<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X Quarterly report pursuant to Section 13 of 15(d) of the
----- Securities Exchange Act of 1934
For the quarterly period ended November 27, 1994 or
----- Transition report pursuant to Section 13 of 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
-------------------- -------------------
Commission file number 0-1118
DEAN FOODS COMPANY
------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 36-0984820
----------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3600 North River Road, Franklin Park, Illinois 60131
------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 708 678-1680
---------------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the Registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
----- -----
The number of shares of the Registrant's Common Stock, par value $1 per
share, outstanding as of the date of this report was 39,923,912.
Total number of pages 20.
---
1
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PART I - FINANCIAL INFORMATION
------------------------------
A. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
-----------------------------------------------------
In the opinion of the Registrant, all adjustments, consisting only
of normal recurring adjustments, necessary for a fair presentation of
the unaudited condensed consolidated financial statements have been
included herein. Certain information and footnote disclosures normally
included in the financial statements have been omitted. These unaudited
condensed consolidated financial statements should be read in conjunction
with the Registrant's 1994 Annual Report on Form 10-K.
2
<PAGE>
ITEM 1.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
-------------------------------------------
FOR THE QUARTERS AND SIX MONTHS ENDED
-------------------------------------
NOVEMBER 27, 1994 AND NOVEMBER 28, 1993
---------------------------------------
(Unaudited)
(In Thousands Except for Per Share Amounts)
<TABLE>
<CAPTION>
Second Quarters Ended Six Months Ended
-------------------------- --------------------------
November 27, November 28, November 27, November 28,
1994 1993 1994 1993
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $662,848 $577,113 $1,277,131 $1,136,764
-------- -------- ---------- ----------
Cost and expenses:
Costs of products sold 504,879 449,284 977,752 892,010
Delivery, selling and
administrative expenses 118,546 96,642 227,203 191,290
Interest expense 5,637 3,373 10,380 6,691
Other income, net (157) (781) (893) (1,391)
-------- -------- ---------- ----------
628,905 548,518 1,214,442 1,088,600
-------- -------- ---------- ----------
Income before income taxes and
cumulative effect of changes
in accounting principles 33,943 28,595 62,689 48,164
Provision for income taxes 13,917 11,140 25,703 20,123
-------- -------- ---------- ----------
Income before cumulative
effect of changes in
accounting principles 20,026 17,455 36,986 28,041
Cumulative effect of changes
in accounting principles,
net of taxes -- -- -- 1,179
-------- -------- ---------- ----------
Net income $ 20,026 $ 17,455 $ 36,986 $ 29,220
======== ======== ========== ==========
Earnings per common share:
Earnings before cumulative
effect of changes in
accounting principles $ .50 $ .44 $ .93 $ .71
Cumulative effect of changes
in accounting principles -- -- -- .03
-------- -------- ---------- ----------
Earnings per common share $ .50 $ .44 $ .93 $ .74
======== ========= ========== ==========
Dividends per share
(Declared and paid) $ .17 $ .16 $ .34 $ .32
======== ========= ========== ==========
Weighted average common
shares outstanding 39,850 39,713
========== ==========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
3
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CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
NOVEMBER 27, 1994 and MAY 29, 1994
----------------------------------
(In Thousands)
<TABLE>
<CAPTION>
November 27, May 29,
1994 1994
------------ ----------
(Unaudited)
<S> <C> <C>
ASSETS
------
CURRENT ASSETS:
Cash and temporary cash investments $ 14,615 $ 10,967
Accounts and notes receivable, less allowance
for doubtful accounts of $4,214 and $3,875,
respectively 188,203 169,395
Inventories 338,756 233,324
Other current assets 46,926 46,496
---------- ----------
Total Current Assets 588,500 460,182
---------- ----------
PROPERTIES:
Property, plant and equipment, at cost 942,433 906,411
Accumulated depreciation 390,247 363,200
---------- ----------
552,186 543,211
---------- ----------
OTHER ASSETS 112,011 105,761
---------- ----------
Total Assets $1,252,697 $1,109,154
