<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 7, 1997
REGISTRATION NO. 333-21411
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO.3
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
ROSE HILLS COMPANY
(FORMERLY KNOWN AS ROSE HILLS ACQUISITION CORP.)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 7261 13-3915765
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION INDUSTRIAL IDENTIFICATION NUMBER)
OF INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
</TABLE>
------------------------
3888 SOUTH WORKMAN MILL ROAD
WHITTIER, CALIFORNIA 90601
(562) 692-1212
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
KENDALL E. NUNGESSER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
ROSE HILLS COMPANY
3888 SOUTH WORKMAN MILL ROAD
WHITTIER, CALIFORNIA 90601
(562) 692-1212
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
Copies to:
WILSON S. NEELY, ESQ.
SIMPSON THACHER & BARTLETT
425 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
------------------------
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, please check the following box. / /
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE 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 OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED AUGUST 7, 1997
PROSPECTUS
ROSE HILLS COMPANY
(FORMERLY KNOWN AS ROSE HILLS ACQUISITION CORP.)
OFFER TO EXCHANGE $80,000,000 OF ITS 9 1/2% SENIOR SUBORDINATED NOTES DUE 2004
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT FOR $80,000,000 OF ITS
OUTSTANDING 9 1/2% SENIOR SUBORDINATED NOTES DUE 2004
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1997, UNLESS EXTENDED (THE 'EXPIRATION DATE').
------------------------
Rose Hills Company (formerly known as Rose Hills Acquisition Corp.) (the
'Issuer') hereby offers to exchange (the 'Exchange Offer') up to $80,000,000
aggregate principal amount of its new 9 1/2% Senior Subordinated Notes due 2004
(the 'Exchange Notes') for $80,000,000 aggregate principal amount of its
outstanding 9 1/2% Senior Subordinated Notes due 2004 (the 'Notes'). THE ISSUER
HAD $74.5 MILLION OF SENIOR INDEBTEDNESS (AS DEFINED ON PAGE 77) OUTSTANDING, NO
SUBORDINATED INDEBTEDNESS OUTSTANDING AND NO FIRM ARRANGEMENTS TO ISSUE ANY
SIGNIFICANT SUBORDINATED INDEBTEDNESS, IN EACH CASE AS OF JUNE 30, 1997, AND
ITS SUBSIDIARIES HAD APPROXIMATELY $30.4 MILLION OF LIABILITIES OUTSTANDING AS
OF SUCH DATE. THE EXCHANGE NOTES WILL BE EFFECTIVELY SUBORDINATED TO ALL
OUTSTANDING LIABILITIES OF THE ISSUER AND ITS SUBSIDIARIES, WHICH TOTALLED
APPROXIMATELY $104.9 MILLION IN THE AGGREGATE AS OF JUNE 30, 1997. THE ISSUER
CURRENTLY HAS NO OUTSTANDING INDEBTEDNESS TO WHICH THE EXCHANGE NOTES WOULD BE
SENIOR. THE INDENTURE (AS DEFINED HEREIN) DOES NOT GENERALLY LIMIT THE ABILITY
OF THE ISSUER TO SECURE SENIOR INDEBTEDNESS. SUBJECT TO CERTAIN REQUIREMENTS
WITH RESPECT TO THE AMOUNT OF ADDITIONAL INDEBTEDNESS (AS DEFINED HEREIN) THAT
MAY BE INCURRED BY THE ISSUER AND/OR ANY OF ITS SUBSIDIARIES, THE INDENTURE DOES
NOT CONTAIN ANY LIMIT ON THE AMOUNT OF DEBT THAT MAY BE SENIOR TO OR ON A PARITY
WITH THE EXCHANGE NOTES.
The terms of the Exchange Notes are identical in all material respects
(including principal amount, interest rate and maturity) to the terms of the
Notes for which they may be exchanged pursuant to this offer, except that the
Exchange Notes will be freely transferable by holders thereof (other than as
provided below) and are issued free from any covenant regarding registration.
The Exchange Notes will evidence the same indebtedness as the Notes and contain
terms which are identical in all material respects to the terms of the Notes
that are to be exchanged therefor. The Notes were sold by the Issuer to finance,
in part, the Issuer's acquisition (the 'Acquisition') of the cemetery related
assets and liabilities of Rose Hills Memorial Park Association (the
'Association') which represent the largest single location cemetery in the
United States (the 'Cemetery'), as well as the separately owned mortuary
operations of Roses, Inc. and its subsidiaries located on the grounds of the
Cemetery in Los Angeles County, California (the 'Mortuary'; together with the
Cemetery, 'Rose Hills'). The Issuer is indirectly owned by Blackstone Capital
Partners II Merchant Banking Fund L.P. and its affiliates (collectively,
'Blackstone') and by affiliates of The Loewen Group Inc. (The Loewen Group Inc.,
collectively with its affiliates, 'Loewen'). In connection with the Acquisition,
which was consummated on November 19, 1996, 14 additional funeral homes and two
combination funeral home and cemetery properties previously owned or leased by
Loewen and located in Los Angeles, San Bernardino and northern Orange Counties
(the 'Satellite Properties') were contributed to subsidiaries of the Issuer.
Interest on the Exchange Notes will be payable semi-annually on May 15 and
November 15 of each year, commencing May 15, 1997. The Exchange Notes will
mature on November 15, 2004. The Exchange Notes will be unsecured senior
subordinated obligations of the Issuer, will be subordinated in right of payment
to all existing and future Senior Indebtedness of the Issuer (which includes all
indebtedness of the Issuer under the Bank Credit Facilities (as defined herein))
and
(Cover continued on next page)
SEE 'RISK FACTORS' BEGINNING ON PAGE 17 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY INVESTORS IN CONNECTION WITH THE EXCHANGE OFFER AND AN
INVESTMENT IN THE EXCHANGE NOTES.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
, 1997
<PAGE>
TERMS OF THE EXCHANGE NOTES
<TABLE>
<CAPTION>
Issuer.................. Rose Hills Company (formerly known as Rose Hills
Acquisition Corp.).
<S> <C>
Notes Offered........... $80 million principal amount of 9 1/2% Senior
Subordinated Notes due 2004.
Maturity Date........... November 15, 2004.
Interest Payment May 15 and November 15 of each year, commencing May 15,
Dates................. 1997.
Ranking................. The Exchange Notes will be unsecured senior
subordinated obligations of the Issuer, will be
subordinated in right of payment to all existing and
future Senior Indebtedness (as defined herein) of the
Issuer (which includes all indebtedness of the Issuer
under the Bank Credit Facilities) and effectively
subordinated to all existing and future liabilities of
its subsidiaries and will rank senior in right of
payment to all other subordinated indebtedness of the
Issuer ('Senior Indebtedness'). The Issuer had $74.5
million of Senior Indebtedness outstanding as of June
30, 1997, and its subsidiaries had $30.4 million of
liabilities outstanding as of that date. The Company
had no subordinated indebtedness outstanding as of that
date and had no firm arrangements to issue any
significant subordinated indebtedness as of that date.
The Exchange Notes will be effectively subordinated to
all existing liabilities of the Issuer and its
subsidiaries, which totalled $104.9 million in the
aggregate as of June 30, 1997. See 'Description of
Exchange Notes--Subordination.' The Indenture does not
generally limit the ability of the Issuer to secure
Senior Indebtedness subject to certain requirements
with respect to the amount of additional Indebtedness
that may be incurred by the Issuer and/or any of its
Subsidiaries. See 'Description of Exchange
Notes--Certain Covenants--Limitation on Indebtedness.'
Optional Redemption..... The Exchange Notes will be redeemable at the option of
the Issuer, in whole or in part, at any time on or
after November 15, 2000 at a premium declining to par
in 2003, plus accrued and unpaid interest, if any, to
the redemption date. See 'Description of Exchange
Notes--Redemption--Optional Redemption.'
The Issuer has established a sinking fund for the
benefit of the Exchange Notes.
Change of Control....... In the event of a Change of Control (as defined
herein), the Issuer will be obligated to make an offer
to purchase the then outstanding Exchange Notes at a
purchase price equal to 101% of the principal amount
thereof, plus accrued and unpaid interest, if any, to
the purchase date. The Issuer's ability to purchase the
Exchange Notes if a Change of Control occurs will be
dependent upon obtaining third-party financing to the
extent it does not have available funds to meet its
purchase obligations. There can be no assurance that
the Issuer will be able to obtain such financing. The
term 'Change of Control' is limited to certain
specified transactions (which do not include the
purchase by Loewen of the shares of RH Holdings held by
Blackstone) and may not include other events that might
adversely affect the financial condition of the Issuer
or result in a
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
downgrade of the credit rating of the Exchange Notes.
