<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------------
FORM 8-KA
(Amendment No. 1 to Form 8-K Filed May 21, 1996)
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
May 6, 1996
VAN DE KAMP'S, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 33-97752 43-1721518
(State or Other Jurisdiction Commission (IRS Employer
of Incorporation) File Number Identification No.)
1000 St. Louis Union Station
St. Louis, Missouri 63103
(Address of Principal Executive Office)
(314) 241-0303
(Registrant's Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On May 6, 1996, Van de Kamp's, Inc., a Delaware corporation, ("the Company")
completed the acquisition of substantially all the assets of the Mrs. Paul's(R)
frozen food business, which was owned by Campbell Soup Company, for a purchase
price of approximately $72.9 million. The Mrs. Paul's(R) frozen food business
consists primarily of frozen breaded or battered seafood and frozen vegetable
products which are sold at retail under the Mrs. Paul's(R) trademark. The
purchase price is subject to adjustment upon completion of an audit of inventory
as of the closing of the acquisition. The acquisition was a purchase of assets
and included trademarks, intangibles, inventories and certain manufacturing
equipment (collectively, the "Mrs. Paul's Assets").
The manufacturing equipment acquired consists of the equipment (such as fryers
and freezing equipment) used by Campbell Soup Company to produce its Mrs.
Paul's(R) brand frozen products. The Company intends to install this equipment
primarily in its Erie, Pennsylvania plant and to use it for the production of
Mrs. Paul's(R) brand frozen seafood and frozen vegetables products and for the
production of certain Van de Kamp's(R) brand frozen seafood products.
In order to achieve certain objectives of Campbell Soup Company, the acquisition
was structured as a sale by Campbell Soup Company of the Mrs. Paul's Assets to
Shellfish Acquisition Company, LLC ("Shellfish") for a $72,884,545 promissory
note of Shellfish due August 22, 1996 (the "Shellfish Note") and an immediate
resale by Shellfish to the Company of the Mrs. Paul's Assets for $72,884,545 in
cash. Because Shellfish resold the Mrs. Paul's Assets to the Company for the
same price at which it acquired them from Campbell Soup Company, Shellfish
realized no profit on its resale of the Mrs. Paul's Assets to the Company.
All of the cash received by Shellfish from the Company on account of the
Company's purchase of the Mrs. Paul's Assets was transferred by Shellfish to a
grantor trust to secure the issuance of a bank letter of credit in favor of
Campbell Soup Company which, in turn, secures payment of the Shellfish Note. As
part of the transaction, all contractual rights of Shellfish under its purchase
agreement with Campbell Soup Company were assigned by Shellfish to the Company.
Shellfish did not assign its obligations under the Shellfish Note.
The Company financed the acquisition and related costs with an equity
contribution by VDK Holdings, Inc., the Company's parent, of $15 million and
with increased senior secured bank debt totaling $60 million. This bank debt was
incurred through an amendment to the Company's existing senior bank facilities
with Chemical Bank as agent for the following lenders: Chemical Bank; Banque
Paribas; Caisse Nationale de Credit Agricole; Cooperative Centrale Raiffeisen-
Boerenleenbank B.A., "Rabobank Nederland", New York Branch; Dresdner Bank AG,
New York and Grand Cayman Branches; Fleet Bank of Massachusetts, N.A.; Harris
Trust and Savings Bank; The First National Bank of Boston; Merrill Lynch Senior
Floating Rate Fund, Inc.; Prime Income Trust; and Van Kampen American Capital
Prime Rate Income Trust.
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<PAGE>
Shellfish is a Delaware limited liability company. Its members are Dartford
Partnership, L.L.C. and Mr. James B. Ardrey. The Company is a wholly-owned
subsidiary of VDK Holdings, Inc., which is a wholly-owned subsidiary of VDK
Foods LLC. Dartford Partnership, L.L.C. is a member of VDK Foods LLC and Mr.
Ardrey is a Director and Executive Vice President of the Company and a member of
Dartford Partnership, L.L.C.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired. The audited Statement of
Earnings of Mrs. Paul's Business, a Division of Campbell Soup Company, for
the nine months ended April 28, 1996 and the years ended July 30, 1995 and
July 31, 1994 and Statement of Assets to be Acquired as of April 28, 1996
and July 30, 1995, together with the report of independent accountants
thereon, are included on pages 6 through 13 herein.
(b) Pro forma Financial Information. The pro forma statement of income of Van
de Kamp's, Inc. for the year ended June 30, 1995 and the nine months ended
March 30, 1996, and the pro forma balance sheet as of March 30, 1996,
together with notes thereon, included on pages 14 through 24 herein.
(c) Exhibits. The following exhibits were filed along with the Form 8-K (the
"Original 8-K") dated May 6, 1996, as filed with the Securities and
Exchange Commission on May 21, 1996.
