<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JULY 29, 1995
-------------
or
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
----------------- -----------------------.
Commission file number: 0-15077
-------
SHOREWOOD PACKAGING CORPORATION
(Exact name of registrant as specified in its Charter)
DELAWARE 11-2742734
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
277 PARK AVENUE
NEW YORK, NEW YORK 10172
(Address of principal executive offices)
(212) 371-1500
(Registrants telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES /x/ NO / /
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
SEPTEMBER 1, 1995 19,246,854
Date Number of Shares
<PAGE> 2
SHOREWOOD PACKAGING CORPORATION
AND SUBSIDIARIES
<TABLE>
<CAPTION>
INDEX PAGE
<S> <C>
Part I: Financial Statements
Consolidated Condensed Balance Sheets
July 29, 1995 (Unaudited) and
April 29, 1995 (Audited) 3
Consolidated Condensed Statements of Earnings
13 weeks ended July 29, 1995 (Unaudited) and
July 30, 1994 (Unaudited) 4
Consolidated Condensed Statements of Cash flows
13 weeks ended July 29, 1995 (Unaudited) and
July 30, 1994 (Unaudited) 5
Notes to Consolidated Condensed Financial Statements 6 - 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations 8 - 10
Part II: Other Information 11 - 12
</TABLE>
2
<PAGE> 3
SHOREWOOD PACKAGING CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
JULY 29, APRIL 29,
1995 1995
ASSETS (UNAUDITED) (AUDITED)
<S> <C> <C>
Current Assets:
Cash and Cash Equivalents $ 4,621 $ 4,100
Accounts Receivable, net 39,736 40,801
Inventories 50,082 46,641
Deferred Tax Assets 1,424 1,424
Prepaid expenses and other current assets 4,357 3,986
-------- --------
Total Current Assets 100,220 96,952
Property, Plant and Equipment, net 134,998 129,153
Excess of Cost Over the Fair Value of Net Assets Acquired, net 14,778 14,906
Other Assets 5,488 4,253
-------- --------
$255,484 $245,264
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 26,459 $ 28,122
Accrued Expenses 13,699 14,918
Income Taxes Payable 1,574 570
Current maturities of long-term debt 23,841 21,394
-------- --------
Total Current Liabilities 65,573 65,004
Long-Term Debt 102,732 99,793
Deferred Credit and Other Long-Term Liabilities 1,162 1,314
Deferred Income Taxes 12,810 11,744
-------- --------
Total Liabilities 182,277 177,855
-------- --------
Commitments and Contingencies
Fair Value of Warrant, net of deferred
fair value of warrant ($1.357) - -
Stockholders' Equity:
Series A Preferred Stock, $10 par value; 50,000 shares
authorized, none issued - -
Preferred Stock, $10 par value; 5,000,000 shares authorized
none issued - -
Common Stock, $.01 par value; 40,000,000 shares authorized
21,639,038 issued and 19,243,352 outstanding in July and
21,622,726 issued and 19,227,040 outstanding in April 216 216
Additional Paid-In Capital 38,837 38,670
Retained Earnings 58,115 52,255
Cumulative Foreign Currency Translation Adjustment (1,726) (1,497)
Treasury Stock (2,395,686 shares at cost in July and April) (22,235) (22,235)
-------- --------
Total Stockholders' Equity 73,207 67,409
-------- --------
$255,484 $245,264
======== ========
</TABLE>
3
<PAGE> 4
SHOREWOOD PACKAGING CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
13 WEEKS 13 WEEKS
ENDED ENDED
JULY 29, JULY 30,
1995 1994
<S> <C> <C>
Net Sales $90,699 $84,773
------- -------
Costs and Expenses:
Cost of Sales 70,241 65,262
Selling, General and Administrative 9,099 8,521
------- -------
Earnings from Operations 11,359 10,990
Other Income/(Expense), net 207 149
Interest Expense (2,081) (2,320)
------- -------
Earnings Before Provision for Income Taxes 9,485 8,819
Provision for Income Taxes 3,625 3,351
------- -------
Net Earnings $5,860 $5,468
======= =======
Net Earnings Per Common and Common
Equivalent Share $0.30 $0.30
======= =======
Weighted Average Common and Common Equivalent
Shares Outstanding 19,842 18,433
======= =======
</TABLE>
4
<PAGE> 5
SHOREWOOD PACKAGING CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
13 WEEKS 13 WEEKS
ENDED ENDED
JULY 29, JULY 30,
1995 1994
<S> <C> <C>