Pursuant to the Bank Credit Facilities, the Company
would be required to satisfy its obligations thereunder
prior to its purchase of the Exchange Notes upon a
Change of Control in accordance with the Indenture. As
of June 30, 1997, the aggregate amount of the Company's
indebtedness under the Bank Credit Facilities was $74.5
million. See 'Description of Exchange Notes--Certain
Covenants--Change of Control.'
Certain Covenants....... The Indenture contains certain covenants by the Issuer
and its Subsidiaries (as defined herein), including,
but not limited to, covenants with respect to
limitations on the following matters: (i) the
incurrence of additional indebtedness, (ii) certain
payments, including dividends and investments, (iii)
the creation of liens, (iv) sales of assets and
preferred stock, (v) transactions with interested
persons, (vi) payment restrictions affecting
subsidiaries, (vii) sale-leaseback transactions and
(viii) mergers and consolidations. See 'Description of
Exchange Notes--Certain Covenants.' In addition, the
Bank Credit Agreement (as defined herein) contains
certain covenants that, among other things, restrict
the ability of the Issuer and its subsidiaries to
dispose of assets, incur additional indebtedness,
prepay other indebtedness (including the Exchange
Notes), pay dividends or make certain restricted
payments, create liens on assets, engage in mergers or
acquisitions or enter into leases or transactions with
affiliates. See 'Description of Bank Credit
Facilities.' Immediately after giving effect to the
Acquisition Transaction, the Company was in material
compliance with all financial and operating covenants
contained in the Indenture and the Bank Credit
Agreement.
Absence of a Public The Exchange Notes are new securities, and there is
Market for the currently no established market for the Exchange Notes.
Exchange Notes........ The Exchange Notes will generally be freely
transferable (subject to the restrictions discussed
elsewhere herein) but will be new securities for which
there will not initially be a market. Accordingly,
there can be no assurance as to the development or
liquidity of any market for the Exchange Notes. The
Initial Purchaser has advised the Issuer that it
currently intends to make a market in the Exchange
Notes. However, the Initial Purchaser is not obligated
to do so, and any market making with respect to the
Exchange Notes may be discontinued at any time without
notice. The Issuer does not intend to apply for a
listing of the Exchange Notes on a securities exchange.
</TABLE>
RISK FACTORS
Holders of Notes should consider carefully the information set forth in
this Prospectus and, in particular, should evaluate the specific factors set
forth under 'Risk Factors' before tendering Notes in exchange for Exchange
Notes.
10
<PAGE>
SUMMARY PRO FORMA AND OTHER FINANCIAL INFORMATION
<TABLE>
<CAPTION>
FOR THE
YEAR ENDED
DECEMBER 31,
1996
--------------
(IN MILLIONS)
<S> <C>
PRO FORMA INCOME STATEMENT DATA:
Revenues:
Funeral sales and services................................ $ 29.3
Cemetery sales and services............................... 25.0
Other..................................................... 5.2
-------
59.5
-------
Cost of sales:
Funeral sales and services................................ 12.6
Cemetery sales and services............................... 6.5
-------
19.1
-------
Selling, general and administrative expenses................. 34.9
Amortization of goodwill and other intangibles............... 3.2
-------
Operating income............................................. 2.3
-------
Other income and expense:
Interest expense.......................................... 16.1
Interest income........................................... (0.5)
-------
15.6
-------
Loss before taxes............................................ (13.3)
Income tax benefit........................................... (3.8)
-------
Net loss..................................................... $ (9.5)
-------
-------
PRO FORMA OTHER FINANCIAL DATA AND RATIOS:
EBITDA(1).................................................... $ 14.4
Cash flows from(2):
Operating activities...................................... 10.6
Investing activities...................................... (251.3)
Financing activities...................................... 247.4
Capital expenditures......................................... (11.1)
Depreciation and amortization(3)............................. 7.1
Cash interest expense(4)..................................... 14.4
Ratio of EBITDA to cash interest expense..................... 1.0x
Ratio of earnings to fixed charges(5)........................ --
OTHER FINANCIAL INFORMATION:
Adjusted EBITDA(6)........................................... 19.0
Ratio of adjusted EBITDA to cash interest expense............ 1.3x
</TABLE>
- ------------------
(1) EBITDA is defined as income (loss) before income taxes plus interest
expense, depreciation and amortization, the non-cash portion of cemetery
cost of sales and certain reductions of selling, general and administrative
expenses which are expected to have an ongoing impact. EBITDA is presented
because Management believes that EBITDA provides relevant and useful
information and it is a widely accepted
(Footnotes continued on next page)
12
<PAGE>
(Footnotes continued from previous page)
financial indicator of a company's ability to incur and service debt.
However, EBITDA should not be considered in isolation, as a substitute for
net income or cash flow data prepared in accordance with generally accepted
accounting principles or as a measure of a company's profitability or
liquidity. Also, this measure of EBITDA may not be comparable to similar
measures reported by other companies.
The calculation of EBITDA is shown below:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1996
-----------------
(IN MILLIONS)
<S> <C>
Loss before taxes.......................................... $ (13.3)
Net interest............................................... 15.6
Depreciation............................................... 3.9
Amortization............................................... 3.2
Noncash portion of cemetery cost of sales.................. 1.1
Net reduction in selling, general and administrative
expenses................................................. 2.0
Elimination of intercompany expense........................ 1.9
-------
$ 14.4
-------
-------
</TABLE>
The net reduction in selling, general and administrative expenses
results from new contractual arrangements involving Rose Hills,
Blackstone and Loewen (see Note D to 'Unaudited Pro Forma Statements
of Operations'). The elimination of intercompany expense pertains to
certain intercompany expenses between the Mortuary and the Cemetery
(see Note B to 'Unaudited Pro Forma Statements of Operations').
(2) Pro forma cash flows from operating activities reflect the impact of the pro
forma adjustments on net income, depreciation and amortization. Pro forma
cash flows from investing activities are assumed to be unchanged from the
historic cash flows. Pro forma cash flows from financing activities reflect
the cash flows relating to the Acquisition and the offering of the Notes
which are assumed to occur as of the Acquisition Closing Date.
(3) The amount does not include amortization of deferred financing costs, which
are included in interest expense.
(4) Cash interest expense is defined as interest expense less amortization of
deferred financing costs.
(5) Earnings used in computing the ratio of earnings to fixed charges consist of
loss before provision for income taxes plus fixed charges. Fixed charges
consist of interest expense, including amortization of debt issuance costs,
and a portion of operating lease rental expense deemed to be representative
of the interest factor. Earnings were insufficient to cover fixed charges in
the year ended December 31, 1996 by $13.3 million.
(6) Adjusted EBITDA is defined as EBITDA plus (i) the revenue impact of a change
in the investment strategy of the endowment care fund (the 'Fund'), which
the Company expects to increase from $1.8 million actually generated in 1996
to $3.4 million on an illustrative basis and (ii) non-recurring
transaction-related expenses for legal, accounting and investment banking
services which amounted to $3.0 million for the year ended December 31, 1996
(See 'Unaudited Pro Forma Financial Information').
13
<PAGE>
RISK FACTORS
In addition to the other information in this Prospectus, holders of Notes
should consider carefully the following factors before tendering their Notes for
Exchange Notes offered hereby. The risk factors set forth below are generally
applicable to the Notes as well as the Exchange Notes.
SUBSTANTIAL LEVERAGE; ABILITY TO SERVICE INDEBTEDNESS
The Issuer has incurred substantial indebtedness in connection with the
Acquisition Transaction and is highly leveraged. At June 30, 1997, the Issuer's
total indebtedness was $158.8 million, its debt to total capitalization ratio
was 55.0% and the Company had consolidated liabilities (including indebtedness)
of approximately $184.9 million. In the ordinary course of business, the Company
has incurred and, subject to certain covenants and financial tests set out in
the Bank Credit Agreement (as defined herein) and the Indenture, will continue
to incur additional indebtedness to fund working capital requirements and for
other corporate purposes, including to finance acquisitions. See
'Capitalization,' 'Description of Bank Credit Facilities,' 'Description of
Exchange Notes' and the Consolidated Financial Statements, including the notes
thereto, appearing elsewhere in this Prospectus.
