Pro-Fac is a member of another cooperative that markets cherries. As a member of the cooperative, Pro-Fac has entered into a loan agreement with the cooperative that allows Pro-Fac to borrow up to $5 million, limited to the
collateral value of inventory owned by Pro-Fac and held by the cooperative, at the cooperatives cost of funds to finance costs related to the cherry inventory including purchase, packing and processing costs. At June 28, 2008, Pro-Fac had
borrowing capacity of approximately $500,000; no amounts were outstanding.
A discussion of Statement of Cash Flows for the year ended June 28, 2008 follows:
Net cash provided by operating activities was $117.0 million in fiscal year 2008 compared to cash used in operating activities of approximately $1.5 million in fiscal year 2007. The change primarily represents income from
the receipt of the $120.1 million distribution from Holdings LLC and changes in the timing of cash receipts from customers other than Birds Eye Foods and related cash payments to member-growers between fiscal year 2008 and fiscal year 2007.
Cash provided by investing activities in fiscal year 2008 was $5.5 million related to the receipt of $2.0 million from Birds Eye Foods as the final payment under the Termination Agreement and the portion of the distribution
from Holdings LLC classified as a return of capital, approximately $3.5 million. In fiscal year 2007, $8.0 million was received from Birds Eye Foods under the Termination Agreement.
Net cash used in financing activities during fiscal year 2008 included $1.0 million to repay amounts previously borrowed, $6.8 million to redeem all retained earnings allocated to members, $79.6 million to redeem all
non-cumulative preferred shares and 3,155,433 Class A cumulative preferred shares, $0.3 million to purchase and retire common shares, and $9.0 million in dividends paid. During fiscal year 2007, the Cooperative borrowed $1.0 million and paid
dividends of $5.3 million.
In January 2003, the Pro-Fac Board of Directors suspended the payment of dividends on the Cooperative's common stock for an indefinite period of time. In January 2006, the Board placed a moratorium on Pro-Facs
repurchase of shares of its common stock from its member-growers. Any repurchases by Pro-Fac of its common stock are subject to pre-approval by the Board. In the fourth quarter of fiscal 2008, the Cooperative repurchased approximately $348,000 of
common stock from its member-growers (representing approximately 56% of the common shares owned by those members) with proceeds the Cooperative received in consideration of the termination of a raw product supply agreement by a customer, due to the
customers closure of its processing plant. Payment to each member-grower was made upon receipt of a release agreement from the member-grower.
Based on Pro-Facs operations and anticipated cash flow needs, on an annual basis the Pro-Fac Board determines whether to retain a portion of CMV otherwise payable to its grower-members for working capital or other
general corporate purposes. In consideration of its sources and cash flow needs, no CMV was retained in fiscal year 2008 or 2007.
BUSINESS OUTLOOK
The following is a summary of Pro-Facs business outlook for fiscal 2009 and should be read in conjunction with the related current year discussions in the Managements Discussion and Analysis of Financial
Condition and Results of Operations section of this Report.
Since 1960, Pro-Fac has operated as an agricultural cooperative, owned and controlled by its members, to purchase, market, and sell crops grown by its member-growers, for the mutual benefit of its members. The
Cooperatives core business focus has not changed in 48 years and its current strategy is to continue its business of purchasing, marketing, and selling its member-grower crops to its customers.
One of the challenges Pro-Fac faces, which is discussed above under Liquidity and Capital Resources, is the Cooperatives source of available cash to fund its operations and pay its dividends.
Pro-Facs primary source of cash to fund its operations and pay dividends was the $10.0 million in payments it received annually under the Termination Agreement, the last installment of $2.0 million having been received in July 2007, and the
$120.1 million distribution received from Holdings LLC in July 2007. As a result, currently, Pro-Facs primary sources of cash are gross profit and margin on certain sales, interest income and annual distributions, if any, made by Holdings LLC
to Pro-Fac pursuant to the Limited Liability Company Agreement.
Holdings LLC has advised Pro-Fac that it will not speculate as to whether further distributions will be made under the Limited Liability Company Agreement. As a minority owner of Holdings LLC, Pro-Fac has no control over
the determination of whether such distributions will be made. Accordingly, Pro-Fac has been operating under a business plan that assumes no distributions will be made under the Limited Liability Agreement.
As previously announced, during the second quarter of fiscal 2009, Pro-Fac expects to redeem up to 400,000 shares of its Class A cumulative preferred stock at a price of $25.00 per share, for an aggregate redemption cost of
not more than $10.0 million and to pay dividends on its preferred stock to the date of the redemption (approximately $0.8 million).
The Board of Directors continues to periodically evaluate Pro-Facs business plan. Based upon the assumptions contained in Pro-Facs business plan, the Board currently believes that Pro-Fac has sufficient sources
of cash to fund its operations at least through the end of fiscal 2013.
11
The foregoing information may contain forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Forward looking statements may include estimates, projections and statements of the Cooperatives beliefs concerning future events, business plans, objectives, expected operating results, and the assumptions upon which those statements are
based. Please refer to the Cautionary Statement on Forward-Looking Statements and Risk Factors section of this Report for a detailed discussion regarding words used to identify such statements and factors that could cause actual results
to differ materially from those expressed or implied by such statements.
OTHER MATTERS
Indemnifications:
Historically, when Pro-Fac sold assets, it may have retained certain liabilities for known exposures and provided indemnification to the buyer(s) with
respect to future claims for certain unknown liabilities existing, or arising from events occurring, prior to the sale date, including liabilities for taxes, legal matters, environmental exposures, labor contingencies, project liability, and other
obligations. Pro-Fac may enter into similar arrangements in the future. Agreements to provide indemnifications may vary in duration, generally for two years for certain types of indemnities, to terms for tax indemnifications that are generally
aligned to the applicable statute of limitations for the jurisdiction in which the tax is imposed, and to terms for certain liabilities (i.e., warranties of title and environmental liabilities) that typically do not expire. The maximum potential
future payments that the Cooperative could be required to make under agreements of indemnification are (or may be) either contractually limited to a specified amount or unlimited. The maximum potential future payments that the Cooperative could be
required to make under agreements of indemnification are not determinable at this time, as any future payments would be dependent on the type and extent of the related claims, and all relevant defenses, which are not estimable. Historically, costs
incurred to resolve claims related to agreements of indemnification have not been material to the Cooperatives financial position, results of operations or cash flows.
From time to time, in the ordinary course of its business, Pro-Fac has, or may, enter into agreements with its customers, suppliers, service providers and business partners which contain indemnification provisions.
Generally, such indemnification provisions require the Cooperative to indemnify and hold harmless the indemnified party(ies) and to reimburse the indemnified party(ies) for claims, actions, liabilities, losses and expenses in connection with any
personal injuries or property damage resulting from any Pro-Fac products sold or services provided. Additionally, the Cooperative may from time to time agree to indemnify and hold harmless its providers of services from claims, actions, liabilities,
losses and expenses relating to their services to Pro-Fac, except to the extent finally determined to have resulted from the fault of the provider of services relating to such services. The level of conduct constituting fault of the service provider
will vary from agreement to agreement and may include conduct which is defined in terms of negligence, gross negligence, willful misconduct, omissions or other culpable behavior. The terms of these indemnification provisions are generally not
limited. The maximum potential future payments that the Cooperative could be required to make under these indemnification provisions are unlimited and are not determinable at this time, as any future payments would be dependent on the type and
extent of the related claims, and all relevant defenses to the claims, which are not estimable. Historically, costs incurred to resolve claims related to these indemnification provisions have not been material to the Cooperatives financial
position, results of operations or cash flows.
The Cooperative has by-laws, policies, and agreements under which it indemnifies its directors and officers from liability for certain events or occurrences while the directors or officers are, or were, serving at Pro-Fac's
request in such capacities. Pro-Fac indemnifies its officers and directors to the fullest extent allowed by law. The maximum potential amount of future payments that the Cooperative could be required to make under these indemnification provisions is
unlimited, but would be affected by all relevant defenses to the claims.
As part of the Transaction, Pro-Fac agreed to indemnify Birds Eye Foods for certain environmental liabilities. This obligation is only triggered once the aggregate of all liabilities subject to indemnification under the
Unit Purchase Agreement (including those unrelated to environmental matters) exceeds $10.0 million.
As of the date of this Report, Pro-Fac does not expect to be required to perform under the indemnifications described above.
Capital Expenditures
:
The Cooperative does not expect to have any material capital expenditures for the foreseeable
future.
Supplemental Information on Inflation
:
The changes in costs and prices within the Cooperatives business due to inflation
were not significantly different from inflation in the United States economy as a whole. Levels of capital investment, pricing and inventory investment were not materially affected by changes caused by inflation.
12
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA
|
Financial Statements are indexed and presented below:
INDEX TO FINANCIAL STATEMENTS
ITEM
|
|
Page
|
|
Pro-Fac Cooperative, Inc.
|
|
|
Report of Independent Registered Public Accounting Firm
|
|
14
|
Financial Statements:
|
|
|
Statements of Operations and Allocation of Net Income
|
|
|
for the years ended June 28, 2008 and June 30, 2007
|
|
15
|
Balance Sheets as of June 28, 2008 and June 30, 2007
|
|
16
|
Statements of Cash Flows for the years ended June 28, 2008 and June 30, 2007
|
|
17
|
Statements of Changes in Shareholders and Members Capitalization/(Deficit) and Redeemable and Common Stock
|
|
|
for the years ended June 28, 2008 and June 30, 2007
|
|
18
|
Notes to Financial Statements
|
|
19
|
13
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders of
Pro-Fac Cooperative, Inc.
Rochester, New York
We have audited the accompanying balance sheets of Pro-Fac Cooperative, Inc. (the Cooperative) as of June 28, 2008 and June 30, 2007, and the related statements of operations and allocation of net income, cash
flows, and changes in shareholders and members capitalization (deficit), and redeemable and common stock for the years then ended. These financial statements are the responsibility of the Cooperatives management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the Standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. The Cooperative is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Cooperatives internal control over financial
reporting. Accordingly, we express no such opinion
.
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 financial statements referred to above present fairly, in all material respects, the financial position of the Cooperative as of June 28, 2008 and June 30, 2007, and the results of its operations and its
cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.
/s/ Freed, Maxick & Battaglia, CPAs, PC.
Buffalo, New York
September 25, 2008
14
Pro-Fac Cooperative, Inc.
Statements of Operations and Allocation of Net Income
(Dollars in Thousands)
|
|
Fiscal
Years Ended
|
|
|
|
June 28,
|
|
June 30,
|
|
|
2008
|
|
2007
|
|
Net sales
|
|
$
|
1,991
|
|
|
$
|
3,643
|
|
Cost of sales
|
|
|
(1,896
|
)
|
|
|
(3,496
|
)
|
Gross profit
|
|
|
95
|
|
|
|
147
|
|
Gain from transaction with
Birds Eye Foods, Inc. and related agreements
|
|
|
1,200
|
|
|
|
4,800
|
|
Margin on delivered product
|
|
|
264
|
|
|
|
576
|
|
Selling, administrative,
and general expenses
|
|
|
(1,807
|
)
|
|
|
(1,459
|
)
|
Other income
|
|
|
76
|
|
|
|
21
|
|
Operating income/(loss)
|
|
|
(172
|
)
|
|
|
4,085
|
|
Distribution from Holdings
LLC
|
|
|
116,594
|
|
|
|
0
|
|
Contract termination receipts
|
|
|
1,381
|
|
|
|
0
|
|
Contract termination payments
|
|
|
(998
|
)
|
|
|
0
|
|
Shortfall payments
|
|
|
370
|
|
|
|
0
|
|
Investment income
|
|
|
2,577
|
|
|
|
270
|
|
Interest expense
|
|
|
(3
|
)
|
|
|
(88
|
)
|
Income before income taxes
|
|
|
119,749
|
|
|
|
4,267
|
|
Income tax benefit/(provision)
|
|
|
1,025
|
|
|
|
(761
|
)
|
Net income
|
|
$
|
120,774
|
|
|
$
|
3,506
|
|
|
Allocation of net income:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
120,774
|
|
|
$
|
3,506
|
|
Dividends on
preferred stock
|
|
|
(9,038
|
)
|
|
|
(5,278
|
)
|
Net surplus/(deficit)
|
|
|
111,736
|
|
|
|
(1,772
|
)
|
Allocation from
accumulated deficit
|
|
|
(111,736
|
)
|
|
|
1,772
|
|
Net income available
to members
|
|
$
|
0
|
|
|
$
|
0
|
|
The accompanying notes are an integral part of these financial statements.
15
Pro-Fac Cooperative, Inc.
Balance Sheets
(Dollars in Thousands except share and per share information)
ASSETS
|
|
|
|
June 28,
|
|
June 30,
|
|
|
2008
|
|
2007
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
30,397
|
|
|
$
|
4,582
|
|
Accounts receivable,
trade
|
|
|
12,702
|
|
|
|
4,499
|
|
Accounts receivable
from Birds Eye Foods, Inc.
|
|
|
6,559
|
|
|
|
11,478
|
|
Due from Farm
Fresh First, LLC
|
|
|
273
|
|
|
|
270
|
|
Income tax refund
receivable
|
|
|
1,032
|
|
|
|
0
|
|
Inventory
|
|
|
1,121
|
|
|
|
21
|
|
Prepaid expenses
and other current assets
|
|
|
86
|
|
|
|
46
|
|
Total
current assets
|
|
|
52,170
|
|
|
|
20,896
|
|
|
Fixed assets, net
|
|
|
12
|
|
|
|
13
|
|
Account receivable from Birds
Eye Foods, Inc., long-term
|
|
|
155
|
|
|
|
0
|
|
|
Investment in -
|
|
|
|
|
|
|
|
|
Birds
Eye Holdings LLC
|
|
|
0
|
|
|
|
4,324
|
|
Farm
Fresh First, LLC
|
|
|
50
|
|
|
|
50
|
|
Total
assets
|
|
$
|
52,387
|
|
|
$
|
25,283
|
|
|
LIABILITIES AND SHAREHOLDERS AND
MEMBERS CAPITALIZATION/(DEFICIT)
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
383
|
|
|
$
|
291
|
|
Income taxes
payable
|
|
|
0
|
|
|
|
415
|
|
Other accrued
expenses
|
|
|
253
|
|
|
|
32
|
|
Amounts due
members
|
|
|
21,914
|
|
|
|
18,661
|
|
Total
current liabilities
|
|
|
22,550
|
|
|
|
19,399
|
|
Long-term debt
|
|
|
0
|
|
|
|
1,088
|
|
Total
liabilities
|
|
|
22,550
|
|
|
|
20,487
|
|
|
Commitments and contingencies
(Note 6)
|
|
|
|
|
|
|
|
|
|
Common stock, par value $5,
authorized 5,000,000 shares;
|
|
|
|
|
|
|
|
|
issued and outstanding
1,700,064 and 1,769,543 shares
|
|
|
8,500
|
|
|
|
8,848
|
|
|
Shareholders and members capitalization/(deficit):
|
|
|
|
|
|
|
|
|
Retained earnings
allocated to members
|
|
|
0
|
|
|
|
6,771
|
|
Non-cumulative
preferred stock, par value $25 per share, authorized 5,000,000
|
|
|
|
|
|
|
|
|
shares;
issued and outstanding 26,312 shares
|
|
|
0
|
|
|
|
658
|
|
Class A cumulative
preferred stock, liquidation preference $25 per share;
|
|
|
|
|
|
|
|
|
authorized
10,000,000 shares; issued and outstanding 1,773,839 and
|
|
|
|
|
|
|
|
|
4,929,272
shares
|
|
|
44,346
|
|
|
|
123,233
|
|
Accumulated
deficit
|
|
|
(44,742
|
)
|
|
|
(156,447
|
)
|
Special membership
interests
|
|
|
21,733
|
|
|
|
21,733
|
|
Total
shareholders and members capitalization/(deficit)
|
|
|
21,337
|
|
|
|
(4,052
|
)
|
Total
liabilities and capitalization
|
|
$
|
52,387
|
|
|
$
|
25,283
|
|
|
The accompanying notes are
an integral part of these financial statements.
|
|
|
|
|
|
|
|
|
16
Pro-Fac Cooperative, Inc.
