SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to _________
Commission File Number
1-6699
INTERNATIONAL MULTIFOODS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 41-0871880
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
33 South 6th Street, Minneapolis, Minnesota 55402
(Address of principal executive offices) (Zip Code)
(612) 340-3300
(Registrant's telephone number, including area code)
(not applicable)
(Former name, former address and former fiscal year,
if changed since last report)
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 outstanding of the registrant's Common Stock, par
value $.10 per share, as of September 30, 1996 was 17,987,644
PART I. FINANCIAL INFORMATION
INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statements of Earnings
(unaudited)
(in thousands, except per share amounts)
THREE MONTHS ENDED SIX MONTHS ENDED
Aug. 31, Aug. 31, Aug. 31, Aug. 31,
1996 1995 1996 1995
Net sales $ 634,499 $ 621,244 $ 1,260,572 $ 1,255,888
Cost of sales (539,729) (520,822) (1,076,487) (1,055,538)
Gross profit 94,770 100,422 184,085 200,350
Delivery and distribution (41,573) (42,138) (82,004) (80,607)
Selling, general
and administrative (42,836) (42,957) (85,134) (92,269)
Unusual items - (5,700) (3,600) (5,700)
Operating earnings 10,361 9,627 13,347 21,774
Interest, net (4,440) (4,474) (8,730) (9,353)
Other income (expense), net (214) (1,225) 8 (1,471)
Earnings before
income taxes 5,707 3,928 4,625 10,950
Income taxes (1,712) 3,059 (1,063) 601
Net earnings $ 3,995 $ 6,987 $ 3,562 $ 11,551
Net earnings per
share of common stock $ .22 $ .38 $ .20 $ .63
Average shares of common
stock outstanding 17,983 17,954 17,981 17,956
Dividends per share
of common stock $ .20 $ .20 $ .40 $ .40
See accompanying notes to consolidated condensed financial statements.
INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(in thousands)
Condensed
from audited
financial
(Unaudited) statements
Aug. 31, Feb. 29,
1996 1996
Assets
Current assets:
Cash and equivalents $ 5,315 $ 7,508
Trade accounts receivable, net 158,377 165,527
Inventories 256,471 230,626
Other current assets 54,978 55,374
Total current assets 475,141 459,035
Property, plant and equipment, net 227,611 226,498
Goodwill, net 98,642 99,999
Other assets 36,337 36,725
Total assets $837,731 $822,257
Liabilities and Shareholders' Equity
Current liabilities:
Notes payable $ 42,252 $ 28,541
Current portion of long-term debt 1,500 11,000
Accounts payable 186,480 170,884
Other current liabilities 58,478 61,870
Total current liabilities 288,710 272,295
Long-term debt 203,154 202,937
Employee benefits and other liabilities 49,195 47,462
Total liabilities 541,059 522,694
Shareholders' equity:
Common stock 2,184 2,184
Other shareholders' equity 294,488 297,379
Total shareholders' equity 296,672 299,563
Commitments and contingencies
Total liabilities and
shareholders' equity $837,731 $822,257
See accompanying notes to consolidated condensed financial statements.
INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows
(unaudited)
(in thousands)
SIX MONTHS ENDED
Aug. 31, Aug. 31,
1996 1995
Cash flows from operations:
Net earnings $ 3,562 $ 11,551
Adjustments to reconcile net earnings
to cash provided by operations:
Depreciation and amortization 14,970 14,866
Deferred income tax benefit (614) (6,564)
Provision for losses on receivables 2,376 3,445
Provision for unusual charges 3,600 15,493
Gain on major business disposition - (9,900)
Changes in operating assets and liabilities,
net of business acquisitions and disposition:
Accounts receivable 4,879 14,810
Inventories (25,816) 25,199
Other current assets 1,072 (5,037)
Accounts payable 15,798 (23,658)
Other current liabilities (7,062) (7,084)
Other, net 1,239 3,343
Cash provided by operations 14,004 36,464
Cash flows from investing activities:
Business acquisitions - (29,904)
Capital expenditures (13,490) (14,375)
Proceeds from business disposition - 48,009
Proceeds from property disposals 257 566
Cash provided by (used for)
investing activities (13,233) 4,296
Cash flows from financing activities:
Net increase (decrease) in notes payable 13,852 (7,412)
Net decrease in long-term debt (9,500) (19,138)
Dividends paid (7,313) (7,309)
Proceeds from issuance of common stock 14 957
Purchase of treasury stock (16) (1,688)
Other, net (164) (45)
Cash used for
financing activities (3,127) (34,635)
Effect of exchange rate changes on cash
and equivalents 163 (1,828)
Net increase (decrease)in cash and equivalents (2,193) 4,297
Cash and equivalents at beginning of period 7,508 10,792
Cash and equivalents at end of period $ 5,315 $ 15,089
See accompanying notes to consolidated condensed financial statements.
INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
(unaudited)
(1) In the opinion of the Company, the accompanying unaudited consolidated
condensed financial statements contain all adjustments (consisting of only
normal recurring adjustments, except as noted elsewhere in the notes to the
consolidated condensed financial statements) necessary to present fairly its
financial position as of August 31, 1996 and the results of its operations
for the three and six months ended August 31, 1996 and 1995 and cash flows
for the six months ended August 31, 1996 and 1995. These statements are
condensed and therefore do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. The statements should be read in conjunction with the
consolidated financial statements and footnotes included in the Company's
Annual Report on Form 10-K for the year ended February 29, 1996. The
results of operations for the three and six months ended August 31, 1996 are
not necessarily indicative of the results to be expected for the full year.
