Item 1. Business
Savannah Foods & Industries, Inc. ("Registrant") was incorporated in Delaware on February 19, 1969, as the successor to Savannah Sugar Refining Corporation, which was originally incorporated in New York in 1916.
Registrant and its subsidiaries collectively comprise one business segment and are engaged in the production, marketing, and distribution of food products, primarily refined sugar.
Registrant and its wholly-owned subsidiaries, Colonial Sugars, Inc. and Everglades Sugar Refinery, Inc., are engaged in the refining and marketing of a complete line of bulk, packaged and liquid sugars and sugar products, including edible molasses, liquid animal feeds and corn syrup blends. These products are marketed primarily in the southeastern portion of the United States, Louisiana, and Texas, but are also widely distributed into other states generally east of the Mississippi and south of New England. Packaged sugar is marketed under the trade names DIXIE CRYSTALS(R), COLONIAL(R), EVERCANE(R), but is also sold under Registrant's other controlled labels and under customers' private label brands. These products are marketed both by means of direct sales and through brokers and are primarily distributed directly to the customer by common carrier truck or railcar.
Michigan Sugar Company, a wholly-owned subsidiary of Registrant, and its wholly-owned subsidiary, Great Lakes Sugar Company, are engaged in the processing of sugar beets into refined sugar and the production of beet pulp and molasses. The refined sugar is marketed primarily in the states of Michigan and Ohio, but is also distributed in the midwestern and eastern parts of the United States. Packaged sugar is marketed under the trade name PIONEER(R), but is also sold under customers' private label brands. These products are marketed both by means of direct sales and through brokers and are primarily distributed directly to the customer by common carrier truck or railcar. Most of the beet pulp is pelletized and sold for export. The balance is sold in the domestic market. The majority of the molasses is sold to Registrant's beet molasses desugarization facility for further processing to recover additional sugar.
Dixie Crystals(R) Foodservice, Inc., a wholly-owned subsidiary of Registrant, produces and markets a line of sugar envelopes and portion control items consisting of individual servings of salt, pepper, non-dairy creamer, etc., under the trade names DIXIE CRYSTALS(R) and PIONEER(R), and under various private labels. Foodservice also markets a saccharin-based sweetener under the trade name of SWEET THING(R) and an aspartame-based sweetener under
the trade name of SWEET THING II(R). These products are marketed to the food service trade through-out the United States both by means of direct sales and through brokers and are primarily shipped directly to customers by common carrier truck.
King Packaging Company, Inc. a wholly-owned subsidiary of Dixie Crystals(R) Foodservice, Inc., packs custom made meal kits for the food service industry and provides complimentary products to the portion control products manufactured at Registrant's other foodservice locations. These products are marketed to the food service trade through-out the United States both by means of direct sales and through brokers and are primarily shipped directly to customers by common carrier truck.
Raceland Sugars, Inc., a wholly-owned subsidiary of Registrant, operates a raw sugar mill and is engaged in the business of producing raw sugar which is marketed in the Louisiana area. Additionally, the by-products, molasses and bagasse, are currently sold in the domestic market.
During 1994, Registrant entered into agreements with a Mexican business group to conduct several joint ventures in the Mexican sweetener industry. The projects related to the joint ventures are in various stages of development, but as of the end of fiscal 1994, none were operational nor had a material amount of Registrant's assets been committed to the joint ventures.
Parent and Subsidiaries. The following list presents the relationship of Registrant to its subsidiaries at October 2, 1994:
(a) *Michigan Sugar Company, a Michigan corporation, wholly-owned subsidiary.
(b) *Great Lakes Sugar Company, an Ohio corporation, wholly-owned subsidiary of Michigan Sugar Company.
(c) *Everglades Sugar Refinery, Inc., a Florida corporation, wholly-owned subsidiary.
(d) *Food Carrier, Inc., a Georgia corporation, wholly-owned subsidiary.
(e) *Dixie Crystals(R) Foodservice, Inc., a Delaware corporation, wholly-owned subsidiary.
(f) *Biomass Corporation, a Delaware corporation, wholly-owned subsidiary.
(g) *Colonial Sugars, Inc., a Delaware corporation, wholly-owned subsidiary.
(h) *Savannah Sugar Refining Corporation, a Georgia corporation, wholly-owned subsidiary.
(i) *Raceland Sugars, Inc., a Delaware corporation, wholly-owned subsidiary.
(j) *Chatham Sugar Company, a Delaware corporation, wholly-owned subsidiary.
(k) *South Coast Sugars, Inc., a Delaware corporation, wholly-owned subsidiary.
(l) *Phoenix Packaging Corporation, a Delaware corporation, wholly-owned subsidiary.
(m) *Pioneer Trading Company, a Virgin Islands corporation, wholly-owned subsidiary of Michigan Sugar Company.
(n) *Savannah Investment Company, a Delaware corporation, wholly-owned subsidiary.
(o) *King Packaging Company, Inc., a Georgia corporation, wholly-owned subsidiary of Dixie Crystals(R) Foodservice, Inc.
(p) *Savannah International Company, a Delaware corporation, wholly-owned subsidiary.
(q) *Savannah Packaging Company, a Delaware corporation, a wholly-owned subsidiary of Savannah International Company.
(r) *Savannah Total Invert Company, a Delaware corporation, a wholly-owned subsidiary of Savannah International Company.
(s) Refined Sugar Trading Institute, Inc., a Delaware corporation, an Export Trading Company, is a non-profit corporation owned jointly with a non-affiliated company.
*Indicates subsidiaries included in consolidated financial statements.
The operations of Registrant and its wholly-owned subsidiaries, Everglades Sugar Refinery, Inc., Colonial Sugars, Inc., Michigan Sugar Company, Dixie Crystals(R) Foodservice, Inc., and Raceland Sugars, Inc. comprise Registrant's only significant product line which consists of sugar products.
Raw Materials. A large portion of the raw sugar for Registrant's Savannah refinery and all the raw
sugar for Registrant's wholly-owned subsidiary, Everglades Sugar Refinery, Inc., is normally supplied by cane sugar producers in the state of Florida. A large portion of the raw sugar for Registrant's subsidiary, Colonial Sugars, Inc., is normally supplied by cane sugar producers in the state of Louisiana. In the case of the Savannah refinery and Colonial Sugars, Inc., the remaining raw sugar requirements are purchased on the open market, and consist of off-shore cargoes purchased directly and through raw sugar trade houses. Registrant uses the futures market as a hedging mechanism, as circumstances warrant.
Michigan Sugar Company and its subsidiary, Great Lakes Sugar Company, process sugar beets under annual contracts from Michigan and Ohio farmers. The land around the processing plants of the company is well suited to growing sugar beets, and the company has not experienced difficulty in obtaining a sufficient quantity of beets to support successful operation of its plants. Under the contracts with the farmers, certain sales expenses and other non-processing expenses are first deducted from the proceeds of refined sugar, pulp, and molasses sales after which the balance is divided between the company and the farmers.
Competition. All phases of the refined sugar business and all geographic markets of the business engaged in by Registrant and its subsidiaries are highly competitive. This Competition is not only with other cane sugar refiners and beet sugar processors, but also with corn sweeteners, artificial sweeteners, and with resellers who purchase all of these sweeteners. Competing cane sugar refineries are located in Florida, Louisiana, Maryland, New York, Texas, and California. Competing beet sugar processors are located in California, Colorado, Idaho, Michigan, Minnesota, Montana, Nebraska, North Dakota, Oregon, Texas, and Wyoming.
Competition is primarily based upon price, but is also based upon product quality and customer service. At times, the cane sugar refiners are at a competitive disadvantage to the beet sugar producers due to differing methods by which raw materials are purchased. In the beet industry, the beet farmers participate in any increase or decrease in the selling price of refined sugar. However, in the cane industry, refiners purchase raw sugar at prices which are kept artificially high by United States policy to support sugar farmers, and which do not fluctuate in tandem with refined sugar selling prices. Consequently, when competitive pressures reduce refined sugar prices, the margins of beet sugar producers are affected less adversely than those of cane sugar refiners.
Number of Employees. At October 2, 1994, Registrant and its subsidiaries had 2,095 full-time employees. In addition, Michigan Sugar Company, Great Lakes Sugar Company, and Raceland Sugars, Inc.
employ a number of seasonal workers during the beet and cane processing campaigns.
Item 2.

Item 2. Properties.
Registrant and its wholly-owned subsidiaries own and operate three cane sugar refineries, two sugar melt and transfer facilities, five sugar beet processing plants, a beet molasses desugarization facility, a raw sugar mill, and four foodservice production facilities.
The three cane sugar refineries are located in Port Wentworth, Georgia; Gramercy, Louisiana and Clewiston, Florida and are owned by Registrant, Colonial Sugars, Inc. and Everglades Sugar Refinery, Inc., respectively. The Port Wentworth facility borders the Savannah River and the Gramercy facility borders the Mississippi River. Both of these locations include a deep water dock with facilities for shipping and receiving ocean-going vessels.
Registrant owns sugar melt and transfer facilities in St. Louis, Missouri and Ludlow, Kentucky. The St. Louis facility borders on the Mississippi River and has a dock for receiving sugar and molasses shipments.
Michigan Sugar Company owns and operates four sugar beet processing plants which are located in Caro, Carrollton, Sebewaing, and Croswell, Michigan. Great Lakes Sugar Company owns and operates a sugar beet processing plant in Fremont, Ohio and a storage facility in Findlay, Ohio. The beet molasses desugarization facility, which is owned by Registrant, is located in Fremont, Ohio.
Dixie Crystals(R) Foodservice, Inc. owns two production facilities, located in Perrysburg, Ohio and Visalia, California, and leases one facility in Savannah, Georgia. At the end of the lease term, Registrant may purchase the Savannah facility for $10.00. Also, King Packaging Company, Inc. owns and operates a packaging facility in Bremen, Georgia.
Raceland Sugars, Inc. owns and operates a raw sugar mill in Raceland, Louisiana. In addition to its milling operations, Raceland produces and harvests sugar cane for use at its mill. These farming operations are done largely on leased land.
The facilities listed above provide Registrant with sufficient productive capacity to meet the demands of its current markets.
Item 3.