The degree to which the Company is leveraged could have important
consequences to holders of the Exchange Notes, including: (i) the Company's
ability to obtain financing in the future for working capital or other purposes
may be impaired; (ii) a substantial portion of the Company's cash flow from
operations must be dedicated to the payment of principal and interest on its
indebtedness; (iii) the indebtedness outstanding under the Bank Credit
Facilities is secured and will mature prior to the maturity of the Exchange
Notes; (iv) certain of the Company's borrowings are at variable rates of
interest, which could result in higher interest expense in the event of
increases in interest rates; and (v) the Company's high degree of leverage makes
it more vulnerable to economic downturns and may limit its ability to withstand
competitive pressures.
The Company believes that, based upon current levels of operations and
anticipated growth and availability under the Revolving Credit Facility, it will
be able to meet its principal and interest payment obligations. There can be no
assurance, however, that the Company's business will generate sufficient cash
flow from operations or that future working capital borrowings will be available
in an amount sufficient to enable the Company to service its indebtedness,
including the Exchange Notes. If the Company cannot generate sufficient cash
flow from operations or borrow under the Revolving Credit Facility to meet such
obligations, then the Company may be required to take certain actions, including
reducing capital expenditures, restructuring its debt, selling assets or seeking
additional equity in order to avoid an Event of Default (as defined herein).
There can be no assurance that such actions could be effected or would be
effective in allowing the Company to meet such obligations. See 'Management's
Discussion and Analysis of Financial Condition and Results of Operations
- --Liquidity and Capital Resources.'
EXCHANGE NOTES REPRESENT UNSECURED, SUBORDINATED CLAIMS; NO LIMITATION ON
ADDITIONAL INDEBTEDNESS
The Exchange Notes will be unsecured obligations of the Issuer that are
subordinated in right of payment to all Senior Indebtedness of the Issuer,
including all indebtedness under the Bank Credit Facilities. As of June 30,
1997, approximately $74.5 million of Senior Indebtedness was outstanding and the
Issuer had borrowing availability of approximately $25.0 million under the
Revolving Credit Facility. The Indenture and the Bank Credit Facilities permit
the Company to incur additional Senior Indebtedness, provided that certain
conditions are met, and the Company expects from time to time to incur
additional Senior Indebtedness. Furthermore, the Indenture does not limit the
Issuer's ability to secure additional or replacement Senior Indebtedness. In the
event of the insolvency, liquidation, reorganization, dissolution or other
winding up of the Issuer or upon a default in payment with respect to, or the
acceleration of, or if a judicial proceeding is pending with respect to any
default under, any Senior Indebtedness, the Bank Lenders and any other creditors
who are holders of Senior Indebtedness must be paid in full before a holder of
the Exchange Notes may be paid. Accordingly, there may be insufficient assets
remaining after such payments to pay principal or interest on the Exchange
Notes. See 'Description of Exchange Notes--Subordination.' In addition, the
Exchange Notes will be structurally subordinated to any liabilities or
obligations of the Issuer's subsidiaries as described below under '--Holding
Company Structure.'
17
<PAGE>
The Issuer's obligations under the Bank Credit Facilities are secured by
substantially all of the assets of the Issuer and its subsidiaries. If a default
occurs under the Bank Credit Agreement and the Issuer is unable to repay such
borrowings, the Bank Lenders would have the right to exercise the remedies
available to secured creditors under applicable law and pursuant to the Bank
Credit Agreement. Accordingly, the Bank Lenders would be entitled to payment in
full out of the assets securing such indebtedness prior to payment to holders of
the Exchange Notes. If the Bank Lenders or the holders of any other secured
indebtedness were to foreclose on the collateral securing the Issuer's
obligations to them, it is possible that there would be insufficient assets
remaining after satisfaction in full of all such indebtedness to satisfy in full
the claims of holders of the Exchange Notes.
RESTRICTIVE DEBT COVENANTS; CONSEQUENCES OF FAILURE TO COMPLY WITH DEBT
COVENANTS
The Bank Credit Agreement and the Indenture contain a number of significant
covenants that, among other things, restrict the ability of the Company to
dispose of assets, incur additional indebtedness, pay dividends, prepay
subordinated indebtedness (including, in the case of the Bank Credit Agreement,
the Exchange Notes), enter into sale and leaseback transactions, create liens,
make capital expenditures and make certain investments or acquisitions and
otherwise restrict corporate activities. In addition, under the Bank Credit
Agreement, the Company is required to satisfy specified financial ratios and
tests, including, without limitation, minimum fixed charge coverage, minimum
interest coverage, minimum net worth, maximum senior debt leverage and maximum
total debt leverage tests. The ability of the Company to comply with such
provisions may be affected by events beyond the Company's control. To the extent
that the Company does not achieve the pro forma estimates with respect to its
operations, it may not be in compliance with certain of the covenants included
in the Bank Credit Agreement. See 'Unaudited Pro Forma Financial Information.'
The breach of any of these covenants could result in a default under the Bank
Credit Agreement. See 'Description of Bank Credit Facilities.' In the event of
any such default, depending upon the actions taken by the Lenders, the Company
could be prohibited from making any payments of principal or interest on the
Exchange Notes. See 'Description of Exchange Notes--Subordination.' In
addition, the Bank Lenders could elect to declare all amounts borrowed under the
Bank Credit Facilities, together with accrued interest, to be due and payable or
could proceed against the collateral securing such indebtedness.
POTENTIAL ADVERSE CONSEQUENCES IN IMPLEMENTING BUSINESS STRATEGY
The Company's business strategy involves a number of elements which
Management may not be able to implement successfully. For example, the enactment
of price increases may result in a reduction in market share, and the
implementation of staff reductions intended to decrease general and
administrative expenses may lead to low morale and the further loss of
personnel. The strategic integration of the Satellite Properties with Rose Hills
may not result in the increase in market share hoped for, and efforts to sell
additional pre-need services and merchandise to Rose Hills' existing customer
base may not be successful. The implementation of the Administrative Services
Agreement and the clustering of Rose Hills and the Satellite Properties may
encounter operational difficulties such that the expected savings are not
realized. There can be no assurance that these adverse consequences will not
occur and, if they occur, there can be no assurance that they will not result in
a material adverse effect on the Company's results of operations.
HOLDING COMPANY STRUCTURE; RELIANCE ON SUBSIDIARIES TO SERVICE INDEBTEDNESS;
EXCHANGE NOTES SUBORDINATED TO SUBSIDIARY LIABILITIES
The Issuer is a holding company with no significant independent business
operations. Accordingly, its primary sources of cash to meet debt service and
other obligations (including payments on the Exchange Notes) are dividends and
other payments from its subsidiaries. Consequently, obligations of the Issuer to
its creditors, including holders of the Exchange Notes, are effectively
subordinated in right of payment and junior to all liabilities (including trade
payables) of the Issuer's subsidiaries. The Bank Credit Facilities are
guaranteed by each of the Issuer's subsidiaries. As of June 30, 1997, the
aggregate amount of liabilities of the Issuer's subsidiaries (excluding
intercompany indebtedness) was approximately $30.4 million.
