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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark one)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended September 29, 1996 or
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( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
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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 with zip code)
Registrant's telephone number, including area code (912)234-1261
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Securities registered pursuant to Section 12(b) of the Act:
Common Stock - Par Value: $.25 per share
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(Title of Class)
Securities registered pursuant to Section 12(g) of the Act:
None
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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
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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. ( )
At November 30, 1996, 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, 1996 was $373,894,293.
Documents Incorporated by Reference: Portions of the Registrant's Proxy
Statement for the Annual Meeting of Stockholders to be held on February 20, 1997
are incorporated by reference in Part III hereof.
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TABLE OF CONTENTS
PART I
Item 1. Business ................................................ 3
Statement on Business Risks and Forward Looking
Information ............................................ 5
Item 2. Properties .............................................. 6
Item 3. Legal Proceedings ....................................... 7
Item 4. Submission of Matters to a Vote of Security Holders ..... 7
PART II
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters .................................... 8
Item 6. Selected Financial Data ................................. 8
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations .................... 10
Item 8. Financial Statements and Supplementary Data ............. 15
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure .................... 37
PART III
Item 10. Directors and Executive Officers of the Registrant ...... 39
Item 11. Executive Compensation .................................. 39
Item 12. Security Ownership of Certain Beneficial Owners and
Management ............................................. 39
Item 13. Certain Relationships and Related Transactions .......... 39
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K............................................ 40
FORWARD LOOKING STATEMENTS-SAFE HARBOR PROVISIONS
Any statements in this Form 10-K regarding future market prices or
operating results or any other statements that are not historical facts
constitute "forward looking statements" within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
All forward looking statements involve risks and uncertainties. Any forward
looking statements in this document are intended to be subject to the safe
harbor protection provided by Sections 27A and 21E. For a discussion identifying
some important factors that could cause actual results to vary materially from
those anticipated in forward looking statements, see the "Competition" and
"Statement on Business Risks and Forward Looking Information" sections on pages
5 and 6 of this Form 10-K.
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PART I
Item 1. Business
Savannah Foods & Industries, Inc. (the "Registrant") 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.
The 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 Registrant and its wholly-owned subsidiaries, Savannah Foods
Industrial, Inc. and Dixie Crystals(R) Brands, Inc., are engaged in the refining
and marketing of a complete line of bulk and liquid sugars and sugar products,
including edible molasses and liquid animal feeds. They also produce and market
a complete line of packaged sugars and portion control items consisting of sugar
envelopes, artificial sweeteners, salt, pepper, non-dairy creamer, and certain
other products. Industrial and grocery products are marketed primarily in the
southeastern portion of the United States, Louisiana, and Texas, but are also
widely distributed into other states generally east of the Mississippi and south
of New England. Foodservice products are marketed throughout the United States.
Products are marketed under the trade names Dixie Crystals(R), Evercane(R),
Savannah Gold(R), and Quick'n Sweet(TM) but are also sold under the Registrant's
other controlled labels and under customers' private label brands. The
Registrant's saccharin-based sweetener is marketed under the trade name Sweet
Thing(R) and its aspartame-based sweetener is marketed under the trade name
Sweet Thing II(R). These products are marketed both by means of direct sales and
through brokers and are primarily distributed directly to the customer by common
carrier truck or railcar, including Registrant-owned vehicles.
Michigan Sugar Company, a wholly-owned subsidiary of the Registrant, and
its wholly-owned subsidiary, Great Lakes Sugar Company, are engaged in the
processing of sugarbeets into refined sugar and the production of beet pulp and
molasses. The refined sugar is marketed primarily in the states of Michigan and
Ohio, but is also distributed in the midwestern and eastern parts of the United
States. Packaged sugar is marketed under the trade name PIONEER(R), but is also
sold under customers' private label brands. These products are marketed both by
means of direct sales and through brokers and are primarily distributed
directly to the customer by common carrier truck or railcar, including
Registrant-owned vehicles. 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 normally sold to the
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Registrant's beet molasses desugarization facility for further processing to
recover additional sugar.
Due to a significant decrease in the number of sugarbeet acres
contracted to be grown in 1996 in the Ohio sugarbeet growing areas, the
Registrant has decided not to operate Great Lakes Sugar Company's beet
processing facility in Fremont, Ohio during fiscal 1997. In conjunction with
this decision, due to the lack of availability of reasonably priced molasses,
the Registrant has also decided not to operate its molasses desugarization
facility which is also located in Fremont.
King Packaging Company, Inc., a wholly-owned subsidiary of Dixie
Crystals(R) Brands, Inc., packs custom made meal kits for the food service
industry and provides complementary products to the sugar and portion control
products manufactured at the Registrant's other locations. These products are
marketed to the foodservice trade through-out the United States both by means
of direct sales and through brokers and are primarily shipped directly to
customers by common carrier truck.
During fiscal 1996, the Registrant sold the property, plant and
equipment and certain other operating assets of Raceland Sugars, Inc., its raw
sugar mill.
Raw Materials. A large portion of the raw sugar for the Registrant's
Port Wentworth, GA refinery, and all the raw sugar for the Clewiston, FL
refinery, is normally supplied by cane sugar producers in the state of Florida.
A large portion of the raw sugar for the Registrant's Gramercy, LA refinery is
normally supplied by cane sugar producers in the state of Louisiana. In the case
of the Savannah and Gramercy refineries, 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. The Registrant uses the futures
market as a hedging and purchasing mechanism, as circumstances warrant.
Michigan Sugar Company and its subsidiary, Great Lakes Sugar Company,
process sugarbeets under annual contracts from Michigan and Ohio farmers. The
land around the processing plants of the company is well suited to growing
sugarbeets. Until 1996, the company had not experienced difficulty in obtaining
a sufficient quantity of beets to support successful operation of its plants.
However, because of unusually high grain prices during the Spring 1996 planting
season, the company was unable to contract for a sufficient number of beet
sugar acres in Ohio to make operation of the Fremont, Ohio beet facility
economical. Also, the acreage contracted in Michigan has decreased from prior
years for the same reason, but the company has
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been able to contract enough acres to profitably operate the beet processing
plants in Michigan. 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 phases of the refined sugar business and all geographic
markets of the business engaged in by the Registrant and its subsidiaries are
highly competitive. This competition is 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. Competing cane sugar
refineries are located in Florida, Louisiana, Maryland, New York, Texas, and
California. Competing beet sugar processors are located in California, Colorado,
Idaho, Michigan, Minnesota, Montana, Nebraska, North Dakota, Oregon, Texas, and
Wyoming.
Competition is primarily based upon price, but is also based upon
product quality and customer service. At times, the cane sugar refiners are at a
competitive disadvantage to the beet sugar producers due to differing methods by
which raw materials are purchased. In the beet industry, the beet farmers
participate in any increase or decrease in the selling price of refined sugar.
However, in the cane industry, refiners purchase raw sugar at prices which are
kept artificially high by United States policy to support sugar farmers, and
which do not fluctuate in tandem with refined sugar selling prices.
Consequently, when competitive pressures reduce refined sugar prices, the
margins of cane sugar refiners are affected more adversely that those of beet
sugar producers.
Number of Employees. At September 29, 1996, Registrant and its
subsidiaries had 1,898 full-time employees. In addition, Michigan Sugar Company
and Great Lakes Sugar Company employ a number of seasonal workers during the
beet processing campaigns.
Statement on Business Risks and Forward Looking Information. The
Registrant generally does not make specific projections about future income or
provide other specific forward looking information. However, due to changes
brought about by the Private Securities Litigation Reform Act of 1995, we
believe it is appropriate to outline several key factors which impact the
Registrant's future performance.
All phases of the Registrant's business are very competitive with the
primary competitors being other sugar cane refiners and beet sugar processors.
Because sugar is a commodity, competition is based primarily upon price, but is
also based upon product quality and customer service. The Registrant is
diversified into all marketing
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and production (i.e. cane and beet) phases of the refined sugar industry, but
the majority of its capacity, approximately 85%, is cane sugar, with the
remaining 15% being beet sugar. Thus, its operating results are influenced
mostly by factors which affect the cane sugar industry.
Cane sugar refiners operate on large volumes and small margins.
Consequently, a small percentage change in sales prices or in the cost of raw
materials or manufacturing costs can result in a large percentage change in
income from operations.
In today's market, the primary driver of refined sugar sales prices is
the amount of beet sugar produced. A large amount of beet sugar generally means
lower prices as beet producers sell their larger production by undercutting the
prices of cane sugar refiners. The amount of beet sugar produced not only
affects selling prices, but also affects the per unit manufacturing costs of the
sugar industry. Many of the costs in the manufacturing process, whether beet or
cane, are fixed and must be divided among the actual production. As volume
increases or decreases, per unit manufacturing costs decrease or increase,
respectively. Thus, forecasting the amount of beet sugar which will be produced
is an essential element in predicting the Company's profitability.
In addition to sales prices and per unit manufacturing costs, the other
primary factor in determining operating income is the cost of raw sugar, which
is by far the largest single cost of producing refined cane sugar. Raw sugar is
a commodity, and while the Registrant purchases it using many different pricing
methods, the price is always based in some manner on the market price of raw
sugar as determined by the commodities market. Thus, its price is subject to the
numerous variables that affect the price of any commodity. In general, however,
the price of raw sugar is supported at an artificially high level through the
sugar program portion of the U.S. Government's Farm Bill.
Forward looking information affecting the Registrant and the sugar
industry should be considered within this context.
Item 2. Properties.
Registrant and its wholly-owned subsidiaries own and operate three cane
sugar refineries, two sugar melt and transfer facilities, five sugarbeet
processing plants, a beet molasses desugarization facility, and four foodservice
production facilities.
The three cane sugar refineries are located in Port Wentworth, Georgia;
Gramercy, Louisiana and Clewiston, Florida and are owned by
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Savannah Foods Industrial, Inc. The Port Wentworth facility borders the Savannah
River and the Gramercy facility borders the Mississippi River. Both of these
locations include a deep water dock with facilities for shipping and receiving
ocean-going vessels.
Savannah Foods Industrial, Inc. also owns sugar melt and transfer
facilities in St. Louis, Missouri and Ludlow, Kentucky. The St. Louis facility
borders on the Mississippi River and has a dock for receiving sugar and molasses
shipments.
Michigan Sugar Company owns and operates four sugarbeet processing
plants which are located in Caro, Carrollton, Sebewaing, and Croswell, Michigan.
Great Lakes Sugar Company owns and operates a sugarbeet processing plant in
Fremont, Ohio and a storage facility in Findlay, Ohio. The beet molasses
desugarization facility, which is owned by Registrant, is located in Fremont,
Ohio.
Dixie Crystals(R) Brands, Inc. owns production facilities in Perrysburg,
Ohio; Visalia, California and Savannah, Georgia. Also, King Packaging Company,
Inc. owns and operates a packaging facility in Bremen, Georgia.
The facilities listed above provide Registrant with sufficient
productive capacity to meet the demands of its current markets.
Item 3. Legal Proceedings.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of security holders during the
fourth quarter of fiscal 1996.
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PART II
Item 5. Market for Registrant's Common Stock and Related Stockholder Matters.
Registrant's common stock, par value $.25 per share ("Common Stock"), is
listed and traded on the New York Stock Exchange ("NYSE") under the symbol
"SFI". The following table sets forth for the periods indicated the high and low
sales prices on the NYSE composite tape. The information provided has been
adjusted to the nearest 1/8 and was compiled from quotations furnished by the
New York Stock Exchange. Registrant has paid cash dividends on its Common Stock
every year since 1924. The following information is for the twelve-month periods
ended September 29, 1996 and October 1, 1995:
<TABLE>
<CAPTION>
Quarter Dividends
Ended High Low Paid
------- ---- --- ---------
<S> <C> <C> <C>
12/31/95 $13.875 $11.375 $.025
03/31/96 13.000 10.500 .025
06/30/96 13.625 10.750 .025
09/29/96 14.000 11.250 .025
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$.100
=====
01/01/95 $14.750 $10.750 $.135
04/02/95 14.625 10.375 .135
07/02/95 11.875 9.000 .025
10/01/95 14.125 10.375 .025
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$.320
=====
</TABLE>
As of September 29, 1996, the following indicates the number of
holders of record of equity securities:
<TABLE>
<CAPTION>
Title of Class Number of Record Holders
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<S> <C>
Common Stock 2,984
</TABLE>
Item 6. Selected Financial Data.
See following page.
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SAVANNAH FOODS & INDUSTRIES, INC.
Summary of Operations
(In Thousands except for per share amounts and ratios)
<TABLE>
<CAPTION>
Fiscal Period Ended
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September 29, October 1, October 2, October 3, January 3,
1996 1995 1994 1993 (1) 1993
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<S> <C> <C> <C> <C> <C>
OPERATIONS FOR THE FISCAL PERIOD
Net sales......................................... $1,146,332 $1,098,544 $1,074,367 $ 818,116 $1,138,114
Income from operations............................ 21,799 7,401 19,432 11,839 49,143
Income (loss) before change in accounting
principle and extraordinary item................ 6,943 (3,493) 5,743 1,986 27,340
Net income (loss) (2)............................. 5,972 (3,493) 5,743 2,586 9,170
Other income statement information -
Depreciation and amortization expense........... 27,994 28,314 28,972 19,362 23,705
Interest expense................................ 12,355 14,847 13,380 10,226 10,526
Provision for (benefit from) income taxes....... 2,738 (2,585) 2,863 1,155 13,628
Cash dividends declared........................... 2,624 8,396 14,169 10,627 13,890
Capital expenditures (3).......................... 7,916 17,303 22,218 39,877 45,301
- --------------------------------------------------------------------------------------------------------------------------
FINANCIAL POSITION AT THE END OF THE FISCAL PERIOD
Current assets.................................... $ 180,552 $ 197,802 $ 198,880 $ 269,990 $ 371,387
Current liabilities............................... 85,946 114,740 85,140 154,760 233,519
Working capital................................... 94,606 83,062 113,740 115,230 137,868
Property, plant and equipment - gross............. 406,729 436,991 421,312 407,924 355,435
Accumulated depreciation.......................... 220,183 206,100 180,810 159,111 129,306
Total assets...................................... 398,261 476,507 486,127 567,852 635,755
Long-term debt.................................... 59,754 106,864 140,224 142,078 126,464
Stockholders' equity.............................. 173,727 169,649 188,174 194,714 210,620
- --------------------------------------------------------------------------------------------------------------------------
PER SHARE
Weighted average shares outstanding............... 26,238 26,238 26,238 26,238 26,491
Shares outstanding at end of fiscal period........ 26,238 26,238 26,238 26,238 26,238
Income (loss) per weighted average share
outstanding -
Income (loss) before change in accounting
principal and extraordinary item............. $ 0.27 $ (0.13) $ 0.22 $ 0.08 $ 1.03
Net income (loss).............................. 0.23 (0.13) 0.22 0.10 0.35
Dividends declared per share..................... 0.10 0.32 0.54 0.405 0.525
Stockholders' equity per share (4)............... 6.62 6.47 7.17 7.42 8.03
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RATIOS
Current assets divided by current liabilities..... 2.10 1.72 2.34 1.74 1.59
Long-term debt divided by long-term debt
and stockholders' equity....................... 25.6% 38.6% 42.7% 42.2% 37.5%
Provision for (benefit from) income taxes divided
by pre-tax income (loss)....................... 28.3% 42.5% 33.3% 33.8% 33.3%
</TABLE>
(1) During the fiscal period ended October 3, 1993, the Company changed its
year end from the Sunday closest to December 31 to the Sunday closest to
September 30. As a result, the fiscal period ended October 3, 1993
represents a 39 week period.
(2) The Company recorded an extraordinary item for penalties incurred on the
prepayment of long-term debt during the fiscal period ended September 29,
1996. For more information, see Note 5 to the accompanying consolidated
financial statements. The Company adopted FAS 109, "Accounting for
Income Taxes" during the fiscal period ended October 3, 1993 and adopted
FAS 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions" during the fiscal period ended January 3, 1993.
(3) Includes acquisition of Reckitt & Colman, Inc. fixed assets in January
1995 totalling $1,000,000, and King Packaging Company, Inc. fixed assets
in July 1993 totalling $4,757,000.
(4) Based on shares outstanding at end of fiscal period.
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Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Fiscal 1996 Highlights:
During 1996, the Company recorded an impairment loss and other costs of
$13,654,000 against "Income from operations" as discussed in Notes 2 and 11 and
to the consolidated financial statements. The majority of this amount was the
impairment loss of $10,280,000 on a facility the Company cannot operate
profitably due to a shortage of sugarbeets and molasses. The Company also
recorded an extraordinary after-tax charge in 1996 of $971,000 related to the
prepayment of debt. These charges had a significant one-time negative impact on
the Company's net income.
Regarding the Company's financial position and operating results, the
management of Savannah Foods has been aggressively executing the following
steps.
Improving asset efficiency and strengthening the balance sheet -
During 1996, the Company used its cash provided by operations
and the cash generated by the items mentioned below to reduce total
long-term debt from $113,164,000 at the end of 1995 to $61,924,000
at the end of 1996. Management has been concentrating on reducing
working capital, selling non-operating and under-performing
operating assets, and reinvesting in its business to increase the
Company's value-added products. In this regard, the Company sold
Raceland Sugars, Inc. in 1996 for $12,500,000, reduced operating
working capital (working capital, excluding cash and interest
bearing debt) by $11,112,000 from the end of 1995 to the end of
1996, surrendered company owned life insurance for $13,869,000, and
reinvested in its business $7,916,000 of the $27,994,000
depreciation and amortization recorded in 1996.
In addition, the Company established a Benefit Trust as discussed
in Note 7 with 2,500,000 shares of treasury stock to enhance the
Company's financial flexibility to provide funds to satisfy its
obligations under various employee benefit plans and agreements.
Streamlining the Company's cost structure -
Management is committed to maintaining its roughly 20% share of the
U.S. sugar market. To do this, the Company must remain competitive
by eliminating costs which are not necessary to serve its customers.
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The debt reduction discussed above reduced interest expense in 1996
as compared to 1995 by $2,492,000. Additionally, during 1996 the
Company reduced costs by $8,500,000 and took actions that are
expected to reduce costs by an additional $11,500,000 in 1997.
Major actions taken in 1996 were a reduction in sugar production
costs of $2,650,000 compared to 1995; the sale of the Company's
plane and other reductions in travel expenses which saved $960,000
in 1996 as compared to 1995; and a reduction in headcount of 109
people, or 5%.
During 1996, the Company also modified retirement plans as
discussed in Notes 8 and 9 which reduced the projected benefit
obligation of its pension and SERP plans by a present value of
$6,698,000 and froze the Company's compensation deferral plans.
Results of Operations:
Fiscal 1996 compared to fiscal 1995
The Company's net income for fiscal 1996 was $5,972,000, or $.23 per
share, on sales of $1,146,332,000, compared to a net loss ($3,493,000), or
($.13) per share, on sales of $1,098,544,000 for fiscal 1995. Fiscal 1996 net
income includes an after-tax extraordinary charge of $971,000, or $.04 per
share, for the prepayment of long-term debt. Domestic sugar sales volumes
increased 5% over fiscal 1995, but overall sugar sales volume was flat as export
volume decreased significantly from fiscal 1995. Domestic sugar sales prices
increased 4% and average raw sugar costs decreased 2%.
