-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, TX3fS+sUMv13YwgXC10UYoxZ+Z3kmsOOlUbe+k/qphvOjTym9pLFrrjIkUMLxtvH Q8c30VYQ4Sp/FNV5sWkaxg== 0000950124-95-001744.txt : 19950616 0000950124-95-001744.hdr.sgml : 19950616 ACCESSION NUMBER: 0000950124-95-001744 CONFORMED SUBMISSION TYPE: 424B2 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19950615 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DEAN FOODS CO CENTRAL INDEX KEY: 0000027500 STANDARD INDUSTRIAL CLASSIFICATION: DAIRY PRODUCTS [2020] IRS NUMBER: 360984820 STATE OF INCORPORATION: DE FISCAL YEAR END: 0527 FILING VALUES: FORM TYPE: 424B2 SEC ACT: 1933 Act SEC FILE NUMBER: 033-57353 FILM NUMBER: 95547272 BUSINESS ADDRESS: STREET 1: 3600 N RIVER RD CITY: FRANKLIN PARK STATE: IL ZIP: 60131 BUSINESS PHONE: 7086781680 MAIL ADDRESS: STREET 1: 3600 N RIVER RD CITY: FRANKLIN PARK STATE: IL ZIP: 60131 424B2 1 PROSPECTUS SUPPLEMENT - 6 3/4% SENIOR NOTES 1 PROSPECTUS SUPPLEMENT (To Prospectus dated April 13, 1995) $100,000,000 DEAN FOODS COMPANY [LOGO] 6 3/4% SENIOR NOTES DUE JUNE 15, 2005 ------------------------ Interest payable June 15 and December 15 ------------------------ THE 6 3/4% SENIOR NOTES DUE JUNE 15, 2005 (THE "NOTES") WILL MATURE ON JUNE 15, 2005 AND WILL NOT BE REDEEMABLE PRIOR TO MATURITY. THE NOTES WILL NOT BE SUBJECT TO ANY SINKING FUND. THE NOTES WILL BE REPRESENTED BY BOOK-ENTRY SECURITIES REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (THE "DEPOSITARY") OR ITS NOMINEE. INTERESTS IN SUCH BOOK-ENTRY SECURITIES WILL BE SHOWN ON, AND TRANSFER THEREOF WILL BE EFFECTED ONLY THROUGH, RECORDS MAINTAINED BY THE DEPOSITARY AND ITS PARTICIPANTS. EXCEPT AS DESCRIBED HEREIN, NOTES IN DEFINITIVE FORM WILL NOT BE ISSUED. SETTLEMENT FOR THE NOTES WILL BE MADE IN IMMEDIATELY AVAILABLE FUNDS. SO LONG AS THE NOTES ARE REGISTERED IN THE NAME OF THE DEPOSITARY OR ITS NOMINEE, THE NOTES WILL TRADE IN THE DEPOSITARY'S SAME-DAY FUNDS SETTLEMENT SYSTEM AND SECONDARY MARKET TRADING ACTIVITY IN THE NOTES WILL THEREFORE SETTLE IN IMMEDIATELY AVAILABLE FUNDS. SEE "DESCRIPTION OF THE NOTES" HEREIN. ------------------------ 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 SUPPLEMENT OR THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------------------ PRICE 99.64% AND ACCRUED INTEREST, IF ANY ------------------------
UNDERWRITING PRICE TO DISCOUNTS AND PROCEEDS TO PUBLIC(1) COMMISSIONS(2) COMPANY(1)(3) ----------- -------------- ------------- Per Note..................................... 99.64% .65% 98.99% Total........................................ $99,640,000 $650,000 $98,990,000
- ------------ (1) Plus accrued interest, if any, from June 19, 1995. (2) The Company has agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended. (3) Before deducting expenses payable by the Company estimated at $75,000. ------------------------ The Notes are offered, subject to prior sale, when, as and if accepted by the Underwriters named herein and subject to approval of certain legal matters by Sidley & Austin, counsel for the Underwriters. It is expected that delivery of the Notes will be made on or about June 19, 1995 through the book-entry facilities of the Depositary against payment therefor in immediately available funds. ------------------------ MORGAN STANLEY & CO. J.P. MORGAN SECURITIES INC. Incorporated June 14, 1995 2 IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. ------------------------ TABLE OF CONTENTS PROSPECTUS SUPPLEMENT
PAGE ---- The Company.......................................................................... S-3 Use of Proceeds...................................................................... S-3 Selected Consolidated Financial Information.......................................... S-4 Capitalization....................................................................... S-5 Management's Discussion and Analysis of Financial Condition and Results of Operations.......................................................... S-6 Business............................................................................. S-9 Description of the Notes............................................................. S-11 Underwriters......................................................................... S-14 Validity of the Notes................................................................ S-14 PROSPECTUS Available Information................................................................ 2 Documents Incorporated by Reference.................................................. 2 The Company.......................................................................... 4 Use of Proceeds...................................................................... 4 Ratio of Earnings to Fixed Charges................................................... 4 Description of Debt Securities....................................................... 4 Plan of Distribution................................................................. 14 Legal Matters........................................................................ 14 Experts.............................................................................. 14
S-2 3 THE COMPANY Dean Foods Company and its subsidiaries (the "Company") are engaged in the processing, purchasing and distribution of dairy and specialty food products. The Company's principal products are Dairy Products (fluid milk, specialty dairy products and ice cream) and Specialty Food Products (frozen and canned vegetables; pickles, relishes and specialty items; powdered products; and sauces, puddings and dips). A significant portion of the Company's products are sold under private labels. The Company also operates a trucking business hauling less-than-truckload freight, concentrating primarily on refrigerated and frozen cartage. Acquisitions have been an important factor in the Company's strategy. The Company generally focuses on food companies having a well-established reputation for quality products and service. The predecessor to the Company was incorporated in Illinois in 1925. The principal office of the Company is located at 3600 North River Road, Franklin Park, Illinois 60131, and its telephone number is (708) 678-1680. USE OF PROCEEDS The net proceeds from the sale of the Notes will be used to repay existing short and long-term indebtedness under the Company's syndicated bank revolving credit facilities and bank short-term credit lines. As of the date of this Prospectus Supplement, $128 million was outstanding under these revolving credit facilities and credit lines, bearing interest at floating rates which at June 8, 1995 were between 6.11% and 6.23%. The syndicated bank revolving credit facilities expire no later than February, 2000. These facilities were used to fund business acquisitions in fiscal 1994 and 1995 and working capital requirements. Morgan Guaranty Trust Company of New York is the Agent under the syndicated bank revolving credit facilities and is an affiliate of J.P. Morgan Securities Inc., one of the Underwriters for the offering of the Notes. See "Underwriting." S-3 4 SELECTED CONSOLIDATED FINANCIAL INFORMATION (IN THOUSANDS EXCEPT FOR PER SHARE DATA) The selected consolidated financial data presented below under the captions "Operating Data", "Balance Sheet Data" and "Common Stock Data" are derived from the consolidated financial statements of Dean Foods Company and subsidiaries, which consolidated financial statements are as of and for the five fiscal years ended May 29, 1994. The consolidated financial statements as of May 29, 1994 and May 30, 1993 and for each of the years in the three-year period ended May 29, 1994 are incorporated by reference in this Prospectus Supplement. The selected consolidated financial data presented below as of February 26, 1995 and for the 39 week periods ended February 26, 1995 and February 27, 1994 are derived from the unaudited consolidated financial statements of the Company also incorporated by reference in this Prospectus Supplement. In the opinion of management, such unaudited consolidated financial statements include all adjustments (consisting of only normal, recurring accruals) necessary for a fair presentation of the consolidated financial position as of February 26, 1995 and consolidated results of operations for the 39 week periods ended February 26, 1995 and February 27, 1994. The results for the 39 week period ended February 26, 1995 are not necessarily indicative of the operating results to be expected for the full year. The selected consolidated financial data should be read in conjunction with the consolidated financial statements and related notes thereto.
39 WEEKS ENDED FISCAL YEAR ENDED MAY, ------------------------ ------------------------------------------------------------------ 2/26/95 2/27/94 1994 1993 1992 1991 1990 ---------- ---------- ---------- ---------- ---------- ---------- ---------- (UNAUDITED) OPERATING DATA: Net sales............. $1,943,026 $1,759,654 $2,431,203 $2,274,340 $2,289,441 $2,157,997 $1,987,517 Costs of products sold and all operating expenses............ 1,835,756 1,671,386 2,298,399 2,148,385 2,162,820 2,022,092 1,876,176 Interest expense...... 16,567 11,101 15,471 14,888 15,551 16,780 12,682 Income before taxes... 92,269 78,446 118,313 114,759 105,527(B) 124,340 102,066 Provision for income taxes............... 38,107 31,963 47,551 46,350 43,511 51,807 40,834 Net income............ 54,162 47,662 71,941(A) 68,409 62,016(B) 72,533 61,232 Depreciation on properties.......... 49,686 43,082 58,549 51,815 48,348 44,465 37,338 Capital expenditures........ 57,814 63,450 80,977 74,803 77,867 72,844 68,196 BALANCE SHEET DATA: Working capital....... $ 159,739 $ 114,764 $ 92,915 $ 198,393 $ 183,577 $ 198,429 $ 182,852 Total assets.......... 1,194,996 1,112,361 1,109,154 892,836 857,152 816,999 744,759 Net plant and equipment........... 555,273 546,637 543,211 443,764 415,791 375,930 337,068 Long-term obligations......... 184,914 148,423 136,150 151,127 155,478 149,980 146,622 Shareholders' equity.............. 561,491 506,283 524,774 476,319 430,443 416,560 362,760 COMMON STOCK DATA: Net income per share............... $ 1.36 $ 1.20 $ 1.81(A) $ 1.73 $ 1.53(B) $ 1.79 $ 1.53 Cash dividends per share............... .51 .48 .64 .60 .56 .49 .44
- ------------ (A) 1994 includes an after-tax net gain of $1,179 ($.03 per share) related to changes in accounting principles. (B) 1992 includes a charge against operations of $9,100 related to the termination of the Company's refrigerated truckload transportation business ($5,685 after taxes, or $.14 per share). S-4 5 CAPITALIZATION The following table sets forth the total current liabilities and consolidated capitalization of the Company at February 26, 1995, and as adjusted to reflect the application of the estimated net proceeds ($98,915,000) from the sale of Notes.
