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 29, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission File Number
1-6699
INTERNATIONAL MULTIFOODS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 41-0871880
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
200 East Lake Street, Wayzata, Minnesota 55391
(Address of principal executive offices) (Zip Code)
(952) 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 10-K or any amendment to this Form 10-K. [X]
The aggregate market value of Common Stock, par value $.10 per
share, held by non-affiliates of the registrant (see Item 12 hereof) as
of May 1, 2000 (based on the closing sale price of $13.4375 per share as
reported in the consolidated transaction reporting system on such date)
was $240,590,106.
The number of shares outstanding of the registrant's Common Stock,
par value $.10 per share, as of May 1, 2000 was 18,735,913.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Annual Report to Stockholders -
Financial Review for the fiscal year ended February 29, 2000 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 16, 2000 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 a
foodservice distribution business in the United States and food
manufacturing businesses in the United States and Canada. 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 August 1999, the
Company completed the sale of its Venezuela Foods business. The Company
has classified the Venezuela Foods business as a discontinued operation.
The Company's business segments are Multifoods Distribution Group
and North America Foods. Financial information for the last three
fiscal years for each of the Company's business segments, which is
included in Note 16 to the Company's Consolidated Financial Statements
on pages 22 and 23 of the Company's Annual Report to Stockholders -
Financial Review for the fiscal year ended February 29, 2000 ("2000
Annual Report to Stockholders - Financial Review"), is incorporated
herein by reference.
Multifoods Distribution Group
The Multifoods Distribution Group segment is a distributor of food
and other products to the foodservice industry in the United States.
The Company leases or owns a fleet of approximately 425 tractors, 500
trailers and 50 straight trucks, most of which are equipped with an on
board computer system from which drivers obtain delivery performance and
route information. The Company operates 31 distribution centers located
nationwide. The Company also operates 19 cash and carry locations from
which customers can make purchases. No single customer accounts for a
significant portion of the segment's sales. Deliveries are made
directly to customers, generally once a week, from distribution centers
located nationwide.
The Company is a distributor of food and other products in the
United States to independent pizza restaurants and other casual-dining,
limited-menu operators, including sandwich shops, Mexican and Italian
restaurants, movie theaters, fund-raising groups, commissaries and
stadium and recreational concession stands. 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. The Company is
also the largest U.S. vending distributor, serving approximately 13,000
vending and office coffee service operators and other concessionaires.
The Company distributes and sells more than 5,000 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. Through its Better Brands, Inc. subsidiary, the Company also
operates a broadline distribution business out of its Windsor,
Connecticut distribution center. The Company distributes a broad
selection of food and other products to restaurants and other
foodservice operators such as universities and schools, health care
institutions and casinos.
The 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. While the Company is the only nationwide
vending distributor, it encounters significant competition from regional
and local distributors as well as warehouse clubs. 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. No single customer accounts for a significant
portion of the segment's sales.
U.S. Foods. The U.S. Foods unit produces approximately 1,400
products for retail, wholesale and in-store 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 batters, doughs and 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
foodservice operators and retail and in-store bakeries in the United
States 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 consists of
the Company's Canada consumer and commercial foods businesses. 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, GOLDEN TEMPLE, 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. In
addition, the Company 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 the HABITANT,
GATTUSO, WOODMAN'S, ROSE and MCLARENS labels. The commercial foods
business produces condiments, bakery mix products, wheat flour and oat
products for retail, in-store and wholesale bakeries and foodservice
customers in Canada and the United States. Such products are sold under
the Company's ROBIN HOOD and BICK'S brands. The Company also
manufactures and markets frozen batters, doughs and desserts in Canada
under its GOURMET BAKER 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.
Discontinued Operations
The Company completed the sale of its Venezuela Foods business in
August 1999. The Company, however, retained certain Venezuelan
receivables and properties, which are expected to be collected or
liquidated over the next 12-18 months.
Other Information Relating to the Business of the Company
Sources of Supply and Raw Materials. The Company's 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's 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 segment, 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 8 to the Company's
Consolidated Financial Statements which are incorporated by reference in
Part II, Item 8, hereof.
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 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 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.
Employees. As of February 29, 2000, the Company and its
subsidiaries had 4,362 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 or
weather conditions that may affect the costs of grain, cheese, other raw
materials and fuel; changes in laws and regulations; fluctuations in
interest rates; the Company's ability to realize the book value of its
remaining Venezuelan assets; the Company's ability to reduce delivery
and distribution costs and realize the earnings benefits related to the
distribution group's consolidation and expansion plans; the inability of
the Company to collect on a $6 million insurance claim related to the
theft of product in 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 and
Canada. The Company believes that its facilities are suitable and
adequate for current production or distribution volumes. The following
is a description of the Company's properties as of February 29, 2000.
Multifoods Distribution Group
The Company owns 12 and leases 19 distribution centers aggregating
approximately 2.8 million square feet for its Multifoods Distribution
Group segment. These distribution centers are located in Tempe,
Arizona; Anaheim, Fremont, Livermore, Modesto and Ontario, California;
Denver, Colorado; East Windsor and Windsor, Connecticut; Kissimmee,
Florida; Austell, Georgia; Boise, Idaho; Woodridge, Illinois;
Indianapolis, Indiana; Shawnee, Kansas; Louisville, Kentucky;
Belleville, Michigan; Maple Grove and Rice, Minnesota; Springfield,
Missouri; Paulsboro and Parsippany, New Jersey; Greensboro, North
Carolina; Twinsburg, Ohio; Portland, Oregon; Middletown, Pennsylvania;
Memphis, Tennessee; Dallas(2) and Houston, Texas; and Kent, Washington.
The Company's distribution business also operates 19 cash-and-carry
distribution locations, 10 of which are separate from the Company's
other distribution centers.
North America Foods
The Company owns 14 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, Delhi Township, Port Colborne, Scarborough and
Simcoe, Ontario; Montreal, Quebec (2); and Saskatoon, Saskatchewan.
The Company also operates two research and development
laboratories.
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 29,
2000.
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
17 to the Company's Consolidated Financial Statements on pages 24 and 25
of the 2000 Annual Report to Stockholders - Financial Review, are
incorporated herein by reference.
As of May 1, 2000, there were 4,403 holders of record of the Common
Stock of the Company.
Item 6. Selected Financial Data.
The information for fiscal years 1996 through 2000 in the "Five-
Year Comparative Summary" on page 3 of the 2000 Annual Report to
Stockholders - Financial Review under the headings "Consolidated Summary
of Operations," "Year-End Financial Position" and "Dividends Paid" is
incorporated herein by reference. The information contained in Note 2
("Business Acquired"), Note 3 ("Discontinued Operations") and Note 5
("Unusual Items") to the Company's Consolidated Financial Statements on
pages 14 through 16 of the 2000 Annual Report to Stockholders -
Financial Review 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" on pages 4 through 7 of the 2000 Annual Report to Stockholders
- - Financial Review is incorporated herein by reference.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
The section under the heading "Management's Discussion and
Analysis" entitled "Market Risk Management" on page 7 of the 2000 Annual
Report to Stockholders - Financial Review is incorporated herein by
reference.
Item 8. Financial Statements and Supplementary Data.
The Independent Auditors' Report, the Company's Consolidated
Financial Statements as of February 29, 2000 and February 28, 1999, and
for each of the fiscal years in the three-year period ended February 29,
2000, and the Notes to the Company's Consolidated Financial Statements
on pages 8 through 25 of the 2000 Annual Report to Stockholders -
Financial Review 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 5
through 10 and the section entitled "Section 16(a) Beneficial Ownership
Reporting Compliance" on page 23 of the Company's Proxy Statement dated
May 10, 2000 ("2000 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, 2000. Unless otherwise noted, the positions
described are positions with the Company or its subsidiaries.
Name Age Positions Held Period
Gary E. Costley 56 Chairman of the Board, President January 1997
and Chief Executive Officer to present
Dean of the Babcock Graduate 1995 to 1996
School of Management at
Wake Forest University
Executive Vice President of 1992 to 1994
Kellogg Company and
President, Kellogg North America
Jeffrey E. Boies 55 Vice President and President, April 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 58 Vice President, General Counsel 1992 to
and Secretary present
John E. Byom 46 Vice President - Finance and March 2000
Chief Financial Officer to present
President, U.S. Foods 1999 to 2000
Vice President - Finance, 1995 to 1999
North America Foods
Ralph P. Hargrow 48 Vice President, Human May 1999
Resources to present
Senior Vice President - 1994 to 1998
Human Resources &
Administration of
Rollerblade, Inc.
Dennis R. Johnson 48 Vice President and Controller December 1995
to present
Assistant Controller - 1993 to 1995
Operations and Tax
Gregory J. Keup 41 Vice President and Treasurer March 2000
to present
Assistant Treasurer 1996 to 2000
Director - Treasury Operations 1991 to 1996
Jill W. Schmidt 41 Vice President, Communications March 2000
and Investor Relations to present
Vice President, Communications 1997 to 2000
Vice President of 1995 to 1997
Tunheim Santrizos Co.
Account Supervisor of 1992 to 1995
Tunheim Santrizos Co.
Donald H. Twiner 59 Vice President and President, June 1999
Robin Hood Multifoods Inc. to present
President, 1997 to 1999
Robin Hood Multifoods Inc.
President - Consumer Foods 1989 to 1997
Division of
Robin Hood Multifoods Inc.
Robert S. Wright 53 Senior Vice President August 1999
and President, to present
U.S. Foodservice Operations
Vice President and President, 1995 to 1999
North America Foods
President, Specialty Brands 1994 to 1995
Division of Foodbrands
America, Inc.
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 9 and 10 and the section entitled
"Executive Compensation" on pages 14 through 21 of the 2000 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 3 through 5 of the 2000 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 2000 Annual Report to Stockholders -
Financial Review, are incorporated by reference in Part II, Item 8,
hereof:
Independent Auditors' Report
Consolidated Statements of Operations - Years ended
February 29, 2000, February 28, 1999 and
February 28, 1998
Consolidated Balance Sheets - February 29, 2000 and
February 28, 1999
Consolidated Statements of Cash Flows - Years ended
February 29, 2000, February 28, 1999 and
February 28, 1998
Consolidated Statements of Shareholders' Equity - Years ended
February 29, 2000, February 28, 1999 and
February 28, 1998
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
2.1 Stock Purchase Agreement, dated as of August 6, 1999, by
and between International Multifoods Corporation and Gruma S.A. de C.V.,
including Note Purchase Agreement attached as Exhibit A thereto
(incorporated herein by reference to Exhibit 2.1 to the Company's
Current Report on Form 8-K dated August 18, 1999).
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.
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).
4.7 Amending Agreement dated as of November 1, 1999 among Robin
Hood Multifoods Inc., Multifoods Inc., various financial institutions
and Canadian Imperial Bank of Commerce, as Agent, amending the Credit
Agreement dated as of May 30, 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, as amended (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 and Exhibit 10.3 to the Company's Annual Report on
Form 10-K for the fiscal year ended February 28, 1998).*
10.3 Amended and Restated 1989 Stock-Based Incentive Plan of
International Multifoods Corporation (incorporated herein by reference
to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the
quarter ended August 31, 1993).*
10.4 1986 Stock Option Incentive Plan of International Multifoods
Corporation (incorporated herein by reference to Exhibit 4 to the
Company's Registration Statement on Form S-8 (Registration No. 33-
6223)).*
10.5 Management Incentive Plan of International Multifoods
Corporation, Amended and Restated as of March 1, 1998 (incorporated
herein by reference to Exhibit 10.7 to the Company's Annual Report on
From 10-K for the fiscal year ended February 28, 1998).*
10.6 Management Benefit Plan of International Multifoods
Corporation, Restated Effective January 1, 1997, as further amended
(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
and Exhibit 10.10 to the Company's Annual Report on Form 10-K for the
fiscal year ended February 28, 1998).*
10.7 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).*
10.8 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).*
10.9 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).*
10.10 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).*
10.11 Employment Agreement, dated as of November 1 1996, between
International Multifoods Corporation and Gary E. Costley, as amended
(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
and Exhibit 10.16 to the Company's Annual Report on Form 10-K for the
fiscal year ended February 28, 1998).*
10.12 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).*
10.13 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).*
10.14 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).*
10.15 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).*
10.16 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).*
10.17 Agreement, dated October 20, 1999, between Jeffrey E. Boies
and International Multifoods Corporation regarding retirement 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 November 30, 1999).*
10.18 Amendment to Agreement, dated March 23, 2000, between Jeffrey
E. Boies and International Multifoods Corporation.*
10.19 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).*
10.20 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).*
10.21 Memorandum of understanding, dated September 20, 1996, between
Frank W. Bonvino and International Multifoods Corporation regarding
supplemental retirement benefits (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, 1999).*
10.22 Amendment to Supplemental Retirement Agreement, dated March
23, 2000, between Frank W. Bonvino and International Multifoods
Corporation.*
10.23 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).*
10.24 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).*
10.25 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).*
10.26 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 2000 Annual Report to Stockholders - Financial Review (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 LLP.
27 Financial Data Schedule.
- -------------------------------
*Management contract or compensatory plan or arrangement required to be
filed as an exhibit to Form 10-K pursuant to Item 14(c) of this Report.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
February 29, 2000.
(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 16, 2000 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 16, 2000
Gary E. Costley, Ph.D. and Chief Executive Officer
(Principal Executive Officer)
and Director
/s/ John E. Byom Vice President - Finance, and May 16, 2000
John E. Byom Chief Financial Officer
(Principal Financial Officer)
/s/ Dennis R. Johnson Vice President and May 16, 2000
Dennis R. Johnson Controller
(Principal Accounting Officer)
/s/ Claire L. Arnold Director May 16, 2000
Claire L. Arnold
/s/ Robert M. Price Director May 16, 2000
Robert M. Price
/s/ Nicholas L. Reding Director May 16, 2000
Nicholas L. Reding
/s/ Jack D. Rehm Director May 16, 2000
Jack D. Rehm
/s/ Lois D. Rice Director May 16, 2000
Lois D. Rice
/s/ Richard K. Smucker Director May 16, 2000
Richard K. Smucker
/s/ Dolph W. von Arx Director May 16, 2000
Dolph W. von Arx
Independent Auditors' Report
----------------------------
The Board of Directors and Shareholders of
International Multifoods Corporation:
Under date of March 27, 2000, we reported on the consolidated balance
sheets of International Multifoods Corporation and subsidiaries as of
February 29, 2000 and February 28, 1999, and the related consolidated
statements of operations, cash flows and shareholders' equity for each
of the years in the three-year period ended February 29, 2000, as
contained in the 2000 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 29, 2000. In connection with our audits of the aforementioned
consolidated financial statements, we also have audited the related
consolidated financial statement schedule listed in Item 14. The
consolidated financial statement schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion on
the consolidated financial statement schedule based on our audits.
In our opinion, such consolidated financial statement schedule, when
considered in relation to the basic consolidated financial statements
taken as a whole, presents fairly, in all material respects, the
information set forth therein.
/s/ KPMG LLP
KPMG LLP
Minneapolis, Minnesota
March 27, 2000
<TABLE>
Schedule II
INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES
Valuation and Qualifying Accounts
Three years ended February 29, 2000
(in thousands)
Additions
--------------------
Balance at Net charges/(credits) Balance
beginning to costs and (Additions)/ at end
Description of year expenses Deductions of year
- ------------ --------- -------------------- ---------- -------
<S> <C> <C> <C> <C>
Allowance deducted from assets
for doubtful receivables:
Year ended February 29, 2000 $ 3,034 $1,847 $ (57) (a) $4,938
======= ====== ====== ======
Year ended February 28, 1999 $ 4,317 $ 713 $1,996 (a) $3,034
======= ====== ====== ======
Year ended February 28, 1998 $ 9,029 $ (430) $4,282 (a) $4,317
======= ====== ====== ======
</TABLE>
Note: (a) (Additions)/Deductions include accounts charged off, net of
recoveries, and foreign currency translation adjustments
which arise from changes in current rates of exchange.
INDEX TO EXHIBITS
TO ANNUAL REPORT ON FORM 10-K OF
INTERNATIONAL MULTIFOODS CORPORATION
FOR THE FISCAL YEAR ENDED FEBRUARY 29, 2000
2.1 Stock Purchase Agreement, dated as of August 6, 1999, by
and between International Multifoods Corporation and Gruma S.A. de C.V.,
including Note Purchase Agreement attached as Exhibit A thereto
(incorporated herein by reference to Exhibit 2.1 to the Company's
Current Report on Form 8-K dated August 18, 1999).
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.
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).
4.7 Amending Agreement dated as of November 1, 1999 among Robin
Hood Multifoods Inc., Multifoods Inc., various financial institutions
and Canadian Imperial Bank of Commerce, as Agent, amending the Credit
Agreement dated as of May 30, 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, as amended (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 and Exhibit 10.3 to the Company's Annual Report on
Form 10-K for the fiscal year ended February 28, 1998).*
10.3 Amended and Restated 1989 Stock-Based Incentive Plan of
International Multifoods Corporation (incorporated herein by reference
to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the
quarter ended August 31, 1993).*
10.4 1986 Stock Option Incentive Plan of International Multifoods
Corporation (incorporated herein by reference to Exhibit 4 to the
Company's Registration Statement on Form S-8 (Registration No. 33-
6223)).*
10.5 Management Incentive Plan of International Multifoods
Corporation, Amended and Restated as of March 1, 1998 (incorporated
herein by reference to Exhibit 10.7 to the Company's Annual Report on
From 10-K for the fiscal year ended February 28, 1998).*
10.6 Management Benefit Plan of International Multifoods
Corporation, Restated Effective January 1, 1997, as further amended
(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
and Exhibit 10.10 to the Company's Annual Report on Form 10-K for the
fiscal year ended February 28, 1998).*
10.7 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).*
10.8 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).*
10.9 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).*
10.10 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).*
10.11 Employment Agreement, dated as of November 1 1996, between
International Multifoods Corporation and Gary E. Costley, as amended
(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
and Exhibit 10.16 to the Company's Annual Report on Form 10-K for the
fiscal year ended February 28, 1998).*
10.12 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).*
10.13 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).*
10.14 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).*
10.15 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).*
10.16 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).*
10.17 Agreement, dated October 20, 1999, between Jeffrey E. Boies
and International Multifoods Corporation regarding retirement 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 November 30, 1999).*
10.18 Amendment to Agreement, dated March 23, 2000, between Jeffrey
E. Boies and International Multifoods Corporation.*
10.19 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).*
10.20 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).*
10.21 Memorandum of understanding, dated September 20, 1996, between
Frank W. Bonvino and International Multifoods Corporation regarding
supplemental retirement benefits (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, 1999).*
10.22 Amendment to Supplemental Retirement Agreement, dated March
23, 2000, between Frank W. Bonvino and International Multifoods
Corporation.*
10.23 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).*
10.24 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).*
10.25 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).*
10.26 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 2000 Annual Report to Stockholders - Financial Review (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 LLP.
27 Financial Data Schedule.
- -------------------------------
*Management contract or compensatory plan or arrangement required to be
filed as an exhibit to Form 10-K pursuant to Item 14(c) of this Report.
Exhibit 3.2
BYLAWS OF
INTERNATIONAL MULTIFOODS CORPORATION
(A Delaware Corporation)
ARTICLE I
Meetings of Stockholders
Section 1. Annual Meeting. The annual meeting of the
stockholders of International Multifoods Corporation
(hereinafter called the "Corporation") for the election of
directors and for the transaction of such other business as
may come before the meeting shall be held on the third
Friday in June in each year, or on such other date as
determined by the Board of Directors (hereinafter called the
"Board"). The annual meeting shall be held at such time as
shall be designated by the Board, the Chairman of the Board,
or the President.
Section 2. Special Meetings. Special meetings of the
stockholders, unless otherwise prescribed by statute, may be
called at any time by the Board or by the Chairman of the
Board.
Section 3. Notice of Meetings. Notice of the place,
date and time of the holding of each annual and special
meeting of the stockholders and, in the case of a special
meeting, the purpose or purposes thereof, shall be given
personally or by mail in a postage prepaid envelope to each
stockholder entitled to vote at such meeting, not less than
ten nor more than sixty days before the date of such
meeting, and, if mailed, it shall be directed to such
stockholder at his address as it appears on the records of
the Corporation, unless he shall have filed with the
Secretary of the Corporation a written request that notices
to him be mailed to some other address, in which case it
shall be directed to him at such other address. Notice of
any meeting of stockholders shall not be required to be
given to any stockholder who shall attend such meeting in
person or by proxy and shall not, at the beginning of such
meeting, object to the transaction of any business because
the meeting is not lawfully called or convened, or who
shall, either before or after the meeting, submit a signed
waiver of notice, in person or by proxy. Unless the Board
shall fix after the adjournment a new record date for an
adjourned meeting, notice of such adjourned meeting need not
be given if the time and place to which the meeting shall be
adjourned were announced at the meeting at which the
adjournment is taken. At the adjourned meeting the
Corporation may transact any business which might have been
transacted at the original meeting. If the adjournment is
for more than thirty days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
Section 4. Place of Meetings. Meetings of the
stockholders may be held at such place, within or without
the State of Delaware, as the Board or the officer calling
the same shall specify in the notice of such meeting, or in
a duly executed waiver of notice thereof.
