<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 13, 1994
REGISTRATION NO. 33-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
HUDSON FOODS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
DELAWARE 71-0427616
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1225 HUDSON ROAD
ROGERS, ARKANSAS 72756
(501) 636-1100
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
JAMES T. HUDSON
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
HUDSON FOODS, INC.
1225 HUDSON ROAD
ROGERS, ARKANSAS 72756
(501) 636-1100
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES OF ALL CORRESPONDENCE TO:
C. DOUGLAS BUFORD, JR., ESQ. JOEL S. KLAPERMAN, ESQ.
WRIGHT, LINDSEY & JENNINGS SHEARMAN & STERLING
200 WEST CAPITOL AVENUE, SUITE 2200 599 LEXINGTON AVENUE
LITTLE ROCK, ARKANSAS 72201 NEW YORK, NEW YORK 10022
(501) 371-0808 (212) 848-4000
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
possible after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED PROPOSED
TITLE OF EACH CLASS OF AMOUNT MAXIMUM MAXIMUM AMOUNT OF
SECURITIES TO BE TO BE OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED REGISTERED(1) PER SHARE (2) OFFERING PRICE FEE
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A common stock,
$.01 par value per
share................ 4,600,000 shares $21.19 $97,474,000 $33,612
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Includes 600,000 shares subject to the exercise of the Underwriters' over-
allotment option.
(2) Estimated solely for the purposes of calculating the registration fee
pursuant to Rule 457(c), based upon the average of the high and low prices
reported for October 7, 1994.
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(A)
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
This Registration Statement contains two forms of prospectus: one to be used
in connection with a United States and Canadian offering of the registrant's
Class A common stock (the "U.S. Prospectus") and one to be used in connection
with a concurrent international offering of the Class A common stock (the
"International Prospectus" and, together with the U.S. Prospectus, the
"Prospectuses"). The International Prospectus will be identical to the U.S.
Prospectus except that it will contain different front and back cover pages, a
different inside cover page and a different section entitled "Underwriting."
The U.S. Prospectus is included herein and is followed by those pages to be
used in the International Prospectus which differ from those in the U.S.
Prospectus. Each of the pages for the International Prospectus included herein
has been labeled "Alternate Page for International Prospectus."
If required pursuant to Rule 424(b) of the General Rules and Regulations
under the Securities Act of 1933, as amended, ten copies of each of the
Prospectuses in the forms in which they are used will be filed with the
Securities and Exchange Commission.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED OCTOBER 13, 1994
PROSPECTUS
4,000,000 SHARES
LOGO
CLASS A COMMON STOCK
-----------
Of the 4,000,000 shares of Class A common stock offered hereby, 2,500,000
shares are being sold by Hudson Foods, Inc. ("Hudson" or the "Company") and
1,500,000 shares are being sold by certain stockholders of the Company (the
"Selling Stockholders"). See "Selling Stockholders." The Company will not
receive any proceeds from the sale of the shares by the Selling Stockholders.
Of the 4,000,000 shares of Class A common stock offered hereby, 3,200,000
shares are being offered in the United States and Canada by the U.S.
Underwriters (the "U.S. Offering") and 800,000 shares are being offered in a
concurrent offering outside the United States and Canada by the International
Underwriters (the "International Offering" and, together with the U.S.
Offering, the "Offerings"). The public offering price and the underwriting
discount per share are identical for the Offerings. See "Underwriting."
The Company's Class A common stock is listed on the New York Stock Exchange,
Inc. under the symbol "HFI." On October 12, 1994, the last reported sale price
of the Class A common stock on the New York Stock Exchange was $24 3/8. See
"Price Range of Common Stock."
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO PROCEEDS TO
PUBLIC DISCOUNT (1) COMPANY (2) SELLING STOCKHOLDERS (2)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share................................. $ $ $ $
- ----------------------------------------------------------------------------------------------------------------
Total(3).................................. $ $ $ $
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
(1) The Company and the Selling Stockholders have agreed to indemnify the
several Underwriters against certain liabilities under the Securities Act
of 1933. See "Underwriting."
(2) Before deducting expenses of the offering estimated at $ payable
by the Company and $ payable by the Selling Stockholders.
(3) One of the Selling Stockholders has granted each of the U.S. Underwriters
and the International Underwriters an option exercisable within 30 days
after the date hereof to purchase up to 480,000 and 120,000 additional
shares of Class A common stock, respectively, solely to cover over-
allotments, if any. If such options are exercised in full, the total Price
to Public, Underwriting Discount and Proceeds to Selling Stockholders will
be $ , $ and $ , respectively. See
"Underwriting."
-----------
The shares of Class A common stock are offered by the several Underwriters,
subject to prior sale, when, as and if issued to and accepted by them, subject
to approval of certain legal matters by counsel for the Underwriters and
certain other conditions. The Underwriters reserve the right to withdraw,
cancel or modify such offer and to reject orders in whole or in part. It is
expected that delivery of the shares of Class A common stock will be made in
New York, New York on or about , 1994.
-----------
MERRILL LYNCH & CO.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
A.G. EDWARDS & SONS, INC.
-----------
The date of this Prospectus is , 1994
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission,
Washington, D.C. 20549, a Registration Statement on Form S-3 (the "Registration
Statement") under the Securities Act of 1933, as amended, with respect to the
Class A common stock offered hereby. The Prospectus does not contain all the
information set forth in the Registration Statement and exhibits and schedules
thereto. For further information with respect to the Company and such Class A
common stock, reference is made to the Registration Statement and the exhibits
and schedules filed as part thereof. Statements contained in this Prospectus as
to the contents of any contract or any other document referred to are not
necessarily complete, and, in each instance, reference is made to the copy of
such contract or document filed as an exhibit to the Registration Statement,
each such statement being qualified in all respects by such reference to such
exhibit.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). The Registration
Statement, including exhibits and schedules thereto, such reports, proxy
statements and other information filed by the Company may be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and at
the Commission's following Regional Offices: 7 World Trade Center (13th Floor),
New York, New York 10048; and Suite 1400 Citicorp Center, 500 West Madison
Street, Chicago, Illinois 60661. In addition, copies of such material can be
obtained by mail from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, at prescribed
rates.
The Company's Class A common stock is listed on the New York Stock Exchange.
Reports, proxy statements and other information concerning the Company can be
inspected at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are hereby
incorporated by reference: (i) the Company's Annual Report on Form 10-K for the
fiscal year ended October 2, 1993; (ii) the Company's proxy statement for its
annual meeting of stockholders held on February 11, 1994; (iii) the Company's
Form 10-Q for the quarter ended January 1, 1994; (iv) the Company's Form 10-Q
for the quarter ended April 2, 1994; (v) the Company's Form 10-Q for the
quarter ended July 2, 1994; (vi) the description of the Class A common stock
contained in the Company's Form 8-A Registration Statement filed January 22,
1986, as amended by Form 8 filed January 19, 1987 and (vii) the Company's Form
8-K filed October 13, 1994.
All reports and other documents filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of this offering shall be deemed to be
incorporated by reference into this Prospectus, and to be a part hereof from
the date of filing such documents.
Any statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein, or in any other subsequently filed document which also is or is deemed
to be incorporated by reference herein, modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of this
Prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the foregoing documents incorporated herein by reference
other than exhibits to such documents (unless such exhibits are specifically
incorporated by reference therein). Requests for such copies should be directed
to Tommy D. Reynolds, Secretary, Hudson Foods, Inc., P.O. Box 777, Rogers,
Arkansas 72757-0777, (501) 636-1100.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CLASS A COMMON
STOCK OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE
OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. Unless indicated otherwise, the information
contained in this Prospectus assumes that the Underwriters' over-allotment
option is not exercised.
THE COMPANY
Hudson is a major U.S. producer of further-processed poultry and meat
products with sales for the twelve months ended July 2, 1994 of over $1
billion. The Company was established in 1972 as a regional poultry company
selling commodity-type products. Through sales growth and product line
expansion, Hudson has grown into one of the country's largest domestic poultry
producers. In recent years the Company has implemented a strategy to increase
sales of further-processed poultry products, to increase sales to targeted
large customers under supply and pricing arrangements that yield more stable
profit margins and to diversify its product line to include non-poultry
products. The Company's product lines and their percentage of total sales for
the first nine months of fiscal 1994 were: chicken, 51.1%; portioned entrees,
16.9%; luncheon meats, 16.2%; turkey, 10.7%; and other products, 5.1%. The
Company's products are marketed nationwide to club store chains, fast food
chains and full service restaurants, retail supermarket chains, prepared food
companies, and various institutional customers. Its largest customers are Wal-
Mart Stores, Inc. ("Wal-Mart"), including its Sam's Club division, and the
Burger King system. The Company is also a principal supplier to the Boston
Chicken system.
The Company continues to implement the following business strategies:
. Increasing sales of further-processed poultry products. The production
and sale of further-processed products reduces the influence of feed
grain costs on the Company's profitability. As additional processing is
performed, this cost becomes a decreasing percentage of a product's total
production cost. The sales prices of further-processed products also
fluctuate less than commodity poultry prices. In implementing this
strategy, Hudson has expanded, upgraded and modified most of its poultry
production facilities to accommodate the production of further-processed
items.
. Increasing sales represented by cost-plus or firm-price sales
arrangements. Sales under cost-plus or firm-price arrangements generally
lead to more stable margins. To increase its sales under such
arrangements, the Company has recently agreed to customize specific
production facilities to meet a portion of the production requirements of
the Burger King system and the Boston Chicken system. In turn, these
customers have entered into long-term supply agreements with cost-plus or
firm-price arrangements.
. Developing foodservice and club store sales. Sales to foodservice and
club store customers involve higher and more predictable volumes. In
recent years the Company expanded its production facilities and marketing
staff to focus on these customers. Over the past two fiscal years sales
to these customers have increased more than 40%.
. Diversifying the portioned entree and luncheon meat product lines. By
increasing the breadth of its product line, the Company is able to
develop new customers and further penetrate existing accounts. The
Company has implemented this strategy primarily through acquisition and
expansion of existing portioned entree and luncheon meat brands such as
Pierre(TM), Ohse(R), Schweigert(R) and Roegelein(R).
. Increasing international sales. Due to U.S. consumers' preference for
chicken breast meat the Company has targeted international markets to
generate sales of leg quarters. In 1992, the Company established an
international sales department to expand the volume of leg quarters and
other products sold abroad. As a result of this effort, sales in these
markets have grown from less than 1% of total sales in fiscal 1991 to
more than 5% for the first nine months of fiscal 1994.
. Assessing appropriate acquisition opportunities. The Company continues to
assess appropriate acquisition opportunities to satisfy growing customer
demands and to continue to broaden the Company's product base.
3
<PAGE>
On October 12, 1994, Hudson entered into a five-year, cost-plus supply
agreement with Boston Chicken, Inc., ("Boston Chicken") a franchisor and
operator of food service stores specializing in complete meals featuring
rotisserie roasted chicken. The agreement provides for Boston Chicken to
purchase 100% of the capacity of two Hudson chicken processing plants. One
plant in Dexter, Missouri will be expanded to process approximately 650,000
chickens per week and is expected to begin production for Boston Chicken in the
spring of 1995. The other plant will be part of an integrated chicken
processing complex to be built near Henderson, Kentucky. The Henderson plant is
expected to begin production for Boston Chicken in the spring of 1996, with
initial production averaging 325,000 chickens per week. When the Henderson
plant reaches full capacity, scheduled for 1998, its production is expected to
average 1.3 million chickens per week. The Company currently processes
approximately 4.3 million chickens per week.
The Company is nearing completion of a hamburger processing plant in
Columbus, Nebraska. The Burger King system has committed to purchase for a
multi-year period a majority of the capacity of this facility. These sales will
be made to the Burger King system at a formula price plus raw material costs.
In addition, the Company is a minority co-investor with the Burger King
Corporation and SBS Processing, Inc. in a second hamburger plant currently
being constructed in Petersburg, Virginia.
The Company's executive offices are located at 1225 Hudson Road, Rogers,
Arkansas 72756, and its telephone number is (501) 636-1100.
THE OFFERING
<TABLE>
<S> <C>
Class A common stock offered by the
Company.............................. 2,500,000 shares
Class A common stock offered by the
Selling Stockholders................. 1,500,000 shares
Common stock to be outstanding after
the offering:
Class A............................. 12,472,574 shares (1)
Class B............................. 7,102,834 shares
Use of proceeds....................... To finance capital expenditures and for
general corporate purposes
New York Stock Exchange symbol........ HFI
Dividend policy....................... Currently, $.03 per share per quarter on
Class A common stock and $.025 per share
per quarter on Class B common stock. See
"Dividend Policy."
</TABLE>
- --------
(1) Excludes 530,686 shares of Class A common stock reserved for issuance and
exercisable under the Company's stock option plans as of July 2, 1994.
4
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
The following table sets forth selected consolidated financial data of the
Company for the five fiscal years ended October 2, 1993 and for the nine months
ended July 3, 1993 and July 2, 1994. The information for the fiscal years has
been derived from the consolidated financial statements of the Company which
have been audited by Coopers & Lybrand, independent certified public
accountants. The information for the nine months ended July 3, 1993 and July 2,
1994 is unaudited. The results of operations for the first nine months of
fiscal 1994 may not be indicative of the results of operations for the entire
year. This data should be read in conjunction with the Company's consolidated
financial statements and the notes thereto and "Management's Discussion and
Analysis of Results of Operations and Financial Condition." The Company's
fiscal year is a 52- or 53-week period ending each year on the Saturday closest
to September 30.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED (AS RESTATED)(1) NINE MONTHS ENDED
---------------------------------------------------------------------- ---------------------------
SEPT. 30, 1989 SEPT. 29, 1990 SEPT. 28, 1991 OCT. 3, 1992 OCT. 2, 1993 JULY 3, 1993 JULY 2, 1994
(52 WEEKS) (52 WEEKS) (52 WEEKS) (53 WEEKS) (52 WEEKS) (39 WEEKS) (1) (39 WEEKS)
-------------- -------------- -------------- ------------ ------------ -------------- ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Sales................. $620,485 $666,697 $765,292 $809,243 $920,545 $676,726 $773,392
Gross profit.......... 72,556 60,477 74,976 76,215 118,543 87,991 114,110
Operating income...... 43,421 16,830 21,196 7,775 33,922 24,969 36,886
Income before
income taxes......... 36,565 13,850 13,529 3,641 25,417 18,218 31,898
Net income............ 22,767 8,712 8,542 2,170 15,905 11,125 19,298
Earnings per share:
Primary.............. 1.70 0.60 0.58 0.15 1.01 0.72 1.16
Fully diluted........ 1.56 0.60 0.58 0.15 1.01 0.72 1.14
Weighted average
shares outstanding:
Primary.............. 13,397 14,621 14,733 14,303 15,751 15,524 16,585
Fully diluted........ 16,951 14,621 14,733 14,303 15,751 15,524 17,516
Cash dividends
per share:
Class A.............. $ 0.12 $ 0.12 $ 0.12 $ 0.12 $ 0.12 $ 0.090 $ 0.090
Class B.............. 0.10 0.10 0.10 0.10 0.10 0.075 0.075
Total dividends paid.. 1,414 1,537 1,513 1,503 1,706 1,263 1,335
OTHER FINANCIAL DATA:
Capital expenditures.. $ 19,501 $ 32,446 $ 31,326 $ 46,960 $ 21,453 $ 21,489 $ 34,075
Depreciation and
amortization......... 12,406 14,346 16,536 17,911 22,943 17,156 16,680
</TABLE>
<TABLE>
<CAPTION>
JULY 2, 1994
-----------------------
OCT. 2, 1993(1) ACTUAL AS ADJUSTED(2)
--------------- -------- --------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital........................ $103,811 $106,602 $
Total assets........................... 416,503 453,506
Long-term obligations, less current
portion............................... 88,985 85,493
Total stockholders' equity............. 173,902 192,896
</TABLE>
- --------
(1) Amounts are restated for adoption of Statement of Financial Accounting
Standards No. 109. See "Management's Discussion and Analysis of Results of
Operations and Financial Condition--Accounting Policies."
(2) Reflects the sale by the Company of the shares of Class A common stock in
the Offerings and the retirement subsequent to July 2, 1994 of $17.4
million of 8% Convertible Subordinated Debentures of which $13.7 million
were converted to 652,225 shares of common stock.
5
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of shares of Class A common
stock offered by the Company hereby are estimated to be $ million. The
Company will not receive any proceeds from the sale of 1,500,000 shares of
Class A common stock (2,100,000 shares of Class A common stock if the
Underwriters' over-allotment option is exercised in full) offered by the
Selling Stockholders.
The Company intends to use a portion of the net proceeds to finance the
construction of an integrated poultry processing complex near Henderson,
Kentucky, dedicated to production for Boston Chicken, and a hamburger
processing plant in Columbus, Nebraska, dedicated to production for the Burger
King system, and for general corporate purposes. Pending application of the
proceeds as described above, the Company intends to invest in short-term,
interest-bearing bank deposits, repurchase obligations and governmental
securities. See "Management's Discussion and Analysis of Results of Operations
and Financial Condition."
DIVIDEND POLICY
The Company's Board of Directors has declared cash dividends every fiscal
quarter since the Company's initial public offering in February 1986. Since
April 1987, the Board has declared quarterly dividends of $.03 per share of
Class A common stock and $.025 per share of Class B common stock. The Company's
certificate of incorporation restricts the per share dividends declared and
paid on Class B common stock to not more than 90% of the per share dividends
declared and paid on Class A common stock.
Payment of future dividends will depend upon the Company's financial
condition, results of operations and other factors deemed relevant by the Board
of Directors. Additionally, the Company has entered into certain loan
agreements that restrict its ability to pay dividends. The Company's primary
credit facility restricts dividend payments to a maximum of $2.75 million in
any fiscal year.
PRICE RANGE OF COMMON STOCK
The Company's Class A common stock is traded on the New York Stock Exchange
("NYSE") under the symbol "HFI." The following table sets forth on a per share
basis, for the period indicated, the high and low sales prices of the Class A
common stock as reported on the NYSE composite tape.
<TABLE>
<CAPTION>
FISCAL 1993 HIGH LOW
----------- ------- -------
<S> <C> <C>
First Quarter............................................. $14 $ 7 1/2
Second Quarter............................................ 15 3/8 10 3/8
Third Quarter............................................. 13 7/8 10 1/4
Fourth Quarter............................................ 11 3/8 10 1/4
<CAPTION>
FISCAL 1994
-----------
<S> <C> <C>
First Quarter............................................. 13 1/2 10 5/8
Second Quarter............................................ 16 5/8 11 1/8
Third Quarter............................................. 18 3/8 12 3/4
Fourth Quarter............................................ 25 1/8 17 7/8
<CAPTION>
FISCAL 1995
-----------
<S> <C> <C>
First Quarter (through October 12, 1994) 24 1/2 21
</TABLE>
On October 12, 1994, the closing price of the Class A common stock on the
NYSE was $24 3/8 per share. At October 11, 1994, 8,572,574 shares of Class A
common stock were outstanding; these shares were held by approximately 1,316
holders of record.
The Class B common stock is not traded on the NYSE or any other exchange, and
the Company is not aware of any public market for such shares. At October 11,
1994, 8,502,834 shares of Class B common stock were outstanding; these shares
were held by approximately 20 holders of record.
