SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
File No. 333-
FORM S-2
REGISTRATION STATEMENT
Under
The Securities Act of 1933
As filed with the Securities and Exchange Commission on October 22, 1999
PRO-FAC COOPERATIVE, INC.
(Exact Name of Registrant as Specified in Its Charter)
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NEW YORK 16-6036816
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
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90 Linden Oaks
P.O. Box 682
Rochester, New York 14603
(Address, Including Zip Code)
(716) 383-1850
(Telephone Number, Including Area Code of
Registrant's Principal Executive Offices)
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Earl L. Powers Copy to: Catherine A. King, Esq.
Vice President, Finance and Harris Beach & Wilcox, LLP
Assistant Treasurer 130 East Main Street
Pro-Fac Cooperative, Inc. Rochester, New York 14604
90 Linden Oaks (716) 232-4440
Rochester, New York 14625
(716) 383-1850
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box. [x]
If the registrant elects to deliver its latest annual report to
security holders, or a complete and legible facsimile thereof, pursuant to Item
11(a)(1) of this form 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, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to rule
462(c) 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. [ ]
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. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<TABLE>
CALCULATION OF REGISTRATION FEE
<S> <C> <C> <C> <C>
Proposed Maximum Proposed Maximum Amount of
Title of Each Class of Securities Amount to be Offering Price Aggregate Registration
to be Registered Registered Per Security Offering Price Fee
Class A Common Stock 1,000,000 $5.00 $5,000,000 $1,390.00*
Retains $ *
Class A Cumulative Preferred Stock** $
PRIOR REGISTRATION - RULE 429
<FN>
* As permitted by Rule 429(a), the Prospectus included herein also relates to 156,630 shares of common stock and $545,000
of retains covered by Registration Statement No. 33-60273, and $7,000,000 of retains covered by Registration Statement
No. 333-63385.
** Representing Class A cumulative preferred stock issuable at maturity of retains. No additional fee is required pursuant to
Rule 457(i).
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 or until this Registration Statement
shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine.
</FN>
</TABLE>
<PAGE>
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.
<PAGE>
Prospectus
PRO-FAC COOPERATIVE, INC.
1,156,630 Shares of Class A Common Stock
$7,545,000 Retains
We are a New York agricultural cooperative corporation formed in 1960
to process and market crops grown by our members. Membership in Pro-Fac is
limited to persons or entities who are actively engaged in the growing of
agricultural products, such as cherries, apples, corn and peas. Growers who wish
to become members of Pro-Fac are required to purchase shares of our common
stock.
We are registering shares of our Class A common stock, retains and
shares of our Class A cumulative preferred stock. Our Class A common stock is
being offered to growers who are currently members, or who wish to become
members, who deliver raw product for sale and processing by Agrilink Foods,
Inc., which is our wholly owned subsidiary. Retains represent that portion of
patronage proceeds payable to our members but retained by us. Our retains may be
redeemed for cash or shares of our Class A cumulative preferred stock. Our Class
A cumulative preferred stock is traded on the Nasdaq National Market under the
symbol "PFACP."
<TABLE>
<S> <C> <C> <C> <C>
Underwriting
Price to Discounts and Proceeds to
Public Commissions (1) Issuer (2)
----------- --------------- -----------
Class A common stock Per Share $5.00 0.0 $5.00
Total: $5,783,150 $5,783,150
Retains Per Unit: 100% 0.0 100%
Total: $7,545,000 $7,545,000
<FN>
(1) The securities described in this Prospectus are to be offered and
distributed directly through officers of Pro-Fac, without the use of any
underwriter or dealer, and no discounts, commissions or other compensation
are to be allowed or paid.
(2) Before deducting expenses estimated at $28,890.
</FN>
</TABLE>
SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN FACTORS
RELATING TO THIS OFFERING.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or as passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
This prospectus is accompanied by a copy of Pro-Fac Cooperative, Inc.'s Annual
Report on Form 10-K/A-1 for the year ended June 26, 1999.
This prospectus is dated October ,1999
<PAGE>
TABLE OF CONTENTS
Page
Prospectus Summary....................................................3
Risk Factors..........................................................7
Ratio of Earnings to Fixed Charges and Preferred Dividends...........11
Where You Can Find More Information..................................12
Forward-Looking Information..........................................13
Use of Proceeds......................................................13
Determination of Offering Price......................................13
Plan of Distribution.................................................14
Business of Pro-Fac..................................................14
Description of Pro-Fac Securities....................................21
Experts..............................................................25
ABOUT THIS PROSPECTUS
You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus or incorporated by reference in this prospectus. We
are not making offers to sell the securities covered by this prospectus or
soliciting offers to purchase the securities covered by this prospectus in any
jurisdiction in which such an offer or solicitation is not authorized or in
which the person making such offer or solicitation is not qualified to do so or
to anyone to whom it is unlawful to make such offer or solicitation. The
information in this prospectus is accurate as of the date on the front cover.
You should not assume that the information contained in this prospectus is
accurate as of any other date.
Unless otherwise indicated, references in this prospectus to "Pro-Fac,"
"we," "our," and "us" refer to Pro-Fac Cooperative, Inc., a New York
agricultural cooperative formed in 1960, together with its subsidiaries Agrilink
Foods, Inc. and PF Acquisition II, Inc., which conducts business under the name
AgriFrozen Foods. References in this prospectus to our fiscal year refer to the
12-month period ended the last Saturday of June of that year.
This prospectus includes trademarks, trade names and service marks of
Pro-Fac.
Our principal executive offices are located at 90 Linden Oaks, Rochester,
New York 14625. Our telephone number is 716-383-1850.
<PAGE>
PROSPECTUS SUMMARY
You should read the following summary together with the more detailed
information regarding Pro-Fac and the securities being sold in this offering and
our audited consolidated financial statements incorporated by reference in this
prospectus.
Pro-Fac
As an agricultural cooperative, we process and market crops grown by our
members. Our crops include fruits, such as cherries, apples, blueberries,
peaches and plums, vegetables, such as snap beans, beets, cucumbers, peas, sweet
corn, carrots, cabbage, squash, asparagus, potatoes, turnip roots and leafy
greens, and popcorn. Only growers of crops marketed through us, or associations
of such growers, can become members. Growers become members of Pro-Fac by
purchasing shares of our common stock. You cannot be a member unless you own
shares of our common stock.
We have two subsidiaries, Agrilink and AgriFrozen. Our membership is
divided into two separate classes. Members who own shares of our Class A common
stock are our Class A members, and members who own shares of our Class B common
stock are our Class B members.
Our Class A members are our current members who deliver raw product for
processing and sale at the facilities of Agrilink Foods, Inc., which is our
wholly owned subsidiary. We currently have approximately 645 Class A members
consisting of individual growers or of associations of growers, located
principally in the states of New York, Delaware, Pennsylvania, Illinois,
Michigan, Washington, Oregon, Iowa, Nebraska, Florida, and Georgia.
We do not currently have any Class B members. It is anticipated that our
Class B members will be those who deliver raw product for processing and sale by
AgriFrozen Foods.
Agrilink.
Agrilink is a producer and marketer of processed food products. Agrilink
has four primary product lines including vegetables, fruit, snacks and canned
meals. The vegetable product line consists of canned and frozen vegetables,
chili beans, pickles, and various other products. Branded products within the
vegetable category include Birds Eye, Birds Eye Voila!, Freshlike, Veg-All,
McKenzies, Brooks Chili Beans, Farman's, and Nalley. The fruit product line
consists of canned and frozen fruits including fruit fillings and toppings.
Branded products within the fruit category include Comstock and Wilderness. The
snack product line consists of potato chips, popcorn and other corn-based snack
items. Branded products within the snack category include Tim's Cascade Chips,
Snyder of Berlin, Husman, La Restaurante, Erin's, Beehive, Pops-Rite, and Super
Pop. The canned meal product line includes products such as chilies, stews,
soups, and various other ready-to-eat prepared meals. Branded products within
the canned meal category include Nalley. All other product lines primarily
represent salad dressings. Brand products within this category include
Bernstein's and Nalley. Agrilink also sells its products to supermarkets,
warehouse clubs and mass merchandisers under private labels and to food service
institutions such as restaurants, caterers, bakeries and schools. Agrilink
operates 28 processing facilities located throughout the United States and one
facility in Mexico. These processing facilities provide Agrilink with access to
diverse sources of raw agricultural products. Agrilink distributes its finished
products to over 13,000 customer distribution points through a nationwide
network of distribution centers and food brokers.
In 1994, we entered into a marketing and facilitation agreement with
Agrilink. Under that agreement, we supply Agrilink with crops and provide
additional financing to Agrilink, Agrilink provides us with marketing and
management services and we share in Agrilink's profits or losses.
<PAGE>
The Acquisition of Dean Foods Vegetable Company
On September 24, 1998, Agrilink acquired the frozen and canned vegetable
business of Dean Foods Company, by acquiring from Dean Foods all the outstanding
capital stock of Dean Foods Vegetable Company and Birds Eye de Mexico SA de CV.
DFVC was a vegetable processor selling its products under brand names, such as
Birds Eye, Freshlike and Veg-All, and various private labels. In connection with
the acquisition of DFVC, Agrilink sold its aseptic business to Dean Foods. The
aseptic business produced primarily dairy-based products, such as puddings and
cheese sauces. In addition to selling its aseptic business, Agrilink paid Dean
Foods $360.0 million in cash and issued to Dean Foods a $30.0 million unsecured
subordinated promissory note due November 22, 2008, as consideration for the
acquisition of DFVC. In connection with the acquisition of DFVC, Agrilink
reserved the right to require Dean Foods, in consideration for the payment of an
additional $13.2 million, to treat the acquisition of DFVC as an asset sale for
tax purposes under Section 338(h)(10) of the Internal Revenue Code. Agrilink
exercised that right on April 15, 1999 and paid Dean Foods $13.2 million.
Immediately following the acquisition, DFVC was merged into Agrilink. We
believe that the acquisition of DFVC strengthens Agrilink's competitive position
by enhancing its brand recognition and market position, providing opportunities
for cost savings and operating efficiencies, and increasing Agrilink's product
and geographic diversification.
The Refinancing
Concurrently with the acquisition of DFVC, Agrilink refinanced its
then-existing indebtedness, which included $160.0 million of its senior
subordinated notes having an interest rate of 12 1/4% per year and maturing in
the year 2005, which we refer to as Agrilink's old notes, and its then-existing
bank debt. As part of its refinancing, Agrilink purchased substantially all its
old notes for an aggregate amount of approximately $184.0 million, including
accrued interest of $2.9 million, terminated its old credit facility and repaid
$176.5 million of indebtedness that had been outstanding under that facility.
In order to finance the acquisition of DFVC, the subsequent merger of DFVC
into Agrilink, the refinancing of Agrilink's then-existing indebtedness, and pay
related fees and expenses, Agrilink:
entered into and borrowed from a new credit facility, consisting of a
$455.0 million term loan facility and a $200.0 million revolving credit
facility;
entered into and borrowed from a $200.0 million bridge loan facility; and
issued the $30.0 million subordinated promissory note to Dean Foods.
Agrilink repaid the $200.0 million bridge loan facility on November 18,
1998 with the proceeds of an offering of $200.0 million of new senior
subordinated notes having an interest rate of 11-7/8% per year and maturing in
the year 2008. These "initial" notes were later exchanged for notes that were
substantially identical to the initial notes, except that the new notes are
freely transferable. We refer to the notes issued in exchange for all of the
initial notes as the "new notes."
We have guaranteed Agrilink's obligations under the new credit facility,
the subordinated promissory note to Dean Foods Company and its new notes.
AgriFrozen.
AgriFrozen is a producer and marketer of primarily frozen vegetables.
AgriFrozen's products include frozen green peas, sugar-snap peas, cob corn and
whole kernel corn, green beans, carrots, and lima beans. Although AgriFrozen
does have branded products, including Chef Du Jour, Perfect Sense, Sweet
Jubilee, Jack and the Beanstalk and Oregon's Finest, most of its frozen
vegetable products are packaged and sold under
<PAGE>
private labels. Under trademark licensing agreements with Ore-Ida Foods, Inc.,
AgriFrozen distributes some of its frozen cob corn products under the Ore-Ida
and Mini-Gold trademarks, certain of its frozen breaded vegetable products,
including okra, mushrooms, zucchini and corn nuggets are sold under the
Tendekrisp and Ore-Ida trademarks and some of its frozen stew vegetable products
are marketed and distributed under the Ore-Ida trademark. In addition, under its
co-packing agreement with Agrilink, AgriFrozen processes and packages a variety
of frozen vegetables under Agrilink's Birds Eye trademark. Sales of finished
product sold to Agrilink for distribution under the Birds Eye brand constitute
approximately $30.0 million of AgriFrozen's total net sales for the 1999 fiscal
year.