Item 3. Legal Proceedings.
Not applicable.
Item 4.

Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of security holders during the fourth quarter of fiscal 1994.
PART II
Item 5.

Item 5. Market for Registrant's Common Stock and Related Stockholder Matters.
Registrant's common stock, par value $.25 per share ("Common Stock"), is presently listed and traded on the New York Stock Exchange ("NYSE") under the symbol "SFI". (Until October 14, 1992, it was traded in the over-the-counter market under the symbol "SVAN".) The following table sets forth for the periods indicated the high and low sales prices on the NYSE composite tape for when the Common Stock was traded on the NYSE and the high and low bids for the Common Stock for when it was quoted on the NASDAQ National Market System. The bids set forth below do not include retail mark-ups, mark-downs, or commissions and the prices represent quotations between dealers and may not necessarily represent actual transactions. The information provided has been adjusted to the nearest 1/8 and was compiled from quotations furnished by the National Association of Securities Dealers, Inc. and the New York Stock Exchange. Registrant has paid cash dividends on its common stock every year since 1924. The following information is for the twelve-month period ended January 3, 1993, the nine-month period ended October 3, 1993 and the twelve-month period ended October 2, 1994:
As of October 2, 1994, the following indicates the number of holders of record of equity securities:
Title of Class Number of Record Holders -------------- ------------------------ Common Stock 3,462
Item 6.

Item 6. Selected Financial Data.
See following pages.
SAVANNAH FOODS & INDUSTRIES, INC. SUMMARY OF OPERATIONS
(In thousands except for per share amounts and ratios)
(1) On July 21, 1993, the Company changed its fiscal year end from the Sunday closest to December 31 to the Sunday closest to September 30. As a result, the fiscal period ended October 3, 1993 represents a nine-month period. For further information, see Note 2 to the accompanying consolidated financial statements.
(2) The Company adopted FAS 109, "Accounting for Income Taxes" during the fiscal period ended October 3, 1993 and adopted FAS 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" during the fiscal period ended January 3, 1993. For more information, see Notes 7 and 10 to the accompanying consolidated financial statements.
(3) Capital expenditures include $4,757 for the acquisition of King Packaging Company, Inc. fixed assets in July 1993 and $15,798 for the acquisition of Raceland Sugars, Inc. fixed assets in October 1991.
(4) Based on shares outstanding at end of fiscal period.
Item 7.

Item 7. Management's Discussion and Analysis of the Company's Financial Position and Results of Operations.
Change in fiscal year end:
On July 21, 1993, the Company changed its fiscal year end from the Sunday closest to December 31 to the Sunday closest to September 30, beginning with the fiscal period ended October 3, 1993. The decision to change the fiscal year end was made to conform the Company's financial reporting year to the natural business year of the sugar industry. This is further discussed in Notes 1 and 2 to the consolidated financial statements.
Liquidity
In 1994 the Company expanded its Total Quality Program to include a working capital reduction program. The purpose of this program is to minimize operating working capital, defined as non-cash assets and non-interest bearing liabilities including dividends payable, and to therefore improve liquidity. The program has been successful and the Company's liquidity improved by $24,758,000. The improved liquidity is primarily represented by an increase in cash and equivalents of $20,955,000 and a decrease in short-term debt of $26,300,000 net of a decrease in investments included in other current assets in 1993 of $19,733,000. Operating working capital decreased by $26,248,000. This decrease was primarily in inventories ($60,299,000) and accounts receivable ($11,254,000) net of a decrease in accounts payable ($49,457,000). During 1994 about $1,490,000 of the decrease in operating working capital was used to fund expenditures (primarily dividends and capital additions, net of asset sales) in excess of net income adjusted for non-cash transactions.
Capital Resources
Long-term debt, excluding the current portion, decreased $1,854,000 as a result of debt payments. Changes in debt and equity resulted in an increase from 42% to 43% in the ratio of long-term debt to total capital. At October 2, 1994, the Company had $145,000,000 in revolving credit facilities, of which $20,000,000 was outstanding as long-term debt. The Company had no short-term debt as of October 2, 1994. The remaining available balance of $125,000,000 is intended to meet working capital and other cash needs as they arise. All of the $145,000,000 of available facilities are committed through September 30, 1996. The revolving credit facilities, in general, enable the Company to borrow at the banks' cost of funds plus 1/2%.
In addition, Michigan Sugar Company and Raceland Sugars, Inc. can borrow from the Commodity Credit Corporation against their respective sugar inventory balances to meet working capital requirements and to provide a hedge against reduced refined sugar selling prices.
At October 2, 1994, stockholders' equity was $188,174,000 compared to equity at October 3, 1993, of $194,714,000. Equity increased as a result of earnings of $5,743,000 for the year ended October 2, 1994, a
reduction in the minimum pension liability of $1,243,000, and a reduction in the note receivable from the employee stock ownership plan of $643,000. Dividends decreased equity by $14,169,000.
Fixed asset additions during the year ended October 2, 1994, were $23,367,000 and proceeds from sale of fixed assets were $3,309,000. The capital expenditures were primarily upgrading and installing sugar packaging and production equipment and concentrated on cost saving or expansion projects which are expected to benefit the Company through increased efficiency, improved quality control and expanded operational capabilities. The Company expects that expenditures for fixed assets, net of cash receipts from disposals, in fiscal 1995 will approximate $17,000,000.
Effective December 30, 1991, the first day of the year ended January 3, 1993, the Company adopted Statement of Financial Accounting Standards No. 106 - Employers' Accounting for Postretirement Benefits Other Than Pensions (FAS 106). The cumulative effect of adopting FAS 106 was a one-time noncash charge of $18,170,000, net of tax benefits, or $.68 per share. This new accounting standard does not impact the cash flows of the Company. For further information, see Note 10 to the accompanying consolidated financial statements.
Effective January 4, 1993, the first day of the nine-month period ended October 3, 1993, the Company adopted Statement of Financial Accounting Standards No. 109 - Accounting for Income Taxes (FAS 109). The cumulative effect of adopting FAS 109 was a one-time noncash credit to income of $600,000, or $.02 per share. The credit was recorded as the cumulative effect of a change in an accounting principle. This new accounting standard does not impact the cash flows of the Company. For further information, see Note 7 to the accompanying consolidated financial statements.
Results of Operations
Year ended October 2, 1994 and nine months ended October 3, 1993
The Company's net income for the fiscal year ended October 2, 1994 (fiscal 1994) was $5,743,000, or $.22 per share, compared to income of $2,586,000, or $.10 per share, for the nine months ended October 3, 1993 (fiscal 1993). Income for fiscal 1993 includes a $3,030,000 charge to net income (a $4,900,000 increase in cost of sales, net of the associated $1,870,000 income tax benefit) related to a LIFO inventory liquidation at Michigan Sugar as further discussed in Note 2 to the consolidated financial statements and a $600,000 cumulative effect credit due to adopting FAS 109. Income for fiscal 1993 before the cumulative effect of adopting FAS 109 was $1,986,000 or $.08 per share. Average weekly sales volume and prices were down in fiscal 1994 compared to fiscal 1993 due to competitive pressure from beet sugar producers marketing a larger beet crop along with additional sugar carried over from the previous year.
Productivity increased again in fiscal 1994 at the cane refineries. However, higher raw sugar costs caused by a low raw sugar quota reduced
average weekly operating income in this division compared to fiscal 1993.
Michigan Sugar's average weekly sales volume increased 4% in fiscal 1994 due to a larger crop in Michigan and a carry over from the previous crop. However, average weekly operating income dropped from fiscal 1993 due to lower beet pulp prices and a smaller beet crop in Ohio.
Dixie Crystals Foodservice's average weekly operating income decreased from fiscal 1993 due to higher sugar costs and competitive pricing pressures. Cost cutting programs which lowered manufacturing costs helped minimize the impact of these negative factors.
Raceland Sugars, Inc. showed a significant increase in average weekly operating income in fiscal 1994 compared to fiscal 1993 as a result of higher raw sugar prices in 1994.
Selling, general and administrative expenses decreased 7% on an average weekly basis in fiscal 1994 from fiscal 1993 primarily due to a reduction in storage costs achieved through a production optimization program.
Interest expense decreased slightly on an average weekly basis in fiscal 1994 due to lower short-term borrowings.
The effective income tax rate for fiscal 1994 was 33% compared to 37% in fiscal 1993. The lower tax rate in fiscal 1994 is primarily due to lower state income tax expense.
The outlook is brighter for fiscal 1995. On October 1, 1994, the U.S. Department of Agriculture implemented marketing allotments which should limit the amount of beet sugar which can be sold in the United States. The continued expansion of beet sugar and the resulting negative impact on refined sugar prices has depressed the Company's earnings over the last four years. Marketing allotments are intended to raise refined selling prices to prevent forfeiture of sugar under loan with the Commodity Credit Corporation.
Additionally, higher sugar content of beets in Michigan and Ohio, processing more sugar cane at our Raceland raw sugar mill, and an emphasis on reducing costs and promoting value-added products which are not impacted by government legislation should continue to add to the Company's profitability.
Nine months ended October 3, 1993 and year ended January 3, 1993
The Company's net income for the nine months ended October 3, 1993, (fiscal 1993) was $2,586,000, or $.10 per share, compared to income of $9,170,000, or $.35 per share, for the year ended January 3, 1993 (fiscal 1992). The Company's net income for fiscal 1992 includes the impact of adopting FAS 106. Income for fiscal 1992 before the cumulative effect of adopting FAS 106 was $27,340,000, or $1.03 per share. Average weekly sales volume and prices were down in fiscal 1993
compared to fiscal 1992 due to competitive pressure from beet sugar producers and cane refiners fighting for market share.
Productivity at the cane refineries during fiscal 1993 was excellent. The Colonial refinery set an average daily production record, and the Savannah refinery just missed doing likewise.
Michigan Sugar's average weekly sales volume increased 17% in fiscal 1993 due to a larger beet crop compared to fiscal 1992. However, sugar and byproduct pricing were down and average weekly operating income decreased from fiscal 1992.
Dixie Crystals Foodservice showed good improvements in sales and profits on an average weekly basis when compared to fiscal 1992. Lower manufacturing costs were achieved through the move of the Savannah facility to its new location.
Raceland Sugars, Inc. showed an increase in average weekly operating income as a result of higher sales volume offset set by lower raw sugar prices.
Selling, general and administrative expenses increased in fiscal 1993 on an average weekly basis due to higher selling costs at Michigan Sugar caused by a larger beet crop and higher administrative costs.
Interest expense increased primarily due to the increased long-term debt acquired in the latter part of fiscal 1992 and the acquisition of King Packaging in July 1993.
The effective tax rate for fiscal 1993 was 37% compared to 33% in fiscal 1992. The higher tax rate in fiscal 1993 is due to a 1% increase in the statutory rate in 1993 and to the receipt of non-taxable life insurance proceeds in 1992.
Item 8.

