<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File No. 33-66606
PM HOLDINGS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 76-0407288
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification Number)
1401 S. HANLEY ROAD
ST. LOUIS, MISSOURI 63144
(Address of principal executive offices) (Zip Code)
(314) 768-4100
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such report(s), and (2) has been subject to
such filing requirements for the past 90 days.
Yes...X.... No........
As of August 5, 1996, 453,051 shares of the registrant's common stock, par
value $.01 per share, which is the only class of common stock of the
registrant, were outstanding.
Page 1 of 19 pages
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PM HOLDINGS CORPORATION
<TABLE>
Table of Contents
Form 10-Q for the Quarterly Period
Ended June 30, 1996
<CAPTION>
Page
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<S> <C>
PART I FINANCIAL INFORMATION
- ------ ---------------------
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets at June 30,
1996 and December 31,1995 3
Consolidated Statements of Operations for
the three months ended June 30, 1996 and
1995 and six months ended June 30, 1996
and 1995 4
Consolidated Statements of Cash Flows for
the six months ended June 30, 1996 and
1995 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
PART II OTHER INFORMATION
- ------- -----------------
Item 4. Submission of Matters to a Vote of Security
Holders 15
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURE 17
</TABLE>
2
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<TABLE>
PM HOLDINGS CORPORATION
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
JUNE 30, 1996 AND DECEMBER 31, 1995
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<CAPTION>
DECEMBER 31, 1995
(DERIVED FROM
AUDITED
FINANCIAL
JUNE 30, 1996 STATEMENTS)
------------- -----------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 10,640 $ 21,479
Accounts receivable, net 49,997 55,499
Inventories 68,321 61,437
Prepaid expenses and other current assets 17,964 16,088
----------------------------------------
TOTAL CURRENT ASSETS 146,922 154,503
Property, plant and equipment, net 254,504 266,769
Intangible assets, net 151,232 160,439
Other assets 54,717 55,954
----------------------------------------
TOTAL ASSETS $ 607,375 $ 637,665
========================================
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 54,856 $ 75,152
Current portion of long-term debt 24,606 27,717
Bank borrowings under Revolving Credit Facility 34,000 6,000
Customer advance payments 3,018 11,136
Other current liabilities 24,621 32,342
----------------------------------------
TOTAL CURRENT LIABILITIES 141,101 152,347
Other liabilities 62,206 60,338
Long-term debt 358,903 371,306
Common stock held by ESOP 35,943 31,000
Less unearned ESOP compensation (3,523) (1,483)
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value: 200,000
shares authorized, none issued or outstanding
Common stock, $0.01 par value: 800,000
shares authorized, 453,051 and 452,951 shares
issued and outstanding at June 30, 1996 and
December 31, 1995, respectively 5 5
Additional paid-in capital 34,024 38,769
Retained earnings deficit (21,284) (14,617)
----------------------------------------
TOTAL STOCKHOLDERS' EQUITY 12,745 24,157
========================================
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 607,375 $ 637,665
========================================
(SEE ACCOMPANYING NOTES)
</TABLE>
3
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<TABLE>
PM HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<CAPTION>
THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1996 1995 1996 1995
------------ ------------ ---------- ----------
<S> <C> <C> <C> <C>
NET SALES $ 293,811 $ 241,032 $ 602,013 $ 492,562
COSTS AND EXPENSES:
Cost of products sold 254,285 197,658 515,672 404,034
Marketing, distribution and advertising 21,135 20,841 42,799 39,962
General and administrative 6,503 8,846 16,354 16,854
Amortization of intangibles 4,900 4,885 9,765 9,040
Research and development 1,752 1,640 3,557 3,109
Other (income) expense, net 570 2,491 970 2,407
------------------------------------------------------------
289,145 236,361 589,117 475,406
------------------------------------------------------------
OPERATING INCOME 4,666 4,671 12,896 17,156
Interest expense 10,994 11,219 21,820 21,879
------------------------------------------------------------
Loss before income taxes (6,328) (6,548) (8,924) (4,723)
Income tax benefit (1,794) (2,627) (2,783) (1,555)
------------------------------------------------------------
NET LOSS $ (4,534) $ (3,921) $ (6,141) $ (3,168)
============================================================
NET LOSS PER COMMON SHARE $ (10.31) $ (9.20) $ (13.86) $ (15.03)
============================================================
(SEE ACCOMPANYING NOTES)
</TABLE>
4
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<TABLE>
PM HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(DOLLARS IN THOUSANDS)
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, 1996 JUNE 30, 1995
------------- -------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (6,141) $ (3,168)
Adjustment to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation & amortization 29,734 23,474
Compensation under ESOP 2,779 5,216
Accretion of discount on Discount Debentures 3,742 3,320
Other (38,211) (28,140)
----------------------------------------
Net cash provided by (used in) operating activities $ (8,097) $ 702
INVESTING ACTIVITIES:
Purchase of Golden Sun Acquisition Company -- (57,100)
Other (6,545) (7,102)
----------------------------------------
Net cash used in investing activities $ (6,545) $ (64,202)
FINANCING ACTIVITIES:
Proceeds from revolving credit facility 28,000 27,000
Proceeds from term loans -- 45,000
Loan to ESOP (4,819) (4,000)
Other (19,378) (15,819)
----------------------------------------
Net cash provided by financing activities $ 3,803 $ 52,181
Decrease in cash and cash equivalents (10,839) (11,319)
Cash and cash equivalents at beginning of period 21,479 22,597
----------------------------------------
Cash and cash equivalents at end of period $ 10,640 $ 11,278
========================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest $ 16,131 $ 16,604
Income taxes 4,643 3,735
(SEE ACCOMPANYING NOTES)
</TABLE>
5
<PAGE> 6
PM HOLDINGS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
1. BASIS OF PRESENTATION
PM Holdings Corporation ("Holdings") acquired Purina Mills, Inc.
("Purina Mills" or the "Company") in September 1993. On March 15,
1995, the Company acquired Golden Sun Acquisition Company ("Golden
Sun"), the parent company of Golden Sun Feeds, Inc. and its wholly
owned subsidiaries. As used herein, the term "Company" refers to
Purina Mills, Inc. and its subsidiaries. Unless the context
otherwise requires, the term "Holdings" refers to PM Holdings
Corporation and its subsidiaries. Holdings has no subsidiaries
other than the Company and conducts no business other than that of
the Company.
The consolidated balance sheet at June 30, 1996 and the
consolidated statements of operations and cash flows for all
periods presented are unaudited and reflect all adjustments,
consisting of normal recurring items, which management considers
necessary for a fair presentation. Operating results for the
fiscal 1996 interim periods are not necessarily indicative of
results to be expected for the fiscal year ending December 31,
1996. The consolidated balance sheet at December 31, 1995 was
derived from the Holdings' December 31, 1995 audited financial
statements, but does not include all disclosures required by
generally accepted accounting principles.
