-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EJgqs+RyDucF1jZU2wZQkMjEDZDWIp0wf5zV0qrbH5W42uy1ovC6xOf/idwV3xvl m+HKoI7YS7pgqhhP7o2+Kg== 0000051410-97-000023.txt : 19970714 0000051410-97-000023.hdr.sgml : 19970714 ACCESSION NUMBER: 0000051410-97-000023 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19970531 FILED AS OF DATE: 19970711 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERNATIONAL MULTIFOODS CORP CENTRAL INDEX KEY: 0000051410 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-GROCERIES & RELATED PRODUCTS [5140] IRS NUMBER: 410871880 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06699 FILM NUMBER: 97639412 BUSINESS ADDRESS: STREET 1: 33 S SIXTH ST STREET 2: P O BOX 2942 CITY: MINNEAPOLIS STATE: MN ZIP: 55402-0942 BUSINESS PHONE: 6123403300 FORMER COMPANY: FORMER CONFORMED NAME: INTERNATIONAL MILLING CO INC DATE OF NAME CHANGE: 19700217 10-Q 1 1ST QTR 10Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended May 31, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to _________ Commission File Number 1-6699 INTERNATIONAL MULTIFOODS CORPORATION (Exact name of registrant as specified in its charter) Delaware 41-0871880 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 33 South 6th Street, Minneapolis, Minnesota 55402 (Address of principal executive offices) (Zip Code) (612) 340-3300 (Registrant's telephone number, including area code) (not applicable) (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No The number of shares outstanding of the registrant's Common Stock, par value $.10 per share, as of June 30, 1997 was 18,187,844. PART I. FINANCIAL INFORMATION INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES Consolidated Condensed Statements of Operations (unaudited) (in thousands, except per share amounts) THREE MONTHS ENDED May 31, May 31, 1997 1996 - ---------------------------------------------------------------------- Net sales $667,186 $626,073 Cost of sales (573,687) (536,758) - ---------------------------------------------------------------------- Gross profit 93,499 89,315 Delivery and distribution (40,657) (40,431) Selling, general and administrative (45,315) (42,298) Unusual items - (3,600) - ---------------------------------------------------------------------- Operating earnings 7,527 2,986 Interest, net (4,484) (4,290) Other income (expense), net (186) 222 - ---------------------------------------------------------------------- Earnings (loss) before income taxes 2,857 (1,082) Income taxes (857) 649 Net earnings (loss) $ 2,000 $ (433) ====================================================================== Net earnings (loss) per share of common stock $ .11 $ (.02) ====================================================================== Average shares of common stock outstanding 18,016 17,969 ====================================================================== Dividends per share of common stock $ .20 $ .20 ====================================================================== See accompanying notes to consolidated condensed financial statements. INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES Consolidated Condensed Balance Sheets (in thousands) Condensed from audited financial (Unaudited) statements May 31, Feb. 28, 1997 1997 - ----------------------------------------------------------------------- Assets Current assets: Cash and cash equivalents $ 8,939 $ 8,753 Trade accounts receivable, net 177,259 207,459 Inventories 280,248 283,948 Other current assets 64,350 63,096 - ----------------------------------------------------------------------- Total current assets 530,796 563,256 - ----------------------------------------------------------------------- Property, plant and equipment, net 222,003 225,357 Goodwill, net 86,975 87,641 Other assets 38,748 39,034 - ----------------------------------------------------------------------- Total assets $878,522 $915,288 - ----------------------------------------------------------------------- Liabilities and Shareholders' Equity Current liabilities: Notes payable $ 90,426 $ 88,201 Current portion of long-term debt 30,078 6,790 Accounts payable 177,973 206,966 Other current liabilities 60,344 70,037 - ----------------------------------------------------------------------- Total current liabilities 358,821 371,994 - ----------------------------------------------------------------------- Long-term debt 178,834 202,328 Employee benefits and other liabilities 51,884 51,388 - ----------------------------------------------------------------------- Total liabilities 589,539 625,710 - ----------------------------------------------------------------------- Shareholders' equity: Common stock 2,184 2,184 Other shareholders' equity 286,799 287,394 - ----------------------------------------------------------------------- Total shareholders' equity 288,983 289,578 - ----------------------------------------------------------------------- Commitments and contingencies - ----------------------------------------------------------------------- Total liabilities and shareholders' equity $878,522 $915,288 ======================================================================= See accompanying notes to consolidated condensed financial statements. INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES Consolidated Condensed Statements of Cash Flows (unaudited) (in thousands) THREE MONTHS ENDED May 31, May 31, 1997 1996 - --------------------------------------------------------------------------- Cash flows from operations: Net earnings (loss) $ 2,000 $ (433) Adjustments to reconcile net earnings (loss) to cash provided by (used for) operations: Depreciation and amortization 7,506 7,476 Deferred income tax expense (benefit) 408 (975) Provision for losses on receivables 845 767 Provision for unusual charges - 3,600 Changes in operating assets and liabilities: Accounts receivable 29,092 8,373 Inventories 3,358 (21,612) Other current assets (1,353) 2,780 Accounts payable (28,714) 37 Other current liabilities (9,633) (10,097) Other, net 504 515 - --------------------------------------------------------------------------- Cash provided by (used for) operations 4,013 (9,569) - --------------------------------------------------------------------------- Cash flows from investing activities: Capital expenditures (4,045) (4,141) Proceeds from property disposal 198 58 - --------------------------------------------------------------------------- Cash used for investing activities (3,847) (4,083) - --------------------------------------------------------------------------- Cash flows from financing activities: Net increase in notes payable 2,321 27,733 Net decrease in long-term debt - (8,500) Dividends paid (3,635) (3,571) Proceeds from issuance of common stock 2,107 - Purchase of treasury stock (769) (16) Other, net (15) (102) - --------------------------------------------------------------------------- Cash provided by financing activities 9 15,544 - --------------------------------------------------------------------------- Effect of exchange rate changes on cash and cash equivalents 11 190 - --------------------------------------------------------------------------- Net increase in cash and cash equivalents 186 2,082 Cash and cash equivalents at beginning of period 8,753 7,508 - --------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 8,939 $ 9,590 =========================================================================== See accompanying notes to consolidated condensed financial statements. INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES Notes to Consolidated Condensed Financial Statements (unaudited) (1) In the opinion of the Company, the accompanying unaudited consolidated condensed financial statements contain all adjustments (consisting of only normal recurring adjustments, except as noted elsewhere in the notes to the consolidated condensed financial statements) necessary to present fairly its financial position as of May 31, 1997 and the results of its operations and cash flows for the three months ended May 31, 1997 and 1996. These statements are condensed and therefore do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The statements should be read in conjunction with the consolidated financial statements and footnotes included in the Company's Annual Report on Form 10-K for the year ended February 28, 1997. The results of operations for the three months ended May 31, 1997 are not necessarily indicative of the results to be expected for the full year. (2) Cost of sales - To more closely match costs with related revenues, the Company classifies the inflation element inherent in interest rates on Venezuelan local currency borrowings and the foreign exchange gains and losses, which occur on such borrowings, as a component of cost of sales. Accordingly, cost of sales increased by $0.5 million and $0.3 million for the three months ended May 31, 1997 and 1996, respectively. (3) Interest, net consisted of the following (in thousands): Three Months Ended May 31, May 31, 1997 1996 - ----------------------------------------------------- Interest expense $5,422 $4,389 Capitalized interest (9) (9) Non-operating interest income (929) (90) - ----------------------------------------------------- Interest, net $4,484 $4,290 ===================================================== Cash payments for interest, net of amounts capitalized were $6.5 million in each three-month period ended May 31, 1997 and 1996. (4) Income taxes - Cash payments for income taxes for the three months ended May 31, 1997 and 1996 were $3.8 million and $3.9 million, respectively. (5) Supplemental balance sheet information (in thousands) May 31, Feb. 28, 1997 1997 - ---------------------------------------------------------------------- Trade accounts receivable, net: Trade $184,185 $216,798 Allowance for doubtful accounts (6,926) (9,339) - ---------------------------------------------------------------------- Total trade accounts receivable, net $177,259 $207,459 ====================================================================== Inventories: Raw materials, excluding grain $ 17,539 $ 15,776 Grain 71,210 86,500 Finished and in-process goods 183,656 174,274 Packages and supplies 7,843 7,398 - ---------------------------------------------------------------------- Total inventories $280,248 $283,948 ====================================================================== Property, plant and equipment, net: Land $ 13,401 $ 13,413 Buildings and improvements 93,237 93,099 Machinery and equipment 233,211 228,514 Transportation equipment 6,947 7,194 Improvements in progress 12,610 15,019 - ---------------------------------------------------------------------- 359,406 357,239 Accumulated depreciation (137,403) (131,882) - ---------------------------------------------------------------------- Total property, plant and equipment, net $222,003 $225,357 ====================================================================== (6) Segment information (in millions) Net Operating Unusual Operating Sales Costs Items Earnings - -------------------------------------------------------------------------- Three Months Ended May 31, 1997 Foodservice Distribution $449.4 $(445.3) $ - $4.1 North America Foods 115.5 (112.5) - 3.0 Venezuela Foods 102.3 (99.5) - 2.8 Corporate Expenses - (2.4) - (2.4) - -------------------------------------------------------------------------- Total $667.2 $(659.7) $ - $7.5 ========================================================================== Three Months Ended May 31, 1996 Foodservice Distribution $443.3 $(438.2) $ - $5.1 North America Foods 111.6 (109.5) - 2.1 Venezuela Foods 71.2 (69.1) - 2.1 Corporate Expenses - (2.7) (3.6) (6.3) - -------------------------------------------------------------------------- Total $626.1 $(619.5) $(3.6) $3.0 ========================================================================== INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES Management's Discussion and Analysis of Results of Operations and Financial Condition (Unaudited) Results of Operations: For the first quarter ended May 31, 1997 compared with the corresponding prior period Overview Fiscal 1998 first quarter net earnings were $2 million, or 11 cents per share, compared with a net loss of $0.4 million, or 2 cents per share, a year ago. Net earnings in fiscal 1998 improved on higher operating earnings in the North America Foods and Venezuela Foods business segments. Last year's results were adversely affected by after tax unusual charges of $2.2 million, or 12 cents per share, for costs resulting from the resignation of the Company's former chief executive officer and from business assessment studies. Net sales for fiscal 1998 increased 7% to $667.2 million primarily from the Venezuela Foods business segment. Segment Results Foodservice Distribution first quarter net sales increased 1% to $449.4 million, compared with $443.3 million a year ago. Vending and limited-menu distribution businesses had an increase in net sales, which was substantially offset by lower sales volumes to a major customer of the Company's food exporting business that distributes food products in Russia. This volume decline was attributable to business disruptions the customer experienced from the Russian government commencing the enforcement of tariffs which delayed the unloading of shipments and distribution of product in Russia. The Company expects that the sales and earnings contribution from this customer in fiscal 1998 will be below last