Cash Flows from Operating Activities:
Net Earnings $5,860 $5,468
Adjustments to reconcile earnings to net cash flows
provided from operations:
Depreciation and Amortization 3,379 3,549
Deferred Income Taxes 1,066 317
Changes in operating assets and liabilities
Accounts receivable 901 (5,088)
Inventories (3,587) (4,893)
Prepaid expenses and other current assets (390) 258
Other assets (1,476) (234)
Accounts Payable and Accrued Expenses (2,764) 5,096
Income Taxes Payable 1,013 (950)
------- -------
Net cash flows provided from operating activities 4,002 3,523
------- -------
Cash Flows from Investing Activities:
Capital Expenditures (9,301) (2,433)
Other - 122
------- -------
Net cash flows used in investing activities (9,301) (2,311)
------- -------
Cash Flows from Financing Activities
Net proceeds from (repayments of) long-term borrowings 5,560 (1,000)
Issuance of common stock 167 394
Other - 156
------- -------
Net cash flows provided from (used in) financing activities 5,727 (450)
------- -------
Effect of exchange rate changes on cash and cash equivalents 93 (3)
------- -------
Increase in cash and cash equivalents 521 759
Cash and cash equivalents at beginning of year 4,100 2,735
------- -------
Cash and cash equivalents at end of period $4,621 $3,494
======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid, net of capitalized amounts $2,102 $2,844
======= =======
Income taxes paid $488 $3,163
======= =======
</TABLE>
5
<PAGE> 6
SHOREWOOD PACKAGING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
1. BASIS OF PRESENTATION
In the opinion of the Company, the accompanying unaudited consolidated
condensed financial statements contain all adjustments (consisting only of
normal recurring adjustments) necessary to present fairly the financial
position, the results of operations, and the changes in cash flows at July 29,
1995 and for all periods presented.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. These financial statements should be read in
conjunction with the Consolidated Financial Statements and Notes included in
the Company's April 29, 1995 Annual Report to Stockholders on Form 10-K as
filed with the Securities and Exchange Commission ("1995 Form 10-K").
The results of operations for the 13 week periods ended July 29, 1995 and July
30, 1994 are not necessarily indicative of the results for the full year.
2. INCOME TAXES
The effective income tax rate is based on estimates of annual amounts of
taxable income and other factors. These estimates are updated periodically and
any increase or decrease in the provision for income taxes is reflected in the
period in which the estimate is changed.
3. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
JULY 29, 1995 APRIL 30, 1995
<S> <C> <C>
Raw materials and supplies $21,781 $20,767
Work in process 10,945 12,043
Finished Goods 17,356 13,831
------- -------
$50,082 $46,641
======= =======
</TABLE>
4. OTHER ASSETS
In May 1995, the Company loaned $2.0 million to its Vice Chairman of the Board
and President (the "Executive"). The loan is due on May 4, 2000, and bears
interest payable quarterly equal to the Applicable Federal Rate as defined
(6.46% at July 29, 1995), adjusted quarterly. Mandatory prepayments of this
loan are required if the Executive's compensation exceeds certain thresholds.
5. COMMITMENTS AND CONTINGENCIES
a. Treasury Stock
In January 1993, the Company's Board of Directors authorized the purchase of up
to 2.0 million shares of the Company's common stock from time to time in the
open market. Pursuant to this authorization
6
<PAGE> 7
SHOREWOOD PACKAGING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(continued)
through July 29, 1995, the Company purchased, utilizing internally generated
funds, approximately 1.2 million shares of its common stock for approximately
$12.6 million.
b. New Facility
In connection with a planned expansion of the Company's facilities, the Company
anticipates investing approximately $20.0 million in a new plant and equipment,
of which approximately $5.6 million has been disbursed as of July 29, 1995.
