UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended February 28, 1997
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)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
- ------------------- ----------------------
Common Stock (par value $.10 per share) New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes__X__ No_______
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. [__X__]
The aggregate market value of Common Stock, par value $.10 per
share, held by non-affiliates of the registrant (see Item 12 hereof) as
of May 1, 1997 (based on the closing sale price of $24.75 per share as
reported in the consolidated transaction reporting system on such date)
was $442,891,721.
The number of shares outstanding of the registrant's Common Stock,
par value $.10 per share, as of May 1, 1997 was 18,002,919.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Annual Report to Stockholders for the
fiscal year ended February 28, 1997 are incorporated by reference into
Parts I and II.
Portions of the registrant's Proxy Statement for the Annual Meeting
of Stockholders to be held June 20, 1997 are incorporated by reference
into Part III.
PART I
Item 1. Business.
General
International Multifoods Corporation, incorporated in Delaware in
1969 as the successor to a business founded in 1892, operates food
manufacturing and foodservice distribution businesses in the United
States, Canada and Venezuela. Unless indicated otherwise or the context
suggests otherwise, the term "Company," as used in this Report, means
International Multifoods Corporation and its consolidated subsidiaries.
The Company's business segments are Foodservice Distribution, North
America Foods and Venezuela Foods. The North America Foods segment was
previously named the Bakery segment. Financial information for the last
three fiscal years for each of the Company's business segments, which is
included in Note 17 to the Company's Consolidated Financial Statements
on pages 36 and 37 of the Company's Annual Report to Stockholders for
the fiscal year ended February 28, 1997 ("1997 Annual Report to
Stockholders"), is incorporated herein by reference.
Foodservice Distribution
The Foodservice Distribution segment includes the Company's vending
distribution business, the limited-menu distribution business, and the
food exporting business. No single customer accounts for a significant
portion of the segment's sales. The Company's food exporting business
has a major customer that distributes food products in Russia. Earnings
on sales to this customer accounted for approximately 14% of the
Company's consolidated operating earnings before unusual items in fiscal
year 1997, compared with 3% in fiscal year 1996.
Vending Distribution. The Company is the largest U.S. vending
distributor, serving approximately 14,000 vending and office coffee
service operators and other concessionaires. The Company distributes
and sells more than 8,000 food products consisting primarily of candy,
snacks, frozen and refrigerated products, pastries, hot beverages and
juices. Most of the products are nationally advertised brand products.
The Company also sells certain products, such as premium ground and
whole-bean coffee, hot cocoa, creamer and sugar, under its own private
labels, VENDOR'S SELECT and GRINDSTONE CAFE. Deliveries are made
directly to vending and office coffee service operators from 20
distribution centers located nationwide. The frequency of deliveries
varies, depending upon customer needs, but generally deliveries are made
once a week. The Company leases a fleet of approximately 175 tractor-
trailers, most of which are equipped with an on-board computer system
from which drivers obtain delivery performance and route information.
The Company also operates 18 cash-and-carry locations from which
customers can make purchases.
The vending distribution business is highly competitive. While the
Company is the only nationwide vending distributor, it encounters
significant competition from regional and local distributors as well as
warehouse clubs. Price is a significant competitive element in the
vending distribution business, however other important competitive
factors are prompt and accurate delivery of orders, availability of a
wide variety of products and customer service.
Limited-Menu Distribution. The Company is a leading specialty
distributor in the United States to independent pizza restaurants and
other select limited-menu operators, including sandwich shops, Mexican
restaurants, bakery shops and movie theaters. The Company distributes a
broad selection of cheeses, meats, snacks, paper goods and other
products, including pizza ingredients sold under the Company's ULTIMO!
brand as well as major national brands. Deliveries are made directly to
customers, generally once a week, from 14 distribution centers located
strategically around the country to provide efficient and timely
delivery to customers. The distribution centers are linked by computer
network to the distribution business' headquarters. The Company
maintains a fleet of more than 250 tractors and 300 trailers,
approximately half of which are owned and half of which are leased by
the Company.
The limited-menu distribution business is highly competitive. The
Company competes with several national and regional broadline
distributors and numerous regional specialty foodservice distributors
and local independent distributors. The Company competes on the basis
of product quality and consistency, customer service and the
availability of a wide variety of products, as well as price and prompt
and accurate delivery of orders. The Company believes that its pizza
expertise, which includes providing customers with ideas on promotions,
menu planning and baking, differentiates the Company in part from its
competitors. In addition, the Company believes that it further
distinguishes itself from broadline distributors by providing more
personalized customer service.
Food Exporting. The food exporting business markets and exports a
variety of goods, primarily branded and commodity food products. Export
sales are made to customers in diverse geographic areas, including
Eastern Europe, Asia and the Caribbean region. The Company markets its
food products under the MULTIFOODS, GOLDEN TEMPLE, ROBIN HOOD and BICK'S
brands.
As indicated above, the food exporting business has a major
customer that distributes food products in Russia. The Company's
financial position and results of operations could be adversely affected
in the event of economic or political instability in Russia or if the
customer experienced difficulty in meeting its commitments.
North America Foods
The North America Foods segment consists of two divisions, North
America Bakery and consumer products. No single customer accounts for a
significant portion of the segment's sales.
North America Bakery. The North America Bakery division produces
approximately 3,000 products for retail, in-store and wholesale bakeries
and foodservice customers in the United States and Canada. The Company
produces bakery mix products, including mixes for breads, rolls, bagels,
donuts, muffins, danish, cakes, cookies, brownies, bars and pizza
crusts, as well as fillings and icings. Bakery mix products are
marketed under its MULTIFOODS and JAMCO brands in the United States and
under its ROBIN HOOD brand in Canada. In addition, the Company
manufactures and markets frozen desserts under its MULTIFOODS, GOURMET
BAKER and FANTASIA brands. In Canada, the Company also produces wheat
flour and durum and oat products. Bakery products are marketed through
the Company's own sales organization and independent distributors and
brokers.
The Company encounters significant competition in the bakery
products market. The Company is a leading supplier of bakery mixes to
retail and in-store bakeries in North America and it competes with
several large corporations and regional producers of bakery mixes. With
respect to frozen bakery products, the Company competes primarily in the
foodservice and in-store bakery markets with several large corporations
and numerous regional suppliers that have select product offerings. The
Company competes primarily in Canada with respect to its commercial
flour products and its competitors include both large corporations and
regional producers. The Company competes on the basis of product
quality and uniqueness, product convenience, brand loyalty, timely
delivery and customer service as well as price.
Consumer Products. The consumer products division is the leading
marketer in Canada of flour and specialty baking mixes sold to
consumers. More than 40 consumer baking mixes are sold under the
Company's ROBIN HOOD brand, while consumer flour is sold under the
Company's ROBIN HOOD, BRODIE, CREAM OF THE WEST and MONARCH brands. The
Company also sells hot cereals under its ROBIN HOOD, OLD MILL, RED RIVER
and PURITY brands. The Company also manufactures and markets pickles,
relishes and other condiments to consumers in Canada, where its BICK'S
brand is the leading brand. The Company also sells condiments under its
HABITANT, GATTUSO, WOODMAN'S, ROSE and MCLARENS labels. Consumer
products are marketed primarily through the Company's own sales
organization, supported by advertising and other promotional activities.
The Company competes on the basis of product quality, product
convenience, the ability to identify and satisfy emerging consumer
preferences, brand loyalty, timely delivery and customer service as well
as price.
Venezuela Foods
The Venezuela Foods segment includes consumer products for home
baking, bakery products for food processors and commercial and retail
bakeries, and products for the agricultural sector. Consumer products
include wheat flour, corn flour, whole grain rice, rice flour, corn
cooking oil, oat cereals and spices, which are sold to grocery stores
principally under the Company's ROBIN HOOD, JUANA, MONICA, PAYARA, GOLD
BELL, LASSIE and LA COMADRE brands. Bakery products include wheat
flour, which is sold under the Company's POLAR, GRAN AGUANTE, GOLDRIM
and ELEFANTE brands, and prepared bakery mixes, which are sold under the
ROBIN HOOD brand. Animal feeds are sold principally under the Company's
SUPER-S brand to animal producers and farm distributors. The Venezuela
Foods segment's products are marketed through the Company's own sales
organization and independent distributors and brokers.
The Company's Venezuelan subsidiary is one of the largest food
companies in Venezuela and the second-largest producer of animal feeds
for the agricultural sector. The Company is the leading producer of
consumer wheat flour, flour for commercial food processors and retail
bakeries, and commercial bakery mixes. No single customer accounts for
a significant portion of the Venezuela Foods segment's sales. The
Company competes on the basis of quality, price, uniqueness, timely
delivery and customer service.
The Company's operations in Venezuela are subject to risks inherent
in operating under a different legal and political system along with a
difficult economic environment. Among these risks are inflation,
currency volatility, possible limitations on foreign investment,
exchangeability of currency, dividend repatriation and changes in
existing tax laws. See "Management's Discussion and Analysis of Results
of Operations and Financial Condition," which is included on pages 17
through 20 of the 1997 Annual Report to Stockholders and is incorporated
by reference in Part II, Item 7, hereof.
Other Information Relating to the Business of the Company
Sources of Supply and Raw Materials. The Company's vending
distribution business purchases products directly from numerous
manufacturers, processors and independent suppliers. Several of these
sources are large corporations from which the Company purchases large
quantities of brand name candy and snacks. The Company believes that
adequate alternative sources of supply for other vending products are
readily available.
The Company's limited-menu distribution business purchases products
directly from numerous manufacturers, processors and independent
suppliers. The Company's limited-menu distribution business is not
dependent upon any single supplier and alternative sources of supply are
readily available.
With respect to the Company's North America Foods and Venezuela
Foods segments, raw materials generally are available from numerous
sources and the Company believes that it will continue to be able to
obtain adequate supplies. In Canada, the Company minimizes risks
associated with wheat market price fluctuations by hedging its wheat and
flour inventories, open wheat purchase contracts and open flour sales
contracts with wheat futures contracts. In the United States, the
Company also enters into futures contracts to reduce the risk of price
fluctuations on certain anticipated raw material purchases. See Note 7
to the Company's Consolidated Financial Statements which are
incorporated by reference in Part II, Item 8, hereof.
The Company's Venezuelan operations are dependent on raw material
imports for many of its products. Wheat, oats and soybeans are not
grown in Venezuela and adequate quantities of sorghum and yellow corn
are not grown in Venezuela. However, adequate wheat, oats, soybean,
sorghum and yellow corn requirements generally are available and
procured from sources primarily in the United States and Canada.
Generally, adequate quantities of corn (other than yellow corn) and
rice, which are grown in Venezuela, are available locally. In the event
of a local shortage of corn or rice, the Company has, from time to time,
purchased corn and rice from the world market.
Trademarks and Other Intellectual Property. The Company owns
numerous trademarks, service marks and product formulae which are
important to the Company's business. The most significant trademarks
and service marks are identified above. Most of the Company's
trademarks and service marks are registered.
Seasonality. The Company does not experience material seasonal
variations in its sales volumes.
Environmental Regulation. The Company's facilities in the United
States are subject to federal, state and local environmental laws and
regulations. Compliance with these provisions has not had, and the
Company does not expect such compliance to have, any material adverse
effect upon the Company's capital expenditures, net earnings or
competitive position.
The Company has received notices from the U.S. Environmental
Protection Agency and the New York State Department of Environmental
Conservation that the Company has been identified as a potentially
responsible party ("PRP") under the Comprehensive Environmental
Response, Compensation and Liability Act and may be required to share in
the cost of cleanup of two environmentally contaminated sites. The
Company recognizes that its potential exposure with respect to each of
these sites may be joint and several. However, based upon several
factors such as the volume of material contributed to the sites, the
number and financial viability of other PRP's, allocations of volumetric
waste contributions to other PRP's, remediation cost estimates and the
present status of the proceedings involving such sites, the Company has
concluded that its probable aggregate exposure in regard to such sites
is not material.
On December 3, 1996, Curtice-Burns Foods, Inc. and Curtice Burns
Meat Snacks, Inc. (together, "Curtice-Burns") filed a third-party
complaint against the Company in the United States District Court for
the District of Oregon. The complaint was filed in connection with a
civil lawsuit commenced in October 1996 by Oberto Sausage Company of
Oregon ("Oberto") against Curtice-Burns. The third-party complaint
alleges that the Company caused or contributed to the environmental
contamination of certain real property, and groundwater beneath the real
property, located in Oregon. The Company operated a meat-snack
manufacturing plant on the property for a period of 10 years until 1986,
when the Company sold the business to Curtice-Burns. Curtice-Burns
subsequently sold the property to Oberto. Curtice-Burns is seeking
declaratory and monetary relief against the Company under theories of
strict liability, contribution for remedial action costs under Oregon
and federal statutes, and indemnity. Curtice-Burns is seeking damages
in excess of $35,000, the cost of all past, present and future remedial
action related to the environmental contamination of the property and
the groundwater beneath the property, and costs and disbursements
incurred in litigating this matter. Oberto has asserted similar causes
of action and is seeking similar relief against Curtice-Burns in the
underlying lawsuit. The parties to the lawsuit are in the initial
stages of discovery and the Company intends to vigorously defend itself
in the lawsuit. The Company has also tendered defense of the lawsuit to
the Company's primary general liability insurance carrier during the
period of time at issue in the lawsuit.
Employees. As of February 28, 1997, the Company and its
subsidiaries had 7,176 employees.
Item 2. Properties.
The Company's principal executive offices are located in
Minneapolis, Minnesota in leased office space. Several of the Company's
subsidiaries also own or lease office space. The Company operates
numerous processing and distribution facilities throughout the United
States, Canada and Venezuela. The Company believes that its facilities
are suitable and adequate for current production or distribution
volumes.
Foodservice Distribution
The Company owns two and leases 18 distribution centers aggregating
approximately 1.6 million square feet for its vending distribution
business. These distribution centers are located in Commerce and
Fremont, California; Denver, Colorado; East Windsor, Connecticut;
Orlando, Florida; Austell, Georgia; Woodridge, Illinois; Shawnee,
Kansas; Louisville, Kentucky; Belleville, Michigan; Minneapolis,
Minnesota; Greensboro, North Carolina; Paulsboro and Parsippany, New
Jersey; Twinsburg, Ohio; Memphis, Tennessee; Dallas and Houston, Texas;
Kent, Washington; and Pewaukee, Wisconsin.
The Company's vending distribution business also operates 18 cash-
and-carry distribution locations, 11 of which are separate from the
Company's other distribution centers.
The Company owns nine and leases five distribution centers
aggregating approximately 1.0 million square feet for its limited-menu
distribution business. These distribution centers are located in Tempe,
Arizona; Anaheim, Livermore and Modesto, California; Denver, Colorado;
Kissimmee, Florida; Atlanta, Georgia; Boise, Idaho; Indianapolis,
Indiana; Rice, Minnesota; Springfield, Missouri; Portland, Oregon;
Middletown, Pennsylvania; and Dallas, Texas.
North America Foods
The Company owns 13 and leases four processing facilities. These
processing facilities are located in La Mirada, California; Bonner
Springs, Kansas; Malden, Massachusetts; Sedalia, Missouri; Lockport, New
York; Elyria, Ohio; Burnaby, British Columbia (2); Winnipeg, Manitoba;
Burlington, Dunnville, Port Colborne, Scarborough and Simcoe, Ontario;
Montreal, Quebec (2); and Saskatoon, Saskatchewan.
The Company also operates two research and development
laboratories.
Venezuela Foods
The Company owns 18 processing facilities and leases one processing
facility. These processing facilities are located in Barcelona,
Anzoategui; Ciudad Bolivar, Bolivar; Puerto Cabello (5) and Valencia,
Carabobo; Calabozo, Guarico (3); Acarigua (3) and Araure, Portuguesa;
Cumana, Sucre; and Maracaibo, Zulia (3).
The Company owns three and leases 14 warehouse facilities. In
addition, the Company owns two and leases 14 agricultural distribution
centers.
The Company also operates two Company-owned hatcheries and one
leased hatchery and operates four Company-owned and seven leased poultry
farms.
Item 3. Legal Proceedings.
Neither the Company nor any of its subsidiaries is a party to any
legal proceeding that is material to the business or financial condition
of the Company. See the information under the heading "Other
Information Relating to the Business of the Company - Environmental
Regulation" in Item 1 above for a description of environmental matters
in which the Company is involved.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of security holders of the
Company during the fourth quarter of the fiscal year ended February 28,
1997.
EXECUTIVE OFFICERS OF THE COMPANY.
The information contained in Item 10 in Part III hereof under the
heading "Executive Officers of the Company" is incorporated by reference
in Part I of this Report.
PART II
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters.
The Company's Common Stock is listed on the New York Stock
Exchange. The high and low sales prices for the Company's Common Stock
as reported in the consolidated transaction reporting system and the
amount of the cash dividends paid on the Company's Common Stock for each
quarterly period within the two most recent fiscal years, shown in Note
18 to the Company's Consolidated Financial Statements on page 38 of the
1997 Annual Report to Stockholders, are incorporated herein by
reference.
As of May 1, 1997, there were 4,944 holders of record of the Common
Stock of the Company.
Item 6. Selected Financial Data.
The information for fiscal years 1993 through 1997 in the "Six-Year
Comparative Summary" on page 39 of the 1997 Annual Report to
Stockholders under the headings "Consolidated Summary of Operations,"
"Year-End Financial Position" and "Dividends Paid" is incorporated
herein by reference. The information contained in Note 4 ("Unusual
Items") to the Company's Consolidated Financial Statements on pages 27
and 28 of the 1997 Annual Report to Stockholders is also incorporated
herein by reference.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
The information under the heading "Management's Discussion and
Analysis of Results of Operations and Financial Condition" on pages 17
through 20 of the 1997 Annual Report to Stockholders is incorporated
herein by reference.
Item 8. Financial Statements and Supplementary Data.
The Independent Auditors' Report, the Company's Consolidated
Financial Statements as of February 28, 1997 and February 29, 1996, and
for each of the fiscal years in the three-year period ended February 28,
1997, and the Notes to the Company's Consolidated Financial Statements
on pages 21 through 38 of the 1997 Annual Report to Stockholders are
incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Registrant.
The section under the heading "Election of Directors" on pages 3
through 6 and the section entitled "Section 16(a) Beneficial Ownership
Reporting Compliance" on page 22 of the Company's Proxy Statement dated
May 15, 1997 ("1997 Proxy Statement") are incorporated herein by
reference.
Executive Officers of the Company
The following sets forth the name, age and business experience for
at least the past five years of each of the executive officers of the
Company as of May 1, 1997. Unless otherwise noted, the positions
described are positions with the Company or its subsidiaries.
Name Age Positions Held Period
Gary E. Costley 53 Chairman of the Board, President January 1, 1997
and Chief Executive Officer to present
Dean of the Babcock Graduate 1995 to 1996
School of Management at
Wake Forest University
Executive Vice President of 1992 to 1994
Kellogg Company and President,
Kellogg North America
Executive Vice President of 1988 to 1992
Kellogg Company and President
and Chairman, Kellogg, USA
Jeffrey E. Boies 52 President, VSA, Inc. October 28, 1996
to present
President and Chief Executive 1995 to 1996
Officer of Sysco Food
Services/Cincinnati
President and Chief Executive 1993 to 1995
Officer of Sysco Food
Services/Albany
President and Chief Executive 1984 to 1993
Officer of Sysco Food
Services/Houston
Frank W. Bonvino 55 Vice President, General Counsel 1992 to present
and Secretary
Vice President and Associate 1991 to 1992
General Counsel
D. Bruce Kean 57 President - Multifoods 1994 to present
Specialty Distribution, Inc.
Senior Vice President 1989 to 1994
Leprino Foodservice Distribution
Division of Leprino Foods Company
Fidias Robuste 59 President and Managing Director 1993 to present
Molinos Nacionales, C.A.
(MONACA)
Vice President-Operations of 1989 to 1993
Molinos Nacionales, C.A. (MONACA)
William L. Trubeck 50 Senior Vice President-Finance March 1, 1997
and Chief Financial Officer to present
Senior Vice President and Chief 1994 to 1996
Financial Officer of
SPX Corporation
Senior Vice President and Chief 1993 to 1994
Financial Officer of
Honeywell Inc.
Chief Financial and 1991 to 1993
Administrative Officer of
White & Case
Robert S. Wright 50 President, North America Foods 1995 to present
President, Specialty 1994 to 1995
Brands Division
of Foodbrands America, Inc.
President, Prepared Foods 1992 to 1994
Division of International
Multifoods Corporation
Vice President, Marketing 1991 to 1992
of MasterLock Co.
Group Vice President of 1989 to 1991
Universal Foods Corporation
The executive officers of the Company are elected annually by the
Board of Directors with the exception of the Presidents of the Company's
business units, who hold appointed offices.
Item 11. Executive Compensation.
The section under the heading "Election of Directors" entitled
"Compensation of Directors" on page 7 and the section entitled
"Executive Compensation" on pages 12 through 21 of the 1997 Proxy
Statement are incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
The section entitled "Security Ownership of Certain Beneficial
Owners and Management" on pages 2 and 3 of the 1997 Proxy Statement is
incorporated herein by reference.
For purposes of computing the market value of the Company's Common
Stock held by non-affiliates of the Company on the cover page of this
Report, all executive officers and directors of the Company are
considered to be affiliates of the Company. This does not represent an
admission by the Company or any such person as to the affiliate status
of such person.
Item 13. Certain Relationships and Related Transactions.
Not applicable.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K.
(a) Documents Filed as a Part of this Report
1. Financial Statements
The following consolidated financial statements of International
Multifoods Corporation and subsidiaries and the Independent Auditors'
Report thereon, included in the 1997 Annual Report to Stockholders, are
incorporated by reference in Part II, Item 8, hereof:
Independent Auditors' Report
Consolidated Statements of Earnings - Years ended
February 28, 1997, February 29, 1996 and February 28,
1995
Consolidated Balance Sheets - February 28, 1997 and
February 29, 1996
Consolidated Statements of Cash Flows - Years ended
February 28, 1997, February 29, 1996 and
February 28, 1995
Notes to Consolidated Financial Statements
2. Financial Statement Schedules
The consolidated financial statement schedule of International
Multifoods Corporation and subsidiaries and the Independent Auditors'
Report thereon required to be filed as part of this Report are listed
below and are included at the end of this Report.
Independent Auditors' Report
Schedule II - Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable and,
therefore, have been omitted.
3. Exhibits
3.1 Restated Certificate of Incorporation of International
Multifoods Corporation, as amended to date (incorporated herein by
reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K for
the fiscal year ended February 28, 1993).
3.2 Bylaws of International Multifoods Corporation, as amended
to date (incorporated herein by reference to Exhibit 3.2 to the
Company's Annual Report on Form 10-K for the fiscal year ended February
28, 1994).
4.1 Indenture, dated as of January 1, 1990, between
International Multifoods Corporation and First Trust of New York,
National Association, successor to Morgan Guaranty Trust Company of New
York (incorporated herein by reference to Exhibit 4.1 to the Company's
Annual Report on Form 10-K for the fiscal year ended February 28, 1993).
4.2 First Supplemental Indenture, dated as of May 29, 1992,
supplementing the Indenture, dated as of January 1, 1990, between
International Multifoods Corporation and First Trust of New York,
National Association, successor to Morgan Guaranty Trust Company of New
York (incorporated herein by reference to Exhibit 4.2 to the Company's
Annual Report on Form 10-K for the fiscal year ended February 28, 1993).
4.3 Officers' Certificate, with exhibits thereto, relating to
the Company's Medium-Term Notes, Series A, issued under the Indenture,
dated as of January 1, 1990, as supplemented by the First Supplemental
Indenture, dated as of May 29, 1992, between International Multifoods
Corporation and First Trust of New York, National Association, successor
to Morgan Guaranty Trust Company of New York (incorporated herein by
reference to Exhibit 4.3 to the Company's Annual Report on Form 10-K for
the fiscal year ended February 28, 1993).
4.4 Officers' Certificate and Authentication Order dated
February 1, 1996 relating to the Company's Medium-Term Notes, Series B,
including the forms of Notes, issuable under the Indenture, dated as of
January 1, 1990, as supplemented by the First Supplemental Indenture,
dated as of May 29, 1992, between International Multifoods Corporation
and First Trust of New York, National Association, successor to Morgan
Guaranty Trust Company of New York (incorporated herein by reference to
Exhibit 4.1 to the Company's Current Report on Form 8-K dated February
1, 1996).
4.5 Credit Agreement dated as of March 22, 1996 among
International Multifoods Corporation, various financial institutions,
Bankers Trust Company, as Syndication Agent, The First National Bank of
Chicago, as Documentation Agent, and Bank of America National Trust and
Savings Association, as Administrative Agent (incorporated herein by
reference to Exhibit 4.5 to the Company's Annual Report on Form 10-K for
the fiscal year ended February 29, 1996).
4.6 Credit Agreement dated as of May 30, 1996 among Robin Hood
Multifoods Inc., various financial institutions and Canadian Imperial
Bank of Commerce, as Agent (incorporated herein by reference to Exhibit
4.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended
May 31, 1996).
The Company hereby agrees to furnish to the Securities and
Exchange Commission upon request copies of all other instruments
defining the rights of holders of long-term debt of International
Multifoods Corporation and its consolidated subsidiaries.
10.1 Rights Agreement, dated as of October 4, 1990, as amended
as of March 1, 1993, between International Multifoods Corporation and
Norwest Bank Minnesota, N.A., with exhibits thereto (incorporated herein
by reference to Exhibit 1 to the Company's Registration Statement on
Form 8-A dated October 11, 1990 and Exhibit 1 to Amendment No. 1 on Form
8 dated March 1, 1993 to the Company's Registration Statement on Form 8-
A dated October 11, 1990).
10.2 1997 Stock-Based Incentive Plan of International
Multifoods Corporation.*
10.3 Amended and Restated 1989 Stock-Based Incentive Plan of
International Multifoods Corporation (incorporated herein by reference
to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the
quarter ended August 31, 1993).*
10.4 1986 Stock Option Incentive Plan of International
Multifoods Corporation (incorporated herein by reference to Exhibit 4 to
the Company's Registration Statement on Form S-8 (Registration No. 33-
6223)).*
10.5 Management Incentive Plan of International Multifoods
Corporation, Amended and Restated as of September 17, 1993, as further
amended (incorporated herein by reference to Exhibit 10.3 to the
Company's Quarterly Report on Form 10-Q for the quarter ended November
30, 1993 and Exhibit 10.11 to the Company's Annual Report on Form 10-K
for the fiscal year ended February 28, 1995).*
10.6 Multifoods Division Long-Term Incentive Program (incorporated
herein by reference to Exhibit 10.11 to the Company's Annual Report on
Form 10-K for the fiscal year ended February 29, 1996).*
10.7 Management Benefit Plan of International Multifoods
Corporation, Restated Effective January 1, 1997.*
10.8 Trust Agreement, dated July 30, 1987, between
International Multifoods Corporation and Norwest Bank Minnesota,
National Association, as successor trustee to Bank of America NT and SA,
relating to the Management Benefit Plan of International Multifoods
Corporation (incorporated herein by reference to Exhibit 10.11 to the
Company's Annual Report on Form 10-K for the fiscal year ended February
28, 1993).*
10.9 Compensation Deferral Plan for Executives of International
Multifoods Corporation, Amended and Restated as of September 17, 1993
(incorporated herein by reference to Exhibit 10.5 to the Company's
Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).*
10.10 First Amendment to the Compensation Deferral Plan for
Executives of International Multifoods Corporation, Amended and Restated
as of September 17, 1993.*
10.11 Supplemental Deferred Compensation Plan of International
Multifoods Corporation, Adopted Effective April 1, 1997.*
10.12 Deferred Income Capital Accumulation Plan for Executives
of International Multifoods Corporation, Amended and Restated as of
September 17, 1993 (incorporated herein by reference to Exhibit 10.6 to
the Company's Quarterly Report on Form 10-Q for the quarter ended
November 30, 1993).*
10.13 Trust Agreement, dated February 25, 1991, between
International Multifoods Corporation and Norwest Bank Minnesota,
National Association, as successor trustee to Bank of America NT and SA,
relating to the Supplemental Retirement Benefit for Anthony Luiso
(incorporated herein by reference to Exhibit 10.14 to the Company's
Annual Report on Form 10-K for the fiscal year ended February 28,
1993).*
10.14 Employment Agreement, dated as of November 1 1996,
between International Multifoods Corporation and Gary E. Costley
(incorporated herein by reference to Exhibit 10.1 to the Company's
Quarterly Report on Form 10-Q for the quarter ended November 30, 1996).*
10.15 Form of Revised and Restated Severance Agreement between
International Multifoods Corporation and each of the Company's executive
officers, other than Gary E. Costley (incorporated herein by reference
to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the
quarter ended November 30, 1993).*
10.16 Letter Agreement, dated July 10, 1995, between
International Multifoods Corporation and Robert S. Wright regarding
benefits and severance arrangements (incorporated herein by reference to
Exhibit 10.19 to the Company's Annual Report on Form 10-K for the fiscal
year ended February 29, 1996).*
10.17 Memorandum of understanding, dated March 29, 1996,
between International Multifoods Corporation and Robert S. Wright
regarding supplemental retirement benefits (incorporated herein by
reference to Exhibit 10.20 to the Company's Annual Report on Form 10-K
for the fiscal year ended February 29, 1996).*
10.18 Letter Agreement, dated September 24, 1996, between
International Multifoods Corporation and Jeffrey E. Boies regarding
benefits and severance arrangements.*
10.19 Memorandum of understanding, dated May 7, 1997, between
International Multifoods Corporation and Jeffrey E. Boies regarding
supplemental retirement benefits.*
10.20 Separation Agreement dated June 21, 1996 between Anthony
Luiso and International Multifoods Corporation (incorporated herein by
reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q
for the quarter ended May 31, 1996).*
10.21 Separation Agreement dated December 31, 1996 between
International Multifoods Corporation and Duncan H. Cocroft.*
10.22 Letter dated January 3, 1997 from the Company to Devendra
Mishra regarding separation from employment with the Company.*
10.23 Agreement dated February 19, 1997 between International
Multifoods Corporation and Devendra Mishra.*
10.24 Form of Indemnity Agreement between International
Multifoods Corporation and each of the Company's executive officers
(incorporated herein by reference to Exhibit 10.19 to the Company's
Annual Report on Form 10-K for the fiscal year ended February 28,
1993).*
10.25 Fee Deferral Plan for Non-Employee Directors of
International Multifoods Corporation, Amended and Restated as of
September 17, 1993 (incorporated herein by reference to Exhibit 10.7 to
the Company's Quarterly Report on Form 10-Q for the quarter ended
November 30, 1993).*
10.26 First Amendment to Fee Deferral Plan for Non-Employee
Directors of International Multifoods Corporation, Amended and Restated
as of September 17, 1993.*
10.27 Deferred Income Capital Accumulation Plan for Directors
of International Multifoods Corporation, Amended and Restated as of
September 17, 1993 (incorporated herein by reference to Exhibit 10.8 to
the Company's Quarterly Report on Form 10-Q for the quarter ended
November 30, 1993).*
10.28 Form of Indemnity Agreement between International
Multifoods Corporation and each non-employee director of the Company
(incorporated herein by reference to Exhibit 10.21 to the Company's
Annual Report on Form 10-K for the fiscal year ended February 28,
1993).*
10.29 Stock Purchase Agreement between International Multifoods
Corporation (Seller) and Doskocil Companies Incorporated (Buyer) dated
as of March 17, 1994 (incorporated herein by reference to Exhibit 2.1 to
the Company's Current Report on Form 8-K dated June 1, 1994).