Although Holdings believes the disclosures are adequate, certain
information and disclosures normally included in the notes to the
financial statements have been condensed or omitted as permitted by
the rules and regulations of the Securities and Exchange
Commission. The accompanying unaudited financial statements should
be read in conjunction with the financial statements contained in
the Annual Report on Form 10-K for the year ended December 31,
1995.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements of Holdings include the
accounts of all majority-owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated.
Reclassifications
Certain reclassifications have been made to the prior period
consolidated financial statements to conform to the consolidated
financial statement presentation at June 30, 1996 and for the three
and six months then ended.
6
<PAGE> 7
Net Loss per Common Share
Net loss per common share for the three and six months ended June
30, 1996 and 1995 is computed based on the weighted average number
of common shares outstanding during the period. Such number of
shares represents the average outstanding shares, net of the shares
held by the Employee Stock Ownership Plan (the "ESOP") and not
allocated to employees (the "Unreleased Shares").
For purposes of computing net loss per common share, net loss has
been increased by an amount equal to the fair market value of
Released Shares (as hereinafter defined) at the end of the period,
minus the sum of the amount previously recognized as compensation
expense with respect to Released Shares and the amount of
appreciation in value of Released Shares in prior periods.
"Released Shares" are shares held by the ESOP but allocated to
employees. The weighted average number of outstanding shares and
computation of the net loss per common share is as follows:
<TABLE>
(Dollars in thousands, except per share amounts)
<CAPTION>
THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, 1996 JUNE 30, 1995 JUNE 30, 1996 JUNE 30, 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Average outstanding shares 439,875 426,283 443,188 417,133
Net income (loss) per consoli-
dated statement of operations $ (4,534) $ (3,921) $ (6,141) $ (3,168)
Less appreciation in value of
Released Shares during the
period in excess of amounts
recognized as compensation
expense -- -- -- $ (3,102)
----------------------------------------------------------------------
Net loss for purposes of com-
puting net loss per share $ (4,534) $ (3,921) $ (6,141) $ (6,270)
======================================================================
Net loss per common share $ (10.31) $ (9.20) $ (13.86) $ (15.03)
======================================================================
</TABLE>
3. INVENTORIES
Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
JUNE 30, 1996 DECEMBER 31, 1995
------------- -----------------
<S> <C> <C>
Finished goods $ 20,465 $ 19,867
Raw materials 47,856 41,570
--------------------------------------
Total inventories $ 68,321 $ 61,437
======================================
</TABLE>
7
<PAGE> 8
4. PROPERTY, PLANT AND EQUIPMENT
During the first six months of 1996 the Company made the decision
to discontinue all manufacturing operations at its facility in Iowa
Falls, Iowa and at Cole Grain Company in Muskogee, Oklahoma. Cole
brand products and products for distribution to Iowa Falls'
customers will be manufactured at the Company's other facilities.
Under Statement of Financial Accounting Standards No. 121 ("SFAS
121"), the Company has recorded a loss of $3.5 million on these
manufacturing assets, representing the amount by which the book
value exceeds the estimated net realizable value. The value of the
assets awaiting disposition is based on estimates of Company
management. The $3.5 million expense is included in other (income)
expense in the financial statement for the six month period ended
June 30, 1996. No other significant costs are anticipated in
connection with this decision.
5. LONG-TERM DEBT
The Company is required to make annual supplemental repayments
under its $130.0 million seven-year term loan (the "Senior Term
Loan") with a group of lending banks, in amounts equal to 50% of
Excess Cash Flow (as defined in the Credit Agreement [defined
below]). Based on Excess Cash Flow for the initial period
September 27, 1993 through December 31, 1994, a supplemental
repayment of $17.9 million was required. In 1994 the Company made
a $12.0 million prepayment with the remaining annual supplemental
repayment of $5.9 million being paid on May 1, 1995. The annual
supplemental repayment of $9.8 million for the year 1995 was paid
on April 30, 1996.
6. COMMON STOCK HELD BY THE ESOP
Common stock held by the ESOP (100,000 shares at December 31, 1995
and 115,946 shares at June 30, 1996) and valued at its fair market
value has been classified outside of permanent equity as, under
certain conditions, participants may require the Company to
purchase for cash common stock distributed to them by the ESOP.
The unearned compensation, being the fair market value of
Unreleased Shares of approximately $3.5 million at June 30, 1996
and $1.5 million at December 31, 1995, is presented in the
consolidated balance sheet as a reduction to common stock held by
the ESOP. The increase in unearned compensation is due to the
purchase of 15,946 shares of common stock by the ESOP in 1996.
Funds for such purchase were primarily from proceeds of $4.8
million in loans from the Company to the ESOP.
8
<PAGE> 9
7. SUMMARIZED FINANCIAL INFORMATION
Summarized financial information for the Company at June 30, 1996,
for the three and six-month periods then ended, and at December 31,
1995 and the three and six-month periods ended June 30, 1995 is as
follows (in thousands):
<TABLE>
<CAPTION>
JUNE 30, 1996 DECEMBER 31, 1995
------------- -----------------
<S> <C> <C>
BALANCE SHEET DATA:
Current assets $ 148,982 $ 156,568
Noncurrent assets 452,062 475,675
Current liabilities 141,321 152,549
Noncurrent liabilities 356,688 370,966
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED
STATEMENTS OF OPERATIONS DATA: JUNE 30, 1996 JUNE 30, 1995 JUNE 30, 1996 JUNE 30, 1995
- ----------------------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net sales $ 293,811 $ 241,032 $ 602,013 $ 492,562
Costs and expenses 289,099 234,019 589,090 473,058
Net income (loss) (3,219) (1,253) (3,601) 606
</TABLE>
9
<PAGE> 10
ITEM 2 - MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Overview
The Company develops, manufactures and markets a comprehensive line
of animal nutrition products for dairy cattle, beef cattle, hogs,
horses and poultry, as well as specialty feeds for rabbits, zoo
animals, birds, fish and pets. For the year ended December 31,
1995 the product-mix by volume was approximately 25% for dairy
cattle, 29% for beef cattle, 21% for hogs, 7% for horses, 8% for
poultry and 10% for all others.