Certain prior year amounts have been reclassified to conform with the
current year presentation.
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (SFAS 123). SFAS 123, which was adopted by the Company on
March 1, 1996, establishes financial accounting and reporting standards for
stock-based employee compensation plans. SFAS 123 allows companies to
either continue the current method of accounting for stock-based
compensation, or to switch to a fair-value based method. The Company
elected to continue using the current accounting method, and therefore will
be required to present pro forma disclosures of net income and earnings per
share as if the fair-value based method had been applied.
(2) Cost of sales - To more closely match costs with related revenues, the
Company classifies the inflation element inherent in interest rates on
Venezuelan local currency borrowings and the foreign exchange gains and
losses, which occur on such borrowings, as a component of cost of sales.
Accordingly, cost of sales was increased by $1.2 million and $1.5 million
for the three and six months ended August 31, 1996, respectively. Cost of
sales was reduced by $2.7 million and $1.6 million for the three and six
months ended August 31, 1995, respectively.
(3) Unusual items - During the quarter ended May 31, 1996, the Company
recognized unusual items that resulted in a pre-tax charge of $3.6 million,
$2.2 million after tax ($0.12 per share). The unusual items included $2.2
million for severance and other costs resulting from the resignation of the
Company's former Chief Executive Officer, Anthony Luiso, and $1.4 million
primarily for the cost of business assessment studies.
(4) Interest, net consisted of the following (in thousands):
Three Months Ended Six Months Ended
Aug. 31, Aug. 31, Aug. 31, Aug. 31,
1996 1995 1996 1995
Interest expense $4,548 $5,144 $8,937 $10,445
Capitalized interest (10) (51) (19) (95)
Non-operating interest income (98) (619) (188) (997)
Interest, net $4,440 $4,474 $8,730 $ 9,353
Cash payments for interest, net of amounts capitalized, for the six months
ended August 31, 1996 and 1995 were approximately $8.6 million and $11.1
million, respectively.
(5) Income taxes - Cash payments for income taxes for the six months ended
August 31, 1996 and 1995 were $4.8 million and $2.8 million, respectively.
(6) Supplemental balance sheet information (in thousands)
Aug. 31, Feb. 29,
1996 1996
Trade accounts receivable, net:
Trade $167,845 $179,504
Allowance for doubtful accounts (9,468) (13,977)
Total trade accounts receivable, net $158,377 $165,527
Inventories:
Raw materials, excluding grain $ 26,603 $ 17,529
Grain 36,377 46,331
Finished and in-process goods 184,680 159,077
Packages and supplies 8,811 7,689
Total inventories $256,471 $230,626
Property, plant and equipment, net:
Land $ 13,398 $ 12,045
Buildings and improvements 90,426 90,001
Machinery and equipment 224,408 217,567
Transportation equipment 8,083 9,188
Improvements in progress 14,926 13,157
351,241 341,958
Accumulated depreciation (123,630) (115,460)
Total property, plant and equipment, net $227,611 $226,498
(7) Segment information - The Company's business segments are as follows:
Foodservice Distribution consists of U.S. vending distribution and limited-
menu distribution and food exporting business; Bakery consists of U.S. and
Canadian bakery products and consumer products in Canada, which includes
primarily home baking products and condiments; Venezuela Foods consists of
bakery products, consumer products for home baking and agricultural
products; Divested Businesses consists of the surimi seafood business which
was divested in fiscal 1996.
Net Operating Unusual Operating
(in millions) Sales Costs Items Earnings
Three Months Ended Aug. 31, 1996
Foodservice Distribution $ 432.7 $ (432.3) $ - $ .4
Bakery 114.4 (110.8) - 3.6
Venezuela Foods 87.4 (78.5) - 8.9
Corporate Expenses - (2.6) - (2.6)
Total $ 634.5 $ (624.2) $ - $10.3
Three Months Ended Aug. 31, 1995
Foodservice Distribution $ 400.3 $ (396.5) $(9.4) $(5.6)
Bakery 110.1 (105.4) - 4.7
Venezuela Foods 106.3 (97.8) - 8.5
Divested Businesses 4.6 (3.7) 9.9 10.8
Corporate Expenses - (2.5) (6.2) (8.7)
Total $ 621.3 $ (605.9) $(5.7) $ 9.7
Six Months Ended Aug. 31, 1996
Foodservice Distribution $ 876.0 $ (870.5) $ - $ 5.5
Bakery 226.0 (220.3) - 5.7
Venezuela Foods 158.6 (147.6) - 11.0
Corporate Expenses - (5.3) (3.6) (8.9)
Total $1,260.6 $(1,243.7) $(3.6) $13.3
Six Months Ended Aug. 31, 1995
Foodservice Distribution $ 816.7 $ (807.3) $(9.4) $ -
Bakery 218.1 (211.8) - 6.3
Venezuela Foods 203.0 (188.0) - 15.0
Divested Businesses 18.1 (15.6) 9.9 12.4
Corporate Expenses - (5.7) (6.2) (11.9)
Total $1,255.9 $(1,228.4) $(5.7) $21.8
INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES
Management's Discussion and Analysis of Results of
Operations and Financial Condition
(Unaudited)
Results of Operations:
For the second quarter and six months ended August 31, 1996 compared with
the corresponding prior periods
Overview
Consolidated fiscal 1997 second quarter net sales increased 2% to $634.5
million, compared with $621.3 million a year ago. Consolidated net earnings
for the second quarter were $4 million, or $.22 per share, compared with net
earnings of $7 million, or $.38 per share a year ago. Excluding unusual
items, net earnings for the second quarter last year were $6.5 million, or
$.36 per share. Included in fiscal 1996 unusual items were a gain from the
divestiture of the Company's surimi seafood business and a favorable impact
from a tax settlement, which was principally offset by a write-down of
vending distribution software costs and a charge for a corporate
restructuring plan. The decline in second quarter net earnings was
primarily the result of an operating loss in the Company's vending
distribution business. The Company expects that vending distribution will
continue to adversely affect the Company's operating results and the
Company's fiscal 1997 net earnings are likely to be lower than last year's
earnings.
