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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark one)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended October 2, 1994
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or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
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Commission file number 1-11420
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SAVANNAH FOODS & INDUSTRIES, INC.
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(Exact name of Registrant as specified in its Charter)
Delaware 58-1089367
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
P. O. Box 339, Savannah, Georgia 31402
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (912) 234-1261
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Securities registered pursuant to Section 12(b) of the Act:
Common Stock - Par Value: $.25 per share
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(Title of Class)
Securities registered pursuant to Section 12(g) of the Act:
None
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(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
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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. ( )
At November 30, 1994, there were 26,238,196 shares of Common Stock outstanding.
The aggregate market value of the voting stock held by non-affiliates of the
Registrant on November 30, 1994 was $308,298,803.
DOCUMENTS INCORPORATED BY REFERENCE: Portions of the Registrant's Proxy
Statement for the Annual Meeting of Stockholders to be held on February 16,
1995 are incorporated by reference in Part III hereof.
The exhibit index is located on page 40 of this filing.
Page 1 of 232 pages.
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PART I
Item 1. Business
Savannah Foods & Industries, Inc. ("Registrant") was incorporated in
Delaware on February 19, 1969, as the successor to Savannah Sugar Refining
Corporation, which was originally incorporated in New York in 1916.
Registrant and its subsidiaries collectively comprise one business segment
and are engaged in the production, marketing, and distribution of food
products, primarily refined sugar.
Registrant and its wholly-owned subsidiaries, Colonial Sugars, Inc. and
Everglades Sugar Refinery, Inc., are engaged in the refining and marketing of
a complete line of bulk, packaged and liquid sugars and sugar products,
including edible molasses, liquid animal feeds and corn syrup blends. These
products are marketed primarily in the southeastern portion of the United
States, Louisiana, and Texas, but are also widely distributed into other states
generally east of the Mississippi and south of New England. Packaged sugar is
marketed under the trade names DIXIE CRYSTALS(R), COLONIAL(R), EVERCANE(R),
but is also sold under Registrant's other controlled labels and under
customers' private label brands. These products are marketed both by means of
direct sales and through brokers and are primarily distributed directly to the
customer by common carrier truck or railcar.
Michigan Sugar Company, a wholly-owned subsidiary of Registrant, and its
wholly-owned subsidiary, Great Lakes Sugar Company, are engaged in the
processing of sugar beets into refined sugar and the production of beet pulp
and molasses. The refined sugar is marketed primarily in the states of
Michigan and Ohio, but is also distributed in the midwestern and eastern parts
of the United States. Packaged sugar is marketed under the trade name
PIONEER(R), but is also sold under customers' private label brands. These
products are marketed both by means of direct sales and through brokers and are
primarily distributed directly to the customer by common carrier truck or
railcar. Most of the beet pulp is pelletized and sold for export. The balance
is sold in the domestic market. The majority of the molasses is sold to
Registrant's beet molasses desugarization facility for further processing to
recover additional sugar.
Dixie Crystals(R) Foodservice, Inc., a wholly-owned subsidiary of
Registrant, produces and markets a line of sugar envelopes and portion control
items consisting of individual servings of salt, pepper, non-dairy creamer,
etc., under the trade names DIXIE CRYSTALS(R) and PIONEER(R), and under various
private labels. Foodservice also markets a saccharin-based sweetener under the
trade name of SWEET THING(R) and an aspartame-based sweetener under
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the trade name of SWEET THING II(R). These products are marketed to the food
service trade through-out the United States both by means of direct sales and
through brokers and are primarily shipped directly to customers by common
carrier truck.
King Packaging Company, Inc. a wholly-owned subsidiary of Dixie
Crystals(R) Foodservice, Inc., packs custom made meal kits for the food service
industry and provides complimentary products to the portion control products
manufactured at Registrant's other foodservice locations. These products are
marketed to the food service trade through-out the United States both by means
of direct sales and through brokers and are primarily shipped directly to
customers by common carrier truck.
Raceland Sugars, Inc., a wholly-owned subsidiary of Registrant, operates a
raw sugar mill and is engaged in the business of producing raw sugar which is
marketed in the Louisiana area. Additionally, the by-products, molasses and
bagasse, are currently sold in the domestic market.
During 1994, Registrant entered into agreements with a Mexican business
group to conduct several joint ventures in the Mexican sweetener industry. The
projects related to the joint ventures are in various stages of development,
but as of the end of fiscal 1994, none were operational nor had a material
amount of Registrant's assets been committed to the joint ventures.
Parent and Subsidiaries. The following list presents the relationship of
Registrant to its subsidiaries at October 2, 1994:
(a) *Michigan Sugar Company, a Michigan corporation, wholly-owned
subsidiary.
(b) *Great Lakes Sugar Company, an Ohio corporation, wholly-owned
subsidiary of Michigan Sugar Company.
(c) *Everglades Sugar Refinery, Inc., a Florida corporation,
wholly-owned subsidiary.
(d) *Food Carrier, Inc., a Georgia corporation, wholly-owned
subsidiary.
(e) *Dixie Crystals(R) Foodservice, Inc., a Delaware corporation,
wholly-owned subsidiary.
(f) *Biomass Corporation, a Delaware corporation, wholly-owned
subsidiary.
(g) *Colonial Sugars, Inc., a Delaware corporation, wholly-owned
subsidiary.
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(h) *Savannah Sugar Refining Corporation, a Georgia corporation,
wholly-owned subsidiary.
(i) *Raceland Sugars, Inc., a Delaware corporation, wholly-owned
subsidiary.
(j) *Chatham Sugar Company, a Delaware corporation, wholly-owned
subsidiary.
(k) *South Coast Sugars, Inc., a Delaware corporation, wholly-owned
subsidiary.
(l) *Phoenix Packaging Corporation, a Delaware corporation,
wholly-owned subsidiary.
(m) *Pioneer Trading Company, a Virgin Islands corporation,
wholly-owned subsidiary of Michigan Sugar Company.
(n) *Savannah Investment Company, a Delaware corporation, wholly-owned
subsidiary.
(o) *King Packaging Company, Inc., a Georgia corporation, wholly-owned
subsidiary of Dixie Crystals(R) Foodservice, Inc.
(p) *Savannah International Company, a Delaware corporation,
wholly-owned subsidiary.
(q) *Savannah Packaging Company, a Delaware corporation, a
wholly-owned subsidiary of Savannah International Company.
(r) *Savannah Total Invert Company, a Delaware corporation, a
wholly-owned subsidiary of Savannah International Company.
(s) Refined Sugar Trading Institute, Inc., a Delaware corporation, an
Export Trading Company, is a non-profit corporation owned jointly
with a non-affiliated company.
*Indicates subsidiaries included in consolidated financial statements.
The operations of Registrant and its wholly-owned subsidiaries, Everglades
Sugar Refinery, Inc., Colonial Sugars, Inc., Michigan Sugar Company, Dixie
Crystals(R) Foodservice, Inc., and Raceland Sugars, Inc. comprise Registrant's
only significant product line which consists of sugar products.
Raw Materials. A large portion of the raw sugar for Registrant's Savannah
refinery and all the raw
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sugar for Registrant's wholly-owned subsidiary, Everglades Sugar Refinery,
Inc., is normally supplied by cane sugar producers in the state of Florida. A
large portion of the raw sugar for Registrant's subsidiary, Colonial Sugars,
Inc., is normally supplied by cane sugar producers in the state of Louisiana.
In the case of the Savannah refinery and Colonial Sugars, Inc.,
the remaining raw sugar requirements are purchased on the open market, and
consist of off-shore cargoes purchased directly and through raw sugar trade
houses. Registrant uses the futures market as a hedging mechanism, as
circumstances warrant.
Michigan Sugar Company and its subsidiary, Great Lakes Sugar Company,
process sugar beets under annual contracts from Michigan and Ohio farmers. The
land around the processing plants of the company is well suited to growing
sugar beets, and the company has not experienced difficulty in obtaining a
sufficient quantity of beets to support successful operation of its plants.
Under the contracts with the farmers, certain sales expenses and other
non-processing expenses are first deducted from the proceeds of refined sugar,
pulp, and molasses sales after which the balance is divided between the company
and the farmers.
Competition. All phases of the refined sugar business and all
geographic markets of the business engaged in by Registrant and its
subsidiaries are highly competitive. This Competition is not only with other
cane sugar refiners and beet sugar processors, but also with corn sweeteners,
artificial sweeteners, and with resellers who purchase all of these sweeteners.
Competing cane sugar refineries are located in Florida, Louisiana, Maryland,
New York, Texas, and California. Competing beet sugar processors are located
in California, Colorado, Idaho, Michigan, Minnesota, Montana, Nebraska, North
Dakota, Oregon, Texas, and Wyoming.
Competition is primarily based upon price, but is also based upon
product quality and customer service. At times, the cane sugar refiners are at
a competitive disadvantage to the beet sugar producers due to differing methods
by which raw materials are purchased. In the beet industry, the beet farmers
participate in any increase or decrease in the selling price of refined sugar.
However, in the cane industry, refiners purchase raw sugar at prices which are
kept artificially high by United States policy to support sugar farmers,
and which do not fluctuate in tandem with refined sugar selling prices.
Consequently, when competitive pressures reduce refined sugar prices, the
margins of beet sugar producers are affected less adversely than those of cane
sugar refiners.
Number of Employees. At October 2, 1994, Registrant and its subsidiaries
had 2,095 full-time employees. In addition, Michigan Sugar Company, Great
Lakes Sugar Company, and Raceland Sugars, Inc.
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employ a number of seasonal workers during the beet and cane processing
campaigns.
Item 2. Properties.
Registrant and its wholly-owned subsidiaries own and operate three cane
sugar refineries, two sugar melt and transfer facilities, five sugar beet
processing plants, a beet molasses desugarization facility, a raw sugar mill,
and four foodservice production facilities.
The three cane sugar refineries are located in Port Wentworth, Georgia;
Gramercy, Louisiana and Clewiston, Florida and are owned by Registrant,
Colonial Sugars, Inc. and Everglades Sugar Refinery, Inc., respectively. The
Port Wentworth facility borders the Savannah River and the Gramercy facility
borders the Mississippi River. Both of these locations include a deep water
dock with facilities for shipping and receiving ocean-going vessels.