year. Foodservice Distribution operating earnings declined 20% to $4.1 million, compared with $5.1 million last year. The decline was the result of the lower volumes with the major customer of the food exporting business and from lower gross margins in vending distribution. The gross margin decline was the result of competitive pricing pressures. In addition, last year included a benefit from the purchase of candy inventories at favorable prices which was partially offset by the favorable impact in the current year of purchasing coffee prior to world market price increases. Foodservice Distribution operating results also included higher earnings in limited-menu distribution as a result of lower operating costs. North America Foods first quarter net sales increased 3% to $115.5 million, compared with $111.6 million a year ago. Sales were up on higher Canadian commercial flour volumes but were partially offset by lower volumes in Canadian frozen bakery products resulting from continued competitive pressures. Operating earnings increased 43% to $3 million, compared with $2.1 million last year. Operating earnings increased on higher gross margins from improved manufacturing efficiencies, the higher commercial flour volumes and an improved customer mix in the United States. The increase was partially offset by the volume decline in Canadian frozen bakery products. Venezuela Foods first quarter net sales increased 44% to $102.3 million, compared with $71.2 million a year ago. Net sales in the prior year were adversely impacted by significant devaluation in the exchange rate while the Company operated under price controls. The Venezuelan government eliminated price controls last year. Operating earnings increased 33% to $2.8 million, compared with $2.1 million last year. Although earnings increased, current year results were adversely affected by competitive pricing pressures coupled with higher costs of locally grown grain and distribution. Operating earnings in the prior year were depressed by the significant devaluation of the exchange rate. The Company expects that the competitive pricing pressures coupled with the higher costs will continue. The Company also expects that Venezuela Foods operating results in the second quarter of fiscal 1998 will be significantly lower than the second quarter last year. Second quarter fiscal 1997 results were positively impacted by the removal of price and foreign exchange controls and other effects of the transition to a free-market economy. Non-operating Expense and Income Net interest expense increased to $4.5 million from $4.3 million last year on higher debt levels partially offset by lower interest rates in Canada. Financial Condition: Capital Resources and Liquidity The debt-to-total capitalization ratio of 51% remained unchanged from February 28, 1997. Working capital increased on lower accounts payable attributable to the timing of payments. Partially offsetting this increase was a reduction in accounts receivable in the Company's food exporting business resulting from lower sales volumes with a major customer that distributes food products in Russia. The major customer is past due on certain accounts receivable owed to the Company as a result of business disruptions it has experienced, as discussed above. The Company continues to receive payments on these receivables, although on longer payment terms, and management expects that all amounts due will be collected. On June 5, 1997, the Company announced that it intends to sell its Canada Frozen bakery unit. The Company believes that the sale will not have a material affect on full-year fiscal 1998 results of operations. The Company anticipates using the proceeds from the sale to reduce debt. On July 9, 1997, the Company announced that it will combine its vending distribution and limited-menu distribution businesses into a single distribution business to more quickly capitalize on growth opportunities and achieve cost savings. The Company is unable to estimate one-time charges, if any, associated with the combination as specific actions have not yet been determined. The combination is expected to result in significant long-term benefits, net of any one-time charges. PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 10.1 Letter Agreement, dated February 3, 1997, between William L. Trubeck and International Multifoods Corporation regarding benefits and severance arrangements. 10.2 Consulting Agreement, dated May 1, 1997, between RFM Enterprises, Inc. and International Multifoods Corporation. 10.3 Memorandum of understanding, dated May 7, 1997, between William L. Trubeck and International Multifoods Corporation regarding supplemental retirement benefits. 10.4 Amendment to Consulting Agreement, dated May 9, 1997, between International Multifoods Corporation and RFM Inc. 11. Computation of Earnings (Loss) Per Common Share. 12. Computation of Ratio of Earnings to Fixed Charges. 27. Financial Data Schedule. (b) Reports on Form 8-K No reports on Form 8-K were filed during the quarter ended May 31, 1997. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. INTERNATIONAL MULTIFOODS CORPORATION Date: July 11, 1997 By: /s/ William L. Trubeck William L. Trubeck Senior Vice President - Finance and Chief Financial Officer (Principal Financial Officer and Duly Authorized Officer) EXHIBIT INDEX 10.1 Letter Agreement, dated February 3, 1997, between William L. Trubeck and International Multifoods Corporation regarding benefits and severance arrangements. 10.2 Consulting Agreement, dated May 1, 1997, between RFM Enterprises, Inc. and International Multifoods Corporation. 10.3 Memorandum of understanding, dated May 7, 1997, between William L. Trubeck and International Multifoods Corporation regarding supplemental retirement benefits. 10.4 Amendment to Consulting Agreement, dated May 9, 1997, between International Multifoods Corporation and RFM Inc. 11. Computation of Earnings (Loss) Per Common Share. 12. Computation of Ratio of Earnings to Fixed Charges. 27. Financial Data Schedule. EX-10.1 2 EXHIBIT 10.1 EXHIBIT 10.1 February 3, 1997 Mr. William L. Trubeck 3300 Fox Street Long Lake, MN 55356 Dear Bill: We are pleased to extend to you an offer of employment with International Multifoods Corporation ("Multifoods"). The offer reflects and confirms our recent verbal discussion in which we agreed to certain employment arrangements. 1. The position being offered is Senior Vice President - Finance and Chief Financial Officer, International Multifoods Corporation. In this position you will report directly to Gary E. Costley, Chairman, President and Chief Executive Officer. Your office will be in Minneapolis, MN. The Multifoods headquarters office is located at 33 South 6th Street. 