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, 1998
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 (I.R.S. Employer
of incorporation or organization) Identification No.)
200 East Lake Street, Wayzata, Minnesota 55391
(Address of principal executive offices) (Zip Code)
(612) 594-3300
(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 10K or any amendment to this Form 10-K. [ ]
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, 1998 (based on the closing sale price of $30.3125 per share as
reported in the consolidated transaction reporting system on such date)
was $565,350,344.
The number of shares outstanding of the registrant's Common Stock,
par value $.10 per share, as of May 1, 1998 was 18,798,341.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Annual Report to Stockholders for the
fiscal year ended February 28, 1998 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 19, 1998 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
foodservice distribution businesses in the United States and food
manufacturing 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.
In fiscal year 1998, the Company divested its food exporting
business.
The Company's business segments are Multifoods Distribution Group,
North America Foods and Venezuela Foods. 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, 1998 ("1998 Annual
Report to Stockholders"), is incorporated herein by reference.
Multifoods Distribution Group
The Multifoods Distribution Group segment includes the Company's
vending distribution business and the foodservice distribution business.
During fiscal 1998, the Company exited its food exporting business and,
therefore, the results of such business have been removed from the
results of the Multifoods Distribution Group segment. No single
customer accounts for a significant portion of the segment's sales.
Vending Distribution. The Company is the largest U.S. vending
distributor, serving approximately 20,000 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 19
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 165 tractors
and approximately 175 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.
Foodservice 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, cleaning
supplies 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 230 tractors
and 290 trailers, a majority of which are leased by the Company.
The foodservice 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.
North America Foods
The North America Foods segment consists of two units, U.S. Foods
and Robin Hood Multifoods. In addition, the North America Foods segment
operates a Canadian frozen bakery business that it is presently
attempting to divest. No single customer accounts for a significant
portion of the segment's sales.
U.S. Foods. The U.S. Foods unit produces approximately 3,000
products for retail, in-store and wholesale bakeries and foodservice
customers in the United States. 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 addition, the Company manufactures and
markets frozen desserts under its MULTIFOODS, GOURMET BAKER and FANTASIA
brands. 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 on the basis of product quality and uniqueness, product
convenience, brand loyalty, timely delivery and customer service as well
as price.
Robin Hood Multifoods. The Robin Hood Multifoods unit combines the
Company's Canada consumer foods business with its Canada bakery mix
business. The consumer foods business 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. The Company produces bakery mix
products, wheat flour and durum and oat products for retail, in-store
and wholesale bakeries and foodservice customers in Canada. Such
products are sold under the Company's ROBIN HOOD brand.
The products of Robin Hood Multifoods are marketed primarily
through the Company's own sales organization, supported by advertising
and other promotional activities. The Company's competitors in Canada
include both large corporations and regional producers. 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 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 18
through 21 of the 1998 Annual Report to Stockholders and is incorporated
by reference in Part II, Item 7, hereof.
Divested Businesses
The Company's Divested Businesses segment consists of the Company's
former food exporting business which was divested in fiscal year 1998.
This business was principally involved in the international trading of
food products. A significant portion of the sales of the food exporting
business was to a major customer that distributes food products in
Russia. During fiscal 1998, the Company entered into an exit agreement
to wind down its business with the major customer. The Company's
results of operations could be materially adversely affected if the
customer is unable to meet its commitments to the Company under the exit
agreement. In addition, in fiscal 1998, the Company was notified that
approximately $6 million in Company-owned inventory was stolen from a
ship in the port of St. Petersburg, Russia. The Company believes, based
on the facts known to date, that the loss is covered by insurance. If
the loss from the theft of product is not covered by insurance, the
Company would likely recognize a material charge to its results of
operations. See "Management's Discussion and Analysis of Results of
Operations and Financial Condition," which is included on pages 18
through 21 of the 1998 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
significant 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 foodservice distribution business purchases products
directly from numerous manufacturers, processors and independent
suppliers. The Company's foodservice 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.
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 Albany, 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 discovery
stage 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.
On January 15, 1998, VIP's Industries, Inc. ("VIP's") filed a
third-party complaint against the Company in the Circuit Court of Linn
County, Oregon. The third-party complaint alleges that the Company,
through its former subsidiary Crown Industries, Inc. ("Crown"), caused
the environmental contamination of certain real property, and the
groundwater beneath the real property, located in Albany, Oregon. At
the time of the Company's acquisition of Crown in 1976, Crown owned the
subject real property and leased it to an operator of a retail gasoline
service station. The Company sold the subject real property in 1981.
VIP's has alleged that the Company is strictly liable under Oregon law
for costs of removal of contamination and remediation of the subject
real property. VIP's is seeking damages in excess of $210,000, the cost
of all past, present and future remedial action related to the
contamination of the real property and the groundwater beneath the real
property. 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, 1998, the Company and its
subsidiaries had 6,807 employees.
Cautionary Statement Relevant to Forward-Looking Information
This Report contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. In addition,
the Company and its representatives may from time to time make written
and oral forward-looking statements. These forward-looking statements
are based on current expectations or beliefs, including, but not limited
to, statements concerning the Company's operations and financial
performance and condition. For this purpose, statements that are not
statements of historical fact may be deemed to be forward-looking
statements. The Company cautions that these statements by their nature
involve risks and uncertainties, and actual results may differ
materially depending on a variety of important factors, including, among
others, the impact of competitive products and pricing; market
conditions and weather patterns that may affect the costs of grain and
other raw materials; changes in laws and regulations; the inability of
the Company to obtain the estimated fair market value of its Canadian
frozen bakery business, which is being held for sale; the inability of
the Company to either resolve the Company's "Year 2000" issues or to
accurately estimate the cost associated with "Year 2000" compliance;
economic and political conditions in Venezuela including inflation,
currency volatility, possible limitations on foreign investment,
exchangeability of currency, dividend repatriation and changes in
existing tax laws; economic or political instability in Russia including
the possibility of tariff law changes or other marketplace changes and
restrictions; the inability of the major customer of the Company's
former food exporting business to meet remaining commitments; the
inability of the Company to collect insurance proceeds related to the
theft of inventory from the port of St. Petersburg, Russia; fluctuations
in foreign exchange rates; risks commonly encountered in international
trade; and other factors as may be discussed in the Company's reports
filed with the Securities and Exchange Commission.
Item 2. Properties.
The Company's principal executive offices are located in Wayzata,
Minnesota in owned 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.
Multifoods Distribution Group
The Company owns two and leases 17 distribution centers aggregating
approximately 1.5 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; Paulsboro and Parsippany, New Jersey; Greensboro, North
Carolina; Twinsburg, Ohio; Memphis, Tennessee; Dallas and Houston,
Texas; and Kent, Washington.
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 900,000 square feet for its foodservice
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 two and leases 10 warehouse facilities. In
addition, the Company owns one and leases 12 agricultural distribution
centers.
The Company also operates two Company-owned hatcheries and one
leased hatchery and operates four Company-owned and 12 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,
1998.
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
1998 Annual Report to Stockholders, are incorporated herein by
reference.
As of May 1, 1998, there were 4,569 holders of record of the Common
Stock of the Company.
On May 9, 1997, the Company granted to Stern Stewart & Co., a
partnership ("Stern Stewart"), an option to purchase 48,000 shares of
the Company's Common Stock (the "Option") in a transaction that was not
registered under the Securities Act of 1933, as amended (the "Securities
Act"). The Option was granted pursuant to a non-qualified stock option
agreement between Stern Stewart and the Company (the "Option Agreement")
in lieu of $400,000 of cash compensation, as partial payment of the fee
owed by the Company to Stern Stewart for consulting services. The
Option has an exercise price of $25 per share and may be exercised at
any time during the period commencing on May 9, 2000 and ending on May
9, 2002; provided, however, that the Option may be exercised sooner
following the occurrence of a "Change of Control" of the Company as
defined in the Option Agreement. In addition, in the event of a Change
of Control of the Company prior to May 9, 2002, in lieu of exercising
the Option, Stern Stewart may elect to receive from the Company $400,000
in cash in consideration of cancellation of the Option. The Option was
granted in a transaction exempt pursuant to Section 4(2) of the
Securities Act. The Company has agreed to file a registration statement
under the Securities Act for the resale of the shares of Common Stock of
the Company issued to Stern Stewart upon its exercise of the Option.
The Company has agreed to file such registration statement upon the
written request of Stern Stewart; provided, however, that Stern Stewart
may not make any such request prior to the earlier to occur of (i) a
Change of Control of the Company or (ii) March 15, 2000.
Item 6. Selected Financial Data.
The information for fiscal years 1994 through 1998 in the "Six-Year
Comparative Summary" on page 17 of the 1998 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 3 ("Unusual
Items") to the Company's Consolidated Financial Statements on page 28 of
the 1998 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 18
through 21 of the 1998 Annual Report to Stockholders is incorporated
herein by reference.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
Item 8. Financial Statements and Supplementary Data.
The Independent Auditors' Report, the Company's Consolidated
Financial Statements as of February 28, 1998 and February 28, 1997, and
for each of the fiscal years in the three-year period ended February 28,
1998, and the Notes to the Company's Consolidated Financial Statements
on pages 22 through 38 of the 1998 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 4
through 8 and the section entitled "Section 16(a) Beneficial Ownership
Reporting Compliance" on page 25 of the Company's Proxy Statement dated
May 14, 1998 ("1998 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, 1998. Unless otherwise noted, the positions
described are positions with the Company or its subsidiaries.
Name Age Positions Held Period
- ---- --- -------------- ------
Gary E. Costley 54 Chairman of the Board, January 1, 1997
President and Chief Executive to present
Officer
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
Jeffrey E. Boies 53 Vice President and President, April 17, 1998
Multifoods Distribution to present
Group, Inc.
President, Multifoods 1997 to 1998
Distribution Group, Inc.
President, VSA, Inc. 1996 to 1997
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
Frank W. Bonvino 56 Vice President, General Counsel 1992 to present
and Secretary
Anthony T. Brausen 38 Vice President and Treasurer September 20, 1996
to present
Treasurer 1996
Assistant Treasurer and 1995 to 1996
Director of Investor Relations
Assistant Controller - 1994
Financial Reporting and Director
of Investor Relations
Assistant Controller - 1991 - 1994
Financial Reporting
Dennis R. Johnson 46 Vice President and Controller December 15, 1995
to present
Assistant Controller - 1993 to 1995
Operations and Tax
Assistant Controller - Operations 1987 to 1993
Jill W. Schmidt 39 Vice President, Communications June 1, 1997
to present
Vice President of 1995 to 1997
Tunheim Santrizos Co.
Account Supervisor of 1992 to 1995
Tunhaim Santrizos Co.
William L. Trubeck 51 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.
Donald H. Twiner 57 President, Robin Hood June 1, 1997
Multifoods Inc. to present
President - Consumer Foods 1989 to 1997
Division of Robin Hood
Multifoods Inc.
Robert S. Wright 51 Vice President and President, 1995 to present
North America Foods
President, Specialty Brands 1994 to 1995
Division of Foodbrands
America, Inc.
President, Prepared Foods 1992 to 1994
Division of International
Multifoods 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 pages 7 and 8 and the section entitled
"Executive Compensation" on pages 14 through 24 of the 1998 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 1998 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 1998 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, 1998, February 28, 1997 and February 29,
1996
Consolidated Balance Sheets - February 28, 1998 and
February 28, 1997
Consolidated Statements of Cash Flows - Years ended
February 28, 1998, February 28, 1997 and
February 29, 1996
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 (incorporated by reference to Exhibit 10.2 to the Company's
Annual Report on Form 10-K for the fiscal year ended February 28,
1997).*
10.3 Amendment to the 1997 Stock-Based Incentive Plan of
International Multifoods Corporation.*
10.4 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).*
10.5 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)).*
10.6 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).*
10.7 Management Incentive Plan of International Multifoods
Corporation, Amended and Restated as of March 1, 1998.*
10.8 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).*
10.9 Management Benefit Plan of International Multifoods
Corporation, Restated Effective January 1, 1997 (incorporated herein by
reference to Exhibit 10.7 to the Company's Annual Report on Form 10-K
for the fiscal year ended February 28, 1997).*
10.10 First Amendment to the Management Benefit Plan of
International Multifoods Corporation, Restated Effective January 1,
1997.*
10.11 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).*
10.12 Compensation Deferral Plan for Executives of International
Multifoods Corporation, Amended and Restated as of September 17, 1993,
as further amended (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 and Exhibit 10.10 to the Company's Annual Report on
Form 10-K for the fiscal year ended February 28, 1997).*
10.13 Supplemental Deferred Compensation Plan of International
Multifoods Corporation, Adopted Effective April 1, 1997 (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, 1997).*
10.14 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).*
10.15 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).*
10.16 First Amendment to Employment Agreement, dated December 19,
1997, between International Multifoods Corporation and Gary E. Costley.*
10.17 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).*
10.18 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).*
10.19 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).*
10.20 Letter Agreement, dated September 24, 1996, between
International Multifoods Corporation and Jeffrey E. Boies regarding
benefits and severance arrangements (incorporated herein by reference to
Exhibit 10.18 to the Company's Annual Report on Form 10-K for the fiscal
year ended February 28, 1997).*
10.21 Memorandum of understanding, dated May 7, 1997, between
International Multifoods Corporation and Jeffrey E. Boies regarding
supplemental retirement benefits (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, 1997).*
10.22 Letter Agreement, dated February 3, 1997, between William L.
Trubeck and International Multifoods Corporation regarding benefits and
severance arrangements (incorporated herein by reference to Exhibit 10.1
to the Company's Quarterly Report on Form 10-Q for the quarter ended May
31, 1997).*
10.23 Memorandum of understanding, dated May 7, 1997, between
William L. Trubeck and International Multifoods Corporation regarding
supplemental retirement benefits (incorporated herein by reference to
Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the
quarter ended May 31, 1997).*
10.24 Release, Confidentiality, Non-Disclosure and Non-Competition
Agreement, dated as of October 27, 1997, between D. Bruce Kean and
International Multifoods Corporation.*
10.25 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).*
10.26 Fee Deferral Plan for Non-Employee Directors of International
Multifoods Corporation, Amended and Restated as of September 17, 1993,
as further amended (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 and Exhibit 10.26 to the Company's Annual Report on
Form 10-K for the fiscal year ended February 28, 1997).*
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).*
11 Computation of Earnings (Loss) Per Common Share.
12 Computation of Ratio of Earnings to Fixed Charges.
13 1998 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.
27.1 Financial Data Schedule.
27.2 Restated Financial Data Schedule (February 28, 1997).
27.3 Restated Financial Data Schedule (February 29, 1996).
27.4 Restated Financial Data Schedule (May 31, 1997).
27.5 Restated Financial Data Schedule (August 31, 1997).
27.6 Restated Financial Data Schedule (November 30, 1997).
27.7 Restated Financial Data Schedule (May 31, 1996).
27.8 Restated Financial Data Schedule (August 31, 1996).
27.9 Restated Financial Data Schedule (November 30, 1996).
*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, 1998.