6
<PAGE>
CAPITALIZATION
The following table sets forth unaudited information regarding the
capitalization of the Company as of July 2, 1994, and as adjusted to give
effect to (i) the sale by the Company of the shares of the Class A common
stock in the Offerings and the application of the net proceeds therefrom, (ii)
conversion of 1.4 million shares of Class B common stock into an equivalent
number of shares of Class A common stock by certain Selling Stockholders for
sale in the Offerings, and (iii) the retirement, subsequent to July 2, 1994,
of $17.4 million of 8% Convertible Subordinated Debentures, of which $13.7
million were converted to 651,273 shares of Class A common stock and $26,000
were converted to 952 shares of Class B common stock. This table should be
read in conjunction with "Selected Consolidated Financial Data" and the
Consolidated Financial Statements of the Company appearing elsewhere herein.
See "Index to Consolidated Financial Statements."
<TABLE>
<CAPTION>
JULY 2, 1994
--------------------------
(DOLLARS IN THOUSANDS)
ACTUAL AS ADJUSTED
----------- -------------
<S> <C> <C>
Long-term obligations (less current portion)(1)...... $ 85,493 $
----------- -----------
Stockholders' equity:
Common stock:
Class A, $.01 par value, issued 8,730,729 shares
(12,472,574 shares as adjusted)(2)............... 87
Class B, $.01 par value, issued 8,501,952 shares
(7,102,834 shares as adjusted)................... 85
Additional capital................................. 88,450
Retained earnings.................................. 115,690
Treasury stock, at cost (933,854 Class A shares)... (11,416)
----------- -----------
Total stockholders' equity......................... 192,896
----------- -----------
Total capitalization................................. $ 278,389 $
=========== ===========
</TABLE>
- --------
(1) See Note 6 of Notes to Consolidated Financial Statements.
(2) Excludes 530,686 shares of Class A common stock reserved for issuance and
exercisable under the Company's stock option plans as of July 2, 1994.
7
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth selected consolidated financial data of the
Company for the five fiscal years ended October 2, 1993 and for the nine months
ended July 3, 1993 and July 2, 1994. The information for the fiscal years has
been derived from the consolidated financial statements of the Company which
have been audited by Coopers & Lybrand, independent certified public
accountants. The information for the nine months ended July 3, 1993 and July 2,
1994 is unaudited. The results of operations for the first nine months of
fiscal 1994 may not be indicative of the results of operations for the entire
year. This data should be read in conjunction with the Company's consolidated
financial statements and the notes thereto and "Management's Discussion and
Analysis of Results of Operations and Financial Condition." The Company's
fiscal year is a 52- or 53-week period ending each year on the Saturday closest
to September 30.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED (AS RESTATED)(1) NINE MONTHS ENDED
---------------------------------------------------------------------- --------------------------
SEPT. 30, 1989 SEPT. 29, 1990 SEPT. 28, 1991 OCT. 3, 1992 OCT. 2, 1993 JULY 3, 1993 JULY 2, 1994
(52 WEEKS) (52 WEEKS) (52 WEEKS) (53 WEEKS) (52 WEEKS) (39 WEEKS)(1) (39 WEEKS)
-------------- -------------- -------------- ------------ ------------ ------------- ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Sales................... $620,485 $666,697 $765,292 $809,243 $920,545 $676,726 $773,392
Cost of sales........... 547,929 606,220 690,316 733,028 802,002 588,735 659,282
-------- -------- -------- -------- -------- -------- --------
Gross profit............ 72,556 60,477 74,976 76,215 118,543 87,991 114,110
Selling................. 13,400 27,270 37,135 49,907 63,926 47,759 58,319
General and
administrative.......... 15,735 16,377 16,645 18,533 20,695 15,263 18,905
-------- -------- -------- -------- -------- -------- --------
Operating income........ 43,421 16,830 21,196 7,775 33,922 24,969 36,886
Interest expense........ 9,462 7,571 9,073 8,476 7,975 6,424 5,251
Other, net.............. (2,606) (4,591) (1,406) (4,342) 530 327 (263)
-------- -------- -------- -------- -------- -------- --------
Income before
income taxes............ 36,565 13,850 13,529 3,641 25,417 18,218 31,898
Income tax expense...... 13,798 5,138 4,987 1,471 9,512 7,093 12,600
-------- -------- -------- -------- -------- -------- --------
Net income.............. $ 22,767 $ 8,712 $ 8,542 $ 2,170 $ 15,905 $ 11,125 $ 19,298
======== ======== ======== ======== ======== ======== ========
Earnings per share:
Primary................ $ 1.70 $ 0.60 $ 0.58 $ 0.15 $ 1.01 $ 0.72 $ 1.16
Fully diluted.......... 1.56 0.60 0.58 0.15 1.01 0.72 1.14
Weighted average shares
outstanding:
Primary................ 13,397 14,621 14,733 14,303 15,751 15,524 16,585
Fully diluted.......... 16,951 14,621 14,733 14,303 15,751 15,524 17,516
Cash dividends
per share:
Class A................ $ 0.12 $ 0.12 $ 0.12 $ 0.12 $ 0.12 $ 0.090 $ 0.090
Class B................ 0.10 0.10 0.10 0.10 0.10 0.075 0.075
Total dividends paid.... 1,414 1,537 1,513 1,503 1,706 1,263 1,335
OTHER FINANCIAL DATA:
Capital expenditures.... $ 19,501 $ 32,446 $ 31,326 $ 46,960 $ 21,453 $ 21,489 $ 34,075
Depreciation and
amortization............ 12,406 14,346 16,536 17,911 22,943 17,156 16,680
BALANCE SHEET DATA:
Working capital......... $ 86,813 $ 89,822 $ 88,564 $ 81,475 $103,811 $100,834 $106,602
Total assets............ 299,054 342,269 360,191 402,188 416,503 417,421 453,506
Long-term obligations,
less current portion.... 78,509 89,675 97,418 125,695 88,985 90,855 85,493
Total stockholders'
equity.................. 110,637 126,005 133,499 134,330 173,902 169,534 192,896
</TABLE>
- --------
(1) Amounts are restated for adoption of Statement of Financial Accounting
Standards No. 109. See "Management's Discussion and Analysis of Results of
Operations and Financial Condition--Accounting Policies."
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
GENERAL
Historically, the Company's operating results have been heavily influenced by
two external factors: the cost to the Company of feed grains and the price
received by the Company for its commodity-based finished products. These two
factors have fluctuated significantly and independently. Inflation has not
materially affected results of operations.
In recent years the Company has undertaken a business strategy focused
largely on the following: increased production and sale of further-processed
poultry and other processed food products, and increased sales to larger
customers such as club store and fast food chains. This strategy decreased the
proportion of feed grain costs in relation to total cost of sales, which
reduced the impact of commodity cost fluctuations. In addition, the sales
prices of further-processed products are less sensitive to commodity poultry
price fluctuations. Another result of this strategy has been increased sales to
large customers under firm-price or cost-plus contracts utilizing dedicated
plant arrangements. Although an increase in feed grain costs or a decrease in
finished product prices could have an adverse effect on the Company, management
believes that the implementation of this strategy has reduced the Company's
vulnerability to such price fluctuations.
While the Company believes the above factors will result in more predictable
and stable profit margins, increased sales to large customers and sales of
further-processed products have tended to increase costs relating to
commissions, advertising, distribution, demonstration and storage expenses. For
example, introductions of new products in fiscal 1992 and 1993 into Sam's Club
stores, a division of Wal-Mart ("Sam's Club"), required the Company to sponsor
and pay for in-store product demonstrations, thereby increasing selling
expenses in those years. Although there can be no assurances, the Company
expects that future selling expenses as a percentage of sales will approximate
current levels.
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
PERCENTAGE OF SALES
------------------------------------------------------------------
FISCAL YEAR ENDED NINE MONTHS ENDED
---------------------------------------- -------------------------
SEPT. 28, 1991 OCT. 3, 1992 OCT. 2, 1993 JULY 3, 1993 JULY 2, 1994
(52 WEEKS) (53 WEEKS) (52 WEEKS) (39 WEEKS) (39 WEEKS)
-------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Sales................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales........... 90.2 90.6 87.1 87.0 85.2
----- ----- ----- ----- -----
Gross profit............ 9.8 9.4 12.9 13.0 14.8
Selling................. 4.8 6.1 6.9 7.1 7.5
General and
administrative......... 2.2 2.3 2.3 2.2 2.5
----- ----- ----- ----- -----
Operating income........ 2.8 1.0 3.7 3.7 4.8
Interest expense........ 1.2 1.0 0.9 0.9 0.7
Other, net.............. (0.2) (0.5) 0.1 0.1 --
----- ----- ----- ----- -----
Income before income
taxes.................. 1.8 0.5 2.7 2.7 4.1
Income tax expense...... 0.7 0.2 1.0 1.1 1.6
----- ----- ----- ----- -----
Net income.............. 1.1 0.3 1.7 1.6 2.5
===== ===== ===== ===== =====
</TABLE>
Nine Months of Fiscal 1994 Compared With Nine Months of Fiscal 1993
Sales from the Company's operations were $773.4 million for the first nine
months of fiscal 1994, an increase of $96.7 million, or 14.3%, over the first
nine months of fiscal 1993. The sales increase primarily resulted from the
following:
. Chicken sales increased 13.7% to $395.1 million in the first nine months
of fiscal 1994 from $347.6 million in the first nine months of fiscal
1993 due to higher finished product prices, a change in the
9
<PAGE>
product mix to include additional further-processed and convenience
products and a 12.2% increase in volume. The volume increase was primarily
due to increased sales to the Burger King system and the Company's
expansion in its international markets.
. Portioned entree sales increased 32.5% to $130.4 million in the first
nine months of fiscal 1994 from $98.4 million in the first nine months of
fiscal 1993 primarily due to higher finished product prices and a 24.4%
increase in volume which was primarily due to new sales to the Burger
King system, sales of meal kit products and increased sales to Sam's
Club.
. Luncheon meat sales increased 13.3% to $125.3 million in the first nine
months of fiscal 1994 from $110.6 million in the first nine months of
fiscal 1993 due to higher finished product prices and a 1.3% increase in
volume primarily due to new sales to the Burger King system and increased
sales to Sam's Club.
. Turkey sales increased 13.6% to $82.8 million in the first nine months of
fiscal 1994 from $72.9 million in the first nine months of fiscal 1993
due to higher finished product prices and sales of additional further-
processed products.
Cost of sales was $659.3 million for the first nine months of fiscal 1994, an
increase of $70.5 million, or 12.0%, over the first nine months of fiscal 1993.
As a percentage of sales, cost of sales decreased to 85.2% in the first nine
months of fiscal 1994 from 87.0% in the first nine months of fiscal 1993
primarily due to a higher percentage of sales of further-processed products and
improved operating efficiencies. This improvement was partially offset by a
10.2% increase in feed costs per ton.
Gross profit was $114.1 million for the first nine months of fiscal 1994, an
increase of $26.1 million, or 29.7%, over the first nine months of fiscal 1993.
As a percentage of sales, gross profit increased to 14.8% in the first nine
months of fiscal 1994 from 13.0% in the first nine months of fiscal 1993
largely due to the improvements described above.
Selling and general and administrative expenses were $77.2 million in the
first nine months of fiscal 1994, an increase of $14.2 million, or 22.5%, over
the first nine months of fiscal 1993. As a percentage of sales, selling and
general and administrative expenses increased to 10.0% in the first nine months
of fiscal 1994 from 9.3% in the first nine months of fiscal 1993. This increase
was due to higher advertising, distribution, demonstration, and product
handling expenses primarily related to increased international sales, meal kit
products and Sam's Club sales. In addition, there was an increase in incentive
compensation accruals.
Operating income was $36.9 million in the first nine months of fiscal 1994,
an increase of $11.9 million, or 47.7%, over the first nine months of fiscal
1993. This increase was primarily due to the improvements in the Company's
operations as described previously.
Fiscal 1993 Compared with Fiscal 1992
Sales from the Company's operations were $920.5 million for fiscal 1993, an
increase of $111.3 million, or 13.8%, over fiscal 1992. The sales increase
primarily resulted from the following:
. Chicken sales increased 10.2% to $454.9 million in fiscal 1993 from
$412.9 million in fiscal 1992 due to higher finished product prices,
changes in product mix to include additional further-processed and
convenience products and a 1.3% increase in volume which was primarily
due to new sales to the Burger King system, increased sales to Sam's Club
and the Company's entrance into new international markets such as Russia
and Eastern Europe, Mexico and Central America, Southeast Asia and the
Middle East.
. Portioned entree sales increased 34.4% to $143.5 million in fiscal 1993
from $106.8 million in fiscal 1992 due to higher finished product prices
and a 27.8% increase in volume. Volume increased due to increased sales
to Sam's Club and sales of new products such as meal kits and sandwiches.
. Luncheon meat sales increased 5.3% to $159.9 million in fiscal 1993 from
$151.9 million in fiscal 1992 due to increased volume of 5.5% which was
partially offset by a slight decline in finished product prices.
10
<PAGE>
. Turkey sales increased 28.6% to $100.6 million in fiscal 1993 from $78.2
million in fiscal 1992 primarily due to a 32.2% increase in volume
resulting from late Thanksgiving and Christmas orders placed after fiscal
1992 year-end and also increased sales of further-processed products such
as deli turkey breasts. This increase was partially offset by a slight
decline in finished product prices.
Cost of sales was $802.0 million for fiscal 1993, an increase of $69.0
million, or 9.4%, over fiscal 1992. As a percentage of sales, cost of sales
decreased to 87.1% in fiscal 1993 from 90.6% in fiscal 1992 primarily due to a
higher percentage of further-processed product sales, a 4.2% decrease in feed
costs per ton and improved operating efficiencies.
Gross profit increased to $118.5 million for fiscal 1993, an increase of
$42.3 million, or 55.5%, over fiscal 1992. As a percentage of sales, gross
profit increased to 12.9% in fiscal 1993 from 9.4% in fiscal 1992 largely due
to the improvements described above.
Selling and general and administrative expenses were $84.6 million in fiscal
1993, an increase of $16.2 million, or 23.6%, over fiscal 1992. As a percentage
of sales, selling and general and administrative expenses increased to 9.2% in
fiscal 1993 from 8.4% in fiscal 1992. This increase was due to higher
commissions, advertising, distribution, demonstration, rebates, storage and
product handling expenses relating to Sam's Club sales, meal kit and portioned
entree products and increased international sales.
Operating income was $33.9 million in fiscal 1993, an increase of $26.1
million, or 336.3%, over fiscal 1992. This increase was primarily due to the
improvements in the Company's operations discussed above.
Fiscal 1992 Compared with Fiscal 1991
Sales from the Company's operations were $809.2 million for fiscal 1992, an
increase of $44.0 million, or 5.7%, over fiscal 1991. The sales increase
primarily resulted from the following:
. Chicken sales increased 9.2% to $412.9 million in fiscal 1992 from $378.1
million in fiscal 1991 due to higher finished product prices, changes in
product mix to include additional further-processed and convenience
products and a 3.1% increase in volume which was primarily due to
increased sales to Sam's Club.
. Portioned entree sales increased 42.8% to $106.8 million in fiscal 1992
from $74.8 million in fiscal 1991 due to higher finished product prices
and a 31.7% increase in volume which was due to additional sales to Sam's
Club and sales of new products.
. Luncheon meat sales decreased 2.7% to $151.9 million in fiscal 1992 from
$156.1 million in fiscal 1991 due to lower finished product prices offset
by a 4.7% increase in volume.
. Turkey sales decreased 14.3% to $78.2 million in fiscal 1992 from $91.3
million in fiscal 1991 primarily due to a 14.2% decrease in volume
resulting from late Thanksgiving and Christmas orders placed after fiscal
1992 year-end.
Cost of sales was $733.0 million for fiscal 1992, an increase of $42.7
million, or 6.2%, over fiscal 1991. As a percentage of sales, cost of sales
increased to 90.6% in fiscal 1992 from 90.2% in fiscal 1991 primarily due to a
3.1% increase in feed costs per ton partially offset by sales of more further-
processed products.
Gross profit increased to $76.2 million for fiscal 1992, an increase of $1.2
million, or 1.7%, over fiscal 1991. As a percentage of sales, gross profit
decreased to 9.4% in fiscal 1992 from 9.8% in fiscal 1991, largely due to the
factors described above.
Selling and general and administrative expenses were $68.4 million in fiscal
1992, an increase of $14.7 million, or 27.3%, over fiscal 1991. As a percentage
of sales, selling and general and administrative expenses increased to 8.4% in
fiscal 1992 from 7.0% in fiscal 1991. This increase was due to higher
commissions, advertising, distribution, demonstration and storage expenses
relating to portioned entree, luncheon meat and Sam's Club sales.
11
<PAGE>
Operating income was $7.8 million in fiscal 1992, a decrease of $13.4
million, or 63.3%, from fiscal 1991. This decrease was primarily due to the
items discussed above.
Other, net for fiscal 1992, includes $3.9 million of casualty gains from
insurance proceeds received in excess of the book value of assets destroyed by
fire.
LIQUIDITY AND CAPITAL RESOURCES
Working capital at July 2, 1994 was $106.6 million compared with $103.8
million at October 2, 1993 and the current ratio was 2.05 to 1 and 2.28 to 1 at
July 2, 1994 and October 2, 1993, respectively. The Company's total
capitalization, as represented by long-term obligations plus stockholders'
equity, was $278.4 million on July 2, 1994, compared with $262.9 million on
October 2, 1993. Long-term obligations represented 30.7% and 33.8% of total
capitalization on July 2, 1994 and October 2, 1993, respectively.
Notes payable due under the Company's unsecured credit agreement were $13.0
million on July 2, 1994 compared with no outstanding balance on October 2,
1993. Notes payable increased due to the higher levels of capital spending
during the nine months ended July 2, 1994. Total long-term obligations
decreased $3.5 million as a result of scheduled long-term debt repayments.
The Company's cash flow provided by operating activities was $17.9 million
for the nine months ended July 2, 1994 compared with $15.0 million for the nine
months ended July 3, 1993. The increase was due to higher net income offset in
part by increases in working capital.
For the first nine months of fiscal 1994 and 1993, the Company had capital
expenditures of $34.1 million and $21.5 million, respectively. Those
expenditures were primarily for upgrading and expanding production facilities
and related equipment. The Company's capital budget for fiscal 1994
contemplates aggregate capital expenditures of approximately $50.0 million to
upgrade and/or expand current production facilities and related equipment. The
capital expenditures have been financed by operations, borrowings under the
Company's credit agreement and/or lease arrangements.
The Company recently announced plans to build a new chicken complex near
Henderson, Kentucky the capacity of which will be dedicated to Boston Chicken.
Additionally, during the third quarter of fiscal 1994, the Company began
construction of a beef processing plant in Columbus, Nebraska that will supply
hamburger patties to the Burger King system. It is expected that during fiscal
1995 capital expenditures for these and other projects will be approximately
$85.0 million. The capital expenditures will be financed by operations,
borrowings under the Company's credit agreements, lease arrangements and
proceeds of the Offerings.
Historically, the Company's operations have been financed through internally
generated funds, borrowings, lease arrangements and the issuance of common
stock. On April 26, 1994, the Company entered into a $100 million unsecured
revolving credit agreement that expires June 30, 1997. At July 2, 1994, the
Company had available under this agreement $79.6 million. The credit agreement,
among other things, limits the payment of dividends to approximately $2.8
million in any fiscal year and limits annual capital expenditures and lease
obligations. It requires the maintenance of minimum levels for working capital
and tangible net worth and that the current ratio, leverage ratio and cash flow
coverage ratio be maintained at certain levels. It also limits the creation of
new secured debt to $25.0 million and new unsecured short-term debt with
parties outside the credit agreement to $20.0 million. Additionally, an event
of default will exist if the aggregate outstanding voting power of James T.
