Item 1. Business.
General
International Multifoods Corporation, incorporated in Delaware in 1969 as the successor to a business founded in 1892, operates in three businesses: foodservice distribution in the United States, bakery products in the United States and Canada, and bakery, consumer and agricultural products in Venezuela. Unless indicated otherwise or the context suggests otherwise, the term "Company," as used in this Report, means International Multifoods Corporation and its consolidated subsidiaries.
In fiscal year 1996, the Company divested its surimi seafood business.
The Company's business segments are Foodservice Distribution, Bakery, Venezuela Foods, and Divested Businesses. Financial information for the last three fiscal years for each of the Company's business segments, which is included in Note 19 to the Company's Consolidated Financial Statements on page 37 of the Company's Annual Report to Stockholders for the fiscal year ended February 29, 1996 ("1996 Annual Report to Stockholders"), is incorporated herein by reference.
Foodservice Distribution
The Company's Foodservice Distribution segment includes the Company's vending distribution business, the limited-menu distribution business, and the food exporting business. No single customer accounts for a significant portion of the segment's sales.
Vending Distribution. The Company is the largest U.S. vending distributor, serving approximately 14,000 vending and office coffee service operators and other concessionaires. The Company distributes and sells more than 8,000 food products consisting primarily of candy, snacks, frozen and refrigerated products, pastries, hot beverages and juices. Most of the products are nationally advertised brand products. The Company also sells certain products, such as premium ground and whole-bean coffee, hot cocoa, creamer and sugar, under its own private labels, VENDOR'S SELECT and GRINDSTONE CAFE. Deliveries are made directly to vending and office coffee service operators from 20 distribution centers located nationwide. The frequency of deliveries varies, depending upon customer needs, but generally deliveries are made once a week. The Company leases a fleet of approximately 175 tractor-trailers, most of which are equipped with an on-board computer system from which drivers obtain delivery performance and route information. The Company also operates 18 cash-and-carry locations from which customers can make purchases.
The vending distribution business is highly competitive. While the Company is the only nationwide vending distributor, it encounters significant competition from regional and local distributors as well as warehouse clubs. Price is a significant competitive element in the vending distribution business, however other important competitive factors are prompt and accurate delivery of orders, availability of a wide variety of products and customer service.
Limited-Menu Distribution. The Company is a leading specialty distributor in the United States to independent pizza restaurants and other select limited-menu operators, including sandwich shops, Mexican restaurants, bakery shops and movie theaters. The Company distributes a broad selection of cheeses, meats, snacks, paper goods and other products, including pizza ingredients sold under the Company's ULTIMO brand as well as major national brands. Deliveries are made directly to customers, generally once a week, from 14 distribution centers located strategically around the country to provide efficient and timely delivery to customers. The distribution centers are linked by computer network to the distribution business' headquarters. The Company maintains a fleet of more than 250 tractors and 300 trailers, approximately half of which are owned and half of which are leased by the Company.
The limited-menu distribution business is highly competitive. The Company competes with several national and regional broadline distributors and numerous regional specialty foodservice distributors and local independent distributors. The Company competes on the basis of product quality and consistency, customer service and the availability of a wide variety of products, as well as price and prompt and accurate delivery of orders. The Company believes that its pizza expertise, which includes providing customers with ideas on promotions, menu planning and baking, differentiates the Company in part from its competitors. In addition, the Company believes that it further distinguishes itself from broadline distributors by providing more personalized customer service.
Food Exporting. The Company's food exporting business markets and exports a variety of goods, primarily branded and commodity food products. Export sales are made to customers in diverse geographic areas, including Eastern Europe, Asia, the Middle East and the Caribbean region. The Company markets its food products under the MULTIFOODS, PRIMA, GOLDEN TEMPLE and ROBIN HOOD brands.
The food exporting business sells food products to Russia. The Company's continued ability to do business in this region may be affected by political events or the economic stability of that region.
Bakery
The Company's Bakery segment processes and markets bakery products for retail, in-store and wholesale bakeries and foodservice customers in North America and consumer products in Canada, which include primarily home baking products and condiments. No single customer accounts for a significant portion of the segment's sales.
North America Bakery. The Company's North America Bakery division produces approximately 3,000 products for retail, in-store and wholesale bakeries and foodservice customers in the United States and Canada. The Company produces bakery mix products, including mixes for breads, rolls, bagels, donuts, muffins, danish, cakes, cookies, brownies, bars and pizza crusts, as well as fillings and icings. Bakery mix products are marketed under its MULTIFOODS and JAMCO brands in the United States and under its ROBIN HOOD brand in Canada. In addition, the Company manufactures and markets frozen desserts under its MULTIFOODS, GOURMET BAKER and FANTASIA brands. In Canada, the Company also produces wheat flour and durum and oat products. Bakery products are marketed through the Company's own sales organization and independent distributors and brokers.
The Company encounters significant competition in the bakery products market. The Company is the leading supplier of bakery mixes to retail and in- store bakeries in North America and it competes with several large corporations and regional producers of bakery mixes. With respect to frozen bakery products, the Company competes primarily in the foodservice and in- store bakery markets with several large corporations and numerous regional suppliers that have select product offerings. The Company competes primarily in Canada with respect to its commercial flour products and its competitors include both large corporations and regional producers. The Company competes on the basis of product quality and uniqueness, product convenience, brand loyalty, timely delivery and customer service as well as price.
Consumer Products. The Company's consumer products division is the leading marketer in Canada of flour and specialty baking mixes sold to consumers. More than 40 consumer baking mixes are sold under the Company's ROBIN HOOD brand, while consumer flour is sold under the Company's ROBIN HOOD, BRODIE, CREAM OF THE WEST and MONARCH brands. The Company also sells hot cereals under its ROBIN HOOD, OLD MILL, RED RIVER and PURITY brands. The Company also manufactures and markets pickles, relishes and other condiments to consumers in Canada, where its BICK'S brand is the leading brand. The Company also sells condiments under its HABITANT, GATTUSO, WOODMAN'S, ROSE and MCLARENS labels. Consumer products are marketed primarily through the Company's own sales organization, supported by advertising and other promotional activities. The Company competes on the basis of product quality, product convenience, the ability to identify and satisfy emerging consumer preferences, brand loyalty, timely delivery and customer service as well as price.
Venezuela Foods
The Company's Venezuela Foods segment includes consumer products for home baking, bakery products for food processors and commercial and retail bakeries, and products for the agricultural sector. The Company's consumer products include wheat flour, corn flour, whole grain rice, rice flour, corn cooking oil, oat cereals and spices, which are sold to grocery stores principally under the Company's ROBIN HOOD, JUANA, MONICA, PAYARA, GOLD BELL, LASSIE and LA COMADRE brands. The Company's bakery products include wheat flour, which is sold under the Company's POLAR, GRAN AGUANTE, GOLDRIM and ELEFANTE brands, and prepared bakery mixes, which are sold under the ROBIN HOOD brand. The Company's animal feeds are sold principally under the Company's SUPER-S brand to animal producers and farm distributors. The Venezuela Foods segment's products are marketed through the Company's own sales organization and independent distributors and brokers.
The Company's Venezuelan subsidiary is one of the largest food companies in Venezuela and the second-largest producer of animal feeds for the agricultural sector. The Company is the leading producer of consumer wheat flour, flour for commercial food processors and retail bakeries, and commercial bakery mixes. No single customer accounts for a significant portion of the Venezuela Foods segment's sales. The Company competes on the basis of quality, price, uniqueness, timely delivery and customer service.
The Company's operations in Venezuela are subject to risks inherent in operating under a different legal and political system along with a difficult economic environment. Among these risks are inflation, currency volatility, government price and foreign exchange controls, restrictions on the exchangeability of currency, possible limitations on foreign investment and dividend repatriation, and changes in existing tax laws. Certain of these risks are currently affecting results. See "Management's Discussion and Analysis of Results of Operations and Financial Condition," which is included on pages 16 through 21 of the 1996 Annual Report to Stockholders and is incorporated by reference in Part II, Item 7, hereof, and Note 18 to the Company's Consolidated Financial Statements which are incorporated by reference in Part II, Item 8, hereof.
Divested Businesses
The Company's Divested Businesses segment consists principally of the Company's Frozen Specialty Foods and Meats businesses which were divested in fiscal year 1995 and the surimi seafood business which was divested in fiscal year 1996.
Other Information Relating to the Business of the Company
Sources of Supply and Raw Materials. The Company's vending distribution business purchases products directly from numerous manufacturers, processors and independent suppliers. Several of these sources are large corporations from which the Company purchases large quantities of brand name candy and snacks. The Company believes that adequate alternative sources of supply for other vending products are readily available.
The Company's limited-menu distribution business purchases products directly from numerous manufacturers, processors and independent suppliers. The Company's limited-menu distribution business is not dependent upon any single supplier and alternative sources of supply are readily available.
With respect to the Company's Bakery and Venezuela Foods segments, raw materials generally are available from numerous sources and the Company believes that it will continue to be able to obtain adequate supplies. In Canada, the Company minimizes risks associated with wheat market price fluctuations by hedging its wheat and flour inventories, open wheat purchase contracts and open flour sales contracts with wheat futures contracts. In the United States, the Company also enters into futures contracts to reduce the risk of price increases on certain anticipated raw material purchases. See Note 7 to the Company's Consolidated Financial Statements which are incorporated by reference in Part II, Item 8, hereof.
Wheat, oats and soybeans are not grown in Venezuela and adequate quantities of sorghum and yellow corn are not grown in Venezuela. However, adequate wheat, oats, soybean, sorghum and yellow corn requirements generally are available and procured from sources primarily in the United States and Canada. Exchange controls did not have a material impact on the Company's ability to obtain raw materials from sources outside of Venezuela in fiscal year 1996. Generally, adequate quantities of corn (other than yellow corn) and rice, which are grown in Venezuela, are available locally. In the event of a local shortage of corn or rice, the Company has, from time to time, purchased corn and rice from the world market.
Trademarks and Other Intellectual Property. The Company owns numerous trademarks, service marks and product formulae which are important to the Company's business. The most significant trademarks and service marks are identified above. Most of the Company's trademarks and service marks are registered.
Seasonality. The Company does not experience material seasonal variations in its sales volumes.
Environmental Regulation. The Company's facilities in the United States are subject to federal, state and local environmental laws and regulations. Compliance with these provisions has not had, and the Company does not expect such compliance to have, any material adverse effect upon the Company's capital expenditures, net earnings or competitive position.
The Company has received notices from the U.S. Environmental Protection Agency and the New York State Department of Environmental Conservation that the Company has been identified as a potentially responsible party ("PRP") under the Comprehensive Environmental Response, Compensation and Liability Act and may be required to share in the cost of cleanup of two environmentally contaminated sites. The Company recognizes that its potential exposure with respect to each of these sites may be joint and several. However, based upon several factors such as the volume of material contributed to the sites, the number and financial viability of other PRP's, allocations of volumetric waste contributions to other PRP's, remediation cost estimates and the present status of the proceedings involving such sites, the Company has concluded that its probable aggregate exposure in regard to such sites is not material.
Employees. As of February 29, 1996, the Company and its subsidiaries had 7,115 employees.
Item 2.