The feed industry generally prices products on the basis of
aggregate ingredient cost plus a dollar amount margin, rather than
a gross margin percentage. As ingredient prices fluctuate, the
changes are generally passed on to customers through weekly changes
in the Company's price lists. Feed tonnage and total income over
ingredient cost ("IOIC"), which is net sales minus cost of
ingredients, and gross profit (IOIC less manufacturing costs),
rather than sales dollars, are the key indicators of performance
because of the distortions in sales dollars caused by changes in
commodity prices and product-mix between complete feed and
concentrate products, to which customers add their own base
ingredients, such as corn and other grains. When the price of
grains has been relatively high, more of the Company's customers
have tended to purchase complete rations and the Company's sales
volume has been higher. When the price of grains has been
relatively low, more of the Company's customers have tended to use
their own grains and mix them with the Company's higher-margin
concentrates, resulting in lower sales volume but relatively higher
overall unit margins.
Three Months Ended June 30, 1996 Compared to Three Months Ended
June 30, 1995
Gross profit decreased $3.8 million, or 8.9% over the comparable
1995 period. Average feed IOIC per ton was $60.89, a 2.1% decrease
over the three-month period ended June 30, 1995, as a result of a
shift in purchases to more complete products and the price
pressures due to the unusually high commodity prices. Overall
volume was 1.17 million tons during the quarter ended June 30,
1996, a 1.0% decrease compared to the 1995 period, as product sale
decreases in dairy, laying chicken, meatbird, specialty and other
offset the increases in beef cattle, hog and horse.
Beef cattle tons increased 1.5% from the 1995 period due primarily
to the drought in the southwest in 1996. Dairy cattle tons
decreased by .8% with IOIC per ton also decreasing 6.9% due to a
product-mix shift toward complete products and the extremely high
commodity prices. Hog volume increased .4% but IOIC per ton
decreased 4.7% again being affected by commodity prices.
10
<PAGE> 11
Laying chicken and meatbird volume decreased 10.5% compared to the
1995 period and reflects the Company's decision to less
aggressively pursue this lower margin business and the termination
of the lease of a plant manufacturing poultry products in the third
quarter of 1995. Horse volume increased 5.4% over the 1995 period,
continuing its growth and reflecting the aggressive promotion of
these products. Specialty and other volume decreased 5.0% over the
1995 period.
Cost of products sold increased $56.6 million over the 1995 period,
reflecting the unusually large increase in ingredient costs.
Manufacturing expenses also increased $1.2 million primarily as a
result of additional depreciation expense on facilities in 1996.
The total of marketing, distribution and advertising, general and
administrative, and research and development costs decreased $1.9
million as the expense for the 1995 period included $1.0 million
additional non-cash compensation expense related to the ESOP and
$.9 million in additional administrative costs.
Other (income) expense for the 1996 period includes the $2.0
million loss on the write-down of the Iowa Falls manufacturing
facility. This is offset by $1.4 million of income related to
service fees and profits from marketing arrangements and joint
venture income. For the comparable 1995 period, service fees and
profits from marketing arrangements and joint ventures approximated
break-even with the $2.5 million loss for the period being
primarily attributable to the aborted Ralston international agri-
business acquisition.
Interest expense decreased as a result of an approximate 1.0%
decrease in the interest rate on the Senior Term Loan over 1995
offset partially by increased accretion on the Discount Debentures
(defined below).
The Company's effective income tax rate exceeds the statutory rate
in 1996 due to the amortization of goodwill not being allowed as a
tax deduction and the loss of state tax benefits attributable to
the interest expense deduction for the accretion of discount on
Holdings 11 1/2% Series B Subordinated Discount Debentures due 2005
(the "Discount Debentures").
Six Months Ended June 30, 1996 Compared to Six Months Ended June
30, 1995
Gross profit decreased $2.2 million, or 2.5% over the comparable
1995 period. Average feed IOIC per ton was $59.17, approximately
equal to the six-month period ended June 30, 1995. Overall volume
was 2.5 million tons during the quarter ended June 30, 1996, a 2.1%
increase compared to the 1995 period. The increase is attributable
to the addition of Golden Sun with the remaining business
approximating the same volume as the comparable 1995 period.
Beef cattle tons increased 10.1% from the 1995 period as a result
of more normal winter temperatures compared to the unseasonably
mild winter temperatures during the 1995 period. However, IOIC on
cattle tons decreased 6.0% per ton due to the
11
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significant increase in commodity prices. Dairy cattle tons decreased
slightly with IOIC per ton decreasing 8.4% due to a product-mix shift
toward complete products and price pressures caused by unusually high
commodity prices. Hog volume increased 3.8% due to the addition of
Golden Sun with IOIC per ton also increasing 1.8% due primarily to
the higher unit margin of Golden Sun products.
Laying chicken and meatbird volume decreased 16.3% compared to the
1995 period and reflects the Company's decision to less
aggressively pursue this lower margin business and the termination
of the lease of a plant manufacturing poultry products in the third
quarter of 1995. Horse volume increased 4.5% over the 1995 period,
continuing its growth and reflecting the aggressive promotion of
these products. Specialty and other volume decreased .8% over the
1995 period.
Cost of products sold increased $111.6 million over the 1995
period, reflecting the unusually large increase in ingredient
costs. Manufacturing expenses also increased $3.6 million, $1.7
million being attributable to the additional Golden Sun business
and operating its facilities in 1996, and $1.7 million being
attributable to additional depreciation expense. The total of
marketing, distribution and advertising, general and
administrative, and research and development costs increased $2.8
million as the expense for the 1996 period included the additional
costs of $1.8 million associated with the Golden Sun operations and
an increased overall sales force versus the comparable 1995 period.
Other (income) expense for the 1996 period includes the $3.5
million loss on the write-down of the Cole Grain and Iowa Falls
manufacturing facilities. This is offset by $2.5 million of income
related to service fees and profits from marketing arrangements and
joint venture income. For the comparable 1995 period, service fees
and profits from marketing arrangements and joint ventures
approximated break-even with the $2.4 million loss primarily
representing costs associated with the aborted Ralston
international agri-business acquisition.
Interest expense increased as a result of increased accretion on
the Discount Debentures (defined below) and the increased
borrowings related to the acquisition of Golden Sun. Such increase
was mostly offset by an approximate .9% decrease in the interest
rate on the Senior Term Loan over 1995.
The Company's effective income tax rate exceeds the statutory rate
in both the 1996 and 1995 periods due to the amortization of
goodwill not being allowed as a tax deduction and the loss of state
tax benefits attributable to the interest expense deduction for the
accretion of discount on Holdings 11 1/2% Series B Subordinated
Discount Debentures due 2005 (the "Discount Debentures").
12
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LIQUIDITY AND CAPITAL RESOURCES
For the six months ended June 30, 1996, net cash provided by
operations before the effects of changes in operating assets and
liabilities was $26.0 million, compared to $27.4 million in the
1995 period. The 1996 decrease was primarily due to reduced
operating income.
