SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 2000 Commission File Number 33-383149
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SFAC New Holdings, Inc.
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(Exact name of registrant as specified in its charter)
State of Delaware 52-2173534
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
520 Lake Cook Road, Suite 550, Deerfield, IL 60015
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 405-5300
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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 and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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The number of shares outstanding of the Registrant's common stock as of May
15, 2000 was 319,250 shares of common stock.
SFAC NEW HOLDINGS, INC AND SUBSIDIARIES
INDEX
PART I - FINANCIAL INFORMATION Page No.
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ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets
as of March 31, 2000 and December 31, 1999 3
Condensed Consolidated Statements of Operations for
the three-month periods ended March 31, 2000 and 1999 4
Condensed Consolidated Statements of Cash Flows for
the three-month periods ended March 31, 2000 and 1999 5
Notes to Financial Statements 6-8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 9-10
PART II - OTHER INFORMATION 11
SIGNATURE 12
PAGE <2>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL INFORMATION
SFAC NEW HOLDINGS, INC AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
($ In thousands)
<TABLE>
March 31, December 31,
2000 1999
-------- -------
Assets (unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 254,122 $ 28,545
Accounts receivable, net 26,199 15,826
Inventories 13,268 10,895
Net assets of discontinued operations - 169,980
Other current assets 24,589 8,680
--------- ---------
Total current assets 318,178 233,926
Property, plant, and equipment, net 66,307 67,248
Intangible assets, net 112,337 96,954
Other noncurrent assets 37,804 33,310
--------- ---------
Total assets $ 534,626 $ 431,438
========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of long-term debt $ 748 $ 2,867
Accounts payable 15,446 12,999
Accrued expenses 35,144 44,700
--------- ---------
Total current liabilities 51,338 60,566
Long-term debt 924,350 1,176,027
Due to Specialty Foods Acquisition Corporation 7,491 7,507
Other noncurrent liabilities 13,086 22,615
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Total liabilities 996,265 1,266,715
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Stockholders' equity (461,639) (835,277)
--------- ---------
Total liabilities and stockholders' equity $ 534,626 $ 431,438
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
PAGE <3>
SFAC NEW HOLDINGS, INC AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
($ In thousands)
<TABLE>
Successor Predecessor
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Three months ended March 31,
2000 1999
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<S> <C> <C>
Net sales $ 69,617 $ 69,357
Cost of sales 30,056 30,244
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Gross profit 39,561 39,113
Operating expenses:
Selling, distribution, general and administrative 38,825 40,094
Amortization of intangibles 704 699
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Total operating expenses 39,529 40,793
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Operating profit (loss) 32 (1,680)
Other expenses:
Interest expense, net 36,676 36,745
Other expense, net 634 483
--------- ---------
Loss before income taxes (37,278) (38,908)
Provision for income taxes 87 22
--------- ---------
Loss from continuing operations (37,365) (38,930)
Discontinued operations:
Net income (loss) (454) 5,787
Gain on disposal, net 414,310 -
--------- --------
413,856 5,787
--------- --------
Income (loss) before extraordinary item 376,491 (33,143)
Extraordinary item (2,853) -
--------- --------
Net income (loss) $ 373,638 $ (33,143)
========= =========
</TABLE>
PAGE <4>
See accompanying notes to condensed consolidated financial statements.
SFAC NEW HOLDINGS, INC AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
($ In thousands)
<TABLE>
Successor Predecessor
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Three months ended March 31,
-----------------------------
2000 1999
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<S> <C> <C>
Cash flows from operating activities:
Loss from continuing operations $ (37,365) $ (38,930)
Adjustments to reconcile to net
cash from continuing operating activities
Depreciation and amortization 4,865 3,658
Debt issuance cost amortization 2,603 2,915
Accretion of interest 11,816 13,100
Changes in operating assets and liabilities, net
of effects from businesses acquired or sold (30,405) (5,800)
------- --------
Net cash used by continuing operating activities (48,486) (25,057)
Net cash provided (used) by
discontinued operations (5,545) 10,196
-------- --------
Net cash used by operating activities (54,031) (14,861)
Cash flows from investing activities:
Proceeds from divestitures of businesses 567,381 3,800
Acquisitions of businesses, net of cash acquired (22,336) -
Capital expenditures (1,364) (1,399)
Other 1,538 2,205
------- ------
Net cash provided by investing activities 545,219 4,606
Cash flows from financing activities:
Increase (decrease) in revolving credit (97,801) 22,801
Refinancing costs - (586)
Payments on long-term debt (167,810) (857)
-------- --------
Net cash provided (used) by
financing activities (265,611) 21,358
Increase in cash and cash equivalents 225,577 11,103
Cash - beginning of period 28,545 5,715
-------- --------
Cash - end of period $ 254,122 $ 16,818
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
PAGE <5>
NOTE 1 - General
(a) Reorganization
SFAC New Holdings, Inc. (together with its Subsidiaries, the
"Successor Company") was formed to exchange debt securities
issued by the Company for certain debt securities of Specialty
Foods Acquisition Corporation ("Predecessor Company" or
"SFAC"). As required by the context, the "Company" refers to
the Successor Company or the Predecessor Company. Specialty
Foods Corporation ("SFC"), a direct wholly owned subsidiary of
the Predecessor Company, contributed its interest in the
operating subsidiaries and other assets through a wholly-owned
subsidiary, SFC-Sub, to SFAC New Holdings, Inc. As a result of
the debt exchange and revised corporate structure, completed on
June 11, 1999, SFAC New Holdings, Inc. is treated as a
successor company for reporting purposes.
