SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
April 23, 1997
Date of Report
(Date of earliest event reported)
JP FOODSERVICE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-24954 52-1634568
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification Number)
9830 Patuxent Woods Drive
Columbia, Maryland
(Address of principal executive offices)
21046
(Zip Code)
(410) 312-7100
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
In connection with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, JP Foodservice, Inc. ("JP Foodservice"
or the "Company") is hereby filing cautionary statements identifying important
factors that could cause the Company's actual results to differ materially from
those projected in forward-looking statements made by or on behalf of the
Company.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(99) Additional Exhibits
99 Cautionary Statements for Purposes of the "Safe Harbor"
Provisions of the Private Securities Litigation Reform
Act of 1995.
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SIGNATURES
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.
JP FOODSERVICE, INC.
Date: April 23, 1997 By: /s/ Lewis Hay, III
---------------------------
Senior Vice President and
Chief Financial Officer
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EXHIBIT 99
CAUTIONARY STATEMENTS FOR PURPOSES OF THE
"SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995
JP Foodservice, Inc. ("JP Foodservice" or the "Company") is filing this
Current Report on Form 8-K to take advantage of the new "safe harbor" provisions
of the Private Securities Litigation Reform Act of 1995. Many of the important
factors presented below have been discussed in the Company's prior filings with
the Securities and Exchange Commission.
JP Foodservice wishes to caution readers that the following important
factors, among others, in some cases have affected, and in the future could
affect, the Company's actual results, and could cause the Company's actual
results for the fiscal periods ending after the date hereof to differ materially
from those expressed in any forward-looking statements made by or on behalf of
the Company. The following factors are not all factors which investors should
consider prior to making an investment decision with respect to the Company's
securities, nor should investors assume that the information contained herein is
complete or accurate in all respects after the date of this filing. The Company
disclaims any duty to update the statements contained herein.
Low Margin Business; Economic Sensitivity. The foodservice distribution
industry is characterized by relatively high inventory turnover with relatively
low profit margins. A significant portion of the Company's sales are made at
prices that are based on product cost plus a percentage markup. As a result, the
Company's profit levels may be negatively affected during periods of food price
deflation, even though the Company's gross profit percentage may remain
relatively constant.
The foodservice industry is sensitive to national and regional economic
conditions, and the demand for foodservice products supplied by JP Foodservice
has been adversely affected in past years by economic downturns. The Company's
operating results also are particularly sensitive to, and may be adversely
affected by, difficulties with the collectability of accounts receivable,
inventory control, competitive price pressures, severe weather conditions and
unexpected increases in fuel or other transportation-related costs. Although
these factors generally have not had a material adverse impact on the Company's
past operations, there can be no assurance that one or more of such factors will
not adversely affect future operating results.
Acquisition Strategy. The Company's business strategy emphasizes
supplementing internal expansion with acquisitions. There can be no assurance
that the Company will successfully identify suitable acquisition candidates,
complete announced acquisitions, integrate acquired operations into its existing
operations or expand into new markets. Further, there can be no assurance that
acquisitions will not have an adverse effect upon the Company's operating
results, particularly in periods, such as the quarters immediately following the
consummation of such transactions, in which the operations of the acquired
businesses are being integrated into the Company's operations. Once integrated,
acquired operations may not achieve levels of net sales
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or profitability comparable to those achieved by the Company's existing
operations, or otherwise perform as expected. Management may determine that it
is necessary or desirable to obtain financing for such acquisitions through bank
borrowings or the issuance of debt or equity securities. Debt financing of any
such acquisition could increase the leverage of the Company. Equity financing of
any such transaction may dilute the ownership of the Company's stockholders.
There can be no assurance that the Company will be able to obtain financing on
acceptable terms.