10.30 Stock Purchase Agreement between International Multifoods
Corporation (Seller) and Tyson Foods, Inc. (Buyer) dated as of June 7,
1995 (incorporated herein by reference to Exhibit 2.1 to the Company's
Current Report on Form 8-K dated June 26, 1995).
11 Computation of Earnings (Loss) Per Common Share.
12 Computation of Ratio of Earnings to Fixed Charges.
13 1997 Annual Report to Stockholders (only those portions
expressly incorporated by reference herein shall be deemed filed with
the Securities and Exchange Commission).
21 List of significant subsidiaries of the Company.
23 Consent of KPMG Peat Marwick LLP.
27 Financial Data Schedule.
____________________
*Management contract or compensatory plan or arrangement required to be
filed as an exhibit to Form 10-K pursuant to Item 14(c) of this Report.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
February 28, 1997.
(c) See Exhibit Index and Exhibits attached to this Report.
(d) See Financial Statement Schedules included at the end of
this Report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
Report to be signed on its behalf by the undersigned, thereunto duly
authorized.
INTERNATIONAL MULTIFOODS CORPORATION
Dated: May 15, 1997 By /s/ Gary E. Costley
---------------------------------
Gary E. Costley, Ph.D.
Chairman of the Board, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this Report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
/s/ Gary E. Costley Chairman of the Board, President May 15, 1997
- -------------------------
Gary E. Costley, Ph.D. and Chief Executive Officer
(Principal Executive Officer)
and Director
/s/ William L. Trubeck Senior Vice President - Finance May 15, 1997
- -------------------------
William L. Trubeck and Chief Financial Officer
(Principal Financial Officer)
/s/ Dennis R. Johnson Vice President and May 15, 1997
- -------------------------
Dennis R. Johnson Controller
(Principal Accounting Officer)
/s/ James G. Fifield Director May 15, 1997
- -------------------------
James G. Fifield
/s/ Robert M. Price Director May 15, 1997
- -------------------------
Robert M. Price
/s/ Nicholas L. Reding Director May 15, 1997
- -------------------------
Nicholas L. Reding
/s/ Jack D. Rehm Director May 15, 1997
- -------------------------
Jack D. Rehm
/s/ Lois D. Rice Director May 15, 1997
- -------------------------
Lois D. Rice
/s/ Richard K. Smucker Director May 15, 1997
- -------------------------
Richard K. Smucker
/s/ Dolph W. von Arx Director May 15, 1997
- -------------------------
Dolph W. von Arx
Independent Auditors' Report
The Board of Directors and Shareholders of
International Multifoods Corporation:
Under date of April 8, 1997, we reported on the consolidated balance
sheets of International Multifoods Corporation and subsidiaries as of
February 28, 1997 and February 29, 1996 and the related consolidated
statements of earnings and cash flows for each of the years in the
three-year period ended February 28, 1997, as contained in the 1997 Annual
Report to Stockholders. These consolidated financial statements and our
report thereon are incorporated by reference in the Annual Report on
Form 10-K for the fiscal year ended February 28, 1997. In connection with
our audits of the aforementioned consolidated financial statements, we also
have audited the related consolidated financial statement schedule
listed in Item 14. The consolidated financial statement schedule is the
responsibility of the Company's management. Our responsibility is to
express an opinion on the consolidated financial statement schedule
based on our audits.
In our opinion, such consolidated financial statement schedule, when
considered in relation to the basic consolidated financial statements
taken as a whole, presents fairly, in all material respects, the
information set forth therein.
/s/KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Minneapolis, Minnesota
April 8, 1997
Schedule II
INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES
Valuation and Qualifying Accounts
Three years ended February 28, 1997
(in thousands)
<TABLE>
<CAPTION>
Additions
-----------------------
Balance at Net charges Balance
beginning to costs and at end
Description of year expenses Other Deductions of year
- ------------ ---------- ------------ ------- ---------- -------
<S> <C> <C> <C> <C> <C>
Allowance deducted from assets
for doubtful receivables:
Year ended February 28, 1997 $13,982 $2,862 $ - $7,505(a) $ 9,339(b)
====== ===== ===== ===== ======
Year ended February 29, 1996 $ 6,708 $5,783 $2,877 $1,386(a) $13,982(b)
====== ===== ===== ===== ======
Year ended February 28, 1995 $ 5,219 $4,477 $1,190 $4,178(a) $ 6,708(b)
====== ===== ===== ===== ======
</TABLE>
Notes: (a) Deductions include accounts charged off, net of recoveries, and
foreign currency translation adjustments which arise from changes
in current rates of exchange.
(b) Classified in the balance sheets as follows:
1997 1996 1995
------ ------- ------
Trade accounts receivable $9,339 $13,977 $6,658
Miscellaneous receivables - current - 5 50
------ ------- ------
$9,339 $13,982 $6,708
====== ======= ======
INDEX TO EXHIBITS
TO ANNUAL REPORT ON FORM 10-K OF
INTERNATIONAL MULTIFOODS CORPORATION
FOR THE FISCAL YEAR ENDED FEBRUARY 28, 1997
3.1 Restated Certificate of Incorporation of International
Multifoods Corporation, as amended to date (incorporated herein by
reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K for
the fiscal year ended February 28, 1993).
3.2 Bylaws of International Multifoods Corporation, as amended
to date (incorporated herein by reference to Exhibit 3.2 to the
Company's Annual Report on Form 10-K for the fiscal year ended February
28, 1994).
4.1 Indenture, dated as of January 1, 1990, between
International Multifoods Corporation and First Trust of New York,
National Association, successor to Morgan Guaranty Trust Company of New
York (incorporated herein by reference to Exhibit 4.1 to the Company's
Annual Report on Form 10-K for the fiscal year ended February 28, 1993).
4.2 First Supplemental Indenture, dated as of May 29, 1992,
supplementing the Indenture, dated as of January 1, 1990, between
International Multifoods Corporation and First Trust of New York,
National Association, successor to Morgan Guaranty Trust Company of New
York (incorporated herein by reference to Exhibit 4.2 to the Company's
Annual Report on Form 10-K for the fiscal year ended February 28, 1993).
4.3 Officers' Certificate, with exhibits thereto, relating to
the Company's Medium-Term Notes, Series A, issued under the Indenture,
dated as of January 1, 1990, as supplemented by the First Supplemental
Indenture, dated as of May 29, 1992, between International Multifoods
Corporation and First Trust of New York, National Association, successor
to Morgan Guaranty Trust Company of New York (incorporated herein by
reference to Exhibit 4.3 to the Company's Annual Report on Form 10-K for
the fiscal year ended February 28, 1993).
4.4 Officers' Certificate and Authentication Order dated
February 1, 1996 relating to the Company's Medium-Term Notes, Series B,
including the forms of Notes, issuable under the Indenture, dated as of
January 1, 1990, as supplemented by the First Supplemental Indenture,
dated as of May 29, 1992, between International Multifoods Corporation
and First Trust of New York, National Association, successor to Morgan
Guaranty Trust Company of New York (incorporated herein by reference to
Exhibit 4.1 to the Company's Current Report on Form 8-K dated February
1, 1996).
4.5 Credit Agreement dated as of March 22, 1996 among
International Multifoods Corporation, various financial institutions,
Bankers Trust Company, as Syndication Agent, The First National Bank of
Chicago, as Documentation Agent, and Bank of America National Trust and
Savings Association, as Administrative Agent (incorporated herein by
reference to Exhibit 4.5 to the Company's Annual Report on Form 10-K for
the fiscal year ended February 29, 1996).
4.6 Credit Agreement dated as of May 30, 1996 among Robin Hood
Multifoods Inc., various financial institutions and Canadian Imperial
Bank of Commerce, as Agent (incorporated herein by reference to Exhibit
4.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended
May 31, 1996).
The Company hereby agrees to furnish to the Securities and
Exchange Commission upon request copies of all other instruments
defining the rights of holders of long-term debt of International
Multifoods Corporation and its consolidated subsidiaries.
10.1 Rights Agreement, dated as of October 4, 1990, as amended
as of March 1, 1993, between International Multifoods Corporation and
Norwest Bank Minnesota, N.A., with exhibits thereto (incorporated herein
by reference to Exhibit 1 to the Company's Registration Statement on
Form 8-A dated October 11, 1990 and Exhibit 1 to Amendment No. 1 on Form
8 dated March 1, 1993 to the Company's Registration Statement on Form 8-
A dated October 11, 1990).
10.2 1997 Stock-Based Incentive Plan of International
Multifoods Corporation.*
10.3 Amended and Restated 1989 Stock-Based Incentive Plan of
International Multifoods Corporation (incorporated herein by reference
to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the
quarter ended August 31, 1993).*
10.4 1986 Stock Option Incentive Plan of International
Multifoods Corporation (incorporated herein by reference to Exhibit 4 to
the Company's Registration Statement on Form S-8 (Registration No. 33-
6223)).*
10.5 Management Incentive Plan of International Multifoods
Corporation, Amended and Restated as of September 17, 1993, as further
amended (incorporated herein by reference to Exhibit 10.3 to the
Company's Quarterly Report on Form 10-Q for the quarter ended November
30, 1993 and Exhibit 10.11 to the Company's Annual Report on Form 10-K
for the fiscal year ended February 28, 1995).*
10.6 Multifoods Division Long-Term Incentive Program (incorporated
herein by reference to Exhibit 10.11 to the Company's Annual Report on
Form 10-K for the fiscal year ended February 29, 1996).*
10.7 Management Benefit Plan of International Multifoods
Corporation, Restated Effective January 1, 1997.*
10.8 Trust Agreement, dated July 30, 1987, between
International Multifoods Corporation and Norwest Bank Minnesota,
National Association, as successor trustee to Bank of America NT and SA,
relating to the Management Benefit Plan of International Multifoods
Corporation (incorporated herein by reference to Exhibit 10.11 to the
Company's Annual Report on Form 10-K for the fiscal year ended February
28, 1993).*
10.9 Compensation Deferral Plan for Executives of International
Multifoods Corporation, Amended and Restated as of September 17, 1993
(incorporated herein by reference to Exhibit 10.5 to the Company's
Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).*
10.10 First Amendment to the Compensation Deferral Plan for
Executives of International Multifoods Corporation, Amended and Restated
as of September 17, 1993.*
10.11 Supplemental Deferred Compensation Plan of International
Multifoods Corporation, Adopted Effective April 1, 1997.*
10.12 Deferred Income Capital Accumulation Plan for Executives
of International Multifoods Corporation, Amended and Restated as of
September 17, 1993 (incorporated herein by reference to Exhibit 10.6 to
the Company's Quarterly Report on Form 10-Q for the quarter ended
November 30, 1993).*
10.13 Trust Agreement, dated February 25, 1991, between
International Multifoods Corporation and Norwest Bank Minnesota,
National Association, as successor trustee to Bank of America NT and SA,
relating to the Supplemental Retirement Benefit for Anthony Luiso
(incorporated herein by reference to Exhibit 10.14 to the Company's
Annual Report on Form 10-K for the fiscal year ended February 28,
1993).*
10.14 Employment Agreement, dated as of November 1 1996,
between International Multifoods Corporation and Gary E. Costley
(incorporated herein by reference to Exhibit 10.1 to the Company's
Quarterly Report on Form 10-Q for the quarter ended November 30, 1996).*
10.15 Form of Revised and Restated Severance Agreement between
International Multifoods Corporation and each of the Company's executive
officers, other than Gary E. Costley (incorporated herein by reference
to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the
quarter ended November 30, 1993).*
10.16 Letter Agreement, dated July 10, 1995, between
International Multifoods Corporation and Robert S. Wright regarding
benefits and severance arrangements (incorporated herein by reference to
Exhibit 10.19 to the Company's Annual Report on Form 10-K for the fiscal
year ended February 29, 1996).*
10.17 Memorandum of understanding, dated March 29, 1996,
between International Multifoods Corporation and Robert S. Wright
regarding supplemental retirement benefits (incorporated herein by
reference to Exhibit 10.20 to the Company's Annual Report on Form 10-K
for the fiscal year ended February 29, 1996).*
10.18 Letter Agreement, dated September 24, 1996, between
International Multifoods Corporation and Jeffrey E. Boies regarding
benefits and severance arrangements.*
10.19 Memorandum of understanding, dated May 7, 1997, between
International Multifoods Corporation and Jeffrey E. Boies regarding
supplemental retirement benefits.*
10.20 Separation Agreement dated June 21, 1996 between Anthony
Luiso and International Multifoods Corporation (incorporated herein by
reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q
for the quarter ended May 31, 1996).*
10.21 Separation Agreement dated December 31, 1996 between
International Multifoods Corporation and Duncan H. Cocroft.*
10.22 Letter dated January 3, 1997 from the Company to Devendra
Mishra regarding separation from employment with the Company.*
10.23 Agreement dated February 19, 1997 between International
Multifoods Corporation and Devendra Mishra.*
10.24 Form of Indemnity Agreement between International
Multifoods Corporation and each of the Company's executive officers
(incorporated herein by reference to Exhibit 10.19 to the Company's
Annual Report on Form 10-K for the fiscal year ended February 28,
1993).*
10.25 Fee Deferral Plan for Non-Employee Directors of
International Multifoods Corporation, Amended and Restated as of
September 17, 1993 (incorporated herein by reference to Exhibit 10.7 to
the Company's Quarterly Report on Form 10-Q for the quarter ended
November 30, 1993).*
10.26 First Amendment to Fee Deferral Plan for Non-Employee
Directors of International Multifoods Corporation, Amended and Restated
as of September 17, 1993.*
10.27 Deferred Income Capital Accumulation Plan for Directors
of International Multifoods Corporation, Amended and Restated as of
September 17, 1993 (incorporated herein by reference to Exhibit 10.8 to
the Company's Quarterly Report on Form 10-Q for the quarter ended
November 30, 1993).*
10.28 Form of Indemnity Agreement between International
Multifoods Corporation and each non-employee director of the Company
(incorporated herein by reference to Exhibit 10.21 to the Company's
Annual Report on Form 10-K for the fiscal year ended February 28,
1993).*
10.29 Stock Purchase Agreement between International Multifoods
Corporation (Seller) and Doskocil Companies Incorporated (Buyer) dated
as of March 17, 1994 (incorporated herein by reference to Exhibit 2.1 to
the Company's Current Report on Form 8-K dated June 1, 1994).
10.30 Stock Purchase Agreement between International Multifoods
Corporation (Seller) and Tyson Foods, Inc. (Buyer) dated as of June 7,
1995 (incorporated herein by reference to Exhibit 2.1 to the Company's
Current Report on Form 8-K dated June 26, 1995).
11 Computation of Earnings (Loss) Per Common Share.
12 Computation of Ratio of Earnings to Fixed Charges.
13 1997 Annual Report to Stockholders (only those portions
expressly incorporated by reference herein shall be deemed filed with
the Securities and Exchange Commission).
21 List of significant subsidiaries of the Company.
23 Consent of KPMG Peat Marwick LLP.
27 Financial Data Schedule.
________________
*Management contract or compensatory plan or arrangement required to be
filed as an exhibit to Form 10-K pursuant to Item 14(c) of this Report.
Exhibit 10.2
1997 STOCK-BASED INCENTIVE PLAN OF
INTERNATIONAL MULTIFOODS CORPORATION
The purpose of the 1997 Stock-Based Incentive Plan of International
Multifoods Corporation is to enable International Multifoods Corporation
("Multifoods") and its subsidiaries to attract and retain officers and
key employees capable of assuring the future success of Multifoods and
to provide opportunities for stock ownership by such officers and
employees which will increase their proprietary interest in Multifoods
and, consequently, their identification with the interests of the
stockholders of Multifoods. The 1997 Stock-Based Incentive Plan of
International Multifoods Corporation shall be referred to herein as the
"Plan."
The Plan shall become effective upon being approved by the
requisite affirmative vote of the stockholders of Multifoods entitled to
vote thereon at the annual meeting of stockholders of Multifoods to be
held on June 20, 1997, or any adjournment thereof. From and after the
effective date of the Plan, no awards of any kind shall be made under
Part I of the Amended and Restated 1989 Stock-Based Incentive Plan of
International Multifoods Corporation, but all outstanding awards
previously granted under Part I of such plan shall remain outstanding in
accordance with the terms thereof. The Plan (but not Options, Stock
Appreciation Rights, Restricted Stock, Restricted Stock Units and
Performance Awards theretofore granted under the Plan) shall terminate
on, and no Awards shall be granted after, June 20, 2007.
Section 1. Definitions
For purposes of the Plan, the following terms shall have the
meanings set forth below:
"Award" shall mean an award granted to a Participant in accordance with
the provisions of the Plan in the form of Options, Stock Appreciation
Rights, Restricted Stock, Restricted Stock Units or Performance Awards,
or any combination thereof.
"Award Agreement" shall mean the written agreement evidencing each Award
granted to a Participant under the Plan.
"Board" shall mean the Board of Directors of Multifoods.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Committee" shall mean the Compensation Committee of the Board or such
other committee of Directors as may be designated by the Board to
administer the Plan. The Committee shall be comprised of not less than
such number of Directors as shall be required to permit the Plan to
satisfy the requirements of Rule 16b-3, and each member of the Committee
shall be a "Non-Employee Director" within the meaning of Rule 16b-3 and
an "outside director" within the meaning of Section 162(m).
"Date of Grant" shall mean the date on which the Committee grants the
Award or such other date as the Committee may designate.
"Designated Event" shall mean any of the following:
(a) the acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a
"Person") of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of either (i) the
then outstanding shares of Stock (the "Outstanding Stock") or (ii) the
combined voting power of the then outstanding voting securities of
Multifoods entitled to vote generally in the election of Directors (the
"Outstanding Voting Securities"); provided, however, that for purposes
of this provision (a), the following acquisitions shall not constitute a
Designated Event: (i) any acquisition directly from Multifoods, (ii)
any acquisition by Multifoods, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by Multifoods or
any corporation controlled by Multifoods or (iv)any acquisition by any
corporation pursuant to a transaction which complies with clauses (i),
(ii) and (iii) of provision (c) of this definition; or
(b) individuals, who, as of the date hereof, constitute the
Board (the "Incumbent Board"), cease for any reason to constitute at
least a majority of the Board; provided, however, that any individual
becoming a Director subsequent to the date hereof whose election, or
nomination for election by Multifoods' stockholders, was approved by a
vote of at least a majority of the Directors then comprising the
Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or
removal of Directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board; or
(c) the consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all
of the assets of Multifoods (a "Business Combination"), in each case,
unless, following such Business Combination, (i) all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Stock and Outstanding Voting Securities
immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 60% of, respectively, the then
outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation resulting
from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns Multifoods or all
or substantially all of Multifoods' assets either directly or through
one or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the
Outstanding Stock and Outstanding Voting Securities, as the case may be,
(ii) no Person (excluding any employee benefit plan (or related trust)
of Multifoods or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to
the Business Combination and (iii) at least a majority of the members of
the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(d) the approval by the stockholders of Multifoods of a
complete liquidation or dissolution of Multifoods.
"Director" or "Directors" shall mean a member, or more than one member,
of the Board of Directors of Multifoods.
"Eligible Employee" shall mean any officer or key employee of Multifoods
or any Subsidiary designated by the Committee to receive an Award.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Fair Market Value" shall mean, as of any date, the mean of the high and
low sale prices of a share of Stock on The New York Stock Exchange,
Inc., or its successor on such date (or, if no sale took place on such
exchange on such date, the mean between the high and low sale prices on
such exchange on the most recent preceding date on which a sale took
place).
"Incentive Stock Option" shall mean an Option which is designated as
such by the Committee and which meets the requirements of Section 422 of
the Code on the Date of Grant.
"Multifoods" shall mean International Multifoods Corporation, a Delaware
corporation.
"Non-Qualified Stock Option" shall mean an Option other than an
Incentive Stock Option.
"Option" shall mean a stock option awarded pursuant to the Plan to
purchase Stock.
"Participant" shall mean an Eligible Employee who receives an Award
which has not been terminated, expired or been fully exercised.
"Performance Award" shall mean a performance award made to a Participant
pursuant to the Plan.
"Plan" shall mean this 1997 Stock-Based Incentive Plan of International
Multifoods Corporation.
"Restricted Stock" shall mean the award of Stock pursuant to the Plan.
"Restricted Stock Unit" shall mean a unit awarded pursuant to the Plan
having a value equal to the Fair Market Value of one share of Stock
(plus, if so determined by the Committee, the value of any dividends or
other rights or property received by holders of Stock after the Date of
Grant of such Restricted Stock Unit).
"Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Exchange Act or any successor rule or
regulation.
"Section 162(m)" shall mean Section 162(m) of the Code.
"Stock" shall mean common stock (par value $.10 per share) of
Multifoods.
"Stock Appreciation Right" shall mean a stock appreciation right awarded
pursuant to the Plan, which need not be granted in tandem with an
Option.
"Subsidiary" shall mean any subsidiary or affiliate of Multifoods.
Section 2. Shares of Stock Subject to the Plan
Subject to adjustment as provided in Section 11 hereof, an
aggregate of 750,000 shares of Stock shall be available to Participants
under the Plan. Of such shares of Stock, a maximum of 150,000 shares
shall be available for issuance pursuant to Awards of Restricted Stock
and Restricted Stock Units. The shares of Stock deliverable upon the
exercise of any Award may be made available from authorized but unissued
shares or shares reacquired by Multifoods, including shares of Stock
purchased in the open market or in private transactions. For purposes
of this Section 2, if an Award entitles the holder thereof to receive or
purchase shares of Stock, the number of shares subject to such Award
shall reduce as of the Date of Grant the aggregate number of shares
available for granting Awards under the Plan by the number of shares
subject to such Award. If Stock Appreciation Rights are granted in
tandem with an Option under Section 4 hereof and the exercise of the
Option would cancel the Stock Appreciation Rights and vice versa, then
the grant of such Stock Appreciation Rights shall not reduce the number
of shares of Stock available for granting Awards under the Plan. Any
shares of Stock that are used by a Participant as full or partial
payment to Multifoods of the purchase price relating to an Award, or in
connection with the satisfaction of tax obligations relating to an
Award, shall again be available for granting Awards (other than
Incentive Stock Options) to Eligible Employees. If any Award granted
under the Plan shall terminate, the shares of Stock subject to, but not
delivered under, such Award shall be available for other Awards.
Section 3. Grants of Awards; Expiration of and Limitations on Awards
(a) Officers and other key employees of Multifoods or any
Subsidiary shall be eligible to be selected by the Committee to
participate in the Plan. The Committee may require any Participant to
remain in the employ of Multifoods or a Subsidiary for a stated period
or periods of time before an Award may be exercised; provided that
nothing in the Plan or in any Award Agreement shall confer upon any
Participant any right to remain in the employ of Multifoods or any of
its Subsidiaries, and nothing herein shall be construed in any manner to
interfere in any way with the right of Multifoods or any Subsidiary to
terminate such Participant's employment at any time.
(b) Subject to the provisions of the Plan, the Committee shall:
(i) determine and designate from time to time those Eligible
Employees to whom Awards are to be granted;
(ii) determine the form or forms of Award to be granted;
(iii) determine the amount or number of shares of Stock subject
to each Award; and
(iv) determine the terms and conditions of each Award, provided
that no Award shall have a term that extends beyond 10 years from the
Date of Grant.
(c) Each Award granted under the Plan shall be evidenced by a
written Award Agreement. Each Award Agreement shall be subject to the
applicable terms and conditions of the Plan and any other terms and
conditions (not inconsistent with the Plan) determined by the Committee.
(d) In case of termination of employment, the following
provisions shall apply:
(i) if a Participant who has been granted an Option or Stock
Appreciation Rights shall die before such Option or Stock Appreciation
Rights have expired, his or her Option or Stock Appreciation Rights may
be exercised, to the extent exercisable at the date of death, by the
personal representatives or administrators of the Participant or by any
person or persons to whom the Participant's rights under the Option or
Stock Appreciation Rights pass by will or the applicable laws of descent
and distribution, as follows:
(A) in the case of an Incentive Stock Option and Stock
Appreciation Rights granted in tandem with such Incentive Stock Option,
at any time, or from time to time, within 12 months after the date of
the Participant's death or such shorter period as the Committee may
specify as set forth in the Award Agreement; and
(B) in the case of a Non-Qualified Stock Option, Stock
Appreciation Rights granted in tandem with a Non-Qualified Stock Option
and Stock Appreciation Rights not granted in tandem with an Option, at
any time, or from time to time, within such period as the Committee may
specify as set forth in the Award Agreement;
but, in either event, not later than the expiration of the
applicable exercise period.
(ii) if a Participant's employment terminates because of any
reason other than his or her death, such Participant may exercise his or
her Options or Stock Appreciation Rights, to the extent exercisable at
the date of termination of employment as follows:
(A) in the case of an Incentive Stock Option and Stock
Appreciation Rights granted in tandem with such Incentive Stock Option,
at any time, or from time to time, within three months after the date of
termination of employment or such shorter period as the Committee may
specify as set forth in the Award Agreement; and
(B) in the case of a Non-Qualified Stock Option, Stock
Appreciation Rights granted in tandem with a Non-Qualified Stock Option
and Stock Appreciation Rights not granted in tandem with an Option, at
any time, or from time to time, within such period as the Committee may
specify as set forth in the Award Agreement;
but, in either event, not later than the expiration of the
applicable exercise period.
(e) No Eligible Employee may be granted any Award or Awards
under the Plan, the value of which Award or Awards is based solely on an
increase in the value of the Stock after the Date of Grant thereof, for
more than 100,000 shares of Stock in the aggregate in any calendar year.
The foregoing annual limitation specifically includes the grant of any
Award or Awards representing "qualified-performance-based compensation"
within the meaning of Section 162(m).
(f) No Award granted under the Plan shall be transferable other
than by will or by the laws of descent and distribution. During the
lifetime of a Participant, an Option or Stock Appreciation Right shall
be exercisable only by the Participant to whom the Option or Stock
Appreciation Right is granted.
(g) The Committee may grant Awards prior to approval of the
Plan by the stockholders of Multifoods at the annual meeting of
stockholders of Multifoods to be held on June 20, 1997, or any
adjournment thereof, provided that all such Awards shall be contingent
upon such approval.
Section 4. Options
(a) Subject to the provisions of paragraph (d) of this Section
4, any Option granted by the Committee may be either an Incentive Stock
Option or a Non-Qualified Stock Option, as the Committee shall
determine.
(b) The option price of the shares of Stock covered by each
Option shall not be less than 100% of the Fair Market Value of such
shares on the Date of Grant.
(c) Subject to the other provisions of the Plan, any Option may
be exercised in whole or in part at such time or times, and the
Participant may make payment of the option price in such form or forms,
including without limitation payment by delivery of Stock having a Fair
Market Value on the exercise date equal to the total option price, or by
a combination of Stock and other consideration, as the Committee may
specify in the applicable Award Agreement.
(d) To the extent that the aggregate Fair Market Value
(determined as of the Date of Grant) of the Stock with respect to which
all Incentive Stock Options are exercisable for the first time by a
Participant during any calendar year (under all plans described in
Section 422(d) of the Code of Multifoods and its Subsidiaries) exceeds
$100,000, such Option shall be treated as an Option which does not
qualify as an Incentive Stock Option.
(e) Notwithstanding anything else contained herein, any Option
may be exercised in full at any time following the occurrence of a
Designated Event.
Section 5. Stock Appreciation Rights
(a) Stock Appreciation Rights granted under the Plan may, but
need not, relate to a specific Option granted under Section 4 hereof.
Any Stock Appreciation Right related to a Non-Qualified Stock Option may
be granted at the same time the Option is granted or at any time
thereafter before exercise or expiration of the Option. Any Stock
Appreciation Right related to an Incentive Stock Option must be granted
at the same time the Option is granted. Any Stock Appreciation Right
related to any Option shall be exercisable only to the extent the
related Option is exercisable. The Committee may impose such conditions
or restrictions on the exercise of Stock Appreciation Rights as it shall
deem appropriate.
(b) Upon the exercise of each Stock Appreciation Right,
Multifoods shall pay to the Participant the excess of (i) the Fair
Market Value of one share of Stock on the date of exercise over (ii) the
Fair Market Value of one share of Stock on the Date of Grant (the "Base
Value"). Any such payment by Multifoods may be made in cash, in shares
of Stock (valued at the Fair Market Value on the date of exercise) or in
a combination thereof, as the Committee shall determine.
(c) Notwithstanding anything else contained herein, any Stock
Appreciation Right may be exercised in full at any time following the
occurrence of a Designated Event.
Section 6. Restricted Stock and Restricted Stock Units
The Committee may grant Awards of Restricted Stock and Restricted
Stock Units to Participants with the following terms and conditions and
with such additional terms and conditions not inconsistent with the
provisions of the Plan as the Committee shall determine:
(a) Shares of Restricted Stock and Restricted Stock Units shall
be subject to such restrictions as the Committee may impose (including,
without limitation, any limitation on the right to vote a share of
Restricted Stock or the right to receive any dividend or other right or
property with respect thereto), which restrictions may lapse separately
or in combination at such time or times, in such installments or
otherwise as the Committee may deem appropriate.
(b) Any Restricted Stock granted under the Plan shall be
evidenced by issuance of a stock certificate or certificates, which
certificate or certificates shall be held by Multifoods. Such
certificate or certificates shall be registered in the name of the
Participant and shall bear an appropriate legend referring to the
restrictions applicable to such Restricted Stock. In the case of
Restricted Stock Units, no shares of Stock shall be issued at the time
such Awards are granted.
(c) Except as otherwise determined by the Committee, upon
termination of employment (as determined under criteria established by
the Committee) during the applicable restriction period, all shares of
Restricted Stock and all Restricted Stock Units at such time subject to
restriction shall be forfeited and reacquired by Multifoods; provided,
however, that the Committee may, when it finds that a waiver would be in
the best interest of Multifoods, waive in whole or in part any or all
remaining restrictions with respect to shares of Restricted Stock or
Restricted Stock Units. Shares representing Restricted Stock that is no
longer subject to restrictions shall be delivered to the holder thereof
promptly after the applicable restrictions lapse or are waived. Upon
the lapse or waiver of restrictions and the restricted period relating
to Restricted Stock Units evidencing the right to receive shares of
Stock, such shares shall be issued and delivered to the holders of the
Restricted Stock Units.
(d) Without limiting the generality of the foregoing, the
Committee may specify in an Award Agreement granting an Award of
Restricted Stock or Restricted Stock Units, or subsequently determine in
its discretion, that, upon the occurrence of a Designated Event, the
restrictions applicable to such Award shall lapse with respect to, and
the Participant shall be unconditionally vested in, all or any part of
the Award.
Section 7. Performance Awards
(a) The Committee may grant Performance Awards to Participants
subject to the terms of the Plan and any applicable Award Agreement. A
Performance Award granted under the Plan (i) may be denominated or
payable in cash, shares of Stock (including, without limitation,
Restricted Stock), other securities or other Awards and (ii) shall
confer on the holder thereof the right to receive payments, in whole or
in part, upon the achievement of such performance goals during such
performance periods as the Committee shall establish. Subject to the
terms of the Plan and any applicable Award Agreement, the performance
goals to be achieved during any performance period, the length of any
performance period, the amount of any Performance Award granted and the
amount of any payment or transfer to be made pursuant to any Performance
Award shall be determined by the Committee.