Funds for this expansion are to be provided from the Company's existing credit
facilities.
c. Legal Matters
In January 1995, the Company commenced a civil action in the Supreme Court of
the State of New York against Heminway Packaging Corporation ("Heminway") and
certain of its affiliates seeking compensatory and punitive damages and other
relief in connection with the January 1994 acquisition by the Company of
Heminway's rigid set-up box and thermoforming business (the "Heminway
Business"). The suit contends that the defendants misrepresented the financial
condition and operational capabilities of the acquired business. The Company
is seeking damages in excess of $5.0 million. In June 1995, the defendants
filed an answer and a counterclaim to the Company's complaint, seeking
compensatory damages exceeding $10.0 million and punitive damages of $7.7
million. Management intends to pursue its claims against the defendants and to
vigorously defend the counter claim, and believes that the ultimate outcome of
these claims will not have a material adverse effect on the operations or
financial condition of the Company.
d. Environmental Matters
On a continuing basis, the Company monitors its compliance with applicable
environmental laws and regulations. As part of this process the Company
cooperates with appropriate governmental authorities to perform any necessary
testing and compliance procedures. The purchase agreements relating to the
acquisition of certain acquired companies indemnify the Company from all costs
and expenses relating to environmental matters which existed at the related
acquired facilities on or prior to the respective closing dates. The Company
is not currently aware of any environmental compliance matters that it believes
will have a material effect on the consolidated financial statements.
e. 1995 Performance Bonus Plan
In July 1995, the Board of Directors approved, subject to shareholder approval,
the 1995 Performance Bonus Plan (the "Plan"), applicable to the Executive only.
Under the Plan, for each of the five fiscal years of the Company commencing
with fiscal year 1996, the Executive will be entitled to a graduated bonus (the
"Performance Bonus") based upon a comparison of the Company's earnings from
operations plus depreciation and amortization (the "Performance Measure") in
that award year with the immediately preceding fiscal year. Bonuses are
payable only if pre-established thresholds are met. The size of the
Performance Bonus is tied to the level of the Company's performance, as
measured by the Performance Measure, with the larger bonuses available only in
the case of truly superior results. The maximum Performance Bonus payable in
respect of any award year under the Plan is $2.0 million.
7<PAGE> 8
SHOREWOOD PACKAGING CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
In January 1994, the Company acquired certain operating assets of the Premium
Packaging Group of Cascades Paperboard International, Inc. (the "Premium Group")
and the Heminway Business. The Premium Group's and Heminway's operations are
reflected in the results of operations for the entire quarters ended July 29,
1995 and July 30, 1994 (hereinafter these dates are referred to as "1995" and
"1994" respectively)
RESULTS OF OPERATIONS
Net Sales
Net sales for the quarter ended July 29, 1995 were $90.7 million compared to net
sales of $84.8 million for the corresponding prior period, an increase of 7.0%.
The Company believes that future sales growth will be generated through
continued penetration of its existing markets, and the expanding market of CD
ROM products. The Company expects its new facility in Oregon to begin production
and provide incremental sales in September 1995. In addition, the Company is in
the process of moving machinery and equipment from its Pittsford facility to
other Company facilities, which is scheduled to cease production in September
1995. The Company believes that the closure of Pittsford will not have a
significant effect on sales as customer orders will be satisfied by other
Company facilities.
Cost of Sales
Cost of Sales as a percentage of sales for the quarter ended July 29, 1995 were
77.4% as compared to 77.0% for the corresponding prior period. The Company has
been able to maintain relatively consistent margins although operations continue
to be affected by increases in certain raw material costs during the past year,
some of which could not be reflected in the selling price to the customer. The
Company remains sensitive to price competitiveness in the markets that it
serves, and in the areas that are targeted for growth. It believes that the
installation of state-of-the-art printing and manufacturing equipment (and
related labor and production efficiencies) will enable it to compete
effectively.
Selling, General and Administrative Expenses
Selling, general and administrative expenses as a percentage of sales for the
quarter ended July 29, 1995 were 10.0% as compared to 10.1% for the
corresponding prior period. The increased dollar amount of selling, general and
administrative expenses are due to costs incurred related to increased sales.
