Document/Exhibit Description Pages Size
1: 10-K/A Amendment to Annual Report 56± 243K
2: EX-3.1 Articles of Incorporation/Organization or By-Laws 8± 33K
3: EX-3.2 Articles of Incorporation/Organization or By-Laws 8± 34K
4: EX-4.8 Instrument Defining the Rights of Security Holders 53± 222K
5: EX-4.9 Instrument Defining the Rights of Security Holders 20± 88K
6: EX-10.18 Material Contract 8± 41K
7: EX-10.20 Material Contract 6± 29K
8: EX-10.35 Material Contract 16± 65K
9: EX-10.36 Material Contract 62± 291K
10: EX-11.1 Statement re: Computation of Earnings Per Share 2± 14K
11: EX-21.1 Subsidiaries of the Registrant 1 7K
12: EX-23.1 Consent of Experts or Counsel 1 7K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
Amendment No. 2
__X__ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended January 1, 1994.
_____ 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 0-7803
D O S K O C I L C O M P A N I E S I N C O R P O R A T E D
(Exact name of registrant as specified in its charter)
_________Delaware_____________ ____13-2535513_____
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2601 Northwest Expressway, Oklahoma City, Oklahoma __73112__
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (405)879-5500
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Name of Each Exchange
Title of Each Class on Which Registered
____________________________ _____________________
Common Stock, par value $.01 NASDAQ/NMS
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 (Section 229.405 of this
chapter) is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. [X]
As of March 28, 1994, the aggregate market value of the
voting stock held by non-affiliates of the registrant was
$61,691,247.
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check
mark whether the registrant has filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities
under a plan confirmed by a court.
YES__X__ NO_____
On March 28, 1994, the number of shares outstanding of the
registrant's common stock, $.01 par value, was 7,940,165 shares.
DOCUMENTS INCORPORATED BY REFERENCE: None.
PAGE
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General
The financial results of the Company's operations in
recent years have been significantly affected by certain events
and accounting changes. The following is a general discussion of
the impact of these factors on the Company's financial
statements.
Retiree Medical Benefit Expenses. The Company adopted
Statement of Financial Accounting Standards No. 106 ("FAS 106"),
"Employers' Accounting for Postemployment Benefits Other Than
Pensions," as of January 3, 1993. This statement requires the
accrual of the cost of providing postemployment benefits other
than pensions in the period in which the employee renders the
service necessary to qualify for those benefits. The Company
elected to immediately recognize the accumulated liability,
measured as of January 3, 1993, and recorded a one-time, noncash
charge of $34.4 million, a deferred tax benefit of $31.0 million
and a liability of $65.4 million for Postemployment Medical
Benefits. The obligation as of January 3, 1993 represents the
discounted present value of accumulated retiree benefits, other
than pensions, attributed to employees' service rendered prior to
that date. The noncash charges associated with the accrual
required by FAS 106 for fiscal 1993 were approximately $1.1
million more than the cost that would have been recognized under
the method of accounting previously used, pay-as-you-go.
Expenses for fiscal 1992 and the three months ended December 28,
1991 recorded on the pay-as-you-go basis were $4.4 million and
$1.0 million, respectively.
Sales of Slaughtering Operations. The sale of the
Company's last remaining slaughtering and fresh pork operation in
Logansport, Indiana in December 1993 was the final step in the
Company's plan to improve operating results by withdrawing from
that low-margin and volatile business. The Company is now
concentrating on higher margin processed meat operations.
The Company announced the Logansport closing in late
1992 and recorded a charge to operations of $32 million to cover
the operating losses, severance and benefits and other noncash
charges until the plant was closed. Net cash costs of operating
this facility in 1993 were $15.8 million, which were charged
against this reserve.
The Company sold the Marshall, Missouri slaughtering
facility in 1992. Slaughtering operations had been suspended
since 1988 at that location.
The selected financial data for fiscal 1992, the three
months ended December 28, 1991 and the nine months ended
September 28, 1991 includes in continuing operations the sales
and operating income (loss) of slaughtering and fresh pork
operations as follows (no such amounts were included in fiscal
1993 operations)(in millions):
Fiscal Year Three Months Nine Months
Ended Ended Ended
January 2, December 28, September 28,
1993 1991 1991
___________ ____________ _____________
Sales . . . . . . . . . . $138.8 $37.8 $118.4
Operating income (loss) . (3.7) 0.2 (5.2)
Rationalization of Meat Processing Operations. The
Company's ongoing program to improve the efficiency of its meat
processing operations has involved two specific initiatives: (i)
the consolidation of ham processing operations and (ii) the
closing of inefficient and/or under-utilized facilities.
Beginning in 1989, the Company took a series of steps to lower
ham processing costs and gain greater control over its ham
production. These steps included: (i) terminating an unfavorable
co-pack agreement in 1990, (ii) acquiring a ham production
facility in Concordia, Missouri and (iii) consolidating ham
production in this more cost-effective facility in 1991. The
acquisition of this facility, in combination with the termination
of the co-pack arrangements, has resulted in substantial cost
savings to the Company notwithstanding significant start-up costs
incurred in 1991.
The Company also has taken significant steps to improve
operating efficiencies by closing inefficient and redundant
facilities. In April of 1990 and May of 1991, respectively, the
Company closed its pizza toppings facility in Sedalia, Missouri
and its dry sausage facility in Clarinda, Iowa and moved their
production to more efficient Doskocil facilities. In 1991, the
Company incurred five months of fixed operating expenses and
closing expenses related to these facilities totalling
approximately $500,000, which were charged against operating
income.
In September of 1992, the Company closed its sausage
production facility located in Oklahoma City, Oklahoma.
Management believes this production capacity has been replaced by
a combination of lower costing internal and external sources.
A newly constructed frank facility in Forrest City,
Arkansas began production in late 1993. This lower operating
cost facility was built to replace production from other
facilities, provide the capability to add new products and to
allow for increased manufacturing capacity.
As a result of these and other measures, management
believes that the Company has increased the capacity utilization
of its meat processing facilities and that this increase in
capacity utilization and the decrease in fixed expenses has had,
and will continue to have, a substantial positive impact on the
Company's profitability and competitiveness.
Sale of Certain Other Businesses. In December 1993,
the Company contracted for the sale of its processed food
equipment manufacturing division and provided a reserve for
losses of $0.5 million. The business was sold in January 1994.
The Company's edible fats and oil refinery was accounted for as
Assets Held for Sale until it was sold in June 1992. The
Company's metal fabrication subsidiary was reported as a
discontinued operation until its sale in December 1992. The
results from operations for the businesses sold in 1992 were
excluded from sales and operating income during all periods
presented.
Income Taxes. After considering utilization
restrictions, the Company believes it has approximately $133.0
million of net operating loss carryforwards ("NOLs") which will
be available as follows: $77.9 million in 1994, $13.3 million in
years 1995 through 1998, and $1.9 million in 1999. NOLs not
utilized in the first year that they are available may be carried
over and utilized in subsequent years, subject to their
expiration provisions. As a result, management anticipates that
the Company's cash income tax liability for the next four to five
years will not be material.
The amount of the Company's NOLs and the limitation of
their availability are subject to significant uncertainties. In
addition, a future change in stock ownership could result in the
Company's NOLs being substantially reduced or eliminated. The
Company is not aware of any proposed legislation for changes in
the tax laws which could impact the ability of the Company to
utilize the NOLs as described above. However, there can be no
assurance that legislation will not be adopted which would limit
the Company's ability to utilize its NOLs in future periods.
In accordance with Fresh Start Reporting, the Company
will not reflect the realized income tax benefit of these NOLs in
its statement of operations. Instead, such benefit is reflected
as a reduction in the "Reorganization Value in Excess of Amounts
Allocable to Identifiable Assets" ("Excess Value"), thus reducing
future intangible amortization expense. Due to the nondeductible
amortization expenses the Company will, in future years, have an
income tax rate for book purposes that is above statutory levels.
In 1993, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes". This new standard is based on a liability
approach rather than an income statement approach and requires
deferred tax liabilities and assets to be recognized based on the
difference between the tax basis of assets and liabilities and
their financial reporting amounts measured by using presently
enacted income tax laws and rates. Implementing the new standard
resulted in the Company recording a deferred tax benefit of
approximately $31.0 million for deductible temporary differences
consisting primarily of future retiree medical benefit
obligations and pension obligations. The Company provided a
valuation allowance of approximately $51.7 million for the
remaining deductible temporary differences and NOLs. In
determining the valuation allowance, the Company considered prior
years' taxable income before utilization of NOLs and projected
taxable income during the next four years. A similar
determination of the valuation allowance was performed at the end
of the year.
The projected taxable income before NOL's is expected
to be significantly higher than the financial pre-tax income due
to the non-deductible amortization of the intangible assets and
the fact that the tax basis of the assets was not adjusted as a
result of the reorganization. Accordingly, the Company expects to
realize the net deferred tax asset from future operations, which
contemplates annual increases in sales consistent with industry
projections, and historical operating margins (after adjusting
historical results of operations for the sale of the Company's
slaughtering operations in 1993) but does not anticipate any
material asset sales or other unusual transactions. As previously
indicated, due to the non-deductible amortization of intangible
assets, the annual effective tax rate in future years is expected
to be significantly in excess of the statutory income tax rate.
Reorganization and Fresh Start Reporting. In
connection with the Reorganization, the Company adopted Fresh
Start Reporting at the end of the third fiscal quarter of 1991.
As a result of this and other accounting policies adopted after
confirmation of the Plan of Reorganization, historical financial
data for periods ending after September 28, 1991 are of a
different reporting entity and are not prepared on a basis
consistent with prior periods. See Note 6 of the Notes to the
Consolidated Financial Statements.
Depreciation and Amortization Expense. Under Fresh
Start Reporting, a "Reorganization Value," which is designed to
approximate the fair value of the Company as an ongoing business,
is determined and allocated to specific identifiable assets based
on their estimated fair values. Any excess is identified as
Excess Value, which is an intangible asset, the amortization of
which is a noncash expense. The Reorganization Value was
determined by management and its advisors to be $321.2 million at
September 28, 1991 after considering several factors and by
reliance upon various valuation methods, including discounted
cash flows, price/earnings ratios and other applicable ratios.
By employing this method, the Company's property, plant and
equipment was determined to have a "fair value" of approximately
$87.2 million, or approximately $26.1 million less than the
historical carrying value.
Following the allocation of Reorganization Value to the
Company's tangible assets, approximately $124.6 million remained
to be allocated to intangible assets. Of this amount,
approximately $25.0 million was allocated to trademarks and trade
names leaving Excess Value in the amount of approximately $99.6
million. These intangible assets are being amortized on a
straight-line basis over a period of 20 years. As discussed
above, future amortization expense is expected to decline as a
result of the anticipated realization of benefits from NOLs.
Results of Operations
Comparability of Periods. Because application of Fresh
Start Reporting establishes a new basis of accounting, the
following discussions, when making comparisons to results of
operations, are based on the approach of combining amounts for
the three months ended December 28, 1991 (post-confirmation) and
the nine months ended September 28, 1991 (pre-confirmation) into
combined 1991 results (the "1991 Combined Period"). Management
believes that such approach will provide useful information and
facilitate discussions of annual increases and decreases in
amounts. However, comparisons of annual operating results for
the fiscal year ended January 2, 1993 with those for the 1991
Combined Period should only be made with the understanding that
the 1991 Combined Period operating results include both the three
month (post-confirmation) and the nine month (pre-confirmation)
amounts.
The following summary of selected financial data has
been prepared based on the historical financial statements of the
Company.
[Enlarge/Download Table]
1991 Combined Period
______________________________________________
Fiscal Year Fiscal Year 1991 Combined Three Months Nine Months
Ended Ended Period Ended Ended Ended
January 1, January 2, December 28, December 28, September 28,
1994 <F1> 1993 <F1> 1991 1991 <F1> 1991 <F2>
___________ ___________ _____________ _____________ _____________
__________________________________________________
Income Statement Data (in thousands): | |
Net sales $648,207 $770,687 | $820,220 $208,691 $611,529 |
======== ======== | ======== ======== ======== |
Gross profit $110,677 $109,338 | $110,730 $ 32,744 $ 77,986 |
Selling, general | |
and administrative 87,497 86,135 | 87,418 22,455 64,963 |
Amortization of intangible assets 6,183 6,307 | 5,399 1,436 3,963 |
Provision for plant closings 500 32,000 | - - - |
________ ________ | ________ ________ ________ |
| |
Operating income (loss) $ 16,497 $(15,104) | $ 17,913 $ 8,853 $ 9,060 |
======== ======== | ======== ======== ======== |
| |
Interest and financing costs $(13,849) $(11,485) | $(20,389) $ (3,795) $(16,594) |
Reorganization items - - | (40,952) - (40,952) |
Provision for income taxes (419) (357) | (1,075) (1,075) - |
Income (loss) before extraordinary | |
item and cumulative effect of | |
accounting change 2,407 (26,834) | (44,481) 3,943 (48,424) |
Extraordinary gain- | |
forgiveness of debt - - | 113,794 - 113,794 |
Cumulative effect on prior years | |
of change in accounting for | |
postretirement benefits other | |
than pensions (34,426) - | - - - |
Net income (loss) (32,019) (26,834) | 69,313 3,943 65,370 |
| |
Cash Flows and Capital Expenditures Data: | |
Depreciation $ 9,166 $ 11,479 | $ 13,551 $ 3,047 $ 10,504 |
Amortization of intangible | |
assets <F3> 6,183 6,307 | 5,399 1,436 3,963 |
EBITDA <F4> 32,024 2,794 | 36,885 13,296 23,589 |
Capital expenditures 19,690 6,604 | 7,009 1,193 5,816 |
Net cash provided (used) by | |
operating activities 18,138 1,088 | 14,596 14,599 (3) |
|_________________________________________________|
_____________________
<FN>
<F1> Post-Confirmation
<F2> Pre-Confirmation
<F3> See footnote (6) to the table under Item 6
<F4> See footnote (7) to the table under Item 6
The Fiscal Year Ended January 1, 1994 ("Fiscal 1993")
Compared to The Fiscal Year Ended January 2, 1993 ("Fiscal
1992"). Net sales of processed product for Fiscal 1993 totaled
$648.2 million compared to $631.9 million for Fiscal 1992, an
increase of $16.3 million, or 2.6%. This increase is due
primarily to increased volumes partially offset by a temporary
decrease in sales price per pound in certain product lines.
