<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 25, 1998
REGISTRATION NO.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM S-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
GOLD KIST INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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GEORGIA 58-0255560
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
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244 PERIMETER CENTER PARKWAY, N.E.
ATLANTA, GEORGIA 30346
770-393-5000
(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 J. DAVID DYSON
VICE PRESIDENT--FINANCE SECRETARY
GOLD KIST INC. AGVESTMENTS, INC.
POST OFFICE BOX 2210 POST OFFICE BOX 2210
ATLANTA, GEORGIA 30301 ATLANTA, GEORGIA 30301
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable on or after the effective date of this Registration Statement.
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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. [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF OFFERING AGGREGATE AMOUNT OF
SECURITIES TO BE AMOUNT TO BE PRICE OFFERING REGISTRATION
REGISTERED REGISTERED PER UNIT PRICE FEE
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<S> <C> <C> <C> <C>
Subordinated Capital
Certificates of Interest
(Series C) 5 years....... $ 5,000,000 $ 500(1) $ 5,000,000 $1,475
Subordinated Capital
Certificates of Interest
(Series A) 3 years....... $ 2,000,000 $ 500(1) $ 2,000,000 $ 590
Subordinated Loan
Certificates (Series C) 1
year..................... $10,000,000 $ 500(1) $10,000,000 $2,950
Subordinated Large
Denomination Loan
Certificates (Series A) 1
year..................... $ 5,000,000 $50,000(2) $ 5,000,000 $1,475
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Total..................... $22,000,000 $22,000,000 $6,490
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</TABLE>
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(1) All certificates are offered at par in minimum denominations of $500;
however, certificates will be issued in any amount which is $500 or
larger.
(2) 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.
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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, No. 33-55563, No. 33-62869, 333-12397 and 333-36291.
--------------
The Registration 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>
SUBJECT TO COMPLETION, DATED SEPTEMBER 25, 1998
GOLD KIST INC.
$ 5,058,816--8.25%, FIFTEEN YEAR SUBORDINATED
CAPITAL CERTIFICATES OF INTEREST (SERIES D)
LOGO $ 4,065,382--8.00%, TEN YEAR SUBORDINATED
CAPITAL CERTIFICATES OF INTEREST (SERIES D)
$ 9,700,320--7.75%, SEVEN YEAR SUBORDINATED
CAPITAL CERTIFICATES OF INTEREST (SERIES A)
$10,541,159--7.50%, FIVE YEAR SUBORDINATED
CAPITAL CERTIFICATES OF INTEREST (SERIES C)
$10,651,354--7.00%, THREE YEAR SUBORDINATED
CAPITAL CERTIFICATES OF INTEREST (SERIES A)
$10,612,364--6.75%, TWO YEAR SUBORDINATED
CAPITAL CERTIFICATES OF INTEREST (SERIES A)
$13,251,732--6.30%, ONE YEAR SUBORDINATED LOAN
CERTIFICATES (SERIES C)
$35,975,806--6.40%, ONE YEAR SUBORDINATED LARGE
DENOMINATION LOAN CERTIFICATES (SERIES A)
$13,042,489--5.60%, SIX MONTH SUBORDINATED
LARGE DENOMINATION LOAN CERTIFICATES (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 June 27, 1998,
Superior Indebtedness (as defined in the indenture under which each series will
be issued) amounted to approximately $726,736,000. See Description of
Subordinated Capital Certificates of Interest and Description of Subordinated
Loan Certificates and Subordinated Large Denomination Loan Certificates.
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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............................. $ 5,058,816 $202,353 $ 4,856,463
Ten Year (Series D)--Per Unit
(3)............................... $ 500
Total............................. $ 4,065,382 $121,961 $ 3,943,421
Seven Year (Series A)--Per Unit
(3)............................... $ 500
Total............................. $ 9,700,320 $242,508 $ 9,457,812
Five Year (Series C)--Per Unit
(3)............................... $ 500
Total............................. $10,541,159 $210,823 $10,330,336
Three Year (Series A)--Per Unit
(3)............................... $ 500
Total............................. $10,651,354 $106,514 $10,544,840
Two Year (Series A)--Per Unit
(3)............................... $ 500
Total............................. $10,612,364 $ 79,593 $10,532,771
SUBORDINATED LOAN CERTIFICATES
One Year (Series C)--Per Unit
(3)............................... $ 500
Total............................. $13,251,732 $ 66,259 $13,185,973
SUBORDINATED LARGE DENOMINATION
LOAN CERTIFICATES
One Year (Series A)--Per Unit
(4)............................... $ 50,000
Total............................. $35,975,806 $179,879 $35,795,927
Six Month (Series A)--Per Unit
(5)............................... $ 20,000
Total............................. $13,042,489 $ 32,606 $13,009,883
</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 $112,899,422 in face
amount of certificates would total $1,242,495.
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 Rule 2720 of the NASD Conduct Rules. 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 $111,656,927 are before deducting the
expenses to be borne by Gold Kist of an estimated amount of $99,490. 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 a
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 , 1998
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
<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.
In addition, the Commission maintains a site on the World Wide Web at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission.
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 June 27, 1998,
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 J. David Dyson, Corporate Secretary, Gold Kist Inc., 244
Perimeter Center Parkway, N.E., Atlanta, Georgia 30346, whose telephone number
is (770) 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. ("Gold Kist" or the "Association") is a diversified
agricultural membership cooperative association, headquartered in Atlanta,
Georgia. Gold Kist serves approximately 31,000 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)......................................... $ 5,058,816
10 year maturity, Series D (Interest as indicated on the front
cover of this Prospectus)......................................... $ 4,065,382
7 year maturity, Series A (Interest as indicated on the front cover
of this Prospectus)............................................... $ 9,700,320
5 year maturity, Series C (Interest as indicated on the front cover
of this Prospectus)............................................... $10,541,159
3 year maturity, Series A (Interest as indicated on the front cover
of this Prospectus)............................................... $10,651,354
2 year maturity, Series A (Interest as indicated on the front cover
of this Prospectus)............................................... $10,612,364
Subordinated Loan Certificates
1 year maturity, Series C (Interest as indicated on the front cover
of this Prospectus)............................................... $13,251,732
Subordinated Large Denomination Loan Certificates
1 year maturity, Series A (Interest as indicated on the front cover
of this Prospectus)............................................... $35,975,806
6 month maturity, Series A (Interest as indicated on the front
cover of this Prospectus)......................................... $13,042,489
</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 25, JULY 1, JUNE 29, JUNE 28, JUNE 27,
1994 1995 1996 1997 1998
---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Consolidated Statement of
Operations Data:
Net sales volume.......... $1,183,729 1,255,087 1,420,281 1,658,191 1,651,115
Margins (loss) from
continuing operations.... $ 38,064 9,875 33,706 10,870 (57,036)
Ratio of net margins to
fixed charges (A)........ 8.5 3.1 6.5 1.2 (1.40)
<CAPTION>
AS OF (000'S OMITTED)
--------------------------------------------------
JUNE 25, JULY 1, JUNE 29, JUNE 28, JUNE 27,
1994 1995 1996 1997 1998
---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Consolidated Balance Sheet
Data:
Total assets.............. $ 678,922 768,415 914,161 1,051,813 1,080,655
Total liabilities......... $ 357,244 429,453 559,579 677,280 846,649
Patrons' and other equity
(B)...................... $ 296,662 314,990 326,410 346,075 234,006
</TABLE>
- --------
A. The loss from continuing operations for the fiscal year ended June 27, 1998
was inadequate to cover fixed charges. The coverage deficiency was $128.9
million for the fiscal year ended June 27, 1998.
B.See Note 9(a) of Notes to Consolidated Financial Statements.
4
<PAGE>
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
June 27, 1998, Superior Indebtedness (as defined in the indentures) amounted
to approximately $726,736,000 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 Rule 2720 of the NASD Conduct Rules; 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
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.
5
<PAGE>
GOLD KIST INC.
Gold Kist Inc. is a diversified agricultural membership cooperative
association, headquartered in Atlanta, Georgia. Gold Kist serves approximately
31,000 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, is a partner in a major peanut processing and marketing
business and in a pecan processing and marketing business, and is a
participant in joint ventures organized for the production and sale of hogs
and fertilizer ingredients.
Gold Kist has entered into an Asset Purchase Agreement (the "Agreement"),
dated as of July 23, 1998, with Southern States Cooperative, Incorporated
("Southern States"), pursuant to which the Association has agreed to sell and
assign, and Southern States has agreed to purchase and assume, the assets and
certain of the obligations of the Association's agricultural inputs business.
The affected assets include substantially all of the assets of the
Association's AgriServices segments (including the retail stores division, the
fertilizer and chemicals division, and the pet food and animal products
division), as well as certain crop notes receivable of AgraTrade Financing,
Inc., the Association's wholly-owned finance subsidiary. The Association's
poultry, pork, aquaculture, seed marketing and other operations and businesses
are not affected by this transaction. Subject to the satisfaction of certain
conditions to closing, the consummation of the transaction shall take place on
October 12, 1998, or such other date as the Association and Southern States
may agree. Upon the consummation of this transaction, the Association will no
longer engage in the business operated by the affected segments.
In addition, in September 1998, the Association sold certain assets of its
cotton marketing business. As a result of that transaction, and the conveyance
of certain cotton ginning and storage facilities operated by the Association
to Southern States pursuant to the Agreement described above, the Association
will terminate its cotton operations other than the Moultrie, Georgia cotton
warehouse activities in the second quarter of fiscal 1999.
The Association's principal office is located at 244 Perimeter Center
Parkway, N.E., Atlanta, Georgia 30346, and its telephone number is (770) 393-
5000.
USE OF PROCEEDS
The maximum net proceeds to Gold Kist from the sale of the certificates
offered hereby are estimated to be $111,656,927 before deduction of expenses
estimated to be $99,490. The proceeds will be used in the following order of
priority. Approximately $38,293,000 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, 1999. 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
6
<PAGE>
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.
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 June 27, 1998 and "Consolidated Balance Sheet Data" as of
June 25, 1994, July 1, 1995, June 29, 1996, June 28, 1997 and June 27, 1998
are derived from the consolidated financial statements of Gold Kist Inc. and
subsidiaries. The consolidated financial statements as of June 28, 1997 and
June 27, 1998 and for each of the years in the three-year period ended June
27, 1998, and the report thereon of KPMG Peat Marwick LLP, which is based
partially upon the report of other auditors, are included elsewhere herein.
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.
<TABLE>
<CAPTION>
FOR FISCAL YEARS ENDED (000'S OMITTED)
--------------------------------------------------
JUNE 25, JULY 1, JUNE 29, JUNE 28, JUNE 27,
1994 1995 1996 1997 1998
---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Net sales volume........... $1,183,729 1,255,087 1,420,281 1,658,191 1,651,115
========== ========= ========= ========= =========
Margins (loss) from
continuing operations
before cumulative effect
of accounting change...... $ 32,725 9,875 33,706 10,870 (57,036)
========== ========= ========= ========= =========
Cumulative effect of change
in accounting for income
taxes (A)................. $ 5,339 -- -- -- --
========== ========= ========= ========= =========
Margins (loss) from
continuing operations..... $ 38,064 9,875 33,706 10,870 (57,036)
========== ========= ========= ========= =========
<CAPTION>
AS OF (000'S OMITTED)
--------------------------------------------------
JUNE 25, JULY 1, JUNE 29, JUNE 28, JUNE 27,
1994 1995 1996 1997 1998
---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET
DATA:
Total assets............... $ 678,922 768,415 914,161 1,051,813 1,080,655
========== ========= ========= ========= =========
Long-term liabilities...... $ 144,992 176,259 224,183 301,190 376,553
========== ========= ========= ========= =========
Patrons' and other equity
(B)....................... $ 296,662 314,990 326,410 346,075 234,006
========== ========= ========= ========= =========
</TABLE>
- --------
NOTE:
A. 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.
B.See Note 9(a) of Notes to Consolidated Financial Statements.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
CONSOLIDATED RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The nature of the poultry 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
worldwide supply and demand. Additionally, demand for poultry and costs of
other agricultural products utilized by Gold Kist are often influenced by
supplies and prices of alternative products.
As with other perishable commodity businesses, the integrated poultry
industry has demonstrated varying levels of profitability, and to a lesser
extent, losses over its thirty-six year history. Although the industry has
been profitable since 1983 with the exception of brief periods during 1992 and
1996, 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 five years. Increased market
prices in 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. During 1996, broiler
market prices increased approximately 10% as compared to 1995 as a result of
hot, dry weather conditions that reduced meat production in the summer of
1995, as well as lower than expected industry expansion and increased exports.
Average market prices for broilers during 1997 remained at relatively high
levels as compared to historical averages. However, during the May-June 1997
period, market prices declined below 1996 levels as a result of the increase
in industry production. Export prices for broiler leg-quarters declined
substantially in 1997 as a result of disruptions in the Russian markets.
Although market prices for broiler products strengthened in the fourth quarter
of 1998, average market prices for 1998 were approximately 4.0% lower than in
1997. According to USDA estimates, the supply of broilers is expected to
increase at a 2.0% rate in 1998 and a 5.0% rate in 1999 as compared to the
5.3% average annual increase between 1994 and 1997.
Generally, feed grain costs represent approximately fifty percent of total
broiler production costs. In 1994, feed ingredient prices, primarily corn and
soybean meal, 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. Average cash market prices for corn and soybean
meal increased 59% and 30%, respectively, during 1996 as compared to 1995 due
to the weather reduced 1995 harvest and strong export demand. During 1997,
average cash market prices for corn declined 14% as a result of the favorable
1996 harvest. However, soybean meal average cash market prices increased
approximately 26% for 1997 as compared to 1996 as a result of strong demand
and lower carryover stocks. Average cash market prices for corn and soybean
meal declined 18% and 20%, respectively, during 1998 as a result of the
favorable 1997 harvest and reduced exports of agricultural commodities.
Historically, weather has had a significant impact on the agricultural
economy and the operating results of the Association. 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. In addition, favorable spring weather conditions contributed to
increased planting activity in 1994. The weather reduced 1995 grain harvest in
the Midwestern U.S. boosted farm commodity prices. Favorable weather
conditions during the summer of 1996 contributed to plentiful grain harvests
in the United States. Favorable growing conditions in the summer of 1997
contributed to a slight increase in the 1997 grain harvest as compared to
1996. Favorable growing conditions in the summer of 1998 are expected to
contribute to the second largest grain harvest on record in the United States.