Item 8. Financial Statements and Supplementary Data.
(a) Financial Statements: Page ----
Report of Independent Accountants 15
Consolidated Balance Sheets at October 2, 1994 and October 3, 1993 16
Consolidated Statements of Operations for the fiscal periods ended October 2, 1994, October 3, 1993 and January 3, 1993 17
Consolidated Statements of Changes in Stockholders' Equity for the fiscal periods ended October 2, 1994, October 3, 1993 and January 3, 1993 18
Consolidated Statements of Cash Flows for the fiscal periods ended October 2, 1994, October 3, 1993 and January 3, 1993 19
Notes to Consolidated Financial Statements 20
(b) Financial Statement Schedules for the fiscal periods ended October 2, 1994, October 3, 1993 and January 3, 1993:
V - Property, Plant and Equipment 37
VI - Accumulated Depreciation and Amortization of Property, Plant and Equipment 38
Other schedules are omitted because they are not applicable, or the required information is shown in the financial statements or notes thereto.
Report of Independent Accountants ---------------------------------
November 18, 1994
To the Stockholders and Board of Directors of Savannah Foods & Industries, Inc.
In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Savannah Foods & Industries, Inc. at October 2, 1994, and October 3, 1993, and the results of their operations and their cash flows for the fifty-two weeks ended October 2, 1994, the thirty-nine weeks ended October 3, 1993 and the fifty-three weeks ended January 3, 1993, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.
As discussed in Notes 7 and 10 to the financial statements, the Company changed its methods of accounting for income taxes and accounting for postretirement benefits other than pensions, during the thirty-nine weeks October 3, 1993 and the fifty-three weeks ended January 3, 1993, respectively.
PRICE WATERHOUSE LLP
Savannah, Georgia
SAVANNAH FOODS & INDUSTRIES, INC. Consolidated Balance Sheets (In thousands except for shares and per share amounts)
(The accompanying notes are an integral part of the financial statements.)
SAVANNAH FOODS & INDUSTRIES, INC. Consolidated Statements of Operations (In thousands except for shares and per share amounts)
(The accompanying notes are an integral part of the financial statements.)
SAVANNAH FOODS & INDUSTRIES, INC. Consolidated Statements of Changes in Stockholders' Equity (In thousands except for shares and per share amounts)
(The accompanying notes are an integral part of the financial statements.)
SAVANNAH FOODS & INDUSTRIES, INC. Consolidated Statements of Cash Flows (In thousands of dollars)
(The accompanying notes are an integral part of the financial statements.)
SAVANNAH FOODS & INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Summary of Significant Accounting Policies:
Fiscal year - As described in Note 2, the Company changed its fiscal year end from the Sunday closest to December 31 to the Sunday closest to September 30. The fiscal periods ended October 2, 1994, October 3, 1993 and January 3, 1993 include 52 weeks, 39 weeks and 53 weeks, respectively.
Principles of consolidation and business segments - The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly-owned. The Company has one primary business segment - Sugar Products.
Changes in accounting principles - As discussed in Note 7, Statement of Financial Accounting Standards No. 109 - Accounting for Income Taxes (FAS 109) was prospectively adopted effective January 4, 1993, the first day of the fiscal period ended October 3, 1993. As discussed in Note 9, Statement of Financial Accounting Standards No. 106 - Employers' Accounting for Postretirement Benefits Other Than Pensions (FAS 106) was adopted effective December 30, 1991, the first day of the fiscal period ended January 3, 1993.
Cash equivalents - Cash equivalents include all investments purchased with an original maturity of 90 days or less which have virtually no risk of loss of value of the principal amount of the investment.
Inventories - Inventories are valued at the lower of cost or market. Cost is determined by the last-in, first-out (LIFO) method for sugar, packaging materials, and certain other items. Costs for maintenance parts, sugar cane and other non-sugar products are determined using the first-in, first-out (FIFO) and moving average methods.
Futures transactions and interest rate swaps - The Company uses futures and other financial instruments as hedges in its inventory purchasing and cash management programs. Gains and losses on such transactions related to inventory are matched to specific inventory purchases and charged or credited to cost of sales as such inventory is sold. Gains and losses on transactions related to loans are included in interest expense during the period in which the related instruments are outstanding. In connection with the Company's futures trading activity, the Company maintains deposits with futures brokers. These deposits are included in "Other current assets".
Investments in marketable securities - At October 3, 1993, the Company had invested in marketable securities directly and through certain investment partnerships and mutual funds. The estimated fair market value of these investments approximated the carrying value of $19,733,000 based on quoted market prices and dealer quotes. These
investments are included in "Other current assets" at October 3, 1993. No investments in marketable securities are held at October 2, 1994.
Amortization of intangibles - The Company has intangible assets included in "Other assets" aggregating $8,031,000 and $10,648,000 at October 2, 1994 and October 3, 1993, respectively. These assets are being amortized over five years. Amortization expense for the fiscal periods ended October 2, 1994, October 3, 1993 and January 3, 1993 was $2,617,000, $1,363,000 and $1,328,000, respectively.
Property, plant and equipment - Property, plant and equipment is valued at cost less accumulated depreciation and amortization. For financial reporting purposes, depreciation is computed on the straight-line method. Accelerated depreciation methods are used for tax purposes on $266,294,000 of equipment.
Accrued expenses related to beet and sugar cane operations - The Company's beet and sugar cane processing plants are generally operated from October through February and then, from March through September, are repaired for the next processing cycle. As sugar is processed from October through February, the Company accrues estimated repair costs and other costs to be incurred in March through September and includes such costs in inventory and, as the sugar is sold, in cost of sales. In contrast, some sugar processors capitalize such costs and include them as prepaid expenses related to the next processing cycle.
Fair value of financial instruments - For cash, cash equivalents, accounts receivable, accounts payable, accrued expenses and short-term borrowings, the carrying amounts approximate fair value because of the short maturities of these instruments. See Note 6 for discussion of the fair value of long-term debt.
Revenue recognition - The Company recognizes revenue as product is shipped.
Reclassifications - Certain prior year amounts have been reclassified to conform to current year presentation.
Note 2 - Change in Fiscal Year End:
In July 1993, the Company changed its fiscal year end from the Sunday closest to December 31 to the Sunday closest to September 30 in order to conform the Company's financial reporting to the natural business year of the sugar industry. Inventory quantities are significantly lower at the end of the new fiscal year than at the end of a calendar year. Therefore, as a consequence of the change in fiscal year end the Company experienced a LIFO inventory liquidation and recorded a charge to operations of $3,030,000, net of tax of $1,870,000, during the fiscal period ended October 3, 1993. To aid comparative analysis, the Company has presented below results of operations (condensed) for the nine-month periods ended October 3, 1993 and September 27, 1992 (in thousands except for shares and per share amounts):
Additionally, to aid comparative analysis of the fiscal periods ended October 2, 1994 and January 3, 1993, the Company has presented below the pro forma condensed consolidated statements of operations through income before change in accounting principle for the fiscal year ended October 2, 1994 and for the fiscal year ended October 3, 1993, as included in the 1993 Annual Report. The amounts are presented without the LIFO charge discussed above (in thousands except for shares and per share amounts):
Note 3 - Acquisition:
On July 7, 1993, the Company acquired the outstanding common stock of King Packaging Company, Inc., a supplier of plastic cutlery and customized meal kits to the foodservice and healthcare industries. The acquisition was accounted for as a purchase, and the acquisition costs of the assets acquired and the liabilities assumed are as follows (in thousands of dollars):
Current assets $10,330 Inventories 1,770 Property, plant and equipment 4,757 Value of non-compete agreements 8,203 Other assets 290 ------- Assets acquired 25,350 Liabilities assumed (977) ------- $24,373 =======
Note 4 - Inventories:
A summary of inventories by method of pricing and class is as follows:
During the fiscal period ended October 2, 1994, inventory quantities were reduced. This reduction resulted in a liquidation of LIFO inventory quantities carried at lower costs prevailing in prior years as compared with the cost of fiscal 1994 purchases, the effect of which decreased cost of goods sold by approximately $1,762,000 and increased net income by approximately $1,097,000 or $.04 per share.
The replacement cost of inventories exceeded reported cost by approximately $10,013,000 at October 2, 1994 and $11,616,000 at October 3, 1993.
Note 5 - Property, Plant and Equipment:
Property, plant and equipment is summarized as follows:
Repairs and maintenance expense was $31,584,000 for the fiscal period ended October 2, 1994, $26,706,000 for the fiscal period ended October 3, 1993 and $33,879,000 for the fiscal period ended January 3, 1993.
Note 6 - Long-term Debt and Credit Arrangements:
Long-term debt is summarized as follows:
During the fiscal period ended January 3, 1993, the Company entered into a 10-year loan for $70,000,000 with three insurance companies. Series A for $50,000,000 has a fixed interest rate of 8.35% and Series B for $20,000,000 has a fixed interest rate of 7.15%. These funds were used to finance capital projects at existing production facilities and to repay long-term debt outstanding under the Company's revolving credit lines.
