<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED FEBRUARY 29, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _____ TO ____
COMMISSION FILE NUMBER 1-5858
UNIVAR CORPORATION
A Washington I.R.S. Employer
Corporation No. 91-0816142
6100 Carillon Point
Kirkland, Washington 98033
Telephone No. (206) 889-3400
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ----------------------
Common Stock, No Par Value New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [ X ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
The aggregate market value of voting stock held by non-affiliates of the
registrant at May 9, 1996 was approximately $123,719,000. As of such date,
21,681,447 shares of the registrant's no par common stock, which is the
registrant's only class of common stock, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
The Corporation's definitive Proxy Statement to be filed pursuant to Regulation
14A under the Securities Exchange Act of 1934 (Item 10 - Directors Only, and
Items 11, 12 and 13 of Part III)
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PART I
ITEM 1. BUSINESS
The Company
Univar Corporation (Univar, the Registrant, or the Corporation) was incorporated
in October, 1995. As of February 29, 1996, Univar changed its state of
incorporation from Delaware to Washington by means of a migratory merger. The
Delaware predecessor of the Corporation was incorporated in September, 1966 to
become the successor corporation in the merger of Van Waters & Rogers Inc. and
United Pacific Corporation, both long established companies then doing business
in the western United States and western Canada. For the fiscal year ended
February 29, 1996, Univar Corporation and its three wholly owned subsidiaries
were involved in the distribution of industrial, agricultural and pest control
chemicals and related products and services. In the United States, the
Corporation conducts its operations through Van Waters & Rogers Inc.; in Canada,
through Van Waters & Rogers Ltd.; and through Univar Europe N.V. (Univar Europe)
in the United Kingdom, Scandinavia, Switzerland, and northern Italy.
Distribution is the process by which manufacturers, both large and small, move
their products in the most economical way to many end users. As a distributor of
industrial, pest control, and agricultural chemicals and related products, the
Corporation's role is to purchase chemicals from manufacturers in truck,
railcar, or tankcar quantities and sell them in smaller quantities to various
customers. Univar adds value to its products through superior service,
selection, blending and packaging, delivery reliability, and provides customers
assistance with environmental and regulatory compliance.
The Corporation provides a hazardous waste management service in the U.S. called
ChemCare(R). ChemCare is a service providing its customers with logistics
management, temporary waste storage, and access to various treatment and
disposal technologies. ChemCare allows the Corporation to maximize existing
equipment, facilities and chemical handling knowledge to assist customers in
responsibly collecting and disposing of their chemical waste streams. It is, in
essence, a reverse distribution process, developed in response to customer
demand for help in coping with increasingly complex environmental regulations at
the federal, state, and local levels.
The Corporation does not, under ChemCare or any other program, actually dispose
of chemical waste streams. Rather, it contracts with Environmental Protection
Agency (EPA) permitted hazardous waste disposal sites to do so, through
incineration, recycling, or other means.
The Corporation is developing additional ancillary services in the U.S.,
including contract chemical management services, and third party logistics. The
Corporation provides contract management services through its VIMS(TM) services.
(Van Waters & Rogers Integrated Management Services). VIMS takes full advantage
of the Corporation's UVX2000(R) networked computer system combined with
expertise in sourcing, procuring, warehousing, and transporting to reduce
customers' costs of acquiring and managing products and materials. With its
Third Party Logistics business, the Corporation is making existing warehousing
capacities available to customers, along with services such as packaging and
terminaling of bulk liquids, for manufactured products.
Financial Information About Industry Segments
The Corporation operates in only one market segment, chemical distribution,
through its wholly owned subsidiaries, Van Waters & Rogers Inc. in the United
States, Van Waters & Rogers Ltd. in Canada, and Univar Europe N.V. in Europe.
The ancillary services described above are not material in relation to the
Corporation's chemical distribution business.
Operations in Canada and Europe for each of the last three years are reported in
the Univar Corporation financial statements on page 36 of this filing, under the
caption of Note 11. Such Industry Segment Information is incorporated herein by
reference.
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ITEM 1. BUSINESS (Continued)
Raw Materials
Numerous sources of supply generally exist for nearly all raw materials
essential to the business.
Patents, Trademarks and Tradenames
Univar and its subsidiaries own certain trademarks, servicemarks, and tradenames
which are subject to renewal at various dates beginning in 1997 through 2010.
These marks and names are important in the Corporation's current operations but
not indispensable.
Seasonal Business
Approximately 27% of annual sales occur in the first quarter of the year,
followed by approximately 26% in the second quarter, 24% in the third quarter
and 23% in the fourth quarter. While quarterly sales volumes do not vary
significantly, the mix of business during the year is subject to seasonal
variation. The Corporation markets pest control and agricultural products, which
together represented 13%, 12%, and 11% of sales, respectively, in fiscal 1996,
1995, and 1994. While sales of these products occur throughout the year,
approximately 69% of these annual sales occur during the first two quarters of
the fiscal year. Complimentary seasonal fluctuations of certain industrial
chemical sales, such as aircraft de-icing fluid, offset lower sales volumes of
agricultural and pest control products in the third and fourth quarters of the
fiscal year. This seasonal change in product mix results in expected fluctuation
of gross margin percentage from quarter to quarter during the year.
Principal Customers
No portion of the continuing operations of the Corporation is dependent upon a
single customer or a few customers, the loss of any one or more of which would
have a material adverse effect on the Corporation.
Competitive Conditions
In the distribution of chemicals and related products, Van Waters & Rogers Inc.,
Van Waters & Rogers Ltd., and Univar Europe N.V. compete with local, regional,
and national distributors, as well as with manufacturers who sell directly to
end users. Although Univar is one of the largest industrial chemical
distributors in North America and has expanded its operations to western Europe,
the Corporation faces significant competition from distributors who have a
larger market share within local and regional markets as well as from other
national distributors.
The Corporation competes on a variety of factors such as price, product quality,
customer service, selection of available products, reliability, technical
support, and delivery.
Research and Development
As a distributor, Univar and its subsidiaries do not engage in research
activities relating to the development of new products or the improvement of
existing products.
Environmental Matters
See "The Environment" section of Management's Discussion and Analysis of
Financial Condition and Results of Operations on page 17 of this filing.
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ITEM 1. BUSINESS (Continued)
Employees
As of February 29, 1996, Univar and its subsidiaries had 3,237 full-time
employees, of which 579 employees are members of various labor unions. At year
end, the Corporation was in negotiations with three labor unions in connection
with renewal of labor contracts. The Corporation generally enjoys good relations
with its employees.
Backlog
The Corporation records revenues as orders are shipped. Due to the nature of the
Corporation's business, no record of the backlog of orders is maintained.
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EXECUTIVE OFFICERS OF THE REGISTRANT
<TABLE>
<CAPTION>
Name Age Business Experience Past Five Years Position Held
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
James H. Wiborg(1) 71 Chairman of Registrant 1990 -
Chairman
Director
Paul Hough 57 President and Chief Executive Officer of Registrant 1995 -
President and CEO Vice President of Registrant 1992 -1995
President, Van Waters & Rogers Ltd. 1991 -1995
Vice President, Van Waters & Rogers Ltd. 1988 - 1991
(Distribution of chemicals and
related products)
Jeffrey Ellwood 50 Vice President of the Registrant 1995 -
Vice President Managing Director of Univar Europe 1991 -
William A. Butler 45 Vice President, General Counsel,
Vice President, General and Corporate Secretary of Registrant 1990 -
Counsel and Corporate
Secretary
Gary E. Pruitt 46 Chief Financial Officer 1995 -
Chief Financial Officer Vice President-Finance, Treasurer and
Assistant Corporate Secretary of the Registrant 1992 - 1995
Vice President, Treasurer and Assistant
Corporate Secretary of Registrant 1989 - 1992
James L. Fletcher 52 Vice President of Registrant 1989 -
Vice President
H. Drew MacAfee 46 Vice President - Human Resources of Registrant 1995 -
Vice President - Human Resources 1992 -
Vice President, Van Waters & Rogers Inc.
Human Resources Vice President - Human Resources
Spacelabs, Inc. (Medical Electronics) 1985 - 1992
</TABLE>
(1) Family Relationships: James H. Wiborg and N. Stewart Rogers, directors of
the Registrant, are brothers-in-law.
No arrangement or understanding exists between any officer and any other person
pursuant to which he or she was elected as an officer.
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ITEM 2. PROPERTIES
The Corporation operates from 147 facilities; 99 in the United States, 18 in
Canada, and 30 in Europe, with a total of approximately 4,962,000 square feet of
office and warehouse space, (3,596,000 in the U.S., 826,000 in Canada, and
540,000 in Europe) of which 3,552,000 square feet is owned (82 facilities) and
the remainder leased.
Listed below are the principal plants and physical properties of the Corporation
and its subsidiaries used in the wholesale distribution of industrial,
agricultural, and pest control chemicals. The Corporation believes its
facilities are in good condition and adequate for its current operations.
VAN WATERS & ROGERS INC.
Principal Facilities
<TABLE>
<CAPTION>
Nature of Ownership
Bldg. Land ----------------------------------
Area Area Expiration
Location (Sq. Ft.) (Acres) Owned Leased Date of Lease
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Atlanta, GA 96,000 8.6 X
Chicago, IL 55,000 2.8 X
Cleveland, OH 47,000 5.6 X
Dallas, TX 146,000 9.8 X
Denver, CO 70,000 4.9 X
Houston, TX 132,440 20.6 X
Indianapolis, IN 58,000 8.8 X
Jacksonville, FL 51,000 1.8 X
Kent, WA 132,000 11.7 X
Kirkland, WA 126,000 X August 2001
Lafayette, LA 60,000 5.1 X
(Carencro)
Los Angeles, CA 156,000 9.4 X
(Bonnie Beach)
Los Angeles, CA 64,000 4.0 X
(Jillson Street)
Omaha, NE 84,000 10.3 X
Phoenix, AZ 66,000 10.0 X
Portland, OR 95,000 9.5 X
St. Paul, MN 88,000 9.0 X September 2002
Salem, MA 188,000 10.6 X December 2000
Salt Lake City, UT 76,000 4.6 X
San Jose, CA 155,000 14.6 X
</TABLE>
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ITEM 2. PROPERTIES (CONTINUED)
Other Van Waters & Rogers Inc. properties (owned or leased), which consist
mainly of industrial warehouses and related office space:
<TABLE>
<S> <C> <C>
Albany, NY Glendale (Phoenix), AZ Oxnard, CA
Albuquerque, NM Grand Rapids, MI Philadelphia, PA
Altoona, PA Greensboro, NC Pittsburgh, PA
Amarillo, TX Greenville, NC Pocatello, ID
Anchorage, AK Harlingen, TX Pompano Beach, FL
Augusta, GA Harrisburg, PA Richland, MS
Beaumont, TX Helena, MT Richmond, VA
Birmingham, AL Houston, TX Riverside, CA
Bloomington, IL Honolulu, HI Rock Springs, WY
Buffalo, NY Kansas City, MO Sacramento, CA
Burlington, IA Kingsport, TN San Antonio, TX
Carlin, NV Las Vegas, NV San Diego, CA
Casper, WY Little Rock, AR San Juan, Puerto Rico
Carteret, NJ Longview, TX Sioux City, IA
Charlotte, NC Memphis, TN South Bend, IN
Chattanooga, TN Miami, FL Spartanburg, SC
Chicago Hts., IL Milwaukee, WI Spokane, WA
Chippewa Falls, WI Mobile, AL Springfield, MO
Cincinnati (Evendale), OH Nampa, ID St. Louis, MO
Corpus Christi, TX Nashville, TN Tampa, FL
Delray Beach, FL New Orleans, LA Toledo, OH
Detroit, MI New Rochelle, NY Tucson, AZ
El Paso, TX North Charleston, SC Tulsa, OK
Fort Myers, FL Oak Brook, IL Wichita (Mosley), KS
Fort Wayne, IN Odessa, TX Woodbridge, NJ
Fresno, CA Oklahoma City, OK
Geismar, LA Orlando, FL
</TABLE>
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ITEM 2. PROPERTIES (CONTINUED)
VAN WATERS & ROGERS LTD.
Principal Facilities
<TABLE>
<CAPTION>
Nature of Ownership
Bldg. Land ---------------------------------
Location Area Area Expiration
(all properties are located in Canada) (Sq.Ft.) (Acres) Owned Leased Date of Lease
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Abbotsford, British Columbia 27,000 4.5 X
Calgary, Alberta 58,000 4.6 X
Downsview (Toronto), Ontario 90,000 8.0 X
Edmonton, Alberta 59,000 5.6 X
Lachine (Montreal), Quebec 55,000 3.3 X
London, Ontario 40,000 X October 1998
Richmond (Vancouver), British Columbia 126,000 8.7 X
Valleyfield, Quebec 99,000 23.9 X
Weston (Toronto), Ontario 137,000 11.3 X
Winnipeg, Manitoba 36,000 4.7 X
</TABLE>
Other Van Waters & Rogers Ltd. properties in Canada (owned or leased) which
consist mainly of industrial warehouses and related office space:
Brandon, Manitoba
Coaldale, Alberta
Dartmouth, Nova Scotia
Fort St. John, British Columbia
Kelowna, British Columbia
Red Deer, Alberta
Regina, Saskatchewan
Saskatoon, Saskatchewan
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ITEM 2. PROPERTIES (CONTINUED)
UNIVAR EUROPE N.V.
Principal Facilities
<TABLE>
<CAPTION>
Nature of Ownership
Bldg. Land --------------------------------
Area Area Expiration
Location (Sq.Ft.) (Acres) Owned Leased Date of Lease
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Basingstoke, United Kingdom 35,000 1.5 X April 2072
Birmensdorf, Switzerland 66,000 3.2 X
Copenhagen (Provestenen), Denmark 8,000 4.2 X January 2004
Croydon, United Kingdom 18,000 X June 1997
Fagerstrand, Norway 21,500 1.2 X
Gothenberg, Sweden 150,000 7.5 X September 2003
Grimsby, United Kingdom 78,000 4.0 X April 2068
Kista, Sweden 5,000 X December 1997
Malmo, Sweden 39,000 4.4 X December 2018
Manchester, United Kingdom 16,000 X April 2013
Milan, Italy 4,000 X December 1996
Milton Keynes, United Kingdom 45,000 3.3 X
Oslo, Norway 3,000 X January 2000
Stockholm, Sweden 23,000 2.6 X December 1999
Zurich, Switzerland 28,000 X March 2001
</TABLE>
Other Univar Europe properties (owned or leased) which consist mainly of
industrial warehouses and related office space:
Bergen, Norway
Christchurch, United Kingdom
Croydon, United Kingdom
Empoli, Italy
Exeter, United Kingdom
Fredrikstad, Norway
Gateshead, United Kingdom
Glasgow, United Kingdom
Helsinki (Kerava), Finland
Manchester, United Kingdom
Norrkiping (Fleminggatan), Sweden
Scunthorpe, United Kingdom
Tamworth, United Kingdom
Venizia Mestre, Italy
Ware, United Kingdom
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ITEM 3. LEGAL PROCEEDINGS
Because of the nature of its business, the Corporation is involved in numerous
contractual, product liability, and public liability cases and claims. The
liabilities for injuries to persons or property are frequently covered by
liability insurance, and the deductible and self-insured portions of these
liabilities, where applicable, have been accrued in the financial statements set
forth at Item 8 below. See also "The Environment" section of Management's
Discussion and Analysis in Item 7 of this filing.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None during the fourth quarter of the fiscal year covered by this report.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Market Information
Univar Corporation common stock is listed for trading on the New York Stock
Exchange under the trading symbol UVX. The high and low sales prices for the
Corporation's common stock for each quarter during the last two years as
reported on the New York Stock Exchange follows:
<TABLE>
<CAPTION>
1996 1995
High Low High Low
------------------------------------------
<S> <C> <C> <C> <C>
First Quarter $12.75 $10.38 $11.50 $ 9.75
Second Quarter $15.88 $11.75 12.00 9.75
Third Quarter $16.25 $12.25 14.50 11.75
Fourth Quarter $13.75 $9.88 13.75 11.63
</TABLE>
Security Holders
As of February 29, 1996, the Corporation estimated there were approximately
6,800 beneficial shareholders.
Dividends
Quarterly cash dividends of $0.075 per share have been declared during each of
the last eight quarters.
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ITEM 6. SELECTED FINANCIAL DATA
For the Fiscal Years Ended February 29/28
(Thousands of dollars, except share data)
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales $2,037,674 $1,912,728 $1,802,464 $1,801,023 $1,558,496
Cost of sales 1,756,840 1,639,055 1,532,931 1,536,817 1,334,123
--------------------------------------------------------------
Gross margin 280,834 273,673 269,533 264,206 224,373
Operating expenses 254,138 248,767 242,388 243,008 212,783
Reengineering and restructuring charges 160 37,361 4,507 --- 9,870
--------------------------------------------------------------
Income (loss) from operations 26,536 (12,455) 22,638 21,198 1,720
Interest expense (15,226) (11,973) (12,921) (15,248) (11,358)
Other - net 896 709 525 2,478 1,835
--------------------------------------------------------------
Income (loss) before provision for (benefit of)
taxes on income and minority interest 12,206 (23,719) 10,242 8,428 (7,803)
Provision for (benefit of) taxes on income (loss) 6,306 (8,066) 4,403 2,811 (1,785)
--------------------------------------------------------------
Income (loss) before minority interest 5,900 (15,653) 5,839 5,617 (6,018)
Minority interest's share in income (loss) -- 604 379 482 (392)
--------------------------------------------------------------
Net income (loss) $ 5,900 $ (16,257) $ 5,460 $ 5,135 $ (5,626)
==============================================================
Weighted average common shares outstanding 21,701 21,346 19,703 19,698 19,247
Net income (loss) per share $ 0.27 $ (0.76) $ 0.28 $ 0.26 $ (0.29)
Cash dividends declared per share $ 0.30 $ 0.30 $ 0.30 $ 0.30 $ 0.30
Total assets 740,605 673,203 652,694 692,351 716,488
Total interest bearing debt 188,703 162,348 177,685 208,300 216,005
Long-term debt 132,812 122,086 147,058 169,922 202,894
Working capital 75,443 76,608 83,545 93,858 114,724
Shareholders' equity 179,606 176,163 157,406 163,290 168,407
Book value per share $ 8.28 $ 8.08 $ 8.01 $ 8.32 $ 8.59
Return on beginning equity 3.3% (10.3)% 3.3% 3.0% (3.8)%
</TABLE>
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OPERATIONS HIGHLIGHTS
Fiscal 1996 was a year distinguished by excellent performances by the
Corporation's European and Canadian operations, but which were overshadowed by
less than satisfactory operating results in the United States. At the beginning
of the year in the United States, implementation activities relating to a major
reengineering program were underway, which impacted core business processes as
well as the network of warehouses and distribution centers. During the third and
fourth quarters, following appointment of a new Chief Executive Officer and
President of the Corporation and its U.S. subsidiary, the Corporation dropped
certain of its reengineering initiatives as operations in the United States were
not achieving many of the benefits anticipated from these activities. The
Corporation revised its plans for dealing with operations in the United States,
placing emphasis on a "back to basics" approach to sales and marketing coupled
with decentralization of the organization structure.
For fiscal 1996, the Corporation had net income of $5.9 million compared with
last year's loss of $16.3 million. Excluding a substantial one-time charge and
other costs relating to the U.S. reengineering program, as well as a settlement
gain recognized in the fourth quarter last year, comparable net income for
fiscal 1995 would have totaled $3.9 million.
FISCAL 1996 COMPARED WITH FISCAL 1995
Sales for 1996 totaled $2.0 billion, an increase of 6.5% compared to 1995. Sales
growth of less than 1% in the United States was hampered by the disruption
caused by implementation of reengineering initiatives, and later, by strategic
changes in the United States organizational structure.
Foreign markets served by the Corporation posted strong sales growth for the
year. When measured in local currencies, sales were up 19% in Europe and 12% in
Canada. During the year, the combination of European currencies in the markets
served by Univar increased almost 7% against the U.S. dollar, while the Canadian
dollar increased by less than 1%. The impact of favorable currency exchange
rates accounted for approximately 21% of total sales growth for the Corporation.
The Corporation's sales were affected by inflation rates estimated at 2.2% and
4.6%, for 1996 and 1995, respectively.
Gross margin dollars for the current year increased by $7.2 million compared
with the prior year. Gross margin percentage for 1996 was 13.8%, down from 14.3%
for 1995. Margin percentage decreased in the United States and in Europe, and
remained constant in Canada. In the United States, decreased margin percentage
is attributable to a combination of increased transportation costs, decreased
margins on certain products, and a change in the mix of products sold. The
decrease in gross margin percentage in Europe reflects higher sales volumes of
lower margin products, such as bulk and commodity chemicals.
Consolidated operating expenses, as a percentage of sales, including
reengineering costs, were 12.5% for 1996 compared with 15.0% for 1995. In the
United States, operating expenses, as a percentage of sales, exclusive of
reengineering charges, dropped to 13.1% for 1996, down from 13.3% for 1995. The
reduction is due primarily to reduced labor costs. Canadian operating expenses
dropped to 8.0% of sales for 1996 compared with 8.4% of sales for 1995. European
operating expenses decreased to 12.9% of sales compared with 14.0% in the prior
year. Reductions in operating expenses, as a percentage of sales, in both Canada
and Europe, are due primarily to continuing increased sales volumes.
During the third and fourth quarters of fiscal 1996, the Corporation revised
certain of its reengineering estimates. The revisions stem from mid-course
corrections in the Corporation's strategic direction, following appointment of a
new Chief Executive Officer and President of the Corporation and its U.S.
subsidiary. Estimate revisions include changes in the number and location of
planned facility closures, equipment to be abandoned or liquidated, revised
severance accruals, relocation costs, and other costs related to
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decentralization of the Corporation's organizational structure. Costs arising in
connection with estimate revisions were offset, in part, by reversal of a
portion of reengineering accurals established in 1995.
At the beginning of the year, accruals pertaining to reengineering charges
totaled $20.4 million. For the year, cash expenditures and non-cash accrual
reductions totaled $4.9 million and $7.6 million, respectively. At year-end
1996, the remaining accruals pertaining to the revised estimates totaled $7.9
million.
Interest expense increased to $15.2 million, up from $12.0 million last year.
Interest expense last year is net of a non recurring $0.8 million settlement
achieved in fiscal 1995, as discussed below. The overall average interest rate
was 8.1% for 1996 compared with 7.4% for 1995.
The Corporation has entered into certain interest rate swap agreements to manage
its exposure to interest rate fluctuations. At February 29, 1996, the aggregate
notional amount of these agreements totaled $50 million, with a weighted average
remaining life of approximately 5 years. These agreements effectively convert a
portion of the Corporation's floating rate debt to fixed rate debt with rates
ranging from 6.77% to 7.25%. (See Note 3 to the financial statements.)
The Corporation provided for income taxes at an effective rate of 51.7% or $6.3
million, for fiscal 1996. In fiscal 1995, the Corporation recorded an income tax
benefit of $8.0 million, at an effective rate of 34.0%. The change in the
effective rate is due in part to a change in the mix of foreign and domestic
income. The portion of taxable income subject to higher Canadian tax rates
increased. Additionally, results for the prior year included settlement gains
which were not subject to foreign taxes.
FISCAL 1995 COMPARED WITH FISCAL 1994
Sales for 1995 totaling $1.9 billion were up 6.1% compared to 1994, but were not
reflective of the real growth experienced in each of the Corporation's
continuing markets. In the United States, sales increased by 1.7%, despite the
impact of legislation that resulted in a decline in the sales of chlorinated
fluorocarbons and chlorinated solvents. These chemicals accounted for 2.1% of
total sales during 1995, down from 3.5% in 1994. Excluding these products, sales
in the United States grew by 5.1%
Foreign markets served by the Corporation posted strong sales growth for the
year. When measured in local currencies, sales were up over 8% in Europe and
more than 28% in Canada. However, due to changes in currency exchange rates,
Canadian sales expressed in U.S. dollars did not reflect this real growth. The
Canadian dollar dropped approximately 6% against the U.S. dollar. On the other
hand, the combination of European currencies in the markets served by Univar
increased approximately 2% against the U.S. dollar.
The Corporation's sales were affected by inflation rates estimated at 4.6% and
0.9%, for 1995 and 1994, respectively.
Gross margin dollars for fiscal 1995 increased by $4.1 million compared with
fiscal 1994. Gross margin percentage for 1995 was 14.3%, down from 15.0% for
1994. Sales of lower margin agricultural chemicals increased to 5.3% of total
sales, up from 4.1% in the prior year. The Corporation's business mix changed
slightly compared with the fiscal 1994. Through-warehouse and direct sales
accounted for approximately 78.0% and 20.4%, respectively, of total sales for
fiscal 1995. Other sales, consisting primarily of ChemCare(R) services accounted
for the remaining 1.6% of sales. In fiscal 1994, through-warehouse and direct
sales accounted for approximately 76.9% and 21.3%, respectively, of total sales.
Other sales accounted for the remaining 1.8% of sales. Along with the change in
mix, margin percentages on both through-warehouse and direct sales decreased
compared with fiscal 1994. Margin percentage on ChemCare services increased
slightly compared with fiscal 1994.
Consolidated operating expenses, as a percentage of sales, including
reengineering costs, were 15.0% for 1995 compared with 13.7% for 1994. In the
United States, operating expenses, as a percentage of sales, exclusive of
reengineering charges, remained constant at 13.3% for 1995 and 1994. Canadian
operating expenses dropped to 8.4% of sales for 1995 compared with 9.8% of sales
for 1994. European operating
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expenses decreased to 14.0% of sales compared with 14.6% in fiscal 1994.
Reductions in operating expenses, as a percentage of sales, in both Canada and
Europe were due primarily to continuing increased sales volumes.
Beginning in the second quarter of fiscal 1994, the Corporation began work on a
strategic business transformation of its U.S. operating company. As a result of
this effort, at the end of the second quarter of fiscal 1995, the Corporation
announced its plans to reorganize the U.S. operating company, redesign its
distribution network, develop a national procurement and materials management
strategy, increase sales force efficiency, improve gross margins, and reduce the
amount of capital required to conduct ongoing operations. In support of this
effort, during fiscal 1995 the Corporation recorded pretax reengineering charges
of $37.4 million.
At February 28, 1995, the remaining accruals pertaining to the reengineering
charges totaled $20.4 million. For the year, cash expenditures and non-cash
accrual reductions totaled $14.6 million and $2.4 million, respectively.