On February 23, 1999, AgriFrozen acquired substantially all of the frozen
vegetable processing assets of Agripac, Inc., an Oregon cooperative in
bankruptcy. In order to finance the acquisition AgriFrozen obtained financing
from CoBank, ACB under the credit facilities. The CoBank financing consists of:
a credit facility consisting of a term loan facility of $30.0 million and a
revolving credit facility of $55.0 million for fiscal 2000 and $50.0
million for each year thereafter, and
a $12.0 million subordinated promissory note.
The net purchase price for the frozen vegetable processing business was
$80.5 million, including expenditures of $7.8 million consisting of cash
payments of approximately $6.4 million to obtain grower contracts from former
Agripac member-growers, and transaction expenses and miscellaneous costs
totaling $1.4 million. AgriFrozen also expects to pay severance costs of
approximately $1.2 million.
In order to pay the total acquisition price, AgriFrozen:
borrowed $30.0 million under the term loan facility,
borrowed a total of $36.9 million under the revolving credit facility, and
issued the $12.0 million subordinated promissory note.
The balance of the total acquisition price, $8.0 million, was paid by
AgriFrozen from the sale of shares of its preferred stock to PFA Northwest
Growers Cooperative, Inc. In addition, $6.4 million borrowed under the revolving
credit facility was held in escrow until the final purchase price was agreed to.
These funds were returned to AgriFrozen in July 1999 and applied to the
revolving credit facility.
AgriFrozen granted a security interest in substantially all of its assets
as security for the CoBank credit facility and the subordinated promissory note.
Neither we nor Agrilink guaranteed the debts of AgriFrozen or otherwise pledged
any of our respective properties as security for the CoBank financing. In fact,
all of AgriFrozen's indebtedness is expressly without recourse to us and
Agrilink.
We have entered into a marketing and facilitation agreement with
AgriFrozen. Under this agreement, we expect to sell the crops of our Class B
members to AgriFrozen at their commercial market value ("CMV") for earnings or
processing and distribution by AgriFrozen. AgriFrozen has agreed to pay us the
CMV of those crops, less any earnings or losses incurred on products processed
using our Class B members' crops. We will distribute to our Class B members
payments received from AgriFrozen for our Class B members' crops. The commercial
market value of a crop or its CMV is the weighted average of the prices paid by
other commercial processors for similar crops used for similar or related
purposes sold under pre-season contracts or in the open market in the same or
similar market areas.
AgriFrozen has also entered into an administrative services agreement with
Agrilink, pursuant to which Agrilink provides AgriFrozen with certain management
consulting and administrative services.
<PAGE>
Recent Developments.
On September 16, 1999, Agrilink and Seneca Foods Corporation announced that
they are currently negotiating the purchase by Seneca of Agrilink's Midwest
private label canned vegetable business. The proposed assets to be acquired by
Seneca will include Agrilink's Cambria, Wisconsin and Arlington, Minnesota
facilities. The transaction will also include reciprocal co-packing agreements.
The parties are working toward finalizing the agreement by early November,
subject to further due diligence and board and regulatory approval. This
transaction does not include Agrilink's branded canned vegetables, Veg-All and
Freshlike.
<PAGE>
RISK FACTORS
Before you invest in our securities, you should be aware that there are
various risks, including those described below. You should carefully consider
these risks together with all of the other information included in this
prospectus, incorporated by reference in this prospectus, and filed as exhibits
to our registration statement before you decide to purchase shares of our Class
A common stock.
Patronage income distributed to our Class A members will be derived
exclusively from Agrilink's operations.
Our members participate in two separate and distinct pools: (a) the Class A
member pool, which is limited to Class A members and (b) the Class B member
pool, which is limited to Class B members. A Class A member is a producer and
supplier of raw products to us for processing by Agrilink. A Class B member is a
producer and supplier of raw products to us for processing at facilities of
AgriFrozen. A member's share of patronage proceeds will be determined within the
particular membership pool the member is assigned. All income from patronage
sources and related expenses will be allocated to either the Class A member pool
or the Class B member pool. Members in the Class A member pool will not have any
right to participate in patronage income generated by growers in the Class B
member pool. Similarly, members in the Class B member pool will not have any
right to participate in patronage income generated by growers in the Class A
member pool. See "Business of Pro-Fac."
A member's share of proceeds may be less than CMV.
Payment for crops is based upon the CMV of the crops supplied to us by our
members. There is no relationship, however, between the CMV of crops and the
cost of producing such crops, since CMV is determined by supply and demand in
the marketplace. Under our marketing and facilitation agreement with Agrilink,
if Agrilink experiences a loss on products processed from crops supplied by our
Class A members, this loss will be deducted from the CMV Agrilink would
otherwise pay to us for distribution to our Class A members. Agrilink's ability
to pay us the CMV of crops supplied by our Class A members will depend in large
part on the overall profitability of Agrilink. There can be no assurance that
Agrilink will be able to pay the CMV of our Class A members' crops.
Holders of our common stock receive only one vote regardless of the number
of shares owned.
Each of our members has one vote, regardless of the number of shares of
common stock held. If two or more members are joined in a single farming
enterprise, the participating members receive only a single vote. Therefore,
even a member with substantial holdings of common stock will have relatively
little control over the election of directors or other matters on which our
members may vote. See "Description of Pro-Fac Securities."
Possible discontinuance of crops.
We continuously review the ability of our members to produce high-quality
crops. Based on our evaluations, we may determine to stop marketing, in whole or
in part, a particular crop and terminate or reduce the crops deliverable under
the crop delivery agreements of our members producing that crop for sale through
us. The members affected would be required to sell all of their shares of common
stock supporting that portion of the crop to us for cash at its par value, which
is $5.00 per share, plus any declared but unpaid dividends.
We may also adjust the quantity of a crop to be marketed for our members.
This adjustment may be temporary or permanent. Permanent increases in the
quantity of a crop to be marketed would involve the purchase of additional
shares of common stock, and permanent decreases would involve the sale of shares
of common stock by members.
<PAGE>
We are the guarantor of Agrilink's indebtedness.
We do not have any independent operations or any significant assets other
than the capital stock of Agrilink and AgriFrozen. We are dependent upon the
receipt of payments under our marketing and facilitation agreements with
Agrilink and AgriFrozen, and upon the receipt of dividends or other
distributions from Agrilink to fund our obligations, including our obligations
under our guarantees with respect to Agrilink's indebtedness under its new
credit facility, the Dean Foods subordinated promissory note and Agrilink's new
notes.
Agrilink's substantial leverage and debt service requirements could
adversely affect our operating flexibility and place us at a competitive
disadvantage.
Agrilink is highly leveraged and has significant debt service requirements.
At June 26, 1999, Agrilink had $677 million of indebtedness outstanding, not
including borrowings under its $200 million revolving credit facility. At June
26, 1999, Agrilink had $18.9 million of indebtedness outstanding under its
revolving credit facility, representing seasonal working capital borrowings, and
it had issued $16.2 million of letters of credit under its revolving credit
facility.
Agrilink's credit facility contains covenants imposing a number of
significant operating and financing restrictions on our business, as well as
Agrilink's business. These covenants, among other things, limit our ability to:
incur additional indebtedness;
incur or maintain liens;
pay dividends or other distributions;
redeem our capital stock;
make other restricted payments;
enter into transactions with affiliates;
sell or dispose of assets; and
merge, consolidate or sell all or substantially all of our assets.
In addition, we are required under Agrilink's credit facility to maintain
specified levels with regard to EBITDA, interest coverage, fixed charges
coverage, leverage and net worth. These provisions could negatively affect our
ability to react to changes in market conditions or to take advantage of
business opportunities we believe to be desirable.
Our or Agrilink's failure to comply with these provisions in Agrilink's
credit facility would result in a default thereunder.
In addition, a substantial portion of Agrilink's cash flow from operations
must be dedicated to the payment of principal and interest on its indebtedness,
reducing funds available to Agrilink for operations, capital expenditures, or
other purposes. For example:
Agrilink must make interest payments on its new notes in the amount of
approximately $23.8 million each year;
Agrilink is required to make interest payments under the new credit
facility of approximately $40.4 million each year under the term loan
facility and approximately $81,000 per $1 million borrowed under the
revolving credit facility, assuming its interest rates do not change;
<PAGE>
Agrilink is required to make annual principal repayments under the new
credit facility in amounts of: $8.3 million in fiscal 2000, $10.8 million
in each of fiscal 2001, 2002, and 2003, $11.1 million in fiscal 2004,
$195.3 million in fiscal 2005 and $199.5 million in fiscal 2006. Agrilink
would not presently be able to make the payments due in fiscal 2005 or 2006
out of its current cash flow and may be unable to pay these principal
amounts when they become due unless Agrilink is able to refinance
indebtedness; and
Certain of Agrilink's loans under the new credit facility have variable or
floating interest rates. Of the $446.6 million principal amount of loans
outstanding at June 26, 1999 under Agrilink's term loan facility, Agrilink
has effectively fixed the applicable interest rates for $250 million of
such loans for three years through interest rate hedges. Accordingly,
Agrilink remains vulnerable to increases in interest rates, and
correspondingly, increases in its interest costs, for the unfixed portion
of the interest due for this floating rate debt.
A default under Agrilink's credit facility would allow the lenders to
terminate their loan commitments under Agrilink's revolving credit facility. In
addition, Agrilink's creditors under its credit facility could require
acceleration of the payment of principal and interest on those loans upon the
occurrence of a default, causing all amounts owed under Agrilink's credit
facility to be immediately due and payable. If Agrilink is unable to repay its
indebtedness under it's credit facility, the lenders could enforce our guaranty
and require us to pay Agrilink's indebtedness. Because we have no independent
operations, it is unlikely that we would be able to pay such debt. In addition,
because of Agrilink's indebtedness, we are more highly leveraged than several of
our competitors. As a result, our ability to react to changing market conditions
may be limited, our ability to withstand competitive pressures may be inhibited
and we may be more vulnerable to a downturn in general economic conditions in
our business.
Delayed payments for crops.
Our members receive delayed payment of a portion of the purchase price for
their crops. This delay may exceed the industry average in some instances. For
instance, we have historically paid the final 25% of CMV by July 15 of the year
immediately following the year of delivery. See "Business of Pro-Fac."
Our members must include as taxable income proceeds for which they have not
received any cash payment.
A member of Pro-Fac must include in his taxable income for federal income
tax purposes his share of the net proceeds of Pro-Fac realized from patronage
business, which is member related business, paid to him in cash and allocated to
his account as qualified retains. As a result, a member is required to declare
as income the value of the qualified retains allocated to him even though he has
not received an actual cash payment of that amount. Non-qualified retains are
included in a member's taxable income only when they are redeemed. See "Business
of Pro-Fac."
Transferability of our Class A common stock is limited and you may have
limited liquidity.
The Class A common stock may only be transferred to us or other Class A
members. You may not be able to readily sell your Class A common stock in the
event you are in an immediate need of a source of cash.
The non-qualified retains are not transferable and you have limited
liquidity.
Non-qualified retains are non-transferable. They do not bear interest and
have no dividend rights. You may not be able to readily sell your non-qualified
retains for cash, or pledge your non-qualified retains as collateral for loans.
<PAGE>
We have the ability to change our treatment of retains.
Every year our board of directors determines whether to redeem our retains,
and, if so, the amount of retains that should be redeemed. Historically, we have
redeemed our qualified retains for shares of our Class A cumulative preferred
stock, and our non-qualified retains for our Class A Cumulative preferred stock
and cash.
Historically, our board of directors has redeem retains, qualified and
non-qualified, five years after issuance. This policy is subject to change in
the discretion of our board of directors. Our board could, for example, increase
the number of years the retains must be held before they are redeemed or our
board could decide to redeem the retains for cash only, for shares of our Class
A cumulative preferred stock or shares of some other authorized class of our
capital stock, some other form of consideration, or for some combination of cash
and securities.
Shortages or oversupplies of raw product due to seasonality and other
factors could result in reduced profitability.
We and our members are subject to all the risks generally associated with
the production and marketing of agricultural commodities. The production of
agricultural products is predominantly seasonal. The vegetable business can be
positively or negatively affected by national weather conditions because of the
weather's effect on crop yields. Favorable weather conditions can produce high
crop yields and an oversupply situation in a given year. Oversupply typically
will result in depressed selling prices and reduced profitability on products
produced from that year's crops. Excessive rain or drought conditions can
produce low crop yields and a shortage situation. Shortages typically result in
higher selling prices and increased profitability for products. Although the
overall national supply situation controls pricing, the supply can differ
regionally because of variations in weather.
