<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 19, 1994
REGISTRATION NO. 33-54137
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------
DOSKOCIL COMPANIES INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C>
DELAWARE 13-2535513
(State or other
jurisdiction of (I.R.S. Employer
incorporation or Identification
organization) No.)
</TABLE>
2601 NORTHWEST EXPRESSWAY
SUITE 1000W
OKLAHOMA CITY, OKLAHOMA 73112
(405) 879-5500
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
DARIAN B. ANDERSEN, ESQ.
SECRETARY AND CORPORATE COUNSEL
2601 NORTHWEST EXPRESSWAY
SUITE 1000W
OKLAHOMA CITY, OKLAHOMA 73112
(405) 879-5500
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
COPY TO:
J. GREGORY MILMOE, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
919 THIRD AVENUE
NEW YORK, NEW YORK 10022
(212) 735-3000
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If the only Securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.
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/
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILE 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>
SUBJECT TO COMPLETION DATED AUGUST 19, 1994
PROSPECTUS
SHARES OF COMMON STOCK
DOSKOCIL COMPANIES INCORPORATED
Issuable Upon Exercise of
Rights to Subscribe for Such Shares
------------------------
Doskocil Companies Incorporated (the "Company") is issuing to its
stockholders and warrantholders of record ("Recordholders") as of the close of
business on , 1994 (the "Record Date") transferable rights
("Rights") entitling the holders thereof ("Holders") to purchase an aggregate of
shares (the "Underlying Shares") of the Company's Common Stock, par value
$.01 per share (the "Common Stock"). It is currently estimated that the exercise
price will be between $9 and $10 per share (the "Exercise Price"). Recordholders
will receive Rights for each share of Common Stock held or acquirable upon
the exercise of warrants. As soon as practicable after the Record Date,
certificates evidencing the Rights (the "Rights Certificates") will be delivered
to the Recordholders. No fractional Rights or cash in lieu thereof will be
issued or paid by the Company. The number of Rights issued by the Company to
each Recordholder will be rounded up to the nearest whole number. Pursuant to
their basic subscription privilege, Rights holders may purchase one full share
of Common Stock for each whole Right held (the "Basic Subscription Privilege"),
subject to reduction by the Company for the purpose of avoiding the loss of
certain federal income tax benefits to the Company. Recordholders who fully
exercise all Rights issued to them by the Company also will be eligible to
subscribe at the Exercise Price for shares of Common Stock that are not
otherwise purchased pursuant to the exercise of Rights up to the total number of
Underlying Shares (the "Oversubscription Privilege"), subject to reduction by
the Company for the purpose of avoiding the loss of certain federal income tax
benefits to the Company. If an insufficient number of Underlying Shares is
available to satisfy fully all elections to exercise the Oversubscription
Privilege, then the available shares will be prorated among those who exercise
the Oversubscription Privilege based upon the number of Rights exercised by
those Holders pursuant to the Basic Subscription Privilege. Payments received
for Underlying Shares which are not available for purchase will be promptly
returned by the independent exercise agent, American Stock Transfer & Trust
Company (the "Exercise Agent"), without interest. The Rights are evidenced by
transferable certificates.
The Rights will expire at 5:00 p.m., New York City time, on ,
1994, unless extended as described herein (the "Expiration Date"). A Holder may
exercise Rights by delivering his properly completed and executed Rights
Certificate (or following the procedures for guaranteed delivery set forth
herein), together with payment in full of the Exercise Price for each Underlying
Share subscribed for pursuant to the Basic Subscription Privilege and the
Oversubscription Privilege, to the Exercise Agent by the Expiration Date.
Joseph Littlejohn & Levy Fund, L.P. (together with its affiliates, "JLL"),
the holder of approximately 27% of the currently outstanding shares of Common
Stock, has agreed that JLL will exercise its Basic Subscription Privilege in
full. Further, JLL has agreed that it will exercise its Oversubscription
Privilege to the extent necessary to assure that the Company receives gross
proceeds of $30 million. JLL's exercise of its Basic Subscription Privilege and
its Oversubscription Privilege is subject to reduction by the Company in order
to avoid the loss of certain Federal income tax benefits to the Company. In the
event that no Holder other than JLL exercises Rights, the Company intends to
reduce the number of Underlying Shares issuable to JLL such that the Company
would receive approximately $23.7 million in gross proceeds from the Rights
Offering (based upon an Exercise Price of $9.50 per share).
The Common Stock is traded on the NASDAQ National Market System under the
symbol DOSK. On June 13, 1994, the last full day of trading before the
announcement of the Rights Offering, the last reported sale price of the Common
Stock on the NASDAQ National Market System was $10 7/8. On , 1994, the
last full day of trading before the effective date of the Registration
Statement, the last reported sale price of the Common Stock on the NASDAQ
National Market System was $ . Application has been made to include the
Rights for trading on the NASDAQ National Market System.
Questions or requests for assistance or for additional copies of this
Prospectus may be directed to the Exercise Agent at (800) 937-5449.
------------------------
FOR INFORMATION CONCERNING CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY
HOLDERS OF RIGHTS IN CONSIDERING AN INVESTMENT IN THE COMMON STOCK, SEE "RISK
FACTORS."
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
EXERCISE DEALER MANAGER AND PROCEEDS TO
PRICE SOLICITING FEES COMPANY (1)
<S> <C> <C> <C>
Per Share............. $ (2) $
Total Minimum (3)..... $ (2) $
Total Maximum (3)..... $ (2) $
<FN>
(1) Before deduction of estimated expenses of this offering, including Dealer
Manager fees and Soliciting Dealer fees, estimated at $1.3 million.
(2) See "Plan of Distribution" for information regarding the Dealer Managers'
fee and commissions payable to soliciting dealers in connection with this
offering. No fees or commissions are payable in respect of Underlying
Shares acquired
by JLL.
(3) "Maximum" assumes that all of the Rights issued will be exercised.
"Minimum" assumes that no Holder other than JLL exercises Rights and that
the Company decreases the number of Underlying Shares issuable to JLL such
that the Company receives gross proceeds of approximately $23.7 million.
</TABLE>
The Dealer Managers for this offering are:
MERRILL LYNCH & CO. JOHNSON RICE & COMPANY
The date of this Prospectus is , 1994.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information may be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549; Seven World Trade Center, 13th
Floor, New York, New York 10007; and Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such material can be obtained at
prescribed rates from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549. In addition, material filed by the
Company can be inspected at the offices of the National Association of
Securities Dealers, Inc. at 1735 K Street, N.W., Washington, D.C., 20006
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
This Prospectus incorporates by reference certain documents relating to the
Company which are not delivered herewith. These documents (other than the
exhibits to such documents, unless such exhibits are specifically incorporated
by reference into such documents) are available without charge, on oral or
written request by any person to whom this Prospectus is delivered. Written or
telephone requests should be directed to Darian B. Andersen, Esq., Secretary and
Corporate Counsel, 2601 Northwest Expressway, Suite 1000W , Oklahoma City,
Oklahoma 73112 (405) 879-5500.
The following documents, which have been filed by the Company with the
Commission, are hereby incorporated by reference in this Prospectus:
(i) The Company's Annual Report on Form 10-K for the fiscal year ended
January 1, 1994 as amended by Form 10-K/A No. 1, filed on June 29, 1994
and Form 10-K/A No. 2, filed on July 22, 1994;
(ii) The Company's Current Report on Form 8-K dated March 17, 1994;
(iii) The Company's Quarterly Report on Form 10-Q for the quarterly period
ended April 2, 1994, as amended by Form 10-Q/A No. 1, filed on July 22,
1994;
(iv) The Company's Current Report on Form 8-K dated May 25, 1994;
(v)_The Company's Quarterly Report on Form 10-Q for the quarterly period
ended July 2, 1994 as amended by Form 10-Q/A No. 1, filed on August 18,
1994;
(vi) The Company's Current Report on Form 8-K dated June 1, 1994; and
(vii)_The Company's Current Report on Form 8-K dated August 15, 1994.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Common Stock shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from the
respective dates of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein, or in any other subsequently filed
documents that also is or is deemed to be incorporated by reference herein,
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
-------------------
2
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND CONSOLIDATED FINANCIAL STATEMENTS APPEARING ELSEWHERE OR
INCORPORATED BY REFERENCE HEREIN.
THE COMPANY
The Company produces, markets and distributes branded and processed food
products under proprietary brand names that include Wilson Foods-R-, Corn
King-R-, Wilson's Continental Deli-R-, American Favorite-TM-, Doskocil
Foods-TM-, Jefferson Meats-TM-, Fred's-R-, Rotanelli's-R-, Posada-R- and Butcher
Boy-R-. The Company's products include pepperoni and beef and pork toppings
marketed to the pizza industry as well as boneless hams, sausage, bacon,
appetizers, Mexican and Italian foods, and other branded and processed products
for the foodservice, delicatessen and retail markets.
THE ACQUISITION
On June 1, 1994, the Company acquired the Frozen Specialty Foods division of
International Multifoods Corporation ("IMC") for approximately $136 million (the
"Acquisition"). The Acquisition was financed with borrowings under a $186
million senior secured credit facility with Chemical Bank (the "New Credit
Agreement"). Following the Acquisition, the Frozen Specialty Foods business was
renamed "Doskocil Specialty Brands Company" ("Specialty Brands"). Specialty
Brands, with revenues for the fiscal year ended February 28, 1994 of
approximately $185 million, is a processor and marketer of prepared frozen food
products for the foodservice and consumer markets. Major products, most of which
are branded, include ethnic foods, appetizers, entrees and portion meats.
Specialty Brands' ethnic products include Mexican and Italian foods such as
burritos and pasta. The majority of these products is sold to the foodservice
industry. A portion of the Mexican products is also sold to the retail industry.
Specialty Brands' products are sold nationally through a network of 73
foodservice brokers and 73 retail brokers. A direct sales force of 30 manages
the broker organizations. The six processing facilities in New York, Missouri,
Indiana, New Mexico and California produce approximately 140 million pounds of
frozen food product annually.
The Company's objective is to increase revenue and earnings growth rates
through both internal means and appropriate acquisitions in a manner that will
continue to improve the level and consistency of profitability. The key elements
of the Company's strategy include: (i) becoming a broad-based food company by
diversifying and expanding into complementary product lines; (ii) expanding
market share in the growing food service and deli markets; (iii) continuing
emphasis on higher margin processed food products; and (iv) upgrading and
rationalizing manufacturing and distribution operations. Implementation of these
strategies will focus the Company's business on higher growth and higher margin
food segments thereby transforming the Company from a meat processor to a
broad-based food company. The Company believes that the Acquisition furthers its
objective.
RECENT EVENTS
The Company named R. Randolph Devening as its Chairman of the Board,
President and Chief Executive Officer effective August 15, 1994. Mr. Devening
was formerly Vice Chairman and Chief Financial Officer of Fleming Companies,
Inc. ("Fleming"), which is the second largest food marketing and distribution
company in the United States and one of the Company's largest customers.
THE RIGHTS OFFERING
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Rights............................ Each record holder of Common Stock and warrants to
acquire Common Stock ("Warrants") at the close of
business on the Record Date ("Recordholders") will
receive transferable Rights for each share of Common
Stock held of record or acquirable upon exercise of
Warrants on the Record Date. The number of Rights
distributed to each Recordholder will be rounded up to
the nearest whole number and no fractional Rights
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
or cash in lieu thereof will be distributed or paid.
Each whole Right entitles the holder thereof to purchase
from the Company one share of Common Stock (an
"Underlying Share"). An aggregate of approximately
shares of Common Stock will be sold in this offering
upon the exercise of Rights, assuming the exercise of
all Rights. The distribution of Rights and the sale of
shares of Common Stock upon the exercise of Rights or
pursuant to the Oversubscription Privilege are referred
to herein as the "Rights Offering."
Exercise Price.................... $ per share of Common Stock (the "Exercise Price").
Basic Subscription Privilege...... Rights holders ("Holders") are entitled to purchase for
the Exercise Price one Underlying Share for each whole
Right held, subject to reduction by the Company for the
purpose of avoiding the loss of certain federal income
tax benefits to the Company as described below. See "The
Rights Offering--Subscription Privileges--Basic
Subscription Privilege."
Oversubscription Privilege........ Each Holder who elects to exercise his Basic
Subscription Privilege in full may also subscribe at the
Exercise Price for additional shares of Common Stock up
to the total number of Underlying Shares, subject to
reduction by the Company for the purpose of avoiding the
loss of certain federal income tax benefits to the
Company as described below. If an insufficient number of
Underlying Shares is available to satisfy fully all
elections to exercise the Oversubscription Privilege,
then the available Underlying Shares will be prorated
among Holders who exercise their Oversubscription
Privilege based upon the respective numbers of Rights
exercised by those Holders pursuant to the Basic
Subscription Privilege. See "The Rights Offering--
Subscription Privileges--Oversubscription Privilege."