Interest expense, which is net of $0.8 million pertaining to a settlement
achieved as discussed below, decreased to $12.0 million for 1995 compared with
$12.9 million for 1994. The overall average interest rate was 7.4% for 1995
compared with 7.7% for 1994.
The Corporation recorded an income tax benefit of $8.0 million in fiscal 1995,
compared with income tax expense of $4.4 million in fiscal 1994. The
Corporation's effective income tax rate was 34.0 % in fiscal 1995 compared with
43.0% for 1994. The change in the effective rate for fiscal 1995 was due to a
change in the mix of domestic and foreign income coupled with higher Canadian
tax rates compared with U.S. rates, and to settlement gains which were not
subject to foreign taxes.
FISCAL 1995 SETTLEMENT ACHIEVED
In fiscal 1992, Univar Europe executed a foreign currency denominated note (U.S.
dollar equivalent of $6.8 million) in connection with certain business
acquisitions. The note was contingently payable in June 1995, or could be
deferred until December 1998 if the seller did not achieve certain minimum net
worth requirements by December 1994. In accordance with contract provisions, the
seller agreed to provide indemnification to Univar Europe for certain
environmental and other undisclosed contingencies that may have existed as of
the acquisition date. Univar Europe had the right to offset these liabilities
against the note's principal balance. Univar Europe had also agreed to pay
additional consideration, in the minimum amount of $1.8 million, which was
non-interest bearing and payable in 1995.
Shortly after the acquisition, the Corporation began negotiations with the
seller to settle certain disputes regarding acquisition asset values and other
claims. When the seller subsequently entered bankruptcy, the seller's largest
secured creditor, a Swedish bank, was appointed the receiver in bankruptcy for
the seller's assets, liabilities and contingent obligations. In addition to the
original claims and disputes with the seller, certain disputes also arose with
the receiver, due to its handling of the seller's bankruptcy proceedings and the
attachment of certain of Univar Europe's assets.
The Corporation and the receiver reached a settlement of all claims,
counterclaims and disputes on October 31,1994. As part of the settlement
agreement, the note plus accrued interest and the additional consideration
discussed above were satisfied. A settlement gain totaling $3.0 million, net of
related costs, was recorded as a recovery of representations and warranties
pertaining to environmental costs ($0.9 million), interest ($0.8 million) and
damages caused by the receiver's actions as part of the bankruptcy proceedings
($1.3 million). Univar Europe is consolidated using its financial year-end,
December 31. Accordingly, recognition of the settlement gain was included in the
Corporation's fourth quarter of fiscal 1995.
RECENT ACCOUNTING PRONOUNCEMENTS
During 1995, the Financial Accounting Standards Board issued FASB Statement No.
123, "Accounting for Stock-Based Compensation." The Company plans to continue to
measure compensation cost of employee
14
<PAGE> 15
stock option plans using the intrinsic value method prescribed by APB Opinion
No. 25, and starting in fiscal 1997, to make pro forma disclosures of net income
and earnings per share as if the fair value method prescribed by FASB No. 123
had been applied.
In the fourth quarter of fiscal 1996, the Corporation adopted FASB Statement No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of." This Statement requires that long-lived assets and
certain identifiable intangibles to be held and used by an entity be reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. If the sum of the expected
future cash flows is less than the carrying amount of the asset, an impairment
loss is recognized. This Statement also requires that long-lived assets and
certain identifiable intangibles to be disposed of be reported at the lower of
carrying amount or fair value less cost to sell. Adoption of FASB No. 121 had no
impact on the Corporation's results of operations or financial position.
In the first quarter of fiscal 1995, the Corporation adopted FASB Statement No.
112, "Employers' Accounting for Postemployment Benefits." Postemployment
benefits are all types of benefits, other than retirement benefits, provided to
former or inactive employees, their beneficiaries and covered dependents. These
benefits include, but are not limited to, salary continuation, supplemental
unemployment benefits, severance benefits, disability related benefits
(including workers' compensation), job training and counseling, and continuation
of benefits such as health care benefits and life insurance coverage. Under this
statement, the cost of postemployment benefits is recognized on an accrual
basis. The adoption of this statement did not materially increased operating
expenses.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows provided by operations totaled $19.1 million for the current year,
compared with $15.9 million for fiscal 1995, and $35.4 million for fiscal 1994.
The reduction in operating cash flows for fiscal 1996 and 1995 compared with
fiscal 1994 was due primarily to costs of the U.S. reengineering efforts. Cash
provided by operations was used in part to finance the Corporation's capital
expenditures and pay dividends.
The Corporation has domestic and foreign short-term credit lines totaling $105.9
million, of which $56.4 million was available at fiscal year-end 1996. The
Corporation and its domestic and Canadian subsidiaries are parties to a
medium-term revolving credit agreement with a group of banks which provide up to
$195 million in available borrowings, of which $80 million was available at
February 29, 1996.
During the year, the foreign subsidiaries of the Corporation entered into a
multi-currency revolving credit agreement with a group of banks. Under the terms
of the agreement, which is guaranteed by the Corporation, the borrowers may
borrow up to the U.S. dollar equivalent of $90 million, of which $76.9 was
available at February 29, 1996.
Total short, medium, and long-term borrowings at fiscal year-end 1996 were
$188.7 million, compared with $162.3 million at the end of fiscal 1995. (See
Notes 2 and 3 to the financial statements.) The ratio of interest bearing debt
to equity, which the Corporation has targeted at 1:1 historically, was 1.05:1 at
the end of the current year, up from 0.92:1 at the end of the prior year.
The Corporation believes its internally generated cash, together with its access
to available worldwide bank lines, will be adequate to cover anticipated
liquidity requirements.
Working capital, excluding cash and cash equivalents and short-term borrowings,
totaled $112.3 million at the end of fiscal 1996, compared with $97.4 million at
the end of fiscal 1995. At fiscal year-end 1996, the ratio of current assets to
current liabilities was 1.19:1 compared to 1.23:1 at fiscal year-end 1995. The
increase in working capital resulted in part from an acquisition in the United
Kingdom and in part from growth in sales in both Canada and Europe.
EXERCISE OF DOW PUT AGREEMENT
On June 24, 1991, the Corporation and The Dow Chemical Company ("Dow") entered
into an Agreement of Purchase and Sale of Stock (the "Dow Purchase Agreement").
In accordance with the Dow Purchase
15
<PAGE> 16
Agreement, Univar sold 1,900,000 shares of its common stock to Dow at a price of
$15.84 per share. In addition, Univar reserved the right to put to Dow between
approximately 2,500,000 and 2,900,000 additional shares of common stock at a
price that escalated over time, but which reached a maximum price of $18.74 per
share. The number of additional shares that could be sold depended on whether
Pakhoed Investeringen B.V. ("Pakhoed") exercised its right to acquire shares
from Univar at the same price as they were sold to Dow in order for Pakhoed to
maintain its percentage share ownership in Univar. Pakhoed elected not to
exercise its right to acquire additional shares. Therefore, based on the manner
in which the calculation of the number of additional shares to be sold was made,
the actual maximum number of shares that Univar could put to Dow was 2,509,371.
In lieu of the unilateral right of Univar to put these shares of common stock to
Dow, on May 13, 1994, Univar and Dow executed an Amended and Restated Agreement
of Purchase and Sale of Stock (the "Amended Agreement").
Under the terms of the Amended Agreement, Dow purchased from Univar 2,000,000
shares of common stock at a price of $18.74 per share (a total purchase price of
$37,480,000). Dow now holds 3,900,000 shares of common stock representing 17.89%
of the issued and outstanding shares of Univar. In addition, Dow and Univar have
agreed that, at any time within the period ending May 12, 1997, Univar can put
to Dow, or Dow can call, up to 101,874 shares of Series A Convertible Preferred
Stock. The price per share will be $93.70. Each share of Series A Convertible
Preferred Stock is convertible, by either Dow or Univar, into five shares of
common stock. In the event of a call or put, either all or half the 101,874
shares must be called by Dow or put by Univar. With respect to the conversion of
the Series A Convertible Preferred Stock into Univar common stock, Univar has
agreed that it will not convert the preferred shares if, following the
conversion, Dow would own in excess of 19.9% of the issued and outstanding
common stock of the Corporation. Dow has agreed that it will pay to Univar
$350,000 per year for each of the three years ending May 12, 1995, 1996, and
1997, in the event Univar does not elect to put the Series A Convertible
Preferred Stock to Dow, or in the event Dow does not call the Series A
Convertible Preferred Stock.
DIVIDENDS AND RETURN ON EQUITY
Cash dividends declared and paid during the year totaled $0.30 per share,
unchanged from the two prior years. Return on beginning equity for the past
three years has varied, with a 3.3% return for fiscal 1996 and 1994, and a 10.3%
negative return for fiscal 1995.
BUSINESS ACQUISITIONS
At the end of fiscal 1996, the Corporation acquired a company located in the
United Kingdom with annual revenues of approximately $70 million. The
acquisition included equity shares with a total value of $16.0 million. Funding
for the acquisition was provided from credit line borrowings. The newly acquired
operations were consolidated with the Corporation's existing operations in the
United Kingdom.
At the time of the organization of Univar Europe in 1991, Univar and its then
31% shareholder, Pakhoed, entered into a Shareholder Agreement resulting in the
formation of Univar Europe, which was incorporated in the Netherlands in 1990.
At the time Univar Europe was capitalized, it was 51% owned by the Corporation
and 49% owned by Pakhoed. On September 1, 1994 the Corporation acquired the
minority shareholder's 49% interest in Univar Europe, in accordance with the
terms of the Shareholder Agreement. The acquisition included equity shares and
subordinated debt with a total value of $25.8 million. Funding for this
aggregate purchase price was provided through the sale of 2 million shares of
the Corporation's common stock to The Dow Chemical Company as described above.
During fiscal 1995, the Corporation completed an acquisition in Europe. The
acquired company had annual revenues of approximately $6.5 million. The
aggregate purchase price was $3.2 million, consisting of fixed assets,
inventories, and customer lists.
See Note 11 to the financial statements for sales and other operations data by
geographic area.
CAPITAL EXPENDITURES
16
<PAGE> 17
Capital expenditures for fiscal 1996 totaled $22.5 million. Capital expenditures
include normal additions, upgrades, and expansions of offices, plants, delivery
equipment, and similar items. Capital expenditures during fiscal 1995 and 1994
totaled $23.0 million and $14.0 million, respectively. Capital expenditures for
fiscal 1997 are projected to be approximately $40 million, which includes plans
for two new warehouse facilities.
THE ENVIRONMENT
The Corporation is subject to a variety of environmental laws and regulations
and faces exposure from actual or potential claims and legal proceedings
involving environmental matters. The Corporation or related entities have been
contacted by various governmental agencies regarding potential liability for a
share of the cost of clean up of independent waste disposal or recycling sites
with alleged or confirmed contaminated soil and/or groundwater to which the
Corporation or related entities may have taken waste products. With regard to
many of these sites, the Corporation has denied liability because of an absence
of any connection between the Corporation or related entities and the waste
disposal or recycling site. The Corporation believes there are twenty-eight
sites in which the Corporation may be liable for a share of the cost of clean
up. With the exception of one site, at those sites which show some alleged
evidence of an association between the Corporation or related entities and the
waste disposal or recycling site, the Corporation is considered a de minimis, or
small quantity, "potentially responsible party." The Corporation estimates the
probable liability for the remediation of independent waste disposal sites
totals $1.7 million, which is included in the Corporation's environmental
accrual. Possible costs for these sites could range up to $3.0 million.
Forty-three owned, previously owned, or leased sites of the Corporation are
currently undergoing remediation efforts or are in the process of active review
of the need for potential remedial efforts. Some of these efforts are being
conducted pursuant to governmental proceedings or investigations, while others
are being conducted voluntarily by the Corporation, with appropriate state or
federal agency oversight and approval. The following table shows additions to
and expenditures charged against the Corporation's environmental accruals during
the past three fiscal years:
<TABLE>
<CAPTION>
(Millions of dollars) 1996 1995 1994
----------------------------
<S> <C> <C> <C>
Beginning balance $17.0 $15.6 $15.4
Expense provisions 5.0 5.4 4.0
Expenditures (5.4) (4.0) (3.8)
----- ----- -----
Ending balance $16.6 $17.0 $15.6
===== ====== ======
</TABLE>
Annual cash expenditures for remedial, monitoring and investigatory activities
have averaged approximately $4.4 million during the past three years. In
addition, annual cash expenditures for environmental capital expenditures have
averaged $1.0 million. While the Corporation does not anticipate a material
increase in the projected annual level of its environmental related
expenditures, there is the possibility that such increases may occur in the
future. The precision of the Corporation's environmental estimates is affected
by several uncertainties such as the developments at sites that result from
investigatory studies; the extent of required cleanup; the complexity of
applicable government laws and regulations and their interpretations; the
varying costs and effectiveness of alternative cleanup technologies and methods;
the uncertainty concerning recovery of such costs from third-parties which may
be jointly liable; and the questionable level of the Corporation's involvement
at various sites at which the Corporation is allegedly associated. The
Corporation periodically reviews the status of all significant existing or
potential environmental issues and adjusts its accruals as new remediation
requirements are defined, as information relevant to reasonable estimates to be
made becomes available, and to reflect new and changing facts. The accruals do
not reflect any possible future insurance recoveries.
Although the Corporation believes adequate accruals have been provided for
environmental contingencies, it is possible, due to the uncertainties previously
noted, that additional accruals could be required in the future that could have
a material effect on the results of operations in a particular quarter or annual
period. However,
17
<PAGE> 18
the ultimate resolution of these contingencies, to the extent not previously
provided for, is not expected to have a material adverse effect on the
Corporation's financial position.
STOCK PRICE
During the fiscal year ended February 29, 1996, the price of Univar common
shares ranged between a high of $16.25 on September 20, 1995, and a low of $9.88
per share on December 19, 1995. The range, on a fiscal quarter by quarter basis
is presented in Part II, Item 5.
The closing price on the New York Stock Exchange at February 29, 1996 was $10.63
per share, down from $12.63 per share a year earlier and down from $11.25 at the
end of 1994. The S&P 500 Index for the same dates was 640.43, 487.39 and 467.14,
respectively.
18
<PAGE> 19
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended February 29/28
(Thousands of dollars, except per share amounts)
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Sales $2,037,674 $1,912,728 $1,802,464
Cost of Sales 1,756,840 1,639,055 1,532,931
---------- ---------- ----------
Gross Margin 280,834 273,673 269,533
Operating Expenses 254,138 248,767 242,388
Reengineering Charges 160 37,361 4,507
---------- ---------- ----------
Income (Loss) from Operations 26,536 (12,455) 22,638
Other Income (Expense):
Interest expense (15,226) (11,973) (12,921)
Other - net 896 709 525
---------- ---------- ----------
Income (Loss) Before Provision for (Benefit of)
Taxes on Income and Minority Interest 12,206 (23,719) 10,242
Provision for (Benefit of) Taxes on Income (Loss) 6,306 (8,066) 4,403
---------- ---------- ----------
Income (Loss) Before Minority Interest 5,900 (15,653) 5,839
Minority Interest's Share in Income of Foreign Subsidiary --- 604 379
---------- ---------- ----------
Net Income (Loss) $ 5,900 $ (16,257) $ 5,460
========== ========== ==========
Net Income (Loss) Per Share $ 0.27 $ (0.76) $ 0.28
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
19
<PAGE> 20
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended February 29/28
(Thousands of dollars)
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Cash Flows Provided by Operating Activities
Net income (loss) $ 5,900 $ (16,257) $ 5,460
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 29,135 27,020 27,449
Loss on sale of fixed assets 1,306
Deferred taxes on income (4,430) (4,463) (2,452)
Other liabilities and deferred credits (2,024) 836 (1,483)
Non-cash portion of reengineering charges --- 16,389 ---
Other-net (707) 53 (294)
Change in assets and liabilities, net of effect of
businesses acquired:
Accounts receivable (12,889) (11,656) (4,804)
Inventories (20,628) (5,864) 6,212
Accounts payable 16,002 16,463 (3,991)
Other current assets 1,221 (2,734) 5,226
Other current liabilities 6,212 (3,841) 4,063
---------- --------- ---------
Net Cash Provided by Operating Activities 19,098 15,946 35,386
---------- --------- ---------
Cash Flows Used by Investing Activities
(Increase in) proceeds from investments (208) 1,790 1,132
Additions to property, plant, and equipment (22,536) (21,437) (14,121)
Acquisition of businesses and investments (16,004) (32,065) (4,383)
Sale of business --- --- 2,812
Change in other assets 457 305 (106)
---------- --------- ---------
Net Cash Used by Investing Activities (38,291) (51,407) (14,666)
---------- --------- ---------
Cash Flows Provided (Used) by Financing Activities
Short-term borrowing - net 9,638 7,685 (6,813)
Common stock activity 241 37,770 286
Long-term debt proceeds 119,851 50,000 20,000
Reduction in long-term debt (105,494) (50,704) (40,739)
Payment of dividends (6,477) (6,215) (5,895)
---------- --------- ---------
Net Cash Provided (Used) by Financing Activities 17,759 38,536 (33,161)
---------- --------- ---------
Effect of Exchange Rate Changes on Cash 971 911 (1,545)
---------- --------- ---------
Net Cash Provided (Used) (463) 3,986 (13,986)
Cash and Equivalents at Beginning of Year 19,516 15,530 29,516
---------- --------- ---------
Cash and Equivalents at End of Year $ 19,053 $ 19,516 $ 15,530
========== ========= =========
Supplemental Disclosure of Cash Flow Information
Cash paid during the year for:
Interest (net of capitalized interest) $ 15,212 $ 13,309 $ 13,325
Taxes on income 9,939 3,259 6,008
</TABLE>
The accompanying notes are an integral part of these statements.
20
<PAGE> 21
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
February 29/28
(Thousands of dollars) 1996 1995
<S> <C> <C>
ASSETS
Current Assets
Cash and equivalents $ 19,053 $ 19,516
Receivables-
Trade accounts (less allowance for losses of
$1,924 in 1996 and $1,695 in 1995) 261,272 233,844
Other 10,621 10,055
Inventories 162,469 133,282
Prepaid expenses and other 11,301 10,551
---------- ----------
Total current assets 464,716 407,248
Real Properties Held for Sale and Long-Term Receivables 24,193 28,780
Property, Plant, and Equipment
Land 23,950 24,052
Buildings 117,410 112,267
Equipment 230,129 222,448
Leased property under capital leases 6,716 5,213
Construction in progress 3,763 7,251
---------- ----------
381,968 371,231
Accumulated depreciation and amortization (167,957) (162,876)
---------- ----------
Net property, plant, and equipment 214,011 208,355
Other Assets 37,685 28,820
---------- ----------
$ 740,605 $ 673,203
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
21
<PAGE> 22
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
February 29/28
(Thousands of dollars) 1996 1995
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Bank overdrafts $ 21,217 $ 19,584
Notes payable 49,502 36,284
Current portion of long-term debt 6,389 3,978
Accounts payable 253,500 222,675
Other accrued liabilities 58,665 48,119
-------- --------
Total current liabilities 389,273 330,640
Long-Term Debt, less Current Portion 132,812 122,086
Other Long-Term Liabilities
Deferred taxes on income 8,903 12,408
Other liabilities and deferred credits 30,011 31,906
-------- --------
Total other long-term liabilities 38,914 44,314
Commitments and Contingencies - -
Shareholders' Equity
Preferred stock, no par value
Authorized 5,000,000 shares in 1996
and 750,000 shares in 1995 - -
Common stock, no par in 1996 and par value
$.33 1/3 per share in 1995
Authorized - 100,000,000 shares in 1996 and
40,000,000 shares in 1995
Issued - 21,681,624 shares in 1996
and 24,018,502 shares in 1995 105,505 8,006
Additional paid-in capital - 107,799
Retained earnings 73,859 74,428
Cumulative translation adjustment 246 (4,909)
Treasury stock, at cost, 2,222,539 shares in 1995 - (9,087)
Deferred stock compensation expense (4) (74)
-------- --------
Total shareholders' equity 179,606 176,163
-------- --------
$740,605 $673,203
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
22
<PAGE> 23
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Deferred
Stock Total
For the Three Years Ended Additional Cumulative Compen- Share-
February 29, 1996 Common Paid-in Retained Translation Treasury sation holders'
(Thousands of dollars) Stock Capital Earnings Adjustment Stock Expense Equity
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, February 28, 1993 7,339 69,555 97,495 (1,041) (9,633) (425) 163,290
Net income - - 5,460 - - - 5,460
Exercise of stock options - 58 - - 85 - 143
Cash dividends at
$.30 per share - - (5,895) - - - (5,895)
Foreign currency
translation adjustment - - - (5,920) - - (5,920)
Purchase of treasury stock - - - - (44) - (44)
Stock compensation expense - - - - (18) 205 187
Other - 185 - - - - 185
- ------------------------------------------------------------------------------------------------------------------------------
Balance, February 28, 1994 7,339 69,798 97,060 (6,961) (9,610) (220) $ 157,406
Net loss - - (16,257) - - - (16,257)
Sale of stock (2.0 million shares) 667 36,813 - - - - 37,480
Exercise of stock options - 63 - - 62 - 125
Stock awards (144,345 shares) - 887 - - 587 (1,474) -
Cash dividends at
$.30 per share - - (6,375) - - - (6,375)
Foreign currency
translation adjustment - - - 2,052 - - 2,052
Purchase of treasury stock - - - - (73) - (73)
Stock compensation expense - - - - (53) 1,620 1,567
Other - 238 - - - - 238
- ------------------------------------------------------------------------------------------------------------------------------
Balance, February 28, 1995 8,006 107,799 74,428 (4,909) (9,087) (74) 176,163
Net income 5,900 5,900
Exercise of stock options 176 164 340
Cash dividends at
$.30 per share (6,469) (6,469)
Foreign currency
translation adjustment 5,155 5,155
Purchase of treasury stock (1,559) (1,559)
Stock compensation expense 70 70
Reincorporation in Washington State 97,493 (107,975) 10,482 -
Other 6 6
- ------------------------------------------------------------------------------------------------------------------------------
Balance, February 29, 1996 105,505 - 73,859 246 - (4) 179,606
==============================================================================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
23
<PAGE> 24
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Corporation
and all of its majority-owned domestic and foreign subsidiaries, after
elimination of significant intercompany accounts and transactions.
The Corporation's 100% owned subsidiary, Univar Europe N.V. (Univar Europe), is
consolidated using its financial year-end, December 31.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results are likely to differ from those estimates and it is possible the
difference may be significant.
REVENUE RECOGNITION
The Corporation records revenues as orders are shipped.
INVENTORIES
Inventories consist primarily of finished goods. The methods of valuation of
inventories at the balance sheet dates were as follows:
<TABLE>
<CAPTION>
(Thousands of dollars) 1996 1995
<S> <C> <C>
At Cost (last-in, first-out method) $ 81,781 $ 66,571
At Lower of Cost or Market (average-cost method) 80,688 66,711
-------- --------
$162,469 $133,282
======== ========
</TABLE>
If the inventories valued on the last-in, first-out (LIFO) method had been
valued at average costs, they would have been $34.4 million and $32.0 million
higher than reported at year-end 1996 and 1995, respectively.
During fiscal 1995, the Corporation experienced decreases in certain LIFO
inventories that were carried at lower costs prevailing in prior years. The
effect of these decreases was to increase earnings before income taxes by
approximately $1.4 million in fiscal year 1995.
PROPERTY, PLANT, & EQUIPMENT
Expenditures for property, plant, and equipment and for renewals and betterments
that extend the originally estimated economic lives of assets are capitalized at
the related cost. Expenditures for maintenance, repairs, and other renewals are
charged to expense. Gain or loss is recognized for dispositions. For financial
reporting purposes, depreciation has been provided using the straight-line
method over the estimated useful lives of the related assets which range from
three to forty years. For income tax purposes, depreciation on certain assets is
computed using accelerated methods. Interest cost of approximately $0.4 million
for fiscal year 1995 was capitalized to the cost of new assets.
Costs incurred in developing or purchasing management information systems are
capitalized and included in property, plant, and equipment. These costs are
depreciated over their estimated useful lives from the date the systems become
operational.
INTANGIBLE ASSETS
Intangible assets, which consist of goodwill and covenants not to compete, are
amortized using the straight-line method over their estimated useful lives,
typically not more than twenty and ten years, respectively.
ENVIRONMENT
Accruals for contamination removal costs are recorded when it is probable that a
liability has been incurred and the amount of the liability can be reasonably
estimated. Accruals for such environmental liabilities are included in the
balance sheet caption "Other Liabilities and Deferred Credits." Accruals for
insurance or other third-party recoveries for environmental costs are recorded
when it is probable that recoveries on the claim will be realized.
24
<PAGE> 25
Environmental costs are capitalized if the costs extend the life of the
property, increase its capacity, and/or mitigate or prevent contamination from
future operations. Costs related to investigation of potential environmental
matters are expensed as incurred.
SELF-INSURANCE RESERVES
The Corporation retains certain exposures in its insurance plan under various
deductible or self-insured programs. Reserves for claims made are recorded at
estimated costs as current liabilities. Reserves for estimated claims incurred
but not yet reported are recorded as other long-term liabilities.
INCOME TAXES
Taxes on income are calculated using the asset and liability method which
results in recognition of deferred tax assets and liabilities for the expected
future tax consequences of temporary differences between the carrying amounts
and tax basis of assets and liabilities, using enacted rates. The principal
differences between financial and tax reporting arise from depreciation,
self-insurance, reengineering, restructuring and other accruals and reserves,
pension accruals, alternative minimum tax credits, foreign tax credits, and net
operating loss carryforwards. Accumulated undistributed earnings after taxes for
the Canadian subsidiary amounted to approximately $74 million at February 29,
1996. The European subsidiaries have accumulated undistributed earnings of
approximately $9 million at February 29, 1996. No provision for foreign
withholding or United States federal income taxes is necessary, as it is
management's intention that dividends will be paid only under circumstances
which will not generate additional net tax cost.
MINORITY INTEREST
The Corporation acquired the minority shareholder's 49% interest in Univar
Europe during fiscal 1995, as described in Note 8.
FAIR VALUE
The carrying value of financial instruments approximates fair value, unless
otherwise disclosed. Fair values have been estimated using available market
prices for similar issues and maturities.
TRANSLATION OF FOREIGN CURRENCY
Local currencies have been used as the functional currency throughout the world.
The balance sheet accounts of foreign subsidiaries are translated using the
exchange rates in effect at their respective years-end. Results of operations
are translated using the average exchange rates prevailing throughout the
periods. The effects of unrealized exchange rate fluctuations on translating
foreign currency assets and liabilities into U.S. dollars are accumulated as the
cumulative translation adjustment in shareholders' equity. Realized gains and
losses from foreign currency transactions are included in net income for the
period.