Item 2. Properties.
The Company's principal executive offices are located in Minneapolis, Minnesota in leased office space. Several of the Company's subsidiaries also own or lease office space. The Company operates numerous processing and distribution facilities throughout the United States, Canada and Venezuela. The Company believes that its facilities are suitable and adequate for current production or distribution volumes.
Foodservice Distribution
The Company owns two and leases 18 distribution centers aggregating approximately 1.6 million square feet for its vending distribution business. These distribution centers are located in Commerce and Fremont, California; Denver, Colorado; East Windsor, Connecticut; Orlando, Florida; Austell, Georgia; Woodridge, Illinois; Shawnee, Kansas; Louisville, Kentucky; Belleville, Michigan; Minneapolis, Minnesota; Greensboro, North Carolina; Paulsboro and Parsippany, New Jersey; Twinsburg, Ohio; Memphis, Tennessee; Dallas and Houston, Texas; Kent, Washington; and Pewaukee, Wisconsin.
The Company's vending distribution business also operates 18 cash-and- carry distribution locations, 11 of which are separate from the Company's other distribution centers.
The Company owns nine and leases six distribution centers aggregating approximately 1.0 million square feet for its limited-menu distribution business. These distribution centers are located in Tempe, Arizona; Anaheim and Livermore (2), California; Denver, Colorado; Kissimmee, Florida; Atlanta, Georgia; Boise, Idaho; Indianapolis, Indiana; Rice, Minnesota; Springfield, Missouri; Portland, Oregon; Middletown, Pennsylvania; and Dallas and Grand Prairie, Texas.
Bakery
The Company owns 13 and leases four processing facilities. These processing facilities are located in La Mirada, California; Bonner Springs, Kansas; Malden, Massachusetts; Sedalia, Missouri; Lockport, New York; Elyria, Ohio; Burnaby, British Columbia (2); Winnipeg, Manitoba; Burlington, Dunnville, Port Colborne, Scarborough and Simcoe, Ontario; Montreal, Quebec (2); and Saskatoon, Saskatchewan.
The Company also operates two research and development laboratories.
Venezuela Foods
The Company owns 18 processing facilities and leases one processing facility. These processing facilities are located in Barcelona, Anzoategui; Ciudad Bolivar, Bolivar; Puerto Cabello (5) and Valencia, Carabobo; Calabozo, Guarico (3); Acarigua (3) and Araure, Portuguesa; Cumana, Sucre; and Maracaibo, Zulia (3).
The Company owns three and leases 14 warehouse facilities. In addition, the Company owns two and leases 14 agricultural distribution centers.
The Company also operates two Company-owned hatcheries and one leased hatchery and operates four Company-owned and seven leased poultry farms.
Item 3.

Item 3. Legal Proceedings.
Neither the Company nor any of its subsidiaries is a party to any legal proceeding that is material to the business or financial condition of the Company. See the information under the heading "Other Information Relating to the Business of the Company - Environmental Regulation" in Item 1 above for a description of environmental matters in which the Company is involved.
Item 4.

Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of security holders of the Company during the fourth quarter of the fiscal year ended February 29, 1996.
EXECUTIVE OFFICERS OF THE COMPANY.
The information contained in Item 10 in Part III hereof under the heading "Executive Officers of the Company" is incorporated by reference in Part I of this Report.
PART II
Item 5.