(b) Interim Financial Information
In the opinion of management, the accompanying unaudited
interim condensed financial information of the Company and the
Predecessor Company contains all adjustments, consisting only
of those of a normal recurring nature, except as otherwise
indicated, necessary to present fairly the Company's and the
Predecessor Company's financial position and results of
operations. All significant intercompany accounts,
transactions and profits have been eliminated.
These financial statements are for interim periods and do not
include all information normally provided in annual financial
statements and should be read in conjunction with the financial
statements of the Successor Company for the year ended
December 31, 1999 included in the annual report filed on Form
10-K. The results of operations for interim periods are not
necessarily indicative of the results that may be expected for
the full year.
Prior period financial information of the Predecessor Company
is based on its historical financial information. Certain
amounts in the Predecessor Company 1999 financial statements
have been reclassified to conform to the manner in which the
2000 financial statements have been presented.
PAGE <6>
NOTE 2 - Inventories
The components of inventories are as follows:
March 31, December 31,
2000 1999
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Raw materials and packaging $ 6,269 $ 5,275
Work in progress 302 190
Finished goods 5,462 4,158
Other 1,904 1,742
-------- --------
13,937 11,365
Less obsolescence and other allowances (669) (470)
-------- --------
$ 13,268 $ 10,895
======== ========
Inventories are stated at the lower of cost or market. Cost is
determined principally by the first-in first-out ("FIFO")
method.
NOTE 3 -Divestitures
On March 20, 2000, SFC New Holdings, Inc., a subsidiary of SFAC
New Holdings, Inc., completed the sale of its subsidiary, Metz
Baking Company ("Metz"), to the Earthgrains Company for
$625,000. This divestiture has been reported as discontinued
operations in the accompanying financial statements in
accordance with Accounting Principles Board Opinion No. 30 and
the related gain on disposal has been recorded in the three-
month period ended March 31, 2000. Metz is a leading retail
bread company serving the Midwestern United States. Upon
closing, approximately $37,000 of the purchase price was
used to terminate the Company's accounts receivable facility.
Additionally, $20,000 of the purchase price was paid into an
escrow to secure potential future indemnification obligations
of SFC New Holdings, Inc. arising out the sale. Depending on
the amount of any potential future indemnification obligations,
the escrow will release $10,000 one year after closing and the
remaining amount two years after the closing.
In addition, in April 1999, the Company sold its subsidiary,
H&M Food Systems Company, Inc. ("H&M"), to IBP for $132,000.
H&M is a producer of custom formulated, pre-cooked meat
products that are sold primarily to national restaurant chains
and prepared-food producers. This divestiture has been
reported as discontinued operations in the accompanying
financial statements in accordance with Accounting Principles
Board Opinion No. 30. At closing, $5,000 of the purchase price
was paid into a one-year escrow to secure potential future
indemnification obligations of SFC New Holdings, Inc. arising
out of the sale. The Company has not yet received payment of
the escrow and is currently in discussions with IBP regarding
payment.
The net assets of Metz are reported as a single line
item in the Company's Condensed Consolidated Balance Sheet for
December 31, 1999 and the pre-divestiture operating results of
Metz and H&M are reported in the discontinued operations
section of the accompanying Condensed Consolidated Statements
of Operations. No interest expense has been allocated to
discontinued operations.