Registrant owns sugar melt and transfer facilities in St. Louis, Missouri
and Ludlow, Kentucky. The St. Louis facility borders on the Mississippi River
and has a dock for receiving sugar and molasses shipments.
Michigan Sugar Company owns and operates four sugar beet processing plants
which are located in Caro, Carrollton, Sebewaing, and Croswell, Michigan.
Great Lakes Sugar Company owns and operates a sugar beet processing plant in
Fremont, Ohio and a storage facility in Findlay, Ohio. The beet molasses
desugarization facility, which is owned by Registrant, is located in Fremont,
Ohio.
Dixie Crystals(R) Foodservice, Inc. owns two production facilities,
located in Perrysburg, Ohio and Visalia, California, and leases one facility in
Savannah, Georgia. At the end of the lease term, Registrant may purchase the
Savannah facility for $10.00. Also, King Packaging Company, Inc. owns and
operates a packaging facility in Bremen, Georgia.
Raceland Sugars, Inc. owns and operates a raw sugar mill in Raceland,
Louisiana. In addition to its milling operations, Raceland produces and
harvests sugar cane for use at its mill. These farming operations are done
largely on leased land.
The facilities listed above provide Registrant with sufficient productive
capacity to meet the demands of its current markets.
Item 3. Legal Proceedings.
Not applicable.
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Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of security holders during the fourth
quarter of fiscal 1994.
PART II
Item 5. Market for Registrant's Common Stock and Related
Stockholder Matters.
Registrant's common stock, par value $.25 per share ("Common Stock"),
is presently listed and traded on the New York Stock Exchange ("NYSE") under
the symbol "SFI". (Until October 14, 1992, it was traded in the
over-the-counter market under the symbol "SVAN".) The following table sets
forth for the periods indicated the high and low sales prices on the NYSE
composite tape for when the Common Stock was traded on the NYSE and the high
and low bids for the Common Stock for when it was quoted on the NASDAQ National
Market System. The bids set forth below do not include retail mark-ups,
mark-downs, or commissions and the prices represent quotations between dealers
and may not necessarily represent actual transactions. The information
provided has been adjusted to the nearest 1/8 and was compiled from quotations
furnished by the National Association of Securities Dealers, Inc. and the New
York Stock Exchange. Registrant has paid cash dividends on its common stock
every year since 1924. The following information is for the twelve-month
period ended January 3, 1993, the nine-month period ended October 3, 1993 and
the twelve-month period ended October 2, 1994:
Quarter Dividends
Ended High Low Paid
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03/29/92 $20.500 $16.250 $.130
06/28/92 19.000 14.750 .130
09/27/92 18.000 14.500 .130
01/03/93 16.875 13.625 .135
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$.525
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04/04/93 $16.750 $13.500 $.135
07/04/93 16.625 14.125 .135
10/03/93 17.875 15.125 .135
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$.405
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01/02/94 $16.500 $13.000 $.135
04/03/94 15.375 10.500 .135
07/03/94 12.250 10.000 .135
10/02/94 12.750 10.375 .135
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$.540
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As of October 2, 1994, the following indicates the number of holders
of record of equity securities:
Title of Class Number of Record Holders
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Common Stock 3,462
Item 6. Selected Financial Data.
See following pages.
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SAVANNAH FOODS & INDUSTRIES, INC.
SUMMARY OF OPERATIONS
(In thousands except for per share amounts and ratios)
Fiscal Period Ended
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October 2, October 3, January 3, December 29, December 30,
1994 1993 (1) 1993 1991 1990
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OPERATIONS FOR THE FISCAL PERIOD
Net sales........................................ $1,074,367 $ 818,116 $1,138,114 $1,199,710 $1,213,721
Income from operations (excludes other income
and expenses, taxes and change in accounting
principle)..................................... 20,297 11,839 49,143 66,884 80,837
Income before change in accounting principle..... 5,743 1,986 27,340 38,260 48,628
Net income (2)................................... 5,743 2,586 9,170 38,260 48,628
Other income statement information:
Depreciation and amortization expense.......... 28,972 19,362 23,705 20,510 17,626
Interest expense............................... 13,380 10,226 10,526 9,820 9,672
Provision for income taxes..................... 2,863 1,155 13,628 21,798 26,249
Cash dividends declared.......................... 14,169 10,627 13,890 13,116 10,539
Capital expenditures (3)......................... 23,367 40,111 45,301 55,661 41,558
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FINANCIAL POSITION AT THE END OF THE FISCAL PERIOD
Current assets................................... $198,880 $269,990 $371,387 $356,769 $309,916
Current liabilities.............................. 85,140 154,760 233,519 223,104 178,531
Working capital.................................. 113,740 115,230 137,868 133,665 131,385
Property, plant and equipment - gross............ 422,695 408,158 355,435 318,391 268,252
Accumulated depreciation......................... 180,810 159,111 129,306 112,092 97,295
Total assets..................................... 486,127 567,852 635,755 581,819 495,585
Long-term debt................................... 140,224 142,078 126,464 94,364 77,411
Stockholders' equity............................. 188,174 194,714 210,620 224,275 201,387
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PER SHARE
Weighted average shares outstanding.............. 26,238 26,238 26,491 26,782 27,069
Shares outstanding at end of fiscal period 26,238 26,238 26,238 26,723 26,853
Income before change in accounting principle per
weighted average share outstanding............. $ .22 $ .08 $ 1.03 $ 1.43 $ 1.80
Net income per weighted average share
outstanding (2)................................ .22 .10 .35 1.43 1.80
Dividends declared per share..................... .54 .405 .525 .49 .39
Stockholders' equity per share (4)............... 7.17 7.42 8.03 8.39 7.50
RATIOS
Current assets divided by current liabilities.... 2.32 1.74 1.59 1.60 1.74
Long-term debt divided by total long-term debt
and stockholders' equity....................... .43 .42 .38 .30 .28
Tax expense divided by pre-tax income............ .33 .37 .33 .36 .35
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(1) On July 21, 1993, the Company changed its fiscal year end from the
Sunday closest to December 31 to the Sunday closest to September 30.
As a result, the fiscal period ended October 3, 1993 represents a
nine-month period. For further information, see Note 2 to the
accompanying consolidated financial statements.
(2) The Company adopted FAS 109, "Accounting for Income Taxes" during the
fiscal period ended October 3, 1993 and adopted FAS 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions" during the
fiscal period ended January 3, 1993. For more information, see Notes
7 and 10 to the accompanying consolidated financial statements.
(3) Capital expenditures include $4,757 for the acquisition of King
Packaging Company, Inc. fixed assets in July 1993 and $15,798 for the
acquisition of Raceland Sugars, Inc. fixed assets in October 1991.
(4) Based on shares outstanding at end of fiscal period.
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Item 7. Management's Discussion and Analysis of the Company's
Financial Position and Results of Operations.
Change in fiscal year end:
On July 21, 1993, the Company changed its fiscal year end from the
Sunday closest to December 31 to the Sunday closest to September 30, beginning
with the fiscal period ended October 3, 1993. The decision to change the
fiscal year end was made to conform the Company's financial reporting year to
the natural business year of the sugar industry. This is further discussed in
Notes 1 and 2 to the consolidated financial statements.
Liquidity
In 1994 the Company expanded its Total Quality Program to include a
working capital reduction program. The purpose of this program is to minimize
operating working capital, defined as non-cash assets and non-interest bearing
liabilities including dividends payable, and to therefore improve liquidity.
The program has been successful and the Company's liquidity improved by
$24,758,000. The improved liquidity is primarily represented by an increase in
cash and equivalents of $20,955,000 and a decrease in short-term debt of
$26,300,000 net of a decrease in investments included in other current assets
in 1993 of $19,733,000. Operating working capital decreased by $26,248,000.
This decrease was primarily in inventories ($60,299,000) and accounts
receivable ($11,254,000) net of a decrease in accounts payable ($49,457,000).
During 1994 about $1,490,000 of the decrease in operating working capital was
used to fund expenditures (primarily dividends and capital additions, net of
asset sales) in excess of net income adjusted for non-cash transactions.
Capital Resources
Long-term debt, excluding the current portion, decreased $1,854,000 as
a result of debt payments. Changes in debt and equity resulted in an increase
from 42% to 43% in the ratio of long-term debt to total capital. At October 2,
1994, the Company had $145,000,000 in revolving credit facilities, of which
$20,000,000 was outstanding as long-term debt. The Company had no short-term
debt as of October 2, 1994. The remaining available balance of $125,000,000
is intended to meet working capital and other cash needs as they arise. All of
the $145,000,000 of available facilities are committed through September 30,
1996. The revolving credit facilities, in general, enable the Company to
borrow at the banks' cost of funds plus 1/2%.
In addition, Michigan Sugar Company and Raceland Sugars, Inc. can
borrow from the Commodity Credit Corporation against their respective sugar
inventory balances to meet working capital requirements and to provide a hedge
against reduced refined sugar selling prices.
At October 2, 1994, stockholders' equity was $188,174,000 compared to
equity at October 3, 1993, of $194,714,000. Equity increased as a result of
earnings of $5,743,000 for the year ended October 2, 1994, a
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reduction in the minimum pension liability of $1,243,000, and a reduction in
the note receivable from the employee stock ownership plan of $643,000.
Dividends decreased equity by $14,169,000.
Fixed asset additions during the year ended October 2, 1994, were
$23,367,000 and proceeds from sale of fixed assets were $3,309,000. The
capital expenditures were primarily upgrading and installing sugar packaging
and production equipment and concentrated on cost saving or expansion projects
which are expected to benefit the Company through increased efficiency,
improved quality control and expanded operational capabilities. The Company
expects that expenditures for fixed assets, net of cash receipts from
disposals, in fiscal 1995 will approximate $17,000,000.
Effective December 30, 1991, the first day of the year ended January
3, 1993, the Company adopted Statement of Financial Accounting Standards No.
106 - Employers' Accounting for Postretirement Benefits Other Than Pensions
(FAS 106). The cumulative effect of adopting FAS 106 was a one-time noncash
charge of $18,170,000, net of tax benefits, or $.68 per share. This new
accounting standard does not impact the cash flows of the Company. For further
information, see Note 10 to the accompanying consolidated financial statements.