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
The Company's Common Stock is listed on the New York Stock Exchange. The high and low sales prices for the Company's Common Stock as reported in the consolidated transaction reporting system and the amount of the cash dividends paid on the Company's Common Stock for each quarterly period within the two most recent fiscal years, shown in Note 20 to the Company's Consolidated Financial Statements on page 38 of the Company's 1996 Annual Report to Stockholders, are incorporated herein by reference.
As of May 1, 1996, there were 4,830 holders of record of the Common Stock of the Company.
Item 6.

Item 6. Selected Financial Data.
The information for fiscal years 1992 through 1996 in the "Six-Year Comparative Summary" on page 39 of the Company's 1996 Annual Report to Stockholders under the headings "Consolidated Summary of Operations," "Year- End Financial Position" and "Dividends Paid" is incorporated herein by reference. The information contained in Note 2 ("Businesses Acquired") and Note 4 ("Unusual Items") to the Company's Consolidated Financial Statements on pages 27 and 28, respectively, of the Company's 1996 Annual Report to Stockholders is also incorporated herein by reference.
Item 7.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
The information under the heading "Management's Discussion and Analysis of Results of Operations and Financial Condition" on pages 16 through 21 of the Company's 1996 Annual Report to Stockholders is incorporated herein by reference.
Item 8.

Item 8. Financial Statements and Supplementary Data.
The Independent Auditors' Report, the Company's Consolidated Financial Statements as of February 29, 1996 and February 28, 1995, and for each of the fiscal years in the three-year period ended February 29, 1996, and the Notes to the Company's Consolidated Financial Statements on pages 22 through 38 of the Company's 1996 Annual Report to Stockholders are incorporated herein by reference.
Item 9.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
PART III
Item 10.

Item 10. Directors and Executive Officers of the Registrant.
The section under the heading "Election of Directors" on pages 3 through 5 and the section entitled "Compliance with Section 16(a) of the Exchange Act" on page 19 of the Company's Proxy Statement dated May 15, 1996 ("1996 Proxy Statement") are incorporated herein by reference.
Executive Officers of the Company
The following sets forth the name, age and business experience for at least the past five years of each of the executive officers of the Company as of May 1, 1996. Unless otherwise noted, the positions described are positions with the Company or its subsidiaries.
Name Age Positions Held Period
Anthony Luiso 52 Chairman of the Board, President 1989 to present and Chief Executive Officer
Frank W. Bonvino 54 Vice President, General Counsel 1992 to present and Secretary Vice President and Associate 1991 to 1992 General Counsel Associate General Counsel 1986 to 1991
Duncan H. Cocroft 52 Vice President - Finance, Chief 1995 to present Financial Officer and Treasurer Vice President - Finance and 1990 to 1995 Chief Financial Officer
D. Bruce Kean 56 President - Multifoods 1994 to present Specialty Distribution, Inc. Senior Vice President - 1989 to 1994 Leprino Foodservice Distribution Division of Leprino Foods Company
Robert F. Maddocks 65 Vice President - Human Resources 1990 to present
Devendra Mishra 51 President - VSA, Inc. 1994 to present President - New Ventures of 1992 to 1994 Technicolor, Inc. President and Chief Operating 1989 to 1992 Officer of Live Entertainment, Inc.
Fidias Robuste 58 President and Managing Director - 1993 to present Molinos Nacionales, C.A. (MONACA) Vice President - Operations 1989 to 1993 of Molinos Nacionales, C.A. (MONACA)
John E. Sampson 55 Vice President - Corporate 1992 to present Planning and Development Vice President - Corporate 1990 to 1992 Planning and Development and Treasurer
Robert S. Wright 49 President, Bakery Segment 1995 to present President, Specialty Brands 1994 to 1995 Division of Foodbrands America, Inc. President, Prepared Foods 1992 to 1994 Division of International Multifoods Corporation Vice President, Marketing 1991 to 1992 of MasterLock Co. Group Vice President of 1989 to 1991 Universal Foods Corporation
The executive officers of the Company are elected annually by the Board of Directors with the exception of the Presidents of the Company's business units, who hold appointed offices.
Item 11.

Item 11. Executive Compensation.
The section under the heading "Election of Directors" entitled "Compensation of Directors" on page 6 and the section entitled "Executive Compensation" on pages 11 through 18 of the Company's 1996 Proxy Statement are incorporated herein by reference.
Item 12.

Item 12. Security Ownership of Certain Beneficial Owners and Management.
The section entitled "Security Ownership of Certain Beneficial Owners and Management" on pages 2 and 3 of the Company's 1996 Proxy Statement is incorporated herein by reference.
For purposes of computing the market value of the Company's Common Stock held by non-affiliates of the Company on the cover page of this Report, all executive officers and directors of the Company are considered to be affiliates of the Company. This does not represent an admission by the Company or any such person as to the affiliate status of such person.
Item 13.

Item 13. Certain Relationships and Related Transactions.
Not applicable.
PART IV
Item 14.

