<PAGE>
 
    
    As filed with the Securities and Exchange Commission on March 11, 1996      
                                                        Registration No. 333-541
================================================================================

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                 -------------
                                    
                                Amendment No. 1
                                      to      
                                   Form S-1
                            REGISTRATION STATEMENT
                                     Under
                          THE SECURITIES ACT OF 1933

                             AMERICOLD CORPORATION
            (Exact name of registrant as specified in its charter)

      Oregon                         4222                         93-0295215
 (State or other             (Primary Standard                (I.R.S. Employer
 jurisdiction of          Industrial Classification          Identification No.)
 incorporation or                Code Number)
   organization)

          7007 S.W. Cardinal Lane, Suite 135, Portland, Oregon 97224
                                (503) 624-8585

         (Address, including zip code, and telephone number, including
            area code, of registrant's principal executive offices)

                            -----------------------

                                 JOEL M. SMITH
               Senior Vice President and Chief Financial Officer
                             Americold Corporation
          7007 S.W. Cardinal Lane, Suite 135, Portland, Oregon 97224
                                (503) 624-8585
           (Name, address, including zip code, and telephone number,
                  including area code, of agent for service)

                            -----------------------

                                  Copies to:

        Thomas P. Palmer, Esq.                        Richard D. Bohm, Esq.
Tonkon, Torp, Galen, Marmaduke & Booth                Debevoise & Plimpton
        888 S.W. Fifth Avenue                           875 Third Avenue
       Portland, Oregon  97204                      New York, New York 10022

                            -----------------------

        Approximate date of commencement of proposed sale to the public:

     As soon as practicable following the date on which this Registration
Statement becomes effective.
     If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
     If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]  __________
     If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]  __________
     If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
    
     
     The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
<PAGE>
 
                             AMERICOLD CORPORATION

        Cross Reference Sheet Pursuant to Item 501(b) of Regulation S-K
             Between Items in Part I of Form S-1 and the Prospectus
<TABLE>
<CAPTION>
                                                                           Location or Caption
Form S-1 Item Number and Caption                                              in Prospectus
----------------------------------                                         -------------------
<S>                                                            <C>
 1.  Forepart of Registration Statement and Outside
       Front Cover Page of Prospectus........................  Outside Front Cover Page

 2.  Inside Front and Outside Back Cover Pages of
       Prospectus............................................  Inside Front Cover Page; Outside Back Cover
                                                                Page; Additional Information
 3.  Summary Information, Risk Factors and Ratio of
       Earnings to Fixed Charges.............................  Prospectus Summary; Risk Factors; Selected
                                                               Consolidated Financial and Other Information            
                                                                                                   
 4.  Use of Proceeds.........................................  Use of Proceeds

 5.  Determination of Offering Price.........................  Not applicable

 6.  Dilution................................................  Not applicable

 7.  Selling Security Holders................................  Not applicable

 8.  Plan of Distribution....................................  Outside Front Cover Page; Underwriting

 9.  Description of Securities to Be Registered..............  Description of Senior Subordinated Notes
       
10.  Interests of Named Experts and Counsel..................  Legal Matters; Experts
       
11.  Information with Respect to the
       Registrant............................................  Outside Front Cover Page; Prospectus
                                                               Summary; Capitalization; Selected
                                                               Consolidated Financial and Other
                                                               Information; Management's Discussion and
                                                               Analysis of Financial Condition and Results
                                                               of Operations; Business; Properties; Legal
                                                               Proceedings; Management; Principal
                                                               Shareholders; Consolidated Financial
                                                               Statements

12.  Disclosure of Commission Position
      on Indemnification for Securities
      Act Liabilities.......................................  Not applicable
</TABLE>

                                       i
<PAGE>
 
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A         +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE   +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY  +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT        +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR   +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE      +
+SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE      +
+WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES +
+LAWS OF ANY SUCH JURISDICTION.                                                +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
 
PROSPECTUS (Subject to Completion)
   
Issued March 11, 1996     
 
                                  $120,000,000
 
                             Americold Corporation
                      % SENIOR SUBORDINATED NOTES DUE 2008
 
                                  ----------
                     Interest payable May 1 and November 1
 
                                  ----------
 
 THE NOTES WILL  BE REDEEMABLE AT  THE OPTION OF  THE COMPANY, IN  WHOLE OR  IN
  PART, AT  ANY TIME  ON OR  AFTER  MAY 1,  2001, INITIALLY  AT   %  OF  THEIR
   PRINCIPAL AMOUNT DECLINING TO 100% OF  THEIR PRINCIPAL AMOUNT ON OR  AFTER
    MAY 1, 2003,  IN EACH CASE  PLUS ACCRUED INTEREST.  IN ADDITION, AT  THE
     OPTION OF THE COMPANY, AT ANY TIME PRIOR TO MAY 1, 1999, UP TO 35%  OF
      THE ORIGINAL PRINCIPAL AMOUNT OF  THE NOTES WILL BE REDEEMABLE  FROM
       THE PROCEEDS OF ONE OR MORE PUBLIC EQUITY OFFERINGS (AS  DEFINED),
        AT   % OF THEIR PRINCIPAL AMOUNT, PLUS ACCRUED INTEREST.
 
UPON A CHANGE OF CONTROL (AS  DEFINED), IN CERTAIN CIRCUMSTANCES EACH HOLDER OF
 NOTES  WILL HAVE  THE RIGHT TO  REQUIRE THE  COMPANY TO  PURCHASE ALL OR  ANY
  PORTION OF  THE NOTES HELD BY SUCH  HOLDER AT 101% OF THE  PRINCIPAL AMOUNT
   THEREOF,  PLUS ACCRUED  INTEREST.  THERE  CAN BE  NO  ASSURANCE THAT  THE
    COMPANY WILL  HAVE THE FINANCIAL  ABILITY OR  WILL BE PERMITTED  BY ITS
     OTHER FINANCING INSTRUMENTS TO PURCHASE THE NOTES UPON THE OCCURRENCE
      OF A CHANGE OF CONTROL.
   
THE  NOTES OFFERED  HEREBY (THE  "OFFERING") WILL  CONSTITUTE UNSECURED  SENIOR
 SUBORDINATED OBLIGATIONS OF  THE COMPANY,  RANKING PARI PASSU  WITH ALL OTHER
 EXISTING  AND FUTURE  SENIOR  SUBORDINATED INDEBTEDNESS  OF  THE COMPANY  AND
  SENIOR IN RIGHT OF  PAYMENT TO ANY FUTURE INDEBTEDNESS  OF THE COMPANY THAT
  IS  EXPRESSLY  SUBORDINATED  TO  SENIOR SUBORDINATED  INDEBTEDNESS  OF  THE
   COMPANY. THE  NOTES WILL  BE  SUBORDINATED TO  SENIOR DEBT  (AS DEFINED),
   INCLUDING  INDEBTEDNESS UNDER  THE  COMPANY'S BANK  CREDIT AGREEMENT  AND
    INDEBTEDNESS UNDER  THE COMPANY'S OUTSTANDING FIRST  MORTGAGE BONDS (AS
     DEFINED). SEE  "DESCRIPTION  OF  SENIOR  SUBORDINATED  NOTES."  AS  OF
     NOVEMBER  30, 1995,  SENIOR DEBT  OF THE  COMPANY AND  ITS SUBSIDIARY
      (INCLUDING OBLIGATIONS UNDER  CAPITALIZED LEASES) WAS  APPROXIMATELY
      $349.5 MILLION.     
 
                                  ----------
 
AN INVESTMENT IN THE NOTES INVOLVES SIGNIFICANT RISKS. SEE "RISK FACTORS" ON
  PAGE 12 FOR INFORMATION THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
 
                                  ----------
 
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.
 
                                  ----------
 
                        PRICE 100% AND ACCRUED INTEREST
 
                                  ----------
 
 
<TABLE>
<CAPTION>
                                                     UNDERWRITING
                                         PRICE TO   DISCOUNTS AND   PROCEEDS TO
                                        PUBLIC(1)   COMMISSIONS(2) COMPANY(1)(3)
                                       ------------ -------------- -------------
<S>                                    <C>          <C>            <C>
Per Senior Subordinated Note..........    100.0%
Total................................. $120,000,000
</TABLE>
-----
  (1) Plus accrued interest from     , 1996, if any.
 
  (2) The Company has agreed to indemnify the Underwriters against certain
      liabilities, including liabilities under the Securities Act of 1933, as
      amended. See "Underwriting."
 
  (3) Before deducting expenses payable by the Company estimated at $   .
 
                                  ----------
   
  The Notes are offered, subject to prior sale, when, as and if accepted by the
Underwriters and subject to approval of certain legal matters by Debevoise &
Plimpton, counsel for the Underwriters. It is expected that delivery of the
Notes will be made on or about April , 1996 at the offices of Morgan Stanley &
Co. Incorporated, New York, N.Y., against payment therefor in immediately
available funds.     
                                  ----------
 
MORGAN STANLEY & CO.
    Incorporated
                                CS FIRST BOSTON
 
                                                               SMITH BARNEY INC.
   
April  , 1996     
<PAGE>
 
                         
                      AMERICOLD'S NATIONWIDE NETWORK     
 
  Americold's network of 49 warehouse facilities, with its related refrigerated
transportation management capabilities, are linked by a common, integrated
information system.
 
                             [GRAPHIC APPEARS HERE]
 
  [Narrative description: outline map of the contiguous states of the United
States showing, within circles, the number of company warehouse facilities
located in a geographic area and indicating with a star the Company's corporate
headquarters as of December 31, 1995.]
 
 
CALIFORNIA          ILLINOIS            NEBRASKA             UTAH
----------          --------            --------             ---- 
Burbank             Chicago             Grand Island         Clearfield
Corona              Rochelle
Fullerton                               OREGON               WASHINGTON
Los Angeles                             ------               ----------
Turlock (2)         IOWA                Brooks               Burlington
Watsonville (3)     ----                Hermiston            Connell     
                    Bettendorf          Milwaukie            Kent        
COLORADO            Fort Dodge          Ontario              Moses Lake  
--------                                Portland             Pasco       
Denver (2)          KANSAS              (corporate office)   Walla Walla 
                    ------              Salem                Wallula     
FLORIDA             Kansas City         Woodburn                          
-------                                                      WISCONSIN  
Bartow              MAINE               PENNSYLVANIA         ---------  
Plant City          -----               ------------         Plover     
Tampa (3)           Portland            Fogelsville          Tomah       
                                                             --------          
IDAHO               MASSACHUSETTS       TENNESSEE            All information   
-----               -------------       ---------            as of December    
Burley              Boston              Murfreesboro         31, 1995.         
Nampa               Gloucester (4)                                             
                    Watertown                                Numbers in        
                                                             parentheses       
                                                             indicate multiple 
                                                             locations per     
                                                             city.              
                                                             
                                                             
                                                              
                                       2
<PAGE>
 
  NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER
TO BUY ANY SECURITY OTHER THAN THE NOTES OFFERED HEREBY, NOR DOES IT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES OFFERED TO ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL
TO MAKE SUCH AN OFFER OR SOLICITATION TO SUCH PERSON. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES
CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY DATE SUBSEQUENT TO THE DATE HEREOF.
 
                               ---------------
                               TABLE OF CONTENTS
                               ---------------
 
<TABLE>
<CAPTION>
                                        PAGE
                                        ----
<S>                                     <C>
Prospectus Summary.....................   4
Risk Factors...........................  12
Use of Proceeds........................  15
Capitalization.........................  16
Selected Consolidated Financial and
 Other Information.....................  17
Management's Discussion
 and Analysis of
 Financial Condition
 and Results of Operations.............  20
Business...............................  31
Properties.............................  38
Legal Proceedings......................  40
Management.............................  41
Principal Shareholders.................  48
Debt of the Company....................  50
Description of Senior
 Subordinated Notes....................  61
Underwriting...........................  81
Legal Matters..........................  82
Experts................................  82
Additional Information.................  82
Index to Consolidated Financial
 Statements............................ F-1
</TABLE>

  IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES 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.
 
  DURING THIS OFFERING, CERTAIN PERSONS AFFILIATED WITH PERSONS PARTICIPATING
IN THE DISTRIBUTION MAY ENGAGE IN TRANSACTIONS FOR THEIR OWN ACCOUNTS OR FOR
THE ACCOUNTS OF OTHERS IN THE NOTES PURSUANT TO EXEMPTIONS FROM RULES 10B-6,
10B-7 AND 10B-8 UNDER THE SECURITIES EXCHANGE ACT OF 1934.
 
  WITH RESPECT TO SALES OF THE SECURITIES BEING OFFERED HEREBY TO CALIFORNIA
RESIDENTS, AS OF THE DATE OF THE PROSPECTUS, SUCH SECURITIES MAY BE SOLD ONLY
TO: (1) "ACCREDITED INVESTORS" WITHIN THE MEANING OF REGULATION D UNDER THE
SECURITIES ACT OF 1933, (2) BANKS, SAVINGS AND LOAN ASSOCIATIONS, TRUST
COMPANIES, INSURANCE COMPANIES, INVESTMENT COMPANIES REGISTERED UNDER THE
INVESTMENT COMPANY ACT OF 1940, PENSION AND PROFIT- SHARING TRUSTS,
CORPORATIONS OR OTHER ENTITIES WHICH, TOGETHER WITH THE CORPORATION'S OR OTHER
ENTITY'S AFFILIATES WHICH ARE UNDER COMMON CONTROL, HAVE A NET WORTH ON A
CONSOLIDATED BASIS ACCORDING TO THEIR MOST RECENT REGULARLY PREPARED FINANCIAL
STATEMENTS (WHICH SHALL HAVE BEEN REVIEWED, BUT NOT NECESSARILY AUDITED, BY
OUTSIDE ACCOUNTANTS) OF NOT LESS THAN $14 MILLION AND SUBSIDIARIES OF THE
FOREGOING, (3) ANY PERSON (OTHER THAN A PERSON FORMED FOR THE SOLE PURPOSE OF
PURCHASING THE SECURITIES BEING OFFERED HEREBY) WHO PURCHASES AT LEAST $1
MILLION AGGREGATE AMOUNT OF THE SECURITIES OFFERED HEREBY OR (4) ANY PERSON
WHO (A) HAS AN INCOME OF $65,000 AND A NET WORTH OF $250,000 OR (B) HAS A NET
WORTH OF $500,000 (IN EACH CASE, EXCLUDING HOME, HOME FURNISHINGS AND PERSONAL
AUTOMOBILES). EACH CALIFORNIA RESIDENT PURCHASING SECURITIES OFFERED HEREBY
WILL BE DEEMED TO REPRESENT BY SUCH PURCHASE THAT IT COMES WITHIN ONE OF THE
AFOREMENTIONED CATEGORIES, THAT IT WILL NOT SELL OR OTHERWISE TRANSFER ANY OF
SUCH SECURITIES TO A CALIFORNIA RESIDENT UNLESS THE TRANSFEREE COMES WITHIN
ONE OF THE AFOREMENTIONED CATEGORIES AND THAT IT WILL ADVISE THE TRANSFEREE OF
THIS CONDITION WHICH TRANSFEREE, BY BECOMING SUCH, WILL BE DEEMED TO BE BOUND
BY THE SAME RESTRICTIONS ON RESALE.
 
  "SUPERCOLD(R)" IS A REGISTERED SERVICE MARK OF AMERICOLD CORPORATION.
 
                                       3
<PAGE>
 
                               PROSPECTUS SUMMARY
 
  The following prospectus summary is qualified in its entirety by the more
detailed information and consolidated financial statements appearing elsewhere
in this Prospectus. Prospective investors are urged to read this Prospectus in
its entirety. As used herein, the terms "Americold" and the "Company" refer to
Americold Corporation, an Oregon corporation, and its subsidiary, unless the
context indicates otherwise. See "Risk Factors" for a discussion of certain
factors that should be considered in connection with the Offering.
 
                                  THE COMPANY
 
  Americold, the nation's largest supplier of public refrigerated warehouse
space, provides integrated logistics services for the frozen food industry.
These services, consisting of warehousing and transportation management, are
provided through the Company's network of 49 refrigerated warehouses in 16
states and through the Company's refrigerated transportation management unit.
Americold serves a broad array of customers ranging from small local food
producers to most of the large national frozen food companies, including
ConAgra, Inc., H. J. Heinz Co., J. R. Simplot Co., Kellogg Company and Ocean
Spray Cranberries Inc. The Company's strategy is to use its position as the
largest supplier of public refrigerated warehouse space to access both
increased volumes of frozen food storage and additional transportation
management business.
 
REFRIGERATED WAREHOUSING
   
  Since its founding in 1911, the Company has grown to become the largest owner
and operator of refrigerated warehouses in the United States. The Company
believes it supplies approximately 15% of the total publicly-available freezer
storage space in the country. With approximately twice the capacity of its
nearest competitor, the Company's network of 49 refrigerated warehouse
facilities provides a total storage capacity of approximately 229 million cubic
feet. Approximately 94% of the storage space operated by the Company is freezer
space (zero degrees Fahrenheit and below), with the remaining space comprised
of cooler space (28 degrees Fahrenheit and above) and unrefrigerated dry
storage space. Major items stored include potatoes, vegetables, fish, poultry,
prepared foods and fruits. The Company believes that its facilities are
sufficiently dispersed geographically to allow it to compete in most of the
significant markets in the United States.     
   
  According to 1995 industry statistics, approximately 77% of all commercial
freezer space is available through public suppliers, such as the Company, and
the remainder is owned or operated by food processors and distributors for
their private use. Since 1979, there has been a trend toward the use of public
as opposed to private freezer space. The Company believes it is well-positioned
to benefit from this growth in public refrigerated warehouse space. Since
August 1994, the Company has added approximately 15.1 million cubic feet of new
warehouse space, while eliminating approximately 12 million cubic feet of non-
strategic warehouse space.     
     
  Refrigerated warehouse services provided by the Company include storage,
handling, blast freezing and facility leasing. In addition to these services,
the Company has developed several ancillary services and intends to continue
developing and promoting such services as well as adding incremental freezer,
cooler or dry space. Ancillary services include product assembly/packaging,
palletizing, labeling and SUPERCOLD freezer storage provided at 11 of
Americold's facilities for the preservation of products, such as ice cream,
which require storage at temperatures as low as 20 degrees below zero
(Fahrenheit).      
 
                                       4
<PAGE>
 
 
TRANSPORTATION MANAGEMENT
 
  The Company has recently expanded its focus to provide integrated warehousing
and transportation management services to the frozen food industry. To expand
its transportation management business, the Company has consolidated its
transportation management functions, added staff resources and improved its
transportation management information systems capabilities, including
integrating these systems with the Company's warehouse information systems.
Transportation management services offered by the Company include dispatching,
freight rate negotiation, backhaul coordination, freight bill auditing, network
flow management, local/store door delivery, order consolidation, truck routing
and distribution channel assessment. As part of its expanded transportation
management services, the Company has entered into arrangements with three
subsidiaries of its largest customer, H.J. Heinz Co. ("Heinz"), pursuant to
which it is providing transportation management services from manufacturing
plants through distribution channels to the subsidiaries' customers. In
addition, for one of these subsidiaries, the Company also manages the in-bound
transportation of over 200 non-frozen ingredients to the subsidiary's
manufacturing plants.
 
COMPANY STRATEGY
 
  The Company's strategy is to use its position as the largest supplier of
public refrigerated warehouse space to access both increased volumes of frozen
food storage and additional transportation management business. The Company
believes its strong industry position, its geographically dispersed network of
refrigerated warehouse facilities and its integrated logistics information
systems provide it with a competitive advantage in developing and maintaining
relationships with large frozen food manufacturers, distributors and retailers
that have freezer storage and product distribution requirements in numerous
locations throughout the United States. Industry studies suggest that frozen
food processors spend approximately twice as much on transportation as on
warehousing of frozen food products. The Company's customers, by outsourcing to
Americold, may benefit from the transportation efficiencies Americold achieves
while being able to reduce redundant staff and avoid individual investments in
warehouse facilities and in the computer hardware and software systems
necessary for transportation management.
 
  The Company's experience in providing a wide range of services in what it
believes to be a reliable and cost-effective manner, together with its
warehouse network and expanding capabilities in transportation management
services, may enable the Company to attract new customers and to offer enhanced
services to current customers. The Company believes that the potential cost
savings brought to customers in product distribution will strengthen and
broaden the Company's relationships with its customers and provide
opportunities to expand its operations to meet customer needs.
   
RECENT DEVELOPMENTS     
 
  On May 9, 1995, the Company filed a prepackaged plan of reorganization (the
"Plan") under Chapter 11 of the Bankruptcy Code (the "Prepackaged Bankruptcy").
The principal purpose of the Plan was to reduce the Company's short-term cash
requirements with respect to payments due on its senior subordinated
indebtedness by extending the maturity of such indebtedness and to adjust
certain restrictive financial covenants and other provisions contained in an
agreement with one of its principal lenders. The bankruptcy court approved the
Plan as filed and it became effective on June 30, 1995. The Plan as approved
provided, among other things, that each holder of the Company's then
outstanding 11% Senior Subordinated Debentures due 1997 (the "11% Debentures")
was entitled to receive a corresponding amount of the Company's new 15% Senior
Subordinated Debentures due 2007 (the "15% Debentures"), plus accrued but
unpaid interest; that the holders of the Company's Senior Debt, including
holders of the 11.45% First Mortgage Bonds, Series A, due 2002 (the "Series A
Bonds") and the 11.5% First Mortgage Bonds, Series B, due 2005 (the "Series B
Bonds," and together with the Series A Bonds, the "First Mortgage Bonds") were
 
                                       5
<PAGE>
 
   
not adversely affected by the Prepackaged Bankruptcy; and that the prior
Amended and Restated Investment Agreement dated as of March 2, 1993 (the
"Investment Agreement") was superseded by the Second Amended and Restated
Investment Agreement dated as of May 5, 1995 (the "Second Investment
Agreement") with Metropolitan Life Insurance Company (the "Institutional
Investor"). See "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Liquidity and Capital Resources--Liquidity--Effect
of Prepackaged Bankruptcy" and "Legal Proceedings." The Company believes that
the restructuring pursuant to the Prepackaged Bankruptcy has not adversely
affected the holders of its Senior Debt or its relationships with its
customers, suppliers or shareholders. See "Risk Factors--Conclusion of
Prepackaged Bankruptcy." The Company intends to apply the net proceeds of the
Offering to redeem at par all of its 15% Debentures.     
   
  The Company is currently considering the possibility of issuing secured debt
to refinance a portion of the Series A Bonds. If such a refinancing is
consummated, and if after such refinancing the Institutional Investor holds
either (i) less than 25% of the outstanding principal amount of Series A Bonds
or (ii) less than $25 million in principal amount of the Series A Bonds,
certain covenants, redemption obligations and other provisions of the Second
Investment Agreement will terminate. The Second Investment Agreement will
terminate completely when neither the Institutional Investor nor any of its
affiliates continues to hold any Series A Bonds. See "Debt of the Company--The
Second Investment Agreement." The Company will not offer or sell any securities
in connection with such refinancing unless such securities are registered under
the Securities Act of 1933, as amended (the "Securities Act"), or unless an
exemption therefrom is available. There can be no assurance as to the terms of
such refinancing or that such refinancing will occur.     
 
OWNERSHIP
 
  The Company is controlled by Kelso & Company, a private investment firm, and
its affiliates ("Kelso"), which together currently hold approximately 53% of
the Company's common equity. Management of the Company beneficially owns
approximately 11% of the Company's common equity. See "Principal Shareholders."
 
  The Company's principal executive offices are located at 7007 S.W. Cardinal
Lane, Suite 135, Portland, Oregon 97224. Its telephone number at that address
is (503) 624-8585.
 
                                       6
<PAGE>
 
                                  THE OFFERING
 
    $120,000,000 principal amount of   % Senior Subordinated Notes due 2008
 
Maturity Date.............  May 1, 2008.
 
Interest..................    % per annum payable semi-annually in arrears on
                            each May 1 and November 1, commencing November 1,
                            1996.
 
Optional Redemption.......     
                            The Notes may not be redeemed at the option of the
                            Company prior to May 1, 2001. Thereafter, the Notes
                            will be redeemable at any time, in whole or in
                            part, at the option of the Company, initially at  %
                            of their principal amount declining ratably to 100%
                            of their principal amount on or after May 1, 2003,
                            in each case plus accrued interest. In addition, at
                            any time prior to May 1, 1999 up to 35% of the
                            original principal amount of the Notes will be
                            redeemable, at the option of the Company, from the
                            proceeds of one or more Public Equity Offerings (as
                            defined), at    % of their principal amount, plus
                            accrued interest. See "Description of Senior
                            Subordinated Notes--Optional Redemption."     
 
Change of Control.........     
                            Upon the occurrence of a Change of Control (as
                            defined in the indenture pursuant to which the
                            Notes will be issued, the "Note Indenture"), and
                            after satisfaction by the Company of the
                            requirements described below, each holder of the
                            Notes will have the right to require the Company to
                            repurchase all or any part of such holder's Notes
                            at a price in cash equal to 101% of the principal
                            amount thereof, plus accrued and unpaid interest,
                            if any, to the date of repurchase, subject to the
                            terms of any Senior Debt (as defined in the Note
                            Indenture). The Company's Senior Debt agreements
                            restrict the redemption or repurchase of the Notes
                            so long as Senior Debt remains outstanding. If a
                            Change of Control occurs, there can be no assurance
                            that the Company will have the financial ability to
                            redeem the Notes. See "Description of Senior
                            Subordinated Notes--Change of Control."     
 
Ranking...................     
                            The Notes will be unsecured senior subordinated
                            obligations of the Company, subordinated in right
                            of payment to all existing and future Senior Debt,
                            including, without limitation, the Company's
                            obligations under the credit agreement with its
                            primary bank dated as of June 19, 1995 (the "Bank
                            Credit Agreement") and the indenture governing the
                            First Mortgage Bonds (the "Bond Indenture"), dated
                            as of March 9, 1993 and as amended on June 30,
                            1995, between the Company and Fleet National Bank
                            of Connecticut, as trustee (the "Bond Trustee").
                            The Notes will rank pari passu with all other
                            existing and future senior subordinated
                            indebtedness of the Company and senior in right of
                            payment to any future indebtedness of the Company
                            that is expressly subordinated to senior
                            subordinated indebtedness of the Company. See "Debt
                            of the Company--The Bank Credit Agreement" and "--
                            The First Mortgage Bonds," and "Description of
                            Senior Subordinated Notes--Ranking." As of November
                            30, 1995, the Company had approximately $349.5
                            million of Senior Debt outstanding.     
 
                                       7
<PAGE>
 
 
Covenants.................  The Note Indenture will contain certain covenants
                            for the benefit of the holders of the Notes,
                            including among others, covenants limiting (a) the
                            incurrence of additional indebtedness by the
                            Company, (b) the issuance of debt and preferred
                            stock by the Company's subsidiary, (c) the payment
                            of dividends on, and the redemption of, capital
                            stock of the Company and its subsidiary, (d) the
                            making of investments, (e) the sale of assets and
                            subsidiary stock and (f) transactions with
                            affiliates. In addition, the Note Indenture will
                            restrict the ability of the Company to consolidate
                            or merge with or into, or to transfer all or
                            substantially all its assets to, another person.
                            However, these limitations will be subject to a
                            number of important qualifications and exceptions.
                            See "Description of Senior Subordinated Notes--
                            Certain Covenants" and "--Consolidation, Merger and
                            Sale of Assets."
 
Use of Proceeds...........  The net proceeds of the Offering will be used by
                            the Company to retire at par the Company's 15%
                            Debentures. See "Use of Proceeds."
 
                                  RISK FACTORS
 
  For a discussion of certain factors which should be considered by prospective
investors in evaluating an investment in the Notes, see "Risk Factors"
beginning on page 12.
 
                                       8
<PAGE>
 
             SELECTED CONSOLIDATED FINANCIAL AND OTHER INFORMATION
 
  The following table presents selected consolidated historical financial and
other information of the Company. The information should be read in conjunction
with the "Management's Discussion and Analysis of Financial Condition and
Results of Operations" as furnished below. The consolidated financial
information for the Company for each of the five fiscal years set forth in the
table has been derived from the historical consolidated financial statements of
the Company which have been audited by KPMG Peat Marwick LLP, independent
certified public accountants for the Company. The reports of KPMG Peat Marwick
LLP refer to changes in accounting for income taxes and postretirement benefits
other than pensions. Selected consolidated financial information for the nine
months ended November 30, 1994 and November 30, 1995 has been derived from
unaudited consolidated financial statements and, in the opinion of the Company,
includes all adjustments that are considered necessary for a fair presentation
of such financial information. Historical data and interim results are not
necessarily indicative of future results and interim data are not necessarily
indicative of results for a full year.
 
<TABLE>   
<CAPTION>
                                                                                     NINE
                                                                                 MONTHS ENDED
                              FISCAL YEAR ENDED LAST DAY OF FEBRUARY,            NOVEMBER 30,
                          ---------------------------------------------------  ------------------
                            1991      1992      1993       1994       1995       1994      1995
                          --------  --------  ---------  ---------  ---------  --------  --------
                                   (DOLLARS ARE IN THOUSANDS EXCEPT PER SHARE DATA)
<S>                       <C>       <C>       <C>        <C>        <C>        <C>       <C>
INCOME STATEMENT DATA:
Net sales...............  $196,927  $200,680  $ 196,130  $ 198,887  $ 215,207  $162,214  $199,897
Operating expenses:
 Cost of sales..........   115,030   115,452    118,846    126,273    138,132   104,188   135,903
 Amortization of cost
  in excess of net
  assets acquired.......     2,527     2,528      2,533      2,531      2,535     1,902     2,146
 Selling and
  administrative
  expense...............    30,517    30,094     27,192     27,090     25,955    19,500    21,154
 Employee stock
  ownership plan
  expense...............       750       750        750        --         750       --        --
                          --------  --------  ---------  ---------  ---------  --------  --------
   Total operating
    expense.............   148,824   148,824    149,321    155,894    167,372   125,590   159,203
                          --------  --------  ---------  ---------  ---------  --------  --------
Gross operating margin..    48,103    51,856     46,809     42,993     47,835    36,624    40,694
Other income (expense):
 Interest income........        22        16        323        757      1,870     1,134     1,018
 Interest expense.......   (53,112)  (51,601)   (51,943)   (55,403)   (55,344)  (41,318)  (42,135)
 Amortization of debt
  issuance cost.........    (1,120)   (1,129)    (1,173)    (1,249)    (1,276)     (944)     (761)
 Other, net(a)..........       165       773        289        680     17,706    17,483    (7,308)
                          --------  --------  ---------  ---------  ---------  --------  --------
   Total other
    expenses............   (54,045)  (51,941)   (52,504)   (55,215)   (37,044)  (23,645)  (49,186)
                          --------  --------  ---------  ---------  ---------  --------  --------
Income (loss) before
 taxes, extraordinary
 items and cumulative
 effect of accounting
 changes................    (5,942)      (85)    (5,695)   (12,222)    10,791    12,979    (8,492)
Income tax expense
 (benefit)..............     3,774     5,408      2,455     (1,183)     5,227     5,754    (2,489)
Extraordinary gain
 (loss)(b)..............       654       --         --      (1,848)       --        --     (1,793)
Cumulative effect of
 accounting changes(c)
 .......................       --        --         --     (64,234)       --        --        --
                          --------  --------  ---------  ---------  ---------  --------  --------
Net income (loss).......  $ (9,062) $ (5,493) $  (8,150) $ (77,121) $   5,564  $  7,225  $ (7,796)
                          ========  ========  =========  =========  =========  ========  ========
Net income (loss) per
 common share...........  $  (1.93) $  (1.24) $   (1.80) $  (16.00) $    1.00  $   1.38  $  (1.71)
OTHER DATA:
Adjusted EBITDA(d)......  $ 71,438  $ 75,104  $  68,179  $  66,870  $  71,565  $ 54,454  $ 57,215
Ratio of Adjusted EBITDA
 to interest
 expense(d).............      1.35x     1.46x      1.31x      1.21x      1.29x     1.32x     1.36x
Capital
 expenditures(e)........  $  8,509  $  9,212  $   7,661  $   8,925  $  13,203  $ 13,213  $ 29,300
Ratio of earnings to
 fixed charges(f).......       --        --         --         --        1.19x     1.30x      --
Deficiency in earnings
 to cover fixed
 charges(g).............  $  5,942  $    148  $   5,699  $  12,283        --        --   $  8,996
Net cash provided (used)
 by operating
 activities(h)..........  $ 16,287  $ 22,506  $  17,700  $  18,476  $  12,684  $  4,415  $   (866)
Weighted average
 capacity--cubic feet
 (in millions)..........     223.4     225.9      228.8      231.4      229.2     227.5     230.1
Total pounds handled--
 receipts and release
 (in millions)..........    17,380    17,154     16,609     17,906     20,004    15,160    15,709
Total pounds stored--
 average at month-end
 (in millions)..........     1,560     1,635      1,534      1,493      1,568     1,563     1,552
</TABLE>    
 
 
                                       9
<PAGE>
 
<TABLE>
<CAPTION>
                                                                                   AS OF
                                   AS OF LAST DAY OF FEBRUARY,                  NOVEMBER 30,
                          -------------------------------------------------  -------------------
                            1991      1992      1993      1994       1995      1994      1995
                          --------  --------  --------  ---------  --------  --------  ---------
<S>                       <C>       <C>       <C>       <C>        <C>       <C>       <C>
BALANCE SHEET DATA:
 Total assets...........  $493,651  $483,841  $490,151  $ 528,703  $544,595  $537,205  $ 523,543
 Long-term debt.........   449,299   435,133   443,003    467,337   442,912   438,251    461,791
 Preferred stock........     3,208     4,204     4,773      5,348     5,789     5,850      6,325
 Common stockholders'
  deficit...............   (10,578)  (16,882)  (25,175)  (102,577)  (97,747)  (95,853)  (106,079)
</TABLE>
-------
(a) Includes a pretax gain of approximately $17.0 million in fiscal 1995 from
    insurance proceeds related to the Company's settlement of claims arising
    out of the Kansas City fire. See "Management's Discussion and Analysis of
    Financial Condition and Results of Operations--Introduction--Effect of
    Kansas City Fire." Includes a pretax expense of approximately $6.7 million
    in the nine months ended November 30, 1995 relating to reorganization fees
    and expenses incurred as part of the Prepackaged Bankruptcy.
(b) For fiscal 1991, includes a gain of approximately $0.7 million from the
    purchase of $5 million face value of the Company's 11% Debentures. For
    fiscal 1994, includes a loss of approximately $1.8 million from the
    retirement of $150 million in principal amount of Series A Bonds as part of
    the issuance of the Series B Bonds. For the nine months ended November 30,
    1995, includes a loss of approximately $1.8 million relating to the
    exchange of the Company's 11% Debentures for the 15% Debentures and the
    repurchase of $10 million in principal amount of Series A Bonds.
(c) Effective March 1, 1993, the Company implemented Financial Accounting
    Standards Board Statement of Financial Accounting Standard No. 106,
    "Employer's Accounting for Postretirement Benefits Other Than Pensions,"
    and Statement No. 109, "Accounting for Income Taxes." As a result of the
    implementation of these accounting standards, the Company's fiscal 1994
    earnings were reduced by approximately $64.2 million.
   
(d) EBITDA is a widely accepted financial indicator of a company's ability to
    service debt. However, the Company believes that because of the gain from
    insurance proceeds in fiscal 1995 and in the nine months ended November 30,
    1994, and the reorganization fees and expenses in the nine months ended
    November 30, 1995, a more meaningful indicator is Adjusted EBITDA. Except
    for fiscal 1995 and the nine months ended November 30, 1994 and 1995,
    EBITDA is the same as Adjusted EBITDA. Adjusted EBITDA is calculated as
    follows:     
 
<TABLE>   
<CAPTION>
                                                                               NINE
                                                                           MONTHS ENDED
                           FISCAL YEAR ENDED LAST DAY OF FEBRUARY,         NOVEMBER 30,
                          ---------------------------------------------  -----------------
                           1991     1992     1993      1994      1995      1994     1995
                          -------  -------  -------  --------  --------  --------  -------
<S>                       <C>      <C>      <C>      <C>       <C>       <C>       <C>
 Income (loss) before
  taxes, extraordinary
  items and cumulative
  effect of accounting
  changes...............  $(5,942) $   (85) $(5,695) $(12,222) $ 10,791  $ 12,979  $(8,492)
 Interest income........      (22)     (16)    (323)     (757)   (1,870)   (1,134)  (1,018)
 Interest expense.......   53,112   51,601   51,943    55,403    55,344    41,318   42,135
 Total non-cash
  charges(g)............   25,015   24,542   23,322    25,651    25,622    19,253   18,316
 Amortization of
  original issue
  discount (included in
  interest expense).....     (725)    (938)  (1,068)   (1,205)   (1,369)   (1,009)    (430)
 Gain on insurance pro-
  ceeds.................      --       --       --        --    (16,953)  (16,953)     --
 Reorganization ex-
  pense.................      --       --       --        --        --        --     6,704
                          -------  -------  -------  --------  --------  --------  -------
 Adjusted EBITDA........  $71,438  $75,104  $68,179  $ 66,870  $ 71,565  $ 54,454  $57,215
                          =======  =======  =======  ========  ========  ========  =======
</TABLE>    
 
    The Company believes that Adjusted EBITDA, while providing useful
    information, should not be considered in isolation or as a substitute for
    the consolidated income statement data prepared in accordance with generally
    accepted accounting principles. For example, Adjusted EBITDA should not be
    considered an alternative to net income as an indicator of operating
    performance or an alternative to the use of cash flow as a measure of
    liquidity. See "Management's Discussion and Analysis of Financial Condition
    and Results of Operations--Liquidity and Capital Resources."
   
(e) During the nine months ended November 30, 1995, the Company completed
    capital expenditure projects related to the construction and expansion of
    refrigerated warehouse facilities totalling $24.5 million. Approximately
    $18.6 million of such capital expenditures were funded from the escrow fund
    established with the proceeds from the sale of the Series B Bonds. See
    "Management's Discussion and Analysis of Financial Condition and Results of
    Operations--Liquidity and Capital Resources--Capital Resources--Capital
    Expenditures."     
 
                                       10
<PAGE>
 
 
(f) For purposes of computing the ratio of earnings to fixed charges,
    "earnings" are defined as earnings before income taxes, extraordinary
    items, cumulative effect of accounting changes and fixed charges, and
    "fixed charges" consist of interest expense, amortization of debt issuance
    cost and that portion of rental expense considered to be representative of
    the interest factor in capital leases.
 
(g) Non-cash charges to the Company, which also have been included in the
    calculation of Adjusted EBITDA above, have been as follows:
 
<TABLE>
<CAPTION>
                                                                          NINE
                                                                      MONTHS ENDED
                             FISCAL YEAR ENDED LAST DAY OF FEBRUARY,  NOVEMBER 30,
                             --------------------------------------- ---------------
                              1991    1992    1993    1994    1995    1994    1995
                             ------- ------- ------- ------- ------- ------- -------
   <S>                       <C>     <C>     <C>     <C>     <C>     <C>     <C>
   Non-cash Charges:
    Depreciation...........  $19,822 $19,171 $17,725 $19,938 $20,140 $15,154 $14,505
    Goodwill amortization..    2,527   2,528   2,533   2,531   2,535   1,902   2,146
    Amortization of debt
     issuance costs........    1,120   1,129   1,173   1,249   1,276     944     761
    Amortization of
     original issue
     discount..............      725     938   1,068   1,205   1,369   1,009     430
    Other amortization.....      221     291     373     408     302     244     474
    Employee stock
     ownership plan
     expense...............      600     485     450     320     --      --      --
                             ------- ------- ------- ------- ------- ------- -------
    Total..................  $25,015 $24,542 $23,322 $25,651 $25,622 $19,253 $18,316
                             ======= ======= ======= ======= ======= ======= =======
</TABLE>
   
(h) The decrease in net cash provided by operating activities in the nine
    months ended November 30, 1995 is due to the reorganization fees and
    expenses associated with the Prepackaged Bankruptcy and changes in certain
    working capital items. See "Management's Discussion and Analysis of
    Financial Condition and Results of Operations--Liquidity and Capital
    Resources--Liquidity--Operating Cash Flow."     
 
 
                                       11
<PAGE>
 
                                  RISK FACTORS
 
  In addition to the other matters described in this Prospectus, the following
factors should be considered carefully by each prospective investor prior to
any purchase of Notes.
 
SUBSTANTIAL LEVERAGE; NET LOSSES; DEFICIT OF EARNINGS TO FIXED CHARGES
 
  The Company is highly leveraged, with a percentage of total debt to total
capitalization at November 30, 1995 of approximately 127%. See
"Capitalization." In addition, the Company may, subject to certain restrictions
in its debt agreements, incur further indebtedness from time to time to finance
expansion either through construction, acquisitions or capital leases, or for
other purposes. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources."
   
  Significant payments are required to service the Company's debt. As a result
of the significant interest charges on the debt incurred in connection with its
leveraged acquisition in December 1986, the adverse effect on the Company's net
sales resulting from drought and flood conditions in the agricultural sector in
the United States in certain years and the adverse effects of a December 1991
fire at the Kansas City, Kansas warehouse, the Company experienced losses
before extraordinary items and the cumulative effect of accounting changes of
approximately $9.7 million, $5.5 million, $8.2 million and $11.0 million for
fiscal 1991, 1992, 1993 and 1994, respectively. The Company's earnings were
sufficient to cover fixed charges in fiscal 1995 as a result of the receipt of
insurance payments related to the Kansas City fire, but were insufficient to
cover fixed charges by approximately $5.9 million, $0.15 million, $5.7 million,
$12.3 million and $6.3 million in fiscal 1991, 1992, 1993, 1994 and 1995
(before insurance payments), respectively. As of November 30, 1995, the Company
had a common stockholders' deficit of approximately $106.1 million and a
working capital deficit of approximately $1.1 million. See "--Substantial
Payment Obligations; Consequences of Failure to Service Debt" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Results of Operations."     
 
  The extent to which the Company is leveraged could have important
consequences to holders of the Notes, including: (a) impairment of the
Company's ability to obtain additional financing in the future for working
capital, capital expenditures, acquisitions or other purposes; (b) impairment
of the Company's ability to refinance existing debt; (c) dedication of a
substantial portion of the Company's cash flow from operations to the payment
of debt service requirements (principal and interest) on its indebtedness; (d)
vulnerability of the Company to changes in general economic conditions,
including conditions in the agricultural sector; and (e) limitations on the
Company's ability to capitalize on significant business opportunities and to
respond to competition, including limitations on its ability to make capital
expenditures included in its business plan.
 
RESTRICTIONS IMPOSED BY DEBT AGREEMENTS
   
  The Company's debt agreements contain a number of significant financial and
operating covenants that, among other things, significantly restrict the
ability of the Company and its subsidiary to dispose of assets, incur
additional indebtedness, pay dividends, create liens on assets, enter into
leases, make investments or acquisitions, engage in mergers or consolidations,
or engage in certain transactions with subsidiaries and affiliates and
otherwise restrict corporate activities. In particular, the Company's Senior
Debt agreements may substantially restrict the ability of the Company to redeem
or otherwise make payments in respect of principal on the Notes prior to the
maturity thereof. The Company's debt agreements do not restrict the receipt of
dividends from its subsidiary. See "Debt of the Company" and "Description of
Senior Subordinated Notes."     
 
  The Second Investment Agreement contains further restrictive covenants,
including covenants requiring the Company to comply with specific financial
ratios and maintenance tests. See "Debt of the Company--The Second Investment
Agreement."
 
  The Company is currently in compliance with all of the covenants in its debt
agreements. However, to remain in compliance with these covenants, the Company
will be required to achieve financial and operating
 
                                       12
<PAGE>
 
results that are better than those achieved historically. There can be no
assurance that such improved results will be achieved.
 
  The breach of any of these covenants or restrictions could result in a
default under the Company's debt agreements. In the event of such a default,
the holders of such indebtedness could elect to declare all such indebtedness
immediately due and payable, including accrued and unpaid interest, and to
terminate their commitments (if any) with respect to funding obligations under
the agreements related to such indebtedness. In addition, such holders could
proceed against any collateral securing their debt. The collateral securing the
Company's senior indebtedness constitutes substantially all of the assets of
the Company. Any such default would also have a significant adverse effect on
the market value and marketability of the Notes.
 
SUBSTANTIAL PAYMENT OBLIGATIONS; CONSEQUENCES OF FAILURE TO SERVICE DEBT
 
  The Company has substantial payment obligations with respect to its
indebtedness, including the First Mortgage Bonds. The First Mortgage Bonds will
mature nearly six years (Series A) and three years (Series B) prior to the
maturity of the Notes. No assurance can be given that the Company will be able
to generate sufficient cash flow from operations to meet its debt service
obligations. To make long-term debt repayments, the Company will attempt to
increase operating cash flow through improvements in existing operations,
through expansion of its transportation management business, and through
capacity growth by pursuing viable growth opportunities, such as the
acquisition or expansion of warehouse facilities. Alternatively, the Company
may seek to refinance its debt as it matures. There can be no assurance,
however, that such improved operations, expanded transportation management
business, warehouse capacity growth or refinancing will be accomplished
successfully. If such increase in operating cash flow or refinancing is not
accomplished, the Company anticipates it would pursue the following
alternatives: (1) restrict its projected capital expenditure program; (2) seek
alternative sources of financing; (3) seek modifications to its financing
arrangements with existing lenders; or (4) sell certain warehouses (subject to
obtaining any necessary lender consents). See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Debt of the
Company."
 