Poultry export sales for 1996, 1997 and 1998 were $89.3 million, $81.7
million and $61.6 million, respectively. During 1997 and 1998, export sales
declined as a result of lower market prices for poultry and the economic
problems in Southeast Asia and Russia. Export sales of poultry products will
be influenced by credit availability to foreign countries, political and
economic stability, particularly in Russia, Eastern Europe and Mexico.
8
<PAGE>
In May 1998, the Association's Board of Directors adopted a plan to
discontinue operations of the Agri-Services segment. Accordingly, the
operating results of the Agri-Services segment, including provisions for
losses during the phase out period, have been segregated from continuing
operations and reported separately in the Statements of Operations. See Notes
1 and 10 of Notes to Consolidated Financial Statements. The Association's
continuing operations include the Association's poultry and pork operations.
The discussion and analysis of results of operations that follows relates
solely to the continuing operations of the Association for each of the years
in the three-year period ended June 27, 1998.
RESULTS OF OPERATIONS
Fiscal 1997 Compared to Fiscal 1996
For 1997, net sales volume of $1.7 billion represented a 16.8% increase as
compared to 1996. Margins from continuing operations were $10.9 million for
1997 as compared to $33.7 million for 1996. The decline in margins from
continuing operations was primarily the result of an increase in poultry and
pork feed ingredient costs. The increase in net sales volume for 1997 was due
to a 11.5% increase in pounds of poultry sold and a 6.0% increase in average
selling prices. The increase in poultry products market prices was due to the
reduction in the rate of industry growth as compared to prior years. The
increase in pounds sold during 1997 reflected the Association's acquisition of
its twelfth processing facility in July 1996 and changes in product mix.
Cost of sales for 1997 increased $288.5 million or 22.2% as compared to 1996
as a result of the Association's poultry expansion program and significant
increases in feed ingredient costs. The Association's feed ingredient costs
for 1997 increased 28.0% as compared to the prior fiscal year. As a result of
the Association's forward purchasing and hedging strategies, feed ingredient
costs for 1996 were below market prices for corn and soybean meal. In 1997,
the Association's feed ingredient costs reflected the increase in market
prices for corn and soybean meal. As a percentage of net sales volume, cost of
sales were 95.7% of net sales volume for 1997 as compared to 91.4% for 1996.
Distribution, administrative and general expenses for 1997 were $64.9
million, which represented a .85% decline as compared to 1996. The decrease in
1997 was due to lower incentive compensation costs. As a percentage of net
sales volume, distribution, administration and general expenses were 3.9% of
net sale volume for 1997 as compared to 4.6% for 1996.
The various components included in other income (deductions) represented an
income of $1.4 million for 1997 as compared to a deduction of $354,000 for
1996. Interest income of $4.8 million for 1997 increased $1.9 million
primarily as a result of interest income related to a favorable tax litigation
decision. Interest expense for 1997 was $10.7 million as compared to $6.5
million in 1996. The increase was due to an increase in average borrowings.
Equity in earnings of partnership represents the Association's 33 1/3% pro
rata share of the Golden Peanut Company's 1997 earnings. See Note 9(b) of
Notes to Consolidated Financial Statements. Miscellaneous, net for 1997
includes a $1.2 million loss on the purchase of subsidiary common stock.
Miscellaneous, net for 1997 includes a $992,000 loss representing the
Association's equity in the loss of a pecan processing and marketing
enterprise. In 1996, the Association recognized earnings of $1.0 million
related to this investment. Net rental income of approximately $1.9 million
and $1.6 million, respectively, was included in miscellaneous, net for 1997
and 1996.
In 1997 and 1996, the Association's combined federal and state effective
income tax rates for continuing operations were (48)% and 33%, respectively.
The effective tax rate for 1997 reflects a $5.2 million income tax benefit
related to a Circuit Court of Appeals decision in the Association's favor. See
Note 6 of Notes to Consolidated Financial Statements.
Fiscal 1998 Compared to Fiscal 1997
The Association's net sales volume was $1.7 billion for 1998 and 1997. The
loss from continuing operations for 1998 was $57.0 million as compared to
margins from continuing operations of $10.9 million for 1997. The
9
<PAGE>
loss from continuing operations for 1998 was the result of lower market prices
for poultry and live hogs and higher feed ingredient costs. Net sales volume
for 1998 reflected lower broiler market prices, which were partially offset by
a 3.0% increase in broiler pounds sold. Average selling prices for poultry
products for 1998 declined 3.0% as compared to 1997 as a result of excess
industry supply, an increase in pork and beef supplies and instability in
export markets. Poultry sales to Russia were affected by disruptions in the
market related to tariffs and custom regulations resulting in lower than
expected net margins. Poultry sales to the Southeast Asia markets were
affected by the financial crisis in that region. Pork net sales volume for
1998 declined 39% as compared to 1997 due to head reduction and lower market
prices for live hogs.
Cost of sales for 1998 increased $76.3 million or 4.8% as compared to 1997
primarily due to higher field production and processing costs. Although corn
and soybean meal cash market prices declined significantly in 1998, the
Association's feed ingredient costs for 1998 were comparable to 1997 as a
result of the Association's forward purchasing and commodity trading
activities. Feed ingredient costs reflected losses realized on commodities
futures and options transactions of $85.2 million for 1998. As a percent of
net sales volume, cost of sales was 100.7% of net sales volume for 1998 as
compared to 95.7% in 1997.
Distribution, administrative and general expenses of $66.7 million for 1998
increased 2.8% as compared to 1997. As a percent of net sales volume,
distribution, administrative and general expenses were 4.0% of net sales
volume for 1998 as compared to 3.9% for 1997.
The components included in other income (deductions) represent a $14.2
million deduction for 1998 as compared to income of $1.4 million for 1997.
Interest income of $2.0 million for 1998 declined $2.8 million as compared to
1997. Interest income for 1997 reflected interest income related to a
favorable tax litigation decision. Interest expense for 1998 was $26.9 million
as compared to $10.7 million for 1997, which reflected the increase in
borrowings to support higher asset levels, the acquisition of minority
interest in Golden Poultry and the 1998 operating losses. Also, interest
expense for 1998 reflected an increase in borrowing costs related to the
decline in the Association's financial condition. Equity in the earnings of
the partnership represents the Association's 33 1/3% pro rata share of the
Golden Peanut Company's 1998 earnings. See Note 9(b) of Notes to Consolidated
Financial Statements. Miscellaneous, net for 1998 includes a $192,000 loss
representing the Association's equity in the loss of a pecan processing and
marketing enterprise. The Association recorded a $992,000 loss on this
investment in 1997. Net rental income of $2.1 million and $1.9 million,
respectively, was included in miscellaneous, net for 1998 and 1997.
Miscellaneous, net for 1998 includes $2.0 million of income related to a
poultry grower agreement. Miscellaneous, net for 1997 reflects a $1.2 million
loss on the purchase of subsidiary common stock.
In 1998 and 1997, the Association's combined federal and state effective
income tax rates for continuing operations were (38)% and (48)%, respectively.
The effective tax rate for 1997 reflects a $5.2 million income tax benefit
resulting from a Circuit Court of Appeals decision in the Association's favor.
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, a secured committed credit facility with a commercial bank and
proceeds from the continuous offering of Subordinated Certificates. At June
27, 1998, the Company had a $440 million secured committed credit facility
with eight commercial banks. The facility included a three-year $132 million
revolving credit commitment, a $132 million 364-day line of credit commitment
and a $176 million three-year term loan. As of June 27, 1998, borrowings of
$21.5 million, $132.0 million and $176.0 million, respectively, were
outstanding under the revolving credit, 364-day line-of-credit and term loan
commitments.
In August 1998, the Association replaced the $440 million facility with a
$500 million credit agreement with a commercial bank that includes a secured
$125 million 364-day line of credit commitment, a secured $125
10
<PAGE>
million three-year revolving credit facility and a $250 million three-year
unsecured bridge facility. Upon the consummation of the anticipated sale of
certain assets of the Agri-Services segment, the loan agreement provides that
proceeds be applied to the $250 million bridge loan. See Notes 1 and 10 of
Notes to Consolidated Financial Statements. Alternatively, the Association may
convert the bridge facility to a three-year term loan secured with
substantially all of the Association's assets. In 1998, the Association
obtained a $50 million term loan from an agricultural credit bank and a $69.9
million rolling four-month equity swap arrangement with a commercial bank. At
June 27, 1998, the Association had unused loan commitments of $110.5 million
and additional letters of credit from banks aggregating $12.5 million. The
primary sources of external long-term financing are proceeds from the
continuous offering of Subordinated Capital Certificates of Interest and a
revolving credit facility. 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 1.25:1 and the ratio of total funded debt
to total capitalization not to exceed 65%. At June 27, 1998, the Association's
current ratio and ratio of total funded debt to capitalization, determined
under the loan agreements, were 1.32:1 and 64%, respectively. The terms of the
$500 million credit facility requires specific quarterly fixed charge coverage
ratios during fiscal 1999 and a fixed charge ratio for fiscal 1999 of 150%. In
addition, the terms place a limitation on capital expenditures, equity
distribution, cash patronage refunds and commodity hedging contracts that
include cash forward purchases, as well as futures and options contracts. At
June 27, 1998, the Association was in compliance with the agreements. See Note
4 of Notes to Consolidated Financial Statements.
During 1996, the uses of cash in continuing operations included capital
expenditures of $56.7 million and $28.6 million for repayments of long-term
debt, as well as increases in operating assets. Increases in inventories
reflected the impact of higher feed ingredient prices on raw materials and
live poultry and hog inventories and the increase in poultry prices on
marketable products inventories. During 1996, net cash used in operating and
investing activities of discontinued operations totaled $66.5 million. The
funds for these activities were provided by borrowings of $131.5 million.
In 1997, the uses of cash in the Association's continuing operations
included $67.5 million for capital expenditures, $55.7 million for long-term
debt repayments and $30.0 million for patronage refunds and other equity
payments. In addition, cash uses included the funding of increases in
operating assets, such as inventories, receivables and commodities margin
deposits. During 1997, increases in inventories and receivables primarily
reflected the expansion in poultry operations. The increase in commodities
margin deposits was the result of corn and soybean futures contracts and the
related unrealized losses associated with these positions at June 28, 1997.
See Note 1(c) of Notes to Consolidated Financial Statements. During 1997, net
cash used in operating and investing activities of discontinued operations
totaled $26.8 million. The funds for these activities were provided by
borrowings of $182.8 million.
During 1998, the primary uses of cash in continuing operations included
$54.4 million in capital expenditures and $53.1 million for the acquisition of
the remaining 3.7 million shares of Golden Poultry Company, Inc. common stock
that the Association did not already own. See Note 11 of Notes to Consolidated
Financial Statements. During 1998, net cash used in operating and investing
activities of discontinued operations totaled $58.8 million. The funds for
these activities were provided by borrowings of $173.0 million. Borrowings and
repayments of long-term debt during 1998 reflected the replacement of Golden
Poultry Company, Inc.'s debt subsequent to the merger and the replacement of
the Association's $250 million unsecured committed credit facility with the
$440 million secured committed credit facility.
The Association plans capital expenditures of approximately $45 million in
1999 that primarily include expenditures for expansion and technological
advances in poultry production and processing. In addition, planned capital
expenditures include other asset improvements and necessary replacements.
Management intends to finance planned 1999 capital expenditures and related
working capital needs with existing cash balances and net margins adjusted for
non-cash items and additional long-term borrowings, as needed. In 1999,
management expects cash expenditures to approximate $4.0 million for equity
distributions. In connection with the sale of
11
<PAGE>
assets of the Agri-Services segment to Southern States Cooperative,
Incorporated and the plan to discontinue operations of the Agri-Services
segment during fiscal 1999, Gold Kist will discontinue the sale of
Subordinated Certificates. The Association believes cash on hand and cash
equivalents at June 27, 1998 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 1999 and to fund the repayment of
outstanding Subordinated Certificates as they mature. Approximately, $36.9
million of Subordinated Certificates and accrued interest will mature during
the last three quarters of fiscal 1999.
YEAR 2000 DISCLOSURE STATEMENT
The year 2000 problem is the result of computer programs written using two
digits (rather than four) to define the applicable year. Any of the
Association's programs that have time-sensitive software may recognize a date
using "00" as the year 1900 rather than the year 2000, which could result in
miscalculations or system failures.
The Association has completed its identification of information technology
systems that are not year 2000 compliant and is in the process of implementing
a comprehensive initiative to make its information technology systems ("IT"
systems) and its non-information technology systems ("non-IT" systems),
including embedded microprocessors in equipment, refrigeration systems, feed
mills, and environmental controls, year 2000 compliant. The initiative covers
the following three phases: (1) identification of all IT and non-IT systems
and an assessment of repair requirements, (2) repair of the identified IT and
non-IT systems, and (3) testing of the IT and non-IT systems repaired to
determine correct manipulation of dates and date-related data. As of July 1,
1998, the Association has completed phase (1) of its initiative and has begun
phase (2). The Association is scheduled to complete phase (2) by the end of
the second quarter of fiscal 1999 at which time it will commence its final
testing phase. The Association expects the final testing phase to be complete
by third quarter. The Association believes that it has allocated sufficient
resources to resolve all significant year 2000 issues in the above time frame.
As part of its year 2000 initiative, the Association is also contacting key
suppliers and business partners to evaluate their year 2000 compliance plans
and state of readiness and determine whether a year 2000 problem will impede
the ability of such suppliers and business partners to provide goods and
services as the year 2000 is approached and reached. The Association has
received responses from a majority of its key trading partners and is
currently assessing their state of compliance. As a general matter, the
Association is vulnerable to key suppliers' inability to remedy their own year
2000 issues and there can be no assurance that all date-handling problems in
the IT systems of those suppliers will be identified in advance of their
occurrence.
The Association estimates that its cost of repairing the IT systems and non-
IT systems will range from $500,000 to $700,000. To date, the Association has
yet to fully assess any additional costs that may be incurred to complete the
testing phase of the year 2000 initiative and resolve any problems identified
during that phase. The Association believes such costs will not have a
material effect on liquidity or its financial condition or results of
operations.
To date, the Association has not identified any IT or non-IT system that
presents a material risk of not being year 2000 ready or for which a suitable
alternative cannot be implemented. However, as the initiative moves into the
testing phase, it is possible that the Association may identify potential
risks of year 2000 disruption. It is also possible that such a disruption
could have a material adverse effect on the financial condition and results of
operations. In addition, if any third parties who provide goods or services
that are critical to the Association's business activities fail to
appropriately address their year 2000 issues, there could be a material
adverse effect on the Association's financial condition and results of
operations.