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) Documents Filed as a Part of this Report
1. Financial Statements
The following consolidated financial statements of International Multifoods Corporation and subsidiaries and the Independent Auditors' Report thereon, included in the Company's 1996 Annual Report to Stockholders, are incorporated by reference in Part II, Item 8, hereof:
Independent Auditors' Report Consolidated Statements of Operations - Years ended February 29, 1996, February 28, 1995 and February 28, Consolidated Balance Sheets - February 29, 1996 and February 28, 1995 Consolidated Statements of Cash Flows - Years ended February 29, 1996, February 28, 1995 and February 28, 1994 Notes to Consolidated Financial Statements
2. Financial Statement Schedules
The consolidated financial statement schedule of International Multifoods Corporation and subsidiaries and the Independent Auditors' Report thereon required to be filed as part of this Report are listed below and are included at the end of this Report.
Independent Auditors' Report Schedule II - Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and, therefore, have been omitted.
3. Exhibits
3.1 Restated Certificate of Incorporation of International Multifoods Corporation, as amended to date (incorporated herein by reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993).
3.2 Bylaws of International Multifoods Corporation, as amended to date (incorporated herein by reference to Exhibit 3.2 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1994).
4.1 Indenture, dated as of January 1, 1990, between International Multifoods Corporation and First Trust of New York, National Association, successor to Morgan Guaranty Trust Company of New York (incorporated herein by reference to Exhibit 4.1 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993).
4.2 First Supplemental Indenture, dated as of May 29, 1992, supplementing the Indenture, dated as of January 1, 1990, between International Multifoods Corporation and First Trust of New York, National Association, successor to Morgan Guaranty Trust Company of New York (incorporated herein by reference to Exhibit 4.2 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993).
4.3 Officers' Certificate, with exhibits thereto, relating to the Company's Medium-Term Notes, Series A, issued under the Indenture, dated as of January 1, 1990, as supplemented by the First Supplemental Indenture, dated as of May 29, 1992, between International Multifoods Corporation and First Trust of New York, National Association, successor to Morgan Guaranty Trust Company of New York (incorporated herein by reference to Exhibit 4.3 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993).
4.4 Officers' Certificate and Authentication Order dated February 1, 1996 relating to the Company's Medium-Term Notes, Series B, including the forms of Notes, issuable under the Indenture, dated as of January 1, 1990, as supplemented by the First Supplemental Indenture, dated as of May 29, 1992, between International Multifoods Corporation and First Trust of New York, National Association, successor to Morgan Guaranty Trust Company of New York (incorporated herein by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K dated February 1, 1996).
4.5 Credit Agreement dated as of March 22, 1996 among International Multifoods Corporation, various financial institutions, Bankers Trust Company, as Syndication Agent, The First National Bank of Chicago, as Documentation Agent, and Bank of America National Trust and Savings Association, as Administrative Agent.
The Company hereby agrees to furnish to the Securities and Exchange Commission upon request copies of all other instruments defining the rights of holders of long-term debt of International Multifoods Corporation and its consolidated subsidiaries.
10.1 Rights Agreement, dated as of October 4, 1990, as amended as of March 1, 1993, between International Multifoods Corporation and Norwest Bank Minnesota, N.A., with exhibits thereto (incorporated herein by reference to Exhibit 1 to the Company's Registration Statement on Form 8-A dated October 11, 1990 and Exhibit 1 to Amendment No. 1 on Form 8 dated March 1, 1993 to the Company's Registration Statement on Form 8-A dated October 11, 1990).
10.2 Amended and Restated 1989 Stock-Based Incentive Plan of International Multifoods Corporation (incorporated herein by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended August 31, 1993).*
10.3 1986 Stock Option Incentive Plan of International Multifoods Corporation (incorporated herein by reference to Exhibit 4 to the Company's Registration Statement on Form S-8 (Registration No. 33-6223)).*
10.4 1983 Stock Option Incentive Plan of International Multifoods Corporation (incorporated herein by reference to Exhibit 4 to the Company's Registration Statement on Form S-8 (Registration No. 2-84236)).*
10.5 Award Agreement, dated as of August 18, 1989, as amended as of November 16, 1990, between International Multifoods Corporation and Anthony Luiso (incorporated herein by reference to Exhibit 10(c) to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1990 and Exhibit 10(b) to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1991).*
10.6 Irrevocable Waiver Agreement, dated as of August 17, 1989, as amended as of November 16, 1990, between International Multifoods Corporation and Anthony Luiso (incorporated herein by reference to Exhibit 10(b) to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1990 and Exhibit 10(c) to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1991).*
10.7 Non-Qualified Stock Option Agreement, dated as of March 31, 1994, between International Multifoods Corporation and Anthony Luiso (incorporated herein by reference to Exhibit 10.7 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1995).*
10.8 Stock Option Award Agreements, dated as of November 16, 1990, between International Multifoods Corporation and each of Duncan H. Cocroft and Jay I. Johnson (incorporated herein by reference to Exhibits 10(d) and 10(e), respectively, to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1991).*
10.9 Restricted Stock Award Agreement, dated as of December 11, 1992, between International Multifoods Corporation and Anthony Luiso (incorporated herein by reference to Exhibit 10.8 to the Company's Annual Report on Form 10- K for the fiscal year ended February 28, 1993).*
10.10 Management Incentive Plan of International Multifoods Corporation, Amended and Restated as of September 17, 1993, as further amended (incorporated herein by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993 and Exhibit 10.11 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1995).*
10.11 Multifoods Division Long-Term Incentive Program.*
10.12 Management Benefit Plan of International Multifoods Corporation, Restated Effective September 17, 1993 (incorporated herein by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).*
10.13 Trust Agreement, dated July 30, 1987, between International Multifoods Corporation and Norwest Bank Minnesota, National Association, as successor trustee to Bank of America NT and SA, relating to the Management Benefit Plan of International Multifoods Corporation (incorporated herein by reference to Exhibit 10.11 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993).*
10.14 Compensation Deferral Plan for Executives of International Multifoods Corporation, Amended and Restated as of September 17, 1993 (incorporated herein by reference to Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).*
10.15 Deferred Income Capital Accumulation Plan for Executives of International Multifoods Corporation, Amended and Restated as of September 17, 1993 (incorporated herein by reference to Exhibit 10.6 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).*
10.16 Revised and Restated Employment Agreement, dated as of September 17, 1993, between International Multifoods Corporation and Anthony Luiso (incorporated herein by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).*
10.17 Trust Agreement, dated February 25, 1991, between International Multifoods Corporation and Norwest Bank Minnesota, National Association, as successor trustee to Bank of America NT and SA, relating to the Supplemental Retirement Benefit for Anthony Luiso (incorporated herein by reference to Exhibit 10.14 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993).*
10.18 Form of Revised and Restated Severance Agreement between International Multifoods Corporation and each of the Company's executive officers, other than Anthony Luiso (incorporated herein by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).*
10.19 Letter Agreement, dated July 10, 1995, between International Multifoods Corporation and Robert S. Wright regarding benefits and severance arrangements.*
10.20 Memorandum of understanding, dated March 29, 1996, between International Multifoods Corporation and Robert S. Wright regarding supplemental retirement benefits.*
10.21 Letter Agreement, dated July 29, 1994, between International Multifoods Corporation and Devendra Mishra regarding compensation and severance arrangements.*
10.22 Letter Agreement, dated August 31, 1994, between International Multifoods Corporation and John E. Sampson regarding severance arrangement (incorporated herein by reference to Exhibit 10.22 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1995).*
10.23 Memorandum of understanding, dated July 24, 1995, between International Multifoods Corporation and Jay I. Johnson regarding severance and retirement arrangements (incorporated herein by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended August 31, 1995).*
10.24 Form of Indemnity Agreement between International Multifoods Corporation and each of the Company's executive officers (incorporated herein by reference to Exhibit 10.19 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993).*
10.25 Fee Deferral Plan for Non-Employee Directors of International Multifoods Corporation, Amended and Restated as of September 17, 1993 (incorporated herein by reference to Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).*
10.26 Deferred Income Capital Accumulation Plan for Directors of International Multifoods Corporation, Amended and Restated as of September 17, 1993 (incorporated herein by reference to Exhibit 10.8 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).*
10.27 Form of Indemnity Agreement between International Multifoods Corporation and each non-employee director of the Company (incorporated herein by reference to Exhibit 10.21 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993).*
10.28 Asset Purchase Agreement dated November 15, 1991 between AGP, L.P. (as the purchaser) and International Multifoods Corporation, Multifoods Transportation, Inc., Lucan Feed Services, Inc. and The Pickaway Grain Company (as the sellers) (incorporated herein by reference to Exhibit 2(a) to the Company's Current Report on Form 8-K dated December 2, 1991).
10.29 Share Purchase Agreement dated November 15, 1991 between AGP, Inc. (as the purchaser) and Damca International Corporation and Robin Hood Multifoods, Inc. (as the sellers) (incorporated herein by reference to Exhibit 2(b) to the Company's Current Report on Form 8-K dated December 2, 1991).
10.30 Stock Purchase Agreement between International Multifoods Corporation (Seller) and Doskocil Companies Incorporated (Buyer) dated as of March 17, 1994 (incorporated herein by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K dated June 1, 1994).
10.31 Asset Purchase Agreement among Multifoods Distribution, Inc. (Buyer), International Multifoods Corporation (Buyer's Parent) and Leprino Foods Company (Seller) and James G. Leprino (Seller's Shareholder) dated as of July 29, 1994 (incorporated herein by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K dated August 22, 1994).
10.32 Stock Purchase Agreement between International Multifoods Corporation (Seller) and Tyson Foods, Inc. (Buyer) dated as of June 7, 1995 (incorporated herein by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K dated June 26, 1995).
11 Computation of Earnings (Loss) Per Common Share.
12 Computation of Ratio of Earnings to Fixed Charges.
13 1996 Annual Report to Stockholders (only those portions expressly incorporated by reference herein shall be deemed filed with the Securities and Exchange Commission).
21 List of significant subsidiaries of the Company.
23 Consent of KPMG Peat Marwick LLP.
27 Financial Data Schedule.
- ---------------------------------
*Management contract or compensatory plan or arrangement required to be filed as an exhibit to Form 10-K pursuant to Item 14(c) of this Report.
(b) Reports on Form 8-K
During the quarter ended February 29, 1996, the Company filed a report on Form 8-K, dated February 1, 1996, for the purpose of filing additional exhibits to the Company's Registration Statement on Form S-3 (File No. 33-65221) filed by the Company with the Securities and Exchange Commission relating to the Company's Medium-Term Notes, Series B.
(c) See Exhibit Index and Exhibits attached to this Report.
(d) See Financial Statement Schedules included at the end of this Report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
INTERNATIONAL MULTIFOODS CORPORATION
Dated: May 10, 1996 By /s/ Anthony Luiso Anthony Luiso Chairman of the Board, President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
/s/ Anthony Luiso Chairman of the Board, President May 10, 1996 Anthony Luiso and Chief Executive Officer (Principal Executive Officer) and Director
/s/ Duncan H . Cocroft Vice President - Finance, May 10, 1996 Duncan H. Cocroft Chief Financial Officer and Treasurer (Principal Financial Officer)