(b) Without limiting the generality of the foregoing, the
Committee may specify in an Award Agreement granting a Performance
Award, or subsequently determine in its discretion, that, upon the
occurrence of a Designated Event, the performance requirements
applicable to such Performance Award shall terminate with respect to,
and the Participant shall be unconditionally vested in, all or any part
of the Performance Award.
Section 8. Administration of the Plan
The Committee shall have the full power and authority to interpret
and administer the Plan. The Committee may adopt such rules,
regulations and procedures with respect to the administration of the
Plan as it deems appropriate. Any decisions, determinations or actions
made or taken by the Committee pursuant to the Plan shall be final,
conclusive and binding on all persons for all purposes. The Committee
may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent
it shall deem desirable to carry the Plan into effect.
Section 9. Delivery of Shares; Securities Law Compliance
(a) No shares of Stock shall be issued or delivered pursuant to
any exercise of an Award hereunder until the requirements of such laws
and regulations as may be deemed by the Committee to be applicable
thereto are satisfied.
(b) Without limiting the generality of the foregoing, all
certificates for shares of Stock delivered under the Plan pursuant to
any Award or the exercise thereof shall be subject to such restrictions
as the Committee may deem advisable under the Plan or the rules,
regulations and other requirements of the Securities and Exchange
Commission and any applicable federal or state securities laws.
Section 10. Withholding
Upon exercise or receipt of (or the lapse of restrictions relating
to) any Award, the delivery of shares of Stock subject to such Award
shall be subject to payment of any required withholding taxes. A
Participant receiving shares of Stock subject to withholding taxes may,
as a condition precedent to receiving the shares of Stock, be required
to pay Multifoods a cash amount equal to the amount of required
withholdings. In lieu of all or any part of such a cash payment, the
Committee may permit the Participant to elect to cover all or any part
of the required withholdings, and to cover any additional withholdings
up to the amount needed to cover the Participant's full Federal
Insurance Contributions Act and federal, state and local income taxes
with respect to income arising from exercise of Options or receipt of
Restricted Stock or shares of Stock in payment of Performance Awards,
through a reduction of the number of shares of Stock delivered to the
Participant and/or through the return to Multifoods of shares of Stock
delivered to the Participant in connection with the Award or shares
otherwise held by such Participant.
Section 11. Adjustment of and Changes in Stock
In the event of a reorganization, recapitalization, stock split,
stock dividend, combination of shares, merger, consolidation,
distribution of assets, or any other changes in the corporate structure
or stock of Multifoods, the Committee shall make such adjustments as it
deems appropriate in the number and kind of shares of Stock authorized
by the Plan, in the number and kind of shares of Stock covered by the
Awards granted and in the exercise price of outstanding Options or the
Base Value of outstanding Stock Appreciation Rights.
Section 12. No Rights of Stockholders
Except with respect to Restricted Stock, neither a Participant nor
the Participant's legal representative shall be, or have any of the
rights and privileges of, a stockholder of Multifoods in respect of any
shares of Stock receivable upon the exercise of any Award, in whole or
in part, unless and until certificates for such shares of Stock shall
have been issued.
Section 13. Amendments
(a) The Board may, at any time, amend or terminate the Plan,
subject to the following:
(i) No such amendment may adversely affect the rights of any
Participant under an Award which has not terminated, expired or been
fully exercised without the consent of such Participant or beneficiary
thereof.
(ii) It is intended that the Plan qualify as an incentive stock
option plan meeting the requirements of Section 422 of the Code or any
successor thereto, and that certain Awards constitute "qualified
performance-based compensation" within the meaning of Section 162(m).
Unless otherwise determined by the Board, amendments to the Plan shall
be subject to approval of the stockholders of Multifoods to the extent
necessary to satisfy such requirements and meet such qualifications as
in effect from time to time.
(iii) Unless otherwise determined by the Board, amendments to
the Plan shall be subject to approval of the stockholders of Multifoods
to the extent necessary to satisfy the requirements of the listing rules
of The New York Stock Exchange, Inc.
(b) The Committee may not amend, alter, suspend, discontinue or
terminate any outstanding Award if such action would adversely affect
the rights of the holder of such Award, without the consent of the
Participant or beneficiary thereof.
Section 14. Governing Law.
The validity, construction and effect of the Plan and any Award
shall be determined in accordance with the laws of the State of
Delaware.
Section 15. Severability.
If any provision of the Plan or any Award is or becomes or is
deemed to be invalid, illegal or unenforceable or would disqualify the
Plan or any Award under any law deemed applicable by the Committee, such
provision shall be construed or deemed amended to conform to applicable
laws, or if it cannot be so construed or deemed amended without, in the
determination of the Committee, materially altering the purpose or
intent of the Plan or the Award, such provision shall be stricken, and
the remainder of the Plan or any such Award shall remain in full force
and effect.
Exhibit 10.7
MANAGEMENT BENEFIT PLAN OF
INTERNATIONAL MULTIFOODS CORPORATION
Restated Effective January 1, 1997
MANAGEMENT BENEFIT PLAN OF
INTERNATIONAL MULTIFOODS CORPORATION
SECTION 1.
DECLARATION
1.1 The Management Benefit Plan of International Multifoods
Corporation was established as of April 1, 1977, and is amended and
restated in this document, as a means of providing retirement and other
benefits to a select group of executives of International Multifoods
Corporation and its consolidated subsidiaries.
1.2 This January 1, 1997 restatement shall apply to Participants
actively employed on or after that date. The September 17, 1993
restatement shall control as to benefits to Participants terminated
prior to January 1, 1997 and on or after September 17, 1993. The March
1, 1990 restatement shall control as to benefits to Participants
terminated prior to September 17, 1993 and on or after March 1, 1990.
The July 1, 1987 restatement and prior plan documents shall control as
to benefits to Participants terminated prior to March 1, 1990.
1.3 This Plan has been established and will be maintained as a non-
qualified form of executive deferred compensation, in accordance with
Section 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement
Income Security Act of 1974, as amended.
SECTION 2.
DEFINITIONS
2.1 The terms defined in this Section 2 shall, for all purposes of
this Plan, have the meanings herein specified, unless the context
expressly or by necessary implication otherwise requires:
2.1.1 "Accrued Benefit" means an annual income payable for life in
an amount equal to "A" minus "B" where:
"A" = The annual benefit that would have been paid under the PEP in
the form of a single life annuity starting as of the date retirement
benefits start under this Plan if (i) the Participant's "Covered Pay"
under the PEP included amounts deferred at the election of the
Participant under any nonqualified deferred compensation plan or
arrangement approved by the Committee, and also amounts waived by the
Participant under any waiver arrangement approved by the Committee, and
(ii) Code sections 401(a)(17) and 415 did not apply to the PEP.
minus
"B" = The annual benefit actually payable under the PEP in the form
of a single life annuity starting as of the date retirement benefits
start under this Plan.
2.1.2 "Actuary" means an Enrolled Actuary under the Employee
Retirement Income Security Act of 1974, appointed by the Company.
2.1.3 "Actuarial Equivalent" means a benefit of equivalent value
when computed on the basis of mortality and interest rate assumptions
recommended by the Actuary and approved by the Vice President - Finance
and Chief Financial Officer or the Vice President and Controller of the
Company.
2.1.4 "Affected Participant" means:
(a) any Participant who is an Employee on the Date of a Change in
Control of the Company except any Participant who has delivered to the
Company, prior to the Date of Change in Control of the Company, a signed
letter stating that such Participant has elected not to receive the lump
sum payment contemplated and provided for in Section 5.5 hereof in the
event of a Change in Control of the Company; provided, however, that any
such Participant shall have the right to withdraw such election by
delivering a signed letter to that effect to the Company at any time
prior to the Date of a Change in Control of the Company; and
(b) any Participant who: (i) on the Date of a Change in Control of
the Company is a retired Employee, or a former Employee who at the time
of termination of employment was vested in his or her Accrued Benefit,
or the beneficiary of any such retired Employee or former vested
Employee ("Retired Employee"), and (ii) has delivered to the Company,
prior to the Date of a Change in Control of the Company, a signed letter
electing to receive, upon the occurrence of a Change in Control of the
Company, in the form of a lump sum, the benefits payable to such
Participant as of the Date of a Change in Control of the Company;
provided, however, that any such Participant shall have the right to
withdraw such election by delivering a signed letter to that effect to
the Company, at any time prior to the Date of a Change in Control of the
Company.
2.1.5 "Change in Control of the Company" means any one of the
following:
(a) the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either (i) the then outstanding shares
of common stock of the Company (the "Outstanding Common Stock") or (ii)
the combined voting power of the then outstanding voting securities of
the Company entitled to vote generally in the election of directors (the
"Outstanding Voting Securities"); provided, however, that for purposes
of this subsection (a), the following acquisitions shall not constitute
a Change of Control of the Company: (i) any acquisition directly from
the Company, (ii) any acquisition by the Company, (iii) any acquisition
by any employee benefit plan (or related trust) sponsored or maintained
by the Company or any corporation controlled by the Company or (iv) any
acquisition by any corporation pursuant to a transaction which complies
with clauses (i), (ii) and (iii) of subsection (c) of this Section
2.1.5; or
(b) individuals who, as of the date hereof, constitute the Board of
Directors of the Company (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board of Directors of the Company;
provided, however, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or
other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board of Directors of the Company; or
(c) consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of
the Company (a "Business Combination"), in each case, unless, following
such Business Combination, (i) all or substantially all of the
individuals and entities who were the beneficial owners, respectively,
of the Outstanding Common Stock and Outstanding Voting Securities
immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 60% of, respectively, the then
outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation resulting
from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Company or
all or substantially all of the Company's assets either directly or
through one or more subsidiaries) in substantially the same proportions
as their ownership, immediately prior to such Business Combination of
the Outstanding Common Stock and Outstanding Voting Securities, as the
case may be, (ii) no Person (excluding any employee benefit plan (or
related trust) of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly, 20% or
more of, respectively, the then outstanding shares of common stock of
the corporation resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to
the Business Combination and (iii) at least a majority of the members of
the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board of
Directors of the Company, providing for such Business Combination; or
(d) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
2.1.6 "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
2.1.7 "Committee" means the Compensation Committee of the Board of
Directors of International Multifoods Corporation, or its successor
group.
2.1.8 "Company" or "Multifoods" means International Multifoods
Corporation, a Delaware corporation, and its successors and assigns.
2.1.9 "Effective Date" means April 1, 1977.
2.1.10 "Employee" means any person including any officer, employed
on a regular, full-time, salaried basis by the Employer.
2.1.11 "Employer" means the Company or any of its subsidiaries.
2.1.12 "Normal Retirement Date" means the first day of the month
coincident with or next following the Participant's attainment of age
sixty-five (65).
2.1.13 "Participant" means an Employee who has been designated by
the Board of Directors of Multifoods, or the Committee, to participate
in this Plan in accordance with the provision of Section 4 of this Plan.
2.1.14 "PEP" means the Multifoods Pension Equity Plan, as originally
adopted or, if amended or supplemented or restated, as so amended or
supplemented or restated.
2.1.15 "Plan" means this Management Benefit Plan, as originally
adopted or, if amended or supplemented or restated, as so amended or
supplemented or restated.
2.1.16 "Vesting Service" shall have the respective meaning specified
in the PEP, subject to modification under Section 3 of this Plan.
SECTION 3.
VESTING SERVICE
3.1 Vesting Service shall be used to determine vesting under Section
4.2 of this Plan.
3.2 At the discretion of the Committee, an Employee's period of
service, or any part thereof, with a company of which the assets or
stock have been acquired by the Employer, may be included as Vesting
Service.
3.3 Vesting Service shall include a leave of absence, but for
purposes of this Plan, such period shall not exceed one (1) year, unless
otherwise determined by the Committee.
SECTION 4.
ELIGIBILITY AND VESTING
4.1 ELIGIBILITY
4.1.1 Any executive of the Employer shall be eligible for
consideration as a Participant in this Plan.
4.1.2 It shall be the prerogative of the Board of Directors of
Multifoods, or the Committee, to designate an Employee as a Participant
under this Plan. The Board of Directors of Multifoods, or the
Committee, in designating Participants shall give full consideration to
recommendations submitted by the Chairman of the Board of Directors of
Multifoods.
4.1.3 An Employee designated as a Participant under this Plan will
commence participation as of the effective date specified by the Board
of Directors of Multifoods, or the Committee.
4.1.4 An Employee designated as a Participant under this Plan will
continue as a Participant under this Plan until death, termination of
employment, or until removed from participation by the Board of
Directors of Multifoods, or by the Committee.
4.2 VESTING
4.2.1 A Participant shall be vested in his or her Accrued Benefit at
the earliest to occur of the following events:
(a) the date that the Participant completes five (5) years of
Vesting Service;
(b) the date that the Participant attains age sixty-five (65)
provided the Participant is employed with the Employer on that date; or
(c) the Date of a Change in Control.
SECTION 5.
BENEFITS
5.1 NORMAL RETIREMENT
5.1.1 The Accrued Benefit shall commence at the Participant's Normal
Retirement Date (or, if later, as of the first day of the month
coincident with or next following the Participant's termination of
employment).
5.1.2 The Accrued Benefit shall be paid in the form of a single life
annuity with monthly payments unless the Participant elects an
alternative payment form. The alternative payment forms available shall
be those available to the Participant under the PEP, provided that a
single lump-sum payment is not an available payment form under this Plan
(except as provided in Section 5.1.3, 5.5 or 8.3 of this Plan). The
election of an alternative payment form must be made within 90 after the
date the Participant first becomes a Participant in this Plan (or, in
the case of a Participant who is a Participant as of January 1, 1997, no
later than March 31, 1997). In addition, the Accrued Benefit may, at
the discretion of the Committee, be payable in any form other than a
single life annuity or the alternative payment form elected by the
Participant. Notwithstanding the form or frequency of payments of the
Accrued Benefit, the value of the benefit payable to the Participant
shall be the Actuarial Equivalent of the single life annuity payable to
the Participant.
5.1.3 Notwithstanding any provisions to the contrary contained in
this Plan, if the present value of the Participant's Accrued Benefit is
$10,000 or less, such present value shall be paid in the form of a
single lump-sum payment as soon as administratively practicable
following the Participant's termination of employment with the Employer.
The present value for purposes of this Section 5.1.3 shall be calculated
using the mortality and interest assumptions that would be used for
purposes of calculating a minimum lump-sum distribution under the PEP.
Payment of a lump-sum shall be in full satisfaction of all benefits
otherwise payable under this Plan.
5.2 EARLY RETIREMENT OR TERMINATION OF EMPLOYMENT
If a Participant who is vested terminates employment prior to
the date he or she attains age sixty-five (65), then in such event, a
retirement benefit shall be due such Participant under this Plan. Such
benefit shall be payable, at the discretion of the Committee, starting
either on the first day of the month coincident with or next following
the Participant's termination of employment with the Employer, or on
some other date not later than the Participant's Normal Retirement Date.
The amount of such retirement benefit (when expressed as a single life
annuity with monthly payments) shall equal the Participant's Accrued
Benefit. Such benefit shall be paid in the form specified in Section
5.1.
5.3 BENEFIT PAYABLE UPON DEATH
If a Participant dies on or after the date that such Participant becomes
vested but before the payment or commencement of a benefit under Section
5.1, 5.2 or 5.5 of this Plan, a death benefit shall be paid to his or
her beneficiary as soon as administratively practicable after the
Participant's death. Such benefit shall be paid in a single lump-sum
payment in an amount equal to the present value of the Participant's
Accrued Benefit (expressed as a single life annuity commencing as of the
Participant's Normal Retirement Date). The present value for purposes
of this Section 5.3 shall be calculated using the mortality and interest
assumptions that would be used for purposes of calculating a minimum
lump-sum distribution under the PEP.
A Participant's "beneficiary" for this purpose means any person
(including a trust) designated in writing by the Participant to receive
the death benefit payable under this Plan. If no such designation is
made by the Participant, or if such designation fails, in whole or in
part, by reason of the prior death of such person or for any other
cause, then the Participant's "beneficiary" shall mean the surviving
spouse of the Participant, if one shall then survive; or, if not, then
the surviving issue of the Participant per stirpes and not per capita;
or, if no issue survive the Participant, then the executor,
administrator or personal representative of the estate of the deceased
Participant.
5.4 OPTIONS
Any of the benefits provided for in this Plan may, at the discretion of
the Committee, be paid in any form of Actuarial Equivalent value.
5.5 CHANGE IN CONTROL OF THE COMPANY
Notwithstanding any provisions to the contrary contained in this Plan,
upon the occurrence of a Change in Control of the Company, the fact and
the date ("Date") of which is to be determined finally and conclusively
by the Chief Executive Officer of the Company or by the Vice-President -
Finance and Chief Financial Officer of the Company, to be evidenced by a
letter signed by such officer, addressed and delivered to the Committee,
the Company shall pay, or cause to be paid, to each Affected Participant
under this Plan in lieu of any benefits (excluding benefits paid to any
Affected Participant prior to the date of a Change in Control of the
Company) payable pursuant to Sections 5.1 through 5.3 hereof,
automatically and simultaneously, without any further action,
determination or notice of any kind, and whether or not such Affected
Participant is vested under the provisions of Section 4.2.1 hereof, a
lump sum determined and calculated in accordance with the following,
subject to adjustment pursuant to the provisions of Section 5.6 hereof:
(a) if, on the Date of the Change in Control of the Company, the
Affected Participant is an Employee, the amount of such lump sum payment
shall be an amount equal to the present value of the Affected
Participant's Accrued Benefit. The present value for purposes of this
Section 5.6 shall be calculated using the mortality and interest
assumptions that would be used for purposes of calculating a minimum
lump-sum distribution under the PEP.
(b) if, on the Date of the Change in Control of the Company, the
Affected Participant is a Retired Employee, as defined in Section
2.1.4(b) hereof, the amount of such lump sum payment shall be an amount
equal to the present value (as determined in (a), above) of the benefits
remaining payable to such Affected Participant as of the Date of the
Change in Control of the Company. If a Change in Control of the Company
occurs and both the Chief Executive Officer of the Company and the Vice
President-Finance and Chief Financial Officer of the Company fail, for
any reason whatsoever, to sign, address and deliver to the Committee the
letter described above in this Section 5.5, such failure shall not
affect in any manner the obligation of the Company or the full right,
title and interest of each Affected Participant under this Plan to
receive from the Company the full amount of the lump sum payment
determined and calculated in accordance with the forgoing provisions of
this Section 5.5, subject to adjustment pursuant to the provisions of
Section 5.6 hereof; and the entitlement of each Affected Participant to
receive such sum from the Company shall be valid and enforceable by each
Affected Participant in any state or federal court having jurisdiction
thereof.
5.6 PARACHUTE PAYMENTS
In the event it shall be determined that any payment by the Company to
or for the benefit of the Participant hereunder determined without
regard to any additional payments required under this Section 5.6 (a
"Payment") would be subject to the excise tax imposed by Code section
4999 or any interest or penalties are incurred by the Affected
Participant with respect to such excise tax (such excise tax, together
with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then the Affected Participant shall be
entitled to receive an additional payment (a "Gross-Up Payment") in an
amount such that after payment by the Affected Participant of all taxes
(including any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax
imposed upon the Gross-Up Payment, the Affected Participant retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payment.
For purposes of these calculations, all applicable amounts shall be
determined by the Company's independent auditors.
SECTION 6.
LIABILITY OF COMPANY
6.1 The benefits of this Plan shall be paid by Multifoods or any of
its consolidated subsidiaries or by a trust established by the Company
for this purpose. The amounts of all benefits with respect to which any
and all Participants under the Plan are vested pursuant to the term and
provisions of the Plan, shall be provided for in such manner and form as
shall be approved, from time to time, by the Board of Directors or the
Committee, to assure that funds will be available to pay all such
amounts when due, to vested Participants under the Plan.
6.2 The Company shall establish on its accounting ledgers, or cause
to be established on the accounting ledgers of any consolidated
subsidiary, a reserve for the retirement benefits of each Participant,
based on the Aggregate Cost Method of actuarial valuation and the
actuarial assumptions approved by the Committee on the recommendation of
the Actuary.
6.3 A Participant who is vested in a benefit under this Plan shall
be an unsecured general creditor of the Company as to the payment of any
benefit under the Plan.
SECTION 7.
ADMINISTRATION
7.1 Except for the functions reserved to the Company, the Board of
Directors of the Company, the Chairman of the Board of Directors of the
Company or a trustee, if any, appointed by the Company, the
administration of the Plan shall be the responsibility of the Committee.
7.2 The Committee shall have the power and the duty to take all
actions necessary and proper to carry out the provisions of this Plan.
The determinations of the Committee shall be final and binding, unless
the Board of Directors of Multifoods modifies or reverses the
determination made by the Committee.
7.3 In administering the Plan, the Committee shall:
(a) designate Participants and furnish them, upon request, with
copies of the Plan;
(b) determine the reserve required under Section 6.2 of the Plan;
(c) instruct the Company (or trustee, if any) as to payments to be
made under this Plan;
(d) make and enforce such rules and regulations as it shall deem
proper from time to time for the administration of this Plan;
(e) interpret the Plan (in its discretion) to resolve ambiguities,
inconsistencies and omissions, which interpretations shall be final and
binding unless the Board of Directors of Multifoods modifies or reverses
the interpretation made by the Committee;
(f) determine the amount of benefits payable in accordance with
Section 3 of this Plan; and
(g) take whatever action is necessary in fulfilling the purposes and
intent of this Plan.
7.4 The Committee may appoint a person or persons to act in the day-
to-day administration of the Plan, which person or persons may or may
not be a Participant or a member of the Committee.
7.5 Except in circumstances involving bad faith, no member of the
Committee, the Board of Directors of the Company or the Chairman of the
Board of Directors of the Company, or any person assisting in the Plan
administration, shall be liable, in respect to this Plan, for any act
whether of commission or omission taken by any other member of the
Committee, officer, agent or employee of the Company or any of its
consolidated subsidiaries, or for anything done or omitted to be done by
any member of the Committee, officer, agent or employee of the Company.
Any person claiming benefits under this Plan shall look solely to the
Company for redress.
SECTION 8.
AMENDMENT AND TERMINATION
8.l The Board of Directors of the Company shall have the power to
suspend or terminate this Plan in whole or in part at any time, and from
time to time to extend, modify, amend or revise this Plan in such
respects as the Board of Directors of Multifoods by resolution may deem
advisable; provided that no such extension, modification, amendment or
revision shall deprive a Participant or any beneficiary designated by a
Participant, of the vested portion of any benefit under this Plan
accrued as of the date of such action. The fact that a director is, has
been, or will be a Participant in this Plan shall not disqualify such
Participant from voting as a director for or against an extension,
discontinuance, modification, amendment or revision of this Plan or any
part thereof.
8.2 The Company intends to continue this Plan indefinitely, but
nevertheless assumes no contractual obligation, other than as
specifically provided herein, beyond the guarantee of the vested
portions of any benefits payable under this Plan.
8.3 If this Plan is terminated by the Board of Directors of
Multifoods under and pursuant to the provisions of this Section 8, a
Participant who is vested, as determined in Section 4.2.1 or Section 5.5
of this Plan accrued as of the date of such action, shall be paid the
present value of his or her Accrued Benefit in the form of a single
lump-sum payment as soon as administratively practicable following the
termination of the Plan. The present value for purposes of this Section
8.3 shall be calculated using the mortality and interest assumptions
that would be used for purposes of calculating a minimum lump-sum
distribution under the PEP. Payment of a lump-sum shall be in full
satisfaction of all benefits otherwise payable under this Plan.
SECTION 9.
MISCELLANEOUS
9.l This Plan is not a contract between the Employer and any
Participant or beneficiary, and nothing herein shall affect the right of
the Employer to discharge an Employee.
9.2 Except to the extent required by law, no benefit hereunder shall
be subject to anticipation, alienation, garnishment, sale, pledge,
transfer, encumbrance, judgment or damage. Any attempt at such may
cause the Committee to cancel the benefit, or pay it otherwise for the
use of the Participant or beneficiary.
9.3 If the Committee determines that a person entitled to benefits
hereunder is incompetent, it may cause benefits to be paid to another
person for the use of the Participant or beneficiary, in total discharge
of the Plan's obligations.
9.4 The provisions of the Plan shall be construed and governed under
the laws of the State of Minnesota, unless and except as preempted by
federal law; provided, however, that the provisions of any trust
agreement relating to a trust established for the purpose of
accumulating assets to assist the Company in fulfilling the obligations
of the Company under this Plan shall be construed and under the laws of
the jurisdiction stated in such trust agreement.
9.5 In determining entitlement to benefits and in calculating the
amount of any benefits payable to Participants under this Plan which are
based or predicated upon the PEP, the terms and conditions (including,
without limitations, any provisions governing vesting and any provisions
governing payment options available to Participants) of the PEP shall
govern and control, except as specifically provided otherwise in this
Plan.
APPENDIX A
MANAGEMENT BENEFIT PLAN OF INTERNATIONAL
MULTIFOODS CORPORATION
A.1 Appendix A Participants
This Appendix A shall apply to the following Participants who were
Participants in the Plan as of January 1, 1997 (referred to as "Appendix
A Participants"):
Jeffrey E. Boies
Frank W. Bonvino
Duncan H. Cocroft
Gary E. Costley
Howard A. Grauff
Dennis R. Johnson
D. Bruce Kean
Robert F. Maddocks
Edgardo E. Rodriguez
Joseph A. Van Bourgondien
Robert A. Wallace
Robert W. Wright
A.2 Definitions
The terms in this Section A.2 shall, for all purposes of this Plan,
have the meanings herein specified, unless the context expressly or by
necessary implication otherwise requires:
A.2.1 "Accrual Service" shall have the respective meaning
specified in Section A.3 of this Appendix A.
A.2.2 "Accrued Appendix A Benefit" means the Appendix A Benefit
multiplied times a fraction (not to exceed "1.00"), the numerator of
which is equal to the Accrual Service of the Participant and the
denominator of which is equal to what that Accrual Service would have
been had the Participant remained an active Employee until the date he
or she attained age sixty-five (65).
A.2.3 "Appendix A Benefit" means an annual income for life in an
amount equal to "A" plus "B" minus "C" where:
"A" = 50% of the Bonus Base of such Participant.
plus
"B" = The annual benefit that would have been received under the
PEP in the form of a single life annuity starting as of the
Participant's Normal Retirement Date (or, if later, as of the first day
of the month coincident with or next following the Participant's
termination of employment) if (i) the Participant were eligible for the
Grandfathered Formula, and only that formula, under the PEP (regardless
of whether the Participant actually is eligible for such Grandfathered
Formula), (ii) the Participant's Final Average Pay under the
Grandfathered Formula included amounts deferred at the election of the
Participant under any nonqualified deferred compensation plan or
arrangement approved by the Committee, and also amounts waived by the
Participant under any waiver arrangement approved by the Committee and
any extra benefits resulting from special service awards approved by the
Committee, and (iii) Code sections 401(a)(17) and 415 did not apply to
the Grandfathered Formula under the PEP.
minus
"C" = The Participant's Accrued Benefit calculated without regard
to this Appendix A.
A.2.4 "Bonus" or "Bonuses" means (for the fiscal year in which the
bonus is earned, and whether or not deferred or waived as to payment):
(a) The amounts (if any) awarded to the Participant under the
Management Incentive Plan of International Multifoods Corporation, as
may be amended from time to time;
(b) The amounts (if any) awarded to the Participant under the
Management Bonus Program - General of International Multifoods
Corporation, as amended from time to time.
A.2.5 "Bonus Base" means the average of the highest five (5) or less
Bonuses awarded to the Participant during the last ten (10) years of
employment with the Employer. From and after March 1, 1990, but not
applicable to Employees who are Participants before that date, unless
the Committee prescribes otherwise, only Bonuses paid while a
Participant shall be included in the Bonus Base. In calculating the
Bonus Base with respect to a Participant, the denominator shall be "5"
in all circumstances.
A.2.6 "Disabled" or "Disability" means a condition described in
Section A.6 of this Appendix.
A.2.7 "Grandfathered Formula" means the benefit formula set forth in
Appendix B of the PEP, which is a continuation of the benefit formula in
effect under the PEP as of December 31, 1995 (then called the
"Employees' Retirement Plan of International Multifoods Corporation").
All other capitalized terms used in this Appendix shall have the same
meanings as in the Plan.
A.3 Accrual Service
A.3.1 "Accrual Service" shall be used to calculate the Accrued
Appendix A Benefit under Section A.2.2.
A.3.2 "Accrual Service" as used in this Appendix A shall refer
to the period of years and fractions of a year between the most recent
date that an Employee is made a Participant in the Plan and the first to
occur of that Employee's death, disability, termination of employment or
retirement. Employees who were Participants before March 1, 1990
receive Accrual Service credit from date of hire, unless specified
otherwise by the Committee. Fractions of a year, for purposes of this
Appendix A, shall be based upon complete months of employment.
A.3.3 At the discretion of the Committee, a period of
employment with the Employer prior to the most recent date of hire or
prior to date of participation may be included as Accrual Service.
Also, at the discretion of the Committee, an Employee's period of
service, or any part thereof, with a company of which the assets or
stock have been acquired by the Employer, may be included as Accrual
Service.
A.3.4 Accrual Service shall include a leave of absence, but for
purposes of this Plan, such period shall not exceed one (1) year, unless
otherwise determined by the Committee.
A.4 Normal Retirement
A.4.1 The Appendix A Benefit shall commence at the
Participant's Normal Retirement Date (or, if later, as of the first day
of the month coincident with or next following the Participant's
termination of employment).
A.4.2 The Appendix A Benefit shall be paid in the form of a
single life annuity with monthly payments. However, the Appendix A
Benefit may, at the discretion of the Committee, be payable in any form
other than a single life annuity. Notwithstanding the form or frequency
of payments of the Appendix A Benefit, the value of the benefit payable
to the Participant shall be the Actuarial Equivalent of the single life
annuity payable to the Participant.
A.5 Early Retirement or Termination of Employment
If an Appendix A Participant who is vested, as determined under Section
4.2 of the Plan elects to retire or terminate employment prior to the
date he or she attains age sixty-five (65) (and he or she is not
eligible for a benefit under Section A.6 of this Appendix A), then in
such event, the retirement benefit due such Participant shall be
payable, at the discretion of the Committee, either on the first day of
the month coincident with or next following the Participant's
termination of employment with the Employer, or at some other date not
later than the Participant's Normal Retirement Date; provided, however,
that, except as specifically provided otherwise herein, no retirement
benefit due such Participant shall be payable prior to the attainment by
such Participant of age fifty-five (55). The retirement benefit due
such Participant shall equal the Appendix A Benefit times a percentage
from the following table:
Age Benefits Commence Percentage of Appendix A
Benefit Payable
62 or older 100%
61 98%
60 96%
59 94%
58 90%
57 86%
56 82%
55 78%
(NOTE: Use straight line interpolation for intermediate ages.)
