-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, hVFjdHN1EUa1ww3nxELrlBf+KtdYcsQR4phRj/LZEtVO3RcQCYxejOKEukRue6up P6V5Q7YVHz80QXIgps8hUg== 0000051410-95-000007.txt : 19950517 0000051410-95-000007.hdr.sgml : 19950517 ACCESSION NUMBER: 0000051410-95-000007 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19950228 FILED AS OF DATE: 19950516 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERNATIONAL MULTIFOODS CORP CENTRAL INDEX KEY: 0000051410 STANDARD INDUSTRIAL CLASSIFICATION: GRAIN MILL PRODUCTS [2040] IRS NUMBER: 410871880 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 001-06699 FILM NUMBER: 95540102 BUSINESS ADDRESS: STREET 1: 33 S SIXTH ST STREET 2: P O BOX 2942 CITY: MINNEAPOLIS STATE: MN ZIP: 55402-0942 BUSINESS PHONE: 6123403300 FORMER COMPANY: FORMER CONFORMED NAME: INTERNATIONAL MILLING CO INC DATE OF NAME CHANGE: 19700217 10-K405 1 2/28/95 FORM 10-K405 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 February 28, 1995 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 ________ Commission File Number 1-6699 INTERNATIONAL MULTIFOODS CORPORATION (Exact name of registrant as specified in its charter) Delaware 41-0871880 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 33 South Sixth Street, Minneapolis, Minnesota 55402 (Address of principal (Zip Code) executive offices) (612) 340-3300 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of each class on which registered Common Stock (par value $.10 per share) New York Stock Exchange Preferred Stock Purchase Rights New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ] The aggregate market value of Common Stock, par value $.10 per share, held by nonaffiliates of the registrant (see Item 12 hereof) as of May 1, 1995 (based on the closing sale price of $20.25 per share as reported in the consolidated transaction reporting system on such date) was $359,747,123. The number of shares outstanding of the registrant's Common Stock, par value $.10 per share, as of May 1, 1995 was 17,995,362. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant's Annual Report to Stockholders for the fiscal year ended February 28, 1995 are incorporated by reference into Parts I and II. Portions of the registrant's Proxy Statement for the Annual Meeting of Stockholders to be held June 16, 1995 are incorporated by reference into Part III. PART I Item 1. Business. General International Multifoods Corporation, incorporated in Delaware in 1969 as the successor to a business founded in 1892, operates in three businesses: foodservice distribution in the United States, bakery products in the United States and Canada, and bakery and agricultural products in Venezuela. Unless indicated otherwise or the context suggests otherwise, the term "Company," as used in this Report, means International Multifoods Corporation and its consolidated subsidiaries. In fiscal 1995, the Company acquired the limited-menu distribution business of Leprino Foods Company, with annualized sales of approximately $400 million, and combined that business with the Company's Pueringer limited-menu foodservice distribution business. In fiscal 1995, the Company divested its Frozen Specialty Foods and Meats businesses. In addition, in fiscal 1995, the Company announced that it is exploring the divestiture of its surimi seafood business, which the Company anticipates divesting in fiscal 1996. In the fourth quarter of fiscal 1995, the Company changed its segment reporting to the following business segments: Foodservice Distribution, Bakery, Venezuela Foods, and Divested Businesses. Financial information for the last three fiscal years for each of the Company's business segments, which is included in Note 19 to the Company's Consolidated Financial Statements on page 31 of the Company's Annual Report to Stockholders for the fiscal year ended February 28, 1995 ("1995 Annual Report to Stockholders"), is incorporated herein by reference. Foodservice Distribution The Company's Foodservice Distribution segment includes the Company's vending distribution business; the limited-menu distribution business, which comprises the newly acquired limited-menu distribution business of Leprino Foods Company and the Company's former Pueringer limited-menu foodservice distribution business; and the food exporting business. No single customer accounts for a significant portion of the segment's sales. Vending Distribution. The Company is the largest U.S. vending distributor, serving approximately 14,000 vending and office coffee service operators and other concessionaires. The Company distributes and sells more than 8,000 food products consisting primarily of candy, snacks, hot beverages and juices. Most of the products are nationally advertised brand products. The Company also sells certain products, such as premium ground and whole-bean coffee, hot cocoa, creamer and sugar, under its own private labels, Vendor's Select and GRINDSTONE CAFE. Deliveries are made directly to vending and office coffee service operators from 20 distribution centers located nationwide. The frequency of deliveries varies, depending upon customer needs, but generally deliveries are made once a week. The Company leases a fleet of approximately 200 tractor-trailers, most of which are equipped with an on-board computer system from which drivers obtain delivery performance and route information. The Company also operates 18 cash-and-carry locations from which customers can make purchases. The vending distribution business is highly competitive. While the Company is the only nationwide vending distributor, it encounters significant competition from regional and local distributors. Price is a significant competitive element in the vending distribution business, however other important competitive factors are prompt and accurate delivery of orders, availability of a wide variety of products and customer service. Limited-Menu Distribution. The Company is a leading distributor in the United States to independent pizza restaurants and other select limited-menu operators, including sandwich shops, Mexican restaurants, bakery shops and movie theaters. The Company distributes a broad selection of cheeses, meats, snacks, paper goods and other products, including pizza ingredients sold under the Company's Ultimo brand as well as major national brands. Deliveries are made directly to customers, generally once a week, from 12 distribution centers located strategically around the country to provide efficient and timely delivery to customers. The distribution centers are linked by computer network to the distribution business' headquarters. The Company maintains a fleet of more than 200 tractor- trailers, approximately half of which are owned and half of which are leased by the Company. The limited-menu distribution business is highly competitive. The Company competes with several national and regional broadline distributors and numerous regional specialty foodservice distributors and local independent distributors. The Company competes on the basis of product quality and consistency, customer service and the availability of a wide variety of products, as well as price and prompt and accurate delivery of orders. The Company believes that its pizza expertise, which includes providing customers with ideas on promotions, menu planning and baking, differentiates the Company in part from its competitors. In addition, the Company believes that it further distinguishes itself from broadline distributors by providing more personalized customer service. Food Exporting. The Company markets and exports a variety of products, including the Company's bakery products sold under the Company's Multifoods and ROBIN HOOD brand names. Export products account for less than 2% of the Foodservice Distribution segment's net sales. Bakery The Company's Bakery segment comprises bakery products for foodservice, retail bakery, in-store bakery and wholesale bakery customers in North America and consumer products in Canada, which include primarily home baking products and condiments. No single customer accounts for a significant portion of the segment's sales. North America Bakery. The Company's North America Bakery division produces approximately 3,000 products for foodservice, retail bakery, in- store bakery and wholesale bakery customers in the United States and Canada. The Company produces bakery mix products, including mixes for breads, rolls, bagels, donuts, muffins, danish, cakes, cookies, brownies, bars and pizza crusts, as well as fillings and icings. Bakery mix products are marketed under the Multifoods and JAMCO brands in the United States and under the Robin Hood brand in Canada. In addition, the Company manufactures and markets frozen desserts under its MULTIFOODS, Gourmet Baker and Fantasia brands. In Canada the Company also produces wheat flour and durum and oat products. Bakery products are marketed through the Company's own sales organization and independent distributors and brokers. The Company encounters significant competition in the bakery products market. The Company is the leading producer of bakery mixes in North America and it competes with several large corporations and regional producers of bakery mixes. With respect to frozen bakery products, the Company competes primarily in the foodservice and in-store bakery markets with several large corporations and numerous regional suppliers that have select product offerings. The Company competes primarily in Canada with respect to its commercial flour products and its competitors include both large corporations and regional producers. The Company competes on the basis of product quality and uniqueness, product convenience, brand loyalty, timely delivery and customer service as well as price. Consumer Products. The Company's consumer products division is the leading marketer in Canada of flour and specialty baking mixes sold to consumers. More than 40 consumer baking mixes are sold under the Company's Robin Hood brand, while consumer flour is sold under the Company's Robin Hood and Brodie brands. The Company also sells hot cereals under its Robin Hood and Old Mill brands. The Company also manufactures and markets pickles, relishes and other condiments to consumers in Canada, where its Bick's brand is the leading brand. The Company also sells condiments under its Habitant, Gattuso, WOODMAN'S, ROSE and MCLARENS labels. Consumer products are marketed primarily through the Company's own sales organization, supported by advertising and other promotional activities. The Company competes on the basis of product quality, product convenience, the ability to identify and satisfy emerging consumer preferences, brand loyalty, timely delivery and customer service as well as price. Venezuela Foods The Company's Venezuela Foods segment includes consumer products for home baking, bakery products for food processors and commercial and retail bakeries, and products for the agricultural sector. The Company's consumer products include wheat flour, corn flour, whole grain rice, rice flour and oat cereals, which are sold to grocery stores principally under the Company's Robin Hood, Juana, Monica, Payara and Lassie brands. The Company's bakery products include wheat flour, which is sold under the Company's Polar, Gran Aguante, Goldrim and Elefante brands, and prepared bakery mixes, which are sold under the Robin Hood brand. The Company's animal feeds are sold principally under the Company's Super-S brand to animal producers and farm distributors. The Venezuela Foods segment's products are marketed through the Company's own sales organization and independent distributors and brokers. The Company's Venezuelan subsidiary is one of the largest food companies in Venezuela and the second-largest producer of animal feeds for the agricultural sector. The Company is the leading producer of consumer wheat flour, flour for commercial food processors and retail bakeries, and bakery mixes. No single customer accounts for a significant portion of the Venezuela Foods segment's sales. The Company competes on the basis of quality, price, uniqueness, timely delivery and customer service. Operations outside the United States are subject to risks inherent in operating under different legal systems and various political and economic environments. In Venezuela, among these risks are inflation, currency volatility, government price and foreign exchange controls, restrictions on the exchangeability of currency, possible limitations on foreign investment and dividend repatriation, and changes in existing tax laws. Certain of these risks are currently affecting results. See "Management's Discussion and Analysis of Results of Operations and Financial Condition," which is included on pages 12 through 15 of the 1995 Annual Report to Stockholders and is incorporated by reference in Part II, Item 7, hereof, and Note 7 to the Company's Consolidated Financial Statements which are incorporated by reference in Part II, Item 8, hereof. Divested Businesses The Company's Divested Businesses segment consists principally of the Company's Frozen Specialty Foods and Meats businesses which were divested in fiscal 1995 and the surimi seafood business which the Company anticipates divesting in fiscal 1996. Other Information Relating to the Business of the Company Sources of Supply and Raw Materials. The Company's vending distribution business purchases products directly from numerous manufacturers, processors and independent suppliers. Several of these sources are large corporations from which the Company purchases large quantities of brand name candy and snacks. The Company believes that adequate alternative sources of supply for other vending products are readily available. The Company's limited-menu distribution business purchases products directly from numerous manufacturers, processors and independent suppliers. The Company's limited-menu distribution business is not dependent upon any single supplier and alternative sources of supply are readily available. With respect to the Company's Bakery and Venezuela Foods segments, raw materials generally are available from numerous sources and the Company believes that it will continue to be able to obtain adequate supplies. In Canada, the Company minimizes risks associated with wheat market price fluctuations by hedging its wheat and flour inventories, open wheat purchase contracts, and open flour sales contracts with wheat futures contracts. See Note 7 to the Company's Consolidated Financial Statements which are incorporated by reference in Part II, Item 8, hereof. Wheat, oats and soybeans are not grown in Venezuela and adequate quantities of sorghum are not grown in Venezuela. However, adequate Venezuelan wheat, oats, soybean and sorghum requirements generally are available and procured from sources primarily in the United States and Canada. Exchange controls implemented by the Venezuelan government during the Company's fiscal year 1995 have not had a material impact on the Company's ability to obtain raw materials from sources outside of Venezuela. However, the Company cannot be certain that this condition will continue. Generally, adequate quantities of corn and rice, which are grown in Venezuela, are available locally. In the event of a local shortage of corn or rice, the Company has, from time to time, purchased corn and rice from the world market. Trademarks and Other Intellectual Property. The Company owns numerous trademarks, service marks and product formulae which are important to the Company's business. The most significant trademarks and service marks are identified above. Most of the Company's trademarks and service marks are registered. Seasonality. The Company does not experience material seasonal variations in its sales volumes. Environmental Regulation. The Company's facilities in the United States are subject to federal, state and local environmental laws and regulations. Compliance with these provisions has not had, and the Company does not expect such compliance to have, any material adverse effect upon the Company's capital expenditures, net earnings or competitive position. The Company has received notices from the U.S. Environmental Protection Agency and the New York State Department of Environmental Conservation that the Company has been identified as a potentially responsible party ("PRP") under the Comprehensive Environmental Response, Compensation and Liability Act and may be required to share in the cost of cleanup of two environmentally contaminated sites. The Company recognizes that its potential exposure with respect to each of these sites may be joint and several. However, based upon several factors such as the volume of material contributed to the sites, the number and financial viability of other PRP's, allocations of volumetric waste contributions to other PRP's, remediation cost estimates and the present status of the proceedings involving such sites, the Company has concluded that its probable aggregate exposure in regard to such sites is not material. Employees. As of February 28, 1995, the Company and its subsidiaries had 7,495 employees. Item 2. Properties. The Company's principal executive offices are located in Minneapolis, Minnesota in leased office space. Several of the Company's subsidiaries also own or lease office space. The Company operates numerous processing and distribution facilities throughout the United States, Canada and Venezuela. The Company believes that its facilities are suitable and adequate for current production or distribution volumes. Foodservice Distribution The Company owns two and leases 18 distribution centers aggregating approximately 1.6 million square feet for its vending distribution business. These distribution centers are located in Commerce and Fremont, California; Denver, Colorado; East Windsor, Connecticut; Orlando, Florida; Austell, Georgia; Woodridge, Illinois; Shawnee, Kansas; Louisville, Kentucky; Belleville, Michigan; Minneapolis, Minnesota; Greensboro, North Carolina; Paulsboro and Parsippany, New Jersey; Twinsburg, Ohio; Memphis, Tennessee; Dallas and Houston, Texas; Kent, Washington; and Pewaukee, Wisconsin. The Company's vending distribution business also operates 18 cash-and- carry distribution locations, 11 of which are separate from the Company's other distribution centers. The Company owns eight and leases four distribution centers aggregating approximately 900,000 square feet for its limited-menu distribution business. These distribution centers are located in Phoenix, Arizona; Anaheim and