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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended September 27, 1997 Commission File No. 1-1790
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DI GIORGIO CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 94-0431833
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
380 Middlesex Avenue 07008
Carteret, New Jersey (Zip Code)
(Address of principal executive offices)
Registrant's telephone number including area code: (732) 541-5555
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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 (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 ____
As of October 31, 1997, there were 101.62 shares of Class A Common Stock and 100
shares of Class B Common Stock, par value of each class $.01, outstanding.
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DI GIORGIO CORPORATION AND SUBSIDIARIES
INDEX
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets,
December 28, 1996 and September 27, 1997 (Unaudited).............. 1
Consolidated Condensed Statements of Operations,
Thirty-Nine Weeks and Thirteen Weeks Ended
September 28, 1996 and September 27, 1997 (Unaudited) ........... 2
Consolidated Condensed Statement of Stockholders' Equity/(Deficit)
Thirty-Nine Weeks Ended September 27, 1997 (Unaudited) ........... 3
Consolidated Condensed Statements of Cash Flows,
Thirty-Nine Weeks Ended September 28, 1996 and
September 27, 1997 (Unaudited) ................................... 4
Notes to Consolidated Condensed Financial Statements ................ 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations ................................... 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K ............................... 13
Signatures ............................................................. 14
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DI GIORGIO CORPORATION and SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
December 28, September 27,
1996 1997
(Unaudited)
ASSETS
Current Assets:
Cash...................................... $1,749 $1,936
Accounts and notes receivable-net......... 61,550 69,239
Inventories............................... 49,563 52,831
Prepaid expenses.......................... 3,706 6,373
----- -----
Total current assets................ 116,568 130,379
------- -------
Property, Plant & Equipment
Cost...................................... 71,785 60,433
Accumulated depreciation.................. (15,515) (18,191)
------ ------
Net....................................... 56,270 42,242
------ ------
Long-term notes receivable.................. 19,276 6,921
Deferred taxes.............................. 0 18,366
Other assets................................ 12,216 16,063
Deferred financing costs.................... 4,172 5,843
Excess of costs over net assets acquired.... 92,567 79,342
------ ------
$301,069 $299,156
======== ========
LIABILITIES & STOCKHOLDERS' EQUITY/(DEFICIT)
Current Liabilities:
Notes payable............................. $26,719 $12,681
Accounts payable.......................... 49,468 58,764
Accrued expenses.......................... 24,362 26,036
Current installment long-term obligations. 3,677 1,779
----- -----
Total current liabilities........... 104,226 99,260
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Long-term debt.............................. 153,389 166,936
Capital lease liability..................... 31,523 30,404
Other long-term liabilities................. 7,826 7,168
Stockholders' Equity/(Deficit):
Common stock.............................. - -
Additional paid-in-capital................ 17,225 13,002
Accumulated deficit....................... (13,120) (17,614)
------ -----
Total stockholders' equity/(deficit) 4,105 (4,612)
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$301,069 $299,156
======== ========
See Notes to Consolidated Condensed Financial Statements
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DI GIORGIO CORPORATION and SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(in thousands)
(unaudited)
Thirteen weeks ended Thirty-Nine weeks ended
-------------------- -----------------------
Sept 28, Sept 27, Sept 28, Sept 27,
1996 1997 1996 1997
Revenue:
Net Sales..................$257,508 $255,478 $779,691 $772,044
Other revenue.............. 1,094 1,161 3,519 4,447
----- ----- ----- -----
Total Revenue....... 258,602 256,639 783,210 776,491
Cost of Products Sold....... 230,829 230,265 698,043 693,327
------- ------- ------- -------
Gross Profit-exclusive of
warehouse expense shown
below...................... 27,773 26,374 85,167 83,164
Warehouse expense......... 10,267 10,232 30,863 31,482
Transportation expense.... 5,387 5,511 16,342 16,185
Selling, general and
administrative expense.... 5,767 5,498 17,558 16,803
Amortization-excess of cost
over net assets acquired.. 723 408 2,169 1,746
----- ----- ----- -----
Operating Income............ 5,629 4,725 18,235 16,948
Interest expense.......... 5,974 5,392 18,001 17,085
Amortization-deferred
financing costs.......... 283 115 851 766
Other (income)-net........ (855) (210) (2,392) (2,411)
--- --- ----- -----
Income (loss) before
income taxes and
extraordinary items....... 227 (572) 1,775 1,508
Income taxes................ 0 (4,003) 0 (2,691)
--- ----- ----- -----
Income before
extraordinary items........ 227 3,431 1,775 4,199
Extraordinary gain (loss)
on extinguishment of
debt-net of tax............ 0 (226) 219 (8,693)
--- ----- ----- -----
Net income (loss)........... $227 $3,205 $1,994 ($4,494)
=== ===== ===== =====
See Notes to Consolidated Condensed Financial Statements
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DI GIORGIO CORPORATION and SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY/(DEFICIT)
(in thousands, except share data)
(unaudited)
Additional
Class A Class B Paid-In
Common Stock Common Stock Capital (Deficit) Total
------------ ------------ ------- ------- ------
Shares Total Shares Total
Balance at
December 28,
1996 101.62 $ -- 100.00 $ -- $17,225 ($13,120) $4,105
Net loss -- -- -- -- -- (4,494) (4,494)
Dividend to
Stockholders -- -- -- -- (4,223) -- (4,223)
------ ---- ------ ---- ------- ------- ------
Balance at
September 27,
1997 101.62 $ -- 100.00 $ -- $13,002 ($17,614) ($4,612)
====== ==== ====== ==== ======= ======= =======
See Notes to Consolidated Condensed Financial Statements
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DI GIORGIO CORPORATION and SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(in thousands)
(unaudited)
Thirty-nine weeks ended
September 28, September 27,
1996 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).................................... $1,994 ($4,494)
Adjustments to reconcile net income to net cash
used in operating activities
Extraordinary (gain) loss on
extinguishment of debt........................... (219) 8,693
Depreciation and amortization..................... 3,447 3,531
Amortization...................................... 3,414 3,722
Provision for bad debts........................... 1,875 1,125
Increase in prepaid pension cost.................. (315) (225)
Accretion of 12-3/4% senior discount notes........ 4,339 3,010
Deferred tax benefit.............................. 0 (3,910)
Noncash interest income........................... (720) 0
Changes in assets and liabilities:
(Increase) decrease in:
Accounts & notes receivable....................... 1,841 (8,814)
Inventory......................................... 1,445 (3,268)
Prepaid expenses.................................. (703) 221
Long-term receivables............................. (2,251) (297)
Others assets..................................... 338 (5,393)
(Decrease) increase in:
Accounts payable, accrued expenses and