FEBRUARY 26, 1995 ----------------------- ACTUAL AS ADJUSTED -------- ----------- (IN THOUSANDS) Current Liabilities: Notes payable to banks............................................... $117,000 $ 68,085 Other current liabilities............................................ 249,698 249,698 -------- ---------- Total current liabilities......................................... 366,698 317,783 ======== ========= Long-term obligations, excluding current portion....................... $184,914 $ 134,914 Notes offered hereby................................................... 100,000 -------- ---------- Total long-term obligations....................................... 184,914 234,914 -------- ---------- Shareholders' Equity: Common stock (80,000,000 shares authorized; 41,189,497 shares issued)......................................... 41,189 41,189 Capital in excess of par value....................................... 8,695 8,695 Retained earnings.................................................... 541,797 541,797 Cumulative translation adjustment.................................... (19) (19) Less--treasury stock--at cost (1,261,990 shares)..................... 30,171 30,171 -------- ---------- Total shareholders' equity........................................ 561,491 561,491 -------- ---------- Total capitalization................................................... $746,405 $ 796,405 ======== =========
S-5 6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Earnings for the 39 weeks ended February 26, 1995 increased 14% over the same period in fiscal 1994 with net income of $54.2 million or $1.36 per share compared to $47.7 million or $1.20 per share for the same period in fiscal 1994. Earnings for fiscal 1994 increased 5% over fiscal 1993 with income of $71.9 million or $1.81 per share compared to $68.4 million or $1.73 per share for fiscal 1993. The increased earnings for the 39 weeks ended February 26, 1995 were principally due to improved earnings by the Company's vegetable and pickle and specialty products operations. After a sharp drop in first quarter earnings, fiscal 1994 earnings finished strong, principally due to improved vegetable earnings and the contribution of a business acquired in the latter part of the year. The fiscal 1994 earnings were impacted by the adoption of new accounting principles and the Revenue Reconciliation Act of 1993. On May 31, 1993, the Company adopted the provisions of Statement of Financial Accounting Standard No. 106 (FAS 106), "Employers' Accounting for Postretirement Benefits Other than Pensions" and FAS No. 109, "Accounting for Income Taxes." The implementation of FAS 106 resulted in a non-cash charge of $1.0 million, net of taxes, or $.03 per share. The Company elected to recognize the cumulative effect of the adoption of FAS 109 which resulted in increasing fiscal 1994 earnings by $2.2 million or $.06 per share. Further discussion of FAS 106 and FAS 109 are contained respectively in the "Employee Benefit Plans" and "Income Taxes" notes to the consolidated financial statements. Results for the first quarter of fiscal 1994 included a charge of $1.5 million or $.04 per share as a result of the increase in the corporate tax rate to 35% retroactive to January 1, 1993. Both fiscal 1993 and fiscal 1992 earnings were impacted principally by lower profits in the Company's vegetable operations, the result of industry-wide excess inventories and competitive conditions. Fiscal 1992 results included a special charge to earnings of $9.1 million ($5.7 million after taxes) or $.14 per share related to the termination of the Company's refrigerated truckload transportation business. Net sales for the 39 weeks ended February 26, 1995 were $1.9 billion compared to $1.8 billion for the same period in fiscal 1994, a 10% increase. Both Dairy Products and Specialty Food Products recorded sales increases in fiscal 1995. Net sales for fiscal 1994 were $2.4 billion compared to $2.3 billion for fiscal 1993, a 7% increase. Both Dairy Products and Specialty Food Products recorded sales increases in fiscal 1994. The increased sales of Dairy Products were the result of higher selling prices, reflecting increased raw milk costs, and the sales contribution of a business acquired in fiscal 1994. The sales contribution of a business acquired during the latter half of fiscal 1994 and the full year's sales contribution of a business acquired in fiscal 1993 contributed to the increased Specialty Food Products sales. Overall Dairy Products and Specialty Food Products unit sales volumes for fiscal year 1994 remained strong, slightly exceeding fiscal 1993 levels. CASH FLOWS The crop-related seasonal aspects of the Company's vegetable and pickle operations resulted in a significant use of cash in the first 39 weeks of fiscal year 1995. Cash flows for the 39 weeks ended February 26, 1995 were more favorable than during the same period in fiscal 1994. Net cash flow for fiscal 1994 was $30.6 million unfavorable, primarily the result of outlays for acquisitions net of the short-term borrowings used to fund such acquisitions. During fiscal 1993, cash flow provided from operations resulted in a net positive cash flow of $7.6 million for the year. Particulars of the Company's cash flow activities for full fiscal years 1992 through 1994 are as follows: Operating Activities--Cash provided from operations for fiscal 1994 was $122.0 million compared to $122.7 million and $124.5 million, for fiscal years 1993 and 1992, respectively. The cash provided in 1994 was principally the result of increased earnings and greater non-cash charges to income less a net increase in working capital items. Investing Activities--Net cash used in the Company's investing activities in fiscal 1994 was $242.7 million compared to $76.5 million and $80.5 million for fiscal years 1993 and 1992, respectively. Capital expenditures and business acquisitions are the Company's principal investing activities. During fiscal 1994, S-6 7 $171.5 million was used to acquire businesses, an important aspect of the Company's growth. These acquisitions are discussed in the "Business Acquisitions" note to the consolidated financial statements. Capital expenditures for 1994 were $81.0 million compared with $74.8 million and $77.9 million in fiscal years 1993 and 1992, respectively. Three businesses, which the Company concluded were not consistent with its long range goals, were sold during the three years ended May 29, 1994, providing cash of $12.8 million. Financing Activities--Net cash provided by financing activities during fiscal 1994 was $90.1 million. During fiscal years 1993 and 1992, net cash used in financing activities was $38.7 million and $54.1 million, respectively. The principal reason for the increase in cash provided in fiscal 1994 was the use of short-term bank borrowings for acquisitions. No short-term borrowings were outstanding at the end of fiscal years 1993 and 1992. Cash dividends paid, which have increased in each of the last three years, were $25.0 million during fiscal 1994 compared to $23.4 million and $22.2 million during fiscal years 1993 and 1992, respectively. During fiscal years 1993 and 1992, the Company used $41.6 million to purchase treasury stock. No treasury stock purchases were made during fiscal 1994. BUSINESS SEGMENTS The Company is a diversified food processor and distributor engaged in two business segments, Dairy Products and Specialty Food Products. The Company is a major processor of fluid milk and related products, specialty dairy products and ice cream serving various regional markets, with some products distributed nationwide and to Mexico. Dairy Products is the Company's largest segment, accounting for 60% of total fiscal 1994 sales. Included within the Specialty Food Products segment are frozen and canned vegetables, pickles and related products, powdered non-dairy products and other specialty food items. Products within this segment are sold both in regional markets and nationally, with certain products sold internationally. Segment operating earnings represent total sales less operating expenses of the segment with the following items not deducted: general corporate expenses, interest expense and federal and state income taxes. Both business segments are large users of certain agricultural related commodities, the prices for which can vary greatly. Wet 1993 spring planting conditions and summer flooding in some Midwest growing areas resulted in reduced supplies of certain commodities during fiscal 1994. The 1994 crop yields were substantially greater than the 1993 crop resulting in more typical supply levels for commodities and overall availability of raw milk supplies were adequate. The competitive conditions and relatively low profit margins in the food industry necessitate timely adjustment of the Company's product pricing to reflect changes in commodity pricing as well as changes in other production and distribution related costs. Dairy Products--Sales for the 39 weeks ended February 26, 1995 increased 2.7% over the same period in fiscal 1994 as increased unit sales volumes offset lower raw milk costs in fiscal 1995. Dairy Products sales for fiscal 1994 increased 2.2% over sales of fiscal 1993 principally the result of higher selling prices reflecting increased raw milk costs and the sales contribution of a business acquired in fiscal 1994. Sales for fiscal 1993 (a 52 week period) were greater than fiscal 1992 (a 53 week period) on slightly higher selling prices with approximately the same unit sales volume as fiscal 1992. During the first 39 weeks of fiscal 1995, raw milk costs declined from fiscal 1994 levels. Raw milk costs, which exceeded fiscal year 1993 levels during the first quarter of fiscal 1994, fell in the second quarter and then increased significantly during the last half of fiscal 1994, remaining higher than the fiscal 1993 levels. During the first half of fiscal 1993, raw milk costs rose, slightly declining during the latter part of the year as costs were moderately higher than fiscal 1992 cost levels. Dairy Products' operating earnings for the 39 weeks ended February 26, 1995 were slightly below results for the same period in fiscal 1994 principally due to competitive pressures on margins and costs associated with entry into new markets and introduction of a new product line. Dairy Products' fiscal 1994 operating earnings declined 5.5% from fiscal 1993 earnings, principally the result of higher raw milk costs and competitive conditions encountered in certain markets. Fiscal 1993 operating earnings declined slightly from fiscal 1992 earnings, principally the result of competitive conditions encountered in certain markets. Specialty Food Products--This business segment is a large user of raw vegetables, corn syrups, vegetable oils, sugar and casein. In fiscal 1995, vegetables and raw cucumbers were in plentiful supply, resulting in costs S-7 8 below fiscal 1994 levels. Weather-related crop shortages and harvest delays in the Midwest growing region resulted in higher fiscal 1994 costs in the Company's vegetable and pickle businesses. Prices for vegetables and raw cucumbers were relatively stable during fiscal 1993 and 1992. Prices for corn syrups and vegetable oils declined during the 39 weeks ended February 26, 1995 from 1994 prices which had increased during fiscal 1994 as a result of the weather-related Midwest harvest conditions. Sugar prices have been relatively stable over the last three fiscal years. Prices for casein were relatively stable during fiscal years 1994 and 1993, but increased in fiscal 1995 as a result of drought conditions in New Zealand and the declining value of the U.S. dollar. Overall sales of Specialty Food Products for the 39 weeks ended February 26, 1995 increased 23% over the same period in fiscal 1994 principally due to the inclusion of earnings of a vegetable operation acquired in the latter half of fiscal 1994, increased selling prices and increased sales in the Company's pickle and specialty products operations. Sales of Specialty Food Products for fiscal 1994 increased 16% over fiscal 1993 sales, principally the result of the sales of a business acquired during the latter part of fiscal 1994 and the full year's sales contribution of a fiscal 1993 business acquisition. All of the Company's Specialty Food Products operations recorded sales increases in fiscal 1994. Sales of Specialty Food Products for fiscal 1993 (a 52 week year) increased 2% over sales of fiscal 1992 (a 53 week year), principally the result of the sales of a fiscal 1993 acquired business. Specialty Food Products' operating earnings for the 39 weeks ended February 26, 1995 improved significantly over the previous fiscal year's earnings due to earnings of a vegetable operation acquired in the latter half of fiscal 1994 and improved earnings in the Company's pickle and specialty products operations. Operating earnings for fiscal year 1994 increased 19%, principally due to improved vegetable earnings and the contribution of a vegetable business acquired during the latter part of the year. Pricing for certain vegetable products, which had declined during fiscal 1993 and 1992, increased in fiscal 1994 as a result of weather-related crop shortages and harvesting delays. Pickle margins declined in fiscal 1994, the result of increased weather-related costs and competitive market conditions. CORPORATE AND OTHER Corporate and Other sales and expenses include sales and expenses of the Company's transportation subsidiary and canned meats under government bid contracts, along with general corporate expenses, interest expense and interest income. Corporate and Other sales for the 39 weeks ended February 26, 1995 increased 36% over the sales for the same period in fiscal 1994 principally the result of increased canned meat sales. Sales for fiscal 1994 declined 21.3%, principally the result of decreased fiscal 1994 government bid canned meat sales. Corporate and Other expenses increased in fiscal 1994, principally the result of interest expense associated with the increased short-term borrowings and less investment income. Fiscal 1992 expenses included a special $9.1 