18
<PAGE>
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
(IN MILLIONS)
<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE PERIOD
1/1-11/18 11/19-12/31
------------------------------- ----------------------
HISTORICAL (PREDECESSOR) HISTORICAL (SUCCESSOR)
------------------------------- ----------------------
SATELLITE ACQUISITION OTHER COMPANY
MORTUARY CEMETERY PROPERTIES ROSE HILLS COMPANY ADJUSTMENTS ADJUSTMENTS PRO FORMA
-------- -------- ---------- ---------------------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues:
Funeral sales and
services........... $ 17.7 $ -- $ 8.5 $ 3.1 $ -- $ -- $29.3
Cemetery sales and
services........... -- 20.2 1.8 3.0 -- -- 25.0
Other................ 2.7 1.8(A) -- 0.9 -- (0.2)(B) 5.2
-------- -------- ---- ----- ----------- ----------- ---------
20.4 22.0 10.3 7.0 -- (0.2) 59.5
-------- -------- ---- ----- ----------- ----------- ---------
Cost of sales and
services:
Funeral sales and
services........... 5.5 -- 6.3 0.8 -- -- 12.6
Cemetery sales and
services........... -- 3.9 1.6 0.8 -- 0.2(C) 6.5
-------- -------- ---- ----- ----------- ----------- ---------
5.5 3.9 7.9 1.6 -- 0.2 19.1
-------- -------- ---- ----- ----------- ----------- ---------
Selling, general and
administrative
expenses............. 14.1 16.0 1.5 3.8 -- (0.5)(B,D) 34.9
Amortization of
goodwill and other
intangibles.......... 0.1 -- -- 0.4 2.7(E) -- 3.2
-------- -------- ---- ----- ----------- ----------- ---------
Operating income....... 0.7 2.1 0.9 1.2 (2.7) 0.1 2.3
-------- -------- ---- ----- ----------- ----------- ---------
Other income and
expense:
Interest expense..... 1.5 0.1 0.8 2.0 11.7(F) -- 16.1
Other income......... (0.4) (0.1) -- (0.1) -- 0.1(B) (0.5)
-------- -------- ---- ----- ----------- ----------- ---------
1.1 -- 0.8 1.9 11.7 0.1 15.6
-------- -------- ---- ----- ----------- ----------- ---------
Income (loss) before
taxes................ (0.4) 2.1 0.1 (0.7) (14.4) -- (13.3)
Income tax expense
(benefit)............ 0.6 -- 0.1 (0.2) -- (4.3)(G) (3.8)
-------- -------- ---- ----- ----------- ----------- ---------
Net income (loss)...... $ (1.0) $ 2.1 $ -- $ (0.5) $ (14.4) $ 4.3 $(9.5)
-------- -------- ---- ----- ----------- ----------- ---------
-------- -------- ---- ----- ----------- ----------- ---------
</TABLE>
See Notes to Unaudited Pro Forma Financial Information
30
<PAGE>
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
A) Other cemetery revenues principally relate to investment income on the
Endowment Care Fund. During 1996 the Association changed its investment strategy
from capital growth to current income. The impact of a 1.0% change in the
investment return over a full year, based on the Endowment Care Fund balance in
marketable securities of $54.4 million at December 31, 1996, is an increase or
decrease in investment income of $0.5 million before taxation.
B) Represents the elimination of intercompany balances and income between
the Mortuary and the Cemetery as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD
1/1 - 11/18
--------------
(IN MILLIONS)
<S> <C>
Elimination of cemetery management fee:
Other revenue................................ $ (0.2)
-------
-------
Elimination of interest on intercompany notes:
Other income................................. 0.1
-------
-------
</TABLE>
The Unaudited Pro Forma Statements of Operations do not reflect the
elimination of certain intercompany expenses between the Mortuary and the
Cemetery as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD
1/1 - 11/18
--------------
(IN MILLIONS)
<S> <C>
Elimination of settlement of intercompany expense:
Selling, general and administrative
expense.................................... (1.9)
-------
-------
</TABLE>
C) Represents the incremental non-cash cost of cemetery sales of grave
sites, crypts and niches based on preliminary appraisals and Management's final
evaluation of the fair value of cemetery property. See Note (J). Such final
allocation and the resulting effect on net income is not expected to differ
significantly from the pro forma amounts included herein.
<TABLE>
<CAPTION>
FOR THE PERIOD
1/1 - 11/18
-----------------
(IN MILLIONS)
<S> <C>
Non-cash cost of grave sites, crypts and niches
sold:
Pro forma cost............................... $ 0.9
Less historical cost......................... (0.7)
-------
Net adjustment to cemetery cost of sales..... $ 0.2
-------
-------
</TABLE>
D) Represents the net reduction in selling, general and administrative
expenses resulting from (i) the termination of certain contractual arrangements
with executive management and between the Mortuary and the Cemetery, (ii) the
change in status of the Cemetery from a not-for-profit association to a taxable
entity and (iii) the application of purchase accounting adjustments.
<TABLE>
<CAPTION>
FOR THE PERIOD
1/1 - 11/18
-----------------
(IN MILLIONS)
<S> <C>
Employee and trustee benefits plans(1)............ $ 1.2
Cemetery management fees(2)....................... 0.2
Real estate and personal property taxes(3)........ (0.9)
-------
Net reduction..................................... $ 0.5
-------
-------
</TABLE>
--------------------------
(1) Represents the effect of applying purchase accounting to historical
benefits plan expense after taking into account that certain plans
were terminated, frozen, or otherwise discontinued after the
Acquisition Closing Date in accordance with the terms of the
definitive agreements relating to the Acquisition. See 'Certain
Related Transactions--The Acquisition.'
(2) Represents the termination of fees payable to trustees and the
elimination of cemetery management fees charged by the Mortuary to
the Cemetery pursuant to the Operating and Management Agreement that
was terminated as of the Acquisition Closing Date. See
'Business--Company Overview.'
31
<PAGE>
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION--(CONTINUED)
(3) Represents estimated incremental real estate and personal property
taxes that will be incurred as a result of the change in status of
the Cemetery from a not-for-profit association to a taxable entity.
The Unaudited Pro Forma Statements of Operations do not give effect to
certain additional cost savings resulting from new contractual arrangements
involving Rose Hills, Blackstone and Loewen.
<TABLE>
<CAPTION>
FOR THE PERIOD
1/1 - 11/18
-----------------
(IN MILLIONS)
<S> <C>
Salaries and benefits(1).......................... $ 1.8
Overhead allocation(2)............................ 0.8
Administrative Services Agreement(3).............. (0.3)
Monitoring fee(4)................................. (0.3)
-------
Net reduction..................................... $ 2.0
-------
-------
</TABLE>
--------------------------
(1) Represents the reduction of executive/owner salaries and benefits
from historic levels to new contractual amounts and the reduction of
salaries and benefits related to specifically identified job
positions that were eliminated and replaced, in part, by the
Administrative Services Agreement that was entered into on the
Acquisition Closing Date. See 'Certain Related Transactions--
Administrative Services Agreement' and 'Management.'
(2) Represents the elimination of overhead charges allocated by Loewen
to the Satellite Properties that were replaced by the Administrative
Services Agreement. See 'Certain Related Transactions--
Administrative Services Agreement.'
(3) Represents base fees payable to Loewen pursuant to the
Administrative Services Agreement. See 'Certain Related
Transactions--Administrative Services Agreement.'
(4) Represents monitoring fees payable to an affiliate of Blackstone
pursuant to the Shareholder's Agreement that was entered into on the
Acquisition Closing Date. See 'Certain Related Transactions--Payment
of Certain Fees and Expenses.'
In addition, the Unaudited Pro Forma Statements of Operations do not reflect
certain additional cost savings expected to be achieved from the changes in
operating strategy described under 'Business Strategy Following Acquisition.'
Both historical and pro forma selling, general and administrative expenses
include non-recurring transaction-related expenses for legal, accounting and
investment banking services which amounted to $3.0 million for the year ended
December 31, 1996.
E) Represents the incremental amortization of goodwill resulting from the
preliminary allocation of the purchase cost.
<TABLE>
<CAPTION>
FOR THE PERIOD
1/1 - 11/18
-----------------
(IN MILLIONS)
<S> <C>
Pro forma amortization:
Goodwill(1)..................................... $ 2.8
Covenants not to compete(2)..................... 0.2
Less historical amortization...................... (0.3)
-------
Net adjustment.................................... $ 2.7
-------
-------
</TABLE>
--------------------------
(1) Represents total pro forma goodwill amortization based upon goodwill
of $129.6 million and an amortization period of 40 years.
(2) Represents total pro forma amortization of covenants not to compete
based upon a capitalized valuation of $1.3 million and average term
of 5 years.
32
<PAGE>
BUSINESS
COMPANY OVERVIEW
The Issuer, a Delaware corporation, was formed in 1996 to acquire Rose
Hills, which is the largest single location cemetery and funeral home
combination in the United States. As a result of the Acquisition of Rose Hills
and the Satellite Properties, the Company owns a strategic assembly of
cemeteries and funeral homes in the greater Los Angeles area that, in addition
to Rose Hills, includes a group of 14 surrounding funeral homes and two cemetery
and funeral home combination properties located in Los Angeles, San Bernardino
and northern Orange Counties. Rose Hills is situated less than 14 miles from
downtown Los Angeles on approximately 1,418 acres of permitted cemetery land
near Whittier, California. The Cemetery and Mortuary have been continuously
operating since 1914 and 1956, respectively. During the period from 1990 until
the Acquisition Closing Date, the Cemetery and Mortuary functioned as separate
entities, with the Cemetery owned by a not-for-profit association and the
Mortuary owned by a closely held corporation controlled by previous management.