The Credit Agreement between the Company and a group of lending
banks (The "Credit Agreement") contains covenants that require the
Company to limit capital expenditures to $20.0 million per year.
These expenditures are permitted subject to compliance with certain
financial covenants and may be increased under certain conditions.
As a result of the annual supplemental repayment based on Excess
Cash Flow, the Company has increased its capital expenditure
allowance by approximately $9.8 million for the period May 1, 1996
to April 30, 1997. The Company currently anticipates that its
total 1996 capital expenditures will approximate $24.0 million,
inclusive of approximately $12.1 million allocated for construction
of new plants in Statesville, NC and Hagerstown, MD. The Company
plans to fund capital expenditures by using internally generated
funds, borrowings from the sale of Industrial Revenue Bonds and, if
necessary, borrowing capacity under the Revolving Credit Facility
created pursuant to the Credit Agreement. The Credit Agreement was
amended on June 28, 1996 to increase the borrowing capacity under
the Revolving Credit Facility from $50.0 million to $65.0 million.
At June 30, 1996 the Company had approximately $10.6 million in
cash and cash equivalents on hand, and approximately $14.1 million
(after giving effect to borrowing base limitations) was available
for borrowings under the Revolving Credit Facility.
Net cash used in investing activities for purchases of property,
plant and equipment was $6.5 million for the six-months ended June
30, 1996 compared to $7.1 million for the six-month period ended
June 30, 1995. In March 1995 the Company purchased all of the
outstanding stock of Golden Sun. Proceeds for the purchase were
obtained from a borrowing of $45.0 million under its Senior Term
Loan and a borrowing of $15.0 million under the Revolving Credit
Facility.
Net cash provided by financing activities in the six months ended
June 30, 1996 includes debt repayments of $19.4 million as compared
to $15.8 million for the comparable 1995 period. Additionally, the
Company loaned $4.8 million to the ESOP for the purchase of 15,546
shares of common stock from existing shareholders.
The Company's cash and cash equivalents decreased from the amount
at year-end as a result of the repayment of $19.4 million in debt,
the loan to the ESOP, and the normal decrease in prepaid feed
purchases from such amount at year-end. The Company operates with
a relatively low working capital level because a majority of its
sales are made on terms whereby customers receive a 3% discount if
payment is received immediately upon shipment of feed products, and
raw ingredients are normally purchased shortly prior to
manufacturing and shipment.
13
<PAGE> 14
Since the Acquisition, liquidity needs have been and will continue
to be met through internally generated funds and, to the extent
necessary, borrowings under the Revolving Credit Facility.
Holdings and the Company's ability to obtain additional financing
in the future for working capital, capital expenditures,
acquisitions and general corporate purposes, should they need to do
so, may be affected by cash requirements for debt service. The
Credit Agreement and the Indenture relating to the Company's 10
1/2% Senior Subordinated Notes due 2003 (the "Notes Indenture")
contain numerous financial and operating covenants, including, but
not limited to, restrictions on the Company's ability to incur
indebtedness, pay dividends, create liens, sell assets, engage in
mergers and acquisitions, and refinance existing indebtedness. The
Indenture relating to the Discount Debentures (the "Debenture
Indenture") and Holdings' guaranty of the Credit Agreement have
covenants binding Holdings that restrict similar types of matters.
Holdings and the Company's ability to meet their debt service
obligations and to comply with the terms of these covenants depends
on the future performance of the Company.
The Credit Agreement requires that half of Excess Cash Flow (as
defined) be used to repay the Senior Term Loan, with the remaining
Excess Cash Flow available for use for additional capital
expenditures, for acquisitions or for other purposes. The first
mandatory supplemental repayment of Excess Cash Flow was for the
period from September 1, 1993 to December 31, 1994 and totaled
$17.9 million. In 1994 the Company made a $12.0 million prepayment
with the remaining annual supplemental repayment of $5.9 million
being paid on May 1, 1995. The next supplemental repayment for the
year 1995 totals $9.8 million and was paid on April 30, 1996.
The Credit Agreement, the Notes Indenture and the Debenture
Indenture contain provisions that restrict the payment of advances
and loans from the Company to Holdings. Holdings conducts no
business other than its ownership of the Company's common stock.
Holdings has no direct funded debt obligation other than the
Discount Debentures. As those Discount Debentures do not require
any cash payments of debt service prior to 2001, the restrictive
covenants described above should not limit Holdings' ability to
meet its obligations.
14
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PART II - OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The annual meeting of the stockholders of Holdings was held
on April 19, 1996. At the meeting the following persons
were elected to serve as directors of Holdings until the
1997 annual meeting of stockholders and until their
successors are duly elected and qualified: Paul F.
Cornelsen, David L. Abbott, Allan R. Dragone, Frank
Hevrdejs, William A. McMinn, William C. Oehmig, Jo Ann Smith
and Gene G. Stoever.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT PAGE NUMBER OR
NUMBER DESCRIPTION INCORPORATION BY REFERENCE TO
- -------------------------------------------------------------------------------------------------------------
<C> <S> <C>
3.1 Restated Certificate of Incorporation of Filed as Exhibit 3.1 to the
Holdings Registration Statement on
Form S-1 of Holdings and PMI,
Registration No. 33-66606 and
incorporated herein by
reference
3.2 Bylaws of Holdings Filed as Exhibit 3.3 to the
Registration Statement on
Form S-1 of Holdings and PMI,
Registration No. 33-66606 and
incorporated herein by
reference
4.1 Indenture by and between Holdings and Filed as Exhibit 4.1 to the
NationsBank of Texas, National Association, as Registration Statement on
Trustee, with respect to the 11 1/2% Series A Form S-1 of Holdings,
and Series B Discount Debentures Registration No. 33-70920 and
incorporated herein by
reference
4.2 Indenture dated as of September 27, 1993 by Filed as Exhibit 4.1 to the
and between the Company and IBJ Schroder Bank Current Report on Form 8-K of
& Trust Company, as Trustee, with respect to Holdings dated September 27,
the 10 1/4% Senior Subordinated Notes due 1993 and incorporated herein
2003, including the form of Note and guaranty by reference
of Holdings
4.3 Stockholders Agreement among Holdings and Filed as Exhibit 4.4 to the
certain holders of Holdings Common Stock Current Report on Form 8-K of
effective as of September 27, 1993 Holdings dated September 27,
1993 and incorporated herein
by reference
4.4 Employee Stockholders' Agreement among Filed as Exhibit 4.5 to the
Holdings and certain holders of Holdings Current Report on Form 8-K of
Common Stock effective as of September 27, Holdings dated September 27,
1993 1993 and incorporated herein
by reference
15
<PAGE> 16
<CAPTION>
EXHIBIT PAGE NUMBER OR
NUMBER DESCRIPTION INCORPORATION BY REFERENCE TO
- -------------------------------------------------------------------------------------------------------------
<C> <S> <C>
4.5 Registration Rights Agreement among Holdings Filed as Exhibit 4.6 to the
and certain holders of Holdings Common Stock Current Report on Form 8-K of
effective as of September 27, 1993 Holdings dated September 27,
1993 and incorporated herein
by reference
4.6 Registration Rights Agreement among Holdings Filed as Exhibit 4.8 to the
and the holders of Holdings Common Stock Current Report on Form 8-K of
issued as a part of the Units effective as of Holdings dated September 27,
September 27, 1993 1993 and incorporated herein
by reference
10.1 Ninth Amendment dated as of March 22, 1996 to Filed as Exhibit 10.1 to the
Credit Agreement dated as of September 27, Quarterly Report on Form 10-Q
1993 (the "Credit Agreement") among the filed by Holdings on May 2,
Company, the banks named therein and Texas 1996, and incorporated herein
Commerce Bank National Association, as by reference.