million pretax charge related to the decision to terminate the Company's refrigerated truckload business. Interest expense for the 39 weeks ended February 26, 1995 increased 49% over interest expense of the same period in fiscal 1994 principally the result of interest on borrowings associated with fiscal 1994 and fiscal 1995 business acquisitions and higher prevailing interest rates during the 39 weeks ended February 26, 1995. Interest expense for fiscal 1994 increased 3.9%, the result of increased short-term borrowing requirements and increased interest rates during the latter part of the fiscal year, offsetting reductions in long-term obligations. Interest expense for fiscal 1993 decreased 4%, the result of lower long-term obligations outstanding, reduced short-term borrowings and lower prevailing interest rates during the year. The decreased fiscal 1994 interest income was the result of lower available funds for short-term investments. Income Taxes--The Company's effective income tax rate for the 39 weeks ended February 26, 1995 was 41.3% compared to 40.7% for the same period in fiscal 1994. The difference in the effective tax rates principally was the result of a difference between book and tax basis on certain non-operating transactions. The Company's effective income tax rate for fiscal 1994 was 40.2%, reflecting the higher corporate tax rate and retroactive requirement of the Revenue Reconciliation Act of 1993 offset by the impact of the adoption of FAS 109. The effective income tax rates for fiscal years 1993 and 1992 were 40.4% and 41.2%, respectively. Explanations of the impact of FAS 109 and the differences from statutory rates are explained in the "Income Taxes" note to the consolidated financial statements. S-8 9 BUSINESS GENERAL The Company is engaged in the processing, purchase and distribution of dairy and specialty food products. The Company's principal products are Dairy Products (fluid milk, specialty dairy products and ice cream) and Specialty Food Products (frozen and canned vegetables; pickles, relishes and specialty items; powdered products; and sauces, puddings and dips). A significant portion of the Company's products are sold under private labels. The Company also operates a trucking business hauling less-than-truckload freight, concentrating primarily on refrigerated and frozen cartage. The predecessor to Dean Foods Company was incorporated in Illinois in 1925. Acquisitions have been an important factor in the Company's strategy. The Company does not have specific acquisition criteria, but generally focuses on food companies having a well-established reputation for quality products and service. During the 39 weeks ended February 26, 1995, the Company completed one acquisition of a fluid milk processing operation. Prior thereto, the Company completed 14 acquisitions in the five year period ending in fiscal 1994. During fiscal 1994, the Company acquired Longlife Dairy Products of Jacksonville, Florida, an ultra-high temperature (UHT) processor of specialty dairy products, the Birds Eye frozen vegetable business and the Bennett's premium sauce line. During fiscal year 1993, the Company acquired W. B. Roddenbery Co., Inc. of Cairo, Georgia, a processor of pickles, peanut butter, boiled peanuts and syrups, and acquired an East Coast replacement sour cream product line. In fiscal year 1992, the Company acquired Meadow Brook Dairy Company, a dairy processor with plants in Pennsylvania and New York; and Frio Foods, Inc., a Texas frozen vegetable processor. In fiscal year 1991, the Company acquired a fluid milk and ice cream business located in Utah and Nevada operating as Cream o'Weber; Ready Food Products, Inc., a UHT processor of specialty dairy products; and Pilgrim Farms, Inc., an Indiana pickle processor. The Company, in fiscal year 1990, acquired Chas. F. Cates & Sons, Inc., a North Carolina pickle processor; Bellingham Frozen Foods, Inc., a Washington frozen vegetable processor; Mayfield Dairy Farms, Inc., a fluid milk and ice cream processor located in Tennessee; and the business and assets of Western Food Products, Inc., a pickle processor in LaJunta, Colorado. The results of operations of these acquisitions, from their respective dates of acquisition, have been included in the Company's results of operations. DAIRY PRODUCTS FLUID MILK AND SPECIALTY DAIRY PRODUCTS The Company processes raw milk and other raw materials into fluid milk and specialty dairy products. Included in the fluid products category is homogenized, low-fat and skim milk plus buttermilk, chocolate milk and juice products. Specialty dairy products include cottage cheese, yogurt, portion control cream cheese and sour cream, all cultured fresh dairy products, and an assortment of UHT processed and aseptic packaged products. The specialty dairy UHT products include whipping creams, half and half, aerosol toppings, coffee creamers, flavored milks and lactose-reduced milks. Fluid milk and fresh cultured specialty products are sold to grocery store chains, convenience stores, smaller retail grocery outlets, warehouse club stores, grocery warehouses and institutional customers in the Midwest and mid-Southern states, in parts of the Southwestern, Southeastern and Rocky Mountain states, parts of Pennsylvania and New York, and the Caribbean and Mexico. In addition to the strong Dean brand in the Midwest and mid-South, fluid milk and fresh cultured specialty dairy products are sold in various areas under well-established labels such as Bell, Bowman, Creamland, Cream o'Weber, Fairmont, Fieldcrest, Gandy's, T. G. Lee, Mayfield, McArthur, Meadow Brook, Price's, Reiter, St. Thomas Dairies and Verifine. A substantial portion of the Company's fluid milk and specialty dairy products volume is sold under private labels. S-9 10 Specialty UHT processed products produced and marketed by Ryan Milk Company, Ready Food Products, Inc. and Longlife Dairy Products are distributed nationwide under various branded and private labels. ICE CREAM The Company produces packaged and bulk ice cream products which are sold through supermarkets, convenience stores, smaller retail grocery outlets, restaurants and other foodservice users. The product line includes ice cream (regular, light, reduced fat, lowfat and non-fat), fruit sherbets, frozen yogurts, and novelties made with ice cream, sherbet and ices. These products are sold under a variety of regional brands and numerous private labels in the Midwest, Southwest, Florida, Georgia, South Carolina, Ohio, Tennessee, Wisconsin, the Caribbean and parts of the Rocky Mountain states under numerous well-established brands. Such brands include Dean, Country Charm, Gandy's, Creamland, Cream o'Weber, Bell, Price's, Fitzgerald, Mayfield, Fieldcrest, McArthur/T. G. Lee, Reiter, Verifine, Carnival and Calypso. During the 39 weeks ended February 26, 1995, the Company introduced in various markets a non-fat, no sugar-added ice cream product under the Guilt Free label. Sales of ice cream products are substantially greater during the summer months than during the rest of the year. Additionally, the Company produces and supplies Baskin-Robbins ice cream products in the Midwest and Southwest United States. SPECIALTY FOOD PRODUCTS FROZEN AND CANNED VEGETABLES The Company processes and markets frozen and canned vegetables consisting of corn, peas, green beans, carrots, beets, spinach, peas and carrots, green lima beans and various mixed vegetable blends. Additional products in the frozen vegetable line include asparagus, broccoli, Brussels sprouts, cauliflower, fordhook lima beans, celery and vegetable blends with pasta and with rice. The packaging of processed frozen vegetables occurs year-round. The processing and canning of fresh vegetables is seasonal in nature, with most of the canning activity in the Midwest occurring during and shortly after harvesting periods. The Company believes the geographic diversity of its plants and growing areas provides the ability to balance production. As a result of the seasonal nature of the vegetable business, inventory levels vary significantly during the year. Frozen vegetables account for approximately 60% of the total vegetable sales. Products are marketed under several brand names including Birds Eye, Veg-All, Freshlike, Larsen, Rancho Fiesta, and Shaw, as well as under customer brand names or in-house brands. The Company's Birds Eye vegetable brand is marketed in all markets throughout the United States. The Company's canned mixed vegetable, Veg-All, is marketed in all major and secondary markets throughout the United States, while Veg-All frozen and canned single vegetable items are marketed in the Southeast and the South. The Freshlike frozen and canned vegetable line is marketed primarily in the Midwest, Pennsylvania, West Virginia and Texas. Other vegetable products are marketed under private labels or in-house brands throughout the United States and exported to the Far East, Mid-East, Europe, Mexico, Canada and the Caribbean. Retail or consumer sizes are distributed for ultimate sales to consumers through chain and independent retail stores and include Company brands and buyers' brands of all products. Institutional customers, including hotels, restaurants, in-plant feeding programs, and schools are serviced through foodservice distributors with products packaged in larger containers. PICKLES, RELISHES AND SPECIALTY ITEMS The Company is one of the largest pickle processors and marketers in the United States with sales nationwide. Pickles, relishes, pickled peppers and other assorted specialty items are sold under several brand names, including Roddenbery, Peter Piper, Heifetz, Pesta, Atkins, Whitfield, Aunt Jane's, Ma Brown, Tree, Rainbo, Cates and Dailey. Products are also sold for private label distribution to retail grocery store chains, wholesalers and the foodservice industry and in bulk to other food processors. Late in fiscal 1993 the Company acquired W. B. Roddenbery Co., Inc. located in Cairo, Georgia, a processor of pickles, peanut butter, boiled peanuts and syrups. During fiscal 1992 the Company's Dean Pickle and Specialty Products Company became S-10 11 the exclusive U.S. marketer of green olives for a leading Spanish olive packer. The Company markets a number of specialty sauces, including shrimp, seafood, tartar, horseradish, chili and sweet and sour sauces, in the Eastern, Midwestern and Southern United States to retail grocers. The processing of pickle products is seasonal, dependent to a large extent upon the growing season of cucumbers in the summer months. Inventories are therefore higher in the fall and winter months than in the spring and early summer. POWDERED PRODUCTS Non-dairy coffee creamers are the Company's principal powdered products. Powdered premium and low-fat products are sold primarily under private labels to vending operators, office beverage service companies and institutional foodservice distributors with national distribution which supply restaurants, schools, health care institutions, hotels and vending and fast-food operations. Non-dairy creamers are also sold for private label distribution to all classes of the retail trade and sold in bulk to a number of other food companies for use as an ingredient in their food products. Powdered products are also sold to international customers in Australia, Canada, the Far East, Mexico, South America, Europe and the Middle East. The Company's non-dairy coffee creamers are an economical and convenient substitute for milk and cream. They require no refrigeration and have long shelf lives. SAUCES, PUDDINGS AND DIPS The Company's aseptic products primarily include ready-to-serve natural cheese sauces, puddings and other specialty sauces which are sterilized under a process which allows storage for prolonged periods without refrigeration. Aseptic products are sold nationwide, primarily under private labels to distributors which supply restaurants, schools, hotels and other segments of the foodservice industry. The Company manufactures vegetable-fat-based party dips, low-fat sour cream and sour cream replacements at its Rockford, Illinois facility. These products are sold nationally, but primarily east of the Rockies, under the Dean's, King and private label brands in supermarkets and other retail outlets through distributor or direct warehouse delivery. CORPORATE AND OTHER DFC Transportation Company, a trucking subsidiary of the Company, operates nationwide with a fleet of approximately 74 tractors and 167 trailers, providing less-than-truckload refrigerated and frozen cartage service. The majority of its revenues are derived from refrigerated freight. Its customers include food and industrial companies. A significant portion of its revenues are derived from the brokerage of various types of freight. During the fourth quarter of 1992, the Company decided to terminate operation of the refrigerated truckload transportation portion of its trucking business and an appropriate charge to earnings was provided for the costs associated with such termination. DESCRIPTION OF THE NOTES The following description of the particular terms of the Notes offered hereby (referred to in the Prospectus as the "Debt Securities") supplements, and to the extent inconsistent therewith replaces, insofar as such description relates to the Notes, the description of the general terms and provisions of the Debt Securities set forth in the Prospectus, to which description reference is hereby made. The following summaries of certain provisions of the Indenture and the Notes do not purport to be complete and are subject to, and are qualified in their entirety by reference to, all provisions of the Indenture, including the definition therein of certain terms. Capitalized terms used herein and not defined herein or in the Prospectus have the respective meanings set forth in the Indenture. The Notes are limited to $100,000,000 aggregate principal amount and will mature on June 15, 2005. The Notes will bear interest from June 19, 1995 or from the most recent interest payment date to which interest has been paid or provided for, at the rate shown on the front cover of this Prospectus