AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 8, 2002
REGISTRATION NO. 333-92262
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2
TO
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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FLEMING COMPANIES, INC.
(Exact Name of Registrant as Specified in Its Charter)
<Table>
OKLAHOMA 5141 48-0222760
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
</Table>
1945 LAKEPOINTE DRIVE
LEWISVILLE, TEXAS 75057
(972) 906-8000
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
FOR CO-REGISTRANTS, SEE "TABLE OF CO-REGISTRANTS" ON FOLLOWING PAGE.
---------------------
CARLOS M. HERNANDEZ, ESQ.
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
FLEMING COMPANIES, INC.
1945 LAKEPOINTE DRIVE
LEWISVILLE, TEXAS 75057
(972) 906-8000
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
---------------------
COPIES TO:
JOHN M. NEWELL, ESQ.
LATHAM & WATKINS
505 MONTGOMERY STREET, SUITE 1900
SAN FRANCISCO, CALIFORNIA 94111
(415) 391-0600
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after the effective date of this registration statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration number of the earlier effective
registration number for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier, effective registration statement
for the same offering. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE SEC, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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TABLE OF CO-REGISTRANTS
<Table>
<Caption>
STATE OF I.R.S. EMPLOYER
JURISDICTION OF IDENTIFICATION PSICC
NAME ORGANIZATION NUMBER NUMBER
- ---- --------------- --------------- ------
ABCO Food Group, Inc. ................................... Nevada 88-0440077 5411
ABCO Markets, Inc. ...................................... Arizona 86-0491500 *
ABCO Realty Corp......................................... Arizona 86-0491499 *
AG, L.L.C................................................ Oklahoma ** **
American Logistics Group, Inc. .......................... Delaware 13-2656567 5141
ASI Office Automation, Inc. ............................. California 95-3256944 *
Baker's Food Group, Inc. ................................ Nevada 88-0440078 5411
Cardinal Wholesale, Inc. ................................ Minnesota 41-0969178 5194
C/M Products, Inc. ...................................... California 94-3104739 5194
Core-Mark International, Inc. ........................... Delaware 91-1295550 5194
Core-Mark Interrelated Companies, Inc.................... California 94-2317385 5194
Core-Mark MidContinent, Inc. ............................ Arkansas 74-2354997 5194
Dunigan Fuels, Inc. ..................................... Texas 52-2206478 5172
E.A. Morris Distributors Limited......................... Canada 91-1243227 *
FAVAR CONCEPTS, LTD...................................... Delaware 73-1570430 5411
Fleming Food Management Co., L.L.C....................... Oklahoma 73-1577381 5141
Fleming Foods of Texas, L.P.............................. Oklahoma 73-1577380 5141
Fleming International Ltd................................ Oklahoma 73-1414701 5141
Fleming Supermarkets of Florida, Inc. ................... Florida 65-0418543 5411
Fleming Transportation Service, Inc. .................... Oklahoma 73-1126039 5141
Fleming Wholesale, Inc. ................................. Nevada 93-1175982 5141
Food 4 Less Beverage Company, Inc. ...................... Texas ** **
FuelServ, Inc. .......................................... Delaware 75-2894483 5172
Gateway Insurance Agency, Inc. .......................... Wisconsin 39-1346803 5141
General Acceptance Corporation........................... California 95-3895935 *
Head Distributing Company................................ Georgia 58-1095258 5194
LAS, Inc. ............................................... Oklahoma 73-1410261 5411
Marquise Ventures Company, Inc. ......................... California 95-3983880 *
Minter-Weisman Co........................................ Minnesota 41-0809931 5194
Piggly Wiggly Company.................................... Oklahoma 73-1477999 6794
Progressive Realty, Inc. ................................ Oklahoma 73-1485750 5141
Rainbow Food Group, Inc. ................................ Nevada 88-0440079 5411
Retail Investments, Inc. ................................ Nevada 86-0900985 5411
Retail Supermarkets, Inc. ............................... Texas 74-0658440 5411
RFS Marketing Services, Inc. ............................ Oklahoma 73-1489627 5141
Richmar Foods, Inc. ..................................... California 68-0095094 5411
Scrivner Transportation, Inc. ........................... Oklahoma 73-1288028 *
</Table>
- ---------------
* Inactive entity.
** No I.R.S. Employer Identification Number or PSICC Number -- subsidiary
created solely for liquor license.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED OCTOBER 8, 2002
PRELIMINARY PROSPECTUS
FLEMING COMPANIES, INC.
OFFER TO EXCHANGE
UP TO
$260,000,000 AGGREGATE PRINCIPAL AMOUNT OF ITS
9 7/8% SENIOR SUBORDINATED NOTES DUE 2012,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT,
FOR ANY AND ALL OF ITS OUTSTANDING 9 7/8% SENIOR SUBORDINATED NOTES DUE 2012
MATERIAL TERMS OF THE EXCHANGE OFFER
- The exchange offer expires at 5:00 p.m., New York City time, on
, 2002, unless extended.
- We will exchange all outstanding notes that are validly tendered and not
validly withdrawn for an equal principal amount of notes which are
registered under the Securities Act.
- The exchange offer is not subject to any conditions other than that it
not violate applicable law or any applicable interpretation of the staff
of the SEC.
- You may withdraw tenders of outstanding notes at any time before the
exchange offer expires.
- The exchange of notes will not be a taxable event for U.S. federal income
tax purposes.
- We will not receive any proceeds from the exchange offer.
- The terms of the new series of notes are substantially identical to the
outstanding notes, except for transfer restrictions and registration
rights relating to the outstanding notes.
- You may tender outstanding notes only in denominations of $1,000 and
multiples of $1,000.
- Our affiliates may not participate in the exchange offer.
PLEASE REFER TO "RISK FACTORS" BEGINNING ON PAGE 11 OF THIS PROSPECTUS FOR
A DESCRIPTION OF THE RISKS YOU SHOULD CONSIDER WHEN EVALUATING THIS INVESTMENT.
We are not making this exchange offer in any state where it is not
permitted.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OF THE NOTES OR DETERMINED THAT THIS PROSPECTUS IS
ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is , 2002.
We have not authorized any dealer, salesperson or other person to give any
information or to make any representations to you other than the information
contained in this prospectus. You must not rely on any information or
representations not contained in this prospectus as if we had authorized it.
This prospectus does not offer to sell or solicit an offer to buy any securities
other than the registered notes to which it relates, nor does it offer to buy
any of these notes in any jurisdiction from any person to whom it is unlawful to
make such offer or solicitation in such jurisdiction.
The information contained in this prospectus is current only as of the date
on the cover page of this prospectus, and may change after that date. We do not
imply that there has been no change in the information contained in this
prospectus or in our affairs since that date by delivering this prospectus.
THIS PROSPECTUS INCORPORATES IMPORTANT BUSINESS AND FINANCIAL INFORMATION
ABOUT US THAT IS NOT INCLUDED IN OR DELIVERED WITH THIS PROSPECTUS. THIS
INFORMATION IS AVAILABLE WITHOUT CHARGE TO YOU UPON WRITTEN OR ORAL REQUEST. IF
YOU WOULD LIKE A COPY OF ANY OF THIS INFORMATION, PLEASE SUBMIT YOUR REQUEST TO
1945 LAKEPOINTE DRIVE, BOX 299013, LEWISVILLE, TEXAS 75029, ATTENTION: LEGAL
DEPARTMENT, OR CALL (972) 906-8000 AND ASK TO SPEAK TO SOMEONE IN OUR LEGAL
DEPARTMENT. IN ADDITION, TO OBTAIN TIMELY DELIVERY OF ANY INFORMATION YOU
REQUEST, YOU MUST SUBMIT YOUR REQUEST NO LATER THAN , 2002, WHICH IS
FIVE BUSINESS DAYS BEFORE THE DATE THE EXCHANGE OFFER EXPIRES.
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TABLE OF CONTENTS
<Table>
Industry Data............................................... ii
Disclosure Regarding Forward-Looking Statements............. ii
Prospectus Summary.......................................... 1
Risk Factors................................................ 11
The Exchange Offer.......................................... 19
Use of Proceeds............................................. 28
Capitalization.............................................. 28
Selected Consolidated Financial Data of Fleming............. 29
Selected Consolidated Financial Data of Core-Mark........... 31
Unaudited Pro Forma Condensed Consolidated Financial
Information............................................... 33
Business.................................................... 38
Management.................................................. 50
Principal and Management Shareholders....................... 55
Description of Other Indebtedness........................... 57
Description of Notes........................................ 59
Book-Entry; Delivery and Form............................... 92
Plan of Distribution........................................ 95
Material United States Federal Income Tax Considerations.... 95
Legal Matters............................................... 101
Independent Auditors........................................ 101
Available Information....................................... 101
Incorporation by Reference.................................. 102
</Table>
i
INDUSTRY DATA
The statements included in this prospectus regarding our relative position
in the markets in which we operate are based on publicly available independent
industry publications and reports and our management's knowledge and experience
in the markets in which we operate. Although we believe the information is
reliable, we have not independently verified the accuracy or completeness of the
information.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
All statements other than statements of historical facts included or
incorporated by reference in this prospectus, including statements in the
section entitled "Risk Factors" and elsewhere in this prospectus regarding our
future financial position, business strategy and our management's plans and
objectives for future operations, are forward-looking statements.
Forward-looking statements generally can be identified by the use of
forward-looking terminology such as "may," "will," "expect," "intend,"
"estimate," "anticipate," "believe" or "continue" or the negative thereof or
variations thereon or similar terminology. Although we believe that the
expectations reflected in these forward-looking statements are reasonable, these
expectations may not prove to be correct. Important factors that could cause
actual results to differ materially from our expectations are disclosed under
the section "Risk Factors" and elsewhere in this prospectus, including in
conjunction with the forward-looking statements included and incorporated by
reference in this prospectus.
Our actual results, performance or achievements could differ materially
from those expressed in, or implied by, the forward-looking statements. We
cannot assure you that any of the events anticipated by the forward-looking
statements will occur, or if any of them do, what impact they will have on our
results of operations or financial condition. We caution you not to place undue
reliance on these forward-looking statements, which speak only as of the date of
this prospectus. We undertake no obligation to update forward-looking statements
to reflect developments or information obtained after the date on the cover page
of this prospectus.
ii
PROSPECTUS SUMMARY
In this prospectus, the words "Fleming," "the Company," "ours," "us" and
"we" refer to Fleming Companies, Inc., the issuer of the notes, and its
subsidiaries. We will refer to the outstanding notes as the "old notes," and
will refer to new notes as the "exchange notes." Unless indicated otherwise, the
term "notes" refers to both the old notes and the exchange notes. The following
summary contains basic information about us and this exchange offer. For a more
complete understanding of this exchange offer, we encourage you to read this
entire document and the documents to which we have referred you.
THE EXCHANGE OFFER
The Old Notes................. We issued the old notes to Deutsche Bank
Securities Inc., Lehman Brothers Inc., Salomon
Smith Barney Inc., First Union Securities,
Inc., J.P. Morgan Securities Inc., Morgan
Stanley & Co. Incorporated and UBS Warburg LLC
on April 15, 2002. These initial purchasers
subsequently resold the old notes to "qualified
institutional buyers" as defined under Rule
144A of the Securities Act and to persons
outside the United States under Regulation S.
The purchasers of the old notes agreed to
comply with transfer restrictions and other
conditions.
The Exchange Offer............ We are offering to exchange our exchange notes
for our outstanding old notes that are properly
tendered and accepted. You may tender
outstanding old notes only in denominations of
$1,000 and multiples of $1,000. We will issue
the exchange notes on or promptly after the
exchange offer expires. As of the date of this
prospectus, $260,000,000 principal amount of
the old notes are outstanding.
Expiration Date............... The exchange offer will expire at 5:00 p.m.,
New York City time, on , 2002, unless
extended, in which case the expiration date
will mean the latest date and time to which we
extend the exchange offer.
Conditions to the Exchange
Offer......................... The exchange offer is not subject to any
condition other than that it not violate
applicable law or any applicable interpretation
of the staff of the SEC. The exchange offer is
not conditioned upon any minimum principal
amount of old notes being tendered for
exchange.
Procedures for Tendering Old
Notes......................... If you wish to tender your old notes for
exchange notes pursuant to the exchange offer
you must transmit to Manufacturers and Traders
Trust Company, as exchange agent, on or before
the expiration date, either:
- a computer generated message transmitted
through The Depository Trust Company's
Automated Tender Offer Program system and
received by the exchange agent and forming a
part of a confirmation of book-entry transfer
in which you acknowledge and agree to be
bound by the terms of the letter of
transmittal; or
- a properly completed and duly executed letter
of transmittal, which accompanies this
prospectus, or a facsimile of the letter of
transmittal, together with your old notes and
any other required documentation, to the
exchange agent at its address
1
listed in this prospectus and on the front
cover of the letter of transmittal.
If you cannot satisfy either of these
procedures on a timely basis, then you should
comply with the guaranteed delivery procedures
described below. By executing the letter of
transmittal, you will make the representations
to us described under "The Exchange
Offer -- Procedures for Tendering."
Special Procedures for
Beneficial Owners............. If you are a beneficial owner whose old notes
are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee
and you wish to tender your old notes in the
exchange offer, you should contact the
registered holder promptly and instruct the
registered holder to tender on your behalf. If
you wish to tender on your own behalf, you must
either (1) make appropriate arrangements to
register ownership of the old notes in your
name or (2) obtain a properly completed bond
power from the registered holder, before
completing and executing the letter of
transmittal and delivering your old notes.
Guaranteed Delivery
Procedures.................... If you wish to tender your old notes and time
will not permit the documents required by the
letter of transmittal to reach the exchange
agent before the expiration date, or the
procedure for book-entry transfer cannot be
completed on a timely basis, you must tender
your old notes according to the guaranteed
delivery procedures described in this
prospectus under the heading "The Exchange
Offer -- Guaranteed Delivery Procedures."
Acceptance of Old Notes and
Delivery of Exchange Notes.... Subject to the satisfaction or waiver of the
conditions to the exchange offer, we will
accept for exchange any and all old notes which
are validly tendered in the exchange offer and
not withdrawn before 5:00 p.m., New York City
time, on the expiration date.
Withdrawal Rights............. You may withdraw the tender of your old notes
at any time before 5:00 p.m., New York City
time, on the expiration date, by complying with
the procedures for withdrawal described in this
prospectus under the heading "The Exchange
Offer -- Withdrawal of Tenders."
Material United States Federal
Income Tax Considerations..... The exchange of notes will not be a taxable
event for United States federal income tax
purposes. For a discussion of the material
federal income tax consequences relating to the
exchange of notes, see "Material United States
Federal Income Tax Considerations."
Exchange Agent................ Manufacturers and Traders Trust Company, the
trustee under the indenture governing the old
notes, is serving as the exchange agent.
Consequences of Failure to
Exchange Old Notes............ If you do not exchange your old notes for
exchange notes, you will continue to be subject
to the restrictions on transfer provided
2
in the old notes and in the indenture governing
the old notes. In general, the old notes may
not be offered or sold, unless registered under
the Securities Act, except pursuant to an
exemption from, or in a transaction not subject
to, the Securities Act and applicable state
securities laws. We do not currently plan to
register the old notes under the Securities
Act. See "Risk Factors -- If you do not
exchange your old notes pursuant to this
exchange offer, you may never be able to sell
your old notes."
Registration Rights
Agreement..................... You are entitled to exchange your old notes for
exchange notes with substantially identical
terms. The exchange offer satisfies this right.
After the exchange offer is completed, you will
no longer be entitled to any exchange or
registration rights with respect to your old
notes.
WE EXPLAIN THE EXCHANGE OFFER IN GREATER DETAIL BEGINNING ON PAGE 19.
3
THE EXCHANGE NOTES
The form and terms of the exchange notes are the same as the form and terms
of the old notes, except that the exchange notes will be registered under the
Securities Act and, therefore, the exchange notes will not be subject to the
transfer restrictions, registration rights and provisions providing for an
increase in the interest rate applicable to the old notes. The exchange notes
will evidence the same debt as the old notes and both the old notes and the
exchange notes, which we will collectively refer to as the "notes," are governed
by the same indenture.
Securities Offered............ $260,000,000 principal amount of 9 7/8% senior
subordinated notes due 2012.
Issuer........................ Fleming Companies, Inc.
Maturity Date................. May 1, 2012.
Interest...................... The exchange notes will bear interest at the
rate of 9 7/8% per year (calculated using a
360-day year), payable every six months on May
1 and November 1, commencing November 1, 2002.
Interest on the exchange notes will accrue from
the last interest payment date on which
interest was paid on the old notes, or if no
interest was paid on the old notes, from the
date of issuance of the old notes, which was
April 15, 2002. Holders whose old notes are
accepted for exchange will be deemed to have
waived their right to receive any interest
accrued on the old notes from the last interest
payment date.
Ranking....................... The notes are our general unsecured obligations
subordinated in right of payment to all our
existing and future Senior Indebtedness,
including all our obligations under our credit
agreement, our 10 1/8% senior notes due 2008
and our 9 1/4% senior notes due 2010 and will
rank equal in right of payment with all our
existing and future senior subordinated
indebtedness, including our outstanding 10 5/8%
senior subordinated notes due 2007 and our
5 1/4% convertible senior subordinated notes
due 2009, and senior to all our future
subordinated indebtedness. As of July 13, 2002,
we and our subsidiaries had a total of
approximately $2.2 billion of indebtedness, of
which approximately $1.4 billion was Senior
Indebtedness, and our credit facility would
have provided additional capacity of up to
approximately $404 million.
Note Guarantees............... The Note Guarantees are general unsecured
obligations of the Subsidiary Guarantors,
subordinated in right of payment to all such
Subsidiary Guarantors' existing and future
Senior Indebtedness, and rank equal in right of
payment to all such Subsidiary Guarantors'
existing and future senior subordinated
indebtedness and senior to all future
subordinated indebtedness of such Subsidiary
Guarantors. If we create or acquire a new
wholly-owned subsidiary or if any subsidiary
guarantees certain other debt, it will
guarantee the notes unless we designate the
subsidiary as an "unrestricted subsidiary"
under the indenture.
Optional Redemption........... The notes are redeemable at our option, in
whole or in part, at any time on or after May
1, 2007 at the redemption prices set forth
herein, plus accrued and unpaid interest.
4
Optional Redemption After
Equity Offerings.............. At any time (which may be more than once)
before the third anniversary of the issue date
of the old notes, we can choose to redeem up to
35% of the initial aggregate principal amount
of the notes with money that we raise in one or
more equity offerings, as long as:
- we pay 109.875% of the face amount of the
notes, plus interest;
- we redeem the notes within 90 days of
completing the equity offering; and
- at least 65% of the initial aggregate
principal amount of the notes issued remains
outstanding afterwards.
Change of Control Offer....... Upon the occurrence of a change of control of
Fleming, each holder of notes will have the
right to require us to purchase such holder's
notes at a purchase price of 101% of the
principal amount thereof, plus accrued and
unpaid interest.
We might not be able to pay you the required
price for notes you present to us at the time
of a change of control, because:
- we might not have enough funds at that time;
- the terms of our senior debt may prevent us
from paying; or
- our bylaws may prevent us from paying.
Certain Indenture
Provisions.................... The indenture governing the notes contains
covenants limiting our (and most or all of our
subsidiaries') ability to:
- incur additional debt;
- pay dividends or distributions on our capital
stock or repurchase our capital stock;
- issue stock of subsidiaries;
- make certain investments;
- create liens on our assets to secure debt;
- enter into transactions with affiliates;
- merge or consolidate with another company;
and
- transfer and sell assets.
These covenants are subject to a number of
important limitations and exceptions.
Form of Exchange Notes........ The exchange notes will be represented by one
or more permanent global certificates, in fully
registered form, deposited with a custodian
for, and registered in the name of a nominee
of, The Depository Trust Company, as
depositary. You will not receive exchange notes
in certificated form unless one of the events
described in the section entitled "Book-Entry;
Delivery and Form" occurs. Instead, beneficial
interests in the exchange notes will be shown
on, and transfers of these notes will be
5
effected only through, records maintained in
book-entry form by The Depository Trust Company
and its participants.
Use of Proceeds............... We will not receive any cash proceeds from the
exchange offer. The exchange offer satisfies an
obligation to holders of old notes under the
registration rights agreement. The net proceeds
from the $260 million old notes offering, after
deducting estimated fees and expenses, were
approximately $251 million. We used the net
proceeds from the old notes offering to repay
our $250 million of 10 1/2% senior subordinated
notes due 2004, which we redeemed on June 1,
2002 at a redemption price of 102.625% of the
aggregate outstanding principal amount thereof.
Risk Factors.................. Investing in the notes involves substantial
risks. See the section entitled "Risk Factors"
for a description of certain of the risks you
should consider before investing in the notes.
WE EXPLAIN THE EXCHANGE NOTES IN GREATER DETAIL BEGINNING ON PAGE 59.
6
THE COMPANY
Fleming is an industry leader in the distribution of consumer package
goods. As a result of our acquisition of Core-Mark International, Inc. on June
18, 2002 (the "Acquisition"), our distribution group now serves approximately
50,000 retail locations across the United States and western Canada, including
approximately 3,000 supermarkets, approximately 40,000 convenience stores and
approximately 7,000 supercenters, discount stores, limited assortment stores,
drug stores, specialty stores and other stores.
On a pro forma basis after giving effect to the Acquisition, our
distribution group net sales were $16.6 billion for 2001 and $9.0 billion for
the 28 weeks ended July 13, 2002. Our distribution group represented
approximately 87% and 88% of our pro forma total net sales in 2001 and for the
28 weeks ended July 13, 2002. To supply our customers, we currently have a
network of 24 high velocity case-pick and flow-through distribution centers, 26
high velocity piece-pick distribution centers and five low velocity case-pick
and piece-pick distribution centers, that have a total of approximately 21
million square feet of warehouse space. We employ the high velocity case-pick
method to distribute items that sell quickly, such as grocery items. This method
allows us to select products in case quantities and then aggregate and
distribute them on pallets. We use flow-through distribution methods to
distribute items that move rapidly through the distribution center in full
pallet quantities, such as bulk paper, water and promotional grocery items. We
also use the high velocity piece-pick method to distribute consumer goods that
sell quickly such as tobacco, candy, snacks, fast food and beverages to
convenience-oriented retailers. This method selects products in single-unit
quantities and distributes them in totes. We use low velocity case-pick and
piece-pick distribution methods to distribute products that turn least often,
such as health and beauty aids, general merchandise and specialty and
slow-moving grocery items.
Our retail group operates 110 price impact supermarkets. Price impact
supermarkets offer everyday low prices, typically below the prices of
market-leading conventional supermarkets, focus on high-quality perishables and
typically cost less to build, maintain and operate than conventional
supermarkets. In addition, we operate 17 limited assortment stores under the
yes!LESS(R) banner. Limited assortment stores offer a narrow selection of
low-price, private label food and other consumable goods and general merchandise
at deep-discount prices. Our retail group net sales were $2.4 billion for 2001
and $1.2 billion for the 28 weeks ended July 13, 2002, representing
approximately 13% and 12% of our total net sales for each respective period, on
a pro forma basis after giving effect to the Acquisition. Of those amounts,
approximately $2.0 billion and $1.2 billion were attributable to continuing
retail formats for each respective period.
Kmart Corporation is our largest customer, accounting for 17% of our net
sales in 2001, on a pro forma basis after giving effect to the Acquisition. We
began shipments under a ten-year agreement in April 2001, with full
implementation in July 2001. On January 22, 2002, Kmart and certain of its
subsidiaries filed voluntary petitions for relief under Chapter 11 of the U.S.
Bankruptcy Code. Shortly thereafter, we and Kmart entered into a critical vendor
agreement under the terms of which Kmart paid us $76 million of outstanding
accounts receivable and we agreed to continue to supply Kmart for two years. We
cannot predict what effect this bankruptcy will have on us, but Kmart's closure
of 283 stores has resulted in the elimination of sales to those stores. Further,
a failure by Kmart to successfully reorganize or to continue as a going concern
would eliminate sales to Kmart. For more information, see "Risk Factors -- We
may be materially adversely affected by the bankruptcy of Kmart Corporation" on
page 12.
RECENT DEVELOPMENTS
After the completion of the Acquisition, we began an evaluation of
strategic alternatives related to our price-impact retail stores. After
completing this strategic evaluation, we announced on September 24, 2002 our
decision to divest all 110 of our price impact supermarkets, which we operate
under the Food 4 Less and Rainbow Foods banners.
We have contacted and have begun negotiations with potential buyers for
these stores, including with self-distributing chains and regional and
independent supermarket operators. We believe that the actual
7
disposition of these retail assets will occur through a series of sales to
multiple buyers, beginning in the fourth quarter of 2002 and completed in 2003.
We expect to apply the proceeds from the sale of these stores to reduce
outstanding debt under our credit facility.
8
SUMMARY HISTORICAL CONSOLIDATED AND UNAUDITED PRO FORMA FINANCIAL INFORMATION
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
The following table displays our summary financial data for the periods
ended and as of the dates indicated. We derived the historical data for the
fiscal years ended December 25, 1999, December 30, 2000 and December 29, 2001
and as of those dates from our audited consolidated financial statements. We
derived the historical data for the 28 weeks ended July 14, 2001 and July 13,
2002 and as of those dates from our unaudited consolidated condensed financial
statements, which include all adjustments that management considers necessary
for a fair presentation of our financial position and results of operation for
those periods. The historical data for the 28 weeks ended July 13, 2002 are not
necessarily indicative of the results that may be expected for any other interim
period or for the full fiscal year ending December 28, 2002. The summary
unaudited pro forma income statement data give effect to the Acquisition and
related financings as if each of these transactions had occurred at the
beginning of the period. The summary pro forma financial data are not intended
to represent our financial position or results of operations had these
transactions been completed as of such dates or to project our financial
position or results of operations for any future period or date. You should read
the information set forth below together with the other financial information
contained or incorporated by reference in this prospectus.
<Table>
<Caption>
HISTORICAL PRO FORMA
------------------------------------------------------------------ ---------
FISCAL YEAR ENDED(1) 28 WEEKS ENDED 28 WEEKS
------------------------------------------ --------------------- ENDED
DECEMBER 25, DECEMBER 30, DECEMBER 29, JULY 14, JULY 13, JULY 13,
1999(2) 2000(3) 2001(4) 2001(5) 2002(6) 2002
------------ ------------ ------------ --------- --------- ---------
INCOME STATEMENT DATA:
Net sales(7)......................... $14,218 $14,369 $15,558 $7,583 $8,616 $10,222
Costs and expenses:
Cost of sales(7)................... 12,781 13,022 14,367 6,953 7,997 9,531
Selling and administrative......... 1,262 1,187 961 526 457 506
Interest expense................... 165 175 166 92 93 105
Interest income and other.......... (30) (25) (24) (15) (15) (15)
Impairment/restructuring charge
(credit)......................... 103 213 (24) (27) 27 27
Litigation charge (credit)......... -- (2) 49 49 -- --
------- ------- ------- ------ ------ -------
Total costs and expenses....... 14,281 14,570 15,495 7,578 8,559 10,154
------- ------- ------- ------ ------ -------
Earnings (loss) before taxes......... (63) (201) 63 5 57 68
Taxes on income (loss)............... (18) (79) 36 3 22 27
------- ------- ------- ------ ------ -------
Earnings (loss) before extraordinary
charge............................. (45) (122) 27 2 35 $ 41
=======
Extraordinary charge from early
retirement of debt (net of
taxes)............................. -- -- (4) (3) (8)
------- ------- ------- ------ ------
Net earnings (loss)............ $ (45) $ (122) $ 23 $ (1) $ 27
======= ======= ======= ====== ======
Diluted earnings (loss) per share.... $ (1.17) $ (3.15) $ 0.52 $(0.03) $ 0.57 $ 0.74
BALANCE SHEET DATA: (AT END OF
PERIOD)
Cash and cash equivalents.......... $ 7 $ 30 $ 17 $ 14 $ 41
Total assets....................... 3,573 3,403 3,655 3,546 4,362
Total debt (including current
maturities and capital leases)... 1,694 1,669 1,811 1,689 2,208
Shareholders' equity............... 561 427 498 486 695
OTHER FINANCIAL AND OPERATING DATA:
EBITDAL(8)......................... $ 281 $ 154 $ 385 $ 183 $ 231 $ 261
Depreciation and amortization(9)... 158 169 166 87 82 89
Capital expenditures............... 166 151 238 112 98
</Table>
- ---------------
(1) Fiscal 2000 is a 53-week year; all other years are 52 weeks.
(2) The results in 1999 reflect an impairment/restructuring charge with related
costs totaling $137 million ($92 million after-tax) related to our strategic
plan. Such period also reflects unusual items ($31 million charge
9
to close ten conventional retail stores, income of $22 million from
extinguishing a portion of the self-insured workers' compensation liability,
interest income of $9 million related to refunds in federal income taxes from
prior years, and $6 million in gains from the sale of distribution facilities)
netting to $6 million of income ($3 million after-tax).
(3) The results in 2000 reflect an impairment/restructuring charge with related
costs totaling $309 million ($183 million after-tax) relating to our
strategic plan. Such period also reflects unusual items ($10 million charge
related primarily to asset impairment on retail stores, income of $2 million
relating to litigation settlements, and $9 million in gains from the sale of
distribution facilities) netting to less than $1 million of income ($1
million loss after-tax).
(4) The results in 2001 reflect an impairment/restructuring credit totaling $24
million ($25 million after-tax reflecting the tax expense impact of goodwill
permanent differences from the sale of certain retail stores) relating to
our strategic plan. Such period also reflects unusual items ($49 million in
charges relating to litigation settlements, $20 million in charges relating
to Kmart's bankruptcy reorganization and $2 million due to early retirement
of debt) netting to approximately $70 million in charges ($42 million
after-tax).
(5) The results in the first two quarters of 2001 reflect an
impairment/restructuring net charge with related costs totaling $12 million
($7 million after-tax) relating to our strategic plan. Such period also
reflects unusual items ($49 million in charges relating to litigation
settlements and approximately $2 million in charges due to early retirement
of debt) netting to approximately $63 million in charges ($38 million
after-tax).
(6) The results in the first two quarters of 2002 reflect an
impairment/restructuring charge totaling $27 million ($16 million after-tax)
relating to the closure of two distribution facilities and certain
integration costs related to recent acquisitions. Such period also reflects
approximately $3 million ($2 million after-tax) in charges due to early
retirement of debt. Also, cash and cash equivalents and total debt amounts
exclude amounts related to Core-Mark's accounts receivable securitization
facility and related accrued interest as these amounts were being held in
trust to repay the facility in July 2002.
(7) During the first quarter of 2002, we adopted EITF 01-9 and reduced sales and
cost of sales for all prior periods with the impact on any year reported not
exceeding $75 million. The adoption had no effect on gross margins or
earnings.
(8) EBITDAL is earnings before extraordinary items, interest expense, income
taxes, depreciation and amortization, equity investment results and LIFO
provision. We present EBITDAL to help us describe our ability to generate
cash flows that can be used to service our debt; however, conditions may
require conservation of funds for other uses. EBITDAL is a non-GAAP
liquidity measure commonly used in our industry and should not be considered
as an alternative measure of our net income or cash flows from operations as
computed in accordance with GAAP. Amounts presented may not be comparable to
similar measures disclosed by other companies.
<Table>
<Caption>
PRO FORMA
FISCAL YEAR ENDED 28 WEEKS ENDED 28 WEEKS
------------------------------------------ ------------------- ENDED
DECEMBER 25, DECEMBER 30, DECEMBER 29, JULY 14, JULY 13, JULY 13,
1999 2000 2001 2001 2002 2002
------------ ------------ ------------ -------- -------- ---------
Earnings (loss) before extraordinary
charge...................................... $(45) $(122) $ 27 $ 2 $ 35 $ 41
Interest expense............................. 165 175 166 92 93 105
Taxes on income (loss)....................... (18) (79) 36 3 22 27
Depreciation and amortization................ 158 169 166 87 82 89
LIFO adjustments............................. 11 3 (12) (1) (1) (1)
Equity investment results.................... 10 8 2 -- -- --
---- ----- ---- ---- ---- ----
EBITDAL...................................... $281 $ 154 $385 $183 $231 $261
</Table>
(9) Depreciation and amortization expense includes goodwill amortization, if
any, and excludes amortization of debt cost which is reflected in interest
expense. During the first quarter of 2002 we adopted SFAS No. 142 and ceased
amortizing goodwill cost. No prior period restatements were made. Goodwill
amortization did not exceed $33 million for any of the prior years reported.
10
RISK FACTORS
You should read and carefully consider the risks described below, together
with the other information contained in or incorporated by reference into this
prospectus, before making a decision to tender your old notes in the exchange
offer. The risk factors set forth below, other than the first risk factor set
forth below, are generally applicable to the old notes as well as the exchange
notes. If any of the following risks actually occur, our business, financial
condition, operating results and prospects could be materially adversely
affected, which in turn could adversely affect our ability to repay the notes.
IF YOU DO NOT EXCHANGE YOUR OLD NOTES PURSUANT TO THIS EXCHANGE OFFER, YOU MAY
NEVER BE ABLE TO SELL YOUR OLD NOTES.
If you are a holder of old notes, it may be difficult for you to sell old
notes that are not exchanged in the exchange offer. Those notes may not be
offered or sold unless they are registered or they are exempt from the
registration requirements under the Securities Act and applicable state
securities laws. The restrictions on transfer of your old notes arise because we
issued the old notes pursuant to an exemption from the registration requirements
of the Securities Act and applicable state securities laws. We do not intend to
register the old notes under the Securities Act.
If you do not tender your old notes or if we do not accept some of your old
notes, those notes will continue to be subject to the transfer and exchange
restrictions in:
- the indenture;
- the legend on the old notes; and
- the offering memorandum relating to the old notes.
Moreover, to the extent old notes are tendered and accepted in the exchange
offer, the trading market, if any, for the old notes would be adversely
affected.
WE HAVE A SUBSTANTIAL AMOUNT OF DEBT AND DEBT SERVICE OBLIGATIONS, WHICH COULD
ADVERSELY AFFECT OUR FINANCIAL HEALTH AND PREVENT US FROM FULFILLING OUR
OBLIGATIONS UNDER THE NOTES AND OUR OTHER OUTSTANDING DEBT INSTRUMENTS.
We have a substantial amount of debt outstanding. The following chart shows
certain important credit statistics as of July 13, 2002.
<Table>
<Caption>
AS OF JULY 13,
2002
--------------
(IN THOUSANDS)
Total debt (including capital leases)....................... $2,207,929
Shareholders' equity........................................ 694,779
Total capitalization........................................ 2,902,708
Debt to capitalization...................................... 76.1%
</Table>
The amount of our debt could have important consequences to you. For
example, it could:
- make it more difficult for us to satisfy our obligations with respect to
the notes and our other outstanding debt instruments;
- require us to dedicate a substantial portion of our cash flow to payments
on our debt;
- increase our vulnerability to general adverse economic and industry
conditions;
- limit our ability to fund future working capital, capital expenditures
and other general corporate requirements;
- limit our flexibility in planning for, or reacting to, changes in our
business and the industry in which we operate; and
11
- limit, along with the financial and other restrictive covenants in our
debt, among other things, our ability to borrow additional funds. If we
fail to comply with those covenants, it could result in an event of
default which, if not cured or waived, could cause our outstanding debt
to accelerate and become immediately due and payable.
We and our subsidiaries may be able to incur substantial additional debt in
the future, including secured debt. The terms of the indentures governing our
outstanding debt and our credit facility do not fully prohibit us or our
subsidiaries from doing so. As of July 13, 2002, our credit facility would have
provided additional capacity of up to approximately $404 million, all of which
would be secured. If new debt is added to our and our subsidiaries' current debt
levels, the related risks that we and they now face could intensify.
Our ability to make payments on and to refinance our debt will depend on
our financial and operating performance, which may fluctuate significantly from
quarter to quarter and is subject to prevailing economic conditions and to
financial, business and other factors beyond our control.
We cannot assure you that our business will generate sufficient cash flow
from operations or that future borrowings will be available to us under our
credit facility in an amount sufficient to enable us to pay our debt, including
the notes, or to fund our other liquidity needs. We may need to refinance all or
a portion of our debt, including the notes, on or before maturity. We cannot
assure you that we will be able to refinance any of our debt, including our
credit facility or the notes, on commercially reasonable terms or at all.
WE MAY BE MATERIALLY ADVERSELY AFFECTED BY THE BANKRUPTCY OF KMART CORPORATION.
Kmart Corporation is our largest customer, accounting for 17% of our net
sales in 2001, on a pro forma basis after giving effect to the Acquisition. We
began shipments under a ten-year agreement in April 2001, with full
implementation in July 2001. On January 22, 2002, Kmart and certain of its
subsidiaries filed voluntary petitions for relief under Chapter 11 of the U.S.
Bankruptcy Code. Shortly thereafter, we and Kmart entered into a critical vendor
agreement under the terms of which Kmart paid us $76 million of outstanding
accounts receivable and we agreed to continue to supply Kmart for two years. We
have asserted a prepetition claim in the bankruptcy proceeding for obligations
under our ten-year distribution agreement.
The terms of our distribution agreement provide that Kmart can terminate
if, among other things, the volume of Kmart's purchases declines by certain
amounts, if we materially breach our obligations or if we experience certain
types of changes of control. Either party can elect to terminate the
distribution agreement on 12 months' written notice given after the fifth
anniversary of its effective date, with the termination to take place at the end
of a transition period of up to an additional 12 months at Kmart's discretion.
Subject to the effect of the critical vendor agreement, Kmart has the right
to assume or reject the distribution agreement with us. If Kmart rejects it, a
breach by Kmart will result, effective immediately prior to the bankruptcy
filing date, but we may still have to supply Kmart for a transition period. If
Kmart assumes the distribution agreement, it would be required to cure all
defaults, including payment of our prepetition claim. Because Kmart represents a
substantial portion of our business, negative information about Kmart's
performance, financial condition, business prospects and progress through its
bankruptcy may adversely affect the market for and prices of the notes.
We cannot predict what effect this bankruptcy will have on us, but Kmart's
closure of 283 stores has resulted in the elimination of sales to those stores.
Further, a failure by Kmart to successfully reorganize or to continue as a going
concern would eliminate sales to Kmart. Also, although no material litigation is
currently outstanding, we may become involved in litigation related to the Kmart
bankruptcy, including litigation with vendors because we ordered product from
the vendors for delivery to Kmart.
12
THE NOTES ARE SUBORDINATED TO ALL SENIOR INDEBTEDNESS.
The notes and the guarantees of the notes by our subsidiaries are
subordinated in right of payment to all of our existing and future Senior
Indebtedness, as defined in the "Description of Notes -- Subordination" section
of this prospectus beginning on page 62. As a result, in the event of
bankruptcy, liquidation or reorganization or upon acceleration of the notes due
to an event of default and in specific other events, our assets will be
available to pay obligations on the notes only after all Senior Indebtedness has
been paid in full in cash or other payment satisfactory to the holders of the
notes. The incurrence of additional indebtedness and other liabilities could
adversely affect our ability to pay our obligations on the notes. As of July 13,
2002, we and our subsidiaries had $2.2 billion of indebtedness, of which $1.4
billion was senior to the notes. We anticipate that from time to time we may
incur additional indebtedness, including Senior Indebtedness.
NOT ALL OF OUR SUBSIDIARIES WILL GUARANTEE THE NOTES, AND YOUR RIGHT TO RECEIVE
PAYMENTS ON THE NOTES COULD BE ADVERSELY AFFECTED IF ANY OF OUR NON-GUARANTOR
SUBSIDIARIES DECLARES BANKRUPTCY, LIQUIDATE OR REORGANIZE.
Not all of our subsidiaries will guarantee the notes. In the event any of
our non-guarantor subsidiaries becomes insolvent, liquidates, reorganizes,
dissolves or otherwise winds up, holders of their indebtedness and their trade
creditors will generally be entitled to payment on their claims from the assets
of those subsidiaries before any of those assets are made available to us.
Consequently, your claims in respect of the notes will be effectively
subordinated to all of the liabilities of our non-guarantor subsidiaries.
THE INDENTURE GOVERNING THE NOTES, OUR CREDIT FACILITY AND OUR OTHER EXISTING
INDEBTEDNESS CONTAIN PROVISIONS THAT COULD MATERIALLY RESTRICT OUR BUSINESS.
The indenture governing the notes, our credit facility and our other
existing indebtedness contain a number of significant covenants that, among
other things, restrict our ability to:
- dispose of assets;
- incur additional debt;
- guarantee third-party obligations;
- repay other debt or amend other debt instruments;
- create liens on assets;
- enter into capital leases;
- make investments, loans or advances;
- make acquisitions or engage in mergers or consolidations;
- make capital expenditures; and
- engage in certain transactions with our subsidiaries and affiliates.