(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 14, 1998 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 14, 1998
Gary E. Costley, Ph.D. and Chief Executive Officer
(Principal Executive Officer)
and Director
/s/ William L. Trubeck Senior Vice President - Finance May 14, 1998
William L. Trubeck and Chief Financial Officer
(Principal Financial Officer)
/s/ Dennis R. Johnson Vice President and May 14, 1998
Dennis R. Johnson Controller
(Principal Accounting Officer)
/s/ Claire L. Arnold Director May 14, 1998
Claire L. Arnold
/s/ James G. Fifield Director May 14, 1998
James G. Fifield
/s/ Robert M. Price Director May 14, 1998
Robert M. Price
/s/ Nicholas L. Reding Director May 14, 1998
Nicholas L. Reding
/s/ Jack D. Rehm Director May 14, 1998
Jack D. Rehm
/s/ Lois D. Rice Director May 14, 1998
Lois D. Rice
/s/ Richard K. Smucker Director May 14, 1998
Richard K. Smucker
/s/ Dolph W. von Arx Director May 14, 1998
Dolph W. von Arx
Independent Auditors' Report
The Board of Directors and Shareholders of
International Multifoods Corporation:
Under date of March 30, 1998, we reported on the consolidated balance
sheets of International Multifoods Corporation and subsidiaries as of
February 28, 1998 and 1997 and the related consolidated statements of
earnings and cash flows for each of the years in the three-year period
ended February 28, 1998, as contained in the 1998 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, 1998. 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.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
March 30, 1998
<TABLE>
<CAPTION>
Schedule II
INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES
Valuation and Qualifying Accounts
Three years ended February 28, 1998
(in thousands)
Additions
------------------------------
Balance at Net charges/(credits) Balance
beginning to costs and at end
Description of year expenses Other Deductions of year
- ---------------------------------------------------------------------------------------------------------
Allowance deducted from assets
for doubtful receivables:
<S> <C> <C> <C> <C> <C>
Year ended February 28, 1998 $ 9,339 $( 228) $ - $4,365(a) $ 4,746(b)
======= ======= ====== ====== =======
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)
======= ======= ====== ====== =======
<FN>
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:
1998 1997 1996
---- ---- ----
Trade accounts receivable $4,746 $ 9,339 $13,977
Miscellaneous receivables - current - - 5
------ ------- -------
$4,746 $ 9,339 $13,982
====== ======= =======
</FN>
</TABLE>
INDEX TO EXHIBITS
TO ANNUAL REPORT ON FORM 10-K OF
INTERNATIONAL MULTIFOODS CORPORATION
FOR THE FISCAL YEAR ENDED FEBRUARY 28, 1998
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 (incorporated by reference to Exhibit 10.2 to the Company's
Annual Report on Form 10-K for the fiscal year ended February 28,
1997).*
10.3 Amendment to the 1997 Stock-Based Incentive Plan of
International Multifoods Corporation.*
10.4 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).*
10.5 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)).*
10.6 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).*
10.7 Management Incentive Plan of International Multifoods
Corporation, Amended and Restated as of March 1, 1998.*
10.8 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).*
10.9 Management Benefit Plan of International Multifoods
Corporation, Restated Effective January 1, 1997 (incorporated herein by
reference to Exhibit 10.7 to the Company's Annual Report on Form 10-K
for the fiscal year ended February 28, 1997).*
10.10 First Amendment to the Management Benefit Plan of
International Multifoods Corporation, Restated Effective January 1,
1997.*
10.11 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).*
10.12 Compensation Deferral Plan for Executives of International
Multifoods Corporation, Amended and Restated as of September 17, 1993,
as further amended (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 and Exhibit 10.10 to the Company's Annual Report on
Form 10-K for the fiscal year ended February 28, 1997).*
10.13 Supplemental Deferred Compensation Plan of International
Multifoods Corporation, Adopted Effective April 1, 1997 (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, 1997).*
10.14 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).*
10.15 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).*
10.16 First Amendment to Employment Agreement, dated December 19,
1997, between International Multifoods Corporation and Gary E. Costley.*
10.17 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).*
10.18 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).*
10.19 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).*
10.20 Letter Agreement, dated September 24, 1996, between
International Multifoods Corporation and Jeffrey E. Boies regarding
benefits and severance arrangements (incorporated herein by reference to
Exhibit 10.18 to the Company's Annual Report on Form 10-K for the fiscal
year ended February 28, 1997).*
10.21 Memorandum of understanding, dated May 7, 1997, between
International Multifoods Corporation and Jeffrey E. Boies regarding
supplemental retirement benefits (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, 1997).*
10.22 Letter Agreement, dated February 3, 1997, between William L.
Trubeck and International Multifoods Corporation regarding benefits and
severance arrangements (incorporated herein by reference to Exhibit 10.1
to the Company's Quarterly Report on Form 10-Q for the quarter ended May
31, 1997).*
10.23 Memorandum of understanding, dated May 7, 1997, between
William L. Trubeck and International Multifoods Corporation regarding
supplemental retirement benefits (incorporated herein by reference to
Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the
quarter ended May 31, 1997).*
10.24 Release, Confidentiality, Non-Disclosure and Non-Competition
Agreement, dated as of October 27, 1997, between D. Bruce Kean and
International Multifoods Corporation.*
10.25 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).*
10.26 Fee Deferral Plan for Non-Employee Directors of International
Multifoods Corporation, Amended and Restated as of September 17, 1993,
as further amended (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 and Exhibit 10.26 to the Company's Annual Report on
Form 10-K for the fiscal year ended February 28, 1997).*
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).*
11 Computation of Earnings (Loss) Per Common Share.
12 Computation of Ratio of Earnings to Fixed Charges.
13 1998 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.
27.1 Financial Data Schedule.
27.2 Restated Financial Data Schedule (February 28, 1997).
27.3 Restated Financial Data Schedule (February 29, 1996).
27.4 Restated Financial Data Schedule (May 31, 1997).
27.5 Restated Financial Data Schedule (August 31, 1997).
27.6 Restated Financial Data Schedule (November 30, 1997).
27.7 Restated Financial Data Schedule (May 31, 1996).
27.8 Restated Financial Data Schedule (August 31, 1996).
27.9 Restated Financial Data Schedule (November 30, 1996).
*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 10.3
AMENDMENT TO THE
1997 STOCK-BASED INCENTIVE PLAN OF
INTERNATIONAL MULTIFOODS CORPORATION
EFFECTIVE AS OF FEBRUARY 2, 1998
The 1997 Stock-Based Incentive Plan of International Multifoods
Corporation (the "Plan") is amended, effective as of February 2, 1998,
as follows:
1. The first and second sentences of Section 2 of the Plan are
amended to read as follows:
"Subject to adjustment as provided in Section 11 hereof, an aggregate of
1,250,000 shares of Stock shall be available to Participants under the
Plan. Of such shares of Stock, a maximum of 250,000 shares shall be
available for issuance pursuant to Awards of Restricted Stock and
Restricted Stock Units."
2. The first sentence of Section 3(e) of the Plan is amended
to read as follows:
"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 200,000
shares of Stock in the aggregate in any calendar year."
Exhibit 10.7
MANAGEMENT INCENTIVE PLAN
OF
INTERNATIONAL MULTIFOODS CORPORATION
Approved by the Board of Directors of International
Multifoods Corporation on March 20, 1998
As Amended and Restated Effective as of March 1, 1998
The purpose of the Management Incentive Plan of International
Multifoods Corporation (the "Plan") is to provide incentive and reward
to officers and other key management employees of International
Multifoods Corporation and its subsidiaries who contribute to the
success of the corporate enterprise by their industry, creativity,
ability or exceptional service. Amounts paid pursuant to the Plan are
intended to qualify as performance-based compensation within the
meaning of Section 162(m) of the Internal Revenue Code, as amended (the
"Code").
Section 1. Definitions
For purposes of the Plan, the following terms shall have the meanings
set forth below:
"Award Year" means the fiscal year of Multifoods with respect to which
a Target Award is established for a Participant.
"Board of Directors" means the Board of Directors of International
Multifoods Corporation.
"Change in Control of Multifoods" has the meaning set forth in Section
3.5 hereof.
"Committee" means the Compensation Committee of the Board of Directors
or such other committee of directors as may be designated by the Board
of Directors to administer the Plan.
"Multifoods" means International Multifoods Corporation.
"Participant" means any individual, including any officer, employed on
a regular, full-time, salaried basis by Multifoods or any of its
subsidiaries, designated by the Committee pursuant to Section 2 hereof.
"Restricted Stock" means shares of common stock, par value $.10 per
share, of Multifoods in which incentive compensation may be payable, in
whole or in part, pursuant to Section 4 hereof, and which shall be
issuable pursuant to, and subject to the terms and conditions of, the
1997 Stock-Based Incentive Plan of International Multifoods Corporation
or such other plan of Multifoods which authorizes the issuance of
restricted stock.
"Target Award" means the incentive compensation amount established for
a Participant pursuant to Section 3 hereof that would be payable if the
performance targets are met, subject to such limitations as may apply
under the Plan.
Section 2. Participants
Prior to or within 90 days following the commencement of each Award
Year, the Committee shall designate the Participants for such Award
Year. If an employee is hired during an Award Year, the Committee may
designate such employee as a Participant for the remaining portion of
the Award Year provided such designation is made within 90 days
following the date of hire.
Section 3. Determination of Incentive Awards
3.1 Performance Based Awards. The Participants for an Award Year
shall be eligible to receive an award of incentive compensation upon
the attainment of performance targets selected by the Committee that
are established based upon measures of "economic value added" ("EVA(R)")
reflecting net operating profits after taxes less a capital charge with
such adjustments as are deemed appropriate by the Committee. Any such
performance targets shall be designated by the Committee prior to or
within 90 days following the commencement of each Award Year and may
relate to one or any combination of two or more of corporate, group,
unit, division, affiliate or individual performance. The Committee, in
the exercise of its discretion, shall determine, as a percentage of
base annual salary, the amount of the Target Award for each
Participant, and the performance targets that must be met as a
condition to an award of incentive compensation equal to the Target
Award or an award of incentive compensation less than or greater than
the Target Award. The Committee, in the exercise of its discretion,
also may establish an incentive bank in the name of each Participant
which shall be credited or charged in such manner as is deemed
appropriate by the Committee in the event performance exceeds or falls
short of the performance targets, with the incentive compensation
payable in subsequent Award Years adjusted in such manner as is deemed
appropriate by the Committee to account for the positive or negative
balance in the incentive bank of the Participant. For purposes of this
Section 3.1, the term "base annual salary" means the base annual salary
paid by Multifoods and its subsidiaries to an employee for services
rendered during the Award Year, exclusive of commissions, fringe
benefits, expense allowances, incentive compensation and other similar
payments or benefits, but inclusive of amounts contributed from base
annual salary by means of salary reduction to the Supplemental Deferred
Compensation Plan of International Multifoods Corporation, the
Employees' Voluntary Investment and Savings Plan of International
Multifoods Corporation or to the Multifoods Flexible Spending Account
Plan (or any other plan maintained by Multifoods or a subsidiary of
Multifoods that is intended to qualify under Sections 125 or 401(k) of
the Code).
3.2 Maximum Amount of Awards. The total amount of the incentive
compensation awarded to a Participant pursuant to the Plan for any
Award Year shall not exceed $2,500,000, and any incentive compensation
that would otherwise have been awarded but for such limit shall be
forfeited by the Participant and shall not be added to the incentive
bank of the Participant or otherwise serve to increase the amount of
the incentive compensation awarded to the Participant in any subsequent
Award Year.
3.3 Entitlements. Unless the Committee determines otherwise,
(a) the designation of a Participant by the Committee and/or the
establishment of a Target Award or performance targets as a condition
to payment of incentive compensation (i) shall not be deemed to be the
grant of incentive compensation, and (ii) shall not entitle the
Participant to any amount under the Plan, and
(b) incentive compensation shall be deemed to be granted to a
Participant following completion of the Award Year upon written
certification by the Committee that all performance targets to be met
as a condition to payment of incentive compensation have been met.
3.4 Continued Employment Required. Unless the Committee
determines otherwise, as a condition to receiving the payment of
incentive compensation, a Participant must continue in the employ of
Multifoods or a subsidiary of Multifoods as of the date that payment of
the incentive compensation is authorized by the Committee. If a
Participant continues in the employ of Multifoods or a subsidiary of
Multifoods as of the last day of an Award Year but does not continue in
the employ of Multifoods or a subsidiary of Multifoods on the date that
payment of the incentive compensation is authorized by the Committee
for such Award Year as a result of disability, death or retirement or
for such other reason acceptable to the Committee, the Committee may,
in its discretion, determine that the Participant is entitled to
receive the incentive compensation which would have otherwise been
payable to the Participant if such Participant had continued in the
employ of Multifoods or a subsidiary of Multifoods as of the date that
payment of such incentive compensation is authorized by the Committee.
If a Participant does not continue in the employ of Multifoods or a
subsidiary of Multifoods as of the last day of an Award Year as a
result of disability, death or retirement or for such other reason
acceptable to the Committee, the Committee may, in its discretion,
determine that the Participant is entitled to receive any positive
balance standing in his or her incentive bank as of the date of
termination of employment and/or a prorata portion (through the date of
termination of employment) of the Target Award or incentive
compensation which would have otherwise been payable to the Participant
if such Participant had continued in the employ of Multifoods or a
subsidiary of Multifoods as of the last day of the Award Year.
3.5 Change in Control. Notwithstanding anything to the contrary
contained in this Plan, following a Change in Control of Multifoods,
each Participant shall be entitled to the following immediate payment:
(a) If the Change in Control of Multifoods occurs during the
first six months of the Award Year, 100% of the amount of the Target
Award of the Participant for the Award Year in which the Change in
Control of Multifoods occurs, plus 100% of the balance (if positive) of
any incentive bank maintained in the name of the Participant;
(b) If the Change in Control of Multifoods occurs during the last
six months of the Award Year, 100% of the incentive compensation which
would have otherwise been paid to the Participant for the full Award
Year in which the Change in Control of Multifoods occurs, such amount
to be determined based upon the greater of the following:
(i) the Target Award of the Participant for the Award Year; or
(ii) an amount determined based upon the anticipated results
relating to the performance objectives to be met as a condition to
payment of incentive compensation to the Participant for the Award
Year;
plus 100% of the balance (if positive) of any incentive bank
maintained in the name of the Participant.
For purposes of the Plan, the term "Change in Control of Multifoods"
means any one of the following:
(a) the acquisition by any individual, entity or group or (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 Multifoods (the "Outstanding Common 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 subsection (a), the following acquisitions shall not constitute
a Change of Control: (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 subsection (c) of this definition; or
(b) individuals who, as of the date hereof, constitute the Board
of Directors (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board of Directors; 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; or
(c) 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 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 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 Common 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
of Directors, providing for such Business Combination; or
(d) approval by the shareholders of Multifoods of a complete
liquidation or dissolution of Multifoods.
3.6 Payment Form. The Committee, in the exercise of its
discretion, shall also determine whether any incentive compensation
shall be paid in a lump sum or in installments in equal or varying
amounts over a period of not more than five years. Lump sum awards
shall be paid to the Participant as soon as administratively
practicable after the close of the applicable Award Year. In the case
of installment awards, the first installment shall be paid as soon as
administratively practicable after the close of the applicable Award
Year, and the remaining installments shall be paid at the times and in
the amounts determined by the Committee. All remaining installments
shall be retained by Multifoods, pending payment thereof. Amounts so
retained shall be treated by Multifoods as if they were the property of
Multifoods for all purposes, and the only liability of Multifoods
therefor shall be to pay cash installments to the Participant when and
as they become due in accordance with the Plan. Unless the Committee
determines otherwise, Multifoods shall not be liable for any interest
on any amounts so retained.
3.7 Forfeitures. Unless the Committee determines otherwise, if
incentive compensation is being paid in installments to a Participant
and the Participant voluntarily terminates his or her employment, he or
she shall forfeit any remaining unpaid installments; provided, that
when the Committee determines it would serve the best interests of
Multifoods and its subsidiaries, the Committee may waive the forfeiture
in whole or in part. In addition, the Committee may accelerate payment
of unpaid installments. In the event of termination of employment
resulting from death, disability or retirement, the installments which
remain unpaid at that time will be paid to the Participant in the same
manner as if he or she were still employed, or, in the event of his or
her death, in the same manner as if he or she were still living. The
Committee, in its discretion, may accelerate such payments in such
cases. For purposes of this Section 3, a "retirement" will be deemed
to have occurred if the Participant terminates employment after
satisfying such age and/or service requirements as are imposed on the
receipt of an early or normal retirement benefit with respect to a
grandfathered participant under the Multifoods Pension Equity Plan.
3.8 Reduction in Awards. The Committee is authorized at any time
during or after an Award Year, in its sole and absolute discretion, to
reduce or eliminate the incentive compensation awarded to any
Participant for any reason. No reduction in the incentive compensation
awarded or paid to any Participant shall increase the amount of the
incentive compensation payable to any other Participant.