A.6 Disability
If the Committee determines that a Participant has become Disabled, and
the Disability occurs prior to the Participant's attainment of age
fifty-five (55) and subsequent to the date such Participant is vested,
as determined under Section 4.2 of this Plan, the Accrued Appendix A
Benefit shall be payable to the Disabled Participant commencing as of
the date of Disability, as such date is determined by the Committee.
For purposes of this Plan, a Participant shall deliver to the Committee
the written opinion of a reputable, licensed physician or physicians,
approved by the Committee, stating to the effect that on account of the
sickness, accident, ill health or other physical or mental disability,
such a Participant is, in the opinion of such physician or physicians,
so disabled as totally to prevent the Participant from performing and
discharging the duties of the position held by the Participant
immediately prior to the occurrence of the Disability, and that such
Disability is likely to be permanent.
A.7 Spouse Benefit
If an Appendix A Participant dies on or after the date that such
Participant becomes vested or attains age 55 and is survived by a
spouse, it shall be assumed the Participant had terminated or retired on
the first day of the month in which the Participant's death occurred,
and that the Committee had approved a conversion of the life annuity to
a joint and survivor option, with the surviving spouse as joint
annuitant, providing for one hundred percent (100%) continuation of
income to the surviving spouse. The income to the surviving spouse
shall commence on the latest of the following dates:
(i) the first day of the month following the Participant's death; or
(ii) the first day of the month following the date that such
Participant would have attained age 55; or
(iii) the first day of the month following the date that such
Participant's attained age in years and fractions of a year, plus
Accrual Service in years and fractions of a year, equals, or would have
equaled, sixty (60).
The Committee may approve an Actuarial Equivalent form of income payable
to the surviving spouse.
A.8 Change in Control of the Company
Notwithstanding any provisions to the contrary contained in the Plan, if
a lump-sum payment becomes due and payable to an Appendix A Participant
upon the occurrence of a Change in Control of the Company pursuant to
Section 5.5 of the Plan, such lump-sum payment shall include an
additional amount determined and calculated in accordance with the
following, subject to adjustment pursuant to the provisions of Section
5.6 of the Plan:
(a) if, on the Date of the Change in Control of the Company, the
Affected Participant is an Employee and is vested in the Appendix A
Benefit pursuant to Section 4.2.1 hereof, the amount of such lump sum
payment shall be an amount equal to the greater of the present value of:
(i) the Affected Participant's Appendix A Benefit times the
applicable percentage from the following table:
Age of Affected Participant Percentage Applicable to
on the Date of the Change in the Affected Participant's
Control of the Company Appendix A Benefit
62 or older 100%
61 98%
60 96%
59 94%
58 90%
57 86%
56 82%
55 78%
(NOTE: For ages under 55, reduce % by 4 per year; use straight line
interpolation for fractional ages)
and
(ii) the Accrued Appendix A Benefit applicable to such Affected
Participant; or
(b) if, on the Date of the Change in Control of the Company, the
Affected Participant is an Employee but is not vested in the Normal
Retirement Benefit pursuant to Section 4.2.1 of the Plan, the Affected
Participant shall be vested in the Accrued Appendix A Benefit applicable
to such Affected Participant, and the amount of such lump sum payment
shall be an amount equal to the present value of the Accrued Appendix A
Benefit applicable to such Affected Participant; or
(c) if, on the Date of the Change in Control of the Company, the
Affected Participant is a Retired Employee, as defined in Section
2.1.4(b) of the Plan, the amount of such lump sum payment shall be an
amount equal to the present value of the benefits payable to such
Affected Participant as of the Date of the Change in Control of the
Company.
The present value for purposes of this Section A.8 shall be calculated
using the mortality and interest assumptions that would be used for
purposes of calculating a minimum lump-sum distribution under the PEP.
The lump-sum benefit provided under this Section A.8 shall be in lieu of
any benefits (excluding benefits paid to an Affected Participant prior
to the date of Change in Control of the Company) payable pursuant to
this Appendix A.
The lump-sum benefit provided under this Section A.8 shall be subject
the provisions of Section 5.6 of the Plan.
A.9 Termination of Plan
If this Plan is terminated by the Board of Directors of Multifoods
under and pursuant to the provisions of Section 8, the bonuses to be
taken into account to compute the Bonus Base with respect to any
Appendix A Participant who is vested, as determined in Section 4.2.1 or
Section 5.5, shall be the Bonuses awarded to such Participant during the
ten (l0) year period immediately preceding the date on which the Plan is
terminated.
Exhibit 10.10
FIRST AMENDMENT
TO THE
COMPENSATION DEFERRAL PLAN
FOR EXECUTIVES OF
INTERNATIONAL MULTIFOODS CORPORATION
(Amended and Restated as of September 17, 1993)
The Compensation Deferral Plan for Executives of International
Multifoods Corporation (Amended and Restated as of September 17, 1993)
is amended as follows:
I
Section 3.7 is added effective January 1, 1997, to read as follows:
3.7 Notwithstanding any contrary provision of the Plan, no
additional deferrals shall be allowed under the Plan on or after January
1, 1997, by any current Participant, and no new Participants shall be
added to the Plan on or after January 1, 1997.
II
Section 4.5 is amended effective January 1, 1997, to read as
follows:
4.5 The Account Balance of each Participant shall be credited as of
the last day of each calendar quarter with interest at a rate equal to
one-fourth of the annual rate reported for such date (or the next
preceding business day) in the Federal Reserve Statistical Release as
the yield on U.S. Treasury Bills with a constant maturity of 10 years.
Such interest shall be credited based on the Account Balance as of the
first day of the calendar quarter, reduced by any withdrawals or
distributions made from the Account during the calendar quarter.
EXHIBIT 10.11
SUPPLEMENTAL DEFERRED COMPENSATION PLAN OF
INTERNATIONAL MULTIFOODS CORPORATION
Adopted Effective April 1, 1997
SUPPLEMENTAL DEFERRED COMPENSATION PLAN OF
INTERNATIONAL MULTIFOODS CORPORATION
SECTION 1.
DECLARATION
1.1 The Supplemental Deferred Compensation Plan of International
Multifoods Corporation was established as of April 1, 1997, as a means
of providing deferred compensation benefits to a select group of
executives of International Multifoods Corporation and its consolidated
subsidiaries whose pre-tax contributions are otherwise limited under the
VISA Plan.
1.2 This April 1, 1997 statement shall apply to Participants
actively employed on or after that date.
1.3 This Plan has been established and will be maintained as a non-
qualified form of executive deferred compensation, in accordance with
Section 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement
Income Security Act of 1974, as amended.
SECTION 2.
DEFINITIONS
2.1 The terms defined in this Section 2 shall, for all purposes of
this Plan, have the meanings herein specified, unless the context
expressly or by necessary implication otherwise requires:
2.1.1 "Account" means the account established for a Participant
under this Plan to reflect his or her credits under this Plan. The
Account shall include a subaccount to reflect deferred compensation
credits under Section 5.1, and a subaccount to reflect matching credits
under Section 5.2. Interest credits under Section 5.3 of this Plan
shall be reflected in each such subaccount.
2.1.2 "Affected Participant" means:
(a) any Participant who is an Employee on the Date of a Change
in Control of the Company except any Participant who has delivered to
the Company, prior to the Date of Change in Control of the Company, a
signed letter stating that such Participant has elected not to receive
the lump sum payment contemplated and provided for in Section 6.3 hereof
in the event of a Change in Control of the Company; provided, however,
that any such Participant shall have the right to withdraw such election
by delivering a signed letter to that effect to the Company at any time
prior to the Date of a Change in Control of the Company; and
(b) any Participant who: (i) on the Date of a Change in Control of
the Company is a retired Employee, or a former Employee who at the time
of termination of employment was vested in his or her Account, or the
beneficiary of any such retired Employee or former vested Employee
("Retired Employee"), and (ii) has delivered to the Company, prior to
the Date of a Change in Control of the Company, a signed letter electing
to receive, upon the occurrence of a Change in Control of the Company,
in the form of a lump sum, the benefits payable to such Participant as
of the Date of a Change in Control of the Company; provided, however,
that any such Participant shall have the right to withdraw such election
by delivering a signed letter to that effect to the Company, at any time
prior to the Date of a Change in Control of the Company.
2.1.3 "Change in Control of the Company" means any one of the
following:
(a) the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either (i) the then outstanding shares
of common stock of the Company (the "Outstanding Common Stock") or (ii)
the combined voting power of the then outstanding voting securities of
the Company entitled to vote generally in the election of directors (the
"Outstanding Voting Securities"); provided, however, that for purposes
of this subsection (a), the following acquisitions shall not constitute
a Change of Control of the Company: (i) any acquisition directly from
the Company, (ii) any acquisition by the Company, (iii) any acquisition
by any employee benefit plan (or related trust) sponsored or maintained
by the Company or any corporation controlled by the Company or (iv) any
acquisition by any corporation pursuant to a transaction which complies
with clauses (i), (ii) and (iii) of subsection (c) of this Section
2.1.3; or
(b) individuals who, as of the date hereof, constitute the Board of
Directors of the Company (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board of Directors of the Company;
provided, however, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or
other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board of Directors of the Company; or
(c) consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of
the Company (a "Business Combination"), in each case, unless, following
such Business Combination, (i) all or substantially all of the
individuals and entities who were the beneficial owners, respectively,
of the Outstanding Common Stock and Outstanding Voting Securities
immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 60% of, respectively, the then
outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation resulting
from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Company or
all or substantially all of the Company's assets either directly or
through one or more subsidiaries) in substantially the same proportions
as their ownership, immediately prior to such Business Combination of
the Outstanding Common Stock and Outstanding Voting Securities, as the
case may be, (ii) no Person (excluding any employee benefit plan (or
related trust) of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly, 20% or
more of, respectively, the then outstanding shares of common stock of
the corporation resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to
the Business Combination and (iii) at least a majority of the members of
the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board of
Directors of the Company, providing for such Business Combination; or
(d) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
2.1.4 "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
2.1.5 "Committee" means the Compensation Committee of the Board of
Directors of International Multifoods Corporation, or its successor
group.
2.1.6 "Company" or "Multifoods" means International Multifoods
Corporation, a Delaware corporation, and its successors and assigns.
2.1.7 "Effective Date" means January 1, 1997.
2.1.8 "Employee" means any person including any officer, employed on
a regular, full-time, salaried basis by the Employer.
2.1.9 "Employer" means the Company or any of its subsidiaries.
2.1.10 "Excess Covered Pay" means the Participant's "Covered Pay"
(as defined in the VISA Plan) in excess of the limit imposed under Code
section 401(a)(17), plus the amounts deferred at the election of the
Participant under any nonqualified deferred compensation plan or
arrangement approved by the Committee, and amounts waived by the
Participant under any waiver arrangement approved by the Committee, to
the extent that such amount are not included in Covered Pay under the
VISA Plan.
2.1.11 "Participant" means an Employee who has been designated by
the Board of Directors of Multifoods, or the Committee, to participate
in this Plan in accordance with the provision of Section 4 of this Plan.
2.1.12 "Plan" means this Supplemental Deferred Compensation Plan of
International Multifoods Corporation, as originally adopted or, if
amended or supplemented or restated, as so amended or supplemented or
restated.
2.1.13 "Vesting Service" shall have the respective meaning specified
in the VISA Plan, subject to modification under Section 3 of this Plan.
2.1.14 "VISA Plan" means the Employees' Voluntary Investment and
Savings Plan of International Multifoods Corporation, as originally
adopted or, if amended or supplemented or restated, as so amended or
supplemented or restated.
SECTION 3.
VESTING SERVICE
3.1 Vesting Service shall be used to determine vesting under Section
4.2 of this Plan.
3.2 At the discretion of the Committee, an Employee's period of
service, or any part thereof, with a company, of which the assets or
stock have been acquired by the Employer, may be included as Vesting
Service.
3.4 Vesting Service shall include a leave of absence, but for
purposes of this Plan, such period shall not exceed one (1) year, unless
otherwise determined by the Committee.
SECTION 4.
ELIGIBILITY AND VESTING
4.1 ELIGIBILITY
4.1.1 Any executive of the Employer shall be eligible for
consideration as a Participant in this Plan.
4.1.2 It shall be the prerogative of the Board of Directors of
Multifoods, or the Committee, to designate an Employee as a Participant
under this Plan. The Board of Directors of Multifoods, or the
Committee, in designating Participants shall give full consideration to
recommendations submitted by the Chairman of the Board of Directors of
Multifoods.
4.1.3 An Employee designated as a Participant under this Plan will
commence participation as of the January 1 next following such
designation (or, if later, as of the date the Employee first becomes
eligible to participate in the VISA Plan). Notwithstanding the above,
an Employee designated as a Participant prior to April 1, 1997, will
commence participation as of April 1, 1997.
4.1.4 An Employee designated as a Participant under this Plan will
continue as a Participant under this Plan until death, termination of
employment, or until removed from participation by the Board of
Directors of Multifoods, or by the Committee.
4.2 VESTING
4.2.1 A Participant shall be fully vested at all times in that
subaccount within his or her Account that reflects deferred compensation
credits under Section 5.1 and interest credits thereon under Section
5.3.
4.2.2 A Participant shall be fully vested in that subaccount within
his or her Account that reflects matching credits under Section 5.2 and
interest credits thereon under Section 5.3 at the earliest to occur of
the following events:
(a) the date that the Participant completes five (5) years of
Vesting Service;
(b) the date that the Participant terminates employment provided
such termination is a result of death or Disability (as defined in the
VISA Plan).
(c) the date that the Participant attains age sixty-five (65)
provided the Participant is employed with the Employer on that date; or
(d) the Date of a Change in Control.
Prior to the occurrence of one of the above events, the vested interest
of a Participant in such subaccount shall be determined under the
following table based upon his or her Vesting Service:
Years of Vesting Service Vested Interest
Less than 1 Year 0%
1 but less than 2 Years 20%
2 but less than 3 Years 40%
3 but less than 4 Years 60%
4 but less than 5 Years 80%
5 Years or more 100%
SECTION 5.
ACCOUNT CREDITS AND CHARGES
5.1 DEFERRED COMPENSATION CREDITS
5.1.1 A Participant may elect either or both of the following:
(a) A Participant may elect that, if his or her "Member
Contributions" under the VISA Plan for a calendar year are limited under
Code section 402(g), such additional amounts as would have been
contributed as Member Contributions under the VISA Plan if the limit
imposed under Code section 402(g) did not apply (based upon the actual
deferral elections made by the Participant under the VISA Plan) shall
instead be deferred under this Plan.
(b) A Participant may elect to defer a percentage of his or her
Excess Covered Pay under this Plan. The amount of the deferral may
equal any whole percentage, but not less than 2% or more than 10% of his
or her Excess Covered Pay.
The Account of each Participant shall be credited as of the last
day of each calendar quarter during the year with the amount deferred by
the Participant for such calendar quarter.
A Participant who wishes to defer amounts hereunder for a calendar
year must execute a salary reduction agreement and file the same with
Multifoods prior to the first day of the calendar year (or, in the case
of an employee who commences participation during the calendar year,
prior to date on which he or she commences participation). Such salary
reduction agreement shall be irrevocable for the calendar year. An
election made by a Participant for a calendar year shall continue in
effect for the next and subsequent calendar years until revoked or
modified by the Participant prior to the first day of a calendar year.
5.2 MATCHING CREDITS
The Account of each Participant shall be credited as of the last
day of each calendar quarter during the year with a matching credit
equal to the additional amount (if any) that would have been contributed
as an "Employer Contribution" under the VISA Plan if the deferred
compensation credits under this Plan for such calendar quarter had been
made as "Member Contributions" under the VISA Plan. The total of the
matching credits under this Plan for any calendar year shall not exceed
three and one-half percent (3.5%) of the sum of the Participant's
Covered Pay under the VISA Plan and Excess Covered Pay under this Plan
for the calendar year, minus fifty percent (50%) of the dollar limit in
effect under Code section 402(g) for such calendar year, and matching
credits under this Plan shall be limited accordingly.
5.3 INTEREST CREDITS
The Account of each Participant (and each subaccount thereunder)
shall be credited as of the last day of each calendar quarter during the
year with interest at a rate equal to one quarter of the annual rate
reported for such date (or the next preceding business day) in the
Federal Reserve Statistical Release as the yield on U.S. Treasury bills
with a constant maturity of 10 years. Such interest shall be credited
based on the balance of the Account (or subaccount) as of the first day
of the calendar quarter, reduced by any withdrawals or distributions
made from the Account (or subaccount) during the calendar quarter (but
not increased for deferred compensation or matching credits made for the
calendar quarter).
5.4 DISTRIBUTION/WITHDRAWAL CHARGE
The Account of each Participant shall be charged with any
distribution or withdrawal as of the date of the distribution or
withdrawal.
SECTION 6.
BENEFITS
6.1 BENEFIT PAYABLE TO PARTICIPANT
6.1.1 The vested balance of a Participant's Account shall be paid
(or start to be paid) to the Participant as soon as administratively
practicable following the termination of employment of the Participant.
6.1.2 The vested balance of a Participant's Account shall be paid in
either of the following forms as elected by the Participant:
(a) A single lump-sum payment.
(b) A series of substantially equal annual installments over a
period not exceeding the lesser of 10 years or the life expectancy of
the Participant.
The election of an alternative payment form must be made
contemporaneously with the first salary reduction agreement entered into
by the Participant for this Plan.
6.1.3 Notwithstanding any provisions to the contrary contained in
this Plan, if the vested balance of the Participant's Account is $10,000
or less as of his or her termination of employment, such vested balance
shall be paid in the form of a single lump-sum payment as soon as
administratively practicable following termination of employment.
6.2 BENEFIT PAYABLE UPON DEATH
If a Participant dies before full payment of the vested balance of
his or her Account under this Plan, the remaining balance shall be paid
to his or her beneficiary as soon as administratively practicable after
the Participant's death. Such balance shall be paid in a single lump-
sum payment.
A Participant's "beneficiary" for this purpose means any person
(including a trust) designated in writing by the Participant to receive
the death benefit payable under this Plan. If no such designation is
made by the Participant, or if such designation fails, in whole or in
part, by reason of the prior death of such person or for any other
cause, then the Participant's "beneficiary" shall mean the surviving
spouse of the Participant, if one shall then survive; or , if not, then
the surviving issue of the Participant per stirpes and not per capita;
or, if no issue survive the Participant, then the executor,
administrator or personal representative of the estate of the deceased
Participant.
6.3 HARDSHIP WITHDRAWALS
If a Participant demonstrates to the satisfaction of the Committee
that he or she is facing a financial hardship (as defined below), he or
she may withdraw in a single lump-sum all or any portion of the
subaccount within his or her Account that reflects deferred compensation
credits under Section 5.1 and interest credits thereon under Sec. 5.3.
A hardship withdrawal also shall be available to a Participant with
respect to the subaccount within his or her Account that reflects
matching credits under Section 5.2 and interest credits thereon under
Section 5.3 provided that the Participant is fully (100%) vested in such
subaccount under Section 4.2.1.
A "financial hardship" for this purpose means a need that is
determined by the Committee to be an immediate and heavy financial need
that arises from an unforseen emergency affecting the Participant and
that cannot be satisfied through other resources that are reasonably
available to the Participant.
6.4 CHANGE IN CONTROL OF THE COMPANY
Notwithstanding any provisions to the contrary contained in this
Plan, upon the occurrence of a Change in Control of the Company, the
fact and the date ("Date") of which is to be determined finally and
conclusively by the Chief Executive Officer of the Company or by the
Vice-President - Finance and Chief Financial Officer of the Company, to
be evidenced by a letter signed by such officer, addressed and delivered
to the Committee, the Company shall pay, or cause to be paid, to each
Affected Participant under this Plan in lieu of any benefits (excluding
benefits paid to any Affected Participant prior to the Date of a Change
in Control of the Company) payable pursuant to Sections 6.1 through 6.3
hereof, automatically and simultaneously, without any further action,
determination or notice of any kind, and whether or not such Affected
Participant is vested under the provisions of Section 4.2.1 hereof, a
lump sum in an amount equal to the balance (or the remaining balance) of
his or her Account under this Plan.
If a Change in Control of the Company occurs and both the Chief
Executive Officer of the Company and the Vice President-Finance and
Chief Financial Officer of the Company fail, for any reason whatsoever,
to sign, address and deliver to the Committee the letter described above
in this Section 6.4, such failure shall not affect in any manner the
obligation of the Company or the full right, title and interest of each
Affected Participant under this Plan to receive from the Company the
full amount of the lump sum payment determined and calculated in
accordance with the forgoing provisions of this Section 6.4, subject to
adjustment pursuant to the provisions of Section 6.5 hereof; and the
entitlement of each Affected Participant to receive such sum from the
Company shall be valid and enforceable by each Affected Participant in
any state or federal court having jurisdiction thereof.
6.5 PARACHUTE PAYMENTS
In the event it shall be determined that any payment by the Company
to or for the benefit of the Participant hereunder determined without
regard to any additional payments required under this Section 6.5 (a
"Payment") would be subject to the excise tax imposed by Code section
4999 or any interest or penalties are incurred by the Affected
Participant with respect to such excise tax (such excise tax, together
with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then the Affected Participant shall be
entitled to receive an additional payment (a "Gross-Up Payment") in an
amount such that after payment by the Affected Participant of all taxes
(including any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax
imposed upon the Gross-Up Payment, the Affected Participant retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payment.
For purposes of these calculations, all applicable amounts shall be
determined by the Company's independent auditors.
SECTION 7.
LIABILITY OF COMPANY
7.1 The benefits of this Plan shall be paid by Multifoods or any of
its consolidated subsidiaries or by a trust established by the Company
for this purpose. The amounts of all benefits with respect to which any
and all Participants under the Plan are vested pursuant to the terms and
provisions of the Plan, shall be provided for in such manner and form as
shall be approved, from time to time, by the Board of Directors or the
Committee, to assure that funds will be available to pay all such
amounts when due, to vested Participants under the Plan.
7.2 A Participant who is vested in a benefit under this Plan shall
be an unsecured general creditor of the Company as to the payment of any
benefit under the Plan.
SECTION 8.
ADMINISTRATION
8.1 Except for the functions reserved to the Company, the Board of
Directors of the Company, the Chairman of the Board of Directors of the
Company or a trustee, if any, appointed by the Company, the
administration of the Plan shall be the responsibility of the Committee.
8.2 The Committee shall have the power and the duty to take all
actions necessary and proper to carry out the provisions of this Plan.
The determinations of the Committee shall be final and binding, unless
the Board of Directors of Multifoods modifies or reverses the
determination made by the Committee.
8.3 In administering the Plan, the Committee shall:
(a) designate Participants and furnish them, upon request, with
copies of the Plan;
(b) instruct the Company (or trustee, if any) as to payments to be
made under this Plan;
(c) make and enforce such rules and regulations as it shall deem
proper from time to time for the administration of this Plan;
(d) interpret the Plan (in its discretion) to resolve ambiguities,
inconsistencies and omissions, which interpretations shall be final and
binding unless the Board of Directors of Multifoods modifies or reverses
the interpretation made by the Committee;
(e) determine the amount of credits in accordance with Section 5 of
this Plan and the amount of benefits payable in accordance with Section
6 of this Plan; and
(f) take whatever action is necessary in fulfilling the purposes and
intent of this Plan.
8.4 The Committee may appoint a person or persons to act in the day-
to-day administration of the Plan, which person or persons may or may
not be a Participant or a member of the Committee.
8.5 Except in circumstances involving bad faith, no member of the
Committee, the Board of Directors of the Company or the Chairman of the
Board of Directors of the Company, or any person assisting in the Plan
administration, shall be liable, in respect to this Plan, for any act
whether of commission or omission taken by any other member of the
Committee, officer, agent or employee of the Company or any of its
consolidated subsidiaries, or for anything done or omitted to be done by
any member of the Committee, officer, agent or employee of the Company.
Any person claiming under this Plan shall look solely to the Company for
redress.
SECTION 9.
AMENDMENT AND TERMINATION
9.l The Board of Directors of the Company shall have the power to
suspend or terminate this Plan in whole or in part at any time, and from
time to time to extend, modify, amend or revise this Plan in such
respects as the Board of Directors of Multifoods by resolution may deem
advisable; provided that no such extension, modification, amendment or
revision shall deprive a Participant or any beneficiary designated by a
Participant, of the vested portion of any Account under this Plan
determined as of the date of such action. Notwithstanding the
foregoing, any amendment of Section 5.3 regarding the rate used for
interest credits may apply to all interest credits after the date the
amendment is adopted, including credits with respect to existing Account
balances. The fact that a director is, has been, or will be a
Participant in this Plan shall not disqualify such Participant from
voting as a director for or against an extension, discontinuance,
modification, amendment or revision of this Plan or any part thereof.
9.2 The Company intends to continue this Plan indefinitely, but
nevertheless assumes no contractual obligation, other than as
specifically provided herein, beyond the guarantee of the vested
portions of any benefits payable under this Plan.
9.3 If this Plan is terminated by the Board of Directors of
Multifoods under and pursuant to the provisions of this Section 9, the
vested balance of the Participant's Account determined as of the date of
termination. shall be paid in the form of a single lump-sum payment as
soon as administratively practicable following the termination of the
Plan. Payment of a lump-sum shall be in full satisfaction of all
benefits otherwise payable under this Plan.
SECTION 10.
MISCELLANEOUS
10.l This Plan is not a contract between the Employer and any
Participant or beneficiary, and nothing herein shall affect the right of
the Employer to discharge an Employee.
10.2 Except to the extent required by law, no benefit hereunder
shall be subject to anticipation, alienation, garnishment, sale, pledge,
transfer, encumbrance, judgment or damage. Any attempt at such may
cause the Committee to cancel the benefit, or pay it otherwise for the
use of the Participant or beneficiary.
10.3 If the Committee determines that a person entitled to benefits
hereunder is incompetent, it may cause benefits to be paid to another
person for the use of the Participant or beneficiary, in total discharge
of the Plan's obligations.
10.4 The provisions of the Plan shall be construed and governed
under the laws of the State of Minnesota, unless and except as preempted
by federal law; provided, however, that the provisions of any trust
agreement relating to a trust established for the purpose of
accumulating assets to assist the Company in fulfilling the obligations
of the Company under this Plan shall be construed and under the laws of
the jurisdiction stated in such trust agreement.
10.5 In determining entitlement to benefits and in calculating the
amount of any credits to Participants and benefits payable to
Participants under this Plan which are based or predicated upon the VISA
Plan, the terms and conditions (including, without limitations, any
provisions governing vesting and any provisions governing payment
options available to Participants) of the VISA Plan shall govern and
control, except as specifically provided otherwise in this Plan.
Exhibit 10.18
September 24, 1996
Jeffrey Boies
[address]
Dear Jeff:
I am pleased to extend to you an offer of employment with International
Multifoods Corporation ("Multifoods"). The offer reflects our recent
discussion in which you described your present total compensation and
expressed your expectations in certain areas.
1. The position being offered is President, VSA, Inc., a subsidiary of
Multifoods.
2. In this position you will report directly to Robert M. Price, Chairman
and Chief Executive Officer, Multifoods and his successor when appointed
by the Board of Directors.
3. The effective date of your employment with VSA, Inc. will be no later
than November 1, 1996. We anticipate an earlier start date, however, we
understand that is subject to your availability based on present
business commitments. Your primary office will be in Denver, Colorado.
The VSA, Inc. headquarters office is located at 370 17th Street, Suite
1400, Denver, Colorado 80217.
4. Your starting salary will be $285,000 annually with a commitment to a
performance based salary increase of $20,000 within 12 months (November
1, 1997). "Performance based" means reasonable performance based on
achieving the FY98 business plan.
5. Since you will be joining VSA, Inc. on November 1, 1996, Multifoods will
guarantee the bonus you would likely have received from your present
employer. If your bonus for 1996 would have been $160,000 then $80,000
will be treated as an employment bonus to be paid by November 15, 1996
and $80,000 will be treated as a guaranteed bonus to be paid by April
15, 1997. You agree to reimburse Multifoods for $80,000 if you
voluntarily terminate within a period of one year, November 1, 1996 -
October 31, 1997.
6. A recommendation will be made to the Compensation Committee of the Board
of Directors of Multifoods for the following:
(a) A stock option grant of 6,000 shares of Multifoods Common Stock. The
grant price will be the average price of Multifoods stock on your date
of employment; you will also be considered for a stock option grant when
the Compensation Committee meets in March at which time grants are
considered for all senior executives. The recommendation to the
Committee will be for no less than 4,000 shares.
(b) In consideration of the expected loss on your present employer's match
to the deferred incentive funds and the loss on matching 401(K) shares,
a restricted stock grant of 8,650 shares of Multifoods stock will be
recommended to the Committee. This value is determined based on the
$79,000 of value at risk with the incentive match and $68,000 at risk
with the 401(K) match. You agree to confirm the actual loss of value at
the time of your employment with Multifoods. The number of restricted
shares granted may be modified to reflect a greater or lessor loss of
value.
(c) You will be recommended for participation in the Multifoods' Management
Benefit Plan. You will also be eligible for the Multifoods' Pension
Equity Plan. Considering your retirement opportunity at age 60 with
your present employer, the following Supplemental Retirement Plan will
be proposed to the Committee. This arrangement would provide retirement
benefits (in addition to any other benefits payable under the qualified
or non-qualified retirement plans of Multifoods) based upon the benefits
you would have received from the Pension Equity Plan and the Management
Benefit Plan had your service from your employment date counted double
for both benefit accrual and vesting purposes. In addition, the
hypothetical Pension Equity Plan benefit would be calculated assuming
you had satisfied the age and service requirements necessary to qualify
for the "grandfather" benefit formula. This would allow you to receive
pension benefits under the prior Employees' Retirement Plan formula if
that formula would produce a larger benefit than the new Pension Equity
Plan formula.
(d) We will also recommend to the Compensation Committee that you receive a
Change of Control agreement similar to that of other executives of
Multifoods.
7. You will be protected in the case of involuntary termination, except for
cause. If involuntary termination should occur during the first year of
your employment November 1, 1996 - October 31, 1997 you will receive
three years' salary as a severance payment. If the termination should
occur during the second year of employment, November 1, 1997 - October
31, 1998, you will receive two years' salary as a severance payment.
Following the two year period, in the event of involuntary termination
you will receive one years' salary. Any severance payment will require
a release prepared by Multifoods and signed by you as well as an
agreement not to compete with Multifoods or any of its subsidiaries for
a period of one year.
8. Your annual incentive opportunity will be no less than 50% of base
salary at business plan level with a maximum incentive opportunity of
70%. However, it is our intent to design an incentive arrangement based
either on a percent of operating earnings and/or agreed upon return on
sales of VSA, Inc. that will provide an incentive opportunity
significantly in excess of the 50% target and 70% maximum opportunities.
This incentive plan will be designed by January 1, 1997 for the fiscal
year which begins on March 1, 1997.
9. Multifoods provides a comprehensive benefit program including medical,
dental, life insurance, long term disability, etc. Multifoods' medical
plan does not have a "pre-existing condition" provision, therefore your
son's condition would be covered by the medical plans. A summary of
Multifoods' benefit plans, which are comprehensive, are attached for
your review. Multifoods also has a 401(K) program called VISA. There
is a one year employment period for eligibility, however, this provision
is currently under review. Employees may contribute up to 7% of base
salary (maximum this year is $9,500) which is matched 50% with
Multifoods Common Stock.