Livermore, California; Denver, Colorado; Kissimmee, Florida; Atlanta, Georgia; Indianapolis, Indiana; Rice, Minnesota; Springfield, Missouri; Middletown, Pennsylvania; and Dallas and Grand Prairie, Texas. Bakery The Company owns 13 and leases four processing facilities. These processing facilities are located in La Mirada, California; Bonner Springs, Kansas; Malden, Massachusetts; Sedalia, Missouri; Lockport, New York; Elyria, Ohio; Burnaby, British Columbia (2); Winnipeg, Manitoba; Burlington, Dunnville, Port Colborne, Scarborough and Simcoe, Ontario; Montreal, Quebec (2); and Saskatoon, Saskatchewan. The Company also operates two research and development laboratories. Venezuela Foods The Company owns 13 processing facilities and leases three processing facilities. These processing facilities are located in Barcelona, Anzoategui; Puerto Cabello (3) and Valencia, Carabobo; Calabozo, Guarico (3); Acarigua (3) and Araure, Portuguesa; Cumana, Sucre; and Maracaibo, Zulia (3). The Company owns four and leases 13 warehouse facilities. In addition, the Company leases 16 agricultural distribution centers. The Company also operates two Company-owned hatcheries and one leased hatchery and operates four Company-owned and six leased poultry farms. Item 3. Legal Proceedings. Neither the Company nor any of its subsidiaries is a party to any legal proceeding that is material to the business or financial condition of the Company. See the information under the heading "Other Information Relating to the Business of the Company-Environmental Regulation" in Item 1 above for a description of environmental matters in which the Company is involved. Item 4. Submission of Matters to a Vote of Security Holders. No matters were submitted to a vote of security holders of the Company during the fourth quarter of the fiscal year ended February 28, 1995. EXECUTIVE OFFICERS OF THE COMPANY. The information contained in Item 10 in Part III hereof under the heading "Executive Officers of the Company" is incorporated by reference in Part I of this Report. PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters. The Company's Common Stock is listed on the New York Stock Exchange. The high and low sales prices for the Company's Common Stock as reported in the consolidated transaction reporting system and the amount of the cash dividends paid on the Company's Common Stock for each quarterly period within the two most recent fiscal years, shown in Note 20 to the Company's Consolidated Financial Statements on page 32 of the Company's 1995 Annual Report to Stockholders, are incorporated herein by reference. As of May 1, 1995, there were 5,089 holders of record of the Common Stock of the Company. Item 6. Selected Financial Data. The information for fiscal years 1991 through 1995 in the "Six-Year Comparative Summary" on page 33 of the Company's 1995 Annual Report to Stockholders under the headings "Consolidated Summary of Operations," "Year-End Financial Position" and "Dividends Paid" is incorporated herein by reference. The information contained in Note 2 ("Businesses Acquired") and Note 4 ("Unusual Items") to the Company's Consolidated Financial Statements on pages 21 and 22, respectively, of the Company's 1995 Annual Report to Stockholders is also incorporated herein by reference. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. The information under the heading "Management's Discussion and Analysis of Results of Operations and Financial Condition" on pages 12 through 15 of the Company's 1995 Annual Report to Stockholders is incorporated herein by reference. Item 8. Financial Statements and Supplementary Data. The Independent Auditors' Report, the Company's Consolidated Financial Statements as of February 28, 1995 and February 28, 1994, and for each of the fiscal years in the three-year period ended February 28, 1995, and the Notes to the Company's Consolidated Financial Statements on pages 16 through 32 of the Company's 1995 Annual Report to Stockholders are incorporated herein by reference. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None. PART III Item 10. Directors and Executive Officers of the Registrant. The section under the heading "Election of Directors" on pages 3 through 5 and the section entitled "Compliance with Section 16(a) of the Exchange Act" on page 18 of the Company's Proxy Statement dated May 15, 1995 ("1995 Proxy Statement") are incorporated herein by reference. Executive Officers of the Company The following sets forth the name, age and business experience for at least the past five years of each of the executive officers of the Company as of May 1, 1995. Unless otherwise noted, the positions described are positions with the Company or its subsidiaries. Name Age Positions Held Period Anthony Luiso 51 Chairman of the Board, President and Chief Executive Officer 1989 to present Frank W. Bonvino 53 Vice President, General Counsel and Secretary 1992 to present Vice President and Associate General Counsel 1991 to 1992 Associate General Counsel 1986 to 1991 Duncan H. Cocroft 51 Vice President-Finance and Chief Financial Officer 1990 to present Jay I. Johnson 57 Group Vice President 1988 to present Robert F. Maddocks 64 Vice President-Human Resources 1990 to present John E. Sampson 54 Vice President - Corporate Planning and Development 1992 to present Vice President - Corporate Planning and Development and Treasurer 1990 to 1992 Vice President - Corporate Planning and Development 1984 to 1990 A. Harry Vis 63 Group Vice President 1993 to present President-Robin Hood Multifoods Inc. 1989 to present The executive officers of the Company are elected annually by the Board of Directors. Item 11. Executive Compensation. The section under the heading "Election of Directors" entitled "Compensation of Directors" on pages 6 and 7 and the section entitled "Executive Compensation" on pages 11 through 16 of the Company's 1995 Proxy Statement are incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management. The section entitled "Security Ownership of Certain Beneficial Owners and Management" on pages 2 and 3 of the Company's 1995 Proxy Statement is incorporated herein by reference. For purposes of computing the market value of the Company's Common Stock held by nonaffiliates of the Company on the cover page of this Report, all executive officers and directors of the Company are considered to be affiliates of the Company. This does not represent an admission by the Company or any such person as to the affiliate status of such person. All shares of the Company's Cumulative Redeemable Sinking Fund First Preferred Capital Stock, Series A, C, D and E, par value $100 per share, have been excluded from such computation of market value because such shares are not actively traded. Item 13. Certain Relationships and Related Transactions. Not applicable. PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K. (a) Documents Filed as a Part of this Report 1. Financial Statements The following consolidated financial statements of International Multifoods Corporation and subsidiaries and the Independent Auditors' Report thereon, included in the Company's 1995 Annual Report to Stockholders, are incorporated by reference in Part II, Item 8, hereof: Independent Auditors' Report Consolidated Balance Sheets - February 28, 1995 and February 28, 1994 Consolidated Statements of Operations - Years ended February 28, 1995, February 28, 1994 and February 28, 1993 Consolidated Statements of Cash Flows - Years ended February 28, 1995, February 28, 1994 and February 28, 1993 Notes to Consolidated Financial Statements 2. Financial Statement Schedules The consolidated financial statement schedules of International Multifoods Corporation and subsidiaries and the Independent Auditors' Report thereon required to be filed as part of this Report are listed below and are included at the end of this Report. Independent Auditors' Report Schedule II - Valuation and Qualifying Accounts All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and, therefore, have been omitted. 3. Exhibits 3.1 Restated Certificate of Incorporation of International Multifoods Corporation, as amended to date (incorporated herein by reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993). 3.2 Bylaws of International Multifoods Corporation, as amended to date (incorporated herein by reference to Exhibit 3.2 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1994). 4.1 Indenture, dated as of January 1, 1990, between International Multifoods Corporation and First Trust of New York, National Association, successor to Morgan Guaranty Trust Company of New York (incorporated herein by reference to Exhibit 4.1 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993). 4.2 First Supplemental Indenture, dated as of May 29, 1992, supplementing the Indenture, dated as of January 1, 1990, between International Multifoods Corporation and First Trust of New York, National Association, successor to Morgan Guaranty Trust Company of New York (incorporated herein by reference to Exhibit 4.2 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993). 4.3 Officers' Certificate, with exhibits thereto, establishing the terms of the series of securities issuable under the Indenture, dated as of January 1, 1990, as supplemented by the First Supplemental Indenture, dated as of May 29, 1992, between International Multifoods Corporation and First Trust of New York, National Association, successor to Morgan Guaranty Trust Company of New York (incorporated herein by reference to Exhibit 4.3 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993). 4.4 Letter of Representations, dated May 29, 1992, among International Multifoods Corporation, First Trust of New York, National Association, successor to Morgan Guaranty Trust Company of New York, and The Depository Trust Company (incorporated herein by reference to Exhibit 4.4 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993). The Company hereby agrees to furnish to the Securities and Exchange Commission upon request copies of all other instruments defining the rights of holders of long-term debt of International Multifoods Corporation and its consolidated subsidiaries. 10.1 Rights Agreement, dated as of October 4, 1990, as amended as of March 1, 1993, between International Multifoods Corporation and Norwest Bank Minnesota, N.A., with exhibits thereto (incorporated herein by reference to Exhibit 1 to the Company's Registration Statement on Form 8-A dated October 11, 1990 and Exhibit 1 to Amendment No. 1 on Form 8 dated March 1, 1993 to the Company's Registration Statement on Form 8-A dated October 11, 1990). 10.2 Amended and Restated 1989 Stock-Based Incentive Plan of International Multifoods Corporation (incorporated herein by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended August 31, 1993).* 10.3 1986 Stock Option Incentive Plan of International Multifoods Corporation (incorporated herein by reference to Exhibit 4 to the Company's Registration Statement on Form S-8 (Registration No. 33-6223)).* 10.4 1983 Stock Option Incentive Plan of International Multifoods Corporation (incorporated herein by reference to Exhibit 4 to the Company's Registration Statement on Form S-8 (Registration No. 2- 84236)).* 10.5 Award Agreement, dated as of August 18, 1989, as amended as of November 16, 1990, between International Multifoods Corporation and Anthony Luiso (incorporated herein by reference to Exhibit 10(c) to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1990 and Exhibit 10(b) to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1991).* 10.6 Irrevocable Waiver Agreement, dated as of August 17, 1989, as amended as of November 16, 1990, between International Multifoods Corporation and Anthony Luiso (incorporated herein by reference to Exhibit 10(b) to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1990 and Exhibit 10(c) to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1991).* 10.7 Non-Qualified Stock Option Agreement, dated as of March 31, 1994, between International Multifoods Corporation and Anthony Luiso.* 10.8 Stock Option Award Agreements, dated as of November 16, 1990, between International Multifoods Corporation and each of Duncan H. Cocroft, Jay I. Johnson and Robert F. Maddocks (incorporated herein by reference to Exhibits 10(d), 10(e) and 10(f), respectively, to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1991).* 10.9 Restricted Stock Award Agreement, dated as of December 11, 1992, between International Multifoods Corporation and Anthony Luiso (incorporated herein by reference to Exhibit 10.8 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993).* 10.10 Management Incentive Plan of International Multifoods Corporation, Amended and Restated as of September 17, 1993 (incorporated herein by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).* 10.11 First Amendment to Management Incentive Plan of International Multifoods Corporation, Amended and Restated as of September 17, 1993.* 10.12 Management Benefit Plan of International Multifoods Corporation, Restated Effective September 17, 1993 (incorporated herein by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).* 10.13 Trust Agreement, dated July 30, 1987, between International Multifoods Corporation and Bank of America NT and SA relating to the Management Benefit Plan of International Multifoods Corporation (incorporated herein by reference to Exhibit 10.11 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993).* 10.14 Executive Employees' Pension Plan of Robin Hood Multifoods Inc., as amended to date (incorporated herein by reference to Exhibit 10.12 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1994).* 10.15 Pension Trust Agreement, dated as of June 30, 1992, between Robin Hood Multifoods Inc. and The Canada Trust Company relating to the Executive Employees' Pension Plan of Robin Hood Multifoods Inc. (incorporated herein by reference to Exhibit 10.13 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1994).* 10.16 Agreement, dated October 28, 1991, between International Multifoods Corporation and A. Harry Vis regarding supplemental pension benefits (incorporated herein by reference to Exhibit 10.14 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1994).* 10.17 Compensation Deferral Plan for Executives of International Multifoods Corporation, Amended and Restated as of September 17, 1993 (incorporated herein by reference to Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).* 10.18 Deferred Income Capital Accumulation Plan for Executives of International Multifoods Corporation, Amended and Restated as of September 17, 1993 (incorporated herein by reference to Exhibit 10.6 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).* 10.19 Revised and Restated Employment Agreement, dated as of September 17, 1993, between International Multifoods Corporation and Anthony Luiso (incorporated herein by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).* 10.20 Trust Agreement, dated February 25, 1991, between International Multifoods Corporation and Bank of America NT and SA relating to the Supplemental Retirement Benefit for Anthony Luiso (incorporated herein by reference to Exhibit 10.14 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993).* 10.21 Form of Revised and Restated Severance Agreement between International Multifoods Corporation and each of the Company's executive officers, other than Anthony Luiso (incorporated herein by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).* 10.22 Letter Agreement, dated August 31, 1994, between International Multifoods Corporation and John E. Sampson regarding severance arrangement.* 10.23 Form of Indemnity Agreement between International Multifoods Corporation and each of the Company's executive officers (incorporated herein by reference to Exhibit 10.19 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993).* 10.24 Fee Deferral Plan for Non-Employee Directors of International Multifoods Corporation, Amended and Restated as of September 17, 1993 (incorporated herein by reference to Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).* 10.25 Deferred Income Capital Accumulation Plan for Directors of International Multifoods Corporation, Amended and Restated as of September 17, 1993 (incorporated herein by reference to Exhibit 10.8 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).* 10.26 Form of Indemnity Agreement between International Multifoods Corporation and each non-employee director of the Company (incorporated herein by reference to Exhibit 10.21 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993).* 10.27 Asset Purchase Agreement dated November 15, 1991 between AGP, L.P. (as the purchaser) and International Multifoods Corporation, Multifoods Transportation, Inc., Lucan Feed Services, Inc. and The Pickaway Grain Company (as the sellers) (incorporated herein by reference to Exhibit 2(a) to the Company's Current Report on Form 8-K dated December 2, 1991). 10.28 Share Purchase Agreement dated November 15, 1991 between AGP, Inc. (as the purchaser) and Damca International Corporation and Robin Hood Multifoods, Inc. (as the sellers) (incorporated herein by reference to Exhibit 2(b) to the Company's Current Report on Form 8-K dated December 2, 1991). 10.29 Stock Purchase Agreement between International Multifoods Corporation (Seller) and Doskocil Companies Incorporated (Buyer) dated as of March 17, 1994 (incorporated herein by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K dated June 1, 1994). 10.30 Asset Purchase Agreement among Multifoods Distribution, Inc. (Buyer), International Multifoods Corporation (Buyer's Parent) and Leprino Foods Company (Seller) and James G. Leprino (Seller's Shareholder) dated as of July 29, 1994 (incorporated herein by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K dated August 22, 1994). 11 Computation of Earnings Per Share. 12 Computation of Ratio of Earnings to Fixed Charges. 13 1995 Annual Report to Stockholders (only those portions expressly incorporated by reference herein shall be deemed filed with the Securities and Exchange Commission). 21 List of significant subsidiaries of the Company. 23 Consent of KPMG Peat Marwick LLP. 27 Financial Data Schedule. ___________________ *Management contract or compensatory plan or arrangement required to be filed as an exhibit to Form 10-K pursuant to Item 14(c) of this Report. (b) Reports on Form 8-K No reports on Form 8-K were filed during the quarter ended February 28, 1995. (c) See Exhibit Index and Exhibits attached to this Report. (d) See Financial Statement Schedules included at the end of this Report. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. INTERNATIONAL MULTIFOODS CORPORATION Dated: May 12, 1995 By /s/ Anthony Luiso Anthony Luiso Chairman of the Board, President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. /s/ Anthony Luiso Chairman of the Board, President May 12, 1995 Anthony Luiso and Chief Executive Officer (Principal Executive Officer) and Director /s/ Duncan H. Cocroft Vice President - Finance May 12, 1995 Duncan H. Cocroft and Chief Financial Officer (Principal Financial Officer) /s/ Edgardo E. Rodriguez Vice President and May 12, 1995 Edgardo E. Rodriguez Controller (Principal Accounting Officer) /s/ William A. Andres Director May 12, 1995 William A. Andres /s/ James G. Fifield Director May 12, 1995 James G. Fifield /s/ Robert M. Price Director May 12, 1995 Robert M. Price /s/ Nicholas L. Reding Director May 12, 1995 Nicholas L. Reding /s/ Jack D. Rehm Director May 12, 1995 Jack D. Rehm /s/ Lois D. Rice Director May 12, 1995 Lois D. Rice /s/ Peter S. Willmott Director May 12, 1995 Peter S. Willmott Independent Auditors' Report The Board of Directors and Shareholders International Multifoods Corporation: Under date of April 12, 1995, we reported on the consolidated balance sheets of International Multifoods Corporation and subsidiaries as of February 28, 1995 and 1994 and the related consolidated statements of operations and cash flows for each of the years in the three-year period ended February 28, 1995, as contained in the 1995 Annual Report to Stockholders. These consolidated financial statements and our report thereon are incorporated by reference in the Annual Report on Form 10-K for the fiscal year ended February 28, 1995. In connection with our audits of the aforementioned consolidated financial statements, we also have audited the related consolidated financial statement schedule listed in Item 14. The consolidated financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion on the consolidated financial statement schedule based on our audits. In our opinion, such consolidated financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. /s/ KPMG Peat Marwick LLP KPMG Peat Marwick LLP Minneapolis, Minnesota April 12, 1995 Schedule II INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES Valuation and Qualifying Accounts Three years ended February 28, 1995 (in thousands)