PAGE <7>
NOTE 4 - Acquisitions
On January 20, 2000, the Company completed the acquisition of
the Lew-Mark Baking Company for $23,100. Lew-Mark Baking holds
the exclusive license to the Archway brand in the states of New
York and New Jersey and had 1999 sales of approximately $25,000.
NOTE 5 - Debt
As a result of the March 20, 2000 sale of its Metz operating
unit, the Company has (i) paid in full its Revolving and Term
Loan facilities and (ii) initiated two separate offers to
purchase senior notes.
Concurrent with the Metz closing, the Company has paid in full
amounts outstanding under the Revolving and Term Loan
facilities totaling $265,611 and terminated these
arrangements. Due to this early extinguishment of debt, the
Company wrote off deferred debt issuance costs related to these
facilities of $2,853 during the three-month period ended March
31, 2000 and recorded the write-off as an extraordinary item.
On April 14, 2000, SFC New Holdings, Inc. initiated offers to
purchase, in two separate offers, (i) any and all of its $150,000
issue of 12 1/8% Senior Notes and (ii) $54,000 of
its 11 1/4% Senior Notes. Each offer was made for a cash
purchase price of 100% of the principal amount, plus accrued
and unpaid interest, if any. In the event that the aggregate
principal amount of the tendered 11 1/4% Senior Notes
surrendered by the holders thereof exceeds the $54,000
amount, the 11 1/4% Senior Notes shall be selected for tender
on a pro rata basis. Any notes not tendered or returned in the
tender offers will remain obligations of SFC and will continue
to accrue interest and have all of the benefits of the
indenture pursuant to which such notes were issued.
On May 15, 2000, the Company completed the tender offer and
paid the following amounts: (i) $149,905 of the 12 1/8
Senior Notes and (ii) $54,000 of the 11 1/4 Senior Notes
on a pro rata basis.
NOTE 6 - Legal
SFC New Holdings, Inc., Saputo Group ("Saputo") and Dean
Metropoulos have reached a global settlement (the "Settlement")
with respect to the ongoing Cacique case. In connection with
the Settlement, all lawsuits and claims involving the Company
that concern the Cacique case were dismissed with prejudice,
including: (a) the lawsuit filed by Saputo seeking to require
the Company to post an appeal bond in the Cacique case and (b)
the lawsuit filed by Mr. Metropoulos concerning his
indemnification from Stella. In addition, as part of the
Settlement, Saputo assumed full responsibility for and control
of the Cacique litigation and fully and finally released the
Company from any and all indemnity obligations with respect to
the litigation. In exchange for the dismissals and release of
indemnity, the Company has made a payment to Saputo that is
substantially less than the currently outstanding verdict of
approximately $24,000. This payment may be reduced (but
cannot be increased) by certain future amounts that will be
determined by the ultimate resolution of the Cacique case.
PAGE <8>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Seasonality
The Company's businesses are moderately seasonal with lower
sales, operating profit, and cash flows generally occurring in
the first quarter of the year. This seasonality is due primarily
to higher cookie sales in the summer months, as well as in the
winter holiday season.
Results of Operations
COMPARISON OF FIRST QUARTER 2000 TO FIRST QUARTER 1999
Consolidated net sales from continuing operations increased to
$69.6 million in 2000 compared to $69.4 million in 1999. Higher
Archway brand sales driven by the Lew-Mark acquisition more than
offset declines in discontinued product lines.
The Company's gross profit margin improved to 56.8% in 2000 from
56.4% in 1999 due principally to a favorable product mix at
Mother's.
Selling, distribution, and general and administrative ("SDG&A")
expenses decreased $1.3 million in 2000 to $38.8 million
primarily due to lower sales management, route and trade
promotion cost levels.
Interest expense, net remained constant at $36.7 million in 2000
and 1999. Increased interest rates that resulted from the June
1999 debt exchange and refinancing were offset by decreased
interest expense related to the 11% Senior Subordinated
Debentures of the Predecessor Company which were not exchanged
for securities of the Successor Company.
Other expense, net increased to $0.6 million in 2000 compared to
$0.5 million in 1999. The increase is primarily due to losses on
the disposal of property, plant and equipment.
As a result of the above factors, net loss from continuing
operations decreased to $37.4 million in 2000 compared to $38.9
million in 1999.
The Company reports minimal state income tax and no federal
income tax due to its net operating loss position for tax
purposes.