Total sales for Fiscal 1992 of $770.7 million included $138.8
million of sales from fresh pork operations.
Gross profit for Fiscal 1993 was $110.7 million, an
increase of $1.4 million, or 1.3%, from gross profit of $109.3
million for Fiscal 1992. This increase resulted primarily from
cost savings programs and improvements in product mix partially
offset by decreases in margin per pound due to competitive
pricing pressure in certain product lines and increased noncash
expense resulting from the previously described adoption of the
accounting standard relating to Postemployment Medical Benefits.
Selling, general and administrative expense for Fiscal
1993 of $87.5 million was greater than Fiscal 1992 of $86.1
million by $1.4 million, or 1.6%. Selling expense increased
approximately $2.0 million as a result of additional promotion
expense and hiring and training cost incurred for additional
staff to support growth in the Company's foodservice and deli
divisions. The increase in selling expense was partially offset
by a $0.6 million net decrease in general and administrative
expense. A $2.0 million decrease in general and administrative
expense, which resulted from cost reduction programs and
decreased incentive cost, was partially offset by approximately
$1.5 million of additional cost for the settlement of certain
employment agreements.
In December 1993 the Company entered into a contract
for the sale of its processed food equipment manufacturing
division and recorded a provision for closing of $0.5 million.
Fiscal 1992 included a charge to operations of $32.0 million for
the closing of the Logansport facility as previously described.
Interest and financing costs for Fiscal 1993 increased
$2.4 million, or 20.6%, over Fiscal 1992 even though the average
debt outstanding decreased. Fixed interest rates on the
Company's new long term financing are higher than the variable
rates paid in Fiscal 1992. The financing, however, is less
restrictive and better supports the Company's growth objectives.
Fiscal 1992 Compared to the 1991 Combined Period.
Fiscal 1992 net sales totaled $770.7 million, a decrease of $49.5
million, or 6.0%, compared to net sales of $820.2 million for the
1991 Combined Period. The decrease is attributable to: (i)
pricing pressures in the fresh pork market, which was highly
competitive in the fourth quarter of 1992 and (ii) a continued
decrease in raw material costs and the resulting decrease in
selling prices during the first nine months of 1992. Although
these factors resulted in a decrease in net sales dollars, the
Company experienced an increase during Fiscal 1992 of 4.6% and
2.3% in processed meat sales volume and total sales volume,
respectively.
Gross profit for Fiscal 1992 was $109.3 million, a
decrease of $1.4 million, or 1.3%, from gross profit of $110.7
million for the 1991 Combined Period. This decrease resulted
from the following items, which are more fully described below:
(i) increased operating expense resulting from the application of
Fresh Start Reporting of $1.3 million, (ii) expense of unusual
events which management has estimated to be between $3.3 million
and $4.3 million, partially offset by (iii) improved product
profit realization.
Fresh Start Reporting - Fiscal 1992 gross profit was
negatively impacted by approximately $4.4 million for retiree
medical programs, which were included in cost of sales, when
compared to the 1991 Combined Period, which included only $1.0
million of such expense. Partially offsetting this $3.4 million
negative impact was a $2.1 million reduction of depreciation
expense resulting from a decrease in the carrying value of the
Company's property, plant and equipment described in the General
section above.
Unusual Events - Gross profit for Fiscal 1992 was
adversely impacted by a labor strike during May of 1992 at four
of the Company's meat processing facilities. Management believes
that the strike adversely impacted gross profit by $5.0 million
to $6.0 million and operating income by $4.0 million to $5.0
million. Management does not believe the strike resulted in a
permanent loss of customer base or that the strike had a material
adverse impact on the Company's liquidity or capital resources.
Partially offsetting the negative impact of the labor
strike was an increase in gross profit of $1.7 million for the
receipt of proceeds from insurance settlements in excess of the
value of damaged inventory and related expenses, representing the
gross profit that otherwise would have been realized on such
inventory. These proceeds were received as a consequence of
fires that caused temporary business interruptions at two of the
Company's facilities during the first quarter of Fiscal 1992.
Improved Product Profit Realization - Gross profit was
negatively impacted during the fourth quarter of 1992 by
approximately $1.1 million when compared to the fourth quarter of
1991 for fresh pork products as a result of highly competitive
pricing in the fresh pork market. Partially offsetting this and
the decreases associated with Fresh Start Reporting and the
unusual events was an improvement in gross profit of processed
products. This improvement resulted primarily from: (i)
decreases in production costs associated with the replacement in
September of 1992 of the inefficient and high-cost production
facility in Oklahoma City, Oklahoma with lower-cost internal and
external production capacity and (ii) an improved ability during
Fiscal 1992 to match changes in raw material costs with changes
in product sales prices.
For Fiscal 1992, selling, general and administrative
expenses totaled $86.1 million, a decrease of $1.3 million, or
1.5%, from $87.4 million for the 1991 Combined Period. This
decrease was primarily attributable to a temporary decrease in
selling and marketing expenses during the labor strike in May of
1992 and decreases in brokerage and marketing expenses resulting
from changes in product mix and improvements in the cost
effectiveness of marketing programs partially offset by increased
administrative costs.
During the fourth quarter of Fiscal 1992, the Company
recorded a provision for plant closing in the amount of $32.0
million in connection with the elimination in 1993 of the
Company's last remaining slaughtering operation, located in
Logansport, Indiana, and the restructuring of the adjoining
processing operations. The closing of the Logansport fresh pork
operation was the final step in the Company's plan to improve
operating results by withdrawing from the low margin slaughtering
and fresh pork business and concentrating on higher margin
processed meat operations. There was no comparable item recorded
during the 1991 Combined Period.
Interest expense for Fiscal 1992 was $11.5 million, a
decrease of $8.9 million, or 43.6%, compared to interest expense
of $20.4 million for the 1991 Combined Period. The decrease in
interest expense resulted primarily from a decline in interest
rates in Fiscal 1992. Average borrowing levels also declined
during Fiscal 1992 compared to the 1991 Combined Period.
Additionally, interest expense declined as a result of
amortization of the discount amount relating to the previously
discussed Retiree Medical Benefits. The "pay-as-you-go" Retiree
Medical Benefits expense was recorded as cost of sales and
general and administrative expense during Fiscal 1992 and the
fourth quarter of 1991 (the post-confirmation periods) and did
not impact interest expense. However, in the pre-confirmation
period of the 1991 Combined Period, the imputed interest
attributable to the Retiree Medical Benefits obligation totaled
approximately $3.3 million.
As a result of the Chapter 11 filing, the Company, on
March 5, 1990, discontinued accruing interest expense on
uncollateralized pre-petition debt obligations. Although such
discontinuance does not impact comparability of results between
Fiscal 1992 and the 1991 Combined Period, consolidated
contractual interest and financing costs, as a consequence,
exceeded reported interest expense by $13.0 million for the 1991
Combined Period. Pursuant to the Plan of Reorganization, the
obligations relating to these uncollateralized debts were
extinguished, and no associated principal or interest expense was
payable after October 31, 1991.
In the 1991 Combined Period, the Company recorded pre-
confirmation items which included: (i) reorganization charges of
$41.0 million, including $30.3 million in charges to realign
facilities and to effect the provisions of the Plan of
Reorganization, and (ii) an extraordinary gain on forgiveness of
debt of $113.8 million pursuant to the confirmation of the Plan
of Reorganization on September 26, 1991. Because of the impact
of such reorganization and the adoption of Fresh Start Reporting,
the financial statements for Fiscal 1992 are not comparable to
those for the 1991 Combined Period.
The provision for income taxes for Fiscal 1992 totaled
$0.4 million, a decrease of $0.7 million, or 63.6%, from the
income tax provision of $1.1 million for the 1991 Combined
Period. For Fiscal 1992, although the Company reflected a net
loss, the Company incurred a federal income tax obligation
resulting from the alternative minimum tax whereas for the prior
year, when the Company reflected net income, the provision was a
result of taxes on income during the period, which were in excess
of the alternative minimum tax. For the 1991 Combined Period, no
cash liability for federal income taxes was due because, for
income tax purposes, the taxable income generated in the fourth
quarter of 1991 was offset by operating losses incurred in the
first three quarters of the 1991 Combined Period while the
Company was still in Chapter 11. For financial reporting
purposes, the 1991 Combined Period income tax provision of $1.1
million was recorded as a reduction of Excess Value rather than
as an extraordinary benefit. State income taxes for both periods
were comparable in amount.
Cash Flows and Capital Expenditures
Fiscal 1993. Operating activities provided net cash of
$18.1 million in Fiscal 1993 compared to $1.1 million in Fiscal
1992. Investments in property, plant and equipment totaled $19.7
million during Fiscal 1993 compared to $6.6 million for fiscal
1992. These expenditures included construction of the new
facility at Forrest City, Arkansas, construction of additional
drying room at the Company's South Hutchinson, Kansas production
facility to support growth in the foodservice division and $7.0
million of modifications and replacements at existing facilities.
The Company sold certain assets which had been classified as
Assets Held for Sale resulting in net proceeds of $14.9 million
offset by $16.9 million of net cash used by Assets Held for Sale.
The Company reduced its net borrowings by $26.8 million
during Fiscal 1993. The Company issued $110.0 million in 9 3/4%
Senior Subordinated Redeemable Notes due in the year 2000 (the
"Senior Subordinated Notes") and entered into a new revolving
working capital facility (the "1993 Credit Agreement"). Proceeds
were used to retire the previous bank credit agreement.
On March 22, 1993, Joseph Littlejohn & Levy Fund, L.P.
("JLL") purchased from the Company two million newly-issued
shares of Common Stock at $15.00 per share pursuant to a stock
purchase agreement. The Company used the net proceeds from the
sale, $26.7 million, to repay indebtedness. As a result of this
purchase, JLL owned approximately 25% of the Common Stock.
Pursuant to the JLL stock purchase agreement, JLL may increase
its holdings to 33% by purchasing additional shares in
open-market or privately negotiated transactions or from the
Company from time to time. As a result of subsequent open market
purchases, at January 1, 1994, JLL owned approximately 27.4% of
the Common Stock. JLL holds the Common Stock subject to certain
restrictions including, among other things, the ability of JLL to
resell or otherwise transfer securities of the Company or to
purchase additional securities of the Company. This agreement
also grants certain demand and piggyback registration rights to
JLL.
Fiscal 1992. Operating activities provided net cash of
approximately $1.1 million in Fiscal 1992 compared to net cash
provided of approximately $14.6 million for the 1991 Combined
Period. Significant uses of cash in Fiscal 1992 resulted from
decreases in accounts payable and accrued liabilities of
approximately $20.0 million primarily as a result of payments of
Chapter 11 related obligations, which were established upon
confirmation of the Plan of Reorganization during the fourth
quarter of 1991. These uses of cash were offset by noncash items
of $17.8 million resulting from depreciation and amortization and
$32.0 million resulting from the provision for plant closing
discussed above.
Investments in property, plant and equipment totaled
approximately $6.6 million during Fiscal 1992 compared to
approximately $7.0 million during the 1991 Combined Period.
These purchases were primarily for modifications to existing
facilities and replacement of existing equipment. During Fiscal
1992, the Company sold certain assets which had been classified
as Assets Held for Sale upon confirmation of the Plan of
Reorganization. Such sales resulted in net proceeds of $10.3
million.
Net borrowings during Fiscal 1992 under the Company's
various credit facilities decreased approximately $4.5 million.
Payments under the Amended and Restated Credit and Security
Agreement entered into in 1991 (the "1991 Credit Agreement")
reduced the balance outstanding under the 1991 Credit Agreement
term loan facility to $73.1 million at January 2, 1993 compared
to $79.6 million at December 28, 1991, while net borrowings
increased the balance of the 1991 Credit Agreement revolving
credit facility to $64.0 million at January 2, 1993 from $55.0
million at December 28, 1991. Payments on other mortgage debt
and capitalized lease obligations totaled approximately $7.0
million during Fiscal 1992.
1991 Combined Period. Operating activities provided
net cash of approximately $14.6 million for the 1991 Combined
Period. In addition to results of operations, sources of cash
provided during the 1991 Combined Period primarily resulted from
decreases in accounts receivable and inventory levels. Payments
on pre-petition liabilities, such as employee benefits and
certain accounts payable and accrued liabilities, during the 1991
Combined Period resulted in a use of cash of approximately $9.9
million.
During the 1991 Combined Period, investments in
property, plant and equipment totaled approximately $7.0 million,
primarily for modifications to existing facilities and
replacement of existing equipment. Dispositions of property,
plant and equipment were approximately $2.5 million. Net
borrowings under the Company's various credit facilities during
the 1991 Combined Period decreased by approximately $6.9 million.
Financial Condition and Liquidity
In April 1993 the Company completed the issuance of
$110.0 million of Senior Subordinated Notes. Additionally, and
concurrently the Company consummated the 1993 Credit Agreement.
The proceeds of the Senior Subordinated Notes, the 1993 Credit
Agreement and the issuance of shares of Common Stock to JLL were
used to repay the previously outstanding credit agreement.
