<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 23, 1995
REGISTRATION NO.33-62869
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 1
TO
FORM S-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
GOLD KIST INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
GEORGIA 58-0255560
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
----------------
244 PERIMETER CENTER PARKWAY, N.E.
ATLANTA, GEORGIA 30346
404-393-5000
(ADDRESS AND TELEPHONE NUMBER OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
ALEXANDER W. PATTERSON
ALSTON & BIRD
ONE ATLANTIC CENTER
1201 WEST PEACHTREE STREET
ATLANTA, GEORGIA 30309-3424
404-881-7688
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
----------------
COPIES TO:
PETER J. GIBBONS JACK L. LAWING
VICE PRESIDENT--FINANCE SECRETARY
GOLD KIST INC. AGVESTMENTS, INC.
POST OFFICE BOX 2210 POST OFFICE BOX 2210
ATLANTA, GEORGIA 30301 ATLANTA, GEORGIA 30301
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable on or 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 delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
----------------
PURSUANT TO RULE 429, THE COMBINED PROSPECTUS FILED AS A PART OF THIS
REGISTRATION STATEMENT RELATES AS WELL TO THE FOLLOWING REGISTRATION
STATEMENTS AND AMENDMENTS THERETO: REGISTRATION STATEMENTS NO. 2-86777, NO.
33-428, NO. 33-17394, NO. 33-24623, NO. 33-31164, NO. 33-42900, NO. 33-52268,
NO. 33-69204 AND NO. 33-55563.
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE>
PART I
GOLD KIST INC.
CROSS REFERENCE SHEET BETWEEN REGISTRATION
STATEMENT AND FORM OF PROSPECTUS
<TABLE>
<CAPTION>
ITEM NUMBER AND CAPTION HEADING IN PROSPECTUS
----------------------- ---------------------
<S> <C>
1. Forepart of the Registration Statement
and Outside Front Cover Page of
Prospectus.......................... Facing Page of Registration
Statement; Cross Reference Sheet;
Cover Page of Prospectus
2. Inside Front and Outside Back Cover
Pages of Prospectus................. Available Information; Information
Incorporated by Reference; Table of
Contents
3. Summary Information, Risk Factors and
Ratio of Earnings to Fixed Charges.. Prospectus Summary; Risk Factors
4. Use of Proceeds...................... Use of Proceeds
5. Determination of Offering Price...... Not Applicable
6. Dilution............................. Not Applicable
7. Selling Security Holders............. Not Applicable
8. Plan of Distribution................. Cover Page of Prospectus
9. Description of Securities to be
Registered.......................... Description of Subordinated Capital
Certificates of Interest;
Description of Subordinated Loan
Certificates and Subordinated Large
Denomination Loan Certificates
10. Interests of Named Experts and
Counsel............................. Not Applicable
11. Information with Respect to the
Registrant
(a) Description of Business.......... Business
(b) Financial Statements............. Consolidated Financial Statements
(c) Information about Industry
Segments, Classes of Similar
Products, and Export Sales...... Business
(d) Selected Financial Data.......... Selected Consolidated Financial Data
(e) Supplementary Financial
Information Selected Quarterly
Financial Data.................. Not Applicable
(f) Management's Discussion and
Analysis of Financial Condition
and Results of Operations....... Management's Discussion and Analysis
of Consolidated Results of
Operations and Financial Condition
(g) Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure............ Not Applicable
12. Incorporation of Certain Information
by Reference........................ Information Incorporated by
Reference
13. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities......................... Not Applicable
</TABLE>
<PAGE>
GOLD KIST INC.
$ 6,120,563--7.50%, FIFTEEN YEAR SUBORDINATED CAPITAL CERTIFICATES
OF INTEREST (SERIES D)
$ 5,608,355--7.25%, TEN YEAR SUBORDINATED CAPITAL CERTIFICATES OF
INTEREST (SERIES D)
$12,083,239--7.00%, SEVEN YEAR SUBORDINATED CAPITAL CERTIFICATES
OF INTEREST (SERIES A)
$11,670,318--6.75%, FIVE YEAR SUBORDINATED CAPITAL CERTIFICATES OF
INTEREST (SERIES C)
$14,433,592--6.50%, THREE YEAR SUBORDINATED CAPITAL CERTIFICATES
OF INTEREST (SERIES A)
[LOGO] $14,973,083--6.25%, TWO YEAR SUBORDINATED CAPITAL CERTIFICATES OF
INTEREST (SERIES A)
$23,883,444--6.00%, ONE YEAR SUBORDINATED LOAN CERTIFICATES
(SERIES C)
$24,919,607--6.10%, ONE YEAR SUBORDINATED LARGE DENOMINATION LOAN
CERTIFICATES (SERIES A)
$13,203,694--5.60%, SIX MONTH SUBORDINATED LARGE DENOMINATION LOAN
CERTIFICATE (SERIES A)
- -------------------------------------------------------------------------------
The Subordinated Capital Certificates of Interest, Subordinated Loan
Certificates and Subordinated Large Denomination Loan Certificates are
unsecured obligations of Gold Kist. The certificates of each series are
redeemable, subject to certain limitations, by the holders, and the Five,
Seven, Ten and Fifteen Year Certificates are subject to redemption at the call
of Gold Kist. The Certificates of each series are subordinated, in case of
liquidation of Gold Kist, to "Superior Indebtedness." As of July 1, 1995,
Superior Indebtedness (as defined in the indenture under which each series
will be issued) amounted to approximately $384,402,000. See Description of
Subordinated Capital Certificates of Interest and Description of Subordinated
Loan Certificates and Subordinated Large Denomination Loan Certificates.
- -------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
SEE "RISK FACTORS" ON PAGE 5.
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- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNDERWRITING
DISCOUNTS AND
PRICE TO COMMISSIONS PROCEEDS TO GOLD
PUBLIC (1)(2) KIST (2)
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
SUBORDINATED CAPITAL CERTIFICATES
OF INTEREST
Fifteen Year (Series D)--Per Unit
(3).............................. $ 500
Total............................. $ 6,120,563 $244,823 $ 5,875,740
Ten Year (Series D)--Per Unit
(3).............................. $ 500
Total............................. $ 5,608,355 $168,251 $ 5,440,104
Seven Year (Series A)--Per Unit
(3).............................. $ 500
Total............................. $12,083,239 $302,081 $11,781,158
Five Year (Series C)--Per Unit
(3).............................. $ 500
Total............................. $11,670,318 $233,406 $11,436,912
Three Year (Series A)--Per Unit
(3).............................. $ 500
Total............................. $14,433,592 $144,336 $14,289,256
Two Year (Series A)--Per Unit (3). $ 500
Total............................. $14,973,083 $112,278 $14,860,785
SUBORDINATED LOAN CERTIFICATES
One Year (Series C)--Per Unit
(3).............................. $ 500
Total............................. $23,883,444 $119,417 $23,764,027
SUBORDINATED LARGE DENOMINATION
LOAN CERTIFICATES
One Year (Series A)--Per Unit
(4).............................. $ 50,000
Total............................. $24,919,607 $124,598 $24,795,009
Six Month (Series A)--Per Unit
(5).............................. $ 20,000
Total............................. $13,203,694 $ 33,009 $13,170,685
</TABLE>
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- -------------------------------------------------------------------------------
(1) Agvestments, Inc. ("Agvestments"), a wholly-owned subsidiary of Gold
Kist, has been engaged by Gold Kist to solicit from the public on a best
efforts basis offers to purchase the securities described herein. All offers
to purchase are subject to acceptance by Gold Kist. Gold Kist has agreed to
pay all of the expenses and disbursements of Agvestments, including the
commissions of its associated persons and to furnish all facilities, financing
and accounting, clerical and recordkeeping services necessary for the conduct
of Agvestments' business. Gold Kist has also agreed to pay all liabilities
incurred by Agvestments, including liabilities under the Securities Act of
1933. The commissions to be paid to Agvestments' associated persons will be
established by Agvestments from time to time within the following ranges of
percentage of the sales price of the certificates: Six Month Certificates--
1/8- 1/4%; One Year Certificates-- 1/4- 1/2%; Two Year Certificates-- 1/2-
3/4%; Three Year Certificates-- 3/4-1%; Five Year Certificates--1-2%; Seven
Year Certificates--1.5-2.5%; Ten Year Certificates--2-3%; and Fifteen Year
Certificates--2-4%. Agvestments offers cash bonuses to its associated persons
under an incentive program, but in no event can the total compensation to any
associated person exceed 5% of the sales price of certificates. Assuming that
all registered certificates are sold and that the maximum incentive bonuses
are earned by Agvestments' associated persons on such sales, the maximum
compensation to be paid to Agvestments on the sale of $126,895,895 in face
amount of certificates would total $1,506,619.
Agvestments is a registered broker-dealer under the Securities Exchange Act
of 1934 and a member of the National Association of Securities Dealers, Inc.
("NASD"). Agvestments' principal office is located at 244 Perimeter Center
Parkway, N.E., Post Office Box 2210, Atlanta, Georgia 30301. This offering is
being made in compliance with the terms of a partial exemption from the
requirements of Schedule E of the NASD By-Laws. As a condition of this partial
exemption, a minimum of 80 percent of the dollar amount of aggregate sales
made in this offering must be to members, equity holders, producer-suppliers,
non-member patrons or employees of Gold Kist, a subsidiary, franchisee or
member association, or to holders of securities thereof within the past three
years who were in one of the above categories at the time of purchase of such
securities, or to family members or affiliates of one of the above.
(2) The proceeds to Gold Kist of $125,389,276 are before deducting the
expenses to be borne by Gold Kist of an estimated amount of $103,350. The
certificates are offered on a best efforts basis for an indeterminate period
of time, not expected to be in excess of two years. There is no requirement
that the minimum amount of the securities of any series offered hereby must be
sold.
(3) All certificates are offered at par in minimum denominations of $500;
however, certificates will be issued in any amount which is $500 or larger.
(4) All certificates are offered at par in minimum denominations of $50,000;
however, certificates will be issued in any amount which is $50,000 or larger.
(5) All certificates are offered at par in minimum denominations of $20,000;
however, certificates will be issued in any amount which is $20,000 or larger.
---------------
AGVESTMENTS, INC.
The Date of this Prospectus is , 1995
<PAGE>
AVAILABLE INFORMATION
Gold Kist is subject to the informational requirements of the Securities
Exchange Act of 1934 and in accordance therewith files reports and other
information with the Securities and Exchange Commission (the "Commission").
Reports and other information filed by Gold Kist can be inspected and copied
at the public reference facilities of the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the following
regional offices of the Commission: Northeast Regional Office, 7 World Trade
Center, Suite 1300, New York, N.Y. 10008; and Midwest Regional Office, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
material can be obtained by mail from the Public Reference Section of the
Commission, 450 Fifth Street N.W., Washington, D.C. 20549 at prescribed rates.
Gold Kist has filed with the Securities and Exchange Commission Registration
Statements under the Securities Act of 1933 with respect to the securities
offered hereby. This Prospectus does not contain all information set forth in
the Registration Statements, certain portions of which have been omitted as
permitted by the rules and regulations of the Commission. For further
information with respect to Gold Kist and the securities offered hereby,
reference is made to the Registration Statements, including the exhibits,
consolidated financial statements and schedules filed as a part thereof. The
Registration Statements may be inspected without charge at the principal
offices of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. Copies of the Registration Statements, or any part
thereof, may be obtained from the Commission's principal office in Washington,
D.C. upon payment of the fees prescribed by the Commission.
The summaries or descriptions of documents in this Prospectus do not purport
to be complete, and where any such document is an exhibit to the Registration
Statement, each such statement is qualified in all respects by the provisions
of such exhibit, to which reference is hereby made for a full statement of its
provisions.
INFORMATION INCORPORATED BY REFERENCE
The Annual Report on Form 10-K for the fiscal year ended July 1, 1995, which
was filed by Gold Kist with the Securities and Exchange Commission, is
incorporated into this Prospectus by reference.
Gold Kist will furnish without charge to each person to whom this Prospectus
is delivered, on the request of such person, a copy of any and all of the
information that has been incorporated by reference in the Registration
Statement (not including exhibits to the information that is incorporated by
reference unless such exhibits are specifically incorporated by reference into
the information that the Registration Statement incorporates). Such request
should be directed to Jack L. Lawing, Corporate Secretary, Gold Kist Inc., 244
Perimeter Center Parkway, N.E., Atlanta, Georgia 30346, whose telephone number
is (404) 393-5000.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary highlights certain information about Gold Kist Inc. and
is qualified in its entirety by the detailed information and financial
statements and related notes appearing elsewhere in this Prospectus.
THE ASSOCIATION
Gold Kist Inc. is a diversified agricultural membership cooperative
association, headquartered in Atlanta, Georgia. Gold Kist serves approximately
25,000 active farmer members and other cooperative associations located
principally in the southeastern United States. Gold Kist both markets products
and purchases supplies and equipment for its members. See Business.
THE OFFERING
The various classes of securities described below are offered for sale.
SECURITIES OFFERED
<TABLE>
<CAPTION>
AGGREGATE
DESCRIPTION OF SECURITIES FACE AMOUNT
------------------------- -----------
<S> <C>
Subordinated Capital Certificates of Interest
15 year maturity, Series D (Interest as indicated on the front
cover of this Prospectus)......................................... $ 6,120,563
10 year maturity, Series D (Interest as indicated on the front
cover of this Prospectus)......................................... $ 5,608,355
7 year maturity, Series A (Interest as indicated on the front cover
of this Prospectus)............................................... $12,083,239
5 year maturity, Series C (Interest as indicated on the front cover
of this Prospectus)............................................... $11,670,318
3 year maturity, Series A (Interest as indicated on the front cover
of this Prospectus)............................................... $14,433,592
2 year maturity, Series A (Interest as indicated on the front cover
of this Prospectus)............................................... $14,973,083
Subordinated Loan Certificates
1 year maturity, Series C (Interest as indicated on the front cover
of this Prospectus)............................................... $23,883,444
Subordinated Large Denomination Loan Certificates
1 year maturity, Series A (Interest as indicated on the front cover
of this Prospectus)............................................... $24,919,607
6 month maturity, Series A (Interest as indicated on the front
cover of this Prospectus)......................................... $13,203,694
</TABLE>
Equivalent Subordination
The Subordinated Capital Certificates of Interest, the Subordinated Loan
Certificates and the Subordinated Large Denomination Loan Certificates of each
class rank equally under their respective subordination provisions. See
Description of Subordinated Capital Certificates of Interest--Subordination,
and Description of Subordinated Loan Certificates and Subordinated Large
Denomination Loan Certificates--Subordination.
Redemption at Request of Certificateholder
The certificates of each class may be redeemed prior to maturity upon the
death of a certificateholder or, subject to quarterly amount limitations except
in the case of the Subordinated Loan Certificates and Subordinated Large
Denomination Loan Certificates, at any time. Redemption prior to maturity,
other than upon the death of a certificateholder, requires a substantial
redemption penalty which, under certain circumstances, could exceed the amount
of interest paid or accrued on the certificate to the date of redemption, thus
resulting in a redemption price which is less than the principal amount of the
certificate. See Description of Subordinated Capital Certificates of Interest--
Redemption at the Request of Certificateholder, and Description of Subordinated
Loan Certificates and Subordinated Large Denomination Loan Certificates--
Redemption at the Request of Certificateholder.
3
<PAGE>
The indentures governing the Subordinated Capital Certificates of Interest,
the Subordinated Loan Certificates and the Subordinated Large Denomination Loan
Certificates of each series do not contain additional redemption provisions
requiring Gold Kist to repurchase the certificates at the request of the
certificateholder upon the occurrence of a change in control of Gold Kist, nor
do the indentures contain any provisions designed to afford protection to
certificateholders in the event of a highly leveraged transaction involving
Gold Kist.
Redemption at the Option of Gold Kist
In addition to redemptions at the request of the certificateholder, Gold Kist
may, at its option, redeem all or, from time to time, any part of the
certificates of five, seven, ten and fifteen year maturity on any date prior to
maturity. In such event, the redemption price would be 100% of the principal
amount redeemed, plus accrued but unpaid interest on that amount, plus a
substantial redemption premium. See Description of Subordinated Capital
Certificates of Interest--Redemption at the Option of Gold Kist.
METHOD OF SALE
The securities are offered for sale by Agvestments, Inc. on a best efforts
basis.
SELLING PRICE
The securities are offered at par.
USE OF PROCEEDS
The proceeds from this offering of securities will be used primarily to repay
a portion of the Association's other indebtedness and for general corporate
purposes. See Use of Proceeds.
MATERIAL RISKS
Reference is made to the section of this Prospectus entitled Risk Factors.
SUMMARY OF SELECTED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
FOR FISCAL YEARS ENDED (000'S OMITTED)
---------------------------------------------------
JUNE 29, JUNE 27, JUNE 26, JUNE 25, JULY 1,
1991 1992 1993 1994 1995
---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Consolidated Statement of
Operations Data:
Net sales volume......... $1,259,033 1,300,906 1,400,566 1,561,034 1,688,537
Net margins (loss)(A).... $ 32,933 (20,614) 27,238 39,404 11,751
Ratio of net margins
(loss) to fixed
charges(B).............. 2.5 1.4 3.2 3.7 2.0
<CAPTION>
AS OF (000'S OMITTED)
---------------------------------------------------
JUNE 29, JUNE 27, JUNE 26, JUNE 25, JULY 1,
1991 1992 1993 1994 1995
---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Consolidated Balance Sheet
Data:
Total assets............. $ 671,756 676,698 665,102 716,432 821,637
Total liabilities........ $ 351,284 382,789 354,889 394,754 482,675
Patrons' and other
equity(A)............... $ 296,940 271,456 285,620 296,662 314,990
</TABLE>
- --------
A. See Note 6 and Note 9(a) of Notes to Consolidated Financial Statements.
B. See Selected Consolidated Financial Data, Note C.
4
<PAGE>
GOLD KIST INC.
Gold Kist Inc. ("Gold Kist" or the "Association") is a diversified
agricultural membership cooperative association, headquartered in Atlanta,
Georgia. Gold Kist serves approximately 25,000 active farmer members located
principally in the southeastern United States. In addition, other cooperative
associations are members.
Gold Kist is both a marketing and purchasing cooperative; it markets
products and commodities and purchases supplies and equipment for its members.
The Association also engages in marketing and purchasing transactions with
nonmembers. Transactions with its members are on a cooperative basis, and
members are entitled to receive patronage refunds out of net margins earned on
such business. See Business--Patronage Refunds. Patronage refunds are not paid
to nonmembers. The Association also engages in non-cooperative activities
through subsidiaries and partnerships.
Gold Kist conducts broiler and pork production operations, providing both
marketing and purchasing services to producers. Gold Kist also purchases or
manufactures feed, seed, fertilizers, pesticides, animal health products and
other farm supply items for sale at wholesale and retail. Additionally, the
Association is engaged in the processing, storage and marketing of cotton,
serves as a contract procurement agent for, and stores, farm commodities such
as soybeans and grain, and is a partner in a major peanut processing and
marketing business and in a pecan processing and marketing business.
The Association's principal office is located at 244 Perimeter Center
Parkway, N.E., Atlanta, Georgia 30346, and its telephone number is (404) 393-
5000.
RISK FACTORS
LACK OF ESTABLISHED MARKET FOR SECURITIES OFFERED
There is no established market for the Subordinated Capital Certificates of
Interest, Subordinated Loan Certificates and Subordinated Large Denomination
Loan Certificates presently outstanding, and it is unlikely that a market will
be available in which the certificates offered by this Prospectus can be sold.
SUBORDINATION OF SECURITIES OFFERED
Payment of the principal and interest on the Subordinated Capital
Certificates of Interest, Subordinated Loan Certificates and Subordinated
Large Denomination Loan Certificates of each series offered hereby is
subordinated in right of payment, in case of liquidation of Gold Kist, to the
prior payment in full of the principal of and interest on "Superior
Indebtedness," as set forth in the indentures under which each series of
Subordinated Capital Certificates of Interest, Subordinated Loan Certificates
and Subordinated Large Denomination Loan Certificates will be issued. As of
July 1, 1995, Superior Indebtedness (as defined in the indentures) amounted to
approximately $384,402,000 and additional Superior Indebtedness, without
limitation, may be created from time to time. See Description of Subordinated
Capital Certificates of Interest--Subordination, and Description of
Subordinated Loan Certificates and Subordinated Large Denomination Loan
Certificates--Subordination.
AFFILIATED UNDERWRITER
Agvestments, Inc. is a wholly-owned subsidiary of Gold Kist. Under the terms
of an agreement with Gold Kist, Agvestments' business is restricted to the
offering and sale of securities issued by Gold Kist. This offering is being
made in compliance with the terms of a partial exemption from the requirements
of Schedule E of the NASD By-Laws; no persons other than associated persons of
Gold Kist or Agvestments participated in determining the price and other terms
of the securities offered hereby. The rate of interest borne by certificates
of each series is determined from time to time by the Board of Directors of
Gold Kist or its delegates, who are officers of Gold Kist, but no change in
the rate affects any certificates theretofore issued. The rates are
5
<PAGE>
reexamined weekly by officers of Gold Kist and Agvestments, and a pricing
determination is made based upon the yields offered on debt securities of
comparable maturities issued by the United States Government and other market
factors.
