<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D/A
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 5)
United Foods, Inc.
- --------------------------------------------------------------------------------
(NAME OF ISSUER)
Class A and Class B Common Stock
- --------------------------------------------------------------------------------
(TITLE OF CLASS OF SECURITIES)
910365 30 3
910365 10 5
- --------------------------------------------------------------------------------
(CUSIP NUMBER)
James I. Tankersley
Daniel B. Tankersley
Ten Pictsweet Drive
Bells, Tennessee 38006-0119
(901) 422-7600
- --------------------------------------------------------------------------------
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS)
July 10, 1997
- --------------------------------------------------------------------------------
(DATE OF EVENT WHICH REQUIRES FILING OF THIS STATEMENT)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box [ ].
Check the following box if a fee is being paid with the statement [ ].
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent of
the class of securities described in Item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of five percent or less of
such class.) (See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom copies
are to be sent.
The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that
section of the Act but shall be subject to all other provisions of the Act
(however, see the Notes).
(Continued on following page(s))
Page 1 of 8 Pages
<PAGE> 2
SCHEDULE 13D
CUSIP No. 910365 303 Page 2 of 8 Pages
910365 10 5
<TABLE>
<S> <C> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Daniel B. Tankersley SS# ###-##-####
- ----------------------------------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / /
(b) / /
- ----------------------------------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ----------------------------------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS
00
- ----------------------------------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
/ /
- ----------------------------------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- ----------------------------------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
712,176 Class A Common Stock. 312,783 of these shares represent Class B Common Stock of the
Company which is convertible into Class A Common Stock on a one for one basis.
NUMBER OF -----------------------------------------------------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY EACH -----------------------------------------------------------------------------------------------------------
REPORTING PERSON 9 SOLE DISPOSITIVE POWER
WITH 712,176 Class A Common Stock. 312,783 of these shares represent Class B Common Stock of the
Company which is convertible into Class A Common Stock on a one for one basis.
-----------------------------------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
- ----------------------------------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
712,176 Class A Common Stock. 312,783 of these shares represent Class B Common Stock of the Company which is
convertible into Class A Common Stock on a one for one basis.
- ----------------------------------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / /
- ----------------------------------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
24.32% Class A Common Stock
- ----------------------------------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- ----------------------------------------------------------------------------------------------------------------------------------
SEE INSTRUCTIONS BEFORE FILLING OUT!
</TABLE>
<PAGE> 3
SCHEDULE 13D
CUSIP No. 910365 303 Page 3 of 8 Pages
910365 10 5
<TABLE>
<S> <C> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Daniel B. Tankersley SS# ###-##-####
- ----------------------------------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / /
(b) / /
- ----------------------------------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ----------------------------------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS
00
- ----------------------------------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) / /
- ----------------------------------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- ----------------------------------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
312,783 Class B Common Stock
NUMBER OF -----------------------------------------------------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY EACH -----------------------------------------------------------------------------------------------------------
REPORTING PERSON 9 SOLE DISPOSITIVE POWER
WITH
312,783 Class B Common Stock
-----------------------------------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
- ----------------------------------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
312,783 Class B Common Stock
- ----------------------------------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / /
- ---------------------------------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.46% Class B Common Stock
- ----------------------------------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- ----------------------------------------------------------------------------------------------------------------------------------
SEE INSTRUCTIONS BEFORE FILLING OUT!
</TABLE>
<PAGE> 4
SCHEDULE 13D
CUSIP No. 910365 303 Page 4 of 8 Pages
910365 10 5
<TABLE>
<S> <C> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
James I. Tankersley SS# ###-##-####
- ----------------------------------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) / /
- ----------------------------------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ----------------------------------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS
00
- ----------------------------------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) / /
- ----------------------------------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- ----------------------------------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
1,221,328 Class A Common Stock
NUMBER OF -----------------------------------------------------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY James I. Tankersley has no power to vote, and disclaims beneficial ownership
OWNED BY EACH of, shares owned by his spouse or children included herein.
REPORTING PERSON 1,332,087 Class A Common Stock
WITH -----------------------------------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
1,221,328 Class A Common Stock
-----------------------------------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
James I. Tankersley has no power to dispose of, and disclaims beneficial
ownership of, shares owned by his spouse and children included herein.
1,332,613 Class A Common Stock
- ----------------------------------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,553,415 Class A Common Stock. These shares represent Class B Common Stock of the Company which is convertible into
Class A Common Stock on a one for one basis.
- ----------------------------------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / /
- ----------------------------------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
49.39% Class A Common Stock
- ----------------------------------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- ----------------------------------------------------------------------------------------------------------------------------------
SEE INSTRUCTIONS BEFORE FILLING OUT!
</TABLE>
<PAGE> 5
SCHEDULE 13D
CUSIP No. 910365 303 Page 5 of 8 Pages
910365 10 5
<TABLE>
<S> <C> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
James I. Tankersley SS# ###-##-####
- ----------------------------------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) / /
- ----------------------------------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ----------------------------------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS
00
- ----------------------------------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) / /
- ----------------------------------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- ----------------------------------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
1,221,328 Class A Common Stock
NUMBER OF -----------------------------------------------------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY James I. Tankersley has no power to vote, and disclaims beneficial ownership
OWNED BY EACH of, shares owned by his spouse or children included herein.
REPORTING PERSON 1,332,087 Class A Common Stock
WITH -----------------------------------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
1,221,328 Class A Common Stock
-----------------------------------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
James I. Tankersley has no power to dispose of, and disclaims beneficial
ownership of, shares owned by his spouse and children included herein.
1,332,087 Class A Common Stock
- ----------------------------------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,553,415 Class B Common Stock
- ----------------------------------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / /
- ----------------------------------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
60.88% Class B Common Stock
- ----------------------------------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- ----------------------------------------------------------------------------------------------------------------------------------
SEE INSTRUCTIONS BEFORE FILLING OUT!
</TABLE>
<PAGE> 6
ITEM 1. SECURITY AND ISSUER.
This statement refers to Class A and Class B Common Stock of:
United Foods, Inc.
10 Pictsweet Drive
Bells, Tennessee 38006-0119
ITEM 2. IDENTITY AND BACKGROUND.
The information is provided below with respect to the reporting
person.
<TABLE>
<S> <C> <C>
i. (a) Name: Daniel B. Tankersley
(b) Business Address: 2611 Beech Bluff Road
Jackson, Tennessee 38301
(c) Principal Occupation: Vice Chairman and Director of United Foods, Inc.
(d) Daniel B. Tankersley has never been convicted of a crime.
(e) Daniel B. Tankersley has never been subject to a judgment, decree or final order in any civil
proceeding.
(f) Daniel B. Tankersley is a citizen of the United States.
ii. (a) Name: James I. Tankersley
(b) Business Address: 10 Pictsweet Drive
Bells, Tennessee 38006-0119
(c) Principal Occupation: Chairman of the Board and Chief Executive Officer of United
Foods, Inc.
(d) James I. Tankersley has never been convicted of a crime.
(e) James I. Tankersley has never been subject to a judgment, decree or final order in any civil
proceeding.
(f) James I. Tankersley is a citizen of the United States.
</TABLE>
ITEM 3. SOURCE AND AMOUNT OF FUNDS.
Pursuant to an Offer to Purchase dated May 20, 1997, as amended by a
Supplement to Offer to Purchase dated June 18, 1997, United Foods, Inc.
purchased 2,500,000 shares of its Class A Common Stock and 1,500,000 shares of
its Class B Common Stock, which resulted in an increase in the percentage
ownership of the Company's common stock of Daniel B. Tankersley and
James I. Tankersley.
<PAGE> 7
ITEM 4. PURPOSE OF TRANSACTION.
The information contained in the section entitled "Purpose of the
Offer, Certain Effects of the Offer" in the Offer to Purchase dated May 20,
1997, and attached hereto as Exhibit 7(a), and in the Supplement to the Offer
to Purchase dated June 18, 1997, and attached hereto as Exhibit 7(b), is
incorporated by reference herein.
ITEM 5. INTERESTS IN SECURITIES OF THE ISSUER.
(i)
<TABLE>
<CAPTION>
(a) Owner No. of Shares % of Shares
-------------------- -------------------------- -----------
<S> <C> <C> <C>
Class A
Common Stock Daniel B. Tankersley 712,176(1.) 24.32%
Class B
Common Stock Daniel B. Tankersley 312,783 7.46%
</TABLE>
(1.) 312,783 of these shares represent shares of Class B Common
Stock which is convertible into class A Common Stock on a one
for one basis.
(b) The power to vote and dispose of the shares owned by Daniel B.
Tankersley rests solely with him.
(c) None.
(d) Not applicable.
(e) Not applicable.
(ii)
<TABLE>
<CAPTION>
(a) Owner No. of Shares % of Shares
-------------------- -------------------------- ---------------------------
<S> <C> <C> <C>
Class A
Common Stock James I. Tankersley 1,221,328(1.) 31.83%
Spouse 9,474(1.) .36%
Children 1,322,613(1.) 33.58%
TOTAL 2,553,413(1.) 49.39%
Class B
Common Stock James I. Tankersley 1,221,328 29.12%
Spouse 9,474 .23%
Children 1,322,613 31.54%
TOTAL 2,553,415 60.88%
</TABLE>
(1.) All of these shares represent shares of Class B Common Stock
which is convertible into Class A Common Stock on a one for one basis.
<PAGE> 8
(b) The power to vote and dispose of the shares owned of
record by James I. Tankersley, his spouse and children
rests solely with the record owner in each case.
(c) None.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ETC. WITH RESPECT TO SECURITIES OF THE ISSUER.
Not applicable.
ITEM 7. MATERIAL TO BE FILED AS EXHIBIT.
(a) United Foods, Inc. Offer to Purchase dated May 20, 1997;
(b) United Foods, Inc. Supplement to Offer to Purchase dated
June 18, 1997.
SIGNATURE
After reasonable inquiry and to the best of the knowledge and belief
of the undersigned, I certify that the information set forth in this statement
is true, complete and correct as of this 17th day of July, 1997.
/s/ James I. Tankersley
----------------------------
James I. Tankersley
/s/ Daniel B. Tankersley
----------------------------
Daniel B. Tankersley
<PAGE> 1
EXHIBIT 7(a)
<PAGE> 2
UNITED FOODS, INC.
OFFER TO PURCHASE
FOR CASH UP TO 1,000,000 SHARES OF ITS
CLASS A COMMON STOCK AND CLASS B COMMON STOCK
AT A PRICE OF $2.50 PER SHARE
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON TUESDAY, JUNE 17, 1997, AS SUCH DATE MAY BE EXTENDED.
United Foods, Inc., a Delaware corporation (the "Company"), is offering to
purchase up to 1,000,000 shares of its Class A Common Stock, par value $1.00 per
share and Class B Common Stock, par value $1.00 per share (the "Shares"), at a
price of $2.50 per Share, net to the seller in cash, upon the terms and subject
to the conditions set forth in this Offer to Purchase and in the related Letter
of Transmittal (which together constitute the "Offer"). The Company will treat
the two classes of stock equally for all purposes in connection with the Offer.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE
SECTION 6.
The Shares are listed and principally traded on the American Stock Exchange
(the "Amex"). The Shares are also listed and traded on the Pacific Exchange (the
"PE"). On May 16, 1997, the last trading day before the day on which the Company
announced its intention to commence the Offer, the closing sales price of the
Class A Common Stock as reported by the Amex was $1 5/8 per share. No sale of
Class B Common Stock occurred on May 16, 1997, but the then most recent sale was
at $1 9/16 per share on May 15, 1997. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT
MARKET QUOTATIONS FOR THE SHARES.
Questions and requests for assistance or for additional copies of this
Offer may be directed to the Information Agent at the address and telephone
number set forth on the back cover of this Offer to Purchase.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION AS
TO WHETHER ANY STOCKHOLDER SHOULD TENDER ANY OR ALL OF SUCH STOCKHOLDER'S SHARES
PURSUANT TO THE OFFER. EACH STOCKHOLDER MUST MAKE THE DECISION WHETHER TO TENDER
SHARES AND, IF SO, HOW MANY SHARES TO TENDER.
THE COMPANY HAS NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON
BEHALF OF THE COMPANY AS TO WHETHER STOCKHOLDERS SHOULD TENDER OR REFRAIN FROM
TENDERING SHARES PURSUANT TO THE OFFER. THE COMPANY HAS NOT AUTHORIZED ANY
PERSON TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH
THE OFFER ON BEHALF OF THE COMPANY OTHER THAN THOSE CONTAINED IN THIS OFFER TO
PURCHASE OR IN THE LETTER OF TRANSMITTAL. DO NOT RELY ON ANY SUCH RECOMMENDATION
OR ANY SUCH INFORMATION OR REPRESENTATIONS, IF GIVEN OR MADE, AS HAVING BEEN
AUTHORIZED BY THE COMPANY.
May 20, 1997
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C> <C>
INTRODUCTION......................................................... 1
THE OFFER............................................................ 1
1. NUMBER OF SHARES, PRORATION; EXTENSION OF THE OFFER......... 1
2. TENDERS BY HOLDERS OF FEWER THAN 100 SHARES................. 2
3. PROCEDURE FOR TENDERING SHARES.............................. 3
Proper Tender of Shares..................................... 3
Signature Guarantees and Method of Delivery................. 3
Federal Income Tax Withholding.............................. 4
Book-Entry Delivery......................................... 4
Guaranteed Delivery......................................... 5
Determinations of Validity; Rejection of Shares; Waiver of
Defects; No Obligation to Give Notice of Defects............ 5
4. WITHDRAWAL RIGHTS........................................... 5
5. ACCEPTANCE FOR PAYMENT OF SHARES AND PAYMENT OF PURCHASE
PRICE....................................................... 6
6. CERTAIN CONDITIONS OF THE OFFER............................. 7
7. PRICE RANGE OF THE SHARES; DIVIDENDS........................ 8
8. PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER.......... 9
9. CERTAIN INFORMATION CONCERNING THE COMPANY.................. 12
Historical and Unaudited Pro Forma Financial Information.... 12
Additional Information...................................... 14
10. SOURCE AND AMOUNT OF FUNDS.................................. 14
11. TRANSACTIONS AND ARRANGEMENTS CONCERNING THE SHARES......... 15
12. CERTAIN LEGAL MATTERS; REGULATORY AND FOREIGN APPROVALS..... 15
13. CERTAIN FEDERAL INCOME TAX CONSEQUENCES..................... 15
14. EXTENSION OF THE TENDER PERIOD; TERMINATION; AMENDMENTS..... 18
15. FEES AND EXPENSES........................................... 19
16. MISCELLANEOUS............................................... 19
</TABLE>
i
<PAGE> 4
To the Holders of Class A and Class B Common Stock of United Foods, Inc.:
INTRODUCTION
United Foods, Inc., a Delaware corporation (the "Company"), is offering to
purchase up to 1,000,000 shares of its Class A Common Stock, par value $1.00 per
share and Class B Common Stock, par value $1.00 per share (the "Shares"), at a
price of $2.50 per Share (the "Purchase Price"), net to the seller in cash, upon
the terms and subject to the conditions set forth in this Offer to Purchase and
in the related Letter of Transmittal (which together constitute the "Offer").