Section 5. Quorum. At all meetings of the
stockholders the holders of a majority of the votes of the
shares of stock of the Corporation issued and outstanding
and entitled to vote shall be present in person or by proxy
to constitute a quorum for the transaction of any business,
except when stockholders are required to vote by class, in
which event a majority of the issued and outstanding shares
of the appropriate class shall be present in person or by
proxy, or except as otherwise provided by statute or in the
Certificate of Incorporation. In the absence of a quorum,
the holders of a majority of the votes of the shares of
stock present in person or by proxy and entitled to vote, or
if no stockholder entitled to vote is present, then any
officer of the Corporation may adjourn the meeting from time
to time. At any such adjourned meeting at which a quorum
may be present any business may be transacted which might
have been transacted at the meeting as originally called.
Section 6. Organization. At each meeting of the
stockholders, the Chairman of the Board, or in the absence
or inability to act of the Chairman of the Board, the
Chairman of the Executive Committee, or in the absence of
both the Chairman of the Board and the Chairman of the
Executive Committee, the President, or in the absence of the
President, that Vice President who is present shall preside
as shall be determined from time to time by the Board or, in
absence of any such determination, that Vice President who
is present who is oldest in seniority of service in that
office, or if two or more have equal service, who is oldest
in age, shall act as chairman of the meeting. The
Secretary, or, in his absence or inability to act, an
Assistant Secretary or any person appointed by the chairman
of the meeting, shall act as secretary of the meeting and
keep the minutes thereof.
Section 7. Order of Business. The order of business
at all meetings of the stockholders shall be as determined
by the chairman of the meeting.
Section 8. Voting. Except as otherwise provided by
statute, the Certificate of Incorporation, or any
certificate duly filed in the State of Delaware pursuant to
Section 151 of the Delaware General Corporation Law, each
holder of record of shares of stock of the Corporation
having voting power shall be entitled at each meeting of the
stockholders to one vote for every share of such stock
standing in his name on the record of stockholders of the
Corporation on the date fixed by the Board as the record
date for the determination of the stockholders who shall be
entitled to notice of and to vote at such meeting; or if
such record date shall not have been so fixed, then at the
close of business on the day next preceding the day on which
notice thereof shall be given, or if notice is waived, at
the close of business on the day next preceding the day on
which the meeting is held; and each stockholder entitled to
vote at any meeting of stockholders may authorize another
person or persons to act for him by a proxy signed by such
stockholder or his attorney-in-fact. Any such proxy shall
be delivered to the secretary of such meeting at or prior to
the time designated in the order of business for so
delivering such proxies. No proxy shall be valid after the
expiration of three years from the date thereof, unless
otherwise provided in the proxy. Except as otherwise
provided by statute, these Bylaws, or the Certificate of
Incorporation, any corporate action to be taken by vote of
the stockholders shall be authorized by a majority of the
total votes, or when stockholders are required to vote by
class by a majority of the votes of the appropriate class,
cast at a meeting of stockholders by the holders of shares
present in person or represented by proxy and entitled to
vote on such action. Unless required by statute, or
determined by the chairman of the meeting to be advisable,
the vote on any question need not be by written ballot. On
a vote by written ballot, each ballot shall be signed by the
stockholder voting, or by his proxy, if there be such proxy,
and shall state the number of shares voted.
Section 9. List of Stockholders. The officer who has
charge of the stock ledger of the Corporation shall prepare
and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled
to vote at the meeting, arranged in alphabetical order, and
showing the address of each stockholder and the number of
shares registered in the name of each stockholder. Such
list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten days prior to
the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any
stockholder who is present.
Section 10. Inspectors. The Board may, in advance of
any meeting of stockholders, appoint one or more inspectors
to act at such meeting or any adjournments thereof. If the
inspectors shall not be so appointed or if any of them shall
fail to appear or act, the chairman of the meeting may, and
on the request of any stockholder entitled to vote thereat
shall, appoint inspectors. Each inspector, before entering
upon the discharge of his duties, shall take and sign an
oath faithfully to execute the duties of inspector at such
meeting with strict impartiality and according to the best
of his ability. On request of the chairman of the meeting
or any stockholder entitled to vote thereat, the inspectors
shall make a report in writing of any challenge, request or
matter determined by them and shall execute a certificate of
any fact found by them. No director or candidate for the
office of director shall act as inspector of an election of
directors. Inspectors need not be stockholders.
Section 11. Stockholder Action. Except as otherwise
provided by the Certificate of Incorporation, any action
required or permitted to be taken by the stockholders of the
Corporation must be effected at a duly called annual or
special meeting of the stockholders of the Corporation and
may not be effected by any consent in writing by such
stockholders.
Section 12. Business to be Conducted. (a) At any
annual meeting of the stockholders, only such business shall
be conducted as shall have been brought before the meeting
(i) by or at the direction of the Board of Directors or (ii)
by any stockholder of the Corporation who is entitled to
vote with respect thereto and who complies with the
procedures set forth in this Section 12. For business to be
properly brought before an annual meeting by a stockholder,
such business must be a proper subject for stockholder
action and the stockholder must have given timely notice
thereof in writing to the Secretary of the Corporation. To
be timely for the 2000 annual meeting, a stockholder's
notice must be delivered or mailed to and received at the
principal executive offices of the Corporation not less than
ninety (90) days prior to the date of the annual meeting.
To be timely for the 2001 annual meeting and for each annual
meeting thereafter, a stockholder's notice must be delivered
or mailed to and received at the principal executive offices
of the Corporation not less than ninety (90) days prior to
the first anniversary of the preceding year's annual
meeting; provided, however, that in the event that the date
of the annual meeting has been changed by more than thirty
(30) calendar days from the prior year, notice by the
stockholder to be timely must be so received not later than
the later of ninety (90) calendar days prior to such annual
meeting or ten (10) calendar days following the day on which
public announcement of such meeting is first made. Except
to the extent otherwise required by law, in no event shall
the public announcement of an adjournment of an annual
meeting commence a new time period for the giving of a
stockholder's notice as described above. A stockholder's
notice to the Secretary shall set forth as to each matter
such stockholder proposes to bring before the annual meeting
(i) a brief description of the business desired to be
brought before the annual meeting and the reasons for
conducting such business at the annual meeting, (ii) the
name and address of the stockholder proposing such business,
(iii) the class and number of shares of the Corporation's
capital stock that are beneficially owned by such
stockholder, (iv) any material interest of such stockholder
in such business, and (v) such other information regarding
such business as would be required to be included in a proxy
statement filed pursuant to the proxy rules of the
Securities and Exchange Commission if such business had been
proposed by the Board of Directors. Notwithstanding
anything in the Bylaws to the contrary, no business shall be
brought before or conducted at an annual meeting, and the
chairman of the meeting shall refuse to acknowledge the
proposal of any such business, except in accordance with the
provisions of this Section 12. The officer of the
Corporation or other person presiding at the annual meeting
shall, if the facts so warrant, determine and declare to the
meeting that business was not properly brought before the
meeting in accordance with such provisions and, if he should
so determine, he shall so declare to the meeting and any
such business so determined to be not properly brought
before the meeting shall not be transacted.
(b) At any special meeting of the stockholders, only
such business shall be conducted as shall have been brought
before the meeting by or at the direction of the Board of
Directors.
(c) Notwithstanding this Section 12, only persons who
are nominated in accordance with the procedures set forth in
Article Thirteenth of the Certificate of Incorporation shall
be eligible for election as directors.
(d) For purposes of this Bylaw, "public announcement"
shall mean disclosure (i) when made in a press release
reported by the Dow Jones News Service, Associated Press or
comparable national news service, (ii) when filed in a
document publicly filed by the Corporation with the
Securities and Exchange Commission pursuant to Section 13,
14 or 15(d) of the Securities Exchange Act of 1934, as
amended, or (iii) when mailed as the notice of the meeting
pursuant to Section 3 of this Article.
ARTICLE II
Board of Directors
Section 1. General Powers. The business and affairs
of the Corporation shall be managed by the Board. The Board
may exercise all such authority and powers of the
Corporation and do all such lawful acts and things as are
not by statute or the Certificate of Incorporation directed
or required to be exercised or done by the stockholders.
Section 2. Number and Qualifications. The Board shall
consist of not less than three nor more than twelve
directors. Only the directors, by a vote of a majority of
the entire Board or amendment of these Bylaws, shall have
the power from time to time to increase or decrease the
number of directors to constitute the entire Board; but no
decrease in the number of directors shall shorten the term
of any incumbent director. Any change in the number of
directors which is so made by the Board shall be effective
until such number be again so changed by the Board. Each
director shall be at least twenty-one years of age.
Directors need not be stockholders of the Corporation.
Section 3. Election and Term. Except as provided in
Paragraph (6) of Article Thirteenth of the Certificate of
Incorporation relating to cumulative voting for the election
of directors in certain instances at an annual or special
meeting of stockholders, the directors shall be elected at
the annual meeting of stockholders for the election of
directors at which a quorum is present, and the persons
receiving a plurality of the votes cast at such election
shall be elected. The directors, other than the directors
who may be elected by the holders of any class or series of
stock of the Corporation having preference over the Common
Stock as to the election of directors under certain
specified circumstances, shall be divided into three classes
as provided in the Certificate of Incorporation: Class I to
hold office initially for a term expiring at the 1986 Annual
Meeting of Stockholders, Class II to hold office initially
for a term expiring at the 1987 Annual Meeting of
Stockholders and Class III to hold office initially for a
term expiring at the 1988 Annual Meeting of Stockholders,
with such directors to hold office until their successors
are elected and qualified. At each annual meeting of
stockholders, the successors of the class of directors whose
term expires at that meeting shall be elected to hold office
for a three-year term expiring at the annual meeting of
stockholders held in the third year following the year of
their election. Except as otherwise fixed pursuant to the
provisions of the Certificate of Incorporation relating to
the rights of the holders of any class or series of stock
having preference as to the election of directors under
certain circumstances, an increase or decrease shall be
apportioned among the classes so as to maintain, as nearly
as possible, an equal number of directors in each class.
Any director elected to fill a vacancy resulting from an
increase in such class shall hold office for a term that
shall coincide with the remaining term of that class. In no
event will a decrease in the number of directors shorten the
term of any incumbent director.
Section 4. Place of Meetings. Meetings of the Board
may be held at such place, within or without the State of
Delaware, as the Board may from time to time determine or as
shall be specified in the notice or waiver of notice of such
meeting.
Section 5. First Meeting. The Board shall meet for
the purpose of organization, the election of officers and
the transaction of other business, as soon as practicable
after each annual meeting of the stockholders, on the same
day where such annual meeting shall be held. Notice of such
meeting need not be given. Such meeting may be held at any
other time or place (within or without the State of
Delaware) which shall be specified in a notice thereof given
as hereinafter provided in Section 8 of this Article II.
Section 6. Regular Meetings. Regular meetings of the
Board shall be held at such time and place as the Board may
from time to time determine. If any day fixed for a regular
meeting shall be a legal holiday at the place where the
meeting is to be held, then the meeting which would
otherwise be held on that day shall be held at the same hour
on the next succeeding business day. Notice of regular
meetings of the Board need not be given except as otherwise
required by statute or these Bylaws.
Section 7. Special Meetings. Special meetings of the
Board may be called by two or more directors of the
Corporation or by the Chairman of the Board.
Section 8. Notice of Meetings. Notice of each special
meeting of the Board (and of each regular meeting for which
notice shall be required) shall be given by the Secretary as
hereinafter provided in this Section 8, in which notice
shall be stated the time and place (within or without the
State of Delaware) of the meeting. Notice of each such
meeting shall be delivered to each director either
personally or by telephone, telegraph, cable or wireless, at
least twenty-four hours before the time at which such
meeting is to be held or by first-class mail, postage
prepaid, addressed to him at his residence, or usual place
of business, at least three days before the day on which
such meeting is to be held. Notice of any such meeting need
not be given to any director who shall, either before or
after the meeting, submit a signed waiver of notice or who
shall attend such meeting without protesting, prior to or at
its commencement, the lack of notice to him. Except as
otherwise specifically required by these Bylaws, a notice or
waiver of notice of any regular or special meeting need not
state the purposes of such meeting.
Section 9. Quorum and Manner of Acting. At all
meetings of the Board a majority of the entire Board shall
be necessary and sufficient to constitute a quorum for the
transaction of business; provided, however, that
(i) if the Chairman of the Board, if there is then
elected and acting a Chairman of the Board, is present at
any meeting of the Board; or
(ii) if by reason of catastrophe or emergency due
to enemy action or otherwise a majority of the entire Board
is not available or capable of acting
one-third of the entire Board, but not less in any event
than two directors, shall constitute a quorum for the
transaction of business at any meeting of the Board.
The act of a majority of the directors present at any
meeting at which there is a quorum, as herein provided,
shall be the act of the Board, except as may be otherwise
specifically provided by law or by the Certificate of
Incorporation or by these Bylaws.
In the absence of a quorum at any meeting of the Board,
a majority of the directors present thereat, or if no
director be present, the Secretary, may adjourn such meeting
to another time and place, or such meeting, unless it be the
first meeting of the Board, need not be held. At any
adjourned meeting at which a quorum is present, any business
may be transacted which might have been transacted at the
meeting as originally called. Except as provided in Article
III of these Bylaws, the directors shall act only as a Board
and the individual directors shall have no power as such.
Section 10. Organization. At each meeting of the
Board, the Chairman of the Board (or, if there is no
Chairman of the Board, or in his absence or inability to
act, the President of the Corporation, or, in his absence or
inability to act, another director chosen by a majority of
the directors present) shall act as chairman of the meeting
and preside thereat. The Secretary (or, in his absence or
inability to act, any person appointed by the Chairman)
shall act as secretary of the meeting and keep the minutes
thereof.
Section 11. Resignations. Any director of the
Corporation may resign at any time by giving written notice
of his resignation to the Board or the President or the
Secretary. Any such resignation shall take effect at the
time specified therein or, if the time when it shall become
effective shall not be specified therein, immediately upon
its receipt; and unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to
make it effective.
Section 12. Vacancies. Any director elected to fill a
vacancy resulting from an increase in such class shall hold
office for a term that shall coincide with the remaining
term of that class. In no event will a decrease in the
number of directors shorten the term of any incumbent
director. Any vacancy on the Board of Directors that
results from an increase in the number of directors may be
filled only by a majority of the Board of Directors then in
office, and any other vacancy occurring in the Board of
Directors may be filled only by a majority of the directors
then in office, although less than a quorum, or by a sole
remaining director. Any director elected to fill a vacancy
not resulting from an increase in the number of directors
shall have the same remaining terms as that of his or her
predecessor. If there are no directors in office, then an
election of directors may be held in the manner provided by
statutes. If, at the time of filling any vacancy or any
newly created directorship, the directors then in office
shall constitute less than a majority of the whole board (as
constituted immediately prior to any such increase), the
Court of Chancery may, upon application of any stockholder
or holders of at least ten percent of the votes of the
shares at the time outstanding having the right to vote for
such directors, summarily order an election to be held to
fill any such vacancies or newly created directorships, or
to replace the directors chosen by the directors then in
office. Except as otherwise provided in these Bylaws, when
one or more directors shall resign from the Board, effective
at a future date, a majority of the directors then in
office, including those who have so resigned, shall have
power to fill such vacancy or vacancies, the vote thereon to
take effect when such resignation or resignations shall
become effective, and each director so chosen shall hold
office as provided in this section in the filling of other
vacancies.
Section 13. Removal of Directors. A director may be
removed only for cause by the affirmative vote of a majority
of the Board of Directors or a majority of the votes of the
issued and outstanding stock entitled to vote for the
election of directors of the Corporation given at a special
meeting of the stockholders called and held for the purpose.
Section 14. Compensation. The Board shall have
authority to fix the compensation, including fees and
reimbursement of expenses, of directors for services to the
Corporation in any capacity, provided, no such payment shall
preclude any director from serving the Corporation in any
other capacity and receiving compensation therefor.
Section 15. Action Without Meeting. Any action
required or permitted to be taken at any meeting of the
Board or of any committee thereof may be taken without a
meeting if all members of the Board or committee, as the
case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the
Board or committee.
Section 16. Telephone Conference Meetings. The
members of the Board or any committee thereof designated by
the Board, may participate in a meeting of the Board or any
such committee of the Board by means of conference telephone
by means of which all persons participating in the meeting
can hear each other, and participation in a meeting pursuant
to this Section 16 of Article II shall constitute presence
in person at such meeting.
Section 17. Independent Directors. (a) Majority of
Board's Nominees in Annual Proxy Statement for Election to
Board of Directors to be Independent. A majority of the
individuals to constitute the nominees of the Board of
Directors for the election of whom the Board will solicit
proxies from the stockholders for use at the Corporation's
annual meeting shall consist of individuals who, on the date
of their selection as the nominees of the Board of
Directors, would be Independent Directors.
(b) Directors Elected by Board of Directors. In the
event the Board of Directors elects directors between annual
meetings of stockholders, the number of such directors who
qualify as Independent Directors on the date of their
nomination shall be such that the majority of all directors
holding office immediately thereafter shall have been
Independent Directors on the date of the first of their
nomination or selection as nominees of the Board of
Directors.
(c) Definition of Independent Director. For purposes of
this Bylaw, the term "Independent Director" shall mean a
director who: (i) is not and has not been employed by the
Corporation or its subsidiaries in an executive capacity
within five years immediately prior to the annual meeting at
which the nominees of the Board of Directors will be voted
upon; (ii) is not (and is not affiliated with a company or
firm that is) a significant advisor or consultant to the
Corporation or its subsidiaries; (iii) is not affiliated
with a significant customer or supplier of the Corporation
or its subsidiaries; (iv) does not have significant personal
services contract(s) with the Corporation or its
subsidiaries; (v) is not affiliated with a tax-exempt entity
that receives significant contributions from the Corporation
or its subsidiaries; and (vi) is not a spouse, parent,
sibling or child of any person described by (i) through (v).
(d) Interpretation and Application of This Bylaw. The
Board of Directors shall have the exclusive right and power
to interpret and apply the provisions of this Bylaw,
including, without limitation, the adoption of written
definitions of terms used in and guidelines for the
application of this Bylaw (any such definitions and
guidelines shall be filed with the Secretary, and such
definitions and guidelines as may prevail shall be made
available to any stockholder upon written request); any such
definitions or guidelines and any other interpretation or
application of the provisions of this Bylaw made in good
faith shall be binding and conclusive upon all holders of
the issued and outstanding capital stock of the Corporation,
provided that, in the case of any interpretation or
application of this Bylaw by the Board of Directors to a
specific person which results in such person being
classified as an Independent Director, the Board of
Directors shall have determined that such person is
independent of management and free from any relationship
that, in the opinion of the Board of Directors, would
interfere with such person's exercise of independent
judgment as a Board member.
ARTICLE III
Executive and Other Committees
Section 1. Executive and Other Committees. The Board
may, by resolution passed by a majority of the whole Board,
designate an Executive Committee and one or more committees,
each committee to consist of three or more of the directors
of the Corporation. The Board may designate one or more
directors as alternative members of any committee, who may
replace any absent or disqualified member at any meeting of
the committee. Any such committee, to the extent provided
in the resolution shall have and may exercise all powers of
the Board in the management of the business and affairs of
the Corporation which the Board may lawfully delegate,
including the power to declare dividends and to authorize
the issuance of stock, and may authorize the seal of the
Corporation to be affixed to all papers which may require
it; provided, however, that in the absence or
disqualification of any member of such committee or
committees, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he
or they constitute a quorum, may unanimously appoint another
member of the Board to act at the meeting in the place of
any such absent or disqualified member. Each committee
shall keep written minutes of its proceedings and shall
report such minutes to the Board when required. All such
proceedings shall be subject to revision or alteration by
the Board; provided, however, that third parties shall not
be prejudiced by such revision or alteration.
Section 2. General. A majority of any committee may
determine its action and fix the time and place of its
meetings, unless the Board shall otherwise provide. Special
meetings of any committee may also be called by the Chairman
of the Board. Notice of such meetings shall be given to
each member of the committee in the manner provided for in
Article II, Section 8. The Board shall have power at any
time to fill vacancies in, to change the membership of, or
to dissolve any such committee.