Fiscal 1996 income from operations includes three significant
transactions which affect the comparability between fiscal 1996 and fiscal 1995.
First, in the first quarter of 1996, the Company sold its plane resulting in a
gain of $2,289,000. Second, in the second quarter of fiscal 1996, the Company
sold the property, plant and equipment and certain other assets of Raceland
Sugars, Inc., its raw sugar mill subsidiary, for $12,500,000 cash and recognized
a loss on the sale of $3,800,000. This amount is included in the caption "Other
costs" in the accompanying Consolidated Statement of Operations. After
liquidation of the inventories and other working capital accounts, the Company
received net proceeds of approximately $15,000,000 on the sale of Raceland.
Third, in accordance with Statement of Financial Accounting Standards No. 121 -
Accounting for the Impairment of Long-Lived Assets and for Assets to be Disposed
Of, the Company recorded a non-cash charge in the fourth quarter of 1996
of $10,280,000 ($6,476,000, or $.25 per share, net of tax) for the impairment of
long-lived assets located at the Company's Fremont, Ohio beet sugar
manufacturing facility. A decision was made not to run the Fremont facility
during fiscal 1997 due to a lack of a viable supply
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of sugarbeets and molasses. Future operation of the facility is dependent on an
adequate supply of sugarbeets and molasses. However, the projected future cash
flows from this facility are less than the carrying value of the assets;
therefore, an impairment loss has been recognized. These amounts are included in
the caption "Impairment of long-lived assets" in the accompanying Consolidated
Statement of Operations.
Fiscal 1996 income from operations before the above transactions was
$33,590,000, up $26,189,000 from fiscal 1995. The large increase resulted from
smaller domestic beet sugar production of 3.9 million tons in fiscal 1996
compared to 4.5 million tons in fiscal 1995. The reduction in beet sugar
improved refined sugar selling prices and, therefore, the Company's
profitability. Additionally, average raw sugar costs have decreased from fiscal
1995 which has also increased profitability.
The Company's cane sugar divisions experienced significant domestic
volume and margin increases over fiscal 1995 as the reduced domestic beet crop
and increased sugar consumption provided more sales opportunities for cane
refiners.
The Company's beet sugar division benefited from the higher refined
sales prices, but reported much lower operating profit due to significantly
reduced sugar production. The sugarbeet crop was smaller and of lesser quality
due to poor growing conditions and an insect infestation.
Selling, general and administrative expenses decreased $1,199,000 in
fiscal 1996 from fiscal 1995 despite a $1,177,000 increase in advertising costs
related to the Company's new products.
Interest expense decreased compared to fiscal 1995 as a result of lower
long-term debt levels throughout the year resulting from the prepayment of the
Senior Notes.
In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123 - Accounting for
Stock-Based Compensation, which the Company is required to adopt next fiscal
year. Management has not decided whether the Company will adopt the accounting
requirements or the alternative disclosure requirements. Management does not
expect this statement to have a material impact on the Company's results of
operations.
Management expects that fiscal 1997 will be a good year for the Company
because refined sugar sales margins and volumes are expected to be higher than
in fiscal 1996.
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Fiscal 1995 compared to fiscal 1994
The Company's results of operations for the fiscal year ended October 1,
1995 was a net loss of ($3,493,000), or ($.13) per share, on sales of
$1,098,544,000, compared to income of $5,743,000, or $.22 per share, on sales of
$1,074,367,000 for the fiscal year ended October 2, 1994. Sugar sales volume was
flat compared to fiscal 1994 while sugar sales prices increased slightly.
Average raw sugar costs increased dramatically in fiscal 1995, from $22.07 per
cwt. in fiscal 1994, to $23.03 per cwt. in fiscal 1995. Raw sugar shortages in
the summer of 1995 pushed raw sugar costs as high as $25.70 per cwt. in late
July 1995.
This rise in raw sugar costs primarily affected the cane refining
divisions which, as a result, reported an operating loss for fiscal 1995.
Focused selling of higher value-added sugar and non-sugar products, along with
lower operating costs, helped somewhat offset the higher raw sugar costs. The
cane refining division's loss also included a $1,615,000 charge for the
settlement of litigation, a $1,472,000 charge for a workforce reduction, and a
$1,197,000 charge related to capital projects which were not pursued because of
changing business circumstances. Fiscal 1994 also included a $2,950,000
charge for the same litigation referenced above.
The beet sugar division's sales volume decreased 3% in fiscal 1995 due
to marketing allotments imposed by the U. S. Department of Agriculture which
restricted the amount of sugar sold. However, higher sugar content in the
beets resulted in lower processing costs per cwt., and operating income in this
division increased substantially over fiscal 1994. Higher molasses and beet pulp
prices also contributed to the increased earnings.
Selling, general and administrative expenses increased 5% in fiscal 1995
from fiscal 1994 primarily due to higher advertising and selling costs.
Interest expense increased as a result of higher interest rates on
short-term borrowings for working capital.
Liquidity and Capital Resources:
The Company maintains revolving credit facilities, as discussed below,
to provide liquidity for short-term operating needs. The Company also has the
ability to fund seasonal increases in inventory through borrowings from the
Commodity Credit Corporation. These two sources of short-term funds provide
ample liquidity to the Company to meet its operating cash requirements.
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During April 1996, the Company entered into a new revolving credit
agreement aggregating $120,000,000, of which $7,500,000 was outstanding as
short-term debt at year end. Under this agreement, a Standby Letter of Credit
(SLC) is drawn in favor of the Senior Note lenders. The SLC is maintained at
105% of the Senior Notes outstanding and was $26,250,000 at September 29, 1996.
In connection with the execution of this agreement, the Senior Note agreement
was amended to remove all of the financial ratio covenants. The remaining
available balance of the revolving credit agreement of $86,250,000 is intended
to meet working capital and other cash needs as they arise. All of the
$120,000,000 of available facilities are committed through January 1, 2000. The
Company also has available a $10,000,000 discretionary line of credit with a
bank.
Long-term debt, including the current portion, decreased $51,240,000
during fiscal 1996. The debt payments were funded with the liquidation of
non-current assets discussed above and cash provided by operations. Changes in
debt and equity resulted in a decrease in the ratio of long-term debt to total
capital from 39% to 26%.
At September 29, 1996, stockholders' equity was $173,727,000 compared to
equity at October 1, 1995, of $169,649,000. Equity primarily increased by net
income of $5,972,000, and decreased by dividends of $2,624,000.
Fixed asset additions of $7,916,000 during fiscal 1996 were primarily
made to upgrade and install packaging and production equipment. These projects
are expected to benefit the Company through new packaging, increased
efficiency, improved quality control, and expanded operational capabilities.
The Company expects that expenditures for fixed assets in fiscal 1997,
exclusive of any acquisitions, will approximate $17,000,000 and that
depreciation and amortization for fiscal 1997 will be lower than that of
1996 because of the asset write-downs and disposals discussed above, and should
approximate $23,000,000.
14
<PAGE> 15
Item 8. Financial Statements and Supplementary Data.
(a) Financial Statements: Page
Report of Independent Accountants 16
Consolidated Balance Sheets at September 29, 1996
and October 1, 1995 17
Consolidated Statements of Operations for the
fiscal years ended September 29, 1996,
October 1, 1995, and October 2, 1994 18
Consolidated Statements of Changes in Stockholders'
Equity for the fiscal years ended September 29, 1996,
October 1, 1995, and October 2, 1994 19
Consolidated Statements of Cash Flows for the fiscal
years ended September 29, 1996, October 1, 1995,
and October 2, 1994 20
Notes to Consolidated Financial Statements 21
(b) Financial Statement Schedules for the fiscal years ended September
29, 1996, October 1, 1995, and October 2, 1994:
Schedules are omitted because they are not applicable, or the required
information is shown in the financial statements or notes thereto.
15
<PAGE> 16
Report of Independent Accountants
November 18, 1996
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 September
29, 1996 and October 1, 1995, and the results of their operations and their
cash flows for the fifty-two weeks ended September 29, 1996, October 1, 1995
and October 2, 1994, 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.
PRICE WATERHOUSE LLP
Atlanta, Georgia
16
<PAGE> 17
SAVANNAH FOODS & INDUSTRIES, INC.
Consolidated Balance Sheets
(In thousands except for shares and per share amounts)
<TABLE>
<CAPTION>
September 29, October 1,
1996 1995
Assets -------------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 15,300 $ 11,574
Accounts receivable 76,109 66,991
Inventories (net of LIFO reserve of $8,018 in 1996 and
$10,460 in 1995) (Note 3) 83,929 103,121
Other current assets 5,214 16,116
------------ ------------
Total current assets 180,552 197,802
Property, plant and equipment (Note 4) 186,546 230,891
Other assets 31,163 47,814
------------ ------------
$ 398,261 $ 476,507
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Short-term borrowings (Note 5) $ 7,500 $ 22,300
Current portion of long-term debt (Note 5) 2,170 6,300
Trade accounts payable 52,701 63,259
Other liabilities and accrued expenses 23,575 22,881
------------ ------------
Total current liabilities 85,946 114,740
------------ ------------
Long-term debt (Note 5) 59,754 106,864
------------ ------------
Deferred employee benefits 78,834 85,254
------------ ------------
Stockholders' equity (Note 7):
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 31,764 12,190
Retained earnings 193,524 190,176
Treasury stock, at cost (2,568,604 shares in 1996 and
5,068,604 shares in 1995) (15,849) (31,275)
Minimum pension liability adjustment (14,038) (14,842)
Stock held by benefit trust, at market (2,500,000 shares
in 1996) (35,000) -
Other (4,039) (3,965)
------------ ------------
Total stockholders' equity 173,727 169,649
------------ ------------
Commitments and contingencies (Note 10) - -
------------ ------------
$ 398,261 $ 476,507
============ ============
</TABLE>
(The accompanying notes are an integral part of the consolidated financial
statements.)
17
<PAGE> 18
SAVANNAH FOODS & INDUSTRIES, INC.
Consolidated Statements of Operations
(In thousands except for shares and per share amounts)
<TABLE>
<CAPTION>
Fiscal Year Ended
-----------------------------------------------
September 29, October 1, October 2,
1996 1995 1994
------------- ------------- -------------
<S> <C> <C> <C>
Net sales $ 1,146,332 $ 1,098,544 $ 1,074,367
------------- ------------- -------------
Operating expenses:
Cost of sales and operating expenses 1,028,218 1,002,679 969,621
Selling, general and
administrative expenses 54,667 55,866 53,392
Depreciation and amortization 27,994 28,314 28,972
Impairment of long-lived assets (Note 2) 10,280 - -
Other costs (Note 11) 3,374 4,284 2,950
------------- ------------- -------------
1,124,533 1,091,143 1,054,935
------------- ------------- -------------
Income from operations 21,799 7,401 19,432
------------- ------------- -------------
Other income and (expenses):
Interest and other investment income 847 1,258 2,170
Interest expense (12,355) (14,847) (13,380)
Other income (expense) (610) 110 384
------------- ------------- -------------
(12,118) (13,479) (10,826)
------------- ------------- -------------
Income (loss) before income taxes
and extraordinary item 9,681 (6,078) 8,606
Provision for (benefit from)
income taxes (Note 6) 2,738 (2,585) 2,863
------------- ------------- -------------
Income (loss) before extraordinary
item 6,943 (3,493) 5,743
Extraordinary item, net of tax (Note 5) (971) - -
------------- ------------- -------------
Net income (loss) $ 5,972 $ (3,493) $ 5,743
============= ============= =============
Per share:
Income (loss) before
extraordinary item $ 0.27 $ (0.13) $ 0.22
Extraordinary item (Note 5) (0.04) - -
------------- ------------- -------------
Net income (loss) $ 0.23 $ (0.13) $ 0.22
============= ============= =============
Dividends $ 0.10 $ 0.32 $ 0.54
============= ============= =============
Weighted average shares outstanding 26,238,196 26,238,196 26,238,196
============= ============= =============
</TABLE>
(The accompanying notes are an integral part of the consolidated financial
statements.)
18
<PAGE> 19
SAVANNAH FOODS & INDUSTRIES, INC.
Consolidated Statements of Changes in Stockholders' Equity
(In thousands)
<TABLE>
<CAPTION>
Capital in Minimum
Excess of Pension Stock Held
Common Stated Retained Treasury Liability By Benefit
Stock Value Earnings Stock Adjustment Trust Other Total
-------- --------- --------- ---------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at October 3, 1993 $ 17,365 $ 12,190 $ 210,491 $ (31,275) $ (9,453) $ - $ (4,604) $ 194,714
Net income 5,743 5,743
Cash dividends declared (14,169) (14,169)
Decrease in minimum pension
liability adjustment 1,243 1,243
Decrease in note receivable
from employee stock
ownership plan 643 643
-------- -------- --------- ---------- ---------- --------- --------- ---------
Balance at October 2, 1994 17,365 12,190 202,065 (31,275) (8,210) - (3,961) 188,174
Net loss (3,493) (3,493)
Cash dividends declared (8,396) (8,396)
Increase in minimum pension
liability adjustment (6,632) (6,632)
Increase in cumulative
translation adjustment (425) (425)
Decrease in note receivable
from employee stock
ownership plan 421 421
-------- -------- --------- ---------- ---------- --------- --------- ---------
Balance at October 1, 1995 17,365 12,190 190,176 (31,275) (14,842) - (3,965) 169,649
Net income 5,972 5,972
Cash dividends declared (2,624) (2,624)
Decrease in minimum pension
liability adjustment 804 804
Establish benefit trust with
treasury stock (Note 7) 11,449 15,426 (26,875) -
Increase in fair market
value of stock held by
benefit trust (Note 7) 8,125 (8,125) -
Increase in cumulative
translation adjustment (74) (74)
-------- -------- --------- ---------- ---------- --------- --------- ---------
Balance at September 29, 1996 $ 17,365 $ 31,764 $ 193,524 $ (15,849) $ (14,038) $ (35,000) $ (4,039) $ 173,727
======== ======== ========= ========== ========== ========= ========= =========
</TABLE>
(The accompanying notes are an integral part of the consolidated financial
statements.)
19
<PAGE> 20
SAVANNAH FOODS & INDUSTRIES, INC.
Consolidated Statements of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
Fiscal Year Ended
----------------------------------------
September 29, October 1, October 2,
1996 1995 1994
------------- ------------ ----------
<S> <C> <C> <C>
Cash flows from operations:
Net income (loss) $ 5,972 $ (3,493) $ 5,743
Adjustments to reconcile net income (loss) to
net cash provided by operations -
Depreciation and amortization 27,994 28,314 28,972
Impairment of long-lived assets (Note 2) 10,280 - -
Extraordinary item, net of tax, related to
financing activities 971 - -
Provision for deferred income taxes (5,173) (207) (5,283)
Net loss on disposal of assets 2,595 674 460
Decreases (increases) in working capital -
Accounts receivable (9,118) 8,785 11,254
Inventories 20,565 (17,781) 60,299
Other current assets 7,924 (6,952) 2,657
Trade accounts payable (10,558) 6,306 (49,457)
Other liabilities and accrued expenses 1,110 (777) 3,373
Other (2,713) 1,122 1,431
---------- ---------- ----------
Cash provided by operations 49,849 15,991 59,449
---------- ---------- ----------
Cash flows from investing activities:
Additions to property, plant and equipment (7,916) (16,303) (22,218)
Proceeds from sale of property, plant and
equipment 2,538 784 3,309
Sale of investments 13,869 3,615 18,559
Business sales and (acquisitions) 12,500 (7,050) -
Use of escrowed industrial revenue bond funds
for additions to property, plant and equipment 3,253 - 3,669
Other (182) (2,182) (2,930)
---------- ---------- ----------
Cash provided by (used for) investing activities 24,062 (21,136) 389
---------- ---------- ----------
Cash flows from financing activities:
(Decrease) increase in short-term borrowings (14,800) 22,300 (26,300)
Payments of long-term debt (51,240) (28,703) (2,632)
Debt prepayment charge, net of tax (971) - -
Liquidation of unused industrial revenue
bond escrow balances - 5,742 -
Dividends paid (3,280) (11,282) (10,627)
Other 106 226 676
---------- ---------- ----------
Cash used for financing activities (70,185) (11,717) (38,883)
---------- ---------- ----------
Cash flows for year 3,726 (16,862) 20,955
Cash and cash equivalents, beginning of year 11,574 28,436 7,481
---------- ---------- ----------
Cash and cash equivalents, end of year $ 15,300 $ 11,574 $ 28,436
========== ========== ==========
</TABLE>
(The accompanying notes are an integral part of the consolidated financial
statements.)
20
<PAGE> 21
SAVANNAH FOODS & INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Summary of Significant Accounting Policies:
Nature of operations - The Company is engaged in the production,
marketing and distribution of food products, primarily refined sugar. The
Company produces a complete line of bulk and liquid sugars, packaged sugar,
sugar envelopes and sugar products, including edible molasses and liquid animal
feeds. The Company also packages and distributes other products such as custom
made meal kits, salt, pepper, artificial sweetener, non-diary creamer and
certain other products which complement its sugar business. Industrial and
grocery markets served by the Company are the southeastern, midwestern and
eastern parts of the United States, as well as Louisiana and Texas. Products for
the foodservice market are distributed throughout the United States. The Company
has one primary business segment - Sugar Products.
Fiscal year - The Company's fiscal year ends on the Sunday closest to
September 30. Fiscal 1996, 1995 and 1994 each included 52 weeks.
Principles of consolidation - The consolidated financial statements
include the accounts of the Company and its wholly-owned subsidiaries. Business
entities in which the Company owns 50% or less are accounted for using the
equity method.
Cash and cash equivalents - Cash and cash equivalents include all
investments purchased with an original maturity of 90 days or less which have
virtually no risk of loss of the principal value 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. Costs for maintenance parts and other
non-sugar products are determined using the first-in, first-out (FIFO) and
moving average methods.
Futures transactions and interest rate swaps - The Company uses futures,
options and interest rate swaps 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. The net cash paid or received on interest rate
swaps is included in interest expense.
21
<PAGE> 22
Amortization of intangibles - The Company has intangible assets included
in "Other assets" aggregating $9,529,000 and $11,912,000 at September 29, 1996
and October 1, 1995, respectively. Goodwill of $5,378,000 at September 29, 1996,
and $5,781,000 at October 1, 1995, is being amortized over fifteen years on a
straight-line basis, and other intangible assets are being amortized over five
years on a straight-line basis. Amortization expense was $2,341,000, $2,169,000
and $2,617,000 for fiscal 1996, 1995 and 1994, respectively.
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 over the
estimated useful lives of the assets. In general, buildings are depreciated over
20 years, machinery and equipment over 3 to 15 years and leasehold improvements
over 10 years.
