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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Mark one)
( ) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended_____________________________________________________
or
(X) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from January 4, 1993 to October 3, 1993
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Commission file number 1-11420
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SAVANNAH FOODS & INDUSTRIES, INC.
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(Exact name of Registrant as specified in its Charter)
Delaware 58-1089367
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
P. O. Box 339, Savannah, Georgia 31402
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (912) 234-1261
Securities registered pursuant to Section 12(b) of the Act:
None
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(Title of Class)
Securities registered pursuant to Section 12(g) of the Act:
Common Stock - Par Value: $.25 per share
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(Title of Class)
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 and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. (X)
At November 30, 1993, there were 26,238,196 shares of Common Stock outstanding.
The aggregate market value of the voting stock held by non-affiliates of the
Registrant on November 30, 1993 was $350,935,872.
DOCUMENTS INCORPORATED BY REFERENCE: Portions of the Registrant's Proxy
Statement for the Annual Meeting of Stockholders to be held on February 17,
1994 are incorporated by reference in Part III hereof.
The exhibit index is located on page 45 of this filing.
Page 1 of 64 pages.
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PART I
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Item 1. Business
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Savannah Foods & Industries, Inc. (the "Registrant" or "Company") was
incorporated in Delaware on February 19, 1969, as the successor to Savannah
Sugar Refining Corporation, which was originally incorporated in New York in
1916.
Registrant and its subsidiaries collectively comprise one business
segment and are engaged in the production, marketing, and distribution of food
products, primarily refined sugar.
The Savannah Sugar Refinery Division of Registrant is engaged in the
refining and marketing of sugar and sugar products (including blends with corn
syrups) and liquid animal feeds, produced at its refinery located on the
Savannah River approximately five miles north of the city of Savannah in the
community of Port Wentworth, Georgia. A complete line of bulk, packaged, and
liquid sugars is marketed under the trade name DIXIE CRYSTALS(R). The primary
marketing area for the distribution of these products comprises the states
of Alabama, Florida, Georgia, Kentucky, Tennessee, Virginia, North Carolina,
and South Carolina, with the Registrant's grocery and industrial sugars now
being widely distributed into other states generally east of the Mississippi
and south of New England. Packaged sugars are also sold under customers'
private brand labels or under Registrant's controlled labels other than DIXIE
CRYSTALS(R). These products are marketed primarily in the distribution area
outlined above and also in other states, both by means of direct sales and
through brokers. Registrant also operates a bulk transfer and melt station in
Ludlow, Kentucky for distributing bulk and liquid sugar to customers in the
Midwest and Northeast.
Molasses and liquid animal feeds are sold directly to the customers,
and in order to provide customers a full line of sweeteners, Registrant also
acts in the capacity of a jobber of high fructose corn sweeteners.
Registrant's wholly-owned subsidiary, Everglades Sugar Refinery, Inc.
(ESRI), was formed by Registrant and began operations in 1964. ESRI produces
bulk, liquid (including corn syrup blends), and a limited line of packaged
sugars under the brand names EVERCANE(R) and DIXIE CRYSTALS(R). Grocery sugars
are marketed both directly and through brokers in the state of Florida.
Industrial sugars are marketed throughout the East and Midwest.
In 1984, the Company purchased 100% of the outstanding stock of
Michigan Sugar Company, which is engaged in the processing of sugar beets into
refined sugar and the production of beet pulp and molasses. The primary market
for the refined sugar is in the state
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of Michigan; however, sales are also made in the midwestern and eastern parts
of the United States. Sales of sugar are usually made through brokers, but
direct sales are also made. Sales of sugar are made under the PIONEER(R) brand
name, although private labels are also packed for the consumer trade. Most of
the beet pulp is pelletized and sold for export. The balance is sold in the
domestic market. The majority of the molasses is sold to Registrant's beet
molasses desugarization facility for further processing to recover additional
sugar. An additional beet plant and storage facility was purchased by
Registrant's subsidiary, Michigan Sugar Company, in April 1985. Michigan Sugar
formed a wholly- owned subsidiary, Great Lakes Sugar Company, to operate the
plant and storage facility. The beet sugar plant is located at Fremont, Ohio,
and a related refined sugar storage facility is at Findlay, Ohio. The refined
sugar is sold under the PIONEER(R) brand name and a number of private labels.
On December 30, 1986, Registrant purchased substantially all of the
assets and assumed certain of the liabilities of Colonial Sugars, Inc. Among
the assets thus acquired were two cane sugar refineries located in Gramercy,
Louisiana, and St. Louis, Missouri. The St. Louis refinery was subsequently
operated in a more limited capacity as a melt and transfer facility, and in
1992 was transferred from Colonial Sugars, Inc. to the Registrant. The
Colonial acquisition added about 50% to the Registrant's existing cane sugar
refining capacity. Colonial is engaged in the refining and marketing of sugar,
sugar products (including blends), and by-products of the sugar refining
process. It makes a complete line of bulk, packaged, and liquid sugars under
the tradename COLONIAL(R). The primary marketing area for the distribution of
these products includes Texas and Louisiana as well as 18 other states east of
the Mississippi River. Industrial and packaged private label sugars are sold
in the states mentioned and also in other states, both by means of direct sales
and sales through brokers.
DIXIE CRYSTALS(R) Foodservice, Inc. produces and markets a line of
sugar envelopes and portion control items consisting of individual servings of
salt, pepper, non-dairy creamer, etc., under the trade names DIXIE CRYSTALS(R)
and PIONEER(R), and under various private labels. Foodservice also markets a
saccharin-based sweetener under the name of SWEET THING(R) and an
aspartame-based sweetener under the name of SWEET THING II(R).
During 1992, Transales Corporation, a wholly-owned subsidiary of the
Registrant engaged in public warehousing in Savannah, Georgia, ceased
operations and the Foodservice Division began moving its operations from the
Savannah Sugar Refinery to the former Transales warehouse to increase
efficiency. The relocation was completed in 1993. Along with this move, the
Foodservice Division in Savannah was merged into the Registrant's wholly-owned
subsidiary, Savannah Foodservice, Inc. In October 1992, the
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Foodservice Division sold its Miami, Florida wet-pack operations and moved the
sugar portion control operations to the new facility in Savannah.
In 1985, Registrant incorporated a wholly-owned subsidiary, Savannah
Foodservice, Inc. located in Jackson, Michigan to produce a line of sugar
envelopes and portion control items for the midwestern and northeastern
markets. During 1991, Savannah Foodservice, Inc. ceased its operations in
Jackson, Michigan and transferred its production assets to Perrysburg, Ohio.
In 1989, Registrant purchased substantially all of the assets and
assumed certain liabilities of International Automated Machines, Inc. (IAM), a
manufacturer of portion control products located in Perrysburg, Ohio.
Subsequent to the purchase, Registrant formed a wholly-owned subsidiary under
the same name to conduct the IAM business. IAM's sales complement the other
Foodservice locations' product lines and enable the Registrant to better serve
its customers in the Midwest and Northeast.
In 1991, the Registrant merged its wholly-owned subsidiaries, Savannah
Foodservice, Inc. and International Automated Machines, Inc., into its
wholly-owned subsidiary, Savannah Foodservice of Florida, Inc. Subsequently,
the Registrant changed the name of the successor wholly- owned subsidiary to
Savannah Foodservice, Inc. In October 1993, the Registrant changed the name of
its wholly-owned subsidiary Savannah Foodservice, Inc., to DIXIE CRYSTALS(R)
Foodservice, Inc. Also in 1991, Savannah Foodservice, Inc., now DIXIE
CRYSTALS(R) Foodservice, Inc., opened an additional operation in Visalia,
California to produce a line of sugar envelopes and other portion control items
to serve its customers in the West as well as to better serve national
customers. DIXIE CRYSTALS(R) Foodservice's locations enable the Registrant to
serve its customers throughout the United States.
During 1989, Registrant purchased substantially all of the assets of
Phoenix Packaging Corporation located in Union City, Indiana. Phoenix
primarily packages powdered and brown sugars and gives Registrant needed
additional capacity for these product lines.
On October 4, 1991, Registrant purchased certain assets and assumed
certain liabilities of South Coast Sugars, Inc. in the name of Raceland Sugars,
Inc., a wholly-owned subsidiary of Registrant. Among the assets acquired were a
raw sugar mill and assets for growing and supplying sugar cane to the mill.
Raceland Sugars, Inc. is engaged in the business of producing raw sugar which
is currently marketed in the Louisiana area. Additionally, the by-products,
molasses and bagasse, are currently sold in the domestic market.
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On July 7, 1993, Registrant through its wholly-owned subsidiary DIXIE
CRYSTALS(R) Foodservice, Inc., purchased 100% of the stock of King Packaging
Company, Inc., located in Bremen, Georgia. King packs custom made meal kits
for the foodservice industry and provides complimentary products to the portion
control products manufactured at Registrant's other foodservice locations.
Registrant and United States Sugar Corporation (USSC) have, for years,
cooperated in performing research and development to develop technology that
might be profitably utilized in producing industrial alcohol or sweeteners.
During 1991, Registrant and USSC developed a process to utilize patented
technology to produce high fructose syrup from blackstrap cane molasses. Due
to a decline in the price for high fructose sweeteners, the Registrant has
postponed building a facility to produce high fructose syrup using this
process.
Food Carrier, Inc., a wholly-owned subsidiary of Registrant formed in
1974, operates under interstate and intrastate motor carrier authority
transporting sugar products and general commodities.
Savannah Investment Company is a wholly-owned subsidiary which is
domiciled in and operates from facilities in the state of Delaware. This
corporation began operations in 1986. The Registrant performs much of its
investing activities through this subsidiary.
Parent and Subsidiaries. The following list presents the relationship
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of Registrant to its subsidiaries at October 3, 1993:
(a) *Michigan Sugar Company, a Michigan corporation, wholly-owned
subsidiary.
(b) *Great Lakes Sugar Company, an Ohio corporation, wholly-owned
subsidiary of Michigan Sugar Company.
(c) *Everglades Sugar Refinery, Inc., a Florida corporation,
wholly-owned subsidiary.
(d) *Food Carrier, Inc., a Georgia corporation, wholly-owned
subsidiary.
(e) *Dixie Crystals(R) Foodservice, Inc., a Delaware corporation,
wholly-owned subsidiary.
(f) *Biomass Corporation, a Delaware corporation, wholly-owned
subsidiary.
(g) *Colonial Sugars, Inc., a Delaware corporation, wholly-owned
subsidiary.
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(h) *Savannah Sugar Refining Corporation, a Georgia corporation,
wholly-owned subsidiary.
(i) *Raceland Sugars, Inc., a Delaware corporation, wholly-owned
subsidiary.
(j) *Chatham Sugar Company, a Delaware corporation, wholly-owned
subsidiary.
(k) *South Coast Sugars, Inc., a Delaware corporation,
wholly-owned subsidiary.
(l) *Phoenix Packaging Corporation, a Delaware corporation,
wholly-owned subsidiary.
(m) *Pioneer Trading Company, a Virgin Islands corporation,
wholly-owned subsidiary of Michigan Sugar Company.
(n) *Savannah Investment Company, a Delaware corporation,
wholly-owned subsidiary.
(o) *King Packaging Company, Inc., a Georgia corporation,
wholly-owned subsidiary of DIXIE CRYSTALS(R)
Foodservice, Inc.
*Indicates subsidiaries included in consolidated financial statements.
The operations of Registrant and its wholly-owned subsidiaries,
Everglades Sugar Refinery, Inc., Colonial Sugars, Inc., Michigan Sugar Company,
Savannah Foodservice, Inc., and Raceland Sugars, Inc. comprise Registrant's
only significant product line which consists of sugar products.
Raw Materials. A large quantity of the raw sugar for Registrant's
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Savannah Sugar Refinery Division, and all the raw sugar for Registrant's
wholly-owned subsidiary, Everglades Sugar Refinery, Inc., is normally supplied
by cane sugar producers in the state of Florida. A large quantity of the raw
sugar for Registrant's subsidiary, Colonial Sugars, Inc., is normally supplied
by cane sugar producers in the state of Louisiana. In the case of the Savannah
Sugar Refinery Division and Colonial Sugars, Inc., the remaining raw sugar
requirements are purchased on the open market, and consist of off-shore cargoes
purchased directly and through raw sugar trade houses. Registrant uses the
futures market as a hedging mechanism, as circumstances warrant.
Michigan Sugar Company and its subsidiary, Great Lakes Sugar Company,
process sugar beets under annual contracts from Michigan and Ohio farmers. The
land around the processing plants of the company is well suited to growing
sugar beets, and the company has
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not experienced difficulty in obtaining a sufficient quantity of beets to
support successful operation of its plants. Under the contracts with the
farmers, certain sales expenses and other non-processing expenses are first
deducted from the proceeds of refined sugar, pulp, and molasses sales after
which the balance is divided between the company and the farmers.
Competition. All refined sugar phases of the business engaged in by
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Registrant and its subsidiaries are highly competitive, competing not only with
other cane sugar refiners and beet sugar processors, but also with corn
sweeteners, artificial sweeteners, and with resellers who purchase all of these
sweeteners and compete aggressively with the producers to sell this purchased
product. Competing cane sugar refineries are located in Louisiana, Maryland,
New York, and Texas. Competing beet sugar processors are located in Colorado,
Idaho, Michigan, Minnesota, Montana, Nebraska, North Dakota, Oregon, Texas, and
Wyoming.
Number of Employees. At October 3, 1993, Registrant and its
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subsidiaries had 2,244 full-time employees. In addition, Michigan Sugar
Company, Great Lakes Sugar Company, and Raceland Sugars, Inc. employ a number
of seasonal workers during the beet and cane processing campaigns.
Item 2. Properties.
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Registrant owns 161.2 acres of land comprising its Port Wentworth
(Savannah) refinery site. The refinery buildings include the refinery, a deep
water dock and unloading facilities for receiving off-shore shipments of raw
sugar and tankers containing cargoes of molasses, storage tanks, warehouse
facilities, and motor carrier and liquid animal feed facilities. There are
also three dwellings for housing supervisory personnel. In St. Louis,
Missouri, Registrant owns a sugar melt and transfer facility and a small liquid
sugar refinery which is currently not operating. The property has a frontage
of 356 feet on the Mississippi River with its own dock, warehouse and necessary
tank storage. Registrant also owns a small sugar melt and transfer facility in
Ludlow, Kentucky and a beet molasses desugarization facility in Fremont, Ohio.
The site of Everglades Sugar Refinery, Inc., in Clewiston, Florida,
consists of 80 acres which are owned by this subsidiary. The facilities at
this site include a refinery, motor carrier facilities, raw and refined sugar
warehouses, and dwellings for the manager and assistant manager.
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Michigan Sugar Company owns and operates four processing plants in
Michigan. They are located in Caro, Carrollton, Sebewaing, and Croswell and
all have bulk storage facilities for refined sugar.
Michigan's wholly-owned subsidiary, Great Lakes Sugar Company, owns
and operates an additional beet processing plant and an additional storage
facility in Fremont, Ohio. Great Lakes also owns an additional storage
facility in Findlay, Ohio.
Colonial Sugars, Inc., owns 981.69 acres in Gramercy, Louisiana, which
borders on the east bank of the Mississippi River. Its facilities include the
refinery buildings and docks for unloading raw sugar and for loading molasses
and refined sugar. Also present at this location are storage tanks, warehouse
facilities, and office space.
DIXIE CRYSTALS(R) Foodservice, Inc. has four locations. The acreage
and buildings at all locations are owned by DIXIE CRYSTALS(R) Foodservice,
Inc., except for DIXIE CRYSTALS(R) Foodservice - Georgia, whose facility was
partially financed by a $1,000,000 industrial revenue bond issue of the
Savannah Port Authority. Title to the property is in the name of Savannah Port
Authority which has leased it through Registrant to DIXIE CRYSTALS(R)
Foodservice, Inc. under a lease term which coincides with the amortization of
the industrial bond issue, at the end of which, Registrant or DIXIE CRYSTALS(R)
Foodservice, Inc. will acquire the property for $10.00.
DIXIE CRYSTALS(R) Foodservice is operated in a 300,000 sq. ft.
facility on approximately 56 acres of land in Savannah, Georgia. DIXIE
CRYSTALS(R) Foodservice - Ohio is operated in a 115,920 sq. ft. facility on
approximately 20.05 acres of land in Perrysburg, Ohio. DIXIE CRYSTALS(R)
Foodservice - California is operated in a 102,000 sq. ft. facility on 34.02
acres of land in Visalia, California. DIXIE CRYSTALS(R) Foodservice also owned
a 38,000 sq. ft. building and approximately 3 acres of land in Jackson,
Michigan which were sold in January 1993. This facility ceased operations in
the second quarter of 1991. All machinery and equipment was either transferred
to other locations or retired.
King Packaging Company, Inc., owns and operates a packaging facility
in Bremen, Georgia. The facilities on this 13.88 acre site include a 65,150
sq. ft. office, production and warehouse building and a 67,200 sq. ft.
warehouse and loading facility.
