UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ........ to ........
Commission file number 1-10307
IMPERIAL HOLLY CORPORATION
(Exact name of registrant as specified in its charter)
Texas 74-0704500
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Imperial Square, Suite 200, P.O. Box 9, Sugar Land, Texas 77487
(Address of principal executive offices, including Zip Code)
(713) 491-9181
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [ X ] No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of February 1, 1995.
10,272,286 shares.
Exhibit Index Appears on Page 14
<PAGE>
IMPERIAL HOLLY CORPORATION
Index
Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets 3
Consolidated Statements of Income 4
Consolidated Statements of Cash Flows 5
Consolidated Statement of Changes in
Shareholders' Equity 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
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IMPERIAL HOLLY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 1994 March 31, 1994
(UNAUDITED)
ASSETS (In Thousands of Dollars)
CURRENT ASSETS:
Cash and temporary investments $ 3,000 $ 555
Marketable securities 32,596 28,334
Accounts receivable 35,454 43,856
Advances on raw sugar cargos 1,483 -
Inventories:
Finished products 109,771 110,671
Raw and in-process materials 68,675 22,370
Supplies 11,815 11,688
Manufacturing costs prior to production 5,284 13,573
Prepaid expenses 4,978 4,604
-------- --------
Total current assets 273,056 235,651
OTHER INVESTMENTS 7,640 6,553
PROPERTY, PLANT AND EQUIPMENT, NET 135,825 141,234
OTHER ASSETS 9,975 10,222
-------- --------
TOTAL $426,496 $393,660
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable -- trade $ 61,337 $ 43,767
Short-term borrowings 91,640 77,438
Current maturities of long-term debt 68 84
Other current liabilities 32,243 30,318
-------- --------
Total current liabilities 185,288 151,607
LONG-TERM DEBT 100,014 100,044
DEFERRED TAXES AND OTHER CREDITS 27,346 27,272
SHAREHOLDERS' EQUITY
Preferred stock - -
Common stock 31,933 31,780
Retained earnings 78,594 79,862
Unrealized securities gains -- net 4,030 3,804
Pension liability adjustment (709) (709)
-------- --------
Total shareholders' equity 113,848 114,737
-------- --------
TOTAL $426,496 $393,660
======== ========
See notes to consolidated financial statements.
- 3 -
<PAGE>
IMPERIAL HOLLY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
December 31, December 31,
---------------------------------------------------------
1994 1993 1994 1993
------------ --------- ------------ ------------
(In Thousands of Dollars)
<S> <C> <C> <C> <C>
NET SALES ............................... $ 147,776 $ 176,070 $ 459,172 $ 508,957
------------ --------- ------------ ------------
COSTS AND EXPENSES:
Cost of sales ........................... 130,393 159,496 412,960 462,383
Selling, general and administrative ..... 14,637 14,824 42,285 47,142
Cost of work force reduction ............ -- -- -- 925
------------ --------- ------------ ------------
Total ................................... 145,030 174,320 455,245 510,450
------------ --------- ------------ ------------
OPERATING INCOME (LOSS) ................. 2,746 1,750 3,927 (1,493)
INTEREST EXPENSE ........................ (2,870) (2,539) (8,057) (8,139)
REALIZED SECURITIES GAINS (LOSSES) -- NET (89) 1,001 1,649 1,463
OTHER INCOME -- NET ..................... 250 846 2,272 1,660
------------ --------- ------------ -----------
INCOME (LOSS) BEFORE INCOME TAXES ....... 37 1,058 (209) (6,509)
PROVISION (CREDIT) FOR INCOME TAXES ..... (70) 377 (172) (1,555)
------------ --------- ------------ -----------
NET INCOME (LOSS) ....................... $ 107 $ 681 $ (37) $ (4,954)
============ ========= ============ ============
EARNINGS (LOSS) PER SHARE
OF COMMON STOCK ......................... $ 0.01 $ 0.07 -- $ (0.49)
============ ========= ============ ============
WEIGHTED AVERAGE SHARES OUTSTANDING ..... 10,268,278 10,222,866 10,262,337 10,210,167
============ ========== ============ ===========
</TABLE>
See notes to consolidated financial statements.
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IMPERIAL HOLLY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
December 31
-----------------------
1994 1993
-------- --------
(In Thousands of Dollars)
OPERATING ACTIVITIES:
Net income (loss) ................................... $ (37) $ (4,954)
Adjustments for non-cash and non-operating items:
Depreciation ........................................ 10,242 12,154
Gain on sales of securities ......................... (1,649) (1,463)
Gain on sales of fixed assets ....................... (1,484) 872
Other ............................................... 400 543
Working capital changes:
Receivables ......................................... 8,402 9,872
Advances on raw sugar purchase contract ............. (1,483) -
Inventory ........................................... (46,184) (70,880)
Deferred and prepaid costs .......................... 7,915 9,885
Accounts payable .................................... 17,570 22,135
Other liabilities ................................... 1,105 (7,588)
-------- --------
Operating cash flow ................................. (5,203) (29,424)
-------- --------
INVESTMENT ACTIVITIES:
Capital expenditures ................................ (6,717) (7,131)
Investment in marketable securities ................. (6,482) (4,911)
Proceeds from sale of marketable securities ......... 4,182 6,230
Proceeds from sale of fixed assets .................. 2,856 45
Other ............................................... 102 59
-------- --------
Investing cash flow ................................. (6,059) (5,708)
-------- --------
FINANCING ACTIVITIES:
Short-term debt:
Bank borrowings - net ............................... 29,826 52,257
CCC borrowings - advances ........................... 55,462 47,226
CCC borrowings - repayments ......................... (70,434) (50,077)
Repayment of long-term debt ......................... (46) (18,794)
Dividends paid ...................................... (1,231) (2,858)
Other ............................................... 130 287
-------- --------
Financing cash flow ................................. 13,707 28,041
-------- --------
INCREASE (DECREASE) IN CASH AND TEMPORARY INVESTMENTS 2,445 (7,091)
CASH AND TEMPORARY INVESTMENTS, BEGINNING OF PERIOD . 555 9,405
-------- --------
CASH AND TEMPORARY INVESTMENTS, END OF PERIOD ....... $ 3,000 $ 2,314
======== ========
See notes to consolidated financial statements.
