- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
DECEMBER 11, 1997
INTERFOODS OF AMERICA, INC.
-------------------------------------------------------
(Exact name of registrant as specified in this charter)
NEVADA 000-21093 59-3356011
- ---------------------------- ------------------------ -------------------
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
9400 SOUTH DADELAND BOULEVARD, SUITE 720, MIAMI, FLORIDA 33156
--------------------------------------------------------------
(Address and Zip Code of Principal Executive Offices)
Issuer's Telephone Number: (305) 670-0746
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<PAGE>
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
Not Applicable.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On December 11, 1997, the Registrant, pursuant to two Asset Purchase Agreements,
purchased eight Popeyes Chicken restaurants from J. Russell Jones and R. Jones
Enterprises, Inc., including all their equipment and the real estate upon which
six of the restaurants are located. All eight restaurants are located in the
Baton Rouge, Louisiana area. The purchase price for the restaurants was
approximately $3.7 million. The source of financing for the transaction was
received from simultaneous sale lease back with a financial institution in which
the registrant sold six parcels of real estate and leased them back.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Not Applicable.
ITEM 5. OTHER EVENTS
On December 12, 1997, J. Russell Jones and Andrew Nichols were elected to the
Registrant's Board of Directors to fill the two vacancies left by the
resignations of the former directors Norman Kaufman and James Byrd.
ITEM 6. RESIGNATION OF REGISTRANT'S DIRECTORS
Not applicable.
ITEM 7. FINANCIAL STATEMENT AND EXHIBITS
(a) EXHIBITS
Audited financial statements for R. Jones Enterprises, Inc. for fiscal years
1996 and 1997 along with proforma statements showing the effect of the purchase
of the eight Popeyes Chicken franchises identified in Item 2 above.
ITEM 8. CHANGE IN FISCAL YEAR
Not applicable.
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
INTERFOODS OF AMERICA, INC.
---------------------------
(Registrant)
By: /s/ ROBERT BERG
-----------------------------
Robert Berg, Chief Executive Officer
Dated: March 6, 1998
3
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
R. Jones Enterprises, Inc.
d/b/a Popeyes Famous Fried Chicken:
We have audited the accompanying balance sheets of R. Jones Enterprises, Inc.
d/b/a Popeyes Famous Fried Chicken (a Louisiana corporation) as of April 20,
1997 and April 21, 1996, and the related statements of operations and retained
earnings and cash flows for the years then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial 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 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 financial statements referred to above present fairly, in
all material respects, the financial position of R. Jones Enterprises, Inc.
d/b/a Popeyes Famous Fried Chicken as of April 20, 1997 and April 21, 1996, and
the results of its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles.
/s/ ARTHUR ANDERSEN LLP
- -----------------------
Arthur Andersen LLP
Miami, Florida,
December 17, 1997.
<PAGE>
<TABLE>
<CAPTION>
R. JONES ENTERPRISES, INC.
D/B/A POPEYES FAMOUS FRIED CHICKEN
BALANCE SHEETS
ASSETS
APRIL 20, APRIL 21,
1997 1996
--------- ---------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $194,780 $191,581
Accounts receivable 2,787 1,174
Employee receivables 1,401 3,695
Inventories 53,323 56,734
Prepaid expenses 28,865 57,093
Due from affiliate 36,687 26,963
-------- --------
Total current assets 317,843 337,240
-------- --------
PROPERTY AND EQUIPMENT, net 409,190 220,611
-------- --------
OTHER ASSETS:
Cash value of officer life insurance, net of loans of $249,526
in 1997 and 1996 50,639 38,207
Franchise fees, net of accumulated amortization of $37,291
in 1997 and $31,521 in 1996 78,109 83,479
Deposits 13,454 13,454
-------- --------
Total other assets 142,202 135,140
-------- --------
Total assets $869,235 $692,991
======== ========
</TABLE>
(Continued)