Section 4. Payment of Incentive Compensation
All incentive compensation shall be payable in cash or in Restricted
Stock, or both, as determined in the sole discretion of the Committee.
Section 5. Powers of Committee
The Committee shall have full power and authority to interpret and
administer the Plan. 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.
Section 6. Extension, Amendment or Termination
The Board of Directors shall have the power to suspend or discontinue
the Plan, in whole or in part, at any time, and, from time to time, to
extend, modify, amend or revise the Plan in such respects as the Board
of Directors, by resolution, may deem advisable. The fact that a
director is, has been, or will be, a Participant in the Plan shall not
disqualify him or her from voting as a director for or against a
suspension, discontinuance, extension, modification, amendment or
revision of the Plan or any part thereof.
Section 7. No Right to Continued Employment
Nothing in the Plan or the establishment of any Target Award or payment
of any incentive compensation shall be interpreted to confer upon the
Participant any right with respect to continuance of employment by
Multifoods or any subsidiary of Multifoods, nor shall the Plan or the
establishment of any Target Award or payment of any incentive
compensation interfere in any way with the right of Multifoods or any
subsidiary of Multifoods to terminate the employment of the Participant
at any time.
Exhibit 10.10
FIRST AMENDMENT
TO THE
MANAGEMENT BENEFIT PLAN
OF
INTERNATIONAL MULTIFOODS CORPORATION
(As Restated Effective January 1, 1997)
The Management Benefit Plan of International Multifoods Corporation
(As Restated Effective January 1, 1997) is amended effective March 1,
1998, as follows:
I
Section 2.1.1 is amended by adding a new paragraph to the end
thereof to read as follows:
For purposes of "A" and "B" above, if a Participant has accrued a
"supplemental pension benefit" under Appendix D of the PEP but has not yet
satisfied the age and service conditions required to start payment of such
supplemental pension benefit, then the annual benefit attributable to such
supplemental pension benefit shall be deemed to be the annual amount that
would be payable in the form of an immediate single life annuity that is the
Actuarial Equivalent of the supplemental pension benefit that would be payable
under Appendix D of the PEP starting as of the first day of the month after
the Participant attains age sixty-five (65).
II
Section A.1 of Appendix A is amended to read as follows:
This Appendix A shall apply to the following Participants (referred to as
"Appendix A Participants"):
Jeffrey E. Boies
Frank W. Bonvino
Duncan H. Cocroft
Gary E. Costley (except that, the Appendix A Benefit
of Gary E. Costley shall not include the benefit
specified in "A" of Sec. A.2.3)
Howard A. Grauff
Dennis R. Johnson
D. Bruce Kean
Kendall G. Mercer
Edgardo E. Rodriguez
Bernard P. Sarrazin
Donald H. Twiner
Joseph A. Van Bourgondien
Robert S. Wright
III
Section A.2.4 of Appendix A is amended to read as follows:
A.2.4 "Bonus" or "Bonuses" means:
(a) The amount (if any) awarded to the Participant under the Management
Incentive Plan of International Multifoods Corporation, as amended from time
to time, for any fiscal year of the Company that ended on or prior to February
28, 1997;
(b) The amount (if any) awarded to the Participant under the Management
Incentive Plan of International Multifoods Corporation, as amended from time
to time, for the fiscal year of the Company that ended on February 28, 1998,
but disregarding any amount in excess of seventy percent (70%) of his base
compensation for such fiscal year;
(c) The amount (if any) awarded to the Participant under the Management
Incentive Plan of International Multifoods Corporation, as amended from time
to time, for any fiscal year of the Company that ended after February 28,
1998, but disregarding any such amount in excess of the "target" bonus level
established under such plan for such fiscal year with respect to the
Participant.
(d) The amounts (if any) awarded to the Participant under the Management
Bonus Program - General of International Multifoods Corporation, as amended
from time to time.
Any contrary provision notwithstanding, the amounts described in
paragraphs (c) and (d), above, that are awarded to any of the following
Participants with respect to any fiscal year of the Company ending after
February 28, 1998, shall not be included as Bonuses under this Plan:
Frank W. Bonvino
Dennis R. Johnson
Donald H. Twiner
Robert S. Wright
IV
Section A.2.5 of Appendix A is amended to read as follows:
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. For this purpose, a Bonus shall be deemed to
have been awarded as of the last day of the fiscal year of the Company to
which the Bonus relates, regardless of whether the Bonus is actually
determined or actually paid after the end of such fiscal year, and regardless
of whether payment of such Bonus is deferred or waived by the Participant.
However, 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.
Any contrary provision notwithstanding, with respect to any Participant
listed in the last paragraph of Sec. A.2.4, the Bonus Base of such Participant
after February 28, 1998, shall not be less than the Bonus Base of the
Participant calculated as of February 28, 1998, taking into account all
Bonuses awarded to the Participant up through and including the fiscal year of
the Company ended February 28, 1998, regardless of whether such Bonuses are
actually determined or actually paid after February 28, 1998.
V
Section A.2.7 of Appendix A is amended to read as follows:
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"), and also includes
any "supplemental pension benefit" accrued under Appendix D of the PEP as
added effective March 1, 1998.
Exhibit 10.16
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT ("Amendment") is made
as of the 19th day of December 1997, by and between INTERNATIONAL
MULTIFOODS CORPORATION, a Delaware corporation (the "Company"), and GARY
E. COSTLEY, a resident of Wayzata, Minnesota (the "Executive").
WHEREAS, the Company and the Executive entered into an Employment
Agreement, dated as of November 1, 1996 (the "Employment Agreement");
and
WHEREAS, Section 4.(a) of the Employment Agreement, entitled
"Employee Benefits", provides in part, as follows, "The Compensation
Committee shall approve, effective as of the first day of the
Executive's actual employment with the Company, the Executive's
participation in the Company's Management Benefit Plan ("MBP") and shall
authorize that the Executive's participation in the MBP shall commence
immediately upon the first day of his actual employment with the Company
notwithstanding the provisions of the MBP."; and
WHEREAS, the Executive now wishes to waive participation in, and
relinquish any benefit to which the Executive is, or may in the future,
be entitled under Appendix A of the Management Benefit Plan of the
Corporation ("MBP") relating to incentive bonuses credited toward the
unqualified excess pension benefit provided under Appendix A of the MBP,
retroactive to the first day of the Executive's actual employment by the
Corporation; and
WHEREAS, the Compensation Committee of the Board of Directors of
the Company and the Board of Directors of the Company each have
considered and approved the Executive's request to waive participation
in, and relinquish any benefit to which the Executive is, or may in the
future, be entitled under Appendix A of the MBP related to incentive
bonuses credited toward the unqualified excess pension benefit provided
under Appendix A of the MBP, retroactive the first day of the
Executive's actual employment with the Company.
NOW, THEREFORE, in consideration of the preceding recitals and of
the mutual covenants and undertakings stated herein, the Company and the
Executive agree, as follows:
1. Section 4.(a) of the Employment Agreement be and the same
hereby is deleted in its entirety, and a new Section 4.(a) is hereby
inserted in full and complete substitution therefore, as follows:
"(a) While the Executive is employed by the Company hereunder, the
Executive shall be entitled to participate in the Company's Voluntary
Investment and Savings Plan ("VISA") and the Company's Pension Equity Plan
("PEP") in accordance with the provisions of such plans. The Compensation
Committee shall approve, effective as of the first day of the Executive's
actual employment with the Company, the Executive's participation in the
Company's Management Benefit Plan ("MBP"), and shall authorize that the
Executive's participation in the MBP shall commence immediately upon the first
day of his actual employment with the Company notwithstanding the provisions
of the MBP; provided, however that the Executive shall not be included as a
participant in Section A.1 of Appendix A of the MBP or have an entitlement to
any benefit under Appendix A of the MBP relating to incentive bonuses credited
toward the unqualified excess pension benefit provided by Appendix A of the
MBP."
2. Section 6. (f) (iii) of the Employment Agreement be and the
same hereby is deleted in its entirety, and a new Section 6. (f) (iii)
is hereby inserted in full and complete substitution therefore, as
follows:
"(iii) a material reduction of the Executive's Base Salary, or
material modifications to the Incentive Plan, the Stock Option Plan
(or any similiar stock option plan), or the MBP to the extent of the
Executive's participation as described in Section 4(a) of the
Agreement, that amount to a material reduction in the Executive's
total compensation hereunder;"
3. Except as amended by the terms of this Amendment, all of the
other agreements and undertakings set forth and contained in the
Employment Agreement shall remain unchanged and continue in full force
and effect.
IN WITNESS WHEREOF, the parties have caused this Amendment to be
duly executed as of the date and year first above written.
INTERNATIONAL MULTIFOODS CORPORATION
200 East Lake Street
Wayzata, Minnesota 55391
By:/s/ William L. Trubeck
William L. Trubeck
Senior Vice President-Finance
and Chief Financial Officer
GARY E. COSTLEY
1185 Ferndale Road West
Wayzata, Minnesota 55391
/s/ Gary E. Costley
Gary E. Costley
Exhibit 10.24
RELEASE, CONFIDENTIALITY, NON-DISCLOSURE AND NON-COMPETITION AGREEMENT
NOTE: MULTIFOODS HEREBY ADVISES KEAN TO CONSULT WITH AN ATTORNEY-
AT-LAW OF KEAN'S CHOICE BEFORE KEAN SIGNS AND DELIVERS THIS AGREEMENT.
THIS AGREEMENT (hereinafter "the Agreement" or "this Agreement"),
dated as of October 27, 1997, by and between INTERNATIONAL MULTIFOODS
CORPORATION, a Delaware corporation ("Multifoods"), and D. BRUCE KEAN,
residing at 567 Fox Hunt Circle, Highlands Ranch, Colorado 80126
("Kean").
WITNESSETH THAT:
WHEREAS, Kean will terminate his employment as Executive Vice
President of Multifoods' Distribution Business Unit and as President of
Multifoods Specialty Distribution, Inc., a Delaware corporation, wholly
owned by Multifoods, effective as of the close of business on October
31, 1997, and
WHEREAS, Multifoods and Kean wish to enter this Agreement.
NOW, THEREFORE, in consideration of the preceding recitals and of
the mutual covenants and agreements hereinafter set forth, Multifoods
and Kean agree as follows:
1. Consideration For This Agreement.
In consideration of the Release given by Kean in Section 2 of this
Agreement and Kean's covenants of confidentiality, non-disclosure and
non-competition set forth in Section 3 of this Agreement, Multifoods
agrees to pay the amounts and perform its other obligations set forth
in that certain Memorandum, dated October 27, 1997, from Jeffrey E.
Boies, President of Multifoods' Distribution Business Unit, to Bruce
Kean, and the attachment to such memo entitled Employee Benefit Plans,
copies of which are attached hereto as Exhibit A and Exhibit B,
respectively, including, but not limited to, Multifoods' agreement to
pay Kean the amount of $262,500 severance pay, as described in
paragraph 3 of Exhibit A, less all applicable federal, state and
local withholding taxes, commencing on a date which is the later
to occur of November 1, 1997 or the date immediately following
the date on which the "Rescission Period" (as defined in Section 2.E.
of this Agreement) expires. The foregoing is hereinafter
collectively called the "Consideration.")
2. Release.
A. In consideration of the Consideration payable by Multifoods
to Kean set forth and described in Section 1 of this Agreement, and for
other good and valuable consideration, Kean 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 Kean or his
heirs, executors, administrators, legal representatives, successors or
assigns and beneficiaries, have or may have in connection with Kean's
employment with or termination of employment from Multifoods, for all
time to the date of this Agreement, except for (i) the Consideration
for this Agreement, (ii) any rights that Kean has as a result of his
participation in any benefit plan or plans of Multifoods to which Kean
is entitled by reason of his employment by Multifoods or any of its
subsidiaries, including, but not limited to, pension, health and
welfare plans in accordance with and subject to the terms and
conditions of such plans, and (iii) any indemnification right to which
Kean 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 liability
insurance issued to Multifoods under which Kean is an insured and
entitled to coverage (the foregoing herein called the "Release").
B. Except as specifically provided in Paragraph A of this
Section 2, the Release applies to any action, claim, demand, debt,
contract and/or agreement that Kean has or may have as of the date of
this Agreement including, without limitation, any and all claims
relating to Kean's employment with or termination of employment from
Multifoods including, but not limited to, breach of contract claims and
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. Kean acknowledges that Multifoods willingness to enter into
this Agreement is not an admission that Multifoods or any of the other
Released Parties has engaged in any wrongful conduct towards Kean, has
acted in any way to cause injury to Kean, or is responsible or legally
obligated to Kean in any way, except as specifically provided in this
Agreement.
D. Kean acknowledges that he may have twenty-one (21) calendar
days from the day that he receives this Agreement, not counting the day
upon which he receives it, to consider whether he wishes to sign this
Agreement. If Kean cannot make up his mind in that period of time,
Multifoods may or may not allow Kean more time. Kean agrees that if he
signs this Agreement before the end of the twenty-one (21) day period,
it is because he has decided that he already has had a sufficient
period of time to decide whether to sign this Agreement.
E. Kean acknowledges that he has been advised and that he
understands, that he has fifteen (15) days from the date that he signs
this Agreement (the "Rescission Period") 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. This Agreement
will not be effective or enforceable until the expiration of the
Recission Period. Kean also understands that if he rescinds this
Agreement, he shall forfeit the Consideration. Kean 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 Rescission 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.
F. Kean 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. Kean's manual
signature on this Agreement, set forth below in the signature block,
constitutes Kean'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, its attorneys or any of
the Released Parties.
G. Concurrent with the execution and delivery of this
Agreement, Kean shall execute and deliver a resignation, effective as
of October 31, 1997, of all officerships and/or directorships that Kean
currently holds in any subsidiary of Multifoods, in the form of
Resignation attached hereto as Exhibit C.
3. Covenants of Confidentiality, Non-Disclosure and Non-
Competition.
A. In consideration of the Consideration for this Agreement,
Kean covenants and agrees with Multifoods that at all times from and
after the date of this Agreement, Kean will maintain in strict
confidence and not disclose to any corporation, partnership or other
entity or person, any non-public or proprietary information including,
without limitation, financial information, customer names or lists of
customers, or business plans of Multifoods, or any of Multifoods'
subsidiaries or affiliates, or any proprietary information of
Multifoods or any subsidiary or affiliate of Multifoods to which Kean
had access to or knowledge of while he was employed by Multifoods or
any of its subsidiaries (herein collectively called "Confidential
Information"). 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
Kean; or (iii) which is disclosed to Kean 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 Kean is compelled by subpoena, civil
investigative demand, court order or other legal process in any
proceeding to disclose any Confidential Information, Kean 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 Kean shall be compelled to disclose any such
Confidential Information based upon the advice of Kean's counsel, Kean
may disclose such information without liability under this Agreement,
provided that Kean 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 Kean is
required to disclose such information, and in any event, such
disclosure shall be limited to the specific information that Kean is
legally required to disclose based upon the advice of Kean's counsel.
C. During the period beginning November 1, 1997 through
December 31, 1998, inclusive (the "Non-competition Period"), Kean will
refrain from carrying on, either directly or indirectly (whether as a
principal, agent, investor, employee, employer, consultant,
shareholder, partner or in any other individual or representative
capacity whatsoever), anywhere in the United States of America or its
territories and possessions, any business engaged in specialty
distribution of any food and other products to: (i) independent or
national chain pizza restaurants; and (ii) vending and office service
and other concessionaires. An investment by Kean of not more than one
percent (1%) of all the issued and outstanding stock of a corporation
which is publicly traded on a national stock exchange and competes
with Multifoods in the aforementioned manner, shall not violate Kean's non-
competition covenant set forth herein.
D. Kean agrees that in the event there is a breach or
threatened breach by Kean of Kean's covenants set forth in Paragraphs A
or C of this Section 3, Multifoods shall have the right to pursue all
available legal and equitable remedies (including, without limitation,
injunctive relief) without an obligation to post bond.