Hudson and his immediate family in the Company is reduced below 51%.
On May 18, 1994, the Company entered into an unsecured term loan agreement
with a financial institution giving the Company the right to borrow up to $50.0
million of senior notes fixed at a rate to be determined at drawdown. The
Company had not borrowed under the agreement at July 2, 1994. The agreement
expires February 24, 1996.
12
<PAGE>
TAX MATTERS
The Internal Revenue Service has examined the Company's 1989 and 1990 federal
income tax returns and has issued a notice of deficiency asserting additional
taxes of $22.4 million and penalties of $5.8 million. If an assessment is
ultimately upheld, it will result in the acceleration of previously recorded
deferred income taxes. However, since most of the items in dispute relate to
the timing of the recognition of income or deductions, a portion of the income
taxes for years subsequent to 1990 would be refundable. Management is
contesting the notice of deficiency and the case has been docketed for a
hearing in early 1995 in federal tax court. Management believes that ultimate
resolution of these matters will not have a material impact on the Company's
financial position or results of operations.
ACCOUNTING POLICIES
Beginning in fiscal 1994, the Company adopted Statement of Financial
Accounting Standards No. 109 (SFAS 109), "Accounting for Income Taxes," which
requires that deferred tax liabilities and assets be recognized for any
difference between the tax basis of assets and liabilities and their financial
reporting amounts measured by using presently enacted tax laws and rates. The
Company elected to apply the provisions of SFAS 109 retroactively to September
28, 1986.
The Company uses the farm price method of inventory valuation for income tax
reporting which results in current deferred income taxes for financial
reporting. The Company anticipates that it will be able to maintain its
inventory at current levels and, accordingly, does not expect a significant
portion of the current deferred income tax to be paid in the near future.
13
<PAGE>
BUSINESS
GENERAL
Hudson is a major U.S. producer of further-processed poultry and meat
products with sales for the twelve months ended July 2, 1994 of over $1
billion. The Company was established in 1972 as a regional poultry company
selling commodity-type products. Through sales growth and product line
expansion, Hudson has grown into one of the country's largest domestic poultry
producers. In recent years the Company has implemented a strategy to increase
sales of further-processed poultry products, to increase sales to targeted
large customers under supply and pricing arrangements that yield more stable
profit margins and to diversify its product line to include non-poultry
products. The Company's product lines and their percentage of total sales for
the first nine months of fiscal year 1994 were: chicken, 51.1%; portioned
entrees, 16.9%; luncheon meats, 16.2%; turkey, 10.7%; and other products, 5.1%.
The Company's products are marketed nationwide to club store chains, fast food
chains and full service restaurants, retail supermarket chains, prepared food
companies, and various institutional customers. Its largest customers are Wal-
Mart, including Sam's Club, and the Burger King system. The Company is also a
principal supplier to the Boston Chicken system.
COMPANY HISTORY
The Company was organized in 1972 by James T. Hudson to purchase a broiler
processing plant in Noel, Missouri and other related assets from the Ralston
Purina Company. The Company's poultry operations grew in subsequent years
through a series of acquisitions including an integrated turkey operation in
1979 and a major poultry company in 1986 which doubled Hudson's size and made
it one of the nation's ten largest poultry producers. Between 1987 and 1990 the
Company expanded into luncheon meats with the acquisitions of three established
regional brands: Ohse, Schweigert and Roegelein. In 1990, the Company entered
the market for frozen portioned entrees through the acquisition of Pierre
Frozen Foods, Inc. ("Pierre") and expanded those operations in 1992 with the
purchase of an additional manufacturing plant.
RECENT EVENTS
On October 12, 1994, Hudson entered into a five-year, cost-plus supply
agreement with Boston Chicken, a franchisor and operator of food service stores
specializing in complete meals featuring rotisserie roasted chicken. The
agreement provides for Boston Chicken to purchase 100% of the capacity of two
Hudson chicken processing plants. One plant in Dexter, Missouri will be
expanded to process approximately 650,000 chickens per week and is expected to
begin production for Boston Chicken in the spring of 1995. The other plant will
be part of an integrated chicken processing complex to be built near Henderson,
Kentucky. The Henderson plant is expected to begin production for Boston
Chicken in the spring of 1996, with initial production averaging 325,000
chickens per week. When the Henderson plant reaches full capacity, scheduled
for 1998, its production is expected to average 1.3 million chickens per week.
The Company currently processes approximately 4.3 million chickens per week.
The Company is nearing completion of a hamburger processing plant in
Columbus, Nebraska. The Burger King system has committed to purchase for a
multi-year period a majority of the capacity of this facility. These sales will
be made to the Burger King system at a formula price plus raw material costs.
In addition, the Company is a minority co-investor with the Burger King
Corporation and SBS Processing, Inc. in a second hamburger plant currently
being constructed in Petersburg, Virginia.
14
<PAGE>
BUSINESS STRATEGY
The Company continues to implement the following business strategies:
. Increasing sales of further-processed poultry products. The production
and sale of further-processed products reduces the influence of feed
grain costs on the Company's profitability. As additional processing is
performed, this cost becomes a decreasing percentage of a product's total
production cost. The sales prices of further-processed products also
fluctuate less than commodity poultry prices. In implementing this
strategy, Hudson has expanded, upgraded and modified most of its poultry
production facilities to accommodate the production of further-processed
items.
. Increasing sales represented by cost-plus or firm-price sales
arrangements. Sales under cost-plus or firm-price arrangements generally
lead to more stable margins. To increase its sales under such
arrangements, the Company has recently agreed to customize specific
production facilities to meet a portion of the production requirements of
the Burger King system and the Boston Chicken system. In turn, these
customers have entered into long-term supply agreements with cost-plus or
firm-price arrangements.
. Developing foodservice and club store sales. Sales to foodservice and
club store customers involve higher and more predictable volumes. In
recent years the Company expanded its production facilities and marketing
staff to focus on these customers. Over the past two fiscal years sales
to these customers have increased more than 40%.
. Diversifying the portioned entree and luncheon meat product lines. By
increasing the breadth of its product line, the Company is able to
develop new customers and further penetrate existing accounts. The
Company has implemented this strategy primarily through acquisition and
expansion of existing portioned entree and luncheon meat brands such as
Pierre, Ohse, Schweigert and Roegelein.
. Increasing international sales. Due to U.S. consumers' preference for
chicken breast meat the Company has targeted international markets to
generate sales of leg quarters. In 1992, the Company established an
international sales department to expand the volume of leg quarters and
other products sold abroad. As a result of this effort, sales in these
markets have grown from less than 1% of total sales in fiscal 1991 to
more than 5% for the first nine months of fiscal 1994.
. Assessing appropriate acquisition opportunities. The Company continues to
assess appropriate acquisition opportunities to satisfy growing customer
demands and to continue to broaden the Company's product base.
PRODUCTS, MARKETING AND CUSTOMERS
The following table sets forth for the periods indicated the net sales of
each of the Company's major product lines.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED NINE MONTHS ENDED
---------------------------------------- -------------------------
SEPT. 28, 1991 OCT. 3, 1992 OCT. 2, 1993 JULY 3, 1993 JULY 2, 1994
(52 WEEKS) (53 WEEKS) (52 WEEKS) (39 WEEKS) (39 WEEKS)
-------------- ------------ ------------ ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Chicken(1).............. $378.1 $412.9 $454.9 $347.6 $395.1
Portioned entrees....... 74.8 106.8 143.5 98.4 130.4
Luncheon meats.......... 156.1 151.9 159.9 110.6 125.3
Turkey(1)............... 91.3 78.2 100.6 72.9 82.8
Other................... 65.0 59.4 61.6 47.2 39.8
------ ------ ------ ------ ------
Total sales........... $765.3 $809.2 $920.5 $676.7 $773.4
====== ====== ====== ====== ======
</TABLE>
- --------
(1) The sales figures for chicken and turkey do not include poultry products
processed and sold as luncheon meats and portioned entrees.
15
<PAGE>
The following table sets forth for the periods indicated the net sales to
each of the Company's customers groups.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED NINE MONTHS ENDED
---------------------------------------- -------------------------
SEPT. 28, 1991 OCT. 3, 1992 OCT. 2, 1993 JULY 3, 1993 JULY 2, 1994
(52 WEEKS) (53 WEEKS) (52 WEEKS) (39 WEEKS) (39 WEEKS)
-------------- ------------ ------------ ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Foodservice and club
stores................. $384.2 $441.8 $538.0 $395.9 $440.9
Retail.................. 302.0 290.0 307.3 226.4 280.1
Other................... 79.1 77.4 75.2 54.4 52.4
------ ------ ------ ------ ------
Total sales............. $765.3 $809.2 $920.5 $676.7 $773.4
====== ====== ====== ====== ======
</TABLE>
Chicken. Per capita consumption of chicken in the United States has increased
73.5% from 1970 to 1993, as consumers have changed their diet toward foods with
lower fat, cholesterol and calorie content. Chicken consumption has also
increased as the convenience of further-processed chicken products has become
more important to consumers, and as fast food and full-service restaurants have
expanded their menus to satisfy demand for affordable, healthier foods. In
response to this demand, the Company offers a wide variety of further-processed
chicken products for convenient preparation and consumption at home and in
restaurants.
The Company's principal further-processed products are individually frozen
boneless and bone-in chicken pieces, breaded and fried chicken breast patties,
chicken breast tenderloins, chicken nuggets, buffalo-style wings and chicken
cordon bleu. These products are sold primarily to club stores under the
Hudson(R) brand name. Hudson's customers for individually frozen products
include the nation's leading club store chains, with the largest club store
customer being Sam's Club. Additionally, Hudson is a principal supplier of
chicken products to the Burger King system.
One of the Company's fastest growing further-processed products is fresh
rotisserie chicken. Hudson is a principal supplier of rotisserie chickens to
the Boston Chicken system and has recently announced an agreement to dedicate
the production of its Dexter, Missouri plant and its planned Henderson,
Kentucky plant to the requirements of that customer's system. See "Business--
Recent Events."
In addition to further-processed products, Hudson sells ice-packed and chill-
packed fresh chicken parts and whole birds. The Company's chill-packed products
are marketed under the Hudson brand name. Hudson's ice-packed products are sold
in bulk to small and medium-sized food retailers and franchisees of fast food
chains directly and through independent distributors.
U.S. consumer preference for chicken breast meat has led the Company to
develop a marketing strategy for leg quarters that targets international
markets, such as Russia and Eastern Europe, Mexico and Central America,
Southeast Asia and the Middle East. The Company has established a sales office
and distribution center in Gdynia, Poland and a sales office in Moscow, Russia.
Exports accounted for 5.5% of the Company's total sales during the first nine
months of fiscal 1994.
Portioned Entrees. The Company entered the portioned entree business with its
acquisition of Pierre in 1990. This acquisition significantly broadened the
range of products offered by the Company, particularly to club store and
foodservice customers. The Company has continued to develop this business, and
portioned entree sales have grown from an annualized $49.1 million in fiscal
1990 to $143.5 million in fiscal 1993, and amounted to $130.4 million for the
first nine months of fiscal 1994.
The Company's portioned entrees consist of a full line of portion-controlled
products including fried and flame-broiled hamburgers, sausage patties and
links, country-fried steak, chicken nuggets and chicken patties, meal kits and
related products. These products are distributed nationwide to club store
chains and
16
<PAGE>
foodservice customers such as restaurants, employee cafeterias, colleges and
universities, and health-care facilities. The Company is also one of the
nation's largest processors of United States Department of Agriculture ("USDA")
commodity beef and pork into further-processed products for school lunch
programs. In addition, the portioned entree division sells to vending machine
operators and sandwich makers that service convenience stores.
Luncheon Meats. The Company formed its luncheon meats division with the
acquisition in 1987 of Ohse Meat Products and the subsequent acquisitions of
the Schweigert and Roegelein luncheon meat brands. This division produces a
line of further-processed meat products including luncheon meats, wieners,
sausage, hams and bacon. Its principal customers consist of retail supermarket
chains, cooperative supermarket warehouses and club store chains, together with
foodservice customers such as restaurants, schools and other vendors. This
division is a major supplier of ham to the Burger King system. Products are
marketed under the Ohse, Schweigert and Roegelein brand names as well as
various private labels.
The luncheon meats division sells products, for example a line of
microwaveable sandwiches, made by the portioned entree division under all three
of its brand names. In turn, the luncheon meats division supplies certain
products to the portioned entree division. The Company believes this synergy
between the two divisions increases the profitability of both.
Turkey. Many of the factors that led to the increase in chicken consumption
in the United States also positively affected turkey consumption, which
increased 119.8% on a per capita basis from 1970 to 1993. In response to this
demand, in 1990 Hudson began the process of transforming the turkey division
from being solely a grower and seller of whole turkeys to becoming also a
supplier of further-processed turkey products, including smoked turkey, turkey
sausage, turkey pastrami, turkey salami, turkey bologna and turkey ham sold
under the Hudson brand name. The Company markets individually packaged whole
turkeys, both fresh and frozen, during seasonal peaks under the Hudson brand
name and private label. The Company's further-processed turkey products are
sold primarily to retail grocery chains, delicatessens, institutional
foodservice customers and club store chains. In addition, the Company has begun
exporting turkey products to Mexico.
Major Customers. The Company's sales to Wal-Mart in fiscal 1993 and the first
nine months of fiscal 1994 constituted approximately 17.9% of total sales in
those periods. No other customer accounted for more than 10% of the Company's
sales in fiscal 1993 or the first nine months of fiscal 1994. However, due to
recent agreements, the Company believes that sales to the Burger King system
will increase significantly in fiscal 1995. The loss of either of these
customers may have a material adverse effect on the Company.
PRODUCTION AND FACILITIES
Chicken. The Company's chicken operations include breeding, hatching,
rearing, ingredient procurement, feed formulation and milling, veterinary and
other technical services, and related transportation and delivery services. The
Company contracts with independent growers to maintain the Company's flocks of
breeder chickens which have the capability of laying eggs. The Company
transfers the eggs to its hatcheries. The newly hatched broiler chicks are then
delivered to independent contract growers or Company owned farms where they are
raised until they reach processing weight, usually within seven weeks. During
the grow-out period, the Company provides growers with feed and other items, as
well as supervisory and technical assistance. The broilers are then transported
by the Company's trucks to its processing plants.
The Company currently processes approximately 4.3 million chickens per week,
yielding approximately 775 million pounds of dressed chicken on an annual
basis. In addition, from time to time the Company purchases chicken from
outside sources.
The Company operates six chicken processing plants devoted to various phases
of slaughtering, dressing, cutting, packaging, deboning and further-processing.
It operates six feed mills, seven broiler hatcheries and four protein
facilities.
Portioned Entrees. The Company produces its portion controlled products at
plants in Cincinnati, Ohio and Caryville, Tennessee which have annual
production capacity of approximately 100 million pounds. The Company purchases
its raw materials of beef and pork, and some poultry products, from outside
sources.
17
<PAGE>
Luncheon Meats. The Company produces luncheon meats, wieners and sausage
products at two plants, one in Topeka, Kansas, and one in Albert Lea,
Minnesota. All hams and bacon for the division are produced at the plant in
Wichita, Kansas. The three plants' annual production capacity for processed
meat products is approximately 170 million pounds. The Company purchases its
raw materials of beef and pork, and some poultry products, from outside
sources.
Turkey. The Company operates two turkey processing facilities in Springfield,
Missouri one of which is a further-processing plant. These facilities have an
annual capacity to produce 140 million pounds of turkey products.
COMPETITION
The primary competitive factors in the poultry industry include price,
product quality, product development, brand identification and customer
service. Hudson's poultry products compete primarily with other integrated
poultry companies. Some competitors have greater financial and marketing
resources than the Company. Although poultry is relatively inexpensive in
comparison with other meats, the Company also competes indirectly with the
producers of other meats and fish, as changes in the relative prices of these
foods may affect consumer buying patterns.
The Company's portioned entree division competes with regional and national
meat processing companies, some of which are divisions of fully integrated
companies. Its involvement in USDA commodity conversion programs has resulted
in increased marketing opportunities on a nationwide basis.
The Ohse, Schweigert and Roegelein brands compete primarily with national and
regional meat processing companies. Price and brand name recognition are
important factors in the business. Through a strong marketing program and a
consistent, quality product that is competitively priced, Ohse, Schweigert and
Roegelein have gained strong brand name recognition in their marketing areas.
REGULATION
The poultry industry is subject to significant government regulation,
particularly in the health and environmental areas by the USDA, the Food and
Drug Administration ("FDA") and the Environmental Protection Agency. The
Company anticipates increased regulation by the USDA concerning food safety as
well as by the FDA regarding the use of medication in feed. The Company's food
processing facilities are subject to on-site examination, inspection and
regulation by the USDA. The FDA inspects the production of the Company's feed
mills. Compliance with applicable regulations has not had a material adverse
effect upon the Company's earnings or competitive position in the past, and is
not anticipated to have a material adverse effect in the future. Management
believes that the Company is in substantial compliance with all applicable laws
and regulations relating to the operation of its facilities.
The Company takes all reasonable precautions to ensure that its flocks are
healthy and that its processing plants and other facilities operate in a
sanitary and environmentally sound manner. However, events beyond the control
of the Company, such as an outbreak of poultry disease in its flocks or the
adoption by the government of more stringent environmental regulations, could
adversely affect its operations.
CONTROL BY HUDSON FAMILY
As of October 11, 1994, there were 8,572,574 shares of Class A common stock
and 8,502,834 shares of Class B common stock outstanding. James T. Hudson and
his family currently own in excess of 99% of the outstanding shares of Class B
common stock. Each share of Class A common stock is entitled to one vote in
matters requiring a stockholder vote, while each share of Class B common stock
is entitled to ten votes. Consequently, Mr. Hudson and his family hold
sufficient voting power to control the outcome of matters submitted to a
stockholder vote, including approval of extraordinary corporate transactions
and the election of all directors, thereby insuring their ability to control
the future direction and management of the Company.
18
<PAGE>
MANAGEMENT
Set forth below are the names, ages, positions and certain other information
concerning the current directors and executive officers of the Company as of
October 1, 1994.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY
---- --- ---------------------
<S> <C> <C>
James T. Hudson......... 70 Chairman of the Board of Directors and Chief Executive Officer
Michael T. Hudson....... 47 President, Chief Operating Officer and Director
Charles B. Jurgensmeyer. 50 Chief Financial Officer, Executive Vice President and Director
James R. Hudson......... 35 Vice President--Director of Transportation Division and Director
Donard W. Perkins....... 63 Vice President--Director of Broiler Division
James B. Clemmons....... 55 President--Ohse Foods Division
Joe E. Campbell......... 64 Vice President--Director of Acquisitions
Tommy D. Reynolds....... 40 Secretary and Treasurer
Elmer W. Shannon........ 73 Director
Jerry L. Hitt, M.D...... 48 Director
Kenneth N. May.......... 63 Director
Jane M. Helmich......... 42 Director
</TABLE>
James T. Hudson has served as Chairman of the Board and Chief Executive
Officer of the Company since its organization in February 1972. He was
President of the Company from its organization until October 1985. Prior to
1972, Mr. Hudson was with Ralston Purina for 26 years, the last seven as
Operating Director of the West Central Region. Mr. Hudson was also Chairman of
the Board of the National Broiler Council from 1982 to 1984 and is a past
President of the Arkansas Poultry Federation.