Because the Association has not begun the testing phase of its initiative,
and, accordingly, has not fully assessed its risks from potential year 2000
failures, the Association has not yet fully developed year 2000 specific
contingency plans. These plans will be developed as appropriate, if the
results of testing identify a material business function that is substantially
at risk.
12
<PAGE>
IMPORTANT CONSIDERATIONS RELATED TO FORWARD-LOOKING STATEMENTS
It should be noted that this discussion contains forward-looking statements
which are subject to substantial risks and uncertainties. There are many
factors which could cause actual results to differ materially from those
anticipated by statements made herein. Such factors include, but are not
limited to, changes in general economic conditions, weather, the growth rate
of the market for the Company's products and services, the availability of raw
inputs, global political events, the ability of the Association to implement
changes in sales strategies and organization on a timely basis, the affect of
competitive products and pricing, seasonal revenues, a delay in closing the
sale of assets of the Agri-Services segment, as well as a number of other risk
factors which could effect the future performance of the Association.
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 and feed
grains. 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 June 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income," and SFAS No. 131, "Disclosures About Segments of an
Enterprise and Related Information." These new standards become effective for
fiscal years beginning after December 15, 1997. The Association will begin
reporting comprehensive income in compliance with SFAS No. 130 beginning with
the quarter ending September 26, 1998, while reporting under SFAS No. 131
initially will be presented in the consolidated financial statements for
fiscal 1999. While the Association is evaluating the criteria of SFAS No. 131
as they apply to its operations, the Association does not anticipate
significant changes to its reportable segments. Both of the statements require
additional reporting and expanded disclosures, but will have no effect on the
Association's results of operations, financial position, capital resources or
liquidity.
In February 1998, the FASB issued SFAS No. 132, "Employers' Disclosure about
Pension and Other Postretirement Benefits" that revised disclosure
requirements for pension and other postretirement benefits. It does not affect
the measurement of the expense of the Association's pension and other
postretirement benefits. The disclosure requirements of the standard will be
reflected in the Association's 1999 consolidated financial statements.
In June 1998, the Financial Accounting Standards Board issued Statement No.
133 "Accounting for Derivative Instruments and Hedging Activities." The
Statement requires the recognition of all derivatives on the balance sheet at
fair value. The Company's derivatives, which include agricultural related
futures and options, are specifically designated as hedges. Changes in the
fair value of these derivatives will either be offset against the change in
fair value of the corresponding hedged assets, liabilities, or firm
commitments through earnings or reflected as other comprehensive income until
the hedged item is recognized in earnings. The disclosure requirements of the
Standard will be reflected in the Association's 2000 consolidated financial
statements. If the Association were to adopt the new Statement as of July 1,
1998, the effect of adoption would be immaterial to the financial statements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS.
MARKET RISK
The principal market risks affecting the Association are exposure to changes
in commodity prices and interest rates on borrowings. Although the Company has
international net sales volume and related accounts receivable for foreign
customers, it considers the market risk in such activities to be immaterial.
13
<PAGE>
INTEREST RATE RISK
The Association uses interest rate swaps to hedge interest rate changes on a
portion of its borrowings. At June 27, 1998, the Association had $150 million
notional value of interest rate swaps outstanding. The swaps effectively
change the average interest rates on $150 million of long-term debt to a 5.97%
fixed rate from LIBOR. See Note 4 of Notes to Consolidated Financial
Statements. Assuming year-end fiscal 1998 variable rates and borrowings at
June 27, 1998, a one-hundred-basis-point change in interest rates would impact
the Association's net interest expense by approximately $2.6 million, net of
the effect of the swaps.
COMMODITIES RISK
The Association is a purchaser of certain agricultural commodities used for
the manufacture of poultry feeds. The Association uses commodity futures and
options for hedging purposes to reduce the effect of changing commodity prices
on a portion of its commodity inventories and related purchase and sale
contracts. Feed ingredients futures contracts, primarily corn and soybean
meal, are recognized when closed and option contracts are accounted for at
market. Gains and losses on the transactions are recorded as a component of
product cost. Terms of the Association's committed secured credit facility
limit the use of cash forward contracts and commodities futures and options to
hedge no more than thirteen weeks of the Association's soybean meal and corn
requirements. At June 27, 1998, the fair value of the Association's
outstanding commodity futures and options positions was not material.
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, is a partner
in a major peanut processing and marketing business and in a pecan processing
and marketing business and is a participant in joint ventures organized for
the production and sale of hogs and of fertilizer ingredients.
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.
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. See Note 1(c) 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. Eleven 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, Georgia, North Carolina, and 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
14
<PAGE>
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 Gold Kist
Farms(R) and 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 Gold Kist
Farms(R) and 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 29, JUNE 28, JUNE 27,
1996 1997 1998
----------- ----------- -----------
<S> <C> <C> <C>
Broiler Products
Volume.................................... $1,380,649 $ 1,629,705 $1,630,437
Percentage (%)............................ 97.2 98.2 98.7
</TABLE>
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 100 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 precision
farming, 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.
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
June 27, 1998, Gold Kist purchased approximately 38% 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.
Gold Kist's four AgriServices feed mills produce feeds distributed at
wholesale or at retail through the Gold Kist stores and independent dealers.
Approximately forty percent 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.
15
<PAGE>
Gold Kist also markets hogs raised by members and non-members in Alabama and
Georgia and is a participant in a joint venture with another cooperative
association for the production and sale of hogs.
In fiscal 1997, the Association conducted cotton ginning and storage
operations in Georgia and South Carolina. Cotton ginning and storage
facilities are operated at Statesboro, Morven, Byromville and DeSoto, Georgia
and Bishopville, South Carolina. A central storage warehouse is operated in
Moultrie, Georgia. The Association provides ginning and storage services to
members and markets cotton purchased from members to domestic and foreign
textile mills. While operations of the Moultrie storage warehouse shall be
continued to service cotton currently stored in that facility, the other
facilities of the cotton ginning and storage operations and the cotton
marketing operations shall be terminated in the second quarter of fiscal 1999.
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 and Alimenta Processing
Corporation 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.
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
June 27, 1998, Gold Kist had poultry export sales of $61.6 million. During
that period, export sales of poultry were mainly to customers in Russia,
Eastern Europe, the Far East, South Africa, Central and South America 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 deduction for a reasonable
reserve for permanent non-allocated equity and 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
16
<PAGE>
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 SunTrust Bank, Atlanta, 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.
2-65587, 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
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.
17
<PAGE>
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 June 27, 1998, there were the following aggregate
principal amounts of the series offered hereby outstanding: Fifteen Year--
$15,301,000; Ten Year--$11,198,000; Seven Year--$11,926,000; Five Year--
$16,739,000; Three Year--$7,505,000; and Two Year--$10,283,000. 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 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, 1998, 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, 1999 and ending on June
30, 1999. (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
18
<PAGE>
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 7.50%, purchased on January 1, 1999, and redeemed at the request
of the holder on June 15, 1999, the redemption price would equal:
<TABLE>
<C> <C> <S>
$1,000.00 (Principal amount)
plus 33.90 (165 days' accrued interest at 7.50% per annum)
---------
$1,033.90
less 75.00 (1 year's simple interest at 7.50% per annum)
---------
$ 958.90 (Total Redemption Price)
</TABLE>
B. For a Five Year Certificate in the principal amount of $5,000, bearing
interest at 7.50% (paid quarterly at the election of the holder), purchased on
January 1, 1999 and redeemed at the request of the holder on June 15, 1999,
the redemption price would equal:
<TABLE>
<C> <C> <S>
$5,000.00 (Principal amount)
(75 days' accrued interest at 7.50% per annum. Interest
previously paid on April 1, 1999 equals $93.75)
plus 77.05
---------
$5,077.05
less 375.00 (1 year's simple interest at 7.50% per annum)
---------
$4,702.05 (Total Redemption Price)
</TABLE>
C. For a Five Year Certificate in the principal amount of $5,000 bearing
interest at 7.50% (accumulated quarterly at the election of the holder),
purchased on January 1, 1999, and redeemed at the request of the holder on
June 15, 2001, the redemption price would equal:
<TABLE>
<C> <C> <S>
$5,000.00 (Principal amount)
plus 999.45 (2 1/4 years, 75 days' accrued interest at 7.50%
---------
per annum accumulated and compounded quarterly)
$5,999.45
less 375.00 (1 year's simple interest at 7.50% per annum)
---------
$5,624.45 (Total Redemption Price)
</TABLE>
Except to the extent described above, certificates cannot be cashed by the
holder before maturity.
19
<PAGE>
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 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, or the One Year
or Six Month Subordinated Large Denomination Loan Certificates issued pursuant
to the Indentures dated as of September 1, 1985, shall be Superior
Indebtedness, but shall rank equally with the certificates outstanding under
each of the Indentures. As of June 27, 1998, Superior Indebtedness amounted to
approximately $726,736,000, 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 Notes 8 and 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
SunTrust Bank, Atlanta 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
20
<PAGE>
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.)
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.)
21
<PAGE>
CONCERNING THE TRUSTEE
Gold Kist has a credit facility with the SunTrust Bank, Atlanta, under which
varying amounts are outstanding from time to time. Any such indebtedness to
the SunTrust Bank, Atlanta would constitute Superior Indebtedness as defined
in the Indenture. Gold Kist also maintains deposit accounts with the SunTrust
Bank, Atlanta, and from time to time the Bank provides other banking and trust
services to Gold Kist in the ordinary course of its business. SunTrust Bank,
Atlanta 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 SunTrust Bank, Atlanta, 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 SunTrust Bank, Atlanta, 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.
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
22
<PAGE>
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 June 27, 1998, there were the following aggregate principal amounts of the
series offered hereby outstanding: One Year Loan Certificates -- $12,781,000,
One Year Jumbo Loan Certificates -- $22,224,000, 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.
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
<TABLE>
<C> <S>
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.
</TABLE>
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.
23
<PAGE>
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 6.30%, purchased on January 1, 1999, and redeemed at
the request of the holder on February 15, 1999, the redemption price would
equal:
<TABLE>
<C> <C> <S>
$1,000.00 (Principal amount)
plus 7.77 (45 days' accrued interest at 6.30% per annum)
---------
$1,007.77
less 15.75 (3 month's simple interest at 6.30% per annum)
---------
$ 992.02 (Total Redemption Price)
</TABLE>
B. For a One Year Loan Certificate in the principal amount of $5,000,
bearing interest at 6.30% (paid quarterly at the election of the holder),
purchased on January 1, 1999 and redeemed at the request of the holder on
June 15, 1999, the redemption price would equal:
<TABLE>
<C> <C> <S>
$5,000.00 (Principal amount)
plus 64.73 (75 days' accrued interest at 6.30% per annum. Interest
---------
previously paid on April 1, 1999 equals $78.75)
$5,064.73
less 78.75 (3 month's simple interest at 6.30% per annum)
---------
$4,985.98 (Total Redemption Price)
</TABLE>
Total redemption price ($4,985.98) plus interest previously paid ($78.75)
equals $5,064.73.
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.
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 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, or the One Year
or Six Month Subordinated Large Denomination Loan Certificates issued pursuant
to the Indentures dated as of September 1, 1985, shall be Superior
Indebtedness, but shall rank equally with the loan certificates outstanding
under each of the Indentures. As of June 27, 1998, Superior Indebtedness
amounted to approximately $726,736,000, 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 Notes 8 and 9 (b) of Notes to
Consolidated Financial Statements.
24
<PAGE>
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
SunTrust Bank, Atlanta 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 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.)
25
<PAGE>
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 credit facility with the SunTrust Bank, Atlanta, under which
varying amounts are outstanding from time to time. Any such indebtedness to
the SunTrust Bank, Atlanta would constitute Superior Indebtedness as defined
in the Indenture. Gold Kist also maintains deposit accounts with the SunTrust
Bank, Atlanta, and from time to time the Bank provides other banking and trust
services to Gold Kist in the ordinary course of its business. SunTrust Bank,
Atlanta 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 28, 1997, and June 27, 1998 and for each of the years in the three-year
period ended June 27, 1998 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 certified public accountants,
appearing elsewhere herein or incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
The consolidated financial statements of Golden Peanut Company and
Subsidiaries at June 30, 1998 and 1997, and for each of the three years in the
period ended June 30, 1998 (not included separately herein), have been audited
by Ernst & Young LLP, independent auditors, as set forth in their report
thereon appearing elsewhere herein. The consolidated financial statements
audited by Ernst & Young LLP reflect certain amounts which have been included
in the consolidated financial statements of Gold Kist Inc. as of June 28, 1997
and June 27, 1998 and for each of the three years in the period ended June 27,
1998, 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.
26
<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 28, 1997 and June 27, 1998, 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 June 27, 1998.
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 and Subsidiaries, 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 and Subsidiaries
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 and Subsidiaries, 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 the other
auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the report of the 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 28, 1997 and June 27, 1998, and the results of their operations and
their cash flows for each of the years in the three-year period ended June 27,
1998, in conformity with generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Atlanta, Georgia
September 10, 1998
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, 1997 and 1998, and the related
consolidated statements of operations, partners' equity, and cash flows for
each of the three years in the period ended June 30, 1998 (not presented
separately herein). These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements 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, 1997 and 1998, and the consolidated
results of their operations and their cash flows for each of the three years
in the period ended June 30, 1998, in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
Atlanta, Georgia
August 28, 1998
F-2
<PAGE>
GOLD KIST INC.