EXHIBIT NO. EXHIBIT DESCRIPTION
---------- -------------------
2.1 Asset Purchase and Sale Agreement, dated as of
January 17, 1996, between Shellfish
Acquisition Company, LLC and Campbell Soup
Company (the text of which and exhibits to
which are incorporated by reference to Exhibit
2.1 to Van de Kamp's, Inc.'s Form 10-Q for the
quarter ended March 30, 1996 (the "10-Q") and
a list of the contents of the schedules to
which was filed with the Original 8-K.
2.2 Asset Purchase Agreement, dated as of January
17, 1996, between Van de Kamp's, Inc. and
Shellfish Acquisition Company, LLC
(incorporated by reference to Exhibit 2.2 to
the 10-Q).
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<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
VAN DE KAMP'S, INC.
Dated: July 22, 1996 By: /s/ Timothy B. Andersen
---------------------------
Timothy B. Andersen
Chief Financial Officer and duly
authorized officer
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<PAGE>
ITEM 7(a): FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
The following financial statements of Mrs. Paul's Business, a Division of
Campbell Soup Company are included in item 7(a):
Page
------
Report of Independent Accountants 6
Financial Statements:
Statement of Earnings for the nine months ended
April 28, 1996 and for the years ended July 30, 1995 and
July 31,1994 7
Statement of Assets to be Acquired as of April 28, 1996
and July 30, 1995 8
Notes to the Financial Statements 9 - 13
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<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Directors of
Campbell Soup Company
We have audited the accompanying statements of assets to be acquired as of April
28, 1996 and July 30, 1995, and the statements of earnings for the nine months
ended April 28, 1996 and the years ended July 30, 1995 and July 31, 1994 of Mrs.
Paul's Business, a Division of Campbell Soup Company (the Business). These
statements are the responsibility of the Business' management. Our
responsibility is to express an opinion on these statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall presentation of the statements. We believe that
our audits provide a reasonable basis for our opinion.
The accompanying statements reflect the assets attributable to the Business as
described in Notes 1 and 2 and are not intended to be a complete presentation of
the financial position of the Business.
In our opinion, the statements of assets to be acquired as of April 28, 1996 and
July 30, 1995 and the statements of earnings for the nine months ended April 28,
1996 and the years ended July 30, 1995 and July 31, 1994 present fairly, in all
material respects, the assets and the results of operations of the Business as
described in Notes 1 and 2, in conformity with generally accepted accounting
principles.
Price Waterhouse LLP
San Francisco, California
June 21, 1996
- -------------------------
-6-
<PAGE>
<TABLE>
<CAPTION>
Mrs. Paul's Business
A Division of Campbell Soup Company
Statements of Earnings
(dollars in thousands)
Nine Months Year Ended
Ended ---------------------------
April 28, 1996 July 30, 1995 July 31, 1994
-------------- ------------- -------------
<S> <C> <C> <C>
Net Sales $60,235 $78,336 $92,156
Cost and expenses
Cost of products sold 31,788 43,311 54,434
Marketing and selling expenses 18,357 24,003 27,704
Administrative expenses 2,169 3,236 4,661
Research and development expenses 657 1,431 1,718
------- ------- -------
Total costs and expenses 52,971 71,981 88,517
------- ------- -------
Earnings Before Taxes 7,264 6,355 3,639
Taxes on earnings 2,760 2,415 1,383
------- ------- -------
Net Earnings $ 4,504 $ 3,940 $ 2,256
======= ======= =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
-7-
<PAGE>
Mrs. Paul's Business
A Division of Campbell Soup Company
Statements of Assets to be Acquired
(dollars in thousands)
April 28, 1996 July 30, 1995
-------------- -------------
Inventories $ 5,307 $ 6,207
Machinery and equipment, net of depreciation 6,626 7,019
Intangible assets, net of amortization 936 963
------ ------
Total assets $ 12,869 $ 14,189
====== ======
The accompanying notes are an integral part of the financial statements.
-8-
<PAGE>
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(dollars in thousands)
1. BASIS OF PRESENTATION
---------------------
On January 17, 1996, Campbell Soup Company ("Campbell") entered into an Asset
Purchase and Sale Agreement (the "Agreement") with Shellfish Acquisition
Company, LLC (the "Buyer") for the sale of certain assets of the Mrs. Paul's
Business, a Division of Campbell Soup Company (the "Business"). The Buyer
then immediately sold the Business to Van de Kamp's, Inc. The Business
processes, distributes and markets frozen fried coated seafood and specialty
vegetable products, primarily to retail consumers in the United States.
Under the terms of the Agreement, as amended on May 6, 1996 (the "Closing
Date"), Campbell sold to the Buyer certain assets exclusively used in the
Business, as defined in the Agreement, and all the capital stock of MPK
Holdings, Inc., a dormant Delaware corporation. Campbell retained the
manufacturing plants, employees and all liabilities of the Business with
respect to Campbell's operation of the Business prior to the Closing Date.
Throughout the periods covered by the Financial Statements, the Business'
operations were conducted and accounted for as part of Campbell's Frozen
Foods Group ("FFG"). These Financial Statements have been carved out from
Campbell's historical accounting records.