Repayment of this debt eliminated the numerous restrictions under
that agreement. The amount available for borrowing under the
1993 Credit Agreement is based on the borrowing base set out in
the facility. The balance borrowed at January 1, 1994 was $8.0
million and $32.0 million was available for borrowing at that
date.
Management believes that cash flow from operations
combined with the borrowing capacity available under the 1993
Credit Agreement will be sufficient to meet the Company's
operating and debt service cash requirements for the foreseeable
future. Management anticipates that the purchase price for and
operating capital needs of any acquisitions that may be
consummated in the future, including the Frozen Specialty Foods
acquisition, could be financed through borrowings under the 1993
Credit Agreement, the issuance of additional secured or unsecured
debt, equity investment and from the Company's cash flow from
operations.
Historically, the Company's business has been seasonal.
Such seasonality results in significantly different operating
capital needs during the year to finance varying levels of inventory
and accounts receivable. Such requirements are largest when sales
are highest which usually occurs around a holiday period.
Additional requirements also occur prior to such seasonal sales
peaks to finance a build up of inventory and for inventory hedging
programs more fully described below.
The Company's primary raw materials are fresh and frozen
pork, poultry and beef. Severe price swings in such raw materials,
and the resultant impact on the prices the Company charges for its
products, at times had, and may in the future have, material
adverse effects on the demand for the Company's products and its
profits. The Company utilizes several techniques for reducing the
risk of future raw materials price increases. These techniques
include purchasing and freezing raw materials during seasonally low
periods of the year and periodically entering into futures contracts.
Such techniques are generally employed prior to an expected
seasonal price increase to hedge the cost of raw materials for both
firm and forecasted sales commitments that will occur during a
seasonal sales peak. Historically, such techniques have been used
to offset firm sales commitments and a portion of anticipated
sales commitments during a seasonal sales peak.
Such futures contracts described above are accounted for
as hedges. Accordingly, resulting gains or losses are deferred and
recognized as part of the product cost. The Company's fiscal year
end is typically a seasonal low point in hedging activities and
deferred losses for Fiscal 1993, Fiscal 1992 and the 1991 Combined
Period were each less than $0.1 million.
On March 17, 1994 the Company entered into a stock
purchase agreement with IMC regarding the IMFC Acquisition
pursuant to which the Company agreed to purchase all of the
issued and outstanding capital stock of IMFC for approximately
$135 million, subject to certain conditions and customary
purchase price adjustments. The Company has received a
commitment from Chemical Bank, subject to completion of
documentation and other requirements, to provide a $186 million
senior secured credit facility for this transaction and to
refinance the existing credit facility. Frozen Specialty Foods,
with estimated revenues for the fiscal year ended February 26,
1994 of approximately $185 million, is a processor and marketer
of prepared frozen food products primarily for the foodservice
and consumer markets. Completion of the transaction is expected
in the second quarter of fiscal 1994.
Impact of Inflation
The impact of inflation on the Company's operations is
primarily a function of beef and pork commodity prices. These
prices are subject to many forces including those of the
marketplace and inflation. The Company does not believe that
inflation played a major role in either the cost of raw materials
or labor, or the selling price of its products during Fiscal
1993, Fiscal 1992 or the 1991 Combined Period. Like many food
processors, the Company periodically adjusts selling prices of
its products, subject to competitive constraints and costs of raw
materials.
Part IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a) List of Documents filed as part of this Report:
1. Financial Statements:
Page
Consolidated Balance Sheet at
January 1, 1994 and January 2, 1993 . . . . F-1
Consolidated Statement of Operations
For the Years Ended January 1, 1994,
January 2, 1993, the Three Months Ended
December 28, 1991 (all Post-Confirmation)
and the Nine Months Ended September 28,
1991 (Pre-Confirmation) . . . . . . . . . . F-2
Consolidated Statement of Stockholders' Equity
For the Years Ended January 1, 1994,
January 2, 1993, the Three Months
Ended December 28, 1991 (all Post-
Confirmation) and the Nine Months Ended
September 28, 1991 (Pre-Confirmation) . . . F-4
Consolidated Statement of Cash Flows
For the Years Ended January 1, 1994,
January 2, 1993, the Three Months
Ended December 28, 1991 (all Post-
Confirmation) and the Nine Months Ended
September 28, 1991(Pre-Confirmation). . . . F-5
Notes to Consolidated Financial Statements . . . F-7
Report of Independent Accountants. . . . . . . .F-25
Quarterly Results of Operations (Unaudited). . .F-26
2. Financial Statement Schedules:
Schedule V - Property, Plant and Equipment . .F-27
Schedule VI - Accumulated Depreciation,
Depletion and Amortization of
Property, Plant and Equipment . .F-28
Schedule IX - Short-Term Borrowings . . . . . .F-29
Schedule X - Supplementary Income Statement
Information . . . . . . . . . . .F-30
Schedules other than those listed above are omitted
for the reason that they are not required or are not
applicable, or the required information is shown in
the financial statements or notes thereto.
3. Exhibits (numbered in accordance with Item
601 of Regulation S-K):
Exhibit Number Description
3.1 Amended and Restated Certificate of
Incorporation of Doskocil Companies
Incorporated ("Doskocil")
3.2 Amended and Restated Bylaws of Doskocil
4.1 Specimen certificate for Doskocil Common
Stock, par value $.01 per share
4.2 Credit Agreement among Doskocil, the Several
Lenders from Time to Time Parties Thereto
and Chemical Bank, as Agent dated as of
April 28, 1993
4.3 Form of Doskocil 9 3/4 % Senior
Subordinated Redeemable Notes due 2000
4.4 Indenture between Doskocil and First
Fidelity Bank, National Association, New
York, as Trustee
4.5 Warrant Agreement dated as of October 31,
1991, between Doskocil and the signatory
banks thereto
4.6 Amended and Restated Certificate of
Incorporation of Doskocil (see Exhibit 3.1
above)
4.7 Amended and Restated Bylaws of Doskocil (see
Exhibit 3.2 above)
4.8 Doskocil Companies Incorporated Retirement
and Profit Sharing Plan
4.9* Doskocil Companies Incorporated 1992 Stock
Incentive Plan, as amended
4.10 Lease by and between the City of South
Hutchinson, Kansas and Doskocil dated
August 1, 1985
4.11 Guaranty Agreement between Doskocil and The
Fourth National Bank and Trust Company,
Wichita, dated August 1, 1985
4.12 Agreement for Waste Water Treatment Service
between Stoppenbach, Inc. and The City of
Jefferson, Wisconsin dated November 1985
4.13 Agreement (for waste water treatment)
between the City of Logansport, Indiana, and
Wilson & Co., Inc., dated June 26, 1967
10.1 Credit Agreement among Doskocil, the Several
Lenders from Time to Time Parties Thereto
and Chemical Bank, as Agent dated as of
April 28, 1993 (see Exhibit 4.2 above)
10.2 Form of Doskocil 9 3/4% Senior Subordinated
Redeemable Notes due 2000 (see Exhibit 4.3
above)
10.3 Indenture between Doskocil and First
Fidelity Bank, National Association, New
York, as Trustee (see Exhibit 4.4 above)
10.4 Amended and Restated Credit and Security
Agreement dated as of October 31, 1991,
among Doskocil and its subsidiaries,
Chemical Bank and the signatory banks
thereto
10.5 First Amendment to the Amended and Restated
Credit Agreement dated as of October 31,
1991
10.6 Second Amendment to Amended and Restated
Credit and Security Agreement dated on or
about February 12, 1992
10.7 Third Amendment to Amended and Restated
Credit and Security Agreement dated June 11,
1992
10.8 Fourth Amendment to Amended and Restated
Credit and Security Agreement dated
September 25, 1992
10.9 Fifth Amendment to Amended and Restated
Credit and Security Agreement dated
January 22, 1993
10.10 Sixth Amendment, Waiver and Consent to
Amended and Restated Credit and Security
Agreement dated March 5, 1993
10.11 Warrant Agreement dated as of October 31,
1991, between Doskocil and the signatory
banks thereto (see Exhibit 4.5 above)
10.12 Waiver Agreement dated March 5, 1993, by and
among Doskocil, Chemical Bank and the banks
signatory to the Warrant Agreement
10.13 Doskocil Companies Incorporated Retirement
and Profit Sharing Plan (see Exhibit 4.8
above)
10.14* Doskocil Companies Incorporated Annual
Incentive Plan
10.15* Doskocil Companies Incorporated 1992 Stock
Incentive Plan, as amended (see Exhibit 4.9
above)
10.16 Wilson Foods Corporation Retirement and
Profit Sharing Plan for Salaried Employees
of Wilson Foods Corporation effective
January 1, 1985, restated December 31, 1987
10.17* Employment Agreement dated November 1, 1991,
between Doskocil and John Hanes
10.18* Separation Agreement and Release dated
December 31, 1993 between Doskocil and John
Hanes
10.19* Employment Agreement dated November 1, 1991,
between Doskocil and Theodore A. Myers
10.20* Settlement Agreement dated July 6, 1993
between Doskocil and Theodore A. Myers
10.21* Form of Transition Employment Agreement
dated on or about December 17, 1991, between
Doskocil and Ronald W. Marsh, Thomas G.
McCarley, William L. Brady, David J. Clapp,
Raymond J. Haefele, Neil R. Johnson,
Charles I. Merrick, Darian B. Andersen,
Bryant P. Bynum, Joseph P. Baker, Lee C.
Harrison, William Kelly, James J. Krause,
T.D. Traver and Charles M. Sweeney
10.22 Lease by and between the City of South
Hutchinson, Kansas and Doskocil dated
August 1, 1985 (see Exhibit 4.10 above)
10.23 Lease dated November 4, 1991, between
Doskocil and American General Life and
Accident Insurance Company
10.24 Lease Agreement dated April 4, 1992, between
Doskocil and Millard Refrigerated Services-
Atlanta, as amended
10.25 Agreement between Wilson Foods Corporation
and the City of Cherokee, Iowa, dated
February 28, 1964, and First Amendment
thereto dated October 24, 1978; Second
Amendment thereto dated February 24, 1981;
and Third Amendment thereto dated August 18,
1983, covering water and sewage services
10.26 Agreement dated December 26, 1989, by and
between the City of Cherokee, Iowa and
Wilson Foods Corporation, covering water
rates
10.27 Equipment Lease Agreement between Wilson
Foods and MDFC Equipment Leasing
Corporation, dated May 20, 1992, and related
unconditional Guaranty executed by Doskocil
dated June 11, 1992, and Equipment Lease
Addendum to date
10.28 Stock Purchase Agreement by and between
Doskocil and JLL dated February 16, 1993
10.29 Waiver Agreement by and between Doskocil and
Chemical Bank dated March 5, 1993
10.30 Form of Indemnification Agreement between
Doskocil and its non-employee Directors
10.31 Agreement dated as of March 22, 1993, by and
between Joseph Littlejohn and Levy Fund,
L.P., The Airlie Group, L.P. and Doskocil
10.32 Stockholders Agreement dated as of March 22,
1993, by and between the Airlie Group, L.P.
and Doskocil
10.33* Separation Pay Plan, dated March 31, 1993
10.34 Consulting Agreement between Doskocil
Companies Incorporated and Richard N. Bauch,
dated January 18, 1993
10.35 Master Equipment Lease between Doskocil and
Cargill Leasing Corporation dated September
1, 1993
10.36 Stock Purchase Agreement between
International Multifoods Corporation and
Doskocil Companies Incorporated dated as of
March 17, 1994
11.1 Calculation of Earnings Per Share
20.1** Annual Report on Form 11-K with Respect to
Doskocil Employee Investment Plan
21.1 Subsidiaries of Doskocil
22.1** Proxy Statement for Annual Meeting of
Stockholders Scheduled to be Held June 2,
1994
23.1 Consent of Independent Accountants
_______________________
* Management contracts and compensatory plans or arrangements
** To be filed by amendment.
(b) Reports on Form 8-K.
None
[Download Table]
DOSKOCIL COMPANIES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Dollar amounts in thousands, except par value)
January 1, January 2,
1994 1993
__________ __________
ASSETS
Current assets:
Cash and cash equivalents (Note 10) $ 6,203 $ 9,312
Receivables 36,283 34,763
Inventories (Note 2) 39,984 38,930
Other current assets 2,101 3,726
________ ________
Total current assets 84,571 86,731
Property, plant and equipment - net of
accumulated depreciation and amortization
of $20,046 in 1993 and $10,381 in 1992
(Note 3) 77,678 81,294
Trademarks and tradenames, net of accumulated
amortization of $2,837 in 1993 and
$1,587 in 1992 22,163 23,413
Deferred charges and other assets (Note 7) 44,907 7,045
Reorganization value in excess of amounts
allocable to identifiable assets, net
of accumulated amortization of $11,090 in
1993 and $6,157 in 1992 (Note 1) 87,562 92,495
________ ________
$316,881 $290,978
======== ========
[Download Table]
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 2,330 $ 10,170
Accounts payable 10,357 7,657
Accrued liabilities (Note 4) 40,732 54,476
________ ________
Total current liabilities 53,419 72,303
Long-term debt (Note 5) 127,906 137,305
Other long-term liabilities (Note 8) 79,987 19,731
Commitments and contingencies (Note 9)
Stockholders' equity (Note 6):
Common stock, $.01 par value, 20,000,000
shares authorized, 7,918,343 and
5,887,500 shares issued and
outstanding, respectively 79 59
Capital in excess of par value 112,315 85,267
Retained earnings (deficit) (54,910) (22,891)
Minimum pension liability adjustment (1,575) -
________ ________
55,909 62,435
Unearned compensation (340) (796)
________ ________
Total stockholders' equity 55,569 61,639
________ ________
$316,881 $290,978
======== ========
<FN>
The accompanying notes are an integral part of the consolidated
financial statements.