In addition, under our credit facility, we are required to meet a number of
financial ratios and tests. For more information on these ratios and tests, see
"Description of Other Indebtedness -- Senior Secured Credit Facility" beginning
on page 57.
Our ability to comply with these covenants may be affected by events beyond
our control. If we breach any of these covenants or restrictions, it could
result in an event of default under our credit facility and the documents
governing our other existing indebtedness, which would permit our lenders to
declare all amounts borrowed thereunder to be due and payable, together with
accrued and unpaid interest, and our senior lenders could terminate their
commitments to make further extensions of credit under our credit facility. If
we were unable to repay debt to our secured lenders, they could proceed against
the collateral securing the debt.
13
IF THE CUSTOMERS TO WHOM WE LEND MONEY OR FOR WHOM WE GUARANTEE STORE LEASE
OBLIGATIONS FAIL TO REPAY US, IT COULD RESULT IN SUBSTANTIAL LOSSES.
We provide subleases, extend loans to and make investments in many of our
retail store customers, often in conjunction with the establishment of long-term
supply contracts. As of July 13, 2002, we had an aggregate of approximately $115
million in outstanding net loans to our customers. Our loans to our customers
are generally not investment grade and are highly illiquid. We also have
investments in customers through direct financing leases of real property and
equipment, lease guarantees, operating leases or credit extensions for inventory
purchases.
Although we have strict credit policies and apply cost/benefit analyses to
these investment decisions, we face the risk that a portion of these outstanding
loans may result in credit losses. On a pro forma basis after giving effect to
the Acquisition, our credit loss expense from receivables as well as from
investments in customers was $40 million in 2001 (including a $17 million charge
relating to the Kmart bankruptcy) and approximately $4 million for the 28 weeks
ended July 13, 2002.
VARIOUS CHANGES IN THE DISTRIBUTION AND RETAIL MARKETS IN WHICH WE OPERATE HAVE
LED AND MAY CONTINUE TO LEAD TO REDUCED SALES AND MARGINS FOR US AND LOWER
PROFITABILITY FOR OUR CUSTOMERS.
The distribution and retail markets in which we operate are undergoing
accelerated change as distributors and retailers seek to lower costs and provide
additional services in an increasingly competitive environment. An example of
this is the growing trend of large self-distributing chains consolidating to
reduce costs and gain efficiencies. Eating away from home and alternative format
food stores, such as warehouse stores and supercenters, have taken market share
from traditional supermarket operators, including independent grocers, many of
whom are our customers. Vendors, seeking to ensure that more of their
promotional fees and allowances are used by retailers to increase sales volume,
increasingly direct promotional dollars to large self-distributing chains. We
believe that these changes have led to reduced sales, reduced margins and lower
profitability among many of our customers and, consequently, for us. If the
strategies we have developed in response to these changing market conditions are
not successful, our net sales may decline.
CONSUMABLE GOODS DISTRIBUTION IS A LOW-MARGIN BUSINESS AND IS SENSITIVE TO
ECONOMIC CONDITIONS.
We derive most of our revenues from the consumable goods distribution
industry. This industry is characterized by a high volume of sales with
relatively low profit margins. A significant portion of our sales are at prices
that are based on product cost plus a percentage markup. Consequently, our
results of operations may be negatively impacted when consumable goods prices go
down, even though our percentage markup may remain constant. The consumable
goods industry is also sensitive to national and regional economic conditions,
and the demand for our consumable goods has been diminished from time to time by
economic downturns.
WE FACE COMPETITION IN BOTH OUR DISTRIBUTION AND RETAIL MARKETS, AND IF WE ARE
UNABLE TO COMPETE EFFECTIVELY IN THESE MARKETS, WE MAY LOSE MARKET SHARE AND
SUFFER A DECLINE IN NET SALES.
Our distribution group operates in a highly competitive market. We face
competition from local, regional and national food distributors on the basis of
price, quality and assortment, schedules and reliability of deliveries and the
range and quality of services provided. We also compete with retail supermarket
chains that self-distribute, purchasing directly from vendors and distributing
products to their supermarkets for sale to the consumer. Consolidation of
self-distributing chains may produce even stronger competition for our
distribution group.
Our retail group competes with other food outlets on the basis of price,
quality and assortment, store location and format, sales promotions,
advertising, availability of parking, hours of operation and store appeal.
Traditional mass merchandisers have gained a growing foothold in food marketing
and distribution with alternative store formats, such as warehouse stores and
supercenters, which depend on concentrated buying power and low-cost
distribution technology. We expect that stores with alternative formats will
14
continue to increase their market share in the future. Retail consolidations not
only produce stronger competition for our retail group, but may also result in
declining sales in our distribution group if our existing customers are acquired
by self-distributing chains.
Some of our competitors have greater financial and other resources than we
do. In addition, consolidation in the industry, heightened competition among our
vendors and new entrants could create additional competitive pressures that
reduce our margins and adversely affect our business. If we fail to successfully
respond to these competitive pressures or to implement our strategies
effectively, we may lose market share and suffer a decline in net sales.
For more information, see "Business -- Competition" on page 45.
BECAUSE WE OWN AND OPERATE REAL ESTATE, WE FACE THE RISK OF BEING HELD LIABLE
FOR ENVIRONMENTAL DAMAGES THAT MAY OCCUR ON OUR PROPERTIES.
Our facilities and operations are subject to various laws, regulations and
judicial and administrative orders concerning protection of the environment and
human health, including provisions regarding the transportation, storage,
distribution, disposal or discharge of certain materials. In conformity with
these provisions, we have a comprehensive program for testing, removal,
replacement or repair of our underground fuel storage tanks and for site
remediation where necessary. Although we have established reserves which we
believe will be sufficient to satisfy the anticipated costs of all known
remediation requirements, we cannot assure you that these reserves will be
sufficient.
WE ARE A PARTY TO OR THREATENED WITH VARIOUS LITIGATION AND CONTINGENT LOSS
SITUATIONS ARISING IN THE ORDINARY COURSE OF OUR BUSINESS. IF ANY PROCEEDING IS
RESOLVED AGAINST US, IT COULD RESULT IN SUBSTANTIAL PAYMENTS BY US AND A
REDUCTION OF OUR EARNINGS.
We have recently been named a defendant in several securities lawsuits. For
more information, see "Business -- Legal Proceedings" beginning on page 48. In
addition, we are a party to or threatened with various litigation and contingent
loss situations arising in the ordinary course of our business including:
- disputes with customers and vendors;
- disputes with owners or creditors of financially troubled or failed
customers;
- disputes with employees;
- disputes with insurance carriers;
- disputes with landlords and lessees;
- disputes with tax authorities;
- litigation involving health and other effects of cigarette smoking and
other uses of tobacco; and
- litigation by the U.S. Department of Justice to recover federal Medicare
costs allegedly connected to smoking;
some of which may result in substantial payments. We incur the costs of
defending any litigation whether or not a claim has merit or is material. We
intend to vigorously defend against all lawsuits, but we cannot predict the
outcome of any case. An unfavorable outcome in any material case could result in
substantial payments by us and a reduction of our earnings.
BECAUSE WE SELL FOOD, TOBACCO AND OTHER PRODUCTS, WE ARE SUBJECT TO PRODUCT
LIABILITY CLAIMS.
Like any other seller of food, tobacco and other consumer products, we face
the risk of exposure to product liability claims in the event that people who
purchase products we sell become injured or experience illness from those
products. In particular, we and our subsidiaries sell a substantial amount of
tobacco products. For more information, see "Business -- Products" on page 45.
15
We carry umbrella liability insurance, but this insurance may not continue
to be available at a reasonable cost, or, even if it is available, it may not be
adequate to cover our liabilities. We generally seek contractual indemnification
and insurance coverage from parties supplying our products, but this
indemnification or insurance coverage is limited, as a practical matter, to the
creditworthiness of the indemnifying party and the policy limits of any
insurance provided by suppliers. If we do not have adequate insurance or
contractual indemnification to cover our liabilities, product liability claims
could materially reduce our earnings.
FROM TIME TO TIME WE MAY MAKE STRATEGIC ACQUISITIONS, WHICH WOULD REQUIRE US TO
INCUR SUBSTANTIAL COSTS AND POTENTIAL LIABILITIES FOR WHICH WE MAY NEVER
REALIZE THE ANTICIPATED BENEFITS.
We may seek strategic acquisitions of other distributors on a selective
basis. Since the beginning of 2001, we have acquired several businesses. For
more information on these acquisitions, see "Business -- Our Distribution
Group -- Strategic Acquisitions" on page 43.
We regularly engage in evaluations of potential acquisitions. Any potential
acquisition may result in significant transaction expenses, increased interest
expense and amortization of intangibles expense, increased capital expenditures,
increased depreciation expense and increased operating expense, any of which
could have a material adverse effect on our operating results.
Achieving the benefits of acquisitions will depend in part on our ability
to integrate those businesses with our business in an efficient manner. We
cannot assure you that this will happen or that it will happen in an efficient
manner. Our consolidation of operations following these acquisitions may require
substantial attention from our management. The diversion of management attention
and any difficulties encountered in the transition and integration process could
have a material adverse effect on our ability to achieve expected net sales,
operating expenses and operating results for these acquired businesses. We
cannot assure you that we will realize any of the anticipated benefits of any
acquisition, and if we fail to realize these anticipated benefits, our operating
performance could suffer.
WE DEPEND ON OUR SENIOR MANAGEMENT AND KEY PERSONNEL.
We substantially depend on the continued services and performance of our
senior management and other key personnel, particularly Mark S. Hansen, our
Chairman and Chief Executive Officer. The loss of the services of any of our
executive officers or key employees could harm our business. We have employment
agreements with each of Messrs. Hansen, Rider and Northcutt, none of which
expires prior to November 2003. We do not maintain "key person" life insurance
policies on these individuals or any of our other executive officers.
WE OPERATE IN A COMPETITIVE LABOR MARKET, AND A SUBSTANTIAL NUMBER OF OUR
EMPLOYEES ARE COVERED BY COLLECTIVE BARGAINING AGREEMENTS.
Our continued success will depend on our ability to attract and retain
qualified personnel in both our distribution and retail groups. We compete with
other businesses in our markets with respect to attracting and retaining
qualified employees. A shortage of qualified employees would require us to
enhance our wage and benefits packages in order to compete effectively in the
hiring and retention of qualified employees or to hire more expensive temporary
employees. In addition, approximately 38%, or approximately 9,750 of our
employees are covered by collective bargaining agreements, most of which expire
at various times over the course of the next five years.
We cannot assure you that we will be able to renew our respective
collective bargaining agreements, that our labor costs will not increase, that
we will be able to recover any increases through increased prices charged to
customers or that we will not suffer business interruptions as a result of
strikes or other work stoppages. If we fail to attract and retain qualified
employees, to control our labor costs, or to recover any increased labor costs
through increased prices charged to our customers, our earnings will be reduced
accordingly.
16
UNDER CERTAIN CIRCUMSTANCES, FEDERAL AND STATE LAWS MAY ALLOW COURTS TO VOID
THE GUARANTEES OF THE NOTES AND REQUIRE NOTEHOLDERS TO RETURN PAYMENTS THEY
RECEIVE FROM OUR SUBSIDIARY GUARANTORS.
Under the federal Bankruptcy Code and comparable provisions of state
fraudulent transfer laws, a court could void the guarantees or subordinate
claims in respect of the guarantees to all of a Subsidiary Guarantor's other
debts if, among other things, any Subsidiary Guarantor, at the time it incurred
the indebtedness evidenced by its guarantee:
- received less than reasonably equivalent value or fair consideration for
the incurrence of such guarantee; and
- was insolvent or rendered insolvent by reason of the incurrence; or
- was engaged in a business or transaction for which its remaining assets
constituted unreasonably small capital; or
- intended to incur, or believed that it would incur, debts beyond its
ability to pay as they became due.
In addition, a court could void any payment by a Subsidiary Guarantor or
require a noteholder to return the payment to a Subsidiary Guarantor or to a
fund for the benefit of its creditors.
The measure of insolvency for purposes of fraudulent transfer laws varies
depending upon the law applied in any proceeding. Generally, however, a
Subsidiary Guarantor would be considered insolvent if:
- the sum of its debts, including contingent liabilities, was greater than
the fair saleable value of its assets; or
- the present fair saleable value of its assets was less than the amount
that would be required to pay its probable liability on its existing
debts, including contingent liabilities, as they become absolute and
mature; or
- it could not pay its debts as they become due.
WE MAY NOT HAVE THE ABILITY TO RAISE THE FUNDS NECESSARY TO FINANCE THE CHANGE
OF CONTROL OFFER REQUIRED BY THE INDENTURE GOVERNING THE NOTES AND OUR OTHER
EXISTING INDEBTEDNESS.
Upon the occurrence of a change of control of our company, we will be
required to offer to repurchase all outstanding notes and other outstanding
debt. If a change of control were to occur, we cannot assure you that we would
have sufficient funds to pay the repurchase price for all the notes tendered by
the holders. Our credit facility and our other indentures contain, and any
future other agreements relating to other indebtedness to which we become a
party may contain, restrictions or prohibitions on our ability to repurchase
notes or may provide that an occurrence of a change of control constitutes an
event of default under, or otherwise requires payment of amounts borrowed under
those agreements. If a change of control occurs at a time when we are prohibited
from repurchasing the notes, we could seek the consent of our then existing
lenders and noteholders to the repurchase of the notes or attempt to refinance
the borrowings that contain the prohibition. If we were unable to obtain such a
consent or repay the borrowings, we would remain prohibited from repurchasing
the notes. In that case, our failure to repurchase tendered notes would
constitute an event of default under the indenture governing the notes and may
constitute a default under the terms of other indebtedness that we may enter
into from time to time.
OUR BYLAWS MAY NOT PERMIT US TO MAKE PAYMENTS TO HOLDERS AS REQUIRED UNDER THE
INDENTURE UPON THE OCCURRENCE OF A CHANGE OF CONTROL.
Our bylaws contain a provision that prohibits us from adopting a
shareholder rights plan or any other form of "poison pill" without the prior
approval of holders of at least a majority of the shares of our outstanding
capital stock. It is unclear whether this provision of our bylaws would prohibit
us from repurchasing the notes in the event of a change of control. If a court
concluded that the change of control
17
provisions of the indenture governing the notes were inconsistent with or
prohibited by our bylaws, we may not be able to repurchase the notes. For more
details, see the section "Description of Notes" in this prospectus under the
heading "Purchase of Notes upon a Change of Control" beginning on page 60.
YOU CANNOT BE SURE THAT A PUBLIC MARKET WILL DEVELOP FOR THE EXCHANGE NOTES
AND YOU MAY BE REQUIRED TO BEAR THE FINANCIAL RISK OF AN INVESTMENT IN THE
NOTES FOR AN INDEFINITE PERIOD OF TIME.
Before this exchange offer, there was no established trading market for the
exchange notes. We have been informed by certain initial purchasers of the old
notes that they intend to make a market in the exchange notes. However, they may
cease their market-making at any time. In addition, such market-making activity
will be subject to the limits imposed by the Securities Act and the Exchange
Act. Accordingly, we cannot assure you that any market for the exchange notes
will develop or, if one does develop, that it will be maintained. If a public
market for the exchange notes fails to develop or be sustained, the trading
price of the exchange notes could be materially adversely affected.
If a market for the exchange notes develops, the exchange notes might trade
at prices higher or lower than their initial debt offering price. The trading
price would depend on many factors, such as prevailing interest rates, the
market for similar securities, general economic conditions, and our financial
condition, performance and business prospects. Historically, the market for
non-investment grade debt has been subject to disruptions that have caused
substantial fluctuation in the prices of these securities. The market for the
notes may be subject to such disruptions, which could have an adverse effect on
the price of the notes. You should be aware that you may be required to bear the
financial risk of an investment in the notes for an indefinite period of time.
TERRORIST ATTACKS AND OTHER ACTS OF VIOLENCE OR WAR MAY AFFECT THE MARKETS ON
WHICH THE NOTES TRADE, THE MARKETS IN WHICH WE OPERATE, OUR OPERATIONS AND OUR
PROFITABILITY.
Terrorist attacks may negatively affect our operations and your investment.
There can be no assurance that there will not be further terrorist attacks
against the United States or U.S. businesses. These attacks or armed conflicts
may directly impact our physical facilities or those of our suppliers or
customers. Furthermore, these attacks may make travel and the transportation of
our supplies and products more difficult and more expensive and ultimately
affect our sales.
Also as a result of terrorism, the United States has entered into an armed
conflict which could have a further impact on our sales, our supply chain, and
our ability to deliver product to our customers. Political and economic
instability in some regions of the world may also result and could negatively
impact our business. The consequences of any armed conflict are unpredictable,
and we may not be able to foresee events that could have an adverse effect on
our business or your investment.
More generally, any of these events could cause consumer confidence and
spending to decrease or result in increased volatility in the United States and
worldwide financial markets and economy. They also could result in a worsening
of economic conditions in the United States or abroad. Any of these occurrences
could have a significant impact on our operating results, revenues and costs and
may result in the volatility of the market price for our securities and on the
future price of our securities.
18
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
We issued the old notes on April 15, 2002 to Deutsche Bank Securities Inc.,
Lehman Brothers Inc., Salomon Smith Barney Inc., First Union Securities, Inc.,
J.P. Morgan Securities Inc., Morgan Stanley & Co. Incorporated and UBS Warburg
LLC, the initial purchasers, pursuant to a purchase agreement. The initial
purchasers subsequently sold the old notes to "qualified institutional buyers,"
as defined in Rule 144A under the Securities Act, in reliance on Rule 144A, and
outside the United States under Regulation S of the Securities Act. As a
condition to the sale of the old notes, we entered into a registration rights
agreement with the initial purchasers on April 15, 2002. Pursuant to the
registration rights agreement, we agreed that we would:
(1) file a registration statement with the SEC with respect to the
exchange notes on or before July 12, 2002;
(2) use all reasonable efforts to cause the registration statement to
be declared effective by the SEC on or before October 11, 2002;
(3) use all reasonable efforts to keep the registration statement
effective until the closing of the exchange offer;
(4) use all reasonable efforts to keep the exchange offer open for not
less than 30 days (or longer if required by applicable law) after the date
that notice of the exchange offer is mailed to holders of the old notes;
and
(5) use our best efforts to consummate the exchange offer on or before
November 26, 2002.
We filed a copy of the registration rights agreement as an exhibit to the
registration statement.
RESALE OF THE EXCHANGE NOTES
Based upon an interpretation by the staff of the SEC contained in no-action
letters issued to third parties, we believe that you may exchange old notes for
exchange notes in the ordinary course of business. For further information on
the SEC's position, see Exxon Capital Holdings Corporation, available May 13,
1988, Morgan Stanley & Co. Incorporated, available June 5, 1991 and Shearman &
Sterling, available July 2, 1993, and other interpretive letters to similar
effect. You will be allowed to resell exchange notes to the public without
further registration under the Securities Act and without delivering to
purchasers of the exchange notes a prospectus that satisfies the requirements of
Section 10 of the Securities Act so long as you do not participate, do not
intend to participate, and have no arrangement with any person to participate,
in a distribution of the exchange notes. However, the foregoing does not apply
to you if you are:
- a broker-dealer who purchased the exchange notes directly from us to
resell pursuant to Rule 144A or any other available exemption under the
Securities Act; or
- you are an "affiliate" of ours within the meaning of Rule 405 under the
Securities Act.
In addition, if:
- you are a broker-dealer; or
- you acquire exchange notes in the exchange offer for the purpose of
distributing or participating in the distribution of the exchange notes,
you cannot rely on the position of the staff of the SEC contained in the
no-action letters mentioned above and must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction, unless an exemption from registration is otherwise
available.
19
Each broker-dealer that receives exchange notes for its own account in
exchange for old notes, which the broker-dealer acquired as a result of
market-making activities or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of the exchange notes.
The letter of transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. A broker-dealer may use
this prospectus, as it may be amended or supplemented from time to time, in
connection with resales of exchange notes received in exchange for old notes
which the broker-dealer acquired as a result of market-making or other trading
activities.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions described in this prospectus
and in the letter of transmittal, we will accept any and all old notes validly
tendered and not withdrawn before the expiration date. We will issue $1,000
principal amount of exchange notes in exchange for each $1,000 principal amount
of outstanding old notes surrendered pursuant to the exchange offer. You may
tender old notes only in integral multiples of $1,000.
The form and terms of the exchange notes are the same as the form and terms
of the old notes except that:
- we will register the exchange notes under the Securities Act and,
therefore, the exchange notes will not bear legends restricting their
transfer; and
- holders of the exchange notes will not be entitled to any of the rights
of holders of old notes under the registration rights agreement, which
rights will terminate upon the completion of the exchange offer.
The exchange notes will evidence the same debt as the old notes and will be
issued under the same indenture, so the exchange notes and old notes will be
treated as a single class of debt securities under the indenture.
As of the date of this prospectus, $260,000,000 in aggregate principal
amount of the old notes are outstanding and registered in the name of Cede &
Co., as nominee for The Depository Trust Company. Only registered holders of the
old notes, or their legal representative or attorney-in-fact, as reflected on
the records of the trustee under the indentures, may participate in the exchange
offer. We will not set a fixed record date for determining registered holders of
the old notes entitled to participate in the exchange offer.
You do not have any appraisal or dissenters' rights under the indenture in
connection with the exchange offer. We intend to conduct the exchange offer in
accordance with the provisions of the registration rights agreement and the
applicable requirements of the Securities Act, the Exchange Act and the rules
and regulations of the SEC.
We will be deemed to have accepted validly tendered old notes when, as and
if we had given oral or written notice of acceptance to the exchange agent. The
exchange agent will act as your agent for the purposes of receiving the exchange
notes from us.
If you tender old notes in the exchange offer you will not be required to
pay brokerage commissions or fees or, subject to the instructions in the letter
of transmittal, transfer taxes with respect to the exchange of old notes
pursuant to the exchange offer. We will pay all charges and expenses, other than
the applicable taxes described below, in connection with the exchange offer.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term expiration date will mean 5:00 p.m., New York City time on
, 2002, unless we, in our sole discretion, extend the exchange offer,
in which case the term expiration date will mean the latest date and time to
which we extend the exchange offer.
20
To extend the exchange offer, we will:
- notify the exchange agent of any extension orally or in writing; and
- mail to each registered holder an announcement that will include
disclosure of the approximate number of old notes deposited to date,
each before 9:00 a.m., New York City time, on the next business day after the
previously scheduled expiration date.
We reserve the right, in our reasonable discretion:
- to delay accepting any old notes:
- to extend the exchange offer; or
- if any conditions listed below under "-- Conditions" are not satisfied,
to terminate the exchange offer by giving oral or written notice of the
delay, extension or termination to the exchange agent.
We will follow any delay in acceptance, extension or termination as
promptly as practicable by oral or written notice to the registered holders. If
we amend the exchange offer in a manner we determine constitutes a material
change, we will promptly disclose the amendment in a prospectus supplement that
we will distribute to the registered holders. We will also extend the exchange
offer for a period of five to ten business days, depending upon the significance
of the amendment and the manner of disclosure, if the exchange offer would
otherwise expire during the five to ten business day period.
INTEREST ON THE EXCHANGE NOTES
The exchange notes will bear interest at the same rate and on the same
terms as the old notes. Consequently, the exchange notes will bear interest at a
rate equal to 9 7/8% per annum (calculated using a 360-day year). Interest will
be payable semi-annually on each May 1 and November 1.
You will receive interest on from the date of initial issuance of
the exchange notes, plus an amount equal to the accrued interest on the old
notes from the date of initial issuance of the old notes to the date of
exchange. We will deem the right to receive any interest accrued on the old
notes waived by you if we accept your old notes for exchange.
PROCEDURES FOR TENDERING
You may tender old notes in the exchange offer only if you are a registered
holder of old notes. To tender in the exchange offer, you must:
- complete, sign and date the letter of transmittal or a facsimile of the
letter of transmittal;
- have the signatures guaranteed if required by the letter of transmittal;
and
- mail or otherwise deliver the letter of transmittal or the facsimile to
the exchange agent at the address listed below under "-- Exchange Agent"
for receipt before the expiration date.
In addition, either:
- the exchange agent must receive certificates for the old notes along with
the letter of transmittal into its account at the depositary pursuant to
the procedure for book-entry transfer described below before the
expiration date;
- the exchange agent must receive a timely confirmation of a book-entry
transfer of the old notes, if the procedure is available, into its
account at the depositary pursuant to the procedure for book-entry
transfer described below before the expiration date; or
- you must comply with the guaranteed delivery procedures described below.
21
Your tender, if not withdrawn before the expiration date, will constitute
an agreement between you and us in accordance with the terms and subject to the
conditions described in this prospectus and in the letter of transmittal.
The method of delivery of old notes and the letter of transmittal and all
other required documents to the exchange agent is at your election and risk. We
recommend that instead of delivery by mail, you use an overnight or hand
delivery service, properly insured. In all cases, you should allow sufficient
time to assure delivery to the exchange agent before the expiration date. You
should not send letters of transmittal or old notes to us. You may request your
respective brokers, dealers, commercial banks, trust companies or nominees to
effect the transactions described above for you.
If you are a beneficial owner of old notes whose old notes are registered
in the name of a broker, dealer, commercial bank, trust company or other nominee
and you wish to tender your notes, you should contact the registered holder
promptly and instruct the registered holder to tender on your behalf. If you
wish to tender on your own behalf, before completing and executing the letter of
transmittal and delivering the old notes you must either:
- make appropriate arrangements to register ownership of the old notes in
your name; or
- obtain a properly completed bond power from the registered holder.
The transfer of registered ownership may take considerable time. Unless the
old notes are tendered:
(1) by a registered holder who has not completed the box entitled
"Special Issuance Instructions" or the box entitled "Special Delivery
Instructions" on the letter of transmittal; or
(2) for the account of:
- a member firm of a registered national securities exchange or of the
National Association of Securities Dealers, Inc.;
- a commercial bank or trust company having an office or correspondent
in the United States; or
- an "eligible guarantor institution" within the meaning of Rule 17Ad-15
under the Exchange Act that is a member of one of the recognized
signature guarantee programs identified in the letter of transmittal,
an eligible guarantor institution must guarantee the signatures on a letter of
transmittal or a notice of withdrawal described below under "-- Withdrawal of
Tenders."
If the letter of transmittal is signed by a person other than the
registered holder, the old notes must be endorsed or accompanied by a properly
completed bond power, signed by the registered holder as the registered holder's
name appears on the old notes.
If the letter of transmittal or any old notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, they
should so indicate when signing, and unless waived by us, they must submit
evidence satisfactory to us of their authority to so act with the letter of
transmittal.
The exchange agent and the depositary have confirmed that any financial
institution that is a participant in the depositary's system may utilize the
depositary's Automated Tender Offer Program to tender notes.
We will determine in our sole discretion all questions as to the validity,
form, eligibility, including time of receipt, acceptance and withdrawal of
tendered old notes, which determination will be final and binding. We reserve
the absolute right to reject any and all old notes not properly tendered or any
old notes our acceptance of which would, in the opinion of our counsel, be
unlawful. We also reserve the right to waive any defects, irregularities or
conditions of tender as to particular old notes. Our interpretation of the terms
and conditions of the exchange offer, including the instructions in the letter
of transmittal, will be final and binding on all parties. Unless waived, you
must cure any defects or irregularities in connection
22
with tenders of old notes within the time we determine. Although we intend to
notify you of defects or irregularities with respect to tenders of old notes,
neither we, the exchange agent nor any other person will incur any liability for
failure to give you that notification. Unless waived, we will not deem tenders
of old notes to have been made until you cure the defects or irregularities.
While we have no present plan to acquire any old notes that are not
tendered in the exchange offer or to file a registration statement to permit
resales of any old notes that are not tendered in the exchange offer, we reserve
the right in our sole discretion to purchase or make offers for any old notes
that remain outstanding after the expiration date. We also reserve the right to
terminate the exchange offer, as described below under "-- Conditions," and, to
the extent permitted by applicable law, purchase old notes in the open market,
in privately negotiated transactions or otherwise. The terms of any of those
purchases or offers could differ from the terms of the exchange offer.
If you wish to tender old notes in exchange for exchange notes in the
exchange offer, we will require you to represent that:
- you are not an affiliate of ours;
- you will acquire any exchange notes in the ordinary course of your
business; and
- at the time of completion of the exchange offer, you have no arrangement
with any person to participate in the distribution of the exchange notes.
In addition, in connection with the resale of exchange notes, any
participating broker-dealer who acquired the old notes for its own account as a
result of market-making or other trading activities must deliver a prospectus
meeting the requirements of the Securities Act. The SEC has taken the position
that participating broker-dealers may fulfill their prospectus delivery
requirements with respect to the exchange notes, other than a resale of an
unsold allotment from the original sale of the notes, with this prospectus.
RETURN OF NOTES
If we do not accept any tendered old notes for any reason described in the
terms and conditions of the exchange offer or if you withdraw or submit old
notes for a greater principal amount than you desire to exchange, we will return
the unaccepted, withdrawn or non-exchanged notes without expense to you as
promptly as practicable. In the case of old notes tendered by book-entry
transfer into the exchange agent's account at the depositary pursuant to the
book-entry transfer procedures described below, we will credit the old notes to
an account maintained with the depositary as promptly as practicable.
BOOK-ENTRY TRANSFER
The exchange agent will make a request to establish an account with respect
to the old notes at the depositary for purposes of the exchange offer within two
business days after the date of this prospectus, and any financial institution
that is a participant in the depositary's systems may make book-entry delivery
of old notes by causing the depositary to transfer the old notes into the
exchange agent's account at the depositary in accordance with the depositary's
procedures for transfer. However, although delivery of old notes may be effected
through book-entry transfer at the depositary, you must transmit and the
exchange agent must receive, the letter of transmittal or a facsimile of the
letter of transmittal, with any required signature guarantees and any other
required documents, at the address below under "-- Exchange Agent" on or before
the expiration date or pursuant to the guaranteed delivery procedures described
below.
23
GUARANTEED DELIVERY PROCEDURES
If you wish to tender your old notes and (1) the notes are not immediately
available or (2) you cannot deliver the old notes, the letter of transmittal or
any other required documents to the exchange agent before the expiration date,
you may effect a tender if:
(a) the tender is made through an eligible guarantor institution;
(b) before the expiration date, the exchange agent receives from the
eligible guarantor institution a properly completed and duly executed
notice of guaranteed delivery, substantially in the form provided by us,
that:
- states your name and address, the certificate number(s) of the old
notes and the principal amount of old notes tendered,
- states that the tender is being made by that notice of guaranteed
delivery, and
- guarantees that, within three New York Stock Exchange trading days
after the expiration date, the eligible guarantor institution will
deposit with the exchange agent the letter of transmittal, together
with the certificate(s) representing the old notes in proper form for
transfer or a confirmation of a book-entry transfer, as the case may
be, and any other documents required by the letter of transmittal; and
(c) within five New York Stock Exchange trading days after the
expiration date, the exchange agent receives a properly executed letter of
transmittal, as well as the certificate(s) representing all tendered old
notes in proper form for transfer and all other documents required by the
letter of transmittal.
Upon request, the exchange agent will send to you a notice of guaranteed
delivery if you wish to tender your notes according to the guaranteed delivery
procedures described above.
WITHDRAWAL OF TENDERS
Except as otherwise provided in this prospectus, you may withdraw tenders
of old notes at any time before 5:00 p.m., New York City time, on the expiration
date.
To withdraw a tender of old notes in the exchange offer, the exchange agent
must receive a written or facsimile transmission notice of withdrawal at its
address listed in this prospectus before the expiration date. Any notice of
withdrawal must:
- specify the name of the person who deposited the old notes to be
withdrawn;
- identify the old notes to be withdrawn, including the certificate
number(s) and principal amount of the old notes; and
- be signed in the same manner as the original signature on the letter of
transmittal by which the old notes were tendered, including any required
signature guarantees.
We will determine in our sole discretion all questions as to the validity,
form and eligibility of the notices, and our determination will be final and
binding on all parties. We will not deem any properly withdrawn old notes to
have been validly tendered for purposes of the exchange offer, and we will not
issue exchange notes with respect to those old notes, unless you validly
retender the withdrawn old notes. You may retender properly withdrawn old notes
by following one of the procedures described above under "-- Procedures for
Tendering" at any time before the expiration date.
CONDITIONS
Notwithstanding any other term of the exchange offer, we will not be
required to accept for exchange, or exchange the exchange notes for, any old
notes, and may terminate the exchange offer as provided in
24
this prospectus before the acceptance of the old notes, if, in our reasonable
judgment, the exchange offer violates applicable law, rules or regulations or an
applicable interpretation of the staff of the SEC.
If we determine in our reasonable discretion that any of these conditions
are not satisfied, we may:
- refuse to accept any old notes and return all tendered old notes to you;
- extend the exchange offer and retain all old notes tendered before the
exchange offer expires, subject, however, to your rights to withdraw the
old notes; or
- waive the unsatisfied conditions with respect to the exchange offer and
accept all properly tendered old notes that have not been withdrawn.
If the waiver constitutes a material change to the exchange offer, we will
promptly disclose the waiver by means of a prospectus supplement that we will
distribute to the registered holders of the old notes, and we will extend the
exchange offer for a period of five to ten business days, depending upon the
significance of the waiver and the manner of disclosure to the registered
holders, if the exchange offer would otherwise expire during the five to ten
business day period.
TERMINATION OF RIGHTS
All of your rights under the registration rights agreement will terminate
upon consummation of the exchange offer except with respect to our continuing
obligations:
- to indemnify you and parties related to you against liabilities,
including liabilities under the Securities Act; and
- to provide, upon your request, the information required by Rule
144A(d)(4) under the Securities Act to permit resales of the notes
pursuant to Rule 144A.
SHELF REGISTRATION
If (1) applicable law or SEC policy does not permit us to consummate the
exchange offer, (2) we do not consummate the exchange offer on or before
November 26, 2002 or (3) you notify us before the 60th day following the
completion of the exchange offer that:
- you are prohibited by law or SEC policy from participating in the
exchange offer;
- you may not resell the exchange notes acquired by you in the exchange
offer to the public without delivering a prospectus, and the prospectus
contained in the registration statement is not appropriate or available
for resales by you; or
- you are a broker-dealer and hold notes acquired directly from us,
we will file with the SEC a shelf registration statement to register for public
resale the registrable notes held by you if you provide us with the necessary
information for inclusion in the shelf registration statement.
For the purposes of the registration rights agreement, "registrable notes"
means each old note until the earliest date on which:
- a registration statement covering the old note has been declared
effective by the SEC and the note has been disposed of in accordance with
such effective registration statement;
- the old note has been exchanged pursuant to the exchange offer for an
exchange note or exchange notes that may be resold without restriction
under state and federal securities laws;
- such old note ceases to be outstanding; or
- the old note may be resold without restriction pursuant to Rule 144 under
the Securities Act.
25
ADDITIONAL INTEREST
If:
(1)(A) we do not file the registration statement with the SEC on or
before July 12, 2002 or (B) we are obligated to file a shelf registration
statement and we fail to file the shelf registration statement with the SEC
on or before the 90th day after the obligation to file a shelf registration
statement arises, then, commencing on the day after either required filing
date, we agree to pay additional interest on the principal amount of the
old notes at a rate of 0.50% per annum for the first 90 days immediately
following the required filing date, with the additional interest increasing
by an additional 0.50% per annum at the beginning of each subsequent 90-day
period; or
(2)(A) the SEC does not declare the registration statement effective
on or before October 11, 2002, or (B) we are obligated to file a shelf
registration statement and the SEC does not declare the shelf registration
statement effective on or before the 180th day after the obligation to file
a shelf registration statement arises, then, commencing on the day after
either required effective date, we agree to pay additional interest on the
principal amount of the old notes at a rate of 0.50% per annum for the
first 90 days immediately following the required effective date, with the
additional interest increasing by an additional 0.50% per annum at the
beginning of each subsequent 90-day period; or
(3)(A) we do not complete the exchange offer on or before the 45th day
after the SEC declares the registration statement effective, or (B) if
applicable, a shelf registration statement has been declared effective but
thereafter ceases to be effective at any time prior to April 15, 2004
(unless all of the old notes have already been disposed of or all of the
old notes are eligible to be sold pursuant to Rule 144(k)), then we agree
to pay additional interest on the principal amount of the old notes at a
rate of 0.50% per annum for the first 90 days commencing on (x) the 46th
day after the effective date, in the case of (A) above, or (y) the day the
shelf registration statement ceases to be effective, in the case of (B)
above, with the additional interest rate increasing by an additional 0.50%
per annum at the beginning of each subsequent 90-day period;
provided, however, that the additional interest rate on the old notes may not
accrue under more than one of the foregoing clauses (1) through (3) at any one
time and at no time will the aggregate amount of additional interest accruing
exceed in the aggregate 1.00% per annum; provided, further, however, that when
(i) we file the registration statement or the shelf registration statement (in
the case of clause (1) above), (ii) the SEC declares the registration statement
or the shelf registration statement (in the case of clause (2) above), or (iii)
we complete the exchange offer (in the case of clause (3)(A) above), or upon the
effectiveness of the shelf registration statement which had ceased to remain
effective (in the case of clause (3)(B) above), additional interest on the old
notes as a result of such clause (or the relevant subclause thereof), as the
case may be, shall cease to accrue.
We agree to pay any amount of additional interest due pursuant to clause
(1), (2) or (3) above in cash on the same original interest payment dates as the
old notes.
EXCHANGE AGENT
We have appointed Manufacturers and Traders Trust Company as exchange agent
for the exchange offer. You should direct questions and requests for assistance,
requests for additional copies of this prospectus or the letter of transmittal
and requests for a notice of guaranteed delivery to the exchange agent addressed
as follows:
<Table>
By Registered or Certified Mail: By Hand Delivery:
Manufacturers and Traders Trust Company Manufacturers and Traders Trust Company
One M&T Plaza One M&T Plaza
Buffalo, New York 14203 Buffalo, New York 14203
Attention: Russell T. Whitley Attention: Russell T. Whitley
</Table>
26
<Table>
By Overnight Delivery: By Facsimile:
Manufacturers and Traders Trust Company (716) 842-4474
One M&T Plaza Attn: Russell T. Whitley
Buffalo, New York 14203 Confirm by Telephone: (716) 842-5602
Attention: Russell T. Whitley
</Table>
Delivery to an address other than the one stated above or transmission via
a facsimile number other than the one stated above will not constitute a valid
delivery.
FEES AND EXPENSES
We will bear the expenses of soliciting tenders. We are making the
principal solicitation by mail; however, our officers and regular employees may
make additional solicitations by facsimile, telephone or in person.
We have not retained any dealer manager in connection with the exchange
offer and will not make any payments to brokers, dealers or others soliciting
acceptances of the exchange offer. We will, however, pay the exchange agent
reasonable and customary fees for its services and will reimburse it for its
reasonable out-of-pocket expenses.
We will pay the cash expenses incurred in connection with the exchange
offer, which we estimate to be approximately $250,000. These expenses include
registration fees, fees and expenses of the exchange agent and the trustee,
accounting and legal fees and printing costs, among others.
We will pay all transfer taxes, if any, applicable to the exchange of notes
pursuant to the exchange offer. If, however, a transfer tax is imposed for any
reason other than the exchange of the old notes pursuant to the exchange offer,
then you must pay the amount of the transfer taxes. If you do not submit
satisfactory evidence of payment of the taxes or exemption from payment with the
letter of transmittal, we will bill the amount of the transfer taxes directly to
you.
CONSEQUENCE OF FAILURES TO EXCHANGE
Participation in the exchange offer is voluntary. We urge you to consult
your financial and tax advisors in making your decisions on what action to take.
Old notes that are not exchanged for exchange notes pursuant to the exchange
offer will remain restricted securities. Accordingly, those old notes may be
resold only:
- to a person whom the seller reasonably believes is a qualified
institutional buyer in a transaction meeting the requirements of Rule
144A under the Securities Act;
- in a transaction meeting the requirements of Rule 144;
- outside the United States to a foreign person in a transaction meeting
the requirements of Rule 903 or 904 of Regulation S under the Securities
Act;
- in accordance with another exemption from the registration requirements
of the Securities Act and based upon an opinion of counsel if we so
request;
- to us; or
- pursuant to an effective registration statement.
In each case, the old notes may be resold only in accordance with any
applicable securities laws of any state of the United States or any other
applicable jurisdiction.