Under Campbell's centralized cash management system, cash requirements of the
Business were generally provided directly by Campbell, and cash generated by
the Business was generally remitted directly to Campbell. Transaction systems
(e.g., payroll, employee benefits, accounts payable) used to record and
account for cash disbursements were provided by centralized Campbell
organizations outside the defined scope of the Business. Most of these
corporate systems are not designed to track assets/liabilities and
receipts/payments on a business specific basis. Given these constraints and
the fact that only certain assets of the Business were sold, statements of
financial position and cash flows were not prepared.
The manufacturing and distribution operations of the Business are conducted
at sites where other Campbell manufacturing and distribution operations not
included in the Business are present. In addition, certain non-manufacturing
operations of the Business share facilities and space with other Campbell
operations. At these shared sites, only the assets of the Business
(principally inventories and machinery and equipment) are included in the
Statements of Assets to be Acquired.
The Statements of Earnings include all revenues and costs directly
attributable to the Business, including costs for facilities, functions and
services used by the Business at shared sites. Costs for certain functions
and services performed by centralized Campbell organizations outside the
defined scope of the Business are directly charged to the Business based on
usage, sales or the number of employees of the Business, as appropriate. The
results of operations also include allocations of 1) costs for administrative
functions and services performed on behalf of the Business by centralized
staff groups within Campbell, 2) research and development expense and 3)
Campbell's general corporate expenses and
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<PAGE>
pension and certain other postretirement benefit costs (see Note 2 for a
description of the allocation methodologies employed). Campbell maintains all
debt and notes payable on a consolidated basis to fund and manage all of its
operations. Accordingly, debt and related interest expense were not allocated
to the Business.
All of the allocations and estimates in the Statements of Earnings are based
on assumptions that Campbell management believes are reasonable under the
circumstances. However, these allocations and estimates are not necessarily
indicative of the costs and expenses that would have resulted if the Business
had been operated as a separate entity.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
(a) Income Recognition
Sales and related cost of products sold are included in income and
expense, respectively, when products are shipped to the customer.
(b) Inventories
Inventories are priced at the lower of cost or market, with cost
determined by the last-in, first-out (LIFO) method.
(c) Machinery and Equipment (M&E)
M&E is stated at historical cost. Alterations and major overhauls which
extend the lives or increase the capacity of M&E are capitalized. The
amounts for property disposals are removed from M&E and accumulated
depreciation accounts and any resultant gain or loss is included in
earnings. Ordinary repairs and maintenance are charged to operating
costs.
(d) Depreciation
Depreciation provided in costs and expenses is calculated using the
straight-line method. Buildings and M&E are depreciated over periods not
exceeding 45 years and 15 years, respectively. Accelerated methods of
depreciation are used for income tax purposes in certain jurisdictions.
(e) Intangibles
Intangible assets are amortized on a straight-line basis over periods
not exceeding 40 years.
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<PAGE>
(f) Income Taxes
The taxable income of the Business was included in the tax returns of
Campbell. As such, separate income tax returns were not prepared or filed
for the Business. The provision for income taxes included in the
accompanying Statements of Earnings has been determined based upon
statutory rates applied to pre-tax income and may not necessarily be
indicative of the Business' tax expense on a stand alone basis.
(g) Pensions
Campbell has noncontributory defined benefit plans covering substantially
all U.S. employees, including the employees of the Business. The benefits
for these plans are based primarily on employees' years of service and
employees' compensation during the last years of employment. The cost of
these plans for active employees was assigned to the Business based on
the number of employees and sales of the Business.
(h) Other Postretirement Benefits
Campbell provides certain health care and life insurance benefits
(postretirement benefits) to substantially all retired U.S. employees and
their dependents. These benefits are accounted for as they are earned by
active employees. The postretirement costs assigned to the Business are
based on the number of employees and sales of the Business.
(i) Use of Estimates
Generally accepted accounting principles require management to make
estimates and assumptions that affect assets and liabilities, contingent
assets and liabilities, and revenues and expenses. Actual results could
differ from those estimates.
3. RELATED PARTY TRANSACTIONS
--------------------------
The Statements of Earnings include significant allocations from other
Campbell organizations involving functions and services (such as finance and
accounting, MIS, research and development, legal, human resources and
purchasing) that were provided to the Business by centralized Campbell
organizations outside the defined scope of the Business. The costs of these
functions and services have been allocated to the Business using methods that
Campbell management believes are reasonable. Such allocations are not
necessarily indicative of the costs that would have been incurred if the
Business had been a separate entity. Total marketing and selling expenses
include $4,015, $5,482 and $6,966 in allocated costs for the nine months
ended April 28, 1996 and the years ended July 30, 1995 and July 31, 1994,
respectively. Administrative and research and development expenses are
composed solely of allocated general corporate and FFG expenses to the
Business.