[Download Table]
DOSKOCIL COMPANIES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data)
Pre-
Post-Confirmation Confirmation
______________________________________ ____________
Fiscal Year Fiscal Year Three Months Nine Months
Ended Ended Ended Ended
Jan. 1, Jan. 2, Dec. 28, Sept. 28,
1994 1993 1991 1991
___________ ___________ ____________ ____________
Net sales $648,207 $770,687 $208,691 | $611,529
Cost of sales 537,530 661,349 175,947 | 533,543
________ ________ ________ | ________
Gross profit 110,677 109,338 32,744 | 77,986
|
Operating expenses: |
Selling 60,930 58,920 16,341 | 44,201
General and administrative 26,567 27,215 6,114 | 20,762
Amortization of intangible |
assets 6,183 6,307 1,436 | 3,963
Provision for plant |
closings (Note 3) 500 32,000 - | -
________ ________ ________ | ________
Total 94,180 124,442 23,891 | 68,926
________ ________ ________ | ________
Operating income (loss) 16,497 (15,104) 8,853 | 9,060
|
Other income (expense): |
Interest and financing |
costs (13,849) (11,485) (3,795) | (16,594)
Other, net 178 112 (40) | 62
________ ________ ________ | ________
Total (13,671) (11,373) (3,835) | (16,532)
Income (loss) before reorgani- |
zation items, income taxes, |
extraordinary item and |
cumulative effect of a change |
in accounting principle 2,826 (26,477) 5,018 | (7,472)
Reorganization items (Note 6) - - - | (40,952)
Provision for income taxes |
(Note 7) (419) (357) (1,075) | -
________ ________ ________ | ________
Income (loss) before extra- |
ordinary item and cumulative |
effect of a change in |
accounting principle 2,407 (26,834) 3,943 | (48,424)
|
Extraordinary gain - |
forgiveness of debt (Note 6) - - - | 113,794
Cumulative effect on prior |
years (to January 2, 1993) |
of change in accounting for |
postretirement benefits |
other than pensions (Note 8) (34,426) - - | -
________ ________ ________ | ________
Net income (loss) $(32,019) $(26,834) $ 3,943 | $ 65,370
======== ======== ======== ========
(continued)
[Download Table]
DOSKOCIL COMPANIES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data)
Pre-
Post-Confirmation Confirmation
______________________________________ ____________
Fiscal Year Fiscal Year Three Months Nine Months
Ended Ended Ended Ended
Jan. 1, Jan. 2, Dec. 28, Sept. 28,
1994 1993 1991 1991
___________ ___________ ____________ ____________
|
Earnings (loss) per share - |
primary and fully diluted:<F1> |
Income (loss) before |
extraordinary item and |
cumulative effect of a |
change in accounting |
principle $ 0.32 $(4.63) $ 0.68 | $(9.46)
Extraordinary gain- |
forgiveness of debt - - - | 22.24
Cumulative effect of change |
in accounting for post- |
retirement benefits other |
than pensions (Note 8) (4.64) - - | -
_______ ______ ______ | ______
Net income (loss) $ (4.32) $(4.63) $ 0.68 | $12.78
======= ====== ====== ======
Weighted average number of
common and common equivalent
shares outstanding - primary
and fully diluted 7,419 5,790 5,790 5,116
<FN>
<F1> The per share amounts for the period ended September 28,
1991 do not provide meaningful comparisons due to the Company's Chapter
11 reorganization.
The accompanying notes are an integral part of the consolidated
financial statements.
[Enlarge/Download Table]
DOSKOCIL COMPANIES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(In thousands)
Minimum
Capital in Retained Pension Unearned
__Common Stock__ Excess of Earnings Treasury Liability Compen-
Shares Amount Par Value (Deficit) Stock Adjustment sation
______ _______ __________ _________ ________ __________ ________
Balance, December 29, 1990 6,092 $ 2,437 $100,763 $(63,575) $(8,591) $ - $ -
Net income for period through
September 28, 1991 (pre-
confirmation) - - - 65,370 - - -
Effects of reorganization
(Note 6):
"Fresh Start" adjustments - - (91,852) - - - -
Elimination of accumulated
deficit - - 1,795 (1,795) - - -
Cancellation of predecessor
shares (6,092) (2,437) (6,154) - 8,591 - -
Issuance of new shares 5,790 58 79,522 - - - -
______ _______ ________ ________ _______ _______ _______
Balance, September 28, 1991 5,790 58 84,074 - - - -
Net income for period from
September 29, 1991 (post-
confirmation) - - - 3,943 - - -
______ _______ ________ ________ _______ _______ _______
Balance, December 28, 1991 5,790 58 84,074 3,943 - - -
Net Loss - - - (26,834) - - -
Issuance of shares under
Stock Incentive Plan (Note 6) 98 1 1,193 - - - (1,193)
Amortization - - - - - - 397
______ _______ ________ ________ _______ _______ _______
Balance, January 2, 1993 5,888 59 85,267 (22,891) - - (796)
Net Loss - - - (32,019) - - -
Issuance of new shares (Note 6) 2,000 20 26,702 - - - -
Issuance of shares under
Stock Incentive Plan (Note 6) 30 - 346 - - - -
Minimum pension liability
adjustment - - - - - (1,575) -
Amortization - - - - - - 456
______ _______ ________ ________ _______ _______ _______
Balance, January 1, 1994 7,918 $ 79 $112,315 $(54,910) $ - $(1,575) $ (340)
====== ======= ======== ======== ======= ======= =======
<FN>
The accompanying notes are an integral part of the consolidated financial statements.
[Download Table]
Doskocil Companies Incorporated and Subsidiaries
Consolidated Statement of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
(Dollar amounts in thousands)
Pre-
Post-Confirmation Confirmation
______________________________________ ____________
Fiscal Year Fiscal Year Three Months Nine Months
Ended Ended Ended Ended
Jan. 1, Jan. 2, Dec. 28, Sept. 28,
1994 1993 1991 1991
___________ ___________ ____________ ____________
Cash flows from operating
activities: |
Net income (loss) $(32,019) $ (26,834) $ 3,943 | $ 65,370
Adjustments to reconcile |
income (loss) to net cash |
provided (used) by |
operating activities: |
Depreciation and |
amortization 16,015 17,786 4,483 | 18,591
Postretirement medical |
benefits 1,090 - - | -
Provision for plant |
closing and sale 500 32,000 - | -
Reorganization adjustments - - - | 30,265
Extraordinary gain - |
forgiveness of debt - - - | (113,794)
Cumulative effect of change |
in accounting for post- |
retirement benefits other |
than pensions 34,426 - - | -
Gain on sale of property, |
plant and equipment - - 142 | -
Changes in: |
Receivables (1,761) (860) 4,335 | (485)
Inventories (1,054) (257) 5,386 | 1,541
Other current assets 1,625 (109) 1,417 | 519
Deferred charges and |
other assets (609) - - | -
Income taxes payable (141) 182 936 | -
Accounts payable and |
accrued liabilities 1,441 (19,981) (5,561) | 6,365
Noncurrent liabilities (1,467) (862) (472) | -
Pre-petition liabilities - - - | (9,900)
Net cash provided (used) by |
discontinued operations - - (10) | 1,187
Other 92 23 - | 338
________ ________ _______ | ________
Net cash provided (used) by |
operating activities 18,138 1,088 14,599 | (3)
________ ________ _______ ________
(Continued)
[Enlarge/Download Table]
Doskocil Companies Incorporated and Subsidiaries
Consolidated Statement of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
(Dollar amounts in thousands)
Pre-
Post-Confirmation Confirmation
______________________________________ ____________
Fiscal Year Fiscal Year Three Months Nine Months
Ended Ended Ended Ended
Jan. 1, Jan. 2, Dec. 28, Sept. 28,
1994 1993 1991 1991
___________ ___________ ____________ ____________
Cash flows from investing |
activities: |
Purchase of property, plant |
and equipment (19,690) (6,604) (1,193) | (5,816)
Proceeds from sale of |
property, plant and equipment 14,900 10,271 179 | 2,453
Decrease in deferred |
charges and other assets 517 - - | -
Net cash used by Assets Held |
for Sale (16,914) (1,554) - | -
________ _______ _______ | _______
Net cash provided (used) by |
investing activities (21,187) 2,113 (1,014) | (3,363)
________ _______ _______ | _______
Cash flows from financing |
activities: |
Proceeds from debt obligations 214,220 94,282 31,000 | 80,800
Payments on capital lease and |
debt obligations (235,270) (98,816) (38,384) | (80,348)
Payment of debt issue costs (5,732) - - | -
Issuance of common stock 26,722 - - | -
Pre-petition debt obligations - - - | (4,986)
________ _______ _______ | _______
Net cash provided (used) by |
financing activities (60) (4,534) (7,384) | (4,534)
________ _______ _______ | _______
Increase (decrease) in cash |
and cash equivalents (3,109) (1,333) 6,201 | (7,900)
Cash and cash equivalents, |
beginning of period 9,312 10,645 4,444 | 12,344
________ _______ _______ | _______
Cash and cash equivalents, |
end of period $ 6,203 $ 9,312 $10,645 | $ 4,444
======== ======= ======= =======
<FN>
The accompanying notes are an integral part of the consolidated
financial statements.
DOSKOCIL COMPANIES INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 Description of Business and Summary of Significant
Accounting Policies
a. Description of Business:
The Company specializes in formulating, processing,
marketing and distributing specialty precooked
value-added meat, meat toppings, pepperoni, dry
sausage, cooked and value-added smoked boneless
hams, bacon, various delicatessen specialty meats
and other food products to the foodservice,
delicatessen and retail markets. In addition,
management of the Company believes that the Company
is a leading supplier of beef and pork toppings and
pepperoni to the pizza foodservice market. The
Company supplies its products to grocery and
independent delicatessens, and numerous restaurant,
food processor and institutional customers.
The Company's annual reporting period ends on the
Saturday nearest December 31. Accordingly, the
annual reporting period ended January 1, 1994
contained 52 weeks, the annual reporting period
ended January 2, 1993 contained 53 weeks, the
reporting period for the three months ended
December 28, 1991 contained 13 weeks and the
reporting period for the nine months ended
September 28, 1991 contained 39 weeks.
b. Principles of Consolidation:
The consolidated financial statements include the
accounts of Doskocil Companies Incorporated
("Doskocil") and all of its subsidiaries. All
significant intercompany accounts and transactions
have been eliminated.
c. Inventories:
Inventories are valued at the lower of cost
(first-in, first-out) or market. The Company
periodically enters into livestock futures
contracts as deemed appropriate to reduce the risk
of future price increases. These futures contracts
are accounted for as hedges. Accordingly,
resulting gains or losses are deferred and
recognized as part of the product cost and included
in cash flows from operating activities in the
Consolidated Statement of Cash Flows.
d. Property, Plant and Equipment:
Property, plant and equipment are stated at cost if
acquired after September 28, 1991 (See Note 6).
Depreciation and amortization are provided using
the straight-line method over either the estimated
useful lives of the related assets (3 to 40 years)
or, for capital leases, the terms of the related
leases. Betterments, renewals and extraordinary
repairs that extend the life of the asset are
capitalized; other repairs and maintenance are
expensed. Upon sale, retirement or other
disposition, the cost and related accumulated
depreciation are removed from the respective
accounts, and any resulting gain or loss is
recognized in income.
Interest incurred to finance significant
construction projects is capitalized as part of the
cost of such projects. During fiscal 1993,
interest of approximately $273,000 was capitalized.
During fiscal 1992 and fiscal 1991, no interest was
capitalized.
e. Intangible Assets:
Trademarks and tradenames are amortized on the
straight-line method over 20 years.
f. Deferred Charges:
Deferred loan costs associated with various debt
instruments issued in 1993 are being amortized over
the terms of the related debt using the straight
line or interest method as appropriate. At January
1, 1994, $5.1 million remained to be amortized over
future periods. Amortized expense for these loans
included in interest expense for fiscal 1993 was
approximately $627,000.
g. Reorganization Value in Excess of Amounts Allocable to
Identifiable Assets:
Based on the allocation of reorganization value in
conformity with the procedures specified by SOP
90-7, the portion of the reorganization value which
cannot be attributed to specific tangible or
identifiable intangible assets of the reorganized
Company has been reported as "Reorganization Value
in Excess of Amounts Allocable to Identifiable
Assets" ("Reorganization Value") and is amortized
using the straight-line method over 20 years.
The Company continually reevaluates the propriety
of the carrying amount of the Reorganization Value
and other intangibles as well as the amortization
period to determine whether current events and
circumstances warrant adjustments to the carrying
value and/or revised estimates of useful lives.
At this time, the Company believes that no
significant impairment of the Reorganization Value
and other intangibles has occurred and that no
reduction of the estimated useful lives is warranted.
h. Earnings (Loss) Per Common Share:
Primary and fully diluted earnings (loss) per share
are computed by dividing net income (loss) by the
weighted average number of common and common
equivalent shares outstanding during each period.
Options, warrants and convertible subordinated
debentures which have a dilutive effect are
considered in the per share computations.
Management believes that, because of the effects of
the reorganization described in Note 6, the
earnings (loss) per common share amounts do not
provide meaningful comparisons for periods prior to
the date of reorganization.
i. Presentation:
The statements of operations, stockholders' equity
and cash flows for the fiscal years ended January
1, 1994 and January 2, 1993 and the three months
ended December 28, 1991 are those of a new
reporting entity and have been prepared on a basis
not comparable to prior periods (See Note 6).
j. Reclassifications:
Certain prior year balances have been reclassified
to conform to the current year's presentation.
