FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 25, 1993
______________________________
IBP, inc.
DELAWARE CORPORATION 42-0838666
(State of Incorporation) (Employer Identification Number)
IBP AVENUE
POST OFFICE BOX 515
DAKOTA CITY, NE 68731
(Address) (Zip Code)
Telephone Number: (402) 494-2061
_________________________________________________
Securities registered pursuant to section 12(g) of Act:
Common Stock Registered with the New York Stock Exchange and the
Pacific Stock Exchange.
Registrant has filed all reports required to be filed by Section 13 or 15(d)
of the Security Exchange Act of 1934 during the preceding 12 months, and has
been subject to such filing requirements for the past 90 days.
Disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is
contained in definitive Proxy Statement incorporated by reference in Part III
of this Form 10-K.
The aggregate market value of the registrant's common stock held by non-
affiliates (47,321,681 shares) based on the New York Stock Exchange average
bid and ask price on March 17, 1994 was approximately $1.148 billion.
As of March 18, 1994, the registrant had outstanding 47,449,235 shares of
its common stock.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's 1993 Annual Report to Stockholders (the "Annual
Report") are incorporated by reference in Parts I, II and IV of this Report.
Portions of the registrant's definitive Proxy Statement dated March 11, 1994
(the "Proxy Statement") are incorporated by reference in Part III of this
Report. Other documents incorporated by reference in this Report are listed
in the Exhibit Index.<PAGE>
PART I
ITEMS 1 AND 2. BUSINESS AND PROPERTIES
General
IBP, inc., ("IBP") a Delaware corporation, principally produces fresh beef
and fresh pork products. IBP's principal products include boxed beef and
fresh pork which are marketed principally in the United States to grocery
chains, meat distributors, wholesalers, restaurant and hotel chains, and
processors who produce cured and smoked products, such as bacon, ham,
luncheon meats and sausage items. IBP also produces inedible allied
products, such as hides and other items used to manufacture products such as
leather, animal feed and pharmaceuticals, and edible allied products, which
include variety meat items.
IBP operates an extensive sales network to service its customers with
regional sales and service centers in the United States (including an
independently-owned contractor in Los Angeles that is licensed to use IBP
trademarks) as well as service centers in foreign countries. The address of
IBP's corporate headquarters is IBP Avenue, Post Office Box 515, Dakota City,
Nebraska 68731; its telephone number is (402) 494-2061. All references to
"IBP" include IBP, inc. and its subsidiaries.
IBP operates 11 beef carcass production facilities in eight cattle-producing
states, which reduce live cattle to dressed carcass form. Seven of these
locations include processing facilities which conduct fabricating operations
to produce boxed beef.
IBP operates six pork facilities in Iowa and Nebraska that include both
carcass production and processing of fresh pork products employing a
production process similar to that employed in its beef operation. In 1993
IBP purchased a seventh pork facility in Indiana which is currently being
renovated. On January 28, 1994, IBP announced an anticipated closing of the
Perry, Iowa plant in April, 1994.
The following table reflects the approximate percentages of revenues during
the last three fiscal years from IBP's principal product categories, all of
which are within one industry segment:
1993 1992 1991
Boxed Beef Products 67% 67% 64%
Beef Carcasses (1) 4 4 5
Pork Products 18 18 20
Beef And Pork Allied Products 11 11 11
--- --- ---
100% 100% 100%
______________________ === === ===
(1) Represents beef carcasses sold to third parties that are not used in IBP's
processing operation.
History of IBP's Business
IBP was first incorporated in 1960. It began operations in 1961 with a
single beef carcass production facility located near Denison, Iowa, in what
was then the nation's major cattle-producing region. IBP grew in the
Northern and Central Plains states over the following nine years and opened
beef plants in Dakota City, Nebraska; Emporia, Kansas; Luverne, Minnesota;
and West Point, Nebraska. IBP expanded into the Southern Plains in 1975,
when it built its Amarillo, Texas, facility near the large commercial feedlot
operations of that region. In 1976, it moved into the Pacific Northwest
through the acquisition and expansion of plants in Pasco, Washington and
Boise, Idaho. Company expansion continued in 1980 with construction of a
facility in Finney County, Kansas, and in 1983 with the purchase and
expansion of a plant in Joslin, Illinois. In 1990, IBP opened its newest beef
plant in Lexington, Nebraska.
IBP began pork operations in 1982 when it purchased, expanded and commenced
operation of a pork facility in Storm Lake, Iowa. Additional pork facilities
were added in 1986 in Louisa County, and Council Bluffs, Iowa; in 1987 in
Madison, Nebraska; in 1989 in Perry, Iowa; in 1990 in Waterloo, Iowa; and in
1993 a pork plant in Logansport, Indiana was purchased and is currently being
renovated. All of IBP's pork plants are strategically located in the nation's
major hog-producing region.
In August 1981, when it was acquired by Occidental Petroleum Corporation
("Occidental"), IBP was a publicly-held corporation that was listed on the
New York Stock Exchange (the "NYSE"). From August 1981 to October 1987, IBP
was a wholly-owned subsidiary of Occidental. In October, 1987, IBP sold 23.5
million shares (49.5%) of its Common Stock for $447 million and was again
listed on the NYSE. The stock sale was part of transactions which funded
the payment of a $960 million dividend to Occidental in September 1987. The
approximately $420 million of net proceeds from the offering were used to
substantially retire short-term debt of $430 million incurred to partially
fund the dividend. The balance of the dividend was funded from the proceeds
of a $500 million revolving credit and term loan facility, other revolving
credit facilities, and available working capital.
On September 4, 1991, at the request of Occidental under the Stockholders
Rights Agreement dated October 8, 1987 between it and IBP, IBP filed a Form
S-3 Registration Statement with the Securities and Exchange Commission.
Under this registration statement, Occidental offered all of its shares of
IBP Common Stock to its stockholders and certain standby underwriters in an
underwritten rights offering. As a result of this transaction, Occidental no
longer owns any shares of IBP Common Stock.
Operations
- ----------
Cattle and Hog Supplies
IBP does not currently raise cattle or hogs. IBP buyers are trained to
select animals that are candidates for higher yields as well as to judge the
quality of the animals. IBP's buyers purchase cattle and hogs on a daily
basis, generally a few days before the animals are required for production,
and live animals are generally held in IBP's holding pens for only a few
hours.
Production Process
IBP's beef carcass production facilities reduce live cattle to dressed
carcass form and process allied products, and its processing facilities
conduct fabricating operations to produce boxed beef. IBP's carcass and beef
processing facilities operated in 1993 at approximately 85.1% and 83.7%,
respectively, of their production capacities.
IBP's pork facilities produce fresh boxed pork for shipment to retailers and
also produce pork bellies, hams and boneless picnic meat for shipment to
customers who further process the pork into bacon, cooked hams, luncheon
meats and sausage items. In 1993, IBP's pork plants operated at
approximately 84.4% of their production capacity.
Throughout production, edible beef and pork allied products, such as variety
meat items, are segregated and prepared for shipment or further refinement.
Inedible beef and pork products derived from processing operations are used
in the manufacture of leather, animal feed, gelatin, pharmaceuticals and
cosmetics.
Seven of IBP's beef plants include hide treatment facilities. The majority
of the hides from IBP's other beef plants are transported to these
facilities, which include brine curing operations and, in four locations,
chrome hide tanneries. The chrome tanning process produces a semifinished
product that is shipped to leather good manufacturers worldwide. Brine-cured
hides are sold to other tanneries. IBP is the largest chrome tanner of
cattle hides in the United States.
Design Products Division
IBP believes that significant opportunities exist for the sale of value-
added, consumer-ready products as consumer acceptance of such products grows
and packaging technology improves. The Design Products Division is currently
exploring the potential for customer-friendly products. Currently, the Design
Products Division produces cooked meats for food service customers.
Facilities
The corporate headquarters of IBP is located in Dakota City, Nebraska. IBP
believes that its plants are among the most modern in the nation, if not the
world, and strives to maintain and enhance its facilities. Generally, plants
and additions are designed and constructed by IBP's personnel. IBP considers
its existing plants and equipment to be in excellent condition. IBP's
capital spending for 1994 is expected to be between $90 and $100 million,
which includes expenditures for environmental compliance activities. Its
principal plants as of December 25, 1993 are described below.
Beef
IBP's eleven beef carcass production facilities are located in the states of
Idaho, Illinois, Iowa, Kansas, Minnesota, Nebraska, Texas and Washington. At
these locations, seven have processing facilities and hide treatment or
tanning operations, two have cold storage freezer operations and one has a
tallow refining plant.
Pork
IBP's seven pork carcass production and processing facilities are located in
the states of Iowa, Nebraska and Indiana. At these locations, four have cold
storage freezer operations.
Design Products
IBP's cooked meats plant is in Waterloo, Iowa.
Sales and Distribution
IBP's customers include domestic and international grocery chains, meat
distributors, wholesalers, restaurant and hotel chains, and meat processors
who produce cured and smoked products, such as bacon, ham, luncheon meat and
sausage items. Most sales are made pursuant to daily orders as opposed to
long-term supply contracts. In each of the past three years, IBP's largest
beef customer accounted for less than 4% of its annual beef gross sales, and
its largest pork customer accounted for less than 8% of its annual pork gross
sales. For the same periods, IBP's largest customer for beef and pork
combined accounted for less than 4% of its annual gross product sales.
Most IBP products are shipped by trucks, generally from plants located
closest to the purchaser, although other plants may supplement such
deliveries, depending upon prevailing supplies and product demand.
IBP sells to international customers through foreign and domestic sales
offices. In fiscal 1993, export sales accounted for approximately 11.9% of
IBP's net sales, which compares to approximately 11.6% in fiscal 1992 and 9%
in fiscal 1991.
Some allied products are sold as commodities in bulk, although other items
are trimmed, boxed and frozen by IBP. Cattle hides are sold for both
domestic and international use. Uncured and brine-cured hides are sold to
tanneries for further processing. Chrome-tanned hides are sold to tanneries
and directly to further processors of leathers.
Competition
The industry in which IBP operates is highly competitive and characterized by
very small margins. IBP considers its principal competition to come from
domestic producers of fresh beef and pork products although IBP also competes
with other suppliers of protein, including other red meats, poultry, seafood,
grain, dairy products, eggs, soya and other protein products. Competition
exists both in the purchase of live cattle and hogs and in the sale of beef
and pork products. The principal competitive element in both buying and
selling is price.
To effectively compete in the purchase of livestock, a livestock buyer must
be able to accurately judge the yield and quality of the livestock to
establish a fair price to the producer. Failure to accurately assess the
quality of livestock can result in (i) the payment of an excessive price if
the livestock yields less than expected or (ii) the failure to bid a price
sufficiently high to purchase high quality livestock. As part of IBP's
buying process, each buyer prepares an estimate by lot of the yield and
quality of the animals purchased. IBP's information systems prepare a report
on each lot that compares the actual yield and quality to the buyer's initial
estimate. This enables IBP to monitor the quality of various livestock
producers and to measure the skill of its buyers, which are critical factors
in determining IBP's success and competitiveness.
In addition to price, the quality, product mix, location and service are
important competitive elements in the sale of fresh beef and pork products.
IBP is the largest producer of fresh beef and pork products in the United
States. IBP believes that its two largest beef competitors in 1993 were
ConAgra, Inc. ("ConAgra") and Excel Corporation, a subsidiary of Cargill,
Inc. It believes that its largest pork competitors in 1993 were ConAgra,
Smithfield and Hormel, all three of which operate at approximately the same
capacity.
Employees
As of December 25, 1993, IBP had approximately 29,200 employees. Whenever
possible, production employees are recruited locally and trained by IBP for
specific tasks.
IBP considers its relations with its employees at its plants to be good.
Approximately 11,200 hourly employees at six of IBP's 18 plants are
represented by labor organizations. The labor contracts applicable to these
plants expire as follows:
Contract Expiration
Plant Union Date
Amarillo, Texas Teamsters (1) March 1994
Pasco, Washington Teamsters (1) March 1996
Dakota City, Nebraska UFCW(2) July 1995
Joslin, Illinois UFCW(2) October 1996
Perry, Iowa UFCW(2) Indefinite (3)
Waterloo, Iowa UFCW(2) June 1994
__________________
(1) Teamsters local unions affiliated with The International Brotherhood
of Teamsters, Chauffeurs, Warehousemen, and Helpers of America.
(2) United Food and Commercial Workers, International Union, AFL-CIO.
(3) As of March 15, 1994, the Perry employees were working under an
extension of the labor contract, as amended, that was to expire in June 1993.
Regulatory Matters
IBP's operations are subject to the constant inspection and regulation of the
United States Department of Agriculture (the "USDA"), including (i)
regulations of the USDA's Packers and Stockyards Administration, (ii)
continuous in-plant inspection of IBP's production facilities, (along with
each live animal, each carcass, and all edible products) by USDA employees to
ensure compliance with USDA standards and (iii) grading of beef carcasses by
USDA employees. IBP strongly supports the USDA's continuous inspection
program and has actively opposed efforts to curtail it.
IBP is subject to federal, state and local laws and regulations governing
environmental protection, which require significant expenditures to maintain
compliance. IBP believes that it is in substantial compliance with such laws
and regulations. IBP is not aware of any violations of, or pending changes
in, such laws and regulations that are likely to result in material penalties
or material increases in compliance costs. IBP incurred $11.5 million in
capital expenditures for environmental control facilities in fiscal 1993 and
anticipates capital expenditures of approximately $8 million in fiscal 1994
and $12 million in fiscal 1995.
ITEM 3. LEGAL PROCEEDINGS
Incorporated by reference from the Annual Report, page 18, section entitled
"Notes to Consolidated Financial Statements," at note "J. Commitments and
Contingencies."
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of IBP's security holders during the
fourth quarter of 1993.