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 28, 1997 JUNE 27, 1998
------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents......................... $ 17,921 11,789
Receivables, principally trade, less allowance for
doubtful accounts of $1,426 in 1997 and $3,113 in
1998............................................. 101,419 107,957
Inventories (note 2).............................. 179,489 174,204
Commodities margin deposits....................... 53,348 --
Deferred income taxes (note 6).................... 13,541 45,431
Other current assets.............................. 7,862 32,673
Net assets of discontinued operations (note 10)... 261,445 247,621
---------- ---------
Total current assets............................. 635,025 619,675
Investments (note 9)............................... 132,373 125,623
Property, plant and equipment, net (note 3)........ 239,242 255,791
Other assets....................................... 45,173 79,566
---------- ---------
$1,051,813 1,080,655
========== =========
LIABILITIES AND EQUITY
Current liabilities:
Notes payable and current maturities of long-term debt (note 4):
Short-term borrowings............................ $ 178,900 201,939
Subordinated loan certificates................... 36,466 35,005
Current maturities of long-term debt............. 14,956 93,248
---------- ---------
230,322 330,192
Accounts payable.................................. 92,635 85,188
Accrued compensation and related expenses......... 28,545 32,466
Interest left on deposit (note 4)................. 11,396 11,451
Other current liabilities......................... 13,192 10,799
---------- ---------
Total current liabilities........................ 376,090 470,096
Long-term debt, excluding current maturities (note
4)................................................ 247,176 320,600
Accrued postretirement benefit costs (note 7(b))... 43,683 48,678
Other liabilities.................................. 10,331 7,275
---------- ---------
Total liabilities................................ 677,280 846,649
---------- ---------
Minority interest (note 11)........................ 28,458 --
Patrons' and other equity (note 5):
Common stock, $1.00 par value--Authorized 500
shares; issued and
outstanding 32 in 1997 and 33 in 1998............ 32 33
Patronage reserves................................ 203,988 198,517
Unrealized gain on marketable equity security
(note 9(a))...................................... 32,749 27,099
Retained earnings................................. 109,306 8,357
---------- ---------
Total patrons' and other equity.................. 346,075 234,006
Commitments and contingent liabilities (notes 4, 7,
8 and 9(b)).......................................
---------- ---------
$1,051,813 1,080,655
========== =========
</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 29, JUNE 28, JUNE 27,
1996 1997 1998
---------- --------- ---------
<S> <C> <C> <C>
Net sales volume............................. $1,420,281 1,658,191 1,651,115
Cost of sales................................ 1,297,602 1,586,110 1,662,376
---------- --------- ---------
Gross margins (loss)........................ 122,679 72,081 (11,261)
Distribution, administrative and general
expenses.................................... 65,440 64,885 66,695
---------- --------- ---------
Net operating margins (loss)................ 57,239 7,196 (77,956)
Other income (deductions):
Interest income............................. 2,930 4,804 1,955
Interest expense............................ (6,477) (10,666) (26,910)
Equity in earnings (loss) of partnership
(note 9(b))................................ (1,181) 5,807 4,369
Miscellaneous, net (note 9(a)).............. 4,374 1,464 6,383
---------- --------- ---------
Total other income (deductions)............ (354) 1,409 (14,203)
---------- --------- ---------
Margins (loss) from continuing operations
before income taxes and minority interest.. 56,885 8,605 (92,159)
Income tax expense (benefit)-(note 6)........ 18,848 (4,108) (35,123)
---------- --------- ---------
Margins (loss) from continuing operations
before minority interest................... 38,037 12,713 (57,036)
Minority interest............................ (4,331) (1,843) --
---------- --------- ---------
Margins (loss) from continuing operations... 33,706 10,870 (57,036)
Discontinued operations (notes 6 and 10):
Margins (loss) from operations of
discontinued Agri-Services segment (less
applicable income taxes of $1.9 million for
1996, $.7 million for 1997 and $(8.6)
million for 1998).......................... 3,326 1,020 (15,130)
Loss on disposal of Agri-Services segment
including provision of $20.4 million for
operating losses during phase out period
(less applicable income taxes of $(16.5)
million)................................... -- -- (30,622)
---------- --------- ---------
Net margins (loss)........................... $ 37,032 11,890 (102,788)
========== ========= =========
</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 29, 1996, JUNE 28, 1997 AND JUNE 27, 1998
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
UNREALIZED
GAIN (LOSS) ON
MARKETABLE
COMMON PATRONAGE EQUITY RETAINED
TOTAL STOCK RESERVES SECURITY EARNINGS
-------- ------ --------- -------------- --------
<S> <C> <C> <C> <C> <C>
July 1, 1995............... $314,990 62 216,854 18,531 79,543
Net margins for 1996...... 37,032 -- 21,700 -- 15,332
Nonqualified patronage
refund and other equity
payable in cash.......... (24,212) -- (24,212) -- --
Redemptions and other
changes.................. (3,847) (26) (5,202) -- 1,381
Change in value of
marketable equity
security, net of tax
(note 9(a)).............. 2,447 -- -- 2,447 --
-------- --- ------- ------ --------
June 29, 1996.............. 326,410 36 209,140 20,978 96,256
Net margins for 1997...... 11,890 -- -- -- 11,890
Redemptions and other
changes.................. (3,996) (4) (5,152) -- 1,160
Change in value of
marketable equity
security, net of tax
(note 9(a)).............. 11,771 -- -- 11,771 --
-------- --- ------- ------ --------
June 28, 1997.............. 346,075 32 203,988 32,749 109,306
Net loss for 1998......... (102,788) -- -- -- (102,788)
Redemptions and other
changes.................. (3,631) 1 (5,471) -- 1,839
Change in value of
marketable equity
security, net of tax
(note 9(a)).............. (5,650) -- -- (5,650) --
-------- --- ------- ------ --------
June 27, 1998.............. $234,006 33 198,517 27,099 8,357
======== === ======= ====== ========
</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
JUNE 29, 28, JUNE 27,
1996 1997 1998
-------- ------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Margins (loss) from continuing operations........ $ 33,706 10,870 (57,036)
Non-cash items included in margins (loss) from
continuing operations:
Depreciation and amortization................... 33,719 32,801 37,547
Equity in (earnings) loss of partnership........ 1,181 (5,807) (4,369)
Deferred income tax benefit..................... (2,095) (1,718) (14,486)
Other........................................... 3,697 2,265 8,549
Changes in operating assets and liabilities:
Receivables..................................... (8,387) (5,278) (8,225)
Inventories..................................... (32,985) (6,853) 5,285
Commodities margin deposits..................... (18,590) (31,951) 53,348
Other current assets............................ 585 (10,619) (24,809)
Accounts payable and accrued expenses........... 16,540 11,513 (5,919)
Interest left on deposit........................ 1,626 (723) 56
-------- ------- --------
Net cash provided by (used in) operating
activities of continuing operations.............. 28,997 (5,500) (10,059)
Net cash used in operating activities of
discontinued operations.......................... (49,013) (17,400) (52,400)
-------- ------- --------
Net cash used in operating activities............. (20,016) (22,900) (62,459)
-------- ------- --------
Cash flows from investing activities:
Acquisitions of property, plant and equipment.... (56,727) (67,547) (54,360)
Acquisition of subsidiary minority interest (note
11)............................................. -- -- (53,104)
Other............................................ 8,302 (405) 513
-------- ------- --------
Net cash used in investing activities of
continuing operations............................ (48,425) (67,952) (106,951)
Net cash used in investing activities of
discontinued operations--acquisitions of
property, plant and equipment.................... (17,535) (9,375) (6,385)
-------- ------- --------
Net cash used in investing activities............. (65,960) (77,327) (113,336)
-------- ------- --------
Cash flows from financing activities:
Short-term borrowings, net....................... 45,211 71,992 21,578
Proceeds from long-term debt..................... 86,296 110,846 272,116
Principal payments of long-term debt............. (28,557) (55,656) (120,400)
Patronage refunds and other equity paid in cash.. (13,009) (29,596) (3,631)
-------- ------- --------
Net cash provided by financing activities....... 89,941 97,586 169,663
-------- ------- --------
Net change in cash and cash equivalents......... 3,965 (2,641) (6,132)
Cash and cash equivalents at beginning of year.... 16,597 20,562 17,921
-------- ------- --------
Cash and cash equivalents at end of year.......... $ 20,562 17,921 11,789
======== ======= ========
Supplemental disclosure of cash flow data:
Cash paid during the years for:
Interest (net of amounts capitalized)........... $ 18,327 25,761 45,577
======== ======= ========
Income taxes.................................... $ 20,676 11,173 --
======== ======= ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 29, 1996, JUNE 28, 1997 AND JUNE 27, 1998
(DOLLAR AMOUNTS IN THOUSANDS)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Gold Kist Inc. is an agricultural membership cooperative association,
headquartered in Atlanta, Georgia. Gold Kist Inc. has approximately 31,000
farmer members and other cooperative associations located principally in the
southeastern United States. Gold Kist Inc. operates fully integrated broiler
production, processing and marketing operations, as well as pork production
facilities. These operations provide marketing and purchasing services to
approximately 2,400 breeder, broiler and pork producers.
Gold Kist Inc. and Southern States Cooperative, Incorporated ("Southern
States") have entered into an Asset Purchase Agreement (the "Agreement"),
dated as of July 23, 1998, pursuant to which Gold Kist Inc. has agreed to sell
and assign, and Southern States has agreed to purchase and assume, the assets
and certain of the liabilities of Gold Kist Inc.'s agricultural inputs
business. The affected assets include substantially all of the assets of the
Agri-Services segment, as well as certain crop notes receivable of AgraTrade
Financing, Inc., a wholly-owned finance subsidiary (see note 10).
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
(collectively "Gold Kist" or "Company"). All significant intercompany
balances and transactions have been eliminated in consolidation.
(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
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 ingredients, 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 engages in commodity futures and options
transactions to manage the risk of adverse price fluctuations with regard
to its feed ingredient purchases. Futures contracts are recognized when
closed and option contracts are accounted for at market. Gains or losses on
futures and options transactions are included as a part of product cost.
F-7
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
At June 28, 1997, Gold Kist had unrealized commodity futures losses of
$36.8 million related to its hedging of a portion of its 1998 poultry feed
ingredients requirements. These futures positions were closed in July 1997
resulting in realized losses of approximately $48.6 million which are
reflected in the 1998 consolidated financial statements as an adjustment to
product cost. At June 27, 1998, there were no significant unrealized
commodity futures positions.
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 marketable
and quoted market prices are not available. Accordingly, it is not
practical to determine these investments' fair value. 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.
Gold Kist applies 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 Company 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
financial statements, net of deferred income taxes. 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 1996 which are deductible for income tax purposes only to the
extent paid or redeemed in cash.
F-8
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
Income taxes are accounted for 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. 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.
(g) Fair Value of Financial Instruments
Gold Kist's financial instruments include cash and cash equivalents,
commodities margin deposits, accounts receivable and payable and accrued
expenses, interest left on deposit, notes receivable, debt and interest
rate swap agreements. Because of the short maturity of cash equivalents,
notes and accounts receivable and payable and accrued expenses, interest
left on deposit, certain short-term debt which matures in less than one
year, long-term debt with variable interest rates and interest rate swap
agreements, the carrying value approximates fair value. All financial
instruments are considered to have an estimated fair value which
approximates carrying value at June 28, 1997 and June 27, 1998 unless
otherwise specified (see notes 1(e) and 4).
(h) Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of
Gold Kist adopted the provisions of SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of" (SFAS 121), on June 30, 1996. SFAS 121 requires that long-lived assets
and certain identifiable intangibles be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. Recoverability of assets to be held and used
is measured by a comparison of the carrying amount of an asset to future
net cash flows expected to be generated by the asset. If such assets are
considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying amount of the assets exceed the fair value
of the assets. Assets to be disposed of are reported at the lower of the
carrying amount or fair value less costs to sell. Adoption of SFAS 121 did
not have a material impact on Gold Kist's financial position, results of
operations or liquidity.
(i) Fiscal Year
Gold Kist employs a 52/53 week fiscal year. The consolidated financial
statements for 1996, 1997 and 1998 reflect 52 weeks. Fiscal 1999 will be a
52 week year.
(j) Use of Estimates
Management of Gold Kist has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial statements in
conformity with generally accepted accounting principles. Actual results
could differ from these estimates.
F-9
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
(2) INVENTORIES
Inventories are summarized as follows:
<TABLE>
<CAPTION>
1997 1998
-------- -------
<S> <C> <C>
Live poultry and hogs....................................... $101,062 94,005
Marketable products......................................... 36,331 45,081
Raw materials and supplies.................................. 42,096 35,118
-------- -------
$179,489 174,204
======== =======
</TABLE>
(3) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is summarized as follows:
<TABLE>
<CAPTION>
1997 1998
-------- -------
<S> <C> <C>
Land and land improvements.................................. $ 28,233 33,412
Buildings................................................... 168,863 182,735
Machinery and equipment..................................... 328,432 369,441
Construction in progress.................................... 28,134 8,569
-------- -------
553,662 594,157
Less accumulated depreciation............................... 314,420 338,366
-------- -------
$239,242 255,791
======== =======
</TABLE>
(4) NOTES PAYABLE AND LONG-TERM DEBT
Short-term borrowings at June 27, 1998 include $69.9 million under a rolling
four-month secured agreement with a commercial bank entered into in April
1998. The commercial bank holds marketable equity securities owned by Gold
Kist as collateral (see note 9(a)). The Company is required to maintain funds
with the bank to account for volatility in the market price of the securities
held as collateral. Interest on the borrowings are at one-month LIBOR plus
.75% per annum. The Company earns interest on the collateral funds at rates
that approximate the federal funds rate.
In February 1997, an insurance company purchased $30 million of 7.6% Series
A Senior Notes and $25 million of 7.94% Series B Senior Notes. As a result of
changes in the Company's financial structure, the interest rates on the senior
promissory notes, as well as the previously issued $20.0 million 9.35%
interest note, will be adjusted quarterly in accordance with the Company's
overall financial condition. Effective August 1, 1998, interest rates on the
9.35% interest notes, the 7.6% Series A Senior Notes and the 7.94% Series B
Senior Notes will be 11.1%, 9.35% and 9.69%, respectively.
At June 27, 1998, the Company had a $440 million secured committed credit
facility with eight commercial banks. The facility included a three-year $132
million revolving credit commitment, a $132 million 364-day line of credit
commitment and a $176 million three-year term loan. As of June 27, 1998,
borrowings of $21.5 million, $132.0 million and $176.0 million, respectively,
were outstanding under the revolving credit, 364-day line-of-credit and term
loan commitments.
In August 1998, the Company refinanced its $440 million secured committed
credit facility with a $500 million credit agreement with a commercial bank.
The new credit facility includes a secured $125 million 364-day line of credit
commitment, a secured $125 million three-year revolving credit facility and a
$250 million three-year unsecured bridge facility. The 364-day line of credit
and three-year revolving credit facility are secured by all inventory and
receivables of the Company. Upon the consummation of the Agreement with
Southern States, the loan provisions require that proceeds be applied to the
$250 million bridge facility (see note 1). Alternatively, the Company may
convert the bridge facility to a three-year term loan secured with
F-10
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
substantially all of the Company's assets. The credit agreement contains
provisions that require accelerated payments in accordance with certain terms
and conditions, including the sale of facilities and excess cash flow as
defined. The 364-day line of credit provides short-term financing that will
expire in August 3, 1999 and may be extended with the consent of the bank. The
364-day line of credit is subject to a .30% per annum facility fee. The three-
year revolving credit agreement expires on August 3, 2001, but may be extended
for a one-year period with the consent of the bank. The revolving credit
facility fee will be computed quarterly based on the Association's ratio of
funded debt to total capital and will not exceed .35% per annum. The term loan
commitment matures on August 3, 2001. Borrowings under the $500 million
facility will bear variable interest rates below prime.