Accrued expenses related to beet operations - The Company's beet
processing plants are generally operated 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, the Company 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. In
contrast, certain other sugarbeet processors capitalize such costs and include
them as prepaid expenses related to the next processing cycle.
Fair value of financial instruments - For cash, cash equivalents,
accounts receivable, trade accounts payable, other liabilities and accrued
expenses and short-term borrowings, the carrying amounts approximate fair value
because of the short maturities of these instruments.
Revenue recognition - The Company recognizes revenue as product is
shipped.
Use of estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
Reclassifications - Certain prior year amounts have been reclassified to
conform to current year presentation.
22
<PAGE> 23
Note 2 - Impairment Loss:
In the fourth quarter of fiscal 1996, the Company recorded a non-cash
impairment loss of $10,280,000 ($6,476,000, or $.25 per share, net of tax)
related to a write-down of the property, plant and equipment of the Company's
Fremont, Ohio beet sugar facility. A decision was made in 1996 not to run the
Fremont facility during fiscal 1997 due to the lack of a viable supply of
sugarbeets and beet molasses. As a result, the projected future cash flows from
this facility are less than the carrying value of the assets; therefore, an
impairment loss has been recognized. The impaired assets include buildings and
machinery and equipment used to manufacture, ship, and store refined sugar and
its by-products. These assets were written down to their fair value based on the
salvage value of the assets. The recognition of this impairment was in
accordance with the provisions of Statement of Financial Accounting Standards
No. 121 - Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of and is not materially different than the amount that
would have been recognized under the Company's previous policies.
Note 3 - Inventories:
A summary of inventories by method of pricing and class is as follows:
<TABLE>
<CAPTION>
September 29, October 1,
1996 1995
------------- ----------
(In thousands)
<S> <C> <C>
Last-in, first-out $35,311 $ 64,642
First-in, first-out 9,682 9,807
Moving average 29,462 28,672
Specific identification 9,474 -
------- --------
$83,929 $103,121
======= ========
Raw materials and work-in-process $17,693 $ 46,533
Packaging materials, parts and supplies 20,713 26,245
Finished goods 36,049 30,343
Payments related to future inventory
purchases 9,474 -
------- --------
$83,929 $103,121
======= ========
</TABLE>
The replacement cost of inventories exceeded reported cost by
approximately $8,233,000 at September 29, 1996 and $11,101,000 at October 1,
1995. In fiscal 1994 there was a LIFO liquidation which decreased cost of goods
sold by $1,762,000 and increased net income by $1,097,000, or $.04 per share.
23
<PAGE> 24
Note 4 - Property, Plant and Equipment:
Property, plant and equipment is summarized as follows:
<TABLE>
<CAPTION>
September 29, October 1,
1996 1995
------------- ----------
(In thousands)
<S> <C> <C>
Land $ 7,498 $ 8,143
Buildings 89,194 94,670
Machinery and equipment 305,717 326,842
Leasehold improvements 1,201 1,201
Projects-in-process 3,119 6,135
-------- --------
406,729 436,991
Less -
Accumulated depreciation
and amortization (220,183) (206,100)
-------- --------
$186,546 $230,891
======== ========
</TABLE>
Repairs and maintenance expense was $31,699,000, $35,241,000 and
$31,584,000 for fiscal 1996, 1995 and 1994, respectively.
Note 5 - Long-term Debt, Credit Arrangements and Leases:
Long-term debt is summarized as follows:
<TABLE>
<CAPTION>
September 29, October 1,
1996 1995
------------- ----------
(In thousands)
<S> <C> <C>
Senior Notes - Series A at 8.35% of
$19,941 and $47,857, respectively,
and Series B at 7.15% of
$5,059 and $12,143,
respectively $25,000 $ 60,000
Long-term debt supported by revolving
credit facilities with banks - 10,000
Notes payable to banks related to
the ESOP 9,815 14,100
Industrial revenue bonds 22,500 22,500
Other long-term debt 4,609 6,564
------- --------
61,924 113,164
Less - Current portion (2,170) (6,300)
------- --------
$59,754 $106,864
======= ========
</TABLE>
The Company elected to prepay $35,000,000 of the Senior Notes in 1996.
The Company incurred $971,000 (net of $570,000 income tax benefits), or $.04 per
share, of related prepayment penalties which are reflected as an extraordinary
item in the Consolidated Statement of Operations.
24
<PAGE> 25
The remaining Senior Notes are payable in amounts of $8,750,000 in
fiscal 1999, $14,792,000 in fiscal 2000, and $1,458,000 in fiscal 2001. The
market value of this $25,000,000 fixed rate long-term debt at September 29, 1996
is approximately $26,301,000 based on interest rates at that date.
At September 29, 1996, the Company had $9,815,000 in notes payable
related to the Employee Stock Ownership Plan (ESOP) and $22,500,000 of
industrial revenue bonds. These notes and bonds carry tax-advantaged variable
rates of interest equal to approximately 4.99% in 1996. The ESOP loans are
payable as follows: $6,215,000 in fiscal 1998 and $3,600,000 payable in fiscal
1999 through fiscal 2001. The $22,500,000 industrial revenue bonds are payable
as follows: $4,500,000 in 2000; $4,500,000 in 2001; $6,000,000 in $1,000,000
annual installments in 2002 through 2007; $3,500,000 in 2004; $2,500,000 in
$500,000 installments from 2001 through 2005; and $1,500,000 due in 2017. These
bonds are secured by financing statements on project-related equipment, the
cost of which approximates the bond amounts.
On April 1, 1996, the Company entered into a $120,000,000 revolving
credit facility which expires on January 1, 2000, and automatically extends by
one year on each anniversary date of the agreement. In general, this facility
enables the Company to borrow funds at LIBOR plus 1/2% to 3/4%, depending upon
achievement of specified financial targets. The Company pays an annualized
facility fee of 1/10% and an annualized fee of 1/10% of the unused portion of
the facility. At September 29, 1996, $7,500,000 was outstanding as short-term
debt. The Company has a Standby Letter of Credit (SLC) in favor of the Senior
Note lenders drawn under the revolving credit agreement. The SLC is maintained
at 105% of the Senior Notes outstanding and was $26,250,000 at September 29,
1996. In connection with the execution of this agreement, the Senior Note
agreement was amended to remove all of the financial ratio covenants. As of
September 29, 1996 the Company was in compliance with all of its debt covenants.
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>
Fiscal Year Ended
-------------------------------------------
September 29, October 1, October 2,
1996 1995 1994
------------- ---------- ----------
(In thousands)
<S> <C> <C> <C>
Daily average outstanding borrowings $39,004 $31,373 $27,953
Daily weighted average interest rate 5.66% 6.29% 3.82%
Maximum borrowings $71,980 $68,500 $62,300
Amount outstanding at year-end $ 7,500 $22,300 $ -
</TABLE>
The Company uses interest rate exchange agreements, more commonly called
interest rate swaps, to manage its interest rate exposure. Swaps were entered
into to fix the interest rate on variable debt at rates which the Company
considered attractive at the time the agreements were consummated. When the
Company entered into these agreements, it compared its anticipated interest
costs to other long-term borrowing sources such as private placements and other
fixed rate borrowing options. The notional amounts of swaps outstanding at
September 29, 1996 and October 1, 1995 were $30,000,000 and $50,000,000,
respectively. The fixed rates of interest for swaps outstanding during fiscal
1996 and 1995 were 8.66% and 8.52%, respectively. These swaps expire from
December 1997 to February 1998. The effective fixed rate of swapped debt
instruments during fiscal 1996 and 1995 was 7.76% and 8.00%, respectively.
Accordingly, the Company has realized its desired objectives in the use of
these financing instruments. If the Company had canceled these agreements as of
September 29, 1996, it would have been required to pay the counter-parties to
the agreements an aggregate amount of $1,342,000.
25
<PAGE> 26
The Company has also entered into forward swap agreements for periods
ranging from 1998 to 2004 which fix the rate on debt as follows: $20,000,000 in
1998-1999, $30,000,000 in 2000, $50,000,000 in 2001, $90,000,000 in 2002 and
$80,000,000 in 2003-2004. The Company entered into these agreements to fix the
rate on variable rated debt intended to be borrowed during this time period.
The swaps require the Company to pay fixed rates ranging from 6.5% to 7.0%
against 90 day LIBOR. These transactions were entered into to protect the
Company against interest rate increases and to fix future interest rates at
rates the Company considers attractive. If the Company had canceled these
agreements as of September 29, 1996, it would have received from the
counter-parties to the agreements an aggregate amount of $734,000.
Interest expense was $12,355,000 in fiscal 1996, $14,847,000 in fiscal
1995, and $13,380,000 in fiscal 1994. Cash payments of interest were $12,945,000
in fiscal 1996, $13,620,000 in fiscal 1995, and $12,321,000 in fiscal 1994.
26
<PAGE> 27
Annual maturities of long-term debt each year for the next five fiscal
years are $2,170,000 in 1997, $7,894,000 in 1998, $9,440,000 in 1999,
$19,982,000 in 2000, $9,248,000 in 2001, and $13,190,000 in subsequent years
through 2017.
Lease expense related to operating leases aggregated $2,081,000,
$1,552,000, and $1,887,000 in fiscal 1996, 1995 and 1994, respectively. Lease
commitments on operating leases exceeding one year for fiscal 1997, 1998, 1999,
2000 and 2001 are $1,265,000, $1,245,000, $837,000, $802,000 and $564,000,
respectively.
Note 6 - Income Taxes:
Pre-tax income for all years presented was taxed exclusively in the
United States. The provision for (benefit from) income taxes is comprised of the
following:
<TABLE>
<CAPTION>
Fiscal Year Ended
-------------------------------------------
September 29, October 1, October 2,
1996 1995 1994
------------ ---------- ----------
(In thousands)
<S> <C> <C> <C>
Current federal $6,092 $(1,515) $8,071
Current state 1,249 (863) 75
Deferred federal (4,357) (271) (4,794)
Deferred state (816) 64 (489)
------ ------- ------
Provision for (benefit from)
income taxes $2,168 $(2,585) $2,863
====== ======= ======
Tax effect of change in:
Minimum pension liability adjustment $ 507 $(4,716) $ 720
Cumulative translation adjustment (45) (261) -
------ ------- ------
$ 462 $(4,977) $ 720
====== ======= ======
</TABLE>
Cash payments for income taxes amounted to $537,000, $6,637,000 and
$7,504,000 for fiscal 1996, 1995 and 1994, respectively.
27
<PAGE> 28
Deferred income tax assets (liabilities) are comprised of the
following:
<TABLE>
<CAPTION>
September 29, October 1,
1996 1995
------------- ----------
(In thousands)
<S> <C> <C>
Loss on impairment of long-lived assets $ 3,906 $ -
Depreciation (21,658) (22,854)
Other postretirement benefits 12,565 12,316
Accrued pension liability 8,796 12,769
Deferred compensation 7,743 6,227
Tax benefit purchases (1,143) (2,616)
Other non-current 4,009 659
------- --------
Total net non-current asset 14,218 6,501
------- --------
Other accrued expenses 2,288 847
Inventory (243) (411)
Other current 980 1,226
------- --------
Total net current asset 3,025 1,662
------- --------
Net deferred asset $17,243 $ 8,163
======= ========
</TABLE>
A reconciliation between the provision for (benefit from) income taxes and
the amount computed by applying the U. S. federal income tax rate to income
before income taxes and extraordinary item is as follows:
<TABLE>
<CAPTION>
Fiscal Year Ended
------------------------------------------
September 29, October 1, October 2,
1996 1995 1994
------------- ---------- ----------
(In thousands)
<S> <C> <C> <C>
Computed "expected" tax expense (benefit) $3,292 $(2,127) $3,012
Increases (reductions) in taxes
resulting from:
State income taxes, net of federal
income tax benefit 224 280 (269)
Tax-free income earned (221) (120) (104)
ESOP dividends (17) (254) (506)
Tax rate benefit of NOL carryback (600) - -
Other 60 (364) 730
------ ------- ------
2,738 (2,585) 2,863
Extraordinary item (570) - -
------ ------- ------
Provision for (benefit from) income taxes $2,168 $(2,585) $2,863
====== ======= ======
</TABLE>
Note 7 - Stockholders' Equity:
The Certificate of Incorporation of the Company, as amended, authorizes a
class of preferred stock to consist of up to 1,000,000 shares of $.50 par value
stock. The Board of Directors can determine the characteristics of the
preferred stock without further stockholder approval.
28
<PAGE> 29
During fiscal 1996, the Company established a Benefit Trust (the "Trust")
with 2,500,000 shares of treasury stock. The Trust will enhance the Company's
financial flexibility to provide funds to satisfy its obligations under various
employee benefit plans and agreements. The shares may be sold at the Company's
discretion, until March 31, 2011. However, the shares do not have to be sold.
Proceeds from the sales, if any, will be used to fund eligible employee
benefits. The employee benefits payable from the Trust are primarily included in
the $78,834,000 "Deferred employee benefits" liability. Shares held by the Trust
are not considered outstanding for earnings per share calculations until they
are sold, but are considered outstanding for shareholder voting purposes. The
shares are voted based upon the voting results of the shares held in the
Company's Employee Stock Ownership Plan.
To record this transaction, the Company reduced "Treasury stock" by the
average cost of these shares to the Company, or $15,426,000, and the fair market
value of the stock was recorded as "Stock held by benefit trust". "Capital in
excess of stated value" was increased for the difference of $11,449,000 between
the cost of the shares and their fair value. Each quarter, "Stock held by
benefit trust" is adjusted to the fair market value of the shares held in the
Trust, and an adjustment for the same amount is made to "Capital in excess of
stated value". At September 29, 1996, the market value of the stock was $14.00
per share. Total stockholders' equity will increase as the shares are sold from
the Trust.
Effective April 23, 1996, the Company entered into a one-year employment
agreement with the Chairman of the Board of Directors of the Company. The
employment agreement grants an option to purchase from the Company 100,000
shares of the Company's common stock at the price of $11.00 per share. The
option price coincided with the market price of the Company's common stock on
the date the options were granted. The options are exercisable until April 24,
2001. None of the options have yet been exercised.
Note 8 - Pension 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.
The Company's largest defined benefit plan provides employees a retirement
benefit based on a percentage of their final three year average pay. Effective
July 1, 1996, this percentage of final pay was
29
<PAGE> 30
modified, and provisions to reduce pension benefits for early retirement were
incorporated into this plan. These modifications, along with some other minor
changes, reduced the "projected benefit obligation" at September 29, 1996 by
$3,009,000.
Benefits under the noncontributory defined benefit pension plans for
bargaining employees are primarily based on years of service.
The Company's contribution policy for all pension plans is to contribute
at least the minimum amount required by the Employee Retirement Income Security
Act. At September 29, 1996, the assets of these plans are invested primarily in
cash equivalents and commingled institutional stock and bond funds.
The following table sets forth the status of the Company's qualified
defined benefit pension plans and the pertinent assumptions used in computing
this information as of the end of each respective year:
<TABLE>
<CAPTION>
September 29, October 1,
1996 1995
------------- ----------
(In thousands)
<S> <C> <C>
Actuarial present value of benefit
obligation based on current
compensation:
Vested $(80,235) $(78,364)
Nonvested (6,216) (6,927)
-------- --------
Accumulated benefit obligation (86,451) (85,291)
Increase in present value of benefit
obligation to reflect projected
compensation increases (4,846) (7,524)
-------- --------
Projected benefit obligation (91,297) (92,815)
Plan assets at fair value 72,533 62,852
-------- --------
Projected benefit obligation
in excess of plan assets (18,764) (29,963)
Unrecognized prior service cost (193) 3,386
Unrecognized net loss 29,810 31,876
Unrecognized net asset at transition (1,276) (2,352)
Adjustment required to recognize
minimum liability (23,495) (25,386)
-------- --------
Pension liability included in
"Deferred employee benefits" $(13,918) $(22,439)
======== ========
Actuarial assumptions:
Discount rate 7.5% 7.5%
Projected salary increases 4.5% 4.5%
</TABLE>
30
<PAGE> 31
Pension expense and the assumed rate of return on plan assets used to
calculate it are summarized as follows:
<TABLE>
<CAPTION>
Fiscal Year Ended
------------------------------------
September 29, October 1, October 2,
1996 1995 1994
------------- ---------- -----------
(In thousands)
<S> <C> <C> <C>
Costs related to services provided
by employees during the year $2,070 $2,250 $2,401
Interest cost on projected benefit
obligation 6,874 6,601 6,274
Actual gain on plan assets (5,939) (6,390) (1,172)
Net amortization and deferrals 659 437 (4,564)
------ ------ ------
Pension expense related to defined
benefit plans 3,664 2,898 2,939
Supplemental pension benefits 205 190 126
------ ------ ------
Total pension expense $3,869 $3,088 $3,065
====== ====== ======
Actuarial assumption:
Expected long-term rate of
return on plan assets 9.5% 9.5% 9.5%
</TABLE>
The Company has an unqualified Supplemental Executive Retirement Plan
(SERP) which it amended in 1996 by freezing the years of credited service for
participants as of June 30, 1996. This modification reduced the "projected
benefit obligation" at September 29, 1996 by $3,689,000. The actuarially
determined expense related to the SERP is summarized as follows:
<TABLE>
<CAPTION>
Fiscal Year Ended
-----------------------------------
September 29, October 1, October 2,
1996 1995 1994
------------ ---------- ----------
(In thousands)
<S> <C> <C> <C>
Costs related to services provided
by employees during the year $ 316 $ 283 $ 285
Interests cost on projected benefit
obligation 928 912 781
Net amortization and deferrals 203 169 189
Net curtailment gain (189) - -
------ ------ ------
Total pension expense related to
SERP plan $1,258 $1,364 $1,255
====== ====== ======
</TABLE>
31
<PAGE> 32
The table below summarizes the status of the SERP plan and the pertinent
assumptions used in computing this information at the end of each respective
year:
<TABLE>
<CAPTION>
September 29, October 1,
1996 1995
------------- ----------
(In thousands)
<S> <C> <C>
Actuarial present value of benefit
obligation based on current
compensation:
Vested $ (7,770) $(11,097)
Nonvested (648) (917)
-------- --------
Accumulated benefit obligation (8,418) (12,014)
Increase in present value of benefit
obligation to reflect projected
compensation increases (2,613) (850)
-------- --------
Projected benefit obligation (11,031) (12,864)
Unrecognized prior service cost - 197
Unrecognized net loss 700 2,893
Unrecognized net obligation at
transition - 70
Adjustment required to recognize
minimum liability (273) (2,310)
-------- --------
Pension liability included in
"Deferred employee benefits" $(10,604) $(12,014)
======== ========
Actuarial assumptions:
Discount rate 7.5% 7.5%
Projected salary increases 4.5% 4.5%
</TABLE>
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 September 29, 1996 and at October 1, 1995
representing the excess of the accumulated benefit obligation over the fair
value of plan assets and accrued (prepaid) pension expense for its pension and
SERP plans. The additional liability has been offset by an intangible asset
which is included in "Other assets" to the extent of 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 $14,038,000 at September 29, 1996 and $14,842,000 at
October 1, 1995.