Statements of Cash Flows
(Dollars in Thousands)
|
|
Fiscal
Years Ended
|
|
|
|
June 28,
|
|
June 30,
|
|
|
2008
|
|
2007
|
|
Cash Flows from Operating
Activities:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
120,774
|
|
|
$
|
3,506
|
|
Adjustments
to reconcile net income to net cash provided by/(used in)
|
|
|
|
|
|
|
|
|
operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
5
|
|
|
|
3
|
|
Gain
from transaction with Birds Eye Foods, Inc. and related agreements
|
|
|
(1,200
|
)
|
|
|
(4,800
|
)
|
Change
in assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(3,442
|
)
|
|
|
(6,846
|
)
|
Inventory
|
|
|
(1,100
|
)
|
|
|
207
|
|
Income
taxes
|
|
|
(1,447
|
)
|
|
|
85
|
|
Accounts
payable and accrued expenses
|
|
|
225
|
|
|
|
293
|
|
Amounts
due members
|
|
|
3,253
|
|
|
|
6,090
|
|
Other
assets and liabilities
|
|
|
(40
|
)
|
|
|
(19
|
)
|
Net cash provided by/(used
in) operating activities
|
|
|
117,028
|
|
|
|
(1,481
|
)
|
|
Cash Flows from Investing
Activities:
|
|
|
|
|
|
|
|
|
Proceeds from
Termination Agreement with Birds Eye Foods, Inc.
|
|
|
2,000
|
|
|
|
8,000
|
|
Purchase of
property, plant and equipment
|
|
|
(4
|
)
|
|
|
0
|
|
Investment in
Farm Fresh First, LLC
|
|
|
0
|
|
|
|
(50
|
)
|
Distribution
from Holdings LLC classified as a return of capital
|
|
|
3,524
|
|
|
|
0
|
|
Net cash provided by investing
activities
|
|
|
5,520
|
|
|
|
7,950
|
|
|
Cash Flows from Financing
Activities:
|
|
|
|
|
|
|
|
|
Proceeds from
(repayment of) Credit Facility with Birds Eye Foods, Inc.
|
|
|
(1,000
|
)
|
|
|
1,000
|
|
Redemption of
retained earnings allocated to members
|
|
|
(6,771
|
)
|
|
|
0
|
|
Redemption of
preferred stock
|
|
|
(79,576
|
)
|
|
|
0
|
|
Repurchase of
common stock
|
|
|
(348
|
)
|
|
|
0
|
|
Cash dividends
paid
|
|
|
(9,038
|
)
|
|
|
(5,278
|
)
|
Net cash used in financing
activities
|
|
|
(96,733
|
)
|
|
|
(4,278
|
)
|
|
Net change in cash and cash
equivalents
|
|
|
25,815
|
|
|
|
2,191
|
|
Cash and cash equivalents
at beginning of period
|
|
|
4,582
|
|
|
|
2,391
|
|
Cash and cash equivalents
at end of period
|
|
$
|
30,397
|
|
|
$
|
4,582
|
|
|
Supplemental disclosure of
cash flow information:
|
|
|
|
|
|
|
|
|
Cash paid during
the year for:
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
0
|
|
|
$
|
0
|
|
Income
taxes, net
|
|
$
|
422
|
|
|
$
|
676
|
|
|
Non-cash investing and financing
activities:
|
|
|
|
|
|
|
|
|
Increase in
investment in Birds Eye Holdings LLC for reversal of
|
|
|
|
|
|
|
|
|
accumulated
comprehensive income/(loss) due to loss of significant influence
|
|
$
|
0
|
|
|
$
|
5,582
|
|
The accompanying notes are an integral part of these financial statements.
17
Pro-Fac Cooperative, Inc.
Statements of Changes in Shareholders and Members Capitalization/(Deficit) and Redeemable and Common Stock
(Dollars in Thousands)
|
|
Fiscal
Years Ended
|
|
|
|
June 28,
|
|
June 30,
|
|
|
2008
|
|
2007
|
|
Retained earnings allocated
to members:
|
|
|
|
|
|
|
|
|
Qualified retains:
|
|
|
|
|
|
|
|
|
Balance at beginning
of period
|
|
$
|
6,771
|
|
|
$
|
6,771
|
|
Redeemed
|
|
|
(6,771
|
)
|
|
|
0
|
|
Balance at end
of period
|
|
$
|
0
|
|
|
$
|
6,771
|
|
|
Non-cumulative preferred
stock:
|
|
|
|
|
|
|
|
|
Balance at beginning
of period
|
|
$
|
658
|
|
|
$
|
658
|
|
Repurchased
and cancelled
|
|
|
(658
|
)
|
|
|
0
|
|
Balance at end
of period
|
|
$
|
0
|
|
|
$
|
658
|
|
|
Class A cumulative preferred
stock:
|
|
|
|
|
|
|
|
|
Balance at beginning
of period
|
|
$
|
123,233
|
|
|
$
|
123,233
|
|
Repurchased
and cancelled
|
|
|
(78,887
|
)
|
|
|
0
|
|
Balance at end
of period
|
|
$
|
44,346
|
|
|
$
|
123,233
|
|
|
Accumulated deficit:
|
|
|
|
|
|
|
|
|
Balance at beginning
of period
|
|
$
|
(156,447
|
)
|
|
$
|
(154,675
|
)
|
Allocation to/(from)
accumulated deficit
|
|
|
111,736
|
|
|
|
(1,772
|
)
|
Costs related
to redemption of preferred stock
|
|
|
(31
|
)
|
|
|
0
|
|
Balance at end
of period
|
|
$
|
(44,742
|
)
|
|
$
|
(156,447
|
)
|
|
Special membership interests:
|
|
|
|
|
|
|
|
|
Balance at beginning
of period
|
|
$
|
21,733
|
|
|
$
|
21,733
|
|
Balance at end
of period
|
|
$
|
21,733
|
|
|
$
|
21,733
|
|
|
Total shareholders and
members capitalization/(deficit)
|
|
$
|
21,337
|
|
|
$
|
(4,052
|
)
|
|
Common stock:
|
|
|
|
|
|
|
|
|
Balance at beginning
of period
|
|
$
|
8,848
|
|
|
$
|
8,848
|
|
Repurchased
and cancelled
|
|
|
(348
|
)
|
|
|
0
|
|
Balance at end
of period
|
|
$
|
8,500
|
|
|
$
|
8,848
|
|
|
The accompanying notes are
an integral part of these financial statements.
|
|
|
|
|
|
|
|
|
18
PRO-FAC COOPERATIVE, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Pro-Fac Cooperative, Inc. ("Pro-Fac" or the "Cooperative"), is a New York agricultural cooperative which markets crops grown by its members. Birds Eye Foods, Inc. (Birds Eye Foods), until August 19, 2002, was a
wholly-owned subsidiary of Pro-Fac. Pro-Fac continues to have an indirect ownership in Birds Eye Foods and Birds Eye Foods remains a significant customer of Pro-Fac.
The CMV of crops delivered by Pro-Fac was approximately $76.9 million (unaudited) and $74.1 million (unaudited) for the fiscal years ended June 28, 2008 and June 30, 2007, respectively. For the fiscal years ended June 28,
2008 and June 30, 2007, approximately 29 percent and 84 percent, respectively, of the crops purchased by Pro-Fac from its members were sold to Birds Eye Foods pursuant to the Amended and Restated Marketing and Facilitation Agreement. On December 21,
2006, Birds Eye Foods sold substantially all of the operating assets of its non-branded frozen vegetable business to Allens, Inc. (Allens), including its processing facilities located in Oakfield and Bergen, New York. As part of the
transaction, Birds Eye Foods assigned to Allens, Inc. the portion of the Amended and Restated Marketing and Facilitation Agreement related to those crops processed in the New York facilities. Pro-Fac subsequently entered into a new raw project
supply agreement with Allens, which continues through the 2011 growing season. For the years ended June 28, 2008 and June 30, 2007, the CMV of crops delivered to Allens, Inc. was approximately $35.3 million (unaudited) and $1.8 million (unaudited),
respectively, which represented 48 percent and 3 percent, respectively, of crops purchased by Pro-Fac from its members and sold to customers. Accounts receivable from Allens were $10.3 million and $1.8 million at June 28, 2008 and June 30, 2007,
respectively.
On August 19, 2002, pursuant to the terms of the Unit Purchase Agreement dated as of June 20, 2002 (the Unit Purchase Agreement), by and among Pro-Fac, Birds Eye Foods and Vestar/Agrilink Holdings LLC, a
Delaware limited liability company, Vestar/Agrilink Holdings, LLC and certain co-investors (collectively, Vestar) acquired indirect control of Birds Eye Foods (the Transaction).
Upon consummation of the Transaction, Vestar acquired Class A common units and Pro-Fac acquired Class B common units in Birds Eye Holdings LLC (Holdings LLC), a Delaware limited liability company and the sole
stockholder of Birds Eye Holdings Inc. (Holdings Inc.), a Delaware corporation and the sole stockholder of Birds Eye Foods. The Class A common units entitle Vestar to two votes for each Class A common unit held. All other Holdings LLC common units
entitle the holder(s) thereof to one vote for each common unit held. Vestar has a voting majority of all common units.
For additional information about the Transaction, including resulting agreements, see below and "NOTE 2. Agreements with Birds Eye Foods " under these "Notes to Condensed Financial Statements".
Limited Liability Company Agreement of Holdings LLC
:
Pro-Fac and Vestar, together with others, are parties to a limited
liability company agreement dated August 19, 2002 (as amended from time to time, the Limited Liability Company Agreement) that contains terms and conditions relating to the management of Holdings LLC and its subsidiaries (including Birds
Eye Foods), the distribution of profits and losses and the rights and limitations of members of Holdings LLC. The Limited Liability Company Agreement provides, among other things, that Holdings LLCs distributable assets, which include cash
receipts from operations, investing and financing, net of expenses, will be distributed to Holdings LLCs members as determined by Holdings LLCs management committee. In general, those distributable assets are distributable first to
holders of preferred units and then to holders of common units. As of June 28, 2008, Pro-Fac owned approximately 40.0 percent of the common equity of Holdings LLC through its ownership of 321,429 Class B common units. Vestar owns 100.0 percent of
the Class A common units; Vestar has a voting majority of all common units. As of June 28, 2008, Holdings LLC had no preferred units issued and outstanding.
The Limited Liability Company Agreement further provides that, subject to restrictions contained in any financing arrangements of Holdings LLC or its subsidiaries (including Birds Eye Foods), after August 19, 2007 and prior
to a sale (or dissolution) of Holdings LLC, Holdings LLC will use commercially reasonable efforts to cause Birds Eye Foods to distribute annually to Holdings LLC up to $24.8 million of cash flow from the operations of Birds Eye Foods, which Holdings
LLC will then distribute to the holders of its common units. Under the Limited Liability Company Agreement, Holdings LLC is only required to provide Pro-Fac with annual financial statements of Holdings LLC within 120 days after the close of a fiscal
year and to provide financial statements of Birds Eye Foods to the extent received. Any financial information received is subject to confidentiality provisions that preclude public disclosure.
19
Further, under the Limited Liability Company Agreement, the management committee of Holdings LLC is authorized to issue up to 16,000 Class C common units and up to 16,000 Class D common units. The Limited Liability Company
Agreement further provides that the holders of a majority of the total voting power of the outstanding Class A, Class B and Class E common units can cause Holdings LLC to create and issue additional units, provided no such issuance would adversely
affect the relative economic rights of the holders of Class A, Class B, Class C and Class D common units and further subject to the amendment provisions of the Limited Liability Company Agreement. The Limited Liability Company Agreement provides,
in part, that the management committee of Holdings LLC can amend the Limited Liability Company Agreement to provide for the issuance of any other type of preferred unit, whether of an existing or new class, and to provide for the issuance of any
other class of units or other securities, with the consent of each unit holder, if any, who would be adversely affected by such issuance as to any such unit holder's limited liability or as to the alteration of any such unit holder's rights to
receive allocations or distributions unless such alterations of rights are in connection with a debt or equity financing, a restructuring, a recapitalization or other transaction in which Holdings LLC will receive an investment or contribution to
its capital or in connection with the issuance of equity to employees or directors of Holdings LLC, its subsidiaries or to third party lenders. The issuance of additional common units will reduce the percentage ownership of the current holders of
common units in Holdings LLC, including Pro-Fac.
Securityholders Agreement
:
Holdings LLC, Pro-Fac and Vestar, together with others entered into a securityholders agreement dated
August 19, 2002 (as amended from time to time, the Securityholders Agreement) containing terms and conditions relating to the transfer of membership interests in and the management of Holdings LLC. Among other things, the
Securityholders Agreement includes a voting agreement pursuant to which the holders of common units agree to vote their common units to elect or cause to be elected to the respective management committees or boards of directors of Holdings LLC,
Holdings, Inc. and Birds Eye Foods: (i) those individuals designated by Vestar to serve as members/directors, which shall represent the majority of such individuals to serve in such capacities, and by Pro-Fac, which shall designate two
members/directors, and (ii) the chief executive officer of Birds Eye Foods who shall serve as a member/director.
The voting agreement further provides that the holders of common units shall vote their common units as directed by Vestar with respect to the approval of any amendment(s) to the Limited Liability Company Agreement, the
merger, unit exchange, combination or consolidation of Holdings LLC, the sale, lease or exchange of all or substantially all of the property and assets of Holdings LLC and its subsidiaries, including Birds Eye Foods, and the reorganization,
recapitalization, liquidation, dissolution or winding-up of Holdings LLC, provided such action is not inconsistent with the Limited Liability Company Agreement or the Securityholders Agreement, and further provided such action shall not have a
material adverse effect on a unit holder that would be borne disproportionately by such unit holder.
The Securityholders Agreement also provides:
-
Pro-Fac and management investors with "tag-along" rights in connection with certain transfers of Holdings LLC units by
Vestar;
-
Vestar with "take-along" rights to require Pro-Fac and management investors to consent to a proposed sale of Holdings
LLC; and
-
Pro-Fac and Vestar with demand registration rights in securities of a subsidiary of Holdings LLC, including Birds Eye
Foods, which are acquired by them through a distribution by Holdings LLC
of such securities in exchange for their
respective units in Holdings LLC, such distributed securities being "Registrable Securities", and other unit holders,
including management
investors with incidental registration rights in the Registrable Securities owned by such unit holders.