EXECUTIVE OFFICERS OF THE REGISTRANT
Age at Positions With IBP and
January 26, Five-Year Employment
Name 1994 History
Richard L. Bond 46 Group Vice President --
Beef Sales and Marketing
since 1989; 1982-1989,
Vice President -- Boxed
Beef Sales and Marketing
Kenneth W. Browning, Jr. 45 Senior Vice President -
Hide Division since
1989; 1982-1989, Vice
President-Hides
Lonnie O. Grigsby 54 Executive Vice President --
Finance & Administration
since 1988; Secretary since
1985; General Counsel 1985-
1990 and since 1993; 1987-
1988, Senior Vice President;
1985-1987, Vice President
David C. Layhee 49 Group Vice President --
Design Products since 1989;
1983-1989, Group Vice
President -- Sales &
Marketing
Eugene D. Leman 51 Director since 1989;
Executive Vice President --
Pork Division since 1986;
1981-1986, Group Vice
President -- Pork Division
James V. Lochner 41 Senior Vice President -
Technical Services since
1993; 1989- 1993, Vice
President--Technical
Services; 1986-1989,
Assistant Vice President-Quality
Control--Beef; 1984-1986, Director-
Quality Control
Robert L. Peterson 61 Chairman of the Board
of Directors since 1982;
Chief Executive Officer
since 1980; President since
1977; Director since 1976
Kenneth L. Rose 49 Senior Vice President --
Logistics Services since
1989; 1982-1989, Vice
President-Transportation
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Incorporated by reference from Annual Report, page 13, section entitled
"Consolidated Statements of Stockholders' Equity"; from page 19, section
entitled "Notes to Consolidated Financial Statements," at note "K. Quarterly
Financial Data (Unaudited)"; and from page 21, section entitled "Stockholders
and Market Data." Those pages incorporated by reference from the Annual
Report are part of the exhibits to this Form 10-K.
ITEM 6. SELECTED FINANCIAL DATA
Incorporated by reference from Annual Report, page 22, section entitled
"Selected Financial Data."
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Incorporated by reference from the Annual Report, pages 20-21, section
entitled "Management's Discussion and Analysis."
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Incorporated by reference from the Annual Report, pages 8-19, sections
entitled "Report of Independent Accountants", "Consolidated Financial
Statements," and "Notes to Consolidated Financial Statements."
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Incorporated by reference from the Proxy Statement, page 17, section entitled
"INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS."
(Reference is made to the Report on Form 8-K dated September 14, 1992 and
filed September 16, 1992.)
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Incorporated by reference from the Proxy Statement, pages 3-5, section
entitled "ELECTION OF DIRECTORS" and reference is also made to the
information regarding executive officers set forth in "EXECUTIVE OFFICERS OF
THE REGISTRANT" in Part I of this report.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated by reference from the Proxy Statement, pages 8-11, section
entitled "SUMMARY COMPENSATION TABLE"; "OPTION GRANTS TABLE", "AGGREGATED
OPTION EXERCISES AND YEAR-END OPTION VALUE TABLE" and "PERFORMANCE GRAPH" and
from page 5, section entitled "ELECTION OF DIRECTORS," subsection
"Information Regarding Director's Compensation."
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Incorporated by reference from the Proxy Statement, pages 2 and 6, sections
entitled "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS" and "SECURITY
OWNERSHIP OF MANAGEMENT."
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated by reference from the Proxy Statement, pages 4-5, sections
entitled "ELECTION OF DIRECTORS," subsection "Information Regarding the
Board of Directors and its Committees" and from page 8, section entitled
"COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS."
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) Documents filed as part of this report.
The following financial information is incorporated by reference from the
Annual Report, as identified below, or is found in this report.
1. Consolidated Financial Location
Statements
Reports of Independent Accountants Annual Report, page 8 and pages
16-17 of this report
Consolidated Statements of Earnings Annual Report, page 9
Consolidated Balance Sheets Annual Report, pages 10-11
Consolidated Statements of
Cash Flows Annual Report, page 12
Consolidated Statements of
Stockholders' Equity Annual Report, page 13
Notes to Consolidated Financial
Statements Annual Report, pages 14-19
2. Financial Statement Schedules
Reports of Independent Accountants on Financial Statement
Schedules
Schedule V Property, Plant and Equipment
Schedule VI Accumulated Depreciation of
Property, Plant and Equipment
Schedule VIII Valuation and Qualifying
Accounts and Reserves
Schedule IX Short-Term Borrowings
All other schedules are omitted because they are not applicable or not
required.
3. Exhibits
3.1* Restated Certificate of Incorporation of IBP (filed
as Exhibit No. 2A to IBP's Registration Statement on Form 8-A,
dated March 9, 1988, File No. 1-6085).
3.2* By-laws of IBP (filed as Exhibit No. 2B to IBP's
Registration Statement on Form 8-A, dated March 9, 1988,
File No. 1-6085).
10.5* IBP's 1987 Stock Option Plan (filed as Exhibit No. 28(a) to
IBP's Registration Statement on Form S-8, January 5, 1988,
File No. 33-19441). (Executive Compensation Plan)
10.5.1* Form of Stock Option Agreement (10/1/87) (filed as Exhibit
No. 28(b) to IBP's Registration Statement on Form S-8, dated
January 5, 1988, File No. 33-19441).
10.5.2* Form of Stock Option Agreement (12/31/87) (filed as Exhibit
No. 28(c) to IBP's Registration Statement on Form S-8, dated
January 5, 1988, File No. 33-19441).
10.5.3 IBP Officer Long-Term Stock Plan
10.5.4 IBP Directors Stock Option Plan
10.5.5 IBP 1993 Stock Option Plan
10.19* Note Agreement for 9.82% Senior Notes Due September 15, 2000,
dated as of September 26, 1990 between IBP, inc. and various
lenders (filed as Exhibit No. 10.19 to the Annual Report on
Form 10-K of IBP for the fiscal year ended December 29, 1990,
File No. 1-6085).
10.20* Debenture Purchase Agreement for 10.39% Senior Subordinated
Debentures due September 15, 2002, dated September 26, 1990
between IBP, inc. and various lenders (filed as Exhibit
No. 10.20 to the Annual Report on Form 10-K of IBP for the
fiscal year ended December 29, 1990, File No. 1-6085).
10.21* Credit Agreement (Revolving/Term Credit Facility) dated as of
November 13, 1990 between IBP, inc. and various lenders with
First Bank National Association as Administrative Agent and
Bank of America National Trust and Savings Association as
Co-Agent (filed as Exhibit No. 10.21 to the Annual Report on
Form 10-K of IBP for the fiscal year ended December 29, 1990,
File No. 1-6085).
10.22* Credit Agreement (Short-Term Revolving Credit Facility) dated as
of November 13, 1990 between IBP, inc. and various lenders with
First Bank National Association as Administrative Agent (filed as
Exhibit No. 10.22 to the Annual Report on Form 10-K of IBP for
the fiscal year ended December 29, 1990, File No. 1-6085).
10.23* Intercompany Agreement, dated as of September 4, 1991 between IBP
and Occidental Petroleum Corporation (filed as Exhibit No. 10.23
to the Annual Report on Form 10-K of IBP for the fiscal year ended
December 28, 1991, File No. 1-6085).
10.24* Employment Agreement, dated as of October 9, 1992, between IBP
and Lonnie O. Grigsby (filed as Exhibit No. 10.24 to the Annual
Report on Form 10-K of IBP for the fiscal year ended December 26,
1992, File No. 1-6085).
10.25* Employment Agreement, dated as of October 9, 1992, between IBP
and Perry V. Haines (filed as Exhibit 10.25 to the Annual Report
on Form 10-K of IBP for the fiscal year ended December 26, 1992,
File No. 1-6085).
10.26* Employment Agreement, dated as of October 9, 1992, between IBP
and Eugene D. Leman (filed as Exhibit 10.26 to the Annual Report
on Form 10-K of IBP for the fiscal year ended December 26, 1992,
File No. 1-6085).
10.27* Employment Agreement, dated as of October 9, 1992, between IBP
and David C. Layhee (filed as Exhibit 10.27 to the Annual Report
on Form 10-K of IBP for the fiscal year ended December 26, 1992,
File No. 1-6085).
10.28* Text of Retirement Income Plan of IBP, inc. (As Amended and
Restated Effective as of January 1, 199 as amended. (Executive
Compensation Plan) (filed as Exhibit No. 10.28 to the Annual
Report on Form 10-K of IBP for the fiscal year ended December 26,
1992, File No. 1-6085).
10.29 Employment Agreement, effective January 1, 1993, between IBP and
Dale Tinstman.
11. Statement regarding computation of earnings per share.
13. Those pages incorporated by reference from the 1993 Annual Report
to Stockholders.
21. Subsidiaries of IBP, inc. as of December 25, 1993.
22.* Matters submitted to vote of security holders (filed as Item 4
to the Quarterly Report on Form 10-Q for the 26 weeks ended
June 26, 1993, File No. 1-6085).
23.1 Consent of Independent Public Accountants.
__________________
* Incorporated herein by reference
(b) Reports on Form 8-K
Not Applicable.
(c) Other Matters
With the exception of the information expressly referenced and thereby
incorporated in ITEMS 3, 5, 6, 7 and 8, the Annual Report is not to be deemed
"filed" with the Securities and Exchange Commission or otherwise subject to
the liabilities of Section 18 of the Securities and Exchange Act of 1934.
For the purpose of complying with the amendments to the rules governing Form
S-8 (effective July 13, 1990) under the Securities Act of 1933, IBP hereby
undertakes as follows, which undertaking shall be incorporated by reference
into IBP's Registration Statement on Form S-8 No. 33-19441 (filed January 5,
1988):
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
IBP pursuant to the foregoing provisions, or otherwise, IBP has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by IBP of
expenses incurred or paid by a director, officer or controlling person of IBP
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, IBP will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULES
To the Board of Directors
of IBP, inc.
Our audit of the consolidated financial statements referred to in our report
dated February 4, 1994 appearing on page 8 of the 1993 Annual Report to
Stockholders of IBP, inc. (which report and consolidated financial statements
are incorporated by reference in this Annual Report on Form 10-K) also
included an audit of the Financial Statement Schedules at December 25, 1993
and December 26, 1992 and for the years then ended listed in Item 14(a)2 of
this Form 10-K. In our opinion, these Financial Statement Schedules present
fairly, in all material respects, the information set forth therein when read
in conjunction with the related consolidated financial statements.
/s/ Price Waterhouse(signature on file)
PRICE WATERHOUSE
Chicago, Illinois
February 4, 1994
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
and Stockholders
IBP, inc.
Dakota City, Nebraska
We have audited the accompanying IBP, inc. and subsidiaries consolidated
statements of earnings, stockholders' equity and case flows for the year
ended December 28, 1991. Our audit also included the financial statement
schedules for the related period listed in the Index at Item 14. These
financial statements and financial statement schedules are the
responsibility of the company's management. Our responsibility is to
express an opinion on these financial statements and financial statement
schedules based on our audits.
We conducted our audit 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 audit
provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, IBP, inc. and subsidiaries
results of operations and cash flows for the year ended December 28, 1991,
in conformity with generally accepted accounting principles. Also, in our
opinion, such financial statement schedules, when considered in relation to
the basic consolidated financial statements taken as a whole, present
fairly in all material respects the information set forth therein.
/s/ Deloitte & Touche(signature on file)
DELOITTE & TOUCHE
Omaha, Nebraska
February 7, 1992
<PAGE>
IBP, inc. AND SUBSIDIARIES
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
Fiscal Years 1991, 1992 and 1993
(In thousands)
Land Buildings
and Land and Contruction
Improvements Stockyards Equipment in Progress Total
Balance,
December 29, 1990 $61,048 $258,170 $575,552 $23,262 $918,032
Additions, at cost 2,966 11,160 20,457 (6,994) 27,589
Retirements (384) (101) (7,887) - (8,372)
Other changes (63) (2,670) (9,568) - (12,301)
------ ------- ------- ------ ---------
Balance,
December 28, 1991 63,567 266,559 578,554 16,268 924,948
Additions, at cost 402 6,454 27,732 923 35,511
Retirements (643) (623) (22,456) - (23,722)
Other changes 221 138 (759) - (400)
------ ------- ------- ------ ---------
Balance,
December 26, 1992 63,547 272,528 583,071 17,191 936,337
Additions, at cost 2,452 3,666 30,675 23,007 59,800
Retirements (607) (1,199) (11,781) - (13,587)
Cumulative effect
of accounting
change (1) 6,336 32,068 65,126 - 103,530
Other changes 1,350 6,698 1,918 - 9,966
------ ------- ------- ------ ---------
Balance,
December 25, 1993 $73,078 $313,761 $669,009 $40,198 $1,096,046
====== ======= ======= ====== =========
(1) Adjustment to fair value from net-of-tax value related to IBP's
acquisition in 1981 as required by Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes," which IBP adopted in
fiscal 1993.
IBP, inc. AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION OF
PROPERTY, PLANT AND EQUIPMENT
Fiscal Years 1991, 1992 and 1993
(In thousands)
Land Buildings
and Land and
Improvements Stockyards Equipment Total
Balance,
December 29, 1990 $21,239 $44,210 $239,635 $305,084
Additions charged
to costs and
expenses 3,506 7,668 44,458 55,632
Retirements (52) (28) (5,648) (5,728)
Other changes (57) (1,428) (5,866) (7,351)
------ ------ -------- -------
Balance,
December 28, 1991 24,636 50,422 272,579 347,637
Additions charged
to costs and
expenses 2,759 7,530 43,077 53,366
Retirements (596) (270) (17,498) (18,364)
Other changes 252 (175) (579) (502)
------ ------ ------- -------
Balance,
December 26, 1992 27,051 57,507 297,579 382,137
Additions charged
to costs and
expenses 2,724 7,521 39,321 49,566
Retirements (476) (489) (9,351) (10,316)
Cumulative effect of
accounting change (1) 5,021 10,380 64,758 80,159
Other changes 449 4,320 950 5,719
------ ------ ------- -------
Balance,
December 25, 1993 $34,769 $79,239 $393,257 $507,265
====== ====== ======= =======
(1) Adjustment to fair value from net-of-tax value related to IBP's
acquisition in 1981 as required by Statement of Financial Accounting
Standards No. 109,"Accounting for Income Taxes," which IBP adopted in
fiscal 1993.