Additions Balance at Net charges Balance beginning to costs and at end Description of year expenses Other Deductions of year Allowance deducted from assets for doubtful receivables: Year ended February 28, 1995 $5,219 $4,477 $1,190(a) $4,178(b) $6,708(c) Year ended February 28, 1994 $5,611 $3,783 $ - $4,175(b) $5,219(c) Year ended February 28, 1993 $5,153 $2,953 $ 91(a) $2,586(b) $5,611(c)
Notes: (a) Acquired in purchase of businesses. (b) Deductions include accounts charged off, net of recoveries, and foreign currency translation adjustments which arise from changes in current rates of exchange. Foreign currency translation adjustments were $162,000, $116,000, and $90,000, in 1995, 1994, and 1993, respectively. (c) Classified in the balance sheets as follows: 1995 1994 1993 Trade accounts receivable $6,658 $5,187 $5,433 Miscellaneous receivables - current 50 32 178 $6,708 $5,219 $5,611 INDEX TO EXHIBITS TO ANNUAL REPORT ON FORM 10-K OF INTERNATIONAL MULTIFOODS CORPORATION FOR THE FISCAL YEAR ENDED FEBRUARY 28, 1995 3.1 Restated Certificate of Incorporation of International Multifoods Corporation, as amended to date (incorporated herein by reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993). 3.2 Bylaws of International Multifoods Corporation, as amended to date (incorporated herein by reference to Exhibit 3.2 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1994). 4.1 Indenture, dated as of January 1, 1990, between International Multifoods Corporation and First Trust of New York, National Association, successor to Morgan Guaranty Trust Company of New York (incorporated herein by reference to Exhibit 4.1 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993). 4.2 First Supplemental Indenture, dated as of May 29, 1992, supplementing the Indenture, dated as of January 1, 1990, between International Multifoods Corporation and First Trust of New York, National Association, successor to Morgan Guaranty Trust Company of New York (incorporated herein by reference to Exhibit 4.2 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993). 4.3 Officers' Certificate, with exhibits thereto, establishing the terms of the series of securities issuable under the Indenture, dated as of January 1, 1990, as supplemented by the First Supplemental Indenture, dated as of May 29, 1992, between International Multifoods Corporation and First Trust of New York, National Association, successor to Morgan Guaranty Trust Company of New York (incorporated herein by reference to Exhibit 4.3 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993). 4.4 Letter of Representations, dated May 29, 1992, among International Multifoods Corporation, First Trust of New York, National Association, successor to Morgan Guaranty Trust Company of New York and The Depository Trust Company (incorporated herein by reference to Exhibit 4.4 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993). The Company hereby agrees to furnish to the Securities and Exchange Commission upon request copies of all other instruments defining the rights of holders of long-term debt of International Multifoods Corporation and its consolidated subsidiaries. 10.1 Rights Agreement, dated as of October 4, 1990, as amended as of March 1, 1993, between International Multifoods Corporation and Norwest Bank Minnesota, N.A., with exhibits thereto (incorporated herein by reference to Exhibit 1 to the Company's Registration Statement on Form 8-A dated October 11, 1990 and Exhibit 1 to Amendment No. 1 on Form 8 dated March 1, 1993 to the Company's Registration Statement on Form 8-A dated October 11, 1990). 10.2 Amended and Restated 1989 Stock-Based Incentive Plan of International Multifoods Corporation (incorporated herein by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended August 31, 1993).* 10.3 1986 Stock Option Incentive Plan of International Multifoods Corporation (incorporated herein by reference to Exhibit 4 to the Company's Registration Statement on Form S-8 (Registration No. 33- 6223)).* 10.4 1983 Stock Option Incentive Plan of International Multifoods Corporation (incorporated herein by reference to Exhibit 4 to the Company's Registration Statement on Form S-8 (Registration No. 2- 84236)).* 10.5 Award Agreement, dated as of August 18, 1989, as amended as of November 16, 1990, between International Multifoods Corporation and Anthony Luiso (incorporated herein by reference to Exhibit 10(c) to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1990 and Exhibit 10(b) to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1991).* 10.6 Irrevocable Waiver Agreement, dated as of August 17, 1989, as amended as of November 16, 1990, between International Multifoods Corporation and Anthony Luiso (incorporated herein by reference to Exhibit 10(b) to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1990 and Exhibit 10(c) to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1991).* 10.7 Non-Qualified Stock Option Agreement, dated as of March 31, 1994, between International Multifoods Corporation and Anthony Luiso.* 10.8 Stock Option Award Agreements, dated as of November 16, 1990, between International Multifoods Corporation and each of Duncan H. Cocroft, Jay I. Johnson and Robert F. Maddocks (incorporated herein by reference to Exhibits 10(d), 10(e) and 10(f), respectively, to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1991).* 10.9 Restricted Stock Award Agreement, dated as of December 11, 1992, between International Multifoods Corporation and Anthony Luiso (incorporated herein by reference to Exhibit 10.8 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993).* 10.10 Management Incentive Plan of International Multifoods Corporation, Amended and Restated as of September 17, 1993 (incorporated herein by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).* 10.11 First Amendment to Management Incentive Plan of International Multifoods Corporation, Amended and Restated as of September 17, 1993.* 10.12 Management Benefit Plan of International Multifoods Corporation, Restated Effective September 17, 1993 (incorporated herein by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).* 10.13 Trust Agreement, dated July 30, 1987, between International Multifoods Corporation and Bank of America NT and SA relating to the Management Benefit Plan of International Multifoods Corporation (incorporated herein by reference to Exhibit 10.11 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993).* 10.14 Executive Employees' Pension Plan of Robin Hood Multifoods Inc., as amended to date (incorporated herein by reference to Exhibit 10.12 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1994).* 10.15 Pension Trust Agreement, dated as of June 30, 1992, between Robin Hood Multifoods Inc. and The Canada Trust Company relating to the Executive Employees' Pension Plan of Robin Hood Multifoods Inc. (incorporated herein by reference to Exhibit 10.13 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1994).* 10.16 Agreement, dated October 28, 1991, between International Multifoods Corporation and A. Harry Vis regarding supplemental pension benefits (incorporated herein by reference to Exhibit 10.7 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1994).* 10.17 Compensation Deferral Plan for Executives of International Multifoods Corporation, Amended and Restated as of September 17, 1993 (incorporated herein by reference to Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).* 10.18 Deferred Income Capital Accumulation Plan for Executives of International Multifoods Corporation, Amended and Restated as of September 17, 1993 (incorporated herein by reference to Exhibit 10.6 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).* 10.19 Revised and Restated Employment Agreement, dated as of September 17, 1993, between International Multifoods Corporation and Anthony Luiso (incorporated herein by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).* 10.20 Trust Agreement, dated February 25, 1991, between International Multifoods Corporation and Bank of America NT and SA relating to the Supplemental Retirement Benefit for Anthony Luiso (incorporated herein by reference to Exhibit 10.14 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993).* 10.21 Form of Revised and Restated Severance Agreement between International Multifoods Corporation and each of the Company's executive officers, other than Anthony Luiso (incorporated herein by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).* 10.22 Letter Agreement, dated August 31, 1994, between International Multifoods Corporation and John E. Sampson regarding severance arrangement.* 10.23 Form of Indemnity Agreement between International Multifoods Corporation and each of the Company's executive officers (incorporated herein by reference to Exhibit 10.19 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993).* 10.24 Fee Deferral Plan for Non-Employee Directors of International Multifoods Corporation, Amended and Restated as of September 17, 1993 (incorporated herein by reference to Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).* 10.25 Deferred Income Capital Accumulation Plan for Directors of International Multifoods Corporation, Amended and Restated as of September 17, 1993 (incorporated herein by reference to Exhibit 10.8 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).* 10.26 Form of Indemnity Agreement between International Multifoods Corporation and each non-employee director of the Company (incorporated herein by reference to Exhibit 10.21 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993).* 10.27 Asset Purchase Agreement dated November 15, 1991 between AGP, L.P. (as the purchaser) and International Multifoods Corporation, Multifoods Transportation, Inc., Lucan Feed Services, Inc. and The Pickaway Grain Company (as the sellers) (incorporated herein by reference to Exhibit 2(a) to the Company's Current Report on Form 8-K dated December 2, 1991). 10.28 Share Purchase Agreement dated November 15, 1991 between AGP, Inc. (as the purchaser) and Damca International Corporation and Robin Hood Multifoods, Inc. (as the sellers) (incorporated herein by reference to Exhibit 2(b) to the Company's Current Report on Form 8-K dated December 2, 1991). 10.29 Stock Purchase Agreement between International Multifoods Corporation (Seller) and Doskocil Companies Incorporated (Buyer) dated as of March 17, 1994 (incorporated herein by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K dated June 1, 1994). 10.30 Asset Purchase Agreement among Multifoods Distribution, Inc. (Buyer), International Multifoods Corporation (Buyer's Parent) and Leprino Foods Company (Seller) and James G. Leprino (Seller's Shareholder) dated as of July 29, 1994 (incorporated herein by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K dated August 22, 1994). 11 Computation of Earnings Per Share. 12 Computation of Ratio of Earnings to Fixed Charges. 13 1995 Annual Report to Stockholders (only those portions expressly incorporated by reference herein shall be deemed filed with the Securities and Exchange Commission). 21 List of significant subsidiaries of the Company. 23 Consent of KPMG Peat Marwick LLP. 27 Financial Data Schedule. _ *Management contract or compensatory plan or arrangement required to be filed as an exhibit to Form 10-K pursuant to Item 14(c) of this Report. EX-10.7 2 2/28/95 10-K EXHIBIT 10.7 Exhibit 10.7 INTERNATIONAL MULTIFOODS CORPORATION NON-QUALIFIED STOCK OPTION AGREEMENT THIS AGREEMENT, dated as of March 31, 1994, is entered into between International Multifoods Corporation, a Delaware corporation (the "Company") and Anthony Luiso, Chairman of the Board, Chief Executive Officer and President of the Company ("Participant"). The Company, pursuant to its Amended and Restated 1989 Stock-Based Incentive Plan (the "Plan"), wishes to provide opportunities for stock ownership by Participant which will increase Participant's proprietary interest in the Company and, consequently, Participant's identification with the interests of stockholders of the Company by granting to Participant stock options to purchase Common Stock of the Company, par value $.10 per share (the "Common Stock"), on the terms and conditions contained in this Agreement and the Plan. Accordingly, in consideration of the premises and the agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows: 1. Irrevocable Waiver of Bonus Participant hereby irrevocably waives $100,000 of any cash bonus which may be awarded to Participant under the Management Incentive Plan of the Company or any other cash bonus plan of the Company for the Company's fiscal year ending February 28, 1995. 2. Grant of Options The Company, effective as of the date of this Agreement, hereby grants to Participant, the right and option to purchase all or any part of an aggregate of 20,513 shares of Common Stock (the "Shares") at the price of $16.875 per share on the terms and conditions set forth in this Agreement (the "Options"). The Options are not intended to be incentive stock options within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended. 3. Vesting, Exercisability and Term of Options (a) The Options shall vest on the date on which a cash bonus, if any, is awarded to Participant under the Management Incentive Plan of the Company or any other cash bonus plan of the Company for the Company's fiscal year ending February 28, 1995 (the "Vesting Date"); provided, however, in the event that the amount of the bonus awarded to Participant under the Management Incentive Plan of the Company or any other cash bonus plan of the Company for the Company's fiscal year ending February 28, 1995 is less than $100,000, the number of Options that shall vest shall be equal to 20,513 multiplied by a fraction of which (i) the numerator shall be the amount of the bonus awarded and (ii) the denominator shall be $100,000, and the remaining Options that do not vest shall be forfeited at such time. (b) Any Options that vest pursuant to Section 3(a) hereof may be exercised, in whole or in part, at any time, or from time to time, on or after the Vesting Date and on or before the close of business on March 30, 2004 or such shorter period as is prescribed herein. (c) Notwithstanding the provisions of Sections 3(a) and 3(b) above, but subject to the other terms and conditions set forth herein, upon the occurrence of a Designated Event (as defined in Part I of the Plan) prior to the Vesting Date, Participant may make a payment to the Company of $4.875 for each Option and upon such payment to the Company by Participant each Option purchased shall become immediately vested as of the date of the payment. Each Option that vests pursuant to this Section 3(c) may be exercised, in whole or in part, at any time, or from time to time, on or after the date the Option vests pursuant to this Section 3(c) and on or before the close of business on March 30, 2004 or such shorter period as prescribed herein. 4. Effect of Termination of Employment (a) If Participant's employment is terminated for any reason (including, without limitation, disability, death or voluntary termination) other than Cause (as defined in Section 4(b) of the Revised and Restated Employment Agreement, dated as of September 17, 1993, by and between the Company and Participant), Participant or his legal representatives may exercise the Options at any time within five years after such termination, but not after the expiration of the term of the Options, to the extent that the Options were exercisable by Participant on the date of such termination of employment. (b) If Participant's employment is terminated for Cause (as defined in Section 4(b) of the Revised and Restated Employment Agreement, dated as of September 17, 1993, by and between the Company and Participant), Participant or his legal representatives may exercise the Options at any time within one year after such termination, but not after the expiration of the term of the Options, to the extent that the Options were exercisable by Participant on the date of such termination of employment. 