Section 3. Compensation and Nominating Committees. The
Board may, by resolution passed by a majority of the whole
Board and in accordance with Section 1 of this Article III,
designate a Compensation Committee and/or a Nominating
Committee, each of which shall have such duties as may be
assigned by the Board from time to time. Each member of the
Compensation Committee and each member of the Nominating
Committee shall be an Independent Director (as that term is
defined in Article II, Section 17 (c) of these Bylaws).
ARTICLE IV
Officers
Section 1. Number and Qualifications. All officers of
the Corporation shall be elected or appointed by the Board.
The officers shall be a President, one or more Vice
Presidents, a Secretary, a Treasurer, and a Controller. The
Board may also elect a Chairman of the Board, a Vice
Chairman of the Board, a Chairman of the Executive
Committee, and one or more Assistant Secretaries, Assistant
Treasurers, and Assistant Controllers, and the Board may
designate any Vice President as an Executive Vice President,
a Senior Vice President, or a Group Vice President. Any two
or more offices may be held by the same person. The
Chairman of the Board, the Vice Chairman of the Board, the
Chairman of the Executive Committee, and the President shall
be chosen from among the directors, but no other officer
need be a director.
Section 2. Resignations. Any officer of the
Corporation may resign at any time by giving written notice
of his resignation to the Board, the President or the
Secretary. Any such resignation shall take effect at the
time specified therein, or, if the time when it shall become
effective shall not be specified therein, immediately upon
its receipt; and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to
make it effective.
Section 3. Removal. Any officer or agent of the
Corporation may be removed, either with or without cause, at
any time, by the vote of the majority of the entire Board at
any meeting of the Board, or, except in the case of an
officer or agent elected or appointed by the Board, by the
Chairman of the Board. Such removal shall be without
prejudice to the contractual rights, if any, of the person
so removed.
Section 4. Vacancies. A vacancy in any office,
whether arising from death, resignation, removal or any
other cause, may be filled for the unexpired portion of the
term of the office which shall be vacant, in the manner
prescribed in these Bylaws for the regular election or
appointment to such office.
Section 5. The Chairman of the Board. The Chairman of
the Board shall preside at and be Chairman of all meetings
of the stockholders and of the Board, if present. The
Chairman of the Board shall be the chief executive officer
of the Corporation and shall have general supervision and
authority over the business and affairs of the Corporation
subject to the control of the Board, and he shall perform
such other duties as may be prescribed from time to time by
the Board. In the absence or inability of the Chairman of
the Board to act, or in the event of a vacancy in the office
of Chairman of the Board, the President of the Corporation
shall have all the rights and powers and shall perform all
the duties of the Chairman of the Board as are vested in or
required of him by these Bylaws.
Section 6. The President. The President shall be the
chief operating officer of the Corporation and shall perform
such duties as may be prescribed from time to time by the
Chairman of the Board.
Section 7. Vice Presidents. Each Vice President shall
perform such duties and have such powers as shall from time
to time be prescribed by the Board or as shall from time to
time be assigned to him by the Chairman of the Board.
Section 8. Secretary. The Secretary shall act as
custodian of the minutes of all meetings of the Board and of
the stockholders and any committees of the Board which keep
formal minutes, shall have charge of the corporate seal and
the corporate minute books and shall make such reports and
perform such other duties as may be assigned to him from
time to time by the Board or the Chairman of the Board. The
Assistant Secretaries, or any of them, shall perform such
duties of the Secretary as may from time to time be assigned
to them by the Board, the Chairman of the Board, or the
Secretary.
Section 9. Treasurer. The Treasurer shall have
custody of all moneys and securities of the Corporation, and
shall have responsibility for disbursement of the funds of
the Corporation and shall make payment of the just demands
on the Corporation as may be ordered by the Board, shall
invest surplus cash of the Corporation and manage its
investment portfolio under the direction of the Board, shall
prepare and file tax returns and pay all proper taxes of the
Corporation and shall render to the Board from time to time
as may be required of him an account of all his transactions
and activities as Treasurer. The Treasurer shall also
perform such other duties as may be assigned to him from
time to time by the Board, the Chairman of the Board or by
the Vice President-Finance if there be an officer elected by
the Board and serving in that office at the time. The
Assistant Treasurers, or any of them, shall perform such of
the duties of the Treasurer as may from time to time be
assigned to them by the Board, the Chairman of the Board or
the Vice President-Finance, if there be an officer elected
by the Board and serving in that office at the time, or the
Treasurer.
Section 10. Controller. The Controller shall provide
and maintain a system of accounts and accounting records of
the Corporation, shall prepare from time to time and render
to the Board accounts of the financial condition of the
Corporation as may be required, shall provide and administer
a system of internal financial controls, and shall audit the
books, records and affairs of the Corporation. The
Controller shall also perform such other duties as may from
time to time be assigned to him by the Board, the Chairman
of the Board or by the Vice President-Finance if there be an
officer elected by the Board and serving in that office at
the time. The Assistant Controllers, or any of them, shall
perform such of the duties of the Controller as may from
time to time be assigned to them by the Board, the Chairman
of the Board, the Vice President-Finance if there be an
officer elected by the Board and serving in that office at
the time, or the Controller.
Section 11. Other Officers and Agents. The Board may
from time to time appoint such other officers and agents as
it shall deem proper. Each person so appointed shall hold
the office to which appointed at the pleasure of the Board
and shall exercise such powers and perform such duties as
shall be determined from time to time by the Board.
Section 12. Delegation of Authority. In case of the
absence of any officer of the Corporation, or for any other
reason that the Board may deem sufficient, the Board may
delegate for the time being the powers and duties of any of
them to such other officer or person as the Board shall
determine.
Section 13. Officers' Bonds or Other Securities. If
required by the Board, any officer of the Corporation shall
give a bond or other security for the faithful performance
of his duties, in such amount and with such surety or
sureties as the Board may require.
Section 14. Compensation. The compensation of the
officers of the Corporation for their services as such
officers shall be fixed from time to time by the Board;
provided, however, that the Board may delegate to a
committee designated by the Board the power to fix the
compensation of officers of the Corporation. An officer of
the Corporation shall not be prevented from receiving
compensation by reason of the fact that he is also a
director of the Corporation, but any such officer who shall
also be a director shall not have any vote in the
determination of the amount of compensation paid to him.
Section 15. Voting Corporation's Securities. The
Chairman of the Board shall have full power and authority on
behalf of the Corporation, in person or by proxy, to attend
and to act and to vote at any meetings of security holders
of corporations in which the Corporation may hold
securities, and at such meetings, he or his proxy shall
possess and may exercise any and all rights and powers
incident to the ownership of such securities and which as
the owner thereof the Corporation might have possessed or
exercised, if present. The Board may by resolution from
time to time confer like powers upon any other person or
persons.
ARTICLE V
Indemnification
Section 1. Director Liability. A director of the
Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, except for liability
(i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or
a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law, or (iv) for any
transaction from which the director derived any improper
personal benefit. If the Delaware General Corporation Law
is amended after approval by the stockholders of the
proposed amendment of Article FIFTEENTH of the Restated
Certificate of Incorporation to authorize corporate action
further eliminating or limiting the personal liability of
directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest
extent permitted by the Delaware General Corporation Law, as
so amended. Any repeal or modification of this Section 1 by
the stockholders of the Corporation shall not adversely
affect any right or protection of a director of the
Corporation existing at the time of such repeal or
modification.
Section 2. Indemnification. Each person who was or is
made a party or is threatened to be made a party to or is
otherwise involved in any action, suit or proceeding,
whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he
or she is or was a director or officer of the Corporation or
is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation
or of a partnership, joint venture, trust or other
enterprise, including service with respect to an employee
benefit plan (hereinafter an "indemnitee"), whether the
basis of such proceeding is alleged action in an official
capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer,
employee or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent authorized by the
Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits
the Corporation to provide broader indemnification rights
than permitted prior thereto), against all expense,
liability and loss (including attorneys' fees, judgments,
fines, ERISA excise taxes or penalties and amounts paid in
settlement) reasonably incurred or suffered by such
indemnitee in connection therewith and such indemnification
shall continue as to an indemnitee who has ceased to be a
director, officer, employee or agent and shall inure to the
benefit of the indemnitee's heirs, executors and
administrators; provided, however, that, except as provided
in Section 3 of this Article V with respect to proceedings
to enforce rights to indemnification, the Corporation shall
indemnify any such indemnitee in connection with a
proceeding (or part thereof) initiated by such indemnitee
only if such proceeding (or part thereof) was authorized by
the board of directors of the Corporation. The right to
indemnification conferred in this Article V shall be a
contract right and shall include the right to be paid by the
Corporation the expenses incurred in defending any such
proceeding in advance of its final disposition (hereinafter
an "advancement of expenses"); provided, however, that, if
the Delaware General Corporation Law requires, an
advancement of expenses incurred by an indemnitee in his or
her capacity as a director or officer (and not in any other
capacity in which service was or is rendered by such
indemnitee, including, without limitation, service to an
employee benefit plan) shall be made only upon delivery to
the Corporation of an undertaking (hereinafter an
"undertaking"), by or on behalf of such indemnitee, to repay
all amounts so advanced if it shall ultimately be determined
by final judicial decision from which there is no further
right to appeal (hereinafter a "final adjudication") that
such indemnitee is not entitled to be indemnified for such
expenses under this Section or otherwise.
Section 3. Suits by Indemnitees. If a claim under
Section 2 of this Article V is not paid in full by the
Corporation within sixty days after a written claim has been
received by the Corporation, except in the case of a claim
for an advancement of expenses, in which case the applicable
period shall be twenty days, the indemnitee may at any time
thereafter bring suit against the Corporation to recover the
unpaid amount of the claim. If successful in whole or in
part in any such suit, or in a suit brought by the
Corporation to recover an advancement of expenses pursuant
to the terms of an undertaking, the indemnitee shall be
entitled to be paid also the expense of prosecuting or
defending such suit. In (i) any suit brought by the
indemnitee to enforce a right to indemnification hereunder
(but not in a suit brought by the indemnitee to enforce a
right to an advancement of expenses) it shall be a defense
that, and (ii) in any suit by the Corporation to recover an
advancement of expenses pursuant to the terms of an
undertaking the Corporation shall be entitled to recover
such expenses upon a final adjudication that, the indemnitee
has not met the applicable standard of conduct set forth in
the Delaware General Corporation Law. Neither the failure
of the Corporation (including its board of directors,
independent legal counsel, or its stockholders) to have made
a determination prior to the commencement of such suit that
indemnification of the indemnitee is proper in the
circumstances because the indemnitee has met the applicable
standard of conduct set forth in the Delaware General
Corporation Law, nor an actual determination by the
Corporation (including its board of directors, independent
legal counsel, or its stockholders) that the indemnitee has
not met such applicable standard of conduct, shall create a
presumption that the indemnitee has not met the applicable
standard of conduct or, in the case of such a suit brought
by the indemnitee, be a defense to such suit. In any suit
brought by the indemnitee to enforce a right to
indemnification or to an advancement of expenses hereunder,
or by the Corporation to recover an advancement of expenses
pursuant to the terms of an undertaking, the burden of
proving that the indemnitee is not entitled to be
indemnified, or to such advancement of expenses, under this
Section or otherwise shall be on the Corporation.
Section 4. Non-Exclusive Nature of Indemnification.
The rights to indemnification and to the advancement of
expenses conferred in this Article V shall not be exclusive
of any other right which any person may have or hereafter
acquire under any statute, the certificate of incorporation,
these Bylaws, agreement, vote of stockholders or
disinterested directors or otherwise.
Section 5. Insurance. The Corporation may maintain
insurance, at its expense, to protect itself and any
director, officer, employee or agent of the Corporation or
other corporation, partnership, joint venture, trust or
other enterprise against any expense, liability or loss,
whether or not the Corporation would have the power to
indemnify such person against such expense, liability or
loss under the Delaware General Corporation Law.
Section 6. Other Designated Persons Entitled to
Indemnification. The Corporation may, to the extent
authorized from time to time by the board of directors,
grant rights to indemnification, and to the advancement of
expenses to any employee or agent of the Corporation to the
fullest extent of the provisions of this Article V with
respect to the indemnification and advancement of expenses
of directors and officers of the Corporation.
Section 7. Indemnification Agreements. The
Corporation shall have the express authority to enter such
agreements as the board of directors deems appropriate for
the indemnification of present or future directors and
officers of the Corporation in connection with their service
to, or status with, the Corporation or any other
corporation, entity or enterprise with whom such person is
serving at the express written request of the Corporation.
ARTICLE VI
Deeds, Contract, Checks, Drafts, Bank Accounts, Etc.
Section 1. Deeds, Contracts and Other Instruments.
Deeds, mortgages, leases, contracts, and other instruments
requiring the signature of the Corporation shall be signed
in such manner and by such officer or officers or other
person or persons as the Board may from time to time
prescribe. Unless authorized by the Board, an officer or
agent or employee shall not have any power or authority to
bind the Corporation by any contract or engagement or to
pledge its credit or to render it pecuniarily liable for any
purpose or to any amount.
Section 2. Checks, Drafts and Notes. All checks or
demands for money and notes of the Corporation shall be
signed by such officer or officers or such other person or
persons as may from time to time be designated by the Board
or by any officer or officers or person or persons
authorized to so designate by the Board. Facsimile
signatures may be authorized in any such case where
authorized by the Board.
Section 3. Deposits. All funds of the Corporation not
otherwise employed shall be deposited from time to time to
the credit of the Corporation in such banks, trust companies
or other depositaries as the Board may from time to time
designate or as may be designated by any officer or officers
of the Corporation to whom such power of designation may
from time to time be delegated by the Board. For the
purpose of deposit and for the purpose of collection for the
account of the Corporation, checks, drafts and other orders
for the payment of money which are payable to the order of
the Corporation may be endorsed, assigned and delivered by
any officer or agent of the Corporation, or in such other
manner as the Board may determine by resolution.
Section 4. General and Special Bank Accounts. The
Board may from time to time authorize the opening and
keeping of general and special bank accounts with such
banks, trust companies or other depositaries as the Board
may designate or as may be designated by any officer or
officers of the Corporation to whom such power of
designation may from time to time be delegated by the Board.
The Board may make such special rules and regulations with
respect to such bank accounts, not inconsistent with the
provisions of these Bylaws, as it may deem expedient.
ARTICLE VII
Shares, Etc.
Section 1. Stock Certificates. Each holder of stock
of the Corporation shall be entitled to have a certificate,
in such form as shall be approved by the Board, certifying
the number of shares of stock of the Corporation owned by
him. The certificates representing shares of stock shall be
signed in the name of the Corporation by the Chairman of the
Board or the President or a Vice President and by the
Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer and sealed with the seal of the
Corporation (which seal may be a facsimile, engraved or
printed); provided, however, if such certificate is
countersigned (1) by a transfer agent other than the
Corporation or its employee, or, (2) by a registrar other
than the Corporation or its employee, any other signature on
the certificate may be a facsimile. In case any officer,
transfer agent, or registrar who has signed or whose
facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent, or registrar
before such certificate is issued, it may be issued by the
Corporation with the same effect as if he were such officer,
transfer agent, or registrar at the date of issue.
Section 2. Books of Account and Record of
Stockholders. The books and records of the Corporation may
be kept at such places, within or without the State of
Delaware, as the Board may from time to time determine. The
stock record books and the blank stock certificate books
shall be kept by the Secretary or by any other officer or
agent designated by the Board.
Section 3. Transfer of Shares. Transfer of shares of
stock of the Corporation shall be made on the stock records
of the Corporation only upon authorization by the registered
holder thereof, or by his attorney thereunto authorized by
power of attorney duly executed and filed with the Secretary
or with a transfer agent or transfer clerk, and on surrender
of the certificate or certificates for such shares properly
endorsed or accompanied by a duly executed stock transfer
power and the payment of all taxes thereon. Except as
otherwise provided by law, the Corporation shall be entitled
to recognize the exclusive right of a person in whose name
any share or shares stand on the record of stockholders as
the owner of such share or shares for all purposes,
including, without limitation, the rights to receive
dividends or other distributions, and to vote as such owner,
and the Corporation may hold any such stockholder of record
liable for calls and assessments and the Corporation shall
not be bound to recognize any equitable or legal claim to or
interest in any such share or shares on the part of any
person whether or not it shall have express or other notice
thereof. Whenever any transfers of shares shall be made for
collateral security and not absolutely, and both the
transferor and transferee request the Corporation to do so,
such fact shall be stated in the entry of the transfer.
Section 4. Regulations. The Board may make such
additional rules and regulations, not inconsistent with
these Bylaws, as it may deem expedient concerning the issue,
transfer and registration of certificates for shares of
stock of the Corporation. It may appoint, or authorize any
officer or officers to appoint, one or more transfer agents
or one or more transfer clerks and one or more registrars
and may require all certificates for shares of stock to bear
the signature or signatures of any of them.
Section 5. Lost, Destroyed or Mutilated Certificates.
The holder of any certificate representing shares of stock
of the Corporation shall immediately notify the Corporation
of any loss, destruction or mutilation of such certificate,
and the Corporation may issue a new certificate of stock in
the place of any certificate theretofore issued by it which
the owner thereof shall allege to have been lost, stolen, or
destroyed or which shall have been mutilated, and the Board
may, in its discretion, require such owner or his legal
representatives to give to the Corporation a bond in such
sum, limited or unlimited, and in such form and with such
surety or sureties as the Board in its absolute discretion
shall determine, to indemnify the Corporation against any
claim that may be made against it on account of the alleged
loss, theft, or destruction of any such certificate, or the
issuance of a new certificate. Anything herein to the
contrary notwithstanding, the Board, in its absolute
discretion, may refuse to issue any such new certificate,
except pursuant to legal proceedings under the laws of the
State of Delaware.
Section 6. Stockholder's Right of Inspection. No
stockholder shall have any right to inspect any book,
account, record or other document of the Corporation unless
such right shall be conferred upon him by an express
statutory provision or by resolution duly adopted by the
Board or by the stockholders.
Section 7. Fixing of Record Date. In order that the
Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive
payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect
of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board may fix, in
advance, a record date, which shall not be more than sixty
nor less than ten days before the date of such meeting, nor
more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to
any adjournment of the meeting; provided, however, that the
Board may fix a new record date for the adjourned meeting.
ARTICLE VIII
Catastrophe or Emergency Conditions
Section 1. Emergency Management Committee. Anything
in these Bylaws to the contrary notwithstanding, the
management of the property and business of the Corporation
shall automatically vest in the Emergency Management
Committee, hereafter provided for, during any period of
catastrophe or emergency due to enemy action or otherwise
where as a result a quorum of the Board is not available or
capable of acting.
Section 2. Selection and Powers. The Board may from
time to time determine who shall be members of the Emergency
Management Committee, the number thereof required to
constitute a quorum, and the powers which such committee
shall have. Unless and until so determined by the Board the
following shall apply:
Members. The members of the Emergency Management
Committee shall consist of all readily available directors
and all readily available officers of the Corporation other
than Assistant Secretaries and Assistant Treasurers. Two
members shall constitute a quorum; and
Powers. During the period of catastrophe or
emergency and until a quorum of the Board can be convened,
the Emergency Management Committee shall have and exercise
all powers and duties of the Board in the management of the
property and business of the Corporation; provided, however,
that such committee shall be without power
(a) to fill vacancies in the Board of any
committee; or
(b) to sell, mortgage or otherwise dispose of
all or any substantial portion of the Corporation's assets;
or
(c) to authorize any contract other than in
the ordinary course of business.
Section 3. Assumption of Offices During Emergency.
The Board or the Executive Committee may by resolution
determine what person or persons shall during any period of
emergency or catastrophe, when the office of the President
or any other office be vacant or the President or any other
officer be absent or unable to act, assume the power and
duties of the President or of any other officer of the
Corporation, the manner of selecting the same, and under
what circumstances and for what duration they shall act.
The person or persons so appointed, shall during any such
period have and exercise all of the powers and duties of the
President or such other office.
Section 4. Board of Directors to Resume Control. The
Emergency Management Committee shall attempt to convene a
quorum of the Board at the earliest possible date after the
occurrence of an event described in Section 1 of this
Article VIII. In the event that it appears impossible to
convene such a quorum, the Emergency Management Committee
shall call a special meeting of stockholders at the earliest
practicable date to remove directors who are unable to act
and to elect new directors to fill vacancies caused by death
or by such removals. As soon as a quorum can be convened,
the Board shall resume the management of the property and
business of the Corporation, and the Emergency Management
Committee shall thereupon be discharged.
Section 5. Powers of Board of Directors. The Board is
hereby authorized from time to time to make any other or
additional or contrary provisions for the continued
management of the property and business of the Corporation
during any period of catastrophe or emergency of sufficient
severity to prevent the Board from exercising such
management as contemplated in these Bylaws.