other liabilities................................ (9,300) 10,134
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Net cash provided by operating activities............ 5,185 4,035
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CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant, & equipment............ (506) (1,866)
Proceeds from Farmingdale sale....................... 0 12,432
--- ------
Net cash (used in) provided by investing activities.. (506) 10,566
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CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings (repayments) under
revolving line-of-credit........................... 2,812 (14,038)
Capital lease payments............................... (1,657) (2,340)
Premiums on mortgage payoff.......................... 0 (52)
Premiums on completed tender offers.................. 0 (10,829)
Repayment of Rose Partner note receivable............ 0 8,917
Dividend paid........................................ 0 (61)
Finance fees paid.................................... 0 (5,871)
New note offering.................................... 0 155,000
Long-term debt payments.............................. (5,631) (145,140)
----- -------
Net cash used in financing activities................ (4,476) (14,414)
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Increase in cash..................................... 203 187
Cash at beginning of period.......................... 365 1,749
--- -----
Cash at end of period................................ $568 $1,936
=== =====
Supplemental Disclosure of Cash Flow Information
Cash paid during the period:
Interest......................................... $16,940 $16,970
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Income Taxes..................................... $71 $195
=== ===
Non-cash dividend of notes receivable and land
held for sale....................................... $0 $4,162
== ======
Reduction of goodwill for reversal of valuation
reserve on deferred tax asset....................... $0 $11,479
== =======
See Notes to Consolidated Condensed Financial Statements
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DI GIORGIO CORPORATION AND SUBSIDIARIES
NOTES TO
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (UNAUDITED)
1. BASIS OF PRESENTATION
On June 20, 1997, the Company and White Rose Foods, Inc ("White Rose"), its
parent company, consummated a merger in which White Rose was merged with and
into the Company, with the Company as the survivor (the "Merger"). Since the
stockholders of the Company are identical to the stockholders of White Rose, the
Merger was a transfer of interest among entities under common control, and is
being accounted for at historical cost in a manner similar to
pooling-of-interests accounting. Accordingly, the consolidated financial
statements presented herein reflect the assets and liabilities and related
results of operations for the combined entity for all periods. Revenue for the
thirty-nine weeks ended September 28, 1996 and September 27, 1997 were the same
for the separate entities prior to the combination. Income before extraordinary
items would have been approximately $1.5 million and $693,000 higher for the
Company than White Rose for the thirty-nine weeks ended September 27, 1997 and
September 28, 1996, respectively, prior to the combination due to additional
White Rose net interest expense. See Note 2 for information relating to the
refinancing actions taken in connection with the Merger.
The consolidated condensed balance sheet as of September 27, 1997, the
consolidated condensed statements of operations for the thirty-nine weeks and
thirteen weeks ended September 28, 1996 and September 27, 1997, the consolidated
condensed statements of cash flows for the thirty-nine weeks ended September 28,
1996 and September 27, 1997, and stockholders' equity/(deficit) for the
thirty-nine weeks ended September 27, 1997, and related notes are unaudited and
have been prepared in accordance with generally accepted accounting principles
for interim financial information and pursuant to the rules and regulations of
the Securities and Exchange Commission. Accordingly, certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been omitted
pursuant to such rules and regulations. The accompanying unaudited interim
consolidated condensed financial statements and related notes should be read in
conjunction with the financial statements and related notes included in the Form
10-K for the fiscal year ended December 28, 1996, Form 10-Q for the quarter
ended March 29, 1997, and Form 10-Q/A for the quarter ended June 28, 1997 filed
with the Securities and Exchange Commission. The information furnished reflects,
in the opinion of the management of the Company, all adjustments, consisting of
normal recurring accruals, which are necessary to present a fair statement of
the results for the interim periods presented.
Previously, the Company classified as other income reclamation service fees,
label income and other customer related services. Commencing in the year ended
December 28, 1996, the Company is classifying these items as other revenue.
Prior year amounts have been reclassified and the change in classification has
no effect on previously reported net income.
The interim figures are not necessarily indicative of the results to be expected
for the full fiscal year.
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2. Refinancing
On June 20, 1997, the Company completed a refinancing (the "Refinancing") of
itself and White Rose, intended to extend debt maturities, reduce interest
expense and improve financial flexibility. The components of the Refinancing
were (i) the offering of $155 million 10% senior notes (the "10% Notes") due
2007 (the "Offering"), (ii) the modification of the Company's bank credit
facility (the "Bank Credit Facility"), (iii) the receipt of $8.9 million from
the repayment of a note held by the Company from Rose Partners, LP ("Rose
Partners"), which owns 98.54% of the Company, (iv) the consummation of the
tender offers and consent solicitations commenced by the Company (the "Company
Tender Offer") and White Rose (the "White Rose Tender Offer," and together with
the Company Tender Offer, the "Tender Offers") on May 16, 1997 in respect of the
Company's 12% Senior Notes due 2003 (the "12% Notes") and White Rose's 12- 3/4%
Senior Discount Notes due 1998 (the "12-3/4% Notes"), respectively, (v) the $4.2
million dividend by the Company to White Rose of certain non-cash assets which
were unrelated to the Company's primary business and the subsequent dividend of
those assets to White Rose's stockholders and (vi) the Merger.
As of September 27, 1997, no 12-3/4% Notes remained outstanding and $7.45
million aggregate principal amount of 12% Notes remained outstanding; however,
the Indenture pursuant to which the 12% Notes were issued has been substantially
amended effective as of June 9, 1997 pursuant to the Company Tender Offer.
Interest on the 10% Notes is payable semi-annually, in arrears, on June 15 and
December 15 of each year, commencing December 15, 1997. The 10% Notes mature on
June 15, 2007. The Company may redeem the 10% Notes, in whole or in part at any
time on or after June 15, 2002 at the redemption prices set forth in the
indenture governing the 10% Notes (the "Indenture"). In addition, on or prior to
June 15, 2000, the Company may redeem up to 35% of the 10% Notes under certain
conditions set forth in the Indenture.
As a result of the Refinancing, the Company recorded an $8.5 million
extraordinary charge, net of a $5.7 million tax benefit , on the extinguishment
of debt relating to premiums paid as a result of the Tender Offers and the
write-off of the deferred financing fees associated with the 12% Notes and
12-3/4 % Notes.