10. You will be eligible for all benefits under the Multifoods Employee
Relocation Policy. It is a comprehensive policy and includes: home
marketing assistance (for your current residence), house hunting trips
to the new location, transportation of household goods, one month's
salary as a relocation allowance, reasonable closing costs as well as a
home buyout option. With the home buyout option, Multifoods' third
party relocation company will forward a list of qualified relocation
appraisers to you, from which you select two appraisers to determine the
market value of your home. An average of those two appraisals is taken,
and an offer made to you. If the appraisals are more than 5% apart,
then a 3rd certified relocation appraiser will be selected by you to
conduct an appraisal on your home. The offer price will be the average
of the two closest appraisals. In addition, we will provide you with
temporary living expense reimbursement for up to six months at the new
location.
11. In accordance with our prior discussion, you will be entitled to four
weeks of vacation. Our vacation year is from January 1, to December 31.
12. Also in accordance with our verbal discussion, Multifoods will pay fees
and dues for a country club membership of your choice in the Denver
area. We expect a condition of reasonableness to apply to the
selection. All expenses incurred for business use of the club will be
reimbursed based on Multifoods' policies.
Jeff, this offer is contingent upon your completion of an executive type
physical examination. If you have had a recent physical exam (within
one year) the written assurance from your doctor, followed by a written
summary of the condition of your health will constitute "satisfactory
completion."
We will also need to complete discussions with references.
We are very pleased with the prospect of having you join Multifoods. We
are counting on your contribution and strongly believe you will have a
very positive impact on the Company. We also believe that Multifoods
can offer you a significant challenge as well as growth opportunities in
the years ahead.
Will you please indicate your acceptance of this offer by signing and
dating the original letter and returning it to me at your earliest
convenience.
Very truly yours,
/s/ Robert F.Maddocks
Robert F. Maddocks
Executive Vice President
Accepted by:
Dated: 10/5/96 /s/ Jeffrey Boies
Jeffrey Boies
RFM/pr/f:boies
cc: Robert M. Price
Exhibit 10.19
[MULTIFOODS LOGO] MEMO
DATE: May 7, 1997
TO: Jeffrey E. Boies
FROM: Frank W. Bonvino
SUBJECT: SUPPLEMENTAL RETIREMENT BENEFIT
The intent of this memorandum is to set forth the terms and conditions
of the supplemental retirement benefit provided under Paragraph 6(c) of
your employment offer letter dated September 24, 1996.
Paragraph 6(c) provides that you will be recommended for participation
in the Management Benefit Plan of International Multifoods Corporation
("MBP") and will participate in the Multifoods Pension Equity Plan
("PEP"). Paragraph 6(c) further provides that you will receive
additional retirement benefits equal to what you would have received
under the MBP and the PEP if your service counted double for both
benefit accrual and vesting purposes.
The PEP Plan is a "qualified" defined benefit pension plan that was
adopted January 1, 1996, as a restructuring of a prior defined benefit
plan maintained by Multifoods (called the "Employees' Retirement Plan
of International Multifoods Corporation"). Employees with sufficient
age and service as of January 1, 1996, are eligible to participate in
the PEP under the same benefit formula that was in effect prior to the
restructuring on January 1, 1996. Even though you do not satisfy the
age and service requirements to be "grandfathered" under the prior
benefit formula under the PEP, the grandfathered formula will be
extended to you on a nonqualified basis under the MBP.
The MBP is a nonqualified excess benefit plan that generally provides
the additional benefits that would have been provided under the PEP if
the limits imposed under Code sections 401(a)(17) and 415 did not apply
to your benefit under the PEP. The MBP also extends the grandfathered
formula to certain individuals and provides such individuals with a
bonus-based nonqualified arrangement.
The benefits described in this memorandum are in addition to those
provided under the PEP and MBP.
SUPPLEMENTAL RETIREMENT BENEFIT
(a) Definitions. The following terms are used herein:
"Actuarial Equivalent" means a benefit of equivalent value when
computed on the basis of mortality and interest rate assumptions
recommended by an actuary and approved by the Senior Vice President -
Finance and Chief Financial Officer or the Vice President and
Controller of the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means International Multifoods Corporation, and any successor
thereto.
"Grandfathered Formula" means the benefit formula set forth in Appendix
B of the PEP, which is a continuation of the benefit formula in effect
under the PEP as of December 31, 1995 (then called the "Employees'
Retirement Plan of International Multifoods Corporation").
"MBP" means the Management Benefit Plan of International Multifoods
Corporation, as it may be amended from time to time.
"PEP" means the Multifoods Pension Equity Plan, as adopted January 1,
1996 (as a continuation of the Employees' Retirement Plan of
International Multifoods Corporation), as it may be amended from time
to time.
"Supplemental Retirement Benefit" means the benefit payable to you
under the terms of this memorandum.
(b) Vesting Service. For purposes of determining your Supplemental
Retirement Benefit, your vesting service under this memorandum will be
equal to two times (2x) your vesting service earned under the PEP and
MBP.
(c) Supplemental Retirement Benefit. You will be entitled to
receive the following Supplemental Retirement Benefit:
(1) Less Than Five Years of Vesting Service. If you have less than
5 years of vesting service at your termination of employment, then you
will not be entitled to any Supplemental Retirement Benefit.
(2) Five or More Years of Vesting Service. If you have 5 or more
years of vesting service at your termination of employment, then your
monthly benefit will be equal to "A" plus "B" minus "C" minus "D"
below:
A = 50% of your Bonus Base (calculated under the terms of the
MBP) divided by 12.
plus
B = The greater of the following:
(i) The monthly benefit to which you would have been entitled under
the PEP if (A) you were fully vested (regardless of whether you
actually are vested), (B) your Base Points were equal to two times (2x)
your actual Base Points, and your Integration Points were equal to two
times your actual Integration Points, (C) your benefit was paid in the
form of a single life annuity, and (D) the limits imposed under Code
sections 401(a)(17) and 415 did not apply to your benefit under the
PEP.
(ii) The monthly benefit to which you would have been entitled
under the PEP if (A) you were fully vested (regardless of whether you
actually are vested), (B) you were eligible to and did elect to have
your benefit calculated under the Grandfathered Formula, (C) your
Credited Service was equal to two times (2x) your actual Credited
Service, (D) your benefit was paid in the form of a single life
annuity, and (E) the limits imposed under Code sections 401(a)(17) and
415 did not apply to your benefit under the PEP.
minus
C = The monthly benefit (if any) actually paid to you under the
PEP (or, if you receive your benefit other than in the form of a single
life annuity, the monthly benefit that would have been paid to you if
you had received your benefit in the form of a single life annuity
under the PEP).
minus
D = The monthly benefit (if any) actually paid to you under the
MBP.
All monthly benefits described above will be computed as of the date of
your termination of employment and each will be expressed in the form
of a single life annuity starting as of the first day of the month
after age 65 (or as of the first day of the month after your
termination of employment, if your termination of employment occurs
after age 65).
(d) Form of Benefit. The supplemental Retirement Benefit will be
paid to you in the form of a single life annuity with monthly benefit
payments. However, at the sole discretion of the Company, it may be
paid in any other form. If it is paid in any form other than a single
life annuity starting as of the first day of the month after you attain
age 65, the benefit will be adjusted so that it is the Actuarial
Equivalent of the benefit that would have been paid as a single life
annuity starting as of the first day of the month after you attain age
65.
(e) Commencement of Benefit. The Supplemental Retirement Benefit
will start as of the same day as the benefit paid to you under the PEP.
If you have less than 5 years of vesting service under the PEP at your
termination of employment (and thus are not entitled to a benefit), the
Supplemental Retirement Benefit will start on the same day as the
benefit would have been paid to you if you had 5 years of vesting
service under the PEP.
(f) Spouse Benefit. If you have 5 or more years of vesting
service, you die before your Supplemental Retirement Benefit is paid or
starts to be paid to you, and you are survived by a spouse, that spouse
will be entitled to a monthly benefit payable in the form of a single
life annuity as follows:
(i) If you die at or after age 55, the benefit will start as of the
first day of the month after your death, and the monthly amount of the
benefit will equal the monthly amount of the survivor annuity that
would have been paid to your spouse if you had retired and started to
receive your Supplemental Retirement Benefit in the form of a joint and
100% survivor annuity, and then died.
(ii) If you die before age 55, the benefit will start as of the
first day of the month after you would have reached age 55, and the
monthly amount of the benefit will equal the monthly amount of the
survivor annuity that would have been paid to your spouse if you had
retired on the date of your death, survived to age 55 and started to
receive your Supplemental Retirement Benefit in the form of a joint and
100% survivor annuity, and then died.
(g) No Effect on Employment Rights. This memorandum is not an
employment agreement and nothing in this memorandum will confer on you
the right to be retained in the employ of the Company, or limit any
right of the Company to discharge you or otherwise deal with you
without regard to the existence of this memorandum.
(h) FICA Taxes/Withholding. To the extent that benefit accruals
hereunder are taken into account as amounts deferred under a
nonqualified deferred compensation plan under Code section 3121(v), and
thus are subject to tax under Code section 3101 ("FICA"), the Company
may calculate the amount deferred and withhold against other
compensation paid to you in any manner determined by it to be
appropriate under Code section 3121(v).
Please indicate your receipt and acceptance of the terms of this
memorandum by signing one of the enclosed copies and returning it at
your earliest convenience.
INTERNATIONAL MULTIFOODS CORPORATION
/s/ Frank W. Bonvino
By: Frank W. Bonvino
Its: Vice President & General Counsel
cc: Joyce G. Traver
______________________________________________________________________
ACCEPTANCE
I, Jeffrey E. Boies, hereby acknowledge receipt of this memorandum and
hereby agree to the manner in which Paragraph 6(c) of my offer letter
dated September 24, 1996, is to be implemented as set forth in this
memorandum.
Dated: May 12, 1997
JEFFREY E. BOIES
/s/ Jeffrey E. Boies
Exhibit 10.21
SEPARATION AGREEMENT
This Agreement is made and entered into as of this 31st day of
December, 1996 by and between International Multifoods Corporation, a
Delaware corporation (the "Company"), and Duncan H. Cocroft ("Cocroft").
WHEREAS, Cocroft has resigned his position as Vice President -
Finance and Chief Financial Officer of the Company effective December
31, 1996;
WHEREAS, Cocroft has requested that the Company retain him as
an inactive employee until he reaches early retirement age on June 27,
1998; and
WHEREAS, the Company is willing to retain Cocroft as an
inactive employee under certain conditions and in exchange for certain
agreements, as provided herein.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements set forth herein, the parties hereto
agree as follows:
1. Employment Status and Term. Cocroft will continue as
Vice President - Finance and Chief Financial Officer until December 31,
1996. Prior to such date he will confirm his resignation as Vice
President - Finance and Chief Financial Officer of the Company and as an
officer and director of all subsidiaries and affiliates of the Company
effective as of December 31, 1996 by submitting to the Company a written
resignation, in the form attached hereto as Exhibit A. Thereafter,
subject to the provisions of Section 13 of this Agreement, Cocroft will
continue as an inactive employee on a paid leave of absence until June
30, 1998, at which time Cocroft's employment with the Company will
terminate. For the period from January 1, 1997 through June 30, 1998,
Cocroft agrees to make himself available to advise and assist the
Company with respect to the business of the International Sales and
Marketing division of the Company and other matters related to the
business of the Company during regular business hours for reasonable
amounts of time pursuant to a schedule mutually agreed to by the Company
and Cocroft.
2. Salary and Vacation Pay. Until December 31, 1996,
Cocroft will receive his current base salary, less all applicable
withholding amounts. For the period from January 1, 1997 through June
30, 1998, the Company will pay Cocroft a salary in 36 semi-monthly
installments of $2,777.78 each, less all applicable withholding amounts,
for providing advice and assistance to the Company pursuant to Section 1
above. The Company will pay Cocroft in a lump sum, less all applicable
withholding amounts, the amount of any accrued and earned vacation days
not yet taken as of December 31, 1996. Such lump sum payment will be
made on or before January31, 1997. No additional vacation pay for
Cocroft will accrue after December 31, 1996.
3. Severance Payment. The Company will pay Cocroft a
severance payment in the amount of $255,000 in a lump sum, less all
applicable withholding amounts, on January 16, 1997, provided that
Cocroft has not rescinded the release agreement contained in Section 9
of this Agreement within the applicable rescission period and Cocroft
has not breached any of his obligations under this Agreement.
4. Expenses. The Company will reimburse Cocroft for his
reasonable travel expenses and other reasonable out-of-pocket expenses
he incurs during the period from January 1, 1997 through June 30, 1998
in providing advice and assistance to the Company pursuant to Section 1
above, provided that Cocroft shall obtain prior written approval of an
officer of the Company at the Vice President or higher officer level if
Cocroft's expenses on any single assignment are reasonably estimated to
exceed $1,000. Cocroft shall provide the Company with receipts and
other evidence reasonably requested by the Company to substantiate any
costs and expenses incurred by Cocroft in providing advice and
assistance to the Company pursuant to Section 1 above.
5. Employee Benefits for the Period from January 1, 1997
Through June30, 1998; Termination of Certain Arrangements and
Agreements. Except as otherwise provided herein, during the period from
January 1, 1997 through June 30, 1998, Cocroft will be eligible to
participate in and receive benefits under, in accordance with the
respective terms and conditions of, the Company's employee benefit plans
in which Cocroft is enrolled as of December 31, 1996 (other than, inter
alia, the Company's long-term disability plan, the Company's Management
Incentive Plan and any long-term incentive plan or program), which plans
are listed in Exhibit B hereto, unless Cocroft elects to discontinue
coverage or ceases to make the required contributions. The Company will
deduct contributions for such employee benefit plans from the periodic
salary payments described in Section 2 above. The Company has the right
to amend or terminate any such plans at any time and for any reason, and
the contribution amounts are subject to change by the Company.
Cocroft's coverage under the Company's long-term disability plan will
discontinue on December31, 1996. Cocroft's participation in the
Company's Management Incentive Plan and any long-term incentive plan or
program, or successor plan or program, will terminate on December 31,
1996 and no payments will be made thereunder. The Revised and Restated
Severance Agreement by and between the Company and Cocroft, dated as of
September17, 1993, shall terminate on December 31, 1996.
6. Employee Benefits After June30, 1998. After June 30,
1998, Cocroft will be eligible to participate in and receive benefits
under the Company's employee benefit plans available to similarly-
situated retirees of the Company in accordance with the provisions of
such plans and other applicable requirements. Such plans, and certain
estimates and assumptions relating thereto, are listed in Exhibit C
hereto. The Company has the right to amend or terminate any such plans
at any time and for any reason, and the contribution amounts are subject
to change by the Company.
7. Stock Options and Restricted Stock. In consideration
of the Company's agreements contained herein, including, without
limitation, the Company's agreement to pay salary and provide benefits
to Cocroft through June 30, 1998, Cocroft agrees that all options to
purchase shares of the Company's Common Stock, par value $.10 per share
("Common Stock"), and all shares of restricted Common Stock held by
Cocroft shall terminate, expire or be forfeited in accordance with the
terms of the respective plans and agreements relating to such stock
options and restricted stock (the "Stock Plans and Agreements") as if
Cocroft's employment had terminated on December31, 1996, which terms are
set forth in Exhibit D hereto.
8. Outplacement. The Company will pay directly to the
outplacement firm of Market Share Inc. or Personnel Decisions, Inc., or
a nationally-recognized outplacement firm located in Minneapolis,
Minnesota selected by Cocroft, an aggregate amount not to exceed $10,000
for outplacement services to be provided to Cocroft. Such amount will
be paid to such outplacement firm by January 15, 1997.
9. Release.
(a) In consideration of the severance payment to Cocroft
pursuant to Section 3 of this Agreement and the Company's agreements
contained herein, and for other good and valuable consideration, Cocroft
hereby releases and discharges the Company 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
Cocroft or his heirs, executors, administrators, legal representatives,
successors or assigns and beneficiaries have or may have in connection
with Cocroft's employment with and termination of employment from the
Company, except for claims under: (i) this Agreement; (ii) the employee
benefit plans as provided in Sections 5 and 6 of this Agreement; (iii)
any stock option, as modified by this Agreement; and (iv) any
indemnification right to which Cocroft is entitled by reason of his
employment by the Company under (A) the Restated Certificate of
Incorporation, as amended, of the Company, (B) the Bylaws of the
Company, and/or (C) any policy of insurance issued to the Company under
which Cocroft is an insured and entitled to coverage (the foregoing
hereinafter called the "Release").
(b) Except as specifically provided in paragraph (a) of
this Section 9, the Release applies to any cause of action, claim,
demand, debt, contract and agreement that Cocroft has or may have as of
the date of this Agreement, including, without limitation, any and all
claims relating to Cocroft's employment with and termination of
employment from the Company, 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) Cocroft acknowledges and agrees that the Company's
agreement to make the severance payment pursuant to Section 3 hereof and
the Company's other agreements contained herein do not constitute an
admission that the Company or any of the other Released Parties has
engaged in any wrongful conduct towards Cocroft, has acted in any way to
cause injury to Cocroft, or is responsible or legally obligated to
Cocroft in any way, except as specifically provided in this Agreement.
(d) Cocroft acknowledges that he has been advised, and he
understands, that he has 15 days from the date that he signs this
Agreement to rescind this Agreement in its entirety, if he notifies the
Company, in writing, at Multifoods Tower, 33 South 6th Street, P.O. Box
2942, Minneapolis, Minnesota 55402, Attention: Frank W. Bonvino, Vice
President, General Counsel and Secretary of the Company, of his decision
to rescind this Agreement. Cocroft also understands that, if he
rescinds this Agreement, he shall forfeit the salary payments to be made
pursuant to Section 2 hereof and the severance payment payable pursuant
to Section 3 hereof and his employment shall terminate as of the date of
such rescission, at which time this Agreement shall become null and
void. Cocroft further acknowledges and understands that, to be
effective, his notice of rescission must be in writing and must be
delivered to the address stated above either by hand or by mail within
the 15-day period. If delivered by mail, the rescission must be:
(i)postmarked within the 15-day period; (ii)properly addressed to the
Company; and (iii)sent by certified mail, return receipt requested.
(e) Cocroft 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 the Company to discuss this Agreement
with an attorney-at-law of his choice. Cocroft's manual signature on
this Agreement, set forth below on the signature line, constitutes
Cocroft's acknowledgment that he understands the effect of this
Agreement, and that he has signed this Agreement KNOWINGLY AND
VOLUNTARILY, and that he has not relied on any representations,
statements or explanations made by the Company or any of the Released
Parties or their attorneys.
NOTE
THE COMPANY HEREBY ADVISES COCROFT TO CONSULT WITH
AN ATTORNEY-AT-LAW OF COCROFT'S CHOICE BEFORE
COCROFT SIGNS AND DELIVERS THIS AGREEMENT.
10. The Company's Representation. The Company represents
to Cocroft that, as of the date of this Agreement, the Company has no
knowledge or any information which would cause the Company to assert a
claim against Cocroft in connection with Cocroft's employment to the
date of this Agreement.
11. Confidential Information.
(a) Cocroft covenants and agrees that during and after his
employment with the Company he will maintain in strict confidence and
not, directly or indirectly, use or disclose to any person, corporation,
partnership, entity or enterprise, any information, including, without
limitation, financial information, strategic and business plans,
customer lists or trade secrets of the Company or any of its
subsidiaries, or any other confidential or proprietary information of
the Company 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 Cocroft; or (iii) which is disclosed to Cocroft by a third
party who has the right to disclose such information without violating
any agreement of confidentiality with the Company.
(b) In the event that Cocroft 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, Cocroft shall give the Company prompt
written notice so that the Company may seek an appropriate protective
order or other confidential treatment of such confidential information.
If the Company shall fail for any reason to obtain a protective order
and Cocroft shall be compelled to disclose any such confidential
information, based upon the advice of Cocroft's counsel, Cocroft may
disclose such information without liability under this Agreement,
provided that Cocroft shall give the Company 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 Cocroft is
required to disclose such information and, in any event, such disclosure
shall be limited to the specific information that Cocroft is legally
required to disclose based upon the advice of Cocroft's counsel.
(c) Cocroft acknowledges and agrees that money damages
would not be a sufficient remedy for any breach or threatened breach by
Cocroft of his covenant of confidentiality set forth in this Section 11
and that, in addition to all other remedies that the Company shall be
entitled to, the Company shall be entitled to specific performance and
injunctive or other equitable relief as a remedy for any such breach or
threatened breach. Cocroft acknowledges and agrees that no failure or
delay by the Company in exercising any right under this Section 11 shall
operate as a waiver thereof, nor shall a single or partial exercise of
any such right preclude further or other exercise thereof.
12. Cocroft's Covenants of Non-Competition, Non-
Solicitation and Non-Disparagement.
(a) Cocroft covenants and agrees that he will not,
directly or indirectly: (i) during the period commencing on the date of
this Agreement and ending on June 30, 1998 (the "Restricted Period"),
become an owner of more than one percent of the stock of, take
employment with, become a director, officer or partner of, or become a
consultant or advisor to, any competitor of the Company in any line of
business (except Divested Businesses) in which the Company is engaged as
described in the Company's Annual Report on Form 10-K for the fiscal
year of the Company ended on February 29, 1996 filed with the Securities
and Exchange Commission; (ii) during the Restricted Period, employ or
attempt to employ any director, officer or employee of the Company or
any of its subsidiaries, or otherwise interfere with or disrupt any
employment relationship (contractual or otherwise) between the Company
and any director, officer or employee of the Company or any of its
subsidiaries; (iii) during the Restricted Period, solicit, request,
advise or induce any present or potential customer, supplier or other
business contact of the Company to cancel, curtail or otherwise change
its relationship with the Company or any of its subsidiaries; or (iv)
during the Restricted Period and at any time thereafter, publicly
criticize or disparage in any manner or by any means the Company or any
of its subsidiaries, its and their personnel, or any aspect of its and
their management policies, operations, products, services or practices.
(b) Cocroft acknowledges and agrees that money damages
would not be a sufficient remedy for any breach or threatened breach by
Cocroft of his covenants set forth in this Section 12 and that, in
addition to all other remedies that the Company shall be entitled to,
the Company shall be entitled to specific performance and injunctive or
other equitable relief as a remedy for any such breach or threatened
breach. Cocroft acknowledges and agrees that no failure or delay by the
Company in exercising any right under this Section 12 shall operate as a
waiver thereof, nor shall a single or partial exercise of any such right
preclude further or other exercise thereof.
13. Termination of Employment and Agreement. The Company
may terminate Cocroft's employment, upon written notice to Cocroft, in
the event that Cocroft breaches any of his obligations under this
Agreement, at which time this Agreement shall become null and void.
14. No Waiver. The waiver by the Company or Cocroft of a
breach by the Company or Cocroft, as applicable, of any term of this
Agreement shall not operate or be construed as a waiver of any
subsequent breach by the Company or Cocroft, as applicable.
15. Successors and Assigns. The rights and obligations of
Cocroft under this Agreement may not be assigned, transferred or
delegated, in whole or in part, by Cocroft. This Agreement is binding
upon the successors and assigns of the Company.
16. Entire Agreement. This Agreement, including the
Exhibits hereto, the employee benefit plans as provided in Sections 5
and 6 of this Agreement, and the Stock Plans and Agreements (to the
extent not modified by this Agreement) constitute the entire agreement
and understanding of the parties and supersedes all previous
communications, representations, understandings and agreements between
the parties, oral or written, with respect to the subject matter hereof.
17. Headings. The descriptive headings of the sections of
this Agreement are inserted for convenience only and do not constitute a
part of this Agreement.
18. Governing Law. This Agreement shall be governed by
and interpreted and construed in accordance with the laws of the State
of Minnesota, without giving effect to the conflicts of laws principles
thereof.
19. Severability. The provisions of this Agreement are
severable and if any provision of this Agreement is invalid or
unenforceable under any statute, regulation, order or other rule of law,
that provision shall be deemed to be modified or deleted, but only to
the extent necessary to comply with the statute, regulation, order or
rule and the remaining provisions of this Agreement shall remain in full
force and effect.
20. Counterparts. This Agreement may be executed in two
counterparts, each of which will be deemed an original, but which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the date stated above.
INTERNATIONAL MULTIFOODS CORPORATION
By /s/ Robert F. Maddocks
Its Executive Vice President
/s/ Duncan H. Cocroft
Duncan H. Cocroft
Exhibit A
RESIGNATION
I, Duncan H. Cocroft, hereby resign, effective as of December
31, 1996, the office of Vice President - Finance and Chief Financial
Officer of International Multifoods Corporation, a Delaware corporation
("Multifoods"), and all offices and directorships that I hold in any
subsidiaries or affiliates of Multifoods.
Dated as of the 31st day of December, 1996.
/s/ Duncan H. Cocroft
Duncan H. Cocroft
Exhibit B
EMPLOYEE BENEFITS FOR THE PERIOD
JANUARY 1, 1997 THROUGH JUNE 30, 1998
I. Group Benefits
Subject to the terms and conditions of the Agreement, of which this
Exhibit B is a part, the group benefit plans listed below will remain in
effect unless you choose to discontinue coverage or cease to make the
required contributions. Contributions for group benefits will be
deducted from semi-monthly salary payments. The semi-monthly
contributions effective January 1, 1997 are as follows:
Semi-Monthly
Contribution
Indemnity medical, family coverage $33.50
Dental plan with orthodontia, family coverage $ 5.50
Vision care, family coverage $10.21
Life insurance coverage equal to $268,000* $12.73
Dependent life insurance $ 5.70
Health Care Flexible Spending Account $100.00
(based on 1996 election)
Note: Contribution amounts are subject to change by the Company.
*Based on salary equal to $2,777.78 per semi-monthly pay period.
II. Retirement Plans
Subject to the terms and conditions of the Agreement, of which this
Exhibit B is a part, you will continue as an active participant in the
Employees' Voluntary Investment and Savings Plan of International
Multifoods Corporation, the Multifoods Pension Equity Plan and the
Management Benefit Plan of International Multifoods Corporation until
June 30, 1998.
Exhibit C
EMPLOYEE BENEFITS AFTER JUNE 30, 1998
I. Group Benefits
Subject to the terms and conditions of the Agreement, of which this
Exhibit C is a part, effective July 1, 1998, you will be eligible to
enroll in retiree group insurance plans available to similarly-situated
employees under the plans that exist on that date. The plans currently
available are:
A. Life insurance
Under Minnesota Statute 61A.092, you could continue your then active
coverage amount for up to 18 months following your termination of
employment date. You could also continue dependent life insurance for
up to 18 months.
At the time your life insurance continuation period ceases (at the end
of the 18-month period or on the date you move from Minnesota, if
earlier), you could convert all or any portion of your group term life
insurance to an individual policy (except term insurance or a policy
which contains disability benefits).
B. Medical Insurance
Your participation in the Multifoods medical plan available to employees
would cease on June 30, 1998. However, you would have the option to
continue company-sponsored medical coverage under Multifoods Retiree
Medical Program. You and your eligible dependents could continue
coverage under an indemnity plan option and receive increased benefits
when services are received within a network of preferred providers. An
HMO option may also be available depending on where you reside at that
time.
C. Dental and Vision Plans
Your participation in the dental and vision plans would cease on June
30, 1998. However, under the Consolidated Omnibus Budget Reconciliation
Act of 1985 ("COBRA"), you and your eligible dependents could continue
these plans for up to 18 months.
II. VISA Plan
Distribution may be made promptly following your termination of
employment date or deferred until not later than the April 1 following
the year in which you reach age 70-1/2. At your election, distribution
may be made in one lump sum or in a series of approximately-equal annual
installments over a period not exceeding 10 years.
III. Multifoods Pension Equity Plan and Management Benefit Plan
You will be eligible to receive monthly pension benefits commencing July
1, 1998 under one of the payment options shown below in the approximate
amounts noted:
Pension Equity Bonus Base Total
Payment Option Formula* Formula Pension
Life only $1,619 $3,911 $5,530
Life with 10 years certain $1,586 $3,832 $5,418
100% joint and survivor, $1,311 $3,168 $4,479
with benefits equal to the
amounts shown continuing to
your surviving spouse following
your death
50% joint and survivor, $1,434 $5,023 $6,457
with benefits equal to 50% of
the amounts shown to your surviving
spouse following your death
* Amounts which could not be paid from the Pension Equity Plan because
of Internal Revenue Code limits would be paid from the Management
Benefit Plan.
The above estimates were calculated assuming that salary equal to
$2,777.78 per semi-monthly pay period continues through 1997 and that
there are no future changes in plan design or increases in the Social
Security covered wage base.
Exhibit D
DUNCAN H. COCROFT
EXPIRATION DATES OF STOCK OPTIONS
Date of Number Exercise Expiration
Grant of Shares Price Plan Date
5/4/90 11,250 $18.875 1986 12/31/96
11/16/90 11,250 $22.75 1989 3/31/97
11/16/90 95,454 $22.75 1989 11/15/00
12/20/91 6,000 $25.6875 1989 12/31/96
12/11/92 6,500 $28.0625 1989 12/31/96
3/17/95 10,000 $18.6875 1986 12/31/96
The option to purchase 7,500 shares which was granted on March 15, 1996
will be forfeited as the vesting requirements will not be satisfied by
December 31, 1996.
FORFEITURE OF SHARES OF RESTRICTED STOCK
The shares of restricted stock listed below will be forfeited since the
shares will not be vested by December 31, 1996.
Date of Number Date of
Grant of Shares Forfeiture
3/18/93 10,000 12/31/96
3/18/94 675 12/31/96
3/17/95 675 12/31/96
3/15/96 525 12/31/96
Exhibit 10.22
STRICTLY CONFIDENTIAL
January 3, 1997
Mr. Devendra Mishra
Advisor for Strategic Analysis
Denver West Suites
1746 Cole Blvd.
Suite 225
Golden, CO 80401-3210
Dear Devendra:
This will confirm the understanding reached regarding your separation
from Multifoods.
1. Your termination date will be April 30, 1997.
2. A severance amount equal to one year's base salary ($275,000), as
agreed to in our employment offer letter of July 29, 1994, which amount,
in semi-monthly installments, less all applicable withholding taxes,
began on November 1, 1996. By April 30, 1997, you will have received
$137,500. We will pay you the balance of $137,500 in a lump sum payment
on April 30, 1997, less all applicable withholding taxes.
3. You will continue as an at will employee from November 1, 1996 to
April 30, 1997 and will, during this period, be covered by the benefit
programs in which you are currently enrolled unless you are re-employed
prior to April 30, 1997.
You are entitled to benefit coverage under COBRA for a period of
eighteen (18) months following your termination date of April 30, 1997.
COBRA includes medical, dental, vision and EAP benefit programs. It
excludes life insurance and long-term disability. Multifoods will pay
the COBRA insurance premiums for a period of six (6) months (May-
October), or until you are re-employed, whichever is earlier. You will,
however, continue the same payment rate for these benefit coverages as
you presently are paying. This will be $89 per month. You may then
elect to continue coverage at your full cost for the remaining twelve
(12) months. The full cost premiums today are approximately $412 per
month.
4. No further vacation pay will accrue for the period after November
1, 1996. You will be entitled to any unused earned vacation prior to
November 1, 1996.
5. Below are the expiration dates of your outstanding options to
purchase shares of Common Stock of International Multifoods Corporation.