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Notes payable to banks $ 138,000 $ 122,000
Current installments of long-term obligations 6,712 6,960
Accounts payable and accrued expenses 276,443 227,348
Dividends payable 6,862 6,462
Federal and state income taxes 6,430 4,497
---------- ----------
Total Current Liabilities 434,447 367,267
---------- ----------
LONG-TERM OBLIGATIONS (Less current installments
included above) 185,632 136,150
---------- ----------
DEFERRED CREDITS 81,586 80,963
---------- ----------
SHAREHOLDERS' EQUITY:
Preferred stock - -
Common stock 41,185 41,050
Capital in excess of par value 8,607 5,911
Retained earnings 531,408 507,981
Less-Treasury stock-at cost 30,168 30,168
---------- ----------
Total Shareholders' Equity 551,032 524,774
---------- ----------
Total Liabilities and Shareholders' Equity $1,252,697 $1,109,154
========== ==========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
4
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
FOR THE SIX MONTHS ENDED
------------------------
NOVEMBER 27, 1994 AND NOVEMBER 28, 1993
---------------------------------------
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
Six Months Ended
---------------------------
November 27, November 28,
1994 1993
------------ ------------
<S> <C> <C>
Net cash used by operations $ (3,340) $ (2,249)
-------- --------
Cash flows from investing activities:
Capital expenditures (37,782) (43,867)
Proceeds from disposition of property,
plant and equipment 1,091 5,092
Acquisitions of business, net of
cash acquired (11,581) (17,301)
-------- --------
Net cash used in investing activities (48,272) (56,076)
-------- --------
Cash flows from financing activities:
Issuance of notes payable to banks, net 66,000 47,000
Issuance of long-term obligations 310 -
Repayment of long-term obligations (1,076) (844)
Unexpected industrial revenue
bond proceeds 202 489
Cash dividends paid (13,007) (12,308)
Issuance of common stock 2,831 1,102
-------- --------
Net cash provided by financing
activities 55,260 35,439
-------- --------
Increase (decrease) in cash and temporary
cash investments 3,648 (22,886)
Cash and temporary cash investments -
beginning of period 10,967 41,572
-------- --------
Cash and temporary cash investments -
end of period $ 14,615 $ 18,686
======== ========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
5
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
INVENTORIES
-----------
The following is a tabulation of inventories by class at November 27,
1994, November 28, 1993 and May 29, 1994 (In Thousands).
<TABLE>
<CAPTION>
<S> <C> <C> <C>
November 27, November 28, May 29,
1994 1993 1994
------------ ------------ --------
(Unaudited)
Raw materials and supplies $ 45,095 $ 47,398 $ 45,356
Materials in process 103,230 73,920 55,725
Finished goods 208,696 165,749 151,358
-------- -------- --------
357,021 287,067 252,439
Less: Excess of current cost
over stated value of
last-in, first-out
inventories (18,265) (17,251) (19,115)
-------- -------- --------
Total inventories $338,756 $269,816 $233,324
======== ======== ========
</TABLE>
Inventories at November 28, 1993 and May 29, 1994 have been reclassified to
conform with the November 27, 1994 presentation.
LEGAL PROCEEDINGS
-----------------
See PART II, ITEM 1 for a discussion of pending legal proceedings.
---------------
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
A.) Liquidity and Capital Resources
As of November 27, 1994, there has been no material overall
change in the Registrant's liquidity or its capital resources from those
described in the Management's Discussion and Analysis contained in the
Registrant's Annual Report on Form 10-K for the fiscal year ended May
29, 1994. Borrowings outstanding under bank lines of credit at the end
of fiscal 1994 were used principally to fund 1994 business acquisitions.
The Registrant entered into a $150 million bank revolving credit
agreement in the first quarter 1995 with $50 million of short-term
borrowings classified as long-term debt reflecting the commitment under
said agreement. Cash and temporary cash investments were $14.6 million
at November 27, 1994, a $3.6 million increase over the balance at May
29, 1994.
Working capital at November 27, 1994, was $154.1 million
compared to $92.9 million at May 29, 1994. The increase in working
capital reflects:
1.)Increases in inventories and accounts payable and accrued
expenses, largely due to the normal seasonal pack in the
Registrant's vegetable and pickle operations and
2.)Increased accounts and notes receivable principally the result
of increased sales.
