-----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, OKzGCCUv3Cl5ZemW+b/o6zcEEhSDj6cjgVoWyAC5SUE1uiP5qXDph2BcWwcrQvmL 8tuqAM5q7R8t5XQjeWHvpA== 0000051410-95-000028.txt : 199507130000051410-95-000028.hdr.sgml : 19950713 ACCESSION NUMBER: 0000051410-95-000028 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19950531 FILED AS OF DATE: 19950712 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-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06699 FILM NUMBER: 95553349 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-Q 1 1ST QTR 10Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended May 31, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 1-6699 INTERNATIONAL MULTIFOODS CORPORATION (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of 41-0871880 incorporation or organization) (I.R.S. Employer Identification No.) 33 South Sixth Street, Minneapolis, Minnesota 55402 (Address of principal executive offices) (Zip Code) (612) 340-3300 (Registrant's telephone number, including area code) (not applicable) (Former name, former address and former fiscal year, if changed since last report) 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 The number of shares outstanding of the registrant's Common Stock, par value $.10 per share, as of June 30, 1995 was 18,010,212. PART I. FINANCIAL INFORMATION INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES Consolidated Condensed Statements of Earnings (unaudited) (in thousands, except per share amounts) THREE MONTHS ENDED May 31, May 31, 1995 1994 Net sales $ 634,644 $ 547,907 Cost of sales (534,716) (448,988) Gross profit 99,928 98,919 Delivery and distribution (38,469) (34,553) Selling, general and administrative (49,312) (53,916) Operating earnings 12,147 10,450 Financing costs: Interest, net (5,125) (3,355) Foreign exchange losses on cash and equivalents - (2,033) Total financing costs (5,125) (5,388) Earnings before income taxes 7,022 5,062 Income taxes (2,458) (2,025) Net earnings $ 4,564 $ 3,037 Net earnings per share of common stock $ .25 $ .17 Average shares of common stock outstanding 17,956 18,107 Dividends per share of common stock $ .20 $ .20 See accompanying notes to consolidated condensed financial statements. INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES Consolidated Condensed Balance Sheets (dollars in thousands) Condensed from audited financial (Unaudited) statements May 31, February 28, 1995 1995 Assets Current assets: Cash and equivalents $ 8,214 $ 10,792 Trade accounts receivable, net 127,382 142,474 Inventories 250,057 256,878 Other current assets 70,649 61,553 Total current assets 456,302 471,697 Property, plant and equipment, net 231,945 228,025 Goodwill 109,308 108,636 Other assets 38,201 38,347 Total assets $835,756 $846,705 Liabilities and Shareholders' Equity Current liabilities: Notes payable $ 59,496 $ 47,149 Current portion of long-term debt 11,083 11,083 Accounts payable 142,122 167,114 Other current liabilities 83,275 90,646 Total current liabilities 295,976 315,992 Long-term debt, net of current portion 189,789 183,087 Employee benefits and other liabilities 54,123 52,960 Total liabilities 539,888 552,039 Redeemable preferred stock 3,554 3,604 Shareholders' equity 292,314 291,062 Commitments and contingencies Total liabilities and shareholders' equity $835,756 $846,705 See accompanying notes to consolidated condensed financial statements. INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES Consolidated Condensed Statements of Cash Flows (unaudited) (dollars in thousands) THREE MONTHS ENDED May 31, May 31, 1995 1994 Cash flows from operations: Net earnings $ 4,564 $ 3,037 Adjustments to reconcile net earnings to cash provided by (used for) operations: Depreciation and amortization 7,582 7,150 Deferred income tax expense 547 1,452 Provision for losses on receivables 2,601 809 Changes in operating assets and liabilities, net of business acquisitions and dispositions: Accounts receivable 14,187 (463) Inventories 7,796 7,210 Other current assets (10,818) (6,098) Accounts payable (25,413) (6,962) Other current liabilities (7,559) (4,566) Other, net 269 3,173 Cash provided by (used for) operations (6,244) 4,742 Cash flows from investing activities: Business acquisitions (5,275) (3,950) Capital expenditures (5,370) (8,028) Proceeds from business disposition - 20,595 Proceeds from other property disposals 675 507 Cash provided by (used for) investing activities (9,970) 9,124 Cash flows from financing activities: Net increase in notes payable 12,197 7,326 Net increase (decrease) in long-term debt 5,862 (4,195) Dividends paid (3,695) (3,733) Proceeds from issuance of common stock 428 109 Purchase of treasury shares (1,118) (5,777) Other, net (45) (6) Cash provided by (used for) financing activities 13,629 (6,276) Effect of exchange rate changes on cash and equivalents 7 (2,045) Net increase (decrease) in cash and equivalents (2,578) 