Potential Reduction............... If the Company believes that the issuance of Underlying
Shares pursuant to the Basic Subscription Privilege or
Oversubscription Privilege will have an adverse effect
upon the Company's ability to utilize certain federal
income tax benefits, then the Company will have the
right to reduce the number of Underlying Shares issuable
to all Holders exercising the Basic Subscription
Privilege or the Oversubscription Privilege, pro rata,
or to any individual Holder whose exercise of the Basic
Subscription Privilege or the Oversubscription Privilege
may create such adverse effect, to the extent necessary
in the opinion of the Company to avoid such adverse
effect. See "Risk Factors--Continuation of Net Operating
Loss Carryforwards" and "The Rights Offering--
Subscription Privileges--Oversubscription Privilege."
Method of Exercising Rights....... A Holder may exercise Rights by properly completing and
signing the certificate evidencing the Rights (a "Rights
Certificate") and forwarding such Rights Certificate (or
following the Guaranteed Delivery Procedures described
herein), with payment of the full Exercise Price for
each Underlying Share subscribed for, pursuant to the
Basic Subscription Privilege and the Oversubscription
Privilege, to American Stock Transfer & Trust Company,
as Exercise Agent, on or prior to the Expiration Date.
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
IF REGULAR MAIL IS USED TO FORWARD RIGHTS CERTIFICATES,
IT IS RECOMMENDED THAT INSURED, REGISTERED MAIL BE USED.
See "The Rights Offering--Method of Exercising Rights."
No interest will be paid on funds delivered in payment
of the Exercise Price.
Record Date....................... , 1994.
Expiration Date................... 5:00 p.m., New York City time, on , 1994,
unless extended by the Company at its option.
No Revocation..................... HOLDERS WHO EXERCISE THEIR RIGHTS WILL NOT BE ENTITLED
TO REVOKE THEIR SUBSCRIPTIONS.
Transferability................... Rights are transferable until the Expiration Date and,
if a market for the Rights develops, may be traded on
the NASDAQ National Market System until the close of
business on the Expiration Date. There can be no
assurance that a market for the Rights will develop. See
"The Rights Offering--Method of Transferring Rights."
Amendments; Termination........... The Company reserves the right to amend the terms and
conditions of the offering made hereby or to terminate
the Rights Offering at any time prior to delivery of the
shares of Common Stock offered hereby. See "The Rights
Offering--Amendments and Waivers; Termination."
Procedure for Foreign Holders..... Rights Certificates will not be mailed to holders of
Common Stock or Warrants whose addresses are outside the
United States and Canada, or who have an Army Post
Office ("APO") or Fleet Post Office ("FPO") address but
will be held by the Exercise Agent for their account. To
exercise the Rights represented thereby, such holders
must notify the Exercise Agent on or prior to
, 1994. See "The Rights Offering--Foreign
Stockholders."
Persons Holding Shares Through
Others.......................... Persons holding shares of Common Stock and receiving the
Rights distributable with respect thereto through a
broker, dealer, commercial bank, trust company or other
nominee should promptly contact the appropriate
institution or nominee and request it to effect the
transactions for them. See "The Rights
Offering--Exercise of Rights."
Certain Tax Consequences.......... Generally, Holders will not recognize any gain or loss
upon receipt or exercise of Rights. See "Certain United
States Federal Income Tax Consequences."
Shares Currently Outstanding...... 7,940,168 as of August 5, 1994.
Shares Outstanding After the
Rights Offering................. 13,203,326, assuming that all Rights are exercised at an
Exercise Price of $9.50 per share (the midpoint of the
range of Exercise Prices set forth on the cover page of
this Prospectus) (the "Maximum Subscription");
10,429,868, assuming that the number of Rights exercised
is such that the Company receives approximately $23.7
million in gross proceeds and that such Rights are
exercised at an Exercise Price of $9.50 per share (the
"Minimum Subscription").
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
Exercise Agent.................... American Stock Transfer & Trust Company is acting as the
Exercise Agent. See "The Rights Offering--Exercise
Agent" for addresses and information relating to the
delivery of Rights Certificates and the payment of the
Exercise Price. The Exercise Agent is acting as the
information agent for the Rights Offering. The Exercise
Agent's toll-free telephone number is (800) 937-5449.
Use of Proceeds................... The purpose of the Rights Offering is to strengthen the
Company's capital structure and enhance its ability to
obtain future financing so as to enable the Company to
continue its growth through both internal means and
appropriate acquisitions. The net proceeds to the
Company from the sale of the Underlying Shares will be
between approximately $22.7 million and $48.5 million
depending on the number of Rights exercised. The Company
intends to use such net proceeds to repay indebtedness
under the New Credit Agreement, subject to the execution
of an amendment to such agreement which would, among
other things, permit the Company to reborrow certain
amounts repaid under the term loan facility of the New
Credit Agreement. In the event that such an amendment is
not executed, the Company intends to use $10 million of
the net proceeds to repay indebtedness under the New
Credit Agreement and the balance thereof for general
corporate purposes. See "Use of Proceeds."
Principal Stockholder............. Joseph Littlejohn & Levy Fund, L.P. (together with its
affiliates, "JLL"), the holder of approximately 27% of
the currently outstanding shares of Common Stock, has
agreed that JLL will exercise its Basic Subscription
Privilege in full. In addition, JLL has agreed that it
will exercise its Oversubscription Privilege to the
extent necessary to assure that the Company receives
gross proceeds of $30 million. JLL's exercise of its
Basic Subscription Privilege and its Oversubscription
Privilege is subject to reduction by the Company in
order to avoid the loss of certain Federal income tax
benefits to the Company. In the event that no Holder
other than JLL exercises Rights, the Company intends to
reduce the number of Underlying Shares issuable to JLL
such that the Company would receive approximately $23.7
million in gross proceeds from the Rights Offering
(based upon an Exercise Price of $9.50 per share).
Accordingly, although JLL will subscribe for Underlying
Shares having an aggregate Exercise Price of $30
million, it will be required to pay $23.7 million of the
Exercise Price in respect of such Underlying Shares on
or prior to the Expiration Date. As soon as practicable
after the Expiration Date, the Company will notify JLL
of the additional Exercise Price, if any, that is
payable in respect of Underlying Shares that will be
issuable to JLL. JLL will remit payment for such
Underlying Shares to the Exercise Agent within three
days of receipt of such notice.
NASDAQ National Market System
Symbols......................... Common Stock--"DOSK"; Rights--"DOSKR."
</TABLE>
See "Risk Factors" for a discussion of certain factors that should be
considered by Holders in evaluating an investment in Common Stock.
6
<PAGE>
RISK FACTORS
In addition to the other information included in this Prospectus, the
following factors should be considered carefully by each prospective purchaser
of the Common Stock.
ABSENCE OF PROFITABLE OPERATIONS
The Company realized a $2 million net loss during the six months ended July
2, 1994, a $32 million net loss in fiscal 1993 and a $27 million net loss in
fiscal 1992 as a result of an extraordinary charge of approximately $1 million
due to the early extinguishment of debt during fiscal 1994, a one-time charge to
earnings of approximately $34.4 million in fiscal 1993 in connection with
recognition of certain retiree medical benefit expenses and a provision of $32
million for plant closings in fiscal 1992, respectively. There can be no
assurance that the Company will be profitable in future periods.
LEVERAGE
The Company currently has a significant amount of outstanding indebtedness.
At July 2, 1994, the Company had long-term indebtedness (excluding current
maturities) of approximately $262.1 million and, on a pro forma basis, at July
2, 1994, after giving effect to the Rights Offering (assuming the Minimum
Subscription and Maximum Subscription), the Company would have had long-term
indebtedness of approximately $250.6 million and $230.6 million, respectively.
The degree to which the Company is leveraged could have important
consequences to the Company, including: (i) increased vulnerability to adverse
general economic and industry conditions, (ii) impaired ability to obtain
additional financing for future working capital, capital expenditures,
acquisitions, general corporate purposes or other purposes, and (iii) dedication
of a substantial portion of the Company's cash flow from operations to the
payment of principal and interest on indebtedness, thereby reducing the funds
available for operations and future business opportunities. In addition, the New
Credit Agreement contains certain covenants which could limit the Company's
operating and financial flexibility.
CONTINUATION OF NET OPERATING LOSS CARRYFORWARDS
The Company currently has net operating loss carryforwards for Federal
income tax purposes of approximately $133 million. Acquisitions of Common Stock
by persons who are not currently holders of Common Stock, or by current holders
whose acquisition would increase or maintain their equity ownership in the
Company above five percent, could result in an "ownership change" within the
meaning of section 382 of the Internal Revenue Code of 1986, as amended (the
"Code"), thereby imposing an annual limitation (the "Section 382 Limitation") on
the Company's ability to utilize the net operating loss carryforward to reduce
future taxable income. Specifically, in the event of an "ownership change," the
Company's utilization of its net operating loss carryforwards would be limited
to an annual amount equal to the product of the equity value of the Company at
the time of such "ownership change" (subject to reduction with respect to
certain recent increases in value) multiplied by the long-term tax-exempt rate
as published monthly by the Internal Revenue Service, without extending the
expiration date of the net operating loss carryforwards. The long-term
tax-exempt rate is currently 6.01%; such rate, however, is subject to change,
and it is impossible to predict whether the equity value of the Company and such
rate will increase or decrease, and to what extent. See "Certain United States
Federal Income Tax Consequences--Tax Consequences to Company."
If the Company believes that the issuance of Underlying Shares pursuant to
the Basic Subscription Privilege or the Oversubscription Privilege will cause an
"ownership change," then the Company will have the right to reduce the number of
Underlying Shares issuable to all holders exercising the Basic Subscription
Privilege or the Oversubscription Privilege, pro rata, or to any individual
Holder or Holders whose exercise of the Basic Subscription Privilege or the
Oversubscription Privilege may cause an "ownership change," to the extent
necessary in the sole discretion of the Company to prevent such "ownership
change." Notwithstanding the foregoing, the Rights Offering increases the
likelihood that an "ownership change" will occur in the future, and it is
impossible for the Company to ensure that such "ownership change," will not
occur, in part because the Company has no ability to restrict the acquisition or
disposition of Common Stock by persons whose ownership could cause an "ownership
change." In addition, the Company may in the future take certain actions which
could give rise to an ownership change, if in the exercise of the business
judgment
7
<PAGE>
of the Company such actions are necessary or appropriate. If an "ownership
change" were to occur subsequent to the Rights Offering, the Section 382
Limitation could have a material adverse impact upon the Company's earnings and
upon the Company's cash flow.
RAW MATERIAL AND PRICING CONSIDERATIONS
The Company's results of operations and financial condition are affected by
the cost and supply of raw materials, including pork, beef, poultry and produce,
and by the selling prices for some of its products, both of which are determined
by constantly changing market forces of supply and demand over which the Company
has limited control. Severe price swings in such raw materials, and the
resultant impact on the prices the Company charges for its products, have at
times had, and may in the future have, material adverse effects on the demand
for the Company's products and its profits.
The Company utilizes several techniques for reducing the risk of future raw
materials price increases. These techniques include purchasing and freezing raw
materials and finished products during periods of the year when raw material
prices are low and entering into futures contracts for raw materials.
PRINCIPAL STOCKHOLDER
JLL owns approximately 27% of the currently outstanding shares of Common
Stock and has agreed that it will exercise its Basic Subscription Privilege in
full. Accordingly, upon consummation of the Rights Offering, JLL will continue
to own at least 27% of the outstanding shares of Common Stock. If JLL acquires
Underlying Shares pursuant to the exercise of its Oversubscription Privilege, it
will increase its percentage ownership of Common Stock after the Rights
Offering. Depending upon the number of shares subscribed for by others, the
percentage of the outstanding Common Stock owned by JLL upon completion of the
Rights Offering will range from approximately 27% (in the event that all
stockholders exercise their Rights in full) to approximately 45%. Further,
pursuant to the terms of a stock purchase agreement, dated February 16, 1993
between the Company and JLL (the "JLL Stock Purchase Agreement"), JLL is
entitled to designate for nomination to the Company's Board of Directors (the
"JLL Designees") one less than the number of persons that would constitute a
majority of the members of the Company's Board of Directors, and the Company has
agreed to nominate and use its best efforts to cause such persons to be elected.
The number of JLL Designees is subject to reduction in the event that JLL's
Common Stock ownership percentage decreases. JLL's level of ownership is
expected to enable it to continue to exert significant influence on the
Company's affairs.
DIVIDEND RESTRICTIONS
The Company has not paid dividends on the Common Stock since its issuance in
1991. The Company does not expect to pay any cash dividends in the foreseeable
future and intends to continue to retain any earnings for the Company's
operations. Additionally, payment of such dividends is limited by the terms of
the New Credit Agreement and the indenture governing its 9 3/4% Senior
Subordinated Redeemable Notes due 2000 (the "9 3/4% Notes"). See "Price Range of
Common Stock and Dividends" and "Description of Capital Stock--Common Stock."