Note 9 - Other Retirement and Benefit Plans:
The Company has a deferred compensation program, which it modified in
1996. This program allowed directors and certain management employees to defer
their compensation and earn a guaranteed interest rate on the deferred amounts.
In effect, such amounts deferred are unsecured loans to the Company. The
deferred salaries
32
<PAGE> 33
and interest at the market rate are accrued as incurred. Interest above the
market rate is accrued over the vesting period. The expense related to the
Company's deferral plan was $2,523,000 in 1996, $2,320,000 in 1995, and
$1,915,000 in 1994.
The 1996 amendment terminated all additional employee deferrals
effective June 30, 1996. The nonemployee directors' deferral plan was also
modified to reduce the guaranteed rate of interest on amounts deferred to 8%,
and then to the prime rate in effect each January 1. The effect of this
amendment is estimated to have reduced the present value of the payments which
ultimately will be paid to the directors under the plan by $2,600,000.
As consideration for the reduction in the interest rate on the directors'
deferred compensation, a Supplemental Share Unit Plan (the "Plan") was
established for nonemployee directors. The Plan granted a number of Share Units
(a Share Unit is the equivalent of one share of Company common stock) to each
nonemployee director equal to one-half of the director's deferred compensation
account balance as of June 30, 1996 divided by a price of $11.00 per Share Unit.
These Share Units fully vested on June 30, 1996 and the value of each unit is
adjusted upward or downward based on the highest daily closing price of the
Company's common stock during the preceding twelve month period. At retirement
from the Board of Directors, each nonemployee director will receive, in cash,
the value of the Share Units in their deferral account. During 1996, the Company
expensed $1,563,000 related to this plan. Future expenses related to this plan
will only be incurred as the Company's stock price increases.
The Company has included in "Deferred employee benefits" $20,524,000 at
September 29, 1996 and $17,694,000 at October 1, 1995 to reflect its liability
under its deferred compensation programs. Payments required to be made to
participants in these programs for the next five fiscal years are approximately
$1,460,000 in 1997, $1,460,000 in 1998, $1,555,000 in 1999, $1,878,000 in 2000
and $2,706,000 in 2001.
The Company sponsors 401(k) plans in which substantially all non-
bargaining employees and certain bargaining unit employees are eligible to
participate. These plans allow eligible employees to save a portion of their
salary on a pre-tax basis. The Company makes monthly contributions to these
plans which aggregated $449,000, $437,000 and $408,000 in fiscal 1996, 1995 and
1994, respectively.
33
<PAGE> 34
The Company also sponsors benefit plans that provide postretirement health
care and life insurance benefits to certain employees who meet the applicable
eligibility requirements. The cost of postretirement health care and life
insurance benefits is summarized as follows:
<TABLE>
<CAPTION>
Fiscal Year Ended
-----------------------------------
September 29, October 1, October 2,
1996 1995 1994
------------- ---------- ----------
(In thousands)
<S> <C> <C> <C>
Costs related to services provided by
employees during the year $ 520 $ 476 $ 669
Interest cost on accumulated benefit
obligation 2,408 2,447 2,369
------ ------ ------
Total postretirement benefit expense $2,928 $2,923 $3,038
====== ====== ======
</TABLE>
The actuarial and recorded liabilities for these postretirement benefits,
none of which have been funded, and the pertinent assumptions used to compute
this information are as follows:
<TABLE>
<CAPTION>
September 29, October 1,
1996 1995
------------- ----------
(In thousands)
<S> <C> <C>
Accumulated postretirement benefit
obligation:
Retirees $(20,594) $(20,473)
Active participants (11,865) (11,634)
-------- --------
Accumulated benefit obligation (32,459) (32,107)
Unrecognized net gain (1,329) (1,000)
-------- --------
Accrued postretirement benefit
obligation included in
"Deferred employee benefits" $(33,788) $(33,107)
======== ========
Actuarial assumptions:
Discount rate 7.5% 7.5%
Health care cost trend rate -
Fiscal 1996 - 7.5%
Fiscal 1997 - 1999 7.5% 7.5%
Fiscal 2000 - 2004 6.0% 6.0%
Thereafter 5.0% 5.0%
</TABLE>
Increasing the health care cost trend rate assumption by one percentage point
would have increased the accumulated postretirement benefit obligation as of
September 29, 1996 by approximately $1,983,000 and would have increased
postretirement benefit expense by approximately $221,000 in fiscal 1996.
34
<PAGE> 35
The Company also sponsors an Employee Stock Ownership Plan (ESOP).
Substantially all non-bargaining employees participate and receive shares in
their account at the discretion of the Board of Directors. Expenses related to
this plan have been immaterial in 1996, 1995, and 1994.
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.
The Company is exposed to loss in the event of non-performance by the
other party to the interest rate swap agreements discussed in Note 5. However,
the Company does not anticipate non-performance by the counter-parties to the
transactions.
As of the end of fiscal 1996, approximately $2,500,000 of a claim by the
United States Customs Service (Customs) remains unresolved. Customs has alleged
that drawback claims prepared by the Company for certain export shipments of
sugar during the years 1984 to 1988 are technically and/or substantively
deficient and that the Company, therefore, is not entitled to amounts previously
received under these drawback claims. The Company disputes Customs' findings and
has been vigorously protesting this matter with Customs. 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.
35
<PAGE> 36
Note 11 - Quarterly Financial Information (Unaudited):
Unaudited quarterly financial information for fiscal 1996 and 1995 is as
follows:
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
------- ------- ------- -------
(In thousands except for per share amounts)
Fiscal 1996
<S> <C> <C> <C> <C>
Net sales $304,409 $250,804 $287,462 $303,657
Gross profit 27,937 24,951 31,151 34,075
Impairment loss - - - (10,280)
Other costs 1,525 (3,800) - (1,099)
Income from operations 8,550 162 10,906 2,181
Income (loss) before
extraordinary item 3,543 (2,043) 4,726 717
Per share .14 (.08) .18 .03
Net income (loss) 3,543 (2,043) 4,028 444
Per share .14 (.08) .15 .02
Fiscal 1995
Net sales $282,477 $253,377 $275,554 $287,136
Gross profit 28,848 20,907 20,472 25,638
Other costs - - - (4,284)
Income (loss) from operations 8,428 299 199 (1,525)
Net income (loss) 3,618 (1,927) (2,428) (2,756)
Per share .14 (.07) (.10) (.10)
</TABLE>
"Other costs" included above and in the Consolidated Statements of Operations
includes the following:
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
Fiscal 1996 ------- ------- ------- -------
<S> <C> <C> <C> <C>
Net gain (loss) on asset disposals $1,525 $(3,800) $ - $ (376)
Cost of workforce reduction - - - (723)
------ ------- ------- -------
Other costs $1,525 $(3,800) $ - $(1,099)
====== ======= ======= =======
Fiscal 1995
Net loss on asset disposals $(1,197)
Litigation settlement (1,615)
Cost of workforce reduction (1,472)
-------
Other costs $(4,284)
=======
</TABLE>
A $1,514,000 net gain on the disposal of assets in the first quarter of
fiscal 1996 has been reclassified to income from operations from other income
(expense), where it was shown in the first quarter 10-Q.
36
<PAGE> 37
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
(a) Previous independent accountants
On October 17, 1996, the Registrant notified Price Waterhouse LLP that it
would be dismissed as the Registrant's independent accountants upon completion
of its audit of the consolidated financial statements as of and for the fiscal
year ended September 29, 1996. This audit was completed on November 18, 1996.
The reports of Price Waterhouse LLP on the consolidated financial
statements of the Registrant as of and for the fiscal years ended September 29,
1996 and October 1, 1995 contained no adverse opinion or disclaimer of opinion
and were not qualified or modified as to uncertainty, audit scope or accounting
principle.
The Registrant's Audit Committee and Board of Directors made and approved
the decision to change independent accountants.
In connection with its audits for the fiscal years ended September 29,
1996 and October 1, 1995 and through November 18, 1996, there have been no
disagreements with Price Waterhouse LLP on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure,
which disagreements if not resolved to the satisfaction of Price Waterhouse LLP
would have caused them to make reference thereto in their report on the
consolidated financial statements for such years.
During the fiscal years ended September 29, 1996 and October 1, 1995 and
through November 18, 1996, there have been no reportable events (as defined in
Regulation S-K Item 304(a)(1)(v)).
The Registrant has requested that Price Waterhouse LLP furnish it with a
letter addressed to the SEC stating whether or not it agrees with the above
statements. Copies of such letters, one dated October 22, 1996 and one dated
November 18, 1996 were filed as Exhibits 16-1 to two Form 8-K's filed with the
SEC. The Form 8-K's were dated October 17, 1996 and November 18, 1996,
respectively.
37
<PAGE> 38
(b) New independent accountants
The Registrant engaged Arthur Andersen LLP as its new independent
accountants as of December 16, 1996. During the fiscal years ended September 29,
1996 and October 1, 1995 and through December 16, 1996, the Registrant has not
consulted with Arthur Andersen LLP on items which (1) were or should have been
subject to SAS 50 (Reports on the Application of Accounting Principles) or (2)
concerned the subject matter of a disagreement or reportable event with the
former independent accountants, (as described in Regulation S-K Item 304(a)(2)).
38
<PAGE> 39
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 20, 1997, to be filed pursuant to Section 14 of the Securities Exchange
Act of 1934 ("1997 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 1997 Proxy Statement.
The information relating to disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is incorporated by reference from the "SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE" section, page 19, of the 1997
Proxy Statement.
Item ll. Executive Compensation.
The information relating to executive compensation is incorporated by
reference from the "EXECUTIVE COMPENSATION" section, pages 9 and 10, the "BOARD
OF DIRECTORS AND COMMITTEES OF THE BOARD" section, pages 14 through 16, the
"COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION" section, pages 11 and
12, the "COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION" section,
page 12, and the performance graph, page 13, of the 1997 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 1997
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 14, and the "COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION" section, page 12, of the 1997 Proxy Statement.
39
<PAGE> 40
PART IV
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 15.
(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.
1-11420 on Form 10-K for the year ended January 3,
1993 as Exhibit 3-1.
3-2 By-Laws, as amended, are hereby incorporated by
reference to Commission File No. 1-11420 on Form
10-K for the year ended October 1, 1995 as Exhibit
3-3.
4-1 Credit Agreement, dated as of April 1, 1996, among
Savannah Foods & Industries, Inc., as the borrower,
the banks listed therein, and Wachovia Bank of
Georgia, N.A., as agent is hereby incorporated by
reference to Commission File No. 1-11420 on Form
10-Q for the quarter ended March 31, 1996 as Exhibit
4-1.
4-2 Note Agreements, dated as of September 1, 1992,
between Savannah Foods & Industries, Inc., as
borrower, and the lenders named therein, consisting
of $50,000,000 8.35% Series A Senior Notes due
November 1, 2002 and $20,000,000 7.15% Series B
Senior Notes due November 1, 2002 is hereby
incorporated by reference to Commission File No.
1-11420 on Form 10-K for the year ended October 2,
1994 as Exhibit 4-2.
4-3 Third Amendment to Note Agreements, dated as of
March 29, 1996, by and among Savannah Foods &
Industries, Inc., as borrower, and the lenders named
therein, consisting of $50,000,000 8.35% Series A
Senior Notes due November 1, 2002 and $20,000,000
7.15% Series B Senior Notes due November 1, 2002 is
hereby incorporated by
</TABLE>
40
<PAGE> 41
<TABLE>
<S> <C>
reference to Commission File No. 1-11420 on Form 10-Q
for the quarter ended March 31, 1996 as Exhibit 4-2.
4-4 In reliance upon Item 601(b) (4) (iii) of Regulation
S-K, various instruments defining the rights of
holders of long-term debt of Registrant are not
being filed herewith because the total of securities
authorized under each such instrument does not exceed
10% of the total assets of Registrant. Registrant
hereby agrees to furnish a copy of any such
instrument to the Commission upon request.
10-1* Profit Sharing and Management Incentive Compensation
Plan is hereby incorporated by reference to
Commission File No. 1-11420 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. 1-11420 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. 1-11420 on Form 10-K for the
year ended January 3, 1993 as Exhibit 10-3.
10-4* Amendment No. 2 to the Supplemental Executive
Retirement Plan.
10-5* Deferred Compensation Plan for Key Employees, as
amended and restated, is hereby incorporated by
reference to Commission File No. 1-11420 on Form 10-K
for the year ended January 3, 1993 as Exhibit 10-4.
10-6* Amendment No. 1 to the Deferred Compensation Plan for
Key Employees is hereby incorporated by reference to
Commission File No. 1-11420 on Form 10-K for
the year ended January 3, 1993 as Exhibit 10-5.
10-7* Amendment No. 2 to the Deferred Compensation Plan for
Key Employees is hereby incorporated by
</TABLE>
41
<PAGE> 42
<TABLE>
<S> <C>
reference to Commission File No. 1-11420 on Form 10-K
for the year ended October 2, 1994 as Exhibit 10-6.
10-8* Deferred Compensation Plan for Directors of Savannah
Foods & Industries, Inc. as amended and restated.
10-9* Savannah Foods & Industries, Inc. Non-Employee
Directors' Compensation Plan.
10-10* Savannah Foods & Industries, Inc. Non-Employee
Directors' Supplemental Share Unit Plan.
10-11* Employment Agreements with all other Executive
Officers of the Company are incorporated by
reference to Commission File No. 1-11420 filed on
Form 10-K for the year ended January 1, 1989 as
Exhibit 10-7.
10-12* Employment Agreement - W. W. Sprague, III is
incorporated by reference to Commission File No.
1-11420 filed on Form 10-K for the year ended
December 29, 1991 as Exhibit 10-8.
10-13* Employment Agreement - David H. Roche is incorporated
by reference to Commission File No. 1-11420 filed on
Form 10-K for the year ended October 1, 1995 as
Exhibit 10-9.
10-14* Employment Agreement - R. Eugene Cartledge
16-1 Letters re: change in certifying accountant are
incorporated by reference to Commission File No.
1-11420 filed on Form 8-K dated October 17, 1996
as Exhibit 16-1 and by reference to Commission
File No. 1-11420 filed on Form 8-K dated
November 18, 1996 as Exhibit 16-1.
21-1 Subsidiaries of Registrant
23-1 Consent of Independent Accountants
27-1 Financial Data Schedules (for SEC use only).
</TABLE>
* Indicates exhibits which are management contracts or compensatory agreements.
42
<PAGE> 43
(b) Reports on Form 8-K:
No reports were filed on Form 8-K during the last quarter covered by this
Form 10-K. However, since September 29, 1996 the Registrant has filed
three Form 8-K's related to the dismissal of Price Waterhouse LLP as
independent accountants and the engagement of Arthur Andersen LLP as
independent accountants. The Form 8-K's were dated October 17, 1996,
November 18, 1996 and December 16, 1996.
(c) See (a) (3) Exhibits above.
(d) Not applicable.
43
<PAGE> 44
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 Statement on Form S-8
Number 2-94678, Employee Retirement Savings Account Plan (filed December 22,
1984 as amended on October 18, 1994).
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.
44
<PAGE> 45
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: December 16, 1996 By: /s/William W. Sprague, III
----------------- ---------------------------
William W. Sprague, III
President and
Chief Executive Officer
45
<PAGE> 46
Pursuant to the requirements of the Securities Act of 1934, this report
has been signed by the following persons on behalf of Registrant in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
<S> <C> <C>
/S/William W. Sprague, III President and December 16, 1996
- -------------------------- Chief Executive Officer
William W. Sprague, III and Director
/S/Gregory H. Smith Senior Vice President December 16, 1996
- ------------------- Chief Financial Officer
Gregory H. Smith and Treasurer (PRINCIPAL
FINANCIAL AND PRINCIPAL
ACCOUNTING OFFICER)
/S/F. Sprague Exley Senior Vice President - December 16, 1996
- -------------------- Human Resources and
F. Sprague Exley Administration
and Assistant Secretary
and Director
/S/R. Eugene Cartledge Chairman of the Board December 16, 1996
- ---------------------- of Directors
R. Eugene Cartledge
/S/W. Waldo Bradley Director December 16, 1996
- -------------------
W. Waldo Bradley
/S/John D. Carswell Director December 16, 1996
- -------------------
John D. Carswell
/S/Hugh M. Tarbutton Director December 16, 1996
- --------------------
Hugh M. Tarbutton
/S/Arthur Gignilliat, Jr. Director December 16, 1996
- -------------------------
Arthur Gignilliat, Jr.
/S/Robert L. Harrison Director December 16, 1996
- ---------------------
Robert L. Harrison
</TABLE>
46
<PAGE> 1
EXHIBIT 10.4
AMENDMENT NO. 2
TO THE SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN (SERP)
OF
SAVANNAH FOODS & INDUSTRIES, INC. AND SUBSIDIARIES
THIS AMENDMENT NO. 2 is made this 18th day of April 1996, by Savannah
Foods & Industries, Inc. (the "Company").
WITNESSETH:
WHEREAS, the Board of Directors of the Company adopted the Second
Amendment and Restatement of the Supplemental Executive Retirement Plan (SERP)
of Savannah Foods & Industries, Inc. and Subsidiaries, effective January 1,
1989 (the "Plan"); and
WHEREAS, the Board deems it to be the best interests of the Plan
Participants and the Company's shareholders to amend certain provisions of the
Plan relating to years of service;
THEREFORE, effective as of April 18, 1996, the Plan is hereby amended
as set forth below.
ITEM ONE
Section 1.33 is rewritten to read as follows:
1.33 SERVICE: "Service" shall have the same
meaning which the Retirement Income Plan ascribes to such term;
provided, however, that as of June 30, 1996, years of service shall be
limited to the years of service rounded up to the next full year as
the numerator of a fraction, and the denominator of which would be the
years of potential service at normal retirement.
IN WITNESS WHEREOF, the Company has caused this Amendment to be
executed as of April 18, 1996.
SAVANNAH FOODS & INDUSTRIES, INC.
By: /s/ William W. Sprague, III
---------------------------------
President
Attest: /s/ John M. Tatum
-----------------------------
Secretary
[CORPORATE SEAL]
<PAGE> 1
EXHIBIT 10.8
DEFERRED COMPENSATION PLAN
FOR DIRECTORS OF
SAVANNAH FOODS & INDUSTRIES, INC.
(Amended and Restated Effective as of June 30, 1996)
This amended and restated Deferred Compensation Plan (the "Plan") is
effective June 30, 1996.
ARTICLE I
DEFINITIONS
1.1 "Account" means the separate account maintained for each
Participant in accordance with Article IV hereof.
1.2 "Beneficiary" means the person(s) so designated in accordance
with Article VII hereof. In the absence of a valid Beneficiary designation, a
Participant's Beneficiary shall be deemed to be the Participant's estate.
1.3 "Code" means the Internal Revenue Code of 1986, as amended.
1.4 "Committee" means the administrative committee appointed by
the Board of Directors of the Company to administer the Plan.
1.5 "Company" means Savannah Foods & Industries, Inc.
1.6 "Meeting Fees" means the compensation periodically paid to a
Director of the Company for attendance at any meeting of the Board of Directors
of the Company or any Committee or Sub-Committee thereof.