The increase in inventories at November 27, 1994 compared to November
28, 1993 principally was the result of the acquisition of a vegetable
business in the latter half of fiscal 1994.
The change in short-term borrowing levels at November 27, 1994 compared
to May 29, 1994 affected working capital. Under the bank revolving
credit agreement described above, $50 million of short-term borrowings
at May 29, 1994 was classified as long-term obligations at November 27,
1994. Higher short-term borrowings at November 27, 1994 were the result
of higher inventories associated with the normal pack of seasonally
grown crops.
The Registrant's debt-to-capital ratio was 25.2% at November 27,
1994, compared with 20.6% at May 29, 1994. Long-term obligations at
November 27, 1994 totaled $185.6 million compared to $136.2 million at
May 29, 1994. The increased long-term obligations resulted from the
classification of the long-term portion of the bank revolving credit
borrowing commitment ($50 million) less normal maturities.
7
<PAGE>
B.) Results of Operations
Overall sales for the second quarter and for the six month period ended
November 27, 1994 increased 14.9% and 12.3% respectively over the same periods a
year ago. Consolidated after-tax earnings for the second quarter and for the six
month period ended November 27, 1994 increased 15% and 27% respectively over the
earnings of the comparable periods a year ago. Earnings for the six months ended
November 28, 1993 included a charge of $1.5 million related to the tax
provisions of the Revenue Reconciliation Act of 1993 and a net after-tax credit
of $1.2 million related to the Registrant's adoption of new accounting
principles for income taxes and postretirement benefits other than pensions.
Sales of the Registrant's Dairy Products operations for the second quarter
($374.8 million) and for the six months ($746.0 million) increased 5% and 3%
respectively over sales of the comparable periods a year ago. The increased
sales principally were the result of the sales contribution of businesses
acquired in fiscal year 1994 and the first quarter of the current fiscal year.
Increases in unit sales volumes were offset by lower average selling prices
during the current fiscal year reflecting lower raw milk costs this year.
Dairy Product's operating earnings declined in the second quarter
principally due to the seasonal aspect and margin pressures on the Registrant's
ice cream operations and a $1.7 million charge in the second quarter related to
costs associated with the closure of two small fluid milk plants to align
production capacities with the sales levels in the associated market areas.
Operating earnings for the six months were slightly below last year because of
lower second quarter earnings this year. Raw milk supplies are plentiful and raw
milk costs are expected to remain below year ago levels.
Sales of the Registrant's Specialty Food Products operations for the second
quarter ($282.0 million) and for the six month period ($518.3 million) ended
November 27, 1994 increased 33% and 28% respectively over sales of the
comparable periods a year ago. The increased sales principally were the result
of:
1.) The sales of a vegetable operation acquired during the third quarter
of fiscal 1994,
2.) Higher selling prices for frozen vegetables reflecting market
conditions, and
3.) Increased sales of the Registrant's pickle operations.
8
<PAGE>
Specialty Foods Products earnings both for the second quarter and the six
months improved significantly over the earnings for the comparable periods a
year ago, principally the result of improved earnings of the Registrant's
vegetable operations. The increased earnings principally were the result of:
1.) The earnings of a vegetable operation acquired during the third quarter
of fiscal 1994,
2.) Higher selling prices for frozen vegetables reflecting market conditions,
and
3.) Improved plant processing costs as a result of normal growing and harvest
conditions.
Margins a year ago were unfavorably impacted by weather-related costs, crop
shortages and competitive market conditions. Margins on the Registrant's pickle
operations improved this year, the result of improved pricing and more
favorable crop related costs as compared to last year.
Delivery, selling and administrative expenses for the second quarter and the
six months ended November 27, 1994, increased 23% and 45% respectively over
comparable periods a year ago. The principal reasons for the increased expenses
this year are:
1.) Marketing and promotional expenses associated with a vegetable business
acquired in fiscal year 1994,
2.) Expenses associated with businesses acquired in fiscal year 1994 and
first quarter fiscal 1995, and
3.) Increased expenses associated with the increased unit sales volumes this
year.