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<PAGE>
4. TAXES ON EARNINGS
-----------------
Taxes computed at the U.S. statutory rates are summarized below:
<TABLE>
<CAPTION>
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Federal $2,542 35.0% $2,224 35.0% $1,274 35.0%
State (net of Federal tax benefit) 218 3.0% 191 3.0% 109 3.0%
------ ---- ------ ---- ------ ----
Provision for income taxes $2,760 38.0% $2,415 38.0% $1,383 38.0%
====== ==== ====== ==== ====== ====
</TABLE>
5. INVENTORIES
-----------
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Raw materials, containers
and supplies $2,337 $2,927
Finished products 3,048 2,824
----- -----
5,385 5,751
Adjustment to LIFO basis (78) 456
----- -----
$5,307 $6,207
====== ======
Campbell's application of LIFO is not focused on individual business units.
Accordingly, the results of applying LIFO are allocated to the Business.
Management believes such allocations are reasonable, but may not necessarily
reflect the cost that would have been incurred if LIFO had been applied on a
business specific basis. The impact of the LIFO method was an increase to
Cost of Products Sold of $532 and $285 in 1996 and 1995, respectively, and a
decrease to Cost of Products Sold of $545 in 1994. A "period-end" LIFO
calculation has been applied to April 28, 1996 inventory balances.
</TABLE>
6. MACHINERY AND EQUIPMENT
-----------------------
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Machinery and equipment, at cost $11,413 $11,097
Accumulated depreciation (4,787) (4,078)
------- -------
$ 6,626 $ 7,019
======= =======
</TABLE>
Depreciation provided in costs and expenses for all tangible assets used in
the Business, including those to be acquired, was $1,019 in 1996, $1,500 in
1995 and $1,637 in 1994.
7. INTANGIBLE ASSETS
-----------------
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Trademark $1,441 $1,441
Accumulated amortization (505) (478)
------- -------
$ 936 $ 963
====== =======
</TABLE>
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<PAGE>
8. COMMITMENTS AND CONTINGENCIES
-----------------------------
The Business is currently subject to various lawsuits and claims with
respect to matters such as product liabilities, governmental regulations,
and other actions arising in the normal course of business. The ultimate
liabilities resulting from the lawsuits and claims existing at the Closing
Date are the responsibility of Campbell.
9. SUBSEQUENT EVENTS
-----------------
On May 6, 1996, Campbell sold the Business to the Buyer in accordance with
the terms and conditions of the Agreement. Ancillary agreements for
transition services and product manufacturing provided to the Buyer by
Campbell were also negotiated.
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<PAGE>
ITEM 7(b): PRO FORMA FINANCIAL INFORMATION
The following Pro Forma Statement of Income for the year ended June 30, 1995
gives effect to the acquisitions of the Van de Kamp's frozen seafood business
and certain frozen dessert product lines, discussed below, and Mrs. Paul's, and
the financing and the application of the net proceeds therefrom as though the
transactions occurred as of July 1, 1994. On September 19, 1995 (commencement of
operations), Van de Kamp's, Inc. acquired the assets of the Van de Kamp's frozen
seafood business and certain frozen dessert product lines from the Pillsbury
Company and Pet Incorporated. On May 6, 1996, Van de Kamp's, Inc. acquired
substantially all the assets of the Mrs. Paul's frozen food business from
Campbell Soup Company.
The following Pro Forma Statement of Income is based on the unaudited Pro Forma
Statement of Income of the Company and the audited Statement of Earnings of
Mrs. Paul's. The Pro Forma Statement of Income for Van de Kamp's, Inc. for the
year ended June 30, 1995, shown on the next page in the first column, is
incorporated by reference to Van de Kamp's, Inc. Form S-4, filed November 14,
1995. The audited Statement of Earnings for Mrs. Paul's is for the twelve months
ended July 30, 1995.
The pro forma financial information set forth on the next page reflects pro
forma adjustments that are based upon available information and which the
Company believes are reasonable. The pro forma financial information does not
necessarily reflect the results of operations of the Company that actually would
have resulted had the transactions to which pro forma effect is given been
consummated as of the date or for the period indicated.
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<PAGE>
VAN DE KAMP'S, INC.