IBP, inc. AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
AND RESERVES
Fiscal Years 1991, 1992 and 1993
(In thousands)
Allowance Accumulated
for Doubtful Amortization
Accounts of Goodwill
Balance, December 29, 1990 $4,778 $72,093
Amounts (credited) charged to costs
and expenses (989) 7,686
Recoveries of amounts previously
written off 9 -
Write-off of uncollectible accounts (744) -
----- ------
Balance, December 28, 1991 3,054 79,779
Amounts charged to costs and expenses 451 7,686
Recoveries of amounts previously
written off 45 -
Write-off of uncollectible accounts (550) -
----- ------
Balance, December 26, 1992 3,000 87,465
Amounts charged to costs and expenses 1,535 7,779
Recoveries of amounts previously
written off 27 -
Write-off of uncollectible accounts (364) -
----- ------
Balance, December 25, 1993 $4,198 $95,244
===== ======
IBP, inc. AND SUBSIDIARIES
SCHEDULE IX - SHORT-TERM BORROWINGS
Fiscal Years 1991, 1992 and 1993
(In thousands)
Weighted
Average Maximum Average Weighted
Category of Balance Interest Amount Amount Average
Aggregate at End Rate at Outstanding Outstanding Interest
Short-Term of End of During the During the Rate During
Borrowings Period Period Period Period the Period
(A) (B) (A,C)
For the year ended
December 28, 1991:
Notes payable
to banks $25,000 5.5% $206,000 $148,890 6.6%
For the year ended
December 26, 1992:
Notes payable
to banks 6,000 3.3% 174,000 110,231 4.2%
For the year ended
December 25, 1993:
Notes payable
to banks - - 137,000 55,687 3.4%
NOTES:
(A) Interest rate computed on a 360-day basis.
(B) Average computed using daily balances.
(C) (Short-term interest expense/weighted average
short-term borrowings) x 360/364.
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, thereto duly authorized.
IBP, inc.
By: /s/Robert L. Peterson
Robert L. Peterson
Chairman of the Board,
President and Chief Executive Officer
Date: March 23, 1994
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 date indicated.
Signature Title Date
/s/Robert L. Peterson Chairman of the Board March 23, 1994
Robert L. Peterson President and Chief
Executive Officer
(principal executive
officer)
/s/Lonnie O. Grigsby Executive Vice March 23, 1994
Lonnie O. Grigsby President - Finance and
Administration (principal
financial officer)
/s/Craig J. Hart Controller March 23, 1994
Craig J. Hart
/s/John S. Chalsty Director March 23, 1994
John S. Chalsty
/s/Alec P. Courtelis Director March 23, 1994
Alec P. Courtelis
/s/Wendy L. Gramm Director March 23, 1994
Wendy L. Gramm
/s/Eugene D. Leman Director March 23, 1994
Eugene D. Leman
/s/JoAnn R. Smith Director March 23, 1994
JoAnn R. Smith
/s/Dale C. Tinstman Director March 23, 1994
Dale C. Tinstman
EXHIBIT INDEX
Exhibit Number Description Sequentially Numbered
Page
Exhibit 10.5.3 IBP Officer Long Term Stock Plan
Exhibit 10.5.4 IBP Director Stock Option Plan
Exhibit 10.5.5 IBP 1993 Stock Option Plan
Exhibit 10.29 Employment Agreement, dated January 1, 1993, between IBP
and Dale Tinstman
Exhibit 11 Statement regarding computation of earnings per share.
Exhibit 13 1993 Annual Report to Stockholders.
Exhibit 21 Subsidiaries of IBP, inc. as of December 25, 1993.
Exhibit 23 Consent of Independent Public Accountants.
IBP Officer Long-Term Stock Plan
1. Purposes. The purposes of this IBP Officer Long-Term Stock Plan
(the "Plan") are to assist IBP and its subsidiaries (unless the context
otherwise requires, the "Company") (a) in the attraction and retention of
officers and executive officers who have demonstrated superior
ability, and (b) to provide the officers with an incentive to exert
extraordinary efforts toward the achievement of increased growth and
profitability in the operations of the Company in order that the value
of the Company's Common Stock may appreciate accordingly.
2. Administration. The Plan shall be administered by a committee
consisting of three or more members of the board of
directors, all of whom shall not (either while members of the
Committee or at any time within one year prior to becoming members of
the Committee) be or have been eligible for selection as a person to
whom awards may be made under the Plan (the "Committee"). The
Committee is authorized to adopt operating rules necessary to
implement and administer the Plan. The Committee shall periodically
review the performance of the Plan and its rules and make any
necessary revisions in such rules to assure the Plan's purposes are
met. The interpretation and construction of any provision of the Plan
by the Committee shall be final and conclusive.
3. Participants. The Committee shall select as participants in the
Plan the officers and executive officers who are in a position directly
and significantly to enhance the growth and profitability of the Company's
operations and whose continued employment by the Company would favorably
affect such operations.
4. Awards. The Plan shall be effective when approved by the
affirmative votes of the holders of a majority of the securities of
the Company present, or represented, and entitled to vote at a meeting
duly held in accordance with the laws of the state of Delaware. All
awards made by the Committee prior to such approval are contingent
upon that approval. Each participant in the Plan shall be awarded a
number of Common Shares ("Deferred Stock" or "Stock") of the Company
as determined by the Committee, such shares to be awarded in
consideration of services to be rendered to the Company and on its
behalf. Upon the making of any award, the Committee shall set by
resolution its determination of the fair value in monetary terms of
the services to be rendered to the Company and which serves as the
employee's consideration for the award. The number of shares of
Common Stock awarded as Deferred Stock shall be (a) for awards made on
or before January 27, 1993, the result of dividing the fair value of
the services so determined by $16.125 (the "Closing Price" of the
Company's Common Stock on October 9, 1992), and (b) for awards made
after January 27, 1993, the result of dividing the fair value of the
services so determined by the "closing price" of the Company's Common
Stock on the date of any such award; the "closing price" being that
reported for the Company's Common Stock in the New York Stock Exchange
Composite Transactions Index, as published in The Wall Street Journal,
or in such other national financial press or information service
available from time to time over the duration of the Plan. All shares
so granted are declared and taken to be fully paid shares of Stock and
not liable to any further call, nor shall the holders thereof be
liable for any further payment therefor. All shares so awarded will
be subject to the restrictions described in Section 5. No more than
seven hundred thousand (700,000) shares of Stock (subject to
adjustment to reflect any Stock dividend, split-up, combination of
shares, reclassification, merger or consolidation) shall be awarded
under the Plan, but any shares forfeited prior to the expiration of
the Deferral Period as described in Section 5 shall revert to the
status of shares not awarded. Shares delivered pursuant to this Plan
may be Common Stock acquired by the Company on the open market and
held in the treasury of the Company or previously authorized but
unissued Common Stock.
5. Restrictions. During the Deferral Period (as determined
in the discretion of the Committee and as defined in each stock grant
agreement any shares of Stock awarded pursuant to the
Plan shall not be sold, assigned, pledged, hypothecated or otherwise
transferred or encumbered. At the expiration of the Deferral Period,
the certificate representing those shares for which
the Deferral Period has expired shall be delivered to the
participant, or his legal representative, in a number equal to such
shares. Unless otherwise provided in
the stock grant agreement to be entered into between the
Company and the participant, the Deferral Period with
respect of shares of Stock awarded to a participant in the Plan shall
terminate at the close of business on the fifth anniversary of the
Award Date, provided that if such participant shall cease to perform
officer duties for the Company during the Deferral Period
with respect to such shares:
(a) in the event he shall cease to perform such duties by reason of
resignation or discharge by the Company for cause, such Deferred Stock
shall be forfeited by the participant;
(b) in the event he shall cease to perform such duties for the
Company by reason of death, total and permanent disability or
retirement at age 65, the Deferral Period shall terminate
with respect to all of the remaining shares covered under the Deferred
Stock Award; and
(c) in the event he shall cease to perform such duties for the
Company by reason of discharge otherwise than for cause, the Mandatory
Deferral Period shall terminate with respect to a number of shares
which bears the same relation to all such shares as the number of full
calendar months elapsed since the date of such award bears to 60, and
the remaining such shares shall be forfeited by such participant;
provided that in cases where the Committee determines that it was for
the convenience of the Company that a participant has resigned or
otherwise ceased to perform executive duties for the Company, the
Committee shall have the power to make a settlement which would have
the same result as the one that would obtain under subparagraph (c) of
this Section 5 if such participant had ceased to perform such duties
of the Company by reason of discharge otherwise than for cause.
"Cause" shall mean gross negligence, willful misconduct, refusal to
carry out an order of the Company or any disloyal action inimical to
the Company.
Amounts equal to any dividends declared during the Deferral
Period with respect to the number of shares covered by a Deferred
Stock Award will be deferred and deemed to be reinvested in additional
Deferred Stock. Except as set forth in the preceding sentence, the
Participant shall have none of the rights of a stockholder with
respect to shares of Common Stock covered by a Deferred Stock Award
until the shares of Common Stock are transferred to such Participant
at the expiration of the Deferral Period.
6. Tax Withholding. Any Deferred Stock Award granted hereunder shall
provide as determined by the Committee for appropriate arrangements
for the satisfaction by the Company and the participant of all
Federal, state, local or other income, excise or employment taxes or
tax withholding requirements applicable to the transfer of Common
Stock pursuant to a Deferred Stock Award or other right or payment and
all such additional taxes or amounts as determined by the Committee in
its discretion, including without limitation, the right of the Company
or any subsidiary thereof to receive transfers of shares of Common
Stock or other property from the Participant or to deduct or
withhold in the form of cash or shares from any transfer of payment to
a Participant, in such amount or amounts deemed required or
appropriate by the Committee in its discretion.
7. Modifications. The Company's board of directors shall have the
power to modify or supplement the Plan in such manner as it may from
time to time determine, provided that unless the holders of a majority
of shares of capital stock of the Company having voting power present
or represented and entitled to vote at a meeting of such holders shall
have first given their approval, (a) the number of shares of Stock
(adjusted in accordance with Section 4) which may be awarded under the
Plan shall not be increased, (b) the benefits accruing to the
Participants in the Plan shall not be materially increased and (c) the
requirements as to eligibility for participation in the Plan shall not
be materially modified.
EXHIBIT 10.5.4
IBP 1993 STOCK OPTION PLAN
1. Purpose. The purpose of this IBP 1993 Stock Option Plan (the
"Plan") is to enhance the value of the stockholders' investment in
IBP, inc. (the "Company") by encouraging key employees, upon whose
performance the Company and its subsidiaries is largely dependent for
the successful conduct of its operations, to acquire and retain a
financial interest in the Company. In addition, the Plan is intended
to enable the Company and its subsidiaries to compete effectively for
and retain the services of such employees.
It is intended that the incentive stock options ("ISOs") (as defined
by Section 422 of the Internal Revenue Code of 1990, as amended or
superseded (the "Code")), other stock options and stock appreciation
rights ("SARs"), may be granted under this Plan.
2. Administration of the Plan.
(a) The Plan shall be administered by a committee (the "Committee")
consisting of not less than three members of the board of directors
designated from time to time by the board of directors, all of whom
shall not (either while members of the Committee or at any time within
one year prior to becoming members of the Committee) be or have been
eligible for selection as a person to whom awards may be made under
the Plan. The interpretation and construction of any provision of the
Plan or any option or right granted hereunder and all determinations
by the Committee in each case shall be final, binding and conclusive
with respect to all interested parties, unless otherwise determined by
the board of directors. No member of the Committee shall be
personally liable for any action, failure to act, determination,
interpretation or construction made in good faith with respect to the
Plan or any option or right or transaction thereunder.
(b) The Committee shall have full power and authority in its
discretion to take any and all action required or permitted to be
taken under the Plan. Such full power and authority shall include,
without limitation, the selection of participants to whom stock
options or SARs may be granted pursuant to the Plan; the determination
of the number of shares of Commons Stock which may be covered by stock
options or SARs granted to any such participant of the Plan and the
purchase price thereof; the granting of options and related rights;
the right to interpret and construct any provision of the Plan or any
option or right granted hereunder; the making of all required or
appropriate determinations under the Plan or any option or right
granted hereunder; the fixing and determination of the terms,
provisions, conditions and restrictions of all option instruments or
agreements (and any related rights), which need not be identical,
entered into or issued in connection with grants under the Plan; and
the adoption, amendment and rescission of such rules related to the
Plan as the Committee shall determine in its discretion, subject to
the express provisions of the Plan.
3. Participants. Participants in the Plan shall be key employees of
the Company or its subsidiaries selected as hereinafter provided. Key
employees may include officers of the Company or its subsidiaries who
are also directors of the Company but not directors who are not
employees of the Company or its subsidiaries. Nothing contained in
this Plan, nor in any option or right granted pursuant to the Plan,
shall confer upon any employee any right to continue in the employ of
the Company or any subsidiary nor limit in any way the right of the
Company or any subsidiary to terminate his employment at any time.
