benefitsassets benefitsassets
-------------- --------------
Actuarial present value of benefit obligations:
Accumulated benefit obligations:
Vested benefits $ 24,482$ 120$ 19,035$ 107
Nonvested benefits 460 - 301 -
---------------- ----------------
24,942 120 19,336 107
Effect of assumed future compensation
increases 2,892 - 3,203 -
---------------- ----------------
Projected benefit obligations for
services rendered to date27,834 120 22,539 107
Plan assets at fair value 25,257 57 23,706 47
---------------- ----------------
Projected benefit obligations in
excess of (less than) plan assets2,57763 (1,167) 60
Unrecognized prior service cost(335) (3) (346) (3)
Unrecognized net gain (loss) from past
experience different from that assumed
and effects of changes in assumptions2,132(55)4,639 (29)
---------------- ----------------
Accrued pension liability$ 4,374$ 5$ 3,126$ 28
================ ================
(Continued)
-66-
AMERICOLD CORPORATION
Notes to Consolidated Financial Statements
Net periodic pension expense for the years ended the last day
of February 1994, 1993 and 1992 includes the following
components (in thousands):
Last day of February
- - -------------------------------------
1994 1993 1992
---- ---- ----
Service cost - benefits earned during the period$ 1,013$ 1,005$ 979
Interest cost on projected benefit obligation2,0941,9841,903
Actual return on plan assets (2,202) (2,097) (1,976)
Net amortization and deferral (233) (214) (138)
-------- -------- --------
Net periodic pension expense$ 672$ 678$ 768
======== ======== ========
Actuarial assumptions used for determining pension expenses
were:
Last day of February
-------------------------------------
1994 1993 1992
---- ---- ----
Discount rate for interest cost 8.0% 9.0% 9.0%
Rate of increase in future compensation levels4.05.0 5.0
Expected long-term rate of return on plan assets10.59.59.5
Plan assets are assigned to several investment management
companies and are invested in various equity and fixed fund
investments in accordance with the Company's investment
policy.
(b) Employee Stock Ownership Plan
-----------------------------
The Company established an employee stock ownership plan,
effective March 1, 1987, which is intended to provide
qualifying employees an equity interest in the Company, as
well as potential retirement benefits. The trust
established under the plan is designed to invest primarily
in the Company's stock. Contributions by the Company, in
the form of common or preferred stock of the Company, or
cash, or a combination thereof, may be made to the trustee
on behalf of eligible participants for each plan year as
determined by the Company's Board of Directors.
Participating employees with vested benefits, upon
retirement or termination, have the option of retaining the
stock or selling it back to the Company at its fair market
value. No contribution has been declared for the fiscal
year ending the last day of February 1994.
(c) Postretirement Benefits Other Than Pensions
-------------------------------------------
In addition to providing retirement benefits, the Company
provides certain health care and life insurance benefits for
retired employees. These benefits are provided to
substantially all employees other than certain union
employees who have elected not to participate. Prior to
1994, the Company recognized the cost of providing
retirement health benefits and life insurance benefits as
the claims or premiums were incurred.
(Continued)
-67-
AMERICOLD CORPORATION
Notes to Consolidated Financial Statements
Effective March 1, 1993, the Company adopted Financial
Accounting Standards Board Statement of Financial Accounting
No. 106 (Statement 106), which required that the expected
cost of providing such benefits be accrued over the years
that the employee renders service, in a manner similar to
the accounting for pension benefits. As permitted under
Statement 106, the Company elected to recognize this change
in accounting principle on the immediate recognition basis.
The cumulative effect as of March 1, 1993 of adopting the
standard resulted in a decrease in deferred taxes of
approximately $1.5 million, an increase in accrued
postretirement benefits of approximately $3.9 million, and a
one-time non-cash charge to fiscal 1994 earnings of
approximately $2.4 million.
The total of accumulated postretirement benefit obligation
(APBO), which is an unfunded obligation, is as follows:
February 28, 1994March 1, 1993
------------------------------
Retirees $ 2,339 $ 2,538
Active employees 1,573 1,353
--------- ---------
Total APBO $ 3,912 $ 3,891
========= =========
The components of net periodic postretirement expense for
the year ended the last day of February 1994 are as follows
(in thousands):
Service cost benefits earned in period$ 90
Interest cost on APBO 329
------
$ 419
======
The discount rate used to determine the APBO as of March 1,
1993 was 9%, and was 8.5% to determine the APBO and net
periodic expense as of and for the year ended the last day
of February 1994.