Note 2 Inventories
Inventories at January 1, 1994 and January 2, 1993 are
summarized as follows (in thousands):
__1993_ __1992_
Raw materials and supplies $ 8,176 $ 7,586
Work in process 6,254 6,796
Finished goods 25,554 24,548
_______ _______
$39,984 $38,930
======= =======
Note 3 Property, Plant and Equipment
Property, plant and equipment at January 1, 1994 and January
2, 1993 is summarized as follows (in thousands):
__1993__ _1992__
Land $ 630 $ 690
Buildings and improvements 33,172 30,702
Machinery and equipment 49,134 41,301
Construction in progress 11,924 1,118
________ _______
94,860 73,811
Less accumulated depreciation and
amortization 20,046 10,381
________ _______
74,814 63,430
Assets held for sale, net 2,864 17,864
________ _______
$ 77,678 $81,294
======== =======
Assets held for sale represents facilities that have been
determined to be excess property and have been closed. In
December 1993 the Company sold its Logansport, Indiana facility.
In December 1992, the Company announced the closing of this
facility and recorded a $32.0 million provision as its estimate
of the related loss on sale of assets, costs of employee
severance compensation and benefits and results of operations
during the holding period. No gain or loss resulted in
connection with this sale.
In January 1994, the Company sold all the assets of its
processed food equipment manufacturing division at South
Hutchinson, Kansas. A provision for loss was made in 1993 for
$500,000 in connection with the decision to sell the unit.
Note 4 Accrued Liabilities
Accrued liabilities at January 1, 1994 and January 2, 1993
are summarized as follows (in thousands):
__1993_ __1992_
Interest $ 5,634 $ 126
Salaries, wages and payroll taxes 5,549 7,241
Employee medical benefits 7,299 3,423
Workers' compensation benefits 4,249 8,043
Post employment benefits 2,209 2,169
Marketing expenses 2,588 2,476
Provision for facility restructuring and
holding costs 6,552 18,016
Reorganization expenses 1,852 7,244
Other 4,800 5,738
_______ _______
$40,732 $54,476
======= =======
Note 5 Long-term Debt
Long-term debt, more fully described below, at January 1,
1994 and January 2, 1993 consisted of the following (in
thousands):
__1993__ __1992__
Notes payable to banks $ 8,000 $137,133
Industrial revenue bonds and mortgage notes 6,077 4,010
9 3/4% Senior Subordinated Redeemable Notes
due 2000, net of discount 109,627 -
Capital lease obligations 6,532 6,332
________ ________
130,236 147,475
Less current maturities 2,330 10,170
________ ________
$127,906 $137,305
======== ========
Based on the borrowing rates currently available to the
Company for bank borrowings, industrial revenue bonds and
mortgage notes, with similar terms and average maturities, the
Company believes that the carrying amount of these long term
debts approximates face value. The fair value of the 9 3/4%
Senior Subordinated Redeemable Notes due 2000 (the "Senior
Subordinated Notes") based on the quoted market price
approximates the carrying amount of $109.6 million.
The aggregate amounts of all long-term obligations which
become due during each of the next five fiscal years, excluding
obligations under capitalized leases, are as follows (in
millions): $0.8 in 1994, $1.1 in 1995, $0.8 in 1996, $0.9 in 1997
and $8.9 in 1998.
On April 28, 1993, the Company consummated a new $40.0
million secured revolving working capital facility (the "1993
Credit Agreement") provided by Chemical Bank as managing agent.
See "Notes Payable to Banks" below. Additionally and
concurrently, the Company completed the issuance of $110.0
million of the Senior Subordinated Notes. See "Senior
Subordinated Notes" below. The proceeds from these transactions
were used to repay all amounts then outstanding under the Amended
and Restated Credit and Security Agreement with Chemical Bank
entered into in 1991 (the "1991 Credit Agreement"). Retirement
of the 1991 Credit Agreement eliminated all of the Company's
restrictions under that secured credit facility.
Notes Payable to Banks
The 1993 Credit Agreement makes available a revolving credit
loan facility in the aggregate principal amount of up to $40.0
million and ranks senior in right of payment to the Senior
Subordinated Notes. The 1993 Credit Agreement includes a $5.0
million subfacility for standby and trade letters of credit. The
1993 Credit Agreement is collateralized by a first priority
security interest in all of the accounts receivable and inventory
of the Company. Borrowings under the 1993 Credit Agreement bear
interest at an annual rate equal to, at the Company's option,
either (i) Chemical Bank's Base Rate (as defined in the 1993
Credit Agreement) plus 1 1/2% or (ii) the Eurodollar Rate (as
defined in the 1993 Credit Agreement) plus 2 1/2%. Interest on
the borrowings under the 1993 Credit Agreement is payable
periodically in arrears, and the 1993 Credit Agreement is due and
payable in full no later than April 28, 1998. Borrowings under
this agreement total $8.0 million at January 1, 1994 at an
interest rate of 7.5%.
In 1991, concurrent with consummation of the 1991 Credit
Agreement, the Company entered into an interest rate swap
agreement with a notional amount of $35 million at January 1,
1994 ($40 million at January 2, 1993) to reduce the impact of
changes in interest rates on its floating rate notes payable to
banks. The termination date for this agreement is April 1, 1997.
This agreement, which effectively caps interest rates at 7.85%,
involves the exchange of floating rate for fixed rate interest
payment obligations. The net effect of this transaction is
included in interest expense.
The 1993 Credit Agreement and the Senior Subordinated Notes
contain certain restrictive covenants and conditions among which
are limitations on further indebtedness, restrictions on
dispositions and acquisitions of assets, limitations on dividends
and compliance with certain financial covenants, including but
not limited to minimum net worth and interest expense coverage.
Senior Subordinated Notes
The Senior Subordinated Notes mature on July 15, 2000, and
interest is payable on January 15 and July 15 of each year. The
Senior Subordinated Notes are redeemable at the option of the
Company, in whole or in part, at any time on or after July 15,
1998. If the Senior Subordinated Notes are redeemed during the
12-month period beginning July 15, 1998, the redemption price
(expressed as a percentage of principal amount) will be 103.0%,
and if they are redeemed during the 12-month period beginning
July 15, 1999, the redemption price will be 101.5%. The Senior
Subordinated Notes are unsecured and subordinated to all existing
and future senior indebtedness of the Company, including
borrowings under the 1993 Credit Agreement. The balance at
January 1, 1994, is net of unamortized bond discount of $0.4
million.
Industrial Revenue Bonds and Mortgage Notes
In July 1993, the Company entered into an agreement with the
Arkansas Development Finance Authority to borrow $4.0 million
using industrial revenue bonds. The interest rate is 6%.
Payments of approximately $58,000, principal and interest, are
due monthly starting August 1993 through July 2000. In addition,
the Company entered into a note payable of approximately $1.8
million collateralized by a mortgage with the City of Forrest
City, Arkansas. The interest rate on the note is 7%. Interest
only for the first year is due in July 1994 and quarterly
payments of principal and interest beginning in September 1994
are due through September 2000.
At January 1, 1994, a total of $2.2 million of the
outstanding debt remained in an escrow account from the Arkansas
Development Finance Authority and the City of Forrest City in
connection with construction of the production facility at that
site. This is included in "Deferred Charges and Other Assets" on
the balance sheet.
Other industrial revenue bonds require annual principal
payments of approximately $0.3 million on August 1, 1994 and
1995. Interest at the rate of 7.31% is due semi-annually on
February 1 and August 1.
All mortgage notes outstanding at January 2, 1993, were paid
in 1993 in connection with the sale of the Logansport facility
(See Note 3).
Leases
The Company leases certain facilities, equipment and
vehicles under agreements which are classified as capital leases.
The building leases have original terms ranging from 20 to 25
years and have renewal options for varying periods ranging from
three years to 60 years. Leased capital assets included in
property, plant and equipment at January 1, 1994 and January 2,
1993 are as follows (in thousands):
__1993_ _1992_
Buildings $ 2,666 $2,666
Machinery and equipment 6,669 5,374
_______ ______
9,335 8,040
Accumulated amortization 2,385 1,022
_______ ______
$ 6,950 $7,018
======= ======
Future minimum payments, by year and in the aggregate, under
noncancellable capital leases and operating leases with initial
or remaining terms of one year or more consist of the following
at January 1, 1994 (in thousands):
Capital Operating
Leases Leases
_______ _________
1994 $1,990 $ 2,573
1995 1,930 2,227
1996 1,816 2,149
1997 988 2,156
1998 293 2,154
Future years 921 4,501
______ _______
Total minimum lease payments 7,938 $15,760
Amounts representing interest 1,406 =======
______
Present value of net minimum
payments 6,532
Current portion 1,485
______
$5,047
======
Noncash investing and financing activities which are not
reflected in the statement of cash flows include capital lease
transactions totaling $1.6 million, $2.9 million, none, and $.5
million for the years ended January 1, 1994 and January 2, 1993,
the three months ended December 28, 1991 and the nine months
ended September 28, 1991, respectively.
The Company's rental expense for operating leases was (in
millions) $4.0, $3.0, $1.0 and $3.0 for the fiscal years ended
January 1, 1994 and January 2, 1993, the three months ended
December 28, 1991 and the nine months ended September 28, 1991.
Note 6 Common Stock
On March 22, 1993, the investment firm of Joseph Littlejohn
& Levy Fund, L.P. ("JLL") purchased from the Company two million
newly-issued shares of common stock at $15.00 per share. The
Company used the net proceeds from the sale to repay indebtedness
under the 1991 Credit Agreement. As a result of this purchase,
JLL owned approximately 25% of the Company's outstanding common
stock. Pursuant to the JLL stock purchase agreement, JLL may
increase its holdings to 33% by purchasing additional shares in
open-market or privately negotiated transactions or from the
Company from time to time. As a result of subsequent open market
purchases, at January 1, 1994, JLL owned approximately 27.4% of
the Common Stock. JLL holds the Company's common stock subject
to certain restrictions. The pro forma loss per share for the
year ended January 1, 1994, assuming the JLL agreement was signed
as of the beginning of fiscal 1993, is $4.08.
At the Company's annual meeting of shareholders held on June
10, 1993, the Company's shareholders approved a proposal to amend
the Company's Amended and Restated Certificate of Incorporation
to authorize four million shares of preferred stock. At the same
meeting, the Company's shareholders approved a proposal to
increase the aggregate number of shares of common stock available
under the Company's 1992 Stock Incentive Plan from 510,000 to
810,000. On February 5, 1993, the Company filed an amendment to
the Certificate of Incorporation increasing its number of
authorized shares of common stock to 20,000,000.
Plan of Reorganization
On September 26, 1991, the Bankruptcy Court confirmed the
Third Amended Joint Plan of Reorganization for Doskocil Companies
Incorporated and Chapter 11 Affiliates, as Modified (the "Plan of
Reorganization"), and the Company emerged from Chapter 11 on
October 31, 1991 (the "Effective Date"). For accounting
purposes, the Plan of Reorganization was deemed to be effective
as of September 28, 1991, the end of the Company's third quarter.
In conjunction with the emergence from Chapter 11 bankruptcy
proceedings, Doskocil and its direct and indirect subsidiaries
(collectively, the "Company") implemented Fresh Start Reporting
as set forth in Statement of Position 90-7, "Financial Reporting
by Entities in Reorganization Under the Bankruptcy Code" ("SOP
90-7"), issued by the American Institute of Certified Public
Accountants. Accordingly, all assets and liabilities were
restated to reflect their reorganization value, which
approximated fair value.
Pursuant to the Plan of Reorganization, Doskocil's shares of
common stock that were outstanding prior to the effective date
(the "Canceled Common Stock" or "Predecessor Common Stock") were
canceled. Also pursuant to the Plan of Reorganization, Doskocil
was to issue 6,000,000 shares of its new common stock, par value
$.01 (the "Common Stock") to holders of unsecured claims, to
holders of Canceled Common Stock and pursuant to employee
incentive plans. Of these shares of Common Stock, 92%, or
5,520,000 shares, were issued to the unsecured creditors of
Doskocil or its subsidiaries on January 14, 1992. In
connection with the reorganization the Company recognized
forgiveness of debt of $113.8 million and expensed $41.0 million
in reorganization items.
The holders of shares of the Canceled Common Stock have
received 4.5%, or 270,000 shares, of Common Stock. The remaining
3.5%, or 210,000 shares, of Common Stock were reserved for
issuance in connection with employee incentive programs, of which
128,340 shares were issued as of January 1, 1994.
Pursuant to the Plan of Reorganization, Doskocil entered
into a warrant agreement dated as of October 31, 1991 with the
1991 Credit Agreement Bank Group (the "Bank Group") (the "Current
Warrant Agreement") wherein Doskocil agreed to issue warrants to
the Bank Group to purchase up to 3% of the shares of Common Stock
at $17.53 per share, subject to certain anti-dilution provisions.
The warrants may be exercised through December 31, 1998. At
January 1, 1994, the Bank Group held warrants to purchase 193,454
shares. The Current Warrant Agreement also provides the holders
of the warrants an irrevocable put option, which obligates
Doskocil to repurchase the warrants at a price per warrant equal
to the difference between (i) the then-current market price per
share of Common Stock, and (ii) $17.53, which may be exercised by
each of the holders of the warrants only upon a Change of
Control, as defined in the Current Warrant Agreement.