4. No Waiver.
The waiver by Multifoods or Kean of a breach by Multifoods or
Kean, as applicable, of any term of this Agreement shall not operate or
be construed as a waiver of any subsequent breach by Multifoods or
Kean, as applicable.
5. Governing Law.
This Agreement shall be interpreted under and governed by the laws
of the State of Colorado.
6. Entire Agreement.
This Agreement contains the entire agreement between Multifoods
and Kean with respect to the Release and Kean's covenants of non-
disclosure, confidentiality and non-competition, and supersedes any
prior oral or written agreement or understanding with respect to the
subject matter hereof.
IN WITNESS WHEREOF, Multifoods and Kean have signed and delivered
this Agreement as of the day and year first above written.
WITNESS: INTERNATIONAL MULTIFOODS CORPORATION
/s/ Rachael Galarneau By: /s/Gary E. Costley
Gary E. Costley
Its: Chairman of the Board,
President and Chief
Executive Officer
WITNESS:
/s/ Kim L. Blackerby /s/ D. Bruce Kean
D. Bruce Kean
EXHIBIT A
[MULTIFOODS LOGO] Memo
DATE: October 27, 1997
TO: D. Bruce Kean
FROM: Jeffrey E. Boies
SUBJECT: Separation from Service
This will confirm the understanding reached regarding your separation
from International Multifoods:
1. Employment Status and Term. You will continue as Executive Vice
President - Distribution Operations until October 31, 1997. Prior to
such date you will confirm your resignation as an officer of Multifoods
Special Distribution, Inc. (the "Company") as of October 31, 1997.
You will continue as an inactive employee on paid leave of absence from
November 1, 1997 until March 31, 1998, at which time your employment
with the Company will terminate.
2. Salary and Vacation Pay. For the period from November 1, 1997
through March 31, 1998, you will receive your current base salary, less
all applicable withholding amounts. The Company will pay you in a lump
sum, less all applicable withholding amounts, the amount of any unpaid
vacation as of October 31, 1997. No further vacation pay will be
earned after October 31, 1997.
3. Severance Pay. The Company will pay you severance payments equal
to $262,500 (14 months' base salary). Salary continuation payments for
the period from November 1, 1997 through March 31, 1998 will count
toward the $262,500 and will be paid to you on regularly-scheduled pay
dates. On March 31, 1998, the unpaid balance will be paid in a lump
sum, less all applicable withholding amounts.
4. Employee Benefits for the Period from November 1, 1997 through
March 31, 1998. During this period, you will be eligible to
participate in and receive benefits under Multifoods' employee benefit
plans (other than the long-term disability plan, the Management
Incentive Plan and any long-term incentive plan or program), which
plans are listed in the attachment entitled " Employee Benefit Plans,"
unless you elect to discontinue coverage or cease to make the required
contributions. The Company will deduct contributions for such employee
benefit plans from the salary payments described in Section 2 above.
Your participation in the Multifoods' Management Incentive Plan and any
long-term incentive plan or program or successor plan or program, will
terminate on October 31, 1997 provided, however, that Multifoods'
management will recommend to the Compensation Committee of the Board
that you receive a bonus award under the Management Incentive Plan
equal to the amount you would otherwise have been eligible to receive
if your participation in the Management Incentive Plan continued
through February 28, 1998. To the extent any bonus is payable, the 20%
discretionary portion of such bonus will be deemed to have been fully
attained. As you know, any bonus award consideration under the
Management Benefit Plan is wholly within the discretion of the
Compensation Committee.
5. Employee Benefits After March 31, 1998. After March 31, 1998,
you will be eligible to participate in and receive benefits under the
Multifoods' employee benefit plans available to similarly-situated
retirees of Multifoods in accordance with the provisions of such plans
and other applicable requirements. Such plans, and certain estimates
and assumptions relating thereto, are listed in the attachment entitled
" Employee Benefit Plans." Multifoods 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 Multifoods.
6. Stock Options. Shown below are the expiration dates of your
outstanding options to purchase common stock of Multifoods. The
expiration dates are determined based on the date of your termination
of employment (March 31, 1998) and in accordance with the terms of the
respective stock option plans and stock option agreements relating to
the options.
Date of Number Exercise Expiration
Grant of Shares Price Date
3/17/95 5,000 $18.6875 3/31/2003
3/15/96 5,000 $19.3125 3/31/2003
3/21/97 6,000 $21.4375 3/31/2001
7. Outplacement. The Company will pay directly to a nationally-
recognized outplacement firm located in Denver, Colorado, selected by
you, an aggregate amount not to exceed $10,000 of outplacement
services.
8. Company Car. The Company will purchase the vehicle which it
currently leases on your behalf and transfer title of that vehicle to
you. The fair market value, less $5,000, will be reported as taxable
income to you, and you will be responsible for payment of the taxes
associated with this transaction. Details of this transaction will be
worked out in the near future.
9. Club Memberships. The Company will assign its rights, if any, in
the membership presently used by you at the Glenmore Country Club. The
Company will pay any transfer fee required by the country club in
connection with the assignment. You will be responsible for any fees
or dues incurred after October 31, 1997.
10. Release. As a condition of Multifoods' willingness to provide
the separation program outlined above, you will be required to sign a
Form of Release and Confidentiality Agreement.
Exhibit B
Employee Benefit Plans
Employee Benefits for the Period November 1, 1997 through March 31,
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 your salary payments. The bi-weekly contributions are as
follows:
Contributions in effect:
11/01/97 1/01/98
through through
12/31/97 3/31/98
CIGNA Point-of-service, family coverage $30.92 $38.65
Dental plan, family coverage $ 3.23 $ 4.04
Life insurance coverage equal to $450,000 $ 0.00 $ 0.00
Dependent life insurance $ 1.05 $ 1.05
Health Care Flexible Spending Account $57.70 Unknown
Note: Contribution amounts are subject to change by Multifoods.
II. RETIREMENT PLANS
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 March 31, 1998.
Employee Benefits after March 31, 1998
I. GROUP BENEFITS
Effective April 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
You can 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 March 31, 1998. However, you would have the
option to continue company-sponsored medical coverage under Multifoods
Retiree Medical Program. You and your wife can 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 March
31, 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
April 1, 1998 under one of the payment options shown below in the
approximate amounts noted:
PENSION BONUS
EQUITY BASE TOTAL
PAYMENT OPTION FORMULA* FORMULA PENSION
Life only $681.96 $755.56 $1,437.52
Life with 10 years certain $654.00 $724.58 $1,378.58
100% joint and survivor, with benefits $492.38 $545.51 $1,037.89
equal to the amounts shown continuing
to your surviving spouse following
your death
50% joint and survivor, with benefits $564.67 $625.60 $1,190.27
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 there are no future
changes in plan design or increases in the Social Security covered wage
base.
EXHIBIT C
RESIGNATION
I hereby resign as President of Multifoods Specialty
Distribution, Inc. and as an officer and/or director of any other
subsidiary, division or business unit of International Multifoods
Corporation, effective as of October 31, 1997.
/s/ D. Bruce Kean
-------------------------------
D. Bruce Kean
<TABLE>
<CAPTION>
Exhibit 11
INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES
Computation of Earnings (Loss) Per Common Share
(dollars in thousands, except per share amounts)
Years Ended
--------------------------------------------------------------------
February 28, February 28, February 29, February 28, February 28,
1998 1997 1996 1995 1994
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Average shares of common
stock outstanding 18,385,262 17,982,348 17,964,688 17,974,156 18,910,748
Common stock equivalents 233,791 4,550 49,358 15,809 -
---------- ---------- ---------- ---------- ----------
Total common stock and equivalents
assuming full dilution 18,619,053 17,986,898 18,014,046 17,989,965 18,910,748
========== ========== ========== ========== ==========
Earnings (loss) $20,024 $ 2,780 $24,075 $57,021 $ (13,438)
Less dividends on preferred stock - - 260 167 174
---------- ---------- ---------- ---------- ----------
Earnings (loss) applicable
to common stock $20,024 $ 2,780 $23,815 $56,854 $ (13,612)
======== ======== ======== ======== ==========
Earnings (loss) per share of common stock:
Basic $ 1.09 $ .15 $ 1.33 $ 3.16 $ (.72)
======== ======== ======== ======== ==========
Diluted $ 1.08 $ .15 $ 1.32 $ 3.16 $ (.72)
======== ======== ======== ======== ==========
</TABLE>
Basic earnings (loss) per share is 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.
Diluted earnings (loss) per share is computed similar to basic earnings
(loss) per share except that the weighted average shares outstanding is
increased to include additional shares from the assumed exercise of
stock options. The number of additional shares is calculated by
assuming that outstanding stock options were exercised and the proceeds
from such exercises were used to acquire shares of common stock at the
average market price during the year.
<TABLE>
<CAPTION>
Exhibit 12
INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES
Computation of Ratio of Earnings to Fixed Charges
(dollars in thousands)
Years Ended
----------------------------------------------------------------
February 28, February 28, February 29, February 28, February 28,
1998 1997 1996 1995 1994
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Earnings (loss) before income taxes (1) $32,395 $ 5,016 $27,754 $71,739 $(12,717)
Plus: Fixed charges (2) 27,154 28,052 29,314 24,795 22,001
Less: Capitalized interest (8) (109) (128) (317) (746)
------- ------- ------- ------- --------
Earnings available to cover fixed charges $59,541 $32,959 $56,940 $96,217 $ 8,538
======= ======= ======= ======= ========
Ratio of earnings to fixed charges(3) 2.19 1.17 1.94 3.88 .39
======= ======= ======= ======= ========
<FN>
(1)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:
Years Ended
---------------------------------------------------------------
February 28, February 28, February 29, February 28, February 28,
1998 1997 1996 1995 1994
----------------------------------------------------------------
Interest expense, gross $17,651 $18,658 $19,613 $15,592 $12,578
Rentals (interest factor) 9,503 9,394 9,701 9,203 9,423
------- ------- ------- ------- -------
Total $27,154 $28,052 $29,314 $24,795 $22,001
======= ======= ======= ======= =======
(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.
</FN>
</TABLE>
Exhibit 13
MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
Overview
Fiscal 1998 net earnings were $20 million, or $1.09 per basic share,
compared with $2.8 million, or 15 cents per basic share, in fiscal 1997.
Net earnings increased on substantially higher operating earnings in
Multifoods Distribution Group and North America Foods, which offset a
significant decline in Venezuela Foods operating results and a higher
effective tax rate. Net earnings were also affected by unusual items in
both years. Excluding unusual items, fiscal 1998 net earnings were
$23.2 million, or $1.26 per basic share, compared with $17.6 million, or
98 cents per basic share, in fiscal 1997.
Fiscal 1998 results included an unusual after-tax charge of $3.2
million, or 17 cents per share, as a result of a determination that
receivables from a major customer of the Company's former food exporting
business may not be fully recoverable. The Company exited its food
exporting business in fiscal 1998. Unusual items in fiscal 1997
resulted in a $14.8 million after-tax charge, or 83 cents per share.
Further discussion of unusual items follows in Segment Results and in
Note 3 to the consolidated financial statements.
Net sales for fiscal 1998 increased 1% to $2.6 billion.
Segment Results
The Company operates in three business segments: Multifoods Distribution
Group, North America Foods and Venezuela Foods. In fiscal 1998, the
Company changed the name of its Foodservice Distribution segment to
Multifoods Distribution Group. In addition, the Company is now
reporting the results of its former food exporting business in Divested
Businesses. Food exporting results were previously included in
Multifoods Distribution Group. Previously reported segment financial
information has been reclassified to conform with the fiscal 1998
presentation.
A description of the business segments and summary of operating results
are included in Note 17 to the consolidated financial statements.
Fiscal 1998 compared with Fiscal 1997
Multifoods Distribution Group: Net sales increased 2% to $1.8 billion.
An increase in vending distribution net sales from higher volumes in the
independent and fund-raising customer segments was partially offset by
lower sales in the foodservice distribution business (formerly referred
to as limited-menu distribution). Foodservice distribution net sales
declined as a result of decisions to relinquish low-margin accounts.
Operating earnings before unusual items increased 384% to $23.7 million
as a result of a substantial improvement in vending distribution.
Vending distribution results improved on higher volumes, lower delivery
and distribution costs, and a reduction in bad debt expense. In
addition, vending distribution earnings benefited from the purchase of
coffee prior to world-market price increases. Operating earnings also
increased in foodservice distribution because of lower delivery and
distribution costs. Segment results also included a $2 million
curtailment gain from the elimination of the subsidy for post-retirement
health-care benefits for future retirees. See Note 16 to the
consolidated financial statements for additional information.
Fiscal 1997 unusual items included a $4 million charge for a
restructuring plan and a $1.1 million charge to consolidate two
foodservice distribution facilities. The restructuring plan involved
moving key customer support functions from a central location to each of
the Company's vending distribution centers. All significant actions
related to the plan were completed in fiscal 1998.
In fiscal 1998, the Company announced that it would combine its vending
and foodservice distribution businesses into a single distribution
business to capitalize on growth and cost-saving opportunities. As a
result, the Company expects to incur unusual charges during fiscal 1999.
Although the Company believes such charges will be material to its
results of operations, it is presently unable to estimate the amount of
the charges or the benefits from such actions as the details and
timetable of the consolidation plan have yet to be completed. The
recognition of these charges will be dependent upon the timing of
management's approval of the consolidation plan.
North America Foods: Net sales declined 1% to $471.7 million due to
lower prices of the Company's grain-based products that resulted from a
reduction in commodity costs and from unfavorable currency translation
because of a weakening Canadian dollar. The decline was partially
offset by higher volumes in Canadian commercial flour and U.S. bakery
products.
Operating earnings before unusual items increased 47% to $30.6 million
as a result of higher volumes and margins in Canadian commercial flour
and U.S. bakery products. The increase in margins was the result of a
more favorable product and customer mix, lower manufacturing costs and
lower ingredient costs. Segment results also included a $0.6 million
curtailment gain from the elimination of the subsidy for post-retirement
health-care benefits for future retirees. The increase in operating
earnings was partially offset by an operating loss in the Company's
Canadian frozen bakery business due to lower volumes and margins, and
unfavorable currency translation.
In fiscal 1997, the Company recognized an unusual charge of $11.4
million for asset impairment in its Canadian frozen bakery business.
The impairment resulted from a significant decline in operating results
during fiscal 1997, which occurred because of competitive pressures.
The Company estimated the fair value of the assets in accordance with
Statement of Financial Accounting Standards No. 121. During the second
quarter of fiscal 1998, the Company announced its decision to sell the
business, which had net assets of approximately $15 million as of
February 28, 1998. If the Company is not successful in realizing its
current estimate of fair value, it may be required to recognize an
additional material charge to its results of operations.
Venezuela Foods: Net sales increased 4% to $360.7 million, as prior
year sales were adversely affected by a significant devaluation in the
exchange rate while the Company operated under price controls. The
Venezuelan government eliminated price controls in April 1996. The net
sales increase was partially offset by a substantial decrease in
consumer corn flour volumes. The volume decline resulted from difficult
economic conditions that caused a loss of consumer purchasing power and
a shift in consumer buying patterns, including an overall decline in
corn flour consumption. Volumes were also affected by continued
competitive pressures and the Company being awarded less than its
anticipated share of corn flour for a Venezuelan government subsidy
program. The program is designed to make available to low-income
consumers certain basic food products at below market prices and
involves competitive bids by suppliers.
The business segment recognized an operating loss of $0.2 million,
compared with operating earnings of $18.6 million last year. In
addition to the lower corn flour volumes, the operating loss resulted
from economic and competitive conditions that prevented the Company from
raising prices sufficiently to cover higher raw material and operating
costs. Operating costs increased primarily because of local inflation,
which was approximately 37% in fiscal 1998.