Because of the highly leveraged status of the Company, earnings
before interest, taxes, depreciation, and amortization ("EBITDA")
is an important performance measure used by the Company and its
stakeholders. The Company believes that EBITDA provides
additional information for determining its ability to meet future
debt service requirements. However, EBITDA is not indicative of
operating income or cash flow from operations as determined under
generally accepted accounting principles. The Company's EBITDA
from continuing operations for the three-month periods ended
March 31, 2000 and March 31, 1999 is calculated as follows:
PAGE <9>
Three months ended March 31,
---------------------------
2000 1999
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(In thousands)
Operating profit (loss) $ 32 $ (1,680)
Depreciation and amortization 4,865 3,658
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$ 4,897 $ 1,978
======= =========
Liquidity and Capital Resources
Net cash used in operating activities for the three months ended
March 31, 2000 totaled $54.0 million. Net cash used by
continuing operating activities included seasonally high levels
of cash pay interest, the termination of the accounts receivable
facility and the related repurchase of Mother's and Archway's
receivables, the legal settlement with respect to the ongoing
Cacique case and amounts required to collateralize remaining
letters of credit. In 1999, cash used by operating activities of
$14.9 million was principally driven by interest and working
capital requirements.
Net cash provided by investing activities totaled $545.2 million
in 2000 and is primarily due to the proceeds from the sale of
Metz, offset by the cost of the Lew-Mark Baking Company
acquisition. In 1999, net cash provided by investing activities
totaled $4.6 million and was primarily attributable to the
collection of a note receivable from a previously divested
business.
Net cash used in financing activities totaled $265.6 million in
2000 due to payments made to terminate the Revolving Credit and
Term Loan facilities. In 1999, net cash provided by financing
activities amounted to $21.4 million principally due to
additional borrowings under the Company's Revolving Credit
Facility.
Based upon the above, the net increase in cash in 2000 and 1999
was $225.6 million and $11.1 million, respectively.
As of March 31, 2000 the Company had a cash balance of $254.1
million. The Company intends to use available funds to satisfy the
Senior Note tender offers. Additionally, management believes that
available funds should be adequate for near-term operating needs.
However, there can be no assurances that available
funds will be adequate to meet such needs.
Cautionary Statement for Purposes of the "Safe Harbor" Provision
of the Private Securities Litigation Reform Act of 1995
This Form 10-Q contains statements that constitute forward-
looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. When used in this Form 10-Q, the
words "anticipates", "intends", "plans", "believes", "estimates",
"expects", and similar expressions are intended to identify
forward-looking statements. Such forward-looking statements
involve known and unknown risks,
uncertainties and other factors which may cause actual results,
performance or achievements of the Company to be materially
different from any future results, performance or achievements
expressed or
implied by such forward-looking statements. Such factors
include, but are not limited to: the Company's highly leveraged
capital structure, its substantial principal repayment
obligations, weather, economic and market conditions, cost and
availability of raw materials, competitive activities or other
business conditions. Further, any forward-looking statement
speaks only as of the date on which such statement is made, and
the Company undertakes no obligation to update any forward-
looking statement or statements to reflect events or
circumstances after the date on which such statement is made or
to reflect the occurrence of unanticipated events. New factors
emerge from time to time, and it is not possible for management
to predict all of such factors. Further, management cannot
assess the impact of each such factor on the Company's actual
business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those
contained in any forward-looking statements.
PAGE <10>
PART II - OTHER INFORMATION
Item 4: Submission of Matters to a Vote of Security Holders
None.
Item 6: Exhibits and Reports on Form 8-K
(a) See Exhibit Index filed herewith.
(b) On March 13, 2000, the Company filed a report on Form 8-K
announcing the offers to purchase, in two separate offers, (i)
any and all of its $150 million issue of 12 1/8% Senior Notes
and (ii) $54 million of its 11 1/4% Senior Notes.
(c) On April 25, 2000, the Company filed a report on Form 8-K
describing a settlement with respect to the ongoing Cacique case.
PAGE <11>
SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
SFAC NEW HOLDINGS, INC.
------------------------
(Registrant)
-------------
By:
Date: May 15, 2000 /s/ Robert L. Fishbune
------------------------
Robert L. Fishbune
Vice President and Chief
Financial Officer
EXHIBIT INDEX
Exhibit
Number Description of Document
- ---- ----------------------------
10.55* 2000 Specialty Foods Corporation Annual Bonus Plan
27* Financial Data Schedule
___________
*Filed Herewith.