The Company will treat the two classes of stock equally for all purposes in
connection with the Offer.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE
SECTION 6.
As of May 15, 1997, the Company had issued and outstanding 5,116,075 shares
of Class A Common Stock and 5,693,854 shares of Class B Common Stock. As of May
15, 1997, 829,384 shares of Class A Common Stock were reserved for issuance
pursuant to the exercise of employee stock options (the "Options"). The Company
is not offering to purchase any of the Options. Holders of Options who wish to
participate in the Offer must first exercise such Options, in accordance with
the terms and provisions thereof. The maximum number of Shares that the Company
is offering to purchase represents approximately 9.3% of the Shares outstanding
as of May 15, 1997.
If, before the Expiration Date (as defined in Section 1), more than
1,000,000 Shares (or such greater number of Shares as the Company may elect to
purchase pursuant to the Offer) are properly tendered and not withdrawn, the
Company will upon the terms and subject to the conditions of the Offer, purchase
Shares first from all Odd Lot Owners (as defined below) who properly tender all
of their Shares and then on a pro rata basis from all other stockholders who
properly tender Shares. See Sections 1, 2 and 3. The Company will return all
Shares not purchased under the Offer, including Shares not purchased because of
proration. Tendering stockholders will not be obligated to pay brokerage
commissions, solicitation fees or, subject to the Instructions to the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by the Company. The
Company will pay all charges and expenses of the Depositary and Information
Agent incurred in connection with the Offer.
The Shares are listed and principally traded on the Amex. The Shares are
also listed on the PE. On May 16, 1997, the last trading day before the day on
which the Company announced its intention to commence the Offer, the closing
sales price of the Class A Common Stock as reported by the Amex was $1 5/8 per
share. No sale of Class B Common Stock occurred on May 16, 1997, but the then
most recent sale was at $1 9/16 per share on May 15, 1997. See Section 7.
STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION AS TO
WHETHER ANY STOCKHOLDER SHOULD TENDER ANY OR ALL OF SUCH STOCKHOLDER'S SHARES
PURSUANT TO THE OFFER. EACH STOCKHOLDER MUST MAKE HIS OR HER OWN DECISION
WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER.
THE OFFER
1. NUMBER OF SHARES, PRORATION; EXTENSION OF THE OFFER
Upon the terms and subject to the conditions of the Offer, the Company will
accept for payment (and thereby purchase) 1,000,000 Shares or such lesser number
of Shares as are properly tendered on or before the Expiration Date (and not
withdrawn in accordance with Section 4) at the Purchase Price. The term
"Expiration Date" means 5:00 p.m., New York City time, on June 17, 1997, unless
and until the Company shall have extended the period of time during which the
Offer is open, in which event the term "Expiration Date" shall refer to the
latest time and date at which the Offer, as so extended by the Company, shall
expire.
1
<PAGE> 5
See Section 14 for a description of the Company's right to extend the time
during which the Offer is open and to delay, terminate or amend the Offer. If
the Offer is oversubscribed, Shares tendered before the Expiration Date will be
subject to proration. The proration period also expires on the Expiration Date.
The Company expressly reserves the right, in its sole discretion, at any
time or from time to time, to extend the period of time during which the Offer
is open by giving oral or written notice of such extension to the Depositary and
making a public announcement thereof. See Section 14. There can be no assurance,
however, that the Company will exercise its right to extend the Offer.
The Offer is not conditioned on any minimum number of Shares being validly
tendered. The Offer is, however, subject to certain other conditions. See
Section 6.
If (a) the Company (i) increases or decreases the price to be paid for
Shares, (ii) increases the number of Shares being sought and any such increase
in the number of Shares being sought exceeds 2% of the outstanding Shares, or
(iii) decreases the number of Shares being sought and (b) the Offer is scheduled
to expire at any time earlier than the tenth business day from and including the
date that notice of such increase, decrease or waiver is first published, sent
or given in the manner specified in Section 14, the Offer will be extended until
the expiration of such period of ten business days. For purposes of the Offer,
"business day" means any day other than a Saturday, Sunday or federal holiday
and consists of the time period from 12:01 a.m. through 12:00 Midnight, New York
City time.
All Shares purchased pursuant to the Offer will be purchased at the
Purchase Price, net to the seller in cash. The Company expressly reserves the
right, in its sole discretion, to amend the Offer and purchase more than
1,000,000 Shares pursuant to the Offer, but does not currently expect to do so.
See Section 14.
All Shares not purchased pursuant to the Offer, including Shares not
purchased because of proration and Shares tendered and withdrawn, will be
returned to the tendering stockholders at the Company's expense as promptly as
practicable following proration or withdrawal, as the case may be.
Upon the terms and subject to the conditions of the Offer, in the event
that prior to the Expiration Date the number of Shares properly tendered and not
withdrawn is greater than 1,000,000 Shares (or such greater number of Shares as
the Company may elect to purchase pursuant to the Offer), the Company will
accept Shares for purchase in the following order of priority:
(a) first, all Shares properly tendered and not withdrawn prior to the
Expiration Date by any Odd Lot Owner (as defined in Section 2) who: (i)
tenders all Shares beneficially owned by such Odd Lot Owner (partial
tenders will not qualify for this preference); and (ii) completes the box
captioned "Odd Lots" on the Letter of Transmittal and, if applicable, on
the Notice of Guaranteed Delivery; and
(b) then, after purchase of all of the foregoing Shares, all other
Shares properly tendered and not withdrawn before the Expiration Date on a
pro rata basis.
In the event that proration of tendered Shares is required, the Company
will determine the final proration factor as promptly as practicable after the
Expiration Date. Although the Company does not expect to be able to announce the
final results of such proration until at least approximately eight Amex trading
days after the Expiration Date, it will announce preliminary results of
proration by press release as promptly as practicable after the Expiration Date.
Stockholders may obtain such preliminary information from the Information Agent
and may be able to obtain such information from their brokers or financial
advisors.
As described in Section 13, because of proration the Company may not
purchase from a stockholder all of the shares tendered pursuant to the Offer,
thus potentially affecting the United States federal income tax consequences to
the stockholder. The Letter of Transmittal affords each tendering stockholder
the opportunity to designate the order of priority in which Shares tendered are
to be purchased in the event of proration.
2. TENDERS BY HOLDERS OF FEWER THAN 100 SHARES
The Company, upon the terms and subject to the conditions of the Offer,
will accept for purchase, without proration, all Shares properly tendered and
not withdrawn on or before the Expiration Date by or on
2
<PAGE> 6
behalf of stockholders who beneficially owned as of the close of business on May
15, 1997, and continue to beneficially own as of the Expiration Date, an
aggregate of fewer than 100 Shares ("Odd Lot Owners"). See Section 1. To avoid
proration, however, an Odd Lot Owner must properly tender all Shares that such
Odd Lot Owner beneficially owns; partial tenders will not qualify for this
preference. This preference is not available to owners of 100 or more Shares,
even if such owners have separate stock certificates for fewer than 100 Shares.
Any Odd Lot Owner wishing to tender all Shares beneficially owned by the Odd Lot
Owner pursuant to this Offer must complete the box captioned "Odd Lots" on the
Letter of Transmittal and, if applicable, on the Notice of Guaranteed Delivery.
See Section 3.
The Company reserves the right, but will not be obligated, to purchase all
shares properly tendered and not withdrawn by any stockholder who has so
tendered all Shares owned by the stockholder beneficially or of record and as a
result of proration would the own an aggregate of fewer than 100 Shares.
3. PROCEDURE FOR TENDERING SHARES
Proper Tender of Shares. For Shares to be properly tendered pursuant to
the Offer:
i. the certificates for such Shares (or confirmation of receipt of
such Shares pursuant to the procedures for book-entry transfer set forth
below), together with a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof, in the case of an Eligible Institution
as defined herein), with any required signature guarantees, and any other
documents required by the Letter of Transmittal, must be received before
the Expiration Date by the Depositary at one of its addresses set forth on
the back cover of this Offer to Purchase; or
ii. the tendering stockholder must comply with the guaranteed delivery
procedure set forth below.
A tender of Shares made pursuant to any method of delivery set forth herein
will constitute a binding agreement between the tendering stockholder and the
Company upon the terms and subject to the conditions of the Offer, including the
tendering stockholder's representation that (i) such stockholder has a "net long
position" in the Shares being tendered within the meaning of Rule 14e-4
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and (ii) the tender of such Shares complies with Rule 14e-4.
It is a violation of Section 14(e) of the Exchange Act and Rule 14e-4
promulgated thereunder for a person to tender Shares for such person's own
account unless the person so tendering at the time of tender and as of the
Expiration Date has a net long position at least equal to the number of Shares
tendered and:
a. owns the number of Shares tendered; or
b. owns other securities convertible into or exchangeable for such
Shares or owns an option, warrant or right to purchase such Shares and will
acquire Shares for tender by conversion, exchange or exercise of such
option, warrant or right.
Section 14(e) and Rule 14e-4 provide a similar restriction applicable to
the tender or guarantee of a tender on behalf of another person.
Signature Guarantees and Method of Delivery. No signature guarantee is
required on the Letter of Transmittal if the Letter of Transmittal is signed by
the registered owner of the Shares (which term, for purposes of this Section,
includes any participant in The Depository Trust Company (the "DTC") or the
Philadelphia Depository Trust Company (the "PDTC") (collectively, the
"Book-Entry Transfer Facilities") whose name appears on a security position
listing as the owner of the Shares) tendered therewith, and payment and delivery
are to be made directly to such registered owner at such owner's address shown
on the records of the Company, or if Shares are tendered for the account of a
bank, broker, dealer, credit union, savings association or other entity that is
a member in good standing of a recognized Medallion Program approved by The
Securities Transfer Association Inc. (each such entity being hereinafter
referred to as an "Eligible Institution"). In all other cases, all signatures on
the Letter of Transmittal must be guaranteed by an Eligible Institution. See
Instruction 1 of the Letter of Transmittal. If a certificate representing Shares
is registered in the name of a person other than the signer of a Letter of
Transmittal, or if payment is to be made,
3
<PAGE> 7
or Shares not purchased or tendered are to be issued, to a person other than the
registered owner, the certificate must be endorsed or accompanied by an
appropriate stock power, in either case signed exactly as the name of the
registered owner appears on the certificate, with the signature on the
certificate or stock power guaranteed by an Eligible Institution. In all cases,
payment for Shares tendered and accepted for payment pursuant to the Offer will
be made only after timely receipt by the Depositary of certificates for such
Shares (or a timely confirmation of a book-entry transfer of such Shares into
the Depositary's account at one of the Book-Entry Transfer Facilities), a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof, in the case of an Eligible Institution) and any other documents
required by the Letter of Transmittal.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING STOCK CERTIFICATES, THE
LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS, IS AT THE ELECTION AND
RISK OF THE TENDERING STOCKHOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH
RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
Federal Income Tax Withholding. Unless an exemption applies under the
applicable law and regulations concerning "backup withholding" of federal income
tax, the Depositary will be required to withhold, and will withhold, 31% of the
gross proceeds otherwise payable to a stockholder or other payee pursuant to the
Offer unless the stockholder or other payee provides such person's tax
identification number (social security number or employer identification number)
and certifies that such number is correct. Each tendering stockholder, other
than a noncorporate foreign stockholder, should complete and sign the main
signature form and the Substitute Form W-9 included as part of the Letter of
Transmittal, so as to provide the information and certification necessary to
avoid backup withholding, unless an applicable exemption exists and is proved in
a manner satisfactory to the Company and the Depositary. Noncorporate foreign
stockholders should generally complete and sign a Form W-8, Certificate of
Foreign Status, a copy of which may be obtained from the Depositary, in order to
avoid backup withholding. In the case of any foreign stockholder, the Depositary
will withhold 30% of the Purchase Price of Shares purchased from such
stockholder in order to satisfy certain withholding requirements, unless such
foreign stockholder proves in a manner satisfactory to the Company and the
Depositary that either (i) the sale of its Shares pursuant to the Offer will
qualify as a sale or exchange, rather than a dividend, for federal income tax
purposes (see Section 13), in which case no withholding will be required, or
(ii) the foreign stockholder is eligible for a reduced tax treaty rate with
respect to dividend income, in which case the Depositary will withhold at the
reduced treaty rate.
Book-Entry Delivery. The Depositary will establish an account with respect
to the Shares at each of the Book-Entry Transfer Facilities for purposes of the
Offer within two business days after the date of this Offer to Purchase. Any
financial institution that is a participant in a Book-Entry Transfer Facility's
system may make book-entry delivery of the Shares by causing such facility to
transfer such Shares into the Depositary's account in accordance with such
facility's procedure for such transfer. Even though delivery of Shares may be
effected through book-entry transfer into the Depositary's account at one of the
Book-Entry Transfer Facilities, a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof, in the case of an Eligible Institution),
with any required signature guarantees and other required documents, must, in
any case, be transmitted to and received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date, or the guaranteed delivery procedure set forth below must be
followed. DELIVERY OF THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS
TO ONE OF THE BOOK-ENTRY TRANSFER FACILITIES DOES NOT CONSTITUTE DELIVERY TO THE
DEPOSITARY.