  If for any reason the Company were unable to meet its debt service
obligations, it would be in default under the terms of its indebtedness. The
consequences of any such default could be the same as a covenant default
described above under "--Restrictions Imposed by Debt Agreements."
 
SUBORDINATION
   
  The Notes will be subordinated to all Senior Debt, as defined in the Note
Indenture, including the debt evidenced by the Company's Bank Credit Agreement
and the First Mortgage Bonds. See "Description of Senior Subordinated Notes."
Substantially all the assets of the Company are encumbered pursuant to its
Senior Debt agreements. In a liquidation, bankruptcy, reorganization or similar
proceeding, the assets of the Company would be available to pay obligations on
its subordinated indebtedness (including the Notes) only after all Senior Debt
had been paid in full and, in such event, there may be insufficient assets to
pay in full amounts due on the Notes. On November 30, 1995, the Company had
approximately $349.5 million in principal amount of Senior Debt outstanding.
    
CONCLUSION OF PREPACKAGED BANKRUPTCY
   
  Although the Plan became effective on June 30, 1995, a lease rejection claim
by one landlord involving one warehouse property remains unresolved. The
Company does not believe that the resolution of such claim will have a material
adverse effect upon the Company, but there can be no assurance as to the
outcome of such proceeding. See "Legal Proceedings."     
 
 
                                       13
<PAGE>
 
COMPANY DEPENDENCE ON SIGNIFICANT CUSTOMERS
 
  A number of the Company's facilities depend to a large extent upon one or a
small number of customers. In fiscal 1995, the Company's ten largest customers
accounted for approximately 55% of the Company's total net sales. One customer
of the Company, Heinz and its subsidiaries, accounted for approximately 21% of
the Company's net sales in fiscal 1995 (consisting primarily of refrigerated
warehousing sales) and 33% of the Company's net sales in the first nine months
of fiscal 1996 (consisting of both refrigerated warehousing and transportation
management sales). An interruption or reduction in the business received from
such customers would result in a decrease in the sales at certain facilities
and in the overall net sales of the Company. See "--Expansion of Transportation
Management Services."
   
  Although the Company has previously disclosed a customer's intention to
relocate by late fiscal 1997 a significant portion of the customer's storage
volume from one of the Company's warehouses to a new warehouse to be
constructed closer to one of the customer's production facilities, the Company
has been advised that the customer has reassessed such relocation. The customer
has notified the Company that it intends to maintain its current levels of
storage volume in the Company's warehouse through at least the first quarter of
fiscal 1998. Also, the Company believes that the customer has not reached a
final decision to relocate such business. The Company believes that if the
final decision is made to relocate such business, the Company will be allowed
to participate in proposals to provide warehousing services in such new
location. If such storage volume is relocated, the Company believes that it
will secure replacement business to recover a substantial portion of the gross
operating margin represented by such storage volume but there can be no
assurance in this regard. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Results of Operations--
Comparison of Nine-month Periods Ended November 30, 1994 and 1995" and
"Business--Customers."     
 
EXPANSION OF TRANSPORTATION MANAGEMENT SERVICES
   
  The Company has recently expanded its transportation management services, and
its current strategy involves assuming full responsibility for certain
logistics requirements of its customers. See "Business--Company Strategy." Due
to the complexity of implementing and coordinating several inter-related
systems, the Company encountered start-up difficulties in achieving agreed-upon
service levels with respect to the introduction of certain transportation
management services for certain customers in the latter part of fiscal 1996. In
light of remedial actions taken by the Company and based on discussions with
such customers, the Company believes that it has overcome such difficulties.
There can be no assurance, however, that the Company will not encounter
difficulties in the future or that such difficulties, if encountered, would not
adversely affect operating income or customer relationships.     
 
  The maintenance and continued growth of the Company's transportation
management services is dependent upon meeting customer expectations. There can
be no assurance that existing transportation management services customers will
continue to use the Company's services, that the Company will be successful in
its effort to reach arrangements with additional customers for the provision of
integrated logistics services or that the Company will not experience losses in
the transportation management business in the future. See "--Company Dependence
on Significant Customers."
 
COMPETITION
 
  Americold operates in a competitive environment in which several national and
regional, and many smaller, warehouse operators compete with the Company. One
important competitive factor is the location of the Company's warehouse
facilities, and, consequently, the geographic markets in which it competes are
primarily local. Competition varies from local market to local market, but
almost all local markets are characterized by low barriers to entry since any
competitor able to obtain financing may build a competing facility. In
addition, the Company's customers, many of which have substantially greater
resources than the Company, may divert business from the Company or build their
own private refrigerated warehouse facilities. See "Business--Competition."
 
                                       14
<PAGE>
 
  In the transportation management business, there are several national and
local enterprises that presently provide or may in the future provide
transportation management services to frozen food shippers. The Company is
unaware, however, of any competitor which at this time provides significant
transportation management services in conjunction with a single, integrated
network of frozen food warehouses. See "Business--Competition."
 
DEPENDENCE ON AGRICULTURAL MARKETS
 
  A substantial portion of the Company's warehousing sales are derived from
storage and handling of agricultural products and foods prepared from
agricultural products. The Company's operating results, therefore, may be
materially affected by severe weather or other conditions affecting the
agricultural sector generally.
 
VOTING CONTROL
 
  Kelso holds approximately 53% and seven entities (including Kelso) and
management together hold approximately 83% of the outstanding shares of the
Company's common stock. These entities and management are able to elect all of
the members of the Company's Board of Directors. As a result of such stock
ownership, these shareholders can effectively control the affairs and business
policies of the Company. See "Principal Shareholders."
 
ABSENCE OF ESTABLISHED TRADING MARKET; LIQUIDITY OF NOTES
 
  The Company does not intend to apply for listing of the Notes on any
securities exchange or seek approval for quotation of the Notes on any inter-
dealer quotation system. It is unlikely that a public trading market for the
Notes will exist. The Underwriters have advised the Company that they presently
intend to make a market in the Notes, but they are not obligated to do so and
any such market-making may be discontinued by the Underwriters in their sole
discretion at any time without notice. Accordingly, no assurance can be given
as to the liquidity of, or the existence of trading markets for, the Notes.
 
  The Notes may be characterized as "high-yield" securities. In recent years,
uncertainties in the high-yield debt market have been reflected in volatile
prices of such securities. Such volatility may have a material adverse effect
on the ability of a purchaser to resell the Notes for any value. Accordingly,
no assurance can be given that any purchaser of the Notes will be able to sell
the Notes in the future.
 
                                USE OF PROCEEDS
   
  The net proceeds to the Company from the Offering are expected to be
approximately $115 million after payment of underwriting discounts and
commissions and certain fees and expenses related to the Offering. The Company
intends to apply the net proceeds of the Offering to redeem at par all of its
15% Debentures. As of December 31, 1995, there was $115.0 million aggregate
principal amount of 15% Debentures outstanding at an interest rate of 15% and
with a maturity date of November 1, 2007. Concurrently with the closing of the
Offering, the Company will defease all outstanding 15% Debentures in accordance
with the provisions of the indenture related to such debentures by depositing
with the trustee under such indenture $115.0 million of the proceeds from the
Offering, plus accrued interest. The 15% Debentures will remain a legal
obligation of the Company for approximately 45 days following the closing of
the Offering until the trustee applies such proceeds to redeem the 15%
Debentures upon expiration of the applicable notice periods provided in such
indenture. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources" and "Underwriting."
    
                                       15
<PAGE>
 
                                 CAPITALIZATION
 
  The following table sets forth the capitalization of the Company as of
November 30, 1995, and as adjusted to give effect to the issuance of the Notes
and the redemption of the 15% Debentures as if the Offering and the redemption
had been completed on November 30, 1995. The information included in the table
is qualified in its entirety by, and should be read in conjunction with, the
Consolidated Financial Statements and related notes included elsewhere herein.
 
<TABLE>
<CAPTION>
                                                         NOVEMBER 30, 1995
                                                      -------------------------
                                                       ACTUAL    AS ADJUSTED(A)
                                                      ---------  --------------
                                                       (DOLLARS IN THOUSANDS)
<S>                                                   <C>        <C>
Debt:
  Bank Credit Agreement (b).........................  $     --     $     --
  Series A Bonds....................................    140,000      140,000
  Series B Bonds....................................    176,250      176,250
  15% Debentures....................................    115,000          --
  Notes.............................................        --       120,000
  Other indebtedness................................     33,243       33,243
                                                      ---------    ---------
      Total debt....................................    464,493      469,493
Preferred stock $100 par value; authorized 1,000,000
 shares; issued and outstanding 52,936 shares.......      6,325        6,325
Common stockholders' deficit:
  Common stock $.01 par value; authorized 10,000,000
   shares; issued and outstanding 4,860,934 shares..         49           49
  Additional paid in capital........................     49,022       49,022
  Retained deficit..................................   (155,107)    (155,107)
  Equity adjustment to recognize minimum pension
   liability (c)....................................        (43)         (43)
                                                      ---------    ---------
    Total common stockholders' deficit..............   (106,079)    (106,079)
                                                      ---------    ---------
      Total capitalization..........................  $ 364,739    $ 369,739
                                                      =========    =========
</TABLE>
--------
(a) Gives effect to the issuance of the Notes and the redemption of the 15%
    Debentures as if the Offering and the redemption had been completed on
    November 30, 1995.
(b) The Company currently has a revolving credit facility with its primary bank
    of up to $27.5 million, including up to $10.0 million of letters of credit.
    Other than letters of credit, the Company, as of November 30, 1995, had no
    borrowings outstanding under the credit facility. See "Debt of the
    Company--The Bank Credit Agreement."
(c) This adjustment reflects the excess of the present value of accumulated
    plan benefits over the fair value of plan assets under one of the Company's
    pension plans.
 
                                       16
<PAGE>
 
             SELECTED CONSOLIDATED FINANCIAL AND OTHER INFORMATION
 
  The following table presents selected consolidated historical financial and
other information of the Company. The information should be read in conjunction
with the "Management's Discussion and Analysis of Financial Condition and
Results of Operations" as furnished below. The consolidated financial
information for the Company for each of the five fiscal years set forth in the
table has been derived from the historical consolidated financial statements of
the Company which have been audited by KPMG Peat Marwick LLP, independent
certified public accountants for the Company. The reports of KPMG Peat Marwick
LLP refer to changes in accounting for income taxes and post-retirement
benefits other than pensions. Selected consolidated financial information for
the nine months ended November 30, 1994 and November 30, 1995 has been derived
from unaudited consolidated financial statements and, in the opinion of the
Company, includes all adjustments that are considered necessary for a fair
presentation of such financial information. Historical data and interim results
are not necessarily indicative of future results and interim data are not
necessarily indicative of results for a full year.
 
<TABLE>   
<CAPTION>
                                                                                  NINE
                                                                              MONTHS ENDED
                            FISCAL YEAR ENDED LAST DAY OF FEBRUARY,           NOVEMBER 30,
                          ------------------------------------------------  ------------------
                            1991      1992      1993      1994      1995      1994      1995
                          --------  --------  --------  --------  --------  --------  --------
                                 (DOLLARS ARE IN THOUSANDS EXCEPT PER SHARE DATA)
<S>                       <C>       <C>       <C>       <C>       <C>       <C>       <C>
INCOME STATEMENT DATA:
Net sales...............  $196,927  $200,680  $196,130  $198,887  $215,207  $162,214  $199,897
Operating expenses:
 Cost of sales..........   115,030   115,452   118,846   126,273   138,132   104,188   135,903
 Amortization of cost in
  excess of net assets
  acquired..............     2,527     2,528     2,533     2,531     2,535     1,902     2,146
 Selling and
  administrative
  expense...............    30,517    30,094    27,192    27,090    25,955    19,500    21,154
 Employee stock
  ownership plan
  expense...............       750       750       750       --        750       --        --
                          --------  --------  --------  --------  --------  --------  --------
 Total operating
  expense...............   148,824   148,824   149,321   155,894   167,372   125,590   159,203
                          --------  --------  --------  --------  --------  --------  --------
Gross operating margin..    48,103    51,856    46,809    42,993    47,835    36,624    40,694
Other income (expense):
 Interest income........        22        16       323       757     1,870     1,134     1,018
 Interest expense.......   (53,112)  (51,601)  (51,943)  (55,403)  (55,344)  (41,318)  (42,135)
 Amortization of debt
  issuance cost.........    (1,120)   (1,129)   (1,173)   (1,249)   (1,276)     (944)     (761)
 Other, net(a)..........       165       773       289       680    17,706    17,483    (7,308)
                          --------  --------  --------  --------  --------  --------  --------
 Total other expenses...   (54,045)  (51,941)  (52,504)  (55,215)  (37,044)  (23,645)  (49,186)
                          --------  --------  --------  --------  --------  --------  --------
Income (loss) before
 taxes, extraordinary
 items and cumulative
 effect of accounting
 changes................    (5,942)      (85)   (5,695)  (12,222)   10,791    12,979    (8,492)
Income tax expense
 (benefit)..............     3,774     5,408     2,455    (1,183)    5,227     5,754    (2,489)
Extraordinary gain
 (loss)(b)..............       654       --        --     (1,848)      --        --     (1,793)
Cumulative effect of
 accounting changes(c)
 .......................       --        --        --    (64,234)      --        --        --
                          --------  --------  --------  --------  --------  --------  --------
Net income (loss).......  $ (9,062) $ (5,493) $ (8,150) $(77,121) $  5,564  $  7,225  $ (7,796)
                          ========  ========  ========  ========  ========  ========  ========
Net income (loss) per
 common share...........  $  (1.93) $  (1.24) $  (1.80) $ (16.00) $   1.00  $   1.38  $  (1.71)
OTHER DATA:
Adjusted EBITDA(d)......  $ 71,438  $ 75,104  $ 68,179  $ 66,870  $ 71,565  $ 54,454  $ 57,215
Ratio of adjusted EBITDA
 to interest
 expense (d)............     1.35x     1.46x     1.31x     1.21x     1.29x     1.32x     1.36x
Capital
 expenditures(e)........  $  8,509  $  9,212  $  7,661  $  8,925  $ 13,203  $ 13,213  $ 29,300
Ratio of earnings to
 fixed charges(f).......       --        --        --        --      1.19x     1.30x       --
Deficiency in earnings
 to cover fixed
 charges(g).............  $  5,942  $    148  $  5,699  $ 12,283       --        --   $  8,996
Net cash provided (used)
 by operating
 activities(h)..........  $ 16,287  $ 22,506  $ 17,700  $ 18,476  $ 12,684  $  4,415  $   (866)
Weighted average
 capacity--cubic feet
 (in millions)..........     223.4     225.9     228.8     231.4     229.2     227.5     230.1
Total pounds handled--
 receipts and releases
 (in millions)..........    17,380    17,154    16,609    17,906    20,004    15,160    15,709
Total pounds stored--
 average at month-end
 (in millions)..........     1,560     1,635     1,534     1,493     1,568     1,563     1,552
</TABLE>    
 
                                       17
<PAGE>
 
<TABLE>
<CAPTION>
                                                                                  AS OF
                                  AS OF LAST DAY OF FEBRUARY,                  NOVEMBER 30,
                         -------------------------------------------------  -------------------
                           1991      1992      1993      1994       1995      1994      1995
                         --------  --------  --------  ---------  --------  --------  ---------
<S>                      <C>       <C>       <C>       <C>        <C>       <C>       <C>
BALANCE SHEET DATA:
 Total assets........... $493,651  $483,841  $490,151  $ 528,703  $544,595  $537,205  $ 523,543
 Long-term debt.........  449,299   435,133   443,003    467,337   442,912   438,251    461,791
 Preferred stock........    3,208     4,204     4,773      5,348     5,789     5,850      6,325
 Common stockholders'
  deficit...............  (10,578)  (16,882)  (25,175)  (102,577)  (97,747)  (95,853)  (106,079)
</TABLE>
--------
(a) Includes a pretax gain of approximately $17.0 million in fiscal 1995 from
    insurance proceeds related to the Company's settlement of claims arising
    out of the Kansas City fire. See "Management's Discussion and Analysis of
    Financial Condition and Results of Operations--Introduction--Effect of
    Kansas City Fire." Includes a pretax expense of approximately $6.7 million
    in the nine months ended November 30, 1995 relating to reorganization fees
    and expenses incurred as part of the Prepackaged Bankruptcy.
(b) For fiscal 1991, includes a gain of approximately $0.7 million from the
    purchase of $5 million face value of the Company's 11% Debentures. For
    fiscal 1994, includes a loss of approximately $1.8 million from the
    retirement of $150 million in principal amount of Series A Bonds as part
    of the issuance of the Series B Bonds. For the nine months ended November
    30, 1995, includes a loss of approximately $1.8 million relating to the
    exchange of the Company's 11% Debentures for the 15% Debentures and the
    repurchase of $10 million in principal amount of Series A Bonds.
(c) Effective March 1, 1993, the Company implemented Financial Accounting
    Standards Board Statement of Financial Accounting Standard No. 106,
    "Employer's Accounting for Postretirement Benefits Other Than Pensions,"
    and Statement No. 109, "Accounting for Income Taxes." As a result of the
    implementation of these accounting standards, the Company's fiscal 1994
    earnings were reduced by approximately $64.2 million.
   
(d) EBITDA is a widely accepted financial indicator of a company's ability to
    service debt. However, the Company believes that because of the gain from
    insurance proceeds in fiscal 1995 and in the nine months ended November
    30, 1994, and the reorganization fees and expenses in the nine months
    ended November 30, 1995, a more meaningful indicator is Adjusted EBITDA.
    Except for fiscal 1995 and the nine months ended November 30, 1994 and
    1995, EBITDA is the same as Adjusted EBITDA. Adjusted EBITDA is calculated
    as follows:     
 
<TABLE>
<CAPTION>
                                                                                  NINE
                                                                              MONTHS ENDED
                              FISCAL YEAR ENDED LAST DAY OF FEBRUARY,         NOVEMBER 30,
                             ---------------------------------------------  -----------------
                              1991     1992     1993      1994      1995      1994     1995
                             -------  -------  -------  --------  --------  --------  -------
   <S>                       <C>      <C>      <C>      <C>       <C>       <C>       <C>
   Income (loss) before
    taxes, extraordinary
    items and cumulative
    effect of accounting
    changes................  $(5,942) $   (85) $(5,695) $(12,222) $ 10,791  $ 12,979  $(8,492)
   Interest income.........      (22)     (16)    (323)     (757)   (1,870)   (1,134)  (1,018)
   Interest expense........   53,112   51,601   51,943    55,403    55,344    41,318   42,135
   Total non-cash
    charges(g).............   25,015   24,542   23,322    25,651    25,622    19,253   18,316
   Amortization of original
    issue discount
    (included in interest
    expense)...............     (725)    (938)  (1,068)   (1,205)   (1,369)   (1,009)    (430)
   Gain on insurance
    proceeds...............      --       --       --        --    (16,953)  (16,953)     --
   Reorganization expense..      --       --       --        --        --        --     6,704
                             -------  -------  -------  --------  --------  --------  -------
   Adjusted EBITDA.........  $71,438  $75,104  $68,179  $ 66,870  $ 71,565  $ 54,454  $57,215
                             =======  =======  =======  ========  ========  ========  =======
</TABLE>
     
    The Company believes that Adjusted EBITDA, while providing useful
    information, should not be considered in isolation or as a substitute for
    the consolidated income statement data prepared in accordance with generally
    accepted accounting principles. For example, Adjusted EBITDA should not be
    considered an alternative to net income as an indicator of operating
    performance or an alternative to the use of cash flow as a measure of
    liquidity. See "Management's Discussion and Analysis of Financial Condition
    and Results of Operations--Liquidity and Capital Resources."     
(e) During the nine months ended November 30, 1995, the Company completed
    capital expenditure projects related to the construction and expansion of
    refrigerated warehouse facilities totalling $24.5 million. Approximately
    $18.6 million of such capital expenditures were funded from the escrow
    fund established with the proceeds from the sale of the Series B Bonds.
    See "Management's Discussion and Analysis of Financial Condition and
    Results of Operations--Liquidity and Capital Resources--Capital
    Resources--Capital Expenditures."
(f) For purposes of computing the ratio of earnings to fixed charges,
    "earnings" are defined as earnings before income taxes, extraordinary
    items, cumulative effect of accounting changes and fixed charges, and
    "fixed charges" consist of interest expense, amortization of debt issuance
    cost and that portion of rental expense considered to be representative of
    the interest factor in capital leases.
 
                                      18
<PAGE>
 
(g) Non-cash charges to the Company, which also have been included in the
    calculation of Adjusted EBITDA above, have been as follows:
 
<TABLE>
<CAPTION>
                                                                       NINE MONTHS
                                                                          ENDED
                             FISCAL YEAR ENDED LAST DAY OF FEBRUARY,  NOVEMBER 30,
                             --------------------------------------- ---------------
                              1991    1992    1993    1994    1995    1994    1995
                             ------- ------- ------- ------- ------- ------- -------
   <S>                       <C>     <C>     <C>     <C>     <C>     <C>     <C>
   Non-cash Charges:
    Depreciation...........  $19,822 $19,171 $17,725 $19,938 $20,140 $15,154 $14,505
    Goodwill amortization..    2,527   2,528   2,533   2,531   2,535   1,902   2,146
    Amortization of debt
     issuance costs........    1,120   1,129   1,173   1,249   1,276     944     761
    Amortization of
     original issue
     discount..............      725     938   1,068   1,205   1,369   1,009     430
    Other amortization.....      221     291     373     408     302     244     474
    Employee stock
     ownership plan
     expense...............      600     485     450     320     --      --      --
                             ------- ------- ------- ------- ------- ------- -------
    Total..................  $25,015 $24,542 $23,322 $25,651 $25,622 $19,253 $18,316
                             ======= ======= ======= ======= ======= ======= =======
</TABLE>
   
(h) The decrease in net cash provided by operating activities in the nine
    months ended November 30, 1995 is due to the reorganization fees and
    expenses associated with the Prepackaged Bankruptcy and changes in certain
    working capital items. See "Management's Discussion and Analysis of
    Financial Condition and Results of Operations--Liquidity and Capital
    Resources--Liquidity--Operating Cash Flow."     
 
                                      19
<PAGE>
 
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
INTRODUCTION
 
  Americold provides integrated logistics services for the frozen food industry
consisting of warehousing and transportation management. These services are
provided through the Company's network of 49 refrigerated warehouses and its
refrigerated transportation management unit. The Company's fiscal year ends on
the last day of February.
   
  Development of Transportation Management Services--In recent quarters, the
Company has experienced increased interest by customers in procuring
transportation management services from the Company. In this regard, the
Company entered into arrangements in the first half of fiscal 1996 pursuant to
which it is providing such services to three subsidiaries of one large
customer. Transportation management services provided to these three customers
account for substantially all of the increase in the Company's transportation
management revenues thus far in fiscal 1996. The Company has made proposals to
offer similar services to certain other potential customers by emphasizing its
logistics expertise and warehouse industry position which enable customers to
obtain services in support of distribution of frozen food products from a
single provider.     
   
  The maintenance and continued growth of transportation management services
revenues is dependent upon meeting customer expectations. Due to the complexity
of implementing and coordinating several inter-related systems, the Company
encountered start-up difficulties in achieving agreed-upon service levels with
respect to the introduction of certain transportation management services for
certain customers in the latter part of fiscal 1996. In light of remedial
actions taken by the Company and based on discussions with such customers, the
Company believes that it has overcome such difficulties. There can be no
assurance, however, that the Company will not encounter difficulties in the
future or that such difficulties, if encountered, would not adversely affect
operating income or customer relationships. The Company believes, however, that
its transportation management activities may lead to stronger customer
relationships and increased revenues in the higher-margin warehousing business.
See "Risk Factors--Expansion of Transportation Management Services."     
 
  As the Company does not own transportation equipment, the Company has entered
into contracts with independent carriers to provide freight transportation at
negotiated rates. Accordingly, the margins that the Company earns in providing
transportation management services are lower than for its warehousing services.
   
  Development of Refrigerated Warehouse Properties--The Company continually
evaluates the need for warehouse space and intends to pursue growth of its
refrigerated warehouse business both by expanding its network of warehouses and
by expanding existing facilities in response to customer requirements. Since
August 1994 (mid-fiscal 1995), the Company has added approximately 15.1 million
cubic feet of storage capacity in five locations. Two of such facilities became
operational in fiscal 1995, and one in the second quarter and two in the third
quarter of fiscal 1996. The increase, net of warehouse closures discussed
below, represents a 1.4% increase in available warehouse space. The Company is
currently working toward the development of several new warehouses which
include the acquisition of 2.1 million cubic feet and the construction of 16.4
million cubic feet of new refrigerated warehouse space. The Company intends to
finance such expansion primarily through operating leases pursuant to an
existing commitment and from other financing sources. See "--Liquidity and
Capital Resources--Capital Resources."     
 
  Since August 1994, the Company has reduced the amount of available
refrigerated warehouse space by approximately 12 million cubic feet due to the
sale of one property, termination of four operating leases in the Prepackaged
Bankruptcy in the third quarter of fiscal 1996 and the non-renewal of three
other operating leases. The Company expects that the effects of the closure or
disposition of such non-strategic facilities will have a positive effect on
future gross operating margin as a percentage of net sales.
 
  Prepackaged Bankruptcy--During the first quarter of fiscal 1996, the Company
solicited acceptance of the Plan in the Prepackaged Bankruptcy. The principal
purpose of the Plan was to reduce the Company's
 
                                       20
<PAGE>
 
short-term cash requirements with respect to payments due on its subordinated
indebtedness by extending the maturity on such indebtedness from May 1997 to
November 2007 and to adjust certain restrictive financial covenants and certain
other provisions contained in the prior Investment Agreement between the
Company and the Institutional Investor. Each holder of the 11% Debentures
received a corresponding amount of the Company's new 15% Debentures at par,
plus accrued but unpaid interest. The Company received approval from the
classes of debtholders entitled to vote on the Plan and, on May 9, 1995, filed
the Plan as approved with the United States Bankruptcy Court for the District
of Oregon. On June 19, 1995, the Court approved the Company's Plan, and on June
30, 1995, the Plan became effective. The Company was debtor-in-possession
during the proceedings. The Company believes the Prepackaged Bankruptcy has not
adversely affected the holders of its Senior Debt or its relationships with its
customers, suppliers or shareholders. See "Risk Factors--Conclusion of
Prepackaged Bankruptcy" and "--Liquidity and Capital Resources--Liquidity--
Effect of Prepackaged Bankruptcy."
 
  Through the third quarter of fiscal 1996, the Company incurred approximately
$6.7 million in reorganization fees and expenses related to the Prepackaged
Bankruptcy. In addition, the write-off of unamortized original issue discount
and unamortized issuance costs related to the exchange of the 11% Debentures
and the repurchase of $10.0 million in principal amount of the Series A Bonds
in the Prepackaged Bankruptcy resulted in an extraordinary loss, net of taxes,
of approximately $1.8 million in the same period.
 
  Effect of the 1986 Acquisition--In December 1986, Kelso, certain
institutional investors and members of Americold's management (its "Management
Group") purchased the Company from its prior owners (the "1986 Acquisition").
The Company's operating results and cash flow have been and will continue to be
materially affected by the indebtedness incurred to finance the 1986
Acquisition. For fiscal 1994 and 1995, interest expense, principally related to
debt incurred to finance the 1986 Acquisition, totaled $55.4 million and $55.3
million, respectively. See "Risk Factors--Substantial Leverage; Net Losses;
Deficit of Earnings to Fixed Charges."
 
  Effect of Kansas City Fire--In December 1991 a fire began at the Company's
Kansas City, Kansas underground warehouse, the Company's largest warehouse
facility. Due to its underground location, the fire required an extended period
to extinguish. As a result of the fire, the Company's warehousing activities in
Kansas City have operated at a substantially reduced level due to loss of
public storage and lease customers. Although a substantial portion of the
Kansas City warehouse facility has been restored to its pre-fire condition, the
Company is unable to predict its ability to return the facility to pre-fire
operating volumes and profits. The Company settled its first party claims with
its insurance carriers for business interruption losses, property damage and
out-of-pocket expenses with respect to the fire and recognized in the third
quarter of fiscal 1995 approximately $17 million as a gain on insurance
settlement.
 
HISTORICAL INCOME STATEMENT INFORMATION
 
  The following table sets forth, for the nine-month periods ended November 30,
1994 and November 30, 1995, respectively, certain consolidated financial data
of the Company, expressed as a percentage of net sales:
                             
                          PERCENTAGE OF NET SALES     
 
<TABLE>
<CAPTION>
                                                                    NINE MONTHS
                                                                       ENDED
                                                                   NOVEMBER 30,
                                                                   -------------
                                                                    1994   1995
                                                                   ------ ------
<S>                                                                <C>    <C>
Net sales......................................................... 100.0% 100.0%
Cost of sales.....................................................  64.2%  68.0%
Amortization of cost in excess of net assets acquired.............   1.2%   1.1%
Selling and administrative expenses...............................  12.0%  10.6%
Gross operating margin............................................  22.6%  20.4%
Interest expense..................................................  25.5%  21.1%
</TABLE>
 
 
                                       21
<PAGE>
 
  The following table sets forth, for the fiscal years ended the last day of
February 1993, 1994 and 1995, respectively, certain consolidated financial data
for the Company, expressed as a percentage of net sales:
                             
                          PERCENTAGE OF NET SALES     
 
<TABLE>
<CAPTION>
                           LAST DAY OF FEBRUARY,
                          -----------------------
                           1993    1994    1995
                          ------- ------- -------
<S>                       <C>     <C>     <C>
Net sales...............   100.0%  100.0%  100.0%
Cost of sales...........    60.6%   63.5%   64.2%
Amortization of cost in
 excess of net assets
 acquired...............     1.3%    1.3%    1.2%
Selling and
 administrative
 expenses...............    13.9%   13.6%   12.1%
Gross operating margin..    23.9%   21.6%   22.2%
Interest expense........    26.5%   27.9%   25.7%
</TABLE>
 
RESULTS OF OPERATIONS
 
 Comparison of Nine-month Periods Ended November 30, 1994 and 1995
 
  Net Sales--The Company's net sales increased 23.2% from $162.2 million for
the first nine months of fiscal 1995 to $199.9 million for the first nine
months of fiscal 1996, reflecting a substantial increase in transportation
management sales as well as a 3.7% increase in warehousing sales. The Company's
third fiscal quarter is typically its strongest sales quarter.
 
  Americold's net sales for the first nine months of fiscal 1995 and the first
nine months of fiscal 1996 are detailed in the table below, by activity:
                                    
                                 NET SALES     
                             (DOLLARS IN MILLIONS)
 
<TABLE>
<CAPTION>
                              NINE MONTHS         NINE MONTHS
                                 ENDED               ENDED           % CHANGE
                           NOVEMBER 30, 1994   NOVEMBER 30, 1995   FY95 TO FY96
                           ------------------  ------------------  ------------
                            AMOUNT      %       AMOUNT      %
                           ------------------  ------------------
<S>                        <C>       <C>       <C>       <C>       <C>
Logistics
  Warehousing
    Storage............... $    77.4     47.7% $    79.9     40.0%      3.2 %
    Handling..............      53.1     32.7%      56.8     28.4%      7.0 %
    Leasing...............       5.3      3.3%       5.1      2.6%     (3.8)%
    Freezing and other....       9.4      5.8%       8.7      4.3%     (7.4)%
                           --------- --------  --------- --------     ------
                               145.2     89.5%     150.5     75.3%       3.7%
  Transportation
   management services....      12.9      8.0%      46.0     23.0%    256.6 %
                           --------- --------  --------- --------     ------
Total logistics...........     158.1     97.5%     196.5     98.3%     24.3 %
Other nonlogistics........       4.1      2.5%       3.4      1.7%    (17.1)%
                           --------- --------  --------- --------     ------
Total net sales........... $   162.2    100.0% $   199.9    100.0%     23.2 %
                           ========= ========  ========= ========     ======
</TABLE>
 
  Warehousing sales increased 3.7% from $145.2 million for the first nine
months of fiscal 1995 to $150.5 million for the first nine months of fiscal
1996, principally due to a 3.2% increase in storage revenue and a 7.0% increase
in handling revenue. The increase in storage revenue is primarily due to price
increases and changes in product mix, as storage volume remained stable at
approximately 1.56 billion pounds stored on average per month in each of the
two periods.
 
                                       22
<PAGE>
 
   
  Although the Company has previously disclosed a customer's intention to
relocate by late fiscal 1997 a significant portion of the customer's storage
volume from one of the Company's warehouses to a new warehouse to be
constructed closer to one of the customer's production facilities, the Company
has been advised that the customer has reassessed such relocation. The customer
has notified the Company that it intends to maintain its current levels of
storage volume in the Company's warehouse through at least the first quarter of
fiscal 1998. Also, the Company believes that the customer has not reached a
final decision to relocate such business. The Company believes that if the
final decision is made to relocate such business, the Company will be allowed
to participate in proposals to provide warehousing services in such new
location. If such storage volume is relocated, the Company believes that it
will secure replacement business to recover a substantial portion of the gross
operating margin represented by such storage volume, but there can be no
assurance in this regard. Unless mitigated by the Company's efforts to obtain
replacement business or to provide warehousing services at the new location,
the effect on gross operating margin from such relocation would be a reduction
of approximately $2.0 million per year. See "Risk Factors--Dependence on
Significant Customers."     
 
  The 7.0% increase in handling revenue resulted primarily from a 3.7% increase
in volume of product handled, with the remaining increase due to price
increases and changes in product mix. For the first nine months of fiscal 1995,
15.2 billion pounds of product were handled by the Company compared with 15.7
billion pounds during the same period in fiscal 1996.
 
  Transportation management sales increased 256.6% from $12.9 million for the
first nine months of fiscal 1995 to $46.0 million for the first nine months of
fiscal 1996, due to the outsourcing to the Company of additional transportation
management responsibilities by three customers.
   
  Other non-logistics sales (quarry sales) decreased 17.1% from $4.1 million
for the first nine months of fiscal 1995 to $3.4 million for the first nine
months of fiscal 1996.     
 
  Cost of Sales--Cost of sales increased 30.4% from $104.2 million for the
first nine months of fiscal 1995 to $135.9 million for the first nine months of
fiscal 1996. The increased volume of transportation management services, which
required increases in transportation capacity purchased from carriers and the
addition of new employees, resulted in an approximately $32.1 million increase
in cost of sales. In addition, the cost of sales decreased as a result of
warehouse additions and closures in the net amount of $1.6 million. See "--
Introduction--Development of Refrigerated Warehouse Properties."
 
  Cost of sales as a percentage of net sales increased from 64.2% for the first
nine months of fiscal 1995 to 68.0% for the first nine months of fiscal 1996,
as handling and transportation management sales, which each have high variable
cost requirements, increased from 40.7% of net sales in the prior period to
51.4% in the more recent period.
 
  Selling and Administrative Expenses--Selling and administrative expenses
increased 8.5% from $19.5 million for the first nine months of fiscal 1995 to
$21.2 million for the first nine months of fiscal 1996. The increase primarily
reflects an increase of approximately $1.0 million in salaries and related
fringe benefits. Selling and administrative expenses as a percentage of net
sales decreased from 12.0% in the first nine months of fiscal 1995 to 10.6% in
the first nine months of fiscal 1996 due to the increase in transportation
management sales which did not require a corresponding increase in selling and
administrative expenses.
 
  Gross Operating Margin--As a result of the factors discussed above, gross
operating margin increased 11.1% from $36.6 million for the first nine months
of fiscal 1995 to $40.7 million for the first nine months of fiscal 1996.
 
  Interest Expense--Interest expense increased from $41.3 million for the first
nine months of fiscal 1995 to $42.1 million for the first nine months of fiscal
1996 as a result of slightly higher overall interest rates partially offset by
slightly lower overall borrowings. The increase in interest rates resulted from
the exchange in the Prepackaged Bankruptcy of the Company's 11% Debentures for
the new 15% Debentures.
 
                                       23
<PAGE>
 
  Reorganization Expenses--Reorganization expenses of approximately $6.7
million reflect the expenses incurred for professional services related to the
Prepackaged Bankruptcy including investment banking, accounting and legal fees,
through the third quarter of fiscal 1996.
 
  Income (Loss)--The Company's income before income taxes and extraordinary
item for the first nine months of fiscal 1995 was $13.0 million, compared to a
loss of $8.5 million in the first nine months of fiscal 1996. The decrease in
income between the two periods is due to the approximately $6.7 million of
reorganization fees and expenses incurred during the first nine months of
fiscal 1996 and the recognition by the Company of an approximately $17.0
million gain from the insurance settlement related to the Kansas City, Kansas
fire in the first nine months of fiscal 1995. These two factors were offset in
part by improved earnings from operations.
 
  Extraordinary Item--In connection with the exchange of the Company's 11%
Debentures for the 15% Debentures and the repurchase of the $10.0 million of
Series A Bonds in the Prepackaged Bankruptcy, unamortized original issue
discount of approximately $2.0 million and unamortized issuance costs of
approximately $1.0 million were written off, resulting in an extraordinary
loss, net of taxes, of approximately $1.8 million.
 
 Comparison of Fiscal Years 1994 and 1995
 
  Net Sales--The Company's net sales increased 8.2% from $198.9 million for
fiscal 1994, to $215.2 million for fiscal 1995.
 
  Americold's net sales for fiscal 1994 and fiscal 1995 are detailed in the
table below, by activity:
                                    
                                 NET SALES     
                             (DOLLARS IN MILLIONS)
 
<TABLE>
<CAPTION>
                                                                      % CHANGE
                                        FISCAL 1994   FISCAL 1995   FY94 TO FY95
                                        ------------  ------------  ------------
                                        AMOUNT   %    AMOUNT   %
                                        ------ -----  ------ -----
<S>                                     <C>    <C>    <C>    <C>    <C>
Logistics
  Warehousing
    Storage............................ $ 98.5  49.5% $103.4  48.0%      5.0%
    Handling...........................   65.3  32.8%   70.7  32.9%      8.3%
    Leasing............................    7.4   3.7%    7.0   3.3%    (5.4)%
    Freezing and other.................    9.9   5.0%   11.4   5.3%     15.2%
                                        ------ -----  ------ -----     -----
                                         181.1  91.0%  192.5  89.5%      6.3%
  Transportation management services...   12.6   6.4%   18.0   8.3%     42.9%
                                        ------ -----  ------ -----     -----
Total logistics........................  193.7  97.4%  210.5  97.8%      8.7%
Other non-logistics....................    5.2   2.6%    4.7   2.2%    (9.6)%
                                        ------ -----  ------ -----     -----
Total net sales........................ $198.9 100.0% $215.2 100.0%      8.2%
                                        ====== =====  ====== =====     =====
</TABLE>
 
  Warehousing sales increased 6.3% from $181.1 million for fiscal 1994 to
$192.5 million for fiscal 1995, primarily due to a 5.0% increase in storage
revenue and an 8.3% increase in handling revenue. The increase in storage
revenue was principally due to a 5.0% increase in storage volume as the storage
volume increased from 1.49 billion pounds stored on average per month in fiscal
1994 to 1.57 billion pounds on average per month in fiscal 1995. The increase
in storage volume was due primarily to the increased storage of vegetables,
which is attributable to a stronger vegetable harvest in the Midwest in fiscal
1995.
 
  The increase in handling revenue resulted primarily from an 11.7% increase in
volume of product handled. For fiscal 1994, 17.9 billion pounds of product were
handled by the Company compared with 20.0 billion pounds in fiscal 1995. While
handling volume increased 11.7%, handling revenue increased only 8.3% due to
decreased special services revenue (classified by the Company as handling
revenue), changes in product mix and other factors.
 
                                       24
<PAGE>
 
  Transportation management sales increased 42.9% from $12.6 million in fiscal
1994 to $18.0 million in fiscal 1995 due to the startup by one customer of a
distribution program in the Company's Kansas City, Kansas warehouse facility
for which the Company provided transportation management services. Other non-
logistics (quarry) sales decreased 9.6% from $5.2 million in fiscal 1994 to
$4.7 million in fiscal 1995.
 
  Cost of Sales--Cost of sales increased 9.4% from $126.3 million for fiscal
1994 to $138.1 million for fiscal 1995. Approximately $6.2 million of the
increase was due to the increased volume of transportation management business,
which requires corresponding increases in transportation capacity purchased
from carriers. Another $4.2 million of the increase in cost of sales was
primarily attributable to increased warehouse payroll expense resulting from
the increase in handling volume at the Company's facilities.
 
  Cost of sales as a percentage of net sales increased from 63.5% in fiscal
1994 to 64.2% in fiscal 1995, as handling and transportation management sales,
which have high variable cost requirements, increased from 39.2% of total sales
in fiscal 1994 to 41.2% in fiscal 1995.
 
  Selling and Administrative Expenses--Selling and administrative expenses
decreased 4.2% from $27.1 million for fiscal 1994 to $26.0 million for fiscal
1995. The reduction primarily reflects a decrease of approximately $0.5 million
in professional fees. Selling and administrative expenses as a percentage of
net sales decreased from 13.6% in fiscal 1994 to 12.1% in fiscal 1995. The
Company was able to reduce selling and administrative expenses in an
environment of increasing sales due to an intensive program to reduce and
restructure administrative activities.
 
  Gross Operating Margin--As a result of the factors discussed above, gross
operating margin increased 11.3% from $43.0 million for fiscal 1994 to $47.8
million for fiscal 1995.
 
  Interest Expense--Interest expense decreased from $55.4 million for fiscal
1994 to $55.3 million for fiscal 1995, as a result of slightly lower average
borrowings during the fiscal year.
 
  Gain on Insurance Settlement--This one-time gain reflects the gain on
insurance settlement of approximately $17.0 million related to the Company's
settlement with its insurance carriers of its first party claims for business
interruption losses, property damage and out-of-pocket expenses incurred with
respect to the Kansas City fire.
 
  Income (Loss)--The Company's loss before income taxes, extraordinary item and
cumulative effect of accounting changes for fiscal 1994 was $12.2 million,
compared to income of $10.8 million in fiscal 1995. The increase in income
reported in the more recent period is primarily the result of the insurance
settlement referred to above.
 
  Extraordinary Loss--During the first quarter of fiscal 1994, the Company
completed a debt refinancing transaction related to the First Mortgage Bonds
which resulted in an extraordinary loss to the Company, net of taxes, of
approximately $1.8 million due to the write-off of unamortized issuance costs.
 
 Comparison of Fiscal Years 1993 and 1994
 
  Net Sales--The Company's net sales increased 1.4% from $196.1 million for
fiscal 1993 to $198.9 million for fiscal 1994.
 
                                       25
<PAGE>

  Americold's net sales for fiscal 1993 and 1994 are detailed below, by
activity:
                                    
                                 NET SALES     
                             (DOLLARS IN MILLIONS)
 
<TABLE>   
<CAPTION>
                                                                      % CHANGE
                                        FISCAL 1993   FISCAL 1994   FY93 TO FY94
                                        ------------  ------------  ------------
                                        AMOUNT   %    AMOUNT   %
                                        ------ -----  ------ -----
<S>                                     <C>    <C>    <C>    <C>    <C>
Logistics
  Warehousing
    Storage............................ $101.0  51.5% $ 98.5  49.5%     (2.5)%
    Handling...........................   60.3  30.8%   65.3  32.8%      8.3 %
    Leasing............................    9.5   4.8%    7.4   3.7%    (22.1)%
    Freezing and other.................   10.2   5.2%    9.9   5.0%     (2.9)%
                                        ------ -----  ------ -----     -----
                                         181.0  92.3%  181.1  91.0%      0.1 %
  Transportation management services...   11.9   6.1%   12.6   6.4%      5.9 %
                                        ------ -----  ------ -----     -----
Total logistics........................  192.9  98.4%  193.7  97.4%      0.4 %
Other non-logistics....................    3.2   1.6%    5.2   2.6%     62.5 %
                                        ------ -----  ------ -----     -----
Total net sales........................ $196.1 100.0% $198.9 100.0%      1.4 %
                                        ====== =====  ====== =====     =====
</TABLE>    
 
  Warehousing sales increased 0.1% from $181.0 million in fiscal 1993 to $181.1
million for fiscal 1994, primarily due to an 8.3% increase in handling
revenues. This increase was partially offset by a 2.5% decline in storage
revenue and a 22.1% decline in leasing revenue. The decline in storage revenue
resulted from a 2.7% decrease in storage volume, offset slightly by net price
increases and other factors. The Company believes the decreased storage volume
was due to a reduction in certain frozen vegetable stocks across several
production warehouses. The reduction in frozen vegetable stocks was principally
attributable to the flooding in the Midwest in fiscal 1994. For fiscal 1993,
1.53 billion pounds of product were stored on average per month compared to
1.49 billion pounds of product stored on average per month in fiscal 1994.
Approximately $1.9 million of the $2.1 million decline in leasing activity was
attributable to the loss of lease customers in the Company's Kansas City,
Kansas warehouse facility.
 
  The increase in handling revenue resulted primarily from a 7.8% increase in
volume of product handled. For fiscal 1993, 16.6 billion pounds were handled
compared with 17.9 billion pounds during fiscal 1994.
 
  Transportation management sales increased 5.9% from $11.9 million for fiscal
1993 to $12.6 million in fiscal 1994. Non-logistics sales increased 62.5% from
$3.2 million for fiscal 1993 to $5.2 million for fiscal 1994 as the increase in
quarry sales of approximately $2.4 million helped offset the loss of
approximately $0.4 million in sales due to the closure of the vital records
center. Due to the fire in Kansas City, the vital records center ceased
operations during the first quarter of fiscal 1994.
 