- 5 -
<TABLE>
IMPERIAL HOLLY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the Nine Months Ended December 31, 1994
(UNAUDITED)
<CAPTION>
Common Stock
-------------------- Unrealized Pension
Retained Securities Liability
Shares Amount Earnings Gains Adjustment Total
---------- ------- -------- ---------- ---------- --------
(In Thousands of Dollars)
<S> <C> <C> <C> <C> <C> <C>
BALANCE, MARCH 31, 1994 10,252,959 $31,804 $79,862 $3,804 $(709) $114,737
Net income (loss) ..... (37) (37)
Cash dividend ......... (1,231) (1,231)
Employee stock
purchase plan ......... 17,711 153 153
Change in unrealized
securities gains - net 226 226
---------- ------- ------- ------ ----- ---------
BALANCE,
DECEMBER 31, 1994 ..... 10,270,670 $31,933 $78,594 $4,030 $(709) $ 113,848
========== ======= ======= ====== ===== =========
</TABLE>
See notes to consolidated financial statements.
- 6 -
IMPERIAL HOLLY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED DECEMBER 31, 1994 AND 1993
Basis of Presentation -- The unaudited condensed consolidated financial
statements included herein have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission and reflect, in the
opinion of management, all adjustments, consisting only of normal recurring
accruals, that are necessary for a fair presentation of financial position and
results of operations for the interim periods presented. These financial
statements include the accounts of Imperial Holly Corporation and its majority
owned subsidiaries (the "Company"). All significant intercompany balances and
transactions have been eliminated in consolidation. Certain information and
footnote disclosures required by generally accepted accounting principles have
been condensed or omitted pursuant to such rules and regulations. The financial
statements included herein should be read in conjunction with the financial
statements and notes thereto included in the Company's Annual Report on Form
10-K for the year ended March 31, 1994.
Cost of Sales -- Payments to growers for sugarbeets are based in part upon
the Company's average net return for sugar sold (as defined in the participating
contracts with growers) during the grower contract years, some of which extend
beyond December 31. The contracts provide for the sharing of the net selling
price (gross sales price less certain marketing costs, including packaging
costs, brokerage, freight expense and amortization of costs for certain
facilities used in connection with marketing) with growers. Cost of sales
includes an accrual for estimated additional amounts to be paid to growers based
on the average net return realized for sugar sold during each of the contract
years through December 31. The final cost of sugarbeets cannot be determined
until the end of the contract year for each growing area. Manufacturing costs
prior to production are deferred and allocated to production costs based on
estimated total units of production for each sugar manufacturing campaign.
Additionally, the Company's sugar inventories, which are accounted for on a LIFO
basis, are periodically reduced at interim dates to levels below that of the
beginning of the fiscal year. When such interim LIFO liquidations are expected
to be restored prior to fiscal year-end, the estimated replacement cost of the
liquidated layers is utilized as the basis of the cost of sugar sold from
beginning of the year inventory. Accordingly, the cost of sugar utilized in the
determination of cost of sales for interim periods includes estimates which may
require adjustment in future fiscal periods.
Contingencies -- In 1992, the U.S. Customs Service ("Customs") notified the
Company that Customs had audited customs drawback claims filed by the Company in
1985 and that Customs would require the Company to repay to Customs certain
duties and fees previously refunded to the Company. In April 1992, the Company
refunded $2.5 million to Customs under protest, a condition precedent to the
commencement of an appeal of the audit decision and recorded such amount in
other assets. The Company has reached a tentative settlement
- 7 -
with Customs, subject to final approval by the U.S. Department of the Treasury,
which would result in the Company collecting the amount previously recorded.
The Company was notified by the Environmental Protection Agency ("EPA") in
July 1994 that it had been reclassified as a "de minimis" potentially
responsible party with respect to the Operating Industries, Inc. Superfund site
in Monterey, California. The EPA has indicated that fuel oil removed from a
former Holly Sugar Corporation factory was disposed of at the site by a third
party waste disposal contractor when the factory was closed in 1977, prior to
the acquisition of Holly Sugar by the Company. According to the EPA,
approximately 300 potentially responsible parties have previously agreed to
perform portions of the cleanup work at the site and to pay the costs for the
oversight of this work. By law, as long as a party remains a "de minimis"
potentially responsible party, liability for clean up costs is limited to no
more than $500,000. Holly Sugar had third party insurance coverage in force in
1977 which management believes may provide coverage against losses which may be
incurred. The Company has not been able to determine its ultimate liability, if
any, with respect to this matter.