PRO FORMA STATEMENT OF INCOME
FOR THE YEAR ENDED JUNE 30, 1995
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ADJUSTMENTS ADJUSTED
PRO FORMA TO PRO FORMA PRO FORMA PRO FORMA
VAN DE VAN DE VAN DE ADJUSTMENTS COMPANY
KAMP'S, INC. KAMP'S, INC. KAMP'S, INC. MRS. PAUL'S TO MRS. PAUL'S PRO FORMA
------------ ------------ ------------ ----------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net sales $149,359 $ -- $149,359 $78,336 $ 7,693 (g) $235,388
Cost of goods sold 65,596 1,385 (a) 66,981 43,311 (2,322)(h,i) 107,970
-------- ------- -------- ------- ------- --------
Gross profit 83,763 (1,385) 82,378 35,025 10,015 127,418
Selling, distribution and
marketing:
Selling and distribution 11,376 -- 11,376 6,910 5,714 (j) 24,000
Trade promotions 34,530 -- 34,530 12,718 -- 47,248
Consumer marketing 8,260 -- 8,260 4,375 -- 12,635
-------- ------- -------- ------- ------- --------
Total selling, distribution
and marketing 54,166 0 54,166 24,003 5,714 83,883
Amortization of goodwill 4,819 (38)(b) 4,781 -- 2,074 (k) 6,855
-------- ------- -------- ------- ------- --------
Product profit before
corporate expenses 24,778 (1,347) 23,431 11,022 2,227 36,680
General and administrative 5,471 429 (c) 5,900 4,667 (2,967)(l,m) 7,600
-------- ------- -------- ------- ------- --------
Total operating expenses 64,456 391 64,847 28,670 4,821 98,338
-------- ------- -------- ------- ------- --------
Operating income 19,307 (1,776) 17,531 6,355 5,194 29,080
Interest expense 14,906 (116)(d) 14,790 -- 5,417 (n) 20,207
Amortization of deferred
financing expense 932 (194)(e) 738 -- 271 (n) 1,009
-------- ------- -------- ------- ------- --------
Income before income tax 3,469 (1,466) 2,003 6,355 (494) 7,864
Provision for income taxes 1,387 (587)(f) 800 2,415 (70)(o) 3,145
-------- ------- -------- ------- ------- --------
Net income (loss) $ 2,082 $ (879) $ 1,203 $ 3,940 $ (424) $ 4,719
======== ======= ======== ======= ======= ========
EBITDA (p) $ 39,921
========
</TABLE>
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<PAGE>
NOTES TO PRO FORMA STATEMENT OF INCOME
FOR THE YEAR ENDED JUNE 30, 1995
(a) Represents a change in estimate based upon the actual allocation of the
fair market value of the fixed assets of Van de Kamp's, Inc. The average
depreciable life is 30 years for buildings and 12 years for equipment.
(b) Reflects an adjustment to amortization of goodwill based on actual
goodwill and intangibles recorded in connection with the acquisition of
the Van de Kamp's businesses.
(c) Represents an adjustment to reflect the actual experience of the Company
during the first fiscal year.
(d) Represents an adjustment to reflect the actual experience of the Company
in terms of its needs under the letter of credit facility.
(e) Reflects an adjustment to refine the amortization of deferred loan
acquisition costs based on actual costs incurred.
(f) Reflects a reduction in the provision for income taxes as a result of the
pro forma decrease in income before income taxes.
(g) Represents a reclassification of distribution and selling expenses to
report sales consistently with Van de Kamp's, Inc., as further discussed
in note(j).
(h) Represents a decrease of $999 in depreciation expense as a result of lower
depreciable basis of property, plant and equipment as compared to the
prior owner's. The average depreciable life for equipment is 12 years.
(i) Includes the reversal of $1,323 of corporate allocated expenses from
Campbell Soup Company for indirect fixed plant overhead costs. This
reversal is supportable as the Company already has the plant
infrastructure to support the Mrs. Paul's business.
(j) Includes the reclassification of expense described above in note (g)
($7,693) and the elimination of a corporate allocation from Campbell Soup
Company of costs associated with the sales force, sales administration and
marketing overhead ($1,979). The reversal of these allocations is
supportable as the Company already has established sales force, sales
administration and marketing functions to support the Mrs. Paul's
business.
(k) Reflects the goodwill and intangible amortization expense as a result of
the acquisition of Mrs. Paul's. Goodwill will be amortized on a straight-
line basis over a 40 year period and other intangibles will be amortized
over periods ranging from five to 15 years.
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<PAGE>
(l) Represents the elimination of Mrs. Paul's research and developments costs
($1,431). The Company records its research and development costs in
general and administrative expense and management believes the amount
included in general and administrative expense for the period is
sufficient.
(m) Reflects the reduction in expense ($1,536) the Company will experience as
compared to the general and administrative corporate allocation from
Campbell Soup Company. The reduction is supported by the Company's
experience during its current period of ownership and personnel and
expense changes that it has implemented.
(n) Pro forma interest expense has been calculated based upon pro forma debt
levels and the applicable interest rates. Mrs. Paul's was not allocated
any interest expense from Campbell Soup Company. The pro forma interest
expense on the Revolving Facility assumes an incremental $2 million would
be outstanding during the year. Accordingly, the commitment fee required
on the outstanding Revolving Facility is reduced as the balance outstanding
is higher. The table below represents a pro forma interest expense, noted
with the respective interest rates, and pro forma amortization of
incremental deferred financing costs (in thousands):
<TABLE>
<CAPTION>
Pro Forma Interest Expense
<S> <C>
Revolving Facility (8.5%) $ 170
Term Facility - Tranche A (8.5%) 1,668
Term Facility - Tranche B (9.0%) 3,589
Commitment fee on Revolving Facility (.50%) (10)
-------
Total pro forma adjustment to interest expense $5,417
=======
Pro forma adjustment to amortization of
deferred financing costs $ 271
=======
</TABLE>
(o) Reflects a decrease in the provision for income taxes as a result of the
pro forma decrease in income before income taxes.