2. The effective date of your employment with Multifoods will be March 1, 1997. We discussed your availability for a February 13 management meeting and other potential meetings during the month. If you attend the February 13th meeting, we will reimburse your actual and reasonable expenses for this trip. In lieu of a consulting fee, we will fully support your commitment to a speaking engagement in South Africa during the month of March and other commitments as discussed. 3. The starting salary will be $280,000 annually. You will be eligible for periodic merit increases based on performance. Merit increases for executive officers are reviewed every 15-18 months. 4. You will receive an employment bonus of $20,000 payable on or about March 15, 1997. If you should voluntarily terminate within one year from date of employment, you agree to repay the $20,000. 5. A recommendation will be made to the Compensation Committee of the Board of Directors of Multifoods for the following: (a) A restricted stock grant of 1,200 shares of Multifoods stock. The approximate value of this grant is $20,000. The restriction will be time only for a two-year period. (b) A non-qualified stock option grant of 20,000 shares of Multifoods Common Stock. The grant price will be the average price of Multifoods stock on your date of employment and will vest within one year. (c) A non-qualified stock option grant of 30,000 shares of Multifoods Common Stock. The option grant will fully vest in eight years; however, vesting will be accelerated one third each year for three years if Multifoods Net Pre-Tax Earnings exceed the prior year by 15%, or by 45% in aggregate for a three-year period. The stock option grant is dependent on the shareholders approving a 1997 stock-based incentive plan. (d) You will be included as a participant in the Multifoods Pension Equity Plan ("PEP") following one year of service. You will be recommended for participation in the Management Benefit Plan of International Multifoods Corporation, restated Effective January 1, 1997 ("MBP"). The MBP is a "non-qualified" excess benefit plan that provides retirement benefits that would have been provided under the PEP if the Internal Revenue Code limits on compensation (currently $160,000 per year) and benefits (currently $125,000) did not apply to benefits under the PEP. The following Supplemental Retirement Plan will be proposed to the Committee: The arrangement will provide additional retirement benefits equal to what you would have received under the MBP and the PEP had your service from your employment date counted one and one-half (1.5) for both benefit accrual and vesting purposes. You will also be recommended for participation in the Supplemental Deferred Compensation Plan of International Multifoods Corporation. This plan provides for the "non-qualified" deferral of amounts which could have been deferred under the Voluntary Investment and Savings Plan of International Multifoods Corporation (the "VISA Plan") if certain Internal Revenue Code limits did not apply, and to provide matching credits on such non- qualified deferrals. We have given you an estimate of the benefits from both these plans. (e) A Change of Control agreement similar to that of other executives of Multifoods will also be recommended to the Compensation Committee. While the agreement will contain the detail of the arrangement, essentially if there is a change of control and a subsequent termination, either involuntary or by "constructive discharge", you will receive a payment equal to 2.5 times base salary and the average of the last three (3) incentive awards or the target level if there has not been any incentive payments. 6. You will be protected in the case of involuntary termination, except for cause. If involuntary termination should occur during the first year of your employment March 1, 1997 - February 28, 1998 you will receive two years' salary as a severance payment. Following the first year, in the event of involuntary termination you will receive one years' salary. Any severance payment will require a release, including an agreement not to compete with Multifoods or any of its subsidiaries for a period of one year, prepared by Multifoods and signed by you. 7. Your annual incentive opportunity will be no less than 50% of base salary at business plan level with a maximum incentive opportunity of 70%. 8. It is our intent to review the incentive plan designs for fiscal 1998 and fiscal 1999 which could positively effect the incentive opportunities. As we have discussed, this is related to the implementation of "economic value" as a measurement and reward system and may not become effective until fiscal 1999. You will have a primary role in determining the measurement system. 9. Multifoods provides a comprehensive benefit program including medical, dental, life insurance, long term disability, etc. A summary of Multifoods' benefit plans, which are comprehensive, are attached for your review. The Multifoods' 401(k) program is called VISA. There is a one year employment period for eligibility. Employees may contribute up to 7% of base salary (maximum this year is $9,500) which is matched 50% with Multifoods Common Stock. 10. In accordance with our prior discussion, you will be entitled to four weeks of vacation. Our vacation year is from January 1 to December 31. The Company will consider any need you have for additional personal time. 11. Also in accordance with our verbal discussion, Multifoods will pay fees and dues for a club membership. Since you are a member of the Minneapolis Club, we will assume the monthly dues and fees. All expenses incurred for business use of the club will be reimbursed based on Multifoods' policies. Bill, we have received the medical report from Dr. Owen at the Mayo Clinic. Since the exam was completed within one year of date of employment, it satisfies the requirement to complete an executive physical exam. Congratulations on your good health. We are very pleased with the prospect of having you join Multifoods. We are counting on your contribution and strongly believe you will have a very positive impact on the Company. We also believe that Multifoods can offer you a significant challenge. Will you please indicate your acceptance of this offer by signing and dating the original letter and returning it to me at your earliest convenience. Very truly yours, /s/ Robert F. Maddocks Robert F. Maddocks Executive Vice President RFM:rg cc: Gary E. Costley Accepted by: Dated: 02/04/97 /s/ William L. Trubeck William L. Trubeck EX-10.2 3 EXHIBIT 10.2 Exhibit 10.2 CONSULTING AGREEMENT CONSULTING AGREEMENT dated and effective as of May 1, 1997, by and between INTERNATIONAL MULTIFOODS CORPORATION, a Delaware corporation ("Multifoods"), and RFM Enterprises, Inc. an Illinois corporation ("Contractor"), hereinafter referred to as "the Agreement" or "this Agreement". WITNESSETH THAT: WHEREAS, Contractor is engaged in the business of providing executive compensation and human resources consulting services to business organizations; and WHEREAS, Multifoods wishes to avail itself of the experience and skill of Contractor during the consulting period hereinafter described. NOW, THEREFORE, in consideration of the preceding recitals and of the mutual covenants and agreements set forth in this Agreement, Multifoods and Contractor agree, as follows: 1. Term and Scope of Consulting Services. A. Consulting Period. Multifoods agrees to retain Contractor as a consultant to Multifoods, and Contractor agrees to serve as a consultant to Multifoods, for a period of two (2) years commencing on the date of this Agreement (the "Consulting Period"), provided, that either Multifoods or Contractor shall have the right at any time during the Consulting Period, after the "First Six Months" (as that term is hereinafter defined) to terminate and cancel this Agreement upon at least ninety (90) days prior written notice given to the other party in accordance with notice provision contained in Section 11 of this Agreement. Contractor shall make Robert F. Maddocks available to provide "Consulting Services" (as that term is hereinafter defined), to Multifoods: (i) during the period May 1, 1997 to November 1, 1997 (the "First Six Months"), for not less than eighty (80) days and not more than ninety (90) days during such period of time; (ii) during the period November 1, 1997 to April 30, 1998 (the "Second Six Months"), for not less than thirty (35) days and not more than forty (40) days during such period; and (iii) during the period May 1, 1998 to April 30, 1999 (the "Second Year"), for not less than eighty (80) days and not more than ninety (90) days during such period. As used herein, a calendar day shall mean not less than five and not more than eight hours during any twenty-four hour period. B. Consulting Services. The Consulting Services to be performed by Contractor shall include corporate level organization, executive and compensation services as may be requested and specified by the Chairman of the Board, President and Chief Executive Officer of Multifoods, the Chairman of the Compensation Committee or the Chairman of the Nominating and Corporate Governance Committee of the Board of Directors of Multifoods (collectively the "Consulting Services"). C. Contractor's Other Activities. Multifoods acknowledges and agrees that Contractor has the right during the Consulting Period to pursue his personal, business and investment interests so long as they are not in conflict with Contractor's duties and obligations under this Agreement. 2. Compensation and Travel Expenses Payable by Multifoods to Contractor. A. Compensation for Consulting Services. As compensation for the Consulting Services to be rendered by Contractor to Multifoods during the Consulting Period, Multifoods shall pay to Contractor: (i) for the First Six Months and the Second Six Months of the Consulting Period, an aggregate amount of One Hundred and Thirty Thousand Dollars ($130,000) in consecutive quarterly installments of (a) $40,000 each, on the first day of May and August, 1997, (b) $30,000 on the first day of November, 1997, and (c) $30,000 on the first day of February, 1998; and (ii) for the Second Year, an aggregate amount of Eighty Thousand Dollars ($80,000) in equal consecutive quarterly installments of $20,000 each, on the first day of May, August and November, 1998, and on the first day of February, 1999. Multifoods will report the payment of compensation paid to Contractor for Consulting Services rendered by Contractor to Multifoods under this Agreement on Form No. 1099, or such other form as may be prescribed by applicable federal, state and local tax authorities. If either Multifoods or Contractor should exercise its right to terminate the Consulting Period at any time during the Consulting Period as provided in Section 1A of this Agreement, the compensation due and payable to Contractor for such calendar quarter shall be prorated by the number of days elapsed in the quarter to the effective date of termination B. Travel Expenses of Contractor During Performance of Consulting Services. If Contractor is requested to travel by Multifoods to perform Consulting Services during the Consulting Period, Multifoods will reimburse Contractor on a basis that is consistent with Multifoods' travel polices for its employees in effect at such time, for the reasonable travel and travel related expenses, reasonably incurred by Contractor solely and exclusively with respect to Contractor's performance of the Consulting Services requested by Multifoods during the Consulting Period. Contractor shall provide Multifoods with receipts and other evidence reasonably requested by Multifoods to substantiate any such travel and travel related expenses incurred by Contractor while on assignment for Multifoods as provided hereunder. All of the Contractor's travel and travel related expenses shall be subject to the approval of the Chairman of the Board, President and Chief Executive Officer of Multifoods, or his designee. Multifoods shall reimburse Contractor for all such approved travel and travel related expenses submitted by Contractor, within thirty (30) days following the date of Multifoods receipt of Contractors' invoice for such reimbursement and supporting documentation. C. Office Space, Office Services and Parking Space. During the Consulting Period, Multifoods shall provide Contractor with the use of an office, free of charge, for Contractor's use in connection with the performance of the Consulting Services, in the headquarters office of Multifoods, and secretarial services, free of charge, in connection with the performance by Contractor of the Consulting Services. Also, during the Consulting Period, Multifoods shall provide Contractor the use of a parking space, free of charge, in the garage facility used by the executive officers of Multifoods who office in Multifoods headquarters office, to the extent that such parking perquisite is made available to the Multifoods' executive officers. D. Change of Control. As used in this Agreement, the term "Change of Control" shall have the same meaning that term has in the form of Severance Agreement adopted by the Board of Directors of Multifoods at a meeting of the Board of Directors on September 17, 1993, as the same may be amended from time-to-time. Notwithstanding any term or provision in this Agreement to the contrary, if during the Consulting Period a Change of Control should occur, and unless otherwise agreed by the parties in writing, this Agreement shall terminate effective upon the effective date of the Change of Control, and in such event an amount equal to the unpaid quarterly installments of compensation described in Paragraph A of this Section 2, shall be paid to Contractor within thirty (30) days following the effective date of the Change of Control. 