Interest expense for the second quarter ($5.6 million) and six month period
($10.4 million) ended November 27, 1994 increased 67% and 55% respectively over
interest expense of the comparable periods a year ago. The increased interest
expense was the result of:
1.) The interest on borrowings associated with business acquisitions during
fiscal year 1994 and first quarter this year,
2.) Increased level of borrowings to meet seasonal crop requirements
associated with the increased sales of the Registrant's vegetable and
pickle operations, and
9
<PAGE>
3.) Higher prevailing interest rates this year as compared with rates during
the corresponding periods a year ago.
The effective income tax rate for the second quarter was 41.0% compared with a
rate of 39.0% for the same period last year. The increased effective tax rate
this year is principally the result of a reduction in certain non-taxable
benefits which existed last year and new IRS deduction guidelines. The effective
tax rate for the six month period ended November 27, 1994 was 41.0% compared to
41.8% for the same period a year ago.
10
<PAGE>
PART II - OTHER INFORMATION
---------------------------
ITEM 1. Legal Proceedings
There has been no material change in the legal proceedings reported
under Item 3 - Legal Proceedings, of the Registrant's Form 10-K Annual
Report, for the fiscal year ended May 29, 1994.
ITEM 6. Exhibits and Reports on Form 8-K
a.) Exhibits
Item 10 - Material Contracts
Dean Foods Company 1989 Stock Awards Plan (As Amended Effective
October 4, 1994)
Item 27 - Financial Data Schedules
b.) Reports on Form 8-K
None were filed during the quarter for which this report is filed.
11
<PAGE>
SIGNATURES
----------
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.
DEAN FOODS COMPANY
------------------
(Registrant)
DATE: January 11, 1995
---------------- ------------------------
TIMOTHY J. BONDY
Vice President, Finance
DATE: January 11, 1995
---------------- ------------------------
DALE I. HECOX
Treasurer
12
<PAGE>
EXHIBIT 10
DEAN FOODS COMPANY
1989 STOCK AWARDS PLAN
(As Amended Effective October 4, 1994)
1. Purpose. The purpose of the Dean Foods Company 1989 Amended Stock
Awards Plan (the "Plan") is to promote the long-term financial interests of the
Company and its Affiliates by (a) attracting and retaining personnel, (b)
motivating personnel by means of growth-related incentives, (c) providing
incentive compensation opportunities that are competitive with those of other
major corporations and (d) furthering the identity of interests of participants
with those of the stockholders of the Company.
2. Definitions. The following definitions are applicable to the Plan:
"Affiliate" means (a) any subsidiary and (b) any other entity in
which the Company has a direct or indirect equity interest which is
designated an "Affiliate" by the Committee.
"Board of Directors" means the Board of Directors of the
Company.
"Code" means the Internal Revenue Code of 1986, as amended, and
any successor statute.
"Committee" means the Compensation Committee or, if the Board of
Directors so determines, another committee of three or more directors
of the Company who are "disinterested persons" as such term is used in
Rule 16b-3 and are "outside directors" as such term is used in Section
162(m) of the Code.
"Common Stock" means Common Stock, $1.00 par value, of the
Company or such other securities as may be substituted therefor
pursuant to paragraph 5(c).
"Company" means Dean Foods Company, a Delaware corporation, and
its successors.
"eligible employee" means any full-time employee of the Company
or an Affiliate.
The "fair market value" of the Common Stock shall be determined
in accordance with procedures established by the Committee.
"fiscal year" means the Company's fiscal year.
"participant" means any employee of the Company or an Affiliate
who has been granted an award pursuant to the Plan.
"Rule 16b-3" means such rule adopted under the Securities
Exchange Act of 1934, as amended, or any successor rule.
"subsidiary" means any corporation fifty percent or more of the
voting stock of which is owned, directly or indirectly, by the
Company.
3. Limitation on Aggregate Shares/Individual Five-Year Limitation on
Option, SAR and Performance Shares Awards. Subject to adjustment as provided in
paragraph 5(c), the number of shares of Common Stock which may be issued upon
the exercise or payment of awards granted under the Plan shall not exceed, in
the aggregate, 3,200,000 shares; it being understood that to the extent any
awards expire unexercised or unpaid or are cancelled,
<PAGE>
terminated or forfeited in any manner without the issuance of shares of Common
Stock thereunder, such shares shall again be available under the Plan unless
such availability would prevent the Plan from complying with Rule 16b-3. Such
3,200,000 shares of Common Stock may be either authorized and unissued shares,
treasury shares, or a combination thereof, as the Committee shall determine.