Risks of the food industry, including changes in consumer preferences and
distribution channels could adversely affect our business.
Food processors are subject to risks of:
adverse changes in general economic conditions;
evolving consumer preferences and nutritional and health related concerns;
changes in food distribution channels and increasing buying power of large
supermarket chains, warehouse clubs, mass merchandisers, super centers and
other retail outlets that tend to resist price increases and have stringent
inventory and management requirements;
federal, state and local food processing controls;
consumer product liability claims; and
risks of product tampering.
Product liability claims or product recalls could adversely affect our
business.
The packaging, marketing and distribution of food products entails an
inherent risk of product liability and product recall and resultant adverse
publicity. We may be subject to significant liability if the consumption of any
of our products causes injury, illness or death. We could be required to recall
certain of our products in the event of contamination or damage. There can be no
assurances that product liability claims will not be asserted against us in the
future, or that any claims that are made will not create adverse publicity that
will have a material adverse effect on our ability to successfully market our
products and on our business, financial condition, and results of operations.
<PAGE>
Proceeds Not Committed to Specific Purposes.
The securities offered are issued on a continuing basis as part of normal
operations and not to raise funds for any specific purpose. Our management will
determine the allocation of the net proceeds from the sale of our Class A common
stock. As a result, members will be relying upon our management's judgment as to
the use and investment of the net proceeds.
Environmental risks; compliance with environmental laws.
We are subject to various federal, state and local laws and regulations
relating to the protection of the environment. These environmental laws and
regulations govern the disposal of solid and liquid waste material, which
results from the preparation and processing of foods, and emissions into the
atmosphere, including odors inherent in the heating of foods during preparation.
These environmental laws and regulations have had an important effect on the
food processing industry as a whole, requiring substantially all firms in the
industry to incur material expenditures for modification of existing processing,
as well as for the construction, operation and closure of waste treatment and
related facilities. We cannot predict what environmental legislation or
regulations will be enacted in the future, how existing or future laws or
regulations will be administered or interpreted or whether new environmental
conditions may be found to exist. Enactment of more stringent laws or
regulations, more strict interpretation of existing laws and regulations or
identification of new conditions may require additional expenditures by us.
Year 2000 technology problems could cause business interruptions.
Many currently installed computer systems and software products worldwide
are coded to accept only two-digit entries to identify a year in the date code
field. Consequently, on January 1, 2000, many of these systems could fail or
malfunction because they are not able to distinguish between the year 1900 and
the year 2000. Accordingly, many companies, including Pro-Fac and our customers
and suppliers, may need to upgrade their systems to comply with applicable year
2000 requirements.
Because we, our customers and suppliers depend, to a very substantial
degree, upon the proper functioning of computer systems, a failure of these
systems to correctly recognize dates beyond January 1, 2000 could disrupt
operations. Any disruptions could have a material adverse effect on our
business, financial condition or results of operations.
<TABLE>
RATIO OF EARNINGS TO FIXED CHARGES AND
PREFERRED DIVIDENDS
<CAPTION>
Fiscal Years Ended
June 24, June 29, June 28, June 27, June 26,
1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges
and preferred dividends 1.5 (A) 1.1 1.4 1.6
Pro forma ratio of earnings to fixed
charges and preferred dividends 1.3 (B) (B) 1.2 1.5
<FN>
(A) In the fiscal year ended June 29, 1996, the earnings were inadequate by
$37,048,000 to cover the amount of fixed charges and pre-tax preferred
dividends.
(B) In the fiscal years ended June 29, 1996 and June 28, 1997, the earnings
were inadequate by $43,748,000 and $2,028,000, respectively, to cover the
amount of fixed charges and pre-tax preferred dividends which would have
been declared and paid if all retained earnings allocated to members'
"retains" at the end of each fiscal period had been converted to preferred
stock at the beginning of the period at the maximum dividend permitted by
law.
</FN>
</TABLE>
<PAGE>
For purposes of computing the ratio of earnings to fixed charges and
preferred dividends, earnings consist of net proceeds before
equity in the undistributed earnings of CoBank, ACB;
fixed charges;
income taxes; and
dividends on common and preferred stock.
Fixed charges represent total interest expense. For purposes of this
computation, preferred dividends are adjusted to a pre-tax basis. Dividends
represent amounts deducted to determine net proceeds in each fiscal year.
The pro forma ratios of earnings to fixed charges and preferred dividends
were computed by further increasing combined fixed charges and such dividends,
adjusted to a pre-tax basis, by the amount of pre-tax preferred dividends which
would have been declared and paid if all retained earnings allocated to members
at the end of each fiscal period had been converted to preferred stock at the
beginning of the respective periods and the maximum dividend permitted by law of
12 percent of par value was declared and paid thereon.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-2 under the
Securities Act registering, the Class A common stock, retains and Class A
cumulative preferred stock. This prospectus, which is part of the registration
statement, does not contain all of the information included in the registration
statement. Also, any statement made in this prospectus concerning the contents
of any contract, agreement or other document is not necessarily complete. If we
have filed any contract, agreement or other document as an exhibit to the
registration statement, you should read the exhibit for a more complete
understanding of the document or matter involved.
We are required to file periodic reports and other information with the SEC
under the Securities Exchange Act. Accordingly, we file reports and other
information with the Commission.
You may read and copy the registration statement, including the attached
exhibits, and any reports, statements or other information that we may file, at
the SEC's public reference room at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549-1004, and at the SEC`s Midwest Regional Office located at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511; and its Northeast Regional Office located at 7 World Trade Center,
Suite 1300, New York, New York 10048. You can request copies of these documents,
upon payment of the duplicating fee, by writing to the SEC at its principal
office at 450 Fifth Street, N.W., Washington, D.C. 20549-1004. Please call the
SEC at 1-800-SEC-0330 for further information on the operation of the public
reference rooms. Our and Agrilink's SEC filings are also available to the public
on the SEC's Internet site (http://www.sec.gov).
The SEC allows us to "incorporate by reference" information we have filed
with it, which means that we can disclose important information to you by
referring you to those previously filed documents. These incorporated documents
contain important business and financial information about us that is not
included in or delivered with this prospectus, and later information filed with
the SEC will update and supersede this information. The information incorporated
by reference is considered to be part of this prospectus. We incorporate by
reference the document listed below.
Our Annual Report on Form 10-K/A-1 for the year ended June 26, 1999.
A copy of our Annual Report on Form 10-K/A-1 for the fiscal year ended June
26, 1999 is being delivered with this prospectus. The above filing is also
available at the SEC's offices and Internet site described
<PAGE>
above. You may request a copy of the filing by writing or telephoning us at the
following address: Pro-Fac Cooperative, Inc., 90 Linden Oaks, P.O. Box 682,
Rochester, New York 14603, Attention: Vice-President-Communications; telephone:
(716) 383-1850.
FORWARD-LOOKING INFORMATION
This prospectus, together with the annual report on Form 10-K/A-1
incorporated into this prospectus, contains forward-looking statements, which
are not statements of historical facts. We have based these forward-looking
statements on our current expectations and projections about future events,
based on the information currently available to us. The forward-looking
statements include, among other things, our expectations and estimates about
business operations, strategies and future financial performance.
The forward-looking statements are subject to risks, uncertainties and
assumptions about us, and about the future, and could prove to be wrong.
Important factors that could cause actual results to differ materially from our
expectations are discussed in this prospectus, including the forward-looking
statements included in this prospectus and under "Risk Factors." Among the
factors that could impact our ability to achieve our goals are:
the impact of strong competition in the food industry;
the impact of weather on the volume and quality of raw products;
the inherent risks in the marketplace associated with new product
introductions, including uncertainties about trade and consumer acceptance;
our success in integrating operations (including whether the anticipated
cost savings in connection with acquisitions will be realized and the
timing of any such realization) and the availability of acquisition and
alliance opportunities;
our ability to achieve gains in productivity, and improvements in capacity
utilization; and
our ability to service debt.
We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
In light of these risks, uncertainties and assumptions, the forward-looking
events discussed in this prospectus may not occur.
USE OF PROCEEDS
The securities offered are issued on a continuing basis as part of our
normal operations and are not offered to raise funds for any specific purpose.
Our Class A common stock is sold from time to time to new members or to members
who increase the quantity of crops marketed through us for sale and processing
at Agrilink's facilities. Retains are issued annually to represent net proceeds
from patronage business retained by us and are used for general corporate
purposes, such as the financing of fixed assets and the reduction of short or
long-term borrowings, as determined by the board of directors at the time of
receipt. We receive no cash proceeds from the issuance of our shares of Class A
cumulative preferred stock.
DETERMINATION OF OFFERING PRICE
Our Class A common stock issued by us is at its $5.00 par value to Class A
members or to growers who wish to become Class A members and meet our standards
for membership. The amount of patronage proceeds issued to our members in the
form of retains is determined annually by our board of directors. One share of
our Class A cumulative preferred stock is issued for each $25 worth of retains
redeemed by us.
<PAGE>
PLAN OF DISTRIBUTION
The Offering.
We are offering shares of our Class A common stock to our current Class A
members and to growers who wish to become Class A members and meet our
standards. Shares of our Class A common stock will be sold based upon the
quantity and types of crops to be marketed through us by the grower-offeree.
The Distribution.
The offering will be implemented through our Agricultural Services
Department. Members of the Agricultural Services Department will provide
assistance in this offering, which may consist of: (i) assisting in the mailing
of this prospectus; (ii) responding to phone inquiries from potential
grower-offerees with regard to matters of an administrative nature; (iii)
maintaining records of all subscriptions; and (iv) attending informational
meetings for potential grower-offerees and communicating with them by telephone
concerning the information contained in this prospectus.
None of the members of our Agricultural Services Department are registered
with the SEC as a broker-dealer. No member of our Agricultural Services
Department will receive any compensation or other remuneration, either directly
or indirectly, for his or her assistance in this offering. Any time spent by the
members of our Agricultural Services Department to assist in this offering will
be incidental to his or her regular duties at Pro-Fac.
Subscription Procedure.
Subscriptions for the Class A common stock can be made by completing and
signing the subscription agreement provided with this prospectus and mailing it
to Pro-Fac Cooperative, Inc., 90 Linden Oaks, P.O. Box 682, Rochester, New York
14603, Attention: Kevin M. Murphy, Vice President Member Relations -
Agricultural Services Department.
The execution and delivery of the subscription agreement will obligate the
subscriber to irrevocably and unconditionally acquire the number of shares of
Class A common stock subscribed for in the subscription agreement if we accept
the subscription. We reserve the right to accept or reject any subscription in
whole or in part in our sole and complete discretion.
By executing the subscription agreement, each grower-subscriber expressly
grants to us the right to repurchase his shares of Class A common stock for a
total consideration of $5.00 for each share.
Prospective growers-subscribers are referred to the subscription agreement
provided with this prospectus for the full text of the representations and
warranties and other agreements and obligations he will make to or with Pro-Fac.
BUSINESS OF PRO-FAC
We are an agricultural cooperative formed under New York State law to
process and market crops grown by our members. Only growers of crops marketed
through Pro-Fac, or associations of such growers, can become members of Pro-Fac.
Membership.
Membership in Pro-Fac is evidenced by the ownership of our common stock.
Our common stock is divided into two classes -- Class A common stock and Class B
common stock. Holders of Class A common stock are "Class A members." Holders of
our Class B common stock are "Class B members." We do not currently have any
Class B members. Crops supplied to us by our Class A members are sold to
Agrilink for
<PAGE>
processing, and crops supplied by our Class B members will be sold to AgriFrozen
for processing. See "Description of Pro-Fac Securities - Common Stock".
Growers desiring to become members of Pro-Fac are required to file an
application for membership. In the application a grower agrees to, among other
things, purchase the required number and class of shares of our common stock, as
determined by our board of directors based upon the quantity and type of crops
to be marketed through Pro-Fac by the member-applicant.
We currently have approximately 645 Class A members located principally in
New York, Delaware, Pennsylvania, Illinois, Michigan, Washington, Oregon, Iowa,
Nebraska, Florida, and Georgia. Crops grown by our members and purchased by us
include:
fruits, such as cherries, apples, blueberries, peaches and plums,
vegetables, such as snap beans, beets, cucumbers, dry beans, spinach, lima
beans, peas, sweet corn, carrots, cabbage, squash, asparagus, potatoes,
turnip roots and leafy greens, and
popcorn.
Regional Representation.
The business of Pro-Fac is conducted pursuant to policies established by
our board of directors. The territorial area in which Pro-Fac operates has been
divided into geographic regions based on natural divisions of product and
location. In addition, some regions have been further divided into districts.