Phoenix Packaging Corporation is operated in its 15,075 sq. ft.
facility located on 8.1 acres of land in Union City, Indiana, and leases a
10,360 sq. ft. private warehouse storage facility in
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Union City, Ohio. In 1991, the subsidiary also began leasing a 5,000 sq. ft.
private warehouse in Union City, Indiana to store additional packaging
supplies.
Registrant also owns Raceland Sugars, Inc. Raceland owns and operates
a raw sugar mill in Raceland, Louisiana, situated on 171.481 acres of land.
Registrant also owns 800 acres of land used as an impounding basin, 61.72 acres
used as a pond site, and 15.66 acres of land used for harvesting operations.
The facilities on the plant site include a receiving area for the sugar cane,
the raw mill, raw sugar warehouse, storage tanks, office facility, and
dwellings for housing mill personnel. In addition to its milling operations,
Raceland produces and harvests sugar cane for use at its mill. These farming
operations are done largely on leased land. In 1992, Raceland, in equal
partnership with two non-affiliated companies, formed a partnership which
purchased 3,325 acres of land in Louisiana. This land is leased to farmers who
grow sugar cane for the partnership.
Registrant also owns Chatham Sugar Corporation, an inactive sugar
refinery located on approximately 110 acres in Belle Glade, Florida.
Item 3. Legal Proceedings.
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Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
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No matters were submitted to a vote of security holders during the
last quarter of the nine-month period ended October 3, 1993.
PART II
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Item 5. Market for Registrant's Common Stock and Related Stockholder Matters.
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The common stock of Registrant is traded on the New York Stock
Exchange under the symbol "SFI". (Until October 14, 1992, it was traded in the
over-the-counter market under the symbol "SVAN".) The following table sets
forth for the periods indicated the range of high and low bids for the
Company's common stock on the NASDAQ National Market System and the New York
Stock Exchange. The bids set forth below do not include retail mark-ups,
mark-downs, or commissions and the prices represent quotations between dealers
and may not necessarily represent actual transactions. The information
provided has been adjusted to the nearest 1/8 and was compiled from quotations
furnished by the National Association of Securities
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Dealers, Inc. and the New York Stock Exchange. Registrant has paid cash
dividends on its common stock every year since 1924. The following information
is for the nine-month period ended October 3, 1993, the twelve-month period
ended January 3, 1993 and the twelve-month period ended December 29, 1991:
<TABLE>
<CAPTION>
Quarter Dividends
Ended High Low Paid
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<S> <C> <C> <C>
03/31/91 $26.500 $21.000 $.120
06/30/91 26.375 19.500 .120
09/29/91 22.750 18.750 .120
12/29/91 20.000 15.000 .130
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$.490
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03/29/92 $20.500 $16.250 $.130
06/28/92 19.000 14.750 .130
09/27/92 18.000 14.500 .130
01/03/93 16.875 13.625 .135
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$.525
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04/04/93 $16.750 $13.500 $.135
07/04/93 16.625 14.125 .135
10/03/93 17.875 15.125 .135
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$.405
=====
</TABLE>
As of September 10, 1993, the record date for Registrant's fourth
fiscal quarter dividend to stockholders, the following indicates the number of
holders of record of equity securities:
Title of Class Number of Record Holders
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Common Stock 3,572
In 1982, a Dividend Reinvestment Plan (the "Plan") was made available
to holders of Registrant's common stock, which provides the opportunity for
stockholders to reinvest their dividends in additional shares of stock
automatically on a regular basis. Participation is entirely voluntary, and
participants may also make optional cash payments to be used toward the
purchase of additional shares. Wachovia Bank of North Carolina, N.A. acts as
agent for the Plan. As of October 3, 1993, 1,502 stockholders were
participants in the Plan, and during the nine-month period ended October 3,
1993, 27,457 shares were purchased through the Plan.
Item 6. Selected Financial Data.
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See following pages.
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SAVANNAH FOODS & INDUSTRIES, INC.
SUMMARY OF OPERATIONS
(In thousands except for per share amounts and ratios)
The information shown below for the nine months ended October 3, 1993 and for
the twelve months ended January 3, 1993, December 29, 1991, December 30, 1990
and December 31, 1989 has been summarized from audited financial statements.
The information for the nine months ended September 27, 1992 has been
summarized from the unaudited financial statements which are included for
comparative purposes with the audited financial statements included in Item 8
of this document.
<TABLE>
<CAPTION>
For the Nine Months Ended For the Twelve Months Ended
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October 3, September 27, January 3, December 29, December 30, December 31,
1993 (1) 1992 (1) 1993 1991 1990 1989
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<S> <C> <C> <C> <C> <C> <C>
OPERATIONS FOR THE PERIOD
Net sales................................. $818,116 $833,341 $1,138,114 $1,199,710 $1,213,721 $1,096,698
Income from operations (excludes other
income and expenses, taxes and
change in accounting principle)......... 11,839 34,367 49,143 66,884 80,837 65,595
Income before change in accounting
principle............................... 1,986 17,724 27,340 38,260 48,628 41,084
Net income (loss) (2)..................... 2,586 (446) 9,170 38,260 48,628 41,084
Other income statement information:
Depreciation and amortization expense... 19,362 17,863 23,705 20,510 17,626 15,555
Interest expense........................ 10,226 7,634 10,526 9,820 9,672 8,010
Provision for income taxes.............. 1,155 9,903 13,628 21,798 26,249 19,664
Cash dividends declared................... 10,626 10,348 13,890 13,116 10,539 7,879
Capital expenditures (3).................. 40,111 32,024 45,301 55,661 41,558 34,476
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FINANCIAL POSITION AT THE END OF THE PERIOD
Current assets............................ $269,990 $229,214 $ 371,387 $ 356,769 $309,916 $318,760
Current liabilities....................... 154,760 109,229 233,519 223,104 178,531 200,507
Working capital........................... 115,230 119,985 137,868 133,665 131,385 118,253
Property, plant and equipment - gross..... 408,158 346,533 355,435 318,391 268,252 233,567
Accumulated depreciation.................. 159,111 125,894 129,306 112,092 97,295 86,892
Total assets.............................. 567,852 481,662 635,755 581,819 495,585 481,846
Long-term debt............................ 142,078 106,510 126,464 94,364 77,411 76,406
Stockholders' equity...................... 194,714 202,638 210,620 224,275 201,387 169,502
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PER SHARE
Weighted average shares outstanding....... 26,238 26,572 26,491 26,782 27,069 26,910
Shares outstanding at end of year......... 26,238 26,305 26,238 26,723 26,853 27,145
Income before change in accounting
principle per weighted average share
outstanding............................. $ .08 $ .66 $ 1.03 $ 1.43 $ 1.80 $ 1.53
Net income (loss) per weighted average
share outstanding (2)................... .10 (.02) .35 1.43 1.80 1.53
Dividends declared per share.............. .405 .39 .53 .49 .39 .29
Stockholders' equity per share (4)........ 7.42 7.70 8.03 8.39 7.50 6.24
RATIOS
Current assets divided by current
liabilities............................. 1.74 2.10 1.59 1.60 1.74 1.59
Long-term debt divided by total long-
term debt and stockholders'
equity.................................. .42 .34 .38 .30 .28 .31
Tax expense divided
by pre-tax income....................... .37 .36 .33 .36 .35 .32
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</TABLE>
(1) On July 21, 1993, the Company changed its fiscal year end from the
Sunday closest to December 31 to the Sunday closest to September 30.
Unaudited information for the nine month period ended September 27,
1992 is presented for comparative purposes. To provide further
information relative to the Company's new fiscal year end, the Company
has presented the pro forma results of operations for the twelve-month
periods ended October 3, 1993 and September 27, 1992 in Note 2 to the
financial statements.
(2) The Company adopted FAS 109, "Accounting for Income Taxes" during the
nine month period ended October 3, 1993 and adopted FAS 106,
"Employers' Accounting for Postretirement Benefits Other Than
Pensions" during the nine month period ended September 27, 1992 and
the twelve month period ended January 3, 1993. For more information,
see Notes 7, 9 and 11 to the accompanying consolidated financial
statements.
(3) Capital expenditures include $4,757 for the acquisition of King
Packaging Company, Inc. fixed assets in July 1993, $15,798 for the
acquisition of Raceland Sugars, Inc. fixed assets in October 1991, and
$6,226 for the acquisition of International Automated Machines, Inc.
fixed assets in June 1989. For more information, see Note 3 to the
accompanying consolidated financial statements.
(4) Based on shares outstanding at end of year.
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Item 7. Management's Discussion and Analysis of the Company's Financial
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Position and Results of Operations.
-----------------------------------
Change in Fiscal Year End:
- --------------------------
On July 21, 1993, the Company changed its fiscal year end from the
Sunday closest to December 31 to the Sunday closest to September 30, beginning
with the fiscal year ended October 3, 1993. The decision to change the fiscal
year end was made in order to conform the Company's financial reporting year to
the natural business year of the sugar industry. In connection with this, the
Company has included below a comparison of the nine months ended October 3,
1993 to the nine months ended September 27, 1992. Additionally, to provide
further information relative to the Company's new fiscal year end, the Company
has elected to present the pro forma results of operations for the twelve-month
periods ended October 3, 1993 and September 27, 1992, in Note 2 to the
financial statements. Furthermore, the financial position of the Company as of
October 3, 1993 and January 3, 1993 is presented below.
Financial Position:
- -------------------
October 3, 1993 versus January 3, 1993
- --------------------------------------
At October 3, 1993, stockholders' equity was $194,714,000 compared to
equity at January 3, 1993, of $210,620,000. Equity increased as a result of
earnings of $1,986,000, during the period January 4, 1993 to October 3, 1993,
the effect of adoption of Statement of Financial Accounting Standards No. 109 -
-----------------------------------------------------
Accounting for Income Taxes (FAS 109) of $600,000 and a decrease in the note
- ---------------------------
receivable from the employee stock ownership trust of $151,000, and decreased
by dividends of $10,627,000, and a minimum pension liability adjustment of
$8,016,000.
Long-term debt, excluding the current portion, increased $15,614,000
primarily as a result of the purchase of King Packaging Company, Inc. These
changes in debt and equity resulted in an increase from 38% to 42% in the ratio
of debt to total capital. Cash and cash equivalents decreased $498,000 while
noncash working capital decreased $22,140,000. Cash generated from operations
was used primarily for capital improvements and payment of dividends. Other
working capital changes include a decrease in inventory levels due to the
change in year end.
At October 3, 1993, the Company had $145,000,000 in revolving credit
facilities, of which $20,000,000 was outstanding as long-term debt and
$26,300,000 was outstanding as short-term debt. The remaining available
balance of $98,700,000 is intended to meet working capital requirements and
other cash needs as they arise. All of the $145,000,000 of available
facilities are committed through September 1996 with an option to extend
through September 1998. The revolving credit facilities, in general, enable
the Company to borrow funds at the bank's cost of funds plus approximately
1/2%.
12
<PAGE> 13
At October 3, 1993, the Company had $15,500,000 in notes payable
related to the ESOP trust. These notes carry a tax-advantaged rate of interest
equal to 85%-86% of LIBOR and are due between 1996 and 1998.
In addition, Michigan Sugar Company and Raceland Sugars, Inc. can
borrow from the Commodity Credit Corporation against their respective sugar
inventory balances to meet working capital requirements and to provide a hedge
against reduced sugar selling prices. None of the short-term borrowings for
temporary working capital needs at October 3, 1993 or January 3, 1993 were
borrowed from the Commodity Credit Corporation.
Fixed asset additions during the nine months ended October 3, 1993
were $40,111,000, including $4,757,000 of net fixed assets from the July 7,
1993 acquisition of King Packaging Company, Inc. The Company spent $19,100,000
at the cane refineries and raw sugar mill including the upgrading of computer
systems, and the upgrading of existing, and installation of new, packaging and
production lines. Capital additions also included $12,000,000 of expenditures
at the beet refineries and the beet molasses desugarization facility, and
$4,200,000 for expenditures at the Foodservice facilities, including the
relocation and expansion of Foodservice facilities to the location operated by
the Company's former warehousing subsidiary. In addition to acquiring King
Packaging Company, Inc., capital expenditures were concentrated on cost saving
or expansion projects which are expected to benefit the Company through
increased efficiency and expanded operational capabilities. The Company
expects that expenditures for fixed assets, net of disposals, in fiscal 1994
will approximate $20,000,000.
Effective December 30, 1991, the first day of the year ended January
3, 1993, the Company adopted Statement of Financial Accounting Standards No.
-----------------------------------------------
106 - Employers' Accounting for Postretirement Benefits Other Than Pensions
- ---------------------------------------------------------------------------
(FAS 106). The cumulative effect of adopting FAS 106 was a one-time noncash
charge of $18,170,000, net of tax benefits, or $.68 per share. The effect of
this new pronouncement on the Company's financial position at January 3, 1993
was to increase "Deferred employee benefits" by $29,814,000, and to decrease
"Deferred income taxes" by $11,031,000. This new accounting standard does not
impact the cash flows of the Company. For further information, see Notes 9 and
11 to the accompanying consolidated financial statements.
Effective January 4, 1993, the first day of the nine month period
ended October 3, 1993, the Company adopted Statement of Financial Accounting
---------------------------------
Standards No. 109 - Accounting for Income Taxes (FAS 109). The cumulative
- -----------------------------------------------
effect of adopting FAS 109 was a one-time noncash credit to income of $600,000,
or $.02 per share. The credit was recorded as the cumulative effect of a
change in accounting principle. This new accounting standard does not impact
the cash flows of the Company. For further information, see Note 7 to the
accompanying consolidated financial statements.
13
<PAGE> 14
Results of Operations:
- ----------------------
Nine month periods ended October 3, 1993 and September 27, 1992
- ---------------------------------------------------------------
The Company's net income for the nine months ended October 3, 1993 was
$2,586,000, or $.10 per share, compared to a loss of $446,000, or $.02 per
share, for the nine months ended September 27, 1992. Net income for the nine
months ended October 3, 1993 includes a $3,030,000 charge to net income (a
$4,900,000 increase in cost of sales net of the associated $1,870,000 income
tax benefit) as further discussed in Note 1 to the financial statements and a
$600,000 cumulative effect of adopting FAS 109. Net income for the nine months
ended September 27, 1992 includes the impact of the adoption of FAS 106. Net
income before the cumulative effect of adopting the accounting principle
changes was $1,986,000, or $.08 per share, in the nine months ended October 3,
1993, and $17,724,000, or $.66 per share, in the nine months ended September
27, 1992. Sales dollars in the nine months ended October 3, 1993 were down
compared with the nine months ended September 27, 1992 on similar volumes and
lower average sales prices. A 2% decrease in the average sugar sales price
combined with a 2% increase in the average cost of raw sugar, and the
$4,900,000 charge to cost of sales noted above, resulted in a 66% decrease in
income from operations.
Sugar pricing was under pressure by the record national beet crop for
the first two quarters of the nine months ended October 3, 1993. The U. S.
Department of Agriculture imposed marketing allotments effective July 1, 1993
which had the effect of raising beet sugar prices in the third quarter of the
nine month period. However, aggressive price competition between cane refiners
for market share throughout most of the quarter substantially reduced the
benefit of this price increase.
Productivity at the cane refineries during the nine months ended
October 3, 1993 was excellent. The Colonial refinery set an average daily
production record, and the Savannah refinery just missed doing likewise.
Michigan Sugar's sales volume was up in the nine months ended October
3, 1993 because the beet crop was much larger than for the nine months ended
September 27, 1992. However, sugar and byproduct pricing were down as a result
of the record national beet crop resulting in lower earnings than in the nine
months ended September 27, 1992. The current Michigan crop is slightly larger
than last year. However, Ohio suffered a drought this summer which is expected
to result in a much smaller crop at our plant there for this campaign.
Dixie Crystals(R) Foodservice, Inc. experienced increases in both
sales and profits in the nine months ended October 3, 1993. The move of the
Savannah manufacturing operations to the former Transales location in Savannah
continues to produce an excellent return on the investment made in the move.
On July 7, 1993 the Company purchased King Packaging Company, Inc., located in
Bremen, Georgia. King produces plastic cutlery and customized meal kits for
the foodservice and healthcare industries, and has annual sales of
approximately $20,000,000. Combining the King product line with the existing
Foodservice products
14
<PAGE> 15
and facilities provides significant synergistic benefits, and plans are to
substantially increase King's sales over the next three years. The King
product line is currently being added to another Foodservice facility and our
business plan is to add it to others in the future.
Selling, general and administrative expenses increased in the nine
months ended October 3, 1993 compared to the nine months ended September 27,
1992. Increases in selling, general and administrative expense for planned
expenditures related to growth in the Company over the last few years were
somewhat offset by lower incentive compensation related to the lower level of
profitability for the period.
Interest expense increased in the nine months ended October 3, 1993
primarily due to the increased long-term debt acquired in the latter part of
1992 and the acquisition of King Packaging Company, Inc. in July of 1993.