4. The Stock. The shares of stock available for issuance pursuant to
the grant of options (with or without related SARs) under this Plan
shall consist of one million nine hundred fifty thousand (1,950,000)
shares of Common Stock, par value $0.05 per share (the "Common
Stock"), of the Company, subject to adjustment as provided in Section
8 hereof. Shares may be (a) previously issued Common Stock
purchased by the Company in the open market, and held in the treasury
of the Company, or (b) previously authorized but unissued Common
Stock. Should any option grant (or a portion thereof) be terminated,
expire, or be cancelled for any reason without being exercised (e.g.,
by reason of the exercise of related SARs for stock or for cash), the
shares subject to the portion of such option grant not so exercised
shall be available for subsequent grants under this Plan.
5. Effective Date and Termination of Plan. The Plan shall be
effective when approved by the affirmative votes of the holders of a
majority of the securities of the Company present, or represented, and
entitled to vote at a meeting duly held in accordance with the laws of
the state of Delaware, but in no event later than January 26, 1994.
All grants made by the Committee prior to such approval shall be
contingent upon such approval. This Plan shall terminate upon the
earlier of (i) January 26, 2003; or (ii) the date on which all shares
available for issuance under the Plan have been issued pursuant to the
exercise of options granted hereunder; or (iii) the determination of
the board of directors that the Plan shall terminate. No options may
be granted under the Plan after the termination date, provided that
the options granted and outstanding on such date shall continue to
have force and effect in accordance with the provisions of the
instruments evidencing such options.
6. Grant, Terms, and Conditions. Options and SARs may be granted at
any time and from time to time prior to the termination of the Plan to
such eligible employees and on such terms and conditions as determined
by the Committee. All options and SARs shall be granted under the
Plan by execution of instruments in writing in the form approved by
the Committee. Notwithstanding any contrary provision of this Plan
other than Section 9 hereof, with respect to any ISOs granted under
any plan of the Company or its subsidiaries or any parent, the
aggregate fair market value (determined at the time the option is
granted) of the shares with respect to which such ISOs are exercisable
for the first time by an optionee during any calendar year (under all
such plans of the Company its subsidiaries and any parent) shall not
exceed One Hundred Thousand Dollars ($100,000.00) or the maximum
amount permitted under the Code.
All options and SARs granted pursuant to the Plan shall be subject to
the following terms and conditions and such other terms and conditions
determined by the Committee which are not inconsistent therewith:
(a) Price. The option exercise price per share of each option shall
be determined by the Committee, provided that, except as provided
below, in no instance shall such price be less than the fair market
value of a share of Common Stock (as defined by subsection (j) hereof)
on the effective date of the option grant. The option exercise price
shall be subject to adjustment only as provided in Section 8 hereof.
(b) Term of Options. Options may be granted for terms of up to but
not exceeding ten (10) years from date granted. Each grant shall be
subject to earlier termination as provided in subsection (f) of this
Section 6.
(c) Exercise of Options. Options granted under this Plan shall be
exercisable on such date or dates and during such period and for such
number of shares as shall be determined pursuant to the provisions of
the instrument evidencing such grant. No fractional shares shall be
issued, and fractional shares remaining in any grant shall be rounded
down to the nearest whole number of shares.
(d) Alternate Exercise in Case of Hardship. In the case of options
other than ISOs, in the event of the imminent expiration of the grant
where the optionee is absent from the United States or is otherwise
subject to a hardship which renders exercise of the grant by such
optionee unreasonable or impossible prior to its expiration date, the
Committee in its sole and absolute discretion may issue or cause to
have issued to the optionee (in lieu of the exercise of said grant)
the number of shares which represent the difference (if any) between
the aggregate option exercise price and aggregate fair market value of
the shares of the Common Stock with respect to which the grant is then
exercisable, determined as of the date of issuance of said shares. In
such event the grant shall be deemed fully exercised for all purposes
hereof.
(e) Notice of Exercise and Payment. To the extent options are
exercisable, they shall be exercised by written notice to the Company,
stating the number of shares with respect to which options are being
exercised and the intended manner of payment. The date of the notice
shall be the exercise date. Payment for the shares purchased shall be
made in full to the company within ten (10) business days after the
exercise date by check payable to the order of the Company equal to
the option price for the shares being purchased, in whole shares of
Common Stock of the Company owned by the optionee having a fair market
value on the exercise date (as defined by subsection (j) hereof) equal
to the option price for the shares being purchased, or a combination
of Common Stock and check equal in the aggregate to the option price
for the shares being purchased. Payments of Common Stock shall be
made by delivery of stock certificates properly endorsed for transfer
in negotiable form. If other than the optionee, the person or persons
exercising shall be required to furnish to the Company appropriate
documentation that such person or persons have the full legal right
and power to exercise on behalf of and for the optionee.
(f) Termination of Employment.
(i) Except as otherwise provided in this Plan, an optionee's options
(A) are exercisable only by the optionee, (B) are exercisable only
while the optionee is in the employ of the Company, and (C) if not
exercisable by their terms at the time the optionee ceases to be in
the employ of the Company, shall immediately expire on the date of
termination of employment.
(ii) Except as provided herein, an optionee's options which are
exercisable by their terms at the time the optionee ceases to be in
the employ of the Company must be exercised on or before the earlier
of three months after the date of termination of employment or the
fixed expiration date of such options after which period such options
shall expire.
(iii) In the event of the death of the optionee while in the employ
of the Company, all of that optionee's unexercised options (whether or
not then exercisable by their terms) shall become immediately
exercisable by his estate for a period ending on the earlier of the
fixed expiration date of such options or twelve months after the date
of death, after which period such options shall expire. For purposes
hereof, the estate of an optinee shall be defined to include the legal
representatives
thereof or any person who has acquired the right to exercise an option
by reason of the death of the optionee.
(iv) In the case of options other than ISOs, in the event of the
termination of employment by reason of the permanent disability (as
defined below) of the optionee, all of that optionee's unexercised
options (whether or not then exercisable by their terms) shall become
exercisable for a period ending on the earlier of the fixed expiration
date of such options or twelve months from the date of termination
after which period such options shall expire. For purposes hereof
"permanent disability" shall be deemed to be the inability of the
optionee to perform the duties of his job with the Company because of
a physical or mental disability as evidenced by the opinion of
a Company-approved doctor of medicine licensed to practice medicine
in the United States of America.
(v) In the case of options other than ISOs, in the event of the
normal retirement of the optionee, all of that optionee's
unexercised options (whether or not then exercisable by their terms)
granted to that optionee on or before his 65th birthday shall become
immediately exercisable for a period ending on the earlier of the
fixed expiration date of such options or twelve months after the date
of the retirement, after which period such options shall expire.
Also, in the event of the normal retirement of the optionee, all of
the optionee's unexercised options (whether or not then exercisable by
their terms) granted to the optionee after his 65th birthday and held
for a period of at least twelve consecutive months of active
employment with the Company after the date of grant shall become
immediately exercisable for a period ending on the earlier of the
fixed expiration date of such options or twelve months after the date
of retirement, after which period such options shall expire. For
purposes hereof, retirement shall be deemed to be "normal retirement"
if the optionee is at least 65 years of age and has completed at least
five consecutive years of employment with the Company at the date of
retirement.
(vi) In the case of ISOs, in the event of the termination of
employment by reason of the permanent disability or the normal
retirement of the optionee (as defined in (iv) and (v) above), each
ISO then held by the optionee shall terminate on the earlier of the
period ending three months after the termination of employment or the
fixed expiration date of such options; provided however, that if such
termination of employment occurs by reason of disability within the
meaning of Section 422(c)(6) of the Code said three-month period shall
be extended to twelve months.
(g) Transferability of Options. Any option granted hereunder shall
be transferable only by will or the laws of descent and distribution
and shall be exercisable during the lifetime of the optionee only by
him.
(h) Other Terms and Conditions. Options may contain such other
terms, conditions, or provisions, which shall not be inconsistent with
this Plan, as the Committee shall deem appropriate.
(i) Tax Withholding. Any option and related SAR granted hereunder
shall provide, as determined by the Committee, for appropriate
arrangements for the satisfaction by the Company and the optionee of
all federal, state, local or other income, excise or employment taxes
or tax withholding requirements applicable to the exercise of the
option or any related SAR or the later disposition of the shares of
Common Stock or other property thereby acquired and all such
additional taxes or amounts as determined by the Committee in its
discretion, including without limitation, the right of the Company or
any subsidiary thereof to receive transfers of shares of common Stock
or other property from the optionee or, beginning one year after the
Company becomes subject to the reporting requirements of Section 13 of
the Securities Exchange Act of 1934, to deduct or withhold in the form
of cash or shares from any transfer or payment to an optionee, in such
amount or amount deemed required or appropriate by the Committee in
its discretion.
(j) Fair Market Value. The "fair market value" of a share of Common
Stock on any relevant date for purposes of any provision of the Plan
shall be the closing price reported for the Common Stock in the New
York Stock Exchange Composite Transactions Index on such date or, if
there were no reported sales on such date, then the closing price
reported for the Common Stock in the New York Stock Exchange Composite
Index on the next preceding day on which such a sale is transacted, as
published in The Wall Street Journal, or such other national financial
press or service as may be available from time to time over the
duration of the Plan.
(k) Cancellation of Option. The Committee shall have the authority
to effect, at any time and from time to time, with the consent of the
affected optionee or optionees, the cancellation of any or all
outstanding options [and related SARs] granted under the Plan and the
grant in substitution therefore of new options and related SARs under
the Plan (subject to the limitations hereof) covering the same or
different number of shares of Common Stock at an option price per
share in all events not less than fair market value on the new grant
date (as determined under subsection
(j) of this Section 6).
7. Stock Appreciation Rights. Any options granted or to be granted
under this Plan may, in the sole and absolute discretion of the
Committee, include related SARs with respect to all or part of the
shares of Common Stock subject to options as determined by the
Committee. SARs may be granted at the time options are granted or (in
the case of options other than ISOs) at a later date with respect to
existing options. Optionees granted SARs may exercise the SARs by
written notice to the Company, stating the number of shares with
respect to which the SARs are being exercised, to the extent that said
SARs are then exercisable. In the event of the exercise of SARs, the
obligation of the Company in respect of the options to which the SARs
related shall be discharged by payment of the SARs so exercised.
(a) SAR Payment. Any SAR granted hereunder shall set forth the
method of computation and form of payment of the SAR and such other
terms and conditions as determined by the Committee in its discretion
or as otherwise required by this Plan, provided that no SAR shall
exceed the difference between one hundred percent (100%) of the then
fair market value on the date of exercise of the share of Common Stock
subject to the option surrendered by the optionee, and the option
exercise price of such share. Without limiting the generality of the
foregoing, the Committee may provide for the payment of said SAR in
cash or in shares of Common Stock valued at fair market value as of
the date of exercise, or in any combination thereof as determined by
the Committee.
(b) Other Provisions. Notwithstanding any contrary provisions
hereof, (i) SARs shall be exercisable only to the extent the options
to which such SARs relate are then exercisable (further subject to
such additional conditions and restrictions as may be imposed by the
Committee) and shall expire upon expiration of the options to which
such SARs relate, and (ii) in the case of any SARs related to ISOs
granted hereunder, said SARs shall be exercisable only when the then
fair market value of the shares of Common Stock subject to the options
(or portion thereof) surrendered by the optionee exceeds the exercise
price of such options (or such portion thereof).
(c) "Option." References in this Plan to the term "option" shall,
unless the context requires otherwise, include an SAR.
8. Adjustment and Changes in the Common Stock.
(a) In the event that the shares of Common Stock as presently
constituted shall be changed into or exchanged for a different kind of
share of stock or other securities of the Company or of another
corporation (whether by reason of merger, consolidation,
recapitalization, reclassification, split-up, combination of shares or
otherwise) or if the number of such shares of stock shall be increased
through the payment of a stock dividend, then unless such change
results in the termination of all outstanding options pursuant to the
provisions of Section 9 hereof, there shall be substituted for or
added to each share of stock of the Company therefore appropriated or
thereafter subject or which may become subject to an option under this
Plan, the number and kind of shares of stock or other securities into
which each outstanding share of stock of the Company shall be so
changed, or for which each such share shall be exchanged, or to which
each share shall be entitled, as the case may be. Outstanding options
shall also be appropriately amended as to price and other terms as may
be necessary to reflect the foregoing events. In the event there
shall be any other change in the number or kind of the outstanding
shares of the stock of the Company of any stock or other securities
into which such stock shall have been changed, or for which it shall
have been exchanged, then if the Committee shall, in its sole
discretion, determine that such change equitably requires an
adjustment in any option theretofore granted or which may be granted
under the Plan, such adjustment shall be made in accordance with such
determination. Fractional shares resulting from any adjustment in
options pursuant to this Section 8 shall be rounded down to the
nearest whole number of shares.
(b) Notwithstanding the foregoing, any and all adjustments in
connection with an ISO shall comply in all respects with Sections 422
and 424 of the Code and the regulations thereunder.
(c) Notice of any adjustment shall be given by the Company to each
holder of an option which shall have been so adjusted, provided that
such adjustment (whether or not such notice is given) shall be
effective and binding for all purposes of the Plan and any instrument
or agreement issued thereunder.
9. Acceleration of Options.
(a) In the event that the Company enters into one or more agreements
to dispose of all or substantially all of the assets of the Company or
the Company's stockholders dispose of or become obligated to dispose
of fifty-percent (50%) or more of the outstanding capital stock of the
Company other than to the Company or a subsidiary of the Company, in
either case by means of sale (whether as a result of a tender offer or
otherwise), merger, reorganization or liquidation in one or a series
of related transactions ("Acceleration Event"), then each option
outstanding under the Plan shall become exercisable during the fifteen
(15) days immediately prior to the scheduled consummation of the
Acceleration Event with respect to the full number of shares of which
such option has been granted.