Other - In December 1994, the Company sold a distribution facility in
exchange for a $1,280,000 three year note and recorded a deferred gain of
$780,000.
- 8 -
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FINANCIAL CONDITION
The Company finances its working capital and capital expenditure
requirements from a combination of funds generated by operations and short-term
borrowing arrangements, including short- term, secured, non-recourse borrowings
from the Commodity Credit Corporation ("CCC"). Net selling prices of sugar
during parts of the year have been below collateral rates on some CCC loans. The
Company chose to forfeit sugar in full satisfaction of a CCC loan which matured
August 31, 1994 in the amount of $652,000. CCC loans outstanding at December 31,
1994 totaled $36,142,000.
The increase in raw and in-process inventory during the nine months ended
December 31, 1994 was due to the seasonal production schedule of the Company's
beet sugar operations as well as increases in raw cane sugar inventory. The
increases in accounts payable result from the timing of the payments for sugar
beets.
Short-term borrowings and the increase in accounts payable related to
sugarbeet purchases were used to finance the increase in inventory. Long-term
debt consists almost entirely of $100 million principal amount of 8-3/8% senior
notes due 1999, which requires semi-annual interest-only payments prior to
maturity. Management believes that existing internal and external sources are
adequate to meet its financing requirements, including fiscal 1995 capital
expenditures, estimated at $8.5 million. The Company's marketable securities
portfolio is reported at its market value of $32.6 million at December 31, 1994,
$6.2 million in excess of its cost basis.
RESULTS OF OPERATIONS
Net sales decreased $28.3 million or 16.1% for the quarter and $49.8
million or 9.8% for the nine months ended December 31, 1994 as compared to the
same periods of the prior year, principally due to decreases in the volume of
sugar sold of 13.2% and 7.5% respectively, as well as reductions in beet pulp
volumes. In an effort to improve gross margins, the Company was more selective
in sales opportunities which, in addition to lower first quarter beet sugar
production owing to the Betteravia factory closure in July 1993, was largely
responsible for the volume reductions.
On September 29, 1994, the USDA announced that marketing allotments
provided for in the current Farm Bill were being imposed on refined beet sugar
and raw cane sugar for the USDA fiscal year which commenced October 1, 1994.
Based on the announced allotments and the Company's current production
estimates, Management does not believe that marketing allotments will materially
restrict the Company's beet sugar sales volumes or materially affect inventory
levels. Selling prices have shown only modest increases from the depressed
levels experienced prior to the announcement. Average sales prices realized by
the Company during the third quarter improved 2.1% when
- 9 -
compared to the immediately preceeding quarter, partially as a result of a
more favorable seasonal product mix, but remained 2.7% below year earlier
levels.
Cost of sales decreased $49.4 million or 10.7% during the nine months ended
December 31, 1994 compared to the same period of the prior year primarily due to
the decreases in sales volumes. As a percent of sales, cost of sales decreased
from 90.8% to 89.9% for the nine month period. For the third quarter, cost of
sales decreased $29.1 million or 18.2% and represented 88.2% of sales, down from
90.6% in the prior year's quarter. Unit costs of sugar sold declined 3.1% for
the nine months and 5.9% for the third quarter of the fiscal year as a result of
exceptional production campaigns in certain of the Company's factories
and the elimination of high cost production from the Betteravia factory which
was closed in July 1993. Raw cane sugar costs, which declined during most of the
quarter but were beginning to increase by quarter end, averaged .6% lower than
the year earlier quarter and 1.6% higher than the first nine month period. These
improvements more than offset the impact of smaller beet crops in the Hereford
and Worland factories, and rail delays of sugarbeet deliveries in Northern
California. The recent flooding in Northern California forced the Hamilton City
factory to cease production for a week in January. The facility sustained no
damage, however, unit manufacturing costs for this factory are expected to
increase in the fourth quarter as a result of the interruption. The Company
purchases sugarbeets under participatory contracts which provide for a
percentage sharing of the net selling price realized on refined beet sugar sales
between the Company and the grower. Use of this type of contract reduces the
Company's exposure to inventory price risks on sugarbeet purchases so long as
the contract net selling price does not fall below the regional minimum support
prices established by the USDA. Depressed refined sugar selling prices have
resulted in net selling prices falling below such minimum support levels in some
contract areas. Consequently, the decline in the unit selling price of refined
beet sugar was only partially offset by a decline in the unit cost of sugar
beets purchased.
Total selling, general and administrative expenses decreased by $4.9
million or 10.3% for the nine months compared to the same period of the prior
year, as decreases in warehousing costs were coupled with reductions in general
and administrative costs. The Company undertook a cost reduction program, which
included a work force reduction in the third quarter of the prior fiscal year,
with the majority of the cost reductions reflected in selling, general and
administrative expenses. For the third quarter, increases in brand advertising
largely offset reductions in warehousing, general and administrative costs.