For fiscal 1994, a 12.5% increase in the medical cost trend
rate was assumed. This rate decreases incrementally to 6%
after nine years. A 1% increase in the medical trend rate
would increase the APBO by $.1 million and increase the net
periodic expense by a negligible amount.
(Continued)
-68-
AMERICOLD CORPORATION
Notes to Consolidated Financial Statements
(9) Common Stockholders' Equity
---------------------------
The Company has reserved 300,000 shares of common stock for
issuance under a stock option plan established in 1987.
Under the plan, options are granted by the compensation
committee of the Board of Directors to purchase common stock
at a price not less than 85% of the fair market value on the
date the option is granted.
Information with regard to the plan as of the last day of
February 1994 follows:
Number of SharesPriceExercisable Expires
-------------------------------- -------
97,934 10.0097,934 May 1998
100,000 18.9560,000 June 2000
30,000 21.88- May 2003
30,000 20.40- December 2003
No options had been exercised as of the last day of February
1994.
The Company has reserved 500,000 shares of common stock for
issuance under a Stock Incentive Plan effective March 1,
1991. Under the terms of the plan, officers and key
management employees can receive either common stock or cash
in specified amounts depending upon the financial
performance of the Company measured over a four-year period
ending February 28, 1995. As of the last day of February
1994, no shares had been issued. The Board approved a total
award of approximately 106,000 shares related to the year
ended the last day of February 1992. Total expense accrued
under this plan for each of the years ended the last day of
February 1994 and 1993 was $-0- and cumulatively since the
beginning of the plan was approximately $1.0 million.
In November 1993, the Company funded the fiscal 1993
Americold Employee Stock Ownership Plan contribution of
$750,000. The contribution was in the form of 13,333 shares
of the Company's common stock and $430,008 in cash.
(10) Preferred Stock
---------------
The Company contributes shares of its Series A, variable
rate, cumulative preferred stock to the Americold Employee
Stock Ownership Plan (ESOP). The preferred stock is
redeemable by participants of the plan (note 8). The
Company contributed 5,812, 5,471 and 9,225 shares, inclusive
of stock dividends, to the ESOP during the years ended the
last day of February 1994, 1993 and 1992, respectively. As
of the last day of February 1994, dividends not declared on
the Company's cumulative preferred stock total approximately
$381,000.
(Continued)
-69-
AMERICOLD CORPORATION
Notes to Consolidated Financial Statements
(11) Income Taxes
------------
Prior to 1994, the Company provided for income taxes under
APB 11. Effective March 1, 1993, the Company adopted
Financial Accounting Standards Board Statement of Financial
Accounting Standards No. 109 (Statement 109) which required
a change in the method of providing for income taxes. As
permitted under Statement 109, the Company elected to
recognize this change in accounting principle on the
immediate recognition basis. The cumulative effects as of
March 1, 1993 of adopting Statement 109 were an increase in
net fixed assets of approximately $31.2 million (the amount
of a previous write-down of assets under APB No. 16 as a
result of the purchase of the Company in December 1986, net
of subsequent depreciation), an increase in deferred income
taxes of $93 million, and a one-time, non-cash charge of
approximately $61.8 million in fiscal 1994. Application of
Statement 109 has reduced earnings before cumulative effect
of accounting principle change by approximately $1.7 million
as a result of increased depreciation for the year ended the
last day of February 1994.
The provision (benefit) for income taxes consists of the
following (in thousands):
1994 1993 1992
---- ---- ----
Federal:
Current $ 500 $ 275 $ 503
Deferred (1,557) 1,649 3,580
-------- -------- --------
(1,057) 1,924 4,083
State:
Current 68 647 364
Deferred (194) (116) 961
-------- -------- --------
$ (1,183)$ 2,455 $ 5,408
======== ======== ========
(Continued)
-70-
AMERICOLD CORPORATION
Notes to Consolidated Financial Statements
Following is a reconciliation of the difference between
income taxes computed at the federal statutory rate and the
provision for income taxes (in thousands):
1994 1993 1992
---- ---- ----
Computed income tax benefit at federal
statutory rate $ (4,278) $ (1,936) $ (29)
State and local income taxes, net of
federal income tax benefits (418) 351 874
Adjustment to deferred tax assets and
liabilities for changes in enacted rates 2,627 - -
Amortization of cost in excess of net
assets acquired 886 861 860
Financial statement depreciation not
deductible for income tax purposes - 3,429 3,859
Other, net - (250) (156)
-------- -------- ------
Provision (benefit) for income taxes$ (1,183)$ 2,455$5,408
======== ======== ======
Deferred income taxes for 1994 reflect the impact of
"temporary differences" between amounts of assets and
liabilities for financial reporting purposes and such
amounts as measured by tax laws. These temporary
differences are determined in accordance with Statement 109
and are more inclusive in nature than "timing differences"
as determined under previously applicable accounting
principles.