ARTICLE IX
Offices
Section 1. Registered Office. The registered office
of the Corporation in the State of Delaware shall at be 1209
Orange Street, Wilmington, Delaware. The name of the
resident agent in charge thereof shall be The Corporation
Trust Company.
Section 2. Other Offices. The Corporation may also
have an office or offices other than said principal office
at such place or places, either within or without the State
of Delaware, as the Board shall from time to time determine
or the business of the Corporation may require.
ARTICLE X
Fiscal Year
The fiscal year of the Corporation shall end on the
Saturday nearest to the last day of February in each year
unless otherwise determined by the Board.
ARTICLE XI
Seal
The Board shall provide a corporate seal, which shall
be in the form of the name of the Corporation and the words
"Corporate Seal, Delaware."
ARTICLE XII
Amendments
Except for Section 11 of Article I and Sections 3, 12
and 13 of Article II of these Bylaws, these Bylaws may be
amended or repealed, or new Bylaws may be adopted, at any
annual or special meeting of the stockholders, by a majority
of the total votes validly cast thereon provided, however,
that the notice of such meeting shall have been given as
provided in these Bylaws, which notice shall mention that
amendment or repeal of these Bylaws, or the adoption of new
Bylaws, is one of the purposes of such meeting. These
Bylaws may also be amended or repealed, or new Bylaws may be
adopted, by the Board; provided, however, that Bylaws
adopted by the Board may be amended or repealed by the
stockholders as hereinabove provided. Notwithstanding the
foregoing, Section 11 of Article I and Sections 3, 12 and 13
of Article II of these Bylaws shall not be altered, amended
or repealed and no provisions inconsistent therewith shall
be adopted without the affirmative vote of the holders of
80% of all shares of stock of the Corporation entitled to
vote on all matters that may come before each meeting of
stockholders, voting together without regard to class.
Exhibit 4.7
AMENDING AGREEMENT
This Agreement is made as of the 1st day of November, 1999 among Robin
Hood Multifoods Inc., Canadian Imperial Bank of Commerce, as Agent, and
the parties named as Lenders on the execution pages hereof.
WHEREAS the parties hereto other than Multifoods Inc. have entered
into a credit agreement dated as of May 30, 1996 which agreement was
amended as of the 30th day of September, 1997 (the "Credit Agreement")
and the parties wish to further amend the Credit Agreement to permit
Multifoods Inc., a subsidiary of Robin Hood Multifoods Inc. to borrow
under the Credit established under the Credit Agreement.
In consideration of the mutual covenants herein contained and
other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto agree as follows:
1. Interpretation. In this Agreement, defined terms shall have the
meaning given in the Credit Agreement.
2. Amendments.
(a) Section 2.1(a) of the Credit Agreement is amended to read as
follows:
(1) Credit A:
Subject to the terms of this Agreement (including the restrictions
contained in this Article), each Lender hereby severally agrees to make
Accommodation available to the Borrower on a revolving basis, provided
that the amount of the Accommodation made by any Lender shall not at
any time exceed its Commitment from time to time and the total
Accommodation, outstanding under Credit A including Accommodation
obtained by Multifoods Inc. under Section 2.1(2A), shall not at any
time exceed $100,000,000.
(b) Section 2.1(2A) is added to the Credit Agreement
as follows:
(2A) Accommodation by Multifoods Inc.:
Subject to the terms of this Agreement (including the restrictions
contained in this Article), Multifoods Inc. may obtain Accommodation
under Credit A and the terms of this Agreement shall apply to such
Accommodation as if such Accommodation were obtained by the Borrower.
Multifoods Inc. agrees to be bound by all of the provisions of the
Credit Agreement relating to such Accommodation.
(c) Section 9.1 of the Credit Agreement is amended to read as
follows:
9.1 Guarantee
The present and future indebtedness and liability of the Borrower and
Multifoods Inc. to the Lenders, including the Swingline Lender, under
this Agreement shall be supported by the guarantee of the Guarantor in
favour of the Agent, on behalf of the Lenders, in substantially the
form set out in Schedule "H".
(d) Schedule H to the Credit Agreement is hereby
deleted and Schedule H in the form attached to this Agreement is
substituted therefor.
3. Continuing Effect. Each of the parties hereto acknowledges and
agrees that the Credit Agreement, as amended by this Agreement, shall
be and continue in full force and effect.
4. Counterparts. This Agreement may be executed in two or more
counterparts, either in original or telecopy form, each of which shall
constitute an original and all of which together shall constitute one
and the same agreement.
IN WITNESS WHEREOF the parties hereto have executed the
Agreement as of the date and year first above written.
ROBIN HOOD MULTIFOODS INC.
By: /s/ D. H. Twiner
Name: Donald H. Twiner
Title: President
MULTIFOODS INC.
By: /s/ D. H. Twiner
Name: Donald H. Twiner
Title: President
Commitment: $35,000,000 CANADIAN IMPERIAL BANK OF
Swing Line COMMERCE, as Lender
Commitment: $10,000,000
Address:
Commerce Court West, 9th Floor By: /s/ Mario Biscardi
Toronto, Ontario, M5L 1A2 Name: Mario Biscardi
Title: Commercial Lending
Specialist
Attn: Mr. M. Spagnolo By: /s/ M. Spagnolo
Executive Director Name: M. Spagnolo
Telephone: (416) 956-3327 Title: Director
Facsimile: (416) 304-5704
Commitment: $35,000,000 THE TORONTO-DOMINION BANK, as Lender
Address:
55 King Street West By: /s/ Parin Kanji
Toronto-Dominion Bank Tower, Name: Parin Kanji
9th Floor - P.O. Box 1 Title: Assistant Manager
Toronto, Ontario M5K 1A2
Attn: Parin Kanji By: [left blank intentionally]
Assistant Manager Name:
Telephone: (416) 827-7586 Title:
Commitment: $30,000,000 BANK OF NOVA SCOTIA, as Lender
Address:
Corporate Banking By: /s/ K. Coulson
44 King Street West, 16th Floor Name: K. Coulson
Toronto, Ontario, M5H 1H1 Title: Director
Attn: Ms. Kathleen Coulson By: /s/ Judy McKay
Relationship Manager Name: Judy McKay
Telephone: (416) 866-6078 Title: Director
Facsimile: (416) 866-2009
CANADIAN IMPERIAL BANK OF
COMMERCE, as Agent
By: /s/ M.W. Lobo
Name: M.W. Lobo
Title: Associate
SCHEDULE H
GUARANTEE
WHEREAS Robin Hood Multifoods Inc. has entered into a credit
agreement dated as of May 30, 1996, among Robin Hood Multifoods Inc.,
the financial institutions named as Lenders on the execution pages
thereof or which have executed a Lender's Acknowledgement as lenders
including Canadian Imperial Bank of Commerce as the Swing Line Lender
(the "Swing Line Lender") (each a "Lender" and collectively the
"Lenders") and Canadian Imperial Bank of Commerce, as Agent for the
Lenders in the manner and to the extent described in Article 14 thereof
(the "Agent"), (such credit agreement as amended, restated or revised
from time to time is referred to as the "Credit Agreement");
AND WHEREAS the Credit Agreement has been amended by Amending
Agreement dated as of November 1, 1999 to permit Multifoods Inc., a
subsidiary of Robin hood Multifoods Inc., to obtain accommodation under
Credit A established under the Credit Agreement;
AND WHEREAS it is a condition precedent to the granting of
Accommodation under the Credit Agreement that the undersigned (the
"Guarantor") guarantee to the Agent, on behalf of the Lenders, the
indebtedness and liability of each of Robin Hood Multifoods Inc. and
Multifoods Inc. to the Lenders under the Credit Agreement;
NOW THEREFORE for valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Guarantor hereby
agrees as follows:
1. All capitalized terms in this Guarantee that are defined in
the Credit Agreement unless otherwise defined in this Guarantee have
the meaning attributed to them in the Credit Agreement and the term the
"Debtor" shall mean each of Robin Hood Multifoods Inc. and Multifoods
Inc. in their separate capacities.
2. The Guarantor hereby unconditionally guarantees payment to the
Agent, on behalf of the Lenders including the Swing Line Lender,
forthwith after demand therefor by the Agent following any Event of
Default, the indebtedness and liability which the Debtor has incurred
or is under or may incur or be under to the Lenders including the Swing
Line Lender pursuant to, in respect of or in any manner related to the
Credit Agreement, plus interest thereon at the rate or rates provided
in the Credit Agreement from the date of demand for payment hereunder.
3. The Agent and the Lenders may grant extensions of time or
other indulgences, take and give up securities, accept compositions,
grant releases and discharges and otherwise deal with the Debtor and
other parties and securities as the Agent or the Lenders may see fit,
and may apply all moneys received from the Debtor or others, or from
securities, upon such part of the Debtor's liability to the Lenders
under the Credit Agreement as the Agent or the Lenders may think best,
without prejudice to or in any way limiting or lessening the obligation
of the Guarantor under this Guarantee.
4. Neither the Agent nor the Lenders are bound to exhaust their
recourse against the Debtor or other parties or the securities they may
hold before being entitled to payment from the Guarantor under this
Guarantee; and the benefit of any statute affecting the liability of
the Guarantor hereunder or enforcement thereof is hereby waived to the
extent permitted by law.
5. Any loss of or in respect of any securities received by the
Agent or the Lenders from the Debtor or any other person, whether
occasioned through the fault of the Agent or the Lenders or otherwise,
shall not discharge pro tanto or limit or lessen the liability of the
Guarantor under this Guarantee.
6. This shall be a continuing Guarantee and shall cover all
present and future liabilities of the Debtor to the Lenders incurred
pursuant to the Credit Agreement, and shall be binding as a continuing
security on the Guarantor.
7. Any change or changes in the name of the Debtor shall not
affect or in any way limit or lessen the liability of the Guarantor
hereunder and this Guarantee shall extend to the person, firm or
corporation acquiring or from time to time carrying on the business of
the Debtor.
8. All moneys, advances, renewals and credits in fact borrowed or
obtained from the Lenders pursuant to the Credit Agreement shall be
deemed to form part of the liabilities hereby guaranteed
notwithstanding any incapacity, disability or lack or limitation of
status or of power of the Debtor or of the directors, officers or
agents thereof or that the Debtor may not be a legal entity, or any
irregularity, defect or informality in the Debtor or obtaining of such
moneys, advances, renewals or credits.
9. The Guarantor shall assume the responsibility for being and
keeping itself informed of the financial condition of the Debtor and of
all other circumstances bearing upon the risk of non-payment of the
liability under this Guarantee.
10. In the event that the Agent or the Lenders receive from the
Guarantor a payment or payments in full or on account of the
Guarantor's liability hereunder, the Guarantor shall not be entitled to
recover repayment against the Debtor until all claims of the Lenders
against the Debtor have been paid in full; and in the case of
liquidation, winding up or bankruptcy of the Debtor (whether voluntary
or compulsory) or in the event that the Debtor shall make a bulk sale
of any of the Debtor's assets within the bulk transfer provisions of
any applicable legislation or any composition with creditors or scheme
or arrangement, the Lenders shall have the right to rank for their full
claims and receive all dividends or other payments in respect thereof
until such claim has been paid in full and the Guarantor shall continue
to be liable for any balance which may be owing to the Lenders. If the
Lenders value and/or retain any securities, such valuation and/or
retention shall not, as between the Lenders and the Guarantor, be
considered as a purchase of such securities, or as payment or
satisfaction or reduction of the Debtor's liabilities to the Lenders,
or any part thereof.
11. The Guarantor shall make payment to the Agent of the amount
of the liability of the Guarantor forthwith after demand therefor is
made in writing by the Agent following and during the continuance of an
Event of Default and such demand shall be conclusively deemed to have
been effectually made by delivering or mailing by prepaid registered
mail an envelope containing that addressed to the Guarantor in
accordance with the terms of the Credit Agreement. The liability of
the Guarantor shall bear interest from the date of receipt of such
demand at the rate or rates then applicable to the liabilities of the
Debtor to the Lenders under the Credit Agreement.
12. The Guarantor shall pay all reasonable legal fees and all
other costs and expenses which may be incurred by the Agent or the
Lenders in the enforcement of this Guarantee.
13. Nothing herein contained or in any security now held or
hereafter acquired by the Agent or the Lenders, nor any act or omission
of the Agent or the Lenders with respect to any such security, shall in
any way prejudice or affect the rights, remedies or powers of the Agent
or the Lenders with respect to any other security at any time held by
the Agent or the Lenders.
14. The Agent and the Lenders may, at their election, exercise
any right or remedy they respectively might have against the Debtor or
any security held by the Agent or the Lenders, including without
limitation the right to foreclose upon any such security by judicial or
non-judicial sale, without affecting or impairing in any way the
liability of the Guarantor hereunder except to the extent the
indebtedness has been paid. The Guarantor waives any defense arising
out of the absence, impairment or loss of any right of reimbursement or
subrogation or other right or remedy of the Guarantor against the
Debtor or any such security, whether resulting from such election by
the Agent or the Lenders or otherwise, to the extent permitted by law.
15. Until all indebtedness of the Debtor to the Lenders has been
paid in full, the Guarantor shall have no right to subrogation and
waives any right to enforce any remedy which the Agent or the Lenders
now have or may hereafter have against the Debtor, and waives any
benefit of any right to participate in the security now or hereafter
held by the Agent or the Lenders. The Guarantor waives all
presentments, demands for performance, notices of nonperformance,
protests, notices of protest, notices of dishonor, and notices of
acceptance of this Guarantee and of the existence, creation or
incurring of new or additional indebtedness.
16. The Guarantor shall make each payment in the currency in
which the Debtor is obliged to make payment to the Lenders (the
"Original Currency"). If the Guarantor makes payment in a currency
other than the Original Currency (the "Other Currency"), such payment
shall constitute a discharge of the liability of the Guarantor
hereunder only to the extent of the amount of the Original Currency
which the Lender is able to purchase at Toronto, Ontario with the Other
Currency on the date of receipt in accordance with its normal practice.
If the amount of the Original Currency which the Lender is able to
purchase is less than the amount of such currency originally due to it,
the Guarantor shall indemnify and save the Lender harmless from and
against any loss as a result of such deficiency. This indemnity shall
constitute an obligation separate and independent from the other
obligations contained in this Guarantee and shall continue in full
force and effect notwithstanding any judgment or order in respect of
any amount due hereunder.
17. This instrument is in addition and without prejudice to any
securities of any kind now or hereafter held by the Agent or the
Lenders.
18. The Guarantor represents and warrants to the Agent, on behalf
of the Lenders, as follows:
(a) Organization and Existence: The Guarantor is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware. In all respects material to the Guarantor and its
Subsidiaries, taken as a whole, the Guarantor has all requisite power
and authority, corporate and otherwise, to own, operate and lease its
properties and to carry on its business as now being conducted. The
Guarantor is qualified to do business and is in good standing as a
foreign corporation in each jurisdiction where the character of its
properties owned or leased or the nature of the activities conducted by
the Guarantor makes such qualification necessary, except where failure
so to qualify would not have a material adverse effect on the business,
assets, condition nor prospects, financial or otherwise, of the
Guarantor and its subsidiaries, taken as a whole.
(b) Power and Authority:
(i) The Guarantor has all power and authority necessary to
execute, deliver and carry out the terms and provisions of the
Guarantee. All action on the part of the Guarantor which is required
for the execution, delivery and performance of the Guarantee has been
duly and effectively taken.
(ii) The Guarantee constitutes a valid and binding obligation of
the Guarantor enforceable in accordance with its terms, in each case as
enforceability may be subject to bankruptcy, reorganization,
insolvency, moratorium or other similar laws and court decisions
relating to or affecting the enforcement of creditors' rights generally
and as enforceability may be subject to limitations imposed by law on
the availability of specific enforcement, injunctive relief or other
equitable remedies. The execution, delivery and performance of the
Guarantee will not violate the terms and conditions or any other
material agreement, instrument, mortgage or similar document to which
the Guarantor is a party.
(c) Financial Position: The Guarantor has delivered to the
Lenders the consolidated balance sheet of the Guarantor and its
Subsidiaries as of February 28, 1999, accompanied by related
consolidated statements of earnings and cash flows, for the fiscal year
ended on such date and the related report of the Guarantor's auditors.
Such financial statements, with the notes thereto, present fairly the
consolidated financial position of the Guarantor and its Subsidiaries
and the results of their operations and cash flows as of the date and
for the period indicated, and were prepared in accordance with U.S.
GAAP. Since February 28, 1999 to the date of this Guarantee, there has
not occurred any material adverse change in the business, operations or
financial condition of the Guarantor and its Subsidiaries, taken as a
whole, except as described in any reports on Forms 8-K, 10-Q and 10-K
filed during such period by the Guarantor with the Securities and
Exchange Commission.
(d) Litigation: Except as disclosed in the notes to the
Guarantor's financial statements referred to in Subsection 18(c)
hereof, no litigation, investigation or proceeding of or before any
arbitrator or governmental authority is pending or, to the knowledge of
the Guarantor, threatened by or against the Guarantor or any of its
Subsidiaries or against any of its or their respective properties or
revenues which would reasonably be expected to have a material adverse
effect on the business, operations, properties or financial condition
of the Guarantor and its Subsidiaries, taken as a whole.
(e) No Violation of Law or Instrument: The execution, delivery
and performance of the Guarantee does not require any action or consent
of, or any registration with, any governmental authority, or of any
other party under any material contract or agreement to which the
Guarantor or any of its Subsidiaries is a party, or under any order or
decree to which the Guarantor or any of its Subsidiaries is a party or
to which any of their properties or assets are subject, or conflict
with, or entitle any party, with the giving of notice or lapse of time
or otherwise, to terminate or declare a default under, any such
contract, agreement, order or decree.
19. So long as this Guarantee is in force and except as otherwise
permitted by the prior written consent of the Required Lenders, the
Guarantor covenants and agrees with the Agent on behalf of the Lenders
that:
(a) the ratio of Guarantor's Total Indebtedness to Guarantor's
Total Capitalization at any time will not be greater than .55 to 1.0;
provided that the Guarantor may exceed the specified ratio at any time,
and from time to time, during any period of 270 consecutive days from
the date such ratio was first exceeded so long as on the date such
ratio is first exceeded the Guarantor's Fixed Charge Coverage for the
period of four consecutive fiscal quarters ending on the last day of
the most recently ended fiscal quarter was equal to or greater than
1.5; and provided, further, that (I) such ratio may be exceeded for
only one such period of 270 days in any period of eighteen months
beginning on the date such ratio was first exceeded and (ii) in no
event shall the ratio of Guarantor's Total Indebtedness to Guarantor's
Total Capitalization at any time be greater than .65 to 1.0;
(b) as of the last day of any fiscal quarter of the Guarantor
during which a Ratings Downgrade exists (regardless of whether a
Ratings Downgrade exists on such last day), the Guarantor's Fixed
Charge Coverage for the period of four consecutive fiscal quarters
ending on such last day will not be less than 1.5; and
(c) the Guarantor's Tangible Net Worth shall at all times be not
less than U.S.$80,000,000.
20. There are no representations, collateral agreements or
conditions with respect to this instrument or affecting the Guarantor's
liability hereunder other than as contained herein.
21. All amounts payable by the Guarantor hereunder shall be made
without setoff or counterclaim and without deduction for or on account
of any present or future taxes of any nature, unless the Guarantor is
prohibited by law from doing so, in which case the Guarantor shall pay
to the Agent on behalf of the Lenders such additional amount as is
necessary to ensure that the Lenders receive the full amount they would
have received if no deduction or withholding had been made.
22. This Guarantee shall be construed in accordance with the laws
of the Province of Ontario, Canada and the Guarantor agrees that any
legal suit, action or proceeding arising out of or relating to this
Guarantee may be instituted in the courts of such jurisdiction and the
Guarantor hereby accepts and irrevocably submits to the jurisdiction of
such courts and acknowledges their competence and agrees to be bound by
any judgment thereof, provided that nothing herein shall limit the
Agent's or the Lenders' rights to bring proceedings against the
Guarantor elsewhere.
23. This Guarantee shall extend and enure to the benefit of the
successors and assigns of the Agent and the Lenders and shall be
binding upon the Guarantor and its successors and assigns.
24. This Guarantee replaces the Guarantee dated May 30, 1996 in
favour of the Agent on behalf of the Lenders which Guarantee is hereby
cancelled.
EXECUTED at Minneapolis, Minnesota as of the 1st day of November,
1999.