4
<PAGE> 8
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates are not immediately available (or
the procedures for book-entry transfer cannot be completed on a timely basis) or
time will not permit all required documents to reach the Depositary before the
Expiration Date, such Shares may nevertheless be tendered provided that all of
the following conditions are satisfied:
a. such tender is made by or through an Eligible Institution;
b. the Depositary receives (by hand, mail, overnight courier, telegram
or facsimile transmission), on or prior to the Expiration Date, a properly
completed and duly executed Notice of Guaranteed Delivery substantially in
the form the Company has provided with this Offer to Purchase, including
(where required) a signature guarantee by an Eligible Institution in the
form set forth in such Notice of Guaranteed Delivery; and
c. the certificates for all tendered Shares in proper form for
transfer (or confirmation of book-entry transfer of such Shares into the
Depositary's account at one of the Book-Entry Transfer Facilities),
together with a properly completed and duly executed Letter of Transmittal
(or manually signed facsimile thereof) and any other documents required by
the Letter of Transmittal, are received by the Depositary within three Amex
trading days after the date the Depositary receives such Notice of
Guaranteed Delivery.
Determinations of Validity; Rejection of Shares; Waiver of Defects; No
Obligation to Give Notice of Defects. All questions as to the number of Shares
to be accepted and the validity, form, eligibility (including time of receipt)
and acceptance for payment of any tender of Shares will be determined by the
Company, in its sole discretion, which determination shall be final and binding
on all parties. The Company reserves the absolute right to reject any or all
tenders it determines not to be in proper form or the acceptance for payment of
which may, in the opinion of the Company's counsel, be unlawful. The Company
also reserves the absolute right to waive any of the conditions of the Offer and
any defect or irregularity in the tender of any particular Shares. No tender of
Shares will be deemed to be properly made until all defects or irregularities
have been cured or waived. None of the Company, the Depositary, the Information
Agent or any other person is or will be obligated to give notice of any defects
or irregularities in tenders, and none of them will incur any liability for
failure to give any such notice.
4. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 4, a tender of Shares pursuant
to the Offer is irrevocable. Shares tendered pursuant to the Offer may be
withdrawn at any time before the Expiration Date and, unless theretofore
accepted for payment by the Company, may also be withdrawn after 12:00 Midnight,
New York City time, on July 16, 1997.
If the Company extends the period of time during which the Offer is open,
is delayed in accepting for payment or paying for Shares or is unable to accept
for payment or pay for Shares pursuant to the Offer for any reason, then,
without prejudice to the Company's rights under the Offer, the Depositary may,
on behalf of the Company, retain all Shares tendered, and such Shares may not be
withdrawn except as otherwise provided in this Section 4, subject to Rule
13e-4(f)(5) under the Exchange Act, which provides that the issuer making the
tender offer shall either pay the consideration offered, or return the tendered
securities promptly after the termination or withdrawal of the tender offer.
For a withdrawal to be effective, the Depositary must receive (at one of
its addresses set forth on the back cover of this Offer to Purchase) a written,
telegraphic or facsimile transmission notice of withdrawal on a timely basis.
Such notice of withdrawal must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the name of the
registered owner, if different from that of the person who tendered such Shares.
If the certificates have been delivered or otherwise identified to the
Depositary, then, prior to the release of such certificates, the tendering
stockholder must also submit the serial numbers shown on the particular
certificates evidencing the Shares and the signature on the notice of withdrawal
must be guaranteed by an Eligible Institution (except in the case of Shares
tendered by an Eligible
5
<PAGE> 9
Institution). If Shares have been delivered pursuant to the procedure for
book-entry transfer set forth in Section 3, the notice of withdrawal must
specify the name and the number of the account at the applicable Book-Entry
Transfer Facility to be credited with the withdrawn Shares and otherwise comply
with the procedures of such facility.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Company, in its sole discretion,
which determination shall be final and binding on all parties. None of the
Company, the Depositary, the Information Agent or any other person is or will be
obligated to give any notice of any defects or irregularities in any notice of
withdrawal, and none of them will incur any liability for failure to give any
such notice. A withdrawal of a tender of Shares may not be rescinded, and Shares
properly withdrawn will thereafter be deemed not validly tendered for purposes
of the Offer. Withdrawn Shares may, however, be retendered before the Expiration
Date by again following any of the procedures described in Section 3.
5. ACCEPTANCE FOR PAYMENT OF SHARES AND PAYMENT OF PURCHASE PRICE
Upon the terms and subject to the conditions of the Offer, promptly after
the Expiration Date, the Company will purchase and pay the Purchase Price for
1,000,000 Shares (subject to increase or decrease as provided in Section 1 and
Section 14) or such lesser number of Shares as are properly tendered and not
withdrawn as permitted in Section 4. For purposes of the Offer, the Company will
be deemed to have accepted for payment (and thereby purchased), subject to
proration, Shares which are validly tendered and not withdrawn when, as and if
it gives oral or written notice to the Depositary of its acceptance of such
Shares for payment pursuant to the Offer.
In the event of proration, the Company will determine the proration factor
and pay for those tendered Shares accepted for payment as soon as practicable
after the Expiration Date; however, the Company does not expect to be able to
announce the final results of any such proration until at least approximately
eight Amex trading days after the Expiration Date. Certificates for all Shares
not purchased will be returned (or, in the case of Shares delivered by
book-entry transfer, such Shares will be credited to the account maintained with
one of the Book-Entry Transfer Facilities by the participant therein who so
delivered such Shares) as soon as practicable after the Expiration Date without
expense to the tendering stockholder.
Payment for Shares purchased pursuant to the Offer will be made by
depositing the aggregate Purchase Price therefor with the Depositary, which will
act as agent for tendering stockholders for the purpose of receiving payment
from the Company and transmitting payment to the tendering stockholders.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of certificates for such Shares (or a timely
confirmation by a Book-Entry Transfer Facility of book-entry transfer of such
Shares to the Depositary), a properly completed and duly executed Letter of
Transmittal (or facsimile thereof, in the case of an Eligible Institution) with
any required signature guarantees and any other required documents. UNDER NO
CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES TO BE
PAID BY THE COMPANY, REGARDLESS OF ANY DELAY IN MAKING SUCH PAYMENT.
The Company will pay any stock transfer taxes with respect to the transfer
and sale of Shares to it or its order pursuant to the Offer. If, however,
payment of the Purchase Price is to be made to, or if certificates for Shares
not tendered or accepted for purchase are to be registered in the name of, any
person other than the registered holder, or if tendered certificates are
registered in the name of any person other than the person(s) signing the Letter
of Transmittal, the amount of any stock transfer taxes (whether imposed on the
registered holder or such person) payable on account of the transfer to such
person will be deducted from the Purchase Price unless satisfactory evidence of
the payment of such taxes or exemption therefrom is submitted. See Instruction 6
of the Letter of Transmittal.
ANY TENDERING STOCKHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE FULLY AND
SIGN THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL (OR, IN THE
CASE OF A NONCORPORATE FOREIGN STOCKHOLDER, FORM W-8 OBTAINABLE FROM THE
DEPOSITARY) MAY BE SUBJECT TO REQUIRED FEDERAL INCOME TAX WITH-
6
<PAGE> 10
HOLDING OF 31% OF THE GROSS PROCEEDS PAID TO SUCH STOCKHOLDER OR OTHER PAYEE
PURSUANT TO THE OFFER. SEE SECTION 3.
6. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, subject to any applicable
rules and regulations under the Exchange Act, including Rule 13e-4(f), the
Company shall not be required to accept for payment, purchase or pay for any
shares tendered, may delay the acceptance for payment of or payment for any
shares tendered, and may terminate or amend the Offer, if at any time after May
19, 1997 and prior to the time of payment for any such Shares (whether any
Shares have theretofore been accepted for payment, purchased or paid for
pursuant to the Offer) any of the following shall have occurred (or shall have
been determined by the Company to have occurred):
a. there shall have been threatened, instituted or pending any action
or proceeding by any government or governmental, regulatory or
administrative agency or authority or tribunal or any other person,
domestic or foreign, before any court or governmental, regulatory or
administrative authority, agency or tribunal, domestic or foreign, which
(i) challenges the making of the Offer, the acquisition of Shares pursuant
to the Offer or otherwise relates in any manner to the Offer; or (ii) in
the sole judgment of the Company, could materially affect the business,
condition (financial or other), income, operations or prospects of the
Company and its subsidiaries, taken as a whole, or otherwise materially
impair in any way the contemplated future conduct of the business of the
Company or any of its subsidiaries or materially impair the Offer's
contemplated benefits to the Company;
b. there shall have been any action threatened, pending or taken, or
approval withheld, or any statute, rule, regulation, judgment, order or
injunction threatened, proposed, sought, promulgated, enacted, entered,
amended, enforced or deemed to be applicable to the Offer or the Company or
any of its subsidiaries, by any court or any government or governmental,
regulatory or administrative authority, agency or tribunal, domestic or
foreign, which, in the Company's sole judgment, would or might directly or
indirectly (i) make the acceptance for payment of, or payment for, Shares
illegal or otherwise restrict or prohibit consummation of the Offer; (ii)
delay or restrict the ability of the Company, or render the Company unable,
to accept for payment, or pay for, Shares; (iii) materially impair the
contemplated benefits of the Offer to the Company; or (iv) materially
affect the business, condition (financial or other), income, operations or
prospects of the Company and its subsidiaries, taken as a whole, or
otherwise materially impair in any way the contemplated future conduct of
the business of the Company or any of its subsidiaries;
c. there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on any United States national
securities exchange or in the over-the-counter market (excluding any
coordinated trading halt triggered solely as a result of a specified
decrease in a market index); (ii) the declaration of a banking moratorium
or any suspension of payments in respect of banks in the United States;
(iii) the commencement of a war, armed hostilities or other international
or national crisis directly or indirectly involving the United States; (iv)
any limitation (whether or not mandatory) by any governmental, regulatory
or administrative agency or authority on, or any event which, in the sole
judgment of the Company, might affect the extension of credit by banks or
other lending institutions in the United States; (v) any significant
decrease in the market price of the Shares; (vi) any change in the general
political, market, economic or financial conditions in the United States or
abroad that could, in the sole judgment of the Company, have a material
adverse effect on the Company's business, operations, prospects or the
trading in the Shares; (vii) in the case of any of the foregoing existing
at the time of the commencement of the Offer, a material acceleration or
worsening thereof; or (viii) any decline in either the Dow Jones Industrial
Average or the Standard and Poor's Index of 500 Industrial Companies by an
amount in excess of 15% measured from the close of business on May 19,
1997;
d. any tender or exchange offer with respect to the Shares (other than
the Offer), or any merger, acquisition, business combination or other
similar transaction with or involving the Company or any subsidiary, shall
have been proposed, announced or made by any person or entity;
7
<PAGE> 11
e. any change shall occur or be threatened in the business, condition
(financial or other), income, operations or prospects of the Company and
its subsidiaries, taken as a whole, which, in the sole judgment of the
Company, is or may be material to the Company; or
f. (i) any person, entity or "group" (as that term is used in Section
13(d)(3) of the Exchange Act) shall have acquired, or proposed to acquire,
beneficial ownership of more than 5% of the outstanding Shares (other than
a person, entity or group which had publicly disclosed such ownership in a
Schedule 13D or 13G (or an amendment thereto) on file with the Securities
and Exchange Commission prior to May 19, 1997); (ii) any new group shall
have been formed which beneficially owns more than 5% of the outstanding
Shares; or (iii) any person, entity or group, other than James I.
Tankersley and/or Daniel B. Tankersley, shall have filed a Notification and
Report Form under the Hart-Scott-Rodino Antitrust Improvement Act of 1976,
or made a public announcement reflecting an intent to acquire the Company
or any of its subsidiaries or any of their respective assets or securities;
and, in the sole judgment of the Company, in any such case and regardless
of the circumstances (including any action or inaction by the Company)
giving rise to such condition, such event makes it inadvisable to proceed
with the Offer or with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances (including any action or
inaction by the Company) giving rise to any such condition, and any such
condition may be waived by the Company, in whole or in part, at any time and
from time to time in its sole discretion; provided, however, that the Exchange
Act and the rules and regulations promulgated thereunder require that all
conditions to the Offer, other than those relating to the receipt of certain
necessary governmental approvals, must be satisfied or waived prior to the
Expiration Date. The Company's failure at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right; the waiver of
any such right with respect to particular facts and circumstances shall not be
deemed a waiver with respect to any other facts or circumstances; and each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time. Any determination by the Company concerning the events
described above and any related judgment by the Company regarding the
inadvisability of proceeding with the acceptance for payment or payment for any
tendered Shares will be final and binding on all parties.
7. PRICE RANGE OF THE SHARES; DIVIDENDS
The Shares are listed on the Amex and the PE, and principally traded on the
Amex. The following table sets forth, for each period shown, the high and low
sales prices of the Shares as reported by the Amex:
<TABLE>
<CAPTION>
CLASS A CLASS B
COMMON STOCK COMMON STOCK
PRICE RANGE PRICE RANGE
------------------ ------------------
HIGH LOW HIGH LOW
------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FISCAL YEAR 1996
Quarter ended May 31, 1995........................ 2 5/8 2 2 3/4 2 1/8
Quarter ended August 31, 1995..................... 2 9/16 1 5/8 2 9/16 1 3/4
Quarter ended November 30, 1995................... 2 5/16 1 3/4 2 1/2 1 3/4
Quarter ended February 29, 1996................... 2 1/8 1 5/8 2 1/8 1 5/8
FISCAL YEAR 1997
Quarter ended May 31, 1996........................ 2 1/8 1 3/4 2 1/8 1 3/4
Quarter ended August 31, 1996..................... 2 1/4 1 5/8 2 1/4 1 3/4
Quarter ended November 30, 1996................... 1 15/16 1 5/8 2 1 5/8
Quarter ended February 28, 1997................... 1 7/8 1 1/2 1 7/8 1 1/2
</TABLE>
8
<PAGE> 12
The Company has not declared or paid a cash dividend on the Shares in the
last two years(1). On May 16, 1997, the last trading day before the day on which
the Company announced its intention to commence the Offer, the closing sales
price of the Class A Common Stock as reported by the Amex was $1 5/8 per share.
No sale of Class B Common Stock occurred on May 16, 1997, but the then most
recent sale was at $1 9/16 per share on May 15, 1997. STOCKHOLDERS ARE URGED TO
OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES.
8. PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER
The following discussion contains forward-looking statements which involve
risks and uncertainties. The Company's actual results may differ materially from
the results discussed in forward-looking statements. Factors that might cause
such a difference include, but are not limited to, the matters discussed below
as well as factors described in the Company's Annual Report of Form 10-K for the
fiscal year ended February 28, 1997.