Consolidated net sales for the six months ended August 31, 1996 increased
slightly to $1.26 billion. Consolidated net earnings were $3.6 million, or
$.20 per share, compared with $11.6 million, or $.63 per share, a year ago.
Excluding unusual items, net earnings were $5.8 million, or $.32 per share,
compared with $11.1 million, or $.61 per share, a year ago. Fiscal 1997
unusual items consist of a charge resulting from the resignation of the
Company's former Chief Executive Officer, Anthony Luiso, and costs for
business assessment studies. The decline in net earnings for the six-month
period was primarily the result of an operating loss in the vending
distribution business, lower Venezuela Foods operating earnings and the
absence of earnings from the Company's surimi seafood business which was
divested in June 1995.
Segment Results
Foodservice Distribution second quarter net sales increased 8% to $432.7
million, compared with $400.3 million a year ago. The increase was
primarily related to higher volumes in the limited-menu distribution
business which resulted from new customer accounts and the acquisition of
Alum Rock Foodservice business in July 1995. Operating earnings before
unusual items declined 89% to $0.4 million, compared with $3.8 million last
year. The decline was the result of the vending distribution performance
which was affected by lower volumes, competitive pricing pressures and
increased costs associated with correcting service-related issues. The
decline was partially offset by higher earnings in the limited-menu
distribution and food exporting businesses. Limited-menu distribution
earnings improved from the higher volumes and benefit of business
integration efforts.
Foodservice Distribution net sales for the six-month period increased 7% to
$876 million, compared with $816.7 million a year ago. Operating earnings
before unusual items declined 41% to $5.5 million compared with $9.4 million
last year. After unusual items, operating results were break-even in fiscal
1996. Fiscal 1996 unusual items of $9.4 million were principally for the
write-down of vending distribution computer software costs. In addition to
the factors noted above for the second quarter, fiscal 1997 operating
earnings benefited from the purchase of certain inventories in vending
distribution at favorable prices.
Bakery second quarter net sales increased 4% to $114.4 million, compared
with $110.1 million a year ago. Sales increased on higher prices for wheat-
based products and from higher volumes in consumer bakery products. The
increase was partially offset by lower volumes in U.S. bakery mix which was
primarily the result of softness in a large customer's business, and lower
volumes in frozen products which were affected by a strike at two large
Canadian retailers. Operating earnings declined 23% to $3.6 million,
compared with $4.7 million last year, as a result of the lower volumes.
Bakery net sales for the six-month period increased 4% to $226 million,
compared with $218.1 million a year ago. Operating earnings declined 10% to
$5.7 million, compared with $6.3 million last year. In addition to the
factors noted above for the second quarter, fiscal 1997 operating earnings
benefited from a change in the Company's promotional spending strategy.
Venezuela Foods second quarter net sales declined 18% to $87.4 million,
compared with $106.3 million a year ago. The decline was primarily the
result of lower volumes in commercial wheat flour and agricultural products
that resulted from the impact of significant local currency price increases.
Price increases in local currency were in response to higher world wheat
costs and currency devaluation, which also substantially increased the local
cost of imported grains. The net sales decline was partially offset by
higher consumer corn flour volumes. Operating earnings increased 5% to $8.9
million, compared with $8.5 million last year. The increase was the result
of a stable exchange rate in an inflationary environment coupled with the
higher consumer corn flour volumes. In addition, last year's net sales and
operating earnings benefited from the government imposed fixed foreign
exchange rate used for translation. The earnings benefit was partially
offset by the impact of the Company's use of a free-market exchange rate for
translation effective August 31, 1995.
Venezuela Foods net sales for the six-month period declined 22% to $158.6
million, compared with $203 million a year ago. Operating earnings declined
27% to $11 million, compared with $15 million last year. In addition to the
factors noted above for the second quarter, sales and operating earnings
declined as a result of a significant devaluation in the free-market
exchange rate which occurred during the second half of fiscal 1996.
Last year's second quarter results included an unusual gain of $9.9 million
from the divestiture of the Company's surimi seafood business.
Non-operating Expense and Income
Second quarter net interest expense of $4.4 million was essentially
unchanged from the prior year as the effect of higher borrowing levels were
offset by lower interest rates. For the six-month period, net interest
expense declined to $8.7 million from $9.4 million a year ago as the result
of lower interest rates.
Income Taxes
Excluding unusual items, the Company's effective tax rate in the second
quarter of fiscal 1997 was 30% compared with 32% last year. In the second
quarter of fiscal 1996 the Company recognized a $5 million benefit from a
tax settlement. For the six-month periods, the effective tax rate before
unusual items declined to 30% in fiscal 1997 compared with 33.3% last year.