AGRICULTURE AND AGRIBUSINESS INDUSTRY
Gold Kist's business is principally composed of operations in agriculture
and related agribusiness industries. The nature of agribusiness industry in
general, including poultry processing and marketing, is such that supply and
demand market forces exert significant influence upon the operations of firms
engaged in these businesses. Demand for the products produced, processed and
marketed by Gold Kist is often influenced by supplies and prices of
alternative products. Historically, weather has also had a significant impact
on the farm economy and the operating results of agribusinesses such as Gold
Kist. Additionally, as is common with other businesses involving perishable
commodities, the poultry and other operations of Gold Kist have demonstrated a
cyclical nature with varying levels of profits, and to a lesser extent losses,
over periods of years. Management is unable to predict whether, and to what
extent, such factors and conditions will affect the Association's operating
results in the future.
PENDING LITIGATION
The Association is a defendant in two Alabama state court lawsuits which
have been certified as class actions. Unspecified damages are sought against
Gold Kist on behalf of the classes of plaintiffs in the two actions. The
Association disputes the merits of the litigation and is defending both
lawsuits vigorously, but is unable to predict the outcome of such legal
actions.
USE OF PROCEEDS
The maximum net proceeds to Gold Kist from the sale of the certificates
offered hereby are estimated to be $125,389,276 before deduction of expenses
estimated to be $103,350. The proceeds will be used in the following order of
priority. Approximately $43,659,000 of the proceeds will be used for the
repayment or redemption of outstanding Gold Kist Certificates of Interest,
Loan Certificates and Large Denomination Loan Certificates which will mature
during the twelve-month period ending October 31, 1996. The rates of interest
borne by such indebtedness are set forth in Note 4 of Notes to Consolidated
Financial Statements. Any remaining proceeds will be used for general
corporate purposes, including additional production and processing plant
capacity expansion and additional working capital.
The Subordinated Capital Certificates of Interest, Subordinated Loan
Certificates and Subordinated Large Denomination Loan Certificates are being
offered as a continuous offering on a "best efforts" basis by Agvestments,
Inc. Consequently, no assurance can be given as to the amount of Subordinated
Capital Certificates of Interest, Subordinated Loan Certificates or
Subordinated Large Denomination Loan Certificates that will be sold or as to
the amount of net proceeds therefrom which will be available to Gold Kist from
time to time. If substantially less than the maximum proceeds are obtained, to
the extent that cash flow from future operations is not sufficient, Gold Kist
would borrow necessary additional funds from banks and other lenders. See Note
4 of Notes to Consolidated Financial Statements.
6
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data presented below under the captions
"Consolidated Statement of Operations Data" for each of the years in the five-
year period ended July 1, 1995 and "Consolidated Balance Sheet Data" as of
June 29, 1991, June 27, 1992, June 26, 1993, June 25, 1994 and July 1, 1995
are derived from the consolidated financial statements of Gold Kist Inc. and
subsidiaries, which consolidated financial statements have been audited by
KPMG Peat Marwick LLP, independent auditors. The consolidated financial
statements as of June 25, 1994 and July 1, 1995 and for each of the years in
the three-year period ended July 1, 1995, and the report thereon of KPMG Peat
Marwick LLP, which is based partially upon the report of other auditors, are
included elsewhere. The information set forth below should be read in
conjunction with Management's Discussion and Analysis of Consolidated Results
of Operations and Financial Condition and the aforementioned consolidated
financial statements, the related notes and the audit report, which refers to
changes in accounting for income taxes and for certain investments in debt and
equity securities, included elsewhere herein.
<TABLE>
<CAPTION>
FOR FISCAL YEARS ENDED (000'S OMITTED)
---------------------------------------------------
JUNE 29, JUNE 27, JUNE 26, JUNE 25, JULY 1,
1991 1992 1993 1994 1995
---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Net sales volume.......................... $1,259,033 1,300,906 1,400,566 1,561,034 1,688,537
========== ========= ========= ========= =========
Interest expense.......................... $ 18,437 18,545 17,163 13,924 17,525
========== ========= ========= ========= =========
Margins (loss) before cumulative effect of
accounting changes....................... $ 32,933 (1,643) 27,238 34,065 11,751
Cumulative effect of changes in
accounting:
Income taxes (A)........................ $ -- -- -- 5,339 --
Postretirement benefits other than
pensions (net of $10,698 income tax
benefit)............................... -- (18,971) -- -- --
---------- --------- --------- --------- ---------
Net margins (loss)........................ $ 32,933 (20,614) 27,238 39,404 11,751
========== ========= ========= ========= =========
Ratio of net margins (loss) to fixed
charges (C).............................. 2.5 1.4 3.2 3.8 2.0
========== ========= ========= ========= =========
<CAPTION>
AS OF (000'S OMITTED)
---------------------------------------------------
JUNE 29, JUNE 27, JUNE 26, JUNE 25, JULY 1,
1991 1992 1993 1994 1995
---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Working capital........................... $ 114,652 108,045 140,629 139,847 146,585
========== ========= ========= ========= =========
Total assets.............................. $ 671,756 676,698 665,102 716,432 821,637
========== ========= ========= ========= =========
Long-term liabilities..................... $ 146,183 159,449 152,792 144,992 178,777
========== ========= ========= ========= =========
Total liabilities......................... $ 351,284 382,789 354,889 394,754 482,675
========== ========= ========= ========= =========
Patrons' and other equity (B)............. $ 296,940 271,456 285,620 296,662 314,990
========== ========= ========= ========= =========
Current ratio............................. 1.56 1.48 1.70 1.56 1.48
========== ========= ========= ========= =========
Ratio of long-term liabilities to total
capitalization........................... % 32.99 37.00 34.85 32.83 36.21
========== ========= ========= ========= =========
</TABLE>
- --------
Note:
(A) See Note 6 of Notes to Consolidated Financial Statements.
(B) See Note 9(a) of Notes to Consolidated Financial Statements.
(C) The ratio is calculated by dividing the sum of margins (loss) before
cumulative effect of change in accounting principle, income tax expense
(benefit), equity in the earnings (loss) of certain partially-owned
affiliates, minority interest in earnings (loss) of subsidiary, adjusted
to exclude earnings not distributed of partially-owned affiliates,
interest capitalized and fixed charges by fixed charges. Fixed charges
consist of interest charges on all indebtedness and that portion of
rentals considered to be the interest factor. The ratio computation does
not include interest charges incurred by Golden Peanut Company of $10,684,
$8,151, $9,126, $10,113 and $15,249 for 1991, 1992, 1993, 1994 and 1995,
respectively.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
The nature of the poultry industry and the agriculture (agribusiness)
industry in general is such that supply and demand market forces exert a
significant amount of influence over the operations of firms engaged in these
businesses. Prices of commodities react directly to supply and demand.
Additionally, demand for poultry and other agricultural products produced,
processed and marketed by Gold Kist is often influenced by supplies and prices
of alternative products.
As with other perishable commodity businesses, the integrated poultry
industry has demonstrated a cyclical nature with varying levels of profits,
and to a lesser extent, losses over its 36 year history. Although the past
twelve years have been a period of continued profitability with the exception
of a brief period during 1992, net margins have varied from year to year in
response to market fundamentals. The following addresses the various factors
that have influenced poultry industry profitability during the past several
years. Broiler market prices declined in 1991 and remained at low levels
throughout 1992 as a result of the economic recession affecting the United
States, the decline in poultry exports and excess industry supply. Improved
market prices in 1993 and 1994 were the result of a general economic recovery
in the United States and increased demand for poultry products. During 1995,
broiler market prices declined due to the large supply of competing meats,
such as beef and pork, and the continuation of broiler industry expansion.
According to USDA estimates, the supply of broilers is expected to increase at
a 6.6% rate in 1995 and a 6.2% rate in 1996 as compared to the 6.5% average
annual increase between 1991 and 1994. In 1991, feed grain prices, which
represent approximately 50% of total broiler production costs, moderated as a
result of the favorable United States grain harvests. In 1992, market prices
for corn and soybean meal increased as supplies came in balance with world
demand. The record 1992 domestic corn harvest brought lower feed ingredient
prices in 1993. In 1994, feed ingredient prices increased substantially as a
result of the reduced corn harvest in 1993. As a result of the increase in
planted corn and soybean acreage and favorable growing conditions in the
summer of 1994, market prices for feed ingredients declined in 1995. Feed
ingredient prices are expected to increase in 1996 due to poor spring planting
conditions in the Midwest and difficult growing conditions during the summer
of 1995. Management is unable to predict whether such conditions will continue
in the future or to what extent cyclical pressures will affect the
Association's operations.
Historically, weather has had a significant impact on the farm economy and
the operating results of the Association. Favorable weather conditions
contributed to normal grain production in the United States, which contributed
to lower commodity prices resulting in lower broiler production costs in 1991.
Wet weather conditions in the Southeast during the 1991 spring planting season
contributed to reduced planting of corn and soybean acreage. However, planted
acreage of peanuts and cotton, although delayed by wet weather, increased in
1991 as compared to the prior year. Generally, favorable weather conditions
throughout 1992 provided for a near perfect planting season in the Southeast,
which contributed to improved 1992 operating results in the Agri-Services
segment. Wet weather conditions in the Southeast during the 1993 spring
planting season reduced corn and peanut acreage and were followed by early
summer drought conditions. These inclement weather factors had a negative
impact on 1993 Agri-Services operating results. Flooding in the Midwestern
United States during the summer of 1993 severely impacted the domestic grain
harvest and boosted feed ingredient prices to near record levels. Hot, dry
weather conditions in the late summer of 1993 damaged pastures in the
Southeast, which resulted in increased sales of agricultural products in 1994.
In addition, favorable spring weather conditions contributed to increased
planting activity in 1994. In 1995, generally favorable spring weather
conditions in the Southeast contributed to increased sales of agricultural
inputs in the Association's primary retail sales area. However, wet weather
conditions in the Delta and Midwest regions of the U.S. negatively impacted
market prices for corn, seed and certain fertilizers in areas where these
products are sold through independent dealers and four of the Association's
retail stores.
Export sales for 1993, 1994 and 1995 were $27.5 million, $37.7 million and
$70.1 million, respectively. In 1994 and 1995, export sales increased
primarily as a result of the demand for poultry from the Commonwealth of
Independent States and the Far East. Export sales of poultry products will be
influenced by credit availability
8
<PAGE>
to foreign countries, political and economic stability, particularly in the
Commonwealth of Independent States, Eastern European nations and Mexico, and
the United States government's willingness to support the industry through
export enhancements.
The Association's operations are classified into two reportable business
segments. See Note 10 of Notes to Consolidated Financial Statements. The
discussion of results of operations relates the effects of these significant
economic factors on those segments for each of the years in the three-year
period ended July 1, 1995.
RESULTS OF OPERATIONS
Fiscal 1994 Compared to Fiscal 1993
Net sales volume of $1.6 billion for 1994 increased 11.5% or $160.5 million
from the prior fiscal year as a result of increased sales of poultry products,
as well as increased sales of agricultural production inputs. The Association
had net margins from operations, before general corporate expenses and other
deductions, of $60.6 million for 1994 as compared to $45.1 million in 1993.
The 34.3% increase resulted primarily from higher selling prices for poultry
products and increased sales of agricultural products in the Southeast. The
Association's margins before the cumulative effect of accounting changes were
$34.1 million for 1994 as compared to $27.2 million in 1993.
The Poultry segment had record setting net sales volume of $1.2 billion for
1994, which represented a 9.8% increase from the previous fiscal year. Net
margins from operations for 1994 were $52.2 million, a 20.6% increase as
compared to 1993. The increase in net sales volume resulted from an 6.7%
increase in pounds of poultry marketed and a 6.3% increase in average selling
prices. The impact of these factors on net sales volume was partially offset
by lower sales of non-poultry items. As previously discussed, the increase in
market prices for poultry products reflected the general economic recovery in
the United States and the increase in poultry exports during 1994. The
increase in poultry net margins was partially offset by increased feed
ingredient prices which averaged approximately 10.0% above the prior year.
Market prices for corn and soybean meal increased 21.0% and 8.7%,
respectively, over the prior year due to the weather reduced crop in 1993.
Market prices for competing meats in late 1994 declined as a result of heavy
cattle and pork processing. As a result, net margins in the pork production
operation declined to $775,000 for 1994 as compared to $1.2 million in 1993.
Net sales volume in the Agri-Services segment for 1994 was $377.3 million,
an increase of $54.7 million or 16.9% as compared to 1993. Net margins from
operations for 1994 were $8.5 million which represented a $6.6 million
increase from 1993. The improvements were due primarily to increased sales of
agricultural production inputs such as fertilizers, chemicals, seed and animal
feeds through the Association's farm supply stores and independent dealers.
Hot, dry weather conditions in 1993 damaged pastures in the Southeast, which
resulted in increased sales of animal feeds in the fall and winter and led to
increased plantings necessary to reestablish pastures. Also, contributing to
these improvements was the increase in cotton acreage and generally favorable
weather conditions for planting during the late winter and spring of 1994.
In 1994, the Association's distribution, administrative and general expenses
were $121.4 million as compared to $111.5 million for 1993, an increase of
8.9%. The increase reflects higher incentive compensation expense related to
the increase in margins and general expense increases related to expansion in
the Poultry segment and increased net sales volume in the Agri-Services
segment. Distribution, general and administrative expenses as a percentage of
net sales were 7.8% for 1994 and 8.0% for 1993.
The various components included in other income (deductions) represented a
deduction of $4.3 million for 1994 as compared to income of $4.2 million for
1993. Interest income of $6.8 million for 1994 declined approximately $788,000
from 1993 due primarily to the sale of collateralized loans to an insurance
company. See Note 8 of Notes to Consolidated Financial Statements. Interest
expense for 1994 was $13.9 million as compared to $17.2 million in 1993. The
$3.2 million decline was due primarily to an 11% reduction in average
borrowings and lower interest rates. The Association's $1.1 million pro rata
share of the Golden Peanut
9
<PAGE>
Company's 1994 loss (equity in loss of partnership) represented a significant
portion of the decrease in other income (deductions) for 1994. Golden Peanut
Company adopted Statement of Financial Accounting Standards No. 106 (SFAS 106)
"Employers' Accounting for Postretirement Benefits other Than Pensions,"
resulting in a charge of $3.9 million to earnings in 1994. Also, the decline
in Golden Peanut Company's 1994 operating results was related to the general
oversupply situation that exists in the United States for domestic peanuts and
the increase of peanut based foods imported into the United States. See Note
9(b) of Notes to Consolidated Financial Statements. Miscellaneous, net
includes the Association's equity in the earnings of a partially-owned foreign
affiliate whose principal business activities include the marketing,
purchasing and resale of edible peanuts. The Association recognized income for
1994 and 1993 of $250,000 and $1.6 million, respectively. The decline in the
affiliate's net earnings was the result of lower market prices for foreign
sourced peanuts. Miscellaneous, net for 1994 includes patronage refunds from
other cooperatives and other dividends totaling $710,000 as compared to $2.9
million for 1993. Rental income of approximately $1.8 million was included in
miscellaneous, net for 1994 and 1993.
Fiscal 1995 Compared to Fiscal 1994
The Association's accounting cycle resulted in 53 weeks of operations in
1995 and 52 weeks in 1994.
Net sales volume for 1995 was $1.7 billion, which represented an 8.2%
increase over the prior fiscal year. Net margins from operations, before
general corporate expenses and other deductions, were $38.7 million as
compared to $60.6 million for 1994. The decline in net margins from operations
was due primarily to lower market prices for poultry products.
The Poultry segment's net sales volume of $1.3 billion was up 6.0% from 1994
as a result of increased pounds of poultry sold, which was partially offset by
lower average selling prices. The decline in average selling prices
contributed to a 35% decline in net margins from operations to $34.1 million.
The 4.9% decline in average selling prices for 1995 was due to excessive
supplies of competing meats and increased broiler industry production. The
impact of the decline in selling prices on net sales was offset by an 11.0%
increase in poultry pounds sold. The decline in poultry net margins from
operations was partially offset by an 8.6% decline in feed ingredient costs.
Due to the lower pork market prices, the poultry segment's Pork Division
incurred a net loss of $3.7 million as compared to a net margin of $775,000
for 1994.
In the Agri-Services segment, net sales volume for 1995 of $433.4 million
increased 14.9% as compared to 1994 due to increased sales of agricultural
production inputs, including fertilizer, chemicals and farm supplies sold
through the Association's farm supply stores and independent dealers. Net
margins from operations for 1995 were $4.6 million, down $3.9 million from
1994. The net sales increase for 1995 was due to increased sales prices for
fertilizer, increased application in the Southeast related to the increase in
cotton acreage and the addition of five retail outlets primarily in the
Mississippi Delta region. The decline in net margins from operations for 1995
was due primarily to lower margins on seed corn sold in the Midwest, reduced
gross margins on retail fertilizer sales and expenses related to the closing
of four suburban retail stores.
Distribution, administrative and general expenses for 1995 and 1994 were
$131.4 million and $121.4 million, respectively, which represent 7.8% of net
sales volume. The $10.0 million increase reflects the growth in the Agri-
Services operations, which was partially offset by lower incentive
compensation expenses related to the decrease in net operating margins.
The various components included in other income (deductions) represented a
deduction of $5.6 million for 1995 as compared to $4.3 million for 1994.
Interest income of $8.8 million for 1995 increased $2.0 million as a result of
increased crop financing for patrons and other customers. Interest expense for
1995 was $17.5 million as compared to $13.9 million in 1994 due to increased
average borrowings of approximately 10.0% and higher interest rates on short-
term borrowings. In 1995, interest expense includes $1.6 million related to
income tax litigation. The Association's $9.6 million pro rata share of the
Golden Peanut Company's 1995 loss (equity in loss of partnership) represented
a significant portion of other income (deductions) for 1995. The decline in
10
<PAGE>
Golden Peanut Company's 1995 operating results was primarily the result of low
peanut selling prices resulting from the general oversupply situation that
exists for domestic and export peanuts, reduced U.S. consumption of peanut
products and the increase of peanut based foods imported into the United
States. See Note 9(b) of Notes to Consolidated Financial Statements. The $3.1
million gain on sale of investments represents the sale of common stock in two
agricultural related entities. Miscellaneous, net for 1995 includes the
Association's $1.7 million pro rata share in the loss of a partially-owned
foreign affiliate whose principal business activities include the marketing,
purchasing and resale of edible peanuts. In 1994, the Association recognized
income of $250,000 on this investment. Miscellaneous, net for 1995 includes
$1.7 million representing the Association's equity in the earnings of a pecan
processing and marketing enterprise in South Carolina. Miscellaneous, net for
1994 includes patronage refunds from other cooperatives and other dividends of
$4.4 million as compared to $710,000 for 1994. Net rental income of
approximately $2.0 million and $1.8 million, respectively, was included in
miscellaneous, net for 1995 and 1994.
In 1995 and 1994, the Association's combined federal and state effective tax
rates were 51% and 30%, respectively. The effective tax rate for 1995 reflects
$5.5 million of additional tax related to an adverse tax court decision. See
Note 6 of Notes to Consolidated Financial Statements.
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
The Association's liquidity is dependent upon funds from operations and
external sources of financing. The principal sources of external short-term
financing are proceeds from the continuous offering of Subordinated Loan
Certificates, an unsecured committed credit facility with a group of banks and
uncommitted letters and lines of credit. The Association had unused loan
commitments of $53.0 million and additional unused uncommitted facilities to
provide loans and letters of credit from banks aggregating approximately $15.1
million at July 1, 1995. A $50.0 million unsecured line of credit is available
beginning December 1, 1995 through May 31, 1996. The primary sources of
external long-term financing are a note agreement with an insurance company,
proceeds from the continuous offering of Subordinated Capital Certificates of
Interest and revolving credit agreements. See Note 4 of Notes to Consolidated
Financial Statements.
Covenants under the terms of the loan agreements with lenders include
conditions that could limit short-term and long-term financing available from
various external sources. The terms require a ratio of current assets to
current liabilities of not less than 1.20:1, the ratio of senior funded debt
to total capitalization not to exceed 40% and total funded debt to total
capitalization not to exceed 50%. At July 1, 1995, Gold Kist's current ratio,
senior funded debt to total capitalization and total funded debt to
capitalization, determined under the loan agreements, were 1.41:1, 21% and
36%, respectively. The loan agreements apply to the Association and its
subsidiaries, excluding Golden Poultry. At July 1, 1995, the Association was
in compliance with the agreements. See Note 4 of Notes to Consolidated
Financial Statements.
During 1993, net cash provided by operations and proceeds from long-term
debt were used primarily to repay short-term and long-term borrowings of $76.7
million. The Association and its consolidated subsidiaries investment
activities for 1993 included $23.3 million in expenditures for property, plant
and equipment. The Association's use of cash included $4.8 million for cash
patronage refunds and other equity payments as compared to $8.8 million in
1992. The expenditures for property, plant and equipment during 1993 included
$17.5 million related to expansion and improvements in the poultry operations,
as well as $5.5 million for the acquisition of retail stores, agricultural
chemical distribution facilities, and a chemical application equipment
manufacturer and distributor.
In 1994, existing cash balances, proceeds from long-term debt and short-term
borrowings, and net cash provided by operations of $36.8 million were used for
capital expenditures, repayments of long-term debt, patronage refunds and
other equity payments. Capital expenditures in 1994 included $32.7 million
related to expansion and improvements in poultry operations, as well as $3.8
million for improvements to retail stores and other agricultural operations.