The expiration dates were determined based on the date of your
termination of employment (4/30/97) and in accordance with the terms of
the respective stock option plan and stock option agreement relating to
the options.
Date Number Exercise Expiration
of Grant of Shares Price Plan Date
09-15-94 10,000 $16.625 1989 07-30-97
03-17-95 7,500 $18.6875 1986 04-30-97
03-15-96 5,000 $19.3125 1986 04-30-97
The 170 shares of restricted Common Stock of International Multifoods
Corporation which were granted to you on March 15, 1996 will be
forfeited since the vesting requirements will not have been met by April
30, 1997.
The Compensation Committee of the Board of Directors has waived the
vesting requirements with respect to the 13,260 shares of restricted
Common Stock which were granted to you on September 15, 1995 such that
the shares vest on April 30, 1997 (provided that the rescission period
with respect to your release of claims has expired and you have not
rescinded or revoked such release).
The Compensation Committee at its meeting on December 19 waived the
vesting requirements with respect to the 6,000 shares of restricted
Common Stock which were granted to you on September 15, 1994. Please be
advised that in order to satisfy the tax withholding obligations that
will arise upon the vesting of the shares of restricted Common Stock,
you may elect to have shares withheld from the shares otherwise to be
delivered to you to cover such taxes. Pursuant to the terms of your
Restricted Stock Award Agreements, any such election must be made by you
prior to April 30, 1997. In the alternative, you will be required to
pay the tax withholding amount in cash prior to the delivery to you of
the vested shares.
6. The Company will provide you with executive outplacement
assistance up to $10,000. The two primary organizations which
Multifoods uses in the Denver area are Drake Beam Morin and Wright
Associates. These funds are sufficient to cover a full six-month
program, including office space.
If you choose an alternate program outside the Denver area, you will
need to submit statements for approval which support the program and
costs. Travel and travel-related expenses outside the Denver area will
not be paid by the Company.
7. The lease terms for the office space at 1746 Cole Boulevard,
Golden, Colorado, will end on January 31, 1997, and will not be renewed.
In consideration for the above separation program, you will be required
to sign the Form of Release Agreement attached. The release must be
signed and returned to the Company by April 15, 1997. As you know, once
signed you have a 15-day period to rescind the agreement. You will
receive the semi-monthly severance payments through April 30, 1997;
however, further separation payments due you under this agreement will
be paid only following the rescission period.
You will be asked to return any Company property in your possession by
April 30, 1997.
Sincerely,
/s/ Robert F. Maddocks
Robert F. Maddocks
Executive Vice President
RFM:rg
Exhibit 10.23
AGREEMENT
THIS AGREEMENT (hereinafter "the Agreement" or "this Agreement"),
dated as of February 19, 1997 by and between INTERNATIONAL MULTIFOODS
CORPORATION, a Delaware corporation ("Multifoods"), and DEVENDRA
MISHRA, an employee of Multifoods, residing in the State of Colorado
("Mishra").
WITNESSETH THAT:
WHEREAS, Mishra is an employee of Multifoods; and
WHEREAS, Multifoods and Mishra have agreed that Mishra's
employment with Multifoods shall terminate effective on April 30, 1997.
NOW, THEREFORE, in consideration of the preceding recitals and of
the mutual covenants and agreements hereinafter set forth, Multifoods
and Mishra agree as follows:
1. Termination Date.
Mishra's employment with Multifoods shall terminate effective on
April 30, 1997 (the "Termination Date"). Notwithstanding the
Termination Date, the employment relationship between Multifoods and
Mishra prior to the Termination Date shall be at the will of the
parties.
2. Termination Allowance and Waiver of Restriction on Restricted
Common Stock.
A. Multifoods shall pay Mishra, by check, on the Termination
Date, an amount equal to $137,500, in a lump sum, less all applicable
federal, state and local withholding taxes (the "Termination
Allowance"). The Termination Allowance payable to Mishra under this
Agreement is in lieu of any other amounts which may be payable to
Mishra for severance pay under any prior oral or written agreement
between Multifoods and Mishra. All tax liability, with respect to the
Termination Allowance paid to Mishra under this Agreement (other than
employer withholding and employer payroll taxes) shall be Mishra's sole
responsibility.
B. Mishra was awarded and granted (i) 6,000 shares of
restricted Common Stock, par value $0.10 per share, of Multifoods on
September 15, 1994 ("1994 Restricted Common Stock"), under and pursuant
to that certain Restricted Stock Award Agreement, dated as of September
15, 1994 between Multifoods and Mishra ("1994 Restricted Stock Award
Agreement"); and (ii) 13,260 shares of restricted Common Stock, par
value $0.10 per share, of Multifoods on September 15, 1995 ("1995
Restricted Common Stock"), under and pursuant to that certain
Restricted Stock Award Agreement, dated as of September 15, 1995
between Multifoods and Mishra ("1995 Restricted Stock Award
Agreement"); by the Compensation Committee of the Board of Directors of
Multifoods (the "Compensation Committee"). Under the 1994 Restricted
Stock Award Agreement, the 1994 Restricted Common Stock will vest in
Mishra on September 15, 1997, and under the 1995 Restricted Stock Award
Agreement, the 1995 Restricted Common Stock will vest in Mishra on
September 15, 1997 if Mishra is an employee of Multifoods on such date.
(Pursuant to the 1995 Restricted Stock Award Agreement, Mishra elected,
in writing, to defer the vesting date of the 1995 Restricted Common
Stock for one year from September 15, 1996 to September 15, 1997.) If
Mishra's employment were to terminate prior to September 15, 1997,
Mishra would forfeit the 1994 Restricted Common Stock and the 1995
Restricted Common Stock. As part of the consideration for this
Agreement, the Compensation Committee has, pursuant to special action
of the Compensation Committee, waived the vesting requirements on the
1994 Restricted Common Stock and the 1995 Restricted Common Stock, so
that such shares, 6000 and 13,260 , respectively, will vest on the
earlier to occur of (i) April 30, 1997 or (ii) the last date of
Mishra's employment with Multifoods provided that the rescission period
described in Section 3.D. below has expired (the "Waiver of Restriction
on the Restricted Common Stock"), and further provided that Mishra has
not rescinded or revoked this Agreement, including the Release (as
defined below), in which case all of the 1994 Restricted Common Stock
and all of the 1995 Restricted Common Stock, and all of the rights
relating thereto, including the payment of accrued dividends, will be
forfeited immediately as of the date of such rescission.
RELEASE AGREEMENT
3. Release.
A. In consideration of the Termination Allowance payable by
Multifoods to Mishra set forth and described in Section 2 of this
Agreement, the Waiver of Restriction on the Restricted Common Stock,
the agreements of Multifoods set forth in that certain letter, dated
January 3, 1997, to Mishra from R.F. Maddocks, Executive Vice President
of Multifoods, attached hereto as Exhibit A (the "Letter Agreement"),
and other good and valuable consideration, Mishra 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 Mishra or his
heirs, executors, administrators, legal representatives, successors or
assigns and beneficiaries have or may have in connection with Mishra's
employment with and termination of employment from Multifoods, for all
time to the date of this Agreement, except for: (i) this Agreement and
the Termination Allowance payable to Mishra under the terms of this
Agreement; (ii) any indemnification right to which Mishra is entitled
by reason of his employment by Multifoods, under (A) the Restated
Certificate of Incorporation, as amended, of Multifoods, (B) the Bylaws
of Multifoods, and/or (C) any policy of insurance issued to Multifoods
under which Mishra is an insured and entitled to coverage; (iii) any
right that Mishra has as a result of his participation in any health
and welfare and pension benefit plans of Multifoods to which Mishra is
entitled by reason of his employment by Multifoods under the terms and
conditions set forth in such plans as of the date of this Agreement;
and (iv) the 1994 Restricted Stock Award Agreement and the 1995
Restricted Stock Award Agreement, as modified by the Waiver of
Restriction on the Restricted Common Stock, and any Non-Qualified Stock
Option Agreements between Multifoods and Mishra, under the terms and
conditions set forth in such Restricted Stock Award Agreements and Non-
Qualified Stock Option Agreement (the foregoing hereinafter called the
"Release").
B. Except as specifically provided in Paragraph A of this
Section 3, the Release applies to any action, claim, demand, debt,
contract and agreement that Mishra has or may have as of the date of
this Agreement including, without limitation, any and all claims
relating to Mishra'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. Mishra acknowledges and agrees that Multifoods' agreement
to pay the Termination Allowance, Multifoods' agreements set forth in
the Letter Agreement, and the Waiver of Restriction on the Restricted
Common Stock, do not constitute an admission that Multifoods or any of
the other Released Parties has engaged in any wrongful conduct towards
Mishra, has acted in any way to cause injury to Mishra, or is
responsible or legally obligated to Mishra in any way, except as
specifically provided in this Agreement.
D. Mishra 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. Mishra also understands that if he
rescinds this Agreement, he shall forfeit the Termination Allowance,
and the agreements of Multifoods set forth in the Letter Agreement and
the Waiver of Restriction on the Restricted Common Stock shall
terminate and be canceled. Mishra further acknowledges and understands
that to be effective, his notice of rescission 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
rescission 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. Mishra 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. Mishra's manual
signature on this Agreement, set forth below in the signature block,
constitutes Mishra's acknowledgment that he understands the effect of
this Agreement, 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 MISHRA TO CONSULT WITH
AN ATTORNEY-AT-LAW OF MISHRA'S CHOICE BEFORE
MISHRA SIGNS AND DELIVERS THIS AGREEMENT.
4. Multifoods' Representation.
Multifoods represents to Mishra that, as of the date of this
Agreement, Multifoods has no knowledge or any information which would
cause Multifoods to assert a claim against Mishra in connection with
Mishra's employment to the date of this Agreement.
5. Confidential Information.
A. Mishra's Covenant of Confidentiality
Further, in consideration of the Termination Allowance payable by
Multifoods under Section 2 of this Agreement, the agreements of
Multifoods set forth in the Letter Agreement and the Waiver of
Restriction on the Restricted Common Stock, Mishra covenants and agrees
that during and after his employment with Multifoods 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 of its subsidiaries, 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 Mishra; or (iii) which is disclosed
to Mishra 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 Mishra 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, after the Termination Date, Mishra 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 Mishra shall be compelled to disclose any
such confidential information, based upon the advice of Mishra's
counsel, Mishra may disclose such information without liability under
this Agreement, provided that Mishra 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 Mishra is required to disclose such information, and in any event,
such disclosure shall be limited to the specific information that
Mishra is legally required to disclose based upon the advice of
Mishra's counsel.
C. Remedies.
Mishra acknowledges and agrees that money damages would not be a
sufficient remedy for any breach or threatened breach by Mishra of his
covenant of confidentiality set forth in Paragraph A of this Section 5;
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.
6. Mishra's Covenant of Nonsolicitation.
A. Nonsolicitation. Mishra covenants and agrees that he will
not, directly or indirectly: (i) for a period of two (2) years
following the Termination Date, employ or attempt to employ any
director, officer or employee of Multifoods or any of its subsidiaries,
or otherwise interfere with or disrupt any employment relationship
(contractual or otherwise) between Multifoods and any director, officer
or employee of Multifoods or any of its subsidiaries; (ii) for a period
of two (2) years following the Termination Date, solicit, request,
advise, or induce any present or potential customer, supplier, or other
business contact of the Company to cancel, curtail, or otherwise change
its relationship with Multifoods or any of its subsidiaries; or (iii)
at any time after the Termination Date, publicly criticize or disparage
in any manner or by any means Multifoods or any of its subsidiaries,
its and their personnel, or any aspect of its management policies,
operations, products, services, or practices.
B. Remedies. Mishra acknowledges and agrees that money
damages would not be sufficient remedy for any breach or threatened
breach by Mishra of his covenants set forth in this Section 6; 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 such breach or threatened breach.
7. No Waiver.
The waiver by Multifoods or Mishra of a breach by Multifoods or
Mishra, as applicable, of any term of this Agreement shall not operate
or be construed as a waiver of any subsequent breach by Multifoods or
Mishra, as applicable.
8. Governing Law.
This Agreement shall be interpreted under and governed by the laws
of the State of Minnesota.
9. Entire Agreement.
This Agreement, including the Letter Agreement, contains the
entire agreement between Multifoods and Mishra with respect to Mishra's
termination as an employee of Multifoods, and supersedes any prior oral
or written agreement or understanding between the parties with respect
to severance pay and the other matters described in this Agreement.
IN WITNESS WHEREOF, Multifoods and Mishra have signed and
delivered this Agreement as of the day and year first above written.
WITNESS: INTERNATIONAL MULTIFOODS CORPORATION
/s/ Rachael Galarneau By: /s/ Robert F. Maddocks
Robert F. Maddocks, Executive Vice President
WITNESS:
/s/ John Pistilli /s/ Devendra Mishra
Devendra Mishra
Exhibit 10.26
FIRST AMENDMENT
TO THE
FEE DEFERRAL PLAN
FOR NON-EMPLOYEE DIRECTORS OF
INTERNATIONAL MULTIFOODS CORPORATION
(Amended and Restated as of September 17, 1993)
Section 4.4 of the Fee Deferral Plan for Non-Employee Directors of
International Multifoods Corporation (Amended and Restated as of
September 17, 1993) is amended effective January 1, 1997, to read as
follows:
4.4 The Account Balance of each Participant shall be credited as of
the last day of each calendar quarter with interest at a rate equal to
one-fourth of the annual rate reported for such date (or the next
preceding business day) in the Federal Reserve Statistical Release as
the yield on U.S. Treasury Bills with a constant maturity of 10 years.
Such interest shall be credited based on the Account Balance as of the
first day of the calendar quarter, reduced by any withdrawals or
distributions made from the Account during the calendar quarter.
<TABLE>
Exhibit 11
INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES
Computation of Earnings (Loss) Per Common Share
(dollars in thousands, except per share amounts)
<CAPTION>
Years Ended
-------------------------------------------------------------------
February 28, February 29, February 28, February 28, February 28,
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Average shares of common
stock outstanding 17,982,348 17,964,688 17,974,156 18,910,748 19,281,578
Common stock equivalents 22,218 81,630 17,446 104,338 245,973
---------- ---------- ---------- ---------- ----------
Total common stock and equivalents
assuming full dilution 18,004,566 18,046,318 17,991,602 19,015,086 19,527,551
========== ========== ========== ========== ==========
Earnings (loss) $ 2,780 $24,075 $57,021 $(13,438) $41,210
Less dividends on preferred stock - 260 167 174 180
------ ------ ------ ------- ------
Earnings (loss) applicable
to common stock $ 2,780 $23,815 $56,854 $(13,612) $41,030
====== ====== ====== ======= ======
Earnings (loss) per share of common stock:
Primary $ .15 $ 1.33 $ 3.16 $ (.72) $ 2.13
====== ====== ====== ======= ======
Fully diluted $ .15 $ 1.32 $ 3.16 $ (.72) $ 2.10
====== ====== ====== ======= ======
</TABLE>
Primary earnings (loss) per share have been computed by dividing net
earnings (loss), after deduction of preferred stock dividends, by the
weighted average number of shares of common stock outstanding during the
year. 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 (loss) per share have 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
(dollars in thousands)
<TABLE>
<CAPTION>
Years Ended
---------------------------------------------------------------
February 28, February 29, February 28, February 28, February 28,
1997 1996 1995 1994 1993
----------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Earnings (loss) before income taxes (1) $ 5,016 $27,754 $71,739 $(12,717) $64,331
Plus: Fixed charges (2) 28,052 29,314 24,795 22,001 23,558
Less: Capitalized interest (109) (128) (317) (746) (1,144)
------ ------ ------ ------- ------
Earnings available to cover fixed charges $32,959 $56,940 $96,217 $ 8,538 $86,745
====== ====== ====== ======= ======
Ratio of earnings to fixed charges(3) 1.17 1.94 3.88 .39 3.68
====== ====== ====== ======= ======
</TABLE>
(1) Earnings (loss) before income taxes have been adjusted to reflect
income received (but not undistributed amounts) from less-than-fifty-
percent-owned persons. Earnings (loss) before income taxes have also
been adjusted to exclude losses from less-than-fifty-percent-owned
persons.
(2) Fixed charges consist of the following:
<TABLE>
<CAPTION>
Years Ended
---------------------------------------------------------------
February 28, February 29, February 28, February 28, February 28,
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Interest expense, gross $18,658 $19,613 $15,592 $12,578 $13,600
Rentals (interest factor) 9,394 9,701 9,203 9,423 9,958
------ ------ ------ ------ ------
Total $28,052 $29,314 $24,795 $22,001 $23,558
====== ====== ====== ====== ======
</TABLE>
(3) For the year ended February 28, 1994, earnings were inadequate to
cover fixed charges. The deficiency of $13,463 was the result of
unusual items. Exclusive of these unusual items, the ratio of earnings
to fixed charges would have been 3.57 for the year ended February 28,
1994.
EXHIBIT 13
MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
Overview
Fiscal 1997 net earnings were $2.8 million, or 15 cents per share,
compared with $24.1 million, or $1.33 per share, in fiscal 1996. The
decline in net earnings was primarily the result of unusual charges
and an operating loss in the Company's vending distribution business.
The vending distribution loss resulted from lower sales volumes,
competitive pricing pressures and a changing customer mix. Excluding
unusual items, fiscal 1997 net earnings were $17.6 million, or 98
cents per share, compared with $23.6 million, or $1.31 per share in
fiscal 1996.
Unusual items in fiscal 1997 resulted in a $14.8 million after-tax
charge, or 83 cents per share. The Company estimates that the actions
associated with unusual charges will reduce future annualized
operating expenses by approximately $1 million. In fiscal 1996,
unusual items totaled a net benefit of $0.5 million after tax, or 2
cents per share. Further discussion of unusual items follows in
"Segment Results" and in Note 4 to the consolidated financial
statements.
Net sales for fiscal 1997 were up 3% to $2.6 billion, compared
with $2.5 billion last year. All of the Company's business segments
recorded sales increases.
Segment Results
The Company operates in three business segments: Foodservice
Distribution, North America Foods and Venezuela Foods. A description
of the business segments and summary of operating results are included
in Note 17 to the consolidated financial statements.
Fiscal 1997 compared with fiscal 1996
Foodservice Distribution: Net sales increased 3% to $1.8 billion.
This increase was primarily related to higher volumes in the Company's
limited-menu distribution business, which resulted from the addition
of several new customer accounts in fiscal 1997. The increase in
limited-menu distribution net sales was partially offset by a sales
decline in vending distribution as a result of lower volumes. The
Company is addressing the decline in sales volumes by restructuring
certain customer support functions as described below.
Operating earnings before unusual items declined 43% to $12.6
million as a result of the vending distribution operating loss. The
decline was partially offset by higher earnings in the limited-menu
distribution and food exporting businesses. Limited-menu distribution
earnings improved as a result of lower operating costs and the higher
volumes. Food exporting earnings increased on higher volumes to a
major customer that distributes food products in Russia. Earnings on
sales to this customer accounted for approximately 14% of the
Company's consolidated operating earnings before unusual items in
fiscal 1997, compared with 3% in fiscal 1996.
Fiscal 1997 unusual items included a $4 million charge for a
restructuring plan at vending distribution and a $1.1 million charge
to consolidate two limited-menu distribution facilities. The
restructuring plan is directed at improving customer service and
involves moving key customer support functions from a central location
to each of the Company's vending distribution centers. The charges
for the restructuring plan and facility consolidation cover losses on
lease commitments and employee termination benefits. Fiscal 1996
unusual items of $9.4 million included an $8.9 million charge for a
write-down of vending distribution software.
North America Foods: Net sales increased 4% to $476.7 million because
of price increases resulting from higher worldwide wheat costs, and
volume growth in consumer products. The increase was partially offset
by lower volumes in U.S. bakery mix, which resulted primarily from
softness in a large customer's business, and lower volumes in Canadian
frozen bakery products, which occurred because of increased
competitive pressures.
Operating earnings before unusual items were $20.8 million,
unchanged from the prior year. While higher consumer product volumes
increased earnings, lower U.S. bakery mix and Canadian frozen bakery
volumes adversely affected results. In addition, fiscal 1996 earnings
benefited from a 53-week reporting period.
In fiscal 1997, the Company recognized an unusual charge of $11.4
million for asset impairment in its Canadian frozen bakery operation.
The impairment resulted from a significant decline in operating
performance during fiscal 1997, which occurred because of increased
competitive pressures. The Company estimated the fair value of the
assets in accordance with Statement of Financial Accounting Standards
No. 121 by using discounted expected future cash flows. In estimating
future cash flows, considerable management judgment is necessary and
actual results could vary significantly from such estimates.
Venezuela Foods: Net sales increased 6% to $346.8 million on higher
sales prices and increased consumer corn flour volumes. The increase
was partially offset by lower volumes in commercial wheat flour and
animal feeds. Sales volumes were affected by substantially higher
local prices, which caused consumers to shift to lower-priced
products, such as corn flour, and away from higher-priced products,
such as meat and prepared food products. Sales in the prior year were
adversely affected by a significant devaluation in the free-market
exchange rate while the Company operated under government price
controls.
Operating earnings declined 3% to $18.6 million as a result of
significant prior year currency devaluation, which affected first
quarter results, competitive pricing pressures following the April
1996 implementation of economic reforms and a major increase in the
cost of locally grown grain. Prior year results were adversely
affected by a significant devaluation in the free-market exchange rate
and a $3.9 million charge associated with the December 1995 change in
the official exchange rate. When the official exchange rate was
changed, the Company had to settle certain U.S. dollar obligations at
a substantially higher cost.
During fiscal 1997, the Venezuelan government implemented major
reforms in order to address the country's economic problems. Economic
reforms included the removal of controls over foreign exchange,
interest rates and prices. The Venezuelan government also entered
into a loan agreement with the International Monetary Fund. The
Company believes the reforms are a positive development over the long
term.
Corporate: Fiscal 1997 corporate expenses included $2.2 million in
costs associated with the resignation of the Company's former chief
executive officer and $1.4 million principally for the cost of
business assessment studies. Fiscal 1996 corporate expenses included
a charge of $6.2 million for costs associated with reducing corporate
administrative operations.
Fiscal 1996 compared with fiscal 1995
Fiscal 1996 net earnings were $24.1 million, or $1.33 per share,
compared with net earnings of $57 million, or $3.16 per share, in
fiscal 1995. Fiscal 1995 results included a $1.61 per share benefit
from unusual items, principally from the gain on the sale of the
Company's frozen specialty foods business. Excluding unusual items,
fiscal 1995 net earnings were $28 million, or $1.55 per share.
Net sales for fiscal 1996 increased 10% to $2.5 billion, compared
with $2.3 billion in fiscal 1995. The increase was largely the result
of the full-year inclusion of a fiscal 1995 distribution business
acquisition.
Foodservice Distribution: Net sales increased 23% to $1.7 billion from
the full-year inclusion of the acquired limited-menu distribution
business of Leprino Foods Company. The increase was partially offset
by a slight sales decline in the Company's vending distribution
business as a result of lower volumes.
Fiscal 1996 operating earnings before unusual items increased 27%
to $22.3 million on the full-year earnings contribution of the
business acquisition, higher earnings in the Company's food exporting
business and the benefit of purchasing certain inventories before
suppliers increased prices. Earnings were adversely affected by the
lower volumes and from higher selling costs in vending distribution.
Fiscal 1995 operating earnings included an unusual charge of $6.2
million for costs associated with integration of the Company's
limited-menu distribution business.
North America Foods: Net sales were $459.7 million in fiscal 1996
compared with $459.2 million in fiscal 1995. Sales improved on higher
volumes in commercial bakery products in Canada but were offset by
lower volumes in U.S. bakery mix and North American frozen products.
Operating earnings declined 7% to $20.8 million from $22.4 million
in fiscal 1995. The earnings decline was the result of the lower
volumes partially offset by improved earnings in consumer and
commercial bakery products in Canada and the benefit of a 53-week
reporting period in fiscal 1996.
Venezuela Foods: Net sales increased 3% to $328.5 million on higher
volumes along with the benefit in the first half of fiscal 1996 of a
stable exchange rate as a result of government imposed foreign
exchange controls. The increase was partially offset by the impact of
a significant devaluation in the free-market exchange rate during the
second half of fiscal 1996. Higher volumes in commercial bakery
products resulted primarily on business obtained from the addition of
two wheat flour mills which the Company had leased beginning in
October 1994 and subsequently purchased in August 1995. Consumer
product volumes increased on higher market share and the benefit of a
corn flour business acquisition.
Fiscal 1996 operating earnings declined 4% to $19.1 million as a
result of the significant devaluation in the free-market exchange rate
and from a $3.9 million charge associated with the December 1995
change in the official exchange rate. The decline was partially
offset by the benefit of a stable exchange rate in the first half of
fiscal 1996 and the higher volumes.
Divested businesses: Fiscal 1996 results consisted of the Company's
surimi seafood business, which was divested in June 1995. In addition
to the surimi seafood business, fiscal 1995 results included the
frozen specialty foods and meats businesses, which were divested in
June and May 1994, respectively. The unusual gain of $9.9 million in
fiscal 1996 was from the divestiture of the surimi seafood business.
Unusual items of $34.2 million in fiscal 1995 were primarily from the
gain on the divestiture of the frozen specialty foods business.
Non-operating Expense and Income
In fiscal 1997, net interest expense declined to $16.8 million from
$17.9 million last year. The decline was the result of lower interest
rates in Canada and interest income earned on income tax refunds in
the United States.
In fiscal 1996, net interest expense increased to $17.9 million
from $11.4 million as a result of higher interest rates in the United
States and Canada, and lower interest income in Venezuela. Interest
expense also increased as a result of higher debt levels.
In fiscal 1996, net other income (expense) included foreign
exchange losses of $3.6 million from Venezuelan local currency cash
and cash equivalents.
Income Taxes
The effective tax rates on earnings before unusual items were 30% and
29.4% in fiscal 1997 and 1996, respectively. Including the impact of
unusual items, the Company's overall effective tax rate was 44.6% in
fiscal 1997, compared with 13.3% in fiscal 1996 and 20.5% in fiscal
1995. The low tax rate in fiscal 1996 was the result of a $5 million
benefit from a tax settlement. The fiscal 1995 effective tax rate was
affected by a low tax rate on the frozen specialty foods business
divestiture. The Company's overall tax rate in each fiscal year was
affected by low effective tax rates in Venezuela.
Financial Condition
Capital Resources and Liquidity
The Company's short-term financing is provided by borrowings against
its U.S. and Canadian revolving credit agreements, uncommitted lines
of credit and, on a more limited basis, U.S. commercial paper.
Approximately $280 million in committed U.S. and Canadian revolving
credit agreements are maintained to ensure availability of funds.
Additionally, the Company's Venezuelan subsidiary has uncommitted
lines of credit totaling $135 million, which are not guaranteed by the
parent Company. As of February 28, 1997, approximately $200 million of
outstanding debt obligations were at variable interest rates. The
Company has a medium-term note program under its shelf registration
statement filed with the Securities and Exchange Commission that
provides for the issuance of up to $150 million in medium-term notes
in various amounts. As of February 28, 1997, $140 million was
available under the medium-term note program. See Notes 8 and 9 to
the consolidated financial statements for additional information on
capital resources.
In fiscal 1997, Standard and Poor's lowered its ratings on the
Company's long-term debt and commercial paper to BBB- and A-3,
respectively, and 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 believes that the ratings
downgrades will not have a material impact on the Company's results of
operations or ability to obtain financing.
During fiscal 1997, the debt-to-total capitalization ratio
increased from 45% to 51%. The primary reason for the higher
percentage is an increase in operating working capital of
approximately $71 million, which occurred primarily because of higher
inventories and accounts receivable in Venezuela and the Company's
food exporting business. The increase in working capital was partially
offset by higher accounts payable, which resulted from the timing of
payments Companywide and higher prices in Venezuela. In Venezuela,
inventories were up as a result of the significantly higher costs of
locally grown grain, primarily corn, and accounts receivable increased
because of higher sales prices which resulted from local inflation.
Accounts receivable increased in the Company's food exporting business
because of delays in receiving payment from a major customer that
distributes food products in Russia and from the adoption of a new
accounting standard. The delay occurred because the Russian
government began to enforce a tariff on imported products. On January
1, 1997, the Company adopted Statement of Financial Accounting
Standards No. 125, which sets forth the accounting for transfers of
assets. As a result, the Company no longer transfers its food
exporting business receivables to a third party. As of
February 29, 1996, the outstanding balance of sold receivables from
the food exporting business was $10.8 million. The increase in working
capital was financed principally through short-term borrowings.
Capital expenditures for fiscal 1997 were $27.5 million compared
with $31.2 million in fiscal 1996. Approximately 30% of the fiscal
1997 capital expenditures was attributable to projects designed to
increase earnings through volume improvements, new business or cost
savings. The remaining capital expenditures were related to projects
required to maintain existing facilities and equipment.
The Company believes that cash flows from operations together with
available external financing will be sufficient to fund operations,
dividend payments and capital expenditures anticipated for fiscal
1998.
Business Concentrations
The Company's Venezuelan operations are subject to risks inherent in
operating under a different legal and political system along with a
difficult economic environment. Among these risks are inflation,
currency volatility, possible limitations on foreign investment,
exchangeability of currency, dividend repatriation and changes in
existing tax laws.
The Company's present strategies for managing Venezuelan currency
risk include product pricing strategies and active management of its
net monetary exposure, principally through U.S. dollar versus bolivar
denominated financing. With respect to product pricing strategies,
the Company is exposed to the risk of declines in gross profit margins
if the bolivar were to decline in value versus the U.S. dollar. With
respect to the Company's Venezuela monetary position (which includes
its bolivar denominated assets and liabilities, except for inventory
and fixed assets), the Company is exposed to the risk of foreign
exchange gains and losses if the bolivar were to change in value
versus the U.S. dollar. For example, if the bolivar were to decline
in value and the Company were in a net monetary asset position (i.e.,
bolivar denominated assets exceed liabilities), there would be foreign
exchange losses, the amount of which would depend upon the size of the
net monetary asset position and the magnitude of the currency
devaluation. Conversely, if the Company were in a net monetary
liability position (i.e., bolivar denominated liabilities exceed
assets) and the bolivar declined in value, there would be foreign
exchange gains. As of February 28, 1997, the Company's Venezuelan
operation was in a net monetary liability position of $18 million.
The Company's food exporting business has a major customer that
distributes food products in Russia. The Company's financial position
and results of operations could be adversely affected in the event of
economic or political instability in Russia or if the customer
experienced difficulty in meeting its commitments.
Commodity Risk Management
The Company's Canadian operations minimize risks associated with wheat
market price fluctuations by hedging its wheat and flour inventories,
open wheat purchase contracts and open flour sales contracts with
wheat futures contracts. The Company also enters into futures
contracts to reduce the risk of price increases on certain anticipated
raw material purchases. See Note 7 to the consolidated financial
statements for further discussion.