Michael T. Hudson has served as President of the Company since October 1985
and Chief Operating Officer since August 1987. Prior to joining the Company in
1972, he was employed for two years in the Southeast Region of Ralston Purina's
poultry operations. Since joining the Company, Mr. Hudson has served as Vice
President--Sales, Vice President--Sales and Marketing and Vice President--
Production and he has been a Director since 1972.
Charles B. Jurgensmeyer is Chief Financial Officer and Executive Vice
President of the Company. Prior to joining Hudson in 1972, he was employed in
the West Central Region of Ralston Purina's poultry operations for seven years,
primarily in finance and accounting positions. Mr. Jurgensmeyer has previously
served as Secretary/Treasurer and Controller of the Company and has been a
Director since July 1985.
James R. Hudson has been Vice President-Director of Transportation Division
of the Company since September 1992, and previously served as the Company's
Director of Fleet Operations from November 1984 until August 1992. Mr. Hudson
has been a Director since November 1992 and previously served as a Director
from July 1985 until December 1985.
Donard W. Perkins has served as Vice President-Director of the Broiler
Division since July 1988. Prior to joining the Company, he was Senior Vice
President--Processing, Sales & Marketing for Pilgrim's Pride Corporation from
1976 to May 1983; Vice President--General Manager of Spring Valley (a division
of Lane Poultry) from May 1983 to December 1986; and Senior Vice President--
Processing, Sales & Marketing for Cagle's Inc. from December 1986 until his
employment with the Company.
James B. Clemmons has served as President--Ohse Foods Division since December
1987. Prior to joining the Company, he was Product Manager for the Frozen Food
Division of Armour from 1980 to 1984; Senior Product Manager for the Frozen
Food Division of Armour from 1984 to 1985; and General Manager for the Frozen
Food Division of Armour from 1985 until his employment with the Company.
19
<PAGE>
Joe E. Campbell has served as Vice President--Director of Acquisitions since
October 1994 and served as Director of Foodservice Operations for Hudson Foods,
Inc. from November 1989 to October 1994. Prior to joining Hudson he was Vice
President and Chief Operating Officer for Holly Farms Food Service Inc. from
1980 to 1986, and President and Chief Executive Officer of Holly Farms Food
Service Inc. from 1986 until his employment with the Company.
Tommy D. Reynolds has been employed by the Company since May 1979 in various
accounting, auditing and finance positions. He has served as Secretary and
Treasurer since October 1992, and previously served as Assistant Secretary and
Assistant Treasurer since 1986. Mr. Reynolds is a certified public accountant
in the state of Arkansas.
Elmer W. Shannon began service with the Company in 1972 as Marketing Manager.
He retired as Vice President and Director of Marketing in April 1984 and was
subsequently retained by the Company as a consultant. Mr. Shannon has been a
Director since December 1986.
Jerry L. Hitt is a physician engaged in family practice at Rogers Medical
Center, Rogers, Arkansas since 1971. Dr. Hitt has been a Director since
November 1989.
Kenneth N. May is currently a consultant to the Company. Previously he was
Chairman and Chief Executive Officer of Holly Farms Foods, Inc. from January
1988 through August 1989; President and Chief Executive Officer of Holly Farms
Foods, Inc. from October 1985 through January 1988; and Vice President--
Research and Quality Assurance of Holly Farms Foods, Inc. from September 1973
through September 1985. Dr. May has been a Director since December 1989. Dr.
May also serves as a director of Embrex, Inc.
Jane M. Helmich is a homemaker and has been a Director since November 1992.
Michael T. Hudson, James R. Hudson and Jane M. Helmich are the children of
James T. Hudson.
20
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership by the Selling Stockholders of the Company's classes of
common stock as of October 11, 1994, and as adjusted to reflect the sale of
shares of Class A common stock offered hereby by the Company and the Selling
Stockholders (assuming the over-allotment option is not exercised).
CLASS A COMMON STOCK
<TABLE>
<CAPTION>
NUMBER OF
SHARES
BENEFICIALLY
OWNED
AFTER THE
PERCENT OF OFFERING
NUMBER OF SHARES CLASS OWNED SHARES BEING --------------
NAME BENEFICIALLY OWNED BENEFICIALLY(1) OFFERED(2) NUMBER %
- ---- ------------------ --------------- --------------- --------- ----
<S> <C> <C> <C> <C> <C>
DIRECTORS AND OFFICERS
James T.
Hudson(3)(4)(8)........ 8,038,385 51.5% 1,100,000 6,838,385 37.2%
Michael T.
Hudson(4)(5)(8)........ 537,585 5.9 100,000 437,585 3.4
Charles B.
Jurgensmeyer(4)(8)..... 553,407 6.4 100,000 453,407 3.6
James R.
Hudson(4)(6)(8)........ 505,800 5.6 100,000 405,800 3.2
Jane M.
Helmich(4)(6)(8)....... 538,585 5.9 100,000 438,585 3.4
CLASS B COMMON STOCK
<CAPTION>
NUMBER OF
SHARES
BENEFICIALLY
OWNED
SHARES BEING AFTER THE
PERCENT OF CONVERTED OFFERING
NUMBER OF SHARES CLASS OWNED TO CLASS A --------------
NAME BENEFICIALLY OWNED BENEFICIALLY(1) FOR OFFERING(2) NUMBER %
- ---- ------------------ --------------- --------------- --------- ----
<S> <C> <C> <C> <C> <C>
DIRECTORS AND OFFICERS
James T. Hudson(7)(8)... 8,500,000 99.9% 1,100,000 7,100,000 99.9%
Michael T. Hudson(8).... 500,000 5.9 100,000 400,000 5.6
James R. Hudson(8)...... 500,000 5.9 100,000 400,000 5.6
Jane M. Helmich(8)...... 500,000 5.9 100,000 400,000 5.6
</TABLE>
- --------
(1) Calculated based on 8,572,574 shares of Class A common stock outstanding
and 8,502,834 shares of Class B common stock outstanding as of October 11,
1994. However, for purposes of computing the beneficial ownership of any
individual, it was assumed that such individual had exercised all options
and/or made all conversions by which that individual had the right, within
60 days following October 11, 1994, to acquire shares of Class A common
stock.
(2) The certificate of incorporation allows the holders of Class B common
stock to convert such shares to an equal number of shares of Class A
common stock at any time. All shares of Class A common stock to be sold by
the Selling Stockholders in the Offerings, other than those to be sold by
Mr. Jurgensmeyer, will be converted from shares of Class B common stock
prior to consummation of the Offerings by the Selling Stockholders.
(3) James T. Hudson holds 100 shares of Class A common stock in his own name.
He has rights under revocable proxies to vote 1,000,000 shares of Class A
common stock, which are held in blocks of 500,000 each by Charles B.
Jurgensmeyer and Gary L. Anderson, a former officer of the Company. Mr.
Hudson's wife holds 1,000 shares of Class A common stock in her own name.
Because of the revocable proxies and Mrs. Hudson's stock ownership, Mr.
Hudson is considered beneficially to own 1,001,000 shares of Class A
common stock. Mr. Hudson has disclaimed beneficial ownership of those
shares. Mr. Hudson also holds a total of 7,000,000 shares of Class B
common stock, which may be converted at any time into a like number of
shares of Class A common stock, and is thus considered to own the shares
of Class A common stock into which his shares of Class B common stock may
be converted.
(4) Includes shares of Class A common stock that the named individual may
acquire within the next 60 days by exercise of stock options, in the
following amounts: James T. Hudson, 37,285; Michael T. Hudson, 37,285;
Charles B. Jurgensmeyer, 37,285; James R. Hudson, 5,800; and Jane M.
Helmich, 37,285 (through the exercise of options held by her husband,
Larry E. Helmich).
(5) Michael T. Hudson holds 300 shares of Class A common stock jointly with
his children. In addition, Mr. Hudson holds 500,000 shares of Class B
common stock, which may be converted at any time into a like number of
shares of Class A common stock. Mr. Hudson is thus considered beneficially
to own the shares of Class A common stock into which his shares of Class B
common stock may be converted.
(6) James R. Hudson and Jane M. Helmich each hold 500,000 shares of Class B
common stock, which may be converted at any time into a like number of
shares of Class A common stock. Mr. Hudson and Ms. Helmich are thus
considered beneficially to own the shares of Class A common stock into
which their shares of Class B common stock may be converted.
(7) James T. Hudson holds 7,000,000 shares of Class B common stock in his own
name. In addition, Mr. Hudson has rights under revocable proxies to vote
another 1,500,000 shares, which are held in blocks of 500,000 each by
Michael T. Hudson, James R. Hudson and Jane M. Helmich, and thus is
considered a beneficial owner of those shares. James T. Hudson cannot
convert these shares of Class B common stock to Class A common stock and,
therefore, such shares are not attributed to him as Class A common stock.
Mr. Hudson has disclaimed beneficial ownership of the shares for which he
holds revocable proxies.
(8) See "Management" for the position, office or other relationship such
person has with the Company.
21
<PAGE>
DESCRIPTION OF COMMON STOCK
The Company's certificate of incorporation permits the issuance of up to
40,000,000 shares each of Class A common stock, $.01 par value, and Class B
common stock, $.01 par value. As of October 11, 1994, there were 9,506,428
shares of Class A common stock issued (including 933,854 shares held in
treasury) and 8,502,834 shares of Class B common stock issued and outstanding.
The Transfer Agent and Registrar for both classes of common stock is Chemical
Trust Company of Los Angeles, California.
The Class A common stock has one vote per share, while the Class B common
stock has ten votes per share in all matters submitted to a vote of the
Company's stockholders. Except as required by law or the certificate of
incorporation, holders of Class A or Class B common stock shall vote together
as a single class. Holders of Class A and Class B common stock are entitled to
receive such dividends and other distributions as may be determined by the
Board of Directors out of any funds of the Company legally available therefor;
provided, however, that no dividend may be declared and paid on the Class B
common stock unless a dividend is also declared and paid on the Class A common
stock, and, in such an event, the dividend per share of Class B common stock
may not exceed 90% of the dividend per share of Class A common stock. Certain
members of the Hudson family own substantially all of the Class B common stock
which concentrates voting control over the Company in James T. Hudson and the
Hudson family. The Class B common stock voting power is sufficient to, among
other things, approve or prevent extraordinary corporate transactions, such as
mergers, consolidations or sales of substantially all of the Company's assets
and to elect or remove the members of the Board of Directors.
Transfer of the Class B common stock may only be made to a "permitted
transferee" as defined in the Company's certificate of incorporation, but
shares of Class B common stock may be converted by the holder into an equal
number of shares of Class A common stock at any time. The Company may not issue
additional shares of Class B common stock without the approval of a majority of
the votes of the outstanding shares of Class A common stock and Class B common
stock, each voting separately as a class, except in connection with stock
splits and stock dividends. The board of directors and the holders of a
majority of the outstanding shares of Class B common stock may approve the
conversion of all of the Class B common stock into shares of Class A common
stock.
In the event of a liquidation of the Company, all assets available for
distribution after payment of all prior claims would be divided among and paid
ratably to the holders of Class A common stock and Class B common stock.
Subject to any conversion rights of the holders of Class B common stock,
holders of Class A and Class B common stock have no preemptive rights to
subscribe for or receive any part of the authorized stock of the Company,
additional or increased issues of stock of any class or of any obligations
convertible into any class or classes of stock. Further, no stockholder has the
right to cumulate votes in the election of directors.
22
<PAGE>
CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
FOR NON-U.S. HOLDERS OF COMMON STOCK
The following discussion concerns the material United States federal income
and estate tax consequences of the ownership and disposition of the Company's
Class A common stock (the "Common Stock") applicable to non-U.S holders of such
common stock. In general, a "Non-U.S. Holder" is any person holding Common
Stock other than (a) a citizen or resident of the United States, (b) a
corporation or partnership created or organized in the United States or under
the laws of the United States or of any State, or (c) an estate or trust whose
income is includable in gross income for United States federal income tax
purposes regardless of its source. The discussion is based on current
provisions of the Internal Revenue Code of 1986 (the "Code"), and
administrative and judicial interpretations of the Code as of the date hereof,
all of which are subject to change, and is for general information only. The
discussion does not address aspects of taxation other than United States
federal income and estate taxation and does not address all aspects of United
States federal income and estate taxation. The discussion does not consider any
specific facts or circumstances that may apply to a particular Non-U.S. Holder.
Accordingly, prospective investors are urged to consult their tax advisors
regarding the United States federal, state, local and non-U.S. income and other
tax consequences of holding and disposing of shares of Common Stock.
DIVIDENDS
In general, dividends with respect to the Common Stock paid to a Non-U.S.
Holder will be subject to United States federal withholding tax at a 30% rate
(or any lower rate prescribed by an applicable tax treaty) unless the dividends
are (a) effectively connected with a trade or business carried on by the Non-
U.S. Holder within the United States, and (b) if a tax treaty applies,
attributable to a permanent establishment maintained by the Non-U.S. Holder in
the United States. Dividends effectively connected with such a trade or
business and, if applicable, attributable to such a permanent establishment,
will generally not be subject to withholding (if the Non-U.S. Holder files
certain forms with the payor of the dividend) and generally will be subject to
United States federal income tax at the same rates applicable to U.S. holders.
In the case of a Non-U.S. Holder which is a corporation, such effectively
connected income also may be subject to the United States federal branch
profits tax (which is generally imposed on a foreign corporation on the
repatriation from the United States of effectively connected earnings and
profits) at a 30% rate (or any lower rate provided by an applicable income tax
treaty if certain requirements are met). To determine the applicability of a
tax treaty providing for a lower rate of withholding, dividends paid to an
address in a foreign country are presumed under current Treasury regulations to
be paid to a resident of that country in the absence of definite knowledge to
the contrary.
SALE OF COMMON STOCK
Generally, a Non-U.S. Holder will not be subject to United States federal
income tax on any gain realized upon the sale or other disposition of such
holder's common stock unless (a) the Company is or has been a "U.S. real
property holding corporation" for United States federal income tax purposes
and, provided the common stock continues to be regularly traded on an
established securities market (as defined in Treasury Regulations), the Non-
U.S. Holder held, directly or indirectly at any time during the five-year
period ending on the date of disposition, more than 5% of the Common Stock; (b)
the gain is effectively connected with a trade or business carried on by the
Non-U.S. Holder within the United States and, if a tax treaty applies,
attributable to a permanent establishment maintained by the Non-U.S. Holder in
the United States; (c) the Common Stock is disposed of by a Non-U.S. Holder who
is an individual, who holds the Common Stock as a capital asset and who is
present in the United States for 183 days or more in the taxable year of the
disposition and certain other requirements are met. At present, the Company has
made no determination as to whether it is a United States real property holding
corporation, and there can be no assurance that the company is not now or will
not become, or be determined to be, such a corporation.
23
<PAGE>
ESTATE TAX
Common stock owned or treated as owned by an individual who is not a citizen
or domiciliary of the United States at the time of death will be includable in
the individual's gross estate for United States federal estate tax purposes,
unless an applicable tax treaty provides otherwise, and may be subject to
United States federal estate tax.
BACKUP WITHHOLDING AND INFORMATION REPORTING
The Company must report annually to the Internal Revenue Service and to each
Non-U.S. Holder the amount of dividends paid to, and the tax withheld with
respect to, each Non-U.S. Holder. These reporting requirements apply regardless
of whether withholding was reduced by an applicable tax treaty. Copies of these
information returns also may be made available under the provisions of a
specific treaty or agreement to the tax authorities in the country in which the
Non-U.S. Holder resides. United States backup withholding tax (which generally
is a withholding tax imposed at the rate of 31% on certain payments to persons
that fail to furnish the information required under the United States
information reporting requirements) generally will not apply under existing
Treasury regulations to dividends paid on Common Stock to a Non-U.S. Holder who
is subject to United States federal withholding tax.
The payment of the proceeds from the disposition of the Company's Common
Stock to or through the United States office of a broker will be subject to
information reporting and backup withholding unless the owner certifies, among
other things, its status as a Non-U.S. Holder or otherwise establishes an
exemption. The payment of the proceeds from the disposition of Common Stock to
or though a non-U.S. office of a non-U.S. broker will not be subject to backup
withholding and generally will not be subject to information reporting. Under
the existing Treasury regulations, unless the broker has documentary evidence
in its files that the owner is a Non-U.S. Holder and certain other conditions
are met (or the owner otherwise establishes an exemption), information
reporting (but not backup withholding) will apply to dispositions through (a) a
non-U.S. office of a U.S. broker, and (b) a non-U.S. office of a non-U.S.
broker that is either a "controlled foreign corporation" for United States
federal income tax purposes or a person 50% or more of whose gross income from
all sources for a certain three-year period was effectively connected with a
United States trade or business.
Any amounts withheld under the backup withholding rules from a payment to a
Non-U.S. Holder will be refunded (or credited against the Non-U.S. Holder's
United States federal income tax liability, if any), provided that the required
information is furnished to the Internal Revenue Service.
24
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in a purchase agreement (the
"U.S. Purchase Agreement") among the Company, the Selling Stockholders and
each of the underwriters named below (the "U.S. Underwriters"), and
concurrently with the sale of 800,000 shares of Common Stock to the
International Underwriters (as defined below), the Company and the Selling
Stockholders have severally agreed to sell to each of the U.S. Underwriters,
and each of the U.S. Underwriters has severally agreed to purchase, the
aggregate number of shares of Common Stock set forth opposite its name below.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
----------- ---------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...........................................
Donaldson, Lufkin & Jenrette Securities Corporation.............
A.G. Edwards & Sons, Inc........................................
---------
Total....................................................... 3,200,000
=========
</TABLE>
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Donaldson, Lufkin &
Jenrette Securities Corporation and A.G. Edwards & Sons, Inc. are acting as
representatives (the "U.S. Representatives") of the several U.S. Underwriters.
The Company and the Selling Stockholders have also entered into a purchase
agreement (the "International Purchase Agreement") with certain underwriters
outside the United States and Canada (the "International Underwriters") for
whom Merrill Lynch International Limited, Donaldson, Lufkin & Jenrette
Securities Corporation and A.G. Edwards & Sons, Inc. are acting as
representatives (the "International Representatives"). Subject to the terms
and conditions set forth in the International Purchase Agreement, and
concurrently with the sale of 3,200,000 shares of Common Stock to the U.S.
Underwriters, the Company and the Selling Stockholders have severally agreed
to sell to the International Underwriters, and the International Underwriters
severally have agreed to purchase, an aggregate of 800,000 shares of Common
Stock. The public offering price per share of Common Stock and the
underwriting discount per share of Common Stock are identical under the U.S.
Purchase Agreement and the International Purchase Agreement.
In the U.S. Purchase Agreement the several U.S. Underwriters have agreed,
subject to the terms and conditions set forth therein, to purchase all of the
shares of Common Stock being sold pursuant to such Agreement if any of the
shares of Common Stock being sold pursuant to such Agreement are purchased and
in the International Purchase Agreement the several International Underwriters
have agreed, subject to the terms and conditions set forth therein, to
purchase all the shares of Common Stock being sold pursuant to such agreement
if any of the shares of Common Stock being sold pursuant to such agreement are
purchased. Under certain circumstances, the commitments of nondefaulting U.S.