<PAGE>
<TABLE>
<CAPTION>
R. JONES ENTERPRISES, INC.
D/B/A POPEYES FAMOUS FRIED CHICKEN
BALANCE SHEETS
(Continued)
LIABILITIES AND STOCKHOLDER'S EQUITY
APRIL 20, APRIL 21,
1997 1996
----------- -----------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 96,360 $ 119,022
Accrued expenses 115,750 123,546
Current portion of capital lease obligations 2,856 2,593
Current portion of notes payable 16,166 4,640
Due to stockholder 93,664 50,006
Income taxes payable -- 3,677
----------- -----------
Total current liabilities 324,796 303,484
CAPITAL LEASE OBLIGATIONS, net of current portion 757 3,613
DEFERRED INCOME TAXES 2,814 4,686
NOTES PAYABLE, net of current portion 153,670 --
----------- -----------
Total liabilities 482,037 311,783
----------- -----------
COMMITMENTS AND CONTINGENCIES (Note 5)
STOCKHOLDER'S EQUITY:
Common stock, no par value; 100 shares authorized,
100 shares issued, 50 shares outstanding -- --
Additional paid-in capital 1,000 1,000
Retained earnings 1,069,130 1,063,140
Treasury stock, 50 shares, at cost (682,932) (682,932)
----------- -----------
Total stockholder's equity 387,198 381,208
----------- -----------
Total liabilities and stockholder's equity $ 869,235 $ 692,991
=========== ===========
</TABLE>
The accompanying notes to financial statements
are an integral part of these balance sheets.
<PAGE>
<TABLE>
<CAPTION>
R. JONES ENTERPRISES, INC.
D/B/A POPEYES FAMOUS FRIED CHICKEN
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
FOR THE YEAR ENDED
--------------------------
APRIL 20, APRIL 21,
1997 1996
----------- -----------
<S> <C> <C>
NET SALES $ 5,901,207 $ 5,233,597
----------- -----------
OPERATING EXPENSES:
Cost of sales 5,255,910 4,647,694
General and administrative expenses 517,808 500,599
Depreciation and amortization 97,212 69,663
----------- -----------
Total costs and expenses 5,870,930 5,217,956
----------- -----------
Income from operations 30,277 15,641
OTHER INCOME (EXPENSE):
Interest expense (25,425) (38,826)
Other income 5,131 63,846
----------- -----------
Total other income (expense) (20,294) 25,020
----------- -----------
Income before provision for income taxes 9,983 40,661
PROVISION FOR INCOME TAXES 3,993 16,274
----------- -----------
Net income 5,990 24,387
RETAINED EARNINGS, beginning of year 1,063,140 1,038,753
----------- -----------
RETAINED EARNINGS, end of year $ 1,069,130 $ 1,063,140
=========== ===========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
<PAGE>
<TABLE>
<CAPTION>
R. JONES ENTERPRISES, INC.
D/B/A POPEYES FAMOUS FRIED CHICKEN
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED
----------------------
APRIL 20, APRIL 21,
1997 1996
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 5,990 $ 24,387
Adjustments to reconcile net income to net cash
provided by (used in) operating activities-
Depreciation and amortization 97,212 69,663
Deferred tax provision (benefit) (1,872) 2,497
Gain on sale of real estate -- (44,620)
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (1,613) 850
Decrease in employee receivables 2,294 2,096
(Increase) decrease in inventories 3,411 (12,281)
Decrease (increase) in prepaid expenses 28,228 (6,264)
(Decrease) increase in accounts payable (22,662) 8,632
(Decrease) in accrued expenses (7,796) (44,538)
(Decrease) in income taxes payable (3,677) (1,884)
--------- ---------
Net cash provided by (used in) operating activities 99,515 (1,462)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of franchise rights (400) (15,000)
Capital expenditures (277,427) (9,877)
Increase in cash value of officer's life insurance (12,432) (20,902)
Proceeds from sale of real estate -- 146,001
Due from affiliate (9,724) (9,467)
--------- ---------
Net cash provided by (used in) investing activities (299,983) 90,755
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from note payable 172,258 --
Principal payments on notes payable (12,249) (105,351)
Due to stockholder 43,658 (11,534)
--------- ---------
Net cash provided by (used in) financing activities 203,667 (116,885)
--------- ---------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 3,199 (27,592)
CASH AND CASH EQUIVALENTS, beginning of year 191,581 219,173
--------- ---------
CASH AND CASH EQUIVALENTS, end of year $ 194,780 $ 191,581
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash payments for-
Interest $ 25,425 $ 26,877
========= =========
Income taxes $ 17,457 $ 10,100
========= =========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
<PAGE>
R. JONES ENTERPRISES, INC.
D/B/A POPEYES FAMOUS FRIED CHICKEN
NOTES TO FINANCIAL STATEMENTS
APRIL 20, 1997 AND APRIL 21, 1996
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
R. Jones Enterprises, Inc., d/b/a Popeyes Famous Fried Chicken, ("RJE")
was incorporated in Louisiana on September 22, 1976, and is located in Baton
Rouge, Louisiana. RJE was formed for the purpose of purchasing fried chicken
franchises to operate "Popeyes Fried Chicken and Biscuits" restaurants in Baton
Rouge.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include all highly liquid investments with an original
maturity of three months or less. There were no cash equivalents at April 20,
1997 or April 21, 1996.
