-----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, MzZM1QZTTyF4ufZ4ZVwVkt90NeFyjo+6iU8vhpJ1RE1bKaS3HDPbOJ9YWzOIbyt2 KbBf36ZaB/VOnYVa2oFetw== 0000760775-96-000015.txt : 19960930 0000760775-96-000015.hdr.sgml : 19960930 ACCESSION NUMBER: 0000760775-96-000015 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 19 CONFORMED PERIOD OF REPORT: 19960629 FILED AS OF DATE: 19960927 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: WLR FOODS INC CENTRAL INDEX KEY: 0000760775 STANDARD INDUSTRIAL CLASSIFICATION: POULTRY SLAUGHTERING AND PROCESSING [2015] IRS NUMBER: 541295923 STATE OF INCORPORATION: VA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-17060 FILM NUMBER: 96635521 BUSINESS ADDRESS: STREET 1: P O BOX 7000 CITY: BROADWAY STATE: VA ZIP: 22815 BUSINESS PHONE: 7038674001 MAIL ADDRESS: STREET 1: 800 CO OP DRIVE CITY: TIMBERVILLE STATE: VA ZIP: 22853 FORMER COMPANY: FORMER CONFORMED NAME: WAMPLER LONGACRE ROCKINGHAM INC DATE OF NAME CHANGE: 19881114 FORMER COMPANY: FORMER CONFORMED NAME: WAMPLER LONGACRE INC DATE OF NAME CHANGE: 19880209 10-K 1 10-K TEXT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal year ended June 29, 1996 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to ___________ Commission File Number 0-17060 WLR FOODS, INC. (Exact name of registrant as specified in its charter) Virginia 54-1295923 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) P.O. Box 7000, Broadway, Virginia 22815 (Address of principal executive offices) Registrant's telephone number, including area code 540-896-7001 Securities registered pursuant Name of exchange on which required to Section 12(b) of the Act: N/A N/A Common Stock - no par value (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 (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. (X) Yes _____ No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) 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. ________ The aggregate value of the voting stock held by non-affiliates of the registrant as of September 24, 1996 was approximately $154,820,644. The number of shares outstanding of registrant's common stock, no par value, as of such date was 13,176,225 shares. Documents Incorporated by Reference Annual Report to Shareholders for fiscal year Part II ended June 29, 1996 Proxy Statement for Annual Meeting of Shareholders Part III to be held October 26, 1996 PART I Item 1. BUSINESS. General WLR Foods, Inc. (WLR Foods or the Company) is a fully-integrated poultry processing company involved in the production, further processing and marketing of turkey and chicken products, and the distribution of poultry and meat products. In addition, WLR Foods manufactures ice for retail distribution and is a provider of public refrigerated warehousing services. WLR Foods markets branded, as well as private label, commodity and value-added poultry and related products to selected retail, food service and institutional markets, primarily in the mid-Atlantic, northeastern, and southeastern regions of the United States and, to a lesser extent, the upper Midwest and California. WLR Foods exports to more than 50 countries, with particular customer strength in the Far East, the Caribbean and United States military installations. WLR Foods is the result of the combination of three poultry companies, Wampler Foods, Inc., Horace W. Longacre, Inc. and Rockingham Poultry Marketing Cooperative Incorporated, all of which trace their beginnings to before 1945. The three companies combined in 1985 and 1988, and in 1992 were joined by Round Hill Foods, Inc. and its affiliates (Round Hill) of New Oxford, Pennsylvania. Previously, WLR Foods' poultry operations were conducted through two wholly-owned subsidiaries, Wampler-Longacre Chicken, Inc. and Wampler- Longacre Turkey, Inc. These subsidiaries, along with Round Hill, were merged on January 1, 1994 to form one subsidiary, Wampler-Longacre, Inc., which on July 26, 1996 changed its name back to Wampler Foods, Inc. (Wampler Foods). WLR Foods expanded its operations into North Carolina with the August 1994 acquisition of Cuddy Farms, Inc.-USA Food Division of Marshville, North Carolina, including its turkey processing, further processing, feedmill and distribution facilities, and the September 1995 acquisition of the chicken processing and production assets of New Hope Feeds, Inc. of New Hope, North Carolina, including its processing plant, hatchery, feedmill and grain storage facilities. In April 1990, the Company expanded into the cold storage and ice manufacturing and distribution business with the acquisition of Cassco Ice & Cold Storage, Inc. (Cassco). In 1992, WLR Foods acquired all the Virginia ice business assets of Southern Ice Company, Inc., a Norfolk-based ice manufacturing and distribution company, and in 1993, the Company acquired the assets of two ice manufacturing and distribution companies located in the greater Washington, D.C. area and in Richmond, Virginia. WLR Foods acquired an additional cold storage facility as part of the Cuddy acquisition. The Company also owns 65% of May Supply Company, Inc., a wholesale distributor of plumbing supplies and equipment. Poultry Production WLR Foods' operations include the breeding, hatching, grow-out and processing of turkeys and chickens. For fiscal 1996, WLR Foods produced approximately 599 million pounds of dressed turkey and 600 million pounds of dressed chicken. WLR Foods purchases breeder stock turkey eggs which it hatches and places with growers who supply labor and housing to produce breeder flocks. These breeder flocks produce eggs that are taken to the company-owned turkey hatchery for incubation and hatching into poults, providing approximately 50% of the Company's poult supply. The balance of the Company's poults are purchased from outside sources, the most significant of which is Cuddy Farms, Inc. (not affiliated with WLR Foods). In its chicken operations, WLR Foods purchases breeder flock chicks and places them with growers who supply labor and housing to raise the birds. The birds are then moved to breeder farms where they begin providing eggs, which are in turn transported to company-owned hatcheries. Once hatched, day-old poults and chicks are inspected and vaccinated against common poultry diseases. In total, WLR Foods contracts with 172 breeder growers who grow approximately one-half of WLR Foods' turkey, and all of WLR Foods' chicken, breeder flocks. After hatching and vaccination, poults and chicks are transported to one of WLR Foods' approximately 928 contract growers located in Virginia, West Virginia, Pennsylvania, Maryland, North Carolina and South Carolina who supply labor and housing to raise the turkeys and chickens to maturity. WLR Foods supplies feed primarily from company- owned feedmills and provides grower support through WLR Foods' technicians and veterinarians. Grow-out and breeder farms provide WLR Foods with more than 59 million square feet of growing facilities. These farms typically are grower-owned and operate under contract with WLR Foods, providing facilities, utilities and labor. Contract growers are compensated on a cost-based formula and several incentive-based formulas. Approximately 90% of WLR Foods' turkeys and 100% of its chickens are raised by contract growers, with the balance grown by independent growers and company-owned farms. WLR Foods strives to maintain good contract grower relationships and believes the availability of contract growers is sufficient for anticipated needs. An important factor in the grow-out of poultry is the rate at which poultry converts feed into body weight. The Company purchases its primary feed ingredients on the open market. These ingredients consist primarily of corn and soybean meal. Because the quality and composition of feed is critical to the feed conversion rate, WLR Foods formulates and manufactures a majority of its feed at one of its five feedmills. WLR Foods has an annual feed manufacturing capacity of approximately 2.0 million tons and anticipates no difficulty in meeting the Company's feed requirements in the future. Once the turkeys and chickens reach processing weight, they are transported in WLR Foods' trucks to one of its eight poultry processing plants. These plants utilize modern, highly automated equipment to process and package the turkeys and chickens for sale or preparation for further processing. WLR Foods further processes bulk poultry in its processing plants and in two additional further processing plants by adding value beyond deboning and skinning, such as slicing, grinding, marinating, spicing and cooking to produce delicatessen products, frankfurters, meat salads, ground turkey and chicken, and food service products. Distribution, Public Refrigerated Warehousing, Ice and Other WLR Foods' distribution business includes fresh poultry, beef, and other meat products purchased from third parties for resale, along with certain products produced by the company. These operations are conducted within a radius of approximately 75 miles of WLR Foods' further processing facility in Franconia, Pennsylvania. Cassco manufactures and distributes ice in the mid-Atlantic region and operates five public refrigerated warehouses in Virginia, West Virginia and North Carolina. WLR Foods' protein conversion plants convert the nonedible by-products of its poultry processing plants into feed ingredients, with the balance sold to pet food manufacturers. The following table sets out sales revenues from WLR Foods' products for the last three fiscal years. 2 Fiscal 1996 Fiscal 1995 Fiscal 1994 (Dollars in Millions) ----------- ----------- ----------- Chicken, fresh and frozen $362.9 $300.8 $287.5 Turkey, fresh and frozen 213.8 218.0 171.4 Further processed 266.1 248.8 152.1 Distribution 87.0 86.1 82.4 Ice/Warehousing 19.4 18.0 17.6 Other 48.4 37.1 16.3 ------ ------ ------ Total Net Sales $997.6 $908.8 $727.3 ====== ====== ====== Competition Poultry production requires continuous growing and processing, and with limited refrigerated storage, makes the poultry industry highly competitive. WLR Foods markets its products in competition with larger and smaller poultry companies on the basis of price, quality and service, with WLR Foods' greatest competition coming from four or five of the country's larger poultry producers and processors. The pricing of poultry products is so competitive that any company with a cost advantage is in a favorable competitive position. Seasonal increases in production and customer buying patterns contribute to fluctuations in prices which are controlled more by supply and demand than by cost of production. WLR Foods primarily markets its products in the highly competitive northeastern, mid- Atlantic and southeastern sections of the United States. In July 1996, WLR Foods was ranked as the seventh largest company in poultry processing/further processing according to Meat & Poultry Magazine. WLR Foods was the second largest American turkey producer according to Turkey World magazine's January/February 1996 issue. WLR Foods was cited as the thirteenth largest chicken producer in the January 1996 issue of Broiler Industry magazine. Seasonality In general, WLR Foods' sales are relatively stable throughout the year. Highest demand for poultry is in May, June, July, November and December. The early summer months have strong demand for chicken and further processed products, and November and December are high demand months for turkey products. The highest demand for ice is from mid- May to mid-September. Trademarks and Patents As of August 1996, Wampler Foods began marketing products under the trademarks WAMPLER FOODS and WAMPLER FOODS and design, which have applications for registration pending at the U.S. Patent and Trademark Office. Wampler Foods continues to market its products under the trademarks WAMPLER-LONGACRE and design, TRIM FREE, COLONY FARMS, DINOSAUR WINGS, and THE DELI ROAST COLLECTION and design, all of which are federally registered trademarks. Wampler Foods also markets products and services under the trademarks POULTRY PARTNERS, POULTRY PARTNERSHIP and TURKEY MIGNON, which have pending federal applications. Products are also sold under the LEAN LITE DELI, ROUND HILL, FARMER'S CHOICE and VALLEY PRIDE marks. Wampler Foods has marketed products under the chicken in heart design, TENDERLINGS, CHEF'S SELECT, CHEF'S QUALITY and MASTERPIECE trademarks, but expects to cease packing products under those marks as of January 1, 1997. Following the acquisition of Cuddy Foods, Wampler Foods obtained the right to market products under various marks using the CUDDY name. Wampler Foods expects to cease packing products under the CUDDY marks as of January 1, 1997. Wampler Foods continues to market its export and foreign military sales under the COLONEL ROCKINGHAM design and ROCKINGHAM trademarks, as well as the WAMPLER FOODS trademark. Cassco distributes its products under the federally registered trademark CASSCO. 3 Wampler Foods holds a patent for pasteurized salads and a patent for processing turkey. Government Contracts WLR Foods' government contracts are a small segment of its total sales, consisting of bids on particular products for delivery at specified locations. Contracts are generally bid, and the product is delivered, within a one- to two-month period. These contracts include both chicken and turkey products and can involve further processed products. WLR Foods had less than $0.1 million of governmental contracts outstanding as of June 29, 1996, compared to approximately $0.9 million as of July 1, 1995. Foreign Sales WLR Foods' export sales constituted approximately 10% of its total annual sales in fiscal 1996, compared to 8% for fiscal year 1995 and 7% for fiscal year 1994. Wampler Foods has a full-time staffed export sales office which coordinates export sales efforts on behalf of WLR Foods. Export sales originate from that office and use independent brokers as needed. Sales are made to customers in over 50 countries. Transportation Transportation logistics, including the availability of transportation equipment and the efficiency of transportation systems, are key elements in the raising of poultry, transporting feed to the contract growers and outside purchasers, transporting poultry to the processing plants, and transporting products to customers. WLR Foods has contracts with two railroad companies for the delivery of feed ingredients to WLR Foods' feedmills. Delivery of the Company's products are generally made by truck. WLR Foods maintains a fleet of refrigerated trucks and uses them, along with refrigerated common carrier and customer-owned vehicles, to deliver its products. Export products are loaded in refrigerated containers and shipped overseas. Raw Materials WLR Foods' largest cost is for basic feed ingredients, namely corn and soybean meal. Feed grains are commodities and, as such, are subject to volatile price changes caused by weather, size of harvest, transportation and storage cost and the agricultural policies of the United States and foreign governments. Although WLR Foods can, and sometimes does, purchase grain in the forward markets, it cannot completely eliminate the potential adverse effect of grain price increases. Environmental and Other Regulatory Compliance WLR Foods' facilities and operations are subject to the regulatory jurisdiction of various federal agencies, including the Food and Drug Administration, Department of Agriculture, Environmental Protection Agency, Occupational Safety and Health Administration, and of corresponding state agencies in Virginia, West Virginia, North Carolina and Pennsylvania. All environmental permits, such as air, water and solid waste disposal permits, are issued by appropriate state agencies. A total of seven environmental permits are held by Wampler Foods's Virginia facilities, all of which were issued by the Virginia Department of Environmental Quality. The Hinton turkey processing facility holds an air permit which regulates certain combustion equipment and a water permit which regulates the treatment of process wastewater. The Harrisonburg turkey processing facility holds a water permit requiring pretreatment of its process wastewater to meet 4 certain effluent standards before discharging into the regional sewer system. Wampler Foods' Timberville chicken processing and protein conversion facility holds a water permit which regulates the discharge of process wastewater and an air permit which regulates the operation of its protein conversion facility, as well as certain combustion equipment. The chicken processing facility in Alma/Stanley holds one water permit which regulates the discharge of process wastewater. Finally, the Broadway feedmill holds an air permit which was issued primarily for the control and abatement of dust. In addition to the seven environmental permits held by Wampler Foods, WLR Foods holds a Virginia Pollution Abatement permit which allows Wampler Foods' Virginia facilities to apply to land in Virginia certain wastewater biosolids generated by the facilities' wastewater treatment systems. In West Virginia, Wampler Foods' Moorefield facilities hold four environmental permits, all of which were issued by the West Virginia Department of Commerce, Labor & Environmental Resources. The chicken processing and protein conversion facility holds a water permit which regulates the discharge of process wastewater, an air permit which regulates the operation of the company's protein conversion facility, and a sludge management permit regulating the land application in West Virginia of certain wastewater biosolids generated at the Moorefield facilities wastewater treatment works. The Moorefield feedmill holds one air permit which was issued primarily for the control and abatement of dust. Wampler Foods' North Carolina facilities hold a total of fifteen environmental permits, all of which were issued by the North Carolina Department of Environment, Health & Natural Resources. The Monroe turkey processing plant holds three permits: an industrial wastewater discharge permit which requires process wastewater to be pretreated prior to discharge to a regional sewer system, a stormwater permit which regulates stormwater discharges, and an air permit which regulates boiler emissions. The Marshville turkey processing plant and Charlotte turkey processing plant each hold an industrial wastewater discharge permit and stormwater permit which are similar to the counterpart permits held by the Monroe facility. In addition, the Marshville facility holds a stormwater permit which regulates cooling water and boiler blowdown discharges. The Wingate feedmill holds a stormwater permit which regulates stormwater discharges and an air permit which regulates emissions from boilers, bagfilters, and related equipment. The Goldsboro feedmill and Jones County grain elevator each hold an air permit issued for the control and abatement of dust. Finally, the Goldsboro chicken processing facility holds three environmental permits, a general stormwater permit, an industrial user pretreatment permit providing for the pretreatment of certain wastewater before discharge to the City of Goldsboro Control Authority, and an air permit regulating certain combustion equipment. Pennsylvania facilities owned by Wampler Foods hold a total of six environmental permits. The Franconia turkey processing plant holds five permits: two water permits for the treatment of process wastewater, two air permits to regulate operation of certain combustion and incineration equipment, and one municipal solid waste disposal permit for the disposal of incinerator ash. The New Oxford turkey processing facility holds one air permit which regulates combustion equipment. All of the Pennsylvania permits were issued by the Pennsylvania Department of Environmental Resources. In addition to the foregoing environmental permits, and where not otherwise addressed above, all facilities have taken steps to ensure compliance with stormwater regulations. Where applicable, facilities have applied for the necessary group, individual or general storm water permit in accordance with state and federal guidelines. Further, each facility has registered aboveground and underground storage tanks in accordance with relevant state and federal regulations. Management believes that all facilities and operations are currently in compliance with environmental and regulatory standards. Compliance has not had a materially adverse effect upon WLR Foods' 5 earnings or competitive position in the past, and it is not anticipated to have a materially adverse effect in the future. Employees WLR Foods employed over 8,500 persons as of June 29, 1996, none of whom were covered by a collective bargaining agreement. Item 2. PROPERTIES. WLR Foods' eight poultry processing facilities and two further processing plants are located in Virginia, West Virginia, Pennsylvania and North Carolina, and have a total slaughter capacity of approximately 650,000 turkeys per week (single shift) and 3.3 million chickens per week (double shift, except in the Goldsboro plant, which runs a single shift). WLR Foods owns and operates five feedmills with a production capacity in excess of 1.9 million tons of finished feed per year; a turkey hatchery with a production capacity of approximately 360,000 poults per week and three chicken hatcheries with a production capacity of approximately 3.5 million chicks per week; freezer and cold storage for finished products with approximately 5.2 million cubic feet of capacity; and two protein conversion plants with a total production capacity of 4,500 tons of raw product weekly. The diversity, number and geographic proximity of its processing and support facilities provide WLR Foods with operating flexibility and enable it to alter the size and mix of poultry processed among the various facilities, as market conditions change. The Company's assets are depreciated on a straight-line basis, based on the following asset lives: Land Improvements 10-20 years Buildings & Improvements 5-20 years Machinery & Equipment 3-17 years Transportation Equipment 3-5 years Cassco operates public refrigerated facilities at five locations with approximately 9.2 million cubic feet. These facilities are located close to major food processors in Virginia, West Virginia and North Carolina. Cassco also operates seven ice manufacturing facilities in Virginia, West Virginia and Washington, D.C. with a capacity of approximately 1,200 tons per day. From fiscal 1988 through the end of fiscal 1996, WLR Foods spent over $188 million for replacement and productivity improvements, acquisitions and expansions of facilities, and protein conversion plant construction. WLR Foods owns virtually all of its manufacturing and production equipment which is in good repair and is updated periodically. Replacement parts and service for the equipment are readily available, which allows for timely processing of the Company's products. Item 3. LEGAL PROCEEDINGS. On March 8, 1996, suit was filed against WLR Foods and its wholly owned subsidiary, WLR Poultry Products, Inc., New Hope Feeds, Inc. and Equipment Truck Leasing, Inc. (collectively, New Hope) and the principal shareholders of New Hope, by Case Foods, Inc. and its wholly owned subsidiary, Case Farms of North Carolina, Inc. (collectively, Case). The suit, filed in the Burke County, North Carolina, General Court of Justice, Superior Court Division, arises from the September 29, 1995 acquisition by the Company of the chicken processing plant, live production assets, and inventory of New Hope (the Acquisition). The Complaint maintains that the Acquisition was in violation of a right of first refusal previously granted by New Hope to Case. The suit also maintains that the Acquisition was in violation of a letter of intent between New Hope and Case, and in contravention of certain 6 oral promises and representations claimed to have been made by New Hope. In addition to breach of contract and other claims against Case, the claims against WLR Foods and its subsidiary include tortious interference with contract, tortious interference with prospective advantage, and unfair and deceptive trade practices under North Carolina law. The Complaint seeks monetary damages of an unspecified amount from WLR Foods and New Hope, some of which are requested to be trebled pursuant to North Carolina law. The Company intends to defend vigorously against the claims made by Case, and does not expect the litigation to have a material effect on the Company or its financial statements. Moreover, in connection with the Acquisition, the Company entered into an Indemnification Agreement with New Hope, secured by a Stock Escrow Agreement, pursuant to which New Hope is obligated to defend WLR Foods, and to indemnify WLR Foods for certain liabilities arising from the Acquisition, specifically including liabilities arising from this litigation. The escrow account currently holds 318,332 shares of WLR Foods Common Stock with a market value as of September 24, 1996 of approximately $3,740,000. Settlement negotiations continue in the Keystone Sanitation litigation reported in the Company's Form 10-K for the fiscal year ended July 1, 1995. Based on current settlement proposals, the Company reasonably believes that its exposure is now less than $100,000 and is not expected to materially affect the Company or its financial statements. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. No matters were submitted to the shareholders of the Company during the fourth quarter of the fiscal year ended June 29, 1996. Executive Officers of the Registrant The following information is given regarding WLR Foods' executive officers. ______________________________________________________________________________ Name and Position Principal Occupation with the Company Age During the Last Five Years ______________________________________________________________________________ James L. Keeler 61 Chief Executive Officer since February President 1988 Chief Executive Officer James L. Mason 46 President of Wampler Foods since January Executive Vice President 1994; previously, General Manager and President President of Wampler-Longacre Turkey, Inc. Wampler Foods, Inc. since April 1990 V. Eugene Misner 59 Vice President of Live Production since Vice President of January 1994; previously, General Manager Live Production and President of Wampler-Longacre Chicken, Wampler Foods, Inc. Inc. since April 1990 Robert T. Ritter 45 Chief Financial Officer since June 1996; Chief Financial previously, Private Investor and Officer Consultant; Controller and Treasurer of Treasurer and Secretary American Cyanamid Co. John J. Broaddus 46 Executive Vice President since June 1996; Executive Vice President previously, Vice President of Wampler Wampler Foods, Inc. Longacre, Inc. since 1994 and President of Cassco since 1990 7 Henry L. Holler 67 Vice President Sales and Marketing since Vice President of January 1994; previously, Vice President Sales and Marketing of Sales for Wampler-Longacre Chicken, Wampler Foods Inc. Jane T. Brookshire 50 Vice President of Human Resources since Vice President of October 1993; previously, Director of Human Resources Human Resources for WLR Foods ________________ [FN] James L. Mason is the son of Herman D. Mason, who is Vice Chairman of the Company's Board. PART II Item 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS. Public trading of shares of WLR Foods' common stock commenced on May 10, 1988. The stock was included in NASDAQ as of September 12, 1988, and was included in NASDAQ/National Market System as of March 7, 1989. The range of high and low bid information for the stock, as well as information regarding dividends declared by WLR Foods, for each full quarterly period within the two most recent fiscal years is incorporated by reference to Note 12 to the Registrant's Consolidated Financial Statements in the Annual Report, attached hereto as Exhibit 13.3. As of September 1, 1996, the approximate number of shareholders of record was 3,514. Item 6. SELECTED FINANCIAL DATA. Selected financial data for each of the fiscal years in the eight-year period ended June 29, 1996 is incorporated by reference to the table entitled "Financial Highlights" in the Annual Report, attached hereto as Exhibit 13.1. A summary of significant accounting policies and business acquisitions and dispositions is incorporated by reference to Notes 1 and 2 to the Registrant's Consolidated Financial Statements in the Annual Report, attached hereto as Exhibit 13.3. Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Management's discussion and analysis of financial condition and results of operations is incorporated by reference to that section in the Annual Report, attached hereto as Exhibit 13.2. Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. The information required by this Item, except for the required financial statement schedules, is incorporated by reference to the Consolidated Financial Statements and Notes thereto in the Annual Report, attached hereto as Exhibit 13.3. The required financial statement schedules are included on page 13 of this report. Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. There were no changes in or disagreements with accountants on accounting and financial disclosure during WLR Foods' two most recent fiscal years or any subsequent interim period. 8 PART III Items 10 - 13 inclusive. These items have been omitted in accordance with instructions to Form 10-K Annual Report. The Registrant will file with the Commission in September 1996, pursuant to Regulation 14A, a definitive proxy statement that will involve the election of directors. PART IV Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. (a) Financial Statements, Schedules and Exhibits Financial Statements Location Consolidated Statements of Operations Exhibit 13.3 - - Fiscal years ended June 29, 1996, July 1, 1995 and July 2, 1994 Consolidated Balance Sheets - June 29, 1996 and Exhibit 13.3 July 1, 1995 Consolidated Statements of Shareholders' Equity - Exhibit 13.3 Fiscal years ended June 29, 1996, July 1, 1995 and July 2, 1994 Consolidated Statements of Cash Flows - Fiscal years Exhibit 13.3 ended June 29, 1996, July 1, 1995 and July 2, 1994 Notes to Consolidated Financial Statements - Exhibit 13.3 Fiscal years ended June 29, 1996, July 1, 1995 and July 2, 1994 Financial Statement Schedules Independent Auditors' Report on Schedules Page 12 Schedule II - Valuation and Qualifying Accounts Page 13 Schedules not included in this Item have been omitted because they are either not applicable or the information is included in the Consolidated Financial Statements or notes thereto. (b) Reports on Form 8-K. No reports on Form 8-K were filed during the fourth quarter of fiscal 1996 that ended on June 29, 1996. (c) Exhibits See Exhibit Index. [The remainder of this page is intentionally left blank.] 9 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. WLR Foods, Inc. By:___/S/ James L. Keeler________________ Its President & Chief Executive Officer Date: September _25_, 1996 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. __/s/ James L. Keeler_________________ President & Chief Executive Officer Date: September _25_, 1996 _/s/ Robert T. Ritter_________________ Chief Financial Officer Date: September __26_, 1996 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities on September _26 1996. Signature Title ______________________________ Director George E. Bryan* ______________________________ Director Charles L. Campbell* ______________________________ Director Stephen W. Custer* ______________________________ Director Calvin G. Germroth* ______________________________ Director William H. Groseclose* ______________________________ Director J. Craig Hott* 10 __/s/ James L. Keeler_________ Director James L. Keeler ______________________________ Director Herman D. Mason* ______________________________ Director Charles W. Wampler, Jr.* ______________________________ Director William D. Wampler* *By /s/ Robert T.Ritter________ Robert T. Ritter, attorney-in-fact 11 INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT SCHEDULE The Board of Directors and Shareholders WLR Foods, Inc. Under date of August 14, 1996, we reported on the consolidated balance sheets of WLR Foods, Inc. and subsidiaries as of June 29, 1996 and July 1, 1995, and the related consolidated statements of operations, shareholders' equity and cash flows for each of the fiscal years in the three-year period ended June 29, 1996, as contained in the 1996 annual report to stockholders. These consolidated financial statements and our report thereon are incorporated by reference in the annual report on Form 10-K for the year ended June 29, 1996. In connection with out audits of the aforementioned consolidated financial statements, we also have audited the related financial statement schedule as listed in Item 14(a) on this Form 10-K. This financial statement schedule is the responsibility of the Company's management. Out responsibility is to express an opinion on this financial statement schedule based on our audits. In our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. /s/ KPMG PEAT MARWICK LLP Richmond, Virginia August 14, 1996 12 WLR FOODS, INC. SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS FOR FISCAL YEARS ENDED JUNE 29, 1996, JULY 1, 1995 AND JULY 2, 1994 (in thousands)
Description Balance at Charged to Charged to Balance at beginning cost and other end of of period expenses accounts period Fiscal year ended June 29, 1996 Allowance for Doubtful Accounts $613 $297 $202 $708 Total $613 $297 $202 $708 Fiscal year ended July 1, 1995 Allowance for Doubtful Accounts $360 $686 $433 $613 Total $360 $686 $433 $613 Fiscal year ended July 2, 1994 Allowance for Doubtful Accounts $363 $156 $159 $360 Total $363 $156 $159 $360
13 EXHIBIT INDEX 3.1 Articles of Incorporation of the Registrant, restated effective May 30, 1995, incorporated by reference to Exhibit 3.1 of Form 10-K filed with the Securities and Exchange Commission on October 2, 1995. 3.2 Bylaws of the Registrant, as amended on November 2, 1994, incorporated by reference to Exhibit 3.2 of Form 10-K filed with the Securities and Exchange Commission on October 2, 1995. 4.1 Specimen Stock Certificate incorporated by reference to Exhibit 4 of Form 10-K filed with the Securities and Exchange Commission on September 27, 1990. 4.2 Note Agreement, dated May 1, 1991 with Minnesota Mutual Life Insurance Company, Inc. and others, incorporated by reference to Exhibit 4.4 of Form 10-K filed with the Securities and Exchange Commission on September 27, 1991. 4.3 First Amendment, dated October 16, 1992, to the Note Agreement, dated May 1, 1991 with Minnesota Mutual Life Insurance Company, Inc., incorporated by reference to Exhibit 4.3 of Form 10-K filed with the Securities and Exchange Commission on October 2, 1995. 4.4 Agreement of the Company, dated September 27, 1995, to furnish a copy of the Second Amendment, dated June 1, 1995, to the Note Agreement, dated May 1, 1991 with Minnesota Mutual Life Insurance Company, Inc. to the Securities and Exchange Commission upon its request, incorporated by reference to Exhibit 4.4 of Form 10-K filed with the Securities and Exchange Commission on October 2, 1995. 4.5 Shareholder Protection Rights Agreement, dated as of February 4, 1994, which includes as Exhibit A the forms of Rights Certificate and Election to Exercise and as Exhibit B the Form of Certificate of Designation and Terms of the Participating Preferred Stock incorporated by reference to Exhibit 1 of Form 8-A filed with the Securities and Exchange Commission on September 30, 1993. 4.6 Loan Agreement, dated March 1, 1995 with First Union National Bank, incorporated by reference to Exhibit 4.1 of Form 10-Q filed with the Securities and Exchange Commission on May 11, 1995. 4.7 Agreement of the Company, dated September 25, 1996, to furnish a copy of the Modification Agreement, dated April 1, 1996, to the Loan Agreement, dated March 1, 1995 with First Union National Bank of Virginia. 4.8 Credit Agreement, dated March 1, 1995 with First Union National Bank of Virginia and others, incorporated by reference to Exhibit 4.2 of Form 10-Q filed with the Securities and Exchange Commission on May 11, 1995. 4.9 Amendment, dated as of July 1, 1995, to the Credit Agreement, dated March 1, 1995 with First Union National Bank of Virginia and others, incorporated by reference to Exhibit 4.8 of Form 10-K filed with the Securities and Exchange Commission on October 2, 1995. 4.10 Agreement of the Company, dated September 25, 1996, to furnish a copy of the Modification Agreement, dated June 1, 1996, to the Credit Agreement, dated March 1, 1995 with First Union National Bank of Virginia and others. 4.11 Agreement of the Company, dated September 27, 1995, to furnish a copy of the Note Agreement, dated June 1, 1995 with respect to the issuance of certain long-term debt to the Securities and Exchange Commission upon its request, incorporated by reference to Exhibit 4.9 of Form 10-K filed with the Securities and Exchange Commission on October 2, 1995. 14 9.1 Voting Trust Agreement, dated August 29, 1994, incorporated by reference to Exhibit 9.1 of Form 8-K filed with the Securities and Exchange Commission on September 13, 1994. 9.2 Voting Trust Agreement, dated September 29, 1995. 10.1 Employment Agreement, dated July 4, 1993 between the Registrant and James L. Keeler (Deferred Compensation Agreement attached thereto as Exhibit A), incorporated by reference to Exhibit 10.6 of Form 10-K filed with the Securities and Exchange Commission on September 30, 1993. 10.2 Amendment to Employment Agreement, dated February 4, 1994, between the Registrant and James L. Keeler, incorporated by reference to Exhibit 10.2 of Form 10-Q filed with the Securities and Exchange Commission on February 15, 1994. 10.3 Amendment to Deferred Compensation Agreement, dated February 4, 1994, between the Registrant and James L. Keeler, incorporated by reference to Exhibit 10.3 of Form 10-Q filed with the Securities and Exchange Commission on February 15, 1994. 10.4 Amendment, dated June 27, 1995, to Employment Agreement dated July 4, 1993, between the Registrant and James L. Keeler. 10.5 Executive Cash Bonus Program, incorporated by reference to Exhibit 10.7 of Form 10-K filed with the Securities and Exchange Commission on September 30, 1993. 10.6 Long-Term Incentive Plan, as amended, incorporated by reference to Exhibit 28 to Post-Effective Amendment Number One to Form S-8 (No. 33-27037), filed with the Securities and Exchange Commission on November 18, 1992. 10.7 Severance Agreement, dated February 4, 1994 between the Registrant and James L. Keeler, incorporated by reference to Exhibit 10.4 of Form 10-Q filed with the Securities and Exchange Commission on February 15, 1994. 10.8 Severance Agreement, dated February 4, 1994, between the Registrant and James L. Mason, incorporated by reference to Form 10-Q/A filed with the Securities and Exchange Commission on February 23, 1994. 10.9 Severance Agreement, dated June 20, 1996 between the Registrant and John J. Broaddus. 10.10 Severance Agreement, dated February 4, 1994 between the Registrant and V. Eugene Misner incorporated by reference to Form 10-Q/A filed with the Securities and Exchange Commission on February 23, 1994. 10.11 Deferred Compensation Agreement, dated February 4, 1994 between the Registrant and Charles W. Wampler, Jr. incorporated by reference to Exhibit 10.9 of Form 10-Q filed with the Securities and Exchange Commission on February 15, 1994. 10.12 Deferred Compensation Agreement, dated February 4, 1994 between the Registrant and Herman D. Mason incorporated by reference to Exhibit 10.10 of Form 10-Q filed with the Securities and Exchange Commission on February 15, 1994. 10.13 Amendment to Deferred Compensation Agreement, dated July 25, 1996 between the Registrant and Herman D. Mason. 10.14 Deferred Compensation Agreement, dated February 4, 1994, between the Registrant and George E. Bryan, incorporated by reference to Exhibit 10.11 to Form 10-Q filed with the Securities and Exchange Commission on February 15, 1994. 10.15 Deferred Compensation Agreement, dated February 4, 1994, between the Registrant and William D. Wampler, incorporated by reference to Exhibit 10.12 of Form 10-Q filed with the Securities and Exchange Commission on February 15, 1994. 15 10.16 1995 Nonqualified Deferred Compensation Plan. 10.17 Amendment No. One to 1995 Deferred Compensation Plan. 10.18 Trust Under WLR Foods, Inc. Nonqualified Deferred Compensation Plan. 10.19 Description of Plan to Issue Stock for Director Compensation. 13.1 Financial Highlights, from the Registrant's Annual Report to Shareholders for the fiscal year ended June 29, 1996. 13.2 Management's Discussion and Analysis, from the Registrant's Annual Report to Shareholders for the fiscal year ended June 29, 1996. 13.3 Consolidated Financial Statements and Notes to Consolidated Financial Statements, from the Registrant's Annual Report to Shareholders for the fiscal year ended June 29, 1996. 13.4 Independent Auditors' Report on Consolidated Financial Statements, from the Registrant's Annual Report to Shareholders for the fiscal year ended June 29, 1996. 21 List of Subsidiaries of the Registrant. 23 Consent of Independent Certified Public Accountants. 24 Power of Attorney. 27 Financial Data Schedule. 16 EX-4.7 2 AGREEMENT TO FURNISH LOAN AGREEMENT Exhibit 4.7 Agreement to Furnish Copy of Modification Agreement September 25, 1996 Pursuant to Item 601(b)(4)(3)(A) of Regulation S-K, the Company hereby agrees to furnish to the Securities and Exchange Commission, upon request, a copy of the Modification Agreement, dated April 1, 1996, to the Loan Agreement dated March 1, 1995 with First Union National Bank of Virginia. WLR FOODS, INC. By: _/S/ Robert T. Ritter_________ ROBERT T. RITTER Its: Chief Financial Officer EX-4.10 3 AGREEMENT TO FURNISH MODOFICATION AGREEMENT Exhibit 4.10 Agreement to Furnish Copy of Modification Agreement September 25, 1996 Pursuant to Item 601(b)(4)(3)(A) of Regulation S-K, the Company hereby agrees to furnish to the Securities and Exchange Commission, upon request, a copy of the Modification Agreement, dated June 1, 1996, to the Credit Agreement dated March 1, 1995 with First Union National Bank of Virginia and others. WLR FOODS, INC. By:__/s/ Robert T. Ritter___ ROBERT T. RITTER Its: Chief Financial Officer EX-9.2 4 VOTING TRUST AGREEMENT Exhibit 9.2 VOTING TRUST AGREEMENT THIS VOTING TRUST AGREEMENT ( Agreement ), dated as of September 29, 1995, is made by and among WLR FOODS, INC., a Virginia corporation ( WLR ), NEW HOPE FEEDS, INC., a North Carolina corporation ( New Hope ), ECONOMY TRUCK LEASING, INC., a North Carolina corporation ( Economy ) (with New Hope and Economy being referred to herein, individually, as a Seller, and together, as the Sellers ), and J. HAROLD WEBBER, ( Webber ), JAMES H. WEBBER, JR., ROBERT L. WEBBER, and PEGGY W. KEARNEY (with Webber and such individuals being referred to herein, individually, as a Shareholder, and together, as the Shareholders ), and CRESTAR BANK, Trustee, and its successors (the Trustee ) who agree as follows. WLR, the Sellers and the Shareholders are referred to herein as the Parties. RECITALS A. As of the date hereof 411,216 shares of WLR common stock ( Shares ) have been issued to the Trustee hereunder, on behalf of the Sellers in consideration for the transfer of certain assets pursuant to the terms of an Asset Purchase Agreement dated August 21, 1995 among WLR, WLR Poultry Products, Inc., the Sellers and the Shareholders ( Asset Purchase Agreement ). The parties anticipate that additional Shares may be issued to the Trustee, on behalf of the Sellers and the Shareholders, following certain post-closing adjustments which, when issued, shall also be considered Shares hereunder. Certain capitalized terms used herein without definition are used herein as defined in the Asset Purchase Agreement. B. A condition precedent to WLR s obligation to issue the Shares was the Sellers and the Shareholders execution of this Agreement in order for the Transactions not to compromise the continuity and stability of WLR s long-term business strategy and policies as effectively confirmed by a recent vote of shareholders of WLR and as implemented and managed by WLR s Board of Directors and management. C. The Trustee has consented to act under this Agreement for the purposes hereunder. TERMS Now, therefore, in consideration of the premises and other good and valuable consideration, receipt of which is hereby acknowledged, the Parties and the Trustee agree as follows: 1. TRANSFER OF STOCK TO TRUSTEE. Concurrently with the Closing of the above-referenced Asset Purchase Agreement, the Shares were issued to the Trustee, on behalf of the Sellers and the Shareholders, who shall hold the Shares subject to the terms of this Agreement and shall issue and deliver to the Sellers and/or the Shareholders voting trust certificates for the Shares. 2. VOTING TRUST CERTIFICATES. Each voting trust certificate issued hereunder shall be in substantially the same form as set forth on Exhibit A attached hereto. 3. TRANSFER OF CERTIFICATES. Unless otherwise agreed to in writing by WLR, the voting trust certificates are not transferable except that (a) the holder thereof, if a Seller, may transfer the certificates to the Shareholders in connection with the dissolution and liquidation of such Seller, or the holder thereof, if a Shareholder, may transfer the certificates to any other Shareholder; provided, however, that the Shareholders in whose favor such certificates are transferred shall be bound by all of the provisions of this Agreement as though that person were the original holder and shall exercise the rights of the voting trust certificates only in accordance with this Agreement; and (b) the holder thereof may transfer the certificates to the Trustee for cancellation in any event where the Shares or portions thereof are released from the restrictions imposed by this Agreement as described in Section 7 below. In the event of any permitted transfer, the certificates shall be transferable at the Trustee s principal office in Richmond, Virginia (and at such other office as the Trustee may designate by an instrument signed by it and sent by telecopy to the registered holders of voting trust certificates), on the books of the Trustee, by the registered owner thereof, either in person or by attorney thereto duly authorized, upon surrender thereof, according to the rules established for that purpose by the Trustee. 4. TERM OF AGREEMENT. This Agreement shall terminate upon the earlier of: (a) The fourth (4th) anniversary of the date of this Agreement; (b) The date on which a Change of Control occurs in WLR. For the purpose of this Agreement, a Change in Control shall mean the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the Exchange Act )) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than thirty percent (30%) of either the then outstanding shares of common stock of WLR or the combined voting power of the then outstanding voting securities of WLR entitled to vote generally in the election of directors; or (c) The written consent of the Parties to terminate this Agreement. 5. TERMINATION PROCEDURE. (a) Immediately upon the termination of this Agreement as provided in Section 4 above, the voting trust certificates shall cease to have any effect, and their holders shall have no further rights under this Voting Trust Agreement other than to receive certificates for Shares or other property distributable under the terms hereof and upon the surrender of such voting trust certificates. (b) Immediately upon surrender of the voting trust certificates at the Trustee s offices, the Trustee shall deliver to the registered holders of all voting trust certificates stock certificates for the number of shares of the WLR common stock represented thereby. (c) If any voting trust certificate has not been surrendered within thirty (30) days after the termination of this Agreement, the Trustee may deposit with WLR stock certificates representing the number of shares of common stock represented by such voting trust certificates then outstanding, with authority in writing to WLR to deliver such stock certificates in exchange for voting trust certificates representing a like number of shares of the capital stock of WLR. Upon such deposit, all further liability of the Trustee for the delivery of such stock certificates and the delivery or payment of dividends upon surrender of the voting trust certificates shall cease, and the Trustee shall not be required to take any further action hereunder. 