5. Method of Exercising Options (a) Subject to the terms and conditions of this Agreement, the Options may be exercised by written notice to the Company, to the attention of the Secretary. Such notice shall state the election to exercise the Options, the number of Shares as to which the Options are being exercised and the manner of payment and shall be signed by the person or persons so exercising the Options. The notice shall be accompanied by payment in full of the exercise price for all Shares designated in the notice. To the extent that the Options are exercised after Participant's death, the notice of exercise shall also be accompanied by appropriate proof of the right of such person or persons to exercise the Options. (b) Payment of the exercise price shall be made to the Company through one or a combination of the following methods: (i) delivery of a check payable to the Company or cash, in United States currency; or (ii) delivery of previously acquired shares of Common Stock having a Fair Market Value on the date of exercise equal to the exercise price of the Options. Participant shall duly endorse all certificates delivered to the Company in blank and shall represent and warrant in writing that Participant is the owner of the shares so delivered, free and clear of all liens, encumbrances, security interests and restrictions. 6. Adjustments In the event of a reorganization, recapitalization, stock split, stock dividend, combination of shares, merger, consolidation, distribution of assets, or any other changes in the corporate structure or stock of the Company, the Committee shall make such adjustments as it deems appropriate in the number and kind of shares covered by the Options and in the exercise price of the Options. 7. Income Tax Withholding In order to provide the Company with the opportunity to claim the benefit of any income tax deduction which may be available to it upon the exercise of the Options, and in order to comply with all applicable federal or state income tax laws or regulations, the Company may take such action as it deems appropriate to ensure that all applicable federal or state payroll, withholding, income or other taxes, which are the sole and absolute responsibility of Participant, are withheld or collected from Participant. Participant may, at Participant's election (the "Tax Election"), satisfy applicable tax withholding obligations by (a) electing to have the Company withhold a portion of the Shares of Common Stock otherwise to be delivered upon exercise of the Options having a Fair Market Value equal to the amount of such taxes or (b) delivering to the Company shares of Common Stock having a Fair Market Value equal to the amount of such taxes. The Tax Election must be made on or before the date that the amount of tax to be withheld is determined; provided that if Participant is subject to the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934, as amended, (i) the Tax Election may not be made within six months of the date of grant of the Options (except that this limitation does not apply in the event of death or disability of Participant during such six-month period), (ii) the Tax Election is made either at least six months prior to the date as of which the amount of tax to be withheld is determined or during the ten-day period beginning on the third business day and ending on the twelfth business day following the date of public release of the quarterly or annual financial results of the Company, (iii) the Tax Election is in writing and is irrevocable and (iv) the Tax Election shall be approved or disapproved by the Committee. 8. Taxation This Agreement is entered into based upon the understanding of the Company and Participant that (a) the grant of the Options is not subject to federal or state income tax and (b) that the cash bonus irrevocably waived by Participant hereunder will not be taxable income to Participant. The Company and Participant agree to report the grant of the Options and the waiver of the cash bonus in a manner consistent with such mutual understanding. In the event that the Internal Revenue Service challenges such tax treatment of the grant of the Options or of the waiver, the Company will select and provide counsel, at its expense, to defend the Company's and Participant's position with respect to the appropriate tax treatment of the grant of the Options and the waiver. The Company agrees to hold Participant harmless from and against any federal or state income taxes and interest and penalties thereon that may be incurred by Participant as a result of a successful challenge by the Internal Revenue Service to the position taken by the Company and Participant regarding the grant of the Options or the waiver, provided, however, that any such indemnity payments shall be net of any federal or state income tax savings to Participant calculated at Participant's tax rate for the calendar year of the grant of the Options or the waiver, whichever is applicable, by reason of basis adjustments, deductions, credits or other tax benefits realized or to be realized by Participant. 9. General (a) Nothing in this Agreement or the Plan shall confer upon Participant any right with respect to continuance of employment by the Company, nor shall this Agreement or the Plan interfere in any way with the right of the Company to terminate the employment of Participant at any time. (b) It is the intention of the Company and Participant that the amount of cash bonus waived pursuant to Section 1 hereof shall not be taken into account for purposes of determining the benefits to which Participant would be entitled under any employee benefit plan or other arrangement of the Company in the absence of such waiver. The Company agrees to make supplemental payments to Participant to the extent necessary to compensate him for any reduction in such benefits arising from such waiver. (c) Neither Participant nor Participant's legal representatives shall have any of the rights and privileges of a stockholder of the Company with respect to the Shares of Common Stock subject to the Options unless and until certificates for such Shares shall have been issued upon exercise of the Options. (d) The Options shall not be transferable other than by will or by the laws of descent and distribution. During Participant's lifetime the Options shall be exercisable only by Participant. (e) The Company shall not be required, upon the exercise of the Options, to issue or deliver any Shares until the requirements of any federal or state securities laws, rules or regulations or other laws or rules (including the rules of the New York Stock Exchange) as may be determined by the Company to be applicable are satisfied. (f) The Company shall at all times during the term of the Options reserve and keep available such number of shares of Common Stock as will be sufficient to satisfy the requirements of this Agreement. (g) This Agreement is subject to the terms of Part I of the Plan. Terms used herein which are defined in Part I of the Plan shall have the respective meanings ascribed to such terms in Part I of the Plan, unless otherwise defined herein. A copy of the Plan is attached hereto and made a part hereof as Exhibit A. Participant hereby acknowledges receipt of a copy of the Plan. (h) This Agreement shall be governed by and construed under the internal laws of the State of Delaware, without giving effect to the conflicts of laws principles thereof. IN WITNESS WHEREOF, the Company and Participant have executed this Agreement as of the day and year first above written. Attest: INTERNATIONAL MULTIFOODS CORPORATION /s/ Frank W. Bonvino By /s/ Robert F. Maddocks Secretary Robert F. Maddocks Vice President - Human Resources PARTICIPANT /s/ Anthony Luiso Anthony Luiso 6 EX-10.11 3 2/28/95 10-K EXHIBIT 10.11 Exhibit 10.11 FIRST AMENDMENT TO MANAGEMENT INCENTIVE PLAN OF INTERNATIONAL MULTIFOODS CORPORATION Amended and Restated as of September 17, 1993 Section 1 is hereby amended to include the following definition, after the definition of "Participant" in Section 1: "Restricted Stock" means shares of common stock, par value $.10 per share, of Multifoods in which a Bonus Award may be payable, in whole or in part, pursuant to Section 5 hereof, and which shall be issuable pursuant to, and subject to the terms and conditions of, Part I of the Amended and Restated 1989 Stock-Based Incentive Plan of International Multifoods Corporation or such other plan of Multifoods which authorizes the issuance of restricted stock. Section 5 is hereby amended to read in its entirety as follows: Section 5. Payment of Bonus Awards All Bonus Awards shall be payable in cash or in Restricted Stock, or both, as determined in the sole discretion of the Committee, and the amount of all Bonus Awards paid shall be charged to the Incentive Compensation Accrual. EX-10.22 4 2/28/95 10-K EXHIBIT 10.22 Exhibit 10.22 [Multifoods Letterhead] STRICTLY PERSONAL August 31, 1994 Mr. John E. Sampson Vice President - Corporate Planning and Development Dear John: This will confirm the verbal discussions you and Tony Luiso and I have had regarding your continued employment with Multifoods. Please interpret this letter as a letter of understanding rather than a commitment since it needs to be reviewed by Tony when he returns from vacation. Your position as of September 16, 1994, will be Vice President, Corporate Planning and Development, reporting directly to Tony Luiso. In this reporting capacity, you will have the corporate responsibility for strategic planning, including merger and acquisition activity. You will also have the responsibility for the investment banking relationships relating to the M & A activity. In this regard, however, since we are trying to foster a strong team atmosphere, it is important to understand that while you have the primary relationship with the investment bankers, other corporate officers such as Frank Bonvino, Duncan Cocroft and myself will also need to be appropriately involved in discussions with the investment bankers. You asked for a second clarification on the level of involvement you will have in quarterly reviews, board meetings, etc. It will obviously be at the same level as Frank, Duncan and myself. Tony wants the key officers involved in quarterly reviews; however, it is important that participation from the corporate staff be kept at a reasonable level and all corporate officers cannot attend all quarterly reviews. Dennis Brown will continue to report to you and will maintain his responsibility for Purchasing and Transportation. This function will be under your direction and will be transferred from Jay Johnson concurrent with the announcement on September 16. As appropriate, you will also have access to Kim Erickson and/or Tony Brausen who we agreed should have some exposure to the planning activities of the corporation. As a senior corporate officer reporting to Tony, your bonus entitlement at target level will be 50% with a threshold at 15% and a maximum of 70%. Your compensation is under review and while you are paid high in the range based on market data, we will propose an increase to the Compensation Committee at the September or December meeting. We will also propose stock option grants to the committee in September or December at the same level which would be granted to other executive officers. John, you should be aware, however, that no executive officer this year has received a salary increase or a stock option grant. Since we were prepared to provide one year's compensation and a transition period to age 55 as of August 1, 1994, we will maintain this commitment for a 24-month period with a 3-month notification period on your part. We expect, however, that under normal operating circumstances this would not be an election that you would make. However, it is being maintained since we were prepared to offer this arrangement to you at this time and it represents no additional cost to the company. Finally, we know you have made commitments to other clients under the assumption you were leaving Multifoods and we understand that you must complete these commitments which would require no more than two or three days a month. We support this, however, only under the condition that there is no conflict of interest. The above is meant to provide clarification to the question you raised as to your status in the position reporting directly to Tony. While I have discussed some aspects of this arrangement with Tony, there are other aspects to confirm; and I understand you will have this discussion with Tony on Tuesday morning, September 6. I believe the above represents all the items which we discussed. Sincerely, /s/ Robert F. Maddocks Robert F. Maddocks Vice President, Human Resources RFD:rg cc: A. Luiso EX-11 5 2/28/95 10-K EXHIBIT 11 INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES Schedule of Computation of Earnings (Loss) Per Common Share (dollars in thousands, except per share amounts)
Years Ended February 28, February 28, February 28, February 29, February 28, 1995 1994 1993 1992 1991 Average shares of common stock outstanding 17,974,156 18,910,748 19,281,578 19,493,251 19,363,947 Common stock equivalents 17,446 104,338 245,973 386,992 534,006 Total common stock and equivalents assuming full dilution 17,991,602 19,015,086 19,527,551 19,880,243 19,897,953 Earnings (loss) before cumulative effect of accounting change $57,021 $(13,438) $41,210 $ 39,100 $35,161 Less dividends on preferred stock 167 174 180 184 188 Earnings (loss) before cumulative effect of accounting change applicable to common stock $56,854 $(13,612) $41,030 $ 38,916 $34,973 Cumulative effect of accounting change, net of taxes $ - $ - $ - $(17,133) $ - Earnings (loss) per share of common stock: Primary Before cumulative effect of accounting change $ 3.16 $ (.72) $ 2.13 $ 2.00 $ 1.81 Cumulative effect of accounting change, net of taxes - - - (.88) - $ 3.16 $ (.72) $ 2.13 $ 1.12 $ 1.81 Fully diluted Before cumulative effect of accounting change $ 3.16 $ (.72) $ 2.10 $ 1.96 $ 1.76 Cumulative effect of accounting change, net of taxes - - - (.86) - $ 3.16 $ (.72) $ 2.10 $ 1.10 $ 1.76
Primary earnings (loss) per share have been computed by dividing net earnings (loss), after deduction of preferred stock dividends, by the weighted average number of shares of common stock outstanding during the year. Common stock options and other common stock equivalents have not entered into the primary earnings per share computations since their effect is not significant. Fully diluted earnings (loss) per share have been computed assuming issuance of all shares for stock options deemed to be common stock equivalents, using the treasury stock method. EX-12 6 2/28/95 10-K EXHIBIT 12 Exhibit 12 INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES Computation of Ratio of Earnings to Fixed Charges (dollars in thousands)
Years Ended February 28, February 28, February 28, February 29, February 28, 1995 1994 1993 1992 1991 Earnings (loss) before income taxes and cumulative effect of accounting change (1) $71,739 $(12,717) $64,331 $ 69,477 $66,227 Plus: Fixed charges (2) 25,490 22,604 24,550 32,228 34,681 Less: Capitalized interest (317) (746) (1,144) (1,294) (2,132) Earnings available to cover fixed charges $96,912 $ 9,141 $87,737 $100,411 $98,776 Ratio of earnings to fixed charges (3) 3.80 .40 3.57 3.12 2.85
(1) Earnings (loss) before income taxes have been adjusted to reflect income received (but not undistributed amounts) from less-than-fifty-percent- owned persons. Earnings (loss) before income taxes have also been adjusted to exclude losses from less-than-fifty-percent-owned persons. (2) Fixed charges consist of the following:
Years Ended February 28, February 28, February 28, February 29, February 28, 1995 1994 1993 1992 1991 Interest expense, gross $16,287 $13,181 $14,592 $21,573 $24,459 Rentals (1/3) 9,203 9,423 9,958 10,655 10,222 Total $25,490 $22,604 $24,550 $32,228 $34,681