The current market prices of the Shares are less than their book value. The
Company believes that such market prices do not adequately reflect the value of
the Company's business, assets and prospects. The Company believes that the
purchase of its Shares at this time represents a good use of a substantial
portion of the cash, cash equivalents and credit it has available and is an
attractive investment opportunity for the Company. The Offer will afford to
stockholders the opportunity to dispose of Shares without the usual transaction
costs associated with a market sale. Stockholders whose Shares are not purchased
in the Offer will obtain an increase in their ownership interest in the Company
and thus in the Company's assets and future earnings, subject to the Company's
right to sell or issue additional shares and other equity securities. The
Company and its Board of Directors believe that the purchase of the Shares
covered by the Offer at this time represents an attractive investment
opportunity that will benefit the Company and its stockholders. The Company and
its Board of Directors believe that the Offer is in the best interest of the
Company and its stockholders.
Shares the Company acquires pursuant to the Offer initially will be held in
the Company's treasury or retired (or a combination thereof) and will be
available for the Company to issue without further stockholder action (except as
required by applicable law or the rules of the Amex or the PE) for such purposes
as, among others, the acquisition of other businesses, the raising of additional
capital for use in the Company's business, the distribution of stock dividends
and the implementation of, or the satisfaction of obligations under, employee
benefit plans. The Company has no present plans for the use of the Shares
acquired pursuant to the Offer.
The Company has been advised that none of its executive officers and
directors and none of the members of the Tankersley family currently intend to
tender Shares pursuant to the Offer.
James I. Tankersley and Daniel B. Tankersley have advised the Company that
the Offer is not a "Rule 13e-3 transaction" or a step in any series of
transactions constituting a Rule 13e-3 transaction. A Rule 13e-3 transaction
(also known as a "going private" transaction) is defined in Rule 13e-3 under the
Exchange Act to include a transaction such as the Offer if it has either a
reasonable likelihood or a purpose of producing, either directly or indirectly,
the effect of causing a class of equity securities that is registered under
Section 12(b) or 12(g) of the Exchange Act to be neither listed on the Amex, the
PE or another national securities exchange or authorized to be quoted on an
inter-dealer quotation system of a registered national securities association.
The Company's purchase of Shares pursuant to the Offer will reduce the
number of Shares that might otherwise trade publicly and is likely to reduce the
number of stockholders, which could adversely affect the liquidity and market
value of the remaining Shares. Nonetheless, the Company believes that there
still will be a sufficient number of Shares outstanding and publicly traded
following the consummation of the Offer to ensure a continued trading market in
the Shares. Based on the published guidelines of the Amex and the PE,
- ---------------
(1) Restrictive covenants in various loan agreements limit retained earnings
available for payment of dividends to $5,393,000 at February 28, 1997 (See Note
3 -- Notes to Financial Statements).
9
<PAGE> 13
the Company does not believe the purchase by the Company of Shares pursuant to
the Offer will cause its remaining Shares to be delisted from either of such
exchanges.
According to the Amex's published guidelines, the Amex would consider
delisting the Shares if, among other things, the number of holders of round lots
should fall below 300, the number of publicly held Shares (exclusive of holdings
of officers, directors, their immediate families and other concentrated holdings
of 10% or more ("Amex Excluded Holdings"), should drop below 200,000 Shares or
the aggregate market price of publicly held Shares (exclusive of Amex Excluded
Holdings) should fall below $1,000,000. The published guidelines of the Amex
also state that any development which substantially reduces the number of
holders of shares may occasion review of continued listing by Amex. The Board of
Directors does not believe any such review would result in delisting of the
Shares as a result of the Offer.
According to the PE's published guidelines, the PE would consider delisting
the Shares if, among other things, the number of holders of Shares should fall
below 800, the number of publicly held Shares (exclusive of holdings of
officers, directors, their immediate families and other concentrated holdings of
10% or more ("PE Excluded Holdings")), should drop below 500,000 or the
aggregate market price of publicly held Shares (exclusive of PE Excluded
Holdings) should fall below $3,000,000. The published guidelines of the PE also
state that it will examine qualitative criteria, which may include unwarranted
use of company funds for the repurchase of equity securities as a factor which
could lead to delisting. The Board of Directors does not believe that the
repurchase of Shares pursuant to the Offer would be considered unwarranted or
would result in the delisting of the Shares.
The market value of the Shares remaining after the Company's purchase of
Shares pursuant to the Offer also may be adversely affected because the Purchase
Price is substantially in excess of recent market prices at which the Shares
have traded prior to announcement of the Company's intention to commence the
Offer. The Company has not undertaken any studies or made any analysis of the
market prices at which the remaining Shares are likely to trade following
consummation of the Offer, and can provide no assurance as to the market value
of the Shares following the Company's purchase pursuant to the Offer.
The reduction in cash assets or the increased borrowings resulting from
purchase of Shares pursuant to the Offer will reduce the resources of the
Company available to make acquisitions and other capital investments. While the
Company regularly reviews its business strategy and evaluates various options
available to it, the Company does not currently contemplate any acquisition or
other strategic investment.
It is possible that the purchase of Shares pursuant to the Offer may cause
an "ownership change" with respect to the Company within the meaning of Section
382 of the Internal Revenue Code of 1986, as amended (the "Code"). Generally, an
ownership change would be deemed to occur if, immediately following the
Company's purchase of Shares pursuant to the Offer, the percentage of Shares
owned by one or more stockholders who then own five percent or more of the
outstanding Shares has increased, in the aggregate, by more than 50 percentage
points over the lowest percentage owned by such stockholders during the
three-year period ending on the day that the Shares tendered pursuant to the
Offer are purchased by the Company. The purchase of Shares pursuant to the Offer
will continue to affect the determination of whether an ownership change occurs
at some point in the next three years. If the Company experiences an ownership
change, its ability to offset taxable income generated in taxable periods ending
after the ownership change with its existing net operating loss carry forwards
and the general business and minimum tax credit carry forwards will be subject
to an annual limitation. The amount of the annual limitation is equal to the
product of the value of the Company's outstanding stock determined after the
completion of the Company's purchase of Shares pursuant to the Offer or future
triggering event (reduced by certain capital contributions made in the two-year
period prior to the ownership change) and the "long-term tax-exempt rate"
(determined monthly and, for ownership changes occurring in the month of May,
1997, 5.64%). The Company will be required to pay federal income taxes in any
year in which its taxable income exceeds the annual limitation, notwithstanding
the existence of the net operating loss carryforwards and the general business
and minimum tax credit carryforwards. The Company cannot predict whether an
ownership change will occur as a result of the purchase of Shares pursuant to
the Offer. If an ownership change does occur, the effect would depend upon the
number and value of Shares remaining outstanding after such purchase and the
federal long-term tax-exempt rate for the month
10
<PAGE> 14
of the ownership change; thus, this effect cannot be predicted with certainty.
The Company, however, no longer has a net operating loss carryforward. Although
the Company does have significant general business and minimum tax
carryforwards, the use of these carryforwards is already limited by other
sections of the Code. Accordingly, the Company does not believe that any
limitation on the use of such carryforwards triggered by an ownership change
will result in a material adverse change in the Company's financial condition or
results of operations.
As of May 15, 1997 the Company had issued and outstanding 10,809,929 Shares
and had reserved for issuance upon exercise of outstanding stock options 829,384
Shares. Pursuant to the United Foods, Inc. Second Management Retirement Plan
dated February 26, 1997, all holders of outstanding options have agreed to
refrain from exercising such options in consideration of deferred compensation
as provided in the plan. The 1,000,000 Shares the Company is offering to
purchase represent approximately 9.3% of the Shares then outstanding. With
respect to the election of directors, the holders of Class A Common Stock are
entitled to elect 25% (or the next highest whole number) of the Company's Board
of Directors, and the holders of the Class B Common Stock are entitled to elect
the remaining directors. On matters requiring the two classes of common stock to
vote together, the holders of Class A Common Stock are entitled to one tenth of
a vote per share and the holders of Class B Common Stock are entitled to one
vote per share. As of May 15, 1997 the Company's directors and executive
officers as a group (14 persons) beneficially owned 4,412,395 shares of Class A
Common Stock and 2,928,798 shares of Class B Common Stock, representing
approximately 50.7% of the Class A Common Stock and 51.4% of the Class B Common
Stock. As of May 15, 1997 James I. Tankersley and Daniel B. Tankersley
beneficially owned 3,265,591 shares of Class A Common Stock and 2,866,198 shares
of Class B Common Stock, representing approximately 40.9% of the Class A Common
Stock and 50.3% of the Class B Common Stock. Beneficial ownership of the Class A
Common Stock as set forth above includes beneficial ownership of Shares of Class
A Common Stock which may be acquired upon the conversion of Class B Common Stock
or upon the exercise of outstanding options. As of May 15, 1997 James I.
Tankersley and Daniel B. Tankersley directly owned 399,393 shares of Class A
Common Stock and 2,866,198 shares of Class B Common Stock, representing
approximately 7.8% of the Class A Common Stock and 50.3% of the Class B Common
Stock, respectively.
Assuming the Company purchases 1,000,000 Shares and no Shares are tendered
by directors, officers or affiliates of the Company, based on the Shares
outstanding on May 15, 1997, the percentage of the outstanding Class A Common
Stock and Class B Common Stock beneficially owned by the Company's directors and
executive officers as a group may increase as a result of the Offer to as much
as 57.2% of the Class A Common Stock (assuming only Class A Common Stock is
purchased pursuant to the Offer) and 62.3% of the Class B Common Stock (assuming
only Class B Common Stock is purchased pursuant to the Offer), respectively.
Assuming the Company purchases 1,000,000 Shares and no Shares are tendered by
directors, officers or affiliates of the Company, based on the Shares
outstanding on May 15, 1997, the percentage of the outstanding Class A Common
Stock and Class B Common Stock beneficially owned by James I. Tankersley and
Daniel B. Tankersley will increase as a result of the Offer to as much as 46.8%
of the Class A Common Stock (assuming only Class A Common Stock is purchased
pursuant to the Offer) and 61.1% of the Class B Common Stock (assuming only
Class B Common Stock is purchased pursuant to the Offer), respectively. Assuming
the Company purchases 1,000,000 Shares and no Shares are tendered by directors,
officers or affiliates of the Company, based on the Shares outstanding on May
15, 1997, the percentage of the outstanding Class A Common Stock and Class B
Common Stock directly owned by James I. Tankersley and Daniel B. Tankersley will
increase as a result of the Offer to as much as 9.7% of the Class A Common Stock
(assuming only Class A Common Stock is purchased pursuant to the Offer) and
61.1% of the Class B Common Stock (assuming only Class B Common Stock is
purchased pursuant to the Offer), respectively.
The Shares are currently "margin securities" under the rules of the Federal
Reserve Board. This has the effect, among other things, of allowing brokers to
extend credit on the collateral of the Shares. Following the repurchase of
Shares pursuant to the Offer, the Company believes the Shares will continue to
be "margin securities" for purposes of the Federal Reserve Board's margin
regulations.
The Shares are registered under the Exchange Act which requires, among
other things, that the Company furnish certain information to its stockholders
and to the Commission and comply with the
11
<PAGE> 15
Commission's proxy rules in connection with meetings of the Company's
stockholders. The Company does not believe that the purchase by the Company of
Shares pursuant to the Offer will result in the Shares becoming eligible for
deregistration under the Exchange Act.
A tender offer by the Company for a portion of its Shares initially was
proposed to the Company's Board of Directors by management of the Company at a
meeting on April 19, 1997. The terms discussed at the April 19, 1997 meeting
were similar to those embodied in the Offer. The final terms of the Offer were
proposed by management and unanimously approved by the Executive Committee of
the Board of Directors (the "Executive Committee") by action taken upon
unanimous written consent on May 19, 1997. The Executive Committee unanimously
determined that the Company would make no recommendation as to whether any
stockholder should tender any or all of such stockholder's shares pursuant to
the Offer. The Board of Directors did not authorize any committee of independent
directors to evaluate or otherwise act in connection with the Offer and did not
engage any investment banking firm to evaluate the financial terms of the Offer
or otherwise assist in structuring the Offer.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION AS
TO WHETHER ANY STOCKHOLDER SHOULD TENDER ANY OR ALL OF SUCH STOCKHOLDER'S SHARES
PURSUANT TO THE OFFER AND NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS HAS
AUTHORIZED ANY PERSON TO MAKE ANY SUCH RECOMMENDATION. EACH STOCKHOLDER MUST
MAKE SUCH STOCKHOLDER'S OWN DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW
MANY SHARES TO TENDER.
9. CERTAIN INFORMATION CONCERNING THE COMPANY
The Company was incorporated under the laws of Texas on March 9, 1956 and
became a Delaware corporation on September 30, 1983. The Company is a leading
processor of frozen vegetables and fresh mushrooms, with six facilities located
in Tennessee, Utah, Oregon and California. Its products are sold in retail
grocery stores under the Pictsweet brand, and also to private label and food
service accounts.
Historical and Unaudited Pro Forma Financial Information. The table below
sets forth summary historical financial information for the Company and summary
unaudited pro forma financial information giving effect to the purchase of
Shares pursuant to the Offer. The historical financial information for the
fiscal years ended February 29, 1996 and February 28, 1997 (other than the
ratios of earnings to fixed charges) has been derived from, and should be read
in conjunction with, the audited consolidated financial statements of the
Company contained in the Company's Annual Report on Form 10-K for the year ended
February 28, 1997, which is hereby incorporated herein by reference. The summary
historical financial information should be read in conjunction with, and is
qualified by reference to, the audited financial information and related notes
thereto from which it has been derived. The summary unaudited pro forma
financial information gives effect to the purchase of Shares pursuant to the
Offer, based on certain assumptions described in the table, as if it had
occurred on March 1, 1996 with respect to income statement data and on February
28, 1997 with respect to balance sheet data. The unaudited pro forma financial
information should be read in conjunction with the historical financial
information incorporated herein by reference and does not purport to be
indicative
12
<PAGE> 16
of the results that would actually have been obtained had the purchase of the
Shares pursuant to the Offer been completed at the dates indicated or that may
be obtained in the future.