6. DIVIDENDS. (a) Prior to the termination of this Agreement, and subject to the Stock Escrow Agreement of even date herewith among the Parties, the holder of each voting trust certificate shall be entitled to receive payments equal to the cash dividends, if any, received by the Trustee upon a like number and class of shares of WLR common stock as is called for by each voting trust certificate. If any dividend in respect of the stock deposited with the Trustee is paid, in whole or in part, in WLR common stock, the Trustee shall hold, subject to the terms of this Agreement, the certificates for stock which are received by it on account of such dividend. In the event of a dividend payable in cash or stock at the election of the holder of the voting trust certificate, the Trustee shall make such election upon the direction of the registered holder of the voting trust certificate, or, in the absence of such election, shall elect a cash dividend payment. The holder of each voting trust certificate representing stock on which such stock dividend has been paid shall be entitled to receive a voting trust certificate issued under this 2 Agreement for the number of shares and class of stock received as such dividend with respect to the shares represented by such voting trust certificate. Holders entitled to receive the dividends described above shall be those registered as such on the Trustee s transfer books at the close of business on the day fixed by WLR for the taking of a record to determine those holders of its stock entitled to receive such dividends. (b) If any dividend in respect of the stock deposited with the Trustee is paid other than in cash or in common stock, then the Trustee shall distribute the same among the holders of the voting trust certificates registered as such on the Trustee s transfer books at the close of business on the day fixed by WLR for the taking of a record to determine those holders of its stock entitled to receive such dividends. (c) In lieu of receiving cash dividends upon the common stock of WLR and paying the same to the holders of voting trust certificates pursuant to the provisions of this Agreement, the Trustee may instruct WLR in writing to pay such dividends to the holders of the voting trust certificates. Upon receipt of such written instructions, WLR shall pay such dividends directly to the holders of the voting trust certificates. Upon such instructions being given by the Trustee, all liability of the Trustee with respect to such dividends shall cease. The Trustee may at any time revoke such instructions and by written notice to WLR direct it to make dividend payments to the Trustee. 7. PARTIAL RELEASES OF AND FIRST RIGHT OF REFUSAL WITH RESPECT TO SHARES. At any time after the second anniversary of the date of this Agreement, the Shareholders, acting by their unanimous written consent, may request the Trustee, by written notice signed by all such Shareholders sent to the Trustee, to release to them portions of the shares being held pursuant to the terms of this Agreement, provided that the following conditions shall apply: (a) None of the shares so released shall, at the time of such release, be subject to the terms of the Stock Escrow Agreement dated as of the date of this Agreement among the parties hereto; (b) The total value of the shares so released, determined by reference to the average per share closing price of WLR s common stock as quoted by NASDAQ s National Market System for the 10 consecutive trading days of WLR s common stock ending at the closing of market 5 days prior to any release of shares hereunder, shall in no event exceed, in any consecutive twelve (12)-month period during the term of this Agreement, the greater of (i) $500,000, or (ii) the total amount of the federal and state estate or inheritance taxes for which the estate of any Shareholder becomes liable and which are directly attributable to the inclusion of the value of the shares of the WLR stock registered in the name of such Shareholder in the gross estate of such Shareholder for federal estate tax purposes (and all determinations as to the amount of such taxes shall be verified by WLR s review of all federal and state estate or inheritance tax returns and other documents and records deemed necessary by WLR to make such verification of the amount of such taxes). (c) In any and all events, no release of shares pursuant to this Section 7 shall be permitted or deemed effective until the provisions of this Section 7(c) shall have been complied with in full. Upon the Trustee s receipt of any written request from the Shareholders that any portion of the shares be released in accordance with the provisions of this Section 7, the Trustee shall send a copy of such request to WLR. Within thirty (30) days after WLR s receipt of the request from the Trustee, WLR shall have the right to send a written notice (the Purchase Notice ) to the Shareholders and the Trustee that WLR elects to purchase and redeem from the Shareholders, proportionately, all or any portion of the shares which are otherwise to be released to the respective holders of the voting trust certificates hereunder and which specifies a closing date for the purchase no later than sixty (60) days after the date of the Purchase Notice. In the event that WLR sends such a Purchase Notice within such thirty (30)-day period, then on the closing date specified in the Purchase Notice, WLR shall purchase all or such portion of the shares to be released for a price per share equal to the average per share closing 3 price of WLR s common stock as quoted by NASDAQ s National Market System for the 10 consecutive trading days of WLR s common stock ending at the closing of market 5 days prior to the date of the Purchase Notice. At the closing, WLR shall pay the purchase price for the shares which it elects to purchase hereunder in cash to the Shareholders in the proportions in which they would otherwise have been entitled to received the shares if released to them, and the Trustee shall convey, assign and release to WLR certificates evidencing the shares so released and purchased by WLR from the respective Shareholders. 8. RIGHTS OF TRUSTEE. (a) Until the actual delivery to the holders of voting trust certificates issued hereunder of stock certificates in exchange therefor, and until the surrender of the voting trust certificates for cancellation, the Trustee shall have the right, subject to the provisions hereof, including, without limitation, paragraph (b) below, to exercise, in person or by his nominees or proxies, all stockholder voting rights and powers in respect of all stock deposited hereunder, and to take part in or consent to any corporate or stockholder action of any kind whatsoever. The right to vote shall include the right to vote for the election of directors, and in favor of or against any resolution or proposed action of any character whatsoever, which may be presented at any meeting or require the consent of the WLR stockholders. Without limiting such general right, it is understood that such action or proceeding may include mortgaging, creating a security interest in, and pledging of all or any part of the WLR property, the lease or sale of all or any part of its property, for cash, securities, or other property, and the dissolution of WLR, or its consolidation, merger, reorganization, or recapitalization. (b) In voting the stock held by it hereunder either in person or by its nominees or proxies, the Trustee shall vote, subject to the exceptions set forth in paragraph (c) below, in accordance with written directions of the registered voting trust certificate holder in connection with all matters that may be presented at any meeting or require the consent of WLR stockholders. If the registered voting trust certificate holder fails to provide the Trustee with voting directions in a timely manner, the Trustee shall vote the shares held by such certificate holder in accordance with the recommendation of WLR s Board of Directors as it exists at the time of the vote. (c) Notwithstanding the provisions of paragraph (b) of this Section 8, in voting the stock held by it hereunder either in person or by its nominees or proxies, the Trustee shall vote in accordance with the recommendation of WLR s Board of Directors as it exists at the time of the vote of WLR shareholders only in connection with, and limited to the duration of, the following specific matters: (i) any amendment to the articles of incorporation of WLR; (ii) a plan of merger, consolidation, share exchange or dissolution or a transaction involving the sale of all or substantially all of WLR s assets; (iii) a proposal to grant voting rights to shares of WLR stock acquired in a control share acquisition (as defined in section 13.1-728.1 of the Virginia Stock Corporation Act); (iv) any matter that is the subject of a proxy contest (as defined below); and (v) a proposal to issue additional shares of WLR stock. For purposes of this Agreement, a matter which is the subject of a proxy contest is a proposal or matter being submitted for voting by WLR s shareholders and with respect to which, in addition to the solicitation of proxies from WLR shareholders by WLR s management or Board of Directors, a shareholder or group of shareholders is conducting a separate, opposing proxy solicitation seeking shareholder action on such proposal or matter which is opposed by or contrary to the recommendation of WLR s Board of Directors. Any dispute with respect to whether a matter shall be voted by the Trustee in accordance with the recommendation of WLR s Board of Directors shall be determined in the sole discretion of the Trustee and shall be binding on the Trustee and the registered voting trust certificate holder. 9. TRUSTEES. (a) The Trustee (and any successor Trustee) may at any time resign by mailing to the registered holders of voting trust certificates a written resignation, to take effect ten (10) days thereafter or upon its prior acceptance. 4 In the event of resignation, a successor Trustee shall be mutually acceptable to, and designated by, WLR, the Sellers and Shareholders, and, in the absence of an agreement between the parties, designated by an independent third party selected by them. No person or entity shall be named as successor Trustee who is restricted from voting WLR common stock by any other law, agreement or regulatory or judicial order. (b) The rights, powers, and privileges of the Trustee named hereunder shall be possessed by the successor Trustees, with the same effect as though such successors had originally been parties to this Agreement. The word Trustee, as used in this Agreement, means the Trustee or any successor Trustees acting hereunder, and shall include both the single and the plural number. 10. COMPENSATION AND REIMBURSEMENT OF TRUSTEE. The Trustee shall serve for an annual fee of $750.00 which shall be paid by WLR. The Trustee shall have the right to incur and pay such reasonable expenses and charges, to employ and pay such agents, attorneys, and counsel as it may deem necessary and proper to effectuate this Agreement. All such expenses or charges incurred by and due to the Trustee shall be reimbursed by WLR. 11. INDEMNIFICATION. WLR shall indemnify and hold harmless each of the Sellers and Shareholders and the Trustee and their respective officers, directors, employees, shareholders, partners, agents, legal counsel and accountants (each an Indemnitee and together the Indemnitees ) to the fullest extent permitted by applicable law in effect on the date hereof or as such laws may from time to time be amended from and against any and all losses, claims, damages, liabilities and expenses (including attorneys fees and expenses and any and all expenses whatsoever incurred in investigating, preparing or defending any action suit, investigation or proceeding), and amounts paid in settlement (together, Losses ) incurred by an Indemnitee if such Indemnitee is a party or is threatened to be made a party to any threatened, pending or completed action, suit, investigation or proceeding, whether civil, administrative or investigation in nature, arising from, caused by or in connection with the negotiation, execution, delivery and performance of this Agreement (including any other agreements entered into in connection herewith), other than as a result of the breach by the Indemnitee of any terms of this Agreement or such agreements. 12. NOTICE. (a) Unless otherwise specifically provided herein, any notice to or communication with the holders of the voting trust certificates hereunder shall be deemed to be sufficiently given or made if telecopied or delivered against receipt to the party to whom it is to be given at the following address (or such other address as the party shall have furnished in writing in accordance with this Section): 5 To Wampler: WLR Foods, Inc. P.O. Box 7000 Broadway, Virginia 22815-7000 Attention: James L. Keeler, President and CEO Facsimile # 540-896-0498 with a copy to: Gary D. LeClair, Esq. LeClair Ryan, A Professional Corporation 707 E. Main Street Eleventh Floor Richmond, VA 23219 Facsimile # 804-783-2294 To the Sellers or the Shareholders: c/o J. Harold Webber 761 Miller s Chapel Road Goldsboro, North Carolina 27534 Facsimile # with a copy to: Tommy W. Jarrett, Esq. Dees, Smith, Powell, Jarrett, Dees & Jones 100 North William Street Goldsboro, North Carolina 27530 Facsimile # 919-735-0234 6 To the Trustee: Crestar Bank Attn: Corporate Trust Administration 919 East Main Street 10th Floor Richmond, Virginia 23219 Phone: (804) 782-5438 Fax: (804) 782-7855 (b) All distributions of cash, securities, or other property hereunder by the Trustee to the holders of voting trust certificates shall be made, in the Trustee s discretion, by overnight delivery to the addresses set forth above. 13. MODIFICATIONS AND NON-WAIVER. This Agreement may be modified only by a written instrument executed by the Sellers, the Shareholders and WLR and the Trustee; provided, however, that the Trustee s consent shall not be necessary to modifications except as they expressly relate to its fees, indemnification and right to resign. No delay or failure by a party to exercise any right under this Agreement, and no partial or single exercise of that right, shall constitute a waiver of that or any other right, unless otherwise expressly provided herein. 14. HEADINGS. Headings in this Agreement are for convenience only and shall not be used to interpret or construe its provisions. 15. GOVERNING LAW; VENUE. This Agreement shall be governed and construed in accordance with the laws of the Commonwealth of Virginia applicable to agreements made and to be performed entirely within the Commonwealth. The Circuit Court of the County of Rockingham, Virginia or the United States District Court for the Western District of Virginia, Harrisonburg Division, as appropriate, shall have exclusive jurisdiction and venue over any claims or causes of action concerning this Agreement. 16. COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. 17. BINDING EFFECT. The provisions of this Agreement shall be binding upon and inure to the benefit of each of the parties and their respective legal representatives, successors and assigns. 7 IN WITNESS WHEREOF, the parties have caused this Voting Trust Agreement to be executed by their respective officers hereunto duly authorized as of the day and year first above written. WLR FOODS, INC. By: _/s/ James L. Keeler_______ Title:__President & CEO_________ NEW HOPE FEEDS, INC. By: _/s/ J. Harold Webber ________ Title:___President_________________ ECONOMY TRUCK LEASING, INC. By: _/s/_Robert L. Webber_________ Title:_President___________________ /s/__J. Harold Webber______________ J. HAROLD WEBBER /s/ James H. Webber, Jr.___________ JAMES H. WEBBER, JR. /s/___Robert L. Webber_____________ ROBERT L. WEBBER /s/ Peggy W. Kearney_______________ PEGGY W. KEARNEY 8 CRESTAR BANK, Trustee By:__/s/_K. A. Pickerel___________ Its:___Vice-President_____________ 9 Exhibit A No.__________________ Shares_____________ WLR Foods, Inc. a Virginia corporation Voting Trust Certificate for Common Stock This certifies that _______________, or registered assigns, is entitled to all benefits arising from the deposit with the Trustee under the Voting Trust Agreement hereinafter mentioned of certificates for shares of WLR Foods, Inc., a Virginia corporation (WLR), as provided in such Voting Trust Agreement and subject to the terms thereof. The registered holder hereof, or assigns, is entitled to receive payment equal to the amount of cash dividends, if any, received by the Trustee upon the number of shares of common stock of WLR in respect of which this certificate is issued. Dividends received by the Trustee in WLR common stock shall be payable in voting trust certificates, in form similar hereto. Until the Trustee has delivered the stock held under such Voting Trust Agreement to the holders of the trust certificates, or to WLR, as specified in such Voting Trust Agreement, the Trustee shall possess and be entitled to exercise all rights and powers of an absolute owner of such stock, including the right to vote thereon for every purpose according to and as restricted by the terms of the Voting Trust Agreement, and to execute consents in respect thereof for every purpose, it being expressly stipulated that no direct voting right passes to the owner hereof, or assigns, under this certificate or any agreement, expressed or implied; provided that the Trustee shall vote pursuant to the direction of the registered voting trust certificate holders or pursuant to the recommendation of WLR s Board of Directors as is expressly set forth in the Voting Trust Agreement. This certificate is issued, received, and held under, and the rights of the owner hereof are subject to, the terms of a Voting Trust Agreement dated September 29, 1995 by and among WLR, New Hope Feeds, Inc., Economy Truck Leasing, Inc., and others, and their successors and assigns, and, the Trustee and its successors, a copy of which is on file with WLR. The holder of this certificate, by acceptance hereof, assents and is bound to all the provisions of the Voting Trust Agreement. In the event that the Trustee receives any dividend or distribution other than in cash or WLR common stock, the Trustee shall distribute the same to the registered holders of voting trust certificates pursuant to the provisions of the Voting Trust Agreement. The Voting Trust Agreement shall continue in full force and effect until the earlier of [four years from Closing Date], a change of control, and certain other events, as provided in the Voting Trust Agreement. Stock certificates for the number of shares of common stock then represented by this certificate, or the net proceeds in cash or property of such shares, shall be due and deliverable hereunder upon the termination of such Voting Trust Agreement as provided therein. Except as provided in the Voting Trust Agreement, this certificate is not transferable except that the holder hereof may pledge, mortgage or otherwise encumber the certificates; provided, however, that the person or persons in whose favor such certificates are pledged, mortgaged, or otherwise encumbered, shall, except as WLR and they may otherwise agree, be bound by all of the provisions of the Voting Trust Agreement as though they were the holder and shall exercise the rights of this certificate only in accordance therewith. In the event of any transfer by virtue of a pledge, mortgage or encumbrance, the certificates shall be transferable at the Trustee s principal office (set forth in the Voting Trust Agreement) on the books of the Trustee, by the registered owner thereof, either in person or by attorney thereto duly authorized, upon surrender thereof, according to the rules established for that purpose by the Trustee. 10 This certificate shall not be valid for any purpose until duly signed by the Trustee. The word Trustee as used in this certificate means the Trustee or the successor trustee acting under such Voting Trust Agreement. In witness whereof the Trustee has signed this certificate on __________________,1995. ___________________________________ Trustee 11 (Form of Assignment): For value received __________________________ hereby assigns the within certificate, and all rights and interests represented thereby, to_______________________________ and appoints ________________________attorney to transfer this certificate on the books of the Trustee mentioned therein, with full power of substitution. Dated: ____________________ ____________________________________ ______________________________(SEAL) Witness THIS VOTING TRUST CERTIFICATE MAY NOT BE TRANSFERRED WITHOUT THE EXPRESS WRITTEN CONSENT OF WLR FOODS, INC. 12 EX-10.4 5 AMENDMENT TO EMPLOYMENT AGREEMENT Exhibit 10.4 This Amendment to the Employment Agreement dated July 4, 1993 is made as of ___June 27______, 1995 by and between WLR FOODS, INC., a Virginia corporation (WLR) and JAMES L. KEELER (Keeler) who agree as follows: A new Paragraph 6 is hereby inserted as follows: 6. Continuing Health Care Coverage. The Company shall provide health care insurance coverage for Keeler and his wife for their respective lives, provided Keeler does not retire from the Company prior to his reaching age 65. For purposes of this Paragraph 6, retirement shall not include his termination of employment due to death or disability, or a termination following a change in control as defined in the Severance Agreement by and between WLR and Keeler dated February 4, 1994, in any of which events Keeler and his wife shall be entitled to the coverage provided herein. Existing Paragraphs 6 through 12 are hereby renumbered as Paragraphs 7 through 13 respectively. WITNESS the following signature and seal; and IN WITNESS WHEREOF, WLR Foods, Inc. has caused this writing to be signed in its name and on its behalf as thereunto duly authorized. ____/S/ James L. Keeler______________________ JAMES L. KEELER WLR FOODS, INC. By:__/s/ Herman D. Mason_____________________ Herman D. Mason By:__/S/ Chas. Wampler, Jr.__________________ Charles W. Wampler, Jr. By:___/s/ Charles L. Campbell________________ Charles L. Campbell Members of the Executive Compensation Committee By:___/s/ Chas. Wampler, Jr._________________ Charles W. Wampler, Jr. Chairman of the Board PCSjr/mc/50080-28/52912 EX-10.9 6 SEVERENCE AGREEMENT Exhibit 10.9 [WLR Letterhead] June 20, 1996 Mr. John J. Broaddus Executive Vice President of Wampler-Longacre, Inc. Post Office Box 7275 Broadway, Virginia 22815-7275 Dear Mr. Broaddus: WLR Foods, Inc., a Virginia corporation (the "Company"), considers the establishment and maintenance of a sound and vital management to be essential to protecting and enhancing the best interests of the Company and its shareholders. In this connection, the Company recognizes that, as is the case with many publicly held corporations, the possibility of a Change in Control (as defined herein) may arise and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its shareholders. Accordingly, the Board of Directors of the Company (the "Board") has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company's management to their assigned duties without distraction in circumstances arising from the possibility of a Change in Control of the Company. In particular, the Board believes it important, should the Company or its shareholders receive a proposal for transfer of control of the Company, that you be able to assess and advise the Board whether such proposal would be in the best interests of the Company and its shareholders and to take such other action regarding such proposal as the Board might determine to be appropriate, without being influenced by the uncertainties of your own situation. In order to induce you to remain in the employ of the Company, this letter agreement ("Agreement"), which has been approved by the Board, sets forth the severance benefits which the Company agrees will be provided to you in the event your employment with the Company is terminated subsequent to a Change in Control of the Company under the circumstances described below. 