Effective January 4, 1993, the first day of the nine-month period
ended October 3, 1993, the Company adopted Statement of Financial Accounting
Standards No. 109 - Accounting for Income Taxes (FAS 109). The cumulative
effect of adopting FAS 109 was a one-time noncash credit to income of $600,000,
or $.02 per share. The credit was recorded as the cumulative effect of a
change in an accounting principle. This new accounting standard does not
impact the cash flows of the Company. For further information, see Note 7 to
the accompanying consolidated financial statements.
Results of Operations
Year ended October 2, 1994 and nine months ended October 3, 1993
The Company's net income for the fiscal year ended October 2, 1994
(fiscal 1994) was $5,743,000, or $.22 per share, compared to income of
$2,586,000, or $.10 per share, for the nine months ended October 3, 1993
(fiscal 1993). Income for fiscal 1993 includes a $3,030,000 charge to net
income (a $4,900,000 increase in cost of sales, net of the associated
$1,870,000 income tax benefit) related to a LIFO inventory liquidation at
Michigan Sugar as further discussed in Note 2 to the consolidated financial
statements and a $600,000 cumulative effect credit due to adopting FAS 109.
Income for fiscal 1993 before the cumulative effect of adopting FAS 109 was
$1,986,000 or $.08 per share. Average weekly sales volume and prices were down
in fiscal 1994 compared to fiscal 1993 due to competitive pressure from beet
sugar producers marketing a larger beet crop along with additional sugar
carried over from the previous year.
Productivity increased again in fiscal 1994 at the cane refineries.
However, higher raw sugar costs caused by a low raw sugar quota reduced
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average weekly operating income in this division compared to fiscal 1993.
Michigan Sugar's average weekly sales volume increased 4% in fiscal
1994 due to a larger crop in Michigan and a carry over from the previous crop.
However, average weekly operating income dropped from fiscal 1993 due to lower
beet pulp prices and a smaller beet crop in Ohio.
Dixie Crystals Foodservice's average weekly operating income decreased
from fiscal 1993 due to higher sugar costs and competitive pricing pressures.
Cost cutting programs which lowered manufacturing costs helped minimize the
impact of these negative factors.
Raceland Sugars, Inc. showed a significant increase in average weekly
operating income in fiscal 1994 compared to fiscal 1993 as a result of higher
raw sugar prices in 1994.
Selling, general and administrative expenses decreased 7% on an
average weekly basis in fiscal 1994 from fiscal 1993 primarily due to a
reduction in storage costs achieved through a production optimization program.
Interest expense decreased slightly on an average weekly basis in
fiscal 1994 due to lower short-term borrowings.
The effective income tax rate for fiscal 1994 was 33% compared to 37%
in fiscal 1993. The lower tax rate in fiscal 1994 is primarily due to lower
state income tax expense.
The outlook is brighter for fiscal 1995. On October 1, 1994, the U.S.
Department of Agriculture implemented marketing allotments which should limit
the amount of beet sugar which can be sold in the United States. The continued
expansion of beet sugar and the resulting negative impact on refined sugar
prices has depressed the Company's earnings over the last four years.
Marketing allotments are intended to raise refined selling prices to prevent
forfeiture of sugar under loan with the Commodity Credit Corporation.
Additionally, higher sugar content of beets in Michigan and Ohio,
processing more sugar cane at our Raceland raw sugar mill, and an emphasis on
reducing costs and promoting value-added products which are not impacted by
government legislation should continue to add to the Company's profitability.
Nine months ended October 3, 1993 and year ended January 3, 1993
The Company's net income for the nine months ended October 3, 1993,
(fiscal 1993) was $2,586,000, or $.10 per share, compared to income of
$9,170,000, or $.35 per share, for the year ended January 3, 1993 (fiscal
1992). The Company's net income for fiscal 1992 includes the impact of
adopting FAS 106. Income for fiscal 1992 before the cumulative effect of
adopting FAS 106 was $27,340,000, or $1.03 per share. Average weekly sales
volume and prices were down in fiscal 1993
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compared to fiscal 1992 due to competitive pressure from beet sugar producers
and cane refiners fighting for market share.
Productivity at the cane refineries during fiscal 1993 was excellent.
The Colonial refinery set an average daily production record, and the Savannah
refinery just missed doing likewise.
Michigan Sugar's average weekly sales volume increased 17% in fiscal
1993 due to a larger beet crop compared to fiscal 1992. However, sugar and
byproduct pricing were down and average weekly operating income decreased from
fiscal 1992.
Dixie Crystals Foodservice showed good improvements in sales and
profits on an average weekly basis when compared to fiscal 1992. Lower
manufacturing costs were achieved through the move of the Savannah facility to
its new location.
Raceland Sugars, Inc. showed an increase in average weekly operating
income as a result of higher sales volume offset set by lower raw sugar prices.
Selling, general and administrative expenses increased in fiscal 1993
on an average weekly basis due to higher selling costs at Michigan Sugar caused
by a larger beet crop and higher administrative costs.
Interest expense increased primarily due to the increased long-term
debt acquired in the latter part of fiscal 1992 and the acquisition of King
Packaging in July 1993.
The effective tax rate for fiscal 1993 was 37% compared to 33% in
fiscal 1992. The higher tax rate in fiscal 1993 is due to a 1% increase in the
statutory rate in 1993 and to the receipt of non-taxable life insurance
proceeds in 1992.
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Item 8. Financial Statements and Supplementary Data.
(a) Financial Statements: Page
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Report of Independent Accountants 15
Consolidated Balance Sheets at October 2, 1994
and October 3, 1993 16
Consolidated Statements of Operations for the
fiscal periods ended October 2, 1994,
October 3, 1993 and January 3, 1993 17
Consolidated Statements of Changes in Stockholders'
Equity for the fiscal periods ended October 2, 1994,
October 3, 1993 and January 3, 1993 18
Consolidated Statements of Cash Flows for the
fiscal periods ended October 2, 1994, October 3, 1993
and January 3, 1993 19
Notes to Consolidated Financial Statements 20
(b) Financial Statement Schedules for the fiscal
periods ended October 2, 1994, October 3, 1993
and January 3, 1993:
V - Property, Plant and Equipment 37
VI - Accumulated Depreciation and
Amortization of Property,
Plant and Equipment 38
Other schedules are omitted because they are not applicable, or the
required information is shown in the financial statements or notes thereto.
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Report of Independent Accountants
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November 18, 1994
To the Stockholders and Board of Directors of
Savannah Foods & Industries, Inc.
In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the financial
position of Savannah Foods & Industries, Inc. at October 2, 1994, and October
3, 1993, and the results of their operations and their cash flows for the
fifty-two weeks ended October 2, 1994, the thirty-nine weeks ended October 3,
1993 and the fifty-three weeks ended January 3, 1993, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which 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, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
As discussed in Notes 7 and 10 to the financial statements, the Company changed
its methods of accounting for income taxes and accounting for postretirement
benefits other than pensions, during the thirty-nine weeks October 3, 1993 and
the fifty-three weeks ended January 3, 1993, respectively.
PRICE WATERHOUSE LLP
Savannah, Georgia
15
16
SAVANNAH FOODS & INDUSTRIES, INC.
Consolidated Balance Sheets
(In thousands except for shares and per share amounts)
October 2, October 3,
1994 1993
---------- ----------
Assets
Current assets:
Cash and cash equivalents (Note 1) $ 28,436 $ 7,481
Accounts receivable 75,776 87,030
Inventories (net of LIFO reserve of $8,889 in
1994 and $9,011 in 1993) (Notes 1 and 4) 85,340 145,639
Other current assets (Notes 1 and 7) 9,328 29,840
-------- --------
Total current assets 198,880 269,990
Property, plant and equipment (net of accumulated
depreciation of $180,810 in 1994 and
$159,111 in 1993) (Notes 1 and 5) 241,885 249,047
Other assets (Notes 1, 9 and 10) 45,362 48,815
-------- --------
$486,127 $567,852
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Short-term borrowings (Note 6) $ - $ 26,300
Current portion of long-term debt (Note 6) 1,643 2,421
Trade accounts payable 56,953 106,410
Dividends payable 3,542 -
Other liabilities and accrued expenses 23,002 19,629
-------- --------
Total current liabilities 85,140 154,760
-------- --------
Long-term debt (Note 6) 140,224 142,078
-------- --------
Deferred income taxes (Note 7) - 3,951
-------- --------
Deferred employee benefits (Notes 9 and 10) 72,589 72,349
-------- --------
Stockholders' equity (Notes 6 and 8):
Common stock $.25 par value; $.55 stated value;
64,000,000 shares authorized; 31,306,800 shares issued 17,365 17,365
Capital in excess of stated value 12,190 12,190
Retained earnings 202,065 210,491
Minimum pension liability adjustment (Note 9) (8,210) (9,453)
-------- --------
223,410 230,593
Less - Treasury stock, at cost (5,068,604 shares) 31,275 31,275
- Note receivable from employee stock ownership
plan 3,961 4,604
-------- --------
Total stockholders' equity 188,174 194,714
Commitments and contingencies (Note 11) - -
-------- --------
$486,127 $567,852
======== ========
(The accompanying notes are an integral part of the financial statements.)
16
17
SAVANNAH FOODS & INDUSTRIES, INC.
Consolidated Statements of Operations
(In thousands except for shares and per share amounts)
Fiscal Period Ended (Notes 1 and 2)
--------------------------------------------
October 2, October 3, January 3,
1994 1993 1993
(52 weeks) (39 weeks) (53 weeks)
---------- ---------- ----------
Net sales $1,074,367 $ 818,116 $1,138,114
---------- ---------- ----------
Operating expenses:
Cost of sales and operating
expenses 971,706 743,731 1,008,658
Selling, general and
administrative expenses 53,392 43,184 56,608
Depreciation and amortization
(Note 1) 28,972 19,362 23,705
---------- ---------- ----------
1,054,070 806,277 1,088,971
---------- ---------- ----------
Income from operations 20,297 11,839 49,143
---------- ---------- ----------
Other income and (expenses):
Interest and other investment
income 2,170 1,412 1,747
Interest expense (Note 6) (13,380) (10,226) (10,526)
Other income (expense) (481) 116 604
---------- ---------- ----------
(11,691) (8,698) (8,175)
---------- ---------- ----------
Income before income taxes and
change in accounting principle 8,606 3,141 40,968
Provision for income taxes
(Notes 1 and 7) 2,863 1,155 13,628
---------- ---------- ----------
Income before change in
accounting principle 5,743 1,986 27,340
Cumulative effect of change in
accounting principle
(Notes 1, 7 and 10) - 600 (18,170)
---------- ---------- ----------
Net income $ 5,743 $ 2,586 $ 9,170
========== ========== ==========
Income per weighted average
share outstanding:
Income before change in
accounting principle $ .22 $ .08 $1.03
Cumulative effect of change
in accounting principle - .02 (.68)
---------- ---------- ----------
Net income $ .22 $ .10 $ .35
---------- ---------- ----------
Weighted average shares
outstanding 26,238,196 26,238,196 26,490,701
========== ========== ==========
(The accompanying notes are an integral part of the financial statements.)