  Cost of Sales--Cost of sales increased 6.2% from $118.8 million for fiscal
1993 to $126.3 million for fiscal 1994. Excluding the approximately $4.1
million allowance for non-collection of disputed billings and other expenses
related to the Kansas City, Kansas warehouse fire, cost of sales for fiscal
1993 would have been $114.7 million. Payroll costs and energy costs increased
approximately $3.9 million and $1.5 million, respectively, as a result of
increased handling volume at the Company's facilities, including the quarry,
and as a result of the new warehouse facility added in January 1993.
Depreciation increased approximately $1.7 million related to the adoption of
Financial Accounting Standards Board Statement No. 109, "Accounting For Income
Taxes."
 
  Cost of sales as a percentage of net sales increased from 60.6% for fiscal
1993 to 63.5% for fiscal 1994, primarily due to increased handling and non-
logistics sales which carry lower operating margins.
 
                                       26
<PAGE>
 
  Selling and Administrative Expenses--Selling and administrative expenses
decreased 0.4% from $27.2 million in fiscal 1993 to $27.1 million for fiscal
1994. This decrease primarily reflects a decrease of approximately $1.2 million
in salaries and related fringe benefits. Certain other costs declined,
including office supplies, communications and equipment rentals, while
professional fees, due primarily to one-time expenses for consulting services
related to administrative cost reduction efforts, and meeting and travel
expenses, increased.
 
  Gross Operating Margin--As a result of the factors discussed above, gross
operating margin decreased 8.2% from $46.8 million for fiscal 1993 to $43.0
million for fiscal 1994.
 
  Interest Expense--Interest expense increased from $51.9 million for fiscal
1993 to $55.4 million for fiscal 1994, resulting from both the $26.3 million
net increase in the principal amount of First Mortgage Bonds outstanding and
from the addition of the mortgage payable on the Burley, Idaho warehouse
facility.
 
  Income (Loss)--The Company's loss before income taxes, extraordinary item and
cumulative effect of accounting changes for fiscal 1993 was $5.7 million
compared to a loss of $12.2 million for fiscal 1994. The principal reasons for
the increased loss includes the increase in interest expense and the increase
in cost of sales.
 
LIQUIDITY AND CAPITAL RESOURCES
   
  The Company believes it has sufficient liquidity and capital resources to
meet its needs related to payment of interest expense, continued operation and
maintenance of its warehouses, operation and planned expansion of its
transportation management business and limited growth in warehouse investment.
Anticipated growth in the volume of transportation management services is not
expected to consume significant capital resources. Although the Company's
internal resources for new warehouse acquisition or construction are limited,
the Company has arranged for up to $25 million in lease financing for new
warehouse facilities from a finance company (the "Lease Line"). See "--Capital
Resources." The Company plans to finance its warehouse expansion program
principally through lease financing, and the Company believes it has the
ability to finance all of its fiscal 1997 expansion projects from the Lease
Line, similar lease financing or mortgage financing. In light of the
significant debt obligations due between fiscal 2000 and fiscal 2008, the
Company continues to need to increase operating cash flow and seek external
sources for refinancing. To the extent such operating cash flow growth will
result from warehouse capacity growth, the Company will be required to obtain
additional sources of financing. See "Risk Factors--Substantial Payment
Obligations; Consequences of Failure to Service Debt."     
 
 Liquidity
   
  Operating Cash Flow--Net cash flow from operating activities, representing
cash provided from operations, is used to fund capital expenditures and meet
debt service requirements. Operating cash flow reported for any one period is
sensitive to the timing of the collection of receivables and the payment of
payables. In addition, the third quarter, ending each November 30, normally
represents the Company's strongest sales quarter, thus resulting in higher
receivables balances at such time.     
   
  Net cash flow from operating activities as reported in the Company's
consolidated financial statements decreased from $4.4 million for the first
nine months of fiscal 1995 to a negative $0.9 million for the first nine months
of fiscal 1996. The decrease is due to the reorganization fees and expenses
associated with the Prepackaged Bankruptcy and changes in certain working
capital items. The Company's operating cash flow would have been $5.8 million
for the first nine months of fiscal 1996 without reorganization fees and
expenses of $6.7 million. Net cash flow from operating activities in fiscal
years 1993, 1994 and 1995 was $17.7 million, $18.5 million and $12.7 million,
respectively. See "--Results of Operations--Comparison of Nine-month Periods
Ended November 30, 1994 and 1995." As a result of increased taxable earnings
and the reversal of deferred tax liabilities, the Company anticipates that cash
tax payments will increase. See Note 11 of Notes to Consolidated Financial
Statements as of the last day of February 1994 and 1995.     
 
 
                                       27
<PAGE>
 
  Working Capital--The Company's working capital position as of the last day of
the nine-month period ended November 30, 1995 was a negative $1.1 million. This
position compares to a negative $14.9 million at fiscal 1995 year end. Working
capital was reduced in the more recent period due to the decrease in net cash
flow from operations discussed above and the funding of the construction of the
Grand Island, Nebraska warehouse facility discussed below, but was increased by
the effects of the Prepackaged Bankruptcy. Under the Plan, approximately $28.8
million of senior subordinated debt payments were postponed from May 1995 until
fiscal 2008, which reduced the current portion of long-term debt. Partially
offsetting this decrease in the current portion of long-term debt, as part of
the reorganization proceedings, the Company repurchased for cash $10.0 million
in principal amount of long-term Series A Bonds.
 
  The Company's historical negative working capital position has not affected
its ability to meet its cash operating needs. The Company, however, in fiscal
1995 experienced a shortfall in working capital necessary to make the fiscal
1995 and fiscal 1996 sinking fund payments required with respect to the 11%
Debentures, leading to the Prepackaged Bankruptcy. See "Risk Factors--
Substantial Leverage; Net Losses; Deficit of Earnings to Fixed Charges."
 
 Capital Resources
 
  The Bank Credit Agreement provides an aggregate availability of $27.5
million, which may be used for any combination of letters of credit (not to
exceed $10.0 million) and revolving cash borrowings for general working capital
purposes, subject to borrowing base limitations. The borrowing base for both
cash borrowings and letter of credit amounts equals 85% of eligible accounts
receivable pledged to the bank plus, at the option of the Company, 70% of the
value of all real property mortgaged to the bank, up to a maximum of $27.5
million. The Company has not mortgaged any properties under the Bank Credit
Agreement. The Bank Credit Agreement, which matures on February 28, 1999,
requires a 30-day resting period (during which there may be no outstanding
borrowings) in fiscal 1997, and requires two such periods during each of fiscal
1998 and fiscal 1999. The Bank Credit Agreement also contains certain
restrictive covenants, including financial covenants. See "Debt of the
Company--The Bank Credit Agreement."
 
  Based on eligible accounts receivable as of November 30, 1995, the Company
had an available credit line of $25.2 million, of which $7.9 million was used
for letters of credit, principally related to leasing commitments and worker's
compensation reserves. No cash borrowings were outstanding.
   
  The Lease Line, for which the Company signed a commitment letter in November
1995, is available to finance, subject to meeting certain conditions, the
construction or acquisition of new warehouses or the expansion of existing
warehouses which are not pledged as collateral security for Senior Debt. The
Company intends to finance several of the planned warehouse additions with the
new Lease Line. The terms of each lease financing will be separately
established. The first funding of approximately $5.7 million closed in late
fiscal 1996 with respect to the Company's recently completed Grand Island,
Nebraska facility. The Lease Line commitment expires December 31, 1996. The
lease rate will be fixed at the time of funding each property, and will be
based on a spread over seven-year Treasury Bills.     
   
  The Company, as part of its Kansas City, Kansas location, operates a
limestone quarry. The Company has terminated its previously disclosed
discussions related to the possible sale of the quarry and is currently
considering its options with respect to such operation.     
 
  Capital Expenditures--Budgeted fiscal 1996 capital expenditures total
approximately $35.4 million, including approximately $25.6 million for
warehouse expansions. Expenditures for property, plant and equipment for the
first nine months of fiscal 1996 totaled $29.7 million, of which approximately
$24.5 million related to warehouse expansions. Of the $24.5 million, all
expenditures other than the construction of the Grand Island facility were
funded from sources other than net cash flow from operations. Two new warehouse
 
                                       28
<PAGE>
 
facilities, in Pasco, Washington and Rochelle, Illinois, were funded with
approximately $18.6 million of escrow funds established with the proceeds from
the sale of the Series B Bonds and available under the Bond Indenture.
   
  As a result of the expenditures described above, the Company has exhausted
substantially all of the escrowed funds under the Bond Indenture, except for
approximately $4.8 million from the insurance proceeds from the Kansas City
fire. In late fiscal 1996 the Company submitted to the Bond Trustee an
accounting of restoration expenses incurred to date at the Kansas City
warehouse facility. Based on such submission, the Company has requested that
approximately $4.0 million of the $4.8 million be released to the Company as
reimbursement for such restoration expenses. The Company is working with the
Bond Trustee to define its options with respect to the use of any remaining
funds held by the Bond Trustee following the reimbursement of such restoration
expenses.     
   
  The projects the Company is currently exploring for fiscal 1997 would require
the expenditure of up to $34.0 million, no portion of which is presently
committed. The Company, however, has entered into two non-binding letters of
intent with customers for projects aggregating approximately $10 million. The
Company plans to finance its warehouse expansion program principally through
lease financing, and the Company believes it has the ability to finance all of
its fiscal 1997 expansion projects from the Lease Line, similar lease financing
or mortgage financing. Certain capital expenditures originally planned for late
fiscal 1996 will be deferred until early fiscal 1997, and certain capital
expenditures originally planned for early fiscal 1997 are expected to be
deferred until late fiscal 1997, resulting in corresponding delays in the
realization of benefits from such investments.     
 
  Expenditures, including capital leases, for property, plant and equipment for
fiscal years 1993, 1994 and 1995 totaled $18.9 million, $9.9 million and $14.3
million, respectively, as summarized in the following table:
                         
                      HISTORICAL CAPITAL EXPENDITURES     
                                 (IN MILLIONS)
 
<TABLE>
<CAPTION>
                                      FISCAL YEAR ENDED LAST NINE MONTHS ENDED
                                         DAY OF FEBRUARY,    NOVEMBER 30, 1995
                                      ---------------------- -----------------
                                       1993    1994   1995
                                      ------- --------------
<S>                                   <C>     <C>    <C>     <C>  
Routine Replacements/Betterments..... $   2.6   $2.7 $   5.5       $ 2.8
Revenue Enhancements or Cost
 Reductions..........................     1.9    1.9     1.9         2.4
Expansions...........................    14.4    5.3     6.9        24.5
                                      ------- ------ -------       -----
Total................................ $  18.9   $9.9   $14.3       $29.7
                                      ======= ====== =======       =====
Cash Portion of Capital
 Expenditures(a).....................   $ 7.7   $8.9   $13.2       $29.3
                                      ======= ====== =======       =====
</TABLE>
--------
(a) The cash portion of capital expenditures for all periods was funded from
    escrow funds available under the Bond Indenture and net cash flow from
    operations. The non-cash portion of capital expenditures was funded from,
    for fiscal 1993, a seller-provided mortgage and capital leases and, for all
    other periods, from capital leases.
 
  Effect of Prepackaged Bankruptcy--The Bankruptcy Court approved the Plan on
June 19, 1995 and the Plan became effective on June 30, 1995. The Plan as
approved provided, among other things, that each holder of the Company's then
outstanding 11% Debentures was entitled to receive a corresponding amount of
the Company's new 15% Debentures at par, plus accrued but unpaid interest; that
the holders of the Company's Senior Debt were not adversely affected by the
Prepackaged Bankruptcy; and that the prior Investment Agreement was superseded
by the Second Investment Agreement with the Institutional Investor. See "Debt
of the Company--The Second Investment Agreement."
 
  Subsequently, the Company rejected in the Prepackaged Bankruptcy certain
operating lease agreements relating to four warehouse facilities at
Watsonville, Oakland and San Francisco, California; and Chicago,
 
                                       29
<PAGE>
 
   
Illinois. Properties subject to the leases accounted for approximately $11.7
million of sales and a minimal amount of gross operating margin in fiscal 1995.
In late fiscal 1996 the Company settled all lease rejection issues with the
lessor of the Watsonville, Oakland and San Francisco, California warehouse
facilities. Such settlement did not involve the payment of any damages by the
Company. The outcome of any damage claim resulting from the remaining lease
rejection of the Chicago warehouse facility cannot be predicted at this time,
but the Company does not believe that the resolution of such claim will be
material. See "Risk Factors--Conclusion of Prepackaged Bankruptcy."     
 
  The Company believes that the effect of the Plan has been to improve the
Company's financial position by postponing the maturity of its subordinated
debt and increasing the likelihood that the Company will realize the benefits
of its capital expenditures and the continuing expansion of its transportation
management activities. The Company remains highly leveraged, however, and will
continue to be subject to substantial principal and interest obligations with
respect to its indebtedness. See "Risk Factors--Substantial Payment
Obligations; Consequences of Failure to Service Debt."
 
 Inflation
 
  The Company's operations have not been, nor are they expected to be,
materially affected by inflation or changing prices.
 
 New Accounting Standards
 
  Effective March 1, 1993, the Company implemented Financial Accounting
Standards Board Statement of Financial Accounting Standard No. 106, "Employer's
Accounting for Postretirement Benefits Other Than Pensions", and Statement No.
109, "Accounting for Income Taxes." The Company has not implemented the
requirements of Financial Accounting Standards Board Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of," although it will be
required to do so for fiscal years beginning March 1, 1996 and thereafter. This
statement generally requires assessment of recoverability of an asset after
events or circumstances that indicate an impairment to the asset and its future
cash flows. Any impairment loss would be recognized as a one-time charge to
earnings affecting results of operations, but would not affect the cash flow of
the Company. At this time, the Company does not believe there will be an
impairment loss to report.
       
                                       30
<PAGE>
 
                                    BUSINESS
 
  Americold, the nation's largest supplier of public refrigerated warehouse
space, provides integrated logistics services for the frozen food industry.
These services, consisting of warehousing and transportation management, are
provided through the Company's network of 49 refrigerated warehouses in 16
states and through the Company's refrigerated transportation management unit.
Americold serves a broad array of customers ranging from small local food
producers to most of the large national frozen food companies, including
ConAgra, Inc., Heinz, J. R. Simplot Co., Kellogg Company and Ocean Spray
Cranberries Inc.
 
  The Company has recently expanded its focus to provide integrated warehousing
and transportation management services to the frozen food industry. To expand
its transportation management business, the Company has consolidated its
transportation management functions, added staff resources and improved its
transportation management information systems capabilities, including
integrating these systems with the Company's warehouse information systems. The
Company currently offers integrated warehousing and transportation management
services that permit it to coordinate and manage the distribution of frozen
food products for its customers. The Company believes that its facilities are
sufficiently dispersed geographically to allow the Company to provide these
logistics services in most of the significant markets in the United States.
 
  Americold, an Oregon corporation, was founded in 1911. In December 1986,
Americold was purchased from its prior owners by a private group consisting of
Kelso, certain institutional investors and the Management Group.
 
BUSINESS STRATEGY
 
  The Company's strategy is to use its position as the largest supplier of
public refrigerated warehouse space to access both increased volumes of frozen
food storage and additional transportation management business. The Company
believes its strong industry position, its geographically dispersed network of
refrigerated warehouse facilities and its integrated logistics information
systems provide it with a competitive advantage in developing and maintaining
relationships with large frozen food manufacturers, distributors and retailers
that have freezer storage and product distribution requirements in numerous
locations throughout the United States. Industry studies suggest that frozen
food processors spend approximately twice as much on transportation as on
warehousing of frozen food products. The Company's customers, by outsourcing to
Americold, may benefit from the transportation efficiencies Americold achieves
while being able to reduce redundant staff and avoid individual investments in
warehouse facilities and in the computer hardware and software systems
necessary for transportation management.
 
  The Company believes that the potential cost savings brought to customers in
product distribution will strengthen and broaden the Company's relationships
with customers and provide opportunities to expand its operations to meet
customer needs. In this regard, the Company has entered into arrangements with
three subsidiaries of its largest customer, Heinz, pursuant to which it is
providing transportation management services from manufacturing plants through
distribution channels to the subsidiaries' customers. In addition, for one of
these subsidiaries, the Company also manages the in-bound transportation of
over 200 non-frozen ingredients to the subsidiary's manufacturing plants. See
"--Company Services--Transportation Management." The Company believes that the
availability of such services will attract additional customers to its existing
warehouse facilities and create opportunities to develop additional warehouses
and provide incremental transportation management services.
 
  Americold's logistics systems allow it to perform the entire process of
warehousing and transportation management for the storage and distribution of
frozen food products for its customers. The Company, by utilizing logistical
data and combining product volumes from multiple customers, can pool shipments
and achieve transportation efficiencies which would be unavailable to any one
customer operating on its own. Moreover, the integration of transportation
management services with the Company's network of 49
 
                                       31
<PAGE>
 
refrigerated warehouses enables larger frozen food customers with broad
distribution requirements to obtain integrated logistics services from a single
provider rather than contracting with individual carriers and warehousing
providers in many locations. The Company plans to continue to actively pursue
these larger customers who are able to utilize the full resources of the
Company.
 
  The Company has also entered into warehousing agreements with two large
frozen food manufacturers pursuant to which the Company has become a preferred
provider of services. Under such agreements, the Company has the opportunity to
increase its warehousing business with such customers in multiple locations in
return for a commitment to provide certain continuing services and volume-based
pricing incentives. The Company believes these agreements have the potential to
reduce these customers' overall distribution costs while providing the Company
with increased storage volume in existing warehouses. The Company believes that
such agreements may also create opportunities to build or acquire additional
warehouses and encourage such customers to utilize the transportation
management services offered by the Company.
 
 
COMPANY SERVICES
 
  The Company provides frozen food manufacturers with refrigerated warehousing
and transportation management services. Integration of these services allows
frozen food manufacturers to contract on an outsource basis with a single
entity, the Company, for the following services to coordinate and manage the
distribution of frozen food products:
                         
                      AMERICOLD'S LOGISTICS SERVICES     
 
<TABLE>
<CAPTION>
      WAREHOUSING SERVICES          TRANSPORTATION MANAGEMENT SERVICES
      --------------------          ----------------------------------
      <S>                           <C>
      Storage                           Dispatching
      Handling                          Freight Rate Negotiation
      Order Assembly                    Backhaul Coordination
      Order Management                  Freight Bill Auditing
      Blast Freezing/Tempering          Network Flow Management
      Facility Leasing                  Local/Store Door Delivery
      Facility Operation                Order Consolidation
      Inventory Status Information      Truck Routing
      Product Assembly/Packaging        Distribution Channel
      Product Recalls                   Assessment
</TABLE>
 
  The Company offers these services both on a separate and an integrated basis.
The Company also provides services such as electronic order processing, order
status information and freight payment to its customers as part of its
integrated services, although such services are not billed separately. The
Company's integrated services allow customers to focus on their manufacturing
and marketing requirements instead of on the complex process of storing and
transporting their frozen food products.
 
 Refrigerated Warehousing
   
  Since its founding in 1911, the Company has grown to become the largest owner
and operator of refrigerated warehouses in the United States. With
approximately twice the storage capacity of its nearest competitor, Americold
supplies approximately 13.1% of the total publicly-available refrigerated
storage space and approximately 15% of the total publicly-available freezer
storage space in the United States, based on 1995 data published by the United
States Department of Agriculture and 1995 data prepared by the International
Association of Refrigerated Warehousemen (the "IARW"). As of December 31, 1995,
the Company's network of 49 refrigerated warehouse facilities in 16 states
provided a total storage capacity of approximately 229 million cubic feet.
Approximately 94% of the storage space operated by the Company is     
 
                                       32
<PAGE>
 
freezer space (zero degrees Fahrenheit and below), with the remaining space
comprised of cooler space (28 degrees Fahrenheit and above) and unrefrigerated
dry storage space. Refrigerated warehouse services provided by the Company
include storage, handling, blast freezing and facility leasing.
 
  The Company intends to pursue growth of its refrigerated warehouse business
both by expanding its network of warehouses across the country and by expanding
existing facilities in response to customer requirements. Since August 1994,
the Company has added storage capacity in the following locations:
 
<TABLE>
<CAPTION>
                                       CUBIC FEET                  COMPLETION
     LOCATION                         (IN MILLIONS) NEW/EXPANSION     DATE
     --------                         ------------- -------------  ----------
<S>                                   <C>           <C>           <C>
Tomah, Wisconsin.....................      2.2        Expansion   August 1994
Burley, Idaho........................      2.3        Expansion   January 1995
Pasco, Washington....................      2.5        New         July 1995
Rochelle, Illinois...................      5.9        New         August 1995
Grand Island, Nebraska...............      2.2        New         November 1995
</TABLE>
   
  In addition, the Company is working toward the development of several new
warehouses which include the acquisition of 2.1 million cubic feet and the
construction of 16.4 million cubic feet of refrigerated warehouse space. The
Company has signed non-binding letters of intent or received preliminary
approval from certain of its customers for commitments involving 7.5 million
cubic feet of the anticipated new warehouse space. Generally, the Company does
not acquire or construct warehouse space without assurances of support from the
anticipated customer base for the facilities. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Capital Resources--
Capital Expenditures." The Company also continually evaluates the need for
warehouse space in certain locations and, since August 1994, the Company has
reduced the amount of its available refrigerated warehouse space by
approximately 12 million cubic feet due to the sale of one warehouse facility,
termination of four operating leases in the Prepackaged Bankruptcy and the non-
renewal of three other operating leases.     
 
  Most of the Company's warehouses may be classified as combination production
and distribution facilities, although some provide solely production or
distribution services. Production facilities differ from distribution
facilities in that they typically serve one or a small number of customers
located nearby. These customers store large quantities of processed or
partially processed products in the facility until they are further processed
or shipped to the next stage of production or distribution. Distribution
facilities primarily serve customers of the Company's production warehouses and
other customers who store a wide variety of finished products to support
shipment to end-users, such as food retailers and food service companies, in a
specific geographic market.
 
  During the past four years, the Company has implemented new management
operating systems and performance standards in its warehouses. The IBM AS400
warehouse management information system was completed in December 1992 to tie
together into a single network with common services all of the Company's
locations. To further integrate the Company's services, the Company, using
upgraded computer hardware and a combination of purchased and internally
developed software, completed in March 1995 a transportation management system
which has been fully integrated with the Company's warehouse management system.
The Company also offers electronic data interchange to receive customer orders
and to transmit product flow and status information to its customers. The
Company believes that the standardization of warehouse operating systems and
procedures, combined with the enhanced integrated logistics management
information systems and capabilities, have improved the quality and consistency
of customer services, reduced costs and led to the overall enhancement of
performance.
 
  The Company has developed several services ancillary to its warehouse freezer
operations and intends to continue developing and promoting such services as
well as adding incremental freezer, cooler or dry space. Ancillary services
include product assembly/packaging, palletizing, labeling and SUPERCOLD freezer
 
                                       33
<PAGE>
 
storage provided at 11 of Americold's facilities for the preservation of
products, such as ice cream, which require storage at temperatures as low as 20
degrees below zero (Fahrenheit).
 
 Transportation Management
 
  To expand its transportation management business, the Company has
consolidated its transportation management functions, added staff resources and
improved its transportation management information systems capabilities,
including integrating these systems with the Company's warehouse information
systems. Utilizing its network of IBM AS400 computers, its transportation
management and communications software and its multiple warehouse locations,
the Company is currently providing integrated warehousing and transportation
management services to certain of its customers, including subsidiaries of its
largest customer, Heinz.
 
  Transportation management services offered by the Company include
dispatching, freight rate negotiation, backhaul coordination, freight bill
auditing, network flow management, local/store door delivery, order
consolidation, truck routing and distribution channel assessment. The Company
also offers services that enable customers to assess the most economical means
to store and ship frozen food products. The Company believes that its
temperature-controlled logistics expertise and access to both frozen food
warehouses and distribution channels will enable its customers to respond
quickly and efficiently to time-sensitive orders from distributors and
retailers using the Company's systems.
 
  In fiscal 1996, the Company began providing a broad range of transportation
management services to three subsidiaries of Heinz. For each of the
subsidiaries, the Company manages the distribution of frozen food products from
manufacturing plants through distribution channels to the subsidiaries'
customers. In addition, for one of these subsidiaries, the Company also manages
the in-bound transportation of over 200 non-frozen ingredients to the
subsidiary's manufacturing plants. The Company believes that this is an example
of the kind of integrated warehousing and transportation management services
that other frozen food manufacturers will seek to subcontract to outside
specialists in the future. The Company is presently discussing similar
arrangements with several other potential customers. See "Risk Factors--
Expansion of Transportation Management Services."
 
  In providing transportation management services, the actual freight
transportation is performed by carriers who have negotiated rates with the
Company. The Company does not own and does not intend to own significant
transportation equipment.
 
CUSTOMERS
 
  Americold's customers consist primarily of national, regional and local
frozen food manufacturers, distributors, retailers and food service
organizations. Americold serves a broad array of customers ranging from small
local food producers to most of the large national frozen food companies,
including ConAgra, Inc., Heinz, J. R. Simplot Co., Kellogg Company, and Ocean
Spray Cranberries Inc. Although the Company provides services to approximately
3,200 customers, in fiscal 1995 the 10 largest customers accounted for
approximately 55% of total net sales. One customer of the Company, Heinz and
subsidiaries, accounted for approximately 21% of the Company's net sales in
fiscal 1995 (consisting primarily of warehousing sales) and 33% of the
Company's net sales in the first nine months of fiscal 1996 (consisting of both
warehousing and transportation management sales). The Company believes that the
risk to the Company of losing such large customers has been reduced in several
cases through long-term storage and operating agreements and by the fact that
services are provided to certain large customers in multiple locations.
 
  At several locations, the Company's production warehouses are located
adjacent to customers' processing facilities. Several of the Company's
customers guarantee a minimum quantity of product to be stored in return for
guaranteed space pursuant to long-term contracts. At several locations, the
Company leases space to manufacturers or distributors on a long-term, fixed-
rate basis. At a number of facilities,
 
                                       34
<PAGE>
 
   
particularly those located adjacent to customers' processing facilities, a
majority of, and in some cases virtually all, business is attributable to a
single user of the facility. Although the Company has previously disclosed a
customer's intention to relocate by late fiscal 1997 a significant portion of
the customer's storage volume from one of the Company's warehouses to a new
warehouse to be constructed closer to one of the customer's production
facilities, the Company has been advised that the customer has reassessed such
relocation. The customer has notified the Company that it intends to maintain
its current levels of storage volume in the Company's warehouse through at
least the first quarter of fiscal 1998. Also, the Company believes that the
customer has not reached a final decision to relocate such business. The
Company believes that if the final decision is made to relocate such business,
the Company will be allowed to participate in proposals to provide warehousing
services in such new location. If such storage volume is relocated, the Company
believes that it will secure replacement business to recover a substantial
portion of the gross operating margin represented by such storage volume, but
there can be no assurance in this regard.     
 
  Management has observed in the past that to the extent products produced at
locations adjoining the Company's facilities are commodities grown in the
surrounding area, demand for the products has been more significant to the
long-term sales and profitability of the facility than has been the viability
of a single customer. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Results of Operations--Comparison of the
Nine-month Periods Ended November 30, 1994 and 1995," "Risk Factors--Company
Dependence on Significant Customers" and "--Expansion of Transportation
Management Services."
 
SEASONALITY
 
  Warehousing sales are seasonal, depending upon the timing and availability of
crops grown for frozen food production and the seasonal build-up of certain
products for holiday consumption. The third quarter, ending each November 30,
normally represents the strongest sales quarter. Capacity utilization at
facilities varies from season to season, with average annual capacity
utilization of approximately 72%. The Company generally keeps sufficient space
available at individual warehouses to meet peak season demand. The Company has
experienced similar seasonality in its transportation management business.
 
COMPETITION
 
  Americold operates in an environment in which location, customer mix,
warehouse size, breadth of service, service performance and price are the
principal competitive factors. Since frozen food manufacturers and distributors
incur transportation costs which typically are significantly greater than
warehousing costs, location is a major competitive factor. In addition, in
certain locations customers depend upon pooling shipments, which involves
combining their products with the products of others destined for the same
markets. In these cases, the mix of customers in a warehouse can significantly
influence the cost of delivering products to markets. The size of a warehouse
is important because large customers generally prefer to have all of the
products needed to serve a given market in a single location and to have the
flexibility to increase storage at that single location during seasonal peaks.
The Company believes that customers generally will select a warehouse facility
based upon the types of services available, service performance and price, if
there are several warehouse locations which satisfy its transportation,
customer mix and size requirements.
   
  Competition is national, regional and local in nature. There are no
significant barriers to entry, permitting a relatively large number of smaller
competitors to enter the Company's markets. On the national level, Americold
competes with United Refrigerated Services, Inc. ("URS"), United States Cold
Storage, Inc., Millard Refrigerated Services and Christian Salvesen, Inc.,
which, according to statistics compiled by the IARW, accounted for
approximately 7.5%, 5.5%, 5.1% and 3.0% of public freezer space, respectively,
in 1995. On the regional and local level, there are many smaller warehouse
operators that compete with the Company. According to data prepared by the
IARW, warehouse operators who own or control less than 35 million cubic feet
each of refrigerated space or freezer space accounted for approximately 67% of
all public refrigerated storage space in 1995. The Company believes that
competition from these local and regional competitors is significant because
national competitors often do not compete in the same markets as the     
 
                                       35
<PAGE>
 
Company. The Company's customers, many of which have substantially greater
resources than the Company, may also divert business from the public
warehousing sector by building their own refrigerated warehouse facilities.
 
  The Company believes that if its strategy of providing fully integrated
warehousing and transportation management services is successful, the ability
to reduce customers' distribution costs resulting from the economies of scale
attendant to the movement of large quantities of diverse products through its
national network of warehouses will create a marketing advantage not available
to smaller competitors. Other companies, such as GATX Corporation and Exel
Logistics, Inc., provide transportation management services to shippers, but
the Company is not aware of another company's ability to provide such
transportation services in conjunction with full service refrigerated
warehousing capabilities.
 
  Kelso holds approximately 57% of the common equity of URS and, therefore,
owns a controlling interest in both the Company and URS. Kelso has implemented
procedures intended to address possible conflicts of interest that might arise
from its investment in both URS and the Company. Kelso has considered on a
preliminary basis the possibility of a business combination between the Company
and URS. Although Kelso continues to have discussions concerning such a
combination, there currently are no discussions between Americold and URS. Any
such combination would not trigger a Change of Control, as defined in the Note
Indenture. See "Description of Senior Subordinated Notes."
 
ORGANIZATION
 
  The Company's operations are headquartered in Portland, Oregon. The Company's
warehouse facilities are organized into four districts. Each district is
managed by a District Manager to whom the respective General Managers report.
General Managers are responsible for one to five warehouses and are supported
at the district and corporate levels by certain logistics, accounting,
marketing, engineering, data processing and operational functions. The
Company's transportation management services are managed from the Company's
headquarters.
 
SALES AND MARKETING
 
  Sales responsibility at the Company resides primarily with district and local
management who are supported at the national level by the Company's executive
and sales and marketing staff. Marketing is principally a corporate management
function.
 
  Local sales efforts are supplemented by the national corporate sales,
marketing and logistics departments, which supply sales support, logistics
analysis, account pricing guidance and advertising, and monitor relationships
with large district and national accounts. The Company employs two sales
managers and a sales representative, all reporting to a director of sales in
Portland, Oregon. The sales managers are based in California and Colorado,
while the sales representative is based in Massachusetts. The Company also
employs a Senior Vice President, Logistics, based in Portland.
 
  In addition, a primary account manager and pricing contact is assigned to
each of the Company's top 100 accounts in order to facilitate services for such
customers. Certain customers storing product in multiple facilities, but who
are not among the Company's top 100 accounts, are also offered similar
contacts. It is the responsibility of each warehouse's or group's management to
understand and be responsive to the needs of its individual marketplace and to
adapt sales efforts accordingly. Each General Manager actively engages in the
sales effort. Although the Company operates nationally, prices charged by the
Company tend to reflect local market conditions.
 
  The Company has promoted its logistics services to existing and potential
customers through consultations with such customers, during which the Company
presents a range of potential logistics services to that customer. Although the
Company has primarily focused on its existing large frozen food manufacturer
customers, the Company is also currently approaching smaller manufacturers,
distributors and retailers to offer the Company's network of warehouses and
transportation management services, which such customers may find more
attractive than developing their own logistics resources. The Company intends
to continue to
 
                                       36
<PAGE>
 
emphasize integrated warehousing and transportation management services and to
pursue other customers who may wish to outsource logistics responsibilities to
Americold.
 
  The majority of the Company's customers are billed on a monthly basis for
warehousing charges. Handling and first period storage is billed upon receipt
of the product. Recognition of one-half of the handling revenue is deferred
until the product is released. Transportation management customers are
generally billed on a shipment by shipment basis.
 
EMPLOYEES
 
  The Company had approximately 2,032 employees as of November 30, 1995. A
breakdown of employees by function is set forth below:
 
                         EMPLOYEE BREAKDOWN BY FUNCTION
 
<TABLE>
<CAPTION>
                                                           NUMBER OF PERCENTAGE
              FUNCTION                                     EMPLOYEES  OF TOTAL
              --------                                     --------- ----------
<S>                                                        <C>       <C>
Warehousing Services......................................   1,587      78.1%
Transportation Management Services........................      41       2.0%
Sales and Marketing.......................................       4       0.2%
Non-Logistics.............................................      27       1.3%
Administration (Warehouse and Corporate)..................     373      18.4%
                                                             -----     -----
  Total...................................................   2,032     100.0%
                                                             =====     =====
</TABLE>
 
  Approximately 643 of the Company's employees are covered by union contracts.
Currently, 23 facilities employ unionized labor, while 26 facilities are non-
unionized. Union contracts for individual locations are with the local chapters
of national unions, principally the International Brotherhood of Teamsters, and
generally have staggered expiration dates. During the past three years there
has been one strike which lasted for approximately four days. The Company
believes its relationships with its employees are satisfactory.
 
  As a result of the anticipated continued expansion in transportation
management, the size of the transportation management staff is expected to
increase in fiscal 1997.
 
PATENTS, LICENSES AND TRADEMARKS
   
  The Company's operations are not dependent upon any single or related group
of patents, licenses, franchises or concessions. The Company's operations are
also not dependent upon a single trademark or service mark, although the
Company has registered the SUPERCOLD service mark with the United States Patent
and Trademark Office.     
 
RESEARCH AND DEVELOPMENT
 
  The Company believes that the refrigerated warehouse industry is not one in
which research and development has traditionally played a significant role. The
Company, however, has made significant expenditures in developing its
integrated warehousing and transportation management services, including
installing its new computer data processing support system which integrates
modern transportation management systems with the Company's warehouse
management system. The Company also continues to pursue methods of reducing
energy costs at its facilities.
 
ENVIRONMENTAL COMPLIANCE
 
  In fiscal 1995, the Company completed the conversion of its last remaining
freon-based cooling system to an ammonia-based system. The Company's capital
expenditures, earnings and competitive position are not materially affected by
compliance with federal, state and local provisions which have been enacted or
adopted to regulate or otherwise protect the environment.
 
                                       37
<PAGE>
 
                                   PROPERTIES
   
  As of December 31, 1995, the Company owned or leased 49 warehouse facilities
in 16 states. Although most of the facilities are owned by the Company, seven
facilities comprising approximately 5.0% of the Company's total cubic feet of
storage space are leased or subleased by the Company under operating-type lease
arrangements. One facility in Ontario, Oregon is operated in its entirety under
a capitalized lease arrangement. Four facilities representing approximately
5.4% of the total cubic feet of storage space are leased, in whole or in part,
under sale-and-leaseback or capitalized-type lease arrangements. Five
facilities, or portions thereof, representing approximately 6.2% of the total
cubic feet of storage space, are situated on leased land.     
   
  Capacity utilization at facilities varies from season to season, with average
annual capacity utilization of approximately 72%. As of December 31, 1995 all
but six of the Company's 41 owned warehouses were encumbered as security for
Senior Debt. Subsequent to December 31, 1995, the Company's Grand Island,
Nebraska facility was financed with proceeds from the Lease Line.     
 
  The Company's facilities are typically single-story concrete or insulated
panel buildings constructed at dock height elevation, with very heavy
insulation and vapor barrier protection. Refrigeration is generally supplied by
screw-type compressors in ammonia-based cooling systems. All facilities are
served by truck and all but seven by rail. Many facilities also have room for
expansion.
 
  The following table lists the 49 refrigerated warehouse properties owned or
leased by the Company as of December 31, 1995. It also shows the 32 facilities
that presently secure the Company's First Mortgage Bonds.
                        
                     REFRIGERATED WAREHOUSE FACILITIES     
 
<TABLE>   
<CAPTION>
                           TOTAL STORAGE
                           SPACE (CUBIC   TYPE  OF         OWNED OR
                             FT./MIL)    FACILITY(*)        LEASED
                           ------------- ----------- ---------------------
<S>                        <C>           <C>         <C>
Burbank (W. Magnolia
 Blvd.), California......       0.8          P/D     Owned
Fullerton (S. Raymond
 Ave.), California.......       4.0          P/D     Leased(1)
Los Angeles (Corona St.),
 California..............       0.7          D       Leased(1)
Los Angeles (Jesse St.),
 California..............       2.7          P/D     Owned(4)
Pajaro (Salinas Rd.),
 California..............       0.8          P/D     Leased(1)
Turlock (5th St.),
 California..............       2.5          P/D     Owned(4)
Turlock (S. Kilroy Rd.),
 California..............       3.0          P/D     Owned(4)
Watsonville (W. Riverside
 Dr.), California........       5.2          P/D     Owned(2)(4)
Watsonville (Second St.),
 California..............       1.5          P/D     Leased(1)
Denver (E. 50th St.),
 Colorado................       2.8          P/D     Owned(2)/Leased(3)(4)
Denver (N. Washington
 St.), Colorado..........       0.5          P/D     Leased(1)
Bartow (U. S. Highway
 17), Florida............       1.2          P/D     Owned(2)(4)
Plant City (S. Alexander
 St.), Florida...........       0.9          P/D     Owned
Tampa (N. 50th St.),
 Florida.................       4.1          P/D     Owned/Leased(3)
Tampa (S. Lois Ave.),
 Florida.................       0.4          D       Owned
Tampa (Shoreline Dr.),
 Florida.................       0.8          D       Owned(2)
Burley (U.S. Highway 30),
 Idaho...................       7.8          P/D     Owned(2)(5)
Nampa (4th St. N.),
 Idaho...................       8.0          P       Owned(4)
Chicago (S. Blue Island
 Ave.), Illinois.........       2.9          P/D     Leased(1)
Rochelle (Americold
 Drive), Illinois........       5.9          D       Owned(4)
Bettendorf (State St.),
 Iowa....................       8.9          P/D     Owned(4)
Fort Dodge (Maple Dr.),
 Iowa....................       3.7          D       Owned(4)
Kansas City (Inland Dr.),
 Kansas..................      35.2          P/D     Owned(4)
Portland (Read St.),
 Maine...................       1.8          P/D     Owned
Boston (Widett Ci.),
 Massachusetts...........       3.1          P/D     Owned(4)
Gloucester (E. Main St.),
 Massachusetts...........       1.9          P/D     Owned(4)
</TABLE>    
 
                                       38
<PAGE>
 
<TABLE>   
<CAPTION>
                              TOTAL STORAGE
                              SPACE (CUBIC   TYPE  OF        OWNED OR
                                FT./MIL)    FACILITY(*)       LEASED
                              ------------- ----------- ------------------
<S>                           <C>           <C>         <C>
Gloucester (Railroad Ave.),
 Massachusetts..............        0.3         P/D     Owned(4)
Gloucester (Rogers St.),
 Massachusetts..............        2.8         P/D     Owned(4)
Gloucester (Rowe Sq.),
 Massachusetts..............        2.4         P/D     Owned(4)
Watertown (Pleasant St.),
 Massachusetts..............        4.7         P/D     Owned(4)
Grand Island (E. Roberts
 St.), Nebraska.............        2.2         P/D     Owned
Brooks (Brooklake Rd.),
 Oregon.....................        4.8         P       Owned(4)
Hermiston (Westland Rd.),
 Oregon.....................        4.0         P       Owned(4)
Milwaukie (S. E. McLoughlin
 Blvd.), Oregon.............        4.7         D       Owned(4)
Ontario (N. E. First St.),
 Oregon.....................        8.1         P       Leased(3)
Salem (Portland Rd. N.E.),
 Oregon.....................       12.5         P/D     Owned(4)
Woodburn (Silverton Rd.),
 Oregon.....................        6.3         P/D     Owned(4)
Fogelsville (Mill Rd.),
 Pennsylvania...............       14.0         D       Owned/Leased(3)(4)
Murfreesboro (Stephenson
 Dr.), Tennessee............        2.9         P/D     Owned(4)
Clearfield (South St.),
 Utah.......................        8.6         P/D     Owned(4)
Burlington (S. Walnut),
 Washington.................        4.7         P/D     Owned(4)
Connell (W. Juniper St.),
 Washington.................        5.7         P       Owned
Kent (S. 190th St.),
 Washington.................        1.0         D       Leased(1)
Moses Lake (Wheeler Rd.),
 Washington.................        7.3         P/D     Owned(4)
Pasco (Industrial Way),
 Washington.................        2.5         P       Owned(4)
Walla Walla (4-14th Ave.
 S.), Washington............        3.1         P       Owned(4)
Wallula (Dodd Rd.),
 Washington.................        1.2         P/D     Owned(4)
Plover (110th St.),
 Wisconsin..................        9.4         P/D     Owned(4)
Tomah (Route 2), Wisconsin..        4.6         P       Owned(4)
                                  -----
                                  228.9
                                  =====
</TABLE>    
--------
(*) "P" designates a production facility.
    "D" designates a distribution facility.
    "P/D" designates a facility that is used for both production and
    distribution.
(1) Operating lease.
(2) Building owned by the Company; land is leased.
(3) Capitalized lease.
   
(4) Security for the Company's First Mortgage Bonds. See Note 7 of Notes to
    Consolidated Financial Statements as of the last day of February 1994 and
    1995.     
   
    
   
(5) Security for mortgage payable.     
 
                                       39
<PAGE>
 
                               LEGAL PROCEEDINGS
   
  On May 9, 1995, the Company filed the Plan under Chapter 11 of the Bankruptcy
Code in the United States Bankruptcy Court for the District of Oregon (Case No.
395-33058elp11) in the Prepackaged Bankruptcy. On the filing date, the Plan had
received approval from both of the classes of debtholders entitled to vote on
the Plan. A hearing was held on June 19, 1995 to consider the motion of the
Company requesting the Bankruptcy Court (1) to approve the Company's Disclosure
Statement dated April 14, 1995 and the Company's procedure for solicitation of
votes to accept or reject the Plan, and (2) to confirm the Plan. The Bankruptcy
Court granted the motions and confirmed the Plan on June 19, 1995, and the Plan
became effective on June 30, 1995. As a part of the Prepackaged Bankruptcy, the
Company also rejected certain lease agreements relating to four warehouse
facilities. In late fiscal 1996, the Company settled all lease rejection issues
with the lessor of the Watsonville, Oakland and San Francisco, California
warehouse facilities. Such settlement did not involve the payment of any
damages by the Company. The outcome of any damage claim resulting from the
remaining lease rejection related to the Chicago warehouse facility cannot be
predicted at this time, but the Company does not believe the resolution of such
claim will be material. See "Risk Factors--Conclusion of Prepackaged
Bankruptcy." For additional information with respect to the Plan, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."     
   
  From time to time, the Company has been involved in litigation relating to
claims arising out of its operations in the regular course of business. As of
January 31, 1996, the Company was not a party to any legal proceedings, the
outcome of which would, in management's opinion, have a material adverse effect
on the Company's results of operations or financial position.     
 
  The Company maintains property, liability and warehouseman's legal liability
insurance in amounts which it believes are consistent with industry practice
and adequate for its operations. The Company has settled all of the material
lawsuits and claims filed in connection with the 1991 Kansas City underground
warehouse fire. The aggregate amount of all settlement payments for the
litigation and claims related to the Kansas City fire did not exceed the amount
of the Company's applicable insurance coverage and no cash payment by the
Company was therefore required. After resolution of the lawsuits and claims,
the Company applied the insurance proceeds paid to the Company in the third
quarter of fiscal 1995. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Introduction--Effect of Kansas City Fire."
 
                                       40
<PAGE>
 
                                   MANAGEMENT
 
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 
  The directors and executive officers of Americold as of December 31, 1995 are
as follows:
 
<TABLE>
<CAPTION>
          NAME           AGE                                TITLE
          ----           ---                                -----
<S>                      <C> <C>
Ronald H. Dykehouse.....  54 Chairman of the Board, President and Chief Executive Officer
Joel M. Smith...........  52 Senior Vice President, Chief Financial Officer and Director
John P. LeNeveu.........  49 Executive Vice President, Operations and Sales
F. Stanley Sena.........  46 Executive Vice President, Transportation and Distribution Logistics
J. Roy Coxe.............  55 Senior Vice President, Logistics
Ronald A. Nickerson.....  58 Vice President, Operations
Lon V. Leneve...........  39 Vice President and Treasurer
Frank Edelstein.........  70 Director
George E. Matelich......  39 Director
James C. Pigott.........  59 Director
William A. Marquard.....  75 Director
</TABLE>
 
  Ronald H. Dykehouse was named President of Americold Corporation in May 1990
and Chairman of the Board and Chief Executive Officer in June 1990. From 1989
to 1990, Mr. Dykehouse was a private investor and consultant. From 1986 to
1989, he was Executive Vice President and Chairman of the Food and Distribution
Groups of Amfac Inc., a diversified holding company. Mr. Dykehouse is a past
director of the National Frozen Foods Association and past Chairman of the
American Frozen Food Institute.
 