(p) EBITDA is defined as earnings before interest, taxes, depreciation,
amortization and extraordinary items and is presented because it is
commonly used by certain investors and analysts to analyze and compare on
the basis of operating performance and to determine a company's ability to
service and incur debt. EBITDA should not be considered in isolation from
or as a substitute for net income, cash flows from operating activities or
other consolidated income or cash flow statement data prepared in
accordance with generally accepted accounting principles or as a measure of
profitability or liquidity. Cash flows data are not presented as it is not
practicable to separate cash flows for the Company (as set forth in Van de
Kamp's, Inc. Form S-4, filed November 14, 1995) or Mrs. Paul's as approved
by the SEC in a letter dated July 1, 1996. EBITDA as defined here is the
same as that required by the Senior Bank Facilities covenant, except that
the Senior Bank Facilities definition also excludes all other non-cash
expenses and any non-cash income or non-cash gains and includes interest
income. The Company did not have any such items for the periods presented.
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<PAGE>
The following Pro Forma Statement of Income for the nine months ended March 30,
1996 gives effect to the acquisitions of the Van de Kamp's frozen seafood
business and certain frozen dessert product lines, discussed below, and Mrs.
Paul's, and the financing and the application of the net proceeds therefrom as
though the transactions occurred July 1, 1995. On September 19, 1995
(commencement of operations), Van de Kamp's, Inc. acquired the assets of the Van
de Kamp's frozen seafood business and certain frozen dessert product lines
(collectively the "Predecessor") from the Pillsbury Company and Pet
Incorporated. On May 6, 1996, Van de Kamp's, Inc. acquired substantially all
the assets of the Mrs. Paul's frozen food business from Campbell Soup Company.
The following Pro Forma Statement of Income is based on the unaudited Statements
of Income of the Predecessor and the Company and the audited Statement of
Earnings of Mrs. Paul's. The Statements of Income for the Predecessor and Van de
Kamp's, Inc. are incorporated by reference to the Van de Kamp's, Inc. Form 10Q
for the nine months ended March 30, 1996. The nine month period includes the
Predecessor period, July 1, 1995 to September 18, 1995, and the Company's
ownership period of September 19, 1995 to March 30, 1996. The audited Statement
of Earnings for Mrs. Paul's is for the nine months ended April 28, 1996.
The pro forma financial information set forth on the next page reflects pro
forma adjustments that are based upon available information and which the
Company believes are reasonable. The pro forma financial information does not
necessarily reflect the results of operations of the Company that actually would
have resulted had the transactions to which pro forma effect is given been
consummated as of the date or for the period indicated.
-18-
<PAGE>
VAN DE KAMP'S, INC.
PRO FORMA STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED MARCH 30, 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
TO PREDECESSOR PRO FORMA
VAN DE AND VAN DE ADJUSTMENTS COMPANY
PREDECESSOR KAMP'S, INC. KAMP'S, INC. MRS. PAUL'S TO MRS. PAUL'S PRO FORMA
----------- ------------ -------------- ----------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net sales $21,061 $106,362 $ -- $60,235 $ 6,172 (j) $193,830
Cost of goods sold 9,658 43,304 800 (a,b) 31,788 (1,606) (k,l) 83,944
------- -------- ------- ------- -------- --------
Gross profit 11,403 63,058 (800) 28,447 7,778 109,886
Selling, distribution and
marketing:
Selling and distribution 2,843 11,657 -- 4,482 4,450 (m) 23,432
Trade promotions 3,699 22,997 -- 10,920 -- 37,616
Consumer marketing 1,919 7,875 238 (c) 2,955 -- 12,987
------- -------- ------- ------- -------- --------
Total selling, distribution
and marketing 8,461 42,529 238 18,357 4,450 74,035
Amortization of goodwill 689 2,641 256 (d) -- 1,555 (n) 5,141
------- -------- ------- ------- -------- --------
Product profit before
corporate expenses 2,253 17,888 (1,294) 10,090 1,773 30,710
General and administrative 1,104 3,557 (236) (e) 2,826 (1,551) (o,p) 5,700
Transition related expenses -- 917 (917) (f) -- -- --
------- -------- ------- ------- -------- --------
Total operating expenses 10,254 49,644 (659) 21,183 4,454 84,876
------- -------- ------- ------- -------- --------
Operating income 1,149 13,414 (141) 7,264 3,324 25,010
Interest expense -- 7,979 3,291 (g) -- 3,956 (q) 15,226
Amortization of deferred
financing expense -- 354 194 (h) -- 203 (q) 751
------- -------- ------- ------- -------- --------
Income before income tax 1,149 5,081 (3,626) 7,264 (835) 9,033
Provision for income taxes 735 2,032 (1,726) (i) 2,760 (188) (r) 3,613
------- -------- ------- ------- -------- --------
Net income (loss) $ 414 $ 3,049 $(1,900) $ 4,504 $ (647) $ 5,420
======= ======== ======= ======= ======== ========
EBITDA (s) $ 32,931
</TABLE>
-19-
<PAGE>
NOTES TO PRO FORMA STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED MARCH 30, 1996
Note that adjustments (b) and (c) are to refine previously reported Predecessor
business financial information.