1.7 "Participant" means any person eligible to participate in the
Plan in accordance with the provisions of Article II hereof.
1.8 "Participant Deferral Form" means the form on which a
Participant makes an election under Article III hereof.
1.9 "Participant Election Form" means the form on which a
Participant makes any election (other than any election described in Article
III or Article VI) provided for herein.
1.10 "Plan" means this Amended and Restated Deferred Compensation
Plan for Directors of Savannah Foods & Industries, Inc., as amended from time
to time.
1.11 "Prime Rate" means the prime interest rate announced from time
to time by SunTrust Banks, Inc., which shall be deemed to include any successor
bank or company.
<PAGE> 2
1.12 "Severance Date" means the date on which a Participant
terminates service as a member of the Board of Directors of the Company.
ARTICLE II
ELIGIBILITY
Any non-employee member of the Board of Directors of the Company who
(i) has previously made an election to defer compensation under this Plan, or
(ii) has made an election under Article III hereof, shall be a Participant
hereunder.
ARTICLE III
DEFERRAL OF MEETING FEES
3.1 Deferral Election. In accordance with rules established by
the Committee, a Participant may elect to defer Meeting Fees due to be earned
and which would otherwise be paid to the Participant during a calendar year. A
Participant shall make such election on a Participant Deferral Form provided by
the Company. Once made, a deferral election shall continue in force
indefinitely until suspended or modified by a subsequent election; provided,
however, that any subsequent election shall not take effect until the first day
of the calendar year following the calendar year during which such election is
made. Notwithstanding the above, a Participant may immediately suspend all
deferrals at any time by written notice delivered to the Company; provided,
however, upon such suspension of deferral, the Participant shall be ineligible
to make another deferral election during that calendar year in which the
suspension occurred.
3.2 Timing of Elections. All elections under this Article III
shall be made on or before December 31 of the calendar year preceding the
calendar year in which such election shall become effective; provided, however,
a Participant may elect, within thirty (30) days after the adoption of this
Plan, to defer Meeting Fees for meetings occurring after the effective date of
the Plan but prior to December 31, 1996; provided further, in the calendar year
in which a Participant first becomes eligible to participate in the Plan, the
Participant may elect, within thirty (30) days after the date the individual
becomes eligible to participate in the Plan, to defer Meeting Fees for meetings
occurring after such election but during the same calendar year.
ARTICLE IV
DEFERRED COMPENSATION ACCOUNT
The Company shall record in a deferred compensation account (an
"Account") maintained in the name of each Participant the Participant's Account
balance as of June 30, 1996 as specified on Exhibit "A" attached hereto and
made a part hereof. The Company shall also credit to each Participant's
Account all amounts deferred on a Participant Deferral Form in accordance with
Article III hereof on the date(s) such amounts would be payable to the
Participant absent such deferral
- 2 -
<PAGE> 3
election. The Company shall credit interest to each Participant's Account on
the last day of each month at a rate determined as follows: (i) for the period
from July 1, 1996 through June 30, 1997, applying an interest rate of eight
percent (8%) per annum; (ii) for the period from July 1, 1997 through December
31, 1997, applying the Prime Rate in effect on July 1, 1997; and (iii) for each
calendar year beginning on or after January 1, 1998, applying the Prime Rate in
effect on January 1 of each such calendar year. The amount of interest
credited to a Participant's Account at the end of each month shall be included
in the balance in such Participant's Account for purposes of subsequent monthly
interest computations.
ARTICLE V
BENEFITS
5.1 Severance Benefits. Upon a Participant's termination of
service on the Board of Directors of the Company, the Participant shall be
entitled to payment from the Company of an amount (the "Severance Benefit")
equal to the balance then credited to the Participant's Account. Payment of
the Severance Benefit shall be made in cash in quarterly installments over a
fifteen (15) year period; provided, however a Participant may irrevocably
elect, within thirty (30) days after date of the adoption of this Plan, to
receive such benefits either in a lump sum or in quarterly installments over a
five (5), ten (10) or fifteen (15) year period. If made in installments, such
payments shall bear interest, compounded quarterly through the date of payment,
at a rate per annum equal to the Prime Rate determined annually on the first
business day of each calendar year. Such payments shall occur or commence on
the first day of the calendar quarter following the date of the Participant's
termination of service on the Board of Directors of the Company. If a
Participant dies after such Participant terminates service on the Board of
Directors of the Company, then the remaining installments of the Participant's
Severance Benefit shall be paid to the Participant's Beneficiary (as determined
under Article VII of the Plan) in accordance with the Participant's elected
payment schedule. If a Participant dies prior to the date such Participant
terminates service on the Board of Directors of the Company, the payment of the
Participant's Severance Benefit shall be paid to the Participant's Beneficiary
(as determined under Article VII of the Plan) in accordance with the
Participant's elected payment schedule, commencing on the first day of the
calendar quarter following the Participant's death.
5.2 Election to Defer Beyond Termination of Service.
Notwithstanding the provisions of Section 5.1 hereof, a Participant may
irrevocably elect, within thirty (30) days after the adoption of this Plan, to
have payment of his Severance Benefit commence at any time after the
Participant's termination of service on the Board of Directors of the Company,
but not later than the January 1 next following the date the Participant
attains seventy (70) years of age. The unpaid balance of a Participant's
Account shall, at all times prior to the commencement of payment of such
balance, bear interest as described in Article IV hereof.
- 3 -
<PAGE> 4
ARTICLE VI
CHANGE IN CONTROL
6.1 Payment of Benefits upon Change in Control. Notwithstanding
anything herein to the contrary, upon any Potential Change in Control (as such
term is defined in the Benefit Trust Agreement dated March 14, 1996 by and
between Savannah Foods & Industries, Inc. and Wachovia Bank of North Carolina,
as such agreement is or has been amended from time to time), the Company shall
promptly deliver to each Participant an election form (a "Change in Control
Election Form") which shall permit each Participant to make the elections
contemplated by this Article VI. A Participant may, at any time at least
thirty (30) days prior to a Change in Control, make any of the elections
described in this Article VI (a "Change in Control Election") on such Change in
Control Election Form. If a Participant so elects, then, in the event of a
Change in Control, in lieu of the benefits provided in Section 5.1 hereof, the
Participant shall be entitled to payment from the Company of an amount (the
"Post Change Severance Benefit") equal to the balance then credited to the
Participant's Account. Payment of the Post Change Severance Benefit shall be
made in cash in a lump sum on the date of the Change in Control; provided,
however, that a Participant may elect on the Change in Control Election Form to
receive payment of the Post Change Severance Benefit in quarterly installments
over a period not to exceed the period otherwise applicable to benefits under
the Plan (taking into account any election under Article V hereof). If made in
installments, such payments and the Participant's unpaid account balance shall
bear interest (compounded quarterly) at a rate per annum equal to the Prime
Rate determined annually on the first business day of each calendar year. If a
Participant elects to receive his Post Change Severance Benefit in
installments, payment of the Post Change Severance Benefit shall commence on
the first day of the calendar quarter following the date of the Change in
Control. If a Participant who has made a Change in Control Election hereunder
dies, any remaining installments of the Participant's Post Change Severance
Benefit shall be paid to the Participant's Beneficiary (as determined under
Article VII of the Plan).
6.2 Definition of Change in Control. A Change in Control shall be
deemed to have occurred when and only when the first of the following events
occurs:
(a) Any "person" (as that term is used in Sections 13(d)
and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), other than (1) any employee plan established by the
Corporation, (2) the Corporation, (3) an underwriter temporarily
holding securities pursuant to an offering of such securities, or (4)
a corporation owned, directly or indirectly, by stockholders of the
Corporation in substantially the same proportions as their ownership
of the Corporation) is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 20% or more of
the combined voting power of the Company's then outstanding voting
securities; or
(b) During any period of two consecutive years,
individuals who at the beginning of such period constituted the Board
and any new director (other than an individual whose nomination for
election is in connection with an actual or threatened election
contest relating
- 4 -
<PAGE> 5
to the election of the directors of the Company, as such terms are
used in Rule 14a-11 of Regulation 14A under the Exchange Act) whose
appointment, election, or nomination for election by the Company's
shareholders, was approved by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors
at the beginning of the period or whose appointment, election or
nomination for election was previously so approved, cease for any
reason to constitute a majority of the Board; or
(c) There is consummated a merger or consolidation of the
Company or a subsidiary thereof with or into any other corporation,
other than a merger or consolidation which would result in the holders
of the voting securities of the Company outstanding immediately prior
thereto holding securities which represent immediately after such
merger or consolidation more than 80% of the combined voting power of
the voting securities of either the Company or the other entity which
survives such merger or consolidation or the parent of the entity
which survives such merger or consolidation; or
(d) There is consummated a sale or disposition by the
Company of all or substantially all of the Company's assets.
ARTICLE VII
BENEFICIARIES
Each Participant may file with the Company a notice in writing
designating one or more Beneficiaries to whom payments otherwise due to or for
the benefit of the Participant hereunder shall be made in the event of the
Participant's death prior to the complete payment of such benefit. A
Participant shall have the right to change the Beneficiary or Beneficiaries so
designated from time to time; provided, however, that any change shall not be
effective until received in writing by the Committee.
ARTICLE VIII
ADMINISTRATION
8.1 Administrative Authority. This Plan shall be administered by
a Committee of not less than three (3) members appointed by the Board of
Directors of the Company. The Board of Directors may from time to time appoint
members of the Committee in substitution for the members previously appointed
and may fill vacancies, however caused. The Committee shall act by a majority
of the number then constituting the Committee, and such action may be taken
either by a vote at a meeting or in writing without a meeting. Except as
otherwise specifically provided herein, the Company shall have the sole
responsibility for and sole control of the operation and administration of this
Plan, and shall have the power and authority to take all action and make all
interpretations which may be necessary or appropriate in order to administer
and operate the Plan, including the power, duty, and responsibility to:
- 5 -
<PAGE> 6
(a) Make determinations as to all disputes or questions arising
under the Plan, including the power to determine the rights of
Participants and Beneficiaries and to remedy any ambiguities,
inconsistencies, or omissions in the Plan;
(b) Adopt such rules of procedure and regulations, consistent with
the Plan, as in its opinion may be necessary for the proper and
efficient administration of the Plan;
(c) Implement the Plan in accordance with its terms and the rules
and regulations adopted as above;
(d) Make determinations concerning the crediting and distribution
of Plan Accounts;
(e) Appoint any persons or firms, or otherwise act to secure
specialized advice or assistance, as it deems necessary or desirable
in connection with the administration and operation of the Plan; the
Committee shall be entitled to rely conclusively upon, and shall be
fully protected in any action or omission taken by it in good faith
reliance upon, the advice or opinion of such persons or firms. The
Committee shall have the power and authority to delegate from time to
time by written instrument all or any part of its duties, powers, or
responsibilities under the Plan, both ministerial and discretionary,
as it deems appropriate, to any person or committee, and in the same
manner to revoke any such delegation of duties, powers or
responsibilities. Any action of such person or committee in the
exercise of such delegated duties, powers or responsibilities shall
have the same force and effect for all purposes hereunder as if such
action had been taken by the Committee.
8.2 Uniformity of Discretionary Acts. Whenever in the
administration or operation of the Plan discretionary actions by the Company
are required or permitted, such actions shall be consistently and uniformly
applied to all persons similarly situated, and no such action shall be taken
which shall discriminate in favor of any particular person or group of persons.
8.3 Claims Procedure. Any person claiming a benefit under the
Plan (a "Claimant") shall present the claim, in writing, to the Committee, and
the Committee shall respond in writing. If the claim is denied, the written
notice of denial shall state, in a manner calculated to be understood by the
Claimant:
(a) The specific reason or reasons for the denial, with specific
references to the Plan provisions on which the denial is based;
(b) A description of any additional material or information
necessary for the Claimant to perfect his or her claim and an
explanation of why such material or information is necessary; and
(c) An explanation of the Plan's claims review procedure.
- 6 -
<PAGE> 7
The written notice denying or granting the Claimant's claim shall be
provided to the Claimant within ninety (90) days after the Committee's receipt
of the claim, unless special circumstances require an extension of time for
processing the claim. If such an extension is required, written notice of the
extension shall be furnished by the Committee to the Claimant within the
initial ninety (90) day period and in no event shall such an extension exceed a
period of ninety (90) days from the end of the initial ninety (90) day period.
Any extension notice shall indicate the special circumstances requiring the
extension and the date on which the Committee expects to render a decision on
the claim. Any claim not granted or denied within the period noted above shall
be deemed to have been denied.
Any Claimant whose claim is denied or is deemed to have been denied
under the preceding sentence (or such Claimant's authorized representative),
may, within sixty (60) days after the Claimant's receipt of notice of the
denial, or after the date of the deemed denial, request a review of the denial
by notice given, in writing, to the Company. Upon such a request for review,
the claim shall be reviewed by the Company (or its designated representative),
which may, but shall not be required to, grant the Claimant a hearing. In
connection with the review, the Claimant may have representation, may examine
pertinent documents, and may submit issues and comments in writing.
The decision on review normally shall be made within sixty (60) days of
the Company's receipt of the request for review. If an extension of time is
required due to special circumstances, the Claimant shall be notified, in
writing, by the Company, and the time limit for the decision on review shall be
extended to one hundred twenty (120) days. The decision on review shall be in
writing and shall state in a manner calculated to be understood by the
Claimant, the specific reasons for the decision and shall include references to
the relevant Plan provisions on which the decision is based. The written
decision on review shall be given to the Claimant within the sixty (60) day
(or, if applicable, the one hundred twenty (120) day) period discussed above.
If the decision on review is not communicated to the Claimant within the sixty
(60) day (or, if applicable, the one hundred twenty (120) day) period discussed
above, the claim shall be deemed to have been denied upon review.
ARTICLE IX
AMENDMENT
9.1 Right to Amend or Terminate. The Company, by written
instrument executed by the Company, shall have the right to (i) amend the Plan
at any time and with respect to any provisions hereof, and all parties hereto
or claiming any interest hereunder shall be bound by such amendment, and (ii)
to terminate the Plan; provided, however, that no such amendment or termination
shall deprive a Participant or Beneficiary of a right accrued hereunder prior
to the date of the amendment or termination.
9.2 Amendments to Ensure Proper Characterization of Plan.
Notwithstanding the provisions of Section 9.1 hereof, the Plan may be amended
by the Company at any time, retroactively if required, if in the opinion of the
Company, in order to ensure that the Plan is characterized as a plan maintained
primarily for the purpose of providing deferred compensation for a select group
of management or highly compensated employees and to conform the Plan to the
provisions and
- 7 -
<PAGE> 8
requirements of any applicable law (including ERISA and the Code). No such
amendment shall be considered prejudicial to any interest of a Participant or
Beneficiary hereunder.
ARTICLE X
MISCELLANEOUS
10.1 Limitations on Liability of Company. Neither the
establishment of the Plan nor any modification thereof, nor the creation of any
Account under the Plan, nor the payment of any benefits under the Plan shall be
construed as giving to any Participant or other person any legal or equitable
right against the Company, or any officer or employer thereof except as
provided by law or by any Plan provision. In no event shall the Company, or
any successor, employee, officer, director, or stockholder of the Company, be
liable to any person on account of any claim arising by reason of the
provisions of the Plan or of any instrument or instruments implementing its
provisions, or for the failure of any Participant, Beneficiary, or other person
to be entitled to any particular tax consequences with respect to the Plan, or
any credit or distribution hereunder.
10.2 Construction.
(a) If any provision of the Plan is held to be illegal or invalid,
such illegality or invalidity shall not affect the remaining
provisions of the Plan, but shall be fully severable, and the Plan
shall be construed and enforced as if such provision had never been
inserted herein. For all purposes of the Plan, where the context
requires, the singular shall include the plural, and the plural shall
include the singular. Headings of Articles and Sections herein are
inserted only for convenience of reference and are not to be
considered in the construction of the Plan. The laws of the State of
Georgia shall govern, control and determine all questions of law
arising with respect to the Plan and the interpretation and validity
of its respective provisions, except where those laws are preempted by
the laws of the United States. Participation under the Plan will not
give any Participant the right to be retained in the service of the
Company nor any right or claim to any benefit under the Plan unless
such right or claim has specifically accrued hereunder.
(b) The Plan is intended to be and at all times shall be
interpreted and administered so as to qualify as an unfunded deferred
compensation plan, and no provision of the Plan shall be interpreted
so as to give any individual any right in any assets of the Company
which right is greater than the rights of a general unsecured creditor
of the Company.
10.3 Spendthrift Provision.
(a) No amount payable to a Participant or a Beneficiary
under the Plan will, except as otherwise specifically provided by law,
be subject in any manner to anticipation, alienation, attachment,
garnishment, sale, transfer, assignment (either at law or in equity),
levy, execution, pledge, encumbrance, charge, or any other legal or
equitable process, and any
- 8 -
<PAGE> 9
attempt to do so will be void; nor will any benefit be in any manner
liable for or subject to the debts, contracts, liabilities,
engagements, or torts of the person entitled thereto. Further,
neither the withholding of taxes from Plan benefit payments nor the
recovery under the Plan of overpayments of benefits previously made to
a Participant or Beneficiary shall be construed as an assignment or
alienation.
(b) In the event that any Participant's or Beneficiary's
benefits hereunder are garnished or attached by order of any court,
the Company may bring an action or a declaratory judgment in a court
of competent jurisdiction to determine the proper recipient of the
benefits to be paid under the Plan. During the pendency of said
action, any benefits that become payable shall be held as credits to
the Participant's or Beneficiary's Account or, if the Company prefers,
paid into the court as they become payable, to be distributed by the
court to the recipient as the court deems proper at the close of said
action.
10.4 No Guaranty of Benefits. Nothing contained in the Plan shall
constitute a guaranty by the Company or any related entity or any other entity
or person that the assets of the Company or any related entity will be
sufficient to pay any benefit hereunder.
10.5 No Enlargement of Rights. No Participant or Beneficiary shall
have any right to a benefit under the Plan except in accordance with the terms
of the Plan. Establishment of the Plan shall not be construed to give any
Participant the right to be retained as a director of the Company.
10.6 Applicable Law. The Plan shall be construed and administered
under the laws of the State of Georgia.
10.7 Gender; Number. Words in the masculine gender shall include
the feminine gender as appropriate, and the singular shall include the plural,
and vice-versa, unless qualified by the context.
10.8 Captions and Headings. Any headings used herein are included
for convenience of reference only and are not to be construed so as to alter
the terms hereof.
[THE REMAINDER OF THIS PAGE HAS INTENTIONALLY BEEN LEFT BLANK.]
- 9 -
<PAGE> 10
IN WITNESS WHEREOF, the Company has caused this Amendment and
Restatement of the Plan to be executed and its seal to be affixed hereto,
effective as of the 30th day of June, 1996.
SAVANNAH FOODS & INDUSTRIES, INC.