At October 2, 1994, the Company had $145,000,000 in revolving credit facilities with banks which are committed through September 1996. The Company has $20,000,000 outstanding under these facilities which it treats as long-term debt. The revolving credit facilities, in general, enable the Company to borrow funds at the banks' cost of funds plus approximately 1/2%. The Company pays an annualized commitment fee of 3/16% on the unused portion of these facilities.
At October 2, 1994, the Company had $15,500,000 in notes payable related to the Employee Stock Ownership Plan (ESOP). These notes carry a tax-advantaged rate of interest equal to about 85% of LIBOR. The rates averaged 3.08% and 3.40% during the fiscal periods ended October 2, 1994 and October 3, 1993, respectively. See further discussion of the ESOP at Note 10.
The $28,000,000 industrial revenue bonds consist of two issues of bonds for $4,500,000 each due in 2000, an issue for $3,500,000 due in 2003, an issue for $2,500,000 due in 2005, an issue for $6,000,000 due in 2007, and an issue for $7,000,000 due in 2017. The rate on these bonds can vary as frequently as every seven days in order to sell the bonds at par value. During the fiscal period ended October 2, 1994 and the fiscal period ended October 3, 1993, the average interest rate on these bonds was 2.7% and 2.5%, respectively. If the two $4,500,000 bonds cannot be sold, the Company has an agreement with a bank which acts as the marketing agent for the bonds whereby the bank would buy and hold the bonds until their maturity and would receive interest at a rate of 65% of the prime interest rate. If the other issues could not be
sold by the bank, the Company would have an obligation to sell the bonds themselves or repurchase them. To enhance the marketability of the bonds, the bank/marketing agent has issued letters of credit to guarantee payment of the bonds on the Company's behalf. The Company expects to be able to renew these letters of credit upon their expiration throughout the life of these bonds. Also, the bonds are secured by financing statements on project-related equipment, the cost of which approximates the bond amounts.
The Company uses interest rate exchange agreements, more commonly called interest rate swaps, to manage its interest rate exposure.
The effect of certain of the swap agreements is to fix the rate on the $20,000,000 long-term debt borrowed under revolving credit agreements, the $15,500,000 ESOP loans and the $28,000,000 industrial revenue bonds over the 2.5 years remaining on the swap contracts. The average fixed interest rate on this $63,500,000 of debt fixed through these swap agreements is 6.89%. These swaps were entered into to fix the interest rate on variable debt at rates which the Company considered attractive at the time the agreements were consummated. The Company did not enter into these agreements in anticipation of rate movements. When the Company entered into these agreements, it compared its anticipated interest costs to other long term borrowing sources such as private placements and other fixed rate borrowing options. Accordingly, the Company has realized its desired objectives in the use of these derivatives. If the Company had canceled these agreements as of October 2, 1994, it would have been required to pay the counter parties to the agreements an aggregate amount of $2,100,000.
During the last quarter of the fiscal period ended January 3, 1993, the Company entered into agreements whereby it receives/pays the difference between six month LIBOR and 4.54% on $50,000,000 for a three year period to reduce the interest rate on the Series A senior notes. The Company anticipated that short-term rates would continue to decline. If the Company had canceled these agreements as of October 2, 1994, it would have been required to pay the counter parties to the agreements an aggregate amount of approximately $830,000. Over the life of this transaction the Company expects to break-even. This agreement expires in October 1995.
Short-term borrowings, including borrowings under the Company's revolving credit facilities which were for temporary working capital needs, are summarized as follows:
The Company's most restrictive loan covenants require that the Company maintain stockholders' equity of $174,703,000 plus 20% of consolidated net income beginning with fiscal year 1994 and ending with calendar year 1996 and that the Company maintain certain financial ratios. These financial ratio covenants include a requirement that the ratio of income before taxes, interest expense and lease expense to the sum of interest and lease expense be 1.4, or greater, through March 31, 1995 and 2.0, or greater, thereafter. The Company is in compliance with these requirements at October 2, 1994 and expects to be in compliance with such requirements in the future.
Interest expense was $13,380,000 for the fiscal period ended October 2, 1994, $10,226,000 for the fiscal period ended October 3, 1993 and $10,526,000 for the fiscal period ended January 3, 1993. Cash payments of interest were $13,364,000 for the fiscal period ended October 2, 1994, $9,377,000 for the fiscal period ended October 3, 1993 and $9,336,000 for the fiscal period ended January 3, 1993.
Annual maturities of long-term debt each year for the next five fiscal years are $1,747,000 in 1995, $6,300,000 in 1996, $27,610,000 in 1997, $7,400,000 in 1998, $8,940,000 in 1999, and $89,870,000 in subsequent years through 2017.
The carrying value of the Company's long-term debt approximates its market value at October 2, 1994. Virtually all of the Company's debt had a fixed rate at October 2, 1994, either from the note terms or through interest rate swaps. The market value of fixed-rate long-term debt was estimated based on the present value of expected cash flows using current market rates and the Company's incremental borrowing rate for debt with similar terms.
Note 7 - Income Taxes:
The Company prospectively adopted Statement of Financial Accounting Standards No. 109 - Accounting for Income Taxes (FAS 109) effective January 4, 1993, the first day of the fiscal period ended October 3, 1993. The adoption of FAS 109 changed the Company's method of accounting for income taxes from the deferred method (Accounting Principles Board Opinion No. 11) to an asset and liability approach. Previously the Company deferred the past tax effects of timing differences between financial reporting and taxable income. The asset and liability approach requires the recognition of deferred tax
liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of other assets and liabilities.
Under FAS 109, assets and liabilities acquired in business combinations accounted for under the purchase method are assigned their fair values, and deferred taxes are provided for lower or higher tax bases. Under APB 11, values assigned were net-of-tax. In adopting FAS 109, the Company adjusted the carrying amounts of the Michigan Sugar Company fixed assets and LIFO inventories acquired in 1984. Pretax income from operations for the fiscal period ended October 3, 1993 was reduced by $5,600,000 representing additional cost of sales and depreciation expense resulting from the higher carrying amounts.
The net adjustments to the January 4, 1993 balance sheet to adopt FAS 109 resulted in a $600,000 credit to net income. This amount is reflected in the accompanying consolidated statement of operations for the fiscal period ended October 3, 1993 as a cumulative effect of a change in accounting principle.
Pretax income from continuing operations for all periods presented was taxed exclusively in the United States. The provision for income taxes is comprised of the following:
Cash payments of income taxes amounted to $7,504,000 for the fiscal period ended October 2, 1994, $11,834,000 for the fiscal period ended October 3, 1993 and $16,774,000 for the fiscal period ended January 3, 1993.
Deferred income tax liabilities (assets) are comprised of the following:
The components of the Company's deferred income tax provision calculated under APB 11 and the tax effects of each are summarized below:
A reconciliation between the provision for income taxes and the amount computed by applying the U. S. federal income tax rate to income before income taxes and change in accounting principle is as follows:
The Company increased its deferred income tax liability in the last quarter of the fiscal period ended October 3, 1993 as a result of legislation enacted during 1993 increasing the corporate tax rate from 34% to 35% commencing in 1993.
Note 8 - Stockholders' Equity:
The Certificate of Incorporation of the Company, as amended, authorizes a class of preferred stock to consist of up to 1,000,000 shares of $.50 par value stock. The Board of Directors can determine the characteristics of the preferred stock without further stockholder approval.
Note 9 - Pension Plans:
Substantially all employees and retirees of the Company are covered by noncontributory defined benefit pension plans. The Company also provides supplemental pension benefits to certain retired employees. The supplemental pension benefits are determined annually by the Board of Directors.
Benefits under the noncontributory defined benefit pension plans for bargaining employees are primarily based on years of service; benefits for other employees are generally based on years of service and the employee's highest consecutive three-year average earnings. The Company's policy is to contribute at least the minimum amount required by the Employee Retirement Income Security Act. At October 2, 1994, the assets of these plans are invested primarily in cash equivalents, mutual stock and bond funds, and common stocks including 217,587 shares of the Company's common stock with a market value of $2,611,000. The plan received $117,497 in dividends from these shares during the fiscal period ended October 2, 1994.
The following table sets forth the status of the Company's defined benefit pension plans and the pertinent assumptions used in computing this information as of the end of each respective period:
The table above is based on a discount rate of 8.5 % for the fiscal period ended October 2, 1994 and 7.5% for the fiscal period ended October 3, 1993, and projected salary increases of 4.5% for the fiscal period ended October 2, 1994 and 4% for the fiscal period ended October 3, 1993.
Pension expense for the fiscal period ended October 2, 1994, the fiscal period ended October 3, 1993 and the fiscal period ended January 3, 1993 is summarized as follows:
The expected long-term rate of return on plan assets used in determining "Pension expense related to defined benefit plans" as shown above was 9.5% for the fiscal period ended October 2, 1994, 10.5% for the fiscal period ended October 3, 1993, and 11% for the fiscal period ended January 3, 1993.
The Company sponsors a Supplemental Executive Retirement Plan (SERP) to supplement its qualified plan for certain management employees. The actuarially determined expense related to this plan was $1,255,000 for the fiscal period ended October 2, 1994, $800,000 for the fiscal period ended October 3, 1993, and $1,010,000 for the fiscal period ended January 3, 1993. Of these expenses, the interest portion amounted to $781,000 for the fiscal period ended October 2, 1994, $569,000 for the fiscal period ended October 3, 1993, and $707,000 for the fiscal period ended January 3, 1993. The remaining balance of the expense in each year is primarily service cost.
The table below summarizes the status of the SERP plan at the end of each respective period:
The table above is based on a discount rate of 8.5% for the fiscal period ended October 2, 1994 and 7.5% for the fiscal period ended October 3, 1993, and projected salary increases of 4.5% for the fiscal period ended October 2, 1994 and 4% for the fiscal period ended October 3, 1993.
In accordance with the provisions of Statement of Financial Accounting Standards No. 87 - Employers' Accounting for Pensions, the Company has recorded an additional minimum liability at October 2, 1994 and at October 3, 1993 representing the excess of the accumulated benefit obligation over the fair value of plan assets and accrued pension liability for its pension and SERP plans. The additional liability has been offset by an intangible asset which is included in "Other assets" to the extent of previously unrecognized prior service cost. Amounts in excess of previously unrecognized prior service cost are recorded net of the related deferred tax benefit as a reduction of stockholders' equity of $8,210,000 at October 2, 1994 and $9,453,000 at October 3, 1993.
Note 10 - Other Retirement and Benefit Plans:
The Company sponsors a deferred compensation plan which permits directors and certain management employees to defer portions of their compensation and earn a guaranteed interest rate on the deferred amounts. The salaries which have been deferred since the plan's inception have been accrued, and the expense, other than salaries, related to this plan is interest on the deferred amounts. Interest expense during the fiscal periods ended October 2, 1994, October 3, 1993 and January 3, 1993 includes $1,915,000, $1,247,000, and $1,196,000, respectively, related to this plan. The Company has included in "Deferred employee benefits" $15,176,000 at October 2, 1994 and $13,191,000 at October 3, 1993 to reflect its liability under this plan.
In connection with the deferred compensation plan and the SERP plan referred to in Note 9, the Company purchases whole-life insurance contracts on the related directors and employees. The Company has included in "Other assets" $15,496,000 at October 2, 1994 and $12,303,000 at October 3, 1993 which represent the capitalized value of these policies. If all of the assumptions regarding mortality, interest rates, policy dividends, and other factors are realized, the Company will ultimately realize its full investment plus a factor for the use of its money.
The Company sponsors 401(k) plans in which substantially all non-bargaining employees and certain bargaining unit employees are eligible to participate. These plans allow eligible employees to save a portion of their salary on a pre-tax basis. The Company makes annual contributions to these plans which aggregated $408,000, $320,000 and $345,000 for the fiscal periods ended October 2, 1994, October 3, 1993 and January 3, 1993, respectively.
The Company also sponsors an Employee Stock Ownership Plan (ESOP) in which substantially all non-bargaining employees participate. Contributions may be made in the form of cash or Company stock. The Company has expensed contributions to the ESOP of $0, $1,235,000 and $1,500,000 for the fiscal periods ended October 2, 1994, October 3, 1993 and January 3, 1993, respectively.
The Company maintains a profit-based incentive plan which currently covers approximately 1,100 qualified employees. Compensation under this plan was $0, $0 and $979,000 for the fiscal periods ended October 2, 1994, October 3, 1993 and January 3, 1993, respectively.
The Company also sponsors benefit plans that provide postretirement health care and life insurance benefits to certain employees who meet the applicable eligibility requirements. Effective December 30, 1991, the first day of the fiscal period ended January 3, 1993, the Company adopted Statement of Financial Accounting Standards No. 106 - Employers' Accounting for Postretirement Benefits Other Than Pensions (FAS 106). This standard requires accrual of the expected cost of providing postretirement benefits to employees and their beneficiaries and covered dependents during the years that employees provide services. Prior to December 30, 1991, the Company expensed the costs of health care and
life insurance benefits provided to retirees in the period in which these costs were paid.
The cumulative effect of this change in accounting principle was a one-time charge of $28,841,000 before taxes, or $18,170,000 net of tax benefits calculated at an estimated effective tax rate of 37%. The cost of postretirement health care and life insurance benefits is summarized as follows:
The actuarial and recorded liabilities for these postretirement benefits, none of which has been funded, are as follows:
The assumed discount rate was 8.5% for the fiscal period ended October 2, 1994 and 7.5% for the fiscal period ended October 3, 1993. For the fiscal period ended October 2, 1994, the rate of increase in the per capita costs of covered health care benefits was assumed to be 8% for the first five years, 6% for the next five years and 5% thereafter. For the fiscal period ended October 3, 1993, the rate of increase was assumed to be 9% for the first five years, 7% for the next five years, and 5% thereafter. Increasing the health care cost trend rate assumption by one percentage point would increase the accumulated postretirement benefit obligation as of October 2, 1994 by approximately $3,390,000 and would increase postretirement benefit cost by approximately $355,000 for the fiscal period ended October 2, 1994.
Note 11 - Commitments and Contingencies:
The Company has contracted for the purchase of a substantial portion of its future raw sugar requirements. Prices to be paid for raw sugar under these contracts are based in some cases on market prices during the anticipated delivery month. In other cases prices are fixed and, in these instances, the Company generally obtains commitments from
its customers to buy the sugar prior to fixing the price, or enters into futures transactions to hedge the commitment.
The Company is exposed to loss in the event of non-performance by the other party to the interest rate swap agreements discussed in Note 6. However, the Company does not anticipate non-performance by the counter-parties to the transactions.
In May 1992, the United States Customs Service (Customs) issued a bill to the Company for approximately $7,500,000 seeking reimbursement for certain drawback claims filed by the Company with Customs during the period 1984 through 1988. Customs has alleged that drawback claims prepared by the Company for certain export shipments of sugar during these years are technically and/or substantively deficient and that the Company, therefore, is not entitled to monies previously received under these drawback claims. The Company disputes Customs' findings and intends to vigorously protest the decision of Customs. While it is not certain how long the protest (administrative appeal) process will take, based upon the facts known to the Company at this time, the ultimate resolution of this matter is not expected to have a materially adverse effect on the Company's financial position or results of operations.
In July 1991, National Utility Service, Inc. (NUS) filed a complaint against the Company in the United States District Court for the District of New Jersey seeking compensation and damages arising from a contract between the Company and NUS for energy cost saving recommendations. On September 12, 1994, summary judgment was entered against the Company in the amount of $2,973,000 in this case. A motion is presently pending in that action to modify the judgment by the addition of prejudgment interest in an amount between $1,343,000 and $1,472,000. The Company has opposed the motion to modify and has appealed the judgment to the United States Court of Appeals for the Third Circuit. The Company intends to pursue the appeal vigorously and strongly contends that no amounts are due to NUS.
Note 12 - Quarterly Financial Information (Unaudited):
Unaudited quarterly financial information for the fiscal periods ended October 2, 1994 and October 3, 1993 is as follows:
Quarterly results of operations for the fiscal period ended October 3, 1993 reflect the change in the Company's fiscal year end. The first quarter ended April 4, 1993 reflects the cumulative effect of adoption of FAS 109 of $600,000 effective January 4, 1993. The third quarter reflects a $4,900,000 increase in cost of sales and the associated $1,900,000 income tax benefit representing the liquidation of LIFO basis inventory acquired in 1984 as further explained in Note 2 to the financial statements.
SAVANNAH FOODS & INDUSTRIES, INC. AND SUBSIDIARIES Schedule V Property, Plant and Equipment (In thousands of dollars)
(1) Additions for the fiscal period ended October 3, 1993 include $10,446 for the write-up of assets at Michigan Sugar Company due to the adoption of FAS 109 (see Note 7 for further discussion) and $10,852 for the assets acquired as a result of the acquisition of King Packaging Company.
SAVANNAH FOODS & INDUSTRIES, INC. AND SUBSIDIARIES Schedule VI Accumulated Depreciation and Amortization of Property, Plant and Equipment (In thousands of dollars)
(1) Additions for the fiscal period ended October 3, 1993 include $7,754 for the write-up of assets at Michigan Sugar Company due to the adoption of FAS 109 (see Note 7 for further discussion) and $6,095 for the accumulated depreciation on assets acquired as a result of the acquisition of King Packaging Company.
Item 9.