Supplement, payable S-11 12 semi-annually on June 15 and December 15 of each year, commencing December 15, 1995, and at maturity, to the person in whose name each Note is registered at the close of business on the June 1 and December 1 (each a "Record Date") next preceding such June 15 and December 15, respectively. Principal and interest will be payable, and the Notes will be transferable and exchangeable, at the office or agency of the Company maintained for such purpose in New York, New York; provided that the Global Security will be exchangeable only in the manner and to the extent set forth under "Book-Entry Notes"; provided further that, except in the case of the Global Security deposited in the Depositary's Same-Day Funds Settlement System, payment of interest may be made at the option of the Company by check mailed to the registered holders of the Notes. On the date hereof, the agent for the payment, transfer and exchange of the Notes (the "Paying Agent") is Bank of America Illinois, acting through its agent, Mellon Securities Transfer Services, Inc., 120 Broadway, 33rd Floor, NY, NY 10271. The Notes shall be issuable only in registered form in denominations of $1,000 and any integral multiple thereof. The Notes will be unsecured general obligations of the Company, will be senior obligations of the Company and are to be issued as a separate series of Senior Debt Securities under an Indenture dated as of January 15, 1995 (the "Indenture"), between the Company and Bank of America Illinois, as trustee (the "Trustee"), which is described more fully in the Prospectus. The Notes are not redeemable prior to their maturity and will not be entitled to any sinking fund. The covenants contained in Sections 3.5 and 3.6 of the Indenture relating to Limitations on Liens and Limitation on Sale and Lease-Back Transactions and the provisions of Article Ten of the Indenture relating to Defeasance and Covenant Defeasance shall be applicable to the Notes. At February 26, 1995, the Company had approximately $140 million aggregate principal amount of Senior Indebtedness (as defined in the Prospectus) outstanding and no subordinated indebtedness outstanding. BOOK-ENTRY NOTES The Notes will be represented by a Global Security, and will be deposited with, or on behalf of, the Depositary, and registered in the name of a nominee of the Depositary. Ownership of beneficial interests in a Global Security representing Book-Entry Notes will be limited to institutions that have accounts with the Depositary or its nominee ("participants") or persons that may hold interests through participants. In addition, ownership of beneficial interests by participants in such a Global Security will only be evidenced by, and the transfer of that ownership interest will only be effected through, records maintained by the Depositary or its nominee for such Global Security. Ownership of beneficial interests in such a Global Security by persons that hold through participants will only be evidenced by, and the transfer of that ownership interest within such participant will only be effected through, records maintained by such participant. The laws of some jurisdictions require that certain purchasers of securities take physical delivery of such securities in definitive form. Such laws may impair the ability to transfer beneficial interests in such a Global Security. The Company understands that upon the issuance of a Global Security representing Book-Entry Notes, and the deposit of such Global Security with the Depositary, the Depositary will immediately credit, on its book-entry registration and transfer system, the respective principal amounts of the Book-Entry Notes represented by such Global Security to the accounts of participants. The accounts to be credited shall be designated by the Underwriters. Payment of principal of and any premium and interest on Book-Entry Notes represented by any Global Security registered in the name of or held by the Depositary or its nominee will be made to the Depositary or its nominee, as the case may be, as the registered Holder of the Global Security representing such Book-Entry Notes. None of the Company, the Trustee or any agent of the Company or the Trustee will have any responsibility or liability for any aspect of the Depositary's records or any participant's records relating to, or payments made on account of, beneficial ownership interests in a Global Security representing such Book-Entry Notes or for maintaining, supervising or reviewing any of the Depositary's records or any participant's records relating to such beneficial ownership interests. S-12 13 The Company understands that upon receipt of any payment of principal of or any premium or interest in respect of a Global Security, the Depositary will immediately credit, on its book-entry registration and transfer system, accounts of participants with payments in amounts proportionate to their respective beneficial interests in the principal amount of such Global Security as shown on the records of the Depositary. Payments by participants to owners of beneficial interests in a Global Security held through such participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers registered in "street name," and will be the sole responsibility of such participants. No Global Security described above may be transferred except as a whole by the Depositary for such Global Security to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by such Depositary or any such nominee to a successor Depositary or a nominee of such successor. A Global Security representing Book-Entry Notes is exchangeable for Notes registered in the name of a Holder other than the Depositary only if (i) the Depositary notifies the Company that it is unwilling or unable to continue as Depositary or the Depositary shall no longer be eligible to serve as Depositary and a successor depositary is not appointed by the Company within ninety (90) calendar days, (ii) an Event of Default with respect to the Notes has occurred and is continuing or (iii) the Company in its sole discretion instructs the Trustee that such Global Security shall be so exchangeable. Notes issued in exchange for a Global Security shall be registered in the name or names of such person or persons as the Company shall instruct the Trustee. It is expected that such instructions may be based upon directions from the Depositary which are received by the Depositary from its participants with respect to ownership of beneficial interests in such Global Security. Except as provided above, owners of beneficial interests in such Global Security will not be entitled to receive physical delivery of Notes in certificated form and will not be considered the Holders thereof for any purpose under the Indenture, and no Global Security representing Book-Entry Notes shall be exchangeable, except for another Global Security of like denominations and tenor to be registered in the name of the Depositary or its nominee. Accordingly, each person owning interest in such Global Security must rely on the procedures of the Depositary and, if such person is not a participant, on the procedures of the participant through which such person owns its interest, to exercise any rights of a Holder under the Indenture. The Company understands that under existing industry practices, in the event that the Company requests any action of Holders or an owner of a beneficial interest in such Global Security desires to give or take any action that a Holder is entitled to give or take under the Indenture, the Depositary would authorize the participants holding the relevant beneficial interests to give or take such action, and such participants would authorize beneficial owners owning through such participants to give or take such action or would otherwise act upon the instructions of beneficial owners owning through them. The Company understands that the Depositary is a limited-purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered under the Exchange Act. The Depositary was created to hold securities of its participants and to facilitate the clearance and settlement of securities transactions among its participants in such securities through electronic book-entry changes in accounts of the participants, thereby eliminating the need for physical movement of securities certificates. The Depositary's participants include securities brokers and dealers (including the Underwriters), banks, trust companies, clearing corporations, and certain other organizations, some of whom (and/or their representatives) own the Depositary. Access to the Depositary's book-entry system is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly ("indirect participants"). Persons who are not participants may beneficially own securities held by the Depositary only through participants or indirect participants. The Depositary has confirmed to the Company, each Underwriter and the Trustee that it intends to follow such procedures. SAME-DAY SETTLEMENT AND PAYMENT Settlement for the Notes will be made by the Underwriters in immediately available or same-day funds. S-13 14 Secondary trading on long-term notes and debentures of corporate issuers is generally settled in clearing-house or next-day funds. In contrast, the Notes will trade in the Depositary's Same-Day Funds Settlement System until maturity, and secondary market trading activity in the Notes will therefore be required by the Depositary to settle in same-day funds. No assurance can be given as to the effect, if any, of settlement in same-day funds on trading activity in the Notes. UNDERWRITERS Under the terms and subject to the conditions contained in an Underwriting Agreement dated the date hereof, the Underwriters named below have severally agreed to purchase, and the Company has agreed to sell to them, severally, the respective principal amounts of Notes set forth opposite their respective names below:
PRINCIPAL AMOUNT NAME OF NOTES --------------------------------------------------------------------- ---------------- Morgan Stanley & Co. Incorporated.................................... $ 50,000,000 J.P. Morgan Securities Inc. ......................................... 50,000,000 ------------ Total.............................................................. $100,000,000 ============
The Underwriting Agreement provides that the obligations of the Underwriters to pay for and accept delivery of the Notes are subject to the approval of certain legal matters by their counsel and to certain other conditions. The Underwriters are committed to take and pay for all of the Notes if any are taken. The Underwriters propose initially to offer part of the Notes directly to the public at the public offering price set forth on the cover page hereof and part to certain dealers at a price that represents a concession not in excess of .40% of the principal amount of the Notes. The Underwriters may allow, and such dealers may reallow, a concession not in excess of .25% of the principal amount of the Notes to certain other dealers. After the initial offering of the Notes, the offering price and other selling terms may from time to time be varied by the Underwriters. The Company has agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended. The Company does not intend to apply for listing of the Notes on a national securities exchange, but has been advised by the Underwriters that they presently intend to make a market in the Notes, as permitted by applicable laws and regulations. The Underwriters are not obligated, however, to make a market in the Notes and any such market making may be discontinued at any time at the sole discretion of the Underwriters. Accordingly, no assurance can be given as to the liquidity of, or trading markets for, the Notes. Each Underwriter engages in transactions with and performs services for the Company in the ordinary course of business. In addition, Morgan Guaranty Trust Company of New York, is Agent under the Company's syndicated bank revolving credit facilities and is an affiliate of J.P. Morgan Securities Inc. See "Use of Proceeds." VALIDITY OF THE NOTES Certain matters with respect to the validity of the Notes offered hereby will be passed upon for the Company by Kirkland & Ellis, Chicago, Illinois, and for the Underwriters by Sidley & Austin, Chicago, Illinois. S-14 15 PROSPECTUS $300,000,000 DEAN FOODS COMPANY DEBT SECURITIES ------------------------------ Dean Foods Company (the "Company") intends to issue from time to time senior debt securities (the "Senior Securities") and/or subordinated debt securities (the "Subordinated Securities") each of which will be a direct, unsecured obligation of the Company for aggregate proceeds not to exceed the equivalent of $300,000,000 and offered to the public on terms determined by market conditions at the time of sale (the Senior Securities and the Subordinated Securities being herein referred to collectively as the "Debt Securities"). The Debt Securities may be denominated in U.S. dollars or in any other currency, including composite currencies such as the European Currency Unit, as may be designated by the Company (the "Specified Currency"). Debt Securities may be sold for U.S. dollars or any other currency, including composite currencies and the principal of and any interest on Debt Securities may be payable in U.S. dollars, or in any other currency, including composite currencies, in each case, as the Company specifically designates. The Debt Securities may be issued in one or more series with the same or various maturities at or above par or with an original issue discount. The specific designation, aggregate principal amount, authorized denominations, purchase price, maturity, interest rate (or method of calculation) and time of payment of any interest, any terms for redemption or repurchase, any listing on a securities exchange or other specific terms of the Debt Securities in respect of which this Prospectus is being delivered (the "Offered Securities") are set forth in the accompanying supplement to the Prospectus (the "Prospectus Supplement"), together with the terms of offering of the Offered Securities. ------------------------------ 