The Securityholders Agreement provides Pro-Fac and management investors certain pre-emptive rights with respect to new securities of Holdings LLC or any of its subsidiaries proposed to be issued to Vestar or any affiliate
of Vestar. Further, Vestar has the right to amend or modify the Securityholders Agreement without the consent of Pro-Fac or any other unit holder if the amendment cannot reasonably be expected to have a material adverse effect on a unit holder that
would be borne disproportionately by such unit holder or the amendment does not adversely affect any unit holder or Holdings LLC in any material respect and it is in connection with a change that cures any ambiguity or corrects or supplements a
provision of the Securityholders Agreement.
Accounting Estimates
:
The accompanying financial statements have been prepared in accordance with accounting principles
generally accepted in the United States of America (GAAP) which requires management 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
Fiscal Year
:
The fiscal year of Pro-Fac ends on the last Saturday in June. Fiscal year 2008 comprised 52 weeks. Fiscal year 2007
comprised 53 weeks.
20
Reclassification
:
Prior year information is reclassified whenever necessary to conform to the current years
presentation.
Cash and Cash Equivalents
:
Cash and cash equivalents include short-term
investments, including money market accounts and commercial paper, with original maturities of three months or less. The Cooperative maintains its cash and cash equivalents in accounts, which, at times, may exceed federally insured limits or may
not be federally insured. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk with respect to cash and cash equivalents.
Cash and cash equivalents
consisted of:
|
|
|
|
|
|
|
|
|
June 28,
|
|
June 30,
|
(Dollars in Thousands)
|
|
2008
|
|
2007
|
|
Checking
accounts
|
|
$
|
4,149
|
|
$
|
4,582
|
Money
market accounts
|
|
|
26,248
|
|
|
0
|
|
|
|
$
|
30,397
|
|
$
|
4,582
|
Accounts Receivable, Trade
:
The Cooperative provides credit in the normal course of business to the majority of its
third-party customers. The Cooperative performs periodic credit evaluations of its customers financial condition and generally does not require collateral. When necessary, the Cooperative maintains allowances for doubtful customer accounts for
estimated losses resulting from the inability of its customers to make required payments based on prior experience. There was no allowance for doubtful accounts at June 28, 2008 or June 30, 2007.
Inventory
:
The Cooperative supplies cherries to another cooperative that markets the cherries. Title remains with Pro-Fac
until the inventory is sold to third parties. Inventory and an equal amount due member-growers is recorded at the lower of estimated cost or market value. The Cooperative also holds minor amounts of other commodities as inventory.
Fixed Assets, Net
:
Fixed assets, which consist of office and computer equipment, are recorded at cost. Depreciation is
provided using the straight-line method over the estimated useful lives of the related assets, which range from five to seven years.
Investment in Birds Eye Holdings, LLC
:
The Cooperative accounts for its investment in Holdings LLC under the cost method
of accounting. Under the cost method, the Cooperatives share of earnings or losses is not included in the Cooperatives balance sheet or statement of operations and the Cooperative does not record its proportionate share of other
comprehensive income and loss items of Holdings LLC. As a result of the $120.1 million distribution received from Holdings LLC during the first quarter of fiscal year 2008, Pro-Facs recorded investment in Holdings LLC was reduced to zero.
However, Pro-Fac continues to own an approximately 40% interest in Holdings LLC through its ownership of Class B common units.
Investment in Farm Fresh First, LLC
:
Pro-Fac owns a 5.55% membership interest in Farm Fresh First, LLC (Farm
Fresh) and has entered into an agricultural services agreement with Farm Fresh. Under the services agreement, Farm Fresh provides Pro-Fac with agricultural and administrative services and acts as Pro-Facs exclusive sales agent for the
sale of agricultural products grown by Pro-Fac member-growers located in New York State, which are not subject to existing supply agreements. Certain members of Pro-Fac own the majority of the membership interests of Farm Fresh either directly or
indirectly through entities owned or controlled by them, including three members of Pro-Facs Board of Directors who own their interests indirectly through affiliated entities and who serve as directors on the Farm Fresh board of directors.
Pro-Fac accounts for this investment using the cost method. Accordingly, distributions of earnings are reported as income and distributions that represent a return of capital reduce the carrying value of the related investment. Pro-Fac received
$20,000 in distributions from Farm Fresh in fiscal year 2008, which was reported as other income. No distributions were received from Farm Fresh in fiscal year 2007.
21
Revenue Recognition
:
Under the provisions of Emerging Issues Task Force Issue No. 99-19, "Reporting Revenue Gross as a
Principal Versus Net as an Agent", the Cooperative records activity among Birds Eye Foods and other customers, itself, and its members on a net basis. For transactions in which the Cooperative acts as a principal rather than an agent, sales and cost
of sales are reported.
Margin on Delivered Product
:
The Cooperative negotiates certain sales transactions on behalf of its members which result in
margin being earned by the Cooperative.
Commercial Market Value Adjustment
:
Pro-Facs bylaws permit its Board of Directors to reduce amounts paid to its members for
product delivered by its members through Pro-Fac as necessary to fund the operations of Pro-Fac and to establish reserves as the Board of Directors deems fair and reasonable. No amount was withheld in fiscal year 2008 or 2007.
Gain from Transaction with Birds Eye Foods, Inc and Related Agreements
:
In connection with the Transaction, Pro-Fac and
Birds Eye Foods entered into a termination agreement (the Termination Agreement), pursuant to which the 1994 marketing and facilitation agreement between Pro-Fac and Birds Eye Foods was terminated, and in consideration of such
termination, Pro-Fac was entitled to the payment of a termination fee of $10.0 million per year for five years with the last $2.0 million installment received in July 2007.
Payments under the Termination Agreement were considered additional consideration related to the Transaction. Accordingly, the portion of the payments received under the Termination Agreement representing Pro-Facs
continuing ownership percentage was recorded as an adjustment to Pro-Facs investment in Holdings LLC. The remaining portion of the payments was recognized as additional gain on the Transaction with Birds Eye Foods in the period it was
received. Accordingly, in fiscal 2008 and 2007, Pro-Fac recognized approximately $1.2 million and $4.8 million, respectively, as additional gain from the receipt of the termination payments.
Distribution
from Holdings LLC
:
During the first quarter of 2008, Pro-Fac received a distribution of approximately $120.1 million from Holdings LLC under the Limited
Liability Agreement dated August 19, 2002 with Vestar (as amended from time to time, the Limited Liability Agreement). In accordance with the cost method of accounting for the investment in Holdings LLC, distributions of earnings are
reported as income and distributions that represent a return of capital reduce the carrying value of the related investment. The portion of the distribution representing a return of capital exceeded the carrying value of the investment resulting in
Pro-Fac reducing its investment in Holdings LLC by $3.5 million to zero with the remaining $116.6 million of the distribution recorded as income.
Contract Termination Receipts and Payments
:
During fiscal year 2008, Pro-Fac was notified that, due to closure of a
processing plant by a customer, the customer would no longer be purchasing product specified under the terms of a raw product supply agreement. On April 14, 2008, Pro-Fac entered into a settlement agreement and release with the customer. In
consideration of the termination of the raw product supply agreement, Pro-Fac received a payment of approximately $1.4 million.
Subsequently, Pro-Fac agreed to make contract termination payments totaling approximately $1.0 million to member-growers who would no longer be supplying raw product to the customer. Pro-Fac also redeemed approximately
$348,000 of common stock of those member-growers representing approximately 56% of shares owned by those members.
Shortfall Payments
:
Under the Amended and Restated Marketing and Facilitation Agreement, Birds Eye Foods determines the
amount of crops which it will acquire from Pro-Fac for each crop year. If the amount to be purchased by Birds Eye Foods during a particular crop year does not meet (i) a defined crop amount and (ii) a defined target percentage of Birds Eye
Foods needs for each particular crop, then certain shortfall payments will be made by Birds Eye Foods to Pro-Fac. The defined crop amounts and targeted percentages were set based upon the needs of Birds Eye Foods in the 2002 crop year (fiscal
2003). The shortfall payment provisions include a maximum shortfall payment for each crop. During fiscal year 2008, Pro-Fac ascertained that Birds Eye Foods had not met purchasing targets for two crops. As a result, Pro-Fac expects to receive a
total of $370,000 in shortfall payments; $215,000 in fiscal year 2009 and $155, 000 in fiscal year 2010.
Distributions of Patronage Income
:
The Cooperatives bylaws require it to pay or allocate each members pro rata
share of patronage income within 8 1/2 months after the end of the Cooperatives fiscal year unless the Cooperatives Board of Directors takes action in accordance with its bylaws to withhold all or a portion of patronage income.
Patronage income equals gross receipts derived from sources that, under law, qualify as patronage income less expenses attributable to the production of patronage income including operating expenses and dividends on capital
stock, all as determined for federal income tax purposes.
The Pro-Fac Board of Directors determined that there would be no payment or allocation of patronage proceeds for fiscal year 2008 or 2007.
22
Income Taxes
:
The Cooperative qualifies for tax exempt status as a farmers cooperative under Section 521 of the Internal
Revenue Code. Exempt cooperatives are permitted to reduce or eliminate taxable income through the use of special deductions such as dividends paid on its common and preferred stock and distributions of patronage income.
The Cooperative uses these special deductions and distributions of patronage income to reduce the Cooperative's taxable income for periods after August 19, 2002. The Pro-Fac Board of Directors determined that there would be
no payment or allocation of patronage income for the fiscal years ended June 28, 2008 or June 30, 2007.
The Cooperative intends to surrender its tax exempt status effective for fiscal year 2009. This action is not expected to have a material impact on Pro-Facs operations or income tax liabilities.
A deferred income tax asset has not been recognized on the excess of the tax basis over the recorded financial statement value of the investment in Holdings LLC of approximately $76.4 million. This asset would only be
realized upon the sale of the investment based on the proceeds received or receipt of a distribution representing a return of capital, which was not considered probable at June 28, 2008 or June 30, 2007. During fiscal year 2008, Pro-Fac received a
$120.1 million distribution from Holdings LLC. Approximately $10.1 million of the distribution is expected to be a taxable dividend. This amount is $106.5 million less than the amount reported as income for financial statement purposes, resulting in
a reduction of the excess of tax basis over the recorded financial statement basis in Pro-Facs investment in Holdings LLC. The remaining amount of the distribution represents a return of capital. Pro-Fac could not reasonably estimate this
allocation at June 30, 2007. Because the distribution occurred subsequent to June 30, 2007, and because the portion of the distribution representing a return of capital could not be reasonably estimated, no deferred tax asset related to the portion
of the distribution which may represent a return of capital was recorded at June 30, 2007.
Earnings Per Share Data Omitted
:
Earnings per share amounts are not presented because earnings are not distributed to members in
proportion to their common stock holdings. Earnings (representing those earnings derived from patronage-sourced business) are distributed to members in proportion to the dollar value of deliveries under Pro-Fac contracts rather than based on the
number of shares of common stock held.
Disclosures About Fair Value of Financial Instruments
:
The following methods and assumptions were used by the Cooperative in
estimating its fair value disclosures for financial instruments:
Cash and Cash Equivalents, Accounts Receivable and Accounts Payable:
The carrying amount approximates fair value because of the short maturity of these instruments.
Long-Term Debt:
The carrying amount approximates fair value of the long-term debt based on the estimated market prices for the same or similar issues. For additional
information about Long-Term Debt, see Note 3. Long Term Debt under these Notes to Financial Statements.
New Accounting Pronouncements:
In September 2006, the Financial Accounting Standards Board (FASB) issued Statement No. 157, Fair Value
Measurements (FAS 157), which addresses how companies should measure fair value when they are required to use a fair value measure for recognition or disclosure purposes under generally accepted accounting principles
(GAAP). As a result of FAS 157, there is now a common definition of fair value to be used throughout GAAP, which is expected to make the measurement of fair value more consistent and comparable. The Cooperative must adopt FAS 157 in
fiscal 2009, but has not yet begun to evaluate the effects, if any, of adoption on its financial statements.
In July 2006, the FASB released FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109 (FIN 48). FIN 48 prescribes a comprehensive model
for the financial statement recognition, measurement, presentation and disclosure of income tax uncertainties with respect to positions taken or expected to be taken in income tax returns. The Cooperative adopted FIN 48 in the first quarter of
fiscal 2008. Adoption of FIN 48 had no material impact on the Cooperatives financial statements.
In February 2007, Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and Financial Liabilities Including an Amendment of FASB Statement No. 115, (FAS
159), was issued. This standard allows a company to irrevocably elect fair value as the initial and subsequent measurement attribute for certain financial assets and financial liabilities on a contract-by-contract basis, with changes in fair
value recognized in earnings. The Cooperative may adopt the provisions of FAS 159 in fiscal 2009, but has not yet begun to evaluate the effects, if any, of adoption in its financial statements.
NOTE 2. AGREEMENTS WITH BIRDS EYE FOODS
In connection with the Transaction, Birds Eye Foods and Pro-Fac entered into several agreements effective as of August 19, 2002, including the following:
Termination
Agreement
:
Pro-Fac and Birds Eye Foods entered into the Termination Agreement, pursuant to which, among other things, the 1994 marketing and facilitation
agreement between Pro-Fac and Birds Eye Foods was terminated and, in consideration of such termination, Birds Eye Foods agreed to pay Pro-Fac a termination fee of $10.0 million per year for five years. The last $2.0 million installment was received
on July 3, 2007.
23
Amended and Restated Marketing and Facilitation Agreement:
Birds Eye Foods, a significant Pro-Fac customer, buys mainly fruits from Pro-Fac pursuant to the terms of the
Amended and Restated Marketing and Facilitation Agreement dated August 19, 2002, between Pro-Fac and Birds Eye Foods. Birds Eye Foods pays Pro-Fac the CMV of the crops supplied Birds Eye Foods in installments corresponding to the dates payment is
made by Pro-Fac to its members for the delivered crops. Birds Eye Foods also provides Pro-Fac services under the Amended and Restated Marketing and Facilitation Agreement relating to planning, consulting, sourcing and harvesting crops from Pro-Fac
members.
Under the Amended and Restated Marketing and Facilitation Agreement, Birds Eye Foods determines the amount of crops, which it will acquire from Pro-Fac for each crop year. If the amount to be purchased by Birds Eye Foods
during a particular crop year does not meet (i) a defined crop amount and (ii) a defined target percentage of Birds Eye Foods' needs for each particular crop, then certain shortfall payments will be made by Birds Eye Foods to Pro-Fac. The defined
crop amounts and targeted percentages were set based upon the needs of Birds Eye Foods in the 2002 crop year (fiscal 2003). The shortfall payment provisions include a maximum shortfall payment for each crop. The aggregate shortfall payment amounts
for all crops covered under the agreement cannot exceed $10.0 million over the term of the agreement.