5,545 Cash and equivalents at beginning of period 10,792 10,507 Cash and equivalents at end of period $ 8,214 $16,052 See accompanying notes to consolidated condensed financial statements. INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES Notes to Consolidated Condensed Financial Statements (unaudited) (1) In the opinion of the Company, the accompanying unaudited consolidated condensed financial statements contain all adjustments (consisting of only normal recurring adjustments, except as noted elsewhere in the notes to the consolidated condensed financial statements) necessary to present fairly its financial position as of May 31, 1995 and the results of its operations and cash flows for the three months ended May 31, 1995 and 1994. These statements are condensed and therefore do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The statements should be read in conjunction with the consolidated financial statements and footnotes included in the Company's Annual Report on Form 10-K for the year ended February 28, 1995. The results of operations for the three months ended May 31, 1995 are not necessarily indicative of the results to be expected for the full year. (2) Cost of sales - To more closely match costs with related revenues, the Company classifies the foreign exchange gains on Venezuelan local currency borrowings along with the inflation element inherent in interest rates on such borrowings as a component of cost of sales. Accordingly, an increase of $1,075,000 and a reduction of $2,395,000 for the three months ended May 31, 1995 and 1994, respectively, are included in cost of sales. (3) Businesses acquired - The Company acquired, with cash, certain businesses during fiscal 1996 and 1995. All acquisitions have been accounted for as purchases and, accordingly, the results of operations of the acquired businesses have been included since their respective dates of acquisition. The most significant acquisitions were as follows: Fiscal Business Segment Name Date Acquired 1996 Venezuela Foods Ciudad Bolivar Corn Flour business April 1995 1995 Foodservice Distribution business Distribution of Leprino Foods August 1994 The components of cash used for all acquisitions, as reflected in the consolidated condensed statements of cash flows, are summarized as follows (in thousands): Three Months Ended May 31, May 31, 1995 1994 Fair value of current assets $ 288 $ - Fair value of non-current assets, excluding goodwill 3,931 3,950 Goodwill 1,180 - Liabilities assumed, principally current (124) - Cash paid at closing $5,275 $3,950 The following unaudited pro forma financial information assumes the Company's fiscal 1995 acquisition of the specialty foodservice distribution business of Leprino Foods Company had been completed on March 1, 1994, the beginning of fiscal 1995. 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 1995. Three Months Ended (in thousands, except earnings per share) May 31, 1994 Net sales $655,950 Net earnings 3,100 Net earnings per share of common stock .17 (4) Unusual items - The following table summarizes the change in the Company's reorganization and integration reserves for the three months ended May 31, 1995 (in thousands):
Foodservice Distribution Bakery ------------------------ ---------------------- Consoli- Organiza- Organiza- dation/ tional Business tional Closing Total Changes Integration Changes Facilities Company Reorganization and integration reserves at Feb. 28, 1995 $ 792 $ 4,406 $4,310 $2,997 $12,505 Reserves utilized (193) (1,510) (284) (578) (2,565) Exchange rate effect - - 66 56 122 Reorganization and integration reserves at May 31, 1995 $ 599 $ 2,896 $4,092 $2,475 $10,062
(5) Financing costs consisted of the following (in thousands): Three Months Ended May 31, May 31, 1995 1994 Interest expense $5,547 $3,695 Capitalized interest (44) (78) Non-operating interest income (378) (262) Interest, net 5,125 3,355 Foreign exchange losses - 2,033 Total financing costs $5,125 $5,388 Cash payments for interest, net of amounts capitalized, for the three months ended May 31, 1995 and 1994 were approximately $5,634,000 and $3,609,000, respectively. Total interest income was $675,000 and $455,000 for the three months ended May 31, 1995 and 1994, respectively. (6) Income taxes - Cash payments for income taxes for the three months ended May 31, 1995 and 1994 were $1,900,000 and $1,121,000, respectively. (7) Supplemental balance sheet information (in thousands) May 31, Feb. 28, 1995 1995 Trade accounts receivable, net: Trade $133,056 $149,132 Allowance for doubtful accounts (5,674) (6,658) Total trade accounts receivable, net $127,382 $142,474 Inventories: Raw materials, excluding grain $ 31,034 $ 25,683 Grain 54,730 65,402 Finished and in-process goods 154,425 158,497 Packages and supplies 9,868 7,296 Total inventories $250,057 $256,878 Property, plant and equipment, net: Land $ 11,673 $ 11,635 Buildings and improvements 