Interest expense for the nine month period ended December 31, 1994 was
lower than the comparable period of the prior year as a result of the repayment
out of lower cost short-term borrowings of the remaining $18.8 million principal
amount of 10.93% senior notes in October 1993. Higher average interest rates,
somewhat offset by lower average short-term balances,
- 10 -
accounted for the increase in interest cost in the third fiscal quarter. Other
income -- net includes a $1.4 million gain on the sale of a corporate aircraft
in May 1994.
The provision for income taxes for the nine months ended December 31, 1993,
includes a charge of $872,000 to adjust the Company's deferred tax liabilities
for the increase in corporate income tax rates enacted in August 1993.
- 11 -
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) The exhibits required to be filed with this report are listed in the
Exhibit Index which immediately follows the signatures page of this report.
Registrant is a party to several long-term debt instruments under which in
each case the total amount of securities authorized does not exceed 10% of the
total assets of Registrant and its subsidiaries on a consolidated basis.
Pursuant to paragraph 4(iii) (A) of Item 601(b) of Regulation S-K, Registrant
agrees to furnish a copy of such instruments to the Securities and Exchange
Commission upon request.
(b) No reports on Form 8-K were filed during the quarter ended December 31,
1994.
- 12 -
SIGNATURES
Pursuant to the requirements 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.
IMPERIAL HOLLY CORPORATION
(Registrant)
Dated: February 2, 1995 By: /s/ James C. Kempner
James C. Kempner
President,
Chief Executive Officer
and Chief Financial Officer
(Principal Financial Officer)
- 13 -
IMPERIAL HOLLY CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED DECEMBER 31, 1994
Exhibit Index
Exhibit
-------
10(a) Second Amendment to Imperial Holly Corporation's
Retirement Plan dated December 28, 1994
10(b) Fifth Amendment to Imperial Holly Corporation's
Employee Stock Ownership Plan dated December 28, 1994
10(c) First Amendment to Imperial Holly Corporation's
Employee Stock Purchase Plan dated November 7, 1994
11 Computation of Income Per Common Share
27 Financial Data Schedule
- 14 -
EXHIBIT 10(a)
IMPERIAL HOLLY CORPORATION RETIREMENT PLAN
(As Amended and Restated Effective January 1, 1989)
SECOND AMENDMENT
Imperial Holly Corporation, having adopted the Imperial Holly
Corporation Retirement Plan, as amended and restated effective January 1, 1989,
and as thereafter amended (the "Plan"), and having reserved the right under
Section 7.2 thereof to amend the Plan, does by these presents hereby amend the
Plan, effective as of the dates specified herein, as follows:
1. Section 1.1(A)(20) of the Plan is hereby amended effective
January 1, 1994, to read hereafter as follows:
"(20) The term "Compensation" as used herein means all
compensation actually paid to a Participant by the Employer as reported on
the Participant's Form W-2 plus any amount which is contributed by the
Employer pursuant to a salary reduction agreement or otherwise deferred
and which is not included in the gross income of the Participant under
Code Sections 125, 402(a)(8), 402(h), 403(b), 457(b) or 414(h)(2). For
purposes of determining the amount of such Compensation, the books and
records of the Employer shall be conclusive. Notwithstanding anything
herein to the contrary, in no event shall the annual Compensation taken
into account under the Plan for any Employee from and after January 1,
1989, exceed $200,000, which maximum amount shall be adjusted for cost of
living adjustments at the same time and in the same manner as prescribed
under Code Section 415(d).
In addition to other applicable limitations set forth in the Plan,
and notwithstanding any other provision of the Plan to the contrary, for
Plan Years beginning on or after January 1, 1994, the annual Compensation
of each Employee taken into account under the Plan shall not exceed
$150,000, as adjusted by the Commissioner for increases in the cost of
living in accordance with Section 401(a)(17)(B) of the Code. The
cost-of-living adjustment in effect for a calendar year applies to any
period, not exceeding 12 months, over which Compensation is determined
("determination period") beginning in such calendar year. If a
determination period consists of fewer than 12 months, the Compensation
limit will be multiplied by a fraction, the numerator of which is
-1-
the number of months in the determination period, and the denominator of
which is 12.
For Plan Years beginning on or after January 1, 1994, any reference
in this Plan to the limitation under Section 401(a)(17) of the Code shall
mean the Compensation limit set forth in this provision.
If Compensation for any prior determination period is taken into
account in determining an Employee's benefits accruing in the current Plan
Year, the Compensation for that prior determination period is subject to
the Compensation limit in effect for that prior determination period. For
this purpose, for determination periods beginning before the first day of
the first Plan Year beginning on or after January 1, 1994, the
Compensation limit is $150,000. For purposes of applying these limits on
Compensation, the family unit of an Employee who either is a 5% owner or
is both a highly compensated employee and one of the ten most highly
compensated employees will be treated as a single Employee with one
Compensation, and the Compensation limit (except for purposes of
determining the portion of compensation up to the integration level of
$1,275 per month) will be allocated among the members of the family unit
in proportion to the total Compensation of each member of the family unit.
For this purpose, a family unit consists of the Employee who is a 5% owner
or one of the ten most highly compensated employees, the Employee's
spouse, and the Employee's lineal descendants who have not attained age 19
before the close of the year."