By: /s/ William W. Sprague, III
--------------------------------------------
President
ATTEST:
/s/ John M. Tatum
- ---------------------------
Secretary
[CORPORATE SEAL]
- 10 -
<PAGE> 11
EXHIBIT A
TO THE
DEFERRED COMPENSATION PLAN FOR DIRECTORS OF
SAVANNAH FOODS & INDUSTRIES, INC.
<TABLE>
<CAPTION>
6/30/96
PARTICIPANT ACCOUNT BALANCE
----------- ---------------
<S> <C> <C>
1. W. Waldo Bradley $532,655
2 John D. Carswell $431,845
3. Dale C. Critz $ 78,984
4. Lee B. Durham, Jr. $409,343
5. Arthur M. Gignilliat, Jr. $209,459
6. Robert L. Harrison $170,129
7. Hugh M. Tarbutton $542,587
8. Arnold M. Tenenbaum $ 80,624
</TABLE>
- 11 -
<PAGE> 1
EXHIBIT 10.9
SAVANNAH FOODS & INDUSTRIES, INC.
NON-EMPLOYEE DIRECTORS' COMPENSATION PLAN
Effective as of August 15, 1996
ARTICLE I
Definitions
1.01 COMMITTEE means the administrative committee appointed by the Board of
Directors of the Company to administer this Plan.
1.02 COMPANY means Savannah Foods & Industries, Inc.
1.03 COMPENSATION means value payable by the Company to a Director in
consideration for his or her service as a Director.
1.04 DIRECTOR means a member of the Board of Directors of the Company.
1.05 DIVIDEND EQUIVALENT means the entry in an Account (as defined in Article
III) of a dividend credit with respect to a Share Unit, each Dividend
Equivalent being equal to the dividend paid from time to time on a Share.
1.06 FAIR MARKET VALUE means the daily closing price of a Share as reported on
the New York Stock Exchange (the "Exchange"); provided, however, that in
the event of a transaction which results in a Change in Control, Fair
Market Value is the greater of the value so determined or the price of a
Share in the transaction causing the Change in Control.
1.07 PARTICIPANT means a non-employee Director of the Company.
1.08 PLAN means this Non-Employee Directors' Compensation Plan, as it may be
amended from time to time.
1.09 POST CHANGE DIVIDEND EQUIVALENT means a Dividend Equivalent determined
with reference to the stock of an acquiring corporation upon a Change in
Control.
1.10 POST CHANGE FAIR MARKET VALUE means the Fair Market Value determined with
reference to the stock of an acquiring corporation upon a Change in
Control.
1.11 PRIME RATE means the prime interest rate announced from time to time by
SunTrust Banks, Inc., which shall be deemed to include any successor bank
or company.
EXHIBIT B
<PAGE> 2
1.12 SHARE means a share of the Company's authorized voting Common Stock ($.25
par value per share) and any share or shares of stock of the Company
hereafter issued or issuable in substitution or exchange for each such
share.
1.13 SHARE UNIT means the monetary equivalent of one Share.
ARTICLE II
Directors' Compensation
2.01 COMPENSATION IN SHARE UNITS - As compensation for service as a Director
from July 1, 1996 through December 31, 2001, each Director serving at the
time this Plan is adopted who is a Participant in this Plan shall be
granted 10,010 Share Units. Directors elected after the adoption of this
Plan shall be granted four hundred fifty-five (455) Share Units for each
calendar quarter between the first quarter following his or her election
and the last quarter of 2001, inclusive, as of the first day of the
calendar quarter following his or her election. Compensation pursuant to
this Plan shall be in addition to compensation paid to a Director for
attendance at meetings of the Board of Directors and at meetings of
committees of the Board of Directors.
2.02 MATURITY OF SHARE UNITS - On the last day of each calendar quarter
beginning the third quarter of 1996 and ending the fourth quarter of
2001, Four Hundred Fifty Five (455) of the Share Units granted to a
Participant under Section 2.01 hereof shall become vested. If a
Participant's service as a Director of the Company terminates for any
reason prior to December 31, 2001, a pro-rata portion of the Share Units
which would have otherwise vested on the last day of the calendar quarter
during which such termination occurs shall become vested, all remaining
unvested Share Units as of the date of such termination shall be
forfeited, and the Participant shall have no rights hereunder with regard
to such unvested Share Units, except as otherwise provided herein.
2.03 PAYMENT FOR SHARE UNITS
(a) On the date (the "Vesting Date") each Share Unit becomes vested
pursuant to the terms of this Article II, the Participant shall be
entitled to receive from the Company, with respect to each such
vested Share Unit then in the Participant's Account (as defined in
Article III hereof), an amount (the "Benefit") equal to the Fair
Market Value on the Vesting Date or, in the event the Exchange is
closed on the Vesting Date, the next day on which the Exchange is
open.
(b) Payment to a Participant of the Benefit for Share Units shall
be made in cash in a lump sum on the first business day following
the Vesting Date, or as soon thereafter, without interest, as
administratively practicable.
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(c) Directors are expected, but not in any way required, to use Benefits
paid pursuant to this Section 2.03 to acquire common stock in the
Company and to hold such stock for investment purposes.
2.04 ELECTION TO DEFER
(a) Notwithstanding the provisions of Section 2.03 hereof, a
Participant may make an election (a "Deferral Election") to defer
the Benefit due hereunder. Such Deferral Election shall specify
the form of payment and the date (the "Commencement Date") such
payments shall be made or begin; provided, however, that such date
shall not be earlier than the date the Participant terminates
service on the Board of Directors of the Company and shall not be
later than the January 1 next following the date the Participant
reaches seventy (70) years of age. Such Deferral Election shall be
made in such manner and form as the Committee shall prescribe, in
accordance with the terms of this Section 2.04 and other relevant
provisions of the Plan.
(b) Deferral Elections shall be made as follows:
(1) For Benefits vesting on September 30 and December
31, 1996, within thirty (30) days following the approval of
the Plan by the Board of Directors of the Company; and
(2) In all other cases, on or before December 31 of the
calendar year prior to the calendar year which includes the
Vesting Date for such Benefit.
(c) If a Participant makes a Deferral Election hereunder, the
payment of the Benefit to which such Deferral Election relates
shall be deferred until the Commencement Date. Upon the
Commencement Date, the Participant shall be entitled to payment
from the Company, with respect to each vested Share Unit to which a
Deferral Election has been made of an amount (the "Severance
Benefit") equal to the highest closing price of a share during the
twelve months preceding the date of the Participant's termination
of service on the Board of Directors of the Company plus the
Dividend Equivalent. Payment of the Severance Benefit shall be
made in cash in a lump sum on the Commencement Date or in quarterly
installments over a five (5), ten (10) or fifteen (15) year period
as elected by the Participant on the Deferral Election form. The
Severance Benefit shall bear interest, compounded quarterly from
the date of the Participant's termination of service on the Board
of Directors of the Company until such Severance Benefit is paid,
at a rate per annum equal to the Prime Rate determined annually on
the first business day of each calendar year, and each payment of
the Severance Benefit shall commence on the Commencement Date. If
a Participant who has made a Deferral Election hereunder dies, any
remaining installments of the Participant's Severance Benefit shall
be paid to the Participant's
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Beneficiary (as determined under Article IV of the Plan) in
accordance with the Participant's elected payment schedule.
ARTICLE III
Accounts
3.01 CREATION OF ACCOUNTS - The Share Units granted under the Plan shall be
credited to an Account established and maintained for each Participant.
Subject to any elections made by a Participant pursuant to Article V of
this Plan (relating to a Change in Control), the number of Share Units in
an Account shall be appropriately adjusted by the Committee in the event
of changes in the Company's outstanding common stock by reason of stock
dividends, stock splits, recapitalizations, reorganizations, mergers,
consolidations, combinations, exchanges or other relevant changes in
capitalization, and such adjustments shall be conclusive. Share Units
shall not entitle any person to the rights of a stockholder.
3.02 CREDITING DIVIDEND EQUIVALENTS - The fractional Share value of all
dividends paid on a Share shall be added to each Account as a vested
fractional Share Unit for each vested Share Unit in the Account.
ARTICLE IV
Designation of Beneficiaries
A Participant may name a beneficiary and a contingent beneficiary (the
"Beneficiary") to receive any payments due him or her at the time of his or her
death, and to receive any benefits due to such Beneficiary hereunder. The
Participant shall have the right to change such Beneficiary at any time. In
case of a failure of designation or the death of the designated Beneficiary
without a designated successor, distribution shall be made to the estate of the
Participant. No designation of Beneficiaries shall be valid unless it is made
in writing, signed by the participant, dated and filed with the Committee.
ARTICLE V
Change in Control
5.01 VESTING AND PAYMENT OF BENEFITS UPON CHANGE IN CONTROL
(a) In the event of a Change in Control (as defined below), all Share
Units awarded under this Plan to Directors serving on June 1, 1996, shall
become fully vested. Share Units awarded to Participants who become Directors
after June 1, 1996 shall continue to vest in accordance with the provisions of
Article II hereof.
(b) Notwithstanding anything herein to the contrary, upon any Potential
Change in Control (as such term is defined in the Benefit Trust Agreement,
dated March 14, 1996, by and
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between Savannah Foods & Industries, Inc., and Wachovia Bank of North Carolina,
as such agreement is or has been amended from time to time), the Company shall
promptly deliver to each Participant an election form (a "Change in Control
Election form") which shall permit each Participant to make the elections
contemplated by this Article V. A Participant may, at any time at least thirty
(30) days prior to a Change in Control, make any of the elections described in
this Article V (a "Change in Control Election") on such Change in Control
Election form.
(i) If a Participant so elects, then, in the event of a Change in
Control, in lieu of the Benefits provided in Article II hereof, the
Participant shall be entitled to payment from the Company, with respect
to each vested Share Unit then in the Participant's Account, of an amount
(the "Post Change Severance Benefit") equal to the Fair Market Value as
of the date of the Change in Control plus the Dividend Equivalent.
Payment of the Post Change Severance Benefit shall be made in cash in a
lump sum on the date the Change in Control occurs or in quarterly
installments over a period not to exceed the period selected by the
Participant in his Deferral Election, as elected by the Participant on
the Change in Control Election form. If made in installments, such
payments shall bear interest, compounded quarterly, from the date of the
Change in Control until such Post Change Severance Benefit is paid, at a
rate per annum equal to the Prime Rate determined annually on the first
business day of each calendar year. Such payment shall occur or commence
on the first day of the calendar quarter following the date of the Change
in Control. If a Participant who has made a Change in Control Election
hereunder dies, any remaining installments of the Participant's Post
Change Severance Benefit shall be paid to the Participant's Beneficiary
(as determined under Article IV of the Plan) in accordance with the
Participant's elected payment schedule.
(ii) If a Participant does not make the election specified in
subparagraph (i) above, then, in the event of a Change in Control, the
Participant's Severance Benefit under Article II hereof with respect to
each vested Share Unit then in the Participant's Account shall be an
amount equal to the Fair Market Value as of the date of the Change in
Control plus the Dividend Equivalent, plus interest, compounded
quarterly, from the date of the Change in Control through the date the
Participant's Severance Benefit is paid, at a rate per annum equal to the
Prime Rate determined initially on the date of the Change in Control and
adjusted annually on the first business day of each calendar year.
Provided, however, that if a Participant so elects, the Participant's
Severance Benefit under Article II hereof with respect to each vested
Share Unit then in the Participant's Account shall be an amount equal to
the Post Change Fair Market Value plus the Post Change Dividend
Equivalent as of the Commencement Date. All payments described in this
subparagraph shall be made in accordance with the provisions of Article
II hereof.
5.02 DEFINITION OF CHANGE IN CONTROL - For purposes of this Plan, a Change in
Control shall be deemed to have occurred when and only when the first of
the following events occurs:
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(a) Any "person" (as that term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), other than (1) any employee plan established by
the Corporation, (2) the Corporation, (3) an underwriter
temporarily holding securities pursuant to an offering of such
securities, or (4) a corporation owned, directly or indirectly, by
stockholders of the Corporation in substantially the same
proportions as their ownership of the Corporation) is or becomes
the beneficial owner, directly or indirectly, of securities of the
Company representing 20% or more of the combined voting power of
the Company's then outstanding voting securities; or
(b) During any period of two consecutive years, individuals who at
the beginning of such period constituted the Board and any new
director (other than an individual whose nomination for election is
in connection with an actual or threatened election contest
relating to the election of the directors of the Company, as such
terms are used in Rule 14a-11 of Regulation 14A under the Exchange
Act) whose appointment, election, or nomination for election by the
Company's shareholders, was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either
were directors at the beginning of the period or whose appointment,
election or nomination for election was previously so approved,
cease for any reason to constitute a majority of the Board; or
(c) There is consummated a merger or consolidation of the Company
or a subsidiary thereof with or into any other corporation, other
than a merger or consolidation which would result in the holders of
the voting securities of the Company outstanding immediately prior
thereto holding securities which represent immediately after such
merger or consolidation more than 80% of the combined voting power
of the voting securities of either the Company or the other entity
which survives such merger or consolidation or the parent of the
entity which survives such merger or consolidation; or
(d) There is consummated a sale or disposition by the Company of
all or substantially all of the Company's assets.
ARTICLE VI
Death Benefits
6.01 If a Participant who is a director at the time this Plan is adopted dies
while serving on the Board of Directors, all Share Units awarded under
this Plan shall become fully vested and the Company shall pay to the
Participant's Beneficiary (as determined under Article IV of the Plan) for
each Share Unit for which a Deferral Election has not been made, in cash
and in a lump sum, an amount equal to the Fair Market Value on the date of
death plus the Dividend Equivalent, and for each Share Unit for which a
Deferral Election has been made, the
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Company shall pay to the Participant's Beneficiary the Severance Benefit
in the same manner as provided in Section 2.04(c) above.
ARTICLE VII
Source of Payments
All payments of deferred compensation shall be paid in cash from the
general funds of the Company and the Company shall be under no obligation to
segregate any assets in connection with the maintenance of an Account, nor
shall anything contained in this Plan nor any action taken pursuant to the Plan
create or be construed to create a trust of any kind, or a fiduciary
relationship between the Company and the Participant. Title to the beneficial
ownership of any assets, whether cash or investments, which the Company may
designate to pay the amount credited to an Account shall at all times remain in
the Company and the Participant shall not have any property interest whatsoever
in any specific assets of the Company. A Participant's interest in his Account
shall be limited to the right to receive payments pursuant to the terms of this
Plan and such rights to receive shall be no greater than the right of any other
unsecured general creditor of the Company.
ARTICLE VIII
Administration
8.1 Administrative Authority. This Plan shall be administered by a
Committee of not less than three (3) members appointed by the Board of
Directors of the Company. The Board of Directors may from time to time appoint
members of the Committee in substitution for the members previously appointed
and may fill vacancies, however caused. The Committee shall act by a majority
of the number then constituting the Committee, and such action may be taken
either by a vote at a meeting or in writing without a meeting. Except as
otherwise specifically provided herein, the Company shall have the sole
responsibility for and sole control of the operation and administration of this
Plan, and shall have the power and authority to take all action and make all
interpretations which may be necessary or appropriate in order to administer
and operate the Plan, including the power, duty, and responsibility to:
(a) Make determinations as to all disputes or questions arising under the
Plan, including the power to determine the rights of Participants and
Beneficiaries and to remedy any ambiguities, inconsistencies, or
omissions in the Plan;
(b) Adopt such rules of procedure and regulations, consistent with the
Plan, as in its opinion may be necessary for the proper and efficient
administration of the Plan;
(c) Implement the Plan in accordance with its terms and the rules and
regulations adopted as above;
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(d) Make determinations concerning the crediting and distribution of Plan
Accounts;
(e) Appoint any persons or firms, or otherwise act to secure specialized
advice or assistance, as it deems necessary or desirable in connection
with the administration and operation of the Plan; the Committee shall be
entitled to rely conclusively upon, and shall be fully protected in any
action or omission taken by it in good faith reliance upon, the advice or
opinion of such persons or firms. The Committee shall have the power and
authority to delegate from time to time by written instrument all or any
part of its duties, powers, or responsibilities under the Plan, both
ministerial and discretionary, as it deems appropriate, to any person or
committee, and in the same manner to revoke any such delegation of
duties, powers or responsibilities. Any action of such person or
committee in the exercise of such delegated duties, powers or
responsibilities shall have the same force and effect for all purposes
hereunder as if such action had been taken by the Committee.
8.2 Uniformity of Discretionary Acts. Whenever in the administration or
operation of the Plan discretionary actions by the Company are required or
permitted, such actions shall be consistently and uniformly applied to all
persons similarly situated, and no such action shall be taken which shall
discriminate in favor of any particular person or group of persons.
8.3 Claims Procedure. Any person claiming a benefit under the Plan (a
"Claimant") shall present the claim, in writing, to the Committee, and the
Committee shall respond in writing. If the claim is denied, the written notice
of denial shall state, in a manner calculated to be understood by the Claimant:
(a) The specific reason or reasons for the denial, with specific
references to the Plan provisions on which the denial is based;
(b) A description of any additional material or information necessary for
the Claimant to perfect his or her claim and an explanation of why such
material or information is necessary; and
(c) An explanation of the Plan's claims review procedure.
The written notice denying or granting the Claimant's claim shall be
provided to the Claimant within ninety (90) days after the Committee's receipt
of the claim, unless special circumstances require an extension of time for
processing the claim. If such an extension is required, written notice of the
extension shall be furnished by the Committee to the Claimant within the
initial ninety (90) day period and in no event shall such an extension exceed a
period of ninety (90) days from the end of the initial ninety (90) day period.
Any extension notice shall indicate the special circumstances requiring the
extension and the date on which the Committee expects to render a decision on
the claim. Any claim not granted or denied within the period noted above shall
be deemed to have been denied.
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Any Claimant whose claim is denied or is deemed to have been denied under
the preceding sentence (or such Claimant's authorized representative), may,
within sixty (60) days after the Claimant's receipt of notice of the denial, or
after the date of the deemed denial, request a review of the denial by notice
given, in writing, to the Company. Upon such a request for review, the claim
shall be reviewed by the Company (or its designated representative), which may,
but shall not be required to, grant the Claimant a hearing. In connection with
the review, the Claimant may have representation, may examine pertinent
documents, and may submit issues and comments in writing.
The decision on review normally shall be made within sixty (60) days of
the Company's receipt of the request for review. If an extension of time is
required due to special circumstances, the Claimant shall be notified, in
writing, by the Company, and the time limit for the decision on review shall be
extended to one hundred twenty (120) days. The decision on review shall be in
writing and shall state in a manner calculated to be understood by the
Claimant, the specific reasons for the decision and shall include references to
the relevant Plan provisions on which the decision is based. The written
decision on review shall be given to the Claimant within the sixty (60) day
(or, if applicable, the one hundred twenty (120) day) period discussed above.
If the decision on review is not communicated to the Claimant within the sixty
(60) day (or, if applicable, the one hundred twenty (120) day) period discussed
above, the claim shall be deemed to have been denied upon review.