17
18
SAVANNAH FOODS & INDUSTRIES, INC.
Consolidated Statements of Changes in Stockholders' Equity
(In thousands except for shares and per share amounts)
Note Receivable
Minimum from
Capital in Pension Employee Stock
Common Excess of Retained Liability Treasury Ownership
Stock Stated Value Earnings Adjustment Stock Plan Total
------ ------------ -------- ---------- -------- --------------- -----
Balance at December 29, 1991 $17,365 $12,120 $223,252 $ - $(23,516) $(4,946) $224,275
Net income 9,170 9,170
Cash dividends declared
($.525 per share) (13,890) (13,890)
Sale of treasury stock -
113,590 shares 70 2,146 2,216
Acquisition of treasury stock -
598,425 shares (9,905) (9,905)
Increase in minimum pension
liability adjustment (1,437) (1,437)
Decrease in note receivable from
employee stock ownership plan 191 191
------- ------- -------- ------- -------- ------- --------
Balance at January 3, 1993 17,365 12,190 218,532 (1,437) (31,275) (4,755) 210,620
Net income 2,586 2,586
Cash dividends declared
($.405 per share) (10,627) (10,627)
Increase in minimum pension
liability adjustment (8,016) (8,016)
Decrease in note receivable from
employee stock ownership plan 151 151
------- ------- -------- ------- -------- ------- --------
Balance at October 3, 1993 17,365 12,190 210,491 (9,453) (31,275) (4,604) 194,714
Net income 5,743 5,743
Cash dividends declared
($.54 per share) (14,169) (14,169)
Decrease in minimum pension
liability adjustment 1,243 1,243
Decrease in note receivable from
employee stock ownership plan 643 643
------- ------- -------- ------- -------- ------- --------
Balance at October 2, 1994 $17,365 $12,190 $202,065 $(8,210) $(31,275) $(3,961) $188,174
======= ======= ======== ======= ======== ======= ========
(The accompanying notes are an integral part of the financial statements.)
18
19
SAVANNAH FOODS & INDUSTRIES, INC.
Consolidated Statements of Cash Flows
(In thousands of dollars)
Fiscal Period Ended (Notes 1 and 2)
---------------------------------------------
October 2, October 3, January 3,
1994 1993 1993
(52 weeks) (39 weeks) (53 weeks)
---------- ---------- ----------
Cash flows from operations:
Net income $ 5,743 $ 2,586 $ 9,170
Adjustments to reconcile net income
to net cash provided by operations -
Depreciation and amortization 28,972 19,362 23,705
Cumulative effect of change in
accounting principle - (600) 18,170
Provision for deferred income taxes (5,283) 6,986 239
Other 865 204 1,619
Changes in balance sheet accounts -
Accounts receivable 11,254 (25,347) 388
Inventories 60,299 133,498 (56,991)
Other current assets 2,657 (1,092) 1,008
Trade accounts payable (49,457) (39,441) 30,573
Income taxes accrued - (17,593) (2,636)
Accrued expenses related to beet
operations - (22,884) (125)
Other liabilities and accrued expense 3,373 (1,951) (7,379)
Other 2,331 1,547 1,475
------- -------- -------
Cash provided by operations 60,754 55,275 19,216
------- -------- -------
Cash flows from investing activities:
Additions to property, plant and equipment (23,367) (35,354) (45,301)
Proceeds from sale of property, plant
and equipment 3,309 2,342 1,550
Acquisition of short-term investments
included in "Other current assets" - (4,220) (11,169)
Liquidation of short-term investments
included in "Other current assets" 19,708 - -
Purchase of King Packaging Company, Inc. - (8,925) -
Acquisition of long-term investments - (3,237) (1,608)
Changes in escrow balances related
to industrial revenue bonds 3,669 460 (13,124)
Other (3,335) 198 (4,213)
------- -------- -------
Cash used for investing activities (16) (48,736) (73,865)
------- -------- -------
Cash flows from financing activities:
Decrease in short-term borrowings (26,300) (3,700) (9,674)
Increase in long-term debt - 10,111 83,300
Payments of long-term debt (2,632) (1,337) (51,544)
Dividends declared to stockholders (14,169) (10,627) (13,890)
Increase in dividends payable 3,542 - -
Treasury stock repurchases - - (9,905)
Treasury stock issues - - 2,216
Other (224) (1,484) 2,539
------- -------- -------
Cash (used for) provided by financing activities (39,783) (7,037) 3,042
------- -------- -------
Cash flows for period 20,955 (498) (51,607)
Cash and cash equivalents, beginning of period 7,481 7,979 59,586
------- -------- -------
Cash and cash equivalents, end of period $28,436 $ 7,481 $ 7,979
======= ======== =======
(The accompanying notes are an integral part of the financial statements.)
19
20
SAVANNAH FOODS & INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Summary of Significant Accounting Policies:
Fiscal year - As described in Note 2, the Company changed its fiscal year
end from the Sunday closest to December 31 to the Sunday closest to September
30. The fiscal periods ended October 2, 1994, October 3, 1993 and January 3,
1993 include 52 weeks, 39 weeks and 53 weeks, respectively.
Principles of consolidation and business segments - The consolidated
financial statements include the accounts of the Company and its subsidiaries,
all of which are wholly-owned. The Company has one primary business segment -
Sugar Products.
Changes in accounting principles - As discussed in Note 7, Statement of
Financial Accounting Standards No. 109 - Accounting for Income Taxes (FAS 109)
was prospectively adopted effective January 4, 1993, the first day of the
fiscal period ended October 3, 1993. As discussed in Note 9, Statement of
Financial Accounting Standards No. 106 - Employers' Accounting for
Postretirement Benefits Other Than Pensions (FAS 106) was adopted effective
December 30, 1991, the first day of the fiscal period ended January 3, 1993.
Cash equivalents - Cash equivalents include all investments purchased with
an original maturity of 90 days or less which have virtually no risk of loss of
value of the principal amount of the investment.
Inventories - Inventories are valued at the lower of cost or market. Cost
is determined by the last-in, first-out (LIFO) method for sugar, packaging
materials, and certain other items. Costs for maintenance parts, sugar cane
and other non-sugar products are determined using the first-in, first-out
(FIFO) and moving average methods.
Futures transactions and interest rate swaps - The Company uses futures and
other financial instruments as hedges in its inventory purchasing and cash
management programs. Gains and losses on such transactions related to
inventory are matched to specific inventory purchases and charged or credited
to cost of sales as such inventory is sold. Gains and losses on transactions
related to loans are included in interest expense during the period in which
the related instruments are outstanding. In connection with the Company's
futures trading activity, the Company maintains deposits with futures brokers.
These deposits are included in "Other current assets".
Investments in marketable securities - At October 3, 1993, the Company had
invested in marketable securities directly and through certain investment
partnerships and mutual funds. The estimated fair market value of these
investments approximated the carrying value of $19,733,000 based on quoted
market prices and dealer quotes. These
20
21
investments are included in "Other current assets" at October 3, 1993. No
investments in marketable securities are held at October 2, 1994.
Amortization of intangibles - The Company has intangible assets included in
"Other assets" aggregating $8,031,000 and $10,648,000 at October 2, 1994 and
October 3, 1993, respectively. These assets are being amortized over five
years. Amortization expense for the fiscal periods ended October 2, 1994,
October 3, 1993 and January 3, 1993 was $2,617,000, $1,363,000 and $1,328,000,
respectively.
Property, plant and equipment - Property, plant and equipment is valued at
cost less accumulated depreciation and amortization. For financial reporting
purposes, depreciation is computed on the straight-line method. Accelerated
depreciation methods are used for tax purposes on $266,294,000 of equipment.
Accrued expenses related to beet and sugar cane operations - The Company's
beet and sugar cane processing plants are generally operated from October
through February and then, from March through September, are repaired for the
next processing cycle. As sugar is processed from October through February,
the Company accrues estimated repair costs and other costs to be incurred in
March through September and includes such costs in inventory and, as the sugar
is sold, in cost of sales. In contrast, some sugar processors capitalize such
costs and include them as prepaid expenses related to the next processing
cycle.
Fair value of financial instruments - For cash, cash equivalents, accounts
receivable, accounts payable, accrued expenses and short-term borrowings, the
carrying amounts approximate fair value because of the short maturities of
these instruments. See Note 6 for discussion of the fair value of long-term
debt.
Revenue recognition - The Company recognizes revenue as product is shipped.
Reclassifications - Certain prior year amounts have been reclassified to
conform to current year presentation.