1. Agreement to Provide Services; Right to Terminate. (i) Except as otherwise provided in paragraph (ii) below, the Company or you may terminate your employment at any time following a Change in Control as defined herein, subject to the Company's providing the benefits hereinafter specified in accordance with the terms hereof. (ii) In the event a Person (as hereinafter defined) makes an offer which, if accepted by the Company and subsequently consummated, would constitute a Change in Control, you agree that you will not leave the employ of the Company (other than as a result of Disability or upon Retirement, as such terms are hereinafter defined) and will render the services contemplated in the recitals to this Agreement until such Change in Control offer has been abandoned or terminated or a Change in Control has occurred. For the purposes of this Agreement, Retirement shall mean a termination of your employment by you on or after you have reached age sixty-five (65) and have completed at least five (5) years of service for the Company (including any service for a predecessor of the Company where such prior service is recognized by the Company for Mr. John J. Broaddus Juen 20, 1996 Page 2 the purpose of awarding other benefits). For purposes of this Section 1, "years of service" shall be defined as in the WLR Profit Sharing and Salary Savings Plan. 2. Term of Agreement. This Agreement shall commence on the date hereof and shall continue in effect until December 31, 1996; provided, however, that commencing on January 1, 1997 and each January 1 thereafter, the term of this Agreement shall automatically be extended for one (1) additional year unless at least ninety (90) days prior to such January 1st date, the Company or you shall have given notice that this Agreement shall not be extended; and provided, further, that, notwithstanding the delivery of any such notice, this Agreement shall continue in effect for a period of thirty-six (36) months after a Change in Control, if such Change in Control shall have occurred while this Agreement is in effect. Notwithstanding anything in this Section 2 to the contrary, this Agreement shall terminate if you or the Company terminate your employment prior to a Change in Control of the Company. 3. Change in Control. For the purpose of this Agreement, a "Change in Control" shall mean: (i) The acquisition by any individual, entity or group (within the meaning of Section 13 (d) (3) or 14 (d) (2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty percent (20%) or more of either the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, that in no event may the following acquisitions constitute a Change in Control: (a) any acquisition directly from the Company (excluding an acquisition by virtue of the exercise of a conversion privilege), (b) any acquisition by the Company, (c) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, (d) any acquisition by any corporation pursuant to a reorganization, merger or consolidation, if, following such reorganization, merger or consolidation, the conditions described in clauses (a), (b) and (c) of paragraph (iii) of this Section 3 are satisfied, or (e) any sale or other disposition of all or substantially all of the assets of the Company, if , following such sale or other disposition, the conditions described in (1), (2) and (3) of paragraph (iv) of this Section 3 are satisfied; or (ii) Individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least seventy-five percent (75%) of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or (iii) Approval by the shareholders of the Company of a reorganization, merger or consolidation, unless, in each case following such reorganization, merger or consolidation, (a) more than sixty percent (60%) of, respectively, the then outstanding shares of common stock of the corporation resulting from such reorganization, merger or consolidation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the Mr. John J. Broaddus June 20, 1996 Page 3 election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such reorganization, merger or consolidation in substantially the same proportions as their ownership immediately prior to such reorganization, merger or consolidation, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (b) no Person (excluding the Company, any employee benefit plan (or related trust) of the Company or a corporation resulting from such reorganization, merger or consolidation) beneficially owns, directly or indirectly, thirty-nine percent (39%) or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such reorganization, merger or consolidation or the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors, and (c) at least a majority of the members of the board of directors of the corporation resulting from such reorganization, merger or consolidation were members of the Incumbent Board at the time of the execution of the initial agreement providing for such reorganization, merger or consolidation; or (iv) Approval by the shareholders of the Company of (a) a complete liquidation or dissolution of the Company or (b) the sale or other disposition of all or substantially all of the assets of the Company, other than to a corporation with respect to which following such sale or other disposition, (1) more than sixty percent (60%) of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (2) no Person (excluding the Company and any employee benefit plan (or related trust) of the Company or such corporation) beneficially owns, directly or indirectly, thirty-nine percent (39%) or more of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors and (3) at least a majority of the members of the board of directors of such corporation were members of the Incumbent Board at the time of the execution of the initial agreement or action of the Board providing for such sale or other disposition of assets of the Company. (v) Notwithstanding anything in the paragraphs (i) - (iv) of this Section 3 to the contrary, no Change in Control shall be deemed to have occurred for purposes of this Agreement by virtue of any transaction which results in you, or a group of Persons which includes you, acquiring, directly or indirectly, twenty percent (20%) or more of the combined voting power of the Company's Voting Securities. 4. Termination Following Change in Control. If any of the events described in Section 3 hereof constituting a Change in Control of the Company shall have occurred, you shall be entitled to the benefits provided in Section 5 hereof upon the termination of your employment with the Company within thirty-six (36) months after such Change in Control, unless such termination is (a) because of your death, (b) by the Company for Cause or Disability or (c) by you other than for Good Reason (as all such capitalized terms are hereinafter defined). Mr. John J. Broaddus June 20, 1996 Page 4 (i) Disability. Termination by the Company of your employment based on "Disability" shall mean termination because of your absence from your duties with the Company on a full time basis for one hundred eighty (180) consecutive days as a result of your incapacity due to physical or mental illness, unless within thirty (30) days after Notice of Termination (as hereinafter defined) is given to you following such absence, you shall have returned to the full time performance of your duties. (ii) Cause. Termination by the Company of your employment for "Cause" shall mean termination upon (a) the willful and continued failure by you to perform substantially your duties with the Company (other than any such failure resulting from your incapacity due to physical or mental illness) after a written demand for substantial performance is delivered to you by the Chairman of the Board or President of the Company which specifically identifies the manner(s) in which such executive believes that you have not substantially performed your duties, or (b) the willful engaging by you in illegal conduct which is materially and demonstrably injurious to the Company. For purposes of this paragraph (ii), no act, or failure to act, on your part shall be considered "willful" unless done, or failed to be done, by you in bad faith and without reasonable belief that your action or omission was in, or not opposed to, the best interests of the Company. Any act or failure to act based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by you in good faith and in the best interests of the Company. It is also expressly understood that your attention to matters not directly related to the business of the Company shall not provide a basis for termination for Cause so long as the Board has approved your engagement in such activities. Notwithstanding the foregoing, you shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to you a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to you and an opportunity for you, together with your counsel, to be heard before the Board), finding that in the good faith opinion of the Board you were guilty of the conduct set forth above in clauses (a) or (b) of this paragraph (ii) and specifying the particulars thereof in detail. (iii) Good Reason. Termination by you of your employment for "Good Reason" shall mean termination based on: (A) a determination by you, in your reasonable judgment, that there has been an adverse change in your status or position(s) as an executive officer of the Company as in effect immediately prior to the Change in Control, including, without limitation, any adverse change in your status or position as a result of a diminution in your duties or responsibilities (other than, if applicable, any such change directly attributable to the fact that the Company is no longer publicly owned) or the assignment to you of any duties or responsibilities which are inconsistent with such status or position(s), or any removal of you from, or any failure to reappoint or reelect you to, such positions(s) (except in connection with the termination of your employment for Cause or Disability or as a result of your death or by you other than for Good Reason); (B) a reduction by the Company in your base salary as in effect immediately prior to the Change in Control; (C) the failure by the Company to continue in effect any Plan (as hereinafter defined) in which you are participating at the time of the Change in Control of the Company (or Plans providing you with at least substantially similar benefits) other than as a result of the normal expiration of any such Plan in accordance with its terms as in Mr. John J. Broaddus June 20, 1996 Page 5 effect at the time of the Change in Control, or the taking of any action, or the failure to act, by the Company which would adversely affect your continued participation in any of such Plans on at least as favorable a basis to you as is the case on the date of the Change in Control or which would materially reduce your benefits in the future under any of such Plans or deprive you of any material benefit enjoyed by you at the time of the Change in Control; (D) the failure by the Company to provide and credit you with the number of paid vacation days to which you are then entitled in accordance with the Company's normal vacation policy as in effect immediately prior to the Change in Control; (E) the Company's requiring you to be based at any office that is greater than thirty (30) miles from where your office is located immediately prior to the Change in Control except for required travel on the Company's business to an extent substantially consistent with the business travel obligations which you undertook on behalf of the Company prior to the Change in Control; (F) the failure by the Company to obtain from any Successor (as hereinafter defined) the assent to this Agreement contemplated by Section 6 hereof; (G) any purported termination by the Company of your employment which is not effected pursuant to a Notice of Termination satisfying the requirements of paragraph (iv) below (and, if applicable, paragraph (ii) above); and for purposes of this Agreement, no such purported termination shall be effective; or (H) any refusal by the Company to continue to allow you to attend to matters or engage in activities not directly related to the business of the Company which, prior to the Change in Control, you were permitted by the Board to attend to or engage in. For purposes of this Agreement, "Plan" shall mean any compensation plan such as the Company Incentive Bonus Plan or any employee benefit plan such as a thrift, pension, profit sharing, medical, disability, accident, life insurance plan or a relocation plan or policy or any other plan, program or policy of the Company intended to benefit employees, except for the Company Restated Long- Term Incentive Plan. (iv) Notice of Termination. Any purported termination by the Company or by you following a Change in Control shall be communicated by written Notice of Termination to the other party hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon. (v) Date of Termination. "Date of Termination" following a Change in Control shall mean (a) if your employment is to be terminated for Disability, thirty (30) days after Notice of Termination is given (provided that you shall not have returned to the performance of your duties on a full-time basis during such thirty (30) day period), (b) if your employment is to be terminated by the Company for Cause or by you pursuant to Sections 4(iii)(F) or 6 hereof or for any other Good Reason, the date specified in the Notice of Termination, (c) if your employment is to be terminated by the Company for any reason other than Cause, the date specified in the Notice of Termination, which in no event shall be a date earlier than ninety (90) days after the date on which a Notice of Termination is given, unless an earlier date has been expressly agreed to by you in writing either in advance of, or after, receiving such Notice of Termination, or (d) if your employment is terminated on Mr. John J. Broaddus June 20, 1996 Page 6 account of your death, the day after your death. In the case of termination of your employment by the Company for Cause, if you have not previously expressly agreed in writing to the termination, then within thirty (30) days after receipt by you of the Notice of Termination with respect thereto, you may notify the Company that a dispute exists concerning the termination, in which event the Date of Termination shall be the date set either by mutual written agreement of the parties or by such court having the matter before it. During the pendency of any such dispute, the Company will continue to pay you your full compensation in effect just prior to the time the Notice of Termination is given and until the dispute is resolved. However, if such court issues a final and non-appealable order finding that the Company had Cause to terminate you then you must return all compensation paid to you after the Date of Termination specified in the Notice of Termination previously received by you. 5. Compensation Upon Termination or During Disability; Other Agreements. (i) During any period following a Change in Control of the Company that you fail to perform your duties as a result of incapacity due to physical or mental illness, you shall continue to receive your base salary at the rate then in effect and any benefits or awards under any Plans shall continue to accrue during such period, to the extent not inconsistent with such Plans, until your employment is terminated pursuant to and in accordance with paragraphs 4(iv) - 4(v) hereof. Thereafter, your benefits shall be determined in accordance with the Plans then in effect. (ii) If your employment is terminated for Cause following a Change in Control of the Company, the Company shall pay to you your base salary through the Date of Termination at the rate in effect just prior to the time a Notice of Termination is given plus any benefits or awards (including both the cash and stock components) which pursuant to the terms of any Plans have been earned or become payable, but which have not yet been paid to you. Thereupon the Company shall have no further obligations to you under this Agreement. (iii) Subject to Section 8 hereof, if, within thirty-six (36) months after a Change in Control of the Company has occurred, your employment by the Company is terminated other than on account of your death and is terminated (a) by the Company other than for Cause or Disability or (b) by you for Good Reason, then the Company shall pay to you, no later than the fifth (5th) day following the Date of Termination, without regard to any contrary provisions of any Plan, the following: (A) your base salary through the Date of Termination at the rate in effect just prior to the time a Notice of Termination is given plus any benefits or awards (including both the cash and stock components) which pursuant to the terms of any Plans have been earned or become payable, but which have not yet been paid to you (including amounts which previously had been deferred at your request); (B) an amount in cash equal to three times the sum of (i) the higher of (a) your annual base salary on the Date of Termination or (b) your annual base salary in effect immediately prior to the Change in Control plus (ii) an amount equal to the average of the bonuses awarded to you in each of the three previous years. For the purposes of this Agreement, the term "base salary" shall include any amounts deducted by the Company with respect to you or for your account pursuant to Sections 125 and 401(k) of the Internal Revenue Code of 1986, as amended (the "Code"). Mr. John J. Broaddus June 20, 1996 Page 7 (iv) If, within thirty-six (36) months after a Change in Control of the Company has occurred, your employment by the Company is terminated for any reason other than retirement, the Company shall pay to you, on the date specified below, an amount ("Spread") in cash equal to the Termination Fair Market Value (as hereinafter defined) less the exercise price of all options which were granted to you pursuant to the Company's Restated Long-Term Incentive Plan or any Plan succeeding thereto, and which shall not become exercisable prior to (a) the end of the one (1) year period immediately following the Date of Termination if your employment is terminated on account of your death, or (b) the end of the third (3rd) month following the Date of Termination if your employment is terminated for any reason other than death. The Company shall make such payment upon the fifth (5th) day following such Date of Termination. For the purposes of this Agreement, the "Termination Fair Market Value" shall be the higher of (a) the highest price of the Company's stock as quoted on the NASDAQ, or any other exchange complying with the requirements of the Securities and Exchange Act of 1934, as amended, within the period beginning ninety (90) days prior to the Date of Termination and ending upon such Date of Termination, and (b) the highest price of the Company's stock as quoted on the NASDAQ, or any other exchange complying with the requirements of the Securities and Exchange Act of 1934, as amended, within the period beginning ninety (90) days prior to a Change of Control and ending upon the date of a Change of Control. (v) If, within thirty-six (36) months after a Change in Control of the Company has occurred, your employment by the Company is terminated (a) by the Company other than for Cause or Disability, or (b) by you for Good Reason, then the Company shall maintain in full force and effect, for the continued benefit of you and your dependents for a period terminating on the earliest of (a) three (3) years after the Date of Termination or (b) the commencement date of equivalent benefits from a new employer, insured and self-insured employee welfare benefit Plans in which you were entitled to participate immediately prior to the Date of Termination, provided that your continued participation is possible under the general terms and provisions of such Plans (and any applicable funding media) and you continue to pay an amount equal to your regular contribution under such Plans for such participation. If three (3) years after the Date of Termination you have not previously received, nor are then receiving, equivalent benefits from a new employer, the Company shall offer you continuation coverage under COBRA as prescribed under Section 4980B of the Code. At the expiration of such continuation coverage (or, if COBRA continuation coverage is not applicable to the Plan, then upon the expiration of the three (3) year period beginning on the Termination Date), the Company shall arrange, at its sole cost and expense, to enable you to convert you and your dependents' coverage under such plans to individual policies and programs upon the same terms as employees of the Company may apply for such conversions. In the event that your participation in any such Plan is barred, the Company, at its sole cost and expense, shall arrange to have issued for the benefit of you and your dependents individual policies of insurance providing benefits substantially similar (on an after-tax basis) to those which you otherwise would have been entitled to receive under such Plans pursuant to this paragraph (v) or, if such insurance is not available at a reasonable cost to the Company, the Company shall otherwise provide you and your dependents with equivalent benefits (on an after-tax basis). You shall not be required to pay any premiums or other charges in an amount greater than that which you would have paid in order to participate in such Plans. (vi) Except as specifically provided in paragraph (v) above, the amount of any payment provided for in this Section 5 shall not be reduced, offset or subject to recovery by the Company by reason of any Mr. John J. Broaddus June 20, 1996 Page 8 compensation earned by you as the result of employment by another employer after the Date of Termination, or otherwise. (vii) In the event that you become entitled to the payments provided by paragraphs (iii) and (iv) of Section 5(iii) hereof (the "Agreement Payments"), if any of the Agreement Payments will be subject to the tax (the "Excise Tax") imposed by Section 4999 of the Code (or any similar tax that may hereafter be imposed), the Company shall pay to you at the time specified in paragraph (viii) below an additional amount (the "Gross-up Payment") such that the net amount retained by you, after deduction of any Excise Tax on the Total Payments (as hereinafter defined) and any federal, state and local income tax and Excise Tax upon the Gross-up Payment provided for by this paragraph (vii), but before deduction for any federal, state or local income tax on the Agreement Payments, shall be equal to the sum of (a) the Total Payments and (b) an amount equal to the product of any deductions disallowed because of the inclusion of the Gross-up Payment in your adjusted gross income and the highest applicable marginal rate of federal income taxation for the calendar year in which the Gross-up Payment is to be made. For purposes of determining whether any of the Agreement Payments will be subject to the Excise Tax and the amount of such Excise Tax, (a) any other payments or benefits received or to be received by you in connection with a Change in Control of the Company or your termination of employment (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control of the Company or any person affiliated with the Company or such person) (which, together with the Agreement Payments, shall constitute the "Total Payments") shall be treated as "parachute payments" within the meaning of Section 280G(b)(2) of the Code, and all "excess parachute payments" within the meaning of Section 280G(b)(1) of the Code shall be treated as subject to the Excise Tax, unless in the opinion of tax counsel selected by the Company's independent auditors such other payments or benefits (in whole or in part) do not constitute parachute payments, or such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered within the meaning of Section 280G(b)(4) of the Code in excess of the base amount within the meaning of Section 280G(b)(3) of the Code, or are otherwise not subject to the Excise Tax; (b) the amount of the Total Payments which shall be treated as subject to the Excise Tax shall be equal to the lesser of (1) the total amount of the Total Payments or (2) the amount of excess parachute payments within the meaning of Section 280G(b)(1) of the Code (after applying clause (a), above); and (c) the value of any non-cash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of Sections 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-up Payment, you shall be deemed to (a) pay federal income taxes at the highest marginal rate of federal income taxation for the calendar year in which the Gross-up Payment is to be made, (b) pay the applicable state and local income taxes at the highest marginal rate of taxation for the calendar year in which the Gross-up Payment is to be made, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes (determined without regard to limitations on deductions based upon the amount of your adjusted gross income), and (c) have otherwise allowable deductions for federal income tax purposes at least equal to those disallowed because of the inclusion of the Gross-up Payment in your adjusted gross income. In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time the Gross-up Payment is made, you shall repay to the Company at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-up Payment attributable to such reduction (plus the portion of the Gross-up Payment attributable to the Excise Tax and federal state and Mr. John J. Broaddus June 20, 1996 Page 9 local income tax imposed on the portion of the Gross-up Payment being repaid by you if such repayment results in a reduction in Excise Tax and/or a federal and state and local income tax deduction), plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time the Gross-up Payment is made (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-up Payment), the Company shall make an additional Gross-up Payment in respect of such excess (plus any interest payable with respect to such excess at the rate provided in Section 1274(b)(2)(B) of the Code) at the time that the amount of such excess is finally determined. (viii) The Gross-up Payment or portion thereof provided for in paragraph (vii) above shall be paid not later than the thirtieth (30th) day following payment of any amounts under paragraphs (iii) and (iv) of Section 5; provided, however, that if the amount of such Gross-up Payment or portion thereof cannot be finally determined on or before such day, the Company shall pay to you on such day an estimate, as determined in good faith by the Company, of the minimum amount of such payments and shall pay the remainder of such payments (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined, but in no event later than the forty-fifth (45th) day after payment of any amounts under paragraphs (iii) and (iv) of Section 5. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to you, payable on the fifth (5th) day after demand by the Company (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code). 6. Successors; Binding Agreement. (i) The Company will seek, by written request at least five (5) business days prior to the time a Person becomes a Successor (as hereinafter defined), to have such Person, by agreement in form and substance satisfactory to you, assent to the fulfillment of the Company's obligations under this Agreement. Failure of such Person to furnish such assent by the later of (a) three (3) business days prior to the time such Person becomes a Successor or (b) two (2) business days after such Person receives a written request to so assent shall constitute Good Reason for termination by you of your employment if a Change in Control of the Company occurs or has occurred. For purposes of this Agreement, "Successor" shall mean any Person that succeeds to, or has the practical ability to control (either immediately or with the passage of time), the Company's business directly, by merger or consolidation, or indirectly, by purchase of the Company's Voting Securities or otherwise. (ii) This Agreement shall inure to the benefit of and be enforceable by your personal legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If you should die while any amount would still be payable to you hereunder if you had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee or, if no such designee exists, to your estate. (iii) For purposes of this Agreement, the "Company" shall include any subsidiaries of the Company and any corporation or other entity which is the surviving or continuing entity in respect of any merger, consolidation or form of business combination in which the Company ceases to exist; provided, however, for purposes of determining whether a Change in Control has occurred herein, the term "Company" shall refer to WLR Foods, , Inc. or its successor(s). 7. Fees and Expenses; Mitigation. Mr. John J. Broaddus June 20, 1996 Page 10 (i) The Company shall reimburse you, on a current basis, for all reasonable legal fees and related expenses incurred by you in connection with the Agreement following a Change in Control of the Company, including without limitation, (a) all such fees and expenses, if any, incurred in contesting or disputing any termination of your employment or incurred by you in seeking advice with respect to the matters set forth in Section 8 hereof or (b) your seeking to obtain or enforce any right or benefit provided by this Agreement, in each case, regardless of whether or not your claim is upheld by a court of competent jurisdiction; provided, however, you shall be required to repay any such amounts to the Company to the extent that a court issues a final and non-appealable order setting forth the determination that the position taken by you was frivolous or advanced by you in bad faith. (ii) You shall not be required to mitigate the amount of any payment the Company becomes obligated to make to you in connection with this Agreement, by seeking other employment or otherwise. 8. Taxes. Subject to the provisions of Section 5(vii), all payments to be made to you under this Agreement will be subject to required withholding of federal, state and local income and employment taxes. 9. Survival. The respective obligations of, and benefits afforded to, the Company and you as provided in Sections 5, 6(ii), 7, 8, 12 and 14 of this Agreement shall survive termination of this Agreement. 10. Notice. For the purposes of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid and addressed, in the case of the Company, to the address set forth on the first page of this Agreement or, in the case of the undersigned employee, to the address set forth below his signature, provided that all notices to the Company shall be directed to the attention of the Chairman of the Board or President of the Company, with a copy to the Secretary of the Company, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. 11. Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such modification, waiver or discharge is agreed to in a writing signed by you and the Chairman of the Board or President of the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or of compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement. 12. Governing Law and Venue. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the Commonwealth of Virginia. Venue for any proceeding related to the performance or interpretation of this Agreement, or in any way arising out of this Agreement, shall be either the Circuit Court of Rockingham County, Virginia, or the United States District Court for the Western District of Virginia, Harrisonburg Division. 13. Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. Mr. John J. Broaddus June 20, 1996 Page 11 14. Employee's Commitment. You agree that subsequent to your period of employment with the Company, you will not at any time communicate or disclose to any unauthorized person, without the written consent of the Company, any proprietary processes of the Company or other confidential information concerning its business, affairs, products, suppliers or customers which, if disclosed, would have a material adverse effect upon the business or operations of the Company, taken as a whole; it being understood, however, that the obligations under this Section 14 shall not apply to the extent that the aforesaid matters (a) are disclosed in circumstances where you are legally required to do so or (b) become generally known to, and available for use by, the public otherwise than by your wrongful act or omission. 15. Related Agreements. To the extent that any provision of any other agreement between the Company and you shall limit, qualify or be inconsistent with any provision of this Agreement, then for purposes of this Agreement, while the same shall remain in force, the provision of such other agreement shall be deemed to have been superseded, and to be of no force or effect, as if such other agreement had been formally amended to the extent necessary to accomplish such purpose. Notwithstanding the effect of the preceding sentence, the conditional Employment Agreement, renewed on June 26, 1992 between the Company and you is hereby cancelled and shall be of no force or effect. If this letter correctly sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter which will then constitute our agreement on this subject. Sincerely, WLR Foods, Inc. By_____/s/ Herman D. Mason___________ Herman D. Mason, Chair Executive Compensation Committee WLR Foods, Inc. Agreed to this _28_ day of June, 1996. ________/s/ John J. Broaddus__________ John J. Broaddus ______________________________________ ______________________________________ EX-10.13 7 AMENDMENT TO DEFERRED COMP AGREEMENT Exhibit 10.13 AMENDMENT TO SUPPLEMENTAL DEFERRED COMPENSATION AGREEMENT The Supplemental Deferred Compensation Agreement dated November 1, 1994, by and between WLR Foods, Inc., a Virginia corporation (WLR) and Herman D. Mason (Mason) is hereby amended, effective July 25, 1996, as follows: Section 2 is hereby deleted, and the following substituted in lieu thereof: 2. Deferred Compensation. WLR shall pay to Mason as deferred compensation Fourteen Thousand Seven Hundred Fifty Dollars ($14,750.00) on each August 1, November 1, February 1 and May 1 commencing August 1, 1996, for the rest of his life. Upon his death this provision shall terminate. IN WITNESS WHEREOF, WLR has caused this Amendment to Supplemental Deferred Compensation Agreement to be signed in its name and on its behalf as thereunto duly authorized; and WITNESS the following signature and seal. WLR FOODS, INC. By___/s/ James L. Keeler______________ Its__Pres. & CEO_______________________ _____/s/ Herman D. Mason_________(SEAL) Herman D. Mason JWF/kh 50080/28/77580 EX-10.16 8 1995 NONQUALIFIED DEFERRED COMP PLAN Exhibit 10.13 1995 NONQUALIFIED DEFERRED COMPENSATION PLAN Effective the 1st day of October, 1995, WLR FOODS, INC. (WLR), a Virginia corporation, hereby establishes the 1995 Nonqualified Deferred Compensation Plan (the Plan). 1. Eligibility. (a) Any employee of WLR or any of its subsidiaries who is expected to receive compensation of $70,000 per year or more (Executive) shall be eligible to participate in the Plan; provided, however, that before enrolling in the Plan, an Executive must have enrolled in the Company's Profit Sharing and Salary Savings Plan and Trust (Profit Sharing Plan), and must have elected under the Profit Sharing Plan to defer the maximum amount of compensation permitted under such Plan. For purposes of determining eligibility, compensation shall be limited to base salary and bonus. (b) The level of compensation considered in determining eligibility pursuant to this Section 1 shall be adjusted from time to time, and shall continue to be at least $4,000 above the highly compensated employee compensation level set forth in Section 414(q)(1)(C) of the Internal Revenue Code of 1986, as amended (the Code). Once an employee becomes a participant in the Plan, he or she shall continue to be eligible to participate regardless of his or her level of compensation. 2. Deferred Compensation Account. (a) WLR shall credit to a book reserve account (the Deferred Compensation Account) such portion of a participating Executive's compensation, including salary and/or bonus, as the Executive shall elect in writing. An Executive may make a General Deferral Election at least one (1) month before the beginning of any calendar quarter, and may change his or her General Deferral Election at any time at least one (1) month prior to the beginning of any subsequent quarter. Notwithstanding the foregoing, an Executive may suspend deferrals at any time, to be effective as of the next pay period, but may not change his or her General Deferral Election to a level other than 0% except quarterly. An Executive may also make a Special Deferral Election, applicable to bonus only, prior to June 1 of each year. In the absence of a Special Deferral Election, the General Deferral Election shall apply to both base salary and bonus. Deferral elections may be made on forms provided by WLR, and shall be in whole percents, but in no event less than 1%. (b) In addition to the Deferral Election, an Executive may make a Distribution Election to have his or her Deferred Compensation Account balance distributed upon Retirement (as hereinafter defined) or other termination according to such distribution options as WLR may permit. A participant may make separate Distribution Elections applicable to Retirement and other terminations. An executive may change his or her Distribution Elections at any time by making a new Distribution Election; provided, however, that any Distribution Election made after an Executive's initial Distribution Election shall not be effective until six (6) months following receipt by WLR. In the absence of a Distribution Election, an Executive's Deferred Compensation Account balance shall be paid in twenty (20) quarterly installments, commencing on the first day of the first calendar quarter following the Executive's Retirement or termination, or as soon thereafter as benefits can be determined. Unless an Executive makes one or more Distribution Elections upon his or her initial enrollment in the Plan, the Executive's initial Distribution Election will be deemed to be twenty (20) quarterly installments, and any subsequent Distribution Election shall not be effective until six (6) months following receipt by WLR. (c) The Deferred Compensation Account shall accrue interest at a rate to be determined by the Chief Financial Officer based on WLR's average cost of funds for permanent financing. The interest rate shall be determined annually as of the end of the fiscal year ending nearest the beginning of the Plan Year. Interest shall be credited to the Executive's Deferred Compensation Account on a quarterly basis, and shall be calculated as (1) the Deferred Compensation Account balance at the beginning of the quarter plus (2) one-half of all contributions made during the quarter, less (3) any distributions made during the quarter, multiplied by (4) one- fourth of the annual interest rate. (d) In the event that an employee's election to defer a portion of his or her compensation under the Plan results in a reduction in his or her compensation for purposes of the Company's Profit Sharing and Salary Savings Plan and Trust and the Company's contribution made by the Company on the Executive's behalf, the Company shall credit an additional amount to the Executive's Deferred Compensation Account equal to the difference between the amount of the contribution actually made by the Company and the amount the Company would have contributed had the Executive not elected to defer a portion of his or her compensation under the Plan. (e) Any funds so credited to the Deferred Compensation Account may be kept in cash or invested and reinvested in mutual funds, stocks, bonds, securities or any other assets as may be selected by WLR in its discretion. In the exercise of the foregoing discretionary investment powers, WLR may engage investment counsel and, if it so desires, may delegate to such counsel full or limited authority to select the assets in which the funds are to be invested. (f) Title to and beneficial ownership of any assets, whether cash or investments, which WLR may earmark to pay the deferred compensation hereunder, shall at all times remain in WLR, and the Executive and his designated beneficiary shall have no property interest whatsoever in any specific assets of WLR. 3. Retirement. For purposes of the Plan, Retirement shall mean the termination of employment on or after attaining age sixty-five (65), or on or after attaining age fifty-five (55) and ten (10) full years of service with WLR or any of its subsidiaries. 4. Distributions. Deferred compensation benefits shall be paid as follows: (a) Upon Retirement or other termination of employment, the balance of an Executive's Account shall be paid to the Executive in accordance with the Distribution Election filed with the Company. In the absence of an election to the contrary, such payment shall be made according to the most recent Distribution Election applicable to distributions upon Retirement. If an Executive should die before the Executive's entire Deferred Compensation Account balance has been distributed, the unpaid balance will continue to be paid in accordance with the applicable election to the Executive's designated beneficiary. (b) If both the Executive and the Executive's designated beneficiary should die before the Executive's Deferred Compensation Account has been fully distributed, the remaining balance of the Deferred Compensation Account shall be determined as of the date of the death of the designated beneficiary and shall be paid as promptly as possible in one lump sum to the estate of such designated beneficiary. (c) The beneficiary referred to in this Section 4 may be designated or changed by the Executive (without the consent of any prior beneficiary) on a form provided by WLR and delivered to WLR before the Executive's death. If no such beneficiary shall have been designated, or if no designated beneficiary shall survive the Executive, distributions shall be made to the Executive's estate. 2 (d) Distributions under the Plan shall commence on the first day of the first quarter following the date of Retirement or termination, or as soon thereafter as benefits may reasonably be determined. (e) WLR may, in its sole and absolute discretion, make such early distributions and in such amounts as it deems appropriate. 5. Funding. Nothing contained in this Plan and no action taken pursuant to the provisions of this Plan shall create or be construed to create a trust of any kind, or a fiduciary relationship between WLR and any Executive, his designated beneficiary or any other person. Any funds which may be invested under the provisions of this Plan shall continue for all purposes to be a part of the general funds of WLR and no person other than WLR shall by virtue of the provisions of this Plan have any interest in such funds. To the extent that any person acquires a right to receive payments from WLR under this Plan, such right shall be no greater than the right of any unsecured general creditor of WLR. 6. Plan Year. The Plan Year shall be July 1-June 30. 7. Non-Assignability. The right of an Executive or any other person to the payment of deferred compensation or other benefits under this Plan shall not be assigned, transferred, pledged or encumbered except by will or by the laws of descent and distribution. 8. Interpretation. WLR shall have full power and authority to interpret, construe, and administer this Plan and WLR's interpretations and construction thereof, and actions thereunder, including any valuation of the Deferred Compensation Account, or the amount or recipient of the payment to be made therefrom, shall be binding and conclusive on all persons for all purposes. No director, officer or employee of WLR shall be liable to any person for any action taken or omitted in connection with the interpretation and administration of this Plan unless attributable to his own willful misconduct or lack of good faith. 9. Amendment and Termination. WLR may amend or terminate this Plan at any time; provided, however, that no amendment or revocation shall reduce the amount credited to any Executive's Deferred Compensation Account before the date of such amendment or revocation. 10. Choice of Law. This Plan shall be construed in accordance with and governed by the laws of the Commonwealth of Virginia. IN WITNESS WHEREOF, WLR Foods, Inc. has caused this Plan to be signed on its behalf by its duly authorized officer. WLR FOODS, INC. ___/s/ Delbert L. Seitz____ Secretary by:_/s/ James L. Keeler__________ Its:___Pres & CEO________________ PCSjr/mc/50080-28/46960 3 EX-10.17 9 AMENDMENT ONE TO 1995 DEF COMP PLAN Exhibit 10.17 AMENDMENT NO. ONE TO 1995 NONQUALIFIED DEFERRED COMPENSATION PLAN Effective this 20th day of June, 1996, WLR Foods, Inc. (WLR), a Virginia corporation, hereby amends the 1995 Nonqualified Deferred Compensation Plan dated October 1, 1995 (the Plan), pursuant to Section 9 of the Plan. Section 1(a) of the Plan is hereby restated in its entirety to read as follows: 1. Eligibility. (a) Any employee of WLR or any of its subsidiaries who is expected to receive compensation of $70,000 per year or more (Executive) shall be eligible to participate in the Plan; provided, however, that before enrolling in the Plan, an Executive who is eligible to participate in the Company's Profit Sharing and Salary Savings Plan and Trust (Profit Sharing Plan) must have enrolled in the Profit Sharing Plan, and must have elected under the Profit Sharing plan to defer the maximum amount of compensation permitted under such Plan. For purposes of determining eligibility, compensation shall be limited to base salary and bonus. All other terms, conditions and provisions of the Plan, as amended, shall remain the same. IN WITNESS WHEREOF, WLR Foods, Inc. has caused this Amendment No. One to be signed on its behalf by its duly authorized officer. WLR FOODS, INC. /S/ Robert T. Ritter___ By:__/s/ James L. Keeler_____________ Secretary Its:__President & Chief Executive Officer_ PCSjr/kh 50080/28/74438 EX-10.18 10 TRUST UNDER NONQUALIFIED DEF COMP PLAN Exhibit 10.18 TRUST UNDER WLR FOODS, INC. NONQUALIFIED DEFERRED COMPENSATION PLAN THIS AGREEMENT is made as of this 1st day of October, 1995, by and between WLR FOODS, INC., a Virginia corporation (the Company), and FIRST UNION NATIONAL BANK OF VIRGINIA (Trustee). RECITALS A. The Company has adopted the 1995 Nonqualified Deferred Compensation Plan and a Deferred Compensation Agreement dated July 4, 1993 by and between James L. Keeler and the Company (collectively, the Plan). B. The Company wishes to establish a trust (the Trust) and to contribute to the Trust assets that shall be held therein, subject to claims of the Company's creditors in the event of the Company's insolvency, as herein defined, until paid to Plan participants and their beneficiaries in such manner and at such times as specified in the Plan; C. The parties intend that this Trust shall constitute an unfunded arrangement and shall not affect the status of the Plan as an unfunded plan maintained for the purpose of providing deferred compensation for a select group of management or highly compensated employees for purposes of Title I of the Employee Retirement Income Security Act of 1974; D. The Company intends to make contributions to the Trust to provide itself with a source of funds to assist it in the meeting of its liabilities under the Plan. NOW, THEREFORE, the parties hereby establish the Trust and agree that the Trust shall be comprised, held and disposed of as follows: 1. Establishment of Trust. (a) The Company hereby deposits with the Trustee in trust One Dollar ($1.00) which shall become the principal of the Trust to be held, administered and disposed of by Trustee as provided in this Trust Agreement. (b) The Trust hereby established is revocable by the Company. It shall become irrevocable upon a Change of Control as defined in Section 13(d). (c) The Trust is intended to be a grantor trust, of which the Company is the grantor, within the meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended, and shall be construed accordingly. (d) The principal of the Trust and any earnings thereon shall be held separate and apart from other funds of the Company and shall be used exclusively for the uses and purposes of Plan participants and general creditors as herein set forth. Plan participants and their beneficiaries shall have no preferred claim on, or any beneficial ownership interest in, any assets of the Trust. Any rights created under the Plan and this Trust Agreement shall be mere unsecured contractual rights of Plan participants and their beneficiaries against the Company. Any assets held by the Trust will be subject to the claims of the Company's general creditors under federal and state law in the event of insolvency, as defined in Section 3(a) herein. (e) Upon a Change of Control, the Company shall, as soon as possible, but in no event later than thirty (30) days following the Change of Control, make an irrevocable contribution to the Trust in an amount that is sufficient to pay each Plan participant or beneficiary the benefits to which Plan participants or their beneficiaries would be entitled pursuant to the terms of the Plan as of the date on which the Change of Control occurred. (f) Within 60 days following the end of the Company's fiscal year ending after the Trust has become irrevocable pursuant to Section 1(b) hereof, the Company shall be required to irrevocably deposit additional cash or other property to the Trust in an amount sufficient to pay each Plan participant or beneficiary the benefits payable pursuant to the terms of the Plan as of the close of the Company's fiscal year. 2. Payments to Plan Participants and Their Beneficiaries. (a) The Company shall deliver to the Trustee a schedule (the Payment Schedule) that indicates the amounts payable to each Plan participant (and his or her beneficiaries), the form in which such amount is to be paid (as provided for or available under the Plan), and the time of commencement for payment of such amounts. The Payment Schedule shall also provide a formula or other instructions acceptable to the Trustee for determining the amounts so payable. Except as 2 otherwise provided herein, the Trustee shall make payments to the Plan participants and their beneficiaries in accordance with such Payment Schedule. The Trustee shall make provision for the reporting and withholding of any federal, state or local taxes that may be required to be withheld with respect to the payment of benefits pursuant to the terms of the Plan and shall pay amounts withheld to the appropriate taxing authorities or determine that such amounts have been reported, withheld and paid by the Company. (b) The entitlement of a Plan participant or his or her beneficiaries to benefits under the Plan shall be determined by such party as designated under the Plan, and any claim for such benefits shall be considered and reviewed under the procedures set out in the Plan. (c) The Company may make payments of benefits directly to Plan participants or their beneficiaries as they become due under the terms of the Plan. The Company shall notify the Trustee of its decision to make payment of benefits directly prior to the time amounts become payable to participants or their beneficiaries. In addition, if the principal of the Trust, and any earnings thereon, are not sufficient to make payments of benefits in accordance with the terms of the Plan, the Company shall make the balance of each such payment as it becomes due. The Trustee shall notify the Company where principal and earnings are not sufficient. 