3. Farmingdale Option Sale
In August 1997, the Company completed the sale of the option it held on its
Farmingdale facility, the site of its former grocery warehouse and headquarters,
which had been under lease to a third party. The Company realized net cash
proceeds of approximately $7.3 million after the repayment of a mortgage in the
amount of approximately $5.2 million. For book purposes the Company recognized a
$40,000 gain (before a noncash writeoff of deferred expenses in the amount of
approximately $400,000) due to the original valuation of the property. For
federal income tax purposes, the Company expects to use its net operating loss
carryforwards to offset an approximate $12.0 million taxable gain on the sale.
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4. Income Taxes
As of December 28, 1996, the Company's deferred tax assets were fully reserved
based on the then current evidence indicating that it was more likely than not
that the future benefits of the deferred tax assets would not be realized.
During the third quarter of fiscal 1997, the Company reversed the valuation
allowance related to its deferred income tax assets. In the opinion of
management, sufficient evidence now exists, such as the positive trend in
operating performance and the favorable effects of the recently completed
refinancing, which indicates that it is more likely than not that the Company
will be able to realize its deferred income tax assets.
The reversal of the valuation allowance resulted in an income tax benefit of
$3.9 million and a reduction in goodwill of $11.5 million. The reduction in
goodwill reflects benefits which were attributable to the pre-acquisition
period. At September 27, 1997, the deferred tax assets of $21.2 million consist
principally of operating loss carryforwards which expire from 2006 to 2010. The
deferred tax assets are classified for balance sheet purposes as $18.4 million
non-current and $2.8 million current.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Forward- Looking Statements
Certain statements contained herein are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 and are thus
subject to risks, uncertainties and other factors which could cause actual
results to differ materially from future results expressed or implied by such
forward-looking statements.
General
On June 20, 1997, the Company consummated the Refinancing. The following
discussion assumes that the Merger between White Rose and the Company had taken
place as of December 30, 1995. Since the stockholders of the Company are
identical to the stockholders of White Rose, the exchange of shares was a
transfer of interest among entities under common control, and is being accounted
for at historical cost in a manner similar to pooling-of-interests accounting.
Accordingly, the discussion presented herein reflects the assets and liabilities
and related results of operations for the combined entity for all periods.
Results of Operations
Thirteen weeks ended September 27, 1997 and September 28, 1996
Net sales for the thirteen weeks ended September 27, 1997 were $255.5 million as
compared to $257.5 million for the thirteen weeks ended September 28, 1996. The
decline in sales reflects a $16.2 million decrease in sales to a customer which
terminated its contract for dairy division products in the fourth quarter of
1996 partially offset by increased sales to existing and new customers. In
August 1997, the Company began shipping frozen food products to an additional
division of the Great Atlantic and Pacific Tea Company ("A&P") that it did not
previously supply. Sales to this division are estimated to be in excess of $75
million annually.
Other revenue, consisting of recurring customer related services, increased to
$1.2 million for the thirteen weeks ended September 27, 1997 as compared to $1.1
million in the prior period.
Gross margin (excluding warehouse expense) decreased to 10.3% of net sales or
$26.4 million for the thirteen weeks ended September 27, 1997 as compared to
10.8% of net sales or $27.8 million for the prior period, as a result of a
change in mix of both customers and products sold. The Company has, and will
continue to, take steps to maintain and improve its margins; however, as
indicated by the comparative decrease in gross margin, factors such as the
decrease in promotional activities, changes in product mix, additions of high
volume, low margin customers, or competitive pricing pressures will continue to
have an effect on gross margin.
Warehouse expense remained constant at 4.0% of net sales or $10.2 million for
the thirteen weeks ended September 27, 1997 as compared to 4.0% of net sales or
$10.3 million for the prior period.
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Transportation expense increased to 2.2% of net sales or $5.5 million for the
thirteen weeks ended September 27, 1997 as compared to 2.1% of net sales or $5.4
million in the prior period as a result of temporary increased costs, in the
current period, associated with the new frozen food business and temporary sales
in the prior period that had no corresponding transportation costs.
Selling, general and administrative expense remained unchanged as a percentage
of net sales at 2.2% or $5.5 million for the thirteen weeks ended September 27,
1997 as compared to 2.2% or $5.8 million for the prior period.
Other income, net of other expenses, decreased to $210,000 for the thirteen
weeks ended September 27, 1997 as compared to $855,000 for the prior period
primarily due to decreased interest income as a result of the repayment of the
Rose Partner note receivable (repaid in June 1997) which accounted for $247,000
of interest income in the prior period. In addition, as a result of the
Farmingdale option sale in August 1997, the Company incurred $404,000 of noncash
charges.
Interest expense decreased to $5.4 million for the thirteen weeks ended
September 27, 1997 from $6.0 million for the prior period. The comparative
decrease in the 1997 period is a result of lower average outstanding levels of
the Company's funded debt and lower average interest rates as a result of the
Company's refinancing on June 20, 1997.
The Company reversed the valuation allowance related to its deferred tax assets.
In the opinion of management, sufficient evidence now exists, such as the
positive trend in operating performance and the favorable effects of the
recently completed refinancing which indicates that it is more likely than not
that the Company will be able to realize its deferred income tax assets. The
reversal of the valuation allowance resulted in an income tax benefit of $3.9
million and a reduction in goodwill of $11.5 million. The reduction in goodwill
reflects benefits which were attributable to the pre-acquisition period.
The Company recorded a net income for the thirteen weeks ended September 27,
1997 of $3.2 million, including an extraordinary loss on the extinguishment of
debt, net of tax, of $226,000 as compared to net income of $227,000 for the
prior period.
Thirty-nine weeks ended September 27, 1997 and September 28, 1996
Net sales for the thirty-nine weeks ended September 27, 1997 were $772.0 million
as compared to $779.7 million for the thirty-nine weeks ended September 28,
1996. The 1% decline primarily reflects a $46.2 million decrease in sales to a
customer which terminated its contract for dairy division products in the fourth
quarter of 1996 partially offset by increased sales to existing and new
customers.
Other revenue, consisting of recurring customer related services, increased to
$4.4 million for the thirty-nine weeks ended September 27, 1997 as compared to
$3.5 million in the prior period primarily due to providing a produce
distribution service for a particular customer which ended in June 1997.
Excluding this produce service, other revenue would have been $3.8 million for
the thirty-nine weeks ended September 27, 1997 as compared to $3.5 million in
the prior period.
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Gross margin (excluding warehouse expense) decreased to 10.8% of net sales or
$83.2 million for the thirty-nine weeks ended September 27, 1997 as compared to
10.9% of net sales or $85.2 million for the prior period as a result of a change
in mix of both customers and product sold. The Company has, and will continue
to, take steps to maintain and improve its margins; however, factors such as the
decrease in promotional activities, changes in product mix, additions of high
volume, low margin customers, or competitive pricing pressures will have an
effect on gross margin.