/s/ Dennis R. Johnson Vice President and May 10, 1996 Dennis R. Johnson Controller (Principal Accounting Officer)
/s/ James G. Fifield Director May 10, 1996 James G. Fifield
/s/ Robert M. Price Director May 10, 1996 Robert M. Price
/s/ Nicholas L. Reding Director May 10, 1996 Nicholas L. Reding
/s/ Jack D. Rehm Director May 10, 1996 Jack D. Rehm
/s/ Lois D. Rice Director May 10, 1996 Lois D. Rice
/s/ Peter S. Willmott Director May 10, 1996 Peter S. Willmott
Independent Auditors' Report
The Board of Directors and Shareholders International Multifoods Corporation:
Under date of April 9, 1996, except as to Note 18, which is as of April 23, 1996, we reported on the consolidated balance sheets of International Multifoods Corporation and subsidiaries as of February 29, 1996 and February 28, 1995 and the related consolidated statements of operations and cash flows for each of the years in the three-year period ended February 29, 1996, as contained in the 1996 Annual Report to Stockholders. These consolidated financial statements and our report thereon are incorporated by reference in the Annual Report on Form 10-K for the fiscal year ended February 29, 1996. In connection with our audits of the aforementioned consolidated financial statements, we also have audited the related consolidated financial statement schedule listed in Item 14. The consolidated financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion on the consolidated financial statement schedule based on our audits.
In our opinion, such consolidated financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
/s/ KPMG Peat Marwick LLP KPMG Peat Marwick LLP
Minneapolis, Minnesota April 9, 1996
Schedule II
INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES Valuation and Qualifying Accounts Three years ended February 29, 1996 (in thousands)
Notes: (a) Deductions include accounts charged off, net of recoveries, and foreign currency translation adjustments which arise from changes in current rates of exchange. (b) Classified in the balance sheets as follows:
1996 1995 1994
Trade accounts receivable $13,977 $6,658 $5,187 Miscellaneous receivables - current 5 50 32 $13,982 $6,708 $5,219
INDEX TO EXHIBITS TO ANNUAL REPORT ON FORM 10-K OF INTERNATIONAL MULTIFOODS CORPORATION FOR THE FISCAL YEAR ENDED FEBRUARY 29, 1996
3.1 Restated Certificate of Incorporation of International Multifoods Corporation, as amended to date (incorporated herein by reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993).
3.2 Bylaws of International Multifoods Corporation, as amended to date (incorporated herein by reference to Exhibit 3.2 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1994).
4.1 Indenture, dated as of January 1, 1990, between International Multifoods Corporation and First Trust of New York, National Association, successor to Morgan Guaranty Trust Company of New York (incorporated herein by reference to Exhibit 4.1 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993).
4.2 First Supplemental Indenture, dated as of May 29, 1992, supplementing the Indenture, dated as of January 1, 1990, between International Multifoods Corporation and First Trust of New York, National Association, successor to Morgan Guaranty Trust Company of New York (incorporated herein by reference to Exhibit 4.2 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993).
4.3 Officers' Certificate, with exhibits thereto, relating to the Company's Medium-Term Notes, Series A, issued under the Indenture, dated as of January 1, 1990, as supplemented by the First Supplemental Indenture, dated as of May 29, 1992, between International Multifoods Corporation and First Trust of New York, National Association, successor to Morgan Guaranty Trust Company of New York (incorporated herein by reference to Exhibit 4.3 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993).
4.4 Officers' Certificate and Authentication Order dated February 1, 1996 relating to the Company's Medium-Term Notes, Series B, including the forms of Notes, issuable under the Indenture, dated as of January 1, 1990, as supplemented by the First Supplemental Indenture, dated as of May 29, 1992, between International Multifoods Corporation and First Trust of New York, National Association, successor to Morgan Guaranty Trust Company of New York (incorporated herein by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K dated February 1, 1996).
4.5 Credit Agreement dated as of March 22, 1996 among International Multifoods Corporation, various financial institutions, Bankers Trust Company, as Syndication Agent, The First National Bank of Chicago, as Documentation Agent, and Bank of America National Trust and Savings Association, as Administrative Agent.
The Company hereby agrees to furnish to the Securities and Exchange Commission upon request copies of all other instruments defining the rights of holders of long-term debt of International Multifoods Corporation and its consolidated subsidiaries.
10.1 Rights Agreement, dated as of October 4, 1990, as amended as of March 1, 1993, between International Multifoods Corporation and Norwest Bank Minnesota, N.A., with exhibits thereto (incorporated herein by reference to Exhibit 1 to the Company's Registration Statement on Form 8-A dated October 11, 1990 and Exhibit 1 to Amendment No. 1 on Form 8 dated March 1, 1993 to the Company's Registration Statement on Form 8-A dated October 11, 1990).
10.2 Amended and Restated 1989 Stock-Based Incentive Plan of International Multifoods Corporation (incorporated herein by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended August 31, 1993).*
10.3 1986 Stock Option Incentive Plan of International Multifoods Corporation (incorporated herein by reference to Exhibit 4 to the Company's Registration Statement on Form S-8 (Registration No. 33-6223)).*
10.4 1983 Stock Option Incentive Plan of International Multifoods Corporation (incorporated herein by reference to Exhibit 4 to the Company's Registration Statement on Form S-8 (Registration No. 2-84236)).*
10.5 Award Agreement, dated as of August 18, 1989, as amended as of November 16, 1990, between International Multifoods Corporation and Anthony Luiso (incorporated herein by reference to Exhibit 10(c) to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1990 and Exhibit 10(b) to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1991).*
10.6 Irrevocable Waiver Agreement, dated as of August 17, 1989, as amended as of November 16, 1990, between International Multifoods Corporation and Anthony Luiso (incorporated herein by reference to Exhibit 10(b) to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1990 and Exhibit 10(c) to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1991).*
10.7 Non-Qualified Stock Option Agreement, dated as of March 31, 1994, between International Multifoods Corporation and Anthony Luiso (incorporated herein by reference to Exhibit 10.7 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1995).*
10.8 Stock Option Award Agreements, dated as of November 16, 1990, between International Multifoods Corporation and each of Duncan H. Cocroft and Jay I. Johnson (incorporated herein by reference to Exhibits 10(d) and 10(e), respectively, to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1991).*
10.9 Restricted Stock Award Agreement, dated as of December 11, 1992, between International Multifoods Corporation and Anthony Luiso (incorporated herein by reference to Exhibit 10.8 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993).*
10.10 Management Incentive Plan of International Multifoods Corporation, Amended and Restated as of September 17, 1993, as further amended (incorporated herein by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993 and Exhibit 10.11 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1995).*
10.11 Multifoods Division Long-Term Incentive Program.*
10.12 Management Benefit Plan of International Multifoods Corporation, Restated Effective September 17, 1993 (incorporated herein by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).*
10.13 Trust Agreement, dated July 30, 1987, between International Multifoods Corporation and Norwest Bank Minnesota, National Association, as successor trustee to Bank of America NT and SA, relating to the Management Benefit Plan of International Multifoods Corporation (incorporated herein by reference to Exhibit 10.11 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993).*
10.14 Compensation Deferral Plan for Executives of International Multifoods Corporation, Amended and Restated as of September 17, 1993 (incorporated herein by reference to Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).*
10.15 Deferred Income Capital Accumulation Plan for Executives of International Multifoods Corporation, Amended and Restated as of September 17, 1993 (incorporated herein by reference to Exhibit 10.6 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).*
10.16 Revised and Restated Employment Agreement, dated as of September 17, 1993, between International Multifoods Corporation and Anthony Luiso (incorporated herein by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).*
10.17 Trust Agreement, dated February 25, 1991, between International Multifoods Corporation and Norwest Bank Minnesota, National Association, as successor trustee to Bank of America NT and SA, relating to the Supplemental Retirement Benefit for Anthony Luiso (incorporated herein by reference to Exhibit 10.14 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993).*
10.18 Form of Revised and Restated Severance Agreement between International Multifoods Corporation and each of the Company's executive officers, other than Anthony Luiso (incorporated herein by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).*
10.19 Letter Agreement, dated July 10, 1995, between International Multifoods Corporation and Robert S. Wright regarding benefits and severance arrangements.*
10.20 Memorandum of understanding, dated March 29, 1996, between International Multifoods Corporation and Robert S. Wright regarding supplemental retirement benefits.*
10.21 Letter Agreement, dated July 29, 1994, between International Multifoods Corporation and Devendra Mishra regarding compensation and severance arrangements.*
10.22 Letter Agreement, dated August 31, 1994, between International Multifoods Corporation and John E. Sampson regarding severance arrangement (incorporated herein by reference to Exhibit 10.22 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1995).*
10.23 Memorandum of understanding, dated July 24, 1995, between International Multifoods Corporation and Jay I. Johnson regarding severance and retirement arrangements (incorporated herein by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended August 31, 1995).*
10.24 Form of Indemnity Agreement between International Multifoods Corporation and each of the Company's executive officers (incorporated herein by reference to Exhibit 10.19 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993).*
10.25 Fee Deferral Plan for Non-Employee Directors of International Multifoods Corporation, Amended and Restated as of September 17, 1993 (incorporated herein by reference to Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).*
10.26 Deferred Income Capital Accumulation Plan for Directors of International Multifoods Corporation, Amended and Restated as of September 17, 1993 (incorporated herein by reference to Exhibit 10.8 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).*
10.27 Form of Indemnity Agreement between International Multifoods Corporation and each non-employee director of the Company (incorporated herein by reference to Exhibit 10.21 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993).*
10.28 Asset Purchase Agreement dated November 15, 1991 between AGP, L.P. (as the purchaser) and International Multifoods Corporation, Multifoods Transportation, Inc., Lucan Feed Services, Inc. and The Pickaway Grain Company (as the sellers) (incorporated herein by reference to Exhibit 2(a) to the Company's Current Report on Form 8-K dated December 2, 1991).
10.29 Share Purchase Agreement dated November 15, 1991 between AGP, Inc. (as the purchaser) and Damca International Corporation and Robin Hood Multifoods, Inc. (as the sellers) (incorporated herein by reference to Exhibit 2(b) to the Company's Current Report on Form 8-K dated December 2, 1991).
10.30 Stock Purchase Agreement between International Multifoods Corporation (Seller) and Doskocil Companies Incorporated (Buyer) dated as of March 17, 1994 (incorporated herein by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K dated June 1, 1994).
10.31 Asset Purchase Agreement among Multifoods Distribution, Inc. (Buyer), International Multifoods Corporation (Buyer's Parent) and Leprino Foods Company (Seller) and James G. Leprino (Seller's Shareholder) dated as of July 29, 1994 (incorporated herein by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K dated August 22, 1994).
10.32 Stock Purchase Agreement between International Multifoods Corporation (Seller) and Tyson Foods, Inc. (Buyer) dated as of June 7, 1995 (incorporated herein by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K dated June 26, 1995).
11 Computation of Earnings (Loss) Per Common Share.
12 Computation of Ratio of Earnings to Fixed Charges.
13 1996 Annual Report to Stockholders (only those portions expressly incorporated by reference herein shall be deemed filed with the Securities and Exchange Commission).
21 List of significant subsidiaries of the Company.
23 Consent of KPMG Peat Marwick LLP.
27 Financial Data Schedule.
*Management contract or compensatory plan or arrangement required to be filed as an exhibit to Form 10-K pursuant to Item 14(c) of this Report.