The members within each region or district are represented on Pro-Fac's board of
directors by at least one director. In an effort to insure a reasonably balanced
representation of members from various geographic regions on our board of
directors, our board of directors designates the number of directors to be
elected from each region or district based on the value of raw product delivered
by the members from the particular geographic region. Presently, Pro-Fac's
operations are conducted in five regions. Those regions, as well as the number
of directors elected from each of those regions, are identified in the table
below.
Present Number
Region Area of Directors
I (Dist. 1) Western Upstate New York 2
(Dist. 2) Eastern Upstate New York 2
(Dist. 3) Pennsylvania and Delaware 1
II (Dist. 1) Michigan 3
(Dist. 2) Illinois 1
III Iowa and Nebraska 1
IV Washington and Oregon 1
V Georgia and Florida 1
The members in each region elect the director or directors for that region.
In the case of a region that is divided into districts, the members in each
district elect the directors for that district. There are currently 12 directors
on our board of directors even though our bylaws permit us to have up to 18
directors. Although our bylaws authorize our board of directors to appoint up to
one-fifth of the total number of directors, our members have historically
elected all our directors.
Commodity Committees.
Commodity committees have been established for each of the major crops
marketed through us. Each committee member is a member of Pro-Fac who grows the
crop or crops with which his committee represents.
<PAGE>
The committees are charged with the responsibility of counseling and advising
our board of directors, our officers and management of matters generally
associated with the specific crop or crops the committee members represent.
Under our current policy, if a particular crop is produced in different
geographic areas, commodity committees are established either for the separate
geographic areas or for a combination of the geographic areas. Members of each
commodity committee are elected by the members of Pro-Fac in the region or
regions for which the particular commodity committee serves.
Our commodity committees have been active in advising our board of
directors on numerous matters affecting Pro-Fac crops, particularly with regard
to the determination of CMV and the content of the annual crop delivery
agreements, which specify, among other things, the terms under which crops will
be grown, harvested and delivered.
Marketing of Members' Crops.
General Marketing Agreement. Each member of Pro-Fac enters into a general
marketing agreement with Pro-Fac. In the general marketing agreement the member
appoints Pro-Fac as his exclusive agent for processing and marketing the portion
of his crop committed under the general marketing agreement, and under the crop
delivery agreements executed between Pro-Fac and the members each year for the
then up-coming growing season. In the general marketing agreement Pro-Fac agrees
to make available, through its marketing and facilitation agreements with
Agrilink and AgriFrozen, facilities for receiving and processing the crops
delivered by its members to Agrilink or AgriFrozen, as the case may be.
Passage of Title to Crops. Upon a member's delivery of crops to us, we take
title to the crops and have the right to transfer, process or encumber the crops
as we see fit, subject to the provisions of the general marketing agreement. A
member delivering crops to Pro-Fac has no control over those crops following
delivery. Prior to delivery to Pro-Fac, each member bears all risk of loss or
damage to his crops.
Quantity of Crops Marketed. The quantity of a crop to be delivered by a
member in any year is the quantity established in the annual crop delivery
agreements which are supplements to the general marketing agreements. Members
are required to purchase additional shares of common stock if they undertake to:
increase their delivery to Pro-Fac of a particular crop or
grow a new type of crop to be marketed through Pro-Fac.
A member's common stock ownership is dependent upon the quantity and type
of raw product to be delivered by the member.
If we determine that additional quantities of a crop are required,
additional shares of common stock will be offered to growers of the crop.
Qualified current members of Pro-Fac in the area where the crop is needed will
be given the first opportunity to purchase the stock. If a reduction in the
quantity of a crop is required, the common stock holdings of all Pro-Fac members
delivering that crop will be proportionately reduced. The opportunity to grow
additional crops and the requirement to reduce crop production will be given and
made by our board of directors.
If a change in total crop requirement is determined to be only temporary,
adjustments of common stock holdings will not be required. If additional
quantities are temporarily required, we will offer our members currently growing
the crop the opportunity to deliver the additional quantities, on a pro rata
basis, without regard to membership class. If a temporary reduction in a crop is
required, we may temporarily pro-rate downward the quantity of the crop
delivered by all members supplying it, without regard to membership class.
<PAGE>
If the deliveries of a crop are temporarily pro-rated downward, the members
affected may, with the approval of our board of directors, be offered the
opportunity to sell their excess common stock to Pro-Fac.
A member choosing to sell a portion of his shares of common stock would
permanently reduce, by a corresponding amount, the amount of crop he is entitled
to deliver to Pro-Fac.
The quantity of a particular crop to be delivered to Pro-Fac may be based
on:
the actual number of acres the member agrees to plant and harvest for
delivery to Pro-Fac, or
a specified tonnage.
For example, growers of sweet corn and snap beans typically agree to plant
and harvest a specified number of acres of those crops, while growers of squash,
carrots and asparagus typically agree to supply a specified tonnage of those
crops.
Agent Growers. If a member is temporarily unable to fulfill his crop
production obligations to Pro-Fac, either in whole or in part, he may, on a
temporary basis, contract with another grower or growers, who may, but need not
be, a member, to fulfill all or a part of the member's obligations to deliver
crops to Pro-Fac. In the event a member contracts with another member to fulfill
his crop production obligations, the member must be of the same class. In other
words, Class A members may only contract with other Class A members and Class B
members may only contract with other Class B members. All payments, including
the allocation of retains, made by Pro-Fac for crops delivered by an agent
grower will be made directly to the agent grower. A member may not utilize an
agent grower to fulfill his production obligations to Pro-Fac more frequently
than once in any two consecutive years without subjecting himself to a mandatory
transfer of his excess common stock.
Payment for Members' Crops.
Commercial Market Value. Our marketing and facilitation agreements with
Agrilink and AgriFrozen provide, generally, that we will be paid the CMV of the
crops purchased from us.
Acting upon the recommendation of a joint committee, our board of
directors, together with the board of directors of Agrilink, will determine the
CMV of our Class A members' crops; and our board of directors, together with the
board of directors of AgriFrozen, will determine the CMV of our Class B members'
crops. The joint committee is comprised of the chief executive officer of
Agrilink and an equal number of Pro-Fac directors and disinterested directors.
In making its determination, the joint committee will consider data
supplied by Agrilink and AgriFrozen concerning pre-season contracts and open
market purchases for various crops. The joint committee will also give
considerable weight to the advice of the commodity committees representing the
various crops marketed through Pro-Fac.
Pools. Our membership is divided into two separate and distinct pools: (a)
our Class A member pool, which is limited to Class A members and (b) the Class B
member pool, which is limited to Class B members.
Patronage Proceeds.
Our patronage proceeds are equal to our gross receipts, which are derived
from sources that under law qualify as patronage income, including income from
the sale of raw products and all income from other patronage sources, less our
operating expenses attributable to the production of our patronage income. Our
operating expenses include overhead, interest, dividends on capital stock,
maintenance, depreciation, obsolescence, bad debts, taxes and other proper
costs, all as determined by our board of directors. Gains and losses are
distributed based on the nature of the business disposed of, but in any event
such gains and losses are to be distributed to the members of the particular
pool affected.
<PAGE>
Members' Share of Patronage Proceeds.
A member's share of patronage proceeds is determined within the particular
pool to which the member is assigned. Within each pool, each member's and each
agent grower's pro rata share of the patronage proceeds is determined annually
based upon each member's share of the year's total CMV within the pool.
In any year in which patronage proceeds of a particular pool exceed the CMV
of the pool, the members within that pool will be paid or allocated their pro
rata portion of the excess patronage proceeds. Similarly, if in any year the
patronage proceeds of a particular pool are less than CMV of the pool then the
CMV paid to each member and agent grower as the purchase price for his crop
shall be reduced by his share of the loss of the pool for the year.
Payment of Patronage Proceeds. Our bylaws require us to pay or allocate to
each member or agent grower his pro rata share of patronage proceeds within 8
1/2 months after the end of our fiscal year.
Retention of Patronage Proceeds. A portion of the patronage proceeds
payable to our members may be retained by us for use as working capital or for
other general corporate purposes. Retained patronage proceeds are characterized
as either qualified retains or non-qualified retains. The portion of the
patronage proceeds of a particular pool that are retained will be allocated
among the members and agent growers within the pool.
Under the Internal Revenue Code, we are permitted to deduct, for federal
income tax purposes, the entire amount of retained patronage proceeds allocated
(but not yet distributed) to our members, provided,
we give our members a "qualified written notice of allocation," which
discloses to the member the stated dollar amount allocated to him as
retained patronage income;
each member consents to include in his gross income for the taxable year
the stated dollar amount of the allocation, as well as the amount of
percentage income actually distributed to him; and
at least 20% of each member's retained patronage income is paid in cash.
If all of these requirements are met, the retained patronage income
constitutes a qualified retain. Retained patronage income not meeting the above
requirements is a non-qualified retain.
Our bylaws require us to pay or account annually to our members for their
crops, on a cooperative basis, in cash and through the allocation of retains -
qualified or non-qualified - as our board of directors determines. In four out
of the past five years we have paid our Class A members the full CMV of all of
their products marketed through us. Patronage proceeds in excess of CMV, after
payment of dividends on our capital stock, have been paid partially in cash to
our members and partially in the form of retains. In fiscal 1996, Class A
members' cash payments for CMV were reduced by 10%.
The percentages of CMV paid in cash or allocated to our Class A members as
retains over the last five fiscal years are as follows:
Fiscal Years Ended June
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
Paid in cash 102.6% 90.0% 101.7% 102.6% 100.0%
Allocated as qualified retains 10.6 0.0 5.2 7.9 0.0
Allocated as non-qualified retains 0.5 0.0 0.0 0.0 0.0
----- ---- ----- ----- -----
Total 113.7% 90.0% 106.9% 110.5% 100.0%
===== ==== ===== ===== =====
<PAGE>
Timing of Payments for Crops. Both Agrilink and AgriFrozen are required,
under their respective marketing and facilitation agreements with us, to pay us
the purchase price for crops purchased from us on a date or dates that coincide
with the time of payment for crops by us to our members. The actual CMV of a
crop cannot ordinarily be determined until well after the harvest, so initial
payments are generally based upon the final CMV established for the crop in the
prior year, unless the board of directors determines that average industry
prices have changed significantly since that time.
Recognizing the costs involved in harvesting and delivering a crop, we have
adopted a policy of offering harvest time cash advances to our members. The
terms and conditions governing these advances are specified in the annual crop
delivery agreements. The harvest time payment is usually due approximately one
week after delivery of a crop, and the total amount of the advance may not
exceed 50% of the crops estimated CMV. The harvest time advance is repaid by
deducting the amount of the advance from the first CMV payment otherwise due the
member for the crop.
Once payments for particular crops are received from Agrilink or
AgriFrozen, we will pay the funds received over to the members of the Class A
pool or the Class B pool, as the case may be, who delivered those crops. Subject
to minor variations, we have historically paid our members the purchase price
for their crops in accordance with the following schedule:
50% of estimated CMV is paid not later than 30 days after completion of
delivery of a particular crop;
another 25% of estimated or actual CMV is paid not later than 120 days
after the average date of final delivery for each crop; and
the balance of CMV is paid not later than the immediately following July
15.
Any payments in addition to CMV are made as soon as possible, but in any
event within 8 1/2 months following the end of our fiscal year.
For example, if a member delivers crops to us with a CMV of $10,000 on
September 1, 1999 and a total of $1,050 in patronage proceeds in excess of CMV
is earned for the year and allocated to him, he will be paid or allocated a
total of $11,050 for his crops. Of this amount, he will be paid $10,000 (CMV) in
cash, in three installments based on the following schedule of payments from
Agrilink or AgriFrozen, as the case may be:
$5,000 by October 1, 1999, less any harvest time advance;
$2,500 by February 1, 2000, assuming this member's date of final delivery
coincides with the average date of final delivery for the same crop, and
$2,500 by July 15, 2000.
In addition, as soon as the necessary computations can be made and final
payment is received from Agrilink or AgriFrozen, as the case may be, but before
March 15, 2001, the $1,050 of excess patronage proceeds will be paid or
allocated to the member in the form of cash or retains. A minimum of 20% of the
excess over CMV, in the above example $210, must be distributed in cash and the
balance may be distributed in the form of retains. See "Description of Pro-Fac
Securities."
Tax Matters.
As a cooperative, we are taxed under Subchapter T of the Internal Revenue
Code. Subchapter T imposes regular corporate income tax rates on cooperatives,
but at the same time allows cooperatives to deduct from taxable income, for
federal income tax purposes, certain deductions which are not available to other
business corporations. In particular, under Subchapter T a cooperative may
deduct from its taxable income all
<PAGE>
amounts which are paid to its members and other patrons as patronage dividends
(either in cash or through the allocation of amounts retained by the cooperative
and represented by qualified written notices of allocation) with respect to
patronage occurring during the taxable year. Non-patronage-sourced income of a
cooperative is subject to federal income tax at the cooperative level.