27
USE OF PROCEEDS
We will not receive any cash proceeds from the exchange offer. The exchange
offer satisfies an obligation to holders of old notes under the registration
rights agreement. The net proceeds from the $260 million old notes offering,
after deducting estimated fees and expenses, were approximately $251 million. We
used the net proceeds from the old notes offering to repay our $250 million of
10 1/2% senior subordinated notes due 2004, which we redeemed on June 1, 2002 at
a redemption price of 102.625% of the aggregate outstanding principal amount
thereof.
CAPITALIZATION
The following table sets forth our current maturities of long-term debt and
capital leases and our consolidated capitalization at July 13, 2002:
<Table>
<Caption>
AT JULY 13,
2002
--------------
(IN THOUSANDS)
Current maturities of long-term debt and capital leases..... $ 26,473
Long-term debt:
Senior secured revolving credit facility(1)............... 75,000
Senior secured term loan facility(2)...................... 420,750
Long-term obligations under capital leases................ 325,345
10 1/8% senior notes due 2008............................. 357,228
9 1/4% senior notes due 2010.............................. 200,240
10 5/8% senior subordinated notes due 2007................ 400,000
9 7/8% senior subordinated notes due 2012................. 262,764
5 1/4% convertible senior subordinated notes due 2009..... 150,000
Other debt (including discounts).......................... (9,871)
----------
Total long-term debt (including current maturities).... 2,207,929
Total shareholders' equity............................. 694,779
----------
Total capitalization (including current maturities).... $2,902,708
==========
</Table>
- ---------------
(1) The stated interest rate on borrowings under the revolving credit facility
is a referenced index rate, normally the London interbank offered interest
rate, or LIBOR, plus a margin ranging from 1.50% to 2.25%, depending on (i)
the ratio of our consolidated indebtedness to consolidated EBITDA and (ii)
amounts already outstanding under the revolving credit facility. From June
18, 2002 to July 13, 2002, the average interest rate for the revolving
credit facility was 4.3%.
(2) The stated interest rate on borrowings under the term credit facility is a
referenced index rate, normally LIBOR plus a margin of 2.25%. From June 18,
2002 to July 13, 2002, the average interest rate for the term credit
facility was 4.7%.
28
SELECTED CONSOLIDATED FINANCIAL DATA OF FLEMING
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
The information presented below for, and as of the end of, each of the
fiscal years in the five-year period ended December 29, 2001 is derived from our
audited consolidated financial statements. The information presented below for,
and as of the end of, the 28 weeks ended July 14, 2001 and July 13, 2002 is
derived from our unaudited consolidated condensed financial statements, which
include all adjustments that management considers necessary for a fair
presentation of our financial position and results of operations for those
periods. The information for, and as of the end of, the 28 weeks ended July 13,
2002 is not necessarily indicative of the results that may be expected for any
other interim period or for the full fiscal year ending December 28, 2002. You
should read the information set forth below together with the other financial
information contained or incorporated by reference in this prospectus.
<Table>
<Caption>
FISCAL YEAR ENDED(1) 28 WEEKS ENDED
------------------------------------------------------------------------ -------------------
DECEMBER 27, DECEMBER 26, DECEMBER 25, DECEMBER 30, DECEMBER 29, JULY 14, JULY 13,
1997(2) 1998(3) 1999(4) 2000(5) 2001(6) 2001(7) 2002(8)
------------ ------------ ------------ ------------ ------------ -------- --------
INCOME STATEMENT DATA:
Net sales(9)..................... $14,916 $14,629 $14,218 $14,369 $15,558 $7,583 $8,616
Costs and expenses:
Cost of sales(9)............... 13,508 13,179 12,781 13,022 14,367 6,953 7,997
Selling and administrative..... 1,172 1,251 1,262 1,187 961 526 457
Interest expense............... 163 161 165 175 166 92 93
Interest income and other...... (30) (25) (30) (25) (24) (15) (15)
Impairment/restructuring charge
(credit)..................... -- 653 103 213 (24) (27) 27
Litigation charge (credit)..... 21 8 -- (2) 49 49 --
------- ------- ------- ------- ------- ------ ------
Total costs and expenses..... 14,834 15,227 14,281 14,570 15,495 7,578 8,559
------- ------- ------- ------- ------- ------ ------
Earnings(loss) before taxes...... 82 (598) (63) (201) 63 5 57
Taxes on income(loss)............ 44 (87) (18) (79) 36 3 22
------- ------- ------- ------- ------- ------ ------
Earnings(loss) before
extraordinary charge........... 38 (511) (45) (122) 27 2 35
Extraordinary charge from early
retirement of debt (net of
taxes)......................... (13) -- -- -- (4) (3) (8)
------- ------- ------- ------- ------- ------ ------
Net earnings(loss)........... $ 25 $ (511) $ (45) $ (122) $ 23 $ (1) $ 27
======= ======= ======= ======= ======= ====== ======
Diluted earnings(loss) per
share.......................... $ 0.67 $(13.48) $ (1.17) $ (3.15) $ 0.52 $(0.03) $ 0.57
BALANCE SHEET DATA (AT END OF
PERIOD):
Cash and cash equivalents...... $ 30 $ 6 $ 7 $ 30 $ 17 $ 14 $ 41
Total assets................... 3,924 3,491 3,573 3,403 3,655 3,546 4,362
Total debt (including current
maturities and capital
leases)...................... 1,563 1,566 1,694 1,669 1,811 1,689 2,208
Shareholders' equity........... 1,090 570 561 427 498 486 695
OTHER FINANCIAL AND OPERATING
DATA:
Cash flows provided by (used
in) operating activities..... $ 113 $ 141 $ 118 $ 127 $ (32) $ (64) $ (126)
Cash flows used in investing
activities................... (54) (163) (213) (48) (190) (41) (227)
Cash flows provided by (used
in) financing activities..... (92) (2) 96 (55) 209 89 432
EBITDAL(10).................... 441 (237) 281 154 385 183 231
Depreciation and
amortization(11)............. 173 180 158 169 166 87 82
Capital expenditures........... 129 200 166 151 238 112 98
Ratio of earnings to fixed
charges(12).................. 1.41x -- -- -- 1.29x 1.01x 1.47x
</Table>
- ---------------
(1) Fiscal 2000 is a 53-week year; all other years are 52 weeks.
(2) The results in 1997 reflect a charge of $19 million ($9 million after-tax)
related to the settlement of a lawsuit against us. Such period also
reflects an extraordinary charge of $22 million ($13 million after-tax)
related to a recapitalization.
(3) The results in 1998 reflect an impairment/restructuring charge with related
costs totaling $668 million ($543 million after-tax) related to our
strategic plan.
(4) The results in 1999 reflect an impairment/restructuring charge with related
costs totaling $137 million ($92 million after-tax) related to our
strategic plan. Such period also reflects unusual items ($31 million charge
to close 10 conventional retail stores, income of $22 million from
extinguishing a portion of the self-insured workers' compensation
liability, interest income of $9 million related to refunds in federal
income taxes from prior years, and $6 million in gains from the sale of
distribution facilities) netting to $6 million of income ($3 million
after-tax).
(5) The results in 2000 reflect an impairment/restructuring charge with related
costs totaling $309 million ($183 million after-tax) relating to our
strategic plan. Such period also reflects unusual items ($10 million charge
related primarily to asset impairment
29
on retail stores, income of $2 million relating to litigation settlements, and
$9 million in gains from the sale of distribution facilities) netting to less
than $1 million of income ($1 million loss after-tax).
(6) The results in 2001 reflect an impairment/restructuring credit totaling $24
million ($25 million after-tax reflecting the tax expense impact of
goodwill permanent differences from the sale of certain retail stores)
relating to our strategic plan. Such period also reflects unusual items
($49 million in charges relating to litigation settlements, $20 million in
charges relating to Kmart's bankruptcy reorganization and $2 million due to
early retirement of debt) netting to approximately $70 million in charges
($42 million after-tax).
(7) The results in the first two quarters of 2001 reflect an
impairment/restructuring net charge with related costs totaling $12 million
($7 million after-tax) relating to our strategic plan. Such period also
reflects unusual items ($49 million in charges relating to litigation
settlements and approximately $2 million in charges due to early retirement
of debt) netting to approximately $63 million in charges ($38 million
after-tax).
(8) The results in the first two quarters of 2002 reflect an
impairment/restructuring charge totaling $27 million ($16 million after-
tax) relating to the closure of two distribution facilities and certain
integration costs related to recent acquisitions. Such period also reflects
approximately $3 million ($2 million after-tax) in charges due to early
retirement of debt. Also, cash and cash equivalents and total debt amounts
exclude amounts related to Core-Mark's accounts receivable securitization
facility and related accrued interest as these amounts were being held in
trust to repay the facility in July 2002.
(9) During the first quarter of 2002, we adopted EITF 01-9 and reduced sales
and cost of sales for all prior periods with the impact on any year
reported not exceeding $75 million. The adoption had no effect on gross
margins or earnings.
(10) EBITDAL is earnings before extraordinary items, interest expense, income
taxes, depreciation and amortization, equity investment results and LIFO
provision. We present EBITDAL to help us describe our ability to generate
cash flows that can be used to service our debt; however, conditions may
require conservation of funds for other uses. EBITDAL is a non-GAAP
liquidity measure commonly used in our industry and should not be
considered as an alternative measure of our net income or cash flows from
operations as computed in accordance with GAAP. Amounts presented may not
be comparable to similar measures disclosed by other companies.
<Table>
<Caption>
FISCAL YEAR ENDED 28 WEEKS ENDED
------------------------------------------------------------------------ -------------------
DECEMBER 27, DECEMBER 26, DECEMBER 25, DECEMBER 30, DECEMBER 29, JULY 14, JULY 13,
1997 1998 1999 2000 2001 2001 2002
------------ ------------ ------------ ------------ ------------ -------- --------
Earnings (loss) before
extraordinary charge...... $ 38 $(511) $(45) $(122) $ 27 $ 2 $ 35
Interest expense........... 163 161 165 175 166 92 93
Taxes on income (loss)..... 44 (87) (18) (79) 36 3 22
Depreciation and
amortization.............. 173 180 158 169 166 87 82
LIFO adjustments........... 6 8 11 3 (12) (1) (1)
Equity investment
results................... 17 12 10 8 2 -- --
---- ----- ---- ----- ---- ---- ----
EBITDAL.................... $441 $(237) $281 $ 154 $385 $183 $231
</Table>
(11) Depreciation and amortization expense includes goodwill amortization, if
any, and excludes amortization of debt cost which is reflected in interest
expense. During the first quarter of 2002 we adopted SFAS No. 142 and
ceased amortizing goodwill cost. No prior period restatements were made.
Goodwill amortization did not exceed $33 million for any of the prior years
reported.
(12) For purposes of computing this ratio, earnings consist of earnings before
income taxes and fixed charges. Fixed charges consist primarily of interest
expense, including amortization of deferred debt issuance costs and
one-third of rental expense (the portion considered representative of the
interest factor). Earnings were insufficient to cover fixed charges by $598
million, $63 million and $202 million for the fiscal years ended December
26, 1998, December 25, 1999 and December 30, 2000, respectively.
30
SELECTED CONSOLIDATED FINANCIAL DATA OF CORE-MARK
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
The following table sets forth selected historical consolidated financial
and other data for Core-Mark International, Inc. The historical financial data
as of the end of and for each year in the five-year period ended December 31,
2001 have been derived from Core-Mark's audited consolidated financial
statements. The information presented below for, and as of the end of, the
three-month period ended March 31, 2001 and 2002 is derived from Core-Mark's
unaudited condensed consolidated financial statements, which include all
adjustments that Core-Mark's management considers necessary for a fair
presentation of Core-Mark's financial position and results of operations for
those periods. The information for, and as of the end of, the three months ended
March 31, 2002 is not necessarily indicative of the results that may be expected
for any other interim period or for the full fiscal year ended December 31,
2002. You should read the information set forth below together with the other
financial information contained or incorporated by reference in this prospectus.
<Table>
<Caption>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
-------------------------------------------------------------- -------------------
1997 1998 1999 2000 2001 2001 2002
---------- ---------- ---------- ---------- ---------- -------- --------
(IN THOUSANDS)
STATEMENT OF INCOME DATA:
Net sales....................... $2,395,867 $2,476,376 $2,838,107 $3,035,379 $3,425,024 $754,266 $825,153
Costs of goods sold(1).......... 2,216,162 2,295,659 2,643,069 2,840,334 3,211,160 705,121 774,297
---------- ---------- ---------- ---------- ---------- -------- --------
Gross profit(1)................. 179,705 180,717 195,038 195,045 213,864 49,145 50,856
Operating and administrative
expenses...................... 148,902 150,977 155,128 160,143 169,691 42,150 41,463
---------- ---------- ---------- ---------- ---------- -------- --------
Operating income(1)............. 30,803 29,740 39,910 34,902 44,173 6,995 9,393
Interest expense, net........... 18,181 15,402 12,696 12,852 11,121 3,042 2,488
Amortization of debt refinancing
costs(2)...................... 1,498 2,204 1,274 1,274 1,274 318 318
---------- ---------- ---------- ---------- ---------- -------- --------
Income before income taxes...... 11,124 12,134 25,940 20,776 31,778 3,635 6,587
Income tax expense(3)........... 4,834 4,925 5,740 9,721 14,268 1,633 2,832
---------- ---------- ---------- ---------- ---------- -------- --------
Net income(4)................... $ 6,290 $ 7,209 $ 20,200 $ 11,055 $ 17,510 $ 2,002 $ 3,755
========== ========== ========== ========== ========== ======== ========
OTHER DATA:
EBITDAL(5)...................... $ 41,597 $ 56,419 $ 53,493 $ 50,129 $ 59,446 $ 9,867 $ 11,664
Cash provided by (used in):
Operating activities.......... $ 17,547 $ 5,933 $ 40,781 $ (1,925) $ 28,211 $ 48,867 $ 11,964
Investing activities.......... (30,739) (5,311) (6,575) (7,620) (7,916) (517) (152)
Financing activities.......... 3,549 9,533 (42,789) 21,282 (23,150) (56,617) (12,467)
Depreciation and
amortization(6)............... 7,528 8,065 7,912 8,911 9,678 2,475 2,052
LIFO expense(1)................. 3,266 18,614 5,671 6,316 5,595 397 219
Capital expenditures............ 9,378 5,311 6,575 7,620 7,916 517 152
</Table>
<Table>
<Caption>
AS OF DECEMBER 31, AS OF
---------------------------------------------------- MARCH 31,
1997 1998 1999 2000 2001 2002
-------- -------- -------- -------- -------- ---------
(IN THOUSANDS)
BALANCE SHEET DATA:
Total assets.............................. $336,580 $359,390 $350,068 $374,876 $390,141 $376,465
Total debt, including current
maturities.............................. 197,012 208,124 165,335 186,617 163,467 151,000
</Table>
- ---------------
(1) Core-Mark's U.S. inventories are valued at the lower of cost or market. Cost
of goods sold is determined on a last-in, first-out (LIFO) basis. During
periods of rising prices, the LIFO method of costing inventories generally
results in higher costs being charged against income compared to the
31
FIFO method ("LIFO expense") while lower costs are retained in inventories.
Conversely, during periods of declining prices or a decrease of Core-Mark's
inventory quantities, the LIFO method of costing inventories generally
results in lower costs being charged against income compared to the FIFO
method ("LIFO income"). During the year ended December 31, 1998, Core-Mark
recognized LIFO expense of $18.6 million, primarily due to several very
large increases in domestic cigarette wholesale prices during 1998. However,
the LIFO expense in 1998 was more than offset by profits resulting from such
price increases.
(2) Amortization of debt refinancing costs reflects the amortization of all
costs associated with issuing, restructuring and refinancing debt.
(3) Prior to 1999, Core-Mark had a significant valuation allowance that reduced
certain deferred tax assets, based upon management's assessment that it was
more likely than not that these deferred tax assets would not be realized.
However, as a result of Core-Mark's earnings history, in 1999 Core-Mark's
management concluded that the tax benefits related to future deductions,
including net operating loss carryforwards, were more likely than not to be
realized. Therefore, in 1999, Core-Mark recorded a $6.2 million decrease in
its valuation allowance, which resulted in a one-time reduction of its tax
rate of approximately 24%.
(4) On January 1, 2002, Core-Mark adopted SFAS 142, Accounting for Goodwill and
Other Intangibles. If Core-Mark had applied the nonamortization provisions
of SFAS 142 to all periods presented, net income would have been $8 million
for 1997, $9 million for 1998, $22 million for 1999, $13 million for 2000,
$20 million for 2001, and $2.5 million for the three months ended March 31,
2001.
(5) EBITDAL represents operating income before depreciation, amortization and
LIFO expense, each as defined herein. EBITDAL should not be considered in
isolation or as a substitute for net income, operating income, cash flows or
other consolidated income or cash flow data prepared in accordance with
generally accepted accounting principles, or as a measure of a company's
profitability or liquidity. EBITDAL is included because it is one measure
used by certain investors to determine a company's ability to service its
indebtedness.
(6) Depreciation and amortization includes depreciation on property and
equipment, amortization of goodwill and other non-cash charges, and excludes
amortization of debt refinancing costs.
32
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following pro forma consolidated information gives effect to Fleming's
acquisition of Core-Mark (the "Acquisition") and has been derived by the
application of pro forma adjustments to the consolidated statements of income of
(i) Fleming for the 52 weeks ended December 29, 2001 and Core-Mark for the 12
months ended December 31, 2001 and (ii) Fleming for the 28 weeks ended July 13,
2002 and Core-Mark for the period from January 1, 2002 to June 17, 2002. The
Acquisition was completed on June 18, 2002.
The pro forma consolidated statements of income give effect to the
Acquisition and the related financing transactions as if they had occurred on
December 31, 2000, with respect to the pro forma consolidated statement of
income for the 52 weeks ended December 29, 2001, and carried forward through
July 13, 2002, with respect to the pro forma consolidated statement of income
for the 28 weeks ended July 13, 2002. The adjustments necessary to fairly
present this pro forma consolidated financial information have been made based
on available information and in the opinion of Fleming's management are
reasonable and are described in the accompanying notes. This pro forma
information reflects that the Acquisition was financed by a combination of
borrowings under a new credit facility and public offerings of debt and equity.
The pro forma consolidated financial information should not be considered
indicative of actual results that would have been achieved had the Acquisition
and the related financing transactions been consummated on the respective dates
indicated and do not purport to indicate income statement data as of any future
date or for any future period. We cannot assure you that the assumptions used in
the preparation of the pro forma consolidated financial information will prove
to be correct.
The pro forma adjustments were applied to the historical consolidated
financial information to reflect and account for the Acquisition and the related
financing transactions. As a result, these adjustments have no impact on the
historical basis of the assets and liabilities. We estimated that Core-Mark had
an overall enterprise value of approximately $390 million represented by our
purchase of Core-Mark's equity of $295 million, assumption of Core-Mark's debt
(net of cash acquired) of approximately $90 million and transaction costs of
approximately $5 million. Our purchase price allocation for the Acquisition is
not final. Our final allocation of purchase price may differ from this
presentation primarily due to potential changes in the fair value analysis of
leases and the appraisal results for identifiable intangibles. The following
table sets forth our preliminary allocation of the cash purchase price (dollars
in thousands):
<Table>
Fair value of assets acquired:
Cash...................................................... $ 79,151
Receivables, net.......................................... 132,572
Inventories............................................... 130,665
Other current assets...................................... 7,899
Property and equipment.................................... 31,238
Other assets.............................................. 4,393
Fair value of liabilities assumed:
Accounts payable.......................................... (185,486)
Current maturities of long-term debt...................... (55,000)
Other current liabilities................................. (23,380)
Long-term debt............................................ (77,133)
Other liabilities......................................... (13,242)
Goodwill and other intangibles recognized from the
Acquisition............................................... 268,387
---------
Total cash purchase price for Core-Mark equity........ $ 300,064
=========
</Table>
The following table sets forth our preliminary calculation of the cash
purchase price (dollars in thousands):
<Table>
Cash payment for acquisition of Core-Mark stock........... $295,000
Professional fees and other............................... 5,064
--------
Total cash purchase price for Core-Mark equity........ $300,064
========
</Table>
33
PRO FORMA COMBINING INCOME STATEMENT INFORMATION
52 WEEKS ENDED DECEMBER 29, 2001
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<Table>
<Caption>
PRO FORMA
FLEMING CORE-MARK ADJUSTMENTS PRO FORMA
----------- ---------- ----------- -----------
Net sales................................ $15,558,102 $3,425,024 $ -- $18,983,126
Costs and expenses (income):
Cost of sales....................... 14,368,199 3,211,160 76,680(a) 17,656,039
Selling and administrative.......... 960,590 169,691 (71,085)(b) 1,059,196
Interest expense.................... 165,534 12,395 13,194(c) 191,123
Interest income and other........... (24,053) -- (834)(d) (24,887)
Impairment/restructuring credit..... (23,595) -- -- (23,595)
Litigation charge................... 48,628 -- -- 48,628
----------- ---------- --------- -----------
Total costs and expenses....... 15,495,303 3,393,246 17,955 18,906,504
----------- ---------- --------- -----------
Income before taxes...................... 62,799 31,778 (17,955) 76,222
Taxes on income(f)....................... 36,022 14,268 (8,739)(e) 41,551
----------- ---------- --------- -----------
Income before extraordinary charge....... $ 26,777 $ 17,510 $ (9,216) $ 35,071
=========== ========== ========= ===========
Basic income per share before
extraordinary charge(f)................ $ 0.63 $ 0.68
=========== ===========
Diluted income per share before
extraordinary charge(f)................ $ 0.60 $ 0.65
=========== ===========
Weighted average shares outstanding:
Basic............................... 42,588 9,200(g) 51,788
Diluted............................. 44,924 9,200(h) 54,124
</Table>
34
PRO FORMA COMBINING INCOME STATEMENT INFORMATION
28 WEEKS ENDED JULY 13, 2002
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<Table>
<Caption>
PRO FORMA
FLEMING CORE-MARK ADJUSTMENTS PRO FORMA
---------- ---------- ----------- -----------
Net sales................................ $8,616,095 $1,606,183 $ -- $10,222,278
Costs and expenses (income):
Cost of sales....................... 7,996,663 1,499,846 34,908(a) 9,531,417
Selling and administrative.......... 457,165 80,703 (32,344)(b) 505,524
Interest expense.................... 93,089 5,052 6,758(c) 104,899
Interest income and other........... (14,803) -- (408)(d) (15,211)
Impairment/restructuring charge..... 27,361 -- -- 27,361
---------- ---------- -------- -----------
Total costs and expenses....... 8,559,475 1,585,601 8,914 10,153,990
---------- ---------- -------- -----------
Income before taxes...................... 56,620 20,582 (8,914) 68,288
Taxes on income.......................... 21,921 8,850 (4,183)(e) 26,588
---------- ---------- -------- -----------
Income before extraordinary charge....... $ 34,699 $ 11,732 $ (4,731) $ 41,700
========== ========== ======== ===========
Basic income per share before
extraordinary charge................... $ 0.76 $ 0.78
========== ===========
Diluted income per share before
extraordinary charge................... $ 0.72 $ 0.74
========== ===========
Weighted average shares outstanding:
Basic............................... 45,542 7,979(g) 53,521
Diluted............................. 51,998 7.979(h) 59,977
</Table>
35
NOTES TO UNAUDITED PRO FORMA COMBINING INCOME STATEMENTS
(DOLLARS IN THOUSANDS)
Fleming's Financial Statements for the 52 weeks ended December 29, 2001
reflect the retroactive reclassification to decrease net sales and cost of sales
by approximately $70 million with no effect on gross margin due to the adoption
of EITF 01-9. Core-Mark early adopted EITF 01-9 in 2001.
For the purpose of determining the pro forma effect of the transactions on
Fleming's Consolidated Income Statements for the 52 weeks ended December 29,
2001 and the 28 weeks ended July 13, 2002, the following pro forma adjustments
have been made:
(a) The adjustment to cost of sales reflects the following:
<Table>
52 WEEKS 28 WEEKS
ENDED ENDED
DECEMBER 29, JULY 13,
2001 2002
-------- --------
Reclass Core-Mark distribution and warehouse expense
from selling and administrative (see note (b))..... $ 76,680 $ 34,908
======== ========
</Table>
(b) The adjustment to selling and administrative reflects the
following:
<Table>
<Caption>
52 WEEKS 28 WEEKS
ENDED ENDED
DECEMBER 29, JULY 13,
2001 2002
------------ --------
Reclass Core-Mark distribution and warehouse expense
to cost of sales (see note (a)).................... $(76,680) $(34,908)
Amortize estimated other intangible assets acquired
of approximately $56 million as a result of the
transaction (estimate of 10 years)................. 5,595 2,564
-------- --------
$(71,085) $(32,344)
======== ========
</Table>
(c) The adjustment for interest expense reflects the following:
<Table>
<Caption>
52 WEEKS 28 WEEKS
ENDED ENDED
DECEMBER 29, JULY 13,
2001 2002
------------ --------
Reclassify Core-Mark interest income from interest
expense (see note (d)).............................. $ 834 $ 408
Eliminate Core-Mark interest to reflect debt repayment
of $77 million long-term debt and $55 million
accounts receivable securitization.................. (13,229) (5,460)
Reflect Fleming interest expense on $86 million of
borrowings under concurrent new $975 million credit
agreement at 5.8%*.................................. 4,961 2,290
Reflect Fleming interest expense on concurrent sale of
$200 million 9.25% senior notes due 2010............ 18,500 8,538
Debt refinancing amortization......................... 2,128 982
-------- -------
$ 13,194 $ 6,758
======== =======
</Table>
* Our credit agreement has a variable interest rate structure. A change in the
interest rate by 1/8% would change pro forma interest expense by approximately
$108 for the 52 weeks ended December 29, 2001 and approximately $58 for the 28
weeks ended July 13, 2002. The 5.8% interest rate represents the interest rate
on our credit agreement on the date of the Acquisition.
36
NOTES TO UNAUDITED PRO FORMA COMBINING INCOME STATEMENTS -- CONTINUED
(DOLLARS IN THOUSANDS)
(d) The adjustment for interest income and other reflects the
following:
<Table>
<Caption>
28
52 WEEKS WEEKS
ENDED ENDED
DECEMBER 29, JULY 13,
2001 2002
------------ --------
Reclassify Core-Mark interest income from interest
expense (see note (c))............................... $ (834) $(408)
======== =====
</Table>
(e) The adjustment for taxes on income reflects the following:
<Table>
<Caption>
52 WEEKS 28 WEEKS
ENDED ENDED
DECEMBER 29, JULY 13,
2001 2002
------------ --------
Eliminate Core-Mark taxes on income.................. $(14,268) $ (8,850)
Reflect tax provision on Core-Mark results of
operations net of pro forma adjustments............ 5,529 4,667
-------- --------
$ (8,739) $ (4,183)
======== ========
</Table>
(f) The pro forma combined effective tax rate of 54% for the 52 weeks
ended December 29, 2001 includes the impact of an unusual tax
gain related to our disposition of non-strategic retail
operations. Our effective tax rate would have been approximately
40% absent this item since we do not anticipate another similar
tax gain. For the 52 weeks ended December 29, 2001, our effective
tax rate of approximately 40% would have represented a pro forma
combined tax expense of $30.6 million, net income before
extraordinary item of $45.8 million, basic income per share
before extraordinary item of $0.89 and diluted income per share
before extraordinary item of $0.85.
(g) The adjustment for basic weighted average shares outstanding
reflects the following:
<Table>
<Caption>
52 WEEKS 28 WEEKS
ENDED ENDED
DECEMBER 29, JULY 13,
2001 2002
------------ ---------
Reflect Fleming common shares issued to partially
fund the transaction (including the exercise of the
underwriters' over-allotment option)............... 9,200 7,979
======== ========
</Table>
(h) The adjustment for diluted weighted average shares outstanding
reflects the following:
<Table>
<Caption>
52 WEEKS 28 WEEKS
ENDED ENDED
DECEMBER 29, JULY 13,
2001 2002
------------ ---------
Reflect Fleming common shares issued to partially
fund the transaction (including the exercise of the
underwriters' over-allotment option)............... 9,200 7,979
======== ========
</Table>
37
BUSINESS
INTRODUCTION
Fleming is an industry leader in the distribution of consumer package
goods. We believe that our network of "multi-tier" distribution centers offers
retailers of varying size and format a low-cost supply chain alternative to
other distribution competitors or to self-distribution. "Multi-tier"
distribution means that we employ a number of different distribution methods in
our distribution centers depending on the type of product that is being
distributed. For example, we employ the high velocity piece-pick method to
distribute consumer goods that sell quickly such as tobacco, candy, snacks, fast
food and beverages to convenience-oriented retailers, and we employ the low
velocity case-pick and piece-pick distribution methods to distribute products
that turn least often, such as health and beauty aids, general merchandise and
specialty and slow-moving grocery items. Our "multi-tier" distribution centers
allow us to optimize the particular volume, value and velocity characteristics
of each product that we distribute, thereby increasing our efficiency and
lowering our costs.
On June 18, 2002, we acquired Core-Mark International, Inc. ("Core-Mark"),
a distributor of consumer package goods to convenience stores and other
retailers in the western United States and western Canada. As a result of our
acquisition of Core-Mark (the "Acquisition"), our distribution group now serves
approximately 50,000 retail locations across the United States and western
Canada, including approximately 3,000 supermarkets, approximately 40,000
convenience stores and approximately 7,000 supercenters, discount stores,
limited assortment stores, drug stores, specialty stores and other stores. We
believe that the Acquisition will further transform our distribution group into
an efficient, nationwide, multi-tier supply chain for consumer package goods to
retailers of any size and format.
On a pro forma basis after giving effect to the Acquisition, our
distribution group net sales were $16.6 billion for 2001 and $9.0 billion for
the 28 weeks ended July 13, 2002. Our distribution group represented
approximately 87% of our pro forma total net sales in 2001 and 88% for the 28
weeks ended July 13, 2002. To supply our customers, we currently have a network
of 24 high velocity case-pick and flow-through distribution centers, 26 high
velocity piece-pick distribution centers and five low velocity case-pick and
piece-pick distribution centers, that have a total of approximately 21 million
square feet of warehouse space.
Our retail group operates 110 price impact supermarkets. Price impact
supermarkets offer everyday low prices, typically below the prices of
market-leading conventional supermarkets, focus on high-quality perishables and
typically cost less to build, maintain and operate than conventional
supermarkets. In addition, we operate 17 limited assortment stores under the
yes!LESS(R) banner. Limited assortment stores offer a narrow selection of
low-price, private label food and other consumable goods and general merchandise
at deep-discount prices. Our retail group net sales were $2.4 billion for 2001
and $1.2 billion for the 28 weeks ended July 13, 2002, representing
approximately 13% and 12% of our total net sales for each respective period, on
a pro forma basis after giving effect to the Acquisition. Of those amounts,
approximately $2.0 billion and $1.2 billion were attributable to continuing
retail formats for each respective period.
We recently announced our decision to divest our 110 price impact retail
stores. For more information, see "Business -- Our Retail Group -- Price Impact
Supermarkets" on page 44.
COMPETITIVE STRENGTHS
Interconnected Network of Multi-Tier, High-Volume, Low-Cost Distribution
Centers: Our network of multi-tier distribution centers optimizes the
particular volume, value and velocity characteristics of each product that we
distribute. We employ case-pick (in which products are selected in case
quantities and aggregated and distributed on pallets), piece-pick (in which
products are selected in single-unit quantities and distributed in totes) and
flow-through (in which products are distributed in full pallet quantities)
distribution methods. Our multi-tier process further segregates products into
high velocity items (which are characterized by fast inventory turns, such as
tobacco products, candy and paper products) and low
38
velocity items (which are characterized by slower inventory turns, such as
health and beauty products, general merchandise and specialty items).
Consequently, we are able to serve consumer package goods retailers of any size
and format. We also believe that our distribution center volumes are among the
highest in the consumer package goods distribution industry. With high volume
comes the opportunity to operate more efficiently by reducing costs through
economies of scale, which enables us to provide our customers with lower-cost
merchandise and services.
National Distribution Capabilities: We believe we are the only distributor
of consumer package goods capable of meeting the growing need for a national
supply chain that can serve all retail formats anywhere in the United States. In
addition, we believe we are one of only two suppliers capable of distributing
consumer package goods to convenience stores and related convenience-oriented
retailers across the United States and western Canada.
Efficient Centralized Purchasing: We currently make category management
decisions and negotiate with vendors for approximately 84% of our merchandise
procurement from one location, our customer support center near Dallas, Texas.
We believe our customer support center is one of the largest volume-buying
locations of consumable goods in the United States. Centralized purchasing
benefits us and ultimately, our customers, in several ways. It allows us to
lower our cost of goods through aggregated purchasing power, and it lowers our
administrative costs by eliminating the redundancy involved in purchasing
through multiple locations. It also makes it less expensive for our vendors to
serve us, which we believe in turn reduces our cost of goods. We believe that
our centralized purchasing capabilities are valuable to national retailers, as
well as the smaller independent retailers that make up our traditional customer
base.
Diverse Distribution Customer Base: We distribute to approximately 50,000
retail store locations that operate in a wide variety of formats across the
United States and western Canada. On a pro forma basis after giving effect to
the Acquisition, other than Kmart, which accounted for 17% of our net sales in
2001, no customer accounted for more than approximately 2% of our fiscal 2001
net sales.
Experienced Management Team: Our management team is led by Mark Hansen,
Chairman and Chief Executive Officer, who has been with Fleming since 1998.
Since Mr. Hansen joined us, we have further strengthened our management team
through the addition of a number of experienced officers across key functional
areas of our organization including information technology, logistics,
merchandising and supply chain management, retail store operations, finance and
human resources. These executives bring substantial experience from leading food
wholesale, supermarket, supercenter and general merchandise retailers.
BUSINESS STRATEGY
Our business strategy is to use our competitive strengths to achieve sales
and earnings growth in both our distribution group and retail group. As
principal elements of our strategy, we intend to:
Further Grow Sales to New Channel Retailers: We believe that our network
of multi-tier distribution centers strategically positions us to grow our sales
to new channel retailers. In recent years, consumers have been shifting their
purchases of food and other consumable goods away from conventional full-service
grocery stores toward these other retail channels. For this reason, we have
moved beyond our historic focus on conventional full-service grocery stores and
have successfully targeted convenience stores and other convenience-related
retailers, supercenters, discount stores, price impact stores, dollar stores,
ethnic food stores, limited-assortment stores, drug stores, military exchanges
and other specialty retailers, as evidenced by our supply arrangement with
Target, which will be expanded in October 2002. We do not anticipate that sales
to Target will represent more than 2% of our net sales for 2002.
Grow Sales to Traditional Format Customers: Despite being the largest
distributor in the wholesale grocery industry, we currently account for a small
percentage of sales in this traditional core market, representing substantial
room for additional growth. Many of our potential customers are currently served
by local or regional wholesalers that cannot offer the efficiencies produced by
our nationwide network of
39
multi-tier distribution centers and our centralized purchasing. Our repositioned
distribution group has already enabled us to increase sales to existing and new
customers in this sector, and we expect to be able to continue this trend.
Grow Sales to Self-Distributing Chain Supermarkets: In addition to
enabling us to grow our sales of consumer package goods and other merchandise to
new channel retailers and our traditional format customers, we believe that we
can employ our network of multi-tier distribution centers to expand our
distribution capabilities to serve large, national chain supermarkets that
currently self-distribute. For example, during the next five years we will
supply 39 Albertson's stores in Oklahoma and Nebraska. We do not anticipate that
sales to Albertson's will represent more than 2% of our net sales for 2002. We
believe that our national presence, our multi-tier distribution platform and our
centralized purchasing capabilities will provide national chain supermarkets
with a compelling alternative to self-distribution. We are seeking additional
opportunities to establish similar relationships with other major supermarket
chains.
Continue to Improve Working Capital Management and Reduce Costs: We intend
to improve our working capital management primarily by further developing our
centralized procurement operations, taking advantage of the efficiencies created
by our multi-tier distribution network, and by continuing to develop and
implement our "F-1" supply chain technologies to better integrate our
distribution centers and our central procurement operations.
OUR DISTRIBUTION GROUP
Our distribution group sells food and non-food products to supermarkets,
convenience stores, supercenters, discount stores, limited assortment stores,
drug stores, specialty stores and other stores across the United States. On a
pro forma basis after giving effect to the Acquisition, our distribution group
net sales were $16.6 billion for fiscal 2001 and $9.0 billion for the 28 weeks
ended July 13, 2002, excluding sales to our own retail stores. Sales to our own
retail stores totaled $1.2 billion during fiscal 2001 and $671 million for the
28 weeks ended July 13, 2002.
As a result of the Acquisition, we have a nationwide network of multi-tier
distribution centers that employ piece-pick, case-pick and flow-through
distribution methods. We believe that our network of multi-tier distribution
centers offers retailers of varying size and format a low-cost alternative to
other distribution competitors or to self-distribution, partly because our
network allows us to address the particular volume, value and velocity
characteristics of each product that we distribute. In particular, we believe
there is an increasing demand for a national network of distribution facilities
that can uniformly meet the piece-pick needs of large-scale retail chains.
40
The following map displays the location of our distribution centers.
[MAP OF DISTRIBUTION CENTERS]
We employ the high velocity case-pick method to distribute items that sell
quickly, such as grocery items. This method allows us to select products in case
quantities and then aggregate and distribute them on pallets. We use
flow-through distribution methods to distribute items that move rapidly through
the distribution center, such as bulk paper, water and promotional grocery
items, in full pallet quantities. We have 24 high velocity case-pick and
flow-through distribution centers. We use the high velocity piece-pick method to
distribute consumer goods that sell quickly such as tobacco, candy, snacks, fast
food and beverages to convenience-oriented retailers. This method selects
products in single-unit quantities and distributes them in totes. We have 26
high velocity piece-pick distribution centers. We use low velocity case-pick and
piece-pick distribution methods to distribute products that turn the least
often, such as health and beauty aids, general merchandise and specialty and
slow-moving grocery items. We have five low velocity case-pick and piece-pick
distribution centers.
Cross-docking of product between facilities allows us to maximize the
efficiency of our truck fleet, reduce costly truck miles and, consequently,
lower our costs.
Customers Served. Our distribution group serves a wide variety of retail
operations located in all 50 states, western Canada and the Caribbean including
supermarkets, convenience stores, supercenters, discount stores, limited
assortment stores, drug stores, specialty stores and other stores.
On a pro forma basis after giving effect to the Acquisition, our top ten
customers accounted for approximately 26% of our total net sales during 2001 and
approximately 25% of our total net sales for the 28 weeks ended July 13, 2002.
On a pro forma basis after giving effect to the Acquisition, Kmart Corporation,
our largest customer, represented approximately 17% of our total net sales in
2001 and 18% of our total net sales for the 28 weeks ended July 13, 2002. On a
pro forma basis after giving effect to the Acquisition, no other single customer
represented more than approximately 2% of our net sales for fiscal 2001 or the
28 weeks ended July 13, 2002.
Pricing. Our distribution segment uses market research and cost analyses
as a basis for pricing its products and services. We have three basic marketing
programs for our distribution business: FlexMate,
41
FlexPro and FlexStar. Most of our distribution divisions offer and many of their
customers utilize the FlexMate plan.
The FlexMate marketing program prices product to customers at a quoted sell
price, a selling price established by us that might include a mark-up. Under the
FlexPro and FlexStar programs, grocery, frozen and dairy products are priced at
their net acquisition value, which is generally comparable to the net cash price
paid by the distribution segment. Customers pay fees for specific activities
related to the selection and distribution of products. Certain vendor allowances
and service income are passed through to the customer under the FlexPro and
FlexStar programs, but service charges are different between the two programs.
Private Label. Fleming's private label brands are Fleming-owned brands
that we offer exclusively to our customers. Our predominant brand is BestYet,
and we also offer a growing number of products under Exceptional Value, our
opening price-point brand. We recently introduced BestYet meat and a re-
formatted BestYet health and beauty care line. Private label lines are designed
to offer quality products that are equal or superior in quality to comparable
nationally advertised brands and value brand products at more competitive
prices. We believe our private label brands generate higher margins for us and
for our customers than nationally advertised brands and other value brand
products because we are able to acquire them at lower costs. Approximately 10%
of the private label volume that we distribute is distributed to our own stores.
We offer two controlled labels, IGA and Piggly Wiggly brands, which are
national quality brands. Controlled labels are brands to which we have exclusive
distribution rights to a particular customer or in a specific region and are
offered only in stores operating under specific banners, which we may or may not
control.