Warehouse expense increased to 4.1% of net sales or $31.5 million for the
thirty-nine weeks ended September 27, 1997 as compared to 4.0% of net sales or
$30.9 million for the prior period.
Transportation expense remained constant at 2.1% of net sales or $16.2 million
for the thirty-nine weeks ended September 27, 1997 as compared to 2.1% of net
sales or $16.3 million in the prior period.
Selling, general and administrative expense decreased to 2.2% of net sales or
$16.8 million for the thirty-nine weeks ended September 27, 1997 as compared to
2.3% of net sales or $17.6 million for the prior period primarily due to a
reduction in the provision for doubtful accounts as a result of both a
significant decline in credit exposure to a former customer and an overall
improvement in the credit quality of the portfolio.
Other income, net of other expenses, remained constant at $2.4 million for the
thirty-nine weeks ended September 27, 1997 and the prior period, although
interest income on the Rose Partner note receivable ceased as of the June 1997
repayment (the Rose Partner note accounted for $247,000 of interest in the third
quarter of 1996). In addition, as a result of the Farmingdale option sale in
August 1997, the Company incurred $404,000 of noncash charges.
Interest expense decreased to $17.1 million for the thirty-nine weeks ended
September 27, 1997 from $18.0 million for the prior period. The comparative
decrease in the 1996 period represents a decline in both the average outstanding
level of the Company's funded debt and the average interest rate as a result of
the Company's refinancing on June 20, 1997.
The Company reversed the valuation allowance related to its deferred tax assets.
In the opinion of management, sufficient evidence now exists, such as the
positive trend in operating performance and the favorable effects of the
recently completed refinancing which indicates that it is more likely than not
that the Company will be able to realize its deferred income tax assets. The
reversal of the valuation allowance resulted in an income tax benefit of $3.9
million and a reduction in goodwill of $11.5 million. The reduction in goodwill
reflects benefits which were attributable to the pre-acquisition period.
The Company recorded a net loss for the thirty-nine weeks ended September 27,
1997 of $4.5 million, including an extraordinary loss on the extinguishment of
debt, net of tax, of $8.7 million as compared to net income of $2.0 million for
the prior period which included a $219,000 extraordinary gain on the
extinguishment of debt.
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Liquidity and Capital Resources
Cash flow from operations and amounts available under the Company's Bank Credit
Facility are the Company's principal sources of liquidity. The Company's Bank
Credit Facility will mature on June 30, 2000 and bears interest at a rate per
annum equal to (at the Company's option): (i) the Euro Dollar Offering Rate plus
2.25% or (ii) Bankers Trust Company's prime rate plus 0.75%. Borrowings under
the Company's revolving bank credit facility were $12.7 million at September 27,
1997. Additional borrowing capacity of $62.3 million was available at that time
under the Company's borrowing base formula. The Company believes that these
sources will be adequate to meet its anticipated working capital needs, capital
expenditures, and debt service requirements during fiscal 1997.
During the thirty-nine weeks ended September 27, 1997, cash flow provided by
operating activities was $4.0 million, consisting primarily of (i) cash
generated from income before extraordinary items and non-cash expenses and (ii)
an increase in accounts payable, accrued expenses and other liabilities of $10.1
million which were offset by (i) an increase in net receivable levels of $8.8
million, (ii) an increase in inventory of $3.3 million and (iii) an increase in
other assets of $5.4 million.
Cash flow provided by investing activities during the thirty-nine weeks ended
September 27, 1997 was approximately $10.6 million, consisting of proceeds of
$12.4 million from the sale of the Farmingdale option and $1.9 for capital
expenditures. Net cash used in financing activities was approximately $14.4
million as a result of the refinancing discussed more fully below and the payoff
of the Farmingdale mortgage.
Earnings before interest expense, income taxes, depreciation and amortization,
non-recurring charges such as extraordinary gains or losses ("EBITDA"), was
$25.8 million during the thirty-nine weeks ended September 27, 1997 as compared
to $25.9 million in the comparable prior year period.
The consolidated indebtedness of the Company decreased to $211.8 million at
September 27, 1997 as compared to $215.3 million at December 28, 1996 and $223.0
million at September 28, 1996. Net indebtedness related to the Refinancing was
more than offset by the Company selling its option on the Farmingdale property
and lowering its average days outstanding in the third quarter of 1997 as a
result of some of its new business, offset in part by funding, as part of the
Refinancing, premiums to repay high cost long-term debt and the cash expenses of
the transaction. The Company raised an aggregate of $155.0 million through the
issuance of the 10% Notes and received $8.9 million from the repayment of the
Rose Partners note which aggregate funds were used (i) to fund the purchase of
$85.4 million of the 12% Notes leaving $7.5 million outstanding, (ii) to fund
the $53.7 million purchase of 100% of the 12 3/4% Notes, (iii) to pay premiums
of $10.8 million related to such purchases, (iv) to pay accrued interest and the
fees and expenses of the Refinancing, and (v) to reduce the Bank Credit Facility
by $4.9 million.
Stockholders' equity/(deficit) decreased to a deficit of $4.6 million on
September 27, 1997 from $4.1 million of equity on December 28, 1997 and $3.9
million of equity on September 28, 1996. The decrease was the result of the $8.7
million extraordinary charge, net of tax, on the
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extinguishment of debt relating to premiums paid as a result of the Tender
Offers and the write-off of the deferred financing fees associated with the 12%
Notes and the 12-3/4% Notes. In addition, the Company dividended non-cash,
non-core assets consisting of land in Colorado and notes receivable with a book
value of approximately $4.2 million and $61,400 in cash to its stockholders on
June 20, 1997.
The 10% Notes also provide that the Company may repurchase, and retire into
treasury (i) up to $5 million of its outstanding Common Stock if the Company
converts the capital lease relating to its Carteret, New Jersey distribution
facility into an operating lease on or before December 20, 1998 and (ii)
additional Common stock up to an amount equal to $7.3 million relating to its
sale of the Farmingdale Option on or before June 20, 1998. Currently the Bank
Credit Facility only permits (i) but not (ii).
Under the terms of the Company's revolving Bank Credit Facility, the Company is
required to meet certain financial tests, including minimum interest coverage
ratios and minimum net worth. As of September 27, 1997, the Company was in
compliance with its covenants.
The indenture governing the Company's 10% Notes, as well as the agreement
governing the Bank Credit Facility, impose various restrictions upon the
Company, including, among other things, limitations on the occurrence of
additional debt and the making of certain payments and investments.