Subordinated loan certificates of $36.5 million at June 28, 1997 bore
interest at rates of 5.75% to 6.4% with terms of one year and were unsecured.
At June 27, 1998, subordinated loan certificates outstanding were $35.0
million bearing interest at rates of 6.3% and 6.4%.
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>
1997 1998
-------- -------
<S> <C> <C>
Senior notes payable:
9.90% interest notes, due in semi-annual installments of
$1,539 with interest payable semiannually................... $ 6,152 3,077
9.35% interest note, due in a single installment in June 2001
with interest payable quarterly............................. 20,000 20,000
7.60% Series A senior notes, due in annual installments of
$2,727 beginning in February 2002 with interest payable
quarterly................................................... 30,000 30,000
7.94% Series B senior notes, due in annual installments of
$2,272 beginning in May 2002 with interest payable quarter-
ly.......................................................... 25,000 25,000
Other long term debt:
Subordinated capital certificates of interest with fixed ma-
turities ranging from two to fifteen years, unsecured
(weighted average interest rate of 7.7% at June 28, 1997 and
7.6% at June 27, 1998)...................................... 63,714 73,407
Term loan agreement with commercial banks (interest rate of
8.2% at June 27, 1998)...................................... -- 176,000
Term loan agreement with agricultural credit bank, due in
semi-annual installments of $1,785 beginning in June 1999
with interest payable quarterly (weighted average interest
rate of 8.7% at June 27, 1998).............................. -- 50,000
Revolving credit agreements with commercial banks (weighted
average rate of 6.0% at June 28, 1997 and 8.1% at June 27,
1998)....................................................... 101,350 21,500
Tax exempt industrial revenue bonds with varying interest
rates, due in quarterly and annual installments through
2016, secured by property, plant and equipment.............. 11,350 10,900
Pro rata share of mortgage loan, at 8.47% interest, due in
monthly installments to June 30, 2004, secured by a build-
ing......................................................... 2,100 1,873
Other........................................................ 2,466 2,091
-------- -------
262,132 413,848
Less current maturities....................................... 14,956 93,248
-------- -------
$247,176 320,600
======== =======
</TABLE>
F-11
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
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 senior notes payable at June 28,
1997 was approximately $83.1 million.
In June 1997, Gold Kist entered into two notional amount $25 million
interest rate swap agreements with a commercial bank. Under a five-year
interest rate swap, the Company pays interest at a fixed rate of 6.48% and
receives interest at the three-month London Interbank Offered Rate (LIBOR).
Under the ten year interest rate swap, the Company paid interest at the three-
month LIBOR and received interest at a fixed rate of 7.44%. In June 1998, the
commercial bank exercised its option to terminate the ten-year interest rate
swap. In September 1997, Gold Kist entered into a notional amount five-year
$25 million interest rate swap agreement with a commercial bank. Under the
agreement, the Company pays interest at a fixed rate of 5.90% and receives
interest at the three-month LIBOR. In September 1999, the commercial bank has
an option to convert the fixed rate payment to LIBOR less .23%. In October
1997, Gold Kist entered into three notional amount five-year $25 million
interest rate swap agreements with two commercial banks. Under the agreements,
the Company pays interest at a weighted average fixed rate of 5.98% and
receives interest at the three-month LIBOR. In October 2000, one of the
commercial banks has the option to cancel two of the $25 million interest rate
swap agreements. In January 1998, the Company entered into a five-year $25
million interest rate swap agreement with a commercial bank. Under the
agreement, the Company pays interest at a fixed rate of 5.51% and receives
interest at the three-month LIBOR. In January 2001, the bank has an option to
convert the fixed rate payment to LIBOR less .10%.
The terms of debt agreements specify minimum working capital, consolidated
tangible net worth, current ratio and fixed charge coverage ratio
requirements, as well as a limitation on the funded debt to total capital
ratio. The debt agreements place a limitation on capital expenditures, equity
distributions, cash patronage refunds, commodity hedging contracts and
additional loans, advances or investments.
Annual required principal repayments on long-term debt for the five years
subsequent to June 27, 1998 are as follows:
<TABLE>
<CAPTION>
YEAR:
<S> <C>
1999............................................................. $ 93,248
2000............................................................. 27,230
2001............................................................. 123,389
2002............................................................. 43,554
2003............................................................. 16,913
</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. Retained earnings at June 27, 1998 reflected the net loss for
1998. Also included are amounts related to the early redemption of notified
equity, representing the difference between the face value and the redemption
amounts.
F-12
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
(6) INCOME TAXES
Total income tax expense (benefit) was allocated as follows:
<TABLE>
<CAPTION>
1996 1997 1998
------- ------ -------
<S> <C> <C> <C>
Margins (loss) from continuing operations......... $18,848 (4,108) (35,123)
Discontinued operations........................... 1,909 662 (8,571)
Loss on disposal of Agri-Services segment,
including operating losses during phase out
period........................................... -- -- (16,489)
Patrons and other equity -- unrealized gain on
marketable equity security....................... 1,530 4,518 (3,043)
------- ------ -------
$22,287 (1,072) (63,226)
======= ====== =======
</TABLE>
The provisions for income tax expense (benefit), principally Federal,
related to margins (loss) from continuing operations consist of the following:
<TABLE>
<CAPTION>
1996 1997 1998
------- ------ -------
<S> <C> <C> <C>
Current expense (benefit).......................... $20,943 (2,391) (20,637)
Deferred benefit................................... (2,095) (1,717) (14,486)
------- ------ -------
$18,848 (4,108) (35,123)
======= ====== =======
</TABLE>
Gold Kist's combined federal and state effective tax rate from operations
for 1996, 1997 and 1998 was 33%, (48)% and (38)%, respectively. A
reconciliation of income tax expense (benefit) from continuing operations
computed by applying the Federal corporate income tax rate of 35% in 1996,
1997 and 1998 to margins from continuing operations before income taxes and
minority interest for the applicable year follows:
<TABLE>
<CAPTION>
1996 1997 1998
------- ------ -------
<S> <C> <C> <C>
Computed expected income tax expense (benefit)... $19,910 3,012 (32,256)
Increase (decrease) in income tax expense
resulting from:
Income tax litigation........................... -- (5,207) --
Cash portion of nonqualified patronage refund... (986) -- --
Effect of state income taxes, net of Federal
benefit........................................ 970 (531) (2,199)
Nonqualified equity redemptions................. (886) (831) (1,203)
Target jobs credits............................. (11) (344) (80)
Other, net...................................... (149) (207) 615
------- ------ -------
$18,848 (4,108) (35,123)
======= ====== =======
</TABLE>
F-13
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at June 28,
1997 and June 27, 1998 are as follows:
<TABLE>
<CAPTION>
1997 1998
-------- -------
<S> <C> <C>
Deferred tax assets:
Postretirement benefits.................................. $ 16,920 18,826
Insurance accruals....................................... 7,487 7,440
Federal net operating loss carryforward.................. -- 12,286
Bad debt reserves........................................ 895 1,531
State tax operating loss carryforwards................... 1,850 3,950
Other.................................................... 1,164 2,100
Discontinued operations.................................. 2,547 21,188
-------- -------
Total gross deferred tax assets......................... 30,863 67,321
Less valuation allowance................................. (1,078) (1,136)
-------- -------
Total net deferred tax assets........................... 29,785 66,185
-------- -------
Deferred tax liabilities:
Unrealized gain on marketable equity security............ (17,634) (14,592)
Accelerated depreciation................................. 350 (2,831)
Deferred compensation.................................... (3,604) (3,622)
-------- -------
Total deferred tax liabilities.......................... (20,888) (21,045)
-------- -------
Net deferred tax assets................................. $ 8,897 45,140
======== =======
</TABLE>
The net change in the total valuation allowance for the years ended 1996,
1997 and 1998 was a decrease of $578, $328 and an increase of $58,
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.
At June 27, 1998, Gold Kist has net operating loss carryforwards for federal
income tax purposes of $34.9 million, which are available to offset future
federal taxable income through 2013.
(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 1996, 1997 and 1998 included the following
components:
<TABLE>
<CAPTION>
1996 1997 1998
-------- ------- -------
<S> <C> <C> <C>
Service cost--benefits
earned during the
year................... $ 4,092 4,226 4,484
Interest cost on
projected benefit
obligations............ 7,426 8,006 8,677
Actual return on plan
assets................. (27,724) (19,118) (47,530)
Net amortization and
deferral............... 16,799 7,127 34,564
-------- ------- -------
Net periodic pension
expense................ $ 593 241 195
======== ======= =======
</TABLE>
F-14
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
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 28, 1997 and June 27, 1998 and
economic assumptions:
<TABLE>
<CAPTION>
1997 1998
-------- -------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested participants................................... $ 90,256 108,620
Nonvested............................................. 7,410 10,822
-------- -------
Total accumulated benefit obligations............... 97,666 119,442
======== =======
Projected benefit obligations for services rendered to
date................................................... $116,670 140,983
======== =======
Plan assets for benefits:
Plan assets at fair value............................. $156,673 198,521
Prepaid pension cost included in other assets in
consolidated balance sheets.......................... (19,721) (22,740)
-------- -------
Net plan assets..................................... $136,952 175,781
======== =======
Plan assets in excess of projected benefit obliga-
tions................................................. $ 20,282 34,798
======== =======
Consisting of:
Unrecognized net asset existing at the date of
adoption............................................. $ 7,116 5,970
Unrecognized net gain/(loss) from past experience
different from that assumed and effects of changes in
assumptions.......................................... 18,889 34,743
Prior service cost not yet recognized in net periodic
pension cost......................................... (5,723) (5,915)
-------- -------
$ 20,282 34,798
======== =======
Actuarial assumptions:
Weighted-average discount rate........................ 8.25% 7.25%
Weighted-average expected long-term rate of return on
plan assets.......................................... 9.50% 9.50%
Weighted-average rate of compensation increase........ 5.50% 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.
F-15
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
(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 1996, 1997 and 1998
included the following components:
<TABLE>
<CAPTION>
1996 1997 1998
------ ------- ------
<S> <C> <C> <C>
Service cost--benefits earned during the year..... $2,029 2,452 2,917
Interest cost..................................... 2,998 3,508 4,290
Net amortization and deferral..................... 80 80 155
------ ------- ------
Net postretirement health and death benefit
expense........................................ $5,107 6,040 7,362
====== ======= ======
Gold Kist's postretirement benefit plans are not funded. The status of
the plans at June 28, 1997 and June 27, 1998 was as follows:
1997 1998
------- ------
Actuarial present value of accumulated
postretirement benefit obligation:
Retirees............................................... $21,130 22,799
Fully eligible active plan participants................ 11,786 12,974
Other active plan participants......................... 20,245 23,839
------- ------
53,161 59,612
Unrecognized net loss from experience differences...... (7,332) (8,677)
------- ------
$45,829 50,935
======= ======
</TABLE>
The health care cost trend rate used to determine the accumulated
postretirement benefit obligation at June 28, 1997 was 7%, declining
ratably to 5% by the year 2001 and remaining at that level thereafter. The
health care cost trend rate used to determine the accumulated
postretirement benefit obligation at June 27, 1998 was 6%, declining
ratably to 5% by the year 2001 and remaining at that level thereafter. The
discount rate used to determine the accumulated postretirement benefit
obligation was 8.25% at June 28, 1997 and 7.25% at June 27, 1998,
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 June 27, 1998 by approximately 13% and net
postretirement health care cost by 13%.
F-16
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
(8) CONTINGENT LIABILITIES AND COMMITMENTS
Gold Kist is a party to various legal and administrative proceedings, all of
which management believes constitute ordinary routine litigation incident to
the business conducted by Gold Kist, or are not material in amount.
Gold Kist received proceeds of $20.0 million, $5.0 million, $4.9 million and
$10.2 million during 1993, 1994, 1995 and 1996, respectively, for
collateralized loans sold with recourse to an insurance company, of which
$11.7 million was outstanding at June 27, 1998. No gain or loss was recognized
on the sale of these loans. A $176 thousand allowance has been recognized in
the accompanying consolidated financial statements for potential losses that
may occur. As of June 27, 1998, there have been no credit losses related to
the loans guaranteed under this agreement.
Gold Kist is a guarantor of amounts outstanding under a $65.0 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 June 27, 1998, the
amounts outstanding under this facility were $64.8 million.
(9) INVESTMENTS
(a) Marketable Equity Security
At June 27, 1998, the Association's marketable equity securities were
carried at their fair value of $62.4 million, which represents a gross
unrealized gain of $41.7 million. The 1998 gross unrealized gain, net of
deferred taxes of $14.6 million, has been reflected as a separate component
of patrons' and other equity. At June 28, 1997, the Association's
marketable equity securities were carried at their fair value of $71.1
million, which represents a gross unrealized gain of $50.4 million. The
1997 gross unrealized gain, net of deferred income taxes of $17.7 million,
has been reflected as a separate component of patrons' and other equity. At
June 29, 1996, the marketable equity securities were carried at their fair
value of $54.8 million, which represents a gross unrealized gain of $34.1
million. The 1996 gross unrealized gain, net of deferred income taxes of
$13.1 million, has been reflected as a separate component of patrons' and
other equity.
Dividends of $494 thousand, $595 thousand and $625 thousand are included
in miscellaneous, net for the years ended June 29, 1996, June 28, 1997 and
June 27, 1998, respectively.
(b) Golden Peanut Company
Gold Kist has a 33 1/3% interest in Golden Peanut Company and
Subsidiaries, a partnership interest ("Golden Peanut Company"). Gold Kist's
investment in the Golden Peanut Company amounted to $24.1 million and $22.7
million at June 28, 1997 and June 27, 1998, respectively. In July 1997,
Gold Kist made additional investments of $1.2 million. In September 1997,
Gold Kist received a $5.8 million distribution from Golden Peanut Company.