2. Section 2.2(B)(1) of the Plan is hereby amended effective January
1, 1994, by adding the following two paragraphs at the end thereof, as follows:
"Unless otherwise provided under the Plan, each Section 401(a)(17)
Employee's accrued benefit under this Plan will be the greater of the
accrued benefit determined for the Employee under (x) or (y) below:
(x) the Employee's accrued benefit determined with respect to
the benefit formula applicable for the Plan Year beginning on or
after January 1, 1994, as applied to the Employee's total years of
Credited Service taken into account under the Plan for the purposes
of benefit accruals; or
(y) the sum of:
(i) the Employee's accrued benefit as of the last day of
the last Plan Year beginning before January 1, 1994, frozen in
accordance with Section 1.401(a)(4)-13 of the regulations; and
-2-
(ii) the Employee's accrued benefit determined under the
benefit formula applicable for the Plan Year beginning on or
after January 1, 1994, as applied to the Employee's years of
Credited Service credited to the Employee for Plan Years
beginning on or after January 1, 1994 for purposes of benefit
accruals.
A Section 401(a)(17) Employee means an employee whose current
accrued benefit as of a date on or after the first day of the first Plan
Year beginning on or after January 1, 1994 is based on Compensation for a
year beginning prior to the first day of the first Plan Year beginning on
or after January 1, 1994 that exceeded $150,000."
3. The first sentence of subsection (D) of Section 2.4 is hereby
amended effective January 1, 1989, to read as follows:
"The benefit payable upon disability retirement shall commence at the time
provided in subsection (E) below, if the Participant is then living and
totally disabled."
4. The second sentence of subsection (E) of Section 2.4 is hereby
amended effective January 1, 1989, to read as follows:
"The first payment will be made on the first day of the month coincident
with or next following the later of (1) the date the Participant attains
age 65 and (2) the date such Participant's long-term disability benefits
cease. Unless Option 2 is applicable or the Participant otherwise elects,
such payments shall be payable on a five-year certain and life annuity
basis. To the extent the first payment commences after the first day of
the month coincident with or next following the date the Participant
attains age 65, the amount of his Disability Retirement Income will be
actuarially adjusted for such late commencement."
5. Subsection (F) of Section 2.4 is hereby amended in its entirety
effective January 1, 1989, to read as follows:
"(F) BENEFIT PAYABLE IN THE EVENT OF DEATH OF DISABLED PARTICIPANT
PRIOR TO COMMENCEMENT OF DISABILITY RETIREMENT INCOME: In the event that
the death of a disabled Participant occurs after he has been determined to
be disabled by the Retirement Committee, but prior to the commencement of
his Disability Retirement Income and after his earning five years of
Vesting Service, his Beneficiary (or Beneficiaries) will receive the death
benefit, payable in the manner described in Section 2.5(C) hereof, which
would have been payable on behalf of the Participant under the provisions
of such Section 2.5(C) assuming
-3-
that he had continued in the employ of the Employer and assuming that his
last regular rate of monthly Compensation prior to the date of termination
of his service due to disability would have continued without change to
the date of his death. For purposes of this subsection the period of
disability shall be counted as Vesting Service. If the Participant dies
after he has been determined to be disabled by the Retirement Committee
but prior to the commencement of his Disability Retirement Income, and
after earning a partially vested interest in the Plan but prior to
completing five years of Vesting Service, his Beneficiary (or
Beneficiaries) will receive as a death benefit, payable in the manner
described in Section 2.5(B) hereof, the amount which would have been
payable on behalf of the Participant under the provisions of Section
2.5(B) but assuming that service had terminated and his Compensation had
ceased on the date of his termination of service due to disability."
6. Section 3.4 of the Plan is hereby amended effective January 1,
1994, by adding the following three paragraphs at the end thereof:
"From and after January 1, 1994, in the event of early Plan
termination, the benefit of any highly compensated active or former
Employee is limited to a benefit that is non-discriminatory under Section
401(a)(4). In the event of early Plan termination, benefits distributed to
any of the 25 most highly compensated active and highly compensated former
Employees with the greatest Compensation in the current or any prior year
are restricted such that the annual payments are no greater than an amount
equal to the payment that would be made on behalf of the Employee under a
straight life annuity that is the actuarial equivalent of the sum of the
Employee's accrued benefit, the Employee's other benefits under the Plan
(other than a social security supplement, within the meaning of Section
1.411(a)-7(c)(4)(ii) of the Income Tax Regulations), and the amount the
Employee is entitled to receive under a social security supplement.
The preceding paragraph shall not apply if: (i) after payment of the
benefit to an Employee described in the preceding paragraph, the value of
Plan assets equals or exceeds 110% of the value of current liabilities, as
defined in Section 412(l)(7) of the Code, (ii) the value of the benefits
for an Employee described above is less than 1% of the value of current
liabilities before distribution, or (iii) the value of the benefits
payable under the Plan to an Employee described above does not exceed
$3,500.
For purposes of this Section, benefit includes loans in excess of
the amount set forth in Section 72(p)(2)(A) of the Code, any periodic
income, any withdrawal values payable to a living Employee, and any death
benefits not provided for by insurance on the Employee's life."