The Company expects that the difficult economic and competitive
environment in Venezuela will continue to adversely affect the Company's
Venezuela Foods operating results in fiscal 1999. In order to improve
Venezuela Foods' operating performance, the Company will be evaluating
opportunities to reduce costs and focus on strategies that provide the
highest possible returns to shareholders. As a result, future actions
taken by the Company could result in material unusual charges to the
Company's results of operations.
Divested Business: The Company's Divested Business segment in fiscal
1998 and 1997 represents the results of its former food exporting
business. This business was principally involved in the international
trading of food products. A significant portion of food exporting's
sales was to a major customer that distributes food products in Russia.
During fiscal 1998, the Company entered into an exit agreement to wind
down its business with the major customer. In addition, the remainder of
the food exporting business was sold. The proceeds and earnings impact
from the sale were immaterial. The decline in fiscal 1998 net sales and
operating earnings before unusual items is a result of the Company's
decision to exit this business.
In fiscal 1998, the Company recognized an unusual pre-tax charge of $5
million as a result of a determination that receivables from the major
customer may not be fully recoverable. The charge reduced the carrying
value of the receivables to their estimated net realizable value. Prior
to the charge, the Company's financial position included a $10.7 million
note receivable and accounts receivable of $4.6 million from the major
customer. In estimating net realizable value, considerable management
judgment is necessary and, accordingly, future events may result in
additional charges that could be material to the Company's results of
operations. See Note 12 to the consolidated financial statements for
additional discussion.
In fiscal 1998, the Company was notified that approximately $6 million
in Company-owned inventory was stolen from a ship in the port of St.
Petersburg, Russia. The ship had been chartered by the major customer of
the Company's former food exporting business. The Company believes,
based on the facts known to date, that the loss is covered by insurance.
If the loss from the theft of product is not covered by insurance, the
Company would likely recognize a material charge to its results of
operations.
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 1997 compared with Fiscal 1996
Fiscal 1997 net earnings were $2.8 million, or 15 cents per basic share,
compared with net earnings of $24.1 million, or $1.33 per basic 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. Excluding unusual items, fiscal 1997 net
earnings were $17.6 million, or 98 cents per basic share, compared with
$23.6 million, or $1.31 per basic share, in fiscal 1996.
Net sales for fiscal 1997 were up 3% to $2.6 billion. All of the
Company's business segments recorded sales increases.
Multifoods Distribution Group: Net sales increased 2% to $1.7 billion,
primarily because of higher volumes in the foodservice distribution
business, which resulted from the addition of several new customer
accounts in fiscal 1997. The increase was partially offset by a sales
decline in vending distribution, resulting from lower volumes. The
Company addressed the decline in sales volumes by restructuring certain
customer support functions that resulted in a $4 million unusual charge,
as described above.
Operating earnings before unusual charges declined 73% to $4.9 million
as a result of the vending distribution operating loss. The decline was
partially offset by higher earnings in foodservice distribution as a
result of lower operating costs and the higher volumes. Fiscal 1996
operating earnings included an unusual charge of $9.4 million, primarily
from the 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 from softness in a
large customer's business, and lower volumes in Canadian frozen bakery
products.
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.
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 foods 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.
Corporate: Fiscal 1996 corporate expenses included an unusual charge of
$6.2 million for costs associated with reducing corporate administrative
operations.
Divested Businesses: Fiscal 1997 results represent the Company's former
food exporting business, which the Company exited in fiscal 1998. In
addition to the food exporting business, fiscal 1996 Divested Businesses
results included the surimi seafood business, which was sold in June
1995. Fiscal 1997 operating earnings before unusual items increased 15%
to $7.7 million as a result of higher volumes to the major customer of
the food exporting business. The unusual gain of $9.9 million in fiscal
1996 was from the sale of the surimi seafood business.
Non-Operating Expense and Income
In fiscal 1998, net interest expense declined to $12.4 million from
$16.8 million last year. The decline was primarily the result of $3.2
million in interest income recognized on U.S. Federal income tax
refunds, lower interest rates in Canada and lower debt levels.
In fiscal 1997, net interest expense declined to $16.8 million from
$17.9 million as a result of lower interest rates in Canada and $1
million in interest income recognized on U.S. Federal income tax
refunds.
In fiscal 1996, other income (expense) included foreign exchange losses
of $3.6 million on cash and cash equivalents in Venezuela.
Income Taxes
The effective tax rates on earnings before unusual items were 38% in
fiscal 1998, 30% in fiscal 1997 and 29.4% in fiscal 1996. The increase
in fiscal 1998 was due to the substantial decline in Venezuela Foods
operating results, which had a low effective tax rate in prior years.
Including the effects of unusual items, the Company's overall tax rates
were 38.2% in fiscal 1998, 44.6% in fiscal 1997 and 13.3% in fiscal
1996. The high tax rate in fiscal 1997 was primarily caused by a low tax
benefit associated with the Canadian frozen bakery business impairment
charge. The low tax rate in fiscal 1996 was the result of a $5 million
benefit from a tax settlement.
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 and uncommitted lines of
credit. Approximately $280 million in committed U.S. and Canadian
revolving credit agreements and $140 million of uncommitted lines of
credit in the United States are maintained to ensure availability of
funds. Additionally, the Company's Venezuelan subsidiary has
uncommitted lines of credit totaling $148 million. 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, 1998, $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.
During fiscal 1998, the debt-to-total-capitalization ratio decreased
from 51% to 38%. The improvement was due primarily to an increase in
cash provided by operations, including a significant reduction in
working capital, and proceeds from the exercise of stock options.
The reduction in working capital was the result of lower accounts
receivable and inventory balances along with an increase in accounts
payable. The reduction in accounts receivable and inventories was
partially caused by the Company's decision to wind down its business
with a major customer of the former food exporting business. The
Company also had substantial collections against a significant prior
year-end accounts receivable balance with this customer. In addition,
working capital requirements were reduced in all businesses through
improved management processes, including the Company's implementation of
Economic Value Added principles. For example, a new grain procurement
process in Venezuela was established that resulted in extended payment
terms and, accordingly, increased the accounts payable balance
outstanding at fiscal year-end.
Capital expenditures for fiscal 1998 were $26.1 million, compared with
$27.5 million in fiscal 1997. Approximately 25% of the fiscal 1998
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 1999.
Business and Credit 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, 1998,
the Company's Venezuelan operation was in a net monetary asset position
of $7 million.
The Company has a carrying value of approximately $10.3 million ($15.3
million net of a $5 million reserve) in notes and accounts receivable
from the major customer of the Company's former food exporting business.
In the event of economic or political instability in Russia or if the
customer experienced difficulty in meeting its commitments, there could
be a material adverse effect on the Company's results of operations.
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.
Year 2000
The Company has completed a comprehensive inventory and review of its
computer systems and identified the systems that could be affected by
the "Year 2000" issue. An implementation plan addressing these issues
has been developed. The Company believes that implementation of
scheduled upgrades to packaged software systems in North America will
resolve the remaining "Year 2000" issues. The costs associated with
implementing these upgrades, as well as ongoing testing of North
American systems, are not expected to be material to the Company's
results of operations. North American systems are scheduled to be
compliant by June 30, 1999.
In Venezuela, the Company is in the process of evaluating packaged
software to replace existing business and financial systems that are not
"Year 2000" compliant. The capital cost for a new business system is
estimated at $5.5 million. Alternatively, the Company may choose to
modify some or all of its existing systems making them "Year 2000"
compliant. The cost of these modifications is estimated at up to $1
million. The replacement or modification of existing systems is expected
to be completed prior to the year 2000.
The Company believes that with upgrades to existing packaged systems in
North America and conversion to new replacement systems in Venezuela,
the "Year 2000" issue will not pose significant operational problems.
However, if such upgrades or conversions are not completed in a timely
manner, or major suppliers or customers experience "Year 2000" issues in
their respective systems, the "Year 2000" issue may have a material
adverse effect on the operations of the Company.
Cautionary Statement Relevant to Forward-Looking Information
This document contains certain statements that are forward-looking as
defined in the Private Securities Litigation Reform Act of 1995. These
forward-looking statements are based on current expectations or beliefs,
including, but not limited to, statements concerning the Company's
operations and financial performance and condition. The Company
cautions that these statements by their nature involve risks and
uncertainties, and actual results may differ materially depending on a
variety of important factors, including, among others, the impact of
competitive products and pricing; market conditions and weather patterns
that may affect the costs of grain and other raw materials; changes in
laws and regulation; the inability of the Company to obtain its
estimated fair value of its Canadian frozen bakery business, which is
being held for sale; the inability of the Company to either resolve the
Company's "Year 2000" issues or to accurately estimate the cost
associated with "Year 2000" compliance; economic and political
conditions in Venezuela, including inflation, currency volatility,
possible limitations on foreign investment, exchangeability of currency,
dividend repatriation and changes in existing tax laws; economic or
political instability in Russia, including the possibility of tariff law
changes or other marketplace changes and restrictions; the inability of
the major customer of the Company's former food exporting business to
meet remaining commitments; the inability of the Company to collect
insurance proceeds related to the theft of inventory from the port of
St. Petersburg, Russia; fluctuations in foreign exchange rates; other
risks commonly encountered in international trade; and other factors as
may be discussed in the Company's reports filed with the Securities and
Exchange Commission.
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,
1998 and 1997, and the related consolidated statements of earnings and
cash flows for each of the years in the three-year period ended February
28, 1998. 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, 1998 and 1997, and the results of their operations and their cash
flows for each of the years in the three-year period ended February 28,
1998, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
March 30, 1998
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.
Gary E. Costley William L. Trubeck
Chairman, President Senior Vice President, Finance, and
Chief Executive Officer and Chief Financial Officer;
President, Latin America Operations
INTERNATIONAL MULTIFOODS CORPORATION and SUBSIDIARIES
Consolidated Statements of Earnings
Fiscal year ended the last day of February
(in thousands, except per share data) 1998 1997 1996
- ------------------------------------------------------------------------
Net sales $2,611,792 $2,595,873 $2,523,197
Cost of materials and production (2,237,586) (2,215,366) (2,135,707)
Delivery and distribution (163,915) (167,788) (162,870)
- ------------------------------------------------------------------------
Gross profit 210,291 212,719 224,620
Selling, general and
administrative (160,481) (170,508) (168,825)
Unusual items (5,000) (20,107) (5,700)
- ------------------------------------------------------------------------
Operating earnings 44,810 22,104 50,095
Interest, net (12,377) (16,758) (17,908)
Other income (expense), net (38) (330) (4,433)
- ------------------------------------------------------------------------
Earnings before income taxes 32,395 5,016 27,754
Income taxes (12,371) (2,236) (3,679)
- ------------------------------------------------------------------------
Net earnings $ 20,024 $ 2,780 $ 24,075
========================================================================
Earnings per share of common stock:
Basic $ 1.09 $ .15 $ 1.33
Diluted 1.08 .15 1.32
- -----------------------------------------------------------------------
Average shares of common stock outstanding:
Basic 18,385 17,982 17,965
Diluted 18,619 17,987 18,014
- ----------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
INTERNATIONAL MULTIFOODS CORPORATION and SUBSIDIARIES
Consolidated Balance Sheets
February 28, 1998 and 1997
(in thousands) 1998 1997
- ------------------------------------------------------------------------
Assets
Current assets:
Cash and cash equivalents $ 10,363 $ 8,753
Trade accounts receivable, net of allowance 144,201 207,459
Inventories 265,989 283,948
Deferred income taxes 7,080 9,418
Other current assets 56,771 53,678
- -----------------------------------------------------------------------
Total current assets 484,404 563,256
- -----------------------------------------------------------------------
Property, plant and equipment, net 220,567 225,357
Goodwill, net 84,911 87,641
Other assets 37,504 39,034
- -----------------------------------------------------------------------
Total assets $827,386 $915,288
=======================================================================
Liabilities and Shareholders' Equity
Current liabilities:
Notes payable $ 1,025 $ 88,201
Current portion of long-term debt 25,042 6,790
Accounts payable 217,500 206,966
Other current liabilities 68,856 70,037
- -----------------------------------------------------------------------
Total current liabilities 312,423 371,994
- -----------------------------------------------------------------------
Long-term debt 162,857 202,328
Deferred income taxes 13,810 17,419
Employee benefits and other liabilities 28,943 33,969
- -----------------------------------------------------------------------
Total liabilities 518,033 625,710
- -----------------------------------------------------------------------
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 91,340 88,124
Retained earnings 398,754 393,335
Equity adjustment from foreign
currency translation (110,812) (108,000)
Equity adjustment from minimum
pension liability (3,499) (2,309)
Treasury stock, 3,106 and 3,835 shares, at cost (67,480) (83,262)
Unearned compensation (1,134) (494)
- ------------------------------------------------------------------------
Total shareholders' equity 309,353 289,578
- ------------------------------------------------------------------------
Commitments and contingencies
- ------------------------------------------------------------------------
Total liabilities and shareholders' equity $827,386 $915,288
========================================================================
See accompanying notes to consolidated financial statements.
<TABLE>
<CAPTION>
INTERNATIONAL MULTIFOODS CORPORATION and SUBSIDIARIES
Consolidated Statements of Cash Flows
Fiscal year ended the last day of February
(in thousands) 1998 1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operations:
Net earnings $ 20,024 $ 2,780 $ 24,075
Adjustments to reconcile net earnings
to cash provided by (used for) operations:
Depreciation and amortization 30,670 30,748 29,772
Provision for unusual charges 5,000 20,107 15,493
Gain on major business disposition - - (9,900)
Deferred income tax expense 2,486 3,252 4,544
Provision for losses on (recoveries of)
receivables (228) 2,862 5,783
Change in noncurrent notes receivable (10,298) (328) 485
Changes in working capital, net of
business acquisitions
and disposition* 85,877 (71,196) (43,456)
Other, net (3,334) (672) (1,215)
- ---------------------------------------------------------------------------------
Cash provided by
(used for) operations 130,197 (12,447) 25,581
- ---------------------------------------------------------------------------------
Cash flows from investing activities:
Acquisitions of businesses,
net of cash acquired - - (29,904)
Capital expenditures (26,125) (27,507) (31,181)
Proceeds from business disposition - - 48,009
Proceeds from other property disposals 2,562 623 1,707
Other, net (14) - -
- --------------------------------------------------------------------------------
Cash used for
investing activities (23,577) (26,884) (11,369)
- --------------------------------------------------------------------------------
Cash flows from financing activities:
Net increase (decrease) in notes payable (86,521) 60,119 (12,203)
Additions to long-term debt 9,278 20,000 85,945
Reductions in long-term debt (28,251) (25,390) (65,165)
Dividends paid (14,665) (14,477) (14,471)
Proceeds from issuance of common stock 16,108 546 1,470
Purchase of treasury stock (799) (82) (2,877)
Redemption of preferred stock - - (3,732)
Other, net (16) (230) (712)
- ---------------------------------------------------------------------------------
Cash provided by (used for)
financing activities (104,866) 40,486 (11,745)
- ---------------------------------------------------------------------------------
Effect of exchange rate changes
on cash and cash equivalents (144) 90 (5,751)
- ---------------------------------------------------------------------------------
Net increase (decrease) in cash
and cash equivalents 1,610 1,245 (3,284)
Cash and cash equivalents at beginning of year 8,753 7,508 10,792
- ---------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 10,363 $ 8,753 $ 7,508
=================================================================================
*Cash flows from changes in working capital,
net of business acquisitions and disposition:
Accounts receivable $ 60,774 $(45,043) $(45,993)
Inventories 16,065 (53,086) 19,172
Other current assets (4,019) (9,671) (4,759)
Accounts payable 13,184 36,688 16,871
Other current liabilities (127) (84) (28,747)
- ----------------------------------------------------------------------------------
Net change $ 85,877 $(71,196) $(43,456)
==================================================================================
</TABLE>
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
former food exporting business as net sales. If gross commodity sales
had been reported, net sales and cost of sales would have increased by
$60.5 million in fiscal 1998, $278.2 million in fiscal 1997 and $227.2
million in fiscal 1996.