(Continued)
-71-
AMERICOLD CORPORATION
Notes to Consolidated Financial Statements
Deferred income taxes reflect the net tax effects of
temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the
related amounts used for income tax purposes. Significant
components of the Company's deferred tax liabilities and
assets as of February 28, 1994 are as follows (in
thousands):
Deferred tax liabilities:
Property, plant and equipment, due to
differences in depreciation and prior
accounting treatment (13,372)
Other, net (1,481)
--------
Total deferred tax liabilities (114,853)
--------
Deferred tax assets:
Receivables, due to allowance for
doubtful accounts 388
Employee compensation and other benefits 2,382
Capital leases, net 2,019
Postretirement benefits other than
pensions, due to accrual for financial
reporting purposes 1,535
Net operating loss carryforwards 3,585
Alternative minimum tax carryforwards 1,289
Other, net 417
--------
Total deferred tax assets 11,615
--------
Net deferred tax liability before
valuation allowance (103,238)
Deferred tax asset valuation allowance (1,320)
--------
Net deferred tax liability $ (104,558)
========
The valuation allowance for deferred tax assets as of
March 1, 1993 and as of the last day of February 1994 was
approximately $1.3 million. The valuation allowance is
required to reduce the amount of deferred tax assets to an
amount which will more likely than not be realized. The
valuation allowance relates to acquired net operating loss
carryforwards for which subsequent recognition will be
allocated to reduce cost in excess of net assets acquired.
The Omnibus Budget Reconciliation Act of 1993 resulted in a
federal tax rate increase from 34% to 35% effective
January 1, 1993. The tax rate increase resulted in
additional income tax expense for the Company of $2.6
million.
For tax return purposes as of the last day of February 1994,
the Company has federal net operating loss carryforwards of
approximately $9.1 million to offset future taxable income.
These net operating loss carryforwards, if not utilized,
will begin to expire in the year ended the last day of
February 2004. The Company has an alternative minimum tax
credit carryforward of approximately $1.3 million available
to offset future regular taxes in excess of future
alternative minimum taxes.
(Continued)
-72-
AMERICOLD CORPORATION
Notes to Consolidated Financial Statements
(12) Extraordinary Item
-------------------
In conjunction with the retirement of the $150 million in
first mortgage bonds as discussed in Note 7, unamortized
issuance costs of approximately $3.0 million were written
off, resulting in an extraordinary loss, net of taxes, of
approximately $1.8 million.
(13) Disclosures About The Fair Value of Financial Instruments
---------------------------------------------------------
Cash, Trade Receivables, Other Receivables, Accounts
Payable, and Accrued Expenses
-----------------------------------------------------
The carrying amount approximates fair value because of the
short maturity of these instruments.
Long-Term Debt
--------------
The fair values of each of the Company's long-term debt
instruments are based on (a) the amount of future cash flows
associated with each instrument discounted using the
Company's current borrowing rate for similar debt
instruments of comparable maturity or (b) in the case of the
first mortgage bonds - Series B and senior subordinated
debentures, market price.
As of last day
of February 1994
----------------
Estimated
fair
Carrying market
amount value
-------- ---------
Senior subordinated debentures $ 111,212 $ 114,425
First mortgage bonds - Series A 150,000 150,000
First mortgage bonds - Series B 176,250 183,300
Mortgage notes payable 24,565 24,565
Limitations
-----------
Fair value estimates are made at a specific point in time,
based on relevant market information and information about
the financial instrument. These estimates are subjective in
nature and involve uncertainties and matters of significant
judgment and therefore cannot be determined with precision.
Changes in assumptions could significantly affect the
estimates.
(Continued)
-73-
AMERICOLD CORPORATION
Notes to Consolidated Financial Statements
(14) Contingency
-----------
In December 1991, a fire occurred at the Company's Kansas
City, Kansas underground warehouse facility. As a result of
the fire, lawsuits have been filed. The lawsuits allege,
among other things, that the Company was negligent. The
defense of existing lawsuits has been tendered to the
Company's insurance carriers (note 15).
On February 18, 1994, the Company received, from the United
States Attorney for District of Kansas, a claim of
approximately $67.3 million from the United States
Department of Agriculture (the USDA) for fire-related damage
to commodity food-stuffs stored and computer equipment
utilized at the Company's Kansas City, Kansas facility
(note 15).