MARKET CONSIDERATIONS
There can be no assurance that the market price of the Common Stock will not
decline during the subscription period or that, following the issuance of the
Rights and the sale of the Underlying Shares upon exercise of Rights, a
subscribing Holder will be able to sell shares purchased in the Rights Offering
at a price equal to or greater than the Exercise Price. The election of a Holder
to exercise Rights in the Rights Offering is irrevocable. Moreover, until
certificates are delivered, subscribing Holders may not be able to sell the
shares of Common Stock that they have purchased in the Rights Offering.
Certificates representing shares of Common Stock purchased will be delivered as
soon as practicable after consummation of the Rights Offering.
No interest will be paid to Holders on funds delivered to the Exercise Agent
pursuant to the exercise of Rights pending delivery of Underlying Shares.
8
<PAGE>
ABSENCE OF PUBLIC MARKET FOR RIGHTS
Although the Company has applied for listing of the Rights on the NASDAQ
National Market System, no assurance can be given that an active trading market
for the Rights will develop.
THE COMPANY
The Company produces, markets and distributes branded and processed food
products under proprietary brand names that include Wilson Foods-R-, Corn
King-R-, Wilson's Continental Deli-R-, American Favorite-TM-, Doskocil
Foods-TM-, Jefferson Meats-TM-, Fred's-R-, Rotanelli's-R-, Posada-R- and Butcher
Boy-R-. The Company's products include pepperoni and beef and pork toppings
marketed to the pizza industry as well as boneless hams, sausage, bacon,
appetizers, Mexican and Italian foods, and other branded and processed products
for the foodservice, delicatessen and retail markets.
The Company was incorporated in 1964 under the laws of the State of
Delaware. Its executive offices are located at 2601 Northwest Expressway, Suite
1000W, Oklahoma City, Oklahoma 73112 and its telephone number is (405) 879-5500.
THE ACQUISITION
On June 1, 1994, the Company acquired Specialty Brands for approximately
$136 million. Specialty Brands, with revenues for the fiscal year ended February
28, 1994 of approximately $185 million, is a processor and marketer of prepared
frozen food products for the foodservice and consumer markets. Major products,
most of which are branded, include ethnic foods, appetizers, entrees and portion
meats. Specialty Brands' ethnic products include Mexican and Italian foods such
as burritos and pasta. The majority of these products is sold to the foodservice
industry. A portion of the Mexican products is also sold to the retail industry.
Specialty Brands' products are sold nationally through a network of 73
foodservice brokers and 73 retail brokers. A direct sales force of 30 manages
the broker organizations. The six processing facilities in New York, Missouri,
Indiana, New Mexico and California produce approximately 140 million pounds of
frozen food product annually.
The Acquisition was financed with borrowings under the New Credit Agreement.
The New Credit Agreement provides the Company with a $146 million term loan and
a $40 million revolving credit facility. As of July 2, 1994, $146 million was
outstanding under the term loan and $11.5 million was outstanding under the
revolving credit facility. Loans under the New Credit Agreement currently bear
interest, at the Company's option, at either the Alternate Base Rate plus 1 1/2%
or the Adjusted LIBO Rate plus 2 1/2% (each as defined in the New Credit
Agreement). In the event that the Company meets certain financial tests in the
future, the interest rates under the Credit Agreement will be decreased. At July
2, 1994, debt outstanding under the term loan and revolving credit facility bore
interest at a weighted average interest rate of 7.19% per annum. The maturity
date for the term loan and revolving credit facility is January 15, 2000, with
semi-annual principal payments due under the term loan commencing December 31,
1994. The borrowing base under the New Credit Agreement is equal to 75% of
certain eligible accounts receivable plus 50% of the lower of the cost or market
value of certain eligible inventory plus certain uncollected receipts. The New
Credit Agreement contains certain customary financial and other covenants which
may limit the Company's ability in the future to incur debt and make capital
expenditures, among other things.
The Company's objective is to increase revenue and earnings growth rates
through both internal means and appropriate acquisitions in a manner that will
continue to improve the level and consistency of profitability. The key elements
of the Company's strategy include: (i) becoming a broad-based food company by
diversifying and expanding into complementary product lines; (ii) expanding
market share in the growing food service and deli markets; (iii) continuing
emphasis on higher margin processed food products; and (iv) upgrading and
rationalizing manufacturing and distribution operations. Implementation of these
strategies will focus the Company's business on higher growth and higher margin
food segments thereby transforming the Company from a meat processor to a
broad-based food company. The Company believes that the Acquisition furthers its
objective.
9
<PAGE>
RECENT EVENTS
The Company named R. Randolph Devening as its Chairman of the Board,
President and Chief Executive Officer effective August 15, 1994. Mr. Devening
was formerly Vice Chairman and Chief Financial Officer of Fleming, which is the
second largest food marketing and distribution company in the United States and
one of the Company's largest customers.
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
The Common Stock was and is traded on the NASDAQ National Market System
under the following symbols: (i) "DOSKV" from November 1, 1991, to January 14,
1992; and (ii) "DOSK" as of and since January 15, 1992. 7,940,168 shares of the
Common Stock were outstanding as of August 5, 1994. The number of holders of
record of Common Stock at August 5, 1994 was approximately 8,267.
The following table sets forth the range of high and low closing bid prices
for the Common Stock for each full quarterly period in fiscal 1993 and fiscal
1992, respectively, as quoted by the NASDAQ National Market System. The Common
Stock traded in the over-the-counter market on a "when issued" basis from
November 1, 1991 until January 14, 1992. The Common Stock began to trade on a
"regular way" basis as of January 15, 1992. These prices represent quotations
between dealers without retail mark-ups, mark-downs, or commissions and may not
necessarily represent actual transactions. The Common Stock is traded on the
NASDAQ National Market System under the symbol DOSK. On June 13, 1994, the last
full day of trading before the announcement of the Rights Offering, the last
reported sale price of the Common Stock on the NASDAQ National Market System was
$10 7/8. On , 1994, the last full day of trading before the effective
date of the Registration Statement, the last reported sale price of the Common
Stock on the NASDAQ National Market System was $ .
<TABLE>
<CAPTION>
HIGH BID LOW BID
----------- -----------
<S> <C> <C>
Fiscal 1992
First Quarter...................................................... $ 18 3/4 $ 8 3/8
Second Quarter..................................................... $ 17 1/2 $ 12 1/4
Third Quarter...................................................... $ 14 1/2 $ 11 1/2
Fourth Quarter..................................................... $ 16 7/8 $ 10 1/2
Fiscal 1993
First Quarter...................................................... $ 16 1/2 $ 13 1/2
Second Quarter..................................................... $ 17 $ 14 3/4
Third Quarter...................................................... $ 15 5/8 $ 10
Fourth Quarter..................................................... $ 12 $ 9 5/8
Fiscal 1994
First Quarter...................................................... $ 15 1/4 $ 10 3/8
Second Quarter..................................................... $ 13 1/2 $ 8 1/4
Third Quarter (through August 16, 1994)............................ $ 9 1/2 $ 7 7/8
</TABLE>
The Company has not paid any cash dividends on the Common Stock since its
issuance in 1991. The Company does not expect to pay any dividends in the
foreseeable future and intends to continue to retain any such earnings for the
Company's operations. Additionally, payment of such dividends is limited by the
terms of the New Credit Agreement and the indenture governing the 9 3/4% Notes.
10
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company and its
consolidated subsidiaries as of July 2, 1994 and as adjusted to reflect the
Rights Offering assuming the Exercise Price is $9.50 (the midpoint of the range
set forth on the cover page of this Prospectus) and (i) the Minimum Subscription
and (ii) the Maximum Subscription. This table should be read in conjunction with
the Consolidated Financial Statements of the Company and related Notes thereto
incorporated by reference in this Prospectus.
<TABLE>
<CAPTION>
AS OF JULY 2, 1994
-------------------------------------
AS ADJUSTED
---------------------------
MINIMUM MAXIMUM
ACTUAL SUBSCRIPTION SUBSCRIPTION
-------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Current maturities of long-term debt...................................... $ 20,104 $ 8,952 $ 3,104
-------- ------------ ------------
-------- ------------ ------------
Long-term debt............................................................ $262,062 $250,562 $230,562
-------- ------------ ------------
Stockholders' equity:
Preferred Stock, 4 million shares authorized; none issued................. -- -- --
Common Stock, $.01 par value; 20,000,000 shares authorized; 7,940,168
shares issued and outstanding (10,429,868 as adjusted assuming Minimum
Subscription and 13,203,326 as adjusted assuming Maximum Subscription)... 79 104 132
Capital in excess of par value............................................ 112,465 135,092 160,912
Retained earnings (deficit) (1)........................................... (57,155) (57,155) (57,155)
Minimum pension liability adjustment...................................... (1,575) (1,575) (1,575)
Unearned compensation..................................................... (99) (99) (99)
-------- ------------ ------------
Total stockholders' equity............................................ 53,715 76,367 102,215
-------- ------------ ------------
Total capitalization.................................................. $315,777 $326,929 $332,777
-------- ------------ ------------
-------- ------------ ------------
<FN>
- ------------------------
(1) Does not include the write-off of debt issue costs of $.3 million and $.7
million, respectively, resulting from the application of the minimum and
maximum net proceeds of the Rights Offering to reduce debt under the New
Credit Agreement.
</TABLE>
11
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA
The following table sets forth certain historical financial data with
respect to the Company on a consolidated basis. This table is principally
derived from and should be read in conjunction with the Company's historical
consolidated financial statements and related notes thereto and management's
discussions and analysis of financial condition and results of operations
incorporated by reference herein. As a result of the adoption of Fresh Start
Reporting, historical financial data for periods ended prior to September 29,
1991 is that of a different reporting entity and is not prepared on a basis
comparable to financial data for periods ending after that date.
<TABLE>
<CAPTION>
POST-CONFIRMATION
------------------------------------------------------------------------
SIX MONTHS SIX MONTHS FISCAL YEAR FISCAL YEAR THREE MONTHS
ENDED ENDED ENDED ENDED ENDED
JULY 2, JULY 3, JANUARY 1, JANUARY 2, DECEMBER 28,
1994 1993 1994 1993 1991
------------ ------------ ------------ ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net Sales......................... $322,925 $302,621 $648,207 $770,687 $ 208,691
Gross profit...................... 57,407 49,935 110,677 109,338 32,744
Total operating expenses.......... 51,456 44,789 94,180 124,442(4) 23,891
------------ ------------ ------------ ------------ ------------
Operating income (loss)........... $ 5,951 $ 5,146 $ 16,497 $(15,104)(4) $ 8,853
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Income (loss) from continuing
operations....................... $ (1,259) $ (483) $ 2,407 $(26,834)(4) $ 3,943
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Net income (loss)................. $ (2,245)(1) $(34,909)(2) $(32,019)(2) $(26,834)(4) $ 3,943
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Earnings (loss) per share: (7)
Income (loss) from continuing
operations..................... $ (0.16) $ (0.07) $ 0.32 $ (4.63) $ 0.68
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Net income (loss)................. $ (0.28)(1) $ (5.00)(2) $ (4.32)(2) $ (4.63) $ 0.68
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
BALANCE SHEET DATA
(at period end)
Working capital (8)............... $ 45,334 $ 27,041 $ 31,152 $ 14,428 $ 15,852
Total assets...................... 470,838 325,005 316,881 290,978 311,912
Long-term debt (8)................ 262,062 133,185 127,906 137,305 140,455
Total long-term obligations (8)... 342,270 208,097 207,893(3) 157,036 146,726
Stockholders' equity.............. 53,715 54,012 55,569 61,639 88,075
CASH FLOW AND CAPITAL EXPENDITURES
DATA
Depreciation...................... $ 5,492 $ 4,547 $ 9,166 $ 11,479 $ 3,047
Amortization (9).................. 3,244 3,092 6,183 6,307 1,436
EBITDA (10)....................... 15,127 14,388 32,024 2,794 13,296
Capital expenditures.............. 5,911 7,710 19,690 6,604 1,193
Net cash provided (used) by
operating activities............. (1,305) (2,146) 18,138 1,088 14,599
<CAPTION>
PRE-CONFIRMATION
--------------------------------------------
NINE MONTHS
ENDED FISCAL YEAR ENDED
SEPTEMBER -----------------------------
28, DECEMBER 29, DECEMBER 30,
1991 1990 1989
------------ ------------ ------------
<S> <C> <C> <C>
INCOME STATEMENT DATA
Net Sales......................... $611,529 $877,568 $1,133,398
Gross profit...................... 77,986 97,070 98,454
Total operating expenses.......... 68,926 87,909 96,161
------------ ------------ ------------
Operating income (loss)........... $ 9,060 $ 9,161 $ 2,293
------------ ------------ ------------
Income (loss) from continuing ------------ ------------ ------------
operations....................... $(48,424)(5) $(32,562)(5) $ (29,254)
------------ ------------ ------------
------------ ------------ ------------
Net income (loss)................. $ 65,370 (5)(6)$(25,290)(5) $ (7,857)
------------ ------------ ------------
Earnings (loss) per share: (7) ------------ ------------ ------------
Income (loss) from continuing
operations..................... $ (9.46)(5) $ (6.37)(5) $ (5.74)
------------ ------------ ------------
------------ ------------ ------------
Net income (loss)................. $ 12.78(6) $ (4.94) $ (1.54)
------------ ------------ ------------
BALANCE SHEET DATA ------------ ------------ ------------
(at period end)
Working capital (8)............... $ 16,938 $ 2,632 $ 44,379
Total assets...................... 321,200 438,534 461,520
Long-term debt (8)................ 149,402 301,299 221,449
Total long-term obligations (8)... 156,106 301,299 260,460
Stockholders' equity.............. 84,132 31,034 56,304
CASH FLOW AND CAPITAL EXPENDITURES
DATA
Depreciation...................... $ 10,504 $ 10,135 $ 10,699
Amortization (9).................. 3,963 4,676 3,419
EBITDA (10)....................... 23,589 23,256 16,713
Capital expenditures.............. 5,816 1,606 7,581
Net cash provided (used) by
operating activities............. (3) (32) (12,507)
<FN>
- ------------------------------
(1) Includes a net extraordinary charge of $1 million resulting from the early
extinguishment of debt.