During 1994, the Association had cash payments of approximately $22.7 million
for patronage refunds and other equity payments. These payments included $10.2
million representing the redemption of Revolving Fund Certificates and
Cumulative Preferred Capital Certificates of Interest with no fixed
maturities.
11
<PAGE>
During 1995, uses of cash included capital expenditures of $61.8 million,
$36.7 million for repayments of long-term debt and patronage refunds and other
equity distributions of $19.5 million. The funds for these investing and
financing activities were provided primarily by borrowings of approximately
$110.0 million and to a lesser extent, cash provided by operating activities
of $7.2 million and the sale of investments in marketable securities totaling
$8.9 million. Capital expenditures in 1995 included $43.3 million related to
expansion and improvement in poultry operations, as well as $18.0 million for
the acquisition of Agri-Services operations, improvements to retail stores and
the construction of cotton facilities.
The Association, including its non-cooperative subsidiaries, plans capital
expenditures of approximately $90.0 million in 1996 that primarily include
expenditures for expansion and technological advances in poultry production
and processing and expansion into cotton ginning and warehousing. In addition,
planned capital expenditures include other asset improvements and necessary
replacements. Management intends to finance the planned 1996 capital
expenditures with existing cash balances and cash provided by operating
activities and additional long-term borrowings as needed. In 1996, management
expects cash expenditures to approximate $12.0 million for equity redemptions.
The Association believes cash on hand at July 1, 1995 and cash expected to be
provided from operations, in addition to borrowings available under existing
credit arrangements, will be sufficient to maintain cash flows adequate for
the Association's projected growth and operational objectives during 1996.
EFFECTS OF INFLATION
The major factor affecting the Association's net sales volume and cost of
sales is the change in commodity market prices for broilers, hogs, feed grains
and fertilizers. The prices of these commodities are affected by world market
conditions and are volatile in response to supply and demand, as well as
political and economic events. The price fluctuations of these commodities do
not necessarily correlate with the general inflation rate. Inflation has,
however, affected operating costs such as labor, energy and material costs.
FUTURE ACCOUNTING REQUIREMENTS
In May 1993, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 114, "Accounting by
Creditors for Impairment of a Loan" and in October 1994, the FASB issued SFAS
No. 118, "Accounting by Creditors for Impairment of a Loan-Income Recognition
and Disclosures," which must be applied by fiscal 1996. SFAS 114 and 118 are
not expected to have a significant impact upon adoption.
In March 1995, the FASB issued SFAS No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," which must
be applied by fiscal 1997. SFAS 121 is not expected to have a significant
impact upon adoption.
BUSINESS
Gold Kist offers both cooperative marketing and cooperative purchasing
services to its member patrons. The standard Membership, Marketing and/or
Purchasing Agreement between each member and Gold Kist does not require the
member to market agricultural products or to purchase farm supplies through
Gold Kist. The Association undertakes to market for the member agricultural
products of a type marketed by Gold Kist and to purchase or manufacture and
sell to the member farm supplies, provided handling such supplies is
advantageous for Gold Kist. The Association also is engaged in the purchase,
sale, processing and storage of cotton, serves as a contract procurement agent
for, and storer of, farm commodities such as soybeans and grain and is a
partner in a major peanut processing and marketing business and in a pecan
processing and marketing business.
Agriculture is generally cyclical in nature. Agricultural commodities are
subject to wide fluctuations in price, based on supply of the farm commodities
and demand for the raw or processed products. In addition, a portion of Gold
Kist's business is dependent on the demand of farmers for the purchase of
products, which is influenced by the general farm economy and the success of
particular crops. The cyclical nature of Gold Kist's operations related to
various commodities causes variations from year to year in sales, costs, and
prices which has resulted in net margins in certain years and losses in
others.
12
<PAGE>
Gold Kist follows the general practice of hedging varying amounts of its
feed ingredients by buying or selling options or contracts for future delivery
in the commodity markets. While hedging is designed to reduce the risk of
fluctuations in the market prices of commodities, hedging itself involves
substantial risks and can result in losses. Gold Kist's activities related to
commodities futures hedging strategies have not been significant to its feed
grain requirements, and the results of commodities options transactions have
not been material to results of operations.
For information relating to Gold Kist's industry segments, see Note 10 of
Notes to Consolidated Financial Statements.
POULTRY
Gold Kist provides cooperative purchasing and marketing services to its
members who are producers under its integrated broiler or pork production
programs. Six broiler complexes operating on a cooperative basis and
encompassing broiler, pullet and breeder flocks, hatcheries, feed mills,
poultry processing plants and transportation facilities, are located in
Alabama, Florida and Georgia. Golden Poultry, a subsidiary owned 73% by Gold
Kist, owns and operates integrated broiler complexes on a non-cooperative
basis, in Alabama, Georgia and North Carolina. Carolina Golden Products
Company, a general partnership consisting of Golden Poultry and AgriGolden,
Inc., a wholly-owned subsidiary of Gold Kist, operates a poultry processing
complex on a non-cooperative basis in South Carolina.
The principal poultry products marketed are whole chickens, cut-up chickens,
segregated chicken parts and further processed products packaged in various
forms, i.e., bulk fresh ice pack, chill pack and frozen. Ice pack chicken is
sold primarily to distributors, grocery stores and fast food chains. Chill
pack chicken is packaged for retail sale and kept chilled by mechanical
refrigeration from the packing plant to the store counter. Frozen chicken is
marketed primarily to school systems, the military services, fast food chains
and in the export market. Further processed products, which include preformed
breaded chicken nuggets and patties, and deboned, skinless and marinated
products, are marketed primarily to fast food and grocery store chains. Chill
pack chicken is sold in certain localities under the Young 'n Tender(R) label;
however, some volume is sold under customer's private labels. Most of the
frozen chicken carries the Gold Kist(R) or Early Bird(R) label. Cornish game
hens are marketed in frozen form primarily to hotels, restaurants and grocery
stores under the Young 'n Tender and Medallion(R) labels.
Broiler products are marketed directly from the processing plant in each
broiler complex, from the Association's headquarters in Atlanta and from
separate distribution facilities located near major metropolitan areas. Gold
Kist is one of the largest poultry processors in the United States. It
competes with other large processors and with smaller companies on the basis
of price, quality and service.
The following table shows the amount and percentage of Gold Kist's net sales
volume contributed by sales of broiler products for each of the years
indicated.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED (000'S OMITTED)
-----------------------------------
JUNE 26, JUNE 25, JULY 1,
1993 1994 1995
----------- ----------- -----------
<S> <C> <C> <C>
Broiler Products
Volume.................................... $1,041,175 $1,152,252 $1,226,104
Percentage (%)............................ 74.3 73.8 72.6
</TABLE>
Gold Kist also markets hogs raised by members and non-members in Alabama,
Georgia and North Carolina.
AGRI-SERVICES
Gold Kist purchases, manufactures and processes fertilizers, agricultural
chemicals, seed, pet food, feed, animal health products and other farm supply
items for distribution and sale at wholesale and retail. These products are
distributed through approximately 92 Gold Kist retail stores and at wholesale
to national accounts and independent dealers. The Gold Kist stores are located
in Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, South Carolina
and Texas. A typical store is a complete farm supply center offering for sale
many types of feeds, animal health products, fertilizers, pesticides, seeds,
farm supplies and equipment. It also offers services such as customized
fertilizer spreading, field mapping, soil testing, insect scouting, and
agronomic and animal nutrition advice. Urban locations offer turf and garden
supplies, consumer items and houseware products.
13
<PAGE>
The Association operates a system of receiving and storing facilities for
unprocessed commodities located principally in Alabama, Florida, Georgia and
South Carolina. The principal farm commodities handled are soybeans, corn and
other grains. Gold Kist has aggregate storage capacity of approximately seven
million bushels. Approximately 98% of Gold Kist storage facilities are
licensed by the federal or state government and can issue negotiable warehouse
receipts. Pursuant to a renewable five year grain handling agreement which
terminates in July 2000, Gold Kist utilizes these facilities and assets
exclusively as independent buying points operating on a commission basis for
the Archer Daniels Midland Company.
Gold Kist distributes granular, blended and liquid fertilizers and
fertilizer materials in bagged and bulk form. Gold Kist is a member of CF
Industries, Inc., a cooperative owned by regional cooperatives, which produces
and supplies fertilizer materials to its members. For the fiscal year ended
July 1, 1995, Gold Kist purchased approximately 32% percent of its total
volume of fertilizer materials and products at market prices from CF
Industries. The remaining fertilizer materials and products were purchased
from more than 50 other suppliers.
The following table shows the amount and percentage of Gold Kist's net sales
volume contributed by sales of fertilizer and chemical products for each of
the years indicated.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED (000'S
OMITTED)
--------------------------
JUNE 26, JUNE 25, JULY 1,
1993 1994 1995
-------- -------- --------
<S> <C> <C> <C>
Fertilizer and Chemicals
Volume............................................. $173,778 $211,218 $268,625
Percentage (%)..................................... 12.4 13.5 15.9
</TABLE>
Gold Kist's four AgriServices feed mills produce feeds distributed at
wholesale or at retail through the Gold Kist stores and independent dealers.
Approximately one-half of the feed distributed through the stores is delivered
in bulk form directly from the feed mill to the farm; the remainder is sold in
bag form.
In fiscal 1995, the Association began cotton ginning and storage operations
in Georgia. Cotton ginning facilities are operated at Byromville and DeSoto,
Georgia. New ginning and storage facilities are under construction at
Statesboro, Georgia and a central storage warehouse is under construction in
Moultrie, Georgia. The Association will provide ginning and storage services
to members and will market cotton purchased from members to domestic and
foreign textile mills.
AgraTech Seeds, Inc., a wholly-owned subsidiary of Gold Kist, owns and
operates a seed business which consists of the development, contract
production, processing and sale primarily of proprietary seed varieties. Seed
is marketed by AgraTech Seeds at wholesale to seed retailers, including Gold
Kist stores and independent seed retail outlets, in the Southeast and Midwest.
AgraTech Seeds contracts with farmers for the production of seed and processes
or contracts for the processing of approximately 95% of the seeds it
distributes. Proprietary corn, soybean, sorghum and peanut seed varieties are
marketed under the trademark AgraTech (R).
PARTNERSHIP INTEREST
Gold Kist, the Archer Daniels Midland Company ("ADM") and Alimenta
Processing Corporation ("Alimenta") are partners in Golden Peanut Company, a
general partnership formed to operate a peanut procuring, processing, and
marketing business. Each partner leases peanut facilities, equipment, and
fixed assets to the partnership. Gold Kist, as a general partner, participates
in all partnership allocations in proportion to its 33 1/3% partnership
interest. See Note 9(b) of Notes to Consolidated Financial Statements.
Golden Peanut Company procures, processes and markets peanuts and peanut by-
products in each of the three peanut producing areas of the United States
(Southeast, Southwest and Virginia/Carolina). Golden Peanut Company is a major
processor of edible peanuts and is active in domestic and international
markets. The principal peanut product is shelled edible peanuts. Shelled
edible peanuts are marketed primarily to manufacturers of peanut butter, candy
and salted nuts and are sold in the export market. Golden Peanut also
processes peanuts for sale in the shell or for processing by others into oil
and meal.
14
<PAGE>
EXPORT SALES
Gold Kist owns no physical facilities overseas and has no overseas
employees. Product sales managers maintain sales networks overseas through
contacts with independent dealers and customers. During the fiscal year ended
July 1, 1995, the approximate export sales volume of the primary export
product (poultry) was $70.1 million. During that period, export sales of
poultry were mainly to customers in the Commonwealth of Independent States,
Eastern Europe, Far East, Mexico and the Caribbean area. Subsidized foreign
competition has depressed export demand for many products. Export sales
involve an additional element of transportation and credit risk to the shipper
beyond that normally encountered in domestic sales. All material export sales
transactions are denominated in United States dollars.
PATRONAGE REFUNDS
The By-Laws of Gold Kist provide that Gold Kist shall operate on a
cooperative basis. After the close of each fiscal year, the net taxable
margins of Gold Kist for that year from business done with or for member
patrons (patronage margins) are computed and, after adjustments, are
distributed to members as patronage refunds on the basis of their respective
patronage during that year. Patronage refunds are distributed in the form of
either qualified or nonqualified written notices of allocation (as defined for
purposes of Subchapter T of the Internal Revenue Code). If qualified notices
are used, at least 20% of each patronage refund is distributed in cash or by
qualified check (as defined in the Internal Revenue Code) with the remainder
distributed in written notices of allocated reserves. See Notes 1(f) and 6 of
Notes to Financial Statements. Allocated reserves distributed as a part of
either qualified or nonqualified notices bear no interest and are subordinate
in the event of insolvency of the Association to outstanding patronage
dividend certificates and to all indebtedness of Gold Kist. Patronage refunds
distributed by check or as qualified written notices are deductible from Gold
Kist's gross income for federal income tax purposes. To the extent that Gold
Kist distributes nonqualified written notices of allocation, has income from
transactions with nonmembers or has income from non-patronage sources, it will
be taxed at the corporate rate. Gold Kist has subsidiaries which are not
cooperatives, and the income of these subsidiaries is subject to corporate
income taxes.
DESCRIPTION OF SUBORDINATED CAPITAL CERTIFICATES OF INTEREST
Gold Kist's Subordinated Capital Certificates of Interest of the six series
offered hereby are issued under indentures (the "Indentures") between Gold
Kist and Trust Company Bank, as Trustee (the "Trustee"). A separate Indenture
dated as of September 1, 1979, amended by a First Supplemental Indenture dated
as of September 1, 1980 and a Second Supplemental Indenture dated as of
September 1, 1982, governs each of the following three series of certificates
offered hereby: the Fifteen Year Subordinated Capital Certificates of Interest
(Series D), (the "Fifteen Year Certificates"); the Ten Year Subordinated
Capital Certificates of Interest (Series D), (the "Ten Year Certificates");
and the Five Year Subordinated Capital Certificates of Interest (Series C),
(the "Five Year Certificates"). The Two Year Subordinated Capital Certificates
of Interest (Series A), (the "Two Year Certificates") are governed by an
Indenture dated as of September 1, 1980. The Seven Year Subordinated Capital
Certificates of Interest (Series A), (the "Seven Year Certificates") and the
Three Year Subordinated Capital Certificates of Interest (Series A), (the
"Three Year Certificates") are governed by separate Indentures dated as of
September 1, 1985. The forms of the Indentures and Supplemental Indentures are
filed as exhibits to Registration Statements No. 2-59948, No. 2-65587, No.
2-69267, No. 2-79538 and No. 33-428. With the exception of the maturities of
and interest rates borne by the certificates issued thereunder, the redemption
provisions, and the other exceptions indicated below, the terms of the six
Indentures, as amended, and the certificates issued thereunder and offered
hereby are identical in all material respects. The following summaries of
certain provisions of the Indentures do not purport to be complete, and where
particular provisions of the Indentures are referred to, such provisions
including definitions of certain terms, are incorporated by reference as a
part of such summaries or terms, which are qualified in their entirety by such
reference.
The certificates are unsecured obligations of Gold Kist which are
transferable on the books of Gold Kist when properly endorsed, but are not
negotiable. (Section 2.04 of the Indentures.) The certificates are issued in a
15
<PAGE>
minimum amount of $500 or in any larger amount. The certificates are issued as
of the date on which payment of the purchase price is received by Gold Kist or
its agent for such purpose, except that, where payment is received by the 15th
of January, April, July or October, the certificate will be issued as of the
first of such month, and where payment is received by the 10th of any other
month, the certificate will be issued as of the first of such month. Each
Fifteen Year Certificate matures Fifteen years from the date of such
certificate; each Ten Year Certificate matures ten years from the date of such
certificate; each Seven Year Certificate matures seven years from the date of
such certificate; each Five Year Certificate matures five years from the date
of such certificate; each Three Year Certificate matures three years from the
date of such certificate; and each Two Year Certificate matures two years from
the date of such certificate. (Section 2.01 of the Indentures.)
Each certificate bears interest from the date issued at the per annum rate
stated on the face thereof. The rate of interest borne by certificates of each
series shall be determined from time to time by the Board of Directors of Gold
Kist or its delegate, but no change in the rate will affect any certificates
theretofore issued. The Five, Seven, Ten and Fifteen Year Certificates are
further subdivided and designated by subseries. Each subseries encompasses all
Certificates of the particular series issued pursuant to a single
determination of the rate of interest to be borne by Certificates of that
series; more than one subseries may bear the same rate of interest. The
current rate of interest borne by certificates of each series is set forth on
the front cover of this Prospectus. Interest is payable on July 1 of each year
to holders of record as of the preceding June 30. Holders of $5,000 or more of
certificates of a given series are entitled to payment of interest on such
certificates quarterly, on the first day in January, April, July and October
of each year. (Sections 1.01 and 2.01 of the Indentures.)
Upon the written request of a holder of certificates, Gold Kist will retain
the interest otherwise payable to the holder and pay such interest (i) at the
maturity of the certificate, (ii) annually (if the interest is accumulated
quarterly and if requested by the holder), or (iii) subject to any applicable
redemption penalty, upon redemption prior to maturity, in each case together
with interest thereon at the per annum rate stated on the face of the
certificate compounded as of each Interest Payment Date. Any holder who makes
such a request may at any time, by written notice delivered to Gold Kist at
its principal office in Atlanta, Georgia, terminate such request or withdraw
any interest so retained together with accrued interest thereon through the
date of withdrawal, or both. The certificates will be paid in full, including
all principal and accrued but unpaid interest, at maturity. (Section 5.02 of
the Indentures.)
The Indentures do not limit the aggregate principal amount of certificates
which may be issued thereunder and each Indenture may be modified by Gold Kist
and the Trustee, without the consent of the certificateholders, to provide for
the issuance under the Indentures of one or more additional series of
certificates having terms different from those of the series offered hereby.
(Sections 2.01 and 10.01 of the Indentures.) Certificates of previous series
have been issued and are outstanding under certain of the Indentures governing
the certificates. As of July 1, 1995, there were the following aggregate
principal amounts of the series offered hereby outstanding: Fifteen Year--
$9,887,000; Ten Year--$8,886,000; Seven Year--$11,305,000; Five Year--
$12,456,000; Three Year--$8,154,000; and Two Year--$8,095,000. The Indentures
do not limit the amount of other securities, either secured or unsecured,
superior or subordinate to the certificates, which may be issued by Gold Kist.
REDEMPTION AT THE REQUEST OF CERTIFICATEHOLDER
Upon the death of a registered holder of a certificate, at the request of
(a) the personal representative of the deceased holder's estate or (b) any
surviving joint holder of a jointly held certificate, Gold Kist will redeem
certificates held by such deceased holder. In such event, redemption shall be
at the full face value of the certificate redeemed plus interest accrued and
unpaid thereon to the date of redemption only. (Section 3.01 of the
Indentures.)
Additional Redemptions at the Request of Certificateholder
In addition to redemption upon the death of a registered holder of a
certificate, Gold Kist agrees to redeem prior to maturity a limited amount of
the certificates of any series of Subordinated Capital Certificates of
Interest
16
<PAGE>
offered hereby at the request of the registered holders. The maximum principal
amount of certificates of any series that Gold Kist will redeem during each
calendar quarter shall be equal to five percent (5%) of the aggregate
principal amount of all certificates of that series outstanding at the end of
the last preceding calendar quarter. For example, if there were $5,000,000 in
principal amount of Fifteen Year Subordinated Capital Certificates of Interest
(Series D) outstanding on March 31, 1996, Gold Kist would redeem at the
request of the holders up to $250,000 of such Fifteen Year Certificates during
the quarter beginning on April 1, 1996 and ending on June 30, 1996. (Section
3.04 of the Indenture governing the Fifteen Year Certificates; Section 3.03 of
the remaining Indentures.)
All such redemptions shall be only at the written request of the registered
holder(s) of the certificates redeemed delivered to the Association at its
principal office in Atlanta, Georgia. Redemptions will be made in the order
that such requests are received, and the redemption date will be a date
determined by Gold Kist which is within fifteen (15) days after such request
is received.
The redemption price of each certificate redeemed will be an amount equal to
the full principal amount of the certificate, plus interest accrued but unpaid
to the redemption date (including, if appropriate, interest compounded on
interest retained by the Association at the request of the holder) less a
redemption penalty computed in accordance with the following table.
REDEMPTION PENALTIES APPLICABLE TO VARIOUS CLASSES
<TABLE>
<C> <S>
Two and Three Year Certificates --An amount equal to six (6)
months' interest on the
principal amount of the
certificate computed at the
nominal (simple interest)
rate shown on the face of the
certificate.
Five, Seven, Ten and Fifteen Year Certificates --An amount equal to one (1)
year's interest on the
principal amount of the
certificate computed at the
nominal (simple interest)
rate shown on the face of the
certificate.
</TABLE>
The redemption penalty computed as provided above will be deducted
regardless of the length of time the certificate has been outstanding. The
penalty could exceed the amount of interest paid or accrued on the certificate
to the redemption date, thus resulting in a redemption price which is less
than the principal amount of the certificate.
The following examples illustrate the calculation of the redemption price
assuming the stated principal amounts and interest rates. The Total Redemption
Price in each example will vary with different interest rates and amounts of
principal.