Unless terminated earlier, the Amended and Restated Marketing and Facilitation Agreement will continue in effect until August 19, 2012. Birds Eye Foods may terminate the Amended and Restated Marketing and Facilitation
Agreement prior to August 19, 2012 upon the occurrence of certain events, including in connection with a change in control transaction affecting Birds Eye Foods or Holdings Inc.
NOTE 3. LONG-TERM DEBT
Credit Agreement
: Birds Eye Foods and Pro-Fac entered into a credit agreement, dated August 19, 2002, which was amended on March 28, 2007, (the Credit
Agreement), pursuant to which Birds Eye Foods agreed to make available to Pro-Fac loans in an aggregate principal amount of up to $5.0 million (the Credit Facility). The maximum amount was reduced by $1.0 million per year, if not
borrowed. The Credit Agreement expired on November 20, 2007. At June 30, 2007, Pro-Fac owed $1.1 million, including accrued interest at 10 percent. Pro-Fac repaid this amount in fiscal year 2008.
Lines of Credit:
The Cooperative may borrow up to $2.0 million from M&T Bank under the terms of the M&T Line of Credit. As of June 28, 2008 and June 30, 2007, no
amount was outstanding under the M&T Line of Credit. Principal amounts borrowed bear interest at 75 basis points above the prime rate (prime rate was 5 percent at June 28, 2008) in effect on the day proceeds are disbursed, as announced by
M&T Bank, as its prime rate of interest. Interest is payable monthly. Amounts extended under the M&T Line of Credit are required to be repaid in full during each year by July 15, with further borrowings prohibited for a minimum of 60
consecutive days after such repayment. The Cooperative's obligations under the M&T Line of Credit are secured by a security interest granted to M&T Bank in substantially all of the assets of the Cooperative, excluding its Class B common
units owned in Holdings LLC. However, the collateral does include any distributions made in respect of the Class B common units and cash payments made by Birds Eye Foods to the Cooperative.
Pro-Fac is a member of another cooperative that markets cherries. As a member of the cooperative, Pro-Fac has entered into a loan agreement with the cooperative that allows Pro-Fac to borrow up to $5 million, limited to the
collateral value of inventory owned by Pro-Fac held by the cooperative, at the cooperatives cost of funds to finance costs related to the cherry inventory including purchase, packing and processing costs. At June 28, 2008, Pro-Fac had
borrowing capacity of approximately $500,000; no amounts were outstanding.
NOTE 4. INCOME TAXES
The Cooperative qualifies for tax exempt status as a farmers cooperative under Section 521 of the Internal Revenue Code. Exempt cooperatives are permitted to reduce or eliminate taxable income through the use of
special deductions such as dividends paid on its common and preferred stock and distributions of patronage income.
The Cooperative uses these special deductions and distributions of patronage income to reduce the Cooperative's taxable income for periods after August 19, 2002. The Pro-Fac Board of Directors determined that there would be
no payment or allocation of patronage income for the fiscal years ended June 28, 2008 or June 30, 2007.
The Cooperative adopted the provisions of FIN 48 in the first quarter of fiscal year 2008. Adoption of FIN 48 had no material impact on the Cooperatives financial statements.
Interest and penalties related to income taxes, if any, are classified as income tax expense in the Cooperatives financial statements. No interest or material penalties are included in income taxes for the years ended
June 28, 2008 or June 30, 2007. Tax returns for all years after fiscal year 2004 are subject to future examination by tax authorities.
24
The Cooperatives tax provision differs from the expected tax computed by applying the U.S. Federal corporation income tax rate of 34% to pretax income/(loss) before dividends and allocation of
income/(loss) as follows:
|
|
Fiscal
Year Ended
|
(Dollars in Thousands)
|
|
June 28,
|
|
June 30,
|
|
|
2008
|
|
2007
|
|
Computed expected tax
|
|
$
|
40,715
|
|
|
$
|
1,451
|
|
Termination payments
|
|
|
272
|
|
|
|
1,088
|
|
Distribution offset against
investment account
|
|
|
1,198
|
|
|
|
0
|
|
Non-taxable portion of distribution
|
|
|
(37,400
|
)
|
|
|
0
|
|
Effect of dividends received
deduction
|
|
|
(2,747
|
)
|
|
|
0
|
|
Dividends paid
|
|
|
(3,073
|
)
|
|
|
(1,794
|
)
|
Other
|
|
|
10
|
|
|
|
16
|
|
|
|
|
$
|
(1,025
|
)
|
|
$
|
761
|
|
|
|
|
|
|
|
|
|
|
NOTE 5. COMMON STOCK AND CAPITALIZATION
The following table illustrates the Cooperatives shares authorized, issued, and outstanding at June 28, 2008 and June 30, 2007.
|
|
Par
|
|
Shares
|
|
Shares
Issued and Outstanding
|
|
|
Value
|
|
Authorized
|
|
June
28, 2008
|
|
June
30, 2007
|
|
Common Stock
|
|
$
|
5.00
|
|
5,000,000
|
|
1,700,064
|
|
1,769,543
|
Non-Cumulative Preferred
Stock
|
|
$
|
25.00
|
|
5,000,000
|
|
0
|
|
26,312
|
Class A Cumulative Preferred
Stock
|
|
$
|
1.00
|
|
10,000,000
|
|
1,773,839
|
|
4,929,272
|
Class B Cumulative Preferred
Stock
|
|
$
|
1.00
|
|
9,500,000
|
|
0
|
|
0
|
Class C Cumulative Preferred
Stock
|
|
$
|
1.00
|
|
10,000,000
|
|
0
|
|
0
|
Class D Cumulative Preferred
Stock
|
|
$
|
1.00
|
|
10,000,000
|
|
0
|
|
0
|
Class E Cumulative Preferred
Stock
|
|
$
|
1.00
|
|
10,000,000
|
|
0
|
|
0
|
Class B, Series I 10% Cumulative
Redeemable
|
|
|
|
|
|
|
|
|
|
Preferred
Stock
|
|
$
|
1.00
|
|
500,000
|
|
0
|
|
0
|
In the event of liquidation, the relative preference of Pro-Facs outstanding securities is as follows: first retains, then cumulated dividends on the Cooperatives Class A cumulative preferred stock, then all
classes of preferred stock, pari passu, then common stock and, finally, special membership interests.
During the quarter ended December 29, 2007, the Cooperative redeemed and cancelled all non-cumulative preferred shares at a cost of approximately $0.7 million and 3,155,433 Class A cumulative preferred shares at a cost of
approximately $78.9 million. Transaction costs were approximately $31,000.
While the Cooperative presently has no plans to liquidate, if liquidation were to occur, the order of redemption and the amount required to fully redeem each class outstanding, at June 28, 2008, is as follows:
|
Amount Required
|
(Dollars in Thousands)
|
to Fully Redeem
|
|
Class A Cumulative Preferred Stock
|
|
$
|
44,346
|
Common Stock
|
|
|
8,500
|
Special Membership Interests
|
|
|
21,733
|
|
|
|
$
|
74,579
|
Retained Earnings Allocated to Members (Retains)
:
Retains arise from patronage income and are allocated to the
accounts of members within 8 1/2 months of the end of each fiscal year. For fiscal years 2008 and 2007, no patronage income was retained. Qualified retains are taxable income to the member in the year the allocation is made.
During the first quarter of fiscal year 2008, the Cooperative redeemed all outstanding retains for approximately $6.8 million using proceeds of the $120.1 distribution received in July 2007 from Holdings LLC.
25
Preferred Stock
:
All preferred stock outstanding originated, directly or indirectly, from the conversion at par value of retains
at the discretion of Pro-Facs Board of Directors. Preferred stock is generally non-voting, except that the holders of preferred stock are entitled to vote on those matters specifically required by law.
Pro-Facs Class A cumulative preferred stock is listed under the symbol PFACP on the Nasdaq Capital Market and has a dividend rate of $1.72 per share annually, payable in four quarterly installments of $.43 per share;
cumulative, if not paid.
During fiscal year 2008, Pro-Fac paid cash dividends totaling $9.1 million on the non-cumulative and Class A cumulative preferred stock, representing $3.3 million of accumulated dividends and $5.8 million of dividends for
the year ended June 28, 2008.
The Cooperatives ability to pay dividends is dependent upon available cash, capital surplus and its future earnings. The Cooperatives principal use of available cash has been the payment of dividends on its
preferred stock and the redemption of its securities. Historically, the $10.0 million annual receipts under the Termination Agreement have been the principal source of cash for payment of dividends with the last $2.0 million installment received in
July 2007 and the $120.1 million distribution received from Holdings LLC in July 2007. Although Pro-Fac is a party to the Limited Liability Company Agreement and, as a member of Holdings LLC, is entitled to annual distributions, if made, Holdings
LLC has advised Pro-Fac that it will not speculate as to whether distributions will be made under the Limited Liability Company Agreement. As a minority owner of Holdings LLC, Pro-Fac has no control over the determination of whether such
distributions will be made.
Using proceeds of a July 2007 distribution from Holdings LLC, the Board of Directors declared and the Cooperative paid dividends on its preferred stock in July and October 2007 and January and April and July 2008. There can
be no assurances that Pro-Fac will pay dividends after the payment on October 31, 2008. The declaration of any future dividends is subject to Board action in advance of any such declaration based upon available facts and circumstances at such time.
In July 2007, Pro-Fac received a distribution of approximately $120.1 million from Holdings LLC. Pro-Fac invested the $120.1 million distribution in high quality, low risk investments pending use of the funds. During the
first quarter of fiscal year 2008, Pro-Fac used this distribution: to redeem all retained earnings allocated to its members at a cost of approximately $6.8 million; to pay dividends on its non-cumulative preferred stock and its Class A cumulative
preferred stock at a cost of approximately $5.4 million; and to repay principal and interest owed under its Credit Agreement with Birds Eye Foods in an amount equal to approximately $1.1 million. During the second quarter of fiscal year 2008,
Pro-Fac used this distribution: to redeem all of Pro-Facs non-cumulative preferred stock at a price of $25.00 per share for an aggregate redemption cost of approximately $0.7 million; to redeem 3,155,433 shares of its Class A cumulative
preferred stock at a price of $25.00 per share for an aggregate redemption cost of approximately $78.9 million related to the Class A cumulative preferred stock; and to pay dividends on its preferred stock to the date of redemption as required to
affect the redemption at a cost of approximately $2.1 million.
The Board of Directors continues to periodically evaluate Pro-Facs business plan. Based upon the assumptions contained in Pro-Facs business plan, the Board currently believes that Pro-Fac has sufficient sources
of cash to fund its operations at least through the end of fiscal 2013.
Common Stock
:
The Cooperatives common stock is owned by its members. The number of shares of common stock owned by a
Pro-Fac member-grower is based upon the quantity and type of crops to be marketed through Pro-Fac by the member-grower. If a member-grower ceases to be a producer of agricultural products that are marketed through the Cooperative, then the
member-grower must sell its shares of Pro-Fac common stock to another grower that is acceptable to the Cooperative. Additionally, member-growers desiring to adjust quantities of crops marketed through Pro-Fac may either offer to sell or purchase
shares of Pro-Fac common stock.
If the selling member-grower is unable to find a qualified grower to purchase its shares of Pro-Fac common stock, the member-grower must, upon notification from the Cooperative, sell its shares of common stock to the
Cooperative for cash at par value, plus any dividends thereon which have been declared but remain unpaid.
In January 2003, the Pro-Fac Board of Directors suspended the payment of dividends on the Cooperatives common stock for an indefinite period of time, and in January 2006 the Board placed a moratorium on Pro-Facs
repurchase of shares of its common stock from its member-growers. Any repurchases by Pro-Fac of its common stock are subject to pre-approval by the Board. In the fourth quarter of fiscal 2008, the Cooperative repurchased approximately 69,500 of
common stock for approximately $348,000 from its member-growers (representing approximately 56% of the common shares owned by those member-growers) with proceeds the Cooperative received in consideration of the termination of a raw product supply
agreement by a customer, due to the customers closure of its processing plant. Payment to each member-grower was made upon receipt of a release agreement from the member-grower.
Special Membership Interests
:
In conjunction with the Transaction, special membership interests were allocated to the then
current and former members of Pro-Fac who had made patronage deliveries to or on behalf of Pro-Fac in the six fiscal years ended June 29, 2002, in proportion to the patronage deliveries made by those members in each case during that six fiscal year
period.
Accumulated Deficit
:
Accumulated deficit consists of accumulated (losses)/income after distribution of earnings allocated to
members and dividends.
26
NOTE 6. OTHER MATTERS
Legal Matters
:
The Cooperative is party to various legal proceedings from time to time in the normal course of its business. In
the opinion of management, any liability that might be incurred upon the resolution of these proceedings will not, in the aggregate, have a material adverse effect on the Cooperative's business, financial condition, and results of operations.
Further, no such proceedings are known to be contemplated by any governmental authorities. The Cooperative maintains general liability insurance coverage in amounts deemed to be adequate by the Board of Directors.
Guarantees and Indemnifications
:
During the fourth quarter of fiscal year 2007, Pro-Fac was released from its previous
guarantee of $30.0 million in original principal plus accrued interest, if any, due by Birds Eye Foods to GLK, LLC, a New York limited liability company whose members are Birds Eye Foods and GLK Holdings, Inc., a wholly-owned subsidiary of Birds Eye
Foods.
Historically, when Pro-Fac sold assets, it may have retained certain liabilities for known exposures and provided indemnification to the buyer(s) with respect to future claims for certain unknown liabilities existing, or
arising from events occurring, prior to the sale date, including liabilities for taxes, legal matters, environmental exposures, labor contingencies, project liability, and other obligations. Pro-Fac may enter into similar arrangements in the future.
Agreements to provide indemnifications may vary in duration, generally for two years for certain types of indemnities, to terms for tax indemnifications that are generally aligned to the applicable statute of limitations for the jurisdiction in
which the tax is imposed, and to terms for certain liabilities (i.e., warranties of title and environmental liabilities) that typically do not expire. The maximum potential future payments that the Cooperative could be required to make under
agreements of indemnification are (or may be) either contractually limited to a specified amount or unlimited. The maximum potential future payments that the Cooperative could be required to make under agreements of indemnification are not
determinable at this time, as any future payments would be dependent on the type and extent of the related claims, and all relevant defenses, which are not estimable. Historically, costs incurred to resolve claims related to agreements of
indemnification have not been material to the Cooperatives financial position, results of operations or cash flows.
From time to time, in the ordinary course of its business, Pro-Fac has, or may, enter into agreements with its customers, suppliers, service providers and business partners which contain indemnification provisions.
Generally, such indemnification provisions require the Cooperative to indemnify and hold harmless the indemnified party(ies) and to reimburse the indemnified party(ies) for claims, actions, liabilities, losses and expenses in connection with any
personal injuries or property damage resulting from any Pro-Fac products sold or services provided. Additionally, the Cooperative may from time to time agree to indemnify and hold harmless its providers of services from claims, actions, liabilities,
losses and expenses relating to their services to Pro-Fac, except to the extent finally determined to have resulted from the fault of the provider of services relating to such services. The level of conduct constituting fault of the service provider
will vary from agreement to agreement and may include conduct which is defined in terms of negligence, gross negligence, willful misconduct, omissions or other culpable behavior. The terms of these indemnification provisions are generally not
limited. The maximum potential future payments that the Cooperative could be required to make under these indemnification provisions are unlimited and are not determinable at this time, as any future payments would be dependent on the type and
extent of the related claims, and all relevant defenses to the claims, which are not estimable. Historically, costs incurred to resolve claims related to these indemnification provisions have not been material to the Cooperatives financial
position, results of operations or cash flows.