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 components of
cost of sales. Accordingly, cost of sales was increased by $0.9 million
in fiscal 1998 and $2.6 million in fiscal 1997, and was reduced by $7.8
million in fiscal 1996.
Foreign currency translation and transactions
The functional currency of the Company's Canadian operations is the
Canadian dollar. 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 of 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 $0.1 million in fiscal 1998, $0.4 million in fiscal 1997 and
$2.4 million in fiscal 1996.
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. Under
APB 25, compensation expense is recorded for stock options if the market
price of the underlying stock exceeds the exercise price on the date of
grant. The Financial Accounting Standards Board issued Statement No.
123, "Accounting for Stock-Based Compensation" (SFAS 123), which the
Company adopted in fiscal 1997. SFAS 123 gives the Company 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 and to provide pro forma disclosure as if the fair value
method had been applied. See Note 14.
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 the tax basis of assets and liabilities.
Earnings per share
The Company adopted Statement of Financial Accounting Standards No. 128,
"Earnings Per Share" (SFAS 128), in the fourth quarter of fiscal 1998.
SFAS 128 establishes standards for computing and presenting earnings per
share and requires restatement of previously reported earnings per share
amounts. For the Company, basic earnings per share under SFAS 128 are
equivalent to earnings per share previously reported.
Basic earnings per share are computed by dividing net earnings by the
weighted average shares outstanding during the reporting period.
Diluted earnings per share are computed similar to basic earnings per
share except that the weighted average shares outstanding are increased
to include additional shares from the assumed exercise of stock options.
The number of additional shares is calculated by assuming that
outstanding stock options were exercised and the proceeds from such
exercises were used to acquire shares of common stock at the average
market price during the reporting period.
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").
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, trade names 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, 1998 and 1997, was $25.9 million and
$22.2 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 pronouncements
In June 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" (SFAS 130), which establishes standards for
reporting comprehensive income and its components in the financial
statements. Comprehensive income is defined as the change in the equity
of a business from all nonowner transactions and events. The Company is
required to adopt SFAS 130 in the first quarter of fiscal 1999. The
Company does not expect the adoption of SFAS 130 to have a material
effect on the consolidated financial statements.
In June 1997, the FASB also issued Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise and
Related Information" (SFAS 131), which establishes standards for
disclosure of operating segments, products and services, geographic
areas and major customers. The Company is required to adopt SFAS 131
beginning with its annual report for the fiscal year ending February 28,
1999. The Company does not expect the adoption of SFAS 131 to have a
material effect on its current definition of operating segments or the
consolidated financial statements.
Note 2: Interest, Net
Interest, net consisted of the following:
(in thousands) 1998 1997 1996
- -----------------------------------------------------------------
Interest expense $17,651 $18,658 $19,613
Capitalized interest (8) (109) (128)
Non-operating interest income (5,266) (1,791) (1,577)
- -----------------------------------------------------------------
Interest, net $12,377 $16,758 $17,908
=================================================================
Total interest income was $8.8 million in fiscal 1998, $3.4 million in
fiscal 1997 and $2.5 million in fiscal 1996.
Cash payments for interest, net of amounts capitalized, totaled $17.1
million in fiscal 1998, $18.9 million in fiscal 1997 and $20.7 million
in fiscal 1996.
Note 3: Unusual Items
Fiscal 1998
The Company recognized a pre-tax charge of $5.0 million ($3.2 million
after tax or 17 cents per share) as a result of a determination that
receivables from a major customer of the Company's former food exporting
business may not be fully recoverable. See Note 12 for additional
discussion.
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 were
comprised of the following:
(in millions) Segment
- -----------------------------------------------------------------------
Asset impairment $11.4 North America Foods
Restructuring plan 4.0 Multifoods Distribution Group
Severance and other costs 3.6 Corporate
Facility consolidation plan 1.1 Multifoods Distribution Group
- ------------------------------------------------------------------------
Total $20.1
=======================================
The Company recognized a charge of $11.4 million for asset impairment in
its Canadian frozen bakery operation. The impairment resulted in a $9.6
million reduction in goodwill and a $1.8 million reduction in fixed
assets. During fiscal 1997, the operation experienced a significant
increase in competition in certain key markets. As a result, there was
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.
Management adopted a restructuring plan at its vending distribution
business directed at improving customer service. The plan included
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. All significant actions
related to the plan were completed in fiscal 1998.
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.
Management adopted a plan to consolidate two foodservice 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 covered approximately 40
warehouse, delivery and administrative employees. All significant
actions related to the plan were completed in 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 were comprised of the following:
(in millions) Segment
- -----------------------------------------------------------------------
Write-down of software costs $8.9 Multifoods Distribution Group
Corporate restructuring plan 6.2 Corporate
Lease commitment loss .5 Multifoods Distribution Group
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 that 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.
Note 4: Income Taxes
Income tax expense was as follows:
U.S. Operations Non-U.S.
(in thousands) Federal Other Operations Total
- ------------------------------------------------------------------------
1998:
Current expense (benefit) $ (229) $ 283 $ 9,831 $ 9,885
Deferred expense (benefit) 3,240 1,472 (2,226) 2,486
- -----------------------------------------------------------------------
Total tax expense $ 3,011 $ 1,755 $ 7,605 $12,371
=======================================================================
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
========================================================================
Temporary differences that gave rise to deferred tax assets and
liabilities as of February 28, 1998 and 1997, were as follows:
1998 1997
------------------- --------------------
Deferred Deferred Deferred Deferred
Tax Tax Tax Tax
(in thousands) Assets Liabilities Assets Liabilities
- ------------------------------------------------------------------------
Depreciation and
amortization $ 1,483 $29,247 $ 1,633 $28,256
Accrued expenses 20,952 11,738 21,429 11,055
Inventory valuation methods 743 - 974 -
Reorganization and
divestiture reserves 637 - 3,640 -
Provision for losses
on receivables 3,571 - 3,263 -
Loss carryforwards 7,137 - 4,591 -
Foreign earnings repatriation - 3,139 - 3,027
Other 4,631 2,246 2,983 2,558
- ------------------------------------------------------------------------
Subtotal 39,154 46,370 38,513 44,896
Valuation allowance (1,111) - (2,420) -
- ------------------------------------------------------------------------
Total deferred taxes $38,043 $46,370 $36,093 $44,896
========================================================================
At February 28, 1998, the Company had a U.S. federal consolidated net
operating loss carryforward of approximately $7.9 million that will
expire in fiscal 2013. The Company's foreign operations had net
operating loss carryforwards of approximately $3.2 million that will
expire in fiscal 2005. The Company's foreign operations also had
capital loss carryforwards of approximately $3.6 million that have no
expiration date. The Company expects to fully utilize the net operating
and capital loss carryforwards.
In fiscal 1998, the Company's valuation allowance decreased
approximately $1.3 million. Approximately $0.9 million of the decrease
resulted from a change in the expected utilization of the net operating
loss carryforwards of the Company's foreign operations. The remaining
decrease resulted from a decline in Venezuelan deferred tax assets and
had no effect on income tax expense.
Total income taxes differ from the amount computed by applying the U.S.
federal income tax rate because of the following items:
(in thousands) 1998 1997 1996
- ------------------------------------------------------------------------
Tax at U.S. federal statutory rate (35.0%) $11,338 $1,756 $9,714
Differences:
Effect of taxes on non-U.S. earnings (130) 176 (2,049)
State and local income taxes 1,141 (249) (887)
Effect of intangibles 137 148 209
Basis difference for business disposals - - 355
Resolution of tax examinations - - (5,000)
Other (115) 405 1,337
- ------------------------------------------------------------------------
Total income taxes $12,371 $2,236 $3,679
========================================================================
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 $22.1 million
in fiscal 1998, $21.5 million in fiscal 1997 and $28.4 million in fiscal
1996.
Cash paid (received) for income taxes totaled $(0.9) million in fiscal
1998, $6.7 million in fiscal 1997 and $4.8 million in fiscal 1996.
Note 5: Earnings Per Share
The Company adopted SFAS No. 128 "Earnings Per Share" in fiscal 1998.
The table below reconciles average shares outstanding used to compute
basic and diluted earnings per share. There was no earnings impact for
the assumed conversion of stock options in each of the fiscal years.
<TABLE>
<CAPTION>
1998 1997 1996
--------------- --------------- ---------------
(in thousands, except Average Per Average Per Average Per
per share data) Shares Share Shares Share Shares Share
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Basic E.P.S. 18,385 $1.09 17,982 $ .15 17,965 $1.33
Effect of
Stock Options 234 - 5 - 49 -
- -----------------------------------------------------------------------------------
Diluted E.P.S. 18,619 $1.08 17,987 $ .15 18,014 $1.32
- -----------------------------------------------------------------------------------
</TABLE>
Note 6: Supplemental Balance Sheet Information
(in thousands) 1998 1997
- ------------------------------------------------------------------------
Trade accounts receivable, net:
Trade $148,947 $216,798
Allowance for doubtful accounts (4,746) (9,339)
- ------------------------------------------------------------------------
Total trade accounts receivable, net $144,201 $207,459
========================================================================
Inventories:
Raw materials, excluding grain $ 19,823 $ 15,776
Grain 87,769 86,500
Finished and in-process goods 151,894 174,274
Packages and supplies 6,503 7,398
- ------------------------------------------------------------------------
Total inventories $265,989 $283,948
========================================================================
Property, plant and equipment, net:
Land $ 15,123 $ 13,413
Buildings and improvements 98,204 93,099
Machinery and equipment 235,906 228,514
Transportation equipment 5,883 7,194
Improvements in progress 16,969 15,019
- ------------------------------------------------------------------------
372,085 357,239
Accumulated depreciation (151,518) (131,882)
- ------------------------------------------------------------------------
Total property, plant and equipment, net $220,567 $225,357
========================================================================
Other current liabilities:
Wages and benefits $ 18,510 $ 12,445
Income taxes 13,784 12,946
Other accrued expenses 36,562 44,646
- ------------------------------------------------------------------------
Total other current liabilities $ 68,856 $ 70,037
========================================================================
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 $90 million carrying value of medium-term notes, $23 million
of which is classified as current, had a fair value of $87 million as of
February 28, 1998.
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 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 gains, measured by using quoted
market prices as of February 28, 1998, was immaterial. At February 28,
1998, the Company held futures to purchase wheat and soybean oil with an
aggregate contract value of $17.1 million. The open futures mature in
the period from March 1998 through December 1998 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.
Foreign currency hedging
As the Company's 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 (see
Commodity risk management) into Canadian dollar equivalents. At
February 28, 1998, the Company held foreign exchange forward contracts
to sell and buy U.S. dollars totaling $5.5 million and $13.5 million,
respectively. The foreign exchange forward contracts are purchased
through major Canadian banking institutions.
The Company's Canadian operations also purchase foreign currency forward
contracts to minimize its exposure to foreign currency fluctuations as a
result of U.S. dollar-denominated sales to customers. As of February
28, 1998, the aggregate notional amount of these contracts in U.S.
dollars was $16.2 million, and the losses on such contracts were
insignificant. The gains and losses arising on these transactions are
recognized in income at the maturity of the contracts.
Interest rate risk management
In December 1997, the Company entered into a five-year interest-rate
swap contract commencing March 2, 1998, and expiring March 3, 2003.
Under the terms of the agreement, the Company will make quarterly
payments based on a $20 million notional amount at a fixed rate of
6.175%. In return, the Company will receive a floating rate payment
based on the current three-month London Interbank Offered Rate (LIBOR).
The net amount received or paid under the terms of the contract will be
classified as interest expense.
In December 1997, the Company also entered into a $20 million notional
value 10-year forward Treasury lock at a rate of 5.815% with a
settlement date of July 15, 1998. At the settlement date, the
instrument is priced based on the then-current 10-year U.S. Treasury
yield. The agreement provides for the Company to receive a payout if
rates rise above 5.815% and to make a payment if rates fall below
5.815%. The result of this settlement will be amortized into interest
expense.
Off-balance sheet risk
As of February 28, 1998 and 1997, the Company had sold with limited
recourse $21.2 million and $14.6 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), net in the consolidated statements of earnings.
Concentrations of credit risk
Management believes the credit risk of exchange-traded futures
contracts, foreign exchange forward contracts and interest rate
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. The Company
believes that its 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.
The Company has a carrying value of $10.3 million ($15.7 million net of
a $5 million reserve) in notes and accounts receivable from a major
customer of the Company's former food exporting business. See Note 12
for further discussion.
Note 8: Notes Payable
Notes payable consisted of the following:
(in thousands) 1998 1997
- -----------------------------------------------------------------------
U.S. commercial paper $ - $ 1,200
Canadian bankers' acceptances 15,451 43,854
Notes payable, principally to banks 80,303 154,077
Amounts reclassified to long-term debt (94,729) (110,930)
- -----------------------------------------------------------------------
Total notes payable $ 1,025 $ 88,201
=======================================================================
The Company has a $200 million revolving credit agreement in the U.S.
and an $80 million revolving credit agreement in Canada that expire
March 15, 2001. The Company had available $251 million under these
revolving credit agreements as of February 28, 1998. 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 facility fees were $0.4 million in fiscal 1998 and 1997.
Notes payable totaling $94.7 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, 1998 and 1997, was 6.0% and 5.7%, respectively.
At February 28, 1998, the Company had total uncommitted lines of credit
from banks in the United States and Venezuela of approximately $288
million, of which $208 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 $25.0 million in fiscal 1998
and $6.8 million in fiscal 1997, was as follows:
(in thousands) 1998 1997
- ------------------------------------------------------------------------
Medium-term notes $ 67,000 $ 90,000
Other 1,128 1,398
Notes payable, reclassified 94,729 110,930
- ------------------------------------------------------------------------
Total long-term debt $162,857 $202,328
========================================================================
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,
1998. 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, 1998, mature in fiscal 1999 to 2006
and had a weighted average interest rate of 6.6%.
Minimum principal payments totaling $162.9 million are due as follows:
$2.3 million in fiscal 2000, $20.3 million in fiscal 2001, $95.1 million
in fiscal 2002, $1.2 million in fiscal 2003, $14.0 million in fiscal
2004 and $30.0 million in fiscal 2005 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, 1998.
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, 1998:
Operating
(in thousands) Leases
- ------------------------------------------------------------
1999 $19,295
2000 14,732
2001 9,708
2002 5,370
2003 2,341
2004 and beyond 1,696
- -----------------------------------------------------------
Total minimum lease payments * $53,142
===========================================================
* 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) 1998 1997 1996
- ---------------------------------------------------------------------
Minimum rentals $28,508 $28,181 $29,104
Contingent rentals 99 29 79
Sublease rentals (94) (2) (8)
- ---------------------------------------------------------------------
Total net rent expense $28,513 $28,208 $29,175
=====================================================================
Note 12: Commitments and Contingencies
In fiscal 1998, the Company entered into an exit agreement with a major
customer of the Company's former food exporting business. The terms of
the exit agreement have been restructured on several occasions because
of the customer's financial difficulties, which the Company believes
were caused by delays in moving product into the Russian marketplace.
As of February 28, 1998, the Company had a note receivable from the
customer of $10.7 million and accounts receivable of $4.6 million. The
current agreement provides for payments on the accounts receivable
balance totaling $3.0 million by June 1998 with the remaining balance
added to the note receivable. The note receivable has a term of 60
months, bears interest at 8.5% and provides for monthly payments of
interest only for the first 12 months, followed by 48 monthly payments
of interest and principal in equal installments. As a result of
uncertainities with respect to the customer's ability to meet its
obligations, the Company recognized a $5.0 million pre-tax charge in the
fourth quarter of fiscal 1998 to reduce the carrying value of the
receivables to their estimated net realizable value. In estimating the
net realizable value, considerable management judgment is necessary and,
accordingly, future events may result in additional charges that could
be material to the Company's results of operations.
In fiscal 1998, the Company was notified that approximately $6 million
in Company-owned inventory was stolen from a ship in the port of St.