  Joel M. Smith has been Senior Vice President and a director of the Company
since December 1986. Mr. Smith has been the Chief Financial Officer of
Americold since 1978 and a Vice President since 1984.
 
  John P. LeNeveu was named Executive Vice President, Operations and Sales of
Americold in July 1995. From July 1991 to 1995, he was Senior Vice President,
Operations and Sales. From 1988 to 1991, he was a management consultant with
the Institute of Management Resources, an international management consulting
company.
 
  F. Stanley Sena was named Executive Vice President, Transportation and
Distribution Logistics of the Company in July 1995. From August 1991 to 1995,
he was Senior Vice President, Administration and Technical Services. From 1986
to 1990, Mr. Sena was Vice President, Operations, Western Region, and from 1990
to 1991, Mr. Sena was Vice President, Operations of the Company.
 
  J. Roy Coxe was named Senior Vice President, Logistics, of Americold in
December 1993. From 1991 to 1993, he was a management consultant with A. T.
Kearney, Inc., an international management consulting company. Mr. Coxe was a
vice president of Drake Sheahan Stewart Dougall and successors, a logistics and
transportation consulting firm, from 1983 to 1991.
 
  Ronald A. Nickerson has been Vice President, Operations since 1990. From 1987
to 1990, Mr. Nickerson was Vice President, Operations, Eastern Region, of the
Company.
 
  Lon V. Leneve was named Vice President in September 1992 and has been
Treasurer of Americold since July 1988. Mr. Leneve joined Americold in 1982 and
was Controller from 1984 to 1988.
 
  Frank Edelstein was elected a director of the Company in 1986. He is
currently a consultant to Kelso and Vice President of Gordon+Morris Group,
Inc., an investment banking firm. Mr. Edelstein joined Kelso in 1987 and held
the position of Vice President at Kelso until 1992. Mr. Edelstein is also a
director of Ceradyne, Inc., IHOP Corporation and Arkansas Best Corporation.
 
 
                                       41
<PAGE>
 
  George E. Matelich has been a director of the Company since December 1986.
Mr. Matelich joined Kelso in 1985 as an Associate, served as a Vice President
of Kelso from 1986 to 1990 and is currently a Managing Director of Kelso.
   
  James C. Pigott was elected a director of Americold in June 1987. He is
President of Pigott Enterprises, Inc., a private investment company. Mr. Pigott
has been Chairman of the Board and Chief Executive Officer of Management
Reports and Services, Inc., an accounting consulting firm, since 1987. Mr.
Pigott's other business activities include membership on the Board of Directors
of PACCAR, Inc.     
 
  William A. Marquard was elected a director of Americold in June 1987. Mr.
Marquard is a director of Treadco, Inc., Mosler, Inc., Earle M. Jorgenson
Holding Company, Inc., Earle M. Jorgenson Company, Arkansas Best Corporation
and Best Holdings Corporation. He is also Vice Chairman of the Board of
Directors of Kelso.
 
  All directors hold office until the next annual meeting of shareholders of
the Company or until their successors have been elected and qualified. The
executive officers of the Company are chosen by the Board and serve at its
discretion.
 
  For their services on the Board of Directors of the Company, Messrs. Pigott,
Marquard and Edelstein are paid $16,000 per year. Mr. Pigott receives $1,000
per year as Chairman of the Company's Audit Committee. Messrs. Pigott, Marquard
and Edelstein also receive $600 per meeting attended. Directors who are also
officers of the Company and Mr. Matelich do not receive additional compensation
as directors of the Company. Directors are reimbursed for out-of-pocket
expenses incurred in connection with attendance at meetings.
 
  The Compensation Committee for fiscal 1995 consisted of Mr. Matelich, Mr.
Marquard and Mr. Pigott. The Audit Committee for fiscal 1995 consisted of Mr.
Edelstein, Mr. Matelich, and Mr. Pigott.
 
  On December 23, 1992, Kelso and its chief executive officer, without
admitting or denying the findings contained therein, consented to an
administrative order in respect of a Commission inquiry relating to the 1990
acquisition of a portfolio company by a Kelso affiliate. The order found that
Kelso's tender offer filing in connection with the acquisition did not comply
fully with the Commission's tender offer reporting requirements, and required
Kelso and the chief executive officer to comply with these requirements in the
future.
 
STOCKHOLDERS' AGREEMENT
 
  Certain of the Company's shareholders have agreed, pursuant to the
Stockholders' Agreement dated as of December 24, 1986 (as amended, the
"Stockholders' Agreement"), that prior to the occurrence of an initial public
offering of at least 25% of the outstanding shares of common stock of the
Company pursuant to an effective registration statement under the Securities
Act, or December 24, 1996, whichever is earlier, sales of shares of common
stock by a member of the Management Group and, in certain events, the non-
management shareholders who are parties to the Stockholders' Agreement, are
subject to a right of first refusal granted to the Company. See "Principal
Shareholders."
 
EXECUTIVE COMPENSATION
 
  The following table sets forth information as to the compensation of the
Chief Executive Officer and each of the other four most highly compensated
executive officers of the Company as of the last day of February 1995 for
services in all capacities to the Company for the years ended the last day of
February 1993, 1994 and 1995.
 
 
                                       42
<PAGE>
 
<TABLE>
<CAPTION>
                                                                    LONG-TERM
                                                                   COMPENSATION
                                     ANNUAL COMPENSATION              AWARDS
                            -------------------------------------- ------------
                                                        OTHER        OPTION/
         NAME AND                                      ANNUAL          SARS
    PRINCIPAL POSITION      YEAR  SALARY   BONUS   COMPENSATION(1)     NO.
    ------------------      ---- -------- -------- --------------- ------------
<S>                         <C>  <C>      <C>      <C>             <C>
Ronald H. Dykehouse........ 1995 $300,000 $231,000     $  --          $  --
 President, Chairman & CEO  1994  300,000   68,608        --             --
                            1993  300,000   65,276        --             --
Joel M. Smith.............. 1995  159,120   98,654        --             --
 Sr. Vice President and CFO 1994  159,120   29,920        --             --
                            1993  159,120   27,946     44,009            --
John P. Leneveu............ 1995  159,120   98,654        --             --
 Exec. Vice President,
  Operations & Sales        1994  159,120   29,920        --          30,000
                            1993  159,120   27,946     27,208            --
F. Stanley Sena............ 1995  150,320   93,403        --             --
 Exec. Vice President,
  Transportation            1994  140,712   26,459        --             --
 & Distribution Logistics   1993  140,712   24,713     43,774            --
J. Roy Coxe(2)............. 1995  150,000   93,000        --             --
 Sr. Vice President,
  Logistics                 1994   30,192   23,250        --          30,000
</TABLE>
--------
(1) Consists of the cost of relocation, the value of automobiles, payments made
    on behalf of the individuals to a bank which made loans to facilitate
    acquisition of the Company's stock by each individual, and other
    miscellaneous fringe benefits. For fiscal years 1994 and 1995, the amounts
    did not exceed the lesser of $50,000 or 10% of the named executive
    officer's annual salary and bonus. For fiscal 1993, the value of such
    benefits was as follows: Mr. Smith, bank loan $40,291, other $3,718; Mr.
    LeNeveu, relocation $25,999, other $1,209; and Mr. Sena, bank loan $41,910,
    and other $1,864.
(2) Mr. Coxe's employment commenced December 20, 1993.
 
AGGREGATED OPTION TABLE
 
  The following table sets forth information as to the options held by the
Chief Executive Officer and each of the other four most highly compensated
executive officers of the Company through the end of fiscal 1995.
 
<TABLE>   
<CAPTION>
                                                       NUMBER OF
                                                      UNEXERCISED    VALUE OF
                                                      OPTIONS AT   UNEXERCISED
                                                        FISCAL     IN-THE-MONEY
                                  SHARES               YEAR-END     OPTIONS AT
                                ACQUIRED ON  VALUE   EXERCISABLE/     FISCAL
       NAME                      EXERCISE   REALIZED UNEXERCISABLE   YEAR-END
       ----                     ----------- -------- ------------- ------------
<S>                             <C>         <C>      <C>           <C>
Ronald H. Dykehouse............       0        $0    80,000/20,000      $0
Joel M. Smith..................       0         0          8,278/0       0
John P. LeNeveu................       0         0     6,000/24,000       0
F. Stanley Sena................       0         0          8,279/0       0
J. Roy Coxe....................       0         0     6,000/24,000       0
</TABLE>    
 
BENEFIT PLANS AND ARRANGEMENTS
 
  Management Incentive Plan--The Company has a Management Incentive Plan (the
"MIP Plan") to provide additional compensation to participants, including
executive officers, upon the achievement of certain financial objectives of the
Company and individual personal objectives of the participants. The MIP Plan is
administered by the Compensation Committee of the Board of Directors (the
"Compensation Committee") and is applicable to management employees of
Americold and, at the option of the President of the Company, other employees
of Americold. The financial objective award is 50% of the total award and is
based on
 
                                       43
<PAGE>
 
attainment of actual operating results as compared to financial targets. The
financial targets were established and approved by the Company based upon the
annual business plan. The personal objective award is 50% of the total award
and is based on attainment of both quantifiable and nonquantifiable goals
established at the beginning of the MIP Plan year. Incentive compensation
earned under the MIP Plan is computed as soon as possible after the close of
the Company's fiscal year and payment is generally made following approval by
the Board unless a deferred payment election has been filed with the Company in
accordance with the terms of the Plan.
 
  The Board of Directors authorized the payment of approximately $1.6 million
in total fiscal 1995 awards pursuant to the MIP Plan. These awards were paid in
July 1995. Incentive compensation earned by the Company's executive officers
for the fiscal year ended the last day of February 1995, including awards under
the MIP Plan, is included in the above Summary Compensation Table.
 
  In addition to the MIP Plan, between March 1, 1991 and February 28, 1994 the
Company had a Stock Incentive Plan, a long-term incentive plan which was
intended to provide additional financial incentives to key employees, including
executive officers of the Company.
 
  Retirement Plan--Americold has a noncontributory defined benefit retirement
plan for salaried employees, including executive officers (the "Retirement
Plan"). The Retirement Plan provides retirement benefits based on credited
years of service and average monthly compensation for the highest five calendar
years of the final 15 calendar years of employment or, if higher, the highest
60 consecutive months in the last 120 months of employment. A participant's
retirement benefits vest after the participant has completed at least five
years of vesting service.
 
  The following table shows the approximate annual retirement benefits payable
to employees for life from normal retirement date pursuant to the Retirement
Plan before reduction for Social Security payments. The actual retirement
benefit to employees is offset by Social Security benefits. Service credited
under a retirement plan of the Company's former owners will be recognized by
the Retirement Plan for purposes of determining the pension benefits payable
under the Retirement Plan.
 
  Estimated years of credited service to date under the Retirement Plan for the
individuals named in the Summary Compensation Table are as follows: Mr.
Dykehouse, 4 years; Mr. Smith, 16 years; Mr. LeNeveu, 3 years; Mr. Sena, 25
years; and Mr. Coxe, 1 year. Estimated years of credited service at normal
retirement date (age 65) under the Retirement Plan for the individuals named in
the Summary Compensation Table are as follows: Mr. Dykehouse, 16 years; Mr.
Smith, 26 years; Mr. LeNeveu, 20 years; Mr. Sena, 45 years; and Mr. Coxe, 12
years.
 
<TABLE>
<CAPTION>
                                            YEARS OF SERVICE
   AVERAGE ANNUALIZED        -------------------------------------------------------------------
      COMPENSATION             20                30                40                 50
   ------------------        -------           -------           -------           --------
   <S>                       <C>               <C>               <C>               <C>
   $100,000                  $30,000           $45,000           $60,000           $ 75,000
   125,000                    37,500            56,250            75,000             93,744
   150,000                    45,000            67,500            90,000            112,500
   175,000                    45,000            67,500            90,000            112,500
   200,000                    45,000            67,500            90,000            112,500
   300,000                    45,000            67,500            90,000            112,500
</TABLE>
 
  In addition to the above, certain individuals named in the Summary
Compensation Table are entitled to a benefit calculated by using additional
years of service credited under supplements to the Retirement Plan. Years of
credited service under the supplements for the individuals named in the Summary
Compensation Table as of the last day of February 1995 are as follows: Mr.
Dykehouse, 0 years; Mr. Smith, 5 years; Mr. LeNeveu, 0 years; Mr. Sena, 0
years; and Mr. Coxe, 0 years. The annual amount to be received at normal
retirement date pursuant to the supplements is estimated to be as follows: Mr.
Dykehouse, $0 per annum;
 
                                       44
<PAGE>
 
Mr. Smith, $5,906 per annum; Mr. LeNeveu, $0 per annum; Mr. Sena, $0 per annum;
and Mr. Coxe, $0 per annum.
   
  A participant's retirement benefits (excluding any incremental benefit earned
under any supplement) under the Retirement Plan plus 50% of Social Security
benefits may not exceed 60% of his compensation at retirement after 40 years of
service, subject to maximum dollar limitations. See Note 8 of Notes to
Consolidated Financial Statements as of the last day of February 1994 and 1995.
    
  Employee Stock Ownership Plan--Americold established, effective March 1,
1987, an Employee Stock Ownership Plan, as amended January 1, 1994 (the
"ESOP"), in which all qualifying employees of the Company not covered by
collective bargaining arrangements are able to participate. It is contemplated
that contributions on an annual basis will not exceed 15% of the aggregate
total compensation of any participating employee. The Company may contribute
cash as well as or in lieu of its stock. The consent of the Company's Board of
Directors is required to authorize any contribution by Americold to the ESOP.
Contributions are allocated among participants based on the ratio of each
participant's compensation to the total compensation of all such participants,
subject to certain limitations. The ESOP is intended to provide retirement
funds to participants in addition to present pension benefits.
 
  Benefits under the ESOP vest based upon years of service as follows: 20%
after three years of service, increased by 20% for each of the next four years
with a maximum of 100% after seven years of service. A participant is 100%
vested if employed by the Company on or after his 65th birthday, or if the
participant incurs a total and permanent disability or dies while employed by
the Company. The ESOP has the right to repurchase previously distributed shares
from employees terminating their ESOP participation, using funds obtained
through cash contributions by the Company. Participant forfeitures are
allocated pro rata to remaining participants.
 
  Participants are eligible for distribution of their capital accumulation in
the ESOP at the normal retirement age of 65. The distribution will be made in
whole shares of the Company's stock, cash or a combination of both, as
determined by the Compensation Committee, provided the participant has not
elected to be paid in stock.
 
  Upon termination of the ESOP, the ESOP's trust will be maintained until the
capital accumulations of all participants have been distributed.
 
  A $750,000 ESOP contribution was declared and paid for fiscal 1995. No ESOP
contribution has been declared to date for fiscal 1996.
 
  Key Employee Stock Option Plan--In 1987, Americold established a Key Employee
Stock Option Plan (the "Option Plan"). The Option Plan permits the issuance of
nonstatutory options to purchase up to 300,000 shares of common stock of the
Company to directors, officers and other key employees of the Company. Of
these, options to purchase up to 150,000 shares were reserved for issuance to
the Management Group and options to purchase the remaining 150,000 shares are
reserved for issuance to all eligible employees (including the Management
Group) of the Company.
 
  An individual exercising options under the Option Plan must become a party to
the Stockholders' Agreement. The Option Plan is administered by the
Compensation Committee. The Compensation Committee determines the recipients of
options granted, the exercise price and the number of shares of common stock
subject to each option. Options to purchase common stock are granted at a price
not less than 85% of the fair market value on the day that the option is
granted. The Board of Directors may amend the Option Plan from time to time.
The maximum term of each stock option is ten years. Options become exercisable
at such time or times as the Compensation Committee may determine at the time
of grant.
 
  If the outstanding shares of common stock are changed into or exchanged for a
different number or kind of shares of the Company or other securities of the
Company, by reason of any merger, consolidation,
 
                                       45
<PAGE>
 
recapitalization, reclassification, stock split-up, stock dividend or
combination of shares, the Compensation Committee shall make an appropriate and
equitable adjustment in the number and kind of shares as to which the
unexercised portion of the option shall be exercisable, to the extent that
after such event the optionee's right to a proportionate interest in the
Company shall be maintained as if the option had already been exercised and the
option shares were subject to such change or exchange. Such adjustment shall be
made without change in the total price applicable to the unexercised portion of
the option and with a corresponding adjustment in the exercise price per option
share. Any such adjustment made by the Compensation Committee shall be final
and binding upon the Company, the optionee and all other interested persons.
 
  In the event of (i) dissolution or liquidation of the Company, (ii) a merger
in which the Company is not the surviving corporation or (iii) a share exchange
pursuant to which the outstanding shares of common stock of the Company are
acquired by another corporation, then either (a) the Compensation Committee,
upon authorization of the Board, shall make an appropriate and equitable
adjustment in the number and kinds of securities covered by outstanding
options, and such options shall be expressly assumed by the successor
corporation, if any; or (b) in lieu of such adjustment, the Board shall provide
a 30-day period immediately prior to such an event during which each optionee
shall have the right to exercise the optionee's outstanding options, in whole
or in part, without regard to the time the options have been outstanding or the
vesting schedule provided for in any option agreement entered into pursuant to
the Option Plan and all options not exercised shall expire at the end of the
30-day period.
 
  Information with regard to the grant of options as of the last day of
February 1995 under the Plan follows:
 
<TABLE>
<CAPTION>
      NUMBER OF                                OPTION   NUMBER     EXPIRATION
       OPTIONS                                 PRICE  EXERCISABLE     DATE
      ---------                                ------ ----------- -------------
       <S>                                     <C>    <C>         <C>
        93,795................................ $10.00   93,795    May 1998
       100,000................................ $18.95   80,000    June 2000
        30,000................................ $21.88    6,000    May 2003
        30,000................................ $20.40    6,000    December 2003
</TABLE>
   
  No options were exercised during fiscal 1995. See Note 9 of Notes to
Consolidated Financial Statements as of the last day of February 1994 and 1995.
    
  Other Arrangements--In calendar 1995, the Board of Directors authorized
employment agreements for certain executive officers of the Company.
 
  On November 1, 1995, the Company entered into an employment agreement with
Mr. Dykehouse. The agreement expires on December 16, 1998 and may be extended
for one-year periods by mutual agreement. Pursuant to the agreement, Mr.
Dykehouse agreed to serve as Chairman of the Board, President and Chief
Executive Officer of the Company for a minimum base monthly salary of $25,000
and the right to participate in the MIP Plan (or any other senior management
incentive program offered by the Company) and receive all customary employee
benefits ("Benefits"). The agreement provides that if during the term of the
agreement Mr. Dykehouse is terminated "without cause," as defined, the Company
will pay his base compensation through December 16, 1998, employ him as a
consultant at his base salary for 24 months beginning January 1, 1999 and
provide to him all Benefits through the earlier of the date he obtains other
employment and December 16, 2006. The Company is not required to make any such
payments if the termination is "for cause," as defined. Among other termination
provisions, the agreement provides that Mr. Dykehouse may terminate the
agreement with 30 days' written notice if such termination is for "good reason"
(as defined), and in such case, Mr. Dykehouse will receive the same treatment
as if he were terminated "without cause." The employment agreement contains
other customary terms and conditions.
 
  On August 1, 1995, the Company entered into two-year employment agreements
with Messrs. Smith, LeNeveu, Sena and Coxe. Each employee agreed to serve in
the position and at the minimum base monthly salary as follows: Mr. Smith,
Senior Vice President and Chief Financial Officer, $13,666.66; Mr. LeNeveu,
 
                                       46
<PAGE>
 
Executive Vice President, $14,166.66; Mr. Sena, Executive Vice President,
$13,666.67; and Mr. Coxe, Senior Vice President, Logistics $12,500. The
agreements provide, among other conditions, that if during the term of the
employment agreement the employee is terminated "without cause," as defined,
the Company will pay the employee any unpaid base compensation, any benefits
accrued to the date of termination and, for 24 months, a monthly amount equal
to the last monthly salary amount received. The Company is not required to make
any such payment if the termination is "for cause," as defined. The employee
may terminate employment upon 30 days' written notice, and the Company will pay
such employee an amount equal to either 12 months' salary if such termination
is without "good reason," as defined, or 24 months' salary if such termination
is for "good reason." The employment agreements contain other customary terms
and conditions.
 
  Concurrently with the entering into of the employment agreements, Messrs.
Dykehouse, Smith, LeNeveu, Sena and Coxe each also entered into a covenant not
to compete and consulting and non-disclosure agreement with the Company. Under
these agreements, each individual has agreed not to compete with the Company
during the term of his employment with the Company, under the terms of an
employment contract or otherwise. Mr. Dykehouse has agreed not to compete with
the Company for a period of 24 months following termination of employment or
until October 31, 2000, whichever is earlier, while the other officers have
agreed not to compete with the Company (i) for a 24-month period following
termination of his employment or until July 31, 2000, whichever is earlier, if
the termination is "for cause," as defined in the employment agreement, or (ii)
for a 12-month period or until July 31, 2000, whichever is earlier, if the
employee terminates employment with or without "good reason," as defined in the
employment agreement. Subject to certain exceptions, each individual has
further agreed to be available for employment as a consultant to the Company
following termination of employment.
 
 
                                       47
<PAGE>
 
                             PRINCIPAL SHAREHOLDERS
   
  The following table sets forth information regarding the beneficial ownership
of common stock as of February 29, 1996 by (i) each person known by the Company
to own more than five percent of its common stock, (ii) each director of the
Company, (iii) each named executive officer, (iv) all directors and officers as
a group and (v) the Management Group:     
 
<TABLE>
<CAPTION>
                                                                    PERCENT OF
                                                          NUMBER OF OUTSTANDING
              NAME AND ADDRESS                             SHARES     SHARES
              ----------------                            --------- -----------
<S>                                                       <C>       <C>
KIA III-Americold, Inc., L.P.(1) ("KIA III")............. 2,000,000    41.1%
 c/o Kelso & Company
 350 Park Avenue, 21st Floor
 New York, NY 10017
Kelso Investment Associates II, L.P.(1) ("KIA II").......   500,000    10.3%
 c/o Kelso & Company
 350 Park Avenue, 21st Floor
 New York, NY 10017
Kelso Equity Partners, L.P.(1) ("Kelso Equity")..........    70,000     1.4%
 c/o Kelso & Company
 350 Park Avenue, 21st Floor
 New York, NY 10017
Joseph S. Schuchert(2)................................... 2,593,600    53.4%
 350 Park Avenue, 21st Floor
 New York, NY 10017
Frank T. Nickell(2)...................................... 2,593,600    53.4%
 350 Park Avenue, 21st Floor
 New York, NY 10017
George E. Matelich(2).................................... 2,593,600    53.4%
 350 Park Avenue, 21st Floor
 New York, NY 10017
Thomas R. Wall, IV(2).................................... 2,593,600    53.4%
 350 Park Avenue, 21st Floor
 New York, NY 10017
The Northwestern Mutual Life Insurance Company(1)........   500,000    10.3%
 720 East Wisconsin Avenue
 Milwaukee, WI 53202
New York Life Insurance Company(1).......................   330,000     6.8%
 51 Madison Avenue
 New York, NY 10010
New York Life Insurance and Annuity Corporation(1).......   250,000     5.1%
 51 Madison Avenue
 New York, NY 10010
Ronald H. Dykehouse(1)(3)................................   117,900     2.4%
 7007 S. W. Cardinal Lane, Suite 135
 Portland, OR 97224
Joel M. Smith(1)(3)......................................    38,278     0.8%
 7007 S. W. Cardinal Lane, Suite 135
 Portland, OR 97224
</TABLE>
 
 
                                       48
<PAGE>
 
<TABLE>   
<CAPTION>
                                                                   PERCENT OF
                                                         NUMBER OF OUTSTANDING
              NAME AND ADDRESS                            SHARES     SHARES
              ----------------                           --------- -----------
<S>                                                      <C>       <C>
John P. LeNeveu(3)......................................   14,000      0.3%
 7007 S. W. Cardinal Lane, Suite 135
 Portland, OR 97224
F. Stanley Sena(1)(3)...................................   38,279      0.8%
 7007 S. W. Cardinal Lane, Suite 135
 Portland, Or 97224
J. Roy Coxe(3)..........................................   12,000      0.2%
 7007 S. W. Cardinal Lane, Suite 135
 Portland, OR 97224
Frank Edelstein.........................................      --       --
 The Gordon+Morris Group, Suite 1400
 620 Newport Center Drive
 Newport Beach, CA 92660
James C. Pigott.........................................      --       --
 1405-42nd Avenue East
 Seattle, WA 98112
William A. Marquard.....................................      --       --
 Eaglestone Farm
 2199 Maysville Road
 Carlisle, KY 40311
All directors and officers as a group (11
 persons)(2)(3).........................................  290,095      5.8%
Management Group (30 persons)(1)(3).....................  563,556     11.1%
</TABLE>    
--------
(1) These persons are party to the Stockholders' Agreement which gives the
    Company a right of first refusal for shares of common stock sold by these
    parties prior to an initial public offering of at least 25% of the
    outstanding shares of common stock of the Company. See "Management--
    Stockholders' Agreement."
(2) Messrs. Schuchert, Nickell, Matelich and Wall may be deemed to share
    beneficial ownership of shares owned of record by KIA III, KIA II, Kelso
    Equity and Kelso & Company (Kelso & Company owns 23,600 shares) by virtue
    of their status as the general partners of Kelso Partners III, L.P. (the
    general partner of KIA III), Kelso Partners II, L.P. (the general partner
    of KIA II), and Kelso Equity and the controlling stockholders and officers
    of Kelso & Company. Messrs. Schuchert, Nickell, Matelich and Wall share
    investment and voting power with respect to securities owned by the
    foregoing entities. Messrs. Schuchert, Nickell, Matelich and Wall disclaim
    beneficial ownership of such securities (other than the 23,600 shares
    owned by Kelso & Company).
   
(3) Includes the following numbers of shares of common stock that may be
    acquired within 60 days after February 29, 1996 through the exercise of
    stock options granted pursuant to the Company's Option Plan: 100,000
    shares for Mr. Dykehouse; 8,278 shares for Mr. Smith; 12,000 shares for
    Mr. LeNeveu; 8,279 shares for Mr. Sena; 12,000 shares for Mr. Coxe;
    151,595 for all directors and officers as a group; and 213,656 shares for
    the Management Group.     
       
  The shareholders of the Company listed above hold approximately 83% of the
voting power of the Company's common stock and are able to elect all of the
members of the Board of Directors and thereby control the Company.
 
  In consideration for certain assistance provided by Kelso in connection with
the Prepackaged Bankruptcy and the refinancing of the 15% Debentures pursuant
to the Offering, the Company expects to pay Kelso a financial advisory fee of
$500,000 upon closing of the Offering.
 
                                      49
<PAGE>
 
                              DEBT OF THE COMPANY
 
THE BANK CREDIT AGREEMENT
 
  The Company and its primary bank entered into the Bank Credit Agreement
effective June 30, 1995. The following summary, which describes certain
provisions of the Bank Credit Agreement does not purport to be complete and is
subject to, and qualified in its entirety by reference to, the Bank Credit
Agreement, including the definitions therein of terms not defined in this
Prospectus. Capitalized terms in this description shall have the meanings
ascribed to them in the Bank Credit Agreement, unless otherwise noted.
 
  The Bank Credit Agreement provides an aggregate availability of up to $27.5
million, subject to Borrowing Base limitations, which may be used for any
combination of letters of credit (not to exceed $10 million) and revolving cash
borrowings. The Bank Credit Agreement is secured primarily by the Company's
trade receivables and may at the Company's option be secured by mortgages on
certain of the Company's warehouse properties. The Borrowing Base equals 85% of
eligible accounts receivable plus 70% of the appraised value of all real
property optionally mortgaged to the bank. As of the date hereof, no real
property of the Company was mortgaged to the bank. Borrowings under the Bank
Credit Agreement constitute Senior Debt, as defined in the Note Indenture. The
funds borrowed under the Bank Credit Agreement are required to be used for
general working capital purposes. The Bank Credit Agreement matures on February
28, 1999.
 
  Interest rates under the Bank Credit Agreement are based on either (i) the
prime lending rate, as announced by the bank from time to time, plus 1 percent,
or (ii) the Eurodollar Market rate plus 2 percent, at the option of the
Company. These rates are subject to adjustment, up to a maximum increase of
0.25% and a maximum reduction of 1.00%, based on the Company's operating
performance relative to Fixed Charges, measured quarterly. Interest is payable
quarterly in arrears. The Bank Credit Agreement also requires that there be
certain 30-day periods ("resting periods") during which there may be no
outstanding borrowings, including borrowings to reimburse the bank with respect
to letters of credit. One such resting period is required during the fiscal
year ending February 28, 1997, and two such periods are required during each of
the fiscal years ending February 28, 1998 and February 28, 1999. There is no
resting period requirement for the fiscal year ending February 29, 1996. The
resting periods are not expected to affect the Company's ability to service its
seasonal working capital or short-term debt requirements or maintain
outstanding letters of credit.
 
  The Bank Credit Agreement contains certain covenants restricting the
Company's ability to, among other things, (i) pay dividends or any other
distribution with respect to its capital stock; (ii) voluntarily prepay or
redeem any Subordinated Debt; (iii) enter into a consolidation or merger
transaction in which the Company or any Subsidiary is not the surviving entity;
(iv) sell or otherwise transfer its assets; (v) enter into transactions with
affiliates (other than wholly-owned subsidiaries) except on an arm's-length
basis as determined by the Board of Directors; or (vi) modify, waive or amend
any provision of its debt agreements, if such modification, waiver or amendment
would adversely affect the rights of the bank.
 
  In addition, the Company is required to comply with certain specified
financial ratios and tests, including the following:
 
  Available Cash Flow to Pro Forma Debt Service Ratio--The Company may not
permit the ratio of (x) Available Cash Flow plus Net Cash to (y) Pro Forma Debt
Service for any period of four consecutive fiscal quarters to be less than
1.01:1.
 
  Senior Debt to Net Worth Ratio--The Company may not permit the ratio of (x)
consolidated indebtedness of the Company and its Subsidiaries to (y) Net Worth
to exceed the ratios shown below during the periods shown below:
 
 
                                       50
<PAGE>
 
<TABLE>
<CAPTION>
FISCAL YEAR ENDING                                                 MAXIMUM RATIO
------------------                                                 -------------
<S>                                                                <C>
February 28, 1997.................................................     5.05
February 28, 1998.................................................     4.85
February 28, 1999.................................................     4.55
</TABLE>
 
  Under the Bank Credit Agreement, the following, among other things, will
constitute events of default: (i) non-payment of principal when due, (ii) non-
payment of interest within five days after being due, (iii) a material
misrepresentation, (iv) a default in the performance of any covenant unless
cured within the applicable grace period, (v) default in the payment or
performance of obligations under an agreement with respect to any Indebtedness
in a principal amount of at least $5.0 million that permits acceleration of
such Indebtedness, (vi) bankruptcy or insolvency of the Company or any
Subsidiary, (vii) existence of unfunded liabilities under ERISA in excess of
$5.0 million or a reportable event under ERISA with respect to a plan having
unfunded liabilities in excess of $5.0 million, (viii) the liens of the bank
upon its collateral shall cease to be in full force and effect, or (ix) a
Change of Control (as defined in the Bond Indenture) shall occur.
 
  Certain Definitions. Certain definitions contained in the Bank Credit
Agreement are summarized below. Reference is made to the Bank Credit Agreement
for complete definitions of these terms.
 
  Adjusted EBITDA: The term "Adjusted EBITDA" has the same meaning as ascribed
to it in the Second Investment Agreement. See "--The Second Investment
Agreement--Certain Definitions."
 
  Available Cash Flow: The term "Available Cash Flow" means Adjusted EBITDA
minus (i) cash income taxes paid or payable during the determination period and
(ii) the amount of capital expenditures (other than any noncash capital
expenditures and expenditures for the acquisition of assets or property using
net proceeds of the Series B Bonds) of the Company and its Subsidiaries during
such period.
 
  Net Cash: The term "Net Cash" means the amount shown on the Company's
consolidated balance sheet (excluding cash held in restricted accounts,
unavailable to pay interest and principal due on the Company's indebtedness),
minus the amount of any obligations of the Company outstanding under the Bank
Credit Agreement, other than obligations representing undrawn letters of
credit.
 
  Pro Forma Debt Service: The term "Pro Forma Debt Service" has the same
meaning as ascribed to it in the Second Investment Agreement. See "--The Second
Investment Agreement--Certain Definitions."
 
  Net Worth: The term "Net Worth" means the sum of (i) stockholder's equity
plus (ii) the 15% Debentures.
 
THE FIRST MORTGAGE BONDS
 
  The terms of the First Mortgage Bonds, issued in two series, Series A and
Series B, are governed by the Bond Indenture between the Company and the Bond
Trustee. The following summary, which describes certain provisions of the Bond
Indenture, the First Mortgage Bonds and the Mortgages (each as defined below),
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, such documents, including the definitions therein of
terms not defined in this Prospectus. Capitalized terms in this description of
the First Mortgage Bonds shall have the meanings ascribed to them in the Bond
Indenture, unless otherwise noted. See below for a description of the Second
Investment Agreement between the Company and the Institutional Investor, which
provides to the Institutional Investor and, in certain instances, to all
holders of First Mortgage Bonds, certain additional rights.
 
  General--The First Mortgage Bonds are direct, unsubordinated, full recourse
obligations of the Company and constitute Senior Debt, as such term is defined
in the Bond Indenture and in the Note Indenture. The Series A Bonds will mature
on June 30, 2002, subject to the redemption provisions summarized below. The
Series A Bonds, of which a principal amount of $140 million is currently
outstanding,
 
                                       51
<PAGE>
 
bear interest at the annual rate of 11.45 percent, payable semiannually in
arrears on January 1 and July 1 of each year. The Series B Bonds will mature on
March 1, 2005, subject to the redemption provisions summarized below. The
Series B Bonds, of which a principal amount of $176.25 million currently is
outstanding, bear interest at the annual rate of 11.5 percent, payable
semiannually in arrears on March 1 and September 1 of each year. Interest on
overdue principal and (to the extent permitted by law) on overdue installments
of interest accrue at a rate equal to the lesser of (i) the greater of (a) 18%
per annum and (b) 4% per annum over the prime rate or equivalent rate of
interest from time to time in effect as announced by the Bond Trustee and (ii)
the maximum rate of interest on the First Mortgage Bonds then permitted by
applicable law.
 
  Mortgages and Other Security--The First Mortgage Bonds are secured by
mortgages or deeds of trust (the "Mortgages") on 32 of the Company's
properties. See "Properties." Each Mortgage secures the full amount payable
with respect to all the First Mortgage Bonds except in the case of a Mortgage
on any Property located in Tennessee, Florida or Kansas where, due to mortgage
recording or similar taxes, the aggregate amount of the First Mortgage Bonds
secured by such Mortgage may be limited to 100% of the appraised value of the
related Property as of the original issuance of Series A Bonds in 1987. The
Mortgages establish certain Release Values for the release of Mortgaged
Properties from the lien of the Mortgages. The Release Values are adjusted to
reflect the addition of new properties to the collateral pool, redemptions of
principal and amortization payments, releases of obsolete property and certain
other specified events.
 
  The Mortgages prohibit subordinated financing on the Properties and direct or
indirect sales thereof except after release as provided in the Bond Indenture.
The Mortgages also contain covenants on the part of the Company to repair,
maintain, pay taxes on and insure the properties and comply with applicable
law.
 
  Optional Redemption--The Company may redeem Series A Bonds on or after June
30, 1995, and may redeem Series B Bonds on or after March 1, 1998, upon 45
days' notice to the Bond Trustee (which shall provide no less than 30 days'
notice thereof to the bondholders), at optional redemption prices as delineated
in the Bond Indenture, together with accrued interest to the date of
redemption.
 
  So long as the relevant provisions of the Second Investment Agreement remain
in effect, the Company may not optionally redeem any Series B Bonds unless it
simultaneously redeems or has previously redeemed the entire principal amount
of Series A Bonds. On or after March 1, 1998, provided that the Second
Investment Agreement is no longer in effect, optional redemptions may be
allocated between the Series B Bonds and the Series A Bonds at the discretion
of the Company.
 
  So long as the covenant in the Second Investment Agreement relating to
optional redemptions of Series A Bonds remains in effect, the holders of the
Series A Bonds will be entitled to receive the greater of the applicable
redemption price specified in the Bond Indenture and the applicable redemption
price specified in the Second Investment Agreement upon an optional redemption
of Series A Bonds. In addition, so long as the relevant covenants in the Second
Investment Agreement remain in effect, the Company will be required to redeem
all Series A Bonds, or, in certain events, only Series A Bonds held by the
Institutional Investor, upon the occurrence of other specified events at the
greater of the prices specified therein. See "--The Second Investment
Agreement--Required Redemptions."
 
  In addition, the Bond Indenture includes provisions relating to the
redemption of First Mortgage Bonds in connection with certain events of
casualty, condemnation, taxation and other events, as well as provisions
relating to the release and substitution of collateral.
 
  Subject to certain exceptions, partial redemptions of First Mortgage Bonds
are not permitted unless (i) the aggregate principal amount of Series A Bonds
then being redeemed, if any, is more than $5 million and the aggregate
principal amount of Series B Bonds then being redeemed, if any, is more than
$25 million and (ii) the aggregate principal amount of Series B Bonds
outstanding after such redemption exceeds $25 million. In addition, the Company
may redeem or prepay the Series A Bonds, in whole or in part, on one or more
 
                                       52
<PAGE>
 
occasions at any time on or prior to December 31, 1996 without payment of any
prepayment premium. Further, the Company may at any time redeem up to $25
million principal amount of Series A Bonds (less any amounts redeemed in the
18-month period on or prior to December 31, 1996) without payment of any
prepayment premium.
 
  Sinking Fund--The Series A Bonds are entitled to mandatory sinking fund
payments on each interest payment date beginning July 1, 1999, calculated to
retire prior to maturity 73% of the principal amount of the $140 million of
Series A Bonds outstanding. Sinking fund payments will be made with respect to
outstanding Series A Bonds according to the following schedule:
 
<TABLE>
<CAPTION>
                                                         PERCENT OF $140 MILLION
                                              AGGREGATE    PRINCIPAL AMOUNT OF
                                              PRINCIPAL    THE SERIES A BONDS
PAYMENT DATE                                   PAYMENT    AMORTIZED PER PAYMENT
------------                                 ----------- -----------------------
<S>                                          <C>         <C>
July 1, 1999................................ $12,000,000           8.5%
January 1, 2000.............................  18,000,000          12.9%
July 1, 2000................................  18,000,000          12.9%
January 1, 2001.............................  18,000,000          12.9%
July 1, 2001................................  18,000,000          12.9%
January 1, 2002.............................  18,000,000          12.9%
June 30, 2002 (maturity)....................  38,000,000          27.0%
</TABLE>
 
  The Series B Bonds are entitled to a mandatory sinking fund payment of
$88.125 million on March 1, 2004, calculated to retire prior to maturity 50% of
the original principal amount of the Series B Bonds. The Series A Bond and
Series B Bond sinking fund payments will be made prior to the maturity of the
Notes. See "Risk Factors--Substantial Payment Obligations; Consequences of
Failure to Service Debt."
 
  Change of Control--Upon a Change of Control of the Company, as defined in the
Bond Indenture, each holder of First Mortgage Bonds will have the right to
require the Company to repurchase all or any part of such holder's First
Mortgage Bonds at a repurchase price in cash equal to 101% of the principal
amount thereof plus any accrued and unpaid interest as of the date of
repurchase (subject to the right of holders of record on the relevant record
date to receive interest due on the relevant interest payment date). The Change
of Control provisions contained in the Bond Indenture are substantially similar
to the Change of Control provisions of the Note Indenture. However, the holders
of First Mortgage Bonds may require the Company to repurchase the First
Mortgage Bonds prior to repurchasing the Notes. See "Description of the Senior
Subordinated Notes--Change of Control." If the Company merges or consolidates
with or into another entity controlled by Kelso, the holders of the First
Mortgage Bonds may not be able to require the Company to repurchase their First
Mortgage Bonds, unless the holders of voting stock of the Company immediately
prior to such transaction, together with Kelso and its affiliates, own,
directly or indirectly, in the aggregate, less than 70% of the voting stock of
the post-transaction surviving entity.
 
  Certain Covenants--The Bond Indenture contains certain covenants limiting,
among other things, (i) the issuance of additional debt by the Company, (ii)
the issuance of debt and preferred stock by the Company's subsidiaries, (iii)
the payment of dividends on and redemption of capital stock of the Company and
its subsidiaries, (iv) the redemption of subordinated obligations of the
Company, (v) the sale of assets and stock of the Company's subsidiaries, (vi)
transactions with affiliates, (vii) sale and leaseback transactions, (viii)
distributions from subsidiaries and (ix) consolidations, mergers and transfers
of substantially all the assets of the Company. Certain of the covenants
contained in the Bond Indenture are substantially similar to certain of the
covenants contained in the Note Indenture. See "Description of the Senior
Subordinated Notes." The covenants contained in the Bond Indenture relating to
the redemption or prepayment of subordinated obligations of the Company may
substantially restrict the ability of the Company to redeem or otherwise make
payments in respect of principal on the Notes prior to the maturity thereof.
 
 
                                       53
<PAGE>
 
  The covenants under the Bond Indenture are, in certain respects, different
from those under the Second Investment Agreement. In particular, the Bond
Indenture provides that the Company must apply the Net Available Cash from an
Asset Disposition as follows: first, at the Company's election (or to the
extent required by the terms of Senior Debt), to redeem or prepay Senior Debt
other than the First Mortgage Bonds; second, to repurchase First Mortgage Bonds
tendered pursuant to an offer made by the Company to purchase such First
Mortgage Bonds at the applicable redemption price (an "Offer"); and third, to
the extent of the balance of Net Available Cash from such Asset Disposition, to
acquire tangible property or to redeem or prepay Debt within one year of the
later of the receipt of such Net Available Cash or the consummation of such
Offer; provided, however, that any redemption or prepayment of Debt pursuant to
the first and third clauses above shall cause the related loan commitment (if
any) to be permanently reduced in an amount equal to the amount so redeemed or
prepaid. However, while the relevant covenants in the Second Investment
Agreement remain in effect, the Company may first apply Net Available Cash to
acquire Tangible Property acceptable to the Institutional Investor prior to
repurchasing First Mortgage Bonds. See "--The Second Investment Agreement."
   
  Defaults--The following types of events, among others, will constitute an
Event of Default under the Bond Indenture: (i) a default for 30 days in the
payment of interest on any First Mortgage Bond; (ii)(A) a default in the
payment of the principal or premium, if any, on any First Mortgage Bond when
the same becomes due and payable at its stated maturity, upon redemption, upon
declaration or otherwise, or (B) the failure by the Company to redeem or
purchase First Mortgage Bonds when required pursuant to the Bond Indenture or
the First Mortgage Bonds; (iii) the failure by the Company to comply with
certain obligations in the event of a merger, consolidation or transfer of
substantially all the assets of the Company or the failure of the Company or
Americold Services Corporation to comply with the covenant in the Bond
Indenture requiring the Company to own the capital stock of Americold Services
Corporation free of any Lien (other than the lien granted to the Bond Trustee
and the lien granted to the bank in connection with the Bank Credit Agreement);
(iv) the failure by the Company to comply with certain covenants in the First
Mortgage Bonds or the Bond Indenture; (v) the failure of the Company or any
Subsidiary to pay Debt within any applicable grace period; (vi) certain events
of bankruptcy, insolvency or reorganization of the Company or a Subsidiary;
(vii) an "Event of Default" as defined in any of the security documents
relating to the collateral securing the payment of the First Mortgage Bonds;
(viii) an "Event of Default" under the Second Investment Agreement; (ix) any
judgment or decree for the payment of money in excess of $5.0 million is
rendered against the Company or a Subsidiary and is not discharged within
specified time periods.     
 
  The Mortgages, which constitute security documents, include additional Events
of Default including, among others, (A) failure to maintain required insurance
on the Properties, (B) any prohibited disposition or encumbrance of the
Properties, (C) in the case of Mortgages on leasehold estates, termination of
or the happening of certain other events with respect to the applicable lease
and (D) with certain exceptions, failure for 30 days to comply with any other
terms or covenants contained in the Mortgages.
 
  Subject to certain exceptions and conditions, upon an Event of Default, the
Bond Trustee or the holders of at least 25% in principal amount of the First
Mortgage Bonds may declare the principal of and accrued but unpaid interest on
all the First Mortgage Bonds, plus a premium in certain circumstances, to be
immediately due and payable.
 
THE SECOND INVESTMENT AGREEMENT
 
  The Company and the Institutional Investor entered into an investment
agreement dated as of July 2, 1987 in connection with the issuance of the
Series A Bonds. The investment agreement was amended and restated as of March
2, 1993 in connection with the issuance of the Series B Bonds. On June 30,
1995, upon payment by the Company of an Agreement Modification Fee to the
Institutional Investor, the prior Investment Agreement was cancelled and the
Second Investment Agreement became effective.
 