EXHIBIT 10.55
SPECIALTY FOODS CORPORATION
ANNUAL BONUS PLAN
2000
ANNUAL BONUS PLAN
1. PURPOSES
Specialty Foods Corporation ("SFC") has established the Annual
Bonus Plan (the "Plan") as a vehicle for motivating and rewarding
designated executives whose responsibilities have a significant
impact on the key short-term business objectives of SFC. Annual
incentive awards are determined by the relative success of SFC
and in achieving specific annual business objectives. The Plan
provides the opportunity for participants to receive incentive
compensation when results meet or exceed these pre-established
goals.
2. DEFINITION OF TERMS
The following defined terms will have the meanings set forth
below for purposes of the Plan:
a. Annual Salary shall mean the annualized base salary in
effect for a Participant on December 31, 2000.
b. Approval Date shall mean the date of approval of the Plan by
the Compensation Committee.
c. Award shall mean the cash payment made to Participants under
the Plan.
d. Cause shall mean the Participant's admission or conviction
of a felony, the Participant's commission of an act of dishonesty
in the course of his or her duties, the Participant's repeated
disregard of policy directives of SFC or the Subsidiaries, or the
Participant's breach of his or her fiduciary responsibilities or
duties as an employee of SFC or the Subsidiaries.
e. Compensation Committee shall mean the committee designated
as such by the Board of Directors of SFC.
f. Change of Control shall mean the date, if any, at which (i)
with respect to SFAC, a person or group (as such term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended) other than Acadia Partners, L.P., Keystone, Inc., HWP
Partners, L.P. and their respective Affiliates (as defined in
Section 2.1(a) of the Principal Stockholders Agreement) (such
person or group being a "Non-Affiliate") has the collective
ability to directly or indirectly designate a majority of the
members of the SFAC Board (whether by contract or otherwise) or
(ii) with respect to SFC, a transaction is consummated (including
a sale, merger or other similar transaction, but excluding any
transaction among only SFAC, SFC and or their subsidiaries) (x)
pursuant to which all or substantially all of the assets of SFC
are sold or otherwise transferred to Non-Affiliates (the sale of
Mother's Cake and Cookie Co. and Archway Cookies, Inc. to be
deemed such a sale) (y) pursuant to which Non-Affiliates acquire
the collective ability to designate directly or indirectly a
majority of the Board of Directors of SFC (by contract or
otherwise) or (z) which the Compensation Committee of the Board
of Directors of SFC determines, in its discretion, to be a change
of control.
g. Participant shall mean an employee designated by the
Compensation Committee to participate in the Annual Bonus Plan,
provided the authority to designate Participants may be delegated
by the Compensation Committee to SFC.
h. Performance Objectives shall mean the performance objective
of SFC determined by the Compensation Committee for the Plan
Year.
i. Plan shall mean this Annual Bonus Plan.
j. Plan Year shall mean January 1, 2000 through December 31,
2000.
k. SFC shall mean Specialty Foods Corporation.
l. Subsidiary shall mean a direct or indirect subsidiary of SFC
which is included in SFC's consolidated tax return.
3. ELIGIBILITY FOR PARTICIPATION
An Award may be granted for the Plan Year to each Participant who
is in active service during the Plan Year and shall include the
employees identified on Annex A.
4. PERFORMANCE OBJECTIVES
Performance Objectives shall be recommended by the Chief
Executive Officer of SFC and approved by the Compensation
Committee for the Plan Year and will be reflected in the attached
Annex B entitled "2000 Annual Bonus Plan Performance Objectives."
5. ADMINISTRATIVE GUIDELINES
a. Adjustments in Financial Performance Measurements
In order to effectuate the purpose of the Plan, the Compensation
Committee may make adjustments in the criteria established for
the Plan Year which reflect any extraordinary changes that may
have occurred during the Plan Year or which significantly alter
the basis upon which such performance levels were determined.
Such changes may include, without limitation, changes in
acquisitions, accounting practices, tax, regulatory or other laws
or regulations, divestitures, financings, or economic changes not
in the ordinary course of business cycles. Any adjustments made
by the Compensation Committee can be made at any time and in any
manner that the Compensation Committee in its sole discretion
deems appropriate, and any and all such adjustments shall be
conclusive and binding upon all parties concerned.
b. Vesting of Awards
As of the Approval Date, the Participant shall have earned and
shall be fully vested in his or her Award, which Award shall be
paid to the Participant at the time that such payment is to be
made if all conditions with respect to the payment of such
amount, as set forth in this Plan, are met. If such conditions
are not met, no Award payment shall be made.
c. Payment of Bonus Awards
Award payments will normally occur concurrently with payment for
the last pay period in February of the year following the Plan
Year. Payments will normally be made by ordinary payroll
methods.
d. Payment of Award Upon Change of Control
Upon a Change of Control, a Participant shall receive his or her
Award under the Plan. Award payments shall be made no later than
one day following a Change of Control and such payments shall be
pro rated on the basis of the portion of the Plan Year having
actually elapsed through the date of the Change of Control.