The effective tax rate for the nine months ended October 3, 1993 was
37% compared to 36% in the nine months ended September 27, 1992. The higher
rate for the nine months ended October 3, 1993 compared to the nine months
ended September 27, 1992 is primarily attributable to the increased corporate
tax rate effective January 1, 1993 offset partially by lower state income tax
expense and utilization of tax advantaged benefit programs.
In the current industry environment, it is difficult to predict what,
if any, improvement there may be in refined sugar pricing in fiscal 1994, but
industrial sales during fiscal 1994 at prices contracted for during the twelve
months ended October 3, 1993 will make any improvement less significant than it
would otherwise be. The Company is in a high volume business in which a small
change in margins has a significant impact on net income.
Twelve month periods ended January 3, 1993 and December 29, 1991
- ----------------------------------------------------------------
The Company's net income for 1992 was $9,170,000, or $.35 per share,
compared to $38,260,000, or $1.43 per share, in 1991. The Company's net income
for 1992 includes the impact of the adoption of FAS 106. Net income for 1992
before the cumulative effect of adopting FAS 106 was $27,340,000, or $1.03 per
share. Net sales for 1992 were $1,138,114,000 compared to $1,199,710,000 in
1991. Sales dollars decreased 5% in 1992 because of a 2% decrease in volume
and a 3% decrease in average sugar sales price. The volume decrease was the
result of lower beet sugar sales. The 1991 beet crop, which was mostly sold in
1992, was 16% smaller than the 1990 crop because of very wet weather during the
1991 planting and early growing season. Foodservice sugar sales volume was up
over the 1991 level and cane refinery sales volume was about even with the
prior year.
Sugar pricing was under pressure during most of 1992. For much of the
year, cane refiners competed very aggressively for market share, and in the
latter part of the year, beet sugar producers, anticipating a large beet crop,
priced sugar aggressively for delivery in the fourth
15
<PAGE> 16
quarter of 1992 and into 1993. This had a very negative impact on refined
sugar pricing in the fourth quarter of 1992 and in 1993.
Productivity at the cane refineries during 1992 was very good. Two
refineries exceeded their prior year level and one was just slightly below it.
The Savannah refinery nearly equaled its record level of 1990, and the Colonial
refinery set another productivity record in 1992.
Dixie Crystals(R) Foodservice, Inc. moved its Savannah manufacturing
operations during 1992 from the Savannah refinery to the 300,000 sq. ft.
facility previously occupied by Transales Corporation in Savannah. The Company
also sold its plant in Miami, Florida and moved the production from that plant
to the Savannah facility. The relocation to the new facility enabled the
company to significantly reduce manufacturing costs through improved plant
layout, which increased production efficiency, and through lower packaging
costs. Increased sales and profits have resulted from the move.
Selling, general and administrative expenses decreased in 1992
compared to the prior year. Increases in selling, general and administrative
expense for planned expenditures related to growth in the Company over the last
few years were offset by lower incentive compensation related to the lower
level of profitability for the period.
Interest expense increased in 1992 over 1991 primarily due to the
long-term debt related to the acquisition of Raceland Sugars, Inc. in 1991 and
due to the additional long-term debt acquired in 1992.
The effective tax rate for 1992 was 33% compared to 36% in 1991. The
lower rate in 1992 compared to 1991 is primarily attributable to lower state
income tax expense.
16
<PAGE> 17
Item 8. Financial Statements and Supplementary Data.
- -----------------------------------------------------
(a) Financial Statements: Page
-------------------- ----
Report of Independent Accountants 18
Consolidated Balance Sheets at October 3, 1993
and January 3, 1993 19
Consolidated Statements of Operations for the nine
months ended October 3, 1993, the nine months
ended September 27, 1992 (unaudited), the
twelve months ended January 3, 1993 and the
twelve months ended December 29, 1991 20
Consolidated Statements of Changes in Stockholders'
Equity for the nine months ended October 3, 1993,
the twelve months ended January 3, 1993 and
the twelve months ended December 29, 1991 21
Consolidated Statements of Cash Flows for the nine
months ended October 3, 1993, the nine months
ended September 27, 1992 (unaudited), the
twelve months ended January 3, 1993 and the
twelve months ended December 29, 1991 22
Notes to Consolidated Financial Statements 23
(b) Financial Statement Schedules for the nine-month
------------------------------------------------
period ended October 3, 1993, the twelve-month
----------------------------------------------
period ended January 3, 1993 and the twelve-month
-------------------------------------------------
period ended December 29, 1991:
-------------------------------
V - Property, Plant and Equipment 42
VI - Accumulated Depreciation and
Amortization of Property,
Plant and Equipment 43
Other schedules are omitted because they are not applicable, or the
required information is shown in the financial statements or notes thereto.
17
<PAGE> 18
PRICE WATERHOUSE L.L.P. (LOGO)
REPORT OF INDEPENDENT ACCOUNTANTS
September 9, 1994
To the Stockholders and Board of Directors of
Savannah Foods & Industries, Inc.
In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the financial
position of Savannah Foods & Industries, Inc., and its subsidiaries at October
3, 1993, and January 3, 1993, and the results of their operations and their
cash flows for the nine-month period ended October 3, 1993 and each of the two
years in the periods ended January 3, 1993 and December 29, 1991, in conformity
with generally accepted accounting principles. 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. We
conducted our audits of these statements in accordance with generally accepted
auditing standards which 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, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
As discussed in Note 1 to the financial statements, during 1993 the Company
changed its fiscal year end. As discussed in Notes 7 and 9 to the financial
statements, the Company changed its methods of accounting for income taxes and
accounting for postretirement benefits other than pensions, during the periods
ended October 3, 1993 and January 3, 1993, respectively.
Price Waterhouse LLP
18
<PAGE> 19
SAVANNAH FOODS & INDUSTRIES, INC.
Consolidated Balance Sheets
(In thousands except for shares and per share amounts)
<TABLE>
<CAPTION>
October 3, January 3,
1993 1993
------------------------
<S> <C> <C>
Assets
- ------
Current assets:
Cash and cash equivalents (Note 1) $ 7,481 $ 7,979
Accounts receivable 87,030 58,633
Inventories (net of LIFO reserve of $9,011 in
1993 and $8,065 in 1992) (Notes 1 and 4) 145,639 272,574
Other current assets (Notes 1 and 7) 29,840 32,201
-------- --------
Total current assets 269,990 371,387
Property, plant and equipment (net of accumulated
depreciation of $159,111 in 1993 and
$129,306 in 1992) (Notes 1 and 5) 249,047 226,129
Other assets (Notes 1 and 9) 48,815 38,239
-------- --------
$567,852 $635,755
======== ========
Liabilities and Stockholders' Equity
- ------------------------------------
Current liabilities:
Short-term borrowings (Note 6) $ 26,300 $ 30,000
Current portion of long-term debt (Note 6) 2,421 1,203
Trade accounts payable 106,410 145,608
Income taxes accrued (Note 7) - 12,419
Accrued expenses related to beet operations (Note 1) - 23,400
Other liabilities and accrued expenses 19,629 20,889
-------- --------
Total current liabilities 154,760 233,519
-------- --------
Long-term debt (Note 6) 142,078 126,464
-------- --------
Deferred income taxes (Note 7) 3,951 8,726
-------- --------
Deferred employee benefits (Note 9) 72,349 56,426
-------- --------
Stockholders' equity (Notes 6 and 8):
Common stock $.25 par value; $.55 stated value;
64,000,000 shares authorized; 31,306,800 shares issued 17,365 17,365
Capital in excess of stated value 12,190 12,190
Retained earnings 210,491 218,532
Minimum pension liability adjustment (Note 9) (9,453) (1,437)
-------- --------
230,593 246,650
Less - Treasury stock, at cost (5,068,604 shares) 31,275 31,275
- Note receivable from employee stock ownership
trust 4,604 4,755
-------- --------
Total stockholders' equity 194,714 210,620
-------- --------
$567,852 $635,755
======== ========
</TABLE>
(The accompanying notes are an integral part of the financial statements.)
19
<PAGE> 20
SAVANNAH FOODS & INDUSTRIES, INC.
Consolidated Statements of Operations
(In thousands except for shares and per share amounts)
<TABLE>
<CAPTION>
For the Nine Months Ended For the Fiscal Year Ended
--------------------------- --------------------------
October 3, September 27, January 3, December 29,
1993 1992
(Note 1) Unaudited 1993 1991
---------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Net sales $ 818,116 $ 833,341 $ 1,138,114 $ 1,199,710
----------- ----------- ----------- -----------
Operating expenses:
Cost of sales and operating
expenses 743,731 738,421 1,008,658 1,054,606
Selling, general and
administrative expenses 43,184 42,690 56,608 57,710
Depreciation and amortization
(Note 1) 19,362 17,863 23,705 20,510
----------- ----------- ----------- -----------
806,277 798,974 1,088,971 1,132,826
----------- ----------- ----------- -----------
Income from operations 11,839 34,367 49,143 66,884
----------- ----------- ----------- -----------
Other income and (expenses):
Interest and other investment
income 1,412 1,189 1,747 3,330
Interest expense (Note 6) (10,226) (7,634) (10,526) (9,820)
Other income (expense) 116 (295) 604 (336)
----------- ----------- ----------- -----------
(8,698) (6,740) (8,175) (6,826)
----------- ----------- ----------- -----------
Income before income taxes and
change in accounting principle 3,141 27,627 40,968 60,058
Provision for income taxes
(Notes 1 and 7) 1,155 9,903 13,628 21,798
----------- ----------- ----------- -----------
Income before change in
accounting principle 1,986 17,724 27,340 38,260
Cumulative effect of change in
accounting principle
(Notes 1, 7 and 9) 600 (18,170) (18,170) -
----------- ----------- ----------- -----------
Net income (loss) $ 2,586 $ (446) $ 9,170 $ 38,260
=========== =========== =========== ===========
Income per weighted average
share outstanding:
Income before change in
accounting principle $ .08 $ .66 $ 1.03 $ 1.43
Cumulative effect of change
in accounting principle .02 (.68) (.68) -
----------- ----------- ----------- -----------
Net income (loss) $ .10 $ (.02) $ .35 $ 1.43
=========== =========== =========== ===========
Weighted average shares
outstanding 26,238,196 26,571,834 26,490,701 26,782,083
=========== =========== =========== ===========
</TABLE>
(The accompanying notes are an integral part of the financial statements.)
20
<PAGE> 21
SAVANNAH FOODS & INDUSTRIES, INC.
Consolidated Statements of Changes in Stockholders' Equity
(In thousands except for shares and per share amounts)
<TABLE>
<CAPTION>
Note Receivable
Minimum from
Capital in Pension Employee Stock
Common Excess of Retained Liability Treasury Ownership
Stock Stated Value Earnings Adjustment Stock Trust Total
------ ------------ -------- -------------- -------- --------------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 30, 1990 $17,365 $12,120 $198,108 $ 0 $(20,988) $(5,218) $201,387
Net income 38,260 38,260
Cash dividends ($.49 per share) (13,116) (13,116)
Acquisition of treasury
stock - 130,000 shares (2,528) (2,528)
Decrease in note receivable from
employee stock ownership trust 272 272
------- ------- -------- ------- -------- ------- --------
Balance at December 29, 1991 17,365 12,120 223,252 0 (23,516) (4,946) 224,275
Net income 9,170 9,170
Cash dividends ($.53 per share) (13,890) (13,890)
Sale of treasury stock -
113,590 shares 70 2,146 2,216
Acquisition of treasury stock -
598,425 shares (9,905) (9,905)
Increase in minimum pension
liability adjustment (1,437) (1,437)
Decrease in note receivable from
employee stock ownership trust 191 191
------- ------- -------- ------- -------- ------- --------
Balance at January 3, 1993 17,365 12,190 218,532 (1,437) (31,275) (4,755) 210,620
Net income 2,586 2,586
Cash dividends ($.405 per share) (10,627) (10,627)
Increase in minimum pension
liability adjustment (8,016) (8,016)
Decrease in note receivable from
employee stock ownership trust 151 151
------- ------- -------- ------- -------- ------- --------
Balance at October 3, 1993 $17,365 $12,190 $210,491 $(9,453) $(31,275) $(4,604) $194,714
======= ======= ======== ======= ======== ======= ========
</TABLE>
(The accompanying notes are an integral part of the financial statements.)
21
<PAGE> 22
SAVANNAH FOODS & INDUSTRIES, INC.
Consolidated Statements of Cash Flows
(In thousands of dollars)
<TABLE>
<CAPTION>
For the Nine Months Ended For the Fiscal Year Ended
-------------------------- -------------------------
September 27, January 3, December 29,
October 3, 1992
1993 Unaudited 1993 1991
---------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Cash flows from operations:
Net income (loss) $ 2,586 $ (446) $ 9,170 $ 38,260
Adjustments to reconcile net income
(loss) to net cash provided by
operations -
Depreciation and amortization 19,362 17,863 23,705 20,510
Cumulative effect of change in
accounting principle (600) 18,170 18,170 -
Provision for deferred income taxes 6,986 8,556 239 (6,437)
Other 392 456 71 872
Working capital changes affecting cash
provided by operations -
Accounts receivable (25,347) (12,243) 388 7,719
Inventories 133,498 80,325 (56,991) (10,982)
Other current assets (5,312) (575) (10,161) (4,016)
Trade accounts payable (39,441) (36,865) 30,573 25,334
Income taxes accrued (17,593) (14,337) (2,636) 2,155
Accrued expenses related to beet
operations (22,884) (23,009) (125) 6,825
Other liabilities and accrued
expenses (1,951) (6,690) (7,379) 8,185
-------- -------- -------- --------
Cash provided by operations 49,696 31,205 5,024 88,425
-------- -------- -------- --------
Cash flows from investing activities:
Additions to property, plant and
equipment (35,354) (32,024) (45,301) (39,863)
Purchase of King Packaging Company, Inc. (8,925) - - -
Purchase of net assets of Raceland
Sugars, Inc. - - - (18,232)
Acquisition of long-term investments (3,237) - (1,608) -
Decrease (increase) in investments of
unexpended IDB funds included in
other assets 460 (13,065) (13,124) -
Other 3,899 2,415 360 (1,894)
-------- -------- -------- --------
Cash used for investing activities (43,157) (42,674) (59,673) (59,989)
-------- -------- -------- --------
Cash flows from financing activities:
Increase (decrease) in short-term
borrowings (3,700) (37,674) (9,674) 1,717
Increase in long-term debt 10,111 13,000 83,300 20,000
Payments of long-term debt (1,337) (838) (51,544) (2,951)
Dividends paid to stockholders (10,627) (6,928) (13,890) (13,116)
Treasury stock repurchases - (8,928) (9,905) (2,528)
Treasury stock issues - 2,216 2,216 -
Other (1,484) 932 2,539 1,662
-------- -------- -------- --------
Cash provided by (used for) financing
activities (7,037) (38,220) 3,042 4,784
-------- -------- -------- --------
Cash flows for period (498) (49,689) (51,607) 33,220
Cash and cash equivalents, beginning
of period 7,979 59,586 59,586 26,366
-------- -------- -------- --------
Cash and cash equivalents, end of period $ 7,481 $ 9,897 $ 7,979 $ 59,586
======== ======== ======== ========
</TABLE>
(The accompanying notes are an integral part of the financial statements.)
22
<PAGE> 23
SAVANNAH FOODS & INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
Note 1 - Summary of Significant Accounting Policies:
- ------------------------------------------------------
Fiscal year - As described in Note 2, the Company changed its fiscal
-----------
year end from the Sunday closest to December 31 to the Sunday closest to
September 30.
Amendment of the Fiscal 1993 Annual Report - In connection with the
------------------------------------------
Company's decision to change its year end in 1993 from the Sunday closest to
December 31 to the Sunday closest to September 30, the Company filed its fiscal
1993 Annual Report on Form 10-K (the "1993 10- K")with the Securities and
Exchange Commission (the Commission) using a twelve-month period ended October
3, 1993 as its primary statement of operations. Additionally, the Company
reflected in the 1993 10-K the adoption of Statement of Financial Accounting
---------------------------------
Standards No. 109 - Accounting for Income Taxes (FAS 109) as of the beginning
- -----------------------------------------------
of the twelve-month period.
Upon review of the Company's 1993 10-K, the Commission requested an
amendment to present the nine-month period ended October 3, 1993 as the primary
statement of operations for 1993 and the adoption of FAS 109 as of January 4,
1993, the beginning of the nine-month period ended October 3, 1993.
Accordingly, the accompanying financial statements include the nine-month
period ended October 3, 1993, as well as unaudited statements of operations and
cash flows for the comparative nine-month period ended September 27, 1992. The
unaudited consolidated statements of operations and of cash flows for the nine
months ended September 27, 1992 include all adjustments (consisting only of
normal, recurring accruals) which are, in the opinion of management, necessary
for the fair presentation of the Company's results of operations and cash flows
for the nine-month period ended September 27, 1992.