 
                                       54
<PAGE>
 
  The following summary of certain provisions of the Second Investment
Agreement does not purport to be complete and is subject to, and is qualified
in its entirety by reference to, the Second Investment Agreement, including
definitions therein of terms not defined in this Prospectus. Certain important
definitions are included in this summary under "Definitions" below.
   
  The Company is currently considering the possibility of issuing secured debt
to refinance a portion of the Series A Bonds. See "Prospectus Summary--Recent
Developments." Certain covenants, redemption obligations and other provisions
of the Second Investment Agreement will terminate in the event the
Institutional Investor should at any time either (1) hold less than 25% of the
outstanding principal amount of Series A Bonds or (2) hold less than $25
million in principal amount of the Series A Bonds. The Second Investment
Agreement will terminate completely when neither the Institutional Investor nor
any of its Affiliates continues to hold any Series A Bonds. Upon termination of
the Second Investment Agreement, all Series A Bonds, together with the Series B
Bonds, will be governed solely by the provisions of the Bond Indenture.     
 
  Certain Covenants--Among financial covenants contained in the Second
Investment Agreement, the Company may not permit Adjusted Consolidated Net
Worth at any time to be less than the amount set forth below opposite the
period in which the measurement is made:
 
<TABLE>
<CAPTION>
   FISCAL YEARS ENDED FEBRUARY                                      AMOUNT
   ---------------------------                                   ------------
   <S>                                                           <C>
   1997......................................................... $(36,000,000)
   1998......................................................... $(34,000,000)
   1999......................................................... $(32,000,000)
   2000......................................................... $(28,000,000)
   2001......................................................... $(25,000,000)
   2002......................................................... $(19,000,000)
   2003......................................................... $(10,000,000)
</TABLE>
 
  The Company also may not permit the ratio of Senior Debt to Adjusted Total
Capitalization at any time to be greater than the following amounts:
 
<TABLE>
<CAPTION>
                                                                      MAXIMUM
                                                                     PERMITTED
   FISCAL YEARS ENDED FEBRUARY                                         RATIO
   ---------------------------                                       ---------
   <S>                                                               <C>
   1997.............................................................   86.0%
   1998.............................................................   85.0%
   1999.............................................................   85.0%
   2000.............................................................   84.0%
   2001.............................................................   81.0%
   2002.............................................................   79.0%
   2003.............................................................   77.0%
</TABLE>
 
  The Company further may not permit the ratio of (1) the sum of Available Cash
Flow for the four most recently ended quarters, plus Net Cash, to (2) Pro Forma
Debt Service for the four succeeding quarters (or if such determination is made
on a day which is not the last day of a fiscal quarter, the quarter in which a
determination is being made and the following three quarters) at any time to be
less than:
 
<TABLE>
<CAPTION>
   FISCAL YEARS ENDED FEBRUARY                                       RATIO
   ---------------------------                                    ------------
   <S>                                                            <C>
   1997.......................................................... 1.10 to 1.00
   1998.......................................................... 1.20 to 1.00
   1999..........................................................  .95 to 1.00
   2000..........................................................  .70 to 1.00
   2001..........................................................  .65 to 1.00
   2002..........................................................  .66 to 1.00
   2003.......................................................... 1.00 to 1.00
</TABLE>
 
 
                                       55
<PAGE>
 
  Moreover, so long as the Bank Credit Agreement is in effect, the negative
covenants in such agreement, other than those dealing with transactions with
affiliates and modifications of indebtedness and other agreements, are
incorporated by reference into the Second Investment Agreement. In addition, if
the Bank Credit Agreement is replaced by any other bank financing, any
corresponding covenants in such replacement financing agreement will be
incorporated into the Second Investment Agreement so long as any such
replacement financing agreement is in effect.
 
  The Second Investment Agreement restricts the ability of the Company to (i)
pay dividends or make other distributions with respect to the capital stock of
the Company, (ii) redeem capital stock of the Company, (iii) redeem prior to
maturity any subordinated debt of the Company, and (iv) make investments in
certain Affiliates of the Company. Such provisions are in certain respects more
restrictive than those contained in the Bond Indenture and may substantially
restrict the ability of the Company to redeem or otherwise make payments in
respect of principal on the Notes prior to the maturity thereof.
 
  Required Redemptions--In addition to any redemption required by the Bond
Indenture, the Company may be required under the Second Investment Agreement to
redeem Series A Bonds (but only Series A Bonds held by the Institutional
Investor in the case of clause (iii) below) in the following circumstances and
in the principal amounts indicated:
 
    (i) At any time the Company makes an optional redemption of any Series B
  Bonds pursuant to the terms of the Bond Indenture, the Company shall,
  concurrently with such redemption of Series B Bonds, redeem the entire
  principal amount of the Series A Bonds;
 
    (ii) On March 9, 1996, the Company shall prepay a principal amount of
  Series A Bonds equal to the difference, if any, between (x) $21,525,588 and
  (y) the value of Mortgaged Properties acceptable to the Institutional
  Investor that have become subject to the lien of a Mortgage (or, in the
  case of the construction of an addition upon property which is already
  subject to the lien of a Mortgage, the value of each addition qualifying as
  Mortgaged Property under the Bond Indenture) after April 12, 1995 and prior
  to March 9, 1996 (other than Mortgaged Properties acquired with cash or
  U.S. government obligations held by the Bond Trustee pursuant to the
  release and substitution provisions of the Bond Indenture), except that no
  such prepayment shall be required if the difference between the amounts
  described above in clauses (x) and (y) is less than $50,000;
 
    (iii) If the Company or any Affiliate of the Company or other Person (as
  defined in the Bond Indenture) acting on behalf of the Company acquires
  Series B Bonds, in open market purchases or otherwise (excluding, however,
  any redemption of Series B Bonds in accordance with the terms of the Bond
  Indenture and the Second Investment Agreement that occurs concurrently with
  a pro rata redemption of Series A Bonds), the Institutional Investor shall
  have the option to require the Company to redeem all of the Series A Bonds
  held by the Institutional Investor;
 
    (iv) Upon an Asset Disposition, the Company shall apply to the redemption
  of an aggregate principal amount of Senior Debt of the Company an amount
  equal to the amount of Net Available Cash not applied within 360 days of
  such Asset Disposition to the acquisition of Tangible Property acceptable
  to the Institutional Investor; and
 
    (v) At any time the Company exercises certain defeasance options provided
  in the Bond Indenture, the Company shall, concurrently with the exercise of
  such option, prepay the entire principal amount of Series A Bonds.
   
  With regard to clause (ii) above, two additional properties have been
accepted by the Bond Trustee and the Institutional Investor as of March 8, 1996
and therefore no prepayment will be required under clause (ii). Subject to
certain exceptions specified in the Second Investment Agreement, any such
redemption of Series A Bonds and any other redemptions of Series A Bonds
permitted or required under the Bond Indenture shall be made at a price equal
to the redemption price specified below for the date on which such redemption
is to be made (together with accrued interest to the date of redemption), as
long as the Second Investment Agreement is in effect:     
 
                                       56
<PAGE>
 
<TABLE>
<CAPTION>
   TWELVE MONTHS
   BEGINNING MARCH 1                                            REDEMPTION PRICE
   -----------------                                            ----------------
   <S>                                                          <C>
   1996........................................................     109.583%
   1997........................................................     107.666%
   1998........................................................     105.750%
   1999........................................................     103.833%
   2000........................................................     101.917%
   2001 and thereafter.........................................     100.000%
</TABLE>
 
  Notwithstanding the foregoing, the Company is not required to pay any premium
on any redemption or prepayment of Series A Bonds on or prior to December 31,
1996, or on the redemption of $25 million of Series A Bonds (less any amount
redeemed or prepaid on or prior to December 31, 1996) whenever such redemption
shall occur.
 
  Change of Control--Upon a Change of Control (as defined in the Bond
Indenture, which definition is substantially similar to the definition of a
Change in Control contained in the Note Indenture), the Institutional Investor
shall have the right to require the Company to redeem all of the Series A Bonds
at a price equal to 101% of the aggregate principal amount thereof plus any
accrued and unpaid interest as of the date of such redemption.
 
  Events of Default--As long as the Second Investment Agreement remains in
effect, the Institutional Investor will be able to declare an Event of Default
if (i) any interest on the Series A Bonds is not paid within five days of the
applicable payment date, (ii) there is any default which continues for 30 days
in the performance of any other covenant or agreement included or incorporated
by reference in the Second Investment Agreement, (iii) there is a material
breach of a material representation, warranty or other statement made by or on
behalf of the Company included or incorporated by reference in the Second
Investment Agreement or (iv) any event shall occur or any condition shall exist
with respect to any Indebtedness of the Company (other than the Series A Bonds
and the Series B Bonds) or a Subsidiary of the Company in a principal (or
capitalized) amount of at least $2.5 million, or under any agreement securing
or relating to such Indebtedness, the effect of which is to cause or permit any
holder thereof or a trustee to accelerate the maturity of such Indebtedness, or
any such Indebtedness shall not have been paid at the final maturity date
thereof (as renewed or extended if such Indebtedness shall have been renewed or
extended) and any applicable grace period shall have expired; and in any such
case the Institutional Investor has notified the Company and the Bond Trustee
that an Event of Default has occurred under the Second Investment Agreement.
Such an Event of Default constitutes an Event of Default under the Bond
Indenture. The Second Investment Agreement requires the Company promptly to
notify the Institutional Investor of the occurrence of any Event of Default
under the Second Investment Agreement or Bond Indenture, certain pending
litigation and any other event which is likely to affect the financial
condition, operations or prospects of the Company or any Restricted Subsidiary
materially and adversely.
 
  Certain Definitions--Certain definitions contained in the Second Investment
Agreement are listed below.
 
  Adjusted Consolidated Interest Expense: The term "Adjusted Consolidated
Interest Expense" means, for any period, the total interest expense of the
Company and its Restricted Subsidiaries, including (i) interest expense
attributable to capital leases, (ii) amortization of debt discount and debt
issuance cost, (iii) capitalized interest, (iv) non-cash interest payments, (v)
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing, (vi) net costs under interest rate
protection agreements (including amortization of fees), (vii) preferred stock
dividends (other than dividends payable solely in kind) in respect of all
preferred stock held by persons other than the Company or a Restricted
Subsidiary, (viii) interest incurred in connection with investments in
discontinued operations and (ix) interest actually paid by the Company or any
of its Restricted Subsidiaries under any guarantee of Indebtedness or any other
obligation of any other person.
 
 
                                       57
<PAGE>
 
  Adjusted Consolidated Net Income: The term "Adjusted Consolidated Net Income"
means, for any period, the net income (or net loss) of the Company and its
Restricted Subsidiaries determined on a consolidated basis in accordance with
generally accepted accounting principles; provided, however, that there shall
not be included in such Adjusted Consolidated Net Income:
 
    (i) any net income of any person if such person is not a Restricted
  Subsidiary, except that (A) the Company's or any Restricted Subsidiary's
  equity in the net income of any such person for such period shall be
  included in such Adjusted Consolidated Net Income up to the aggregate
  amount of cash actually distributed by such person during such period to
  the Company or a Restricted Subsidiary as a dividend or other distribution
  (subject, in the case of a dividend or other distribution to a Restricted
  Subsidiary, to the limitations contained in clause (iii) below) and (B) the
  Company's or any Restricted Subsidiary's equity in a net loss of any such
  person for such period shall be included in determining such Adjusted
  Consolidated Net Income;
 
    (ii) any net income of any person acquired by the Company or a Restricted
  Subsidiary in a pooling of interests transaction for any period prior to
  the date of such acquisition;
 
    (iii) any net income of any Restricted Subsidiary if such Restricted
  Subsidiary is subject to restrictions, directly or indirectly, on the
  payment of dividends or the making of distributions by such Restricted
  Subsidiary, directly or indirectly, to the Company, except that (A) the
  Company's equity in the net income of any such Restricted Subsidiary for
  such period shall be included in such Adjusted Consolidated Net Income up
  to the aggregate amount of cash actually distributed by such Restricted
  Subsidiary during such period to the Company or another Restricted
  Subsidiary as a dividend or other distribution (subject, in the case of a
  dividend or other distribution to another Restricted Subsidiary, to the
  limitation contained in this clause) and (B) the Company's equity in a net
  loss of any such Restricted Subsidiary for such period shall be included in
  determining such Adjusted Consolidated Net Income;
 
    (iv) any gain or loss realized upon the sale or other disposition of any
  property, plant or equipment of the Company or its Restricted Subsidiaries
  (including pursuant to any sale-and-leaseback arrangement), provided,
  however, that the exclusion from Adjusted Consolidated Net Income of gains
  described in this clause (iv) shall not apply to deferred gains resulting
  from sale and leaseback arrangements to the extent that there is an
  offsetting increase in depreciation expense resulting from the
  recapitalization of the related property, plant or equipment which is not
  sold or otherwise disposed of in the ordinary course of business and any
  gain or loss realized upon the sale or other disposition of any Capital
  Stock of any person;
     
    (v) the cumulative effect of a change in accounting principles, including
  the cumulative effect of the implementation of SFAS 106 by the Company with
  respect to services rendered by employees in periods prior to its
  implementation, but excluding any effects of such implementation with
  respect to services rendered in periods following such implementation, and
  excluding any one-time or cumulative charges associated with the
  implementation of SFAS 109;     
 
    (vi) the cash effect of the rejection of any leases or executory
  contracts pursuant to the Plan; and
 
    (vii) the cash effect of the Company's incurring costs (including but not
  limited to professional fees) in connection with the Plan in excess of
  $5,750,000.
 
  Adjusted Consolidated Net Worth: The term "Adjusted Consolidated Net Worth"
of the Company and its Restricted Subsidiaries means an amount equal to the
total amounts shown on the balance sheet of the Company and its Restricted
Subsidiaries, as of the date for which the determination is being made, as (i)
the par or stated value of all outstanding Capital Stock of the Company plus
(ii) paid-in capital or capital surplus relating to such Capital Stock plus
(iii) any retained earnings or earned surplus less (A) any accumulated deficit,
(B) any amounts attributable to Redeemable Stock, (C) any amounts attributable
to Exchangeable Stock, (D) any amounts attributable to treasury stock and (E)
adjustments relating to pension liabilities, in all cases determined on a
consolidated basis in accordance with generally accepted accounting principles;
provided, however, that to the extent such balance sheet reflects any effects
attributable to any one-time or
 
                                       58
<PAGE>
 
cumulative charges associated with the implementation of SFAS 106 and 109, or
any changes in accounting principles implemented thereafter, such effect shall
be disregarded; provided further, that to the extent such balance sheet
reflects any gain or loss realized upon the sale or other disposition of any
property, plant or equipment of the Company or its restricted subsidiaries
after February 28, 1995 upon the sale or other disposition of any Capital Stock
of any person, such gain or loss shall also be disregarded and provided,
further, that the cash effects of the rejection of any leases or executory
contracts pursuant to the Plan and the cash effects of the Company's incurring
costs (including but not limited to professional fees) in connection with the
Plan in excess of $5,750,000 shall also be disregarded.
 
  Adjusted EBITDA: The term "Adjusted EBITDA" means, for any period, Adjusted
Consolidated Net Income plus (to the extent deducted in calculating Adjusted
Consolidated Net Income) Adjusted Consolidated Interest Expense, income taxes,
depreciation expense, amortization expense, non-cash write-offs of deferred
financing costs and non-cash deductions for contributions to the ESOP (but
without giving effect to any extraordinary gain or loss) for such period.
 
  Adjusted Total Capitalization: The term "Adjusted Total Capitalization"
means, without duplication, Adjusted Consolidated Net Worth plus Indebtedness
of the Company and its Restricted Subsidiaries, consolidated in accordance with
generally accepted accounting principles.
 
  Asset Disposition: The term "Asset Disposition" means any sale, lease,
transfer or other disposition (or series of related sales, leases, transfers or
dispositions) of shares of capital stock of a Subsidiary (other than directors'
qualifying shares), property or other assets (each referred to for the purposes
of this definition as a "disposition") by the Company or any of its
Subsidiaries, other than (i) a disposition by a Subsidiary to the Company or by
the Company or a Subsidiary to a wholly owned Subsidiary that is a Restricted
Subsidiary, (ii) a disposition of property or assets at fair market value in
the ordinary course of business, (iii) a disposition of obsolete or worn out
assets in the ordinary course of business, (iv) a disposition subject to and
made in accordance with the provisions of the Bond Indenture relating to
optional redemptions and redemptions in connection with casualty, condemnation,
taxation and certain other events, or (v) a disposition subject to the
provision of the Bond Indenture relating to Limitations on Restricted Payments.
 
  Available Cash Flow: The term "Available Cash Flow" means, for the most
recent four-quarter period ended prior to the date on which a determination is
being made, Adjusted EBITDA minus (i) cash income taxes paid or payable during
such period and (ii) the amount of Capital Expenditures (other than any non-
cash Capital Expenditures) of the Company and its Restricted Subsidiaries
during such period.
 
  Indebtedness: The term "Indebtedness" of any person means, without
duplication, (a) all indebtedness of such person for borrowed money or for the
deferred purchase price of property or services; (b) except to the extent
supporting Indebtedness of such person (but no other indebtedness) of the type
described in clause (a) above, the face amount of all letters of credit issued
for the account of such person and, without duplication, all drafts drawn
thereunder; (c) all liabilities secured by any lien on any property owned by
such person, whether or not such indebtedness has been assumed; (d) all Capital
Lease Obligations (as defined in the Second Investment Agreement); and (e) all
Contingent Obligations (as defined in the Second Investment Agreement) of such
person.
 
  Net Available Cash: The term "Net Available Cash" from an Asset Disposition
means cash payments received (including any cash payments received by way of
deferred payment of principal pursuant to a note or installment receivable or
otherwise, but only as and when received, but excluding any other consideration
received in the form of assumption by the acquiring person of Indebtedness or
other obligations relating to such properties or assets or received in any
other non-cash form) therefrom, in each case net of all legal, title and
recording tax expenses, commissions and other fees and expenses incurred, and
all federal, state, provincial, foreign and local taxes required to be accrued
as a liability under generally accepted accounting principles, as a consequence
of such Asset Disposition, and in each case net of all payments made on any
Indebtedness which is secured by any assets subject to such Asset Disposition,
in accordance with the terms
 
                                       59
<PAGE>
 
of any Lien upon or other security agreement of any kind with respect to such
assets, or which must by its terms, or in order to obtain a necessary consent
to such Asset Disposition, or by applicable law be repaid out of the proceeds
from such Asset Disposition, and net of all distributions and other payments
required to be made and actually made to minority interest holders in
Subsidiaries or joint ventures as a result of such Asset Disposition.
   
  Net Cash: The term "Net Cash" of the Company and its Restricted Subsidiaries
on a consolidated basis means, as of any date, the amount shown on the
consolidated balance sheet of the Company and its Restricted Subsidiaries as
cash as of such date (but not including cash held in accounts or deposits that
are subject to any lien, encumbrances or restrictions or which is required to
be held in connection with any agreements or obligations), computed in
accordance with generally accepted accounting principles, plus the total amount
of cash payments which the Company has made as of the date of computation for
redemption or prepayment of Series A Bonds pursuant to redemptions without
payment of premium described above (other than the redemption of $10 million of
Series A Bonds pursuant to the Prepackaged Bankruptcy) minus the amount of
Indebtedness outstanding on such date under the Bank Credit Agreement (or any
Indebtedness issued in any refinancing, refunding, replacement, extension or
restructuring thereof), other than any Indebtedness representing undrawn
amounts under letters of credit under the Bank Credit Agreement (or any
Indebtedness issued in any refinancing, refunding, replacement, extension or
restructuring thereof) not in excess of $10.0 million in the aggregate;
provided, however, that Net Cash shall not be less than zero.     
 
  Pro Forma Debt Service: The term "Pro Forma Debt Service" for any period,
means the sum of (i) Adjusted Consolidated Interest Expense (excluding any non-
cash items included in Adjusted Consolidated Interest Expense to the extent no
current liability exists with respect thereto) that would be payable during
such period by the Company and its Restricted Subsidiaries assuming (x) that
all Indebtedness outstanding on the last day of the quarter prior to the period
for which the determination is being made were outstanding throughout such
period (other than scheduled payments of principal to the extent included in
clause (ii) below), and (y) that, with respect to any floating rate or other
Indebtedness, the interest rate in effect on the date of such determination
were in effect throughout such period, but giving effect to any scheduled
increase or decrease in interest rate that is ascertainable on the date of
determination, and (ii) the amount of principal payments payable during such
period (and any interest payable during such period on such principal amounts
to the extent not included in clause (i) above) on all Indebtedness of the
Company and its Restricted Subsidiaries, in each case consolidated in
accordance with generally accepted accounting principles.
 
  Senior Debt: The term "Senior Debt" means all Indebtedness of the Company and
its Restricted Subsidiaries, consolidated in accordance with generally accepted
accounting principles, other than Subordinated Debt.
 
  Subordinated Debt: The term "Subordinated Debt" means the 15% Senior
Subordinated Debentures due 2007, the Notes, and any other unsecured
Indebtedness for money borrowed of the Company which (i) on the date on which
the status of such Indebtedness is determined for any purpose hereof (1) has a
final maturity not earlier than September 1, 2005, and (2) is not subject to
payment, redemption or other retirement by means of any installment, sinking
fund, serial maturity or other required payments prior to September 1, 2005 and
(ii) is issued or assumed pursuant to, or evidenced by, an indenture or other
instrument that contains provisions for the subordination of such Indebtedness
(to which appropriate reference shall be made in the instruments evidencing
such Indebtedness if not contained therein) to the Series A Bonds and the
Series B Bonds (and, at the option of the Company, if so provided, to other
Indebtedness of the Company, either generally or as specifically designated) as
specified in the Second Investment Agreement.
 
                                       60
<PAGE>
 
                    DESCRIPTION OF SENIOR SUBORDINATED NOTES
 
  The Notes are to be issued under the Note Indenture, to be dated as of the
Effective Date, between the Company and United States Trust Company of New
York, as trustee (the "Note Trustee"), which will govern the terms of the
Notes. The terms of the Note Indenture are also governed by certain provisions
of the Trust Indenture Act of 1939, as amended. The following summary, which
describes certain provisions of the Note Indenture, does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
the Note Indenture, including the definitions therein of terms not defined in
this Prospectus. A copy of the Note Indenture has been filed as an exhibit to
the Registration Statement of which this Prospectus forms a part. Certain
important definitions used in the Note Indenture are included below under
"Certain Definitions."
 
  The Notes will be transferable and exchangeable at the office of the Note
Trustee and will be issued in fully registered form, without coupons, in a
minimum denomination of $50,000 and such greater denominations as are whole
multiples of $100,000.
 
  The Company has no sinking fund obligations with respect to the Notes.
 
  Interest on the Notes will be computed on the basis of a 360-day year of
twelve 30-day months. Principal and interest will be payable at the office of
the Note Trustee, but, at the option of the Company, interest may be paid by
check mailed to the registered holders of the Notes (the "Holders") at their
registered addresses. The Company is required to pay interest on overdue
principal and (to the extent permitted by law) on overdue installments of
interest at the rate specified in the Note Indenture.
 
TERMS OF THE NOTES
 
  The Notes will be unsecured, subordinated obligations of the Company, will be
limited in aggregate principal amount to $120.0 million, and will mature on May
1, 2008. Interest will accrue on the Notes from the date of issuance, or from
the most recent Interest Payment Date to which interest has been paid or
provided for, and will be payable in cash semiannually on May 1 and November 1
of each year, commencing November 1, 1996, at the rate of  % per annum of the
principal amount at maturity of the Notes to Holders of record at the close of
business on the April 15 or October 15 immediately preceding the interest
Payment Date.
 
OPTIONAL REDEMPTION
 
  The Notes will be redeemable, at the Company's option, in whole or in part,
at any time and from time to time on or after May 1, 2001 upon not less than 30
nor more than 60 days' prior written notice mailed by first-class mail to each
Holder's registered address, at the following redemption prices (expressed in
percentages of principal amount), plus accrued and unpaid interest to the
redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant Interest Payment Date), if
redeemed during the 12-month period commencing on or after May 1 of the years
set forth below:
 
<TABLE>
<CAPTION>
                                                                     REDEMPTION
          PERIOD                                                       PRICE
          ------                                                     ----------
      <S>                                                            <C>
      2001..........................................................         %
      2002..........................................................
      2003 and thereafter...........................................  100.000
</TABLE>
 
  In addition, at any time and from time to time prior to May 1, 1999, the
Company may redeem in the aggregate up to 35% of the original principal amount
of the Notes with the proceeds of one or more Public Equity Offerings, at a
redemption price (expressed as a percentage of principal amount) of  % plus
accrued and unpaid interest, if any, to the redemption date (subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date).
 
                                       61
<PAGE>
 
  In the case of any partial redemption, selection of the Notes for redemption
will be made by the Note Trustee on a pro rata basis, by lot or by such other
method as the Note Trustee in its sole discretion shall deem to be fair and
appropriate, although no Note of $1,000 in principal amount or less shall be
redeemed in part. If any Note is to be redeemed in part only, the notice of
redemption relating to such Note shall state the portion of the principal
amount thereof to be redeemed. A new Note in principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof
upon cancellation of the original Note.
 
  The Company's Senior Debt agreements may substantially restrict the ability
of the Company to redeem or otherwise make payments in respect of principal on
the Notes prior to the maturity thereof. See "Debt of the Company."
 
RANKING
 
  The Debt evidenced by the Notes constitutes Senior Subordinated Debt of the
Company, and will rank pari passu with all existing or future Senior
Subordinated Debt of the Company and senior to all existing and future
subordinated Debt of the Company. The payment of the principal of and premium,
if any, and interest on the Notes will, to the extent set forth in the Note
Indenture, be subordinated in right of payment to the prior payment in full, in
cash or cash equivalents, of all amounts payable under Senior Debt, including,
without limitation, the Company's obligations under the Bank Credit Agreement,
the Bond Indenture and the Second Investment Agreement (including any interest
accruing subsequent to a bankruptcy event specified in the Note Indenture,
whether or not such interest is an allowed claim enforceable against the debtor
under the United States Bankruptcy Code). As of November 30, 1995, the Company
had approximately $349.5 million of Senior Debt outstanding. The Company's
obligations under the Bank Credit Agreement and the First Mortgage Bonds are
secured by first priority liens on substantially all of the Company's assets.
The Note Indenture does not limit the Company's right to incur additional
Senior Debt, if such incurrence is otherwise permitted by the covenant
governing the incurrence of Debt generally.
   
  No direct or indirect payment by or on behalf of the Company on account of
principal of, interest on and premium, if any, and penalties and fees ("Other
Subordinated Obligations") with respect to the Notes, whether pursuant to the
terms of the Notes or upon acceleration or otherwise, and no payment to
acquire, repurchase, retire, redeem or defease any of the Notes shall be made
if, at the time of such payment, there exists a default in the payment of all
or any portion of any Senior Debt, and such default shall not have been cured
or waived or the benefits of this sentence waived by or on behalf of the
holders of such Senior Debt. In addition, during the continuance of any other
event of default with respect to the Bank Credit Agreement, the First Mortgage
Bonds, the Second Investment Agreement or other Senior Debt pursuant to which
the maturity thereof may be accelerated, and (i) upon receipt by the Note
Trustee of written notice from any holder or holders (or representatives
thereof) of such Senior Debt in the aggregate principal amount of $10 million,
or (ii) if such event of default under the Bank Credit Agreement, the First
Mortgage Bonds, the Second Investment Agreement or other Senior Debt results
from the acceleration of the Notes, from and after the date of such
acceleration or notice, no payment of principal of, interest on, and Other
Subordinated Obligations with respect to the Notes may be made by or on behalf
of the Company upon or in respect of the Notes for a period (a "Payment
Blockage Period") commencing on the earlier of the date of receipt of such
notice or the date of such acceleration and ending 179 days thereafter (unless
such Payment Blockage Period shall be terminated by written notice to the Note
Trustee from the relevant entity giving notice commencing the payment Blockage
Period or such event of default has been cured or waived or by repayment in
full of cash or cash equivalents of such Senior Debt). Not more than one
Payment Blockage Period may be commenced with respect to the Notes during any
period of 360 consecutive days. Notwithstanding anything in the Note Indenture
to the contrary, there must be 180 consecutive days in any 360-day period in
which no Payment Blockage Period is in effect. No event of default (other than
an event of default pursuant to the financial maintenance covenants under the
Bank Credit Agreement, the Bond Indenture or the Second Investment Agreement)
that existed or was continuing (it being acknowledged that any subsequent
action that would give rise to any event of default pursuant to any provision
under which an event of default     
 
                                       62
<PAGE>
 
previously existed or was continuing shall constitute a new event of default
for this purpose) on the date of the commencement of any Payment Blockage
Period with respect to the Bank Credit Agreement, the First Mortgage Bonds, the
Second Investment Agreement or other Senior Debt initiating such Payment
Blockage period shall be, or shall be made, the basis for the commencement of a
second Payment Blockage Period by the representative for, or the holders of,
such Senior Debt, whether or not within a period of 360 consecutive days,
unless such event of default shall have been cured or waived for a period of
not less than 90 consecutive days.
 
  Upon any payment or distribution of assets or securities of the Company, as
the case may be, of any kind or character, whether in cash, property or
securities, upon any dissolution or winding up or total or partial liquidation
or reorganization of the Company, whether voluntary or involuntary, or in
bankruptcy, insolvency, receivership or other proceedings, all amounts due or
to become due upon all Senior Debt (including any interest accruing subsequent
to a bankruptcy event specified in the Note Indenture, whether or not such
interest is an allowed claim enforceable against the debtor under the United
States Bankruptcy Code) shall first be paid in full, in cash or cash
equivalents, before the Holders or the Note Trustee on behalf of the Holders
shall be entitled to receive any payment by or on behalf of the Company on
account of principal of, interest on, or any payment to acquire, repurchase,
retire, redeem or defease any of the Notes for cash, property or securities, or
any distribution with respect to the Notes of any cash, property or securities.
Before any payment may be made by, or on behalf of, the Company on account of
principal of, interest on, and Other Subordinated Obligations with respect to
the Notes upon any such dissolution, winding up, liquidation or reorganization,
any payment or distribution of assets or securities of the Company or any kind
or character, whether in cash, property or securities, to which the Holders or
the Note Trustee on behalf of the Holders would be entitled, but for the
subordination provisions of the Note Indenture, shall be made by the Company or
by any receiver, trustee in bankruptcy, liquidating trustee, agent or other
similar Person making such payment or distribution, or by the Holders or the
Note Trustee if received by them or it, directly to the holders of Senior Debt
(pro rata to such holders on the basis of the respective amounts of Senior Debt
held by such holders) or their representatives, or to any trustee or trustees
under any other indenture pursuant to which any such Senior Debt may have been
issued, as their respective interests appear, to the extent necessary to pay
all such Senior Debt in full, in cash or cash equivalents, after giving effect
to any concurrent payment, distribution or provision therefor to or for the
holders of such Senior Debt.
 
  By reason of such subordination, in the event of insolvency, creditors of the
Company who are holders of Senior Debt may recover more, ratably, than Holders
of the Notes.
 
CHANGE OF CONTROL
   
  Upon the occurrence of any of the following events each Holder of Notes will
have the right to require the Company to repurchase all or any part of such
Holder's Notes at a repurchase price in cash equal to 101% of the principal
amount thereof plus accrued and unpaid interest, if any, to the date of
repurchase (subject to the right of Holders of record on the relevant record
date to receive interest due on the relevant interest payment date): (i) prior
to the earlier to occur of (A) the first public offering (which shall mean the
sale of shares of common stock of the relevant entity pursuant to an effective
registration statement under the Securities Act that covers (together with any
such prior effective registrations) not less than 25% of the outstanding shares
of common stock of such entity on a fully diluted basis after giving effect to
all such registrations) of common stock of Parent or (B) the first public
offering of common stock of the Company, the Permitted Holders cease to be the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), except that a Person
shall be deemed to have beneficial ownership of all shares that any such Person
has the right to acquire, whether such right is exercisable immediately or only
after the passage of time), directly or indirectly, of a majority in the
aggregate of the total voting power of the Voting Stock of the Company, whether
as a result of issuance of securities of the Company, any merger,
consolidation, liquidation or dissolution of the Company, any direct or
indirect transfer of securities by Parent or otherwise (for purposes of this
clause (i) and clause (ii) below, the Permitted Holders shall be deemed to
beneficially own any Voting Stock of a corporation (the "specified
corporation") held by any other corporation (the "parent corporation") so long
as the Permitted Holders beneficially own     
 
                                       63
<PAGE>
 
(as so defined), directly or indirectly, in the aggregate a majority of the
voting power of the Voting Stock of the parent corporation); (ii) any "Person"
(as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other
than one or more Permitted Holders, is or becomes the beneficial owner (as
defined in clause (i) above), directly or indirectly, of more than 30% of the
total voting power of the Voting Stock of the Company; provided, however, that
the Permitted Holders beneficially own (as so defined), directly or indirectly,
in the aggregate a lesser percentage of the total voting power of the Voting
Stock of the Company than such other Person and do not have the right or
ability by voting power, contract or otherwise to elect or designate for
election a majority of the Board of Directors of the Company (for the purposes
of this clause (ii), such other Person shall be deemed to beneficially own any
Voting Stock of a specified corporation held by a parent corporation, if such
other Person "beneficially owns" (as so defined), directly or indirectly, more
than 30% of the voting power of the Voting Stock of such parent corporation and
the Permitted Holders "beneficially own" (as so defined), directly or
indirectly, in the aggregate a lesser percentage of the voting power of the
Voting Stock of such parent corporation and do not have the right or ability by
voting power, contract or otherwise to elect or designate for election a
majority of the Board of Directors of such parent corporation); (iii) during
any period of two consecutive years, individuals who at the beginning of such
period constituted the Board of Directors of the Company (together with any new
directors whose election by such Board of Directors or whose nomination for
election by the shareholders of the Company was approved by a vote of 66 2/3%
of the directors of the Company then still in office who were either directors
at the beginning of such period or whose election or nomination for election
was previously so approved) cease for any reason to constitute a majority of
the Board of Directors of the Company then in office; or (iv) the Company
consolidates with or merges with or into any other Person or conveys, transfers
or leases all or substantially all of its assets to any Person or any Person
consolidates with or merges into the Company, in either event pursuant to a
transaction in which either (A) the outstanding Voting Stock of the Company is
changed into or exchanged for cash, securities or other property (excluding,
however, any such transaction where the outstanding Voting Stock of the Company
is changed into or exchanged for Voting Stock of the surviving or transferee
corporation which is neither Redeemable Stock nor Exchangeable Stock) or (B)
the holders of the Voting Stock of the Company immediately prior to such
transaction, together with Kelso and Affiliates of Kelso which are either
controlled by or under common control with Kelso, own, directly or indirectly,
in the aggregate, less than 50.01% of the Voting Stock of the surviving Person
immediately after such transaction.
 
  Clause (iv) of the definition of Change of Control set forth above includes a
conveyance, transfer or lease of all or "substantially all" of the Company's
assets. Although there is a developing body of case law interpreting the phrase
"substantially all," there is no precise established definition of the phrase
under applicable law. Accordingly, the ability of a Holder of Notes to require
the Company to repurchase such Notes as a result of a transfer or lease of the
Company's assets to another Person may be uncertain. In addition, if the
Company merges or consolidates with or into another entity controlled by Kelso,
the Holders of Notes may not be able to require the Company to repurchase such
Notes.
 
  Within 30 days following any Change of Control, the Company will mail a
notice to each Holder of Notes with a copy to the Note Trustee stating (i) that
a Change of Control has occurred and that such Holder has the right to require
the Company to repurchase all or any part of such Holder's Notes at a
repurchase price in cash equal to 101% of the principal amount thereof plus
accrued and unpaid interest, if any, to the date of repurchase (subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date); (ii) the circumstances and relevant
facts regarding such Change of Control (including, but not limited to,
information with respect to pro forma historical income, cash flow and
capitalization after giving effect to such Change of Control); (iii) the
repurchase date (which will be no earlier than 30 days nor later than 60 days
from the date such notice is mailed); and (iv) the instructions determined by
the Company, consistent with the Note Indenture, that a Holder must follow in
order to have its Notes repurchased.
 
 
                                       64
<PAGE>
 
  The Change of Control provisions of the Notes may in certain circumstances
make more difficult or discourage a takeover of the Company and, thus, the
removal of incumbent management. Subject to the limitations discussed below,
the Company could, in the future, enter into certain transactions, including
acquisitions, refinancings or other recapitalizations, that would not
constitute a Change of Control under the Note Indenture, but that could
increase the amount of indebtedness outstanding at such time or otherwise
affect the Company's capital structure or credit ratings.
 
  The occurrence of certain of the events which would constitute a Change of
Control also would constitute a default under certain of the Company's other
existing indebtedness. In addition, the exercise by the Holders of their right
to require the Company to repurchase the Notes could cause a default under such
indebtedness, even if the Change of Control itself does not, due to the
financial effect of such repurchase on the Company. The Company's ability to
pay cash to the Holders of Notes upon a repurchase may also be limited by the
Company's then existing financial resources. Finally, the fact that a
transaction would constitute a Change of Control as defined does not mean that
the transaction would be permitted under the Note Indenture unless the
transaction would be otherwise permissible under the Note Indenture.
 
  The Company will comply with any tender offer rules under the Exchange Act
which may then be applicable, including Rule 14e-1, in connection with any
offer required to be made by the Company to repurchase the Notes as a result of
a Change of Control.
 
  The provisions relative to the Company's obligation to make an offer to
repurchase the Notes as a result of a Change of Control may be waived or
modified with the written consent of the Holders of a majority in principal
amount of the Notes.
 
CERTAIN COVENANTS
 
  Set forth below are certain covenants contained in the Note Indenture
relating to the Notes:
 
 Limitation on Senior Subordinated Debt
 
  The Company shall not issue, directly or indirectly, any Debt that is
expressly subordinate in right of payment to any Senior Debt unless such Debt
is expressly made pari passu with, or subordinate in right of payment to, the
Notes.
 
 Limitation on Debt
 
  The Company shall not issue, directly or indirectly, any Debt unless the
Consolidated EBITDA Coverage Ratio (as shown by a consolidated pro forma income
statement of the Company and its consolidated Subsidiaries for the Reference
Period after giving effect to (i) the issuance of such Debt and (if applicable)
the application of the net proceeds thereof to refinance other Debt as if such
Debt was issued and the application of such proceeds occurred at the beginning
of the Reference Period, (ii) the issuance and retirement of any other Debt
since the last day of the most recent fiscal quarter covered by such income
statement as if such Debt was issued or retired at the beginning of the
Reference Period and (iii) the acquisition or disposition of any company or
business acquired or disposed of by the Company since the first day of the
Reference Period, including any acquisition or disposition which will be
consummated substantially contemporaneously with the issuance of such Debt, as
if such acquisition or disposition occurred at the beginning of the Reference
Period) exceeds 1.75:1 for the Reference Period.
 
  Notwithstanding the foregoing, the Company may issue the following Debt: (1)
Debt issued as working capital and letter of credit financing in an aggregate
principal amount outstanding at any time not to exceed the greater of (i) the
sum of (A) 85% of the book value of the net trade receivables of the Company
and its Subsidiaries and (B) $10.0 million or (ii) up to $27.5 million of Debt
incurred pursuant to the terms of the Bank Credit Agreement and Debt issued in
exchange for, or the proceeds of which are used to refund or refinance, the
Debt permitted by this clause (ii); (2) Debt owed to and held by a Wholly Owned
Subsidiary;
 
                                       65
<PAGE>
 
provided, however, that any subsequent issuance or transfer of any Capital
Stock which results in any such Wholly Owned Subsidiary ceasing to be a Wholly
Owned Subsidiary or any transfer of such Debt (other than to a Wholly Owned
Subsidiary) shall be deemed, in each case, to constitute the issuance of such
Debt by the Company; (3) the Notes and Debt issued in exchange for, or the
proceeds of which are used to refund or refinance, any Debt permitted by this
clause (3), including reasonable fees, expenses, premiums and defeasance costs
incurred in connection with such refunding or refinancing; provided, however,
that (i) the principal amount of the Debt so issued shall not exceed the
principal amount of the Debt so exchanged, refunded or refinanced (plus
reasonable fees, expenses, premiums and defeasance costs incurred in connection
with such refunding or refinancing) and (ii) the Debt so issued (A) shall not
mature prior to the Stated Maturity of the Debt so exchanged, refunded or
refinanced and (B) shall have an Average Life equal to or greater than the
remaining Average Life of the Debt so exchanged, refunded or refinanced; (4)
Debt (other than Debt described in clause (1), (2) or (3) of this paragraph)
outstanding on the date on which the Notes are originally issued and Debt
issued in exchange for, or the proceeds of which are used to refund or
refinance, any Debt permitted by this clause (4), including reasonable fees,
expenses, premiums and defeasance costs incurred in connection with such
exchange, refunding or refinancing; provided, however, that (i) the principal
amount of the Debt so issued shall not exceed the principal amount of the Debt
so exchanged, refunded or refinanced (plus reasonable fees, expenses, premiums
and defeasance costs incurred in connection with such refunding or refinancing)
and (ii) the Debt so issued (A) shall not mature prior to the Stated Maturity
of the Debt so exchanged, refunded or refinanced, (B) shall have an Average
Life equal to or greater than the remaining Average Life of the Debt so
exchanged, refunded or refinanced and (C) shall be subordinate in right of
payment to the Notes if the Debt so exchanged, refunded or refinanced is so
subordinated; and (5) Purchase Money Debt, provided, however, that the
aggregate amount of Purchase Money Debt may not exceed $25 million; (6) Non-
Recourse Debt of a Non-Recourse Subsidiary issued after the date of original
issuance of the Notes to finance the acquisition of assets by such Non-Recourse
Subsidiary or to provide working capital for such Non-Recourse Subsidiary and
any Non-Recourse Debt of a Non-Recourse Subsidiary issued in exchange for, or
the proceeds of which are used to refund or refinance, any Non-Recourse Debt
permitted by this clause (6), including reasonable fees, expenses, premiums and
defeasance costs incurred in connection with such exchange, refunding or
refinancing; provided, however, that (i) the principal amount of the Non-
Recourse Debt issued in exchange for, or the proceeds of which are used to
refund or refinance, any Non-Recourse Debt shall not exceed the principal
amount of the Debt so exchanged, refunded or refinanced (plus reasonable fees,
expenses, premiums and defeasance costs incurred in connection with such
refunding or refinancing), and (ii) if any such Debt thereafter ceases to be
Non-Recourse Debt of a Non-Recourse Subsidiary, then such event will be deemed
to constitute the issuance of such Debt by the issuer thereof; and (7) Debt in
an aggregate principal amount which, together with all other Debt of the
Company then outstanding (other than Debt permitted by clauses (1) through (6)
of this paragraph) does not exceed the greater of: (i) $25 million and (ii) 5%
of Consolidated Net Tangible Assets as of the end of the most recent fiscal
quarter of the Company ending not less than 45 days from the date of
determination.
 
 Limitation on Subsidiary Debt and Preferred Stock
 
  The Company shall not permit any Subsidiary to issue, directly or indirectly
any Debt or Preferred Stock, except: (1) Debt or Preferred Stock issued to and
held by the Company or a Wholly Owned Subsidiary; provided, however, that (i)
any subsequent issuance or transfer of any Capital Stock which results in any
such Wholly Owned Subsidiary ceasing to be a Wholly Owned Subsidiary or (ii)
any subsequent transfer of such Debt or Preferred Stock (other than to the
Company or a Wholly Owned Subsidiary) shall be deemed, in each case, to
constitute the issuance of such Debt or Preferred Stock by the issuer thereof;
(2) Debt or Preferred Stock of a Subsidiary issued and outstanding on or prior
to the date on which such Subsidiary was acquired by the Company (other than
Debt or Preferred Stock issued as consideration in, or to provide all or any
portion of the funds utilized to consummate, the transaction or series of
related transactions pursuant to which such Subsidiary became a Subsidiary or
was acquired by the Company); (3) Debt or Preferred Stock issued and
outstanding on or prior to the date on which the Notes are originally issued,
other than Debt or Preferred Stock described in clause (1) or (2) of this
paragraph; (4) Non-Recourse Debt of a Non-Recourse
 
                                       66
<PAGE>
 
   
Subsidiary issued after the date of the Note Indenture to finance the
acquisition of assets after such date (as permitted by clause (6) in "--
Limitation on Debt" above); and (5) Debt or Preferred Stock issued in exchange
for, or the proceeds of which are used to refund or refinance, Debt or
Preferred Stock referred to in clause (2) or (3) of this paragraph, including
reasonable fees, expenses, premiums, and defeasance costs incurred in
connection with such refunding or refinancing; provided, however, that (i) the
principal amount of such Debt or the liquidation value of such Preferred Stock
so issued shall not exceed the principal amount or liquidation value of the
Debt or Preferred Stock so exchanged, refunded or refinanced (plus reasonable
fees, expenses, premiums and defeasance costs incurred in connection with such
refunding or refinancing); (ii) the Debt or Preferred Stock so issued (A) shall
have a Stated Maturity later than the Stated Maturity of the Debt or final
redemption date (if any) of the Preferred Stock being exchanged, refunded or
refinanced and (B) shall have an Average Life equal to or greater than the
remaining Average Life of the Debt or Preferred Stock being exchanged, refunded
or refinanced; (iii) the Debt so issued shall be subordinate in right of
payment to the Notes if the Debt so exchanged, refunded or refinanced is so
subordinated; and (iv) Debt may not be issued in exchange for, and the proceeds
of such Debt may not be used to refund or refinance, Preferred Stock.     
 