INTERNATIONAL MULTIFOODS
CORPORATION
By:__________________________
Name:
Title:
Exhibit 10.18
AMENDMENT TO AGREEMENT
THIS AMENDMENT is made and entered into as the 23rd day of March,
2000, by and between INTERNATIONAL MULTIFOODS CORPORATION, a Delaware
corporation (the "Company"), having its principal offices at 200 East
Lake Street, Wayzata, Minnesota 55391, and JEFFREY E. BOIES, whose
principal residence is located at 7372 Fairway Lane, Parker, Colorado
80134 ("Boies").
WHEREAS, the Company and Boies entered into that certain Agreement,
dated as of October 20, 1999, a copy of which is attached as Exhibit A
hereto (the "Agreement"); and
WHEREAS, the Company and Boies wish to amend the Agreement to
clarify the parties' intent that the Agreement and its terms and
provisions do not supersede or modify the terms and provisions of the
Severance Agreement, dated December 20, 1996, between the Company and
Boies, as hereinafter provided.
NOW, THEREFORE, in consideration of the preceding recitals and the
terms and conditions hereinafter set forth, the Company and Boies agree
to amend the Agreement, effective as of the date of this Amendment set
forth above, as follows:
1. Delete Paragraph G of Section 4 of the Agreement, in its
entirety, and insert in full and complete substitution therefore, the
following:
"G. This Agreement is a Colorado contract and shall be governed by
the laws of the State of Colorado. This Agreement, including the
recitals set forth on pages 1 and 2 hereof and the form of Release
Agreement attached thereto as Exhibit B, constitute the entire agreement
between the Company and Boies with respect to the subject matter of this
Agreement, and supersede any prior oral or written agreement between the
Company and Boies with respect to the subject matter of this Agreement,
other than agreements between the Company and Boies set forth in
paragraphs 7 through 12, inclusive, of the September 24, 1996 Letter,
and that certain Severance Agreement, dated December 20, 1996, between
the Company and Boies related to a change of control of the Company (the
"Severance Agreement"), each of which shall continue in full force and
effect and shall not be superseded, or modified in any respect, by this
Agreement. The Company and Boies agree and acknowledge that the
severance payment provided for in Section 1A. of this Agreement is in
addition to, and not in lieu of, any amounts that the Company is
obligated to pay Boies under the terms and provisions of the Severance
Agreement. The Company and Boies agree that by executing and delivering
this Agreement, paragraph 7 of the September 24, 1996 Letter shall be
amended coincidentally to include the definition of "cause" set forth in
Section 3.A. of this Agreement, immediately following the last sentence
of paragraph 7."
2. Except as modified by this Amendment, the terms and conditions of
the Agreement shall continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have signed and delivered this
Amendment as of the day and year first above written.
INTERNATIONAL MULTIFOODS CORPORATION
ATTEST:
/s/ Frank W. Bonvino By: /s/ Gary E. Costley
Secretary Gary E. Costley
Chairman of the Board, President
and Chief Executive Officer
WITNESS:
[unsigned] /s/ Jeffrey E. Boies
Jeffrey E. Boies
Exhibit 10.22
AMENDMENT TO SUPPLEMENTAL RETIREMENT AGREEMENT
THIS AMENDMENT is made and entered into as of the 23rd day of
March, 2000, by and between INTERNATIONAL MULTIFOODS CORPORATION, a
Delaware corporation (the "Company"), having its principal offices at
200 East Lake Street, Wayzata, Minnesota 55391, and FRANK W. BONVINO,
whose principal residence is located at 5518 West Highwood Drive,
Edina, MN 55436 ("Bonvino").
WHEREAS, the Company and Bonvino entered into that certain
Supplemental Retirement Agreement, dated September 20, 1996, and
accepted by Bonvino on September 27, 1996, a copy of which is attached
as Exhibit A hereto (the "Agreement"); and
WHEREAS, the Company and Bonvino wish to amend the Agreement to
clarify the parties' intent that the Agreement and its terms and
provisions do not supercede or modify the terms and provisions of the
Revised and Restated Severance Agreement, dated as of September 17,
1993, between the Company and Bonvino, as hereinafter provided.
NOW, THEREFORE, in consideration of the preceding recitals and the
terms and conditions hereinafter set forth, the Company and Bonvino
agree to amend the Agreement, effective as of the date of this
Amendment set forth above, as follows:
1. The Agreement is hereby amended by inserting the following
new Section 3.6:
"3.6 Effect of Agreement. This Agreement does not supersede or
modify in any respect that certain Revised and Restated Severance
Agreement, dated as of September 17, 1993, between the Company and
Bonvino (the "Severance Agreement"), which shall continue in full force
and effect. The Company and Bonvino agree and acknowledge that the
severance benefit provided for under Section II of this Agreement is in
addition to, and not in lieu of, any amounts that the Company is
obligated to pay to Bonvino under the terms and provisions of the
Severance Agreement."
2. Except as modified by this Amendment, the terms and
conditions of the Agreement shall continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have signed and delivered this
Amendment as of the day and year first above written.
INTERNATIONAL MULTIFOODS CORPORATION
ATTEST:
/s/ Timothy J. Keenan By: /s/ Gary E. Costley
Assistant Secretary Gary E. Costley
Chairman of the Board, President
and Chief Executive Officer
WITNESS:
/s/ Denise M. Kuntz /s/ Frank W. Bonvino
Frank W. Bonvino
<TABLE>
Exhibit 11
INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES
Computation of Earnings (Loss) Per Common Share
(dollars in thousands, except per share amounts)
Years Ended
--------------------------------------------------------------------
February 29, February 28, February 28, February 28, February 29,
2000 1999 1998 1997 1996
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Average shares of common
stock outstanding 18,751,826 18,758,621 18,385,262 17,982,348 17,964,688
Dilutive potential common shares 34,246 144,722 233,791 - 49,358
----------- ----------- ----------- ----------- ------------
Total adjusted average shares 18,786,072 18,903,343 18,619,053 17,982,348 18,014,046
=========== =========== =========== =========== ===========
Earnings (loss) from continuing
operations $ 24,695 $ 6,832 $24,674 $(11,374) $15,017
Earnings (loss) from discontinued
operations (19,560) (138,702) (4,650) 14,154 9,058
-------- --------- ------- -------- -------
Net earnings (loss) 5,135 (131,870) 20,024 2,780 24,075
Less dividends on preferred stock - - - - 260
-------- --------- ------- -------- -------
Net earnings (loss) applicable
to common stock $ 5,135 $(131,870) $20,024 $ 2,780 $23,815
======== ========= ======= ======== =======
Basic earnings (loss) per share:
Continuing operations $ 1.32 $ 0.36 $ 1.34 $ (0.63) $ 0.82
Discontinued operations (1.05) (7.39) (0.25) 0.78 0.51
-------- --------- ------- -------- -------
Total $ 0.27 $ (7.03) $ 1.09 $ 0.15 $ 1.33
======== ========= ======= ======== =======
Diluted earnings (loss) per share:
Continuing operations $ 1.31 $ 0.36 $ 1.33 $ (0.63) $ 0.82
Discontinued operations (1.04) (7.34) (0.25) 0.78 0.50
-------- --------- ------- -------- -------
Total $ 0.27 $ (6.98) $ 1.08 $ 0.15 $ 1.32
======== ========= ======= ======== =======
</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 per share is computed similar to basic earnings per
share except that the weighted average shares outstanding is increased
to include additional shares from the assumed exercise of stock options,
if dilutive. The number of additional shares is calculated by assuming
that outstanding stock options were exercised and that 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 29, February 28, February 28, February 28, February 29,
2000 1999 1998 1997 1996
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Earnings (loss) from continuing operations
before income taxes $40,351 $12,266 $36,990 $(9,767) $14,707
Plus: Fixed charges (1) 25,444 25,719 27,154 28,052 29,314
Less: Capitalized interest (814) (196) (8) (109) (128)
------- ------- ------- ------- -------
Earnings available to cover fixed charges $64,981 $37,789 $64,136 $18,176 $43,893
======= ======= ======= ======= =======
Ratio of earnings to fixed charges(2)(3) 2.55 1.47 2.36 .65 1.50
======= ======= ======= ======= =======
<CAPTION>
(1) Fixed charges consist of the following:
Years Ended
----------------------------------------------------------------
February 29, February 28, February 28, February 28, February 29,
2000 1999 1998 1997 1996
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Interest expense, gross $16,397 $16,519 $17,651 $18,658 $19,613
Rentals (interest factor) 9,047 9,200 9,503 9,394 9,701
------- ------- ------- ------- -------
Total fixed charges $25,444 $25,719 $27,154 $28,052 $29,314
======= ======= ======= ======= =======
</TABLE>
(2) For the year ended February 28, 1997, earnings were inadequate to
cover fixed charges. The deficiency of $9,876 was the result of unusual
items. Exclusive of these unusual items, the ratio of earnings to fixed
charges would have been 1.36 for the year ended February 28, 1997.
(3) Exclusive of unusual items, the ratio of earnings to fixed charges
would have been 2.53 and 2.60, respectively for the years ended February
29, 2000 and February 28, 1999.
Exhibit 13
Five-Year Comparative Summary
<TABLE>
Fiscal year ended the last day of February
(dollars and shares in millions, except per share data) 2000 1999 1998 1997 1996
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Consolidated Summary of Operations
Net sales $ 2,384.7 $ 2,296.6 $ 2,251.1 $ 2,249.1 $ 2,194.7
Cost of materials and production (2,032.3) (1,961.5) (1,915.2) (1,918.3) (1,856.3)
Delivery and distribution (168.4) (150.3) (145.9) (155.5) (154.1)
Selling, general and administrative (132.1) (132.9) (140.5) (152.2) (148.2)
Unusual items 0.5 (29.0) (5.0) (20.1) (5.6)
Interest, net (11.0) (10.4) (7.5) (12.3) (15.0)
Other income (expense), net (1.0) (0.2) - (0.5) (0.8)
- ----------------------------------------------------------------------------------------------------------------------
Earnings (loss) from continuing operations
before income taxes 40.4 12.3 37.0 (9.8) 14.7
Income taxes (15.7) (5.5) (12.4) (1.6) 0.3
- ----------------------------------------------------------------------------------------------------------------------
Earnings (loss) from continuing operations 24.7 6.8 24.6 (11.4) 15.0
- ----------------------------------------------------------------------------------------------------------------------
Discontinued operations:
Operating earnings (loss), after tax - (14.1) (4.6) 14.2 9.1
Net loss on disposition, after tax (19.6) (124.6) - - -
- ----------------------------------------------------------------------------------------------------------------------
Earnings (loss) from discontinued operations (19.6) (138.7) (4.6) 14.2 9.1
- ----------------------------------------------------------------------------------------------------------------------
Net earnings (loss) $ 5.1 $ (131.9) $ 20.0 $ 2.8 $ 24.1
======================================================================================================================
Basic earnings (loss) per share:
Continuing operations $ 1.32 $ 0.36 $ 1.34 $ (0.63) $ 0.82
Discontinued operations (1.05) (7.39) (0.25) 0.78 0.51
- ----------------------------------------------------------------------------------------------------------------------
Total $ 0.27 $ (7.03) $ 1.09 $ 0.15 $ 1.33
======================================================================================================================
Diluted earnings (loss) per share:
Continuing operations $ 1.31 $ 0.36 $ 1.33 $ (0.63) $ 0.82
Discontinued operations (1.04) (7.34) (0.25) 0.78 0.50
- ----------------------------------------------------------------------------------------------------------------------
Total $ 0.27 $ (6.98) $ 1.08 $ 0.15 $ 1.32
======================================================================================================================
Year-End Financial Position
Current assets (3) $ 354.0 $ 340.1 $ 383.4 $ 439.9 $ 389.7
Current liabilities (3) 277.5 264.2 221.8 257.6 215.7
Working capital (excluding cash and short-term debt)(3) 126.8 179.3 177.3 268.6 211.1
Property, plant and equipment, net (2) 204.9 165.2 170.0 175.4 175.6
Long-term debt (2) 147.2 121.2 121.0 200.9 196.5
Shareholders' equity 255.1 260.3 309.4 289.6 299.6
Total assets (3) 736.2 696.9 703.6 804.8 768.5
- ----------------------------------------------------------------------------------------------------------------------
Dividends Paid
Preferred stock $ - $ - $ - $ - $ 0.1
Common stock 15.0 15.0 14.7 14.5 14.4
Per share of common stock 0.80 0.80 0.80 0.80 0.80
- ----------------------------------------------------------------------------------------------------------------------
Other Financial Data
Current ratio 1.3:1 1.3:1 1.7:1 1.7:1 1.8:1
Equity per share of common stock $ 13.62 $ 13.86 $ 16.51 $ 16.08 $ 16.66
Debt to total capitalization (2) 45% 38% 32% 43% 41%
Depreciation (2) $ 18.6 $ 18.6 $ 20.3 $ 19.9 $ 20.1
Capital expenditures, excluding acquisitions (2) $ 49.4 $ 28.1 $ 18.6 $ 21.7 $ 26.2
Average common shares outstanding:
Basic 18.8 18.8 18.4 18.0 18.0
Diluted 18.8 18.9 18.6 18.0 18.0
Number of common shareholders 4,445 4,658 4,705 5,087 4,930
Number of employees (2) 4,362 4,232 4,043 4,204 4,183
Market price per share of common stock:
Close $10 15/16 $21 11/16 $27 15/16 $ 21 1/8 $ 18 5/8
High $ 24 3/16 $ 31 7/16 $32 7/16 $ 22 $ 23 7/8
Low $ 10 3/4 $ 15 3/8 $20 $ 15 1/8 $ 17 1/4
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) In fiscal 1999, the Company classified its Venezuela Foods
business as discontinued operations. Prior year information
has been reclassified accordingly.
(2) Continuing operations only.
(3) Includes discontinued operations.
MANAGEMENT'S DISCUSSION AND ANALYSIS
The Company currently operates in two business segments: Multifoods
Distribution Group and North America Foods. Multifoods Distribution
Group markets and distributes a broad selection of food and related
products to the foodservice industry in the United States. Products are
delivered from a nationwide network of distribution centers. North
America Foods consists of two units, U.S. Foods and Robin Hood
Multifoods. U.S. Foods produces bakery mixes and frozen bakery products
for foodservice operators and commercial customers. Robin Hood
Multifoods, a Canadian subsidiary, processes and markets flour, bakery
mixes, condiments and other food products for consumers and commercial
customers. A summary of operating results by business segment is
included in Note 16 to the consolidated financial statements.
In August 1999, the Company completed the sale of its Venezuela Foods
business. The Venezuelan business is classified as discontinued
operations in the consolidated financial statements and in the following
management discussion and analysis.
RESULTS OF OPERATIONS
- ---------------------
Overview
For the year ended February 29, 2000, net earnings were $5.1 million, or
27 cents per share. Fiscal 2000 earnings were reduced by an after-tax
charge of $19.6 million associated with discontinued operations. The
charge was due to a loss on the sale of the Venezuela Foods business and
higher-than-expected Venezuelan operating losses.
For fiscal 1999, the net loss from continuing and discontinued
operations totaled $131.9 million, or $6.98 per diluted share. The net
loss resulted from a $138.7 million loss from discontinued operations,
which included a $93.3 million non-cash charge for the recognition of
unrealized foreign currency translation losses. Fiscal 1999 results
were also reduced by after-tax unusual charges of $18.7 million, or 99
cents per diluted share, from continuing operations. The unusual
charges were related to the Company's plan to consolidate its vending
and foodservice distribution businesses, the write-off of receivables
from a major customer of the Company's former food-exporting business,
and the write-down of assets and costs associated with the Canadian
frozen bakery business. Further information on unusual charges follows
in the discussion of segment results and in Note 5 to the consolidated
financial statements.
Continuing Operations
Fiscal 2000 compared with Fiscal 1999
Overview
Fiscal 2000 earnings from continuing operations were $24.7 million, or
$1.31 per diluted share, compared with $6.8 million, or 36 cents per
share, a year ago. Excluding unusual charges, fiscal 1999 earnings from
continuing operations were $25.5 million, or $1.35 per diluted share.
Current-year earnings declined because of lower operating earnings in
Multifoods Distribution Group, which experienced higher delivery and
distribution costs. The increase in these costs was related to issues
associated with the distribution group's facility consolidations and
information systems conversion. The Company experienced a decline in
productivity due to employee turnover at recently consolidated
facilities and inefficiencies as employees adjusted to new warehouse
layouts and a new information system. In order to maintain strong
customer service, the Company added temporary employees and incurred
additional freight charges. The Company is addressing these issues and
expects to return to more normalized cost levels by the middle of next
fiscal year.
The decline in fiscal 2000 earnings, however, was partially offset by
higher operating earnings in North America Foods and by lower
administrative expenses, which benefited from reduced pension and
employee incentive compensation costs.
Segment Results
Multifoods Distribution Group: Net sales increased 3% to $1.9 billion as
a result of higher sales volumes to independent vending operators and
the addition of results from Better Brands, Inc., a foodservice
distribution business that was acquired in October 1999. The increase
was partially offset by a significant decline in cheese prices during
the last half of the fiscal year and lower sales to pizza restaurants.
Excluding the impact of the cheese price decline and the acquisition of
Better Brands, overall sales volumes increased 2% for the year.
Operating earnings before unusual charges declined 28% to $20.4 million
due to increased labor and delivery costs at the Company's foodservice
and recently consolidated distribution facilities. The increased costs
at these facilities more than offset improved results achieved at the
Company's vending distribution facilities and lower administrative
expenses.
In fiscal 1999, the Company recognized an unusual charge of $11.5
million for actions associated with the Company's plan to consolidate
its vending and foodservice operations into a single business. The high
delivery and distribution costs experienced in fiscal 2000 more than
offset the operating earnings benefit this year from the consolidation
program. The Company continues to expect the consolidation plan to
provide long-term annualized improvement in operating earnings of $9
million to $12 million from additional capacity to grow sales and cost-
savings. The timing of achieving these full benefits, however, is not
expected to occur until fiscal 2002.
In the third quarter of fiscal 2000, the Company recognized a gain of
$0.5 million from the reversal of certain reserves established as part
of the distribution group's consolidation plan and from the sale of a
distribution facility. The reversal was required as management
determined that four distribution centers identified for closure under
the original plan would remain open. Consequently, the Company had
fewer-than-planned work-force reductions and lower lease commitment
costs. The decision to keep the four distribution centers open was
based on the acquisition of Better Brands in the Northeast United
States, as well as strong growth potential and strategic opportunities
in certain markets. Except for the facilities that will now stay open,
remaining actions are expected to be implemented as planned.
North America Foods: Net sales increased 8% to $485.1 million, due to
higher sales volumes in the United States and Canada. Sales of U.S.
bakery products increased 14% primarily because of additional business
with large in-store bakery chains. In Canada, sales increased 5% on
higher volumes of bakery ingredients and flour to commercial customers
and condiments to foodservice customers. In addition, sales benefited
from favorable currency translation because of a stronger Canadian
dollar but were reduced by the impact of lower wheat costs, which affect
the Company's prices.
Operating earnings before unusual charges increased 23% to $38.6 million
because of the higher sales volumes and lower raw material costs. The
improvement in operating margin resulted primarily from the effects of
spreading fixed expenses over the higher sales volumes.
In fiscal 1999, the Company recognized an unusual charge of $7.2 million
for the write-down of assets and the cost of work-force reductions in
its Canadian frozen bakery business.
Non-Operating Expense and Income
In fiscal 2000, net interest expense for continuing operations was $11
million, compared with $10.4 million last year. The increase in
interest expense resulted from higher debt levels but was partially
offset by an increase in interest income. In the current year, the
Company recognized interest income on a note from Gruma S.A. de C.V.
(Gruma) that was received from the sale of its Venezuelan consumer and
commercial foods business.
Interest expense for continuing operations excludes interest that was
associated with debt obligations of the Company's discontinued Venezuela
Foods business. Interest expense classified in discontinued operations
for fiscal years 2000 and 1999 was $2.4 million and $4.9 million,
respectively.
In fiscal 1999, the Company recognized a gain of $0.8 million from the
sale of its investment in a Mexican animal feed business.
Income Taxes
The effective tax rates on earnings before unusual items was 38% in
fiscal 2000 and 1999. Including the effect of unusual items, the
Company's overall tax rates were 38.8% in fiscal 2000 and 44.3% in
fiscal 1999. The Company currently expects an effective tax rate of
approximately 38% in fiscal 2001.
Fiscal 1999 compared with Fiscal 1998
Overview
Fiscal 1999 earnings from continuing operations were $6.8 million, or 36
cents per share, compared with $24.6 million, or $1.33 per diluted
share, in fiscal 1998. Net earnings were affected by unusual charges in
both years. Excluding unusual charges, fiscal 1999 earnings were $25.5
million, or $1.35 per diluted share, compared with $27.8 million, or
$1.50 per diluted share, in the prior year. The decline in earnings was
the result of non-recurring items that contributed 33 cents per share to
fiscal 1998 earnings. These non-recurring items included income from
the Company's divested food-exporting business, a gain on the
elimination of the post-retirement health-care benefit subsidy for
future retirees and interest income on income tax refunds. In addition,
fiscal 1998 earnings benefited from a low effective tax rate.