Interest Expense
Interest expense for the quarter ended July 29, 1995 was $2.1 million as
compared to $2.3 million for the corresponding prior period. The reduction in
interest expense resulted primarily from the conversion into common stock of
$17.5 million of convertible subordinated debentures, partially offset by an
increase in interest rates. Interest costs capitalized for the quarter ended
July 29, 1995 related to the construction
8
<PAGE> 9
of plant and equipment (including the Company's Oregon facility) amounted to
$262 thousand. Interest costs capitalized during the prior period were not
significant. The Company anticipates additional capitalization of interest in
the quarter ended October 28, 1995 in connection with the construction of the
manufacturing facility in Oregon.
In October 1994, the Company assigned to a bank an interest rate swap agreement
relating to $42.0 million of its Senior Term Notes for cash proceeds of
approximately $1.3 million. The proceeds have been recorded as a deferred credit
which is being amortized as a reduction of interest expense (amounting to $146
thousand for the quarter ended July 29, 1995 and zero for the corresponding
prior period). At July 29, 1995, $767 thousand of deferred gain remains which
will be amortized: $364 thousand in the remaining portion of fiscal 1996, $289
thousand in fiscal 1997; and $114 thousand in fiscal 1998.
The Company has used, and may continue to use, interest rate swaps and caps to
manage its exposure to fluctuating interest rates under its debt agreements.
Income Taxes
The effective income tax rate for the quarter ended July 29, 1995 was 38.2%
compared to 38.0% for the corresponding prior period. These rates reflect a
blend of domestic and foreign taxes and are adjusted periodically based upon the
estimated annual effective tax rate, which for the entire fiscal year ended
April 29, 1995 was 37.8%.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents at July 29, 1995 were $4.6 million as compared to $4.1
million at April 29, 1995, and working capital was $34.6 million as compared to
$31.9 million as of the same dates respectively. The current ratio at July 29,
1995 was 1.5 to one at both dates.
Cash flow from operating activities for the quarter ended July 29, 1995 was $4.0
million as compared to $3.5 million for the corresponding prior period. Before
changes in operating assets and liabilities, cash flow from operations for the
quarter ended July 29, 1995 was $10.3 million as compared to $9.3 million for
the corresponding prior period. For the quarter ended July 29, 1995, $6.3
million of cash flow from operating activities before changes in operating
assets and liabilities was invested in non-cash working capital, primarily raw
material and finished goods inventories. Cash flows from operations as well as
borrowings under the Company's credit facilities were used to support $9.3
million in capital expenditures. In connection with a planned expansion of the
Company's facilities, the Company anticipates investing approximately $20.0
million in a new plant and new equipment in Oregon, of which $5.6 million has
been disbursed as of July 29, 1995. Funds for the expansion are to be provided
from the Company's existing credit facility.
Net capital expenditures, primarily for manufacturing equipment, for the quarter
ended July 29, 1995 were $9.3 million. The Senior Term Note and Long-Term
Revolver Agreement (the "Loan Agreement") limits capital expenditures by the
Company to $15.0 million during fiscal 1996 (excluding capital expenditures
related to the Company's investment in its Oregon facility).
9
<PAGE> 10
The Loan Agreement provides for covenants related to levels of debt to cash
flow, current assets to current liabilities, fixed charge coverage, net worth
and investments (including investments in the Company's own common stock), and
restricts the amount of retained earnings available for payment of dividends.
The Loan Agreement requires the Company to prepay the term notes to the extent
of 50% of excess cash flow as defined. To date, no prepayments are required.
The Company expects that cash flow from operations together with the borrowing
capacity under the revolving credit facility will be sufficient to meet the
needs of the business in the foreseeable future. The Company has a $50.0 million
five-year revolving credit facility for its working capital requirements.
Borrowings under this facility are limited to the sum of 80% of accounts
receivable and 50% of inventories (the "Borrowing Base"). At July 29, 1995, the
Company had borrowings under this facility of $21.2 million and was not limited
by its Borrowing Base.
10
<PAGE> 11
SHOREWOOD PACKAGING CORPORATION AND SUBSIDIARIES
Part II
Item 1 LEGAL PROCEEDINGS
Information concerning legal and environmental matters was previously
reported in Item 3 of the Company's Form 10-K for the fiscal year ended
April 29, 1995
Item 2 CHANGES IN SECURITIES
None
Item 3 DEFAULTS UPON SENIOR SECURITIES
None
Item 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
Item 5 OTHER INFORMATION
None
Item 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.94 - 1995 Performance Bonus Plan*
(b) Reports on Form 8-K
On June 13, 1995, the Company filed a report on Form 8-K to report the
declaration by the Board of Directors of a dividend of one preferred
share purchase right for each outstanding share of common stock. The
date of the report was May 4, 1995.