(2) Includes the cumulative effect on years prior to fiscal year ended January
1, 1994 for a change in accounting for postretirement medical benefits of a
noncash charge against earnings of $34.4 million.
(3) Includes the recognition of a long-term liability of $65.4 million for
postretirement medical benefits.
(4) Includes a $32 million provision for plant closings.
(5) Includes reorganization expenses of $41.0 million and $12.7 million for the
nine months ended September 28, 1991 and year ended December 29, 1990.
(6) Includes an extraordinary gain of $113.8 million for the forgiveness of
debt as part of the Chapter 11 reorganization of the Company which became
effective on October 31, 1991 and reorganization expenses of $41.0 million.
(7) The per share amounts for fiscal years 1989 and 1990 and the period ended
September 28, 1991 do not provide meaningful comparisons due to the
Company's Chapter 11 reorganization.
(8) Certain long-term obligations which were classified as current liabilities
in fiscal 1989 and fiscal 1990, due to bankruptcy proceedings, have been
reclassified as long-term obligations in order to be consistent with the
current year's presentation.
(9) Amortization of intangible assets only. Does not include amortization of
certain other items included in interest expense of $0.6 million for the
six months ended July 2, 1994, $0.1 million for the six months ended July
3, 1993, $0.7 million in the fiscal year ended January 1, 1994, $4.1
million in the nine months ended September 28, 1991, $4.9 million and $6.3
million in the fiscal years ended December 29, 1990 and December 30, 1989,
respectively.
(10) EBITDA represents income (loss) from continuing operations before income
taxes, extraordinary items and cumulative effect of a change in accounting
principle, interest and financing costs, depreciation and amortization.
EBITDA should not be considered as an alternative to, or more meaningful
than, operating income or cash flow as an indication of the Company's
operating performance. EBITDA has been presented here to provide additional
information related to monitoring compliance with certain restrictive
covenants contained in certain of the Company's debt instruments. Under the
covenants of the 9 3/4% Notes and the New Credit Agreement, EBITDA is
defined differently than in the above table.
</TABLE>
12
<PAGE>
PRO FORMA FINANCIAL DATA
YEAR ENDED JANUARY 1, 1994
Presented below is certain unaudited summary pro forma financial information
which assumes that the Acquisition and Rights Offering had occurred on January
3, 1993, that the Exercise Price is $9.50 (the midpoint of the range set forth
on the cover of this Prospectus) and that all net proceeds from the Rights
Offering are used to repay indebtedness under the New Credit Agreement. The pro
forma combined results of operations are not necessarily indicative of results
of operations that would have resulted had the Acquisition and Rights Offering
actually occurred on January 3, 1993, nor are they necessarily indicative of
future results of operations. For more detailed information regarding the pro
forma financial statements, see the Company's Form 8-K dated March 17, 1994,
incorporated herein by reference.
The pro forma condensed combined statement of operations includes the
historical consolidated results of operations of the Company for the fiscal year
ended January 1, 1994 and the historical results of Specialty Brands for the
twelve months ended November 27, 1993. The pro forma combined results of
operations do not give effect to the net extraordinary charge of $1 million
incurred in June, 1994 as a result of extinguishing the Old Credit Agreement,
nor the effect of a net, non-recurring write-off of $.3 million and $.7 million,
respectively, of debt issue costs resulting from the application of the minimum
and maximum net proceeds of the Rights Offering to reduce outstanding debt under
the New Credit Agreement.
<TABLE>
<CAPTION>
PRO FORMA COMBINED
AFTER RIGHTS OFFERING
----------------------------
SPECIALTY ACQUISITION PRO FORMA MINIMUM MAXIMUM
COMPANY BRANDS ADJUSTMENTS COMBINED SUBSCRIPTION SUBSCRIPTION
--------- --------- ------------- --------- ------------- -------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
Net Sales............................. $648,207 $183,330 $-- $831,537 $ 831,537 $ 831,537
Gross profit.......................... 110,677 53,528 1,465 165,670 165,670 165,670
Operating income...................... 16,497 11,958 1,802 30,257 30,257 30,257
Income before income taxes and
cumulative effect of changes in
accounting........................... 2,826 12,010 (5,491) 9,345 11,421 13,178
Income before cumulative effect of
changes in accounting................ $ 2,407 $ 6,966 $(3,295) $ 6,078 $ 7,324 $ 8,378
--------- --------- ------------- --------- ------------- -------------
--------- --------- ------------- --------- ------------- -------------
Earnings per share (income before
cumulative effect of changes in
accounting).......................... $ 0.32 $ 0.82 $ 0.74 $ 0.66
--------- --------- ------------- -------------
--------- --------- ------------- -------------
Weighted average shares outstanding... 7,419 7,419 9,909 12,682
--------- --------- ------------- -------------
--------- --------- ------------- -------------
</TABLE>
13
<PAGE>
SIX MONTHS ENDED JULY 2, 1994
Presented below is certain summary pro forma financial information which
assumes that the Acquisition, which was consummated on June 1, 1994, and Rights
Offering had occurred on January 2, 1994, that the Exercise Price is $9.50 (the
midpoint of the range set forth on the cover of this Prospectus) and that all
net proceeds from the Rights Offering are used to repay indebtedness under the
New Credit Agreement. The pro forma combined results of operations are not
necessarily indicative of results of operations that would have resulted had the
Acquisition and Rights Offering actually occurred on January 2, 1994, nor are
they necessarily indicative of future results of operations. For more detailed
information regarding the pro forma financial statements, see the Company's Form
8-K dated June 1, 1994, incorporated herein by reference.
The pro forma condensed combined statement of operations for the six months
ended July 2, 1994 includes the historical consolidated results of operations of
the Company for the six months ended July 2, 1994 and the historical results of
Specialty Brands for the five months ended May 31, 1994. The pro forma combined
results of operations do not give effect to the net extraordinary charge of $1
million incurred in June, 1994 as a result of extinguishing the Old Credit
Agreement, nor the effect of a net, non-recurring write-off of $.3 million and
$.7 million, respectively, of debt issue costs resulting from the application of
the minimum and maximum net proceeds of the Rights Offering to reduce
outstanding debt under the New Credit Agreement.
<TABLE>
<CAPTION>
PRO FORMA COMBINED
AFTER RIGHTS OFFERING
----------------------------
SPECIALTY ACQUISITION PRO FORMA MINIMUM MAXIMUM
COMPANY BRANDS ADJUSTMENTS COMBINED SUBSCRIPTION SUBSCRIPTION
---------- ---------- ------------ ----------- ------------ -------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net Sales............................. $ 322,925 $78,914 $-- $401,839 $ 401,839 $401,839
Gross Profit.......................... 57,407 22,009 854 80,270 80,270 80,270
Operating income...................... 5,951 3,544 707 10,202 10,202 10,202
Income (loss) before income taxes..... (2,423) 3,508 (2,893) (1,808) (770) 109
Income (loss) before extraordinary
item................................. $ (1,259) $ 2,032 $(1,736) $ (963) $ (340) $ 187
---------- ---------- ------------ ----------- ------------ -------------
---------- ---------- ------------ ----------- ------------ -------------
Earnings (loss) per share before
extraordinary item................... $ (0.16) $ (0.12) $ (0.03) $ 0.01
---------- ----------- ------------ -------------
---------- ----------- ------------ -------------
Weighted average shares outstanding... 7,921 7,921 10,411 13,184
---------- ----------- ------------ -------------
---------- ----------- ------------ -------------
</TABLE>
14
<PAGE>
USE OF PROCEEDS
The purpose of the Rights Offering is to strengthen the Company's capital
structure and enhance its ability to obtain future financing so as to enable the
Company to continue its growth through both internal means and appropriate
acquisitions. In the event of the Maximum Subscription, the net proceeds to the
Company are estimated to be approximately $48.5 million. In the event of the
Minimum Subscription, the net proceeds to the Company are estimated to be
approximately $22.7 million. The Company intends to use the net proceeds from
the sale of the Underlying Shares to repay indebtedness under the New Credit
Agreement, subject to the execution of an amendment to such agreement which
would, among other things, permit the Company to reborrow certain amounts that
are repaid under the term loan facility of the New Credit Agreement. In the
event that such an amendment is not executed, the Company intends to use $10
million of the net proceeds to repay indebtedness under the New Credit Agreement
and the balance thereof for general corporate purposes.
THE RIGHTS OFFERING
THE RIGHTS
The Company is issuing the Rights to Recordholders at no charge to such
Recordholders. The Company is issuing Rights for each share of Common
Stock held or acquirable upon the exercise of Warrants on the Record Date. The
Rights are evidenced by transferable Rights Certificates, which are being
distributed contemporaneously with the delivery of this Prospectus.
No fractional Rights or cash in lieu thereof will be issued or paid. The
number of Rights issued to each Recordholder will be rounded up to the nearest
whole number. A depository, bank, trust company, securities broker or dealer
holding shares of Common Stock on the Record Date for more than one beneficial
owner may, upon proper showing to the Exercise Agent, exchange its Rights
Certificates to obtain a Rights Certificate for the number of Rights to which
all such beneficial owners in the aggregate would have been entitled had each
been a Recordholder; no other Rights Certificates may be so divided as to
increase the number of Rights to which its original recipient was entitled. The
Company reserves the right to refuse to issue any Rights Certificates if such
issuance would be inconsistent with the principle that each beneficial owner's
holdings will be rounded up to the nearest whole Right.
Because the number of Rights issued to each Recordholder will be rounded up
to the nearest whole number, beneficial owners of Common Stock or Warrants who
are also the record holders of their securities will receive more Rights under
certain circumstances than beneficial owners of Common Stock who are not the
record holders of their securities and who do not obtain (or cause the
Recordholder to obtain) a separate Rights Certificate with respect to the shares
or Warrants beneficially owned by them, including shares held in an investment
advisory or similar account. To the extent that Recordholders or beneficial
owners who obtain a separate Rights Certificate receive more Rights, they will
be able to subscribe for more shares pursuant to the Basic Subscription
Privilege.
EXPIRATION DATE
The Rights will expire at 5:00 p.m., New York City time, on 1994,
subject to extension in the discretion of the Company. After the Expiration
Date, unexercised Rights will be null and void. The Company will not be
obligated to honor any purported exercise of Rights received by the Exercise
Agent after the Expiration Date, regardless of when the documents relating to
that exercise were sent, except pursuant to the Guaranteed Delivery Procedures
described below.
SUBSCRIPTION PRIVILEGES
BASIC SUBSCRIPTION PRIVILEGE. Subject to the possible reduction described
below, each Right entitles the holder thereof to purchase at the Exercise Price
one Underlying Share (the "Basic Subscription Privilege"). Certificates
representing Underlying Shares purchased pursuant to the Basic Subscription
Privilege will be delivered to subscribers as soon as practicable after the
Expiration Date.
15
<PAGE>
OVERSUBSCRIPTION PRIVILEGE. Subject to the allocation and possible
reduction described below, each Right also carries the right of the Holder to
subscribe, at the Exercise Price, for additional Underlying Shares up to the
total number of Underlying Shares (the "Oversubscription Privilege"). Only
Holders who exercise the Basic Subscription Privilege in full will be entitled
to exercise this Oversubscription Privilege.