(b) In the event of the occurrence of an Acceleration Event (as
defined by subsection (a) of this Section 9), any optionee who is
subject to the filing requirements imposed under Section 16(a) of the
Securities Exchange Act of 1934 with respect to the Company shall
receive a payment of cash equal to the difference between the
aggregated Fair Value of the shares of Common Stock subject to such
accelerated options and the aggregate option exercise price of such
shares. For this purpose, "Fair Value" shall mean the highest
aggregate fair market value of the subject shares of Common Stock
during the 60-day period immediately preceding the date of the
consummation of the Acceleration Event (as determined under Section
6(j) hereof). Payment of said cash shall be made within 10 days after
said consummation of the Acceleration Event. The foregoing payments
under this subsection (b) shall be made in lieu of and in full
discharge of any and all obligations of the Company in respect of all
subject options and any related SARs of the optionee. Notwithstanding
any of the foregoing, the provisions of this subsection (b) shall not
be applicable to ISOs granted under this Plan.
(c) The grant of options (or related rights) under this Plan shall in
no way affect the right of the Company to adjust, reclassify,
reorganize or otherwise change its capital or business structure of to
merge, consolidate, dissolve, liquidate or sell or transfer all or any
part of its business or assets.
10. Listing and Regulatory Requirement. No options granted pursuant
to this Plan shall be exercisable if at any time, including after
receipt of notice of exercise, the Committee shall determine in its
discretion that the listing, registration, qualification, or
acquisition of the shares of Common Stock subject to such options on
any securities exchange or under any applicable law, or the consent or
approval of any governmental regulatory body is necessary or desirable
as a condition of, or in connection with, the granting of such option
or the acquisition or issuance of shares by IBP thereunder, unless
such listing, registration, qualification, acquisition, consent or
approval shall have been effected or obtained free of any conditions
not acceptable to the Committee.
11. Amendment of the Plan. The board of directors may from time to
time amend or modify or make such changes in and additions to this
Plan as it may deem desirable, without further action on the part of
the stockholders of the Company; provided, however, that unless the
holders of a majority of the securities of the Company present or
represented and entitled to vote at a duly held meeting shall have
first given their approval, then (a) the maximum number of shares of
Common Stock issuable under the Plan shall not be increased (except
for permissible adjustments under Section 8 hereof), (b) the benefits
accruing to the participants in requirements as to eligibility for
participation in the Plan shall not be modified. Subject to and
without limiting the generality of the foregoing, the board of
directors may amend or modify the Plan and any outstanding options
under the Plan to the extent necessary to qualify any or all of such
options or future options to be granted for such beneficial federal
income tax treatment as may be afforded employee stock options under
the Code or any amendments thereto or other statutes or regulations or
rules (or any interpretations thereof by any applicable governmental
agency or entity) which become effective after the effective date of
the Plan (including without limitation any proposed or final Treasury
regulations).
12. Stockholder Rights. An optionee shall have none of the rights of
a stockholder of the Company with respect to any shares subject to any
options granted hereunder until such individual shall have exercised
the options and been issued share therefor.
13. Use of Proceeds. The proceeds received by the Company from the
sale of shares pursuant to the options granted under
this Plan shall be used for general corporate purposes.
EXHIBIT 10.5.5
IBP DIRECTORS STOCK OPTION PLAN
1. Purpose. The purpose of this IBP Directors' Stock Option Plan
(the "Plan") is to enhance the value of the stockholders' investment
in IBP, inc. (the "Company") by enabling the Company and its
subsidiaries to compete effectively for and retain the services of
non-employee directors on the board of directors.
2. Administration of the Plan.
(a) The Plan shall be administered by a committee (the "Directors
Plan Committee") consisting of not less than two members of the board
of directors designated from time to time by the board of directors,
all of whom shall be employees as well as directors of the Company and
shall not (either while members of the Committee or at any time within
one year prior to becoming members of the Committee) be or have been
eligible for selection as a person to whom awards may be made under
this Plan. The interpretation and construction of any provision of
the Plan or any option or right granted hereunder and all
determinations by the Committee in each case shall be final binding
and conclusive with respect to all interested parties, unless
otherwise determined by the board of directors. No member of the
Committee shall be personally liable for any action, failure to act,
determination, interpretation or construction made in good faith with
respect to the Plan or any option or right or transaction thereunder.
(b) The Committee shall have full power and authority in its
discretion to take any and all action required or permitted to be
taken under the Plan. Such full power and authority shall include,
without limitation, the right to interpret and construct any provision
of the Plan or any option or right granted hereunder; the making of
all required or appropriate determinations under the Plan, the fixing
and determination of the terms (other than the timing, quantity and
price of option grants), provisions, conditions and restrictions of
all option instruments or agreements (and any related rights), which
need not be identical, entered into or issued in connection with
grants under the Plan; and the adoption, amendment and rescission of
such rules related to the Plan as the Committee shall determine in its
discretion, subject to the express provisions of the Plan.
3. Participants. Participants in the Plan shall be the non-employee
members of the board of directors of the Company.
4. The Stock. The shares of stock available for issuance pursuant to
the grant of options under this Plan shall consist of fifty thousand
(50,000) shares of Common Stock par value $0.05 per share (the "Common
Stock"), of the Company, subject to adjustment as provided in Section
8 hereof. Shares may be (a) previously issued Common Stock purchased
by the Company in the open market, and held in the treasury of the
Company, or (b) previously authorized but unissued Common Stock.
Should any option grant (or a portion thereof) be terminated, expire,
or be cancelled for any reason without being exercised, the shares
subject to the portion of such option grant not so exercised shall be
available for subsequent grants under this Plan.
5. Effective Date and Termination of Plan. The Plan shall be
effective when approved by the affirmative votes of the holders of a
majority of the securities of the Company present, or represented, and
entitled to vote at a meeting duly held in accordance with the laws of
the state of Delaware, but in no event later than January 26, 1994.
All grants made prior to such approval shall be contingent upon such
approval. This Plan shall terminate upon the earlier of (i) January
26, 2003; or (ii) the date on which all shares available for issuance
under the Plan have been issued pursuant to the exercise of options
granted hereunder; or (iii) the determination of the board of
directors that the Plan shall terminate. No options may be granted
under the Plan after the termination date, provided that the options
granted and outstanding on such date shall continue to have force and
effect in accordance with the provisions of the instruments evidencing
such options.
6. Grant, Terms, and Conditions. Eligible directors receiving grants
before shareholder approval receive an initial grant of option shares
equal to one thousand (1,000) shares of Common Stock. Directors who
are eligible under the Plan, and who are elected after shareholder
approval of the Plan will receive an initial grant of option shares
equal to one thousand (1,000) shares of Common Stock at the time of
being elected as a director. The option grant will be effective as of
the date the director is elected.
Each eligible director under the Plan shall receive an annual option
grant of option shares equal to five hundred (500) shares of Common
Stock for each year that the director continues to serve as a member
of the Board of Directors. Such annual option grant will be effective
on the date of an incumbent's re-election to IBP's Board of Directors.
All options shall be granted under the Plan by execution of
instruments in writing in the form approved by the Committee.
All options granted pursuant to the Plan shall be subject to the
following terms and conditions and such other terms and conditions
determined by the Committee which are not inconsistent therewith:
(a) Price. The option exercise price per share of each option shall
be the fair market value of a share of Common Stock (as defined by
subsection (j) hereof) on the effective date of the option grant. The
option exercise price shall be subject to adjustment only as provided
in Section 7 hereof.
(b) Term of Options. Options may be granted for terms of up to but
not exceeding ten (10) years from date granted. Each grant shall be
subject to earlier termination as provided in subsection (f) of this
Section 6.
(c) Exercise of Options. Two years from the date of grant, the
optionee will have the right to exercise forty-percent (40%) of the
number of shares in an option grant and twenty-percent (20%) each
additional year thereafter through the fifth year when all options
shall be exercisable. All option grants expire ten years from the
date of grant.
(d) Alternate Exercise in Case of Hardship. In the event of the
imminent expiration of the grant where the optionee is absent from the
United States or is otherwise subject to a hardship which renders
exercise of the grant by such optionee unreasonable or impossible
prior to its expiration date, the Committee in its sole and absolute
discretion may issue or cause to have issued to the optionee (in lieu
of the exercise of said grant) the number of shares which represent
the difference (if any) between the aggregate option exercise price
and aggregate fair market value of the shares of the Common Stock with
respect to which the grant is then exercisable, determined as of the
date of issuance of said shares. In such event the grant shall be
deemed fully exercised for all purposes hereof.
(e) Notice of Exercise and Payment. To the extent options are
exercisable, they shall be exercised by written notice to the Company,
stating the number of shares with respect to which options are being
exercised and the intended manner of payment. The date of the notice
shall be the exercise date. Payment for the shares purchased shall be
made in full to the company within ten (10) business dates after the
exercise date by check payable to the order of the Company equal to
the option price for the shares being purchased, in whole shares of
Common Stock of the company owned by the optionee having a fair market
value on the exercise date (as defined by subsection (j) hereof) equal
to the option price for the shares being purchased, or a combination
of Common Stock and check equal in the aggregate to the option price
for the shares being purchased. Payments of Common Stock shall be
made by delivery of stock certificates properly endorsed for transfer
in negotiable form. If other than the optionee, the person or persons
exercising shall be required to furnish to the Company appropriate
documentation that such person or persons have the full legal right
and power to exercise on behalf of and for the optionee.
(f) Termination as Director.
(i) Except as provided herein, an optionee's options which are
exercisable by their terms at the time the optionee ceases to be a
director of the Company must be exercised on or before the earlier of
three months after the date on which such incumbency ends or the fixed
expiration date of such options, after which period such options shall
expire.
(ii) In the event of the death of the optionee while serving as a
director of the Company, all of that optionee's unexercised options
(whether or not then exercisable by their terms) shall become
immediately exercisable by his estate for a period ending on the
earlier of the fixed expiration date of such options or twelve months
after the date of death, after which period such options shall expire.
For purposes hereof, the estate of an optionee shall be defined to
include the legal representatives thereof or any person who has
acquired the right to exercise an option by reason of the death of the
optionee.
(iii) In the event of the termination as a director by reason of the
permanent disability (as defined below) of the optionee, all of that
optionee's unexercised options (whether or not then exercisable by
their terms) shall become exercisable for a period ending on the
earlier of the fixed expiration date of such options or twelve months
from the date of termination after which period such options shall
expire. For purposes hereof "permanent disability" shall be deemed to
be the inability of the optionee to perform the duties of his job with
the Company because of a physical or mental disability as evidenced by
the opinion of a Company-approved doctor of medicine licensed to
practice medicine in the United States of America.
(iv) In the event of the normal retirement of the optionee, all of
that optionee's unexercised options (whether or not then exercisable
by their terms) granted to that optionee on or before his 65th
birthday shall become immediately exercisable for a period ending on
the earlier of the fixed expiration date of such options or twelve
months after the date of the retirement, after which period such
options shall expire. Also, in the event of the normal retirement of
the optionee, all of the optionee's unexercised options (whether or
not then exercisable by their terms) granted to the optionee after his
65th birthday and held for a period of at least twelve consecutive
months of service as a director with the Company after the date of
grant shall become immediately exercisable for a period ending on the
earlier of the fixed expiration date of such options or twelve months
after the date of retirement, after which period such options shall
expire. For purposes hereof retirement shall be deemed to be "normal
retirement" if the optionee is at least 65 years of age and has
completed at least five consecutive years of service as a non-employee
director of the Company at the date of retirement.
(g) Transferability of Options. Any option granted hereunder shall
be transferable only by will or the laws of descent and distribution
and shall be exercisable during the lifetime of the optionee only by
him.
(h) Other Terms and Conditions. may contain
such other terms, conditions, or provisions, which shall not be
inconsistent with this Plan, as the Committee shall deem appropriate.
(i) Tax Withholding. Any option granted hereunder shall provide as
determined by the Committee for appropriate arrangements for the
satisfaction by the Company and the optionee of all federal, state,
local or other income, excise or employment taxes or tax withholding
requirements applicable to the exercise of the option or the later
disposition of the shares of Common Stock or other property thereby
acquired and all such additional taxes or amounts as determined by the
Committee in its discretion, including without limitation the right of
the Company or any subsidiary thereof to receive transfers of shares
of Common Stock or other property from the optionee or, beginning one
year after the Company becomes subject to the reporting requirements
of Section 13 of the Securities Exchange Act of 1934, to deduct or
withhold in the form of cash or shares from any transfer or payment to
an optionee, in such amount or amount deemed required or appropriate
by the Committee in its discretion.
(j) Fair Market Value. The "fair market value" of a share of Common
Stock on any relevant date for purposes of any provision of the Plan
shall be the closing price reported for the Common Stock in the New
York Stock Exchange Composite Transactions Index on such date or, if
there were no reported sales on such date, then the closing price
reported for the Common Stock in the New York Stock Exchange Composite
Transactions Index on the next preceding day on which such a sale is
transacted, as published in The Wall Street Journal, or available in
or from such other national financial press or service from time to
time over the duration of the Plan.
(k) Cancellation of Option. The Committee shall have the authority
to effect, at any time and from time to time, with the consent of the
affected optionee or optionees, the cancellation of any or all
outstanding options granted under the Plan and to grant in
substitution therefore new options under the Plan (subject to the
limitations hereof) covering the same or different number (but in no
event a number greater than an amount equivalent to the number of
options cancelled) of shares of Common Stock at an option price per
share in all events not less than fair market value on the new grant
date (as determined under subsection (j) of this Section 6).