Underwriters and International Underwriters (collectively, the "Underwriters")
may be increased. The closings with respect to the sale of shares of Common
Stock to be purchased by the U.S. Underwriters and the International
Underwriters are conditioned upon one another.
The U.S. Underwriters propose initially to offer the shares of Common Stock
to the public at the public offering price set forth on the cover page of this
Prospectus and to certain dealers (who may include U.S. Underwriters) at such
price less a concession not in excess of $ per share of Common Stock. The
U.S. Underwriters may allow, and such dealers may reallow, a discount not in
excess of $ per share
25
<PAGE>
of Common Stock to certain other dealers. After the initial public offering,
the public offering price, concession and discount may be changed.
James T. Hudson, one of the Selling Shareholders, has granted to the U.S.
Underwriters an option to purchase up to an aggregate of 480,000 additional
shares of Common Stock, and the International Underwriters an option to
purchase up to an aggregate of 120,000 shares of Common Stock, in each case
exercisable for 30 days after the date hereof, to cover overallotments, if any,
at the public offering price, less the underwriting discount. To the extent
that the U.S. Underwriters exercise this option, each of the U.S. Underwriters
will have a firm commitment, subject to certain conditions, to purchase
approximately the same percentage of such shares of Common Stock that the
number of shares of Common Stock to be purchased by it shown in the foregoing
table bears to the total number of shares of Common Stock initially offered to
the U.S. Underwriters hereby.
The U.S. Underwriters and the International Underwriters have entered into an
Intersyndicate Agreement (the "Intersyndicate Agreement") that provides for the
coordination of their activities. Pursuant to the Intersyndicate Agreement,
sales may be made between the U.S. Underwriters and the International
Underwriters of such number of shares of Common Stock as may be mutually
agreed. The price of any shares of Common Stock so sold shall be the public
offering price, less an amount not greater than the selling concession.
Under the terms of the Intersyndicate Agreement, the U.S. Underwriters and
any dealer to whom they sell shares of Common Stock will not offer to sell or
sell shares of Common Stock to persons who are non-United States or non-
Canadian persons or to persons they believe intend to resell to persons who are
non-United States or non-Canadian persons, and the International Underwriters
and any dealer to whom they sell shares of Common Stock will not offer to sell
or sell shares of Common Stock to United States or Canadian persons or to
persons they believe intend to resell to United States or Canadian persons,
except, in each case, for transactions pursuant to the Intersyndicate
Agreement.
The Company, each executive officer, director of the Company, and beneficial
owners of more than 5% of the outstanding shares of Common Stock, will agree,
for a period of days after the commencement of the public offering of the
shares of Common Stock, not to sell, offer to sell, grant any option for the
sale of, or otherwise dispose of, any shares of Common Stock or securities
convertible into shares of Common Stock, without the prior written consent of
the U.S. Representatives.
The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended, or to contribute to payments the
Underwriters may be required to make in respect thereof.
LEGAL MATTERS
The validity of the shares of common stock offered hereby is being passed
upon for the Company by Wright, Lindsey & Jennings, Little Rock, Arkansas.
Certain legal matters will be passed upon for the Underwriters by Shearman &
Sterling, New York, New York.
INDEPENDENT PUBLIC ACCOUNTANTS
The consolidated balance sheets as of October 3, 1992, and October 2, 1993,
as restated, and the consolidated statements of operations and cash flows for
each of the three years in the period ended October 2, 1993, as restated,
included in this prospectus, have been included herein in reliance on the
report of Coopers & Lybrand, independent accountants, given on the authority of
that firm as experts in auditing and accounting. With respect to the unaudited
interim financial information for the periods ended January 1, 1994, January 2,
1993, April 2, 1994, April 3, 1993, July 2, 1994, and July 3, 1993 incorporated
by reference
26
<PAGE>
or included in this prospectus, the independent accountants have reported that
they have applied limited procedures in accordance with professional standards
for a review of such information. However, their separate report included in
the Company's quarterly reports on Form 10-Q for the quarter ended January 1,
1994, April 2, 1994 and July 2, 1994, and incorporated by reference herein,
states that they did not audit and they do not express an opinion on that
interim financial information. Accordingly, the degree of reliance on their
report on such information should be restricted in light of the limited nature
of the review procedures applied. The accountants are not subject to the
liability provisions of Section 11 of the Securities Act of 1933 for their
report on the unaudited interim financial information because that report is
not a "report" or a "part" of the registration statement prepared or certified
by the accountants within the meaning of Sections 7 and 11 of the Act.
27
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants......................................... F-2
Consolidated Balance Sheet as of October 3, 1992, and October 2, 1993..... F-3
Consolidated Statement of Operations for the years ended September 28,
1991, October 3, 1992, and October 2, 1993............................... F-4
Consolidated Statement of Cash Flows for the years ended September 28,
1991, October 3, 1992, and October 2, 1993............................... F-5
Notes to Consolidated Financial Statements................................ F-6
Condensed Consolidated Balance Sheet (Unaudited) as of July 2, 1994....... F-15
Condensed Consolidated Statement of Operations (Unaudited) for the nine
months ended July 3, 1993 and July 2, 1994............................... F-16
Condensed Consolidated Statement of Cash Flows (Unaudited) for the nine
months ended July 3, 1993 and July 2, 1994............................... F-17
Notes to Condensed Consolidated Financial Statements...................... F-18
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
Hudson Foods, Inc.
We have audited the accompanying consolidated balance sheet of Hudson Foods,
Inc. and subsidiaries as of October 3, 1992, and October 2, 1993, as restated,
and the related consolidated statements of operations and cash flows for each
of the three years in the period ended October 2, 1993, as restated. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Hudson
Foods, Inc. and subsidiaries as of October 3, 1992, and October 2, 1993, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended October 2, 1993, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND
Tulsa, Oklahoma
November 2, 1993
F-2
<PAGE>
HUDSON FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(AS RESTATED, SEE NOTE 7)
<TABLE>
<CAPTION>
OCTOBER 3, OCTOBER 2,
1992 1993
---------- ----------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................... $ 3,949 $ 3,891
Receivables:
Trade.................................................. 47,901 58,441
Other.................................................. 228 219
-------- --------
48,129 58,660
Less allowance for doubtful accounts.................... 1,344 1,208
-------- --------
46,785 57,452
Inventories............................................. 108,036 116,497
Other................................................... 3,944 7,275
-------- --------
Total current assets.................................... 162,714 185,115
Property, plant and equipment, net....................... 207,097 205,613
Excess cost of investment over net assets acquired, net.. 16,369 15,807
Other assets............................................. 16,008 9,968
-------- --------
Total assets............................................. $402,188 $416,503
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable........................................... $ 15,000 $ --
Current portion of long-term obligations................ 5,229 5,085
Accounts payable........................................ 30,125 31,555
Accrued liabilities..................................... 19,001 33,198
Deferred income taxes (Note 7).......................... 11,884 11,466
-------- --------
Total current liabilities............................... 81,239 81,304
-------- --------
Long-term obligations.................................... 125,695 88,985
-------- --------
Deferred income taxes (Note 7) and deferred gain (Note
10)..................................................... 60,924 72,312
-------- --------
Commitments and contingencies (Note 10)
Stockholders' equity:
Common stock:
Class A, $.01 par value, issued 6,428,947 and 8,630,407
shares................................................ 64 86
Class B, $.01 par value, issued and outstanding
8,503,052 and 8,502,052 shares........................ 85 85
Additional capital...................................... 62,478 87,638
Retained earnings....................................... 83,528 97,727
-------- --------
146,155 185,536
Treasury stock, at cost (983,731 and 958,358 Class A
shares)................................................ (11,825) (11,634)
-------- --------
Total stockholders' equity.............................. 134,330 173,902
-------- --------
Total liabilities and stockholders' equity............... $402,188 $416,503
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-3
<PAGE>
HUDSON FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(AS RESTATED, SEE NOTE 7)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
-----------------------------------
SEPTEMBER 28, OCTOBER 3, OCTOBER 2,
1991 1992 1993
------------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER
SHARE DATA)
<S> <C> <C> <C>
Sales....................................... $765,292 $809,243 $920,545
-------- -------- --------
Costs and expenses:
Cost of sales............................. 690,316 733,028 802,002
Selling................................... 37,135 49,907 63,926
General and administrative................ 16,645 18,533 20,695
-------- -------- --------
Total costs and expenses.................. 744,096 801,468 886,623
-------- -------- --------
Operating income............................ 21,196 7,775 33,922
-------- -------- --------
Other expense (income):
Interest expense.......................... 9,073 8,476 7,975
Other, net................................ (1,406) (4,342) 530
-------- -------- --------
Total other expense....................... 7,667 4,134 8,505
-------- -------- --------
Income before income taxes.................. 13,529 3,641 25,417
Income tax expense.......................... 4,987 1,471 9,512
-------- -------- --------
Net income.................................. $ 8,542 $ 2,170 $ 15,905
======== ======== ========
Earnings per share:
Primary................................... $0.58 $0.15 $1.01
Fully diluted............................. 0.58 0.15 1.01
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-4
<PAGE>
HUDSON FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(AS RESTATED, SEE NOTE 7)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
-----------------------------------
SEPTEMBER 28, OCTOBER 3, OCTOBER 2,
1991 1992 1993
------------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income............................... $ 8,542 $ 2,170 $15,905
Non-cash items included in net income:
Depreciation........................... 15,252 16,701 21,629
Amortization........................... 1,284 1,210 1,314
Deferred income taxes.................. 1,142 794 171
Other.................................. -- -- (1,004)
Changes in assets and liabilities:
Trade and other receivables............ (1,779) (3,566) (10,667)
Inventories............................ 522 (5,748) (8,461)
Other.................................. (1,644) 1,452 (3,331)
Accounts payable....................... 3,581 452 1,430
Accrued liabilities.................... 8,292 (5,709) 12,021
------- ------- -------
Cash flows provided by operating
activities............................ 35,192 7,756 29,007
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and
equipment............................... (31,326) (46,960) (21,453)
Disposition of property, plant and
equipment, net.......................... 1,678 3,830 1,262
Proceeds from sale-leaseback agreements
(Note 10)............................... -- -- 19,167
Acquisitions of businesses............... -- (4,701) (825)
Purchase of stock........................ (5,850) -- --
Other.................................... (1,119) (3,462) 523
------- ------- -------
Cash flows used for investing activities. (36,617) (51,293) (1,326)
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Additions (reductions) to notes payable.. (3,800) 15,000 (15,000)
Additions to long-term obligations....... 17,600 34,631 3,370
Reductions of long-term obligations...... (10,538) (4,002) (15,769)
Dividends................................ (1,513) (1,503) (1,706)
Exercise of stock options and other...... 464 164 1,366
------- ------- -------
Cash flows provided by (used for)
financing activities.................... 2,213 44,290 (27,739)
------- ------- -------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS............................... 788 753 (58)
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD.................................... 2,408 3,196 3,949
------- ------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD. $ 3,196 $ 3,949 $ 3,891
======= ======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the year for:
Interest, net of amounts capitalized..... $ 6,066 $11,623 $ 7,090
Income taxes............................. 3,195 2,815 7,299
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-5
<PAGE>
HUDSON FOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Following is a summary of significant accounting policies employed by Hudson
Foods, Inc. and subsidiaries ("the Company") in the preparation of the
consolidated financial statements.
PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include
the accounts of the Company and its wholly-owned subsidiaries.
CASH AND CASH EQUIVALENTS. The Company considers all highly liquid
investments purchased with a maturity of three months or less to be cash
equivalents. At October 2, 1993, cash and cash equivalents included temporary
cash investments in certificates of deposit, U.S. treasury bills, repurchase
agreements and U.S. government agency securities of $12,960,000. Cash
equivalents are stated at cost, which approximates market value, and have been
used to offset book overdrafts.
CONCENTRATIONS OF CREDIT RISK. Financial instruments which potentially
subject the Company to concentrations of credit risk consist primarily of trade
receivables from large domestic companies. The Company generally does not
require collateral from its customers. Such credit risk is considered by
management to be limited due to the Company's broad customer base. In fiscal
years 1991, 1992 and 1993, one customer accounted for approximately 10.5%,
15.7%, and 17.9% of consolidated sales, respectively.
INVENTORIES. Inventories are stated at the lower of cost (first-in, first-out
method) or market. Inventory cost includes the cost of raw materials and all
applicable costs of processing.
PROPERTY, PLANT AND EQUIPMENT. Property, plant and equipment are stated at
cost. When assets are sold or retired, the costs of the assets and the related
accumulated depreciation are removed from the accounts and the resulting gains
or losses are recognized. Depreciation is computed using the straight-line
method over the estimated useful lives of the assets. Interest costs of
approximately $1,387,000, $2,874,000 and $1,467,000 were capitalized during
1991, 1992 and 1993, respectively.
EARNINGS PER SHARE. Earnings per share are based on the weighted average
number of shares outstanding. The primary earnings per share computation
assumes that outstanding dilutive stock options were exercised and the proceeds
used to purchase common shares. Earnings per share, assuming full dilution,
gives effect to the conversion of outstanding convertible debentures and the
exercise of dilutive stock options. In addition, 1991 and 1992 earnings per
share include the effect of the contingently issuable shares associated with
the acquisition of Pierre Frozen Foods, Inc.
EXCESS COST OF INVESTMENT OVER NET ASSETS ACQUIRED. The excess cost of
investment over net assets acquired is being amortized using the straight-line
method over periods ranging from 33 to 40 years. Accumulated amortization was
$3,215,000 and $3,729,000 at October 3, 1992 and October 2, 1993, respectively.
FISCAL YEAR. The Company utilizes a 52-53 week accounting period which ends
on the Saturday closest to September 30.
F-6
<PAGE>
HUDSON FOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. INVENTORIES
<TABLE>
<CAPTION>
OCT. 3, OCT. 2,
1992 1993
------- -------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Field inventory--broilers and breeder stock............... $ 26,321 $ 26,333
Field inventory--turkeys and breeder stock................ 8,100 8,914
Feed, eggs and other...................................... 19,023 21,318
Finished products......................................... 54,592 59,932
-------- --------
Total................................................... $108,036 $116,497
======== ========
</TABLE>
3. PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
OCT. 3, OCT. 2,
1992 1993
------- -------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Land...................................................... $ 10,565 $ 10,620
Buildings and improvements................................ 149,120 162,364
Machinery and equipment................................... 109,367 126,747
Construction in progress.................................. 25,262 7,219
-------- --------
294,314 306,950
Less accumulated depreciation............................. 87,217 101,337
-------- --------
Total................................................... $207,097 $205,613
======== ========
</TABLE>
4. FINANCING ARRANGEMENTS
The Company's line of credit agreement, which expires September 30, 1996,
provides for aggregate borrowings or letters of credit up to $100 million. At
October 3, 1992, the Company had $15 million of short-term debt outstanding and
had issued $5.8 million in letters of credit, and at October 2, 1993, had
issued $7.2 million in letters of credit. The agreement requires the payment of
quarterly facility fees, limits the payment of dividends to $2.5 million in any
fiscal year and limits annual capital expenditures. It also requires the
maintenance of minimum working capital and tangible net worth, and that working
capital and debt-to-equity ratios be maintained at certain levels. Borrowings
are collateralized by the Company's inventories and receivables. At October 2,
1993, $92.8 million was unused under the line.
5. ACCRUED LIABILITIES
<TABLE>
<CAPTION>
OCT. 3, OCT. 2,
1992 1993
------- -------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Payroll and benefits........................................ $10,162 $18,098
Income, property and other taxes............................ 2,951 4,963
Interest.................................................... 266 195
Other....................................................... 5,622 9,942
------- -------
Total..................................................... $19,001 $33,198
======= =======
</TABLE>
F-7
<PAGE>
HUDSON FOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. LONG-TERM OBLIGATIONS
<TABLE>
<CAPTION>
OCT. 3, OCT. 2,
1992 1993
------- -------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
14% Convertible Subordinated Debentures due 2008........... $ 32,590 $ --
8% Convertible Subordinated Debentures due 2006............ 17,436 17,436
8.99% Notes payable to an insurance company due March 15,
1998...................................................... 16,698 16,031
9.99% Notes payable to an insurance company due April 12,
1997...................................................... 15,000 15,000
7.62% Notes payable to an insurance company due Sept. 1,
2002...................................................... 14,565 14,709
9.95% Note payable to a bank due in June 1999.............. 8,350 7,800
7.20%-7.64% Notes payable to a bank due Sept. 1, 2002...... 8,315 9,084
7.68% Notes payable to an insurance company due Sept. 1,
2002...................................................... 6,250 5,625
8.14% Notes payable to an insurance company due March 15,
1998...................................................... 5,404 5,201
Other--6%-9.25% payable in various maturities through 2002. 6,316 3,184
-------- -------
Total...................................................... 130,924 94,070
Less current portion of long-term obligations.............. 5,229 5,085
-------- -------
Long-term obligations...................................... $125,695 $88,985
======== =======
</TABLE>
During the second quarter of fiscal 1993, the Company redeemed $8.1 million
of its 14% Convertible Subordinated Debentures for cash and the remaining $24.5
million of the debentures were converted into 1,996,052 shares of Class A
common stock.
The 8% debentures are convertible into shares of Class A common stock at $21
per share. The debentures require semiannual interest payments on April 1 and
October 1, and are redeemable at the option of the Company, in whole or in
part, at declining premiums. Mandatory sinking fund payments sufficient to
retire 75% of the debentures prior to maturity begin October 1, 1996.
Certain of the Company's loan agreements require the maintenance of minimum
working capital, and that net tangible asset, debt-to-equity and working
capital ratios be maintained at specified levels. Also, such loan agreements
contain limitations on capital expenditures, additional indebtedness and
payment of dividends.
At October 2, 1993, all of the Company's receivables and inventory, and less
than half of its property, plant and equipment were pledged as collateral.
The fair value of the Company's long-term obligations is based on market
prices (for the 8% debentures) and on discounted future cash flows using
current interest rates (for bank and insurance notes). The fair value of the
Company's long-term obligations at October 2, 1993, including current portion,
is estimated to be approximately $101.2 million.
At October 2, 1993, the aggregate amount of long-term obligations which will
become due during each of the next five years is as follows: $5,085,000 in
1994; $5,361,000 in 1995; $5,096,000 in 1996; $21,489,000 in 1997; and
$22,139,000 in 1998.
F-8
<PAGE>
HUDSON FOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. INCOME TAXES
Beginning in fiscal year 1994, the Company adopted Statement of Financial
Accounting Standards No. 109 (SFAS 109), "Accounting for Income Taxes," which
requires that deferred income tax liabilities and assets be recognized for
differences between the tax basis of assets and liabilities and their financial
reporting amounts, measured by using presently enacted tax laws and rates. The
Company elected to apply the provisions of SFAS 109 retroactively to September
28, 1986. As a result, a deferred tax liability and a corresponding increase in
property, plant and equipment of $13,535,000 was recognized for the difference
between the assigned values and the tax basis of assets and liabilities
previously acquired in 1986 (Corbett Enterprises, Inc.), 1987 (Thies Companies,
Inc.) and 1990 (Pierre Frozen Foods, Inc.). The adoption of SFAS 109 did not
effect net income or earnings per share since increases in depreciation
expense, due to adjustments for prior business combinations, were offset by the
amortization of the deferred income taxes.
Consolidated income tax expense for each of the three years in the period
ended October 2, 1993 consists of the following:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
-----------------------
OCT. OCT.