Procurement. We currently make category management decisions and negotiate
with vendors for approximately 84% of our merchandise procurement from one
location, our customer support center near Dallas, Texas. This makes more
efficient use of our procurement staff, improves buying efficiency and reduces
the cost of goods. We believe our customer support center is one of the largest
buying locations of consumable goods in the United States. We believe that our
centralized purchasing capabilities and the volume discount pricing we have
achieved are valuable to our customers. We make a small percentage of our
procurement decisions at the distribution center level where local market needs
and trends can best be addressed, such as decisions regarding ethnic products,
and where transportation costs may be minimized.
Facilities and Transportation. Our distribution group operates a network
of 24 high-velocity case-pick and flow-through distribution centers, 26
high-velocity piece-pick distribution centers and five low-velocity case-pick
and piece-pick distribution centers that are responsible for the distribution of
national brands and private label Fleming brands, including groceries, meat,
dairy and delicatessen products, frozen foods, produce, bakery goods and a
variety of related food and non-food items. All facilities are equipped with
modern material handling equipment for receiving, storing and shipping large
quantities of merchandise. Our distribution centers comprise approximately 21
million square feet of warehouse space. Additionally, the distribution group
rents, on a short-term basis, approximately 904,000 square feet of off-site
temporary storage space.
Transportation arrangements and operations vary by distribution center and
may vary by customer. Some customers prefer to handle product delivery
themselves, others prefer us to deliver products, and still others ask us to
coordinate delivery with a third party. Accordingly, many of our distribution
centers maintain a truck fleet to deliver products to customers, and several of
our distribution centers also engage dedicated contract carriers to deliver
products. We increase the utilization of our truck fleet by back-hauling
products from suppliers and others, thereby reducing the number of empty miles
traveled. To further increase our fleet utilization, we have made our truck
fleet available to other firms on a for-hire carriage basis.
Capital Invested in Customers. As part of our services to retailers, we
provide capital to certain customers by extending credit for inventory
purchases, by becoming primarily or secondarily liable for store
42
leases, by leasing equipment to retailers and by making secured loans to
customers. At July 13, 2002, we were the primary lessee of approximately 600
retail store locations subleased to and operated by customers. In making credit
and investment decisions, we consider many factors, including estimated return
on capital, assumed risks and benefits (including our ability to secure
long-term supply contracts with these customers).
At July 13, 2002, we had net loans outstanding to customers totaling
approximately $115 million. We had no loans to Kmart. We also have investments
in customers through direct financing leases of real property and equipment,
lease guarantees, operating leases or credit extensions for inventory purchases.
On a pro forma basis after giving effect to the Acquisition, our credit loss
expense from receivables as well as from investments in customers was $40
million in 2001 (including a $17 million charge relating to the Kmart
bankruptcy) and approximately $4 million for the 28 weeks ended July 13, 2002.
Cost-Reduction Initiatives. To strengthen our position as a low-cost
supplier to our retail customers and increase our profitability, we instituted a
"culture of thrift" among our employees and developed initiatives to reduce our
expenses. This program focuses on five areas: merchandising and procurement,
logistics and distribution, shared services and finance, retail operations and
customer relations. In the merchandising and procurement functions, we have
lowered cost of goods and administrative costs by centralizing most of our
procurement functions, which were conducted in individual distribution centers,
into one national procurement center near Dallas, which we believe is one of the
largest buyer locations of consumable goods in the United States. The logistics
and distribution functions have removed costs associated with back-haul,
in-bound transportation and other logistics functions. In addition, we
established a new shared services center in Oklahoma City where we have
centralized the management of our accounting, human resources, information
technology and other support services. We have also achieved progress in the
rollout of our "F1" supply chain technologies that we are currently developing
and implementing to better integrate our distribution centers and our central
procurement operations. These new technologies will include transportation,
warehouse management and procurement software applications. The transportation
management software and processes will provide us with the ability to track all
freight movement, whether it is inbound, outbound or inter-facility, resulting
in more efficient and effective routing and fleet management. In the first
quarter of 2002, we installed transportation management software in our Geneva,
Northeast, Warsaw, Memphis, Garland, Kansas City, Lincoln and Massillon
divisions. Retail operations have taken steps to reduce labor costs and reduce
store operating costs, and certain administrative functions have also been
centralized for retail operations. Finally, customer relations has established a
single point of contact for each customer to eliminate many paper-based
processes and improve customer communications. We continually look for
initiatives to reduce costs and although we are unable to quantify the exact
amount we have saved as a result of these initiatives, we believe the above
initiatives we have implemented over the course of the past two to three years
have helped reduce our operating expenses as a percentage of sales.
Strategic Acquisitions. Since the beginning of 2001, we have acquired
several businesses. In June 2002, we acquired Core-Mark International, Inc., a
distributor of consumer package goods to nearly 30,000 convenience stores and
other retailers in the western United States and western Canada from its network
of 19 distribution centers. In April 2002, we acquired Head Distributing
Company, a wholesale distributor that operates two piece-pick distribution
centers and serves approximately 3,000 retail locations in six southeastern
states. In September 2001, we purchased certain assets and inventory of Miller &
Hartman South, LLC, a wholesale distributor serving over 1,800 convenience
stores in Kentucky and surrounding states. In April 2001, we acquired
Minter-Weisman Co., a wholesale distribution company serving over 800
convenience stores in Minnesota, Wisconsin and surrounding states.
OUR RETAIL GROUP
At July 13, 2002, our retail group operated 110 price impact supermarkets
primarily under the Food 4 Less and Rainbow Foods banners. In addition, at July
13, 2002, we operated 17 limited assortment stores under the yes!LESS(R) banner,
11 of which we opened in 2001.
43
As part of our strategic plan, we sold or closed 238 of our conventional
format supermarkets in order to focus resources on growing our price impact
stores and improving financial results. The following chart illustrates the
number of supermarkets and limited assortment stores we operated as of the dates
indicated:
<Table>
<Caption>
DECEMBER 25, DECEMBER 30, DECEMBER 29, JULY 13,
1999 2000 2001 2002
------------ ------------ ------------ --------
CONTINUING STORES
Price Impact........................... 71 74 99 110
Limited Assortment..................... -- 6 17 17
--- --- --- ---
Subtotal............................. 71 80 116 127
NON-STRATEGIC STORES................... 171 107 -- --
--- --- --- ---
TOTAL................................ 242 187 116 127
=== === === ===
</Table>
Price Impact Supermarkets. At July 13, 2002, our retail group operated 110
price impact supermarkets, of which 42 are located in Minnesota, 26 in Northern
California, 13 in Wisconsin, seven in the Salt Lake City, Utah area, 14 in
Texas, seven in the Phoenix, Arizona area, and one in Las Cruces, New Mexico.
These stores average approximately 45,000 square feet and offer deep-discount,
everyday low prices below those offered by conventional supermarkets and carry
prices for grocery products that are also generally lower than supercenters.
We believe price-sensitive consumers are underserved on a nationwide basis.
Our price impact supermarkets serve price-sensitive middle-income consumers who
often have larger-than-average families. These stores have a wider trade area
than conventional supermarkets yet are generally more convenient to shop than
supercenters. Our price impact supermarkets offer name-brand food and consumable
goods at significantly lower prices than conventional format retail store
operators because of the many low-cost features of our stores. These features
include: offering a reduced number of product selections, focusing on popular,
name-brand products and product categories, employing flow-through distribution
methods which reduce product storage and handling expense and minimizing store
operating costs.
These stores do not cost as much as conventional stores to construct and
maintain, as price impact stores typically feature cement floors, cinder block
walls, exposed ceiling and walk-in freezers and coolers which combine the
typically separate storage and display areas. In addition, price impact stores
produce lower operating expenses, primarily as a result of less labor content
due to pallet or case-loading display racks, fewer product categories offered
due to focusing on the more popular items, self bagging, and elimination of
staffed service departments. We spend less on advertising and marketing for
these stores compared to conventional format stores.
After the completion of the Acquisition, we began an evaluation of
strategic alternatives related to our price-impact retail stores. After
completing this strategic evaluation, we announced on September 24, 2002 our
decision to divest all 110 of our price impact supermarkets, which we operate
under the Food 4 Less and Rainbow Foods banners.
We have contacted and have begun negotiations with potential buyers for
these stores, including with self-distributing chains and regional and
independent supermarket operators. We believe that the actual disposition of
these retail assets will occur through a series of sales to multiple buyers,
beginning in the fourth quarter of 2002 and completed in 2003.
We expect to apply the proceeds from the sale of these stores to reduce
outstanding debt under our credit facility.
Limited Assortment Stores. In 2000, we began to develop our limited
assortment retail concept operating under the yes!LESS(R) trade name, operating
stores averaging 12,000 to 15,000 square feet of selling space. Our yes!LESS(R)
concept is designed to appeal to a needs-based consumer, primarily with low
price private label food and other consumables and an attractive selection of
general merchandise products
44
at opening price points. With 11 stores opened in 2001, as of July 13, 2002,
there were 17 yes!LESS(R) retail stores open, 16 in Texas and one in Louisiana.
PRODUCTS
We supply a full line of national brands and Fleming brands, including
groceries, meat, dairy and delicatessen products, frozen foods, produce, bakery
goods and a variety of general merchandise, health and beauty care and other
related items. During 2001, the total number of SKUs carried in our distribution
centers was approximately 42,000. During 2001, our product mix as a percentage
of sales was approximately 61% groceries, 33% perishables and 6% general
merchandise.
Our subsidiary Core-Mark distributes a full line of national brands and
Core-Mark brands, including cigarettes and other tobacco products, food products
such as candy, fast food, snacks, groceries, non-alcoholic beverages, and
non-food products such as film, batteries and other sundries and health and
beauty care products, a total of approximately 31,000 SKUs. During 2001,
cigarette net sales constituted approximately 72% of Core-Mark's total net
sales. Core-Mark sells private label cigarettes that are manufactured by a third
party, but neither Fleming nor Core-Mark manufactures tobacco products.
SUPPLIERS
We purchase our products from numerous vendors and growers. As a large
customer with centralized procurement, we are able to secure favorable terms and
volume discounts on many of our purchases, leading to lower unit costs. We
purchase products from a diverse group of suppliers and believe we have adequate
sources of supply for substantially all of our products.
COMPETITION
Our distribution group operates in a competitive market. Our primary
competitors are national chains that self-distribute and national, regional and
local food and consumer package goods distributors. Our primary competitors in
this regard are Supervalu, Inc., C&S Wholesale Grocers, Inc., Wakefern Food
Corporation and Nash Finch Company. The convenience retail distribution business
is comprised of one other national distributor in the United States (McLane, a
subsidiary of Wal-Mart) and a number of large, multi-regional and smaller local
distributors, including EBY-Brown Co. and H.T. Hackney Co. The principal factors
on which we compete include price, quality and assortment of product lines,
schedules and reliability of delivery and the range and quality of customer
services.
The primary competitors of our retail group supermarkets are national,
regional and local grocery chains, as well as supercenters, independent
supermarkets, convenience stores, drug stores, restaurants and fast food
outlets. Principal competitive factors include price, quality and assortment,
store location and format, sales promotions, advertising, availability of
parking, hours of operation and store appeal.
INTELLECTUAL PROPERTY
We or our subsidiaries use many trade names registered either by us or by
third parties from whom we license the rights to use such trade names at either
the federal or state level or a combination of both, such as Piggly Wiggly,
PWPETRO, Piggly Wiggly xpress, Super 1 Foods, Festival Foods, Jubilee Foods,
Jamboree Foods, MEGAMARKET, Shop 'N Kart, ABCO Desert Market, American Family,
Big Star, Big T, Big Bear, Big Dollar, Buy for Less, County Pride Markets,
Rainbow Foods, Red Fox, Sentry, Shop N Bag, Super Duper, Super Foods, Super
Thrift, Thriftway, Value King and yes!LESS.
We license the Food 4 Less service mark and trade name from Ralphs Grocery
Company, a subsidiary of Kroger Co., and have the exclusive right to use and
sublicense the name in certain areas of California. We also have the exclusive
license to use and sublicense the name in all other states, excluding certain
areas of Southern California and certain areas in various other states
previously licensed to others by Ralphs or its predecessors. Additionally,
should the rights to such a previously licensed area terminate, we would
automatically obtain the exclusive license for that area. The Food 4 Less
license agreement
45
generally provides for protected trade area status for five years after the date
that we, our franchisees or Ralphs commit to entering a new market area under
the Food 4 Less banner. However, we are not prohibited by the licensing
agreement from opening stores under a different trade name in any of these
areas.
EMPLOYEES
At August 16, 2002, we had approximately 25,450 full-time and part-time
employees, with 12,750 employed by the distribution group, 10,500 by the retail
group and 2,200 employed in shared services, customer support and other
functions.
Approximately 38% of our employees are covered by collective bargaining
agreements with the International Brotherhood of Teamsters; Chauffeurs,
Warehousemen and Helpers of America; the United Food and Commercial Workers; the
International Longshoremen's and Warehousemen's Union; the Retail, Wholesale and
Department Store Union; and the International Union of Operating Engineers. Most
of these agreements expire at various times throughout the next five years. We
consider our employee relations in general to be satisfactory.
At December 31, 2001, our subsidiary Core-Mark had 2,916 employees.
Core-Mark is a party to local collective bargaining agreements with the
International Brotherhood of Teamsters, United Food Commercial Workers and the
Industrial Wood and Allied Workers of Canada.
46
PROPERTIES
The following chart displays our distribution group facilities. Except as
otherwise indicated in the table below, we lease all of our properties.
<Table>
<Caption>
APPROXIMATE
LOCATION SQUARE FEET
- -------- -----------
(IN THOUSANDS)
HIGH VELOCITY CASE-PICK (24 FACILITIES):
Ewa Beach, HI....................... 361
Ft. Wayne, IN....................... 1,043
Fresno, CA**........................ 828
Garland, TX*........................ 1,175
Geneva, AL.......................... 575
Kansas City, KS..................... 937
La Crosse, WI*...................... 907
Lafayette, LA*...................... 443
Lincoln, NE......................... 516
Lubbock, TX**....................... 762
Massillon, OH....................... 874
Memphis, TN......................... 1,071
Miami, FL........................... 764
Milwaukee, WI*...................... 600
Minneapolis, MN*.................... 480
Nashville, TN....................... 941
North East, MD**.................... 591
Phoenix, AZ......................... 1,033
Sacramento, CA...................... 787
Salt Lake City, UT.................. 555
South Brunswick, NJ................. 526
Superior, WI*....................... 371
Tulsa, OK........................... 748
Warsaw, NC**........................ 672
------
Total........................ 17,560
LOW VELOCITY CASE-PICK AND PIECE-PICK (5 FACILITIES):
King of Prussia, PA................. 377
La Crosse, WI*...................... 163
Memphis, TN**....................... 495
Sacramento, CA...................... 439
Topeka, KS.......................... 223
------
Total........................ 1,697
</Table>
<Table>
<Caption>
APPROXIMATE
LOCATION SQUARE FEET
- -------- -----------
(IN THOUSANDS)
HIGH VELOCITY PIECE-PICK (26 FACILITIES):
Adel, GA............................ 79
Albuquerque, NM..................... 96
Altoona, PA*........................ 172
Denver, CO.......................... 91
Bakersfield, CA..................... 70
Corona, CA.......................... 201
Corona, CA (AMI Consolidation
Facility)......................... 57
Ft. Worth, TX....................... 113
Grants Pass, OR..................... 43
Hayward, CA......................... 130
Las Vegas, NV....................... 100
Leitchfield, KY**................... 169
Los Angeles, CA..................... 194
Marshfield, WI*..................... 157
Plymouth, MN........................ 239
Portland, OR........................ 112
Romeoville, IL...................... 125
Sacramento, CA...................... 187
Sacramento, CA (Arctic Cascade
Consolidation Facility)........... 22
Salt Lake City, UT.................. 109
Smyrna, GA.......................... 125
Spokane, WA......................... 78
Calgary, Alberta.................... 76
Vancouver, BC....................... 70
Victoria, BC........................ 48
Winnipeg, Manitoba.................. 55
------
Total........................ 2,918
TEMPORARY STORAGE FACILITIES:
Typically rented on a short-term
basis............................... 1,016
------
Total Distribution Square
Footage.................... 23,191
======
</Table>
- ---------------
* Owned
** Owned and leased
In addition, we have closed seven other facilities in various states, which
we are actively marketing.
As of July 13, 2002, our retail group operated 127 supermarkets in a
variety of formats in Arizona, California, Minnesota, New Mexico, Louisiana,
Texas, Utah and Wisconsin. Our continuing chains included 110 price impact
supermarkets and 17 limited assortment stores. For more information, see the
subsection "Our Retail Group."
Our shared service center office is located in Oklahoma City, Oklahoma. The
shared service center occupies leased office space totaling approximately
229,000 square feet. Our customer support center near Dallas, Texas occupies
leased office space totaling approximately 153,000 square feet.
47
We own and lease other significant assets, such as inventories, fixtures
and equipment and capital leases.
Our subsidiary Core-Mark does not own any real property. Core-Mark's
principal executive offices are located in South San Francisco, California, and
consist of approximately 22,000 square feet of leased office space. In addition,
Core-Mark leases approximately 13,000 square feet in Vancouver, British Columbia
for its tax and information technology departments and eight small offices for
use by sales personnel in certain parts of the United States and Canada.
Core-Mark also leases its 19 primary distribution facilities, 15 of which are
located in the western United States and four in western Canada, which are shown
in the table above. Each distribution facility is equipped with modern equipment
(including freezers and coolers at 18 facilities) for receiving, stocking, order
selection and shipping a large volume of customer orders.
Our aggregate rental expense for fiscal 2001 was $76 million, which
included our distribution facilities, shared services center, customer support
center and Fleming-operated retail stores. The aggregate rent paid in connection
with Core-Mark's distribution facilities, regional sales offices and corporate
and administrative offices was approximately $8 million in fiscal 2001.
LEGAL PROCEEDINGS
We are a party to or threatened with various litigation and contingent loss
situations arising in the ordinary course of our business including disputes
with customers and vendors, owners or creditors of financially troubled or
failed customers, suppliers, landlords and lessees, employees, insurance
carriers and tax authorities. In this regard, we are currently in binding
arbitration with one of our former convenience store customers, Clark Retail
Enterprises, Inc., regarding the required mix of annual minimum purchases under
a supply agreement and related product service charges. We believe that Clark
failed to purchase the required mix of products as it said it would, making the
supply agreement subject to rescission and making Clark liable to us for
damages. Clark contends that we breached the supply agreement in several
respects, making us liable to Clark for damages. Clark has not yet specified in
the arbitration the amount of damages it is seeking from us. An unfavorable
outcome for us in this arbitration could impact our financial results, but we do
not expect that such an impact would be material.
Since August 29, 2002, several securities lawsuits have been filed against
us and certain of our officers in the United States District Court for the
Eastern District of Texas seeking court certification as a class action. To
date, these complaints collectively raise various categories of claims: (a) we
allegedly issued false and misleading positive statements, including statments
about our price impact retail supermarkets; (b) we allegedly issued financial
results which improperly included certain income from vendor deductions; and (c)
other alleged accounting irregularities.
Manufacturers and distributors of cigarettes and other tobacco products are
currently facing a number of significant issues that affect the business
environment in which they operate including: proposed additional governmental
regulation; actual and proposed excise tax increases; increased litigation
involving health and other effects of cigarette smoking and other uses of
tobacco; and litigation by the U.S. Department of Justice to recover federal
Medicare costs allegedly connected to smoking.
Legislation has been introduced in Congress that would grant the FDA
authority to regulate tobacco products. Although no such legislation passed
during the year 2001, the prospects for similar legislation in the future are
uncertain. If such legislation is passed, we cannot assure you that the FDA
would not promulgate regulations that would result in a material reduction in
the consumption of tobacco products in the United States.
In November 1998, 46 states, five territories and the District of Columbia
entered into a settlement of approximately $250 billion with four major tobacco
companies to resolve litigation over smoking-related costs incurred by state
Medicaid programs.
Included in the terms of the settlement are conditions that tobacco
companies participating in the settlement may not: target youth in the
advertising, promotion or marketing of tobacco products (including the use of
cartoons in such promotion); use tobacco brand names to sponsor concerts,
athletic events or
48
other events in which a significant percentage of the audience is under 18 years
of age; advertise products in conspicuous places outdoors (such as billboards)
or on transit vehicles; merchandise a tobacco brand name through the marketing,
distribution or sale of apparel or other merchandise; provide free samples of
tobacco products in any area except an adults-only facility; distribute or sell
cigarettes in pack sizes of less than 20; or lobby state legislatures on certain
anti-tobacco initiatives (such as limitations on youth access to vending
machines).
GOVERNMENTAL REGULATION
Our facilities and operations are subject to various laws and regulations
and, from time to time, judicial and administrative orders. The material laws
and regulations with which we comply include:
- the Occupational Safety and Health Act of 1970, regarding employee
working conditions;
- the Perishable Agricultural Commodities Act, 1930, regarding our purchase
and resale of fruits and vegetables;
- the National Labor Relations Act, regarding our relationship with our
employees who are represented by unions;
- the Federal Food, Drug, and Cosmetic Act, regarding receipt, storage and
distribution of applicable commodities;
- the Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, regarding our ownership or operation of properties at which
hazardous substances have been stored or disposed; and
- the Solid Waste Disposal Act, regarding petroleum products that we
utilize from storage tanks.
We employ a number of associates who are responsible for staying informed
about changes in laws and to review, from time to time, our compliance with
these laws. Our costs to comply with these laws are not material, individually
or in the aggregate.
49
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
Our executive officers and directors are as follows:
<Table>
<Caption>
NAME AGE PRESENT POSITION
- ---- --- ----------------
EXECUTIVE OFFICERS:
Mark S. Hansen........................ 47 Chairman and Chief Executive Officer
Robert A. Allen....................... 53 Executive Vice President and
President, Convenience Distribution
J.R. Campbell......................... 58 Executive Vice President,
Merchandising and Supply and President
of Retail Operations
E. Stephen Davis...................... 61 Executive Vice President and
President, Wholesale
Ronald B. Griffin..................... 48 Executive Vice President and Chief
Information Officer
Scott M. Northcutt.................... 40 Executive Vice President, Human
Resources
Neal J. Rider......................... 40 Executive Vice President and Chief
Financial Officer
Michael J. Carey...................... 55 Senior Vice President, Western
Operations
Keith D. Durham....................... 44 Senior Vice President, Fleming Retail
Group
Charles L. Hall....................... 52 Senior Vice President, Real Estate and
Store Development
Carlos M. Hernandez................... 48 Senior Vice President, General Counsel
and Secretary
Matthew H. Hildreth................... 37 Senior Vice President, Finance and
Treasurer
Timothy R. LaBeau..................... 47 Senior Vice President, Operations
William E. May, Jr. .................. 54 Senior Vice President, Operations
William A. Merrigan................... 57 Senior Vice President, Logistics
Philip B. Murphy...................... 54 Senior Vice President, Procurement
Mark D. Shapiro....................... 42 Senior Vice President, Finance and
Operations Control
DIRECTORS:
Mark S. Hansen........................ 47 Chairman and Chief Executive Officer
Herbert M. Baum....................... 65 Director
Kenneth M. Duberstein................. 58 Director
Archie R. Dykes....................... 71 Director
Carol B. Hallett...................... 64 Director
Robert S. Hamada...................... 65 Director
Alice M. Peterson..................... 49 Director
</Table>
50
EXECUTIVE OFFICERS
Mark S. Hansen joined us as Chairman and Chief Executive Officer in
November 1998. Prior to joining us, Mr. Hansen served as President and Chief
Executive Officer of SAM's Club, the nation's leading members-only shopping
warehouse and a division of Wal-Mart Stores, Inc., from 1997 through 1998. Prior
to joining Wal-Mart, Mr. Hansen served in multiple capacities at PETsMART, Inc.,
a national pet supply retailer, including as President and Chief Executive
Officer from 1989 to 1997. Prior to 1989, Mr. Hansen served in various
management capacities in the supermarket industry. He serves as an executive
advisory board member of Swander Pace Capital and is a director of Applebee's
Restaurants and Amazon.com.
Robert A. Allen joined us as Executive Vice President and President,
Convenience Distribution upon consummation of the Acquisition in June 2002.
Prior to the Acquisition, Mr. Allen had been Chief Executive Officer of
Core-Mark since January 1998 and President of Core-Mark since January 1996. Mr.
Allen served as Chief Operating Officer of Core-Mark from January 1996 to
December 1997. Prior to 1996, he served as Senior Vice President, Distribution
of Core-Mark from 1992 through 1995. Mr. Allen was a director of Core-Mark from
1994 to June 2002.
J.R. Campbell joined us as our Executive Vice President, Merchandising and
Supply and President of Retail Operations in January 2002. Prior to joining us,
Mr. Campbell served for over 20 years in various capacities at Wal-Mart Stores,
Inc., a national discount retailer, including President, Global Sourcing
Division from 2000 until joining us, Senior Vice President of Merchandising for
SAM's Club from 1998 to 2000 and, prior to that, Senior Vice President and
General Merchandise Manager. Presently, Mr. Campbell is on medical leave.
E. Stephen Davis joined us in 1960 and has served as our Executive Vice
President and President, Wholesale since February 2000. Prior to that, Mr. Davis
has served us in various positions, including Executive Vice President, Food
Distribution from 1998 to February 2000, Executive Vice President, Operations
from 1997 to 1998, Executive Vice President, Food Operations from 1996 to 1997
and Executive Vice President, Distribution from 1995 to 1996.
Ronald B. Griffin joined us as Executive Vice President and Chief
Information Officer in January 2002. Prior to joining us, Mr. Griffin served for
over 10 years in various capacities at The Home Depot, Inc., a home improvement
retailer, including Senior Vice President and Chief Information Officer since
1996.
Scott M. Northcutt joined us as Senior Vice President, Human Resources in
January 1999 and he became Executive Vice President, Human Resources in February
2000. From 1997 until joining us, Mr. Northcutt was Vice President -- People
Group at SAM's Club, the nation's leading members-only shopping warehouse and a
division of Wal-Mart Stores, Inc. From 1988 to 1995, he served as Vice
President -- Human Resources and from 1995 to 1996, he served as Vice
President -- Store Operations at Dollar General Corporation, a retailer of
consumable basics.
Neal J. Rider joined us as Executive Vice President and Chief Financial
Officer in January 2000. From June 1999 until joining us, Mr. Rider was
Executive Vice President and Chief Financial Officer at Regal Cinemas, Inc., a
motion picture exhibitor operator. From 1980 to June 1999, Mr. Rider served in
multiple capacities at American Stores Company, a grocery and drug retailer
purchased by Albertson's, including Treasurer and Controller responsibilities
from 1994 to 1997 before becoming Chief Financial Officer in 1998.
Michael J. Carey joined us in 1983 and has served as our Senior Vice
President, Western Operations since June 2000. Prior to that, Mr. Carey served
as our Operating Group President from 1998 to June 2000, our President, LaCrosse
Division from 1996 to 1998, and our Director of IGA Marketing from 1994 to 1996.
51
Keith D. Durham joined us as Senior Vice President, Fleming Retail Group in
July 2002. From 1993 until joining us, Mr. Durham served as Vice President of
Operations at Costco Wholesale, a retailer operating an international chain of
membership warehouses.
Charles L. Hall joined us as Senior Vice President, Real Estate and Store
Development in June 1999. From 1998 until joining us, he was Senior Vice
President -- Real Estate and Store Development at Eagle Hardware and Garden,
Inc., an operator of large-scale home improvement stores. From 1992 to 1998, he
served as Vice President of Real Estate Development at PETsMART, Inc., a
national pet supply retailer.
Carlos M. Hernandez joined us in March 2000 as Associate General Counsel
and Assistant Secretary and has served as our Senior Vice President, General
Counsel and Secretary since February 2001. Prior to joining us, Mr. Hernandez
was employed as an attorney at Armco Inc., a steel producer, from 1981 to 1999,
and then as an attorney at AK Steel Holding Corporation, a producer of
flat-rolled carbon and steel products, from October to December 1999.
Matthew H. Hildreth joined us as Senior Vice President, Finance and
Treasurer in May 2001. Prior to joining us, Mr. Hildreth served in various
positions at JPMorgan, an investment banking company, since 1989, including most
recently as Vice President and Sector Head of North American Trucking for
JPMorgan's Transportation and Logistics Group since April 2000 and Vice
President from 1997 until April 2000.
Timothy R. LaBeau joined us in January 2002 as Senior Vice President of
Operations. Prior to joining us, Mr. LaBeau served as President and Chief
Executive Officer of American Sales Company, a purchasing and distributing
company and a subsidiary of Royal Ahold, from 1998 to December 2001. Prior to
that, Mr. LaBeau served as Executive Vice President of Merchandising and
Procurement for Ahold USA from 1994 to 1998.
William E. May, Jr. joined us in June 2002 as Senior Vice President,
Operations. Prior to joining us, Mr. May served as Vice President of Gap Global
Distribution, an international specialty retailer offering clothing, accessories
and personal care products, and Vice President of Old Navy Distribution at The
Gap, Inc. from 1999 to 2002. Prior to that, Mr. May served as Executive Vice
President and Chief Operating Officer of Nash Finch Company from 1996 to 1998.
William A. Merrigan joined us in November 2000 and has served as our Senior
Vice President, Logistics since May 2001. Prior to joining us, Mr. Merrigan
served as Senior Vice President of Logistics at Nash Finch Company, a wholesale
distribution company, from December 1998 to November 2000. Prior to that, Mr.
Merrigan served in various senior positions at Wakefern Food Corporation from
1986 to 1998, including Vice President of Logistics and Transportation since
June 1996.
Philip B. Murphy joined us in October 2000 as Vice President of Grocery,
and has served as our Senior Vice President, Procurement since May 2001. Prior
to that, Mr. Murphy served as Senior Vice President and General Manager of
Services at PETsMART, Inc., a national pet supply retailer, from 1995 to 2000.
Mark D. Shapiro joined us in June 2001 as Senior Vice President, Finance.
Prior to joining us, Mr. Shapiro served in various positions at Big Lots, Inc.,
a national broadline closeout retailer, since 1992, including Senior Vice
President and Chief Financial Officer since June 2000 and, prior to that,
Controller since 1994.
DIRECTORS
Herbert M. Baum joined us as a director in 1998. He is Chairman, president
and chief executive officer of The Dial Corporation (a consumer products
company). Prior to joining The Dial Corporation in August 2000, Mr. Baum served
as president and chief operating officer of Hasbro, Inc. from January 1999. From
1993 to 1998, Mr. Baum served as chairman and chief executive officer of Quaker
State Corporation. From 1978 to 1993, Mr. Baum served in a variety of positions
for Campbell Soup Company where his last position held was President Campbell
North and South America. Mr. Baum is a director of
52
Grocery Manufacturers of America, The Dial Corporation, Midas, Inc., Meredith
Corporation, PepsiAmericas, Inc. (formerly Whitman Corporation), and Action
Performance Companies, Inc.
Kenneth M. Duberstein joined us as a director in May 2001. He has served as
chairman and Chief Executive Officer of The Duberstein Group, Inc., an
independent strategic planning and consulting company since 1989. Prior to that,
Mr. Duberstein served President Reagan in various capacities, including Chief of
Staff from 1988 to 1989, Deputy Chief of Staff from 1987 to 1988 and Assistant
and Deputy Assistant to the President for Legislative Affairs from 1981 to 1983.
Mr. Duberstein is a director of The Boeing Company, Conoco, Inc., Fannie Mae,
GVG, The St. Paul Companies, Inc., and serves on the Board of Governors for the
American Stock Exchange and the National Association of Securities Dealers. He
also serves as Vice Chairman of the Kennedy Center for Performing Arts, Chairman
of Ethics Oversight Committee for the U.S. Olympics Committee, Trustee of
Franklin & Marshall College and Johns Hopkins University, and serves on the
Council on Foreign Relations, the Institute of Politics at the John F. Kennedy
School of Government at Harvard University and the National Alliance to End
Homelessness.
Archie R. Dykes joined us as a director in 1981. He has served as chairman
and chief executive officer of Capital City Holdings, Inc. (a venture capital
organization) since 1988. He is senior chairman and a director of PepsiAmericas,
Inc. (formerly Whitman Corporation), Midas, Inc. and the Employment Corporation.
A former chancellor of the University of Kansas and of the University of
Tennessee, Mr. Dykes also serves as a trustee of the Kansas University Endowment
Association and of the William Allen White Foundation.
Carol B. Hallett joined us as a director in 1993. She has served as
president and chief executive officer of the Air Transport Association of
America, Washington, D.C. (the nation's oldest and largest airline trade
organization) since 1995. Prior to joining the Air Transport Association in
April 1995, Mrs. Hallett served as senior government relations advisor with
Collier, Shannon, Rill & Scott from February 1993 to March 1995. From November
1989 through January 1993, Mrs. Hallett served as the Commissioner of the United
States Customs Service. From September 1986 to May 1989, she served as the U.S.
Ambassador to The Commonwealth of the Bahamas. From July 1983 to August 1986,
Mrs. Hallett served as the national vice chairman and field director of Citizens
for America. Mrs. Hallett also served three terms in the California legislature
and as minority leader in the State Assembly. Mrs. Hallett is a director of
Mutual of Omaha Insurance Company. She is a trustee for the Junior Statesmen of
America. Mrs. Hallett also serves on the President's Cabinet of California
Polytechnic State University.
Robert S. Hamada joined us as a director in February 2001. He has been the
Chief Executive Officer of Merchant's Exchange since July 2001. An
internationally known authority in finance, Mr. Hamada was a member of the
faculty of the University of Chicago from 1966 until 2001, during which time he
served as Dean from 1993 to June 2001, as the Edward Eagle Brown Distinguished
Service Professor of Finance at the Graduate School of Business, as director of
the Center for International Business and Research from 1992 to 1993, as deputy
dean for the faculty at the Graduate School of Business from 1985 to 1990, and
as director of the Center for Research in Security Prices from 1980 to 1985. Mr.
Hamada is a director of Northern Trust Corporation, A.M. Castle & Co., Flying
Food Fare, Window to the World Communications, Inc., Merchant's Exchange, Terra
Foundation for the Arts, and the National Bureau of Economic Research.
Alice M. Peterson joined us as a director in 1998. She has served as the
President of Loretto Group, a finance strategy and consulting firm since
September 2001. She served as President of RIM Finance, LLC (a wholly-owned
subsidiary of the Canadian company, Research In Motion Limited, the maker of
BlackBerry wireless handheld devices), from December 2000 to September 2001.
From April 2000 to September 2000, Ms. Peterson served as Chief Executive
Officer of GuidanceResources.com (an Internet-based service that employers
provide as a value-added benefit to enhance employee productivity). From October
1998 to February 2000, Ms. Peterson served as vice president and general manager
of Sears Online, the unit of Sears, Roebuck and Co. where all
business-to-consumer Internet activities are
53
conducted, including interactive marketing. Ms. Peterson was vice president and
treasurer of Sears, Roebuck and Co. from 1993 to 1998. She joined that company
in 1989 as corporate director of finance, became managing director -- corporate
finance in 1992, and vice president -- treasurer in 1993. Prior to joining
Sears, Ms. Peterson served as assistant treasurer of Kraft, Inc. from 1988 to
1989. From 1984 to 1988, Ms. Peterson served in a variety of financial positions
for PepsiCo, Inc. where her last position held was director of capital markets.
Ms. Peterson is a director of RIM Finance, LLC and she serves on the Ravinia
Festival Board of Trustees.
54
PRINCIPAL AND MANAGEMENT SHAREHOLDERS
This table indicates how many shares of our common stock and stock
equivalent units were beneficially owned as of August 20, 2002 by each of our
directors and our five most highly-compensated executive officers who retained
their positions as of August 20, 2002 and by beneficial owners of more than 5%
of our common stock as of the dates indicated in the footnotes to the table. No
director or executive officer owns in excess of 1% of our outstanding shares
except for Mr. Hansen. As of August 20, 2002, 54,300,265 shares of our common
stock were issued and outstanding.
<Table>
<Caption>
EXECUTIVE
SHARES OF DIRECTORS' OFFICERS'
COMMON STOCK STOCK STOCK
BENEFICIALLY EQUIVALENT EQUIVALENT PERCENT OF
NAME OWNED(1) UNITS(2) UNITS(3) CLASS OWNED
- ---- ------------ ---------- ---------- -----------
Mark S. Hansen(4)(5).................... 1,003,349 -- 100,000 1.82%
Herbert M. Baum(5)(6)................... 6,250 1,484 -- *
Archie R. Dykes(6)...................... 19,428 5,314 -- *
Kenneth M. Duberstein(5)................ 2,000 -- -- *
Carol B. Hallett(5)(6).................. 8,449 6,182 -- *
Robert S. Hamada(5)..................... 4,000 1,092 -- *
Alice M. Peterson(6).................... 18,190 2,250 -- *
E. Stephen Davis(4)(5)(6)(7)............ 198,653 -- 66,000 *
William H. Marquard(4).................. 181,000 -- 50,000 *
Neal J. Rider(4)(7)..................... 289,966 -- 66,000 *
All directors and executive officers as
a group (26 persons)(4)(5)(6)(7)...... 2,180,331 16,322 762,000 3.90%
Mellon Financial Corporation(8)......... 6,222,897 -- -- 11.46%
One Mellon Center
Pittsburgh, Pennsylvania 15258
Southeastern Asset Management,
Inc.(9)............................... 7,790,900 -- -- 14.35%
Longleaf Partners Small-Cap Fund
6410 Poplar Avenue, Suite 900
Memphis, Tennessee 38119
</Table>
- ---------------
* Less than 1%
(1) This column includes our common stock held by directors and officers or by
certain members of their families (for which the directors and executive
officers have sole or shared voting or investment power), our common stock
which the officers have the right to acquire within 60 days of August 20,
2002 under our stock option and stock incentive plans, and shares of our
restricted common stock, subject to forfeiture, awarded under our stock
incentive plans.
(2) These stock equivalent units are payable in cash only when a director
ceases to be a member of the board and therefore are not included in the
columns entitled "Shares of Common Stock Beneficially Owned" and "Percent
of Class Owned."
(3) These stock equivalent units are payable in cash only and therefore are not
included in the columns entitled "Shares of Common Stock Beneficially
Owned" and "Percent of Class Owned." In November of 2001, we converted the
following stock equivalent units to stock options:
<Table>
Hansen..................................................... 200,000 stock equivalent units
Davis...................................................... 134,000 stock equivalent units
Marquard................................................... 100,000 stock equivalent units
Rider...................................................... 134,000 stock equivalent units
</Table>
All officers as a group (including those named above): 838,000 stock
equivalent units converted into stock options.
55
(4) The amounts shown include shares which the following persons have the right
to acquire within 60 days of August 20, 2002 under our stock option and
stock incentive plans:
<Table>
Hansen...................................................... 699,999 shares
Davis....................................................... 131,750 shares
Marquard.................................................... 137,500 shares*
Rider....................................................... 242,000 shares
</Table>
All directors and officers as a group (including those named above):
1,573,599.
* Includes 6,250 securities underlying options as to which Mr. Marquard can
only exercise upon instructions from a third party for shares that Mr.
Marquard will not beneficially own upon exercise.
(5) The following shares of restricted stock have been excluded from the share
totals for individuals named in the table and all directors and officers as
a group as they do not have voting or investment power with respect to such
shares:
<Table>
Hansen................................................... 100,000 shares of restricted stock
Baum..................................................... 7,940 shares of restricted stock
Duberstein............................................... 7,940 shares of restricted stock
Hallett.................................................. 7,940 shares of restricted stock
Hamada................................................... 7,940 shares of restricted stock
Davis.................................................... 100,000 shares of restricted stock
Marquard................................................. 10,000 shares of restricted stock
Rider.................................................... 20,000 shares of restricted stock
</Table>
All directors and officers as a group (including those named above):
447,092 shares of restricted stock.
(6) The individuals and group named in the table have sole voting power with
respect to the following shares of restricted stock:
<Table>
Baum........................................................ 5,250 shares
Dykes....................................................... 8,750 shares
Hallett..................................................... 5,250 shares
Peterson.................................................... 8,750 shares
Davis....................................................... 8,000 shares
</Table>
All directors and officers as a group (including those named above): 36,800
shares.
(7) The individuals and group named in the table have shared voting and
investment power with respect to the following shares of common stock:
<Table>
Davis....................................................... 9,000 shares
Rider....................................................... 20,000 shares
</Table>
All directors and officers as a group (including those named above): 67,304
shares.
(8) In a Schedule 13G filed January 9, 2002, Mellon Financial Corporation
disclosed that it held 6,222,897 shares of our common stock and that it
shared voting power with respect to 385,400 shares with The Boston Company,
Inc. and The Boston Company Asset Management L.L.C. and shared dispositive
power with respect to 9,700 shares with The Boston Company, Inc. In the
same Schedule 13G, Mellon Financial Corporation disclosed that it had sole
voting power with respect to 5,202,597 shares and sole dispositive power
with respect to 6,196,622 shares.