DERIVATIVES
The Corporation has limited involvement with derivative financial instruments
and does not use them for trading purposes. Derivatives are used to manage
well-defined interest rate and foreign exchange risks. Interest rate swaps are
entered into with major banks in which the Corporation pays a floating rate and
receives a fixed rate with interest payments being calculated on a notional
amount, as described in Note 3. Amounts received or paid by the Corporation at
the settlement dates under the swap agreements are included in interest expense.
Forward foreign exchange contracts are used to hedge fluctuations in prices on
inventory purchases caused by changes in exchange rates and as hedges for
foreign denominated accounts receivable and payable. Foreign exchange contracts
have gains and losses recognized at the settlement date. The use of derivatives
does not have a significant effect on the Corporation's results of operations or
its financial position.
EARNINGS PER SHARE
Net income (loss) per common share is based on the weighted average number of
shares outstanding during each year (21,700,672 for 1996, 21,345,622 for 1995,
and 19,703,273 for 1994 ). There is no material dilution due to outstanding
stock options.
STATEMENTS OF CASH FLOWS
The Corporation considers cash on hand, certificates of deposit, and short-term
marketable securities with maturities of less than 90 days, as cash and
equivalents for purposes of the statements of cash flows.
RECENT ACCOUNTING PRONOUNCEMENTS
During 1995, the Financial Accounting Standards Board issued FASB Statement No.
123, "Accounting for Stock-Based Compensation." The Company plans to continue to
measure compensation cost of employee stock option
25
<PAGE> 26
plans using the intrinsic value method prescribed by APB Opinion No. 25, and
starting in fiscal 1997, to make pro forma disclosures of net income and
earnings per share as if the fair value method prescribed by FASB No. 123 had
been applied.
During the fourth quarter of fiscal 1996, the Corporation adopted FASB No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of." This Statement requires that long-lived assets and certain
identifiable intangibles to be held and used by an entity be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. If the sum of the expected
future cash flows is less than the carrying amount of the asset, an impairment
loss is recognized. This Statement also requires that long-lived assets and
certain identifiable intangibles to be disposed of be reported at the lower of
carrying amount or fair value less cost to sell. Adoption of FASB No. 121 had no
impact on the Corporation's results of operations or financial position.
NOTE 2 - NOTES PAYABLE
As of February 29, 1996, the Corporation has domestic and foreign short-term
lines of credit totaling $105.9 million, with loans against these bank lines of
$49.5 million. The approximate average aggregate short-term borrowing and
weighted average short-term interest rates were $57.6 million and 6.6% in 1996,
and $50.6 million and 5.8% in 1995. The maximum amount of short-term borrowing
during the year was $71.0 million in 1996 and $75.4 million in 1995.
NOTE 3 - LONG-TERM DEBT AND REVOLVING CREDIT
Long-term debt consists of the following at February 29/28:
<TABLE>
<CAPTION>
(Thousands of dollars) 1996 1995
<S> <C> <C>
Senior Debt:
Revolving credit agreement $115,000 $100,000
Multi-currency revolving credit agreement 13,133 ---
Term credit agreements, 5.26% and 9.84%, unsecured --- 13,333
Industrial revenue bonds, 7.25%, secured by certain
real property, payable in installments to 1999 750 1,000
Non-U.S. mortgage loans, 5.75%, payable in
installments to fiscal 1997 2,167 1,949
Other 4,818 6,117
Capitalized Lease Obligations:
8.51% to 11.75%, secured by certain real property,
payable in monthly installments to 2020 3,333 3,665
-------- --------
139,201 126,064
Current portion (6,389) (3,978)
-------- --------
$132,812 $122,086
======== ========
</TABLE>
Maturities of long-term debt for the fiscal years ending 1998-2001 are as
follows:
<TABLE>
<S> <C>
1998 $1,001
1999 688
2000 476
2001 470
</TABLE>
The Corporation and its domestic subsidiary are parties to a revolving credit
agreement with a group of banks. Under the terms of the agreement, the borrowers
may borrow up to $195 million at the prime rate, certificate of deposit rate
plus 7/8%, or LIBOR (London Interbank Offering Rate) plus 7/8%, at the
Corporation's option. The interest rates in effect were 6.59% and 7.04% as of
year-end 1996 and 1995, respectively. The credit commitment extends for three
years, with annual one year renewals, thereafter. In addition, the agreement
requires fees of 1/4% on unused commitments.
26
<PAGE> 27
During the year, the foreign subsidiaries of the Corporation entered into a
multi-currency revolving credit agreement with a group of banks. Under the terms
of the agreement, which is guaranteed by the Corporation and its U.S.
subsidiary, the borrowers may borrow up to the U.S. dollar equivalent of $90
million at the U.S. prime rate or the Canadian B/A rate plus 5/8%, for Canadian
dollar loans, or LIBOR plus 5/8% for loans in all other authorized currencies,
at the borrower's option. The weighted average interest rate in effect as of
year-end 1996 was 5.4%. The credit commitment extends for three years, with
annual one year renewals. In addition, the agreement requires fees of 1/4% per
annum on the total commitment amount.
The long-term debt instruments include provisions specifying current ratio,
interest bearing debt to equity ratios, and a minimum equity level, among other
restrictions. Under the most restrictive of the financial covenants, the
Corporation's current ratio, as defined, may not fall below 1.20:1; the ratio of
total interest bearing debt, as defined, to equity may not exceed 1.40:1; and
the Corporation's shareholders' equity may not be less than $156.4 million. At
year end, the Corporation was in compliance with all loan covenants.
The Corporation has entered into certain interest rate swap agreements to manage
its exposure to interest rate fluctuations. At February 29, 1996, the aggregate
notional amount of these agreements totaled $50 million, with a weighted average
remaining life of approximately 5 years. These agreements effectively convert a
portion of the Corporation's floating rate debt to fixed rate debt with rates
ranging from 6.77% to 7.25% The estimated aggregate fair value of the contracts,
as measured by the amount the Corporation would have paid if the agreements were
terminated at the balance sheet date, was approximately $1.9 million. The
Corporation is exposed to, but does not anticipate, credit loss in the event of
counterparty nonperformance.
NOTE 4 - LEASES
Rental expense was $25.2 million, $24.1 million, and $23.2 million, for 1996,
1995, and 1994, respectively. The Corporation and its subsidiaries occupy
certain leased premises and lease certain other equipment. Leases that qualify
as capital leases have been capitalized. The amount of such capitalized leases
included in property, plant, and equipment and the related accumulated
amortization was $6.7 million and $2.4 million in 1996, and $5.2 million and
$2.3 million in 1995. Lease amortization is included in depreciation expense.
Future minimum lease payments as of year-end under capital leases and
non-cancelable operating leases, having initial lease terms of more than one
year, are as follows:
<TABLE>
<CAPTION>
Capital Operating
(Thousands of dollars) Leases Leases
------ ------
<S> <C> <C>
1997 $ 707 $25,042
1998 707 19,010
1999 707 13,017
2000 707 9,259
2001 616 6,548
Thereafter 1,452 13,213
------- -------
Total minimum lease payments 4,896 $86,089
=======
Amounts representing interest (1,563)
-------
Present value of net minimum lease payments $ 3,333
=======
</TABLE>
The present value of the capital lease payments is presented in the 1996 balance
sheet as long-term debt.
NOTE 5 - REENGINEERING CHARGES
In the second quarter of fiscal 1994, the Corporation began work on a strategic
business transformation of its U.S. operating company. As a result of this
effort, at the end of the second quarter of fiscal 1995, the Corporation
announced its plans to reorganize the U.S. operating company, redesign its
distribution network, develop a national procurement and materials management
strategy, increase sales force efficiency, improve gross margins, and reduce the
amount of capital required to conduct ongoing operations. In support of this
effort, during fiscal 1995 the Corporation recorded pretax reengineering charges
of $37.4 million, which included severance and other
27
<PAGE> 28
employee benefits, facility closure costs, consultant fees, project travel costs
and write-down to fair value of certain facilities.
At year end 1995, the remaining accruals relating to reengineering charges
totaled $20.4 million. For that year, cash expenditures and non-cash accrual
reductions totaled $14.6 million and $2.4 million, respectively.
During the third and fourth quarters of fiscal 1996, the Corporation revised
certain of its reengineering estimates. The revisions stem from mid-course
corrections in the Corporation's strategic direction, following appointment of a
new Chief Executive Officer and President of the Corporation and its U.S.
subsidiary. Estimate revisions include changes in the number and location of
planned facility closures, equipment to be abandoned or liquidated, revised
severance accruals, relocation costs, and other costs related to
decentralization of the company's organizational structure. Costs arising in
connection with estimate revisions were offset, in part, by reversal of a
portion of reengineering accruals established in 1995.
At year end 1996, the remaining accruals pertaining to the revised estimates
totaled $7.9 million. For the year, cash expenditures and non-cash accrual
reductions totaled $4.9 million and $7.6 million, respectively.
NOTE 6 - TAXES ON INCOME
The components of income (loss) before income taxes and minority interest were
as follows:
<TABLE>
<CAPTION>
(Thousands of dollars) 1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Domestic $(14,163) $ (6,971) $ 4,261
Foreign 26,369 20,612 10,488
Reengineering charge -- (37,360) (4,507)
-------- -------- -------
$ 12,206 $(23,719) $10,242
======== ======== =======
</TABLE>
The provision for (benefit of) taxes on income (loss) consisted of the following
components:
<TABLE>
<CAPTION>
(Thousands of dollars) 1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Current
Federal $ 85 $ (1,115) $ 889
State and Local 70 (88) 140
Foreign 10,061 7,123 5,261
------- -------- ------
10,216 5,920 6,290
------- -------- ------
Deferred
Federal (4,021) (13,067) (1,770)
State and Local (387) (1,696) 291
Foreign 498 777 (408)
------- -------- -------
(3,910) (13,986) (1,887)
------- -------- -------
$ 6,306 $ (8,066) $ 4,403
======= ======== =======
</TABLE>
28
<PAGE> 29
Deferred tax balances consisted of the following temporary differences at
February 29/28:
<TABLE>
<CAPTION>
(Thousands of dollars) 1996 1995 1994
Deferred Tax Deferred Tax Deferred Tax Deferred Tax Deferred Tax Deferred Tax
Assets Liabilities Assets Liabilities Assets Liabilities
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Alternative minimum tax $ 6,474 $ -- $ 6,476 $ --- $ 7,500 $ ---
Tax loss and credit carryforward 6,231 -- 4,758 --- 480 ---
Foreign tax credit carryforward 1,835 --- 2,444 --- --- ---
Self-insurance loss reserves 4,402 --- 3,731 --- 2,410 ---
Pension and other compensation
accruals 218 --- --- 795 1,266 ---
State income tax accrual 115 --- 260 --- 1,268 ---
Vacation accrual 1,552 --- 1,459 --- 1,268 ---
Property --- 35,433 --- 36,369 --- 37,233
Reengineering charges 5,741 --- 8,139 --- --- ---
Environmental reserve 2,063 --- --- --- --- ---
Other 3,898 2,863 3,259 3,039 4,162 4,784
------ ------ ------- ------- ------- -------
$32,529 $38,296 $30,526 $40,203 $18,354 $42,017
======= ======= ======= ======= ======= =======
</TABLE>
29
<PAGE> 30
The accompanying financial statements reflect effective tax (benefit) rates of
51.7% in 1996, (34.0%) in 1995, and 43.0% in 1994. An analysis of the
differences between these rates and the Federal statutory rate is set forth
below:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
(Thousands of dollars) AMOUNT PERCENT Amount Percent Amount Percent
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Federal tax at statutory rates $ 4,272 35.0 % $(8,302) (35.0)% $ 3,483 34.0 %
State taxes, net of
federal tax benefit (206) (1.7) (1,160) (4.9) 285 2.8
Foreign income tax rate differential 1,384 11.4 1,248 5.2 1,099 10.7
Travel and entertainment limitation 605 5.0 561 2.4 210 2.1
Research and experimentation credit --- --- --- --- (787) (7.7)
Non-deductible amortization 265 2.2 492 2.1 226 2.2
Settlement gain --- --- (1,029) (4.3) --- ---
Other - net (14) (0.2) 124 0.5 (113) (1.1)
------- ---- ------- ---- ------- ----
$ 6,306 51.7 % $(8,066) (34.0)% $ 4,403 43.0 %
======= ==== ======= ==== ======= ====
</TABLE>
The Corporation's federal income tax returns are closed for all years up to
1988. The Corporation has U.S. federal tax net operating loss carry-overs
totaling $11.2 million, which expire in 2011. In addition, the Corporation has
alternative minimum tax credit carry-overs totaling $6.5 million, which have no
carry-over limitation period. Research and experimentation credit carry-overs
total $0.5 million and expire through 2007. Charitable contribution carry-overs
total $1.8 million and expire through the year 2001.
NOTE 7 - PENSION AND OTHER POSTRETIREMENT BENEFITS
PENSION BENEFITS
The Corporation and its subsidiaries have defined benefit pension plans covering
substantially all employees in the U.S., Canada, and the United Kingdom,
excluding those employees covered by unions that operate plans independent of
the Corporation or its subsidiaries. The Corporation's funding policy is to
contribute annually amounts that provide for benefits attributed to service to
date and benefits expected to be earned during the plan year, based on the
projected final average compensation and where pension laws or economics either
require or encourage funding.
The U.S. funded plan is the largest plan. Its benefits are based on length of
service and the employee's highest five-year average compensation. The rate of
increase in future compensation levels used in determining the actuarial present
value of the projected benefit obligations was 5% and 6%, respectively for 1996
and 1995. The expected long-term rate of return on plan assets was 10% for both
1996 and 1995. The weighted average discount rate used was 7.8% and 8.8%, for
1996 and 1995, respectively. The market value of assets, consisting primarily of
cash equivalents and equity securities is as reported by the trustee bank
serving the pension plan.
Employees of non-U.S. subsidiaries generally receive pension benefits from
corporate sponsored plans or from statutory plans administered by governmental
agencies in their countries. Corporate sponsored foreign plans have applied the
provisions of Statement of Financial Accounting Standards No. 87 using
assumptions that are similar to those utilized for the U.S. plans.
30
<PAGE> 31
The status of the Corporation's funded defined benefit plans is as follows:
<TABLE>
<CAPTION>
(Thousands of dollars) 1996 1995
<S> <C> <C>
Actuarial present value of benefit obligations
Vested $ 98,638 $ 80,427
Non-vested 2,873 1,978
--------- --------
Accumulated benefit obligation 101,511 82,405
========= ========
Projected benefit obligation 123,660 102,209
Plan assets at fair value (106,871) (83,417)
--------- --------
Projected benefit obligation in excess of plan assets 16,789 18,792
Unrecognized net transition obligation 265 283
Unrecognized prior service cost 1,059 1,204
Unrecognized net loss (plan changes and actuarial losses) (18,115) (17,832)
--------- --------
(Prepaid) Accrued pension cost, included in current and long-term liabilities ($ 2) $ 2,447
========= ========
</TABLE>
The status of the Corporation's unfunded defined benefit plans is as follows:
<TABLE>
<CAPTION>
(Thousands of dollars) 1996 1995
<S> <C> <C>
Accumulated benefit obligation, all of which is vested $ 6,328 $ 3,994
======= =======
Projected benefit obligation $ 7,989 $ 5,259
Unrecognized prior service cost (2,223) (2,282)
Unrecognized net loss (plan changes and actuarial losses) (293) (102)
------- -------
Accrued pension cost, included in long-term liabilities $ 5,473 $ 2,875
======= =======
</TABLE>
Net periodic pension expense for all defined benefit plans sponsored by the
Corporation and its subsidiaries includes the following components:
<TABLE>
<CAPTION>
(Thousands of dollars) 1996 1995 1994
<S> <C> <C> <C>
Service cost (benefits earned during the period) $ 4,064 $ 4,732 $ 4,214
Interest cost on projected benefit obligation 8,977 8,537 7,719
Actual return on plan assets (21,172) (607) (8,357)
Net amortization and deferral 13,983 (5,384) 3,003
-------- ------- -------
$ 5,852 $ 7,278 $ 6,579
======== ======= =======
</TABLE>
Certain employees are covered under union-sponsored, collectively bargained,
defined benefit plans. Expenses for these plans were $0.9 million in 1996 and
1995 and $0.8 million in 1994, as determined in accordance with negotiated labor
contracts.
Provisions of the Multi-Employer Pension Amendments Act of 1980 require
participating employers to assume a proportionate share of a multi-employer
plan's unfunded, vested benefits in the event of withdrawal from or termination
of such plan. Information concerning the Corporation's share of unfunded, vested
benefits is not available from plan administrators. Provisions of the Act may
have the effect of increasing the level of contributions in future years.
31
<PAGE> 32
OTHER POST RETIREMENT BENEFITS
In addition to providing pension benefits, in the United States, the Corporation
provides certain health care benefits to its retired employees. The plan
provides health care benefits including hospital, physicians', dentists', and
eye care services and major medical expense benefits. The plan provides benefits
supplemental to Medicare after retirees are eligible for these benefits. The
cost of the benefits provided are shared by the Corporation and the retiree,
with the Corporation portion increasing as the retiree has increased years of
credited service. The Corporation has the ability to change these benefits at
any time.
The retiree health care cost provision was $1.5 million and $1.9 million for
fiscal 1996 and 1995, respectively. The components of the expense were as
follows:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Service costs (benefits earned during the period) $ 284 $ 418
Interest cost on accumulated postretirement benefit obligation 857 975
Amortization and deferred amounts 326 505
------ ------
Net periodic postretirement cost $1,467 $1,898
====== ======
</TABLE>
Benefit costs were calculated based on assumed cost growth for retiree health
care costs of a 14.0% annual rate for 1997, decreasing to a 6.0% annual growth
rate over a nine year period. The health care cost trend rate assumed has a
significant effect on the amount reported. To illustrate, increasing the assumed
medical cost trend rate by 1 percentage point would increase the accumulated
postretirement benefit obligation at February 29, 1996 by $2.1 million and the
net periodic postretirement benefit cost for the year by $0.2 million. The
accumulated retiree health care obligation at fiscal year end 1996 and 1995 was
determined using a weighted average discount rate of 8.2% and 9.2%,
respectively.
The accumulated retiree health care obligation at February 29/28 consisted of
the following components:
<TABLE>
<CAPTION>
(Thousands of dollars) 1996 1995
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $ 4,598 $ 4,643
Fully eligible active plan participants 3,039 2,486
Other active plan participants 4,324 3,541
-------- --------
Unfunded accumulated postretirement benefit obligation 11,961 10,670
Unrecognized transition obligation (5,546) (5,872)
Unrecognized losses (2,536) (1,665)
-------- --------
Accrued postretirement benefit cost $ 3,879 $ 3,133
======== ========
</TABLE>
NOTE 8 - BUSINESS ACQUISITIONS
At the end of fiscal 1996, the Corporation acquired a company located in the
United Kingdom with annual sales revenues of approximately $70 million. The
acquisition included equity shares with a total value of $16.0 million. Funding
for the acquisition was provided from credit line borrowings. The newly acquired
operations were consolidated with the Corporation's existing operations in the
United Kingdom.
At the time of the organization of Univar Europe in 1991, Univar and its then
31% shareholder, Pakhoed Investeringen B.V. (Pakhoed), entered into a
Shareholder Agreement resulting in the formation of Univar Europe, which was
incorporated in the Netherlands in 1990. At the time Univar Europe was
capitalized, it was 51% owned by the Corporation and 49% owned by Pakhoed. On
September 1, 1994 the Corporation acquired the minority shareholder's 49%
interest in Univar Europe, in accordance with the terms of the Shareholder
Agreement. The acquisition included equity shares and subordinated debt with a
total value of $25.8 million. Funding for this aggregate purchase price was
provided through the sale of 2 million shares of the Corporation's common stock
to The Dow Chemical Company (Dow) as described in Note 9.
32
<PAGE> 33
During fiscal 1995, the Corporation completed an acquisition in Europe. The
acquired company had annual revenues of approximately $6.5 million. The
aggregate purchase price was $3.2 million, consisting of fixed assets,
inventories and customer lists.
NOTE 9 - COMMON STOCK TRANSACTIONS
STOCK OPTIONS AND RESTRICTED STOCK AWARDS
The Corporation's long-term incentive stock plans (the Plans) provide for the
granting of non-qualified stock options, incentive stock options, and restricted
stock awards, to non-employee directors, officers, and key employees. For
incentive stock options, the option price may not be less than the fair market
value of the common stock at the date of grant. Non-qualified stock options may
be granted at less than the fair market value of the common stock. Options may
be exercisable as determined by the committee of the Board of Directors that
administers the Plans.
Under the 1993 Non-Employee Director Stock Option Plan, options become
exercisable six months after grant or upon termination of service to the Board,
whichever is earlier, and expire three months to five years after termination of
service to the Board, depending on the circumstances of retirement.
Under the 1992 Long-Term Incentive Plan (LTIP), options become exercisable at
the earlier of ten years after date of grant, or beginning 3 years after the
date of grant, based on the Corporation's performance compared with performance
of a selected peer group. Options typically expire 10 years and 3 months after
the date of grant. Certain recipients of grants under the 1992 LTIP are also
entitled to receive, subject to achievement of specified Corporation performance
compared with the selected peer group, cash incentives equivalent to the tax
adjusted exercise price of the options,.
Under the 1986 and 1995 Long-Term Incentive Stock Plans, options become
exercisable at the rate of 20% per year beginning two years after the date of
grant, and expire ten years after the date of grant.
Restricted Stock Awards (RSA's) may be granted or sold to officers and key
employees. RSA's may not be sold or otherwise disposed of during the established
restriction periods, presently up to six years. At the end of fiscal 1995, RSA's
totaling 142,293 shares were held for the benefit of certain executive and other
officers in connection with an incentive compensation arrangement. Vesting of
these RSA's and payment of the related dividends were subject to performance
criteria which were not achieved.
Unamortized deferred stock compensation expense related to RSA's granted of
approximately $4,000 and $74,000, is classified as such in the shareholders'
equity section of the Corporation's balance sheet for 1996 and 1995,
respectively.
The Compensation Committee of the Board of Directors may, at its discretion,
determine the number of shares, the purchase price, applicable vesting periods,
and any other terms of each option or award. Options and awards include
provisions for acceleration of such applicable vesting periods in the event of
certain transactions that may result in a change of control of the Corporation.
33
<PAGE> 34
The following table summarizes activity in the Plans:
<TABLE>
<CAPTION>
Number of Shares
----------------------------------------------
Restricted Available
Under Stock for Future
Option Awards Option or Award Price Range
<S> <C> <C> <C> <C>
Outstanding, year-end 1994 794,559 79,007 760,311 $4.19 - $14.56
Granted 353,114 144,345 (497,459) 4.58 - 13.75
Exercised (15,167) -- -- 4.19 - 11.20
Canceled or expired (25,098) (4,540) 29,638 5.91 - 13.75
RSA's vested -- (26,329) --
Reserved under 1992 Plan -- -- 750,000
Reserved under 1993 Plan -- -- 150,000
--------- --------- ----------
Outstanding, year-end 1995 1,107,408 192,483 1,192,490 4.58 - 14.56
Granted 292,372 -- (292,372) 4.20 - 13.50
Exercised (36,908) -- -- 5.91 - 11.20
Canceled or expired (25,011) (144,205) 169,216 8.72 - 13.75
RSA's vested -- (28,193) --
Reserved under 1992 Plan -- -- 750,000
Reserved under 1995 Plan -- -- 2,000,000
--------- --------- ----------
Outstanding, year-end 1996 1,337,861 20,085 3,819,334 4.20 - 13.86
========= ========= ==========
Exercisable at year-end 1996 172,295
=========
</TABLE>
PUT AGREEMENT WITH THE DOW CHEMICAL COMPANY
On June 24, 1991, the Corporation and The Dow Chemical Company ("Dow") entered
into an Agreement of Purchase and Sale of Stock (the "Dow Purchase Agreement").
In accordance with the Dow Purchase Agreement, Univar sold 1,900,000 shares of
its common stock to Dow at a price of $15.84 per share. In addition, Univar
reserved the right to put to Dow between approximately 2,500,000 and 2,900,000
additional shares of common stock at a price that escalated over time, but which
reached a maximum price of $18.74 per share. The number of additional shares
that could be sold depended on whether Pakhoed Investeringen B.V. (Pakhoed)
exercised its right to acquire shares from Univar at the same price as they were
sold to Dow in order for Pakhoed to maintain its percentage share ownership in
Univar. Pakhoed elected not to exercise its right to acquire additional shares.
Therefore, based on the manner in which the calculation of the number of
additional shares to be sold was made, the actual maximum number of shares that
Univar could put to Dow was 2,509,371. In lieu of the unilateral right of Univar
to put 2,509,371 shares of common stock to Dow, on May 13, 1994, Univar and Dow
executed an Amended and Restated Agreement of Purchase and Sale of Stock (the
"Amended Agreement").
Under the terms of the Amended Agreement, Dow purchased from Univar 2,000,000
shares of common stock at a price of $18.74 per share (a total purchase price of
$37,480,000). Dow now holds 3,900,000 shares of common stock representing 17.89%
of the issued and outstanding shares of Univar. In addition, Dow and Univar have
agreed that, at any time within the period ending May 12, 1997, Univar can put
to Dow, or Dow can call, up to 101,874 shares of Series A Convertible Preferred
Stock. The price per share will be $93.70. Each share of Series A Convertible
Preferred Stock is convertible into five shares of common stock by either Dow or
Univar. In the event of a call or put, either all or half the 101,874 shares
must be called by Dow or put by Univar. With respect to the conversion of the
Series A Convertible Preferred Stock into Univar common stock, Univar has agreed
that it will not convert the preferred shares if, following the conversion, Dow
would own in excess of 19.9% of the issued and outstanding common stock of the
Corporation. Dow has agreed that it will pay to Univar $350,000 per year for
each of the three years ending May 12, 1995, 1996, and 1997, in the event Univar
does not elect to put the Series A Convertible Preferred Stock to Dow, or in the
event Dow does not call the Series A Convertible Preferred Stock.
34
<PAGE> 35
NOTE 10 - LITIGATION AND CONTINGENCIES
Because of the nature of its business, the Corporation is involved in numerous
contractual, product liability, and public liability cases and claims. The
liabilities for injuries to persons or property are frequently covered by
liability insurance, and the deductible and self-insured portions of these
liabilities, where applicable, have been accrued in these financial statements.