SEPT. 28, 3, 2,
1991 1992 1993
--------- ---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Current provision:
Federal.............................................. $3,288 $ 606 $8,323
State................................................ 557 71 1,019
Deferred provision:
Federal.............................................. 1,096 707 168
State................................................ 46 87 2
------ ------ ------
Total income tax expense........................... $4,987 $1,471 $9,512
====== ====== ======
</TABLE>
Reconciliations of the statutory federal income tax rate with the effective
income tax rate for each of the three years in the period ended October 2, 1993
are as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
-------------------------
SEPT. 28, OCT. 3, OCT. 2,
1991 1992 1993
--------- ------- -------
<S> <C> <C> <C>
Federal income tax rate.............................. 34.0% 34.0% 34.8%
State income taxes, net of federal benefit........... 4.0 4.0 3.6
Nondeductible items related to business acquisitions,
net................................................. .1 .9 (.1)
Jobs/research tax credit............................. (2.1) -- (2.1)
Other................................................ .9 1.5 1.2
---- ---- ----
Effective income tax rate............................ 36.9% 40.4% 37.4%
==== ==== ====
</TABLE>
F-9
<PAGE>
HUDSON FOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
An analysis of the Company's net current and long-term deferred tax assets
and liabilities at October 3, 1992 and October 2, 1993 is as follows:
<TABLE>
<CAPTION>
OCT. 3, OCT. 2,
1992 1993
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Current:
Inventory................................................ $(13,054) $(13,346)
Allowance for doubtful accounts.......................... 605 530
Accrued liabilities...................................... 282 1,026
Other.................................................... 283 324
-------- --------
Total current deferred income taxes.................... $(11,884) $(11,466)
======== ========
Long-term:
Property, plant and equipment............................ $(23,706) $(22,806)
Change from the cash basis to the accrual basis of
accounting in 1988 for the "Family Farm" subsidiaries... (38,159) (38,159)
Other.................................................... 941 (1,616)
-------- --------
Total long-term deferred income taxes.................. $(60,924) $(62,581)
======== ========
</TABLE>
The Internal Revenue Service has examined the Company's 1989 and 1990 federal
income tax returns and has issued a notice of deficiency assessing additional
taxes of $22.4 million and penalties of $5.8 million. If an assessment is
ultimately upheld, it will result in the acceleration of previously recorded
deferred income taxes. However, since most of the items in dispute relate to
the timing of the recognition of income or deductions, a portion of the income
taxes for years subsequent to 1990 would be refundable. Management is
contesting the notice of deficiency and the case has been docketed for a
hearing in early 1995 in federal tax court. Management believes that ultimate
resolution of these matters will not have a material impact on the Company's
financial position or results of operations.
In fiscal 1989, the Company adopted the farm price method of accounting for
inventory for income tax reporting. As a result, $13.1 million and $13.3
million of deferred income taxes relating to the difference between the book
and tax method of valuing inventory were classified as current in 1992 and
1993, respectively.
8. ACQUISITIONS
In December 1992 and January 1993, respectively, the Company made a $825,000
cash payment and issued 35,603 shares of Class A common stock to the former
owners of Pierre Frozen Foods, Inc. ("Pierre") as additional consideration for
the 1990 acquisition of Pierre. In September 1992, the Company acquired a
manufacturing plant and operations from another food company for $4,701,000 in
cash.
F-10
<PAGE>
HUDSON FOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. EMPLOYEE BENEFIT AND COMPENSATION PLANS
STOCK OPTION PLAN. The 1985 Stock Option Plan (the "Option Plan"), as
amended, reserves 1,200,000 and 300,000 shares of the Company's Class A common
stock for issuance as incentive stock options and nonqualified stock options,
respectively. The Option Plan provides for the grant of options to key
employees upon terms and conditions determined by a committee of the Board of
Directors.
Options expire no later than the tenth anniversary of the date of grant, and
are exercisable at a price which is at least 100% of the fair market value of
such shares on the date of grant (110% in the case of individuals holding at
least 10% of the Company's Class A common stock).
A summary of stock option activity related to the Option Plan for each of the
three years in the period ended October 2, 1993 is as follows:
<TABLE>
<CAPTION>
NUMBER NUMBER OF
OF OPTION PRICE SHARES
SHARES PER SHARE EXERCISABLE
------ ------------ -----------
<S> <C> <C> <C>
Outstanding at September 29, 1990............ 449,275 $5.06-$14.75 250,068
=======
Granted...................................... 406,643 $7.13-$10.00
Exercised.................................... (17,621) $7.00-$ 7.13
Cancelled.................................... (40,515) $7.00-$14.75
--------
Outstanding at September 28, 1991............ 797,782 $5.06-$12.31 384,759
=======
Granted...................................... 21,000 $6.94
Exercised.................................... (31,200) $5.06-$ 7.13
Cancelled.................................... (13,900) $7.00-$10.00
--------
Outstanding at October 3, 1992............... 773,682 $5.06-$12.31 593,105
=======
Granted...................................... 344,650 $7.56-$10.69
Exercised.................................... (168,805) $5.06-$10.50
Cancelled.................................... (38,600) $6.94-$10.00
--------
Outstanding at October 2, 1993............... 910,927 $6.94-$12.31 569,394
======== =======
</TABLE>
EMPLOYEE STOCK PURCHASE PLAN. The Company has reserved 1,000,000 shares of
common stock for purchase under the 1990 Employee Stock Purchase Plan (the
"Purchase Plan"), the purpose of which is to make available to eligible
employees a means of purchasing shares of the Company's common stock at current
market prices. Under the terms of the Purchase Plan, the Company contributes an
amount annually, in cash or Class A stock, equal to 15% of the undistributed
total of participants' contributions for the past ten years. All full-time
employees of the Company (except those owning 10% or more of the Company's
stock) are eligible to participate in the Purchase Plan.
RETIREMENT PLAN. In November 1985, the Company adopted a 401(k) Plan which,
as amended, provides for Company matching of 50% of employee contributions not
exceeding 4% of the participants' salary. The Company's contribution was
$553,000 in 1991; $723,000 in 1992; and $919,000 in 1993.
F-11
<PAGE>
HUDSON FOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. COMMITMENTS AND CONTINGENCIES
The Company leases distribution facilities, transportation and delivery
equipment, poultry farms, and other equipment under operating leases expiring
during the next five to ten years. Management expects that in the normal course
of business the leases will be renewed or replaced by other leases.
In November and December 1992, under sale-leaseback agreements, the Company
sold certain equipment with a net book value of $4.5 million for $19.2 million
cash. Annual payments under the operating lease agreements are $3.5 million.
The gain of $14.7 million is being amortized over the terms of the leases. At
October 2, 1993, the unamortized portion of the deferred gain is included in
accrued liabilities ($2,777,000) and deferred income taxes and deferred gain
($9,731,000).
Total rental expense (net of amortized gain) was $20,144,000 in 1991;
$21,158,000 in 1992; and $20,603,000 in 1993.
At October 2, 1993, future minimum rental payments required under leases that
have initial or remaining noncancellable terms in excess of one year are as
follows: $17,624,000 in 1994; $16,551,000 in 1995; $13,316,000 in 1996;
$10,126,000 in 1997; and $5,116,000 in 1998.
The Company maintains a self-insurance program for employee health care and
workman's compensation costs. Self-insurance costs are accrued based upon the
aggregate of the liability for reported claims and an estimated liability for
claims incurred but not yet reported.
On March 16, 1993, the United States of America, by the Attorney General of
the United States acting at the request of the Environmental Protection Agency,
filed a complaint against the Company alleging violations of the Federal Water
Pollution Control Act (the "Act"). The complaint seeks, among other things, a
permanent injunction preventing the Company from discharging wastewater from
one of its processing facilities, and a civil penalty of up to $25,000 per day
for each violation of the Act. The Company has filed a motion to dismiss the
complaint; the court has not ruled on the Company's motion. Since this case is
at an early stage, it is not possible to estimate the amount of civil penalties
or other expenditures, if any, that the court may award. The Company plans to
vigorously contest this matter. Management believes that the outcome will not
have a material adverse effect on the Company's consolidated financial position
or results of operations.
The Company is involved in litigation incidental to its business. Such
litigation is not considered by management to be significant.
11. RELATED PARTY TRANSACTIONS
Lease payments for transportation equipment made to the Company's chairman
amounted to $920,000 in 1991; $907,000 in 1992; and $936,000 in 1993.
Certain officers and employees of the Company own turkey and broiler farms
and enter into grower contracts with the Company which provide for the payment
of grower fees. The Company's arrangements with these officers and employees
are similar to contracts with unrelated growers and, as such, do not include an
ongoing commitment by the Company. Grower fees paid to these officers and
employees amounted to $814,000 in 1991; $891,000 in 1992; and $651,000 in 1993.
At October 3, 1992 and October 2, 1993, other current assets include $215,000
and other assets include $2,778,000 and $3,356,000, respectively, of accounts
and notes receivable from an officer and director and entities controlled by
this person.
F-12
<PAGE>
HUDSON FOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12.STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK
----------------------------------
CLASS A CLASS B
---------------- -----------------
NUMBER OF NUMBER OF ADDITIONAL RETAINED TREASURY
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS STOCK
--------- ------ --------- ------ ---------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at September 29,
1990................... 6,351,079 $59 8,504,004 $85 $55,718 $75,832 $ (5,689)
Net income............. -- -- -- -- -- 8,542 --
Stock exchange......... 28,341 -- (246) -- 590 -- --
Exercise of stock
options............... 17,621 -- -- -- 124 -- (249)
Purchase of common
stock................. -- 5 -- -- 5,845 -- (5,850)
Cash dividends:
Class A $.12 per
share................ -- -- -- -- -- (662) --
Class B $.10 per
share................ -- -- -- -- -- (851) --
--------- --- --------- --- ------- ------- --------
Balance at September 28,
1991................... 6,397,041 64 8,503,758 85 62,277 82,861 (11,788)
Net income............. -- -- -- -- -- 2,170 --
Stock exchange......... 706 -- (706) -- -- -- --
Exercise of stock
options............... 31,200 -- -- -- 180 -- --
Purchase of common
stock................. -- -- -- -- -- -- (124)
Issuance of stock to
employees under the
Employee Stock
Purchase Plan......... -- -- -- -- 21 -- 87
Cash dividends:
Class A $.12 per
share................ -- -- -- -- -- (652) --
Class B $.10 per
share................ -- -- -- -- -- (851) --
--------- --- --------- --- ------- ------- --------
Balance at October 3,
1992................... 6,428,947 64 8,503,052 85 62,478 83,528 (11,825)
Net income............. -- -- -- -- -- 15,905 --
Stock exchange......... 1,000 -- (1,000) -- -- -- --
Exercise of stock
options............... 168,805 2 -- -- 1,193 -- --
Contingent payment for
1990 acquisition...... 35,603 -- -- -- (825) -- --
Conversion of 14%
debentures............ 1,996,052 20 -- -- 24,777 -- --
Issuance of stock to
employees under the
Employee Stock
Purchase Plan......... -- -- -- -- 15 -- 191
Cash dividends:
Class A $.12 per
share................ -- -- -- -- -- (856) --
Class B $.10 per
share................ -- -- -- -- -- (850) --
--------- --- --------- --- ------- ------- --------
Balance at October 2,
1993................... 8,630,407 $86 8,502,052 $85 $87,638 $97,727 $(11,634)
========= === ========= === ======= ======= ========
</TABLE>
On February 6, 1987, the Company's Restated Certificate of Incorporation was
amended to create two classes of common stock. The amendment authorized the
issuance of up to 40,000,000 shares of Class A common stock, par value $.01
per share, and 40,000,000 shares of Class B common stock, par value $.01 per
share. Upon adoption of the amendment, each outstanding share of common stock
converted automatically into a share of Class A common stock. During fiscal
1987, the Company concluded a one-time-only exchange offer in which holders of
Class A common stock were given the opportunity to exchange their shares for
an equivalent number of shares of Class B common stock. The Class B common
stock has ten votes per share in most matters submitted to a vote of the
Company's stockholders, while the Class A common stock has one vote per share.
As a result of the exchange offer, voting control of the Company rests with
the holders of Class B common stock. In addition, the dividend per share of
Class B common stock may not exceed 90 percent of the dividend per share of
Class A common stock. The number of outstanding Class A shares at October 3,
1992 and October 2, 1993 were 5,445,216, and 7,672,049 respectively.
F-13
<PAGE>
HUDSON FOODS, INC. AND SUBSIDIARIES
QUARTERLY FINANCIAL DATA (UNAUDITED)
(AS RESTATED, SEE NOTE 7)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
QUARTER ENDED 1992
--------------------------------------------------------------------------
JANUARY 4 APRIL 4 JULY 4 OCTOBER 3 FISCAL 1992
------------ -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Sales .................. $213,416 $190,063 $199,510 $206,254 $809,243
------------ -------------- -------------- -------------- -------------
Costs and expenses:
Cost of sales.......... 195,805 176,212 178,165 182,846 733,028
Selling................ 10,992 11,833 13,308 13,774 49,907
General and
administrative........ 4,615 5,077 4,209 4,632 18,533
------------ -------------- -------------- -------------- -------------
Total costs and
expenses.............. 211,412 193,122 195,682 201,252 801,468
------------ -------------- -------------- -------------- -------------
Operating income (loss). 2,004 (3,059) 3,828 5,002 7,775
Other expense (income),
net.................... 2,003 1,002 (449) 1,578 4,134
------------ -------------- -------------- -------------- -------------
Income (loss) before
income taxes........... 1 (4,061) 4,277 3,424 3,641
Income tax expense
(benefit).............. (80) (1,349) 1,261 1,639 1,471
------------ -------------- -------------- -------------- -------------
Net income (loss)....... $ 81 $ (2,712) $ 3,016 $ 1,785 $ 2,170
============ ============== ============== ============== =============
Earnings (loss) per
share:
Primary................ $.01 $(.19) $.21 $.12 $.15
Fully diluted.......... .01 (.19) .21 .12 .15
Dividends:
Class A................ .030 .030 .030 .030 .12
Class B................ .025 .025 .025 .025 .10
Market price (high-low). $9 3/4-7 3/8 $9 1/8-6 7/8 $8 3/8-6 7/8 $8 3/4-7 1/4 $9 3/4-6 7/8
<CAPTION>
QUARTER ENDED 1993
--------------------------------------------------------------------------
JANUARY 2 APRIL 3 JULY 3 OCTOBER 2 FISCAL 1993
------------ -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Sales .................. $231,691 $220,148 $224,887 $243,819 $920,545
------------ -------------- -------------- -------------- -------------
Costs and expenses:
Cost of sales.......... 203,352 192,589 192,794 213,267 802,002
Selling................ 14,145 16,701 16,912 16,168 63,926
General and
administrative........ 4,811 5,132 5,320 5,432 20,695
------------ -------------- -------------- -------------- -------------
Total costs and
expenses.............. 222,308 214,422 215,026 234,867 886,623
------------ -------------- -------------- -------------- -------------
Operating income........ 9,383 5,726 9,861 8,952 33,922
Other expense, net...... 2,456 2,576 1,719 1,754 8,505
------------ -------------- -------------- -------------- -------------
Income before income
taxes.................. 6,927 3,150 8,142 7,198 25,417
Income tax expense...... 2,654 1,289 3,151 2,418 9,512
------------ -------------- -------------- -------------- -------------
Net income.............. $ 4,273 $ 1,861 $ 4,991 $ 4,780 $ 15,905
============ ============== ============== ============== =============
Earnings per share:
Primary................ $.30 $.12 $.30 $.29 $1.01
Fully diluted.......... .29 .13 .30 .29 1.01
Dividends:
Class A................ .030 .030 .030 .030 .12
Class B................ .025 .025 .025 .025 .10
Market price (high-low). $14-7 1/2 $15 3/8-10 3/8 $13 7/8-10 1/4 $11 3/8-10 1/4 $15 3/8-7 1/2
</TABLE>
F-14
<PAGE>
HUDSON FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
JULY 2,
ASSETS 1994
--------
<S> <C>
Current assets:
Cash and cash equivalents........................................... $ 492
Receivables, net.................................................... 65,829
Inventory:
Field inventory.................................................... 41,604
Feed, eggs and other............................................... 19,348
Finished products.................................................. 73,642
Other............................................................... 7,595
--------
Total current assets................................................ 208,510
Property, plant and equipment, net of accumulated depreciation of
$115,757............................................................ 219,801
Excess cost of investment, net....................................... 15,385
Other assets......................................................... 9,810
--------
Total assets......................................................... $453,506
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable....................................................... $ 13,000
Current portion of long-term obligations............................ 5,086
Accounts payable.................................................... 35,267
Accrued liabilities................................................. 37,089
Deferred income taxes............................................... 11,466
--------
Total current liabilities........................................... 101,908
--------
Long-term obligations................................................ 85,493
--------
Deferred income taxes and deferred gain.............................. 73,209
--------
Stockholders' equity:
Common stock:
Class A, $.01 par value; 40,000,000 shares authorized; issued
8,730,729 shares.................................................. 87
Class B, $.01 par value; 40,000,000 shares authorized; issued and
outstanding
8,501,952 shares.................................................. 85
Additional capital.................................................. 88,450
Retained earnings................................................... 115,690
Treasury stock, at cost (933,854 Class A shares).................... (11,416)
--------
Total stockholders' equity.......................................... 192,896
--------
Total liabilities and stockholders' equity........................... $453,506
========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
F-15
<PAGE>
HUDSON FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED
----------------------
JULY 3,
1993 (AS
RESTATED, JULY 2,
SEE NOTE 2) 1994
----------- ----------
<S> <C> <C>
Sales.................................................. $ 676,726 $ 773,392
---------- ----------
Costs and expenses:
Cost of sales........................................ 588,735 659,282
Selling.............................................. 47,759 58,319
General and administrative........................... 15,263 18,905
---------- ----------
Total costs and expenses............................. 651,757 736,506
---------- ----------
Operating income....................................... 24,969 36,886
Other expense.......................................... 6,751 4,988
---------- ----------
Income before income taxes............................. 18,218 31,898
Income tax expense..................................... 7,093 12,600
---------- ----------
Net income............................................. $ 11,125 $ 19,298
========== ==========
Earnings per share:
Primary.............................................. $ 0.72 $ 1.16
========== ==========
Fully diluted........................................ $ 0.72 $ 1.14
========== ==========
Dividends per share:
Class A common....................................... $ .090 $ .090
========== ==========
Class B common....................................... $ .075 $ .075
========== ==========
Weighted average number of common and common equivalent
shares outstanding:
Primary.............................................. 15,523,779 16,585,355
========== ==========
Fully diluted........................................ 15,523,779 17,515,669
========== ==========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
F-16
<PAGE>
HUDSON FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE NINE
MONTHS ENDED
----------------------
JULY 3, 1993
(AS RESTATED, JULY 2,
SEE NOTE 2) 1994
------------- --------
<S> <C> <C>
Operations:
Net income............................................ $ 11,125 $ 19,298
Items reflected in net income not requiring cash:
Depreciation........................................ 16,114 15,867
Amortization........................................ 1,042 813
Deferred gain....................................... (1,537) (2,083)
Deferred income taxes............................... 746 (578)
Interest expense on 14% Debentures.................. 1,227 --
Other............................................... -- (62)
Changes in operating assets and liabilities........... (13,757) (15,365)
-------- --------
Cash flows provided by operations....................... 14,960 17,890
-------- --------
Investments:
Purchase of property, plant and equipment............. (21,489) (34,075)
Disposition of property, plant and equipment, net..... 23,121 3,814
Other................................................. 1,720 (233)
-------- --------
Cash flows provided by (used for) investments........... 3,352 (30,494)
-------- --------
Financing:
Addition (reduction) to notes payable................. (8,300) 13,000
Addition to long-term obligations..................... 3,370 --
Reduction of long-term obligations.................... (13,919) (3,491)
Dividends............................................. (1,263) (1,335)
Exercise of stock options and other................... 510 1,031
-------- --------
Cash flows provided by (used for) financing............. (19,602) 9,205
-------- --------
Decrease in cash........................................ (1,290) (3,399)
Cash and cash equivalents at beginning of period........ 3,949 3,891
-------- --------
Cash and cash equivalents at end of period.............. $ 2,659 $ 492
======== ========
Supplemental cash flow information:
Interest paid......................................... $ 4,892 $ 4,904
Income taxes paid..................................... 5,604 11,615
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
F-17
<PAGE>
HUDSON FOODS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The financial statements for the periods ended July 3, 1993 and July 2,
1994 include, in the opinion of management, all adjustments (none of which were
other than normal recurring accruals) necessary to present fairly the results
of operations and cash flows for such periods. Results for the nine month
period ended July 2, 1994 are not necessarily indicative of the results which
will be realized for the year ending October 1, 1994. The annual report for the
year ended October 2, 1993 contains additional information which should be read
in conjunction with these financial statements.