Independent Auditors' Report
The Board of Directors and Shareholders of
International Multifoods Corporation:
We have audited the accompanying consolidated balance sheets of
International Multifoods Corporation and subsidiaries as of February
28, 1997, and February 29, 1996, and the related consolidated
statements of earnings and cash flows for each of the years in the
three-year period ended February 28, 1997. These consolidated
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position
of International Multifoods Corporation and subsidiaries as of
February 28, 1997, and February 29, 1996, and the results of their
operations and their cash flows for each of the years in the three-
year period ended February 28, 1997 in conformity with generally
accepted accounting principles.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Minneapolis, Minnesota
April 8, 1997
Management's Responsibility for Financial Statements
The consolidated financial statements have been prepared by management
in conformity with generally accepted accounting principles and
include, where required, amounts based on management's best estimates
and judgments. Management continues to be responsible for the
integrity and objectivity of data in these consolidated financial
statements, which it seeks to assure through an extensive system of
internal controls. Such controls are designed to provide reasonable,
but not absolute, assurance that assets are safeguarded from
unauthorized use or disposition and that financial records are
sufficiently reliable to permit the preparation of consolidated
financial statements. It is recognized that estimates and judgments
are required to assess and balance the relative cost and expected
benefits of any system of internal controls.
The system of internal accounting controls is designed to provide
reasonable assurance that the books and records reflect the Company's
transactions and that its established policies and procedures are
carefully followed. The system includes written policies and
procedures, a financial reporting system, an internal audit department
and careful selection and training of qualified personnel.
/s/Gary E. Costley /s/ William L. Trubeck
Gary E. Costley William L. Trubeck
Chairman, President and Senior Vice President - Finance,
Chief Executive Officer and Chief Financial Officer
INTERNATIONAL MULTIFOODS CORPORATION and SUBSIDIARIES
Consolidated Statements of Earnings
Fiscal year ended the last day of February
(in thousands, except per share data) 1997 1996 1995
- ----------------------------------------------------------------------------
Net sales $2,595,873 $2,523,197 $2,295,119
Cost of sales (2,215,366) (2,135,707) (1,901,932)
- ----------------------------------------------------------------------------
Gross profit 380,507 387,490 393,187
Delivery and distribution (167,788) (162,870) (146,220)
Selling, general and
administrative (170,508) (168,825) (186,616)
Unusual items (20,107) (5,700) 26,240
- ----------------------------------------------------------------------------
Operating earnings 22,104 50,095 86,591
Interest, net (16,758) (17,908) (11,410)
Other income (expense), net (330) (4,433) (3,442)
- ----------------------------------------------------------------------------
Earnings before income taxes 5,016 27,754 71,739
Income taxes (2,236) (3,679) (14,718)
- ----------------------------------------------------------------------------
Net earnings $ 2,780 $ 24,075 $ 57,021
============================================================================
Net earnings per share of
common stock $ .15 $ 1.33 $ 3.16
============================================================================
Average shares of common
stock outstanding 17,982 17,965 17,974
============================================================================
See accompanying notes to consolidated financial statements.
INTERNATIONAL MULTIFOODS CORPORATION and SUBSIDIARIES
Consolidated Balance Sheets
February 28, 1997 and February 29, 1996
(in thousands) 1997 1996
- -----------------------------------------------------------------------
Assets
Current assets:
Cash and cash equivalents $ 8,753 $ 7,508
Trade accounts receivable, net of allowance 207,459 165,527
Inventories 283,948 230,626
Deferred income taxes 9,418 10,792
Other current assets 53,678 44,582
- -----------------------------------------------------------------------
Total current assets 563,256 459,035
- -----------------------------------------------------------------------
Property, plant and equipment, net 225,357 226,498
Goodwill, net 87,641 99,999
Other assets 39,034 36,725
- -----------------------------------------------------------------------
Total assets $915,288 $822,257
=======================================================================
Liabilities and Shareholders' Equity
Current liabilities:
Notes payable $ 88,201 $ 28,541
Current portion of long-term debt 6,790 11,000
Accounts payable 206,966 170,884
Other current liabilities 70,037 61,870
- -----------------------------------------------------------------------
Total current liabilities 371,994 272,295
- -----------------------------------------------------------------------
Long-term debt 202,328 202,937
Deferred income taxes 17,419 12,975
Employee benefits and other liabilities 33,969 34,487
- -----------------------------------------------------------------------
Total liabilities 625,710 522,694
- -----------------------------------------------------------------------
Shareholders' equity:
Preferred capital stock - -
Common stock, authorized 50,000 shares;
issued 21,844 shares 2,184 2,184
Capital in excess of par value 88,124 88,316
Retained earnings 393,335 404,813
Equity adjustment from foreign
currency translation (108,000) (108,170)
Equity adjustment from minimum
pension liability (2,309) (2,674)
Treasury stock, 3,835 and 3,864 shares, at cost (83,262) (83,948)
Unearned restricted stock (494) (958)
- -----------------------------------------------------------------------
Total shareholders' equity 289,578 299,563
- -----------------------------------------------------------------------
Commitments and contingencies
Total liabilities and shareholders' equity $915,288 $822,257
=======================================================================
See accompanying notes to consolidated financial statements.
INTERNATIONAL MULTIFOODS CORPORATION and SUBSIDIARIES
Consolidated Statements of Cash Flows
Fiscal year ended the last day of February
(in thousands) 1997 1996 1995
- ------------------------------------------------------------------------------
Cash flows from operations:
Net earnings $ 2,780 $ 24,075 $ 57,021
Adjustments to reconcile net earnings
to cash provided by (used for) operations:
Depreciation and amortization 30,748 29,772 27,045
Provision for unusual charges 20,107 15,493 5,413
Gain on major business dispositions - (9,900) (33,581)
Deferred income tax expense 3,252 4,544 4,483
Provision for losses on receivables 2,862 5,783 4,477
Changes in operating assets and
liabilities, net of business
acquisitions and dispositions* (71,196) (43,456) (49,351)
Other, net (1,000) (730) 6,372
- ------------------------------------------------------------------------------
Cash provided by
(used for) operations (12,447) 25,581 21,879
- ------------------------------------------------------------------------------
Cash flows from investing activities:
Acquisitions of businesses,
net of cash acquired - (29,904) (115,847)
Capital expenditures (27,507) (31,181) (30,776)
Proceeds from business dispositions - 48,009 156,367
Proceeds from other property disposals 623 1,707 823
- ------------------------------------------------------------------------------
Cash provided by (used for)
investing activities (26,884) (11,369) 10,567
- ------------------------------------------------------------------------------
Cash flows from financing activities:
Net increase (decrease) in notes payable 60,119 (12,203) (7,231)
Additions to long-term debt 20,000 85,945 4,973
Reductions in long-term debt (25,390) (65,165) (7,038)
Dividends paid (14,477) (14,471) (14,560)
Proceeds from issuance of common stock 546 1,470 355
Purchase of treasury stock (82) (2,877) (5,877)
Redemption of preferred stock - (3,732) -
Other, net (230) (712) (19)
- ------------------------------------------------------------------------------
Cash provided by (used for)
financing activities 40,486 (11,745) (29,397)
- ------------------------------------------------------------------------------
Effect of exchange rate changes
on cash and cash equivalents 90 (5,751) (2,764)
- ------------------------------------------------------------------------------
Net increase (decrease) in cash
and cash equivalents 1,245 (3,284) 285
Cash and cash equivalents at beginning of year 7,508 10,792 10,507
- ------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 8,753 $ 7,508 $ 10,792
==============================================================================
*Cash flows from changes in operating
assets and liabilities, net of
business acquisitions and dispositions:
Accounts receivable $(45,043) $(45,993) $ (441)
Inventories (53,086) 19,172 (47,866)
Other current assets (9,671) (4,759) (9,089)
Accounts payable 36,688 16,871 16,643
Other current liabilities (84) (28,747) (8,598)
- ------------------------------------------------------------------------------
Net change $(71,196) $(43,456) $(49,351)
==============================================================================
See accompanying notes to consolidated financial statements.
Notes to Consolidated Financial Statements
Note 1: Summary of Significant Accounting Policies
Basis of statement presentation
The accompanying consolidated financial statements include the accounts of
International Multifoods Corporation and all of its subsidiaries.
Intercompany accounts and transactions have been eliminated in
consolidation. Certain amounts in the prior year financial statements have
been reclassified to conform to the current year presentation.
Net sales
The Company reports the gross margin earned from commodity sales of its
food exporting business as net sales. If gross commodity sales had been
reported, net sales and cost of sales would have increased by $278.2
million in fiscal 1997, $227.2 million in fiscal 1996 and $150.3 million in
fiscal 1995.
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 certain Venezuelan borrowings, as a component of cost of sales.
Accordingly, cost of sales was increased by $2.6 million in fiscal 1997 and
was reduced by $7.8 million and $0.4 million in fiscal 1996 and 1995,
respectively.
Foreign currency translation and transactions
For the Company's Canadian operations, the functional currency is the local
currency. Assets and liabilities are translated at current exchange rates
and results of operations are translated using the weighted average
exchange rate in effect during the fiscal year. The gains or losses
resulting from translation are included as a separate component of
shareholders' equity.
The functional currency for the Company's Venezuelan operations is the
U.S. dollar. Nonmonetary assets and liabilities, principally inventory and
fixed assets, are translated at historical exchange rates while monetary
assets and liabilities are translated at current exchange rates. Results
of operations are translated using the weighted average exchange rate in
effect during the fiscal year, except that cost of sales and depreciation
are translated at historical rates. The gains or losses resulting from
translation are included in the determination of net earnings.
The Company recognized in its results of operations net foreign
exchange gains of $0.4 million in fiscal 1997, $2.4 million in fiscal 1996
and net foreign exchange losses of $3.0 million in fiscal 1995.
Stock-based compensation
The Company applies Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees" (APB 25), and related interpretations in
accounting for its stock-based compensation. The Financial Accounting
Standards Board issued Statement No. 123, " Accounting for Stock-Based
Compensation" (SFAS 123), which was effective in fiscal 1997. SFAS 123
provides the option either to continue the Company's current method of
accounting for stock-based compensation or to adopt the fair value method
of accounting. The Company elected to continue accounting for stock-based
compensation using APB 25.
Income taxes
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the expected future
tax consequences of temporary differences between the financial statement
carrying amount and tax basis of assets and liabilities.
Earnings per share
Earnings per share of common stock has been determined by dividing net
earnings, after deduction of preferred stock dividends, by the average
number of shares of common stock outstanding during the year. Common stock
options and other common stock equivalents are not included in earnings per
share computations since their effect is not significant.
Cash and cash equivalents
Included in cash and cash equivalents are cash on hand, time deposits, and
highly liquid short-term investments purchased with original maturities of
three months or less ("cash equivalents"). The Company's cash equivalents
are readily convertible to known amounts of cash and are near their
maturity. Accordingly, the risk of changes in value as a result of changes
in interest rates is insignificant.
Inventories
Inventories, excluding grain in Canada, are valued principally at the lower
of cost (first-in, first-out) or market (replacement or net realizable
value).
In Canada, inventories of grain are valued on the basis of replacement
market prices prevailing at fiscal year-end. The Company generally
minimizes risks associated with market price fluctuations by hedging those
inventories with futures contracts. Therefore, included in inventories is
the amount of gain or loss on open grain contracts, including futures
contracts, which generally has the effect of adjusting those inventories to
cost.
The Company also enters into futures contracts to reduce the risk of
price increases with respect to certain anticipated raw material purchases.
The futures contracts are accounted for as hedges, with gains and losses
deferred in inventory and subsequently included in cost of sales as the
inventory is sold.
Property, plant and equipment
Property, plant and equipment is stated at cost and depreciation is
computed using the straight-line method for determining financial statement
income. When permitted, accelerated depreciation methods are used to
calculate depreciation for income tax purposes.
Goodwill and other intangibles
Goodwill represents the excess of cost of businesses acquired over the fair
market value of net tangible and identifiable intangible assets. Such
excess costs are being amortized on a straight-line basis over various
periods not exceeding 40 years. Identifiable intangible assets represent
costs allocated to noncompete agreements, tradenames and other specifically
identifiable assets arising from business acquisitions. These assets are
amortized on a straight-line basis over their estimated useful lives.
Accumulated amortization of goodwill and other intangibles at February 28,
1997 and February 29, 1996 was $22.2 million and $19.4 million,
respectively.
The Company assesses the recoverability of goodwill and other long-
lived assets whenever events or changes in circumstances indicate that
expected future undiscounted cash flows may not be sufficient to support
the carrying amount of an asset. The Company deems an asset to be impaired
if a forecast of undiscounted future operating cash flows is less than its
carrying amount. If an asset is determined to be impaired, the loss is
measured as the amount by which the carrying value of the asset exceeds its
fair value. An estimate of fair value is based on the best information
available, including values for similar assets or the results of valuation
techniques such as discounting estimated future cash flows. The Company
generally measures fair value by discounting estimated future cash flows.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amount of revenues and expenses
during the reporting period. Actual results could differ from these
estimates.
New accounting pronouncement
In March 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share" (SFAS 128),
which is required to be adopted by the Company in the fourth quarter of
fiscal 1998. SFAS 128 simplifies the computation of earnings per share
(EPS) by replacing the presentation of primary EPS with a presentation of
basic EPS and requires dual presentation of basic and diluted EPS by
entities with complex capital structures. Basic EPS includes no dilution
as opposed to primary EPS that included common stock equivalents. Basic
EPS is computed by dividing income available to common stockholders, which
is net income less preferred stock dividends, by the weighted-average
number of common shares outstanding for the period. This new pronouncement
will not have an impact on the Company's reported EPS because its common
stock equivalents did not enter into historical primary earnings per share
computations since their effect was not significant.
Note 2: Businesses Acquired
The Company acquired, with cash and notes, several businesses during fiscal
1996 and 1995. There were no acquisitions during fiscal 1997. All
acquisitions have been accounted for as purchases and, accordingly, their
results of operations have been included since their respective dates of
acquisition. The most significant acquisitions were as follows:
Fiscal
Year Business Segment Description Date Acquired
- ------------------------------------------------------------------------
1996 Venezuela Foods Two wheat flour mills
in Puerto Cabello, VZ August 1995
Foodservice
Distribution Alum Rock Foodservice July 1995
Venezuela Foods Corn flour business
in Ciudad Bolivar, VZ April 1995
- ------------------------------------------------------------------------
1995 Foodservice Distribution business
Distribution of Leprino Foods Co. August 1994
- -----------------------------------------------------------------------
Components of cash used for acquisitions, as reflected in the
consolidated statements of cash flows, were as follows:
(in thousands) 1996 1995
- -------------------------------------------------------------------------
Fair value of current assets,
net of cash acquired $ 7,252 $ 46,298
Fair value of noncurrent assets,
excluding goodwill 21,266 39,003
Goodwill 2,626 51,478
Liabilities assumed, principally current (740) (20,932)
Purchase contract liabilities (500) -
- -------------------------------------------------------------------------
Cash paid at closing,
net of cash acquired $29,904 $115,847
=========================================================================
Assuming the Company's acquisitions had been completed on March 1,
1994, the beginning of fiscal 1995, pro forma net sales of the Company
would have been approximately $2.55 billion for each of fiscal 1996 and
1995. The pro forma effect on net earnings and net earnings per share of
common stock is not significant. The pro forma information is not
necessarily indicative of the combined results of operations that would
have occurred had the acquisitions been completed as of the beginning of
fiscal 1995. Goodwill acquired in the acquisitions is being amortized
over 40 years on a straight-line basis.
Note 3: Interest, Net
Interest, net consisted of the following:
(in thousands) 1997 1996 1995
- ----------------------------------------------------------------
Interest expense $18,658 $19,613 $15,592
Capitalized interest (109) (128) (317)
Non-operating interest income (1,791) (1,577) (3,865)
- ----------------------------------------------------------------
Interest, net $16,758 $17,908 $11,410
================================================================
Cash payments for interest, net of amounts capitalized, totaled
$18.9 million in fiscal 1997, $20.7 million in fiscal 1996 and $13.9
million in fiscal 1995.
Total interest income was $3.4 million in fiscal 1997, $2.5
million in fiscal 1996 and $4.9 million in fiscal 1995.
Note 4: Unusual Items
Fiscal 1997
The Company recognized unusual items that resulted in pre-tax charges
of $20.1 million ($14.8 million after-tax or 83 cents per share), and
are comprised of the following:
(in millions) Segment
- ------------------------------------------------------------------------
Asset impairment $11.4 North America Foods
Restructuring plan 4.0 Foodservice Distribution
Severance and other costs 3.6 Corporate
Facility consolidation plan 1.1 Foodservice Distribution
- ------------------------------------------------------------------------
Total $20.1
======================================
In the fourth quarter, the Company recognized a charge of $11.4
million for asset impairment in its Canadian frozen bakery operation.
The impairment results in a $9.6 million reduction in goodwill and a $1.8
million reduction in fixed assets. Over the last several quarters, the
operation has experienced a significant increase in competition in
certain key markets. As a result, there has been a significant decline
in sales volume and operating results. The Company reviews its long-
lived assets and goodwill for impairment whenever changes in
circumstances indicate that the carrying amount of an asset or group of
assets may not be recoverable. In this situation, the Company believes
that the operating unit is the lowest level for which identifiable cash
flows could be determined. Accordingly, the Company estimated the fair
value of the operation's assets using discounted expected future cash
flows and determined that the carrying value of the business unit
exceeded the fair value. In estimating future cash flows, considerable
management judgment is necessary and actual results could vary
significantly from such estimates.
In the fourth quarter, management adopted a restructuring plan at its
vending distribution business directed at improving customer service.
The plan will include moving certain customer support functions from a
central location to the distribution centers. Accordingly, the Company
recorded a $2.8 million charge primarily from losses on lease commitments
and a $1.2 million charge for involuntary employee termination benefits
covering approximately 190 customer support employees. The restructuring
plan will be substantially complete by the end of fiscal 1998.
In the first quarter, the Company recognized $2.2 million in
severance and other costs resulting from the resignation of the Company's
former chief executive officer and $1.4 million principally for costs of
business assessment studies.
In the fourth quarter, management adopted a plan to consolidate two
limited-menu business distribution centers. As a result, the Company
recorded a $1.1 million charge for the loss on lease commitments and
employee termination benefits. Involuntary employee termination benefits
will cover approximately 40 warehouse, delivery and administrative
employees. The distribution center consolidation will be substantially
complete by the end of the second quarter of fiscal 1998.
Fiscal 1996
The Company recognized unusual items that resulted in a net pre-tax
charge of $5.7 million ($0.5 million after-tax benefit or 2 cents per
share), and are comprised of the following:
(in millions) Segment
- ------------------------------------------------------------------------
Write-down of software costs $8.9 Foodservice Distribution
Corporate restructuring plan 6.2 Corporate
Lease commitment loss .5 Foodservice Distribution
Gain on business divestiture (9.9) Divested Businesses
- ------------------------------------------------------------------------
Total $5.7
======================================
The Company recognized an $8.9 million charge for the write-down of
vending distribution computer software costs. The charge resulted from
the Company's decision to limit the scope of the software applications
being implemented. In addition, a $0.5 million charge for a loss on a
lease commitment was also recognized in the vending distribution
business.
The Company recognized charges of $2.0 million for asset write-downs
and $4.2 million for termination benefits in order to streamline
corporate administrative operations. All significant actions relating to
the plan were completed in fiscal 1997.
The Company divested its surimi seafood business in June 1995 for a
$9.9 million gain.
The Company recognized a $5.0 million tax benefit which resulted from
an agreement with the IRS regarding proposed disallowances of certain
deductions taken during fiscal years 1985 through 1991 and the benefit of
the closure by the IRS of its examinations of the Company's fiscal 1992
and 1993 tax returns.
Fiscal 1995
The Company recognized unusual items that resulted in a net pre-tax
benefit of $26.2 million ($29.0 million after-tax or $1.61 per share),
and are comprised of the following:
(in millions) Segment
- ------------------------------------------------------------------------
Business integration $ 6.2 Foodservice Distribution
Business acquisition activities 1.8 Corporate
Gain on business divestiture (33.6) Divested Businesses
Other (.6) Divested Businesses
- ------------------------------------------------------------------------
Total $(26.2)
======================================
A $6.2 million charge was recognized for the integration of the
Company's limited-menu foodservice distribution businesses ("Business
Integration"). The Business Integration charge included $3.7 million for
losses on lease commitments, $1.4 million for termination benefits and
$1.1 million for asset write-downs.
The Company divested its frozen specialty foods business for a $33.6
million gain. An additional $0.6 million benefit was recognized relating
to previously divested businesses.
The Company also recognized a benefit from a tax settlement on
proposed disallowances of certain deductions in connection with business
acquisitions.
Note 5: Income Taxes
Income tax expense was as follows:
U.S. Operations Non-U.S.
(in thousands) Federal Other Operations Total
- -----------------------------------------------------------------------
1997:
Current expense (benefit) $ (7,976) $ 57 $ 6,903 $ (1,016)
Deferred expense (benefit) 3,385 (440) 307 3,252
- -----------------------------------------------------------------------
Total tax expense (benefit) $ (4,591) $ (383) $ 7,210 $ 2,236
=======================================================================
1996:
Current expense (benefit) $ (4,336) $ (442) $ 3,913 $ (865)
Deferred expense (benefit) 2,501 (922) 2,965 4,544
- -----------------------------------------------------------------------
Total tax expense (benefit) $ (1,835) $(1,364) $ 6,878 $ 3,679
=======================================================================
1995:
Current expense $ 1,785 $ 2,340 $ 6,110 $ 10,235
Deferred expense (benefit) 603 (151) 4,031 4,483
- -----------------------------------------------------------------------
Total tax expense $ 2,388 $ 2,189 $10,141 $ 14,718
=======================================================================
Temporary differences which give rise to deferred tax assets and
liabilities as of February 28, 1997 and February 29, 1996 were as
follows:
1997 1996
-------------------- -------------------
Deferred Deferred Deferred Deferred
Tax Tax Tax Tax
(in thousands) Assets Liabilities Assets Liabilities
- --------------------------------------------------------------------------
Depreciation and
amortization $ 1,633 $28,256 $ 1,489 $25,884
Accrued expenses 21,429 11,055 21,913 10,131
Inventory valuation methods 974 - 2,175 -
Reorganization and
divestiture reserves 3,640 - 5,014 -
Provision for losses
on receivables 3,263 - 5,149 -
Net operating
loss carryforwards 4,591 - 3,521 -
Foreign earnings repatriation - 3,027 - 4,207
Other 2,983 2,558 2,961 2,479
- ------------------------------------------------------------------------
Subtotal 38,513 44,896 42,222 42,701
Valuation allowance (2,420) - (4,962) -
- ------------------------------------------------------------------------
Total deferred taxes $36,093 $44,896 $37,260 $42,701
========================================================================
At February 28, 1997, the Company's foreign operations had net
operating loss carryforwards of approximately $8.3 million of which
approximately $5.8 million will expire in fiscal 1998 and the balance
will expire in fiscal 2000 through 2004. The financial statement tax
benefit of the net operating loss carryforwards has been offset by a
valuation allowance because of the limited carryforward period.
In fiscal 1997, the valuation allowance decreased approximately $2.5
million. The decrease primarily resulted from a decrease in Venezuelan
deferred tax assets and as such had no effect on tax expense.
Total income taxes differs from the amount computed by applying the
U.S. federal income tax rate because of the following items:
(in thousands) 1997 1996 1995
- ----------------------------------------------------------------------
Tax at U.S. federal statutory rate (35.0%) $1,756 $9,714 $25,109
Differences:
Effect of taxes on non-U.S. earnings 176 (2,049) (1,380)
State and local income taxes (249) (887) 1,416
Effect of intangibles 148 209 (1,794)
Basis difference for business disposals - 355 (9,003)
Resolution of tax examinations - (5,000) -
Other 405 1,337 370
- ----------------------------------------------------------------------
Total income taxes $2,236 $3,679 $14,718
======================================================================
Provision has been made for U.S. income taxes applicable to
anticipated remittances of earnings from non-U.S. affiliates. It is not
practicable to estimate the remaining deferred tax liability associated
with temporary differences related to investments in non-U.S. affiliates.
Earnings before income taxes from non-U.S. affiliates were $21.5 million
in fiscal 1997, $28.4 million in fiscal 1996 and $33.0 million in fiscal
1995.
Cash paid for income taxes totaled $6.7 million in fiscal 1997, $4.8
million in fiscal 1996 and $5.9 million in fiscal 1995.
Note 6: Supplemental Balance Sheet Information
(in thousands) 1997 1996
- ------------------------------------------------------------------------
Trade accounts receivable, net:
Trade $216,798 $179,504
Allowance for doubtful accounts (9,339) (13,977)
- ------------------------------------------------------------------------
Total trade accounts receivable, net $207,459 $165,527
========================================================================
Inventories:
Raw materials, excluding grain $ 15,776 $ 17,529
Grain 86,500 46,331
Finished and in-process goods 174,274 159,077
Packages and supplies 7,398 7,689
- ------------------------------------------------------------------------
Total inventories $283,948 $230,626
========================================================================
Property, plant and equipment, net:
Land $ 13,413 $ 12,045
Buildings and improvements 93,099 90,001
Machinery and equipment 228,514 217,567
Transportation equipment 7,194 9,188
Improvements in progress 15,019 13,157
- ------------------------------------------------------------------------
357,239 341,958
Accumulated depreciation (131,882) (115,460)
- ------------------------------------------------------------------------
Total property, plant and equipment, net $225,357 $226,498
========================================================================
Other current liabilities:
Wages and benefits $ 12,445 $ 10,524
Income taxes 12,946 10,890
Other accrued expenses 44,646 40,456
- ------------------------------------------------------------------------
Total other current liabilities $ 70,037 $ 61,870
========================================================================
Note 7: Financial Instruments
Fair value of financial instruments
The carrying value of cash and cash equivalents, accounts receivable,
accounts payable and short-term debt approximate fair value. The
Company's $95 million carrying value of medium-term notes, $5 million of
which is classified as current, had a fair value of $91.6 million as of
February 28, 1997.
Commodity risk management
The Company's Canadian operations minimize the risk associated with wheat
market price fluctuations by hedging its wheat and flour inventories,
open wheat purchase contracts, and open flour sales contracts with wheat
futures contracts. In the United States, the Company has entered into
futures and options on futures to reduce the risk of price fluctuations
on anticipated flour and soybean oil purchases. The U.S. dollar-
denominated futures contracts are traded on U.S. regulated exchanges.
The amount of deferred losses, measured by using quoted market prices, as
of February 28, 1997 was $0.7 million. At February 28, 1997, the Company
held futures and options on futures to purchase wheat and soybean oil
with an aggregate contract value of $8.8 million and to sell wheat and
soybean oil with contract values of $1.1 million. The open futures and
options on futures mature in the period from May 1997 through December
1997 and substantially coincide with the maturities of the open wheat
purchase contracts, open flour sales contracts and the anticipated timing
of flour and soybean oil purchases.
Since the Canadian operations' inventories, purchase contracts and
sales contracts are generally denominated in Canadian dollars, the
Company enters into foreign exchange forward contracts that have the
effect of converting the U.S. dollar-denominated futures contracts into
Canadian dollar equivalents. At February 28, 1997, the Company held
foreign exchange forward contracts to sell and buy U.S. dollars totaling
$7.4 million and $7.2 million, respectively. The foreign exchange
forward contracts are purchased through major Canadian banking
institutions.
Off-balance sheet risk
As of February 28, 1997 and February 29, 1996, the Company had sold with
limited recourse $14.6 million and $13.1 million of accounts receivable,
respectively, related to its Canadian operations. Collections received
on these accounts may be replaced by new receivables in order to maintain
the aggregate outstanding balance. The credit risk of uncollectible
accounts has been substantially transferred to the purchaser. Fees
associated with these transactions are included in other income (expense)
in the consolidated statements of earnings.
Concentrations of credit risk
Management believes the credit risk of exchange-traded futures contracts
and foreign exchange forward contracts due to nonperformance of the
counterparties is insignificant.
The Company extends credit on a regular basis under various terms to
customers that meet certain financial and other criteria. In general,
the Company does not require collateral or security. As of February 28,
1997, the most significant concentration of trade accounts receivable was
with a major customer of the Company's food exporting business which
accounted for approximately 20% of the Company's trade accounts
receivable. The Company reduces its credit risk on sales to its major
food exporting customer by requiring standby letters of credit, security
deposits and by maintaining title to a significant portion of the
inventory until payment has been made. The Company believes that its
remaining trade receivables do not represent significant concentrations
of credit risk due to the large number of customers and markets into
which its products are sold, as well as their dispersion across
geographic areas.
Note 8: Notes Payable
Notes payable consisted of the following:
(in thousands) 1997 1996
- ----------------------------------------------------------------------
U.S. commercial paper $ 1,200 $ 61,750
Canadian bankers' acceptances 43,854 58,003
Notes payable, principally to banks 154,077 15,332
Amounts reclassified to long-term debt (110,930) (106,544)
- ----------------------------------------------------------------------
Total notes payable $ 88,201 $ 28,541
======================================================================
The Company has a $200 million revolving credit agreement in the U.S.
and an $80 million revolving credit agreement in Canada which expire on
March 15, 2001. The Company had available $181 million under these
revolving credit agreements as of February 28, 1997. The interest rate
on borrowings under these agreements is variable and based on current
market factors. There are no restrictions on the use of these facilities
for general corporate purposes and support for commercial paper issued by
the Company. The credit agreements contain certain restrictive covenants
that include maintenance of minimum tangible net worth, a fixed charge
coverage ratio and an indebtedness to capitalization ratio. None of the
restrictive covenants is expected to affect the payment of dividends
based on the Company's present dividend rate. Related commitment and
facility fees were $0.4 million in fiscal 1997 and $0.6 million in fiscal
1996.
Notes payable totaling $110.9 million have been classified as long-
term debt as a result of the Company's intent to refinance this debt on a
long-term basis and the availability of such financing under the terms of
the revolving credit agreements.
The weighted average interest rate on notes payable outstanding at
February 28, 1997, and February 29, 1996, was 5.7% and 5.6%,
respectively.
At February 28, 1997, the Company had total uncommitted lines of
credit from banks in Venezuela of approximately $135 million, of which
$67 million was available. No compensating balances were required for
any of these credit lines.
Note 9: Long-term Debt
Long-term debt, net of current portion of $6.8 million in fiscal 1997 and
$11.0 million in fiscal 1996, was as follows:
(in thousands) 1997 1996
- ------------------------------------------------------------------------
Medium-term notes $ 90,000 $ 95,000
Other 1,398 1,393
Notes payable, reclassified 110,930 106,544
- ------------------------------------------------------------------------
Total long-term debt $202,328 $202,937
========================================================================
The Company maintains a shelf registration statement with the
Securities and Exchange Commission for the issuance of $150 million of
debt securities, of which $140 million remained available at February 28,
1997. The Company may issue up to the entire amount as medium-term
notes, Series B, in varying amounts, rates and maturities. Medium-term
notes outstanding at February 28, 1997 mature in fiscal 1998 to 2007 and
had a weighted average interest rate of 6.5%.
Minimum principal payments totaling $202.3 million are due as
follows: $23.1 million in fiscal 1999, $2.3 million in fiscal 2000,
$20.3 million in fiscal 2001, $111.4 million in fiscal 2002, $1.2 million
in fiscal 2003 and $44.0 million in fiscal 2004 and beyond.
Note 10: Preferred Capital Stock
The Company has authorized 10,000,000 shares of Preferred Capital Stock,
par value $1.00 per share, which may be designated and issued as
convertible into common shares. The Company has created a series of such
Preferred Capital Stock, designated as Series 1990 Junior Participating
Capital Preferred Stock, consisting of 500,000 shares, par value $1.00
per share.
No Preferred Capital Stock was outstanding during the three years
ended February 28, 1997.