3. Trustee Responsibility Regarding Payments to Trust Beneficiary When the Company is Insolvent. (a) The Trustee shall cease payment of benefits to Plan participants and their beneficiaries if the Company is insolvent. The Company shall be considered "insolvent" for purposes of this Trust Agreement if (i) the Company is unable to pay its debts as they become due, or (ii) the Company is subject to a pending proceeding as a debtor under the United States Bankruptcy Code. (b) At all times during the continuance of this Trust, as provided in Section 1(d) hereof, the principal and income of the Trust shall be subject to claims of general creditors of the Company under 3 federal and state law as set forth below. (1) The Board of Directors and the Chief Executive Officer of the Company shall have the duty to inform the Trustee in writing of the Company's insolvency. If a person claiming to be a creditor of the Company alleges in writing to the Trustee that the Company has become insolvent, the Trustee shall determine whether the Company is insolvent and, pending such determination, the Trustee shall discontinue payments of benefits to Plan participants or their beneficiaries. (2) Unless the Trustee has actual knowledge of the Company's insolvency, or has received notice from the Company or a person claiming to be a creditor alleging that the Company is insolvent, Trustee shall have no duty to inquire whether the Company is insolvent. Trustee may in all events rely on such evidence concerning the Company's solvency as may be furnished to Trustee and that provides Trustee with a reasonable basis for making a determination concerning the Company's solvency. (3) If at any time Trustee has determined that the Company is insolvent, Trustee shall discontinue payments to Plan participants or their beneficiaries and shall hold the assets of the Trust for the benefit of the Company's general creditors. Nothing in this Trust Agreement shall in any way diminish any rights of Plan participants or their beneficiaries to pursue their rights as general creditors of the Company with respect to benefits due under the Plan or otherwise. (4) The Trustee shall resume the payment of benefits to Plan participants or their beneficiaries in accordance with Section 2 of this Trust Agreement only after the Trustee has determined that the Company is not insolvent (or is no longer insolvent). (c) Provided that there are sufficient assets, if the Trustee discontinues the payment of benefits from the Trust pursuant to Section 3(b) hereof and subsequently resumes such payments, the first payment following such discontinuance shall include the aggregate amount of all payments due to Plan participants or their 4 beneficiaries under the terms of the Plan for the period of such discontinuance, less the aggregate amount of any payments made to Plan participants or their beneficiaries by the Company in lieu of the payments provided for hereunder during any such period of discontinuance. If, at such time as the Trustee resumes the payment of benefits following a discontinuance pursuant to this Section 3(c), the assets of the Trust are insufficient to pay fully the benefits to which all participants are entitled under the Plan, the benefits to be paid to each participant from the assets of the Trust shall be reduced proportionately. Notwithstanding the foregoing, such reduction shall not reduce the benefits due to participants pursuant to the Plan, and the Company shall remain obligated for any deficiency. Section 4. Payments to Company. Except as provided in Section 3 above, after the Trust has become irrevocable, the Company shall have no right or power to direct the Trustee to return to the Company or to divert to others any of the Trust assets before all payments of benefits have been made to Plan participants and their beneficiaries pursuant to the terms of the Plan. Section 5. Investment Authority. The Trustee may invest in securities (including stock or rights to acquire stock) or obligations issued by the Company. All rights associated with assets of the Trust shall be exercised by Trustee or the person designated by Trustee, and shall in no event be exercisable by or rest with Plan participants. Section 6. Disposition of Income. During the term of this Trust, all income received by the Trust, net of expenses and taxes, shall be allocated to Plan participants and distributed as provided in Section 2. Undistributed income shall be accumulated and reinvested. Section 7. Accounting by Trustee. The Trustee shall keep accurate and detailed records of all investments, receipts, disbursements, and all other transactions required to be made, including such specific records as shall be 5 agreed upon in writing between the Company and the Trustee. Within sixty (60) days following the close of each calendar year and within sixty (60) days after the removal or resignation of the Trustee, the Trustee shall deliver to the Company a written account of its administration of the Trust during such year or during the period from the close of the last preceding year to the date of such removal or resignation, setting forth all investments, receipts, disbursements and other transactions effected by it, including a description of all securities and investments purchased and sold with the cost or net proceeds of such purchases or sales (accrued interest paid or receivable being shown separately), and showing all cash, securities and other property held in the Trust at the end of such year or as of the date of such removal or resignation, as the case may be. Section 8. Responsibility of Trustee. (a) The Trustee shall act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims, provided, however, that the Trustee shall incur no liability to any person for any action taken pursuant to a direction, request or approval given by the Company which is contemplated by, and in conformity with, the terms of the Plan or this Trust and is given in writing by the Company. In the event of a dispute between the Company and a party, or the Company and the Trustee, the Trustee may apply to a court of competent jurisdiction to resolve the dispute. (b) The Trustee may consult with legal counsel with respect to any of its duties or obligations hereunder. (c) The Trustee may hire agents, accountants, actuaries, investment advisors, financial consultants or other professionals to assist it in performing any of its duties or obligations hereunder. (d) The Trustee shall have, without exclusion unless expressly provided otherwise herein, all of the powers and authority enumerated in Section 64.1-57 of the Code of Virginia, as amended, which is expressly incorporated herein by reference; provided, however, that if an insurance policy is held as an asset of the Trust, 6 Trustee shall have no power to name a beneficiary of the policy other than the Trust, to assign the policy (as distinct from conversion of the policy to a different form) other than to a successor Trustee, or to loan to any person the proceeds of any borrowing against such policy. (e) Notwithstanding any powers granted to the Trustee pursuant to this Trust Agreement or to applicable law, the Trustee shall not have any power that could give this Trust the objective of carrying on a business and dividing the gains therefrom, within the meaning of Section 301.7701-2 of the Procedure and Administrative Regulations promulgated pursuant to the Internal Revenue Code. Section 9. Compensation and Expenses of Trustee. Company shall pay all administrative and Trustee's fees and expenses. If not so paid, the fees and expenses shall be paid from the Trust. Section 10. Resignation and Removal of Trustee. (a) The Trustee may resign at any time by written notice to the Company, which shall be effective sixty (60) days after receipt of such notice unless the Company and the Trustee agree otherwise. (b) The Trustee may be removed by the Company upon sixty (60) days notice or upon shorter notice accepted by the Trustee; provided, however, upon a Change of Control, the Trustee may not be removed by the Company for five years from the date of the Change of Control. (c) If the Trustee resigns or is removed within ten years of a Change of Control, the Trustee shall select a successor Trustee in accordance with the provisions of Section 11 hereof prior to the effective date of the Trustee's resignation or removal. (d) Upon resignation or removal of the Trustee and appointment of a successor Trustee, all assets shall subsequently be transferred to the successor Trustee. The transfer shall be completed within sixty (60) days after receipt of notice of resignation, removal or transfer, unless the Company extends the time limit. 7 (e) If the Trustee resigns or is removed, a successor shall be appointed, in accordance with Section 11 hereof, by the effective date of resignation or removal under paragraph 10 of this section. If no such appointment has been made, the Trustee may apply to a court of competent jurisdiction for appointment of a successor or for instructions. All expenses of the Trustee in connection with the proceeding shall be allowed as administrative expenses of the Trust. Section 11. Appointment of Successor. If the Trustee resigns or is removed pursuant to the provisions of Section 10 above and selects a successor Trustee, the Trustee may appoint any third party such as a bank trust department or other party that may be granted corporate trustee powers under state law. The appointment of a successor Trustee shall be effective when accepted in writing by the new Trustee. The new Trustee shall have all the rights and powers of the former Trustee, including ownership rights in Trust assets. The former Trustee shall execute any instrument necessary or reasonably requested by the successor Trustee to evidence the transfer. Section 12. Amendment or Termination. (a) This Trust Agreement may be amended by a written instrument executed by the Trustee and the Company. Notwithstanding the foregoing, no such amendment shall conflict with the terms of the Plan or shall make the Trust revocable after it has become irrevocable in accordance with Section 1(b) hereof. (b) Upon a Change of Control, the Trust shall not terminate until the date on which Plan participants and their beneficiaries are no longer entitled to benefits pursuant to the terms of the Plan. Upon termination of the Trust, any assets remaining in the Trust shall be returned to the Company. Section 13. Miscellaneous. (a) Any provision of this Trust Agreement prohibited by law shall be ineffective to the extent of any such prohibition, without invalidating the remaining provisions hereof. 8 (b) Benefits payable to Plan participants and their beneficiaries under this Trust Agreement may not be anticipated, assigned (either at law or in equity), alienated, pledged, encumbered or subjected to attachment, garnishment, levy, execution or other legal or equitable process. (c) This Trust Agreement shall be governed and construed in accordance with the laws of the Commonwealth of Virginia. Jurisdiction and venue for any legal action arising from the terms of this Trust Agreement shall be proper in the Circuit Court for Rockingham County, Virginia or the District Court for the Western District of Virginia, Harrisonburg Division, as appropriate. (d) For purposes of this Trust, Change of Control shall mean: (i) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty percent (20%) or more of either the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, that in no event may the following acquisitions constitute a Change in Control: (a) any acquisition directly from the Company (excluding an acquisition by virtue of the exercise of a conversion privilege), (b) any acquisition by the Company, (c) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, (d) any acquisition by any corporation pursuant to a reorganization, merger or consolidation, if, following such reorganization, merger or consolidation, the conditions described in clauses (a), (b) and (c) of paragraph (iii) of this Section 13(d) are satisfied, or (e) any sale or other disposition of all or substantially all of the assets of the Company, if, following such sale or other disposition, the conditions described in (1), (2) and (3) of paragraph (iv) of this Section 13(d) are satisfied; or 9 (ii) The cessation for any reason of the individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least seventy-five percent (75%) of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or (iii) The Approval by the shareholders of the Company of a reorganization, merger or consolidation, unless, in each case following such reorganization, merger or consolidation, (a) more than sixty percent (60%) of, respectively, the then outstanding shares of common stock of the corporation resulting from such reorganization, merger or consolidation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such reorganization, merger or consolidation in substantially the same proportions as their ownership immediately prior to such reorganization, merger or consolidation, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (b) no Person (excluding the Company, any employee benefit plan (or related trust) of the Company or a corporation resulting from such reorganization, merger or consolidation) beneficially owns, directly or indirectly, thirty-nine percent (39%) or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such reorganization, merger or consolidation or the combined voting power of the then outstanding voting securities of such corporation entitled to vote 10 generally in the election of directors, and (c) at least a majority of the members of the board of directors of the corporation resulting from such reorganization, merger or consolidation were members of the Incumbent Board at the time of the execution of the initial agreement providing for such reorganization, merger or consolidation; or (iv) The Approval by the shareholders of the Company of (a) a complete liquidation or dissolution of the Company or (b) the sale or other disposition of all or substantially all of the assets of the Company, other than to a corporation with respect to which following such sale or other disposition, (1) more than sixty percent (60%) of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (2) no Person (excluding the Company and any employee benefit plan (or related trust) of the Company or such corporation) beneficially owns, directly or indirectly, thirty-nine percent (39%) or more of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors and (3) at least a majority of the members of the board of directors of such corporation were members of the Incumbent Board at the time of the execution of the initial agreement or action of the Board providing for such sale or other disposition of assets of the Company. (v) Notwithstanding anything in paragraphs (i) - (iv) of this Section 13(d) to the contrary, no Change in Control shall be 11 deemed to have occurred for purposes of this Agreement by virtue of any transaction which results in some or all Plan participants acquiring, directly or indirectly, twenty percent (20%) or more of the combined voting power of the Company's Voting Securities. Section 14. Effective Date. The effective date of this Trust Agreement shall be October 1, 1995. IN WITNESS WHEREOF, the parties hereto have caused this writing to be signed in their names and on their behalves as thereunto duly authorized. WLR FOODS, INC. By______/s/ James L. Keeler________ Its____Pres & CEO___________________ _/s/__Lisa J. Tilly, CPA, AVP_______ Trustee 46939 EX-10.19 11 PLAN TO ISSUE STOCK FOR DIRECTOR COMP Exhibit 10.19 Description of Plan to Issue Stock for Director Compensation On August 20, 1996, the Board of Directors of the Company approved the issuance of stock to the registrant for the payment of the nonemployee directors' $13,000 annual retainer. The number of shares to be issued will be based on the market value of the registrant's stock on the last trading day prior to its issuance. 79804 EX-13.1 12 FINANCIAL HIGHLIGHTS Exhibit 13.1 Financial Highlights from Registrant's Annual Report to Shareholders WLR FOODS, INC. AND SUBSIDIARIES FINANCIAL HIGHLIGHTS Dollars in thousands, except per share data
June 29, July 1, July 2, July 3, Fiscal year ended: 1996 1995 1994 1993 -------- -------- -------- -------- OPERATIONS Net sales $997,632 $908,776 $727,270 $616,702 Cost of sales 897,892 785,085 632,620 535,014 -------- -------- -------- -------- Gross profit 99,740 123,691 94,650 81,688 Selling, general and administrative expenses 97,324 91,420 63,606 55,732 -------- -------- -------- -------- Operating income 2,416 32,271 31,044 25,956 Interest expense 9,359 6,666 4,989 3,816 Other (income) expense, net 321 (332) (431) (567) -------- -------- -------- -------- Total other expense, net 9,680 6,334 4,558 3,249 Earnings (loss) before income taxes and minority interest (7,264) 25,937 26,486 22,707 Income tax expense (benefit) (2,610) 9,749 9,897 8,057 Minority interest 32 55 38 43 -------- -------- -------- -------- Net earnings (loss) before cumulative effect of change in accounting (4,686) 16,133 16,551 14,607 Cumulative effect on prior years of change in accounting - - - - -------- -------- -------- -------- Net earnings (loss) (4,686) 16,133 16,551 14,607 Less preferred stock dividends - - - 1,389 -------- -------- -------- -------- Net earnings (loss) available to common shareholders $(4,686) $16,133 $16,551 $13,218 ======== ======== ======== ======== PER COMMON SHARE Net earnings (loss) before cumulative effect of change in accounting $(0.27) $0.90 $1.01 $0.95 Cumulative effect on prior years of change in accounting - - - - -------- -------- -------- -------- Net earnings (loss) per share (primary) $(0.27) $0.90 $1.01 $0.95 Net earnings (loss) per share (fully diluted) (0.27) 0.90 1.01 0.93 Dividends declared (excluding Cassco pooling) 0.24 0.22 0.21 0.21 Book value 10.00 10.47 9.45 8.66 Year-end stock price 14.00 14.38 17.00 11.33 Common shares outstanding (in thousands): Average for the year 17,528 17,859 16,451 15,667 At year end 17,682 17,298 16,514 16,427
WLR FOODS, INC. AND SUBSIDIARIES FINANCIAL HIGHLIGHTS-Continued Dollars in thousands, except per share data
June 29, July 1, July 2, July 3, Fiscal year ended: 1996 1995 1994 1993 --------- --------- -------- --------- FINANCIAL POSITION AT END OF YEAR Working capital $144,621 $120,562 $69,989 $57,509 Property, plant and equipment, net 176,691 174,163 139,854 140,540 Total assets 451,121 372,525 283,051 265,626 Long-term debt 138,510 106,481 46,368 52,253 Common stock subject to repurchase 17,750 17,750 - - Preferred shareholders' equity - - - - Common shareholders' equity $159,010 $163,344 $156,157 $142,255 ======== ======== ======== ======== ANALYTICAL & OTHER INFORMATION Current ratio (compared to 1) 2.18 2.67 2.02 1.92 Total debt/total capitalization 55.1% 44.7% 28.4% 33.5% Return on beginning total equity NMF 10.3% 11.6% 13.1% Capital expenditures $18,771 $17,251 $19,186 $31,766 Depreciation expense 28,243 24,817 21,333 18,115 Amortization expense 742 598 520 445 Interest expense 9,359 6,666 4,989 3,816 Dividends declared: Common stock 4,233 4,073 3,513 3,124 Preferred stock - - - 1,389 Market capitalization of common stock at year end $247,547 $248,654 $280,738 $186,168 ======== ======== ======== ========
All information reflects the three-for-two stock split in the form of a 50% stock dividend declared on February 28, 1995. [FN] Fully diluted shares In March 1993, the Company repurchased all the preferred stock issued in January 1992. Common stock subject to repurchase classified as debt. WLR Foods, Inc. common stock was first publicly traded in 1988. 2 WLR FOODS, INC. AND SUBSIDIARIES FINANCIAL HIGHLIGHTS-Continued Dollars in thousands, except per share data
June 27, June 29, June 30, July 1, July 2, Fiscal year ended: 1992 1991 1990 1989 1988 -------- -------- -------- -------- -------- OPERATIONS Net sales $514,465 $502,238 $494,156 $465,951 $381,363 Cost of sales 454,331 434,509 415,803 391,640 335,855 -------- -------- -------- -------- -------- Gross profit 60,134 67,729 78,353 74,311 45,508 Selling, general and administrative expenses 48,191 50,019 49,595 44,566 37,420 -------- -------- -------- -------- -------- Operating income 11,943 17,710 28,758 29,745 8,088 Interest expense 2,755 928 925 2,037 1,536 Other (income) expense, net (251) (453) (491) 166 (184) -------- -------- -------- -------- -------- Total other expense, net 2,504 475 434 2,203 1,352 Earnings (loss) before income taxes and minority interest 9,439 17,235 28,324 27,542 6,736 Income tax expense (benefit) 3,518 6,521 10,895 10,520 2,952 Minority interest 25 33 34 (206) 60 -------- -------- -------- -------- -------- Net earnings (loss) before cumulative effect of change in accounting 5,896 10,681 17,395 17,228 3,724 Cumulative effect on prior years of change in accounting - - - - 1,112 -------- -------- -------- -------- -------- Net earnings (loss) 5,896 10,681 17,395 17,228 4,836 Less preferred stock dividends 982 - - - - -------- -------- -------- -------- -------- Net earnings (loss) available to common shareholders $4,914 $10,681 $17,395 $17,228 $4,836 ======= ======== ======== ======== ======== PER COMMON SHARE Net earnings (loss) before cumulative effect of change in accounting $0.35 $0.68 $1.11 $1.11 $0.24 Cumulative effect on prior years of change in accounting - - - - 0.07 -------- -------- -------- -------- -------- Net earnings (loss) per share (primary) $0.35 $0.68 $1.11 $1.11 $0.31 Net earnings (loss) per share (fully diluted) 0.35 0.68 1.11 1.11 0.31 Dividends declared (excluding Cassco pooling) 0.21 0.21 0.19 0.18 0.21 Book value 6.44 7.33 6.86 5.86 4.95 Year-end stock price 9.67 12.00 12.33 11.87 5.63 Common shares outstanding (in thousands): Average for the year 14,277 15,782 15,645 15,600 15,600 At year end 12,719 15,782 15,782 15,600 15,600