Note 7 Income Taxes
Beginning with the first quarter of 1993, the Company was
required to adopt the provisions of Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("FAS
109"). This new standard is based on a liability approach rather
than an income statement approach and requires deferred tax
assets and liabilities to be recognized based on the difference
between the tax basis of assets and liabilities and their
financial reporting amounts measured by using presently enacted
tax laws and rates. Deferred tax assets primarily result from
operating loss carryforwards and certain accrued liabilities, and
deferred tax liabilities result from the recognition of
depreciation in different periods for financial reporting and
income tax purposes. Valuation allowances are established where
necessary to reduce deferred tax assets to the amount expected to
be realized. Income tax expense results from the income tax
payable for the year and the change during the year in deferred
tax assets and liabilities. Implementing the new standard
resulted in the Company recording a deferred tax benefit of
approximately $31.0 million for deductible temporary differences
consisting primarily of future retiree medical benefit
obligations and pension obligations. The Company provided a
valuation allowance of approximately $51.7 million for the
remaining deductible temporary differences and NOLs. In
determining the valuation allowance, the Company considered prior
years' taxable income before utilization of NOLs and projected
taxable income during the next four years. A similar
determination of the valuation allowance was performed at the end
of the year. The $31.0 million is included in Deferred Charges
and Other Assets on the balance sheet.
The provision for income taxes on continuing operations
consists of the following components (in thousands):
[Download Table]
Pre-
Post-Confirmation Confirmation
________________________________________ ____________
Fiscal Year Fiscal Year Three Months Nine Months
Ended Ended Ended Ended
Jan. 1, Jan. 2, Dec.28, Sept. 28,
1994 1993 1991 1991
___________ ___________ ____________ ____________
(Liability
Method) (Deferred Method)
___________ _________________________________________
Current:
Federal $ 44 $ 118 $ - | $ -
State 375 239 139 | -
______ ______ ______ | ______
$ 419 $ 357 $ 139 | $ -
====== ====== ====== | ======
|
Deferred: |
Federal $ - $ - $ 936 | $ -
State - - - | -
______ ______ ______ | ______
$ - $ - $ 936 | $ -
====== ====== ====== ======
The effective tax rate on income from continuing operations
before extraordinary item and cumulative effect of a change in
accounting principle differs from the statutory rate as follows:
[Download Table]
Pre-
Post-Confirmation Confirmation
________________________________ ____________
Fiscal Fiscal Three Nine
Year Year Months Months
Ended Ended Ended Ended
Jan. 1, Jan. 2, Dec. 28, Sept. 28,
1994 1993 1991 1991
_______ _______ ________ _________
(Liability
Method) (Deferred Method)
__________ _________________________________
Statutory rate 34.0% (34.0)% 34.0% | 34.0%
Tax effect of: |
Items relating to: |
Business acquisitions - - - | 1.1
Fresh Start Reporting - (15.7) (25.1) | -
Amortization of |
intangible assets 74.4 8.1 9.7 | 1.8
State taxes, net of |
federal benefit 8.7 .9 1.8 | -
Nontaxable forgiveness |
of debt - - - | (57.2)
Alternative minimum tax 1.6 .4 - | -
Limitation on recog- |
nition of tax benefit - 41.6 - | 20.3
Benefit of deductible |
temporary differences (103.9) - - | -
Other - - 1.0 | -
_____ ____ ____ | ____
14.8% 1.3% 21.4% | - %
===== ==== ==== ====
At January 1, 1994 the deferred tax assets and deferred tax
liabilities were as follows (in thousands):
Deferred tax assets:
Retiree medical benefit plan accruals $26,521
Pension plan accruals 6,524
Plant closing accruals 2,621
Employee compensation and benefits accruals 3,552
Other accrued expenses 5,286
Net operating loss carryforwards 54,880
_______
Total deferred tax assets 99,384
_______
Deferred tax liabilities:
Capitalized leases (167)
Accumulated depreciation (7,613)
Intangible assets (8,865)
Other (78)
_______
Total deferred tax liabilities (16,723)
_______
Net deferred tax assets 82,661
Valuation allowance (51,723)
_______
Net deferred tax assets $30,938
=======
Prior to the adoption of FAS 109, items relating to business
acquisitions and Fresh Start Reporting include amortization of
intangibles, payments currently deductible for tax purposes
previously charged to expense for financial reporting purposes,
and depreciation on the excess of fair value of assets and
liabilities acquired over the underlying tax basis of such
assets.
At January 1, 1994, after considering utilization
restrictions, the Company's tax loss carryforwards approximated
$133.0 million. In accordance with the provisions of SOP 90-7,
benefits realized from preconfirmation net operating loss
carryforwards are being used to reduce Reorganization Value in
Excess of Amounts Allocable to Identifiable Assets until such net
operating loss carryforwards are exhausted. The net operating
loss carryforwards are subject to utilization limitations due to
ownership changes. The net operating loss carryforwards may be
utilized to offset future taxable income as follows: $77.9
million in 1994, $13.3 million in each of years 1995 through
1998, and $1.9 million in 1999. Loss carryforwards not utilized
in the first year that they are available may be carried over
and utilized in subsequent years, subject to their expiration
provisions. These carryforwards expire as follows: $43.6 million
in 1996, $17.5 million in 1998, $6.0 million in 1999, $.8 million
in 2000 and $65.1 million during the years 2001 through 2008.
Note 8 Employee Benefit Plans
The Company and certain subsidiaries maintain employee
benefit plans covering most employees. Effective July 1, 1993,
the Company merged the Retirement and Profit Sharing Plan for
Salaried Employees of Wilson Foods Corporation and the 401K plan
of Wilson Foods into the Doskocil Employee Investment Plan, made
amendments and renamed the combined plan the Doskocil Retirement
and Profit Sharing Plan (the "401(k) Plan"). All eligible
employees under the predecessor plans were grandfathered into the
401(k) Plan. All full-time employees of Doskocil and its
subsidiaries who have obtained the age of 21, have completed one
year of employment and are not subject to a collective bargaining
agreement are permitted to contribute up to 15% of their salary
to the 401(k) Plan. The Company makes contributions on behalf
of each participant of a matching amount up to an employee
contribution of 3% of such employee's salary. Employees are
fully vested at all times with respect to their contributions and
become 100% vested as to the Company's contributions on their
behalf at the end of three years participation in the 401(k)
Plan. Upon severance from service with the Company, participants
are entitled to a single lump sum distribution of their vested
interest in the 401(k) Plan.
Substantially all of the hourly employees at both Wilson
Foods Corporation ("Wilson Foods") and Stoppenbach, Inc.
("Stoppenbach"), subsidiaries of Doskocil, participate in either
defined benefit pension plans or a multiemployer plan.
Information presented below includes benefits and Company
obligations associated with participants of closed and sold
operations. The funded status of the defined benefit plans at
January 1, 1994 and January 2, 1993 is as follows (in thousands):
1993 1992
_______ _______
Actuarial present value of benefit
obligations:
Vested benefit obligation $66,137 $62,522
======= =======
Accumulated benefit obligation $67,760 $64,457
======= =======
Projected benefit obligation $67,838 $64,457
Plan assets at fair value 51,910 49,624
_______ _______
Projected benefit obligation
in excess of plan assets 15,928 14,833
Unrecognized net actuarial loss -
difference in assumptions and actual
experience (1,653) (337)
Adjustment required to recognize
additional minimum liability 1,575 -
_______ _______
Accrued pension cost $15,850 $14,496
======= =======
For the plan covering hourly employees of Stoppenbach, plan
assets consist of pooled separate accounts managed by an
insurance company. The pooled separate accounts are real estate,
long-term growth stock, public bonds and intermediate term bonds.
For the defined benefit pension plans covering hourly employees
of Wilson Foods, plan assets are comprised of cash and cash
equivalents and mutual funds investing primarily in interest
bearing and equity securities. The funding policy for the Wilson
Foods plan is to contribute amounts sufficient to meet the
minimum funding requirements of the Employee Retirement Income
Security Act of 1974 (ERISA), and the Stoppenbach plan is funded
based upon a recommendation from the Company's actuary. Such
contributions have, in prior years, exceeded the minimum funding
requirements.
Certain of the Company's employees, substantially all of
whom were employed at the Logansport, Indiana facility prior to
its closing and sale, were covered by a union-sponsored,
collectively-bargained multiemployer pension plan. Contributions
to the multiemployer plan were based upon collectively-bargained
agreements and were approximately $30,000, $43,000, $17,000 and
$56,000 for fiscal years 1993 and 1992, the three months ended
December 28, 1991 and the nine months ended September 28, 1991,
respectively.
Pension costs of the defined benefit plans for fiscal 1993,
1992 and 1991 are composed of the following components, based on
expected long-term rates of return of 9.0%, 9.0% and 9.0% and
discount rates of 7.5%, 6.5% and 8.0% for the Stoppenbach plan
and expected long-term rates of return of 8.5%, 8.5% and 8.5% and
discount rates of 7.5%, 8.5% and 8.5% for the Wilson Foods plan
(in thousands):
[Download Table]
January 1, January 2, December 28,
___1994___ ___1993___ ____1991____
Service cost for benefits
earned during the year $ 304 $ 620 $ 618
Interest cost on projected
benefit obligation 5,104 4,796 4,792
Return on plan assets (3,667) (3,476) (3,301)
Amortization of transition
obligation and unrecognized
prior service cost 41 52 245
______ ______ ______
Total pension cost $1,782 $1,992 $2,354
====== ====== ======
Expenses for all of the Company's pension benefit plans for
fiscal years 1993 and 1992, the three months ended December 28,
1991 and the nine months ended September 28, 1991, were (in
millions) $3.0, $3.4, $1.3, and $2.3, respectively.
In 1981, Wilson Foods received approval to fund its 1980
plan year minimum funding standard for its hourly defined benefit
plan in 15 equal annual amounts, with interest. The terms of the
plan provide that if any increase in plan benefits is adopted,
any remaining amount due must then be paid. At January 1, 1994
and January 2, 1993, $0.8 million and $1.1 million, respectively,
remained to be paid under the terms of the agreement.
Wilson Foods provides life insurance and medical benefits
("Postretirement Medical Benefits") for substantially all retired
hourly and salaried employees under various defined benefit
plans, which prior to fiscal 1993 had been accounted for on the
pay-as-you-go method since the beginning of the fourth quarter of
1991. Contributions are made by certain retired participants
toward their Postretirement Medical Benefits.
During the first quarter of 1993, the Company adopted a new
accounting standard, Statement of Financial Accounting Standards
No. 106, "Employers' Accounting for Postretirement Benefits Other
Than Pensions" ("FAS 106"). FAS 106 requires employers to
account for postretirement retiree medical benefits under the
accrual, rather than the pay-as-you-go, method of accounting,
such that the expected benefits to be paid in future years are
recorded during the period in which the employee renders the
service necessary to qualify for those benefits. FAS 106 also
requires an employer to amortize over a period of years the
benefits earned in prior years or, alternatively, to record the
total prior service obligation on the date FAS 106 is adopted as
a one-time charge to earnings.
Upon adoption of the new accounting standard and in
accordance with the standard's provisions, the Company recorded,
in the first quarter of 1993, a one-time, noncash charge for the
cumulative effect of the change in accounting principle of $34.4
million, a deferred tax benefit of approximately $31.0 million
and a liability of $65.4 million for Postretirement Medical
Benefits. The obligation as of the beginning of fiscal 1993
represents the discounted present value of accumulated retiree
benefits, other than pensions, attributed to employees' service
rendered prior to that date. The net increase in the
Reorganization Value in Excess of Amounts Allocable to
Identifiable Assets represents the Postretirement Medical
Benefits considered in the determination of the Reorganization
Value. The effect of adopting FAS 106 for the year ended January
1, 1994 was to increase net periodic postretirement benefit cost
and decrease earnings before cumulative effect of accounting
change by $1.1 million ($0.15 per share) and increase net loss by
$35.5 million ($4.79 per share). Postretirement benefit cost was
$4.4 million for the year ended January 2, 1993 and $1.0 million
for the three months ended December 28, 1991 which were recorded
on the pay-as-you-go basis.
The components of net periodic postretirement benefit cost
for the year ended January 1, 1994 were as follows (in
thousands):
Year
Ended
Jan. 1,
1994
_______
Service cost $ 343
Interest on accumulated benefit obligation 5,719
______
Net periodic postretirement benefit cost $6,062
======
The actuarial and recorded liabilities for these
Postretirement Medical Benefits at January 1, 1994 were as
follows (in thousands):
Accumulated postretirement benefit obligation:
Retirees $61,005
Active plan participants 12,829
_______
73,834
Assets (307)
_______
Accumulated postretirement benefit obligation
in excess of plan assets 73,527
Unrecognized net loss (7,477)
Unrecognized prior service cost 403
_______
Liability recognized on the balance sheet 66,453
Less current portion 4,759
_______
Noncurrent liability for postretirement
medical benefits $61,694
=======
For measuring the accumulated postretirement medical benefit
obligation, an 11.0% annual rate of increase in the per capita
claims cost was assumed for 1994. This rate was assumed to
decrease gradually to 10.5% for 1995, to 8.9% for 2000, to 7.7%
for 2005, and to 6.5% for 2010 and remain at that level
thereafter. The weighted average discount rate used in
determining the accumulated obligation was 7.5%. The expected
long-term rate of return on plan assets was 8.5%.
If the health care cost trend rate were increased 1.0%, the
accumulated benefit obligation as of January 1, 1994 would have
increased by $2.1 million. The effect of this change on the
aggregate of service and interest cost for the year ended January
1, 1994 would be an increase of $0.2 million.
In February 1992, the board of directors adopted the 1992
Stock Incentive Plan (the "Plan"), which authorizes the
compensation committee to grant stock options and/or Common Stock
aggregating 510,000 shares to directors, officers and other key
employees. In June 1993 the Plan was amended to increase the
aggregate number of shares to 810,000.
The compensation committee granted 105,000 restricted shares
(7,500 shares were subsequently canceled), one-third of which
vest annually, beginning January 1, 1993, and 105,000 performance
shares (7,500 shares were subsequently canceled) which vest
annually over three years based upon the attainment of targeted
earnings. In February 1993 the compensation committee approved
the vesting of 16,250 performance shares. The compensation
committee also granted 262,500 Common Stock options (22,500 of
which were subsequently canceled) at option prices ranging from
$13.00 to $14.38 per share. The options started to become
exercisable, one-third annually, beginning in February 1993.