(9) In a Schedule 13G filed March 7, 2002, Southeastern Asset Management, Inc.
disclosed that it held 7,790,900 shares of our common stock and that it
shared voting and dispositive power with respect to 6,419,000 of the held
shares with Longleaf Partners Small-Cap Fund. In the same Schedule 13G,
Southeastern Asset Management disclosed that it had sole power to vote
694,900 shares, had sole power to dispose of 1,371,900 shares, and had no
voting power with regard to 677,000 shares. The Schedule 13G identifies Mr.
O. Mason Hawkins as Chairman of the Board and Chief Executive Officer of
Southeastern Asset Management, but Mr. Hawkins does not claim any voting or
dispositive power with regard to the shares of Fleming common stock held by
Southeastern.
56
DESCRIPTION OF OTHER INDEBTEDNESS
SENIOR SECURED CREDIT FACILITY
On June 18, 2002, we entered into a new senior secured credit facility
consisting of a $550 million revolving credit facility (which includes a $225
million letter of credit subfacility), with a final maturity of five years, and
a $425 million amortizing term loan with a maturity of six years. In addition,
incremental term loans may be extended under our credit facility by lenders
agreeing to provide same up to $250 million aggregate principal amount, provided
that the loans are permitted under the terms of our existing indebtedness.
Borrowings under the revolving credit facility may be used for general corporate
purposes. Letters of credit may also be used for general corporate purposes and
are needed primarily for insurance reserves associated with our normal risk
management activities. To the extent that any of these letters of credit would
be drawn, payments would be financed by borrowings under our revolving credit
facility. Incremental term loans, if extended, may be used only to finance
acquisitions and to repay or redeem indebtedness, including loans under the
revolving credit facility.
The stated interest rate on borrowings under the revolving credit facility
is a referenced index rate, normally the London interbank offered interest rate,
or LIBOR, plus a margin ranging from 1.50% to 2.25%, depending on (i) the ratio
of our consolidated indebtedness to consolidated EBITDA and (ii) amounts already
outstanding under the revolving credit facility. From June 18, 2002 to July 13,
2002, the average interest rate for the revolving credit facility was 4.3%. The
stated interest rate on borrowings under the term credit facility is a
referenced index rate, normally LIBOR plus a margin of 2.25%. From June 18, 2002
to July 13, 2002, the average interest rate of the term credit facility was
4.7%.
Our credit facility (and related interest rate protection agreements,
foreign currency exchange agreements, commodity price hedging agreements and
certain overdraft facilities) is guaranteed by substantially all of our
subsidiaries. In addition, our obligations under our credit facility (and
related interest rate protection agreements, foreign currency exchange
agreements, commodity price hedging agreements and certain overdraft facilities)
and the obligations of our subsidiaries under the guarantees are secured by a
first priority security interest in substantially all our accounts and
inventories and those of our subsidiaries that are guarantors, and in
substantially all the capital stock or other equity interests owned by us or our
subsidiaries that are guarantors.
Our credit facility contains customary covenants associated with similar
facilities, including the following material covenants:
- maintenance of a ratio of consolidated indebtedness to consolidated
EBITDA not to exceed 4.25 to 1 until December 31, 2003, 4.00 to 1 from
December 31, 2003 until December 31, 2004, 3.75 to 1 from December 31,
2004 until December 31, 2005, and 3.50 to 1 thereafter;
- maintenance of a minimum fixed charge coverage ratio of not less than
1.80 to 1 until the end of our third fiscal quarter of 2003, and 2.00 to
1 thereafter;
- maintenance of an adjusted fixed charge coverage ratio of not less that 1
to 1 at any time;
- maintenance of a minimum asset coverage ratio of not less than 2.25 to 1
at any time;
- a limitation on capital expenditures;
- a limitation on acquisitions and investments, including, while any
revolving loans are outstanding, the amount of cash and cash equivalents;
- a limitation on restricted payments, including dividends; and
- a limitation on incurrence of indebtedness and liens.
The commitments under our credit facility will be terminated in the event
of a change of control as defined in our credit facility, which includes the
acquisition by a person of 35% or more of our issued and
57
outstanding common stock, or the occupation of a majority of the seats of our
Board of Directors by persons who were neither nominated by our Board nor
appointed by directors so nominated.
10 1/8% SENIOR NOTES DUE 2008
Our $355 million of 10 1/8% senior notes due 2008 are general unsecured
obligations, equal in right of payment to all of our existing and future senior
indebtedness and are guaranteed on a senior unsecured basis by each guarantor of
the notes.
9 1/4% SENIOR NOTES DUE 2010
Our $200 million of 9 1/4% senior notes due 2010 are general unsecured
obligations, equal in right of payment to all of our existing and future senior
indebtedness and are guaranteed on a senior unsecured basis by each guarantor of
the notes.
10 5/8% SENIOR SUBORDINATED NOTES DUE 2007
Our $400 million of 10 5/8% senior subordinated notes due 2007 are general
unsecured obligations, subordinated in right of payment to all of our existing
and future senior indebtedness and are guaranteed on a senior subordinated basis
by each guarantor of the notes.
5 1/4% CONVERTIBLE SENIOR SUBORDINATED NOTES DUE 2009
Our $150 million of 5 1/4% convertible senior subordinated notes due 2009
are general unsecured obligations, subordinated in right of payment to all of
our existing and future senior indebtedness and are guaranteed on a senior
subordinated basis by each guarantor of the notes.
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DESCRIPTION OF NOTES
We issued the old notes, and will issue the exchange notes, under an
indenture (the "INDENTURE"), among us, the Subsidiary Guarantors and
Manufacturers and Traders Trust Company, as Trustee (the "TRUSTEE"). The
following is a summary of the material provisions of the Indenture. It does not
include all of the provisions of the Indenture. We urge you to read the
Indenture because it defines your rights. The terms of the notes include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939, as amended (the "TIA"). You can obtain a copy of
the Indenture from the Company. You can find definitions of certain capitalized
terms used in this description under "-- Certain Definitions." For purposes of
this section, references to the "Company," "we," "our" and "us" include only
Fleming Companies, Inc. and not its Subsidiaries.
GENERAL
The notes are our unsecured senior subordinated obligations, ranking junior
in right of payment to all of our Senior Indebtedness and pari passu in right of
payment with all of our other senior subordinated unsecured obligations.
Principal of, premium, if any, and interest on the notes and any additional
interest payable pursuant to the Registration Rights Agreement ("ADDITIONAL
INTEREST"), if any, is payable, and the notes are exchangeable and transferable,
at the office or agency of the Paying Agent in The City of New York maintained
for such purposes. At our option, however, we can pay interest by check or by
wire transfer to Holders of at least $5,000,000 aggregate principal amount of
notes. We may change any Paying Agent without notice to holders of the notes
(the "HOLDERS"). The notes will be issued only in fully registered form without
coupons in denominations of $1,000 and any integral multiple thereof. No service
charge will be made for any registration of transfer, exchange or redemption of
notes or, except in certain circumstances, for any tax or other governmental
charge that may be imposed in connection therewith.
MATURITY, INTEREST AND PRINCIPAL
The notes will mature on May 1, 2012, and are our unsecured senior
subordinated obligations in an aggregate principal amount of $260,000,000. We
may issue additional notes in an unlimited amount from time to time, subject to
the limitations set forth under "-- Certain Covenants -- Limitation on
Indebtedness." The notes bear interest at an annual rate of 9 7/8% from the
original date of issuance or from the most recent interest payment date to which
interest has been paid, payable semiannually on May 1 and November 1 of each
year commencing November 1, 2002, to the Person in whose name the notes were
registered at the close of business on the immediately preceding April 15 or
October 15. Interest will be computed on the basis of a 360-day year comprised
of twelve 30-day months. Interest on the exchange notes will accrue from the
last interest payment date on which interest was paid on the old notes or, if no
interest has been paid on the old notes, from the date of issuance of the old
notes, which was April 15, 2002. Holders whose old notes are accepted for
exchange will be deemed to have waived the right to receive any interest accrued
on the old notes.
The notes are not entitled to the benefit of any sinking fund.
GUARANTEES
Payment of the principal of, premium, if any, interest on and any
Additional Interest in respect of the notes are guaranteed, jointly and
severally, on a senior subordinated basis by all of our Wholly Owned Restricted
Subsidiaries and by our Restricted Subsidiaries that guarantee certain other
Indebtedness (the "SUBSIDIARY GUARANTORS").
Upon the sale or disposition of a Subsidiary Guarantor or all or
substantially all of its assets to an entity which is not a Subsidiary Guarantor
(and a Restricted Subsidiary) or the designation of a Restricted Subsidiary to
become an Unrestricted Subsidiary in compliance with the Indenture, such
Subsidiary Guarantor will be deemed released from its obligations under its Note
Guarantee. However,
59
any such termination may occur only to the extent that all obligations of such
Subsidiary Guarantor under all of its guarantees of, and under all of its
pledges of assets or other security interests which secure, any Indebtedness of
the Company or any other Restricted Subsidiary also terminate upon such release,
sale or transfer.
REDEMPTION
Optional Redemption. On or after May 1, 2007, we may redeem the notes at
our option, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the following redemption prices (expressed as percentages of the
principal amount thereof) if redeemed during the 12-month period commencing on
May 1 of the year set forth below.
<Table>
<Caption>
YEAR PERCENTAGE
- ---- ----------
2007........................................................ 104.938%
2008........................................................ 103.292%
2009........................................................ 101.646%
2010 and thereafter......................................... 100.000%
</Table>
In addition, we must pay all accrued and unpaid interest on any notes we
redeem.
Optional Redemption upon Equity Offerings. On or before May 1, 2005, we
may redeem up to 35% of the initial aggregate principal amount of the notes at
our option within 90 days of an Equity Offering with the net proceeds of such
offering at a redemption price equal to 109.875% of the principal amount
thereof, together with accrued and unpaid interest, if any, to the date of
redemption (subject to the right of holders of record on relevant record dates
to receive interest due on relevant interest payment dates), but only if at
least 65% of the notes originally issued under the Indenture remains outstanding
after giving effect to such redemption.
As used in the preceding paragraph, "Equity Offering" means a public or
private offering of our Qualified Capital Stock generating gross proceeds to us
of at least $50 million.
SELECTION AND NOTICE
In the event that we elect to redeem less than all of the notes at any
time, the Trustee will select the notes for redemption on a pro rata basis, by
lot or by such other method as the Trustee deems fair and appropriate, except
that a note of a principal amount of $1,000 or less may not be redeemed in part.
The Trustee will mail the notice of redemption by first class mail at least 30
but not more than 60 days before the redemption date to each Holder of notes to
be redeemed at its registered address. If any note is to be redeemed in part
only, the notice of redemption that relates to such note will state the portion
of the principal amount thereof to be redeemed. A new note in a principal amount
equal to the unredeemed portion thereof will be issued in the name of the Holder
upon cancellation of the original note. On or after the redemption date,
interest will cease to accrue on notes or portions thereof called for redemption
and accepted for payment.
PURCHASE OF NOTES UPON A CHANGE OF CONTROL
If a Change of Control occurs at any time, then each Holder of notes will
have the right, to the extent not inconsistent with our Bylaws as in effect on
the Issue Date, to require us to purchase such Holder's notes in whole or in
part in integral multiples of $1,000 at a purchase price (the "CHANGE OF CONTROL
PURCHASE PRICE") in cash in an amount equal to 101% of the principal amount of
such notes, plus accrued and unpaid interest, if any, to the date of purchase
(the "CHANGE OF CONTROL PURCHASE DATE"), pursuant to the offer described below
(the "CHANGE OF CONTROL PURCHASE OFFER") and the other procedures set forth in
the Indenture.
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Within 30 days following the occurrence of any Change of Control, we will
notify the Trustee and give written notice of such Change of Control to each
Holder of notes, by first-class mail, postage prepaid, at the address appearing
in the security register, stating, among other things:
- the Change of Control Purchase Price and the Change of Control Purchase
Date, which will be a Business Day no earlier than 30 days nor later than
60 days from the date such notice is mailed, or such later date as is
necessary to comply with requirements under the Exchange Act;
- that any note not tendered will continue to accrue interest;
- that, unless we default in the payment of the Change of Control Purchase
Price, any notes accepted for payment of the Change of Control Purchase
Price pursuant to the Change of Control Purchase Offer shall cease to
accrue interest after the Change of Control Purchase Date; and
- certain other procedures that a Holder of notes must follow to accept a
Change of Control Purchase Offer or to withdraw such acceptance.
We will not be required to make a Change of Control Purchase Offer upon a
Change of Control if a third party makes the Change of Control Purchase Offer in
the manner, at the times and otherwise in compliance with the requirements set
forth in the Indenture applicable to a Change of Control Purchase Offer we made
and purchases all notes properly tendered and not withdrawn under the Change of
Control Purchase Offer.
If a Change of Control were to occur, we cannot assure you that we would
have sufficient funds to pay the Change of Control Purchase Price for all the
notes tendered by the Holders. Our Credit Agreement and indentures contain, and
any future other agreements relating to other indebtedness to which we become a
party may contain, restrictions or prohibitions on our ability to repurchase
notes or may provide that an occurrence of a Change of Control constitutes an
event of default under, or otherwise requires payment of amounts borrowed under
those agreements. If a Change of Control occurs at a time when we are prohibited
from repurchasing the notes, we could seek the consent of our then existing
lenders and note holders to the repurchase of the notes or could attempt to
refinance the borrowings that contain the prohibition. If we do not obtain such
a consent or repay the borrowings, we would remain prohibited from repurchasing
the notes. In that case, our failure to repurchase tendered notes would
constitute an Event of Default under the Indenture and may constitute a default
under the terms of other indebtedness that we may enter into from time to time.
Upon the occurrence of a Change of Control and prior to the mailing of the
notice to Holders provided for in the Indenture, we covenant to either:
- repay in full all Indebtedness under the Credit Agreement and the Senior
Notes or offer to repay in full all such Indebtedness and to repay the
Indebtedness of each of the banks or holders thereunder, as the case may
be, that has accepted such offer or
- obtain any requisite consent under the Credit Agreement and the indenture
governing the Senior Notes to permit the purchase of the notes pursuant
to a Change of Control Purchase Offer as provided for in the Indenture or
take any other action as may be required under the Credit Agreement and
the indenture governing the Senior Notes to permit such purchase.
We must first comply with these covenants before we will be required to
purchase the notes pursuant to the Indenture.
Our bylaws contain a provision which limits our ability to "adopt or
maintain a poison pill, shareholder rights plan, rights agreement or any other
form of "poison pill" which is designed to or which has the effect of making
acquisitions of large holdings of the Corporation's shares of stock more
difficult or expensive ... unless such a plan is first approved by a majority
shareholder vote" and prohibits the amendment, alteration, deletion or
modification of such bylaw by our Board of Directors without prior shareholder
approval. This bylaw provision raises a question as to whether the provisions of
the Indenture described above (the "CHANGE OF CONTROL PROVISIONS") constitute a
"poison pill," "shareholder rights plan,
61
rights agreement or any other form of 'poison pill' " (collectively, a "POISON
PILL") within the meaning of this provision. See "Risk Factors -- Our bylaws may
not permit us to make payments to holders as required under the indenture upon
the occurrence of a change of control." Although the matter is not free from
doubt, we believe that a court, properly presented with the facts, should
conclude that the Change of Control Provisions of the Indenture do not
constitute a Poison Pill within the meaning of the bylaw provision, and
accordingly are not inconsistent with the bylaw provision. If the Change of
Control Provisions were found to be inconsistent with the bylaw provision, we
would not be able to make or consummate the Change of Control Purchase Offer or
pay the Change of Control Purchase Price when due.
One of the events that constitutes a Change of Control under the Indenture
is the disposition of "all or substantially all" of our assets. This term has
not been interpreted under New York law (which is the governing law of the
Indenture) to represent a specific quantitative test. As a result, if Holders of
the notes elect to require us to purchase the notes and we elect to contest such
election, there can be no assurance as to how a court interpreting New York law
would interpret the phrase.
We will comply with the applicable tender offer rules, including Rule 14e-1
under the Exchange Act, and any other applicable securities laws or regulations
in connection with a Change of Control Purchase Offer.
SUBORDINATION
The payment (by set-off or otherwise) of principal of, premium, if any,
interest, if any, on the notes (including with respect to any repurchases of the
notes) is subordinated in right of payment, as set forth in the Indenture, to
the prior payment in full in cash or, at the option of the holders of Senior
Indebtedness, in Temporary Cash Investments, of all Obligations in respect of
Senior Indebtedness, whether outstanding on the date of the Indenture or
thereafter incurred.
Upon any distribution to our or any Subsidiary Guarantor's creditors upon
our or such Subsidiary Guarantor's total or partial liquidation, dissolution or
winding up, or in a bankruptcy, reorganization, insolvency, receivership or
similar proceeding relating to us or such Subsidiary Guarantor or its property,
whether voluntary or involuntary, an assignment for the benefit of creditors or
any marshalling of our or such Subsidiary Guarantor's assets and liabilities,
the holders of our or such Subsidiary Guarantor's Senior Indebtedness will be
entitled to receive payment in full in cash or, at the option of the holders of
such Senior Indebtedness, in Temporary Cash Investments, of all Obligations due
or to become due in respect of such Senior Indebtedness (including interest
after the commencement of any such proceeding at the rate specified in the
applicable Senior Indebtedness) before the Holders of notes will be entitled to
receive any payment of any kind or character with respect to the notes, and
until all Obligations with respect to such Senior Indebtedness are paid in full
in cash or, at the option of the holders of such Senior Indebtedness, in
Temporary Cash Investments, any distribution of any kind or character to which
the Holders of notes would be entitled shall be made to the holders of such
Senior Indebtedness (except that Holders of notes may receive Permitted Junior
Securities and payments made from the trust described under "-- Defeasance or
Covenant Defeasance of Indenture").
Neither we nor any Subsidiary Guarantor may make, directly or indirectly,
any payment upon or in respect of the notes (except in Permitted Junior
Securities or from the trust described under "-- Defeasance or Covenant
Defeasance of Indenture") or acquire any of the notes for cash or property or
otherwise or make any other distribution with respect to the notes if:
(1) any default occurs and is continuing in the payment when due,
whether at maturity, upon any redemption, by declaration or otherwise, of
any amount of any Designated Senior Indebtedness (a "PAYMENT DEFAULT"); or
(2) any other default occurs and is continuing with respect to
Designated Senior Indebtedness (a "NON-PAYMENT DEFAULT") that permits
holders of, or the trustee or agent on behalf of the holders of, the
Designated Senior Indebtedness as to which such default relates to
accelerate its maturity and
62
the Trustee receives a notice of such default (a "PAYMENT BLOCKAGE NOTICE")
from the trustee or agent on behalf of holders of any Designated Senior
Indebtedness.
Payments on the notes may and shall be resumed:
(1) in the case of a Payment Default, upon the date on which such
default is cured or waived; and
(2) in case of a Non-Payment Default, the earlier of the date on which
such Non-Payment Default is cured or waived or 179 days after the date on
which the applicable Payment Blockage Notice is received, unless a Payment
Default has occurred and is continuing, including as a result of the
acceleration of the maturity of any Designated Senior Indebtedness.
After a Payment Blockage Notice is given for a Non-Payment Default, no new
period of payment blockage for a Non-Payment Default may be commenced unless and
until:
(1) 360 days have elapsed since the effectiveness of the immediately
prior Payment Blockage Notice; and
(2) all scheduled payments of principal, premium, if any, and interest
and Additional Interest, if any, on the notes that have come due have been
paid in full in cash.
No Non-Payment Default that existed or was continuing on the date of
delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the
basis for a subsequent Payment Blockage Notice unless such Non-Payment Default
shall have been cured or waived for a period of not less than 90 days (it being
acknowledged that any subsequent action, or any breach of any financial
covenants for a period commencing after the date of delivery of any Payment
Blockage Notice which, in either case, would give rise to a default pursuant to
any provision under which a default previously existed or was continuing shall
constitute a new default for this purpose). Each Holder by its acceptance of a
note irrevocably agrees that if we or a Subsidiary Guarantor make any payment or
payments pursuant to the Indenture and the amount or total amount of such
payment or payments exceeds the amount, if any, that such Holder would be
entitled to receive upon the proper application of the subordination provisions
of the Indenture, the payment of such excess amount shall be deemed null and
void, and the Holder agrees that it will be obligated to return the amount of
the excess payment to the Trustee, as instructed in a written notice of such
excess payment, within ten days of receiving such notice.
The Indenture further requires that we promptly notify holders of Senior
Indebtedness if payment of the notes is accelerated because of an Event of
Default.
As a result of the subordination provisions described above, in the event
of a liquidation or insolvency, Holders of notes may recover less ratably than
our or a Subsidiary Guarantor's creditors who are holders of Senior
Indebtedness. The principal amount of consolidated Senior Indebtedness
outstanding at July 13, 2002, was approximately $1.4 billion (excluding $71
million of obligations under undrawn letters of credit) which includes
outstanding Capital Lease Obligations of approximately $347 million. At July 13,
2002, we had outstanding consolidated Pari Passu Indebtedness of approximately
$550 million. The Indenture will limit through certain financial tests the
amount of additional Indebtedness, including Senior Indebtedness and Pari Passu
Indebtedness, that we and the Subsidiary Guarantors can incur. See "-- Certain
Covenants -- Limitation on Indebtedness."
CERTAIN COVENANTS
The Indenture contains the following covenants, among others:
LIMITATION ON INDEBTEDNESS
We will not, and will not permit any of our Restricted Subsidiaries to,
create, assume, or directly or indirectly guarantee or in any other manner
become directly or indirectly liable for the payment of, or otherwise incur
(collectively, "INCUR"), any Indebtedness (including any Acquired Indebtedness)
other
63
than Permitted Indebtedness. Notwithstanding the preceding sentence, we and the
Subsidiary Guarantors may incur Indebtedness if, at the time of such event (and
after giving effect on a pro forma basis to:
(1) the incurrence of such Indebtedness and (if applicable) the
application of the proceeds therefrom, including to refinance other
Indebtedness;
(2) our or our Restricted Subsidiaries' incurrence, repayment or
retirement of any other Indebtedness since the first day of such
four-quarter period as if such Indebtedness was incurred, repaid or retired
at the beginning of such four-quarter period; and
(3) our or our Restricted Subsidiaries' acquisition or disposition of
any company, entity or business acquired or disposed of since the first day
of such four-quarter period as if such acquisition or disposition had
occurred at the beginning of such four-quarter period);
our Consolidated Fixed Charge Coverage Ratio for the four full fiscal quarters
immediately preceding such event, taken as one period and calculated on the
assumption that such Indebtedness had been incurred on the first day of such
four-quarter period and, in the case of Acquired Indebtedness, on the assumption
that the related acquisition also had occurred on such date, with such pro forma
adjustments as may be determined in accordance with GAAP and the rules,
regulations and guidelines of the Commission, would have been at least equal to
2.25 to 1.
Our Consolidated Fixed Charge Coverage Ratio for the four full fiscal
quarters immediately preceding the date of this prospectus, calculated in
accordance with the preceding paragraph, was 2.59 to 1. Although we could
currently incur additional Indebtedness (in addition to Permitted Indebtedness)
without violating this covenant, the covenants contained in our credit facility
impose additional restrictions on our ability to incur indebtedness. For more
information on these restrictions, see "Description of Other
Indebtedness -- Senior Secured Credit Facility" beginning on page 57.
LIMITATION ON RESTRICTED PAYMENTS
We will not, and will not permit any Restricted Subsidiary to, directly or
indirectly:
(1) declare or pay any dividend on, or make any distribution to the
holders of, any Capital Stock of the Company or of any Restricted
Subsidiary (other than dividends or distributions payable (a) solely in
shares of Qualified Capital Stock of the Company or such Restricted
Subsidiary or in options, warrants or other rights to purchase such
Qualified Capital Stock or (b) by a Restricted Subsidiary to the Company or
any Wholly Owned Restricted Subsidiary);
(2) purchase, redeem or otherwise acquire or retire for value,
directly or indirectly, any Capital Stock of the Company or any Restricted
Subsidiary or any options, warrants or other rights to acquire such Capital
Stock held by any Person (other than the Company or any Wholly Owned
Restricted Subsidiary of the Company);
(3) make any principal payment on, or redeem, repurchase, defease or
otherwise acquire or retire for value, prior to any scheduled repayment,
sinking fund payment or maturity, any Subordinated Indebtedness; or
(4) make any Investment (other than any Permitted Investment) in any
Person (such payments described in clauses (1) through (4) and not excepted
therefrom are collectively referred to herein as "RESTRICTED PAYMENTS");
unless at the time of and immediately after giving effect to the proposed
Restricted Payment (the amount of any such Restricted Payment, if other than
cash, being the Fair Market Value thereof as determined by our Board of
Directors, whose determination shall be conclusive and evidenced by a Board
Resolution):
(1) no Default or Event of Default shall have occurred and be
continuing;
(2) we could incur $1.00 of additional Indebtedness (other than
Permitted Indebtedness) in accordance with the provisions described under
"-- Limitation on Indebtedness"; and
64
(3) such Restricted Payment, together with the aggregate of all other
Restricted Payments made by the Company and its Restricted Subsidiaries on
or after the Issue Date, is less than the sum of, without duplication:
(a) 50% of our aggregate cumulative Consolidated Net Income for the
period (taken as one accounting period) from the first day of the
quarter beginning after the Issue Date to the end of our most recently
ended fiscal quarter for which financial statements are available at the
time of such Restricted Payment (or, if such Consolidated Net Income for
such period is a deficit, less 100% of such deficit); plus
(b) 100% of the aggregate net cash proceeds we receive as capital
contributions or from the issue or sale after the Issue Date of our
Equity Interests or debt securities that have been converted into such
Equity Interests (other than Equity Interests (or convertible debt
securities) sold to a Restricted Subsidiary and other than Redeemable
Capital Stock or debt securities that have been converted into
Redeemable Capital Stock); plus
(c) any cash we receive after the date of initial issuance of the
notes as a dividend or distribution from any of our Unrestricted
Subsidiaries less the cost of disposition and taxes, if any (but in each
case excluding any such amounts included in Consolidated Net Income);
plus
(d) $62 million.
Notwithstanding the preceding, we and our Restricted Subsidiaries may take
the following actions so long as (with respect to clauses (2), (3), (4) and (6)
below) at the time of and immediately after giving effect thereto no Default or
Event of Default shall have occurred and be continuing:
(1) the payment of any dividend within 60 days after the date of
declaration thereof, if such dividend would have been permitted on the date
of declaration;
(2) the purchase, redemption or other acquisition or retirement for
value of any shares of our Capital Stock, in exchange for, or out of the
net cash proceeds of, a substantially concurrent issuance and sale (other
than to a Restricted Subsidiary) of shares of our Capital Stock (other than
Redeemable Capital Stock, unless the redemption provisions of such
Redeemable Capital Stock prohibit the redemption thereof prior to the date
on which the Capital Stock to be acquired or retired was, by its terms,
required to be redeemed);
(3) the purchase, redemption, defeasance or other acquisition or
retirement for value of any Subordinated Indebtedness (other than
Redeemable Capital Stock) in exchange for or out of the net cash proceeds
of a substantially concurrent issuance and sale (other than to a Restricted
Subsidiary) of shares of our Capital Stock (other than Redeemable Capital
Stock, unless the redemption provisions of such Redeemable Capital Stock
prohibit the redemption thereof prior to the Stated Maturity of the
Subordinated Indebtedness to be acquired or retired);
(4) the purchase, redemption, defeasance or other acquisition or
retirement for value of any Subordinated Indebtedness (other than
Redeemable Capital Stock) in exchange for, or out of the net cash proceeds
of a substantially concurrent incurrence or sale (other than to a
Restricted Subsidiary) of, new Subordinated Indebtedness of the Company or
a Subsidiary Guarantor, as the case may be, so long as:
(a) the principal amount of such new Subordinated Indebtedness does
not exceed the principal amount (or, if such Subordinated Indebtedness
being refinanced provides for an amount less than the principal amount
thereof to be due and payable upon a declaration of acceleration
thereof, such lesser amount as of the date of determination) of the
Subordinated Indebtedness being so purchased, redeemed, defeased,
acquired or retired, plus the amount of any premium required to be paid
in connection with such refinancing pursuant to the terms of the
Subordinated Indebtedness refinanced or the amount of any premium we
reasonably determine as necessary to accomplish such refinancing, plus
the amount of reasonable expenses of the
65
Company or such Subsidiary Guarantor, as the case may be, incurred in
connection with such refinancing;
(b) such new Subordinated Indebtedness is subordinated to the notes
or the Note Guarantee of such Subsidiary Guarantor, as the case may be,
at least to the same extent as such Subordinated Indebtedness so
purchased, redeemed, defeased, acquired or retired; and
(c) such new Subordinated Indebtedness has an Average Life longer
than the Average Life of the notes and a final Stated Maturity of
principal later than the final Stated Maturity of principal of the
notes;
(5) the payment of a dividend on our Capital Stock (other than
Redeemable Capital Stock) of up to $0.08 per quarter per share (or up to
$0.32 per annum per share, provided that dividend payments may not be
cumulated for more than four consecutive quarters);
(6) the purchase, redemption or other acquisition or retirement for
value of shares of our Capital Stock issued pursuant to options granted
under our stock option plans, in order to pay withholding taxes due as a
result of income recognized upon the exercise of such options; provided
that:
(a) we are permitted, by the terms of such plans, to effect such
purchase, redemption or other acquisition or retirement for value of
such shares; and
(b) the aggregate consideration we pay for such shares so
purchased, redeemed or otherwise acquired or retired for value does not
exceed $2 million during any fiscal year of the Company; and
(7) the repurchases of our Capital Stock deemed to occur upon the
exercise of stock options if such Capital Stock represents a portion of the
exercise price thereof.
The actions described in clauses (2), (3), (5) and (6) of this paragraph
shall be Restricted Payments that shall be permitted to be taken in accordance
with this paragraph but shall reduce the amount that would otherwise be
available for Restricted Payments under clause (3) of the preceding paragraph.
LIMITATION ON LAYERING INDEBTEDNESS
Neither we nor any of the Subsidiary Guarantors will incur, create, issue,
assume, guarantee or otherwise become liable for any Indebtedness that is
subordinate or junior in right of payment to any Senior Indebtedness of the
Company or such Subsidiary Guarantor, as the case may be, and senior in any
respect in right of payment to the notes or such Subsidiary Guarantor's Note
Guarantee.
LIMITATION ON LIENS
We will not, and will not permit any Restricted Subsidiary to, directly or
indirectly, create, incur, assume or permit or suffer to exist any Lien securing
Indebtedness (other than Senior Indebtedness) against any asset of the Company
or any Restricted Subsidiary (including Capital Stock of a Restricted
Subsidiary), whether owned at the Issue Date or thereafter acquired, or any
proceeds therefrom, or assign or otherwise convey any right to receive income or
profits therefrom, except for Permitted Liens, unless at the same time:
(1) in the case of any Lien securing Pari Passu Indebtedness,
effective provision is made to secure the notes or such Note Guarantee, as
the case may be, with a Lien on the same collateral that is senior in
priority to, or pari passu with, the Lien securing such Pari Passu
Indebtedness; and
(2) in the case of any Lien securing Subordinated Indebtedness,
effective provision is made to secure the notes or such Note Guarantee, as
the case may be, with a Lien on the same collateral that is senior in
priority to the Lien securing such Subordinated Indebtedness.
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LIMITATION ON TRANSACTIONS WITH AFFILIATES
We will not, and will not permit any of our Restricted Subsidiaries to,
directly or indirectly, make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, any
Affiliate (other than us, a Wholly Owned Restricted Subsidiary or a Restricted
Subsidiary that is a Subsidiary Guarantor) (each of the foregoing, an "AFFILIATE
TRANSACTION"), unless:
(1) such Affiliate Transaction is on terms that are no less favorable
to us or the relevant Restricted Subsidiary than those that could have been
obtained in a comparable transaction with an unrelated Person; and
(2) we deliver to the Trustee:
(a) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $5
million, an Officers' Certificate certifying that such Affiliate
Transaction complies with clause (1) above and that such Affiliate
Transaction has been approved by a majority of the Disinterested
Directors; and
(b) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of
$10 million, both an Officers' Certificate referred to in clause (a) and
an opinion as to the fairness of such Affiliate Transaction to the
Company or the relevant Restricted Subsidiary from a financial point of
view issued by an investment banking firm of national standing with
total assets in excess of $1.0 billion.
However, this covenant shall not apply to:
(1) fees, compensation and employee benefits, including bonuses,
retirement plans and stock options, paid to or established for directors
and officers of the Company or any Restricted Subsidiary in the ordinary
course of business and approved by a majority of the Disinterested
Directors; and
(2) transactions in the ordinary course of business with customers,
vendors and suppliers, the terms of which have been approved in good faith
by an officer of the Company.
LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES
We will not, and will not permit any of our Restricted Subsidiaries to,
directly or indirectly, create any encumbrance or restriction on the ability of
any Restricted Subsidiary to:
(1) (a) pay dividends or make any other distributions to us or any of
our Restricted Subsidiaries on its Capital Stock or, with respect to any
other interest or participation in, or measured by, its profits, or (b) pay
any indebtedness owed to us or any of our Restricted Subsidiaries;
(2) make loans or advances to us or any of our Restricted
Subsidiaries;
(3) transfer any of its properties or assets to us or any of our
Restricted Subsidiaries;
(4) grant Liens in favor of Holders of notes; or
(5) guarantee the notes;
except in each case for such encumbrances or restrictions existing under or
by reason of:
(a) Indebtedness of the Company or any Restricted Subsidiary
outstanding on the Issue Date;
(b) the Credit Agreement as in effect as of the Issue Date, and any
amendments, modifications, restatements, renewals, increase,
supplements, refunding, replacements or refinancings thereof, provided
that such amendments, modifications, restatements, renewals, increase,
supplements, refundings, replacements or refinancings are no more
restrictive with respect to such
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dividend and other payment restrictions than those contained in the
Credit Agreement in effect on the Issue Date;
(c) the Indenture and the notes;
(d) applicable law;
(e) any instrument governing Indebtedness or Capital Stock of a
Person we or any of our Restricted Subsidiaries acquire at the time of
such acquisition (except to the extent we or our Restricted Subsidiaries
incur such Indebtedness in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not applicable to any
Person, or the property or assets of any Person, other than the Person,
or the property or assets of the Person, so acquired;
(f) by reason of customary non-assignment provisions in existing
and future leases entered into in the ordinary course of business and
consistent with past practices;
(g) purchase money obligations for property acquired in the
ordinary course of business that impose restrictions of the nature
described in clause (3) above on the property so acquired; and
(h) restrictions we or any Restricted Subsidiary incurs in
connection with any Permitted Receivables Financing.
LIMITATION ON SALE OF ASSETS
We will not, and will not permit any of our Restricted Subsidiaries to,
engage in an Asset Sale unless we or such Restricted Subsidiary, as the case may
be, receives Permitted Consideration at the time of such Asset Sale at least
equal to the Fair Market Value of the assets or Equity Interests issued or sold
or otherwise disposed of.
Within 360 days after the receipt of any Net Proceeds from an Asset Sale,
we or such Restricted Subsidiary must apply such Net Proceeds:
(1) to permanently reduce Senior Indebtedness of the Company or one or
more Restricted Subsidiaries (and to correspondingly reduce commitments
with respect thereto);
(2) to offer to repurchase and repurchase the Existing Senior
Subordinated Notes to the extent required by the Indentures governing such
Existing Senior Subordinated Notes; or
(3) to make capital expenditures or acquire long-term assets used or
useful in its businesses or in businesses similar or related to the
businesses of the Company immediately prior to the Issue Date.
Pending the final application of any such Net Proceeds, we may temporarily
reduce Senior Indebtedness or otherwise invest such Net Proceeds in any manner
that is not prohibited by the Indenture. Any Net Proceeds from Asset Sales that
are not applied or invested as provided in the first sentence of this paragraph
will be deemed to constitute "EXCESS PROCEEDS." When the aggregate amount of
Excess Proceeds exceeds $15 million, we will be required to make an offer to all
Holders of notes and holders of other Pari Passu Indebtedness containing
provisions similar to those set forth in the Indenture with respect to offers to
purchase or redeem with the proceeds of sales of assets (an "ASSET SALE OFFER")
to purchase the maximum principal amount of notes that may be purchased out of
the Excess Proceeds (on a pro rata basis if the amount available for such
repayment, purchase or redemption is less than the aggregate amount of the
principal amount of the notes tendered in such Asset Sale Offer and the
principal amount of such Pari Passu Indebtedness), at an offer price in cash in
an amount equal to 100% of the principal amount thereof, plus accrued and unpaid
interest, if any, thereon to the date of purchase, in accordance with the
procedures set forth in the Indenture. To the extent that any Excess Proceeds
remain after consummation of an Asset Sale Offer, we may use any remaining
Excess Proceeds for general corporate purposes (subject to the restrictions of
the Indenture). Upon completion of such offer to purchase, the amount of Excess
Proceeds shall be reset at zero.
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Notwithstanding the provisions of the prior paragraph, we and our
Restricted Subsidiaries may sell or dispose of property, whether in the form of
assets or capital stock of a Restricted Subsidiary, in the aggregate amount not
exceeding $15 million in any year, and any notes we or our Restricted
Subsidiaries receive as consideration in any disposition made pursuant to such
$15 million exclusion from the provisions of this covenant shall not be taken
into account in determining whether the $75 million limitation set forth in the
definition of "Permitted Consideration" has been met.
LIMITATION ON ISSUANCES AND SALES OF CAPITAL STOCK OF SUBSIDIARIES
We will not, and will not permit any of our Restricted Subsidiaries to,
transfer, convey, sell or otherwise dispose of any Capital Stock of any
Restricted Subsidiary to any Person (other than to us or a Wholly Owned
Restricted Subsidiary), unless:
(1) such transfer, conveyance, sale or other disposition is of all of
the Capital Stock of such Restricted Subsidiary that we and our Restricted
Subsidiaries own; and
(2) such transaction is made in accordance with the provisions of
"-- Limitation on Sale of Assets," provided that 85% of the proceeds from
such a sale of Capital Stock of any Restricted Subsidiary that is a
Significant Subsidiary shall consist of cash or Temporary Cash Investments.
Notwithstanding the foregoing or the provisions of any other covenant, we or any
Restricted Subsidiary may sell Qualified Capital Stock of any Restricted
Subsidiary in a Public Equity Offering, provided that:
(1) 100% of the Net Proceeds from such Public Equity Offering shall be
in cash and shall be applied as provided in the provisions of "Certain
Covenants -- Limitation on Sale of Assets"; and
(2) the Tangible Assets of such Restricted Subsidiary do not exceed
10% of the Consolidated Tangible Assets of the Company, determined as of
the last day of the quarter ending immediately before the commencement of
such Public Equity Offering.
ADDITIONAL GUARANTEES
If we or any of our Restricted Subsidiaries acquire or form a Wholly Owned
Restricted Subsidiary or any existing or future majority-owned Restricted
Subsidiary, after the Issue Date, guarantees any Indebtedness of the Company or
any Subsidiary Guarantor, we will cause any such Restricted Subsidiary (other
than an Investee Store or Joint Venture, provided that such Investee Store or
Joint Venture does not guarantee such Indebtedness of any other Person) to:
(1) execute and deliver to the Trustee a supplemental indenture in
form and substance reasonably satisfactory to the Trustee pursuant to which
such Restricted Subsidiary shall guarantee all of our obligations with
respect to the notes on a senior subordinated basis; and
(2) deliver to the Trustee an Opinion of Counsel reasonably
satisfactory to the Trustee to the effect that a supplemental indenture has
been duly executed and delivered by such Restricted Subsidiary and is in
compliance with the terms of the Indenture.
RULE 144A INFORMATION REQUIREMENT
We have agreed to furnish to the Holders or beneficial Holders of notes and
prospective purchasers of notes designated by the Holders of notes, upon their
request, the information required to be delivered pursuant to Rule 144A(4)(d)
under the Securities Act until such time as we either exchange all of the old
notes for the exchange notes or have registered all of the notes for resale
under the Securities Act.
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REPORTS
Whether or not required by the rules and regulations of the Commission, so
long as any notes are outstanding, we will furnish to the Holders of notes:
(1) all quarterly and annual financial information that would be
required to be contained in a filing with the Commission on Forms 10-Q and
10-K if we were required to file such forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
that describes the financial condition and results of operations of the
Company and its Subsidiaries and, with respect to the annual information
only, a report on the consolidated financial statements required by Form
10-K by our independent certified public accountants; and
(2) all reports that would be required to be filed with the Commission
on Form 8-K if we were required to file such reports.