21
22
Note 2 - Change in Fiscal Year End:
In July 1993, the Company changed its fiscal year end from the Sunday
closest to December 31 to the Sunday closest to September 30 in order to
conform the Company's financial reporting to the natural business year of the
sugar industry. Inventory quantities are significantly lower at the end of the
new fiscal year than at the end of a calendar year. Therefore, as a
consequence of the change in fiscal year end the Company experienced a LIFO
inventory liquidation and recorded a charge to operations of $3,030,000, net of
tax of $1,870,000, during the fiscal period ended October 3, 1993. To aid
comparative analysis, the Company has presented below results of operations
(condensed) for the nine-month periods ended October 3, 1993 and September 27,
1992 (in thousands except for shares and per share amounts):
Fiscal Period Ended
---------------------------------------
October 3, September 27,
1993 1992
(Unaudited)
------------------- -----------------
Net sales $ 818,116 $ 833,341
Operating expenses 806,277 798,974
---------- ----------
Income from operations 11,839 34,367
Other income and (expenses) (8,698) (6,740)
---------- ----------
Income before income taxes and
change in accounting principle 3,141 27,627
Provision for income taxes 1,155 9,903
---------- ----------
Income before change in
accounting principle 1,986 17,724
Cumulative effect of change in
accounting principle 600 (18,170)
---------- ----------
Net income (loss) $ 2,586 $ (446)
========== ==========
Income per weighted average share
outstanding:
Income before change in accounting
principle $.08 $ .67
Cumulative effect of change in
accounting principle .02 (.69)
---------- ----------
Net income (loss) $.10 $(.02)
========== ==========
Weighted average shares outstanding 26,238,196 26,571,834
========== ==========
22
23
Additionally, to aid comparative analysis of the fiscal periods ended
October 2, 1994 and January 3, 1993, the Company has presented below the pro
forma condensed consolidated statements of operations through income before
change in accounting principle for the fiscal year ended October 2, 1994 and
for the fiscal year ended October 3, 1993, as included in the 1993 Annual
Report. The amounts are presented without the LIFO charge discussed above (in
thousands except for shares and per share amounts):
Fiscal Year Ended
---------------------------------------
October 2, October 3,
1994 1993
(pro forma)
------------------- -----------------
Net sales $1,074,367 $1,122,889
Operating expenses 1,054,070 1,091,374
---------- ----------
Income from operations 20,297 31,515
Other income and (expenses) (11,691) (10,132)
---------- ----------
Income before income taxes and
change in accounting principle 8,606 21,383
Provision for income taxes 2,863 6,750
---------- ----------
Income before change in
accounting principle $ 5,743 $ 14,633
========== ==========
Income per weighted average
share outstanding before change
in accounting principle $.22 $.56
========== ==========
Weighted average shares outstanding 26,238,196 26,245,194
========== ==========
Note 3 - Acquisition:
On July 7, 1993, the Company acquired the outstanding common stock of King
Packaging Company, Inc., a supplier of plastic cutlery and customized meal kits
to the foodservice and healthcare industries. The acquisition was accounted
for as a purchase, and the acquisition costs of the assets acquired and the
liabilities assumed are as follows (in thousands of dollars):
Current assets $10,330
Inventories 1,770
Property, plant and equipment 4,757
Value of non-compete agreements 8,203
Other assets 290
-------
Assets acquired 25,350
Liabilities assumed (977)
-------
$24,373
=======
23
24
Note 4 - Inventories:
A summary of inventories by method of pricing and class is as follows:
October 2, October 3,
1994 1993
---------- ----------
(In thousands of dollars)
Last-in, first-out $46,952 $104,005
First-in, first-out 9,350 9,137
Moving average 29,038 32,497
------- --------
$85,340 $145,639
------- --------
Raw materials and work-in-process $26,924 $ 76,802
Packaging materials, parts and
supplies 27,115 26,002
Finished goods 31,301 42,835
------- --------
$85,340 $145,639
======= ========
During the fiscal period ended October 2, 1994, inventory quantities were
reduced. This reduction resulted in a liquidation of LIFO inventory quantities
carried at lower costs prevailing in prior years as compared with the cost of
fiscal 1994 purchases, the effect of which decreased cost of goods sold by
approximately $1,762,000 and increased net income by approximately $1,097,000
or $.04 per share.
The replacement cost of inventories exceeded reported cost by approximately
$10,013,000 at October 2, 1994 and $11,616,000 at October 3, 1993.
Note 5 - Property, Plant and Equipment:
Property, plant and equipment is summarized as follows:
October 2, October 3,
1994 1993
---------- ----------
(In thousands of dollars)
Land $ 8,417 $ 8,405
Buildings 91,053 87,162
Machinery and equipment 314,530 289,442
Leasehold improvements 1,159 1,159
Projects-in-process 7,536 21,990
-------- --------
422,695 408,158
Less - Accumulated depreciation
and amortization (180,810) (159,111)
-------- --------
$241,885 $249,047
======== ========
Repairs and maintenance expense was $31,584,000 for the fiscal period ended
October 2, 1994, $26,706,000 for the fiscal period ended October 3, 1993 and
$33,879,000 for the fiscal period ended January 3, 1993.
24
25
Note 6 - Long-term Debt and Credit Arrangements:
Long-term debt is summarized as follows:
October 2, October 3,
1994 1993
---------- ----------
(In thousands of dollars)
Senior notes - $50,000 Series A at 8.35% and
$20,000 Series B at 7.15% payable
through 2002 $ 70,000 $ 70,000
Long-term debt supported by revolving credit
facilities with banks 20,000 20,000
Notes payable to banks from 1996 to 1998 related
to the ESOP 15,500 15,500
Industrial revenue bonds 28,000 28,000
Present value of non-compete agreements related to
the purchase of King Packaging, payable monthly
from 1993 to 1998, discounted at 5% 6,314 7,808
Other notes and capital leases payable 2,053 3,191
-------- --------
141,867 144,499
Less - Current portion (1,643) (2,421)
-------- --------
$140,224 $142,078
======== ========
During the fiscal period ended January 3, 1993, the Company entered into a
10-year loan for $70,000,000 with three insurance companies. Series A for
$50,000,000 has a fixed interest rate of 8.35% and Series B for $20,000,000 has
a fixed interest rate of 7.15%. These funds were used to finance capital
projects at existing production facilities and to repay long-term debt
outstanding under the Company's revolving credit lines.
At October 2, 1994, the Company had $145,000,000 in revolving credit
facilities with banks which are committed through September 1996. The Company
has $20,000,000 outstanding under these facilities which it treats as long-term
debt. The revolving credit facilities, in general, enable the Company to
borrow funds at the banks' cost of funds plus approximately 1/2%. The Company
pays an annualized commitment fee of 3/16% on the unused portion of these
facilities.
At October 2, 1994, the Company had $15,500,000 in notes payable related to
the Employee Stock Ownership Plan (ESOP). These notes carry a tax-advantaged
rate of interest equal to about 85% of LIBOR. The rates averaged 3.08% and
3.40% during the fiscal periods ended October 2, 1994 and October 3, 1993,
respectively. See further discussion of the ESOP at Note 10.
The $28,000,000 industrial revenue bonds consist of two issues of bonds for
$4,500,000 each due in 2000, an issue for $3,500,000 due in 2003, an issue for
$2,500,000 due in 2005, an issue for $6,000,000 due in 2007, and an issue for
$7,000,000 due in 2017. The rate on these bonds can vary as frequently as
every seven days in order to sell the bonds at par value. During the fiscal
period ended October 2, 1994 and the fiscal period ended October 3, 1993, the
average interest rate on these bonds was 2.7% and 2.5%, respectively. If the
two $4,500,000 bonds cannot be sold, the Company has an agreement with a bank
which acts as the marketing agent for the bonds whereby the bank would buy and
hold the bonds until their maturity and would receive interest at a rate of 65%
of the prime interest rate. If the other issues could not be
25
26
sold by the bank, the Company would have an obligation to sell the bonds
themselves or repurchase them. To enhance the marketability of the bonds, the
bank/marketing agent has issued letters of credit to guarantee payment of the
bonds on the Company's behalf. The Company expects to be able to renew these
letters of credit upon their expiration throughout the life of these bonds.
Also, the bonds are secured by financing statements on project-related
equipment, the cost of which approximates the bond amounts.
The Company uses interest rate exchange agreements, more commonly called
interest rate swaps, to manage its interest rate exposure.
The effect of certain of the swap agreements is to fix the rate on the
$20,000,000 long-term debt borrowed under revolving credit agreements, the
$15,500,000 ESOP loans and the $28,000,000 industrial revenue bonds over the
2.5 years remaining on the swap contracts. The average fixed interest rate on
this $63,500,000 of debt fixed through these swap agreements is 6.89%. These
swaps were entered into to fix the interest rate on variable debt at rates
which the Company considered attractive at the time the agreements were
consummated. The Company did not enter into these agreements in anticipation
of rate movements. When the Company entered into these agreements, it compared
its anticipated interest costs to other long term borrowing sources such as
private placements and other fixed rate borrowing options. Accordingly, the
Company has realized its desired objectives in the use of these derivatives.
If the Company had canceled these agreements as of October 2, 1994, it would
have been required to pay the counter parties to the agreements an aggregate
amount of $2,100,000.
During the last quarter of the fiscal period ended January 3, 1993, the
Company entered into agreements whereby it receives/pays the difference between
six month LIBOR and 4.54% on $50,000,000 for a three year period to reduce the
interest rate on the Series A senior notes. The Company anticipated that
short-term rates would continue to decline. If the Company had canceled these
agreements as of October 2, 1994, it would have been required to pay the
counter parties to the agreements an aggregate amount of approximately
$830,000. Over the life of this transaction the Company expects to break-even.
This agreement expires in October 1995.
26
27
Short-term borrowings, including borrowings under the Company's revolving
credit facilities which were for temporary working capital needs, are
summarized as follows:
Fiscal Period Ended
----------------------------------------
October 2, October 3, January 3,
1994 1993 1993
---------- ---------- ----------
(In thousands of dollars)
Daily average outstanding borrowings $27,953 $49,816 $23,040
Daily weighted average interest rate 3.82% 3.42% 4.33%
Maximum borrowings $62,300 $85,500 $39,674
Amount outstanding at year-end $ - $26,300 $30,000
The Company's most restrictive loan covenants require that the Company
maintain stockholders' equity of $174,703,000 plus 20% of consolidated net
income beginning with fiscal year 1994 and ending with calendar year 1996 and
that the Company maintain certain financial ratios. These financial ratio
covenants include a requirement that the ratio of income before taxes, interest
expense and lease expense to the sum of interest and lease expense be 1.4, or
greater, through March 31, 1995 and 2.0, or greater, thereafter. The Company
is in compliance with these requirements at October 2, 1994 and expects to be
in compliance with such requirements in the future.
Interest expense was $13,380,000 for the fiscal period ended October 2,
1994, $10,226,000 for the fiscal period ended October 3, 1993 and $10,526,000
for the fiscal period ended January 3, 1993. Cash payments of interest were
$13,364,000 for the fiscal period ended October 2, 1994, $9,377,000 for the
fiscal period ended October 3, 1993 and $9,336,000 for the fiscal period ended
January 3, 1993.