3 WLR FOODS, INC. AND SUBSIDIARIES FINANCIAL HIGHLIGHTS-Continued Dollars in thousands, except per share data
June 27, June 29, June 30, July 1, July 2, Fiscal year ended: 1992 1991 1990 1989 1988 --------- -------- --------- -------- -------- FINANCIAL POSITION AT END OF YEAR Working capital $40,337 $49,532 $46,039 $42,914 $35,169 Property, plant and equipment, net 113,017 88,807 71,414 59,687 53,524 Total assets 207,736 175,329 157,763 142,832 124,810 Long-term debt 38,148 18,678 6,402 7,858 8,995 Common Stock subject to repurchase - - - - - Preferred shareholders' equity 29,507 - - - - Common shareholders' equity $81,881 $115,625 $108,258 $91,455 $77,181 ======= ======== ======== ======= ======= ANALYTICAL & OTHER INFORMATION Current ratio (compared to 1) 1.80 2.42 2.20 2.12 2.03 Total debt/total capitalization 32.0% 16.1% 8.5% 13.9% 16.0% Return on beginning total equity 5.1% 9.9% 19.0% 22.3% 6.6% Capital expenditures $36,107 $29,471 $20,360 $16,001 $8,163 Depreciation expense 14,041 11,544 9,932 8,595 7,057 Amortization expense 168 - - - - Interest expense 2,755 928 925 2,037 1,536 Dividends declared: Common stock 2,854 3,314 2,948 2,643 2,503 Preferred stock 982 - - - - Market capitalization of common stock at year end $122,942 $189,378 $194,638 $185,432 $87,880 ======== ======== ======== ======== =======
All information reflects the three-for-two stock split in the form of a 50% stock dividend declared on February 28, 1995. [FN] Fully Diluted Shares In March 1993, the Company repurchased all the preferred stock issued in January 1992. Common Stock subject to repurchase classified as debt. WLR Foods, Inc. common stock was first publicly traded in 1988. 4 EX-13.2 13 MD&A Exhibit 13.2 MANAGEMENT'S DISCUSSION AND ANALYSIS, FROM THE REGISTRANT'S ANNUAL REPORT TO SHAREHOLDERS FOR THE FISCAL YEAR ENDED JUNE 29, 1996. What is WLR Foods and where are its operations located? WLR Foods, Inc. (WLR Foods or the company) is a fully-integrated poultry production, processing and marketing business with operations in Virginia, West Virginia, Pennsylvania and North Carolina. Fiscal 1996 is the only year WLR Foods has ever reported a net loss. What caused this? Several extreme industry conditions adversely affected fiscal 1996 results. Most important were: record high grain costs during the second half of the fiscal year; excess supplies of poultry and meats which prevented the company from increasing prices to offset rising grain costs; and disease in turkey flocks in North Carolina. In addition, severe weather in the mid-Atlantic region adversely affected operations throughout fiscal 1996. How did the operating results of fiscal 1996 compare to fiscal 1995? Fiscal 1996 had record sales of $997.6 million, up $88.9 million or 9.8% from last year. Sales volumes increased 6.4%. Chicken sales volume grew 16.3%, with nearly 70% of the chicken volume increase resulting from the acquisition of the Goldsboro chicken complex in September 1995. The Goldsboro acquisition accounted for approximately $30 million of the change in net sales. Turkey sales volumes decreased 1.7% even though 52 weeks of sales from the Carolina division were included in fiscal 1996, versus 44 weeks for the previous year. Compared to fiscal 1995, fiscal 1996 average quoted commodity prices for whole turkeys and chickens were up 6% and 13%, respectively, but, because of excess poultry and meat supplies, were far below those needed to offset the increased grain cost. Rather than accept uneconomic prices, management elected to build turkey finished goods inventories during the third and fourth quarters. This resulted in higher than usual inventory volumes at fiscal year end. Since then, finished goods inventory levels have been brought down by over 20% and are anticipated to be further reduced to near normal levels by calendar year end. Cost of sales increased $112.8 million or 14.4%, because of higher volumes sold and high grain costs. Higher corn and soybean costs in fiscal 1996 caused approximately $58 million of the increase in cost of sales. The average price paid for corn was 46% higher, while soybean meal was 23% higher than last year. Grain futures prices have moved modestly lower since the end of the fiscal year, but still remain higher on an annual average than last year. Management expects that grain prices will remain high at least until the harvest is completed. Due to the production cycle of poultry, it takes up to three months for the impact of a price change in grains to change product costs. The company has various ways to purchase grain. These include cash purchasing, forward pricing, grain futures and options. During fiscal 1996, the company only used cash purchasing and continues to do so. Production volumes were reduced by decreasing chicken placements by 5% and turkey live weights by 10% during the third and fourth quarters. As a result, producer payments were affected since, with less production, many received less pay. These reductions will be adjusted as industry conditions warrant. During the second half of fiscal 1996, management concentrated its efforts on reducing costs throughout the company. Cost cuts included centralizing purchasing, staff reductions and changing the North Carolina turkey processing operation to a single shift, without reducing production levels. Cost reductions throughout the 2 company will generate at least $20 million of savings annually, but only a portion of these savings were reflected in fiscal 1996 operating results. Disease is a risk the company faces while growing poultry. In fiscal 1996, the company was once again adversely affected by Poult Enteritis Mortality Syndrome (PEMS, commonly referred to as spiking mortality) in its North Carolina turkey operations. Although excessive mortality and poor feed conversion caused by the disease combined to increase product costs over those of unaffected flocks, the financial impact of the disease in fiscal 1996 was comparable to fiscal 1995. The drug introduced last fall to combat the disease showed favorable results in certain flocks this summer. The more seriously affected flocks that did not respond to the medication were depopulated to minimize ongoing costs. The company also initiated changes in flock management practices to reduce the effects of the disease while industry research for a cure or better containment continues. Gross profit decreased $24.0 million or 19% to $99.7 million. The gross profit margin decreased to 10.0% from 13.6% last year. Selling, general and administrative expenses increased $5.9 million, or 6.5% because of the incremental expenses of the North Carolina turkey operation (52 weeks this year, 44 weeks last year) and increases in freight and other sales related expenses of $3.4 million and $3.9 million, respectively. Selling and freight expenses increased with higher volumes sold, somewhat offset by operational efficiencies. These higher expenses were also partially offset by a decrease in administrative costs from company-wide centralization of administration, cost reductions and no bonuses earned during fiscal 1996. Operating income decreased $29.9 million to $2.4 million. Other expense totaled $9.7 million, an increase of $3.4 million, primarily because of interest on increased borrowings to cover higher inventory levels and other operating needs. The effective tax benefit was 35.9% due to limitations on the use of operating losses in some states. Net income decreased $20.8 million, resulting in a net loss of $4.7 million. On a per share basis, the company s loss was $0.27 for fiscal 1996 compared to a profit of $0.90 last year. In comparing fiscal 1995 to fiscal 1994, what factors caused operating result changes? Overall, fiscal 1995 and 1994 had similar operating results, with profits of $16.1 million and $16.6 million, respectively. There were various factors that contributed to the similar net income results. Fiscal 1995 sales increased 25% over 1994 primarily as a result of the acquisition of the Carolina Division in August 1994. Sales pounds increased 18% overall, with chicken sales up 2% and turkey and further processed sales up 40% over the prior year. Average quoted commodity prices for whole chickens and turkeys were down 8% and 1%, respectively, because of abundant supplies of not only poultry but all competing meats. Sales of dark turkey meat decreased significantly in the fourth quarter, as export demand waned with the devaluation of the Mexican peso. Cost of sales increased 24%, primarily due to increased volumes sold, somewhat offset by lower grain costs. Average corn prices were down 10% and soybean meal was 16% lower than in fiscal 1994. Operating costs remained steady, with efficiency improvements offsetting increases in labor and packaging costs. 3 Gross profit margin improved for fiscal 1995, but this trend reversed in the fourth quarter as dark meat turkey prices dropped and grain prices increased. Selling, general and administrative expenses rose 43.7% because of increased sales volumes. Selling, marketing, advertising and delivery costs were up due to the acquisition of the Carolina Division and the change in volumes sold. Increased sales volumes of further processed and foodservice products also resulted in increased selling, marketing and advertising expenses. Administrative costs increased only 6% over the prior year. Fiscal 1995 included $1.3 million in defense costs for the hostile takeover attempt of the company by Tyson Foods, Inc. Other expenses increased due to interest on higher borrowing and higher interest rates on variable rate loans. Additional funds were borrowed to finance two acquisitions, and an additional $16.3 million was used to repurchase 1.06 million shares of the company s common stock in fiscal 1995. The effective tax rate was 37.6%, compared to 37.4% from the prior year. Net income was $16.1 million, down $0.5 million from fiscal 1994. How has the company s liquidity and financial condition changed during fiscal 1996? The company s year-end net working capital grew to $144.6 million, up from $120.6 million last year. The current ratio was 2.2-to-1, down from 2.7-to-1, a result of a $30 million unsecured loan funded in June 1996 to provide greater liquidity. Capital spending was reduced to $18.8 million to conserve cash, down from the originally budgeted amount of $30 million. Certain projects were delayed including a new Goldsboro hatchery originally planned for fiscal 1996. Management is negotiating with its lenders to waive and or modify certain financial covenants of the company s existing debt agreements and believes such requests will be granted. Under the existing agreements, projections show one of the covenants could be violated in fiscal 1997 at current earnings levels. During the first half of the year, the company repurchased 0.2 million shares of stock for $2.8 million. Because of industry conditions, no repurchases of stock were made during the second half of the fiscal year. In fiscal 1995, the Board of Directors authorized $30 million of stock repurchases, of which $19.1 million has been expended to date to acquire 1.3 million shares. No further repurchases of shares are anticipated until industry conditions improve significantly. Total debt to total capital was 55.1% compared to 44.7% last year. This calculation reflects the common stock subject to repurchase as debt. The increase came from higher borrowings to fund the acquisition of the Goldsboro chicken complex, higher inventories and receivables, and the repurchases of stock. Until grain costs decrease to more normal levels and inventories are reduced, this ratio will likely remain above the company s target range of 40% to 45%. What resources did the company invest in its operations in fiscal 1996? The company spent $18.8 million for capital items along with $16.6 million in cash and stock disbursed for the Goldsboro chicken complex. The capital projects generally were for normal replacements and upgrades of existing assets, but included $2.4 million for a new ice plant near Richmond, Virginia. Lease financing totaled $1.1 million for equipment, vehicles and computer equipment, all operating leases. Capital expenditures of $15 million are projected for fiscal 1997, but may be increased to cover the Goldsboro hatchery, delayed in fiscal 1996. Strategic projects will be evaluated individually, based on industry conditions and the company s position in the marketplace. 3 In fiscal 1996, the company disbursed $4.2 million for dividends and received $1.3 million from employees, producers and shareholders for purchases of stock. Regulatory items The company is in material compliance with all regulatory requirements at the present time. The company will adopt SFAS No. 123, Accounting for Stock-Based Compensation in fiscal 1997. The company will elect the disclosure provisions of the statement and continue to account for stock-based compensation in accordance with APB Opinion No. 25. SFAS No. 121 Accounting for Long-Lived Assets and Long-Lived Assets to be Disposed of will be adopted in fiscal 1997. These accounting standards are not anticipated to materially impact the financial position of the company or results of operations at the time of adoption. What are the risks of the poultry industry? Risks include weather conditions impacting grain production, and live growout of poultry; disease in poultry; feed supplies and prices; supplies and selling prices of poultry and competing meats; consumer preferences; governmental and regulatory intervention in the export/import of poultry; and changes in regulations governing production processes. Company performance expectations, or "forward looking statements" expressed from time to time are always subject to the possible material impact of any risks identified above. The company hopes that 1996 will remain the best, if not only, example of the adverse impact that can result when almost all such risks present themselves in a single year. EX-13.3 14 CONSOLIDATED FINANCIAL STATEMENTS & NOTES Exhibit 13.3 Consolidated Financial Statements and Notes to Consolidated Financial Statements WLR Foods, Inc. and Subsidiaries Consolidated Statements of Operations
Dollars in thousands, except per share data Fiscal years ended June 29, 1996, July 1, 1995 and July 2, 1994 1996 1995 1994 - ---------------------------------------------- --------- -------- -------- Net sales (Note 11) $997,632 $908,776 $727,270 Cost of sales (Note 11) 897,892 785,085 632,620 -------- -------- -------- Gross profit 99,740 123,691 94,650 Selling, general and administrative expenses 97,324 91,420 63,606 -------- -------- -------- Operating income 2,416 32,271 31,044 Other expense: Interest expense (Note 4) 9,359 6,666 4,989 Other expense (income), net 321 (332) (431) -------- -------- -------- Other expense, net 9,680 6,334 4,558 -------- -------- -------- Earnings (loss) before income taxes and minority interest (7,264) 25,937 26,486 Income tax expense (benefit) (Note 7) (2,610) 9,749 9,897 Minority interest in net earnings of consolidated subsidiary 32 55 38 -------- -------- -------- Net Earnings (loss) (4,686) 16,133 16,551 ======== ======== ======== Net Earnings (loss) per common share $(0.27) $0.90 $1.01 ======= ======= ======= See accompanying Notes to Consolidated Financial Statements.
WLR Foods, Inc. and Subsidiaries Consolidated Balance Sheets
Dollars in thousands June 29, 1996 and July 1, 1995 1996 1995 - ------------------------------------------------- --------- --------- Assets Current Assets Cash and cash equivalents $724 $706 Accounts receivable, less allowance for doubtful 79,932 63,194 accounts of $708 and $613 Inventories (Note 3) 171,946 125,849 Income tax receivable 10,802 1,828 Other current assets 4,275 1,355 -------- -------- Total current assets 267,679 192,932 Investments 745 949 Property, plant and equipment, net (Note 4) 176,691 174,163 Other assets 6,006 4,481 -------- -------- Total Assets $451,121 $372,525 ======== ======== Liabilities and Shareholders' Equity Current Liabilities Notes payable to banks (Note 5) $30,776 $ - Current maturities of long-term debt (Note 5) 7,983 8,028 Excess checks over bank balances 14,788 3,948 Trade accounts payable 31,989 28,021 Accrued expenses 23,887 22,036 Deferred income taxes (Note 7) 12,574 9,299 Other current liabilities 1,061 1,038 -------- -------- Total current liabilities 123,058 72,370 Long-term debt, excluding current maturities (Note 5) 138,510 106,481 Deferred income taxes (Note 7) 8,849 8,730 Minority interest in consolidated subsidiary 552 527 Other liabilities and deferred credits 3,392 3,323 Commitments and other matters (Notes 6, 8, 10 and 11) Common stock subject to repurchase (Notes 2 and 8) 17,750 17,750 Shareholders' equity (Notes 8 and 9) Common stock, no par value 61,407 56,782 Additional paid-in capital 2,974 3,014 Retained earnings 94,629 103,548 -------- -------- Total shareholders' equity 159,010 163,344 -------- -------- Total Liabilities and Shareholders' Equity $451,121 $372,525 ======== ======== See accompanying Notes to Consolidated Financial Statements. Consolidated Statements of Shareholders' Equity
2 Dollars and shares in thousands, except per share data
Fiscal years ended June 29, Additional 1996, July 1, 1995 and July 2, Common Stock Paid-In Retained 1994 Shares Amount Capital Earnings Total - ------------------------------ -------------- ---------- -------- -------- Balance at July 3, 1993 16,427 $60,552 $3,253 $78,450 $142,255 Net earnings 16,551 16,551 Common stock dividends declared - $0.21 per share (3,513) (3,513) Common stock issued under Stock Option Plan including tax benefit of $423 60 450 450 Other common stock issued 27 414 414 ------ ------- ------ ------- -------- Balance at July 2, 1994 16,514 61,416 3,253 91,488 156,157 Net earnings 16,133 16,133 Common stock dividends declared - $0.22 per share (4,073) (4,073) Issuance of common stock for acquisition of businesses (Note 2) 1,775 10,650 10,650 Common stock issued under Stock Option Plan including tax benefit of $182 29 173 173 Other common stock issued 38 563 563 Common stock repurchased (1,058)(16,020) (239) (16,259) ------ ------- ------ ------- -------- Balance at July 1, 1995 17,298 56,782 3,014 103,548 163,344 Net loss (4,686) (4,686) Common stock dividends declared - $0.24 per share (4,233) (4,233) Issuance of common stock for acquisition of businesses (Note 2) 457 6,028 6,028 Common stock issued under Stock Option Plan including tax benefit of $104 20 78 78 Other common stock issued 102 1,298 1,298 Common stock repurchased (195) (2,779) (40) (2,819) ------ ------- ------ ------- -------- Balance at June 29, 1996 17,682 $61,407 $2,974 $94,629 $159,010 ====== ======= ====== ======= ========
3 WLR Foods, Inc. and Subsidiaries Consolidated Statements of Cash Flows
Dollars in thousands Fiscal years ended June 29, 1996, July 1, 1995 and July 2, 1994 1996 1995 1994 - ------------------------------------------------- ------- ------- ------- Cash Flows from Operating Activities: Net earnings (loss) $(4,686) $16,133 $16,551 Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities: Depreciation 28,243 24,817 21,333 (Gain) loss on sales of property, plant and equipment 67 (218) (12) Deferred income taxes 2,339 1,919 8,449 Other, net 395 498 520 Change in operating assets and liabilities net of acquired businesses: (Increase) decrease in accounts receivable (16,583) 4,069 (11,215) Increase in inventories (43,233) (14,430) (6,319) Increase in other current assets (11,766) (878) (961) Increase (decrease) in accounts payable 3,298 (2,713) 2,486 Increase (decrease) in accrued expenses and other 1,656 3,500 (350) ------- ------- ------- Net cash provided by (used in) operating activities (40,270) 32,697 30,482 Cash Flows From Investing Activities: Additions to property, plant and equipment (18,771) (17,251) (19,186) Acquisition of businesses (Note 2) (10,565) (42,489) - Proceeds from sales of property, plant and equipment 833 1,505 140 (Additions to) proceeds from dispositions of other assets 819 302 (44) Minority interest in net earnings of consolidated subsidiary, net of dividends 25 52 34 ------- ------- ------- Net cash used in investing activities (27,659) (57,881) (19,056) Cash Flows From Financing Activities: Net increase (decrease) in notes payable to banks and revolver debt 70,776 25,600 (3,500) Issuance of long-term debt 48,541 - Principal payments on long-term debt (8,016) (25,020) (6,489) Issuance of common stock 1,376 736 864 Repurchase of common stock (2,819) (16,259) - Increase (decrease) in excess checks over bank balances 10,840 (4,563) 1,298 Dividends paid (4,210) (3,916) (3,508) ------ ------- ------- Net cash provided by (used in) financing activities 67,947 25,119 (11,335) ------ ------- ------- Increase (decrease) in cash and cash equivalents 18 (65) 91 Cash and cash equivalents at beginning of fiscal year 706 771 680 ------ ------- ------- Cash and cash equivalents at end of fiscal year $724 $706 $771 ====== ====== ====== 4 WLR Foods, Inc. and Subsidiaries Consolidated Statements of Cash Flows Continued Supplemental cash flow information: Cash paid for: Interest $8,906 $6,555 $4,808 Income taxes 3,213 8,418 2,039 ====== ====== ======