(a) Represents an adjustment in the amount of $191 based upon the actual
allocation of the fair market value of the fixed assets of Van de Kamp's,
Inc. under the Company's basis as opposed to the Predecessor's basis of
assets. The average depreciable life is 30 years for buildings and 12
years for equipment.
(b) Represents an increase in the previously reported Predecessor period cost
of goods, to reflect obsolescence and inventory shrinkage occurring during
such period.
(c) Represents an increase in previously reported Predecessor period coupon
redemption expense.
(d) Reflects an adjustment to amortization of goodwill based on actual
goodwill and intangibles recorded in connection with acquisition of the
Van de Kamp's businesses.
(e) Represents an adjustment to reflect the actual experience of the Company
during the first fiscal year.
(f) Certain transition related costs incurred in connection with the
acquisition of the businesses since September 19, 1995 which are non-
recurring and therefore not an ongoing expense for pro forma purposes.
(g) Represents the interest expense that would have been incurred during the
Predecessor period of ownership based upon pro forma debt levels,
applicable interest rates and as if the Company had owned the businesses
since July 1, 1995.
(h) Represents the amortization of deferred financing costs that would have
been incurred during the Predecessor period of ownership based upon pro
forma debt levels and as if the Company had owned the businesses since
July 1, 1995.
(i) Represents a reduction in the provision for income taxes as a result of
the pro forma decrease in income before income taxes.
(j) Represents a reclassification of distribution and selling expenses to
report sales consistently with Van de Kamp's, Inc., as further discussed
in note (m).
(k) Represents a decrease of $643 in depreciation expense as a result of lower
depreciable basis of property, plant and equipment as compared to the
prior owner's. The average depreciable life for equipment is 12 years.
(l) Includes the reversal of $963 of corporate allocated expenses from
Campbell Soup Company for indirect fixed plant overhead costs. This
reversal is supportable as the Company already has the plant
infrastructure to support the Mrs. Paul's business.
-20-
<PAGE>
(m) Includes the reclassification of expense described above in note (j)
($6,172) and the elimination of a corporate allocation from the Campbell
Soup Company of costs associated with the sales force, sales
administration and marketing overhead ($1,722). The reversal of these
allocations is supportable as the Company already has established sales
force, sales administration and marketing functions to support the Mrs.
Paul's business.
(n) Reflects the goodwill and intangible amortization expense as a result of
the acquisition of Mrs. Paul's. Goodwill will be amortized on a straight
line basis over a 40 year period and other intangibles will be amortized
over periods ranging from five to 15 years.
(o) Represents the elimination of Mrs. Paul's research and developments costs
($657). The Company records its research and development costs in general
and administrative expense and management believes the amount included in
general and administrative expense for the period is sufficient.
(p) Reflects the reduction in expense ($894) the Company will experience as
compared to the general and administrative corporate allocation from
Campbell Soup Company. The reduction is supported by the Company's
experience during its current period of ownership and personnel and
expense changes that it has implemented.
(q) Pro forma interest expense has been calculated based upon pro forma debt
levels and the applicable interest rates. Mrs. Paul's was not allocated any
interest expense from the Campbell Soup Company. The pro forma interest
expense on the Revolving Facility assumes an incremental $2 million would
be outstanding during the year. Accordingly, the committment fee required
on the outstanding Revolving Facility is reduced as the balance outstanding
is higher. The table below represents a pro forma interest expense, noted
with the respective interest rates, and pro forma amortization of
incremental deferred financing costs (in thousands):
<TABLE>
<CAPTION>
Pro Forma Interest Expense
<S> <C>
Revolving Facility (8.5%) $ 123
Term Facility - Tranche A (8.5%) 1,231
Term Facility - Tranche B (9.0%) 2,610
Commitment fee on Revolving Facility (.50%) (8)
------
Total pro forma adjustment to interest expense $3,956
======
Pro forma adjustment to amortization of deferred
financing costs $ 203
======
</TABLE>
(r) Reflects a decrease in the provision for income taxes as a result of the
pro forma decrease in income before income taxes.
-21-
<PAGE>
(s) EBITDA is defined as earnings before interest, taxes, depreciation,
amortization and extraordinary items and is presented because it is
commonly used by certain investors and analysts to analyze and compare on
the basis of operating performance and to determine a company's ability to
service and incur debt. EBITDA should not be considered in isolation from
or as a substitute for net income, cash flows from operating activities or
other consolidated income or cash flow statement data prepared in
accordance with generally accepted accounting principles or as a measure
of profitability or liquidity. Cash flows data are not presented as it is
not practicable to separate cash flows for the Company (as set forth in
Van de Kamp's, Inc. Form S-4, filed November 14, 1995) or Mrs. Paul's
approved by the SEC in a letter dated July 1, 1996. EBITDA as defined
here is the same as that required by the Senior Bank Facilities covenant,
except that the Senior Bank Facilities definition also excludes all other
non-cash expenses and any non-cash income or non-cash gains and includes
interest income. The Company did not have any such items for the periods
presented.