Segment Results
Multifoods Distribution Group: Net sales increased 4% to $1.85 billion
as a result of higher sales to independent vending operators and pizza
and Mexican restaurant customers. The increase was also due to higher
foodservice prices that resulted from an increase in cheese costs.
Operating earnings before unusual items increased 19% to $28.3 million
as a result of the higher sales volumes and lower administrative costs.
The increase was partially offset by higher distribution costs,
resulting from inefficiencies associated with the consolidation of
distribution centers. Fiscal 1998 results included a $2 million
curtailment gain from the elimination of the subsidy for post-retirement
health-care benefits for future retirees.
North America Foods: Net sales declined 4% to $450.8 million due to
unfavorable currency translation because of a stronger U.S. dollar and
the impact of lower wheat costs, which reduced sales prices. Excluding
these factors, sales increased approximately 2% in fiscal 1999. The
increase was the result of higher U.S. bakery product and foodservice
condiments sales volumes. The increase was partially offset by volume
declines in consumer branded flour and commercial bakery ingredients in
Canada.
Operating earnings before unusual items increased 2% to $31.3 million as
a result of the higher sales volumes and lower selling and
administrative expenses. Operating earnings, however, were adversely
affected by approximately $2.2 million from currency translation.
Divested Business: The divested business segment represents the
Company's former food-exporting business, which the Company exited in
fiscal 1998. During fiscal 1999, the Company recognized earnings of
$0.8 million from a refund of customs taxes paid in prior years. The
Company also recognized an unusual charge of $10.3 million for the
write-off of receivables from a major customer.
Non-Operating Expense and Income
In fiscal 1999, net interest expense for continuing operations was $10.4
million, compared with $7.5 million in fiscal 1998. The low net
interest cost in fiscal 1998 was the result of $3.2 million in interest
income recognized from U.S. Federal income tax refunds.
Income Taxes
The effective tax rates on earnings before unusual items were 38% in
fiscal 1999 and 33.7% in fiscal 1998. The low tax rate in fiscal 1998
was the result of a change in the expected utilization of net operating
loss and capital loss carryforwards of the Company's Canadian business.
Including the effect of unusual items, the Company's overall tax rates
were 44.3% in fiscal 1999 and 33.3% in fiscal 1998.
Discontinued Operations
In fiscal 1999, the Company recognized an estimated loss of $124.6
million for the planned disposition of its Venezuela Foods business.
The disposition loss consisted of $93.3 million for the recognition of
the unrealized foreign currency translation losses previously included
as a separate component of shareholders' equity, a provision of $22
million for operating losses from the measurement date (July 31,1998) to
the expected disposal date, and a $9.3 million loss on disposal. The
$9.3 million estimated loss on disposal was based on selling the
business at net book value during fiscal 2000, with the loss resulting
from estimated transaction costs and taxes.
In fiscal 2000, the Company completed its divestiture of the Venezuela
Foods business and recorded an additional after-tax charge of $19.6
million. The charge consisted of a $4 million loss on the June 1999
sale of the Venezuelan agriculture and animal feeds business, a $3.8
million provision resulting from higher-than-expected operating losses
and an $11.8 million charge from the August 1999 sale of the Venezuelan
consumer and commercial foods business to Gruma. The $11.8 million
charge primarily resulted from a higher-than-expected loss on the sale
transaction, and a write-down of certain receivables and properties in
Venezuela that were retained by the Company.
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. As of February 29, 2000, the Company's committed revolving
credit agreements totaled $276 million and its uncommitted lines of
credit totaled $115 million. The Company intends to establish new long-
term credit facilities during fiscal 2001 to replace the existing
revolving credit agreements that expire in March 2001. 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 29, 2000, $140 million was available under the medium-
term note program. See Notes 9 and 10 to the consolidated financial
statements for additional information on capital resources.
The Company's debt-to-total-capitalization ratio increased to 45% at
February 29, 2000, compared with 38% at February 28, 1999. The increase
in the debt-to-total-capitalization ratio was primarily the result of
planned capital expenditures and the acquisition of Better Brands.
Capital expenditures were $49.4 million in fiscal 2000, compared with
$28.1 million in fiscal 1999. The increase reflects expenditures for
facility expansion and consolidation projects in Multifoods Distribution
Group and investments in North America Foods to accommodate volume
growth. For fiscal 2001, the Company currently expects to spend about
$35 million on capital projects. This includes investments in the
distribution group's remaining consolidation and expansion projects and
further investment in North America Foods.
In June 1999, the Company sold its Venezuelan agriculture and animal
feeds business for $27.5 million in cash. Proceeds were used to reduce
debt obligations of the Venezuelan business. In August 1999, the
Company completed the sale of its Venezuelan consumer and commercial
foods business to Gruma. The Company received an $18.96 million note
from Gruma, payable over five years at an annual interest rate of 7.5%,
and Gruma paid off or assumed the remaining debt obligations of the
Venezuelan business, which totaled $55.5 million. The Company, however,
retained $11.9 million of Venezuelan receivables and properties, which
are expected to be collected or liquidated over the next 12-18 months.
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 2001.
MARKET RISK MANAGEMENT
- ----------------------
The Company is exposed to market risks resulting from changes in
commodity prices, foreign currency exchange rates and interest rates.
Changes in these factors could adversely affect the Company's results of
operations and financial position. To minimize these risks, the Company
utilizes derivative financial instruments, such as commodity futures
contracts, currency forward contracts and interest rate swaps. The
Company uses derivative financial instruments as risk management tools
and not for speculative or trading purposes. See Note 8 to the
consolidated financial statements for further information regarding
financial instruments.
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 contracts to reduce the
risk of price fluctuations on anticipated flour, soybean oil and sugar
purchases. The U.S. dollar-denominated futures contracts are traded on
U.S. regulated exchanges.
The open futures contracts mature in the period from March 2000 to
December 2000 and substantially coincide with the maturities of the open
wheat purchase contracts, open flour sales contracts and the anticipated
timing of flour, soybean oil and sugar purchases.
Foreign Currency Hedging: The Company's Canadian operations enter into
foreign currency forward contracts to minimize its exposure to foreign
currency fluctuations as a result of U.S. dollar-denominated sales and
purchases. In addition, the Company's Canadian operations also enter
into foreign currency forward contracts that have the effect of
converting the U.S. dollar-denominated grain futures contracts (see
Commodity Risk Management) into Canadian dollar equivalents.
Interest Rate Risk Management: The Company's exposure to changes in
interest rates results from borrowing activities used to meet its
working capital and other long-term financing needs. The borrowings are
comprised of notes payable, principally to banks, which have variable
interest rates, and of fixed rate medium-term notes.
The Company used sensitivity analysis to determine the impact of market
risk exposures on the fair values of the Company's debt and financial
instruments, including derivative financial instruments. Sensitivity
analysis assesses the risk of loss in market risk sensitive instruments
based on hypothetical changes in market prices or rates. The following
tables provide information on the potential impact in fair value and
pre-tax earnings assuming a 10% adverse change.
Potential Effect on Fair Value
------------------------------
(in millions) 2000 1999
- ----------------------------------------------------------------
Futures contracts $1.1 $2.1
Medium-term notes 6.2 6.6
Interest rate swaps - 1.3
- ----------------------------------------------------------------
Potential Decrease in Pre-Tax Earnings
--------------------------------------
(in millions) 2000 1999
- ----------------------------------------------------------------
Currency forward contracts $2.9 $1.1
Notes payable 0.9 0.5
- ----------------------------------------------------------------
CAUTIONARY STATEMENT RELEVANT TO FORWARD-LOOKING INFORMATION
- ------------------------------------------------------------
This document 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 or weather conditions that may
affect the costs of grain, cheese, other raw materials and fuel; changes
in laws and regulations; fluctuations in interest rates; the Company's
ability to realize the book value of its remaining Venezuelan assets;
the Company's ability to reduce delivery and distribution costs and
realize the earnings benefits related to the distribution group's
consolidation and expansion plans; the inability of the Company to
collect on a $6 million insurance claim related to the theft of product
in 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.
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 29,
2000, and February 28, 1999, and the related consolidated statements of
operations, cash flows and shareholders' equity for each of the years in
the three-year period ended February 29, 2000. 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
29, 2000, and February 28, 1999, and the results of their operations and
their cash flows for each of the years in the three-year period ended
February 29, 2000, in conformity with generally accepted accounting
principles.
/s/ KPMG LLP
- -----------------------
KPMG LLP
Minneapolis, Minnesota
March 27, 2000
Management's Responsibility for Financial Statements
The consolidated financial statements have been prepared by management
in conformity with generally accepted accounting principles and include,
where required, amounts based on management's best estimates and
judgments. Management continues to be responsible for the integrity and
objectivity of data in these consolidated financial statements, which it
seeks to assure through an extensive system of internal controls. Such
controls are designed to provide reasonable, but not absolute, assurance
that assets are safeguarded from unauthorized use or disposition and
that financial records are sufficiently reliable to permit the
preparation of consolidated financial statements. It is recognized that
estimates and judgments are required to assess and balance the relative
cost and expected benefits of any system of internal controls.
The system of internal accounting controls is designed to provide
reasonable assurance that the books and records reflect the Company's
transactions and that its established policies and procedures are
carefully followed. The system includes written policies and
procedures, a financial reporting system, an internal audit department
and careful selection and training of qualified personnel.
/s/ Gary E. Costley /s/ John E. Byom
- -------------------- --------------------------
Gary E. Costley John E. Byom
Chairman, President Vice President, Finance,
and Chief Executive Officer and Chief Financial Officer
INTERNATIONAL MULTIFOODS CORPORATION and SUBSIDIARIES
Consolidated Statements of Operations
<TABLE>
Fiscal year ended the last day of February
(in thousands, except per share data) 2000 1999 1998
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $ 2,384,715 $ 2,296,550 $ 2,251,096
Cost of materials and production (2,032,349) (1,961,441) (1,915,226)
Delivery and distribution (168,371) (150,310) (145,879)
- -----------------------------------------------------------------------------
Gross profit 183,995 184,799 189,991
Selling, general and
administrative (132,057) (132,943) (140,503)
Unusual items 519 (28,963) (5,000)
- -----------------------------------------------------------------------------
Operating earnings 52,457 22,893 44,488
Interest, net (11,040) (10,382) (7,552)
Other income (expense), net (1,066) (245) 54
- -----------------------------------------------------------------------------
Earnings from continuing
operations before income taxes 40,351 12,266 36,990
Income taxes (15,656) (5,434) (12,316)
- -----------------------------------------------------------------------------
Earnings from continuing
operations 24,695 6,832 24,674
- -----------------------------------------------------------------------------
Discontinued operations:
Operating loss, after tax - (14,068) (4,650)
Net loss on disposition,
after tax (19,560) (124,634) -
- -----------------------------------------------------------------------------
Loss from discontinued operations (19,560) (138,702) (4,650)
- -----------------------------------------------------------------------------
Net earnings (loss) $ 5,135 $ (131,870) $ 20,024
=============================================================================
Basic earnings (loss) per share:
Continuing operations $ 1.32 $ 0.36 $ 1.34
Discontinued operations (1.05) (7.39) (0.25)
- -----------------------------------------------------------------------------
Total $ 0.27 $ (7.03) $ 1.09
=============================================================================
Diluted earnings (loss) per share:
Continuing operations $ 1.31 $ 0.36 $ 1.33
Discontinued operations (1.04) (7.34) (0.25)
- -----------------------------------------------------------------------------
Total $ 0.27 $ (6.98) $ 1.08
=============================================================================
Average shares of common stock
outstanding:
Basic 18,752 18,759 18,385
Diluted 18,786 18,903 18,619
- -----------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
INTERNATIONAL MULTIFOODS CORPORATION and SUBSIDIARIES
Consolidated Balance Sheets
<TABLE>
February 29, 2000, and February 28, 1999
(in thousands) 2000 1999
- -------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 11,224 $ 13,495
Trade accounts receivable, net of allowance 122,638 124,843
Inventories 171,342 162,414
Deferred income taxes 9,485 13,364
Other current assets 39,299 25,951
- -------------------------------------------------------------------------
Total current assets 353,988 340,067
- -------------------------------------------------------------------------
Property, plant and equipment, net 204,924 165,161
Goodwill, net 84,894 82,089
Net noncurrent assets of discontinued operations - 44,905
Other assets 92,401 64,711
- -------------------------------------------------------------------------
Total assets $736,207 $696,933
=========================================================================
Liabilities and Shareholders' Equity
Current liabilities:
Notes payable $ 41,521 $ 32,489
Current portion of long-term debt 20,000 2,750
Accounts payable 167,282 161,700
Net current liabilities of discontinued
operations - 9,079
Other current liabilities 48,652 58,227
- -------------------------------------------------------------------------
Total current liabilities 277,455 264,245
- -------------------------------------------------------------------------
Long-term debt 147,199 121,199
Deferred income taxes 23,170 17,036
Employee benefits and other liabilities 33,259 34,137
- -------------------------------------------------------------------------
Total liabilities 481,083 436,617
- -------------------------------------------------------------------------
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 91,888 92,000
Retained earnings 242,013 251,874
Accumulated other comprehensive loss (12,122) (17,215)
Treasury stock, 3,106 and 3,068 shares, at cost (68,437) (67,741)
Unearned compensation (402) (786)
- -------------------------------------------------------------------------
Total shareholders' equity 255,124 260,316
- -------------------------------------------------------------------------
Commitments and contingencies
- -------------------------------------------------------------------------
Total liabilities and shareholders' equity $736,207 $696,933
=========================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
INTERNATIONAL MULTIFOODS CORPORATION and SUBSIDIARIES
Consolidated Statements of Cash Flows
<TABLE>
Fiscal year ended the last day of February
(in thousands) 2000 1999 1998
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operations:
Earnings from continuing operations $ 24,695 $ 6,832 $ 24,674
Adjustments to reconcile earnings from
continuing operations to cash provided by
continuing operations:
Depreciation and amortization 22,157 22,081 23,965
(Gain) loss from unusual items (519) 28,963 5,000
Deferred income tax expense (benefit) 8,443 (2,748) 2,486
Provision for losses on (recoveries of)
receivables 1,847 713 (430)
Changes in working capital* (2,347) (15,582) 50,222
Other, net (4,276) (3,107) (11,025)
- -------------------------------------------------------------------------------------------
Cash provided by continuing operations 50,000 37,152 94,892
Cash provided by (used for)
discontinued operations (12,541) (39,500) 35,304
- -------------------------------------------------------------------------------------------
Cash provided by (used for)
operations 37,459 (2,348) 130,196
- -------------------------------------------------------------------------------------------
Cash flows from investing activities:
Capital expenditures (49,438) (28,050) (18,642)
Acquisition of business (27,934) - -
Purchase of Venezuelan operation assets (15,799) - -
Proceeds from sale of investment - 2,340 -
Proceeds from other property disposals 4,405 2,010 669
Discontinued operations 38,098 (6,220) (5,604)
- -------------------------------------------------------------------------------------------
Cash used for
investing activities (50,668) (29,920) (23,577)
- -------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net increase (decrease) in notes payable 9,492 31,430 (12,862)
Additions to long-term debt 44,921 3,157 -
Reductions in long-term debt (2,750) (23,750) (60,658)
Dividends paid (14,988) (14,995) (14,665)
Proceeds from issuance of common stock 1,235 4,129 16,108
Purchase of treasury stock (2,598) (4,787) (799)
Discontinued operations (26,195) 45,346 (31,974)
Other, net 2,104 (2,133) (16)
- -------------------------------------------------------------------------------------------
Cash provided by (used for)
financing activities 11,221 38,397 (104,866)
- -------------------------------------------------------------------------------------------
(Increase) decrease in cash from discontinued
operations (263) (1,747) 1,978
- -------------------------------------------------------------------------------------------
Effect of exchange rate changes
on cash and cash equivalents (20) (13) (52)
- -------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (2,271) 4,369 3,679
Cash and cash equivalents at beginning of year 13,495 9,126 5,447
- -------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 11,224 $ 13,495 $ 9,126
===========================================================================================
*Cash flows from changes in working capital:
Accounts receivable $ 9,325 $(17,880) $ 67,307
Inventories (1,124) (8,693) 19,874
Other current assets (6,960) 5,360 2,068
Accounts payable 1,036 30,744 (38,300)
Other current liabilities (4,624) (25,113) (727)
- -------------------------------------------------------------------------------------------
Net change $ (2,347) $(15,582) $ 50,222
===========================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
<TABLE>
INTERNATIONAL MULTIFOODS CORPORATION and SUBSIDIARIES
Consolidated Statements of Shareholders' Equity
10 cents par value Accumulated
------------------ Capital in Other
Common Treasury Excess of Retained Comprehensive Unearned
(in thousands) Stock Stock Par Value Earnings Loss Compensation Total
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
February 28, 1997 $2,184 $(83,262) $88,124 $ 393,335 $(110,309) $ (494) $289,578
Comprehensive income(a) - - - 20,024 (4,002) - 16,022
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
- ----------------------------------------------------------------------------------------------------------------------
Balance at
February 28, 1998 2,184 (67,480) 91,340 398,754 (114,311) (1,134) 309,353
Comprehensive loss(a) - - - (131,870) 97,096 - (34,774)
Dividends declared on
common stock - - - (15,010) - - (15,010)
170 shares purchased for
treasury - (4,787) - - - - (4,787)
208 shares issued for
employee benefit plans - 4,526 660 - - (262) 4,924
Amortization of unearned
compensation - - - - - 610 610
- ----------------------------------------------------------------------------------------------------------------------
Balance at
February 28, 1999 2,184 (67,741) 92,000 251,874 (17,215) (786) 260,316
Comprehensive income(a) - - - 5,135 5,093 - 10,228
Dividends declared on
common stock - - - (14,996) - - (14,996)
124 shares purchased for
treasury - (2,599) - - - - (2,599)
86 shares issued for
employee benefit plans - 1,903 (112) - - (226) 1,565
Amortization of unearned
compensation - - - - - 610 610
- ----------------------------------------------------------------------------------------------------------------------
Balance at
February 29, 2000 $2,184 $(68,437) $91,888 $ 242,013 $ (12,122) $ (402) $255,124
======================================================================================================================
</TABLE>
(a) Reconciliations of net earnings (loss) to comprehensive income (loss) are
as follows:
<TABLE>
(in thousands) 2000 1999 1998
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net earnings (loss) $ 5,135 $(131,870) $20,024
- -------------------------------------------------------------------------------------------------
Other comprehensive income (loss):
Foreign currency translation adjustments 3,600 (4,547) (2,812)
Reclassification adjustment due to foreign currency
translation adjustments recognized - 101,555 -
Minimum pension liability adjustment (net of tax
of $(955), $(56), and $761, respectively) 1,493 88 (1,190)
- -------------------------------------------------------------------------------------------------
Other comprehensive income (loss) 5,093 97,096 (4,002)
- -------------------------------------------------------------------------------------------------
Comprehensive income (loss) $10,228 $ (34,774) $16,022
=================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
Notes to Consolidated Financial Statements
Note 1: Summary of Significant Accounting Policies
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the consolidated
financial statements and related notes to consolidated financial
statements. Actual results could differ from these estimates.
In fiscal 2000, the Company completed the sale of its Venezuela
Foods business. The business segment is classified as discontinued
operations in the consolidated financial statements (see Note 3). The
notes to the consolidated financial statements, except where otherwise
indicated, relate to continuing operations only.
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.
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.
Stock-Based Compensation
The Company uses the intrinsic value method prescribed by Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees," and related interpretations in accounting for employee stock
options. Under the intrinsic value method, compensation expense is
recorded only to the extent that the market price of the common stock
exceeds the exercise price of the stock option on the date of grant.
Income Taxes
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
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,
if dilutive. The number of additional shares is calculated by assuming
that outstanding stock options were exercised and that the proceeds from
such exercises were used to acquire shares of common stock at the
average market price during the reporting period.
The computations for basic and diluted earnings per share from
continuing operations are as follows:
<TABLE>
(in thousands, except per share data) 2000 1999 1998
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Earnings from continuing operations $24,695 $ 6,832 $24,674
- -------------------------------------------------------------------------------
Average shares of common stock outstanding:
Basic 18,752 18,759 18,385
Effect of stock options 34 144 234
- -------------------------------------------------------------------------------
Diluted 18,786 18,903 18,619
- -------------------------------------------------------------------------------
Earnings per share from continuing operations:
Basic $ 1.32 $ 0.36 $ 1.34
Diluted 1.31 0.36 1.33
- -------------------------------------------------------------------------------
</TABLE>
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.