From time to time when the Company considers market conditions attractive, the
Company has purchased on the open market a portion of its 12% Notes and may in
the future purchase and retire a portion of its outstanding 12% Notes and/or 10%
Notes. In addition, the Company continuously reviews its capital structure,
including its funded debt and capital leases, to determine if it can more
advantageously finance its operations.
The Company is currently in negotiations with the union representing its grocery
warehouse employees with respect to the contract that expired on October 19,
1997. The Company and the union are operating under an extension of the expired
contract.
In August 1997, the Company completed the sale of the option it held on its
Farmingdale facility, the site of its former grocery warehouse and headquarters,
which had been under lease to a third party. The Company realized net cash
proceeds of approximately $7.3 million after the repayment of a mortgage in the
amount of approximately $5.2 million. For book purposes the Company recognized a
$40,000 gain (before a noncash writeoff of deferred expenses in the amount of
approximately $400,000) due to the original valuation of the property. For
federal income tax purposes, the Company expects to use its net operating loss
carryforwards to offset an approximate $12.0 million taxable gain on the sale.
-12-
<PAGE>
Part II-OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Amended and Restated employment Agreement effective as of October 31,
1997 between the Company and Richard B. Neff
(b) Reports on Form 8-K. None
-13-
<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 hereunto duly authorized.
DI GIORGIO CORPORATION
By: /s/ Arthur M. Goldberg
-----------------------------
Arthur M. Goldberg
Chairman, President and Chief
Executive Officer
By: /s/ Richard B. Neff
-----------------------------
Richard B. Neff
Executive Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
Date: November 10, 1997
-14-
EXHIBIT 10.3
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement") is made
effective as of October 31, 1997, between DiGIORGIO CORPORATION, a Delaware
corporation, with its principal office located at 380 Middlesex Avenue,
Carteret, New Jersey 07008 (the "Corporation"), and RICHARD B. NEFF, residing at
14 High Tor Drive, Watchung, New Jersey 07060 (the "Executive").
W I T N E S S E T H:
WHEREAS, effective May 1, 1992, the Corporation and the Executive, among
others, entered into an employment agreement pursuant to which the Executive
agreed to serve the Corporation as Executive Vice President and Chief Financial
Officer; and such agreement was amended August 31, 1992 (the "1992 Agreement");
WHEREAS, the Corporation desires to continue to employ Executive, and
Executive desires to continue to be so employed by the Corporation, on the terms
and conditions herein set forth:
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, the parties hereby agree as follows:
1. Employment; Term. The Corporation agrees to employ Executive, and
Executive agrees to furnish his services, on the terms and conditions herein set
forth, for a term of three (3) years commencing as of October 31, 1997 and
ending on October 31, 2000, unless sooner terminated as herein provided. The
term of Executive's employment hereunder may be extended for additional one (1)
year periods by the mutual written consent of both parties hereto, given at
least ninety (90) days prior to the then scheduled termination of the
Executive's employment hereunder.
2. Office and Duties. During the term of this Agreement, Executive agrees
to serve the Corporation as the Executive Vice President and Chief Financial
Officer of the Corporation and shall exercise such responsibilities and perform
such duties, consistent with his position and title, as shall be assigned to him
from time to time by the Company's Board of Directors or senior management. The
Executive's job functions shall relate primarily to finance and administration.
The Executive shall report to the Company's President/Chief Executive Officer.
<PAGE>
Executive shall also perform such other duties and shall exercise such other
powers for the Corporation and for any of its divisions, operations,
subsidiaries, or affiliated companies as from time to time may be assigned to
him by the Chief Executive Officer or the Board of Directors without further
compensation other than that for which provision is made in this Agreement;
provided that any such other duties shall be consistent with Executive's
position as Executive Vice President and Chief Financial Officer of the
Corporation.
3. Extent of Services; Other Business Activities. Executive agrees that he
shall devote his best efforts, energies, and skills to the discharge of his
duties and responsibilities hereunder. To this end, Executive agrees that he
shall devote his full business time and attention to the business and affairs of
the Corporation and its divisions, operations, subsidiaries, and affiliated
companies and shall not, without the consent of the Corporation, directly or
indirectly, engage or participate in, or become an officer or director of, or
become employed by, or render advisory or other services in connection with, any
other business enterprise. Notwithstanding the foregoing, during the term of
this Agreement, Executive shall have the right to invest personally in any
corporation, partnership, or other entity or enterprise, engage in appropriate
civic, charitable, and religious activities, and devote a reasonable amount of
time to private investments, provided that (i) any such investment or other
activity shall not interfere with the execution of Executive's duties hereunder
or otherwise violate any provision of this Agreement, (ii) any such corporation,
partnership, or other entity or enterprise does not compete with the
Corporation, and (iii) notwithstanding the foregoing, Executive may purchase an
aggregate of one percent (1%) of any security publicly traded on an established
securities market.
4. Compensation.
(a) In consideration of the services to be rendered by Executive hereunder,
the Corporation agrees to pay to Executive, and Executive agrees to accept, a
salary for each Employment Year (as hereinafter defined) during the term of this
Agreement at the rate of $325,000 per Employment Year, commencing effective as
of October 31, 1997 and ending upon the termination of this Agreement (the
"Salary"). The Salary shall be payable in accordance with the regular payroll
practices of the Corporation. During the term of this Agreement, the Corporation
agrees to review Executive's compensation prior to each anniversary date of the
date hereof, but any increase in compensation offered to Executive under this
Paragraph 4 resulting from such review shall be in the sole discretion of the
Board of Directors of the Corporation.
<PAGE>
(b) In addition to the Salary, the Corporation agrees to pay Executive, as
further compensation, the sum of $100,000, in a single payment, on or before
December 31, 1997 and an additional $100,000 in a single payment, on or before
June 30, 1998.
(c) For the purposes of this Paragraph 4, the following terms shall mean:
(i) "Base Amount": The sum of (x) $43,639,753; plus (y) an amount
equal to the interest that would accumulate if interest was accrued from
February 1, 1990 at a cumulative annual rate equal to the Prime Rate as
announced from time to time by the Bankers Trust Company on the sum of
$43,639,753, as said sum may be reduced (but not below zero) from time to time
by any proceeds received (in respect of its ownership of stock of the
Corporation) by the Partnership after the date of this Agreement.
(ii) "Employment Year": Provided that during each such period
Executive remains employed by the Corporation in accordance with the terms of
this Agreement, each complete one-year period commencing on February 1, 1990.