*Portions of this document have been omitted from the filed text
pursuant to an Application for Confidential Treatment which was
previously filed with the Securities Exchange Commission.
11
<PAGE> 12
SIGNATURES
Pursuant to the regulations of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SHOREWOOD PACKAGING CORPORATION
(Registrant)
by: s/ Howard M. Liebman
----------------------------
Howard M. Liebman
Executive Vice President and
Chief Financial Officer
Dated: September 12, 1995
12
<PAGE> 13
EXHIBIT INDEX
<TABLE>
<CAPTION>
Item Description Page
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<S> <C> <C>
10.94 1995 Performance Bonus Plan* 14
27 Financial Data Schedule
</TABLE>
*Portions of this document have been omitted from the filed text pursuant to
an Application for Confidential Treatment which was previously filed with
the Securities Exchange Commission.
13
<PAGE> 1
CONFIDENTIAL TREATMENT REQUESTED
SHOREWOOD PACKAGING CORPORATION
1995 PERFORMANCE BONUS PLAN
The 1995 Performance Bonus Plan (the "Plan") of Shorewood
Packaging Corporation (the "Company") authorizes the grant of annual
performance bonuses (each, a "Performance Bonus") to Marc P. Shore, the
Company's President and Vice Chairman of the Board (the "Executive"), upon the
attainment of certain performance objectives set forth below. The Plan is
administered by the Compensation and Stock Option Committee (the "Committee").
1. DEFINITIONS. Certain defined terms in the Plan shall
have the meanings ascribed to them below:
(a) "Award Year" means each fiscal year of the
Company during the five year period beginning on May 1, 1995.
(b) "Earnings from Operations" shall mean, with
respect to any fiscal year of the Company, the Company's consolidated earnings
from operations plus depreciation and amortization, determined in accordance
with the Company's audited financial statements for that fiscal year. For
purposes of computing Earnings from Operations, (i) if during any Award Year the
Company or any of its subsidiaries acquires, directly or indirectly, any
material business, the Company's Earnings from Operations in the immediately
preceding fiscal year and that portion of such Award Year preceding the date of
the acquisition shall be adjusted to include therein the earnings from
operations plus depreciation and amortization of the acquired business during
the applicable periods; and (ii) if during any Award Year the Company or any of
its subsidiaries disposes or divests itself, directly or indirectly, of any
material business, the Company's Earnings from Operations in the immediately
preceding fiscal year
__________________________________
*Portions of this document have been omitted pursuant to an application for
Confidential Treatment. Such omissions have been filed separately with the
Securities and Exchange Commission together with such application for
Confidential Treatment.
<PAGE> 2
and that portion of such Award Year preceding the date of the disposition shall
be adjusted to exclude therefrom the earnings from operations plus depreciation
and amortization of the divested business during the applicable periods.
(c) "First Tier Bonus" shall mean, with respect to any
Award Year of the Company, an amount determined in accordance with the following
formula:*
(d) "Second Tier Bonus" shall mean, with respect to
FSany Award Year of the Company, an amount determined in accordance with the
following formula:*
2. PERFORMANCE BONUS. With respect to each Award Year
in which the Company's Earnings from Operations*
Executive shall be entitled to a Performance Bonus in an amount equal
to the sum of*
The Performance Bonus payable to Executive in respect of any Award Year shall
in no event exceed $2,000,000. No Performance Bonus shall be payable in
respect of any Award Year in which the Company's Earnings from Operations*
The determination of the amount of the Performance Bonus (the "Bonus
Determination") payable to Executive
__________________________________
*Portions of this document have been omitted pursuant to an application for
Confidential Treatment. Such omissions have been filed separately with the
Securities and Exchange Commission together with such application for
Confidential Treatment.