The Corporation is subject to a variety of environmental laws and regulations
and faces exposure from actual or potential claims and legal proceedings
involving environmental matters. The Corporation or related entities have been
contacted by various governmental agencies regarding potential liability for a
share of the cost of clean up of independent waste disposal or recycling sites
with alleged or confirmed contaminated soil and/or groundwater to which the
Corporation or related entities may have taken waste products. With regard to
many of these sites, the Corporation has denied liability because of an absence
of any connection between the Corporation or related entities and the waste
disposal or recycling site. The Corporation believes there are twenty-eight in
which the Corporation may be liable for a share of the cost of clean up. With
the exception of one site, those sites which show some alleged evidence of an
association between the Corporation or related entities and the waste disposal
or recycling site, the Corporation is considered a de minimis, or small
quantity, "potentially responsible party." The Corporation estimates the
probable liability for the remediation of independent waste disposal sites
totals $1.7 million, which is included in the Corporation's environmental
accrual. Possible costs for these sites could range up to $3.0 million.
Forty-three owned, previously owned, or leased sites of the Corporation are
currently undergoing remediation efforts or are in the process of active review
of the need for potential remedial efforts. Some of these efforts are being
conducted pursuant to governmental proceedings or investigations, while others
are being conducted voluntarily by the Corporation, with appropriate state or
federal agency oversight and approval. The following table shows additions to
and expenditures charged against the Corporation's environmental accruals during
the past three fiscal years:
<TABLE>
<CAPTION>
(Millions of dollars) 1996 1995 1994
------------------------------
<S> <C> <C> <C>
Beginning balance $17.0 $15.6 $15.4
Expense provisions 5.0 5.4 4.0
Expenditures (5.4) (4.0) (3.8)
----- ----- -----
Ending balance $16.6 $17.0 $15.6
===== ===== =====
</TABLE>
Annual cash expenditures for remedial, monitoring, and investigatory activities
have averaged approximately $4.4 million during the past three years. In
addition, annual cash expenditures for environmental capital expenditures have
averaged $1.0 million. While the Corporation does not anticipate a material
increase in the projected annual level of its environmental related
expenditures, there is the possibility that such increases may occur in the
future. The precision of the Corporation's environmental estimates is affected
by several uncertainties such as the developments at sites resulting from
investigatory studies; the extent of required cleanup; the complexity of
applicable government laws and regulations and their interpretations; the
varying costs and effectiveness of alternative cleanup technologies and methods;
the uncertainty concerning recovery of such costs from third-parties which may
be jointly liable; and the questionable level of the Corporation's involvement
at various sites at which the Corporation is allegedly associated. The
Corporation periodically reviews the status of all significant existing or
potential environmental issues and adjusts its accruals as new remediation
requirements are defined, as information relevant to reasonable estimates to be
made becomes available, and to reflect new and changing facts. The accruals do
not reflect any possible future insurance recoveries.
Although the Corporation believes adequate accruals have been provided for
environmental contingencies, it is possible, due to the uncertainties previously
noted, that additional accruals could be required in the future that could have
a material effect on the results of operations in a particular quarter or annual
period. However, the ultimate resolution of these contingencies, to the extent
not previously provided for, is not expected to have a material adverse effect
on the Corporation's financial position.
35
<PAGE> 36
At year end 1996, the Corporation had letters of credit outstanding totaling
approximately $8.1 million, which guaranteed various insurance and financing
activities. Substantially all of these are automatically renewable each year.
NOTE 11 - GEOGRAPHIC INFORMATION
Univar operates in only one industry segment (chemical distribution) in the
United States, Canada, and Europe.
<TABLE>
<CAPTION>
(Thousands of dollars) UNITED STATES CANADA EUROPE
<S> <C> <C> <C>
1996
Sales $1,276,709 $401,338 $359,627
Income (loss) from operations (3,302) 18,935 10,903
Identifiable assets 406,449 149,179 184,977
Depreciation and amortization expense 22,085 2,710 4,340
Capital expenditures 14,567 4,794 3,175
1995
Sales $1,273,429 $356,089 $283,210
Income (loss) from operations (1) (34,785) 15,370 6,960
Identifiable assets 418,659 122,041 132,503
Depreciation and amortization expense 21,723 2,168 3,129
Capital expenditures 13,723 4,538 4,774
1994
Sales $1,251,549 $295,564 $255,351
Income from operations (1) 8,755 9,940 3,943
Identifiable assets 438,519 102,241 111,934
Depreciation and amortization expense 21,496 2,353 3,600
Capital expenditures 7,844 2,141 4,039
</TABLE>
(1) The income (loss) from operations includes reengineering charges
totaling $37.4 million and $4.5 million, respectively, in fiscal
1995 and 1994.
36
<PAGE> 37
NOTE 12 - QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
(Thousands of dollars,
except per share data) First Second Third Fourth
<S> <C> <C> <C> <C>
1996
Sales $552,932 $531,054 $479,756 $ 473,932
Gross margin 77,929 73,301 67,313 62,291
Net income (loss) 7,770 4,294 28 (6,192)
Net income (loss) per share $ .36 $ .20 $ .00 $ (.29)
1995
Sales $503,335 $496,820 $468,778 $ 443,795
Gross margin 71,260 69,927 68,964 63,522
Net income (loss) 1,497 (19,094) 935 405
Net income (loss) per share $ .08 $ (.88) $ .04 $ .02
1994
Sales $487,951 $474,118 $430,299 $ 410,096
Gross margin 70,399 70,022 64,224 64,888
Net income (loss) 3,273 1,957 458 (228)
Net income (loss) per share $ .17 $ .10 $ .02 $ (.01)
</TABLE>
The net loss in the second quarter of 1995 includes recognition of net-of-tax
reengineering charges totaling $20.6 million. These charges represent the costs
to reorganize the U.S. operating company, eliminate up to 2 layers of
management, redesign its distribution network, develop a national procurement
and materials management strategy, increase sales force efficiency, improve
gross margins, and reduce the amount of capital required to conduct ongoing
operations. Costs accrued included severance, other employee benefits, facility
closure costs, the non-cash write-down to fair value of certain facilities, and
consultant fees and expenses.
Significant items increasing income for the fourth quarter of 1995 include
settlement gains, net of related costs and deferrals totaling $2.7 million,
reduction of reserves and accruals totaling $1.4 million, costing adjustments
totaling $0.8 million, and reduction of the LIFO reserve by $0.8 million.
Significant items increasing income for the fourth quarter of 1994 include
costing adjustments totaling $1.4 million, reductions in self-insurance reserves
for general liability totaling $0.9 million, and reductions in self-insured
health reserves by $1.0 million. The significant item which decreased fourth
quarter 1994 net income was the cost of the Corporation's re-engineering effort
of ($1.8 million).
The total of the amounts shown as quarterly earnings per share may differ from
the amount shown on the Consolidated Statement of Operations because the annual
computation is made separately and is based upon average numbers of shares and
equivalent shares outstanding for the entire year.
NOTE 13 - SETTLEMENT ACHIEVED
In fiscal 1992, Univar Europe executed a foreign currency denominated note (U.S.
dollar equivalent of $6.8 million) in connection with certain business
acquisitions. The note was contingently payable in June 1995, or could be
deferred until December 1998 if the seller did not achieve certain minimum net
worth requirements by December 1994. In accordance with contract provisions, the
seller agreed to provide indemnification to Univar Europe for certain
environmental and other undisclosed contingencies that may have existed as of
the acquisition date. Univar Europe had the right to offset these liabilities
against the note's principal balance. Univar Europe had also agreed to pay
additional consideration, in the minimum amount of $1.8 million, which was
non-interest bearing and payable in 1995.
Shortly after the acquisition, the Corporation began negotiations with the
seller to settle certain disputes regarding acquisition asset values and other
claims. When the seller subsequently entered bankruptcy, the seller's largest
secured creditor, a Swedish bank, was appointed the receiver in bankruptcy for
the seller's assets, liabilities, and contingent obligations. In addition to the
original claims and disputes with the seller, certain disputes also arose
37
<PAGE> 38
with the receiver, due to its handling of the seller's bankruptcy proceedings
and the attachment of certain of Univar Europe's assets.
The Corporation and the receiver reached a settlement of all claims,
counterclaims and disputes on October 31,1994. As part of the settlement
agreement, the note plus accrued interest and the additional consideration
discussed above were satisfied. A settlement gain totaling $3.0 million, net of
related costs, was recorded as a recovery of representations and warranties
pertaining to environmental costs ($0.9 million), interest ($0.8 million) and
damages caused by the receiver's actions as part of the bankruptcy proceedings
($1.3 million). Univar Europe is consolidated using its financial year-end,
December 31. Accordingly, recognition of the settlement gain is included in the
Corporation's fourth quarter of fiscal 1995.
38
<PAGE> 39
MANAGEMENT RESPONSIBILITY FOR FINANCIAL DATA
The management of Univar Corporation has prepared and is responsible for
the integrity and fairness of the financial statements and other financial
information presented in this annual report. The statements have been prepared
in accordance with generally accepted accounting principles and, to the extent
appropriate, include amounts based on management's judgment and/or estimates. In
order to discharge its responsibilities for these financial statements and
information, management maintains accounting systems and related internal
controls. These controls are designed to provide reasonable assurance that
transactions are properly authorized and recorded, that assets are safeguarded,
and that financial records are reliably maintained. While management continually
monitors the effectiveness of and compliance with its control systems, the
concept of reasonable assurance, however, incorporates an acknowledgment that
the cost of a control system must be related to the benefits derived.
The Corporation's financial statements have been audited by Arthur Andersen
LLP, independent public accountants. Management has made available to Arthur
Andersen LLP all the Corporation's financial records and related data, as well
as the minutes of shareholders' and directors' meetings. Furthermore, management
believes that all representations made to Arthur Andersen LLP during its audit
were valid and appropriate.
Management has reviewed the recommendations of Arthur Andersen LLP, and has
responded in what we believe to be appropriate and cost-effective ways.
The Audit Committee of the Board of Directors, which is composed solely of
outside directors, meets periodically with management and with the independent
auditors to review the quality of financial reporting, the operation and
development of the internal control systems, and the work of independent
auditors.
The independent auditors regularly meet with the Audit Committee without
the presence of any other parties.
/s/ Paul H. Hough /s/ Gary E. Pruitt
- -------------------------------------- ------------------------------
PAUL H. HOUGH GARY E. PRUITT
President and Chief Executive Officer Chief Financial Officer
(Principal Financial Officer)
(Principal Accounting Officer)
39
<PAGE> 40
ARTHUR ANDERSEN LLP
801 Second Avenue, Suite 800
Seattle, WA 98104
(206) 623-8023
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of Univar Corporation:
We have audited the accompanying consolidated balance sheets of Univar
Corporation (a Washington corporation) and subsidiaries as of February 29, 1996
and February 28, 1995, and the related consolidated statements of operations,
cash flows and shareholders' equity for each of the three years in the period
ended February 29, 1996. These financial statements are the responsibility of
the Corporation's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Univar Corporation and
subsidiaries as of February 29, 1996 and February 28, 1995, and the results of
their operations and their cash flows for each of the three years in the period
ended February 29, 1996, in conformity with generally accepted accounting
principles.
Arthur Andersen LLP
Seattle, Washington,
April 24, 1996
40
<PAGE> 41
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
Identification of Directors, Identification of Executive Officers,
Business Experience and Family Relationships
The information required of directors of the Corporation by this item
is incorporated by reference to the Corporation's definitive Proxy
Statement which the Corporation will have filed with the Commission
pursuant to Regulation 14A within 120 days after the close of the
fiscal year.
The information required of executive officers of the Corporation by
this item is included in Part I of this Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
Cash Compensation, Bonuses and Deferred Compensation, Compensation
Pursuant to Plans, Pension Table, and Stock Option Plans
The information required by this item is incorporated by reference to
the Corporation's definitive Proxy Statement which the Corporation
will have filed with the Commission pursuant to Regulation 14A within
120 days after the close of the fiscal year.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners, Security Ownership of
Management, and Changes in Control
The information required by this Item is incorporated by reference to
the Corporation's definitive Proxy Statement which the Corporation
will have filed with the Commission pursuant to Regulation 14A within
120 days after the close of the fiscal year.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Management and Related Transactions, Certain
Business Relationships and Indebtedness of Management
The information required by this Item is incorporated by reference to
the Corporation's definitive Proxy Statement which the Corporation
will have filed with the Commission pursuant to Regulation 14A within
120 days after the close of the fiscal year.
41
<PAGE> 42
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) Financial Statements INDEX
Consolidated Statements of Operations Page 19
Consolidated Statements of Cash Flows Page 20
Consolidated Balance Sheets Page 21-22
Consolidated Statements of Shareholders' Equity Page 23
Notes to Consolidated Financial Statements Page 24-38
(2) Financial Statement Schedules
(a) Selected Quarterly Data (see page 37)
(b) The following financial schedule is submitted herewith. All
other financial schedules are either not applicable or are
fully disclosed in the applicable section of the
Corporation's financial statements and Management's
Discussion and Analysis of Financial Condition and Results of
Operations.
Schedule II Valuation and Qualifying Accounts
(c) Report of Independent Public Accountants, Arthur Andersen
LLP, dated April 24,1996.
(b) Reports on Form 8-K
There have been no reports on Form 8-K filed, or required to be filed,
during the fourth quarter of the year.
(c) Exhibits
The required exhibits are included at the end of the Form 10-K Annual
Report and are described in the Exhibit Index immediately preceding
the first exhibit.
42
<PAGE> 43
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
UNIVAR CORPORATION AND SUBSIDIARIES
FOR THE YEARS ENDED FEBRUARY 28, 1995, 1994, AND 1993
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Additions
Balance ------------------------- Balance
at Charged to Charged to at
Beginning of Costs and Other End of
Description Year Expenses Accounts Deductions(1) Year
- --------------------------------------------------------------------------------------------------------------------
Allowance for losses on receivables for the year ended:
<S> <C> <C> <C> <C> <C>
February 28, 1996 $1,695 $2,255 $0 $2,026 $1,924
====== ====== == ====== ======
February 29, 1995 $1,848 $1,481 $0 $1,634 $1,695
====== ====== == ====== ======
February 28, 1994 $1,852 $2,294 $0 $2,298 $1,848
====== ====== == ====== ======
</TABLE>
(1) Uncollectible accounts written off, net of recoveries.
43
<PAGE> 44
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.
UNIVAR CORPORATION
Date: May 17, 1996 /s/ Paul H. Hough
------------------------- --------------------------------------------
Paul H. Hough
President and Chief Executive Officer
Pursuant to the requirements of the Securities and Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant in the capacities and on the dates indicated.
Date: May 17, 1996 /s/ Gary E. Pruitt
------------------------- --------------------------------------------
Gary E. Pruitt,
Chief Financial Officer
(Principal Financial and Accounting Officer)
DIRECTORS
James W. Bernard
Sjoerd D. Eikelboom
Richard E. Engebrecht
Paul H. Hough
Roger L. Kesseler
Curtis P. Lindley
N. Stewart Rogers
John G. Scriven
Andrew V. Smith
Roy E. Wansik
Nicolaas J. Westdijk
James H. Wiborg
By:/s/ William A. Butler
- ------------------------------------
William A. Butler, Attorney-in-Fact
Power of Attorney dated May 2, 1996
44
<PAGE> 45
ARTHUR ANDERSEN LLP
801 Second Avenue, Suite 800
Seattle, WA 98104
(206) 623-8023
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Univar Corporation:
We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements of Univar Corporation and subsidiaries
included in this Form 10-K, and have issued our report thereon dated April 24,
1996. Our audit was made for the purpose of forming an opinion on those
financial statements taken as a whole. The schedule included in this Form 10-K
is presented for the purposes of complying with the Securities and Exchange
Commission rules and is not part of the basic consolidated financial
statements. This schedule has been subjected to the auditing procedures applied
in the audit of the basic consolidated financial statements and, in our opinion,
fairly states in all material respects, the financial data required to be set
forth therein in relation to the basic consolidated financial statements taken
as a whole.
Arthur Andersen LLP
Seattle, Washington,
April 24, 1996
45
<PAGE> 46
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description Page No.
- ----------------------------------------------------------------------------------------------
Exhibits identified in parentheses below, on file with the Securities and
Exchange Commission, are incorporated herein by reference as exhibits hereto.
<S> <C> <C>
(3.1) Articles of Incorporation of the Registrant (filed as an attachment to
the Registrant's proxy statement dated July 7, 1995).
(3.2) By-laws of the Registrant (filed as Exhibit 3.3(ii) to Registration
Sttement on Form 8-B of the Registrant (then known as New Univar
Corporation).
(10.2) Univar Corporation 1986 Long-Term Incentive Stock Plan (filed with
Registration Statement on Form S-8, File No. 33-08523).
(10.3) Agreement for Exchange of Capital Stock, dated as of September 19,
1986, (filed as Exhibit 2(i) to Form 8-K dated November 1, 1986, File
No. 0-2754).
(10.4) Asset Purchase and Sale Agreement, dated as of September 19, 1986,
(filed as Exhibit 2(ii) to Form 8-K dated November 1, 1986, File No.
0-2754).
(10.5) First Amendment to Asset Purchase and Sale Agreement, dated as of
October 21, 1986 (filed as Exhibit 2(iii) to Form 8-K dated November 1,
1986, File No. 0-2754).
(10.6) Addendum to Asset Purchase and Sale Agreement, dated as of October 31,
1986 (filed as Exhibit 2(iv) to Form 8-K dated November 1, 1986 (File
No. 0-2754).
(10.7) Standstill Agreement between Univar Corporation and Pakhoed
Investeringen B.V., dated as of September 19, 1986 (filed as Exhibit
4(i) to Form 8-K dated November 1, 1986, File No. 0-2754).
10.8 Notice of Transfer and Addendum to Standstill Agreement between Univar
Corporation and Pakhoed Investeringen B.V., dated as of June 3, 1992. 48
(10.9) Shareholder Agreements relating to change of control of the Corporation
with Messrs. James W. Bernard; Richard E. Engebrecht; M. M. Harris;
Curtis P. Lindley; N. Stewart Rogers; Nat S. Rogers; Robert S. Rogers;
and James H. Wiborg, dated as of September 19, 1986 (filed as Exhibit
4(ii) to Form 8-K dated November 1, 1986, File No. 0-2754).
10.11 Amended and Restated Univar Corporation Supplemental Benefits Plan,
dated as of May 1,1996. 49
(10.12) Agreements relating to compensation in the event of a change in control
of the Corporation between the Corporation and Messrs. James L.
Fletcher and William A. Butler (filed as Exhibit 10.11 to Form 10-K
dated May 26, 1995).
(10.13) Agreement relating to compensation in the event of a change in control
of the Corporation between the Corporation and H. Drew MacAfee dated as
of March 2, 1995 (filed as Exhibit 10.12 to Form 10-K dated May 26,
1995).
(10.14) Agreement relating to compensation in the event of a change in control
of the Corporation between Univar United Kingdom Ltd. and Jeffrey
Ellwood, dated as of March 2, 1995 (filed as Exhibit 10.13 to Form 10-K
dated May 26, 1995).
10.15 Agreement relating to compensation in the event of a change in control
of the Corporation between the Corporation and Mr. Paul H. Hough, dated
as of May 1, 1996. 52
10.16 Agreement relating to compensation in the event of a change in control
of the Corporation between the Corporation and Mr. Gary E. Pruitt,
dated as of March 2, 1995. 59
10.17 Agreement relating to compensation in the event of a change in control
of the Corporation between Van Waters & Rogers Ltd. and Mr. Larry R.
Bullock, dated as of May 1, 1996. 66
</TABLE>
46
<PAGE> 47
<TABLE>
<CAPTION>
Exhibit
Number Description Page No.
- --------------------------------------------------------------------------------------------
<S> <C> <C>
(10.18) Univar Corporation Stock Purchase Plan as amended and restated as of
May 31, 1994 (filed with Registration Statement on Form S-8, File No.
33-53907).
(10.19) Univar Corporation Uni$aver Tax Savings Investment Plan (filed with
Registration Statement on Form S-8, File No. 33-34511).
(10.20) Van Waters & Rogers Ltd./Univar Corporation Stock Purchase Plan (filed
with Registration Statement on Form S-8, File No. 2-71255).
(10.21) Agreement on the Right of First Refusal - Univar Europe N.V. by and
between Univar Corporation and the Dow Chemical Company dated as of
June 24, 1991 (filed as Exhibit 2(iv) to Form 8-K dated June 24, 1991,
File No. 1-5858).
(10.22) Pre-emption Agreement between Univar Europe N.V., K&K Greeff Limited
and The Dow Chemical Company Limited dated as of June 24, 1991 (filed
as Exhibit 2(v) to Form 8-K dated June 24, 1991, File No. 1-5858).
10.23 Univar Corporation 1992 Long-Term Incentive Plan as amended and
restated as of February 28, 1996. 71
10.24 Van Waters and Rogers Ltd. Supplemental Benefits Plans dated June 25,
1993, as amended and restated as of May 7, 1996. 80
(10.25) Univar Corporation 1993 Non-Employee Director Stock Option Plan (filed
as Exhibit 4 to Registration Statement of Form S-8 dated May 31, 1994,
File No. 33-53907)
(10.26) Amended and Restated Agreement of Purchase and Sale of stock between
Univar Corporation and The Dow Chemical Company dated as of May 13,
1994 (filed as Exhibit 4i to Form 8-K dated May 13, 1994, file no.
1-5858.)
(10.27) Amended and Restated Standstill Agreement between Univar Corporation
and The Dow Chemical Company dated May 13, 1994 (filed as Exhibit 4(I)
to Form 8-K dated May 13, 1994, File No. 1-5858)
(10.28) 1995 Incentive Stock Plan dated April 25, 1995 (filed as Exhibit 4 to
Registration Statement on Form S-8, File No. 33-03199).
22 Subsidiaries of Registrant. 84
24.1 Consent of Independent Public Accountants - Arthur Andersen LLP 85
25 Power of Attorney. 86
27 Financial Data Schedule 88
28.2 Form 11-K Annual Report for the Univar Corporation Stock Purchase Plan. 90
28.4 Form 11-K Annual Report for the Van Waters & Rogers Ltd./Univar
Corporation Stock Purchase Plan. 92
</TABLE>
47
<PAGE> 1
EXHIBT 10.8
NOTICE OF TRANSFER
AND
ADDENDUM TO STANDSTILL AGREEMENT
DATED SEPTEMBER 19, 1986
AMONG UNIVAR CORPORATION,
PAKHOED HOLDING N.V., AND PAKHOED INVESTERINGEN B.V.,
As of the date hereof, and solely for the limited purpose set forth herein, the
undersigned, acting in his capacity as a duly authorized executive officer of
Pakhoed USA, Inc., a Delaware corporation ("USA"), hereby agrees that USA is
bound by the terms of the Standstill Agreement dated as of September 19, 1986
(the "Agreement") by and among Univar Corporation, a Delaware corporation
("Univar"), Pakhoed Holding N.V. (renamed Royal Pakhoed N.V.), a Netherlands
corporation, and Pakhoed Investeringen B.V., a Netherlands corporation
("Investeringen"), pursuant to Section 3.6 of the Agreement, as a result of the
purchase by USA from Investeringen of an amount of shares of Univar common stock
which most closely equals Forty Million U.S. Dollars (US$40,000,000). With
respect to such shares, USA shall also be entitled to all of the rights that
continue to be enjoyed by Investeringen under the Agreement.
Dated: 3 June, 1992
PAKHOED USA, INC.
/s/ N. J. Westdijk
-----------------------------------
By: N. J. Westdijk
Its: Chairman and President
Accordingly, notice is hereby given to Univar pursuant to Section 7.7 of the
Agreement that said sale by Investeringen to USA has occurred as of the date
hereof and that, with respect to the transferred shares, USA is the assignee of
the related registration rights granted in Article VII of the Agreement.
Addendum Agreed To And Receipt
of Notice Acknowledged:
Univar Corporation
/s/ James L. Fletcher
-----------------------------------
By: James L. Fletcher
Its: Senior Vice President
48
<PAGE> 1
Exhibit 10.11
UNIVAR CORPORATION
SUPPLEMENTAL BENEFITS PLAN
AMENDED AND RESTATED AS OF MAY 1, 1996
1. Purpose. The purpose in establishing this Supplemental Benefits Plan
is to provide retirement compensation to specifically designated participants of
the Univar Corporation Retirement Plan ("Retirement Plan") under the terms of
that Retirement Plan without regard to limitations on benefits imposed under
Internal Revenue Code ("Code") Sections 415 and Section 401(a)(17) which apply
to the Retirement Plan.
2. Effective Date. This Plan was established effective January 11, 1983
and was amended and restated in its entirety effective August 21, 1992. The Plan
was subsequently amended effective July 1, 1994 and May 1, 1996. This
restatement of the Plan is effective May 1, 1996.
3. Participation. This Plan shall include only those management or
highly compensated employees who are eligible to receive a benefit under the
Univar Corporation Retirement Plan; whose benefits are affected by the statutory
limitation imposed on compensation used to determine benefits under, and/or
statutory limitation on benefits payable from, such plans; and who have been
specifically designated by the Compensation Committee of Univar Corporation to
participate in this Plan. Such an employee shall be referred to hereinafter as a
'Participant.' An employee's designation as a Participant may be revoked at any
time by the Compensation Committee. Upon such revocation, the employee shall be
entitled only to those benefits that may have accrued and become vested under
the Plan.
4. Benefit Determination Date. Benefits shall be determined under this
Plan as of the same date that benefits are determined under the Retirement Plan.
5. Benefit Amount. The Benefits under this Plan shall equal the
difference, if any, between (a) and (b) below:
(a) The monthly benefit for the life of the Participant, as
calculated under the Retirement Plan, without regard to the limitations
described in Internal Revenue Code Sections 415 and 401(a)(17), as amended from
time to time, and as described in regulations and publications issued under
those Code Sections.
(b) The monthly benefit for the life of the Participant, as
calculated under the terms of the Retirement Plan, which includes limitations
described in Internal Revenue Code Sections 415 and 401(a)(17), as amended from
time to time, and as described in regulations and publications issued under
those Code Sections.
6. Spouse's Death Benefit. If a death benefit is payable under the
Retirement Plan to a spouse of a Participant, that spouse is eligible to receive
benefits under this Plan. The benefit shall be calculated in the same manner as
under Section 5; that is, the death benefit under this Plan shall equal the
difference, if any, between (a) the spouse's death benefit calculated under the
Retirement Plan without regard to the limitations described in Code Sections 415
and 401(a)(17), and (b) the spouse's death benefit as calculated under the terms
of the Univar Corporation Retirement Plan which includes limitations described
in Code Sections 415 and 401(a)(17).