INVENTORIES
Inventories are stated at the lower of cost or market. Cost is determined using
the first-in, first-out method.
PROPERTY AND EQUIPMENT
Property and equipment is recorded at cost. Depreciation is provided using
accelerated methods over the estimated useful lives of the related assets.
INCOME TAXES
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
basis. 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. 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.
<PAGE>
FRANCHISE FEES
Franchise fees are recorded at cost and are being amortized using the
straight-line method over 20 years, the initial term of the related franchise
agreement.
Statement of Financial Accounting Standard No. 121, "Accounting for Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of ("SFAS 121"),
is effective for fiscal years beginning after December 15, 1995. SFAS 121
requires that long-lived assets and certain identifiable intangibles to be held
and used or disposed of by an entity be reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. Under such circumstances, SFAS 121 requires that long-lived
assets and certain identifiable intangibles to be held and used or disposed of
be reported at the lower of their carrying amount or fair value less cost to
sell. Accordingly, when events or circumstances indicate that long-lived assets
may be impaired, RJE estimates the asset's future cash flows expected to result
from the use of the asset and its eventual disposition. If the sum of the
expected future undiscounted cash flows is less than the carrying amount of the
asset, an impairment loss is recognized based on the excess of the carrying
amount over the fair value of the asset. RJE determined that no impairment loss
need be recognized for applicable assets at April 20, 1997.
USE OF ESTIMATES
Management of RJE has made certain estimates and assumptions relating to the
reporting of assets and liabilities and the disclosure of contingent assets and
liabilities to prepare these financial statements in conformity with generally
accepted accounting principles. Actual results could differ from those
estimates.
2. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
USEFUL APRIL 20, APRIL 21,
LIFE 1997 1996
---------------------- ------------ ------------
<S> <C> <C> <C>
Machinery and equipment 5 to 7 years $ 969,383 $ 705,302
Automotive equipment 5 years 51,123 51,113
Leasehold improvements Lesser of 15 years or 444,457 428,527
life of lease ------------ ------------
1,464,963 1,184,942
Less- Accumulated depreciation and (1,055,773) (964,331)
amortization ------------ ------------
$ 409,190 $ 220,611
============ ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
3. NOTES PAYABLE
Notes payable consists of the following:
APRIL 20, APRIL 21,
1997 1996
--------- ---------
<S> <C> <C>
Note payable to a financial institution bearing interest at a rate of
8.60%, payable in 84 monthly installments of $2,691, collateralized by
equipment
$ 163,066 $ --
Note payable to a financial institution bearing interest at a rate of
8.50%, payable in 48 monthly installments of $205, collateralized by
equipment
6,770 --
Note payable to a financial institution bearing interest at a rate of
5.90%, payable in 86 monthly installments of $437 collateralized by
automotive equipment -- 4,640
--------- ---------
169,836 4,640
Less - current portion (16,166) (4,640)
--------- ---------
Notes payable, net of current portion $ 153,670 $ --
========= =========
</TABLE>
Annual maturities of long-term debt as of April 20, 1997 are as follows:
1998 $ 16,166
1999 22,465
2000 24,246
2001 24,966
2002 26,260
Thereafter 55,733
---------
$ 169,836
4. CASH VALUE OF OFFICER LIFE INSURANCE
RJE is the beneficiary of a life insurance policy on the life of its
stockholder. RJE has an advance against the cash value of the policy in the
amount of $249,526. The net cash value as of April 20, 1997 and April 21, 1996
was $50,639 and $38,207, respectively. The policy is assigned to a bank as
collateral for personal loans of the stockholder (see Note 5).
<PAGE>
5. COMMITMENTS AND CONTINGENCIES
Future minimal rental commitments for RJE's operating leases with related
parties over the next five years as of April 20, 1997, are as follows:
1998 $ 371,540
1999 334,655
2000 209,599
2001 115,482
2002 105,960
Thereafter 915,240
------------
$ 2,052,476
============
Total rent expense for the year ended April 20, 1997 and April 21, 1996 was
$542,654 and $448,558, respectively.
RJE is the guarantor on personal loans of its stockholder in the amount of
$1,365,740 and $1,487,092 as of April 20, 1997 and April 21, 1996, respectively.
These loans are primarily for buildings and equipment owned by the stockholder
and leased to RJE.