A. For a Five Year Certificate in the principal amount of $1,000 bearing
interest at 6.75%, purchased on January 1, 1996, and redeemed at the request
of the holder on June 14, 1996, the redemption price would equal:
$1,000.00 (Principal amount)
plus 30.51 (165 days' accrued interest at 6.75% per annum)
---------
$1,030.51
less 67.50 (1 year's simple interest at 6.75% per annum)
---------
$ 963. 01 (Total Redemption Price)
17
<PAGE>
B. For a Five Year Certificate in the principal amount of $5,000, bearing
interest at 6.75% (paid quarterly at the election of the holder), purchased on
January 1, 1996 and redeemed at the request of the holder on June 15, 1996,
the redemption price would equal:
$5,000.00 (Principal amount)
plus 69.35 (75 days' accrued interest at 6.75% per annum. Interest
--------- previously paid on April 1, 1996 equals $84.38)
$5,069.35
less 337.50 (1 year's simple interest at 6.75% per annum)
---------
$4,731.85 (Total Redemption Price)
C. For a Five Year Certificate in the principal amount of $5,000 bearing
interest at 6.75% (accumulated quarterly at the election of the holder),
purchased on January 1, 1996, and redeemed at the request of the holder on
June 15, 1998, the redemption price would equal:
$5,000.00 (Principal amount)
plus 890.92 (2 1/4 years, 75 days' accrued interest at 6.75% per annum
--------- accumulated and compounded quarterly)
$5,890.92
less 337.50 (1 year's simple interest at 6.75% per annum)
---------
$5,553.42 (Total Redemption Price)
Except to the extent described above, certificates cannot be cashed by the
holder before maturity.
The indentures governing the Subordinated Capital Certificates of each
series do not contain additional redemption provisions requiring Gold Kist to
repurchase the certificates at the request of the certificateholder upon the
occurrence of a change in control of Gold Kist, nor do the indentures contain
any provisions designed to afford protection to certificateholders in the
event of a highly leveraged transaction involving Gold Kist.
REDEMPTION AT THE OPTION OF GOLD KIST
Gold Kist may, at its option, redeem all, or from time to time any part, of
the certificates of any subseries of Five, Seven, Ten or Fifteen Year
Certificates on any date prior to maturity. The redemption price of each
certificate redeemed at the option of Gold Kist will be an amount equal to the
full principal amount redeemed (whether the certificate is redeemed in whole
or in part), plus interest accrued but unpaid on the principal amount redeemed
to the redemption date (including, if appropriate, interest compounded on
interest retained by the Association at the request of the holder), plus a
redemption premium equal to one (1) year's interest on the principal amount
redeemed, computed at the nominal (simple interest) rate shown on the face of
the certificate. Notice of redemption will be mailed to each affected
certificateholder not less than 15 nor more than 60 days before the redemption
date. Gold Kist is not required to transfer or exchange any certificates
selected for redemption in whole or in part.
Gold Kist does not have the option of redeeming Two or Three Year
Certificates prior to maturity.
SUBORDINATION
In case of liquidation of Gold Kist, whether voluntary or involuntary, the
payment of the principal of and interest on the certificates is subordinate to
the payment in full of the principal of and interest on any notes or accounts
payable, now due or hereafter made by Gold Kist to any bank, any other lending
agency or creditor ("Superior Indebtedness"); except that none of the
Subordinated Capital Certificates of Interest issued pursuant to the
Indentures dated as of December 1, 1977, September 1, 1979, September 1, 1980
or September 1, 1985, the One Year Subordinated Loan Certificates issued
pursuant to the indentures dated as of December 1, 1977 or September 1, 1979,
the One Year or Six Month Subordinated Large Denomination Loan Certificates
issued pursuant to the Indentures dated as of September 1, 1985, the 5%
Cumulative Preferred Capital Certificates of
18
<PAGE>
Interest previously issued by Gold Kist, or the Cumulative Preferred Capital
Certificates of Interest of any other series previously issued by Gold Kist
shall be Superior Indebtedness, but shall rank equally with the certificates
outstanding under each of the Indentures. As of July 1, 1995, Superior
Indebtedness amounted to approximately $384,402,000, and additional Superior
Indebtedness, without limitation, may be created from time to time. (Article
Four and Section 1.01 of the Indentures.) Gold Kist is jointly and severally
liable for (i) the obligations of Golden Peanut Company, a general partnership
in which Gold Kist has a 33 1/3% interest and (ii) the obligations of Young
Pecan Company, a general partnership in which Gold Kist has a 25% equity
interest and a 35% earnings (loss) allocation. Any such liability incurred
would constitute additional Superior Indebtedness. See Note 9(b) of Notes to
Consolidated Financial Statements.
Nothing contained in the subordination provisions prevents Gold Kist from
making payments of principal or interest on the certificates except during the
pendency of any dissolution or liquidation proceedings with respect to Gold
Kist.
DUTIES OF TRUSTEE
Trust Company Bank is the Trustee under each Indenture and is to perform
only such duties as are specifically set forth in the Indenture. (Section 8.01
of the Indentures.) In the event of a default, the holders of a majority in
aggregate principal amount of the certificates outstanding at the time under
any Indenture have the right to require the Trustee to take action to remedy
such default. (Section 7.12 of the Indentures.)
MODIFICATION OF THE INDENTURE
Each Indenture contains provisions permitting Gold Kist and the Trustee, (i)
with the written consent of the holders of not less than 66 2/3% in aggregate
principal amount of all the certificates outstanding under the Indenture on a
record date set for such purpose, to execute supplemental indentures amending
the provisions of the Indenture or any supplemental indenture so as to modify
the rights of the holders of all the certificates or (ii) with the written
consent of the holders of not less than 66 2/3% in aggregate principal amount
of the certificates of a given series outstanding under the Indenture, on a
record date set for such purpose, to execute supplemental indentures amending
the provisions of the Indenture relating to certificates of such series;
provided that no such supplemental indenture shall (a) extend the maturity of
any certificate or reduce the principal amount thereof or reduce the rate or
extend the time of payment of interest, (b) reduce the 66 2/3% requirement as
to the consent of the holders of the certificates outstanding under the
Indenture or of any series of certificates outstanding thereunder, as
required, for amendment of the provisions of the Indenture, or (c) modify the
provisions of the Indenture which allow holders of not less than 75% of all
certificates outstanding under the Indenture to consent to the postponement of
interest on all certificates outstanding under the Indenture for a period not
exceeding three (3) years from its due date, without the consent of the holder
of each certificate affected thereby. (Section 10.02 of the Indentures.)
DEFAULTS AND NOTICE THEREOF
Each Indenture provides that any of the following shall constitute an event
of default: (a) failure to pay principal when due; (b) failure to pay interest
when due, continued for sixty (60) days; (c) certain events of bankruptcy or
insolvency; and (d) failure to perform any other covenant or agreement
contained in the Indenture, which failure continues for ninety (90) days after
notice to Gold Kist by the Trustee or holders of 10% in aggregate principal
amount of the certificates outstanding under the Indentures. (Section 7.01 of
the Indentures.)
Each Indenture provides that the Trustee shall, within ninety (90) days
after the occurrence of an event of default, give to the Certificateholders
notice of all such defaults unless such defaults have been cured, provided
that, except in the case of a default in the payment of principal of or
interest on any of the certificates outstanding under the Indenture, the
Trustee shall be protected in withholding such notice if, and so long as, the
Trustee determines that the withholding of such notice is in the interest of
the Certificateholders. (Section 8.02 of the Indentures.)
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<PAGE>
Each Indenture provides that upon the occurrence of a default, the Trustee
or the holders of not less than 25% in aggregate principal amount of the
certificates then outstanding under the Indenture may declare the principal of
all certificates outstanding under the Indenture immediately due and payable.
(Section 7.02 of the Indentures.)
SATISFACTION AND DISCHARGE OF INDENTURE
Each Indenture shall be discharged upon payment of all certificates
outstanding thereunder or upon deposit with the Trustee of funds sufficient
therefor. (Section 11.01 of the Indenture.)
AUTHENTICATION AND DELIVERY OF CERTIFICATES
The certificates may be authenticated by the Trustee in the form set forth
in each Indenture and delivered upon the written order of Gold Kist without
any further corporate action. (Section 2.03 of the Indentures.)
STATEMENTS AS TO COMPLIANCE
Each Indenture requires Gold Kist to furnish to the Trustee annually a
statement that Gold Kist has fulfilled all of its obligations throughout the
year, or specifying any default in the fulfillment of any such obligation.
(Section 5.07 of the Indentures.) In addition, upon any application or demand
by Gold Kist to the Trustee to take any action under any of the provisions of
the Indenture, Gold Kist shall first furnish to the Trustee an Officer's
Certificate stating that all such conditions precedent provided for in the
Indenture relating to the proposed action have been complied with and an
Opinion of Counsel to Gold Kist stating that in the opinion of such counsel
all such conditions precedent have been complied with. (Section 1.02 of the
Indentures.)
CONCERNING THE TRUSTEE
Gold Kist has a $10,000,000 revolving credit line, a $10,000,000 committed
364 day credit line and a $10,000,000 committed seasonal credit line (December
1995 through May 1996), all of which can be used for seasonal advances, with
the Trust Company Bank, under which varying amounts are outstanding from time
to time. Any such indebtedness to the Trust Company Bank would constitute
Superior Indebtedness as defined in the Indenture. Gold Kist also maintains
deposit accounts with the Trust Company Bank, and from time to time the Bank
provides other banking and trust services to Gold Kist in the ordinary course
of its business. Trust Company Bank serves as trustee under indentures
governing certain previously issued series of Subordinated Capital
Certificates of Interest and Subordinated Loan Certificates.
DESCRIPTION OF SUBORDINATED LOAN CERTIFICATES
AND SUBORDINATED LARGE DENOMINATION LOAN CERTIFICATES
Gold Kist's Subordinated Loan Certificates (Series C) (the "One Year Loan
Certificates") are issued under an indenture (the "Indenture") dated as of
September 1, 1979, amended by a First Supplemental Indenture dated as of
September 1, 1980, between Gold Kist and Trust Company Bank, as Trustee (the
"Trustee"). Gold Kist's Subordinated Large Denomination Loan Certificates of
the two series offered hereby are issued under indentures (the "Indentures")
between Gold Kist and Trust Company Bank, as Trustee (the "Trustee"). Separate
Indentures dated as of September 1, 1985 govern the One Year Subordinated
Large Denomination Loan Certificates (Series A) (the "One Year Jumbo Loan
Certificates") and the Six Month Subordinated Large Denomination Loan
Certificates (Series A) (the "Six Month Jumbo Loan Certificates"). The forms
of the Indentures and Supplemental Indentures are filed as exhibits to
Registration Statements No. 2-65587, No. 2-69267, and No. 33-428. The
following summaries of certain provisions of the Indentures do not purport to
be complete, and where particular provisions of the Indentures are referred
to, such provisions, including definitions of certain terms, are incorporated
by reference as a part of such summaries or terms, which are qualified in
their entirety by such references.
20
<PAGE>
The loan certificates are unsecured obligations of Gold Kist, which are
transferable on the books of Gold Kist when properly endorsed, but are not
negotiable. (Section 2.04 of the Indentures). The One Year Loan Certificates
are issued in a minimum amount of $500 or in any larger amount. The One Year
Jumbo Loan Certificates and Six Month Jumbo Loan Certificates are issued in
minimum amounts of $50,000 and $20,000, respectively, or any larger amount.
The loan certificates are issued as of the date on which payment of the
purchase price is received by Gold Kist or its agent for such purpose and
mature one year or six months, respectively, from that date.
Loan certificates bear interest from the dates issued at the per annum rate
stated on the face thereof. The rate of interest borne by loan certificates
shall be determined from time to time by the Board of Directors of Gold Kist
or its delegate, but no change in the rate will affect any loan certificates
theretofore issued. The current rates of interest borne by loan certificates
are set forth on the front cover of this Prospectus. Interest is payable on
the maturity date. Holders of $5,000 or more of the One Year Loan Certificates
are entitled to payment of interest on such loan certificates quarterly, on
the first day of January, April, July and October of each year. Holders of the
One Year Jumbo Loan Certificates and Six Month Jumbo Loan Certificates are
entitled to payment of interest on such loan certificates monthly, on the
first day of each month. (Sections 1.01 and 2.01 of the Indentures.)
Upon the written request of a holder of loan certificates entitled to
quarterly or monthly interest payments, on each Interest Payment Date Gold
Kist will retain the interest otherwise payable to the holder and pay such
interest at the maturity of the certificate, or subject to any applicable
redemption penalty, upon redemption prior to maturity, together with interest
thereon at the per annum rate stated on the face of the certificate,
compounded as of each Interest Payment Date. The holder may terminate such
request or withdraw any interest so retained together with interest accrued on
such interest through the date of withdrawal, or both, at any time by written
request delivered to Gold Kist at its principal office in Atlanta, Georgia.
The loan certificates will be paid in full, including all principal and
accrued but unpaid interest, at maturity. (Section 5.02 of the Indentures.)
The Indentures do not limit the aggregate principal amount of loan
certificates which may be issued thereunder, and each Indenture may be
modified by Gold Kist and the Trustee, without the consent of the
certificateholders, to provide for the issuance under the Indenture of one or
more additional series of loan certificates having terms different from those
of the series offered hereby. (Sections 2.01 and 10.01 of the Indentures.) As
of July 1, 1995, there were the following aggregate principal amounts of the
series offered hereby outstanding: One Year Loan Certificates -- $12,981,000,
One Year Jumbo Loan Certificates -- $14,382,000, and Six Month Jumbo Loan
Certificates -- $-0-. The Indentures do not limit the amount of other
securities, either secured or unsecured, superior or subordinate to the loan
certificates, which may be issued by Gold Kist.
REDEMPTION AT THE REQUEST OF CERTIFICATEHOLDER
Upon the death of a registered holder of a loan certificate, at the request
of (a) the personal representative of the deceased holder's estate or (b) any
surviving joint holder of a jointly held certificate, Gold Kist will redeem
loan certificates held by such deceased holder. In such event, redemption
shall be at the full face value of the certificate redeemed plus interest
accrued and unpaid thereon to the date of redemption only. (Section 3.02 of
the Indentures.)
Additional Redemptions at the Request of Certificateholder
In addition to redemptions upon the death of a registered holder of a loan
certificate, Gold Kist agrees to redeem prior to maturity the loan
certificates of any series offered hereby at the request of the registered
holders. (Section 3.03 of the Indentures.)
All such redemptions shall be only at the written request of the registered
holder(s) of the loan certificates redeemed delivered to the Association at
its principal office in Atlanta, Georgia. Redemptions will be made in the
order that such requests are received, and the redemption date will be a date
determined by Gold Kist which is within fifteen (15) days after such request
is received.
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<PAGE>
The redemption price of each loan certificate redeemed will be an amount
equal to the full principal amount of the certificate, plus interest accrued
but unpaid to the redemption date (including, if appropriate, interest
compounded on interest retained by the Association at the request of the
holder) less a redemption penalty computed in accordance with the following
table.
REDEMPTION PENALTIES APPLICABLE TO VARIOUS CLASSES
One Year Loan Certificates and One --An amount equal to three (3) months'
Year Jumbo Loan Certificates interest on the principal amount of the
certificate computed at the nominal
(simple interest) rate shown on the
face of the certificate.
Six Month Jumbo Loan Certificates --An amount equal to one (1) month's
interest on the principal amount of the
certificate computed at the nominal
(simple interest) rate shown on the
face of the certificate.
The redemption penalty computed in this manner will be deducted regardless
of the length of time the loan certificate has been outstanding. The penalty
could exceed the amount of interest paid or accrued on the loan certificate to
the redemption date, thus resulting in a redemption price which is less than
the principal amount of the loan certificate.
The following examples illustrate the calculation of the redemption price
assuming the stated principal amounts and interest rates. The Total Redemption
Price in each example will vary with different interest rates and amounts of
principal.
A. For a One Year Loan Certificate in the principal amount of $1,000
bearing interest at 6.00%, purchased on January 1, 1996, and redeemed at
the request of the holder on February 15, 1996, the redemption price would
equal:
$1,000.00 (Principal amount)
plus 7.40 (45 days' accrued interest at 6.00% per annum)
---------
$1,007.40
less 15.00 (3 month's simple interest at 6.00% per annum)
---------
$ 992.40 (Total Redemption Price)
B. For a One Year Loan Certificate in the principal amount of $5,000,
bearing interest at 6.00% (paid quarterly at the election of the holder),
purchased on January 1, 1996 and redeemed at the request of the holder on
June 15, 1996, the redemption price would equal:
$5,000.00 (Principal amount)
plus (75 days' accrued interest at 6.00% per annum. Interest
61.64 previously
---------
$5,061.64 paid on April 1, 1996 equals $75.00)
less 75.00 (3 month's simple interest at 6.00% per annum)
---------
$4,986.64 (Total Redemption Price)
Total redemption price ($4,986.64) plus interest previously paid ($75.00)
equals $5,061.64.
The indentures governing the loan certificates of each series do not contain
additional redemption provisions requiring Gold Kist to repurchase the
certificates at the request of the certificateholder upon the occurrence of a
change in control of Gold Kist, nor do the indentures contain any provisions
designed to afford protection to certificateholders in the event of a highly
leveraged transaction involving Gold Kist.
Gold Kist does not have the option of redeeming loan certificates prior to
maturity.
22
<PAGE>
SUBORDINATION
In case of liquidation of Gold Kist, whether voluntary or involuntary, the
payment of the principal of and interest on the loan certificates is
subordinate to the payment in full of the principal of and interest on any
notes or accounts payable, now due or hereafter made by Gold Kist to any bank,
any other lending agency or creditor ("Superior Indebtedness"); except that
none of the Subordinated Capital Certificates of Interest issued pursuant to
the Indentures dated as of December 1, 1977, September 1, 1979, September 1,
1980 or September 1, 1985, the One Year Subordinated Loan Certificates issued
pursuant to the Indentures dated as of December 1, 1977 or September 1, 1979,
the One Year or Six Month Subordinated Large Denomination Loan Certificates
issued pursuant to the Indentures dated as of September 1, 1985, the 5%
Cumulative Preferred Capital Certificates of Interest previously issued by
Gold Kist, or the Cumulative Preferred Capital Certificates of Interest of any
other series previously issued by Gold Kist shall be Superior Indebtedness,
but shall rank equally with the loan certificates outstanding under each of
the Indentures. As of July 1, 1995, Superior Indebtedness amounted to
approximately $384,402,000, and additional Superior Indebtedness, without
limitation, may be created from time to time. (Article Four and Section 1.01
of the Indentures.) Gold Kist is jointly and severally liable for (i) the
obligations of Golden Peanut Company, a general partnership in which Gold Kist
has a 33 1/3% interest, and (iii) the obligations of Young Pecan Company, a
general partnership in which Gold Kist has a 25% equity interest and a 35%
earnings (loss) allocation. Any such liability incurred would constitute
additional Superior Indebtedness. See Note 9 (b) of Notes to Consolidated
Financial Statements.
Nothing contained in the subordination provisions prevents Gold Kist from
making payments of principal or interest on the loan certificates except
during the pendency of any dissolution or liquidation proceedings with respect
to Gold Kist.
DUTIES OF TRUSTEE
Trust Company Bank is the Trustee under each Indenture and is to perform
only such duties as are specifically set forth in the Indenture. (Section 8.01
of the Indentures.) In the event of a default, the holders of a majority in
aggregate principal amount of the loan certificates outstanding at the time
under any Indenture have the right to require the Trustee to take action to
remedy such default. (Section 7.12 of the Indentures.)
MODIFICATION OF THE INDENTURE
Each Indenture contains provisions permitting Gold Kist and the Trustee, (i)
with the written consent of the holders of not less than 66 2/3% in aggregate
principal amount of all the loan certificates outstanding under the Indenture
on a record date set for such purpose, to execute supplemental indentures
amending the provisions of the Indenture or any supplemental indenture so as
to modify the rights of the holders of all the loan certificates or (ii) with
the written consent of the holders of not less than 66 2/3% in aggregate
principal amount of the loan certificates of a given series outstanding under
the Indenture, on a record date set for such purpose, to execute supplemental
indentures amending the provisions of the Indenture relating to loan
certificates of such series; provided that no such supplemental indenture
shall (a) extend the maturity of any loan certificate or reduce the principal
amount thereof or reduce the rate or extend the time of payment of interest,
(b) reduce the 66 2/3% requirement as to the consent of the holders of the
loan certificates outstanding under the Indenture or of any series of
certificates outstanding thereunder, as required, for amendment of the
provisions of the Indenture, or (c) modify the provisions of the Indenture
which allow holders of not less than 75% of all loan certificates outstanding
under the Indenture to consent to the postponement of interest on all loan
certificates outstanding under the Indenture for a period not exceeding three
(3) years from its due date, without the consent of the holder of each loan
certificate affected thereby. (Section 10.02 of the Indentures.)
DEFAULTS AND NOTICE THEREOF
Each Indenture provides that any of the following shall constitute an event
of default: (a) failure to pay principal when due; (b) failure to pay interest
when due, continued for sixty (60) days; (c) certain events of
23
<PAGE>
bankruptcy or insolvency; and (d) failure to perform any other covenant or
agreement contained in the Indenture, which failure continues for ninety (90)
days after notice to Gold Kist by the Trustee or holders of at least 10% in
aggregate principal amount of the outstanding loan certificates under the
Indenture. (Section 7.01 of the Indentures.)
Each Indenture provides that the Trustee shall, within ninety (90) days
after the occurrence of an event of default, give to the Certificateholders
notice of all such defaults unless such defaults have been cured, provided
that, except in the case of a default in the payment of principal of or
interest on any of the loan certificates outstanding under the Indenture, the
Trustee shall be protected in withholding such notice if, and so long as, the
Trustee determines that the withholding of such notice is in the interest of
the Certificateholders. (Section 8.02 of the Indentures).