administrative and syndication agent, and the
CIT Group/Business Credit, Inc., as collateral
agent (collectively, the "Agents")
10.2 <F*> Tenth Amendment dated as of June 28, 1996 to
Credit Agreement dated as of September 27,
1993 (the "Credit Agreement") among the
Company, the banks named therein and Texas
Commerce Bank National Association, as
administrative and syndication agent, and the
CIT Group/Business Credit, Inc., as collateral
agent (collectively, the "Agents")
27.1 <F*> Financial Data Schedule
<FN>
- --------------------
<F*> Filed herewith
</TABLE>
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter ended
June 30, 1996.
16
<PAGE> 17
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
PM HOLDINGS CORPORATION
Date: August 5, 1996 /s/Ian R. Alexander
-------------------
Ian R. Alexander
Executive Vice President and
Chief Financial Officer
17
<PAGE> 18
<TABLE>
EXHIBIT INDEX
<CAPTION>
EXHIBIT PAGE NUMBER OR
NUMBER DESCRIPTION INCORPORATION BY REFERENCE TO
- -------------------------------------------------------------------------------------------------------------
<C> <S> <C>
3.1 Restated Certificate of Incorporation of Filed as Exhibit 3.1 to the
Holdings Registration Statement on
Form S-1 of Holdings and PMI,
Registration No. 33-66606 and
incorporated herein by
reference
3.2 Bylaws of Holdings Filed as Exhibit 3.3 to the
Registration Statement on
Form S-1 of Holdings and PMI,
Registration No. 33-66606 and
incorporated herein by
reference
4.1 Indenture by and between Holdings and Filed as Exhibit 4.1 to the
NationsBank of Texas, National Association, as Registration Statement on
Trustee, with respect to the 11 1/2% Series A Form S-1 of Holdings,
and Series B Discount Debentures Registration No. 33-70920 and
incorporated herein by
reference
4.2 Indenture dated as of September 27, 1993 by Filed as Exhibit 4.1 to the
and between the Company and IBJ Schroder Bank Current Report on Form 8-K of
& Trust Company, as Trustee, with respect to Holdings dated September 27,
the 10 1/4% Senior Subordinated Notes due 1993 and incorporated herein
2003, including the form of Note and guaranty by reference
of Holdings
4.3 Stockholders Agreement among Holdings and Filed as Exhibit 4.4 to the
certain holders of Holdings Common Stock Current Report on Form 8-K of
effective as of September 27, 1993 Holdings dated September 27,
1993 and incorporated herein
by reference
4.4 Employee Stockholders' Agreement among Filed as Exhibit 4.5 to the
Holdings and certain holders of Holdings Current Report on Form 8-K of
Common Stock effective as of September 27, Holdings dated September 27,
1993 1993 and incorporated herein
by reference
4.5 Registration Rights Agreement among Holdings Filed as Exhibit 4.6 to the
and certain holders of Holdings Common Stock Current Report on Form 8-K of
effective as of September 27, 1993 Holdings dated September 27,
1993 and incorporated herein
by reference
18
<PAGE> 19
<CAPTION>
EXHIBIT PAGE NUMBER OR
NUMBER DESCRIPTION INCORPORATION BY REFERENCE TO
- -------------------------------------------------------------------------------------------------------------
<C> <S> <C>
4.6 Registration Rights Agreement among Holdings Filed as Exhibit 4.8 to the
and the holders of Holdings Common Stock Current Report on Form 8-K of
issued as a part of the Units effective as of Holdings dated September 27,
September 27, 1993 1993 and incorporated herein
by reference
10.1 Ninth Amendment dated as of March 22, 1996 to Filed as Exhibit 10.1 to the
Credit Agreement dated as of September 27, Quarterly Report on Form 10-Q
1993 (the "Credit Agreement") among the filed by Holdings on May 2,
Company, the banks named therein and Texas 1996, and incorporated herein
Commerce Bank National Association, as by reference.
administrative and syndication agent, and the
CIT Group/Business Credit, Inc., as collateral
agent (collectively, the "Agents")
10.2 <F*> Tenth Amendment dated as of June 28, 1996 to
Credit Agreement dated as of September 27,
1993 (the "Credit Agreement") among the
Company, the banks named therein and Texas
Commerce Bank National Association, as
administrative and syndication agent, and the
CIT Group/Business Credit, Inc., as collateral
agent (collectively, the "Agents")
27.1 <F*> Financial Data Schedule
<FN>
- --------------------
<F*> Filed herewith
</TABLE>
19
<PAGE> 1
TENTH AMENDMENT TO
CREDIT AGREEMENT
This TENTH AMENDMENT TO CREDIT AGREEMENT (this "Amendment")
---------
dated as of June 28, 1996, is among PURINA MILLS, INC., a Delaware
corporation and successor by merger to PMI Acquisition Corporation
(the "Borrower"), the financial institutions listed on the
--------
signature pages hereof (collectively, the "Lenders" and
-------
individually, a "Lender"), TEXAS COMMERCE BANK NATIONAL
------
ASSOCIATION, a national banking association ("TCB"), in its
---
capacity as administrative and syndication agent (in such capacity,
the "Agent") for the Lenders hereunder, and THE CIT GROUP/BUSINESS
-----
CREDIT, INC., a New York corporation ("CIT"), in its capacity as
---
collateral agent (in such capacity, the "Collateral Agent") for the
----------------
Lenders hereunder.