The parties acknowledge that as of the date of this Agreement the Executive has
completed seven (7) Employment Years.
(iii) "Partnership": Rose Partners, L.P.
(iv) "Recognition Event": A distribution of any assets, whether in
cash or in any other form, by the Corporation to the Partnership in respect of
the stock owned by the Partnership, or the realization by the Partnership of any
amount upon the sale or transfer of its ownership interest in the stock of the
Corporation.
(v) "Final Recognition Event": The sale by the Partnership of all of
its stock of the Corporation or the complete liquidation of the Corporation by
the Partnership.
(vi) "Event": Any of a Recognition Event or a Final Recognition Event.
<PAGE>
(vii) "Recognition Proceeds": To the extent that it exceeds the Base
Amount, the aggregate amount of all proceeds received by the Partnership from
and after the date of this Agreement, in respect of its ownership of stock of
the Corporation, whether such proceeds are in the form of a dividend or other
distribution, liquidating or non-liquidating, or in consideration for the sale
or other disposition of such stock.
(d) Subject to the qualifications and limitations set forth below,
Executive shall be entitled to be paid additional compensation (the "Additional
Compensation") upon the occurrence of each Event. The Additional Compensation
payable at each Event shall be the sum of : (i) six (6%) percent of the
Recognition Proceeds, less (ii) the cumulative amount of Additional Compensation
paid to the Executive prior to that particular Event; provided, however, that
the six (6%) percent stated in (i) above may be reduced (but not below zero) as
provided for in Paragraph 4(g) below.
(e) Notwithstanding the provisions of Paragraph 4(d), the minimum amount
payable to the Executive as Additional Compensation upon the occurrence of the
Final Recognition Event shall be the sum of: (i) $1,000,000; less (ii) the
cumulative amount of all Additional Compensation paid to the Executive prior to
the Final Recognition Event.
(f) Notwithstanding anything contained in Paragraph 4(d) or 4(e) to the
contrary, the Executive shall not be entitled to any further payments of
Additional Compensation from and after any of the following events: (i) the
Executive's termination of employment for "cause" (as set forth in Paragraph
10); and (ii) if Executive resigns his employment prior to the end of the term
of this Agreement or any extended term of this Agreement.
(g) In measuring the six (6%) percent set forth in Paragraph 4(d)(i) above,
the six (6%) percent shall be reduced by one (1) full percentage point for each
full twelve (12) months following any of the following events: (i) the
Executive's death; (ii) the Executive becomes disabled (as provided in Paragraph
8); and (iii) the date the Executive's employment is terminated by the
Corporation for a reason other than "cause".
(h) Upon the occurrence of each Event, the Corporation shall calculate the
amount payable, if any, to the Executive under this Paragraph 4 and shall pay
such amount to the Executive within thirty (30) days after the Event.
<PAGE>
5. Executive Benefits.
(a) Executive shall be entitled to participate, on the same basis and
subject to the same qualifications, in all employee benefit plans (the "Plans"),
including, but not limited to, pension and profit-sharing plans, supplemental
retirement benefit plans, and life, health, disability, and similar plans, and
fringe benefits (the "Benefits") which during the term hereof shall be in effect
from time to time and be applicable to the Corporation's employees of senior
executives generally.
(b) If Executive's employment hereunder is terminated by the Corporation
prior to the scheduled termination of the term of Executive's employment
hereunder (other than a termination for "cause" [as hereinafter defined] or as a
result of Executive's voluntary resignation from his employment by the
Corporation), the Corporation shall either (i) continue through the scheduled
termination date of the term of Executive's employment hereunder Executive's
participation in the Plans and entitlement to the Benefits to which Executive
would have been entitled had he remained employed through the term of this
Agreement, or (ii) provide equivalent benefits (taking into account the tax
consequences of any benefits described in clause (i)) to Executive at no
additional cost to Executive, but only to the extent that essentially equivalent
and no less favorable benefits are not provided by a subsequent employer or
otherwise received by Executive. If the terms of any such Plans or Benefits do
not permit continued participation by Executive, the Corporation shall arrange
to provide to Executive benefits substantially similar to, and no less favorable
than, the benefits he was entitled to receive up until the end of the period of
coverage. Executive shall have the option to have assigned to him at no cost and
with no apportionment of prepaid premiums, any assignable insurance policy owned
by the Corporation and relating specifically to Executive.
(c) Recognizing that Executive will be required to do a considerable amount
of driving in connection with his duties as Executive Vice President, Chief
Financial Officer, the Corporation shall either: (i) provide to Executive a
Cadillac, Lincoln, or equivalent American automobile of Executive's choice; or
(ii) provide a monthly car allowance in an amount to be agreed upon by the
Executive and the Chairman of the Board of Directors; and, in either case, the
Corporation will pay all reasonable costs relating to the operation of such
automobile in connection with such duties, including gas, maintenance, and
insurance (including covering any deductible).
<PAGE>
6. Expenses. It is contemplated that, in connection with his employment
hereunder, Executive may be required to incur reasonable travel, entertainment,
and other business expenses. To the extent not otherwise reimbursed under
paragraph 5(c), the Corporation agrees to pay, or reimburse Executive for, all
reasonable and necessary travel, entertainment, and other business expenses
incurred or expended by him incident to the performance of his duties and
responsibilities hereunder, upon submission by Executive to the Corporation of
vouchers or expense statements evidencing the expenses for which reimbursement
is sought.
7. Vacations. Executive shall be entitled to vacations in accordance with
the Corporation's normal vacation policies for senior executives, which
vacations shall be taken at times consistent with the effective discharge of
Executive's duties.
8. Disability. In the event that Executive shall be incapacitated by reason
of mental or physical disability or otherwise during the term of employment so
that he is prevented from substantially performing his duties and services
hereunder for a period of 180 days during any twelve (12) month period, the
Corporation shall have the right to terminate Executive's employment under this
Agreement by sending written notice of such termination to Executive, and
thereupon his employment hereunder shall terminate. Upon such termination,
Executive shall be entitled, subject to the limitations provided herein, to
receive the compensation provided for in paragraph 4 hereof and the benefits
provided for in paragraph 5 hereof for one (1) year following the date of
termination, and shall continue to be entitled to any benefits in which he
otherwise is vested pursuant to this Agreement; provided that if Executive is
receiving payments through a disability policy maintained by the Corporation
(other than a group policy maintained in behalf of all executives), such
payments shall be deducted from the amounts to be paid by the Corporation to
Executive during such period. Executive shall accept such payment in full
discharge and release of the Corporation of and from any further obligations
under this Agreement.