7. Date and Form of Payment. Benefit payments under this Plan shall
commence at the same time as the benefit under the Retirement Plan commences.
The benefit shall be paid in the same form as the benefit is paid under the
Retirement Plan and the actuarial equivalent assumptions used in determining the
benefit in a given form shall be the same as are used to determine the benefit
under the Retirement Plan.
8. Reemployment After Payments Begin. If a Participant is reemployed
after benefits commence, the Participant shall continue receiving benefits under
this Plan. When the Participant retires for the final time, the benefit under
this Plan shall be adjusted in the same manner as the benefit is adjusted under
the Retirement Plan.
9. Termination and Amendment of the Plan. This Plan shall continue in
effect until terminated by resolution of the Board of Directors of Univar
Corporation. In the event of such termination, all amounts accrued and vested to
date of such termination shall be payable pursuant to the terms of this Plan as
if the Plan had not been terminated. The Plan may be amended from time to time
by resolution of either the Board of Directors or the Finance Committee of the
Board of Directors. No amendment or terminating resolution shall reduce any
vested benefit accrued to the date of the resolution amending or terminating the
Plan. This Plan is intended to be exempt from the provisions of Parts 2, 3 and 4
of Title I of the Employee Retirement Income Security Act of 1974, as amended.
If it is determined by an opinion of counsel or by a court of competent
jurisdiction that the Plan is not so exempt, the Plan shall terminate as of the
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<PAGE> 2
last day it was exempt and no benefits shall be paid under this Plan other than
those which have accrued and vested as of the date of termination. In the event
of such a termination, the Board of Directors of Univar Corporation, at its
option, may accelerate the payment of benefits and may have benefits paid in a
single, actuarially-equivalent, lump sum amount.
10. Source of Benefit Payments. No Participant shall acquire any
property interest in any assets of Univar Corporation or Van Waters & Rogers
Inc. as a consequence of participating in this Plan. A Participant's rights are
limited to receiving payments as set forth in this Plan. The Plan is unfunded,
and to the extent that any Participant acquires a right to receive benefits,
such right shall be no greater than the right of any unsecured general creditor
of Univar Corporation or Van Waters & Rogers Inc. Any funds of Univar
Corporation or Van Waters & Rogers Inc. available to pay benefits under the Plan
shall be subject to the claims of general creditors of Univar Corporation and/or
Van Waters & Rogers Inc. and may be used for any purpose by Univar Corporation
or Van Waters & Rogers Inc.
As of July 1, 1994, the Trust Under Univar Corporation Supplemental
Benefits Plan ("Trust") was created to provide for contributions by Univar
Corporation and Van Waters & Rogers Inc. in the event of a Change of Control as
defined in the Trust, and for contributions at such other times as Univar
Corporation or Van Waters & Rogers Inc. shall decide in their sole discretion.
Though contributions of cash or other property (including, without limitation, a
letter of credit) may be made to the Trust, this Plan shall continue to be
"unfunded" as assets in the Trust shall be subject to the claims of general
creditors of Univar Corporation and Van Waters & Rogers Inc. on the terms and
conditions set forth in the Trust. For purposes of determining the amount of
contributions (or the face amount of a letter of credit in which the Trustee is
the beneficiary) needed to fund the Trust with respect to the actuarial present
value of the accrued benefits under this Plan in the event of a Change of
Control, the actuarial assumptions shall be the same actuarial assumptions used
by Univar Corporation to determine the Accumulated Benefit Obligation (ABO) for
Univar Corporation and its United States subsidiaries as required under FASB
Statement Number 87 as of the Measurement Date immediately preceding or
concurrent with the date of Change of Control. Univar Corporation and Van Waters
& Rogers Inc., and not the Trust, shall pay all expenses of the Trust and all
taxes owed on the income earned by the Trust on Trust assets. The actuary who
shall determine the amount needed to fund the trust shall be the actuary engaged
at the time by the Retirement Plan.
As explained in more detail in the Trust, if a letter of credit is
deposited with the Trustee (with the Trustee named as beneficiary of the letter
of credit), the face of the letter of credit may change annually upon renewal of
the letter of credit due, for example, to changes in the actuarial assumptions
or the payment of benefits during the year being completed. Upon renewal, such
amount will be calculated using the actuarial assumptions described above,
except that the assumptions shall be those as of the Measurement Date
immediately preceding or concurrent with the date of renewal of the letter of
credit. Univar Corporation and Van Waters & Rogers Inc. will only be required to
fund the actuarial present value of those benefits accrued through the date of
the first Change of Control to occur after May 1, 1996, and not benefits accrued
between the first Change of Control and the date of a subsequent Change of
Control.
11. Pension Management Committee. This Plan shall be administered by the
Pension Management Committee, a committee appointed by the Finance Committee of
the Board of Directors of Univar Corporation. The Committee shall have full
discretion to construe and interpret the terms and provisions of this Plan,
which interpretation or construction shall be final and binding on all parties.
The Committee shall administer such terms and provisions in a uniform and
nondiscriminating manner.
12. Claims Procedure. The following is the procedure for making claims
under this Plan or appealing a decision made with respect to this Plan.
(a) Filing Claim for Benefits. If a person does not receive the
timely payment of the benefits which he or she believes are due under the Plan
(hereinafter referred to as the "Applicant"), the Applicant may make a claim for
benefits. All claims for benefits under the Plan shall be made in writing and
shall be signed by the Applicant. Claims shall be submitted to the Committee.
Each claim shall be approved or disapproved within 90 days following the receipt
of the information necessary to process the claim. In the event the Committee
denies a claim for benefits in whole or in part, the Committee shall notify the
Applicant in writing of the denial of the claim and notify the Applicant of the
right to a review of the decision. Such notice shall also set forth the specific
reason for such denial, the specific provisions of the Plan on which the denial
is based, a description of any additional material or information necessary to
perfect the claim with an explanation of the Plan's appeals procedure. If no
action is taken by the Committee on an Applicant's claim within 90 days after
receipt by the Committee, such claim shall be deemed to be denied for purposes
of the following appeals procedure.
(b) Appeals Procedure. Any applicant whose claim for benefits is
denied in whole or in part may appeal to the Committee for a review of the
decision. Such appeal must be made within three months after the Applicant has
received actual or constructive notice of the denial. An appeal must be
submitted in writing within such period and must:
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<PAGE> 3
(i) Request a review by the Committee of the claim
for benefits under the Plan;
(ii) Set forth all of the grounds upon which the
Applicant's request for review is based on and any facts in support thereof; and
(iii) Set forth any issues or comments which the Applicant
deems pertinent to the appeal.
The Committee shall act upon each appeal within 60 days after receipt
unless special circumstances require an extension of the time for processing, in
which case a decision shall be rendered by the Committee as soon as possible but
not later than 120 days after the appeal is received by the Committee. The
Committee shall make full and fair review of each appeal and any written
materials submitted by the Applicant in connection therewith. The Committee may
require the Applicant to submit therewith. The Committee may require the
Applicant to submit such additional facts, documents or other evidence as the
Committee in its discretion deems necessary or advisable in making its review.
On the basis of its review the Committee shall make an independent determination
of the Applicant's eligibility for benefits under the Plan. The decision of the
Committee shall be final and conclusive.
13. Alienation. The right of any person to receive payments under this
Plan shall not be subject to any type of assignment or pledge, nor shall such
right be liable for or subject to the debts, contracts, liabilities or torts of
such person.
14. Employee Benefit Statement. Each employee covered by this Plan shall
receive a statement each year which shows total benefits accrued under this
Plan.
15. Withholding. Benefit payments shall be subject to applicable federal,
state or local withholding for taxes.
16. Successors. In the event of any consolidation, merger, acquisition or
reorganization, the obligations of Univar Corporation and Van Waters & Rogers
Inc. under this Plan shall continue and be binding on such corporations and
their successors.
17. Governing Law. This Plan shall be construed in accordance with
applicable federal law, and to the extent federal law is inapplicable, under the
laws of the State of Washington.
This amended and restated plan is adopted and executed this 1st day of
May, 1996.
UNIVAR CORPORATION
By /s/ William A. Butler
-----------------------------------
Its Vice President and General Counsel
-----------------------------------
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<PAGE> 1
EXHIBT 10.15
AGREEMENT
AGREEMENT between Univar Corporation, a Washington corporation (the
"Corporation"), and Paul H. Hough (the "Executive"), dated as of March 1, 1996.
RECITALS
A. Van Waters & Rogers Ltd., a wholly owned subsidiary of the
Corporation and the Executive have entered into a Change of Control Agreement as
of August 21, 1992. Said agreement, as amended as of July 1, 1994, is referred
to herein as the "Prior Agreement."
B. The Board of Directors of the Corporation (the "Board") recognizes
that the possibility of a change in control exists and that the threat or the
occurrence of a change in control can result in significant distractions of its
key management personnel because of the uncertainties inherent in such a
situation;
C. The Board has determined that it is essential and in the best
interest of the Corporation and its stockholders to retain the services of the
Executive in the event of a threat or occurrence of a change in control and to
ensure his continued dedication and efforts in such event without undue concern
for his personal financial and employment security; and
D. In order to induce the Executive to remain in the employ of the
Corporation, particularly in the event of a threat or the occurrence of a change
in control, the Corporation desires to enter into this Agreement with the
Executive to provide the Executive with certain benefits in the event his
employment is terminated as a result of, or in connection with, a change in
control.
E. Since the date of the Prior Agreement, the Executive has become the
Chief Executive Officer of the Corporation, is resident in the United States,
and is an employee of the Corporation rather than of Van Waters & Rogers Ltd. as
he was at the date of the Prior Agreement.
F. The parties desire to replace the Prior Agreement with this
Agreement.
NOW, THEREFORE, it is hereby agreed as follows:
1. CANCELLATION OF PRIOR AGREEMENT; TERM OF AGREEMENT. This Agreement
replaces in all respects the Prior Agreement effective the date hereof and the
Corporation and the Executive agree that the Prior Agreement is canceled and of
no further force or effect. This Agreement shall remain in effect until canceled
by the Corporation. This Agreement shall be automatically canceled on the date
(the "Cancellation Date") that is one year after the date the Corporation gives
the Executive written notice of cancellation; except that if a Change in
Control, as defined in Section 2, occurs prior to such Cancellation Date, this
Agreement shall remain in effect with respect to all rights accruing as a result
of the occurrence of the Change in Control. This Agreement shall terminate and
have no force or effect if Executive's
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<PAGE> 2
employment is terminated for any reason prior to a "Change in Control" as
defined below except under the circumstances set forth in Section 2(d) below.
2. CHANGE IN CONTROL. "Change in Control" shall mean the occurrence
during the term of this Agreement of any of the following events:
(a) An acquisition (other than directly from the Corporation) of any
voting securities of the Corporation (the "Voting Securities") by an "Person" or
"Group" (as such terms are used for purposes of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended (the "1934 Act")) immediately after
which such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3
promulgated under the 1934 Act) of more than fifty percent (50%) of the combined
voting power of the Corporation's then outstanding Voting Securities.
(b) The Board ceases for any reason to have at least a majority of
"Unaffiliated Directors" (which shall be defined as all members of the Board
except those who are or were proposed for nomination as a member of the Board,
or otherwise are "affiliated" or "associated" (as those terms are used for
purposes of Rule 12b-2 of the 1934 Act Regulations) with a Person which has
Beneficial Ownership of ten percent (10%) or more of the combined voting power
of the Corporation.
(c) Approval by stockholders of the Corporation of:
(1) A merger, consolidation or reorganization involving the
Corporation, unless
(i) the stockholders of the Corporation, immediately before
such merger, consolidation or reorganization, own, directly or indirectly
immediately following such merger, consolidation or reorganization, at least
seventy-five percent (75%) of the combined voting power of the outstanding
voting securities of the corporation resulting from such merger or consolidation
or reorganization (the "Surviving Corporation") in substantially the same
proportion as their ownership of the Voting Securities immediately before such
merger, consolidation or reorganization, and
(ii) at least a majority of the members of the board of
directors of the Surviving Corporation are Unaffiliated Directors who were
directors of the Corporation immediately prior to the execution of the agreement
providing for such merger or consolidation.
(2) A complete liquidation or dissolution of the Corporation.
(d) Notwithstanding anything contained in this Agreement to the
contrary, if the Executive's employment is terminated during the term of this
Agreement and the Executive reasonably demonstrates that such termination (i)
was at the request of a third party who has indicated an intention to take or
has taken steps reasonably calculated to effect a Change in Control and who
effectuates a Change in Control or (ii) otherwise occurred in connection with,
or in anticipation of, a Change in Control which actually occurs, then for all
purposes of this Agreement, the date of a Change in Control with respect to the
Executive shall mean the date immediately prior to the date of such termination
of the Executive's employment.
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<PAGE> 3
3. TERMINATION OF EMPLOYMENT. If, during the term of this Agreement,
there is a termination of the Executive's employment after a Change in Control,
the Executive shall have the right to receive compensation and benefits
described in Sections 4 and 5. The term "termination of the Executive's
employment" for purposes of this Agreement, shall mean resignation or any other
termination of the Executive for any reason other than: (i) cause (as defined
below), (ii) the Executive's having reached age 65, (iii) death, or (iv)
disability if the disability is covered by the Corporation's long-term
disability plan. "Termination Date" shall mean the effective date of the
termination of the Executive's employment. The term "Cause" shall mean (a)
continued failure by Executive to perform his or her duties (except as a direct
result of the Executive's incapacity due to physical or mental illness) for a
period of at least six (6) months after receiving written notification by the
Chief Executive Officer of the Corporation or an individual designated by the
Chief Executive Officer (or the Board in the case of the Chief Executive
Officer) identifying the manner in which the Executive has failed to perform his
or her duties; (b) engaging in conduct, which, in the opinion of a majority of
the Board is materially injurious to the Corporation; or (c) conviction of the
Executive of a misdemeanor involving moral turpitude or any felony.
4. COMPENSATION. Subject to the provisions of Section 8, if there is a
termination of the Executive's employment on or before 24 months after a Change
in Control, the Executive shall have the right to receive the compensation
described in this section during the Compensation Period even if the Executive
is employed by another employer or is self-employed during that period. The term
"Compensation Period" shall mean the period between the Termination Date and 30
months thereafter. However, in no event shall the Compensation Period extend
beyond the end of the month in which the Executive reaches 65 years of age.
During the Compensation Period the Executive shall continue to receive his
Annual Salary and Target Incentives. The term "Annual Salary" shall mean the
annual salary being paid the Executive immediately before his termination,
determined prior to any deductions actually taken from salary (a) for salary
reductions or deferrals under any plan of the Corporation, (b) for payment of
employee benefits under any plan of the Corporation which were charged to the
Executive, and (c) for the purchase of stock under any plan of the Corporation.
The term "Target Incentive" shall mean the Target Incentive as determined under
the incentive plan last in effect for the Executive. The Annual Salary and
Target Incentive shall be paid in equal monthly installments. Notwithstanding
any other provision in this paragraph, if the Executive's Annual Salary and
Target Incentive is less than the average of the Executive's gross compensation
for the three calendar years prior to the Executive's Termination Date, the
Executive shall receive, in monthly payments, such average annual gross
compensation during the Compensation Period instead of his current Annual Salary
and Target Incentive. The term "gross compensation" shall mean compensation as
reported on the Executive's Federal Income Tax Withholding Statement (Form W-2)
plus any of the following three items to the extent they were not reported on
the Executive's Federal Income Tax Withholding Statement: (1) any salary
reductions or deferrals under any plan of the Corporation; (2) any amounts paid
for employee benefits
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<PAGE> 4
under any plan of the Corporation which are charged to the Executive, and (3)
any amounts charged to the Executive for the purchase of stock under any plan of
the Corporation.
5. BENEFITS. Subject to the provisions of Section 8, if there is a
termination of the Executive's employment on or before 24 months after a Change
in Control, the Executive shall continue to be treated during the Compensation
Period as an "employee" under all stock option, purchase, or acquisition plans
in effect on his Termination Date; however, no new stock or option awards shall
be granted after the Executive's Termination Date. The Executive, his
dependents, beneficiaries and/or estate shall continue to be entitled to all
benefits under medical, dental, life insurance and similar plans (except for any
disability plan) that are in effect on the Executive's Termination Date. If by
reason of law or government regulation or third-party contractual restriction
the Executive, his dependents, beneficiaries and/or estate, cannot receive or
participate in a benefit, the Corporation shall, to the extent necessary, pay or
provide for payment of such benefit to the Executive, his dependents,
beneficiaries and/or estate in the same amount and manner as they would have
been provided by the Plan. Notwithstanding the foregoing, if the Executive is
employed by another employer, the Corporation shall not provide any medical,
dental, life insurance and similar benefit to the extent it is provided by the
other employer. The Executive shall not continue to participate in or accrue any
benefits (beyond the benefits accrued as of the date of termination) under the
Univar Corporation Retirement Plan, the Univar Uni$aver Tax Savings Investment
Plan, or in any other plan described in Internal Revenue Code Section 401(a)
after his Termination Date nor shall the Corporation provide equivalent
benefits.
6. EXCISE TAX LIMITATION.
6.1 Notwithstanding anything contained in this Agreement to the
contrary, to the extent that the payments and benefits provided under this
Agreement and benefits provided to, or for the benefit of, the Executive under
any other plan or agreement of the Corporation (such payments or benefits are
collectively referred to as the "Payments") would be subject to the excise tax
(the "Excise Tax") imposed under Section 4999 of the Internal Revenue Code of
1986, as amended (the "Code"), the payments shall be reduced (but not below
zero) if and to the extent necessary so that no Payment to be made or benefit to
be provided to the Executive shall be subject to the Excise Tax (such net amount
after such reduction is referred to as the "Limited Payment Amount"). Unless the
Executive shall give other written instructions specifying a different order to
the Corporation to effectuate the Limited Payment Amount, the Corporation shall
reduce or eliminate the Payments, by first reducing or eliminating those
payments or benefits which are not payable in cash and then by reducing or
eliminating cash payments, in each case in reverse order beginning with payments
or benefits which are to be paid the farthest in time from the Determination (as
hereinafter defined). Any notice given by the Executive pursuant to the
preceding sentence shall take precedence over the provisions of any other plan,
arrangement or agreement governing the Executive's right and entitlements to any
benefits or compensation.
6.2 An initial determination as to whether the Payments shall be
reduced to the Limited Payment Amount and the amount of such Limited Payment
Amount shall be made at the Corporation's expense by an accounting
55
<PAGE> 5
firm selected by the Corporation which is a nationally recognized accounting
firm (the "Accounting Firm"). Such Accounting Firm must also be acceptable to a
majority of the officers of the Corporation who are parties to agreements which
impose limitations similar to those set forth in this section. The Accounting
Firm shall provide its determination (the "Determination"), together with
detailed supporting calculations, documentation, and a memorandum summarizing
any relevant tax authorities to the Corporation and the Executive within five
(5) business days of the Termination Date if applicable, or such other time as
requested by the Corporation or by the Executive (provided the Executive
reasonably believes that any of the Payments may be subject to the Excise Tax)
and if the Accounting Firm determines that no Excise Tax is payable by the
Executive with respect to a Payment or Payments, it shall furnish the Executive
with an opinion reasonably acceptable to the Executive that no Excise Tax will
be imposed with respect to any such Payment or Payments. Within ten (10) days of
the delivery of the Determination to the Executive, the Executive shall have the
right to dispute the Determination (the "Dispute") pursuant to the provisions of
Section 9 of this Agreement. If there is no Dispute, the Determination shall be
binding, final and conclusive upon the Corporation and the Executive subject to
the application of Section 6.3 below.
6.3 As a result of the uncertainty in the application of Sections
4999 and 280G of the code, it is possible that the Payments to be made to, or
provided for the benefit of, the Executive either have been made or will not be
made by the Corporation which, in either case, will be inconsistent with the
limitations provided in Section 6.1 (hereinafter referred to as an "Excess
Payment" or "Underpayment," respectively). If it is established pursuant to a
final determination of a court or an Internal Revenue Service (the "IRS")
proceeding which has been finally and conclusively resolved, that an Excess
Payment has been made, such Excess Payment shall be deemed for all purposes to
be a loan to the Executive made on the date the Executive received the Excess
Payment and the Executive shall repay the Excess Payment to the Corporation on
demand (but not less than ten (10) days after written notice is received by the
Executive) together with interest on the Excess Payment at the "Applicable
Federal Rate" (as defined in Section 1274(d) of the Code) from the date of the
Executive's receipt of such Excess Payment until the date of such repayment. In
the event that it is determined (i) by the Accounting Firm, the Corporation
(which shall include the position taken by the Corporation, or together with its
consolidated group, on its federal income tax return) or the IRS, (ii) pursuant
to a determination by a court, or (iii) upon the resolution to the Executive's
satisfaction of the Dispute, that an Underpayment has occurred, the Corporation
shall pay an amount equal to the Underpayment to the Executive within ten (10)
days of such determination or resolution together with interest on such amount
at the Applicable Federal Rate from the date such amount would have been paid to
the Executive until the date of payment.
7. EFFECT OF DEATH. In the event of the death of the Executive during
the Compensation Period, the compensation under Section 4 for the month in which
death occurs shall be paid to the Executive's estate and the Compensation Period
shall be deemed to have ended as of the close of business on the last day of the
month in which
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<PAGE> 6
the death occurred. Coverage of the Executive and any dependents under any plan
described in Section 5 shall also end on such date. Nothing in this section
shall affect payments due in respect of the Executive's death.
8. NON-COMPETITION AND CONFIDENTIALITY. The Executive agrees that:
(a) The Corporation shall cease providing payments and benefits
under Section 4 and 5 (other than benefits or payments already earned
or accrued) if, during the Compensation Period, the Executive shall be
employed by or otherwise engage or be interested in any business which
is competitive with any business of the Corporation or of any of its
subsidiaries in which the Executive was engaged during his employment
prior to a termination and if, but only if, such employment or activity
is likely to cause, or causes, serious damage to the Corporation or any
of its subsidiaries; and
(b) during and after the Compensation Period, the Executive will
not divulge or appropriate to the Executive's own use or the use of
others any secret or confidential information or knowledge pertaining
to the business of the Corporation, or any of its subsidiaries,
obtained during his employment by the Corporation or any of its
subsidiaries.
The Board of Directors has determined, in its best judgment, that the payments
to the Executive under Sections 4 and 5 are reasonable consideration for not
competing as defined in (a) and for maintaining the confidentiality of
information as provided for in (b).
9. ARBITRATION OF ALL DISPUTES. Any controversy or claim arising out of
or relating to this Agreement or the breach thereof, shall be settled by
arbitration in King County, Washington in accordance with the laws of the State
of Washington by three arbitrators, one of whom shall be appointed by the
Corporation, one by the Executive, and the third of whom shall be appointed by
the first two arbitrators. The arbitration shall be conducted in accordance with
the rules of the American Arbitration Association, except with respect to the
selection of arbitrators which shall be as provided in this Section 9. Judgment
upon the award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. In the event that it shall be necessary or desirable for
the Executive to retain legal counsel and/or incur other costs and expenses in
connection with the enforcement of any and all of the Executive's rights under
this Agreement, the Corporation shall pay the Executive's reasonable attorneys'
fees and costs and expenses in connection with the enforcement of his said
rights (including the enforcement of any arbitration award in court), regardless
of the final outcome, unless the arbitrators shall determine that under the
circumstances recovery by the Executive of all or part of any such fees and
costs and expenses would be unjust.
10. NOTICES. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and if sent by
registered or certified mail to Executive at the last address he has filed in
writing with the Corporation or, in the case of the Corporation, at its
principal executive offices.
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11. NON-ALIENATION. The Executive shall not have any right to pledge,
hypothecate, anticipate or in any way create a lien upon any amounts provided
under this Agreement; and no benefits payable hereunder shall be assignable in
anticipation of payment either by voluntary or involuntary acts, or by operation
of law.
12. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the law of the State of Washington.
13. AMENDMENTS. This Agreement may not be changed, waived or discharged
orally but only by an instrument in writing signed by the parties against which
enforcement of such change, waiver, or discharge is sought.
14. SUCCESSORS. This Agreement shall extend to and be binding upon the
Corporation, its successors and assigns.
15. SEVERABILITY. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, the
remaining provisions of this Agreement shall be unaffected thereby and shall
remain in full force and effect.
16. HEADINGS. The headings of the sections in this Agreement are solely
for convenience or reference and shall not control the meaning or interpretation
of any provision of this Agreement.
UNIVAR CORPORATION EXECUTIVE
By /s/ William A. Butler /s/ Paul H. Hough
---------------------------------- --------------------------
Paul H. Hough
Its Vice President & General Counsel
----------------------------------
58
<PAGE> 1
EXHIBIT 10.16
AGREEMENT
AGREEMENT between Univar Corporation, a Delaware corporation (the
"Corporation"), and Gary E. Pruitt (the "Executive"), dated as of March 2, 1995.
RECITALS
A. The Board of Directors of the Corporation (the "Board") recognizes
that the possibility of a change in control exists and that the threat or the
occurrence of a change in control can result in significant distractions of its
key management personnel because of the uncertainties inherent in such a
situation;
B. The Board has determined that it is essential and in the best
interest of the Corporation and its stockholders to retain the services of the
Executive in the event of a threat or occurrence of a change in control and to
ensure his continued dedication and efforts in such event without undue concern
for his personal financial and employment security; and
C. In order to induce the Executive to remain in the employ of the
Corporation, particularly in the event of a threat or the occurrence of a change
in control, the Corporation desires to enter into this Agreement with the
Executive to provide the Executive with certain benefits in the event his
employment is terminated as a result of, or in connection with, a change in
control.
NOW, THEREFORE, it is hereby agreed as follows:
1. TERM OF AGREEMENT. This Agreement shall remain in effect until
canceled by the Corporation. This Agreement shall be automatically canceled on
the date (the "Cancellation Date") that is one year after the date the
Corporation gives the Executive written notice of cancellation; except that if a
Change in Control, as defined in Section 2, occurs prior to such Cancellation
Date, this Agreement shall remain in effect with respect to all rights accruing
as a result of the occurrence of the Change in Control. This Agreement shall
terminate and have no force or effect if Executive's employment is terminated
for any reason prior to a "Change in Control" as defined below except under the
circumstances set forth in Section 2(d) below.
2. CHANGE IN CONTROL. "Change in Control" shall mean the occurrence
during the term of this Agreement of any of the following events:
(a) An acquisition (other than directly from the Corporation) of any
voting securities of the Corporation (the "Voting Securities") by an "Person" or
"Group" (as such terms are used for purposes of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended (the "1934 Act")) immediately after
which such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3
promulgated under the 1934 Act) of more than fifty percent (50%) of the combined
voting power of the Corporation's then outstanding Voting Securities.