Golden Peanut Company has a $450.0 million commercial paper facility
supported by seasonal backup lines of credit with various banks. At June
27, 1998, borrowings of $124.0 million were outstanding under the
commercial paper facility. Summarized financial information of Golden
Peanut Company is shown below:
F-17
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<S> <C> <C> <C>
1997 1998
-------- -------
Current assets........................................... $164,450 182,013
Property, plant and equipment, net and other noncurrent
assets.................................................. 34,775 34,036
-------- -------
Total assets........................................... $199,225 216,049
======== =======
Current liabilities...................................... $120,591 141,031
Accrued postretirement benefit costs..................... 5,703 6,383
Other liabilities........................................ 511 530
Partners' equity......................................... 72,420 68,105
-------- -------
Total liabilities and partners' equity................. $199,225 216,049
======== =======
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
1996 1997 1998
---------------------------
<S> <C> <C> <C>
Net sales and other operating income........... $ 428,955 426,122 425,076
Costs and expenses............................. 432,496 408,702 411,971
--------- -------- -------
Net earnings (loss).......................... $ (3,541) 17,420 13,105
========= ======== =======
</TABLE>
In 1996, 1997 and 1998, 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 $3.1 million,
$4.2 million and $2.5 million in 1996, 1997 and 1998, respectively. In
addition, Gold Kist purchased $2.6 million, $2.3 million and $1.7 million
of inventory from Golden Peanut Company in 1996, 1997 and 1998,
respectively.
(10) DISCONTINUED OPERATIONS
The Company's Agri-Services segment purchases or manufactures feed, seed,
fertilizers, pesticides, animal health products and other farm supply items
for sale at wholesale and retail. Additionally, the Agri-Services segment 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. In May 1998, the
Gold Kist Board of Directors adopted a plan to discontinue operations of the
Agri-Services segment.
In July 1998, Gold Kist entered into an Asset Purchase Agreement, pursuant
to which the Company has agreed to sell and assign the assets and certain of
the liabilities of the Company's agricultural inputs business (see note 1). In
August 1998, the Company entered into an agreement to sell or assign the
cotton marketing operation's purchases and sales commitments for the 1998
cotton crop.
Accordingly, the operating results of the Agri-Services segment, including
provisions for losses during the phase-out period, have been segregated from
continuing operations and reported separately in the Consolidated Statements
of Operations and Cash Flows for 1996, 1997 and 1998. Net sales volume of the
Agri-Services segment was $535.4 million, $636.2 million and $720.0 million,
respectively, in 1996, 1997 and 1998.
The assets and liabilities of such operations at June 27, 1998 have been
reflected as a net current asset. The Company anticipates the sale of
substantially all of these operations in fiscal 1999.
F-18
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
(11) ACQUISITION OF MINORITY INTEREST
In January 1997, the Gold Kist Board of Directors adopted a resolution
authorizing the Company's officers to negotiate with Golden Poultry Company,
Inc. ("Golden Poultry") to pursue a transaction in which Gold Kist would
acquire all of the shares of Golden Poultry's common stock not currently owned
by Gold Kist. Gold Kist owned 10,901,802 shares or 75% of Golden Poultry's
14,628,435 outstanding shares. The negotiations were completed and an
Agreement and Plan of Merger executed in April 1997 (the "Merger Agreement"),
among Gold Kist, Golden Poultry Company, Inc., Agri International, Inc. and
Golden Poultry Acquisition Corp.
Pursuant to the Merger Agreement, Gold Kist agreed to pay $14.25 per share
in cash for each outstanding share of common stock not already beneficially
owned by Gold Kist. The Merger Agreement was approved by the Boards of
Directors of the Association and Golden Poultry Company, Inc. and was approved
by a majority of the owners of the Golden Poultry common stock not owned by
Gold Kist at a Special Meeting of Shareholders on September 5, 1997. The
merger became effective on September 8, 1997. The cost to acquire the
outstanding shares and the fees and expenses incurred in connection with the
merger were approximately $55.1 million. The acquisition of the minority
interest was accounted for using the purchase method of accounting. The cost
in excess over the net assets acquired was $24.7 million, which is being
amortized over 20 years. The pro forma effect of goodwill amortization on
prior years is not significant.
F-19
<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
Risk Factors............................................................. 5
Gold Kist Inc............................................................ 6
Use of Proceeds.......................................................... 6
Selected Consolidated Financial Data..................................... 7
Management's Discussion and Analysis of Consolidated Results of
Operations and Financial Condition...................................... 8
Business................................................................. 14
Description of Subordinated Capital Certificates of Interest............. 17
Description of Subordinated Loan Certificates and Subordinated Large De-
nomination Loan Certificates............................................ 22
Experts.................................................................. 26
Qualified Independent Underwriter........................................ 26
Legal Opinion............................................................ 26
Independent Auditors' Reports............................................ F-1
Consolidated Financial Statements........................................ F-3
</TABLE>
================================================================================
================================================================================
[LOGO OF GOLD KIST APPEARS HERE]
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
----------------
----------------
AGVESTMENTS, INC.
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Registration Fees............................................... $ 6,490
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................................................... $ 5,000*
-------
Total....................................................... $99,490*
</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 while serving as a director or officer of Gold
Kist, is serving or has served as an officer, director or trustee 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 permitted for a director under
Sections 14-3-850 through 14-3-855 of the Georgia Nonprofit 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 a director, officer or trustee 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 an officer or
director 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 under which expenses
associated therewith could be indemnified. 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. In the event that any of the provisions of this
Article (including any provision within a single section, subsection,
paragraph, sentence or clause) is held by a court of competent jurisdiction to
be invalid, void or otherwise unenforceable, the remaining provisions of this
Article are severable and shall remain enforceable to the fullest extent
permitted by law."
II-1
<PAGE>
The Georgia Nonprofit Corporation Code provides:
14-3-850. 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" or "officer" means an individual who is or was a director
or officer, respectively, of a corporation who, while a director or officer
of a corporation, is or was serving at the corporation's request as a
director, officer, partner, trustee, employee, or agent of another domestic
or foreign business or nonprofit corporation, partnership, joint venture,
trust, employee benefit plan, or other entity. A director or officer is
considered to be serving an employee benefit plan at the corporation's
request if the director's duties to the corporation also impose duties on,
or otherwise involve services by, the director to the plan or to
participants in or beneficiaries of the plan. "Director" or "officer"
includes, unless the context otherwise requires, the estate or personal
representative of a director.
(3) "Disinterested director" means a director who at the time of a vote
referred to in subsection (c) of Code Section 14-3-853 or a vote or
selection referred to in subsection (b) or (c) of Code Section 14-3-855 is
not:
(A) A party to the proceeding; or
(B) An individual having a familial, financial, professional, or
employment relationship with the director whose indemnification or
advance for expenses is the subject of the decision being made, which
relationship would, in the circumstances, reasonably be expected to
exert an influence on the director's judgment when voting on the
decision being made.
(4) "Expenses" includes counsel fees.
(5) "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 actually incurred with respect to a
proceeding.
(6) "Official capacity" means:
(A) When used with respect to a director, the office of director in a
corporation; and
(B) When used with respect to an officer, as contemplated in Code
Section 14-3-857, the office in a corporation held by the officer.
"Official capacity" does not include service for any other domestic or
foreign corporation or any partnership, joint venture, trust, employee
benefit plan, or other entity.
(7) "Party" means an individual who was, is, or is threatened to be made
a named defendant or respondent in a proceeding.
(8) "Proceeding" means any threatened, pending or completed action, suit,
or proceeding, whether civil, criminal, administrative, arbitrative, or
investigative and whether formal or informal.
14-3-851. AUTHORITY TO INDEMNIFY DIRECTOR INVOLVED IN LEGAL PROCEEDING.
(a) Except as otherwise provided in this Code section, a corporation may
indemnify an individual who is a party to a proceeding because the individual
is or was a director against liability incurred in the proceeding if:
(1) He or she conducted himself or herself in good faith; and
(2) He or she reasonably believed:
(A) In the case of conduct in his or her official capacity, that his
or her conduct was in the best interests of the corporation;
(B) In all other cases, that his or her conduct was at least not
opposed to the best interests of the corporation; and
II-2
<PAGE>
(C) In the case of any criminal proceeding, he or she had no
reasonable cause to believe his or her conduct was unlawful.
(b) A director's conduct with respect to an employee benefit plan for a
purpose the director believed in good faith to be in the interests of the
participants in and beneficiaries of the plan is conduct that satisfies the
requirements 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
described in 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, except for reasonable expenses incurred in connection with the
proceeding if it is determined that the director has met the relevant
standard of conduct under this Code section; or
(2) In connection with any other proceeding with respect to conduct for
which the director was adjudged liable on the basis that personal benefit
was improperly received by the director, whether or not involving action in
the director's official capacity.
14-3-852. INDEMNIFICATION FOR REASONABLE EXPENSES OF SUCCESSFUL DEFENSE.
A corporation shall indemnify a director who was successful, on the merits
or otherwise, in the defense of any proceeding to which the director was a
party because the director was a director of the corporation against
reasonable expenses incurred by the director in connection with the
proceeding.
14-3-853. ADVANCE OR REIMBURSEMENT OF LITIGATION EXPENSES.
(a) A corporation may, before final disposition of a proceeding, advance
funds to pay for or reimburse the reasonable expenses incurred by a director
who is a party to a proceeding because the director is a director if the
director delivers to the corporation:
(1) A written affirmation of the director's good faith belief that the
director has met the relevant standard of conduct described in of Code
Section 14-3-851 or that the proceeding involves conduct for which
liability has been eliminated under a provision of the articles of
incorporation as authorized by paragraph (4) of subsection (b) of Code
Section 14-3-202; and
(2) The director's written undertaking to repay any funds advanced if it
is ultimately determined that the director 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 the financial ability of
the director to make repayment.
(c) Authorizations under this Code section shall be made by the board of
directors:
(1) If there are two or more disinterested directors, by a majority vote
of all disinterested directors (a majority of whom shall for such purpose
constitute a quorum) or by a majority of the members of a committee of two
or more disinterested directors appointed by such a vote; or
(2) If there are fewer than two disinterested directors, by the vote
necessary for action by the board in accordance with subsection (c) of Code
Section 14-3-824, in which authorization directors who do not qualify as
disinterested directors may participate.
14-3-854. COURT ORDERED INDEMNIFICATION AND PAYMENT OF EXPENSES.
(a) A director who is a party to a proceeding because he or she is a
director may apply for indemnification or advances of expenses to the court
conducting the proceeding or to another court of competent jurisdiction. After
receipt of an application, after giving any notice it considers necessary, the
court shall:
II-3
<PAGE>
(1) Order indemnification or advance for expenses if it determines that
the director is entitled to indemnification under this part; or
(2) Order indemnification or advance for expenses if it determines, in
view of all the relevant circumstances, that it is fair and reasonable:
(A) To indemnify the director; or
(B) To advance expenses to the director,
even if he or she has not met the relevant standard of conduct set
forth in subsections (a) and (b) of Code Section 14-3-851, failed to
comply with Code Section 14-3-853, or was adjudged liable in a
proceeding referred to in paragraph (1) or (2) of subsection (d) of
Code Section 14-3-851, but if he or she was adjudged so liable his or
her indemnification shall be limited to reasonable expenses incurred in
connection with the proceeding.
(b) If the court determines that the director is entitled to indemnification
or advance for expenses under this part, it may also order the corporation to
pay the director's reasonable expenses to obtain court ordered indemnification
or advance for expenses.
14-3-855. DETERMINATION OF RIGHT AND AUTHORIZATION OF PAYMENT FOR
INDEMNIFICATION REQUIRED.
(a) A corporation may not indemnify a director under Code Section 14-3-851
unless authorized thereunder and a determination has been made for a specific
proceeding that indemnification of the director is permissible in the
circumstances because the director has met the relevant standard of conduct
set forth in Code Section 14-3-851.
(b) The determination shall be made:
(1) If there are two or more disinterested directors, by the board of
directors by a majority vote of all disinterested directors (a majority of
whom shall for such purpose constitute a quorum), or by a majority of the
members of a committee of two or more distinterested directors appointed by
such a vote;
(2) By special legal counsel:
(A) Selected in the manner prescribed in paragraph (1) of this
subsection; or
(B) If there are fewer than two disinterested directors, selected by
the board of directors, in which selection directors who do not qualify
as disinterested directors may participate; or
(3) By the members, but directors who do not qualify as disinterested
directors may not vote as members 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 there
are fewer than two disinterested directors or 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 special legal counsel.
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 $50,000,000.
ITEM 16. EXHIBITS.
See Index of Exhibits on Page II-6.
II-4
<PAGE>
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.
(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 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.
II-5
<PAGE>
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 of Merger, Amendment to Schedule 13D Exhibit 3
dated as of April 22, filed April 25, 1997
1997 among Golden
Poultry Company, Inc.,
Agri International,
Inc., Gold Kist, Inc.
and Golden Poultry
Acquisition Corp.
4(a)(1) 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
4(a)(2) 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)(3) 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 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)(2) 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)(3) 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
</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(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
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
</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(g)(3) Form of First Registration filed on Form Exhibit 4(f)(2)
Supplemental Indenture, S-1
dated as of September (Registration No. 2-69267)
1, 1980, governing the
terms of the One Year
Subordinated Loan
Certificates (Series C)
4(h) Form of Indenture dated Registration filed on Form Exhibit 4(i)
as of September 1, S-2 (Registration No.
1985, governing the 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
4(i) Agreement to furnish Registration filed on Form Exhibit 4(h)
copies of constituent S-1 (Registration No.
instruments defining 2-59958)
the rights of the
holders of certain
industrial revenue
bonds
4(j)(1) Note Agreement with the Quarterly Report on Form Exhibit B-4(q)(1)
Prudential Insurance 10-Q for the Fiscal Quarter
Company of America ended December 31, 1988
dated as of November 4,
1988
4(j)(2) Note Agreement with the Quarterly Report on Form Exhibit B-4(q)(2)
Pruco Life Insurance 10-Q for the Fiscal Quarter
Company dated as of ended December 31, 1988
November 4, 1988
4(j)(3) Amendment dated as of Registration filed on Form Exhibit 4(l)(5)
January 9, 1991, to S-2 (Registration No.
Note Agreements' with 33-42900)
the Prudential
Insurance Company of
America and with Pruco
Life Insurance Company
4(j)(4) Note Agreement with the Registration filed on Form Exhibit 4(l)(6)
Prudential Insurance S-2 (Registration No.