Financial Condition:
The debt-to-total capitalization ratio of 45% at August 31, 1996 was
unchanged from February 29, 1996. Working capital increased on higher
inventory levels which primarily resulted from seasonal purchases in the
condiments and limited-menu distribution businesses. Higher working capital
requirements were partially offset by an increase in accounts payable which
resulted from the timing of payments.
During the first quarter of fiscal 1997, the Company entered into an $80
million revolving credit agreement in Canada that replaced an existing $84
million revolving credit agreement and a $7 million line of credit. The new
Canadian revolving credit agreement expires March 15, 2001, and bears
interest on borrowings as determined by current market factors.
In August 1996, Standard & Poor's lowered its rating on the Company's long-
term debt and commercial paper to BBB- and A-3, respectively. In October
1996, Moody's Investors Service, Inc. lowered its rating on the Company's
long-term debt and commercial paper to Baa3 and Prime-3, respectively. The
Company's management believes that the rating downgrades will not have a
material impact on the Company's results of operations or its ability to
obtain financing.
The Company's short-term financing is provided by borrowings against its
U.S. and Canadian revolving credit agreements and, on a more limited basis,
U.S. commercial paper and uncommitted lines of credit.
Management regularly reviews the Company's business operations with the
objective of maximizing its return on investment. In this regard, the
Company continues to take actions to address operating issues in order
to improve financial performance which, if not successful, could result
in material nonrecurring charges.
PART II
OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) The 1996 Annual Meeting of Stockholders of International
Multifoods Corporation (the "Company") was held on June 21, 1996 (the
"Annual Meeting"). Holders of the Company's common stock, par value $.10
per share, of record on May 1, 1996 were entitled to one vote per share.
(c) At the Annual Meeting, James G. Fifield and Robert M. Price
were elected directors for a term of three years. The number of votes cast
for the election of each director and the number of votes withheld are as
follows:
FOR WITHHELD
James G. Fifield 15,262,069 730,696
Robert M. Price 15,241,734 751,031
The other directors whose term of office as a director continued after the
meeting are Nicholas L. Reding, Jack D. Rehm, Lois D. Rice and Peter S.
Willmott.
With respect to the proposal to approve the appointment of KPMG Peat
Marwick LLP as independent auditors of the Company for the fiscal year
ending February 28, 1997, there were 15,829,145 votes cast for the proposal,
95,668 votes cast against the proposal and 67,952 abstentions. There were
no broker nonvotes with respect to such matter.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Release Agreement, dated as of August 31, 1996, between
International Multifoods Corporation and John E. Sampson.
10.2 Consulting Agreement, dated as of September 1, 1996,
between International Multifoods Corporation and John E.
Sampson.
11. Computation of Earnings Per Common Share.
12. Computation of Ratio of Earnings to Fixed Charges.
27. Financial Data Schedule.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
August 31, 1996.
SIGNATURE
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.
INTERNATIONAL MULTIFOODS CORPORATION
Date: October 10, 1996 By /s/ Duncan H. Cocroft
------------------------------------
Duncan H. Cocroft
Vice President - Finance and Chief
Financial Officer
(Principal Financial Officer and Duly
Authorized Officer)
EXHIBIT INDEX
10.1 Release Agreement, dated as of August 31, 1996, between
International Multifoods Corporation and John E. Sampson.
10.2 Consulting Agreement, dated as of September 1, 1996, between
International Multifoods Corporation and John E. Sampson.
11. Computation of Earnings Per Common Share.
12. Computation of Ratio of Earnings to Fixed Charges.
27. Financial Data Schedule.
RELEASE AGREEMENT
THIS RELEASE AGREEMENT (hereinafter "the Agreement" or "this
Agreement"), dated as of August 31, 1996, by and between INTERNATIONAL
MULTIFOODS CORPORATION, a Delaware corporation ("Multifoods"), and JOHN
E. SAMPSON, a resident of Hennepin County, Minnesota ("Sampson").
WITNESSETH THAT:
WHEREAS, Sampson retired as Vice President-Corporate Planning and
Development of Multifoods effective as of the close of business on
August 31, 1996; and
WHEREAS, Multifoods and Sampson wish to enter this Agreement.
NOW, THEREFORE, in consideration of the preceding recitals and of
the mutual covenants and agreements hereinafter set forth, Multifoods
and Sampson agree as follows:
RELEASE AGREEMENT
1. Release Consideration.
In consideration of the Release given by Sampson in Section 2 of
this Agreement, Multifoods shall pay to Sampson (i) the amount of Two
Hundred Twenty-Five Thousand Dollars ($225,000), hereinafter called the
"Release Consideration", as follows: (i) One Hundred Eight Thousand
Dollars ($108,000) in equal consecutive semi-monthly installments of
Four Thousand Five Hundred Dollars ($4,500) each, less all applicable
federal, state and local withholding taxes, commencing on January 15,
1997 through and including December 31, 1997; and (ii) One Hundred
Seventeen Thousand Dollars ($117,000), less all applicable federal,
state and local withholding taxes, in a lump sum payment during the
period beginning October 1, 1996 and January 2, 1998, upon at least 14
calendar days' prior written notice from Sampson to Multifoods, at the
address set forth in Paragraph D of Section 2 of this Agreement.