Underlying Shares will be available for purchase pursuant to the
Oversubscription Privilege only to the extent that any Underlying Shares are not
subscribed for through the Basic Subscription Privilege or are not issuable
pursuant to the Basic Subscription Privilege as a result of a reduction in the
number of shares issuable to a Holder or Holders by the Company as described
below. See "-- Potential Reduction." If the Underlying Shares not subscribed for
or issuable through the Basic Subscription Privilege (the "Excess Shares") are
not sufficient to satisfy all subscriptions pursuant to the Oversubscription
Privilege, the Excess Shares will be allocated pro rata (subject to the
elimination of fractional shares) among those holders of Rights exercising the
Oversubscription Privilege in proportion to the number of Rights exercised by
each Holder pursuant to the Basic Subscription Privilege, relative to the number
of Rights exercised pursuant to the Basic Subscription Privilege by all Holders
exercising the Oversubscription Privilege, provided, however, that if such pro
rata allocation results in any Holder being allocated a greater number of Excess
Shares than such Holder subscribed for pursuant to the exercise of that Holder's
Oversubscription Privilege, then such Holder will be allocated only that number
of Excess Shares for which such Holder oversubscribed, and the remaining Excess
Shares will be allocated among all other Holders exercising the Oversubscription
Privilege on the same pro rata basis outlined above; such proration will be
repeated until all Excess Shares have been allocated to the full extent of the
Oversubscription Privileges exercised. If a proration of the Excess Shares
results in a Holder receiving fewer Excess Shares than such holder subscribed
for pursuant to the Oversubscription Privilege, then the excess funds paid by
that Holder as the Exercise Price for shares not issued will be returned without
interest or deduction. Certificates representing Underlying Shares purchased
pursuant to the Oversubscription Privilege will be delivered to subscribers as
soon as practicable after the Expiration Date and after all prorations and
adjustments contemplated by the terms of the Rights Offering have been effected.
In order to exercise the Oversubscription Privilege, banks, brokers, and
other nominee holders of Rights who exercise the Oversubscription Privilege on
behalf of beneficial owners of Rights will be required to certify to the
Exercise Agent and the Company the aggregate number of Rights as to which the
Oversubscription Privilege has been exercised and the number of Underlying
Shares thereby subscribed for by each beneficial owner of Rights on whose behalf
such nominee holder is acting. Copies of the Nominee Holder Certification form
may be obtained from the Exercise Agent.
POTENTIAL REDUCTION. If the Company believes, following the Expiration
Date, that the issuance of Underlying Shares pursuant to the Basic Subscription
Privilege or the Oversubscription Privilege will have an adverse effect upon its
ability to utilize its net operating loss carryforwards (including its built-in
losses), then the Company will have the right to reduce the number of Underlying
Shares issuable to all Holders exercising the Basic Subscription Privilege or
the Oversubscription Privilege pro rata, or to any individual Holder whose
exercise of the Basic Subscription Privilege or Oversubscription Privilege may
create such adverse effect, to the extent necessary in the sole opinion of the
Company to avoid such adverse effect. See "Risk Factors -- Continuation of Net
Operating Loss Carryforwards." Such opinion of the Company shall be conclusive
and binding.
EXERCISE OF RIGHTS
Holders may exercise their Rights by delivering to the Exercise Agent, at
the address specified below, at or prior to the Expiration Date, the properly
completed and executed Rights Certificate(s) evidencing those Rights, with any
signatures guaranteed as required, together with payment in full of the Exercise
Price for each Underlying Share subscribed for pursuant to the Basic
Subscription Privilege and the Oversubscription Privilege. Payment may only be
made (a) by check or bank draft drawn upon a U.S. bank, or postal, telegraphic
or express money order, payable to American Stock Transfer & Trust Company, as
Exercise Agent, or (b) by wire transfer of funds to the account maintained by
the Exercise Agent for the purpose of accepting subscriptions at Chemical Bank
Account No. 61-093-045 ; ABA No. 021-000-128, or (c) a
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combination of the foregoing. If paying by uncertified personal check, please
note that the funds paid thereby may take at least five business days to clear.
Accordingly, holders of Rights who wish to pay the Exercise Price by means of
uncertified personal check are urged to make payment sufficiently in advance of
the Expiration Date to ensure that such payment is received and clears by such
time and are urged to consider in the alternative payment by means of certified
or cashier's check, money order or wire transfer of funds. All funds received in
payment of the Exercise Price shall be held by the Exercise Agent and invested
at the direction of the Company in short-term certificates of deposit,
short-term obligations of the United States, any state or any agency thereof, or
money market mutual funds investing in the foregoing instruments. Earnings on
such funds will be retained by the Company.
THE ADDRESS TO WHICH THE RIGHTS CERTIFICATES AND PAYMENT OF THE EXERCISE
PRICE SHOULD BE DELIVERED IS:
AMERICAN STOCK TRANSFER & TRUST COMPANY
40 WALL STREET
46TH FLOOR
NEW YORK, NEW YORK 10005
THE EXERCISE AGENT'S TELEPHONE NUMBERS ARE (800) 937-5449 OR (212) 936-5100.
If a Rights holder wishes to exercise Rights, but time will not permit such
holder to cause the Rights Certificates evidencing those Rights to reach the
Exercise Agent prior to the Expiration Date, such Rights may nevertheless be
exercised if all of the following conditions (the "Guaranteed Delivery
Procedures") are met:
(i) the Rights holder has caused payment in full of the Exercise Price
for each Underlying Share being subscribed for pursuant to the Basic
Subscription Privilege and the Oversubscription Privilege to be received (in
the manner set forth above) by the Exercise Agent at or prior to the
Expiration Date;
(ii) the Exercise Agent receives, at or prior to the Expiration Date, a
guarantee notice (a "Notice of Guaranteed Delivery"), substantially in the
form provided with the Instructions as to Use of the Doskocil Companies
Incorporated Rights Certificates (the "Instructions") distributed with the
Rights Certificates, from a member firm of a registered national securities
exchange or a member of the National Association of Securities Dealers, Inc.
(the "NASD"), or from a commercial bank or trust company having an office or
correspondent in the United States (each, an "Eligible Institution"),
stating the name of the exercising Rights holder, the number of Rights
represented by the Rights Certificate(s) held by the exercising Rights
holder, the number of Underlying Shares being subscribed for pursuant to the
Basic Subscription Privilege and, if any, pursuant to the Oversubscription
Privilege, and guaranteeing the delivery to the Exercise Agent of the Rights
Certificate(s) evidencing those Rights within five business days following
the date of the Notice of Guaranteed Delivery; and
(iii) the properly completed Rights Certificate(s) evidencing the Rights
being exercised, with any signatures guaranteed as required, is received by
the Exercise Agent within five business days following the date of the
Notice of Guaranteed Delivery relating thereto. The Notice of Guaranteed
Delivery may be delivered to the Exercise Agent in the same manner as Rights
Certificates at the addresses set forth above, or may be transmitted to the
Exercise Agent by telegram or facsimile transmission (telecopier no. (718)
234-5001). Additional copies of the form of Notice of Guaranteed Delivery
are available upon request from the Exercise Agent, whose addresses and
telephone numbers are set forth under "Exercise Agent" below.
If an exercising Holder does not indicate the number of Rights being
exercised or does not forward full payment of the aggregate Exercise Price for
the number of Rights that the Rights holder indicates are being exercised, then
the Rights holder will be deemed to have exercised the Basic Subscription
Privilege with respect to the maximum number of Rights that may be exercised for
the aggregate Exercise Price payment delivered by the Rights holder, and to the
extent that the aggregate Exercise Price payment delivered by the Rights holder
exceeds the product of the Exercise Price multiplied by the number of Rights
evidenced by the Rights Certificates delivered by the Rights holder (such excess
being the "Subscription Excess"), the Rights holder will be deemed to have
exercised the Oversubscription Privilege to purchase, to the extent available,
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that number of whole Excess Shares equal to the quotient obtained by dividing
the Subscription Excess by the Exercise Price. Any amount remaining after such
division shall be returned to the Rights holder promptly by mail without
interest or deduction.
Funds received in payment of the Exercise Price for Excess Shares subscribed
for pursuant to the Oversubscription Privilege will be held in a segregated
account pending issuance of the Excess Shares. If a Rights holder exercising the
Oversubscription Privilege is allocated less than all of the Underlying Shares
for which that holder subscribed pursuant to the Oversubscription Privilege,
then the excess funds paid by that holder as the Exercise Price for shares not
allocated to such Rights holder shall be returned by mail without interest or
deduction as soon as practicable after the Expiration Date and after all
prorations and adjustments contemplated by the terms of the Rights Offering have
been effected.
Unless a Rights Certificate (i) provides that the Underlying Shares to be
issued pursuant to the exercise of the Rights represented thereby are to be
issued to the holder of such Rights or (ii) is submitted for the account of an
Eligible Institution, signatures on each Rights Certificate must be guaranteed
by an Eligible Institution.
Holders who hold shares of Common Stock for the account of others, such as
brokers, trustees or depositaries for securities, should contact the respective
beneficial owners of such shares as soon as possible to ascertain those
beneficial owners' intentions and to obtain instructions with respect to their
Rights. If a beneficial owner so instructs, the record holder of that beneficial
owner's Rights should complete appropriate Rights Certificates and submit them
to the Exercise Agent with the proper payment. In addition, beneficial owners of
Common Stock or Rights held through such a nominee holder should contact the
nominee holder and request the nominee holder to effect transactions in
accordance with the beneficial owner's instructions.
The Instructions accompanying the Rights Certificate should be read
carefully and followed in detail. RIGHTS CERTIFICATES SHOULD BE SENT WITH
PAYMENT TO THE EXERCISE AGENT. DO NOT SEND RIGHTS CERTIFICATES TO THE COMPANY.
THE METHOD OF DELIVERY OF RIGHTS CERTIFICATES AND PAYMENT OF THE EXERCISE
PRICE TO THE EXERCISE AGENT ARE AT THE ELECTION AND RISK OF THE RIGHTS HOLDERS.
IF SENT BY MAIL, RIGHTS HOLDERS ARE URGED TO SEND RIGHTS CERTIFICATES AND
PAYMENTS BY REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED,
AND ARE URGED TO ALLOW A SUFFICIENT NUMBER OF DAYS TO ENSURE DELIVERY TO THE
EXERCISE AGENT AND CLEARANCE OF PAYMENT PRIOR TO THE EXPIRATION DATE. BECAUSE
UNCERTIFIED PERSONAL CHECKS MAY TAKE AT LEAST FIVE BUSINESS DAYS TO CLEAR,
RIGHTS HOLDERS ARE STRONGLY URGED TO PAY, OR ARRANGE FOR PAYMENT, BY MEANS OF
CERTIFIED OR CASHIER'S CHECK, MONEY ORDER OR WIRE TRANSFER OF FUNDS.
All questions concerning the timeliness, validity, form and eligibility of
any exercise of Rights will be determined by the Company, whose determinations
will be final and binding. The Company, in its sole discretion, may waive any
defect or irregularity, or permit a defect or irregularity to be corrected
within such time as it may determine, or reject the purported exercise of any
Right. Rights Certificates will not be deemed to have been received or accepted
until all irregularities have been waived or cured within such time as the
Company determines, in its sole discretion. Neither the Company nor the Exercise
Agent will be under any duty to give notification of any defect or irregularity
in connection with the submission of Rights Certificates or incur any liability
for failure to give such notification.
Any questions or requests for assistance concerning the method of exercising
Rights or requests for additional copies of this Prospectus, the Instructions or
the Notice of Guaranteed Delivery should be directed to the Exercise Agent at
its address set forth under "Exercise Agent." (telephone (800) 937-5449).
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NO REVOCATION
ONCE A HOLDER OF RIGHTS HAS PROPERLY EXERCISED THE BASIC SUBSCRIPTION
PRIVILEGE AND/OR THE OVERSUBSCRIPTION PRIVILEGE, SUCH EXERCISE MAY NOT BE
REVOKED.
METHOD OF TRANSFERRING RIGHTS
Rights may be purchased or sold through usual investment channels. It is
anticipated that the Rights will trade on the NASDAQ National Market System
until the close of business on the Expiration Date. There has been no prior
trading in the Rights, and no assurance can be given that a trading market will
develop or, if a market develops, that such market will be maintained throughout
the Rights Offering.
The Rights evidenced by a single Rights Certificate may be transferred in
whole by endorsing the Rights Certificate for transfer in accordance with the
accompanying Instructions. A portion of the Rights evidenced by a single Rights
Certificate (but not fractional Rights) may be transferred by delivering to the
Exercise Agent a Rights Certificate properly endorsed for transfer, with
instructions to register that portion of the Rights indicated therein in the
name of the transferee and to issue a new Rights Certificate to the transferee
evidencing the transferred Rights. In that event, a new Rights Certificate
evidencing the balance of the Rights will be issued to the Rights holder or, if
the Rights holder so instructs, to an additional transferee, or will be sold by
the Exercise Agent in the manner described below upon appropriate instruction
from the Rights holder.