Statement of Financial Accounting Standards No. 112
"Employer's Accounting for Postemployment Benefits" is effective
for fiscal years beginning after December 15, 1993. The Company
generally does not provide postemployment benefits, other than
workers compensation payments, the costs of which are estimated
and accrued as the events occur, accordingly, implementation of
this statement is not expected to have a material effect on the
Company's financial condition or results of operations.
Note 9 Commitments and Contingencies
The Company's subsidiary, Wilson Foods, is committed, or
contingently liable, to make payments for a fixed number of years
to various municipalities in connection with obtaining financing
for construction costs incurred in providing facilities adequate
to meet water and sewage needs at several plants. Required
payments for these services are $186,693 and $171,105 for years
1994 and 1995, respectively, for a total commitment of $357,798
at January 1, 1994, of which $35,274 represents interest.
In September 1992, United Refrigerated Services, Inc.
("URS") filed a suit captioned United Refrigerated Services, Inc.
v. Wilson Foods Corp., et al., in the Circuit Court of Saline
County, Missouri, against Wilson Foods and unaffiliated parties
Normac Foods, Inc. ("Normac") and Thompson Builders of Marshall,
Inc. ("Thompson"). The suit arose from claimed damages that
resulted from a fire in the URS warehouse in Marshall, Missouri.
In the suit URS claims damages of approximately $6.3 million for
loss of real property, $1.4 million for loss of personal
property, $1.5 million for lost profits from business
interruption and $0.5 million for other damages and seeks up to a
treble of $6.3 million, for waste to the real property in
addition to the other losses. Wilson Foods' answer counterclaims
against URS and has cross claimed against codefendants for
indemnity and/or contribution. The fire occurred in a part of
the URS warehouse being leased by Wilson Foods in which Wilson
Foods had produced sausage patties under contract for codefendant
Normac until termination of that contract in September 1991.
Normac's contractor, Thompson, was removing Normac's equipment
with a torch when fire broke out and destroyed a large section of
the URS warehouse and its contents.
In addition, in 1993, the following separately filed suits
arising out of the same facts were brought in the same court, all
of which were consolidated in November 1993: (1) Doskocil (as
Wilson Foods' parent corporation) and Sara Lee Corporation vs.
URS, Normac, Thompson and Chemidyne Corporation (that is in the
cleaning service business); (2) ConAgra, Inc. vs. Wilson Foods,
Doskocil, Normac and Thompson; and (3) Midland Foods
Distribution, Inc. vs. URS, Wilson Foods, Normac and Thompson,
claiming property damage (however Midland moved for voluntary
dismissal without prejudice in February 1994).
In a separate action, Normac has brought a declaratory
judgment action against Wilson Foods' liability insurance
carriers in the United States District Court for the Southern
District of Oklahoma seeking to have such carriers cover Normac
for any liability arising out of the fire described above.
Wilson Foods has substantial defenses to these pending and
threatened claims and the Company believes it is not likely that
Wilson Foods will ultimately incur a loss in excess of its
insurance coverage.
In the opinion of management, other than the matters
discussed above and other matters that may arise as a result of
the Chapter 11 filings, the Company's liability, if any, under
various claims and legal actions arising in the normal course of
business, that are not covered by insurance, will be immaterial.
Note 10 Cash Equivalents and Supplemental Cash Flow Information
The Company considers cash equivalents to include all
investments with a maturity at date of purchase of 90 days or
less. Cash equivalents of $6.0 million at January 1, 1994 and
January 2, 1993 represent investments primarily in U.S.
Government Securities, carried at cost, which approximates
market.
Cash payments for 1993 included interest, net of capitalized
interest, of $8.4 million, taxes of $0.8 million and Chapter 11
reorganization professional services and financing fees of $0.3
million. Cash payments for 1992 included interest of $13.8
million, taxes of $175,000 and Chapter 11 reorganization
professional services and financing fees of $6.2 million. Cash
payments during the three months ended December 28, 1991
(post-confirmation), included interest of $3.9 million and
Chapter 11 reorganization professional services and financing
fees of $3.5 million. No income taxes were paid. Cash
payments during the nine months ended September 28, 1991 (pre-
confirmation), included interest of $14.7 million, taxes of
$32,000 and Chapter 11 reorganization professional services and
financing fees of $10.1 million. Additionally, reorganization
items for the nine months ended September 28, 1991, included
charges of $30.3 million for facility realignment and to effect
the provisions of the Plan of Reorganization. The Plan of
Reorganization provisions related primarily to the settlement of
certain claims for pre-petition pension benefits and pre-petition
litigation and to expenses related to the administration of the
settlements and cash payouts provided for in the Plan of
Reorganization.
Note 11 Concentrations of Credit Risk
The concentrations of credit risk with respect to trade
receivables are, in management's opinion, considered minimal due
to the Company's diverse customer base. The Company sells to
customers located throughout the United States and in Japan and
Canada. Credit evaluations of its customers' financial
conditions are performed periodically, and the Company generally
does not require collateral from its customers. As of January 1,
1994, the Company had concentrations of cash in bank balances
totaling approximately $4.7 million located at eight banks which
exposes the Company to concentrations of credit risk.
Note 12 Subsequent Event (unaudited)
On March 17, 1994 the Company entered into a stock purchase
agreement with International Multifoods Corporation ("IMC") with
respect to the Frozen Specialty Foods division ("Frozen Specialty
Foods") of IMC. Pursuant to the stock purchase agreement, the
Company will purchase all of the issued and outstanding capital
stock of International Multifoods Foodservice Corp. ("IMFC") from
IMC for approximately $135 million, subject to certain conditions
and customary purchase price adjustments (the "IMFC
Acquisition"). The Company has received a commitment from
Chemical Bank, subject to completion of documentation and other
requirements, to provide a $186 million senior secured credit
facility for this transaction and to refinance the existing
credit facility. Frozen Specialty Foods, with estimated revenues
for the fiscal year ended February 26, 1994 of approximately $185
million, is a processor and marketer of prepared frozen food
products primarily for the foodservice and consumer markets.
Completion of the transaction
is expected in the second quarter of fiscal 1994.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
Doskocil Companies Incorporated
We have audited the consolidated financial statements and the
financial statement schedules of Doskocil Companies Incorporated
and subsidiaries as listed in Item 14(a) of this Form 10-K.
These financial statements and financial statement schedules are
the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements and financial statement schedules 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 financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Doskocil Companies Incorporated and
subsidiaries as of January 1, 1994 and January 2, 1993, and the
consolidated results of their operations and their cash flows for
the years ended January 1, 1994 and January 2, 1993, the three
months ended December 28, 1991 and the nine months ended
September 28, 1991 in conformity with generally accepted
accounting principles. In addition, in our opinion, the
financial statement schedules referred to above, when considered
in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information
required to be included therein.
As discussed in Notes 7 and 8 to the consolidated financial
statements, effective January 3, 1993, the Company changed its
method of accounting for income taxes and its method of
accounting for postretirement benefits other than pensions.
(COOPERS & LYBRAND)
COOPERS & LYBRAND
Tulsa, Oklahoma
March 1, 1994
[Download Table]
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED):
The following is a summary of the unaudited quarterly
results of operations for the years ended January 1, 1994 and
January 2, 1993.
(Amounts are in thousands except per share data.)
Quarter
________________________________________
Year ended January 1, 1994 First<F1> Second Third Fourth <F2>
________ ________ ________ ________
Net sales $144,555 $158,066 $168,701 $176,885
Gross profit 24,083 25,852 28,060 32,682
Net income (loss) (35,956) 1,047 813 2,077
Earnings (loss) per share,
primary and fully diluted $(5.88) $0.13 $0.10 $0.26
[Download Table]
Quarter
________________________________________
Year ended January 2, 1993 First Second Third Fourth <F3>
________ ________ ________ ________
Net sales $176,222 $184,076 $192,258 $218,131
Gross profit 26,124 23,743 28,122 31,349
Net income (loss) 379 (1,373) 2,744 (28,584)
Earnings (loss) per share,
primary and fully diluted $0.07 $(0.23) $0.47 $(4.94)
__________
<FN>
<F1> The first quarter of the year ended January 1, 1994 included
a noncash charge of $34.4 million for the cumulative effect on
prior years of change in accounting for postretirement
benefits other than pensions. See Note 8 of Notes to
Consolidated Financial Statements.
<F2> The fourth quarter of the year ended January 1, 1994
included a charge of $1.0 million under an employment agreement
and a $0.5 million provision for plant closing.
<F3> The fourth quarter of the year ended January 2, 1993
includes a provision for plant closing in the amount of $32.0
million. See note 3 of Notes to Consolidated Financial Statements.
[Enlarge/Download Table]
Schedule V
DOSKOCIL COMPANIES INCORPORATED AND SUBSIDIARIES
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
(Dollar amounts in thousands)
Other
Balance at Changes- Balance
Beginning Additions Add Fresh Start at End
Classification of Year at Cost Retirements (Deduct) Adjustments of Year
______________ __________ _________ ___________ ________ ___________ _______
Year ended January 1, 1994:
Land $ 690 $ - $ - $ (60) $ - $ 630
Buildings and improvements 30,702 2,967 40 (457) - 33,172
Machinery and equipment 41,301 7,247 310 896 - 49,134
Construction in progress 1,118 10,806 - - - 11,924
________ _______ _______ ________ _______ ________
$ 73,811 $21,020 $ 350 $ 379 $ - $ 94,860
======== ======= ======= ======== ======= ========
Year ended January 2, 1993:
Land $ 871 $ - $ - $ (181) $ - $ 690
Buildings and improvements 42,119 2,368 22 (13,763) - 30,702
Machinery and equipment 44,742 8,376 2,497 (9,320) - 41,301
Construction in progress 535 757 - (174) - 1,118
________ _______ _______ ________ _______ ________
$ 88,267 $11,501 $ 2,519 $(23,438)<F1> $ - $ 73,811
======== ======= ======= ======== ======= ========
Period from September 29, 1991 to
December 28, 1991:
Land $ 871 $ - $ - $ - $ - $ 871
Buildings and improvements 41,728 391 - - - 42,119
Machinery and equipment 42,802 2,023 139 56 - 44,742
Construction in progress 1,756 (1,221) - - - 535
________ _______ _______ ________ _______ ________
$ 87,157 $ 1,193 $ 139 $ 56 $ - $ 88,267
======== ======= ======= ======== ======= ========
Period from December 30, 1990 to
September 28, 1991:
Land $ 2,556 $ - $ 77 $ (303) $(1,305) $ 871
Buildings and improvements 74,175 679 65 (6,532) (26,529) 41,728
Machinery and equipment 90,440 4,197 194 (3,063) (48,578) 42,802
Construction in progress 947 995 - - (186) 1,756
________ _______ _______ _______ ________ ________
$168,118 $ 5,871 $ 336 $(9,898) $(76,598) $ 87,157
======== ======= ======= ======= ======== ========
______________________
<FN>
<F1> Refer to Note 3 of the Notes to Consolidated Financial Statements. Effective January 2, 1993
this schedule no longer reflects activity for assets held for sale.
Depreciation is provided using the following methods and estimated useful lives:
___Life___ ____Method___
Buildings and improvements 5-40 years Straight-line
Machinery and equipment 3-10 years Straight-line
Capitalized leases Lease term Straight-line
[Enlarge/Download Table]
Schedule VI
DOSKOCIL COMPANIES INCORPORATED AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
(Dollar amounts in thousands)
Additions Other
Balance at Charged to Changes- Balance
Beginning Costs and Add Fresh Start at End
Classification of Year Expenses Retirements (Deduct) Adjustments of Year
______________ __________ __________ ___________ ________ ___________ _______
Year ended January 1, 1994:
Buildings and improvements $ 2,003 $ 1,826 $ 5 $ (30) $ - $ 3,794
Machinery and equipment 8,378 7,340 252 786 - 16,252
_______ _______ _____ _______ _______ _______
$10,381 $ 9,166 $ 257 $ 756 $ - $20,046
======= ======= ===== ======= ======= =======
Year ended January 2, 1993:
Buildings and improvements $ 672 $ 2,595 $ 8 $(1,256) $ - $ 2,003
Machinery and equipment 2,287 8,884 419 (2,374) - 8,378
_______ _______ _____ _______ _______ _______
$ 2,959 $11,479 $ 427 $(3,630) $ - $10,381
======= ======= ===== ======= ======= =======
Period from September 29, 1991
to December 28, 1991:
Buildings and improvements $ - $ 672 $ - $ - $ - $ 672
Machinery and equipment - 2,375 88 - - 2,287
_______ _______ _____ _______ _______ _______
$ - $ 3,047 $ 88 $ - $ - $ 2,959
======= ======= ===== ======= ======= =======
Period from December 30, 1990
to September 28, 1991:
Buildings and improvements $ 9,413 $ 3,064 $ 8 $ - $(12,469) $ -
Machinery and equipment 30,627 7,440 49 - (38,018) -
_______ _______ _____ _______ ________ _______
$40,040 $10,504 $ 57 $ - $(50,487) $ -
======= ======= ===== ======= ======== =======
[Enlarge/Download Table]
Schedule IX
DOSKOCIL COMPANIES INCORPORATED AND SUBSIDIARIES
SCHEDULE IX - SHORT-TERM BORROWINGS
(Dollar amounts in thousands)
Maximum Average Weighted
Category of Amount Amount Average
Aggregate Balance Weighted Outstanding Outstanding Interest Rate
Short-Term at End of Average During the During the During the
Borrowings Period Interest Rate Period Period<F1> Period<F2>
___________ _________ _____________ ___________ ___________ _____________
Year Ended January 1, 1994
Lines of Credit <F3> $ - - % $ - $ - - %
Year Ended January 2, 1993
Lines of Credit <F3> $ - - % $ - $ - - %
Period from September 29, 1991
to December 28, 1991
Lines of Credit <F3> $ - - % $ - $ - - %
Period from December 30, 1990
to September 28, 1991
Lines of Credit $61,000 11.3% $68,000 $61,896 11.6%
<FN>
<F1> Computed by using the monthly weighted average amount outstanding.