The Cooperative has by-laws, policies, and agreements under which it indemnifies its directors and officers from liability for certain events or occurrences while the directors or officers are, or were, serving at Pro-Fac's
request in such capacities. Pro-Fac indemnifies its officers and directors to the fullest extent allowed by law. The maximum potential amount of future payments that the Cooperative could be required to make under these indemnification provisions is
unlimited, but would be affected by all relevant defenses to the claims.
As part of the Transaction, Pro-Fac agreed to indemnify Birds Eye Foods for certain environmental liabilities. This obligation is only triggered once the aggregate of all liabilities subject to indemnification under the
Unit Purchase Agreement (including those unrelated to environmental matters) exceeds $10.0 million.
As of the date of this Report, Pro-Fac does not expect to be required to perform under the indemnifications described above.
Rent Commitment
:
Pro-Fac rents office space through June 2009 at an annual rent of approximately $18,900 (approximately
$1,574 per month).
Benefit Plan:
Pro-Fac sponsors a 401(k) profit-sharing plan under which its employees may defer a portion of their salary. Pro-Fac contributes an amount equal to 3
percent of each employees salary. Pro-Fac may also make additional contributions at Pro-Facs sole discretion.
27
Related Party Transactions
: Substantially all purchases are from member-growers of the Cooperative. For fiscal years 2008 and 2007, approximately 29 percent and 81
percent, respectively, of all crops purchased by Pro-Fac from its members were sold to its indirect equity investee, Birds Eye Foods. See Note 2 for additional transactions with Birds Eye Foods.
Pro-Fac is a party to an agricultural services agreement with Farm Fresh, a limited liability company, in which Pro-Fac owns a 5.55% membership interest. Under the services agreement, Farm Fresh provides Pro-Fac with
agricultural and administrative services and acts as Pro-Facs exclusive sales agent for the sale of agricultural products grown by Pro-Fac member-growers located in New York State, which are not subject to existing supply agreements. Certain
members of Pro-Fac own the majority of the membership interests of Farm Fresh either directly or indirectly through entities owned or controlled by them. Included are three members of Pro-Facs Board of Directors, Peter Call, president of
Pro-Facs Board, Kenneth Mattingly and James Vincent, who are each indirect owners of 5.55% of the membership interest of Farm Fresh (total 16.65%) through affiliated entities. Messrs. Call, Mattingly and Vincent serve on the board of directors
of Farm Fresh, and Mr. Call serves as chairman.
During the years ended June 28, 2008 and June 30, 2007, Pro-Fac paid Farm Fresh approximately $210,000 and $97,000, respectively, for services provided. During the year ended June 28, 2008, Farm Fresh paid Pro-Fac $36,000
for consulting services provided by Pro-Fac during the year. In addition, Pro-Fac sold approximately $362,000 of raw product to Farm Fresh during fiscal year 2008. At June 28, 2008, Farm Fresh owed Pro-Fac approximately $362,000.
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
Not applicable.
ITEM 9A(T).
|
CONTROLS AND PROCEDURES
|
Disclosure Controls and Procedures
:
Pro-Facs Principal Executive Officer and Principal Financial Officer evaluated
the effectiveness of the design and operation of Pro-Facs disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) of the Securities Exchange Act of 1934, as amended (the Exchange Act)). Based on that
evaluation, Pro-Facs Principal Executive and Principal Financial Officer concluded that Pro-Facs disclosure controls and procedures as of June 28, 2008 (the end of the period covered by this Report), have been designed and are
functioning effectively to provide reasonable assurance that the information required to be disclosed by Pro-Fac in reports filed or submitted by it under the Exchange Act is recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commissions rules and forms, and that such information is accumulated and communicated to Pro-Facs management, including its Principal Executive and Principal Financial Officer, as appropriate to
allow timely decisions regarding required disclosure.
Managements Annual Report on Internal Control Over Financial Reporting
:
Section 404(a) of the Sarbanes-Oxley Act of
2002, requires Pro-Facs management to assess the effectiveness of Pro-Facs internal controls over financial reporting as of the end of each fiscal year beginning with its fiscal year ended June 28, 2008 and to report, based on that
assessment, whether Pro-Facs internal control over financial reporting is effective.
Pro-Facs management is responsible for establishing and maintaining adequate internal control over financial reporting. Pro-Facs management has assessed the effectiveness of Pro-Facs internal control over
financial reporting as of June 28, 2008. In making this assessment, Pro-Fac used the criteria established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on
Pro-Facs assessment, management has concluded that, as of June 28, 2008, Pro-Facs internal control over financial reporting was effective.
This annual report of Form 10-K does not include an attestation report of Pro-Facs registered public accounting firm regarding internal control over financial reporting. Managements report was not subject to
attestation by Pro-Facs registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit Pro-Fac to provide only managements report in this annual report.
Changes in Internal Control Over Financial Reporting
:
There were no changes
in Pro-Facs internal control over financial reporting identified during the quarter ended June 28, 2008, that materially affected, or are reasonably likely to materially affect, Pro-Facs internal control over financial reporting.
ITEM 9B.
|
OTHER INFORMATION
|
Not applicable.
28
PART III
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE
|
Set forth below is certain information about the individuals that currently serve as directors and executive officers of Pro-Fac.
EXECUTIVE OFFICERS AND DIRECTORS OF PRO-FAC
|
|
Date
|
|
|
Name
|
|
of
Birth
|
|
Positions
|
Bruce R. Fox
|
|
1947
|
|
Director
|
Steven D.
Koinzan
|
|
1948
|
|
Director and
Second Vice President
|
Charles R.
Altemus
|
|
1931
|
|
Director
|
Stephen R.
Wright
|
|
1947
|
|
General Manager,
Chief Executive Officer,
|
|
|
|
|
Chief Financial
Officer and Secretary
|
Peter R. Call
(1)
|
|
1956
|
|
Director and
President
|
Kenneth A.
Dahlstedt
|
|
1954
|
|
Director
|
Robert DeBadts
|
|
1957
|
|
Director
|
Joseph Herman
|
|
1955
|
|
Director
|
Kenneth A.
Mattingly
|
|
1948
|
|
Director
|
Allan W. Overhiser
(1)
|
|
1960
|
|
Director, First
Vice President and Treasurer
|
Paul E. Roe
|
|
1939
|
|
Director
|
Darell Sarff
|
|
1949
|
|
Director
|
James Vincent
|
|
1944
|
|
Director
|
Cornelius
D. Harrington, Jr.
(2)
|
|
1927
|
|
Director
|
William J.
Lipinski
(2)
|
|
1957
|
|
Director
|
Frank M. Stotz
(2)
|
|
1930
|
|
Director
|
(1)
Mr. Allen W. Overhiser and Mr. Peter R. Call serve as directors of both Birds Eye Foods and Pro-Fac. Messrs. Overhiser and Call serve as the "Pro-Fac Directors" on Birds Eye
Foods Board of Directors pursuant to the Securityholders Agreement
(2)
Members of Pro-Fac's Audit Committee, which is a separately-designated standing Audit Committee
established by and among Pro-Facs Board of Directors for the purposes of, among other duties, overseeing the accounting and financial reporting processes of Pro-Fac and audits of Pro-Facs financial statements. The charter of the Audit
Committee is available on the Cooperatives Investor Relations website www.profaccoop.com/aboutProfac/investor.asp. Mr. Harrington is the Chairman of the Audit Committee. The Board of Directors has determined that Messrs. Harrington, Lipinski
and Stotz each qualify as an audit committee financial expert as defined in Item 407 of Regulation S-K and that each of the members of the Audit Committee satisfies the independence standards in Section 4200(a)(15) of the NASDAQ listing
standards and Rule 10A-3 under the Securities Exchange Act of 1934, as amended.
Bruce R. Fox
has been a Director of Pro-Fac since 1973. He was Treasurer of Pro-Fac from 1984 until March 1995, when he was elected President. He served as President of Pro-Fac until
March 2004. Mr. Fox also served as a Director of Birds Eye Foods from 1994 to May 2004; serving as Vice Chairman from 2000 to 2002. He has been a member of Pro-Fac since 1974. Mr. Fox is a fruit and vegetable grower (N.J. Fox & Sons, Inc. and
AEBIG Apple LLC, Shelby, MI).
Steven D. Koinzan
has been a Director of Pro-Fac since 1982. He was Secretary of Pro-Fac from March 1993 until March 1995, Treasurer from March 1995 until 2000 and from March 2004
until March 2005 and Vice-President from 2000 until March 2004. Mr. Koinzan was elected to serve as a Second Vice President of Pro-Fac in March 2005. From 1994 to August 29, 2002, Mr. Koinzan served as a director of Birds Eye Foods; serving as Vice
Chairman from 2001 to 2002. He has been a member of Pro-Fac since 1979. Mr. Koinzan is a popcorn, field corn and soybean farmer (Koinzan Farms; Norden, Nebraska).
Charles R. Altemus
has been a Director of Pro-Fac since March 2004. He has been a member of Pro-Fac since 1978. Mr. Altemus is a potato grower (Altemus Farms; Penn Run, Pennsylvania).
Stephen R. Wright
has been the General Manager of Pro-Fac since March 1995 and was elected as Secretary in June 1999. He became Chief Executive Officer and Chief Financial Officer of
Pro-Fac on August 19, 2004. Mr. Wright previously served as Assistant General Manager of Pro-Fac. Mr. Wright also served as Executive Vice President - Investor Relations of Birds Eye
Foods from November 6, 1996 to August 19, 2004. He was Secretary of Birds Eye Foods from March 2000 to August 2002. He was Senior Vice President -Procurement of Birds Eye Foods from November 1994 to November 1996 and Vice President -
Procurement for Birds Eye Foods from 1990 to November 1994, having served as Director of Commodities and Administration Services for Birds Eye Foods from 1988 to 1990.
Peter R. Call
has been a Director of Pro-Fac since February 2000. He has been a member of Pro-Fac since 1979. He was elected to serve as President of Pro-Fac in March 2004. Mr. Call
also serves as a Director of Birds Eye Foods and has served in this capacity since August 2002. Mr. Call is a vegetable and grain farmer (My-T Acres, Inc. and Call Farms, Inc., Batavia, New York).
29
Kenneth A. Dahlstedt
has been a Director of Pro-Fac since February 1998 and has been a member of Pro-Fac since 1983. Mr. Dahlstedt is a vegetable grower (Ag. Pro, Inc.; Mount Vernon,
WA).
Robert DeBadts
has been a Director of Pro-Fac since January 1997 and has been a member of Pro-Fac since 1978. Mr. DeBadts is a fruit grower (Lake Breeze Fruit Farms, Inc.; Sodus, New
York).
Kenneth A. Mattingly
has been a Director of Pro-Fac since 1993 and a member of Pro-Fac since 1978. Mr. Mattingly is a vegetable and grain farmer (M-B Farms Inc.; LeRoy, New
York).
Joseph Herman
has been a Director of Pro-Fac since February 2007 and a member of Pro-Fac since 1987. Mr. Herman is a fruit farmer (Herman Farms; St. Joseph, Michigan).
Allan W. Overhiser
has been a Director of Pro-Fac since March 1994, a Vice President since March 2004, and First Vice President and Treasurer since March 2005 and a member of Pro-Fac
since 1984. Mr. Overhiser also serves as a Director of Birds Eye Foods and has served in this capacity since May 2004. Mr. Overhiser is a fruit farmer (A.W. Overhiser Orchards; South Haven, Michigan).
Paul E. Roe
has been a Director of Pro-Fac since 1986 and a member of Pro-Fac since 1961. From 2000 to August 19, 2002, Mr. Roe served as a Director of Birds Eye Foods. Mr. Roe is a
vegetable, grain and dry bean farmer (Roe Acres, Inc.; Bellona, New York).
Darell Sarff
has been a Director of Pro-Fac since February 1997 and has been a member of Pro-Fac
since 1988. Mr. Sarff is a grain and vegetable farmer (Sarff Farms; Chandlerville, Illinois).
James Vincent
was elected as a Director of Pro-Fac in February 2005 and has been a member of Pro-Fac since 1967. Mr. Vincent is a vegetable grower (L-Brooke Farms; Byron, New York).
Cornelius D. Harrington Jr.
has been a Director of Pro-Fac since August 2002. Mr. Harrington also served as Director of Birds Eye Foods from 1999 to August 19, 2002. Prior to his
retirement, he was President of the Bank of New England-West in Springfield, MA a predecessor to the Bank of New England-West from 1978 to December 1990. He was Chief Executive Officer of the Bank of New England-West from 1984 to December 1990.
Until 1987, he served as Chairman of the Board of Directors of BayState Medical Center in Springfield, Massachusetts. He is a former Director of the Farm Credit Bank of Springfield.
William J. Lipinski
has been a Director of Pro-Fac since March 2006. Mr. Lipinski currently is the President and Chief Executive Officer of First Pioneer Farm Credit, ACA and has
served in these offices since June 1994. Mr. Lipinski also serves as Chairman of the Board of Directors for Farm Credit Financial Partners, Inc., and has served as Chairman since 1998. Mr. Lipinski also served as Director of Farm Credit Leasing
Services Corporation from 1998 to 2003 and as Chairman of Farm Credit Systems Presidents Planning Committee from 2000 to 2003. Mr. Lipinski has also held various positions with Farm Credit Bank of Springfield, Springfield Bank for
Cooperatives, and Southern New England Production Credit and Federal Land Bank Associations.
Frank M. Stotz
has been a Director of Pro-Fac since August 2002. Mr. Stotz also served as Director of Birds Eye Foods from 1994 to August 19, 2002. Mr. Stotz retired in 1994 from his
position as Senior Vice President - Finance of Bausch & Lomb Incorporated. Before joining Bausch & Lomb in that capacity in 1991, Mr. Stotz was a partner for 25 years with Price Waterhouse (now PricewaterhouseCoopers LLP).
Term of Office
:
Pro-Fac's Board of Directors is currently divided into three classes, with the classes of directors serving for
staggered three-year terms that expire in successive years. Except for those directors serving on Pro-Fac's Audit Committee, approximately one-third of the directors are elected annually by the members. Those directors serving on Pro-Fac's Audit
Committee are appointed by Pro-Fac's Board of Directors. Officers of Pro-Fac are elected for one-year terms.
Section 16(a) Beneficial Ownership Reporting Compliance
:
Section 16(a) of the Securities Exchange Act of 1934 requires
Pro-Facs directors and officers, and persons who own more than 10% of a registered class of Pro-Facs equity securities, to file reports of ownership and changes in ownership of the securities of Pro-Fac with the Securities and Exchange
Commission (the SEC). Pro-Fac officers and directors and beneficial owners of more than 10% of any registered class of Pro-Facs equity securities are required by SEC regulation to furnish Pro-Fac with copies of all Section 16(a)
reports they file.