2. Release.
A. In consideration of the Release Consideration payable by
Multifoods to Sampson set forth and described in Section 1 of this
Agreement, and for other good and valuable consideration, Sampson hereby
releases and discharges Multifoods and its subsidiaries and affiliates,
and the directors, officers, employees, agents and insurers of each
(collectively, the "Released Parties"), from all causes of action,
claims, demands, debts, contracts and agreements to which Sampson or his
heirs, executors, administrators, legal representatives, successors or
assigns and beneficiaries, have or may have in connection with Sampson's
employment with and termination of employment from Multifoods, for all
time to the date of this Agreement, except for (i) the Release
Consideration payable to Sampson under the terms of this Agreement, (ii)
any rights that Sampson has as a result of his participation in any
benefit plan or plans of Multifoods to which Sampson is entitled by
reason of his employment by Multifoods, including, but not limited to,
pension, health and welfare plans, and (iii) any indemnification right
to which Sampson is entitled by reason of his employment by Multifoods,
under (A) the Restated Certificate of Incorporation, as amended by
Multifoods, (B) the Bylaws of Multifoods, and/or (C) any policy of
insurance issued to Multifoods under which Sampson is an insured and
entitled to coverage (the foregoing hereinafter called the "Release").
B. Except as specifically provided in Paragraph A of this
Section 2, the Release applies to any action, claim, demand, debt,
contract and/or agreement that Sampson has or may have as of the date of
this Agreement including, without limitation, any and all claims
relating to Sampson's employment with and termination of employment from
Multifoods including, but not limited to, breach of contract claims;
claims alleging violation of the Fair Labor Standards Act; the Age
Discrimination In Employment Act, as amended; Title VII of the Civil
Rights Act of 1964, as amended; the Civil Rights Act of 1866; the
National Labor Relations Act; the Americans With Disabilities Act; the
Employee Retirement Income Security Act; and/or any other federal, state
or local statute, law, ordinance, regulation, order or principle of
common law.
C. Sampson acknowledges and agrees that the Release and the
Release Consideration payable by Multifoods under this Agreement is not
an admission that Multifoods or any of the other Released Parties has
engaged in any wrongful conduct towards Sampson, has acted in any way to
cause injury to Sampson, or is responsible or legally obligated to
Sampson in any way, except as specifically provided in this Agreement.
D. Sampson acknowledges that he has been advised and that he
understands, that he has fifteen (15) days from the date that he signs
this Agreement to rescind this Agreement in its entirety, if he notifies
Multifoods, in writing, at Multifoods Tower, Box 2942, 33 South Sixth
Street, Minneapolis 55402, Attention: Frank W. Bonvino, Vice President,
General Counsel and Secretary of Multifoods, of his decision to rescind
this Agreement. Sampson also understands that if he rescinds this
Agreement, he shall forfeit the Release Consideration, and the
Consulting Agreement between Multifoods and Sampson Associates, Inc.,
dated September 1, 1996, shall become null and void. Sampson further
acknowledges and understands that to be effective, his notice of
recission must be in writing and must be delivered to the address stated
above either by hand or by mail within the fifteen (15) day period. If
delivered by mail, the recission must be: (1) postmarked within the
fifteen (15) day period; (2) properly addressed to Multifoods; and (3)
sent by certified mail, return receipt requested.
E. Sampson represents that he has read this Agreement and
understands all of the terms and conditions contained in this Agreement,
and that he has been encouraged by Multifoods to discuss this Agreement
with an attorney-at-law of his choice. Sampson's manual signature on
this Agreement, set forth below in the signature block, constitutes
Sampson's acknowledgment that he understands the effect of the Release,
and that he has signed this Agreement KNOWINGLY AND VOLUNTARILY, and
that he has not relied on any representations, statements or
explanations made by Multifoods or any of the Released Parties or their
attorneys.
NOTE
MULTIFOODS HEREBY ADVISES SAMPSON TO CONSULT WITH
AN ATTORNEY-AT-LAW OF SAMPSON'S CHOICE BEFORE
SAMPSON SIGNS AND DELIVERS THIS AGREEMENT.
3. Multifoods' Representation.
Multifoods represents to Sampson that, as of the date of this
Agreement, Multifoods has no knowledge or any information which would
result in a claim by Multifoods against Sampson in connection with
Sampson's employment and/or termination of employment with Multifoods.
4. Confidential Information
A. Sampson's Covenant of Confidentiality
Further, in consideration of the Release Consideration payable by
Multifoods under Section 1.B of this Agreement, Sampson covenants and
agrees with Multifoods that he will maintain in strict confidence and
not disclose to any person, corporation, partnership, entity or
enterprise, any information, including without limitation, financial
information, strategic and business plans of Multifoods or any its
subsidiaries or affiliates, or any confidential or proprietary
information of Multifoods or any of its subsidiaries. For purposes of
this Agreement confidential information shall not include any
information: (i) which was known to the public on the date of this
Agreement; (ii) which becomes known to the public following the date of
this Agreement through no fault of Sampson; or (iii) which is disclosed
to Sampson by a third party who has the right to disclose such
information without violating any agreement of confidentiality with
Multifoods.
B. In the event that Sampson is compelled by subpoena, civil
investigative demand, court order or other legal process in any
proceeding to disclose any confidential information described in
Paragraph A immediately above, Sampson shall give Multifoods prompt
notice so that Multifoods may seek an appropriate protective order or
other confidential treatment of such confidential information. If
Multifoods shall fail for any reason to obtain a protective order and
Sampson shall be compelled to disclose any such confidential
information, based upon the advice of Sampson's counsel, Sampson may
disclose such information without liability under this Agreement,
provided that Sampson shall give Multifoods written notice of the
information to be disclosed as far in advance of its disclosure as is
reasonably practicable and the name of the party to whom Sampson is
required to disclose such information, and in any event, such disclosure
shall be limited to the specific information that Sampson is legally
required to disclose based upon the advice of Sampson's counsel.