3. Contractor's Covenants Not to Compete and Confidentiality. A. Contractor's Covenant Not to Compete. During the Consulting Period, Contractor and its principal shareholder, Robert F. Maddocks ("Maddocks"), subscribing to this Agreement on the signature page hereof, will refrain from carrying on, either directly or indirectly (whether as a principal, agent, investor, employee, employer, consultant, shareholder, partner or in any other individual or representative capacity whatsoever), anywhere in the United States of America, or its territories and possessions, and Canada, any business which competes with any of the businesses conducted by Multifoods and its subsidiaries which are described in Multifoods' Annual Report on Form 10-K for the fiscal year ended on February 28, 1997. An investment by Contractor or Maddocks of not more than one percent (1%) of all the issued and outstanding capital stock of a corporation which is publicly traded on a national stock exchange, shall not violate Contractor's and Maddocks' non-competition covenant set forth herein. B. Contractor's Covenant of Confidentiality. Further, during the Consulting Period and thereafter, Contractor and Maddocks covenant and agree with Multifoods that each of them will maintain in strict confidence and not disclose to any corporation, partnership, or other entity or person, any information including, without limitation, financial information, customer names or lists of customers, or business plans of Multifoods, or any of Multifoods' subsidiaries or affiliates, or any proprietary information of Multifoods or any subsidiary or affiliate of Multifoods, to which Contractor or Maddocks had access to or knowledge of prior to the date of this Agreement, or to which Contractor or Maddocks may have access to or knowledge of in the performance of Contractor's obligations under this Agreement ("Confidential Information"). As used in this paragraph, Confidential Information shall not include any information: (i) which was generally known to the public on the date of this Agreement; (ii) which becomes known to the public following the date of this Agreement through no fault of Contractor or any of its directors, officers, employees and agents; or (iii) which is disclosed to Contractor or Maddocks by a third party who has the right to disclose such information without violating any agreement of confidentiality with Multifoods. C. Remedies. Contractor and Maddocks agree that in the event there is a breach or threatened breach by Contractor or Maddocks of Contractor's or Maddocks' covenant not to compete and Contractor's and Maddocks' covenant of confidentiality described in Paragraphs A and B of this Section 3, Multifoods shall have the right, in addition to all legal remedies available to it, to specific performance or other equitable remedy for any breach or threatened breach by Contractor or Maddocks of their covenants of non-competition and confidentiality set forth in Paragraphs A and B of this Section 3. 4. Independent Contractor. The parties acknowledge that Contractor shall perform its duties under this Agreement as an independent contractor and that this Agreement is not intended nor shall this Agreement be deemed to create an employment relationship or any other relationship between Multifoods and Contractor and Contractor's employees, other than that of independent contractor. Contractor and its employees shall at all times be free to exercise its and their own initiative, judgment and discretion as to how best to perform or provide the Consulting Services. Since Contractor is an independent contractor Multifoods shall not withhold any federal, state or local income taxes related to the compensation paid to Contractor. Contractor agrees that it shall report such compensation to taxing authorities and pay all federal, state and local taxes payable by Contractor in a manner consistent with its status as an independent contractor. Contractor further agrees to indemnify and hold Multifoods harmless and free from and against any tax, penalty and interest which Multifoods may be held liable to pay any governmental authority by reason of Contractor's breach of its obligation to pay its taxes on the compensation paid by Multifoods hereunder for Consulting Services. 5. Indemnification In the event that Contractor and/or Maddocks become involved in any legal action or proceeding as a result of advice and counsel provided by Contractor pursuant to this Agreement, Multifoods will indemnify Contractor and Maddocks against all claims, demands, actions, lawsuits and liabilities, and all reasonable attorneys' fees and disbursements, made against or incurred by Contractor and Maddocks, except to the extent that any such claim, demand, action, lawsuit or liability resulted from the willful misconduct or gross negligence of Contractor or Maddocks. 6. No Waiver. The waiver by Multifoods or Contractor of a breach by Multifoods or Contractor, as applicable, of any provision of this Agreement, shall not operate or be construed as a waiver of any subsequent breach by Multifoods or Contractor, as applicable. 7. Successors and Assigns. The rights and obligations of Contractor under this Agreement shall not be assignable, transferable or delegable in whole or in part by Contractor. This Agreement is binding upon the successors and assigns of Multifoods. 8. Governing Law. This Agreement is a Minnesota contract and shall be governed by and interpreted under the laws of the State of Minnesota. 9. Severability. If any provision of this Agreement or the application of any such provision to any person or circumstance shall be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement. 10. Entire Agreement. This Agreement contains the entire agreement of Multifoods and Contractor with respect to the subject matter of this Agreement, and may only be amended by an agreement in writing executed and delivered by a duly authorized officer of Contractor and an executive officer of Multifoods. 