Although the Company carries substantial property,
liability, warehouseman's legal liability and business
interruption insurance, the claim submitted by the
U.S. Attorney would, together with other pending claims,
exceed the Company's insurance coverage by a material amount
if such claims were established at trial. While the Company
disputes it has any liability with respect to the Kansas
City fire, there can be no assurance that the Company will
not be found liable for damages or that the total damages
resulting from the fire will not exceed its insurance
coverage. The Company has no reason to believe that any
amounts not covered by insurance would be material to the
consolidated financial statements.
A number of tenants and customers discontinued payments on
storage of damaged products or lease space. As of the last
day of February 1994 and 1993, approximately $5.9 million of
billings had been disputed by the Company's tenants and
customers. These disputed billings have been classified as
other receivables. Also, as of the last day of
February 1994 and 1993, included in the amount of other
receivables is approximately $6.5 million and $5.2 million,
respectively, of expenses related to the fire and
approximately $4.6 million and $1.0 million, respectively,
for real and personal property lost in the fire. Claims for
these amounts have been submitted to the Company's insurance
company as part of its overall insurance claim. The Company
has reduced the total fire-related receivables of $17.0
million as of the last day of February 1994 by $7.2 million,
the amount of the insurance advances, and $4.1 million, the
amount of allowance established for possibility of
non-collection of these expenses and any disputed billings
(note 15).
(Continued)
-74-
AMERICOLD CORPORATION
Notes to Consolidated Financial Statements
(15) Subsequent Event
----------------
In March of 1994, the Company settled all of the material
lawsuits in connection with the record storage and warehouse
receipt claims brought by third parties alleging damages as
a result of the Kansas City, Kansas warehouse fire.
However, the settlement does not include the USDA matter
discussed in note 14. The settlement amounts are covered by
the Company's insurance policies.
In addition, in April of 1994, the Company settled its first
party claims with its insurance carriers for which
additional insurance proceeds were received.
The Company has also reached an agreement in principle for
settlement of the lawsuits filed by tenants of the Kansas
City, Kansas facility and their insurers. This settlement
requires no cash payment by the Company, but only an
assignment of certain insurance coverage and other claims of
the Company.
-75-
Schedule V
----------
AMERICOLD CORPORATION
Property, Plant and Equipment
Years ended the last day of
February 1994, 1993 and 1992
(In Thousands)
Balance at Balance
beginning Additions at end
of period at cost RetirementsOther (1) of period
------------------- -------------------- ---------
Year ended the last day
of February 1994:
Land $ 31,737 $ 44 $ - $ (305) $ 31,476
Refrigerated facilities,
buildings and land
improvements 386,604 5,812 6,077 39,936 426,275
Machinery and equipment 56,376 3,790 7,347 3,883 56,702
-------- -------- -------- -------- --------
$474,717 $ 9,646 $ 13,424 $ 43,514 $514,453
======== ======== ========= ======== ========
Year ended the last day
of February 1993:
Land 31,272 465 - - 31,737
Refrigerated facilities,
buildingsand land
improvements 371,647 15,160 184 (19) 386,604
Machinery and equipment 56,705 3,319 3,667 19 56,376
-------- -------- -------- --------- --------
$459,624 $ 18,944 $ 3,851 $ - $474,717
======== ======== ======== ========= ========
Year ended the last day
of February 1992:
Land 33,793 50 - (2,571) 31,272
Refrigerated facilities,
buildings and land
improvements 364,201 6,151 1,273 2,568 371,647
Machinery and equipment 53,294 4,896 1,488 3 56,705
-------- -------- -------- --------- --------
$451,288 $ 11,097 $ 2,761 $ - $459,624
======== ======== ======== ========= ========
(1) February 1994 adjustments relate to adoption of FAS No. 109.
-76-
Schedule VI
-----------
AMERICOLD CORPORATION
Accumulated Depreciation of Property,
Plant and Equipment
Years ended the last day of
February 1994, 1993 and 1992
(In Thousands)
Additions
Balance atcharged to Balance
beginning costs and at end
of period expenses RetirementsOther (1) of period
---------------------------------------- ---------
Year ended the last day
of February 1994:
Land $ 65 $ 15 $ - $ - $ 80
Refrigerated facilities,
buildings and land
improvements 81,295 14,843 1,328 9,307 104,117
Machinery and equipment 33,728 5,080 7,281 2,957 34,484
-------- -------- -------- -------- --------
$115,088 $ 19,938 $ 8,609 $ 12,264 $138,681
======== ======== ======== ======== ========
Year ended the last day
of February 1993:
Land 56 9 - - 65
Refrigerated facilities,
buildings and land
improvements 68,606 12,760 61 (10) 81,295
Machinery and equipment 31,525 4,956 2,763 10 33,728
-------- -------- -------- -------- --------
$100,187 $ 17,725 $ 2,824 $ - $115,088
======== ======== ======== ======== ========
Year ended the last day
of February 1992:
Land 47 9 - - 56
Refrigerated facilities,
buildings and land
improvements 56,249 12,644 287 - 68,606
Machinery and equipment 25,681 6,518 674 - 31,525
-------- -------- -------- -------- --------
$ 81,977 $ 19,171 $ 961 $ - $100,187
======== ======== ======== ======== ========
(1) February 1994 adjustments relate to adoption of FAS No. 109.