As originally filed, the financial statements for the twelve-month
period ended October 3, 1993 reflected a charge to equity of $3,030,000
relating to the difference in the book and tax bases of inventory acquired as
part of the 1984 Michigan Sugar Company acquisition which was accounted for as
a purchase. Due to the Company's LIFO method of accounting for inventories and
the seasonal nature of the Company's beet sugar inventories which result in
relatively high levels of calendar year-end inventories, the cost of inventory
acquired in the 1984 purchase remained on the balance sheet through the
twelve-month period ended January 3, 1993. However, the new fiscal year end
(October 3 for 1993) falls at a time during the year when inventory levels are
normally at significantly reduced levels compared with calendar year ends. As
a result of the change in year ends and the substantially lower inventory level
at October 3, 1993, the Company's statement of operations for the nine-month
period ended October 3, 1993 reflects a charge of $3,030,000, net of tax of
$1,870,000. This item represents the effect of the liquidation of the 1984
LIFO inventory, an event occurring as the result of the change in year end and
not because of any change in the Company's operating cycle.
23
<PAGE> 24
The statements of operations and of cash flows for the twelve-month
periods ended October 3, 1993 and September 27, 1992 (through income before
change in accounting principle), the periods included in the originally filed
Form 10-K have been included in Note 2 on a pro forma basis to provide further
information relative to the Company's new fiscal year end.
Principles of consolidation and business segments - The consolidated
-------------------------------------------------
financial statements include the accounts of the Company and its subsidiaries,
all of which are wholly owned. The Company has one primary business segment -
Sugar Products.
Changes in accounting principles - As discussed in Note 7, Statement
-------------------------------- ---------
of Financial Accounting Standards No. 109 - Accounting for Income Taxes (FAS
- -----------------------------------------------------------------------
109) was prospectively adopted effective January 4, 1993, the first day of the
nine-month period ended October 3, 1993. As discussed in Note 9, Statement of
------------
Financial Accounting Standards No. 106 - Employers' Accounting for
- ------------------------------------------------------------------
Postretirement Benefits Other Than Pensions (FAS 106) was adopted effective
- -------------------------------------------
December 30, 1991, the first day of the twelve-month period ended January 3,
1993.
Cash equivalents - Cash equivalents include all investments purchased
----------------
with an original maturity of 90 days or less which have virtually no risk of
loss of value of the principal amount of the investment.
Inventories - Inventories are valued at the lower of cost or market.
-----------
Cost is determined by the last-in, first-out (LIFO) method for sugar, packaging
materials, and certain other items. Cost for the remaining inventory
categories is determined using the first-in, first-out (FIFO) and moving
average methods. Futures gains and losses related to purchase commitments are
included in inventory.
Futures transactions and interest rate swaps - The Company uses
--------------------------------------------
futures and other financial instruments as hedges in its inventory purchasing
and cash management programs. Gains and losses on such transactions related to
inventory are matched to specific inventory purchases and charged or credited
to cost of sales as such inventory is sold. Gains and losses on transactions
related to loans are recognized during the period in which the related
instruments are outstanding. In connection with the Company's futures trading
activity, the Company maintains deposits with futures brokers. These deposits
are included in "Other current assets".
Investments in marketable securities - The Company invests in
------------------------------------
marketable securities directly and through certain investment partnerships and
mutual funds. At October 3, 1993 and January 3, 1993 the estimated fair market
values of these investments approximated the carrying values of $19,733,000 and
$15,500,000, respectively, based on quoted market prices and dealer quotes.
These investments are included in "Other current assets" at October 3, 1993 and
"Other assets" and "Other current assets" at January 3, 1993.
24
<PAGE> 25
Property, plant and equipment - Property, plant and equipment is valued
-----------------------------
at cost less accumulated depreciation and amortization. For financial
reporting purposes, depreciation is computed on the straight-line method.
Accelerated depreciation methods are used for tax purposes on $254,519,000 of
equipment. Asset costs totalling $27,098,000 are not being depreciated for tax
purposes because the Company retained the original tax bases for the assets at
Michigan Sugar Company when it was acquired. These costs have been adjusted
effective January 4, 1993 due to the adoption of FAS 109. See further
discussion at Note 7.
Accrued expenses related to beet operations - Michigan Sugar Company
-------------------------------------------
(Michigan) operates five beet processing plants which produce refined sugar
from sugar beets. These plants are operated generally from October through
February and then, from March through September, are repaired for the next
processing cycle. As sugar is processed from October through February,
Michigan accrues estimated repair costs and other costs to be incurred in March
through September and includes such costs in inventory and, as the sugar is
sold, in cost of sales.
Fair value of financial instruments - For cash, cash equivalents,
-----------------------------------
accounts receivable, accounts payable and accrued expenses, the carrying
amounts approximate fair value because of the short maturities of these
instruments.
Revenue recognition - The Company recognizes revenue as product is
-------------------
shipped.
Reclassifications - Certain prior year amounts have been reclassified
-----------------
to conform to current year presentation.
Note 2 - Change in Fiscal Year End:
- -----------------------------------
On July 21, 1993, the Company changed its fiscal year end from the
Sunday closest to December 31 to the Sunday closest to September 30 beginning
with the nine-month period ended October 3, 1993. The decision to change the
fiscal year end was made to conform the Company's financial reporting to the
natural business year of the sugar industry. To aid comparative analysis, the
Company has presented below the pro forma consolidated statements of operations
and of cash flows through income before change in accounting principle for each
of the two twelve- month periods ended October 3, 1993 and September 27, 1992.
The pro forma information has been prepared using the Company's historical
results of operations and cash flows assuming that the new year end had
previously been adopted. Consequently the $3,030,000 charge discussed in Note
1 is not included in the pro forma results of operations.
25
<PAGE> 26
Consolidated Statements of Operations (Pro forma)
(In thousands except for shares and per share amounts)
<TABLE>
<CAPTION>
For the Fiscal Year Ended
---------------------------
September 27,
October 3, 1992
1993 Unaudited
----------- -------------
<S> <C> <C>
Net sales $ 1,122,889 $ 1,127,417
----------- -----------
Operating expenses:
Cost of sales and operating
expenses 1,009,068 995,771
Selling, general and
administrative expenses 57,102 58,500
Depreciation and amortization 25,204 22,760
----------- -----------
1,091,374 1,077,031
----------- -----------
Income from operations 31,515 50,386
----------- -----------
Other income and (expenses):
Interest and other investment
income 1,970 2,289
Interest expense (13,118) (9,710)
Other income (expense) 1,016 (614)
----------- -----------
(10,132) (8,035)
----------- -----------
Income before income taxes and
change in accounting principle 21,383 42,351
Provision for income taxes 6,750 15,365
----------- -----------
Income before change in
accounting principle $ 14,633 $ 26,986
=========== ===========
Income per weighted average
share outstanding before
change in accounting principle $ .56 $ 1.01
=========== ===========
Weighted average shares
outstanding 26,245,194 26,619,812
=========== ===========
</TABLE>
26
<PAGE> 27
Consolidated Statements of Cash Flows (Pro forma)
(In thousands of dollars)
<TABLE>
<CAPTION>
For the Fiscal Year Ended
--------------------------
September 27,
October 3, 1992
1993 Unaudited
---------- -------------
<S> <C> <C>
Cash flows from operations:
Income before change in accounting
principle $ 14,633 $ 26,986
Adjustments to reconcile net income
to net cash provided by operations -
Depreciation and amortization 25,204 22,760
Provision for deferred income taxes (1,331) (2,879)
Other 6 698
Working capital changes affecting cash
provided by operations -
Accounts receivable (12,716) 3,729
Inventories (6,848) (33,552)
Other current assets (14,898) 1,261
Trade accounts payable 27,997 10,737
Income taxes accrued (5,892) 855
Accrued expenses related to beet
operations - -
Other liabilities and accrued
expenses (2,640) (2,394)
-------- --------
Cash provided by operations 23,515 28,201
-------- --------
Cash flows from investing activities:
Additions to property, plant and
equipment (48,631) (42,253)
Purchase of King Packaging Company, Inc. (8,925) -
Purchase of net assets of Raceland
Sugars, Inc. - (18,232)
Acquisition of long-term investments (4,845) -
Decrease (increase) in investments of
unexpended IDB funds included in
other assets 401 (13,065)
Other 1,844 3,650
-------- --------
Cash used for investing activities (60,156) (69,900)
-------- --------
Cash flows from financing activities:
Increase in short-term borrowings 24,300 2,000
Increase in long-term debt 80,411 33,000
Payments of long-term debt (52,043) (1,522)
Dividends paid to stockholders (17,589) (13,616)
Treasury stock repurchases (977) (9,926)
Treasury stock issues - 2,216
Other 123 829
-------- --------
Cash provided by financing activities 34,225 12,981
-------- --------
Cash flows for year (2,416) (28,718)
Cash and cash equivalents, beginning
of year 9,897 38,615
-------- --------
Cash and cash equivalents, end of year $ 7,481 $ 9,897
======== ========
</TABLE>
27
<PAGE> 28
Note 3 - Acquisitions:
- ----------------------
On July 7, 1993, the Company acquired all of the outstanding common
stock of King Packaging Company, Inc., a supplier of plastic cutlery and
customized meal kits to the foodservice and healthcare industries. The
acquisition was accounted for as a purchase, and the acquisition costs of the
assets acquired and the liabilities assumed are as follows (in thousands of
dollars):
<TABLE>
<S> <C>
Current assets $10,330
Inventories 1,770
Property, plant and equipment 4,757
Value of non-compete agreements 8,203
Other assets 290
-------
Assets acquired 25,350
Liabilities assumed (977)
-------
$24,373
=======
</TABLE>
On October 4, 1991, the Company acquired certain assets and assumed
certain liabilities of Raceland Sugars, Inc., a raw cane sugar mill and related
property. The acquisition was accounted for as a purchase, and the acquisition
costs of the assets acquired and liabilities assumed are as follows (in
thousands of dollars):
<TABLE>
<S> <C>
Inventories $ 1,068
Property, plant & equipment 15,798
Value of non-compete agreement and
other assets 1,627
-------
Assets acquired 18,493
Liabilities assumed (261)
-------
$18,232
=======
</TABLE>
The effect of these acquisitions was not material to the consolidated
results of operations of the Company.
Note 4 - Inventories:
- ---------------------
A summary of inventories by method of pricing and class is as follows:
<TABLE>
<CAPTION>
October 3, January 3,
1993 1993
---------- ----------
(In thousands of dollars)
<S> <C> <C>
Last-in, first-out $104,005 $228,309
First-in, first-out 9,137 8,885
Moving average 32,497 35,380
-------- --------
$145,639 $272,574
======== ========
Raw materials and work-in-process $ 76,802 $119,490
Packaging materials, parts and
supplies 26,002 26,505
Finished goods 42,835 126,579
-------- --------
$145,639 $272,574
======== ========
</TABLE>
28
<PAGE> 29
The replacement cost of inventories exceeded reported cost by
approximately $11,616,000 at October 3, 1993 and $7,511,000 at January 3, 1993.
Note 5 - Property, Plant and Equipment:
- ---------------------------------------
Property, plant and equipment is summarized as follows:
<TABLE>
<CAPTION>
October 3, January 3,
1993 1993
---------- ----------
(In thousands of dollars)
<S> <C> <C>
Land $ 8,405 $ 6,384
Buildings 87,162 81,233
Machinery and equipment 289,442 253,132
Leasehold improvements 1,159 1,163
Projects-in-process 21,990 13,523
--------- ---------
408,158 355,435
Less - Accumulated depreciation
and amortization (159,111) (129,306)
--------- ---------
$ 249,047 $ 226,129
========= =========
</TABLE>
Repairs and maintenance expense was $26,706,000 for the nine-month
period ended October 3, 1993, $24,662,000 for the nine-month period ended
September 27, 1992 (unaudited), $33,879,000 for the twelve-month period ended
January 3, 1993, and $31,853,000 for the twelve-month period ended December 29,
1991.
Note 6 - Long-term Debt and Credit Arrangements:
- ------------------------------------------------
Long-term debt is summarized as follows:
<TABLE>
<CAPTION>
October 3, January 3,
1993 1993
---------- ----------
(In thousands of dollars)
<S> <C> <C>
Senior notes - $50,000,000 Series A at 8.35% and
$20,000,000 Series B at 7.15% with final
maturity 2002 $ 70,000 $ 70,000
Long-term debt supported by revolving credit
facilities with banks 20,000 10,000
Notes payable to bank from 1996 to 1998 related to
ESOP trust with interest at 85% or 86% of LIBOR 15,500 15,500
Variable rate industrial revenue bonds 28,000 28,000
Present value of non-compete agreements related to
the purchase of King Packaging, payable monthly
from 1993 to 1998, discounted at 5% 7,808 -
Other notes and capital leases payable 3,191 4,167
-------- --------
144,499 127,667
Less - Current portion (2,421) (1,203)
-------- --------
$142,078 $126,464
======== ========
</TABLE>
The carrying value of the Company's long-term debt exceeds the fair value by
$6.8 million at October 3, 1993. The carrying value of adjustable-rate
long-term debt approximates market value based on the frequency of repricing of
these issues. The market value of fixed-rate long-term debt was estimated
based on the present value of expected cash flows using current market rates
and the Company's incremental borrowing rate for debt with similar terms.
29
<PAGE> 30
During the twelve month period ended January 3, 1993, the Company
entered into a 10-year loan for $70,000,000 with three insurance companies.
Series A for $50,000,000 has a fixed interest rate of 8.35% and an effective
rate of 8.1%. The proceeds were used to repay existing long-term debt
outstanding on the Company's revolving credit lines. Series B for $20,000,000
has a fixed coupon rate of 7.15%, and an effective rate of 6.98%. These funds
will be used to finance capital projects at existing production facilities.
The Company has entered into "Interest Rate Exchange Agreements," more
commonly called "interest rate swaps," which fixed the rate on $50,000,000 of
the Company's debt for a period of approximately three years at an averaged
fixed rate of 8.57%. However, in order to take advantage of the current low
short-term interest rate environment, during the last quarter of the
twelve-month period ended January 3, 1993, the Company entered into an interest
rate swap agreement on a principal amount of $50,000,000 whereby the Company
will receive a fixed rate of 4.54% and pay the counter-parties based on 6-month
LIBOR which was set at 3.375% at October 3, 1993. The total estimated fair
value of these interest rate swaps at October 3, 1993 is $(5.9) million. The
fair value of interest rate swaps is the estimated amount the Company would
receive or pay to terminate the swap agreements at the reporting date, taking
into account current market interest rates. The Company views these swap
agreements as part of its overall long-term financing program and has no plans
to terminate the agreements. The Company is exposed to credit loss in the
event of non-performance by the other party to the interest rate swap
agreements. However, the Company does not anticipate non-performance by the
counter-parties to the transactions.
At October 3, 1993, the Company had $145,000,000 in revolving credit
facilities with banks which is committed through September 1996 with an option
to extend the agreement through September 1998. The Company has $20,000,000
outstanding under these facilities which it treats as long-term debt and
$26,300,000 outstanding which it treats as short-term borrowings. The
revolving credit facilities, in general, enable the Company to borrow funds at
the bank's cost of funds plus approximately 1/2%. The Company pays a
commitment fee of 3/16% on the unused portion of these facilites.
At October 3, 1993, the Company had $15,500,000 in notes payable
related to the ESOP trust. These notes carry a tax-advantaged rate of interest
equal to 85% or 86% of LIBOR.
The "Variable rate industrial revenue bonds" consist of two issues of
bonds for $4,500,000 each due in 2000, an issue for $3,500,000 due in 2003, an
issue for $2,500,000 due in 2005, an issue for $6,000,000 due in 2007, and an
issue for $7,000,000 due in 2017. The rate on these bonds can vary as
frequently as every seven days in order to sell the bonds at par value. During
the nine-month period ended October 3, 1993 and the twelve-month period ended
January 3, 1993, the average interest rate on these bonds was 2.5% and 3.0%,
respectively. If for some reason the two $4,500,000 bonds cannot be marketed,
the Company has an agreement with the bank which acts as the marketing agent
for the bonds whereby the bank would buy and hold the bonds until their
maturity and
30
<PAGE> 31
would receive interest at a rate of 65% of the prime interest rate. If the
other issues could not be marketed by the bank, the Company would have an
obligation to market the bonds themselves or repurchase them. To enhance the
marketability of the bonds, the bank/marketing agent has issued its letter of
credit for the life of the bonds to guarantee payment of the bonds on the
Company's behalf. Also, the bonds are secured by financing statements on
project-related equipment, the cost of which approximates the bond amounts.