The Rights evidenced by a Rights Certificate may be sold, in whole or in
part, through the Exercise Agent by delivering to the Exercise Agent the Rights
Certificate properly executed for sale by the Exercise Agent. If only a portion
of the Rights evidenced by a single Rights Certificate is to be sold by the
Exercise Agent, that Rights Certificate must be accompanied by instructions
setting forth the action to be taken with respect to the Rights that are not to
be sold. Promptly following the sale, the Exercise Agent will send the Holder a
check for the proceeds from the sale of any Rights sold, less any applicable
brokerage commissions, taxes and other direct expenses of sale. The Company will
pay the fees charged by the Exercise Agent for effecting such sales. Orders to
sell Rights must be received by the Exercise Agent at or prior to a.m., New
York City time, on , 1994. The Exercise Agent's obligation to execute
orders is subject to its ability to find buyers. If the Rights cannot be sold by
the Exercise Agent by , 1994, they will be returned promptly by mail to
the Holder.
Holders wishing to transfer all or a portion of their Rights (but not
fractional Rights) should allow a sufficient amount of time prior to the
Expiration Date for (i) the transfer instructions to be received and processed
by the Exercise Agent, (ii) new Rights Certificate to be issued and transmitted
to the transferee or transferees with respect to transferred Rights, and to the
transferor with respect to retained Rights, if any, and (iii) the Rights
evidenced by the new Rights Certificate to be exercised or sold by the
recipients thereof. Such amount of time could range from two to ten business
days, depending upon the method by which delivery of the Rights Certificates and
payment is made and the number of transactions which the Rights holder instructs
the Exercise Agent to effect. Neither the Company nor the Exercise Agent shall
have any liability to a transferee or transferor of Rights if Rights
Certificates are not received in time for exercise or sale prior to the
Expiration Date.
Except for the fees charged by the Exercise Agent (which will be paid by the
Company, as described above), all commissions, fees and other expenses
(including brokerage commissions and transfer taxes) incurred in connection with
the purchase, sale or exercise of Rights will be for the account of the
transferor of the Rights, and none of such commissions, fees or expenses will be
paid by the Company or the Exercise Agent.
AMENDMENTS AND WAIVERS; TERMINATION
The Company reserves the right to extend the Expiration Date and to amend
the terms and conditions of the Rights Offering, whether the amended terms are
less or more favorable to the Holders. In the event that the Company amends the
terms of the Rights Offering, the Registration Statement of which this
Prospectus forms a part will be amended, a new definitive Prospectus will be
distributed to all Rights holders
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who have theretofore exercised Rights and to holders of record of unexercised
Rights on the date the Company amends such terms. All Rights holders who have
theretofore exercised Rights shall simultaneously be provided with a form of
Consent to Amended Rights Offering Terms, on which they may confirm their
exercise of Rights under the terms of the Rights Offering as amended by the
Company; any Rights holder who has theretofore exercised any Rights and who does
not return such Consent within 10 business days after the mailing thereof by the
Company shall be deemed to have canceled his or her exercise of Rights, and the
full amount of the Exercise Price theretofore paid by such Rights holder will be
returned promptly by mail, without interest or deduction. Any completed Rights
Certificate received by the Exercise Agent five or more business days after the
date of the amendment will be deemed to constitute the consent of the Rights
holder who completed such Rights Certificate to the amended terms. The Company
reserves the right, in its sole discretion, at any item prior to delivery of the
Underlying Shares to terminate the Rights Offering by giving oral or written
notice to the Exercise Agent and making a public announcement thereof. If the
Rights Offering is so terminated, all funds received from Holders will be
promptly refunded without interest.
EXERCISE AGENT
The Company has appointed American Stock Transfer & Trust Company as
Exercise Agent for the Rights Offering. The Exercise Agent's address, which is
the address to which the Rights Certificates and payment of the Exercise Price
should be delivered, as well as the address to which a Notice of Guaranteed
Delivery must be delivered, is:
American Stock Transfer & Trust Company
40 Wall Street
46th Floor
New York, New York 10005
The Exercise Agent's telephone numbers are (800) 937-5449 or (212) 936-5100.
The Company will pay the fees and expenses of the Exercise Agent and has
also agreed to indemnify the Exercise Agent from any liability which it may
incur in connection with the Rights Offering.
INFORMATION AGENT
The Exercise Agent will also act as information agent for the Rights
Offering. Any questions or requests for additional copies of this Prospectus,
the Instructions, or the Notice of Guaranteed Delivery may be directed to the
Exercise Agent at the address and telephone number set forth above.
DETERMINATION OF EXERCISE PRICE
The Exercise Price was determined by the Company, based on a number of
factors, including advice provided by Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, as financial advisor (the "Financial
Advisor"). The Company believes that the Exercise Price reflects the Company's
objective of achieving the maximum net proceeds obtainable from the Rights
Offering while providing the holders of Common Stock with an opportunity to make
an additional investment in the Company, and thus avoid an excessive dilution of
their ownership position in the Company.
In approving the Exercise Price, the Board of Directors considered the
advice provided by the Financial Advisor and such additional factors as the
alternatives available to the Company for raising capital, the market price of
the Common Stock, the business prospects for the Company and the general
condition of the securities markets at the time of the meeting of the Board of
Directors at which the Rights Offering was approved. There can be no assurance
however, that the market price of the Common Stock will not decline during the
subscription period to a level equal to or below the Exercise Price, or that,
following the issuance of the Rights and of the Common Stock upon exercise of
Rights, a subscribing Holder will be able to sell shares purchased in the Rights
Offering at a price equal to or greater than the Exercise Price.
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FOREIGN STOCKHOLDERS
Rights Certificates will not be mailed to Holders whose addresses are
outside the United States and Canada or who have an APO or FPO address, but will
be held by the Exercise Agent for such Holders' accounts. To exercise their
Rights, such Holders must notify the Exercise Agent at or prior to a.m., New
York City time, on , 1994. The Rights of such Holders expire at the
Expiration Date.
SUBSCRIPTION BY PRINCIPAL STOCKHOLDER
JLL beneficially owns approximately 27% of the Common Stock currently
outstanding. JLL has agreed that it will exercise its Basic Subscription
Privilege in full. In addition, JLL has agreed that it will exercise its
Oversubscription Privilege to the extent necessary to assure that the Company
receives $30 million in gross proceeds. JLL's exercise of its Basic Subscription
Privilege and its Oversubscription Privilege is subject to reduction by the
Company in order to avoid the loss of certain Federal income tax benefits to the
Company. In the event that no Holder other than JLL exercises Rights, the
Company intends to reduce the number of Underlying Shares issuable to JLL such
that the Company would receive approximately $23.7 million in gross proceeds
from the Rights Offering (based upon an Exercise Price of $9.50 per share).
Accordingly, although JLL will subscribe for Underlying Shares having an
aggregate Exercise Price of $30 million, it will be required to pay $23.7
million of the Exercise Price in respect of such Underlying Shares on or prior
to the Expiration Date. As soon as practicable after the Expiration Date, the
Company will notify JLL of the additional Exercise Price, if any, that is
payable in respect of Underlying Shares that will be issuable to JLL. JLL will
remit payment for such Underlying Shares to the Exercise Agent within three days
of receipt of such notice. Depending upon the number of shares subscribed for by
others, the percentage of the outstanding Common Stock owned by JLL upon
completion of the Rights Offering will range from approximately 27% (in the
event that all stockholders exercise their Rights in full) to approximately 45%.
NO BOARD RECOMMENDATION
An investment in the Common Stock must be made pursuant to each investor's
evaluation of its, his or her best interests. Accordingly, although the Board of
Directors of the Company unanimously approved the Rights Offering, it makes no
recommendation to Holders regarding whether they should exercise their Rights.
DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital stock consists of 20,000,000 shares of
Common Stock and 4,000,000 shares of Preferred Stock, par value $.01 per share
(the "Preferred Stock"). The following summary description of the capital stock
of the Company does not purport to be complete and is qualified in its entirety
by reference to the Company's Certificate of Incorporation, a copy of which is
incorporated by reference as an exhibit to the registration statement of which
this Prospectus forms a part, and to Delaware corporate law.
COMMON STOCK
The holders of Common Stock are entitled to receive, pro rata, dividends,
when, if and as declared by the Board of Directors out of any funds lawfully
available therefor. However, the Company's ability to declare and pay dividends
on the Common Stock is limited by the terms of the New Credit Agreement and the
indenture for the 9% Notes. In the event of a liquidation, dissolution or
winding up of the Company, the holders of Common Stock are entitled to
participate ratably in the distribution of assets remaining after payment of
liabilities. The issued and outstanding shares of Common Stock are, and the
Common Stock issued upon the exercise of Rights will be, fully paid and
nonassessable. See "Capitalization."
Holders of Common Stock are entitled to vote at all meetings of stockholders
of the Company for the election of directors and for other purposes. Holders
have one vote for each share of Common Stock held. The Common Stock does not
have cumulative voting rights. Therefore, holders of more than 50% of the shares
voting can elect all directors.
The JLL Stock Purchase Agreement provides certain preemptive rights to JLL.
Such preemptive rights permit JLL to participate in future issuances by the
Company of its Common Stock (including rights and
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other securities convertible into Common Stock) to the extent necessary to
maintain its fully-diluted ownership interest of Common Stock of the Company,
subject to certain exceptions set forth in the JLL Stock Purchase Agreement.
PREFERRED STOCK
The Board of Directors has the authority to issue the Preferred Stock in one
or more classes or series and to fix the designations, powers, preferences and
rights of the shares of each such class or series, including dividend rates,
conversion rights, voting rights, terms of redemption and liquidation
preferences and the number of shares constituting each such class or series,
without any further vote or action by the stockholders. The ability of the Board
of Directors to issue the Preferred Stock, while providing flexibility in
connection with possible acquisitions and other corporate purposes, could have
the effect of making it more difficult for a third party to acquire, or of
discouraging a third party from acquiring, a majority of the outstanding voting
stock of the Company. The Company has no present plans to issue any of the
Preferred Stock.
WARRANTS
On October 31, 1991, the Company entered into a warrant agreement (the
"Warrant Agreement") pursuant to which the Company issued Warrants to purchase
shares of Common Stock (the "Warrant Shares"), representing approximately a 3%
equity interest in the Company on a fully-diluted basis, at a price of $17.53
per share (the "Warrant Price"). The Warrants may be exercised at any time
before their expiration on December 31, 1998.
The number of Warrant Shares is subject to adjustment upon the occurrence of
certain events, including the issuance of Common Stock to be sold pursuant to
the exercise of Rights.
The Warrant Agreement prohibits the declaration or payment of any dividend
or distribution on the Common Stock unless the Company pays to the Warrant
holders the amount of any such dividend or distribution receivable by a holder
of the number of shares of Common Stock for which the Warrants might have been
exercised immediately prior to the declaration or payment of the dividend or
distribution. In addition, if any person or group acquires the power to vote
more than 30% of the Common Stock, the Warrant Agreement provides that the
holders of a majority of the Warrants may require the Company to repurchase the
Warrants at the then current market price of the Common Stock less the Warrant
Price.
REGISTRATION RIGHTS
THE WARRANT AGREEMENT. The Warrant Agreement grants to the Warrant holders
certain demand and piggyback registration rights that require the Company to
include up to 193,454 Warrant Shares in certain registrations under the
Securities Act. Warrant holders are required to exercise Warrants in order to
take advantage of such registration rights. The Warrantholders have not
exercised their registration rights in connection with the Rights Offering.
STOCKHOLDERS AGREEMENT. On March 22, 1993, the Company entered into a
stockholders agreement (the "Stockholders Agreement") with The Airlie Group,
L.P. ("Airlie"). Under the terms of the Stockholders Agreement, Airlie has
certain demand and piggyback registration rights with respect to 761,561 shares
of Common Stock. The Rights Offering is subject to the piggyback registration
rights conferred to Airlie by the Stockholders Agreement. The Company has been
advised by Airlie that it does not intend to exercise such registration rights.
THE JLL STOCK PURCHASE AGREEMENT. The JLL Stock Purchase Agreement grants
to JLL certain demand and piggyback registration rights with respect to
2,000,000 shares of Common Stock. Of these, only the piggyback registration
rights have vested, and JLL has advised the Company that it does not intend to
exercise them in the Rights Offering.
CERTAIN PROVISIONS OF THE CERTIFICATE OF INCORPORATION, THE INDENTURE AND THE
CREDIT AGREEMENT
Certain provisions of the Certificate of Incorporation, the indenture
governing the 9 3/4% Notes and the New Credit Agreement may delay, deter or
prevent a stockholder or group of stockholders from taking corporate action or
gaining control of the Company.
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CLASSIFIED BOARD OF DIRECTORS. The Certificate of Incorporation requires
the Company's Board of Directors to be divided into three classes, with
directors in each class serving successive three-year terms. In addition, the
Certificate of Incorporation provides that directors may be removed only for
cause. These provisions of the Certificate of Incorporation may be amended only
by the affirmative vote of the holders of 75% of the outstanding shares of
Common Stock entitled to vote thereon.
INDENTURE CHANGE OF CONTROL PROVISIONS. The indenture governing the 9 3/4%
Notes provides that in the event of a change of control of the Company, the
Company must repurchase, at the prices set forth in the Indenture, all properly
tendered Notes.