Competition. JP Foodservice operates in highly competitive markets, and
its future success will depend in large part on its ability to provide superior
service and high-quality products at competitive prices. The Company encounters
competition from a variety of sources, including specialty and system
foodservice distributors and other broadline distributors. Some of the Company's
competitors have substantially greater financial and other resources than the
Company.
Labor Relations. A significant portion of the Company's full-time
employees and employees employed in the Company's warehouse and distribution
operations are members of various local unions associated with the International
Brotherhood of Teamsters. Although the Company has not experienced any labor
disputes or work stoppages, a work stoppage could have a material adverse effect
on the Company.
Dependence on Senior Management. The Company's success is largely
dependent on the skills, experience and efforts of its senior management. The
loss of the service of one or more of the Company's senior management could have
a material adverse effect on the Company's business and development.
Provisions With Possible Anti-Takeover Effects. The Company's
Certificate of Incorporation and Bylaws contain provisions that may have the
effect of discouraging certain transactions involving an actual or threatened
change of control of the Company. These provisions include a requirement that
the Board of Directors of the Company be divided into three classes with
approximately one-third of the Board to be elected each year. The classification
of directors has the effect of making it more difficult for stockholders to
change the composition of the Board. In addition, the Board of Directors has the
authority to issue up to 5,000,000 shares of preferred stock in one or more
series and to fix the powers, preferences and rights of any such series without
stockholder approval. The ability to issue preferred stock could have the effect
of discouraging unsolicited acquisition proposals or making it more difficult
for a third party to gain control of the Company, or otherwise could adversely
affect the market price of the common stock of the Company (the "Common Stock").
The Company has adopted a shareholder rights plan under which preferred share
purchase rights will be triggered upon the acquisition (or certain actions that
would result in the acquisition) of 10% or more of the Common Stock by any
person or group (or 15% or more in the case of certain institutional investors).
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Volatility of Market Price for Common Stock. From time to time, there
may be significant volatility in the market price for the Common Stock.
Quarterly operating results of the Company or other distributors of food and
related goods, changes in general conditions in the economy, the financial
markets or the food distribution or foodservice industries, announcement of
proposed acquisitions and failure to complete announced acquisitions, unusual
weather conditions or other developments affecting the Company or its
competitors could cause the market price of the Common Stock to fluctuate
substantially. In addition, in recent years the stock market has experienced
extreme price and volume fluctuations. This volatility has had a significant
effect on the market prices of securities issued by many companies for reasons
unrelated to their operating performance.
Shares Eligible for Future Sale; Registration Rights. Future sales of
substantial amounts of Common Stock in the public market could adversely affect
the market price of the Common Stock. From time to time in connection with its
acquisition program or otherwise, the Company may issue shares of Common Stock
that constitute "restricted securities" within the meaning of Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act"). Such restricted
securities may not be sold except in compliance with the registrations
requirements of the Securities Act or pursuant to an exemption from
registration, such as the exemption provided by Rule 144 or Rule 145 under the
Securities Act.
The Company has granted certain registration rights with respect to the
shares of Common Stock issued to former owners of acquired businesses. Certain
of such stockholders are entitled to require the Company to register the sale of
their shares under the Securities Act. In addition, in connection with any such
registration or if the Company otherwise proposes to register any shares of
Common Stock under the Securities Act in the future, certain of such
stockholders are entitled to require the Company, subject to certain conditions,
to include all or a portion of their shares in such registration. The foregoing
registration rights are subject to certain notice requirements, timing
restrictions and volume limitations which may be imposed by the underwriters of
an offering. The Company is required to bear the expenses of all such
registrations, except for underwriting discounts and commissions. The Company
currently expects that it may grant registration rights with respect to future
issuances of Common Stock in connection with its acquisition program.
Dividend Policy. The Company does not anticipate declaring or paying
cash dividends on the Common Stock in the foreseeable future. The Company's
ability to pay cash dividends is restricted by the terms of the Company's
outstanding senior notes and the Company's existing credit facility, which
consists of a $110 million revolving credit loan.
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