SUMMARY HISTORICAL
AND UNAUDITED PRO FORMA INFORMATION
SUMMARY HISTORICAL FINANCIAL INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED
FEBRUARY 28 OR 29,
---------------------
1997 1996
--------- ---------
(AMOUNTS IN THOUSANDS
EXCEPT PER SHARE
DATA AND RATIOS)
<S> <C> <C>
STATEMENT OF OPERATIONS INFORMATION:
Net sales and service revenue............................. $ 195,820 $ 191,714
Net income (loss)......................................... 922 (660)
Earnings (loss) per share of common stock and common stock
equivalents............................................ $ 0.08 $ (0.06)
Weighted average common stock and common stock equivalents
outstanding............................................ 11,077 11,470
Ratio of Earnings to Fixed Charges(a)....................... 1.39 to 1 0.74 to 1
BALANCE SHEET INFORMATION:
Working capital........................................... $ 40,738 $ 42,164
Total assets.............................................. 119,108 128,188
Total assets, less goodwill............................... 119,108 128,188
Total indebtedness........................................ 63,652 73,654
Stockholders' equity...................................... 55,456 54,534
Shares outstanding........................................ 10,810 10,810
Book value per share...................................... $ 5.13 $ 5.04
</TABLE>
- ---------------
(a) Earnings used in computing the ratio of earnings to fixed charges consists
of income before fixed charges and income taxes. Fixed charges consist of
interest expense.
PRO FORMA EFFECT OF PURCHASE OF 1,000,000 SHARES AT $2.50 PER SHARE
<TABLE>
<CAPTION>
YEAR ENDED FEBRUARY 28, 1997
------------------------------------
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
(AMOUNTS IN THOUSANDS EXCEPT PER
SHARE DATA AND RATIOS)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS INFORMATION:
Net sales and service revenue............................. $ 195,820 $ 195,820
Net income (loss)......................................... 922 (148) 774
Earnings (loss) per share of common stock and common stock
equivalents............................................ $ 0.08 -- $ 0.08
Weighted average common stock and common stock equivalents
outstanding............................................ 11,077 (1,000) 10,077
Ratio of Earnings to Fixed Charges(a)....................... 1.39 to 1 1.31 to 1
</TABLE>
- ---------------
(a) Earnings used in computing the ratio of earnings to fixed charges consists
of income before fixed charges and income taxes. Fixed charges consist of
interest expense.
13
<PAGE> 17
<TABLE>
<CAPTION>
AT FEBRUARY 28, 1997
------------------------------------------
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE
DATA)
<S> <C> <C> <C>
BALANCE SHEET INFORMATION:
Working capital..................................... $ 40,738 $ 40,738
Total assets........................................ 119,108 119,108
Total assets, less goodwill......................... 119,108 119,108
Total indebtedness.................................. 63,652 $ 2,700 66,352
Stockholders' equity................................ 55,456 (2,700) 52,756
Shares outstanding.................................. 10,810 (1,000) 9,810
Book value per share................................ $ 5.13 $ 5.38
</TABLE>
Additional Information. The Company is subject to the informational
requirements of the Exchange Act and in accordance therewith files periodic
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). The Company is required to disclose in such proxy
statements certain information, as of particular dates, concerning the Company's
directors and officers, their remuneration, stock options granted to them, the
principal holders of the Company's securities and any material interest of such
persons in transactions with the Company. The Company has also filed an Issuer
Tender Offer Statement on Schedule 13E-4 with the Commission which includes
certain additional information relating to the Offer.
Such material can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, and at its regional offices at 7 World Trade Center, Suite 1300, New
York, New York 10048, and CitiCorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Reports, proxy materials and other information
about the Company are also available at the offices of the American Stock
Exchange, 86 Trinity Place, New York, NY 10006 and the Pacific Exchange, 301
Pine Street, San Francisco, CA 94104. Copies also may be obtained by mail, upon
payment of the Commission's customary charges, from the Commission's Public
Reference Branch, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549. The
Commission also maintains a Web site on the World Wide Web at http://www.sec.gov
that contains reports, proxy statements and other material filed electronically
by the Company with the Commission. The Company's Schedule 13E-4 will not be
available at the Commission's regional offices.
10. SOURCE AND AMOUNT OF FUNDS
Assuming that the Company purchases 1,000,000 Shares pursuant to the Offer,
the total amount required by the Company to purchase such Shares and pay related
fees and expenses will be approximately $2,700,000. The Company anticipates that
it will fund the purchase of Shares pursuant to the Offer and the payment of
related fees and expenses from available cash or by borrowings under that
certain Loan Agreement, Revolving Credit Note and Security Agreement between
First American National Bank ("First American") and the Company dated April 7,
1993, as amended (the "Revolver"). The Company has available credit of
$18,000,000 under the Revolver at a rate equal to First American's prime rate or
a Euro dollar rate, at the Company's option. The Revolver matures on June 1,
1999. Any indebtedness incurred pursuant to the Revolver is secured by certain
of the Company's accounts receivable and inventory. The Revolver contains
certain restrictive covenants including covenants pertaining to minimum tangible
net worth, working capital, the ratio of debt to equity and a coverage ratio.
The Revolver also restricts stock repurchases by the Company to $2,500,000 for
the fiscal year ending February 28, 1998. The Company anticipates that
borrowings under the Revolver to finance the purchase of Shares in the Offer
will be repaid from cash generated from the Company's operations.
14
<PAGE> 18
11. TRANSACTIONS AND ARRANGEMENTS CONCERNING THE SHARES
Based upon the Company's records and upon information provided to the
Company by its directors, executive officers and affiliates, neither the Company
nor any of its subsidiaries nor, to the best of the Company's knowledge, any of
the directors or executive officers of the Company or any of its subsidiaries,
nor any associates of any of the foregoing, has effected any transactions in the
Shares during the 40 business days prior to the date hereof.
Except as set forth in this Offer to Purchase, neither the Company nor, to
the best of the Company's knowledge, any of its affiliates, directors or
executive officers, or any of the executive officers or directors of its
subsidiaries, is a party to any contract, arrangement, understanding or
relationship with any other person relating, directly or indirectly, to the
Offer with respect to any securities of the Company (including, but not limited
to, any contract, arrangement, understanding or relationship concerning the
transfer of the voting of any such securities, joint ventures, loan or option
arrangements, puts or calls, guarantees of loans, guarantees against loss or the
giving or withholding or proxies, consents or authorizations).
12. CERTAIN LEGAL MATTERS; REGULATORY AND FOREIGN APPROVALS
The Company is not aware of any license or regulatory permit that appears
to be material to its business which might be adversely affected by its
acquisition of Shares as contemplated in the Offer or of any approval or other
action by any government or governmental, administrative or regulatory authority
or agency, domestic or foreign, that would be required for the Company's
acquisition or ownership of Shares as contemplated by the Offer. Should any such
approval or other action be required, the Company currently contemplates that it
will seek such approval or other action. The Company cannot predict whether it
may determine that it is required to delay the acceptance for payment of Shares
tendered pursuant to the Offer pending the outcome of any such matter. There can
be no assurance that any such approval or other action, if needed, would be
obtained or would be obtained without substantial conditions or that the failure
to obtain any such approval or other action might not result in adverse
consequences to the Company's business. The Company's obligation under the Offer
to accept Shares for payment is subject to certain conditions. See Section 6.
Although repurchases of voting securities by issuers of securities are
normally exempt from the requirements of the Hart-Scott-Rodino Antitrust
Improvements Act ("Hart Scott"), the staff of the Federal Trade Commission has
indicated that compliance may nonetheless be required when the result of such
repurchases is to increase the percentage of voting securities held by a
stockholder who may be deemed to control the issuer above a reporting threshold.
The Company believes that compliance with Hart Scott is not required with
respect to purchases of Shares pursuant to the Offer.
13. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following general discussion summarizes certain federal income tax
considerations to stockholders resulting from the sale of Shares pursuant to the
Offer. These summaries are included for general information only. They do not
discuss all aspects of federal income taxation that may be relevant to a
particular investor in light of his or her personal investment or tax
circumstances or to certain types of stockholders subject to special treatment
under the federal income tax laws, such as, but not limited to, insurance
companies, tax-exempt organizations or retirement accounts, financial
institutions, dealers in securities, foreign corporations, and persons who are
neither citizens nor residents of the United States; nor do these summaries
discuss any aspect of state, local or foreign taxation. No legal opinion
regarding such tax considerations is being rendered hereby. No rulings have been
nor will be requested from the Internal Revenue Service (the "Service"), and the
Service or a court may disagree with some of the conclusions set forth below.
The following discussion is based on existing provisions of the Code, as
amended, existing and proposed Treasury Department regulations (the
"Regulations") and existing administrative interpretations and court decisions.
Future legislation, Regulations, administrative interpretations or court
decisions could significantly change such authorities, either prospectively or
retroactively. The discussion is limited to Shares held as "capital assets" as
defined by the Code.
15
<PAGE> 19
EACH STOCKHOLDER IS URGED TO CONSULT WITH HIS OR HER OWN TAX ADVISOR TO
DETERMINE THE SPECIFIC FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES TO THE
STOCKHOLDER OF THE SALE OF SHARES PURSUANT TO THE OFFER AND POTENTIAL CHANGES IN
APPLICABLE TAX LAWS.
In general, sales of Shares by stockholders pursuant to the Offer will be
taxable transactions for federal income tax purposes and may also be taxable
transactions under applicable state, local, foreign and other tax laws. As a
result of such sale, a stockholder will, depending upon the stockholder's
particular facts and circumstances, be treated for federal income tax purposes
either as having sold the Shares tendered or as having received a dividend
distribution from the Company with the consequences described below.
Under Section 302 of the Code, a sale of Shares pursuant to the Offer will,
as a general rule, be treated as a sale or exchange if the receipt of cash upon
such sale (a) is "substantially disproportionate" with respect to the
stockholder, (b) results in a "complete redemption" of the stockholder's
interest in the Company or (c) is "not essentially equivalent to a dividend"
with respect to the stockholder. If any of those three tests is satisfied, a
tendering stockholder will recognize gain or loss equal to the difference
between the amount of cash received by the stockholder pursuant to the Offer and
the stockholder's tax basis in the Shares sold pursuant to the Offer. Recognized
gain or loss will be capital gain or loss, assuming the Shares are held as
capital assets, which will be long-term capital gain or loss if the Shares have
been held for more than one year. Long-term capital gains of individuals,
estates and trusts currently are subject to federal income tax at the maximum
statutory rate of 28%. Gain or loss must be determined separately for each block
of Shares (i.e., shares acquired at the same cost in a single transaction) that
is exchanged pursuant to the Offer. The stockholder is permitted to designate
which blocks of Shares are tendered pursuant to the Offer if less than all of
such stockholders' Shares are tendered, and the order in which different blocks
would be exchanged for cash in the event of proration pursuant to the Offer.
Such designation may be made on the Letter of Transmittal. Stockholders should
consult their tax advisors concerning the mechanics and desirability of such a
designation.
In determining whether any of the tests under Section 302 of the Code are
satisfied, stockholders must take into account not only the Shares they actually
own, but also Shares they are deemed to own pursuant to the constructive
ownership rules of Section 318 of the Code. Pursuant to such constructive
ownership rules, a stockholder is deemed to own the Shares actually owned, and
in some cases, Shares constructively owned by certain related individuals or
entities, and any Shares that the stockholder has the right to acquire by
exercise of an option or by conversion or exchange of a security.
The receipt of cash will be "substantially disproportionate" with respect
to a stockholder within the meaning of Section 302(b) of the Code if the
percentage of the outstanding voting stock of the Company actually and
constructively owned by the stockholder immediately following the sale of Shares
pursuant to the Offer (treating as no longer outstanding all Shares purchased
pursuant to the Offer) is less than 80% of the percentage of the outstanding
voting stock of the Company actually and constructively owned by such
stockholder immediately before the sale of Shares pursuant to the Offer
(treating as outstanding all Shares purchased pursuant to the Offer).
Stockholders should consult their tax advisors with respect to the application
of the "substantially disproportionate" test to their particular facts and
circumstances.
The receipt of cash by a stockholder will result in a "complete redemption"
of the stockholder's interest in the Company within the meaning of Section
302(b)(3) of the Code if either (a) all the Shares actually and constructively
owned by the stockholder are sold pursuant to the Offer or (b) all the Shares
actually owned by the stockholder are sold pursuant to the Offer and the
stockholder is eligible to waive and does effectively waive attribution of all
Shares constructively owned by the stockholder in accordance with Section 302(c)
of the Code.
Even if the receipt of cash by a stockholder fails to satisfy the
"substantially disproportionate" test or the "complete redemption" test, such
stockholder may nevertheless satisfy the "not essentially equivalent to a
dividend" test, if the stockholder's sales of Shares pursuant to the Offer
results in a "meaningful reduction" in the stockholder's proportionate interest
in the Company. Whether the receipt of cash by a stockholder will be "not
essentially equivalent to a dividend" will depend upon the individual
stockholder's facts and circumstances. In certain circumstances, even a small
reduction in a stockholder's proportionate interest may satisfy
16
<PAGE> 20
this test. For example, the Service has indicated in a published ruling that a
3.3% reduction in the proportionate interest of a small minority (substantially
less than 1%) stockholder in a publicly held corporation who exercises no
control over corporate affairs constitutes such a "meaningful reduction."
Stockholders expecting to rely upon the "not essentially equivalent to a
dividend" test should, therefore, consult with tax advisors as to its
application in their particular situations.
Stockholders should be aware that, because proration may occur as to Shares
tendered pursuant to the Offer, fewer than all such Shares may be purchased in
the Offer. This must be taken into account in determining whether a stockholder
is able to satisfy the tests under Section 302 of the Code for sale or exchange
treatment. In general, however, stockholders who tender all of their Shares can
expect to satisfy the "substantially disproportionate" test and thus recognize
sale or exchange treatment, assuming all Shares constructively owned by such
stockholder are also tendered.
It may be possible for a tendering stockholder to satisfy one of the above
three tests by contemporaneously selling or otherwise disposing of all or some
of the Shares that are actually or constructively owned by such stockholder but
are not purchased pursuant to the Offer. Correspondingly, a tendering
stockholder may not be able to satisfy one of the above three tests because of
contemporaneous acquisitions of Shares by such stockholder or a related party
whose Shares would be attributed to such stockholder. Stockholders should
consult their tax advisors regarding the tax consequences of such sales or
acquisitions in their particular circumstances.
If none of the three tests under Section 302 is satisfied and if, as is
anticipated, the Company has sufficient earnings and profits, the tendering
stockholder will be treated as having received a dividend includible in gross
income in an amount equal to the entire amount of cash received by the
stockholder pursuant to the Offer (without regard to gain or loss, if any). The
stockholder's basis in the Shares tendered generally will be added to the basis
of such stockholder's remaining Shares.