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

Item 10. Directors and Executive Officers of Registrant.
The information relating to the Directors of the Company is incorporated by reference from the "ELECTION OF DIRECTORS" section, pages 4 through 7, of the Company's Proxy Statement for its Annual Meeting of Stockholders to be held on February 16, 1995, to be filed pursuant to Section 14 of the Securities Exchange Act of 1934 ("1995 Proxy Statement"). The information relating to the Executive Officers of the Company is incorporated by reference from the "MANAGEMENT OF SAVANNAH FOODS & INDUSTRIES, INC." section, page 8 of the 1995 Proxy Statement. The information relating to disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is incorporated by reference from the "COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934" section, page 12, of the 1995 Proxy Statement.
Item 11.

Item 11. Executive Compensation.
The information relating to executive compensation is incorporated by reference from the "EXECUTIVE COMPENSATION" section, pages 9 and 10, the "BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD" section, page 14, the "COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION" section, pages 11 and 12, the "COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION" section, page 12, and the performance graph, page 13, of the 1995 Proxy Statement.
Item 12.

Item 12. Security Ownership of Certain Beneficial Owners and Management.
The information relating to the security ownership of certain beneficial owners and management is incorporated by reference from the "STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" section, pages 2 and 3, of the 1995 Proxy Statement.
Item 13.

Item 13. Certain Relationships and Related Transactions.
The information relating to certain relationships and related transactions is incorporated by reference from the "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS" section, page 14, and the "COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION" section, page 12, of the 1995 Proxy Statement.
PART IV
Item 14.

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a)(1) and (2): See index of Financial Statements, Item 8(a) and 8(b), page 14.
(a)(3) Exhibits:
* Indicates exhibits which are management contracts or compensatory agreements.
(b) Reports on Form 8-K: None.
(c) See (a)(3) Exhibits above.
(d) Not applicable.
UNDERTAKINGS
For the purposes of complying with the amendments to the rules governing Form S-8 (effective July 13, 1990) under the Securities Act of 1933, the undersigned Registrant hereby undertakes as follows, which undertaking shall be incorporated by reference into Registrant's Registration Statements on Form S-8 Number 2-63448, Monthly Investment Plan for Employees of Savannah Foods & Industries, Inc. (filed June 19, 1984 as amended on April 3, 1992); and Number 2-94678, Employee Retirement Savings Account Plan (filed December 22, 1984 as amended on October 18, 1994).
Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act") may be permitted to Directors, Officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a Director, Officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such Director, Officer or controlling persons in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SAVANNAH FOODS & INDUSTRIES, INC.
Dated: December 20, 1994. By: /S/William W. Sprague, III ------------------ -------------------------- William W. Sprague, III President
Pursuant to the requirements of the Securities Act of 1934, this report has been signed by the following persons on behalf of Registrant in the capacities and on the dates indicated:


ITEM 1. BUSINESS
Background
Old Stone Corporation (the "Corporation") is a general business corporation incorporated in 1969 under the laws of the State of Rhode Island. The principal offices of the Corporation are located at Four Davol Square, Suite 320, Providence, Rhode Island 02903.
On January 29, 1993, the Office of Thrift Supervision ("OTS") declared Old Stone Bank, a Federal Savings Bank, a federally chartered stock savings bank organized under the laws of the United States (the "Bank"), insolvent, and appointed the Resolution Trust Company ("RTC") as receiver (the "Bank Closing"). The RTC formed a bridge bank, Old Stone Federal Savings Bank (the "Bridge Bank") which assumed all of the deposit liabilities and substantially all of the other liabilities of the Bank and acquired substantially all of the assets of the Bank (including the stock of all of its subsidiaries). Immediately prior to the Bank Closing, the Bank constituted substantially all of the assets of the Corporation. Immediately following the Bank Closing, all of the officers of the Corporation resigned and were hired by the Bridge Bank. A limited slate of new officers was elected on March 8, 1993. See Item 10 below.
The Corporation continues to hold its equity interest in Old Stone Securities Company ("Old Stone Securities"). See "Significant Subsidiary" below. The Corporation has no equity interest in any other significant entity.
Significant Subsidiary
The Corporation's only surviving active subsidiary after the Bank Closing is Old Stone Securities, a registered securities broker-dealer which provides brokerage services to retail and institutional clients. In addition, Old Stone Securities participates in Rhode Island underwritings of tax-exempt securities, maintains an inventory of tax-exempt securities for resale, and also trades government securities both at auction and in the secondary market. See "Regulation" below.
Regulation
Old Stone Securities is subject to regulation by the Securities and Exchange Commission, the State of Rhode Island, and the National Association of Securities Dealers, Inc.
Employees
As of December 31, 1994, the Corporation had no employees. As of such date, Old Stone Securities employed 3 persons, all of whom were full-time.
ITEM 2.

ITEM 2. PROPERTIES
The administrative offices of the Corporation and Old Stone Securities are located at Four Davol Square, Suite 320, in Providence, Rhode Island. Such offices are leased on a month-to-month basis at a per month rental of $2,600, which amount is paid by Old Stone Securities.
ITEM 3.

ITEM 3. LEGAL PROCEEDINGS
The Corporation is not aware of any pending or threatened legal proceedings against the Corporation or Old Stone Securities, except as noted in the counterclaim discussed below.
On January 29, 1993, the OTS declared the Bank insolvent, and appointed the RTC as receiver. See Item 1 above, "Business--Background".
On September 16, 1992, the Corporation and the Bank ("Plaintiffs") instituted a suit against the United States ("Defendant") in the U.S. Court of Federal Claims. In connection with certain government-assisted acquisitions by Plaintiffs in the 1980's, the Defendant (through its agencies the Federal Home Loan Bank Board ("FHLBB") and the Federal Savings and Loan Insurance Corporation) agreed to provide Plaintiffs with certain valuable capital credits and authorized Plaintiffs to treat those credits as regulatory capital. Following the passage of the Financial Institutions Reform, Recovery, and Enforcement Act in August, 1989, the OTS (successor in interest to the FHLBB) required the Bank to discontinue treating these capital credits as part of regulatory capital and caused the Bank to write off immediately approximately $75 million of such capital credits. In this suit Plaintiffs allege breach of contract by the United States, resulting in substantial injury to Plaintiffs, effecting a taking of Plaintiffs' property without just compensation, and unjustly enriching the Defendant at the expense of Plaintiffs. Plaintiffs seek compensation for the damages caused by the breach, just compensation for the property taken, and disgorgement of the amounts by which the Defendant has been unjustly enriched. The Defendant has filed a counterclaim against Plaintiffs for alleged breach of Plaintiffs' net worth maintenance agreement. The Plaintiffs have filed an answer denying such counterclaim. The case is one of several similar cases pending before the U.S. Court of Federal Claims. The case as to the Corporation has been stayed pending the outcome of such other suits. In addition, the impact of the Bank Closing on the claims made by the Bank is unclear since the Defendant now acts as receiver for the Bank. No prediction as to the outcome of this case can be made at this time.
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during 1994.
PART II
ITEM 5.

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Until January 29, 1993, the Corporation's Common Stock, $1.00 par value (the "Common Stock"), was quoted on the NASDAQ National Market and was traded under the symbol "OSTN". As of the date hereof, there is no established public trading market for the Common Stock. Book value per share of Common Stock after treating the Bank as a discontinued operation in light of the Bank Closing was ($2.37) on December 31, 1994, compared to ($2.30) on December 31, 1993. At March 17, 1995, there were 8,246,175 shares of Common Stock of the Corporation outstanding held by 40,319 shareholders of record.
The following table shows the Corporation's Common Stock activity. Indicated are the high and low bid quotations and dividends paid for each of the four quarters in 1992.
High Low Dividend
First quarter $6 1/4 $2 7/8 $0 Second quarter 4 3/4 3 5/8 0 Third quarter 3 7/8 1 1/4 0 Fourth quarter 4 1 1/8 0
The Corporation discontinued dividends to holders of its Common Stock and its Cumulative Voting Convertible Preferred Stock, Series B (the "Preferred Stock"), during 1991 and does not expect to pay any dividends on such stock for the foreseeable future. As a result of the failure to pay dividends on the Preferred Stock for more than four quarters, the holders of the Preferred Stock collectively are entitled to elect a number of directors of the Corporation constituting twenty percent (20%) of the total number of directors of the Corporation at the next meeting of stockholders at which directors are to be elected. Until the aggregate deficiency is declared and fully paid on the Preferred Stock, the Corporation may not declare any dividends or make any other distributions on or redeem the Common Stock.
ITEM 6.