Pursuant to an Operation and Management Agreement (the 'Management
Agreement'), during the period commencing October 1989 until the Acquisition
Closing Date, the Mortuary operated and managed the Cemetery for the
Association. In connection with the Management Agreement, certain senior
officers of the Mortuary agreed to work exclusively for the Association. The
Association paid the Mortuary certain management and other incentive based fees
in payment for services provided by the Mortuary under the Management Agreement.
In 1996, the Cemetery sold approximately 9,600 pre-need and approximately
1,300 at-need cemetery grave sites and performed approximately 9,000 interments.
In 1996, the Mortuary performed approximately 5,500 funeral calls and sold
approximately 3,300 funeral services on a pre-need basis. Since its founding,
Rose Hills has performed more than 300,000 interments at the Cemetery, and has
the capacity for more than one million additional interments (without taking
into account measures that might be undertaken to increase capacity). The
Satellite Properties, which were acquired by Loewen between 1990 and 1995, were
contributed to the Company as part of the Acquisition Transaction. In 1996, the
Satellite Properties performed approximately 3,800 funeral calls and 500
interments. Since the Acquisition Transaction, the Company has been managed by a
single management team which includes certain members of the previous management
of Rose Hills, a newly hired senior sales executive with over 25 years of
experience in the industry and a new Chief Financial Officer with 19 years of
finance and accounting experience. The Company also benefits from the strength
of Loewen's management team through the Administrative Services Agreement.
Management believes that the integration of the Satellite Properties with
Rose Hills effected through the Acquisition Transaction will enable the Company
to take advantage of the benefits of 'hub and spoke clustering,' including
opportunities to share personnel, vehicles and other key resources, and
implement revenue enhancing cross-marketing programs. Management anticipates
that such an integration will create a group of funeral homes and cemeteries
capable of serving the majority of the greater Los Angeles metropolitan area, a
region with a population of more than 9.2 million. In addition, the Company
intends to leverage Rose Hills' outstanding reputation in the region by using
the Rose Hills name at many of the Satellite Properties. Management also expects
to generate significant additional cost-savings through the implementation of
the Administrative Services Agreement.
The principal executive offices of the Company are located at 3888 South
Workman Mill Road, Whittier, California 90601 and its telephone number is (562)
692-1212.
THE FUNERAL SERVICE AND CEMETERY INDUSTRY AND LOCAL CHARACTERISTICS
The funeral service and cemetery industry historically has been
characterized by low business risk compared with most other businesses.
According to the Business Failure Record published by The Dun & Bradstreet
Corporation, the average business failure rate in the United States in 1996 was
80 per 10,000. The 1996 failure rate of the funeral service and crematoria
industry was only 12 per 10,000, 85% lower than the average rate and among the
lowest of all industries. This low failure rate can be attributed to a number of
factors, including stable demand in the industry, positive demographic trends
and the low rate of new market entrants due to the length of time required to
establish community acceptance.
In the last 15 years, demand has grown steadily at a 1% compound annual
growth rate while the aggregate number of funeral homes has remained relatively
constant. Future demographic trends are expected to contribute
39
<PAGE>
to the continued stability of the funeral service industry. The first members of
the 'Baby Boom' generation began to turn 50 in 1996 and are advancing into the
prime savings and planning phases of their lives. The Census Bureau projects
that the segment of the United States population over 65 years old, which
presently totals 34 million, will more than double in size to over 73 million by
2035. Over the next 15 years, the aging of this population is expected to
outweigh the effects of increased life expectancies. The Census Bureau projects
that the number of deaths in the United States will grow at approximately 1%
annually through 2010.
A Wirthlin Group study conducted in 1995 concluded that the three most
important factors in selecting a funeral home are that it had previously served
the family, was close to the respondent's residence and had a strong reputation
in the community. Fewer than 5% of the respondents to the Wirthlin study
specified price as an important factor in selecting a funeral home. The
relationship between reputation and market share is an important competitive
advantage for existing funeral homes in that until a new market entrant is able
to establish the community reputation necessary to gain market share, existing
homes will retain considerable pricing flexibility.
The Company attracts customers from a geographic region encompassing
substantially all of Los Angeles County and the northern portion of Orange
County. According to statistics compiled by the State of California Department
of Health Services and the Census Bureau, the estimated population of Los
Angeles County was approximately 9.4 million people (3.1 million households) in
1996. Approximately 16.5% of this population was age 55 or older. The death rate
in Los Angeles County (approximately 62,000 in 1996) has demonstrated stability
from year to year over the last decade and the number of deaths is expected to
increase in step with the 1% annual projected population growth in Los Angeles
County over the next five years.
BUSINESS OPERATIONS
Mortuary Operations
In 1996, the Mortuary performed approximately 5,500 funeral calls and has a
current capacity to provide over 30 funeral services per day. The Mortuary
provides a complete range of funeral services, including collection of remains,
certification of death, embalming, sale of caskets and related merchandise, sale
of flowers, visitation facilities and transportation to place of services and to
burial site. All funeral arrangements provided to each of the Mortuary's
customers are provided by an experienced counselor with the assistance of a
centralized computer system.
The Mortuary began operations in 1956, when the Association recognized that
additional revenue opportunities existed in funeral operations. As the
division's success continued, the Mortuary was spun off in 1976 as a taxable,
for profit, wholly-owned subsidiary of the Association. In 1990, the Association
sold the Mortuary business to senior management in a leveraged buyout
transaction. During the period from October 1989 through the Acquisition Closing
Date, pursuant to the Management Agreement, the Mortuary also operated the
Cemetery.
The Mortuary provides funeral services on both an at-need and a pre-need
basis. Since 1987, all pre-need funeral services have been funded through the
sale by the Mortuary to its customers of a life insurance product called
ForeThought. Under the ForeThought Plan, the Mortuary is named the beneficiary
of the insurance policy but does not recognize funeral service revenue related
to the contracted services until such services are provided, although it does
recognize commission income upon the sale of such policies. On the date of
performance of the prearranged funeral service, the Mortuary recognizes funeral
service income and the proceeds received under the policy are applied against
the contract. Prior to 1987, the Mortuary also offered trust-backed and
debenture-backed pre-need products.
The Satellite Properties consist of 14 funeral homes and two combination
properties located in Los Angeles, San Bernardino and northern Orange Counties
which provide a wide variety of funeral services to various communities in such
counties. While the demographics of the population served by the Satellite
Properties, taken as a whole, are generally similar to that of Rose Hills'
clients, the smaller size and long-standing local reputations of the various
Satellite Properties have led each of such properties to develop a
demographically unique client base within its particular community. Therefore,
as a result of this extended cluster of funeral service providers as well as the
ability of particular Satellite Properties to meet special needs of local
communities, Management believes that the acquisition of the Satellite
Properties will permit the Company to access a base of mortuary clients that it
was previously unable to develop solely from its location near Whittier.
40
<PAGE>
acceleration; (b) the rescission would not conflict with any judgment or decree
of a court of competent jurisdiction; and (c) all Events of Default, other than
the non-payment of principal of, premium, if any, and interest on the Notes and
Exchange Notes that have become due solely by such declaration of acceleration,
have been cured or waived.
The holders of not less than a majority in aggregate principal amount of
the outstanding Notes and Exchange Notes may by notice to the Trustee on behalf
of the holders of all the Notes and Exchange Notes waive any defaults under the
Indenture, except a default in the payment of the principal of, premium, if any,
or interest on any Note or Exchange 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 Note and Exchange Note outstanding.
No holder of any of the Exchange Notes has any right to institute any
proceeding with respect to the Indenture or the Exchange Notes or any remedy
thereunder, unless the holders of at least 25% in aggregate principal amount of
the outstanding Notes and Exchange Notes have made written request, and offered
reasonable indemnity, to the Trustee to institute such proceeding as Trustee
under the Exchange Notes and the Indenture, the Trustee has failed to institute
such proceeding within 30 days after receipt of such notice and the Trustee,
within such 30-day period, has not received directions inconsistent with such
written request by holders of a majority in aggregate principal amount of the
outstanding Notes and Exchange Notes. Such limitations do not apply, however, to
a suit instituted by a holder of an Exchange Note for the enforcement of the
payment of the principal of, premium, if any, or interest on such Exchange Note
on or after the respective due dates expressed in such Exchange Note.