PRELIMINARY STATEMENT. The Borrower, the Lenders, the Agent,
and the Collateral Agent are parties to the Credit Agreement dated
as of September 27, 1993, as amended by the First Amendment to
Credit Agreement dated as of December 1, 1993, the Second Amendment
to Credit Agreement dated as of March 31, 1994, the Third Amendment
to Credit Agreement dated as of April 21, 1994, the Fourth
Amendment to Credit Agreement dated as of November 15, 1994, the
Fifth Amendment to Credit Agreement dated as of January 10, 1995,
the Sixth Amendment to Credit Agreement dated March 15, 1995 to be
effective as of January 31, 1995, the Seventh Amendment to Credit
Agreement dated as of March 15, 1995, the Eighth Amendment to
Credit Agreement dated as of May 31, 1995 and the Ninth Amendment
to Credit Agreement dated as of March 22, 1996 (as so amended, the
"Credit Agreement"; capitalized terms used herein and not otherwise
----------------
defined herein shall have the meanings assigned to them in the
Credit Agreement) and each of PM Holdings Corporation, a Delaware
corporation, Carolina Agri-Products, Inc., a Delaware corporation,
Coastal Ag-Development, Inc., a North Carolina corporation, PMI
Feeds, Inc., a Delaware corporation, PMI Nutrition, Inc., a
Delaware corporation, Purina Livestock Management Services, Inc.,
a Texas corporation, Cole Grain Company, Inc. (formerly known as
Spartan Grain & Feed Co.), a Delaware corporation, and Earth City
Resources, Inc., a Delaware corporation, have guaranteed the
obligations of the Borrower under the Credit Agreement and the
Notes pursuant to Guaranty Agreements each dated as of September
27, 1993 and as may be amended from time to time and Golden Sun
Feeds, Inc., a Delaware corporation, and Golden Sun Finance, Inc.,
an Iowa corporation, have guaranteed the obligations of the
Borrower under the Credit Agreement and the Notes pursuant to a
Guaranty Agreement dated as of March 15, 1995 and as may be amended
from time to time (all such foregoing corporations entering into
such guaranty agreements collectively hereinafter called, the
"Guarantors")
----------
The Borrower has requested that the Lenders make the changes
to the Credit Agreement set forth in this Amendment. The Lenders
have consented to such requests, subject to the terms and
conditions of this Amendment.
1
<PAGE> 2
SECTION 1. Amendment of the Credit Agreement.
---------------------------------
(a) Section 1.1 of the Credit Agreement is hereby amended by
the addition of the following proviso to the end of the definition
for the defined term "Letter of Credit Obligations":
; provided that "Letter of Credit Obligations" shall not
--------
include IRB Letter of Credit Obligations.
(b) Section 1.1 of the Credit Agreement is hereby amended by
restating the definition for the defined term "Revolving Credit
Commitment" to read in its entirety as follows:
"Revolving Credit Commitment" shall mean, as to any Lender,
---------------------------
such Lender's Pro Rata Percentage of $65,000,000 on June
28, 1996, as set forth opposite such Lender's name under
the heading "Revolving Credit Commitment" on Schedule 1.1
------------
hereto, as such amount may be reduced or terminated from
time to time pursuant to Sections 4.4 or 12.1 hereof, and
"Revolving Credit Commitments" means, collectively, the
----------------------------
Revolving Credit Commitments for all the Lenders.
(c) Section 1.1 of the Credit Agreement is hereby amended by
the addition of the following defined terms:
"IRB Letter of Credit" shall mean each Letter of
--------------------
Credit issued in support of industrial revenue bonds, the
proceeds of which bonds have been or will be received by
the Borrower or any Subsidiary of the Borrower as a loan
from a municipal issuer, or a nonprofit entity issuer
acting on behalf of a municipality, for the purpose of
constructing, equipping or renovating mills and designated
in writing by the Borrower as an IRB Letter of Credit."
"IRB Letter of Credit Obligations" shall mean, at any
--------------------------------
time, the lesser of (i) $18,000,000 and (ii) the sum of (a)
the aggregate undrawn and unexpired amount of the
outstanding IRB Letters of Credit plus (b) the aggregate
----
amount of drawings under IRB Letters of Credit which have
not then been reimbursed pursuant to Section 2.3(e)
hereof."
(d) Section 2.3(a) is hereby amended to read in its entirety
as follows:
(a) Subject to the terms and conditions of this
Agreement, the Borrower may request that any Lender at its
option from time to time issue Letters of Credit for the
Borrower's account for, in the case of Letters of Credit
other than IRB Letters of Credit, any general corporate
purpose, and in the case of IRB Letters of Credit, for the
purpose set forth in the definition thereof, (such Lender
thereby becoming the "Issuing Lender"); provided that the
-------------- --------
Issuing Lender shall not issue any such Letter of Credit
(a) if such issuance would cause the Letter of Credit
Obligations to exceed $25,000,000 at the time of such
issuance or (b) if, after giving effect to such Letter of
Credit, (i) the aggregate outstanding principal balance of
the Revolving Credit Loans plus the Letter of Credit
----
Obligations would exceed an amount equal to the lesser of
the Borrowing Base and the Revolving Credit Commitments at
such time or (ii) the aggregate
2
<PAGE> 3
outstanding principal balance of the Revolving Credit Loans
plus the IRB Letter of Credit Obligations plus the Letter of
----
Credit Obligations would exceed an amount equal to the
Revolving Credit Commitments at such time.
(e) Schedule 1.1 attached to the Credit Agreement is hereby
amended and restated in its entirety by Schedule 1.1 attached hereto.
SECTION 2. Conditions of Effectiveness. This Amendment shall
---------------------------
become effective on June 28, 1996, upon the receipt by the Agent of
an executed counterpart of this Amendment or evidence satisfactory to
the Agent of such execution thereof from the Borrower, the Guarantors
and the Lenders (in accordance with Section 14.2 of the Credit
Agreement). The obligation of each Lender to make an advance to the
Borrower of all or any portion of its share of the increase in the
Revolving Credit Commitment as increased by this Amendment is subject
to the following conditions (the making of such an advance by a Lender
shall evidence such Lender's satisfaction with the Borrower's
compliance with the following conditions):
(a) The Agent shall have received, appropriately dated and in
form and substance satisfactory to the Agent, for each Lender, a
Revolving Credit Note duly executed by the Borrower and payable to
the order of such Lender in the amount of such Lender's Revolving
Credit Commitment as set forth on Schedule 1.1.