Short-term borrowings, including borrowings under the Company's
revolving credit facilities which were for temporary working capital needs, are
summarized as follows:
<TABLE>
<CAPTION>
For the Nine For the Twelve
Months Ended Months Ended
------------ --------------
October 3, January 3,
1993 1993
---------- ----------
(In thousands of dollars)
<S> <C> <C>
Daily average outstanding borrowings $ 49,816 $ 23,040
Daily weighted average interest rate 3.42% 4.33%
Maximum borrowings $ 85,500 $ 39,674
Amount outstanding at year-end $ 26,300 $ 30,000
</TABLE>
The carrying value of short-term borrowings approximates market value based on
the frequency of repricing and short-term nature of these issues.
The most restrictive loan agreement of the Company requires that the
Company maintain stockholders' equity of $174,703,000 plus 20% of consolidated
net income beginning with fiscal year 1994 and ending with calendar year 1996
and that the Company maintain certain financial ratios. The Company was in
compliance with these requirements at October 3, 1993.
Interest expense was $10,226,000 for the nine-month period ended
October 3, 1993, $7,634,000 for the nine-month period ended September 27, 1992
(unaudited), $10,526,000 for the twelve-month period ended January 3, 1993, and
$9,820,000 for the twelve-month period ended December 29, 1991. Cash payments
of interest were $9,377,000 for the nine-month period ended October 3, 1993,
$7,403,000 for the nine-month period ended September 27, 1992, $9,336,000 for
the twelve-month period ended January 3, 1993, and $10,037,000 for the
twelve-month period ended December 29, 1991.
Annual maturities of long-term debt each year for the next five fiscal
years are $2,421,000 in 1994, $1,994,000 in 1995, $26,307,000 in 1996,
$7,617,000 in 1997, $7,400,000 in 1998, and $98,760,000 in subsequent years
through 2017.
Note 7 - Income Taxes:
- ----------------------
The Company prospectively adopted Statement of Financial Accounting
---------------------------------
Standards No. 109 - Accounting for Income Taxes (FAS 109) effective January 4,
- -----------------------------------------------
1993, the first day of the nine month period ended October 3, 1993. The
adoption of FAS 109 changed the Company's method of accounting for income taxes
from the deferred method (Accounting
31
<PAGE> 32
Principles Board Opinion No. 11) to an asset and liability approach.
Previously the Company deferred the past tax effects of timing differences
between financial reporting and taxable income. The asset and liability
approach requires the recognition of deferred tax liabilities and assets for
the expected future tax consequences of temporary differences between the
carrying amounts and the tax bases of other assets and liabilities.
Under FAS 109, assets and liabilities acquired in business
combinations accounted for under the purchase method are assigned their fair
values, and deferred taxes are provided for lower or higher tax bases. Under
APB 11, values assigned were net-of-tax. In adopting FAS 109, the Company
adjusted the carrying amounts of the Michigan Sugar Company fixed assets and
LIFO inventories acquired in 1984. Pretax income from operations for the
nine-month period ended October 3, 1993 was reduced by $5,600,000 representing
additional cost of sales and depreciation expense resulting from the higher
carrying amounts.
The net adjustments to the January 4, 1993 balance sheet to adopt FAS
109 resulted in a $600,000 credit to net income. This amount is reflected in
the accompanying consolidated statement of operations for the nine-month period
ended October 3, 1993 as a cumulative effect of a change in accounting
principle. It primarily represents the impact of adjusting deferred taxes to
reflect the then current tax rate of 34% as opposed to the higher tax rates
that were in effect during the Michigan acquisition in 1984.
Pretax income from continuing operations for all periods presented was
taxed exclusively in the United States. The provision for income taxes which
has been accrued by the Company is composed of the following:
<TABLE>
<CAPTION>
For the Nine Months Ended For the Fiscal Year Ended
------------------------- -------------------------
September 27,
October 3, 1992 January 3, December 29,
1993 Unaudited 1993 1991
---------- ------------- ---------- ------------
(In thousands of dollars)
<S> <C> <C> <C> <C>
Current federal $ (3,692) $ 2,015 $ 13,412 $ 27,517
Current state (232) 595 763 2,165
Deferred federal 4,796 7,163 (666) (7,714)
Deferred state 102 130 119 (170)
Tax rate increase 181 - - -
-------- -------- -------- --------
Provision charged to
continuing operations 1,155 9,903 13,628 21,798
Benefit credited to
stockholders' equity
for minimum pension
liability adjustment (5,502) - - -
-------- -------- -------- --------
Total provision $ (4,347) $ 9,903 $ 13,628 $ 21,798
======== ======== ======== ========
</TABLE>
Cash payments of income taxes amounted to $11,834,000 for the
nine-month period ended October 3, 1993, $16,197,000 for the nine-month period
ended September 27, 1992, $16,774,000 for the twelve-month period ended January
3, 1993 and $27,649,000 for the twelve-month period ended December 29, 1991.
32
<PAGE> 33
Deferred income tax liabilities (assets) are comprised of the
following at October 3, 1993 (in thousands of dollars):
<TABLE>
<S> <C>
Depreciation $ 24,824
Other post employment benefits (11,395)
Accrued pension liability (8,513)
Deferred compensation (4,844)
Tax benefit purchases 4,114
Other non-current (235)
--------
Total net non-current liability 3,951
--------
Other accrued expenses (1,118)
Inventory 452
Other current (658)
--------
Total net current asset (1,324)
--------
Net deferred liability $ 2,627
========
</TABLE>
The components of the Company's deferred income tax provisions
calculated under APB 11 and the tax effects of each are summarized below:
<TABLE>
<CAPTION>
For the Nine
Months Ended For the Fiscal Year Ended
------------- -------------------------
September 27,
1992 January 3, December 29,
Unaudited 1993 1991
------------- ---------- ------------
(In thousands of dollars)
<S> <C> <C> <C>
Increase of current federal
taxes resulting from tax
benefit purchases $ (714) $ (787) $(1,447)
Excess of tax over book
depreciation 879 1,439 371
Employee related expenses
recognized in different periods
for book and tax purposes (1,106) (1,562) (1,214)
Expenses related to sugar beet
processing recognized in
different periods for book
and tax purposes 8,299 (77) (3,266)
Other (65) 440 (2,328)
------- ------- -------
$ 7,293 $ (547) $(7,884)
======= ======= =======
</TABLE>
A non-current deferred tax debit of $10,671,000 related to the
cumulative effect of a change in accounting principle for postretirement health
care and life insurance benefits is included in "Deferred income taxes" at
January 3, 1993.
A deferred tax asset of $12,080,000 related to timing differences on
current assets and liabilities is included in "Other current assets" at January
3, 1993.
A reconciliation between the provision for income taxes and the amount
computed by applying the U. S. federal income tax rate of 34% to
33
<PAGE> 34
income before income taxes and change in accounting principle is as follows:
<TABLE>
<CAPTION>
For the Nine Months Ended For the Fiscal Year Ended
------------------------- -------------------------
September 27,
October 3, 1992 January 3, December 29,
1993 Unaudited 1993 1991
---------- ------------- ---------- ------------
(In thousands of dollars)
<S> <C> <C> <C> <C>
Computed "expected" tax expense $1,068 $9,393 $13,929 $20,420
Increases (reductions) in taxes
resulting from:
State income taxes, net of
federal income tax benefit 95 436 581 1,316
Non-deductible depreciation
expense - 312 416 429
Tax-free income earned (107) (215) (519) (656)
Tax credit recapture - - - 322
ESOP dividends (547) - - -
Effect of tax rate increase 181 - - -
Other 465 (23) (779) (33)
------ ------ ------- -------
Provision for income taxes $1,155 $9,903 $13,628 $21,798
====== ====== ======= =======
</TABLE>
The Company increased its deferred income tax liability in the last
quarter of the transition period as a result of legislation enacted during 1993
increasing the corporate tax rate from 34% to 35% commencing in 1993.
Note 8 - Stockholders' Equity:
- ------------------------------
The stockholders have ratified an amendment to the Certificate of
Incorporation of the Company authorizing a class of preferred stock to consist
of up to 1,000,000 shares of $.50 par value stock. Under the amendment, the
Board of Directors can determine the characteristics of the preferred stock
without further stockholder approval.
Note 9 - Employee Retirement Plans and Other Benefit Plans:
- -----------------------------------------------------------
Substantially all employees and retirees of the Company are covered by
noncontributory defined benefit pension plans. The Company also provides
supplemental pension benefits to certain retired employees. The supplemental
pension benefits are determined annually by the Board of Directors and are
expensed as paid.
Benefits under the noncontributory defined benefit plans for
bargaining employees are primarily based on years of service; benefits for
other employees are generally based on years of service and the employee's
highest consecutive three-year average earnings. The Company's policy is to
contribute at least the minimum amount required by the Employee Retirement
Income Security Act as determined by the plans' consulting actuaries. At
October 3, 1993, the assets of these plans are invested primarily in common
stocks, mutual funds, bond funds, and cash equivalents including 217,587
shares of the Company's common stock with a market value of $3,565,000,
$3,565,000 of the Company's common stock at October 3, 1993. The plan received
$116,710 in dividends from these shares during the nine-month period ended
October 3, 1993.
34
<PAGE> 35
The following table sets forth the status of the Company's defined
benefit pension plans and the pertinent assumptions used in computing this
information as of the end of each respective period:
<TABLE>
<CAPTION>
October 3, January 3,
1993 1993
---------- ----------
(In thousands of dollars)
<S> <C> <C>
Actuarial present value of
benefit obligation based
on current compensation:
Vested $(67,785) $(57,329)
Nonvested (7,871) (4,878)
-------- --------
Accumulated benefit obligation (75,656) (62,207)
Increase in present value of
benefit obligation to reflect
projected compensation increases (8,217) (11,265)
-------- --------
Projected benefit obligation (83,873) (73,472)
Plan assets at fair value 57,393 55,478
-------- --------
Projected benefit obligation
(in excess of) plan assets (26,480) (17,994)
Unrecognized prior service cost 4,540 4,825
Unrecognized net loss 26,139 16,826
Unrecognized net asset
at transition (4,503) (5,310)
Adjustment required to recognize
minimum liability (17,912) (5,211)
-------- --------
Pension liability included
in "Deferred employee benefits" $(18,216) $ (6,864)
======== ========
</TABLE>
The table above is based on a discount rate of 7.5 % for the
nine-month period ended October 3, 1993 and 9% for the twelve-month period
ended January 3, 1993, and projected salary increases of 4% for the nine-month
period ended October 3, 1993 and 6% for the twelve-month period ended January
3, 1993.
Pension expense for the nine-month period ended October 3, 1993, the
twelve-month period ended January 3, 1993, and the twelve-month period ended
December 29, 1991 is summarized as follows:
<TABLE>
<CAPTION>
Nine Months Twelve Twelve
Ended Months Ended Months Ended
----------- ------------ ------------
October 3, January 3, December 29,
1993 1993 1991
----------- ------------ ------------
(In thousands of dollars)
<S> <C> <C> <C>
Costs related to services provided
by employees during the year $ 1,573 $ 2,180 $ 1,942
Interest cost on projected benefit
obligation 4,910 6,212 6,050
Actual gain on plan assets (2,476) (1,620) (1,806)
Net amortization and deferrals (2,692) (5,589) (5,331)
------- ------- -------
Pension expense related to
defined benefit plans 1,315 1,183 855
Supplemental pension benefits 92 124 125
------- ------- -------
Total pension expense $ 1,406 $ 1,307 $ 980
======= ======= =======
</TABLE>
Pension expense for the nine-month period ended September 27, 1992 was $824,000
(unaudited).
35
<PAGE> 36
The expected long-term rate of return on plan assets used in
determining "Pension expense related to defined benefit plans" as shown above
was 10.5% for the nine-month period ended October 3, 1993, 11% for the
twelve-month periods ended January 3, 1993 and December 29, 1991, respectively.
For fiscal 1994, the rate has been lowered to 9.5%.
The Company sponsors a non-qualified defined benefit pension plan to
supplement its qualified plan for certain management employees. The
actuarially determined expense related to this plan was $800,000 for the
nine-month period ended October 3, 1993, $1,010,000 for the twelve-month period
ended January 3, 1993, and $878,000 for the twelve-month period ended December
29, 1991. Of these expenses, the interest portion amounted to $569,000 for the
nine-month period ended October 3, 1993, $707,000 for the twelve-month period
ended January 3, 1993, and $615,000 for the twelve-month period ended December
29, 1991. The remaining balance of the expense in each year is primarily
service cost. Total expense related to this plan for the nine-month period
ended September 27, 1992 was approximately $701,000 (unaudited).
The table below summarizes the status of this plan at the end of each
respective period:
<TABLE>
<CAPTION>
October 3, January 3,
1993 1993
---------- ----------
(In thousands of dollars)
<S> <C> <C>
Actuarial present value of
benefit obligation based
on current compensation:
Vested $ (9,063) $(7,701)
Nonvested (993) (682)
-------- -------
Accumulated benefit obligation (10,056) (8,383)
Increase in present value of
benefit obligation to reflect
projected compensation increases (267) (224)
-------- -------
Projected benefit obligation (10,323) (8,607)
Unrecognized prior service cost 130 131
Unrecognized net loss 1,937 740
Unrecognized net obligation
at transition 229 289
Adjustment required to recognize
minimum liability (2,029) (936)
-------- -------
Pension liability included
in "Deferred employee benefits" $(10,056) $(8,383)
======== =======
</TABLE>
The table above is based on a discount rate of 7.5% for the nine-month period
ended October 3, 1993 and 9% for the twelve-month period ended January 3, 1993,
and projected salary increases of 4% for the nine-month period ended October 3,
1993 and 6% for the twelve-month period ended January 3, 1993.
In accordance with the provisions of Statement of Financial Accounting
---------------------------------
Standards No. 87 - Employers' Accounting for Pensions, the Company has recorded
- -----------------------------------------------------
an additional minimum liability at October 3, 1993 and at January 3, 1993
representing the excess of the accumulated benefit obligation over the fair
value of plan assets and accrued pension liability. The additional liability
has been offset by an intangible asset which is included in "Other assets" to
the extent of
36
<PAGE> 37
previously unrecognized prior service cost. Amounts in excess of previously
unrecognized prior service cost are recorded net of the related deferred tax
benefit as a reduction of stockholders' equity of $9,453,000 at October 3,
1993, $1,241,000 at September 27, 1992, and $1,437,000 at January 3, 1993.
The Company also sponsors a deferred compensation plan which permits
directors and certain management employees to defer portions of their
compensation and earn a guaranteed interest rate on the deferred amounts. The
salaries which have been deferred since the plan's inception have been accrued
and the primary expense, other than salaries, related to this plan is interest
on the deferred amounts. Interest expense during the nine-month period ended
October 3, 1993, nine-month period ended September 27, 1992, twelve-month
period ended January 3, 1993, and twelve-month period ended December 29, 1991
includes $1,247,000, $1,037,000 (unaudited), $1,449,000, and $1,196,000,
respectively, related to this plan. The Company has included in "Deferred
employee benefits" $13,191,000 at October 3, 1993 and $11,365,000 at January 3,
1993 to reflect its liability under this plan.
To fund this plan and the non-qualified defined benefit pension plan,
the Company purchases whole-life insurance contracts on the related directors
and employees. The Company has included in "Other assets" $12,303,000 at
October 3, 1993 and $11,330,000 at January 3, 1993 which represent the
capitalized value of these policies. If all of the assumptions regarding
mortality, interest rates, policy dividends, and other factors are realized,
the Company will ultimately realize its full investment plus a factor for the
use of its money.
The Company sponsors a 401(k) or Employee Retirement Savings Plan
(SAVERS) in which substantially all non-bargaining employees are eligible to
participate. The SAVERS allows eligible employees to save a portion of their
salary on a pre-tax basis. The Company matches 25% of employee contributions
of up to 6% of their eligible salary. The Company has expensed contributions
to the SAVERS of $266,000 for the nine-month period ended October 3, 1993,
$257,000 (unaudited) for the nine-month period ended September 27, 1992,
$345,000 for the twelve-month period ended January 3, 1993 and $338,000 for the
twelve-month period ended December 29, 1991.
The Company also sponsors an Employee Stock Ownership Plan (ESOP) in
which substantially all non-bargaining employees participate. Contributions,
if any, are determined annually at the discretion of the Board of Directors and
are primarily based upon the earnings of the Company. The contribution may be
made in the form of cash or Company stock. The Company has expensed
contributions to the ESOP of $1,235,000 for the nine-month period ended October
3, 1993, $1,359,000 (unaudited) for the nine-month period ended September 27,
1992, $1,500,000 for the twelve-month period ended January 3, 1993 and
$3,720,000 for the twelve-month period ended December 29, 1991.
The Company maintains a profit-based incentive plan which currently
covers approximately 1,100 qualified employees. Compensation under this
37
<PAGE> 38
plan was $0 for the nine-month period ended October 3, 1993, $1,553,000 for the
nine-month period ended September 27, 1992 (unaudited), $979,000 for the
twelve-month period ended January 3, 1993, and $5,344,000 for the twelve-month
period ended December 29, 1991. The liability for each respective twelve month
period was included in "Other liabilities and accrued expenses" and paid in the
following year.