6. CAPITAL LEASE OBLIGATIONS
RJE acquired office equipment in fiscal 1997 and 1996 with a value of $2,593 and
$6,206, respectively under the provisions of long-term leases. As of April 20,
1997, the capital lease agreements provide for future minimum annual lease
payments as follows:
1998 $ 3,081
1999 770
--------
3,851
Less - amount representing interest (238)
--------
Present value of net minimum capital lease payments 3,613
Less - current portion (2,856)
--------
Long-term portion $ 757
========
7. RELATED PARTY TRANSACTIONS
RJE's stockholder has made advances to RJE in the form of a loan. The loan bears
interest at the applicable federal rate as prescribed by the Internal Revenue
Code. At April 20, 1997 and April 21, 1996 the balance of this loan was $93,664
and $50,006, respectively.
RJE and an affiliate of RJE routinely share services and employees. These
services are acquired at an amount consistent with RJE's cost. Repayment
of this obligation is intended to occur in the normal course of business. The
amount due from affiliate at April 20, 1997 and April 21, 1996 was $36,687 and
$26,963, respectively.
See Note 5 for related party leases and guarantees.
<PAGE>
8. INCOME TAXES
The provision for income taxes consisted of the following for the years ended:
APRIL 20, APRIL 21,
1997 1996
-------- --------
Current provision $ 5,865 $ 13,777
Deferred provision (1,872) 2,497
-------- --------
$ 3,993 $ 16,274
======== ========
State income taxes represent the only significant reconciling item between the
income tax rate included in the accompanying statements of operations and the
federal income tax rate.
<PAGE>
<TABLE>
<CAPTION>
INTERFOODS OF AMERICA, INC.
UNAUDITED PROFORMA BALANCE SHEET
SEPTEMBER 30, 1997
INTERFOODS OF R. JONES PROFORMA
AMERICA, INC. ENTERPRISES, INC. ADJUSTMENTS PRO FORMA
------------- ----------------- ------------ ------------
ASSETS
- ----------------------------------------
<S> <C> <C> <C> <C> <C>
Current assets:
Cash $ - $ 194,780 $ (194,780) 1 $ -
Accounts receivable 115,742 4,188 (4,188) 1 115,742
Inventories 66,271 53,323 (3,323) 2 116,271
Prepaid and other assets 111,991 79,504 (79,504) 1 111,991
Deferred tax asset 164,900 - - 164,900
----------- ----------- ----------- -----------
Total current assets 458,904 331,795 (281,795) 508,904
----------- ----------- ----------- -----------
Property and equipment 3,698,995 409,190 260,810 2 4,368,995
----------- ----------- ----------- -----------
Other assets:
Deposits 331,122 13,454 (13,454) 2 331,122
Goodwill, net 2,475,701 - - 2,475,701
Other intangibles, net 147,677 78,109 (48,109) 2 177,677
Due from affiliates 26,274 36,687 (36,687) 1 26,274
----------- ----------- ----------- -----------
Total other assets 2,980,774 128,250 (98,250) 3,010,774
----------- ----------- ----------- -----------
Total assets $ 7,138,673 $ 869,235 $ (119,235) $ 7,888,673
=========== =========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ----------------------------------------
Current liabilities:
Accounts payable and accrued liabilities $ 1,182,117 $ 312,201 $ (108,367) 1 $ 1,385,951
Current portion long term debt 204,122 16,166 - 220,288
Current portion of deferred income
on sale and leaseback transactions 19,844 - - 19,844
----------- ----------- ----------- -----------
Total current liabilities 1,406,083 328,367 (108,367) 1,626,083
----------- ----------- ----------- -----------
Deferred income on sale and leaseback
transactions, net of current portion 377,039 - 530,000 2 907,039
Long term debt, net of current portion 1,299,109 153,670 (153,670) 1 1,299,109
----------- ----------- ----------- -----------
Total liabilities 3,082,231 482,037 267,963 3,832,231
----------- ----------- ----------- -----------
Mandatorily redeemable class A and
B preferred stock 658,750 - - 658,750
----------- ----------- ----------- -----------
Stockholder's equity:
Common stock 8,080 1,000 (1,000) 1 8,080
Additional paid-in capital 4,197,189 - - 4,197,189
Accumulated deficit/retained earnings (79,309) 1,069,130 (1,069,130) 1 (79,309)
Treasury stock (728,268) (682,932) 682,932 1 (728,268)
----------- ----------- ----------- -----------
Total stockholders' equity 3,397,692 387,198 (387,198) 3,397,692
----------- ----------- ----------- -----------
Total liabilities and stockholders'
Equity $ 7,138,673 $ 869,235 $ (119,235) $ 7,888,673
=========== =========== =========== ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INTERFOODS OF AMERICA, INC.