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. ------------------------------ The Debt Securities may be offered directly, through agents designated from time to time, through dealers or through underwriters. Such agents or underwriters may act alone or with other agents or underwriters. See "Plan of Distribution." Any such agents, dealers or underwriters are set forth in the Prospectus Supplement. If an agent of the Company or a dealer or underwriter is involved in the offering of the Offered Securities, the agent's commission, dealer's purchase price, underwriter's discount and net proceeds to the Company will be set forth in, or may be calculated from, the Prospectus Supplement. Any underwriters, dealers or agents participating in the offering may be deemed "underwriters" within the meaning of the Securities Act of 1933. This Prospectus may not be used to consummate sales of Debt Securities unless accompanied by a Prospectus Supplement. ------------------------------ The date of this Prospectus is April 13, 1995. ------------------------------ 16 IN CONNECTION WITH AN OFFERING, THE UNDERWRITERS FOR SUCH OFFERING MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE DEBT SECURITIES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. No dealer, salesman or other person has been authorized to give any information or to make any representation not contained or incorporated by reference in this Prospectus or any Prospectus Supplement, and, if given or made, such information or representation must not be relied upon as having been authorized by the Company or by any underwriter, agent or dealer. This Prospectus and any Prospectus Supplement shall not constitute an offer to sell or a solicitation of an offer to buy any of the securities offered hereby in any jurisdiction to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction. Neither the delivery of this Prospectus and any Prospectus Supplement nor any sale made thereunder shall, under any circumstances, create any implication that the information therein is correct as of any time subsequent to the date thereof. ------------------------- AVAILABLE INFORMATION 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 material and other information with the Securities and Exchange Commission (the "Commission"). Reports, proxy material and other information concerning the Company can be inspected and copied at the public reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, or at its regional offices, at 500 West Madison, 14th Floor, Chicago, Illinois 60661, and Seven World Trade Center, New York, New York 10048. Copies of such material can be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Such reports, proxy material and other information concerning the Company also may be inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005. The Company has filed with the Commission a Registration Statement on Form S-3 (the "Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act"), with respect to the Debt Securities. This Prospectus does not contain all of the information set forth in the Registration Statement and the exhibits thereto as permitted by the rules and regulations of the Commission. For information with respect to the Company and the Debt Securities, reference is hereby made to the Registration Statement and the exhibits thereto. The Registration Statement may be inspected without charge by anyone at the office of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and copies of all or any part thereof may be obtained from the Commission upon payment of the prescribed fees. Statements contained in this Prospectus as to the contents of any contract or other document are not necessarily complete, and reference is made to the copy of such contract or other document filed as an exhibit to the Registration Statement of which this Prospectus forms a part, each such statement being qualified in all respects by such reference. DOCUMENTS INCORPORATED BY REFERENCE The following documents heretofore filed by the Company under the Exchange Act with the Commission are incorporated herein by reference: (1) The Company's Annual Report on Form 10-K for the year ended May 29, 1994. (2) The Company's Report on Form 8-K dated June 20, 1994. (3) The Company's Quarterly Reports on Form 10-Q for the thirteen week period ended August 28, 1994, the twenty-six week period ended November 27, 1994, and the thirty-nine week period ended February 26, 1995. All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to the termination of the offering of Debt Securities 2 17 contemplated hereby shall be deemed to be incorporated in this Prospectus by reference and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed 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 has been delivered, upon the written or oral request of such person, a copy of any or all of the documents referred to above which have been or may be incorporated in this Prospectus by reference other than exhibits to such documents. Requests for such copies should be directed to the Corporate Secretary, Dean Foods Company, 3600 North River Road, Franklin Park, Illinois 60131, telephone number (708) 678-1680. Unless the context indicates otherwise, as used in this Prospectus the term "Company" refers to Dean Foods Company and its consolidated subsidiaries. The Company's fiscal year ends on the last Sunday in May. Unless the context indicates otherwise, references herein to years are for years ending on that date. 3 18 THE COMPANY Dean Foods Company and its subsidiaries are engaged in the processing, purchasing and distribution of dairy and specialty food products. The Company's principal products are Dairy Products (fluid milk, specialty dairy products and ice cream) and Specialty Food Products (canned and frozen vegetables; pickles, relishes and specialty items; powdered products; and sauces, puddings and dips). A significant portion of the Company's products are sold under private labels. The Company also operates a trucking business hauling less-than-truckload freight, concentrating primarily on refrigerated and frozen cartage. Acquisitions have been an important factor in the Company's strategy. The Company generally focuses on food companies having a well-established reputation for quality products and service. The predecessor to the Company was incorporated in Illinois in 1925. The principal office of the Company is located at 3600 North River Road, Franklin Park, Illinois 60131, and its telephone number is (708) 678-1680. USE OF PROCEEDS The Company intends to use the net proceeds of the offering of the Debt Securities for general corporate purposes, which may include repaying existing indebtedness or financing acquisitions. Further details relating to the use of the net proceeds will be set forth in the applicable Prospectus Supplement. RATIO OF EARNINGS TO FIXED CHARGES The following table sets forth the ratio of earnings to fixed charges for the periods indicated.
THIRTY-NINE WEEKS FISCAL YEARS ENDED ------------------------------------------------ FEBRUARY 26, 1995 1994 1993 1992 1991 1990 - ----------------- ---- ---- ---- ---- ---- 5.2x 6.2x 6.1x 5.3x 5.9x 5.8x
For the purpose of computing the above ratio of earnings to fixed charges, earnings consist of income before taxes, plus fixed charges. Fixed charges consist of interest expense, net, including amortization of discount and financing costs and one-third of the operating rental expenses which management believes is representative of the interest component of rent expense. DESCRIPTION OF DEBT SECURITIES The following description of the terms of the Debt Securities sets forth certain general terms and provisions of the Debt Securities to which any Prospectus Supplement may relate. The particular terms of the Debt Securities offered by any Prospectus Supplement (the "Offered Securities") and the extent, if any, to which such general provisions may not apply thereto will be described in the Prospectus Supplement relating to such Offered Securities. The Senior Securities are to be issued in one or more series (each such series a "Series") under an Indenture dated as of January 15, 1995, (the "Senior Indenture") between the Company and Bank of America Illinois, as Trustee (the "Senior Trustee"), and the Subordinated Securities are to be issued in one or more Series under an Indenture dated as of January 15, 1995 (the "Subordinated Indenture") between the Company and a trustee to be named prior to an offering of Subordinated Securities, as Trustee (the "Subordinated Trustee"). The forms of the Senior Indenture and the Subordinated Indenture (being sometimes referred to herein collectively as the "Indentures" and individually as an "Indenture") are filed as exhibits to the Registration Statement. The following summaries of certain provisions of the Debt Securities and the Indentures do not purport to be complete and are subject to, and are qualified in their entireties by reference to, all of the provisions of the Indentures, including the definitions therein of certain terms. Whenever particular provisions or defined terms in the Indentures are referred to herein, such provisions or defined terms are incorporated by reference herein. Section references used herein are references to sections in 4 19 both Indentures unless otherwise indicated. The Indentures are substantially identical, except for certain covenants of the Company and provisions relating to subordination. The Debt Securities will be obligations of the Company exclusively. Because the Company conducts substantially all of its business through its subsidiaries, the ability of the Company to meet its obligations under the Debt Securities and its other indebtedness will be dependent on the earnings and cash flow of its subsidiaries and the ability of its subsidiaries to pay dividends and to advance funds to the Company. In addition, the Company's rights and the rights of its creditors and securities holders, including the holders of the Debt Securities, to participate in the assets of any subsidiary upon such subsidiary's liquidation or recapitalization will be subject to prior claims of such subsidiary's creditors, except to the extent that the Company may itself be a creditor with recognized claims against any such subsidiary. Except with respect to the covenants "Limitations on Liens" and "Limitations on Sale and Lease-Back Transactions" contained in the Senior Indenture described below, neither the Senior Indenture nor the Subordinated Indenture restricts or limits the ability of any subsidiary of the Company to incur, create, assume or guarantee indebtedness. At November 27, 1994, the Company's subsidiaries had approximately $25 million of outstanding indebtedness, approximately $19 million of which was guaranteed by the Company and would have constituted Senior Indebtedness. As of November 27, 1994, the Company had approximately $142 million aggregate principal amount of Senior Indebtedness outstanding and no subordinated indebtedness outstanding. The Prospectus Supplement will contain any additional or revised information with respect to the senior and subordinated debt outstanding as of the date of the Prospectus Supplement. GENERAL The Indentures do not limit the amount of Debt Securities which can be issued thereunder and provide that debt securities of any Series may be issued thereunder up to the aggregate principal amount which may be authorized from time to time by the Company. Debt Securities may be denominated and payable in foreign currencies or units based on or relating to foreign currencies, including European Currency Units ("ECUs"). Special United States federal income tax considerations applicable to any Debt Securities so denominated will be described in the relevant Prospectus Supplement. The Indentures do not limit the amount of other indebtedness or securities, other than in the case of the Senior Indenture certain secured indebtedness as described below, which may be issued by the Company. All Senior Securities will be unsecured and will rank pari passu with all other unsecured and unsubordinated indebtedness of the Company. All Subordinated Securities will be unsecured and will be subordinated in right of payment to the prior payment in full of Senior Indebtedness (which term includes the Senior Securities) of the Company described below under "Subordination." The Trustee will authenticate and deliver Debt Securities executed and delivered to it by the Company as set forth in the applicable Indenture. Reference is made to the Prospectus Supplement for the following and other possible terms of each Series of the Offered Securities in respect of which this Prospectus is being delivered: (i) the title of the Offered Securities and classification as Senior Securities or Subordinated Securities; (ii) any limit upon the aggregate principal amount of the Offered Securities; (iii) the currency or currency units based on or relating to currencies in which such Offered Securities are denominated and/or in which principal (and premium, if any) and/or any interest will or may be payable; (iv) if other than 100% of the principal amount, the percentage of their principal amount at which the Offered Securities will be offered; (v) the date or dates on which the principal of the Offered Securities will be payable (or method of determination thereof); (vi) the rate or rates (or method of determination thereof) at which the Offered Securities will bear interest, if any, the date or dates from which any such interest will accrue and on which such interest will be payable, and the record dates for the determination of the holders to whom interest is payable; (vii) if other than as set forth herein, the place or places where the principal of and interest, if any, on the Offered Securities will be payable; (viii) the price or prices at which, the period or periods within which and the terms and conditions upon which Offered Securities may be redeemed, in whole or in part, at the option of the Company; (ix) the obligation, if any, of the Company to redeem, repurchase or repay Offered Securities, whether pursuant to any