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<PAGE> 2
(b) The Board ceases for any reason to have at least a majority of
"Unaffiliated Directors" (which shall be defined as all members of the Board
except those who are or were proposed for nomination as a member of the Board,
or otherwise are "affiliated" or "associated" (as those terms are used for
purposes of Rule 12b-2 of the 1934 Act Regulations) with a Person which has
Beneficial Ownership of ten percent (10%) or more of the combined voting power
of the Corporation.
(c) Approval by stockholders of the Corporation of:
(1) A merger, consolidation or reorganization involving the
Corporation, unless
(i) the stockholders of the Corporation, immediately before
such merger, consolidation or reorganization, own, directly or indirectly
immediately following such merger, consolidation or reorganization, at least
seventy-five percent (75%) of the combined voting power of the outstanding
voting securities of the corporation resulting from such merger or consolidation
or reorganization (the "Surviving Corporation") in substantially the same
proportion as their ownership of the Voting Securities immediately before such
merger, consolidation or reorganization, and
(ii) at least a majority of the members of the board of
directors of the Surviving Corporation are Unaffiliated Directors who were
directors of the Corporation immediately prior to the execution of the agreement
providing for such merger or consolidation.
(2) A complete liquidation or dissolution of the Corporation.
(d) Notwithstanding anything contained in this Agreement to the
contrary, if the Executive's employment is terminated during the term of this
Agreement and the Executive reasonably demonstrates that such termination (i)
was at the request of a third party who has indicated an intention to take or
has taken steps reasonably calculated to effect a Change in Control and who
effectuates a Change in Control or (ii) otherwise occurred in connection with,
or in anticipation of, a Change in Control which actually occurs, then for all
purposes of this Agreement, the date of a Change in Control with respect to the
Executive shall mean the date immediately prior to the date of such termination
of the Executive's employment.
3. TERMINATION OF EMPLOYMENT. If, during the term of this Agreement,
there is a termination of the Executive's employment after a Change in Control,
the Executive shall have the right to receive compensation and benefits
described in Sections 4 and 5. The term "termination of the Executive's
employment" for purposes of this Agreement, shall mean resignation or any other
termination of the Executive for any reason other than: (i) cause (as defined
below), (ii) the Executive's having reached age 65, (iii) death, or (iv)
disability if the disability is covered by the Corporation's long-term
disability plan. "Termination Date" shall mean the effective date of the
termination of the Executive's employment. The term "Cause" shall mean (a)
continued failure by Executive to perform his or her duties (except as a direct
result of the Executive's incapacity due to physical or mental illness) for a
period of at least six (6) months after receiving written notification by the
Chief Executive Officer of the Corporation or an individual designated by
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the Chief Executive Officer (or the Board in the case of the Chief Executive
Officer) identifying the manner in which the Executive has failed to perform his
or her duties; (b) engaging in conduct, which, in the opinion of a majority of
the Board is materially injurious to the Corporation; or (c) conviction of the
Executive of a misdemeanor involving moral turpitude or any felony.
4. COMPENSATION. Subject to the provisions of Section 8, if there is a
termination of the Executive's employment on or before 24 months after a Change
in Control, the Executive shall have the right to receive the compensation
described in this section during the Compensation Period even if the Executive
is employed by another employer or is self-employed during that period. The term
"Compensation Period" shall mean the period between the Termination Date and 30
months thereafter. However, in no event shall the Compensation Period extend
beyond the end of the month in which the Executive reaches 65 years of age.
During the Compensation Period the Executive shall continue to receive his
Annual Salary and Target Incentives. The term "Annual Salary" shall mean the
annual salary being paid the Executive immediately before his termination,
determined prior to any deductions actually taken from salary (a) for salary
reductions or deferrals under any plan of the Corporation, (b) for payment of
employee benefits under any plan of the Corporation which were charged to the
Executive, and (c) for the purchase of stock under any plan of the Corporation.
The term "Target Incentive" shall mean the Target Incentive as determined under
the incentive plan last in effect for the Executive. The Annual Salary and
Target Incentive shall be paid in equal monthly installments. Notwithstanding
any other provision in this paragraph, if the Executive's Annual Salary and
Target Incentive is less than the average of the Executive's gross compensation
for the three calendar years prior to the Executive's Termination Date, the
Executive shall receive, in monthly payments, such average annual gross
compensation during the Compensation Period instead of his current Annual Salary
and Target Incentive. The term "gross compensation" shall mean compensation as
reported on the Executive's Federal Income Tax Withholding Statement (Form W-2)
plus any of the following three items to the extent they were not reported on
the Executive's Federal Income Tax Withholding Statement: (1) any salary
reductions or deferrals under any plan of the Corporation; (2) any amounts paid
for employee benefits under any plan of the Corporation which are charged to the
Executive, and (3) any amounts charged to the Executive for the purchase of
stock under any plan of the Corporation.
5. BENEFITS. Subject to the provisions of Section 8, if there is a
termination of the Executive's employment on or before 24 months after a Change
in Control, the Executive shall continue to be treated during the Compensation
Period as an "employee" under all stock option, purchase, or acquisition plans
in effect on his Termination Date; however, no new stock or option awards shall
be granted after the Executive's Termination Date. The Executive, his
dependents, beneficiaries and/or estate shall continue to be entitled to all
benefits under medical, dental, life insurance and similar plans (except for any
disability plan) that are in effect on the Executive's Termination Date. If by
reason of law or government regulation or third-party contractual restriction
the Executive, his dependents, beneficiaries and/or estate, cannot receive or
participate in a benefit, the Corporation shall, to the extent necessary, pay or
provide for payment of
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such benefit to the Executive, his dependents, beneficiaries and/or estate in
the same amount and manner as they would have been provided by the Plan.
Notwithstanding the foregoing, if the Executive is employed by another employer,
the Corporation shall not provide any medical, dental, life insurance and
similar benefit to the extent it is provided by the other employer. The
Executive shall not continue to participate in or accrue any benefits (beyond
the benefits accrued as of the date of termination) under the Univar Corporation
Retirement Plan, the Univar Uni$aver Tax Savings Investment Plan, or in any
other plan described in Internal Revenue Code Section 401(a) after his
Termination Date nor shall the Corporation provide equivalent benefits.
6. EXCISE TAX LIMITATION.
6.1 Notwithstanding anything contained in this Agreement to the
contrary, to the extent that the payments and benefits provided under this
Agreement and benefits provided to, or for the benefit of, the Executive under
any other plan or agreement of the Corporation (such payments or benefits are
collectively referred to as the "Payments") would be subject to the excise tax
(the "Excise Tax") imposed under Section 4999 of the Internal Revenue Code of
1986, as amended (the "Code"), the payments shall be reduced (but not below
zero) if and to the extent necessary so that no Payment to be made or benefit to
be provided to the Executive shall be subject to the Excise Tax (such net amount
after such reduction is referred to as the "Limited Payment Amount"). Unless the
Executive shall give other written instructions specifying a different order to
the Corporation to effectuate the Limited Payment Amount, the Corporation shall
reduce or eliminate the Payments, by first reducing or eliminating those
payments or benefits which are not payable in cash and then by reducing or
eliminating cash payments, in each case in reverse order beginning with payments
or benefits which are to be paid the farthest in time from the Determination (as
hereinafter defined). Any notice given by the Executive pursuant to the
preceding sentence shall take precedence over the provisions of any other plan,
arrangement or agreement governing the Executive's right and entitlements to any
benefits or compensation.
6.2 An initial determination as to whether the Payments shall be
reduced to the Limited Payment Amount and the amount of such Limited Payment
Amount shall be made at the Corporation's expense by an accounting firm selected
by the Corporation which is a nationally recognized accounting firm (the
"Accounting Firm"). Such Accounting Firm must also be acceptable to a majority
of the officers of the Corporation who are parties to agreements which impose
limitations similar to those set forth in this section. The Accounting Firm
shall provide its determination (the "Determination"), together with detailed
supporting calculations, documentation, and a memorandum summarizing any
relevant tax authorities to the Corporation and the Executive within five (5)
business days of the Termination Date if applicable, or such other time as
requested by the Corporation or by the Executive (provided the Executive
reasonably believes that any of the Payments may be subject to the Excise Tax)
and if the Accounting Firm determines that no Excise Tax is payable by the
Executive with respect to a Payment or Payments, it shall furnish the Executive
with an opinion reasonably acceptable to the Executive that no Excise Tax will
be imposed with respect to any such Payment or Payments. Within ten (10) days of
the delivery of the Determination to the Executive, the Executive shall have the
right to
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dispute the Determination (the "Dispute") pursuant to the provisions of Section
9 of this Agreement. If there is no Dispute, the Determination shall be binding,
final and conclusive upon the Corporation and the Executive subject to the
application of Section 6.3 below.
6.3 As a result of the uncertainty in the application of Sections
4999 and 280G of the code, it is possible that the Payments to be made to, or
provided for the benefit of, the Executive either have been made or will not be
made by the Corporation which, in either case, will be inconsistent with the
limitations provided in Section 6.1 (hereinafter referred to as an "Excess
Payment" or "Underpayment," respectively). If it is established pursuant to a
final determination of a court or an Internal Revenue Service (the "IRS")
proceeding which has been finally and conclusively resolved, that an Excess
Payment has been made, such Excess Payment shall be deemed for all purposes to
be a loan to the Executive made on the date the Executive received the Excess
Payment and the Executive shall repay the Excess Payment to the Corporation on
demand (but not less than ten (10) days after written notice is received by the
Executive) together with interest on the Excess Payment at the "Applicable
Federal Rate" (as defined in Section 1274(d) of the Code) from the date of the
Executive's receipt of such Excess Payment until the date of such repayment. In
the event that it is determined (i) by the Accounting Firm, the Corporation
(which shall include the position taken by the Corporation, or together with its
consolidated group, on its federal income tax return) or the IRS, (ii) pursuant
to a determination by a court, or (iii) upon the resolution to the Executive's
satisfaction of the Dispute, that an Underpayment has occurred, the Corporation
shall pay an amount equal to the Underpayment to the Executive within ten (10)
days of such determination or resolution together with interest on such amount
at the Applicable Federal Rate from the date such amount would have been paid to
the Executive until the date of payment.
7. EFFECT OF DEATH. In the event of the death of the Executive during
the Compensation Period, the compensation under Section 4 for the month in which
death occurs shall be paid to the Executive's estate and the Compensation Period
shall be deemed to have ended as of the close of business on the last day of the
month in which the death occurred. Coverage of the Executive and any dependents
under any plan described in Section 5 shall also end on such date. Nothing in
this section shall affect payments due in respect of the Executive's death.
8. NON-COMPETITION AND CONFIDENTIALITY. The Executive agrees that:
(a) The Corporation shall cease providing payments and benefits
under Section 4 and 5 (other than benefits or payments already earned
or accrued) if, during the Compensation Period, the Executive shall be
employed by or otherwise engage or be interested in any business which
is competitive with any business of the Corporation or of any of its
subsidiaries in which the Executive was engaged during his employment
prior to a termination and if, but only if, such employment or activity
is likely to cause, or causes, serious damage to the Corporation or any
of its subsidiaries; and
(b) during and after the Compensation Period, the Executive will
not divulge or appropriate to the Executive's own use or the use of
others any secret or confidential information or knowledge pertaining
to the
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business of the Corporation, or any of its subsidiaries, obtained
during his employment by the Corporation or any of its subsidiaries.
The Board of Directors has determined, in its best judgment, that the payments
to the Executive under Sections 4 and 5 are reasonable consideration for not
competing as defined in (a) and for maintaining the confidentiality of
information as provided for in (b).
9. ARBITRATION OF ALL DISPUTES. Any controversy or claim arising out of
or relating to this Agreement or the breach thereof, shall be settled by
arbitration in King County, Washington in accordance with the laws of the State
of Washington by three arbitrators, one of whom shall be appointed by the
Corporation, one by the Executive, and the third of whom shall be appointed by
the first two arbitrators. The arbitration shall be conducted in accordance with
the rules of the American Arbitration Association, except with respect to the
selection of arbitrators which shall be as provided in this Section 9. Judgment
upon the award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. In the event that it shall be necessary or desirable for
the Executive to retain legal counsel and/or incur other costs and expenses in
connection with the enforcement of any and all of the Executive's rights under
this Agreement, the Corporation shall pay the Executive's reasonable attorneys'
fees and costs and expenses in connection with the enforcement of his said
rights (including the enforcement of any arbitration award in court), regardless
of the final outcome, unless the arbitrators shall determine that under the
circumstances recovery by the Executive of all or part of any such fees and
costs and expenses would be unjust.
10. NOTICES. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and if sent by
registered or certified mail to Executive at the last address he has filed in
writing with the Corporation or, in the case of the Corporation, at its
principal executive offices.
11. NON-ALIENATION. The Executive shall not have any right to pledge,
hypothecate, anticipate or in any way create a lien upon any amounts provided
under this Agreement; and no benefits payable hereunder shall be assignable in
anticipation of payment either by voluntary or involuntary acts, or by operation
of law.
12. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the law of the State of Washington.
13. AMENDMENTS. This Agreement may not be changed, waived or discharged
orally but only by an instrument in writing signed by the parties against which
enforcement of such change, waiver, or discharge is sought.
14. SUCCESSORS. This Agreement shall extend to and be binding upon the
Corporation, its successors and assigns.
15. SEVERABILITY. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, the
remaining provisions of this Agreement shall be unaffected thereby and shall
remain in full force and effect.
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16. HEADINGS. The headings of the sections in this Agreement are solely
for convenience or reference and shall not control the meaning or interpretation
of any provision of this Agreement.
UNIVAR CORPORATION
By /s/ James. W. Bernard
---------------------------
Its President and CEO
---------------------------
EXECUTIVE
/s/ Gary E. Pruitt
---------------------------
Gary E. Pruitt
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EXHIBIT 10.17
CHANGE OF CONTROL AGREEMENT
THIS AGREEMENT made as of the 1st day of May, 1996
BETWEEN:
VAN WATERS & ROGERS LTD., a company duly incorporated under the
laws of the Province of British Columbia and having its
registered and records offices located at 2500 - 1055 Dunsmuir
Street, Vancouver, B.C. V7X 1S8
(the "Corporation")
OF THE FIRST PART
AND:
LARRY BULLOCK, of 17864 20th Avenue, Surrey, British Columbia,
V3S 5J9
(the "Executive")
OF THE SECOND PART
WHEREAS:
The Corporation is wholly-owned and controlled by Univar Corporation, a
Washington corporation (the "Parent");
The Executive is an employee of long service with the Corporation and
the Parent;
The Corporation and the Parent have recognized that the possibility of
a Change in Control (as hereinafter defined) exists and that the threat or the
occurrence of a Change in Control can result in significant distractions of its
key management personnel due to the uncertainty inherent in such a situation;
The Corporation and the Parent have determined that it is essential and
in their best interests to retain the services of the Executive in the event of
a threat or the occurrence of a Change in Control and to ensure the continued
dedication and efforts of the Executive in such event without undue concern for
his personal financial and employment security; and
In order to induce the Executive to remain in the employ of the
Corporation, particularly in the event of a threat or the occurrence of a Change
in Control, the Corporation desires to enter into this agreement with the
Executive to provide the Executive with certain benefits in the event his
employment is terminated as a result of, or in connection with, a Change in
Control.
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of the continued
employment of the Executive by the Corporation and the mutual covenants and
agreements herein contained, the parties hereto agree each with the other as
follows:
CHANGE IN CONTROL
A reference herein to "Change in Control" shall mean the occurrence during the
term of this agreement of any of the following events:
An acquisition (other than directly from the Parent) of any voting
securities of the Parent (the "Voting Securities") by a "Person"
or "Group" (as such terms are used for purposes of section 13(d)
or 14(d) of the Securities Exchange Act of 1934, as amended (the
"1934 Act")), immediately after which such Person or Group has
"Beneficial Ownership" (within the meaning of Rule 13d-3
promulgated under the 1934 Act) of more than fifty percent (50%)
of the combined voting power of the Parent's then outstanding
Voting Securities;
The board of directors (the "Board") of the Parent ceases for any
reason to have at least a majority of "Unaffiliated Directors"
(which shall be defined as all members of the Board except those
who are or were proposed for nomination as a member of the Board
or otherwise are "affiliated" or "associated" (as those terms are
used for
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purposes of Rule 12b-2 of the 1934 Act Regulations) with a Person
which has Beneficial Ownership of ten percent (10%) or more of
the combined voting power of the Parent;
Approval by stockholders of the Parent of a merger, consolidation or
reorganization involving the Parent, unless:
the stockholders of the Parent, immediately before such merger,
consolidation or reorganization, own, directly or
indirectly, immediately following such merger,
consolidation or reorganization, at least seventy-five
percent (75%) of the combined voting power of the
outstanding voting securities of the corporation
resulting from such merger or consolidation or
reorganization (the "Surviving Corporation") in
substantially the same proportion as the ownership of the
Voting Securities immediately before such merger,
consolidation or reorganization, and
at least a majority of the members of the board of directors V
the Surviving Corporation are Unaffiliated Directors who
were directors of the Parent immediately prior to the
execution of the agreement providing for such merger or
consolidation or reorganization;
Approval by stockholders of the Parent of a complete liquidation or
dissolution of the Parent; and
Notwithstanding anything contained in this agreement to the contrary,
if the Executive's employment is terminated during the term of
this agreement and the Executive reasonably demonstrates that
such termination:
was at the request of a third party who has indicated an
intention to take or has taken steps reasonably
calculated to effect a Change in Control and who
effectuates a Change in Control, or
otherwise occurred in connection with, or in anticipation of, a
Change in Control which actually occurs,
then for all purposes of this agreement, the date of a Change in
Control with respect to the Executive shall mean the date
immediately prior to the date of such termination of the
Executive's employment.
TERMINATION OF EMPLOYMENT
For the purposes of this Agreement, the phrase "termination of the Executive's
employment", or words of similar import, shall mean resignation (subject to the
last two paragraphs of this section) by the Executive or any other termination
of the Executive for any reason other than:
(i) cause (as hereinafter defined),
(ii) the Executive having reached the age of 65,
(iii) death, or
(iv) disability if such disability would have been covered by the
Parent's long term disability plan had the Executive been
eligible to receive benefits under such plan,
and "Termination Date" shall mean the effective date of the termination of the
Executive's employment.
A resignation by Executive shall not be deemed a "termination of
employment" for purposes of this Agreement if (i) such resignation occurs within
twenty-four months after a Change of Control and the "Transaction" leading to
the Change of Control was "Approved in Advance" by a majority of the
Disinterested Directors (as such term is defined in the Articles of
Incorporation of Parent), and (ii) Executive does not have "Good Reason" to
terminate.
For purposes of this Section: (x) the "Transaction" shall include the
event or events causing or leading to the Change of Control and any transaction
by the same Person, members of the same Group, or any Person Associated or
Affiliated with such Person or Group (as such capitalized terms are defined in
the Articles of Incorporation of Parent) initiated or announced within two years
prior to the transaction or event which effects a Change of Control; (y)
"Approved in Advance" shall mean prior to the earliest announcement or other
initiation of any transaction or event which is reasonably expected to result in
a Change in Control; and (z) "Good Reason" shall mean a material adverse change
in the Executive's duties, responsibilities, or compensation or a change in the
Executive's primary work place of more than forty (40) miles, any of which
occurs within twenty-four months after the Change of Control.
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CAUSE
For the purposes of this agreement, the term "cause" shall mean:
continued failure by the Executive to perform his duties
(except as a direct result of the Executive's incapacity
due to physical or mental illness) for a period of at
least six months after receiving written notification by
the Chief Executive Officer of the Parent or an
individual designated by the Chief Executive Officer of
the Parent identifying the manner in which the Executive
has failed to perform his duties, or
conduct of the Executive which, in the opinion of a majority
of the Board is materially injurious to the Corporation
or the Parent, or
the Executive's conviction of an indictable offense or a
summary conviction offense involving moral turpitude.
RETIRING ALLOWANCE
In the event of the termination of the Executive's employment on or before
twenty-four (24) months after a Change in Control, the Corporation shall pay to
the Executive an amount (the "Retiring Allowance") in respect of the loss of
such employment equal to one-twelfth (1/12th) of the aggregate of his Annual
Salary (as hereinafter defined) and Target Incentive (as hereinafter defined) on
the last day of each and every month commencing with the first full month
following the month in which the Termination Date occurs and ending on the
earlier of the last day of the thirtieth (30th) month following the month in
which the Termination Date occurs and the last day of the month in which the
Executive either dies or reaches the age of sixty-five (65) years (the
"Compensation Period").
For the purposes of this agreement, the term "Annual Salary" shall mean the
Annual Salary being paid the Executive immediately before his termination,
determined prior to any deductions actually taken from salary:
For salary reductions or deferrals under any plan of the Corporation or
the Parent;
for payment of employee benefits under any plan of the Corporation or
the Parent which were charged to the Executive; and
for the purchase of stock under any plan of the Corporation or the
Parent.
The term "Target Incentive" shall mean the Target Incentive as determined under
the incentive plan last in effect for the Executive. Notwithstanding any other
provision in this paragraph, if the Executive's Annual Salary and Target
Incentive so determined is less than the average of the Executive's gross
compensation for the three calendar years prior to the Executive's Termination
Date, the Executive shall be entitled to receive and the Corporation shall pay
to the Executive in the manner hereinbefore provided and throughout the
Compensation Period the greater of such average annual gross compensation and
the aggregate of the Executive's Annual Salary and Target Incentive. For the
purposes hereof, the term "gross compensation" shall mean compensation as
reported in the Executive's return of income under Part I of the Income Tax Act
(Canada) (the "Act") plus such of the amounts, if any, as are referred to in
subparagraphs (a),(b) and (c) of this paragraph as have not been reported in
such return of income of the Executive.
BENEFITS
Throughout the Compensation Period, the Executive shall continue to be treated
as an "employee" of the Corporation under all stock option, purchase or
acquisition plans in effect on the Termination Date; however, no new stock
option or purchase awards shall be granted to the Executive after the
Termination Date. In addition, the Executive, his dependants, beneficiaries
and/or estate shall continue to be entitled to all benefits under medical,
dental, life insurance and similar plans (except for any disability plan) that
are in effect on the Termination Date. If by reason of law or government
regulation or third party contractual restriction, the Executive, his
dependants, beneficiaries and/or estate cannot receive or participate in such a
benefit, the Corporation or the Parent shall, to the extent necessary, pay or
provide for payment of such benefit to the Executive, his dependants,
beneficiaries and/or estate in the same amount and manner as they would have
been provided had the employment of the Executive with the Corporation not been
terminated. Notwithstanding the foregoing, if the Executive is at any time
employed by another employer during the Compensation Period, the Corporation or
the Parent shall not provide any medical, dental, life insurance and similar
benefit to the extent that it is provided by the other employer.
TRANSFER TO RRSP
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On the Termination Date, the independent accountants of the Corporation shall
make a determination as to the aggregate amount of the Retiring Allowance that
may be transferred to a registered retirement savings plan ("RRSP") under which
the Executive is an annuitant and which may be deducted by the Executive in
computing his income for a taxation year under Part I of the Act (the "Eligible
Amount"). The Executive may elect by giving written notice to the Corporation
within ten (10) business days following the Termination Date to have such
portion or all of the Retiring Allowance as is equal to or does not exceed the
Eligible Amount transferred and paid directly by the Corporation, without
deduction, to an RRSP designated by the Executive and under which the Executive
is the annuitant. If such election is made, the Executive and the Corporation
agree that they will jointly execute such forms and other documents as may be
required to cause the Eligible Amount to be transferred and paid to the RRSP and
without deduction. In such event, each and every monthly payment of the Retiring
Allowance which is required to be paid to the Executive under the terms of this
agreement shall be paid to the RRSP until the aggregate of such payments is
equal to the Eligible Amount and thereafter such payments shall be made to the
Executive and shall be subject to applicable deductions by the Corporation.
DEATH OF THE EXECUTIVE
In the event of the death of the Executive during the Compensation Period, the
amount of the monthly Retiring Allowance payable in respect of the month in
which death occurs shall be paid to the Executive's estate and the Compensation
Period shall be deemed to have ended as of the close of business on the last day
of the month in which the death occurred. Coverage of the Executive and any
dependants under any plan described in paragraph 5 hereof shall also end on such
date. Nothing in this section shall affect payments which are due and owing in
respect of the Executive's death.
NON-COMPETITION AND CONFIDENTIALITY
The Executive agrees that:
the Corporation shall cease providing benefits as herein provided and
shall cease making payments in respect of the Retiring Allowance
(other than benefits or payments already owed or accrued) if,
during the Compensation Period, the Executive shall be employed
by or otherwise engaged or be interested in any business which is
competitive with any business of the Corporation or the Parent or
of any affiliates of the Corporation or the Parent in which the
Executive was engaged during his employment with the Corporation
and if, but only if, such employment or activity is likely to
cause, or causes, serious damage to the Corporation, the Parent
or any of their affiliates; and
during and after the Compensation Period, the Executive will not
divulge or appropriate to the Executive's own use or the use of
others any secret or confidential information or knowledge
pertaining to the business of the Corporation or the Parent or
any of their affiliates, obtained during his employment by the
Corporation or the Parent or any of their affiliates.
The Corporation has determined, in its best judgment, that the payments to the
Executive of the Retiring Allowance and benefits as herein provided are
reasonable consideration for requiring the Executive not to compete as described
above and for maintaining the confidentiality of information as provided above.
TERMINATION
This agreement shall remain in effect until terminated by the Corporation in
accordance with the following provisions. This agreement shall be automatically
cancelled on the date (the "Cancellation Date") that is one year after the date
the Corporation gives the Executive written notice of cancellation; except that
if a Change in Control occurs prior to such Cancellation Date, this agreement
shall remain in effect with respect to all rights accruing as a result of the
occurrence of the Change in Control. This agreement shall terminate and have no
force or effect if the Executive's employment is terminated for any reason prior
to a Change in Control except in the circumstances described in paragraph 1(e)
hereof.
RELEASE
The Executive accepts the adequacy of the payments and benefits to be made in
his favour in the event of his loss of office due to a Change in control as
herein contemplated and, except as to the Executive's entitlement to receive (i)
such payment and benefits, and (ii) benefits to which the Executive may be
entitled (if any) under the Corporation's and/or Parent's Supplemental Benefit
Plan(s), the Executive does hereby release and discharge the Corporation and the
Parent from any and all liability arising out of or in any way connected with
the termination of the Executive's employment in the circumstances herein
contemplated.