Company of America 33-42900)
dated as of June 3,
1991
4(j)(5) Amendment dated as of Registration filed on Form Exhibit 4(l)(7)
June 26, 1992, to Note S-2 (Registration No. 33-
Agreements with 52268)
Prudential Insurance
Company of America
4(j)(6) Amendment dated as of Registration filed on Form Exhibit 4(l)(8)
July 14, 1993, to Note S-2 (Registration No. 33-
Agreements in the 69204)
Prudential Insurance
Company of America and
Pruco Life Insurance
Company
4(j)(7) Note Purchase and Registration filed on Form Exhibit 4(j)(9)
Private Shelf S-2
Agreement, dated as of (Registration No. 333-36291)
February 11, 1997, with
the Prudential
Insurance Company of
America
</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(j)(8) Amendment dated May 13, Registration filed on Form Exhibit 4(j)(10)
1997 to Note Agreements S-2
dated as of November 4, (Registration No. 333-36291)
1988, with the
Prudential Insurance
Company of America and
with Pruco Life
Insurance Company; Note
Agreement dated as of
June 7, 1991 with the
Prudential Insurance
Company of America; and
Note Purchase and
Private Shelf Agreement
dated February 11, 1997
with the Prudential
Insurance Company of
America
5 Opinion of Alston & Bird
10(a) Form of Deferred Registration filed on Form Exhibit 11(d)
Compensation Agreement S-1 (Registration No.
between Gold Kist and 2-59958)
certain executive
officers
10(b)(1) Gold Kist Management Registration filed on Form Exhibit 10(b)
Bonus Program S-1 (Registration No.
2-69267)
10(b)(2) Amended Gold Kist Registration filed on Form Exhibit 10(b)(2)
Management Bonus S-2 (Registration No.
Program 2-79538)
10(b)(3) Form of Gold Kist Registration filed on Form Exhibit 10(b)(3)
Supplemental Executive S-2 (Registration No.
Retirement Income Non- 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 Form Exhibit 10(b)(4)
Board of Directors S-2 (Registration No.
authorizing the Gold 33-9007)
Kist Special Award Plan
10(b)(5) Form of Gold Kist Registration filed on Form Exhibit 10(b)(5)
Executive's Change in S-2 (Registration No.
Control Agreement 33-31164)
between Gold Kist and
certain officers and
resolutions of Gold
Kist Board of Directors
authorizing the
Officers Contingency
Plan
10(b)(6) Form of Directors Change Registration filed on Form Exhibit 10(b)(6)
in Control Agreement S-2 (Registration No.
between Gold Kist and 33-36938)
Directors of Gold Kist
10(b)(7) Form of Directors Registration filed on Form Exhibit 10(b)(7)
Emeritus Life Benefits S-2 (Registration No.
Agreement 33-36938)
10(b)(8) Form of Directors Registration filed on Form Exhibit 10(b)(8)
Emeritus Agreement for S-2 (Registration No.
Medical Benefits 33-36938)
10(b)(9) Gold Kist Executive Registration filed on Form Exhibit 10(b)(9)
Savings Plan, as S-2 (Registration No. 33-
amended 62869)
</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>
10(b)(10) Gold Kist Director Registration filed on Form Exhibit 10(b)(9)
Savings Plan, as S-2 (Registration No. 33-
amended 62869)
10(b)(11) Gold Kist Split Dollar Registration filed on Form Exhibit 10(b)(9)
Life Insurance Plan S-2 (Registration No. 33-
62869)
10(c)(1) Form of Membership, Registration filed on Form Exhibit 13(b)
Marketing, and/or S-1 (Registration No.
Purchasing Agreement of 2-59958)
Gold Kist Inc.,
Atlanta, Georgia
10(c)(2) Form of Membership, Registration filed on Form Exhibit 10(c)(2)
Marketing, and/or S-1 (Registration No.
Purchasing Agreement of 2-74205)
Gold Kist Inc.,
Atlanta, Georgia, as
revised October 17,
1980
10(c)(3) Form of Membership, Registration filed on Form Exhibit 10(c)(3)
Marketing and/or S-2 (Registration No. 33-
Purchasing Agreement of 428)
Gold Kist Inc.,
Atlanta, Georgia, as
revised November 1,
1984
10(c)(4) Form of Membership, Registration filed on Form Exhibit 10(c)(4)
Marketing and/or S-2 (Registration No. 33-
Purchasing Agreement of 24623)
Gold Kist Inc.,
Atlanta, Georgia, as
revised October 29,
1987
10(c)(5) Form of Membership, Registration filed on Form Exhibit 10(c)(5)
Marketing and/or S-2 (Registration No. 33-
Purchasing Agreement of 42900)
Gold Kist Inc.,
Atlanta, Georgia,
revised as of August
21, 1991
10(c)(6) Form of Membership, Registration filed on Form Exhibit 10(c)(6)
Marketing, and/or S-2
Purchasing Agreement of (Registration No. 333-36291)
Gold Kist Inc.,
Atlanta, Georgia,
revised July 9, 1997
10(d) CF Industries, Inc. Registration filed on Form Exhibit 13(j)
Member Product Purchase S-1 (Registration No. 2-
Agreement 59958)
10(e)(1) General Partnership Registration filed on Form Exhibit 10(h)(1)
Agreement (GC S-2 (Registration No. 33-
Properties) between 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 Form Exhibit 10(h)(2)
Properties, dated S-2 (Registration No. 33-
December 11, 1984, for 428)
home office building
space
10(f)(1) General Partnership Annual Report on Form 10-K Exhibit B-10(f)(1)
Agreement (Golden for the Fiscal Year ended
Peanut Company) between June 30, 1987
Gold Kist and Archer-
Daniels-Midland
Company, dated as of
December 17, 1986
10(f)(2) Restated and Amended Registration filed on Form Exhibit 10(f)(2)
Partnership Agreement S-2 (Registration No. 33-
(Golden Peanut Company) 31164)
between Gold Kist,
Inc., Archer-Daniels-
Midland Company and
Alimenta Processing
Corporation dated as of
March 1, 1989
</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> <C> <S> <C>
10(f)(3) Amendment to Amended and Restated Registration filed on Exhibit 10(f)(3)
Partnership Agreement (Golden Form S-2 (Registration
Peanut Company) between Gold Kist, No. 33-42900)
Inc., Archer-Daniels-Midland
Company and Alimenta Processing
Corporation dated as of June 30,
1991
10(f)(4) Master Commercial Facilities Lease Annual Report on Form 10- Exhibit B-10(f)(2)
Agreement between Gold Kist and K for the Fiscal Year
Golden Peanut Company dated as of ended June 30, 1987
December 17, 1986
10(g) Grain Procurement Agreement between Annual Report on Form 10- Exhibit B-10(h)
Gold Kist and Archer-Daniels- K for the Fiscal Year
Midland Company, dated August 31, ended June 30, 1987
1987
10(h) Guaranty dated December 18, 1992 by Registration filed on Exhibit 4(o)
Gold Kist in favor of NationsBank Form S-2 (Registration
of Georgia, N.A. No. 33-69204)
10(i) Credit Agreement dated as of August Annual Report on Form 10- Exhibit B-10(i)
4, 1998, with Various Banks and K for the Fiscal Year
Lending Institutions, as Lenders ended June 27, 1998
and Cooperatieve Centrale
Raiffeisen-Boerenleenbank B.A., New
York Branch, as Agent
10(j) Asset Purchase Agreement dated as of Report filed on Form 8-K Exhibit 10(k)
July 23, 1998, between Southern dated as of July 23,
States Cooperative, Incorporated 1998
and Gold Kist Inc.
12 Computation of Ratio of Net Margins
to Fixed Charges
23(a) Consent of Alston & Bird
23(b) Consent of KPMG Peat Marwick LLP
23(c) Consent of Ernst & Young LLP
23(d) Consent of Interstate/Johnson Lane
Corporation
</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>
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-12
<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
24TH DAY OF SEPTEMBER, 1998.
Gold Kist Inc.
/s/ G.O. Coan
By: _________________________________
G. O. COAN,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.
SIGNATURE TITLE DATE
/s/ G. O. Coan Chief Executive September 24
- ------------------------------------- Officer (Principal 1998
G. O. COAN Executive Officer)
/s/ Peter J. Gibbons Vice President- September 24,
- ------------------------------------- Finance (Principal 1998
PETER J. GIBBONS Financial Officer)
/s/ W. F. Pohl, Jr. Controller September 24,
- ------------------------------------- (Principal 1998
W. F. POHL, JR. Accounting Officer)
/s/ W. P. Smith, Jr. Director September 21 ,
- ------------------------------------- 1998
W. P. SMITH, JR.
/s/ Fred K. Norris, Jr. Director September 21,
- ------------------------------------- 1998
FRED K. NORRIS, JR.
/s/ Dan Smalley Director September 21,
- ------------------------------------- 1998
DAN SMALLEY
/s/ Phil Ogletree, Jr. Director September 21,
- ------------------------------------- 1998
PHIL OGLETREE, JR.
/s/ James E. Brady, Jr. Director September 21,
- ------------------------------------- 1998
JAMES E. BRADY, JR.
/s/ A. Jack Nally Director September 21,
- ------------------------------------- 1998
A. JACK NALLY
/s/ W. Kenneth Whitehead Director September 21,
- ------------------------------------- 1998
W. KENNETH WHITEHEAD
/s/ H. Michael Davis Director September 21,
- ------------------------------------- 1998
H. MICHAEL DAVIS
/s/ Herbert A. Daniel, Jr. Director September 21,
- ------------------------------------- 1998
HERBERT A. DANIEL, JR.
II-13
<PAGE>
EXHIBIT 1(a)
August 14, 1998
Agvestments, Inc.
244 Perimeter Center Parkway, N.E.
P. 0. Box 2210
Atlanta, Georgia 30301
SUBJECT: Written Notice of Designated Securities
---------------------------------------
Gentlemen:
Pursuant to Section 1 of a certain Amended Agreement made and entered into on
the 12th day of October, 1992, between Gold Kist Inc. and Agvestments, Inc.,
("Agreement"), this letter is to serve as written designation of certain
classes of securities which Agvestments, Inc. is hereby authorized to
offer in accordance with the terms of the Agreement. Upon Gold Kist's receipt of
an effective Registration Statement under the Securities Act of 1933, as amended
and subject to the terms thereof and the terms of the Agreement, Agvestments,
Inc. is authorized to offer to the public the Securities described in the
attached and incorporated Exhibit A (said securities hereafter referred to as
"Designated Securities").
Upon notification of the effective date of the Registration Statement
registering the Designated Securities, Gold Kist will notify Agvestments of its
authority to proceed under this written designation.
Sincerely,
By: /s/ Peter J. Gibbons
-----------------------
Peter J. Gibbons
Vice President, Finance
<PAGE>
EXHIBIT A
---------
Dated: August 14, 1998
Below are listed the class of securities noted as Designated Securities on the
attached Written Notice of Designated Securities.
Subordinated Capital Certificates of Interest
15 year maturity, (Series D)
10 year maturity, (Series D)
7 year maturity,(Series A)
5 year maturity, (Series C)
3 year maturity, (Series A)
2 year maturity, (Series A)
Subordinated Loan Certificates
1 year maturity, (Series C)
Subordinated Large Denomination Loan Certificates
1 year maturity, (Series A)
6 month maturity, (Series A)
all as described in the Offering Prospectus.
2
<PAGE>
EXHIBIT 5
September 23, 1998
The Board of Directors
of Gold Kist Inc.
Post Office Box 2210
Atlanta, Georgia 30303
Re: Registration Statement on Form S-2 with respect to
Two Classes of Subordinated Capital Certificates of
Interest and Two Classes of Subordinated Loan Certificates
----------------------------------------------------------
Gentlemen:
This opinion is given to you in connection with the filing by Gold Kist Inc.
("Gold Kist") with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended, of a registration statement on Form S-2 (the
"Registration Statement") with respect to Gold Kist's Five Year Subordinated
Capital Certificates of Interest (Series C) in the principal amount of
$5,000,000, Three Year Subordinated Capital Certificates of Interest (Series A)
in the principal amount of $2,000,000, One Year Subordinated Loan Certificates
(Series C) in the principal amount of $10,000,000, and One Year Subordinated
Large Denomination Loan Certificates (Series A) in the principal amount of
$5,000,000 (hereinafter referred to collectively as the "Certificates").
We have examined copies of the Articles of Incorporation of Gold Kist, as
restated and amended through the date hereof, the Bylaws of Gold Kist, as
amended through the date hereof, resolutions of the Board of Directors of Gold
Kist, the Indentures under which the Certificates are to be issued, including
the forms of the Certificates, and the Certificate of an officer of Gold Kist.
Based upon the foregoing, we are of the opinion that when the consideration
for the Certificates, as determined by the Board of Directors, shall have been
received by Gold Kist, the Certificates, upon proper execution, authentication
by the Trustee and delivery, will be legally issued, fully paid and
nonassessable and will constitute binding obligations of Gold Kist entitled to
the benefits of the Indentures under which such Certificates are
1
<PAGE>
The Board of Director
of Gold Kist Inc.
September 23, 1998
Page 2
issued, respectively, except as enforceability of the certificates might be
limited by bankruptcy, insolvency, reorganization, moratorium and other laws
relating to or affecting the rights of creditors generally and the availability
of equitable remedies, whether considered in a proceeding in equity or at law.
We consent to the inclusion of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Opinion" in the Prospectus forming part of the Registration Statement.
We also consent to the use of this opinion as an exhibit to the Applications
for Registration of the Certificates which may be filed with the Securities
Commissioners of the various states of the United States of America.
Very truly yours,
ALSTON & BIRD
By: /s/ Alexander W. Patterson
--------------------------
Alexander W. Patterson
<PAGE>
GOLD KIST INC.
RATIO OF NET MARGINS TO FIXED CHARGES
For the Five Years Ended June 27, 1998
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998
------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Fixed Charges:
Debt interest $ 2,788 5,562 6,477 10,666 26,910
Interest portion of rents 3,764 3,877 3,755 4,920 10,954
------- ------- ------- ------- --------
Total $ 6,552 9,439 10,232 15,586 37,864
======= ======= ======= ======= ========
Margins (loss) from continuing operations before
income taxes, minority interest and cumulative
effect of change in accounting principle $47,153 19,210 56,885 8,605 (92,159)
Deduct: Equity in Gain (Loss) of less than
50% owned affiliates (453) (21) 1,621 4,855 4,674
Add: Earnings distributed by less than
50% owned partnership 1,770 653 697 0 5,807
------- ------- ------- ------- --------
$49,376 $19,884 $55,961 $ 3,750 $(91,026)
Fixed charges 6,552 9,439 10,232 15,586 37,864
------- ------- ------- ------- --------
Subtotal 55,928 29,323 66,193 19,336 (53,162)
Divided by fixed charges 6,552 9,439 10,232 15,586 37,864
------- ------- ------- ------- --------
Ratio 8.54 3.11 6.47 1.24 (1.40)
======= ======= ======= ======= ========
</TABLE>
<PAGE>
EXHIBIT 23(a)
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.