In general, the payments from earnings of a cooperative to its members in
the form of cash and qualified retains constitute patronage dividends within the
meaning of Subchapter T. Members and other patrons of a cooperative must agree
to include in their taxable income in the year received all amounts of patronage
dividends paid in cash or allocated to their accounts as qualified retains.
Patronage income allocated by a cooperative to its members in the form of
non-qualified retains is taxable at the cooperative level when such retains are
issued. In the year in which non-qualified retains are redeemed by a
cooperative, the cooperative receives a tax deduction in the amount of the
retains which are redeemed. Members and other patrons of the cooperative must
agree to include in their taxable income in the year of redemption any
non-qualified retains redeemed by the cooperative.
Under our marketing and facilitation agreement with Agrilink, payments are
made by Agrilink for the crops of our members. Such payments, in part, are based
upon the earnings of Agrilink derived from products processed from the crops
supplied by our Class A members. These payments are classified and reported by
us, for federal income tax purposes, as patronage-sourced income. Because there
are few guidelines in this area of law, such classification and reporting has in
the past led to audit disputes with the Internal Revenue Service. The IRS
clarified its position in a technical advice memorandum to us on September 23,
1991. Although changes have occurred in our relationship with Agrilink since the
issuance of the technical advice memorandum, the contractual relationship
requiring the payments based upon the earnings of Agrilink, remains
substantively the same as when the technical advice memorandum was issued.
Accordingly, we have continued to treat payments based upon the earnings of
Agrilink as patronage-sourced income. In January 1995, Agrilink's and our board
of directors approved appropriate amendments to Agrilink's bylaws to allow
Agrilink to qualify as a cooperative under Subchapter T of the Code. On August
24, 1995, we received a favorable ruling from the IRS approving the change in
tax treatment effective for fiscal 1996. This ruling also confirmed that the
change in Agrilink's tax status would have no effect on our ongoing treatment as
a cooperative under Subchapter T of the Code. Based on the foregoing, Harris
Beach & Wilcox, LLP is of the opinion that payments to members of Pro-Fac based
upon earnings of Agrilink continue to constitute patronage-sourced income
pursuant to Subchapter T of the Code. In the event, however, the IRS changes our
classification as a cooperative and/or the reporting of patronage-sourced income
by us, additional income taxes and interest could be assessed as a result of the
reclassification of income reported as patronage-sourced income to
non-patronage-sourced income.
Our marketing and facilitation agreement with AgriFrozen is substantially
the same as the one we have with Agrilink. In reliance upon the technical advice
memorandum discussed above, we believe that, so long as AgriFrozen's
relationship with us is substantially similar to Agrilink's relationship with
us, that payments to our Class B members based upon earnings of AgriFrozen
derived from products processed from the crops supplied by our Class B members
will constitute patronage-sourced income pursuant to Subchapter T of the Code.
From time to time various proposals have been made and bills introduced in
Congress which would have the effect of modifying or eliminating the present
provisions of the Code pursuant to which cooperatives are taxed and could
subject cooperatives to greater federal income tax liability. It is not possible
to predict whether any such proposal may be adopted, or if adopted what effect
it might have on our federal income tax liability and the federal income
liability of our members.
In addition, from time to time the IRS issues revenue rulings, revenue
procedures, and other official statements, which may be either prospective or
retrospective in application, by which it seeks to interpret and administer the
provisions of the Code applicable to cooperatives. It is also impossible to
predict the effect any administrative interpretations which may be adopted in
the future would have on our federal tax liability or that of our members.
<PAGE>
Tax Treatment of Amounts Paid or Allocated to Members.
Under the federal income tax laws, our members must currently include in
their taxable income calculation the purchase price for their crops, including
all cash payments and allocations of qualified retains. Non-qualified retains
are not subject to current taxation to our members and are taxable to members
only if and when redeemed by us.
DESCRIPTION OF PRO-FAC SECURITIES
This description summarizes some of the provisions of our restated
certificate of incorporation, a copy of which has been included as an exhibit to
the registration statement. If you want more complete information, you should
read the provisions of our restated certificate of incorporation.
Our authorized capital stock consists of 5,000,000 shares of Class A common
stock, 2,000,000 shares of Class B common stock and 55,000,000 shares of
preferred stock. We are also authorized to issue up to $15,000,000 of special
membership interests.
As of August 28, 1999, we had outstanding 2,040,568 shares of Class A
common stock, 39,635 shares of non-cumulative preferred stock with a par value
of $25 per share, 3,694,495 shares of Class A cumulative preferred stock with a
par value of $1.00 per share and 26,061 shares of Class B, series 1 10%
cumulative preferred stock with a par value of $1.00 per share.
Common Stock.
Rights to dividends and on liquidation. Any outstanding retains and
preferred stock would rank senior to the common stock in respect of liquidation
rights and dividend rights.
Under present law, dividends on our common stock may not exceed 12% of its
par value per year. Members who purchase shares of common stock in installments
are entitled to receive dividends only on those shares of common stock actually
issued to them.
Voting. All voting power is vested exclusively in the holders of common
stock. However, each member is entitled to one vote regardless of the number of
shares held. When two or more holders of common stock are joined in an
agricultural venture, our board of directors will determine whether the venture
is a single enterprise, entitling the participating holders to a single vote, or
multiple enterprises, entitling the holders to more than one vote.
Preemptive rights. Holders of our common stock do not have any right to
purchase additional shares of common stock or any of our capital stock if we
sell shares to others.
Conversion rights. Our common stock is not convertible into any other
security of Pro-Fac.
Required disposition and redemption of common stock.
In the event a member is no longer a producer of agricultural products
marketed through us then the member is required to dispose of his shares of
common stock.
Upon the death of an individual member, the estate of the deceased member
will continue as a member for the purposes of winding up the affairs of the
deceased member until all of the obligations of the deceased member to us
have been performed, including those under any then current crop delivery
agreement. After fulfillment of the deceased member's obligations to us,
the deceased member's estate is required to dispose of the member's common
stock.
<PAGE>
In the event we discontinue a crop, then all members whose ownership of
common stock is based upon their marketing of the discontinued crop through
us will be required to sell their common stock to us for cash at the par
value, plus any declared but unpaid dividends.
In the event a member desires or is required by us to permanently reduce
the quantity of a crop which he sells to us, then the member will be
required to dispose of the number of shares of his common stock as is
necessary to bring his ownership of shares of common stock into proper
relationship to the quantity and type of crops which he markets through us.
A member who voluntarily wishes to sell his common stock or who is required
to sell his shares of common stock must make a reasonable effort to find another
grower within the disposing member's pool, that is, a Class A member must use
reasonable efforts to find another grower in the Class A member pool and a Class
B member must use reasonable efforts to find another grower in the Class B
member pool, who is willing to purchase the member's common stock and assume all
of his obligations to us and who meets all requirements for membership in
Pro-Fac. We will give a disposing member a reasonable period of time within
which to find another grower.
We may assist the disposing member in finding another grower by advising
him of the price another qualified grower in the appropriate class, that is a
Class A membership or Class B membership, acceptable to us, is willing to pay
for the stock. Historically, these prices have varied widely by commodity and
the region in which the crop associated with the common stock is to be grown.
Sales are often at a price exceeding the $5.00 par value at which the common
stock was originally issued. Historically, there has usually been sufficient
demand for common stock offered for sale by members.
In the event the disposing member is unable to find a qualified grower
within a reasonable period of time, the member must sell his common stock to us
for cash at par value plus any declared and unpaid dividends.
Liability to further assessment. Shares of our common stock are not subject
to further call or assessment. Under the New York Cooperative Corporations Law,
however, each member of a cooperative corporation, as well as each director, may
be personally liable for certain amounts due to employees for services rendered
to the cooperative.
Transfer agent. We function as our own transfer agent for our common stock.
Transferability. Our common stock is issued only to growers of agricultural
products marketed through us, or to associations of growers, and may be
transferred only to another grower who meets our membership standards. A member
holding shares of Class A common stock may only transfer his shares to another
member owning shares of Class A common stock or to a grower eligible for
membership in Pro-Fac and eligible to own shares of Class A common stock.
Similarly, a member holding shares of Class B common stock may only transfer
shares to another member owning shares of Class B common stock or to a grower
eligible for membership in Pro-Fac and eligible to own shares of Class B common
stock.
Non-Cumulative Preferred Stock, Class A Cumulative Preferred Stock and
Class B, Series 1 Cumulative Preferred Stock.
General. Our non-cumulative preferred stock, Class A cumulative preferred
stock and Class B, series 1 cumulative preferred stock are not convertible into
any other securities. We are not obligated to redeem or retire these securities.
<PAGE>
Our Class A cumulative preferred stock is listed on The Nasdaq National
Market under the symbol "PFACP." There is currently no active trading market for
either our non-cumulative preferred stock or our Class B, series 1 preferred
stock. We do maintain an ongoing exchange program to allow holders of
non-cumulative preferred stock to exchange their shares for Class A cumulative
preferred stock on a share-for-share basis. A "blackout" period exists between
the dividend qualifying date for the non-cumulative preferred stock and October
16 each year when such exchanges cannot be made. This prevents a holder from
collecting the annual dividend on the non-cumulative preferred stock and
immediately becoming eligible to collect the quarterly dividend on the Class A
cumulative preferred stock.
Our Class B, series 1 preferred stock is issuable to employees of Agrilink
pursuant to an employee stock purchase plan. Under the plan employees of
Agrilink can purchase shares of Class B, series 1 cumulative preferred stock at
a price of $10.00 per share.
Ranking. The non-cumulative preferred stock, Class A cumulative preferred
stock and Class B, series 1 cumulative preferred stock rank senior to the common
stock and are on parity with each other with respect to dividends and upon
liquidation.
Generally, this means that we cannot pay dividends on our common stock
unless we have paid the full amount of the dividends on the non-cumulative
preferred stock, Class A cumulative preferred stock and Class B, series 1
cumulative preferred stock that are due and owing at the time. Also, if we are
dissolved or liquidated, holders of the non-cumulative preferred stock, Class A
cumulative preferred stock and Class B, series 1 cumulative preferred stock are
required to be paid the full amount of their liquidation preferences before any
assets can be distributed to holders of common stock. The liquidation preference
of the non-cumulative preferred stock is $25 per share plus declared and unpaid
dividends. The liquidation preference of the Class A cumulative preferred stock
is $25 per share plus all accrued and unpaid dividends. The liquidation
preference of the Class B, series 1 cumulative preferred stock is $10 per share
plus all accrued and unpaid dividends.
So long as shares of non-cumulative preferred stock remain outstanding, we
cannot create any class of stock that would rank senior to the non-cumulative
preferred stock with respect to liquidation and dividend rights without the
consent of at least 2/3 of the outstanding shares of non-cumulative preferred
stock.
Dividends. Holders of non-cumulative preferred stock are entitled to
receive, when and as declared by our board of directors, non-cumulative cash
dividends at the rate per annum of not less than 6% per share of the par value
of such shares.
Holders of Class A cumulative preferred stock are entitled to receive, when
and as declared by our board of directors, cumulative cash dividends at a
quarterly rate equal to $.43 per share, or an annual rate of approximately 6.88%
of the liquidation preference of $25 per share. We pay dividends on the Class A
cumulative preferred stock quarterly in arrears on April 30, July 31, October
31, and January 31 of each year.
Holders of Class B, series 1 cumulative preferred stock are entitled to
receive, when and as declared by our board of directors, cumulative cash
dividends at the rate per annum of $1 per share.
Redemption. We can redeem our non-cumulative preferred stock at any time
upon 90 days written notice. If we decide to redeem, we can redeem all of the
outstanding shares at once, or we can redeem some of the shares at different
times. The redemption price is $25 per share, plus an amount equal to all
declared and unpaid dividends.
We can redeem the Class A cumulative preferred stock at any time upon
written notice not less than 30 days and not more than 60 days prior to the date
fixed for redemption. If we decide to redeem less than all of the outstanding
shares at once, the shares to be redeemed can be selected pro-rata or by lot,
except that we have the right to first redeem all of the shares of Class A
cumulative preferred stock held by any holder who
<PAGE>
owns 100 or less shares. The redemption price is $25 per share, plus an amount
equal to accrued and unpaid dividends.
The Class B, series 1 cumulative preferred stock can be redeemed by us at
any time upon not less than 30 days and not more than 60 days written notice
before the date fixed for redemption. The redemption price is $10 per share,
plus an amount equal to accrued and unpaid dividends.