-4-
7. The Plan is hereby amended effective January 1, 1993, by adding
the following new Section 3.11 thereto, as follows:
"3.11 DIRECT ROLLOVERS: Effective January 1, 1993, notwithstanding
any provision of the Plan to the contrary that would otherwise limit a
Distributee's election under this Section, a Distributee may elect, at the
time and in the manner prescribed by the Retirement Committee, to have any
portion of an Eligible Rollover Distribution paid directly to an Eligible
Retirement Plan specified by the Distributee in a Direct Rollover. For the
purposes of this Section the following definitions shall apply:
(i) "Eligible Rollover Distribution" shall mean any
distribution of all or any portion of the balance to the credit of
the Distributee, except that an Eligible Rollover Distribution does
not include: any distribution that is one of a series of
substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the Distributee
or the joint lives (or joint life expectancies) of the Distributee
and the Distributee's designated beneficiary, or for a specific
period of ten years or more; any distribution to the extent such
distribution is required under Section 401(a)(9) of the Code; and
the portion of any distribution that is not includable in gross
income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities).
(ii) "Eligible Retirement Plan" shall mean an
individual retirement account described in Section 408(a) of the
Code, an individual retirement annuity described in Section 408(b)
of the Code, an annuity plan described in Section 403(a) of the
Code, or a qualified trust described in section 401(a) of the Code,
that accepts the Distributee's Eligible Rollover Distribution.
However, in the case of an Eligible Rollover Distribution to the
surviving spouse, an Eligible Retirement Plan is an individual
retirement account or individual retirement annuity.
(iii) "Distributee" shall mean a Participant or former
Participant of the Plan. In addition, the Participant's or former
Participant's surviving spouse and the Participant's or former
Participant's spouse or former spouse who is the alternate payee
under a qualified domestic relations order, as defined in Section
414(p) of the Code, are Distributees with regard to the interest of
the spouse or former spouse.
(iv) "Direct Rollover" shall mean a payment by the
Plan to the Eligible Retirement Plan specified by the Distributee."
-5-
IN WITNESS WHEREOF, Imperial Holly Corporation has caused this
instrument to be duly executed by its duly authorized officers and its corporate
seal hereunto affixed this 28 day of December, 1994.
IMPERIAL HOLLY CORPORATION
By JAMES C. KEMPNER
President
ATTEST:
/s/ LINDA L. MEAGHER
Linda L. Meagher
Assistant Secretary
[SEAL]
The undersigned, as adopting employers, hereby approve of and
consent to the foregoing Second Amendment and acknowledge receipt of a copy of
the Second Amendment this 28 day of December, 1994.
FORT BEND UTILITIES COMPANY
By JAMES C. KEMPNER
ATTEST:
/s/ LINDA L. MEAGHER
Linda L. Meagher
Secretary
CSCO, INCORPORATED
By JAMES C. KEMPNER
ATTEST:
/s/ LINDA L. MEAGHER
Linda L. Meagher
Secretary
HOLLY SUGAR CORPORATION
By ROGER W. HILL
ATTEST:
/s/ LINDA L. MEAGHER
Linda L. Meagher
Assistant Secretary
-6-
IMPERIAL SWEETENER DISTRIBUTORS, INC.
By JAMES C. KEMPNER
ATTEST:
/s/ LINDA L. MEAGHER
Linda L. Meagher
Secretary
THE STATE OF TEXAS ss.
ss.
COUNTY OF FT. BEND ss.
BEFORE ME, the undersigned authority, on this day personally
appeared James C. Kempner, President of Imperial Holly Corporation,
known to me to be the person and officer whose name is subscribed to the
foregoing instrument, and acknowledged to me that the same was the act of
Imperial Holly Corporation, a corporation, and that he executed the same as the
act and deed of said corporation for the purposes and consideration therein
expressed and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 28 day of
December, 1994.
Diane L. Kaufman
Notary Public, State of Texas
My commission expires:
5-26-95
[NOTARY SEAL]
-7-
EXHIBIT 10(b)
IMPERIAL HOLLY CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
(As Established Effective January 1, 1988)
FIFTH AMENDMENT
Imperial Holly Corporation, a Texas corporation, having established
the Imperial Holly Corporation Employee Stock Ownership Plan, effective January
1, 1988 and as thereafter amended (the "Plan"), and having reserved the right
under Section 9.5 thereof to amend the Plan, does hereby amend the Plan,
effective as of the dates specified herein, as follows:
1. Effective January 1, 1994, Section 1.5 is hereby amended in its
entirety, to read as follows:
"1.5 ANNUAL COMPENSATION: The compensation paid to a Participant by
his Employer or Affiliate during the applicable Plan Year that is required
to be reported as wages on the Participant's Form W-2 for income tax
purposes, including contributions made during the Plan Year on a salary
reduction basis under any qualified cash or deferred arrangement under
Code Section 401(k). The Annual Compensation of a Participant as reflected
on the books and records of his Employer shall be conclusive. Effective
January 1, 1989, the Annual Compensation of each Participant taken into
account under the Plan for any Plan Year shall not exceed $200,000 (or
such adjusted amount as provided under Code Section 401(a)(17)). Annual
Compensation shall include all amounts paid to a Participant while
actually employed, and shall not be limited to those amounts paid while
actually participating during any Plan Year. Notwithstanding the foregoing
provisions of this Section 1.5, the Annual Compensation of each
Participant who is a highly compensated employee (within the meaning of
Code Section 414(q)), shall, for purposes of Section 5.2(d)(iii), be
reduced on a comparative compensation basis so that the aggregate
allocation of Employer Contributions under this Plan in a particular Plan
Year to such group of Participants does not exceed one-third (1/3) of the
aggregate Employer Contributions for the Plan Year.