C. Remedies.
Sampson acknowledges and agrees that money damages would not be a
sufficient remedy for any breach or threatened breach by Sampson of his
covenant of confidentiality set forth in Paragraph A of this Section 3;
and that, in addition to all other remedies that Multifoods shall be
entitled to, Multifoods shall be entitled to injunctive or other
equitable relief as a remedy for any such breach or threatened breach.
5. No Waiver.
The waiver by Multifoods or Sampson of a breach by Multifoods or
Sampson, as applicable, of any term of this Agreement shall not operate
or be construed as a waiver of any subsequent breach by Multifoods or
Sampson, as applicable.
6. Governing Law.
This Agreement shall be interpreted under and governed by the laws
of the State of Minnesota.
7. Entire Agreement.
This Agreement contains the entire agreement between Multifoods and
Sampson with respect to the Release and Sampson's covenant of
confidentiality, and supersedes any prior oral or written agreement or
understanding with respect to the subject matter hereof.
IN WITNESS WHEREOF, Multifoods and Sampson have signed and
delivered this Agreement as of the day and year first above written.
WITNESS: INTERNATIONAL MULTIFOODS CORPORATION
/s/Denise M. Kuntz By:/s/ Robert F. Maddocks
Robert F. Maddocks, Executive Vice
President
WITNESS:
/s/Rachael L. Galarneau By:/s/ John E. Sampson
John E. Sampson
CONSULTING AGREEMENT
CONSULTING AGREEMENT dated as of the first day of September, 1996
(hereinafter referred to as the "Agreement" or this "Agreement"), by and
between INTERNATIONAL MULTIFOODS CORPORATION, a Delaware corporation
("Multifoods"), having its principal offices at Multifoods Tower, 33
South Sixth Street, Minneapolis, Minnesota 55402, and SAMPSON
ASSOCIATES, INC., a Minnesota corporation ("Consultant"), having its
principal offices at Suite No. 404, Edina Executive Plaza, 5200 Willson
Road, Edina, Minnesota 55424.
WITNESSETH THAT:
WHEREAS, Consultant is engaged in the business of providing
consulting services; and
WHEREAS, Multifoods wishes to avail itself of the experience and
skill of Consultant during the consulting period, hereinafter described.
NOW, THEREFORE, in consideration of the preceding recitals and of
the mutual covenants and agreements set forth in this Agreement,
Multifoods and Consultant agree, as follows:
1. Term and Scope of Consulting Services.
A. Consulting Period.
Multifoods agrees to retain Consultant as a consultant to
serve Multifoods, and Consultant agrees to serve as a consultant to
Multifoods, for a period of one (1) year, commencing on the date of this
Agreement and ending at midnight on August 31, 1997 (the "Consulting
Period"). At the request of Multifoods during the Consulting Period,
and in consideration of the compensation for the Consulting Services
described in Section 2 of this Agreement, Consultant shall make itself
available to provide the "Consulting Services" (hereinafter described),
for twenty-five calendar days during the Consulting Period pursuant to a
schedule mutually agreed to by Multifoods and Consultant. Consultant
also agrees to assign and cause John E. Sampson, President of
Consultant, to provide the Consulting Services to Multifoods during the
Consulting Period. For purposes of this Agreement, a calendar day shall
be any day Monday through Friday of any calendar week, exclusive of
national holidays, and at least five hours per calendar day.
B. Consulting Services.
Consultant shall provide advice and counsel to Multifoods'
management in connection with any projects which may be assigned to
Consultant by the Chairman of the Board and Chief Executive Officer or
the Executive Vice President of the Corporation from time-to-time during
the Consulting Period (the "Consulting Services").
C. Representation of Consultant.
Consultant represents and warrants to Multifoods that in providing
the Consulting Services to Multifoods, neither Consultant nor any of
Consultant's employees or agents will disclose to Multifoods any
confidential or proprietary information of any third party. As used in
this Paragraph C, confidential information shall not include any
information: (i) which was known to the public on the date of this
Agreement; (ii) which becomes known to the public following the date of
this Agreement; or (iii) which is disclosed to Multifoods by the owner
of such confidential information or by such other third party who has
the right to disclose such information to Multifoods without violating
any agreement of confidentiality with the owner of such confidential
information.
2. Compensation and Expenses Payable by Multifoods to Consultant.
A. Compensation for Consulting Services.
As compensation for the twenty-five (25) calendar days of
Consulting Services which Consultant has agreed to render to Multifoods
during the Consulting Period, Multifoods shall pay to Consultant a fee
of Fifty Thousand Dollars ($50,000), in United States Dollars, in five
installments of Ten Thousand Dollars ($10,000) each, on September 1,
1996, October 1, 1996, November 1, 1996, December 1, 1996 and December
31, 1996. If Multifoods shall request Consultant to provide, and
Consultant shall agree to provide more than twenty-five (25) calendar
days of Consulting Services, Multifoods shall pay Consultant a fee of
Two Thousand Dollars, in United States Dollars, for each additional
calendar day of Consulting Services provided by Consultant. Any such
additional fee, which shall be due and owing to Consultant, shall be
paid by Multifoods to Consultant not later than thirty (30) days
following receipt by Multifoods of an invoice from Consultant for such
additional days of Consulting Services so provided. Multifoods will
report the payment of Consultant's compensation for the Consulting
Services on Form 1099, or such other form as may be prescribed by
applicable federal and state tax authorities.