Annual maturities of long-term debt each year for the next five fiscal
years are $1,747,000 in 1995, $6,300,000 in 1996, $27,610,000 in 1997,
$7,400,000 in 1998, $8,940,000 in 1999, and $89,870,000 in subsequent years
through 2017.
The carrying value of the Company's long-term debt approximates its market
value at October 2, 1994. Virtually all of the Company's debt had a fixed rate
at October 2, 1994, either from the note terms or through interest rate swaps.
The market value of fixed-rate long-term debt was estimated based on the
present value of expected cash flows using current market rates and the
Company's incremental borrowing rate for debt with similar terms.
Note 7 - Income Taxes:
The Company prospectively adopted Statement of Financial Accounting
Standards No. 109 - Accounting for Income Taxes (FAS 109) effective January 4,
1993, the first day of the fiscal period ended October 3, 1993. The adoption
of FAS 109 changed the Company's method of accounting for income taxes from the
deferred method (Accounting Principles Board Opinion No. 11) to an asset and
liability approach. Previously the Company deferred the past tax effects of
timing differences between financial reporting and taxable income. The asset
and liability approach requires the recognition of deferred tax
27
28
liabilities and assets for the expected future tax consequences of temporary
differences between the carrying amounts and the tax bases of other assets and
liabilities.
Under FAS 109, assets and liabilities acquired in business combinations
accounted for under the purchase method are assigned their fair values, and
deferred taxes are provided for lower or higher tax bases. Under APB 11,
values assigned were net-of-tax. In adopting FAS 109, the Company adjusted the
carrying amounts of the Michigan Sugar Company fixed assets and LIFO
inventories acquired in 1984. Pretax income from operations for the fiscal
period ended October 3, 1993 was reduced by $5,600,000 representing additional
cost of sales and depreciation expense resulting from the higher carrying
amounts.
The net adjustments to the January 4, 1993 balance sheet to adopt FAS 109
resulted in a $600,000 credit to net income. This amount is reflected in the
accompanying consolidated statement of operations for the fiscal period ended
October 3, 1993 as a cumulative effect of a change in accounting principle.
Pretax income from continuing operations for all periods presented was
taxed exclusively in the United States. The provision for income taxes is
comprised of the following:
Fiscal Period Ended
----------------------------------------------
October 2, October 3, January 3,
1994 1993 1993
---------- ---------- ----------
(In thousands of dollars)
Current federal $8,071 $(3,692) $13,412
Current state 75 (232) 763
Deferred federal (4,794) 4,977 (666)
Deferred state (489) 102 119
------ ------- -------
Provision charged to
continuing operations $2,863 $ 1,155 $13,628
====== ======= =======
Tax effect of change
in minimum pension
liability $ 720 $(5,502) $ -
====== ======= =======
Cash payments of income taxes amounted to $7,504,000 for the fiscal period
ended October 2, 1994, $11,834,000 for the fiscal period ended October 3, 1993
and $16,774,000 for the fiscal period ended January 3, 1993.
28
29
Deferred income tax liabilities (assets) are comprised of the following:
October 2, October 3,
1994 1993
---------- ----------
(In thousands of dollars)
Depreciation $22,406 $24,824
Other post employment benefits (11,951) (11,395)
Accrued pension liability (8,296) (8,513)
Deferred compensation (5,571) (4,844)
Tax benefit purchases 3,335 4,114
Other non-current (368) (235)
------- -------
Total net non-current (asset)
liability (445) 3,951
------- -------
Other accrued expenses (2,865) (1,118)
Inventory 410 452
Other current (79) (658)
------- -------
Total net current asset (2,534) (1,324)
------- -------
Net deferred (asset) liability $(2,979) $ 2,627
======= =======
The components of the Company's deferred income tax provision calculated
under APB 11 and the tax effects of each are summarized below:
Fiscal Period Ended
-------------------
January 3,
1993
-------------------
(In thousands of dollars)
Increase of current federal
taxes resulting from tax
benefit purchases $ (787)
Excess of tax over book
depreciation 1,439
Employee related expenses
recognized in different periods
for book and tax purposes (1,562)
Expenses related to sugar beet
processing recognized in
different periods for book
and tax purposes (77)
Other 440
-------
$ (547)
=======
29
30
A reconciliation between the provision for income taxes and the amount
computed by applying the U. S. federal income tax rate to income before income
taxes and change in accounting principle is as follows:
Fiscal Period Ended
--------------------------------------------
October 2, October 3, January 3,
1994 1993 1993
---------- ---------- ----------
(In thousands of dollars)
Computed "expected" tax expense $3,011 $1,068 $13,929
Increases (reductions) in taxes
resulting from:
State income taxes, net of
federal income tax benefit (269) 95 581
Non-deductible depreciation
expense - - 416
Tax-free income earned (104) (107) (519)
ESOP dividends (506) (547) -
Effect of tax rate increase - 181 -
Other 731 465 (779)
------ ------ -------
Provision for income taxes $2,863 $1,155 $13,628
====== ====== =======
The Company increased its deferred income tax liability in the last quarter
of the fiscal period ended October 3, 1993 as a result of legislation enacted
during 1993 increasing the corporate tax rate from 34% to 35% commencing in
1993.
Note 8 - Stockholders' Equity:
The Certificate of Incorporation of the Company, as amended, authorizes a
class of preferred stock to consist of up to 1,000,000 shares of $.50 par value
stock. The Board of Directors can determine the characteristics of the
preferred stock without further stockholder approval.
Note 9 - Pension Plans:
Substantially all employees and retirees of the Company are covered by
noncontributory defined benefit pension plans. The Company also provides
supplemental pension benefits to certain retired employees. The supplemental
pension benefits are determined annually by the Board of Directors.
Benefits under the noncontributory defined benefit pension plans for
bargaining employees are primarily based on years of service; benefits for
other employees are generally based on years of service and the employee's
highest consecutive three-year average earnings. The Company's policy is to
contribute at least the minimum amount required by the Employee Retirement
Income Security Act. At October 2, 1994, the assets of these plans are
invested primarily in cash equivalents, mutual stock and bond funds, and
common stocks including 217,587 shares of the Company's common stock with a
market value of $2,611,000. The plan received $117,497 in dividends from these
shares during the fiscal period ended October 2, 1994.
30
31
The following table sets forth the status of the Company's defined benefit
pension plans and the pertinent assumptions used in computing this information
as of the end of each respective period:
October 2, October 3,
1994 1993
---------- ----------
(In thousands of dollars)
Actuarial present value of
benefit obligation based
on current compensation:
Vested $(65,650) $(67,785)
Nonvested (6,370) (7,871)
-------- --------
Accumulated benefit obligation (72,020) (75,656)
Increase in present value of
benefit obligation to reflect
projected compensation increases (7,520) (8,217)
-------- --------
Projected benefit obligation (79,540) (83,873)
Plan assets at fair value 57,120 57,393
-------- --------
Projected benefit obligation
(in excess of) plan assets (22,420) (26,480)
Unrecognized prior service cost 3,614 4,540
Unrecognized net loss 22,904 26,139
Unrecognized net asset
at transition (3,428) (4,503)
Adjustment required to recognize
minimum liability (15,570) (17,912)
-------- --------
Pension liability included
in "Deferred employee benefits" $(14,900) $(18,216)
======== ========
The table above is based on a discount rate of 8.5 % for the fiscal period
ended October 2, 1994 and 7.5% for the fiscal period ended October 3, 1993, and
projected salary increases of 4.5% for the fiscal period ended October 2, 1994
and 4% for the fiscal period ended October 3, 1993.
Pension expense for the fiscal period ended October 2, 1994, the fiscal
period ended October 3, 1993 and the fiscal period ended January 3, 1993 is
summarized as follows:
Fiscal Period Ended
----------------------------------------
October 2, October 3, January 3,
1994 1993 1993
---------- ---------- ----------
(In thousands of dollars)
Costs related to services provided
by employees during the year $2,401 $1,573 $2,180
Interest cost on projected
benefit obligation 6,274 4,910 6,212
Actual gain on plan assets (1,172) (2,476) (1,620)
Net amortization and deferrals (4,564) (2,692) (5,589)
------ ------ ------
Pension expense related to
defined benefit plans 2,939 1,315 1,183
Supplemental pension benefits 126 91 124
------ ------ ------
Total pension expense $3,065 $1,406 $1,307
====== ====== ======
The expected long-term rate of return on plan assets used in determining
"Pension expense related to defined benefit plans" as shown above was 9.5% for
the fiscal period ended October 2, 1994, 10.5% for the fiscal period ended
October 3, 1993, and 11% for the fiscal period ended January 3, 1993.
31
32
The Company sponsors a Supplemental Executive Retirement Plan (SERP) to
supplement its qualified plan for certain management employees. The
actuarially determined expense related to this plan was $1,255,000 for the
fiscal period ended October 2, 1994, $800,000 for the fiscal period ended
October 3, 1993, and $1,010,000 for the fiscal period ended January 3, 1993.
Of these expenses, the interest portion amounted to $781,000 for the fiscal
period ended October 2, 1994, $569,000 for the fiscal period ended October 3,
1993, and $707,000 for the fiscal period ended January 3, 1993. The remaining
balance of the expense in each year is primarily service cost.
The table below summarizes the status of the SERP plan at the end of each
respective period:
October 2, October 3,
1994 1993
---------- ----------
(In thousands of dollars)
Actuarial present value of
benefit obligation based
on current compensation:
Vested $ (9,320) $ (9,063)
Nonvested (1,033) (993)
-------- --------
Accumulated benefit obligation (10,353) (10,056)
Increase in present value of
benefit obligation to reflect
projected compensation increases (399) (267)
-------- --------
Projected benefit obligation (10,752) (10,323)
Unrecognized prior service cost 209 130
Unrecognized net loss 1,502 1,937
Unrecognized net obligation
at transition 149 229
Adjustment required to recognize
minimum liability (1,461) (2,029)
-------- --------
Pension liability included
in "Deferred employee benefits" $(10,353) $(10,056)
======== ========
The table above is based on a discount rate of 8.5% for the fiscal period ended
October 2, 1994 and 7.5% for the fiscal period ended October 3, 1993, and
projected salary increases of 4.5% for the fiscal period ended October 2, 1994
and 4% for the fiscal period ended October 3, 1993.