Each Indenture provides that upon the occurrence of a default, the Trustee
or the holders of not less than 25% in aggregate principal amount of the loan
certificates then outstanding under the Indenture may declare the principal of
all loan certificates outstanding under the Indenture immediately due and
payable (Section 7.02 of the Indentures.)
SATISFACTION AND DISCHARGE OF INDENTURE
Each Indenture shall be discharged upon payment of all loan certificates
outstanding thereunder or upon deposit with the Trustee of funds sufficient
therefor. (Section 11.01 of the Indentures.)
AUTHENTICATION AND DELIVERY OF CERTIFICATES
The loan certificates may be authenticated by the Trustee in the form set
forth in each Indenture and delivered upon the written order of Gold Kist
without any further corporate action. (Section 2.03 of the Indentures.)
STATEMENTS AS TO COMPLIANCE
Each Indenture requires Gold Kist to furnish to the Trustee annually a
statement that Gold Kist has fulfilled all of its obligations throughout the
year, or specifying any default in the fulfillment of any such obligation.
(Section 5.07 of the Indentures.) In addition, upon any application or demand
by Gold Kist to the Trustee to take any action under any of the provisions of
the Indenture, Gold Kist shall first furnish to the Trustee an Officer's
Certificate stating that all such conditions precedent provided for in the
Indenture relating to the proposed action have been complied with and an
Opinion of Counsel to Gold Kist stating that in the opinion of such counsel
all such conditions precedent have been complied with. (Section 1.02 of the
Indentures.)
CONCERNING THE TRUSTEE
Gold Kist has a $10,000,000 revolving credit line, a $10,000,000 committed
364 day credit line and a $10,000,000 committed seasonal credit line (December
1995 through May 1996), all of which can be used for seasonal advances, with
the Trust Company Bank, under which varying amounts are outstanding from time
to time. Any such indebtedness to the Trust Company Bank would constitute
Superior Indebtedness as defined in the Indenture. Gold Kist also maintains
deposit accounts with the Trust Company Bank, and from time to time the Bank
provides other banking and trust services to Gold Kist in the ordinary course
of its business. Trust Company Bank serves as trustee under indentures
governing certain previously issued series of Subordinated Capital
Certificates of Interest and Subordinated Loan Certificates.
EXPERTS
The consolidated financial statements and schedule of Gold Kist Inc. as of
June 25, 1994 and July 1, 1995, and for each of the years in the three-year
period ended July 1, 1995 included herein or incorporated by
24
<PAGE>
reference herein and in the registration statement have been included herein
or incorporated by reference herein and in the registration statement in
reliance upon the reports of KPMG Peat Marwick LLP, independent auditors,
appearing elsewhere herein or incorporated by reference, and upon the
authority of said firm as experts in accounting and auditing. The reports of
KPMG Peat Marwick LLP covering the July 1, 1995 and June 25, 1994 consolidated
financial statements refer to changes in accounting for income taxes and for
certain investments in debt and equity securities.
The consolidated financial statements of Golden Peanut Company and
Subsidiaries at June 30, 1995 and 1994 and for each of the years in the three-
year period ended June 30, 1995 appearing in Gold Kist's Annual Report (Form
10-K) for the year ended July 1, 1995, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon (which contains an
explanatory paragraph with respect to a change in accounting for
postretirement benefits other than pensions) appearing elsewhere herein. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
QUALIFIED INDEPENDENT UNDERWRITER
Interstate/Johnson Lane Corporation, a member of the NASD, has participated
as a qualified independent underwriter, for compensation paid by Gold Kist, in
the "due diligence" review with respect to the preparation of this Prospectus.
LEGAL OPINION
The legality of the securities offered hereby is being passed upon for Gold
Kist by Alston & Bird, One Atlantic Center, 1201 West Peachtree Street,
Atlanta, Georgia 30309-3424.
25
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Gold Kist Inc.:
We have audited the accompanying consolidated balance sheets of Gold Kist
Inc. and subsidiaries as of June 25, 1994 and July 1, 1995, and the related
consolidated statements of operations, patrons' and other equity, and cash
flows for each of the years in the three-year period ended July 1, 1995. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits. We did not audit the consolidated
financial statements of Golden Peanut Company, a partnership investment
accounted for using the equity method of accounting, as described in Note 9(b)
to the consolidated financial statements. The consolidated financial
statements of Golden Peanut Company were audited by other auditors whose
report has been furnished to us, and our opinion, insofar as it relates to the
amounts included for Golden Peanut Company, is based solely on the report of
the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits and the report of other
auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the report of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Gold Kist Inc. and subsidiaries
as of June 25, 1994 and July 1, 1995, and the results of their operations and
their cash flows for each of the years in the three-year period ended July 1,
1995, in conformity with generally accepted accounting principles.
As discussed in notes 1, 6 and 9(a) to the consolidated financial
statements, the Company changed its method of accounting for income taxes in
1994 and for certain investments in debt and equity securities in 1995.
KPMG PEAT MARWICK LLP
Atlanta, Georgia
September 1, 1995
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Partnership Committee
Golden Peanut Company
We have audited the consolidated balance sheets of Golden Peanut Company and
Subsidiaries (the "Partnership") as of June 30, 1995 and 1994, and the related
consolidated statements of operations, partners' equity, and cash flows for
each of the three years in the period ended June 30, 1995 (not presented
separately herein). Our audits also included the financial statement schedule
of the Partnership (not presented separately herein). These financial
statements and schedule are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Golden Peanut
Company and Subsidiaries at June 30, 1995 and 1994, and the consolidated
results of their operations and their cash flows for each of the three years
in the period ended June 30, 1995, in conformity with generally accepted
accounting principles. Also, in our opinion, the related financial statement
schedule of the Partnership, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.
As discussed in Note 8 to the consolidated financial statements, in 1994 the
Partnership changed its method of accounting for postretirement benefits other
than pensions.
ERNST & YOUNG LLP
Atlanta, Georgia
August 10, 1995
F-2
<PAGE>
GOLD KIST INC.
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 25, 1994 JULY 1, 1995
------------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.......................... $ 15,670 16,597
Receivables, principally trade, including notes
receivable of $42.8 million in 1994 and $43.8
million in 1995, less allowance for doubtful
accounts of $5,369 in 1994 and $5,877 in 1995..... 160,714 189,180
Inventories (note 2)............................... 198,467 226,988
Other current assets............................... 14,758 17,718
-------- -------
Total current assets.............................. 389,609 450,483
Investments (note 9)................................ 72,105 93,039
Property, plant and equipment, net (note 3)......... 204,783 227,646
Other assets........................................ 49,935 50,469
-------- -------
$716,432 821,637
======== =======
LIABILITIES AND EQUITY
Current liabilities:
Notes payable and current maturities of long-term
debt (note 4):
Short-term borrowings............................. $ 12,798 70,800
Subordinated loan certificates.................... 25,079 27,363
Current maturities of long-term debt.............. 35,405 25,834
-------- -------
73,282 123,997
Accounts payable................................... 117,926 117,952
Accrued compensation and related expenses.......... 26,431 28,817
Patronage refund and other equity payable in cash.. 14,588 8,863
Interest left on deposit (note 4).................. 9,340 10,493
Other current liabilities.......................... 8,195 13,776
-------- -------
Total current liabilities......................... 249,762 303,898
Long-term debt, excluding current maturities (note
4)................................................. 109,817 138,659
Accrued postretirement benefit costs (note 7(b)).... 34,488 36,929
Other liabilities................................... 687 3,189
-------- -------
Total liabilities................................. 394,754 482,675
-------- -------
Minority interest................................... 25,016 23,972
Patrons' and other equity (note 5):
Common stock, $1.00 par value--Authorized 500
shares; issued and outstanding 79 in 1994 and 62
in 1995........................................... 79 62
Patronage reserves................................. 219,164 216,854
Unrealized gain on marketable equity security (net
of deferred income taxes of $11.6 million (note
9(a))............................................. -- 18,531
Retained earnings.................................. 77,419 79,543
-------- -------
Total patrons' and other equity................... 296,662 314,990
Commitments and contingent liabilities (notes 7 and
8)
-------- -------
$716,432 821,637
======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
GOLD KIST INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED
----------------------------------------
JUNE 26, 1993 JUNE 25, 1994 JULY 1, 1995
------------- ------------- ------------
<S> <C> <C> <C>
Net sales volume...................... $1,400,566 1,561,034 1,688,537
Cost of sales......................... 1,249,509 1,385,239 1,525,924
---------- --------- ---------
Gross margins........................ 151,057 175,795 162,613
Distribution, administrative and
general expenses..................... 111,519 121,417 131,410
---------- --------- ---------
Net operating margins................ 39,538 54,378 31,203
---------- --------- ---------
Other income (deductions):
Interest income...................... 7,540 6,752 8,779
Interest expense..................... (17,163) (13,924) (17,525)
Equity in earnings (loss) of
partnership (note 9(b))............. 4,659 (1,110) (9,625)
Gain on sale of investments.......... -- -- 3,070
Miscellaneous, net................... 9,118 3,978 9,684
---------- --------- ---------
4,154 (4,304) (5,617)
---------- --------- ---------
Margins before income taxes, minority
interest and cumulative effect of
accounting change................... 43,692 50,074 25,586
Income taxes (note 6)................. 14,187 14,861 13,094
---------- --------- ---------
Margins before minority interest and
cumulative effect of accounting
change.............................. 29,505 35,213 12,492
Minority interest..................... (2,267) (1,148) (741)
---------- --------- ---------
Margins before cumulative effect of
accounting change................... 27,238 34,065 11,751
Cumulative effect of change in
accounting for income taxes
(note 6)............................. -- 5,339 --
---------- --------- ---------
Net margins.......................... $ 27,238 39,404 11,751
========== ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
GOLD KIST INC.
CONSOLIDATED STATEMENTS OF PATRONS' AND OTHER EQUITY
FOR THE YEARS ENDED JUNE 26, 1993, JUNE 25, 1994 AND JULY 1, 1995
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
REVOLVING UNREALIZED
FUND AND GAIN ON
CUMULATIVE MARKETABLE
COMMON PREFERRED EQUITY PATRONAGE RETAINED
TOTAL STOCK CERTIFICATES SECURITY RESERVES EARNINGS
-------- ------ ------------ ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
June 27, 1992........... $271,456 81 10,561 -- 206,992 53,822
Net margins for 1993... 27,238 -- -- -- 19,107 8,131
Nonqualified patronage
refund and other
equity payable in
cash.................. (8,525) -- -- -- (8,525) --
Redemptions and other
changes............... (4,549) (2) (308) -- (8,060) 3,821
-------- --- ------- ------ ------- ------
June 26, 1993........... 285,620 79 10,253 -- 209,514 65,774
Net margins for 1994... 39,404 -- -- -- 30,830 8,574
Nonqualified patronage
refund and other
equity payable in
cash.................. (14,588) -- -- -- (14,588) --
Redemptions and other
changes............... (13,774) -- (10,253) -- (6,592) 3,071
-------- --- ------- ------ ------- ------
June 25, 1994........... 296,662 79 -- -- 219,164 77,419
Net margins for 1995... 11,751 -- -- -- 12,590 (839)
Nonqualified patronage
refund and other
equity payable in
cash.................. (8,941) -- -- -- (8,941) --
Redemptions and other
changes............... (3,013) (17) -- -- (5,959) 2,963
Implementation of
change in accounting
for marketable equity
security (note 9(a)).. 18,531 -- -- 18,531 -- --
-------- --- ------- ------ ------- ------
July 1, 1995............ $314,990 62 -- 18,531 216,854 79,543
======== === ======= ====== ======= ======
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
GOLD KIST INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED
----------------------------------------
JUNE 26, 1993 JUNE 25, 1994 JULY 1, 1995
------------- ------------- ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net margins.......................... $ 27,238 39,404 11,751
Non-cash items included in net mar-
gins:
Depreciation and amortization....... 36,315 37,251 38,085
Cumulative effect of changes in ac-
counting principle................. -- (5,339) --
Gains on sales of assets............ (703) (201) (3,459)
Equity in (earnings) loss of part-
nership............................ (4,659) 1,110 9,625
Deferred income tax benefit......... (1,650) (5,562) (6,650)
Other............................... 2,943 3,208 1,943
Changes in operating assets and lia-
bilities:
Receivables......................... (4,902) (26,943) (28,466)
Inventories......................... (5,018) (23,963) (28,521)
Other current assets................ 546 152 (3,382)
Accounts payable and accrued ex-
penses............................. 16,167 21,765 15,117
Interest left on deposit............ 532 (4,052) 1,153
-------- ------- -------
Net cash provided by operating ac-
tivities.......................... 66,809 36,830 7,196
-------- ------- -------
Cash flows from investing activities:
Acquisitions of investments.......... (212) (762) (5,093)
Acquisitions of property, plant and
equipment........................... (23,280) (37,232) (61,762)
Proceeds from partnership earnings
distribution........................ 11,404 1,770 --
Proceeds from disposal of invest-
ments............................... 1,795 1,279 8,942
Proceeds from sales of loans......... 20,084 5,040 4,925
Other................................ 1,498 (7,653) (7,179)
-------- ------- -------
Net cash provided by (used in) in-
vesting activities................ 11,289 (37,558) (60,167)
-------- ------- -------
Cash flows from financing activities:
Short-term borrowings (repayments),
net................................. (48,675) 11,491 60,286
Proceeds from long-term debt......... 22,381 26,668 49,752
Principal payments of long-term
debt................................ (28,056) (30,130) (36,676)
Patronage refunds and other equity
paid in cash........................ (4,812) (22,717) (19,464)
-------- ------- -------
Net cash provided by (used in) fi-
nancing activities................ (59,162) (14,688) 53,898
-------- ------- -------
Net change in cash and cash equiva-
lents............................. 18,936 (15,416) 927
Cash and cash equivalents at beginning
of year.............................. 12,150 31,086 15,670
-------- ------- -------
Cash and cash equivalents at end of
year................................. $ 31,086 15,670 16,597
======== ======= =======
Supplemental disclosure of cash flow
data:
Cash paid during the years for:
Interest (net of amounts capital-
ized).............................. $ 17,495 18,575 18,792
======== ======= =======
Income taxes........................ $ 12,791 23,352 21,144
======== ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 26, 1993, JUNE 25, 1994 AND JULY 1, 1995
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of Gold Kist Inc. and subsidiaries
conform to generally accepted accounting principles and to general practices
among agricultural cooperatives. The following is a summary of the significant
accounting policies.
(a) Basis of Presentation
The accompanying consolidated financial statements include the accounts of
Gold Kist Inc. and its wholly and majority owned subsidiaries (Gold Kist or
Association). All significant intercompany balances and transactions have been
eliminated in consolidation. Certain reclassifications have been made to the
1993 and 1994 consolidated financial statements to conform to the presentation
in the 1995 consolidated financial statements.
(b) Cash and Cash Equivalents
Gold Kist's policy is to invest cash in excess of operating requirements in
highly liquid interest bearing debt instruments, which include commercial
paper and reverse repurchase agreements. These investments are stated at cost
which approximates market. For purposes of the consolidated statements of cash
flows, Gold Kist considers all highly liquid debt instruments purchased with
original maturities of three months or less to be cash equivalents.
(c) Inventories
Merchandise for sale includes feed, fertilizer, seed, pesticides, equipment
and general farm supplies purchased or manufactured by Gold Kist for sale to
agricultural producers and consumers. These inventories are stated, generally,
on the basis of the lower of cost (first-in, first-out or average) or market.
Live poultry and hogs consist of broilers, breeding stock and market hogs.
The broilers and market hogs are stated at the lower of average cost or
market. The breeding stock is stated at average cost, less accumulated
amortization.
Raw materials and supplies consist of feed and fertilizer ingredients,
uncleaned seed, hatching eggs, packaging materials and operating supplies.
These inventories are stated, generally, on the basis of the lower of cost
(first-in, first-out or average) or market. Gold Kist hedges varying amounts
of its feed ingredient purchases to minimize the risk of adverse price
fluctuations. Futures contracts are accounted for as hedges and option
contracts are accounted for at market. Gains or losses on futures and options
transactions are included as a part of product cost.
Marketable products consist primarily of dressed and further processed
poultry. These inventories are stated, principally, on the basis of selling
prices, less estimated brokerage, freight and certain other selling costs
where applicable (estimated net realizable value).
(d) Property, Plant and Equipment
Property, plant and equipment is recorded at cost. Depreciation of plant and
equipment is calculated by the straight-line method over the estimated useful
lives of the respective assets.
(e) Investments
Investments in other cooperatives are recorded at cost and include the
amount of patronage refund certificates and patrons' equities allocated, less
distributions received. These investments are not readily
F-7
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
marketable and quoted market prices are not available. The equity method of
accounting is used for investments in other companies in which Gold Kist's
voting interest is 20 to 50 percent. Investments in less than 20 percent owned
companies which are not readily marketable are stated at cost. For years prior
to fiscal 1994, the investment in the marketable equity security was stated at
the lower of cost or market.
Effective June 26, 1994, Gold Kist adopted the provisions of Statement of
Financial Accounting Standards No. 115 (SFAS 115), "Accounting for Certain
Investments in Debt and Equity Securities." Pursuant to the provisions of SFAS
115, the Association has classified its marketable equity security and
collateralized loans as "available-for-sale." "Available-for-sale" securities
are those the Association intends to hold for a period of time and are not
acquired with the intent of selling them in the near term. Unrealized gains
and losses on "available-for-sale" securities are included as a separate
component of patrons' and other equity in the accompanying 1995 financial
statements, net of deferred income taxes. Upon initial application of SFAS
115, Gold Kist recorded an increase to investments of $20.5 million and to
patrons' and other equity of $12.9 million (net of deferred income taxes of
$7.6 million) related to the marketable equity security (see note 9(a)).
Management believes the carrying value of the collateralized loans approximate
market value and, accordingly, no adjustment has been recognized in the
accompanying financial statements.
Gold Kist's investment in the Golden Peanut Company partnership is accounted
for using the equity method (see note 9(b)). Other investments accounted for
under the equity method are not significant.
(f) Income Taxes
Gold Kist operates as an agricultural cooperative not exempt from Federal
income taxes. Aggregate margins not refunded in cash to members or allocated
in the form of qualified written notices are subject to income taxes.
The bylaws of Gold Kist provide for the issuance of either qualified or
nonqualified patronage refunds (as defined for purposes of Subchapter T of the
Internal Revenue Code). Gold Kist utilized nonqualified patronage refunds in
1993, 1994 and 1995, which are deductible for income tax purposes only to the
extent paid or redeemed in cash.
Effective June 27, 1993, Gold Kist adopted the provisions of Statement of
Financial Accounting Standards No. 109 (SFAS 109), "Accounting for Income
Taxes" and reported the cumulative effect of that change in the method of
accounting for income taxes in the 1994 consolidated statement of operations.
SFAS 109 requires an asset and liability approach in accounting for income
taxes and, therefore, required a change from the deferred method Gold Kist
previously used. Under the asset and liability method, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases and operating loss and
tax credit carryforwards. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled.
Under SFAS 109, the effect on deferred tax assets and liabilities of a change
in tax rates is recognized as income or expense in the period that includes
the enactment date.
Pursuant to the deferred method under Accounting Principles Board Opinion
11, which was applied in fiscal 1993 and prior years, deferred income taxes
were recognized for income and expense items that were reported in different
years for financial reporting purposes and income tax purposes using the tax
rate applicable for the year of the calculation. Under the deferred method,
deferred taxes were not adjusted for subsequent changes in tax rates.
(g) Fair Value of Financial Instruments
Gold Kist's financial instruments include cash and cash equivalents,
accounts receivables and payables, notes receivable and debt. Because of the
short maturity of cash equivalents, accounts receivables and payables,
F-8
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS)
and certain short-term debt which matures in less than one year, the carrying
value approximates fair value. All financial instruments are considered to
have an estimated fair value which approximates carrying value at July 1, 1995
unless otherwise specified (see note 4).
(h) Fiscal Year
Gold Kist employs a 52/53 week fiscal year. The consolidated financial
statements for 1993 and 1994 reflect 52 weeks and 1995 reflects 53 weeks.
Fiscal 1996 will be a 52 week year.
(2) INVENTORIES
Inventories are summarized as follows:
<TABLE>
<CAPTION>
1994 1995
-------- -------
<S> <C> <C>
Merchandise for sale...................................... $ 65,795 85,054
Live poultry and hogs..................................... 75,600 76,211
Raw materials and supplies................................ 30,090 35,191
Marketable products....................................... 26,982 30,532
-------- -------
$198,467 226,988
======== =======
</TABLE>
(3) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is summarized as follows:
<TABLE>
<CAPTION>
1994 1995
-------- -------
<S> <C> <C>
Land and land improvements................................ $ 29,757 31,809
Buildings................................................. 159,065 166,806
Machinery and equipment................................... 304,535 325,270
Construction in progress.................................. 4,332 27,812
-------- -------
497,689 551,697
Less accumulated depreciation............................. 292,906 324,051
-------- -------
$204,783 227,646
======== =======
</TABLE>
Gold Kist owns a 54% interest in its corporate headquarters building through
its investment in GC Properties, a general partnership formed between Gold
Kist and Cotton States Mutual Insurance Company solely for the purpose of
acquiring the corporate headquarters building and related mortgage obligation.