Voting rights. The only voting rights the holders of shares of
non-cumulative preferred stock, Class A preferred stock and Class B, series 1
preferred stock have are those required by law.
Generally, this means that if we want to change our restated certificate of
incorporation in a way that would materially and adversely affect these holders
of the shares, then we must get the approval of holders of at least 2/3 of the
outstanding shares of non-cumulative preferred stock, Class A cumulative
preferred stock and Class B, series 1 cumulative preferred stock.
Restriction on stock acquisitions. We are prohibited from repurchasing or
otherwise redeeming our stock, other than to repurchase our common stock from
departing members, unless full dividends have been paid or are contemporaneously
declared on the non-cumulative preferred stock, Class A cumulative preferred
stock and Class B, series 1 cumulative preferred stock.
Transfer agent: The transfer agent, dividend agent and redemption agent for
the Class A cumulative preferred stock is Harris Trust Company. We act as our
own transfer agent for our non-cumulative preferred stock and Class B, series 1
cumulative preferred stock.
Retains.
Annual allocation. Retains, if any, must be allocated to the accounts of
our members within 8 1/2 months of the close of our fiscal year. Our fiscal year
ends on the last Saturday of June. It has been, and continues to be, our policy
to allocate retains to our members on or about September 15 of each year. Each
member is typically advised of the allocation of qualified retains and
non-qualified retains to his account by means of an investment summary which is
mailed to him each year on or about September 15. There were no allocations of
retains for fiscal 1996 or fiscal 1999.
Qualified retains. Qualified retains bear no interest, but five years after
issuance they generally mature into shares of our Class A cumulative preferred
stock at the discretion of our board of directors. One share of Class A
cumulative preferred stock for each $25 of qualified retains is ordinarily
issued to holders of qualified retains on or about December 31 following the
completion of the fifth year after allocation of the qualified retains. If our
board determines, qualified retains issued prior to fiscal 1996 may be redeemed
for shares of our Class A cumulative preferred stock, unless the holder
specifically requests non-cumulative preferred stock.
Redemption of non-qualified retains. It is the present intention of our
board of directors that non-qualified retains will be redeemed, through partial
payment in cash and the issuance of Class A cumulative preferred stock,
approximately five years after their issuance.
Adjustment of amount of non-qualified retains. It is possible that the
allocation of proceeds made immediately following the close of a fiscal year may
not be final and may require modification because of some event that could occur
after the close of the fiscal year. Should such an event require a reduction in
the proceeds paid or allocated to our members in a prior year, our board of
directors may, in its discretion, reduce the amount of the non-qualified retains
allocated to the accounts of those members for the year in question.
Transferability of retains; absence of market. Non-qualified retains are
not transferable, except to the heirs or personal representative of a member in
the event of the member's death. Qualified retains are freely transferable.
Although there are several broker-dealers making a market in our qualified
retains, there can be no assurance that any such market will be established.
Historically, sales of qualified retains have been at prices
<PAGE>
substantially less than their face amount. If a market for our qualified retains
is established, the increased leverage of Pro-Fac as a result of the acquisition
in fiscal 1999, and the limits on our ability to repurchase our preferred stock
pursuant to Agrilink's new credit facility and the indenture covering its notes,
are likely to decrease the prices at which our qualified retains are traded.
Rights to dividends and on liquidation. All retains are junior and
subordinate to our indebtedness. In the event of our liquidation, holders of our
retains would rank senior to our preferred stock and our common stock. No
dividends are payable on our retains.
Restrictions on dividends and other distributions to members and investors
As guarantors of Agrilink's indebtedness we are limited as to the aggregate
dollar amounts we can pay or distribute in the form of dividends or other
distributions for the purchase or redemption of shares of our common stock and
preferred stock each fiscal year. Further, because Agrilink and its lenders are
the principal sources of cash used by us to pay dividends, the restrictions on
payments from Agrilink to us under its new credit facility may also limit our
ability to pay dividends on our common and preferred stock.
Certificates for securities
Except with respect to our Class A cumulative preferred stock, we
ordinarily do not issue certificates representing shares of either our common or
preferred stock or our members' interests in retains, except upon specific
request. In lieu of certificates, we distribute to our members and our
non-member security holders periodic computerized statements referred to as
"investment summaries." The investment summaries detail the investment of each
member or security holder in our securities by type of security, number of
shares, or dollar amount, and date of issue. In the case of qualified retains,
the summaries also indicate the date upon which they are anticipated to be
replaced by corresponding par value dollar amounts of preferred stock.
Additionally, the investment summaries detail each member's crop commitments to
us.
EXPERTS
The consolidated financial statements of Pro-Fac incorporated by reference
into this prospectus from Pro-Fac's Annual Report on Form 10-K/A-1 for the year
ended June 26, 1999, have been incorporated in reliance upon the report of
PricewaterhouseCoopers, LLP, independent accountants, given on the authority of
that firm as experts in auditing and accounting.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth expenses in connection with the issuance and
distribution of the securities being registered. All amounts except the
registration fee payable to the Securities and Exchange Commission are
estimates.
SEC Registration Fee............................................. $ 1,390
Legal Fees and Expenses..........................................*$ 10,000
Accountants Fees and Expenses....................................*$ 3,500
Printing and Engraving Fees......................................*$ 10,000
Blue Sky Fees and Expenses....................................... None
Transfer Agent and Registration Fee and Expenses................. None
Miscellaneous....................................................*$ 4,000
---------
................................................................. $ 28,890
=========
*Estimated
Item 15. Indemnification of Directors and Officers.
Pro-Fac Cooperative
Pro-Fac is a New York cooperative corporation. Sections 721 through 726 of
the New York Business Corporation Law permit the registrant to indemnify its
officers and directors against liabilities. Under Section 722 of the New York
Business Corporation Law, the registrant may indemnify any person made, or
threatened to be made, a party to any action or proceeding, whether civil or
criminal, by reason of the fact that he, his testator or intestate is or was a
director, officer or employee of the registrant or serves or served any other
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise in any capacity at the request of the registrant against judgments,
fines, amounts paid in settlement and reasonable expenses, including attorneys'
fees actually and necessarily incurred as a result of such action or proceeding
or any appeal thereon, if such director or officer acted in good faith for a
purpose which he reasonably believed to be in, or, under certain circumstances,
not opposed to, the best interests of the registrant.
Section 726 of the New York Business Corporation Law allows the registrant
to purchase and maintain insurance to indemnify (i) the registrant for any
obligation which it incurs as a result of the indemnification of directors and
officers, (ii) directors and officers in instances in which they may be
indemnified by the registrant, and (iii) directors and officers in instances in
which they may not otherwise be indemnified by the registrant provided the
contract of insurance covering such directors and officers provides, in a manner
acceptable to the superintendent of insurance of the State of New York, for a
retention amount and for co-insurance. Notwithstanding the foregoing, no such
insurance may provide for any payment, other than cost of defense, to or on
behalf of any director or officer (i) if a judgment or other final adjudication
adverse to the insured director or officer establishes that his acts of active
and deliberate dishonesty were material to the cause of action so adjudicated,
or that he personally gained in fact a financial profit or other advantage to
which he was not legally entitled or (ii) in relation to any risk the insurance
of which is prohibited under the insurance law of the State of New York.
The foregoing statements are subject to the detailed provisions of Sections
721 through 726 of the New York Business Corporation Law, Pro-Fac's By-laws and
its Restated Certificate of Incorporation, as applicable.
<PAGE>
Liability Insurance
Pro-Fac maintains a directors and officers liability insurance and
corporation reimbursement policy, in such amount as it deems reasonable, against
certain liabilities that may be asserted against, or incurred by, the directors
and officers of each registrant in their capacities as directors or officers of
such registrant, including liabilities under Federal and state securities laws.
Such policy is due for renewal on October 15, 1999.
Item 16. Exhibits.
<TABLE>
(a) Exhibits:
<CAPTION>
Exhibit
Number Description of Exhibit
<S> <C> <C>
3.1(8) -- Restated Certificate of Incorporation for Pro-Fac Cooperative, Inc.
3.2(8) -- Pro-Fac Cooperative, Inc. Bylaws.
4.1(7) -- Indenture, dated as of November 18, 1998, between Agrilink Foods, Inc., the Guarantors
named therein and IBJ Schroder Bank & Trust Company, Inc. as Trustee.
4.2(7) -- Form of 11 7/8 Percent Senior Subordinated Notes due 2008 (included as Exhibit B to Exhibit
4.1).
4.3(2) -- Indenture, dated as of November 3, 1994 (the "Indenture"),
among PFAC, Pro-Fac and IBJ Schroder Bank & Trust Cooperative
("IBJ"), as Trustee, as amended by First Supplemental Indenture,
dated as of November 3, 1994, each with respect to Agrilink 12.25
percent Senior Subordinated Notes due 2005.
5.1 -- Opinion of Harris Beach & Wilcox, LLP.
8.1 -- Opinion of Harris Beach & Wilcox, LLP - Tax Matters.
10.1(2) -- Marketing and Facilitation Agreement, dated as of November 3, 1994, between Pro-Fac and
Agrilink.
10.2(2) -- Management Incentive Plan, as amended.
10.3(2) -- Supplemental Executive Retirement Plan, as amended.
10.4(2) -- Master Salaried Retirement Plan, as amended.
10.5(2) -- Non-Qualified Profit Sharing Plan, as amended.
10.6(2) -- Excess Benefit Retirement Plan.
10.7(9) -- Salary Continuation Agreement - Dennis M. Mullen.
10.8(1) -- Second Amendment to Non-Qualified Profit Sharing Plan.
10.9(3) -- Equity Value Plan Adopted on June 24, 1996.
10.10(4) -- OnSite Services Agreement with Systems & Computer Technology.
10.11(4) -- Raw Product Supply Agreement with Seneca Foods Corporation.
10.12(4) -- Reciprocal Co-Pack Agreement with Seneca Foods Corporation.
10.13(5) -- Second Supplemental Indenture dated November 10, 1997.
10.14(9) -- Third Supplemental Indenture dated September 24, 1998.
10.15(6) -- Credit Agreement among Agrilink Foods, Inc., Pro-Fac
Cooperative, Inc., and Harris Trust and Savings Bank, and Bank of
Montreal, Chicago Branch, and the Lenders from time to time party
hereto, dated September 23, 1998.
10.16(6) -- Subordinated Promissory Note among Agrilink Foods, Inc. and Dean Foods Company, dated as of September 23, 1998.
10.17(8) -- Service Agreement among Agrilink Foods, Inc., and PF Acquisition II, Inc., dated as of February 22, 1999.
10.18(8) -- Amendment to Marketing and Facilitation Agreement between Agrilink Foods, Inc. and Pro-Fac dated September 23, 1998.
</TABLE>
<PAGE>
<TABLE>
(a) Exhibits (Continued):
<CAPTION>
Exhibit
Number Description of Exhibit
<S> <C> <C>
10.19(8) -- Marketing and Facilitation Agreement, dated as of February 22, 1999, between Pro-Fac and PF Acquisition II, Inc.
10.20(8) -- Credit Agreement among PF Acquisition II, Inc. and CoBank as
administrative agent for the lenders thereunder, dated February 22, 1999.
10.21(8) -- Subordinated Promissory Note among PF Acquisition II, Inc. and CoBank, dated February 22, 1999.
10.22(8) -- Asset Purchase Agreement between PF Acquisition II. Inc., Pro-Fac Cooperative, Inc. and Agripac, Inc., Debtor and
Debtor-In-Possession dated February 12, 1999.
12.1 -- Statement regarding the Computation ratios.
23.1 -- Consent of PricewaterhouseCoopers LLP regarding Pro-Fac Cooperative, Inc.
23.2 -- Consent of Counsel (included in Exhibit 5.1).
24.1 -- Powers of Attorney of Pro-Fac Cooperative, Inc., (included in the signature pages hereto).
99.1 -- Application for Stock Purchase.
- -------------------------
<FN>
(1) Incorporated by reference from Registration Statement No. 33-60273.
(2) Incorporated by reference from Registration Statement No. 33-56517, as amended.
(3) Incorporated by reference from Registrant's 1996 Annual Report on Form 10-K.
(4) Incorporated by reference from Registrant's 1997 Annual Report on Form 10-K.
(5) Incorporated by reference from Registrant's Fiscal 1998 Annual Report on Form 10-K.
(6) Incorporated by reference from Registrant's Fiscal 1999 First Quarter Report on Form 10-Q.
(7) Incorporated by reference from Registration Statement No. 333-70143, as amended.
(8) Incorporated by reference from Registrant's Fiscal 1999 Third Quarter Report on Form 10-Q.
(9) Incorporated by reference from Registrant's 1999 Annual Report on Form 10-K.