sinking fund 5 20 or analogous provisions or pursuant to other provisions set forth therein or at the option of a Holder thereof; (x) whether the Offered Securities will be represented in whole or in part by one or more global notes registered in the name of a depository or its nominee; (xi) whether the Offered Securities will be issuable in registered form or bearer form and, if Offered Securities in bearer form are issuable, restrictions applicable to the exchange of one form for another and to the offer, sale and delivery of Offered Securities in bearer form; (xii) whether and under what circumstances the Company will pay additional amounts on Offered Securities held by a person which is not a U.S. person (as defined in the Prospectus Supplement) in respect of any tax, assessment or governmental charge withheld or deducted, and if so, whether the Company will have the option to redeem such Debt Securities rather than pay such additional amounts; and (xiii) any other terms or conditions not inconsistent with the provisions of the Indenture upon which the Offered Securities will be offered. (Section 2.3) "Principal" when used herein includes, when appropriate, the premium, if any, on the Debt Securities. Unless otherwise provided in the Prospectus Supplement relating to any Offered Securities, principal and interest, if any, will be payable, and the Debt Securities will be transferable and exchangeable, at the office or offices or agency maintained by the Company for such purposes, provided that payment of interest on the Debt Securities will be paid at such place of payment by check mailed to the persons entitled thereto at the addresses of such persons appearing on the Security Register. Interest on the Debt Securities will be payable on any interest payment date to the persons in whose name the Debt Securities are registered at the close of business on the record date with respect to such interest payment date. (Section 2.7) Debt Securities may be issued in fully registered form in minimum denominations of $1,000 and any integral multiple thereof. (Section 2.7) Debt Securities may be exchanged for an equal aggregate principal amount of Debt Securities of the same Series and date of maturity in such authorized denominations as may be requested upon surrender of the Debt Securities at an agency of the Company maintained for such purpose and upon fulfillment of all other requirements of such agent. (Section 2.8) No service charge will be made for any transfer or exchange of the Debt Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. (Section 2.8) Debt Securities in bearer form and the coupons, if any, appertaining thereto will be transferable by delivery. (Section 2.8) Debt Securities will bear interest at a fixed rate (a "Fixed Rate Security") or a floating rate (a "Floating Rate Security"). Debt Securities bearing no interest or interest at a rate which, at the time of issuance, is below the prevailing market rate, will be sold at a discount below their stated principal amount. Special United States federal income tax considerations applicable to any such discounted Debt Securities or to certain Debt Securities issued at par which are treated as having been issued at a discount for United States federal income tax purposes will be described in the applicable Prospectus Supplement. Debt Securities may be issued, from time to time, with the principal amount payable on any principal payment date, or the amount of interest payable on any interest payment date, to be determined by reference to one or more currency exchange rates, commodity prices, equity indices or other factors. Holders of such Debt Securities may receive a principal amount on any principal payment date, or a payment of interest on any interest payment date, that is greater than or less than the amount of principal or interest otherwise payable on such dates, depending upon the value on such dates of the applicable currency, commodity, equity index or other factor. Information as to the methods for determining the amount of principal or interest payable on any date, the currencies, commodities, equity indices or other factors to which the amount payable on such date is linked and certain additional tax considerations will be set forth in the applicable Prospectus Supplement. The Indenture requires the annual filing by the Company with the Trustee of a certificate as to compliance with all conditions and covenants contained in the Indenture. (Section 3.4) The Company will comply with Section 14(e) under the Exchange Act, and any other tender offer rules under the Exchange Act which may then be applicable, in connection with any obligation of the Company to purchase Offered Securities at the option of the holders thereof. Any such obligation applicable to a Series of Debt Securities will be described in the Prospectus Supplement relating thereto. 6 21 Unless otherwise described in a Prospectus Supplement relating to any Offered Securities, there are no covenants or provisions contained in either Indenture which may afford the holders of Offered Securities protection in the event of a highly leveraged transaction involving the Company, except to the limited extent described under "Limitations on Liens" and "Limitation on Sale and Lease-Back Transactions" in the Senior Indenture and "Consolidation, Merger, Sale or Conveyance" in the Indentures as described below. Such covenants or provisions are not subject to waiver by the Company's Board of Directors without the consent of the holders of not less than a majority in principal amount of Senior Securities of each Series or Subordinated Securities of each Series, as applicable, as described under "Modification of Indenture" below. REGISTERED GLOBAL SECURITIES The registered Debt Securities of a Series may be issued in the form of one or more fully registered global Debt Securities (a "Registered Global Security") that will be deposited with a depositary (the "Depositary"), or with a nominee for a Depositary identified in the Prospectus Supplement relating to such Series. In such cases, one or more Registered Global Securities will be issued in a denomination or aggregate denominations equal to the portion of the aggregate principal amount of outstanding registered Debt Securities of the Series to be represented by such Registered Global Security or Securities. Unless and until it is exchanged in whole or in part for Debt Securities in definitive registered form, a Registered Global Security may not be transferred except as a whole by the Depositary for such Registered Global Security to a nominee of such Depositary or by a nominee of such Depositary to such Depositary or another nominee of such Depositary or by such Depositary or any such nominee to a successor of such Depositary or a nominee of such successor. The specific terms of the depositary arrangement with respect to any portion of a Series of Debt Securities to be represented by a Registered Global Security will be described in the Prospectus Supplement relating to such Series. The Company anticipates that the following provisions will apply to all depositary arrangements. Upon the issuance of a Registered Global Security, the Depositary for such Registered Global Security will credit, on its book-entry registration and transfer system, the respective principal amounts of the Debt Securities represented by such Registered Global Security to the accounts of persons that have accounts with such Depositary ("participants"). The accounts to be credited shall be designated by any underwriters or agents participating in the distribution of such Debt Securities or by the Company if such Debt Securities are offered and sold directly by the Company. Ownership of beneficial interests in a Registered Global Security will be limited to participants or persons that may hold interests through participants. Ownership of beneficial interests in such Registered Global Security will be shown on, and the transfer of that ownership will be effected only through, records maintained by the Depositary for such Registered Global Security (with respect to interests of participants) or by participants or persons that hold through participants (with respect to interests of persons other than participants). The laws of some states require that certain purchasers of securities take physical delivery of such securities in definitive form. Such limits and such laws may impair the ability to transfer beneficial interests in a Registered Global Security. So long as the Depositary for a Registered Global Security, or its nominee, is the registered owner of such Registered Global Security, such Depositary or such nominee, as the case may be, will be considered the sole owner or holder of the Debt Securities represented by such Registered Global Security for all purposes under the Indenture. Except as set forth below, owners of beneficial interests in a Registered Global Security will not be entitled to have the Debt Securities represented by such Registered Global Security registered in their names, will not receive or be entitled to receive physical delivery of such Debt Securities in definitive form and will not be considered the owners or holders thereof under the Indenture. Principal and interest payments on Debt Securities represented by a Registered Global Security registered in the name of a Depositary or its nominee will be made to such Depositary or its nominee, as the case may be, as the registered owner of such Registered Global Security. None of the Company, the Trustee or any paying agent for such Debt Securities will have any responsibility or liability for any aspect of the records to or payments made on account of beneficial ownership interests in such Registered Global Security or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. 7 22 The Company expects that the Depositary for any Debt Securities represented by a Registered Global Security, upon receipt of any payment of principal or interest, will immediately credit participants' accounts with payments in amounts proportionate to their respective beneficial interests in the principal amount of such Registered Global Security as shown on the records of such Depositary. The Company also expects that payments by participants to owners of beneficial interest in such Registered Global Security held through such participants will be governed by standing instructions and customary practices, as is now the case with the securities held for the accounts of customers registered in "street names," and will be the responsibility of such participants. If the Depositary for any Debt Securities represented by a Registered Global Security is at any time unwilling or unable to continue as Depositary and a successor Depositary is not appointed by the Company within ninety days or an Event of Default has occurred and is continuing with respect to such Debt Securities, the Company will issue such Debt Securities in definitive form in exchange for such Registered Global Security. In addition, the Company may at any time and in its sole discretion determine not to have the Debt Securities of a Series represented by one or more Registered Global Securities and, in such event, will issue Debt Securities of such Series in definitive form in exchange for the Registered Global Securities or Securities representing such Debt Securities. (Section 2.8) PROVISIONS APPLICABLE SOLELY TO SENIOR DEBT SECURITIES Limitations on Liens The Senior Indenture provides that, so long as any of the Senior Securities of a Series remain outstanding, unless the terms of any Series of Senior Securities provide otherwise, the Company will not and will not permit any Consolidated Subsidiary to issue, assume or guarantee any indebtedness for money borrowed ("Indebtedness") secured by a mortgage, pledge, security interest or other lien (a "Lien") upon or with respect to any Principal Property or on the capital stock of any Consolidated Subsidiary that owns a Principal Property unless (a) the Company makes effective provision pursuant to which the Senior Securities shall be secured by such Lien equally and ratably with any and all other obligations and Indebtedness thereby secured, or (b) the aggregate amount of all such Indebtedness secured by such a Lien on the Company and its Consolidated Subsidiaries then outstanding, together with all Attributable Debt in respect of sale and lease-back transactions existing at such time (with the exception of transactions which are not subject to the limitation described in "Limitation on Sale and Lease-Back Transactions" below), would not exceed 15% of the Consolidated Net Tangible Assets of the Company. Such limitation will not apply to, and there shall be excluded in computing such Indebtedness for purposes of this restriction, certain permitted Liens including (a) Liens existing as of the date of the issuance of Senior Securities of any Series, (b) Liens on property or assets of, or any shares of stock or securing Indebtedness of, any corporation existing at the time such corporation becomes a Consolidated Subsidiary, (c) Liens on property or assets or shares of stock or securing Indebtedness existing at the time of acquisition (including acquisition through merger or consolidation) and certain Liens to secure Indebtedness incurred prior to, at the time of or within 180 days after the later of the completion of the acquisition of, or the completion of the construction of and commencement of operation of, any such property, for the purpose of financing all or any part of the purchase price or construction cost thereof, (d) Liens to secure certain development, operation, construction, alteration, repair or improvement costs, (e) Liens in favor of, or which secure Indebtedness owing to, the Company or a Consolidated Subsidiary, (f) Liens in connection with government contracts, including the assignment of moneys due or to come due thereon, (g) certain Liens in connection with legal proceedings to the extent such proceedings are being contested in good faith, (h) certain Liens arising in the ordinary course of business and not in connection with the borrowing of money