90,204 87,739 Machinery and equipment 217,438 212,262 Transportation equipment 9,069 9,042 Improvements in progress 16,406 13,381 Accumulated depreciation (112,845) (106,034) Total property, plant and equipment, net $231,945 $228,025 (8) Segment information - 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 was divested in June 1995. Net Operating Operating (in millions) Sales Costs Earnings Three Months Ended May 31, 1995 Foodservice Distribution $416.4 $(410.8) $ 5.6 Bakery 108.0 (106.4) 1.6 Venezuela Foods 96.7 (90.2) 6.5 Divested Businesses 13.5 (11.9) 1.6 Corporate Expenses - (3.2) (3.2) Total $634.6 $(622.5) $12.1 Three Months Ended May 31, 1994 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 INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES Management's Discussion and Analysis of Results of Operations and Financial Condition (Unaudited) Results of Operations: For the first quarter ended May 31, 1995 compared with the corresponding prior period Overview The consolidated net earnings for the first quarter were $4.6 million, or $.25 per share, compared with net earnings of $3.0 million, or $.17 per share a year ago. Consolidated net sales increased 16% to $634.6 million, compared with $547.9 million in the first quarter last year. First quarter fiscal 1996 results included the limited-menu foodservice distribution business of Leprino Foods Company, which was acquired in August 1994. The prior year first quarter results included the Company's former Frozen Specialty Foods and Meats businesses, which were divested in June and May 1994, respectively. Segment Results Foodservice Distribution first quarter net sales increased 42% to $416.4 million, compared with $293.3 million a year ago. The increase was primarily from sales of the limited-menu distribution business of Leprino Foods Company acquired in August 1994. Net sales of the Company's vending distribution business were even with the same period last year. Foodservice Distribution's first quarter operating earnings increased 12% to $5.6 million compared with $5.0 million last year. Operating earnings increased primarily from earnings of the acquired limited-menu distribution business. The increase was partially offset by lower earnings in vending distribution which resulted from additional costs, including depreciation, associated with the implementation of a business information system. Bakery first quarter net sales increased 4% to $108.0 million, compared with $104.1 million a year ago. Sales benefited from improved volumes in both commercial and consumer bakery products. First quarter operating earnings increased 45% to $1.6 million compared with $1.1 million in the first quarter last year. Operating earnings increased as a result of the improved volumes and the continued benefits of the fiscal 1994 reorganization of operations. Venezuela Foods first quarter net sales increased 26% to $96.7 million, compared with $76.7 million a year ago. The increase was primarily the result of strong animal feed volumes, the current year benefit from the effect of the near-term stability from government imposed foreign exchange controls and the unfavorable impact in the prior year of a significant currency devaluation. Higher volumes in animal feed were the result of an increase in market share. First quarter operating earnings increased to $6.5 million, compared with $2.5 million last year. The improved earnings were primarily due to the comparison with a weak first quarter in fiscal 1995, which resulted from the large currency devaluation, as well as the volume improvement and the current year benefit of the stability of the local currency. Divested Businesses first quarter net sales were $13.5 million, compared with $73.8 million in fiscal 1995. Operating earnings declined to $1.6 million compared with $4.5 million in the first quarter last year. The current fiscal year's first quarter results include only the Company's surimi seafood business, which was divested in June 1995 at a net gain. The net gain will be reported in the Company's second quarter results. Sales and earnings declined from the first quarter last year as a result of the fiscal 1995 divestitures of the Frozen Specialty Foods and Meats businesses. Earnings in the first quarter of fiscal 1996 also declined in the surimi seafood business as a result of higher raw material costs. Non-operating Expense and Income Net interest expense increased to $5.1 million from $3.3 million a year ago as a result of higher interest rates. In fiscal 1995, the Company recognized foreign exchange losses of $2.1 million from local currency cash and equivalents in Venezuela. The loss resulted from a significant currency devaluation coupled with a temporary build-up of local currency cash and equivalents which was due to delays in obtaining U.S. dollars to settle certain U.S. dollar-denominated obligations. Income Taxes The first