During the existence of an Event of Default, the Trustee is required to
exercise such rights and powers vested in it under the Indenture and use the
same degree of care and skill in its exercise thereof as a prudent Person would
exercise under the circumstances in the conduct of such Person's own affairs.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, whether or not an Event of Default shall occur and be continuing, the
Trustee under the Indenture is not under any obligation to exercise any of its
rights or powers under the Indenture at the request or direction of any of the
holders unless such holders shall have offered to the Trustee reasonable
security or indemnity. Subject to certain provisions concerning the rights of
the Trustee, the holders of not less than a majority in aggregate principal
amount of the outstanding Notes and Exchange Notes have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred on the Trustee under the
Indenture.
If a Default or an Event of Default occurs and is continuing and is known
to the Trustee, the Trustee shall mail to each holder of the Exchange Notes
notice of the Default or Event of Default within 30 days after obtaining
knowledge thereof (or as earlier required under Section 11.01 of the Indenture
and Section 315(b) of the TIA). Except in the case of a Default or an Event of
Default in payment of principal of, premium, if any, or interest on any Exchange
Notes, the Trustee may withhold the notice to the holders of such Exchange Notes
if a committee of its board of directors or trust officers in good faith
determines that withholding the notice is in the interest of the holders of the
Exchange Notes.
The Issuer is required to furnish to the Trustee annual and quarterly
statements as to the performance by the Issuer of its obligations under the
Indenture and as to any default in such performance. The Issuer is also required
to notify the Trustee within ten days after the Issuer becomes aware of any
event which is, or after notice or lapse of time or both would become, an Event
of Default.
DEFEASANCE OR COVENANT DEFEASANCE OF INDENTURE
The Issuer may, at its option and at any time, terminate the obligations of
the Issuer with respect to the outstanding Exchange Notes ('defeasance'). Such
defeasance means that the Issuer shall be deemed to have paid and discharged the
entire Indebtedness represented by the outstanding Exchange Notes, except for
(i) the rights of holders of outstanding Exchange Notes to receive payment in
respect of the principal of, premium if any, and interest on such Exchange Notes
when such payments are due, (ii) the Issuer's obligations to issue temporary
Exchange Notes, register the transfer or exchange of any Exchange Notes, replace
mutilated, destroyed, lost or stolen Exchange Notes, to maintain an office or
agency for payments in respect of the Exchange Notes and to compensate the
Trustee, (iii) the rights, powers, trusts, duties and immunities of the Trustee,
and (iv) the defeasance provisions of the Indenture. In addition, the Issuer
may, at its option and at any
65
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE EXCHANGE OFFER MADE HEREBY, AND IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE ISSUER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL,
OR A SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES OTHER THAN THE EXCHANGE
NOTES, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY THE EXCHANGE NOTES IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS NOT
LAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS NOT BEEN A CHANGE IN THE FACTS SET FORTH IN THIS
PROSPECTUS OR THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Additional Information................................................ 3
Disclosure Regarding Forward-Looking Statements....................... 3
Summary............................................................... 4
Risk Factors.......................................................... 17
Use of Proceeds....................................................... 20
The Exchange Offer.................................................... 20
Capitalization........................................................ 28
Unaudited Pro Forma Financial Information............................. 29
Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................... 34
Business.............................................................. 39
Management............................................................ 46
Principal Shareholders................................................ 48
Certain Related Transactions.......................................... 49
Description of Bank Credit Facilities................................. 51
Description of Exchange Notes......................................... 53
Book Entry; Delivery and Form......................................... 79
United States Federal Income Tax Consequences......................... 81
Plan of Distribution.................................................. 81
Legal Matters......................................................... 82
Experts............................................................... 82
Index to Consolidated Financial Statements............................ F-1
</TABLE>
------------------------
Until , 1997 (90 days after the date
of this Prospectus), all dealers effecting transactions in the registered
securities, whether or not participating in this distribution, may be required
to deliver a Prospectus. This is in addition to the obligation of dealers to
deliver a Prospectus when acting as Underwriters and with respect to their
unsold allotments or subscriptions.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
PROSPECTUS
ROSE HILLS COMPANY
(FORMERLY KNOWN AS ROSE HILLS
ACQUISITION CORP.)
OFFER TO EXCHANGE
$80,000,000 OF ITS 9 1/2%
SENIOR SUBORDINATED NOTES DUE
2004 WHICH HAVE BEEN
REGISTERED UNDER THE SECURITIES
ACT FOR $80,000,000 OF ITS
OUTSTANDING 9 1/2% SENIOR
SUBORDINATED NOTES DUE 2004
, 1997
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES
(a) EXHIBIT INDEX
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NO.
- ------- ----------------------------------------------------------- ----------
2.1* -- Asset Purchase Agreement, dated as of September 19,
1996, by and between Rose Hills Memorial Park
Association and Tudor Acquisition Corp. (now known as
the Rose Hills Company).
2.2* -- Agreement and Plan of Merger, dated as of September 19,
1996, by and among the Stockholders of Roses, Inc. and
Tudor Acquisition Corp. (now known as the Rose Hills
Company).
2.3* -- Amendment to the Agreement and Plan of Merger dated as
of November 18,1996 by and among Rose Hills Acquisition
Corp. (now known as Rose Hills Company), Roses Inc., the
Stockholders of Roses Inc., and RH Mortuary Corporation.
3.1* -- Restated Certificate of Incorporation of Tudor
Acquisition Corp. changing its name to Rose Hills
Acquisition Corp.
3.2* -- Certificate of Amendment of Certificate of Incorporation
of Rose Hills Acquisition Corp. changing its name to
Rose Hills Company.
3.3* -- Amended and Restated By-Laws of Rose Hills Company.
4.1* -- Indenture dated as of November 15, 1996 between Rose
Hills Acquisition Corp. and United States Trust Company
of New York, as Trustee.
4.2* -- Form of 9 1/2% Senior Subordinated Note due 2004
(included in Exhibit 4.1).
5** -- Opinion of Simpson Thacher & Bartlett regarding the
legality of the Exchange Notes.
8** -- Opinion of Simpson Thacher & Bartlett regarding certain
tax matters.
10.1* -- Stockholders' Agreement dated as of November 19, 1996
among Rose Hills Holdings Corp., Blackstone Capital
Partners II Merchant Banking Fund L.P., Blackstone Rose
Hills Offshore Capital Partners L.P., Blackstone Family
Investment Partnership II L.P., Roses Delaware, Inc.,
Loewen Group International, Inc., and RHI Management
Direct L.P.
10.2* -- Administrative Services Agreement dated as of November
19, 1996 between Rose Hills Acquisition Corp. (now known
as Rose Hills Company), The Loewen Group, Inc., and
Loewen Group International Inc.
10.3* -- Credit Agreement dated as of November 19, 1996 among
Rose Hills Company, Rose Hills Holdings Corp., Goldman,
Sachs & Co., as syndication agent and arranging agent,
the financial institutions from time to time parties
thereto as lenders and The Bank of Nova Scotia, as
administrative agent for such lenders.
10.4* -- Put/Call Agreement, dated as of November 19, 1996 among
Blackstone Capital Partners II Merchant Banking Fund
L.P., Blackstone Rose Hills Offshore Capital Partners
L.P., Blackstone Family Investment Partnership II L.P.,
Roses Delaware, Inc., Loewen Group International, Inc.,
The Loewen Group Inc., and RHI Management Direct L.P.
10.5* -- Buddhist Memorial Complex Development and Use Agreement
dated as of March 1, 1994 between Rose Hills Memorial
Park Association and International Buddhist Progress
Society.
10.6* -- First Amendment to Buddhist Memorial Complex Development
and Use Agreement, dated as of September 1, 1994 between
Rose Hills Memorial Park Association and International
Buddhist Progress Society.
- ------------------
* Previously filed.
** Filed herewith.
II-3
<PAGE>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NO.
- ------- ----------------------------------------------------------- ----------
10.7* -- Second Amendment to Buddhist Memorial Complex
Development and Use Agreement, dated as of March 15,
1995 between Rose Hills Memorial Park Association and
International Buddhist Progress Society.