6. GENERAL RULES
a. Effective Date. This Plan shall have an effective date of
January 1, 2000.
b. Amendment. The Plan has been adopted by the Board of
Directors of SFC and may be amended from time to time, in
any respect, by such Board. Any such amendment may add to,
amend, reduce or cancel any and all rights in regard to the
Plan.
c. Administration. The Compensation Committee shall be
responsible for the general operation and administration of the
Plan and shall have the authority to interpret the Plan and to
adopt administrative rules and regulations governing its
operation, provided that the Compensation Committee may delegate
this responsibility to any officer of SFC.
d. Termination. The Plan may be terminated at any time by the
Board of Directors of SFC. Upon such termination, all
rights of a Participant to amounts not then awarded to
Participants shall be null and void. However, amounts
previously accrued through the date of the Plan termination
shall not be affected.
e. Continued Employment. Participation in the Plan shall not
give any employee any right to remain in the employment of
SFC. The Plan is not to be construed as a contract of
employment for any period and does not alter the "employee-
at-will" employment status or employment agreement of any
Participant.
f. Employment Taxes. Award payments under the Plan shall be
treated as wages and shall be subject to income, FICA and
any other applicable withholding taxes and deductions at the
time received as required by applicable law or regulation,
as in effect from time to time.
g. Employment Agreements. If a Participant is party to an
employment agreement, the terms of which relate to annual
bonuses and which are inconsistent with the terms of this
Plan, the terms of such employment agreement shall govern to
the extent of such inconsistency.
h. Unfunded Plan. The obligations under this Plan shall be
unfunded. Neither SFC nor any of the Subsidiaries shall be
required to establish any special or separate fund or to
make any other segregation of assets to assure the payment
of any Award under this Plan.
i. Successors Bound. The rights and obligations of the Company
hereunder shall inure to the benefit of and be binding upon
the successors of the Company.
j. Assignment. Participants shall not assign any rights
granted to them by the terms of this Plan or encumber in any
way their interests herein; provided, however, that in the
event of a Participant's death, any payments then due and
owing will be made when due prorated to the date of death.
k. Effect of Plan. This Plan shall have a term expiring on the
earlier of (1) the date on which all Awards earned under the
Plan, if any, are paid to Participants and (2) the date on
which a determination is made by the Compensation Committee
that no Awards have been earned under the Plan (provided
that the authority to determine that no Awards have been
earned under the Plan may be delegated by the Compensation
Committee to SFC). At such time, the Plan shall expire and
be of no further force or effect.
l. Governing Law/Jurisdiction. The substantive law (and not
the law of conflicts) of the State of Illinois will govern
all questions concerning the construction, validity and
interpretation of this Plan and the performance of the
obligations imposed by this Plan. The parties hereby waive
their rights to request or demand a trial by jury in the
event controversy arises under this Plan.
m. Headings. The headings used herein are for reference
purposes only and shall not in any way affect the meaning or
interpretation of this Plan.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 254,122
<SECURITIES> 0
<RECEIVABLES> 26,764
<ALLOWANCES> 565
<INVENTORY> 13,268
<CURRENT-ASSETS> 318,178
<PP&E> 123,012
<DEPRECIATION> 56,705
<TOTAL-ASSETS> 534,626
<CURRENT-LIABILITIES> 51,338
<BONDS> 924,350
0
0
<COMMON> 0
<OTHER-SE> (461,639)
<TOTAL-LIABILITY-AND-EQUITY> 534,626
<SALES> 69,617
<TOTAL-REVENUES> 69,617
<CGS> 30,056
<TOTAL-COSTS> 39,529
<OTHER-EXPENSES> 634
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 36,676
<INCOME-PRETAX> (37,278)
<INCOME-TAX> 87
<INCOME-CONTINUING> (37,365)
<DISCONTINUED> 413,856
<EXTRAORDINARY> (2,853)
<CHANGES> 0
<NET-INCOME> 373,638
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