In the case of a corporate stockholder, if the cash paid is treated as a
dividend, the dividend income may be eligible for the 70% dividends-received
deduction. The dividends-received deduction is subject to certain limitations,
and may not be available if the corporate stockholder does not satisfy certain
holding period requirements with respect to the Shares or if the Shares are
treated as "debt financed portfolio stock." Generally, if a dividends-received
deduction is available, it is expected that the dividend will be treated as an
"extraordinary dividend" under Section 1059(a) of the Code, in which case such
corporate stockholder's tax basis in Shares retained by such stockholder would
be reduced, but not below zero, by the amount of the nontaxed portion of the
dividend. Any amount of the nontaxed portion of the dividend in excess of the
stockholder's basis will generally be subject to tax upon sale or disposition of
those Shares. Corporate stockholders are urged to consult their tax advisors as
to the effect of Section 1059 of the Code on their tax basis in Shares.
A tendering stockholder or other payee who fails to complete fully and sign
the Substitute Form W-9 included in the Letter of Transmittal may be subject to
backup federal income tax withholding equal to 31% of the gross payments made
pursuant to the Offer.
The Depositary will withhold federal income taxes equal to 30% of the gross
amounts paid to a foreign stockholder or that stockholder's agent, unless the
company determines (i) that a reduced rate of withholding applies pursuant to a
tax treaty or (2) that an exemption from withholding applies because such gross
amounts are effectively connected with the conduct of a trade or business by the
foreign stockholder within the United States. For this purpose, a foreign
stockholder generally is any stockholder that is not, under United States tax
laws, (i) a citizen or resident of the United States, (ii) a corporation or
partnership created or organized in the United States or under the laws of the
United States or any State, or (iii) an estate or trust the income of which is
subject to United States income taxation regardless of its source.
Under current Regulations, dividends paid to an address outside the United
States are presumed to be paid to a resident of such country for purposes of
withholding. Therefore, the Company will determine the applicable rate of
withholding by reference to a stockholder's address, unless the facts and
circumstances
17
<PAGE> 21
indicate that such reliance is not warranted or if applicable law (such as an
applicable treaty or regulation thereunder) requires some other method for
determining a stockholder's residence.
To claim an exemption from withholding on the grounds that gross amounts
paid pursuant to the Offer are effectively connected with the conduct of a trade
or business by the foreign stockholder within the United States, the foreign
stockholder must deliver to the Company a properly executed statement claiming
such exemption. Such statement, on Service Form 4224, may be obtained from the
Company. If the gross amounts are effectively connected with the conduct of a
trade or business by the foreign stockholder within the United States, the gross
amounts (as adjusted by any applicable deductions) would be subject to United
States federal income tax at regular graduated rates and would be exempt from
the 30% withholding tax described above.
A foreign stockholder that is eligible for a reduced rate of U.S.
withholding tax pursuant to a tax treaty or because such foreign stockholder
meets the "complete termination", "substantially disproportionate," or "not
essentially equivalent to a dividend" tests generally may obtain a refund of any
excess amounts withheld by filing an appropriate claim for refund with the
Service. Foreign stockholders are urged to consult their own tax advisors
regarding the application of federal income tax withholding, including
eligibility for a withholding tax reduction or exemption and the refund
procedures.
Stockholders who do not tender any Shares will not incur any tax liability
as a result of the Offer.
The foregoing discussion may not apply to Shares acquired pursuant to
certain compensation arrangements with the Company.
14. EXTENSION OF THE TENDER PERIOD; TERMINATION; AMENDMENTS
The Company expressly reserves the right, in its sole discretion, at any
time or from time to time and regardless of whether or not any of the events set
forth in Section 6 shall have occurred or shall be deemed by the Company to have
occurred, to extend the period of time during which the Offer is open and
thereby delay acceptance for payment of, and payment for, any Shares by giving
oral or written notice of such extension to the Depositary and making a public
announcement thereof. During any such extension, all Shares previously tendered
and not purchased or withdrawn will remain subject to the Offer, except to the
extent that such Shares may be withdrawn as set forth in Section 4. The Company
also expressly reserves the right, in its sole discretion, to terminate the
Offer and not accept for payment or pay for any Shares not theretofore accepted
for payment or paid for or, subject to applicable law, to postpone payment for
Shares upon the occurrence of any of the conditions specified in Section 6 by
giving oral or written notice of such termination or postponement to the
Depositary and making a public announcement thereof. The Company's reservation
of the right to delay payment for Shares which it has accepted for payment is
limited by Rule 13e-4(f)(5) under the Exchange Act, which requires that an
issuer must pay the consideration offered or return the securities tendered
promptly after termination or withdrawal of a tender offer. Subject to
compliance with applicable law, the Company further reserves the right, in its
sole discretion, and regardless of whether or not any of the events set forth in
Section 6 shall have occurred or shall be deemed by the Company to have
occurred, to amend the Offer in any respect (including, without limitation, by
decreasing or increasing the consideration offered in the Offer to owners of
Shares or by decreasing the number of Shares being sought in the Offer) or to
waive the limitation on the maximum number of shares to be purchased pursuant to
the Offer. Amendments to the Offer may be made at any time or from time to time
effected by public announcement thereof, such announcement, in the case of an
extension, to be issued no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled or announced Expiration Date. Any
public announcement made pursuant to the Offer will be disseminated promptly to
stockholders in a manner reasonably designed to inform stockholders of such
change. Without limiting the manner in which the Company may choose to make a
public announcement, except as required by applicable law (including Rule
13e-4(e)(2) under the Exchange Act), the Company shall have no obligation to
publish, advertise or otherwise communicate any such public announcement other
than by making a release to the Dow Jones News Service.
If the Company materially changes the terms of the Offer or the information
concerning the Offer or if it waives a material condition of the Offer, the
Company will extend the Offer to the extent required by
18
<PAGE> 22
Rules 13e-4(d)(2) and 13e-4(e)(2) promulgated under the Exchange Act, which
require that the minimum period during which an offer must remain open following
material changes in the terms of the offer or information concerning the offer
(other than a change in price or a change in percentage of securities sought)
will depend on the facts and circumstances, including the relative materiality
of such terms or information. The Commission has stated that, as a general rule,
it is of the view that an offer should remain open for a minimum of five
business days from the date that notice of such a material change is first
published, sent or given. If (a) the Company (i) increases or decreases the
price to be paid for Shares, (ii) increases the number of Shares being sought by
an amount exceeding 2% of the outstanding Shares, or (iii) decreases the number
of Shares being sought, and (b) the Offer is scheduled to expire at any time
earlier than the expiration of a period ending on the tenth business day from
and including the date that notice of such increase, decrease or waiver is first
published, sent or given, the Offer will be extended until the expiration of
such period of ten business days.
The Company has considered making an offer to purchase more than 1,000,000
Shares and reserves the right to amend the Offer to increase the number of
Shares sought to be purchased pursuant to the Offer. Any such amendment would
require an extension of the Offer for at least ten business days, to the extent
described above. The Board of Directors has not authorized the Company to offer
to purchase more than 1,000,000 Shares. Any increase in the number of Shares to
be purchased would require the approval of the Company's lenders. The Company
does not expect to increase the number of Shares covered by the Offer if such
increase would cause the Offer to be deemed a Rule 13e-3 transaction (a going
private transaction) or any step in any series of a transactions constituting a
Rule 13e-3 transaction. Any increase in the number of Shares purchased in the
Offer would increase the percentage of the outstanding Shares owned by James I.
Tankersley and Daniel B. Tankersley following consummation of the Offer.
15. FEES AND EXPENSES
The Company has retained First Union National Bank of North Carolina
("First Union") as Depositary and D.F. King & Co., Inc. ("D.F. King") as
Information Agent in connection with the Offer. The Information Agent will
assist stockholders who request assistance in connection with the Offer and may
request brokers, dealers and other nominee stockholders to forward materials
relating to the Offer to beneficial owners. The Depositary and the Information
Agent will receive reasonable and customary compensation for their services in
connection with the Offer and will also be reimbursed for certain out-of-pocket
expenses, including the reasonable fees and expenses of their counsel. The
Company has agreed to indemnify the Depositary and the Information Agent against
certain liabilities in connection with the Offer, including certain liabilities
under the federal securities laws. Neither First Union nor D.F. King has been
retained to make solicitations or recommendations in their respective roles as
Depositary and Information Agent.
The Company will not pay fees or commissions to any broker, dealer,
commercial bank, trust company or other person for soliciting any Shares
pursuant to the Offer. The Company will, however, on request, reimburse such
persons for customary handling and mailing expenses incurred in forwarding
materials in respect of the Offer to the beneficial owners for which they act as
nominees. No such broker, dealer, commercial bank or trust company has been
authorized to act as the Company's agent for purposes of this Offer. The Company
will pay (or cause to be paid) any stock transfer taxes on its purchase of
Shares, except as otherwise provided in Instruction 6 of the Letter of
Transmittal.
16. MISCELLANEOUS
The Offer is not being made to, nor will the Company accept tenders from,
owners of Shares in any jurisdiction in which the Offer or its acceptance would
not be in compliance with the laws of such jurisdiction. The Company is not
aware of any jurisdiction where the making of the Offer or the tender of Shares
would not be in compliance with applicable law. If the Company becomes aware of
any jurisdiction where the making of the Offer or the tender of Shares is not in
compliance with any applicable law, the Company will make a good faith effort to
comply with such law. If, after such good faith effort, the Company cannot
comply with such law, the Offer will not be made to (nor will tenders be
accepted from or on behalf of) the holders of Shares residing in such
jurisdiction.
19
<PAGE> 23
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE COMPANY IN CONNECTION WITH THE OFFER OTHER THAN
THOSE CONTAINED IN THIS OFFER TO PURCHASE OR IN THE RELATED LETTER OF
TRANSMITTAL. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY.
UNITED FOODS, INC.
May 20, 1997
20
<PAGE> 24
UNITED FOODS, INC.
OFFER TO PURCHASE
FOR CASH UP TO 1,000,000 SHARES OF ITS
CLASS A COMMON STOCK AND CLASS B COMMON STOCK
AT A PRICE OF $2.50 PER SHARE
The Depositary for the Offer is:
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
<TABLE>
<C> <C> <C>
By Hand Delivery or
By Mail: By Facsimile Transmission: Overnight Courier:
FIRST UNION NATIONAL BANK (704) 590-7628 FIRST UNION NATIONAL BANK
OF NORTH CAROLINA (FOR ELIGIBLE INSTITUTIONS OF NORTH CAROLINA
40 BROAD STREET, SUITE 550 ONLY) 40 BROAD STREET, SUITE 500
NEW YORK, NEW YORK 10004 Confirm by Telephone: NEW YORK, NEW YORK
(800) 829-8432
</TABLE>
Any questions or requests for assistance or for additional copies of this
Offer to Purchase or the Letter of Transmittal may be directed to the
Information Agent. Stockholders may also contact their broker, dealer,
commercial bank, trust company or other nominee for assistance concerning the
Offer.
The Information Agent for the Offer is:
D. F. KING & CO., INC.
77 WATER STREET
NEW YORK, NY 10005
CALL TOLL FREE (800) 549-6864
<PAGE> 1
EXHIBIT 7(b)
<PAGE> 2
UNITED FOODS, INC.
SUPPLEMENT TO
OFFER TO PURCHASE
THE OFFER HAS BEEN EXTENDED. THE OFFER, PRORATION PERIOD AND WITHDRAWAL
RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON THURSDAY, JULY 3,
1997, UNLESS THE OFFER IS FURTHER EXTENDED.
The information included in this Supplement amends and supplements the
Offer to Purchase of United Foods, Inc., a Delaware corporation (the "Company"),
to purchase certain shares of its Class A Common Stock, par value $1.00 per
share (the "Class A Common Stock"), and Class B Common Stock, par value $1.00
per share (the "Class B Common Stock" and, together with the Class A Common
Stock, the "Shares"). This Supplement amends the Offer to Purchase (which as
amended by this Supplement and together with the related revised Letter of
Transmittal, constitute the "Offer") by extending the Expiration Date and by
increasing the number of Shares offered to be purchased by the Company to up to
2,500,000 shares of Class A Common Stock and up to 1,500,000 shares of Class B
Common Stock, at a price of $2.50 per Share, net to the seller in cash, upon the
terms and subject to the conditions set forth in the Offer to Purchase, this
Supplement and in the related revised Letter of Transmittal. The Offer is
further amended to add as a condition that the Company does not determine in its
sole judgment that there is a reasonable likelihood that, after purchase of the
Shares covered by the Offer, either the Class A Common Stock or the Class B
Common Stock will cease to qualify for continued listing on the American Stock
Exchange (the "Amex"). See "Certain Conditions of the Offer" and "Purpose of the
Offer; Certain Effects of the Offer" in this Supplement.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE
SECTION 6 OF THE OFFER TO PURCHASE AS AMENDED BY THIS SUPPLEMENT.
The Shares are listed and principally traded on the Amex. The Shares are
also listed and traded on the Pacific Exchange (the "PE"). On June 17, 1997, the
day on which the Company announced, after the close of trading, its intention to
amend the Offer, the closing sales price of the Class B Common Stock as reported
by the Amex was $2 1/8 per share. No sale of Class A Common Stock took place on
the Amex on June 17, 1997, but the then most recent sale was at $2 1/4 per share
on June 16, 1997. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR
THE SHARES. As of 4:00 p.m. Eastern time, June 17, 1997, a total of 2,433,855
shares of Class A Common Stock and 1,639,402 shares of Class B Common Stock had
been validly tendered and not withdrawn in response to the original Offer.
Questions and requests for assistance or for additional copies of this
Offer may be directed to the Information Agent at the address and telephone
number set forth on the back cover of this Offer to Purchase.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION AS
TO WHETHER ANY STOCKHOLDER SHOULD TENDER ANY OR ALL OF SUCH STOCKHOLDER'S SHARES
PURSUANT TO THE OFFER. EACH STOCKHOLDER MUST MAKE THE DECISION WHETHER TO TENDER
SHARES AND, IF SO, HOW MANY SHARES TO TENDER.