B. Expenses of Consultant During Performance of Consulting
Services.
Multifoods will reimburse Consultant for Consultant's
reasonable travel expenses and other reasonable out-of-pocket expenses
incurred by Consultant while on assignment under and pursuant to this
Agreement, provided that Consultant shall obtain approval of an officer
of Multifoods at the Vice President or higher officer level if
Consultant's expenses on any single consulting assignment are reasonably
estimated to exceed $1,000. Consultant shall provide Multifoods with
receipts and other evidence reasonably requested by Multifoods to
substantiate any such costs and expenses incurred by Consultant while
performing the Consulting Services. Multifoods shall reimburse
Consultant for all such costs and expenses submitted by Consultant
within thirty (30) days following the date of Multifoods' receipt of
Consultant's invoice for such reimbursement and supporting
documentation.
3. Confidentiality.
A. Consultant's Covenant of Confidentiality.
In consideration of the compensation payable by
Multifoods to Consultant under this Agreement, Consultant covenants and
agrees with Multifoods that Consultant and its employees and agents will
maintain in strict confidence and not use or disclose to any
corporation, partnership, or other entity or person, any confidential
information including, without limitation, financial information, trade
secrets customer names or lists of customers, or business practices or
plans of Multifoods or any of Multifoods' subsidiaries or affiliates, or
any proprietary information of Multifoods or any subsidiary or affiliate
of Multifoods, to which Consultant or its employees or agents may have
access to or knowledge of in the performance of Consultant's obligations
under this Agreement. As used in this Section 3, confidential
information shall not include any information: (i) which was known to
the public on the date of this Agreement; (ii) which becomes known to
the public following the date of this Agreement through no fault of
Consultant or any of its employees, agents and/or representatives; or
(iii) which is disclosed to Consultant by a third party who has the
right to disclose such information without violating any agreement of
confidentiality with Multifoods.
B. In the event that Consultant, or any employee of Consultant,
is compelled by subpoena, civil investigative demand, court order or
other legal process in any proceeding to disclose any confidential
information described in Paragraph A immediately above, Consultant shall
give Multifoods prompt notice so that Multifoods may seek an appropriate
protective order or other confidential treatment of such confidential
information. If Multifoods shall fail for any reason to obtain a
protective order and Consultant, or any employee of Consultant, shall be
compelled to disclose any such confidential information, based upon the
advice of Consultant's counsel, Consultant, or any employee of
Consultant, may disclose such information without liability under this
Agreement, provided that Consultant shall give Multifoods written notice
of the information to be disclosed as far in advance of its disclosure
as is reasonably practicable and the name of the party to whom
Consultant, or any employee of Consultant, is required to disclose such
information, and in any event, such disclosure shall be limited to the
specific information that Consultant, or any employee of Consultant, is
legally required to disclose base upon the advice of Consultant's
counsel.
C. Remedies.
Consultant agrees that money damages would not be a sufficient
remedy for any breach or threatened breach by Consultant of Consultant's
covenant of confidentiality described in this Section 3. Consultant
agrees that in addition to all other remedies that Multifoods shall be
entitled to, Multifoods shall be entitled to specific performance and
injunction or other equitable relief as a remedy for any such breach or
threatened breach, and Consultant further agrees to waive any
requirement for the securing or posting of any bond in connection with
such remedy. Consultant acknowledges that no failure or delay by
Multifoods in exercising any right under this Paragraph B will operate
as a waiver thereof, nor shall a single or partial exercise of any such
right preclude further or other exercise thereof.
4. No Waiver.
The waiver by Multifoods or Consultant of a breach by Multifoods or
Consultant, as applicable, of any provision of this Agreement, shall not
operate or be construed as a waiver of any subsequent breach by
Multifoods or Consultant, as applicable.
5. Successors and Assigns.
The rights and obligations of Consultant under this Agreement shall
not be assignable, transferable or delegable in whole or in part by
Consultant. This Agreement is binding upon the successors and assigns
of Multifoods.
6. Independent Contractor Status.
The parties acknowledge that Consultant shall perform its duties
and obligations under this Agreement as Multifoods' independent
contractor and that this Agreement is not intended nor shall this
Agreement be deemed to create an employment relationship or any other
relationship between Multifoods and Consultant other than that of
independent contractor. Consultant shall at all time be free to
exercise its own initiative, judgment and discretion as to how best to
perform or provide the Consulting Services. Because Consultant is an
independent contractor and not Multifoods' employee, Multifoods shall
not withhold any Federal, state or local taxes or other taxes for any
fees or amounts to be paid to Consultant. Consultant agrees that it
shall report such fees and amounts to taxing authorities and pay all
Federal, state and local taxes or other taxes payable with respect
thereto in a manner consistent with his status as an independent
contractor. Consultant further agrees to reimburse Multifoods for, and
indemnify and hold Multifoods harmless from, any tax or other amount
Multifoods may pay or be held liable to pay any governmental authority
by reason of Consultant's breach of any of the foregoing obligations or
any act by Consultant that is inconsistent with the treatment of
Consultant as an independent contractor.