2. Accounting Change--Income Taxes. Beginning in fiscal year 1994, the
Company adopted Statement of Financial Accounting Standards No. 109 (SFAS 109),
"Accounting for Income Taxes," which requires that deferred income tax
liabilities and assets be recognized for differences between the tax basis of
assets and liabilities and their financial reporting amounts, measured by using
presently enacted tax laws and rates. The Company elected to apply the
provisions of SFAS 109 retroactively to September 28, 1986. As a result,
property, plant and equipment and deferred income taxes as of October 2, 1993
were each increased by $8,234,000 from the amounts previously reported to
recognize the difference between the assigned values and the tax basis of
assets and liabilities previously acquired in 1986 (Corbett Enterprises, Inc.),
1987 (Thies Companies, Inc.) and 1990 (Pierre Frozen Foods, Inc.). The adoption
of SFAS 109 did not effect net income since increases in depreciation expense,
due to adjustments for prior business combinations, were offset by the
amortization of the deferred income taxes. The statement of operations for the
nine month period ended July 3, 1993 has been restated to increase cost of
sales by $618,000 and decrease deferred income tax expense by a corresponding
amount.
F-18
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, IN CONNECTION WITH THE OFFERING MADE HEREBY, AND INFORMATION OR
REPRESENTATIONS NOT HEREIN CONTAINED, IF GIVEN OR MADE, MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDERS OR THE
UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SO-
LICITATION OF AN OFFER TO BUY, SHARES IN ANY JURISDICTION WHERE, AS TO ANY
PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JU-
RISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUN-
DER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS NOT
BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF
THE COMPANY SINCE THE DATE HEREOF.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 2
Incorporation of Certain Documents by Reference........................... 2
Prospectus Summary........................................................ 3
Use of Proceeds........................................................... 6
Dividend Policy........................................................... 6
Price Range of Common Stock............................................... 6
Capitalization............................................................ 7
Selected Consolidated Financial Data...................................... 8
Management's Discussion and Analysis of Results of Operations and
Financial Condition...................................................... 9
Business.................................................................. 14
Management................................................................ 19
Selling Stockholders...................................................... 21
Description of Common Stock............................................... 22
Certain United States Federal Tax Considerations for Non-U.S. Holders of
Common Stock............................................................. 23
Underwriting.............................................................. 25
Legal Matters............................................................. 26
Independent Public Accountants............................................ 26
Index to Consolidated Financial Statements................................ F-1
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
4,000,000 SHARES
LOGO
CLASS A COMMON STOCK
---------------
PROSPECTUS
---------------
MERRILL LYNCH & CO.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
A.G. EDWARDS & SONS, INC.
, 1994
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED OCTOBER 13, 1994
PROSPECTUS
4,000,000 SHARES
LOGO
CLASS A COMMON STOCK
-----------
Of the 4,000,000 shares of Class A common stock offered hereby, 2,500,000
shares are being sold by Hudson Foods, Inc. ("Hudson" or the "Company") and
1,500,000 shares are being sold by certain stockholders of the Company (the
"Selling Stockholders"). See "Selling Stockholders." The Company will not
receive any proceeds from the sale of the shares by the Selling Stockholders.
Of the 4,000,000 shares of Class A common stock offered hereby, 800,000
shares are being offered outside the United States and Canada by the
International Underwriters (the "International Offering") and 3,200,000 shares
are being offered in a concurrent offering in the United States and Canada by
the U.S. Underwriters (the "U.S. Offering" and, together with the International
Offering, the "Offerings"). The public offering price and the underwriting
discount per share are identical for the Offerings. See "Underwriting."
The Company's Class A common stock is listed on the New York Stock Exchange,
Inc. under the symbol "HFI." On October 12, 1994, the last reported sale price
of the Class A common stock on the New York Stock Exchange was $24 3/8. See
"Price Range of Common Stock."
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO PROCEEDS TO
PUBLIC DISCOUNT (1) COMPANY (2) SELLING STOCKHOLDERS (2)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share................................. $ $ $ $
- ----------------------------------------------------------------------------------------------------------------
Total(3).................................. $ $ $ $
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
(1) The Company and the Selling Stockholders have agreed to indemnify the
several Underwriters against certain liabilities under the Securities Act
of 1933. See "Underwriting."
(2) Before deducting expenses of the offering estimated at $ payable
by the Company and $ payable by the Selling Stockholders.
(3) One of the Selling Stockholders has granted each of the International
Underwriters and the U.S. Underwriters an option exercisable within 30 days
after the date hereof to purchase up to 120,000 and 480,000 additional
shares of Class A common stock, respectively, solely to cover over-
allotments, if any. If such options are exercised in full, the total Price
to Public, Underwriting Discount and Proceeds to Selling Stockholders will
be $ , $ and $ , respectively. See
"Underwriting."
-----------
The shares of Class A common stock are offered by the several Underwriters,
subject to prior sale, when, as and if issued to and accepted by them, subject
to approval of certain legal matters by counsel for the Underwriters and
certain other conditions. The Underwriters reserve the right to withdraw,
cancel or modify such offer and to reject orders in whole or in part. It is
expected that delivery of the shares of Class A common stock will be made in
New York, New York on or about , 1994.
-----------
MERRILL LYNCH INTERNATIONAL LIMITED
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
A.G. EDWARDS & SONS, INC.
-----------
The date of this Prospectus is , 1994
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission,
Washington, D.C. 20549, a Registration Statement on Form S-3 (the "Registration
Statement") under the Securities Act of 1933, as amended, with respect to the
Class A common stock offered hereby. The Prospectus does not contain all the
information set forth in the Registration Statement and exhibits and schedules
thereto. For further information with respect to the Company and such Class A
common stock, reference is made to the Registration Statement and the exhibits
and schedules filed as part thereof. Statements contained in this Prospectus as
to the contents of any contract or any other document referred to are not
necessarily complete, and, in each instance, reference is made to the copy of
such contract or document filed as an exhibit to the Registration Statement,
each such statement being qualified in all respects by such reference to such
exhibit.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). The Registration
Statement, including exhibits and schedules thereto, such reports, proxy
statements and other information filed by the Company may be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and at
the Commission's following Regional Offices: 7 World Trade Center (13th Floor),
New York, New York 10048; and Suite 1400 Citicorp Center, 500 West Madison
Street, Chicago, Illinois 60661. In addition, copies of such material can be
obtained by mail from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, at prescribed
rates.
The Company's Class A common stock is listed on the New York Stock Exchange.
Reports, proxy statements and other information concerning the Company can be
inspected at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.
No action has been taken or will be taken in any jurisdiction by the Company
or any Underwriter that would permit a public offering of the Class A common
stock or possession or distribution of this Prospectus in any jurisdiction
where action for that purpose is required, other than the United States.
Persons into whose possession this Prospectus comes are required by the Company
and the Underwriters to inform themselves about and to observe any restrictions
as to the offering of the Class A common stock and the distribution of this
Prospectus.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are hereby
incorporated by reference: (i) the Company's Annual Report on Form 10-K for the
fiscal year ended October 2, 1993; (ii) the Company's proxy statement for its
annual meeting of stockholders held on February 11, 1994; (iii) the Company's
Form 10-Q for the quarter ended January 1, 1994; (iv) the Company's Form 10-Q
for the quarter ended April 2, 1994; (v) the Company's Form 10-Q for the
quarter ended July 2, 1994; (vi) the description of the Class A common stock
contained in the Company's Form 8-A Registration Statement filed January 22,
1986, as amended by Form 8 filed January 19, 1987 and (vii) the Company's Form
8-K filed October 13, 1994.
All reports and other documents filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of this offering shall be deemed to be
incorporated by reference into this Prospectus, and to be a part hereof from
the date of filing such documents.
Any statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein, or in any other subsequently filed document which also is or is deemed
to be incorporated by reference herein, modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of this
Prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the foregoing documents incorporated herein by reference
other than exhibits to such documents (unless such exhibits are specifically
incorporated by reference therein). Requests for such copies should be directed
to Tommy D. Reynolds, Secretary, Hudson Foods, Inc., P.O. Box 777, Rogers,
Arkansas 72757-0777, (501) 636-1100.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CLASS A COMMON
STOCK OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE
OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
UNDERWRITING
Subject to the terms and conditions set forth in a purchase agreement (the
"International Purchase Agreement") among the Company, the Selling
Stockholders and each of the underwriters named below (the "International
Underwriters"), and concurrently with the sale of 3,200,000 shares of Common
Stock to the U.S. Underwriters (as defined below), the Company and the Selling
Stockholders have severally agreed to sell to each of the International
Underwriters and each of the International Underwriters has severally agreed
to purchase, the aggregate number of shares of Common Stock set forth opposite
its name below.
<TABLE>
<CAPTION>
NUMBER
OF
UNDERWRITER SHARES
----------- -------
<S> <C>
Merrill Lynch International Limited...............................
Donaldson, Lufkin & Jenrette Securities Corporation...............
A.G. Edwards & Sons, Inc..........................................
-------
Total......................................................... 800,000
=======
</TABLE>
Merrill Lynch International Limited, Donaldson, Lufkin & Jenrette Securities
Corporation and A.G. Edwards & Sons, Inc. are acting as representatives (the
"International Representatives") of the several International Underwriters.
The Company and the Selling Stockholders have also entered into a purchase
agreement (the "U.S. Purchase Agreement") with certain underwriters inside the
United States and Canada (the "U.S. Underwriters") for whom Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Donaldson, Lufkin & Jenrette Securities
Corporation and A.G. Edwards & Sons, Inc. are acting as representatives (the
"U.S. Representatives"). Subject to the terms and conditions set forth in the
U.S. Purchase Agreement, and concurrently with the sale of 800,000 shares of
Common Stock to the International Underwriters, the Company and the Selling
Stockholders have severally agreed to sell to the U.S. Underwriters, and the
U.S. Underwriters severally have agreed to purchase, an aggregate of 3,200,000
shares of Common Stock. The public offering price per share of Common Stock
and the underwriting discount per share of Common Stock are identical under
the International Purchase Agreement and the U.S. Purchase Agreement.
In the International Purchase Agreement the several International
Underwriters have agreed, subject to the terms and conditions set forth
therein, to purchase all of the shares of Common Stock being sold pursuant to
such Agreement if any of the shares of Common Stock being sold pursuant to
such Agreement are purchased and in the U.S. Purchase Agreement the several
U.S. Underwriters have agreed, subject to the terms and conditions set forth
therein, to purchase all the shares of Common Stock being sold pursuant to
such agreement if any of the shares of Common Stock being sold pursuant to
such agreement are purchased. Under certain circumstances, the commitments of
nondefaulting U.S. Underwriters and International Underwriters (collectively,
the "Underwriters") may be increased. The closings with respect to the sale of
shares of Common Stock to be purchased by the U.S. Underwriters and the
International Underwriters are conditioned upon one another.
The International Underwriters propose initially to offer the shares of
Common Stock to the public at the public offering price set forth on the cover
page of this Prospectus and to certain dealers (who may include International
Underwriters) at such price less a concession not in excess of $ per share
of Common Stock. The International Underwriters may allow, and such dealers
may reallow, a discount not in excess of
25
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
$ per share of Common Stock to certain other dealers. After the initial
public offering, the public offering price, concession and discount may be
changed.
James T. Hudson, one of the Selling Shareholders, has granted to the
International Underwriters an option to purchase up to an aggregate of 120,000
additional shares of Common Stock, and the U.S. Underwriters an option to
purchase up to an aggregate of 480,000 shares of Common Stock, in each case
exercisable for 30 days after the date hereof, to cover overallotments, if any,
at the public offering price, less the underwriting discount. To the extent
that the International Underwriters exercise this option, each of the
International Underwriters will have a firm commitment, subject to certain
conditions, to purchase approximately the same percentage of such shares of
Common Stock that the number of shares of Common Stock to be purchased by it
shown in the foregoing table bears to the total number of shares of Common
Stock initially offered to the International Underwriters hereby.
The U.S. Underwriters and the International Underwriters have entered into an
Intersyndicate Agreement (the "Intersyndicate Agreement") that provides for the
coordination of their activities. Pursuant to the Intersyndicate Agreement,
sales may be made between the U.S. Underwriters and the International
Underwriters of such number of shares of Common Stock as may be mutually
agreed. The price of any shares of Common Stock so sold shall be the public
offering price, less an amount not greater than the selling concession.
Under the terms of the Intersyndicate Agreement, the U.S. Underwriters and
any dealer to whom they sell shares of Common Stock will not offer to sell or
sell shares of Common Stock to persons who are non-United States or non-
Canadian persons or to persons they believe intend to resell to persons who are
non-United States or non-Canadian persons, and the International Underwriters
and any dealer to whom they sell shares of Common Stock will not offer to sell
or sell shares of Common Stock to United States or Canadian persons or to
persons they believe intend to resell to United States or Canadian persons,
except, in each case, for transactions pursuant to the Intersyndicate
Agreement.
The Company, each executive officer, director of the Company, and beneficial
owners of more than 5% of the outstanding shares of Common Stock, will agree,
for a period of days after the commencement of the public offering of the
shares of Common Stock, not to sell, offer to sell, grant any option for the
sale of, or otherwise dispose of, any shares of Common Stock or securities
convertible into shares of Common Stock, without the prior written consent of
the U.S. Representatives.
The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended, or to contribute to payments the
Underwriters may be required to make in respect thereof.
LEGAL MATTERS
The validity of the shares of common stock offered hereby is being passed
upon for the Company by Wright, Lindsey & Jennings, Little Rock, Arkansas.
Certain legal matters will be passed upon for the Underwriters by Shearman &
Sterling, New York, New York.
INDEPENDENT PUBLIC ACCOUNTANTS
The consolidated balance sheets as of October 3, 1992, as restated and
October 2, 1993, as restated, and the consolidated statements of operations and
cash flows for each of the three years in the period ended October 2, 1993, as
restated, included in this prospectus, have been included herein in reliance on
the report of Coopers & Lybrand, independent accountants, given on the
authority of that firm as experts in auditing and accounting. With respect to
the unaudited interim financial information for the periods ended January 1,
1994, January 2, 1993, April 2, 1994, April 3, 1993, July 2, 1994, and July 3,
1993 incorporated by reference
26
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, IN CONNECTION WITH THE OFFERING MADE HEREBY, AND INFORMATION OR
REPRESENTATIONS NOT HEREIN CONTAINED, IF GIVEN OR MADE, MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDERS OR THE UN-
DERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICI-
TATION OF AN OFFER TO BUY, SHARES IN ANY JURISDICTION WHERE, AS TO ANY PERSON
TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDIC-
TION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS NOT BEEN
ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF.
THERE ARE RESTRICTIONS ON THE OFFER AND SALE OF THE SHARES OF CLASS A COMMON
STOCK IN THE UNITED KINGDOM. ALL APPLICABLE PROVISIONS OF THE FINANCIAL SERV-
ICES ACT 1986 AND THE COMPANIES ACT 1985 WITH RESPECT TO ANYTHING DONE BY ANY
PERSON IN RELATION TO THE SHARES IN, FROM OR OTHERWISE INVOLVING THE UNITED
KINGDOM MUST BE COMPLIED WITH. SEE "UNDERWRITING."
IN THIS PROSPECTUS, REFERENCE TO "DOLLARS" AND "$" ARE TO UNITED STATES DOL-
LARS UNLESS STATED OTHERWISE.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 2
Incorporation of Certain Documents by Reference........................... 2
Prospectus Summary........................................................ 3
Use of Proceeds........................................................... 6
Dividend Policy........................................................... 6
Price Range of Common Stock............................................... 6
Capitalization............................................................ 7
Selected Consolidated Financial Data...................................... 8
Management's Discussion and Analysis of Results of Operations and
Financial Condition...................................................... 9
Business.................................................................. 14
Management................................................................ 19
Selling Stockholders...................................................... 21
Description of Common Stock............................................... 22
Certain United States Federal Tax Considerations for Non-U.S. Holders of
Common Stock............................................................. 23
Underwriting.............................................................. 25
Legal Matters............................................................. 26
Independent Public Accountants............................................ 26
Index to Consolidated Financial Statements................................ F-1
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4,000,000 SHARES
LOGO
CLASS A COMMON STOCK
---------------
PROSPECTUS
---------------
MERRILL LYNCH
INTERNATIONAL LIMITED
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
A.G. EDWARDS & SONS, INC.
, 1994
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses of this offering in connection with this registration statement,
other than underwriting compensation, are estimated as follows:
<TABLE>
<S> <C>
SEC Registration Fee............................................. $33,612
NASD Filing Fee.................................................. 10,248
Blue Sky Fees and Expenses....................................... 17,500
Accounting Fees and Expenses..................................... *
Legal Fees and Expenses.......................................... *
Printing and Engraving........................................... *
Transfer Agent's Fees and Expenses............................... *
Miscellaneous.................................................... *
-------
Total........................................................ $
=======
</TABLE>
- --------
*To be supplied by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Amended and Restated Certificate of Incorporation provides that
a director will not be personally liable for monetary damages to the Company or
its stockholders for each breach of fiduciary duty as a director involving any
act or omission of any such director occurring on or after February 6, 1987,
except for liability (i) for any breach of the director's duty of loyalty to
the Company or its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii)
for paying a dividend or approving a stock repurchase or redemption in
violation of Section 174 of the Delaware Law, or (iv) for any transaction from
which the director derived an improper personal benefit. The Certificate of
Incorporation also provides that directors, officers and employees of the
Company may be indemnified as follows:
The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor
by reason of the fact that he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including
II-1
<PAGE>
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation and
except that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable for
negligence or misconduct in the performance of his duty to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the
case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.
Any indemnification under this paragraph (unless ordered by a court) shall
be made by the corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee or agent
is proper in the circumstances because he has met the applicable standard of
conduct set forth above. Such determination shall be made (1) by the board of
directors by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or (2) if such a quorum is not
obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (3) by the
stockholders.