 Limitation on Restricted Payments
   
  The Company shall not, and shall not permit any Subsidiary, directly or
indirectly, to (i) declare or pay any dividend or make any distribution on or
in respect of its Capital Stock (including any distribution in connection with
any merger or consolidation involving the Company) or to the direct or indirect
holders of its Capital Stock (except dividends or distributions payable solely
in its Non-Convertible Capital Stock or in options, warrants or other rights to
purchase its Non-Convertible Capital Stock and except dividends or
distributions payable to the Company or a Subsidiary), (ii) purchase, redeem or
otherwise acquire or retire for value any Capital Stock of the Company or of
any direct or indirect Parent of the Company, (iii) purchase, repurchase,
redeem, defease or otherwise acquire or retire for value, prior to scheduled
maturity, scheduled repayment or scheduled sinking fund payment any
Subordinated Obligations (other than the purchase, repurchase or other
acquisition of Subordinated Obligations purchased in anticipation of and used
for satisfying a sinking fund obligation, principal installment or final
maturity, in each case due within one year of the date of acquisition), or (iv)
make any Investment in an Affiliate of the Company, other than a Subsidiary
that is not a Non-Recourse Subsidiary or a person which will become a
Subsidiary that is not a Non-Recourse Subsidiary as a result of any such
Investment (any such dividend, distribution, purchase, redemption, repurchase,
defeasance, other acquisition, retirement or Investment being hereinafter
referred to as a "Restricted Payment") if at the time the Company or such
Subsidiary makes such Restricted Payment: (1) a Default shall have occurred and
be continuing (or would result therefrom); (2) the Company is not able to issue
$1.00 of additional Debt in accordance with the provisions of the first
paragraph under "Limitation on Debt" above; or (3) the aggregate amount of such
Restricted Payment and all other Restricted Payments since the date on which
the Notes are issued would exceed the sum of: (a) 50% of the Consolidated Net
Income accrued during the period (treated as one accounting period) from the
date of issuance of the Notes, to the end of the most recent fiscal quarter
ending at least 45 days prior to the date of such Restricted Payment (or, in
case such Consolidated Net Income shall be a deficit, minus 100% of such
deficit), minus 100% of the amount of any write-downs, write-offs, other
negative revaluations and other negative extraordinary charges not otherwise
reflected in Consolidated Net Income during such period; (b) the aggregate Net
Cash Proceeds received by the Company from the issuance or sale of its Capital
Stock (other than Redeemable Stock or Exchangeable Stock) subsequent to the
date on which the Notes are originally issued (other than an issuance or sale
to a Subsidiary or an employee stock ownership plan); (c) the aggregate Net
Cash Proceeds received by the Company from the issue or sale of its Capital
Stock (other than Redeemable Stock or Exchangeable Stock or Capital Stock
referred to in the proviso to clause (vi) of the following paragraph) to an
employee stock ownership plan subsequent to the date of issuance of the Notes,
but, if such employee stock ownership plan incurs any Debt, only to the extent
that any such proceeds are equal to any increase in the Consolidated Net Worth
of the Company resulting from principal repayments made by such employee stock
ownership plan with respect to Debt incurred by it to finance the purchase of
such Capital Stock; and (d) the amount by which Debt of the Company is reduced
on the Company's balance sheet upon the conversion or exchange     
 
                                       67
<PAGE>
 
(other than by a Subsidiary) subsequent to the date on which the Notes are
issued of any Debt of the Company convertible or exchangeable for Capital Stock
(other than Redeemable Stock or Exchangeable Stock) of the Company (less the
amount of any cash, or other property, distributed by the Company upon such
conversion or exchange).
   
  The restrictions described in the preceding paragraph will not prohibit (i)
any purchase or redemption of Capital Stock or Subordinated Obligations of the
Company made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Capital Stock of the Company (other than Redeemable Stock
or Exchangeable Stock and other than Capital Stock issued or sold to a
Subsidiary or an employee stock ownership plan); and (A) such purchase or
redemption shall be excluded in the calculation of the amount of Restricted
Payments made since the date on which the Notes are issued and (B) the Net Cash
Proceeds from such sale shall be excluded from clauses 3(b) and 3(c) of the
previous paragraph; (ii) any purchase or redemption of Subordinated Obligations
of the Company made by exchange for, or out of the proceeds of the
substantially concurrent sale of, other Subordinated Obligations of the
Company; and such purchase or redemption, shall be excluded in the calculation
of the amount of Restricted Payments made since the date on which the Notes are
issued; (iii) any purchase or redemption of Subordinated Obligations from Net
Available Cash to the extent permitted under "Limitation on Sales of Assets and
Subsidiary Stock" below; and such purchase or redemption shall be excluded in
the calculation of the amount of Restricted Payments made since the date on
which the Notes are issued; (iv) dividends paid within 60 days after the date
of declaration thereof if at such date of declaration such dividends would have
complied with this covenant; provided, however, that (A) at the time of payment
of such dividends, no other Default shall have occurred and be continuing (or
result therefrom); and (B) such dividends shall be included in the calculation
of the amount of Restricted Payments made since the date on which the Notes are
originally issued; (v) any repurchase of capital stock of the Company after the
date of issuance of the Notes pursuant to the terms of the Stockholders'
Agreement from officers and employees (or their estates) of the Company or its
Subsidiaries upon death, disability or termination of employment of such
officers and employees; provided, however, that (A) the aggregate amount of all
such repurchases (excluding repurchases made with proceeds of life insurance
policies maintained by the Company on such employees or officers) in any fiscal
year shall not exceed $500,000; (B) to the extent that the aggregate amount of
such repurchases (excluding repurchases made with proceeds of life insurance
policies maintained by the Company on such employees or officers) in any fiscal
year is less than $500,000, the difference between $500,000 and such amount may
be carried forward and applied to repurchases in subsequent fiscal years; and
(C) all such repurchases (other than repurchases made with proceeds of life
insurance policies maintained by the Company on such employees or officers)
shall be included in the calculation of the amount of Restricted Payments made
since the date on which the Notes are originally issued; (vi) cash dividends
paid after the date of issuance of the Notes with respect to the ESOP Preferred
Stock; provided, however, that (A) the aggregate amount of all such dividends
paid in any fiscal year shall not exceed $500,000, net of any cash paid by the
ESOP to the Company concurrently with the payment of such cash dividends for
the purchase of Capital Stock of the Company; (B) to the extent that the
aggregate amount of such dividends paid in any fiscal year is less than
$500,000, the difference between $500,000 and such amount may be carried
forward and applied to the payment of such dividends in subsequent fiscal
years; and (C) all such dividends shall be included in the calculation of the
amount of Restricted Payments made since the date on which the Notes are
issued; (vii) Investments in Non-Recourse Subsidiaries not to exceed $5.0
million outstanding at any one time during the term of the Note Indenture; and
all such Investments shall be excluded in the calculation of the amount of
Restricted Payments made since the date on which the Notes are originally
issued; or (viii) Restricted Payments not to exceed $5.0 million in the
aggregate during the term of the Note Indenture; and such Restricted Payments
shall be included in the calculation of the amount of Restricted Payments made
since the date on which the Notes are issued.     
 
 Limitation on Restrictions on Distributions From Subsidiaries
 
  The Company shall not, and shall not permit any Subsidiary to, create or
otherwise cause or permit to exist or become effective any consensual
encumbrance or restriction on the ability of any Subsidiary to (i) pay
dividends or make any other distributions on its Capital Stock or pay any Debt
or other obligation owed to the Company or any Subsidiary, (ii) make any loans
or advances to the Company or any Subsidiary or (iii)
 
                                       68
<PAGE>
 
   
transfer any of its property or assets to the Company or any Subsidiary, in
each case except: (1) any encumbrance or restriction pursuant to an agreement
in effect on the date of the Note Indenture; (2) any encumbrance or restriction
with respect to a Subsidiary pursuant to an agreement relating to any Debt
issued by such Subsidiary on or prior to the date on which such Subsidiary
became a Subsidiary or was acquired by the Company (other than Debt issued as
consideration in, or to provide all or any portion of the funds utilized to
consummate, the transaction or series of related transactions pursuant to which
such Subsidiary became a Subsidiary or was acquired by the Company) and
outstanding on such date; (3) any encumbrance or restriction pursuant to an
agreement effecting a refinancing of Debt issued pursuant to an agreement
referred to in clause (1) or (2) of this paragraph; provide d, however, that
the encumbrances and restrictions contained in any such refinancing agreement
are no less favorable to the Holders of the Notes than the encumbrances and
restrictions contained in the agreements being refinanced; (4) any such
encumbrance or restriction consisting of customary nonassignment provisions in
leases governing leasehold interests to the extent such provisions restrict the
transfer of the lease; (5) restrictions contained in security agreements
securing Debt of a Subsidiary to the extent such restrictions restrict the
transfer of the property subject to such security agreements; and (6) any such
encumbrance or restriction relating to a Non-Recourse Subsidiary.     
 
 Limitation on Sales of Assets and Subsidiary Stock
   
  The Company shall not, and shall not permit any Subsidiary to, make any Asset
Disposition unless (i) the Company or such Subsidiary receives consideration at
the time of such Asset Disposition at least equal to the fair market value, as
determined in good faith by the Board of Directors (including a determination
as to the value of all non-cash consideration), of the shares and assets
subject to such Asset Disposition, and, except in the case of an asset
disposition which would constitute a like-kind exchange under Section 1031 of
the Internal Revenue Code of 1986, as amended, of a refrigerated warehouse that
is not subject to the lien of the Bond Indenture, at least 90% of the
consideration therefor received by the Company or such Subsidiary is in the
form of cash or cash equivalents and (ii) an amount equal to 100% of the Net
Available Cash from such Asset Disposition is applied by the Company (or such
Subsidiary, as the case may be) either (A) to the extent the Company elects (or
is required by the terms of any Senior Debt), to redeem, prepay, repay or
purchase Senior Debt or Debt of a Wholly Owned Subsidiary to the extent the
asset disposed of was previously held by such Wholly Owned Subsidiary (in each
case other than Debt owed to the Company or an Affiliate of the Company) within
90 days from the later of the date of such Asset Disposition or the receipt of
such Net Available Cash; or (B) to the extent of Net Available Cash not so
applied in accordance with clause (A), to the acquisition by the Company or any
Wholly Owned Subsidiary of Tangible Property of a nature or type or that is
used in a business (or in a company having property and assets of a nature or
type, or engaged in a business) similar or related to the nature or type of the
Tangible Property of, or the business of, the Company and its Subsidiaries
existing on the date of such acquisition (as determined by the Board of
Directors, whose determination shall be conclusive and evidenced by a Board
Resolution); and (C) to the extent there is Net Available Cash after
application in accordance with clauses (A) and (B), to make an Offer (as
defined below) to purchase Notes pursuant to and subject to the conditions of
the following paragraph and to effect any Offer accepted, in each case within
one year from the later of the receipt of such Net Available Cash and the date
the Offer described in the following paragraph is consummated; provided,
however, that in connection with any redemption, prepayment, repayment or
purchase of Debt pursuant to clause (A) above, the Company shall cause the
related loan commitment (if any) to be permanently reduced in an amount equal
to the principal amount so redeemed, prepaid, repaid or purchased.
Notwithstanding the foregoing provisions of this paragraph, the Company and its
Subsidiaries shall only be required to apply any Net Available Cash in
accordance with this paragraph to the extent that the aggregate Net Available
Cash from all Asset Dispositions exceeds $20 million. Pending application of
Net Available Cash pursuant to this paragraph, such Net Available Cash shall be
invested in Permitted Investments.     
 
  To the extent that there is Net Available Cash remaining after (i) any
elected or required payment of Senior Debt or Debt of a Wholly Owned Subsidiary
as described in clause (ii)(A) of the previous paragraph and (ii) any
acquisition of Tangible Property as described in clause (ii)(B) of the previous
paragraph, the Company will be required to purchase Notes tendered pursuant to
an offer by the Company for the Notes
 
                                       69
<PAGE>
 
(the "Offer") at a purchase price equal to the applicable redemption price,
plus accrued interest. The Company shall not be required to make an Offer for
Notes pursuant to this paragraph if the Net Available Cash available therefor
(after application of the proceeds as provided in clauses (ii)(A) and (B) of
the previous paragraph) is less than $5.0 million for any particular Asset
Disposition (which lesser amounts shall not be carried forward for purposes of
determining whether an Offer is required with respect to the Net Available Cash
from any subsequent Asset Disposition).
 
  The Company shall comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
in connection with the repurchase of Notes pursuant to this covenant. To the
extent that the provisions of any securities laws or regulations conflict with
this covenant, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under the
Note Indenture by virtue thereof.
 
 Limitation on Transactions with Affiliates
 
  The Company shall not, and shall not permit any Subsidiary to, conduct any
business or enter into any transaction or series of related transactions
(including the purchase, sale, lease or exchange of any property or the
rendering of any service) with any Affiliate of the Company or any legal or
beneficial owner of five percent or more of any class of Capital Stock of the
Company or with any Affiliate of such owner (other than a Wholly Owned
Subsidiary of the Company or an employee stock ownership plan for the benefit
of the Company's or a Subsidiary's employees) unless (i) the terms of such
business, transaction or series of transactions are (a) set forth in writing
and (b) as favorable to the Company or such Subsidiary as terms that would be
obtainable at the time for a comparable transaction or series of related
transactions in arm's-length dealings with an unrelated third Person and (ii)
the Board of Directors has, by resolution, determined in good faith that such
business or transaction or series of related transactions meets the criteria
set forth in (i) above. This paragraph, however, will not prohibit any dividend
or distribution permitted under the covenant described under "Limitation on
Restricted Payments" above.
 
 Securities and Exchange Commission Reports
   
  The Company shall file with the Note Trustee and provide the Holders of the
Notes, within 15 days after it files them with the Securities and Exchange
Commission (the "Commission") , copies of its annual report and of the
information, documents and other reports (or copies of such portions of any of
the foregoing as the Commission may by rules and regulations prescribe) which
the Company is required to file with the Commission pursuant to Section 13 or
15(d) of the Exchange Act. Notwithstanding that the Company may not be required
to remain subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act, the Company shall continue to file with the Commission so long as
any Notes remain outstanding and provide the Note Trustee and Holders of the
Notes with such annual reports and such information, documents and other
reports (or copies of such portions of any of the foregoing as the Commission
may by rules and regulations prescribe) which are specified in Sections 13 and
15(d) of the Exchange Act.     
 
  The holders of the Senior Debt are entitled to the benefit of covenants and
other provisions similar to those contained in the Note Indenture, including,
without limitation, those relating to Change of Control, defeasance and
optional redemptions, that in many cases are substantially similar to or more
restrictive than the covenants and other provisions described herein. The
holders of the Senior Debt are also entitled to the benefits of the
subordination provisions of the Note Indenture.
 
CONSOLIDATION, MERGER AND SALE OF ASSETS
 
  The Company may not consolidate with or merge with or into, or convey,
transfer or lease all or substantially all its assets to, any Person unless:
(i) the resulting, surviving or transferee Person (the "Successor Company") is
a Person organized and existing under the laws of the United States of America,
any state thereof or the District of Columbia and the Successor Company (if not
the Company) expressly assumes by an indenture supplemental to the Note
Indenture, executed and delivered to the Note Trustee, in
 
                                       70
<PAGE>
 
form satisfactory to the Note Trustee, all the obligations of the Company under
the Notes and the Note Indenture; (ii) immediately after giving effect to such
transaction (and treating any Debt which becomes an obligation of the Successor
Company or any Subsidiary as a result of such transaction as having been
incurred by such Successor Company or such Subsidiary at the time of such
transaction), no Default has occurred and is continuing; (iii) immediately
after giving effect to such transaction, the Consolidated EBITDA Coverage Ratio
of the Successor Company is at least 1:1; provided, however, that, if the
Consolidated EBITDA Coverage Ratio of the Company before giving effect to such
transaction is within the range set forth in column (A) below, then the
Consolidated EBITDA Coverage Ratio of the Successor Company, as the case may
be, shall be at least equal to the lesser of (1) the ratio determined by
multiplying the percentage set forth in column (B) below by the Consolidated
EBITDA Coverage Ratio prior to such transaction and (2) the ratio set forth in
column C below:
 
<TABLE>
<CAPTION>
    (A)                                                              (B)  (C)
    ---                                                              --- ------
<S>                                                                  <C> <C>
1.11:1 to 1.99:1.................................................... 90% 1.50:1
2.00:1 to 2.99:1.................................................... 80% 2.10:1
3.00:1 to 3.99:1.................................................... 70% 2.40:1
4.00:1 or more...................................................... 60% 2.50:1
</TABLE>
 
(iv) immediately after giving effect to such transaction, the Successor Company
has Consolidated Net Worth in an amount which is not less than the Consolidated
Net Worth of the Company prior to such transaction; and (v) the Company
delivers to the Note Trustee an officers' certificate and an opinion of
counsel, each stating that such consolidation, merger or transfer and such
supplemental indenture (if any) comply with the Note Indenture.
 
  The Successor Company will be the successor to the Company and will succeed
to, and be substituted for, and may exercise every right and power of, the
Company under the Note Indenture, but the predecessor Company in the case of a
conveyance, transfer or lease will not be released from the obligation to pay
the principal of and interest on the Notes.
 
DEFAULTS
 
  An Event of Default is defined in the Note Indenture as (i) a default in the
payment of interest on any Notes when due and payable, continued for 30 days,
(ii) a default in the payment of the principal of or premium (if any) on any
Notes when the same becomes due and payable at its Stated Maturity, upon
redemption, upon declaration or otherwise, (iii) the failure by the Company to
comply with its obligations under "Consolidation, Merger and Sale of Assets"
above, (iv) the failure by the Company to comply for 30 days after notice with
any of its covenants or agreements in the Notes or the Note Indenture (other
than those described in clause (i), (ii) or (iii) of this paragraph), (v) Debt
of the Company or any Subsidiary is not paid within any applicable grace period
after final maturity or is accelerated by the holders thereof because of a
default and the total amount of such Debt unpaid or accelerated exceeds $5.0
million or its foreign currency equivalent and such failure continues for 10
days after notice (the "cross acceleration provision"), (vi) certain events of
bankruptcy, insolvency or reorganization of the Company or a Subsidiary (the
"bankruptcy provisions"), or (vii) any judgment or decree for the payment of
money in excess of $5.0 million is rendered against the Company and is not
discharged and either (A) an enforcement proceeding has been commenced by any
creditor upon such judgment or decree or (B) there is a period of 60 days
following such judgment or decree during which such judgment or decree is not
discharged, waived or the execution thereof stayed and, in the case of (B),
such default continues for 10 days after notice (the "judgment default
provision"). However, a default under clause (iv), (v) or (vii)(B) above will
not constitute an Event of Default until the Note Trustee or the Holders of 25%
in principal amount of the outstanding Notes notify the Company of the default
and the Company does not cure such default within the time specified after
receipt of such notice.
 
 
                                       71
<PAGE>
 
  Subject to the subordination provisions in the Note Indenture, if an Event of
Default occurs and is continuing, the Note Trustee or the Holders of at least
25% in principal amount of the outstanding Notes may declare the principal of
and accrued but unpaid interest on all the Notes to be due and payable. Upon
such a declaration, such principal and interest shall be due and payable
immediately. If an Event of Default relating to certain events of bankruptcy,
insolvency or reorganization of the Company occurs and is continuing, the
principal of and interest on all the Notes will automatically become due and
payable, without presentment, demand or other requirements of any kind. Under
certain circumstances, the Holders of a majority in principal amount of the
outstanding Notes may rescind any such acceleration with respect to the Notes
and its consequences.
 
  No Holder of Notes may pursue any remedy with respect to the Note Indenture
or the Notes unless (i) such Holder has previously given the Note Trustee
notice that an Event of Default is continuing, (ii) Holders of at least 25% in
principal amount of the outstanding Notes have requested the Note Trustee to
pursue the remedy, (iii) such Holders have offered the Note Trustee reasonable
security or indemnity against any loss, liability or expense, (iv) the Note
Trustee has not complied with such request within 60 days after the receipt
thereof and the offer of security or indemnity and (v) the Holders of a
majority in principal amount of the outstanding Notes have not given the Note
Trustee a direction inconsistent with such request within such 60-day period.
Subject to certain restrictions, the Holders of a majority in principal amount
of the outstanding Notes are given the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Note Trustee
or of exercising any trust or power conferred on the Note Trustee. The Note
Trustee, however, may refuse to follow any direction that conflicts with law or
the Note Indenture or that the Note Trustee determines is unduly prejudicial to
the rights of any other Holder of Notes or that would involve the Note Trustee
in personal liability.
   
  The Note Indenture provides that if a Default or Event of Default occurs and
is continuing and is known to the Note Trustee, the Note Trustee shall mail to
each Holder of the Notes notice of the Default or Event of Default within 90
days after it occurs. Except in the case of a Default in the payment of
principal of, premium (if any) or interest on any Notes, the Note Trustee may,
however, withhold notice if and so long as it determines that withholding
notice is in the interest of the Holders of the Notes. In addition, the Company
is required to deliver to the Note Trustee, within 120 days after the end of
each fiscal year, an officers' certificate indicating whether the signers
thereof know of any Default or Event of Default that occurred during the
previous year. The Company also is required to deliver to the Note Trustee,
within 30 days after the occurrence thereof, written notice in the form of an
officers' certificate of any event which would constitute certain Defaults,
their status and what action the Company is taking or proposes to take in
respect thereof.     
 
AMENDMENT, SUPPLEMENT, WAIVER
 
  Subject to certain exceptions, the Note Indenture may be amended or
supplemented with the consent of the Holders of a majority in principal amount
of the Notes then outstanding, and any past default or compliance with any
provisions may be waived with the consent of the Holders of a majority in
principal amount of the Notes then outstanding. However, without the consent of
each Holder of outstanding Notes, no amendment may, among other things, (i)
reduce the amount of Notes whose Holders must consent to an amendment,
supplement or waiver, (ii) reduce the rate of or extend the time for payment of
interest on any Notes, (iii) reduce the principal of or extend the fixed
maturity of any Notes, (iv) reduce the premium payable upon the redemption of
any Note or change the time at which or circumstances under which any Notes may
or shall be redeemed or repurchased, (v) make any Notes payable in money other
than that stated in the Notes, (vi) impair the right of any Holder of the Notes
to receive payment of principal of and interest on such Holder's Notes on or
after the due dates therefor or to institute suit for the enforcement of any
payment on or with respect to such Holder's Notes, (vii) make any change in the
amendment provisions which require each Holder's consent or in the waiver
provisions, or (viii) waive any Default in the payment of principal of or
interest on any Notes.
 
 
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<PAGE>
 
  Without the consent of any Holder of Notes, the Company and the Note Trustee
may amend or supplement the Note Indenture to cure any ambiguity, omission,
defect or inconsistency, to provide for the assumption by a successor
corporation of the obligations of the Company under the Note Indenture, to
provide for uncertificated Notes in addition to or in place of certificated
Notes or to make any change that does not adversely affect the rights of any
Holder of the Notes.
 
  The consent of the Holders of the Notes is not necessary under the Note
Indenture to approve the particular form of any proposed amendment. It is
sufficient if such consent approves the substance of the proposed amendment.
 
  After an amendment under the Note Indenture becomes effective, the Company is
required to mail to Holders of the Notes a notice briefly describing such
amendment. However, the failure to give such notice to all Holders of the
Notes, or any defect therein, will not impair or affect the validity of the
amendment.
 
TRANSFER
 
  The Notes will be issued in registered form, and will be transferable only
upon the surrender of the Notes being transferred for registration of transfer.
The Company may require payment of a sum sufficient to cover any tax,
assessment or other governmental charge payable in connection with certain
transfers and exchanges.
 
DEFEASANCE
 
  Subject to certain covenants in documents governing certain of the Company's
Senior Debt which prohibit certain restricted payments, including defeasance of
the Notes, the Company may terminate all its obligations under the Notes and
the Note Indenture ("legal defeasance") except for certain obligations,
including those respecting the defeasance trust and obligation to register the
transfer or exchange of the Notes, to replace mutilated, destroyed, lost or
stolen Notes and to maintain a registrar and paying agent in respect of the
Notes, and the Company at any time may terminate (a) its obligations under the
covenants described under "Certain Covenants," "Change of Control" and "Use of
Proceeds," and the covenants relating to payment of taxes and other claims, the
corporate existence of the Company's Subsidiaries, and certain obligations
regarding books of record and account, notices and providing information to the
Note Trustee, in each case, as described in the Note Indenture; (b) the
operation of the following default provisions described above under "Defaults":
the provision contained in clause (iv) concerning failure to comply with
covenants (with respect to those covenants being defeased), the cross-
acceleration provision contained in clause (v), certain of the bankruptcy
provisions contained in clause (vi) (with respect to any Subsidiary) and the
judgment default provision contained in clause (viii); and (c) the limitations
contained in clauses (iii) and (iv) described above under "Consolidation,
Merger and Sale of Assets" ("covenant defeasance").
 
  The Company may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. If the Company exercises its
legal defeasance option, payment of the Notes may not be accelerated because of
an Event of Default. If the Company exercises its covenant defeasance option,
payment of the Notes may not be accelerated because of an Event of Default
which is being defeased, as described in the preceding paragraph, or because of
the failure of the Company to comply with clause (iii) or (iv) under
"Consolidation, Merger and Sale of Assets" above.
 
  In order to exercise either defeasance option, the Company must irrevocably
deposit in trust (the "defeasance trust") with the Note Trustee money or U.S.
Government Obligations for the payment of principal, premium (if any) and
interest on the Notes to the date of redemption or maturity, as the case may
be, and must comply with certain other conditions, including delivering to the
Note Trustee an opinion of counsel to the effect that Holders of the Notes will
not recognize income, gain or loss for federal income tax purposes as a result
of such deposit and defeasance and will be subject to federal income tax on the
same amount and in the same manner and at the same times as would have been the
case if such deposit and
 
                                       73
<PAGE>
 
defeasance had not occurred (and, in the case of legal defeasance only, such
opinion of counsel must be based on a ruling of the Internal Revenue Service or
a change in applicable federal income tax law).
 
CONCERNING THE NOTE TRUSTEE
 
  United States Trust Company of New York is to be the Note Trustee under the
Note Indenture and will be appointed by the Company as Registrar and Paying
Agent with regard to the Notes.
 
GOVERNING LAW
 
  The Note Indenture provides that it and the Notes will be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to applicable principles of conflicts of law to the extent that the
application of the law of another jurisdiction would be required thereby.
 
CERTAIN DEFINITIONS
 
  Certain definitions contained in the Note Indenture are listed below.
 
  Affiliate: The term "Affiliate" means with respect to any Person (i) any
other Person (or group of Persons acting in concert in respect of such
specified Person) which, directly or indirectly, is in control of, is
controlled by or is under common control with such specified Person or (ii) any
other Person who is a director, executive officer or general partner (A) of
such specified Person, (B) of any Subsidiary of such specified Person or (C) of
any Person described in clause (i) above. For purposes of this definition,
control of a Person means the power, direct or indirect, to direct or cause the
direction of the management and policies of such Person whether by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing; provided, however, that a Person shall not be
deemed to be an Affiliate of another Person solely as a result of a warehouse
management contract entered into between such Persons in the ordinary course of
business.
 
  Asset Disposition: The term "Asset Disposition" means any sale, lease,
transfer or other disposition (or series of related sales, leases, transfers or
dispositions) of shares of Capital Stock of a Subsidiary (other than directors'
qualifying shares), property or other assets (each referred to for the purposes
of this definition as a "disposition") by the Company or any of its
Subsidiaries, other than (i) a disposition by a Subsidiary to the Company or by
the Company or a Subsidiary to a Wholly Owned Subsidiary, (ii) a disposition of
property or assets at fair market value in the ordinary course of business,
(iii) a disposition of obsolete or worn out assets in the ordinary course of
business, (iv) a disposition subject to and made in accordance with the
redemption provisions described above, (v) a disposition subject to the
covenant described under "Certain Covenants--Limitation on Restricted Payments"
above or (vi) a sale-and-leaseback transaction pursuant to which either (x) the
lease in such sale-and-leaseback transaction is for a period, including renewal
rights, of not in excess of three years or (y) the Company could incur
Attributable Debt under "Certain Covenants--Limitation on Debt" above.
 
  Attributable Debt: The term "Attributable Debt" in respect of a sale- and-
leaseback transaction means, as at the time of determination, the present value
(discounted at the interest rate borne by the Series B Bonds compounded
annually) of the total obligations of the lessee for rental payments during the
remaining term of the lease included in such arrangement (including any period
for which such lease has been extended).
 
  Average Life: The term "Average Life" means, as of the date of determination,
with respect to any Debt or Preferred Stock, the quotient obtained by dividing
(i) the sum of the products of the numbers of years from the date of
determination to the dates of each successive scheduled principal payment of
such Debt or redemption payment on such Preferred Stock multiplied by the
amount of such payment by (ii) the sum of all such payments.
 
 
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<PAGE>
 
  Capital Lease Obligation: The term "Capital Lease Obligation" of a Person
means any obligation which is required to be classified and accounted for as a
capital lease on the face of a balance sheet of such Person prepared in
accordance with generally accepted accounting principles; the amount of such
obligation shall be the capitalized amount thereof, determined in accordance
with generally accepted accounting principles; and the Stated Maturity thereof
shall be the date of the last payment of rent or any other amount due under
such lease prior to the first date upon which such lease may be terminated by
the lessee without payment of a penalty.
 
  Capital Stock: The term "Capital Stock" means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of
or interests in (however designated) corporate stock, including any Preferred
Stock.
 
  Consolidated EBITDA Coverage Ratio: The term "Consolidated EBITDA Coverage
Ratio" as determined on any date means the ratio of (i) the aggregate amount of
Consolidated Net Income plus (to the extent deducted in calculating
Consolidated Net Income) Consolidated Interest Expense, income taxes,
depreciation expense, amortization expense, non-cash write-offs of deferred
financing costs, non-cash deductions for contributions to the ESOP and any loss
realized upon the sale or other disposition of any property, plant or equipment
of the Company or a Subsidiary, including pursuant to any sale or leaseback
arrangement (but without giving any effect to any extraordinary gain or loss)
for the Reference Period to (ii) the aggregate amount of Consolidated Interest
Expense for the Reference Period.
 
  Consolidated Interest Expense: The term "Consolidated Interest Expense"
means, for any period, the total interest expense of the Company and its
consolidated Subsidiaries, including (i) interest expense attributable to
capital leases, (ii) amortization of debt discount and debt issuance cost,
(iii) capitalized interest, (iv) non-cash interest payments, (v) commissions,
discounts and other fees and charges owed with respect to letters of credit and
bankers' acceptance financing, (vi) net costs under Interest Rate Protection
Agreements (including amortization of fees), (vii) Preferred Stock dividends in
respect of all Preferred Stock held by Persons other than the Company or a
Wholly Owned Subsidiary, (viii) interest incurred in connection with
investments in discontinued operations and (ix) interest actually paid by the
Company or any of its consolidated Subsidiaries under any guarantee of Debt or
any other obligation of any other Person.
 
  Consolidated Net Income: The term "Consolidated Net Income" means, for any
period, the net income of the Company and its consolidated Subsidiaries
determined on a consolidated basis in accordance with generally accepted
accounting principles; provided, however, that there shall not be included in
such Consolidated Net Income:
 
    (i) any net income of any Person if such Person is not a Subsidiary,
  except that (A) the Company's equity in the net income of any such Person
  for such period shall be included in such Consolidated Net Income up to the
  aggregate amount of cash actually distributed by such Person during such
  period to the Company or a Subsidiary as a dividend or other distribution
  (subject, in the case of a dividend or other distribution to a Subsidiary,
  to the limitations contained in clause (iii) below) and (B) the Company's
  equity in a net loss of any such Person for such period shall be included
  in determining such Consolidated Net Income;
 
    (ii) any net income of any Person acquired by the Company or a Subsidiary
  in a pooling of interests transaction for any period prior to the date of
  such acquisition;
 
    (iii) any net income of any Subsidiary if such Subsidiary is subject to
  restrictions, directly or indirectly, on the payment of dividends or the
  making of distributions by such Subsidiary, directly or indirectly, to the
  Company, except that (A) the Company's equity in the net income of any such
  Subsidiary for such period shall be included in such Consolidated Net
  Income up to the aggregate amount of cash actually distributed by such
  Subsidiary during such period to the Company or another Subsidiary as a
  dividend or other distribution (subject, in the case of a dividend or other
  distribution to another Subsidiary, to the limitation contained in this
  clause) and (B) the Company's equity in a net loss of any such Subsidiary
  for such period shall be included in determining such Consolidated Net
  Income;
 
                                       75
<PAGE>
 
    (iv) any gain (but not loss) realized upon the sale or other disposition
  of any property, plant or equipment of the Company or its consolidated
  Subsidiaries (including pursuant to any sale and leaseback arrangement)
  which is not sold or otherwise disposed of in the ordinary course of
  business and any gain (but not loss) realized upon the sale or other
  disposition of any Capital Stock of any Person; or
 
    (v) the cumulative non-cash effect of a change in accounting principles,
  including (A) the cumulative or one-time non-cash charges associated with
  the implementation of SFAS 106 by the Company with respect to services
  rendered by employees in periods prior to its implementation, but excluding
  any effects of such implementation with respect to services rendered in
  periods following such implementation, and (B) any cumulative or one-time
  non-cash charges associated with the implementation of SFAS 109.
 
  Consolidated Net Tangible Assets: The term "Consolidated Net Tangible Assets"
means the total assets shown on the balance sheet of the Company and its
consolidated Subsidiaries, determined on a consolidated basis using generally
accepted accounting principles, as of any date selected by the Company not more
than 90 days prior to the taking of any action for the purpose of which the
determination is being made, less (i) all current liabilities and minority
interests and (ii) goodwill and other intangibles.
   
  Consolidated Net Worth: The term "Consolidated Net Worth" of any Person means
the total amounts shown on the balance sheet of such Person and its
consolidated Subsidiaries, determined on a consolidated basis in accordance
with generally accepted accounting principles, as of the end of the most recent
fiscal quarter of such Person ending at least 45 days prior to the taking of
any action for the purpose of which the determination is being made, as (i) the
par or stated value of all outstanding Capital Stock of such Person plus (ii)
paid-in capital or capital surplus relating to such Capital Stock plus (iii)
any retained earnings or earned surplus less (A) any accumulated deficit, (B)
any amounts attributable to Redeemable Stock and (C) any amounts attributable
to Exchangeable Stock, and excluding amounts attributable to cumulative or
onetime non-cash charges associated with the implementation of SFAS 106 and
109.     
 
  Debt: The term "Debt" of any Person means, without duplication,
     
    (i) all obligations of such Person in respect of (A) indebtedness for
  money borrowed and (B) indebtedness evidenced by the Notes, or the First
  Mortgage Bonds, or notes, debentures, bonds or other similar instruments
  for the payment of which such person is responsible or liable including,
  without limitation (x) all Obligations (as defined in the Bond Indenture),
  in respect of money owed under the Bond Indenture (y) interest accruing
  subsequent to an event of bankruptcy or reorganization relating to the
  Company, whether or not such interest is an allowed claim enforceable
  against the debtor under the United States Bankruptcy Code, and (z) the
  fees and expenses of the Institutional Investor payable under the Second
  Investment Agreement;     
 
    (ii) all Capital Lease Obligations of such Person;
 
    (iii) all obligations of such Person issued or assumed as the deferred
  purchase price of property, all conditional sale obligations of such Person
  and all obligations of such Person under any title retention agreement (but
  excluding trade accounts payable arising in the ordinary course of
  business);
 
    (iv) all obligations of such Person for the reimbursement of any obligor
  on any letter of credit, banker's acceptance or similar credit transaction
  (other than obligations with respect to letters of credit securing
  obligations (other than obligations described in (i) through (iii) above)
  entered into in the ordinary course of business of such Person to the
  extent such letters of credit are not drawn upon or, if and to the extent
  drawn upon, such drawing is reimbursed no later than the third business day
  following receipt by such Person of a demand for reimbursement following
  payment on the letter of credit);
 
    (v) the amount of all obligations of such Person with respect to the
  redemption, repayment or other repurchase of any Redeemable Stock or
  Exchangeable Stock;
 
    (vi) all obligations of the type referred to in clauses (i) through (v)
  of other Persons and all dividends of other Persons for the payment of
  which, in either case, such Person is responsible or liable as obligor,
 
                                       76
<PAGE>
 
  guarantor or otherwise; provided, however, that to the extent such Person
  is responsible or liable only for the obligation of another Person to pay
  interest on Debt, then a designated percentage of such interest or the
  amount of the underlying Debt, as the case may be, shall be deemed Debt of
  the referent Person and the amount of such deemed Debt of the referent
  Person shall be equal to the lesser of (A) the aggregate principal amount
  of the underlying Debt or (B) the aggregate amount of interest due or
  payable over the term of such Debt (or the term of the Notes, if shorter)
  determined based upon the rate of interest in effect as of the date of such
  determination, together with the maximum prepayment premium or penalty
  which could become due or payable with respect to such Debt if such Debt
  was prepaid prior to the maturity of the Notes;
 
    (vii) all obligations of the type referred to in clauses (i) through (vi)
  of other Persons secured by any Lien on any property or asset of such
  Person (whether or not such obligation is assumed by such Person), the
  amount of such obligation being deemed to be the lesser of the value of
  such property or assets or the amount of the obligation so secured; and
 
    (viii) all obligations of such Person consisting of modifications,
  renewals, extensions, replacements and refundings of any obligations
  described in any of clauses (i) through (vii).
 
  Default: The term "Default" means any condition or event which constitutes or
which, after notice or lapse of time or both, would constitute an Event of
Default under the Note Indenture.
 
  ESOP: The term "ESOP" means the Company's Employee Stock Ownership Plan.
 
  ESOP Preferred Stock: The term "ESOP Preferred Stock" means shares of
preferred stock of the Company held by the ESOP.
 
  Exchangeable Stock: The term "Exchangeable Stock" means any Capital Stock
which is exchangeable or convertible into another security (other than Capital
Stock of the Company which is neither Exchangeable Stock nor Redeemable Stock).
 
  Holder: The term "Holder" means the Person in whose name Notes is registered
on the Registrar's books.
 
  Interest Rate Protection Agreement: The term "Interest Rate Protection
Agreement" means any interest rate swap agreement, interest rate cap agreement
or other financial agreement or arrangement designed to protect the Company or
any Subsidiary against fluctuations in interest rates.
 
  Investment: The term "Investment" in any Person means any loan or advance to,
any acquisition of Capital Stock, equity interest, obligation or other security
of, or capital contribution or other investment in, such Person.
 
  Lien: The term "Lien" means any mortgage, pledge, security interest,
conditional sale or other title retention agreement, constructive trust or
other similar lien.
 
  Net Available Cash: The term "Net Available Cash" from an Asset Disposition
means cash payments received (including any cash payments received by way of
deferred payment of principal pursuant to a note or installment receivable or
otherwise, but only as and when received, but excluding any other consideration
received in the form of assumption by the acquiring Person of Debt or other
obligations relating to such properties or assets or received in any other non-
cash form) therefrom, in each case net of all legal, title and recording tax
expenses, commissions and other fees and expenses incurred, and all federal,
state, provincial, foreign and local taxes required to be accrued as a
liability under generally accepted accounting principles, as a consequence of
such Asset Disposition, and in each case net of all payments made on any Debt
which is secured by any assets subject to such Asset Disposition, in accordance
with the terms of any Lien upon or other security agreement of any kind with
respect to such assets, or which must by its terms, or
 
                                       77
<PAGE>
 
in order to obtain a necessary consent to such Asset Disposition, or by
applicable law be repaid out of the proceeds from such Asset Disposition, and
net of all distributions and other payments required to be made and actually
made to minority interest holders in Subsidiaries or joint ventures as a result
of such Asset Disposition.
 
  Net Cash Proceeds: The term "Net Cash Proceeds," with respect to any issuance
or sale of Capital Stock, means the cash proceeds of such issuance or sale net
of attorneys' fees, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a result thereof.
 
  Non-Convertible Capital Stock: The term "Non-Convertible Capital Stock"
means, with respect to any corporation, any non-convertible Capital Stock of
such corporation and any Capital Stock of such corporation convertible solely
into non-convertible common stock of such corporation; provided, however, that
Non-Convertible Capital Stock shall not include any Redeemable Stock or
Exchangeable Stock.
 
  Non-Recourse Debt: The term "Non-Recourse Debt" means Debt or that portion of
Debt of a Subsidiary as to which (i) neither the Company nor any Subsidiary
(other than a Non-Recourse Subsidiary) (A) provides credit support, (B) is
directly or indirectly liable or (C) constitutes a lender and (ii) no default
with respect to such Debt (including any right which the holders thereof may
have to take enforcement action against such Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Debt of the Company or
any other Subsidiary to declare a default on such other Debt or cause the
payment thereof to be accelerated or payable prior to its Stated Maturity.
   
  Non-Recourse Subsidiary: The term "Non-Recourse Subsidiary" means a
Subsidiary (i) which has been organized or acquired after the date of the Note
Indenture, (ii) which has not acquired any assets (other than (x) cash and (y)
receivables purchased by such Subsidiary for fair market value) directly or
indirectly from the Company or any Subsidiary, (iii) which has no Debt other
than Non-Recourse Debt and (iv) which has been designated as a Non-Recourse
Subsidiary by the Board of Directors of the Company, as provided below. The
Board of Directors of the Company may designate any Subsidiary organized or
acquired after the date of the Note Indenture as a Non-Recourse Subsidiary;
provided, however, that, notwithstanding the foregoing, no Subsidiary as of the
date of the Note Indenture shall be reclassified as a Non-Recourse Subsidiary
or become a Subsidiary of a Non-Recourse Subsidiary. The Note Trustee shall be
given prompt notice by the Company of each resolution adopted by the Board of
Directors under this provision, together with a certified copy of each such
resolution adopted and an officers' certificate certifying that such
designation complies with the foregoing conditions.     
 
  Parent: The term "Parent" means any Person of which the Company is a
Subsidiary at the relevant time.
 
  Permitted Holders: The term "Permitted Holders" means Kelso and its
Affiliates, the Co-Investors and the Management Shareholders. The terms Kelso,
Co-Investors and Management Shareholders have the respective meanings specified
in the Stockholders' Agreement, as in effect on the date of the Note Indenture.
 
  Permitted Investments: The term "Permitted Investments" shall mean (i) U.S.
Government Obligations maturing within 90 days of the date of acquisition
thereof, (ii) investments in certificates of deposit maturing within 90 days of
the date of acquisition thereof issued by a bank or trust company which is
organized under the laws of the United States or any state thereof having
capital, surplus and undivided profits aggregating in excess of $500 million or
issued in an amount not to exceed $1.0 million at any time by United States
National Bank of Oregon (or, if United States National Bank of Oregon ceases to
be the bank with which the Company has its principal banking relationship, the
bank with which the Company then has its principal banking relationship), (iii)
investments in commercial paper given the highest rating (i.e., A-1/P-1 or
better) by two established national credit rating agencies and maturing not
more than 90 days from the date of acquisition
 
                                       78
<PAGE>
 
thereof and (iv) solely with respect to investments by the Note Trustee, in the
absence of any direction by the Company or during the continuance of a Default
or an Event of Default, shares in any money market fund registered under the
Investment Company Act of 1940, as amended, the portfolio of which is limited
to U.S. Government Obligations and U.S. agency obligations.
 
  Person: The term "Person" means any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
 
  Preferred Stock: The term "Preferred Stock," as applied to the Capital Stock
of any corporation, means Capital Stock of any class or classes (however
designated) which is preferred as to the payment of dividends, or as to the
distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such corporation, over shares of Capital Stock of any other
class of such corporation.
 
  Public Equity Offering: The term "Public Equity Offering" means an
underwritten primary public offering of common stock of the Company pursuant to
an effective registration statement under the Securities Act.
   
  Purchase Money Debt: The term "Purchase Money Debt" means Debt (i) consisting
of the deferred purchase price of property, conditional sale obligations,
obligations under any title retention agreement and other purchase money
obligations, in each case where the maturity of such Debt does not exceed the
anticipated useful life of the asset being financed, and (ii) incurred to
finance the acquisition or construction by the Company or any Subsidiary of
such asset, including additions and improvements; provided, however, that (i)
any Lien arising in connection with any such Debt shall be limited to the
specified asset being financed or, in the case of real property or fixtures,
including additions and improvements, the real property on which such asset is
attached, and (ii) the principal amount of such Debt does not exceed the lesser
of 80% of the cost or 80% of the fair market value of the asset being financed
(such fair market value as determined in good faith by the Board of Directors,
as evidenced by a resolution).     
 
  Redeemable Stock: The term "Redeemable Stock" means any Capital Stock that by
its terms or otherwise is required to be redeemed on or prior to the first
anniversary of the Stated Maturity of the Notes or is redeemable at the option
of the holder thereof at any time on or prior to the first anniversary of the
Stated Maturity of the Notes.
 
  Reference Period: The term "Reference Period," with respect to any
computation of the Consolidated EBITDA Coverage Ratio, means the most recent
four consecutive fiscal quarters ending at least 45 days prior to the date of
determination of the Consolidated EBITDA Coverage Ratio.
 