ARTICLE IX
Amendment
9.1 Right to Amend or Terminate. The Company, by written instrument
executed by the Company, shall have the right to (i) amend the Plan at any time
and with respect to any provisions hereof, and all parties hereto or claiming
any interest hereunder shall be bound by such amendment, and (ii) to terminate
the Plan; provided, however, that no such amendment or termination shall
deprive a Participant or Beneficiary of a right accrued hereunder prior to the
date of the amendment or termination.
9.2 Amendments to Ensure Proper Characterization of Plan. Notwithstanding
the provisions of Section 8.1 hereof, the Plan may be amended by the Company at
any time, retroactively if required, if in the opinion of the Company, in order
to ensure that the Plan is characterized as a plan maintained primarily for the
purpose of providing deferred compensation for a select group of management or
highly compensated employees and to conform the Plan to the provisions and
requirements of any applicable law (including ERISA and the Code). No such
amendment shall be considered prejudicial to any interest of a Participant or
Beneficiary hereunder.
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ARTICLE X
Miscellaneous
10.1 Limitations on Liability of Company. Neither the establishment of
the Plan nor any modification thereof, nor the creation of any Account under
the Plan, nor the payment of any benefits under the Plan shall be construed as
giving to any Participant or other person any legal or equitable right against
the Company, or any officer or employer thereof except as provided by law or by
any Plan provision. In no event shall the Company, or any successor, employee,
officer, director, or stockholder of the Company, be liable to any person on
account of any claim arising by reason of the provisions of the Plan or of any
instrument or instruments implementing its provisions, or for the failure of
any Participant, Beneficiary, or other person to be entitled to any particular
tax consequences with respect to the Plan, or any credit or distribution
hereunder.
10.2 Construction.
(a) If any provision of the Plan is held to be illegal or invalid,
such illegality or invalidity shall not affect the remaining provisions
of the Plan, but shall be fully severable, and the Plan shall be
construed and enforced as if such provision had never been inserted
herein. For all purposes of the Plan, where the context requires, the
singular shall include the plural, and the plural shall include the
singular. Headings of Articles and Sections herein are inserted only for
convenience of reference and are not to be considered in the construction
of the Plan. The laws of the State of Georgia shall govern, control and
determine all questions of law arising with respect to the Plan and the
interpretation and validity of its respective provisions, except where
those laws are preempted by the laws of the United States. Participation
under the Plan will not give any Participant the right to be retained in
the service of the Company nor any right or claim to any benefit under
the Plan unless such right or claim has specifically accrued hereunder.
(b) The Plan is intended to be and at all times shall be interpreted
and administered so as to qualify as an unfunded deferred compensation
plan, and no provision of the Plan shall be interpreted so as to give any
individual any right in any assets of the Company which right is greater
than the rights of a general unsecured creditor of the Company.
10.3 Spendthrift Provision.
(a) No amount payable to a Participant or a Beneficiary under the
Plan will, except as otherwise specifically provided by law, be subject
in any manner to anticipation, alienation, attachment, garnishment, sale,
transfer, assignment (either at law or in equity), levy, execution,
pledge, encumbrance, charge, or any other legal or equitable process, and
any attempt to do so will be void; nor will any benefit be in any manner
liable for or subject to the debts, contracts, liabilities, engagements,
or torts of the person entitled thereto. Further, neither the
withholding of taxes from Plan benefit payments nor the recovery under
the Plan
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<PAGE> 11
of overpayments of benefits previously made to a Participant or
Beneficiary shall be construed as an assignment or alienation.
(b) In the event that any Participant's or Beneficiary's benefits
hereunder are garnished or attached by order of any court, the Company
may bring an action or a declaratory judgment in a court of competent
jurisdiction to determine the proper recipient of the benefits to be paid
under the Plan. During the pendency of said action, any benefits that
become payable shall be held as credits to the Participant's or
Beneficiary's Account or, if the Company prefers, paid into the court as
they become payable, to be distributed by the court to the recipient as
the court deems proper at the close of said action.
10.4 No Guaranty of Benefits. Nothing contained in the Plan shall
constitute a guaranty by the Company or any related entity or any other entity
or person that the assets of the Company or any related entity will be
sufficient to pay any benefit hereunder.
10.5 No Enlargement of Rights. No Participant or Beneficiary shall have
any right to a benefit under the Plan except in accordance with the terms of
the Plan. Establishment of the Plan shall not be construed to give any
Participant the right to be retained as a director of the Company.
10.6 Applicable Law. The Plan shall be construed and administered under
the laws of the State of Georgia.
10.7 Gender; Number. Words in the masculine gender shall include the
feminine gender as appropriate, and the singular shall include the plural, and
vice-versa, unless qualified by the context.
10.8 Captions and Headings. Any headings used herein are included for
convenience of reference only and are not to be construed so as to alter the
terms hereof.
IN WITNESS WHEREOF, this Plan has been duly executed by the Company
effective as of the 15th day of August, 1996.
SAVANNAH FOODS & INDUSTRIES, INC.
By: /s/ William W. Sprague, III
------------------------------------
President
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ATTEST:
/s/ John M. Tatum
- ------------------------------------
Secretary
[CORPORATE SEAL]
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EXHIBIT 10.10
SAVANNAH FOODS & INDUSTRIES, INC.
NON-EMPLOYEE DIRECTORS' SUPPLEMENTAL SHARE UNIT PLAN
Effective as of August 15, 1996
ARTICLE I
Definitions
1.01 COMMITTEE means the administrative committee appointed by the Board of
Directors of the Company to administer this Plan.
1.02 COMPANY means Savannah Foods & Industries, Inc.
1.03 DIRECTOR means a member of the Board of Directors of the Company.
1.04 DIVIDEND EQUIVALENT means the entry in an Account (as defined in
Article III) of a dividend credit with respect to a Share Unit, each
Dividend Equivalent being equal to the dividend paid from time to time
on a Share.
1.05 FAIR MARKET VALUE means the highest daily closing price of a Share
during the preceding twelve month period as reported on the New York
Stock Exchange (the "Exchange"); provided, however, that in the event
of a transaction which results in a Change in Control, Fair Market
Value is the greater of the value so determined or the price of a
Share in the transaction causing the Change in Control.
1.06 PARTICIPANT means a non-employee Director of the Company who elects to
become a Participant in the Plan.
1.07 PLAN means this Non-Employee Directors' Supplemental Share Unit Plan,
as it may be amended from time to time.
1.08 POST CHANGE DIVIDEND EQUIVALENT means a Dividend Equivalent determined
with reference to the stock of an acquiring corporation upon a Change
in Control.
1.09 POST CHANGE FAIR MARKET VALUE means the Fair Market Value determined
with reference to the stock of an acquiring corporation upon a Change
in Control.
1.10 PRIME RATE means the prime interest rate announced from time to time
by SunTrust Banks, Inc., which shall be deemed to include any
successor bank or company.
1.11 SHARE means a share of the Company's authorized voting Common Stock
($.25 par value per share) and any share or shares of stock of the
Company hereafter issued or issuable in substitution or exchange for
each such share.
1.12 SHARE UNIT means the monetary equivalent of one Share.
<PAGE> 2
ARTICLE II
Share Units
2.01 AWARD OF SHARE UNITS - In consideration of agreed upon modifications
to those certain deferral agreements under the Amended and Restated
Deferred Compensation Plan for Directors of Savannah Foods and
Industries, Inc., as amended and restated June 30, 1996 (the "Deferred
Compensation Plan"), each Director serving at the time this Plan is
adopted who is a Participant in both this Plan and the Deferred
Compensation Plan shall be granted a number of Share Units equal to
one-half of such Director's account balance on June 30, 1996 under the
Deferred Compensation Plan, divided by eleven (11). Such Share Units
shall be fully vested when granted. The number of Share Units granted
to each Participant hereunder is specified on Exhibit "A" attached
hereto and made a part hereof.
2.02 PAYMENT FOR SHARE UNITS - Upon a Participant's termination of service
on the Board of Directors of the Company, the Participant shall be
entitled to payment from the Company, with respect to each Share Unit
then in the Participant's Account, of an amount (the "Severance
Benefit") equal to the Fair Market Value as of the date of such
termination plus the Dividend Equivalent. Payment of the Severance
Benefit shall be made in cash in a lump sum on the first day of the
calendar quarter following the date of the Participant's termination
of service on the Board of Directors of the Company.
2.03 ELECTION TO DEFER
(a) Notwithstanding the provisions of Section 2.02 hereof, a
Participant may make an election (a "Deferral Election") to
defer the Severance Benefit due hereunder. Such Deferral
Election shall specify the form of payment and the date (the
"Commencement Date") such payments shall begin; provided,
however, that such date shall not be earlier than the date the
Participant terminates service on the Board of Directors of
the Company and shall not be later than the January 1
following the date the Participant reaches seventy (70) years
of age. The Deferral Election shall be made in such manner
and form as the Committee shall prescribe, in accordance with
the terms of this Section 2.03 and other relevant provisions
of the Plan.
(b) A Deferral Election hereunder shall be made within ninety (90)
days following the approval of the Plan by the Board of
Directors of the Company.
(c) If a Participant makes a Deferral Election hereunder, the
payment of the Severance Benefit to which such Deferral
Election relates shall be deferred until the Commencement
Date. Upon the Commencement Date, the Participant shall be
entitled to payment from the Company with respect to each
Share Unit of an amount (the "Deferred Severance Benefit")
equal to the Fair Market Value as of the date of the
Participant's termination of service on the Board of Directors
of the Company. The Deferred Severance Benefit shall be paid
in a lump sum or quarterly installments
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over a five (5), ten (10) or fifteen (15) year period as
elected by the Participant on the Deferral Election form, and
it shall bear interest, compounded quarterly, from the date of
a Participant's termination of service on the Board of
Directors of the Company until such Deferred Severance Benefit
is paid, at a rate per annum equal to the Prime Rate
determined annually on the first business day of each calendar
year. Such payments shall commence on the Commencement Date.
2.04 DEATH BENEFITS - If a Participant dies prior to the Commencement Date,
the Participant's Beneficiary (as determined under Article IV of the
Plan) shall be entitled to payment from the Company of the Severance
Benefit in the same manner as provided above for payment to the
Participant. If a Participant dies after the Commencement Date, any
remaining installments of the Participant's Severance Benefit or
Deferred Severance Benefit, as applicable, shall be paid to the
Participant's Beneficiary (as determined under Article IV of the Plan)
in accordance with the Participant's elected payment schedule.
ARTICLE III
Accounts
3.01 CREATION OF ACCOUNTS - The Share Units granted under this Plan shall
be credited to an Account established and maintained for each
Participant. Subject to any elections made by a Participant pursuant
to Article V of this Plan (relating to a Change in Control), the
number of Share Units in an Account shall be appropriately adjusted by
the Committee in the event of changes in the Company's outstanding
common stock by reason of stock dividends, stock splits,
recapitalizations, reorganizations, mergers, consolidations,
combinations, exchanges or other relevant changes in capitalization,
and such adjustments shall be conclusive. Share Units shall not
entitle any person to the rights of a stockholder.
3.02 CREDITING DIVIDEND EQUIVALENTS - The fractional Share value of all
dividends paid on a Share shall be added to each Account as a
fractional Share Unit for each Share Unit in the Account.
ARTICLE IV
Designation of Beneficiaries
A Participant may name a beneficiary and a contingent beneficiary (the
"Beneficiary") to receive any payments due him or her at the time of his or her
death, and to receive any benefits due to such Beneficiary hereunder. The
Participant shall have the right to change such Beneficiary at any time. In
case of a failure of designation or the death of the designated Beneficiary
without a designated successor, distribution shall be made to the estate of the
Participant. No designation of Beneficiaries shall be valid unless it is made
in writing, signed by the participant, dated and filed with the Committee.
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ARTICLE V
Change in Control
5.01 PAYMENT OF BENEFITS UPON CHANGE IN CONTROL - Notwithstanding anything
herein to the contrary, upon any Potential Change in Control (as such
term is defined in the Benefit Trust Agreement, dated March 14, 1996,
by and between Savannah Foods & Industries, Inc., and Wachovia Bank of
North Carolina, as such agreement is or has been amended from time to
time), the Company shall promptly deliver to each Participant an
election form (a "Change in Control Election form") which shall permit
each Participant to make the elections contemplated by this Article V.
A Participant may, at any time at least thirty (30) days prior to a
Change in Control, make any of the elections described in this Article
V (a "Change in Control Election") on such Change in Control Election
form.
(a) If a Participant so elects, then, in the event of a Change in
Control, in lieu of the benefits provided in Article II
hereof, the Participant shall be entitled to payment from the
Company, with respect to each vested Share Unit of an amount
(the "Post Change Severance Benefit") equal to the Fair Market
Value as of the date of the Change in Control plus the
Dividend Equivalent. Payment of the Post Change Severance
Benefit shall be made in cash in a lump sum on the date of the
Change in Control or in quarterly installments over a period
not to exceed the period selected by the Participant in his
Deferral Election, as elected by the Participant on the Change
in Control Election form. If made in installments, such
payments shall bear interest, compounded quarterly, from the
date of the Change in Control until such Post Change Severance
Benefit is paid, at a rate per annum equal to the Prime Rate
determined annually on the first business day of each calendar
year, and such payments shall commence on the first day of the
calendar quarter following the date of the Change in Control.
If a Participant who has made a Change in Control Election
hereunder dies, any remaining installments of the
Participant's Post Change Severance Benefit shall be paid to
the Participant's Beneficiary (as determined under Article IV
of the Plan) in accordance with the Participant's elected
payment schedule.
(b) If a Participant does not make the election specified in
paragraph (a) above, then, in the event of a Change in
Control, the Participant's Severance Benefit under Article II
hereof with respect to each vested Share Unit shall be an
amount equal to the Fair Market Value as of the date of the
Change in Control plus the Dividend Equivalent, plus interest,
compounded quarterly, from the date of the Change in Control
through the date the Participant's Severance Benefit is paid,
at a rate per annum equal to the Prime Rate determined
initially on the date of the Change in Control and adjusted
annually on the first business day of each calendar year.
Provided, however, that if a Participant so elects, the
Participant's Severance Benefit under Article II hereof with
respect to each vested Share Unit shall be an amount equal to
the Post Change Fair Market Value plus the Post Change
Dividend Equivalent as of the Commencement
-4-
<PAGE> 5
Date. All payments described in this paragraph shall be made
in accordance with the provisions of Article II hereof.
5.02 DEFINITION OF CHANGE IN CONTROL - For purposes of this Plan, a Change
in Control shall be deemed to have occurred when and only when the
first of the following events occurs:
(a) Any "person" (as that term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), other than (1) any employee plan
established by the Corporation, (2) the Corporation, (3) an
underwriter temporarily holding securities pursuant to an
offering of such securities, or (4) a corporation owned,
directly or indirectly, by stockholders of the Corporation in
substantially the same proportions as their ownership of the
Corporation) is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 20% or
more of the combined voting power of the Company's then
outstanding voting securities; or
(b) During any period of two consecutive years, individuals who at
the beginning of such period constituted the Board and any new
director (other than an individual whose nomination for
election is in connection with an actual or threatened
election contest relating to the election of the directors of
the Company, as such terms are used in Rule 14a-11 of
Regulation 14A under the Exchange Act) whose appointment,
election, or nomination for election by the Company's
shareholders, was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were
directors at the beginning of the period or whose appointment,
election or nomination for election was previously so
approved, cease for any reason to constitute a majority of the
Board; or
(c) There is consummated a merger or consolidation of the Company
or a subsidiary thereof with or into any other corporation,
other than a merger or consolidation which would result in the
holders of the voting securities of the Company outstanding
immediately prior thereto holding securities which represent
immediately after such merger or consolidation more than 80%
of the combined voting power of the voting securities of
either the Company or the other entity which survives such
merger or consolidation or the parent of the entity which
survives such merger or consolidation; or
(d) There is consummated a sale or disposition by the Company of
all or substantially all of the Company's assets.
-5-
<PAGE> 6
ARTICLE VI
Source of Payments
All payments of benefits hereunder shall be paid in cash from the
general funds of the Company and the Company shall be under no obligation to
segregate any assets in connection with the maintenance of an Account, nor
shall anything contained in this Plan nor any action taken pursuant to the Plan
create or be construed to create a trust of any kind, or a fiduciary
relationship between the Company and the Participant. Title to the beneficial
ownership of any assets, whether cash or investments, which the Company may
designate to pay the amount credited to an Account shall at all times remain in
the Company and the Participant shall not have any property interest whatsoever
in any specific assets of the Company. A Participant's interest in his Account
shall be limited to the right to receive payments pursuant to the terms of this
Plan and such rights to receive shall be no greater than the right of any other
unsecured general creditor of the Company.
ARTICLE VII
Administration
7.1 Administrative Authority. This Plan shall be administered by
a Committee of not less than three (3) members appointed by the Board of
Directors of the Company. The Board of Directors may from time to time appoint
members of the Committee in substitution for the members previously appointed
and may fill vacancies, however caused. The Committee shall act by a majority
of the number then constituting the Committee, and such action may be taken
either by a vote at a meeting or in writing without a meeting. Except as
otherwise specifically provided herein, the Company shall have the sole
responsibility for and sole control of the operation and administration of this
Plan, and shall have the power and authority to take all action and make all
interpretations which may be necessary or appropriate in order to administer
and operate the Plan, including the power, duty, and responsibility to:
(a) Make determinations as to all disputes or questions arising
under the Plan, including the power to determine the rights of
Participants and Beneficiaries and to remedy any ambiguities,
inconsistencies, or omissions in the Plan;
(b) Adopt such rules of procedure and regulations, consistent with
the Plan, as in its opinion may be necessary for the proper
and efficient administration of the Plan;
(c) Implement the Plan in accordance with its terms and the rules
and regulations adopted as above;
(d) Make determinations concerning the crediting and distribution
of Plan Accounts;
(e) Appoint any persons or firms, or otherwise act to secure
specialized advice or assistance, as it deems necessary or
desirable in connection with the administration
-6-
<PAGE> 7
and operation of the Plan; the Committee shall be entitled to
rely conclusively upon, and shall be fully protected in any
action or omission taken by it in good faith reliance upon,
the advice or opinion of such persons or firms. The Committee
shall have the power and authority to delegate from time to
time by written instrument all or any part of its duties,
powers, or responsibilities under the Plan, both ministerial
and discretionary, as it deems appropriate, to any person or
committee, and in the same manner to revoke any such
delegation of duties, powers or responsibilities. Any action
of such person or committee in the exercise of such delegated
duties, powers or responsibilities shall have the same force
and effect for all purposes hereunder as if such action had
been taken by the Committee.
7.2 Uniformity of Discretionary Acts. Whenever in the
administration or operation of the Plan discretionary actions by the Company
are required or permitted, such actions shall be consistently and uniformly
applied to all persons similarly situated, and no such action shall be taken
which shall discriminate in favor of any particular person or group of persons.
7.3 Claims Procedure. Any person claiming a benefit under the
Plan (a "Claimant") shall present the claim, in writing, to the Committee, and
the Committee shall respond in writing. If the claim is denied, the written
notice of denial shall state, in a manner calculated to be understood by the
Claimant:
(a) The specific reason or reasons for the denial, with specific
references to the Plan provisions on which the denial is
based;
(b) A description of any additional material or information
necessary for the Claimant to perfect his or her claim and an
explanation of why such material or information is necessary;
and
(c) An explanation of the Plan's claims review procedure.