In accordance with the provisions of Statement of Financial Accounting
Standards No. 87 - Employers' Accounting for Pensions, the Company has recorded
an additional minimum liability at October 2, 1994 and at October 3, 1993
representing the excess of the accumulated benefit obligation over the fair
value of plan assets and accrued pension liability for its pension and SERP
plans. The additional liability has been offset by an intangible asset which
is included in "Other assets" to the extent of previously unrecognized prior
service cost. Amounts in excess of previously unrecognized prior service cost
are recorded net of the related deferred tax benefit as a reduction of
stockholders' equity of $8,210,000 at October 2, 1994 and $9,453,000 at October
3, 1993.
32
33
Note 10 - Other Retirement and Benefit Plans:
The Company sponsors a deferred compensation plan which permits directors
and certain management employees to defer portions of their compensation and
earn a guaranteed interest rate on the deferred amounts. The salaries which
have been deferred since the plan's inception have been accrued, and the
expense, other than salaries, related to this plan is interest on the deferred
amounts. Interest expense during the fiscal periods ended October 2, 1994,
October 3, 1993 and January 3, 1993 includes $1,915,000, $1,247,000, and
$1,196,000, respectively, related to this plan. The Company has included in
"Deferred employee benefits" $15,176,000 at October 2, 1994 and $13,191,000 at
October 3, 1993 to reflect its liability under this plan.
In connection with the deferred compensation plan and the SERP plan
referred to in Note 9, the Company purchases whole-life insurance contracts on
the related directors and employees. The Company has included in "Other
assets" $15,496,000 at October 2, 1994 and $12,303,000 at October 3, 1993 which
represent the capitalized value of these policies. If all of the assumptions
regarding mortality, interest rates, policy dividends, and other factors are
realized, the Company will ultimately realize its full investment plus a factor
for the use of its money.
The Company sponsors 401(k) plans in which substantially all non-bargaining
employees and certain bargaining unit employees are eligible to participate.
These plans allow eligible employees to save a portion of their salary on a
pre-tax basis. The Company makes annual contributions to these plans which
aggregated $408,000, $320,000 and $345,000 for the fiscal periods ended October
2, 1994, October 3, 1993 and January 3, 1993, respectively.
The Company also sponsors an Employee Stock Ownership Plan (ESOP) in which
substantially all non-bargaining employees participate. Contributions may be
made in the form of cash or Company stock. The Company has expensed
contributions to the ESOP of $0, $1,235,000 and $1,500,000 for the fiscal
periods ended October 2, 1994, October 3, 1993 and January 3, 1993,
respectively.
The Company maintains a profit-based incentive plan which currently covers
approximately 1,100 qualified employees. Compensation under this plan was $0,
$0 and $979,000 for the fiscal periods ended October 2, 1994, October 3, 1993
and January 3, 1993, respectively.
The Company also sponsors benefit plans that provide postretirement health
care and life insurance benefits to certain employees who meet the applicable
eligibility requirements. Effective December 30, 1991, the first day of the
fiscal period ended January 3, 1993, the Company adopted Statement of Financial
Accounting Standards No. 106 - Employers' Accounting for Postretirement
Benefits Other Than Pensions (FAS 106). This standard requires accrual of the
expected cost of providing postretirement benefits to employees and their
beneficiaries and covered dependents during the years that employees provide
services. Prior to December 30, 1991, the Company expensed the costs of health
care and
33
34
life insurance benefits provided to retirees in the period in which these costs
were paid.
The cumulative effect of this change in accounting principle was a one-time
charge of $28,841,000 before taxes, or $18,170,000 net of tax benefits
calculated at an estimated effective tax rate of 37%. The cost of
postretirement health care and life insurance benefits is summarized as
follows:
Fiscal Period Ended
------------------------------------------------
October 2, October 3, January 3,
1994 1993 1993
---------- ---------- ----------
(In thousands of dollars)
Service cost $ 669 $ 428 $ 547
Interest cost 2,369 1,878 2,451
------ ------ ------
Total postretirement
benefit expense $3,038 $2,306 $2,998
====== ====== ======
The actuarial and recorded liabilities for these postretirement benefits,
none of which has been funded, are as follows:
October 2, October 3,
1994 1993
---------- ----------
(In thousands of dollars)
Accumulated postretirement benefit
obligation:
Retirees $(17,753) $(17,670)
Active participants (11,244) (13,920)
-------- --------
Accumulated benefit obligation (28,997) (31,590)
Unrecognized net (loss) gain (3,163) 704
-------- --------
Accrued postretirement benefit
obligation included in
"Deferred employee benefits" $(32,160) $(30,886)
======== ========
The assumed discount rate was 8.5% for the fiscal period ended October 2,
1994 and 7.5% for the fiscal period ended October 3, 1993. For the fiscal
period ended October 2, 1994, the rate of increase in the per capita costs of
covered health care benefits was assumed to be 8% for the first five years, 6%
for the next five years and 5% thereafter. For the fiscal period ended October
3, 1993, the rate of increase was assumed to be 9% for the first five years, 7%
for the next five years, and 5% thereafter. Increasing the health care cost
trend rate assumption by one percentage point would increase the accumulated
postretirement benefit obligation as of October 2, 1994 by approximately
$3,390,000 and would increase postretirement benefit cost by approximately
$355,000 for the fiscal period ended October 2, 1994.
Note 11 - Commitments and Contingencies:
The Company has contracted for the purchase of a substantial portion of its
future raw sugar requirements. Prices to be paid for raw sugar under these
contracts are based in some cases on market prices during the anticipated
delivery month. In other cases prices are fixed and, in these instances, the
Company generally obtains commitments from
34
35
its customers to buy the sugar prior to fixing the price, or enters into
futures transactions to hedge the commitment.
The Company is exposed to loss in the event of non-performance by the other
party to the interest rate swap agreements discussed in Note 6. However, the
Company does not anticipate non-performance by the counter-parties to the
transactions.
In May 1992, the United States Customs Service (Customs) issued a bill to
the Company for approximately $7,500,000 seeking reimbursement for certain
drawback claims filed by the Company with Customs during the period 1984
through 1988. Customs has alleged that drawback claims prepared by the Company
for certain export shipments of sugar during these years are technically and/or
substantively deficient and that the Company, therefore, is not entitled to
monies previously received under these drawback claims. The Company disputes
Customs' findings and intends to vigorously protest the decision of Customs.
While it is not certain how long the protest (administrative appeal) process
will take, based upon the facts known to the Company at this time, the ultimate
resolution of this matter is not expected to have a materially adverse effect
on the Company's financial position or results of operations.
In July 1991, National Utility Service, Inc. (NUS) filed a complaint
against the Company in the United States District Court for the District of New
Jersey seeking compensation and damages arising from a contract between the
Company and NUS for energy cost saving recommendations. On September 12, 1994,
summary judgment was entered against the Company in the amount of $2,973,000 in
this case. A motion is presently pending in that action to modify the judgment
by the addition of prejudgment interest in an amount between $1,343,000 and
$1,472,000. The Company has opposed the motion to modify and has appealed the
judgment to the United States Court of Appeals for the Third Circuit. The
Company intends to pursue the appeal vigorously and strongly contends that no
amounts are due to NUS.
35
36
Note 12 - Quarterly Financial Information (Unaudited):
Unaudited quarterly financial information for the fiscal periods ended
October 2, 1994 and October 3, 1993 is as follows:
First Second Third Fourth
Quarter Quarter Quarter Quarter
Ended Ended Ended Ended
January 2, April 3, July 3, October 2,
1994 1994 1994 1994
---------- -------- ------- ----------
(In thousands of dollars except for per share amounts)
Fiscal period
ended October 2, 1994
Net sales $280,186 $247,005 $272,891 $274,285
Gross profit 30,979 22,308 23,127 26,247
Income from operations 8,317 1,613 3,197 7,170
Net income (loss) 3,541 (271) 233 2,240
Per share .13 (.01) .01 .09
First Second Third
Quarter Quarter Quarter
Ended Ended Ended
April 4, July 4, October 3,
1993 1993 1993
-------- ------- ----------
(In thousands of dollars except for per share amounts)
Fiscal period
ended October 3, 1993
Net sales $255,015 $270,979 $292,122
Gross profit 25,507 26,042 22,836
Income from operations 6,076 5,317 446
Income (loss) before change in
accounting principle 2,653 1,490 (2,157)
Per share .10 .06 (.08)
Net income (loss) 3,253 1,490 (2,157)
Per share .12 .06 (.08)
Quarterly results of operations for the fiscal period ended October 3, 1993
reflect the change in the Company's fiscal year end. The first quarter ended
April 4, 1993 reflects the cumulative effect of adoption of FAS 109 of $600,000
effective January 4, 1993. The third quarter reflects a $4,900,000 increase in
cost of sales and the associated $1,900,000 income tax benefit representing the
liquidation of LIFO basis inventory acquired in 1984 as further explained in
Note 2 to the financial statements.
36
37
SAVANNAH FOODS & INDUSTRIES, INC.
AND SUBSIDIARIES
Schedule V
Property, Plant and Equipment
(In thousands of dollars)
Column A Column B Column C Column D Column E Column F
-------- -------- -------- -------- -------- --------
Balance at the Balance at
beginning of Transfers the end of
Classification the period Additions Retirements add (deduct) the period
- -------------- -------------- --------- ----------- ------------ ----------
Fiscal Period Ended October 2, 1994
Land $ 8,405 $ 12 $ - $ - $ 8,417
Buildings 87,162 3,891 - - 91,053
Machinery &
equipment 289,442 33,918 (9,490) - 314,530
Leasehold
improvements 1,159 - - - 1,159
Projects-in-
process 21,990 (14,454) - - 7,536
--------- --------- --------- --------- ---------
$ 408,158 $ 23,367 $ (9,490) $ - $ 422,695
========= ========= ========= ========= =========
Fiscal Period Ended October 3, 1993
Land $ 6,384 $ 2,021 $ - $ - $ 8,405
Buildings 81,233 5,929 - - 87,162
Machinery &
equipment 253,132 40,235 (3,925) - 289,442
Leasehold
improvements 1,163 - (4) - 1,159
Projects-in-
process 13,523 8,467 - - 21,990
--------- --------- --------- --------- ---------
$ 355,435 $ 56,652(1) $ (3,929) $ - $ 408,158
========= ========= ========= ========= =========
Fiscal Period Ended January 3, 1993
Land $ 6,504 $ 45 $ (165) $ - $ 6,384
Buildings 66,755 15,825 (1,347) - 81,233
Machinery &
equipment 234,446 24,612 (5,926) - 253,132
Leasehold
improvements 1,982 - (819) - 1,163
Projects-in-
process 8,704 4,819 - - 13,523
--------- --------- --------- --------- ---------
$ 318,391 $ 45,301 $ (8,257) $ - $ 355,435
========= ========= ========= ========= =========
(1) Additions for the fiscal period ended October 3, 1993 include $10,446 for
the write-up of assets at Michigan Sugar Company due to the adoption of FAS
109 (see Note 7 for further discussion) and $10,852 for the assets acquired
as a result of the acquisition of King Packaging Company.