Petersburg, Russia. The ship had been chartered by the major customer of
the Company's former food exporting business. The Company believes,
based on the facts known to date, that the loss is covered by insurance.
If the loss from the theft of product is not covered by insurance, the
Company would likely recognize a material charge to its results of
operations.
In February 1998, the Company signed an exclusive supply agreement with
a customer in Venezuela that requires the Company to guarantee debt
obligations of up to $6.8 million. The customer has pledged certain
assets that have an estimated market value in excess of the guarantee.
It is not practicable to estimate the fair value of the guarantee;
however, the Company does not expect that it will incur losses as a
result of this guarantee.
At February 28, 1998, the estimated cost to complete improvements in
progress totaled approximately $10 million.
Note 13: Shareholders' Equity
The following summarizes the changes in shareholders' equity for the
three years ended February 28, 1998:
<TABLE>
<CAPTION>
Equity Adjustment from:
$.10 par value -----------------------
---------------- Capital in Foreign Minimum
Common Treasury Excess of Retained Currency Pension Unearned
(in thousands) Stock Stock Par Value Earnings Translation Liability Compensation Total
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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
compensation - - - - - - 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
compensation - - - - - - 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
Net earnings - - - 20,024 - - - 20,024
Translation adjustments - - - - (2,812) - - (2,812)
Dividends declared on
common stock - - - (14,605) - - - (14,605)
36 shares purchased for treasury - (799) - - - - - (799)
764 shares issued for
employee benefit plans - 16,581 3,216 - - - (1,289) 18,508
Amortization of unearned
compensation - - - - - - 649 649
Adjustment associated with
recognition of minimum
pension liability - - - - - (1,190) - (1,190)
- ------------------------------------------------------------------------------------------------------------------------------
Balance at February 28, 1998 $2,184 $(67,480) $91,340 $398,754 $(110,812) $(3,499) $(1,134) $309,353
==============================================================================================================================
</TABLE>
The 1997 stock-based plan and the 1989 stock-based plan of the Company
permit awards of restricted stock and incentive units to directors and
key employees subject to the provisions of the plans and as determined
by the Compensation Committee of the Board of Directors. In fiscal
1998, grants of 3,450 shares of restricted stock were awarded with
varying performance criteria and vesting periods. At February 28, 1998,
the total number of restricted shares outstanding was 59,479. The market
value of shares issued under the plans, as of the date of grant, has
been recorded as unearned compensation and is shown as a separate
component of shareholders' equity. Unearned compensation is expensed
over the period that 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 if 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 generally at not
less than fair market value at dates of grant. Options generally become
exercisable one year after the date of grant and expire 10 years after
the date of grant.
At February 28, 1998, a total of 409,476 common shares were available
for grants of stock options or restricted stock under the Company's 1989
and 1997 stock-based plans.
The per share weighted average fair values of stock options granted were
$4.28 in fiscal 1998, $4.40 in fiscal 1997 and $4.87 in fiscal 1996.
The fair value of options at the date of grant was estimated using the
Black-Scholes option pricing model. The following assumptions were
used in the calculation:
Assumptions 1998 1997 1996
- ----------------------------------------------------------------------
Expected dividend yield 4.0% 3.8% 3.5%
Expected volatility 20.7% 19.8% 19.9%
Risk-free interest rates 5.7% to 6.8% 6.5% to 7.0% 6.1% to 7.0%
Expected life (in years) 8.3 8.3 7.7
- ----------------------------------------------------------------------
The Company applies APB Opinion No. 25 in accounting for the
compensation cost of employee stock options in the financial statements.
Had the Company determined compensation cost based on the fair value at
the date of grant 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) 1998 1997 1996
- --------------------------------------------------------------------
Net earnings:
As reported $20,024 $2,780 $24,075
Pro forma 19,265 2,370 23,519
Basic earnings per share:
As reported $ 1.09 $ .15 $ 1.33
Pro forma 1.05 .13 1.30
- --------------------------------------------------------------------
The following table contains information on stock options:
Option Price
Shares Per Share-Range
- ----------------------------------------------------------
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
Granted 583,066 18.19 - 27.69
Exercised (731,451) 16.75 - 28.06
Expired or canceled (40,150) 18.69 - 28.06
- ----------------------------------------------------------
Outstanding at
February 28, 1998 1,336,496 $16.00 - 29.00
==========================================================
Options exercisable at:
February 29, 1996 1,383,422 $16.06 - 29.00
February 28, 1997 1,321,281 $16.06 - 29.00
February 28, 1998 831,396 $16.00 - 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 $2.0
million in fiscal 1998, $2.1 million in fiscal 1997 and $1.8 million in
fiscal 1996.
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 credit for the defined benefit plans was as follows:
(in thousands) 1998 1997 1996
- --------------------------------------------------------------------
Service costs $ 2,492 $ 2,492 $ 1,946
Interest costs 12,883 12,438 12,767
Actual return on plan assets (45,148) (30,382) (39,431)
Net amortization and deferral 28,681 14,834 23,891
- --------------------------------------------------------------------
Net pension credit $(1,092) $ (618) $ (827)
====================================================================
The funded status of the defined benefit plans and the amounts
recognized in the balance sheets were as follows:
1998 1997
------------------- -------------------
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 $169,799 $ 15,355 $148,102 $ 11,169
Nonvested 3,408 663 2,753 1,926
- ------------------------------------------------------------------------
Accumulated benefit
obligations 173,207 16,018 150,855 13,095
Effect of future
salary increases 4,402 - 6,227 351
- ------------------------------------------------------------------------
Projected benefit
obligations 177,609 16,018 157,082 13,446
Plan assets at
fair value 231,032 - 202,131 -
- ------------------------------------------------------------------------
Plan assets in
excess of (less
than) projected
benefit obligations 53,423 (16,018) 45,049 (13,446)
Unamortized prior
service cost 4,864 - 5,217 -
Unrecognized effect
from past experience
different from that
assumed (21,119) 5,744 (13,899) 4,145
Unrecognized transition
(assets) obligations,
net of amortization (7,663) - (9,428) -
Adjustment required
to recognize minimum
pension liability - (5,744) - (3,794)
- ------------------------------------------------------------------------
Prepaid (accrued)
pension costs $ 29,505 $(16,018) $ 26,939 $(13,095)
=========================================================================
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:
1998 1997
- -----------------------------------------------------------------------
Discount rate 6.7% 7.6%
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 $3.6 million
in fiscal 1998, $2.9 million in fiscal 1997 and $3.8 million in fiscal
1996.
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) 1998 1997 1996
- ---------------------------------------------------------------------
Service costs $ 356 $ 474 $ 222
Interest costs 1,154 1,351 999
Net amortization and deferral (861) (1,417) (1,785)
- ---------------------------------------------------------------------
Net post-retirement
benefits cost (credit) $ 649 $ 408 $ (564)
=====================================================================
In addition to the net post-retirement benefit cost, the Company
recorded a $2.9 million curtailment gain in fiscal 1998. The
curtailment gain resulted from the Company's decision to eliminate
subsidized retiree medical coverage for most of its active employees in
the United States. Employees affected by this change who meet certain
age and service requirements at the time of retirement can elect
coverage under Company-sponsored retiree medical plans by paying the
full cost of such plans.
The actuarial present value of benefit obligations and the amounts
recognized in the consolidated balance sheets were as follows:
(in thousands) 1998 1997
- -------------------------------------------------------------------
Actuarial present value of benefit obligations:
Retirees $11,159 $12,952
Fully eligible active plan participants 1,137 1,640
Other active plan participants 1,515 3,930
- -------------------------------------------------------------------
Accumulated benefit obligations 13,811 18,522
Plan assets at fair value - 535
- -------------------------------------------------------------------
Accumulated obligation in excess of plan assets 13,811 17,987
Unrecognized effect from past experience
different from that assumed 220 (1,319)
Unrecognized effect from plan amendments (348) 443
- -------------------------------------------------------------------
Accrued post-retirement cost $13,683 $17,111
===================================================================
The assumed annual rate of future increases in per capita cost of
health-care benefits ranged from 4% to 8.8% for each of the next five
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 6.8% and 7.6% in fiscal 1998 and 1997, respectively.
Note 17: Multifoods' Business Segments
The Company's business segments are Multifoods Distribution Group, North
America Foods, Venezuela Foods and Divested Businesses. In fiscal 1998,
the Company changed the name of its Foodservice Distribution segment to
Multifoods Distribution Group. In addition, the Company changed the
reporting of its former food exporting business results from the
Multifoods Distribution Group to the Divested Businesses segment.
Fiscal 1997 and 1996 segment financial information has been reclassified
to conform with the fiscal 1998 presentation.
Multifoods Distribution Group includes the Company's vending and
foodservice distribution businesses. The foodservice distribution
business was formerly referred to as limited-menu distribution. The
vending distribution business is the largest U.S. distributor of food
products to vending and office coffee service operators. The
foodservice distribution business is a distributor in the United States
to foodservice operators. The foodservice business distributes a broad
selection of items, including food products, paper goods and cleaning
supplies.
North America Foods consists of two groups, U.S. Foods and Robin Hood
Multifoods. U.S. Foods markets bakery products, such as bakery mixes
and frozen desserts, to commercial customers in the United States.
Robin Hood Multifoods sells flour, bakery mixes and condiments to
consumer and commercial customers primarily in Canada. As of February
28, 1998, the Company had approximately $84 million of net assets
located in Canada.
Venezuela Foods includes consumer foods, commercial foods and animal
feeds. The business provides grain-based products to consumers, food
processors, and commercial and retai bakeries. Principal 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, 1998, the Company had approximately $70 million of net
assets located in Venezuela.
Divested Businesses consists of the surimi seafood business, which was
divested in fiscal 1996, and the food exporting business, which was
divested in fiscal 1998.
<TABLE>
<CAPTION>
Operating
Net Operating Unusual Earnings
(in millions) Sales Costs Items (Loss)
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1998:
Multifoods Distribution Group $1,770.2 $(1,746.5) $ - $ 23.7
North America Foods 471.7 (441.1) - 30.6
Venezuela Foods 360.7 (360.9) - (.2)
Divested Business 9.2 (4.8) (5.0) (.6)
Corporate Expenses - (8.7) - (8.7)
- ----------------------------------------------------------------------------
Total $2,611.8 $(2,562.0) $ (5.0) $ 44.8
============================================================================
1997:
Multifoods Distribution Group $1,729.9 $(1,725.0) $ (5.1) $ (.2)
North America Foods 476.7 (455.9) (11.4) 9.4
Venezuela Foods 346.8 (328.2) - 18.6
Divested Business 42.5 (34.8) - 7.7
Corporate Expenses - (9.8) (3.6) (13.4)
- ----------------------------------------------------------------------------
Total $2,595.9 $(2,553.7) $(20.1) $ 22.1
============================================================================
1996:
Multifoods Distribution Group $1,691.6 $(1,673.5) $ (9.4) $ 8.7
North America Foods 459.7 (438.9) - 20.8
Venezuela Foods 328.5 (309.4) - 19.1
Divested Businesses 43.4 (36.7) 9.9 16.6
Corporate Expenses - (8.9) (6.2) (15.1)
- ----------------------------------------------------------------------------
Total $2,523.2 $(2,467.4) $ (5.7) $ 50.1
============================================================================
</TABLE>
<TABLE>
<CAPTION>
1998 1997 1996
---------------------------------- ---------------------------------- ----------------------------------
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>
Multifoods
Distribution
Group $ 5.4 $12.6 $341.4 $ 7.2 $12.9 $372.9 $13.9 $13.2 $392.5
North America Foods 6.5 11.0 217.2 14.0 10.7 234.7 12.0 10.0 241.8
Venezuela Foods 7.5 6.7 205.2 5.8 6.7 191.8 5.0 5.2 125.8
Divested Businesses - - 18.9 .1 - 64.5 .1 .9 23.4
Corporate 6.7 .4 44.7 .4 .4 51.4 .2 .5 38.8
- --------------------------------------------------------------------------------------------------------------------------------
Total $26.1 $30.7 $827.4 $27.5 $30.7 $915.3 $31.2 $29.8 $822.3
================================================================================================================================
</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>
<CAPTION>
Note 18: Quarterly Summary (unaudited)
Operating
Net Operating Unusual Earnings
(in millions) Sales Costs Items (Loss)
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
First Quarter - 1998
Multifoods Distribution Group $446.7 $(443.2) $ - $ 3.5
North America Foods 115.5 (112.5) - 3.0
Venezuela Foods 102.3 (99.5) - 2.8
Divested Business 2.7 (2.1) - .6
Corporate Expenses - (2.4) - (2.4)
- -----------------------------------------------------------------------------
Total $667.2 $(659.7) $ - $ 7.5
=============================================================================
First Quarter - 1997
Multifoods Distribution Group $425.3 $(421.9) $ - $ 3.4
North America Foods 111.6 (109.5) - 2.1
Venezuela Foods 71.2 (69.1) - 2.1
Divested Business 18.0 (16.3) - 1.7
Corporate Expenses - (2.7) (3.6) (6.3)
- -----------------------------------------------------------------------------
Total $626.1 $(619.5) $ (3.6) $ 3.0
=============================================================================
Second Quarter - 1998
Multifoods Distribution Group $422.2 $(417.1) $ - $ 5.1
North America Foods 116.7 (111.4) - 5.3
Venezuela Foods 87.6 (89.0) - (1.4)
Divested Business 2.7 (.6) - 2.1
Corporate Expenses - (1.8) - (1.8)
- -----------------------------------------------------------------------------
Total $629.2 $(619.9) $ - $ 9.3
=============================================================================
Second Quarter - 1997
Multifoods Distribution Group $424.6 $(425.3) $ - $ (.7)
North America Foods 114.4 (110.8) - 3.6
Venezuela Foods 87.4 (78.5) - 8.9
Divested Business 8.1 (7.0) - 1.1
Corporate Expenses - (2.6) - (2.6)
- -----------------------------------------------------------------------------
Total $634.5 $(624.2) $ - $ 10.3
=============================================================================
Third Quarter - 1998
Multifoods Distribution Group $456.8 $(449.0) $ - $ 7.8
North America Foods 133.4 (119.4) - 14.0
Venezuela Foods 83.2 (86.0) - (2.8)
Divested Business 3.4 (2.1) - 1.3
Corporate Expenses - (2.2) - (2.2)
- -----------------------------------------------------------------------------
Total $676.8 $(658.7) $ - $ 18.1
=============================================================================
Third Quarter - 1997
Multifoods Distribution Group $452.6 $(450.9) $ - $ 1.7
North America Foods 139.7 (130.4) - 9.3
Venezuela Foods 95.9 (90.6) - 5.3
Divested Business 8.9 (6.0) - 2.9
Corporate Expenses - (2.3) - (2.3)
- -----------------------------------------------------------------------------
Total $697.1 $(680.2) $ - $ 16.9
=============================================================================
Fourth Quarter - 1998
Multifoods Distribution Group $444.5 $(437.2) $ - $ 7.3
North America Foods 106.1 (97.8) - 8.3
Venezuela Foods 87.6 (86.4) - 1.2
Divested Business .4 - (5.0) (4.6)
Corporate Expenses - (2.3) - (2.3)
- -----------------------------------------------------------------------------
Total $638.6 $(623.7) $ (5.0) $ 9.9
=============================================================================
Fourth Quarter - 1997
Multifoods Distribution Group $427.4 $(426.9) $ (5.1) $ (4.6)
North America Foods 111.0 (105.2) (11.4) (5.6)
Venezuela Foods 92.3 (90.0) - 2.3
Divested Business 7.5 (5.5) - 2.0
Corporate Expenses - (2.2) - (2.2)
- -----------------------------------------------------------------------------
Total $638.2 $(629.8) $(16.5) $ (8.1)
=============================================================================
</TABLE>
<TABLE>
<CAPTION>
Note 18: Quarterly Summary (unaudited) (continued)
First Quarter Second Quarter Third Quarter Fourth Quarter Total Year
(in millions, ------------- -------------- ------------- -------------- --------------
except per share data) 1998 1997 1998 1997 1998 1997 1998 1997 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross profit $52.8 $48.9 $48.4 $53.2 $58.4 $61.2 $50.7 $49.4 $210.3 $212.7
Net earnings (loss) 2.0 (.4)(b) 4.5 4.0 9.4 8.6 4.1(c) (9.4)(d) 20.0 2.8
Earnings (loss) per
share of common stock (a):
Basic .11 (.02)(b) .25 .22 .51 .48 .22(c) (.53)(d) 1.09 .15
Diluted .11 (.02)(b) .25 .22 .50 .48 .21(c) (.53)(d) 1.08 .15
Dividends paid per share
of common stock .20 .20 .20 .20 .20 .20 .20 .20 .80 .80
Market price of
common stock:
Close 28 1/4 19 7/8 26 7/8 16 5/8 26 7/8 15 3/4 27 15/16 21 1/8 27 15/16 21 1/8
High 28 1/4 21 3/8 29 3/8 20 3/8 32 7/16 17 1/2 29 1/4 22 32 7/16 22
Low 20 18 1/4 24 1/2 16 1/4 26 3/16 15 1/8 24 5/8 15 5/8 20 15 1/8
- ---------------------------------------------------------------------------------------------------------------------------
<FN>
(a) Earnings (loss) per share are computed independently for each period
presented. As a result of the effect of common shares issued from
the exercise of employee stock options, the total of diluted per
share results for the four quarters does not equal annual diluted
earnings per share in fiscal 1998.