7. Indemnification.
In the event that Consultant becomes involved in a legal action or
proceeding as a result of advice and counsel provided by Consultant
pursuant to this Agreement, Multifoods will indemnify Consultant against
all claims, demands, actions, lawsuits and liabilities, and all
reasonable attorney's fees and disbursements made against or incurred by
Consultant, except to the extent that any such claim, demand, action,
lawsuit or liability resulted from the gross negligence or willful
misconduct of Consultant. This indemnification shall extend upon the
same terms and conditions to the officers and employees of Consultant.
8. Governing Law.
This Agreement is a Minnesota contract and shall be governed by the
laws of the State of Minnesota.
9. Severability.
If any provision of this Agreement or the application of any such
provision to any person or circumstance shall be held invalid, illegal
or unenforceable in any respect by a court of competent jurisdiction,
such invalidity, illegality or unenforceability shall not affect any
other provision of this Agreement.
10. Entire Agreement.
This Agreement contains the entire agreement of Multifoods and
Consultant with respect to the subject matter of this Agreement, and
supersedes any prior oral or written agreement or understanding of the
parties with respect to the subject matter of this Agreement. This
Agreement may only be amended by an agreement in writing signed by an
authorized representative of Consultant and Multifoods.
11. Condition.
This Agreement shall automatically come to an end and be null and
void should John E. Sampson, sole shareholder and chief executive
officer of Sampson Associates, Inc., exercise his right to rescind the
"Release" described in that certain Release Agreement, dated as of
August 31, 1996, between Multifoods and John E. Sampson (the "Release
Agreement"), within the 15-day recission period provided in the Release
Agreement.
IN WITNESS WHEREOF, Multifoods and Consultant have executed and
delivered this Agreement as of the day and year first above written.
INTERNATIONAL MULTIFOODS CORPORATION
By:/s/ Robert F. Maddocks
Robert F. Maddocks
Its: Executive Vice President
SAMPSON ASSOCIATES, INC.
By:/s/ John E. Sampson
John E. Sampson
Its: President
Exhibit 11
INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES
Computation of Earnings per Common Share
(unaudited)
(in thousands, except per share amounts)
THREE MONTHS ENDED SIX MONTHS ENDED
Aug. 31, Aug. 31, Aug. 31, Aug. 31,
1996 1995 1996 1995
Average shares of
common stock outstanding 17,983 17,954 17,981 17,956
Common stock equivalents 2 103 17 89
Total common stock and
equivalents assuming
full dilution 17,985 18,057 17,998 18,045
Net earnings $3,995 $6,987 $3,562 $11,551
Less dividends on
redeemable preferred stock - (218) - (260)
Net earnings
applicable to common stock $3,995 $6,769 $3,562 $11,291
Earnings per
share of common stock:
Primary $ .22 $ .38 $ .20 $ .63
Fully diluted $ .22 $ .37 $ .20 $ .63
Primary earnings per share has been computed by dividing net earnings,
after deduction of preferred stock dividends, by the weighted average
number of shares of common stock outstanding during the period. Common
stock options and other common stock equivalents have not entered into the
primary earnings per share computations since their effect is not
significant.
Fully diluted earnings per share has been computed assuming issuance of
all shares for stock options deemed to be common stock equivalents, using
the treasury stock method.
Exhibit 12
INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES
Computation of Ratio of Earnings to Fixed Charges
(unaudited)
(in thousands)
THREE MONTHS ENDED SIX MONTHS ENDED
Aug. 31, Aug. 31, Aug. 31, Aug. 31,
1996 1995 1996 1995
Earnings before income taxes $ 5,707 $ 3,928 $ 4,625 $10,950
Plus: Fixed charges (1) 6,801 7,620 13,481 15,362
Less: Capitalized interest (10) (51) (19) (95)
Earnings available to cover
fixed charges $12,498 $11,497 $18,087 $26,217
Ratio of earnings to fixed charges 1.84 1.51 1.34 1.71
(1) Fixed charges consisted of the following:
THREE MONTHS ENDED SIX MONTHS ENDED
Aug. 31, Aug. 31, Aug. 31, Aug. 31,
1996 1995 1996 1995
Interest expense, gross $4,548 $5,144 $ 8,937 $10,445
Rentals (Interest factor) 2,253 2,476 4,544 4,917
Total fixed charges $6,801 $7,620 $13,481 $15,362
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED BALANCE SHEET, STATEMENTS OF EARNINGS AND CASH FLOWS AND
ACCOMPANYING NOTES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS AND NOTES.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-END> AUG-31-1996
<CASH> 5,315
<SECURITIES> 0
<RECEIVABLES> 167,845
<ALLOWANCES> 9,468
<INVENTORY> 256,471
<CURRENT-ASSETS> 475,141
<PP&E> 351,241
<DEPRECIATION> 123,630
<TOTAL-ASSETS> 837,731
<CURRENT-LIABILITIES> 288,710
<BONDS> 203,154
0
0
<COMMON> 2,184
<OTHER-SE> 294,488
<TOTAL-LIABILITY-AND-EQUITY> 837,731
<SALES> 1,260,572
<TOTAL-REVENUES> 1,260,572
<CGS> 1,076,487
<TOTAL-COSTS> 1,076,487
<OTHER-EXPENSES> 82,004
<LOSS-PROVISION> 2,376
<INTEREST-EXPENSE> 8,918
<INCOME-PRETAX> 4,625
<INCOME-TAX> 1,063
<INCOME-CONTINUING> 3,562
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,562
<EPS-PRIMARY> .20
<EPS-DILUTED> 0
</TABLE>