(b) The Agent shall have received a certificate of the Secretary
or an Assistant Secretary of the Borrower certifying (1) the names,
offices held and true signatures of officers of the Borrower
authorized to sign this Amendment, the Revolving Credit Notes and any
other amendments to the Security Documents, to which the Borrower is
a party, and the notices and other documents and certificates to be
delivered pursuant to the Credit Agreement as amended hereby, (2) the
by-laws and certificate of incorporation of the Borrower as in effect
on the date of such certification, and (3) the resolutions of the
Board of Directors of the Borrower approving and authorizing the
increase in the Revolving Credit Commitment and the execution,
delivery and performance by the Borrower of this Amendment, the
Revolving Credit Notes and any amendments to the Security Documents
deemed necessary by either Agent and the transactions contemplated
hereunder.
(c) The Agent shall have received on behalf of the Lenders, an
opinion addressed to the Lenders of Bracewell & Patterson L.L.P.,
counsel for the Borrower in form and substance satisfactory to the
Agent. The Borrower hereby directs its counsel referred to in this
section to deliver to the Lenders such opinion and authorizes the
Lenders to rely thereon.
(d) Payment of all fees due as specified between the Borrower
and the Agent in an Agent's Letter and of all fees and expenses of
or incurred by the Agent and its counsel to the extent billed as of
the effective date of this Amendment and payable pursuant to this
Amendment.
(e) The Borrower shall have taken such actions, and the Agent
shall have received such other documents, as the Agent may reasonably
request.
SECTION 3. Representations and Warranties True; No Default
-----------------------------------------------
or Event of Default. By its execution and delivery hereof, the
- -------------------
Borrower represents and warrants that, as of the date hereof and after
giving effect to this Amendment, (a) the representations and
warranties contained in the Credit Agreement and the Holdings Guaranty
are true and correct on and as of the date hereof as though made on
and as of such date (except for those Sections or parts thereof that,
by their terms, relate to
3
<PAGE> 4
a specified date (in which case such representations and warranties
shall be or shall have been true and correct on and as of such date)),
and (b) no event has occurred and is continuing which constitutes a
Default or an Event of Default.
SECTION 4. Reference to the Credit Agreement. Upon the
---------------------------------
effectiveness of this Amendment, on and after the date hereof each
reference in the Credit Agreement, the Notes or the Security Documents
to "the Credit Agreement," "this Agreement," "hereunder," "herein" or
words of like import shall mean and be a reference to the Credit
Agreement as amended hereby.
SECTION 5. Ratification of Credit Agreement. Except as
--------------------------------
expressly affected by the provisions set forth herein, the Credit
Agreement, as amended hereby, shall remain in full force and effect
and is hereby ratified and confirmed by the Borrower. The execution,
delivery and effectiveness of this Amendment shall not, except as
expressly provided herein, operate as an amendment or waiver of any
right, power or remedy of the Agent or the Lenders under the Credit
Agreement, the Notes, the Security Documents, or any other Loan
Document, nor constitute a waiver of any other provision of the Credit
Agreement.
SECTION 6. Further Assurances. Each of the Borrower and the
------------------
Guarantors agrees to do, execute, acknowledge and deliver all and
every such further acts and instruments as the Agent may request for
the better assuring and confirming unto the Agent and the Lenders all
and singular the rights granted or intended to be granted hereby or
hereunder.
SECTION 7. Costs and Expenses. Pursuant to Section 14.3 of
------------------
the Credit Agreement, the Borrower agrees to pay on demand all costs
and expenses of the Agent in connection with the preparation,
reproduction, execution and delivery of this Amendment (including,
without limitation, the reasonable fees and out-of-pocket expenses
of counsel for the Agent with respect thereto and with respect to
advising the Agent as to its rights and responsibilities under the
Credit Agreement, as hereby amended). In addition, the Borrower shall
pay all stamp and other taxes and fees payable or determined to be
payable in connection with the execution and delivery of this
Amendment, and agrees to save the holder of each Note harmless from
and against any and all liabilities with respect to or resulting from
any delay in paying or omission to pay such taxes or fees.
SECTION 8. Counterparts. This Amendment may be executed in
------------
one or more counterparts, each of which shall constitute an original
but when taken together shall constitute but one agreement. Delivery
of an executed counterpart of a signature page of this Amendment by
telecopier shall be equally effective as delivery of a manually
executed counterpart. Any party delivering an executed counterpart
of a signature page of this Amendment by telecopier shall thereafter
also promptly deliver a manually executed counterpart, but the failure
to deliver such manually executed counterpart shall not affect the
validity, enforceability and binding effect of this Amendment.
SECTION 9. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY
-------------
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND
SHALL BE BINDING UPON THE BORROWER, THE AGENT, THE LENDERS, THE
ISSUING LENDERS, THE COLLATERAL AGENT, THE GUARANTORS AND THEIR
RESPECTIVE SUCCESSORS AND ASSIGNS.
SECTION 10. FINAL AGREEMENT. THE WRITTEN CREDIT AGREEMENT, AS
---------------
AMENDED BY THIS AMENDMENT, AND THE OTHER DOCUMENTS EXECUTED IN
CONNECTION THEREWITH AND HEREWITH, REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE
4
<PAGE> 5
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE BORROWER AND THE GUARANTORS, ON ONE HAND, AND THE AGENT,
THE LENDERS, THE ISSUING LENDERS AND THE COLLATERAL AGENT, ON THE
OTHER HAND.
IN WITNESS WHEREOF, the parties hereof, by their offices duly
authorized have executed this Amendment as of the date first written
above.
PURINA MILLS, INC.,
as Borrower
By:------------------------------------
Ian R. Alexander
Executive Vice President and
Chief Financial Officer
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, Individually and as Agent
By:------------------------------------
THE CIT GROUP/BUSINESS CREDIT, INC.,
Individually and as Collateral Agent
By:------------------------------------
Name:----------------------------------
Title:---------------------------------
ABN AMRO BANK, N.V.
By:------------------------------------
Name:----------------------------------
Title:---------------------------------
By:------------------------------------
Name:----------------------------------
Title:---------------------------------
5
<PAGE> 6
BANQUE PARIBAS
By:------------------------------------
Name:----------------------------------
Title:---------------------------------
By:------------------------------------
Name:----------------------------------
Title:---------------------------------
BANK OF SCOTLAND
By:------------------------------------
Name:----------------------------------
Title:---------------------------------
THE BANK OF NOVA SCOTIA
By:------------------------------------
Name:----------------------------------
Title:---------------------------------
FBS AG CREDIT, INC.
By:------------------------------------
Name:----------------------------------
Title:---------------------------------
GENERAL ELECTRIC CAPITAL CORPORATION
By:------------------------------------
Name:----------------------------------
Title:---------------------------------
6
<PAGE> 7
HELLER FINANCIAL, INC.