Based upon a review of the copies of such reports, all filing requirements under Section 16(a) applicable to its officers, directors and greater than 10% beneficial owners were complied with, except Mr. Altemus who failed
to timely file a Form 4 to report the redemption of shares of Class A cumulative preferred stock on October 31, 2007.
Code of Ethics
: The Board of Directors has adopted the Pro-Fac Cooperative, Inc. Principal Executive Officer/Senior Financial Officer Code of Ethics that
applies to the Companys principal executive officer and principal financial officer. A copy of the Code of Ethics is available at the Cooperatives Investor Relations website - About Pro-Fac
(www.profaccoop.com/aboutProfac/investor.asp). The Cooperative intends to post amendments to or waivers from the Code of Ethics for its principal executive officer and its principal financial officer at this location on that website.
30
ITEM 11.
|
EXECUTIVE COMPENSATION
|
Mr. Stephen Wright is our sole principal executive and financial officer. He serves as Pro-Fac's General Manager, Chief Executive Officer, Chief Financial Officer and Secretary.
Summary Compensation Table
The table below summarizes the total compensation paid to or earned by Stephen R. Wright, Pro-Facs only Named Executive Officer during fiscal years 2008 and 2007.
SUMMARY COMPENSATION TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
and Nonqualified
|
|
|
|
|
Name and
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Incentive Plan
|
|
Deferred
|
|
All Other
|
|
|
principal
|
|
|
|
Salary
|
|
Bonus
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Compensation
|
|
Compensation (2)
|
|
Total
|
position
|
|
Year
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
Earnings ($)
|
|
($)
|
|
($)
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
(h)
|
|
(i)
|
|
(j)
|
Stephen R. Wright (1)
|
|
2008
|
|
$163,846
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
$5,560
|
|
$169,406
|
|
|
|
2007
|
|
$176,539
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
$5,941
|
|
$182,480
|
(1) The terms of Mr. Wrights employment are set forth in an employment agreement discussed below under Employment Agreement Stephen R. Wright; Potential Payments Upon Termination or Change-in-Control of
Pro-Fac.
(2) Pro-Fac contributions of $4,915 and $5,296, respectively, pursuant to 401(k) Plan and life insurance premiums of $645 and $645, respectively, paid on behalf of Mr. Wright in fiscal years 2008 and 2007.
In accordance with the rules of the Securities and Exchange Commission, the compensation described in this table does not include group life, health, hospitalization, or medical reimbursement benefits received by Mr. Wright
under plans that are available generally to all salaried employees of Pro-Fac.
____________
Employment Agreement - Stephen R. Wright; Potential Payments Upon Termination or Change-in-Control of Pro-Fac
Pursuant to an employment agreement entered into on July 30, 2004 with Mr. Wright, as amended, the most recent amendment being as of February 14, 2008, Mr. Wright is employed as the General Manager, Chief Executive Officer
and Chief Financial Officer of Pro-Fac, reporting to Pro-Fac's Board of Directors. Mr. Wrights employment term continues under his employment agreement until terminated by either Pro-Fac or Mr. Wright upon six months prior notice, or as
otherwise provided under the employment agreement. The agreement provides for an annualized salary, beginning July 1, 2008, of $200,000 and, effective July 1, 2009, of $210,000 and, effective July 1, 2010 of $220,000. In addition to Mr.
Wrights base salary, beginning with Pro-Facs 2009 fiscal year, for each fiscal year that Mr. Wright remains employed by Pro-Fac, Mr. Wright will be paid a cash bonus equal to 10% of the increase, if any, in Pro-Facs net income over
its net income for the 2008 fiscal year. For purposes of determining the amount of Mr. Wrights bonus net income means Pro-Facs margin income less operating expenses, but disregarding interest income and interest expense. The
annual bonus, if any, will be paid by September 15 following the end of the fiscal year to which it relates; provided, however, that payment may be delayed in the event the determination of net income for a fiscal year is not available as of such
date. Mr. Wright is entitled to participate in employee benefits generally made available to employees of Pro-Fac, including: Pro-Facs 401(k) plan pursuant to which Pro-Fac contributes 3% of Mr. Wright's earned compensation; term life
insurance; short-term and long-term disability insurance; personal accident insurance and accidental death and dismemberment insurance. All participants in the 401(k) plan are 100% vested in amounts contributed by Pro-Fac. In addition to the term
life insurance provided to all Pro-Fac employees, Pro-Fac provides Mr. Wright with an additional $250,000 in life insurance benefits.
Mr. Wright's employment agreement contains provisions relating to non-competition and non-solicitation of customers during the term of his employment and for a period of 12 months thereafter (except if Mr. Wright's
employment is terminated without cause), and non-solicitation of Pro-Fac's employees for 12 months following termination of employment.
31
Potential Payments Upon Termination or Change-in-Control
.
Either Mr. Wright or Pro-Fac, subject to the rights and obligations set forth in the employment agreement, including proper notice, may terminate Mr. Wright's employment. Pro-Fac is obligated to pay Mr. Wright his salary
plus benefits for the remainder of the month in which such termination becomes effective and for a period of six (6) months thereafter in the event Mr. Wright's employment is terminated by Pro-Fac for any reason other than "for cause" (as such term
is defined in the employment agreement), on account of disability, or on account of death.
The table below reflects the amount of compensation payable to Mr. Wright upon voluntary termination, for cause termination, without cause termination, termination upon cessation or dissolution or
following a change-in-control and in the event of his disability or death is shown below. The amounts shown assume that such termination was effective as of June 28, 2008, and thus includes amounts earned through such time and are estimates of the
amounts which would be paid out to Mr. Wright upon his termination. The actual amounts to be paid out can only be determined at the time of Mr. Wrights separation from Pro-Fac.
|
|
Without
Cause
|
|
For
Cause or by
Executive
|
|
Disability
|
|
Cessation
or
Dissolution
|
|
Death
|
|
Change
in Control
|
|
Salary
|
|
$
|
80,890
|
(1)
|
|
$
|
0
|
|
$
|
0
|
|
$
|
80,890
|
(1)
|
|
$
|
40,890
|
(2)
|
|
$
|
80,890
|
(1)
|
Health insurance (3)
|
|
|
4,442
|
|
|
|
0
|
|
|
0
|
|
|
4,442
|
|
|
|
0
|
|
|
|
4,442
|
|
Total
|
|
$
|
85,332
|
|
|
$
|
0
|
|
$
|
0
|
|
$
|
85,332
|
|
|
$
|
40,890
|
|
|
$
|
85,332
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Salary is for a period of 6-months after termination.
|
(2)
|
Salary for a period of 3-months after death.
|
(3)
|
Reflects
the cost to Pro-Fac of continuing health benefits for a period of six months
after termination.
|
Severance Plan
.
In July 2007, Pro-Fac established a Severance Plan for all of its employees, including Mr. Wright. The purpose of the plan is to provide an incentive to Pro-Facs employees to continue their employment in the event of
a transaction in which Pro-Facs investment in the units of ownership of Holdings, LLC is converted to cash or cash equivalents. If certain cash or cash equivalent proceed thresholds are met, then a minimum of $100,000 ($25,000, individual,
minimum) and a maximum of $200,000 ($50,000, individual, maximum) will be paid to, and allocated equally among, those Pro-Fac employees who are or have remained as employees of Pro-Fac for a period of not less than six months after the
transaction.
Directors' Compensation
The table below sets forth the total compensation earned by or awarded to directors who served on our Board during fiscal year 2008. No employee serves on the Pro-Fac Board.
|
|
Fees
|
|
|
|
|
|
|
|
|
|
|
Change in Pension
|
|
|
|
|
|
|
|
|
Earned or
|
|
|
|
|
|
|
|
Non-Equity
|
|
Value and Non-
|
|
|
|
|
|
|
|
|
Paid
|
|
Stock
|
|
Option
|
|
Incentive Plan
|
|
Qualified
Deferred
|
|
All Other
|
|
|
|
Name
|
|
in
Cash
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Compensation
|
|
Compensation
|
|
Total
($)
|
Member-Directors,
other than
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director
Call(1)
|
|
$
|
11,500
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
126,500
|
Peter R. Call,
Chairman of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Board(2)
|
|
|
18,500
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
18,500
|
Independent,
Non-Member
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Directors(3)
|
|
|
30,000
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
90,000
|
(1) Annual retainer paid to Pro-Fac member-directors: Charles R. Altemus, Kenneth A. Dahlstedt, Robert Debadts, Bruce R. Fox, Joseph Herman, Steven D. Koinzan, Kenneth A. Mattingly, Allan W. Overhiser, Paul Roe, Darell
Sarff and James Vincent.
(2) Annual retainer paid to Mr. Call as Chairman of the Board of Directors of Pro-Fac.
(3) All non-member-grower directors of Pro-Fac: Cornelius D. Harrington, Jr., William J. Lipinski and Frank M. Stotz.
________________
Directors are not paid additional compensation for serving on a standing committee of the Board of Directors or for their participation in special assignments in their capacity as directors. All directors receive
reimbursement for reasonable out-of-pocket expenses incurred in connection with meetings of the Board. During fiscal year 2008, Pro-Fac increased fees paid to directors. In fiscal year 2009 the full year impact of this increase will be reflected.
Annual member director fees for fiscal year 2009 will be $15,000 for each of the 11 member-directors, which does not include Board Chairman Peter Call; $25,000 for the Chairman of the Board; and $40,000 for each of three independent, non-member
directors.
32
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERS MATTERS
|
The following table sets forth information regarding the beneficial ownership, as of June 28, 2008, by (i) each person or entity (including any group) who is known by Pro-Fac to own beneficially more than 5 percent of
Pro-Facs common stock (voting securities) and (ii) each Pro-Fac director, each Named Executive Officer included in the Summary Compensation Table, and all directors and current executive officers as a group, as to each class of securities of
Pro-Fac.
|
|
|
|
Amount and
Nature of
|
|
Percent of
|
Name
and Address
|
|
Title
of Class
|
|
Beneficial
Ownership(a)
|
|
Class(b)
|
|
Beneficial
Owner of More than 5%*:
|
|
|
|
|
|
|
|
|
Michigan Blueberry
Growers Association
|
|
Common
|
|
116,400
|
|
|
6.85
|
%
|
P.O. Box 322
|
|
Class A Cumulative
Preferred
|
|
3,113
|
|
|
0.18
|
%
|
Grand Junction,
MI 49056
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Pro-Fac members
are only entitled to one vote regardless of the number of shares of common
stock owned.
|
|
|
|
|
Amount and Nature
of
|
|
Percent of
|
Name
|
|
Title
of Class
|
|
Beneficial
Ownership(a)
|
|
Class(b)
|
|
Charles R.
Altemus
|
|
Common
|
|
21,007
|
(v)
|
|
1.24
|
%
|
|
|
Class A Cumulative
Preferred
|
|
879
|
(v)
|
|
0.05
|
%
|
|
Peter R. Call
|
|
Common
|
|
41,812
|
(d)
|
|
2.46
|
%
|
|
|
Class A Cumulative
Preferred
|
|
9,783
|
(d)
|
|
0.55
|
%
|
|
|
Class A Cumulative
Preferred
|
|
5,109
|
(e)
|
|
0.29
|
%
|
|
|
Class A Cumulative
Preferred
|
|
1,929
|
(f)
|
|
0.11
|
%
|
|
|
Class A Cumulative
Preferred
|
|
3,656
|
|
|
0.21
|
%
|
|
|
Class A Cumulative
Preferred
|
|
615
|
(g)
|
|
0.03
|
%
|
|
|
Class A Cumulative
Preferred
|
|
1,366
|
(h)
|
|
0.08
|
%
|
|
Kenneth A.
Dahlstedt
|
|
Common
|
|
3,254
|
(x)
|
|
0.19
|
%
|
|
|
Common
|
|
812
|
(i)(x)
|
|
0.05
|
%
|
|
|
Class A Cumulative
Preferred
|
|
884
|
|
|
0.05
|
%
|
|
|
Class A Cumulative
Preferred
|
|
379
|
(i)
|
|
0.02
|
%
|
|
Robert DeBadts
|
|
Common
|
|
12,737
|
(j)
|
|
0.75
|
%
|
|
|
Class A Cumulative
Preferred
|
|
4,853
|
(j)
|
|
0.27
|
%
|
|
|
Class A Cumulative
Preferred
|
|
218
|
(k)
|
|
0.01
|
%
|
|
Bruce R. Fox
|
|
Common
|
|
11,315
|
(l)
|
|
0.67
|
%
|
|
|
Common
|
|
240
|
(m)
|
|
0.01
|
%
|
|
|
Class A Cumulative
Preferred
|
|
3,382
|
(l)
|
|
0.19
|
%
|
|
|
Class A Cumulative
Preferred
|
|
3,436
|
(n)
|
|
0.19
|
%
|
|
|
Class A Cumulative
Preferred
|
|
390
|
|
|
0.02
|
%
|
|
|
Class A Cumulative
Preferred
|
|
455
|
(o)
|
|
0.02
|
%
|
|
Cornelius
D. Harrington, Jr.
|
|
None
|
|
|
|
|
|
|
|
Joseph Herman
|
|
Common
|
|
4,092
|
(w)
|
|
0.24
|
%
|
|
Steven D.
Koinzan
|
|
Common
|
|
11,184
|
(x)
|
|
0.66
|
%
|
|
|
Class A Cumulative
Preferred
|
|
3,027
|
|
|
0.17
|
%
|
|
|
Class A Cumulative
Preferred
|
|
89
|
(p)
|
|
0.01
|
%
|
|
William J.
Lipinski
|
|
None
|
|
|
|
|
|
|
|
Kenneth A.