37
38
SAVANNAH FOODS & INDUSTRIES, INC.
AND SUBSIDIARIES
Schedule VI
Accumulated Depreciation and Amortization of
Property, Plant and Equipment
(In thousands of dollars)
Column A Column B Column C Column D Column E Column F
-------- -------- -------- -------- -------- --------
Balance at Additions
the beginning charged to cost Balance at
of the and Transfers the end of
Classification period expense Retirements add (deduct) the period
- -------------- ------------- --------------- ----------- ------------ ----------
Fiscal Period Ended October 2, 1994
Buildings $ 28,540 $ 4,571 $ - $ - $ 33,111
Machinery &
equipment 129,731 21,720 (4,655) - 146,796
Leasehold
improvements 840 63 - - 903
--------- --------- --------- --------- ---------
$ 159,111 $ 26,354 $ (4,655) $ - $ 180,810
========= ========= ========= ========= =========
Fiscal Period Ended October 3, 1993
Buildings $ 25,483 $ 3,057 $ - $ - $ 28,540
Machinery &
equipment 103,029 28,477 (1,775) - 129,731
Leasehold
improvements 794 46 - - 840
--------- --------- --------- --------- ---------
$ 129,306 $ 31,580(1) $ (1,775) $ - $ 159,111
========= ========= ========= ========= =========
Fiscal Period Ended January 3, 1993
Buildings $ 22,485 $ 3,722 $ (724) $ - $ 25,483
Machinery &
equipment 88,683 18,595 (4,249) - 103,029
Leasehold
improvements 924 56 (186) - 794
--------- --------- --------- --------- ---------
$ 112,092 $ 22,373 $ (5,159) $ - $ 129,306
========= ========= ========= ========= =========
(1) Additions for the fiscal period ended October 3, 1993 include $7,754 for
the write-up of assets at Michigan Sugar Company due to the adoption of FAS
109 (see Note 7 for further discussion) and $6,095 for the accumulated
depreciation on assets acquired as a result of the acquisition of King
Packaging Company.
38
39
Item 9. Change in and Disagreements with Accountants on
Accounting and Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of Registrant.
The information relating to the Directors of the Company is
incorporated by reference from the "ELECTION OF DIRECTORS" section, pages 4
through 7, of the Company's Proxy Statement for its Annual Meeting of
Stockholders to be held on February 16, 1995, to be filed pursuant to Section
14 of the Securities Exchange Act of 1934 ("1995 Proxy Statement"). The
information relating to the Executive Officers of the Company is incorporated
by reference from the "MANAGEMENT OF SAVANNAH FOODS & INDUSTRIES, INC."
section, page 8 of the 1995 Proxy Statement. The information relating to
disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is
incorporated by reference from the "COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934" section, page 12, of the 1995 Proxy Statement.
Item 11. Executive Compensation.
The information relating to executive compensation is incorporated by
reference from the "EXECUTIVE COMPENSATION" section, pages 9 and 10, the "BOARD
OF DIRECTORS AND COMMITTEES OF THE BOARD" section, page 14, the "COMPENSATION
COMMITTEE REPORT ON EXECUTIVE COMPENSATION" section, pages 11 and 12, the
"COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION" section, page 12,
and the performance graph, page 13, of the 1995 Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
The information relating to the security ownership of certain
beneficial owners and management is incorporated by reference from the "STOCK
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" section, pages 2 and 3,
of the 1995 Proxy Statement.
Item 13. Certain Relationships and Related Transactions.
The information relating to certain relationships and related
transactions is incorporated by reference from the "CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS" section, page 14, and the "COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION" section, page 12, of the 1995 Proxy
Statement.
39
40
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K.
(a)(1) and (2): See index of Financial Statements, Item 8(a) and 8(b), page
14.
(a)(3) Exhibits:
Page Exhibit
No. Number Description
- --- ------ -----------
3-1 Articles of Incorporation, as amended, is hereby incorporated by reference to Commission File No. 1-11420 on Form
10-K for the year ended January 3, 1993 as Exhibit 3-1.
3-2 By-Laws, as amended, is hereby incorporated by reference to Commission File No. 1-11420 on Form 10-K for the year
ended October 3, 1993 as Exhibit 3-2.
45 4-1 Credit Agreement, dated as of October 1, 1993, by and among Savannah Foods & Industries, Inc., as borrower, the
lenders named therein, and Nationsbank of Georgia, National Association, as agent.
162 4-2 Note Agreement, dated as of September 1, 1992, between Savannah Foods & Industries, Inc., as borrower, and the
lenders named therein, consisting of $50,000,000 8.35% Series A Senior Notes due November 1, 2002 and $20,000,000
7.15% Series B Senior Notes due November 1, 2002.
4-3 In reliance upon Item 601(b)(4)(iii) of Regulation S-K, various instruments defining the rights of holders of long-
term debt of Registrant are not being filed herewith because the total of securities authorized under each such
instrument does not exceed 10% of the total assets of Registrant. Registrant hereby agrees to furnish a copy of
any such instrument to the Commission upon request.
10-1* Profit Sharing and Management Incentive Compensation Plan is hereby incorporated by reference to Commission File
No. 1-11420 on Form 10-K for the year ended January 3, 1993 as Exhibit 10-1.
10-2* Supplemental Executive Retirement Plan, as amended and restated, is hereby incorporated by reference to Commission
File No. 1-11420 on Form 10-K for the year ended January 3, 1993 as Exhibit 10-2.
10-3* Amendment No. 1 to the Supplemental Executive Retirement Plan is hereby incorporated by reference to Commission
File No. 1-11420 on Form 10-K for the year ended January 3, 1993 as Exhibit 10-3.
10-4* Deferred Compensation Plan for Key Employees, as amended and restated, is hereby incorporated by reference to
Commission File No. 1-11420 on Form 10-K for the year ended January 3, 1993 as Exhibit 10-4.
40
41
Page Exhibit
No. Number Description
- --- ------ -----------
10-5* Amendment No. 1 to the Deferred Compensation Plan for Key Employees is hereby incorporated by reference to
Commission File No. 1-11420 on Form 10-K for the year ended January 3, 1993 as Exhibit 10-5.
227 10-6* Amendment No. 2 to the Deferred Compensation Plan for Key Employees.
10-7* Employment Agreement - W. W. Sprague, Jr., as amended, is incorporated by reference to Commission File No. 1-11420
filed on Form 10-K for the year ended December 29, 1991 as Exhibit 10-7.
10-8* Amendment to Employment Agreement - W. W. Sprague, Jr. - is hereby incorporated by reference to Commission File No.
1-11420 on Form 10-K for the year ended January 3, 1993 as Exhibit 10-7.
10-9* Employment Agreements with all other Executive Officers of the Company are incorporated by reference to Commission
File No. 1-11420 filed on Form 10-K for the year ended January 1, 1989 as Exhibit 10-10.
10-10* Employment Agreement - W. W. Sprague, III is incorporated by reference to Commission File No. 1-11420 filed on Form
10-K for the year ended December 29, 1991 as Exhibit 10-10.
231 23-1 Consent of Independent Accountants
232 27-1 Financial Data Schedules
* Indicates exhibits which are management contracts or compensatory
agreements.
(b) Reports on Form 8-K: None.
(c) See (a)(3) Exhibits above.
(d) Not applicable.
41
42
UNDERTAKINGS
For the purposes of complying with the amendments to the rules
governing Form S-8 (effective July 13, 1990) under the Securities Act of 1933,
the undersigned Registrant hereby undertakes as follows, which undertaking
shall be incorporated by reference into Registrant's Registration Statements on
Form S-8 Number 2-63448, Monthly Investment Plan for Employees of Savannah
Foods & Industries, Inc. (filed June 19, 1984 as amended on April 3, 1992); and
Number 2-94678, Employee Retirement Savings Account Plan (filed December 22,
1984 as amended on October 18, 1994).
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to Directors, Officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a Director, Officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such Director, Officer or controlling persons in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
42
43
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
SAVANNAH FOODS & INDUSTRIES, INC.
Dated: December 20, 1994. By: /S/William W. Sprague, III
------------------ --------------------------
William W. Sprague, III
President
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Pursuant to the requirements of the Securities Act of 1934, this report
has been signed by the following persons on behalf of Registrant in the
capacities and on the dates indicated:
/S/William W. Sprague, Jr. Chairman and Director December 14, 1994
- --------------------------
William W. Sprague, Jr. (PRINCIPAL EXECUTIVE
OFFICER)
/S/William W. Sprague, III President and Director December 14, 1994
- --------------------------
William W. Sprague, III (PRINCIPAL OPERATING
OFFICER)
/S/William R. Steinhauer Senior Vice President - December 14, 1994
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William R. Steinhauer Finance & Administration &
Assistant Secretary (PRINCIPAL
FINANCIAL AND PRINCIPAL
ACCOUNTING OFFICER)
/S/F. Sprague Exley Vice President-Distribution December 14, 1994
- --------------------------
F. Sprague Exley and Director
/S/W. Waldo Bradley Director December 14, 1994
- --------------------------
W. Waldo Bradley
/S/John D. Carswell Director December 14, 1994
- --------------------------
John D. Carswell
/S/Hugh M. Tarbutton Director December 14, 1994
- --------------------------
Hugh M. Tarbutton
/S/Arthur Gignilliatt, Jr. Director December 14, 1994
- --------------------------
Arthur Gignilliatt, Jr.
/S/Robert L. Harrison Director December 14, 1994
- --------------------------
Robert L. Harrison
/S/Arnold Tenenbaum Director December 14, 1994
- --------------------------
Arnold Tenenbaum
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