ITEM 1. BUSINESS
General
From its founding in 1929 until November 15, 1983, the business of National Sanitary Supply Company (the "Company") was privately owned. In September 1983 the Company was incorporated in Delaware as a wholly-owned subsidiary of Chemed Corporation (a diversified public corporation with interests in residential and commercial plumbing and drain cleaning services, home repair service contracts, janitorial supply products distribution, medical and dental disposable product supply distribution for private practices, and home healthcare services). As used herein, "Company" refers to National Sanitary Supply Company, its wholly-owned subsidiaries and its predecessors; and "Chemed" refers to Chemed Corporation.
In June 1986 the Company sold in a public offering 1,000,000 shares of its common stock, par value $1 per share (the "Common Stock"). As of December 31, 1996 Chemed owned 83 percent of the outstanding shares of Common Stock, or 5,144,551 of the 6,162,019 shares outstanding.
In September 1988 the Company acquired by merger Century Papers, Inc., which is now a wholly-owned subsidiary ("National Southwest"). Effective December 31, 1996 Cardinal Papers, Inc., a subsidiary of National Southwest, was merged into its parent corporation.
On June 17, 1992 the Company formed National Sanitary Supply Development, Inc. ("NSSD"), a Delaware corporation, to aid its expansion program in the Midwest.
The Company conducts its business in one segment.
Description of Business
The Company is the nation's largest specialized distributor of sanitary maintenance supplies. The Company's products are sold primarily through over 750 sales personnel employed by the Company to a wide variety of commercial, institutional, and industrial customers. In 1996, the Company serviced approximately 125,000 customers located principally in Arizona, California, Colorado, Indiana, Louisiana, Michigan, Mississippi, Missouri, Nevada, New Mexico, Ohio, Oklahoma, Oregon, Tennessee, Texas, Utah and Washington. Federal, state and local governmental agencies accounted for approximately 8 percent of the Company's total sales for 1996. These sales are attributable to over 1,200 different agencies whose purchasing decisions generally are made separately. Other than sales to the aforementioned entities, no one customer accounts for more than 4 percent of net sales.
Other information called for by this item is included within Notes 1 and 2 of the Notes to Consolidated Financial Statements appearing on pages 14 and 15 of the 1996 Annual Report to Stockholders and is incorporated herein by reference.
Products and Supplies
The Company's product line consists primarily of a wide variety of sanitary maintenance supplies used by commercial, institutional, and industrial facilities. In addition, the Company also distributes, primarily through National Southwest, food service disposable products, packaging materials, and business paper for use in institutional and industrial establishments. Except for the various chemical products that are manufactured by and for the Company, the products sold by the Company are purchased from outside suppliers.
Approximately 26 percent of the Company's total sales in 1996 were of chemical and equipment products, including specialty and general purpose cleaners, floor finishes, hand soaps, deodorants, disinfectants, floor machines, vacuums and carpet extractors. A portion of these products is marketed under the "National Sanitary Supply Co." proprietary label, a federally registered trademark. Most of the proprietary-label chemical products are manufactured by the Company.
Page 3 of 13 Pages
Approximately 17 percent of the Company's total 1996 sales were of a wide variety of general maintenance products needed in the housekeeping function such as mops, buckets, brooms, brushes, trash can liners, floor mats and pads.
Approximately 33 percent of the Company's total 1996 sales were of paper products, such as towels and tissues used in public restrooms.
The remaining 24 percent of the Company's total 1996 sales included food service products such as paper napkins, plates and cups; packaging and business paper products such as tapes, boxes, computer paper, copier paper and stationery; and special order and non-stock items.
The Company purchases products from many different manufacturers. In certain product lines, such as paper products, a significant portion of purchases is made from one supplier. Although the Company has no long-term supply contracts, it expects to continue relationships with its existing suppliers. Because there are numerous sources of similar products, management does not believe that the loss of any one supplier would have a material adverse effect on the business.
Distribution System
The Company maintains over 70 distribution center and sales branch locations throughout the western, southwestern and midwestern United States. From the distribution centers, generally consisting of both a sales office and warehouse facility, products are distributed directly to National's customers, principally by a fleet of Company-owned vehicles or vehicles leased from Chemed. In addition to these distribution facilities, the Company maintains sales branch offices that carry a relatively small inventory of products, which are delivered directly to customers on an emergency basis.
Manufacturing
The Company markets a line of chemical cleaning, sanitation, and maintenance compounds under the "National Sanitary Supply Co." proprietary label. Most of these products are manufactured by the Company in its facility in Los Angeles, with some being manufactured for the Company under contract.
The Company's manufacturing operations are not labor intensive. The Company operates two shifts at its manufacturing facility and could increase its overall production substantially without incurring significant capital expenditures.
The chemicals used in the Company's manufacturing processes are purchased from a number of suppliers. The Company does not believe that the loss of any one chemical supplier would have a material adverse effect on its business and believes that alternative sources could be found in a relatively short period of time.
Employees
As of December 31, 1996, the Company employed 1,710 persons, of whom 755 were field sales personnel; 320 were clerical personnel; and the remainder were production personnel, warehousing and shipping personnel, and headquarters management and administrative personnel. The Company generally considers its relationship with its employees as good. 8% of its employees are represented by labor unions.
Competition
The market for sanitary maintenance and paper supplies is highly competitive. Competition is, however, highly fragmented. In the United States, over 7,000 firms compete in the sanitary maintenance supply distribution business on a local or regional basis. Competition also exists indirectly from wholesale price clubs, manufacturers selling directly to customers, and foodservice distributors.
Page 4 of 13 Pages
The principal competitive factors in this market are the level of service provided; range of products offered; speed, efficiency and reliability of delivery; and price.
Environmental Matters
The Company's operations are subject to various federal, state, and local laws and regulations regarding the environmental aspects of the manufacture and distribution of chemical components. The Company, to the best of its knowledge, is currently in compliance in all material respects with the environmental laws and regulations affecting its operations. Capital expenditures for the purpose of environmental protection during 1997 and 1998 are not expected to be material in amount.
ITEM 2.