In addition to other applicable limitations set forth in the Plan,
and notwithstanding any other provision of the Plan to the contrary, for
Plan Years beginning on or after January 1, 1994, the Annual Compensation
of each Employee taken into account under the Plan shall not exceed
$150,000, as adjusted by the Commissioner for increases in the cost of
living in accordance with Section 401(a)(17)(B) of the Internal Revenue
Code. The cost-of-living adjustment in effect for a calendar year applies
to any period, not exceeding 12 months, over which Annual Compensation is
determined (determination period) beginning in such calendar year. If a
determination period consists of fewer than 12 months, the Annual
Compensation limit will be multiplied by a fraction,
-1-
the numerator of which is the number of months in the determination
period, and the denominator of which is 12.
For Plan Years beginning on or after January 1, 1994, any reference
in this Plan to the limitation under Section 401(a)(17) of the Code shall
mean the Annual Compensation limit set forth in this provision.
If Annual Compensation for any prior determination period is taken
into account in determining an Employee's benefits accruing in the current
Plan Year, the Annual Compensation for that prior determination period is
subject to the Annual Compensation limit in effect for that prior
determination period. For this purpose, for determination periods
beginning before the first day of the first Plan Year beginning on or
after January 1, 1994, the Annual Compensation limit is $150,000. For
purposes of applying the $150,000 limit on Annual Compensation, the family
unit of an Employee who either is a 5% owner or is both a highly
compensated employee and one of the ten most highly compensated employees
will be treated as a single Employee with one Annual Compensation, and the
$150,000 limit will be allocated among the members of the family unit in
proportion to the total Annual Compensation of each member of the family
unit. For this purpose, a family unit consists of the Employee who is a 5%
owner or one of the ten most highly compensated employees, the Employee's
spouse, and the Employee's lineal descendants who have not attained age 19
before the close of the year."
2. Article VII of the Plan is hereby amended, effective January 1,
1993, by adding new Section 7.9 thereto, as follows:
"7.9 DIRECT ROLLOVERS: Effective January 1, 1993, notwithstanding
any provision of the Plan to the contrary that would otherwise limit a
Distributee's election under this Section, a Distributee may elect, at the
time and in the manner prescribed by the Committee, to have any portion of
an Eligible Rollover Distribution paid directly to an Eligible Retirement
Plan specified by the Distributee in a Direct Rollover. For the purposes
of this Section the following definitions shall apply:
(i) "Eligible Rollover Distribution" shall mean any
distribution of all or any portion of the balance to the credit of
the Distributee, except that an Eligible Rollover Distribution does
not include: any distribution that is one of a series of
substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the Distributee
or the joint lives (or joint life expectancies) of the Distributee
and the Distributee's designated beneficiary, or for a specific
period of ten years or more; any distribution to the extent such
distribution is required under Section 401(a)(9) of the Code; and
the portion of any distribution that is not includable in gross
income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities).
-2-
(ii) "Eligible Retirement Plan" shall mean an
individual retirement account described in Section 408(a) of the
Code, an individual retirement annuity described in Section 408(b)
of the Code, an annuity plan described in Section 403(a) of the
Code, or a qualified trust described in section 401(a) of the Code,
that accepts the Distributee's Eligible Rollover Distribution.
However, in the case of an Eligible Rollover Distribution to the
surviving spouse, an Eligible Retirement Plan is an individual
retirement account or individual retirement annuity.
(iii) "Distributee" shall mean a Participant or former
Participant of the Plan. In addition, the Participant's or former
Participant's surviving spouse and the Participant's or former
Participant's spouse or former spouse who is the alternate payee
under a qualified domestic relations order, as defined in Section
414(p) of the Code, are Distributees with regard to the interest of
the spouse or former spouse.
(iv) "Direct Rollover" shall mean a payment by the
Plan to the Eligible Retirement Plan specified by the Distributee."
3. The third sentence of Section 11.2 of the Plan is hereby amended,
effective January 1, 1989, to read as follows:
"If the Plan subsequently ceases to be top heavy, the preceding schedule
shall continue to apply with respect to any Participant who had at least
three (3) years of service (as defined in Treasury Regulation Section
1.411(a)-8T(b)(3)) as of the close of the last year that the Plan was top
heavy."
IN WITNESS WHEREOF, Imperial Holly Corporation has caused this
Amendment to be executed by its duly authorized officers this 28 day of
December, 1994, but effective as stated herein.
IMPERIAL HOLLY CORPORATION
By: JAMES C. KEMPNER
ATTEST:
/s/ LINDA R. MEAGHER
Linda R. Meagher
Assistant Corporate Secretary
[SEAL]
-3-
The undersigned, as adopting employers, hereby approve of and
consent to the foregoing Fifth Amendment and acknowledge receipt of a copy of
the Fifth Amendment this 28 day of December, 1994.
FORT BEND UTILITIES COMPANY
By JAMES C. KEMPNER
ATTEST:
/s/ LINDA R. MEAGHER
Linda R. Meagher
Secretary
CSCO, INCORPORATED
By JAMES C. KEMPNER
ATTEST:
/s/ LINDA R. MEAGHER
Linda R. Meagher
Secretary
HOLLY SUGAR CORPORATION
By ROGER W. HILL
ATTEST:
/s/ LINDA R. MEAGHER
Linda R. Meagher
Assistant Secretary
IMPERIAL SWEETENER
DISTRIBUTORS, INC.