-22-
<PAGE>
The following Pro Forma Balance Sheet is based on the unaudited financial
statements of the Company and the audited Statements of Assets to be Acquired of
Mrs. Paul's. The balance sheet of Van de Kamp's, Inc. as of March 30, 1996 is
incorporated by reference to the Van de Kamp's, Inc. Form 10-Q for that period.
The audited Statement of Assets to be Acquired for Mrs. Paul's is as of April
28, 1996.
The pro forma financial information set forth on the next page reflects pro
forma adjustments that are based upon available information and which the
Company believes are reasonable. The pro forma financial information does not
necessarily reflect the financial position of the Company that actually would
have resulted had the transactions to which pro forma effect is given been
consummated as of the date indicated.
-23-
<PAGE>
VAN DE KAMP'S, INC.
PRO FORMA BALANCE SHEET
AS OF MARCH 30, 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
VAN DE PRO FORMA COMPANY
KAMP'S, INC. MRS. PAUL'S ADJUSTMENTS PRO FORMA
------------ ----------- ----------- ---------
<S> <C> <C> <C> <C>
Assets:
Cash $ 6,867 $ -- $ (1,578)(a) $ 5,289
Receivables 22,034 -- -- 22,034
Inventories 16,333 5,307 95 (b) 21,735
Prepaid Expenses 546 -- -- 546
-------- ------- -------- --------
Total current assets 45,780 5,307 (1,483) 49,604
Property, plant and equipment, net 30,254 6,626 1,887 (b) 38,767
Goodwill and intangibles 140,680 936 61,414 (b) 203,030
Other assets 8,768 -- 1,880 (c) 10,648
-------- ------- -------- --------
Total assets $225,482 $12,869 $ 63,698 $302,049
======== ======= ======== ========
Liabilities and Stockholders' Equity:
Current portion of long-term debt $ 2,500 $ -- $ 2,500 (d) $ 5,000
Accounts payable and accrued expenses 20,981 -- 2,215 (e) 23,196
Income taxes payable 983 -- -- 983
-------- ------- -------- --------
Total current liabilities 24,464 0 4,715 29,179
Senior secured bank debt 27,500 -- 57,500 (d) 85,000
Senior subordinated notes 100,000 -- -- 100,000
Deferred tax liabilities 1,049 -- -- 1,049
-------- ------- -------- --------
Total liabilities 153,013 0 62,215 215,228
Total stockholders' equity 72,469 12,869 1,483 (f) 86,821
-------- ------- -------- --------
Total liabilities and stockholders' equity $225,482 $12,869 $ 63,698 $302,049
======== ======= ======== ========
</TABLE>
-24-
<PAGE>
NOTES TO PRO FORMA BALANCE SHEET
AS OF MARCH 30, 1996
(a) Reflects use of Van de Kamp's, Inc. internally generated cash to fund a
portion of the Mrs. Paul's acquisition.
(b) Reflects the excess of cost over the book value of the Mrs. Paul's net
assets, including inventories and equipment, acquired in connection with the
acquisition. The equipment has been recorded at fair market value, including
costs of transportation, installation and set-up. Goodwill will be amortized
on a straight line basis over a 40 year period and other intangibles will be
amortized over periods ranging from five to 15 years.
(c) Reflects deferred financing costs incurred in connection with the financing.
(d) Represents the current and long-term portions of the $60 million in
additional Senior Secured Debt incurred to finance the acquisition.
(e) Reflects $209 of interest on acquisition related Senior Secured Debt and an
accrual for costs to be incurred in connection with the installation of Mrs.
Paul's equipment in the Company's Erie, Pennsylvania manufacturing facility.
(f) Represents the $15 million equity contribution from VDK Holdings, Inc., net
of syndication expenses and net of the reversal of the division equity of
Mrs. Paul's.
-25-
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NO. EXHIBIT DESCRIPTION
---------- -------------------
2.1 Asset Purchase and Sale Agreement, dated as of
January 17, 1996, between Shellfish
Acquisition Company, LLC and Campbell Soup
Company (the text of which and exhibits to
which are incorporated by reference to Exhibit
2.1 to Van de Kamp's, Inc.'s Form 10-Q for the
quarter ended March 30, 1996 (the "10-Q") and
a list of the contents of the schedules to
which was filed with the Original 8-K).
2.2 Asset Purchase Agreement, dated as of January
17, 1996, between Van de Kamp's, Inc. and
Shellfish Acquisition Company, LLC
(incorporated by reference to Exhibit 2.2 to
the 10-Q).
-26-