9. Death. In the event of Executive's death during the term of this
Agreement, Executive's designated beneficiary or, if no such beneficiary shall
have been designated by Executive, the personal representative of Executive
shall be entitled to receive and shall be paid by the Corporation, the
compensation provided for in Paragraph 4 hereof, subject to the limits set forth
therein, and the benefits provided for in Paragraph 5 hereof for one (1) year
following the date of Executive's death, and shall continue to be entitled to
any benefits in which he otherwise is vested pursuant to this Agreement;
provided that if
<PAGE>
Executive is receiving or is entitled to receive payments through a death
benefit insurance policy maintained by the Corporation (other than a group
policy maintained in behalf of all executives) such payments shall be deducted
from the amounts to be paid by the Corporation to Executive during such period.
Executive's designated beneficiary or personal representative, as the case may
be, shall accept such payment in full discharge and release of the Corporation
of and from any further obligations under this Agreement.
10. Termination for Cause.
(a) The Corporation shall have the right to terminate the employment of
Executive hereunder for cause at any time if:
(i) Executive shall be convicted, by a court of competent and final
jurisdiction, of any crime (whether or not involving the Corporation or any of
its divisions, operations, subsidiaries or affiliated companies) which
constitutes a felony in the jurisdiction involved; or
(ii) Executive shall commit any act of fraud against or shall breach a
fiduciary obligation to the Corporation or any of its divisions, operations,
subsidiaries, or affiliated companies, provided that any such act (or failure to
act) shall be determined in good faith by the Board of Directors to be material
in respect of Executive's duties or functions hereunder; or
(iii) Executive shall fail or refuse to perform any of his duties and
responsibilities as required by, or shall otherwise breach, this Agreement,
provided that termination of Executive's employment pursuant to this
subparagraph 10(a)(iii) shall not constitute valid termination for cause unless
Executive shall first have received written notice from the Board of Directors
or the Chief Executive Officer of the Corporation stating with specificity the
nature of such failure or refusal and affording Executive at least fifteen (15)
days to correct the act or omission complained of.
(b) In the event that the employment of Executive shall be terminated by
the Corporation for cause pursuant to subparagraph 10(a) hereof, Executive shall
be entitled to receive the salary provided for in Paragraph 4(a) hereof,
prorated through the end of the week in which such termination occurs and such
amounts as may be payable under the balance of the provisions in Paragraph 4, as
specifically limited thereunder and in accordance with the terms thereof.
Executive shall accept such payment in full discharge and release of the
Corporation of and from any other further obligations under this Agreement.
<PAGE>
Nothing contained in this Paragraph 10 shall constitute a waiver or release by
the Corporation or any rights or claims it may have against Executive for
actions or omissions which may give rise to an event causing termination of this
Agreement pursuant to this Paragraph 10.
11. Confidentiality; Injunctive Relief.
(a) Executive recognizes and acknowledges that the knowledge, information,
and relationship with resources, suppliers, and customers of the Corporation,
and the knowledge of the Corporation's business methods, systems, plans, and
policies which he has heretofore and shall hereafter receive or obtain as an
employee of the Corporation, are valuable and unique assets of the business of
the Corporation. Accordingly, Executive agrees that he will not, during or after
the term of this Agreement, except if required in connection with his duties as
the Executive Vice President of the Corporation and Chief Financial Officer, and
for a period of three (3) years thereafter, disclose or use, without the prior
written consent of the Board of Directors of the Corporation, directly or
indirectly, any non-public information (whether written or unwritten) relating
to the Corporation or any of its divisions, operations, subsidiaries or
affiliated companies, or any of their respective management, financial
condition, subscription, mailing or customer lists, sources of supply, business,
personnel, policies, or prospects, to any individual or entity for any purpose
whatsoever. The provisions of this subparagraph 11(a) shall not apply to
information which is or shall become generally known to the public or the trade
(except by reason of Executive's breach of his obligations hereunder),
information which is or shall become available in trade or other publications,
or information which Executive is required to disclose by order of a court of
competent jurisdiction (but only to the extent specifically ordered by such
court and, when reasonably possible, if Executive shall give the Corporation
prior notice of such intended disclosure so that it has the opportunity to seek
a protective order if it deems appropriate).
(b) Executive acknowledges and agrees that all memoranda, notes, reports,
records, and other documents made or compiled by Executive, or made available to
Executive prior to or during the term of this Agreement, concerning the
Corporation's business, shall be the Corporation's property and shall be
delivered to the Corporation on the termination of Executive's employment
hereunder or at any other time on request by the Board of Directors of the
Corporation.
<PAGE>
(c) The provisions of this Paragraph 11 shall survive the termination or
expiration of Executive's employment hereunder, irrespective of the reason
therefor, for a period of three (3) years.
12. No Raid; Non-Compete.
(a) Executive agrees that, for a period of three (3) years after the date
of the termination of Executive's employment under this Agreement, Executive
shall not, without the prior written approval of the Board of Directors of the
Corporation directly or indirectly through any other person, firm or
corporation, solicit, raid, entice, or induce any person who is, at the time of
such solicitation or was at any time during the eighteen (18) months immediately
preceding such solicitation, raid, enticement, or inducement, an employee of the
Corporation or any of its subsidiaries or affiliates, to become employed by such
person, firm, or corporation, and Executive shall not approach any such employee
for such purpose or authorize or knowingly approve the taking of such actions by
any other person.
(b) For a period of three (3) years after the date of termination of
Executive's employment under this Agreement, Executive will not, whether
individually or as a partner, owner, officer, director, stockholder, or
employee, own, manage, operate, or control or have a financial interest in, or
serve as a consultant to, any person, firm, corporation, or other entity which
is engaged in any business activity in competition with the business of the
Corporation in the markets in which the Corporation competes. The foregoing
restrictions shall not be deemed to include Executive's direct or indirect
ownership of any securities in a publicly-traded business entity which does not,
and will not with the passage of time, result in his obtaining, directly or
indirectly, more than two (2) percent of the securities of such entity.
Notwithstanding the foregoing, the restrictions imposed on Executive under this
paragraph 12(b) shall cease to apply as of the later of (x) the scheduled
termination (including any extension thereof) of Executive's employment under
paragraph 1 hereof, or (y) one (1) year after the occurrence of either of the
events described in the following clauses (i) and (ii) of this paragraph 12(b),
if either (i) Executive's employment with the Corporation (and any subsidiary or
affiliate thereof) shall be terminated by the Corporation other than for
"cause," or (ii) the Partnership shall have disposed of all or substantially all
of its interest in the Corporation and the aggregate amounts payable to
Executive under subparagraph 4(c) shall be no greater than $1,000,000.