ITEM 6. SELECTED FINANCIAL DATA
On January 29, 1993, the OTS declared the Bank insolvent, and appointed the RTC as receiver. See Item 1 above, "Business--Background". Operations of the Bank, which accounted for substantially all of the Corporation's operations, have been reflected as discontinued operations in 1992. Bank operations are not included in 1993 or 1994 operations. The Corporation has recognized losses from discontinued operations of the Bank only to the extent of its investment in and advances to the former subsidiary savings and loan (determined on a basis consistent with generally accepted accounting principles). At December 31, 1993 and 1994 the Corporation's statements of financial condition do not include any assets or liabilities of the Bank.
The following schedule of selected financial information includes the three years ending December 31, 1992, 1993 and 1994. Financial information for the two years ending December 31, 1990 and 1991 are not included as the Corporation believes that disclosure of this information would no longer be meaningful in light of the Bank Closing.
Old Stone Corporation three year comparison ($ in thousands, except for share and per share amounts):
Fiscal Year Ended: December 31, December 31, December 31, 1992 1993 1994 INCOME: Interest income $ 896 $ 51 $ 47 Other income (loss) 935 357 230 Total income (loss) 1,831 408 277
EXPENSES: Interest expense 590 6 0 Provision for loan losses 112 0 0 Salaries and benefits 212 216 211 Other operating expenses 512 502 420 Total expense 1,426 724 631
INCOME:
Income (loss) from continuing operations before income taxes $ 405 $ (316) $ (354) Income taxes (credit) (814) (7) 26 Income (loss) from continuing operations 1,219 (309) (380) Income (loss) from discontinued operations (57,211) 0 0
NET LOSS ($55,992) (309) (317)
Net loss available to common shareholders ($58,700) $ (3,017) $ (3,088) Loss per share: From continuing operations ($.18) ($.37) ($.37) From discontinued operations ($6.93) 0 0 Net loss ($7.11) ($.37) ($.37)
Average shares outstanding 8,261,306 8,246,175 8,246,175
ASSETS: Cash $ 30 $ 18 $ 32 Short-term investments 1,728 1,150 797 Loans receivable, net 116 122 117 Other assets 674 543 540
TOTAL $2,548 $1,833 $1,486
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) LIABILITIES: Long-term debt 407 5 0 Other liabilities 1,285 1,281 1,319 Total liabilities 1,692 1,286 1,319
Redeemable preferred stock 19,319 19,515 19,711 Stockholders' equity (deficit) (18,463) (18,968) (19,544) $2,548 $1,833 $1,486
ITEM 7.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
On January 29, 1993, the OTS declared the Bank insolvent, and appointed the RTC as receiver. See Item 1 above, "Business--Background". Operations of the Bank, which accounted for substantially all of the Corporation's operations, have been reflected as discontinued operations in 1992. Bank operations are not included in 1993 or 1994 operations. The Corporation has recognized losses from discontinued operations of the Bank only to the extent of its investment in and advances to the former subsidiary savings and loan (determined on a basis consistent with generally accepted accounting principles). At December 31, 1993 and 1994 the Corporation's statements of financial condition do not include any assets or liabilities of the Bank.
Current Operations
As a result of the Bank Closing, the Corporation's present business activities include its only surviving significant subsidiary, Old Stone Securities, a registered securities broker-dealer which provides brokerage services to retail and institutional clients.
Old Stone Securities' loss before income taxes was $150,311 for the year ended December 31, 1994, compared to $7,104 for the year ended December 31, 1993.
Management has invested, and intends in the future to invest, the Corporation's assets on a short-term basis. While the Corporation's Board of Directors has considered selling Old Stone Securities, the Board has determined not to do so at the present time. Various expense saving measures were instituted at Old Stone Securities during the fourth quarter of 1994, which are expected to improve operating results in 1995.
Since the Bank Closing, and except for the operation of Old Stone Securities, the Corporation's primary expenses have been legal, insurance, accounting, and shareholder relations expenses.
Liquidity and Capital Resources
At December 31, 1994, the Corporation had $1.5 million in assets, $1.3 million in total liabilities, $19.7 million in redeemable preferred stock, and a stockholder's deficit of ($19.5) million, compared to $1.8 million in assets, $1.3 million in total liabilities, $19.5 million in redeemable preferred stock and stockholders' deficit of ($19.0) million at December 31, 1993.
The Corporation's assets are currently being invested short-term, and expenses have been reduced to a level that management believes is commensurate with the Corporation's current activities pending resolution of any potential claims. See "Current Operations" above.
Results for Year Ended December 31, 1994 Compared to Year Ended December 31,
The Corporation reported a loss of ($380,000) for the year ended December 31, 1994 compared to a total loss of ($309,000) for the year ended December 31, 1993.
Interest income was $47,000 for the year ended December 31, 1994, compared to $51,000 for the year ended December 31, 1993.
Interest expense was $-0- for the year ended December 31, 1994, compared to $6,000 for the year ended December 31, 1993. The reduction was primarily due to paydown of long term debt during 1994.
Other income was $25,000 for the year ended December 31, 1994, compared to $33,000 for the year ended December 31, 1993.
Since the Bank Closing, the Corporation's primary operating expenses have been legal, insurance and accounting expenses as well as the operating expenses of Old Stone Securities. Operating expenses (including salaries and benefits and excluding interest expense) were $631,000 for the year ended December 31, 1994, compared to $718,000 for the year ended December 31, 1993.
Salaries and benefits for the year ended 1994 were $211,000 compared to $216,000 for 1993.
The loss per share from continuing operations was ($.37) for the year ended December 31, 1994 after the deduction of preferred dividends of $2.7 million. The loss per share from continuing operations was ($.37) for the year ended December 31, 1993 after the deduction of preferred dividends of $2.7 million. No preferred or common dividends have been paid since the second quarter of 1991 and the Corporation does not expect to pay dividends in the foreseeable future. Further, the Corporation is prohibited from paying dividends on the common stock until the aggregate deficiency on the preferred stock dividends is paid in full.
The Corporation had total assets of $1.5 million at December 31, 1994, compared to $1.8 million at December 31, 1993. The reduction in assets from 1993 was primarily due to the funding of the 1994 operating loss of ($380,000).
Results for Year Ended December 31, 1993 Compared to Year Ended December 31,
The Corporation reported a loss of ($309,000) for the year ended December 31, 1993 compared to a total loss of ($56) million for the year ended December 31, 1992. Loss from continuing operations was ($309,000) for the year ended December 31, 1993, compared to income of $1.2 million for the year ended December 31, 1992. The Corporation lost ($57.2) million from discontinued operations in 1992.
Interest income was $51,000 for the year ended December 31, 1993, compared to $896,000 for the year ended December 31, 1992. The reduction was primarily due to the lower amount of funds available for investment as well as the recognition of $648,000 of deferred interest income related to loans made on Old Stone Development projects in 1992.
Interest expense was $6,000 for the year ended December 31, 1993, compared to $590,000 for the year ended December 31, 1992. The reduction was primarily due to the paydown of short-term and long-term debt during 1992.
Other income was $33,000 for the year ended December 31, 1993, compared to $283,000 for the year ended December 31, 1992. The reduction was primarily due to management fee income earned by the Corporation from Old Stone Credit Corporation during 1992 in the amount of $156,000.
Since the Bank Closing, the Corporation's primary operating expenses have been legal, insurance and accounting expenses as well as the operating expenses of Old Stone Securities. Operating expenses (including salaries and benefits and excluding interest expense and the provision for Loan losses) were $718,000 for the year ended December 31, 1993, compared to $724,000 for the year ended December 31, 1992.
Salaries and benefits remained relatively level for the year ended 1993 compared to 1992 ($216,000 for 1993; $212,000 for 1992).
The loss per share from continuing operations was ($.37) for the year ended December 31, 1993 after the deduction of preferred dividends of $2.7 million. The loss per share from continuing operations was ($.18) for the year ended December 31, 1992 after the deduction of preferred dividends of $2.7 million. No preferred or common dividends have been paid since the second quarter of 1991 and the Corporation does not expect to pay dividends in the foreseeable future. Further, the Corporation is prohibited from paying dividends on the common stock until the aggregate deficiency on the preferred stock dividends is paid in full. The loss per share from discontinued operations for the year ended December 31, 1993 and 1992 were $-0- and ($6.93), respectively, bringing the total loss per share for those years to ($.37) and ($7.11) respectively.
The Corporation had total assets of $1.8 million at December 31, 1993, compared to $2.5 million at December 31, 1992. The reduction in assets from 1992 was primarily due to the paydown of long-term debt of $402,000 as well as the funding of the 1993 operating loss of ($309,000).
ITEM 8.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Corporation's Consolidated Financial Statements for the year ended December 31, 1994 is filed as Exhibit 99 to this report.
LGC&D has been engaged by the Corporation to audit the Corporation's financial statements for the year ended December 31, 1994.
ITEM 9.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