7. Adjustment and Changes in the Common Stock.
(a) In the event that the shares of Common Stock as presently
constituted shall be changed into or exchanged for a different kind of
share of stock or other securities of the Company or of another
corporation (whether by reason of merger, consolidation,
recapitalization, reclassification, split-up, combination of shares or
otherwise) or if the number of such shares of stock shall be increased
through the payment of a stock dividend, then unless such change
results in the termination of all outstanding options pursuant to the
provisions of Section 8 hereof, there shall be substituted for or
added to each share of stock of the Company therefore appropriated or
thereafter subject or which may become subject to an option under this
Plan, the number and kind of shares of stock or other securities into
which each outstanding share of stock of the Company shall be so
changed, or for which each such share shall be exchanged, or to which
each share shall be entitled, as the case may be. Outstanding options
shall also be appropriately amended as to price and other terms as may
be necessary to reflect the foregoing events. In the event there
shall be any other change in the number or kind of the outstanding
shares of the stock of the Company of any stock or other securities
into which such stock shall have been changed, or for which it shall
have been exchanged, then if the Committee shall, in its sole
discretion, determine that such change equitably requires an
adjustment in any option theretofore granted or which may be granted
under the Plan, such adjustment shall be made in accordance with such
determination. Fractional shares resulting from any adjustment in
options pursuant to this Section 7 shall be rounded down to the
nearest whole number of shares.
(b) Notice of any adjustment shall be given by the Company to each
holder of an option which shall have been so adjusted, provided that
such adjustment (whether or not such notice is given) shall be
effective and binding for all purposes of the Plan and any instrument
or agreement issued thereunder.
8. Acceleration of Options.
(a) In the event that the Company enters into one or more agreements
to dispose of all or substantially all of the assets of the Company or
the Company's stockholders dispose of or become obligated to dispose
of fifty-percent (50%) or more of the outstanding capital stock of the
Company other than to the Company or a subsidiary of the Company, in
either case by means of sale (whether as a result of a tender offer or
otherwise), merger, reorganization or liquidation in one or a series
of related transactions ("Acceleration Event"), then each option
outstanding under the Plan shall become exercisable during the fifteen
(15) days immediately prior to the scheduled consummation of the
Acceleration Event with respect to the full number of shares of which
such option has been granted.
(b) In the event of the occurrence of an Acceleration Event (as
defined by subsection (a) of this Section 8), any optionee who is
subject to the filing requirements imposed under Section 16(a) of the
Securities Exchange Act of 1934 with respect to the Company shall
receive a payment of cash equal to the difference between the
aggregated Fair Value of the shares of Common Stock subject to such
accelerated options and the aggregate option exercise price of such
shares. For this purpose, "Fair Value" shall mean the highest
aggregate fair market value of the subject shares of Common Stock
during the 60-day period immediately preceding the date of the
consummation of the Acceleration Event (as determined under Section
6(j) hereof). Payment of said cash shall be made within 10 days after
said consummation of the Acceleration Event. The foregoing payments
under this subsection (b) shall be made in lieu of and in full
discharge of any and all obligations of the Company in respect of all
subject options of the optionee. Notwithstanding any of the
foregoing, the provisions of this subsection (b) shall not be
applicable to ISOs granted under this Plan.
(c) The grant of options (or related rights) under this Plan shall in
no way affect the right of the Company to adjust, reclassify,
reorganize or otherwise change its capital or business structure of to
merge, consolidate, dissolve, liquidate or sell or transfer all or any
part of its business or assets.
9. Listing and Regulatory Requirement. No options granted pursuant
to this Plan shall be exercisable if at any time, including after
receipt of notice of exercise, the Committee shall determine in its
discretion that the listing, registration, qualification, or
acquisition of the shares of Common Stock subject to such options on
any securities exchange or under any applicable law, or the consent or
approval of any governmental regulatory body is necessary or desirable
as a condition of, or in connection with, the granting of such option
or the acquisition or issuance of shares by IBP thereunder, unless
such listing, registration, qualification, acquisition, consent or
approval shall have been effected or obtained free of any conditions
not acceptable to the Committee.
10. Amendment of the Plan. The board of directors may from time to
time amend or modify or make such changes in and additions to this
Plan as it may deem desirable, however, the board shall not amend the
Plan more than once every six (6) months unless the amendment is to
comport with changes in the Internal Revenue Code or the Employee
Retirement Income Security Act of 1984 (ERISA) without further action
on the part of the stockholders of the Company; provided, however,
that the holders of a majority of the securities of the Company
present or represented and entitled to vote at a duly held meeting
shall have first given their approval, when the amendment to the Plan;
(a) materially increases the benefits accruing to participants under
the Plan; (b) materially increases the number of securities which may
be issued under the Plan; and/or (c) materially modifies the
requirements as to eligibility for participation in the Plan.
11. Stockholder Rights. An optionee shall have none of the rights of
a stockholder of the Company with respect to any shares subject to any
options granted hereunder until such individual shall have exercised
the options and been issued shares therefor.
12. Use of Proceeds. The proceeds received by the Company from the
sale of shares pursuant to the options granted under
this Plan shall be used for general corporate purposes.
EXHIBIT 10.29
Mr. Dale C. Tinstman January 27, 1993
Suite 605, Lincoln Square
121 South 13th Street
Lincoln, NE 68508
Dear Dale:
Please be advised that I have met with the Executive Committee of the Board of
Directors and received approval for the use of your services.
As you and I discussed, you are willing to serve IBP in the following ways:
1. You will report to the Chairman and work on special projects as
requested.
2. You will remain on the Credit Committee.
3. You will continue to chair the Retirement Savings Plan Committee.
4. You will, when called on, help IBP with its public affairs.
5. You will attend the Monday noon executive group from time to time
for input on Company affairs.
For this, IBP will compensate you at the rate of $3,000 per
month plus offer you the right to continue the benefits of our
health insurance plan as you have done in the past.
This agreement is effective January 1, 1993. Either party may cancel
this agreement with thirty (30) days written notice. If you have any
questions, please do not hesitate to call me.
Sincerely,
/s/ Robert L. Peterson
Exhibit 11
IBP, inc. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
YEARS ENDED DECEMBER 25, 1993,
DECEMBER 26, 1992 AND DECEMBER 28, 1991
(In thousands except per share data)
1993 1992 1991
FINANCIAL STATEMENT COMPUTATIONS
Earnings before cumulative effect of
accounting change $77,457 $63,616 $1,353
Cumulative effect of accounting change 12,626 - -
------ ------ -----
Net earnings $90,083 $63,616 $1,353
====== ====== =====
PRIMARY EARNINGS PER SHARE
Shares used in this computation:
Weighted average shares outstanding 47,495 47,374 47,329
Dilutive effect of shares under
employee stock plans 412 268 454
------ ------ ------
Common and common equivalent shares 47,907 47,642 47,783
====== ====== ======
Primary earnings per share:
Earnings before cumulative effect of
accounting change $1.62 $1.34 $ .03
Cumulative effect of accounting change .26 - -
---- ---- ----
Net earnings $1.88 $1.34 $ .03
==== ==== ====
FULLY-DILUTED EARNINGS PER SHARE
Shares used in this computation:
Weighted average shares outstanding 47,495 47,374 47,329
Dilutive effect of shares under
employee stock plans 678 390 474
------ ------ ------
Common and common equivalent shares 48,173 47,764 47,803
====== ====== ======
Fully-diluted earnings per share:
Earnings before cumulative effect of
accounting change $1.61 $1.33 $ .03
Cumulative effect of accounting change .26 - -
---- ---- ----
Net earnings $1.87 $1.33 $ .03
==== ==== ====
Exhibit 13
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Stockholders of IBP, inc.
Dakota City, Nebraska
We have audited the accompanying consolidated balance sheets of IBP,
inc. and its subsidiaries as of December 25, 1993 and December 26,
1992, and the related consolidated statements of earnings,
stockholders' equity and of cash flows for the years then ended.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audits. The financial statements of
IBP, inc. for the year ended December 28, 1991 were audited by other
independent accountants whose report dated February 7, 1992 expressed
an unqualified opinion on those statements.
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 audited by us
present fairly, in all material respects, the financial position of
IBP, inc. and its subsidiaries at December 25, 1993 and December 26,
1992, and the results of their operations and their cash flows for the
years then ended in conformity with generally accepted accounting
principles.
As discussed in Note E to the consolidated financial statements, the
Company changed its method of accounting for income taxes in 1993.
/s/ Price Waterhouse
PRICE WATERHOUSE
February 4, 1994
Chicago, Illinois
Management's Report on Financial Information
The management of IBP, inc. is responsible for the integrity of the
financial data reported by IBP and its subsidiaries. Fulfilling this
responsibility requires the preparation and presentation of
consolidated financial statements in accordance with generally
accepted accounting principles. Management uses internal accounting
controls, corporate-wide policies and procedures, estimates and
judgements in order that such statements reflect fairly the
consolidated financial position, results of operations and cash flows
of IBP.
IBP, inc. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share data)
December 25, December 26,
1993 1992
ASSETS
CURRENT ASSETS:
Cash, including temporary investments
of $24,793 and $24,595 $ 25,196 $ 25,029
Accounts receivable, less allowance for
doubtful accounts of $4,198 and $3,000 449,570 449,212
Inventories (Note B) 191,716 196,096
Deferred income tax benefit (Note E) 33,668 28,434
Prepaid expenses 3,171 3,291
--------- ---------
TOTAL CURRENT ASSETS 703,321 702,062
PROPERTY, PLANT AND EQUIPMENT, at cost (Note F):
Land and land improvements 73,078 63,547
Buildings and stockyards 313,761 272,528
Equipment 669,009 583,071
--------- ---------
1,055,848 919,146
Less accumulated depreciation (507,265) (382,137)
--------- --------
548,583 537,009
Construction in progress 40,198 17,191
--------- --------
588,781 554,200
OTHER ASSETS:
Goodwill, net of accumulated amortization
of $95,244 and $87,465 222,794 219,962
Other 24,011 23,203
------- -------
246,805 243,165
--------- ---------
$1,538,907 $1,499,427
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses (Note D) $ 340,279 $ 357,419
Federal and state income taxes 23,822 6,541
Notes payable (Note C) - 6,000
Other 2,552 2,375
--------- ---------
TOTAL CURRENT LIABILITIES 366,653 372,335
LONG-TERM OBLIGATIONS (Notes C and F) 460,723 510,900
DEFERRED CREDITS AND OTHER LIABILITIES:
Deferred income taxes (Note E) 79,733 66,157
Other 19,002 15,958
--------- ---------
98,735 82,115
COMMITMENTS AND CONTINGENCIES (Note J)
STOCKHOLDERS' EQUITY (Notes F and G):
Preferred stock, 25,000,000 shares
authorized; none issued
Common stock, $.05 par value per share;
authorized 100,000,000 shares; issued
47,500,000 shares 2,375 2,375
Additional paid-in capital 441,959 443,638
Retained earnings 168,695 88,112
Treasury stock at cost, 10,237 and 2,729
shares (233) (48)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 612,796 534,077
--------- ---------
$1,538,907 $1,499,427
========= =========
See notes to consolidated financial statements.
IBP, inc. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands except per share data)
52 Weeks Ended
----------------------------------------------
December 25, December 26, December 28,
1993 1992 1991
------------ ------------ ------------
Net sales (Note A) $11,671,397 $11,128,405 $10,387,686
Cost of products sold 11,400,302 10,880,212 10,242,614
---------- ---------- ----------
Gross profit 271,095 248,193 145,072
Selling, general and
administrative expense 96,626 87,751 84,002
---------- ---------- ----------
Earnings from operations 174,469 160,442 61,070
Interest:
Incurred (45,838) (54,683) (61,344)
Capitalized 1,426 1,590 1,881
Income 1,200 1,267 646
---------- ---------- ----------
(43,212) (51,826) (58,817)
---------- ---------- ----------
Earnings before income taxes
and cumulative effect of
accounting change 131,257 108,616 2,253
Income taxes (Note E) 53,800 45,000 900
---------- ---------- ----------
Earnings before cumulative
effect of accounting change 77,457 63,616 1,353
Cumulative effect of change
in method of accounting for
income taxes (Note E) 12,626 - -
---------- ---------- ----------
Net earnings $ 90,083 $ 63,616 $ 1,353
========== ========== ==========
Earnings per share:
Earnings before
cumulative effect of
accounting change $1.62 $1.34 $ .03
Cumulative effect of
accounting change .26 - -
---- ---- ----
Net earnings $1.88 $1.34 $ .03
==== ==== ====
See notes to consolidated financial statements.
IBP, inc. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands except per share data)
Common Stock Additional
Par Paid-In Retained Treasury
Shares Value Capital Earnings Stock
------ ------ -------- -------- --------
Balance, December 29, 1990 47,500 $2,375 $445,698 $ 65,760 $(2,538)
Net earnings 1,353
Dividends declared,
$.60 per share (28,398)
Treasury shares purchased (4,684)
Treasury shares delivered
under employee stock plans (1,664) 4,741
------ ----- ------- ------- ------
Balance, December 28, 1991 47,500 2,375 444,034 38,715 (2,481)
Net earnings 63,616
Dividends declared,
$.30 per share (14,219)
Treasury shares purchased (2,320)
Treasury shares delivered
under employee stock plans (396) 4,753
------ ----- ------- ------- ------
Balance, December 26, 1992 47,500 2,375 443,638 88,112 (48)
Net earnings 90,083
Dividends declared,
$.20 per share (9,500)
Treasury shares purchased (6,804)
Treasury shares delivered
under employee stock plans (1,679) 6,619
------ ----- ------- ------- ------
Balance, December 25, 1993 47,500 $2,375 $441,959 $168,695 $ (233)
====== ===== ======= ======= ======
See notes to consolidated financial statements.