quarter effective tax rate was 35% compared to 40% a year ago. The decline was the result of a lower effective tax rate in Venezuela. Financial Condition: The Company's balance sheet at May 31, 1995 reflected the impact of working capital requirements and business acquisitions. The debt-to-total capitalization ratio was 47% at May 31, 1995 as compared to 45% at February 28, 1995. In the first quarter of fiscal 1996, operating working capital increased $21.8 million. Working capital requirements increased as a result of the timing of payments to suppliers along with payments associated with the Company's integration of its limited-menu distribution businesses and reorganization of operations. The decline in accounts receivable was primarily due to the timing of cash receipts. Business acquisitions, which included a corn flour business in Venezuela, totaled $5.3 million. The balance sheet impact from acquisitions is summarized in Note 3 to the consolidated condensed financial statements. In June 1995, the Company completed the divestiture of its surimi seafood business for $48 million in cash. The net proceeds from the disposition were used to reduce debt obligations. In May 1995, the Company entered into an $84 million revolving credit agreement in Canada which expires in March 1997. The interest rate on borrowings under the new agreement is variable and based on current market factors. The new revolving credit agreement replaces a $62 million revolving credit agreement in Canada and short-term lines of credit of approximately $22 million. In the first quarter of fiscal 1996 the Company also replaced variable rate debt in the United States with $20 million of notes under its medium-term note program. The notes mature in fiscal years 1999 to 2001 and have interest rates ranging from 6.75% to 7%. In June 1995, the Company's Board of Directors approved the redemption of all of the Company's outstanding shares of Cumulative Redeemable Sinking Fund First Preferred Capital Stock at a redemption price of $105 per share. The Company expects to complete the redemption on September 1, 1995. The Company will fund the redemption, which will total approximately $3.7 million, with borrowings. PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 11. Computation of Earnings Per Share. 12. Computation of Ratio of Earnings to Fixed Charges. 27. Financial Data Schedule. (b) Reports on Form 8-K No reports on Form 8-K were filed during the quarter ended May 31, 1995. SIGNATURE Pursuant to the requirements 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 Date: July 12, 1995 By /s/ Duncan H. Cocroft Duncan H. Cocroft Vice President - Finance and Chief Financial Officer (Principal Financial Officer and Duly Authorized Officer) EXHIBIT INDEX 11. Computation of Earnings Per Share. 12. Computation of Ratio of Earnings to Fixed Charges. 27. Financial Data Schedule. EX-11 2 1ST QTR EXHIBIT 11 Exhibit 11 INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES Schedule of Computation of Earnings per Share (unaudited) (in thousands, except per share amounts) THREE MONTHS ENDED May 31, May 31, 1995 1994 Average shares of common stock outstanding 17,956 18,107 Common stock equivalents 75 11 Total common stock and equivalents assuming full dilution 18,031 18,118 Net earnings $4,564 $3,037 Less dividends on redeemable preferred stock (42) (42) Net earnings applicable to common stock $4,522 $2,995 Earnings per share of common stock: Primary $ .25 $ .17 Fully diluted $ .25 $ .17 Primary earnings per share has been computed by dividing net earnings, after deduction of preferred stock dividends, by the weighted average number of shares of common stock outstanding during the period. 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 per share has been computed assuming issuance of all shares for stock options deemed to be common stock equivalents, using the treasury stock method. EX-12 3 1ST QTR EXHIBIT 12 Exhibit 12 INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES Schedule of Computation of Ratio of Earnings to Fixed Charges (unaudited) (dollars in thousands) THREE MONTHS ENDED May 31, May 31, 1995 1994 Earnings before income taxes $ 7,022 $ 5,062 Plus: Fixed charges (1) 7,988 6,010 Less: Capitalized interest (44) (78) Earnings available to cover fixed charges $14,966 $10,994 Ratio of earnings to fixed charges 1.87 1.83 (1) Fixed charges consisted of the following: THREE MONTHS ENDED May 31, May 31, 1995 1994 Interest expense, gross $ 5,547 $ 3,695 Rentals (1/3) 2,441 2,315 Total fixed charges $ 7,988 $ 6,010 EX-27 4 1ST QTR EXHIBIT 27
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 3-MOS FEB-29-1996 MAY-31-1995 8,214 0 133,056 5,674 250,057 456,302 344,790 112,845 835,756 295,976 189,789 2,184 3,554 0 290,130 835,756 634,644 634,644 534,716 534,716 38,469 2,601 5,503 7,022 2,458 4,564 0 0 0 4,564 .25 .25
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