ALSTON & BIRD
<PAGE>
EXHIBIT 23(B)
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.
/s/ KPMG Peat Marwick LLP
----------------------------
KPMG Peat Marwick LLP
Atlanta, Georgia
September 23, 1998
<PAGE>
EXHIBIT 23(C)
CONSENT OF ERNST & YOUNG LLP
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 28, 1998 with respect to the consolidated financial statements of Golden
Peanut Company and Subsidiaries (not included separately herein) in the
Registration Statement (Form S-2) and related prospectus of Gold Kist Inc. for
the registration of subordinated capital and loan certificates.
/s/ Ernst & Young LLP
---------------------
Ernst & Young LLP
Atlanta, Georgia
September 23, 1998
<PAGE>
CONSENT OF QUALIFIED INDEPENDENT UNDERWRITER
We consent to the reference to our firm under the caption "Qualified
Independent Underwriter" in the Prospectus.
/s/ Interstate/Johnson Lane Corporation
---------------------------------------
INTERSTATE/JOHNSON LANE CORPORATION
September 24, 1998
<PAGE>
EXHIBIT 25
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an Application to Determine
Eligibility of a Trustee Pursuant to Section 305(b)(2) [ ]
SUNTRUST BANK, ATLANTA
(Exact name of trustee as specified in its charter)
GEORGIA BANKING CORPORATION 58-0466330
(Jurisdiction of incorporation or organization (I.R.S. Employer
if not a U.S. national bank) Identification No.)
25 PARK PLACE, N.E.
ATLANTA, GEORGIA 30303
(Address of principal executive offices) (Zip code)
SANDRA THOMPSON
SUNTRUST BANK, ATLANTA
3495 PIEDMONT ROAD BUILDING 10, SUITE 810
ATLANTA, GEORGIA 30305
(404) 240-1934
(Name, address and telephone number of agent for service)
----------------------
GOLD KIST INC.
(Exact name of obligor as specified in its charter)
GEORGIA 58-0255560
(State or other jurisdiction of (I.R.S. Employee
incorporation or organization) Identification No.)
244 PERIMETER CENTER PARKWAY, N.E.
ATLANTA, GEORGIA 30346
(Address of principal executive offices) (Zip Code)
----------------------
DEBT SECURITIES
(Title of the indenture securities)
================================================================================
<PAGE>
ITEM 1. GENERAL INFORMATION.
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH
IT IS SUBJECT.
Department of Banking and Finance,
State of Georgia,
Atlanta, Georgia
Federal Reserve Bank of Atlanta
104 Marietta Street, N.W.
Atlanta, Georgia
Federal Deposit Insurance Corporation
Washington, D.C.
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
None.
ITEM 3. VOTING SECURITIES OF THE TRUSTEE.
Not Applicable.
ITEM 4. TRUSTEESHIPS UNDER OTHER INDENTURE.
Not Applicable.
ITEM 5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH THE OBLIGOR OR
UNDERWRITERS.
Not Applicable.
ITEM 6. VOTING SECURITIES OF THE TRUSTEE OWNED BY THE OBLIGOR OR ITS OFFICIALS.
Not Applicable.
<PAGE>
ITEM 7. VOTING SECURITIES OF THE TRUSTEE OWNED BY UNDERWRITERS OR THEIR
OFFICIALS.
Not Applicable.
ITEM 8. SECURITIES OF THE OBLIGOR OWNED OR HELD BY THE TRUSTEE.
Not Applicable.
ITEM 9. SECURITIES OF UNDERWRITERS OWNED OR HELD BY THE TRUSTEE.
Not Applicable.
ITEM 10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES OF
CERTAIN AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR.
Not Applicable.
ITEM 11. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF A PERSON
OWNING 50 PERCENT OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR.
Not Applicable.
ITEM 12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE.
Not Applicable.
ITEM 13. DEFAULTS BY THE OBLIGOR.
(a) Whether there is or has been a default with respect to the securities
under this indenture.
There is not and has not been any such default.
(b) If the trustee is a trustee under another indenture under which any
other securities, or certificates of interest or participation in any
other securities, of the obligor are outstanding, or is trustee for
more than one outstanding series of securities under the indenture,
state whether there has been a default under any such indenture or
series.
There has not been any such default.
-2-
<PAGE>
ITEM 14. AFFILIATIONS WITH THE UNDERWRITERS.
Not Applicable.
ITEM 15. FOREIGN TRUSTEE.
Not Applicable.
ITEM 16. LIST OF EXHIBITS.
The additional exhibits listed below are filed herewith: exhibits, if any,
identified in parentheses are on file with the Commission and are incorporated
herein by reference as exhibits hereto pursuant to Rule 7a-29 under the Trust
Indenture Act of 1939 and Rule 24 of the Commission's Rules of Practice.
Exhibit
Number
- -------
1 - A copy of the Articles of Amendment and Restated Articles of
Incorporation of the trustee as now in effect. (Exhibit 1 to Form T-1,
Registration No. 33-63523).
2 - A copy of the certificate of authority of the trustee to commence
business. (Included in Exhibit 1).
3 - A copy of the authorization of the trustee to exercise trust powers.
(Included in Exhibit 1).
4 - Bylaws of the Trustee (Exhibit 4 to Form T-1, Registration No. 33-
49283).
5 - Not applicable.
6 - Consent of the trustee required by Section 321(b) of the Trust
Indenture Act of 1939, as amended.
7 - Latest report of condition of the Trustee published pursuant to law or
the requirements of its supervising or examining authority as of the
close of business on June 30, 1998.
8 - Not applicable.
9 - Not applicable.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, SunTrust Bank, Atlanta, a Georgia banking corporation, has duly caused
this statement of eligibility and qualification to be signed on its behalf by
the undersigned, thereunto duly authorized, all in the City of Atlanta, and
State of Georgia, on the 24th day of September, 1998.
SUNTRUST BANK, ATLANTA
By: /s/ Sandra Thompson
-------------------
Sandra Thompson
Vice President
By: /s/ Kristine Prall
-------------------
Kristine Prall
Trust Officer
-4-
<PAGE>
EXHIBIT 6
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture Act
of 1939, as amended, in connection with the proposed issue of Debt Securities by
Gold Kist Inc., we hereby consent that reports of examination by Federal, State,
Territorial or District authorities may be furnished by such authorities to the
Securities and Exchange Commission upon request therefor.
SUNTRUST BANK, ATLANTA
By: /s/ Sandra Thompson
-------------------
Sandra Thompson
Vice President
Dated: September 24, 1998
By: /s/ Kristine Prall
-------------------
Kristine Prall
Trust Officer
-5-
<PAGE>
EXHIBIT 7
Board of Governors of the Federal Reserve System
OMB Number: 7100-0036
Federal Deposit Insurance Corporation
OMB Number: 3064-0052
Office of the Comptroller of the Currency
OMB Number: 1557-0081
Expires March 31, 2001
FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL
CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR
A BANK WITH DOMESTIC AND FOREIGN OFFICES - FFIEC 031
REPORT AT THE CLOSE OF BUSINESS JUNE 30, 1998
This report is required by law: 12 U.S.C. (S)324 (State member banks); 12 U.S.C.
(S)1817 (State nonmember banks); and 12 U.S.C. (S)161 (National banks).
(19980630)
- -----------
(RCRI 9999)
This report form is to be filed by banks with branches and consolidated
subsidiaries in U.S. territories and possessions, Edge or Agreement susidiaries,
foreign branches, consolidated foreign subsidiaries, or International Banking
Facilities.
- -----------------------------------------------------------------------------
NOTE: The Reports of Condition and Income must be signed by an authorized
officer and the Report of Condition must be attested to by not less than two
directors (trustees) for State nonmember banks and three directors for State
member and National banks.
I,
----------------------------------------------------
Name and Title of Officer Authorized to Sign Report
of the named bank do hereby declare that the Reports of Condition and Income
(including the supporting schedules) for this report date have been prepared in
conformance with the instructions issued by the appropriate Federal regulatory
authority and are true to the best of my knowledge and belief.
/s/ Russell L. Hunter
- -----------------------------------------------------
Signature of Officer Authorized to Sign Report
7/29/98
- -----------------------------------------------------
Date of Signature
The Reports of Condition and Income are to be prepared in accordance with
Federal regulatory authority instructions.
We, the undersigned directors (trustees), attest to the correctness of the
Report of Condition (including the supporting schedules) for this report date
and declare that it has been examined by us and to the best of our knowledge and
belief has been prepared in conformance with the instructions issued by the
appropriate Federal regulatory authority and is true and correct.
/s/ Robert R. Long
- ----------------------------------------------------
Director (Trustee)
/s/ R. W. Courts, II
- ----------------------------------------------------
Director (Trustee)
/s/ L. Phillip Humann
- ----------------------------------------------------
Director (Trustee)
- ------------------------------------------------------------------------------
SUBMISSION OF REPORTS
Each bank must prepare its Reports of Condition and Income either:
(a) in electronic form and then filed the computer data file directly with the
banking agencies' collection agent, Electronic Data Systems Corporation
(EDS), by modem or on computer diskette; or
(b) in hard-copy (paper) form and arrange for another party to convert the
paper report to electronic form. That party (if other than EDS) must
transmit the bank's computer data file to EDS.
For electronic filing assistance, contact EDS Call Report Services, 2150 N.
Prospect Ave., Milwaukee, WI 53202, telephone (800) 255-1571.
To fulfill the signature and attestation requirement for the Reports of
Condition and Income for this report date, attach this signature page to the
hard-copy record of the completed report that the bank places in its files.
- -------------------------------------------------------------------------------
FDIC Certificate Number | | | | | |
--------------------------
(1) CBI 90501
- ---------------------------------------------------
Legal Title of Bank (TEXT 9010)
- ---------------------------------------------------
City (TEXT 9130)
- ---------------------------------------------------
State Abbrev. (TEXT 9200) ZIP Code (TEXT ????)
<PAGE>
REPORT OF CONDITION
- -------------------------------------------------------------------------------
Consolidating domestic subsidiaries of the
SUNTRUST BANK ATLANTA
in the state of GA at the close of business on June 30, 1998
published in response to call made by (Enter additional information below)
__________________________________________________________________
4769 | |
__________________________________________________________________
4769 | |
__________________________________________________________________
STATEMENT OF RESOURCES AND LIABILITIES
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
____________________________________________________________________________________________________________
<S> <C>
ASSETS
Cash and balances due from depository institutions:
____________
Noninterest-bearing balances and currency and coin | 1,251,852 |
____________
Interest-bearing balances | 5,142 |
____________
Securities:
____________
Held-to-maturity securities | 0 |
____________
Available-for-sale securities | 3,586,729 |
____________
Federal funds sold and securities purchased under agreements to resell | 1,277,270 |
____________
Loans and lease financing receivables:
____________
Loans and leases, net of unearned income | 11,169,988 |
____________
LESS: Allowance for loan and lease losses | 135,758 |
____________
LESS: Allocated transfer risk reserve | 0 |
____________ ____________
Loans and leases, net of unearned income, allowance, and reserve | 11,034,230 |
____________
Trading Assets | 22,211 |
____________
Premises and fixed assets (including capitalized leases) | 100,156 |
____________
Other real estate owned | 1,919 |
____________
Investments in unconsolidated subsidiaries and associated companies | 12,664 |
____________
Customers' liability to this bank on acceptances outstanding | 373,600 |
____________
Intangible assets | 15,777 |
____________
Other assets | 166,401 |
____________
Total assets | 17,846,951 |
____________
</TABLE>
<PAGE>
REPORT OF CONDITION (CONTINUED)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
LIABILITIES
(Dollar Amounts in Thousands)
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
DEPOSITS
In domestic offices 7,037,048
Noninterest-bearing 3,029,162
Interest-bearing 4,007,886
In foreign offices, Edge and Agreement subsidiaries, and IBFs 1,518,531
Noninterest-bearing 0
Interest-bearing 1,518,531
Federal funds purchased and securities sold under agreements to repurchase 3,688,681
Demand notes issued to the U.S. Treasury 0
Trading liabilities 0
Other borrowed money:
With remaining maturity of one year or less 967,040
With a remaining maturity of more than one year through three years 2,540
With a remaining maturity of more than three years 0
Bank's liability on acceptances executed and outstanding 373,600
Subordinated notes and debentures 250,000
Other liabilities 1,305,100
----------
Total liabilities 15,142,540
==========
EQUITY CAPITAL
Perpetual preferred stock and related surplus 0
Common stock 21,601
Surplus 703,406
Undivided profits and capital reserves 648,298
Net unrealized holding gains (losses) on available-for-sale securities 1,331,106
Cumulative foreign currency translation adjustments 0
----------
Total equity capital 2,704,411
----------
Total liabilities and equity capital 17,846,951
==========
I,
We, the undersigned directors, attest to the 4769
correctness of this statement of resources and --------------------------------------------------
liabilities. We declare that it has been examined (Name, Title)
by us, and to the best of our knowledge and of the above named bank do hereby declare
belief has been prepared in conformance that this Report of Condition is true and
with the instructions and is true and correct. correct to the best of my knowledge and belief.
Text
----
4769
Director #1
--------------------------------------------- -------------------------------------------
Director #2
--------------------------------------------- -------------------------------------------
Director #3
--------------------------------------------- --------------------------------------------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-27-1998
<PERIOD-START> JUN-27-1997
<PERIOD-END> JUN-27-1998
<CASH> 11,789
<SECURITIES> 0
<RECEIVABLES> 111,070
<ALLOWANCES> 3,113
<INVENTORY> 174,204
<CURRENT-ASSETS> 619,675
<PP&E> 594,157
<DEPRECIATION> 338,366
<TOTAL-ASSETS> 1,080,655
<CURRENT-LIABILITIES> 470,096
<BONDS> 320,600
0
0
<COMMON> 33
<OTHER-SE> 233,973
<TOTAL-LIABILITY-AND-EQUITY> 1,080,655
<SALES> 1,651,115
<TOTAL-REVENUES> 1,663,822
<CGS> 1,662,376
<TOTAL-COSTS> 1,662,376
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 3,113
<INTEREST-EXPENSE> 26,910
<INCOME-PRETAX> (92,159)
<INCOME-TAX> (35,123)
<INCOME-CONTINUING> (57,036)
<DISCONTINUED> (45,752)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (102,788)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