Subject to adjustment as provided in Paragraph 5(c), the number of
shares of Common Stock with respect to which options and stock appreciation
rights may be awarded, and the maximum number of shares of Common Stock
potentially issuable under performance shares awards awarded, during the period
of five fiscal years ending in 1999 to any eligible employee may not exceed, in
the aggregate, 250,000 shares.
4. Awards. The Committee may grant to eligible employees, in accordance
with this paragraph 4 and the other provisions of the Plan, stock options, stock
appreciation rights ("SARs"), restricted stock, performance shares awards and
other awards.
(a) Options.
(i) Options granted under the Plan may be incentive stock options
("ISOs") within the meaning of Section 422A of the Code or any
successor provision, or in such other form, consistent with the Plan,
as the Committee may determine; except that, so long as so provided in
such Section, no ISO may be granted under the Plan after August 1,
1999 or to any employee of an Affiliate which is not a subsidiary
corporation (as such term is used in subsection (b) of such Section)
of the Company.
(ii) The option price per share of Common Stock shall be fixed by
the Committee at (a) in the case of ISOs, not less than 100% of the
fair market value of a share of Common Stock on the date of grant and
not less than the par value of a share of Common Stock and (b) in the
case of other options, not less than 85% of the fair market value of a
share of Common Stock on the date of grant and not less than the par
value of a share of Common Stock.
(iii) Options shall be exercisable at such time or times as the
Committee shall determine at or subsequent to grant.
(iv) An option shall be exercised in whole or in part by written
notice to the Company (to the attention of the Secretary) at any time
prior to its stated expiration and payment in full of the option price
for the shares as to which the option is being exercised. Payment of
the option price may be made, at the discretion of the optionee, and
to the extent permitted by the Committee, (A) in cash (including
check, bank draft, or money order), (B) in Common Stock already owned
by the optionee (valued at the fair market value thereof on the date
of exercise), (C) by a combination of cash and Common Stock, or (D)
with any other consideration.
(b) SARs.
(i) An SAR shall entitle its holder to receive from the Company,
at the time of exercise of such right, an amount equal to the excess
of the fair market value (at the date of exercise) of a share of
Common Stock over a specified price fixed by the Committee multiplied
by the number of shares as to which the holder is exercising the SAR.
SARs may be in tandem with any previously or contemporaneously granted
option or independent of any option. The specified price of a tandem
SAR shall be the option price of the related option. The amount
payable may be paid by the Company in Common Stock (valued at its fair
market value on the date of exercise), cash or a combination thereof,
as the Committee may determine, which determination may take into
consideration any preference expressed by the holder.
(ii) An SAR shall be exercised by written notice to the Company
(to the attention of the Secretary) at any time prior to its stated
expiration. To the extent
<PAGE>
a tandem SAR is exercised, the related option will be cancelled and,
to the extent the related option is exercised, the tandem SAR will be
cancelled.
(c) Restricted Stock.
(i) The Committee may award to any eligible employee shares of
Common Stock, subject to this paragraph 4(c) and such other terms and
conditions as the Committee may prescribe (such shares being called
"restricted stock"). Each certificate for restricted stock shall be
registered in the name of the participant and deposited, together with
a stock power endorsed in blank, with the Company.
(ii) Restricted Stock may be awarded without any consideration
other than services rendered and/or (to the extent permitted by
applicable corporate law on the date of award) services to be
rendered.
(iii) There shall be established for each restricted stock award
a restriction period (the "restriction period") of such length as
shall be determined by the Committee. Shares of restricted stock may
not be sold, assigned, transferred, pledged or otherwise encumbered,
except as hereinafter provided, during the restriction period. Except
for such restrictions on transfer and such other restrictions as the
Committee may impose, the participant shall have all the rights of a
holder of Common Stock as to such restricted stock. The Committee, in
its sole discretion, may permit or require the payment of cash
dividends to be deferred and, if the Committee so determines,
reinvested in additional restricted stock or otherwise invested or
accruing a yield. At the expiration of the restriction period, the
Company shall redeliver to the participant (or the participant's legal
representative or designated beneficiary) the certificates deposited
pursuant to this paragraph.