Mattingly
|
|
Common
|
|
13,958
|
(q)
|
|
0.82
|
%
|
|
|
Class A Cumulative
Preferred
|
|
5,474
|
(q)
|
|
0.31
|
%
|
|
Allan W. Overhiser
|
|
Common
|
|
3,258
|
(r)
|
|
0.19
|
%
|
|
|
Class A Cumulative
Preferred
|
|
897
|
(r)
|
|
0.05
|
%
|
33
Paul E. Roe
|
|
Common
|
|
24,907
|
(s)
|
|
1.47
|
%
|
|
|
Class A Cumulative Preferred
|
|
3,947
|
(s)
|
|
0.22
|
%
|
|
Darell Sarff
|
|
Common
|
|
2,616
|
|
|
0.15
|
%
|
|
|
Class A Cumulative Preferred
|
|
993
|
|
|
0.06
|
%
|
|
Frank M. Stotz
|
|
None
|
|
|
|
|
|
|
|
James Vincent
|
|
Common
|
|
24,028
|
(t)
|
|
1.41
|
%
|
|
|
Common
|
|
1,496
|
(u)
|
|
0.09
|
%
|
|
|
Class A Cumulative Preferred
|
|
2,811
|
(u)
|
|
0.16
|
%
|
|
Stephen R. Wright
|
|
Class A Cumulative Preferred
|
|
516
|
|
|
0.03
|
%
|
|
|
All directors and current
executive
|
|
|
|
|
|
|
|
|
officers as a group (16)
|
|
Common
|
|
176,716
|
|
|
10.39
|
%
|
|
|
Class A Cumulative
Preferred
|
|
55,088
|
|
|
3.11
|
%
|
(a)
|
Certain of the directors named above may have the opportunity, along with the other Pro-Fac members producing a specific crop, to acquire beneficial ownership of additional shares of the common stock of Pro-Fac within a
period of approximately 60 days, commencing each year on February 1, if Pro-Fac determines that a permanent change is required in the total quantity of that particular crop.
|
(b)
|
Based on 1,700,064 shares of common stock and 1,773,839 shares of Class A Cumulative Preferred stock outstanding as of June 28, 2008. In the above table, each director who has direct beneficial ownership of common or
preferred shares by reason of being the record owner of such shares has sole voting and investment power with respect to such shares, while each director who has direct beneficial ownership of common or preferred shares as a result of owning such
shares as a joint tenant has shared voting and investment power regarding such shares. Each director who has indirect beneficial ownership of common or preferred shares resulting from his status as a shareholder, member or a partner of a
corporation, limited liability company or partnership which is the record owner of such shares has sole voting and investment power if he controls such corporation, limited liability company or partnership. If he does not control such corporation,
limited liability company or partnership, he has shared voting and investment power. Pro-Fac does not believe that the percentage ownership of any such corporation, limited liability company or partnership by a director is material, since in the
aggregate no director beneficially owns in excess of 5 percent of either the common or preferred shares of Pro-Fac. Moreover, Pro-Fac members are only entitled to one vote regardless of the number of shares of common stock owned.
|
(d)
|
Record ownership by My-T Acres, Inc.
|
(e)
|
Record ownership by My-T Acres, Inc. Employee Profit Sharing Plan
|
(f)
|
Record ownership by Call Farms, Inc.
|
(g)
|
Record ownership by Julie Call, Mr. Calls spouse
|
(h)
|
Record ownership by Casey Call, minor child of Peter R. Call
|
(i)
|
Record ownership by Ag-Pro, Inc.
|
(j)
|
Record ownership by Lake Breeze Fruit Farm, Inc.
|
(k)
|
Record ownership jointly with spouse
|
(l)
|
Record ownership by N.J. Fox & Sons, Inc.; 2,663 common shares pledged as security
|
(m)
|
Record ownership by AEBIG Apple LLC
|
(n)
|
Record ownership by Kathleen Fox, Mr. Foxs spouse
|
(o)
|
Record ownership by Bruce Fox IRA
|
(p)
|
Record ownership by Steven and Lois Koinzan, jointly
|
(q)
|
Record ownership by M-B Farms, Inc.; all common shares pledged as security
|
(r)
|
Record ownership by A.W. Overhiser Orchards
|
(s)
|
Record ownership by Roe Acres, Inc.
|
(t)
|
Record ownership by L-Brooke Farms, LLC; all common shares pledged as security
|
(u)
|
Record ownership by L-Brooke Farms, Inc.; all common shares pledged as security
|
(v)
|
Record ownership by Charles and Mildred Altemus, jointly
|
(w)
|
Record ownership by Joseph and Susan Herman
|
(x)
|
Pledged as security
|
|
34
ITEM 13.
|
TRANSACTIONS WITH RELATED PERSONS AND DIRECTOR
INDEPENDENCE
|
Crop Delivery Agreements
:
Each year Pro-Fac enters into crop delivery agreements with its member-growers pursuant to which
the member-growers agree to deliver a specified type and quantity (tonnage) of crop(s) to Pro-Fac at crop values based on CMV of the crop(s) to be delivered, as determined by Pro-Facs commercial market value committee for the growing season.
In fiscal year 2008 and 2007, Pro-Fac entered into crop delivery agreements with the following Pro-Fac member-grower Directors, directly or indirectly through entities owned or controlled by them: Charles R. Altemus, Dale
W. Burmeister, Peter R. Call, Kenneth A. Dahlstedt, Robert DeBadts, Bruce R. Fox, Joseph Herman, Steven D. Koinzan, Kenneth A. Mattingly, Allan W. Overhiser, Paul E. Roe, Darell Sarff and James Vincent.
Purchase of Crops by Pro-Fac
:
Pro-Fac members sell crops grown by them to Pro-Fac pursuant to supply agreements between
Pro-Fac and its members. Pro-Fac, in turn, markets and sells its members' crops to its customers. The Directors of Pro-Fac, other than Cornelius D. Harrington, Frank M. Stotz and William J. Lipinski, are grower-members of Pro-Fac. Accordingly,
during fiscal year 2008 and 2007, as grower-members of the Cooperative, they received payments from Pro-Fac for crops delivered by them directly or indirectly through entities owned or controlled by them.
During fiscal years 2008 and 2007, the following directors, directly or indirectly through entities owned or controlled by them, received payments from Pro-Fac for crops:
(Dollars
in Thousands)
|
|
|
RELATIONSHIP
|
|
PAYMENTS RECEIVED
|
|
PAYMENTS RECEIVED
|
NAME
|
|
TO
PRO-FAC
|
|
2008
|
|
2007
|
|
Charles R. Altemus
|
|
|
Director
|
|
|
|
$
|
0
|
|
|
|
$
|
599
|
|
Dale W. Burmeister
|
|
|
Director
|
|
|
|
|
0
|
|
|
|
|
319
|
|
Peter R. Call
|
|
|
Director and President
|
|
|
|
|
3,167
|
|
|
|
|
2,118
|
|
Kenneth A. Dahlstedt
|
|
|
Director
|
|
|
|
|
172
|
|
|
|
|
368
|
|
Robert DeBadts
|
|
|
Director
|
|
|
|
|
636
|
|
|
|
|
405
|
|
Bruce R. Fox
|
|
|
Director
|
|
|
|
|
259
|
|
|
|
|
265
|
|
Joseph Herman
|
|
|
Director
|
|
|
|
|
70
|
|
|
|
|
94
|
|
Steven D. Koinzan
|
|
|
Director and Vice President
|
|
|
|
|
1,252
|
|
|
|
|
719
|
|
Kenneth A. Mattingly
|
|
|
Director
|
|
|
|
|
1,330
|
|
|
|
|
754
|
|
Allan W. Overhiser
|
|
|
Director, Vice President
and Treasurer
|
|
|
|
|
86
|
|
|
|
|
156
|
|
Paul E. Roe
|
|
|
Director
|
|
|
|
|
610
|
|
|
|
|
588
|
|
Darell Sarff
|
|
|
Director
|
|
|
|
|
177
|
|
|
|
|
43
|
|
James
Vincent
|
|
|
Director
|
|
|
|
|
2,000
|
|
|
|
|
1,246
|
|
35
In addition, under the Farm Fresh First Services Agreement, Farm Fresh provides Pro-Fac with agricultural and administrative services and acts as Pro-Facs exclusive sales agent for crops grown by Pro-Fac
member-growers located in New York State. Certain members of Pro-Fac own the majority of the membership interests of Farm Fresh either directly or indirectly through entities owned or controlled by them. Included are three members of Pro-Facs
Board of Directors, Peter Call, Chairman of Pro-Fac's Board, Kenneth Mattingly and James Vincent, who are each indirect owners of 5.55% of the membership interest of Farm Fresh (total 16.65%) through affiliated entities. Messrs. Call, Mattingly and
Vincent also serve on the board of directors of Farm Fresh; Mr. Call as its chairman. For fiscal years 2008 and 2007, Pro-Fac paid Farm Fresh approximately $210,000 and $97,000, respectively, for services provided. During the year ended June 28,
2008, Farm Fresh paid Pro-Fac $36,000 for consulting services provided by Pro-Fac during the year. In addition, Pro-Fac sold approximately $362,000 of raw product to Farm Fresh during fiscal year 2008. At June 28, 2008, Farm Fresh owed Pro-Fac
approximately $362,000.
Pro-Fac, Stephen R. Wright, Pro-Facs Chief Executive Officer, Chief Financial Officer, General Manager and Secretary, together with others continue as parties to the Securityholders Agreement and Limited Liability
Company Agreement because of their ownership of common units of Holdings LLC. As of June 28, 2008, Mr. Wright owned approximately 553 Class C common units, representing approximately 3.3 percent of the issued and outstanding Class C common units and
approximately 379 Class D common units, representing approximately 1.9 percent of the issued and outstanding Class D common units of Holdings LLC. Mr. Wright owns less than 1.0 percent of the total equity of Holdings LLC.
Directors and Officers Liability Insurance
:
As authorized by New York law and in accordance with the policy of that
state, the Cooperative has obtained insurance from Cincinnati Insurance Companies and U.S. Specialty insuring the Cooperative against any obligation it incurs as a result of its indemnification of its officers and directors, and insuring such
officers and directors for liability against which they may not be indemnified by the Cooperative. This insurance has terms expiring on August 19, 2009, at an annual cost of approximately $141,900. Additionally, the Cooperative had obtained
insurance from St. Paul Mercury Insurance Company and Great American Insurance Company, insuring the Cooperative against any obligation it incurs as a result of its indemnification of its officers and directors, and insuring such officers and
directors for liability against which they may not be indemnified by the Cooperative for events occurring prior to August 19, 2002 where claims are submitted prior to August 19, 2008 at a cost of approximately $463,000. This insurance expired on
August 19, 2008. As of the date of this Report, no sums have been paid to any officers or directors of the Cooperative under either of these indemnification insurance policies.
As an agricultural cooperative, Pro-Fac is exempt from NASDAQ listing standards requiring that a majority of our board of directors be comprised of independent directors and that our committee members, other than members of
our audit committee, be independent under NASDAQ Rule 4200.
ITEM 14.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
Fees to Independent Auditor for Fiscal Year 2008 and 2007
:
The following table shows the aggregate fees billed for audit
and other services provided by Deloitte & Touche LLP through and including the first quarter of fiscal year 2007 and Freed, Maxick & Battaglia thereafter:
|
|
2008
|
|
2007
|
|
Audit Fees
|
|
$
|
62,480
|
|
$
|
81,025
|
Audit-Related Fees
|
|
|
0
|
|
|
0
|
Tax Fees
|
|
|
0
|
|
|
0
|
All Other Fees
|
|
|
0
|
|
|
0
|
Total
|
|
$
|
62,480
|
|
$
|
81,025
|
Audit Fees
: This category includes the audit of Pro-Facs annual financial statements, review of financial statements included in Pro-Facs Form 10-Q quarterly reports, and
services that are normally provided by the independent auditors in connection with statutory and regulatory filings or engagements for the above fiscal years.
Audit-Related Fees
: This category consists of assurance and related services provided by Pro-Facs independent auditors that are reasonably related to the performance of the
audit or review of Pro-Facs financial statements and are not otherwise reported above under Audit Fees.
Tax Fees
: This category consists of professional
services rendered by Pro-Facs independent auditors in connection with tax compliance, tax advice and tax planning activities.
All Other Fees
: This category consists of fees for services and products provided to Pro-Fac by its independent auditors and not reported under Audit Fees,
Audit-Related Fees or Tax Fees above.
Audit Committee Pre-Approval Policy
:
The Audit Committee pre-approves all auditing services and permitted non-auditing
services (including the fees and terms of such services).
36
PART IV
ITEM 15.
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
|
|
|
(a) The following documents are filed as part of this Report:
|
|
|
1.
|
Financial Statements. The following Financial Statements and the Report of Independent Registered Public Accounting Firm included in Part II, Item 8:
|
|
|
|
|
Page
|
Pro-Fac Cooperative, Inc.
|
|
|
Report of Independent
Registered Public Accounting Firm
|
|
14
|
Financial Statements:
|
|
|
Statements
of Operations, Allocation of Net Income
|
|
|
for
the years ended June 28, 2008 and June 30, 2007
|
|
15
|
Balance
Sheets as of June 28, 2008 and June 30, 2007
|
|
16
|
Statements
of Cash Flows for the years ended June 28, 2008 and June 30, 2007
|
|
17
|
Statements
of Changes in Shareholders and Members Capitalization/(Deficit)
and Redeemable and Common Stock
|
|
|
for
the years ended June 28, 2008 and June 30, 2007
|
|
18
|
Notes
to Financial Statements
|
|
19
|
37
3
.
|
Exhibits.
The
following exhibits are filed herein or have been previously filed with
the Securities and Exchange Commission:
|
|
|
|
|
|
|
Exhibit
Number
|
|
Description
|
|
|
|
|
|
|
|
2.1
|
|
Unit Purchase Agreement (filed as Exhibit 2.1 to Pro-Facs Form 8-K filed June 21, 2002 and incorporated herein by reference).
|
|
|
|
3.1
|
|
Restated Certificate of Incorporation of Pro-Fac, dated August 19, 2002 (filed as Exhibit 3.1 to Pro-Fac Form 10-K for the fiscal year ended June 29, 2002 and incorporate herein by reference).
|
|
|
|
3.2
|
|
Bylaws of Pro-Fac Cooperative, Inc. as amended January 25, 2007, (filed as Exhibit 3.(ii) to Pro-Facs Current Report on Form 8-K with the Securities and Exchange Commission on January 31, 2007 and incorporated herein
by reference).
|
|
|
|
10.1
|
|
Amended and Restated Marketing and Facilitation Agreement dated August 19, 2002 between Pro-Fac and Birds Eye Foods (filed as Exhibit 99.4 to Pro-Fac's Current Report on Form 8-K filed September 3, 2002 and incorporated
herein by reference).
|
|
|
|
10.2
|
|
Termination Agreement dated August 19, 2002 between Pro-Fac and Birds Eye Foods (filed as Exhibit 99.3 to Pro- Fac's Current Report on Form 8-K filed September 3, 2002 and incorporated herein by reference
).
|
|
|
|
10.3
|
|
Raw Product Supply Agreement with Seneca Foods Corporation (filed as Exhibit 10.22 to Pro-Fac's Annual Report on Form 10-K for the fiscal year ended June 28, 1997 and incorporated herein by reference).
|
|
|
|
10.4
|
|
Securityholders Agreement dated August 19, 2002 among Birds Eye Holdings LLC, Pro-Fac, Vestar/Agrilink Holdings LLC and others (filed as Exhibit 99.7 to Pro-Fac's Current Report on Form 8-K filed September 3, 2002 and
incorporated herein by reference).
|
|
|
|
10.5
|
|
Amendment No. 1 to the Securityholders Agreement dated August 30, 2003 among Birds Eye Holdings, LLC, Pro- Fac Cooperative, Inc., Vestar/Agrilink Holdings, LLC, and others (filed as Exhibit 10.7 to Pro-Facs Annual
Report on Form 10-K for the fiscal year ended June 28, 2003 and incorporated herein by reference).
|
|
|
|
10.6
|
|
Amended and Restated Limited Liability Company Agreement of Birds Eye Holdings LLC dated August 19, 2002 among Birds Eye Holdings LLC, Pro-Fac, Vestar/Agrilink Holdings and others (filed as Exhibit 99.8 to Pro-Fac's Current
Report on Form 8-K filed September 3, 2002 and incorporated herein by reference).
|
|
|
|
10.7
|
|
Amendment No. 1 to Amended and Restated Limited Liability Company Agreement of Birds Eye Holdings LLC (filed as Exhibit 10.10 to Pro-Facs Annual Report on Form 10-K for the fiscal year ended June 28, 2003 and
incorporated herein by reference).
|
|
|
|
10.8
|
|
Amendment No. 2 to Amended and Restated Limited Liability Company Agreement of Holdings LLC (filed as Exhibit 10.10 to Pro-Facs Annual Report on Form 10-K for the fiscal year ended June 26, 2004 and incorporated
herein by reference).
|
|
|
|
10.9
|
|
Amendment No. 3 to Amended and Restated Limited Liability Company Agreement of Birds Eye Holdings LLC (filed as Exhibit 10.11 to Pro-Facs Annual Report on Form 10-K for the fiscal year ended June 24, 2006 and
incorporated herein by reference).
|
|
|
|
|
|
|
|
10.10
|
|
Amendment No. 4 to Amended and Restated Limited
Liability Company Agreement of Birds Eye Holdings LLC (filed as Exhibit
10.12 to Pro-Facs Annual Report on Form 10-K for the fiscal year
ended June 24, 2006 and incorporated herein by reference).
|
|
|
|
|
|
|
|
10.11
|
|
Amendment No.5 to Amended and Restated Limited
Liability Company Agreement of Birds Eye Holdings LLC (filed as Exhibit
10.13 to Pro-Facs Annual Report on Form 10-K for the fiscal year
ended June 30, 2007).
|
|
|
|
|
|
|
*
|
10.12
|
|
Employment Agreement between Pro-Fac and Stephen
R. Wright dated July 30, 2004 (filed as Exhibit 10.12 to Pro-
Facs
Annual Report on Form 10-K for the fiscal year ended June 26, 2004 and
incorporated herein by reference).
|
38
|
*
|
10.13
|
|
Extension and Amendment to Employment Agreement between Pro-Fac and Stephen R.