By:------------------------------------
Name:----------------------------------
Title:---------------------------------
THE FIRST NATIONAL BANK OF CHICAGO
By:------------------------------------
Name:----------------------------------
Title:---------------------------------
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, NEW YORK BRANCH
By:------------------------------------
Name:----------------------------------
Title:---------------------------------
MERCANTILE BANK OF ST. LOUIS
NATIONAL ASSOCIATION
By:------------------------------------
Name:----------------------------------
Title:---------------------------------
NATIONAL WESTMINSTER BANK, PLC
NEW YORK AND/OR NASSAU BRANCHES
By:------------------------------------
Name:----------------------------------
Title:---------------------------------
7
<PAGE> 8
Each of the undersigned, in its capacity as a Guarantor, hereby
consents to the terms and conditions set forth in this Amendment, and
hereby acknowledges the joint and several nature of and ratifies and
confirms its obligations under its Guaranty of the obligations of the
Borrower under and in connection with the Credit Agreement, as amended
by this Amendment, and under the other Security Documents to which it
is a party.
PM HOLDINGS CORPORATION
By:------------------------------------
Ian R. Alexander
Executive Vice President and Chief
Financial Officer
CAROLINA AGRI-PRODUCTS, INC.
By:------------------------------------
Ian R. Alexander
Vice President
COASTAL AG-DEVELOPMENT, INC.
By:------------------------------------
Ian R. Alexander
Vice President
PMI FEEDS, INC.
By:------------------------------------
Ian R. Alexander
Vice President
PMI NUTRITION, INC.
By:------------------------------------
Ian R. Alexander
Vice President
8
<PAGE> 9
PURINA LIVESTOCK MANAGEMENT
SERVICES, INC.
By:------------------------------------
August F. Ottinger
Treasurer
COLE GRAIN COMPANY, INC.
By:------------------------------------
Ian R. Alexander
Vice President
EARTH CITY RESOURCES, INC.
By:------------------------------------
Ian R. Alexander
Vice President
GOLDEN SUN FEEDS, INC.
By:------------------------------------
August F. Ottinger
Vice President
GOLDEN SUN FINANCE, INC.
By:------------------------------------
August F. Ottinger
Vice President
9
<PAGE> 10
<TABLE>
SCHEDULE 1.1
LENDERS SCHEDULE AS OF JUNE 28, 1996
<CAPTION>
DOMESTIC LENDING EURODOLLAR LENDING REMAINING REVOLVING TOTAL
OFFICE OFFICE TERM LOAN CREDIT COMMITMENT
COMMITMENT COMMITMENT
<S> <C> <C> <C> <C> <C>
(a) Texas Commerce Bank 712 Main Street 712 Main Street $0 $7,712,765.94 $7,712,765.94
National Association Houston, Texas 77002 Houston, Texas 77002
(b) The CIT Group/Business Two Lincoln Centre, Two Lincoln Centre, $0 $6,914,893.62 $6,914,893.62
Credit, Inc. Suite 200 Suite 200
5420 LBJ Freeway 5420 LBJ Freeway
Dallas, Texas 75240 Dallas, Texas 75240
(c) ABN AMRO Bank N.V., Three Riverway, Suite Three Riverway, Suite $0 $6,914,893.62 $6,914,893.62
Houston Agency 1600 1600
Houston, Texas 77056 Houston, Texas 77056
(d) Banque Paribas, Houston 1200 Smith, Suite 3100 1200 Smith, Suite 3100 $0 $6,914,893.62 $6,914,893.62
Agency Houston, Texas 77002 Houston, Texas 77002
(e) Bank of Scotland, New York 380 Madison Avenue 380 Madison Avenue $0 $6,914,893.62 $6,914,893.62
Branch New York, New York New York, New York
10017 10017
(f) The Bank of Nova Scotia 600 Peachtree St. NE 600 Peachtree St. NE $0 $4,148,936.17 $4,148,936.17
Suite 2700 Suite 2700
Atlanta, Georgia 30308 Atlanta, Georgia 30308
(g) FBS AG Credit, Inc. 950 Seventeenth Street 950 Seventeenth Street $0 $4,148,936.17 $4,148,936.17
Suite 350 Suite 350
Denver, Colorado 80202 Denver, Colorado 80202
(h) General Electric Capital 501 Merritt Seven 501 Merritt Seven $0 $4,148,936.17 $4,148,936.17
Corporation 3rd Floor 3rd Floor
Norwalk, CT 06851 Norwalk, CT 06851
(i) Heller Financial, Inc. 500 W. Monroe St. 500 W. Monroe St. $0 $4,148,936.17 $4,148,936.17
Chicago, IL 60661 Chicago, IL 60661
(j) The First National Bank of One First National One First National $0 $3,457,446.81 $3,457,446.81
Chicago Plaza, Plaza
Mail Suite 0088, I-14 Mail Suite 0088, I-14
Chicago, Illinois 60670 Chicago, Illinois
60670
(k) The Long-Term Credit Bank 165 Broadway, 49th 165 Broadway, 49th $0 $2,659,574.47 $2,659,574.47
of Japan, Ltd., New York Floor Floor
Branch New York, New York New York, New York
10006 10006
(l) Mercantile Bank of St. 721 Locust Street 721 Locust Street $0 $3,457,446.81 $3,457,446.81
Louis National Association St. Louis, Missouri St. Louis, Missouri
63101 63101
(m) National Westminster Bank, New York Branch Nassau Branch $0 $3,457,446.81 $3,457,446.81
Plc 175 Water Street 175 Water Street
New York, New York New York, New York
10038 10038
- -------------------------------- ==============================================
TOTAL $0 $65,000,000.00 $65,000,000.00
</TABLE>
10
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 10,640
<SECURITIES> 0
<RECEIVABLES> 56,484
<ALLOWANCES> 6,487
<INVENTORY> 68,321
<CURRENT-ASSETS> 146,922
<PP&E> 322,098
<DEPRECIATION> 67,594
<TOTAL-ASSETS> 607,375
<CURRENT-LIABILITIES> 141,101
<BONDS> 358,903
<COMMON> 5
0
0
<OTHER-SE> 12,740
<TOTAL-LIABILITY-AND-EQUITY> 607,375
<SALES> 602,013
<TOTAL-REVENUES> 602,013
<CGS> 515,672
<TOTAL-COSTS> 515,672
<OTHER-EXPENSES> 73,097
<LOSS-PROVISION> 348
<INTEREST-EXPENSE> 21,820
<INCOME-PRETAX> (8,924)
<INCOME-TAX> (2,783)
<INCOME-CONTINUING> (6,141)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,141)
<EPS-PRIMARY> (13.86)
<EPS-DILUTED> (13.86)
</TABLE>