A former Gold Kist chief executive officer is a director of the Cotton States
Insurance Group. Gold Kist's indirect 54% interest in the aforementioned
building and related accumulated depreciation, based on historical cost, is
included in property, plant and equipment in the accompanying consolidated
financial statements.
(4) NOTES PAYABLE AND LONG-TERM DEBT
On June 30, 1995, the Association entered into a $150 million unsecured
committed credit facility with five commercial banks. The facility includes a
five-year $50 million revolving credit commitment, a $50 million 364-day line
of credit commitment, and a $50 million seasonal line of credit commitment.
The five-year revolving credit agreement expires on June 30, 2000, but may be
extended twice for successive one-year periods with the consent of the banks.
The unused credit available under this facility at July 1, 1995 was $20
million. The
F-9
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS)
revolving credit facility fee and the commitment fees on the unused portion of
the revolving credit will be computed quarterly based on the Association's
ratio of funded debt to total capital and will not exceed .25% per annum. The
364-day line of credit provides short-term financing that will expire on June
29, 1996, of which $20 million was unused at July 1, 1995. The $50 million
seasonal line of credit becomes effective on December 1, 1995 and expires on
May 31, 1996. The 364-day and seasonal lines of credit are subject to a .10%
per annum facility fee. Borrowings under the $150 million facility will bear
variable interest rates at or below prime. Also, the facility permits
competitive bid interest rates by the participating banks.
At July 1, 1995, Gold Kist had other unused long-term loan commitments of
$13.0 million and additional uncommitted facilities to provide loans and
letters of credit from banks aggregating approximately $15.1 million. These
unsecured borrowings bear interest at rates below prime.
Subordinated loan certificates of $27.4 million at July 1, 1995 bore
interest from 3.85% to 6.70% with terms of one year and were unsecured.
Interest left on deposit represents amounts of interest payable, which at
the option of the holders of various classes of certificates, is left on
deposit with Gold Kist. Additional interest on these amounts accrues at the
same rates as the related certificates.
Long-term debt is summarized as follows:
<TABLE>
<CAPTION>
1994 1995
---- ----
<S> <C> <C>
Unsecured senior notes
payable:
9.375% interest notes, due
in semi-annual
installments of $5,500
with interest payable
semiannually............. $ 33,000 16,500
9.90% interest notes, due
in semi-annual
installments of $1,539
with interest payable
semiannually............. 15,384 10,766
9.35% interest note, due
in a single installment
in June 2001 with
interest payable
quarterly................ 20,000 20,000
Other long term debt:
Revolving credit agree-
ments with a commercial
bank (weighted average
rate of 5.0% at June 25,
1994 and 6.5% at July 1,
1995).................... 7,000 37,000
Subordinated capital
certificates of interest
with interest rates
ranging from 4.50% to
16.50% and with fixed
maturities ranging from
two to fifteen years,
unsecured (weighted
average interest rate of
7.7% at June 25, 1994 and
July 1, 1995)...............58,387 60,417
Tax exempt industrial
revenue bonds with
varying interest rates
due in quarterly and
annual installments
through 2015, secured by
property, plant and
equipment................ 6,263 12,701
Pro rata share of mortgage
loan, at 8.47% interest,
due in monthly
installments to June 30,
2004, secured by a
building (note 3)........ 2,673 2,497
Other..................... 2,515 4,612
-------- -------
145,222 164,493
Less current maturities... 35,405 25,834
-------- -------
$109,817 138,659
======== =======
</TABLE>
Based upon discounted cash flows of future payments, assuming interest rates
available to Gold Kist for issuance of debt with similar terms and remaining
maturities, the estimated fair value of the unsecured senior notes payable at
July 1, 1995 was approximately $51.7 million.
F-10
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS)
The terms of debt agreements specify minimum working capital, net worth and
current ratio. The debt agreements also place a limitation on equity
distribution, cash patronage refunds and additional loans, advances or
investments. The limitation provides for a carryover to 1996 of unused
amounts, $10.9 million as of July 1, 1995, and is increased by 50% of Gold
Kist's net margins (or minus 100% of a net loss) before any gains or losses on
disposals of capital assets or equity in unremitted earnings of any affiliate.
Annual required principal repayments on long-term debt for the five fiscal
years subsequent to July 1, 1995 are as follows:
<TABLE>
<S> <C>
Fiscal year:
1996.............................................................. $25,834
1997.............................................................. 20,734
1998.............................................................. 17,945
1999.............................................................. 16,577
2000.............................................................. 13,188
=======
</TABLE>
(5) PATRONS' AND OTHER EQUITY
Gold Kist's Articles of Incorporation provide for a class of common stock
and a class of preferred stock pursuant to the provisions of the Georgia
Cooperative Marketing Act. Each member is allocated one share of common stock,
$1.00 par value. The common shares are not marketable or transferable and no
dividends will be declared on these common shares. No issuance of preferred
stock has been authorized by Gold Kist.
Patronage reserves represent allocated undistributed member margins less
taxes paid on nonqualified equity. Patronage reserves do not bear interest and
are subordinated to all certificates outstanding and indebtedness of Gold
Kist. Patronage reserves may be revolved and paid at the discretion of the
Board of Directors.
Retained earnings include the cumulative net margins (losses) resulting from
nonmember and nonpatronage transactions, including noncooperative
subsidiaries. Also included are amounts related to the early redemption of
notified equity, representing the difference between the face value and the
redemption amounts.
(6) INCOME TAXES
As discussed in Note 1(f), the Company adopted SFAS 109 as of June 27, 1993.
The cumulative effect of this change in accounting for income taxes, which
resulted in a tax benefit of $5.3 million, was determined as of June 27, 1993
and was reflected in the consolidated statement of operations for the year
ended June 25, 1994. Prior years' financial statements have not been restated
to apply the provisions of SFAS 109.
The provisions for income tax expense, principally Federal, consist of the
following:
<TABLE>
<CAPTION>
1993 1994 1995
------- ------ ------
<S> <C> <C> <C>
Current expense........................................ $15,837 20,423 19,744
Deferred benefit....................................... (1,650) (5,562) (6,650)
------- ------ ------
$14,187 14,861 13,094
======= ====== ======
</TABLE>
Gold Kist's combined federal and state effective tax rates from operations
for 1993, 1994 and 1995 were 32%, 30% and 51%, respectively. A reconciliation
of income tax expense from operations computed by applying the Federal
corporate income tax rate of 34% in 1993 and 35% in 1994 and 1995 to margins
before income taxes, minority interest and cumulative effect of accounting
changes for the applicable year follows:
F-11
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
1993 1994 1995
------- ------ ------
<S> <C> <C> <C>
Computed expected income tax expense................. $14,855 17,526 8,955
Increase (decrease) in income tax expense resulting
from:
Income tax litigation............................... -- -- 5,520
Cash portion of nonqualified patronage refund....... (1,183) (1,420) (1,031)
Effect of state income taxes, net of Federal
benefit............................................ 1,428 1,050 447
Nonqualified equity redemptions..................... (575) (525) (490)
Target jobs credits................................. (347) (607) (499)
Other, net.......................................... 9 (1,163) 192
------- ------ ------
$14,187 14,861 13,094
======= ====== ======
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at June 25,
1994 and July 1, 1995 are as follows:
<TABLE>
<CAPTION>
1994 1995
------- -------
<S> <C> <C>
Deferred tax assets:
Postretirement benefits............................. $13,478 14,410
Insurance accruals.................................. 8,839 7,903
Equity in partnerships.............................. 723 4,175
Bad debt reserves................................... 2,386 2,573
State tax operating loss carryforwards.............. 1,913 1,984
Other............................................... 1,081 --
------- -------
Total gross deferred tax assets.................... 28,420 31,045
Less valuation allowance............................ (1,913) (1,984)
------- -------
Net deferred tax assets............................ 26,507 29,061
------- -------
Deferred tax liabilities:
Unrealized gain on marketable equity security....... -- (11,587)
Accelerated depreciation............................ (2,986) (969)
Deferred compensation............................... (4,103) (3,990)
Other............................................... -- (118)
------- -------
Total deferred tax liabilities..................... (7,089) (16,664)
------- -------
Net deferred tax assets............................ $19,418 12,397
======= =======
</TABLE>
The valuation allowance for deferred tax assets as of June 25, 1994 and July
1, 1995 was $1,913 and $1,984, respectively. The net change in the total
valuation allowance for the years ended 1994 and 1995 was an increase of $205
and $71, respectively.
The Association's management believes the existing net deductible temporary
differences comprising the total net deferred tax assets will reverse during
periods in which the Association generates net taxable income.
F-12
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS)
Deferred income taxes result from differences in the timing of reporting
income and expenses for financial statement and income tax reporting purposes.
The sources of deferred income taxes and their tax effects are as follows:
<TABLE>
<CAPTION>
1993
--------
<S> <C>
Depreciation expense............................................ $ (1,433)
Deferred compensation expense................................... 167
Insurance accruals.............................................. (1,839)
Equity in partnerships.......................................... 133
Other, net...................................................... 1,322
--------
$ (1,650)
========
</TABLE>
During 1993, the Internal Revenue Service (IRS) concluded its examination of
Gold Kist's 1987 through 1989 Federal income tax returns and issued a notice
of deficiency. In April 1994, the remaining issue, whether Gold Kist must
recognize taxable income related to the redemption of its qualified notified
equity at less than face amount, was litigated before the United States Tax
Court. An adverse decision was received from the Tax Court on June 26, 1995.
The Association plans to appeal the decision. The accompanying financial
statements reflect $5.5 million in additional income tax expense and $1.6
million in additional interest expense for the impact of the decision through
July 1, 1995.
(7) EMPLOYEE BENEFITS
(a) Pension Plans
Gold Kist has noncontributory defined benefit pension plans covering
substantially all of its employees and directors and an affiliate's employees
(participants). The plan covering the salaried participants provides pension
benefits that are based on the employees' compensation during the years before
retirement or other termination of employment. The plan covering the hourly
participants provides pension benefits that are based on years of service.
Gold Kist's funding policy is to contribute within the guidelines prescribed
by Federal regulations. Plan assets consist principally of corporate equities
and bonds, and United States Government and Agency obligations.
Net periodic pension expense for 1993, 1994 and 1995 included the following
components:
<TABLE>
<CAPTION>
1993 1994 1995
------- ------ ------
<S> <C> <C> <C>
Service cost--benefits earned during the year....... $(3,422) (3,720) (3,429)
Interest cost on projected benefit obligations...... (6,247) (6,479) (6,949)
Actual return on plan assets........................ 11,116 3,236 11,393
Net amortization and deferral....................... (1,827) 5,989 (1,208)
------- ------ ------
Net periodic pension expense...................... $ (380) (974) (193)
======= ====== ======
</TABLE>
F-13
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
The following table sets forth the plans' funded status, amounts recognized
in the consolidated balance sheets at June 25, 1994 and July 1, 1995 and
economic assumptions:
<TABLE>
<CAPTION>
1994 1995
-------- -------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested participants........................................ $ 69,662 74,529
Nonvested.................................................. 5,416 6,630
-------- -------
Total accumulated benefit obligations..................... $ 75,078 81,159
======== =======
Projected benefit obligations for services rendered to
date....................................................... $ 88,083 96,559
======== =======
Plan assets for benefits:
Plan assets at fair value.................................. $109,874 118,268
Prepaid pension cost included in other assets in consoli-
dated balance sheets...................................... (15,195) (16,556)
-------- -------
Net plan assets........................................... $ 94,679 101,712
======== =======
Plan assets in excess of projected benefit obligations...... 6,596 5,153
======== =======
Consisting of:
Unrecognized net asset existing at the date of adoption.... $ 10,972 9,721
Unrecognized net loss from past experience different from
that assumed and effects of changes in assumptions........ (351) (1,136)
Prior service cost not yet recognized in net periodic pen-
sion cost................................................. (4,025) (3,432)
-------- -------
$ 6,596 5,153
======== =======
Economic assumptions:
Weighted-average discount rate............................. 8.25% 8.00%
Weighted-average expected long-term rate of return on plan
assets.................................................... 9.00% 9.25%
Weighted-average rate of compensation increase............. 6.00% 5.50%
</TABLE>
The unrecognized net asset existing at the date of adoption of Statement of
Financial Accounting Standards No. 87 is being amortized over the remaining
service lives of the participants.
(b) Other Postretirement Benefits
Gold Kist provides health care and death benefits to substantially all
retired employees, covered dependents and their beneficiaries. Generally,
employees who have attained age 55 and who have 10 years of service are
eligible for these benefits. In addition, employees with less than 10 years of
service who retired before July 1, 1992 are eligible for these benefits. The
health care and death benefit plans are contributory and coverages increase
with increased years of service.
Postretirement health and death benefit expense for 1993, 1994 and 1995
included the following components:
<TABLE>
<CAPTION>
1993 1994 1995
------ ----- -----
<S> <C> <C> <C>
Service cost--benefits earned during the year......... $1,293 1,728 1,742
Interest cost......................................... 2,305 2,530 2,645
Net amortization and deferral......................... -- -- (18)
------ ----- -----
$3,598 4,258 4,369
====== ===== =====
</TABLE>
F-14
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS)
Gold Kist's postretirement benefit plans are not funded. The status of the
plans at June 25, 1994 and July 1, 1995 was as follows:
<TABLE>
<CAPTION>
1994 1995
------- ------
<S> <C> <C>
Actuarial present value of accumulated postretirement benefit
obligation:
Retirees...................................................... $12,896 15,528
Fully eligible active plan participants....................... 6,956 7,821
Other active plan participants................................ 13,029 14,016
------- ------
32,881 37,365
Unrecognized net gain from experience differences............. 3,207 1,341
------- ------
$36,088 38,706
======= ======
</TABLE>
The health care cost trend rate used to determine the accumulated
postretirement benefit obligation at June 25, 1994 was 11%, declining ratably
to 5.5% by the year 2003 and remaining at that level thereafter. The health
care cost trend rate used to determine the accumulated postretirement benefit
obligation at July 1, 1995 was 9%, declining ratably to 5% by the year 2003
and remaining at that level thereafter. The discount rates used to determine
the accumulated postretirement benefit obligation were 8.25% and 8.00% at June
25, 1994 and July 1, 1995, respectively. A 1% increase in the health care cost
trend rate for each year would increase the accumulated postretirement benefit
obligation for health care benefits at July 1, 1995 by approximately 15% and
net postretirement health care cost by 17%.
(8) CONTINGENT LIABILITIES AND COMMITMENTS
In January 1993, two Alabama member patrons of Gold Kist filed a lawsuit in
the nature of a derivative action against Gold Kist and Golden Poultry
Company, Inc., a majority-owned subsidiary of Gold Kist, and certain
directors, officers and employees of the companies. The lawsuit alleges that
the named officers, directors and employees violated their fiduciary duties by
creating Golden Poultry Company, Inc. and Carolina Golden Products Company
(Golden Poultry), and by permitting their continued operations. Among the
remedies requested are the transfer of Golden Poultry's operations to Gold
Kist, as well as unspecified actual damages. In March 1994, the court
certified that litigation as a class action. The Association has advanced the
payment of litigation expenses incurred by the Association's directors who are
defendants in the litigation. Gold Kist intends to defend the litigation
vigorously.
Gold Kist is a defendant in various legal and administrative proceedings
seeking alleged actual and punitive damages and specific performance to
correct certain alleged problems. Gold Kist management is of the opinion that
the ultimate resolution of these matters will not have a material adverse
impact on Gold Kist's financial position.
Gold Kist received proceeds of $20.0 million, $5.0 million and $4.9 million
during 1993, 1994 and 1995, respectively, for collateralized loans sold with
recourse to an insurance company, of which $20.3 million was outstanding at
July 1, 1995. No gain or loss was recognized on the sale of these loans. A
$207 thousand allowance has been recognized in the accompanying consolidated
financial statements for potential losses that may occur. As of July 1, 1995,
there have been no credit losses related to the loans guaranteed under this
agreement.
F-15
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS)
Gold Kist is a guarantor of amounts outstanding under a $55.0 million
secured loan agreement between a commercial bank and Young Pecan Company, a
pecan processing and marketing partnership in which Gold Kist holds a 25%
equity interest and 35% earnings (loss) allocation. At July 1, 1995, the
amounts outstanding under this facility were $50.9 million.
(9) INVESTMENTS
(a) Marketable Equity Security
As discussed in Note 1(e), Gold Kist adopted SFAS 115 at June 26, 1994,
changing the method of accounting for its marketable equity security from a
historical cost basis to a fair value approach. Pursuant to the provisions of
SFAS 115, the Association has classified its marketable equity security as
"available-for-sale." At July 1, 1995, the Association's marketable equity
security was carried at its fair value of $50.1 million, which represents a
gross unrealized gain of $30.1 million. The gross unrealized gain, net of
deferred income taxes of $11.6 million, has been reflected as a separate
component of patrons' and other equity. At June 25, 1994, the marketable
equity security was carried at its cost basis of $21.5 million.
Gains realized on sales and dividends totaled $169 thousand, $170 thousand
and $1.3 million and are included in miscellaneous, net for the years ended
June 26, 1993, June 25, 1994 and July 1, 1995, respectively.
(b) Golden Peanut Company
Gold Kist has a 33 1/3% interest in Golden Peanut Company, a Georgia general
partnership. Gold Kist's investment in the partnership amounted to $20.1
million and $15.5 million at June 25, 1994 and July 1, 1995, respectively. In
July 1995, Gold Kist made an additional investment of $2.8 million. The
partnership has a $450.0 million commercial paper facility of which $205.0
million was outstanding at June 30, 1995.
Summarized financial information of Golden Peanut Company is shown below:
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
1994 1995
-------- -------
<S> <C> <C>
Current assets............................................ $258,195 233,133
Property, plant and equipment, net........................ 33,465 34,385
-------- -------
Total assets............................................ $291,660 267,518
======== =======
Current liabilities....................................... $226,871 220,954
Accrued postretirement benefit costs...................... 4,477 5,103
Partners' equity.......................................... 60,312 41,461
-------- -------
Total liabilities and partners' equity.................. $291,660 267,518
======== =======
</TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
1993 1994 1995
-------- ------- -------
<S> <C> <C> <C>
Net sales and other operating income............ $486,868 456,937 429,067
Costs and expenses.............................. 472,812 460,291 457,942
-------- ------- -------
Net income (loss)............................. $ 14,056 (3,354) (28,875)
======== ======= =======
</TABLE>
F-16
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS)
Golden Peanut Company's 1994 net loss includes a $3.9 million charge
resulting from the adoption of SFAS 106. Gold Kist has included its
proportionate share of Golden Peanut Company's adoption of SFAS 106 in equity
in earnings (loss) of partnership in the accompanying 1994 consolidated
statement of operations since the amount is not significant.
In 1993, 1994 and 1995, Gold Kist received $2.1 million in rental income
from Golden Peanut Company under an operating lease agreement for peanut
shelling and procurement facilities. Gold Kist received procurement
commissions, royalties and administrative service fees of $2.8 million, $2.7
million and $3.9 million in 1993, 1994 and 1995, respectively. In addition,
Gold Kist purchased $2.4 million, $5.4 million, and $3.1 million of inventory
from Golden Peanut Company in 1993, 1994 and 1995, respectively.
(10) MAJOR BUSINESS SEGMENTS
Gold Kist is an agricultural cooperative, with operations located primarily
in the southeastern United States, engaged in marketing products and
purchasing supplies and equipment for its patrons. Gold Kist also operates
non-cooperative businesses engaged in broiler operations, farm and home
retailing, and crop and equipment financing. Gold Kist's operations are
classified into industry segments as follows:
The Poultry segment includes cooperative integrated broiler production,
processing and marketing operations, as well as subsidiary broiler operations.
This segment has decentralized broiler, pork production and cornish game hen
facilities.
The Agri-Services segment purchases or manufactures feed, seed, fertilizers,
agricultural chemicals, animal health products, and other farm supply and
equipment items for sale through Gold Kist retail outlets and independent
dealers. The segment also provides crop procurement services.