Note 11: Leases
The Company leases certain plant, office space and equipment for varying
periods. Management expects that in the normal course of business,
leases will be renewed or replaced by other leases.
The following is a schedule of future minimum lease payments for
operating leases that had initial or remaining noncancelable lease terms
in excess of one year as of February 28, 1997:
Operating
(in thousands) Leases
- ------------------------------------------------------------
1998 $23,475
1999 20,539
2000 16,489
2001 10,838
2002 6,061
2003 and beyond 5,681
- -----------------------------------------------------------
Total minimum lease payments * $83,083
===========================================================
*Minimum payments do not include contingent rentals or vehicle lease
payments based on mileage.
Total net rent expense for operating leases, including those with
terms of less than one year, consisted of the following:
(in thousands) 1997 1996 1995
- --------------------------------------------------------------------
Minimum rentals $28,181 $29,104 $27,608
Contingent rentals 29 79 246
Sublease rentals (2) (8) (44)
- --------------------------------------------------------------------
Total net rent expense $28,208 $29,175 $27,810
====================================================================
Note 12: Commitments and Contingencies
There were no contingencies or litigation as of February 28, 1997 that,
in the opinion of management, would have had a material adverse effect on
the Company's consolidated financial condition, results of operations or
cash flows.
At February 28, 1997, the estimated cost to complete improvements in
progress totaled approximately $8 million.
<TABLE>
Note 13: Shareholders' Equity
The following summarizes the changes in shareholders' equity for the three years ended February 28, 1997:
<CAPTION>
Equity Adjustment from:
-----------------------
$.10 par value Capital in Foreign Minimum Unearned
Common Treasury Excess of Retained Currency Pension Restricted
(in thousands) Stock Stock Par Value Earnings Translation Liability Stock Total
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at February 28, 1994 $2,184 $(78,364) $89,158 $349,298 $(107,364) $(2,301) $(2,607) $250,004
Net earnings - - - 57,021 - - - 57,021
Translation adjustments - - - - (1,520) - - (1,520)
Dividends declared:
Common stock - - - (10,746) - - - (10,746)
Preferred stock - - - (167) - - - (167)
366 shares purchased for treasury - (5,877) - - - - - (5,877)
37 shares issued for
employee benefit plans - 824 (296) - - - (222) 306
Amortization of unearned
restricted stock - - - - - - 1,381 1,381
Adjustment associated with
recognition of minimum
pension liability - - - - - 660 - 660
- ----------------------------------------------------------------------------------------------------------------------------
Balance at February 28, 1995 2,184 (83,417) 88,862 395,406 (108,884) (1,641) (1,448) 291,062
Net earnings - - - 24,075 - - - 24,075
Translation adjustments - - - - 714 - - 714
Dividends declared:
Common stock - - - (14,408) - - - (14,408)
Preferred stock - - - (260) - - - (260)
137 shares purchased for treasury - (2,877) - - - - - (2,877)
108 shares issued for
employee benefit plans - 2,346 (277) - - - (311) 1,758
Amortization of unearned
restricted stock - - - - - - 532 532
Adjustment associated
with long-term incentive
program amendment - - (269) - - - 269 -
Adjustment associated with
recognition of minimum
pension liability - - - - - (1,033) - (1,033)
- ----------------------------------------------------------------------------------------------------------------------------
Balance at February 29, 1996 2,184 (83,948) 88,316 404,813 (108,170) (2,674) (958) 299,563
Net earnings - - - 2,780 - - - 2,780
Translation adjustments - - - - 170 - - 170
Dividends declared on
common stock - - - (14,258) - - - (14,258)
5 shares purchased for treasury - (82) - - - - - (82)
35 shares issued for
employee benefit plans - 768 (192) - - - (569) 7
Amortization of unearned
restricted stock - - - - - - 1,033 1,033
Adjustment associated with
recognition of minimum
pension liability - - - - - 365 - 365
- ----------------------------------------------------------------------------------------------------------------------------
Balance at February 28, 1997 $2,184 $(83,262) $88,124 $393,335 $(108,000) $(2,309) $ (494) $289,578
============================================================================================================================
</TABLE>
The Company's 1989 stock-based plan permits awards of restricted
stock and incentive units to key employees subject to the provisions of
the plan and as determined by the Compensation Committee of the Board of
Directors. In fiscal 1997, grants of 41,610 shares of restricted stock
were awarded with varying performance criteria and vesting periods. At
February 28, 1997, the total number of restricted shares outstanding was
92,441. The market value of shares issued under the plan, as of the date
of grant, has been recorded as unearned restricted stock and is shown as
a separate component of shareholders' equity. Unearned restricted stock
is expensed over the period restrictions lapse.
The Company has a shareholder rights plan that entitles one preferred
share purchase right for each outstanding share of common stock. The
rights become exercisable only after a person or group (with certain
exceptions) becomes the beneficial owner of 10% or more of the Company's
outstanding common stock or announces a tender offer, the consummation of
which would result in beneficial ownership by a person or group of 10% or
more of the Company's outstanding common stock. Each right will entitle
its holder to purchase one one-hundredth share of Series 1990 Junior
Participating Preferred Capital Stock (consisting of 500,000 shares, par
value $1.00 per share) at an exercise price of $100, subject to
adjustment. If a person or group acquires beneficial ownership of 10% or
more of the Company's outstanding common stock, each right will entitle
its holder (other than such person or group) to purchase, at the then-
current exercise price of the right, a number of shares of the Company's
common (or, in certain circumstances, preferred) stock having a market
value of twice the then-current exercise price of the right. In
addition, if the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or
earnings power are acquired, each right will entitle its holder to
purchase, at the then-current exercise price of the right, a number of
the acquiring company's common shares having a market value of twice the
then-current exercise price of the right. Following the acquisition by a
person or group of beneficial ownership of 10% or more of the Company's
outstanding common stock and prior to an acquisition by any person or
group of 50% or more of the Company's outstanding common stock, the Board
of Directors may exchange the outstanding rights (other than rights owned
by such person or group), in whole or in part, for common (or, in certain
circumstances, preferred) stock of the Company. Prior to the acquisition
by a person or group of beneficial ownership of 10% or more of the
Company's outstanding common stock, the rights are redeemable for $.01
per right at the option of the Board of Directors.
Note 14: Stock Options
Stock options are granted to directors, officers and key management
employees to purchase shares of Company common stock at not less than
fair market value at dates of grant. Options generally become
exercisable one year after the date of grant and expire ten years after
the date of grant.
A total of 238,039 common shares are available for grants of stock
options or restricted stock under the Company's 1989 stock plan. The per
share weighted-average fair values of stock options granted were $4.40
during fiscal 1997 and $4.87 during fiscal 1996 on the dates of grant
using the Black Scholes option-pricing model with the following weighted-
average assumptions: fiscal 1997 - expected dividend yield of 3.8%,
expected volatility of 19.8%, risk-free interest rates ranging between
6.5% and 7.0%, and an expected life of 8.3 years; fiscal 1996 - expected
dividend yield of 3.5%, expected volatility of 19.9%, risk-free interest
rates ranging between 6.1% and 7.0%, and an expected life of 7.7 years.
The Company applies APB Opinion No. 25 in accounting for its plans
and, accordingly, no compensation cost has been recognized for employee
stock options in the financial statements. Had the Company determined
compensation cost based on the fair value at the grant date for its stock
options under SFAS 123, the Company's net earnings would have been
reduced to the pro forma amounts indicated below:
(in thousands, except per share data) 1997 1996
- ---------------------------------------------------------
Net earnings:
As reported $2,780 $24,075
Pro forma $2,370 $23,519
Net earnings per share:
As reported $ .15 $ 1.33
Pro forma $ .13 $ 1.30
- ---------------------------------------------------------
The following table contains information on stock options:
Option Price
Shares Per Share-Range
- ----------------------------------------------------------
Outstanding at
February 28, 1994 1,722,115 $11.28 - 29.00
Granted 72,077 16.06 - 18.00
Exercised (26,100) 11.28 - 14.97
Expired or canceled (200,263) 11.28 - 29.00
- ----------------------------------------------------------
Outstanding at
February 28, 1995 1,567,829 $14.97 - 29.00
Granted 220,513 18.69 - 22.69
Exercised (83,545) 14.97 - 20.17
Expired or canceled (137,975) 16.50 - 28.06
- ----------------------------------------------------------
Outstanding at
February 29, 1996 1,566,822 $16.06 - 29.00
Granted 273,509 16.00 - 20.81
Exercised (30,250) 16.63 - 19.21
Expired or canceled (285,050) 16.75 - 28.06
- ----------------------------------------------------------
Outstanding at
February 28, 1997 1,525,031 $16.00 - 29.00
==========================================================
Options exercisable at:
February 28, 1995 1,424,844 $14.97 - 29.00
February 29, 1996 1,383,422 $16.06 - 29.00
February 28, 1997 1,321,281 $16.06 - 29.00
- ----------------------------------------------------------
Note 15: Retirement Plans
The Company sponsors two defined contribution plans and several defined
benefit retirement plans.
The defined contribution plans cover substantially all salaried, sales
and certain hourly employees in the United States and Canada. The Company
makes contributions equal to 50% of the participating employee's
contributions subject to certain limitations. Employer contributions,
which are invested in shares of the Company's common stock, were $2.1
million in fiscal 1997, $1.8 million in fiscal 1996 and $1.7 million in
fiscal 1995.
In the United States and Canada, defined benefit plans cover
substantially all employees. Benefits are based primarily on years of
credited service and average compensation or stated amounts for each year
of service. These plans are generally funded by contributions to tax-
exempt trusts in amounts sufficient to provide assets to cover the plans'
obligations. Plan assets consist principally of listed equity securities,
fixed income securities and cash equivalents.
Net pension cost (credit) for the defined benefit plans was as
follows:
(in thousands) 1997 1996 1995
- -------------------------------------------------------------------
Service costs $ 2,492 $ 1,946 $ 2,483
Interest costs 12,438 12,767 12,102
Actual return on plan assets (30,382) (39,431) 2,337
Net amortization and deferral 14,834 23,891 (16,760)
- -------------------------------------------------------------------
Net pension cost (credit) $ (618) $ (827) $ 162
===================================================================
The funded status of the defined benefit plans and the amounts
recognized in the balance sheets were as follows:
1997 1996
-------------------- ---------------------
Assets Benefit Assets Benefit
Exceed Obli- Exceed Obli-
Benefit gations Benefit gations
Obli- Exceed Obli- Exceed
(in thousands) gations Assets gations Assets
- ------------------------------------------------------------------------
Actuarial present value
of benefit obligations:
Vested $148,102 $ 11,169 $152,786 $ 10,022
Nonvested 2,753 1,926 5,522 1,844
- ------------------------------------------------------------------------
Accumulated benefit
obligations 150,855 13,095 158,308 11,866
Effect of future
salary increases 6,227 351 3,064 548
- ------------------------------------------------------------------------
Projected benefit
obligations 157,082 13,446 161,372 12,414
Plan assets at
fair value 202,131 - 185,095 -
- ------------------------------------------------------------------------
Plan assets in
excess of (less
than) projected
benefit obligations 45,049 (13,446) 23,723 (12,414)
Unamortized prior
service cost 5,217 - 5,601 -
Unrecognized effect
from past experience
different from that
assumed (13,899) 4,145 5,758 4,932
Unrecognized transition
(assets) obligations,
net of amortization (9,428) - (11,013) 428
Adjustment required
to recognize minimum
pension liability - (3,794) - (4,812)
- ------------------------------------------------------------------------
Prepaid (accrued)
pension costs $ 26,939 $(13,095) $ 24,069 $(11,866)
========================================================================
The Company amortizes prior service costs and unrecognized gains and
losses on a straight-line basis over not more than 16 years. Other
assumptions used, which reflect weighted averages of the U.S. and Canadian
defined benefit plans, were as follows:
1997 1996
- -----------------------------------------------------------------------
Discount rate 7.6% 7.4%
Expected long-term return rate on assets 9.5% 9.5%
Rate of increase in future compensation 4.0% 4.0%
- -----------------------------------------------------------------------
In Venezuela, all employees are entitled to certain severance
indemnities based on compensation and cause of separation. This post-
employment arrangement qualifies as a defined benefit plan under the
provisions of Statement of Financial Accounting Standards No. 87,
"Employers' Accounting for Pensions." The Company has elected to define
the vested benefit obligation for this arrangement as the actuarial
present value of vested benefits the employee is entitled to if
immediately separated at the measurement date. This arrangement has not
been funded and the corresponding expense recognized was $2.9 million in
fiscal 1997 and $3.8 million in each of fiscal 1996 and 1995.
Note 16: Post-retirement Health and Life Insurance Benefits
The Company provides post-retirement health and life insurance benefits
for retirees in the United States and Canada who meet minimum age and
service requirements. The costs of the U.S. life insurance benefits are
funded over the employees' active working lives through contributions to
an insurance continuation fund maintained by an insurance company. Life
insurance benefits for Canadian retirees are funded on a pay-as-you-go
basis through an insurance company. Health care benefits for U.S. and
Canadian retirees are provided under a self-insured program administered
by an insurance company.
The net periodic post-retirement benefit cost (credit) was as follows:
(in thousands) 1997 1996 1995
- ---------------------------------------------------------------------
Service costs $ 474 $ 222 $ 296
Interest costs 1,351 999 1,134
Net amortization and deferral (1,417) (1,785) (1,689)
- ---------------------------------------------------------------------
Net post-retirement
benefits cost (credit) $ 408 $ (564) $ (259)
=====================================================================
The actuarial present value of benefit obligations and the amounts
recognized in the consolidated balance sheets were as follows:
(in thousands) 1997 1996
- -------------------------------------------------------------------
Actuarial present value of benefit obligations:
Retirees $12,952 $ 8,740
Fully eligible active plan participants 1,640 1,242
Other active plan participants 3,930 2,719
- -------------------------------------------------------------------
Accumulated benefit obligations 18,522 12,701
Plan assets at fair value 535 -
- -------------------------------------------------------------------
Accumulated obligation in excess of plan assets 17,987 12,701
Unrecognized effect from past experience
different from that assumed (1,319) 3,894
Unrecognized effect from plan amendments 443 2,291
- -------------------------------------------------------------------
Accrued post-retirement cost $17,111 $18,886
===================================================================
The assumed annual rate of future increases in per capita cost of
health care benefits ranged from 4% to 9.5% for each of the next 8 years
and 4% thereafter. These trend rates reflect the Company's prior
experience, plan provisions and management's expectation of future rates.
Increasing the health care cost trend by 1% in each year would result in
an insignificant change to the accumulated benefit obligation and the
service and interest costs. The weighted average discount rates used were
7.6% and 7.5% in fiscal 1997 and 1996, respectively.
Note 17: Multifoods' Business Segments
The Company's business segments are Foodservice Distribution, North
America Foods and Venezuela Foods. The Company's North America Foods
segment was previously named Bakery.
The Foodservice Distribution segment includes the Company's vending
distribution business, the limited-menu distribution business and the food
exporting business. The Company is the largest U.S. vending distributor
of food products to vending and office coffee service operators. The
limited-menu distribution business is a leading specialty distributor in
the United States to independent pizza restaurants and other select
limited-menu operators, including sandwich establishments. The business
distributes a broad selection of items including cheeses, meats, snacks
and paper goods. The Company's food exporting business markets and
exports primarily branded and commodity food products to customers in
diverse geographic areas, including Eastern Europe, Asia and the Caribbean
region. The food exporting business has a major customer that distributes
food products in Russia. In fiscal 1997, earnings on sales to this
customer accounted for approximately 14% of the Company's consolidated
operating earnings before unusual items.
The North America Foods segment consists of two divisions, North
America Bakery and Consumer Products. The North America Bakery division
markets bakery products such as bakery mixes, frozen desserts and flour to
retail, in-store and wholesale bakeries and foodservice customers in the
United States and Canada. The Company's consumer products division sells
flour, bakery mixes and condiments to consumers primarily in Canada. As
of February 28, 1997, the Company had approximately $67 million of net
assets located in Canada.
The Venezuela Foods segment includes consumer products for home
baking, bakery products for foods processors and commercial and retail
bakeries, and products for the agricultural sector. Consumer products
include wheat flour, corn flour, whole grain rice and rice flour. The
Company's operations in Venezuela are subject to risks inherent in
operating under a different legal and political system along with a
difficult economic environment. Among these risks are inflation, currency
volatility, possible limitations on foreign investment, exchangeability of
currency, dividend repatriation and changes in existing tax laws. The
Company's Venezuelan operations are also dependent on raw material imports
for many of its products. As of February 28, 1997, the Company had
approximately $75 million of net assets located in Venezuela.
Divested Businesses consists principally of the frozen specialty foods
and meats businesses which were divested in fiscal 1995 and the surimi
seafood business which was divested in fiscal 1996.
Net Operating Unusual Operating
(in millions) Sales Costs Items Earnings
- ----------------------------------------------------------------------------
1997:
Foodservice Distribution $1,772.4 $(1,759.8) $ (5.1) $ 7.5
North America Foods 476.7 (455.9) (11.4) 9.4
Venezuela Foods 346.8 (328.2) - 18.6
Corporate Expenses - (9.8) (3.6) (13.4)
- ----------------------------------------------------------------------------
Total $2,595.9 $(2,553.7) $(20.1) $22.1
============================================================================
1996:
Foodservice Distribution $1,716.9 $(1,694.6) $ (9.4) $ 12.9
North America Foods 459.7 (438.9) - 20.8
Venezuela Foods 328.5 (309.4) - 19.1
Divested Businesses 18.1 (15.6) 9.9 12.4
Corporate Expenses - (8.9) (6.2) (15.1)
- ----------------------------------------------------------------------------
Total $2,523.2 $(2,467.4) $ (5.7) $ 50.1
============================================================================
1995:
Foodservice Distribution $1,395.9 $(1,378.4) $ (6.2) $ 11.3
North America Foods 459.2 (436.8) - 22.4
Venezuela Foods 317.7 (297.8) - 19.9
Divested Businesses 122.3 (110.4) 34.2 46.1
Corporate Expenses - (11.4) (1.8) (13.2)
- ----------------------------------------------------------------------------
Total $2,295.1 $(2,234.8) $ 26.2 $ 86.5
============================================================================
<TABLE>
<CAPTION>
1997 1996 1995
--------------------------------- ----------------------------------- ------------------------------------
Depreciation Depreciation Depreciation
Capital and Capital and Capital and
(in millions) Expenditures Amortization Assets Expenditures Amortization Assets Expenditures Amortization Assets
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Foodservice
Distribution $ 7.3 $12.9 $437.4 $13.9 $13.3 $415.9 $ 8.4 $10.2 $371.9
North
America Foods 14.0 10.7 234.7 12.0 10.0 241.8 15.2 9.1 251.0
Venezuela Foods 5.8 6.7 191.8 5.0 5.2 125.8 5.5 3.1 147.1
Divested
Businesses - - - .1 .8 - 1.5 3.9 39.6
Corporate .4 .4 51.4 .2 .5 38.8 .2 .7 37.1
- -----------------------------------------------------------------------------------------------------------------------------
Total $27.5 $30.7 $915.3 $31.2 $29.8 $822.3 $30.8 $27.0 $846.7
=============================================================================================================================
</TABLE>
Amounts expended for business acquisitions are not considered as part
of capital expenditures. Assets are identifiable to business segments
either by their direct use or by allocations when used jointly by two
or more segments.
<TABLE>
Note 18: Quarterly Summary (unaudited)
<CAPTION>
Operating
Net Operating Unusual Earnings
(in millions) Sales Costs Items (Loss)
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
First Quarter - 1997
Foodservice Distribution $443.3 $(438.2) $ - $ 5.1
North America Foods 111.6 (109.5) - 2.1
Venezuela Foods 71.2 (69.1) - 2.1
Corporate Expenses - (2.7) (3.6) (6.3)
- ----------------------------------------------------------------------------
Total $626.1 $(619.5) $ (3.6) $ 3.0
============================================================================
First Quarter - 1996
Foodservice Distribution $416.4 $(410.8) $ - $ 5.6
North America Foods 108.0 (106.4) - 1.6
Venezuela Foods 96.7 (90.2) - 6.5
Divested Businesses 13.5 (11.9) - 1.6
Corporate Expenses - (3.2) - (3.2)
- ----------------------------------------------------------------------------
Total $634.6 $(622.5) $ - $ 12.1
============================================================================
Second Quarter - 1997
Foodservice Distribution $432.7 $(432.3) $ - $ .4
North America Foods 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
============================================================================
Second Quarter - 1996
Foodservice Distribution $400.3 $(396.5) $ (9.4) $ (5.6)
North America Foods 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
============================================================================
Third Quarter - 1997
Foodservice Distribution $461.5 $(456.9) $ - $ 4.6
North America Foods 139.7 (130.4) - 9.3
Venezuela Foods 95.9 (90.6) - 5.3
Corporate Expenses - (2.3) - (2.3)
- ----------------------------------------------------------------------------
Total $697.1 $(680.2) $ - $ 16.9
============================================================================
Third Quarter - 1996
Foodservice Distribution $440.8 $(432.9) $ - $ 7.9
North America Foods 126.1 (117.9) - 8.2
Venezuela Foods 65.2 (64.8) - .4
Corporate Expenses - (1.5) - (1.5)
- ----------------------------------------------------------------------------
Total $632.1 $(617.1) $ - $ 15.0
============================================================================
Fourth Quarter - 1997
Foodservice Distribution $434.9 $(432.4) $ (5.1) $ (2.6)
North America Foods 111.0 (105.2) (11.4) (5.6)
Venezuela Foods 92.3 (90.0) - 2.3
Corporate Expenses - (2.2) - (2.2)
- ----------------------------------------------------------------------------
Total $638.2 $(629.8) $(16.5) $ (8.1)
============================================================================
Fourth Quarter - 1996
Foodservice Distribution $459.4 $(454.4) $ - $ 5.0
North America Foods 115.5 (109.2) - 6.3
Venezuela Foods 60.3 (56.6) - 3.7
Corporate Expenses - (1.7) - (1.7)
- ----------------------------------------------------------------------------
Total $635.2 $(621.9) $ - $ 13.3
============================================================================
</TABLE>
<TABLE>
<CAPTION>
First Quarter Second Quarter Third Quarter Fourth Quarter Total Year
(in millions, --------------- ---------------- --------------- --------------- ----------------
except per share data) 1997 1996 1997 1996 1997 1996 1997 1996 1997 1996
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross profit $89.3 $99.9 $94.8 $100.5 $104.6 $95.8 $91.8 $91.3 $380.5 $387.5
Net earnings (loss) (.4)(a) 4.6 4.0 7.0(b) 8.6 6.7 (9.4)(c) 5.8 2.8 24.1
Per share (.02)(a) .25 .22 .38(b) .48 .38 (.53)(c) .32 .15 1.33
Dividends paid per share
of common stock .20 .20 .20 .20 .20 .20 .20 .20 .80 .80
Market price of
common stock:
Close 19 7/8 21 1/8 16 5/8 22 1/2 15 3/4 22 3/8 21 1/8 18 5/8 21 1/8 18 5/8
High 21 3/8 21 7/8 20 3/8 23 17 1/2 23 7/8 22 23 7/8 22 23 7/8
Low 18 1/4 18 1/8 16 1/4 20 5/8 15 1/8 20 1/4 15 5/8 17 1/4 15 1/8 17 1/4
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Includes a net after-tax charge of $2.2 million, or 12 cents per share
from unusual items.
(b) Includes a net after-tax benefit of $0.5 million, or 2 cents per share from
unusual items.
(c) Includes a net after-tax charge of $12.6 million, or 71 cents per share
from unusual items.
<TABLE>
Six-Year Comparative Summary
<CAPTION>
Fiscal year ended the last day of February
(dollars and shares in millions,
except per share data) 1997 1996 1995 1994 1993 1992
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Consolidated Summary of Operations
Net sales $2,595.9 $2,523.2 $2,295.1 $2,158.4 $2,199.2 $2,264.8
Cost of sales (2,215.4) (2,135.7) (1,901.9) (1,743.9) (1,783.4) (1,817.8)
Delivery and distribution (167.8) (162.9) (146.2) (141.8) (141.7) (138.0)
Selling, general and administrative (170.5) (168.8) (186.7) (204.9) (199.0) (224.1)
Unusual items (20.1) (5.7) 26.2 (70.0) - 3.4
Interest, net (16.8) (17.9) (11.4) (10.1) (10.9) (17.2)
Other income (expense), net (.3) (4.4) (3.4) (.4) .1 (1.6)
Earnings (losses) from unconsolidated affiliates - - - (12.2) 1.8 (2.1)
- --------------------------------------------------------------------------------------------------------------------------
Earnings (loss) before income taxes and cumulative
effect of accounting change 5.0 27.8 71.7 (24.9) 66.1 67.4
Income taxes (2.2) (3.7) (14.7) 11.5 (24.9) (28.3)
- --------------------------------------------------------------------------------------------------------------------------
Earnings (loss) before cumulative
effect of accounting change 2.8 24.1 57.0 (13.4) 41.2 39.1
Cumulative effect of accounting change, net of taxes - - - - - (17.1)
- --------------------------------------------------------------------------------------------------------------------------
Net earnings (loss) $ 2.8 $ 24.1 $ 57.0 $ (13.4) $ 41.2 $ 22.0
==========================================================================================================================
Earnings (loss) per share of common stock:
Before cumulative effect of accounting change $ .15 $ 1.33 $ 3.16 $ (.72) $ 2.13 $ 2.00
Cumulative effect of accounting change - - - - - (.88)
- --------------------------------------------------------------------------------------------------------------------------
Net earnings (loss) per share of common stock $ .15 $ 1.33 $ 3.16 $ (.72) $ 2.13 $ 1.12
==========================================================================================================================
Year-End Financial Position
Current assets $ 563.3 $ 459.0 $ 471.7 $ 439.3 $ 415.9 $ 413.3
Current liabilities 372.0 272.3 316.0 301.7 243.5 285.4
Working capital 191.3 186.7 155.7 137.6 172.4 127.9
Property, plant and equipment, net 225.4 226.5 228.0 245.9 245.7 221.3
Long-term debt 202.3 202.9 183.1 195.1 167.0 103.9
Shareholders' equity 289.6 299.6 291.1 250.0 322.0 313.1
Total assets 915.3 822.3 846.7 814.8 803.5 767.7
- --------------------------------------------------------------------------------------------------------------------------
Dividends Paid
Preferred stock $ - $ .1 $ .2 $ .2 $ .2 $ .2
Common stock 14.5 14.4 14.4 15.2 15.4 15.4
Per share of common stock .80 .80 .80 .80 .80 .80
- --------------------------------------------------------------------------------------------------------------------------
Other Financial Data
Current ratio 1.5:1 1.7:1 1.5:1 1.5:1 1.7:1 1.4:1
Equity per share of common stock $ 16.08 $ 16.66 $ 16.16 $ 13.63 $ 16.64 $ 16.19
Debt to total capitalization 51% 45% 45% 50% 37% 33%
Depreciation $ 26.6 $ 25.3 $ 22.8 $ 24.9 $ 23.8 $ 24.7
Capital expenditures, excluding acquisitions $ 27.5 $ 31.2 $ 30.8 $ 51.9 $ 45.7 $ 51.2
Average common shares outstanding 18.0 18.0 18.0 18.9 19.3 19.5
Number of common shareholders 5,087 4,930 5,234 4,939 5,097 5,113
Number of employees 7,176 7,115 7,495 8,390 8,341 8,231
Market price per share of common stock:
Close $ 21 1/8 $ 18 5/8 $ 18 5/8 $ 17 3/8 $ 25 3/4 $ 26 3/8
High $ 22 $ 23 7/8 $ 19 5/8 $ 26 3/8 $ 28 7/8 $ 31 1/2
Low $ 15 1/8 $ 17 1/4 $ 15 1/8 $ 16 3/4 $ 23 1/4 $ 23 7/8
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
Exhibit 21
SUBSIDIARIES OF INTERNATIONAL MULTIFOODS CORPORATION
The following is a list of the Company's subsidiaries as of
March 1, 1997, except for unnamed subsidiaries which, considered
in the aggregate as a single subsidiary, would not constitute a
significant subsidiary.
Jurisdiction
of
Name of Subsidiary Incorporation
- -------------------------------------------- -------------
Damca International Corporation Delaware
Inversiones MONACA, C.A. Venezuela
AGROMONACA, C.A. Venezuela
Molinos Nacionales, C.A. (MONACA) Venezuela
Robin Hood Multifoods Inc. Ontario
Multifoods Inc. Ontario
Gourmet Baker Inc. Ontario
980964 Ontario Limited Ontario
Fantasia Confections, Inc. California
MINETCO - Minnesota International
Export Trading Company, Inc. Minnesota
Multifoods Bakery Distributors, Inc. Delaware
Multifoods Bakery International, Inc. Delaware
Multifoods Specialty Distribution, Inc. Delaware
VSA, Inc. Colorado
EXHIBIT 23
Independent Auditors' Consent
The Board of Directors
International Multifoods Corporation:
We consent to incorporation by reference in Registration Statements
No. 33-48073 on Form S-8 relating to the Employees' Voluntary Investment
and Savings Plan of International Multifoods Corporation, No. 2-99818 on
Form S-8 relating to the Stock Purchase Plan of Robin Hood Multifoods Inc.,
No. 2-84236 on Form S-8 relating to the 1983 Stock Option Incentive Plan of
International Multifoods Corporation, No. 33-6223 on Form S-8 relating to
the 1986 Stock Option Incentive Plan of International Multifoods Corporation,
No. 33-30979 on Form S-8 relating to the Amended and Restated 1989 Stock-Based
Incentive Plan of International Multifoods Corporation and No. 33-65221 on
Form S-3 relating to certain debt securities of International Multifoods
Corporation of our reports dated April 8, 1997, relating to the consolidated
balance sheets of International Multifoods Corporation and subsidiaries as of
February 28, 1997 and February 29, 1996 and the related consolidated
statements of earnings and cash flows and related financial statement schedule
for each of the fiscal years in the three-year period ended February 28,
1997, which reports appear or are incorporated by reference in the Annual
Report on Form 10-K for the fiscal year ended February 28, 1997, of
International Multifoods Corporation.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Minneapolis, Minnesota
May 15, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED 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> YEAR
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-END> FEB-28-1997
<CASH> 8,753
<SECURITIES> 0
<RECEIVABLES> 216,798
<ALLOWANCES> 9,339
<INVENTORY> 283,948
<CURRENT-ASSETS> 563,256
<PP&E> 357,239
<DEPRECIATION> 131,882
<TOTAL-ASSETS> 915,288
<CURRENT-LIABILITIES> 371,994
<BONDS> 202,328
0
0
<COMMON> 2,184
<OTHER-SE> 287,394
<TOTAL-LIABILITY-AND-EQUITY> 915,288
<SALES> 2,595,873
<TOTAL-REVENUES> 2,595,873
<CGS> 2,215,366
<TOTAL-COSTS> 2,215,366
<OTHER-EXPENSES> 167,788
<LOSS-PROVISION> 2,862
<INTEREST-EXPENSE> 18,549
<INCOME-PRETAX> 5,016
<INCOME-TAX> 2,236
<INCOME-CONTINUING> 2,780
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,780
<EPS-PRIMARY> .15
<EPS-DILUTED> 0
</TABLE>