In January, 1994 the Corporation engaged Lefkowitz, Garfinkel, Champi and DeRienzo P.C. ("LGC&D") to audit the Corporation's financial statements for the year ended December 31, 1993. The engagement of LGC&D was approved by the Corporation's Board of Directors. As a result of a fee dispute, the Corporation did not engage Deloitte & Touche, which had audited the Corporation's financial statement for the years ended December 31, 1991 and 1992. Deloitte & Touche had not expressed an opinion on the Corporation's financial statements for 1992 due to the uncertainties resulting from the Bank Closing. However, it should be noted that there had been no disagreements with Deloitte & Touche on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures.
PART III
ITEM 10.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information concerning the directors of the Corporation. There are no persons nominated or chosen to become directors of the Corporation. (See "Market for the Registrant's Common Equity and Related Stockholder Matters" for a discussion of the right of the holders of the Corporation's Preferred Stock to elect 20% of the directors of the Corporation.)
Director Term Name Age Principal Occupation Since Expires
Howard W. Armbrust 67 Chairman and Chief Executive 1974 1995 Officer, Armbrust Corporation (chain and jewelry manufacturer)
Bernard V. Buonanno, Jr. 57 Partner, Edwards & Angell 1979 1994 (law firm) Director, A.T. Cross Company
Robert E. DeBlois 61 Chairman, President and 1974 1995 Chief Executive Officer Officer, DeBlois Oil Company (oil distributor)
Thomas P. Dimeo 64 Chairman, The Dimeo Group of 1974 1995 Companies (construction industry)
Allen H. Howland 74 Chairman and Chief Executive 1992* 1994 Officer, Original Bradford Soap Works, Inc. (manufacturer of private label soaps)
Beverly E. Ledbetter 51 Vice President and General 1981 1995 Counsel, Brown University
Alfred J. Verrecchia 52 Chief Operating Officer and 1987 1993 Director, Hasbro, Inc. (toy manufacturer)
Richmond Viall, Jr. 75 Private Investor 1992** 1993
* Also served as a Director from 1981 to 1991. ** Also served as a Director from 1974 to 1991.
Immediately following the Bank Closing, all of the executive officers of the Corporation resigned and were hired by the Bridge Bank. A limited slate of new officers was elected by the Board of Directors on March 8, 1993, none of whom would be considered executive officers of the Corporation under the Rules.
ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION
Executive Compensation
The Act and the Rules require disclosure of certain information on Executive Compensation with respect to the Corporation and its subsidiaries for the year ended December 31, 1994. Immediately following the Bank Closing, all of the executive officers of the Corporation resigned and were hired by the Bridge Bank and a limited slate of new officers was elected on March 8, 1993. None of the new slate of officers elected on March 8, 1993 would be considered executive officers of the Corporation under the Rules.
Meetings and Compensation of Board of Directors
For the fiscal year ended December 31, 1994, Directors received no compensation for serving on the Board or attending committee meetings.
The Stock Purchase Plan of Old Stone Corporation for Employees and Directors was originally approved by the shareholders of the Corporation on April 29, 1988, and amended by the Directors of the Corporation on December 28, 1988 ("Stock Purchase Plan"). Under the Stock Purchase Plan, Directors and employees were permitted to purchase Common Stock through payroll deductions. As of the date of the Bank Closing, all participation in the Stock Purchase Plan was discontinued.
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Principal Stockholders of the Corporation
The following table sets forth information as to the only persons known to the Corporation to be beneficial owners of more than five percent (5%) of any class of outstanding voting securities of the Corporation.
Amount and Nature of Beneficial Ownership of Common Stock (1)
Sole Shared Sole Shared Percent Voting Voting Dispositive Dispositive of Power Power Power Power Class(2)
Old Stone Employee Stock Ownership Plan 0 0 0 2,065,175(3) 25.04 150 South Main Street Providence, RI 02903
(1)This information with respect to beneficial ownership is based upon information obtained by the Corporation as of December 31, 1994 from the RTC as Trustee of the ESOP.
(2)This percentage is calculated assuming that no outstanding options are exercised.
(3)Employees have sole voting power over all shares of Common Stock which have been allocated to their accounts. Prior to December 31, 1991, shares of Common Stock purchased by the ESOP with borrowed funds were allocated to employees' accounts only as and to the extent that the ESOP's debt was amortized. Unallocated shares were held in a suspense account and, in accordance with the Ninth Amendment to the ESOP adopted on September 27, 1988, were at all times voted in the same proportion as allocated shares. The borrowings were paid in full during 1991, and as a result, 465,524.747 unallocated shares were allocated to employees' accounts, 826,000 unallocated shares were returned to the Corporation and 17,596.813 shares were held in a suspense account until July 6, 1992, at which time such shares were sold to pay Plan expenses. The Ninth Amendment also provides pass-through tender offer rights to Plan participants with respect to all allocated ESOP shares. The Trustee has sole dispositive power with respect to all ESOP shares in all circumstances other than a tender or exchange offer.
Security Ownership of Directors
The following table sets forth information furnished to the Corporation by all present Directors regarding amounts of Common Stock of the Corporation owned by them on December 31, 1994. No director owns any shares of Preferred Stock. Except as noted, all such persons possess sole voting and investment power with respect to the securities listed below. An asterisk in the column listing the percentage of securities beneficially owned indicates the person owns less than one percent.
Name of Individual or Identity of and Number of Persons in Group Number of Shares Percent of Class
Howard W. Armbrust 2,000 *
Bernard V. Buonanno, Jr. 4,613 *
Robert E. DeBlois 4,742 *
Thomas P. Dimeo 11,000 (1) *
Allen H. Howland 2,557 (2) *
Beverly E. Ledbetter 333 *
Alfred J. Verrecchia 1,526 *
Richmond Viall, Jr. 10,000 (3) *
All current Directors of the Corporation as a group (8 persons) 36,771 (4) *
(1)Excludes 1,000 shares owned by Mr. Dimeo's spouse, as to which he disclaims beneficial ownership. Includes 1,000 shares owned indirectly by Mr. Dimeo in the Dimeo Construction Company Profit Sharing Plan.
(2)Excludes 100 shares owned by Mr. Howland's spouse, as to which he disclaims beneficial ownership.
(3)Excludes 284 shares held by Mr. Viall's spouse, as to which he disclaims beneficial ownership.
(4)Includes shares held jointly, or in other capacities, as to which, in some cases, beneficial ownership is disclaimed.
ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Interests of Directors, Officers and Others in Certain Transactions
During 1994, directors of the Corporation and their associates were customers of, and had transactions, including loans, with, the Bank and other former subsidiaries of the Corporation in the ordinary course of business. All such loans were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and did not involve more than normal risk of collectibility or present other unfavorable features.
Mr. Buonanno is a partner of Edwards & Angell, a law firm retained by the Corporation on various legal matters. The dollar amount of fees paid to Edwards & Angell during 1994 did not exceed 5% of Edwards & Angell's gross revenues for 1994.
PART IV
ITEM 14.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. and 2. List of Financial Statements and Financial Statement Schedules
(1) The following consolidated financial statements and report of independent accountants of the Corporation and subsidiaries are filed as Exhibit 99 to this report.
Consolidated Balance Sheets - December 31, 1994 and 1993
Consolidated Statements of Operations - Years ended December 31, 1994, 1993 and 1992
Consolidated Statements of Changes in Stockholders' Equity (Deficit) - Years ended December 31, 1994, 1993 and 1992
Consolidated Statements of Cash Flow - Years ended December 31, 1994, 1993 and 1992
Notes to Consolidated Financial Statements
Independent Auditors' Report
Letter from Management regarding 1992 consolidated financial statements
(2) Schedules to the consolidated financial statements required by Article 9 of Regulation S-X are not required under the related instructions or are inapplicable and therefore have been omitted.
(3) List of Exhibits -- See Item 14(c) below.
(b) Reports on Form 8-K
None
(c) Exhibit Index.
Exhibit Page
(21) Subsidiaries of the Registrant (Exhibit 21 to the Corporation's Annual Report on Form 10-K for the year ended December 31, 1994 is hereby incorporated by reference herein.)
(99) Consolidated Financial Statements
(d) 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.
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.
OLD STONE CORPORATION (Registrant)
March 29, 1995 By:/s/ Geraldine Nelson Geraldine Nelson President
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 on March 29, 1995.
/s/ Geraldine Nelson President and Treasurer Geraldine Nelson
/s/ Howard W. Armbrust Director Howard W. Armbrust
/s/ Bernard V. Buonanno, Jr. Director Bernard V. Buonanno, Jr.
/s/ Robert E. DeBlois Director Robert E. DeBlois
/s/ Thomas P. Dimeo Director Thomas P. Dimeo
/s/ Allen H. Howland Director Allen H. Howland
Beverly E. Ledbetter Director
/s/ Alfred J. Verrecchia Director Alfred J. Verrecchia
/s/ Richmond Viall, Jr. Director Richmond Viall, Jr.
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.
OLD STONE CORPORATION (Registrant)
March , 1995 By: Geraldine Nelson President
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 on March , 1995.
President and Treasurer Geraldine Nelson
Director Howard W. Armbrust
Director Bernard V. Buonanno, Jr.
Director Robert E. DeBlois
Director Thomas P. Dimeo
Director Allen H. Howland
Director Beverly E. Ledbetter
Director Alfred J. Verrecchia
Director Richmond Viall, Jr.