  Senior Debt: The term "Senior Debt" means Debt unless, in the instrument
creating or evidencing the same or pursuant to which the same is outstanding,
it is provided that such obligations are pari passu or junior or subordinate in
right of payment to the Notes; provided, however, that Senior Debt shall not be
deemed to include (1) any obligation of the Company to any Subsidiary, (2) any
liability for federal, state, local or other taxes owed or owing by the
Company, other than reimbursement obligations of the Company in respect of such
taxes that are paid on behalf of the Company pursuant to the provisions in the
Mortgages (as defined in the Bond Indenture) that permit the mortgagee to make
such payment, (3) any accounts payable or other liability to trade creditors
arising in the ordinary course of business (including guarantees thereof or
instruments evidencing such liabilities), (4) any indebtedness, guarantee or
obligation of the Company which is subordinate or junior in any respect to any
other indebtedness, guarantee or obligation of the Company (including, without
limitation, the Notes), (5) the portion of any Debt issued in violation of the
covenant concerning "Limitation on Debt" or "Limitation on Senior Subordinated
Debt" or (6) any obligations of the Company or any Subsidiary with respect to
the redemption, repayment or other repurchase of any Redeemable Stock or
Exchangeable Stock.
 
                                       79
<PAGE>
 
  Senior Subordinated Debt: The term "Senior Subordinated Debt" means the Notes
and any other Debt of the Company, which by its terms or the terms of the
instrument creating or evidencing the same or pursuant to which the same is
outstanding specifically provides that such Debt is to rank pari passu with the
Notes in right of payment to any Debt or other obligation of the Company which
is not Senior Debt of the Company.
 
  Stated Maturity: The term "Stated Maturity" means, with respect to any
security, the date specified in such security as the fixed date on which the
final payment of principal of such security is due and payable, including
pursuant to any mandatory redemption or prepayment provision.
 
  Stockholders' Agreement: The term "Stockholders' Agreement" means the
Stockholders' Agreement, dated as of December 24, 1986, as amended or restated,
among the Company and the parties listed on the signature pages thereof.
 
  Subordinated Obligation: The term "Subordinated Obligation" means any Debt of
the Company (whether outstanding on the date hereof or hereafter incurred)
which is subordinate or junior in right of payment to the Notes.
 
  Subsidiary: The term "Subsidiary" means any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other interests (including partnership
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by (i) the Company, (ii) the
Company and one or more Subsidiaries or (iii) one or more Subsidiaries.
 
  Tangible Property: The term "Tangible Property" means all land, buildings,
machinery and equipment and leasehold interests and improvements which would be
reflected on a consolidated balance sheet of the Company and its consolidated
Subsidiaries, prepared in accordance with generally accepted accounting
principles, excluding (i) all such tangible property located outside the United
States of America, (ii) all rights, contracts and other intangible assets of
any nature whatsoever and (iii) all inventories and other current assets.
 
  U.S. Government Obligations: The term "U.S. Government Obligations" means
direct obligations (or certificates representing an ownership interest in such
obligations) of the United States of America (including any agency or
instrumentality thereof) for the payment of which the full faith and credit of
the United States of America is pledged and which are not callable at the
issuer's option.
 
  Voting Stock: The term "Voting Stock" of a corporation means all classes of
Capital Stock of such corporation then outstanding and normally entitled to
vote in the election of directors.
 
  Wholly Owned Subsidiary: The term "Wholly Owned Subsidiary" means a
Subsidiary all the Capital Stock of which (other than directors' qualifying
shares) is owned by the Company or another Wholly Owned Subsidiary.
 
                                       80
<PAGE>
 
                                  UNDERWRITING
 
  Under the terms and subject to the conditions in an Underwriting Agreement
dated the date hereof (the "Underwriting Agreement"), 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:
 
<TABLE>
<CAPTION>
                                                                    PRINCIPAL
         UNDERWRITER                                             AMOUNT OF NOTES
         -----------                                             ---------------
   <S>                                                           <C>
   Morgan Stanley & Co. Incorporated............................  $
   CS First Boston Corporation..................................
   Smith Barney Inc.............................................
                                                                  ------------
     Total......................................................  $120,000,000
                                                                  ============
</TABLE>
 
  The Underwriting Agreement provides that the obligations of the Underwriters
to pay for and accept delivery of the Notes is subject to the approval of
certain legal matters by their counsel and to certain other conditions. The
Underwriters are obligated to take and pay for all the Notes if any are taken.
   
  The Underwriters initially propose to offer the Notes directly to the public
at the public offering price set forth on the cover page hereof and to certain
dealers at a price that represents a concession not in excess of . % of the
principal amount of the Notes. Each Underwriter may allow, and such dealers may
reallow, a concession to certain other dealers not in excess of .  % of the
principal amount of the Notes. 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 does not intend to apply for listing of the Notes on any
securities exchange or to seek approval for quotation of the Notes on any
inter-dealer quotation system. The Notes will be tradeable in the over-the-
counter market, but any such trading may be limited and sporadic. The
Underwriters have advised the Company that they presently intend to make a
market in the Notes, but they are not obligated to do so and any such market-
making may be discontinued by the Underwriters in their sole discretion at any
time without notice. Accordingly, no assurance can be given as to the liquidity
of, or the existence of trading markets for, the Notes.     
 
  The Company and the Underwriters have agreed to indemnify each other against
certain liabilities, including liabilities under the Securities Act.
 
  Morgan Stanley & Co. Incorporated acted as financial advisor to the Company
in connection with the Prepackaged Bankruptcy. In addition, Morgan Stanley &
Co. Incorporated has provided and may provide, from time to time, certain
financial advisory services to Kelso and its affiliates.
 
  CS First Boston Corporation acted as underwriter in connection with the
Company's offering of the First Mortgage Bonds. In addition, CS First Boston
Corporation has provided and may provide, from time to time, certain financial
advisory services to Kelso and its affiliates.
 
  Smith Barney Inc. acted as financial advisor to the Institutional Investor in
connection with the Prepackaged Bankruptcy. In addition, Smith Barney Inc. has
provided and may provide, from time to time, certain financial advisory
services to Kelso and its affiliates.
 
                                       81
<PAGE>
 
                                 LEGAL MATTERS
   
  The validity of the Notes offered hereby will be passed upon for the Company
by Tonkon, Torp, Galen, Marmaduke & Booth, Portland, Oregon. A member of
Tonkon, Torp, Galen, Marmaduke & Booth currently serves as Secretary to the
Company. The Underwriters have been represented by Debevoise & Plimpton, New
York, New York. Debevoise & Plimpton has acted and may hereafter act as counsel
for the Company and for Kelso from time to time on matters not relating to the
Offering.     
 
                                    EXPERTS
 
  The consolidated financial statements and schedules of the Company as of the
last day of February 1994 and 1995 and for each of the years in the three-year
period ended the last day of February 1995, included herein and elsewhere in
the Registration Statement of which this Prospectus is a part, have been
included in reliance upon the reports of KPMG Peat Marwick LLP, independent
certified public accountants, appearing elsewhere herein, and upon the
authority of that firm as experts in accounting and auditing. The reports of
KPMG Peat Marwick LLP refer to changes in accounting for income taxes and
postretirement benefits other than pensions.
 
                             ADDITIONAL INFORMATION
   
  The Company is subject to the information requirements of the Exchange Act.
Reports and other information filed by the Company may be inspected and copied
at the public reference facilities of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the Commission's regional offices located at
Seven World Trade Center, New York, New York 10048 and Citicorp Center, 500
West Madison Street, Chicago, Illinois 60661. Copies of such materials may be
obtained by mail, upon payment of the Commission's prescribed rates, by writing
to the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Company delivers a copy of its Annual Report on
Form 10-K to certain of its equity security holders and provides and will
continue to provide to the holders of its outstanding debt securities annual
reports and other information, documents and reports specified in Sections 13
and 15 of the Exchange Act and filed with the Commission pursuant to the terms
of the relevant indenture.     
   
  The Company has filed a registration statement on Form S-1 under the
Securities Act with respect to the securities offered hereby. This Prospectus
does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information, reference is made to
the Registration Statement and the exhibits filed as a part thereof.     
 
                                       82
<PAGE>
 
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 
  The Company's consolidated financial statements as of the last day of
February 1994 and 1995, the last day of November 1994 and 1995, and related
information listed below, are set forth in the following section of this
Prospectus.
 
<TABLE>   
<CAPTION>
TITLE                                                                  PAGE
-----                                                                  ----
<S>                                                                    <C>  
Audited Financial Statements
  Independent Auditors' Report........................................  F-2
  Consolidated Balance Sheets as of the last day of February 1994 and
   1995...............................................................  F-3
  Consolidated Statements of Operations for years ended the last day
   of February 1993, 1994 and 1995....................................  F-4
  Consolidated Statements of Common Stockholders' Deficit for years
   ended the last day of February 1993, 1994 and 1995.................  F-5
  Consolidated Statements of Cash Flows for years ended the last day
   of February 1993, 1994 and 1995....................................  F-6
  Notes to Consolidated Financial Statements as of the last day of
   February 1994 and 1995.............................................  F-7
Unaudited Financial Statements
  Consolidated Balance Sheets as of the last day of February 1995 and
   November 1995...................................................... F-20
  Consolidated Statements of Operations for the Three and Nine Months
   ended as of the last day of November 1994 and 1995................. F-21
  Consolidated Statements of Cash Flows for Nine Months ended as of
   the last day of November 1994 and 1995............................. F-22
  Notes to Consolidated Financial Statements for Nine Months ended as
   of the last day of November 1995................................... F-23
</TABLE>    
 
                                      F-1
<PAGE>
 
KPMG Peat Marwick LLP                            Telephone 503 221 6500
Suite 2000                                       Telefax 503 796 7650
1211 South West Fifth Avenue
Portland, OR 97204
 
                          INDEPENDENT AUDITORS' REPORT
 
The Board of Directors and Stockholders
Americold Corporation:
 
  We have audited the consolidated balance sheets of Americold Corporation as
of the last day of February 1994 and 1995, and the related consolidated
statements of operations, common stockholders' deficit and cash flows for each
of the years in the three-year period ended the last day of February 1995.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
 
  We conducted our audits in accordance with general accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
 
  In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Americold
Corporation as of the last day of February 1994 and 1995, and the results of
their operations and their cash flows for each of the years in the three-year
period ended the last day of February 1995, in conformity with generally
accepted accounting principles.
 
  As discussed in Note 1 to the consolidated financial statements, Americold
Corporation adopted the provisions of the Financial Accounting Standards
Board's Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes" and No. 106, "Employers' Accounting for Postretirement Benefits
Other Than Pensions" during the year ended the last day of February 1994.
 
                                          /s/ KPMG Peat Marwick LLP
 
Portland, Oregon
May 12, 1995, except for Notes 15 and 16,
which are as of June 30, 1995
 
 
Member Firm of Klyveld Peat Marwick Goerdeler
 
                                      F-2
<PAGE>
 
                             AMERICOLD CORPORATION
 
                          CONSOLIDATED BALANCE SHEETS
 
                       LAST DAY OF FEBRUARY 1994 AND 1995
 
                       (IN THOUSANDS, EXCEPT SHARE DATA)
 
<TABLE>
<CAPTION>
                           ASSETS                               1994       1995
                           ------                             ---------  ---------
<S>                                                           <C>        <C>
Current assets:
  Cash and cash equivalents (notes 15 and 16)...............  $   3,892  $  33,163
  Trade receivables, less allowance for doubtful accounts of
   $298 and $313, respectively (note 7).....................     16,702     20,510
  Other receivables, less allowance for doubtful accounts of
   $4,100 and $-0-, respectively (note 14)..................      8,351      2,105
  Prepaid expenses..........................................      3,972      5,240
  Tax refund receivable.....................................      1,291        279
  Other current assets......................................        628        695
                                                              ---------  ---------
    Total current assets....................................     34,836     61,992
Net property, plant and equipment (notes 2, 4 and 7)........    375,772    367,248
Cost in excess of net assets acquired, less accumulated
 amortization of $17,230 and $19,765, respectively..........     82,563     80,028
Debt issuance costs, less accumulated amortization of $5,540
 and $6,803, respectively (notes 7 and 12)..................      9,371      8,953
Other noncurrent assets (note 3)............................     26,161     26,374
                                                              ---------  ---------
    Total assets............................................  $ 528,703  $ 544,595
                                                              =========  =========
<CAPTION>
   LIABILITIES, PREFERRED STOCK AND COMMON STOCKHOLDERS'
                          DEFICIT
   -----------------------------------------------------
<S>                                                           <C>        <C>
Current liabilities:
  Accounts payable..........................................  $   5,450  $   6,741
  Accrued interest..........................................     17,334     17,683
  Accrued expenses (note 5).................................      7,512     11,345
  Deferred revenue..........................................      4,772      5,914
  Current maturities of long-term debt (notes 7 and 16).....      2,281     31,315
  Other current liabilities (notes 4 and 6).................      4,944      3,912
                                                              ---------  ---------
    Total current liabilities...............................     42,293     76,910
Long-term debt, less current maturities (notes 7 and 16)....    467,337    442,912
Deferred income taxes (note 11).............................    104,558    106,098
Other noncurrent liabilities (notes 4 and 8)................     11,744     10,633
                                                              ---------  ---------
    Total liabilities.......................................    625,932    636,553
                                                              ---------  ---------
Preferred stock, Series A, $100 par value. Authorized
 1,000,000 shares; issued and outstanding 49,672 and 52,936
 shares, respectively (note 10).............................      5,348      5,789
                                                              ---------  ---------
Common stockholders' deficit (notes 7, 8 and 9):
  Common stock, $.01 par value. Authorized 10,000,000
   shares; issued and outstanding 4,863,999 and 4,860,934
   shares, respectively.....................................         49         49
  Additional paid-in capital................................     49,082     49,022
  Retained deficit..........................................   (151,653)  (146,775)
  Adjustment for minimum pension liability..................        (55)       (43)
                                                              ---------  ---------
    Total common stockholders' deficit......................   (102,577)   (97,747)
                                                              ---------  ---------
Commitments and contingencies (notes 4, 7, 8 and 16)
    Total liabilities, preferred stock and common stockhold-
     ers' deficit...........................................  $ 528,703  $ 544,595
                                                              =========  =========
</TABLE>
 
          See accompanying notes to consolidated financial statements.
 
                                      F-3
<PAGE>
 
                             AMERICOLD CORPORATION
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
 
              YEARS ENDED LAST DAY OF FEBRUARY 1993, 1994 AND 1995
 
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
 
<TABLE>
<CAPTION>
                                                    1993      1994      1995
                                                  --------  --------  --------
<S>                                               <C>       <C>       <C>
Net sales........................................ $196,130  $198,887  $215,207
                                                  --------  --------  --------
Operating expenses:
  Cost of sales..................................  118,846   126,273   138,132
  Amortization of cost in excess of net assets
   acquired......................................    2,533     2,531     2,535
  Selling and administrative expenses............   27,192    27,090    25,955
  Employee stock ownership plan expense (notes 8
   and 10).......................................      750       --        750
                                                  --------  --------  --------
    Total operating expenses.....................  149,321   155,894   167,372
                                                  --------  --------  --------
    Gross operating margin.......................   46,809    42,993    47,835
                                                  --------  --------  --------
Other income (expense):
  Interest income................................      323       757     1,870
  Interest expense...............................  (51,943)  (55,403)  (55,344)
  Amortization of debt issuance costs............   (1,173)   (1,249)   (1,276)
  Gain on insurance settlement (note 14).........      --        --     16,953
  Other, net.....................................      289       680       753
                                                  --------  --------  --------
    Total other expense..........................  (52,504)  (55,215)  (37,044)
                                                  --------  --------  --------
Income (loss) before income taxes, extraordinary
 item and cumulative effect of accounting
 principle changes...............................   (5,695)  (12,222)   10,791
Provision (benefit) for income taxes (note 11)...    2,455    (1,183)    5,227
                                                  --------  --------  --------
    Income (loss) before extraordinary item and
     cumulative effect of accounting principle
     changes.....................................   (8,150)  (11,039)    5,564
Extraordinary item, net of income tax benefit of
 $1,192 (note 12)................................      --     (1,848)      --
Cumulative effect on prior years of accounting
 principle changes for:
  Income taxes (note 11).........................      --    (61,833)      --
  Postretirement benefits other than pensions,
   net of income tax benefit of $1,490 (note 8)..      --     (2,401)      --
                                                  --------  --------  --------
    Net income (loss)............................ $ (8,150) $(77,121) $  5,564
                                                  ========  ========  ========
Income (loss) per share:
  Income (loss) before extraordinary item and
   cumulative effect of accounting principle
   changes....................................... $  (1.80) $  (2.39) $   1.00
  Extraordinary item.............................      --       (.38)      --
  Cumulative effect of accounting principle
   changes:
   Income taxes..................................      --     (12.74)      --
   Postretirement benefits other than pensions...      --       (.49)      --
                                                  --------  --------  --------
    Net income (loss) per common share........... $  (1.80) $ (16.00) $   1.00
                                                  ========  ========  ========
Weighted average number of shares outstanding....    4,839     4,855     4,864
                                                  ========  ========  ========
</TABLE>
 
          See accompanying notes to consolidated financial statements.
 
                                      F-4
<PAGE>
 
                             AMERICOLD CORPORATION
 
            CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS' DEFICIT
 
              YEARS ENDED LAST DAY OF FEBRUARY 1993, 1994 AND 1995
 
                       (IN THOUSANDS, EXCEPT SHARE DATA)
 
<TABLE>
<CAPTION>
                                                       ADJUSTMENT
                                                          FOR
                                 ADDITIONAL             MINIMUM   TOTAL COMMON
                          COMMON  PAID-IN   RETAINED    PENSION   STOCKHOLDERS'
                          STOCK   CAPITAL    DEFICIT   LIABILITY     DEFICIT
                          ------ ---------- ---------  ---------- -------------
<S>                       <C>    <C>        <C>        <C>        <C>
Balance last day of Feb-
 ruary 1992.............   $48    $48,332   $ (65,237)    $(25)     $ (16,882)
Purchase of common stock
 (1,910 shares).........   --         (19)        --       --             (19)
Issuance of common stock
 (17,476 shares)........     1        449         --       --             450
14.25% preferred stock
 dividend...............   --         --         (183)     --            (183)
Undeclared cumulative
 preferred stock divi-
 dend...................   --         --         (387)     --            (387)
Adjustment for minimum
 pension liability......   --         --          --        (4)            (4)
Net loss................   --         --       (8,150)     --          (8,150)
                           ---    -------   ---------     ----      ---------
Balance last day of Feb-
 ruary 1993.............    49     48,762     (73,957)     (29)       (25,175)
Issuance of common stock
 (13,333 shares)........   --         320         --       --             320
13.25% preferred stock
 dividend...............   --         --         (194)     --            (194)
Undeclared cumulative
 preferred stock divi-
 dend...................   --         --         (381)     --            (381)
Adjustment for minimum
 pension liability......   --         --          --       (26)           (26)
Net loss................   --         --      (77,121)     --         (77,121)
                           ---    -------   ---------     ----      ---------
Balance last day of Feb-
 ruary 1994.............    49     49,082    (151,653)     (55)      (102,577)
Purchase of common stock
 (3,065 shares).........   --         (60)        --       --             (60)
11.5% preferred stock
 dividend...............   --         --         (190)     --            (190)
Undeclared cumulative
 preferred stock divi-
 dend...................   --         --         (496)     --            (496)
Adjustment for minimum
 pension liability......   --         --          --        12             12
Net income..............   --         --        5,564      --           5,564
                           ---    -------   ---------     ----      ---------
Balance last day of Feb-
 ruary 1995.............   $49    $49,022   $(146,775)    $(43)     $ (97,747)
                           ===    =======   =========     ====      =========
</TABLE>
 
          See accompanying notes to consolidated financial statements.
 
                                      F-5
<PAGE>
 
                             AMERICOLD CORPORATION
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
              YEARS ENDED LAST DAY OF FEBRUARY 1993, 1994 AND 1995
 
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                    1993      1994       1995
                                                  --------  ---------  --------
<S>                                               <C>       <C>        <C>
Cash flows from operating activities:
 Net income (loss)..............................  $ (8,150) $ (77,121) $  5,564
 Adjustments to reconcile net income (loss) to
  net cash provided by operating activities:
 Depreciation...................................    17,725     19,938    20,140
 Amortization of cost in excess of net assets
  acquired......................................     2,533      2,531     2,535
 Amortization of debt issuance costs............     1,173      1,249     1,276
 Amortization of original issue discount........     1,068      1,205     1,369
 (Gain) loss on sale of assets..................       (63)         8      (286)
 Gain on insurance settlement...................       --         --    (16,953)
 Gain on termination of capital lease...........       --        (514)      --
 Other amortization.............................       373        408       302
 Employee stock ownership plan expense..........       450        320       --
 Cumulative effect of accounting principle
  changes.......................................       --      64,234       --
 Write-off of unamortized issuance costs........       --       3,040       --
 Change in assets and liabilities:
  Receivables...................................     1,963       (336)   (6,952)
  Prepaid expenses..............................    (1,569)    (1,067)   (1,268)
  Tax refund receivable.........................    (1,384)        93     1,012
  Other current assets..........................       (42)       165       (67)
  Accounts payable..............................        24       (890)    1,291
  Accrued interest..............................      (161)     7,166       349
  Accrued expenses..............................      (311)      (458)    3,833
  Deferred revenue..............................      (479)      (443)    1,142
  Other current liabilities.....................       989        906    (1,032)
  Deferred income taxes.........................     1,533     (1,375)    1,540
  Other noncurrent liabilities..................     2,028       (583)   (1,111)
                                                  --------  ---------  --------
   Net cash provided by operating activities....    17,700     18,476    12,684
                                                  --------  ---------  --------
Cash flows from investing activities:
 Proceeds from sale of assets...................  $     16  $      26  $  1,105
 Expenditures for property, plant and equip-
  ment..........................................    (7,661)    (8,925)  (13,203)
 Purchase of long-term investment...............       --      (1,000)     (447)
 Proceeds from insurance policies...............       --         --     26,343
 Expenditures for logistics software............       --         --     (1,650)
 Other items, net...............................    (1,098)      (994)      287
                                                  --------  ---------  --------
 Net cash provided (used) by investing activi-
  ties..........................................    (8,743)   (10,893)   12,435
                                                  --------  ---------  --------
Cash flows from financing activities:
 Net repayments under credit agreement..........   (15,417)    (8,583)      --
 Principal payments under capital lease and
  other debt obligations........................    (2,457)    (2,496)   (2,087)
 Proceeds from mortgage.........................       --         --     13,475
 Payoff of note.................................       --         --     (9,044)
 Net proceeds, excluding escrow amounts, from
  financing lien................................     3,950        --        --
 Net proceeds, excluding escrow amounts, from
  sale of mortgage bonds........................       --     150,000       --
 Retirement of mortgage bonds...................       --    (150,000)      --
 Release of escrow funds........................     7,000      5,809     2,714
 Debt issuance costs............................      (905)      (870)     (846)
 Purchase of treasury stock.....................       (19)       --        (60)
                                                  --------  ---------  --------
 Net cash provided (used) by financing activi-
  ties..........................................    (7,848)    (6,140)    4,152
                                                  --------  ---------  --------
 Net increase in cash and cash equivalents......     1,109      1,443    29,271
Cash and cash equivalents at beginning of year..     1,340      2,449     3,892
                                                  --------  ---------  --------
Cash and cash equivalents at end of year........  $  2,449  $   3,892  $ 33,163
                                                  ========  =========  ========
Supplemental disclosure of cash flow informa-
 tion:
 Cash paid during the year for interest, net of
  amounts capitalized...........................  $ 51,036  $  47,031  $ 53,626
 Cash paid during the year for income taxes.....     2,415        491     2,675
Supplemental schedule of noncash investing and
 financing activities:
 Capital lease obligations incurred to lease new
  equipment.....................................  $  1,217  $     954  $  1,120
 Warehouse facility purchased by long-term
  debt..........................................    10,000        --        --
 Net book value of assets included in other re-
  ceivables.....................................     1,008      3,623       --
 Financing lease proceeds placed in escrow......    12,050        --        --
 Bond proceeds placed in escrow, net of debt is-
  suance costs of $3,966........................       --      22,284       --
 Sale proceeds placed in escrow.................       --         --      1,483
</TABLE>
 
See accompanying notes to consolidated financial statements.
 
                                      F-6
<PAGE>
 
                             AMERICOLD CORPORATION
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
                       LAST DAY OF FEBRUARY 1994 AND 1995
 
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  Accounting policies and methods of their application that significantly
affect the determination of financial position, cash flows and results of
operations are as follows:
 
 (a) Business Description
 
  Americold Corporation (the Company) provides integrated logistics services
for the frozen food industry consisting of warehousing and transportation
management. These services are provided through the Company's network of 51
refrigerated warehouses and its refrigerated transportation management unit.
The Company has a wholly-owned warehousing subsidiary, Americold Services
Corporation.
 
  In addition, the Company operates a limestone quarry. This business is not
significant to the Company as a whole and is not required to be reported as
separate industry segment.
 
 (b) Principles of Consolidation
 
  The consolidated financial statements include the accounts of Americold
Corporation and its wholly-owned subsidiary. All significant intercompany
transactions, profits, and balances have been eliminated.
 
 (c) Property, Plant and Equipment
 
  Property, plant and equipment are stated at cost. Depreciation is generally
provided on the straight-line method over the estimated useful lives of the
respective assets ranging from 3 to 45 years for financial reporting purposes
and on accelerated methods for income tax purposes where possible. Property
held under capital leases (at capitalized value) is amortized on the straight-
line method over its estimated useful life, limited generally by the lease
period. The amortization of the property held under capital leases is included
with depreciation expense. Estimated remaining useful lives are reviewed
periodically for reasonableness and any necessary change is generally effected
at the beginning of the accounting period in which the revision is adopted.
 
  Maintenance and repairs are expensed in the year incurred; major renewals and
betterments of equipment and refrigerated facilities are capitalized and
depreciated over the remaining life of the asset.
 
 (d) Cost in Excess of Net Assets Acquired
 
  On December 24, 1986, all the outstanding capital stock of the Company was
acquired by a private group consisting of affiliates of Kelso & Company, Inc.,
certain institutional investors and certain key employees and members of the
Company's management. The acquisition of the Company (the Acquisition) was
accounted for as a purchase. An allocation of the purchase price was made to
the acquired assets and liabilities based on their estimated fair market values
at the date of acquisition. The unallocated purchase price is the Company's
estimate of goodwill associated with the acquisition and is being amortized
using the straight-line method over a period of 40 years.
 
  On March 1, 1990, the Company acquired the warehousing business of an
unrelated third party. The goodwill associated with the acquisition is being
amortized using the straight-line method over a period of 15 years.
 
  The Company assesses the recoverability of the goodwill by determining
whether the amortization of the goodwill balance over its remaining useful life
can be recovered through projected undiscounted future
 
                                      F-7
<PAGE>
 
                             AMERICOLD CORPORATION
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
net income. The amount of goodwill impairment, if any, is measured based on
projected discounted future net income using a discount rate reflecting the
Company's current average cost of funds.
 
 (e) Debt Issuance Costs
 
  Debt issuance costs incurred are amortized over the term of the related debt.
 
 (f) Income Taxes
 
  In February 1992, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes"
(Statement 109). Statement 109 requires a change from the deferred method of
accounting for income taxes of APB Opinion 11 to the asset and liability method
of accounting for income taxes. Under the asset and liability method of
Statement 109, deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. Under
Statement 109, the effect on deferred tax assets and liabilities of a change in
tax rates is recognized in income in the period that includes the enactment
date.
 
  Effective March 1, 1993, the Company adopted Statement 109 and has reported
the cumulative effect of that change in the method of accounting for income
taxes in the 1994 consolidated statement of operations (note 11).
 
  Pursuant to the deferred method under APB Opinion 11, which was applied in
1993 and prior years, deferred income taxes are recognized for income and
expense items that are reported in different years for financial reporting
purposes using the tax rate applicable for the year of calculation. Under the
deferred method, deferred taxes are not adjusted for subsequent changes in tax
rates.
 
 (g) Postretirement Benefits Other Than Pensions
 
  In December 1990, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 106, "Postretirement Benefits Other Than
Pensions" (Statement 106). Statement 106 requires the recognition of a
liability for obligations for postretirement benefits expected to be provided
to or for an employee to be accrued during the service lives of the employees.
The Company previously expensed the cost of such benefits, which are
principally health care, as claims were received.
 
  Effective March 1, 1993, the Company adopted Statement 106 and has reported
the cumulative effect of that change in the method of accounting for
postretirement benefits other than pensions in the 1994 consolidated statement
of operations (note 8).
 
 (h) Revenue Recognition
 
  The Company's revenues are primarily derived from services provided to
customers in both handling and storing frozen products. Handling and storage
revenue is based primarily upon the total weight of frozen product received
into and held in storage and is recognized as earned, not as billed.
Differences between revenue earned and revenue billed are recorded as deferred
revenue. Approximately 50% of the handling revenue is deferred until the
customers' products are delivered.
 
 
                                      F-8
<PAGE>
 
                             AMERICOLD CORPORATION
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
   
  The Company's transportation management services revenues are primarily
derived from freight services. Revenues and direct costs are recognized upon
delivery of freight.     
 
 (i) Income (loss) Per Share
 
  Income (loss) per common share is computed by dividing net income (loss),
less preferred dividend requirements, by the weighted average number of common
shares outstanding.
 
 (j) Major Customers
 
  Consolidated net sales to H.J. Heinz Co. and subsidiaries amounted to
approximately $26.6 million, $35.8 million and $45.5 million in the years ended
the last day of February 1993, 1994 and 1995, respectively. For the year ended
the last day of February 1993, consolidated net sales to ConAgra, Inc. and
subsidiaries amounted to approximately $21.3 million. No other customers
accounted for 10% or more of consolidated sales.
 
 (k) Cash and Cash Equivalents
 
  The Company considers all highly liquid investment instruments with a
maturity of three months or less when purchased to be cash equivalents. There
were cash equivalents of $-0- and $25.2 million as of the last day of February
1994 and 1995, respectively.
 
(2) NET PROPERTY, PLANT AND EQUIPMENT
 
  Net property, plant and equipment consists of the following (in thousands):
 
<TABLE>
<CAPTION>
                                                                 LAST DAY OF
                                                                  FEBRUARY
                                                              -----------------
                                                                1994     1995
                                                              -------- --------
<S>                                                           <C>      <C>
Land......................................................... $ 31,476 $ 31,087
Refrigerated facilities, buildings and land improvements.....  426,275  433,667
Machinery and equipment......................................   56,702   59,300
                                                              -------- --------
                                                               514,453  524,054
Less accumulated depreciation................................  138,681  156,806
                                                              -------- --------
  Net property, plant and equipment.......................... $375,772 $367,248
                                                              ======== ========
</TABLE>
 
(3) OTHER NONCURRENT ASSETS
 
  Other noncurrent assets consist of the following (in thousands):
 
<TABLE>
<CAPTION>
                                                                   LAST DAY
                                                                 OF FEBRUARY
                                                               ---------------
                                                                1994    1995
                                                               ------- -------
<S>                                                            <C>     <C>
Restricted funds held by trustee (note 7)..................... $21,899 $20,669
Real estate owned, less allowance for loss of $43 and $-0-,
 respectively.................................................     440     300
Security deposits.............................................     424     393
Other.........................................................   3,398   5,012
                                                               ------- -------
                                                               $26,161 $26,374
                                                               ======= =======
</TABLE>
 
                                      F-9
<PAGE>
 
                             AMERICOLD CORPORATION
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
(4) LEASES
 
  Assets under capital leases are included in net property, plant and equipment
and consist of the following (in thousands):
 
<TABLE>
<CAPTION>
                                                                  LAST DAY
                                                                 OF FEBRUARY
                                                               ---------------
                                                                1994    1995
                                                               ------- -------
<S>                                                            <C>     <C>
Land, refrigerated facilities, buildings and land improve-
 ments........................................................ $ 7,140 $ 7,140
Machinery and equipment.......................................   4,255   4,249
                                                               ------- -------
                                                                11,395  11,389
Less accumulated depreciation.................................   3,540   3,575
                                                               ------- -------
                                                               $ 7,855 $ 7,814
                                                               ======= =======
</TABLE>
 
  Future minimum lease payments under noncancelable leases for years ending
after the last day of February 1995 are as follows (in thousands):
 
<TABLE>
<CAPTION>
 YEAR ENDING THE LAST                                             CAPITAL OPERATING
   DAY OF FEBRUARY                                               LEASES   LEASES
--------------------                                              ------- ---------
    <S>                                                           <C>     <C>
      1996....................................................... $1,826   $ 7,962
      1997.......................................................  1,548     6,798
      1998.......................................................  3,773     5,472
      1999.......................................................    522     4,626
      2000.......................................................    402     2,974
      Thereafter.................................................  1,808     5,006
                                                                  ------   -------
        Total minimum lease payments.............................  9,879   $32,838
                                                                           =======
      Less amounts representing interest.........................  2,424
                                                                  ------
      Present value of net minimum lease payments................ $7,455
                                                                  ======
</TABLE>
 
  Included in expenses for the years ended the last day of February 1993, 1994
and 1995 are approximately $8.7 million, $9.1 million and $9.5 million,
respectively, of rental expense net of sublease rentals for operating leases.
 
(5) ACCRUED EXPENSES
 
  Accrued expenses consist of the following (in thousands):
 
<TABLE>
<CAPTION>
                                                                    LAST DAY
                                                                  OF FEBRUARY
                                                                 --------------
                                                                  1994   1995
                                                                 ------ -------
<S>                                                              <C>    <C>
Accrued payroll................................................. $1,498 $ 4,226
Accrued vacation pay............................................  2,345   2,504
Accrued taxes...................................................    837   1,043
Accrued employee stock ownership plan contribution..............    --      750
Other...........................................................  2,832   2,822
                                                                 ------ -------
  Total accrued expenses........................................ $7,512 $11,345
                                                                 ====== =======
</TABLE>
 
 
                                      F-10
<PAGE>
 
                             AMERICOLD CORPORATION
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(6) OTHER CURRENT LIABILITIES
 
  Other current liabilities consist of the following (in thousands):
 
<TABLE>
<CAPTION>
                                                                     LAST DAY
                                                                    OF FEBRUARY
                                                                   -------------
                                                                    1994   1995
                                                                   ------ ------
<S>                                                                <C>    <C>
Workers' compensation............................................. $2,527 $1,227
Other.............................................................  2,417  2,685
                                                                   ------ ------
                                                                   $4,944 $3,912
                                                                   ====== ======
</TABLE>
 
(7) LONG-TERM DEBT
 
  Long-term debt consists of the following (in thousands) (see note 16):
 
<TABLE>
<CAPTION>
                                                                  LAST DAY
                                                                 OF FEBRUARY
                                                              -----------------
                                                                1994     1995
                                                              -------- --------
<S>                                                           <C>      <C>
Capital lease obligations (9.6% and 9.5% weighted average
 interest rate, respectively)...............................  $  7,591 $  7,455
Senior subordinated debentures-- 11% fixed, due May 1, 1997
 with mandatory sinking fund payments of $28,750 on May 1,
 1995 and 1996..............................................   111,212  112,581
First mortgage bonds, Series A--11.45% fixed, due June 30,
 2002, interest payments only to January 1, 1999 with prin-
 cipal amortization commencing July 1, 1999.................   150,000  150,000
First mortgage bonds, Series B--11.5% fixed, due March 1,
 2005, interest payments only to September 1, 2003 with a
 mandatory sinking fund payment of $88,125 on March 1,
 2004.......................................................   176,250  176,250
Mortgage notes payable--various interest rates ranging from
 9.0% to 13.6% requiring monthly principal and interest pay-
 ments with maturities ranging from 2004 to 2017............    24,565   27,941
                                                              -------- --------
  Total long-term debt......................................   469,618  474,227
Less current maturities of long-term debt...................     2,281   31,315
                                                              -------- --------
Total long-term debt, less current maturities...............  $467,337 $442,912
                                                              ======== ========
</TABLE>
 
  On July 2, 1987, the Company sold $300 million in first mortgage bonds. On
March 9, 1993, the Company sold $176.25 million of the Company's 11.5% First
Mortgage Bonds, Series B, due March 1, 2005. The Company used $150 million of
the proceeds from the sale of the Series B bonds to purchase at par $150
million of outstanding first mortgage bonds. The remaining $150 million of such
First Mortgage Bonds have been redesignated Series A First Mortgage Bonds
(together with the Series B First Mortgage Bonds, the "First Mortgage Bonds").
The remaining net proceeds of approximately $22.3 million were placed in escrow
with the Mortgage Bond Trustee (note 3). The bonds are secured by mortgages or
deeds of trust on 31 of the Company's facilities.
 
  On February 3, 1993, the Company entered into a bank credit agreement with
its principal bank. The bank credit agreement is secured by the Company's trade
receivables. The bank credit agreement has an aggregate availability of $27.5
million consisting of $20 million maximum cash borrowings and $10 million of
letter of credit funding. Any amount by which the letter of credit borrowings
exceed $7.5 million reduces the available cash borrowing amount under the
agreement by a like amount. Availability for cash borrowings is limited by a
defined borrowing base advance formula established on the basis of reviews of
trade receivables.
 
                                      F-11
<PAGE>
 
                             AMERICOLD CORPORATION
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The unused and available amount under the bank credit agreement was $16.3
million, of which no amount was borrowed as of the last day of February 1995.
There were $7.3 million of letters of credit outstanding as of the last day of
February 1995.
 
  The senior subordinated debentures are presented as of the last day of
February 1994 and 1995 net of the original issue discount of approximately $9.4
million and accumulated accretion of approximately $5.6 million and $7.0
million, respectively.
 
  The Company entered into an investment agreement in connection with the
issuance of the First Mortgage Bonds which, like the bank credit agreement,
requires the Company to meet certain affirmative and restrictive covenants.
Significant restrictive items include, among others, limitations on additional
indebtedness, liens, dividends, capital expenditures, asset dispositions, lease
commitments and investments. Also, certain "pro-forma debt service" ratios, net
worth levels and senior debt to net worth ratios must be maintained.
 
  As of the last day of February 1995, aggregate annual maturities of long-term
debt are as follows (in thousands):
 
<TABLE>
<CAPTION>
       YEAR ENDED THE LAST
       DAY OF FEBRUARY
       -------------------
       <S>                                                               <C>
       1996............................................................. $31,315
       1997.............................................................   2,634
       1998.............................................................   5,169
       1999.............................................................   2,374
       2000.............................................................   2,583
</TABLE>
 
(8) EMPLOYEE BENEFIT PLANS
 
 (a) Defined Benefit Pension Plans
 
  The Company has defined benefit pension plans which cover substantially all
employees other than union employees covered by union pension plans under
collective bargaining agreements. Benefits under these plans are based on years
of credited service and compensation during the years preceding retirement or
on years of credited service and established monthly benefit levels.
 
  Pension expense for all plans, including plans jointly administered by
industry and union representatives totaled $1.5 million, $1.4 million and $1.4
million for years ended the last day of February 1993, 1994 and 1995,
respectively. Actuarial valuations for defined benefit plans are performed as
of the end of the plan year. The most recent actuarial valuations are as of the
last day of February 1995.
 
                                      F-12
<PAGE>
 
                             AMERICOLD CORPORATION
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
  The funded status of the Company's defined benefit pension plans and the
accrued pension expense amounts recognized in the Company's consolidated
financial statements, within other noncurrent liabilities, as of the last day
of February 1994 and 1995 are as follows (in thousands):
 
<TABLE>
<CAPTION>
                                       LAST DAY OF             LAST DAY OF
                                      FEBRUARY 1994           FEBRUARY 1995
                                 ----------------------- -----------------------
                                 PLANS WITH  PLANS WITH  PLANS WITH  PLANS WITH
                                  ASSETS IN  ACCUMULATED  ASSETS IN  ACCUMULATED
                                  EXCESS OF  BENEFITS IN  EXCESS OF  BENEFITS IN
                                 ACCUMULATED  EXCESS OF  ACCUMULATED  EXCESS OF
                                  BENEFITS     ASSETS     BENEFITS     ASSETS
                                 ----------- ----------- ----------- -----------
<S>                              <C>         <C>         <C>         <C>
Actuarial present value of ben-
 efit obligations:
  Accumulated benefit obliga-
   tions:
  Vested benefits..............    $24,482      $120       $18,025     $6,000
  Nonvested benefits...........        460       --            150        286
                                   -------      ----       -------     ------
                                    24,942       120        18,175      6,286
                                   -------      ----       -------     ------
Effect of assumed future
 compensation increases........      2,892       --          2,616        --
                                   -------      ----       -------     ------
    Projected benefit
     obligations for services
     rendered to date..........     27,834       120        20,791      6,286
Plan assets at fair value......     25,257        57        18,489      5,636
                                   -------      ----       -------     ------
    Projected benefit
     obligations in excess of
     (less than) plan assets...      2,577        63         2,302        650
Unrecognized prior service
 cost..........................       (335)       (3)         (153)       (50)
Unrecognized net gain (loss)
 from past experience different
 from that assumed and effects
 of changes in assumptions.....      2,132       (55)        1,915        212
                                   -------      ----       -------     ------
    Accrued pension liability..    $ 4,374      $  5       $ 4,064     $  812
                                   =======      ====       =======     ======
</TABLE>
 
  Net periodic pension expense for the years ended the last day of February
1993, 1994 and 1995 includes the following components (in thousands):
 
<TABLE>
<CAPTION>
                                                      LAST DAY OF FEBRUARY
                                                     -------------------------
                                                      1993     1994     1995
                                                     -------  -------  -------
<S>                                                  <C>      <C>      <C>
Service cost--benefits earned during the period..... $ 1,005  $ 1,013  $ 1,107
Interest cost on projected benefit obligation.......   1,984    2,094    2,121
Actual return on plan assets........................  (2,097)  (2,202)  (2,554)
Net amortization and deferral.......................    (214)    (233)    (143)
                                                     -------  -------  -------
  Net periodic pension expense...................... $   678  $   672  $   531
                                                     =======  =======  =======
</TABLE>
 
  Actuarial assumptions used for determining pension expenses were:
 
<TABLE>
<CAPTION>
                                                      LAST DAY OF FEBRUARY
                                                      -------------------------
                                                       1993     1994     1995
                                                      ------   -------  -------
<S>                                                   <C>      <C>      <C>
Discount rate for interest cost......................    9.0%      8.0%     8.5%
Rate of increase in future compensation levels.......    5.0       4.0      4.0
Expected long-term rate of return on plan assets.....    9.5      10.5     10.5
</TABLE>
 
 
                                      F-13
<PAGE>
 
                             AMERICOLD CORPORATION
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
  Plan assets are assigned to several investment management companies and are
invested in various equity and fixed fund investments in accordance with the
Company's investment policy.
 
 (b) Employee Stock Ownership Plan
 
  The Company established an employee stock ownership plan, effective March 1,
1987, which is intended to provide qualifying employees an equity interest in
the Company, as well as potential retirement benefits. The trust established
under the plan is designed to invest primarily in the Company's stock.
Contributions by the Company, in the form of common or preferred stock of the
Company, or cash, or a combination thereof, may be made to the trustee on
behalf of eligible participants for each plan year as determined by the
Company's Board of Directors. Participating employees with vested benefits,
upon retirement or termination, have the option of retaining the stock or
selling it back to the Company at its fair market value.
 
 (c) Postretirement Benefits Other Than Pensions
 
  In addition to providing retirement benefits, the Company provides certain
health care and life insurance benefits for retired employees. These benefits
are provided to substantially all employees other than certain union employees
who have elected not to participate. Prior to 1994, the Company recognized the
cost of providing retirement health benefits and life insurance benefits as the
claims or premiums were incurred.
 
  Effective March 1, 1993, the Company adopted Financial Accounting Standards
Board Statement of Financial Accounting No. 106 (Statement 106), which required
that the expected cost of providing such benefits be accrued over the years
that the employee renders service, in a manner similar to the accounting for
pension benefits. As permitted under Statement 106, the Company elected to
recognize this change in accounting principle on the immediate recognition
basis. The cumulative effect as of March 1, 1993 of adopting the standard
resulted in a decrease in deferred taxes of approximately $1.5 million, an
increase in accrued postretirement benefits of approximately $3.9 million, and
a one-time non-cash charge to fiscal 1994 earnings of approximately $2.4
million.
 
  The total of accumulated postretirement benefit obligation (APBO), which is
an unfunded obligation, is as follows:
 
<TABLE>
<CAPTION>
                                              MARCH 1, FEBRUARY 28, FEBRUARY 28,
                                                1993       1994         1995
                                              -------- ------------ ------------
<S>                                           <C>      <C>          <C>
Retirees.....................................  $2,538     $2,339       $2,314
Active employees.............................   1,353      1,573        1,511
                                               ------     ------       ------
  Total APBO.................................  $3,891     $3,912       $3,825
                                               ======     ======       ======
</TABLE>
 
  The components of net periodic postretirement expense for the year ended the
last day of February are as follows (in thousands):
 
<TABLE>
<CAPTION>
                                                                      1994 1995
                                                                      ---- ----
<S>                                                                   <C>  <C>
Service cost benefits earned in period............................... $ 90 $104
Interest cost on APBO................................................  329  313
Amortization of unamortized prior service cost.......................  --   (22)
                                                                      ---- ----
                                                                      $419 $395
                                                                      ==== ====
</TABLE>
 
  The discount rate used to determine the APBO and net periodic expense as of
March 1, 1993 was 9%, as of February 28, 1994 was 8.5%, and as of February 28,
1995 was 9%.
 