CREDIT AGREEMENT DEFAULT UPON CERTAIN BENEFICIAL OWNERSHIP/CHANGE OF CONTROL
CHANGES. The New Credit Agreement provides that an event of default shall occur
thereunder if any person or group (other than JLL) shall own directly,
beneficially and of record, 30% or more (or at any time that JLL shall own
directly, beneficially and of record, shares representing at least 15% of the
outstanding voting capital stock, 50% or more) of the outstanding voting capital
stock of the Company, among other things.
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
Section 203 of the Delaware General Corporation Law ("Section 203")
prohibits a publicly-held Delaware corporation from engaging in a "business
combination" with an "interested stockholder" for a period of three years after
the date of the transaction in which the person became an interested stockholder
unless (i) prior to the date of the business combination, the corporation's
board of directors approved either the business combination or the transaction
which resulted in the stockholder becoming an interested stockholder, (ii) upon
consummation of the transaction which resulted in the stockholder becoming an
interested stockholder, the interested stockholder owns at least 85% of the
outstanding voting stock, or (iii) on or after such date the business
combination is approved by the corporation's board of directors and by the
affirmative vote of at least 66 2/3% of the outstanding voting stock which is
not owned by the interested stockholder. A "business combination" includes
mergers, asset sales and other transactions resulting in a financial benefit to
the stockholder. An "interested stockholder" is a person who, together with
affiliates and associates, owns, or within three years did own, 15% or more of
the corporation's voting stock. The Company is subject to Section 203.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following discussion is based upon current provisions of the Code,
applicable Treasury Regulations, judicial authority and administrative rulings
and practice. Legislative, judicial or administrative changes and
interpretations may be forthcoming that could alter or modify the statements and
conclusions set forth herein. Any such changes or interpretations may or may not
be retroactive and could affect the tax consequences to holders of Rights or
Underlying Shares.
TAX CONSEQUENCES TO COMPANY
The Company currently has net operating loss carryforwards for Federal
income tax purposes of approximately $133 million. Acquisitions of Common Stock
by persons who are not currently holders of Common Stock, or by persons whose
acquisition would increase or maintain their equity ownership in the Company
above five percent, could result in an "ownership change" within the meaning of
section 382 of the Code, thereby imposing a Section 382 Limitation on the
Company's ability to utilize the net operating loss carryforward to reduce
future taxable income.
In general, an ownership change occurs for purposes of section 382 if the
percentage of stock ownership of any one or more "5 percent shareholder(s)" (as
determined under Federal income tax regulations) increases in the aggregate by
more than 50 percentage points during a running three-year period. For this
purpose, the term "5 percent shareholder" includes certain public groups of
shareholders of the Company who may own, directly or indirectly, less than five
percent of the Company's stock. Under existing regulations, direct public groups
which currently own Common Stock will be deemed to exercise the Basic
Subscription Privilege to purchase 50% of such direct public groups' current
percentage ownership interest in the Company (increased to the extent that the
Company has actual knowledge that additional Underlying
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Shares are purchased by members of existing direct public groups and limited so
that the number of Underlying Shares actually issued to shareholders when added
to the number of Underlying Shares deemed issued to existing direct public
groups does not exceed the total number of Underlying Shares issued in the
Rights Offering). Any remaining Underlying Shares purchased by shareholders who
are not 5 percent shareholders will be deemed to be purchased by a new public
group.
If the Company believes that the issuance of Underlying Shares pursuant to
the Basic Subscription Privilege or the Oversubscription Privilege will cause an
ownership change, then the Company will have the right to reduce the number of
Underlying Shares issuable to all Holders exercising the Basic Subscription
Privilege or the Oversubscription Privilege, pro rata, or to any individual
Holder or Holders whose exercise of the Basic Subscription Privilege or the
Oversubscription Privilege may cause an ownership change, to the extent
necessary in the sole discretion of the Company to prevent such ownership
change. Notwithstanding the foregoing, the Rights Offering increases the
likelihood that an ownership change will occur in the future, and it is
impossible for the Company to ensure that such ownership change will not occur,
in part because the Company has no ability to restrict the acquisition or
disposition of Common Stock by persons whose ownership could cause an ownership
change. In addition, the Company may in the future take certain actions which
could give rise to an ownership change, if in the exercise of the business
judgment of the Company such actions are necessary or appropriate. If an
"ownership change" were to occur subsequent to the Rights Offering, the Section
382 Limitation could have a material adverse impact upon the Company's earnings
and upon the Company's cash flow. See "Risk Factors -- Continuation of Net
Operating Loss Carryforwards."
TAX CONSEQUENCES TO HOLDERS
Neither distribution nor exercise of the Rights will be a taxable event for
U.S. Federal income tax purposes to U.S. individual citizens or residents or to
U.S. corporations. Upon the sale of Rights, Holders will recognize gain or loss
for U.S. Federal income tax purposes equal to the difference between the amount
realized from the sale and the adjusted tax basis of the Rights. Any gain or
loss recognized will be long-term or short-term capital gain or loss to
shareholders who hold the Rights as capital assets, depending upon whether the
Common Stock or Warrants with respect to which the Rights were issued has been
held for more than one year.
Except as provided below, a Holder of Rights must allocate the tax basis of
the Common Stock or Warrants between the Common Stock or Warrants and the Rights
in proportion to the fair market value of each on the date of the distribution
of the Rights where the value of the Rights on the date of the distribution is
equal to or greater than 15% of the fair market value of the Common Stock or
Warrants owned by such Holder on the date of the distribution. Where the value
of the Rights is less than 15% of the value of such Common Stock or Warrants at
the time of distribution, the Holder will be treated as having no basis in the
Rights unless a special election is made to allocate the basis in the manner
described above. In any event, no portion of the basis of a Holder's Common
Stock or Warrants will be allocated to the Rights in accordance with these
allocation rules unless such Rights are exercised or sold.
If a Holder exercises Rights pursuant to this offering, the tax basis of the
Underlying Shares will be equal to the Exercise Price plus any tax basis the
Holder has in the Rights.
If a Holder allows the Rights to lapse without exercise or sale, such Holder
will realize no gain or loss since no basis will be allocated to the Rights, and
such Holder's basis in the Common Stock or Warrants will remain the same as such
basis was prior to the distribution of the Rights. Purchasers of the Rights will
be entitled to a loss equal to their tax basis in the Rights, if such Rights
expire unexercised. Any loss recognized on the expiration of the Rights acquired
by purchase will be a capital loss if Common Stock would be a capital asset in
the hands of the seller (if acquired by him).
THE FOREGOING SUMMARY DOES NOT DISCUSS ALL ASPECTS OF FEDERAL INCOME
TAXATION THAT MAY BE RELEVANT TO A PARTICULAR PROSPECTIVE HOLDER OF RIGHTS OR
UNDERLYING SHARES OR TO CERTAIN PROSPECTIVE HOLDERS OF RIGHTS OR UNDERLYING
SHARES SUBJECT TO SPECIAL TREATMENT UNDER THE FEDERAL INCOME TAX LAWS (FOR
EXAMPLE, BANKS, DEALERS IN SECURITIES, LIFE INSURANCE
24
<PAGE>
COMPANIES, TAX-EXEMPT ENTITIES AND FOREIGN PERSONS OR ENTITIES). EACH
PROSPECTIVE HOLDER OF RIGHTS OR UNDERLYING SHARES SHOULD CONSULT HIS OWN TAX
ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO HIM OF RECEIVING, ACQUIRING,
HOLDING, EXERCISING, CONVERTING AND DISPOSING OF THE RIGHTS, OR UNDERLYING
SHARES, INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL AND FOREIGN TAX
LAWS.
PLAN OF DISTRIBUTION
The Company has retained Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner
& Smith Incorporated and Johnson Rice & Company, L.L.C. to act as dealer
managers (the "Dealer Managers") in connection with the Rights Offering. The
Dealer Managers will provide marketing assistance and financial advisory
services in connection with the Rights Offering and will solicit the exercise of
Rights by Holders. The Company has agreed to pay the Dealer Managers an
aggregate fee of $.04 per share for each Underlying Share issued pursuant to the
exercise of Rights other than any Underlying Shares issued to JLL and to pay
broker-dealers (the "Soliciting Dealers"), including the Dealer Managers, fees
for their soliciting efforts equal to $.10 per share for each Underlying Share
issued pursuant to the exercise of Rights other than any Underlying Shares
issued to JLL. The maximum compensation that either Dealer Manager would receive
under this arrangement is $461,053. In addition, the Company has agreed to
indemnify the Dealer Managers and the Soliciting Dealers with respect to certain
liabilities, including liabilities under the Securities Act of 1933, as amended
(the "Securities Act").
The Company is also required to pay to the Financial Advisor a fee in the
amount of $500,000, $250,000 of which is contingent on and payable in cash on
the date of the closing of the Rights Offering. In addition, the Company has
agreed to reimburse the Financial Advisor, upon request made from time to time,
for its reasonable out-of-pocket expenses incurred in connection with its
activities as Financial Advisor, including, without limitation, the reasonable
fees and disbursements of its legal counsel which are not expected to exceed
$75,000.
The Company has agreed to pay the fees and expenses of the Exercise Agent
and has also agreed to indemnify it from any liability which it may incur in
connection with the Rights Offering, including liabilities under the Securities
Act.
Other than the Dealer Managers and the Soliciting Dealers, the Company has
not employed any brokers, dealers or underwriters in connection with the
solicitation of exercise of Rights, and, except as described above, no other
commissions, fees or discounts will be paid in connection with the Rights
Offering. Certain employees of the Company may solicit responses from Holders,
but such employees will not receive any commissions or compensation for such
services other than their normal employment compensation.
LEGAL OPINIONS
The validity of the Common Stock will be passed upon for the Company by
Darian B. Andersen, Esq., Secretary and Corporate Counsel of the Company.
INDEPENDENT PUBLIC ACCOUNTANTS
The consolidated balance sheets of the Company as of January 1, 1994 and
January 2, 1993 and the related consolidated statements of operations,
stockholders' equity and cash flows and the related financial statement
schedules for the years ended January 1, 1994 and January 2, 1993, the three
months ended December 28, 1991, and the nine months ended September 28, 1991,
incorporated by reference in this prospectus, have been incorporated herein in
reliance on the report, which includes an explanatory paragraph relating to the
Company's adoption of new methods of accounting for income taxes and
postretirement benefits other than pensions, of Coopers & Lybrand L.L.P.,
independent accountants, given on the authority of that firm as experts in
accounting and auditing. With respect to the unaudited interim financial
information for the periods ended April 2, 1994 and April 3, 1994 and July 2,
1994 and July 3, 1993, incorporated by reference in this prospectus, the
independent accountants have reported that they have
25
<PAGE>
applied limited procedures in accordance with professional standards for a
review of such information. However, their separate reports included in the
Company's amended quarterly reports on Form 10-Q/A for the quarters ended April
2, 1994 and July 2, 1994, and incorporated by reference herein, state that they
did not audit and they do not express an opinion on that interim financial
information. Accordingly, the degree of reliance on their report on such
information should be restricted in light of the limited nature of the review
procedures applied. The accountants are not subject to the liability provisions
of Section 11 of the Securities Act for their report on the unaudited interim
financial information because that report is not a "report" or a "part" of the
registration statement prepared or certified by the accountants within the
meaning of Sections 7 and 11 of the Securities Act.
The financial statements of the Frozen Specialty Foods Business (a unit of
the Prepared Foods Division of International Multifoods Corporation) as of
November 27, 1993, February 27, 1993 and February 29, 1992 and for the nine
months ended November 27, 1993 and the years ended February 27, 1993 and
February 29, 1992 incorporated by reference herein and elsewhere in the
registration statement have been incorporated by reference herein and in the
registration statement in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing. The
report of KPMG Peat Marwick LLP refers to the adoption by the Frozen Specialty
Foods Business of the provisions of the Financial Accounting Standards Boards'
Statement of Financial Accounting Standards No. 109, ACCOUNTING FOR INCOME
TAXES, in the nine months ended November 27, 1993 and Statement of Financial
Accounting Standards No. 106, EMPLOYERS' ACCOUNTING FOR POSTRETIREMENT BENEFITS
OTHER THAN PENSIONS, in the year ended February 29, 1992.
26
<PAGE>
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH
THE OFFERING DESCRIBED HEREIN, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR THE DEALER MANAGERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR
A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THOSE SPECIFICALLY
OFFERED HEREBY OR OF ANY SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE AN OFFER OR SOLICITATION IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
-------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Available Information.......................... 2
Incorporation of Certain Documents by
Reference..................................... 2
Prospectus Summary............................. 3
Risk Factors................................... 7
The Company.................................... 9
The Acquisition................................ 9
Recent Events.................................. 10
Price Range of Common Stock and Dividends...... 10
Capitalization................................. 11
Selected Historical Financial Data............. 12
Pro Forma Financial Data....................... 13
Use of Proceeds................................ 15
The Rights Offering............................ 15
Description of Capital Stock................... 21
Certain United States Federal Income Tax
Consequences.................................. 23
Plan of Distribution........................... 25
Legal Opinions................................. 25
Independent Public Accountants................. 25
</TABLE>
DOSKOCIL COMPANIES INCORPORATED
SHARES OF
COMMON STOCK ISSUABLE
UPON EXERCISE OF RIGHTS TO
SUBSCRIBE FOR SUCH SHARES
-------------------
PROSPECTUS
-------------------
MERRILL LYNCH & CO.