(iv) Except as provided by the Committee at or subsequent to the
time of grant, upon a termination of employment for any reason during
the restriction period all shares still subject to restriction shall
be forfeited by the participant.
(d) Performance Shares Awards.
(i) A performance shares award shall entitle its holder to
receive from the Company, following the expiration of a period of at
least one fiscal year specified by the Committee (the "performance
measurement period"), cash or Common Stock or a combination thereof as
determined by the Committee (either at the time of grant or
thereafter) in an aggregate amount based on the level of achievement
during the performance measurement period of one or more Company
financial performance criteria. The aggregate amount received by a
participant shall be determined by a formula for such participant
established by the Committee not later than the ninetieth day of the
performance measurement period. The formula shall establish a range
between a minimum level of achievement before any amount will be
received and a level of achievement at or above which the maximum
potential amount will be received. Initially, the financial
performance criterion shall be earnings per share, but the Committee
may subsequently use, either in substitution therefor or in addition
thereto, total shareholder return (i.e., appreciation in the market
value of a share of Common Stock plus dividends paid), return on
stockholders' equity and/or return on invested capital.
<PAGE>
(ii) Performance shares awards may be awarded without any
consideration other than services rendered and/or (to the extent
permitted by applicable corporate law on the date of award) services
to be rendered.
(iii) The Committee may impose restrictions on the transfer of
shares of Common Stock issued as a result of achieving formula levels
of performance. Except for such restrictions on transfer, the
recipient shall have all the rights of a holder of Common Stock as to
such shares.
(iv) Except as provided by the Committee at or subsequent to the
time of grant, upon the termination of employment for any reason
during the performance measurement period the performance shares award
shall be forfeited by the participant.
(e) Other Awards.
(i) Other awards may be granted under the Plan, including,
without limitation, convertible debentures, other convertible
securities and other forms of award measured in whole or in part by
the value of shares of Common Stock, the performance of the
participant, or the performance of the Company, any Affiliate or any
operating unit thereof. Such awards may be payable in Common Stock,
cash or a combination thereof, and shall be subject to such
restrictions and conditions, as the Committee shall determine. At the
time of such an award, the Committee shall, if applicable, determine a
performance period and performance goals to be achieved during the
performance period, subject to such later revisions as the Committee
shall deem appropriate to reflect significant unforeseen events such
as changes in laws, regulations or accounting practices, unusual or
nonrecurring items or occurrences. Following the conclusion of each
performance period, the Committee shall determine the extent to which
performance goals have been attained or a degree of achievement
between maximum and minimum levels during the performance period in
order to evaluate the level of payment to be made, if any.
(ii) The purchase price per share of Common Stock under other
awards involving the right to purchase Common Stock (including for
this purpose the right to acquire Common Stock upon the conversion of
convertible securities) shall be fixed by the Committee at not less
than 85% of the fair market value of a share of Common Stock on the
date of award and not less than the par value of a share of Common
Stock. Other awards not involving the right to purchase Common Stock
may be awarded without any consideration other than services rendered
and/or (to the extent permitted by applicable corporate law on the
date of award) services to be rendered.
(iii) A participant may elect to defer all or a portion of any
such award in accordance with procedures established by the Committee.
Deferred amounts will be subject to such terms and conditions and
shall accrue such yield thereon (which may be measured by the fair
market value of the Common Stock and dividends thereon) as the
Committee may determine. Payment of deferred amounts may be in cash,
Common Stock or a combination thereof, as the Committee may determine.
Deferred amounts shall be considered an award under the Plan. The
Committee may establish a trust or trusts to hold deferred amounts or
any portion thereof for the benefit of participants.
(f) Cash Payments. SARs and options which are not ISOs may, in the
Committee's discretion, provide that in connection with exercises
thereof the holders will receive cash payments based on formulas
designed to reimburse
<PAGE>
holders for their income tax liability resulting from such exercise
and the payment made pursuant to this paragraph 4(f).