ARBITRATION
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Should there be a disagreement or dispute between the parties hereto with
respect to this agreement or the interpretation thereof, the same shall be
referred to a single arbitrator pursuant to the Commercial Arbitration Act
(British Columbia) and the determination of such arbitrator will be final and
binding upon the parties hereto. Submission to arbitration pursuant to the
provisions of this paragraph will be a condition precedent to the bringing of
any action with respect to such disagreement or dispute.
NOTICES
Any notices, request, demands and other communications provided for by this
agreement shall be sufficient if in writing and if sent by registered or
certified mail to the Executive at the last address he has filed in writing to
the Corporation or, in the case of the Corporation, at its principal executive
offices.
NON-ALIENATION
The Executive shall not have any right to pledge, hypothecate, anticipate or in
any way create a lien upon any amounts provided under this agreement; and no
benefits payable hereunder shall be assignable in anticipation of payment either
by voluntary or involuntary act or by operation of law.
GOVERNING LAW
This agreement shall be governed by and construed in accordance with the laws of
the Province of British Columbia and the laws of Canada applicable therein.
AMENDMENTS
This agreement may not be changed, waived or discharged orally but only by an
instrument in writing signed by the parties against which enforcement of such
change, waiver or discharge is sought.
ENUREMENT
This agreement shall extend to and be binding upon the Corporation, its
successor and assigns.
SEVERABILITY
In the event that any provision or portion of this agreement shall be determined
to be invalid or unenforceable for any reason, the remaining provisions of this
agreement shall be unaffected thereby and shall remain in full force and effect
and shall be severable from such invalid or unenforceable provision.
HEADINGS
The headings of the sections in this agreement are solely for convenience of
reference and shall not control the meaning or interpretation of any provision
of this agreement.
IN WITNESS WHEREOF the parties hereto have executed this agreement this 1st day
of May, 1996.
SIGNED, SEALED AND DELIVERED by LARRY
BULLOCK in the presence of:
/s/ C.L. Hamazaki )
- -------------------------------------- )
Witness )
)
Cindy Hamazaki )
- -------------------------------------- )
Name ) /s/ Larry Bullock
) -------------------
#18-7651 Francis Road ) LARRY BULLOCK
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Address )
)
Executive Secretary )
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Occupation
VAN WATERS & ROGERS LTD.
Per: William A. Butler, Assistant Secretary
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Authorized Signatory
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EXHIBIT 10.23
1992 LONG-TERM INCENTIVE PLAN
AS ADOPTED BY THE BOARD OF DIRECTORS OF
UNIVAR CORPORATION ON FEBRUARY 21, 1992
AND AMENDED AND RESTATED AS OF FEBRUARY 28, 1996
1. Purpose of the Plan. The purpose of this 1992 Long-Term Incentive
Plan is to enhance the long-term performance of Univar Corporation by rewarding
key employees of the Company for the sustained creation of incremental value for
the Company's shareholders. The Plan provides a means whereby Participants are
given an opportunity to share financially in this incremental value through
Options and, under certain circumstances, a Deferred Cash Incentive.
2. Definitions. As used herein, the following definitions shall
apply:
2.1 "Board" shall mean the Board of Directors of the Company.
2.2 "Cause" shall mean (1) continued failure by a Participant
to perform his or her duties (except as a direct result of the Participant's
incapacity due to physical or mental illness) for a period of at least six (6)
months after receiving written notification by the Chief Executive Officer or an
individual designated by the Chief Executive Officer (or the Board in the case
of the Chief Executive Officer) identifying the manner in which the Participant
has failed to perform his or her duties; (2) engaging in conduct, which, in the
opinion of a majority of the Committee is materially injurious to the Company;
or (3) conviction of the Participant of a misdemeanor involving moral turpitude
or any felony.
2.3 "Change of Control" shall mean the occurrence of any of
the following events: (1) an acquisition (other than directly from the Company)
of any voting securities of the Company (the "Voting Securities") by any
"Person" or "Group" (as such terms are used for purposes of Section 13(d) or
14(d) of the Exchange Act) immediately after which such Person has "Beneficial
Ownership" (within the meaning of Rule 13d-3 of the Exchange Act) of more than
fifty percent (50%) of the combined voting power of the Company's then
outstanding voting securities; (2) the Board ceases for any reason to have at
least a majority of "Unaffiliated Directors" (defined as all members of the
Board except those who are or were proposed for nomination as a member of the
Board by, or are otherwise "affiliated" or "associated" (as those terms are used
for purposes of Rule 12b-2 of the Exchange Act) with, a person who has
Beneficial Ownership of ten percent (10%) or more of the combined voting power
of the Company); or (3) approval by the shareholders of the Company of (i) a
merger, consolidation, or reorganization involving the Company, unless either
(a) the shareholders of the Company immediately before such merger,
consolidation, or reorganization own, directly or indirectly immediately
following such merger, consolidation, or reorganization, at least seventy-five
percent (75%) of the combined voting power of the company resulting from such
merger, consolidation, or reorganization (the "Surviving Corporation") in
substantially the same proportion as their ownership immediately before such
merger, consolidation, or reorganization, or (b) at least a majority of the
members of the Board of Directors of the Surviving Corporation are Unaffiliated
Directors who were directors of the Company immediately prior to the execution
of the agreement providing for such merger, consolidation or reorganization, or
(ii) a complete liquidation or dissolution of the Company.
2.4 "Change of Control Transaction" shall mean a tender offer,
exchange offer, merger, consolidation, reorganization or other transaction which
may lead to a Change of Control.
2.5 "Code" shall mean the Internal Revenue Code of 1986, as
amended.
2.6 "Committee" shall mean the Compensation Committee appointed
by the Board.
2.7 "Common Stock" shall mean the common stock of Univar
Corporation.
2.8 "Company" shall mean Univar Corporation, a Delaware
corporation.
2.9 "Deferred Cash Incentive" shall mean an award of cash made
to a Participant pursuant to Section 9 below in an amount designed to provide
sufficient funds to cover the exercise price of the Options plus the personal
income taxes calculated at the Tax Rate attributable to the receipt of such cash
payments determined on a "grossed up" basis.
2.10 "Disability" shall mean a physical or mental condition that
prevents a Participant from performing his or her normal duties of employment.
If a Participant makes application for or is otherwise eligible for disability
benefits under the Company's long-term disability program and qualifies for such
benefits, the Participant shall be presumed to have a "Disability" for purposes
of the Plan. In the absence of an applicable Company-sponsored long-
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term disability program, a Participant shall be presumed to have a "Disability"
for purposes of the Plan if the Committee so determines upon review of one or
more medical opinions acceptable to the Committee.
2.11 "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
2.12 "Fair Market Value" shall mean the closing price of a
company's common stock on a given day on the principal trading exchange or
national automated stock quotation system on which the common stock is traded or
quoted, or such other price as may be determined by the Committee.
2.13 "Option" shall mean a stock option granted pursuant to the
Plan and evidenced by a written stock option agreement which generally
incorporates the terms and provisions of the Plan.
2.14 "Parent" shall mean a "parent corporation" of the Company,
whether now or hereafter existing, as defined in Section 424(e) of the Code.
2.15 "Participant" shall mean any employee of the Company, or of
any Parent or Subsidiary of the Company, recommended by the Chief Executive
Officer of the Company and designated by the Committee to participate in the
Plan.
2.16 "Peer Group" shall mean a group of companies selected from
time to time by the Committee against which the Company's performance will be
compared for purposes of determining acceleration of Option vesting under the
Plan. The Peer Group shall be comprised of not less than ten (10) companies on
the last day of each Performance Cycle, unless the Committee otherwise decides.
2.17 "Percentile Ranking" shall mean the Company's percentile
ranking in Total Shareholder Return relative to companies in the Peer Group on
the date on which Company performance is measured for purposes of determining
the accelerated vesting of Options granted under the Plan. Such percentile
ranking will be determined in accordance with procedures approved by the
Committee.
2.18 "Performance Cycle" shall mean, with respect to the
Company, or with respect to a particular member of the Peer Group, a period of
thirty-six (36) consecutive calendar months commencing on March 1 of a specified
year.
2.19 "Plan" shall mean this 1992 Long-Term Incentive Plan.
2.20 "Retirement" shall mean a Termination of Service in
accordance with the retirement provisions of the Company-sponsored tax qualified
defined benefit retirement plan (or any comparable plan in effect for any Parent
or Subsidiary of the Company which Parent or Subsidiary is the Participant's
employer) as in effect immediately prior to the date of such Termination of
Service, or, in the event such retirement plan is discontinued, any tax
qualified replacement plan that is intended to serve a similar purpose,
provided, in each such case, the Participant must have attained 55 years of age
and completed 10 years of Service with the Company or with any Parent or
Subsidiary for a "Retirement" to have occurred for purposes of this Plan. In the
absence of such a plan, "Retirement" shall mean a voluntary Termination of
Service on or after the date the Participant attains 55 years of age, provided
the Participant then has 10 years of Service with the Company or with any of its
Parents or Subsidiaries.
2.21 "Securities Act" shall mean the Securities Act of 1933, as
amended.
2.22 "Service" shall mean full-time, and part-time as approved
by the Committee, employment with the Company.
2.23 "Share" shall mean one share of Common Stock, as adjusted
in accordance with Section 15 of the Plan.
2.24 "Subsidiary" shall mean a "subsidiary corporation" of the
Company, whether now or hereafter existing, as defined in Section 424(f) of the
Code.
2.25 "Tax Rate" shall mean the combined effective federal and
state income tax rate presumed to be in effect for a Participant from time to
time. The Committee shall establish the Tax Rate from time to time. The Tax Rate
may be a uniform rate for all Participants or may be varied among the
Participants.
2.26 "Termination of Service" means a termination of Service
from the Company, or any of its Parents or Subsidiaries, for any reason, whether
voluntary or involuntary, including death, Retirement, and Disability.
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2.27 "Total Shareholder Return" shall mean the compound annual
rate of return from investing in a company's common stock over a Performance
Cycle from both stock price appreciation and dividends and other distributions
provided to shareholders of such company during the Performance Cycle. Total
Shareholder Return for a company shall be calculated by (a) assuming that one
share of common stock of the company is purchased on the first day of the
Performance Cycle. Such stock will be assumed to be purchased at a price equal
to the average Fair Market Value of the common stock for the thirty (30) trading
days immediately prior to the first day of the Performance Cycle; (b) assuming
that additional shares (or portions of shares) are purchased with any dividends
or other shareholder distributions on the initial share and on shares
accumulated through the assumed reinvestment of dividends and other
distributions, with such purchases being made on the "ex-date" with respect to
such payment or distribution at a price equal to the Fair Market Value of the
company's common stock on that date; (c) calculating the number of shares of the
company's common stock that would be accumulated over the Performance Cycle,
adjusting, as necessary, for any stock splits or similar events; (d) multiplying
the number calculated in clause (c) by the average Fair Market Value of the
company's common stock for the thirty (30) trading days immediately prior to the
end of the Performance Cycle; and (e) determining the annual compound rate of
growth between the Fair Market Value determined in clause (a) and the amount
determined in clause (d).
3. Stock Subject to the Plan. Subject to the provisions of Section 15
of the Plan, the maximum aggregate number of shares which may be optioned and
sold under the Plan is 2,250,000 shares of Common Stock. Said number of Shares
may be increased from time to time in accordance with Section 18.1 below. The
Shares may be authorized, but unissued, or reacquired Common Stock.
If an Option should expire or become unexercisable for any reason
without having been exercised in full, the unpurchased Shares which were subject
thereto shall, unless the Plan shall have been terminated, become available for
future grant under the Plan.
4. Administration of the Plan.
4.1 Composition of Committee. The Plan shall be administered by
the Committee. The Committee shall at all times be comprised of not less than
two (2) directors. Each member of the Committee shall be a "disinterested
person" (as that term is defined in Rule 16b-3(c)(2) promulgated by the
Securities and Exchange Commission pursuant to its authority under the Exchange
Act). The Board may increase the size of the Committee and appoint additional
members thereof, remove members with or without cause and appoint new members in
substitution therefor, fill vacancies however caused, or remove all members of
the Committee and thereafter directly administer the Plan.
4.2 Powers of the Committee. Subject to the provisions of the
Plan, the Committee shall have the authority, in its discretion; (i) to
determine, in accordance with Section 10.1 of the Plan, the Fair Market Value of
the Common Stock of the Company and the common stock of the members of the Peer
Group and the exercise price per share of Options to be granted; (ii) to
determine the Participants to whom, and the time or times at which, Options
shall be granted and the number of Shares to be represented by each Option;
(iii) to interpret the Plan; (iv) to prescribe, amend, and rescind rules and
regulations relating to the Plan; (v) to determine the terms and provisions of
each Option granted (which need not be identical) and, with the consent of the
holder thereof, modify or amend each Option; (vi) to establish the time or times
at which the Option Shares may be purchased; (vii) to establish criteria for
accelerating the vesting of Options if certain events occur or if certain
relative Total Shareholder Return levels of the Company are attained; (viii) to
determine the Participants who shall receive Deferred Cash Incentives and to
award Deferred Cash Incentives; (ix) to establish performance requirements and
performance measures that determine acceleration of Option vesting; (x) to
verify such performance; (xi) to accelerate or defer (with the consent of the
Participant) the exercise date of any Option; (xii) to authorize any person to
execute on behalf of the Company any instrument required to effectuate the grant
of an Option previously granted by the Committee or the Board; (xiii) to make
exceptions to the provisions of the Plan in good faith and for the benefit of
the Company; and (xiv) to make all other determinations deemed necessary or
advisable for the administration of the Plan.
4.3 Adjustments for Extraordinary Events. If an event occurs
during a Performance Cycle that materially influences the Total Shareholder
Return of the Company or of a member of the Peer Group (or any other performance
measure used to determine Option vesting), and is deemed by the Committee to be
extraordinary and out of the control of management, the Committee may, in its
sole discretion, change the relationship between performance and Option vesting.
4.4 Effect of Committee's and Board's Decision. All decisions,
determinations, and interpretations of the Committee and/or the Board shall be
final and binding on all Participants and any other holders of any Options
granted under the Plan.
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5. Participation.
5.1 Participants. Participation in the Plan is limited to key
employees of the Company and of its Parents and Subsidiaries who, in the opinion
of the Committee, have the opportunity to materially influence the Company's
long-range performance. Potential Participants will be recommended for
participation by the Chief Executive Officer of the Company and designated as
Participants by the Committee. In determining who shall participate in the Plan,
the Committee shall take into consideration an employee's salary grade, duties
and past and potential contributions to the success of the Company. New
Participants may be added to the Plan at any time at the discretion of the
Committee.
5.2 Grants Discretionary; No Right to Continuing Employment.
The granting of any Option or Deferred Cash Incentive award pursuant to this
Plan shall be entirely in the discretion of the Committee and nothing herein
contained shall be construed to give any person any right to participate under
this Plan or to receive any Option or Deferred Cash Incentive award under it.
Nothing in the Plan or any Option or Deferred Cash Incentive granted hereunder
shall confer upon any Participant any right with respect to continuation of
employment with the Company, nor shall it interfere in any way with the
Participant's right or the Company's right to terminate the employment
relationship at any time, with or without cause.
6. Option Agreements. Each Option shall be evidenced by a written
agreement. Each Option granted under this Plan shall be subject to such
amendment or modification from time to time as the Committee shall deem
necessary or appropriate to comply with or take advantage of applicable laws or
regulations and shall contain such provisions which are consistent with the Plan
as the Committee shall from time to time approve.
7. Term of Option. The term of each Option shall be no more than ten
(10) years and three (3) months from the date of grant. Each Option shall also
specify the terms and conditions under which the Option will terminate prior to
said expiration date.
8. Vesting and Acceleration of Options.
8.1 Overview. Subject to the provisions of Section 5.2, the
Plan provides the opportunity for each Participant (a) to receive an annual
grant of Options, and (b) to have the vesting of granted Options accelerated
based on the Total Shareholder Return of the Company relative to the Total
Shareholder Return of the Peer Group. Certain Participants designated by the
Committee shall also have the right to receive a Deferred Cash Incentive award.
8.2 Vesting Date if No Acceleration. In the event that Options
granted in accordance with the Plan do not qualify for accelerated vesting in
accordance with Section 8.3 below within ten (10) years from their date of grant
based on the Company's Total Shareholder Return performance, such Options, or
the previously unvested portion thereof, will immediately become fully vested on
the day after the tenth (10th) anniversary of the date of grant.
8.3 Acceleration of Vesting Date. Acceleration of a
Participant's right to exercise Options granted under the Plan is subject to the
Company's Percentile Ranking. The initial performance test will be based on
Total Shareholder Return for the Company and for the Peer Group over the
Performance Cycle beginning on March 1, 1992. Subsequent Performance Cycles for
the Company and for each company in the Peer Group will commence on each
anniversary date of the initial Performance Cycle for the Company and each Peer
Group company, unless otherwise specified by the Committee.
Based on the Company's Percentile Ranking, all or part of
each Option grant for which its initial Performance Cycle has been completed may
become available for exercise prior to its expiration date. The portion of each
such outstanding grant that may be exercised at the end of a Performance Cycle
will be based on the following table:
<TABLE>
<CAPTION>
PERCENTAGE OF GRANT WHICH VESTS (BASED ON
ORIGINAL AMOUNT OF GRANT) PERCENTILE RANKING
- ----------------------------------------- ------------------
<S> <C>
None Below the 40th%
20% 40th% and above but below 50th%
33-1/3% 50th% and above but below 60th%
50% 60th% and above but below 70th%
75% 70th% and above but below 80th%
100% 80th% and above
</TABLE>
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The number of Shares for which vesting shall be accelerated
shall be rounded to the nearest whole number of Shares.
Any portion of an Option grant which does not vest and
become available for exercise based on the initial performance test will be
subject to a new performance test at the end of each Performance Cycle ending
after the end of the initial Performance Cycle. These subsequent tests will be
based on the Company's Percentile Ranking for each of the subsequent Performance
Cycles.
EXAMPLE: Assume that an original Option grant dated March
1, 1992 totaled 1000 Shares and that 50% (500 Shares) of the grant
became available for exercise following the first Performance Cycle. If
the Percentile Ranking at the end of the second Performance Cycle is
the 40th percentile, then 200 Shares of the original Option grant will
vest and become exerciseable (1000 original Shares X .20). If the
Percentile Ranking at the end of the third Performance Cycle is the
60th percentile, then the 300 Share unexercised balance of the original
Option grant will become exerciseable (see also Section 8.4).
Except in the case of acceleration upon a Change of Control
as provided in Section 8.5, if all or a portion of such a grant does become
available for exercise prior to its expiration date, and if the Participant has
been granted the right to receive a Deferred Cash Incentive award with respect
to said Option, the Option shall be exercised to the fullest extent exercisable
as soon as possible, but no later than fifteen (15) days following verification
of the Company's performance by the Committee. If the Participant has not been
granted the right to receive a Deferred Cash Incentive with respect to an Option
for which vesting has been accelerated, the vested portion of such Option may be
exercised by the Participant at any time prior to the expiration date of the
Option.
8.4 Supplemental Grants. In the event that the Company's Total
Shareholder Return performance for any Performance Cycle would result in the
vesting of more Options than remain in the grant to which the performance test
applies, the difference will be added to the Participant's next regular annual
grant, if one is awarded to him or her. There shall be only one such
supplemental grant with respect to any one Option.
EXAMPLE: Assume the same Option grant and vesting history
as set forth in the Example in Section 8.3 above. As noted, the
Percentile Ranking at the end of the third Performance Cycle was the
60th percentile, which would have allowed 50% of the original Option
grant to vest (1000 original Shares X .50). However, at that time, 700
of the original Option Shares have vested and only 300 Option Shares
are available for exercise. In such an event, the Participant's next
annual Option grant, if any, would be supplemented by 200 Shares (500
Shares that would have vested by reason of the Percentile Ranking at
the end of the third Performance Cycle minus the 300 Option Shares
available). No additional supplemental grants over and above those 200
Shares can be made with respect to the March 1, 1992 grant.
8.5 Acceleration of Vesting upon Change of Control. Upon a
Change of Control of the Company, all unvested Options previously granted under
the Plan shall become immediately vested and available for exercise. Such
Options need not be exercised within fifteen (15) days of such acceleration as
would otherwise be the case pursuant to Section 8.3 above, and may be exercised
by the Participant at any time prior to the expiration of the Option.
In addition, any Deferred Cash Incentive associated with
such Options shall be immediately payable to the Participant independent of
whether the Participant exercises the Option associated with the Deferred Cash
Incentive.
Any Options, vested or unvested, may be exercised on a
conditional basis in the event of an announcement of a Change of Control
Transaction, provided no provision is made in such Change of Control Transaction
for the exercise, exchange, or surrender of Options, or other procedure whereby
the Participant may realize in cash the difference between the exercise price
and the fair market value of the per share consideration to be received by
holders of the Common Stock of the Company. A conditional exercise shall be made
by giving a written notice of exercise to the Corporate Secretary of the
Company. Any Deferred Cash Incentive shall also be available on a conditional
basis and may be applied towards the satisfaction of the exercise price and the
withholding obligations set forth in Section 10.3. If the Change of Control
Transaction is cancelled or revoked, or otherwise does not occur, or does not
actually result in a Change of Control, the conditional exercise of unvested
Options and the conditional award of any Deferred Cash Incentive attributable to
unvested Options shall be rescinded. The Participant may also rescind the
conditional exercise of any vested Options and the related Deferred Cash
Incentive.
9. Deferred Cash Incentive.
9.1 Award Concept. Subject to the limitation in Sections 9.2
and 9.3 below, each annual Option grant may be accompanied by a Deferred Cash
Incentive award. Such an award will equal the cumulative exercise price
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of the portion of the Option that becomes available for exercise divided by the
difference between 1.00 minus the Tax Rate. The Deferred Cash Incentive shall be
paid by the Company within fifteen (15) days of the date the Option becomes
exercisable.
EXAMPLE: If a Participant with a Tax Rate of 35% is
entitled to receive a Deferred Cash Incentive award and holds an
Option for 1,000 Shares at $10.00 per Share, and 500 of said
Shares become exercisable, the Deferred Cash Incentive payable to
such Participant would be $7,692.31 (500 Shares times $10.00 per
Share divided by (1.00 minus .35))
The Committee shall designate those Participants who are
eligible to receive a Deferred Cash Incentive.
9.2 Requirement to Exercise Option . Except as is set forth in
Section 8.5, the payment of a Deferred Cash Incentive award to those
Participants designated by the Committee as eligible to receive the award, is
subject to the condition that the Participant has previously exercised or
simultaneously exercises the Option to which the award applies.
9.3 Restriction on Award Availability. No Deferred Cash
Incentive award will be provided in connection with any portion of an Option
that becomes available for exercise without accelerated vesting pursuant to
Sections 8.3 or 8.5.
10. Exercises; Payment Mechanics; Withholding.
10.1 Exercise Price. The per Share exercise price under each
Option shall be such price as is determined by the Committee and may be less
than, equal to, or greater than the Fair Market Value per Share on the date of
grant.
10.2 Procedure for Exercise. The Option may not be exercised
for a fraction of a Share.
The Option shall be deemed to be exercised when written
notice of such exercise has been given to the Company in accordance with the
terms of the Option by the person entitled to exercise the Option and full
payment for the Shares with respect to which the Option is exercised has been
received by the Company. A Participant may deliver to the Company a "standing
notice of exercise" which shall constitute, until revoked by the Participant,
the required notice of exercise for any and all portions of the Options for
which the right to exercise has been accelerated other than pursuant to Section
8.5.
Payment of the purchase price provided in the Option shall
be made in cash, in shares of the Company's Common Stock owned by the
Participant, or in any combination of cash and Shares of the Company's Common
Stock. Shares used to pay the exercise price shall be valued at their Fair
Market Value on the exercise date. Payment may also be made by delivering a
properly executed exercise notice together with irrevocable instructions to a
broker to promptly deliver to the Company the amount of sale proceeds necessary
to pay the exercise price.
10.3 Withholding. Prior to issuance of the Shares upon exercise
of an Option, the Participant shall pay any federal, state, and local
withholding obligations of the Company, if applicable. If a Deferred Cash
Incentive is paid to a Participant in connection with an Option exercise, the
Participant may use such Deferred Cash Incentive to apply towards the
satisfaction of the withholding tax obligations on the Deferred Cash Incentive
itself and on the taxable aspect of the Option exercise.
A Participant may also elect to pay all or part of such
withholding tax obligations by having the Company withhold Shares of Common
Stock having a value equal to the amount required to be withheld. The value of
the Shares to be withheld shall equal the Fair Market Value of the Shares on the
day the Option is exercised. If a Participant is an "officer" of the Company
within the meaning of Section 16 of the Exchange Act, the following provisions
shall apply to such elections: (i) if a Participant has received multiple
Options, a separate election must be made for each Option; (ii) the election may
be a "standing election", i.e., upon making an election, a fixed date need not
be set for the exercise of the Option to which the election relates; (iii) the
election will be subject to the approval or disapproval of the Board, which
approval or disapproval may be given at any time after the election to which it
relates; (iv) the election may not be made within six months following the date
of grant of the Option to which it relates; (v) the election must be made at
least six months prior to the day the Option is exercised, or both the election
and exercise must be made in the ten-day "window period" beginning on the third
day following the release of the Company's quarterly or annual summary statement
of sales and earnings; and (vi) an election may be revoked, or may be
reinstituted after a revocation, only upon six months' prior notice.
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10.4 Accounting Requirements. The Committee may at any time
impose restrictions on the use of Shares for payment of the exercise price
pursuant to Section 10.2 or satisfaction of the withholding tax obligation
pursuant to Section 10.3 so as to avoid adverse accounting treatment to the
Company, including requiring that Shares used must be beneficially owned for a
minimum time period.
10.5 Effect of Exercise. Exercise of an Option in any manner
shall result in a decrease in the number of Shares which thereafter may be
available, both for purposes of the Plan and for sale under the Options, by the
number of Shares as to which the Option is exercised.
11. Rights as Shareholder.
Until the issuance (as evidenced by the appropriate entry on the
books of the Company or of a duly authorized transfer agent of the Company) of
the stock certificate evidencing such Shares, no right to vote or receive
dividends or any other rights as a shareholder shall exist with respect to the
optioned Shares, notwithstanding the exercise of the Option, provided that in
the event of a Change of Control or the announcement of a Change of Control
Transaction, a Participant shall have all the rights set forth in Section 8.5 to
conditionally exercise Options and the Company may issue stock certificates on a
conditional basis to enable the Participant to exercise Options, tender shares
or otherwise realize the benefit of vested Options or Options which become
vested pursuant to Section 8.5. The Company shall issue (or cause to be issued)
such stock certificate promptly upon exercise of the Option.