F-17
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS)
The following table presents certain financial information as to industry
segments:
<TABLE>
<CAPTION>
AGRI- INTERSEGMENT
POULTRY SERVICES ELIMINATIONS CONSOLIDATED
---------- -------- ------------ ------------
YEAR ENDED JUNE 26, 1993
- ------------------------
<S> <C> <C> <C> <C>
Net sales volume................. $1,077,928 322,638 -- 1,400,566
========== ======= ======= =========
Net margins from operations...... $ 43,269 1,876 -- 45,145
========== ======= =======
General corporate expenses....... (5,607)
Other income, net................ 4,154
---------
Margins before income taxes and
minority interest............... $ 43,692
=========
Depreciation and amortization ex-
pense........................... $ 30,566 4,911 838(c) 36,315
========== ======= ======= =========
Capital expenditures............. $ 17,475 5,530 275(c) 23,280
========== ======= ======= =========
Identifiable assets at June 26,
1993............................ $ 352,562 202,219 110,321(c) 665,102
========== ======= ======= =========
<CAPTION>
YEAR ENDED JUNE 25, 1994
- ------------------------
<S> <C> <C> <C> <C>
Net sales volume................. $1,183,729 377,305 -- 1,561,034
========== ======= ======= =========
Net margins from operations...... $ 52,177 8,471 -- 60,648
========== ======= =======
General corporate expenses....... (6,270)
Other deductions, net............ (4,304)
---------
Margins before income taxes, mi-
nority interest and cumulative
effect of accounting change..... $ 50,074
=========
Depreciation and amortization ex-
pense........................... $ 31,234 5,134 883(c) 37,251
========== ======= ======= =========
Capital expenditures............. $ 32,655 3,772 805(c) 37,232
========== ======= ======= =========
Identifiable assets at June 25,
1994............................ $ 375,389 218,111 122,932(c) 716,432
========== ======= ======= =========
<CAPTION>
YEAR ENDED JULY 1, 1995
- -----------------------
<S> <C> <C> <C> <C>
Net sales volume................. $1,255,087 433,450 -- 1,688,537
========== ======= ======= =========
Net margins from operations...... $ 34,095 4,559 -- 38,654
========== ======= =======
General corporate expenses....... (7,451)
Other deductions, net............ (5,617)
---------
Margins before income taxes and
minority interest............... $ 25,586
=========
Depreciation and amortization ex-
pense........................... $ 31,551 5,582 952(c) 38,085
========== ======= ======= =========
Capital expenditures............. $ 43,423 17,959 380(c) 61,762
========== ======= ======= =========
Identifiable assets at July 1,
1995............................ $ 418,790 258,461 144,386(c) 821,637
========== ======= ======= =========
</TABLE>
- --------
(a) Net sales volume includes export sales amounting to $27,511, $37,731 and
$70,113 in 1993, 1994 and 1995, respectively, which have no significant
geographical concentration.
(b) Intersegment sales are generally priced at competitive market prices.
(c) Amounts relate to unallocated corporate assets.
F-18
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH
THIS OFFERING TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CON-
TAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESEN-
TATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR
ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES OTHER THAN THE SECURITIES COV-
ERED BY THIS PROSPECTUS; NOR DOES IT CONSTITUTE AN OFFER TO SELL, OR A SOLICI-
TATION OF AN OFFER TO BUY, ANY OF THE SECURITIES COVERED BY THIS PROSPECTUS BY
ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR
IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO
SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITA-
TION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALES MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE OF THIS PROSPECTUS.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary....................................................... 3
Gold Kist Inc............................................................ 5
Risk Factors............................................................. 5
Use of Proceeds.......................................................... 6
Selected Consolidated Financial Data..................................... 7
Management's Discussion and Analysis of Consolidated Results of
Operations and Financial Condition...................................... 8
Business................................................................. 12
Description of Subordinated Capital Certificates of Interest............. 15
Description of Subordinated Loan Certificates and Subordinated Large De-
nomination Loan Certificates............................................ 20
Experts.................................................................. 24
Qualified Independent Underwriter........................................ 25
Legal Opinion............................................................ 25
Independent Auditors' Reports............................................ F-1
Consolidated Financial Statements........................................ F-3
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(LOGO)
GOLD KIST INC.
FIFTEEN YEAR SUBORDINATED CAPITAL CERTIFICATES OF INTEREST (SERIES D)
TEN YEAR SUBORDINATED CAPITAL CERTIFICATES OF INTEREST (SERIES D)
SEVEN YEAR SUBORDINATED CAPITAL CERTIFICATES OF INTEREST (SERIES A)
FIVE YEAR SUBORDINATED CAPITAL CERTIFICATES OF INTEREST (SERIES C)
THREE YEAR SUBORDINATED CAPITAL CERTIFICATES OF INTEREST (SERIES A)
TWO YEAR SUBORDINATED CAPITAL CERTIFICATES OF INTEREST (SERIES A)
ONE YEAR SUBORDINATED LOAN CERTIFICATES (SERIES C)
ONE YEAR SUBORDINATED LARGE DENOMINATION LOAN CERTIFICATES (SERIES A)
SIX MONTH SUBORDINATED LARGE DENOMINATION LOAN CERTIFICATES (SERIES A)
----------------
PROSPECTUS
----------------
, 1995
----------------
AGVESTMENTS, INC.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Registration Fees.............................................. $ 12,350
Legal Fees and Expenses........................................ $ 15,000*
Accountants' Fees and Expenses................................. $ 15,000*
Consulting Fee................................................. $ 40,000
Blue Sky Fees and Expenses..................................... $ 3,000*
Printing Expenses.............................................. $ 15,000*
Miscellaneous.................................................. $ 3,000*
--------
Total...................................................... $103,350*
</TABLE>
- --------
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article XX of the By-Laws of Gold Kist provides:
"INDEMNIFICATION
Each person who is or was a Director or Officer of Gold Kist and each person
who at Gold Kist's request is serving or has served as an officer or director
of another corporation, partnership, joint venture, trust, or other enterprise
(hereinafter referred to individually as the "Indemnitee") shall be
indemnified by Gold Kist to the full extent described in Sections 14-2-156(a)
through (e) of the Georgia Business Corporation Code, as amended from time to
time, against expenses (including attorneys' fees), judgments, fines, amounts
paid in settlement, and other liabilities actually and reasonably incurred by
him in connection with any threatened, pending or completed action, suit, or
proceeding (whether based on facts and circumstances now existing or hereafter
arising) in which the Indemnitee may be involved by reason of his being or
having been a Director or Officer of Gold Kist or of such other enterprise.
Such indemnification shall be made in accordance with the laws of the State of
Georgia and subject to the conditions prescribed therein, including without
limitation, any condition that the Indemnitee have met applicable standards of
conduct. In addition to the indemnification described above Gold Kist, at the
discretion of its disinterested Directors, may indemnify the Indemnitee
against amounts paid in settlement of any threatened or pending action, suit
or proceeding by or in the right of Gold Kist to secure a judgment in its
favor, subject to the same conditions set forth in Sections 14-2-156(b) and
(d) of the Georgia Business Corporation Code, as amended from time to time,
with respect to expenses incurred by him in connection with such an action,
suit or proceeding, and subject to any limitations set forth in Section 14-2-
156(f) of the Georgia Business Corporation Code, as amended from time to time.
In keeping with and not in limitation of the foregoing, the attorneys of Gold
Kist who are officers of the company shall be indemnified by Gold Kist against
any expenses and other liabilities incurred by them in connection with their
rendering of legal opinions or providing other services as counsel to Gold
Kist or its subsidiaries or affiliated companies. Gold Kist may purchase and
maintain insurance on behalf of any Indemnitee against any liability asserted
against him whether or not Gold Kist would have the power to indemnify the
Indemnitee against such liability under the laws of the State of Georgia. If
any expenses or other amounts are paid by way of indemnification, other than
by court order, by membership action or by insurance carrier, Gold Kist shall
provide notice of such payment to the members in accordance with the
provisions of the laws of the State of Georgia."
II-1
<PAGE>
The Georgia Business Corporation Code provides:
14-2-850. PART DEFINITIONS.
As used in this part, the term:
(1) "Corporation" includes any domestic or foreign predecessor entity of
a corporation in a merger or other transaction in which the predecessor's
existence ceased upon consummation of the transaction.
(2) "Director" means an individual who is or was a director of a
corporation or an individual who, while a director of a corporation, is or
was serving at the corporation's request as a director, officer, partner,
trustee, employee, or agent of another foreign or domestic corporation,
partnership, joint venture, trust, employee benefit plan, or other
enterprise. A director is considered to be serving an employee benefit plan
at the corporation's request if his duties to the corporation also impose
duties on, or otherwise involve services by, him to the plan or to
participants in or beneficiaries of the plan. Director includes, unless the
context requires otherwise, the estate or personal representative of a
director.
(3) "Expenses" include attorneys' fees.
(4) "Liability" means the obligation to pay a judgment, settlement,
penalty, fine (including an excise tax assessed with respect to an employee
benefit plan), or reasonable expenses incurred with respect to a
proceeding.
(5) "Party" includes an individual who was, is, or is threatened to be
made a named defendant or respondent in a proceeding.
(6) "Proceeding" means any threatened, pending or completed action, suit,
or proceeding, whether civil, criminal, administrative, or investigative
and whether formal or informal.
14-2-851. AUTHORITY TO INDEMNIFY.
(a) Except as provided in subsections (d) and (e) of this Code section, a
corporation may indemnify or obligate itself to indemnify an individual made a
party to a proceeding because he is or was a director against liability
incurred in the proceeding if he acted in a manner he believed in good faith
to be in or not opposed to the best interests of the corporation and, in the
case of any criminal proceeding, he had no reasonable cause to believe his
conduct was unlawful.
(b) A director's conduct with respect to an employee benefit plan for a
purpose he believed in good faith to be in the interests of the participants
in and beneficiaries of the plan is conduct that satisfies the requirement of
subsection (a) of this Code section.
(c) The termination of a proceeding by judgment, order, settlement, or
conviction, or upon a plea of nolo contendere or its equivalent is not, of
itself, determinative that the director did not meet the standard of conduct
set forth in subsection (a) of this Code section.
(d) A corporation may not indemnify a director under this Code section:
(1) In connection with a proceeding by or in the right of the corporation
in which the director was adjudged liable to the corporation; or
(2) In connection with any other proceeding in which he was adjudged
liable on the basis that personal benefit was improperly received by him.
(e) Indemnification permitted under this Code section in connection with a
proceeding by or in the right of the corporation is limited to reasonable
expenses incurred in connection with the proceeding.
14-2-852. MANDATORY INDEMNIFICATION.
Unless limited by its articles of incorporation, to the extent that a
director has been successful, on the merits or otherwise, in the defense of
any proceeding to which he was a party, or in defense of any claim,
II-2
<PAGE>
issue, or matter therein, because he is or was a director of the corporation,
the corporation shall indemnify the director against reasonable expenses
incurred by him in connection therewith.
14-2-853. ADVANCE FOR EXPENSES.
(a) A corporation may pay for or reimburse the reasonable expenses incurred
by a director who is a party to a proceeding in advance of final disposition
of the proceeding if:
(1) The director furnishes the corporation a written affirmation of his
good faith belief that he has met the standard of conduct set forth in
subsection (a) of Code Section 14-2-851; and
(2) The director furnishes the corporation a written undertaking,
executed personally or on his behalf, to repay any advances if it is
ultimately determined that he is not entitled to indemnification under this
part.
(b) The undertaking required by paragraph (2) of subsection (a) of this Code
section must be an unlimited general obligation of the director but need not
be secured and may be accepted without reference to financial ability to make
repayment.
14-2-854. COURT-ORDERED INDEMNIFICATION AND ADVANCES FOR EXPENSES.
Unless a corporation's articles of incorporation provide otherwise, a
director of the corporation who is a party to a proceeding may apply for
indemnification or advances for expenses to the court conducting the
proceeding or to another court of competent jurisdiction. On receipt of an
application, the court after giving any notice the court considers necessary
may order indemnification or advances for expenses if it determines:
(1) The director is entitled to mandatory indemnification under Code
Section 14-2-852, in which case the court shall also order the corporation
to pay the director's reasonable expenses incurred to obtain court ordered
indemnification;
(2) The director is fairly and reasonably entitled to indemnification in
view of all the relevant circumstances, whether or not he met the standard
of conduct set forth in subsection (a) of Code Section 14-2-851 or was
adjudged liable as described in subsection (d) of Code Section 14-2-851,
but if he was adjudged so liable his indemnification is limited to
reasonable expenses incurred unless the articles of incorporation or a
bylaw, contract, or resolution approved or ratified by the shareholders
pursuant to Code Section 14-2-856 provides otherwise; or
(3) In the case of advances for expenses, the director is entitled,
pursuant to the articles of incorporation, bylaws, or any applicable
resolution or agreement, to payment or reimbursement of his reasonable
expenses incurred as a party to a proceeding in advance of final
disposition of the proceeding.
14-2-855. DETERMINATION AND AUTHORIZATION OF INDEMNIFICATION.
(a) A corporation may not indemnify a director under Code Section 14-2-851
unless authorized thereunder and a determination has been made in the specific
case that indemnification of the director is permissible in the circumstances
because he has met the standard of conduct set forth in subsection (a) of Code
Section 14-2-851.
(b) The determination shall be made:
(1) By the board of directors by majority vote of a quorum consisting of
directors not at the time parties to the proceeding;
(2) If a quorum cannot be obtained under paragraph (1) of this
subsection, by majority vote of a committee duly designated by the board of
directors (in which designation directors who are parties may participate),
consisting solely of two or more directors not at the time parties to the
proceeding;
(3) By special legal counsel:
(A) Selected by the board of directors or its committee in the manner
prescribed in paragraph (1) or (2) of this subsection; or
II-3
<PAGE>
(B) If a quorum of the board of directors cannot be obtained under
paragraph (1) of this subsection and a committee cannot be designated
under paragraph (2) of this subsection, selected by majority vote of
the full board of directors (in which selection directors who are
parties may participate); or
(4) By the shareholders, but shares owned by or voted under the control
of directors who are at the time parties to the proceeding may not be voted
on the determination.
(c) Authorization of indemnification or an obligation to indemnify and
evaluation as to reasonableness of expenses shall be made in the same manner
as the determination that indemnification is permissible, except that if the
determination is made by special legal counsel, authorization of
indemnification and evaluation as to reasonableness of expenses shall be made
by those entitled under paragraph (3) of subsection (b) of this Code section
to select counsel.
14-2-856. SHAREHOLDER APPROVED INDEMNIFICATION.
(a) If authorized by the articles of incorporation or a bylaw, contract, or
resolution approved or ratified by the shareholders by a majority of the votes
entitled to be cast, a corporation may indemnify or obligate itself to
indemnify a director made a party to a proceeding including a proceeding
brought by or in the right of the corporation, without regard to the
limitations in other Code sections of this part;
(b) The corporation shall not indemnify a director under this Code section
for any liability incurred in a proceeding in which the director is adjudged
liable to the corporation or is subjected to injunctive relief in favor of the
corporation:
(1) For any appropriation, in violation of his duties, of any business
opportunity of the corporation;
(2) For acts or omissions which involve intentional misconduct or a
knowing violation of law;
(3) For the types of liability set forth in Code Section 14-2-832; or
(4) For any transaction from which he received an improper personal
benefit.
(c) Where approved or authorized in the manner described in subsection (a)
of this Code section, a corporation may advance or reimburse expenses incurred
in advance of final disposition of the proceeding only if:
(1) The director furnishes the corporation a written affirmation of his
good faith belief that his conduct does not constitute behavior of the kind
described in subsection (b) of this Code section; and
(2) The director furnishes the corporation a written undertaking,
executed personally or on his behalf, to repay any advances if it is
ultimately determined that he is not entitled to indemnification under this
Code section.
14-2-857. INDEMNIFICATION OF OFFICERS, EMPLOYEES, AND AGENTS.
Unless a corporation's articles of incorporation provide otherwise:
(1) An officer of the corporation who is not a director is entitled to
mandatory indemnification under Code Section 14-2-852 and is entitled to
apply for court ordered indemnification under Code Section 14-2-854, in
each case to the same extent as a director; and
(2) A corporation may also indemnify and advance expenses to an officer,
employee, or agent who is not a director to the extent, consistent with
public policy, that may be provided by its articles of incorporation,
bylaws, general or specific action of its board of directors, or contract.
14-2-858. INSURANCE
A corporation may purchase and maintain insurance on behalf of an individual
who is or was a director, officer, employee, or agent of the corporation or
who, while a director, officer, employee, or agent of the corporation, is or
was serving at the request of the corporation as a director, officer, partner,
trustee, employee
II-4
<PAGE>
or agent of another foreign or domestic corporation, partnership, joint
venture, trust, employee benefit plan, or other enterprise against liability
asserted against or incurred by him in that capacity or arising from his
status as a director, officer, employee, or agent, whether or not the
corporation would have power to indemnify him against the same liability under
Code Section 14-2-851 or Code Section 14-2-852.
14-2-859. APPLICATION OF PART.
(a) A provision treating a corporation's indemnification of or advance for
expenses to directors that is contained in its articles of incorporation,
bylaws, a resolution of its shareholders or board of directors, or in a
contract or otherwise, is valid only if and to the extent the provision is
consistent with this part. If articles of incorporation limit indemnification
or advances for expenses, indemnification and advance for expenses are valid
only to the extent consistent with the articles.
(b) This part does not limit a corporation's power to pay or reimburse
expenses incurred by a director in connection with his appearance as a witness
in a proceeding at a time when he has not been made a named defendant or
respondent to the proceeding."
The benefits of the indemnity for directors provided by Article XX of Gold
Kist's by-laws are contractually assured by agreements between Gold Kist and
the directors. There is currently in effect an insurance policy which provides
for reimbursement of Gold Kist for amounts paid in indemnification. The
overall policy limit is $30,000,000.
ITEM 16. EXHIBITS.
See Index of Exhibits on Page II-6.
ITEM 17. UNDERTAKINGS.
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 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 and 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 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(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.
(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 the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful
II-5
<PAGE>
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
(5) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(6) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
EXHIBITS--INDEX OF EXHIBITS
<TABLE>
<CAPTION>
DOCUMENT WITH DESIGNATION
DESIGNATION WHICH EXHIBIT OF SUCH
OF EXHIBIT WAS PREVIOUSLY EXHIBIT IN
IN THIS FILED WITH THAT
REPORT DESCRIPTION OF EXHIBIT COMMISSION DOCUMENT
----------- ---------------------- -------------- -----------
<C> <S> <C> <C>
1 Underwriting Agreement Registration filed on Exhibit 1
with Agvestments, Inc., Form S-2 (Registration
dated October 12, 1992 No. 33-52268)
1(a) Designation of classes
of Securities of Gold
Kist Inc. to be offered
and sold pursuant to
underwriting agreement
with Agvestments, Inc.,
as amended
2 Agreement and Plan of Registration filed on Exhibit 2
Merger, dated June 20, Form S-2 (Registration
1986, and effective No. 33-9007)
June 30, 1986, between
Carolina Golden
Products, Inc., and
Golden Poultry Company,
Inc.