(g) Surrender. If so provided by the Committee at or subsequent to
the time of grant, an award may be surrendered to the Company on such
terms and conditions, and for such consideration, as the Committee
shall determine.
(h) Foreign Alternatives. Without amending and notwithstanding the
other provisions of the Plan, in the case of any award to be held by
any participant who is employed outside the United States or who is a
foreign national, the Committee may specify that such award shall be
made on such terms and conditions different from those specified in
the Plan as may, in the judgment of the Committee, be necessary or
desirable to further the purposes of the Plan.
5. Miscellaneous Provisions.
(a) Administration. The Plan shall be administered by the Committee.
Subject to the limitations of the Plan, the Committee shall have the
sole and complete authority: (i) to select participants, (ii) to make
awards in such forms and amounts as it shall determine, (iii) to
impose such limitations, restrictions and conditions upon such awards
as it shall deem appropriate, (iv) to interpret the Plan and to adopt,
amend and rescind administrative guidelines and other rules and
regulations relating to the Plan, (v) to correct any defect or
omission or to reconcile any inconsistency in the Plan or in any award
granted hereunder and (vi) to make all other determinations and to
take all other actions necessary or advisable for the implementation
and administration of the Plan. The Committee's determinations on
matters within its authority shall be conclusive and binding upon the
Company and all other persons. All expenses associated with the Plan
shall be borne by the Company, subject to such allocation to its
Affiliates and operating units as it deems appropriate. The Committee
may, to the extent that any such action will not prevent the Plan from
complying with Rule 16b-3 or Section 162(m) of the Code, delegate any
of its authority hereunder to such persons as it deems appropriate.
(b) Non-Transferability. Subject to the provisions of paragraph
5(f), no award under the Plan, and no interest therein, shall be
transferable by a participant otherwise than by will or the laws of
descent and distribution. All awards shall be exercisable or received
during a participant's lifetime only by the participant or the
participant's legal representative. Any purported transfer contrary
to this provision will nullify the award.
(c) Adjustments Upon Certain Changes. In the event of any
reorganization, recapitalization, reclassification, merger,
consolidation, or sale of all or substantially all of the Company's
assets followed by liquidation, which is effected in such a way that
holders of Common Stock are entitled to receive securities or other
assets with respect to or in exchange for Common Stock (an "Organic
Change"), the Committee shall make appropriate changes to insure that
each outstanding award involving the right to acquire Common Stock
thereafter represents the right to acquire, in lieu of or in addition
to the shares of Common Stock immediately theretofore acquirable upon
exercise or payment, such securities or assets as may be issued or
payable with respect to or in exchange for an equivalent number of
shares of Common Stock, and appropriate changes in other outstanding
awards; and in the event of any stock dividend, stock split or
combination of shares, the Board of Directors shall make appropriate
changes in the number of shares authorized by the Plan to be delivered
thereafter and in the maximum number of shares with respect to which
options, SARs and performance shares awards may be awarded to any
eligible employee during the period of five fiscal years ending in
1999, and the Committee shall make appropriate changes in the numbers
of shares covered by, or with respect to which payments are measured
under, outstanding awards and the exercise prices and reference prices
specified therein (and in the event of a spinoff, the Committee may
make similar changes), in order to prevent the dilution or enlargement
of award rights. However, no right to purchase or receive a fraction
<PAGE>
of a share shall be created; and if, as a result of any such change, a
fractional share would result or the right to purchase or receive the
same would result, the number of shares in question shall be decreased
to the next lower whole number of shares. The Committee may provide
in the agreement evidencing any award for adjustments to such award in
order to prevent the dilution or enlargement of rights thereunder or
for acceleration of benefits thereunder and/or cash payments in lieu
of benefits thereunder in the event of a change in control (or tender
offer or accumulation of Common Stock), merger, consolidation,
reorganization, recapitalization, sale or exchange of all or
substantially all of the assets or dissolution of the Company.
(d) Tax Withholding. The Committee shall have the power to withhold,
or require a participant to remit to the Company, an amount sufficient
to satisfy any withholding or other tax due with respect to any amount
payable and/or shares issuable under the Plan, and the Committee may
defer such payment or issuance unless indemnified to its satisfaction.