12. Termination of Service.
12.1 Unvested Options. Unvested Options granted under the Plan
and any Deferred Cash Incentive opportunity associated with such Options shall
be immediately forfeited upon (a) any voluntary Termination of Service except
for reason of Retirement and (b) any involuntary Termination of Service for
reason of Cause.
In the event of a Termination of Service for reason of (a)
death, or (b) Disability, a portion of each unvested Option grant then
outstanding under the Plan and any Deferred Cash Incentive opportunity
associated with such Option may vest as provided in the following sentence. The
amount of each Option and related Deferred Cash Incentive opportunity that will
vest will be the excess, if any, of (i) the original amount of the Option grant
times the number of full years that have elapsed since the date of the grant (up
to a maximum of five (5) years) times twenty percent (20%) over (ii) the amount
of such Option grant that has vested prior to such Termination of Service.
In the event of a Termination of Service for reason of
involuntary termination without Cause, all unvested Option grants then
outstanding under the Plan and any Deferred Cash Incentive opportunity
associated with such Options will vest at the quicker rate of either (1) five
equal annual installments beginning one (1) year from the date of termination,
or (2) the rate at which such Options would have vested under this Plan based on
the Total Shareholder Return of the Company over the period after the
Termination of Service.
A Termination of Service which occurs in connection with
the sale or disposition of a division, subsidiary or other business unit shall
be deemed to be an involuntary termination without Cause unless the Committee
specifically determines otherwise.
12.2 Vested Options. Upon Termination of Service except for
reason of Retirement, all vested Options not exercised within the time limits
set forth in this Plan (or an individual Option agreement) for the exercise of
vested Options shall be forfeited.
12.3 Special Rule Upon Retirement. In the event of a Termination
of Service due to Retirement, unvested Options granted in accordance with the
Plan and any Deferred Cash Incentive opportunity associated with such Options
will continue to vest according to their original schedule and shall remain
subject to annual performance tests as if the Participant was still in the
Service of the Company.
12.4 Designation of Beneficiaries. Each Participant shall have
the right at any time to designate any person or persons as beneficiaries to
whom any benefits provided under the Plan shall be made in the event of
Participant's death prior to the distribution of all benefits due the
Participant under the Plan. Each beneficiary designation shall be effective only
when filed in writing with the Company during the Participant's lifetime, on a
Beneficiary Designation Form approved by the Committee. If a Participant
designates more than one beneficiary, distributions of cash awards and Option
Shares due the Participant under the Plan shall be made in equal proportions to
each beneficiary unless otherwise stated on the Beneficiary Designation Form.
The filing of a new Beneficiary Designation Form will
cancel all designations previously filed. Any finalized divorce or marriage
(other than a common law marriage) of a Participant subsequent to the date of
filing of a
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Beneficiary Form shall revoke such designation, unless (i) in the case of
divorce, the previous spouse was not designated as beneficiary, and, (ii) in the
case of marriage, the Participant's new spouse had previously been designated as
beneficiary.
The spouse of a married Participant shall join in any
designation of a beneficiary other than the spouse on a form prescribed by the
Committee.
If a Participant fails to designate a beneficiary as
provided for above, or if the beneficiary designation is revoked by marriage,
divorce, or otherwise without execution of a new designation, then the Committee
shall direct the distribution of Plan benefits to the Participant's estate.
13. Extension of Exercise Dates. Notwithstanding subsections 12.1,
12.2 and 12.3 above, the Committee shall have the authority to extend the
expiration date of any outstanding Option in circumstances in which it deems
such action to be appropriate (provided that, for a Participant who is an
"officer" of the Company within the meaning of Section 16 of the Exchange Act,
each extension shall be for a period of not less than six (6) months and one (1)
day and, if such an extension goes beyond the specified expiration date of the
Option if no Termination of Service had occurred, the expiration date of the
Option will also be extended to the minimum extent necessary to accommodate said
six (6) months and one (1) day period).
14. Non-Transferability of Options and Rights under the Plan. The
Options, any Deferred Cash Incentive award, and any other right under the Plan,
may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in
any manner other than by will or by the laws of descent or distribution and may
be exercised, during the lifetime of the Participant, only by the Participant,
and, after his or her death, by the representative of the Participant's estate.
No person shall have any right to commute, sell, assign, transfer, pledge,
anticipate, mortgage, or otherwise encumber, hypothecate, or convey in advance
of actual receipt, benefits, if any, payable under this Plan, or any part
thereof, or any interest therein, which are, and all rights to which are,
expressly declared to be unassignable and non-transferable. No portion of the
Plan's benefits shall, prior to actual payment, be subject to seizure,
attachment, lien or sequestration for the payment of any debts, judgments,
alimony, or separate maintenance owed by a Participant or any other person, nor
be transferable by operation of law in the event of the Participant's or any
other person's bankruptcy or insolvency. Any such transfer or attempted transfer
in violation of the preceding provisions shall be considered null and void.
15. Adjustments Upon Changes in Capitalization. Subject to any
required action by the shareholders of the Company, the number of shares of
Common Stock covered by each outstanding Option, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option, as well as the price per share of
Common Stock covered by each such outstanding Option, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the Company shall not
be deemed to have been "effected without receipt of consideration." Such
adjustment shall be made by the Board, whose determination in that respect shall
be final, binding, and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of Shares
of Common Stock subject to an Option.
In the event of an extraordinary dividend or partial liquidation,
the Committee shall make an appropriate adjustment to the Option exercise price
so that the difference between the exercise price and the Fair Market Value of
the Common Stock after such distribution is equivalent to the difference between
the exercise price and the Fair Market Value before such distribution. The
Committee shall select a representative period before and after the "ex-dividend
date" for such distribution for the purpose of determining the respective Fair
Market Value of the Common Stock.
16. Time of Granting Options. Except as may otherwise be required
to comply with legal or accounting requirements, the date of grant of an Option
shall, for all purposes, be the date on which the Board makes the determination
granting such Option.
17. Substitutions and Assumptions. The Board shall have the right to
substitute or assume Options in connection with mergers, reorganizations,
separations, or other transactions to which Section 424(a) of the Code applies,
provided such substitutions and assumptions are permitted by Section 424 of the
Code and the regulations promulgated thereunder. The number of Shares reserved
pursuant to Section 3 may be increased by the corresponding number of Options
assumed and, in the case of a substitution, by the net increase in the number of
Shares subject to Options before and after the substitution.
18. Amendment and Termination of the Plan.
78
<PAGE> 9
18.1 Right to Amend and Terminate. The Committee may amend or
terminate the Plan from time to time in such respects as the Committee may deem
advisable; provided that the following revisions or amendments shall require
approval of or ratification by the shareholders of the Company:
18.1.1 any increase in the number of Shares subject to
the Plan, other than in connection with an adjustment under Sections 15 or 17 of
the Plan; or
18.1.2 if the Company has a class of equity securities
registered under Section 12 of the Exchange Act at the time of such revision or
amendment, any change which would require stockholder approval pursuant to Rule
16b-3 promulgated by the Securities and Exchange Commission pursuant to its
authority under the Exchange Act.
18.2 Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Participant
and the Committee, which agreement must be in writing and signed by the
Participant and the Company.
19. Participants in Foreign Countries. The Committee shall have the
authority to adopt such modifications, procedures, and subplans as may be
necessary or desirable to comply with provisions of the laws of foreign
countries in which the Company or its Subsidiaries may operate to assure the
viability of the benefits from Options granted to Participants employed in such
countries and to meet the objectives of the Plan.
20. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act,
the Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the Shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance.
21. Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of shares as shall be
sufficient to satisfy the requirements of the Plan.
22. Shareholder Approval. Continuance of the Plan is subject to
approval by the shareholders of the Company within twelve (12) months after the
date the Plan is adopted by the Board. Any Option granted prior to the receipt
of shareholder approval shall become null and void if such approval is not
received in accordance with the preceding sentence.
23. Miscellaneous Provisions.
23.1 Unsecured Status of Claim. Participants and their
beneficiaries, heirs, successors, and assigns shall have no legal or equitable
rights, interests or claims in any specific property or assets of the Company.
No assets of the Company shall be held under any trust for the benefit of
Participants, their beneficiaries, heirs, successors, or assigns, or held in any
way as collateral security for the fulfillment of the Company's obligations
under the Plan. The Company's obligations under the Plan shall be merely that of
an unfunded and unsecured promise of the Company to pay benefits in the future.
23.2 Validity. In the event that any provision of the Plan or
any related Option is held to be invalid, void or unenforceable, the same shall
not affect, in any respect whatsoever, the validity of any other provision of
the Plan or any related Option.
23.3 Applicable Law. The Plan and any related Options shall be
governed in accordance with the laws of the state of Washington.
23.4 Inurement of Rights and Obligations. The rights and
obligations under the Plan and any related Options shall inure to the benefit
of, and shall be binding upon the Company, its successors and assigns, and the
Participants and their beneficiaries, heirs, successors, and assigns.
79
<PAGE> 1
EXHIBIT 10.24
VAN WATERS & ROGERS LTD.
SUPPLEMENTAL BENEFITS PLAN
AMENDED AND RESTATED AS OF MAY 7, 1996
1. Purpose.
The purpose in establishing the Supplemental Benefits Plan ("Plan") is
to provide retirement benefits to specifically designated participants
of the Van Waters & Rogers Ltd. Pension Plan ("Pension Plan") under the
terms of that Pension Plan without regard to limitations on benefits
imposed under Section 147.1(2) of the Income Tax Act and Regulation
8504 which apply to the Pension Plan.
For purposes of this Supplemental Benefits Plan, any terms specifically
defined in the Van Waters & Rogers Ltd. Pension Plan shall have the
same meaning in this plan.
2. Effective Date.
This Plan was established effective June 25, 1993 and was amended
effective May 7, 1996. This restatement of the Plan is effective May 7,
1996.
3. Participation.
This Plan shall include only those employees who are eligible to
receive a benefit under the Pension Plan; whose benefits are affected
by the limitation on benefits payable from the Pension Plan; and who
have been specifically designated by the Compensation Committee of
Univar Corporation to participate in this Plan. Such an employee shall
be referred to hereinafter as a "Participant". An employee's
designation as a Participant may be revoked at any time by the
Compensation Committee. Upon such revocation, the employee shall be
entitled only to those benefits that may have accrued and become vested
under the Plan. Notwithstanding the foregoing, employees of Van Waters
& Rogers Ltd. who are citizens or residents of the United States while
actively participating in and accruing benefits under the Pension Plan
shall not be eligible to participate in this Plan.
4. Benefit Determination Date.
Benefits shall be determined under this Plan as of the same date that
benefits are determined under the Pension Plan.
5. Benefit Amount.
The initial benefits under this Plan determined as of the benefit
determination date shall equal the difference, if any, between (a) and
(b) below:
(a) The monthly benefit for the life of the Participant, as
calculated under the terms of the Pension Plan, without regard
to the limitations described in Section 147.1(2) of the Income
Tax Act and Regulation 8504;
(b) The monthly benefit for the life of the Participant, as
calculated under the Pension Plan, which includes limitations
described in Section 147.1(2) of the Income Tax Act and
Regulation 8504.
The initial benefits payable under this Plan shall be increased in the
same manner and same percentage amount as any cost of living adjustment
increases granted in respect of benefits payable from the Pension Plan.
6. Spouse's Death Benefits.
If a death benefit is payable under the Pension Plan to a spouse of a
Participant, that spouse is eligible to receive benefits under this
Plan. The benefit shall be calculated in the same manner as under
Section 5; that is, the death benefit under this Plan shall equal the
difference, if any, between:
(a) the spouse's death benefit calculated under the Pension Plan
without regard to the limitations described in Section
147.1(2) of the Income Tax Act and Regulations 8504; and
80
<PAGE> 2
(b) the spouse's death benefit as calculated under the terms of
the Pension Plan which includes limitations described in
Section 147.1(2) of the Income Tax Act and Regulation 8504.
7. Date and Form of Payment.
Benefit payments under this Plan shall commence at the same time as the
benefit under the Pension Plan commences. The benefit shall be paid in
the same form as the benefit is paid under the Pension Plan and the
actuarial equivalent assumptions used in determining the benefit in a
given form shall be the same as are used to determine the benefit under
the Pension Plan. The Company reserves the right to pay a lump sum
amount in lieu of the monthly pension benefit set forth in Section 5 if
such monthly pension benefit is less than $100. This lump sum amount
shall be the actuarial equivalent of the monthly pension benefit
payment calculated on the advice of the Pension Plan Actuary.
8. Re-Employment After Payments Begin.
If a Participant is re-employed after benefits commence, the
Participant's benefits shall be suspended under this Plan. When the
Participant retires for the final time, the benefit under this Plan
shall be recalculated and adjusted in the same manner as the benefit is
adjusted under the Pension Plan.
9. Termination and Amendment of the Plan.
This Plan shall continue in effect until terminated by resolution of
the Board of Directors. In the event of such termination, all amounts
accrued and vested to date of termination, based on service and
earnings to that date, shall be payable pursuant to the terms of this
Plan as if the Plan had not been terminated. The Plan may be amended
from time to time by resolution of the Board of Directors. No amendment
or terminating resolution shall reduce any vested benefit accrued to
the date of the resolution amending or terminating the Plan. In the
event of a plan termination, the Board of Directors, at its option, may
accelerate the payment of benefits and may pay benefits in a single,
actuarially-equivalent, lump-sum amount.
10. Source of Benefit Payments.
No Participant shall acquire any property interest in any assets of Van
Waters & Rogers Ltd. as a consequence of participating in this Plan. A
Participant's rights are limited to receiving payments as set forth in
this Plan. Except to the extent of assets in the Trust described below,
this Plan is unfunded, and to the extent that any Participant acquires
a right to receive benefits, such right shall be no greater than the
right of any unsecured general creditor of Van Waters & Rogers Ltd. Any
funds of Van Waters & Rogers Ltd. available to pay benefits under the
Plan shall be subject to the claims of general creditors of Van Waters
& Rogers Ltd. and may be used for any purpose by Van Waters & Rogers
Ltd.
Effective on or before June 1, 1996, the Trust Under Van Waters &
Rogers Ltd. Supplemental Benefits Plan ("Trust") shall be created to
provide for contributions by Van Waters & Rogers Ltd. in the event of a
Change of Control as defined in the Trust, and for contributions at
such other times as Van Waters & Rogers Ltd. shall decide in its sole
discretion. The assets of the Trust will not be subject to the claims
of the creditors of Van Waters & Rogers Ltd. The Trust, and not Van
Waters & Rogers Ltd., shall pay all expenses of the Trust and all taxes
owed on income earned by the Trust on Trust assets. Van Waters & Rogers
Ltd. shall pay all refundable taxes on contributions it makes to the
Trust. For purposes of determining the amount of contributions (or the
face amount of a letter of credit in which the Trustee is the
beneficiary) needed to fund the Trust with respect to the actuarial
present value of the accrued benefits under this Plan in the event of a
Change of Control, the actuarial assumptions shall be the same
actuarial assumptions used by Van Waters & Rogers Ltd. to determine the
Accumulated Benefit Obligation (ABO) for Van Waters & Rogers Ltd. as
required under FASB Statement Number 87 as of the Measurement Date
immediately preceding or concurrent with the date of the Change of
Control, or equivalent assumptions. Notwithstanding the foregoing, in
determining the amount of contributions (or the face amount of a letter
of credit of which the Trustee is beneficiary) needed to fund the
Trust, the amount shall be adjusted to take into account the fact that
(i) the Trust will pay all expenses of the Trust and all taxes owed on
income earned by the Trust on Trust assets, (ii) the Company will
withhold and remit to Revenue Canada the refundable tax which is owed
on its contributions to the Trust, (iii) the bank which issues a letter
of credit with the Trustee named as beneficiary will withhold and remit
to
81
<PAGE> 3
Revenue Canada the refundable tax owed, if any, on any draw made by
the Trustee on the letter of credit, and (iv) the Trust will receive
tax refunds from Revenue Canada of refundable taxes held in the
Refundable Tax Account with respect to the benefits paid from the
Trust. Any tax refunds received by the Trust of taxes paid on
contributions made for benefits which had accrued prior to a Change of
Control and on income thereon shall be used first to pay such benefits
accrued prior to the Change of Control. The actuary who shall determine
the amount needed to fund the trust shall be the actuary engaged at the
time by the Pension Plan.
As explained in more detail in the Trust, if a letter of credit is
deposited with the Trustee (with the Trustee named as beneficiary of
the letter of credit), the face amount of the letter of credit may
change annually upon renewal of the letter of credit due, for example,
to changes in actuarial assumptions or the payment of benefits during
the year being completed. Upon renewal, such amount will be calculated
using the actuarial assumptions and adjustments described above, except
that the assumptions and adjustments shall be those as of the
Measurement Date immediately preceding or concurrent with the date of
renewal of the letter of credit. Van Waters & Rogers Ltd. will only be
required to fund the actuarial present value of those benefits accrued
through the date of the first Change of Control to occur after May 7,
1996, and not benefits accrued between the first Change of Control and
the date of a subsequent Change of Control.
11. Pension Committee.
This Plan shall be administered by the Pension Committee ("Committee").
The Committee shall have full discretion to construe and interpret the
terms and provisions of this Plan, which interpretation or construction
shall be final and binding on all parties. The Committee shall
administer such terms and provisions in a uniform and
non-discriminating manner.
12. Claims Procedure.
The following is the procedure for making claims under this Plan or
appealing a decision made with respect to this Plan:
(a) Filing Claim for Benefits
If a person does not receive the timely payment of the
benefits which he or she believes are due under the Plan
(hereinafter referred to as the "Applicant"), the Applicant
may make a claim for benefits. All claims for benefits under
the Plan shall be made in writing and shall be signed by the
Applicant. Claims shall be submitted to the Committee. Each
claim shall be approved or disapproved within 90 days
following the receipt of the information necessary to process
the claim. In the event the Committee denies a claim for
benefits in whole or in part, the Committee shall notify the
Applicant in writing of the denial of the claim, and notify
the Applicant of the right to a review of the decision. Such
notice shall also set forth the specific reason for such
denial, the specific provisions of the Plan on which the
denial is based, a description of any additional material or
information necessary to perfect the claim with an explanation
of why such material or information is necessary, and an
explanation of the Plan's appeals procedure. If no action is
taken by the Committee on an Applicant's claim within 90 days
after receipt by the Committee, such claim shall be deemed to
be denied for purposes of the following appeals procedure;
(b) Appeals Procedure
Any Applicant whose claim for benefits is denied in whole or
in part may appeal to the Committee for a review of the
decision. Such appeal must be made within three months after
the Applicant has received actual or constructive notice of
the denial. An appeal must be submitted in writing within such
period and must:
(i) request a review by the Committee of the claim for
benefits under the Plan;
(ii) set forth all of the grounds upon which the
Applicant's request for review is based on and any
facts in support thereof; and
(iii) set forth any issues or comments which the Applicant
deems pertinent to the appeal.
82
<PAGE> 4
The Committee shall act upon each appeal within 60 days after receipt
unless special circumstances require an extension of the time for
processing, in which case a decision shall be rendered by the Committee
as soon as possible but not later than 120 days after the appeal is
received by the Committee. The Committee shall make full and fair
review of each appeal and any written materials submitted by the
Applicant in connection. The Committee may require the Applicant to
submit such additional facts, documents or other evidence as the
Committee in its discretion deems necessary or advisable in making its
review. On the basis of its review, the Committee shall make an
independent determination of the Applicant's eligibility for benefits
under the Plan. The decision of the Committee shall be final and
conclusive.
13. Alienation.
The right of any person to receive payments under this Plan shall not
be subject to any type of assignment or pledge, nor shall such right be
liable for or subject to the debts, contracts, liabilities or torts of
such person.
14. Employee Benefit Statement.
Each employee covered by this Plan shall receive a statement each year
which shows the total benefit payable under this Plan and the Pension
Plan.
15. Withholding.
Benefit payments shall be subject to applicable federal or provincial
withholding for taxes.
16. Successors.
In the event of any consolidation, merger, acquisition or
reorganization, the obligations of Van Waters & Rogers Ltd. under this
Plan shall continue and be binding on Van Waters & Rogers Ltd. and its
successors or assigns.
17. Governing Law.
This Plan shall be construed in accordance with the laws of the
Province of British Columbia.
This amended and restated plan is adopted and executed this 7th day of
May, 1996.
VAN WATERS & ROGERS LTD.
By /s/ William A. Butler
----------------------------------
Its Assistant Secretary
----------------------------------
83
<PAGE> 1
EXHIBIT 22
SUBSIDIARIES OF REGISTRANT
AS OF MARCH 1, 1995
The significant subsidiaries of the registrant, all wholly or majority owned,
are as follows:
Van Waters & Rogers Inc. (100% owned),
incorporated in July, 1986 under the laws of the State of Washington.
Van Waters & Rogers Ltd. (100% owned),
incorporated in August, 1950 under the laws of British Columbia, Canada.
Univar Europe N.V. (51% owned prior to September 1, 1994;
100% owned as of September 1, 1994)
incorporated in December, 1990 under the laws of The Netherlands.
84
<PAGE> 1
EXHIBIT 24.1
ARTHUR ANDERSEN LLP
801 Second Avenue, Suite 800
Seattle WA 98104
(206) 623-8023
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Form 10-K of our reports dated April 24, 1996 included in
Registration Statement File Nos. 33-53907, 33-03199, 33-54883, 33-34511,
33-53905. It should be noted that we have not audited any financial statements
of Univar Corporation subsequent to February 29, 1996 or performed any audit
procedures subsequent to April 24, 1996, the date of our report.
Arthur Andersen LLP
Seattle, Washington,
May 17, 1996
85
<PAGE> 1
EXHIBIT 25
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Gary E. Pruitt, and William A. Butler, and David E.
Olson, or any one of them, their attorneys-in-fact, for them in any and all
capacities, to sign the Annual Report on Form 10-K of Univar Corporation for the
fiscal year ended February 29, 1996, and to file the same, with exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that said
attorneys-in-fact or their substitute or substitutes, may do or cause to be done
by virtue hereof.
Signature Title Date
/s/ James W. Bernard
- -------------------------
James W. Bernard Director May 2, 1996
/s/ Sjoerd D. Eikelboom
- -------------------------
Sjoerd D. Eikelboom Director May 2, 1996
/s/ Richard E. Engebrecht
- -------------------------
Richard E. Engebrecht Director May 2, 1996
/s/ Paul H. Hough
- -------------------------
Paul H. Hough Director May 2, 1996
/s/ Roger L. Kesseler
- -------------------------
Roger L. Kesseler Director May 2, 1996
/s/ Curtis P. Lindley
- -------------------------
Curtis P. Lindley Director May 2, 1996
/s/ N. Stewart Rogers
- -------------------------
N. Stewart Rogers Director May 2, 1996
86
<PAGE> 2
EXHIBIT 25 (Continued)
Signature Title Date
/s/ John G. Scriven
- ------------------------
John G. Scriven Director May 2, 1996
/s/ Andrew V. Smith
- ------------------------
Andrew V. Smith Director May 2, 1996
/s/ Roy E. Wansik
- ------------------------
Roy E. Wansik Director May 2, 1996
/s/ Nicolaas J. Westdijk
- ------------------------
Nicolaas J. Westdijk Director May 2, 1996
/s/ James H. Wiborg
- ------------------------
James H. Wiborg Director May 2, 1996
87
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20459
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(FEE REQUIRED)
FOR THE FISCAL YEAR ENDED FEBRUARY 29, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-5858
UNIVAR CORPORATION
STOCK PURCHASE PLAN
--------------------------
UNIVAR CORPORATION
------------------------------------------------------------
P.O. Box 34325
Seattle, Washington 98124-1325
--------------------------------------------------
88
<PAGE> 2
ITEM 1. FINANCIAL STATEMENTS
The Plan has no financial statements. Reference is made to Form S-8,
Registration Statement, File No. 33-34697 for a description of the Plan.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the Plan) have duly caused this annual
report to be signed by the undersigned thereunto duly authorized.
UNIVAR CORPORATION
STOCK PURCHASE PLAN
Date: May 17, 1996 By:/s/ Gary E. Pruitt
------------------
Gary E. Pruitt
Vice President-Finance & Treasurer
Administrator of the Plan
89
<PAGE> 1
EXHIBIT 28.4
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20459
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(FEE REQUIRED)
FOR THE FISCAL YEAR ENDED FEBRUARY 29, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-5858
VAN WATERS & ROGERS LTD./UNIVAR CORPORATION
STOCK PURCHASE PLAN
------------------------------------------------------------
UNIVAR CORPORATION
------------------------------------------------------------
P.O. Box 34325
Seattle, WA 98124-1325
------------------------------------------------------------
90
<PAGE> 2
ITEM 1. FINANCIAL STATEMENTS
The Plan has no financial statements. Reference is made to Form S-8,
Registration Statement, File No. 2-71255 for a description of the
Plan.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or others persons who administer the Plan) have duly caused this
annual report to be signed by the undersigned thereunto duly authorized.
VAN WATERS & ROGERS LTD./ UNIVAR
CORPORATION STOCK PURCHASE PLAN
Date: May 17, 1996 By: /s/ Gary E. Pruitt
------------------- --------------------
Gary E. Pruitt
Vice President-Finance & Treasurer
Administrator of the Plan
91
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS FOR THE PERIOD ENDED FEBRUARY 28, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-28-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> FEB-28-1996
<EXCHANGE-RATE> 1
<CASH> 19,053
<SECURITIES> 0
<RECEIVABLES> 273,817
<ALLOWANCES> 1,924
<INVENTORY> 162,469
<CURRENT-ASSETS> 464,716
<PP&E> 381,968
<DEPRECIATION> 167,957
<TOTAL-ASSETS> 740,605
<CURRENT-LIABILITIES> 389,273
<BONDS> 0
0
0
<COMMON> 105,505
<OTHER-SE> 74,101
<TOTAL-LIABILITY-AND-EQUITY> 740,605
<SALES> 2,037,674
<TOTAL-REVENUES> 2,037,674
<CGS> 1,756,840
<TOTAL-COSTS> 1,756,840
<OTHER-EXPENSES> 254,298
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,226
<INCOME-PRETAX> 12,206
<INCOME-TAX> 6,306
<INCOME-CONTINUING> 5,900
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,900
<EPS-PRIMARY> 0.27
<EPS-DILUTED> 0.27
</TABLE>