11. Notices. All notices and other communications provided for in this Agreement must be in writing and shall be sent by prepaid and certified mail, telecopied or delivered, as to each party hereto, at its address sent forth below, or at such other address designated by such party in a written notice to the other party. Any such notice or other communication so given or made shall be deemed to have been given, made and received on the day of actual receipt if mailed or delivered, on the same day as telecopying if telecopied. If to Multifoods: Gary E. Costley, Chairman of the Board, President and Chief Executive Officer International Multifoods Corporation Multifoods Tower - Box 2942 33 South Sixth Street Minneapolis, Minnesota 55402 FAX NO.: (612) 340-6502 with copy to: Frank W. Bonvino, Vice President, General Counsel and Secretary International Multifoods Corporation Same address and FAX NO. as above; and If to RFM Enterprises, Inc.: Robert F. Maddocks, President Ocean Village - CAT II 7421 2400 S. Ocean Drive Fort Pierce, FL 34949 Tel. (407) 466-2305 IN WITNESS WHEREOF, Multifoods and Contractor have executed and delivered this Agreement as of the day and year first above written. INTERNATIONAL MULTIFOODS CORPORATION WITNESS: /s/ Frank W. Bonvino By:/s/ Gary E. Costley Frank W. Bonvino Gary E. Costley, Chairman of the Board, Secretary President and Chief Executive Officer RFM Enterprises, Inc. WITNESS: /s/ Rachael L. Galarneau By:/s/ Robert F. Maddocks Robert F. Maddocks, President Agreement Robert F. Maddocks, in his individual capacity and not as a shareholder, director, employee or affiliate of RFM Enterprises, Inc., in consideration of the execution and delivery of this Agreement by Multifoods, does hereby agree to be bound by and perform the covenants and agreement set forth in Paragraphs A, B and C of Section 3 of this Agreement. /s/ Robert F. Maddocks Robert F. Maddocks EX-10.3 4 EXHIBIT 10.3 EXHIBIT 10.3 [MULTIFOODS LOGO] DATE: May 7, 1997 TO: William L. Trubeck FROM: Frank W. Bonvino SUBJECT: SUPPLEMENTAL RETIREMENT BENEFIT The intent of this memorandum is to set forth the terms and conditions of the supplemental retirement benefit provided under Paragraph 5(d) of your employment offer letter dated February 3, 1997. Paragraph 5(d) provides that you will be recommended for participation in the Management Benefit Plan of International Multifoods Corporation ("MBP") and will participate in the Multifoods Pension Equity Plan ("PEP"). Paragraph 5(d) further provides that you will receive additional retirement benefits equal to what you would have received under the MBP and the PEP if your service counted one and one-half times for both benefit accrual and vesting purposes. The PEP Plan is a "qualified" defined benefit pension plan that was adopted January 1, 1996, as a restructuring of a prior defined benefit plan maintained by Multifoods (called the "Employees' Retirement Plan of International Multifoods Corporation"). The MBP is a nonqualified excess benefit plan that generally provides the additional benefits that would have been provided under the PEP if the limits imposed under Code sections 401(a)(17) and 415 did not apply to your benefit under the PEP. The benefits described in this memorandum are in addition to those provided under the PEP and MBP. SUPPLEMENTAL RETIREMENT BENEFIT (a) Definitions. The following terms are used herein: "Actuarial Equivalent" means a benefit of equivalent value when computed on the basis of mortality and interest rate assumptions recommended by an actuary and approved by the Vice President and Controller of the Company. "Code" means the Internal Revenue Code of 1986, as amended. "Company" means International Multifoods Corporation, and any successor thereto. "MBP" means the Management Benefit Plan of International Multifoods Corporation, as it may be amended from time to time. "PEP" means the Multifoods Pension Equity Plan, as adopted January 1, 1996 (as a continuation of the Employees' Retirement Plan of International Multifoods Corporation), as it may be amended from time to time. "Supplemental Retirement Benefit" means the benefit payable to you under the terms of this memorandum. (b) Vesting Service. For purposes of determining your Supplemental Retirement Benefit, your vesting service under this memorandum will be equal to one and one-half times (1-1/2x) your vesting service earned under the PEP and MBP. (c) Supplemental Retirement Benefit. You will be entitled to receive the following Supplemental Retirement Benefit: (1) Less Than Five Years of Vesting Service. If you have less than 5 years of vesting service at your termination of employment, then you will not be entitled to any Supplemental Retirement Benefit. (2) Five or More Years of Vesting Service. If you have 5 or more years of vesting service at your termination of employment, then your monthly benefit will be equal to "A" minus "B" minus "C" below: A = The monthly benefit to which you would have been entitled under the PEP if (i) you were fully vested (regardless of whether you actually are vested), (ii) your Base Points were equal to one and one-half times (1-1/2x) your actual Base Points, and your Integration Points were equal to one and one-half times (1-1/2x) your actual Integration Points, (iii) your benefit was paid in the form of a single life annuity, and (iv) the limits imposed under Code sections 401(a)(17) and 415 did not apply to your benefit under the PEP. minus B = The monthly benefit (if any) actually paid to you under the PEP (or, if you receive your benefit other than in the form of a single life annuity, the monthly benefit that would have been paid to you if you had received your benefit in the form of a single life annuity under the PEP). minus C = The monthly benefit (if any) actually paid to you under the MBP (or, if you receive your benefit other than in the form of a single life annuity, the monthly benefit that would have been paid to you if you had received your benefit in the form of a single life annuity under the MBP). All monthly benefits described above will be computed as of the date of your termination of employment and each will be expressed in the form of a single life annuity starting as of the first day of the month after age 65 (or as of the first day of the month after your termination of employment, if your termination of employment occurs after age 65). (d) Form of Benefit. The Supplemental Retirement Benefit will be paid to you in the form of a single life annuity with monthly benefit payments. However, at the sole discretion of the Company, it may be paid in any other form. If it is paid in any form other than a single life annuity starting as of the first day of the month after you attain age 65, the benefit will be adjusted so that it is the Actuarial Equivalent of the benefit that would have been paid as a single life annuity starting as of the first day of the month after you attain age 65. (e) Commencement of Benefit. The Supplemental Retirement Benefit will start as of the same day as the benefit paid to you under the PEP. If you have less than 5 years of