Subject to the consent of the Committee, a participant may make an
irrevocable election to have shares of Common Stock otherwise issuable
under an award withheld, tender back to the Company shares of Common
Stock received pursuant to an award or deliver to the Company shares
of Common Stock already owned by the participant having a fair market
value sufficient to satisfy all or part of the participant's estimated
tax obligations associated with the transaction. Such election must
be made by a participant prior to the date on which the relevant tax
obligation arises. The Committee may disapprove of any election and
may limit, suspend or terminate the right to make such elections.
(e) Listing and Legal Compliance. The Committee may suspend the
exercise or payment of any award if it determines that securities
exchange listing or registration or qualification under any securities
laws is required in connection therewith and has not been completed on
terms acceptable to the Committee.
(f) Beneficiary Designation. To the extent permitted by the
Committee, participants may name, from time to time, beneficiaries
(who may be named contingently or successively) to whom benefits under
the Plan are to be paid in the event of their death before they
receive any or all of such benefits. Each designation will revoke all
prior designations by the same participant, shall be in a form
prescribed by the Committee, and will be effective only when filed by
the participant in writing with the Committee during the participant's
lifetime. In the absence of any such designation, benefits remaining
unpaid at a participant's death shall be paid to the participant's
estate.
(g) Rights of Participants. Nothing in the Plan shall interfere with
or limit in any way the right of the Company or any Affiliate to
terminate any participant's employment at any time, nor confer upon
any participant any right to continue in the employ of the Company or
any Affiliate for any period of time or to continue his or her present
or any other rate of compensation. No employee shall have a right to
be selected as a participant, or, having been so selected, to be
selected again as a participant.
(h) Amendment, Suspension and Termination of Plan. The Board of
Directors or the Committee may suspend or terminate the Plan or any
portion thereof at any time and may amend it from time to time in such
respects as the Board of Directors or the Committee may deem
advisable; provided, however, that no such amendment shall be made
without stockholder approval to the extent such approval is required
by law, agreement or the rules of any exchange upon which the Common
Stock is listed. No such amendment, suspension or termination shall
impair the rights of participants under outstanding awards without the
consent of the participants affected thereby or make any change that
would disqualify the Plan, or any other plan of the Company intended
to be so qualified, from the exemption provided by Rule 16b-3.
The Committee may amend or modify any award in any manner to the
extent that the Committee would have had the authority under the Plan
to initially
<PAGE>
grant the award as so amended or modified. No such
amendment or modification shall impair the rights of the participant
under such award without the consent of such participant.
6. Effective Date. The effective date of the Plan shall be August 2,
1989, the date of its adoption by the Board of Directors; provided, however,
that no award shall be granted under the Plan unless the holders of at least a
majority of the outstanding shares of Common Stock voting at the Company's 1989
Annual Meeting of Stockholders approve and ratify the Plan.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Registrants' Quarterly Report on Form 10-Q for the quarterly period ended
November 27, 1994.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-28-1995
<PERIOD-START> MAY-30-1994
<PERIOD-END> NOV-27-1994
<CASH> 14,615
<SECURITIES> 0
<RECEIVABLES> 192,417
<ALLOWANCES> 4,214
<INVENTORY> 338,756
<CURRENT-ASSETS> 588,500
<PP&E> 942,433
<DEPRECIATION> 390,247
<TOTAL-ASSETS> 1,252,697
<CURRENT-LIABILITIES> 434,447
<BONDS> 185,632
<COMMON> 41,185
0
0
<OTHER-SE> 509,847
<TOTAL-LIABILITY-AND-EQUITY> 1,252,697
<SALES> 1,277,131
<TOTAL-REVENUES> 1,277,131
<CGS> 977,752
<TOTAL-COSTS> 977,752
<OTHER-EXPENSES> 227,203
<LOSS-PROVISION> 438
<INTEREST-EXPENSE> 10,380
<INCOME-PRETAX> 62,689
<INCOME-TAX> 25,703
<INCOME-CONTINUING> 36,986
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 36,986
<EPS-PRIMARY> .93
<EPS-DILUTED> .93
</TABLE>