The Company also sponsors benefit plans that provide postretirement
health care and life insurance benefits to certain employees who meet the
applicable eligibility requirements. Effective December 30, 1991, the first
day of the twelve month period ended January 3, 1993, the Company adopted
Statement of Financial Accounting Standards No. 106 - Employers' Accounting for
- -------------------------------------------------------------------------------
Postretirement Benefits Other Than Pensions (FAS 106). This standard requires
- -------------------------------------------
accrual of the expected cost of providing postretirement benefits to employees
and their beneficiaries and covered dependents during the years that employees
provide services. Prior to December 30, 1991, the Company expensed the costs
of health care and life insurance benefits provided to retirees in the period
in which these costs were paid.
The cumulative effect of this change in accounting principle was a
one-time charge of $28,841,000 before taxes, or $18,170,000 net of tax benefits
calculated at an estimated effective tax rate of 37%. Annual postretirement
benefits expense for the nine month period ended September 27, 1992 increased
$345,000 (unaudited) net of tax benefits, or $.02 (unaudited) per share, due to
the implementation of FAS 106. Annual postretirement benefits expense for the
twelve month period ended January 3, 1993 increased $613,000 net of tax
benefits, or $.02 per share, due to the implementation of FAS 106. Results of
operations for the interim quarters of calendar 1992 have been restated to
reflect this change in accounting principle (see Note 11). The cost of
postretirement health care and life insurance benefits for the transition
period and fiscal 1992 under FAS 106 includes the following (in thousands of
dollars):
<TABLE>
<CAPTION>
Nine Months Ended Twelve Months Ended
October 3, 1993 January 3, 1993
----------------- -------------------
<S> <C> <C>
Service cost $ 428 $ 547
Interest cost 1,878 2,451
------ ------
Total postretirement benefit expense $2,306 $2,998
====== ======
</TABLE>
The cost of postretirement health care and life insurance benefits for the
nine-month period ended September 27, 1992 was approximately $2,107,000
(unaudited). The cost of these benefits during the twelve-month period ended
December 29, 1991 as recorded under the previous accounting principle was
$2,242,000.
38
<PAGE> 39
The actuarial and recorded liabilities for these postretirement
benefits, none of which have been funded as of the end of each respective
period, were as follows (in thousands of dollars):
<TABLE>
<CAPTION>
October 3, 1993 January 3, 1993
--------------- ---------------
<S> <C> <C>
Accumulated postretirement benefit
obligation:
Retirees $(17,670) $(12,187)
Active participants (13,920) (17,627)
-------- --------
Accumulated benefit obligation (31,590) (29,814)
Unrecognized net loss 704 -
-------- --------
Accrued postretirement benefit
obligation included in
"Deferred employee benefits" $(30,886) $(29,814)
======== ========
</TABLE>
The assumed discount rate was 7.5% for the nine-month period ended
October 3, 1993 and 8.5% for the twelve-month period ended January 3, 1993.
For the nine-month period ended October 3, 1993, the rate of increase in the
per capita costs of covered health care benefits was assumed to be 9% for the
first 5 years, 7% for the next five years and 5% thereafter. For the
twelve-month period ended January 3, 1993, the rate of increase was assumed to
be 10% for the first 5 years, 8% for the next five years, and 6% thereafter.
Increasing the health care cost trend rate assumption by one percentage point
would increase the accumulated postretirement benefit obligation as of October
3, 1993 by approximately $2,590,000 and would increase periodic postretirement
benefit cost by approximately $224,000 for the nine-month period ended October
3, 1993.
Note 10 - Commitments and Contingencies:
- ----------------------------------------
The Company has contracted for the purchase of a substantial portion
of its future raw sugar requirements. Prices to be paid for raw sugar under
these contracts are based in some cases on market prices during the anticipated
delivery month. In other cases prices are fixed and, in these instances, the
Company generally obtains commitments from its customers to buy the sugar prior
to fixing the price, or enters into futures transactions to hedge the
commitment.
In May 1992, the United States Customs Service (Customs) issued a bill
to the Company for approximately $7,500,000 seeking reimbursement for certain
drawback claims filed by the Company with Customs during the period 1984
through 1988. Customs has alleged that drawback claims prepared by the Company
for certain export shipments of sugar during these years are technically and/or
substantively deficient and that the Company, therefore, is not entitled to
monies previously received under these drawback claims. The Company disputes
Customs' findings and intends to vigorously protest the decision of Customs.
While it is not certain how long the protest (administrative appeal) process
will take, based upon the facts known to the Company at this time, the ultimate
resolution of this matter is not expected to have a materially adverse effect
on the Company's financial position or results of operations.
39
<PAGE> 40
In July 1991, National Utility Service, Inc. (NUS) filed a complaint
against the Company in the United States District Court for the District of New
Jersey seeking compensation and damages arising from a contract between the
Company and NUS for energy cost saving recommendations. Discovery in this case
has been completed, and based upon the information obtained, the Company has
determined that NUS is seeking approximately $4,000,000 inclusive of
prejudgment interest from the Company. The Company intends to vigorously
defend the action and strongly contends that no amounts are due to NUS.
40
<PAGE> 41
Note 11 - Quarterly Financial Information (Unaudited):
- ------------------------------------------------------
Unaudited quarterly financial information for the nine-month period
ended October 3, 1993 and the twelve-month period ended January 3, 1993 is as
follows:
<TABLE>
<CAPTION>
First Second Third
Quarter Quarter Quarter
Ended Ended Ended
April 4, July 4, October 3,
1993 1993 1993
-------- ------- ----------
(In thousands of dollars except for per share amounts)
<S> <C> <C> <C>
Nine-month period
ended October 3, 1993
- ---------------------
Net sales $255,015 $270,979 $292,122
Gross profit 25,507 26,042 22,836
Income from operations 6,076 5,317 446
Income (loss) before change in
accounting principle 2,653 1,490 (2,157)
Per share .10 .06 (.08)
Net income (loss) 3,253 1,490 (2,157)
Per share .12 .06 (.08)
</TABLE>
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
Ended Ended Ended Ended
March 29, June 28, September 27, January 3,
1992 1992 1992 1993
--------- -------- ------------- ----------
(In thousands of dollars except for per share amounts)
<S> <C> <C> <C> <C>
Twelve-month period
ended January 3, 1993
- ---------------------
Net sales $253,795 $281,973 $297,573 $304,773
Gross profit 28,254 34,220 32,446 34,536
Income from operations 9,449 14,507 10,411 14,776
Income before change in
accounting principle 4,587 7,557 5,580 9,616
Per share .17 .28 .21 .37
Net (loss) income (13,583) 7,557 5,580 9,616
Per share (.51) .28 .21 .37
</TABLE>
Quarterly results of operations for the nine-month period ended October 3, 1993
reflect the change in the Company's fiscal year end. The First Quarter Ended
April 4, 1993 has been restated to reflect the cumulative effect of adoption of
FAS 109 of $600,000 effective January 4, 1993. The Third Quarter reflects a
$4,900,000 increase in cost of sales and the associated $1,900,000 income tax
benefit representing the liquidation of LIFO basis inventory acquired in 1984
as further explained in Note 1 to the financial statements.
Quarterly results of operations for the twelve-month period ended January 3,
1993 have been restated to reflect the adoption of FAS 106. In addition to the
cumulative after-tax charge of $18,170,000 recorded in the first quarter of the
twelve-month period ended January 3, 1993, the adoption of this accounting
principle reduced income from operations by $243,000 and net income by $153,000
as previously reported for each of the four quarters of the twelve-month period
ended January 3, 1993.
41
<PAGE> 42
SAVANNAH FOODS & INDUSTRIES, INC.
AND SUBSIDIARIES
Schedule V
----------
Property, Plant and Equipment
-----------------------------
(In thousands of dollars)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F
-------- -------- -------- -------- -------- --------
Balance at the Balance at
beginning of Transfers the end of
Classification the period Additions Retirements add (deduct) the period
- -------------- -------------- --------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C>
For the 39 Weeks Ended October 3, 1993
--------------------------------------
Land $ 6,384 $ 2,021 $ - $ - $ 8,405
Buildings 81,233 5,929 - - 87,162
Machinery &
equipment 253,132 40,235 (3,925) - 289,442
Leasehold
improvements 1,163 - (4) - 1,159
Projects-in-
process 13,523 8,467 - - 21,990
--------- --------- --------- --------- ---------
$ 355,435 $ 56,652(1) $ (3,929) $ - $ 408,158
========= ========= ========= ========= =========
For the 53 Weeks Ended January 3, 1993
--------------------------------------
Land $ 6,504 $ 45 $ (165) $ - $ 6,384
Buildings 66,755 15,825 (1,347) - 81,233
Machinery &
equipment 234,446 24,612 (5,926) - 253,132
Leasehold
improvements 1,982 - (819) - 1,163
Projects-in-
process 8,704 4,819 - - 13,523
--------- --------- --------- --------- ---------
$ 318,391 $ 45,301 $ (8,257) $ - $ 355,435
========= ========= ========= ========= =========
For the 52 Weeks Ended December 29, 1991
----------------------------------------
Land $ 5,293 $ 1,211 $ - $ - $ 6,504
Buildings 54,613 12,624 (482) - 66,755
Machinery &
equipment 190,963 48,522 (5,039) - 234,446
Leasehold
improvements 1,963 20 (1) - 1,982
Projects-in-
process 15,420 (6,716) - - 8,704
--------- --------- --------- --------- ---------
$ 268,252 $ 55,661 $ (5,522) $ - $ 318,391
========= ========= ========= ========= =========
</TABLE>
(1) Additions for the 39 weeks ended October 3, 1993 include $10,446 for
the write-up of assets at Michigan Sugar Company due to the adoption
of FAS 109 (see Note 7 for further discussion) and $10,852 for the
assets acquired as a result of the acquisition of King Packaging
Company.
42
<PAGE> 43
SAVANNAH FOODS & INDUSTRIES, INC.
AND SUBSIDIARIES
Schedule VI
Accumulated Depreciation and Amortization of
Property, Plant and Equipment
(In thousands of dollars)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F
-------- -------- -------- -------- -------- --------
Balance at Additions
the beginning charged to cost Balance at
of the and Transfers the end of
Classification period expense Retirements add (deduct) the period
- -------------- ------------- --------------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C>
For the 39 Weeks Ended October 3, 1993
--------------------------------------
Buildings $ 25,483 $ 3,057 $ - $ - $ 28,540
Machinery &
equipment 103,029 28,477 (1,775) - 129,731
Leasehold
improvements 794 46 - - 840
--------- --------- --------- --------- ---------
$ 129,306 $ 31,580(1) $ (1,775) $ - $ 159,111
========= ========= ========= ========= =========
For the 53 Weeks Ended January 3, 1993
--------------------------------------
Buildings $ 22,485 $ 3,722 $ (724) $ - $ 25,483
Machinery &
equipment 88,683 18,595 (4,249) - 103,029
Leasehold
improvements 924 56 (186) - 794
--------- --------- --------- --------- ---------
$ 112,092 $ 22,373 $ (5,159) $ - $ 129,306
========= ========= ========= ========= =========
For the 52 Weeks Ended December 29, 1991
----------------------------------------
Buildings $ 19,656 $ 2,966 $ (137) $ - $ 22,485
Machinery &
equipment 76,808 16,275 (4,400) - 88,683
Leasehold
improvements 831 112 (19) - 924
--------- --------- --------- --------- ---------
$ 97,295 $ 19,353 $ (4,556) $ - $ 112,092
========= ========= ========= ========= =========
</TABLE>
(1) Additions for the 39 weeks ended October 3, 1993 include $7,754 for
the write-up of assets at Michigan Sugar Company due to the adoption
of FAS 109 (see Note 7 for further discussion) and $6,095 for the
accumulated depreciation on assets acquired as a result of the
acquisition of King Packaging Company.
43
<PAGE> 44
Item 9. Disagreements on Accounting and Financial Disclosure.
- ---------------------------------------------------------------
None.
PART III
--------
Item 10. Directors and Executive Officers of Registrant.
- ---------------------------------------------------------
The information relating to the Directors of the Company is
incorporated by reference from the "ELECTION OF DIRECTORS" section, pages 4
through 7, of the Company's Proxy Statement for its Annual Meeting of
Stockholders to be held on February 17, 1994, to be filed pursuant to Section
14 of the Securities Exchange Act of 1934 ("1994 Proxy Statement"). The
information relating to the Executive Officers of the Company is incorporated
by reference from the "MANAGEMENT OF SAVANNAH FOODS & INDUSTRIES, INC."
section, page 8 of the 1994 Proxy Statement.
Item 11. Executive Compensation.
- ---------------------------------
The information relating to executive compensation is incorporated by
reference from the "EXECUTIVE COMPENSATION" section, pages 9 through 11, of the
1994 Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
- -------------------------------------------------------------------------
The information relating to the security ownership of certain
beneficial owners and management is incorporated by reference from the "STOCK
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" section, pages 2 and 3,
of the 1994 Proxy Statement.
Item 13. Certain Relationships and Related Transactions.
- ---------------------------------------------------------
The information relating to certain relationships and related
transactions is incorporated by reference from the "CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS" section, page 15, and the "COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION" section, page 13, of the 1994 Proxy
Statement.
44
<PAGE> 45
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
- ---------------------------------------------------------------------------
(a) (1) and (2) see index of Financial Statements, Item 8 (a) and 8
(b), page 17.
(a) (3) Exhibits
<TABLE>
<CAPTION>
Page Exhibit
No. Number Description
- --- ------ -----------
<S> <C> <C>
3-1 Articles of Incorporation, as amended, is hereby incorporated by reference to Commission File No. 0-5002 on Form
10-K for the year ended January 3, 1993 as Exhibit 3-1.
51 3-2 By-Laws, as amended.
10-1* Profit Sharing and Management Incentive Compensation Plan is hereby incorporated by reference to Commission File
No. 0-5002 on Form 10-K for the year ended January 3, 1993 as Exhibit 10-1.
10-2* Supplemental Executive Retirement Plan, as amended and restated, is hereby incorporated by reference to Commission
File No. 0-5002 on Form 10-K for the year ended January 3, 1993 as Exhibit 10-2.
10-3* Amendment No. 1 to the Supplemental Executive Retirement Plan is hereby incorporated by reference to Commission
File No. 0-5002 on Form 10-K for the year ended January 3, 1993 as Exhibit 10-3.
10-4* Deferred Compensation Plan for Key Employees, as amended and restated, is hereby incorporated by reference to
Commission File No. 0-5002 on Form 10-K for the year ended January 3, 1993 as Exhibit 10-4.
10-5* Amendment No. 1 to the Deferred Compensation Plan for Key Employees is hereby incorporated by reference to
Commission File No. 0-5002 on Form 10-K for the year ended January 3, 1993 as Exhibit 10-5.
</TABLE>
45
<PAGE> 46
<TABLE>
<CAPTION>
Page Exhibit
No. Number Description
- --- ------ -----------
<S> <C> <C>
10-6* Employment Agreement - W. W. Sprague, Jr., as amended, is incorporated by reference to Commission File No. 0-5002
filed on Form 10-K for the year ended December 29, 1991 as Exhibit 10-7.
10-7* Amendment to Employment Agreement - W. W. Sprague, Jr. - is hereby incorporated by reference to Commission File
No. 0-5002 on Form 10-K for the year ended January 3, 1993 as Exhibit 10-7.
10-8* Employment Agreement - Ernest Flegenheimer, as amended, is incorporated by reference to Commission File No. 0-5002
filed on Form 10-K for the year ended December 29, 1991 as Exhibit 10-8.
10-9* Amendment to Employment Agreement - Ernest Flegenheimer - is hereby incorporated by reference to Commission File
No. 0-5002 on Form 10-K for the year ended January 3, 1993 as Exhibit 10-9.
10-10* Employment Agreements with all other Executive Officers of the Company are incorporated by reference to Commission
File No. 0-5002 filed on Form 10-K for the year ended January 1, 1989 as Exhibit 10-10.
10-11* Employment Agreement - W. W. Sprague, III is incorporated by reference to Commission File No. 0-5002 filed on Form
10-K for the year ended December 29, 1991 as Exhibit 10-10.
50 24-1 Consent of Independent Accountants
</TABLE>
* Indicates exhibits which are management contracts or compensatory
agreements.
(b) Reports on Form 8-K - During the quarter ended October 3, 1993,
Registrant filed a current report on Form 8-K, dated
July 21, 1993, reporting that the Registrant changed its fiscal
year end from the Sunday closest to December 31 to the Sunday
closest to September 30 beginning with the fiscal year ended
October 3, 1993.
(c) See Item 14 (a)(3) above.
(d) Not applicable.
46
<PAGE> 47
UNDERTAKINGS
For the purposes of complying with the amendments to the rules
governing Form S-8 (effective July 13, 1990) under the Securities Act of 1933,
the undersigned Registrant hereby undertakes as follows, which undertaking
shall be incorporated by reference into Registrant's Registration Statements on
Form S-8 Number 2-63448, Monthly Investment Plan for Employees of Savannah
Foods & Industries, Inc. (filed June 19, 1984 as amended on April 3, 1992); and
Number 2-94678, Employee Retirement Savings Account Plan (filed December 22,
1984).