10.8* -- Third Amendment to Buddhist Memorial Complex Development
and Use Agreement, dated as of May 15, 1995 between Rose
Hills Memorial Park Association and International
Buddhist Progress Society.
10.9* -- Fourth Amendment to Buddhist Memorial Complex
Development and Use Agreement, dated as of October 15,
1995 between Rose Hills Memorial Park Association and
International Buddhist Progress Society.
10.10* -- Memorandum of Understanding, dated as of March 22, 1996
between Rose Hills Memorial Park Association and
International Buddhist Progress Society.
10.11* -- Amended and Restated Employment Agreement dated December
, 1996 by and between Rose Hills Company and Kendall
E. Nungesser.
10.12* -- Employment Agreement dated November 19, 1996 by and
between RH Mortuary Corporation and Dennis C. Poulsen.
10.13* -- Employment Confirmation dated November 18, 1996 by and
between Rose Hills Company and Mark Helmintoller.
10.14* -- Employment Letter Agreement, dated April 22, 1997 by and
between Rose Hills Company and Kenton C. Woods.
10.15* -- Addendum to Employment Letter Agreement, dated April 28,
1997 by and between Rose Hills Company and Kenton C.
Woods.
10.16* -- Non-Competition Agreement dated as of November 19, 1996,
between RH Mortuary Corporation and Kendall E.
Nungesser.
10.17* -- Non-Competition Agreement dated as of November 19, 1996
between RH Mortuary Corporation and Dennis C. Poulsen.
10.18* -- Non-Competition Agreement dated as of November 19, 1996
between RH Mortuary Corporation and Sandy V. Durko.
12* -- Computation of Ratio of Earnings to Fixed Charges.
21* -- Subsidiaries of Rose Hills Company (formerly known as
Rose Hills Acquisition Corp.).
23.1* -- Consent of Simpson Thacher & Bartlett (included in
Exhibits 5 and 8).
23.2** -- Consent of KPMG Peat Marwick LLP.
23.3** -- Consent of KPMG Peat Marwick LLP.
23.4** -- Consent of Arthur Andersen LLP.
23.5** -- Consent of KPMG Peat Marwick LLP.
23.6** -- Consent of KPMG Chartered Accountants.
24* -- Power of Attorney (included on page II-4 of the
Registration Statement).
25* -- Statement of Eligibility on Form T-1 of United States
Trust Company of New York.
27* -- Financial Data Schedule.
99.1* -- Registration Rights Agreement dated as of November 15,
1996 between Rose Hills Acquisition Corp. and Smith
Barney Inc.
99.2* -- Form of Letter of Transmittal.
99.3* -- Form of Notice of Guaranteed Delivery.
- ------------------
* Previously filed.
** Filed herewith.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 3 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Whittier, California, on August 6, 1997.
ROSE HILLS COMPANY
(formerly known as Rose Hills
Acquisition Corp.)
By: /s/ Kendall E. Nungesser
-------------------------------------
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 3 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ ------------------------------ ---------------
<S> <C> <C>
/s/ Kendall E. Nungesser President, Chief Executive August 6, 1997
- ------------------------------ Officer (principal executive
Kendall E. Nungesser officer) and Director
* Senior Vice President, Chief August 6, 1997
- ------------------------------ Financial Officer (principal
Kenton C. Woods financial officer; principal
accounting officer)
* Secretary, Director August 6, 1997
- ------------------------------
Chinh E. Chu
* Director August 6, 1997
- ------------------------------
David I. Foley
* Director August 6, 1997
- ------------------------------
Howard A. Lipson
* Director August 6, 1997
- ------------------------------
Douglas McKinnon
* Director August 6, 1997
- ------------------------------
Lawrence Miller
* Chairman, Director August 6, 1997
- ------------------------------
Dennis C. Poulsen
*By: /s/Kendall E. Nungesser
-------------------------
Kendall E. Nungesser
Attorney-In-Fact
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NO.
- ------- ----------------------------------------------------------- ----------
<S> <C> <C>
2.1* -- Asset Purchase Agreement, dated as of September 19,
1996, by and between Rose Hills Memorial Park
Association and Tudor Acquisition Corp. (now known as
the Rose Hills Company).
2.2* -- Agreement and Plan of Merger, dated as of September 19,
1996, by and among the Stockholders of Roses, Inc. and
Tudor Acquisition Corp. (now known as the Rose Hills
Company).
2.3* -- Amendment to the Agreement and Plan of Merger dated as
of November 18, 1996 by and among Rose Hills Acquisition
Corp. (now known as Rose Hills Company), Roses Inc., the
Stockholders of Roses Inc., and RH Mortuary Corporation.
3.1* -- Restated Certificate of Incorporation of Tudor
Acquisition Corp. changing its name to Rose Hills
Acquisition Corp.
3.2* -- Certificate of Amendment of Certificate of Incorporation
of Rose Hills Acquisition Corp. changing its name to
Rose Hills Company.
3.3* -- Amended and Restated By-Laws of Rose Hills Company.
4.1* -- Indenture dated as of November 15, 1996 between Rose
Hills Acquisition Corp. and United States Trust Company
of New York, as Trustee.
4.2* -- Form of 9 1/2% Senior Subordinated Note due 2004
(included in Exhibit 4.1).
5** -- Opinion of Simpson Thacher & Bartlett regarding the
legality of the Exchange Notes.
8** -- Opinion of Simpson Thacher & Bartlett regarding certain
tax matters.
10.1* -- Stockholders' Agreement dated as of November 19, 1996
among Rose Hills Holdings Corp., Blackstone Capital
Partners II Merchant Banking Fund L.P., Blackstone Rose
Hills Offshore Capital Partners L.P., Blackstone Family
Investment Partnership II L.P., Roses Delaware, Inc.,
Loewen Group International, Inc., and RHI Management
Direct L.P.
10.2* -- Administrative Services Agreement dated as of November
19, 1996 between Rose Hills Acquisition Corp. (now known
as Rose Hills Company), The Loewen Group, Inc., and
Loewen Group International Inc.
10.3* -- Credit Agreement dated as of November 19, 1996 among
Rose Hills Company, Rose Hills Holdings Corp., Goldman,
Sachs & Co., as syndication agent and arranging agent,
the financial institutions from time to time parties
thereto as lenders and The Bank of Nova Scotia, as
administrative agent for such lenders.
10.4* -- Put/Call Agreement, dated as of November 19, 1996 among
Blackstone Capital Partners II Merchant Banking Fund
L.P., Blackstone Rose Hills Offshore Capital Partners
L.P., Blackstone Family Investment Partnership II L.P.,
Roses Delaware, Inc., Loewen Group International, Inc.,
The Loewen Group Inc., and RHI Management Direct L.P.
10.5* -- Buddhist Memorial Complex Development and Use Agreement
dated as of March 1, 1994 between Rose Hills Memorial
Park Association and International Buddhist Progress
Society.
10.6* -- First Amendment to Buddhist Memorial Complex Development
and Use Agreement, dated as of September 1, 1994 between
Rose Hills Memorial Park Association and International
Buddhist Progress Society.
10.7* -- Second Amendment to Buddhist Memorial Complex
Development and Use Agreement, dated as of March 15,
1995 between Rose Hills Memorial Park Association and
International Buddhist Progress Society.
</TABLE>
- ------------------
* Previously filed.
** Filed herewith.
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NO.
- ------- ----------------------------------------------------------- ----------
<S> <C> <C>
10.8* -- Third Amendment to Buddhist Memorial Complex Development
and Use Agreement, dated as of May 15, 1995 between Rose
Hills Memorial Park Association and International
Buddhist Progress Society.
10.9* -- Fourth Amendment to Buddhist Memorial Complex
Development and Use Agreement, dated as of October 15,
1995 between Rose Hills Memorial Park Association and
International Buddhist Progress Society.
10.10* -- Memorandum of Understanding, dated as of March 22, 1996
between Rose Hills Memorial Park Association and
International Buddhist Progress Society.
10.11* -- Amended and Restated Employment Agreement dated December
, 1996 by and between Rose Hills Company and Kendall
E. Nungesser.
10.12* -- Employment Agreement dated November 19, 1996 by and
between RH Mortuary Corporation and Dennis C. Poulsen.
10.13* -- Employment Confirmation dated November 18, 1996 by and
between Rose Hills Company and Mark Helmintoller.