</FN>
</TABLE>
Item 17. 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 of 1933;
(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 the
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration statement;
<PAGE>
(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 paragraphs
(a)(1)(i) and (a)(1)(ii) do not apply if the registration
statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed with
or furnished to the Commission by the Registrant pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in the registration statement.
2. That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and that
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;
4. If a foreign private issuer, to file a post-effective amendment to the
registration statement to include any financial statements required by Rule 3-19
of this chapter at the start of any delayed offering or throughout a continuous
offering. Financial statements and information otherwise required by Section
10(a)(3) of the Act need not be furnished, provided, that the registrant
includes in the prospectus, by means of a post-effective amendment, financial
statements required pursuant to this paragraph a(4) and other information
necessary to ensure that all other information in the prospectus is at least as
current as the date of those financial statements. Notwithstanding the
foregoing, with respect to registration statements in Form F-3, a post effective
amendment need not be filed to include financial statements and information
required by Section 10(a)(3) of the Act or Rule 3-19 of this chapter if such
financial statements and information are contained in periodic reports filed
with or furnished to the Commission by the registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are incorporate by
reference in the form F-3.
(b) Insofar as indemnifications 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,
therefor, 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 inserted 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 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 governed by the final adjudication of
such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Rochester, State of New
York, on October 21, 1999.
PRO-FAC COOPERATIVE, INC.
By:
/s/ Earl L. Powers
Name: Earl L. Powers
Title: Vice President, Finance and Assistant Treasurer
(Principal Financial Officer and Principal Accounting Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints each of Stephen R. Wright and Earl L.
Powers and each of them, with full power to act alone, as his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement and any subsequent registration statement filed
by the Registrant pursuant to Rule 462(b) of the Securities Act, and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the SEC, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
date indicated.
<TABLE>
Signature Title Date
<S> <C> <C>
/s/ Bruce R. Fox President and Director October 20, 1999
- ----------------------------------------
(Bruce R. Fox)
/s/ Steven D. Koinzan Treasurer and Director October 20, 1999
- ----------------------------------------
(Steven D. Koinzan)
/s/ Earl L. Powers Vice President, Finance and October 20, 1999
- ---------------------------------------- Assistant Treasurer
(Earl L. Powers)
/s/ Stephen R. Wright Assistant Treasurer and October 20, 1999
- ---------------------------------------- General Manager
(Stephen R. Wright) (Principal Executive Officer)
/s/ Dale W. Burmeister Director October 20, 1999
- ----------------------------------------
(Dale W. Burmeister)
/s/ Robert V. Call, Jr. Director October 20, 1999
- ----------------------------------------
(Robert V. Call, Jr.)
/s/ Glen Lee Chase Director October 20, 1999
- ----------------------------------------
(Glen Lee Chase)
</TABLE>
<PAGE>
<TABLE>
Signature Title Date
<S> <C> <C>
/s/ Tom R. Croner Secretary and Director October 20, 1999
- ----------------------------------------
(Tom R. Croner)
/s/ Kenneth A. Dahlstedt Director October 20, 1999
- ----------------------------------------
(Kenneth A. Dahlstedt)
/s/ Robert A. DeBadts Director October 20, 1999
- ----------------------------------------
(Robert A. DeBadts)
/s/ Kenneth A. Mattingly Director October 20, 1999
- ----------------------------------------
(Kenneth A. Mattingly)
/s/ Allan W. Overhiser Director October 20, 1999
- ----------------------------------------
(Allan W. Overhiser)
/s/ Paul E. Roe Director October 20, 1999
- ----------------------------------------
(Paul E. Roe)
/s/ Darell Sarff Director October 20, 1999
- ----------------------------------------
(Darell Sarff)
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
(a) Exhibits:
<CAPTION>
Exhibit
Number Description of Exhibit
<S> <C> <C>
3.1(8) -- Restated Certificate of Incorporation for Pro-Fac Cooperative, Inc.
3.2(8) -- Pro-Fac Cooperative, Inc. Bylaws.
4.1(7) -- Indenture, dated as of November 18, 1998, between Agrilink Foods, Inc., the Guarantors named
therein and IBJ Schroder Bank & Trust Company, Inc. as Trustee.
4.2(7) -- Form of 11 7/8 Percent Senior Subordinated Notes due 2008 (included as Exhibit B to Exhibit 4.1).
4.3(2) -- Indenture, dated as of November 3, 1994 (the "Indenture"), among PFAC, Pro-Fac and IBJ Schroder
Bank & Trust Cooperative ("IBJ"), as Trustee, as amended by First Supplemental Indenture, dated
as of November 3, 1994, each with respect to Agrilink 12.25 percent Senior Subordinated Notes
due 2005.
5.1 -- Opinion of Harris Beach & Wilcox, LLP.
8.1 -- Opinion of Harris Beach & Wilcox, LLP - Tax Matters.
10.1(2) -- Marketing and Facilitation Agreement, dated as of November 3, 1994, between Pro-Fac and Agrilink.
10.2(2) -- Management Incentive Plan, as amended.
10.3(2) -- Supplemental Executive Retirement Plan, as amended.
10.4(2) -- Master Salaried Retirement Plan, as amended.
10.5(2) -- Non-Qualified Profit Sharing Plan, as amended.
10.6(2) -- Excess Benefit Retirement Plan.
10.7(9) -- Salary Continuation Agreement - Dennis M. Mullen.
10.8(1) -- Second Amendment to Non-Qualified Profit Sharing Plan.
10.9(3) -- Equity Value Plan Adopted on June 24, 1996.
10.10(4) -- OnSite Services Agreement with Systems & Computer Technology.
10.11(4) -- Raw Product Supply Agreement with Seneca Foods Corporation.
10.12(4) -- Reciprocal Co-Pack Agreement with Seneca Foods Corporation.
10.13(5) -- Second Supplemental Indenture dated November 10, 1997.
10.14(9) -- Third Supplemental Indenture dated September 24, 1998.
10.15(6) -- Credit Agreement among Agrilink Foods, Inc., Pro-Fac Cooperative, Inc., and Harris Trust and
Savings Bank, and Bank of Montreal, Chicago Branch, and the Lenders from time to time party
hereto, dated September 23, 1998.
10.16(6) -- Subordinated Promissory Note among Agrilink Foods, Inc. and Dean Foods Company, dated as
of September 23, 1998.
10.17(8) -- Service Agreement among Agrilink Foods, Inc., and PF Acquisition II, Inc., dated as of
February 22, 1999.
10.18(8) -- Amendment to Marketing and Facilitation Agreement between Agrilink Foods, Inc. and Pro-Fac
dated September 23, 1998.
10.19(8) -- Marketing and Facilitation Agreement, dated as of February 22, 1999, between Pro-Fac and PF
Acquisition II, Inc.
10.20(8) -- Credit Agreement among PF Acquisition II, Inc. and CoBank as administrative agent for the
lenders thereunder, dated February 22, 1999.
10.21(8) -- Subordinated Promissory Note among PF Acquisition II, Inc. and CoBank, dated February 22, 1999.
10.22(8) -- Asset Purchase Agreement between PF Acquisition II. Inc., Pro-Fac Cooperative, Inc. and Agripac,
Inc., Debtor and Debtor-In-Possession dated February 12, 1999.
12.1 -- Statement regarding the Computation ratios.
23.1 -- Consent of PricewaterhouseCoopers LLP regarding Pro-Fac Cooperative, Inc.
23.2 -- Consent of Counsel (included in Exhibit 5.1).
24.1 -- Powers of Attorney of Pro-Fac Cooperative, Inc., (included in the signature pages hereto).
99.1 -- Application for Stock Purchase.
</TABLE>
<PAGE>
<TABLE>
EXHIBIT INDEX (Continued)
<CAPTION>
- -------------------------
<S> <C>
(1) Incorporated by reference from Registration Statement No. 33-60273.
(2) Incorporated by reference from Registration Statement No. 33-56517, as amended.
(3) Incorporated by reference from Registrant's 1996 Annual Report on Form 10-K.
(4) Incorporated by reference from Registrant's 1997 Annual Report on Form 10-K.
(5) Incorporated by reference from Registrant's Fiscal 1998 Annual Report on Form 10-K.
(6) Incorporated by reference from Registrant's Fiscal 1999 First Quarter Report on Form 10-Q.
(7) Incorporated by reference from Registration Statement No. 33-70143, as amended.
(8) Incorporated by reference from Registrant's Fiscal 1999 Third Quarter Report on Form 10-Q.
(9) Incorporated by reference from Registrant's 1999 Annual Report on Form 10-K.
</TABLE>
HARRIS
BEACH &
WILCOX
A LIMITED LIABILITY PARTNERSHIP
ATTORNEYS AT LAW
THE GRANITE BUILDING
130 EAST MAIN STREET
ROCHESTER, N.Y.
14604-1687
(716) 232-4440
October 20, 1999
Pro-Fac Cooperative, Inc.
90 Linden Oaks
Rochester, New York 14625
Re: Pro-Fac Cooperative, Inc. - Registration Statement on Form S-2
Ladies and Gentlemen:
We have acted as your counsel in connection with a Registration
Statement on Form S-2 to be filed by you with the Securities and Exchange
Commission ("Commission") pursuant to the Securities Act of 1933 as amended. The
Registration Statement may be amended, from time to time, by one or more
amendments at the request of the Commission, or on your own initiative, either
before or after its effective date. The Registration Statement as so amended, or
to be amended, covers Pro-Fac's Class A Common Stock, Retains and Class A
Cumulative Preferred Stock.
We have examined originals or copies, identified to our satisfaction,
of such documents and records of Pro-Fac, and such other documents and records
as we have deemed necessary, as a basis for the opinions hereinafter expressed.
Based on the foregoing, and having regard for such legal considerations
as we have deemed relevant, we are of the opinion that, subject to an order or
other appropriate action by the Commission declaring the Registration Statement
effective, the Class A Common Stock, the Retains and the Class A Cumulative
Preferred Stock of Pro-Fac, when issued in accordance with the terms and
conditions set forth in the Prospectus forming part of the Registration
Statement to be filed with the Commission, will be legally issued, fully paid
and non-assessable, except that under the New York Cooperative Corporations Law
each member and each director of Pro-Fac may be personally liable, jointly and
severally, for certain amounts owed to employees for services rendered to
Pro-Fac, as described in the Prospectus under the caption "Description of
Pro-Fac Securities - Common Stock," and except that the amount of outstanding
Retains may be subject to adjustments subsequent to issuance, as described in
the Prospectus under the caption "Description of Pro-Fac Securities - Retains."
AFFILIATES WASHINGTON, DC NEW YORK
COPENHAGEN LIVORNO PARIS MILFORD, CT ALBANY ITHACA ROCHESTER
KRISTIANSUND LONDON OSLO HACKENSACK, NJ BUFFALO NEW YORK CITY SYRACUSE
<PAGE>
HARRIS
BEACH &
WILCOX
Pro-Fac Cooperative, Inc.
October 20, 1999
Page 2
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
HARRIS BEACH & WILCOX, LLP
By: /s/Catherine A. King
______________________________________
Catherine A. King, Partner of the Firm
HARRIS
BEACH &
WILCOX
A LIMITED LIABILITY PARTNERSHIP
ATTORNEYS AT LAW
THE GRANITE BUILDING
130 EAST MAIN STREET
ROCHESTER, N.Y.
14604-1687
(716) 232-4440
October 20, 1999
Pro-Fac Cooperative, Inc.
90 Linden Oaks
Rochester, New York 14625
Re: Registration Statement on Form S-2
Ladies and Gentlemen:
This opinion is delivered to you in our capacity as counsel to Pro-Fac
Cooperative, Inc. (the "Company" or "Pro-Fac") in connection with the Company's
Registration Statement on Form S-2 (the "Registration Statement") to be filed
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended, including the prospectus forming a part thereof (the "Prospectus") and
any subsequent pre-effective amendments, post-effective amendments, prospectus
supplements or exhibits thereto, relating to the public offering of shares of
Class A common stock, retains and shares of preferred stock, liquidation
preference $25. This opinion relates to the federal income tax consequences that
are likely to be material to a holder of Pro-Fac's common stock.
We have reviewed the Registration Statement and the documents incorporated
by reference therein (the "Incorporated Documents") that describe the Company
and its investments and activities. We have relied upon the representations of
an officer of the Company regarding the manner in which the Company and its
affiliates have been and will be owned and operated. We have neither
independently investigated nor verified such representations, and this opinion
is expressly conditioned upon the accuracy of such representations. We assume
that the Company has been and will be operated in accordance with applicable
laws and the terms and conditions of applicable documents and that the
descriptions of the Company and its actual and proposed activities, operations
and governance set forth in the Incorporated Documents continue to be true,
correct and complete.