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 costs of businesses acquired over the
fair market value of net tangible and identifiable intangible assets.
Such excess costs are 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 29, 2000, and February 28, 1999, was $32.9
million and $29.3 million, respectively.
Recoverability of Long-Lived Assets
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.
New Accounting Pronouncement
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133 (SFAS 133), "Accounting for
Derivative Instruments and Hedging Activities." SFAS 133 requires that
companies record derivative instruments on the consolidated balance
sheet at their fair value. Changes in fair value will be recorded each
period in earnings or other comprehensive income, depending on whether a
derivative is designated as part of a hedge transaction and, if it is,
the type of hedge transaction. Gains and losses on derivative
instruments reported in other comprehensive income will be reclassified
as earnings in the periods in which earnings are affected by the hedged
item. The Company is currently assessing the impact of SFAS 133 on its
financial statements and expects to adopt the new standard in March
2001.
Note 2: Business Acquired
In October 1999, the Company completed its acquisition of Better Brands,
Inc., a broadline foodservice distributor located in Windsor,
Connecticut. The acquisition was accounted for using the purchase
method, and accordingly, the results of operations for Better Brands
have been included in the Company's consolidated financial statements
since the date of acquisition. The purchase price of $29.1 million
included goodwill of $5.1 million, which will be amortized on a
straight-line basis over 20 years. The Company's fiscal 2000 results
would not have been materially different had this acquisition occurred
at the beginning of the fiscal year.
Note 3: Discontinued Operations
In fiscal 1999, the Company recognized an estimated after-tax loss of
$124.6 million (after income tax expense of $10.8 million) for the
planned disposition of its Venezuela Foods business. The disposition
loss consisted of $93.3 million for the recognition of the unrealized
foreign currency translation losses previously included as a separate
component of shareholders' equity, a provision of $22.0 million for
operating losses from the measurement date (July 31, 1998) to expected
disposal date, and a $9.3 million loss on disposal. The $9.3 million
estimated loss on disposal was based on selling the business at net book
value during fiscal 2000, with the loss resulting from estimated
transaction costs and taxes.
In fiscal 2000, the Company completed its divestiture of the
Venezuela Foods business and recorded an additional after-tax charge of
$19.6 million (net of a $5.2 million tax benefit). The charge consisted
of a $4.0 million loss on the June 1999 sale of the Venezuelan
agriculture and animal feeds business, a $3.8 million provision
resulting from higher-than-expected operating losses and an $11.8
million charge from the August 1999 sale of the Venezuelan consumer and
commercial foods business to Gruma S.A. de C.V. (Gruma). The $11.8
million charge primarily resulted from a higher-than-expected loss on
the sale transaction, and a write-down of certain receivables and
properties in Venezuela that were retained by the Company. The retained
assets totaled $10.4 million at February 29, 2000, and the Company
expects to collect or liquidate these assets over the next 12-18 months.
Proceeds from the sale of the Venezuelan agriculture and animal
feeds business were $27.5 million in cash, which was used to reduce debt
obligations of the Venezuelan business. Proceeds from the sale of the
Venezuelan consumer and commercial foods business consisted of an $18.96
million note from Gruma and the assumption of the remaining debt
obligations of the Venezuelan business, which totaled $55.5 million.
The note receivable is payable over five years and bears interest at an
annual rate of 7.5%.
Excluding the loss related to the disposal, the operating results of
Venezuela Foods for fiscal 2000 (to the date of sale) and fiscal 1999
were as follows:
(in thousands) 2000 1999
- -------------------------------------------------------------
Net sales $115,574 $347,178
Operating loss (2,314) (28,102)
Interest, net (2,387) (4,901)
Net loss (5,584) (34,274)
- -------------------------------------------------------------
The net assets of the Venezuela Foods business as of February 28,
1999, were as follows:
(in thousands) 1999
- -------------------------------------------------------------
Cash and cash equivalents $ 2,745
Trade accounts receivable, net 34,807
Inventories 72,638
Other current assets 6,009
Notes payable (83,843)
Current portion of long-term debt (583)
Accounts payable (33,312)
Other current liabilities (7,540)
- -------------------------------------------------------------
Net current liabilities of
discontinued operations $ (9,079)
=============================================================
Property, plant and equipment, net $ 46,127
Other assets 1,665
Long-term debt (896)
Employee benefits and other
liabilities (1,991)
- -------------------------------------------------------------
Net noncurrent assets of
discontinued operations $ 44,905
=============================================================
Note 4: Interest, Net
Interest, net consisted of the following:
<TABLE>
(in thousands) 2000 1999 1998
- --------------------------------------------------------------------
<S> <C> <C> <C>
Interest expense $13,902 $11,107 $12,754
Capitalized interest (814) (196) (8)
Non-operating interest income (2,048) (529) (5,194)
- --------------------------------------------------------------------
Interest, net $11,040 $10,382 $ 7,552
====================================================================
</TABLE>
Cash payments for interest, net of amounts capitalized, totaled
$13.2 million in fiscal 2000, $11.4 million in fiscal 1999 and $14.4
million in fiscal 1998.
Interest expense of the Venezuela Foods business is classified in
discontinued operations.
Note 5: Unusual Items
Fiscal 2000
In the third quarter of fiscal 2000, the Company recognized a gain of
$0.5 million from the reversal of certain reserves established in fiscal
1999 as part of the distribution group's consolidation plan and from the
sale of a distribution facility. The reversal was required as
management determined that four distribution centers identified for
closure under the original plan would remain open. Consequently, the
Company had fewer-than-planned work-force reductions and lower lease
commitment costs. The decision to keep the four distribution centers
open was based on the acquisition of a foodservice distribution business
in the Northeast United States, as well as strong growth potential and
strategic opportunities in certain markets. Except for the facilities
that will now stay open, remaining actions are expected to be
implemented as planned.
Fiscal 1999
The Company recognized unusual items that resulted in pre-tax charges of
$29.0 million ($18.7 million after tax or 99 cents per diluted share).
The following table displays the components of the unusual charges by
business segment along with a roll-forward of the liability balance from
February 28, 1999, to February 29, 2000.
<TABLE>
Employee
Termination Lease Property, Plant
Benefits Commitment and Equipment Receivable
(in millions) and Other Costs Write-down Write-off Total
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Multifoods Distribution
Group $ 6.4 $ 2.3 $ 2.8 $ - $ 11.5
North America Foods 1.1 - 6.1 - 7.2
Divested Business - - - 10.3 10.3
- -------------------------------------------------------------------------------------
Total unusual charges 7.5 2.3 8.9 10.3 29.0
Asset write-down and
receivable write-off - - (8.9) (10.3) (19.2)
Cash payments (5.0) (0.7) - - (5.7)
- -------------------------------------------------------------------------------------
Liability balance as of
February 28, 1999 2.5 1.6 - - 4.1
Cash payments (1.5) (0.3) - - (1.8)
Liability balance reversed (0.3) (0.1) - - (0.4)
- -------------------------------------------------------------------------------------
Liability balance as of
February 29, 2000 $ 0.7 $ 1.2 $ - $ - $ 1.9
=====================================================================================
</TABLE>
Management adopted a plan to consolidate its foodservice and vending
distribution operations into a single business. The plan involved
reducing the number of distribution centers by nine, reducing the size
of the work force by approximately 300 people and reducing the vehicle
fleet size by up to 10 percent. The charge covered losses on lease
commitments; employee termination benefits; costs incurred for warehouse
network, logistics and transportation studies; and the write-down of
leasehold improvements. As a result of certain changes made to the plan
during fiscal 2000, certain accruals were reversed. See further
discussion under Fiscal 2000.
The Company recognized a charge of $7.2 million for the write-down
of assets and the cost of work-force reductions associated with its
Canadian frozen bakery business. The charge resulted from the inability
to sell the business at a price acceptable to the Company and from the
loss of a major customer. The Company evaluated the carrying value of
its long-lived assets as a result of these events and recognized a $6.1
million charge for asset impairment. In addition, a charge of $1.1
million primarily for employee termination benefits was recognized.
The Company recognized an unusual charge of $10.3 million for the
write-off of receivables from a major customer of its former food-
exporting business. The Company had negotiated an exit agreement with
this customer in fiscal 1998, which provided for payments to the Company
for amounts due under notes and accounts receivable. The agreement had
been restructured on several occasions because of the customer's
financial difficulties. As a result of uncertainties with respect to
the customer's ability to meet its obligations, the Company recognized a
$5.0 million charge in the fourth quarter of fiscal 1998. In June 1998,
the Company was notified by the customer that it would not meet its
obligations under the restructured exit agreement. The Company believes
the customer's financial problems were caused by its difficulty in
moving product into the Russian marketplace and were complicated by
economic difficulties in Russia. Accordingly, the Company believes that
the remaining amounts due from the customer are not collectible.
Fiscal 1998
The Company recognized a pre-tax charge of $5.0 million ($3.2 million
after tax or 17 cents per share) to reduce the carrying value of its
receivables from a major customer of the Company's former food-exporting
business. See further discussion under Fiscal 1999.
Note 6: Income Taxes
Income tax expense was as follows:
<TABLE>
U.S. Operations
----------------- Non-U.S.
(in thousands) Federal Other Operations Total
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C>
2000:
Current expense (benefit) $ (773) $ 93 $ 7,893 $ 7,213
Deferred expense 3,775 1,732 2,936 8,443
- ----------------------------------------------------------------------
Total tax expense $ 3,002 $1,825 $10,829 $15,656
======================================================================
1999:
Current expense $ 356 $ 278 $ 7,548 $ 8,182
Deferred expense (benefit) (3,845) (21) 1,118 (2,748)
- ----------------------------------------------------------------------
Total tax expense (benefit) $(3,489) $ 257 $ 8,666 $ 5,434
======================================================================
1998:
Current expense (benefit) $ (229) $ 283 $ 9,775 $ 9,829
Deferred expense (benefit) 3,241 1,472 (2,226) 2,487
- ----------------------------------------------------------------------
Total tax expense $ 3,012 $1,755 $ 7,549 $12,316
======================================================================
</TABLE>
Temporary differences that gave rise to deferred tax assets and
liabilities as of February 29, 2000, and February 28, 1999, were as
follows:
<TABLE>
2000 1999
-------------------- --------------------
Deferred Deferred Deferred Deferred
Tax Tax Tax Tax
(in thousands) Assets Liabilities Assets Liabilities
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Depreciation and
amortization $ 2,247 $28,328 $ 2,072 $26,793
Accrued expenses 16,535 16,012 20,591 13,959
Inventory valuation methods 537 - 633 -
Reorganization and
divestiture reserves 1,657 - 3,261 -
Provision for losses
on receivables 1,729 - 937 -
Loss carryforwards 3,735 - 8,219 -
Foreign earnings repatriation - 2,676 - 2,360
Other 7,550 1,057 5,135 1,622
- --------------------------------------------------------------------------
Subtotal 33,990 48,073 40,848 44,734
Valuation allowance (1,249) - (853) -
- --------------------------------------------------------------------------
Total deferred taxes $32,741 $48,073 $39,995 $44,734
==========================================================================
</TABLE>
At February 29, 2000, the Company had a U.S. federal consolidated net
operating loss carryforward of approximately $5.5 million that will
expire in fiscal 2019. The Company's foreign operations had net
operating loss carryforwards of approximately $1.4 million that will
expire in fiscal 2005. The Company's foreign operations also had capital
loss carryforwards of approximately $3.2 million that have no expiration
date. The Company expects to fully utilize the net operating and capital
loss carryforwards.
In fiscal 1999 and 2000, the Company recognized a valuation allowance
for its foreign tax credit carryforward due to uncertainty over the
Company's ability to utilize these credits before their expiration.
Total income taxes from continuing operations differ from the amount
computed by applying the U.S. federal income tax rate because of the
following items:
<TABLE>
(in thousands) 2000 1999 1998
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Tax at U.S. federal statutory rate $14,123 $4,293 $12,947
Differences:
Effect of taxes on non-U.S. earnings 379 912 (1,641)
State and local income taxes 1,216 167 1,141
Effect of intangibles 137 101 137
Other (199) (39) (268)
- -------------------------------------------------------------------------
Total income taxes $15,656 $5,434 $12,316
=========================================================================
</TABLE>
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
$29.9 million in fiscal 2000, $20.1 million in fiscal 1999 and $26.3
million in fiscal 1998.
Cash paid (received) for income taxes totaled $4.1 million in fiscal
2000, $13.0 million in fiscal 1999 and $(1.0) million in fiscal 1998.
Note 7: Supplemental Balance Sheet Information
<TABLE>
(in thousands) 2000 1999
- ----------------------------------------------------------------------
<S> <C> <C>
Trade accounts receivable, net:
Trade $ 127,576 $ 127,877
Allowance for doubtful accounts (4,938) (3,034)
- ----------------------------------------------------------------------
Total trade accounts receivable, net $ 122,638 $ 124,843
======================================================================
Inventories:
Raw materials, excluding grain $ 12,470 $ 12,742
Grain 2,736 2,745
Finished and in-process goods 152,493 142,122
Packages and supplies 3,643 4,805
- ----------------------------------------------------------------------
Total inventories $ 171,342 $ 162,414
======================================================================
Property, plant and equipment, net:
Land $ 14,938 $ 12,398
Buildings and improvements 97,022 82,766
Machinery and equipment 219,978 191,504
Transportation equipment 1,570 1,451
Improvements in progress 20,921 12,020
- ----------------------------------------------------------------------
354,429 300,139
Accumulated depreciation (149,505) (134,978)
- ----------------------------------------------------------------------
Total property, plant and equipment, net $ 204,924 $ 165,161
======================================================================
Other assets:
Prepaid pension $ 44,659 $ 34,595
Identifiable intangible assets 12,339 10,273
Other 35,403 19,843
- ----------------------------------------------------------------------
Total other assets $ 92,401 $ 64,711
======================================================================
Other current liabilities:
Wages and benefits $ 9,424 $ 11,075
Income taxes 8,921 14,954
Other 30,307 32,198
- ----------------------------------------------------------------------
Total other current liabilities $ 48,652 $ 58,227
======================================================================
Accumulated other comprehensive loss:
Foreign currency translation adjustment $ (10,204) $ (13,804)
Minimum pension liability adjustment (1,918) (3,411)
- ----------------------------------------------------------------------
Total accumulated other comprehensive loss $ (12,122) $ (17,215)
======================================================================
</TABLE>
Note 8: Financial Instruments
The following tables provide information on the carrying amount,
notional amounts and fair value of financial instruments, including
derivative financial instruments. The carrying value of financial
instruments classified as current assets and current liabilities, such
as cash and cash equivalents, receivables, accounts payable and short-
term debt, approximate fair value due to the short-term maturity of the
instruments. The fair value of medium-term notes, futures contracts,
currency forward contracts and interest rate swaps was based on quoted
market prices. The fair value of the note receivable from Gruma was
based on prevailing market conditions and available financial
information.
<TABLE>
<CAPTION>
2000 1999
------------------- -----------------
Carrying Fair Carrying Fair
(in thousands) Amount Value Amount Value
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Note receivable from Gruma $17,864 $16,870 $ - $ -
Liabilities:
Medium-term notes 65,000 61,907 67,000 66,286
- -------------------------------------------------------------------------
<CAPTION>
2000 1999
------------------- -----------------
Notional Fair Notional Fair
(in thousands) Amount Value Amount Value
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Derivative financial instruments:
Futures contracts-buy $11,433 $(257) $23,098 $(2,482)
Futures contracts-sell 231 - - -
Currency forward contracts-buy 11,027 (101) 11,304 99
Currency forward contracts-sell 37,692 267 20,254 214
Interest rate swaps - - 40,000 401
- -------------------------------------------------------------------------
</TABLE>
Commodity Risk Management
The Company utilizes commodity futures contracts, primarily wheat futures
contracts, to reduce the risks associated with price
fluctuations on its wheat inventories and other major bakery
ingredients, such as flour, soybean oil and sugar. For commodity
futures contracts that are accounted for as hedges, gains and losses are
deferred in inventory and subsequently included in cost of sales as the
inventory is sold.
Foreign Currency Hedging
The Company's Canadian operations enter into foreign currency forward
contracts to minimize exposure to foreign currency fluctuations with
respect to U.S. dollar-denominated transactions. The foreign exchange
forward contracts are purchased through major Canadian banking
institutions. The gains and losses arising on these transactions are
recognized in income at the maturity of the contracts.
Interest Rate Risk Management
In fiscal 2000, the Company terminated the two interest rate swaps that
it had entered into in fiscal 1999. In accordance with Emerging Issues
Task Force 84-7, "Termination of Interest Rate Swaps," the gains on the
transactions were deferred and will be recognized over the remaining
original term of the interest rate swaps.
Off-Balance Sheet Risk
As of February 29, 2000, and February 28, 1999, the Company had sold
with limited recourse $18.5 million and $17.8 million of accounts
receivable, respectively, related to its Canadian operations. To
maintain the aggregate outstanding balance, collections received on
these accounts may be replaced by new receivables. 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
operations.
Concentrations of Credit Risk
Management believes that 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.
Note 9: Notes Payable
Notes payable consisted of the following:
(in thousands) 2000 1999
- --------------------------------------------------------------------
Canadian bankers' acceptances $ 8,938 $ -
Notes payable, principally to banks 133,782 88,688
Amounts reclassified to long-term debt (101,199) (56,199)
- --------------------------------------------------------------------
Total notes payable $ 41,521 $ 32,489
====================================================================
The Company has committed revolving credit agreements totaling $276
million that expire in March 2001. The Company had available $165
million under these revolving credit agreements as of February 29, 2000.
The interest rates on borrowings under these agreements are variable and
based on current market factors. These facilities are available for
general corporate purposes. 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 2000 and 1999.
At February 29, 2000, the Company had total uncommitted lines of
credit from banks in the United States and Canada of approximately $115
million, of which $86 million was available. No compensating balances
were required for any of these credit lines.
Notes payable totaling $101.2 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 rates on notes payable outstanding at
February 29, 2000, and February 28, 1999, were 6.1% and 5.3%,
respectively.
Note 10: Long-Term Debt
Long-term debt, net of current portion of $20.0 million in fiscal 2000
and $2.8 million in fiscal 1999, was as follows:
(in thousands) 2000 1999
- -------------------------------------------------------------
Medium-term notes $ 45,000 $ 65,000
Other 1,000 -
Notes payable, reclassified 101,199 56,199
- -------------------------------------------------------------
Total long-term debt $147,199 $121,199
=============================================================
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
29, 2000. 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 29, 2000, mature in fiscal 2001 to 2006
and have a weighted average interest rate of 6.6%.
Minimum principal payments totaling $147.2 million are due as
follows: $102.2 million in fiscal 2002, $1.0 million in fiscal 2003,
$14.0 million in fiscal 2004, $6.0 million in fiscal 2005 and $24.0
million in fiscal 2006. Minimum principal payments of $101.2 million in
fiscal 2002 represent notes payable that were classified as long-term
debt due to the revolving credit agreements that expire in March 2001
(see Note 9). The Company intends to refinance these obligations by
establishing new long-term credit facilities.
Note 11: Shareholders' Equity
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 29, 2000.
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 12: 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 29, 2000:
Operating
(in thousands) Leases
- ------------------------------------------------------------
2001 $20,646
2002 16,116
2003 12,031
2004 9,743
2005 8,604
2006 and beyond 15,683
- ------------------------------------------------------------
Total minimum lease payments* $82,823
============================================================
*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) 2000 1999 1998
- ------------------------------------------------------------
Minimum rentals $26,145 $25,091 $26,663
Contingent rentals 25 53 46
Sublease rentals (488) (355) (53)
- ------------------------------------------------------------
Total net rent expense $25,682 $24,789 $26,656
============================================================
Note 13: Commitments and Contingencies
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 a 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 recognize a material charge to its results of operations.
At February 29, 2000, the estimated cost to complete improvements in
progress totaled approximately $25 million.
Note 14: Stock Plans
The 1989 and 1997 stock-based plans of the Company permit awards of
restricted stock, incentive units and stock options to directors and key
employees subject to the provisions of the plans and as determined by
the Compensation Committee of the Board of Directors. At February 29,
2000, a total of 565,959 common shares were available for grants.
In fiscal 2000, grants of 27,553 shares of restricted stock were
awarded with varying performance criteria and vesting periods. At
February 29, 2000, the total number of restricted shares outstanding
was 73,215. 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.
Stock options are granted to purchase shares of Company common stock
at not less than fair market value at dates of grant. With the
exception of certain options that become exercisable over a period of
years based on varying performance criteria, options generally become
exercisable one year after the date of grant. In addition, options
generally expire 10 years after the date of grant.