10.14* -- Employment Letter Agreement, dated April 22, 1997 by and
between Rose Hills Company and Kenton C. Woods.
10.15* -- Addendum to Employment Letter Agreement, dated April 28,
1997 by and between Rose Hills Company and Kenton C.
Woods.
10.16* -- Non-Competition Agreement dated as of November 19, 1996,
between RH Mortuary Corporation and Kendall E.
Nungesser.
10.17* -- Non-Competition Agreement dated as of November 19, 1996
between RH Mortuary Corporation and Dennis C. Poulsen.
10.18* -- Non-Competition Agreement dated as of November 19, 1996
between RH Mortuary Corporation and Sandy V. Durko.
12* -- Computation of Ratio of Earnings to Fixed Charges.
21* -- Subsidiaries of Rose Hills Company (formerly known as
Rose Hills Acquisition Corp.).
23.1* -- Consent of Simpson Thacher & Bartlett (included in
Exhibits 5 and 8).
23.2** -- Consent of KPMG Peat Marwick LLP.
23.3** -- Consent of KPMG Peat Marwick LLP.
23.4** -- Consent of Arthur Andersen LLP.
23.5** -- Consent of KPMG Peat Marwick LLP.
23.6** -- Consent of KPMG Chartered Accountants.
24* -- Power of Attorney (included on page II-4 of the
Registration Statement).
25* -- Statement of Eligibility on Form T-1 of United States
Trust Company of New York.
27* -- Financial Data Schedule.
99.1* -- Registration Rights Agreement dated as of November 15,
1996 between Rose Hills Acquisition Corp. and Smith
Barney Inc.
99.2* -- Form of Letter of Transmittal.
99.3* -- Form of Notice of Guaranteed Delivery.
</TABLE>
- ------------------
* Previously filed.
** Filed herewith.
(212) 455-2000
August 7, 1997
Rose Hills Company
3888 South Workman Mill Road
Whittier, California 90601
Ladies and Gentlemen:
We have acted as special counsel for Rose Hills Company (formerly
known as Rose Hills Acquisition Corp.), a Delaware corporation (the "Company"),
in connection with the Registration Statement on Form S-4 (the "Registration
Statement") filed by the Company with the Securities and Exchange Commission
(the "Commission") under the Securities Act of 1933, as amended (the "Securities
Act"), relating to the issuance by the Company of $80,000,000 aggregate
principal amount of its 9 1/2% Senior Subordinated Notes due 2004 (the "Exchange
Notes"), which are to be offered by the Company in exchange for $80,000,000
aggregate principal amount of its outstanding 9 1/2% Senior Subordinated Notes
due 2004 (the "Notes").
We have examined the Registration Statement and the Indenture
dated as of November 15, 1996 (the "Indenture") between the Company and United
States Trust Company of New York, as Trustee (the "Trustee"), which has been
filed with the Commission as an Exhibit to the Registration Statement. In
addition, we have examined, and have relied as to matters of fact upon, the
originals or copies, certified or otherwise
<PAGE>
Rose Hills Company -2- August 7, 1997
identified to our satisfaction, of such corporate records, agreements, documents
and other instruments and such certificates or comparable documents of public
officials and of officers and representatives of the Company, and have made such
other and further investigations, as we have deemed relevant and necessary as a
basis for the opinion hereinafter set forth.
We have assumed the genuineness of all signatures, the legal
capacity of natural persons, the authenticity of all documents submitted to us
as originals and the conformity to original documents of all documents submitted
to us as certified or photostatic copies, and the authenticity of the originals
of such latter documents.
Based upon the foregoing, and subject to the qualifications and
limitations stated herein, we hereby advise you that the statements made in the
Registration Statement under the caption "Federal Income Tax Consequences,"
insofar as they purport to constitute summaries of matters of United States
federal income tax law and regulations or legal conclusions with respect
thereto, constitute accurate summaries of the matters described therein in all
material respects.
We are members of the Bar of the State of New York and we do not
express any opinion herein concerning any law other than the federal law of the
United States.
<PAGE>
Rose Hills Company -3- August 7, 1997
We hereby consent to the use of this opinion as an Exhibit to the
Registration Statement and to the reference to our firm under the caption
"Federal Income Tax Consequences" in the Prospectus included therein.
Very truly yours,
/s/ SIMPSON THACHER & BARTLETT
<PAGE>
August 7, 1997
Rose Hills Company
3888 South Workman Mill Road
Whittier, California 90601
Ladies and Gentlemen:
We have acted as special counsel for Rose Hills Company (formerly
known as Rose Hills Acquisition Corp.), a Delaware corporation (the "Company"),
in connection with the Registration Statement on Form S-4 (the "Registration
Statement") filed by the Company with the Securities and Exchange Commission
(the "Commission") under the Securities Act of 1933, as amended (the "Securities
Act"), relating to the issuance by the Company of $80,000,000 aggregate
principal amount of its 9 1/2% Senior Subordinated Notes due 2004 (the "Exchange
Notes"), which are to be offered by the Company in exchange for $80,000,000
aggregate principal amount of its outstanding 9 1/2% Senior Subordinated Notes
due 2004 (the "Notes").
We have examined the Registration Statement and the Indenture
dated as of November 15, 1996 (the "Indenture") between the Company and United
States Trust Company of New York, as Trustee (the "Trustee"), which has been
filed with the Commission as an Exhibit to the Registration Statement. In
addition, we have examined,
<PAGE>
Rose Hills Company -2- August 7, 1997
and have relied as to matters of fact upon, the originals or copies, certified
or otherwise identified to our satisfaction, of such corporate records,
agreements, documents and other instruments and such certificates or comparable
documents of public officials and of officers and representatives of the
Company, and have made such other and further investigations, as we have deemed
relevant and necessary as a basis for the opinion hereinafter set forth.
In such examination, we have assumed that the Indenture has been
duly authorized, executed and delivered by the Trustee. In addition, we have
assumed the genuineness of all signatures, the legal capacity of natural
persons, the authenticity of all documents submitted to us as originals and the
conformity to original documents of all documents submitted to us as certified
or photostatic copies, and the authenticity of the originals of such latter
documents.
Based upon the foregoing, and subject to the qualifications and
limitations stated herein, we hereby advise you that in our opinion the Exchange
Notes, when executed and authenticated in accordance with the provisions of the
Indenture and delivered in exchange for the Notes as contemplated in the
Registration Statement and the Indenture, will constitute valid and legally
binding obligations of the Company, enforceable against the Company in
accordance with their terms.
Our opinion set forth above is subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing.
<PAGE>
Rose Hills Company -3- August 7, 1997
We are members of the Bar of the State of New York and we do not
express any opinion herein concerning any law other than the law of the State of
New York and the federal law of the United States. This opinion is rendered to
you solely in connection with the above-described transaction and may not be
relied upon for any other purpose without our prior written consent.
We hereby consent to the use of this opinion as an Exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" in the Prospectus included therein.
Very truly yours,
/s/ SIMPSON THACHER & BARTLETT
<PAGE>
EX-23.2
The Board of Directors
Rose Hills Company:
We consent to the use of our report included herein and to the reference to
our firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
----------------------------
KPMG Peat Marwick LLP
Orange County, California
August 6, 1997
<PAGE>
EX-23.3
The Board of Directors
Rose Hills Company:
We consent to the use of our report included herein and to the reference to
our firm under the heading "Summary Historical Financial Information--The
Mortuary and the Company" and "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
----------------------------
KPMG Peat Marwick LLP
Orange County, California
August 6, 1997
<PAGE>
EX-23.4
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated October 25, 1996 (and to the reference to our Firm as experts) included in
or made a part of Amendment No. 3 to the S-4 registration statement.
/s/ Arthur Andersen LLP
----------------------------
Los Angeles, California
August 5, 1997
<PAGE>
EX-23.5
The Board of Directors
Rose Hills Company:
We consent to the use of our report included herein and to the reference to
our firm under the headings "Experts" and "Summary Historical Financial
Information--The Cemetery" in the prospectus.
/s/ KPMG Peat Marwick LLP
-----------------------------
Los Angeles, California
August 6, 1997
<PAGE>
EX-23.6
The Board of Directors
Rose Hills Company:
We consent to the use of our reports included herein and to the reference to
our firm under the heading "Experts" in the prospectus.
/s/ KPMG
-------------------
Chartered Accountants
Vancouver, Canada
August 6, 1997