<F2> Computed by dividing interest expense by the average debt outstanding.
<F3> All borrowings under the Company's credit agreements were long-term during the period.
[Enlarge/Download Table]
Schedule X
DOSKOCIL COMPANIES INCORPORATED AND SUBSIDIARIES
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
(Dollar amounts in thousands)
Pre-
Post-Confirmation Confirmation
________________________________________ ____________
Fiscal Year Fiscal Year Three Months Nine Months
Ended Ended Ended Ended
Jan. 1, Jan. 2, Dec. 28, Sept. 28,
1994 1993 1991 1991
___________ ___________ ____________ ____________
|
Maintenance and repairs $ 9,622 $14,179 $ 3,638 | $11,014
Amortization of intangible |
assets and deferred |
charges: |
. Intangible assets 1,250 1,274 313 | 3,963
. Reorganization value |
in excess of amounts |
allocable to |
identifiable assets 4,933 5,033 1,123 | -
. Deferred charges 627 - - | -
. Amortization of bond |
discount 39 - - | -
. Other, primarily |
"Retiree Medical" <F1> - - - | 4,124
Taxes, other than payroll |
and income taxes 894 1,496 451 | 1,417
Advertising costs 31,450 30,662 8,855 | 23,169
__________________________
<FN>
<F1> "Retiree Medical" represents the discounted amount of the
estimated retiree medical benefits obligation and was amortized over
the expected payment period using the "interest method." It was
reported as additional interest expense in the statement of
operations.
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.
DOSKOCIL COMPANIES INCORPORATED
By: (Bryant P. Bynum)
Bryant P. Bynum
Vice President, Finance,
Corporate Planning and
Treasurer
Dated: July 22, 1994
INDEX TO EXHIBITS
Exhibit
Number Description
_______ ___________
3.1 Amended and Restated Certificate of
Incorporation of Doskocil Companies
Incorporated ("Doskocil")
3.2 Amended and Restated Bylaws of Doskocil
4.1 Specimen certificate for Doskocil Common
Stock, par value $.01 per share (incorporated
herein by reference to Exhibit 4.2 to
Registration Statement on Form S-8, dated
March 3, 1992, and filed on March 4, 1992)
4.2 Credit Agreement among Doskocil, the Several
Lenders from Time to Time Parties Thereto and
Chemical Bank, as Agent dated as of April 28,
1993 (incorporated herein by reference to
Exhibit 2 to Current Report on Form 8-K, dated
April 28, 1993, and filed April 30, 1993)
4.3 Form of Doskocil 9 3/4% Senior Subordinated
Redeemable Notes due 2000 (incorporated herein
by reference to Exhibit 4.22 to Amendment No.
2 to Registration Statement on Form S-1 filed
April 13, 1993)
4.4 Indenture between Doskocil and First Fidelity
Bank, National Association, New York, as
Trustee (incorporated herein by reference to
Exhibit 3 to Current Report on Form 8-K, dated
April 28, 1993, and filed April 30, 1993)
4.5 Warrant Agreement dated as of October 31,
1991, between Doskocil and the signatory banks
thereto (incorporated herein by reference to
Exhibit 4.2 to Annual Report on Form 10-K,
dated March 12, 1992, and filed on March 13,
1992)
4.6 Amended and Restated Certificate of
Incorporation of Doskocil (see Exhibit 3.1
above)
4.7 Amended and Restated Bylaws of Doskocil (see
Exhibit 3.2 above)
4.8 Doskocil Companies Incorporated Retirement and
Profit Sharing Plan
4.9* Doskocil Companies Incorporated 1992 Stock
Incentive Plan, as amended
4.10 Lease by and between the City of South
Hutchinson, Kansas and Doskocil dated August
1, 1985 (incorporated herein by reference to
Exhibit 10.14 to Annual Report on Form 10-K,
dated April 12, 1991, and filed on April 15,
1991)
4.11 Guaranty Agreement between Doskocil and The
Fourth National Bank and Trust Company,
Wichita, dated August 1, 1985 (incorporated
herein by reference to Exhibit 4.12 to Annual
Report on Form 10-K, dated March 12, 1992, and
filed on March 13, 1992)
4.12 Agreement for Waste Water Treatment Service
between Stoppenbach, Inc. and the City of
Jefferson, Wisconsin, dated November 1985
(incorporated herein by reference to
Exhibit 4.13 to Annual Report on Form 10-K,
dated March 12, 1992, and filed on March 13,
1992)
4.13 Agreement (for waste water treatment) between
the City of Logansport, Indiana and Wilson &
Co., Inc., dated June 26, 1967 (incorporated
herein by reference to Exhibit 4.26 to Annual
Report on Form 10-K, dated March 12, 1992, and
filed on March 13, 1992)
10.1 Credit Agreement among Doskocil, the Several
Lenders from Time to Time Parties Thereto and
Chemical Bank, as Agent dated as of April 28,
1993 (see Exhibit 4.2 above)
10.2 Form of Doskocil 9 3/4% Senior Subordinated
Redeemable Notes due 2000 (see Exhibit 4.3
above)
10.3 Indenture between Doskocil and First Fidelity
Bank, National Association, New York, as
Trustee (see Exhibit 4.4 above)
10.4 Amended and Restated Credit and Security
Agreement dated as of October 31, 1991, among
Doskocil and its subsidiaries, Chemical Bank
and the signatory banks thereto (incorporated
herein by reference to Exhibit 2 to Current
Report on Form 8-K, dated November 14, 1991,
and filed on November 15, 1991)
10.5 First Amendment to the Amended and Restated
Credit Agreement dated as of October 31, 1991
(incorporated herein by reference to Exhibit 6
to Current Report on Form 8-K, dated November
14, 1991, and filed on November 15, 1991)
10.6 Second Amendment to Amended and Restated
Credit and Security Agreement, dated on or
about February 12, 1992 (incorporated herein
by reference to Exhibit 4.3 to Registration
Statement on Form S-1 dated March 12, 1993)
10.7 Third Amendment to Amended and Restated Credit
and Security Agreement, dated June 11, 1992
(incorporated herein by reference to Exhibit
4.4 to Registration Statement on Form S-1
dated March 12, 1993)
10.8 Fourth Amendment to Amended and Restated
Credit and Security Agreement, dated September
25, 1992 (incorporated herein by reference to
Exhibit 4.5 to Registration Statement on
Form S-1 dated March 12, 1993)
10.9 Fifth Amendment to Amended and Restated Credit
and Security Agreement, dated January 22, 1993
(incorporated herein by reference to Exhibit
4.6 to Registration Statement on Form S-1
dated March 12, 1993)
10.10 Sixth Amendment, Waiver and Consent to Amended
and Restated Credit and Security Agreement
dated March 5, 1993 (incorporated herein by
reference to Exhibit 4.7 to Registration
Statement on Form S-1 dated March 12, 1993)
10.11 Warrant Agreement dated as of October 31,
1991, between Doskocil and the signatory banks
thereto (see Exhibit 4.5 above)
10.12 Waiver Agreement dated March 5, 1993, by and
among Doskocil, Chemical Bank and the banks
signatory to the Warrant Agreement
(incorporated herein by reference to Exhibit
10.40 to Registration Statement on Form S-1
filed March 12, 1993)
10.13 Doskocil Companies Incorporated Retirement and
Profit Sharing Plan (see Exhibit 4.8 above)
10.14* Doskocil Companies Incorporated Annual
Incentive Plan (incorporated herein by
reference to Exhibit 10.4 to Annual Report on
Form 10-K, dated March 12, 1992 and filed
March 13, 1992)
10.15* Doskocil Companies Incorporated 1992 Stock
Incentive Plan, as amended (see Exhibit 4.9
above)
10.16 Wilson Foods Corporation Retirement and Profit
Sharing Plan for Salaried Employees of Wilson
Foods Corporation effective January 1, 1985,
restated December 31, 1987 (incorporated
herein by reference to Exhibit 10.15 to Annual
Report on Form 10-K, dated March 12, 1992, and
filed on March 13, 1992)
10.17* Employment Agreement dated November 1, 1991,
between Doskocil and John Hanes (incorporated
herein by reference to Exhibit 9 to Current
Report on Form 8-K, dated November 14, 1991,
and filed on November 15, 1991)
10.18* Separation Agreement and Release dated
December 31, 1993 between Doskocil and John
Hanes
10.19* Employment Agreement dated November 1, 1991,
between Doskocil and Theodore A. Myers
(incorporated herein by reference to Exhibit
10 to Current Report on Form 8-K, dated
November 14, 1991, and filed on November 15,
1991)
10.20* Settlement Agreement dated July 6, 1993
between Doskocil and Theodore A. Myers
10.21* Form of Transition Employment Agreement dated
on or about December 17, 1991, between
Doskocil and Ronald W. Marsh, Thomas G.
McCarley, William L. Brady, David J. Clapp,
Raymond J. Haefele, Neil R. Johnson,
Charles I. Merrick, Darian B. Andersen,
Bryant P. Bynum, Joseph P. Baker, Lee C.
Harrison, William Kelly, James J. Krause, T.D.
Traver and Charles Sweeney (incorporated
herein by reference to Exhibit 10.18 to
Amendment No. 3 to Registration Statement on
Form S-1, Registration Statement No. 33-59484,
filed on April 20, 1993)
10.22 Lease by and between the City of South
Hutchinson, Kansas and Doskocil dated August
1, 1985 (see Exhibit 4.10 above)
10.23 Lease dated November 4, 1991, between Doskocil
and American General Life and Accident
Insurance Company (incorporated herein by
reference to Exhibit 10.35 to Annual Report on
Form 10-K, dated March 12, 1992 and filed on
March 13, 1992)
10.24 Lease Agreement dated April 4, 1992, between
Doskocil and Millard Refrigerated Services-
Atlanta, as amended (incorporated herein by
reference to Exhibit 10.27 to Registration
Statement on Form S-1 dated August 28, 1992)
10.25 Agreement between Wilson Foods Corporation and
the City of Cherokee, Iowa, dated February 28,
1964, and First Amendment thereto dated
October 24, 1978; Second Amendment thereto
dated February 24, 1981; and Third Amendment
thereto dated August 18, 1983, covering water
and sewage services (incorporated herein by
reference to Exhibit 10.34 to Registration
Statement on Form S-1 dated March 12, 1993)
10.26 Agreement dated December 26, 1989, by and
between the City of Cherokee, Iowa and Wilson
Foods Corporation, covering water rates
(incorporated herein by reference to Exhibit
10.35 to Registration Statement on Form S-1
dated March 12, 1993)
10.27 Equipment Lease Agreement between Wilson Foods
and MDFC Equipment Leasing Corporation, dated
May 20, 1992, and related unconditional
Guaranty executed by Doskocil dated June 11,
1992, and Equipment Lease Addendum to date
(incorporated herein by reference to Exhibit
10.38 to Amendment No. 1 to Registration
Statement on Form S-1 dated March 24, 1993)
10.28 Stock Purchase Agreement by and between
Doskocil and JLL dated February 16, 1993
(incorporated herein by reference to Exhibit 1
to Current Report on Form 8-K dated February
18, 1993 and Filed on February 19, 1993)
10.29 Waiver Agreement by and between Doskocil and
Chemical Bank dated March 5, 1993
(incorporated herein by reference to Exhibit
10.40 to Registration Statement on Form S-1
dated March 12, 1993)
10.30 Form of Indemnification Agreement between
Doskocil and its non-employee Directors
(incorporated herein by reference to Exhibit
10.42 to Amendment No. 1 to Registration
Statement on Form S-1 dated March 24, 1993)
10.31 Agreement dated as of March 22, 1993, by and
between Joseph Littlejohn and Levy Fund, L.P.,
The Airlie Group, L.P. and Doskocil
(incorporated herein by reference to Exhibit
10.43 to Amendment No. 1 to Registration
Statement on Form S-1 dated March 24, 1993)
10.32 Stockholders Agreement dated as of March 22,
1993, by and between the Airlie Group, L.P.
and Doskocil (incorporated herein by reference
to Exhibit 10.44 to Amendment No. 1 to
Registration Statement on Form S-1 dated
March 24, 1993)
10.33* Separation Pay Plan, dated March 31, 1993
(incorporated herein by reference to Exhibit 2
to Current Report on Form 8-K, dated June 10,
1993, and filed on July 13, 1993)
10.34 Consulting Agreement between Doskocil
Companies Incorporated and Richard N. Bauch,
dated January 18, 1993 (incorporated herein by
reference to Exhibit 10.46 to Amendment No. 2
to Registration Statement on Form S-1 filed
April 13, 1993)
10.35 Master Equipment Lease between Doskocil and
Cargill Leasing Corporation dated September 1,
1993
10.36 Stock Purchase Agreement between International
Multifoods Corporation and Doskocil Companies
Incorporated dated as of March 17, 1994
11.1 Calculation of Earnings Per Share
20.1** Annual Report on Form 11-K with Respect to
Doskocil Employee Investment Plan
21.1 Subsidiaries of Doskocil
22.1** Proxy Statement for Annual Meeting of
Stockholders Scheduled to be Held June 2, 1994
23.1 Consent of Independent Accountants
* Management contracts and compensatory plans or arrangements
** To be filed by amendment.
Dates Referenced Herein and Documents Incorporated by Reference
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