THE COMPANY HAS NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON
BEHALF OF THE COMPANY AS TO WHETHER STOCKHOLDERS SHOULD TENDER OR REFRAIN FROM
TENDERING SHARES PURSUANT TO THE OFFER. THE COMPANY HAS NOT AUTHORIZED ANY
PERSON TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH
THE OFFER ON BEHALF OF THE COMPANY OTHER THAN THOSE CONTAINED IN THIS
SUPPLEMENT, THE OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL. DO NOT RELY
ON ANY SUCH RECOMMENDATION OR ANY SUCH INFORMATION OR REPRESENTATIONS, IF GIVEN
OR MADE, AS HAVING BEEN AUTHORIZED BY THE COMPANY.
June 18, 1997
<PAGE> 3
To the Holders of Class A and Class B Common Stock of United Foods, Inc.:
The following information amends and supplements the Offer to Purchase of
the Company pursuant to which the Company is offering to purchase up to
2,500,000 shares of Class A Common Stock and up to 1,500,000 shares of Class B
Common Stock at a price of $2.50 per Share, net to the seller in cash, upon the
terms and subject to the condition set forth in this Supplement, the Offer to
Purchase and the related Letter of Transmittal.
THE OFFER IS SUBJECT TO CERTAIN CONDITIONS SET FORTH IN SECTION 6 OF THE
OFFER TO PURCHASE, AS AMENDED BY THIS SUPPLEMENT, INCLUDING THE CONDITION THAT
THE COMPANY DOES NOT DETERMINE THAT THERE IS A REASONABLE LIKELIHOOD THAT, AFTER
PURCHASE OF THE SHARES COVERED BY THE OFFER, EITHER THE CLASS A COMMON STOCK OR
THE CLASS B COMMON STOCK WILL CEASE TO QUALIFY FOR CONTINUED LISTING ON THE
AMEX.
PROCEDURES FOR TENDERING SHARES ARE SET FORTH IN SECTION 3 OF THE OFFER TO
PURCHASE AS AMENDED BY THIS SUPPLEMENT. ALL SHARES THAT PREVIOUSLY HAVE BEEN
PROPERLY TENDERED AND NOT WITHDRAWN REMAIN PROPERLY TENDERED PURSUANT TO THE
OFFER AS AMENDED BY THIS SUPPLEMENT. SHAREHOLDERS WHO HAVE NOT TENDERED AND
DESIRE TO DO SO MAY USE EITHER THE REVISED LETTER OF TRANSMITTAL DELIVERED WITH
THIS SUPPLEMENT OR THE LETTER OF TRANSMITTAL DELIVERED TO THEM WITH THE OFFER TO
PURCHASE.
Except as amended by this Supplement, the terms and conditions set forth in
the Offer to Purchase and the Letter of Transmittal are applicable in all
respects to the Offer.
Stockholders are urged to read this Supplement, the Offer to Purchase and
the Letter of Transmittal carefully before deciding to tender their Shares.
INCREASE IN NUMBER OF SHARES
The number of Shares the Company is offering to purchase pursuant to the
Offer is increased to up to 2,500,000 shares of Class A Common Stock and up to
1,500,000 shares of Class B Common Stock. All references to the Company offering
to purchase up to 1,000,000 Shares in the Offer to Purchase and the Letter of
Transmittal initially delivered to stockholders are hereby amended to offer to
purchase up to 2,500,000 shares of Class A Common Stock and up to 1,500,000
shares of Class B Common Stock, as appropriate, unless the context requires
otherwise. The maximum number of Shares the Company is offering to purchase
represents approximately 37% of the Shares outstanding as of June 10, 1997, or
approximately 49% of the Class A Common Stock and 26% of the Class B Common
Stock outstanding as of June 10, 1997.
EXTENSION OF THE OFFER
The term "Expiration Date" as defined in Section 1, "Number of Shares;
Proration; Extension of the Offer," of the Offer to Purchase is amended to mean
5:00 p.m., New York City time, on Thursday, July 3, 1997, unless and until the
Company shall have extended the period of time during which the Offer is open,
in which event, the term "Expiration Date" shall refer to the latest time and
date at which the Offer, as so extended by the Company, shall expire.
PRORATION
If, prior to the Expiration Date, more than 2,500,000 shares of Class A
Common Stock (or such greater number of shares of Class A Common Stock as the
Company may elect to purchase pursuant to the Offer) are validly tendered and
not withdrawn, the Company will, upon the terms and subject to the conditions of
the Offer, buy shares of Class A Common Stock first from all stockholders who
beneficially owned as of the close of business on May 15, 1997, and continue to
beneficially own as of the Expiration Date, an aggregate of fewer than 100
shares of Class A Common Stock ("Class A Odd Lot Owners") who properly tender
and do not withdraw all their shares of Class A Common Stock and then on a pro
rata basis from all other stockholders whose shares of Class A Common Stock are
properly tendered and not withdrawn.
2
<PAGE> 4
If, prior to the Expiration Date, more than 1,500,000 shares of Class B
Common Stock (or such greater number of shares of Class B Common Stock as the
Company may elect to purchase pursuant to the Offer) are validly tendered and
not withdrawn, the Company will, upon the terms and subject to the conditions of
the Offer, buy shares of Class B Common Stock first from all stockholders who
beneficially owned as of the close of business on May 15, 1997, and continue to
beneficially own as of the Expiration Date, an aggregate of fewer than 100
shares of Class B Common Stock ("Class B Odd Lot Owners") who properly tender
and do not withdraw all their shares of Class B Common Stock and then on a pro
rata basis from all other stockholders whose shares of Class B Common Stock are
properly tendered and not withdrawn.
CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, subject to any applicable
rules and regulations under the Exchange Act, including Rule 13e-4(f), the
Company shall not be required to accept for payment, purchase or pay for any
shares tendered, may delay the acceptance for payment of or payment for any
Shares tendered, and may terminate or amend the Offer, if at any time after May
19, 1997 and prior to the time of payment for any such Shares (whether any
Shares have theretofore been accepted for payment, purchased or paid for
pursuant to the Offer) any of the conditions set forth in Section 6 of the Offer
to Purchase shall have occurred or if at any time after June 17, 1997 and prior
to the time of payment for any such Shares (whether any Shares have theretofore
been accepted for payment, purchased or paid for pursuant to the Offer) the
Company determines in its sole judgment that there is a reasonable likelihood
that, after purchase of the Shares covered by the Offer, the Class A Common
Stock or the Class B Common Stock will cease to qualify for continued listing on
the Amex. The Company currently believes that there is not a reasonable
likelihood that the Class A and Class B Common Stock will cease to qualify for
continued listing on the Amex following the purchase of the Shares in the Offer.
See "Purpose of the Offer; Certain Effects of the Offer."
PRICE RANGE OF SHARES
The table setting forth the price range of the Shares in Section 7, "Price
Range of the Shares; Dividends," of the Offer to Purchase is supplemented by
adding the following share price information with respect to Fiscal Year 1998:
<TABLE>
<CAPTION>
CLASS A CLASS B
COMMON STOCK COMMON STOCK
PRICE RANGE PRICE RANGE
------------- -------------
HIGH LOW HIGH LOW
----- ----- ----- -----
<S> <C> <C> <C> <C>
FISCAL YEAR 1998
Quarter ended May 31, 1997.............................. 2 1/8 1 7/16 2 3/16 1 9/16
</TABLE>
On June 17, 1997, the day on which the Company announced, after the close
of trading, its intention to amend the Offer, the closing sales price of the
Class B Common Stock as reported by the Amex was $2 1/8 per share. No sale of
Class A Common Stock occurred on June 17, 1997, but the then most recent sale
was at $2 1/4 per share on June 16, 1997. STOCKHOLDERS ARE URGED TO OBTAIN
CURRENT MARKET QUOTATIONS FOR THE SHARES.
PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER
The following discussion contains forward-looking statements which involve
risks and uncertainties. The Company's actual results may differ materially from
the results discussed in forward-looking statements. Factors that might cause
such a difference include, but are not limited to, the matters discussed below
as well as factors described in the Company's Annual Report on Form 10-K for the
fiscal year ended February 28, 1997.
On June 17, 1997, the Company's Board of Directors unanimously determined
to increase the number of Shares covered by the Offer to an amount to be
determined by the Executive Committee of the Board of Directors up to 4,000,000
Shares and authorized the Executive Committee to determine the number of shares
of each class of stock to be covered by the Offer up to a combined total of
4,000,000 Shares. In connection with the increase in the number of Shares
covered by the Offer, the Board determined that it would be prudent to add as a
condition that the Company does not determine, in its sole judgment, that there
is a reasonable
3
<PAGE> 5
likelihood that, after the purchase of the Shares covered by the Offer, either
the Class A Common Stock or the Class B Common Stock will cease to qualify for
continued listing on the Amex. As described below, the Company currently
believes that, after the purchase of the Shares covered by the Offer, there will
not be a reasonable likelihood that the Class A or Class B Common Stock will
cease to qualify for continued listing on the Amex.
On June 17, 1997, the Executive Committee of the Company's Board of
Directors unanimously determined to increase the number of Shares covered by the
Offer to up to 2,500,000 shares of Class A Common Stock and up to 1,500,000
shares of Class B Common Stock.
The Company's Board of Directors based its determination to increase the
number of Shares covered by the Offer on the desire to accommodate the interests
of all stockholders who may wish to tender Shares in the Offer as well as the
Company's continuing belief that the current market prices of the Shares do not
adequately reflect the value of the Company's business, assets and prospects and
that the Shares represent an attractive investment opportunity for the Company
and a good use of a substantial portion of the cash, cash equivalents and credit
it has available. The Offer will afford to stockholders the opportunity to
dispose of Shares without the usual transaction costs associated with a market
sale. Stockholders whose Shares are not purchased in the Offer will obtain an
increase in their ownership interest in the Company and thus in the Company's
assets and future earnings, subject to the Company's right to sell or issue
additional shares and other equity securities.
Shares the Company acquires pursuant to the Offer initially will be held in
the Company's treasury or retired (or a combination thereof) and will be
available for the Company to issue without further stockholder action (except as
required by applicable law or the rules of the Amex or the PE) for such purposes
as, among others, the acquisition of other businesses, the raising of additional
capital for use in the Company's business, the distribution of stock dividends
and the implementation of, or the satisfaction of obligations under, employee
benefit plans. The Company has no present plans for the use of the Shares
acquired pursuant to the Offer.
The Company has been advised that none of its directors or executive
officers (other than W. Donald Dresser, the Company's Executive Vice President
and Director of Development) and none of the members of the Tankersley family
currently intend to tender Shares pursuant to the Offer. Mr. Dresser owns 88,500
shares of Class A Common Stock and 56,800 shares of Class B Common Stock and has
indicated that he intends to tender all Shares that he owns.
James I. Tankersley and Daniel B. Tankersley have advised the Company that
the Offer is not a "Rule 13e-3 transaction" or a step in any series of
transactions constituting a Rule 13e-3 transaction. A Rule 13e-3 transaction
(also known as a "going private" transaction) is defined in Rule 13e-3 under the
Exchange Act to include a transaction such as the Offer if it has either a
reasonable likelihood or a purpose of producing, either directly or indirectly,
the effect of causing a class of equity securities that is registered under
Section 12(b) or 12(g) of the Exchange Act to be neither listed on the Amex, the
PE or another national securities exchange nor authorized to be quoted on an
inter-dealer quotation system of a registered national securities association.
The Offer would also be deemed a Rule 13e-3 transaction if it has a reasonable
likelihood or purpose of causing, directly or indirectly, the Class A Common
Stock or the Class B Common Stock to be held of record by less than 300 persons.
As of May 31, 1997, there were 2,227 record holders of Class A Common Stock and
1,767 record holders of Class B Common Stock.
The Company's purchase of Shares pursuant to the Offer will reduce the
number of Shares that might otherwise trade publicly and is likely to reduce the
number of stockholders, which could adversely affect the liquidity and market
value of the remaining Shares. Nonetheless, the Company believes that there
still will be a sufficient number of Shares outstanding and publicly traded
following the consummation of the Offer to ensure a continued trading market in
the Shares.
According to the Amex's published guidelines, the Amex would consider
delisting the shares of Class A Common Stock or Class B Common Stock if, among
other things, the number of holders of round lots of such class should fall
below 300, the number of publicly held shares of such class (exclusive of
holdings of officers,
4
<PAGE> 6
directors, their immediate families and other concentrated holdings of 10% or
more ("Amex Excluded Holdings"), should drop below 200,000 shares or the
aggregate market price of publicly held shares of such class (exclusive of Amex
Excluded Holdings) should fall below $1,000,000. As of May 19, 1997, there were
1,446 record holders of round lots of Class A Common Stock and 1,055 record
holders of round lots of Class B Common Stock. Based on the number of shares
outstanding and share ownership as of June 10, 1997, there would be, exclusive
of Amex Excluded Holdings, 1,556,775 publicly held shares of Class A Common
Stock and 1,321,856 publicly held shares of Class B Common Stock following the
purchase of all of the Shares covered by the Offer. The published guidelines of
the Amex also state that any development which substantially reduces the number
of holders of shares of a listed class may occasion review of continued listing
by Amex. The Board of Directors does not believe any such review would result in
delisting of the shares of Class A Common Stock or Class B Common Stock as a
result of the Offer.
According to the PE's published guidelines, the PE would consider delisting
the shares of Class A Common Stock or Class B Common Stock if, among other
things, the number of holders of shares of such class should fall below 800, the
number of publicly held shares of such class (exclusive of holdings of officers,
directors, their immediate families and other concentrated holdings of 10% or
more ("PE Excluded Holdings"), should drop below 500,000 or the aggregate market
price of publicly held shares of such class (exclusive of PE Excluded Holdings)
should fall below $3,000,000. The published guidelines of the PE also state that
it will examine qualitative criteria, which may include unwarranted use of
company funds for the repurchase of equity securities as a factor which could
lead to delisting. It is possible that the repurchase of Shares pursuant to the
Offer could result in the delisting of either or both of the Class A Common
Stock and the Class B Common Stock from the PE, particularly in view of the
market value requirement for each class. However, the Board of Directors does
not believe the purchase of Shares pursuant to the Offer is reasonably likely to
result in the delisting of either the Class A Common Stock or the Class B Common
Stock from the Amex.
The market value of the Shares remaining after the Company's purchase of
Shares pursuant to the Offer may be adversely affected by the reduced number of
publicly held Shares or because the Purchase Price is substantially in excess of
recent market prices at which the Shares have traded prior to announcement of
the Company's intention to commence the Offer. The Company has not undertaken
any studies or made any analysis of the market prices at which the remaining
Shares are likely to trade following consummation of the Offer, and can provide
no assurance as to the market value of the Shares following the Company's
purchase pursuant to the Offer.