such as mechanics', materialmans', carriers' or other similar Liens, (i) Liens on property securing obligations issued by a domestic governmental issuer to finance the cost of acquisition or construction of such property, and (j) extensions, substitutions, replacements or renewals of the foregoing if the principal amount of the indebtedness secured thereby is not increased and is not secured by any additional assets. (Section 3.5 of the Senior Indenture) 8 23 Limitation on Sale and Lease-Back Transactions The Senior Indenture provides that, so long as any of the Senior Securities of a Series remain outstanding, unless the terms of any Series of Senior Securities provide otherwise, neither the Company nor any Consolidated Subsidiary may enter into any arrangement with any person (other than the Company) providing for the leasing by the Company or a Consolidated Subsidiary of any Principal Property (except for temporary leases for a term of not more than three years), which Principal Property has been or is to be sold or transferred more than 120 days after such Principal Property has been owned by the Company or such Consolidated Subsidiary and completion of construction and commencement of full operation thereof, by the Company or a Consolidated Subsidiary to such person (herein referred as a "Sale and Lease-Back Transaction"). (Sections 3.5 and 3.6 of the Senior Indenture) Such limitation will not apply to any Sale and Lease-Back Transaction if (a) the net proceeds to the Company or such Consolidated Subsidiary from the sale or transfer equal or exceed the fair value (as determined by the Board of Directors of the Company) of the Principal Property so leased, (b) the Company or such Consolidated Subsidiary could incur Indebtedness secured by a Lien on the Principal Property to be leased pursuant to "Limitation on Liens" above in an amount equal to the Attributable Debt with respect to such Sale and Lease-Back Transaction without equally and ratably securing the Senior Securities or (c) the Company, within 120 days after the effective date of any such Sale and Lease-Back Transaction, applies an amount equal to the fair value (as determined by the Board of Directors of the Company) of the Principal Property so leased to (x) the retirement of Funded Debt (including Debt Securities) of the Company or (y) the acquisition of additional real property. (Section 3.6 of the Senior Indenture) Certain Definitions The term "Attributable Debt," in respect of the Sale and Lease-Back Transactions described above, is defined to mean as of any particular time, the present value, discounted at the Composite Rate, of the obligation of a lessee for rental payments during the remaining term of any lease (including any period for which such lease has been extended or may, at the option of the lessor, be extended). Sale and Lease-Back Transactions with respect to facilities financed with certain tax exempt securities are excepted from the definition. (Section 1.1 of the Senior Indenture) The term "Consolidated Net Tangible Assets" is defined to mean the aggregate amount of assets (less applicable reserves and other properly deductible items) after deducting therefrom (a) all current liabilities (excluding any thereof constituting Funded Debt by reason of being extendible or renewable), and (b) all goodwill, trade names, trademarks, patents, unamortized debt discount and expense and other like intangibles, all as set forth on the books and records of the Company and its Consolidated Subsidiaries and computed in accordance with generally accepted accounting principles. (Section 1.1 of the Senior Indenture) The term "Consolidated Subsidiary" is defined to mean a subsidiary of the Company the accounts of which are consolidated with those of the Company in accordance with generally accepted accounting principles. (Section 1.1 of the Senior Indenture) The term "Funded Debt" is defined to mean all indebtedness for the repayment of money borrowed, whether or not evidenced by a bond, debenture, note or similar instrument or agreement, having a final maturity of more than 12 months after the date of its creation or having a final maturity of less than 12 months after the date of its creation but by its terms being renewable or extendible beyond 12 months after such date at the option of the borrower (excluding obligations under any capital leases). For the purpose of determining "Funded Debt," there shall be excluded any particular indebtedness if, on or prior to the final maturity thereof, there shall have been deposited with the proper depositary in trust the necessary funds for the payment, redemption or satisfaction of such indebtedness. (Section 1.1 of the Senior Indenture) The term "Principal Property" is defined to mean, as of any date, any building, structure or other facility together with the land upon which it is erected and fixtures comprising a part thereof, used primarily for manufacturing, processing or production (other than any pollution control facility), in each case located in the United States, and owned or leased or to be owned or leased by the Company or any Consolidated Subsidiary, 9 24 and in each case the net book value of which as of such date exceeds 2% of the Consolidated Net Tangible Assets of the Company as shown on the consolidated balance sheet contained in the latest filing of the Company with the Commission, other than any such land, building, structure or other facility or portion thereof which, in the opinion of the Board of Directors of the Company, is not of material importance to the total business conducted by the Company and its Consolidated Subsidiaries, considered as one enterprise. PROVISIONS APPLICABLE SOLELY TO SUBORDINATED DEBT SECURITIES Subordination. The Subordinated Securities will be subordinate and junior in right of payment, to the extent set forth in the Subordinated Indenture, to all Senior Indebtedness (as defined below) of the Company. If the Company should default in the payment of any principal of or premium or interest on any Senior Indebtedness when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration of acceleration or otherwise, then, upon written notice of such default to the Company by the holders of such Senior Indebtedness or any trustee therefor and subject to certain rights of the Company to dispute such default and subject to proper notification of the Trustee, unless and until such default shall have been cured or waived or shall have ceased to exist, no direct or indirect payment (in cash, property, securities, by set-off or otherwise) will be made or agreed to be made for principal of, premium, if any, or interest, if any, on the Subordinated Securities, or in respect of any redemption, retirement, purchase or other acquisition of the Subordinated Securities other than those made in capital stock of the Company (or cash in lieu of fractional shares thereof). (Sections 14.1, 14.4 and 14.5 of the Subordinated Indenture) The term "Senior Indebtedness" is defined to mean indebtedness or obligations (other than the Subordinated Debt Securities) of, or guaranteed or assumed by, the Company for borrowed money which is evidenced by (i) bonds, debentures, notes, or other similar instruments, or (ii) capital leases, whether outstanding at the date of the Subordinated Indenture or subsequently incurred, unless the terms of such indebtedness provide that such indebtedness is not senior in right of payment to the Subordinated Debt Securities, and amendments, renewals, extensions, modifications and refinancings of any such indebtedness or obligations. (Section 1.1 of the Subordinated Indenture) If (i) without the consent of the Company a court shall enter an order for relief with respect to the Company under the United States federal bankruptcy laws or a judgment, order or decree adjudging the Company a bankrupt or insolvent, or enter an order for relief for reorganization, arrangement, adjustment or composition of or in respect of the Company under the United States federal or state bankruptcy or insolvency laws or (ii) the Company shall institute proceedings for the entry of an order for relief with respect to the Company under the United States federal bankruptcy laws or for an adjudication of insolvency, or shall consent to the institution of bankruptcy or insolvency proceedings against it, or shall file a petition seeking, or seek or consent to reorganization, arrangement, composition or similar relief under any applicable law, or shall consent to the filing of such petition or to the appointment of a receiver, custodian, liquidator, assignee, trustee, sequestrator or similar official in respect of the Company or of substantially all of its property, or the Company shall make a general assignment for the benefit of creditors, then all Senior Indebtedness (including any interest thereon accruing after the commencement of any such proceedings) will first be paid in full before any payment or distribution, whether in cash, securities or other property, is made on account of the principal of, or interest, if any, on the Subordinated Securities. In such event, any payment or distribution on account of the principal of, or interest, if any, on the Subordinated Securities, whether in cash, securities or other property (other than securities of the Company or any other corporation provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in the subordination provisions with respect to the Subordinated Securities, to the payment of all Senior Indebtedness then outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment), which would otherwise (but for the subordination provisions) be payable or deliverable in respect of the Subordinated Securities will be paid or delivered directly to the holders of Senior Indebtedness in accordance with the priorities then existing among such holders until all Senior Indebtedness (including any interest thereon accruing after the commencement of any such proceedings) has been paid in full. If any payment or distribution on account of the principal of, or interest, if any, on the Subordinated Securities of any character, whether in cash, securities or other property (other than securities of the Company or any other 10 25 corporation provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in the subordination provisions with respect to the Subordinated Securities, to the payment of all Senior Indebtedness then outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment), shall be received by a holder of any Subordinated Securities in contravention of any of the terms of the Subordinated Indenture and before all the Senior Indebtedness shall have been paid in full, such payment or distribution of securities will be received in trust for the benefit of, and will be paid over or delivered and transferred to, the holders of the Senior Indebtedness then outstanding in accordance with the priorities then existing among such holders for application to the payment of all Senior Indebtedness remaining unpaid to the extent necessary to pay all such Senior Indebtedness in full. In the event of any such proceeding, after payment in full of all sums owing with respect to Senior Indebtedness, the holders of Subordinated Securities, together with the holders of any obligations of the Company ranking on a parity with the Subordinated Securities, will be entitled to be repaid from the remaining assets of the Company the amounts at that time due and owing on account of unpaid principal of or any interest on the Subordinated Securities and such other obligations before any payment or other distribution, whether in cash, property or otherwise, shall be made on account of any capital stock or obligations of the Company ranking junior to the Subordinated Securities and such other obligations. (Section 14.1 of the Subordinated Indenture) By reason of such subordination, in the event of the insolvency of the Company, holders of Senior Indebtedness may receive more, ratably, than holders of the Subordinated Securities. In addition, other creditors of the Company who are not holders of Subordinated Securities or holders of Senior Indebtedness may recover less, ratably, than holders of Senior Indebtedness and may recover more, ratably, than holders of Subordinated Securities. Such subordination will not prevent the occurrence of an Event of Default or limit the right of acceleration in respect of the Subordinated Securities. EVENTS OF DEFAULT An Event of Default with respect to the Debt Securities of any Series is defined in each Indenture as: (i) default in the payment of any installment of interest upon any of the Debt Securities of such Series as and when the same shall become due and payable, and continuance of such default for a period of 30 days; (ii) default in the payment of all or any part of the principal of any of the Debt Securities of such Series as and when the same shall become due and payable either at maturity, upon any redemption, by declaration or otherwise; (iii) default in the performance, or breach, of any other covenant or warranty of the Company contained in the Debt Securities of such Series or set forth in the Indenture (other than a covenant or warranty included in the Indenture solely for the benefit of a Series of Debt Securities other than that Series) and continuance of such default or breach for a period of 90 days after due notice by the applicable Trustee or by the holders of at least 25% in principal amount of the Outstanding Securities of that Series; or (iv) certain events of bankruptcy, insolvency or reorganization of the Company. (Section 5.1) Additional Events of Default may be added for the benefit of holders of certain Series of Debt Securities which, if added, will be described in the Prospectus Supplement relating to such Debt Securities. The Indentures provide that the Trustee shall notify the holders of Debt Securities of each Series of any continuing default known to the Trustee which has occurred with respect to that Series within 90 days after the occurrence thereof. The Indentures provide that notwithstanding the foregoing, except in the case of default in the payment of the