(b) Includes a net after-tax charge of $2.2 million, or 12 cents per
share, from unusual items.
(c) Includes a net after-tax charge of $3.2 million, or 17 cents per
share, from unusual items. Also includes a net after-tax gain of
$1.8 million, or 10 cents per share, from the elimination of
subsidized retire medical coverage for most active employees in the
United States.
(d) Includes a net after-tax charge of $12.6 million, or 71 cents per
share, from unusual items.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Six-Year Comparative Summary
Fiscal year ended the last day of February
(dollars and shares in millions, except per share data) 1998 1997 1996 1995 1994 1993
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Consolidated Summary of Operations
Net sales $2,611.8 $2,595.9 $2,523.2 $2,295.1 $2,158.4 $2,199.2
Cost of materials and production (2,237.6) (2,215.4) (2,135.7) (1,901.9) (1,743.9) (1,783.4)
Delivery and distribution (163.9) (167.8) (162.9) (146.2) (141.8) (141.7)
Selling, general and administrative (160.5) (170.5) (168.8) (186.7) (204.9) (199.0)
Unusual items (5.0) (20.1) (5.7) 26.2 (70.0) -
Interest, net (12.4) (16.8) (17.9) (11.4) (10.1) (10.9)
Other income (expense), net - (.3) (4.4) (3.4) (.4) .1
Earnings (losses) from unconsolidated affiliates - - - - (12.2) 1.8
- --------------------------------------------------------------------------------------------------------------------------------
Earnings (loss) before income taxes 32.4 5.0 27.8 71.7 (24.9) 66.1
Income taxes (12.4) (2.2) (3.7) (14.7) 11.5 (24.9)
- --------------------------------------------------------------------------------------------------------------------------------
Net earnings (loss) $ 20.0 $ 2.8 $ 24.1 $ 57.0 $ (13.4) $ 41.2
================================================================================================================================
Earnings (loss) per share of common stock:
Basic $ 1.09 $ .15 $ 1.33 $ 3.16 $ (.72) $ 2.13
Diluted 1.08 .15 1.32 3.16 (.72) 2.10
- --------------------------------------------------------------------------------------------------------------------------------
Year-End Financial Position
Current assets $ 484.4 $ 563.3 $ 459.0 $ 471.7 $ 439.3 $ 415.9
Current liabilities 312.4 372.0 272.3 316.0 301.7 243.5
Working capital (excluding cash and short-term debt) 187.7 277.5 218.8 203.1 189.7 187.9
Property, plant and equipment, net 220.6 225.4 226.5 228.0 245.9 245.7
Long-term debt 162.9 202.3 202.9 183.1 195.1 167.0
Shareholders' equity 309.4 289.6 299.6 291.1 250.0 322.0
Total assets 827.4 915.3 822.3 846.7 814.8 803.5
- --------------------------------------------------------------------------------------------------------------------------------
Dividends Paid
Preferred stock $ - $ - $ .1 $ .2 $ .2 $ .2
Common stock 14.7 14.5 14.4 14.4 15.2 15.4
Per share of common stock .80 .80 .80 .80 .80 .80
- --------------------------------------------------------------------------------------------------------------------------------
Other Financial Data
Current ratio 1.6:1 1.5:1 1.7:1 1.5:1 1.5:1 1.7:1
Equity per share of common stock $ 16.51 $ 16.08 $ 16.66 $ 16.16 $ 13.63 $ 16.64
Debt to total capitalization 38% 51% 45% 45% 50% 37%
Depreciation $ 27.0 $ 26.6 $ 25.3 $ 22.8 $ 24.9 $ 23.8
Capital expenditures, excluding acquisitions $ 26.1 $ 27.5 $ 31.2 $ 30.8 $ 51.9 $ 45.7
Average common shares outstanding:
Basic 18.4 18.0 18.0 18.0 18.9 19.3
Diluted 18.6 18.0 18.0 18.0 18.9 19.5
Number of common shareholders 4,705 5,087 4,930 5,234 4,939 5,097
Number of employees 6,807 7,176 7,115 7,495 8,390 8,341
Market price per share of common stock:
Close $ 27 15/16 $ 21 1/8 $ 18 5/8 $ 18 5/8 $ 17 3/8 $ 25 3/4
High $ 32 7/16 $ 22 $ 23 7/8 $ 19 5/8 $ 26 3/8 $ 28 7/8
Low $ 20 $ 15 1/8 $ 17 1/4 $ 15 1/8 $ 16 3/4 $ 23 1/4
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Exhibit 21
SUBSIDIARIES OF INTERNATIONAL MULTIFOODS CORPORATION
The following is a list of the Company's subsidiaries as of March
1, 1998, 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 Distribution Group, 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 Statement No.
333-51399 on Form S-8 relating to the Employees' Voluntary Investment
and Savings Plan of International Multifoods Corporation, No. 333-34173
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, No. 333-34171 on Form S-8 relating
to the 1997 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
March 30, 1998, relating to the consolidated balance sheets of
International Multifoods Corporation and subsidiaries as of
February 28, 1998 and 1997 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, 1998, which reports appear or are incorporated by
reference in the Annual Report on Form 10-K for the fiscal year ended
February 28, 1998, of International Multifoods Corporation.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
May 13, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED BALANCE SHEET, STATEMENT 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-28-1998
<PERIOD-END> FEB-28-1998
<CASH> 10,363
<SECURITIES> 0
<RECEIVABLES> 148,947
<ALLOWANCES> 4,746
<INVENTORY> 265,989
<CURRENT-ASSETS> 484,404
<PP&E> 372,085
<DEPRECIATION> 151,518
<TOTAL-ASSETS> 827,386
<CURRENT-LIABILITIES> 312,423
<BONDS> 162,857
0
0
<COMMON> 2,184
<OTHER-SE> 307,169
<TOTAL-LIABILITY-AND-EQUITY> 827,386
<SALES> 2,611,792
<TOTAL-REVENUES> 2,611,792
<CGS> 2,401,501
<TOTAL-COSTS> 2,401,501
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (228)
<INTEREST-EXPENSE> 17,643
<INCOME-PRETAX> 32,395
<INCOME-TAX> 12,371
<INCOME-CONTINUING> 20,024
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,024
<EPS-PRIMARY> 1.09
<EPS-DILUTED> 1.08
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED BALANCE SHEET, STATEMENTS OF EARNINGS AND CASH FLOWS AND
ACCOMPANYING NOTES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS AND NOTES.
</LEGEND>
<RESTATED>
<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> 2,383,154
<TOTAL-COSTS> 2,383,154
<OTHER-EXPENSES> 0
<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> 0.15
<EPS-DILUTED> 0.15
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED BALANCE SHEET, STATEMENTS OF EARNINGS AND CASH FLOWS AND
ACCOMPANYING NOTES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS AND NOTES.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-END> FEB-29-1996
<CASH> 7,508
<SECURITIES> 0
<RECEIVABLES> 179,504
<ALLOWANCES> 13,977
<INVENTORY> 230,626
<CURRENT-ASSETS> 459,035
<PP&E> 341,958
<DEPRECIATION> 115,460
<TOTAL-ASSETS> 822,257
<CURRENT-LIABILITIES> 272,295
<BONDS> 202,937
0
0
<COMMON> 2,184
<OTHER-SE> 297,379
<TOTAL-LIABILITY-AND-EQUITY> 822,257
<SALES> 2,523,197
<TOTAL-REVENUES> 2,523,197
<CGS> 2,298,577
<TOTAL-COSTS> 2,298,577
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 5,783
<INTEREST-EXPENSE> 19,485
<INCOME-PRETAX> 27,754
<INCOME-TAX> 3,679
<INCOME-CONTINUING> 24,075
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 24,075
<EPS-PRIMARY> 1.33
<EPS-DILUTED> 1.32
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CO
NSOLIDATED CONDENSED BALANCE SHEET, STATEMENTS OF EARNINGS AND CASH FLOWS
AND ACCOMPANYING NOTES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS AND NOTES.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-28-1998
<PERIOD-END> MAY-31-1997
<CASH> 8,939
<SECURITIES> 0
<RECEIVABLES> 184,185
<ALLOWANCES> 6,926
<INVENTORY> 280,248
<CURRENT-ASSETS> 530,796
<PP&E> 359,406
<DEPRECIATION> 137,403
<TOTAL-ASSETS> 878,522
<CURRENT-LIABILITIES> 358,821
<BONDS> 178,834
0
0
<COMMON> 2,184
<OTHER-SE> 286,799
<TOTAL-LIABILITY-AND-EQUITY> 878,522
<SALES> 667,186
<TOTAL-REVENUES> 667,186
<CGS> 614,344
<TOTAL-COSTS> 614,344
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 845
<INTEREST-EXPENSE> 5,413
<INCOME-PRETAX> 2,857
<INCOME-TAX> 857
<INCOME-CONTINUING> 2,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,000
<EPS-PRIMARY> 0.11
<EPS-DILUTED> 0.11
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED BALANCE SHEET, STATEMENTS OF EARNINGS AND CASH FLOWS AND
ACCOMPANYING NOTES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS AND NOTES.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-28-1998
<PERIOD-END> AUG-31-1997
<CASH> 5,568
<SECURITIES> 0
<RECEIVABLES> 165,572
<ALLOWANCES> 6,552
<INVENTORY> 269,622
<CURRENT-ASSETS> 498,830
<PP&E> 362,453
<DEPRECIATION> 143,214
<TOTAL-ASSETS> 842,982
<CURRENT-LIABILITIES> 316,697
<BONDS> 178,769
0
0
<COMMON> 2,184
<OTHER-SE> 293,064
<TOTAL-LIABILITY-AND-EQUITY> 842,982
<SALES> 1,296,399
<TOTAL-REVENUES> 1,296,399
<CGS> 1,195,168
<TOTAL-COSTS> 1,195,168
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 183
<INTEREST-EXPENSE> 9,949
<INCOME-PRETAX> 9,341
<INCOME-TAX> 2,802
<INCOME-CONTINUING> 6,539
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,539
<EPS-PRIMARY> 0.36
<EPS-DILUTED> 0.36
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED BALANCE SHEET, STATEMENTS OF EARNINGS AND CASH FLOWS AND
ACCOMPANYING NOTES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS AND NOTES.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-28-1998
<PERIOD-END> NOV-30-1997
<CASH> 9,118
<SECURITIES> 0
<RECEIVABLES> 173,863
<ALLOWANCES> 6,518
<INVENTORY> 305,682
<CURRENT-ASSETS> 549,034
<PP&E> 368,900
<DEPRECIATION> 148,156
<TOTAL-ASSETS> 890,178
<CURRENT-LIABILITIES> 350,352
<BONDS> 178,001
0
0
<COMMON> 2,184
<OTHER-SE> 305,723
<TOTAL-LIABILITY-AND-EQUITY> 890,178
<SALES> 1,973,202
<TOTAL-REVENUES> 1,973,202
<CGS> 1,813,660
<TOTAL-COSTS> 1,813,660
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 94
<INTEREST-EXPENSE> 14,111
<INCOME-PRETAX> 25,317
<INCOME-TAX> 9,367
<INCOME-CONTINUING> 15,950
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,950
<EPS-PRIMARY> 0.87
<EPS-DILUTED> 0.86
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED BALANCE SHEET, STATEMENTS OF OPERATIONS AND CASH FLOWS
AND ACCOMPANYING NOTES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS AND NOTES.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-END> MAY-31-1996
<CASH> 9,590
<SECURITIES> 0
<RECEIVABLES> 166,676
<ALLOWANCES> 9,925
<INVENTORY> 252,275
<CURRENT-ASSETS> 472,044
<PP&E> 343,139
<DEPRECIATION> 118,743
<TOTAL-ASSETS> 832,700
<CURRENT-LIABILITIES> 285,337
<BONDS> 203,094
0
0
<COMMON> 2,184
<OTHER-SE> 293,572
<TOTAL-LIABILITY-AND-EQUITY> 832,700
<SALES> 626,073
<TOTAL-REVENUES> 626,073
<CGS> 577,189
<TOTAL-COSTS> 577,189
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 767
<INTEREST-EXPENSE> 4,380
<INCOME-PRETAX> (1,082)
<INCOME-TAX> (649)
<INCOME-CONTINUING> (433)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (433)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED BALANCE SHEET, STATEMENTS OF EARNINGS AND CASH FLOWS AND
ACCOMPANYING NOTES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS AND NOTES.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-END> AUG-31-1996
<CASH> 5,315
<SECURITIES> 0
<RECEIVABLES> 167,845
<ALLOWANCES> 9,468
<INVENTORY> 256,471
<CURRENT-ASSETS> 475,141
<PP&E> 351,241
<DEPRECIATION> 123,630
<TOTAL-ASSETS> 837,731
<CURRENT-LIABILITIES> 288,710
<BONDS> 203,154
0
0
<COMMON> 2,184
<OTHER-SE> 294,488
<TOTAL-LIABILITY-AND-EQUITY> 837,731
<SALES> 1,260,572
<TOTAL-REVENUES> 1,260,572
<CGS> 1,158,491
<TOTAL-COSTS> 1,158,491
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2,376
<INTEREST-EXPENSE> 8,918
<INCOME-PRETAX> 4,625
<INCOME-TAX> 1,063
<INCOME-CONTINUING> 3,562
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,562
<EPS-PRIMARY> 0.20
<EPS-DILUTED> 0.20
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED BALANCE SHEET, STATEMENTS OF EARNINGS AND CASH FLOWS AND
ACCOMPANYING NOTES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS AND NOTES.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-END> NOV-30-1996
<CASH> 11,128
<SECURITIES> 0
<RECEIVABLES> 186,584
<ALLOWANCES> 9,924
<INVENTORY> 332,538
<CURRENT-ASSETS> 577,783
<PP&E> 357,471
<DEPRECIATION> 129,845
<TOTAL-ASSETS> 941,832
<CURRENT-LIABILITIES> 382,268
<BONDS> 203,733
0
0
<COMMON> 2,184
<OTHER-SE> 300,358
<TOTAL-LIABILITY-AND-EQUITY> 941,832
<SALES> 1,957,704
<TOTAL-REVENUES> 1,957,704
<CGS> 1,794,457
<TOTAL-COSTS> 1,794,457
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 3,009
<INTEREST-EXPENSE> 13,349
<INCOME-PRETAX> 16,963
<INCOME-TAX> 4,765
<INCOME-CONTINUING> 12,198
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,198
<EPS-PRIMARY> 0.68
<EPS-DILUTED> 0.68
</TABLE>