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to Directors, Officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a Director, Officer
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such Director, Officer or
controlling persons in connection with the securities being registered, the
Registrant 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.
47
<PAGE> 48
SIGNATURE
---------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
SAVANNAH FOODS & INDUSTRIES, INC.
Dated:September 15, 1994 By: /S/William W. Sprague, III
------------------ ---------------------------
William W. Sprague, III
President
48
<PAGE> 49
Pursuant to the requirements of the Securities Act of 1934, this
report has been signed by the following persons on behalf of the Company in the
capacities and on the dates indicated:
<TABLE>
<S> <C> <C>
/S/William W. Sprague, Jr. Chairman and Director September 15 , 1994
- -------------------------- (PRINCIPAL EXECUTIVE ----
William W. Sprague, Jr. OFFICER)
/S/William W. Sprague, III President and Director September 15 , 1994
- -------------------------- (PRINCIPAL OPERATING ----
William W. Sprague, III OFFICER)
/S/William R. Steinhauer Senior Vice President - September 15 , 1994
- -------------------------- Finance & Administration & ----
William R. Steinhauer Assistant Secretary (PRINCIPAL
FINANCIAL AND PRINCIPAL
ACCOUNTING OFFICER)
/S/F. Sprague Exley Vice President-Distribution September 16 , 1994
- -------------------------- and Director ----
F. Sprague Exley
/S/W. Waldo Bradley Director September 16 , 1994
- -------------------------- ----
W. Waldo Bradley
/S/John D. Carswell Director September 16 , 1994
- -------------------------- ----
John D. Carswell
/S/Hugh M. Tarbutton Director September 16 , 1994
- -------------------------- ----
Hugh M. Tarbutton
/S/Arthur Gignilliatt, Jr. Director September 16 , 1994
- -------------------------- ----
Arthur Gignilliatt, Jr.
/S/Robert L. Harrison Director September 16 , 1994
- -------------------------- ----
Robert L. Harrison
/S/Arnold Tenenbaum Director September 16 , 1994
- -------------------------- ----
Arnold Tenenbaum
</TABLE>
49
<PAGE> 1
EXHIBIT 3-2
Page 1
SAVANNAH FOODS & INDUSTRIES, INC.
BY-LAWS
With Amendments Adopted Through
July 21, 1993
50
<PAGE> 2
EXHIBIT 3-2
Page 2
BY-LAWS
OF
SAVANNAH FOODS & INDUSTRIES, INC.
(A DELAWARE CORPORATION)
ARTICLE I.
OFFICES
SECTION 1. Registered Office in Delaware. The registered office of
SAVANNAH FOODS & INDUSTRIES, INC. (hereinafter called the "Corporation") in the
State of Delaware shall be in the City of Wilmington, County of New Castle, and
the registered agent in charge thereof shall be The Corporation Trust Company,
100 West Tenth Street, Wilmington, Delaware 19801.
SECTION 2. Other Offices. The Corporation may have such other office or
offices at such other place or places, either within or without the State of
Delaware, as the Board of Directors may from time to time determine or as shall
be necessary or appropriate for the conduct of the business of the Corporation.
ARTICLE II.
MEETINGS OF STOCKHOLDERS
SECTION 1. Place of Meeting. Meetings of stockholders may be held at
such place or places, either within or without the State of Delaware, as the
Board of Directors may from time to time determine, or as shall be necessary or
appropriate for the conduct of the business of the Corporation.
SECTION 2. Annual Meetings. The annual meeting of stockholders for the
election of directors and the transaction of other business shall be held on
the third Thursday in February in each year commencing with the year 1994. At
each annual meeting the stockholders entitled to vote shall elect a Board of
Directors and may transact such other business as may properly come before the
meeting.
Section 2 Amended 7/21/93
SECTION 3. Special Meetings. A special meeting of the stockholders, or
of any class thereof entitled to vote, for any purpose or purposes, may be
called at any time by the Chairman of the Board, the President, or by order of
the Board of Directors.
SECTION 4. Notice of Meeting. Except as otherwise expressly required by
law, written notice of each meeting of stockholders, whether annual or special,
stating the place, date and hour of the meeting, shall be given not less than
ten days nor more than fifty days before the date on which the meeting is to be
held, to each stockholders of record entitled to vote thereat by delivering a
notice thereof to him personally or by mailing such notice in a postage prepaid
51
<PAGE> 3
EXHIBIT 3-2
Page 3
envelope directed to him at his address as it appears on the stock ledger of
the Corporation, unless he shall have filed with the Secretary of the
Corporation a written request that notices intended for him be directed to
another address, in which case such notice shall be directed to him at the
address designated in such request. Every notice of a special meeting of the
stockholders, besides stating the time and place of the meeting, shall state
briefly the objects or purposes thereof.
Notices of any meeting of stockholders shall not be required to be
given to any stockholder who shall attend such meeting in person or by proxy
unless such attendance is for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened; and, if any stockholder shall, in
person or by attorney thereunto authorized, in writing or by telegraph, cable
or wireless, waive notice of any meeting of the stockholders, whether prior to
or after such meeting, notice thereof need not be given to him.
If a meeting is adjourned to another time or place and if any announcement
of the adjourned time and place is made at the meeting, it shall not be
necessary to give notice of the adjourned meeting unless the adjournment is for
more than thirty days or the Board of Directors, after adjournment, fixes a new
record date for the adjourned meeting.
SECTION 5. List of Stockholders. It shall be the duty of the Secretary
or other officer of the Corporation who shall have charge of the stock ledger
to prepare and make, at least ten days before every meeting of the
stockholders, a complete list of the stockholders entitled to vote thereat,
arranged in alphabetical order, and showing the address of each stockholder and
the number of shares registered in his name. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall be
kept and produced at the time and place of the meeting during the whole time
thereof and subject to the inspection of any stockholder who may be present.
The original or duplicate stock ledger shall be the only evidence as to who are
the stockholders entitled to examine such list or the books of the Corporation
or to vote in person or by proxy at such meeting.
SECTION 6. Quorum. At each meeting of the stockholders, the holders of
record of a majority of the issued and outstanding stock of the Corporation
entitled to vote at such meeting, present in person or by proxy, shall
constitute a quorum for the transaction of business, except where otherwise
provided by law, the Certificate of Incorporation or these By-Laws. In the
absence of a quorum, any officer entitled to preside at, or act as Secretary
of, such meeting shall have the power to adjourn the meeting from time to time
until a quorum shall be constituted. At any such adjourned meeting at which a
quorum shall be present any business may be transacted which might have been
transacted at the meeting as originally called, but only those stockholders
entitled to vote at the meeting as originally noticed shall be entitled to vote
at any adjournment or adjournments thereof.
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SECTION 7. Voting. Except as otherwise provided in the Certificate of
Incorporation, at every meeting of stockholders each holder of record of the
issued and outstanding stock of the Corporation entitled to vote at such
meeting shall be entitled to one vote, in person or by proxy, for each such
share of stock entitled to vote held by such stockholder, but no proxy shall be
voted after three years from its date unless the proxy provides for a longer
period. Shares of its own stock belonging to the Corporation or to another
corporation, if a majority of the shares entitled to vote in the election of
directors of such corporation is held by the corporation, shall neither be
entitled to vote nor counted for quorum purposes. Nothing in this Section
shall be construed as limiting the right of the Corporation to vote its own
stock held by it in a fiduciary capacity. At all meetings of the stockholders,
a quorum being present, all matters shall be decided by majority vote of the
shares of stock entitled to vote held by stockholders present in person or by
proxy, except as otherwise required by the Certificate of Incorporation or the
laws of the State of Delaware.
Unless demanded by a stockholder of the corporation present in person
or by proxy at any meeting of the stockholders and entitled to vote thereat, or
so directed by the Chairman of the meeting or required by the laws of the State
of Delaware, the vote thereat on any question need not be by ballot. On a vote
by ballot, each ballot shall be signed by the stockholder voting, or in his
name by his proxy, if there by such proxy, and shall state the number of shares
voted by him and the number of votes to which each share is entitled.
SECTION 8. Inspectors at Shareholders' Meetings. The Board of Directors,
in advance of any shareholders' meeting may appoint one or more inspectors to
act at the meeting or any adjournment thereof. If inspectors are not so
appointed, the person presiding at the shareholders' meeting may, and on the
request of any shareholder entitled to vote thereat shall, appoint one or more
inspectors. In case any person appointed fails to appear or act, the vacancy
may be filled by appointment made by the Board of Directors in advance of the
meeting or at the meeting by the person presiding thereat. Each inspector,
before entering the discharge of his duties, shall take and sign an oath
faithfully to execute the duties of inspector at such meeting with strict
impartiality and according to the best of his ability.
The inspectors shall determine the number of shares outstanding and the
voting power of each, the shares represented at the meeting, the existence of a
quorum, the validity and effect of proxies, and shall receive votes, ballots or
consents, hear and determine all challenges and questions arising in connection
with the right to vote, count and tabulate all votes, ballots or consents,
determine the result, and do such acts as are proper to conduct the election or
vote with fairness to all shareholders. On request of the person presiding at
the meeting or any shareholder entitled to vote thereat, the inspectors shall
make a report in writing of any challenge, question or matter determined by
them and execute a certificate of any fact found by them. Any report or
certificate made by them shall be prima facia evidence of the facts stated and
the vote as certified by them.
SECTION 9. Nominations of Directors. Only persons who are nominated in
accordance with the following procedures shall be eligible for election as
directors of the Corporation. Nominations of persons for election to the Board
of Directors may be made at any annual meeting
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of stockholders, or at any special meeting of stockholders called in the manner
set forth in Article II, Section 3 hereof for the purpose of electing
directors, (a) by or at the direction of the Board of Directors (or any duly
authorized committee thereof) or (b) by any stockholder of the Corporation (i)
who is a stockholder of record on the date of the giving of the notice provided
for in this Section 9 and on the record date for the determination of
stockholders entitled to vote at such meeting and (ii) who complies with the
notice procedures set forth in this Section 9.
In addition to any other applicable requirements, for a nomination to be
made by a stockholder, such stockholder must have given timely notice thereof
in proper written form to the Secretary of the Corporation.
To be timely, a stockholder's notice to the Secretary must be delivered to
or mailed and received at the principal executive offices of the Corporation
(a) in the case of an annual meeting, not less than sixty (60) days nor more
than ninety (90) days prior to the anniversary date of the immediately
preceding annual meeting of stockholders; provided, however, that in the event
that the annual meeting is called for a date that is not within thirty (30)
days before or after such anniversary date, notice by the stockholder in order
to be timely must be so received not later than the close of business on the
tenth (10th) day following the day on which such notice of the date of the
annual meeting was mailed or such public disclosure of the date of the annual
meeting was made, whichever first occurs; and (b) in the case of a special
meeting of stockholders called in the manner set forth in Article II, Section 3
hereof for the purpose of electing directors, not later than the close of
business on the tenth (10th) day following the day on which notice of the date
of the special meeting was mailed or public disclosure of the date of the
special meeting was made, whichever first occurs.
To be in proper written form, a stockholder's notice to the Secretary must
set forth (a) as to each person whom the stockholder proposes to nominate for
election as a director (i) the name, age, business address and residence
address of the person, (ii) the principal occupation or employment of the
person, (iii) the class or series and number of shares of capital stock of the
Corporation which are owned beneficially or of record by the person and (iv)
any other information relating to the person that would be required to be
disclosed in a proxy statement or other filings required to be made in
connection with solicitations of proxies for election of directors pursuant to
Section 14 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations promulgated thereunder; and (b) as to the
stockholder giving the notice (i) the name and record address of such
stockholder, (ii) the class or series and number of shares of capital stock of
the Corporation which are owned beneficially or of record by such stockholder,
(iii) a description of all arrangements or understandings between such
stockholder and each proposed nominee and any other person or persons
(including their names) pursuant to which the nomination(s) are to be made by
such stockholder, (iv) a representation that such stockholder intends to appear
in person or by proxy at the meeting to nominate the persons named in its
notice and (v) any other information relating to such stockholder that would be
required to be disclosed in a proxy statement or other filings required to be
made in connection with solicitations of proxies for election of directors
pursuant to Section 14 of the Exchange Act and the rules and regulations
promulgated thereunder. Such notice must be accompanied by a
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written consent of each proposed nominee to being named as a nominee and to
serve as a director if elected.
No person shall be eligible for election as a director of the Corporation
unless nominated in accordance with the procedures set forth in this Section 9.
If the Chairman of the meeting determines that a nomination was not made in
accordance with the foregoing procedures, the Chairman shall declare to the
meeting that the nomination was defective nomination shall be disregarded.
Section 9 Inserted 12/6/91
SECTION 10. Action at Meetings of Stockholders. No business may be
transacted at an annual meeting of stockholders, other than business that is
either (a) specified in the notice of meeting (or any duly authorized committee
thereof), (b) otherwise properly brought before the annual meeting by or at the
direction of the Board of Directors (or any duly authorized committee thereof)
or (c) otherwise properly brought before the annual meeting by any stockholder
of the Corporation (i) who is a stockholder of record on the date of the giving
of the notice provided for in this Section 10 and on the record date for the
determination of stockholders entitled to vote at such annual meeting and (ii)
who complies with the notice procedures set forth in this Section 10.
In addition to any other applicable requirements, for business to be
properly brought before an annual meeting by a stockholder, such stockholder
must have given timely notice thereof in proper written form to the Secretary
of the Corporation.
To be timely, a stockholder's notice to the Secretary must be delivered to
or mailed and received at the principal executive offices of the Corporation
not less than sixty (60) days nor more than ninety (90) days prior to the
anniversary date of the immediately preceding annual meeting of stockholders;
provided, however, that in the event that the annual meeting is called for a
date that is not within thirty (30) days before or after such anniversary date,
notice by the stockholder in order to be timely must be so received not later
than the close of business on the tenth (10th) day following the day on which
such notice of the date of the annual meeting was mailed or such public
disclosure of the date of the annual meeting was made, whichever first occurs.
To be in proper written form, a stockholder's notice to the Secretary must
set forth as to each matter such stockholder proposes to bring before the
annual meeting (i) a brief description of the business desired to be brought
before the annual meeting, (ii) the name and record address of such
stockholder, (iii) the class or series and number of shares of capital stock of
the Corporation which are owned beneficially or of record by such stockholder,
(iv) a description of all arrangements or understandings between such
stockholder and any other person or persons (including their names) in
connection with the proposal of such business by such stockholder and any
material interest of such stockholder in such business and (v) a representation
that such stockholder intends to appear in person or by proxy at the annual
meeting to bring such business before the meeting.
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No business shall be conducted at the annual meeting of stockholders
except business brought before the annual meeting in accordance with the
procedures set forth in this Section 10, provided, however, that, once business
has been properly brought before the annual meeting in accordance with such
procedures, nothing in this Section 10 shall be deemed to preclude discussion
by any stockholder of any such business. If the Chairman of an annual meeting
determines that business was not properly brought before the annual meeting in
accordance with the foregoing procedures, the Chairman shall declare to the
meeting that the business was not properly brought before the meeting and such
business shall not be transacted.
The business transacted at any special meeting of stockholders called in
the manner set forth in Article II, Section 3 hereof shall be confined to the
business stated in the notice of meeting, as determined by the person or
persons calling such meeting.
Section 10 Inserted 12/6/91
ARTICLE III.
BOARD OF DIRECTORS
SECTION 1. General Powers. The property, business and affairs of the
Corporation shall be managed by the Board of Directors.
SECTION 2. Number, Term of Office, and Qualifications. The number of
Directors shall not be less than three nor more than thirteen; provided
however, that the number of Directors to be elected at the annual meeting in
1987 shall be four, to be elected for three-year terms expiring in 1990. And,
upon approval of this amendment by the stockholders, the Directors then in
office will elect a fifth member for a three-year term expiring in 1990.
Commencing in the year 1988, all Directors to be elected shall be
elected for three-year terms except as hereinafter provided in Section 9 of
Article III of these By-Laws with respect to Directors elected to fill certain
vacancies; provided, however, that the director elected by the Board of
Directors in 1990 to fill the vacancy created by the increase in the number of
Directors to 13 will serve until the annual meeting in 1991. No person shall
be eligible to serve as a Director beyond December 31 of the year in which he
reaches the age of sixty-eight, and no person shall be eligible to serve as a
Director beyond December 31 of the third year following retirement from his
principal occupation of employment at the time he first became a Director.
Each Director shall continue in office until the annual meeting in the year in
which his term expires and until his successor shall have been elected and
qualified, or until his death, resignation, or removal.