                                      F-14
<PAGE>
 
                             AMERICOLD CORPORATION
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
  For fiscal 1995, an 11.75% increase in the medical cost trend rate was
assumed. This rate decreases incrementally to 6% after nine years. A 1%
increase in the medical trend rate would increase the APBO by $.1 million and
increase the net periodic expense by a negligible amount.
 
(9) COMMON STOCKHOLDERS' EQUITY
 
  The Company has reserved 300,000 shares of common stock for issuance under a
stock option plan established in 1987. Under the plan, options are granted by
the compensation committee of the Board of Directors to purchase common stock
at a price not less than 85% of the fair market value on the date the option is
granted.
 
  Information with regard to the plan as of the last day of February 1995
follows:
 
<TABLE>
<CAPTION>
NUMBER OF SHARES                                PRICE  EXERCISABLE    EXPIRES
----------------                                ------ ----------- -------------
<S>                                             <C>    <C>         <C>
93,795......................................... $10.00   93,795         May 1998
100,000........................................  18.95   80,000        June 2000
30,000.........................................  21.88    6,000         May 2003
30,000.........................................  20.40    6,000    December 2003
</TABLE>
 
  No options had been exercised as of the last day of February 1995.
 
  The Company had reserved 500,000 shares of common stock for issuance under a
Stock Incentive Plan effective March 1, 1991. Under the terms of the plan,
officers and key management employees can receive either common stock or cash
in specified amounts depending upon the financial performance of the Company
measured over a four-year period ending February 28, 1995. As of the last day
of February 1995, no shares had been issued. Since inception of the plan, the
Board has approved a total award of approximately 106,000 shares. Total expense
accrued under this plan was approximately $1 million with no expense accrued
for each of the years ended the last day of February 1993 and 1994. The Board
suspended the plan effective February 28, 1994, and the Company issued shares
previously awarded and paid cash for the specified amounts in March 1995.
 
(10) PREFERRED STOCK
 
  The Company contributes shares of its Series A, variable rate, cumulative
preferred stock to the Americold Employee Stock Ownership Plan (ESOP). The
preferred stock is redeemable by participants of the plan (note 8). As of the
last day of February 1994 and 1995, dividends not declared on the Company's
cumulative preferred stock total approximately $381 and $496, respectively.
 
(11) INCOME TAXES
 
  Prior to 1994, the Company provided for income taxes under APB 11. Effective
March 1, 1993, the Company adopted Financial Accounting Standards Board
Statement of Financial Accounting Standards No. 109 (Statement 109) which
required a change in the method of providing for income taxes. As permitted
under Statement 109, the Company elected to recognize this change in accounting
principle on the immediate recognition basis. The cumulative effects as of
March 1, 1993 of adopting Statement 109 were an increase in net fixed assets of
approximately $31.2 million (the amount of a previous write-down of assets
under APB No. 16 as a result of the purchase of the Company in December 1986,
net of subsequent depreciation), an increase in deferred income taxes of $93
million, and a one-time, non-cash charge of approximately $61.8 million in
fiscal 1994. Application of Statement 109 has reduced earnings before
cumulative effect of accounting principle change by approximately $1.7 million
and $2.0 million as a result of increased depreciation for the years ended the
last day of February 1994 and 1995, respectively.
 
                                      F-15
<PAGE>
 
                             AMERICOLD CORPORATION
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
  The provision (benefit) for income taxes consists of the following (in
thousands):
 
<TABLE>
<CAPTION>
                                                          1993    1994     1995
                                                         ------  -------  ------
<S>                                                      <C>     <C>      <C>
Federal:
  Current............................................... $  275  $   500  $2,867
  Deferred..............................................  1,649   (1,557)  1,494
                                                         ------  -------  ------
                                                          1,924   (1,057)  4,361
                                                         ------  -------  ------
State:
  Current...............................................    647       68     820
  Deferred..............................................   (116)    (194)     46
                                                         ------  -------  ------
                                                         $2,455  $(1,183) $5,227
                                                         ======  =======  ======
</TABLE>
 
  Following is a reconciliation of the difference between income taxes computed
at the federal statutory rate and the provision for income taxes (in
thousands):
 
<TABLE>
<CAPTION>
                                                        1993     1994     1995
                                                       -------  -------  ------
<S>                                                    <C>      <C>      <C>
Computed income tax expense (benefit) at federal
 statutory rate......................................  $(1,936) $(4,278) $3,777
State and local income taxes, net of federal income
 tax benefits........................................      351     (418)    563
Adjustment to deferred tax assets and liabilities for
 changes in enacted rates............................      --     2,627     --
Amortization of cost in excess of net assets ac-
 quired..............................................      861      886     887
Financial statement depreciation not deductible for
 income tax purposes.................................    3,429      --      --
Other, net...........................................     (250)     --      --
                                                       -------  -------  ------
  Provision (benefit) for income taxes...............  $ 2,455  $(1,183) $5,227
                                                       =======  =======  ======
</TABLE>
 
  Deferred income taxes for 1994 and 1995 reflect the impact of "temporary
differences" between amounts of assets and liabilities for financial reporting
purposes and such amounts as measured by tax laws. These temporary differences
are determined in accordance with Statement 109 and are more inclusive in
nature than "timing differences" as determined under previously applicable
accounting principles.
 
                                      F-16
<PAGE>
 
                             AMERICOLD CORPORATION
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
  Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the related amounts used for income tax purposes. Significant
components of the Company's deferred tax liabilities and assets as of February
28, 1994 and 1995 are as follows (in thousands):
 
<TABLE>
<CAPTION>
                                                            1994       1995
                                                          ---------  ---------
<S>                                                       <C>        <C>
Deferred tax liabilities:
  Property, plant and equipment, due to differences in
   depreciation and prior accounting treatment........... $(113,372) $(113,457)
  Other, net.............................................    (1,481)      (400)
                                                          ---------  ---------
    Total deferred tax liabilities.......................  (114,853)  (113,857)
                                                          ---------  ---------
Deferred tax assets:
  Receivables, due to allowance for doubtful accounts....       388        123
  Employee compensation and other benefits...............     2,382      1,742
  Capital leases, net....................................     2,019      1,936
  Postretirement benefits other than pensions, due to ac-
   crual for financial reporting purposes................     1,535      1,500
  Net operating loss carryforwards.......................     3,585        --
  Alternative minimum tax credit carryforwards...........     1,289      3,122
  Other, net.............................................       417        656
                                                          ---------  ---------
    Total deferred tax assets............................    11,615      9,079
                                                          ---------  ---------
    Net deferred tax liability before valuation allow-
     ance................................................  (103,238)  (104,778)
Deferred tax asset valuation allowance...................    (1,320)    (1,320)
                                                          ---------  ---------
    Net deferred tax liability........................... $(104,558) $(106,098)
                                                          =========  =========
</TABLE>
 
  The valuation allowance for deferred tax assets as of March 1, 1993 was
approximately $1.3 million. The valuation allowance is required to reduce the
amount of deferred tax assets to an amount which will more likely than not be
realized.
 
  The Omnibus Budget Reconciliation Act of 1993 resulted in a federal tax rate
increase from 34% to 35% effective January 1, 1993. The tax rate increase
resulted in additional income tax expense for the Company of $2.6 million
during the year ended the last day of February 1994.
 
  At February 28, 1995, the Company has an alternative minimum tax credit
carryforward of approximately $3.1 million available to offset future regular
taxes in excess of future alternative minimum taxes.
 
(12) EXTRAORDINARY ITEM
 
  In conjunction with the fiscal year 1994 retirement of the $150 million of
first mortgage bonds as discussed in Note 7, unamortized issuance costs of
approximately $3.0 million were written off, resulting in an extraordinary
loss, net of taxes, of approximately $1.8 million.
 
(13) DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS, CASH, TRADE
RECEIVABLES, OTHER RECEIVABLES, ACCOUNTS PAYABLE, AND ACCRUED ESPENSES
 
  The carrying amount approximates fair value because of the short maturity of
these instruments.
 
                                      F-17
<PAGE>
 
                             AMERICOLD CORPORATION
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
   
 Long-Term Debt     
 
  The fair values of each of the Company's long-term debt instruments are based
on (a) the amount of future cash flows associated with each instrument
discounted using the Company's current borrowing rate for similar debt
instruments of comparable maturity or (b) in the case of the first mortgage
bonds--Series B and senior subordinated debentures, market price.
 
<TABLE>
<CAPTION>
                                            AS OF LAST DAY OF FEBRUARY 1995
                                            -----------------------------------
                                                               ESTIMATED FAIR
                                              CARRYING             MARKET
                                               AMOUNT              VALUE
                                            ---------------- ------------------
<S>                                         <C>              <C>
Senior subordinated debentures............. $        112,581    $        88,550
First mortgage bonds--Series A.............          150,000            150,000
First mortgage bonds--Series B.............          176,250            160,388
Mortgage notes payable.....................           27,941             27,941
</TABLE>
   
 Limitations     
 
  Fair value estimates are made at a specific point in time, based on relevant
market information and information about the financial instrument. These
estimates are subjective in nature and involve uncertainties and matters of
significant judgment and therefore cannot be determined with precision. Changes
in assumptions could significantly affect the estimates.
 
(14) GAIN ON INSURANCE SETTLEMENT
 
  Gain on insurance settlement of approximately $17 million relates to the
Company's settlement of its first party claims with its insurance carriers for
business interruption, property damage and out-of-pocket expenses with respect
to the December 1991 fire at the Company's Kansas City, Kansas warehouse
facility.
 
  No previous income recognition was determinable until the Company had settled
all of the lawsuits and claims related to the fire. The settlement amounts have
been used to reduce other receivables recorded as of the last day of February
1994 by $5.7 million.
 
(15) CASH AND CASH EQUIVALENTS
 
  As of the last day of February 1995, the Company had made a proposal to the
Bond Trustee under the indenture related to its First Mortgage Bonds to
substitute approximately $4.8 million in cash as collateral for the property
lost in the Kansas City, Kansas warehouse facility as a result of the fire. On
June 30, 1995, the Company transferred the funds to the Bond Trustee.
 
(16) SUBSEQUENT EVENTS
 
  On May 9, 1995, the Company filed a prepackaged plan of reorganization (the
"Plan") under Chapter 11 of the United States Bankruptcy Code in the United
States Bankruptcy Court for the District of Oregon (the "Court"). The principal
purpose of the Plan was to reduce the Company's short-term cash requirements
with respect to payments due on its subordinated indebtedness and to adjust
certain restrictive financial covenants and certain other provisions contained
in the Amended and Restated Investment Agreement, dated March 2, 1993, between
the Company and Metropolitan Life Insurance Company ("MetLife"). On the filing
date, the Plan had been approved by both of the classes of debtholders entitled
to vote on the Plan.
 
                                      F-18
<PAGE>
 
                             AMERICOLD CORPORATION
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
  On June 19, 1995, the Court approved the Company's Disclosure Statement dated
April 14, 1995 and the Company's solicitation of votes to accept or reject the
Plan, and confirmed the Plan. On June 30, 1995, the Plan became effective,
pursuant to which:
 
    (i) each holder of the Company's 11% Senior Subordinated Debentures due
  1997 was entitled to receive a corresponding amount of new 15% Senior
  Subordinated Debentures due 2007, and an amount in cash equal to the
  accrued but unpaid interest on the old Senior Subordinated Debentures
  through June 29, 1995; and
 
    (ii) the Company repurchased on June 30, 1995, $10.0 million in principal
  amount of its 11.45% Series A First Mortgage Bonds due 2002 at par and paid
  an agreement modification fee of $2.25 million to MetLife in conjunction
  with amending the Amended and Restated Investment Agreement, dated March 2,
  1993, between the Company and MetLife.
   
  The Company also has rejected certain lease agreements relating to four
warehouse facilities. The Company does not believe that the resolution of these
rejections will have a material effect upon the Company's financial statements.
    
  In addition, the Company amended on June 30, 1995, the existing credit
agreement with its primary bank, which provides an aggregate availability of
$27.5 million, to be used for any combination of letters of credit (not to
exceed $10.0 million) and revolving cash borrowings, subject to borrowing base
limitations. The new credit agreement, which terminates on February 28, 1999
unless otherwise extended, is secured by the Company's trade receivables and,
at the Company's option, mortgages on certain of the Company's warehouse
properties.
 
                                      F-19
<PAGE>
 
                             AMERICOLD CORPORATION
 
                          CONSOLIDATED BALANCE SHEETS
                  LAST DAY OF FEBRUARY 1995 AND NOVEMBER 1995
                       (IN THOUSANDS, EXCEPT SHARE DATA)
 
<TABLE>
<CAPTION>
                                                      LAST DAY OF   LAST DAY OF
                                                     FEBRUARY 1995 NOVEMBER 1995
                                                     ------------- -------------
                                                                    (UNAUDITED)
<S>                                                  <C>           <C>
                      ASSETS
Current assets:
  Cash and cash equivalents (note 6)...............    $  33,163     $   7,971
  Trade receivables, net...........................       20,510        30,048
  Other receivables, net...........................        2,105         5,493
  Prepaid expenses.................................        5,240         2,868
  Other current assets.............................          974           906
                                                       ---------     ---------
    Total current assets...........................       61,992        47,286
Property, plant and equipment, less accumulated de-
 preciation of $156,806 and $169,315, respective-
 ly................................................      367,248       382,414
Cost in excess of net assets acquired, less accumu-
 lated amortization of $19,765 and $21,511, respec-
 tively............................................       80,028        77,882
Other noncurrent assets............................       35,327        15,961
                                                       ---------     ---------
    Total assets...................................    $ 544,595     $ 523,543
                                                       =========     =========
  LIABILITIES, PREFERRED STOCK AND COMMON STOCKHOLDERS' DEFICIT
Current liabilities:
  Accounts payable.................................    $   6,741     $  15,808
  Accrued interest.................................       17,683        13,693
  Accrued expenses.................................       11,345         8,544
  Deferred revenue.................................        5,914         6,297
  Current maturities of long-term debt (note 2)....       31,315         2,702
  Other current liabilities........................        3,912         1,319
                                                       ---------     ---------
    Total current liabilities......................       76,910        48,363
Long-term debt, less current maturities (note 2)...      442,912       461,791
Deferred income taxes..............................      106,098       102,401
Other noncurrent liabilities.......................       10,633        10,742
                                                       ---------     ---------
    Total liabilities..............................      636,553       623,297
                                                       ---------     ---------
Preferred stock, $100 par value; authorized
 1,000,000 shares; issued and outstanding 52,936
 shares (note 5)...................................        5,789         6,325
                                                       ---------     ---------
Common stockholders' deficit (note 3):
  Common stock, $.01 par value; authorized
   10,000,000 shares; issued and outstanding
   4,860,934 shares................................           49            49
  Additional paid-in capital.......................       49,022        49,022
  Retained deficit.................................     (146,775)     (155,107)
  Equity adjustment to recognize minimum pension
   liability.......................................          (43)          (43)
                                                       ---------     ---------
    Total common stockholders' deficit.............      (97,747)     (106,079)
                                                       ---------     ---------
    Total liabilities, preferred stock and common
     stockholders' deficit.........................    $ 544,595     $ 523,543
                                                       =========     =========
</TABLE>
 
          See accompanying notes to consolidated financial statements.
 
                                      F-20
<PAGE>
 
                             AMERICOLD CORPORATION
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
         THREE AND NINE MONTHS ENDED LAST DAY OF NOVEMBER 1994 AND 1995
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
 
<TABLE>
<CAPTION>
                              THREE         THREE         NINE          NINE
                          MONTHS ENDED  MONTHS ENDED  MONTHS ENDED  MONTHS ENDED
                           LAST DAY OF   LAST DAY OF   LAST DAY OF   LAST DAY OF
                          NOVEMBER 1994 NOVEMBER 1995 NOVEMBER 1994 NOVEMBER 1995
                          ------------- ------------- ------------- -------------
                           (UNAUDITED)   (UNAUDITED)   (UNAUDITED)   (UNAUDITED)
<S>                       <C>           <C>           <C>           <C>
Net sales...............    $ 60,150      $ 86,852      $162,214      $199,897
                            --------      --------      --------      --------
Operating expenses:
  Cost of sales.........      37,355        62,206       104,188       135,903
  Amortization of cost
   in excess of net
   assets acquired......         633           626         1,902         2,146
  Selling and adminis-
   trative expenses.....       6,467         7,082        19,500        21,154
                            --------      --------      --------      --------
    Total operating ex-
     penses.............      44,455        69,914       125,590       159,203
                            --------      --------      --------      --------
Gross operating margin..      15,695        16,938        36,624        40,694
                            --------      --------      --------      --------
Other income (expense):
  Interest expense......     (13,760)      (14,009)      (41,318)      (42,135)
  Gain on insurance set-
   tlement (note 8).....      16,953           --         16,953           --
  Reorganization ex-
   penses (note 2)......         --           (404)          --         (6,704)
  Other, net............         248          (171)          720          (347)
                            --------      --------      --------      --------
    Total other income
     (expense)..........       3,441       (14,584)      (23,645)      (49,186)
                            --------      --------      --------      --------
Income (loss) before
 income taxes and
 extraordinary item.....      19,136         2,354        12,979        (8,492)
(Provision) benefit for
 income taxes (note 4)..      (7,731)       (1,169)       (5,754)        2,489
                            --------      --------      --------      --------
Net income (loss) before
 extraordinary item.....      11,405         1,185         7,225        (6,003)
Extraordinary item, net
 of income tax benefit
 of $1,157 (note 7).....         --            --            --         (1,793)
                            --------      --------      --------      --------
Net income (loss).......    $ 11,405      $  1,185      $  7,225      $ (7,796)
                            ========      ========      ========      ========
Income (loss) per common
 share (note 5)
  Income (loss) before
   extraordinary item...    $   2.31      $   0.21      $   1.38      $  (1.34)
  Extraordinary item....         --            --            --          (0.37)
                            --------      --------      --------      --------
Net income (loss) per
 common share...........    $   2.31      $   0.21      $   1.38      $  (1.71)
                            ========      ========      ========      ========
Weighted average number
 of shares outstanding..       4,864         4,861         4,864         4,861
                            ========      ========      ========      ========
</TABLE>
 
          See accompanying notes to consolidated financial statements.
 
                                      F-21
<PAGE>
 
                             AMERICOLD CORPORATION
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
              NINE MONTHS ENDED LAST DAY OF NOVEMBER 1994 AND 1995
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                     NINE MONTHS   NINE MONTHS
                                                     ENDED LAST    ENDED LAST
                                                       DAY OF        DAY OF
                                                    NOVEMBER 1994 NOVEMBER 1995
                                                    ------------- -------------
                                                     (UNAUDITED)   (UNAUDITED)
<S>                                                 <C>           <C>
Cash flows from operating activities:
 Net income (loss).................................   $  7,225      $ (7,796)
 Adjustments to reconcile net income (loss) to net
  cash provided (used) by operating activities:
  Depreciation.....................................     15,154        14,505
  Amortization and other noncash expenses..........      3,874         3,915
  Changes in assets and liabilities................     (7,519)      (10,743)
  Provision for deferred taxes.....................      2,634        (3,697)
  Gain on insurance settlement.....................    (16,953)          --
  Write-off of unamortized issuance costs..........        --            962
  Write-off of unamortized original issue dis-
   count...........................................        --          1,988
                                                      --------      --------
    Net cash provided (used) by operating activi-
     ties..........................................      4,415          (866)
                                                      --------      --------
Cash flows from investing activities:
 Net expenditures for property, plant and equip-
  ment.............................................    (13,213)      (29,300)
 Proceeds from insurance policies and other items,
  net..............................................     24,590         1,815
                                                      --------      --------
    Net cash provided (used) by investing activi-
     ties..........................................     11,377       (27,485)
                                                      --------      --------
Cash flows from financing activities:
 Principal payments under capitalized lease and
  other debt obligations...........................     (1,577)       (2,156)
 Retirement of mortgage bonds......................        --        (10,000)
 Release of escrowed funds.........................      2,957        15,315
                                                      --------      --------
    Net cash provided by financing activities......      1,380         3,159
                                                      --------      --------
    Net increase (decrease) in cash and cash equiv-
     alents........................................     17,172       (25,192)
Cash and cash equivalents at beginning of period...      3,892        33,163
                                                      --------      --------
Cash and cash equivalents at end of period.........   $ 21,064      $  7,971
                                                      ========      ========
Supplemental disclosure of cash flow information:
 Cash paid year-to-date for interest, net of
  amounts capitalized..............................   $ 44,196      $ 46,125
                                                      ========      ========
Capital lease obligations incurred to lease new
 equipment.........................................   $    671      $    343
                                                      ========      ========
Cash paid during the year for income taxes.........   $     28      $    395
                                                      ========      ========
Property sale proceeds placed in escrow............   $    463      $    --
                                                      ========      ========
</TABLE>
 
          See accompanying notes to consolidated financial statements.
 
                                      F-22
<PAGE>
 
                             AMERICOLD CORPORATION
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
1. PRINCIPLES OF CONSOLIDATION
 
  The consolidated balance sheet as of the last day of November 1995; the
related consolidated statements of operations for the three and nine months
ended the last day of November 1994 and November 1995; and the related
consolidated statements of cash flows for the nine months ended the last day of
November 1994 and November 1995 are unaudited. In the opinion of management,
all adjustments necessary for a fair presentation of such financial statements
have been included. Such adjustments consisted of normal recurring items.
Interim results are not necessarily indicative of results for a full year. The
financial information presented herein should be read in conjunction with the
financial statements included in the registrant's Annual Report on Form 10-K
for the year ended the last day of February 1995.
 
2. PLAN OF REORGANIZATION UNDER CHAPTER 11
 
  On May 9, 1995, the Company filed a prepackaged plan of reorganization (the
"Plan") under Chapter 11 of the United States Bankruptcy Code in the United
States Bankruptcy Court for the District of Oregon (the "Court"). The principal
purpose of the Plan was to reduce the Company's short-term cash requirements
with respect to payments due on its subordinated indebtedness and to adjust
certain restrictive financial covenants and certain other provisions contained
in the Amended and Restated Investment Agreement, dated March 2, 1993, between
the Company and Metropolitan Life Insurance Company ("MetLife"). On the filing
date, the Plan had been approved by both of the classes of debtholders entitled
to vote on the Plan.
 
  On June 19, 1995, the Court approved the Company's Disclosure Statement dated
April 14, 1995 and the Company's solicitation of votes to accept or reject the
Plan, and confirmed the Plan. On June 30, 1995, the Plan became effective,
pursuant to which:
 
    (i) each holder of the Company's 11% Senior Subordinated Debentures due
  1997 was entitled to receive a corresponding amount of new 15% Senior
  Subordinated Debentures due 2007, and an amount in cash equal to the
  accrued but unpaid interest on the old Senior Subordinated Debentures
  through June 29, 1995; and
 
    (ii) the Company repurchased on June 30, 1995, $10.0 million of its
  11.45% Series A First Mortgage Bonds due 2002 at par and paid an agreement
  modification fee of $2.25 million to MetLife in conjunction with amending
  the Amended and Restated Investment Agreement, dated March 2, 1993, between
  the Company and MetLife.
 
  In addition, the Company has:
 
    (a) Amended on June 30, 1995, the existing credit agreement with its
  primary bank, which provides an aggregate availability of $27.5 million, to
  be used for any combination of letters of credit (up to $10.0 million) and
  revolving cash borrowings, subject to borrowing base limitations. The new
  credit agreement is secured by the Company's trade receivables and, at the
  Company's option, mortgages on certain of the Company's warehouse
  properties.
 
    (b) Rejected certain lease agreements relating to four warehouse
  facilities at Watsonville, Oakland and San Francisco, California; and
  Chicago, Illinois.
 
  In November 1990, the American Institute of Certified Public Accountants
issued Statement of Position 90-7, "Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code" ("SOP 90-7"). Under SOP 90-7, the
financial statements for periods including and subsequent to filing a Chapter
11 petition are structured to distinguish transactions and events that are
directly associated with the reorganization from the ongoing operations of the
Company. Since the Company was in Chapter 11 proceedings for less than two
months, and since the Plan did not differentiate between prepetition and post-
petition liabilities and did not include any forgiveness of liabilities, the
Company has elected not to follow the presentation proposed by
 
                                      F-23
<PAGE>
 
                             AMERICOLD CORPORATION
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
   
SOP 90-7. The Company has expensed all professional fees and similar types of
expenditures, including the $2.25 million agreement modification fee paid to
MetLife, incurred through the last day of November 1995 directly relating to
the Chapter 11 proceedings as "reorganization expenses." The Company also has
not recorded the effects of any possible damage claims as a result of the
rejection of certain lease agreements in the financial statements for the first
nine months of fiscal 1996.     
 
3. COMMON STOCKHOLDERS' DEFICIT
 
  The Company has reserved 300,000 shares of common stock for issuance under a
stock option plan established in 1987. Under the plan, options are granted by
the compensation committee of the Board of Directors to purchase common stock
at a price not less than 85% of the fair market value on the date the option is
granted.
 
  Information with regard to the plan as of the last day of November 1995
follows:
 
<TABLE>
<CAPTION>
NUMBER OF SHARES         EXERCISE             NUMBER OF SHARES              EXPIRATION
SUBJECT TO OPTION         PRICE                 EXERCISABLE                    DATE
-----------------        --------             ----------------             -------------
<S>                      <C>                  <C>                          <C>
  89,656                  $10.00                   89,656                  May 1998
 100,000                  $18.95                  100,000                  June 2000
  30,000                  $21.88                   12,000                  May 2003
  30,000                  $20.40                    6,000                  December 2003
</TABLE>
 
4. PROVISION FOR INCOME TAXES
 
  The provision for income taxes was computed using a tax rate of 39.2%. The
tax rate was applied to loss before income taxes and extraordinary item, after
adjusting for amortization of cost in excess of net assets acquired.
 
5. LOSS PER COMMON SHARE
 
  Loss per common share is computed by dividing net loss, less preferred
dividend requirements, by the weighted average number of common shares
outstanding. See Exhibit 11, Statement Re Computation of Per Share Earnings.
 
6. CASH AND CASH EQUIVALENTS
 
  Cash and cash equivalents includes highly liquid instruments, with original
maturities of three months or less when purchased. There were cash equivalents
totaling approximately $25.2 million and $3.0 million as of the last day of
February 1995 and November 1995.
 
7. EXTRAORDINARY ITEM
 
  In conjunction with the exchange of the senior subordinated debentures and
the repurchase of the $10.0 million of first mortgage bonds, as discussed in
note 2, unamortized original issue discount of approximately $2.0 million and
unamortized issuance costs of approximately $1.0 million were written off,
resulting in an extraordinary loss, net of taxes, of approximately $1.8
million.
 
8. GAIN ON INSURANCE SETTLEMENT
 
  Gain on insurance settlement of approximately $17.0 million relates to the
Company's settlement of its first party claims with its insurance carriers for
business interruption, property damage and out-of-pocket expenses with respect
to the December 1991 fire at the Company's Kansas City, Kansas warehouse
facility.
 
                                      F-24
<PAGE>
 
                                    PART II

                    INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13.  Other Expenses of Issuance and Distribution.

          All expenses in connection with the issuance and distribution of the
Notes being registered will be paid by Americold Corporation (the "Company").
These expenses are estimated as follows:

<TABLE> 
          <S>                                          <C> 
          SEC Registration Fee.....................    $    41,380
          NASD Filing Fee..........................         12,500
          Accounting Fees and Expenses*............     __________
          Legal Fees and Expenses*.................     __________
          Blue Sky Legal Fees and Expenses*........     __________
          Transfer Agent and Registrar Fees*.......     __________
          Printing and Engraving*..................     __________
          Miscellaneous*...........................     __________

               Total...............................    $
                                                        ==========
</TABLE> 

-------------------------
*    Estimated

ITEM 14.  Indemnification of Directors and Officers.

          The Oregon Business Corporation Act (the "Act") authorizes the
indemnification of an officer or director, made party to a proceeding because
the officer or director is or was an officer or director, against liability
(including amounts paid in settlement) incurred in the proceeding and against
expenses with respect to the proceeding (including attorney's fees) if:  (a) the
conduct of the officer or director was in good faith, (b) the officer or
director reasonably believed that his conduct was in the best interests of the
corporation or at least not opposed to its best interests, (c) in the case of a
criminal proceeding, the officer or director had no reasonable cause to believe
his conduct was unlawful, (d) in the case of any proceeding by or in the right
of the corporation, unless a court otherwise determines, if such officer or
director shall not have been adjudged liable, and (e) in connection with any
other proceeding charging improper personal benefit to the director or officer,
unless a court otherwise determines, in which the director or officer was not
adjudged liable on the basis that personal benefit was improperly received by
the director or officer.  The Company's Articles of Incorporation and Bylaws
allow the Company to indemnify officers and directors to the fullest extent
permissible by law.

                                     II-1
<PAGE>
 
          The Act further provides that the Articles of Incorporation of a
corporation may provide that no director shall be personally liable to a
corporation or its shareholders for monetary damages for conduct as a director,
except that such provision does not eliminate the liability of a director (i)
for any breach of the director's duty of loyalty to the corporation or its
shareholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of the law, (iii) for any unlawful
distribution as defined under the Act, or (iv) for any transaction from which
the director derived an improper personal benefit.  The Company's Articles of
Incorporation provide that, to the fullest extent permissible by law, no
director shall be personally liable to the Company or its shareholders for money
damages.

          The Company has entered into indemnification agreements with each
director and certain officers which indemnify them to the full extent authorized
or permitted by the Act.

          Reference is made to Section ___ of the Underwriting Agreement to be
filed as Exhibit (1) hereto, which provides for indemnification of the
registrant against certain liabilities, including certain liabilities under the
Securities Act, in certain circumstances by the Underwriters.

          In addition, the Company has obtained directors' and officers'
liability insurance which insures its directors and officers, and directors and
officers of its subsidiary, against certain liabilities, excluding certain
liabilities under Federal and state securities laws.

ITEM 15.  Recent Sales of Unregistered Securities.

          During the past three fiscal years, the Company has not engaged in the
sale of any of the Company's securities that were not registered under the
Securities Act, except that the Company has granted options to certain of its
officers to purchase an aggregate of 60,000 shares of common stock pursuant to
the Option Plan, at exercise prices between $20.40 and $21.88 per share.  None
of the options granted since December 1993 have been exercised.

ITEM 16.  Exhibits and Financial Statement Schedules.

     (a)  EXHIBITS
          --------
 
          (1)  Form of Underwriting Agreement

          (2)  Plan of Reorganization, dated April 14, 1995 (filed as Exhibit
               (2) to the Form 10-K, dated May 30, 1995, for the fiscal year
               ended

                                     II-2
<PAGE>
 
               February 28, 1995 and incorporated herein by reference)

          (3)  Articles of Incorporation and Bylaws

               (i)    Second Restated Articles of Incorporation, as amended
                      (filed as Exhibit (3)(i) to the Form 10-Q, dated July 14,
                      1995, for the quarter ended May 31, 1995, and incorporated
                      herein by reference)

               (ii)   Restated Bylaws, as amended (filed as Exhibit (3)(ii) to
                      the Form 10-K, dated May 30, 1995, for the fiscal year
                      ended February 28, 1995 and incorporated herein by
                      reference)

          (4)  Instruments defining the rights of security holders, including
               indentures

                 (i)  Articles IV, V and VI of the Second Restated Articles of
                      Incorporation as amended (see Exhibit (3)(i))

                (ii)  Articles I, II, V, VII and X of the Restated Bylaws as
                      amended (see Exhibit (3)(ii))

               (iii)  Second Restated Stockholders' Agreement dated as of
                      December 24, 1986, as amended as of April 15, 1987 and
                      June 22, 1987 (filed as Exhibit (4)(iv) to the Form 10-K,
                      dated May 27, 1988, for the fiscal year ended February 29,
                      1988 and incorporated herein by reference)

                (iv)  Third Amendment dated May 22, 1990 to Stockholders'
                      Agreement dated as of December 24, 1986, as amended as of
                      June 22, 1987 (filed as Exhibit (4) to the Form 10-Q dated
                      July 12, 1990, for the quarter ended May 31, 1990 and
                      incorporated herein by reference)

                 (v)  Amended and Restated Indenture dated March 9, 1993,
                      relating to the First Mortgage Bonds (filed as Exhibit
                      (4)(vi) to the Registration Statement on Form S-1
                      (Registration No. 33-53584) filed with the Commission on
                      March 2, 1993 and incorporated herein by reference)

                (vi)  Stock Pledge Agreement dated as of February 28, 1989,
                      between Registrant and The Connecticut National Bank
                      (filed as Exhibit

                                     II-3
<PAGE>
 
                      (19)(iii) to the Form 10-Q, dated October 14, 1992, for
                      the quarter ended August 31, 1992 and incorporated herein
                      by reference)

               (vii)  Stock Pledge Agreement dated as of February 28, 1989
                      between Registrant and United States National Bank of
                      Oregon, acting as agent pursuant to Article IX of the Bank
                      Credit Agreement, as amended, dated as of April 30, 1987
                      (filed as Exhibit (19)(iv) to the Form 10-Q, dated October
                      14, 1992, for the quarter ended August 31, 1992 and
                      incorporated herein by reference)

              (viii)  Form of Amended and Restated Security Agreement relating
                      to the First Mortgage Bonds (filed as Exhibit (4)(xiv) to
                      the Registration Statement on Form S-1 (Registration No.
                      33-53584) filed with the Commission on March 2, 1993 and
                      incorporated herein by reference)

                (ix)  Form of Series A Bond (included as part of Exhibit (4)(v)

                 (x)  Form of Series B Bond (included as part of Exhibit (4)(v))

                (xi)  Form of Amended and Restated Cash Collateral Pledge
                      Agreement relating to the First Mortgage Bonds (filed as
                      Exhibit (4)(xix) to the Registration Statement on Form S-1
                      (Registration No. 33-53584) filed with the Commission on
                      March 2, 1993 and incorporated herein by reference)

               (xii)  Form of Amended Stock Pledge Agreement relating to the
                      First Mortgage Bonds (filed as Exhibit (4)(xx) to the
                      Registration Statement on Form S-1 (Registration No. 
                      33-53584) filed with the Commission on March 2, 1993 and
                      incorporated herein by reference)

              (xiii)  Form of Amended Mortgage, Assignment of Rents and Security
                      Agreement relating to the First Mortgage Bonds (filed as
                      Exhibit (4)(xxi) to the Registration Statement on Form S-1
                      (Registration No. 33-53584) filed with the Commission on
                      March 2, 1993 and incorporated herein by reference)

                                     II-4
<PAGE>
 
               (xiv)  First Supplemental Indenture relating to the First
                      Mortgage Bonds (filed as Exhibit 4.1 to the Form 10-Q,
                      dated July 14, 1995 for the quarter ended May 31, 1995 and
                      incorporated herein by reference)

                (xv)  Indenture dated as of June 30, 1995, between Registrant
                      and United States Trust Company of New York, as Trustee
                      (filed as Exhibit 4.2 to the Form 10-Q, dated July 14,
                      1995 for the quarter ended May 31, 1995 and incorporated
                      herein by reference)
                       
               (xvi)  Second Amended and Restated Investment Agreement relating
                      to the First Mortgage Bonds (filed as Exhibit 4.3 to the
                      Form 10-Q, dated July 14, 1995, for the quarter ended 
                      May 31, 1995, and incorporated herein by reference)

              (xvii)  Form of 15% Senior Subordinated Debentures due 2007
                      (included as part of Exhibit 4(xv)

             (xviii)  Form of Indenture relating to the __% Senior Subordinated
                      Notes due 2008, between Registrant and United States Trust
                      Company of New York, as Trustee

               (xix)  Form of ___% Senior Subordinated Notes due 2008 
                      (included as part of Exhibit 4(xviii))

          (5)  Opinion of Tonkon, Torp, Galen, Marmaduke & Booth regarding
               legality of securities being registered

          (10) Material Contracts

               (i)    Americold Corporation Key Employee Stock Option Plan, as
                      amended, effective July 12, 1988 (filed as Exhibit (4)(i)
                      to the Form 10-Q dated October 14, 1988, for the quarter
                      ended August 31, 1988 and incorporated herein by
                      reference)

               (ii)   Form of Nonstatutory Stock Option Agreement, as amended,
                      entered into between Registrant and certain employees
                      pursuant to the Americold Corporation Key Employee Stock
                      Option Plan (filed as Exhibit (4)(ii) to the Form 10-Q
                      dated October 14, 1988, for the quarter ended August 31,
                      1988 and incorporated herein by reference)

                                     II-5
<PAGE>
 
               (iii)  Second Amended and Restated Investment Agreement relating
                      to the First Mortgage Bonds (see Exhibit (4)(xvi))

                (iv)  Form of Amended and Restated Security Agreement relating
                      to the First Mortgage Bonds (see Exhibit (4)(viii))

                 (v)  Stock Pledge Agreement dated as of February 28, 1989,
                      between Registrant and The Connecticut National Bank (see
                      Exhibit (4)(vi))

                (vi)  Stock Pledge Agreement dated as of February 28, 1989,
                      between Registrant and United States National Bank of
                      Oregon, a national banking association, acting as agent
                      pursuant to Article IX of the Bank Credit Agreement, as
                      amended, dated as of April 30, 1987 (see Exhibit (4)(vii))

               (vii)  Americold Corporation Management Incentive Plan (filed as
                      Exhibit (10)(iii) to the Form 10-K, dated May 27, 1988,
                      for the fiscal year ended February 29, 1988 and
                      incorporated herein by reference)

              (viii)  Form of Indemnity Agreement entered into between the
                      Company and each of its officers and directors (filed as
                      Exhibit (4)(x) to Form 10-K dated May 29, 1992 for the
                      fiscal year ended February 29, 1992 and incorporated
                      herein by reference)

                (ix)  Second Restated Stockholders' Agreement, dated as of
                      December 24, 1986, as amended as of June 22, 1987 (see
                      Exhibit (4)(iii))

                 (x)  Third Amendment dated May 22, 1990 to Stockholders'
                      Agreement dated as of December 24, 1986, as amended as of
                      June 22, 1987 (see Exhibit (4)(iv))

                (xi)  Amended and Restated Indenture relating to the First
                      Mortgage Bonds (see Exhibit (4)(v))

               (xii)  Form of Amended and Restated Cash Collateral Pledge
                      Agreement relating to the First Mortgage Bonds (see 
                      Exhibit (4)(xi))

                                     II-6
<PAGE>
 
             (xviii)  Form of Amended Stock Pledge Agreement relating to the
                      First Mortgage Bonds (see Exhibit (4)(xii))

               (xix)  Indemnification Agreement dated October 31, 1991 between
                      the Company and The First Boston Corporation (included as
                      Exhibit (10)(xx) to the Registration Statement on 
                      Form S-2 (Registration No. 33-41963) filed with the
                      Commission on July 31, 1991 and incorporated herein by
                      reference)

                (xx)  Master Lease Agreement dated February 28, 1989, between
                      Registrant and Americold Services Corporation (filed as
                      Exhibit (19)(vi) to the Form 10-Q, dated October 14, 1992,
                      for the quarter ended August 31, 1992 and incorporated
                      herein by reference)

               (xxi)  Americold Transportation Systems Purchase of Joint
                      Venture Interest, effective November 1, 1991, between
                      Registrant and Superior Transportation Systems, Inc.
                      (filed as Exhibit (19)(vii) to the Form 10-Q, dated
                      October 14, 1992, for the quarter ended August 31, 1992
                      and incorporated herein by reference)

              (xxii)  Lease dated May 15, 1992, between Registrant and Oregon
                      Warehouse Partners, a Texas general partnership (lease
                      agreement for Ontario, Oregon facility) (filed as Exhibit
                      (19)(viii) to the Form 10-Q, dated October 14, 1992, for
                      the quarter ended August 31, 1992 and incorporated herein
                      by reference)

             (xxiii)  Form of First Amendment to Master Lease Agreement between
                      Registrant and Americold Services Corporation (filed as
                      Exhibit (10)(xxxi) to the Registration Statement on 
                      Form S-1 (Registration No. 33-53584) filed with the 
                      Commission on March 2, 1993 and incorporated hereby by 
                      reference)

              (xxiv)  Nonstatutory Stock Option Agreement dated May 19, 1993
                      between the Company and John P. LeNeveu (filed as Exhibit
                      (10)(i) to the Form 10-Q, dated January 13, 1994 for the
                      quarter ended November 30, 1993, and incorporated herein
                      by reference)

                                     II-7
<PAGE>
 
               (xxv)  Nonstatutory Stock Option Agreement dated December 17,
                      1993 between the Company and J. Roy Coxe (filed as 
                      Exhibit 10 (xxvii) to the Form 10-K, dated May 26, 1994
                      for the fiscal year ended February 28, 1994 and
                      incorporated herein by reference).

              (xxvi)  Second Amended and Restated Credit Agreement between the
                      Company and United States National Bank of Oregon dated
                      June 19, 1995 (filed as Exhibit 10.1 to the Form 10-Q,
                      dated July 14, 1994 for the quarter ended May 31, 1995,
                      and incorporated herein by reference)

             (xxvii)  Employment Agreement dated November 1, 1995, between the
                      Company and Ronald H. Dykehouse (filed as Exhibit 10.1 to
                      the Form 10-Q dated January 16, 1996 for the quarter ended
                      November 30, 1995 and incorporated herein by reference)

            (xxviii)  Form of Employment Agreement dated August 1, 1995,
                      between the Company and certain named executive officers,
                      and schedule thereto (filed as Exhibit 10.2 to the 
                      Form 10-Q dated January 16, 1996 for the quarter ended
                      November 30, 1995 and incorporated herein by reference)

              (xxix)  Form of Covenant Not to Compete and Consulting and Non-
                      Disclosure Agreement between the Company and certain named
                      executive officers, and schedule thereto (filed as Exhibit
                      10.3 to the Form 10-Q dated January 16, 1996 for the
                      quarter ended November 30, 1995 and incorporated herein by
                      reference)

          (11) Statement regarding computation of per share earnings
    
          (12) Ratio of Earnings to Fixed Charges Computations      

          (21) Subsidiaries of the Registrant

          (23) Consent of KPMG Peat Marwick LLP
    
          (24) Power of Attorney      

          (25) Statement of eligibility of trustee


                                     II-8
<PAGE>
 
 (b) Financial Statement Schedules

     Schedule II -- Valuation and Qualifying Accounts

                                     II-9
<PAGE>
 
ITEM 17.  Undertakings.

          Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable.  In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

          The undersigned registrant hereby undertakes that:

     (1)  For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be a part of this Registration
Statement as of the time it was declared effective.

     (2)  For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

                                     II-10
<PAGE>
 
                                  SIGNATURES
    
          Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Amendment No. 1 to the Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Portland, State of Oregon, on March 8, 1996.     
                                  AMERICOLD CORPORATION

                                     
                                  By: *
                                     ------------------------------
                                      Ronald H. Dykehouse
                                      Chairman of the Board,
                                      President and Chief
                                       Executive Officer      
    
     
          Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.

<TABLE>    
<CAPTION> 
    SIGNATURE                   CAPACITIES           DATE
    ---------                   ----------           ----
<S>                      <C>                       <C>  


*                        Chairman of the Board,    March 11, 1996
----------------------   President and Chief
Ronald H. Dykehouse      Executive Officer


/s/ Joel M. Smith        Director, Senior Vice     March 11, 1996
----------------------   President and Chief
Joel M. Smith            Financial Officer
                         (principal financial
                          officer)
</TABLE>       

                                     II-11
<PAGE>
 
<TABLE>    
<S>                      <C>                       <C>  


*                        Vice President and       March 11, 1996
-----------------------  Treasurer (principal
Lon V. Leneve             accounting officer)


*                        Director                 March 11, 1996
-----------------------
Frank Edelstein      


*                        Director                 March 11, 1996
-----------------------
William A. Marquard  


*                        Director                 March 11, 1996
-----------------------
George E. Matelich   


*                        Director                 March 11, 1996
-----------------------
James C. Pigott      


*By  /s/ Joel M. Smith
   --------------------
      Joel M. Smith
     Attorney-in-Fact      
 
</TABLE> 

                                     II-12
<PAGE>
 
                                                                  SCHEDULE II

                             AMERICOLD CORPORATION

                       Valuation and Qualifying Accounts

                          Years ended the last day of
                          February 1993, 1994 and 1995

                                 (In Thousands)

<TABLE>
<CAPTION>
                                       Additions                          
                         Balance at    charged to                   Balance   
                         beginning     costs and                    at end   
                         of period     expenses      Deductions     of period
                         ----------    ----------    ----------     ---------
<S>                      <C>           <C>           <C>            <C>         
Year ended the last day
of February 1993 -
 Allowance for doubtful
 accounts - other
 receivables               $   --        $4,100        $   --         $4,100

Year ended the last day
of February 1994 -
 Allowance for doubtful
 accounts - other
 receivables               $4,100        $   --        $   --         $4,100

Year ended the last day
of February 1995 -
 Allowance for doubtful
 accounts - other
 receivables               $             $             $              $
</TABLE> 

                                      S-1
<PAGE>
 
                             AMERICOLD CORPORATION
                                    FORM S-1

                                 EXHIBIT INDEX

<TABLE>    
<CAPTION> 
Exhibit                                                              Page
-------                                                              ----
<C>            <S>                                                   <C> 
(1)            Form of Underwriting Agreement

(4)(xviii)**   Form of Indenture

(11)**         Statement re Computation of Per Share Earnings

(12)           Ratio of Earnings to Fixed Charges Computation

(21)**         Subsidiaries of the Registrant

(23)           Consent of KPMG Peat Marwick LLP

(24)           Power of Attorney

(25)*          Statement of eligibility of trustee

</TABLE>      

-------------------------
* To be filed by amendment
    
**Previously filed