principal of or interest on any of the Debt Securities of such Series the Trustee may withhold such notice if the Trustee in good faith determines that the withholding of such notice is in the interests of the holders of Debt Securities of such Series. (Section 6.5) The Indentures provide that if an Event of Default with respect to any Series of Debt Securities shall have occurred and be continuing, either the Trustee or the holders of not less than 25% in aggregate principal amount of Debt Securities of that Series then outstanding may declare the principal amount of all Debt Securities of that Series to be due and payable immediately, but upon certain conditions such declaration may be annulled. (Section 5.1) Any past defaults and the consequences thereof (except a default in the payment of principal of or interest on Debt Securities of that Series) may be waived by the holders of a majority in principal amount of the Debt Securities of that Series then outstanding. (Section 5.9) The Senior Indenture 11 26 also permits the Company to omit compliance with certain covenants in such Indenture with respect to Senior Securities of any Series upon waiver by the holders of a majority in principal amount of the Senior Securities of such Series then outstanding. (Section 3.7) Subject to the provisions of each Indenture relating to the duties of each Trustee, in case an Event of Default with respect to any Series of Debt Securities shall occur and be continuing, neither Trustee shall be under any obligation to exercise any of the trusts or powers vested in it by either Indenture at the request or direction of any of the holders of that Series, unless such holders shall have offered to such Trustee reasonable security or indemnity. (Section 6.1 and 6.2) The holders of a majority in aggregate principal amount of the Debt Securities of each Series affected and then outstanding shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee under the applicable Indenture or exercising any trust or power conferred on the Trustee with respect to the Debt Securities of that Series; provided that the Trustee may refuse to follow any direction which is in conflict with any law or such Indenture and subject to certain other limitations. (Section 5.8) No holder of any Debt Security of any Series will have any right by virtue or by availing of any provision of the applicable Indenture to institute any proceeding at law or in equity or in bankruptcy or otherwise upon or under or with respect to such Indenture or for any remedy thereunder, unless such holder shall have previously given the applicable Trustee written notice of an Event of Default with respect to Debt Securities of that Series and unless also the holders of at least 25% in aggregate principal amount of the outstanding Debt Securities of that Series shall have made written request, and offered reasonable indemnity, to the applicable Trustee to institute such proceeding as trustee and the applicable Trustee shall have failed to institute such proceeding within 60 days after its receipt of such request, and the applicable Trustee shall not have received from the holders of a majority in aggregate principal amount of the outstanding Debt Securities of that Series a direction inconsistent with such request. (Section 5.5) However, the right of a holder of any Debt Security to receive payment of the principal of and any interest on such Debt Security on or after the due dates expressed in such Debt Security, or to institute suit for the enforcement of any such payment on or after such dates, shall not be impaired or affected without the consent of such holder. (Section 5.6) CONSOLIDATION, MERGER, SALE OR CONVEYANCE Each Indenture provides that the Company may consolidate with, or sell, convey or lease all or substantially all of its assets to, or merge with or into, any other corporation, if (i) either the Company is the continuing corporation, or the successor corporation is a domestic corporation and expressly assumes the due and punctual payment of the principal of and interest on all the Debt Securities outstanding under the Indenture according to their tenor and the due and punctual performance and observance of all of the covenants and conditions of the Indenture to be performed or observed by the Company and (ii) immediately after such merger or consolidation, or such sale, conveyance or lease, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have occurred and be continuing. (Section 9.1) SATISFACTION AND DISCHARGE OF INDENTURES Each Indenture with respect to any Series (except for certain specified surviving obligations including, among other things, the Company's obligation to pay the principal of and interest on the Debt Securities of such Series) will be discharged and cancelled upon the satisfaction of certain conditions, including the payment of all principal of and interest on all the Debt Securities of such Series or the deposit with the applicable Trustee of cash or appropriate Government Obligations or a combination thereof sufficient for such payment or redemption in accordance with the Indenture and the terms of the Debt Securities of such Series. (Section 10.1) MODIFICATION OF THE INDENTURES Each Indenture contains provisions permitting the Company and the applicable Trustee, with the consent of the holders of not less than a majority in aggregate principal amount of the Debt Securities of each Series at 12 27 the time outstanding under such Indenture, to execute supplemental indentures adding any provisions to, or changing in any manner or eliminating any of the provisions of, such Indenture or any supplemental indenture with respect to the Debt Securities of such Series or modifying in any manner the rights of the holders of the Debt Securities of such Series; provided that no such supplemental indenture may (i) extend the stated maturity of the principal of any Debt Security, or reduce the principal amount thereof or any premium thereon, or reduce the rate or extend the time of payment of any interest thereon, or reduce any amount payable on redemption thereof or change the currency in which the principal thereof (including any amount with respect to original issue discount) or interest thereon is payable or reduce the amount of original issue discount security payable upon acceleration or provable in bankruptcy or alter certain provisions of the Indenture relating to Debt Securities not denominated in U.S. dollars, or impair or affect the right of any holder of Debt Securities to institute suit for payment thereof or, if the Debt Securities provide therefor, any right of repayment at the option of the holders of the Debt Securities, without the consent of the holder of each Debt Security so affected, (ii) reduce the aforesaid percentage of Debt Securities of such Series, the consent of the holders of which is required for any such supplemental indenture, without the consent of the holders of all Debt Securities of such Series so affected or (iii) with respect to the Subordinated Indenture, modify the provisions relating to the subordination of the Subordinated Securities in a manner materially adverse to the Holders of the Subordinated Securities. (Section 8.2) Additionally, in certain prescribed instances, the Company and the Trustee may execute supplemental indentures without the consent of the holders of Debt Securities. (Section 8.1) The Subordinated Indenture may not be amended to alter the subordination of any outstanding Subordinated Securities without the consent of each holder of Senior Indebtedness then outstanding that would be materially adversely affected thereby. (Section 8.6 of the Subordinated Indenture) DEFEASANCE AND COVENANT DEFEASANCE Each Indenture provides, if such provision is made applicable to the Debt Securities of any Series, that the Company may elect either (a) to terminate (and be deemed to have satisfied) all its obligations with respect to such Debt Securities (except for the obligations to register the transfer or exchange of such Debt Securities, to replace mutilated, destroyed, lost or stolen Debt Securities, to maintain an office or agency in respect of the Debt Securities, to compensate and indemnify the Trustee and to punctually pay or cause to be paid the principal of, and interest on, all Debt Securities of such Series when due) ("defeasance") or (b) with respect to the Senior Securities, to be released from its obligations with respect to such Senior Securities under Section 3.5 and 3.6 of the Indenture (being the restrictions described above under "Limitations on Liens" and "Limitations on Sale and Leaseback Transactions") ("covenant defeasance"), upon the deposit with the Trustee, in trust for such purpose, of money and/or Government Obligations which through the payment of principal and interest in accordance with their terms will provide money, in an amount sufficient (in the opinion of a nationally recognized firm of independent public accountants) to pay the principal of and interest, if any, on the outstanding Debt Securities of such Series, and any mandatory sinking fund or analogous payments thereon, on the scheduled due dates therefor. Such a trust may be established only if, among other things, the Company has delivered to the Trustee an opinion of counsel (as specified in the Indenture) with regard to certain matters, including an opinion to the effect that the Holders of such Debt Securities will not recognize income, gain or loss for federal income tax purposes as a result of such deposit and discharge and will be subject to federal income tax on the same amounts and in the same manner and at the same times as would have been the case if such deposit and defeasance or covenant defeasance, as the case may be, had not occurred. The Prospectus Supplement may further describe these or other provisions, if any, permitting defeasance or covenant defeasance with respect to the Debt Securities of any Series. (Section 10.1) APPLICABLE LAW The Debt Securities and the Indentures will be governed by, and construed in accordance with, the laws of the State of New York. (Section 11.8) 13 28 CONCERNING THE TRUSTEE The Senior Trustee may provide various commercial banking services to the Company from time to time. PLAN OF DISTRIBUTION The Company may sell Offered Securities (i) through agents, (ii) through underwriters, (iii) through dealers or (iv) directly to purchasers (through a specific bidding or auction process or otherwise). Offers to purchase Debt Securities may be solicited by agents designated by the Company from time to time. Any such agent involved in the offer or sale of the Offered Securities will be named, and any commissions payable by the Company to such agent will be set forth, in the Prospectus Supplement. Unless otherwise indicated in the Prospectus Supplement, any such agent will be acting on a best efforts basis for the period of its appointment. Any such agent may be deemed to be an underwriter, as that term is defined in the Securities Act, of the Debt Securities so offered and sold. Agents may be entitled under agreements which may be entered into with the Company to indemnification by the Company against certain liabilities, including liabilities under the Securities Act, and may be customers of, engaged in transactions with or perform services for the Company in the ordinary course of business. If an underwriter or underwriters are utilized in the sale of Offered Securities, the Company will execute an underwriting agreement with such underwriter or underwriters at the time an agreement for such sale is reached, and the names of the specific managing underwriter or underwriters, as well as any other underwriters, and the terms of the transactions, including compensation of the underwriters and dealers, if any, will be set forth in the Prospectus Supplement, which will be used by the underwriters to make resales of Offered Securities. The underwriters may be entitled, under the relevant underwriting agreement, to indemnification by the Company against certain liabilities, including liabilities under the Securities Act, and such underwriters or their affiliates may be customers of, engage in transactions with, or perform services for the Company in the ordinary course of business. If a dealer is utilized in the sale of Offered Securities, the Company will sell such Debt Securities to the dealer, as principal. The dealer may then resell such Debt Securities to the public at varying prices to be determined by such dealer at the time of resale. Dealers may be entitled, under agreements which may be entered into with the Company, to indemnification by the Company against certain liabilities, including liabilities under the Securities Act, and such dealers or their affiliates may be customers of, extend credit to or engage in transactions with, or perform services for the Company in the ordinary course of business. The name of any dealer and the terms of the transactions will be set forth in the Prospectus Supplement relating thereto. Offers to purchase Debt Securities may be solicited directly by the Company and sales thereof may be made by the Company directly to institutional investors or others. The terms of any such sales, including the terms of any bidding or auction process, if utilized, will be described in the Prospectus Supplement relating thereto. The place and time of delivery for the Debt Securities in respect of which this Prospectus is delivered are set forth in the Prospectus Supplement. LEGAL MATTERS The validity of the issuance of the Debt Securities offered hereby will be passed upon for the Company by Kirkland & Ellis, special counsel to the Company. Certain legal matters in connection with the Debt Securities offered hereby will be passed upon for the underwriters, if any, by Sidley & Austin, Chicago, Illinois. EXPERTS The financial statements incorporated in this Prospectus by reference to the Annual Report on Form 10-K for the year ended May 29, 1994, have been so incorporated in reliance on the report of Price Waterhouse LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. 14 29 [Logo] -----END PRIVACY-ENHANCED MESSAGE-----