The per share weighted average fair values of stock options granted
were $5.35 in fiscal 2000, $6.91 in fiscal 1999 and $4.28 in fiscal
1998. The fair value of options at the date of grant was estimated
using the Black-Scholes option pricing model. The following weighted-
average assumptions were used in the calculation:
Assumptions 2000 1999 1998
- --------------------------------------------------------------------
Expected dividend yield 4.4% 3.8% 4.0%
Expected volatility 27.6% 24.0% 20.7%
Risk-free interest rates 5.7% 5.7% 6.2%
Expected life (in years) 6.9 8.2 8.3
- --------------------------------------------------------------------
The Company applies APB Opinion No. 25 in accounting for the
compensation costs of employee stock options in the financial
statements. Had the Company determined compensation costs based on the
fair value at the date of grant for its stock options, the Company's
earnings from continuing operations would have been reduced to the pro
forma amounts indicated below:
(in thousands, except per share data) 2000 1999 1998
- -------------------------------------------------------------------
Earnings from continuing
operations:
As reported $24,695 $6,832 $24,674
Pro forma 23,968 5,944 23,915
Diluted earnings per share
from continuing operations:
As reported $ 1.31 $ 0.36 $ 1.33
Pro forma 1.28 0.31 1.28
- -------------------------------------------------------------------
The following table contains information on stock options:
Weighted
Average Exercise
Shares Price per Share
- -----------------------------------------------------------
Outstanding at
February 28, 1997 1,525,031 $21.73
Granted 583,066 23.14
Exercised (731,451) 22.03
Expired or canceled (40,150) 24.07
- -----------------------------------------------------------
Outstanding at
February 28, 1998 1,336,496 $22.11
Granted 181,564 28.55
Exercised (191,879) 21.52
Expired or canceled (25,222) 25.75
- -----------------------------------------------------------
Outstanding at
February 28, 1999 1,300,959 $23.02
Granted 141,550 22.21
Exercised (61,089) 20.21
Expired or canceled (60,700) 25.38
- -----------------------------------------------------------
Outstanding at
February 29, 2000 1,320,720 $22.96
===========================================================
Options exercisable at:
February 28, 1998 831,396 $21.29
February 28, 1999 875,009 $21.74
February 29, 2000 934,670 $22.58
- -----------------------------------------------------------
For options outstanding at February 29, 2000, the range of exercise
price per share was $16 to $29.28 and the average remaining contractual
life was 6.4 years.
Note 15: Retirement Plans
Defined Benefit Pension Plans and Other Post-Retirement Benefits
In the United States and Canada, defined benefit pension 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.
The Company also provides post-retirement health and life insurance
benefits for retirees in the United States and Canada who meet minimum
age and service requirements. Life insurance benefits are funded on a
pay-as-you-go basis through an insurance company. Health-care benefits
are provided under a self-insured program administered by an insurance
company.
Summaries related to the changes in benefit obligations and plan
assets, and to the funded status of the plans are as follows:
<TABLE>
Post-Retirement
Pension Benefits Benefits
------------------- --------------------
(in thousands) 2000 1999 2000 1999
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Change in benefit obligation
Benefit obligation at
beginning of year $203,811 $193,627 $ 14,462 $ 13,811
Service cost 3,724 3,337 149 101
Interest cost 12,358 12,518 929 907
Plan participants'
contributions 600 556 668 526
Amendments 557 2,989 - (967)
Plan expenses (474) (527) - -
Actuarial (gain) loss (24,512) 9,835 (763) 2,093
Benefits payments (15,606) (15,127) (2,040) (1,760)
Foreign exchange adjustment 2,111 (3,397) 177 (249)
- -------------------------------------------------------------------------------
Benefit obligation at end
of year $182,569 $203,811 $ 13,582 $ 14,462
===============================================================================
Change in plan assets
Fair value of plan assets
at beginning of year $257,030 $231,032 $ - $ -
Actual return on plan assets 42,588 44,012 - -
Employer contribution 1,289 1,017 1,372 1,234
Plan participants'
contributions 600 556 668 526
Benefits payments (15,606) (15,127) (2,040) (1,760)
Plan expenses (474) (527) - -
Foreign exchange adjustment 2,677 (3,933) - -
- -------------------------------------------------------------------------------
Fair value of plan assets at
end of year $288,104 $257,030 $ - $ -
===============================================================================
Funded status
Funded status at end of year $105,535 $ 53,219 $(13,582) $(14,462)
Unrecognized transition
asset (4,471) (5,902) - -
Unrecognized prior service
cost 5,616 5,999 (571) (575)
Unrecognized net (gain) loss (73,921) (29,800) 850 1,692
- -------------------------------------------------------------------------------
Net amount recognized $ 32,759 $ 23,516 $(13,303) $(13,345)
===============================================================================
Amounts recognized in the
consolidated balance sheet
consist of:
Prepaid benefit cost $ 44,659 $ 34,595 $ - $ -
Accrued benefit liability (15,044) (16,679) (13,303) (13,345)
Intangible asset - 8 - -
Accumulated other
comprehensive loss 3,144 5,592 - -
- -------------------------------------------------------------------------------
Net amount recognized $ 32,759 $ 23,516 $(13,303) $(13,345)
===============================================================================
</TABLE>
<TABLE>
Post-Retirement
Pension Benefits Benefits
------------------- --------------------
Weighted-average assumptions 2000 1999 2000 1999
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Discount rate 7.6% 6.2% 7.6% 6.2%
Expected return on plan assets 10.3% 10.3% N/A N/A
Rate of compensation increase 4.0% 4.0% N/A N/A
- -------------------------------------------------------------------------------
</TABLE>
The assumed annual rate of increase in per capita costs of post-
retirement health-care benefits for fiscal 2000 ranged from 5.0% to
6.5%. The rate is assumed to decrease gradually to 4% for fiscal 2004
and thereafter.
Assumed health-care cost trends could have an effect on the amounts
reported for the health-care plans. The effects of a one-percent change
in the assumed health-care cost trends are as follows:
1% point 1% point
(in thousands) Increase Decrease
- ----------------------------------------------------------
Total of service and interest cost $ 74 $ (60)
Accumulated post-retirement
benefit obligation 693 (592)
- ----------------------------------------------------------
<TABLE>
Post-Retirement
Pension Benefits Benefits
---------------------------- -------------------------
(in thousands) 2000 1999 1998 2000 1999 1998
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Components of net periodic
benefit cost
Service cost $ 3,724 $ 3,337 $ 2,492 $ 149 $ 101 $ 356
Interest cost 12,358 12,518 12,883 929 907 1,154
Expected return on plan
assets (23,017) (20,419) (16,419) - - (9)
Amortization of transition
asset (1,539) (1,532) (1,443) - - -
Amortization of prior
service cost 1,080 1,367 820 (35) (34) (791)
Recognized actuarial
(gain) loss (45) 760 575 159 117 (61)
- -------------------------------------------------------------------------------------
Net periodic (benefit)
cost $ (7,439) $ (3,969) $ (1,092) $1,202 $1,091 $ 649
=====================================================================================
</TABLE>
The Company recognized a $2.9 million curtailment gain in fiscal
1998 from the elimination of subsidized retiree medical coverage for
most active employees in the United States.
The following information pertains to pension plans with accumulated
benefit obligations in excess of plan assets:
Pension Benefits
------------------------
(in thousands) 2000 1999
- ------------------------------------------------------------
Projected benefit obligation $15,564 $17,251
Accumulated benefit obligation 15,336 17,197
- ------------------------------------------------------------
The minimum liability recorded for pension plans where the
accumulated benefit obligation exceeded the fair market value of assets
is as follows:
(in thousands) 2000 1999
- ------------------------------------------------------------
Minimum liability recognized in
comprehensive loss $(3,144) $(5,592)
Tax benefit 1,226 2,181
- ------------------------------------------------------------
Minimum liability recognized in
comprehensive loss, net of tax $(1,918) $(3,411)
============================================================
Defined Contribution Plans
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 $2.3
million in fiscal 2000, $2.2 million in fiscal 1999 and $2.0 million in
fiscal 1998.
Note 16: Multifoods' Business Segments
The Company has two reportable business segments: Multifoods
Distribution Group and North America Foods.
Multifoods Distribution Group is a distributor of food and related
products to the foodservice industry in the United States. The business
offers foodservice customers a broad selection of national brand-name,
regional and private-label items, including food products, paper goods
and cleaning supplies, through its national network of distribution
centers. Customers include casual-dining, limited-menu restaurants,
such as pizza, Mexican and Italian establishments, and sandwich shops;
vending operators; the office coffee service market; movie theaters;
fund-raising groups; commissaries; and stadium and recreational
concession stands. In October 1999, the Company acquired Better Brands,
Inc., a broadline foodservice distributor based in the Northeast United
States. The acquisition enhances the Company's position in the
foodservice industry and expands its geographic reach. The Company
holds leadership positions in the independent pizza restaurant, vending
and office coffee service foodservice categories.
North America Foods is comprised of two business units: U.S. Foods
and Robin Hood Multifoods in Canada. U.S. Foods is a manufacturer and
provider of baking mixes and frozen batters, doughs and desserts to
foodservice operators and commercial customers. Customers include
retail, wholesale and in-store bakeries, and foodservice establishments,
such as restaurants and convenience stores. In Canada, Robin Hood
Multifoods is a leading consumer foods manufacturer and marketer of
flour and baking mixes, primarily under the Robin Hood brand name; and
condiments, primarily under the Bick's brand name. The Company also is
a leading provider of grain-based products and condiments to foodservice
operators and commercial customers.
Divested Business consists of the food-exporting business, which the
Company exited in fiscal 1998.
The Company does not allocate interest expense, income taxes or
certain corporate expenses to its business segments. Inter-segment
revenues were immaterial for the years ended February 29, 2000 and
February 28, 1999 and 1998. The following tables set forth information
by business segment:
<TABLE>
Operating
Net Operating Unusual Earnings
(in millions) Sales Costs Items (Loss)
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
2000:
Multifoods Distribution Group $1,899.6 $(1,879.2) $ 0.5 $ 20.9
North America Foods 485.1 (446.5) - 38.6
Corporate Expenses - (7.1) - (7.1)
- ---------------------------------------------------------------------------
Total $2,384.7 $(2,332.8) $ 0.5 $ 52.4
===========================================================================
1999:
Multifoods Distribution Group $1,845.8 $(1,817.5) $(11.5) $ 16.8
North America Foods 450.8 (419.5) (7.2) 24.1
Divested Business - 0.8 (10.3) (9.5)
Corporate Expenses - (8.5) - (8.5)
- ---------------------------------------------------------------------------
Total $2,296.6 $(2,244.7) $(29.0) $ 22.9
===========================================================================
1998:
Multifoods Distribution Group $1,770.2 $(1,746.5) $ - $ 23.7
North America Foods 471.7 (441.1) - 30.6
Divested Business 9.2 (4.8) (5.0) (0.6)
Corporate Expenses - (9.2) - (9.2)
- ---------------------------------------------------------------------------
Total $2,251.1 $(2,201.6) $ (5.0) $ 44.5
===========================================================================
</TABLE>
<TABLE>
2000 1999 1998
------------------------------- -------------------------------- --------------------------------
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 $31.1 $11.0 $400.2 $13.0 $11.4 $354.3 $ 5.4 $12.6 $338.3
North America Foods 18.3 10.8 232.7 14.7 10.3 215.6 6.5 11.0 216.3
Divested Business - - 6.2 - - 6.7 - - 16.6
Corporate - 0.4 97.1 0.4 0.4 75.4 6.7 0.4 61.5
Discontinued
Operations - - - - - 44.9 - - 70.9
- ----------------------------------------------------------------------------------------------------------------------
Total $49.4 $22.2 $736.2 $28.1 $22.1 $696.9 $18.6 $24.0 $703.6
======================================================================================================================
</TABLE>
Corporate assets include cash and cash equivalents, U.S. prepaid pension
assets, retained assets of the discontinued Venezuela Foods business and
current and deferred income tax assets.
Geographic Information
The Company's North America Foods business segment operates in the
United States and Canada. The Canadian operations had revenues of
$311.8 million, $297.3 million and $324.7 million for fiscal years 2000,
1999 and 1998, respectively. In addition, long-lived assets of the
Canadian operations were $87.6 million, $79.3 million and $84.9 million
at February 29, 2000, February 28, 1999 and 1998, respectively. Long-
lived assets consist of property, plant and equipment; goodwill; and
identifiable intangible assets.
Note 17: Quarterly Summary (unaudited)
<TABLE>
Operating
Net Operating Unusual Earnings
(in millions) Sales Costs Items (Loss)
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
First Quarter - 2000
Multifoods Distribution Group $472.0 $(465.7) $ - $ 6.3
North America Foods 116.8 (110.5) - 6.3
Corporate Expenses - (2.3) - (2.3)
- -----------------------------------------------------------------------------
Total $588.8 $(578.5) $ - $ 10.3
=============================================================================
First Quarter - 1999
Multifoods Distribution Group $454.7 $(448.2) $(11.5) $ (5.0)
North America Foods 110.5 (105.9) (7.2) (2.6)
Divested business - 0.8 (10.3) (9.5)
Corporate Expenses - (2.0) - (2.0)
- -----------------------------------------------------------------------------
Total $565.2 $(555.3) $(29.0) $(19.1)
=============================================================================
Second Quarter - 2000
Multifoods Distribution Group $452.5 $(447.7) $ - $ 4.8
North America Foods 116.2 (108.2) - 8.0
Corporate Expenses - (1.9) - (1.9)
- -----------------------------------------------------------------------------
Total $568.7 $(557.8) $ - $ 10.9
=============================================================================
Second Quarter - 1999
Multifoods Distribution Group $442.1 $(436.6) $ - $ 5.5
North America Foods 105.0 (98.1) - 6.9
Corporate Expenses - (2.3) - (2.3)
- -----------------------------------------------------------------------------
Total $547.1 $(537.0) $ - $ 10.1
=============================================================================
Third Quarter - 2000
Multifoods Distribution Group $496.2 $(492.0) $ 0.5 $ 4.7
North America Foods 136.0 (122.1) - 13.9
Corporate Expenses - (1.9) - (1.9)
- -----------------------------------------------------------------------------
Total $632.2 $(616.0) $ 0.5 $ 16.7
=============================================================================
Third Quarter - 1999
Multifoods Distribution Group $483.8 $(475.4) $ - $ 8.4
North America Foods 127.3 (115.9) - 11.4
Corporate Expenses - (2.2) - (2.2)
- -----------------------------------------------------------------------------
Total $611.1 $(593.5) $ - $ 17.6
=============================================================================
Fourth Quarter - 2000
Multifoods Distribution Group $478.9 $(473.8) $ - $ 5.1
North America Foods 116.1 (105.7) - 10.4
Corporate Expenses - (1.0) - (1.0)
- -----------------------------------------------------------------------------
Total $595.0 $(580.5) $ - $ 14.5
=============================================================================
Fourth Quarter - 1999
Multifoods Distribution Group $465.2 $(457.3) $ - $ 7.9
North America Foods 108.0 (99.6) - 8.4
Corporate Expenses - (2.0) - (2.0)
- -----------------------------------------------------------------------------
Total $573.2 $(558.9) $ - $ 14.3
=============================================================================
</TABLE>
<TABLE>
First Quarter Second Quarter Third Quarter Fourth Quarter Total Year
(in millions, --------------- ---------------- --------------- ---------------- ---------------
except per share data) 2000 1999 2000 1999 2000 1999 2000 1999 2000 1999
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross profit $ 43.8 $ 44.8 $ 42.5 $ 42.7 $50.5 $ 51.8 $47.2 $ 45.5 $184.0 $184.8
Earnings (loss) from
continuing operations 4.6 (14.6)(b) 5.1 4.6 8.1 9.8 6.9 7.0 24.7 6.8
Earnings (loss) from
discontinued operations (7.8) (9.7) (11.8) (119.2) - (7.3) - (2.5) (19.6) (138.7)
- -----------------------------------------------------------------------------------------------------------------------
Net earnings (loss) (3.2) (24.3) (6.7) (114.6) 8.1 2.5 6.9 4.5 5.1 (131.9)
Basic earnings (loss) per
share of common stock (a):
Continuing operations 0.24 (0.78)(b) 0.27 0.24 0.43 0.52 0.37 0.38 1.32 0.36
Discontinued operations (0.41) (0.52) (0.63) (6.35) - (0.38) - (0.14) (1.05) (7.39)
- -----------------------------------------------------------------------------------------------------------------------
Total (0.17) (1.30) (0.36) (6.11) 0.43 0.14 0.37 0.24 0.27 (7.03)
Diluted earnings (loss) per
share of common stock (a):
Continuing operations 0.24 (0.78)(b) 0.27 0.24 0.43 0.52 0.37 0.37 1.31 0.36
Discontinued operations (0.41) (0.52) (0.62) (6.30) - (0.38) - (0.13) (1.04) (7.34)
- -----------------------------------------------------------------------------------------------------------------------
Total (0.17) (1.30) (0.35) (6.06) 0.43 0.14 0.37 0.24 0.27 (6.98)
Comprehensive income
(loss) (1.1) (26.2) (7.7) (26.8) 9.6 12.1 9.4 6.1 10.2 (34.8)
Dividend paid per share
of common stock 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.80 0.80
Market price of
common stock:
Close 22 29 3/4 22 11/16 17 3/8 13 15/16 25 7/16 10 15/16 21 11/16 10 15/16 21 11/16
High 24 3/16 30 15/16 24 3/16 31 7/16 23 3/8 25 9/16 14 7/16 26 13/16 24 3/16 31 7/16
Low 19 5/8 27 5/8 21 5/16 17 5/16 13 5/8 15 3/8 10 3/4 20 15/16 10 3/4 15 3/8
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Earnings (loss) per share are computed independently for each period
presented. As a result, the sum of the quarterly earnings (loss) per
share in fiscal 2000 and 1999 does not equal the total computed for
the year.
(b) Includes a net after-tax charge of $18.7 million, or 99 cents per
diluted share, from unusual items.
Exhibit 21
SUBSIDIARIES OF INTERNATIONAL MULTIFOODS CORPORATION
The following is a list of the Company's subsidiaries as of March
1, 2000, 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
- ------------------ -------------
Fantasia Confections, Inc. California
Multifoods Bakery Distributors, Inc. Delaware
Multifoods Bakery International, Inc. Delaware
Inversiones 91060, C.A. Venezuela
Multifoods Distribution Management, Inc. Delaware
Better Brands, Inc. Delaware
Multifoods Distribution Group, Inc. Colorado
Multifoods Merchandising, Inc. Delaware
Multifoods Venezuela, C.A. Venezuela
Robin Hood Multifoods Inc. Ontario
Multifoods Inc. Ontario
Gourmet Baker Inc. Ontario
980964 Ontario Limited Ontario
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 and No. 333-69387 on Form S-8
relating to the 1997 Stock-Based Incentive Plan of International
Multifoods Corporation, No. 333-64075 on Form S-8 relating to the
Consulting Agreement between International Multifoods Corporation and
Daryl Schaller and No. 33-65221 on Form S-3 relating to certain debt
securities of International Multifoods Corporation of our reports dated
March 27, 2000, relating to the consolidated balance sheets of
International Multifoods Corporation and subsidiaries as of February 29,
2000 and February 28, 1999 and the related consolidated statements of
operations, cash flows, and shareholders' equity, and related financial
statement schedule for each of the fiscal years in the three-year period
ended February 29, 2000, which reports appear or are incorporated by
reference in the Annual Report on Form 10-K for the fiscal year ended
February 29, 2000, of International Multifoods Corporation.
/s/ KPMG LLP
Minneapolis, Minnesota
May 15, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
consolidated 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>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-29-2000
<PERIOD-END> FEB-29-2000
<CASH> 11,224
<SECURITIES> 0
<RECEIVABLES> 127,576
<ALLOWANCES> 4,938
<INVENTORY> 171,342
<CURRENT-ASSETS> 353,988
<PP&E> 354,429
<DEPRECIATION> 149,505
<TOTAL-ASSETS> 736,207
<CURRENT-LIABILITIES> 277,455
<BONDS> 147,199
0
0
<COMMON> 2,184
<OTHER-SE> 252,940
<TOTAL-LIABILITY-AND-EQUITY> 736,207
<SALES> 2,384,715
<TOTAL-REVENUES> 2,384,715
<CGS> 2,200,720
<TOTAL-COSTS> 2,200,720
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,847
<INTEREST-EXPENSE> 13,088
<INCOME-PRETAX> 40,351
<INCOME-TAX> 15,656
<INCOME-CONTINUING> 24,695
<DISCONTINUED> (19,560)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,135
<EPS-BASIC> 0.27
<EPS-DILUTED> 0.27
</TABLE>