(3) For the year ended February 28, 1994, earnings were inadequate to cover fixed charges. The resulting deficiency was $13,463 for fiscal 1994. The deficiency was the result of unusual items which are described in Note 4 to the consolidated financial statements. Exclusive of these unusual items, the ratio of earnings to fixed charges would have been 3.50 for the year ended February 28, 1994. EX-13 7 2/28/95 10-K EXHIBIT 13 Management's Discussion and Analysis of Results of Operations and Financial Condition Results of Operations Overview Fiscal 1995 net earnings were $57 million, or $3.16 per share, compared with a net loss of $13.4 million, or $.72 per share, in fiscal 1994. Exclusive of unusual items, fiscal 1995 net earnings were $28 million, or $1.55 per share, compared with $35.5 million, or $1.86 per share a year ago. Fiscal 1993 net earnings were $41.2 million, or $2.13 per share. Unusual items in fiscal 1995 resulted in a net benefit of $29 million after tax, or $1.61 per share. Included in unusual items was a gain from the divestiture of the Company's Frozen Specialty Foods business, a charge for the integration of two of the Company's limited-menu foodservice distribution businesses, a benefit with respect to a tax settlement and a benefit from adjustments related to previously divested businesses. The integration of the limited-menu foodservice distribution business of Leprino Foods Company, acquired by the Company in fiscal 1995, with the former Pueringer limited-menu foodservice distribution unit is expected to provide pre-tax benefits of up to $3 million in fiscal 1996 and $6 million in fiscal 1997. Unusual items in fiscal 1994 reduced after-tax earnings by $48.9 million, or $2.58 per share. Included in fiscal 1994 unusual items were the disposition of certain underperforming assets and an investment in an unconsolidated affiliate, the write-downs of certain assets and the reorganization of remaining operations. Reorganization activities included the consolidation and closing of certain facilities, plant rationalization and organizational changes. Segment Results The Company has redefined its business segments and adopted a revised allocation process that provides that corporate general and administrative costs are reflected as corporate expenses unless such costs are associated with a business segment. The three continuing business segments are Foodservice Distribution, Bakery and Venezuela Foods. In addition, the Company has defined as Divested Businesses its Frozen Specialty Foods and Meats businesses, which were sold in fiscal 1995, and its surimi seafood business, which the Company anticipates divesting in fiscal 1996. Previously reported segment financial information has been reclassified to conform with the fiscal 1995 presentation. A description of the business segments along with segment net sales and operating results are included in Note 19 to the consolidated financial statements. Net Sales from Continuing Businesses [Graphic Material Omitted] (in billions) 1993 1994 1995 Foodservice Distribution $1.10 $1.11 $1.39 Bakery .43 .44 .46 Venezuela Foods .25 .27 .32 Total Continuing Businesses $1.78 $1.82 $2.17 Operating Earnings from Continuing Businesses* [Graphic Material Omitted] 1995 Foodservice Distribution 29% Bakery 38% Venezuela Foods 33% *Before unusual items Fiscal 1995 compared with fiscal 1994. Net sales from continuing businesses increased 19% to $2.17 billion. Exclusive of acquisitions, sales from continuing businesses increased 5%. Consolidated net sales increased 6% to $2.3 billion. Consolidated operating earnings before unusual items declined 11% to $60.3 million from $67.8 million in fiscal 1994. As a result of unusual items, consolidated operating earnings were $86.5 million in fiscal 1995 as compared to an operating loss of $2.2 million in fiscal 1994. Foodservice Distribution sales increased 26% to $1.4 billion. Excluding the effect of acquisitions, net sales increased 3% primarily on higher volumes from the former Pueringer limited-menu foodservice distribution unit (Pueringer). Operating earnings before unusual items declined 2% to $17.5 million compared with $17.8 million in fiscal 1994. A significant decrease in vending distribution earnings resulted primarily from costs associated with delays in the implementation timetable of a business information system. Vending distribution will continue to experience added costs in fiscal 1996 as the system is rolled out to distribution centers. Fiscal 1995 operating earnings benefited from the earnings of the acquired Leprino distribution business and improved earnings from Pueringer as a result of the higher volumes. Fiscal 1995 unusual items of $6.2 million were for costs associated with the integration of the limited-menu distribution businesses and fiscal 1994 unusual charges of $9.1 million were for organizational changes in vending distribution. Bakery sales increased 4% to $459.2 million principally as a result of higher volumes in frozen bakery products, bakery flour and consumer flour, partially offset by a 3% impact from a decline in the average Canadian exchange rate. Operating earnings before unusual items increased 15% to $22.4 million compared with $19.5 million in fiscal 1994. The increase in operating earnings was primarily the result of the benefits from the reorganization of operations and improved volumes. The earnings improvement was partially offset by the unfavorable Canadian exchange rate and costs related to the introduction of consumer salsa products in Canada and consumer condiments in the southern United States. Unusual items of $29.4 million in fiscal 1994 consisted of the closing and downsizing of certain facilities and organizational changes, including streamlining Canadian administrative functions. Venezuela Foods sales increased 19% to $317.7 million primarily on volume increases in bakery, consumer and agricultural products. Higher volumes in bakery products resulted from increased market shares and additional business obtained in connection with the lease of two wheat flour mills beginning in October 1994. Improved volumes in consumer products were primarily the result of increased demand for grain-based products and the impact of the acquisition of a corn flour business in May 1994. Higher volumes in agricultural products were primarily attributable to an increase in feed market share. Operating earnings declined 18% to $19.9 million, compared with $24.3 million in fiscal 1994. The earnings decline was primarily the result of difficult economic conditions including rising inflation, which resulted in the change to the U.S. dollar as the functional currency for translation purposes in the fourth quarter of fiscal 1994. These unfavorable impacts were partially offset by the effects of higher volumes and the near-term stability from government-imposed foreign exchange controls, described below. In June 1994, the Venezuelan government implemented price controls, which affect most of the Venezuelan operations' products, and a foreign exchange control system. The government generally has allowed reasonable price increases for most of the Company's products; however, there can be no assurance that the Company will continue to be able to obtain reasonable price increases. In connection with the implementation of exchange and price controls, the government has announced that sufficient U.S. dollars will be made available at the controlled exchange rate for basic food imports, which include the Company's raw material needs. The government has allowed the exchange of Venezuelan bolivars to U.S. dollars for payments by the Company for raw material imports. However, the Company has experienced delays in obtaining U.S. dollars for such import transactions. As of February 28, 1995, net monetary liabilities of the Company's Venezuelan operations totaled the U.S.-dollar equivalent of $14 million. The Company anticipates that its Venezuelan operations will generally be in a net monetary asset position during fiscal 1996. Since June 1994, the Venezuelan government has established the exchange rate at 170 bolivars per dollar and has stated that exchange controls are temporary. However, the Company is unable to determine the extent and timing of any changes in the exchange controls and the potential impact on the exchange rate. If the bolivar were to decline in value versus the U.S. dollar and the Company was in a net monetary asset position, there would be foreign exchange losses, the amount of which will depend upon the size of the net monetary asset position and magnitude of the currency devaluation. In addition, the Company may be unable to immediately increase selling prices to maintain then-current gross profit margins. At the present time, strategies for the management of currency risks consist of working capital management techniques and product pricing strategies. The Venezuelan government announced that companies intending to repatriate dividends in U.S. dollars must obtain government approval. It is unclear whether there will be limits imposed on such dividend repatriations. Divested businesses sales were $122.3 million in fiscal 1995 as compared with $340 million in fiscal 1994. Operating earnings before unusual items declined to $11.9 million compared with $18.5 million in fiscal 1994. Sales and earnings declined as a result of the fiscal 1995 divestitures of the Frozen Specialty Foods and Meats businesses. Earnings of the surimi seafood business, which the Company anticipates divesting in fiscal 1996, were even with the year earlier. Unusual items of $34.2 million in fiscal 1995 were primarily from the gain on the divestiture of the Frozen Specialty Foods business. Unusual items totaling $30.7 million in fiscal 1994 included the write-down of the Company's Meats business net assets to net realizable value and the loss on the sale of a regional bakery distribution business. Fiscal 1994 compared with fiscal 1993. Sales from continuing businesses increased 2% to $1.82 billion while consolidated net sales declined 2% to $2.16 billion. Consolidated operating earnings before unusual items declined 10% to $67.8 million from $75.1 million in fiscal 1993. The fiscal 1994 operating loss of $2.2 million was the result of $70 million of unusual items. Foodservice Distribution sales were $1.11 billion in fiscal 1994, up slightly compared with fiscal 1993. Sales were impacted by the volume loss of a major vending distribution customer which contributed to an overall decline in sales and unit volume in vending distribution. Sales improved on higher volumes from the Company's former Pueringer unit. Foodservice Distribution operating earnings before unusual items declined 36% to $17.8 million compared with $28 million in fiscal 1993. The earnings decline resulted from a significant decrease in vending distribution earnings, which experienced lower sales and also lower gross margins resulting from pricing pressures in a very competitive marketplace. Unusual items totaling $9.1 million in Foodservice Distribution were primarily for organizational changes in vending distribution. Bakery sales increased 3% to $440.3 million principally as a result of higher volumes in bakery mix, partially offset by a 4% impact from a decline in the average Canadian exchange rate. Operating earnings before unusual items declined 20% to $19.5 million compared to $24.5 million in fiscal 1993. Operating earnings were impacted by lower margins in both bakery and consumer products, which resulted from higher wheat costs and competitive pricing pressures, and the unfavorable Canadian exchange rate. Unusual items totaling $29.4 million in fiscal 1994 consisted of the closing and consolidation of certain facilities and organizational changes, including streamlining Canadian administration functions. Venezuela Foods sales increased 7% to $267.8 million on volume increases in consumer and agricultural product lines. Operating earnings declined 5% to $24.3 million from the effects of rising inflation, which resulted in the fiscal 1994 fourth quarter change to the U.S. dollar as the functional currency for translation purposes, higher wheat costs and competitive pricing pressures in animal feed products. Divested businesses sales declined from $420.1 million to $340 million as a result of the fiscal 1994 divestiture of a regional bakery distribution business. Operating earnings before unusual items increased from $9.9 million to $18.5 million on improved surimi seafood results which benefited from more favorable raw material costs and higher volumes. Unusual items totaling $30.7 million in fiscal 1994 included the write-down of the Company's Meats business net assets to net realizable value and the loss on the sale of the regional bakery distribution business. Non-operating Expense and Income In fiscal 1995, net interest expense increased from $10.7 million to $12.1 million primarily as a result of higher interest rates in the United States and Canada, partially offset by higher interest income in Venezuela. Increased interest income in Venezuela was the result of the temporary build-up of local currency cash and equivalents which resulted from delays in obtaining U.S. dollars to settle certain U.S. dollar-denominated obligations as described above. The Company also recognized foreign exchange losses of $2.7 million in fiscal 1995 from the Venezuelan local currency cash and equivalents. In fiscal 1994, interest expense declined from $11.8 million to $10.7 million, principally as a result of lower interest rates in the United States and Canada and higher interest income in Venezuela. In fiscal 1994, losses from unconsolidated affiliates were $12.2 million compared to earnings of $1.8 million in fiscal 1993. The fiscal 1994 loss included $12.5 million associated with the write-down of the Company's investment in a Mexican animal feed affiliate and loss on disposition of the Company's investment in a Mexican bakery mix affiliate. Income Taxes The effective tax rates on earnings before unusual items were 38.5% and 38.4% in fiscal 1995 and 1994, respectively. These rates reflect a low effective tax rate in Venezuela in each of the fiscal years. The overall effective tax rate was 20.5% in fiscal 1995 compared to 46.0% in fiscal 1994 and 37.6% in fiscal 1993. The fiscal 1995 overall effective tax rate was impacted by the low tax rate on the Frozen Specialty Foods transaction and a favorable tax settlement with respect to prior years' business acquisitions. Financial Condition The Company's balance sheet and overall financial condition reflect the impact of business acquisitions and divestitures during fiscal 1995. Common shareholders' equity increased to $291.1 million while the debt-to- total capitalization ratio decreased from 50% to 45%. Short-term financing is provided by the use of commercial paper and short-term bank borrowings. Approximately $263 million in U.S. and Canadian revolving credit agreements and lines of credit are maintained to ensure availability of funds. As of February 28, 1995, approximately $195 million of debt obligations were at variable interest rates. The Company has a medium-term note program under its shelf registration statement filed with the Securities and Exchange Commission, which provides for the issuance of up to $100 million in medium-term notes in various amounts. As of February 28, 1995, $70 million remained available under the medium-term note program. Debt to Total Capitalization [Graphic Material Omitted] (in millions) 1993 1994 1995 Total Debt $194 $258 $241 Total Capitalization $519 $511 $536 Ratio 37% 50% 45% In fiscal 1995, operating working capital increased $49.4 million, exclusive of the impact of acquisitions, dispositions and foreign exchange. The increase was principally the result of higher inventories in Venezuela from the effects of inflation and additional production capacity and, to a lesser extent, the result of higher inventories in Bakery products. The balance sheet impact from acquisitions is summarized in Note 2 to the consolidated financial statements. The balance sheet impact from divestitures includes a reduction of working capital of $40 million and a reduction of property, plant and equipment of $55 million. Capital Expenditures by Continuing Businesses (in millions) [Graphic Material Omitted] 1993 1994 1995 Foodservice Distribution $12.2 $20.8 $ 8.4 Bakery 21.9 18.3 15.2 Venezuela Foods 5.7 8.7 5.5 Total Capital Expenditures by Continuing Businesses $39.8 $47.8 $29.1 Capital expenditures and acquisitions of businesses are the Company's principal investing activities. Capital expenditures by continuing businesses totaled $29.1 million in fiscal 1995, down from $47.8 million in fiscal 1994. Approximately 30% of the fiscal 1995 capital expenditures was attributable to projects focused on increasing earnings through volume improvements, new business or cost savings. The remaining capital expenditures related to projects that were required to maintain existing facilities and equipment. During fiscal 1995, business acquisitions totaled $115.8 million. In addition to the acquisition of the Leprino distribution business, the Company acquired a corn flour business in Venezuela. The Company also completed the divestitures of its Frozen Specialty Foods and Meats businesses at an aggregate sale price of approximately $156 million. The Company continues to pursue tactical and strategic business acquisitions in order to enhance its market leadership positions in its Bakery and Foodservice Distribution businesses. The Company purchased approximately 0.4 million and 1.2 million shares of outstanding common stock in fiscal 1995 and 1994, respectively, primarily pursuant to a 2.5 million share repurchase program which was initiated in fiscal 1994. The Company expects that future share repurchases under this program, if any, will be funded by borrowings or proceeds from any divestitures. In Canada, the Company minimizes risks associated with wheat market price fluctuations by hedging its wheat and flour inventories, open wheat purchase contracts and open flour sales contracts with wheat futures contracts. See Note 7 to the consolidated financial statements for further discussion. Independent Auditors' Report The Board of Directors and Shareholders International Multifoods Corporation: We have audited the accompanying consolidated balance sheets of International Multifoods Corporation and subsidiaries as of February 28, 1995 and 1994, and the related consolidated statements of operations and cash flows for each of the years in the three-year period ended February 28, 1995. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of International Multifoods Corporation and subsidiaries as of February 28, 1995 and 1994, and the results of their operations and their cash flows for each of the years in the three-year period ended February 28, 1995 in conformity with generally accepted accounting principles. /s/KPMG Peat Marwick LLP KPMG Peat Marwick LLP Minneapolis, Minnesota April 12, 1995 Management's Responsibility for Financial Statements The consolidated financial statements have been prepared by management in conformity with generally accepted accounting principles and include, where required, amounts based on management's best estimates and judgments. Management continues to be responsible for the integrity and objectivity of data in these consolidated financial statements, which it seeks to assure through an extensive system of internal controls. Such controls are designed to provide reasonable, but not absolute, assurance that assets are safeguarded from unauthorized use or disposition and that financial records are sufficiently reliable to permit the preparation of consolidated financial statements. It is recognized that estimates and judgments are required to assess and balance the relative cost and expected benefits of any system of internal controls. The system of internal accounting controls is designed to provide reasonable assurance that the books and records reflect the Company's transactions and that its established policies and procedures are carefully followed. The system includes written policies and procedures, a financial reporting system, an internal audit department and careful selection and training of qualified personnel. /s/Anthony Luiso /s/Duncan H. Cocroft Anthony Luiso Duncan H. Cocroft Chairman, President and Vice President-Finance and Chief Executive Officer Chief Financial Officer INTERNATIONAL MULTIFOODS CORPORATION and SUBSIDIARIES Consolidated Statements of Operations Fiscal year ended the last day of February (dollars and shares in thousands, except per share data) 1995 1994 1993 Net sales $2,295,119 $2,158,354 $2,199,158 Cost of sales (1,901,932) (1,743,892) (1,783,403) Gross profit 393,187 414,462 415,755 Delivery and distribution (146,220) (141,838) (141,666) Selling, general and administrative (186,616) (204,852) (199,020) Unusual items 26,240 (70,007) - Operating earnings (loss) 86,591 (2,235) 75,069 Financing costs: Interest, net (12,105) (10,685) (11,848) Foreign exchange gains (losses) on cash and equivalents (2,747) 203 1,110 Total financing costs (14,852) (10,482) (10,738) Earnings (losses) from unconsolidated affiliates - (12,187) 1,759 Earnings (loss) before income taxes 71,739 (24,904) 66,090 Income taxes (14,718) 11,466 (24,880) Net earnings (loss) $ 57,021 $ (13,438) $ 41,210 Net earnings (loss) per share of common stock $ 3.16 $ (.72) $ 2.13 Average shares of common stock outstanding 17,974 18,911 19,282 See accompanying notes to consolidated financial statements. INTERNATIONAL MULTIFOODS CORPORATION and SUBSIDIARIES Consolidated Balance Sheets February 28, 1995 and 1994 (dollars and shares in thousands) 1995 1994 Assets Current assets: Cash and equivalents $ 10,792 $ 10,507 Trade accounts receivable, net of allowance 142,474 146,455 Inventories 256,878 219,630 Deferred income taxes 18,506 27,266 Other current assets 43,047 35,432 Total current assets 471,697 439,290 Property, plant and equipment, net 228,025 245,891 Goodwill 108,636 72,672 Other assets 38,347 56,922 Total assets $846,705 $814,775 Liabilities and Shareholders' Equity Current liabilities: Notes payable $ 47,149 $ 58,651 Current portion of long-term debt 11,083 3,953 Accounts payable 167,114 150,221 Other current liabilities 90,646 88,909 Total current liabilities 315,992 301,734 Long-term debt, net of current portion 183,087 195,125 Deferred income taxes 15,767 22,462 Employee benefits and other liabilities 37,193 41,815 Total liabilities 552,039 561,136 Redeemable preferred stock, redemption value $3,784 and $3,817 3,604 3,635 Shareholders' equity: Preferred capital stock - - Common stock, authorized 50,000 shares; issued 21,844 shares 2,184 2,184 Capital in excess of par value 88,862 89,158 Retained earnings 395,406 349,298 Equity adjustment from foreign currency translation (108,884) (107,364) Equity adjustment from minimum pension liability (1,641) (2,301) Treasury stock, 3,835 and 3,507 shares, at cost (83,417) (78,364) Unearned restricted stock (1,448) (2,607) Total shareholders' equity 291,062 250,004 Commitments and contingencies Total liabilities and shareholders' equity $846,705 $814,775 See accompanying notes to consolidated financial statements. INTERNATIONAL MULTIFOODS CORPORATION and SUBSIDIARIES Consolidated Statements of Cash Flows Fiscal year ended the last day of February (dollars in thousands) 1995 1994 1993 Cash flows from operations: Net earnings (loss) $ 57,021 $(13,438) $41,210 Adjustments to reconcile net earnings (loss) to cash provided by operations: Depreciation and amortization 27,045 29,892 28,797 Provision for unusual charges 5,413 70,007 - Equity in losses (earnings) of unconsolidated affiliates - 12,187 (1,759) Gain on major business disposition (33,581) - - Deferred income tax expense (benefit) 4,483 (12,504) 12,350 Provision for losses on receivables 4,477 3,783 2,953 Changes in operating assets and liabilities, net of business acquisitions and dispositions* (49,351) (49,573) (29,886) Other, net 6,372 (4,137) (1,529) Cash provided by operations 21,879 36,217 52,136 Cash flows from investing activities: Acquisitions of businesses, net of cash acquired (115,847) (18,476) (29,016) Capital expenditures (30,776) (51,904) (45,683) Proceeds from business dispositions 156,367 4,862 - Proceeds from other property disposals 823 1,482 966 Other, net - - (472) Cash provided by (used for) investing activities 10,567 (64,036) (74,205) Cash flows from financing activities: Net increase (decrease) in notes payable (7,231) 40,095 (15,374) Additions to long-term debt 4,973 40,000 81,222 Reductions in long-term debt (7,038) (8,735) (19,503) Dividends paid (14,560) (15,423) (15,562) Proceeds from issuance of common stock 355 1,579 1,501 Purchase of treasury stock (5,877) (27,490) (1,810) Other, net (19) (209) (18) Cash provided by (used for) financing activities (29,397) 29,817 30,456 Effect of exchange rate changes on cash and equivalents (2,764) (2,535) (1,541) Net increase (decrease) in cash and equivalents 285 (537) 6,846 Cash and equivalents at beginning of year 10,507 11,044 4,198 Cash and equivalents at end of year $ 10,792 $ 10,507 $11,044 *Cash flows from changes in operating assets and liabilities, net of business acquisitions and dispositions: Accounts receivable $ (441) $(18,410) $(19,119) Inventories (47,866) (23,032) 17,482 Other current assets (9,089) (1,889) (15,590) Accounts payable 16,643 1,989 27,936 Other current liabilities (8,598) (8,231) (40,595) Net change $(49,351) $(49,573) $(29,886) See accompanying notes to consolidated financial statements. Notes to Consolidated Financial Statements Note 1: Summary of Significant Accounting Policies Basis of statement presentation. The accompanying consolidated financial statements include the accounts of International Multifoods Corporation and all of its subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. The Company's fiscal year ends the last day of February. To conform to the fiscal 1995 presentation, the net margin from commodity sales of the Company's food exporting business for fiscal 1994 and 1993 has been reclassified to net sales. As a result of this reclassification, net sales and cost of sales decreased $66.4 million in fiscal 1994 and $24.8 million in fiscal 1993 from the amounts previously reported. In addition, certain other reclassifications have been made in the accompanying consolidated financial statements in order to conform with fiscal 1995 presentation. Cost of sales. To more closely match costs with related revenues, the Company classifies the inflation element inherent in interest rates on Venezuelan local currency borrowings and the foreign exchange gains and losses, which occur on certain Venezuelan borrowings, as a component of cost of sales. Accordingly, a reduction of $0.4 million in fiscal 1995 and increases of $2.8 million in fiscal 1994 and $3.6 million in fiscal 1993 are included in cost of sales. Foreign currency translation and transactions. For the Company's Canadian operations, the functional currency is the local currency. Assets and liabilities are translated at current exchange rates and results of operations are translated using a weighted average exchange rate during the fiscal year. The gains or losses resulting from such translation are included in a separate component of shareholders' equity. Effective December 1, 1993, the functional currency for the Company's Venezuelan operations changed from the local currency to the U.S. dollar. In U.S. dollar functional currency operations, certain assets and related earnings statement items are translated at historical exchange rates while all other assets and liabilities are translated at current exchange rates. Translation gains or losses are included in the determination of net earnings. Net foreign exchange losses of $3.0 million in fiscal 1995, $2.3 million in fiscal 1994 and $1.1 million in fiscal 1993 are included in earnings. Research and development expense. Research and development expense was $1.6 million in fiscal 1995, $2.1 million in fiscal 1994 and $1.5 million in fiscal 1993. Costs are charged to expense when incurred. Income taxes. The Company adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109), as of March 1, 1993 and has elected to apply its provisions prospectively as of that date. Under SFAS 109, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial statement carrying amount and tax basis of assets and liabilities. The cumulative effect as of March 1, 1993 of the accounting change was insignificant. Earnings per share. Earnings per share of common stock has been determined by dividing net earnings, after deduction of preferred stock dividends, by the average number of shares of common stock outstanding during the year. Common stock options and other common stock equivalents are not included in earnings per share computations since their effect is not significant. Cash and equivalents. The Company considers all highly liquid short-term investments purchased with a maturity of three months or less to be cash equivalents. Inventories. Inventories, excluding grain in Canada, are valued principally at the lower of cost (first-in, first-out) or market (replacement or net realizable value). In Canada, inventories of grain are valued on the basis of replacement market prices prevailing at fiscal year-end. The Company generally minimizes risks associated with market price fluctuations by hedging those inventories with futures contracts. Therefore, included in inventories is the amount of gain or loss on open grain contracts, including futures contracts, which generally has the effect of adjusting those inventories to cost. Property, plant and equipment. Property, plant and equipment is stated at cost and depreciation is computed using the straight-line method for determining financial statement income. When permitted, accelerated depreciation methods are used to calculate depreciation for income tax purposes. Goodwill and other intangibles. Goodwill represents the excess of cost of businesses acquired over the fair market value of net tangible and identifiable intangible assets. Goodwill and other intangibles are amortized on a straight-line basis over not more than a 40-year period. Other intangibles are included in other assets on the consolidated balance sheets. Accumulated amortization of goodwill and other intangibles at February 28, 1995 and 1994 was $16.8 million and $29.0 million, respectively. In March 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" (SFAS 121), which is required to be adopted by the Company on or before the fiscal year ending February 28, 1997. The standard generally requires recognition of impairment in the carrying value of goodwill and other long- lived assets if the undiscounted expected future net cash flows is less than the carrying amount of the assets. If SFAS 121 had been adopted in fiscal 1995, management believes it would not have had a material effect on the Company's financial condition or results of operations. Note 2: Businesses Acquired The Company acquired, with cash and notes, several businesses during the three years ended February 28, 1995. All acquisitions have been accounted for as purchases and, accordingly, their results of operations have been included since their respective dates of acquisition. The most significant acquisitions were as follows: Fiscal Year Business Segment Name Date Acquired 1995 Foodservice Distribution business Distribution of Leprino Foods August 1994 1994 Foodservice Distribution Bevmatic August 1993 Bakery JAMCO June 1993 1993 Bakery Gourmet Baker April 1992 Components of cash used for acquisitions, as reflected in the consolidated statements of cash flows, were as follows: (in thousands) 1995 1994 1993 Fair value of current assets, net of cash acquired $ 46,298 $ 4,738 $ 8,062 Fair value of noncurrent assets, excluding goodwill 39,003 12,276 11,557 Goodwill 51,478 5,778 12,493 Liabilities assumed, principally current (20,932) (1,816) (3,096) Purchase contract liabilities - (2,500) - Cash paid at closing, net of cash acquired $115,847 $18,476 $29,016 The following unaudited pro forma financial information assumes the Company's fiscal 1995 acquisition of the limited-menu foodservice distribution business of Leprino Foods Company had been completed on March 1, 1993, the beginning of fiscal 1994. It includes the financing costs of the acquisition as well as depreciation and amortization associated with the allocation of the purchase price to net tangible and intangible assets acquired. The pro forma information is not necessarily indicative of the combined results of operations that would have occurred had the acquisition been completed as of the beginning of fiscal 1994. (in thousands, except earnings per share) 1995 1994 Net sales $2,495,000 $2,540,000 Net earnings (loss) 57,200 (13,800) Net earnings (loss) per share of common stock 3.17 (.74) Note 3: Financing Costs Financing costs consisted of the following: (in thousands) 1995 1994 1993 Interest expense $16,287 $13,181 $14,592 Capitalized interest (317) (746) (1,144) Non-operating interest income (3,865) (1,750) (1,600) Interest, net 12,105 10,685 11,848 Foreign exchange losses (gains) 2,747 (203) (1,110) Total financing costs $14,852 $10,482 $10,738 Cash payments for interest, net of amounts capitalized, totaled $14.6 million in fiscal 1995, $12.0 million in fiscal 1994 and $17.1 million in fiscal 1993. Total interest income was $4.9 million in fiscal 1995, $2.3 million in fiscal 1994 and $2.0 million in fiscal 1993. Foreign exchange gains and losses which occur on cash and equivalents of the Company's Venezuelan operations are included in financing costs in order to match such gains and losses with the related interest income. Note 4: Unusual Items In fiscal 1995, the Company divested its Frozen Specialty Foods business for a pre-tax gain of $33.6 million. The Company also recognized a pre-tax charge of $6.2 million for the integration of the limited-menu foodservice distribution business of Leprino Foods Company acquired by the Company in fiscal 1995 with the Company's former Pueringer unit ("Business Integration"), a pre-tax charge of $1.8 million for costs associated with business acquisition activities, and a pre-tax benefit of $0.6 million primarily related to previously divested businesses. The net tax benefit from unusual items was $2.8 million which included the tax effect from divested businesses and a benefit from a tax settlement with respect to the proposed disallowance of certain deductions in connection with business acquisitions. The total after-tax gain from these unusual items was $29.0 million, or $1.61 per share. The Business Integration charge of $6.2 million included $1.1 million for asset write-downs and $5.1 million of charges, which consisted of $1.4 million for severance benefits to approximately 125 warehouse, delivery and administrative employees and $3.7 million primarily for the write-down of lease commitments. In fiscal 1994, the Company recognized unusual charges of $70.0 million and a $12.5 million charge related to its investments in Mexican unconsolidated affiliates. The total after-tax loss for these unusual items was $48.9 million, or $2.58 per share. The $70.0 million in charges included the disposition of certain underperforming assets and the reorganization of remaining operations. The reorganization entails the consolidation and closing of certain U.S. and Canadian facilities, plant rationalization and organizational changes. Non-cash pre-tax charges consisted of $19.1 million for asset write-downs and the loss on the sale of a regional bakery distribution business and a $22.5 million charge associated with the write-down of the Company's Meats business net assets to expected realizable value. Remaining pre-tax charges of $28.4 million include the cost of severance and related employee benefits and write-down of lease commitments. The following table summarizes the changes in the Company's reorganization and integration reserves for the year ended February 28, 1995:
Foodservice Distribution Bakery Corporate ------------------------- ------------------ --------- Consoli- Organi- Organi- dation/ Organi- zational Business zational Closing zational (in thousands) Changes Integration Changes Facilities Changes Total Accrued costs at February 28, 1994 $4,043 $ - $6,864 $7,443 $687 $19,037 Reserves additions - 5,120 - - - 5,120 Reserves utilized (3,251) (714) (2,405) (4,282) (547) (11,199) Reserves reversals - - - - (140) (140) Exchange rate effect - - (149) (164) - (313) Accrued costs at February 28, 1995 $ 792 $4,406 $4,310 $2,997 $ - $12,505
Note 5: Income Taxes Income tax expense was as follows: U.S. Operations Non-U.S. (in thousands) Federal Other Operations Total 1995: Current expense $ 1,785 $ 2,340 $ 6,110 $ 10,235 Deferred expense (benefit) 603 (151) 4,031 4,483 Total tax expense $ 2,388 $ 2,189 $10,141 $ 14,718 1994: Current expense (benefit) $ (2,571) $ 666 $ 2,943 $ 1,038 Deferred benefit (9,028) (2,021) (1,455) (12,504) Total tax expense (benefit) $(11,599) $(1,355) $ 1,488 $(11,466) 1993: Current expense $ 3,251 $ 1,739 $ 7,540 $ 12,530 Deferred expense 8,214 909 3,227 12,350 Total tax expense $ 11,465 $ 2,648 $10,767 $ 24,880 Temporary differences which give rise to deferred tax assets and liabilities as of February 28, 1995 and 1994 were as follows: 1995 1994 Deferred Deferred Deferred Deferred Tax Tax Tax Tax (in thousands) Assets Liabilities Assets Liabilities Depreciation and amortization $15,154 $28,141 $15,441 $39,062 Accrued expenses 23,306 7,346 23,563 7,432 Inventory valuation methods 8,973 - 6,826 - Reorganization and divestiture reserves 8,723 - 20,041 - Provision for losses on receivables 2,738 12 3,214 5 Foreign net operating loss carryforwards 9,383 - 4,792 - Foreign earnings repatriation - 4,273 - 3,042 Alternative minimum tax - - 946 - Other 3,537 1,865 3,877 2,471 Subtotal 71,814 41,637 78,700 52,012 Valuation allowance (31,760) - (24,904) - Total deferred taxes $40,054 $41,637 $53,796 $52,012 At February 28, 1995, the Company's Venezuelan operations had net operating loss carryforwards of approximately $30 million which will expire in fiscal 1997 and 1998. The financial statement benefit of the net operating loss carryforwards has been offset by the valuation allowance due to the limited carryforward period. In fiscal 1995, the valuation allowance increased $6.9 million, primarily as a result of the aforementioned net operating loss carryforwards. The remainder of the valuation allowance also relates to the Company's Venezuelan operations. The effective tax rate varied from the U.S. federal statutory tax rate as follows: 1995 1994 1993 U.S. federal statutory tax rate 35.0% (35.0)% 34.0% Differences: Effect of taxes on non-U.S. earnings (1.9) .1 (3.5) State and local income taxes 2.0 (3.5) 3.1 Effect of intangibles (2.5) 1.7 3.0 Basis difference for business disposals (12.6) (12.2) - Other .5 2.9 1.0 Effective tax rate 20.5% (46.0)% 37.6% Provision was made for U.S. and non-U.S. income taxes applicable to anticipated remittances of earnings from affiliates. At February 28, 1995, no provision was made on approximately $85 million of unremitted earnings of non-U.S. affiliates which have been, or are intended to be, permanently reinvested. Such earnings would become taxable upon the sale or liquidation of the non-U.S. affiliates or upon the remittance of dividends. It is not practicable to estimate the amount of the deferred tax liability on such earnings. Earnings before income taxes resulting from non-U.S. affiliates were $33.0 million in fiscal 1995, $3.5 million in fiscal 1994 and $39.3 million in fiscal 1993. The Internal Revenue Service (IRS) has completed examinations of the U.S. federal income tax returns