vesting service under the PEP at your termination of employment (and thus are not entitled to a benefit), the Supplemental Retirement Benefit will start on the same day as the benefit would have been paid to you if you had 5 years of vesting service under the PEP. (f) Spouse Benefit. If you have 5 or more years of vesting service, you die before your Supplemental Retirement Benefit is paid or starts to be paid to you, and you are survived by a spouse, that spouse will be entitled to a single lump-sum benefit to be paid as soon as practicable following the date of your death in an amount that is the Actuarial Equivalent of your Supplemental Retirement Benefit. (g) No Effect on Employment Rights. This memorandum is not an employment agreement and nothing in this memorandum will confer on you the right to be retained in the employ of the Company, or limit any right of the Company to discharge you or otherwise deal with you without regard to the existence of this memorandum. (h) FICA Taxes/Withholding. To the extent that benefit accruals hereunder are taken into account as amounts deferred under a nonqualified deferred compensation plan under Code section 3121(v), and thus are subject to tax under Code section 3101 ("FICA"), the Company may calculate the amount deferred and withhold against other compensation paid to you in any manner determined by it to be appropriate under Code section 3121(v). Please indicate your receipt and acceptance of the terms of this memorandum by signing one of the enclosed copies and returning it at your earliest convenience. INTERNATIONAL MULTIFOODS CORPORATION /s/ Frank W. Bonvino By:Frank W. Bonvino Its:Vice President & General Counsel cc: Joyce G. Traver ACCEPTANCE I, William L. Trubeck, hereby acknowledge receipt of this memorandum and hereby agree to the manner in which Paragraph 5(d) of my offer letter dated February 3, 1997, is to be implemented as set forth in this memorandum. Dated: May 7, 1997 WILLIAM L. TRUBECK s/s William L. Trubeck EX-10.4 5 EXHIBIT 10.4 EXHIBIT 10.4 AMENDMENT TO CONSULTING AGREEMENT BETWEEN INTERNATIONAL MULTIFOODS CORPORATION AND RFM INC. THIS AMENDMENT, dated as of May 9, 1997, to Consulting Agreement, dated as of May 1, 1997 (the "Consulting Agreement"), between International Multifoods Corporation ("Multifoods") and RFM, Inc., an Illinois corporation (the "Contractor"). WITNESSETH: WHEREAS, Multifoods and the Contractor wish to amend the Consulting Agreement as hereinafter provided. NOW, THEREFORE, the Consulting Agreement be and the same hereby is amended effective as of May 9, 1997, as follows: 1. The name and address of the Contractor be and hereby is changed to RFM Inc., 401 South First Street, #111. Minneapolis, Minnesota 55401. 2. Add new paragraph E to Section 2 of the Consulting Agreement, entitled "Signing Bonus", as follows: "E. As an incentive to execute and deliver this Agreement and provide the Consulting Services, Multifoods shall pay the Contractor, in addition to the compensation for Consulting Services described in Section 2 of this Agreement, a "signing bonus" of $50,000, in a lump sum, on or before June 10, 1997." IN WITNESS WHEREOF, the parties hereto have executed and delivered this Amendment as of the day and year first above written. INTERNATIONAL MULTIFOODS CORPORATION By: /s/ Gary E. Costley Gary E. Costley Chairman of the Board, President and Chief Executive Officer RFM, INC. By: /s/ Robert F. Maddocks Robert F. Maddocks President EX-11 6 EXHIBIT 11 Exhibit 11 INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES Computation of Earnings (loss) per Common Share (unaudited) (in thousands, except per share amounts) THREE MONTHS ENDED May 31, May 31, 1997 1996 - -------------------------------------------------------------------- Average shares of common stock outstanding 18,016 17,969 Common stock equivalents 289 33 - ------------------------------------------------------------------- Total common stock and equivalents assuming full dilution 18,305 18,002 =================================================================== Net earnings (loss) applicable to common stock $2,000 $ (433) =================================================================== Earnings (loss) per share of common stock: Primary $ .11 $ (.02) Fully diluted $ .11 $ (.02) =================================================================== Primary earnings (loss) per share has been computed by dividing net earnings (loss) by the weighted average number of shares of common stock outstanding during the period. Common stock options and other common stock equivalents have not entered into the primary earnings per share computations since their effect is not significant. Fully diluted earnings (loss) per share has been computed assuming issuance of all shares for stock options deemed to be common stock equivalents, using the treasury stock method. EX-12 7 EXHIBIT 12 Exhibit 12 INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES Computation of Ratio of Earnings to Fixed Charges (unaudited) (in thousands) THREE MONTHS ENDED May 31, May 31, 1997 1996 - ------------------------------------------------------------- Earnings (loss) before income taxes $ 2,857 $(1,082) Plus: Fixed charges (1) 7,766 6,680 Less: Capitalized interest (9) (9) - ------------------------------------------------------------- Earnings available to cover fixed charges $10,614 $ 5,589 ============================================================= Ratio of earnings to fixed charges(2) 1.37 .84 ============================================================= (1) Fixed charges consisted of the following: THREE MONTHS ENDED May 31, May 31, 1997 1996 - ------------------------------------------------------------- Interest expense, gross $5,422 $4,389 Rentals (Interest factor) 2,344 2,291 - ------------------------------------------------------------- Total fixed charges $7,766 $6,680 ============================================================= (2) For the three months ended May 31, 1996 earnings were inadequate to cover fixed charges by $1,091. The deficiency was the result of unusual items. Excluding the unusual items the ratio of earnings to fixed charges would have been 1.38 for the three months ended May 31, 1996. EX-27 8 FINANCIAL DATA SCHEDULE EXHIBIT 27
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED CONDENSED BALANCE SHEET, STATEMENTS OF OPERATIONS AND CASH FLOWS AND ACCOMPANYING NOTES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND NOTES. 1,000 3-MOS FEB-28-1998 MAY-31-1997 8,939 0 184,185 6,926 280,248 530,796 359,406 137,403 878,522 358,821 178,834 0 0 2,184 286,799 878,522 667,186 667,186 573,687 573,687 40,657 845 5,413 2,857 857 2,000 0 0 0 2,000 .11 0
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