Notwithstanding the foregoing, in the event Executive's employment is terminated
by the Corporation other than for "cause" and the Corporation fails to satisfy
its obligation to pay Executive as required under this Agreement, the
restrictions imposed on Executive under this paragraph 12(b) shall cease to
apply one (1) year after such failure.
<PAGE>
(c) The provisions of this Paragraph 12 shall survive the termination or
expiration of Executive's employment hereunder, irrespective of the reason
therefor.
13. Injunctive Relief.
(a) Executive acknowledges that the services to be rendered by him are of a
special, unique, and extraordinary character, and if he violates any of the
provisions of this Agreement with respect to confidentiality, non-competition,
or solicitation, the Corporation would sustain irreparable harm. Accordingly,
Executive consents and agrees that if he violates any of the provisions of
Paragraphs 12 or 13 hereof, in addition to any other remedies which the
Corporation may have under the Agreement or otherwise, the Corporation shall be
entitled to apply to any court of competent jurisdiction for an injunction
restraining Executive from committing or continuing any such violation of this
Agreement, and Executive shall not object to any such application. Nothing in
this Agreement shall be construed as prohibiting the Corporation from pursuing
any other remedy or remedies including, without limitation, recovery of damages.
(b) The provisions of this Paragraph 13 shall survive the termination or
expiration of Executive's employment hereunder, irrespective of the reason
therefor.
14. Deductions and Withholding. Executive agrees that the Corporation shall
withhold from any and all payments and compensation required to be made to
Executive pursuant to this Agreement all Federal, state, local, and/or other
taxes which the Corporation determines are required to be withheld in accordance
with applicable statutes and/or regulations from time to time in effect.
15. No Conflict. Executive represents and warrants that there is no
restriction, agreement or limitation on his right or ability to enter into and
perform the terms of this Agreement.
<PAGE>
16. Miscellaneous.
(a) This Agreement cancels and supersedes any and all prior agreements and
understandings between the parties hereto respecting the employment of Executive
by the Corporation and constitutes the complete understanding between the
parties with respect to the employment of Executive hereunder. No statement,
representation, warranty, or covenant has been made by either party with respect
thereto except as expressly set forth herein. This Agreement may not be altered,
modified, or amended except by written instrument signed by each of the parties
hereto.
(b) Waiver by either party hereto of any breach of default by the other
party to any of the terms and provisions of this Agreement, shall not operate as
a waiver of any other breach or default, whether similar to or different from
the breach or default waived.
(c) All notices, consents, requests, demands, and other communications
hereunder shall be in writing and shall be delivered personally or sent by
registered or certified mail, return receipt requested, first class postage
prepaid, to the other party hereto at its or his address as set forth in the
beginning of this Agreement. Either party may change the address to which
notices, requests, demands, and other communications hereunder shall be directed
by giving written notice of such change of address to the other party in the
manner above stated.
(d) This Agreement shall inure to the benefit of and shall be binding upon
the heirs, executors, administrators, successors, and legal representatives of
Executive and shall inure to the benefit of and be binding upon the Corporation
and its successors. This Agreement is personal as to Executive and Executive may
not assign, transfer, pledge, encumber, hypothecate, or otherwise dispose of
this Agreement or any of his rights hereunder and any such attempt of
assignment, transfer, pledge, encumbrance, hypothecation, or other disposition
shall be null and void and without effect. The Corporation shall be entitled to
assign this Agreement without the prior written consent of Executive in
connection with the merger or consolidation of the Corporation with another
corporation or the sale of all or substantially all of the assets and business
of the Corporation to another corporation, provided that:
(i) immediately after the consummation of such transaction, the
surviving or acquiring corporation shall have a net worth not less than the net
worth of the Corporation immediately prior to such transaction; and
<PAGE>
(ii) the surviving or acquiring corporation shall agree in
writing to accept an assignment of this Agreement, thereby acquiring the
Corporation's rights and assuming the Corporation's obligations under this
Agreement.
(e) This Agreement shall be governed by and construed in accordance with
the laws of the State of New Jersey.
(f) The paragraph headings of this Agreement are for convenience of
reference only and shall not limit or define the text thereof.
(g) In the event that any one or more of the provisions of this Agreement
shall be invalid, illegal, or unenforceable in any respect, the validity,
legality, and enforceability of the remaining provisions contained herein shall
not in any way be affected thereby.
(h) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original and all of which, when taken together shall be
deemed to constitute one and the same instrument.
(i) Any dispute regarding this Agreement shall be resolved exclusively by
arbitration in New Jersey in accordance with the rules of the American
Arbitration Association then in effect. The Corporation shall pay Executive's
reasonable legal expenses in connection with any such arbitration; provided,
however, that Executive shall reimburse the Corporation for such expenses if the
arbitrator(s) shall decide the material issues in favor of the Corporation.
IN WITNESS WHEREOF, the parties hereto have entered into this
Agreement as of the day and year first above written.
DiGIORGIO CORPORATION
By: /s/ Arthur M. Goldberg
---------------------------
Name: Arthur M. Goldberg
Title: President
By: /s/ Richard B. Neff
---------------------------
Richard B. Neff
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED BALANCE SHEETS, STATEMENTS OF OPERATIONS, STATEMENT OF
STOCKHOLDERS' EQUITY AND STATEMENT OF CASH FLOWS FROM FORM 10Q FOR THE PERIOD
ENDED SEPTE
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Dec-27-1997
<PERIOD-END> Sep-27-1997
<CASH> 1,936
<SECURITIES> 0
<RECEIVABLES> 73,659
<ALLOWANCES> 4,420
<INVENTORY> 52,831
<CURRENT-ASSETS> 130,379
<PP&E> 60,433
<DEPRECIATION> 18,191
<TOTAL-ASSETS> 299,156
<CURRENT-LIABILITIES> 99,260
<BONDS> 162,450
0
0
<COMMON> 0
<OTHER-SE> (4,612)
<TOTAL-LIABILITY-AND-EQUITY> 299,156
<SALES> 772,044
<TOTAL-REVENUES> 776,491
<CGS> 693,327
<TOTAL-COSTS> 757,797
<OTHER-EXPENSES> 101
<LOSS-PROVISION> 1,125
<INTEREST-EXPENSE> 17,085
<INCOME-PRETAX> 1,508
<INCOME-TAX> (2,691)
<INCOME-CONTINUING> 4,199
<DISCONTINUED> 0
<EXTRAORDINARY> (8,693)
<CHANGES> 0
<NET-INCOME> (4,494)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