4(a)(1) Form of Indenture, dated Registration filed on Exhibit 4(a)(2)
as of December 1, 1977, Form S-1 (Registration
governing the terms of No. 2-59958)
the 9% Fifteen Year
Subordinated Capital
Certificates of
Interest, including
therein a table of
contents and cross-
reference sheet
4(a)(2) Form of First Registration filed on Exhibit 4(a)(2)
Supplemental Indenture, Form S-1 (Registration
dated as of September No. 2-69267)
1, 1979, amending the
terms of the Form of
Indenture, dated as of
December 1, 1977,
governing the terms of
the 9% Fifteen Year
Subordinated Capital
Certificates of
Interest
4(a)(3) Form of Indenture, dated Registration filed on Exhibit 4(a)(2)
as of September 1, Form S-1
1979, governing the (Registration No. 2-
terms of the Fifteen 65587)
Year Subordinated
Capital Certificates of
Interest (Series B),
including therein a
table of contents and
cross-reference sheet
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
DOCUMENT WITH DESIGNATION
DESIGNATION WHICH EXHIBIT OF SUCH
OF EXHIBIT WAS PREVIOUSLY EXHIBIT IN
IN THIS FILED WITH THAT
REPORT DESCRIPTION OF EXHIBIT COMMISSION DOCUMENT
----------- ---------------------- -------------- -----------
<C> <S> <C> <C>
4(a)(4) Form of First Registration filed on Exhibit 4(a)(4)
Supplemental Indenture, Form S-1
dated as of September (Registration No. 2-
1, 1980, governing the 69267)
terms of the Fifteen
Year Subordinated
Capital Certificates of
Interest (Series C)
4(a)(5) Form of Second Registration filed on Exhibit 4(a)(5)
Supplemental Indenture, Form S-2 (Registration
dated as of September No. 2-75938)
1, 1982, governing the
terms of the Fifteen
Year Subordinated
Capital Certificates of
Interest (Series D)
4(b)(1) Form of Indenture, dated Registration filed on Exhibit 4(b)(2)
as of December 1, 1977, Form S-1
governing the terms of (Registration No. 2-
the 8 1/2% Ten Year 59958)
Subordinated Capital
Certificates of
Interest, including
therein a table of
contents and cross-
reference sheet
4(b)(2) Form of First Registration filed on Exhibit 4(b)(2)
Supplemental Indenture, Form S-1
dated as of September (Registration No. 2-
1, 1979, amending the 69267)
terms of the Form of
Indenture dated as of
December 1, 1977
governing the terms of
the 8 1/2% Ten Year
Subordinated Capital
Certificates of
Interest
4(b)(3) Form of Indenture, dated Registration filed on Exhibit 4(b)(2)
as of September 1, Form S-1
1979, governing the (Registration No. 2-
terms of the Ten Year 65587)
Subordinated Capital
Certificates of
Interest (Series B),
including therein a
table of contents and
cross-reference sheet
4(b)(4) Form of First Registration filed on Exhibit 4(b)(4)
Supplemental Indenture, Form S-1
dated as of September (Registration No. 2-
1, 1980 governing the 69267)
terms of the Ten Year
Subordinated Capital
Certificates of
Interest (Series C)
4(b)(5) Form of Second Registration filed on Exhibit 4(b)(5)
Supplemental Indenture, Form S-2
dated as of September (Registration No. 2-
1, 1982, governing the 79538)
terms of the Ten Year
Subordinated Capital
Certificates of
Interest (Series D)
4(c) Form of Indenture, dated Registration filed on Exhibit 4(c)
September 1, 1985, Form S-2
governing the terms of (Registration No. 33-
the Seven Year 428)
Subordinated Capital
Certificates of
Interest (Series A)
including therein a
table of contents,
cross-reference sheet
and form of Seven Year
Subordinated Capital
Certificates of
Interest
4(d)(1) Form of Indenture, dated Registration filed on Exhibit 4(c)(2)
as of September 1, Form S-1
1979, governing the (Registration No. 2-
terms of the Five Year 65587)
Subordinated Capital
Certificates of
Interest (Series A),
including therein a
table of contents and
cross-reference sheet
</TABLE>
II-7
<PAGE>
<TABLE>
<CAPTION>
DOCUMENT WITH DESIGNATION
DESIGNATION WHICH EXHIBIT OF SUCH
OF EXHIBIT WAS PREVIOUSLY EXHIBIT IN
IN THIS FILED WITH THAT
REPORT DESCRIPTION OF EXHIBIT COMMISSION DOCUMENT
----------- ---------------------- -------------- -----------
<C> <S> <C> <C>
4(d)(2) Form of First Registration filed on Exhibit 4(d)(2)
Supplemental Indenture, Form S-1
dated as of September (Registration No. 2-
1, 1980, governing the 69267)
terms of the Five Year
Subordinated Capital
Certificates of
Interest (Shares B)
4(d)(3) Form of Second Registration filed on Exhibit 4(d)(3)
Supplemental Indenture, Form S-2
dated as of September (Registration No. 2-
1, 1982, governing the 79538)
terms of the Five Year
Subordinated Capital
Certificates of
Interest (Series C)
4(e) Form of Indenture, dated Registration filed on Exhibit 4(f)(2)
as of September 1, Form S-2
1985, governing the (Registration No. 33-
terms of the Three Year 428)
Subordinated Capital
Certificates of
Interest (Series A),
including therein a
table of contents,
cross-reference sheet,
and form of Three Year
Subordinated Capital
Certificates of
Interest
4(f) Form of Indenture, dated Registration filed on Exhibit 4(g)
September 1, 1980, Form S-1
governing the terms of (Registration No. 2-
the Two Year 69267)
Subordinated Capital
Certificates of
Interest (Series A),
including therein a
table of contents and
cross-reference sheet
4(g)(1) Form of Indenture, dated Registration filed on Exhibit 4(h)(1)
as of September 1, Form S-2
1985, governing the (Registration No. 33-
terms of the One Year 428)
Subordinated Large
Denomination Loan
Certificates (Series
A), including therein a
table of contents,
cross-reference sheet,
and form of One Year
Subordinated Large
Denomination Loan
Certificates
4(g)(2) Form of Indenture, dated Registration filed on Exhibit 4(d)(2)
September 1, 1979, Form S-1
governing the terms of (Registration No. 2-
the One Year 66587)
Subordinated Loan
Certificates (Series
B), including therein a
table of contents and
cross-reference sheet
4(g)(3) Form of First Registration filed on Exhibit 4(f)(2)
Supplemental Indenture, Form S-1
dated as of September (Registration No. 2-
1, 1980, governing the 69267)
terms of the One Year
Subordinated Loan
Certificates (Series C)
4(h) Form of Indenture dated Registration filed on Exhibit 4(i)
as of September 1, Form S-2 (Registration
1985, governing the No. 33-428)
terms of the Six Month
Subordinated Large
Denomination Loan
Certificates (Series
A), including therein a
table of contents,
cross-reference sheet,
and form of Six Month
Subordinated Large
Denomination Loan
Certificates
</TABLE>
II-8
<PAGE>
<TABLE>
<CAPTION>
DOCUMENT WITH DESIGNATION
DESIGNATION WHICH EXHIBIT OF SUCH
OF EXHIBIT WAS PREVIOUSLY EXHIBIT IN
IN THIS FILED WITH THAT
REPORT DESCRIPTION OF EXHIBIT COMMISSION DOCUMENT
----------- ---------------------- -------------- -----------
<C> <S> <C> <C>
4(i)(1) Specimen of Cumulative Registration filed on Exhibit 4(f)
Preferred Capital Form S-1 (Registration
Certificates of No. 2-59958)
Interest used for three
year (6.5%-8%), six
year (6.75%-8.5%), ten
year (7%-9%) and
fifteen year (9%),
fixed-maturity
certificates
4(i)(2) Specimen of Subordinated Annual Report on Form Exhibit B-4(h)(2)
Capital Certificates of 10-K for the Fiscal Year
Interest used for Ended June 30, 1982
Fifteen Year (Series B
and C), Ten Year
(Series B and C), Five
Year (Series A and B)
and Two Year (Series A)
4(i)(3) Specimen of Subordinated Annual Report on Form Exhibit B-4(h)(3)
Loan Certificates 10-K for the Fiscal Year
(Series B and C) Ended June 30, 1982
4(j) Specimen of 5% Registration filed on Exhibit 4(g)
Cumulative Preferred Form S-1 (Registration
Capital Certificates of No. 2-59958)
Interest with no fixed
maturities
4(k) Agreement to furnish Registration filed on Exhibit 4(h)
copies of constituent Form S-1 (Registration
instruments defining No. 2-59958)
the rights of the
holders of certain
industrial revenue
bonds
4(l)(1) Note Agreement with the Quarterly Report on Form Exhibit B-4(n)
Prudential Insurance 10-Q for the Fiscal
Company of America, Quarter Ended December
dated as of December 31, 1986
15, 1986
4(l)(2) Amendment dated June 30, Registration filed on Exhibit 4(l)(2)
1987 to Note Agreement Form S-2 (Registration
with the Prudential No. 33-24623)
Insurance Company of
America
4(l)(3) Note Agreement with the Quarterly Report on Form Exhibit B-4(q)(1)
Prudential Insurance 10-Q for the Fiscal
Company of America Quarter ended December
dated as of November 4, 31, 1988
1988
4(l)(4) Note Agreement with the Quarterly Report on Form Exhibit B-4(q)(2)
Pruco Life Insurance 10-Q for the Fiscal
Company dated as of Quarter ended December
November 4, 1988 31, 1988
4(l)(5) Amendment dated as of Registration filed on Exhibit 4(l)(5)
January 9, 1991, to Form S-2 (Registration
Note Agreements' with No. 33-42900)
the Prudential
Insurance Company of
America and with Pruco
Life Insurance Company
4(l)(6) Note Agreement with the Registration filed on Exhibit 4(l)(6)
Prudential Insurance Form S-2 (Registration
Company of America No. 33-42900)
dated as of June 3,
1991
4(l)(7) Amendment dated as of Registration filed on Exhibit 4(l)(7)
June 26, 1992, to Note Form S-2 (Registration
Agreements with No. 33-52268)
Prudential Insurance
Company of America
</TABLE>
II-9
<PAGE>
<TABLE>
<CAPTION>
DOCUMENT WITH DESIGNATION
DESIGNATION WHICH EXHIBIT OF SUCH
OF EXHIBIT WAS PREVIOUSLY EXHIBIT IN
IN THIS FILED WITH THAT
REPORT DESCRIPTION OF EXHIBIT COMMISSION DOCUMENT
----------- ---------------------- -------------- -----------
<C> <S> <C> <C>
4(l)(8) Amendment dated as of Registration filed on Exhibit 4(l)(8)
July 14, 1993, to Note Form S-2 (Registration
Agreements in the No. 33-69204)
Prudential Insurance
Company of America and
Pruco Life Insurance
Company
4(m)(1) Credit Agreement dated
as of June 30, 1995,
with Various Banks and
Lending Institutions,
as Lenders and Trust
Company Bank, as agent
4(n)(1) Line of Credit Agreement Registration filed on Exhibit 4(n)
with CoBank, dated as Form S-2 (Registration
of February 22, 1991 No. 33-42900)
4(n)(2) Amendment dated as of Registration filed on Exhibit 4(n)(2)
March 1, 1992, to Line Form S-2 (Registration
of Credit Agreement No. 33-52268)
with CoBank
4(n)(3) Amendment dated as of Registration filed on Exhibit 4(n)(3)
December 18, 1992 to Form S-2 (Registration
Line of Credit No. 33-69204)
Agreement with CoBank
4(n)(4) Amendment dated of Registration filed on Exhibit 4(n)(4)
December 13, 1993 to Form S-2 (Registration
Line of Credit No. 33-55563)
Agreement with CoBank
4(o) Guaranty dated December Registration filed on Exhibit 4(o)
18, 1992 by Gold Kist Form S-2 (Registration
in favor of NationsBank No. 33-69204)
of Georgia, N.A.
5 Opinion of Alston & Bird
10(a) Form of Deferred Registration filed on Exhibit 11(d)
Compensation Agreement Form S-1 (Registration
between Gold Kist and No. 2-59958)
certain executive
officers
10(b)(1) Gold Kist Management Registration filed on Exhibit 10(b)
Bonus Program Form S-1 (Registration
No. 2-69267)
10(b)(2) Amended Gold Kist Registration filed on Exhibit 10(b)(2)
Management Bonus Form S-2 (Registration
Program No. 2-79538)
10(b)(3) Form of Gold Kist Registration filed on Exhibit 10(b)(3)
Supplemental Executive Form S-2 (Registration
Retirement Income Non- No. 33-9007)
Qualified Deferred
Compensation Plan and
Agreement between Gold
Kist Inc. and certain
executive officers and
Resolution of Gold Kist
Board of Directors
authorizing the
Supplemental Executive
Retirement Plan
10(b)(4) Resolution of Gold Kist Registration filed on Exhibit 10(b)(4)
Board of Directors Form S-2 (Registration
authorizing the Gold No. 33-9007)
Kist Special Award Plan
10(b)(5) Form of Gold Kist Registration filed on Exhibit 10(b)(5)
Executive's Change in Form S-2 (Registration
Control Agreement No. 33-31164)
between Gold Kist and
certain officers and
resolutions of Gold
Kist Board of Directors
authorizing the
Officers Contingency
Plan
</TABLE>
II-10
<PAGE>
<TABLE>
<CAPTION>
DOCUMENT WITH DESIGNATION
DESIGNATION WHICH EXHIBIT OF SUCH
OF EXHIBIT WAS PREVIOUSLY EXHIBIT IN
IN THIS FILED WITH THAT
REPORT DESCRIPTION OF EXHIBIT COMMISSION DOCUMENT
----------- ---------------------- -------------- -----------
<C> <S> <C> <C>
10(b)(6) Form of Directors Change Registration filed on Exhibit 10(b)(6)
in Control Agreement Form S-2 (Registration
between Gold Kist and No. 33-36938)
Directors of Gold Kist
10(b)(7) Form of Directors Registration filed on Exhibit 10(b)(7)
Emeritus Life Benefits Form S-2 (Registration
Agreement No. 33-36938)
10(b)(8) Form of Directors Registration filed on Exhibit 10(b)(8)
Emeritus Agreement for Form S-2 (Registration
Medical Benefits No. 33-36938)
10(b)(9) Gold Kist Executive
Savings Plan, as
amended
10(b)(10) Gold Kist Investor
Savings Plan, as
amended
10(b)(11) Gold Kist Split Dollar
Life Insurance Plan
10(c)(1) Form of Membership, Registration filed on Exhibit 13(b)
Marketing, and/or Form S-1 (Registration
Purchasing Agreement of No. 2-59958)
Gold Kist Inc.,
Atlanta, Georgia
10(c)(2) Form of Membership, Registration filed on Exhibit 10(c)(2)
Marketing, and/or Form S-1 (Registration
Purchasing Agreement of No. 2-74205)
Gold Kist Inc.,
Atlanta, Georgia, as
revised October 17,
1980
10(c)(3) Form of Membership, Registration filed on Exhibit 10(c)(3)
Marketing and/or Form S-2 (Registration
Purchasing Agreement of No. 33-428)
Gold Kist Inc.,
Atlanta, Georgia, as
revised November 1,
1984
10(c)(4) Form of Membership, Registration filed on Exhibit 10(c)(4)
Marketing and/or Form S-2 (Registration
Purchasing Agreement of No. 33-24623)
Gold Kist Inc.,
Atlanta, Georgia, as
revised October 29,
1987
10(c)(5) Form of Membership, Registration filed on Exhibit 10(c)(5)
Marketing and/or Form S-2 (Registration
Purchasing Agreement of No. 33-42900)
Gold Kist Inc.,
Atlanta, Georgia,
revised as of August
21, 1991
10(d) CF Industries, Inc. Registration filed on Exhibit 13(j)
Member Product Purchase Form S-1 (Registration
Agreement No. 2-59958)
10(e)(1) General Partnership Registration filed on Exhibit 10(h)(1)
Agreement (GC Form S-2 (Registration
Properties) between No. 33-428)
Gold Kist Inc. and
Cotton States Mutual
Insurance Company,
dated as of July 1,
1984
10(e)(2) Lease from GC Registration filed on Exhibit 10(h)(2)
Properties, dated Form S-2 (Registration
December 11, 1984, for No. 33-428)
home office building
space
10(f)(1) General Partnership Annual Report on Form 10- Exhibit B-10(f)(1)
Agreement (Golden K for the Fiscal Year
Peanut Company) between ended June 30, 1987
Gold Kist and Archer-
Daniels-Midland
Company, dated as of
December 17, 1986
</TABLE>
II-11
<PAGE>
<TABLE>
<CAPTION>
DOCUMENT WITH DESIGNATION
DESIGNATION WHICH EXHIBIT OF SUCH
OF EXHIBIT WAS PREVIOUSLY EXHIBIT IN
IN THIS FILED WITH THAT
REPORT DESCRIPTION OF EXHIBIT COMMISSION DOCUMENT
----------- ---------------------- -------------- -----------
<C> <S> <C> <C>
10(f)(2) Restated and Amended Registration filed on Exhibit 10(f)(2)
Partnership Agreement Form S-2 (Registration
(Golden Peanut Company) No. 33-31164)
between Gold Kist,
Inc., Archer-Daniels-
Midland Company and
Alimenta Processing
Corporation dated as of
March 1, 1989
10(f)(3) Amendment to Amended and Registration filed on Exhibit 10(f)(3)
Restated Partnership Form S-2 (Registration
Agreement (Golden No. 33-42900)
Peanut Company) between
Gold Kist, Inc.,
Archer-Daniels-Midland
Company and Alimenta
Processing Corporation
dated as of June 30,
1991
10(f)(4) Master Commercial Annual Report on Form 10- Exhibit B-10(f)(2)
Facilities Lease K for the Fiscal Year
Agreement between Gold ended June 30, 1987
Kist and Golden Peanut
Company dated as of
December 17, 1986
10(g) Agreement of Sale of Annual Report on Form 10- Exhibit B-10(g)
Valdosta, Georgia, Soy K for the Fiscal Year
Processing Plant, ended June 30, 1987
between Gold Kist and
Archer-Daniels-Midland
Company, dated July 2,
1987
10(h) Grain Procurement Annual Report on Form 10- Exhibit B-10(h)
Agreement between Gold K for the Fiscal Year
Kist and Archer- ended June 30, 1987
Daniels-Midland
Company, dated August
31, 1987
10(i) General Partnership Registration filed on Exhibit 10(i)
Agreement (Carolina Form S-2 (Registration
Golden Products No. 33-42900)
Company) between
AgriGolden, Inc., and
Golden Poultry Company,
Inc., dated as of
January 28, 1991
12 Computation of Ratio of
Net Margins to Fixed
Charges
23(a) Consent of Alston & Bird See Page II-15 of this
Registration Statement
23(b) Consent of KPMG Peat
Marwick LLP
23(c) Consent of Ernst & Young
LLP
23(d) Consent of
Interstate/Johnson Lane
Corporation
24 Powers of Attorney
</TABLE>
II-12
<PAGE>
<TABLE>
<CAPTION>
DOCUMENT WITH DESIGNATION
DESIGNATION WHICH EXHIBIT OF SUCH
OF EXHIBIT WAS PREVIOUSLY EXHIBIT IN
IN THIS FILED WITH THAT
REPORT DESCRIPTION OF EXHIBIT COMMISSION DOCUMENT
----------- ---------------------- -------------- -----------
<C> <S> <C> <C>
25 Statements of eligibility
and qualification of
Trustee on Form T-1 with
respect to Fifteen Year
Subordinated Capital
Certificates of Interest
(Series D), Ten Year
Subordinated Capital
Certificates of Interest
(Series D), Seven Year
Subordinated Capital
Certificates of Interest
(Series A), Five Year
Subordinated Capital
Certificates of Interest
(Series C), Three Year
Subordinated Capital
Certificates of Interest
(Series A), Two Year
Subordinated Capital
Certificates of Interest
(Series A), One Year
Subordinated Loan
Certificates (Series C),
One Year Subordinated
Large Denomination Loan
Certificates (Series A),
and Six Month
Subordinated
Large Denomination Loan
Certificates (Series A)
27 Financial Data Schedule
</TABLE>
II-13
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-2 AND HAS DULY CAUSED THIS AMENDMENT TO ITS
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN THE CITY OF ATLANTA, STATE OF GEORGIA, ON THE
23RD DAY OF OCTOBER, 1995.
Gold Kist Inc.
By: /s/ H. O. Chitwood
---------------------------------
H. O. CHITWOOD,
Chief Executive Officer
(Principal Executive Officer)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
TO ITS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ H. O. Chitwood Chief Executive October 23, 1995
- ------------------------------------- Officer (Principal
H. O. CHITWOOD Executive Officer)
/s/ Peter J. Gibbons Vice President- October 23, 1995
- ------------------------------------- Finance (Principal
PETER J. GIBBONS Financial Officer)
/s/ W. F. Pohl, Jr. Controller October 23, 1995
- ------------------------------------- (Principal
W. F. POHL, JR. Accounting Officer)
* Director October 23, 1995
- -------------------------------------
W. P. SMITH, JR.
* Director October 23, 1995
- -------------------------------------
FRED K. NORRIS, JR.
* Director October 23, 1995
- -------------------------------------
DAN SMALLEY
* Director October 23, 1995
- -------------------------------------
PHIL OGLETREE, JR.
* Director October 23, 1995
- -------------------------------------
JAMES E. BRADY, JR.
* Director October 23, 1995
- -------------------------------------
A. JACK NALLY
* Director October 23, 1995
- -------------------------------------
W. KENNETH WHITEHEAD
* Director October 23, 1995
- -------------------------------------
H. MICHAEL DAVIS
* Director October 23, 1995
- -------------------------------------
HERBERT A. DANIEL, JR.
* By: /s/ H. O. Chitwood
----------------------------
H. O. CHITWOOD,
as attorney-in-fact
for each severally
</TABLE>
II-14
<PAGE>
CONSENT OF COUNSEL
The consent of Alston & Bird to the use of their opinion as to the legality
of the securities covered by this Registration Statement and to the reference
to such firm under the caption "Legal Opinion" is contained in their opinion
filed as Exhibit 5 to the Registration Statement.
II-15
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NO. DESCRIPTION NUMBER
------- ----------- ------
<C> <S> <C>
23(b) Consent of KPMG Peat Marwick LLP
23(c) Consent of Ernst & Young LLP
24 Powers of Attorney
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Gold Kist Inc.:
We consent to the use of our reports included herein or incorporated herein
by reference and to the references to our firm under the headings "Selected
Consolidated Financial Data" and "Experts" in the Prospectus. Our reports
refer to changes in accounting for income taxes and for certain investments in
debt and equity securities.
KPMG Peat Marwick LLP
Atlanta, Georgia
October 23, 1995
<PAGE>
The Board of Directors
Gold Kist Inc.:
We consent to the reference to our firm under the captions "Selected
Consolidated Financial Data" and "Experts" and to the use of our report dated
August 10, 1995, with respect to the consolidated financial statements and
schedule of Golden Peanut Company and Subsidiaries, incorporated by reference
in the Registration Statement (Form S-2) and related prospectus of Gold Kist
Inc. for the registration of subordinated capital and loan certificates.
Ernst & Young LLP
Atlanta, Georgia
October 23, 1995
<PAGE>
POWER OF ATTORNEY
-----------------
Each person whose signature appears below hereby authorizes H. O. Chitwood
and G. O. Coan, or each of them, as attorney-in-fact to sign in his behalf,
individually and in his capacity as a director of Gold Kist Inc., and to file
with any federal or state authority the following: (a) a registration statement
under the Securities Act of 1933 for the offering of securities of Gold Kist
Inc. authorized in resolutions adopted by the Board of Directors of Gold Kist
Inc. in its meeting held on July 27, 1995, and any amendment, including
post-effective amendments, to such registration statement, and (b) Gold Kist's
annual report on Form 10-K under the Securities Exchange Act of 1934 and any
amendment to such report.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ W. P. Smith, Jr. Director July 27, 1995
- ----------------------------
W. P. Smith, Jr.
/s/ Phil Ogletree, Jr. Director July 27, 1995
- ----------------------------
Phil Ogletree, Jr.
/s/ James E. Brady, Jr. Director July 27, 1995
- ----------------------------
James E. Brady, Jr.
/s/ Fred K. Norris, Jr. Director July 27, 1995
- ----------------------------
Fred K. Norris, Jr.
/s/ Dan Smalley Director July 27, 1995
- ----------------------------
Dan Smalley
/s/ A. Jack Nally Director July 27, 1995
- ----------------------------
A. Jack Nally
/s/ Ken Whitehead Director July 27, 1995
- ----------------------------
Ken Whitehead
/s/ H. Michael Davis Director July 27, 1995
- ----------------------------
H. Michael Davis
/s/ Herbert A. Daniel, Jr. Director July 27, 1995
- ----------------------------
Herbert A. Daniel, Jr.
</TABLE>