The written notice denying or granting the Claimant's claim shall be
provided to the Claimant within ninety (90) days after the Committee's receipt
of the claim, unless special circumstances require an extension of time for
processing the claim. If such an extension is required, written notice of the
extension shall be furnished by the Committee to the Claimant within the
initial ninety (90) day period and in no event shall such an extension exceed a
period of ninety (90) days from the end of the initial ninety (90) day period.
Any extension notice shall indicate the special circumstances requiring the
extension and the date on which the Committee expects to render a decision on
the claim. Any claim not granted or denied within the period noted above shall
be deemed to have been denied.
Any Claimant whose claim is denied or is deemed to have been denied
under the preceding sentence (or such Claimant's authorized representative),
may, within sixty (60) days after the Claimant's receipt of notice of the
denial, or after the date of the deemed denial, request a review of the denial
by notice given, in writing, to the Company. Upon such a request for review,
the claim
-7-
<PAGE> 8
shall be reviewed by the Company (or its designated representative), which may,
but shall not be required to, grant the Claimant a hearing. In connection with
the review, the Claimant may have representation, may examine pertinent
documents, and may submit issues and comments in writing.
The decision on review normally shall be made within sixty (60) days
of the Company's receipt of the request for review. If an extension of time is
required due to special circumstances, the Claimant shall be notified, in
writing, by the Company, and the time limit for the decision on review shall be
extended to one hundred twenty (120) days. The decision on review shall be in
writing and shall state in a manner calculated to be understood by the
Claimant, the specific reasons for the decision and shall include references to
the relevant Plan provisions on which the decision is based. The written
decision on review shall be given to the Claimant within the sixty (60) day
(or, if applicable, the one hundred twenty (120) day) period discussed above.
If the decision on review is not communicated to the Claimant within the sixty
(60) day (or, if applicable, the one hundred twenty (120) day) period discussed
above, the claim shall be deemed to have been denied upon review.
ARTICLE VIII
Amendment
8.1 Right to Amend or Terminate. The Company, by written
instrument executed by the Company, shall have the right to (i) amend the Plan
at any time and with respect to any provisions hereof, and all parties hereto
or claiming any interest hereunder shall be bound by such amendment, and (ii)
to terminate the Plan; provided, however, that no such amendment or termination
shall deprive a Participant or Beneficiary of a right accrued hereunder prior
to the date of the amendment or termination.
8.2 Amendments to Ensure Proper Characterization of Plan.
Notwithstanding the provisions of Section 8.1 hereof, the Plan may be amended
by the Company at any time, retroactively if required, if in the opinion of the
Company, in order to ensure that the Plan is characterized as a plan maintained
primarily for the purpose of providing deferred compensation for a select group
of management or highly compensated employees and to conform the Plan to the
provisions and requirements of any applicable law (including ERISA and the
Code). No such amendment shall be considered prejudicial to any interest of a
Participant or Beneficiary hereunder.
ARTICLE X
Miscellaneous
9.1 Limitations on Liability of Company. Neither the
establishment of the Plan nor any modification thereof, nor the creation of any
Account under the Plan, nor the payment of any benefits under the Plan shall be
construed as giving to any Participant or other person any legal or equitable
right against the Company, or any officer or employer thereof except as
provided by law or by any Plan provision. In no event shall the Company, or
any successor, employee, officer, director, or
-8-
<PAGE> 9
stockholder of the Company, be liable to any person on account of any claim
arising by reason of the provisions of the Plan or of any instrument or
instruments implementing its provisions, or for the failure of any Participant,
Beneficiary, or other person to be entitled to any particular tax consequences
with respect to the Plan, or any credit or distribution hereunder.
9.2 Construction.
(a) If any provision of the Plan is held to be illegal or invalid,
such illegality or invalidity shall not affect the remaining
provisions of the Plan, but shall be fully severable, and the
Plan shall be construed and enforced as if such provision had
never been inserted herein. For all purposes of the Plan,
where the context requires, the singular shall include the
plural, and the plural shall include the singular. Headings
of Articles and Sections herein are inserted only for
convenience of reference and are not to be considered in the
construction of the Plan. The laws of the State of Georgia
shall govern, control and determine all questions of law
arising with respect to the Plan and the interpretation and
validity of its respective provisions, except where those laws
are preempted by the laws of the United States. Participation
under the Plan will not give any Participant the right to be
retained in the service of the Company nor any right or claim
to any benefit under the Plan unless such right or claim has
specifically accrued hereunder.
(b) The Plan is intended to be and at all times shall be
interpreted and administered so as to qualify as an unfunded
deferred compensation plan, and no provision of the Plan shall
be interpreted so as to give any individual any right in any
assets of the Company which right is greater than the rights
of a general unsecured creditor of the Company.
9.3 Spendthrift Provision.
(a) No amount payable to a Participant or a Beneficiary under the
Plan will, except as otherwise specifically provided by law,
be subject in any manner to anticipation, alienation,
attachment, garnishment, sale, transfer, assignment (either at
law or in equity), levy, execution, pledge, encumbrance,
charge, or any other legal or equitable process, and any
attempt to do so will be void; nor will any benefit be in any
manner liable for or subject to the debts, contracts,
liabilities, engagements, or torts of the person entitled
thereto. Further, neither the withholding of taxes from Plan
benefit payments nor the recovery under the Plan of
overpayments of benefits previously made to a Participant or
Beneficiary shall be construed as an assignment or alienation.
(b) In the event that any Participant's or Beneficiary's benefits
hereunder are garnished or attached by order of any court, the
Company may bring an action or a declaratory judgment in a
court of competent jurisdiction to determine the proper
recipient of the benefits to be paid under the Plan. During
the pendency of said action, any benefits that become payable
shall be held as credits to the Participant's or Beneficiary's
-9-
<PAGE> 10
Account or, if the Company prefers, paid into the court as
they become payable, to be distributed by the court to the
recipient as the court deems proper at the close of said
action.
9.4 No Guaranty of Benefits. Nothing contained in the Plan shall
constitute a guaranty by the Company or any related entity or any other entity
or person that the assets of the Company or any related entity will be
sufficient to pay any benefit hereunder.
9.5 No Enlargement of Rights. No Participant or Beneficiary shall
have any right to a benefit under the Plan except in accordance with the terms
of the Plan. Establishment of the Plan shall not be construed to give any
Participant the right to be retained as a director of the Company.
9.6 Applicable Law. The Plan shall be construed and administered
under the laws of the State of Georgia.
9.7 Gender; Number. Words in the masculine gender shall include
the feminine gender as appropriate, and the singular shall include the plural,
and vice-versa, unless qualified by the context.
9.8 Captions and Headings. Any headings used herein are included
for convenience of reference only and are not to be construed so as to alter
the terms hereof.
IN WITNESS WHEREOF, this Plan has been duly executed by the Company
effective as of the 15th day of August, 1996.
SAVANNAH FOODS & INDUSTRIES, INC.
By: /s/ William W. Sprague, III
-------------------------------------
President
ATTEST:
/s/ John M. Tatum
- ---------------------------
Secretary
[CORPORATE SEAL]
-10-
<PAGE> 11
EXHIBIT A
TO THE
SAVANNAH FOODS & INDUSTRIES, INC.
NON-EMPLOYEE DIRECTORS' SUPPLEMENTAL SHARE UNIT PLAN
<TABLE>
<CAPTION>
PARTICIPANT SHARE UNITS GRANTED
----------- -------------------
<S> <C> <C>
1. W. Waldo Bradley 24,212
2. John D. Carswell 19,629
3. Dale C. Critz 3,590
4. Lee B. Durham, Jr. 18,607
5. Arthur M. Gignilliat, Jr. 9,521
6. Robert L. Harrison 7,733
7. Hugh M. Tarbutton 24,663
8. Arnold M. Tenenbaum 3,665
</TABLE>
-11-
<PAGE> 1
EXHIBIT 10.14
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
this 21st day of May, 1996, to be effective as of April 23, 1996, by and
between SAVANNAH FOODS & INDUSTRIES, INC., a Delaware corporation ("SFI"), and
R. EUGENE CARTLEDGE, an individual resident of Chatham County, Georgia
("Cartledge").
W I T N E S S E T H :
WHEREAS, Cartledge is a member of the Board of Directors of SFI; and
WHEREAS, SFI and its Board of Directors desire to employ Cartledge,
and Cartledge desires to be so employed, as Chairman of the Board of Directors
of SFI on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, for and in consideration of Ten and 00/100 Dollars
($10.00), the mutual covenants and agreements contained herein, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT; SCOPE OF SERVICES.
(a) Cartledge is hereby employed as the Chairman of the Board
of Directors of SFI (the "Chairman").
(b) Cartledge agrees to perform those duties set forth for
the office of Chairman in the bylaws of SFI and to comply with such policy
directives as may be adopted from time to time for the Chairman by the Board of
Directors of SFI. Cartledge shall devote at least two (2) days each week and
shall use his good faith best efforts, knowledge and skills in the performance
of services required of him in the bylaws of SFI and as may be delegated to him
by the Board of Directors of SFI.
2. TERM; TERMINATION.
(a) Term. The term of this Agreement shall begin as
April 25, 1996 and shall continue until April 24, 1997, unless earlier
terminated as provided herein.
(b) TERMINATION. This Agreement may be terminated prior
to expiration as follows:
(1) By mutual agreement of SFI and Cartledge at
any time;
(2) At the election of SFI upon ninety (90) days'
prior written notice to Cartledge; or
<PAGE> 2
(3) Automatically, upon the death of Cartledge.
3. COMPENSATION.
(a) SALARY. As Chairman, SFI shall pay to Cartledge the
sum of One Hundred Eighty-Two Thousand Seven Hundred and no/100s Dollars
($182,700.00), payable on April 25, 1996, in 16,610 shares of SFI common
stock, plus cash in an amount sufficient to pay the taxes due on such
compensation, subject to appropriate tax withholdings.
(b) STOCK OPTION. SFI hereby grants to Cartledge an
option (the "Option") to purchase from SFI 100,000 shares of the common stock
of SFI (the "Shares") at the price of Eleven Dollars ($11.00) per share (the
"Exercise Price"), subject to the terms and conditions set forth in this
paragraph 3(b) of this Agreement. The Option shall expire on and may not be
exercised after April 24, 2001 (the "Expiration Date"). This Option shall be
exercisable by delivery to SFI of written notice of Cartledge's desire to
exercise the Option, accompanied by full payment in immediate funds of the
Exercise Price for the Shares being purchased. Prior to the issuance of the
Shares upon exercise of this Option, Cartledge must pay or make adequate
provision for any applicable federal or state withholding obligations of SFI.
This Option may not be transferred in any manner other than by will or by the
laws of descent and distribution and may be exercised during the lifetime of
Cartledge only by Cartledge and after death by Cartledge's personal
representative.
(c) EMPLOYEE BENEFITS. Except as provided in subsections
(a) and (b) above, during the term of this Agreement, Cartledge shall not be
entitled to any employee benefits.
4. TRADE SECRETS.
(a) DEFINITION. "Trade Secrets" shall mean any and all
data and information relating to SFI which (A) derives independent economic
value, actual or potential, from not being generally known to, and not being
readily ascertainable by proper means by, other persons who can obtain economic
value from its disclosure or use; and (B) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy. "Trade Secrets" of
SFI may include sales and financial data and plans, advertising information and
plans, and strategic plans and initiatives of SFI. Notwithstanding the
foregoing, "Trade Secrets" shall not include data and information which: (A)
was at the time of disclosure to Cartledge or became thereafter through no
fault of Cartledge a part of the public domain by publication or otherwise; (B)
was already in Cartledge' possession prior to the disclosure by SFI to
Cartledge; or (C) was subsequently developed or ascertained by Cartledge or for
Cartledge by independent means without the benefit of Trade Secrets or was
received by Cartledge without restriction from a third party who was under no
obligation of confidentiality to SFI with respect thereto.
(b) OWNERSHIP, NON-DISCLOSURE AND NON-USE OF TRADE
SECRETS AND INTELLECTUAL PROPERTY. Cartledge acknowledges and agrees that all
Trade Secrets, and all physical embodiments thereof, are confidential to and
shall be and remain the sole and exclusive property of SFI. In
- 2 -
<PAGE> 3
addition, Cartledge acknowledges and agrees that all trade names, trademarks,
service marks and similar intellectual property used in connection with the
services performed by SFI (the "Intellectual Property") are the sole and
exclusive property of SFI.
(1) Upon the termination of this Agreement, Cartledge shall
deliver to SFI all property belonging to SFI including, without
limitation, all Trade Secrets (and all embodiments thereof) and all
embodiments of Intellectual Property then in his custody, control or
possession.
(2) Cartledge agrees that (i) all Trade Secrets received or
developed by Cartledge as a result of Cartledge' employment with SFI
shall be held in strictest confidence; (ii) Cartledge shall not
disclose, reproduce, distribute or otherwise disseminate such Trade
Secrets, and shall use his best efforts to protect such Trade Secrets
from disclosure by others; and (iii) Cartledge shall make no use of
such Trade Secrets without the prior written consent of SFI, except in
connection with Cartledge's employment hereunder. The obligations of
confidentiality contained herein shall apply during the term of this
Agreement and (i) with respect to all Trade Secrets consisting of
scientific or technical data, at any and all times after termination
of this Agreement; and (ii) with respect to all other Trade Secrets,
for a period of two (2) years following the date of termination of
this Agreement, or for such longer period of protection as is provided
by law.
(c) AGREEMENT REGARDING CONFIDENTIAL INFORMATION. In the
event any of the sales and financial data and plans, advertising information
and plans, and strategic plans and initiatives of SFI, or any other business or
financial information disclosed to Cartledge during the term of his employment
with SFI, are determined by a court of law not to qualify for protection as
Trade Secrets, then Cartledge acknowledges and agrees that such data or
information shall nonetheless remain confidential and shall not be disclosed by
Cartledge to any other party during the term of his employment with SFI and for
a period of two (2) years following the date of termination of Cartledge'
employment with SFI, absent the express prior written consent of SFI. Upon
termination of this Agreement, Cartledge shall deliver to SFI any and all
documents evidencing and/or physical embodiments of the information described
in this paragraph (c).
5. SEVERABILITY. Each particular prohibition or restriction set
forth in Section 4 of this Agreement shall be deemed a severable unit, and if
any court of competent jurisdiction determines that any portion of such
restraint is against the policy of the law in any respect, but such restraint,
considered as a whole, is not so clearly unreasonable and overreaching in its
terms as to be unconscionable, the court shall enforce so much of such
restraint as it determines by a preponderance of the evidence to be necessary
to protect the interests of SFI.
6. SURVIVAL OF COVENANTS AND INDEMNITIES. All covenants and
indemnities made herein, and all remedies relating thereto, shall survive the
termination of this Agreement for any reason.
- 3 -
<PAGE> 4
7. NOTICES. All notices, consents, approvals and the like
required under any of the provisions of this Agreement shall be in writing and
shall be deemed to have been given (a) if personally delivered, upon receipt,
(b) if sent by overnight courier (such as Federal Express), upon delivery, or
(c) if sent by U.S. Mail registered or certified, return receipt requested,
with sufficient postage affixed thereto, three days after being mailed,
addressed as follows:
(i) If to SFI:
Savannah Foods and Industries, Inc.
2 East Bryan Street
Post Office Box 339
Savannah, Georgia 31402
Attn: William W. Sprague, III
(ii) If to Cartledge:
R. Eugene Cartledge
6 Skidaway Village Walk
No. 203-B
Savannah, Georgia 31411
or as may be otherwise specified by any party by notice to the other parties.
8. AMENDMENTS AND WAIVERS; CUMULATIVE REMEDIES. This Agreement
may not be amended or modified in any manner except by an instrument in writing
signed by each of the parties hereto. The failure of any party hereto to
enforce at any time any of the provisions of this Agreement shall in no way be
construed to be a waiver of any such provision or the right of any party
thereafter to enforce each and every such provision. No waiver of any breach
of this Agreement shall be held to be a waiver of any other or subsequent
breach. Furthermore, all remedies are cumulative, including the right of
either party to seek equitable relief in addition to money damages.
9. BENEFIT AND ASSIGNABILITY. This Agreement shall inure to the
benefit of and shall be binding upon the parties hereto and their respective
successors and assigns. SFI shall have the right to assign its rights under
this Agreement to any affiliate of SFI. The rights and benefits of Cartledge
may not be assigned or transferred without the prior consent of SFI except as
provided in Section 3(b).
10. LAW APPLICABLE. This Agreement shall be governed by and
construed in accordance with the laws of the State of Georgia.
- 4 -
<PAGE> 5
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
SAVANNAH FOODS & INDUSTRIES, INC..
By: /s/ F. Sprague Exley
----------------------------------
F. SPRAGUE EXLEY
Senior Vice President, Human
Resources and Administration
and Assistant Secretary
Attest: /s/ John M. Tatum
------------------------------
JOHN M. TATUM
Secretary
[CORPORATE SEAL]
/s/ R. Eugene Cartledge (L.S.)
-------------------------------------
R. EUGENE CARTLEDGE
- 5 -
<PAGE> 1
EXHIBIT 21-1
SAVANNAH FOODS & INDUSTRIES, INC.
LIST OF SUBSIDIARIES
<TABLE>
<CAPTION>
NAME OF SUBSIDIARY JURISDICTION OF INCORPORATION
- ------------------ -----------------------------
<S> <C>
Biomass Corporation Delaware
Dixie Crystals Brands, Inc. Delaware
Subsidiary of Dixie Crystals Brands, Inc.
King Packaging Company, Inc. Georgia
Food Carrier, Inc. Georgia
Michigan Sugar Company Michigan
Subsidiaries of Michigan Sugar Company
Great Lakes Sugar Company Ohio
Pioneer Trading Corporation Virgin Islands
Refined Sugar Trading Institute Delaware
Savannah Foods Industrial, Inc. Delaware
Subsidiaries of Savannah Foods Industrial,Inc.
Phoenix Packaging Corporation Delaware
Raceland Sugars, Inc. Delaware
Savannah International Company Delaware
Subsidiary of Savannah International Company
Savannah Packaging Company Delaware
Savannah Investment Company Delaware
Savannah Sugar Refining Corporation Georgia
</TABLE>
<PAGE> 1
INSERT 3
EXHIBIT 23-1
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 2-94678), as amended October 18, 1994, pertaining to
the Employee Retirement Savings Account Plan of Savannah Foods & Industries,
Inc., of our report dated November 18, 1996, appearing on page 16 of this Form
10-K.
PRICE WATERHOUSE LLP
Atlanta, Georgia
December 27, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF SAVANNAH FOODS & INDUSTRIES, INC. FOR THE YEAR ENDED
SEPTEMBER 29, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-29-1996
<PERIOD-END> SEP-29-1996
<CASH> 15,300
<SECURITIES> 0
<RECEIVABLES> 76,109
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0
0
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</TABLE>