Wright dated March 23, 2006 (filed as Exhibit 10.1 to Pro-Facs Quarterly Report on Form 10-Q for the third fiscal quarter ended March 25,
2006 and incorporated herein by reference).
|
|
|
*
|
10.14
|
|
Employment Agreement Extension between Pro-Fac and Stephen R. Wright effective February 14, 2008 (filed
herewith).
|
|
|
*
|
10.15
|
|
Summary of Compensation Arrangements for the Cooperatives Named Executive Officer and Directors (filed
herewith).
|
|
|
*
|
10.16
|
|
Pro-Fac Cooperative, Inc. Severance Plan (filed as Exhibit 10.17 to Pro-Facs Annual Report on Form 10-K for the
fiscal year ended June 30, 2007).
|
|
|
|
|
|
|
|
10.17
|
|
Amendment to Agreements - Credit Agreement dated August 19, 2002 and Termination Agreement dated August 19, 2002 - between Pro-Fac Cooperative, Inc. and Birds Eye Foods, Inc., dated March 28, 2007 (incorporated by reference
to Exhibit 10.1 to Pro-Fac Cooperative, Inc.s Current Report on Form 8-k filed with the Securities and Exchange Commission on March 29, 2007).
|
|
|
|
10.18
|
|
Services Agreement dated April 13, 2007 between Pro-Fac Cooperative, Inc. and
Farm Fresh First, LLC (incorporated by reference to Exhibit 10.1 to Pro-Fac Cooperatives
Current Report on Form 8-K filed with Securities
and Exchange Commission on April 17, 2007).
|
|
|
|
10.19
|
|
Raw Product Supply Agreement dated April 17, 2007 between Pro-Fac Cooperative, Inc. and Allens, Inc. (incorporated by reference to Exhibit 10.1 to Pro-Fac Cooperatives Current Report on Form 8-K filed with the
Securities and Exchange Commission on April 20, 2007).
|
|
|
|
31
|
|
Section 302 Certification of the Principal Executive Officer and Principal Financial Officer (filed herewith).
|
|
|
|
32
|
|
Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 USC, Section 1350, as adopted pursuant to Section 906 (filed herewith).
|
|
*Management contracts or compensatory plans or arrangements.
(b)
|
See Item 15(a)(3) above.
|
(c)
|
Financial schedules are omitted because they are either not applicable or not required, or the required information is shown in the financial statements or the notes thereto.
|
|
39
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly
authorized.
|
|
|
|
PRO-FAC COOPERATIVE, INC.
|
|
|
|
Date:
September
25, 2008
|
|
BY:
|
/s/
|
Stephen
R. Wright
|
|
|
|
|
Stephen R. Wright
|
|
|
|
General Manager,
Chief Executive Officer,
|
|
|
|
Chief Financial
Officer and Secretary
|
|
|
|
(Principal Executive
Officer,
|
|
|
|
Principal Financial
Officer, and
|
|
|
|
Principal Accounting
Officer)
|
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Stephen R. Wright as his true and lawful attorney-in-fact and agent, with full power of substitution, for him, and
in his name, place and stead, in any and all capacities, to sign any amendments to this Report on Form 10-K, and to file the same, with Exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite or necessary to be done as fully to all intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
40
|
|
|
SIGNATURE
|
|
TITLE
|
|
Date
|
|
/s/
|
|
|
Peter
R. Call
|
|
President and Director
|
|
September 25, 2008
|
|
|
|
(PETER R. CALL)
|
|
|
|
|
|
/s/
|
|
|
Allan W. Overhiser
|
|
Vice President, Treasurer
and
|
|
September 25, 2008
|
|
|
|
|
|
Director
|
|
|
|
|
|
(ALLAN W. OVERHISER)
|
|
|
|
|
|
/s/
|
|
|
Steven
D. Koinzan
|
|
Vice President and Director
|
|
September 25, 2008
|
|
|
|
(STEVEN D. KOINZAN)
|
|
|
|
|
|
/s/
|
|
|
Bruce
R. Fox
|
|
Director
|
|
September 25, 2008
|
|
|
|
(BRUCE R. FOX)
|
|
|
|
|
|
/s/
|
|
|
Charles
R. Altemus
|
|
Director
|
|
September 25, 2008
|
|
|
|
(CHARLES R.
ALTEMUS)
|
|
|
|
|
|
/s/
|
|
|
Kenneth
A. Dahlstedt
|
|
Director
|
|
September 25, 2008
|
|
|
|
(KENNETH A.
DAHLSTEDT)
|
|
|
|
|
|
/s/
|
|
|
Robert
DeBadts
|
|
Director
|
|
September 25, 2008
|
|
|
|
(ROBERT DeBADTS)
|
|
|
|
|
|
/s/
|
|
|
Cornelius
D. Harrington, Jr.
|
|
Director
|
|
September 25, 2008
|
|
|
|
(CORNELIUS D.
HARRINGTON, JR.)
|
|
|
|
|
|
/s/
|
|
|
William
J. Lipinski
|
|
Director
|
|
September 25, 2008
|
|
|
|
(WILLIAM J.
LIPINSKI)
|
|
|
|
|
|
/s/
|
|
|
Joseph
Herman
|
|
Director
|
|
September 25, 2008
|
|
|
|
(JOSEPH HERMAN)
|
|
|
|
|
|
/s/
|
|
|
Kenneth
A. Mattingly
|
|
Director
|
|
September 25, 2008
|
|
|
|
(KENNETH A.
MATTINGLY)
|
|
|
|
|
|
/s/
|
|
|
Paul
E. Roe
|
|
Director
|
|
September 25, 2008
|
|
|
|
(PAUL E. ROE)
|
|
|
|
|
|
/s/
|
|
|
Darell
Sarff
|
|
Director
|
|
September 25, 2008
|
|
|
|
(DARELL SARFF)
|
|
|
|
|
|
/s/
|
|
|
Frank
M. Stotz
|
|
Director
|
|
September 25, 2008
|
|
|
|
(FRANK M. STOTZ)
|
|
|
|
|
|
/s/
|
|
|
James
Vincent
|
|
Director
|
|
September 25, 2008
|
|
|
|
(JAMES VINCENT)
|
|
|
|
|
|
/s/
|
|
|
Stephen
R. Wright
|
|
General Manager, Chief Executive
|
|
September 25, 2008
|
|
|
|
(STEPHEN R.
WRIGHT)
|
|
Officer, Chief Financial
Officer
|
|
|
|
|
|
|
|
and Secretary
|
|
|
|
|
|
|
|
(Principal Executive Officer,
|
|
|
|
|
|
|
|
Principal Financial Officer,
and
|
|
|
|
|
|
|
|
Principal Accounting Officer)
|
|
|
41
|
Exhibit
Index
|
|
|
|
|
|
Exhibit
Number
|
|
Description
|
|
|
|
|
|
2.1
|
|
Unit Purchase Agreement (filed as Exhibit 2.1
to Pro-Facs Form 8-K filed June 21, 2002 and incorporated herein
by reference).
|
|
|
3.1
|
|
Restated Certificate of Incorporation of Pro-Fac,
dated August 19, 2002 (filed as Exhibit 3.1 to Pro-Fac Form 10-K for
the fiscal year ended June 29, 2002 and incorporate herein by reference).
|
|
|
3.2
|
|
Bylaws of Pro-Fac Cooperative, Inc. as amended
January 25, 2007, (filed as Exhibit 3.(ii) to Pro-Facs Current
Report on Form 8-K with the Securities and Exchange Commission on January
31, 2007 and incorporated herein by reference).
|
|
|
10.1
|
|
Amended and Restated Marketing and Facilitation
Agreement dated August 19, 2002 between Pro-Fac and Birds Eye Foods (filed
as Exhibit 99.4 to Pro-Fac's Current Report on Form 8-K filed September
3, 2002 and incorporated herein by reference).
|
|
|
10.2
|
|
Termination Agreement dated August 19, 2002
between Pro-Fac and Birds Eye Foods (filed as Exhibit 99.3 to Pro-Fac's
Current Report on Form 8-K filed September 3, 2002 and incorporated herein
by reference).
|
|
|
10.3
|
|
Raw Product Supply Agreement with Seneca Foods
Corporation (filed as Exhibit 10.22 to Pro-Fac's Annual Report on Form
10-K for the fiscal year ended June 28, 1997 and incorporated herein
by reference).
|
|
|
10.4
|
|
Securityholders Agreement dated August 19,
2002 among Birds Eye Holdings LLC, Pro-Fac, Vestar/Agrilink Holdings
LLC and others (filed as Exhibit 99.7 to Pro-Fac's Current Report on
Form 8-K filed September 3, 2002 and incorporated herein by reference).
|
|
|
10.5
|
|
Amendment No. 1 to the Securityholders Agreement
dated August 30, 2003 among Birds Eye Holdings, LLC, Pro-Fac Cooperative,
Inc., Vestar/Agrilink Holdings, LLC, and others (filed as Exhibit 10.7
to Pro- Facs Annual Report on Form 10-K for the fiscal year ended
June 28, 2003 and incorporated herein by reference).
|
|
|
10.6
|
|
Amended and Restated Limited Liability Company
Agreement of Birds Eye Holdings LLC dated August 19, 2002 among Birds
Eye Holdings LLC, Pro-Fac, Vestar/Agrilink Holdings and others (filed
as Exhibit 99.8 to Pro-Fac's Current Report on Form 8-K filed September
3, 2002 and incorporated herein by reference).
|
|
|
10.7
|
|
Amendment No. 1 to Amended and Restated Limited
Liability Company Agreement of Birds Eye Holdings LLC (filed as Exhibit
10.10 to Pro-Facs Annual Report on Form 10-K for the fiscal year
ended June 28, 2003 and incorporated herein by reference).
|
|
|
10.8
|
|
Amendment No. 2 to Amended and Restated Limited
Liability Company Agreement of Holdings LLC (filed as Exhibit 10.10 to
Pro-Facs Annual Report on Form 10-K for the fiscal year ended June
26, 2004 and incorporated herein by reference).
|
|
|
10.9
|
|
Amendment No. 3 to Amended and Restated Limited
Liability Company Agreement of Birds Eye Holdings LLC (filed as Exhibit
10.11 to Pro-Facs Annual Report on Form 10-K for the fiscal year
ended June 24, 2006 and incorporated herein by reference).
|
|
|
|
|
|
10.10
|
|
Amendment No. 4 to Amended and Restated Limited
Liability Company Agreement of Birds Eye Holdings LLC (filed as Exhibit
10.12 to Pro-Facs Annual Report on Form 10-K for the fiscal year
ended June 24, 2006 and incorporated herein by reference).
|
|
|
|
|
|
10.11
|
|
Amendment No.5 to Amended and
Restated Limited Liability Company Agreement of Birds Eye Holdings LLC
(filed as Exhibit 10.13 to Pro-Facs Annual Report on Form 10-K
for the fiscal year ended June 30, 2007).
|
|
|
|
|
*
|
10.12
|
|
Employment Agreement between Pro-Fac
and Stephen R. Wright dated July 30, 2004 (filed as Exhibit 10.12
to
Pro-Facs Annual Report on Form 10-K for the fiscal year ended June
26, 2004 and incorporated herein by
reference).
|
|
|
|
|
42
*
|
10.13
|
|
Extension and Amendment
to Employment Agreement between Pro-Fac and Stephen R. Wright dated March
23, 2006 (filed as Exhibit 10.1 to Pro-Facs Quarterly Report on
Form 10-Q for the third fiscal quarter ended March 25, 2006 and incorporated
herein by reference).
|
|
*
|
10.14
|
|
Employment Agreement
Extension between Pro-Fac and Stephen R. Wright effective February 14,
2008 (filed herewith).
|
|
*
|
10.15
|
|
Summary of Compensation
Arrangements for the Cooperatives Named Executive Officer and Directors
(filed herewith).
|
|
*
|
10.16
|
|
Pro-Fac Cooperative,
Inc. Severance Plan (filed as Exhibit 10.17 to Pro-Facs Annual
Report on Form 10-K for the fiscal year ended June 30, 2007).
|
|
|
|
|
|
10.17
|
|
Amendment to Agreements - Credit
Agreement dated August 19, 2002 and Termination Agreement dated August
19, 2002 - between Pro-Fac Cooperative, Inc. and Birds Eye Foods, Inc.,
dated March 28, 2007 (incorporated by reference to Exhibit 10.1 to Pro-Fac
Cooperative, Inc.s Current Report on Form 8-k filed with the Securities
and Exchange Commission on March 29, 2007).
|
|
|
10.18
|
|
Services Agreement dated April
13, 2007 between Pro-Fac Cooperative, Inc. and Farm Fresh First, LLC
(incorporated by reference to Exhibit 10.1 to Pro-Fac Cooperatives
Current Report on Form 8-K filed with Securities and Exchange Commission
on April 17, 2007).
|
|
|
10.19
|
|
Raw Product Supply Agreement dated
April 17, 2007 between Pro-Fac Cooperative, Inc. and Allens, Inc. (incorporated
by reference to Exhibit 10.1 to Pro-Fac Cooperatives Current Report
on Form 8-K filed with the Securities and Exchange Commission on April
20, 2007).
|
|
|
31
|
|
Section 302 Certification of the
Principal Executive Officer and Principal Financial Officer (filed herewith).
|
|
|
32
|
|
Certification of Principal Executive
Officer and Principal Financial Officer pursuant to 18 USC, Section 1350,
as adopted pursuant to Section 906 (filed herewith).
|
|
*Management contracts or compensatory plans or arrangements.
43
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