ITEM 2. PROPERTIES
The Company operates three different types of facilities: branch sales offices, regional distribution centers, and a combination distribution center and manufacturing facility. Branch sales offices provide office facilities for sales representatives whose territories are located in outlying areas as well as storage facilities for maintaining a small inventory of products for emergency shipments. Regional distribution centers generally consist of not only a sales office but also a warehouse facility that delivers products to customers in a wide geographic area including those markets covered by the related sales branch offices. The third type of facility performs the same function as a regional distribution center with the added responsibility of manufacturing and delivering products to regional distribution centers. The following table provides a summary of the major facilities operated by the Company as of December 31, 1996:
Page 5 of 13 Pages
(a) Represents forty-four (44) separate branch sales offices located throughout the western, midwestern, and southwestern United States.
The owned property is held in fee and is not subject to any major encumbrance. Leased properties are occupied under rental agreements having terms ranging up to ten years and with month-to-month tenancies. Certain of the leases provide for payment by the Company of insurance, property taxes, and building operating expenses and for options to purchase and options to renew. The Company does not believe that failure to obtain the renewal of any lease would have a material adverse effect on its business.
Management considers all of the facilities to be in good operating condition and to be generally adequate for the Company's present and anticipated needs.
ITEM 3.

ITEM 3. LEGAL PROCEEDINGS.
None.
Page 6 of 13 Pages
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company are as follows:
(1) Mr. E. L. Hutton is Chairman of the Company and Chairman and Chief Executive Officer of Chemed. He has held the latter two positions since November 1993. Previously, from April 1970 to November 1993, he held the positions of President and Chief Executive Officer of Chemed. He is the father of Mr. Thomas C. Hutton, a Vice President of Chemed and a director of the Company.
(2) Mr. McNamara is a Vice Chairman of the Company and President of Chemed. From August 1986 to August 1994 he was General Counsel and Assistant Secretary of the Company. He served as Executive Vice President, General Counsel and Secretary of Chemed from November 1993 to August 1994, serving as Chemed's Vice Chairman from May 1992 to November 1993.
(3) Mr. Voet is President and Chief Executive Officer of the Company and is also an Executive Vice President of Chemed. He was Vice Chairman and Chief Executive Officer of the Company from November 1986 to January 1992. He served as Chemed's Vice Chairman from 1988 until November 1993.
(4) Mr. Garber is a Vice Chairman of the Company. He was President and Chief Operating Officer of the Company from April 1986 to January 1992.
(5) Mr. Jackson is an Executive Vice President of the Company and is Executive Vice President and General Manager of National Southwest. He has held these positions since November and October 1994, respectively. He was Director of Sales for Scott Paper Co.'s Southwest Division from January 1990 to October 1994.
(6) Mr. Vuylsteke is an Executive Vice President of the Company and General Manager of its National West division and has held these positions since January 1992 and July 1991, respectively. He was Vice President and General Manager of the Company's Northwest division from February 1989 to July 1991.
(7) Mr. Sander is Senior Vice President, Treasurer and Chief Financial Officer of the Company, and has held these positions since August 1996 and May 1988, respectively. From August 1988 to August 1996 he was a Vice President of the Company.
Page 7 of 13 Pages
Each executive officer holds office until the annual election at the next annual organizational meeting of the Board of Directors of the Company, which is scheduled to be held on May 19, 1997.
PART II
ITEM 5.

ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS.
MARKET AND PRICE RANGE OF COMMON STOCK, DIVIDENDS
The Company's Common Stock (par value $1 per share) trades on the NASDAQ National Market tier of its Stock Market under the symbol NSSX. The range of the high and low trade prices for the Company's Common Stock and dividends paid per share for each quarter of 1995 and 1996 are set forth below:
Future dividends are necessarily dependent upon the Company's earnings and financial condition, and other factors not presently determinable.
APPROXIMATE NUMBER OF HOLDERS OF COMMON STOCK
*Includes only stockholders of record; does not include those whose shares are held in nominee name or within clearinghouse positions of brokers, banks and other institutions. The Company believes its stockholders number more than 500.
ITEM 6.

ITEM 6. SELECTED FINANCIAL DATA.
The information called for by this Item for the five years ended December 31, 1996, appearing on page 1 of the 1996 Annual Report to Stockholders is incorporated herein by reference.
ITEM 7.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
Page 8 of 13 Pages
OF OPERATIONS.
The information called for by this Item is set forth on pages 20 through 21 of the 1996 Annual Report to Stockholders and is incorporated herein by reference.
ITEM 8.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information called for by this Item set forth on pages 10 through 19 of the 1996 Annual Report to Stockholders, and the Unaudited Quarterly Data appearing on page 13 of the 1996 Annual Report to Stockholders, are incorporated herein by reference.
ITEM 9.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.
The directors of the Company are:
The information required under this Item with respect to directors is set forth under "Election of Directors" in the Company's 1997 Proxy Statement which is incorporated herein by reference, with the exception of Mr. Cunningham. Mr. Cunningham, age 52, is a Senior Chemical Advisor to Schroder Wertheim, Inc., New York, New York, an investment banking, asset management and securities firm. He has held this position since March 1992. From October 1990 to March 1992 he was a Managing Director of Furman Selz Incorporated, New York, New York, an institutional investment firm. He is a director of Chemed.
The information required under this Item with respect to executive officers is set forth under Part I hereof. The information required under this item set forth under "Section 16(a) Beneficial Ownership Reporting Compliance", in the Company's 1997 Proxy Statement, is incorporated herein by reference.
ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION.
Information required under this Item is set forth under "Executive Compensation" in the Company's 1997 Proxy Statement which is incorporated herein by reference.
Page 9 of 13 Pages
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information required under this Item is set forth under "Security Ownership of Certain Beneficial Owners and Management" in the Company's 1997 Proxy Statement which is incorporated herein by reference.
ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information required under this Item is set forth under "Certain Arrangements and Transactions" in the Company's 1997 Proxy Statement which is incorporated herein by reference.
Page 10 of 13 Pages
PART IV
ITEM 14.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
EXHIBITS
3.1. Certificate of Incorporation of Chemed Supply, Inc., dated September 19, 1983.*
3.2. Certificate of Merger of La-Ru Truck Rental Company, Inc. into Chemed Supply, Inc., dated November 15, 1983.*
3.3. Certificate of Amendment of the Certificate of Incorporation, as amended, of National Sanitary Supply Company, dated July 13, 1987.*
3.4. Amended and Restated By-Laws of the Company as of November 3, 1993.*
10.1. 1986 Stock Incentive Plan of the Company, as amended through August 4, 1993.*,***
10.2. Executive Salary Protection Plan of the Company.*,***
10.3. Form of Executive Salary Protection Agreement.*,***
10.4. Amended Tax Procedures and Services Agreement as of January 1, 1993 between the Company and Chemed Corporation.*
10.5. Employment Agreement, dated November 6, 1995, between Thomas M. Lane and the Company.*,***
10.6. 1988 Stock Incentive Plan adopted May 19, 1988, as amended through August 4, 1993.*,***
10.7. $1,600,000 Promissory Note issued by Century Papers, Inc. to Chemed Corporation on November 10, 1988.*
10.8. $9,400,000 Promissory Note issued by the Company to Chemed Corporation on November 10, 1988.*
10.9. $8,000,000 Promissory Note issued by the Company to Chemed on January 1, 1993.*
10.10. Benefit Equalization Plan, as amended November 6, 1991.*,***
10.11. Employment Contracts with Executives.*,***
10.12. Amendment No. 4 to Employment Contracts with Executives.***
10.13. Assignment of $1,600,000 Promissory Note from Century Papers, Inc. to the Company of May 1, 1992.*
10.14. Employees Thrift and Profit Sharing Plan.*,***
10.15. Trust Agreement of Employees Thrift and Profit Sharing Plan.*,***
10.16. Employment Agreement, dated May 20, 1996, between W. Dwight Jackson and Century Papers, Inc.***
10.17. 1995 Stock Incentive Plan of the Company. *,***
Page 11 of 13 Pages
10.18. Split Dollar Life Insurance Agreements.*, ***
11.1. Computation of earnings per share.
13.1. 1996 Annual Report to Stockholders
21.1. Subsidiaries of the Company.
23.1. Consent of Independent Accountants.
24.1. Powers of Attorney.
27.1. Financial Data Schedule.+
* This exhibit is being filed by means of incorporation by reference (see Index to Exhibits on page E-1). Each other exhibit is being filed with this report.
*** Management contract or Executive Compensation Plan or Arrangement.
+ Not filed herewith.
FINANCIAL STATEMENT SCHEDULES
See Index to Financial Statements and Financial Statement Schedules on page S-1.
REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the fourth quarter of the year ended December 31, 1996.
Page 12 of 13 Pages
SIGNATURES
Pursuant to the requirement 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.
NATIONAL SANITARY SUPPLY COMPANY
March 28, 1997 By: /s/ PAUL C. VOET ------------------------ Paul C. Voet President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934 this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
* Naomi C. Dallob, General Counsel and Secretary of the Company, by signing her name hereto signs this document on behalf of each of the persons indicated above pursuant to powers of attorney duly executed by such persons and filed with the Securities and Exchange Commission.
March 28, 1997 /s/ NAOMI C. DALLOB - -------------- -------------------------- Date Naomi C. Dallob (Attorney-in-Fact and a Director)
INDEX TO EXHIBITS
E-2
E-3
E-4