In addition, whether or not required by the rules and regulations of the
Commission, we will file a copy of all such information with the Commission for
public availability (unless the Commission will not accept such a filing) and
make such information available to investors or prospective investors who
request it in writing.
PAYMENTS FOR CONSENT
We will not, and will not permit any of our Restricted Subsidiaries to,
directly or indirectly, pay or cause to be paid any consideration, whether by
way of interest, fee or otherwise, to any Holder of any notes for or as an
inducement to any consent, waiver or amendment of any terms or provisions of the
notes unless such consideration is offered to be paid or agreed to be paid to
all Holders of the notes which so consent, waive or agree to amend in the time
frame set forth in solicitation documents relating to such consent, waiver or
agreement.
TERMINATION OF CERTAIN COVENANTS IN EVENT OF INVESTMENT GRADE RATING
In the event that each of the Rating Categories assigned to our notes by
the Rating Agencies is Investment Grade, the provisions of "-- Limitation on
Indebtedness," "-- Limitation on Restricted Payments," "-- Limitation on
Issuances and Sales of Capital Stock of Subsidiaries," "-- Limitation on
Transactions With Affiliates" and "-- Limitation on Sale of Assets" and the
Consolidated Net Worth requirement set forth in clause (3) of "-- Consolidation,
Merger, Sale of Assets" shall cease to apply to us and our Restricted
Subsidiaries from and after the date on which the second of the Rating Agencies
notifies us of the assignment of such Rating Category. Notwithstanding the
foregoing, if the Rating Category assigned by either Rating Agency to the notes
should subsequently decline below Investment Grade, the foregoing covenants and
such Consolidated Net Worth requirement shall be reinstituted as and from the
date of such rating decline.
CONSOLIDATION, MERGER, SALE OF ASSETS
We shall not, in a single transaction or a series of related transactions,
consolidate with or merge with or into any other Person or sell, assign, convey,
transfer or lease or otherwise dispose of all or substantially all of our
properties and assets to any Person or group of affiliated Persons, or permit
any of our Restricted Subsidiaries to enter into any such transaction or
transactions if such transaction or transactions, in the aggregate, would result
in a sale, assignment, transfer, lease or disposal of all or substantially all
of the properties and assets of the Company and its Restricted Subsidiaries on a
Consolidated basis to any other Person or group of affiliated Persons, unless at
the time and after giving effect thereto:
(1) either:
(a) we shall be the surviving or continuing corporation; or
(b) the Person (if other than us) formed by such consolidation or
into which we are merged or the Person which acquires by sale,
assignment, conveyance, transfer, lease or
70
disposition our properties and assets substantially as an entirety (the
"SURVIVING ENTITY") shall be a corporation duly organized and validly
existing under the laws of the United States, any state thereof or the
District of Columbia and shall, in any case, expressly assume, by a
supplemental indenture, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all our obligations under the notes and the
Indenture, and the Indenture shall remain in full force and effect;
(2) immediately before and immediately after giving effect to such
transaction on a pro forma basis (and treating any Indebtedness not
previously an obligation of the Company or any of its Restricted
Subsidiaries which becomes an obligation of the Company or any of its
Restricted Subsidiaries in connection with or as a result of such
transaction as having been incurred at the time of such transaction), no
Default or Event of Default shall have occurred and be continuing;
(3) immediately after giving effect to such transaction, except in the
case of a merger of the Company with or into a Wholly Owned Restricted
Subsidiary, we (or the Surviving Entity if we are not the continuing
obligor under the Indenture) will have a Consolidated Net Worth equal to or
greater than our Consolidated Net Worth immediately preceding the
transaction;
(4) immediately after giving effect to such transaction on a pro forma
basis (on the assumption that the transaction occurred on the first day of
the four-quarter period immediately prior to the consummation of such
transaction with the appropriate adjustments with respect to the
transaction being included in such pro forma calculation), we (or the
Surviving Entity if we are not the continuing obligor under the Indenture)
could incur $1.00 of additional Indebtedness (other than Permitted
Indebtedness) under the provisions of "-- Certain Covenants -- Limitation
on Indebtedness" above;
(5) each Subsidiary Guarantor, unless it is the other party to the
transactions described above, shall have confirmed, by supplemental
indenture to the Indenture, that its respective Note Guarantees with
respect to the notes shall apply to such Person's obligations under the
Indenture and the notes;
(6) if any of the property or assets of the Company or any of its
Restricted Subsidiaries would thereupon become subject to any Lien, the
provisions of "-- Certain Covenants -- Limitation on Liens" are complied
with; and
(7) we shall have delivered, or caused to be delivered, to the
Trustee, in form and substance satisfactory to the Trustee, an Officers'
Certificate and an opinion of counsel, each to the effect that such
consolidation, merger, sale, assignment, conveyance, transfer, lease or
other transaction and the supplemental indenture in respect thereto, if
required, comply with the provisions in clauses (1) through (6) of this
paragraph and that all conditions precedent herein provided for relating to
such transaction have been complied with.
The preceding shall not prohibit a merger of any Restricted Subsidiary with and
into the Company or a merger effected solely to reincorporate the Company in
another jurisdiction. In the event of any consolidation, merger, sale,
assignment, conveyance, transfer, lease or other transaction described in, and
complying with, the conditions listed in the immediately preceding paragraph in
which we are not the continuing corporation, the successor Person formed or
remaining shall succeed to, and be substituted for, and may exercise every right
and power of, the Company, as the case may be, and we shall be discharged from
all obligations and covenants under the Indenture and the notes; provided that,
in the case of a transfer by lease, the predecessor shall not be released from
its obligations with respect to the payment of principal (premium, if any) and
interest on the notes.
EVENTS OF DEFAULT
Each of the following is an "EVENT OF DEFAULT":
(1) a default in the payment of any interest on the notes when such
interest becomes due and payable, and continuance of such default for a
period of 30 days;
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(2) a default in the payment of the principal of (or premium, if any,
on) any notes at Maturity;
(3) (a) a default in the performance, or breach, of any covenant or
agreement of the Company or any Subsidiary Guarantor under the Indenture
(other than a default in the performance, or breach, of a covenant or
agreement that is specifically dealt with in the immediately preceding
clauses (1) or (2) or in clauses (b) or (c) of this clause (3)), and such
default or breach shall continue for a period of 60 days after written
notice has been given, by certified mail:
- to the Company by the Trustee; or
- to the Company and the Trustee by the Holders of at least 25%
in aggregate principal amount of the outstanding notes;
(b) a default in the performance or breach of the provisions
described in "-- Consolidation, Merger, Sale of Assets" or "-- Certain
Covenants -- Limitation on Asset Sales"; or
(c) we shall have failed to comply with the provisions of
"-- Purchase of Notes upon a Change of Control" for any reason,
including the inconsistency of such covenant with our Bylaws as in
effect on the Issue Date;
(4) (a) any default in the payment of the principal of any
Indebtedness shall have occurred under any agreements, indentures or
instruments under which we or any Restricted Subsidiary then has
outstanding Indebtedness in excess of $50 million when the same shall
become due and payable in full and such default shall have continued after
any applicable grace period and shall not have been cured or waived; or
(b) an event of default as defined in any of the agreements,
indentures or instruments described in clause (a) of this clause (4)
shall have occurred and the Indebtedness thereunder, if not already
matured at its final maturity in accordance with its terms, shall have
been accelerated;
(5) any Note Guarantee of any Significant Subsidiary individually or
any other Subsidiaries if such Restricted Subsidiaries in the aggregate
represent 15% or more of Consolidated Total Assets with respect to the
notes shall for any reason cease to be, or be asserted in writing by the
Company, any Subsidiary Guarantor or any other Restricted Subsidiary, as
applicable, not to be, in full force and effect, enforceable in accordance
with its terms, except pursuant to the release of any such Note Guarantee
in accordance with the Indenture;
(6) one or more judgments, orders or decrees for the payment of money
in excess of $50 million (net of amounts covered by insurance, bond or
similar instrument), either individually or in the aggregate, shall be
entered against us or any Restricted Subsidiary or any of their respective
properties and shall not be discharged and either:
(a) any creditor shall have commenced an enforcement proceeding
upon such judgment, order or decree; or
(b) there shall have been a period of 60 consecutive days during
which a stay of enforcement of such judgment or order, by reason of an
appeal or otherwise, shall not be in effect;
(7) there shall have been the entry by a court of competent
jurisdiction of:
(a) a decree or order for relief in respect of the Company or any
Significant Subsidiary in an involuntary case or proceeding under any
applicable Bankruptcy Law; or
(b) a decree or order adjudging the Company or any Significant
Subsidiary bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment or composition of or in respect of the Company
or any Significant Subsidiary under any applicable federal or state law,
or appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or any Significant
Subsidiary or of any substantial part of its property, or
72
ordering the winding up or liquidation of its affairs, and any such
decree or order for relief shall continue to be in effect, or any such
other decree or order shall be unstayed and in effect, for a period of
60 consecutive days; or
(8) (a) we or any Significant Subsidiary commences a voluntary case or
proceeding under any applicable Bankruptcy Law or any other case or
proceeding to be adjudicated bankrupt or insolvent;
(b) we or any Significant Subsidiary consents to the entry of a
decree or order for relief in respect of the Company or such Significant
Subsidiary in an involuntary case or proceeding under any applicable
Bankruptcy Law or to the commencement of any bankruptcy or insolvency
case or proceeding against it;
(c) we or any Significant Subsidiary files a petition or answer or
consent seeking reorganization or relief under any applicable federal or
state law;
(d) we or any Significant Subsidiary:
- consents to the filing of such petition or the appointment of,
or taking possession by, a custodian, receiver, liquidator,
assignee, trustee, sequestrator or similar official of the
Company or such Significant Subsidiary or of any substantial
part of its property;
- makes an assignment for the benefit of creditors; or
- admits in writing its inability to pay its debts generally as
they become due; or
- we or any Significant Subsidiary takes any corporate action in
furtherance of any such actions in this clause (8).
If an Event of Default (other than as specified in clause (7) or (8) of the
immediately preceding paragraph) shall occur and be continuing with respect to
the notes, the Trustee, by notice to us, or the Holders of at least 25% in
aggregate principal amount then outstanding of such notes, by notice to the
Trustee and to us, may declare such notes due and payable immediately. Upon such
declaration, all amounts payable in respect of such notes shall be immediately
due and payable. If an Event of Default specified in clause (7) or (8) of the
immediately preceding paragraph occurs and is continuing, then all of the
outstanding notes under the Indenture shall become and be immediately due and
payable without any declaration or other act on the part of the Trustee
thereunder or any Holder of such notes.
After a declaration of acceleration, but before a judgment or decree for
payment of the money due has been obtained by the applicable Trustee, the
Holders of a majority in aggregate principal amount outstanding of notes, by
written notice to us and such Trustee, may annul such declaration if:
(1) we have paid or deposited with such Trustee a sum sufficient to
pay:
(a) all sums paid or advanced by the Trustee under the notes and
the reasonable compensation, expenses, disbursements, and advances of
the Trustee, its agents and counsel;
(b) all overdue interest on all of the notes; and
(c) to the extent that payment of such interest is lawful, interest
upon overdue interest at the rate borne by the notes; and
(2) all Events of Default, other than the non-payment of principal of
such notes which have become due solely by such declaration of
acceleration, have been cured or waived.
The Holders of a majority in aggregate principal amount of the notes
outstanding may, on behalf of the Holders of all of such notes, waive any past
defaults under the Indenture except a default in the payment of the principal
of, premium, if any, or interest on any such note, or in respect of a covenant
or provision which under the Indenture cannot be modified or amended without the
consent of the Holder of each such outstanding note.
We are also required to notify the Trustee within ten days of the
occurrence of any Default.
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DEFEASANCE OR COVENANT DEFEASANCE OF INDENTURE
We may, at our option and at any time, elect to have our obligations and
those of any Subsidiary Guarantor discharged with respect to any notes issued
under the Indenture ("DEFEASANCE"). Such defeasance means that we shall be
deemed to have paid and discharged all obligations represented by the notes,
except for:
(1) the rights of Holders of such outstanding notes to receive
payments in respect of the principal of, premium, if any, and interest on
the notes when such payments are due or on the redemption date;
(2) our obligations with respect to the notes concerning issuing
temporary notes, registration of notes, mutilated, destroyed, lost or
stolen notes, and the maintenance of an office or agency for payment and
money for note payments held in trust;
(3) the rights, powers, trusts, duties and immunities of the
applicable Trustee; and
(4) the defeasance provisions of the Indenture.
In addition, we may, at our option and at any time, elect to have our
obligations released with respect to certain covenants that are described in the
Indenture ("COVENANT DEFEASANCE") and thereafter any omission to comply with
such obligations shall not constitute a Default or an Event of Default with
respect to such notes.
In the event covenant defeasance occurs, certain events (not including
non-payment, enforceability of any Note Guarantee, bankruptcy and insolvency
events) described under "-- Events of Default" will no longer constitute an
Event of Default with respect to such notes.
In order to exercise either defeasance or covenant defeasance with respect
to the notes:
(1) we must irrevocably deposit with the Trustee, in trust, for the
benefit of the Holders of such notes, cash in United States dollars, U.S.
Government Obligations (as defined in the Indenture), or a combination
thereof, in such amounts as will be sufficient, in the opinion of a
nationally recognized firm of independent public accountants, to pay and
discharge the principal of, premium, if any, and interest on the notes
outstanding on the Stated Maturity thereof or on an optional redemption
date (such date being referred to as the "DEFEASANCE REDEMPTION DATE"), as
the case may be, if in the case of a Defeasance Redemption Date prior to
electing to exercise either defeasance or covenant defeasance, we have
delivered to the Trustee an irrevocable notice to redeem all of the
outstanding notes on such Defeasance Redemption Date;
(2) in the case of defeasance, we shall have delivered to the Trustee
an opinion of independent counsel in the United States stating that:
(a) we have received from, or there has been published by, the
Internal Revenue Service a ruling; or
(b) since the Issue Date, there has been a change in the applicable
federal income tax law, in either case to the effect that, and based
thereon such opinion of counsel in the United States shall confirm that,
the Holders of the outstanding notes will not recognize income, gain or
loss for federal income tax purposes as a result of such defeasance and
will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
defeasance had not occurred;
(3) in the case of covenant defeasance, we shall have delivered to the
Trustee an opinion of independent counsel in the United States to the
effect that the Holders of the outstanding notes will not recognize income,
gain or loss for federal income tax purposes as a result of such covenant
defeasance and will be subject to federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if
such covenant defeasance had not occurred;
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(4) such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a Default under, the Indenture or any
other material agreement or instrument to which we or any Subsidiary
Guarantor is a party or by which it is bound;
(5) we shall have delivered to the Trustee an Officers' Certificate
stating that we did not make such deposit with the intent of preferring the
Holders of the notes or any Subsidiary Guarantor over our other creditors
or those of any Subsidiary Guarantor or with the intent of defeating,
hindering, delaying or defrauding creditors of the Company, any Subsidiary
Guarantor or others; and
(6) we shall have delivered to the Trustee an Officers' Certificate
stating that we have complied with all conditions precedent relating to
either the defeasance or the covenant defeasance, as the case may be.
Notwithstanding the preceding, the opinion of counsel required by clause
(2) above with respect to a defeasance need not be delivered if all notes not
theretofore delivered to the Trustee for cancellation have become due and
payable or will become due and payable on the maturity date within one year
under arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in our name and at our expense.
SATISFACTION AND DISCHARGE
The Indenture shall cease to be of further effect (except for surviving
rights of registration of transfer or exchange of the notes) as to all
outstanding notes when:
(1) either
(a) all notes issued under the Indenture and theretofore
authenticated and delivered (except lost, stolen or destroyed notes
which have been replaced or paid and notes for whose payment funds we
have deposited in trust and thereafter repaid to us or discharged from
such trust) have been delivered to the Trustee for cancellation or
(b) all notes issued under the Indenture and not theretofore
delivered to the Trustee for cancellation
(x) have become due and payable or
(y) will become due and payable at their Stated Maturity or
pursuant to an optional redemption within one year, and either we or
any Subsidiary Guarantor has irrevocably deposited or caused to be
deposited with the Trustee funds in an amount sufficient to pay and
discharge the entire Indebtedness in respect of the notes, for
principal of, premium and Additional Interest, if any, and interest
to the date of redemption or Stated Maturity, as the case may be;
(2) we or any Subsidiary Guarantor has paid all other sums payable by
us and any Subsidiary Guarantor under the Indenture; and
(3) we have delivered to the Trustee an Officers' Certificate and an
opinion of counsel each stating that all conditions precedent to the
satisfaction and discharge of the Indenture, as specified therein, have
been complied with and that such satisfaction and discharge will not result
in a breach or violation of, or constitute a default under, the Indenture
or any other material agreement or instrument to which we or any Subsidiary
Guarantor is a party or by which it is bound.
MODIFICATION AND AMENDMENTS
From time to time, we, the Subsidiary Guarantors and the Trustee, without
the consent of the Holders, may amend the Indenture for certain specified
purposes, including curing ambiguities, defects or inconsistencies, so long as
such change does not adversely affect the rights of any of the Holders in any
material respect. We, the Subsidiary Guarantors and the Trustee may make other
modifications and amendments of the Indenture with the consent of the Holders of
a majority in aggregate outstanding
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principal amount of the notes. However, no such modification or amendment may,
without the consent of the Holder of each outstanding note:
(1) change the Stated Maturity or the principal of, or any installment
of interest on, any note or reduce the principal amount thereof or the rate
of interest thereon or any premium payable upon the redemption thereof, or
change the coin or currency in which any note or any premium or the
interest thereon is payable, or impair the right to institute suit for the
enforcement of any such payment after the Stated Maturity thereof;
(2) after a Change of Control has occurred, amend, change or modify
our obligation to make and consummate a Change of Control Purchase Offer
with respect to such Change of Control or modify any of the provisions or
definitions with respect thereto;
(3) reduce the percentage in principal amount of outstanding notes,
the consent of whose Holders is required for any modification or amendment
to the Indenture, or the consent of whose Holders is required for any
waiver thereof;
(4) modify any of the provisions relating to supplemental indentures
requiring the consent of Holders or relating to the waiver of past defaults
or relating to the waiver of certain covenants, except to increase the
percentage of outstanding notes required for such actions or to provide
that certain other provisions of the Indenture cannot be modified or waived
without the consent of each Holder;
(5) except as otherwise permitted under "-- Consolidation, Merger,
Sale of Assets," consent to the assignment or transfer by the Company or
any Subsidiary Guarantor of any of its rights and obligations under the
Indenture; or
(6) amend or modify any of the provisions of the Indenture in any
manner which subordinates the notes issued thereunder in right of payment
to our other Indebtedness or which subordinates any Note Guarantee in right
of payment to other Indebtedness of the Subsidiary Guarantor issuing such
Note Guarantee.
The Holders of a majority in aggregate principal amount of the notes issued
and outstanding may waive compliance with certain restrictive covenants and
provisions of such Indenture.
GOVERNING LAW
The Indenture, the notes and the Note Guarantees are governed by the laws
of the State of New York without giving effect to applicable principles of
conflicts of law to the extent that the application of the law of another
jurisdiction would be required thereby.
THE TRUSTEE
Except during the continuance of an Event of Default, the Trustee will
perform only such duties as are specifically set forth in the Indenture. During
the existence of an Event of Default, the Trustee will exercise such rights and
powers vested in it by the Indenture, and use the same degree of care and skill
in its exercise as a prudent man would exercise or use under the circumstances
in the conduct of his own affairs.
The Indenture and the provisions of the TIA contain certain limitations on
the rights of the Trustee, should it become a creditor of the Company, to obtain
payments of claims in certain cases or to realize on certain property received
in respect of any such claim as security or otherwise. Subject to the TIA, the
Trustee is permitted to engage in other transactions; provided that if the
Trustee acquires any conflicting interest as described in the TIA, it must
eliminate such conflict or resign.
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CERTAIN DEFINITIONS
"Acquired Indebtedness" means Indebtedness of a Person:
(1) existing at the time such Person becomes a Restricted Subsidiary;
or
(2) assumed in connection with the acquisition of assets from such
Person;
in each case, other than Indebtedness incurred in connection with, or in
contemplation of, such Person becoming a Restricted Subsidiary or such
acquisition.
"Affiliate" means, with respect to any specified Person any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control," when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through ownership of Voting Stock, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Asset Sale" means:
(1) the sale, lease, conveyance or other disposition of any assets
(including by way of a sale and leaseback), other than sales of inventory
in the ordinary course of business consistent with past practices (provided
that the sale, lease, conveyance or other disposition of all or
substantially all of the assets of the Company and its Restricted
Subsidiaries taken as a whole will be governed by the provisions of the
Indenture described above under the caption "-- Purchase of Notes upon a
Change of Control" and/or the provisions described above under the caption
"Certain Covenants -- Consolidation, Merger, Sale of Assets" and not by the
provisions of "-- Certain Covenants -- Limitation on Sale of Assets"); and
(2) the issue or sale by us or any of our Restricted Subsidiaries of
Equity Interests of any of our Restricted Subsidiaries, whether in a single
transaction or a series of related transactions, in either case:
(a) that have a fair market value in excess of $2.5 million; or
(b) for net proceeds in excess of $2.5 million.
Notwithstanding the preceding, our transfer of assets to a Wholly Owned
Restricted Subsidiary or by a Wholly Owned Restricted Subsidiary to us or to
another Wholly Owned Restricted Subsidiary, or by a non-Wholly Owned Restricted
Subsidiary to any other Restricted Subsidiary will not be deemed to be an Asset
Sale.
"Average Life to Stated Maturity" means, as of the date of determination
with respect to any Indebtedness, the quotient obtained by dividing:
(1) the sum of the products of:
(a) the number of years from the date of determination to the date
or dates of each successive scheduled principal payment of such
Indebtedness; multiplied by
(b) the amount of each such principal payment; by
(2) the sum of all such principal payments.
"Bankruptcy Law" means Title 11, United States Bankruptcy Code of 1978, as
amended, or any similar United States federal or state law relating to
bankruptcy, insolvency, receivership, winding-up, liquidation, reorganization or
relief of debtors or any amendment to, succession to or change in any such law.
"Banks" means the banks and other financial institutions from time to time
that are lenders under the Credit Agreement.
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"Borrowing Base Amount" means, as of any date, an amount equal to the sum
of:
(1) 85% of the aggregate book value of all accounts receivable of the
Company and its Restricted Subsidiaries; and
(2) 60% of the aggregate book value of all inventory owned by the
Company and its Restricted Subsidiaries,
all calculated on a consolidated basis and in accordance with GAAP.
To the extent the information is not available as to the amount of accounts
receivable or inventory as of a specific date, we shall use the most recent
available information for purposes of calculating the Borrowing Base.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in the City of New York are
authorized or obligated by law or executive order to close.
"Capital Lease Obligation" of any Person means any obligation of such
Person and its Subsidiaries on a Consolidated basis under any capital lease of
real or personal property which, in accordance with GAAP, has been recorded as a
capitalized lease obligation.
"Capital Stock" of any Person means any and all shares, interest,
partnership interests, participations or other equivalents (however designated)
of such Person's capital stock whether now outstanding or issued after the Issue
Date, including all common stock and Preferred Stock.
"Change of Control" means the occurrence of any of the following events:
(1) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act) becomes the "beneficial owner" (as defined
in Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person shall
be deemed to have beneficial ownership of all shares that such Person has
the right to acquire, whether such right is exercisable immediately or only
after the passage of time), directly or indirectly, of more than 50% of our
total outstanding Voting Stock;
(2) during any period of two consecutive years, individuals who at the
beginning of such period constituted our Board of Directors (together with
any new directors whose election to such Board of Directors, or whose
nomination for election by our stockholders, was approved by a vote of
66 2/3% of the directors then still in office who were either directors at
the beginning of such period or whose election or nomination for election
was previously so approved) cease for any reason to constitute a majority
of such Board of Directors then in office;
(3) we consolidate with or merge with or into any Person or convey,
transfer, lease or otherwise dispose of all or substantially all of our
assets to any Person, or any Person consolidates with or merges into or
with us, in any such event pursuant to a transaction in which our
outstanding Voting Stock is changed into or exchanged for cash, securities
or other property, other than any such transaction where our outstanding
Voting Stock is not changed or exchanged at all (except to the extent
necessary to reflect a change in our jurisdiction of incorporation) or
where:
(a) our outstanding Voting Stock is changed into or exchanged for:
- Voting Stock of the surviving corporation which is not
Redeemable Capital Stock; or
- cash, securities or other property (other than Capital Stock
of the surviving corporation) in an amount which we could pay
as a Restricted Payment as described under "-- Certain
Covenants -- Limitation on Restricted Payments" (and such
amount shall be treated as a Restricted Payment subject to the
provisions in the Indenture described under "-- Certain
Covenants -- Limitation on Restricted Payments"); and
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(b) immediately after such transaction, no "person" or "group" (as
such terms are used in Sections 13(d) and 14(d) of the Exchange Act) is
the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that a Person shall be deemed to have beneficial
ownership of all shares that such Person has the right to acquire,
whether such right is exercisable immediately or only after the passage
of time), directly or indirectly, of more than 50% of the total
outstanding Voting Stock of the surviving corporation; or
(4) we are liquidated or dissolved or adopt a plan of liquidation or
dissolution other than in a transaction which complies with the provisions
described under "-- Consolidation, Merger, Sale of Assets."
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or if at any time after the
execution of the Indenture such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Consolidated" means, with respect to any Person, the consolidation of the
accounts of such Person and each of its subsidiaries if and to the extent the
accounts of such Person and each of its subsidiaries would normally be
consolidated with those of such Person, all in accordance with GAAP consistently
applied.
"Consolidated EBITDA" means, with respect to us and our Restricted
Subsidiaries on a Consolidated basis for any period all determined in accordance
with GAAP, the sum of, without duplication:
(1) Consolidated Net Income, plus
(2) Consolidated Interest Expense, to the extent deducted in computing
such Consolidated Net Income, plus;
(3) Consolidated Income Tax Expense, to the extent deducted in
computing such Consolidated Net Income, plus;
(4) Consolidated Non-Cash Charges, to the extent deducted in computing
such Consolidated Net Income, minus;
(5) non-cash items increasing such Consolidated Net Income (other than
such non-cash items in the ordinary course of business).
"Consolidated Fixed Charge Coverage Ratio" of the Company means, for any
period, the ratio of:
(1) Consolidated EBITDA for such period to:
(2) Consolidated Interest Expense for such period; provided that:
(a) in making such computation, the Consolidated Interest Expense
attributable to interest on any Indebtedness computed on a pro forma
basis; and
- bearing a floating interest rate shall be computed as if the
rate in effect on the date of computation had been the
applicable rate for the entire period; and
- which was not outstanding during the period for which the
computation is being made but which bears, at our option, a
fixed or floating rate of interest, shall be computed by
applying, at our option, either the fixed or floating rate;
and
(b) in making such computation, Consolidated Interest Expense
attributable to interest on any Indebtedness under a revolving credit
facility computed on a pro forma basis shall be computed based upon the
average daily balance of such Indebtedness during the applicable period.
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"Consolidated Income Tax Expense" means for any period the provision for
federal, state, local and foreign income taxes of the Company and its Restricted
Subsidiaries for such period as determined on a Consolidated basis in accordance
with GAAP.
"Consolidated Interest Expense" means, without duplication, for any period,
the sum of:
(1) the interest expense of the Company and its Restricted
Subsidiaries for such period, as determined on a Consolidated basis in
accordance with GAAP including:
(a) amortization of debt discount;
(b) the net cost under Interest Rate Agreements (including
amortization of discount);
(c) the interest portion of any deferred payment obligation; and
(d) accrued interest; plus
(2) the aggregate amount for such period of dividends on any
Redeemable Capital Stock or Preferred Stock of the Company and its
Restricted Subsidiaries;
(3) the interest component of the Capital Lease Obligations paid,
accrued and/or scheduled to be paid, or accrued by such Person during such
period; and
(4) all capitalized interest of the Company and its Restricted
Subsidiaries in each case under each of (1) through (4) determined on a
Consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, for any period, the Consolidated net
income (or loss) of the Company and its Restricted Subsidiaries for such period
as determined on a Consolidated basis in accordance with GAAP, adjusted, to the
extent included in calculating such net income (loss), by excluding, without
duplication:
(1) any net after-tax extraordinary gains or losses (less all fees and
expenses relating thereto);
(2) the portion of net income (or loss) of the Company and its
Restricted Subsidiaries determined on a Consolidated basis allocable to
minority interests in unconsolidated Persons to the extent that cash
dividends or distributions by the Company or any Restricted Subsidiary have
not actually been received;
(3) net income (or loss) of any Person combined with the Company or
any Restricted Subsidiary on a "pooling of interests" basis attributable to
any period prior to the date of combination;
(4) net gains or losses (less all fees and expenses relating thereto)
in respect of dispositions of assets other than in the ordinary course of
business; and
(5) the net income of any Restricted Subsidiary to the extent that the
declaration of dividends or similar distributions by that Restricted
Subsidiary of that income is not at the time permitted, directly or
indirectly, by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Restricted Subsidiary or its shareholders.
"Consolidated Net Worth" means, with respect to any Person as of any date,
the sum of:
(1) the consolidated equity of the common equity holders of such
Person and its Restricted Subsidiaries as of such date; plus
(2) the respective amounts reported on such Person's balance sheet as
of such date with respect to any series of preferred stock (other than
Redeemable Capital Stock) that by its terms is not entitled to the payment
of dividends unless such dividends may be declared and paid only out of net
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earnings in respect of the year of such declaration and payment, but only
to the extent of any cash received by such Person upon issuance of such
preferred stock; less
(a) all write-ups (other than write-ups resulting from foreign
currency translations and write-ups of tangible assets of a going
concern business made within 12 months after the acquisition of such
business) subsequent to the Issue Date in the book value of any asset
owned by such Person or a consolidated Restricted Subsidiary of such
Person;
(b) all investments as of such date in unconsolidated Restricted
Subsidiaries and in Persons that are not Subsidiaries (except, in each
case, Permitted Investments); and
(c) all unamortized debt discount and expense and unamortized
deferred charges as of such date, all of the foregoing determined in
accordance with GAAP.
"Consolidated Non-Cash Charges" means, for any period, the aggregate
depreciation, amortization and other non-cash charges of the Company and its
Restricted Subsidiaries for such period, as determined on a Consolidated basis
in accordance with GAAP (excluding any non-cash charges which require an accrual
or reserve for any future period).
"Consolidated Tangible Assets" means the total of all the assets appearing
on the Consolidated balance sheet of the Company and its majority-owned or
Wholly Owned Restricted Subsidiaries less:
(1) intangible assets including items such as goodwill, trademarks,
trade names, patents and unamortized debt discount; and
(2) appropriate adjustments on account of minority interests of other
persons holding stock in any majority-owned Restricted Subsidiary.
"Consolidated Total Assets" means, with respect to the Company, the total
of all assets appearing on the Consolidated balance sheet of the Company and its
majority-owned or Wholly Owned Restricted Subsidiaries, as determined on a
Consolidated basis in accordance with GAAP.
"Convertible Senior Subordinated Notes" means our 5.25% Convertible Senior
Subordinated Notes due 2009.
"Credit Agreement" means the credit agreement dated as of July 25, 1997
among the Company, the Banks, the agents listed therein and The Chase Manhattan
Bank, as Administrative Agent, as such agreement may be amended, renewed,
extended, substituted, refinanced, restructured, replaced, supplemented or
otherwise modified from time to time (including any successive renewals,
extensions, substitutions, refinancings, restructurings, replacements,
supplementations or other modifications of the foregoing).
"Currency Agreements" means any spot or forward foreign exchange agreements
and currency swap, currency option or other similar financial agreements or
arrangements that we or any of our Restricted Subsidiaries enter into.
"Default" means any event which is, or after notice or passage of any time
or both would be, an Event of Default.
"Designated Senior Indebtedness" means:
(1) any Senior Indebtedness outstanding under the Credit Agreement;
(2) any Senior Indebtedness in respect of the Senior Notes; and
(3) any other Senior Indebtedness, the principal amount of which is
$50 million or more and that we have designated as "Designated Senior
Indebtedness."
"Disinterested Director" means, with respect to any transaction or series
of transactions in respect of which the Board of Directors is required to
deliver a resolution of the Board of Directors under the
81
Indenture, a member of the Board of Directors who does not have any material
direct or indirect financial interest in or with respect to such transaction or
series of transactions.
"Equity Interest" of any Person means any shares, interests, participations
or other equivalents (however designated) in such Person's equity, and shall in
any event include any Capital Stock issued by, or partnership or membership
interests in, such Person.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing Senior Subordinated Notes" means:
(1) our 10 1/2% Senior Subordinated Notes due 2004; and
(2) our 10 5/8% Senior Subordinated Notes due 2007.
"Fair Market Value" means, with respect to any asset or property, a price
which could be negotiated in an arm's length transaction, for cash, between a
willing seller and a willing buyer, neither of whom is under undue pressure to
complete the transaction. Fair Market Value shall be determined by our officers
acting in good faith, provided, that any transaction that results in a price in
excess of $10.0 million shall be determined by our Board of Directors acting in
good faith and shall be evidenced by a Board Resolution attached to an Officers'
Certificate delivered to the Trustee.
"Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles in the United States, as in effect on the Issue
Date.
"Guaranteed Debt" means, with respect to any Person, without duplication,
all Indebtedness of any other Person referred to in the definition of
Indebtedness that such Person directly or indirectly guarantees in any manner
through an agreement:
(1) to pay or purchase such Indebtedness or to advance or supply funds
for the payment or purchase of such Indebtedness;
(2) to purchase, sell or lease (as lessee or lessor) property, or to
purchase or sell services, primarily for the purpose of enabling the debtor
to make payment of such Indebtedness or to assure the holder of such
Indebtedness against loss;
(3) to supply funds to, or in any other manner invest in, the debtor
(including any agreement to pay for property or services without requiring
that such property be received or such services be rendered);
(4) to maintain working capital of the debtor, or otherwise to
maintain the net worth, solvency or other financial condition of the
debtor; or
(5) otherwise to assure a creditor against loss;
provided that the term "guarantee" shall not include endorsements for collection
or deposit, in either case in the ordinary course of business.
"Indebtedness" means, with respect to any Person, without duplication:
(1) all of such Person's liabilities for borrowed money (including
overdrafts) or for the deferred purchase price of property or services,
excluding any trade payables and other accrued current liabilities arising
in the ordinary course of business, but including all of such Person's
obligations, contingent or otherwise, in connection with any letters of
credit and acceptances issued under letter of credit facilities, acceptance
facilities or other similar facilities;
(2) all of such Person's obligations evidenced by bonds, notes,
debentures or other similar instruments;
(3) all of such Person's indebtedness created or arising under any
conditional sale or other title retention agreement with respect to
property that such Person acquired (even if the rights and remedies of the
seller or lender under such agreement in the event of default are limited
to
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repossession or sale of such property), but excluding trade payables
arising in the ordinary course of business;
(4) all of such Person's Capital Lease Obligations;
(5) all of such Person's obligations under Interest Rate Agreements or
Currency Agreements;
(6) Indebtedness referred to in clauses (1) through (5) above of other
Persons, the payment of which is secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien, upon or with respect to property (including accounts
and contract rights) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Indebtedness;
(7) all of such Person's Guaranteed Debt;
(8) all Redeemable Capital Stock valued at the greater of its
voluntary or involuntary maximum fixed repurchase price plus accrued and
unpaid dividends; and
(9) any amendment, supplement, modification, deferral, renewal,
extension, refunding or refinancing of any liability of the types referred
to in clauses (1) through (8) above.
For purposes of this definition, the "maximum fixed repurchase price" of any
Redeemable Capital Stock which does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Redeemable Capital Stock as if
such Redeemable Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to the Indenture, and if such price
is based upon or measured by the Fair Market Value of such Redeemable Capital
Stock, such Fair Market Value is to be determined in good faith by the Board of
Directors of the issuer of such Redeemable Capital Stock.
"Interest Rate Agreements" means any interest rate protection agreements
and other types of interest rate hedging agreements (including interest rate
swaps, caps, floors, collars and similar agreements).
"Investee Store" means a Person in which we or any of our Restricted
Subsidiaries has invested equity capital, to which it has made loans or for
which it has guaranteed loans, in accordance with the business practice of the
Company and its Restricted Subsidiaries of making equity investments in, making
loans to or guaranteeing loans made to Persons for the purpose of assisting any
such Person in acquiring, remodeling, refurbishing, expanding or operating one
or more retail grocery stores.
"Investment" means, with respect to any Person, directly or indirectly:
(1) any advance (other than advances to customers in the ordinary
course of business, which are recorded as accounts receivable on the
balance sheet of the Company and its Restricted Subsidiaries), loan or
other extension of credit (including by way of guarantee); or
(2) any capital contribution (by means of any transfer of cash or
other property to others or any payment for property or services for the
account or use of others); or
(3) any purchase, acquisition or ownership by such Person of any
Capital Stock, bonds, notes, debentures or other securities or assets
issued or owned by any other Person.
We shall be deemed to make an Investment in an amount equal to the greater of
the book value (as determined in accordance with GAAP) and Fair Market Value of
the net assets of any Restricted Subsidiary (or, if neither we nor any of our
Restricted Subsidiaries has theretofore made an Investment in such Restricted
Subsidiary, in an amount equal to the Investments being made) at the time such
Restricted Subsidiary is designated an Unrestricted Subsidiary, and any property
we or a Restricted Subsidiary transfer to an Unrestricted Subsidiary shall be
deemed an Investment valued at the greater of its book value (as determined in
accordance with GAAP) and its Fair Market Value at the time of such transfer.
"Investment Grade" means BBB- or higher by S&P or Baa3 or higher by Moody's
or the equivalent of such ratings by S&P or Moody's or in the event S&P or
Moody's shall cease rating the notes and the
83
Company shall select any other Rating Agency, the equivalent of such ratings by
such other Rating Agency.
"Issue Date" means April 15, 2002, the date of original issuance of the old
notes.
"Joint Venture" means any Person in which we or any of our Restricted
Subsidiaries owns 30% or more of the Voting Stock (other than as a result of a
Public Equity Offering).
"Lien" means any mortgage, charge, pledge, lien (statutory or otherwise),
privilege, security interest, hypothecation or other encumbrance upon or with
respect to any property of any kind, real or personal, movable or immovable, now
owned or hereafter acquired.
"Maturity" when used with respect to the notes means the date on which the
principal of the notes becomes due and payable as therein provided or as
provided in the Indenture, whether at Stated Maturity or on a redemption date or
pursuant to a Change of Control Purchase Offer or an Asset Sale Offer, and
whether by declaration of acceleration, call for redemption, purchase or
otherwise.
"Moody's" means Moody's Investors Service, Inc. or any successor rating
agency.
"Net Proceeds" means the aggregate cash proceeds that we or any of our
Restricted Subsidiaries receive from any Asset Sale (including any cash received
upon the sale or other disposition of any non-cash consideration received in any
Asset Sale), net of the direct costs relating to such Asset Sale (including
legal, accounting and investment banking fees, and sales commissions), any
relocation expenses incurred as a result thereof, any taxes that we or any
Restricted Subsidiary paid or must pay as a result thereof (after taking into
account any available tax credits or deductions and any tax sharing
arrangements), amounts required to be applied to the permanent repayment of
Indebtedness secured by a Lien on the assets or assets that were the subject of
such Asset Sale and any reserve for adjustment or indemnity in respect of the
sale price of such asset or assets in each case established in accordance with
GAAP.
"Non-Recourse Debt" means Indebtedness:
(1) as to which neither we nor any of our Restricted Subsidiaries:
(a) provides credit support of any kind (including any undertaking,
agreement or instrument that would constitute indebtedness);
(b) is directly or indirectly liable (as a guarantor or otherwise);
or
(c) constitutes the lender;
(2) no default with respect to which (including any rights that the
holders thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit (upon notice, lapse of time or both) any holder of
any other Indebtedness (other than the notes being offered hereby) of the
Company or any of its Restricted Subsidiaries to declare a default on such
other Indebtedness or cause the payment thereof to be accelerated or
payable prior to its stated maturity; and
(3) as to which the lenders have been notified in writing that they
will not have any recourse to the stock or assets of the Company or any of
its Restricted Subsidiaries.
"Note Guarantee" means any guarantee by a Subsidiary Guarantor of our
obligations under the Indenture.
"Obligations" means any principal, premium, interest (including
post-petition interest), penalties, fees, indemnifications, reimbursements,
damages and other liabilities payable under the documentation governing any
Indebtedness.