In rendering the following opinion, we have examined the Company's Restated
Certificate of Incorporation and the By-Laws of the Company and such other
records, certificates and documents, each as amended, as we have deemed
necessary or appropriate for purposes of rendering the opinion set forth herein.
In rendering the opinion set forth herein, we have assumed (i) the
genuineness of all signatures on documents we have examined, (ii) the
authenticity of all documents submitted to us as originals, (iii) the conformity
to the original documents of all documents submitted to us as copies, (iv) the
conformity of final documents to all documents submitted to us as drafts, (v)
the authority and capacity of the individual or individuals who executed any
such documents on behalf of any person, (vi) the accuracy and completeness of
all records made available to us and (vii) the factual accuracy of all
representations, warranties and other statements made by all parties. We also
have assumed, without investigation, that all documents, certificates,
representations, warranties and covenants on which we have relied in rendering
the opinion set forth below and that were given or dated earlier than the date
of this letter continue to remain accurate, insofar as relevant to the opinion
set forth herein, from such earlier date through and including the date of this
letter and that all representations made to the "best knowledge" of any
person(s),
AFFILIATES WASHINGTON, DC NEW YORK
COPENHAGEN LIVORNO PARIS MILFORD, CT ALBANY ITHACA ROCHESTER
KRISTIANSUND LONDON OSLO HACKENSACK, NJ BUFFALO NEW YORK CITY SYRACUSE
<PAGE>
HARRIS
BEACH &
WILCOX
October 20, 1999
Page 2
or subject to similar qualification, are true and complete as if made without
such qualification. Notwithstanding the foregoing, nothing has come to our
attention that would cause us to question the accuracy or completeness of the
foregoing assumptions.
The opinion set forth below is based upon the Internal Revenue Code of
1986, as amended (the "Code"), the income tax regulations and procedures and
administration regulations promulgated thereunder and existing published
administrative and judicial interpretations thereof, all as they exist at the
date of this letter. All of the foregoing statutes, regulations and
interpretations are subject to change, in some circumstances with retroactive
effect; any changes to the foregoing authorities might result in modifications
of our opinion contained herein.
Based upon and subject to the foregoing, we are of the opinion that the
statements in the Prospectus set forth under the caption "Tax Matters"
concerning our opinions as to the federal income tax consequences that are
likely to be material to a holder of the Company's common stock, accurately
reflect our opinions on the issues discussed and, to the extent such discussion
refers to the opinion of this firm, we adopt and incorporate all such opinions,
subject to the assumptions and limitations set forth herein.
This opinion is rendered with respect to the federal law of the United
States and does not address the laws of any other jurisdiction. We express no
opinion other than that expressly set forth herein. Our opinion is not binding
on the Internal Revenue Service (the "IRS"), and the IRS may disagree with the
opinion contained herein. Except as specifically discussed above, the opinion
expressed herein is based upon federal law as it currently exists. Consequently,
future changes in the law may cause the federal income tax treatment of the
transactions described herein to be materially and adversely different from that
described above.
We consent to being named as counsel to the Company in the Prospectus, to
the references in the Prospectus to our firm and to the inclusion of a copy of
this opinion letter as an exhibit to the Registration Statement.
Very truly yours,
Harris Beach & Wilcox, LLP
/s/ Robert C. Scutt
------------------------------------
Robert C. Scutt, Partner of the Firm
<TABLE>
PRO-FAC COOPERATIVE, INC.
(Dollars in Thousands)
<CAPTION>
Fiscal Year Ended
June 24, June 29, June 28, June 27, June 26,
1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C>
Computation Of Ratio Of Earnings To Fixed Charges and
Preferred Dividends
Income/(loss) before taxes, dividends and allocation of net
proceeds from current operations $ 22,525 $(22,602) $ 13,620 $ 24,970 $ 59,714
Deduct - Equity in undistributed earnings of CoBank (1,288) (1,532) (1,143) (715) (520)
-------- -------- -------- -------- --------
21,237 (24,134) 12,477 24,255 59,194
Fixed charges:
Interest expense 29,035 41,998 36,473 30,767 67,420
Rentals (A) 800 1,420 1,457 1,593 1,996
-------- -------- --------- -------- --------
Total fixed charges 29,835 43,418 37,930 32,360 69,416
-------- -------- -------- -------- --------
Adjusted earning/(loss) before fixed charges $ 51,072 $ 19,284 $ 50,407 $ 56,615 $128,610
======== ======== ======== ======== ========
Preferred dividends $ 4,348 $ 8,523 $ 5,503 $ 5,880 $ 6,278
Add - Adjustment to reflect preferred dividends on a pre-tax basis1 0 4,391 2,835 3,166 3,380
-------- -------- -------- -------- --------
Preferred dividends on a pre-tax basis 4,348 12,914 8,338 9,046 9,658
Fixed charges 29,835 43,418 37,930 32,360 69,416
-------- -------- -------- -------- --------
Total $ 34,183 $ 56,332 $ 46,268 $ 41,406 $ 79,074
======== ======== ======== ======== ========
Ratio of earnings to fixed charges and preferred dividends 1.5:1 (B) 1.1:1 1.4:1 1.6:1
======== ======== ======== ======== ========
Computation of Pro Forma Ratio of Earnings to
Fixed Charges and Preferred Dividends
Adjusted earnings/(loss) before fixed charges, as above $ 51,072 $ 19,284 $ 50,407 $ 56,615 $128,610
======== ======== ======== ======== ========
Total fixed charges and pre-tax basis preferred dividends, as above $ 34,183 $ 56,332 $ 46,268 $ 41,406 $ 79,074
======== ======== ======== ======== ========
Pro forma preferred dividends assuming all "Retains" were converted
into preferred stock (retained earnings allocated to members times
the maximum dividend rate permitted by law of 12 percent) 5,325 4,422 4,070 4,038 3,603
Add - Adjustments to reflect preferred dividends on a pre-tax basis1 0 2,278 2,097 2,174 1,940
-------- -------- -------- -------- --------
5,325 6,700 6,167 6,212 5,543
--------- -------- -------- -------- --------
Pro forma total fixed charges and pre-tax basis preferred dividends $ 39,508 $ 63,032 $ 52,435 $ 47,618 $ 84,617
======== ======== ======== ======== ========
Pro forma ratio of earnings to fixed charges and preferred dividends 1.3:1 (C) (C) 1.2:1 1.5:1
<FN>
(A) Rentals deemed representative of the interest factor included in rent expense.
(B) In the fiscal year ended June 29, 1996, the earnings were inadequate by $37,048 to cover fixed charges and pre-tax basis
preferred dividends.
(C) In fiscal years ended June 29, 1996 and June 28, 1997, the earnings were Inadequate by $43,748 and $2,028, respectively,
to cover the amount of fixed charges and pre-tax basis preferred dividends which would have been declared and paid if all
retained earnings allocated to members' retains at the end of each fiscal periods had been converted to preferred stock at
the beginning of the period at the maximum dividend permitted by law.
1 As a tax-exempt Cooperative until the acquisition of Agrilink, cash dividends paid were an allowable deduction for computation of
taxable income.
</FN>
</TABLE>
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-2 of our report dated
August 23, 1999 appearing on page 27 of the Annual Report on Form 10-K/A-1 of
Pro-Fac Cooperative, Inc. for the year ended June 26, 1999. We also consent to
the application of such report to the Financial Statement Schedule for the three
years ended June 26, 1999 listed under Item 14(a) of Pro-Fac Cooperative, Inc.'s
Annual Report on Form 10-K/A-1 for the year ended June 26, 1999 when such
schedule is read in conjunction with the financial statements referred to in our
report. The audits referred to in such report also included this Financial
Statement Schedule. We also consent to the reference to us under the heading
"Experts" in such Prospectus.
/s/ PricewaterhouseCoopers LLP
_______________________________
PricewaterhouseCoopers LLP
Rochester, New York
October 21, 1999
<TABLE>
APPLICATION FOR STOCK PURCHASE [OBJECT OMITTED]
<S> <C>
- -----------------------------------------------------------------------------------------------
(Social Security or Employer Identification No.)
COMPLETE THIS SECTION IN THE EXACT
- ----------------------------------------------------------------------------------------------- MANNER YOU DESIRE PRO-FAC
(Name) SECURITIES TO BE REGISTERED.
- -----------------------------------------------------------------------------------------------
(Address)
- -----------------------------------------------------------------------------------------------
====================================================================================================================================
A. FOR SALES BY PRO-FAC:
I hereby express my desire for membership in Pro-Fac or to subscribe for additional common stock of the Cooperative, upon
the following terms and conditions:
1A. I apply to produce crops for delivery to Pro-Fac and purchase its common stock at $5.00 per share (par value) in the amount(s)
specified below:
</TABLE>
<TABLE>
PRODUCTION INVESTMENT RATE INVESTMENT REQUIRED
CROP UNITS PER UNIT (ROUNDED UP TO NEAREST $5.00)
<S> <C> <C> <C>
---------------------------------- ------------------- X ----------------------- = $ --------------------------------
2A. Stock payments will be as follows:
a) Payment in full with application............................................. $ -------------------------------- or
b) Cash payable with application (minimum 25%).................................. $ --------------------------------
with the balance to be paid in annual installments. Upon receipt of each payment, the corresponding value in common shares
will be issued by Pro-Fac. I agree that Pro-Fac may deduct the installments from the second payment for the above listed
crops to be delivered during the next three crop years. If for any reason there are in any year insufficient proceeds from
which Pro-Fac may deduct such payment in the full amount due, then I agree to pay any balance remaining on such installment
prior to the next crop season but no later than April 1.
3A. I hereby acknowledge receipt of Pro-Fac's prospectus, and its Certificate of Incorporation, Bylaws and General
Marketing Agreement. I have reviewed those documents prior to executing this application for membership.
===================================================================================================================================
</TABLE>
B. FOR MEMBER TO MEMBER TRANSFERS:
<TABLE>
1B. I hereby apply to produce crops for delivery to Pro-Fac and purchase its common stock in the following amount(s):
PRODUCTION ISSUE PRICE STOCK PAYMENTS
SELLER CROP UNITS PER UNIT ASSUMED
<S> <C> <C> <C> <C>
- ---------------------------------------- --------------------- --------------- ------------------- --------------------------
- ---------------------------------------- --------------------- --------------- ------------------- --------------------------
- ---------------------------------------- --------------------- --------------- ------------------- --------------------------
<FN>
2B. Upon approval of this application by the Pro-Fac board of directors, I hereby agree to produce the above-listed crops in
accordance with the terms of the General Marketing Agreement and designate that payment for the common stock involved in this
transfer is to be accomplished in the following matter:
Directly between buyer and seller;
Directly between buyer and seller for the outstanding stock in
connection with this transaction. I hereby agree to assume
responsibility for the seller's remaining subscription payable.
Other. Specify:
3B. I hereby acknowledge receipt of Pro-Fac's Certificate of Incorporation, Bylaws and General Marketing Agreement. I have
reviewed those documents prior to executing this application.
====================================================================================================================================
FOR ALL APPLICANTS:
4. I further agree that I will annually execute a crop agreement specifically relating to the conditions under which the
commodities for which I am now applying will be produced, delivered and graded.
5. I acknowledge that this application and my qualifications for membership must be reviewed by the board of directors of Pro-Fac
and accepted by them as a condition of my membership; that the terms of this application and the General Marketing Agreement
are not binding until accepted by Pro-Fac.
6. I hereby agree, as a condition of membership, that I will take into account in determining my gross income for federal income
tax purposes the stated dollar amount of all patronage dividends paid to me by Pro-Fac by means of written notices of
allocation within the meaning of the pertinent provisions of the Internal Revenue Code of 1954, as amended.
7. I agree not to mortgage, pledge or otherwise encumber the above-listed crops in any manner that might jeopardize fulfillment
of the conditions specified in paragraph 2(b) of this application.
8. No written or oral information or representations other than those appearing in the Pro-Fac prospectus and the documents
referred to in this application have been authorized by Pro-Fac. This application and the other documents referred to herein
constitute the entire agreement between the parties with respect to this transaction, and no oral agreements made at any time
apply to or affect it.
-------------------------------------------------------Signed----------------------------------------------------
(Date) (Applicant's Signature)
-------------------------------------------------------Signed-----------------------------------------------------
(Date) (Witness)
RECOMMENDATIONS FOR
SIGNATURE DATE APPROVAL DISAPPROVAL
--------------------------------------- -----------
(Committeeman)
--------------------------------------- -----------
(Division Management) USE FOR STOCK SALES BY MEMBER/PRO-FAC
</FN>
</TABLE>