By JAMES C. KEMPNER
ATTEST:
/s/ LINDA R. MEAGHER
Linda R. Meagher
Secretary
-4-
THE STATE OF TEXAS ss.
ss.
COUNTY OF FORT BEND ss.
BEFORE ME, the undersigned authority, on this day personally
appeared James C. Kempner, President of Imperial Holly Corporation, known to
me to be the person and officer whose name is subscribed to the foregoing
instrument, and acknowledged to me that the same was the act of Imperial Holly
Corporation, a corporation, and that he executed the same as the act and deed of
said corporation for the purposes and consideration therein expressed and in the
capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 28 day of
December, 1994.
Diane L. Kaufman
Notary Public, State of Texas
My commission expires:
5-26-95
[NOTARY SEAL]
-5-
EXHIBIT 10(c)
THE IMPERIAL HOLLY CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
(As Amended and Restated Effective September 1, 1993)
FIRST AMENDMENT
Imperial Holly Corporation, a Texas corporation, having established
the Imperial Holly Corporation Employee Stock Purchase Plan, as amended and
restated effective September 1, 1993 (the "Plan"), for the benefit of its
eligible employees, and having reserved the right to amend the Plan under
Section 6 of the Plan, does hereby amend the Plan effective as of November 1,
1994, as follows:
1. Section 3.6 of the Plan is amended in its entirety to read as
follows:
"3.6 MINIMUM CONTRIBUTION. The minimum contribution amount for
bi-weekly or semi-monthly payroll periods for contributions made through
payroll deductions shall set by the Administrator from time to time.
Contributions made through the optional payment method shall be a minimum
of $500 per payment. The rate of contribution shall be designated by the
Participant on his Enrollment Form or optional payment."
2. Terms used in this Amendment and not defined herein are used
herein as they are defined in the Plan. References in the Plan to "this Plan"
(and indirect references such as "hereof" and "herein") are amended to refer to
the Plan as amended by this Amendment. Except as expressly amended hereby, the
Plan shall remain in full force and effect, and is hereby ratified and confirmed
in all respects.
IN WITNESS WHEREOF, Imperial Holly Corporation has caused these
presents to be executed by its duly authorized officers, in a number of copies
all of which shall
-1-
constitute one and the same instrument, which may be sufficiently evidenced by
any executed copy hereof, this 7th day of November, 1994.
IMPERIAL HOLLY CORPORATION
By JAMES C. KEMPNER
ATTEST:
WILLIAM F. SCHWER
[SEAL]
-2-
EXHIBIT 11
IMPERIAL HOLLY CORPORATION AND SUBSIDIARIES
COMPUTATION OF INCOME PER COMMON SHARE
(UNAUDITED)
Three Months Nine Months
Ended Ended
December 31 December 31
1994 1994
------------ -------------
(In Thousands of Dollars)
NET INCOME (LOSS) FOR PRIMARY AND
FULLY DILUTED COMPUTATION:
As reported $ 107 $ (37)
Adjustments - none - -
---------- ----------
As adjusted $ 107 $ (37)
========== ==========
PRIMARY EARNINGS (LOSS) PER SHARE:
Weighted average shares of common
stock outstanding 10,268,278 10,262,337
Incremental shares issuable from
assumed exercise of stock options
under the treasury stock method 30,068 31,325
---------- ----------
Weighted average shares of common
stock outstanding, as adjusted 10,298,346 10,293,662
========== ==========
Primary earnings (loss) per share $ 0.01 -
========== ==========
FULLY DILUTED EARNINGS (LOSS) PER SHARE:
Weighted average shares of common
stock outstanding 10,268,278 10,262,337
Incremental shares issuable from
assumed exercise of stock options
under the treasury stock method 30,068 31,325
---------- ----------
Weighted average shares of common
stock outstanding, as adjusted 10,298,346 10,293,662
========== ==========
Fully diluted earnings (loss)
per share $ 0.01 -
========== ==========
This calculation is submitted in accordance with Item 601(b)(11) of
Regulation S-K; the amount of dilution illustrated in this calculation is
not required to be disclosed pursuant to paragraph 14 of Accounting
Principles Board Opinion No. 15.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial information extracted from the Company's
unaudited condensed consolidated financial statements for the nine months ended
December 31, 1994 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-END> DEC-31-1994
<CASH> 3,000
<SECURITIES> 32,596
<RECEIVABLES> 35,454
<ALLOWANCES> 0
<INVENTORY> 190,261
<CURRENT-ASSETS> 273,056
<PP&E> 267,860
<DEPRECIATION> 132,035
<TOTAL-ASSETS> 426,496
<CURRENT-LIABILITIES> 185,288
<BONDS> 100,014
<COMMON> 31,933
0
0
<OTHER-SE> 81,915
<TOTAL-LIABILITY-AND-EQUITY> 426,496
<SALES> 459,172
<TOTAL-REVENUES> 459,172
<CGS> 412,960
<TOTAL-COSTS> 412,960
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,057
<INCOME-PRETAX> (209)
<INCOME-TAX> (172)
<INCOME-CONTINUING> (37)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (37)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