"Pari Passu Indebtedness" means (a) with respect to the notes, Indebtedness
which ranks pari passu in right of payment to the notes, and (b) with respect to
any Note Guarantee, Indebtedness which ranks pari passu in right of payment to
such Note Guarantee.
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"Permitted Consideration" means consideration consisting of any combination
of the following:
(1) cash or Temporary Cash Investments;
(2) assets used or intended for use in our business as conducted on
the Issue Date;
(3) any liabilities (as shown on the Company's or such Restricted
Subsidiary's most recent balance sheet) of the Company or any Restricted
Subsidiary (other than contingent liabilities and liabilities that are by
their terms subordinated to the notes or any guarantee thereof) that are
assumed by the transferee of any such assets pursuant to a customary
novation agreement that releases the Company or such Restricted Subsidiary
from further liability; and
(4) any securities, notes or other obligations that we or any such
Restricted Subsidiary receive; provided that the aggregate amount of such
securities, notes or other obligations received by the Company and its
Restricted Subsidiaries pursuant to this clause (4) after the Issue Date
and held or carried at any date of determination shall not exceed $75
million.
"Permitted Indebtedness" means any of the following Indebtedness of the
Company or any Restricted Subsidiary, as the case may be:
(1) Indebtedness of the Company and guarantees of the Subsidiary
Guarantors under the Credit Agreement in an aggregate principal amount at
any one time outstanding not to exceed the greater of:
(a) $1.0 billion, less
- the amount of mandatory repayments the Company or any such
Restricted Subsidiary actually made since the Issue Date with
Net Proceeds of an Asset Sale in respect of term Indebtedness
under the Credit Agreement; and
- further reduced by the amount of mandatory repayments of
revolving credit Indebtedness thereunder (accompanied by a
corresponding commitment reduction thereunder) the Company or
any such Restricted Subsidiary actually made since the Issue
Date with Net Proceeds of an Asset Sale; or
(b) the Borrowing Base Amount;
(2) Indebtedness of the Company and guarantees of the Subsidiary
Guarantors under uncommitted bank lines of credit (including any
refinancings of such Indebtedness), provided that the aggregate principal
amount of Indebtedness incurred pursuant to clauses (1), (2) and (10) of
this definition does not exceed the maximum amount of Indebtedness
permitted under clause (1) of this definition;
(3) Indebtedness of the Company and the Subsidiary Guarantors
evidenced by the notes and the Note Guarantees under the Indenture in an
aggregate principal amount not to exceed $260 million;
(4) Indebtedness of the Company or any Restricted Subsidiary
outstanding on the Issue Date;
(5) obligations of the Company or any Restricted Subsidiary entered
into in the ordinary course of business
(a) pursuant to Interest Rate Agreements designed to protect
against or manage exposure to fluctuations in interest rates in respect
of Indebtedness or retailer notes receivables, which, if related to
Indebtedness or such retailer notes receivables, do not exceed the
aggregate notional principal amount of such Indebtedness to which such
Interest Rate Agreements relate, or
(b) under any Currency Agreements in the ordinary course of
business and designed to protect against or manage exposure to
fluctuations in foreign currency exchange rates which, if related to
Indebtedness, do not increase the amount of such Indebtedness other than
as a result of foreign exchange fluctuations;
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(6) Indebtedness of the Company owing to a Wholly Owned Restricted
Subsidiary or of any Restricted Subsidiary owing to the Company or any
Wholly Owned Restricted Subsidiary; provided that any disposition, pledge
or transfer of any such Indebtedness to a Person (other than the Company or
another Wholly Owned Restricted Subsidiary) shall be deemed to be an
incurrence of such Indebtedness by the Company or Restricted Subsidiary, as
the case may be, not permitted by this clause (6);
(7) Indebtedness in respect of letters of credit, surety bonds and
performance bonds provided in the ordinary course of business;
(8) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
drawn against insufficient funds in the ordinary course of business;
provided that such Indebtedness is extinguished within ten business days of
its incurrence;
(9) Indebtedness of the Company or any Restricted Subsidiary
consisting of guarantees, indemnities or obligations in respect of purchase
price adjustments in connection with the acquisition or disposition of
assets;
(10) Indebtedness of the Company evidenced by commercial paper issued
by the Company (including any refinancings of such Indebtedness), provided
that the aggregate principal amount of Indebtedness incurred pursuant to
clauses (1), (2) and (10) of this definition does not exceed the maximum
amount of Indebtedness permitted under clause (1) of this definition;
(11) Indebtedness of the Company pursuant to guarantees by the Company
or any Subsidiary Guarantor in connection with any Permitted Receivables
Financing, provided that such Indebtedness shall not exceed 20% of the book
value of the Transferred Receivables at the time such Transferred
Receivables are sold or, in the case of receivables arising from direct
financing leases, 30% of the book value thereof;
(12) Indebtedness constituting Capital Lease Obligations of the
Company and its Restricted Subsidiaries (including any refinancings of such
Indebtedness) not to exceed $100 million at any time outstanding in the
aggregate;
(13) Indebtedness of the Company and its Restricted Subsidiaries in
addition to that described in clauses (1) through (12) of this definition
of "Permitted Indebtedness," together with any other outstanding
Indebtedness incurred pursuant to this clause (13) (including any
refinancings of such Indebtedness), not to exceed $100 million at any time
outstanding in the aggregate; and
(14) any renewals, extensions, substitutions, refunding, refinancings
or replacements (each, a "REFINANCING") of any Indebtedness described in
clauses (3) and (4) of this definition of "Permitted Indebtedness,"
including any successive refinancings, so long as:
(a) the aggregate principal amount of Indebtedness represented
thereby is not increased by such refinancing to an amount greater than
such principal amount plus the lesser of:
- the stated amount of any premium or other payment required to
be paid in connection with such a refinancing pursuant to the
terms of the Indebtedness being refinanced; or
- the amount of premium or other payment actually paid at such
time to refinance the Indebtedness, plus, in either case, the
amount of reasonable expenses that we or any Restricted
Subsidiary, as the case may be, incurs in connection with such
refinancing;
(b) in the case of any refinancing of Subordinated Indebtedness,
such new Indebtedness is subordinated to the notes or the applicable
Note Guarantee, as the case may be, to the same extent as the
Indebtedness being refinanced; and
(c) such refinancing does not reduce the Average Life to Stated
Maturity or the Stated Maturity of such Indebtedness.
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For purposes of determining compliance with the "Limitation on
Indebtedness" covenant, in the event that an item of Indebtedness meets the
criteria of more than one of the categories of Permitted Indebtedness described
in clauses (1) through (14) above or is permitted to be incurred pursuant to the
Consolidated Fixed Charge Coverage Ratio provisions of such covenant, we shall,
in our sole discretion, classify (or later reclassify) such item of Indebtedness
in any manner that complies with such covenant. Accrual of interest, accretion
or amortization of original issue discount and the payment of interest on any
Indebtedness in the form of additional Indebtedness with the same terms will not
be deemed to be an incurrence of Indebtedness for purposes of the "Limitation on
Indebtedness" covenant.
"Permitted Investment" means
(1) (a) Investments in any Wholly Owned Restricted Subsidiary or any
Restricted Subsidiary that is a Subsidiary Guarantor; (b) any Investment in
any Person by the Company or any Restricted Subsidiary as a result of which
such Person becomes a Wholly Owned Restricted Subsidiary or a Restricted
Subsidiary that is a Subsidiary Guarantor or (c) any Investment in the
Company by a Restricted Subsidiary;
(2) intercompany Indebtedness to the extent permitted under clause (6)
of the definition of "Permitted Indebtedness" and Indebtedness in
connection with a Permitted Receivables Financing permitted under clause
(11) of the definition of "Permitted Indebtedness";
(3) Temporary Cash Investments;
(4) sales of goods and services on trade credit terms consistent with
our past practices or otherwise consistent with trade credit terms in
common use in the industry;
(5) Investments in direct financing leases for equipment and real
estate owned or leased by the Company and leased to its customers in the
ordinary course of business consistent with past practice;
(6) Investments in Joint Ventures related to our operations, not to
exceed $50 million at any one time outstanding;
(7) Investments in Investee Stores either in the form of equity, loans
or other extensions of credit, provided that any such Investment may only
be made if the amount thereof, when added to the aggregate outstanding
amount of Permitted Investments in Investee Stores (excluding for purposes
of this clause (7) any Investments made pursuant to clause (5)), after
giving effect to any loan repayments or returns of capital in respect of
any Permitted Investment in Investee Stores, does not exceed 12.5% of
Consolidated Total Assets at the time of determination;
(8) Investments as a result of non-cash consideration that we or a
Restricted Subsidiary receive in connection with an Asset Sale made in
compliance with the "-- Certain Covenants -- Limitation on Sale of Assets"
covenant;
(9) other Investments, in addition to those permitted under (1)
through (8) above, in an aggregate amount not to exceed $25 million; and
(10) any substitutions or replacements of any Investment so long as
the aggregate amount of such Investment is not increased by such
substitution or replacement.
"Permitted Junior Securities" means Equity Interests in the Company or debt
securities that are subordinated to all Senior Indebtedness (and any debt
securities issued in exchange for Senior Indebtedness) to substantially the same
extent as, or to a greater extent than, the notes are subordinated to Senior
Indebtedness under the Indenture.
"Permitted Liens" means, with respect to any Person:
(1) Liens existing as of the Issue Date;
(2) Liens securing the notes and the Note Guarantees;
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(3) any Lien arising by reason of:
(a) any judgment, decree or order of any court, so long as such
Lien is adequately bonded and any appropriate legal proceedings which
may have been duly initiated for the review of such judgment, decree or
order shall not have been finally terminated or the period within which
such proceedings may be initiated shall not have expired;
(b) deposits to secure public or statutory obligations;
(c) operation of law in favor of growers, dealers and suppliers of
fresh fruits and vegetables, carriers, mechanics, materialmen, laborers,
employees or suppliers, incurred in the ordinary course of business for
sums which are not yet delinquent or are being contested in good faith
by negotiations or by appropriate proceedings which suspend the
collection thereof;
(d) our grant to licensees, pursuant to security agreements, of
security interests in our trademarks and goodwill, patents and trade
secrets to secure the damages, if any, of such licensees, resulting from
the rejection of the license of such licensees in a bankruptcy,
reorganization or similar proceeding with respect to us; or
(e) security for surety or appeal bonds;
(4) any Lien on any property or assets of a Restricted Subsidiary in
favor of us or any Wholly Owned Restricted Subsidiary;
(5) any Lien securing Acquired Indebtedness created prior to (and not
created in connection with, or in contemplation of) the incurrence of such
Indebtedness by the Company or any Restricted Subsidiary, provided that
such Lien does not extend to any assets of the Company or any Restricted
Subsidiary other than the assets acquired in the transaction resulting in
such Acquired Indebtedness being incurred by the Company or Restricted
Subsidiary, as the case may be;
(6) any Lien to secure the performance of bids, trade contracts,
letters of credit and other obligations of a like nature and incurred in
the ordinary course of business of the Company or any Restricted
Subsidiary;
(7) any Lien securing any Interest Rate Agreements or Currency
Agreements permitted to be incurred pursuant to clause (5) of the
definition of "Permitted Indebtedness" or any collateral for the
Indebtedness to which such Interest Rate Agreements or Currency Agreements
relate;
(8) any Lien on an asset securing Indebtedness (including Capital
Lease Obligations) incurred or assumed for the purpose of financing all or
any part of the cost of acquiring or constructing such asset, provided that
such Lien covers only such asset and attaches concurrently or within 180
days after the acquisition or completion of construction thereof;
(9) any Lien on real or personal property securing Capital Lease
Obligations of the Company or any Restricted Subsidiary as lessee with
respect to such real or personal property to the extent such Indebtedness
can be incurred pursuant to "Certain Covenants -- Limitation on
Indebtedness";
(10) any Lien on a Transferred Receivable or other receivable that is
transferred in a Permitted Receivables Financing;
(11) any Lien consisting of any pledge to any Person of Indebtedness
owed by any Restricted Subsidiary to the Company or to any Wholly Owned
Restricted Subsidiary, provided that:
(a) such Restricted Subsidiary is a Subsidiary Guarantor; and
(b) the principal amount pledged does not exceed the Indebtedness
secured by such pledge;
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(12) Liens securing Indebtedness which is incurred to refinance any
Indebtedness which has been secured by a Lien permitted under the Indenture
and which has been incurred in accordance with the provisions of the
Indenture, provided that such Liens:
(a) are no less favorable to the Holders and are not more favorable
to the lienholders with respect to such Liens than the Liens in respect
of the Indebtedness being refinanced; and
(b) do not extend to or cover any property or assets of the Company
or any of the Restricted Subsidiaries not securing the Indebtedness so
refinanced; and
(13) any extension, renewal, substitution or replacement, in whole or
in part, of any Lien described in the foregoing clauses (4) through (12),
provided that the Lien so extended, renewed, substituted or replaced does
not extend to any additional property or assets.
"Permitted Receivables Financing" means any transaction involving the
Company's or any of its Restricted Subsidiaries' transfer (by way of sale,
pledge or otherwise) of receivables to any other Person, provided that after
giving effect to such transaction, the sum of:
(1) the aggregate uncollected balances of the receivables so
transferred ("TRANSFERRED RECEIVABLES"); plus
(2) the aggregate amount of all collections on Transferred Receivables
theretofore received by the seller but not yet remitted to the purchaser,
in each case at the date of determination, would not exceed $600 million.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Preferred Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person's preferred stock whether now outstanding, or issued after the Issue
Date, and including all classes and series of preferred or preference stock of
such Person.
"Public Equity Offering" means with respect to the last sentence of
"Certain Covenants -- Limitation on Issuances and Sales of Capital Stock of
Subsidiaries," a primary or secondary public offering of equity securities of
any Restricted Subsidiary pursuant to an effective registration statement under
the Securities Act.
"Qualified Capital Stock" of any Person means any and all Capital Stock of
such Person other than Redeemable Capital Stock.
"Rating Agency" means any of:
(1) S&P;
(2) Moody's; or
(3) if S&P or Moody's or both shall not make a rating of the notes
publicly available, a security rating agency or agencies, as the case may
be, nationally recognized in the United States, that we select, which shall
be substituted for S&P or Moody's or both, as the case may be, and, in each
case, any successors thereto.
"Rating Category" means:
(1) with respect to S&P, any of the following categories: AAA, AA, A,
BBB, BB, B, CCC, CC, C and D (or equivalent successor categories);
(2) with respect to Moody's, any of the following categories: Aaa, Aa,
A, Baa, Ba, B, Caa, Ca, C and D (or equivalent successor categories); and
(3) the equivalent of any such category of S&P or Moody's used by
another Rating Agency.
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In determining whether the rating of the notes has decreased by one or more
gradation, gradations within Rating Categories (+ and -- for S&P; 1, 2 and 3 for
Moody's; or the equivalent gradations for another Rating Agency) shall be taken
into account (e.g., with respect to S&P, a decline in rating from BB+ to BB, as
well as from BB- to B+, will constitute a decrease of one gradation).
"Redeemable Capital Stock" means any Capital Stock that, either by its
terms or by the terms of any security into which it is convertible or
exchangeable or otherwise, is, or upon the happening of an event or passage of
time would be, required to be redeemed prior to any Stated Maturity of the
principal of the notes or is redeemable at the option of the holder thereof at
any time prior to any such Stated Maturity, or is convertible into or
exchangeable for debt securities at any time prior to any such Stated Maturity
at the option of the holder thereof.
"Restricted Subsidiary" means any Subsidiary of the Company that is not an
Unrestricted Subsidiary.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Indebtedness" of the Company or any Subsidiary Guarantor means:
(1) all Indebtedness of the Company or such Subsidiary Guarantor under
the Credit Agreement or any related loan documentation, including
obligations to pay principal and interest (including any interest accruing
subsequent to the filing of a petition of bankruptcy at the rate provided
for in the documentation with respect thereto, whether or not such interest
is an allowed claim under applicable law), premium, if any, reimbursement
obligations under letters of credit, fees, expenses and indemnities, and
all obligations under Interest Rate Agreements or Currency Agreements with
respect thereto, whether outstanding on the date of the Indenture or
thereafter incurred;
(2) the principal of, premium, if any, and interest (including any
interest accruing subsequent to the filing of a petition of bankruptcy at
the rate provided for in the documentation with respect thereto, whether or
not such interest is an allowed claim under applicable law) on, and all
other Obligations with respect to, any other Indebtedness of the Company or
such Subsidiary Guarantor permitted to be incurred by the Company or such
Subsidiary Guarantor under the terms of the Indenture (including the Senior
Notes), whether outstanding on the date of the Indenture or thereafter
incurred, unless the instrument under which such Indebtedness is incurred
expressly provides that it is on a parity with or subordinated in right of
payment to the notes; and
(3) all Obligations of the Company or such Subsidiary Guarantor with
respect to the foregoing.
Notwithstanding anything to the contrary in the foregoing, Senior Indebtedness
will not include (a) the Existing Senior Subordinated Notes or the Convertible
Senior Subordinated Notes, (b) any liability for federal, state, local or other
taxes owed or owing by the Company or any Subsidiary Guarantor, (c) any
Indebtedness of the Company or any Subsidiary Guarantor to any of its Restricted
Subsidiaries or other Affiliates, (d) any trade payables or (e) any Indebtedness
that is incurred in violation of the Indenture.
"Senior Notes" means our 10 1/8% Senior Notes due 2008.
"Significant Subsidiary" of the Company means any Subsidiary of the Company
that is a "significant subsidiary" as defined in Regulation S-X under the
Exchange Act.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill
Inc., a New York corporation, or any successor rating agency.
"Stated Maturity" when used with respect to any Indebtedness or any
installment of interest thereon means the dates specified in such Indebtedness
as the fixed date on which the principal of or premiums on such Indebtedness or
such installment of interest is due and payable.
"Subordinated Indebtedness" means Indebtedness of the Company or the
Subsidiary Guarantors that is subordinate or junior in right of payment to the
notes or the Note Guarantees, as the case may be.
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"Subsidiary" means any Person a majority of the equity ownership or the
Voting Stock of which is at the time owned, directly or indirectly, by the
Company or by one or more other Restricted Subsidiaries, or by the Company and
one or more other Restricted Subsidiaries.
"Subsidiary Guarantor" means each Wholly Owned Restricted Subsidiary and
each such subsidiary's Wholly Owned Restricted Subsidiaries as of the Issue Date
and any Restricted Subsidiary that is required pursuant to the "Additional
Guarantees" covenant, on or after the Issue Date, to execute a Note Guarantee
pursuant to the Indenture until a successor replaces any such party pursuant to
the applicable provisions of the Indenture and, thereafter, shall mean such
successor.
"Tangible Assets" means the total of all the assets appearing on the
Consolidated balance sheet of a majority-owned or Wholly Owned Restricted
Subsidiary, less the following:
(1) intangible assets including items such as goodwill, trademarks,
trade names, patents and unamortized debt discount and expense; and
(2) appropriate adjustments on account of minority interests of other
Persons holding stock in any such majority-owned Restricted Subsidiary.
"Temporary Cash Investments" means:
(1) any evidence of Indebtedness issued by the United States, or an
instrumentality or agency thereof, and guaranteed fully as to principal,
premium, if any, and interest by the United States;
(2) any certificate of deposit issued by, or time deposit of, a
financial institution that is a member of the Federal Reserve System having
combined capital and surplus and undivided profits of not less than $500
million, whose debt has a rating, at the time of which any investment
therein is made, of "A" (or higher) according to Moody's or "A" (or higher)
according to S&P;
(3) commercial paper issued by a corporation (other than an Affiliate
or Restricted Subsidiary of the Company) organized and existing under the
laws of the United States with a rating, at the time as of which any
investment therein is made, of "P-1" (or higher) according to Moody's or
"A-1" (or higher) according to S&P;
(4) any money market deposit accounts issued or offered by a financial
institution that is a member of the Federal Reserve System having capital
and surplus in excess of $500 million;
(5) short term tax-exempt bonds with a rating, at the time as of which
any investment is made therein, of "Aa3" (or higher) according to Moody's
or "AA-" (or higher) according to S&P;
(6) shares in a mutual fund, the investment objectives and policies of
which require it to invest substantially in the investments of the type
described in clauses (1) through (5); and
(7) repurchase and reverse repurchase obligations with the term of not
more than seven days for underlying securities of the types described in
clauses (1) and (2) entered into with any financial institution meeting the
qualifications specified in clause (2), provided that in the case of
clauses (1), (2), (3) and (5), such investment matures within one year from
the date of acquisition thereof.
"Transferred Receivables" has the meaning specified in the definition of
"Permitted Receivables Financing" set forth herein.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939, as
amended.
"Unrestricted Subsidiary" means any Subsidiary that is designated by our
Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution,
but only to the extent that such Subsidiary:
(1) has no Indebtedness other than Non-Recourse Debt;
(2) is not party to any agreement, contract, arrangement or
understanding with us or any of our Restricted Subsidiaries unless the
terms of any such agreement, contract, arrangement or
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understanding are no less favorable to us or such Restricted Subsidiary
than those that might be obtained at the time from Persons who are not our
Affiliates;
(3) is a Person with respect to which neither we nor any of our
Restricted Subsidiaries has any direct or indirect obligation (a) to
subscribe for additional Equity Interests or (b) to maintain or preserve
such Person's financial condition or to cause such Person to achieve any
specified levels of operating results;
(4) has not guaranteed or otherwise directly or indirectly provided
credit support for any Indebtedness of the Company or any of its Restricted
Subsidiaries; and
(5) does not directly or through any of its Subsidiaries own any
Capital Stock of, or own or hold any Lien on any property of, the Company
or any of its Restricted Subsidiaries.
Any such designation by our Board of Directors shall be evidenced to the Trustee
by filing with the Trustee a certified copy of the Board Resolution giving
effect to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing conditions and was permitted by the
covenant described above under the caption "Certain Covenants -- Limitation on
Restricted Payments." If, at any time, any Unrestricted Subsidiary would fail to
meet the foregoing requirements as an Unrestricted Subsidiary, it shall
thereafter cease to be an Unrestricted Subsidiary for purposes of the Indenture
and any Indebtedness of such Subsidiary shall be deemed to be incurred by a
Restricted Subsidiary as of such date (and, if such Indebtedness is not
permitted to be incurred as of such date under the covenant described under the
caption "Certain Covenants -- Limitation on Indebtedness," we shall be in
default of such covenant). Our Board of Directors may at any time designate any
Unrestricted Subsidiary to be a Restricted Subsidiary and such designation shall
be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of any
outstanding Indebtedness of such Unrestricted Subsidiary. Such designation shall
only be permitted if:
(1) such Indebtedness is permitted under the covenant described under
the caption "Certain Covenants -- Limitation on Indebtedness"; and
(2) no Default or Event of Default would be in existence following
such designation.
"Voting Stock" means stock or securities of the class or classes pursuant
to which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the board of directors, managers
or trustees of a Person (irrespective of whether or not at the time stock of any
other class or classes shall have or might have voting power by reason of the
happening of any contingency).
"Wholly Owned Restricted Subsidiary" means a Restricted Subsidiary all the
Capital Stock (other than directors qualifying shares) of which is owned by us
or another Wholly Owned Restricted Subsidiary.
BOOK-ENTRY; DELIVERY AND FORM
We will issue the exchange notes in the form of a Global Note. The Global
Note will be deposited with, or on behalf of, the clearing agency registered
under the Exchange Act that is designated to act as depositary for the notes and
registered in the name of the depositary or its nominee. DTC will be the initial
depositary.
Except as set forth below, a Global Note may be transferred, in whole or in
part, only to another nominee of DTC or to a successor of DTC or its nominee.
DTC has advised us that DTC is:
- a limited-purpose trust company organized under the laws of the State of
New York;
- a member of the Federal Reserve System;
- a "clearing corporation" within the meaning of the New York Uniform
Commercial Code; and
- a "clearing agency" registered pursuant to the provisions of Section 17A
of the Exchange Act.
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DTC was created to hold securities of institutions that have accounts with
DTC and to facilitate the clearance and settlement of securities transactions
among its participants in securities through electronic book-entry changes in
accounts of the participants, thereby eliminating the need for physical movement
of securities certificates. DTC's participants include:
- securities brokers and dealers;
- banks;
- trust companies;
- clearing corporations; and
- certain other organizations.
Access to DTC's book-entry system is also available to others such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, whether directly or indirectly.
We expect that pursuant to the procedures established by DTC (1) upon the
issuance of a Global Note, DTC will credit, on its book-entry registration and
transfer system, the respective principal amount of the individual beneficial
interests represented by the Global Note to the accounts of participants and (2)
ownership of beneficial interests in a Global Note will be shown on, and the
transfer of those ownership interests will be effected only through, records
maintained by DTC (with respect to participants' interests) and the participants
(with respect to the owners of beneficial interests in the Global Note other
than participants). The accounts to be credited will be designated by the
initial purchasers of the beneficial interests. Ownership of beneficial
interests in a Global Note is limited to participants or persons that may hold
interests through participants.
So long as DTC or its nominee is the registered holder and owner of a
Global Note, DTC or its nominee, as the case may be, will be considered the sole
legal owner of the notes represented by the Global Note for all purposes under
the indenture and the notes. Except as set forth below, owners of beneficial
interests in a Global Note will not be entitled to receive definitive notes and
will not be considered to be the owners or holders of any notes under the Global
Note. We understand that under existing industry practice, in the event an owner
of a beneficial interest in a Global Note desires to take any action that DTC,
as the holder of the Global Note, is entitled to take, DTC would authorize the
participants to take the action, and that participants would authorize
beneficial owners owning through the participants to take the action or would
otherwise act upon the instructions of beneficial owners owning through them. No
beneficial owner of an interest in a Global Note will be able to transfer the
interest except in accordance with DTC's applicable procedures, in addition to
those provided for under the indenture and, if applicable, those of Euroclear
and Clearstream Banking.
We will make payments of the principal of, and interest on, the notes
represented by a Global Note registered in the name of and held by DTC or its
nominee to DTC or its nominee, as the case may be, as the registered owner and
holder of the Global Note.
We expect that DTC or its nominee, upon receipt of any payment of principal
or interest in respect of a Global Note, will credit participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of the Global Note as shown on the records of DTC or its
nominee. We also expect that payments by participants and indirect participants
to owners of beneficial interests in a Global Note held through such
participants will be governed by standing instructions and customary practices,
as is now the case with securities held for accounts of customers registered in
the names of nominees for these customers. The payments, however, will be the
responsibility of the participants and indirect participants, and neither we,
the Trustee nor any paying agent will have any responsibility or liability for:
- any aspect of the records relating to, or payments made on account of,
beneficial ownership interests in a Global Note;
- maintaining, supervising or reviewing any records relating to the
beneficial ownership interests;
93
- any other aspect of the relationship between DTC and its participants; or
- the relationship between the participants and indirect participants and
the owners of beneficial interests in a Global Note.
Unless and until it is exchanged in whole or in part for definitive notes,
a Global Note may not be transferred except as a whole by DTC to a nominee of
DTC or by a nominee of DTC to DTC or another nominee of DTC.
Participants in DTC will effect transfers with other participants in the
ordinary way in accordance with DTC rules and will settle transfers in same-day
funds. Participants in Euroclear and Clearstream Banking will effect transfers
with other participants in the ordinary way in accordance with the rules and
operating procedures of Euroclear and Clearstream Banking, as applicable. If a
holder requires physical delivery of a definitive note for any reason, including
to sell notes to persons in jurisdictions which require physical delivery or to
pledge notes, the holder must transfer its interest in a Global Note in
accordance with the normal procedures of DTC and the procedures set forth in the
indenture.
Cross-market transfers between DTC, on the one hand, and directly or
indirectly through Euroclear or Clearstream Banking participants, on the other,
will be effected in DTC in accordance with DTC rules on behalf of Euroclear or
Clearstream Banking, as the case may be, by its respective depositary; however,
these cross-market transactions will require delivery of instructions to
Euroclear or Clearstream Banking, as the case may be, by the counterparty in the
system in accordance with its rules and procedures and within its established
deadlines (Brussels time). Euroclear or Clearstream Banking, as the case may be,
will, if the transaction meets its settlement requirements, deliver instructions
to its respective depositary to take action to effect final settlement on its
behalf by delivering or receiving interests in a Global Note in DTC, and making
or receiving payment in accordance with normal procedures for same-day funds
settlement applicable to DTC. Euroclear participants and Clearstream Banking
participants may not deliver instructions directly to the depositories for
Euroclear or Clearstream Banking.
Because of time zone differences, the securities account of a Euroclear or
Clearstream Banking participant purchasing an interest in a Global Note from a
DTC participant will be credited during the securities settlement processing day
(which must be a business day for Euroclear or Clearstream Banking, as the case
may be) immediately following the DTC settlement date, and the credit of any
transactions interests in a Global Note settled during the processing day will
be reported to the relevant Euroclear or Clearstream Banking participant on that
day. Cash received in Euroclear or Clearstream Banking as a result of sales of
interests in a Global Note by or through a Euroclear or Clearstream Banking
participant to a DTC participant will be received with value on the DTC
settlement date, but will be available in the relevant Euroclear or Clearstream
Banking cash account only as of the business day following settlement in DTC.
We expect that DTC will take any action permitted to be taken by a holder
of notes (including the presentation of notes for exchange as described below)
only at the direction of one or more participants to whose accounts at the DTC
interests in a Global Note are credited and only in respect of the portion of
the aggregate principal amount of the notes as to which the participant or
participants has or have given direction. However, if there is an event of
default under the notes, DTC will exchange the Global Notes for definitive
notes, which it will distribute to its participants. These definitive notes are
subject to certain restrictions on registration of transfers and will bear
appropriate legends restricting their transfer. Although we expect that DTC,
Euroclear and Clearstream Banking will agree to the foregoing procedures in
order to facilitate transfers of interests in Global Notes among participants of
DTC, Euroclear, and Clearstream Banking, DTC, Euroclear and Clearstream Banking
are under no obligation to perform or continue to perform these procedures, and
these procedures may be discontinued at any time. Neither we nor the trustee
have any responsibility for the performance by DTC, Euroclear or Clearstream
Banking or their participants or indirect participants of their obligations
under the rules and procedures governing their operations.
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If DTC is at any time unwilling or unable to continue as a depositary for
Global Notes or ceases to be a clearing agency registered under the Exchange Act
and we do not appoint a successor depositary within 90 days, we will issue
definitive notes in exchange for the Global Notes. The definitive notes will be
subject to certain restrictions on registration of transfers and will bear
appropriate legends concerning these restrictions.
PLAN OF DISTRIBUTION
Each broker-dealer that receives exchange notes for its own account
pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of the exchange notes. Broker-dealers
may use this prospectus, as it may be amended or supplemented from time to time,
in connection with the resale of exchange notes received in exchange for old
notes where the broker-dealer acquired the old notes as a result of
market-making activities or other trading activities. We have agreed that for a
period of up to 180 days after the date that this registration statement is
declared effective by the SEC, we will make this prospectus, as amended or
supplemented, available to any broker-dealer that requests it in the letter of
transmittal for use in connection with any such resale.
We will not receive any proceeds from any sale of exchange notes by
broker-dealers or any other persons. Broker-dealers may sell exchange notes
received by broker-dealers for their own account pursuant to the exchange offer
from time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the exchange notes or
a combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to the prevailing market prices or negotiated
prices. Broker-dealers may resell exchange notes directly to purchasers or to or
through brokers or dealers who may receive compensation in the form of
commissions or concessions from any broker-dealer and/or the purchasers of the
exchange notes. Any broker-dealer that resells exchange notes that were received
by it for its own account pursuant to the exchange offer and any broker or
dealer that participates in a distribution of the exchange notes may be deemed
to be "underwriters" within the meaning of the Securities Act and any profit on
any resale of exchange notes and any commissions or concessions received by any
such persons may be deemed to be underwriting compensation under the Securities
Act. The letter of transmittal states that by acknowledging that it will deliver
and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act.
We have agreed to pay all expenses incident to our performance of, or
compliance with, the registration rights agreement and will indemnify you
against liabilities under the Securities Act.
By its acceptance of the exchange offer, any broker-dealer that receives
exchange notes pursuant to the exchange offer agrees to notify us before using
the prospectus in connection with the sale or transfer of exchange notes. The
broker-dealer further acknowledges and agrees that, upon receipt of notice from
us of the happening of any event which makes any statement in the prospectus
untrue in any material respect or which requires the making of any changes in
the prospectus to make the statements in the prospectus not misleading or which
may impose upon us disclosure obligations that my have a material adverse effect
on us, which notice we agree to deliver promptly to the broker-dealer, the
broker-dealer will suspend use of the prospectus until we have notified the
broker-dealer that delivery of the prospectus may resume and have furnished
copies of any amendment or supplement to the prospectus to the broker-dealer.
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the material U.S. federal income and estate
tax considerations relevant to the exchange of old notes for the exchange notes
pursuant to this exchange offer and the purchase, ownership and disposition of
the notes by holders thereof, but does not purport to be a complete analysis of
all the potential tax considerations relating thereto. This summary is based
upon the provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), Treasury Regulations promulgated under the Code, administrative rulings
and judicial decisions as of the date hereof. These authorities may be
95
changed, perhaps retroactively, so as to result in U.S. federal income and
estate tax consequences different from those set forth below. We have not sought
any ruling from the Internal Revenue Service or an opinion of counsel with
respect to the statements made and the conclusions reached in the following
summary, and therefore we cannot assure you that the Internal Revenue Service
will agree with such statements and conclusions.
This summary assumes that the notes are held as capital assets within the
meaning of Section 1221 of the Code. This summary also does not address the tax
considerations arising under the laws of any foreign, state or local
jurisdiction. In addition, this discussion does not address all tax
considerations that may be applicable to a holder's particular circumstances or
to holders that may be subject to special tax rules, including:
- holders subject to the alternative minimum tax;
- banks, insurance companies, or other financial institutions;
- tax-exempt organizations;
- dealers in securities or commodities;
- traders in securities that elect to use a mark-to-market method of
accounting for their securities holdings;
- a U.S. holder whose "functional currency" is not the U.S. dollar;
- persons that will hold the notes as a position in a hedging transaction,
"straddle," "conversion transaction" or other risk reduction transaction;
or
- persons deemed to sell the notes under the constructive sale provisions
of the Code.
If a partnership holds notes, the tax treatment of a partner in the
partnership will generally depend upon the status of the partner and the
activities of the partnership. If you are a partner of a partnership holding our
notes, we urge you to consult your tax advisor regarding the tax consequences of
the ownership and disposition of the notes.
THIS SUMMARY OF UNITED STATES FEDERAL TAX CONSIDERATIONS IS FOR GENERAL
INFORMATION ONLY AND IS NOT TAX ADVICE. WE URGE YOU TO CONSULT YOUR TAX ADVISOR
CONCERNING THE TAX CONSEQUENCES OF THE EXCHANGE OF THE OLD NOTES FOR THE
EXCHANGE NOTES AND OF HOLDING AND DISPOSING OF THE EXCHANGE NOTES, INCLUDING THE
U.S. FEDERAL, STATE, LOCAL AND OTHER TAX CONSEQUENCES AND POTENTIAL CHANGES IN
THE TAX LAWS.
CONSEQUENCES OF THE EXCHANGE
The exchange of the old notes for the exchange notes in the exchange offer
will not be treated as an "exchange" for federal income tax purposes, because
the exchange notes will not be considered to differ materially in kind or extent
from the old notes. Accordingly, the exchange of old notes for exchange notes
will not be a taxable event to you for federal income tax purposes. Moreover,
the exchange notes will generally have the same tax attributes as the old notes
and the same tax consequences to you as the old notes have to you, including the
same issue price, adjusted issue price, adjusted tax basis and holding period.
Therefore, references to "notes" apply equally to the exchange notes and the old
notes.
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CONSEQUENCES TO U.S. HOLDERS
The following is a summary of the U.S. federal tax consequences that will
apply to you if you are a U.S. holder of the notes. Certain consequences to
"non-U.S. holders" of the notes are described under "-- Consequences to Non-U.S.
Holders" below. "U.S. holder" means a beneficial owner of a note that is:
- a citizen or resident of the U.S. as determined for federal income tax
purposes;
- a corporation or partnership created or organized in or under the laws of
the U.S. or any political subdivision of the U.S.;
- an estate the income of which is subject to U.S. federal income taxation
regardless of its source; or
- a trust that (1) is subject to the supervision of a court within the U.S.
and the control of one or more U.S. persons or (2) has a valid election
in effect under applicable Treasury Regulations to be treated as a U.S.
person.
PAYMENTS OF INTEREST
Stated interest on the notes will generally be taxable to you as ordinary
income from domestic sources at the time it is paid or accrues in accordance
with your method of accounting for tax purposes.
MARKET DISCOUNT
If you acquire a note at a cost that is less than the stated redemption
price (i.e., the principal) at maturity of the notes, the amount of such
difference is treated as "market discount" for federal income tax purposes,
unless such difference is less than .0025 multiplied by the stated redemption
price at maturity multiplied by the number of complete years to maturity (from
the date of acquisition).
Under the market discount rules of the Code, you are required to treat any
gain on the sale, exchange, retirement or other disposition of a note as
ordinary income to the extent of the accrued market discount that has not
previously been included in income. Thus, principal payments and payments
received upon the sale or exchange of a note are treated as ordinary income to
the extent of accrued market discount that has not previously been included in
income. If you dispose of a note with market discount in certain otherwise
nontaxable transactions, you must include accrued market discount as ordinary
income as if you had sold the note at its then fair market value.
In general, the amount of market discount that has accrued is determined on
a ratable basis. You may, however, elect to determine the amount of accrued
market discount on a constant yield to maturity basis. This election is made on
a note-by-note basis and is irrevocable.
With respect to notes with market discount, you may not be allowed to
deduct immediately a portion of the interest expense on any indebtedness
incurred or continued to purchase or to carry the notes. You may elect to
include market discount in income currently as it accrues, in which case the
interest deferral rule set forth in the preceding sentence will not apply. This
election will apply to all debt instruments that you acquire on or after the
first day of the first taxable year to which the election applies and is
irrevocable without the consent of the Internal Revenue Service. Your tax basis
in a note will be increased by the amount of market discount included in your
income under the election.
AMORTIZABLE BOND PREMIUM
If you purchase a note for an amount in excess of the stated redemption
price at maturity, you will be considered to have purchased the note with
"amortizable bond premium" equal in amount to the excess. Generally, you may
elect to amortize the premium as an offset to interest income otherwise required
to be included in income in respect of the note during the taxable year, using a
constant yield method similar to that described above, over the remaining term
of the note (or, if it results in a smaller amount of amortizable premium, until
an earlier call date). Under Treasury Regulations, the amount of amortizable
bond premium that you may deduct in any accrual period is limited to the amount
by which your total
97
interest inclusions on the note in prior accrual periods exceed the total amount
treated by you as a bond premium deduction in prior accrual periods. If any of
the excess bond premium is not deductible, that amount is carried forward to the
next accrual period. If you elect to amortize bond premium, you must reduce your
tax basis in the note by the amount of the premium used to offset interest
income as set forth above. An election to amortize bond premium applies to all
taxable debt obligations then owned and thereafter acquired by you and may be
revoked only with the consent of the Internal Revenue Service.
SALE, EXCHANGE OR OTHER TAXABLE DISPOSITION OF NOTES
You will generally recognize gain or loss upon the sale, exchange,
retirement or other taxable disposition of a note equal to the difference
between the amount realized upon the sale, exchange or other disposition (less
an amount attributable to any accrued stated interest not previously included in
income, which will be taxable as interest income) and your adjusted tax basis in
the note. Your adjusted tax basis in a note will generally equal the amount you
paid for the note and will be subsequently increased by market discount
previously included in income in respect of the note and will be reduced by any
amortizable bond premium in respect of the note which has been taken into
account.
Any gain or loss recognized on a disposition of the note will be capital
gain or loss except as described under "Market Discount" above. If you are an
individual and have held the note for more than one year, such capital gain will
generally be subject to tax at a maximum rate of 20%. Your ability to deduct
capital losses may be limited.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Payments of interest and principal on the notes and the proceeds received
upon the sale or other disposition of such notes may be subject to information
reporting and backup withholding tax. Payments to certain holders (including,
among others, corporations and certain tax-exempt organizations) are generally
not subject to information reporting or backup withholding. Payments to you will
be subject to information reporting and backup withholding tax if you:
- fail to furnish your taxpayer identification number ("TIN"), which, if
you are an individual, is ordinarily your social security number;
- furnish an incorrect TIN;
- are notified by the Internal Revenue Service that you have failed to
properly report payments of interest or dividends; or
- fail to certify, under penalties of perjury, that you have furnished a
correct TIN and that the Internal Revenue Service has not notified you
that you are subject to backup withholding.