Expenses incurred by an officer or director in defending a civil or criminal
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding as authorized by the
board of directors in the specific case upon receipt of an undertaking by or
on behalf of such director or officer to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified by the
corporation as authorized in this paragraph. Such expenses incurred by other
employees and agents may be so paid upon such terms and conditions, if any, as
the board of directors deems appropriate.
The Company's directors and officers are also covered by insurance policies
indemnifying them against certain civil liabilities, including liabilities
under the federal securities laws, which might be incurred by them in such
capacity.
Section 7 of each of the U.S. Purchase Agreement and the International
Purchase Agreement filed as Exhibits 1.1 and 1.2, respectively, provide that
the Underwriters named therein will indemnify and hold harmless the Company
and each director, officer or controlling person of the Company from and
against certain liabilities, including certain liabilities under the
Securities Act of 1933, as amended.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
*1.1 --Form of U.S. Purchase Agreement
*1.2 --Form of International Purchase Agreement
3.1 --Restated By-Laws of the Company, as amended to date.
4.1 --Restated Certificate of Incorporation of Hudson Foods, Inc., Section 4 (Incorpo-
rated by reference from Hudson Foods, Inc. Form S-4 Registration Statement No.
33-15274, as amended, filed with the Securities and Exchange Commission on June
23, 1987).
4.2 --Indenture, dated as of October 1, 1986, between Hudson Foods, Inc. and The First
National Bank of Boston (formerly Bank of America National Trust and Savings As-
sociation) (Incorporated by reference from Hudson Foods, Inc. Form S-1 Registra-
tion Statement No. 33-8889, as amended, filed with the Securities and Exchange
Commission on September 19, 1986).
*5.1 --Opinion of Wright, Lindsey & Jennings regarding legality.
15.1 --Letter regarding unaudited interim financial information.
*23.1 --Consent of Wright, Lindsey & Jennings (contained in Exhibit 5.1 hereto).
23.2 --Consent of Coopers & Lybrand, Independent Certified Public Accountants.
24.1 --Powers of Attorney of Messrs. James T. Hudson, Michael T. Hudson, Charles B.
Jurgensmeyer, James R. Hudson, Elmer W. Shannon, Jerry L. Hitt, M.D., Kenneth N.
May and Ms. Jane M. Helmich.
27.1 --Financial Data Schedule (9 months).
27.2 --Financial Data Schedule (12 months).
</TABLE>
- --------
* To be supplied by amendment.
II-2
<PAGE>
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
1. For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in the
form of prospectus filed by Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of the
Registration Statement as of the time it was declared effective;
2. For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof; and
3. For purposes of determining any liability under the Securities Act of
1933, each filing of the Registrant's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 (and where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF ROGERS, STATE OF ARKANSAS, ON OCTOBER 13, 1994.
Hudson Foods, Inc.
(Registrant)
/s/ Charles B. Jurgensmeyer
By __________________________________
Charles B. Jurgensmeyer
Executive Vice President--
Finance(Principal Financial and
Accounting Officer) and Director
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES AND
ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Chairman, Chief Executive
____________________________________ Officer and Director
James T. Hudson (Principal Executive
Officer)
* President, Chief Operating
____________________________________ Officer and Director
Michael T. Hudson
Executive Vice President--
____________________________________ Finance (Principal
Charles B. Jurgensmeyer Financial and Accounting
Officer) and Director
* Director October 13, 1994
____________________________________
James R. Hudson
* Director
____________________________________
Jane M. Helmich
* Director
____________________________________
Elmer W. Shannon
* Director
____________________________________
Jerry L. Hitt, M.D.
* Director
____________________________________
</TABLE> Kenneth N. May
/s/ Charles B. Jurgensmeyer
*By ___________________________
Charles B. Jurgensmeyer,
Attorney-in-Fact
II-4
<PAGE>
EXHIBIT 3.1
HUDSON FOODS, INC.
RESTATED BY-LAWS
(Restated as of February 6, 1987)
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of Wilmington,
County of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such other places both
within and without the State of Delaware as the board of directors may from time
to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of directors
shall be held at Rogers, State of Arkansas, at such place as may be fixed from
time to time by the board of directors, or at such other place either within or
without the State of Delaware as shall be designated from time to time by the
board of directors and stated in the notice of the meeting. Meetings of
stockholders for any other purpose may be held at such time and place, within or
without the State of Delaware, as shall be stated in the notice of the meeting
or in a duly executed waiver of notice thereof. The person presiding over all
meetings of the stockholders shall have the authority to take all actions
reasonably necessary to conduct such
<PAGE>
meetings in an orderly manner, to maintain order in such meetings and to prevent
disruption of such meetings.
Section 2. Annual meetings of stockholders shall be held on the first
Friday of February if not a legal holiday, and if a legal holiday, then on the
next secular day following, at 10:00 a.m., or at such other date and time as
shall be designated from time to time by the board of directors and stated in
the notice of the meeting, at which they shall elect by a plurality vote a board
of directors, and transact such other business as may properly be brought before
the meeting. Other than business placed on the agenda by the board of
directors, no business shall be deemed to have been properly brought before the
annual meeting unless a written proposal for the consideration of such business
shall have been delivered to the secretary of the corporation at least 120 days
in advance of the date set for the annual meeting. The board of directors may
waive the requirement of timely written notice if the party proposing the
business is the record owner at the time of proposal of more than 25 percent of
the voting stock of the corporation.
Section 3. Written notice of the annual meeting stating the place, date
and hour of the meeting shall be given to each stockholder entitled to vote at
such meeting not less than ten nor more than sixty days before the date of the
meeting.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
2
<PAGE>
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the board of
directors, or at the request in writing of stockholders owning a majority in
amount of the entire capital stock of the corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
Section 6. Written notice of a special meeting stating the place, date and
hour of the meeting and the purpose or purposes for which the meeting is called,
shall be given not less than ten nor more than sixty days before the date of the
meeting, to each stockholder entitled to vote at such meeting.
Section 7. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum shall not be present
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or represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting, at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than sixty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder or record entitled to
vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or of
the certificate of incorporation, a different vote is required in which case
such express provision shall govern and control the decision of such question.
Section 10. Unless otherwise provided in the certificate of incorporation
each stockholder shall at every meeting of the stockholders be entitled to one
vote in person or by proxy for each share of the capital stock having voting
power held by such stockholder, but no proxy shall be voted on after three years
from its date, unless the proxy provides for a longer period.
Section 11. Unless otherwise provided in the certificate of incorporation,
any action required to be taken at any annual or special meeting of stockholders
of the corporation, or any action which may be taken at any annual or special
meeting of such stockholders, may
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be taken without a meeting, without prior notice and without a vote, if a
consent in writing, setting forth the action so taken, shall be signed by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted. Prompt notice of
the taking of the corporate action without a meeting by less than unanimous
written consent shall be given to those stockholders who have not consented in
writing.
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the whole board
shall be not less than three and not more than fifteen, and shall be determined
by the board of directors. The directors shall be elected at the annual meeting
of the stockholders, except as provided in Section 2 of this Article, and each
director elected shall hold office until his successor is elected and qualified.
Directors need not be stockholders.
Section 2. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum, or by a sole remaining
director, and the directors so chosen shall hold office until the next annual
election and until their successors are duly elected and shall, qualify, unless
sooner displaced. If there are no directors in office, then an election of
directors may be held in the manner provided by statute. If, at the time of
filling any vacancy or any newly created directorship, the directors then in
office shall constitute less
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than a majority of the whole board (as constituted immediately prior to any such
increase), the Court of Chancery may, upon application of any stockholder or
stockholders holding at least ten percent of the total number of the shares at
the time outstanding having the right to vote for such directors, summarily
order an election to be held to fill any vacancies or newly created
directorships, or to replace the directors chosen by the directors then in
office.
Section 3. The business of the corporation shall be managed by its board
of directors which may exercise all such powers of the corporation and do all
such lawful acts and things as are not by statute or by the certificate of
incorporation or by these by-laws directed or required to be exercised or done
by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 5. The first meeting of each newly elected board of directors
shall be held at such time and place as shall be fixed by the vote of the
stockholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event of the failure of the
stockholders to fix the time or place of such first meeting of the newly elected
board of directors, or in the event such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the board of directors, or as shall be specified in a
written waiver signed by all of the directors.
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Section 6. Regular meetings of the board of directors may be held without
notice at such time and at such place as shall from time to time be determined
by the board.
Section 7. Special meetings of the board may be called by the president on
two days' notice to each director, either personally or by mail or by telegram;
special meetings shall be called by the president or secretary in like manner
and on like notice on the written request of two directors.
Section 8. At all meetings of the board a majority of directors shall
constitute a quorum for the transaction of business and the act of a majority of
the directors present at any meeting at which there is a quorum shall be the act
of the board of directors, except as may be otherwise specifically provided by
statute or by the certificate of incorporation. If a quorum shall not be
present at any meeting of the board of directors, the directors present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 9. Unless otherwise restricted by the certificate of incorporation
or these by-laws, any action required or permitted to be taken at any meeting of
the board of directors or of any committee thereof may be taken without a
meeting, if all members of the board or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the board or committee.
COMMITTEES OF DIRECTORS
Section 10. The board of directors may, by resolution passed by a majority
of the whole board, designate one or more committees, each committee to consist
of one or more of the directors of the corporation. The board may designate one
or more directors as alternate
7
<PAGE>
members of any committee, who may replace any absent or disqualified member at
any meeting of the committee. In the absence of disqualification of a member of
a committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the board of directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the board of directors,
shall have and may exercise all the powers and authority of the board of
directors in the management of the business and affairs of the corporation, and
may authorize the seal of the corporation to be affixed to all papers which may
require it; but no such committee shall have the power or authority in reference
to amending the certificate of incorporation, adopting an agreement of merger or
consolidation, recommending to the stockholders the sale, lease or exchange of
all or substantially all of the corporation's property and assets, recommending
to the stockholders a dissolution of the corporation or a revocation of a
dissolution, or amending the by-laws of the corporation; and, unless the
resolution or the certificate of incorporation expressly so provide, no such
committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the board of directors.
Section 11. Each committee shall keep regular minutes of its meetings and
report the same to the board of directors when required.
8
<PAGE>
COMPENSATION OF DIRECTORS
Section 12. Unless otherwise restricted by the certificate of
incorporation, the board of directors shall have the authority to fix the
compensation of directors. The directors may be paid their expenses, if any, of
attendance at each meeting of the board of directors and may be paid a fixed sum
for attendance at each meeting of the board of directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
REMOVAL OF DIRECTORS
Section 13. Directors may be removed by a majority vote of stockholders
with or without cause.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these by-laws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram.
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<PAGE>
Section 2. Whenever any notice is required to be given under the provisions
of the statutes or of the certificate of incorporation or of these by-laws, a
waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board of
directors and shall be a president, a vice-president, a secretary and a
treasurer. The board of directors may also choose additional vice-presidents,
and one or more assistant secretaries and assistant treasurers. Any number of
offices may be held by the same person, unless the certificate of incorporation
or these by-laws otherwise provide.
Section 2. The board of directors at its first meeting after each annual
meeting of stockholders shall choose a president, one or more vice-presidents, a
secretary and a treasurer.
Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board.
Section 4. The salaries of all officers and agents of the corporation
shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the board
of directors may be
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removed at any time by the affirmative vote of a majority of the board of
directors. Any vacancy occurring in any office of the corporation shall be
filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation (unless the board shall otherwise appoint another officer to serve
as chief executive officer), shall preside at all meetings of the stockholders
and the board of directors, shall have general and active management of the
business of the corporation and shall see that all orders and resolutions of the
board of directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation.
THE VICE-PRESIDENTS
Section 8. In the absence of the president or in the event of his inability
or refusal to act, the vice-president (or in the event there be more than one
vice president, the vice-presidents in the order designated, or in the absence
of any designation, then in the order of their election) shall perform the
duties of the president, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the president. The vice-presidents shall
perform such other duties and have such other powers as the board of directors
may from time to time prescribe.
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THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the board or directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He shall have custody of the
corporate seal of the corporation and he, or an assistant secretary, shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by his signature or by the signature of such assistant
secretary. The board of directors may give general authority to any other
officer to affix the seal of the corporation and to attest the affixing by his
signature.
Section 10. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors (or if
there be no such determination, then in the order of their election), shall, in
the absence of the secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to
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the corporation and shall deposit all monies and other valuable effects in the
name and the credit of the corporation in such depositories as may be designated
by the board of directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account or
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond (which shall be renewed every six years) in such sum and with
such surety or sureties as shall be satisfactory to the board of directors for
the faithful performance of the duties of his office and for the restoration to
the corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
Section 14. The assistant treasurer, or if there shall be more than one,
the assistant treasurers in the order determined by the board of directors (or
if there be no such determination, then in the order of their election) shall,
in the absence of the treasurer or in the event of his inability or refusal to
act, perform the duties and exercise the powers of the treasurer and shall
perform such other duties and have such other powers as the board of directors
may from time to time prescribe.
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ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Every holder of stock in the corporation shall be entitled to
have a certificate, signed by, or in the name of the corporation by, the
chairman or vice-chairman of the board of directors or the president or a vice-
president and the treasurer or an assistant treasurer, or the secretary or an
assistant secretary of the corporation, certifying the number of shares owned by
him in the corporation.
Section 2. Any of or all the signatures on the certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the board of directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or to give the corporation a bond in such sum as it may direct
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<PAGE>
as indemnity against any claim that may be made against the corporation with
respect to the certificate alleged to have been lost, stolen or destroyed.
TRANSFERS OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
FIXING RECORD DATE
Section 5. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.
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REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation, subject to
the provisions of the certificate of incorporation, if any, may be declared by
the board of directors at any, regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
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corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
ANNUAL STATEMENT
Section 3. The board of directors shall present at each annual meeting, and
at any special meeting of the Stockholders when called for by vote of the
stockholders, a full and clear statement of the business and condition of the
corporation.
CHECKS
Section 4. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
FISCAL YEAR
Section 5. The fiscal year of the corporation shall be fixed by resolution
of the board of directors.
SEAL
Section 6. The corporate seal shall have inscribed thereon the name
of the corporation, the year of its organization and the words "Corporate Seal,
Delaware." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
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ARTICLE VIII
AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed or new by-laws
may be adopted by the stockholders or by the board of directors, when such power
is conferred upon the board of directors by the certificate of incorporation, at
any regular meeting of the stockholders or of the board of directors or at any
special meeting of the stockholders or of the board of directors if notice of
such alteration, amendment, repeal or adoption of new by-laws be contained in
the notice of such special meeting.
-----------------------------------------
Secretary
Dated:
-----------------------------------------
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EXHIBIT 15.1
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Hudson Foods, Inc.
Registration on Form S-3
We are aware that our reports dated January 23, 1994, April 25, 1994 and
July 22, 1994 on our reviews of interim financial information of Hudson Foods,
Inc. for the periods ended January 1, 1994, April 2, 1994 and July 2, 1994, and
the comparable periods for the previous fiscal year, and included in the
Company's quarterly reports on Form 10-Q for the quarters then ended are
incorporated by reference in this registration statement. Pursuant to Rule
436(c) under the Securities Act of 1933, this report should not be considered a
part of the registration statement prepared or certified by us within the
meaning of Sections 7 and 11 of that Act.
Coopers & Lybrand L.L.P.
Tulsa, Oklahoma
October 12, 1994
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-3 (File No.
33- ) of our report dated November 2, 1993, on our audits of the
consolidated financial statements, as restated, of Hudson Foods, Inc. We also
consent to the reference to our firm under the caption "Independent Public
Accountants."
Coopers & Lybrand L.L.P.
Tulsa, Oklahoma
October 12, 1994
<PAGE>
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Charles B. Jurgensmeyer and/or Tommy D. Reynolds his true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities to sign a
registration statement on Form S-3, and any or all amendments thereto (including
post-effective amendments), to be filed by Hudson Foods, Inc., with respect to
the offer and sale of shares of Class A common stock, $.01 par value, and to
file same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully for all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute(s) may lawfully do or cause to be done by virtue thereof.
Date: October 3, 1994
/s/ James T. Hudson
- -------------------------------
James T. Hudson
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Charles B. Jurgensmeyer and/or Tommy D. Reynolds his true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities to sign a
registration statement on Form S-3, and any or all amendments thereto (including
post-effective amendments), to be filed by Hudson Foods, Inc., with respect to
the offer and sale of shares of Class A common stock, $.01 par value, and to
file same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully for all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute(s) may lawfully do or cause to be done by virtue thereof.
Date: October 3, 1994
/s/ Michael T. Hudson
- -------------------------------
Michael T. Hudson
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints James T. Hudson and/or Tommy D. Reynolds his true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities to sign a
registration statement on Form S-3, and any or all amendments thereto (including
post-effective amendments), to be filed by Hudson Foods, Inc., with respect to
the offer and sale of shares of Class A common stock, $.01 par value, and to
file same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully for all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute(s) may lawfully do or cause to be done by virtue thereof.
Date: October 3, 1994
/s/ Charles B. Jurgensmeyer
- -------------------------------
Charles B. Jurgensmeyer
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Charles B. Jurgensmeyer and/or Tommy D. Reynolds his true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities to sign a
registration statement on Form S-3, and any or all amendments thereto (including
post-effective amendments), to be filed by Hudson Foods, Inc., with respect to
the offer and sale of shares of Class A common stock, $.01 par value, and to
file same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully for all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute(s) may lawfully do or cause to be done by virtue thereof.
Date: October 3, 1994
/s/ James R. Hudson
- -------------------------------
James R. Hudson
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Charles B. Jurgensmeyer and/or Tommy D. Reynolds his true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities to sign a
registration statement on Form S-3, and any or all amendments thereto (including
post-effective amendments), to be filed by Hudson Foods, Inc., with respect to
the offer and sale of shares of Class A common stock, $.01 par value, and to
file same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully for all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute(s) may lawfully do or cause to be done by virtue thereof.
Date: October 3, 1994
/s/ Jane M. Helmich
- -------------------------------
Jane M. Helmich
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Charles B. Jurgensmeyer and/or Tommy D. Reynolds his true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities to sign a
registration statement on Form S-3, and any or all amendments thereto (including
post-effective amendments), to be filed by Hudson Foods, Inc., with respect to
the offer and sale of shares of Class A common stock, $.01 par value, and to
file same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully for all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute(s) may lawfully do or cause to be done by virtue thereof.
Date: October 3, 1994
/s/ Elmer W. Shannon
- -------------------------------
Elmer W. Shannon
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Charles B. Jurgensmeyer and/or Tommy D. Reynolds his true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities to sign a
registration statement on Form S-3, and any or all amendments thereto (including
post-effective amendments), to be filed by Hudson Foods, Inc., with respect to
the offer and sale of shares of Class A common stock, $.01 par value, and to
file same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully for all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute(s) may lawfully do or cause to be done by virtue thereof.
Date: October 3, 1994
/s/ Jerry L. Hitt, M.D.
- -------------------------------
Jerry L. Hitt, M.D.
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Charles B. Jurgensmeyer and/or Tommy D. Reynolds his true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities to sign a
registration statement on Form S-3, and any or all amendments thereto (including
post-effective amendments), to be filed by Hudson Foods, Inc., with respect to
the offer and sale of shares of Class A common stock, $.01 par value, and to
file same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully for all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute(s) may lawfully do or cause to be done by virtue thereof.
Date: October 3, 1994
/s/ Kenneth N. May
- -------------------------------
Kenneth N. May
Director
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