filed by the Company for the fiscal years ended February 28, 1987 through February 28, 1991. As a result of the examinations, the IRS has issued to the Company statutory notices of deficiency covering the fiscal years ended February 28, 1987 and February 29, 1988 and a preliminary report covering the fiscal years ended February 28, 1989 through February 28, 1991, which are primarily related to the proposed disallowance by the IRS of certain deductions claimed by the Company in connection with acquisitions. In fiscal 1995, the Company reached a settlement with the IRS on the proposed deduction disallowance in connection with acquisitions, but the Company is still vigorously pursuing its judicial remedies with respect to certain other issues covering fiscal years 1988 to 1991. Management believes the final outcome of the remaining matters will not have a material adverse effect on the financial condition, results of operations or cash flows of the Company. Net income taxes (refunded) paid totaled $5.9 million in fiscal 1995, $(1.0) million in fiscal 1994 and $31.8 million in fiscal 1993. Note 6: Supplemental Balance Sheet Information (in thousands) 1995 1994 Accounts receivable, net: Trade $149,132 $151,642 Allowance for doubtful accounts (6,658) (5,187) Total accounts receivable, net $142,474 $146,455 Inventories: Raw materials, excluding grain $ 25,683 $ 27,614 Grain 65,402 41,785 Finished and in-process goods 158,497 141,241 Packages and supplies 7,296 8,990 Total inventories $256,878 $219,630 Property, plant and equipment, net: Land $ 11,635 $ 10,733 Buildings and improvements 87,739 107,741 Machinery and equipment 212,262 213,838 Transportation equipment 9,042 4,678 Improvements in progress 13,381 38,740 334,059 375,730 Accumulated depreciation (106,034) (129,839) Total property, plant and equipment, net $228,025 $245,891 Accounts payable: Trade $131,754 $111,061 Other 35,360 39,160 Total accounts payable $167,114 $150,221 Other current liabilities: Wages and benefits $ 16,163 $ 16,520 Income taxes 18,177 12,328 Reorganization reserves 12,505 19,037 Other accrued expenses 43,801 41,024 Total other current liabilities $ 90,646 $ 88,909 Note 7: Financial Instruments Fair value of financial instruments. The carrying value of cash and equivalents, accounts receivable, accounts payable and debt approximate fair value. Concentrations of credit risk. The Company's Venezuelan operations maintain deposits, primarily in local currency, in Venezuelan financial institutions. As of February 28, 1995, these deposits totaled the equivalent of $6.0 million. Due to foreign exchange controls implemented by the Venezuelan government, the Company has experienced delays in converting these deposits to U.S. dollars and, accordingly, paying down U.S. dollar-denominated obligations of its Venezuelan operations. Additionally, the Venezuelan government has assumed control of several local banks due to their respective financial difficulties in order to stabilize the banking system. The Company performs ongoing evaluations of the relative credit standing of the Venezuelan financial institutions in which it has deposits in order to minimize its credit risk. Other financial instruments. In Canada, the Company minimizes risks associated with wheat market price fluctuations by hedging its wheat and flour inventories, open wheat purchase contracts, and open flour sales contracts with wheat futures contracts. These futures contracts are traded on U.S. exchanges and are denominated in U.S. dollars. Since the inventories, purchase contracts and sales contracts are generally denominated in Canadian dollars, the Company enters into foreign currency forward contracts which have the effect of converting the U.S. dollar- denominated futures contracts into Canadian dollar equivalents. At February 28, 1995, the Company had entered into wheat futures contracts with maturities that substantially coincided with the maturities of the open wheat purchase contracts and flour sales contracts. These future contracts hedged substantially all of the Company's Canadian wheat and flour inventories and commitments as of February 28, 1995. At February 28, 1995, the foreign currency forward contracts relating to these wheat futures contracts totaled approximately $3.2 million. The U.S. exchanges on which the futures contracts are traded are the counterparties to these transactions. The foreign currency forward contracts are purchased through major Canadian banking institutions which are counterparties to these transactions. Management believes the credit risk of these futures and foreign currency forward contracts due to nonperformance of the counterparties is insignificant. Note 8: Accounts Receivable As of February 28, 1995 and 1994, the Company had sold approximately $11.5 million and $11.8 million of accounts receivable, respectively. Collections received on these accounts may be replaced by new receivables in order to maintain the aggregate outstanding balance. The credit risk of uncollectible accounts has been substantially transferred to the purchaser. Fees associated with these transactions are included in interest expense in the consolidated statements of operations. Note 9: Notes Payable Notes payable consisted of the following: (in thousands) 1995 1994 Commercial paper $ - $26,154 Notes payable, principally to banks 47,149 32,497 Total notes payable $47,149 $58,651 Note 10: Long-term Debt Long-term debt, net of current portion of $11.1 million in fiscal 1995 and $4.0 million in fiscal 1994, was as follows: (in thousands) 1995 1994 Commercial paper $ 50,455 $ 54,005 Notes payable to banks 49,545 100,000 Canadian Bankers Acceptances 57,504 - Medium-term notes 20,000 30,000 Industrial revenue bond financing 3,500 8,434 Other, due in varying amounts through fiscal 1998 2,083 2,686 Total long-term debt $183,087 $195,125 The Company has a $150 million U.S. revolving credit agreement which expires March 5, 1997, $52 million in U.S. and Canadian short-term lines of credit which expire in fiscal 1996 and a $61 million Canadian revolving credit agreement which expires March 15, 1997. The interest rate on borrowings under these agreements is variable and based on current market factors. There are no restrictions on the use of these facilities for general corporate purposes and support for commercial paper issued by the Company. The credit agreements and lines of credit contain certain restrictive covenants that include maintenance of tangible net worth and an indebtedness ratio. None of the restrictive covenants are expected to affect the payment of dividends based on the Company's present dividend guideline. At February 28, 1995, the Company had available $86 million under the lines of credit and credit agreements. Related commitment and facility fees were $0.6 million and $0.5 million during fiscal 1995 and fiscal 1994, respectively. The notes payable, commercial paper and Canadian Bankers Acceptance amounts have been classified as long-term debt as a result of the Company's intent to refinance this debt on a long-term basis and the availability of such financing under the terms of the revolving credit agreements. Minimum principal and sinking fund payments totaling $183.1 million are as follows: $7.0 million in fiscal 1997, $162.6 million in fiscal 1998, $10.0 million in fiscal 1999, and $3.5 million in fiscal 2004. The weighted average interest rate on commercial paper, notes payable and Canadian Bankers Acceptances outstanding at February 28, 1995 was 6.7% and at February 28, 1994 was 3.9%. The outstanding balances include U.S. dollar, Canadian dollar and Venezuelan bolivar obligations. The average dollar amount of consolidated borrowings in fiscal 1995 was $239.9 million which had a weighted average interest rate of 6.7%. In fiscal 1993, the Company established a medium-term note program under its shelf registration statement filed with the Securities and Exchange Commission for $100 million of debt securities of the Company. Under the program, the Company may issue the entire amount in medium-term notes. Amounts outstanding under this program at February 28, 1995 mature in fiscal 1996 to fiscal 1999 and had a weighted average interest rate of 5.4%. The industrial revenue bond financing matures in fiscal 2004 and had an interest rate of 6.75% in fiscal 1995. At February 28, 1995, the Company had available uncommitted lines of credit from banks in Venezuela of approximately $65 million. No compensating balances were required for any of these credit lines. Note 11: Redeemable Preferred Stock The Company has authorized 200,000 shares of Cumulative Redeemable Sinking Fund First Preferred Capital Stock, par value $100 per share, which is redeemable at the option of the Company at $105 per share plus accrued dividends. There is a semiannual sinking fund requirement equal to $1.00 for each share then outstanding which may be satisfied by repurchases not in excess of the redemption price or by call for redemption. The holders of outstanding shares are entitled to elect one-third of the Company's directors in the event of default in the payment of eight quarterly dividends or in providing four semiannual sinking fund installments. The Company purchased 310 shares in fiscal 1995, 2,841 shares in fiscal 1994 and 300 shares in fiscal 1993 for sinking fund requirements. The amounts issued and outstanding were: (dollars in thousands) 1995 1994 Par value: 4% Series A $1,114 $1,123 4 1/4% Series C 380 390 4 1/2% Series D 755 767 5 1/4% Series E 1,355 1,355 Total $3,604 $3,635 Number of shares 36,042 36,352 Note 12: Preferred Capital Stock The Company has authorized 10,000,000 shares of Preferred Capital Stock, par value $1.00 per share, which may be designated and issued as convertible into common shares. The Company has created a series of such Preferred Capital Stock, designated as Series 1990 Junior Participating Capital Preferred Stock, consisting of 500,000 shares, par value $1.00 per share. No Preferred Capital Stock was outstanding during the three years ended February 28, 1995. Note 13: Leases The Company leases certain plant, office space and equipment for varying periods. Management expects that in the normal course of business, leases will be renewed or replaced by other leases. The following is a schedule of future minimum lease payments for operating leases that had initial or remaining noncancelable lease terms in excess of one year as of February 28, 1995: Operating (in thousands) leases 1996 $16,759 1997 14,232 1998 10,202 1999 7,394 2000 5,256 2001 and beyond 11,271 Total minimum lease payments * $65,114 *Minimum payments do not include contingent rentals or vehicle lease payments based on mileage. Total net rent expense for operating leases, including those with terms of less than one year, consisted of the following: (in thousands) 1995 1994 1993 Minimum rentals $27,608 $28,270 $29,873 Contingent rentals 246 1,009 2,643 Sublease rentals (44) (286) (7) Total net rent expense $27,810 $28,993 $32,509 Note 14: Commitments and Contingencies There were no contingencies or litigation as of February 28, 1995 that, in the opinion of management, would have had a material adverse effect on the Company's consolidated financial condition, results of operations or cash flows. At February 28, 1995, the estimated cost to complete improvements in progress totaled approximately $13 million. Note 15: Shareholders' Equity The following summarizes the changes in shareholders' equity for the three years ended February 28, 1995:
Equity Adjustment from: $.10 par value ----------------------- ------------------ Capital in Foreign Minimum Unearned Common Treasury Excess of Retained Currency Pension Restricted (dollars and shares in thousands) Stock Stock Par Value Earnings Translation Liability Stock Total Balance at February 29, 1992 $2,184 $(54,836) $88,700 $352,452 $(71,828) $(1,989) $(1,559) $313,124 Net earnings - - - 41,210 - - - 41,210 Translation adjustments - - - - (15,238) - - (15,238) Dividends declared: Common stock - - - (15,452) - - - (15,452) Preferred stock - - - (180) - - - (180) 70 shares purchased for treasury - (1,810) - - - - - (1,810) 66 shares issued for employee benefit plans - 1,496 180 - - - (149) 1,527 Amortization of unearned restricted stock - - - - - - 465 465 Adjustment associated with recognition of minimum pension liability - - - - - (1,684) - (1,684) Balance at February 28, 1993 2,184 (55,150) 88,880 378,030 (87,066) (3,673) (1,243) 321,962 Net loss - - - (13,438) - - - (13,438) Translation adjustments - - - - (20,298) - - (20,298) Dividends declared: Common stock - - - (15,120) - - - (15,120) Preferred stock - - - (174) - - - (174) 1,200 shares purchased for treasury - (27,490) - - - - - (27,490) 194 shares issued for employee benefit plans - 4,276 278 - - - (2,844) 1,710 Amortization of unearned restricted stock - - - - - - 1,480 1,480 Adjustment associated with recognition of minimum pension liability - - - - - 1,372 - 1,372 Balance at February 28, 1994 2,184 (78,364) 89,158 349,298 (107,364) (2,301) (2,607) 250,004 Net earnings - - - 57,021 - - - 57,021 Translation adjustments - - - - (1,520) - - (1,520) Dividends declared: Common stock - - - (10,746) - - - (10,746) Preferred stock - - - (167) - - - (167) 366 shares purchased for treasury - (5,877) - - - - - (5,877) 37 shares issued for employee benefit plans - 824 (296) - - - (222) 306 Amortization of unearned restricted stock - - - - - - 1,381 1,381 Adjustment associated with recognition of minimum pension liability - - - - - 660 - 660 Balance at February 28, 1995 $2,184 $(83,417) $88,862 $395,406 $(108,884) $(1,641) $(1,448) $291,062
The Company's 1989 stock-based plan permits awards of restricted stock and incentive units to key employees subject to the provisions of the plan and as determined by the Compensation Committee of the Board of Directors. In fiscal 1994, grants include 78,000 shares of restricted stock which were awarded to key employees under the Company's long-term incentive program. The restricted stock has a ten-year vesting period which will be accelerated only if specified financial performance objectives are achieved over a three-year period. In addition, incentive units were awarded to each such key employee in a number equal to the number of shares of restricted stock awarded. These incentive units will be earned only in the event the Company achieves stronger financial performance than that which is required to accelerate vesting of the restricted stock. Incentive units, if earned, will be paid in the form of restricted stock. The market value of shares issued under the plan, as of the date of grant, has been recorded as unearned restricted stock and is shown as a separate component of shareholders' equity. Unearned restricted stock is expensed over the period restrictions lapse. The Company has a shareholder rights plan that entitles one preferred share purchase right for each outstanding share of common stock. The rights become exercisable only after a person or group (with certain exceptions) becomes the beneficial owner of 10% or more of the Company's outstanding common stock or announces a tender offer, the consummation of which would result in beneficial ownership by a person or group of 10% or more of the Company's outstanding common stock. Each right will entitle its holder to purchase one one-hundredth share of Series 1990 Junior Participating Preferred Capital Stock (consisting of 500,000 shares, par value $1.00 per share) at an exercise price of $100, subject to adjustment. If a person or group acquires beneficial ownership of 10% or more of the Company's outstanding common stock, each right will entitle its holder (other than such person or group) to purchase, at the then- current exercise price of the right, a number of shares of the Company's common (or, in certain circumstances, preferred) stock having a market value of twice the then-current exercise price of the right. In addition, if the Company is acquired in a merger or other business combination transaction or 50% or more of its consolidated assets or earnings power are acquired, each right will entitle its holder to purchase, at the then- current exercise price of the right, a number of the acquiring company's common shares having a market value of twice the then-current exercise price of the right. Following the acquisition by a person or group of beneficial ownership of 10% or more of the Company's outstanding common stock and prior to an acquisition by any person or group of 50% or more of the Company's outstanding common stock, the Board of Directors may exchange the outstanding rights (other than rights owned by such person or group), in whole or in part, for common (or, in certain circumstances, preferred) stock of the Company. Prior to the acquisition by a person or group of beneficial ownership of 10% or more of the Company's outstanding common stock, the rights are redeemable for $.01 per right at the option of the Board of Directors. Note 16: Stock Options A total of 505,081 common shares are available for grants of stock options or restricted stock under the Company's 1986 and 1989 stock plans. Stock options are granted to directors, officers and key management employees to purchase shares of Company common stock at not less than fair market value at dates of grant for incentive stock options and at not less than 75% of fair market value at dates of grant for non-qualified stock options. Options generally become exercisable one year after the date of grant and expire ten years after the date of grant. The following table contains information on stock options: Option Price Shares Per Share-Range Outstanding at February 29, 1992 1,739,532 $11.28 - 29.00 Granted 152,200 23.69 - 28.06 Exercised (79,100) 11.28 - 25.69 Expired or canceled (6,925) 22.75 - 29.00 Outstanding at February 28, 1993 1,805,707 $11.28 - 29.00 Granted 85,019 19.25 - 25.75 Exercised (86,375) 11.28 - 23.21 Expired or canceled (82,236) 19.21 - 28.06 Outstanding at February 28, 1994 1,722,115 $11.28 - 29.00 Granted 72,077 16.06 - 18.00 Exercised (26,100) 11.28 - 14.97 Expired or canceled (200,263) 11.28 - 29.00 Outstanding at February 28, 1995 1,567,829 $14.97 - 29.00 Options exercisable at: February 28, 1993 1,246,463 $11.28 - 29.00 February 28, 1994 1,443,027 $11.28 - 29.00 February 28, 1995 1,424,844 $14.97 - 29.00 Note 17: Retirement Plans The Company sponsors two defined contribution plans and several defined benefit retirement plans. The defined contribution plans cover salaried, sales and certain