The amount of any reportable payments, including interest, made to you
(except if you are an exempt recipient) and the amount of tax withheld, if any,
with respect to such payments will be reported to you and to the Internal
Revenue Service for each calendar year.
We urge you to consult your tax advisor regarding your qualification for an
exemption from backup withholding and information reporting and the procedures
for obtaining such an exemption, if applicable. The backup withholding tax is
not an additional tax, and you may use amounts withheld as a credit against your
U.S. federal income tax liability or may claim a refund as long as you timely
provide certain information to the Internal Revenue Service.
CONSEQUENCES TO NON-U.S. HOLDERS
The following is a summary of the U.S. federal tax consequences that will
apply to you if you are a non-U.S. holder of notes. The term "non-U.S. holder"
means a beneficial owner of a note that is not a U.S. holder.
98
Special rules may apply to certain non-U.S. holders such as "controlled
foreign corporations," "passive foreign investment companies" and "foreign
personal holding companies." We urge such entities to consult their tax advisors
to determine the U.S. federal, state, local and other tax consequences that may
be relevant to them.
PAYMENT OF INTEREST
The 30% U.S. federal withholding tax will not apply to any payment to you
of principal or interest on a note provided that:
- you do not actually or constructively own 10% or more of the total
combined voting power of all classes of our stock that are entitled to
vote within the meaning of Section 871(h)(3) of the Code;
- you are not a controlled foreign corporation that is related to us
through stock ownership;
- you are not a bank whose receipt of interest on a note is described in
section 881(c)(3)(A) of the Code; and
- (a) you provide your name and address, and certify, under penalties of
perjury, that you are not a U.S. person (which certification may be made
on an Internal Revenue Service Form W-8BEN (or a successor form)) or (b)
a securities clearing organization, bank, or other financial institution
that holds customers' securities in the ordinary course of its business
holds the note on your behalf and certifies, under penalties of perjury,
that it has received Internal Revenue Service Form W-8BEN from you or
from another qualifying financial institution intermediary, and, in
certain circumstances, provides a copy of the Internal Revenue Service
Form W-8BEN. If the notes are held by or through certain foreign
intermediaries or certain foreign partnerships, such foreign
intermediaries or partnerships must also satisfy the certification
requirements of applicable Treasury Regulations.
If you cannot satisfy the requirements described above, payments of
interest will be subject to the 30% U.S. federal withholding tax, unless you
provide us with a properly executed (1) Internal Revenue Service Form W-8BEN
claiming an exemption from or reduction in withholding under the benefit of an
applicable tax treaty or (2) Internal Revenue Service Form W-8ECI stating that
interest paid on the note is not subject to withholding tax because it is
effectively connected with your conduct of a trade or business in the U.S.
Alternative documentation may be applicable in certain circumstances.
If you are engaged in a trade or business in the U.S. and interest on a
note is effectively connected with the conduct of that trade or business, you
will be required to pay U.S. federal income tax on that interest on a net income
basis (although exempt from the 30% withholding tax provided the certification
requirement described above is met) in the same manner as if you were a U.S.
person as defined under the Code, except as otherwise provided by applicable tax
treaty. In addition, if you are a foreign corporation, you may be subject to a
branch profits tax equal to 30% (or lower applicable treaty rate) of your
earnings and profits for the taxable year, subject to adjustments, that are
effectively connected with your conduct of a trade or business in the U.S. For
this purpose, interest will be included in your earnings and profits.
SALE, EXCHANGE OR OTHER TAXABLE DISPOSITION OF NOTES
Any gain realized upon the sale, exchange or other taxable disposition of a
note (except with respect to accrued and unpaid interest, which would be taxable
as described above) generally will not be subject to U.S. federal income tax
unless:
- that gain is effectively connected with your conduct of a trade or
business in the U.S.;
- you are an individual who is present in the U.S. for 183 days or more in
the taxable year of that disposition, and certain other conditions are
met; or
- you are subject to Code provisions applicable to certain U.S.
expatriates.
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If you are a holder described in the first bullet point above, you will be
required to pay U.S. federal income tax on the net gain derived from the sale,
except as otherwise required by an applicable tax treaty, and if you are a
foreign corporation, you may also be required to pay a branch profits tax at a
30% rate or a lower rate if so specified by an applicable income tax treaty. If
you are a holder described in the second bullet point above, you will be subject
to a 30% U.S. federal income tax on the gain derived from the sale, which may be
offset by U.S. source capital losses, even though you are not considered a
resident of the U.S. If you are a holder described in the third bullet point
above, we urge you to consult your tax advisor to determine the U.S. federal,
state, local and other tax consequences that may be relevant to you.
U.S. FEDERAL ESTATE TAX
The U.S. federal estate tax will not apply to the notes owned by you at the
time of your death, provided that (1) you do not own actually or constructively
10% or more of the total combined voting power of all classes of our voting
stock (within the meaning of the Code and the Treasury Regulations) and (2)
interest on the note would not have been, if received at the time of your death,
effectively connected with your conduct of a trade or business in the U.S.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Backup withholding will likely not apply to payments made by us or our
paying agents, in their capacities as such, to you if you have provided the
required certification that you are not a U.S. person as described above.
However, certain information reporting may still apply with respect to interest
payments even if certification is provided. Payments of the proceeds of a
disposition by you made to or through a foreign office of a broker will not be
subject to information reporting or backup withholding, except that information
reporting (but not backup withholding) will apply to those payments, unless such
broker has documentary evidence in its records that you are not a U.S. person
and certain other conditions are met, or you otherwise establish an exemption,
if the broker is:
- a U.S. person;
- a controlled foreign corporation for U.S. federal income tax purposes;
- a foreign person 50% or more of whose gross income is effectively
connected with a U.S. trade or business for a specified three-year
period; or
- a foreign partnership, if at any time during its tax year, one or more of
its partners are U.S. persons, as defined in Treasury Regulations, who in
the aggregate hold more than 50% of the income or capital interest in the
partnership or if, at any time during its tax year, the foreign
partnership is engaged in a U.S. trade or business.
You will be subject to backup withholding and information reporting with
respect to any payment of the proceeds of a sale of a note effected by the U.S.
office of a broker unless you properly certify under penalties of perjury as to
your foreign status and certain other conditions are met or you otherwise
establish an exemption.
Currently applicable Treasury Regulations establish reliance standards with
regard to the certification requirements described above.
We urge you to consult your tax advisor regarding application of
withholding and backup withholding in your particular circumstance and the
availability of and procedure for obtaining an exemption from withholding and
backup withholding under current Treasury Regulations. In this regard, the
current Treasury Regulations provide that a certification may not be relied on
if we or our agent (or other payor) knows or has reasons to know that the
certification may be false. Any amounts withheld under the backup withholding
rules from a payment to you will be allowed as a credit against your U.S.
federal income tax liability or you may claim a refund, provided the required
information is furnished timely to the Internal Revenue Service.
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LEGAL MATTERS
Certain legal matters in connection with the notes offered hereby will be
passed upon for us by Latham & Watkins, San Francisco, California and McAfee &
Taft, Oklahoma City, Oklahoma.
INDEPENDENT AUDITORS
The Company's financial statements incorporated in this prospectus by
reference from the Company's Annual Report on Form 10-K for the year ended
December 29, 2001 and Core-Mark's consolidated financial statements as of
December 31, 2001 and 2000, and for each of the three years in the period ended
December 31, 2001 incorporated in this prospectus by reference to the Company's
Current Report on Form 8-K filed with the Securities and Exchange Commission on
May 20, 2002 have been audited by Deloitte & Touche LLP, independent auditors,
as stated in their reports, which are also incorporated in this prospectus by
reference, and have been so incorporated in reliance upon the reports of such
firm given upon their authority as experts in accounting and auditing.
With respect to the Company's unaudited interim financial information for
the 28 weeks ended July 13, 2002 which is incorporated herein by reference,
Deloitte & Touche LLP have applied limited procedures in accordance with
professional standards for a review of such information. However, as stated in
their report included in the Company's Quarterly Report on Form 10-Q for the 28
weeks ended July 13, 2002 and incorporated by reference herein, they did not
audit and they do not express an opinion on that interim financial information.
Accordingly, the degree of reliance on their report on such information should
be restricted in light of the limited nature of the review procedures applied.
Deloitte & Touche LLP are not subject to the liability provisions of Section 11
of the Securities Act of 1933 for their report on the unaudited interim
financial information because that report is not a "report" or a "part" of the
registration statement prepared or certified by an accountant within the meaning
of Sections 7 and 11 of the Securities Act.
AVAILABLE INFORMATION
We are subject to the information requirements of the Securities Exchange
Act of 1934, as amended. Accordingly, we file annual, quarterly and periodic
reports, proxy statements and other information with the SEC relating to our
business, financial statements and other matters (File No. 001-08140). You may
read and copy any documents we have filed with the SEC at prescribed rates at
the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, DC 20549.
You can obtain copies of these materials at prescribed rates by writing to the
SEC's Public Reference Section at the address set forth above, or by calling
(800) SEC-0330. Our SEC filings are also available to you free of charge at the
SEC's web site at http://www.sec.gov. Information contained in our web site is
not part of this prospectus.
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INCORPORATION BY REFERENCE
We have elected to "incorporate by reference" certain information into this
prospectus. By incorporating by reference, we can disclose important information
to you by referring you to another document we have filed with the SEC. The
information incorporated by reference is deemed to be part of this prospectus,
except for information incorporated by reference that is superseded by
information contained in this prospectus. This prospectus incorporates by
reference the documents set forth below that we have previously filed with the
SEC:
<Table>
<Caption>
FLEMING SEC FILINGS (FILE NO. 001-08140) FILED ON
- ---------------------------------------- --------
Annual Report on Form 10-K (including information
specifically incorporated by reference into our Form 10-K
from our Proxy Statement for our 2002 Annual Meeting of
Shareholders)............................................. March 6, 2002
Current Report on Form 8-K.................................. April 2, 2002
Current Report on Form 8-K.................................. April 16, 2002
Current Report on Form 8-K (other than the information
furnished pursuant to Item 9 of such report, which
information is deemed not to be filed).................... April 24, 2002
Quarterly Report on Form 10-Q............................... May 17, 2002
Current Report on Form 8-K.................................. May 20, 2002
Amended Current Report on Form 8-K/A........................ May 29, 2002
Amended Current Report on Form 8-K/A........................ June 14, 2002
Current Report on Form 8-K.................................. June 25, 2002
Quarterly Report on Form 10-Q............................... August 27, 2002
</Table>
We are also incorporating by reference all other reports that we file with
the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
between the date of this prospectus and the date of the completion of the
exchange offer other than any information furnished pursuant to Item 9 of any
current report on Form 8-K.
Our trademarks, service marks and trade names include "Fleming," "FlexPro,"
"FlexStar," "FlexMate," "Piggly Wiggly," "Sentry," "Super 1 Foods," "Festival
Foods," "Head Distributing Company," "Jubilee Foods," "Jamboree Foods,"
"MEGAMARKET," "Minter-Weisman Co.," "Shop "N Kart," "American Family," "ABCO
Desert Market," "Big Star," "Big T," "Buy for Less," "County Pride Markets,"
"Rainbow Foods," "Red Fox," "Shop N Bag," "Super Duper," "Super Foods," "Super
Thrift," "Thriftway," "Value King," "PWPETRO," "Piggly Wiggly xpress,"
"yes!less," "Big Bear," "Big Dollar, "Core-Mark," and "Best Buy." This
prospectus also contains trademarks, service marks, copyrights and trade names
of other companies.
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- --------------------------------------------------------------------------------
[FLEMING LOGO]
FLEMING COMPANIES, INC.
OFFER TO EXCHANGE UP TO $260,000,000 AGGREGATE PRINCIPAL AMOUNT
OF ITS 9 7/8% SENIOR SUBORDINATED NOTES DUE 2012,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT,
FOR ANY AND ALL OF
ITS OUTSTANDING 9 7/8% SENIOR SUBORDINATED NOTES DUE 2012
-------------------------
PROSPECTUS
-------------------------
, 2002
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Article Thirteen of our Restated Certificate of Incorporation contains a
provision, permitted by Section 1006B.7 of the Oklahoma General Corporation Act
(the "OGCA"), limiting the personal monetary liability of directors for breach
of fiduciary duty as a director. The OGCA and our Restated Certificate of
Incorporation provide that such provision does not eliminate or limit liability,
(1) for any breach of the director's duty of loyalty to the company or our
shareholders, (2) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (3) for unlawful payments
of dividends or unlawful stock repurchases or redemptions, as provided in
Section 1053 of the OGCA, or (4) for any transaction from which the director
derived an improper personal benefit.
Section 1031 of the OGCA permits indemnification against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred in connection with actions, suits or
proceedings in which a director, officer, employee or agent is a party by reason
of the fact that he or she is or was such a director, officer, employee or
agent, if he or she acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the company and with
respect to any criminal action or proceeding, had no reasonable cause to believe
his or her conduct was unlawful. However, in connection with actions by or in
our right, such indemnification is not permitted if such person has been
adjudged liable to us unless the court determines that, under all of the
circumstances, such person is nonetheless fairly and reasonably entitled to
indemnity for such expenses as the court deems proper.
Section 1031 also permits us to purchase and maintain insurance on behalf
of our directors and officers against any liability which may be asserted
against, or incurred by, such persons in their capacities as our directors or
officers whether or not we would have the power to indemnify such persons
against such liabilities under the provisions of such section.
Section 1031 further provides that the statutory provision is not exclusive
of any other right to which those seeking indemnification or advancement of
expenses may be entitled under any by-law, agreement, vote of stockholders or
independent directors, or otherwise, both as to action in such person's official
capacity and as to action in another capacity while holding such office.
Article 8 of our bylaws contains provisions regarding indemnification which
parallel those described above. We maintain insurance policies that insure our
officers and directors against certain liabilities.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
A list of exhibits filed with this registration statement on Form S-4 is
set forth on the Exhibit Index and is incorporated in this Item 21 by reference.
ITEM 22. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
increase or decrease in volume of securities offered would not
II-1
exceed that which was registered) and any deviation from the low or high
of the estimated maximum offering range may be reflected in the form of
prospectus filed with the SEC pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than 20
percent change in the maximum aggregate offering price, set forth in the
"Calculation of Registration Fee" table in the effective registration
statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the registration
statement;
provided, however, that clauses (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by
those clauses is contained in periodic reports filed with or furnished
to the Commission by the Company pursuant to Section 13 or 15(d) of the
Exchange Act that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by a controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(d) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into this prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(e) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-2
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Lewisville, state of
Texas, on the 7th day of October, 2002.
FLEMING COMPANIES, INC.,
an Oklahoma corporation
By: /s/ CARLOS M. HERNANDEZ
------------------------------------
Carlos M. Hernandez
Senior Vice President,
General Counsel and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by each of the following persons in the
capacities indicated on the 7th day of October, 2002.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
* Chairman and Chief Executive Officer
----------------------------------------------- (Principal Executive Officer)
Mark S. Hansen
* Executive Vice President and Chief Financial
----------------------------------------------- Officer
Neal J. Rider (Principal Financial Officer)
* Senior Vice President, Finance and Operations
----------------------------------------------- Control (Principal Accounting Officer)
Mark D. Shapiro
* Director
-----------------------------------------------
Herbert M. Baum
* Director
-----------------------------------------------
Kenneth M. Duberstein
* Director
-----------------------------------------------
Archie R. Dykes
* Director
-----------------------------------------------
Carol B. Hallett
* Director
-----------------------------------------------
Robert S. Hamada
* Director
-----------------------------------------------
Alice M. Peterson
*By: /s/ CARLOS M. HERNANDEZ
------------------------------------------
Carlos M. Hernandez,
attorney-in-fact
</Table>
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Lewisville, state of
Texas, on the 7th day of October, 2002.
ABCO FOOD GROUP, INC.,
a Nevada corporation
BAKER'S FOOD GROUP, INC.,
a Nevada corporation
By: *
------------------------------------
Timothy M. Otte
Vice President, Secretary and
Treasurer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 7th day of October, 2002.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
* President and Director
----------------------------------------------- (Principal Executive Officer)
James R. Vaughan
* Vice President, Secretary, Treasurer and Director
----------------------------------------------- (Principal Financial and Accounting Officer)
Timothy M. Otte
*By: /s/ CARLOS M. HERNANDEZ
------------------------------------------
Carlos M. Hernandez,
attorney-in-fact
</Table>
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Lewisville, state of
Texas, on the 7th day of October, 2002.
ABCO MARKETS INC.,
an Arizona corporation
ABCO REALTY CORP.,
an Arizona corporation
RETAIL SUPERMARKETS, INC.,
a Texas corporation
By: /s/ CARLOS M. HERNANDEZ
------------------------------------
Carlos M. Hernandez
Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 7th day of October, 2002.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
* President and Director
- ------------------------------------------------- (Principal Executive Officer)
J.R. Campbell
* Vice President, Treasurer and Director
- ------------------------------------------------- (Principal Financial and Accounting Officer)
Neal J. Rider
/s/ CARLOS M. HERNANDEZ Director
- -------------------------------------------------
Carlos M. Hernandez
*By: /s/ CARLOS M. HERNANDEZ
-----------------------------------------
Carlos M. Hernandez,
attorney-in-fact
</Table>
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Lewisville, state of
Texas, on the 7th day of October, 2002.
AG, L.L.C., an Oklahoma limited
liability company
By: FLEMING COMPANIES, INC., its sole
member
By: /s/ CARLOS M. HERNANDEZ
------------------------------------
Carlos M. Hernandez
Senior Vice President,
General Counsel and Secretary
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Lewisville, state of
Texas, on the 7th day of October, 2002.
AMERICAN LOGISTICS GROUP, INC.,
a Delaware corporation
By: /s/ CARLOS M. HERNANDEZ
------------------------------------
Carlos M. Hernandez
Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 7th day of October, 2002.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
* President and Director
- ------------------------------------------------- (Principal Executive Officer)
William A. Merrigan
* Vice President, Treasurer, Assistant Secretary
- ------------------------------------------------- and Director (Principal Financial and Accounting
Neal J. Rider Officer)
/s/ CARLOS M. HERNANDEZ Director
- -------------------------------------------------
Carlos M. Hernandez
*By: /s/ CARLOS M. HERNANDEZ
-----------------------------------------
Carlos M. Hernandez,
attorney-in-fact
</Table>
II-7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of South San Francisco,
state of California, on the 7th day of October, 2002.
ASI OFFICE AUTOMATION, INC.,
a California corporation
C/M PRODUCTS, INC.,
a California corporation
CORE-MARK INTERRELATED COMPANIES,
INC.,
a California corporation
CORE-MARK MIDCONTINENT, INC.,
an Arkansas corporation
GENERAL ACCEPTANCE CORPORATION,
a California corporation
MARQUISE VENTURES COMPANY, INC.,
a California corporation
By: *
------------------------------------
Leo F. Korman
Senior Vice President, Chief
Financial Officer and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 7th day of October, 2002.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
* Chairman of the Board and President
- ------------------------------------------------- (Principal Executive Officer)
Robert A. Allen
* Senior Vice President, Chief Financial Officer
- ------------------------------------------------- and Secretary
Leo F. Korman (Principal Financial Officer)
* Controller and Assistant Secretary
- ------------------------------------------------- (Principal Accounting Officer)
Gregory P. Antholzner
*By: /s/ CARLOS M. HERNANDEZ
-----------------------------------------
Carlos M. Hernandez,
attorney-in-fact
</Table>
II-8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Lewisville, state of
Texas, on the 7th day of October, 2002.
CARDINAL WHOLESALE, INC.,
a Minnesota corporation
MINTER-WEISMAN CO.,
a Minnesota corporation
By: /s/ CARLOS M. HERNANDEZ
------------------------------------
Carlos M. Hernandez
Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 7th day of October, 2002.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
* Chief Executive Officer, President and Director
- ------------------------------------------------- (Principal Executive Officer)
E. Stephen Davis
* Vice President, Treasurer and Director
- ------------------------------------------------- (Principal Financial and Accounting Officer)
Neal J. Rider
/s/ CARLOS M. HERNANDEZ Director
- -------------------------------------------------
Carlos M. Hernandez
*By: /s/ CARLOS M. HERNANDEZ
-----------------------------------------
Carlos M. Hernandez,
attorney-in-fact
</Table>
II-9
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Lewisville, state of
Texas, on the 7th day of October, 2002.
CORE-MARK INTERNATIONAL, INC.,
a Delaware corporation
By: /s/ CARLOS M. HERNANDEZ
------------------------------------
Carlos M. Hernandez
Senior Vice President and General
Counsel
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 7th day of October, 2002.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
* President and Chief Executive Officer
- ------------------------------------------------- (Principal Executive Officer)
Robert A. Allen
* Senior Vice President, Chief Financial Officer
- ------------------------------------------------- and Secretary (Principal Financial Officer)
Leo F. Korman
* Controller and Assistant Secretary
- ------------------------------------------------- (Principal Accounting Officer)
Gregory P. Antholzner
/s/ CARLOS M. HERNANDEZ Director
- -------------------------------------------------
Carlos M. Hernandez
* Director
- -------------------------------------------------
Matthew H. Hildreth
*By: /s/ CARLOS M. HERNANDEZ
------------------------------------------
Carlos M. Hernandez,
attorney-in-fact
</Table>
II-10
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Lewisville, state of
Texas, on the 7th day of October, 2002.
DUNIGAN FUELS, INC.,
a Texas corporation
By: /s/ CARLOS M. HERNANDEZ
------------------------------------
Carlos M. Hernandez
Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 7th day of October, 2002.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
* Chief Executive Officer, President and Director
- ------------------------------------------------- (Principal Executive Officer)
J.R. Campbell
* Vice President and Treasurer
- ------------------------------------------------- (Principal Financial and Accounting Officer)
Neal J. Rider
/s/ CARLOS M. HERNANDEZ Director
- -------------------------------------------------
Carlos M. Hernandez
* Director
- -------------------------------------------------
Mark D. Shapiro
*By: /s/ CARLOS M. HERNANDEZ
-----------------------------------------
Carlos M. Hernandez,
attorney-in-fact
</Table>
II-11
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Richmond, province of
British Columbia, Canada, on the 7th day of October, 2002.
E.A. MORRIS DISTRIBUTORS LIMITED,
a Canadian corporation
By: *
------------------------------------
Cyril Wan
Treasurer and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 7th day of October, 2002.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
* President
- ------------------------------------------------- (Principal Executive Officer)
Basil P. Prokop
* Treasurer and Secretary
- ------------------------------------------------- (Principal Financial Officer and Accounting
Cyril Wan Officer)
*By: /s/ CARLOS M. HERNANDEZ
-----------------------------------------
Carlos M. Hernandez,
attorney-in-fact
</Table>
II-12
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Lewisville, state of
Texas, on the 7th day of October, 2002.
FAVAR CONCEPTS, LTD.,
a Delaware corporation
By: /s/ CARLOS M. HERNANDEZ
------------------------------------
Carlos M. Hernandez
Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 7th day of October, 2002.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
* President and Director
- ------------------------------------------------- (Principal Executive Officer)
Scott M. Northcutt
* Vice President, Treasurer and Director
- ------------------------------------------------- (Principal Financial and Accounting Officer)
Neal J. Rider
/s/ CARLOS M. HERNANDEZ Director
- -------------------------------------------------
Carlos M. Hernandez
*By: /s/ CARLOS M. HERNANDEZ
-----------------------------------------
Carlos M. Hernandez,
attorney-in-fact
</Table>
II-13
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Lewisville, state of
Texas, on the 7th day of October, 2002.
FLEMING FOOD MANAGEMENT CO., L.L.C.,
an Oklahoma limited liability company
By: FLEMING COMPANIES, INC., its sole
member
By: /s/ CARLOS M. HERNANDEZ
------------------------------------
Carlos M. Hernandez
Senior Vice President,
General Counsel and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 7th day of October, 2002.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
* Chairman, President, Chief Executive Officer and
- ------------------------------------------------- Manager (Principal Executive Officer)
E. Stephen Davis
* Vice President and Treasurer
- ------------------------------------------------- (Principal Financial and Accounting Officer)
Mark D. Shapiro
/s/ CARLOS M. HERNANDEZ Manager
- -------------------------------------------------
Carlos M. Hernandez
*By: /s/ CARLOS M. HERNANDEZ
-----------------------------------------
Carlos M. Hernandez,
attorney-in-fact
</Table>
II-14
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Lewisville, state of
Texas, on the 7th day of October, 2002.
FLEMING FOODS OF TEXAS, L.P.,
an Oklahoma limited partnership
By: FLEMING COMPANIES, INC., its
general partner
By: /s/ CARLOS M. HERNANDEZ
------------------------------------
Carlos M. Hernandez
Senior Vice President,
General Counsel and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 7th day of October, 2002.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
* President and Chief Executive Officer
- ------------------------------------------------- (Principal Executive Officer)
E. Stephen Davis
* Vice President and Treasurer
- ------------------------------------------------- (Principal Financial and Accounting Officer)
Mark D. Shapiro
*By: /s/ CARLOS M. HERNANDEZ
-----------------------------------------
Carlos M. Hernandez,
attorney-in-fact
</Table>
II-15
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Lewisville, state of
Texas, on the 7th day of October, 2002.
FLEMING INTERNATIONAL LTD.,
an Oklahoma corporation
FLEMING WHOLESALE, INC.,
a Nevada corporation
LAS, INC.,
an Oklahoma corporation
RFS MARKETING SERVICES, INC.,
an Oklahoma corporation
By: /s/ CARLOS M. HERNANDEZ
------------------------------------
Carlos M. Hernandez
Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 7th day of October, 2002.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
* President and Director
- ------------------------------------------------- (Principal Executive Officer)
Neal J. Rider
* Vice President, Treasurer, Assistant Secretary
- ------------------------------------------------- and Director (Principal Financial and Accounting
Mark D. Shapiro Officer)
/s/ CARLOS M. HERNANDEZ Director
- -------------------------------------------------
Carlos M. Hernandez
*By: /s/ CARLOS M. HERNANDEZ
-----------------------------------------
Carlos M. Hernandez,
attorney-in-fact
</Table>
II-16
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Lewisville, state of
Texas, on the 7th day of October, 2002.
FLEMING SUPERMARKETS OF FLORIDA, INC.,
a Florida corporation
By: /s/ CARLOS M. HERNANDEZ
------------------------------------
Carlos M. Hernandez
Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 7th day of October, 2002.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
* President
- ------------------------------------------------- (Principal Executive Officer)
Scott Nicholson
* Vice President, Treasurer, Assistant Secretary
- ------------------------------------------------- and Director (Principal Financial and Accounting
Mark D. Shapiro Officer)
* Director
- -------------------------------------------------
Neal J. Rider
/s/ CARLOS M. HERNANDEZ Director
- -------------------------------------------------
Carlos M. Hernandez
*By: /s/ CARLOS M. HERNANDEZ
-----------------------------------------
Carlos M. Hernandez,
attorney-in-fact
</Table>
II-17
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Lewisville, state of
Texas, on the 7th day of October, 2002.
FLEMING TRANSPORTATION SERVICE, INC.,
an Oklahoma corporation
By: /s/ CARLOS M. HERNANDEZ
------------------------------------
Carlos M. Hernandez
Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 7th day of October, 2002.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
* President and Director
- ------------------------------------------------- (Principal Executive Officer)
E. Stephen Davis
* Vice President, Treasurer and Assistant Secretary
- ------------------------------------------------- (Principal Financial and Accounting Officer)
Neal J. Rider
/s/ CARLOS M. HERNANDEZ Director
- -------------------------------------------------
Carlos M. Hernandez
* Director
- -------------------------------------------------
William A. Merrigan
*By: /s/ CARLOS M. HERNANDEZ
-----------------------------------------
Carlos M. Hernandez,
attorney-in-fact
</Table>
II-18
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Lewisville, state of
Texas, on the 7th day of October, 2002.
FOOD 4 LESS BEVERAGE COMPANY, INC.,
a Texas corporation
By: *
------------------------------------
Charles L. Hall
Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 7th day of October, 2002.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
* President, Secretary and Director
- ------------------------------------------------- (Principal Executive Officer)
Charles L. Hall
*By: /s/ CARLOS M. HERNANDEZ
-----------------------------------------
Carlos M. Hernandez,
attorney-in-fact
</Table>
II-19
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Lewisville, state of
Texas, on the 7th day of October, 2002.
FUELSERV, INC.,
a Delaware corporation
By: /s/ CARLOS M. HERNANDEZ
------------------------------------
Carlos M. Hernandez
Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 7th day of October, 2002.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
* Chief Executive Officer, President and Director
- ------------------------------------------------- (Principal Executive Officer)
J.R. Campbell
* Vice President and Treasurer
- ------------------------------------------------- (Principal Financial and Accounting Officer)
Matthew H. Hildreth
/s/ CARLOS M. HERNANDEZ Director
- -------------------------------------------------
Carlos M. Hernandez
* Director
- -------------------------------------------------
Mark D. Shapiro
*By: /s/ CARLOS M. HERNANDEZ
-----------------------------------------
Carlos M. Hernandez,
attorney-in-fact
</Table>
II-20
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Lewisville, state of
Texas, on the 7th day of October, 2002.
GATEWAY INSURANCE AGENCY, INC.
a Wisconsin corporation
By: /s/ CARLOS M. HERNANDEZ
------------------------------------
Carlos M. Hernandez
Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 7th day of October, 2002.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
* President and Director
- ------------------------------------------------- (Principal Executive Officer)
Neal J. Rider
* Vice President, Treasurer, Assistant Secretary
- ------------------------------------------------- and Director
Matthew H. Hildreth (Principal Financial and Accounting Officer)
/s/ CARLOS M. HERNANDEZ Director
- -------------------------------------------------
Carlos M. Hernandez
*By: /s/ CARLOS M. HERNANDEZ
-----------------------------------------
Carlos M. Hernandez,
attorney-in-fact
</Table>
II-21
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Lewisville, state of
Texas, on the 7th day of October, 2002.
HEAD DISTRIBUTING COMPANY,
a Georgia corporation
By: /s/ CARLOS M. HERNANDEZ
------------------------------------
Carlos M. Hernandez
Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 7th day of October, 2002.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
* President and Director
- ------------------------------------------------- (Principal Executive Officer)
Neal J. Rider
* Treasurer and Director
- ------------------------------------------------- (Principal Financial and Accounting Officer)
Matthew H. Hildreth
/s/ CARLOS M. HERNANDEZ Secretary and Director
- -------------------------------------------------
Carlos M. Hernandez
*By: /s/ CARLOS M. HERNANDEZ
-----------------------------------------
Carlos M. Hernandez,
attorney-in-fact
</Table>
II-22
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Lewisville, state of
Texas, on the 7th day of October, 2002.
PIGGLY WIGGLY COMPANY,
an Oklahoma corporation
By: /s/ CARLOS M. HERNANDEZ
------------------------------------
Carlos M. Hernandez
Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 7th day of October, 2002.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
* President
- ------------------------------------------------- (Principal Executive Officer)
Jimmy D. Garrison
* Vice President, Treasurer, Assistant Secretary
- ------------------------------------------------- and Director (Principal Financial and Accounting
Neal J. Rider Officer)
/s/ CARLOS M. HERNANDEZ Director
- -------------------------------------------------
Carlos M. Hernandez
* Director
- -------------------------------------------------
J. R. Campbell
*By: /s/ CARLOS M. HERNANDEZ
-----------------------------------------
Carlos M. Hernandez,
attorney-in-fact
</Table>
II-23
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Lewisville, state of
Texas, on the 7th day of October, 2002.
PROGRESSIVE REALTY, INC.,
an Oklahoma corporation
By: /s/ CARLOS M. HERNANDEZ
------------------------------------
Carlos M. Hernandez
Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 7th day of October, 2002.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
* President and Director
- ------------------------------------------------- (Principal Executive Officer)
Charles L. Hall
* Vice President, Treasurer, Assistant Secretary
- ------------------------------------------------- and Director
Neal J. Rider (Principal Financial and Accounting Officer)
/s/ CARLOS M. HERNANDEZ Director
- -------------------------------------------------
Carlos M. Hernandez
*By: /s/ CARLOS M. HERNANDEZ
-----------------------------------------
Carlos M. Hernandez,
attorney-in-fact
</Table>
II-24
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Lewisville, state of
Texas, on the 7th day of October, 2002.
RAINBOW FOOD GROUP, INC.,
a Nevada corporation
RETAIL INVESTMENTS, INC.
a Nevada corporation
By: *
------------------------------------
Timothy M. Otte
Vice President, Secretary and
Treasurer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 7th day of October, 2002.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
* President and Director
- ------------------------------------------------- (Principal Executive Officer)
James R. Vaughan
* Vice President, Secretary, Treasurer and Director
- ------------------------------------------------- (Principal Financial and Accounting Officer)
Timothy M. Otte
* Director
- -------------------------------------------------
Monte L. Miller
*By: /s/ CARLOS M. HERNANDEZ
-----------------------------------------
Carlos M. Hernandez,
attorney-in-fact
</Table>
II-25
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Lewisville, state of
Texas, on the 7th day of October, 2002.
RICHMAR FOODS, INC.,
a California corporation
By: /s/ CARLOS M. HERNANDEZ
------------------------------------
Carlos M. Hernandez
Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 7th day of October, 2002.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
* President and Director
- ------------------------------------------------- (Principal Executive Officer)
J. R. Campbell
* Vice President, Treasurer and Assistant Secretary
- ------------------------------------------------- (Principal Financial and Accounting Officer)
Mark D. Shapiro
* Director
- -------------------------------------------------
Neal J. Rider
/s/ CARLOS M. HERNANDEZ Director
- -------------------------------------------------
Carlos M. Hernandez
*By: /s/ CARLOS M. HERNANDEZ
-----------------------------------------
Carlos M. Hernandez,
attorney-in-fact
</Table>
II-26
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Lewisville, state of
Texas, on the 7th day of October, 2002.
SCRIVNER TRANSPORTATION, INC.,
an Oklahoma corporation
By: /s/ CARLOS M. HERNANDEZ
------------------------------------
Carlos M. Hernandez
Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 7th day of October, 2002.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
* President and Director
- ------------------------------------------------- (Principal Executive Officer)
Neal J. Rider
* Vice President, Treasurer, Assistant Secretary
- ------------------------------------------------- and Director
Matthew H. Hildreth (Principal Financial and Accounting Officer)
/s/ CARLOS M. HERNANDEZ Director
- -------------------------------------------------
Carlos M. Hernandez
*By: /s/ CARLOS M. HERNANDEZ
-----------------------------------------
Carlos M. Hernandez,
attorney-in-fact
</Table>
II-27
EXHIBIT INDEX
<Table>
<Caption>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------
4.1 Indenture, dated as of June 18, 2002, by and between the
Company and Manufacturers and Traders Trust Company, as
Trustee, regarding the 9 1/4% Senior Notes due 2010, filed
as Exhibit 4.1 to the Current Report on Form 8-K filed on
June 25, 2002 and incorporated herein by reference.
4.2 First Supplemental Indenture, dated as of June 18, 2002, by
and among the Company, the Subsidiary Guarantors party
thereto and Manufacturers and Traders Trust Company, as
Trustee, regarding the 9 1/4% Senior Subordinated Notes due
2010, filed as Exhibit 4.2 to the Current Report on Form 8-K
filed on June 25, 2002 and incorporated herein by reference.
4.3 Credit Agreement dated as of June 18, 2002 by and among the
Company, the lenders from time to time party thereto,
Deutsche Bank Trust Company Americas, as Administrative
Agent, JPMorgan Chase Bank and Citicorp North America, Inc.,
as Syndication Agents, Lehman Commercial Paper Inc. and
Wachovia Bank, National Association, as Documentation
Agents, Deutsche Bank Securities Inc. and J.P. Morgan
Securities Inc., as Joint Book Managers, and Deutsche Bank
Securities Inc., J.P. Morgan Securities Inc. and Salomon
Smith Barney Inc., as Joint Lead Arrangers, filed as Exhibit
10.1 to the Current Report on Form 8-K filed on June 25,
2002 and incorporated herein by reference.
4.4 Security Agreement dated as of June 18, 2002 by and among
the Company, the Grantors party thereto and Deutsche Bank
Trust Company Americas, as Collateral Agent, filed as
Exhibit 10.2 to the Current Report on Form 8-K filed on June
25, 2002 and incorporated herein by reference.
4.5 Guarantee Agreement dated as of June 18, 2002 by and among
the Guarantors party thereto and Deutsche Bank Trust Company
Americas, as Administrative Agent, filed as Exhibit 10.3 to
the Current Report on Form 8-K filed on June 25, 2002 and
incorporated herein by reference.
4.6 Pledge Agreement dated as of June 18, 2002 by and among the
Company, the Pledgors party thereto and Deutsche Bank Trust
Company Americas, as Collateral Agent, filed as Exhibit 10.4
to the Current Report on Form 8-K filed on June 25, 2002 and
incorporated herein by reference.
4.7 Indenture, dated as of April 15, 2002, among Fleming
Companies, Inc., the Subsidiary Guarantors named therein and
Manufacturers and Traders Trust Company, as Trustee,
regarding the 9 7/8% Senior Subordinated Notes due 2012,
filed as Exhibit 4.20 to Quarterly Report on Form 10-Q for
the quarter ended April 20, 2002 and incorporated herein by
reference.
4.8 Registration Rights Agreement, dated as of April 15, 2002,
by and among Fleming Companies, the Subsidiary Guarantors
named therein and the Initial Purchasers named therein
regarding the registration of the 9 7/8% Senior Subordinated
Notes due 2012, filed as Exhibit 4.21 to Quarterly Report on
Form 10-Q for the quarter ended April 20, 2002 and
incorporated herein by reference.
4.9 Form of 9 7/8% Senior Subordinated Note due 2012.*
4.10 Indenture, dated as of October 15, 2001, among Fleming
Companies, Inc., the Subsidiary Guarantors named therein and
Manufacturers and Traders Trust Company, as Trustee,
regarding the 10 5/8% Senior Subordinated Notes due 2007,
filed as Exhibit 4.20 to Quarterly Report on Form 10-Q for
the quarter ended October 6, 2001 and incorporated herein by
reference.
4.11 Indenture, dated as of March 15, 2001, among Fleming
Companies, Inc., the Subsidiary Guarantors named therein and
Bankers Trust Company, as Trustee, regarding the 10 1/8%
Senior Notes due 2008, filed as Exhibit 4.9 to the
Registration Statement on Form S-4 (333-60176) filed on May
3, 2001 and incorporated herein by reference.
4.12 Indenture, dated as of March 15, 2001, among Fleming
Companies, Inc., the Subsidiary Guarantors named therein and
Bank One, N.A., as Trustee, regarding the 5 1/4% Convertible
Senior Subordinated Notes due 2009, filed as Exhibit 4.3 to
the Registration Statement on Form S-3 (333-60178) filed on
May 3, 2001 and incorporated herein by reference.
4.13 Indenture, dated as of July 25, 1997, among Fleming
Companies, Inc., the Subsidiary Guarantors named therein and
Manufacturers and Traders Trust Company, as Trustee,
regarding the 10 5/8% Senior Subordinated Notes due 2007,
filed as Exhibit 4.20 to the Quarterly Report on Form 10-Q
for the quarter ended July 12, 1997 and incorporated herein
by reference.
</Table>
<Table>
<Caption>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------
4.14 Supplement, dated as of September 20, 2001, to the
Indenture, dated as of July 25, 1997, among Fleming
Companies, Inc., the Subsidiary Guarantors named therein and
Manufacturers and Traders Trust Company regarding the
10 5/8% Senior Subordinated Notes due 2007, filed as Exhibit
4.18 to the Quarterly Report on Form 10-Q for quarter ended
October 6, 2001 and incorporated herein by reference.
5.1 Opinion of Latham & Watkins.*
5.2 Opinion of McAfee & Taft.*
12.1 Statement of Computation of Ratios.*
15.1 Letter from Independent Accountants as to Unaudited Interim
Financial Information.
23.1 Consent of Latham & Watkins (included in Exhibit 5.1).*
23.2 Consent of McAfee & Taft (included in Exhibit 5.2).*
23.3 Consent of Deloitte & Touche LLP.
23.4 Consent of Deloitte & Touche LLP.
24.1 Powers of Attorney (included on signature pages hereto).*
25.1 Statement of Eligibility under the Trust Indenture Act of
1939 of a Corporation Designated to Act as Trustee of
Manufacturers and Traders Trust Company (Form T-1).*
99.1 Letter of Transmittal with Respect to the Exchange Offer.*
99.2 Notice of Guaranteed Delivery with Respect to the Exchange
Offer.*
99.3 Letter to DTC Participants Regarding the Exchange Offer.*
99.4 Letter to Beneficial Holders Regarding the Exchange Offer.*
99.5 Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.*
</Table>
- ---------------
* Filed previously.