IBP, inc. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
52 Weeks Ended
----------------------------------------
December 25, December 26, December 28,
1993 1992 1991
------------ ------------ ------------
Inflows (outflows)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 90,083 $ 63,616 $ 1,353
------- -------- --------
Adjustments to reconcile net earnings
to cash flows from operations:
Depreciation and amortization 58,784 62,012 64,646
Cumulative effect of accounting
change (12,626) - -
Deferred income tax (benefit)/
provision (2,400) 9,100 (7,200)
Net loss on disposal of properties 1,713 4,652 5,398
Net changes in:
Accounts payable and accrued
liabilities 36,961 (9,772) (45,202)
Inventories 4,380 (4,759) 24,838
Accounts receivable 3,826 (58,756) 29,795
Other adjustments, net 1,569 (2,151) (8,286)
------- -------- --------
92,207 326 63,989
Net cash flows from operating ------- -------- --------
activities 182,290 63,942 65,342
------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (59,584) (35,511) (24,605)
Payment for stock of new subsidiary,
net of cash acquired (14,628) - -
Other investing activities, net 1,399 638 2,058
Net cash flows from investing ------- -------- -------
activities (72,813) (34,873) (22,547)
------- -------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term
obligations (50,000) (111) (1,001)
Net change in checks in process of
clearance (41,390) 11,862 10,846
Dividends paid (9,499) (18,945) (28,396)
Net change in borrowings under
revolving credit agreements (6,000) (19,000) (15,000)
Other financing activities, net (2,421) (418) (2,063)
------- ------- -------
Net cash flows from financing
activities (109,310) (26,612) (35,614)
-------- ------- -------
Net increase in cash and cash
equivalents 167 2,457 7,181
Cash and cash equivalents at beginning
of year 25,029 22,572 15,391
Cash and cash equivalents at end ------- -------- -------
of year $ 25,196 $ 25,029 $ 22,572
======= ======== =======
See notes to consolidated financial statements.
IBP, inc. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 25, 1993, DECEMBER 26, 1992
AND DECEMBER 28, 1991
A. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION AND BASIS OF PRESENTATION - In 1981, IBP, inc. (IBP)
became a wholly-owned subsidiary of Occidental Petroleum Corporation
(Occidental) through a reorganization and plan of merger. The
accompanying financial statements include the assets, liabilities and
stockholders' equity of IBP, after giving effect to the allocation of
Occidental's acquisition cost to the net assets acquired, as determined
under the purchase method of accounting.
In October 1987, IBP sold 23,500,000 shares of its common stock in an
initial public offering and Occidental's ownership was thereby reduced
to a 50.5% interest. Occidental sold all of its remaining IBP shares
in October 1991 pursuant to an underwritten rights offering to its
stockholders and standby underwriters. As a result, Occidental no
longer controls IBP nor has any person acquired control of IBP.
Transactions between IBP and Occidental or its affiliates during the
periods presented herein were generally insignificant in amount, either
individually or in the aggregate.
PRINCIPLES OF CONSOLIDATION - All subsidiaries are wholly-owned and are
consolidated in the accompanying financial statements. All material
intercompany balances, transactions and profits have been eliminated.
INVENTORIES - Inventories are valued on the basis of the lower of
first-in, first-out cost or market.
PROPERTY, PLANT AND EQUIPMENT - Depreciation is provided for property,
plant and equipment on the straight-line method over the estimated
useful lives of the respective classes of assets as follows:
Land improvements..................8 to 20 years
Buildings and stockyards..........10 to 40 years
Equipment..........................3 to 12 years
Leasehold improvements, included in the equipment class, are
depreciated over the life of the lease or the life of the asset,
whichever is shorter.
INCOME TAXES - Effective December 27, 1992, IBP adopted Statement of
Financial Accounting Standards (SFAS) No. 109, "Accounting for Income
Taxes." See Note E for a discussion of the impact of this new
standard. Income taxes were accounted for in accordance with
Accounting Principles Board (APB) Opinion No. 11 for fiscal years 1992
and 1991.
For certain periods during Occidental's ownership of IBP, IBP was part
of Occidental's consolidated federal and certain state tax returns.
IBP had a tax-sharing agreement for these periods and returns that
required IBP to pay to Occidental any taxes that would have been paid
by IBP if filing separately. This agreement terminated with the sale
of Occidental's remaining interest in IBP in October 1991.
CAPITAL LEASES - Lease arrangements entered into by IBP that constitute
capital lease obligations are capitalized at the present value of
future lease payments. The values assigned to leased assets are
included in property, plant and equipment and accounted for
accordingly. Depreciation on leased assets is included in depreciation
and amortization expense. The capital lease obligations are amortized
over the lease terms as payments are made.
INDUSTRY SEGMENT AND EXPORT SALES INFORMATION - IBP considers its
operations to comprise one industry segment. IBP's operations relate
to the meat packing industry and principally involve cattle and hog
slaughter, beef and pork fabrication and related allied product
processing activities.
In 1993, 1992 and 1991, net export sales, principally to customers in
Asia and North America, amounted to $1,392 million, $1,286 million and
$938 million, respectively.
GOODWILL - Goodwill is amortized on a straight-line basis over a period
of 40 years.
EARNINGS PER SHARE - Earnings per share for 1993, 1992 and 1991 were
calculated using average common and common equivalent shares of
47,907,000, 47,642,000 and 47,783,000, respectively.
STATEMENT OF CASH FLOWS - For purposes of the statement of cash flows,
IBP considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents. Temporary
investments, which are carried at cost which approximates market, were
comprised primarily of variable-rate municipal bonds and time deposits.
RECLASSIFICATIONS - Certain reclassifications have been made to prior
financial statements to conform to the current year presentation.
B.INVENTORIES:
Inventories are comprised of the following:
December 25, December 26,
1993 1992
(In thousands)
Beef $119,001 $123,454
Pork 23,652 25,486
Supplies 49,063 47,156
------- -------
$191,716 $196,096
======= =======
C. CREDIT ARRANGEMENTS:
IBP has a $250,000,000 senior revolving/term facility (the
Revolving/Term Facility) and a $125,000,000 short-term revolving
facility (the Short-Term Revolver). Both committed facilities bear
interest, at the Company's option, at varying rates based upon the
banks' base rates or an uncommitted bid option. From time to time, IBP
also uses uncommitted lines of credit for some or all of its short-term
borrowing needs.
The Revolving/Term Facility is a revolving facility which may be
extended for one-year increments annually during the revolving period
with consent of the banks involved. The revolving period has been
extended through November 15, 1994. At the end of the revolving
period, any outstanding borrowings are converted to a two-year credit
facility with equal quarterly payments. Commitment fees are .275 to
.375 of 1% on the bid option and the unused portion of the committed
facility.
The Short-Term Revolver may be extended semi-annually for additional
six-month periods with consent of the banks involved. It has been
extended through November 10, 1994. Commitment fees are .125 to .25 of
1% on the unused portion of the facility.
Borrowings under the Revolving/Term Facility are treated as current
liabilities with the exception of $100,000,000 which IBP does not
intend to repay within one year. This amount is classified as long-
term in the consolidated balance sheet for 1993; the interest rate at
December 25, 1993 on such borrowings was 3.6%.
During 1993, the maximum amount of short-term borrowings under all of
IBP's credit arrangements was $137,000,000. Average short-term
borrowings and the weighted average interest rate during 1993 were
$55,687,000 and 3.4%. At December 25, 1993, total borrowings
outstanding under committed facilities, including the $100,000,000
classified as long-term, were $100,000,000 and the unused portion
totaled $275,000,000.
D. ACCOUNTS PAYABLE AND ACCRUED EXPENSES:
Accounts payable and accrued expenses are comprised of the following:
December 25, December 26,
1993 1992
(In thousands)
Accounts payable, principally
trade creditors $149,784 $148,176
------- -------
Checks in process of clearance 29,081 70,471
Accrued expenses: ------- -------
Employee benefits 58,734 52,500
Payroll 42,038 40,668
Other 60,642 45,604
------- -------
161,414 138,772
------- -------
$340,279 $357,419
======= =======
E. INCOME TAXES:
Effective December 27, 1992, IBP adopted SFAS No. 109 on a prospective
basis. The cumulative effect of adopting this statement was to
increase net earnings by $12.6 million in fiscal 1993. SFAS No. 109
requires that prior accounting for business combinations, such as IBP's
application of "pushdown accounting" to its acquisition by Occidental
in 1981, be adjusted to reflect remaining assets at fair value rather
than net-of-tax value as under APB No. 11. Any difference between the
adjusted remaining balance and the tax bases are accounted for as
temporary differences. The cumulative effect of the accounting change
was an increase in property, plant and equipment of $23.4 million, net
of accumulated depreciation of $80.2 million, and an increase in net
deferred tax liabilities of $10.8 million.
Income tax expense consists of the following:
1993 1992 1991
(In thousands)
Current:
Federal $54,300 $33,300 $ 7,500
State 1,900 2,600 600
Deferred (2,400) 9,100 (7,200)
------ ------ -------
$53,800 $45,000 $ 900
====== ====== =======
A reconciliation between the actual income tax expense and income taxes
computed by applying the statutory federal income tax rate is as
follows:
Liability Deferred Deferred
Method Method Method
1993 1992 1991
(In thousands)
Computed tax on pre-tax
earnings at federal
statutory rate $45,940 $36,925 $ 766
Foreign Sales Corporation
benefits (1,243) (1,115) (3,992)
Amortization of goodwill 2,723 2,613 2,613
State income taxes, net
of federal benefit 1,254 1,716 417
Targeted jobs credits (650) (990) (990)
Effect of differences
between fair values
assigned in purchase
accounting and historic
tax values - 2,799 2,417
Income tax contingencies
and change in effective
tax rate 6,067 3,330 -
Other, net (291) (278) (331)
------ ------ -------
Income tax provision $53,800 $45,000 $ 900
====== ====== =======
The Company reached an agreement in 1992 with the Internal Revenue
Service (IRS) with respect to income tax examinations involving the
years 1987 and 1988. The agreement included adjustments to the
Company's Foreign Sales Corporation income tax returns. The IRS is
currently examining the years 1989, 1990 and 1991. In management's
opinion, adequate provisions for income taxes have been made for all
years.
Deferred income tax liabilities and assets were comprised of:
Beginning
End of of
1993 1993
(In thousands)
Deferred tax liabilities:
Fixed assets basis
difference $90,015 $86,126
Other 4,162 4,159
------ ------
Gross deferred tax liabilities 94,177 90,285
------ ------
Deferred tax assets:
Nondeductible accrued
liabilities (42,397) (35,569)
State tax credit
carryforwards (18,761) (17,542)
Safe harbor leases (3,796) (4,773)
Bad debt and claims
reserves (1,818) (1,333)
Federal and state operating
loss carryforwards (849) (250)
Other (101) (142)
------- -------
Gross deferred tax assets (67,722) (59,609)
------- -------
Valuation allowance 19,610 17,792
------ ------
$46,065 $48,468
====== ======
The net change in the valuation allowance for deferred tax assets of
$1.8 million relates to acquired net operating loss and earned state
tax credit carryforwards for which utilization is not certain. The
acquired federal net operating loss carryforwards are subject to
various limitations as to use and expire at various dates through 2007.
The state net operating loss and state tax credit carryforwards expire
primarily from 2002 through 2007. No benefit has been recognized for
these net operating loss and state tax credit carryforwards.
F. LONG-TERM OBLIGATIONS:
Long-term obligations are summarized as follows:
December 25, December 26,
1993 1992
(In thousands)
9.82% Senior Notes due 2000 $275,000 $275,000
Revolving/Term Facility 100,000 150,000
10.39% Senior Subordinated
Debentures due 2002 75,000 75,000
Present value of minimum
capital lease obligations 9,900 9,900
Other 1,000 1,000
------- -------
460,900 510,900
Less amounts due within one
year 177 -
------- -------
$460,723 $510,900
======= =======
IBP's loan agreements contain certain restrictive covenants which,
among other things, (1) require the maintenance of a minimum current
ratio, adjusted net worth and debt service coverage ratio; (2) provide
for a maximum funded debt ratio; and (3) place certain restrictions on
the declaration and payment of dividends and similar distributions. As
of December 25, 1993, approximately $131 million of stockholders'
equity was available for the payment of dividends and other similar
distributions.
Aggregate maturities of long-term obligations for each of the five
fiscal years subsequent to 1993 are $177,000, $50,188,000,
$105,489,000, $55,517,000 and $70,545,000.
Substantially all of the leased assets under capital leases can be
purchased by IBP for nominal consideration at the end of the lease
terms. Leased assets included with owned property in the consolidated
balance sheets consist of:
December 25, December 26,
1993 1992
(In thousands)
Land and land improvements $ 8,478 $ 8,478
Buildings and stockyards 331 331
Equipment 1,109 1,091
------- ------
9,918 9,900
Less accumulated depreciation 2,623 1,995
------- -------
$ 7,295 $ 7,905
======= =======
G. CAPITAL STOCK AND STOCK PLANS:
The Board of Directors is authorized to issue up to 25,000,000 shares
of preferred stock at such time or times, in such series, with such
designations, preferences or other special rights as it may determine.
IBP has stock option plans under which incentive and non-qualified
stock options may be granted to key employees and directors of IBP and
its subsidiaries. As of December 25, 1993, the plans provide for the
delivery of up to 3,360,000 shares of common stock upon exercise of
options granted at no less than the fair market value of the shares on
the date of grant. The options may be granted for terms up to but not
exceeding ten years from the date granted.
Stock options under the plan are summarized as follows:
1993 1992 1991
Shares under option,
at beginning of year 1,511,163 1,411,095 1,743,245
Granted 642,197 309,602 317,775
Exercised (275,865) (99,211) (511,424)
Cancelled (98,659) (110,323) (138,501)
Shares under option, --------- --------- ---------
at end of year 1,778,836 1,511,163 1,411,095
========= ========= =========
Price range of options $10 7/8- $12- $10 7/8-
exercised 24 1/4 18 1/2 16 3/8
Options exercisable,
at end of year 606,440 291,677 445,577
Price range per share, $12- $10 7/8- $10 7/8-
outstanding options 26 25 7/8 25 7/8
At December 25, 1993 and December 26, 1992, there were 1,585,000 and
141,000 shares, respectively, reserved for future grants.