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Schedule VIII
-------------
AMERICOLD CORPORATION
Valuation and Qualifying Accounts
Years ended the last day of
February 1994, 1993 and 1992
(In Thousands)
Additions
Balance atcharged to Balance
beginning costs and at end
of period expenses Deductionsof period
---------------------------------------
Year ended the last day
of February 1994 -
Allowance for doubtful accounts -
other receivables $ 4,100 $ - $ - $ 4,100
Year ended the last day
of February 1993 -
Allowance for doubtful accounts -
other receivables - 4,100 - 4,100
Year ended the last day
of February 1992 -
None
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Schedule IX
-----------
AMERICOLD CORPORATION
Short-term Borrowings
Years ended the last day of
February 1994, 1993 and 1992
(In Thousands)
Weighted
Maximum Average average
Weighted amount amount interest
Balance ataverage outstandingoutstandingrate
beginning interest during thein the during the
of period rate period period period
------------------ --------------------------------
Year ended the last day
of February 1994 -
Bank credit agreement$ 8,583 5.5%$ 10,717$ 2,810 5.5%
Year ended the last day
of February 1993 -
Bank credit agreement$ - 7.0% $ 8,583 $ 7,250 7.0%
Year ended the last day
of February 1992 -
None
Note: Averages are calculated as an average at beginning and end of month.
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Schedule X
----------
AMERICOLD CORPORATION
Supplementary Income Statement Information
Years ended the last day of
February 1994, 1993 and 1992
(In Thousands)
Last day of February
-----------------------------------
1994 1993 1992
---- ---- ----
Maintenance and repairs $5,046 $4,304 $4,331
====== ====== ======
Property taxes $6,062 $5,797 $5,521
====== ====== ======
Amortization of cost in excess
of net assets acquired $2,531 $2,533 $2,528
====== ====== ======
All other items do not exceed one percent of total sales and
revenues.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Company has duly caused this
report to be signed on its behalf by the undersigned, thereunto
duly authorized.
AMERICOLD CORPORATION
May 26, 1994
By: /s/ Ronald H. Dykehouse By: /s/ Joel M. Smith
------------------------ ------------------------
Ronald H. Dykehouse Joel M. Smith
Chairman of the Board, Senior Vice President and
President and Chief Financial Officer
Chief Executive Officer (Principal Financial
Officer)
By: /s/ Thomas R. Ferreira
------------------------
Thomas R. Ferreira
Corporate Controller
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed by the following persons on
behalf of the Company and in the capacities and on the dates
indicated.
/s/ Ronald H. Dykehouse
- - ------------------------------- May 24, 1994
Ronald H. Dykehouse, Director
/s/ Joel M. Smith
- - ------------------------------- May 22, 1994
Joel M. Smith, Director
/s/ Frank Edelstein
- - ------------------------------- May 20, 1994
Frank Edelstein, Director
/s/ George E. Matelich
- - ------------------------------- May 23, 1994
George E. Matelich, Director
/s/ James C. Pigott
- - ------------------------------- May 23, 1994
James C. Pigott, Director
/s/ William A. Marquard
- - ------------------------------- May 23, 1994
William A. Marquard, Director
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Supplemental Information to be Furnished With Reports Filed
Pursuant to Section 15(d) of the Act by Registrants Which Have
Not Registered Securities Pursuant to Section 12 of the Act.
No annual report covering the Company's last fiscal year or proxy
statement with respect to any annual or other meeting of security
holders has been sent to security holders. The Company does not
solicit proxies.
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AMERICOLD CORPORATION
FORM 10-K
EXHIBIT INDEX
Exhibit Page
- - -------- ----
(10(xxvii)) Nonstatutory Stock Option Agreement
dated December 17, 1993 between the
Company and J. Roy Coxe 84
(11) Statement re Computation of Per Share
Earnings 89
(21) Subsidiaries of the Registrant 90
(23) Consent of KPMG Peat Marwick 91
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