JOHNSON RICE & COMPANY
, 1994
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee.................... $ 19,158
NASD Fee............................................................... 6,056
NASDAQ NMS Fee......................................................... 1,000
Fees and expenses of the Exercise Agent................................ 50,000*
Printing and engraving expenses........................................ 100,000*
Legal Fees and expenses................................................ 250,000*
Accounting Fees and expenses........................................... 75,000*
Blue Sky Fees and expenses (including fees and expenses of counsel).... 10,000*
Fees and expenses of the Dealer Managers............................... 250,000*
Fees and expenses of the Financial Advisor............................. 500,000
Miscellaneous.......................................................... 38,786*
----------
Total.............................................................. $1,300,000*
----------
----------
<FN>
- ------------------------
* Estimated
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation and Bylaws provide that the
Company shall indemnify and advance expenses to its currently acting and its
former directors, officers, employees or agents to the fullest extent permitted
by the Delaware General Corporation Law (the "DGCL"), whenever they are
defendants or threatened to be made defendants in any legal or administrative
proceeding by reason of their relationship with the Company. Section 145 of the
DGCL provides that a corporation may indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceedings whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Company) by reason
of the fact that such person is or was a director, officer, employee or agent of
the Company or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including attorney's fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if such person acted
in good faith and in a manner the person reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect to any criminal
action or proceeding, had not reasonable cause to believe was unlawful. A
similar standard of care is applicable in the case of derivative actions, except
that indemnification only extends to expenses (including attorneys' fees)
incurred in connection with defense or settlement of such an action and then,
where the person is adjudged to be liable to the Company, only if and to the
extent that the Court of Chancery of the State of Delaware or the court in which
such action was brought determines that such person is fairly and reasonably
entitled to such indemnity and then only for such expenses as the court shall
deem proper.
The Company has entered into Transition Employment Agreements with its
employee-Directors and officers and into Indemnification Agreements with its
nonemployee-Directors contractually obligating the Company to provide
indemnification rights substantially similar to those described above.
The Company is empowered by Section 102(b)(7) of the DGCL to include a
provision in its Certificate of Incorporation that limits a director's liability
to the Company or its stockholders for monetary damages for breaches of his or
her fiduciary duty as a director. The Certificate of Incorporation states that
directors shall not be liable for monetary damages for breaches of their
fiduciary duty to the fullest extent permitted by the DGCL.
The Company maintains insurance policies under which directors and officers
are insured, within the limits and subject to the limitations of the policies,
against expenses in connection with the defense of
II-1
<PAGE>
actions, suits or proceedings, and certain liabilities that might be imposed as
a result of such actions, suits or proceedings, to which they are parties by
reason of being or having been directors or officers of the Company.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- ----------------------------------------------------------------------------------------------
<C> <S>
1 Form of Dealer Manager Agreement.*
4.1 Specimen certificate for the Company's common stock, par value $.01 per share. (1)
4.2 Form of Rights Certificate to Purchase Common Stock of the Company.**
4.3 Credit Agreement among Doskocil, the Several Lenders from Time to Time Parties Thereto and
Chemical Bank, as Agent dated as of May 25, 1994. (2)
4.4 Form of Doskocil 9 3/4% Senior Subordinated Redeemable Note due 2000. (3)
4.5 Indenture between Doskocil and First Fidelity Bank, National Association, New York, as
Trustee. (3)
4.6 Warrant Agreement dated as of October 31, 1991 between the Company and the signatory banks
thereto. (4)
4.7 Amended and Restated Certificate of Incorporation of the Company. (5)
4.8 Amended and Restated Bylaws of the Company. (6)
4.9 Doskocil Employee Investment Plan. (4)
4.10 Doskocil Companies Incorporated 1992 Stock Incentive Plan. (1)
4.11 Doskocil Companies Incorporated Retirement and Profit Sharing Plan. (7)
4.12 Guaranty Agreement between the Company and The Fourth National Bank and Trust Company,
Wichita, dated August 1, 1985. (4)
4.13 Agreement for Waste Water Treatment Service between Stoppenbach, Inc. and the City of
Jefferson, Wisconsin, dated November 1985. (4)
4.14 Agreement (for waste water treatment) between the City of Logansport, Indiana and Wilson &
Co., Inc., dated June 26, 1967. (4)
5 Opinion of Darian B. Andersen, regarding the legality of the Underlying Shares.**
15 Letter re: Unaudited Interim Financial Information.
23.1 Consent of Darian B. Andersen (included as part of Exhibit 5).**
23.2 Consent of Coopers & Lybrand L.L.P.
23.3 Consent of KPMG Peat Marwick LLP.
24 Powers of Attorney pursuant to which amendments to the Registration Statement may be filed
(included on signature page of the Registration Statement).**
99.1 Form of Letter to Securities Dealers, Commercial Banks, Trust Companies and Other Nominees.**
99.2 Form of Transmittal Letter to Holders of Common Stock of the Company.**
99.3 Form of Transmittal Letter to Holders of Common Stock of the Company whose addresses are
outside the continental United States and Canada and who have APO or FPO addresses.**
99.4 Form of Transmittal Letter to Holders of Warrants of the Company.**
99.5 Form of Transmittal Letter to Clients of Securities Dealers, Commercial Banks, Trust Companies
and Other Nominees.**
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- ----------------------------------------------------------------------------------------------
99.6 Form of Instructions as to Use of the Doskocil Companies Incorporated Rights Certificates.**
<C> <S>
99.7 Form of Notice of Guaranteed Delivery.**
99.8 Form of Certification and Request for Additional Rights.**
<FN>
- ------------------------
*To be filed by amendment.
** Previously filed.
(1) Incorporated by reference to the exhibits filed with the Registration
Statement on Form S-8 filed with the Commission on March 4, 1992.
(2) Incorporated by reference to the exhibit filed with the current Report on
Form 8-K filed on June 14, 1994.
(3) Incorporated by reference to the exhibits filed with the Registration
Statement (File No. 33-59484) on Form S-1 filed with the Commission April
13, 1993.
(4) Incorporated by reference to the exhibits to the Annual Report on Form 10-K
(File No. 7803) filed with the Commission on March 13, 1992.
(5) Incorporated by reference to the exhibits to the Current Report on Form 8-K
dated February 5, 1993.
(6) Incorporated by reference to the exhibits to the Current Report on Form 8-K
filed with the Commission on March 23, 1993.
(7) Incorporated by reference to the Annual Report on Form 10-K (File No. 7803)
filed with the Commission on March 31, 1994 as amended by Form 10-K/A No. 1
filed on June 29, 1994 and 10-K/A No. 2 filed on July 22, 1994.
</TABLE>
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(a) To include any material information with respect to the plan of
distribution not previously described in the registration statement or any
material change to such information in the registration statement;
(b) 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.
(c) 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.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, or otherwise, the Company has been
informed 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 Company of expenses incurred or
paid by a director, officer, or controlling person of the Company 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 Company 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 of whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
II-3
<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-3 and has duly caused this amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Oklahoma City, State of Oklahoma, on August 19,
1994.
DOSKOCIL COMPANIES INCORPORATED
By: _____/s/_R. RANDOLPH DEVENING_____
R. Randolph Devening
CHAIRMAN OF THE BOARD OF DIRECTORS,
PRESIDENT,
CHIEF EXECUTIVE OFFICER AND
DIRECTOR
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------------ --------------------------------------- ----------------------
<C> <S> <C>
/s/R. RANDOLPH DEVENING Chairman of the Board of Directors,
-------------------------------------- President, Chief Executive Officer and August 19, 1994
R. Randolph Devening Director (Principal Executive Officer)
/s/WILLIAM L. BRADY Vice President and Controller
-------------------------------------- (Principal Financial and Accounting August 19, 1994
William L. Brady Officer)
*
-------------------------------------- Director August 19, 1994
Theodore Ammon
*
-------------------------------------- Director August 19, 1994
Thomas W. Arenz
*
-------------------------------------- Director August 19, 1994
Richard N. Bauch
*
-------------------------------------- Director August 19, 1994
Richard T. Berg
*
-------------------------------------- Director August 19, 1994
Dort A. Cameron III
*By: /s/WILLIAM L. BRADY
---------------------------------
William L. Brady
Attorney-in-Fact.
</TABLE>
II-4
<PAGE>
<TABLE>
<C> <S> <C>
*
-------------------------------------- Director August 19, 1994
Yvonne V. Cliff
*
-------------------------------------- Director August 19, 1994
Robert D. Cook
*
-------------------------------------- Director August 19, 1994
Terry M. Grimm
*
-------------------------------------- Director August 19, 1994
Peter A. Joseph
*
-------------------------------------- Director August 19, 1994
Michael I. Klein
*
-------------------------------------- Director August 19, 1994
Paul S. Levy
*
-------------------------------------- Director August 19, 1994
Angus C. Littlejohn, Jr.
*
-------------------------------------- Director August 19, 1994
Paul W. Marshall
*By: /s/WILLIAM L. BRADY
---------------------------------
William L. Brady
Attorney-in-Fact.
</TABLE>
II-5
<PAGE>
EXHIBIT 15
[LETTERHEAD OF COOPERS & LYBRAND L.L.P.]
AUGUST 19, 1994
SECURITIES AND EXCHANGE COMMISSION
450 FIFTH STREET, N.W.
WASHINGTON, D.C. 20549
RE: DOSKOCIL COMPANIES INCORPORATED
REGISTRATION ON FORM S-3 (FILE NO. 33-54137)
-------------------------------------------------
We are aware that our reports dated April 29, 1994 and August 5, 1994 on our
reviews of interim financial information of Doskocil Companies Incorporated as
of April 2, 1994 and July 2, 1994 and for the periods ended April 2, 1994 and
April 3, 1993 and July 2, 1994, and July 3, 1993 and included in the Company's
amended quarterly reports on Form 10-Q/A for the quarters ended April 2, 1994
and July 2, 1994 are incorporated by reference in this registration statement.
Pursuant to Rule 436(c) under the Securities Act of 1933, these reports should
not be considered a part of the registration statement prepared or certified by
us within the meaning of Sections 7 and 11 of that Act.
/s/ COOPERS & LYBRAND L.L.P.
-------------------------------------------------
Coopers & Lybrand L.L.P.
<PAGE>
Exhibit 23.2
[Letterhead of Coopers & Lybrand L.L.P.]
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Doskocil Companies Incorporated on Form S-3 (File no. 33-54137) of our report,
which includes an explanatory paragraph relating to the Company's adoption of
new methods of accounting for income taxes and postretirement benefits other
than pensions, dated March 1, 1994, on our audits of the consolidated financial
statements and financial statement schedules of Doskocil Companies Incorporated
as of January 1, 1994 and January 2, 1993, and for the years ended
January 1, 1994 and January 2, 1993, the three months ended December 28, 1991
and the nine months ended September 28, 1991, which report is included in the
amended Annual Report on Form 10-K/A for the year ended January 1, 1994, which
Form 10-K/A is incorporated by reference in this registration statement. We
also consent to the reference to our firm as experts, under the caption
Independent Public Accountants.
/s/ COOPERS & LYBRAND L.L.P.
------------------------------
Coopers & Lybrand L.L.P.
Tulsa, Oklahoma
August 19, 1994
2
<PAGE>
EXHIBIT 23.3
[Letterhead of KPMG Peat Marwick LLP]
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Doskocil Companies Incorporated:
We consent to the use of our report dated February 21, 1994 on the financial
statements of the Frozen Specialty Foods Business (a unit of the Prepared Foods
Division of International Multifoods Corporation) as of November 27, 1993,
February 27, 1993 and February 29, 1992 and for the nine months ended November
27, 1993 and the years ended February 27, 1993 and February 29, 1992
incorporated herein by reference and to the reference to our firm under the
heading "Independent Public Accountants" in the prospectus.
Our report refers to the adoption by the Frozen Specialty Foods Business of
the provisions of the Financial Accounting Standards Board's Statement of
Financial Accounting Standards No. 109, ACCOUNTING FOR INCOME TAXES, in the nine
months ended November 27, 1993 and Statement of Financial Accounting Standards
No. 106, EMPLOYERS' ACCOUNTING FOR POSTRETIREMENT BENEFITS OTHER THAN PENSIONS,
in the year ended February 29, 1992.
/S/ KPMG PEAT MARWICK LLP
--------------------------------------
KPMG PEAT MARWICK LLP
Orange County, California
August 18, 1994