IBP also has an officer long-term stock plan which provides for awards
to key employees of IBP which, subject to certain restrictions, will
vest generally after five years (deferral period) resulting in the
delivery of shares of common stock. A maximum of 700,000 shares of
common stock are available to be awarded under this plan. Initial
awards effective in 1992 were made in 1993, totaling approximately
555,000 shares at $16 1/8 per share. Additional grants are awarded to
plan participants during the deferral period, pursuant to the deemed
dividend reinvestment provisions of the plan.
Shares of common stock to be delivered for approximately 1,360,000
options under the stock option plans must come from shares purchased by
IBP in the open market and held in treasury. All other shares of stock
to be delivered pursuant to the stock option plans and the officer
long-term stock plan may alternatively come from previously authorized
but unissued common stock.
H. SUPPLEMENTAL CASH FLOW INFORMATION:
Supplemental information on cash payments is presented as follows:
1993 1992 1991
(In thousands)
Interest, net of amounts
capitalized $44,229 $53,507 $57,853
Income taxes 39,797 41,364 5,151
I. FINANCIAL INSTRUMENTS:
The following methods and assumptions are used in estimating the fair
value of each class of the Company's financial instruments at December
25, 1993:
For cash and cash equivalents, short-term investments, accounts
receivable and accounts payable, the carrying amount is a reasonable
estimate of fair value because of the short-term nature of these
instruments.
For securities included in other assets, fair value is based upon
quoted market prices for these or similar securities. The carrying
amount approximates fair value for these securities.
The fair value of the Company's long-term debt is estimated by
discounting the future cash outlays associated with each debt
instrument using interest rates currently available to the Company for
debt issues with similar terms and remaining maturities.
The estimated fair values of IBP's financial instruments as of December
25, 1993, are as follows:
Carrying Fair
Amount Value
(In thousands)
Long-term debt:
Current portion $ 177 $ 177
Noncurrent portion 460,723 522,695
J. COMMITMENTS AND CONTINGENCIES:
IBP is involved in numerous disputes incident to the ordinary course of
its business. In the opinion of management, any liability for which
provision has not been made relative to the various lawsuits, claims
and administrative proceedings pending against IBP, including that
described below, will not have a material adverse effect on its
financial position.
A complaint filed against IBP in April 1988 by the Department of Labor,
Wage and Hour Division, in the United States District Court in Kansas
seeks injunctive relief and back wages, plus interest, for certain
hourly employees of the Company. The case relates to compensation
allegedly due for incidental activities of hourly employees before and
after regular working hours. In the liability phase of the case, the
district judge has ruled that IBP is required to pay back wages for a
portion of the incidental activities. An appeal by the Company is in
progress. The Company's management believes it has made adequate
provision for any liability, the amount of which, if any, will be
determined at a later time.
K. QUARTERLY FINANCIAL DATA (UNAUDITED):
Quarterly results are summarized as follows:
(In thousands except per share data)
First Second Third Fourth
1993 Quarter Quarter Quarter Quarter Annual
- ----
Net sales $2,745,361 $3,042,882 $3,054,184 $2,828,970 $11,671,397
Gross profit 53,885 70,162 72,657 74,391 271,095
Earnings before
accounting change 12,314 20,496 22,247 22,400 77,457
Net earnings 24,940 20,496 22,247 22,400 90,083
Earnings per share:
Earnings before
accounting change .26 .43 .46 .47 1.62
Net earnings .52 .43 .46 .47 1.88
Dividends per share .05 .05 .05 .05 .20
Market price:
High 20 3/8 20 7/8 24 1/8 26
Low 17 3/4 17 1/2 19 3/4 24 1/8
1992
- ----
Net sales $2,652,858 $2,823,808 $2,872,539 $2,779,200 $11,128,405
Gross profit 67,973 57,388 58,309 64,523 248,193
Net earnings 19,408 12,494 13,318 18,396 63,616
Earnings per share .41 .26 .28 .38 1.34
Dividends per share .15 .05 .05 .05 .30
Market price:
High 18 19 19 20 1/2
Low 14 3/8 17 16 1/8 15 7/8
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
IBP's financial results in 1993 were very favorable as record levels of net
sales, beef production and net earnings were achieved. The 8.7% increase in
earnings from operations was brought about primarily by the beef division,
reflecting expanding market-ready cattle supplies and strong demand for IBP's
products. Meanwhile, the pork division, when measured against industry
performance, was very profitable but it did not meet management expectations
for return on assets in 1993. A 1.3% decline from 1992 in industry-wide
available hogs put significant pressure on profit margins.
According to the United States Department of Agriculture (USDA), U.S. cattle
supplies should continue to increase in 1994, while pork supplies will decline
through the first half of the year before recovering in the second half of
1994.
IBP's selling prices and the prices it pays for live cattle and hogs are
determined by constantly changing market forces of supply and demand, over
which IBP has little or no control. Therefore, past results are not
necessarily indicative of future performance.
The pork division made some significant changes in 1993 and early in 1994. The
division purchased a pork plant in Logansport, Indiana from Wilson Foods late
in 1993. This plant purchase, along with an earlier 1993 purchase of a network
of hog-buying stations located through the eastern Corn Belt region, will help
expand IBP's presence in this area. IBP currently plans to modernize the plant
and begin operations in the second half of 1994 or the first half of 1995.
The pork division also announced in January 1994 its tentative decision to
close its Perry, Iowa plant which it has operated since 1989. The plant has
not been profitable for IBP and may close in April 1994. If the plant closes,
the potential adverse impact on 1994 operating earnings is not expected to be
significant.
IBP's required adoption of SFAS No. 109, "Accounting for Income Taxes," in the
first quarter 1993 added $12.6 million or $.26 per share to 1993 net earnings.
This earnings increase was primarily attributable to the adjustment of
"pushdown accounting" fixed asset bases resulting from IBP's acquisition in
1981. At the same time, net earnings were reduced by pushdown accounting
adjustments, consisting primarily of goodwill amortization and depreciation of
the higher values assigned to property, plant and equipment, totaling $10.3
million, $11.2 million and $11.0 million for 1993, 1992 and 1991, respectively.
COMPARISON OF 1993 TO 1992
SALES
In 1993, net sales rose 4.9% from 1992 net sales due to increases in the
average selling price of beef and pork and in total pounds of beef products
sold.
Net export sales continued to grow in 1993, rising 8.2% over 1992 totals. The
sales growth was attributable to increased boxed beef and pork sales to Asian
countries, Japan in particular. In total, exports accounted for 11.9% of 1993
net sales compared to 11.6% of net sales in 1992.
The USDA predicts U.S. beef exports will improve and pork export demand will
remain low in 1994. The USDA cites improving overseas economies and reductions
in trade barriers as the main reasons for the expected improvement in beef
export demand. Meanwhile, U.S. industry production levels, based upon pounds
produced, have remained steady for beef and increased approximately 13% for
pork in the last decade.
COST OF PRODUCTS SOLD
The principal factors which caused the 4.8% increase in cost of products sold
were increases in the average price paid for hogs and cattle and an increase in
pounds of beef products sold. Livestock costs comprised approximately 90% of
cost of products sold in 1993 and 1992.
Plant costs were also higher in 1993 than in 1992 due mostly to increased labor
and related costs.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE
Selling expense rose 10.2% in 1993 over 1992 due to higher volume-related
warehousing and freezing charges and export-related selling expense. General
and administrative expense rose 10.1% largely due to increased incentive
compensation accruals, a higher bad debt provision and higher corporate
consulting expense.
INTEREST EXPENSE
Several factors contributed to the lower net interest expense in 1993 compared
to 1992. The expiration of interest rate "collars," 9.9% lower average
borrowings outstanding and a lower average rate on the Company's borrowings
were the most significant factors involved in the decrease. The decrease in
borrowing needs was mainly the result of improved profitability and a reduction
in dividends paid.
INCOME TAXES
The principal reason for the higher 1993 income tax provision versus 1992 was
the increase in pre-tax earnings.
COMPARISON OF 1992 TO 1991
SALES
Net export sales in 1992 increased 37.1% from 1991 and accounted for 11.6% of
total net sales. Boxed beef, hides and boxed pork accounted for most of the
sales volume while the Far East was the most significant destination for export
products. Export market growth was achieved in the Americas and Europe as
well.
COST OF PRODUCTS SOLD
The cost of products sold was 6.2% higher in 1992 than in 1991. Cattle supplies
were relatively flat in relation to the prior year while hog supplies were
higher in 1992 than in 1991. The more plentiful hog supplies brought the
average price paid for live hogs down in 1992 versus 1991, reducing somewhat
the impact of the increase in cost of products sold.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE
The increase in selling, general and administrative expense in 1992 over 1991
was attributable primarily to increased accruals for earnings-based bonuses and
higher volume-related selling expense.
INTEREST EXPENSE
The 10.9% decrease in interest incurred in 1992 versus 1991 resulted from a
5.9% reduction in average borrowings and a half-point decrease in IBP's
effective interest rate. The lower borrowings in 1992 were due in part to
improved profitability and a reduced dividend rate while the lower 1992
effective interest rate was reflective of the general market interest rate
trend.
INCOME TAXES
The higher income tax provision in 1992 compared to 1991 was principally due to
the increase in pre-tax earnings.
LIQUIDITY AND CAPITAL RESOURCES
The meat processing industry is characterized by high working capital
requirements. This is due largely to statutory provisions that generally
provide for prompt payment for livestock, while it takes IBP on average about
one week to turn its inventory and 14 to 15 days to convert its trade
receivables to cash. These factors, combined with fluctuations in production
levels, selling prices and prices paid for livestock can impact cash
requirements substantially on a day-to-day basis. Accordingly, the current
revolving credit facilities (more fully described in Note C to the
consolidated financial statements) provide IBP with same-day access to $375
million in potential borrowings. At December 25, 1993, the unused portion of
the credit line was $275 million.
Although IBP has significant working capital requirements, its accounts
receivable and inventories are highly liquid, characterized by rapid turnover.
The following are key indicators relating to IBP's working capital and asset-
based liquidity:
December 25, December 26,
1993 1992
Working capital (in thousands) $336,668 $329,727
Current ratio 1.92:1 1.89:1
Quick ratio 1.29:1 1.27:1
Number of days' sales in
accounts receivable 15.4 14.8
Inventory turnover 51.1 50.7
Capital expenditures in 1993 and 1992 totaled $59.6 million and $35.5 million,
respectively. The increased 1993 spending was due in part to the purchase of a
pork plant in Logansport, Indiana and to several plant capacity expansions.
Capital spending is expected to be $90 to $100 million for 1994, which
management intends to fund from operating cash flows and available debt
facilities.
IMPACT OF NEW ACCOUNTING PRONOUNCEMENT
Effective December 27, 1992, the Company adopted SFAS No. 106, "Employers
Accounting for Postretirement Benefits Other Than Pensions." Adoption of this
new standard had no impact on the Company because IBP does not provide programs
for Company-funded postretirement benefits.
STOCKHOLDERS AND MARKET DATA
IBP's common shares were held by approximately 11,000 stockholders of record at
year-end 1993. The common stock is traded on the New York, Midwest,
Philadelphia and Pacific Stock Exchanges.
IBP, inc. AND SUBSIDIARIES
Fiscal Year Ended
----------------------------------------------------------
December December December December December
25, 26, 28, 29, 30,
1993 1992 1991 1990 1989
OPERATIONS: ----------- ----------- ----------- ----------- ---------
Net sales $11,671,397 $11,128,405 $10,387,686 $10,185,255 $9,128,596
Gross profit 271,095 248,193 145,072 220,278 189,968
Selling,
general and
administrative
expense 96,626 87,751 84,002 95,578 86,696
Earnings from
operations 174,469 160,442 61,070 124,700 103,272
Interest, net (43,212) (51,826) (58,817) (48,973) (48,047)
Earnings before
income taxes,
accounting
change and
extraordinary
item 131,257 108,616 2,253 75,727 55,225
Income taxes 53,800 45,000 900 27,400 19,900
Accounting
change (1) 12,626 - - - -
Extraordinary
loss - - - (5,980) -
Net earnings 90,083 63,616 1,353 42,347 35,325
PER SHARE DATA:
Earnings per
share:
Earnings before
accounting
change and
extraordinary
item $1.62 $1.34 $.03 $1.01 $.74
Accounting change .26 - - - -
Extraordinary loss - - - (.12) -
Net earnings 1.88 1.34 .03 .89 .74
Dividends per share .20 .30 .60 .60 .60
FINANCIAL CONDITION:
Working capital $ 336,668 $ 329,727 $ 238,163 $ 234,441 $ 182,419
Total assets 1,538,907 1,499,427 1,450,480 1,524,615 1,352,919
Long-term
obligations 460,723 510,900 509,901 507,028 416,296
Stockholders'
equity 612,796 534,077 482,643 511,295 497,291
(1)Cumulative effect of change in accounting for income taxes.
EXHIBIT 21
SUBSIDIARIES OF IBP, inc.
December 25, 1993
IBP Foreign Sales Corporation
IBP Hog Markets, Inc.
IBP International
IBP International, Inc. Asia*
IBP International, Inc. Europe*
IBP Leasing Corporation of Nebraska
IBP Properties, Inc.
IBP of Wisconsin, inc.
IBP Service Center Corp.
PBX, inc.
Rural Energy Systems, Inc.
Texas Transfer, Inc.
_______________________
*Stock is 100% owned by IBP International, Inc.
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (Nos. 33-19441 and 33-51903) relating to the IBP 1987
and 1993 Stock Option Plans of our report dated February 4, 1994 appearing on
page 8 of the Annual Report to Stockholders which is incorporated in this
Annual Report on Form 10-K. We also consent to the incorporation by
reference of our report on the Financial Statement Schedules, which appears
on page 16 of this Form 10-K.
PRICE WATERHOUSE
/s/Price Waterhouse
Chicago, Illinois
March 23, 1994