hourly employees in the United States and Canada. The Company makes contributions equal to 50% of the employee's contribution subject to certain limitations. Employer contributions were approximately $1.7 million in fiscal 1995, $2.1 million in fiscal 1994 and $1.8 million in fiscal 1993. In the United States and Canada, defined benefit plans cover substantially all employees. Benefits are based on final average salary for U.S. salaried employees, years of credited service for U.S. hourly employees and career average pay for Canadian employees. These plans are generally funded by contributions to tax-exempt trusts in amounts sufficient to provide assets to cover the plans' benefits. Plan assets consist principally of listed equity securities, fixed income securities and cash equivalents. Net pension cost for the defined benefit plans was as follows: (in thousands) 1995 1994 1993 Service costs $ 2,483 $ 2,769 $ 2,381 Interest costs 12,102 12,277 11,936 Actual return on plan assets 2,337 (22,813) (7,790) Net amortization and deferral (16,760) 8,272 (6,550) Net pension cost (credit) $ 162 $ 505 $ (23) The funded status of the defined benefit plans and the amounts recognized in the balance sheets were as follows: 1995 1994 Assets Benefit Assets Benefit Exceed Obli- Exceed Obli- Benefit gations Benefit gations Obli- Exceed Obli- Exceed (in thousands) gations Assets gations Assets Actuarial present value of benefit obligations: Vested $131,952 $ 8,183 $146,293 $ 8,332 Nonvested 4,142 1,014 5,105 1,107 Accumulated benefit obligations 136,094 9,197 151,398 9,439 Effect of future salary increases 3,185 810 5,130 1,041 Projected benefit obligations 139,279 10,007 156,528 10,480 Plan assets at fair value 157,284 - 174,826 - Plan assets in excess of (less than) projected benefit obligations 18,005 (10,007) 18,298 (10,480) Unamortized prior service cost 6,080 - 6,815 - Unrecognized effect from past experience different from that assumed 9,390 3,500 8,720 4,813 Unrecognized transition (assets) obligations, net of amortization (12,511) 802 (14,343) 1,203 Adjustment required to recognize minimum pension liability - (3,492) - (4,975) Prepaid (accrued) pension costs $20,964 $(9,197) $ 19,490 $(9,439) The Company amortizes prior service costs and unrecognized gains and losses on a straight-line basis over not more than 16 years. Other assumptions used, which reflect weighted averages of the U.S. and Canadian defined benefit plans, were as follows: 1995 1994 Average discount rate 8.6% 7.5% Expected long-term return rate 9.5% 9.5% Rate of increase in future compensation 4.0% 4.0% In Venezuela, all employees are entitled to certain severance indemnities based on compensation and cause of separation. This post- employment arrangement qualifies as a defined benefit plan under the provisions of Statement of Financial Accounting Standards No. 87, "Employers' Accounting for Pensions." The Company has elected to define the vested benefit obligation for this arrangement as the actuarial present value of vested benefits the employee is entitled to if immediately separated at the measurement date. This arrangement has not been funded and the corresponding expense recognized was $3.8 million in fiscal 1995, $3.7 million in fiscal 1994 and $3.1 million in fiscal 1993. Note 18: Post-retirement Health and Life Insurance Benefits The Company provides post-retirement health and life insurance benefits for retirees in the United States and Canada who meet minimum age and service requirements. The costs of the U.S. life insurance benefits are funded over the employees' active working lives through contributions to an insurance continuation fund maintained by an insurance company. Life insurance benefits for Canadian retirees are funded on a pay-as-you-go basis through an insurance company. Health care benefits for U.S. and Canadian retirees are provided under a self-insured program administered by an insurance company. During fiscal 1993, certain of the Company's U.S. post-retirement health benefit plans were amended resulting in a decrease in accumulated benefit obligations and service and interest costs. The net periodic post-retirement benefit cost was as follows: (in thousands) 1995 1994 1993 Service costs $ 296 $ 458 $ 602 Interest costs 1,134 1,492 1,627 Net amortization and deferral (1,689) (1,944) (1,458) Net post-retirement benefits cost (credit) $ (259) $ 6 $ 771 The actuarial present value of benefit obligations and the amounts recognized in the consolidated balance sheets were as follows: (in thousands) 1995 1994 Actuarial present value of benefit obligations: Retirees $11,718 $14,952 Fully eligible active plan participants 539 2,553 Other active plan participants 2,535 4,144 Accumulated benefit obligations 14,792 21,649 Unrecognized effect from past experience different from that assumed 3,178 (2,840) Unrecognized effect from plan amendments 3,747 6,949 Accrued post-retirement cost $21,717 $25,758 The assumed annual rate of future increases in per capita cost of health care benefits ranged from 4% to 8% for each of the next 10 years and 4% thereafter. These trend rates reflect the Company's prior experience, plan provisions and management's expectation of future rates. Increasing the health care cost trend by 1% in each year would increase the accumulated benefit obligation by $1.0 million at February 28, 1995 and the service and interest cost by $0.1 million for fiscal 1995. The discount rates used, which reflect weighted averages of the U.S. and Canadian plans, were 8.6% and 7.4% in fiscal 1995 and fiscal 1994, respectively. The fiscal 1995 divestitures of the Frozen Specialty Foods and Meats businesses resulted in curtailment gains totaling $2.4 million. The curtailment gains are reflected in the gain and loss, respectively, on these transactions. Note 19: Multifoods' Business Segments The Company's business segments are as follows: - Foodservice Distribution consists of U.S. vending distribution and limited-menu foodservice distribution and food exporting business. - Bakery consists of U.S. and Canadian bakery products and consumer products in Canada, which includes primarily home baking products and condiments. - Venezuela Foods consists of bakery products, consumer products for home baking and agricultural products. - Divested Businesses consists principally of the frozen specialty foods and meats businesses which were divested in fiscal 1995 and the surimi seafood business which the Company anticipates divesting in fiscal 1996. In fiscal 1995 the Company redefined its business segments and also adopted a revised allocation process that provides that corporate general and administrative costs are reflected as corporate expenses unless such costs are associated with a business segment. Fiscal 1994 and 1993 segment financial information has been reclassified to conform with the fiscal 1995 presentation. Operating Net Operating Unusual Earnings (in millions) Sales Costs Items (Loss) 1995: Foodservice Distribution $1,395.9 $(1,378.4) $ (6.2) $ 11.3 Bakery 459.2 (436.8) - 22.4 Venezuela Foods 317.7 (297.8) - 19.9 Divested Businesses 122.3 (110.4) 34.2 46.1 Corporate Expenses - (11.4) (1.8) (13.2) Total $2,295.1 $(2,234.8) $ 26.2 $ 86.5 1994: Foodservice Distribution $1,110.3 $(1,092.5) $ (9.1) $ 8.7 Bakery 440.3 (420.8) (29.4) (9.9) Venezuela Foods 267.8 (243.5) - 24.3 Divested Businesses 340.0 (321.5) (30.7) (12.2) Corporate Expenses - (12.3) (.8) (13.1) Total $2,158.4 $(2,090.6) $(70.0) $ (2.2) 1993: Foodservice Distribution $1,103.2 $(1,075.2) $ - $ 28.0 Bakery 426.6 (402.1) - 24.5 Venezuela Foods 249.3 (223.8) - 25.5 Divested Businesses 420.1 (410.2) - 9.9 Corporate Expenses - (12.8) - (12.8) Total $2,199.2 $(2,124.1) $ - $ 75.1
1995 1994 1993 ---------------------------------- --------------------------------- ---------------------------------- Depreciation Depreciation Depreciation Capital and Capital and Capital and (in millions) Expenditures Amortization Assets Expenditures Amortization Assets Expenditures Amortization Assets Foodservice Distribution $ 8.4 $10.2 $371.9 $20.8 $ 6.1 $248.8 $12.2 $ 5.3 $220.8 Bakery 15.2 9.1 251.0 18.3 8.9 238.4 21.9 7.7 217.3 Venezuela Foods 5.5 3.1 147.1 8.7 2.3 104.3 5.7 1.9 98.3 Divested Businesses 1.5 3.9 39.6 3.6 11.9 183.9 5.5 13.0 214.2 Corporate .2 .7 37.1 .5 .7 39.4 .4 .9 52.9 Total $30.8 $27.0 $846.7 $51.9 $29.9 $814.8 $45.7 $28.8 $803.5
Amounts expended for business acquisitions are not considered as part of capital expenditures. Assets are identifiable to business segments either by their direct use or by allocations when used jointly by two or more segments. Note 20: Quarterly Summary (unaudited) Operating Net Operating Unusual Earnings (in millions) Sales Costs Items (Loss) First Quarter - 1995 Foodservice Distribution $293.3 $(288.3) $ - $ 5.0 Bakery 104.1 (103.0) - 1.1 Venezuela Foods 76.7 (74.2) - 2.5 Divested Businesses 73.8 (69.3) - 4.5 Corporate Expenses - (2.6) - (2.6) Total $547.9 $(537.4) $ - $ 10.5 First Quarter - 1994 Foodservice Distribution $280.0 $(274.6) $ - $ 5.4 Bakery 101.4 (99.4) - 2.0 Venezuela Foods 65.3 (60.0) - 5.3 Divested Businesses 97.0 (93.5) - 3.5 Corporate Expenses - (3.4) - (3.4) Total $543.7 $(530.9) $ - $ 12.8 Second Quarter - 1995 Foodservice Distribution $275.2 $(272.3) $ (6.2) $ (3.3) Bakery 113.8 (109.2) - 4.6 Venezuela Foods 70.2 (66.0) - 4.2 Divested Businesses 17.1 (14.4) 32.9 35.6 Corporate Expenses - (3.0) - (3.0) Total $476.3 $(464.9) $ 26.7 $ 38.1 Second Quarter - 1994 Foodservice Distribution $248.8 $(245.2) $ (9.1) $ (5.5) Bakery 108.0 (103.0) (29.4) (24.4) Venezuela Foods 66.6 (59.6) - 7.0 Divested Businesses 87.5 (82.5) (8.2) (3.2) Corporate Expenses - (2.8) (.8) (3.6) Total $510.9 $(493.1) $(47.5) $(29.7) Third Quarter - 1995 Foodservice Distribution $423.3 $(417.3) $ - $ 6.0 Bakery 132.7 (122.6) - 10.1 Venezuela Foods 81.0 (74.8) - 6.2 Divested Businesses 16.4 (14.2) - 2.2 Corporate Expenses - (3.3) - (3.3) Total $653.4 $(632.2) $ - $ 21.2 Third Quarter - 1994 Foodservice Distribution $297.2 $(291.0) $ - $ 6.2 Bakery 123.4 (115.7) - 7.7 Venezuela Foods 64.5 (59.0) - 5.5 Divested Businesses 81.2 (75.6) - 5.6 Corporate Expenses - (3.3) - (3.3) Total $566.3 $(544.6) $ - $ 21.7 Fourth Quarter - 1995 Foodservice Distribution $404.1 $(400.5) $ - $ 3.6 Bakery 108.6 (102.0) - 6.6 Venezuela Foods 89.8 (82.8) - 7.0 Divested Businesses 15.0 (12.5) 1.3 3.8 Corporate Expenses - (2.5) (1.8) (4.3) Total $617.5 $(600.3) $ (.5) $ 16.7 Fourth Quarter - 1994 Foodservice Distribution $284.3 $(281.7) $ - $ 2.6 Bakery 107.5 (102.7) - 4.8 Venezuela Foods 71.4 (64.9) - 6.5 Divested Businesses 74.3 (69.9) (22.5) (18.1) Corporate Expenses - (2.8) - (2.8) Total $537.5 $(522.0) $(22.5) $ (7.0)
First Quarter Second Quarter Third Quarter Fourth Quarter Total Year (dollars in millions, --------------- --------------- ---------------- --------------- ---------------- except per share amounts) 1995 1994 1995 1994 1995 1994 1995 1994 1995 1994 Gross profit $98.9 $100.9 $82.7 $99.0 $112.4 $111.8 $99.2 $102.8 $393.2 $414.5 Net earnings (loss) 3.0 6.4 31.4(b) (27.2)(c) 10.9 12.5 11.7(d) (5.1)(e) 57.0 (13.4) Per share (a) .17 .33 1.74(b) (1.41)(c) .61 .66 .65(d) (.28)(e) 3.16 (.72) Dividends paid per share of common stock .20 .20 .20 .20 .20 .20 .20 .20 .80 .80 Market price of common stock: Close 16 1/8 25 3/8 16 3/4 21 7/8 15 7/8 22 5/8 18 5/8 17 3/8 18 5/8 17 3/8 High 18 3/8 26 3/8 16 7/8 25 3/4 18 3/8 24 19 5/8 21 1/8 19 5/8 26 3/8 Low 15 1/8 23 5/8 15 3/8 20 15 3/4 21 1/4 15 7/8 16 3/4 15 1/8 16 3/4
(a) Earnings per share is computed independently for each period presented. As a result of the effect of common shares purchased for treasury, the total of the per share results for the four quarters do not equal the annual net earnings (loss) per share in fiscal 1995 and 1994. (b) Includes a net after-tax benefit of $25.9 million, or $1.44 per share from unusual items. The net benefit is the result of a gain from the divestiture of the Company's Frozen Specialty Foods business and a charge for the integration of the Company's limited-menu foodservice distribution businesses. (c) Includes a $36.3 million after-tax, or $1.88 per share charge from unusual items. Included in unusual items were the disposition of underperforming assets, the write-down of certain assets and reorganization of operations. (d) Includes a net after-tax benefit from unusual items of $3.1 million, or $.17 per share. Unusual items included a benefit from a tax settlement and costs associated with acquisition activities. (e) Includes a $12.6 million after-tax loss, or $.69 per share principally from the write-down of Meats business net assets to expected realizable value Six-Year Comparative Summary
Fiscal year ended the last day of February (dollars and shares in millions, except per share data) 1995 1994 1993 1992 1991 1990 Consolidated Summary of Operations Net sales $2,295.1 $2,158.4 $2,199.2 $2,264.8 $2,175.7 $2,065.9 Cost of sales (1,901.9) (1,743.9) (1,783.4) (1,817.8) (1,744.2) (1,678.3) Delivery and distribution (146.2) (141.8) (141.7) (138.0) (128.3) (106.4) Selling, general and administrative (186.7) (204.9) (199.0) (224.1) (217.6) (207.5) Unusual items 26.2 (70.0) - 3.4 1.0 (2.1) Financing costs (14.8) (10.5) (10.8) (18.8) (20.7) (26.9) Earnings (losses) from unconsolidated affiliates - (12.2) 1.8 (2.1) .3 .9 Earnings (loss) before income taxes and cumulative effect of accounting change 71.7 (24.9) 66.1 67.4 66.2 45.6 Income taxes (14.7) 11.5 (24.9) (28.3) (31.0) (20.3) Earnings (loss) before cumulative effect of accounting change 57.0 (13.4) 41.2 39.1 35.2 25.3 Cumulative effect of accounting change, net of taxes - - - (17.1) - - Net earnings (loss) $ 57.0 $ (13.4) $ 41.2 $ 22.0 $ 35.2 $ 25.3 Earnings (loss) per share of common stock: Before cumulative effect of accounting change $ 3.16 $ (.72) $ 2.13 $ 2.00 $ 1.81 $ 1.30 Cumulative effect of accounting change - - - (.88) - - Net earnings (loss) per share of common stock $ 3.16 $ (.72) $ 2.13 $ 1.12 $ 1.81 $ 1.30 Year-End Financial Position Current assets $ 471.7 $ 439.3 $ 415.9 $ 413.3 $ 427.6 $ 474.1 Current liabilities 316.0 301.7 243.5 285.4 312.5 348.0 Working capital 155.7 137.6 172.4 127.9 115.1 126.1 Property, plant and equipment, net 228.0 245.9 245.7 221.3 239.2 218.7 Long-term debt, net of current portion 183.1 195.1 167.0 103.9 115.0 134.6 Shareholders' equity 291.1 250.0 322.0 313.1 320.6 303.0 Total assets 846.7 814.8 803.5 767.7 805.6 844.3 Dividends Paid Preferred stock $ .2 $ .2 $ .2 $ .2 $ .2 $ .2 Common stock 14.4 15.2 15.4 15.4 15.2 15.2 Per share of common stock .80 .80 .80 .80 .79 .79 Other Financial Data Current ratio 1.5:1 1.5:1 1.7:1 1.4:1 1.4:1 1.4:1 Return on beginning shareholders' equity 22.7% (4.2)% 13.1% 12.1%* 11.5% 8.5% Equity per share of common stock $ 16.16 $ 13.63 $ 16.64 $ 16.19 $ 16.41 $ 15.68 Debt to total capitalization 45% 50% 37% 33% 34% 50% Depreciation $ 22.8 $ 24.9 $ 23.8 $ 24.7 $ 24.1 $ 22.4 Capital expenditures, excluding acquisitions $ 30.8 $ 51.9 $ 45.7 $ 51.2 $ 57.3 $ 46.2 Average common shares outstanding 18.0 18.9 19.3 19.5 19.4 19.3 Number of common shareholders 5,234 4,939 5,097 5,113 5,008 5,273 Number of employees 7,495 8,390 8,341 8,231 9,140 9,172 Market price per share of common stock: At year-end $ 18 5/8 $ 17 3/8 $ 25 3/4 $ 26 3/8 $ 25 5/8 $ 16 1/2 Range for year $ 19 5/8- $ 26 3/8- $ 28 7/8- $ 31 1/2- $ 26 1/2- $ 22 1/4- 15 1/8 16 3/4 23 1/4 23 7/8 16 3/8 16 1/8
*Exclusive of cumulative effect of accounting change. EX-21 8 2/28/95 10-K EXHIBIT 21 Exhibit 21 SUBSIDIARIES OF INTERNATIONAL MULTIFOODS CORPORATION The following is a list of the Company's subsidiaries as of March 1, 1995, except for unnamed subsidiaries which, considered in the aggregate as a single subsidiary, would not constitute a significant subsidiary. Jurisdiction of Name of Subsidiary Incorporation Damca International Corporation Delaware Inversiones MONACA, C.A. Venezuela Molinos Nacionales, C.A. (MONACA) Venezuela Robin Hood Multifoods Inc. Ontario Multifoods Inc. Ontario Gourmet Baker Inc. Ontario 980964 Ontario Limited Ontario Fantasia Confections, Inc. California JAC Creative Foods, Inc. California Multifoods Seafood (Canada) Inc. Ontario MINETCO - Minnesota International Export Trading Company, Inc. Minnesota Multifoods Bakery Distributors, Inc. Delaware Multifoods Bakery International, Inc. Delaware Multifoods Specialty Distribution, Inc. Delaware Multifoods Seafood, Inc. Delaware Northeast Bakery Company Delaware VSA, Inc. Colorado Vendors Supply of America Corporation Delaware EX-23 9 2/28/95 10-K EXHIBIT 23 Exhibit 23 Independent Auditors' Consent The Board of Directors International Multifoods Corporation: We consent to incorporation by reference in Registration Statements No. 33- 48073 on Form S-8 relating to the Employees' Voluntary Investment and Savings Plan of International Multifoods Corporation, No. 2-99818 on Form S-8 relating to the Stock Purchase Plan of Robin Hood Multifoods Inc., No. 2-84236 on Form S-8 relating to the 1983 Stock Option Incentive Plan of International Multifoods Corporation, No. 33-6223 on Form S-8 relating to the 1986 Stock Option Incentive Plan of International Multifoods Corporation, No. 33-30979 relating to the Amended and Restated 1989 Stock-Based Incentive Plan of International Multifoods Corporation and No. 33-6978 on Form S-3 relating to certain debt securities of International Multifoods Corporation of our reports dated April 12, 1995, relating to the consolidated balance sheets of International Multifoods Corporation and subsidiaries as of February 28 1995 and 1994 and the related consolidated statements of operations and cash flows and related financial statement schedule for each of the fiscal years in the three-year period ended February 28, 1995, which reports appear or are incorporated by reference in the Annual Report on Form 10-K for the fiscal year ended February 28, 1995, of International Multifoods Corporation. /s/ KPMG Peat Marwick LLP KPMG Peat Marwick LLP Minneapolis, Minnesota May 12, 1995 EX-27 10 2/28/95 10-K EXHBIT 27 (FDS)
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED CONDENSED BALANCE SHEET, STATEMENTS OF OPERATIONS AND CASH FLOWS AND ACCOMPANYING NOTES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND NOTES. 1,000 YEAR FEB-28-1995 FEB-28-1995 10,792 0 149,132 6,658 256,878 471,697 334,059 106,034 846,705 315,992 183,087 2,184 3,604 0 288,878 846,706 2,295,119 2,295,119 1,901,932 1,901,932 146,220 4,477 15,970 71,739 14,718 57,021 0 0 0 57,021 3.16 3.16
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