Non-cash financing activities: In fiscal 1996: The Company issued 456,936 shares of WLR Foods, Inc. common stock valued at $6.0 million for the acquisition of New Hope Feeds, Inc. and a related company. (Note 2) In fiscal 1995: The Company issued 1,774,999 shares of WLR Foods, Inc. common stock valued at $28.4 million including $17.8 million of common stock subject to repurchase, in conjunction with the acquisition of Cuddy Farms, Inc. - USA Food Division. (Notes 2 and 8) See accompanying Notes to Consolidated Financial Statements. 5 WLR FOODS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION Organization WLR Foods, Inc. and Subsidiaries (WLR Foods, or the Company) are primarily engaged in fully integrated turkey and chicken production, processing, further processing and marketing. The Company's operations are predominately located in the mid-Atlantic region of the United States. WLR Foods sells products through a variety of selected national and international retail, food service and institutional markets. Fiscal year The Company's fiscal year ends on the Saturday closest to June 30. Fiscal years 1996, 1995 and 1994 ended on June 29, 1996, July 1, 1995 and July 2, 1994, respectively, and included 52 weeks in each year. Principles of Consolidation and Presentation The accompanying consolidated financial statements include the accounts of WLR Foods and all of its wholly-owned and majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Cash and Cash Equivalents For purposes of the Consolidated Statements of Cash Flows, the Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Inventories Inventories of feed, grain, eggs, packaging supplies, processed poultry and meat products are stated at the lower of cost or market as determined by the first-in, first-out valuation method. Live poultry and breeder flocks consist of poultry raised for slaughter and breeders. Poultry raised for slaughter are stated at the lower of average cost or market. Breeders are stated at average cost less accumulated amortization. The costs of breeders are accumulated during their development stage and then amortized into the cost of the eggs produced over the egg production cycle of the breeders. The Company has four methods of purchasing grain: cash purchasing, forward pricing, grain options, and hedging with futures contracts. Each purchasing method creates varying degrees of risk for WLR Foods. During the fiscal years presented, the Company has used only cash purchasing and forward pricing to buy its grain. As of June 29, 1996, WLR Foods does not have any forward contractual agreements for the purchase of grains. Property, Plant and Equipment Property, plant and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets. The costs of maintenance and repairs are charged to operations, while costs associated with renewals, improvements and major replacements are capitalized. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income for the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Net Earnings Per Common Share Net earnings per common share are based on the weighted average number 6 of common shares and common share equivalents outstanding during the fiscal years (17,527,876 shares, 17,858,942 shares and 16,450,718 shares in 1996, 1995, and 1994, respectively). Fair Value of Financial Instruments The estimated fair value of financial instruments has been determined by the Company using available market information. Except for debt instruments (Note 5), the carrying amounts of all financial instruments approximate their fair values due to their short maturities. Use of Estimates The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Reclassification Certain 1995 and 1994 amounts have been reclassified to conform with fiscal 1996 presentations. 2. Business Acquisitions Each transaction discussed here has been accounted for as a purchase, and, accordingly, the financial statements herein include the net assets acquired at fair value and the results of operations of the acquired businesses from the date of acquisition. On September 29, 1995 the Company acquired substantially all of the assets of New Hope Feeds, Inc. and an affiliated company for $10.6 million in cash, including costs, and $6.0 million in stock. The assets included a new chicken processing facility, a feedmill, a hatchery, and related operating equipment. The transaction was recorded as follows: Dollars in thousands Inventories $2,864 Other current assets 283 Property, plant and equipment 12,900 Other assets 2,537 ------ Total assets acquired 18,584 Cash paid (including costs) 10,565 Issuance of common stock 6,028 ------ Total liabilities assumed $1,991 ====== On April 3, 1995, the Company's wholly owned subsidiary, Cassco Ice & Cold Storage, Inc., acquired the remaining 50% interest in a cold storage and distribution facility in Marshville, North Carolina for $2.3 million in cash. The business is a refrigerated distribution center that operates as a public refrigerated warehouse, located on approximately 15 acres. The Company acquired its initial 50% interest in the facility as part of its purchase of Cuddy Farms, Inc.-USA Food Division mentioned below. Dollars in thousands Total assets acquired $5,881 Cash paid (including costs) (2,346) ------ Total liabilities assumed $3,535 ====== On August 29, 1994, the Company acquired the turkey processing and production assets of Cuddy Farms, Inc.- USA Food Division for $39.1 million in cash and 1,774,999 shares of common stock valued at $28.4 million. 7 The transaction was recorded as follows: Dollars in thousands Accounts receivable $14,758 Inventories 28,372 Other current assets 30 Property, plant and equipment, net 36,289 Other assets 2,611 -------- Total assets acquired 82,060 Cash paid (including costs of $1,043) (40,143) Issuance of common stock (10,650) Common stock subject to repurchase (17,750) ------- Total liabilities assumed $13,517 ======= The following table shows the unaudited pro forma information as if the transaction had been consummated at the beginning of the periods presented. This pro forma information is not necessarily indicative of the results which may have occurred if the transaction had been consummated at the beginning of the periods presented. Dollars in thousands, except per share data Pro-forma unaudited Fiscal year ended July 1, 1995 July 2, 1994 ------------ ------------ Net sales $947,199 $939,464 Net earnings 14,774 13,713 Net earnings per common share $0.82 $0.75 3. Inventories A summary of inventories at June 29, 1996 and July 1, 1995 follows: Dollars in thousands 1996 1995 ------- ------- Live poultry and breeder flocks $71,263 $54,487 Processed poultry and meat products 66,895 41,262 Packaging supplies, parts and other 18,046 19,704 Feed, grain and eggs 15,742 10,396 -------- -------- Total inventories $171,946 $125,849 ======== ======== 4. Property, Plant and Equipment WLR Foods investment in property, plant and equipment at June 29, 1996 and July 1, 1995 was as follows: Dollars in thousands 1996 1995 ------- ------- Land and improvements $21,348 $20,361 Buildings and improvements 116,006 109,368 Machinery and equipment 172,280 168,228 Transportation equipment 28,871 25,371 Construction in progress 5,764 3,236 ------- ------- 344,269 326,564 Less accumulated depreciation 167,578 152,401 ------- ------- Property, plant and equipment, net $176,691 $174,163 ======== ======== The Company capitalized interest costs with respect to certain major construction projects of $91,000, $146,000, and $82,000 in fiscal years 1996, 1995 and 1994, respectively. 8 5. Long-Term Debt and Bank Revolving Credits Long-term debt and other credit facilities at June 29, 1996 and July 1, 1995 consisted of the following obligations: Dollars in thousands 1996 1995 ------- ------- Fixed Rate Notes: 9.41% Senior Unsecured Notes due 2001 $21,000 $24,000 7.47% Senior Unsecured Notes due 2007 22,000 22,000 Variable Rate Notes: Unsecured Bank Term Note due 2002 20,536 24,107 Unsecured Bank Term Note due 1997 30,000 - Revolving Credit Notes: Unsecured Bank Revolving Credit Note due 1997 776 - Unsecured Bank Revolving Credit Note due 1998 75,000 35,000 Other Notes: Other notes with various terms and rates 7,957 9,402 -------- -------- Total long term debt 177,269 114,509 Less revolving debt maturing in less than 1 year 776 - Less term note maturing in less than 1 year 30,000 - Less current maturities of long-term debt 7,983 8,028 -------- -------- Long-term debt and revolving debt, excluding current maturities $138,510 $106,481 ======== ======== The 9.41% Senior Unsecured Notes have $3 million principal payments due in May of each year through 2000. In 2001, a final balloon payment of $9 million is due. Interest is payable semi-annually. The 7.47% Senior Unsecured Notes due 2007 were placed in June 1995. The notes require interest payments on a semiannual basis through maturity. Annual principal payments of $4.4 million begin in 2003. The financial covenants for both senior notes include fixed charge coverage, debt-to-capital, tangible net worth and current ratio requirements. The Unsecured Bank Term Note is a seven-year fully amortizing variable rate note, priced at London Interbank Offered Rates (LIBOR) plus a spread of 60 to 100 basis points, depending on the Company's total debt-to-capitalization ratio. With initial funding in April 1995, WLR Foods made the first payment on June 30, 1995. Principal and interest payments are due quarterly, with repricing occurring on or about the due date of the payment. Annual principal payments are $3.6 million. The $30 million Unsecured Bank Term Note is a 9 month facility executed in June 1996. The note matures March 31, 1997 with the same interest rate as the Unsecured Bank Term Note. WLR Foods has two unsecured revolving credit facilities totaling $110 million with banks. The first facility is a three-year, $100 million syndicated facility, which matures on April 1, 1998. On June 29, 1996, $75 million was outstanding, with $10 million available for borrowing. The facility provides for $15 million of standby letters of credit, including $6.5 million currently available for new standby letters of credit. Pricing is based on the Company's capital ratio with a range between LIBOR plus 35 basis points and LIBOR plus 75 basis points. The second revolving credit facility is a $10 million facility maturing in March 1997. At June 29, 1996, $0.8 million was outstanding. The revolving credit and bank term agreements contain various covenants, including maintenance of a minimum net worth, current ratio, fixed charge coverage, and a maximum debt-to-capitalization ratio. The terms of the Company's borrowing agreements with several lenders contain restrictive financial covenants which include the maintenance of minimum tangible net worth, as defined, and certain financial ratio's. The Company complied with all covenants at June 29, 1996. The Company has assessed through projections, it is probable that it will not meet certain financial covenants during fiscal 1997. The Company is in the process of negotiating with its lenders to modify the covenants or restructure its debt. Management expects to resolve this issue in the near future without a material impact on the financial position or results of operations of the Company. 9 The fair value of the fixed rate notes is estimated at $44 million based on quoted market prices for similar issues at June 29, 1996. The carrying value of all other debt approximates fair value at June 29, 1996. Required annual principal repayments of long-term debt and revolving credits with original maturities of greater than one year are as follows: Dollars in thousands Fiscal 1997 $ 7,983 Fiscal 1998 83,024 Fiscal 1999 7,566 Fiscal 2000 7,566 Fiscal 2001 13,581 6. Employee Benefits The Company maintains a Profit Sharing and Salary Savings Plan that is available to substantially all employees who meet certain age and service requirements. Most participants may elect to make contributions of up to 15% of their salary. For each employee dollar contributed (limited to the first 4% of an employee's compensation), the Company is required to contribute a matching amount of 50 cents. The Company can also make additional contributions at its discretion. WLR Foods total contributions under this plan were approximately $1.7 million, $2.3 million and $2.1 million, for fiscal 1996, 1995 and 1994, respectively. 7. Income Taxes The provision for income taxes from operations was as follows for fiscal years 1996, 1995 and 1994: Dollars in thousands 1996 1995 1994 ------- ------ ----- Current: Federal $(4,092) $6,211 $948 State (857) 1,619 500 ------- ----- ----- (4,949) 7,830 1,448 Deferred: Federal 1,788 1,638 7,477 State 551 281 972 ----- ----- ----- 2,339 1,919 8,449 ----- ----- ----- Total tax provision (benefit) $(2,610) $9,749 $9,897 ======= ====== ====== The provision for income taxes differs from the amounts resulting from applying the federal statutory tax rates (35%) to earnings before income taxes and minority interest as follows for fiscal years 1996, 1995 and 1994: Dollars in thousands 1996 1995 1994 ------ ------ ------ Taxes computed using federal statutory tax rates $(2,542) $9,078 $9,270 State income tax expense, net of federal tax effect (199) 908 957 Other, net 131 (237) (330) ------- ------ ----- Total tax provision $(2,610) $9,749 $9,897 ======= ====== ====== Effective tax rate 35.9% 37.6% 37.4% The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities at June 29, 1996 and July 1, 1995 are listed below. 10 Dollars in thousands 1996 1995 ------- ------ Deferred tax liabilities: Inventories, principally due to the accounting for live inventories on the farm price method for tax purposes $(18,152) $(14,376) Plant and equipment, principally due to differences in depreciation and capitalized interest (9,485) (9,465) Investments in subsidiary companies, principally due to undistributed net income of the subsidiary (375) (357) -------- -------- Gross deferred tax liabilities (28,012) (24,198) Deferred tax assets: Insurance accruals, principally due to the timing of payments verses the recording of expense $3,281 $2,478 Net operating loss carryforwards 465 - Deferred compensation, principally due to accrual for financial reporting purposes 945 955 Alternative minimum tax credit carryforward 836 836 Compensated absences, principally due to accrual for financial reporting purposes 970 970 Accounts receivable, principally due to allowance for doubtful accounts 276 241 Other 281 689 -------- -------- Gross deferred tax assets 7,054 6,169 Valuation allowance on deferred tax assets (465) - ----- ----- Net deferred tax liability $(21,423) $(18,029) ======== ======== The valuation allowance for deferred tax assets was $465,000 at June 29, 1996 (none at July 1, 1995). In assessing the recoverability of deferred tax assets, management considers whether it is reasonably probable that some portion or all of the deferred tax assets will not be realized. The ultimate realization of the deferred tax assets is dependent on the generation of future taxable income, during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based on the level of historical operating results, future expectation of taxable income and reversal of deferred tax liabilities, management believes it is more likely than not the company will realize the benefits of these deductible differences, net of the existing valuation allowance at June 29, 1996. The valuation allowance is a result of limitations on the use of operating losses in some states where the Company does business. 8. Shareholders' Equity and Common Stock Subject to Repurchase In February 1994, the Board of Directors approved the adoption of the Shareholder Protection Rights Plan (the Plan) wherein one right attaches to and trades with each share of common stock. Each right entitles the registered holder to purchase from the Company at an exercise price of $45.33, the number of shares of common stock or participating preferred stock having a market value of twice the exercise price. Such participating preferred stock is designed to have economic and voting terms similar to those of one share of common 11 stock. Rights will separate from the common stock and become exercisable following the earlier of 1) the date a person or group acquires 15% or more of the outstanding stock, or 2) the tenth business day (or such later date the Board may decide) after any person commences a tender offer that would result in such person or group holding a total of 15% or more of the common stock. Additionally, in either case, rights owned by the acquiring person or group would automatically become void. If a person or group acquires between 15% and 50% of the outstanding common stock, the Board may, in lieu of allowing rights to be exercised, require each outstanding right to be exchanged for one share of common stock or participating preferred stock. A provision in the Plan allows for rights holders to acquire stock of the acquiring person or group, in the event a change of control of the Company has occurred. The rights are redeemable by the Company at $0.01 per right prior to becoming exercisable and expire 10 years from issuance. WLR Foods has 100,000,000 shares of common stock authorized, with 17,681,893 outstanding on June 29, 1996, and 17,297,671 outstanding on July 1, 1995. Additionally, there are 50,000,000 shares of preferred stock authorized with none outstanding as of June 29, 1996 or July 1, 1995. The Common Stock subject to Repurchase arises due to WLR Foods commitment to repurchase the shares held by a trustee on behalf of Cuddy Farms, Inc. for $17,750,000 in cash if Cuddy Farms has a payment default under its credit facilities. The obligation is in effect until August 1998, at which point the obligation is terminated. 9. Stock Option and Stock Purchase Plans WLR Foods Stock Option Plan was adopted by the Board of Directors in accordance with the Long-Term Incentive Plan which was ratified by the shareholders of the Company on November 1, 1988. The Plan provides for the granting of incentive or non-qualified common stock options. The option price under the Plan shall not be less than the fair market value of the common shares as of the date of the grant. The options vest over a three-year period and are exercisable at varying dates not to exceed 10 years from the date of the grant. The changes in the outstanding common shares under option for fiscal 1996, 1995, and 1994 are listed below: Common shares Option under option price ------------ ----- Outstanding at July 3, 1993 760,125 $8.22 to $14.67 Canceled or expired (3,000) $11.92 Exercised (164,625) $8.22 to $12.33 Granted in fiscal 1994 150,375 $20.00 -------- ------- Outstanding at July 2, 1994 742,875 $11.92 to $20.00 Exercised (137,625) $12.33 Granted in fiscal 1995 163,000 $15.00 ------- ------ Outstanding at July 1, 1995 768,250 $11.92 to $20.00 Canceled or expired (110,120) $11.92 to $20.00 Exercised (148,255) $11.92 Granted in fiscal 1996 190,500 $14.13 -------- ------ Outstanding at June 29, 1996 700,375 $11.92 to $20.00 ======= ================ At June 29, 1996 there were 376,333 shares exercisable under options. 12 On October 29, 1994, the shareholders of WLR Foods approved the Poultry Producer Stock Purchase Plan and amended and restated the Employee Stock Purchase Plan. These plans allow contract producers and employees to purchase stock at a 10% discount off the market price. All shares must be held in the plans for a period of two years. Upon termination of employment or contract, participants are terminated from the respective plans. 10. Leases WLR Foods has entered into various operating lease agreements for machinery and equipment. The leases are noncancelable and expire on various dates through 2002. Total rent expense was approximately $3.5 million, $2.7 million, and $1.4 million for fiscal 1996, 1995, and 1994, respectively. The following schedule presents the future minimum rental payments required under the operating leases that have initial or remaining noncancelable lease terms in excess of one year as of June 29, 1996: Dollars in thousands Fiscal 1997 $1,962 Fiscal 1998 1,383 Fiscal 1999 1,084 Fiscal 2000 686 Fiscal 2001 476 Fiscal 2002 and thereafter 323 ------ Total minimum lease payments $5,914 ====== 11. Related Party Transactions Certain directors of WLR Foods are contract growers of live poultry for the Company. In addition, a WLR Foods director is a director/officer of a company which supplies fuel and related products to certain locations of the Company. A second director provided consulting services to WLR Foods during each fiscal year presented. As a result of the August 1994 acquisition (Note 2), Cuddy Farms, Inc. (as an affiliate of Cuddy International) became a related party. The 1996 and 1995 transactions include poult purchases and feed sales to Cuddy Farms based on pricing formulas established when the acquisition was completed. The contract terms are through 1998 with extensions available. Transactions with these related parties during the past three fiscal years are as follows: Purchases from related Sales to Dollars in thousands parties related parties ---------- --------------- Fiscal 1996 $25,433 $10,237 Fiscal 1995 21,020 7,939 Fiscal 1994 1,522 - In management's opinion, all related party transactions are conducted under normal business conditions, with no preferential treatment given to related parties. 13 12. Selected Quarterly Financial Data (Unaudited) The unaudited summary of quarterly results for fiscal 1996 and 1995 follows: Dollars in thousands, except per share data Fiscal year ended June 29, 1996 First Second Third Fourth -------- -------- -------- -------- Net sales $250,798 $267,795 $216,263 $262,776 Operating income (loss) 8,947 9,919 (9,274) (7,176) Net earnings (loss) 4,296 4,843 (7,062) (6,763) Per share data: Net earnings (loss) per common share $0.25 $0.28 $(0.40) $(0.38) Dividends declared per common share $0.06 $0.06 $0.06 $0.06 Market price (bid)-high 14.50 16.50 16.25 14.00 -low 12.75 13.25 12.50 11.75 Fiscal year ended July 1, 1995 First Second Third Fourth -------- -------- -------- -------- Net sales $210,285 $247,840 $211,469 $239,182 Operating income 11,823 13,186 4,403 2,859 Net earnings 6,508 6,785 2,033 807 Per share data: Net earnings per common share $0.38 $0.37 $0.11 $0.05 Dividends declared per common share $0.05 $0.05 $0.06 $0.06 Market price (bid)-high 18.67 18.17 18.17 18.00 -low 13.00 15.33 16.83 12.00 Per share calculations are based on each stand alone period presented; therefore, the annual per share results may not be the sum of the four quarters. 14 EX-13.4 15 INDEPENDENT AUDITORS REPORT [KPMG PEAT MARWICK LETTERHEAD] Exhibit 13.4 Independent Auditors' Report The Board of Directors and Shareholders WLR Foods, Inc. We have audited the accompanying consolidated balance sheets of WLR Foods, Inc. and subsidiaries as of June 29, 1996 and July 1, 1995 and the related consolidated statements of operations, shareholders' equity and cash flows for each of the fiscal years in the three-year period ended June 29, 1996. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards 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. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above represent fairly, in all material respects, the financial position of WLR Foods, Inc. and subsidiaries as of June 29, 1996 and July 1, 1995 and the results of their operations and their cash flows for each of the fiscal years in the three-year period ended July 29, 1996, in conformity with generally accepted accounting principles. KPMG PEAT MARWICK LLP Richmond, Virginia August 14, 1996 EX-21 16 LIST OF SUBSIDIARIES Exhibit 21 Subsidiary State of Incorporation Wampler Foods, Inc. Virginia P. O. Box 7275 Broadway, VA 22815 Cassco Ice & Cold Storage, Inc. Virginia 75 W. Bruce Street Harrisonburg, VA 22801 May Supply Company, Inc. Virginia P. O. Box 347 Harrisonburg, VA 22801 23668 EX-23 17 CONSENT OF INDEPENDENT ACCOUNTANTS Exhibit 23 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS The Board of Directors WLR Foods, Inc.: We consent to incorporation by reference in the registration statements on Form S-8 (No. 33-27037, No 33-63364 and No. 33-55649), on Form S-3 (No. 33-48293, No. 33-63368 and No. 33-56775) and on Form S-3(D) (No. 33-54692) of WLR Foods, Inc. of our reports dated August 14, 1996, relating to the consolidated balance sheets of WLR Foods, Inc. and subsidiaries as of June 29, 1996 and July 1, 1995 and the related consolidated statement of operations, shareholders' equity and cash flows for each of the fiscal years in the three-year period ended June 29, 1996 and the related schedule which reports appear or are incorporated by reference in the June 29, 1996 annual report on Form 10-K of WLR Foods, Inc. KPMG PEAT MARWICK LLP Richmond, Virginia September 26, 1996 EX-24 18 POWER OF ATTORNEY Exhibit 24 SPECIAL POWER OF ATTORNEY Each of the undersigned officers and directors of WLR Foods, Inc. (WLR Foods), a Virginia corporation, appoints James L. Keeler and Robert T. Ritter, or either of them (with full power to each of them to act alone) as his or her attorneys-in-fact and agents for him or her in such capacity either as an officer or director, or both, of WLR Foods, and authorizes such persons on behalf of WLR Foods, to sign and file any and all WLR Foods' registration statements, reports, schedules and other filings, and all amendments thereto, required or permitted to be filed under federal or state securities laws, including without limitation Forms 3, 4 and 5, registration statements, Form 10-K annual reports, Form 10-Q quarterly reports and Form 8-K current reports, with all exhibits and any and all documents required to be filed with respect thereto, with the Securities and Exchange Commission, National Association of Securities Dealers, and any regulatory authority for any U.S. state or territory, and each of us hereby ratifies and confirms all that our attorneys-in-fact and agents or each of them may lawfully do or cause to be done by virtue hereof. WITNESS the following signatures and seals. _8/20/96____ /s/ John J. Broaddus________________(SEAL) Date John J. Broaddus _8/20/96____ /s/ Jane T. Brookshire______________(SEAL) Date Jane T. Brookshire _8/20/96____ /s/ George E. Bryan_________________(SEAL) Date George E. Bryan _8/20/96____ /s/ Charles L. Campbell_____________(SEAL) Date Charles L. Campbell _8/20/96____ /s/ Stephen W. Custer_______________(SEAL) Date Stephen W. Custer _8/20/96____ /s/ Calvin G. Germroth______________(SEAL) Date Calvin G. Germroth _8/20/96____ /s/ William H. Groseclose___________(SEAL) Date William H. Groseclose _8/20/96____ /s/ J. Craig Hott___________________(SEAL) Date J. Craig Hott _8/20/96____ /s/ Herman D. Mason_________________(SEAL) Date Herman D. Mason _8/20/96____ /s/ Chas. Wampler, Jr.______________(SEAL) Date Charles W. Wampler, Jr. _8/20/96____ /s/ William D. Wampler______________(SEAL) Date William D. Wampler _8/21/96____ /s/ Henry L. Holler_________________(SEAL) Date Henry L. Holler _8/21/96____ /s/ James L. Keeler_________________(SEAL) Date James L. Keeler _8/20/96____ /s/ James L. Mason__________________(SEAL) Date James L. Mason _8/20/96____ /s/ V. Eugene Misner________________(SEAL) Date V. Eugene Misner _8/20/96____ /s/ Robert T. Ritter________________(SEAL) Date Robert T. Ritter EX-27 19 FINANCIAL DATA SCHEDULE
5 0000760775 GAYLE S PAYNE 1000 YEAR JUN-29-1996 JUN-29-1996 724 0 80,640 708 171,946 267,679 344,269 167,578 451,121 123,058 138,510 0 0 61,407 97,603 451,121 997,632 997,632 897,892 897,892 97,324 0 9,359 (7,264) (2,610) (4,686) 0 0 0 (4,686) (.27) 0
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