Section 2 Amended 2/1/91
SECTION 3. Quorum and Manner of Acting. Unless otherwise provided by
law, the presence of one-third of the whole Board of Directors shall be
necessary to constitute a quorum for the transaction of business. In the
absence of a quorum, a majority of the directors present
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may adjourn the meeting from time to time until a quorum shall be present.
Notice of any adjourned meeting need not be given. At all meetings of
directors, a quorum being present, all matters shall be decided by the
affirmative vote of a majority of the directors present, except as otherwise
required by the laws of the State of Delaware.
SECTION 4. Place of Meetings, etc. The Board of Directors may hold its
meetings and keep the books and records of the Corporation at such place or
places within or without the State of Delaware, as the Board may from time to
time determine.
SECTION 5. Annual Meeting. As promptly as practicable after each annual
meeting of stockholders for the election of directors, the Board of Directors
shall meet in Savannah, Georgia, for the purpose of organization, the election
of officers and the transaction of other business. Notice of such meeting need
not be given. If such meeting is held at any other time, notice thereof must
be given as hereinafter provided for special meetings of the Board of Directors
or a consent and waiver of notice thereof must be signed by all the directors.
SECTION 6. Regular Meetings. The Board of Directors shall hold six
regular meetings annually at such time and place, within or without the State
of Delaware, as determined by the President and specified in the notice of call
thereof. The President shall endeavor to schedule the regular meetings during
a calendar year at approximately even intervals if practicable. Notice of call
of such meetings shall specify the time and date and be given each director in
writing mailed no less than five (5) days nor more than thirty (30) days before
such meeting.
Section 6 Amended 3/4/88
SECTION 7. Special Meetings. Special meetings of the Board of Directors
may be called at any time by the Chairman of the Board, when there is such an
officer, or by the President, and shall be called at the request in writing of
any three directors, on not less than three hours' notice to each director
personally or by telegram, or on not less than three days' written notice to
each director by mail. Notice of call of each special meeting shall state the
date, time and place of the meeting. In lieu of the notice to be given as set
forth above, a waiver thereof in writing, signed by the director or directors
entitled to said notice, whether prior to or after the meeting in question,
shall be deemed equivalent thereto for purposes of this Section 7. No notice to
or waiver by any director with respect to any special meeting shall be required
if such director shall be present at said meeting.
SECTION 8. Resignation. Any director of the Corporation may resign at
any time by giving written notice to the Chairman of the Board, when there is
such an officer, or to the President or the Secretary of the Corporation. The
resignation of any director shall take effect upon receipt of notice thereof or
at such later time as shall be specified in such notice; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective. When one or more directors shall resign from the Board,
effective at a future date, a majority of the directors then in office,
including those who have so resigned, shall have power to fill such vacancy or
vacancies, the vote thereon to take effect when such resignation or
resignations shall become effective.
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(A). Any director or the entire Board of Directors may be removed, with
or without cause, by an affirmative vote of 75% of the holders of the
outstanding stock of the Corporation entitled to vote in the election of
directors, considered for this purpose as one class, taking such action at an
annual meeting of stockholders or at a special meeting of stockholders duly
called for such purpose. Alternatively, any director may be removed for cause
at any time by the affirmative vote of a majority of the directors then in
office.
SECTION 9. Vacancies. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, though less than a quorum,
unless otherwise provided by the Certificate of Incorporation or the laws of
the State of Delaware. Each director so chosen shall hold office for the
unexpired term of the director whose place shall be vacant, provided that each
director so chosen to fill the vacancy created by increase in the number of
directors shall be elected for a term to be designated by the Directors at the
time of his election and shall continue in office for such term and until his
successor shall have been elected and qualified, and until his death,
resignation or removal.
SECTION 10. Compensation of Directors. Directors, by resolutions of the
Board, may be appropriately compensated for their work as directors, and for
attendance at each regular or special meeting of the Board, or any Committee
thereof. Nothing herein contained shall be construed to preclude any director
from servicing the Corporation or any subsidiary thereof in any other capacity
and receiving compensation therefore.
SECTION 11. Executive Committee and Other Committees. The Board of
Directors, by resolution adopted by a majority of the entire Board, may
designate from among its members an Executive Committee and other committees to
serve at the pleasure of the Board. Each committee shall consist of three or
more directors. Except as set forth below and as otherwise limited by the
General Corporation Law of the State of Delaware, the Executive Committee shall
have all of the authority of the Board of Directors. Each other committee
shall be empowered to perform such functions as may, by resolution, be
delegated to it by the Board.
The Board of Directors may designate one or more directors as alternate
members of any such committee, who may replace any absent member or members at
any meetings of such committee. Vacancies in any committee, whether caused by
resignation or by increase in the number of members constituting said
committee, shall be filled by a majority of the entire Board of Directors. The
Executive Committee may fix its own quorum and elect its own Chairman. In the
absence or disqualification of any member of such committee, the member or
members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in place of any such
absent or disqualified member.
The Board of Directors shall have power to change the membership of any
such committee at any time and to discharge any such committee, either with or
without cause, at any time. Each member of any such committee shall be paid
such fee, if any, as shall be fixed by the Board of Directors for each meeting
of such committee which he shall attend and, in addition, such
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transportation and other expenses actually incurred by him in going to the
meeting of such committee and returning therefrom as the Board of Directors
shall approve.
SECTION 12. Action Without Meeting. Any action required or permitted to
be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting if a written consent thereto is signed by all
members of the Board or of such committee, as the case may be, and such written
consent is filed with the minutes or proceedings of the Board or committee.
ARTICLE IV.
OFFICERS
SECTION 1. Number. The principal officers of the Corporation shall be a
President, one or more Vice Presidents, a Secretary and a Treasurer. The
Corporation may also have, at the discretion of the Board of Directors, a
Chairman of the Board of Directors, an Executive Vice President, and such other
officers as may be appointed in accordance with the provisions of these
By-Laws. The offices of Executive Vice President, or of a Vice President, the
Secretary and the Treasurer or any of them may be held by the same persons in
the discretion of the Board of Directors. The offices of President and
Treasurer may also be held by the same person.
SECTION 2. Election and Term of Office. The principal officers of the
Corporation shall be chosen annually by the Board of Directors at the annual
meeting thereof. Each such officer shall hold office until his successor shall
have been duly chosen and shall qualify, or until his death, or until he shall
resign or shall have been removed in the manner hereinafter provided.
SECTION 3. Subordinate Officers. In addition to the principal officers
enumerated in Section I of this Article IV, the Corporation may have one or
more Assistant Secretaries, one or more Assistant Treasurers, and such other
officers, agents and employees as the Board of Directors may deem necessary,
each of whom shall hold office for such period, have such authority, and
perform such duties as the President or the Board of Directors may from time to
time determine. The Board of Directors may delegate to any principal officer
the power to appoint and to remove any such subordinate officers, agents or
employees.
SECTION 4. Removal. Any officer may be removed, either with or without
cause, at any time, by resolution adopted by the Board of Directors at any
regular meeting of the Board, or at any special meeting of the Board called for
that purpose at which a quorum is present.
SECTION 5. Resignations. Any officer may resign at any time by giving
written notice to the Board of Directors or to the President or to the
Secretary. Any such resignation shall take effect upon receipt of such notice
or at any later time specified therein; and, unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective.
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SECTION 6. Vacancies. A vacancy in any office may be filled for the
unexpired portion of the term in the manner prescribed in these By-Laws for
election or appointment to such office for such term.
SECTION 7. Chairman of the Board. When there is a Chairman of the Board
he shall preside at all meetings of stockholders and at all meetings of the
Board of Directors. He shall perform such other duties and have such other
powers as the Board of Directors may from time to time prescribe.
SECTION 8. President. The President shall be the Chief Executive Officer
of the Corporation, and as such shall have general supervision of the affairs
of the Corporation, subject to the control of the Board of Directors. He shall
be an ex officio member of all standing committees. In the absence of the
Chairman of the Board, or whenever the office is vacant, the President shall
preside at all meetings of stockholders and at all meetings of the Board of
Directors. Subject to the control and direction of the Board of Directors the
President may enter into any contract or execute and deliver any instrument in
the name and on behalf of the Corporation. In general, he shall perform all
duties incident to the office of President, as herein defined, and all such
other duties as from time to time may be assigned to him by the Board of
Directors.
SECTION 9. Vice Presidents. When there is an Executive Vice President,
he shall, in the absence or disability of the President, perform the duties and
exercise the powers of the President. He shall perform such other duties and
have such other powers as the President or the Board of Directors may from time
to time prescribe. In the absence or disability of the Executive Vice
President, the Board of Directors shall determine the Vice President or other
officer to perform the duties and exercise the powers of the President.
Vice Presidents shall perform such duties and have such other powers as
the President or the Board of Directors may from time to time prescribe.
SECTION 10. Secretary. The Secretary, if present, shall act as secretary
at all meetings of the Board of Directors and of the stockholders, and keep the
minutes thereof in a book or books to be provided for that purpose; shall see
that all notices required to be given by the Corporation are duly given and
served; shall have charge of the stock records of the Corporation; shall see
that all reports, statements and other documents required by law are properly
kept and filed; and in general, shall perform all the duties incident to the
office of Secretary and such other duties as from time to time may be assigned
to him by the President or the Board of Directors.
SECTION 11. Treasurer. The Treasurer shall have charge and custody of,
and be responsible for, all funds and securities of the Corporation, and shall
deposit all such funds in the name of the Corporation in such banks or other
depositories as shall be selected by the Board of Directors. He shall exhibit
at all reasonable times his books of account and records to any of the
directors of the Corporation upon application during business hours at the
office of the Corporation where such books and records shall be kept; when
requested by the Board of Directors, shall render a statement of the condition
of the finances of the Corporation at any meeting of the Board or at the
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annual meeting of stockholders; shall receive, and give receipts for, moneys
due and payable to the Corporation from any source whatsoever; and in general,
shall perform all the duties incident to the office of the Treasurer and such
other duties as from time to time may be assigned to him by the President or
the Board of Directors. The Treasurer shall give such bond, if any, for the
faithful discharge of his duties as the Board of Directors may require.
SECTION 12. Salaries. The salaries of the principal officers shall be
fixed from time to time by the Board of Directors, and the salaries of any
other officers may be fixed by the President.
ARTICLE V.
SHARES AND THEIR TRANSFER
SECTION 1. Certificate for Stock. Every stockholder of the Corporation
shall be entitled to a certificate or certificates, to be in such form as the
Board of Directors shall prescribe, certifying the number of shares of the
capital stock of the Corporation owned by him.
SECTION 2. Stock Certificate Signature. The certificates for such stock
shall be numbered in the order in which they shall be issued and shall be
signed by the President or any Vice President and the Secretary or Treasurer of
the Corporation, and its seal shall be affixed thereto. If such certificate is
countersigned (1) by a transfer agent other than the Corporation or its
employee, or, (2) by a registrar other than the Corporation or its employee,
the signatures of such officers of the Corporation may be facsimiles. In case
any officer of the Corporation who has signed, or whose facsimile signature has
been placed upon any such certificate shall have ceased to be such officer
before such certificate is issued, it may be issued by the Corporation with the
same effect as if he were such officer at the date of issue.
SECTION 3. Stock Ledger. A record shall be kept by the Secretary,
transfer agent or by any other officer, employee or agent designated by the
Board of Directors of the name of the person, firm or corporation holding the
stock represented by such certificates, the number of shares represented by
such certificates, respectively, and the respective dates thereof, and in case
of cancellation, the respective dates of cancellation.
SECTION 4. Cancellation. Every certificate surrendered to the
Corporation for exchange or registration of transfer shall be cancelled, and no
new certificate or certificates shall be issued in exchange for any existing
certificate until such existing certificate shall have been so cancelled,
except in cases provided in Section 7 of this Article V.
SECTION 5. Registrations of Transfers of Stock. Registrations of
transfers of shares of the capital stock of the Corporation shall be made on
the books of the Corporation by the registered holder thereof, or by his
attorney thereunto authorized by power of attorney duly executed and filed with
the Secretary of the Corporation, or with a transfer clerk or a transfer agent
appointed as in Section 6 of this Article V provided, and on surrender of the
certificate or certificates for
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such shares properly endorsed and the payment of all taxes thereon. The person
in whose name shares of stock stand on the books of the Corporation shall be
deemed the owner thereof for all purposes as regards the Corporation; provided,
however, that whenever any transfer of shares shall be made for collateral
security, and not absolutely, it shall be so expressed in the entry of the
transfer if, when the certificates are presented to the Corporation for
transfer, both the transferor and the transferee request the Corporation to do
so.
SECTION 6. Regulations. The Board of Directors may make such rules and
regulations as it may deem expedient, not inconsistent with the Certificate of
Incorporation or these By-Laws, concerning the issue, transfer and registration
of certificates for shares of the stock of the Corporation. It may appoint, or
authorize any principal officer or officers to appoint, one or more transfer
clerks or one or more transfer agents and one or more registrars, and may
require all certificates of stock to bear the signature or signatures of any of
them.
SECTION 7. Lost, Stolen, Destroyed or Mutilated Certificates. As a
condition of the issue of a new certificate for shares of stock in the place of
any certificate theretofore issued and alleged to have been lost, stolen,
mutilated or destroyed, the Board of Directors, in its discretion, may require
the owner of any such certificate, or his legal representatives, to file with
the Corporation a bond in such sum and in such form as it may deem sufficient
to indemnify the Corporation against any claim that may be made against it on
account of the alleged loss, theft, mutilation or destruction of any such
certificate or the issuance of such new certificate. Proper evidence of such
loss, theft, mutilation or destruction shall be procured for the Board of
Directors, if it so requires. The Board of Directors, in its discretion, may
authorize the issuance of new certificates without any bond when in its
judgment it is proper to do so.
SECTION 8. Record Dates. For the purpose of determining the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock, or for the purpose of
any other lawful action, the Board of Directors may fix, in advance, a date as
a record date for any such determination of stockholders. Such record date
shall not be more than sixty nor less than ten days before the date of such
meeting, nor more than sixty days prior to any other action.
Section 8 Amended 12/6/91
ARTICLE VI.
INDEMNIFICATION
The Corporation shall, to the fullest extent permitted by Section 145 of
the General Corporation Law of the State of Delaware, indemnify any and all
persons whom it shall have power to indemnify under said Section from and
against any and all of the expenses, liabilities or other matters referred to
in, or covered by said Section.
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EXHIBIT 3-2
Page 14
ARTICLE VII.
MISCELLANEOUS PROVISIONS
SECTION 1. Corporate Seal. The Board of Directors shall provide a
corporate seal, which shall be in the form of a circle, and shall bear the name
of the Corporation and words and figures showing that it was incorporated in
the State of Delaware in the year 1969. The Secretary shall be the custodian
of the seal. The Board of Directors may authorize a duplicate seal to be kept
and used by any other officer.
SECTION 2. Fiscal Year. The fiscal year of the Corporation shall end on
the Sunday nearest September 30 in each year commencing with the year 1993.
Section 7 Amended 7/21/93
SECTION 3. Voting of Stocks Owned by the Corporation. The Board of
Directors may authorize any person in behalf of the Corporation to attend, vote
and grant proxies to be used at any meeting of stockholders of any corporation
(except this Corporation) in which the Corporation may hold stock.
SECTION 4. Dividends. Subject to the provisions of the Certificate of
Incorporation, the Board of Directors may, out of funds legally available
therefor, at any regular or special meeting declare dividends upon the capital
stock of the Corporation as and when they deem expedient. Before declaring any
dividend, there may be set apart out of any funds of the Corporation available
for dividends such sum or sums as the directors from time to time in their
discretion deem proper for working capital, or as a reserve fund to meet
contingencies, or for equalizing dividends, or for such other purposes as the
Board of Directors shall deem conducive to the interests of the Corporation.
ARTICLE VIII.
AMENDMENTS
The Board of Directors may alter, amend or repeal the By-laws of the
Corporation at any regular or special meeting of the Board of Directors.
Except as may otherwise be provided in the Certificate of Incorporation,
stockholders may alter, amend or repeal the By-laws of the Corporation at any
annual or special meeting of stockholders only upon the affirmative vote of a
majority of the stock of the Corporation issued and outstanding and entitled to
vote in respect thereof, provided that notice of the proposed alteration,
amendment or repeal is contained in the notice of such meeting. By-laws,
whether made or altered by the stockholders or by the Board of Directors, shall
be subject to alteration or repeal by the stockholders as in this Article VIII
above provided.
Article VIII Amended 12/6/91
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PRICE WATERHOUSE L.L.P. (LOGO)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectuses
constituting part of (i) the Registration Statement on Form S-8 (No. 2-63448),
as amended April 3, 1992, pertaining to the Monthly Investment Plan for
Employees of Savannah Foods & Industries, Inc., and (ii) the Registration
Statement on Form S-8 (No. 2-94678) pertaining to the Employee Retirement
Savings Account Plan of Savannah Foods & Industries, Inc., of our report dated
September 9, 1994, appearing on page 18 of this Form 10-K/A.
Price Waterhouse LLP
Savannah, Georgia
September 15, 1994
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