<PAGE> 3
in respect of any Award Year covered by the Plan shall be made by the
Compensation Committee based upon the audited financial statements of the
Company with respect to such Award Year. The Bonus Determination shall be made
by the Compensation Committee at its first regularly scheduled meeting after
the audited financial statements of the Company are available to the Board of
Directors. The Performance Bonus so determined shall be payable to Executive
in a single lump sum no later than fifteen days after the Bonus Determination
is made. The Bonus Determination shall be final, conclusive and binding for
all purposes.
3. PARTIAL YEARS. Executive's Performance Bonus shall
be reduced proportionately in respect of any fiscal year in which Executive is
not employed by the Company for the entire fiscal year, except that no
Performance Bonus shall be payable to Executive in respect of any fiscal year
in which his employment by the Company is terminated for cause. The provisions
hereof notwithstanding, the termination of Executive's employment by the
Company for any reason shall not affect the Performance Bonus otherwise payable
to him under the Plan in respect of any fiscal year preceding the fiscal year
in which such termination occurs. The Executive shall not be entitled to
receive any Performance Bonus in respect of any period after he ceases being
employed by the Company for any reason.
4. ADMINISTRATION. (a) The Plan shall be administered
and interpreted by the Compensation Committee; provided, however, that,
notwithstanding any other provision of the Plan that might appear to provide to
the contrary, the Plan shall be operated in such manner that awards paid
pursuant to the Plan shall be fully tax-deductible by the Company pursuant to
the exception for qualified performance-based compensation provided for under
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code").
All determinations of the Compensation Committee in respect of the
interpretation and administration of the Plan shall be final, conclusive and
binding for all purposes. In making any such determinations, the Committee
shall be entitled to rely on opinions, reports or statements of officers or
employees of the Company and of counsel, public accountants and other
professional experts and persons. The Committee may adopt such rules as it may
deem appropriate regarding the withholding of taxes on payments to the
Executive.
(b) The Plan shall be governed by the laws of the
State of New York and applicable Federal law.
5. EFFECTIVE DATE; APPLICATION. The Plan shall become
effective as of May 1, 1995, subject to approval by the Company's stockholders
entitled to vote thereon. The Plan shall apply to each fiscal year of the
Company during the five year period beginning on the effective date of the
Plan.
<PAGE> 4
6. ADJUSTMENTS. In order to assure the incentive
features of the Plan and to avoid distortion in the operation of the Plan, the
Committee may make adjustments in the performance criteria in respect of any
Award Year whether before or after the end of such Award Year to compensate for
or reflect any extraordinary changes which may have occurred during the Award
Year or the immediately preceding fiscal year which alter the basis upon which
performance levels were determined or to comply with government regulations.
Such changes include the following: extraordinary operating results,
accounting changes, and the impact of material events that have been publicly
disclosed. Notwithstanding anything to the contrary, the Committee shall not
make any adjustment which would increase the award to the Executive if such
adjustment would render any amount payable to Executive nondeductible under
Section 162(m) of the Code.
7. NO RIGHT TO EMPLOYMENT. The Plan shall not confer
upon the Executive any right to continue in the employ of the Company or affect
in any way the right of the Company to terminate Executive's employment at any
time.
8. CERTIFICATION BY COMMITTEE. The Committee must
certify that performance thresholds have been satisfied before any payments may
be made under the Plan.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-27-1996
<PERIOD-START> APR-30-1995
<PERIOD-END> JUL-29-1995
<CASH> 4,621
<SECURITIES> 0
<RECEIVABLES> 39,736
<ALLOWANCES> 512
<INVENTORY> 50,082
<CURRENT-ASSETS> 100,220
<PP&E> 198,675
<DEPRECIATION> 63,677
<TOTAL-ASSETS> 255,484
<CURRENT-LIABILITIES> 65,573
<BONDS> 102,732
<COMMON> 216
0
0
<OTHER-SE> 72,991
<TOTAL-LIABILITY-AND-EQUITY> 255,484
<SALES> 90,699
<TOTAL-REVENUES> 90,699
<CGS> 70,241
<TOTAL-COSTS> 70,241
<OTHER-EXPENSES> 9,099
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,081
<INCOME-PRETAX> 9,485
<INCOME-TAX> 3,625
<INCOME-CONTINUING> 5,860
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,860
<EPS-PRIMARY> .30
<EPS-DILUTED> .30
</TABLE>