The reduction in cash assets and the increased borrowings resulting from
purchase of Shares pursuant to the Offer will reduce the resources of the
Company available to make acquisitions and other capital investments. While the
Company regularly reviews its business strategy and evaluates various options
available to it, the Company does not currently contemplate any acquisition or
other strategic investment.
It is possible that the purchase of Shares pursuant to the Offer may cause
an "ownership change" with respect to the Company within the meaning of Section
382 of the Internal Revenue Code of 1986, as amended (the "Code"). Generally, an
ownership change would be deemed to occur if, immediately following the
Company's purchase of Shares pursuant to the Offer, the percentage of Shares
owned by one or more stockholders who then own five percent or more of the
outstanding Shares has increased, in the aggregate, by more than 50 percentage
points over the lowest percentage owned by such stockholders during the
three-year period ending on the day that the Shares tendered pursuant to the
Offer are purchased by the Company. The purchase of Shares pursuant to the Offer
will continue to affect the determination of whether an ownership change occurs
at some point in the next three years. If the Company experiences an ownership
change, its ability to offset taxable income generated in taxable periods ending
after the ownership change with its existing net operating loss carryforwards
and the general business and minimum tax credit carryforwards will be subject to
an annual limitation. The amount of the annual limitation is equal to the
product of the value of the Company's outstanding stock determined after the
completion of the Company's purchase of Shares pursuant to the Offer or future
triggering event (reduced by certain capital contributions made in the two-year
period prior to the ownership change) and the "long-term tax-exempt rate"
(determined monthly and, for ownership changes occurring in the month of May,
1997, 5.64%). The Company will be required to pay federal income
5
<PAGE> 7
taxes in any year in which its taxable income exceeds the annual limitation,
notwithstanding the existence of the net operating loss carryforwards and the
general business and minimum tax credit carryforwards. The Company cannot
predict whether an ownership change will occur as a result of the purchase of
Shares pursuant to the amended Offer. If an ownership change does occur, the
effect would depend upon the number and value of Shares remaining outstanding
after such purchase and the federal long-term tax-exempt rate for the month of
the ownership change; thus, this effect cannot be predicted with certainty. The
Company, however, no longer has a net operating loss carryforward. Although the
Company does have significant general business and minimum tax carryforwards,
the use of these carryforwards is already limited by other sections of the Code.
Accordingly, the Company does not believe that any limitation on the use of such
carryforwards triggered by an ownership change will result in a material adverse
change in the Company's financial condition or results of operations.
As of June 10, 1997 the Company had issued and outstanding 10,809,929
Shares and had reserved for issuance upon exercise of outstanding stock options
829,384 Shares. Pursuant to the United Foods, Inc. Second Management Retirement
Plan dated February 26, 1997, all holders of outstanding options have agreed to
refrain from exercising such options in consideration of deferred compensation
as provided in the plan. The 4,000,000 Shares the Company is offering to
purchase represent approximately 37% of the Shares outstanding as of June 10,
1997. With respect to the election of directors, the holders of Class A Common
Stock are entitled to elect 25% (or the next highest whole number) of the
Company's Board of Directors, and the holders of the Class B Common Stock are
entitled to elect the remaining directors. On matters requiring the two classes
of common stock to vote together, the holders of Class A Common Stock are
entitled to 1/10 vote per share and the holders of Class B Common Stock are
entitled to one vote per share. As of June 10, 1997 the Company's directors and
executive officers as a group (14 persons) beneficially owned 4,412,395 shares
of Class A Common Stock and 2,928,798 shares of Class B Common Stock,
representing approximately 50.7% of the Class A Common Stock and 51.4% of the
Class B Common Stock. As of June 10, 1997, the Company's directors and executive
officers as a group directly owned 817,713 shares of Class A Common Stock and
2,928,798 shares of Class B Common Stock, representing approximately 16% of the
Class A Common Stock and 51.4% of the Class B Common Stock. As of June 10, 1997
James I. Tankersley and Daniel B. Tankersley beneficially owned 3,265,591 shares
of Class A Common Stock and 2,866,198 shares of Class B Common Stock,
representing approximately 40.9% of the Class A Common Stock and 50.3% of the
Class B Common Stock. Beneficial ownership of the Class A Common Stock as set
forth above includes beneficial ownership of Shares of Class A Common Stock
which may be acquired upon the conversion of Class B Common Stock or upon the
exercise of outstanding options. As of June 10, 1997 James I. Tankersley and
Daniel B. Tankersley directly owned 399,393 shares of Class A Common Stock and
2,866,198 shares of Class B Common Stock, representing approximately 7.8% of the
Class A Common Stock, and 50.3% of the Class B Common Stock, respectively.
Based on the Shares outstanding on June 10, 1997, the percentage of the
outstanding Class A Common Stock and Class B Common Stock beneficially owned by
the Company's directors and executive officers as a group may increase as a
result of the Offer to as much as 69.3% of the Class A Common Stock and 68.5% of
the Class B Common Stock, respectively, and the percentage of the outstanding
Class A Common Stock and Class B Common Stock directly owned by the Company's
directors and executive officers as a group may increase as a result of the
Offer to as much as 27.9% of the Class A Common Stock and 68.5% of the Class B
Common Stock, respectively. The foregoing percentages reflect the purchase of
the Shares that Mr. Dresser, the Company's Executive Vice President and Director
of Development, has indicated that he intends to tender. The percentage of the
outstanding Class A Common Stock and Class B Common Stock beneficially owned by
James I. Tankersley and Daniel B. Tankersley may increase as a result of the
Offer to as much as 59.6% of the Class A Common Stock and 68.3% of the Class B
Common Stock, respectively, and the percentage of the outstanding Class A Common
Stock and Class B Common Stock directly owned by James I. Tankersley and Daniel
B. Tankersley may increase as a result of the Offer to as much as 15.3% of the
Class A Common Stock and 68.3% of the Class B Common Stock, respectively.
The Shares are currently "margin securities" under the rules of the Federal
Reserve Board. This has the effect, among other things, of allowing brokers to
extend credit on the collateral of the Shares. Following the
6
<PAGE> 8
repurchase of Shares pursuant to the Offer, the Company believes the Shares will
continue to be "margin securities" for purposes of the Federal Reserve Board's
margin regulations.
The Shares are registered under the Exchange Act which requires, among
other things, that the Company furnish certain information to its stockholders
and to the Commission and comply with the Commission's proxy rules in connection
with meetings of the Company's stockholders. The Company does not believe that
the purchase by the Company of Shares pursuant to the Offer will result in the
Shares becoming eligible for deregistration under the Exchange Act.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
Historical and Unaudited Pro Forma Financial Information. The table below
sets forth summary historical financial information for the Company and summary
unaudited pro forma financial information giving effect to the purchase of
4,000,000 Shares pursuant to the Offer. The historical financial information for
the fiscal years ended February 29, 1996 and February 28, 1997 (other than the
ratios of earnings to fixed charges) has been derived from, and should be read
in conjunction with, the audited consolidated financial statements of the
Company contained in the Company's Annual Report on Form 10-K for the year ended
February 28, 1997, which is hereby incorporated herein by reference. The summary
historical financial information should be read in conjunction with, and is
qualified by reference to, the audited financial information and related notes
thereto from which it has been derived. The summary unaudited pro forma
financial information gives effect to the purchase of Shares pursuant to the
Offer, based on certain assumptions described below, as if it had occurred on
March 1, 1996 with respect to income statement data and on February 28, 1997
with respect to balance sheet data. The unaudited pro forma financial
information should be read in conjunction with the historical financial
information incorporated herein by reference and does not purport to be
indicative of the results that would actually have been obtained had the
purchase of the Shares pursuant to the Offer been completed at the dates
indicated or that may be obtained in the future.
SUMMARY HISTORICAL AND UNAUDITED PRO FORMA INFORMATION
SUMMARY HISTORICAL FINANCIAL INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED
FEBRUARY 28 OR 29,
-----------------------
1997 1996
---------- ----------
(AMOUNTS IN THOUSANDS
EXCEPT PER
SHARE DATA AND RATIOS)
<S> <C> <C>
STATEMENT OF OPERATIONS INFORMATION:
Net sales and service revenue............................... $ 195,820 $ 191,714
Net income (loss)........................................... 922 (660)
Earnings (loss) per share of common stock and common stock
equivalents............................................... $ 0.08 $ (0.06)
Weighted average common stock and common stock equivalents
outstanding............................................... 11,077 11,470
Ratio of Earnings to Fixed Charges(a)....................... 1.39 to 1 0.74 to 1
BALANCE SHEET INFORMATION:
Working capital............................................. $ 40,738 $ 42,164
Total assets................................................ 119,108 128,188
Total assets, less goodwill................................. 119,108 128,188
Total indebtedness.......................................... 63,652 73,654
Stockholders' equity........................................ $ 55,456 $ 54,534
Shares outstanding.......................................... 10,810 10,810
Book value per share........................................ $ 5.13 $ 5.04
</TABLE>
- ---------------
(a) Earnings used in computing the ratio of earnings to fixed charges consists
of income before fixed charges and income taxes. Fixed charges consist of
interest expense.
7
<PAGE> 9
PRO FORMA PURCHASE OF
2,500,000 SHARES OF CLASS A COMMON STOCK AND
1,500,000 SHARES OF CLASS B COMMON STOCK
AT $2.50 PER SHARE
<TABLE>
<CAPTION>
YEAR ENDED FEBRUARY 28, 1997
-------------------------------------------
HISTORICAL ADJUSTMENTS PRO FORMA
------------ ------------ -------------
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA
AND RATIOS)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS INFORMATION:
Net sales and service revenue............................. $ 195,820 $ 195,820
Net income (loss)......................................... 922 $ (536) 386
Earnings (loss) per share of common stock and common stock
equivalents............................................. $ 0.08 $ (.03) $ 0.05
Weighted average common stock and common stock equivalents
outstanding............................................. 11,077 (4,000) 7,077
Ratio of Earnings to Fixed Charges(a)..................... 1.39 to 1 1.13 to 1
</TABLE>
<TABLE>
<CAPTION>
AT FEBRUARY 28, 1997
-------------------------------------------
HISTORICAL ADJUSTMENTS PRO FORMA
------------ ------------ -------------
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA
AND RATIOS)
<S> <C> <C> <C>
BALANCE SHEET INFORMATION:
Working capital........................................... $ 40,738 $ 40,738
Total assets.............................................. 119,108 119,108
Total assets, less goodwill............................... 119,108 119,108
Total indebtedness........................................ 63,652 $ 10,300 73,952
Stockholders' equity...................................... $ 55,456 (10,300) $ 45,156
Shares outstanding........................................ 10,810 (4,000) 6,810
Book value per share...................................... $ 5.13 $ 6.63
</TABLE>
- ---------------
(a) Earnings used in computing the ratio of earnings to fixed charges consists
of income before fixed charges and income taxes. Fixed charges consist of
interest expense.
SOURCE AND AMOUNT OF FUNDS
Assuming that the Company purchases 2,500,000 shares of Class A Common
Stock and 1,500,000 shares of Class B Common Stock pursuant to the Offer, the
total amount required by the Company to purchase such Shares and pay related
fees and expenses will be approximately $10,300,000. The Company anticipates
that it will fund the purchase of Shares pursuant to the Offer and the payment
of related fees and expenses from available cash or by borrowings under that
certain Loan Agreement, Revolving Credit Note and Security Agreement between
First American National Bank ("First American") and the Company dated April 7,
1993, as amended (the "First American Revolver") and/or that certain Revolving
Credit Agreement between Cooperatieve Centrale Raiffeisen -- Boerenleenbank
B.A., "Rabobank Nederland" and the Company dated August 20, 1992, as amended
(the "Rabobank Revolver").
The Company has available credit of $18,000,000 under the First American
Revolver at a rate equal to First American's prime rate or an Euro dollar rate,
at the Company's option. The First American Revolver matures on June 1, 2000.
Any indebtedness incurred pursuant to the First American Revolver is secured by
certain of the Company's accounts receivable and inventory. The First American
Revolver contains certain restrictive covenants including covenants pertaining
to minimum tangible net worth, working capital, the ratio of debt to equity and
a coverage ratio. Effective June 17, 1997, the First American Revolver,
including the minimum net worth covenant, was amended to permit stock
repurchases by the Company to up to $10,000,000 for the fiscal year ending
February 28, 1998. The Company anticipates that any borrowings to
8
<PAGE> 10
purchase Shares in the Offer under the First American Revolver will be repaid
from cash generated from the Company's operations.
The Company has available credit of $3,000,000 under the Rabobank Revolver
at a rate equal to the Term Federal Funds Rate plus 1.3% . The Rabobank Revolver
matures on August 31, 1999. Any indebtedness incurred pursuant to the Rabobank
Revolver is secured by the accounts receivable and inventory of the Company's
Pictsweet Mushroom Farms division. The Rabobank Revolver contains certain
restrictive covenants including covenants pertaining to minimum tangible net
worth, working capital and the ratio of debt to equity. Effective June 17, 1997,
the Rabobank Revolver, including the minimum net worth covenant, was amended to
permit stock repurchases by the Company up to $10,000,000 for the fiscal year
ending February 28, 1998. The Company anticipates that any borrowings to
purchase Shares in the Offer under the Rabobank Revolver will be repaid from
cash generated from the Company's operations.
UNITED FOODS, INC.
June 18, 1997
9
<PAGE> 11
UNITED FOODS, INC.
SUPPLEMENT TO
OFFER TO PURCHASE
The Depositary for the Offer is:
First Union National Bank of North Carolina
<TABLE>
<S> <C> <C>
By Mail: By Facsimile Transmission: By Hand Delivery or
First Union National Bank (704) 590-7628 Overnight Courier:
of North Carolina (For Eligible Institutions Only) First Union National Bank
40 Broad Street, Suite Confirm by Telephone: of North Carolina
550 (800) 829-8432 40 Broad Street, Suite 500
New York, New York 10004 New York, New York
</TABLE>
Any questions or requests for assistance or for additional copies of the
Offer to Purchase, this Supplement or the Letter of Transmittal may be directed
to the Information Agent. Stockholders may also contact their broker, dealer,
commercial bank, trust company or other nominee for assistance concerning the
Offer.
The Information Agent for the Offer is:
D.F. King & Co., Inc.
77 Water Street
New York, New York 10005-4495
Call Toll Free (800) 549-6864