UNAUDITED PROFORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1997
INTERFOODS OF R. JONES PROFORMA
AMERICA, INC. ENTERPRISES, INC. ADJUSTMENTS PRO FORMA
------------- ----------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Revenues:
Restaurant sales $13,830,499 $ 5,901,207 $ - $19,731,706
Royalties and fees 261,683 - - 261,683
----------- ----------- ----------- -----------
Total revenues 14,092,182 5,901,207 - 19,993,389
----------- ----------- ----------- -----------
Cost and expenses:
Cost of sales 12,184,518 5,255,910 (40,589) 3 17,399,839
General and administrative 1,574,526 517,808 (323,578) 4 1,768,756
Depreciation and amortization 187,690 97,212 (56,422) 5 228,480
----------- ----------- ----------- -----------
Total cost and expenses 13,946,734 5,870,930 (420,589) 19,397,075
----------- ----------- ----------- -----------
Operating profit (loss) 145,448 30,277 420,589 596,314
----------- ----------- ----------- -----------
Other income (expense):
Other income 62,821 5,131 (5,131) 1 62,821
Interest, net (54,291) (25,425) 25,425 1 (54,291)
----------- ----------- ----------- -----------
Total other income (expense) 8,530 (20,294) 20,294 8,530
----------- ----------- ----------- -----------
Income before benefit (provision)
for income taxes 153,978 9,983 440,883 604,844
Benefit (provision) for income taxes 164,900 (3,993) (176,353) 6 (15,446)
----------- ----------- ----------- -----------
Net income $ 318,878 $ 5,990 $ 264,530 $ 589,398
=========== =========== =========== ===========
Net income per share, basic and diluted $ 0.05 $ 0.09
=========== ===========
Weighted average shares outstanding 6,585,953 6,585,953
=========== ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INTERFOODS OF AMERICA, INC.
UNAUDITED PROFORMA STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1997
INTERFOODS OF R. JONES PRO FORMA
AMERICA, INC. ENTERPRISES, INC. ADJUSTMENTS PRO FORMA
------------- ----------------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Revenues:
Restaurant sales $ 4,379,928 $ 1,047,949 $ - $ 5,427,877
Royalties and fees 42,213 - - 42,213
----------- ----------- ----------- -----------
Total revenues 4,422,141 1,047,949 - 5,470,090
----------- ----------- ----------- -----------
Cost and expenses:
Cost of sales 3,784,074 992,175 (10,000) 3 4,766,249
General and administrative 638,365 129,000 (129,000) 4 638,365
Depreciation and amortization 85,099 18,000 (18,000) 5 85,099
----------- ----------- ----------- -----------
Total cost and expenses 4,507,538 1,139,175 (157,000) 5,489,713
----------- ----------- ----------- -----------
Operating profit (loss) (85,397) (91,226) 157,000 (19,623)
----------- ----------- ----------- -----------
Other income (expense):
Other income 624,653 29,504 (617,920) 7 36,237
Interest, net (64,670) - - (64,670)
----------- ----------- ----------- -----------
Total other income (expense) 559,983 29,504 (617,920) (28,433)
----------- ----------- ----------- -----------
Income before taxes 474,586 (61,722) (460,920) (48,056)
Benefit (provision) for income taxes (166,105) - 166,105 6 -
----------- ----------- ----------- -----------
Net income $ 308,481 $ (61,722) $ (294,815) $ (48,056)
=========== =========== =========== ===========
Net income per share, basic and diluted $ 0.05 $ (0.01)
=========== ===========
Weighted average shares outstanding 6,333,896 6,333,896
=========== ===========
</TABLE>
<PAGE>
INTERFOODS OF AMERICA, INC.
NOTES TO UNAUDITED PROFORMA FINANCIAL STATEMENTS
The unaudited proforma financial statements gives effect to the purchase by
Interfoods of America, Inc. (the "Company") of R. Jones Enterprises, Inc.
("RJE") for cash in the amount of approximately $3,700,000. The unaudited
proforma balance sheet as of September 30, 1997 and the unaudited proforma
statement of operations for the year ended September 30, 1997 reflect
adjustments to the RJE historical balance sheet as of April 20, 1997 and
statements of operations for the year then ended to give effect to the
transaction discussed above as if such transaction had been consummated at
September 30, 1997, or at the beginning of the period presented. The acquisition
has been accounted for under the purchase method of accounting.
The unaudited proforma financial statements may not necessarily be indicative of
the results that would actually have been obtained had the transaction occurred
on the dates indicated or which may be obtained in the future. In the opinion of
the Company's management, all adjustments necessary to present fairly such
unaudited proforma combined financial statements have been included.
1. Amounts represent balance sheet and related statement of operations items
which were not purchased from RJE.
2. Amount represents the net effect of the purchase of the assets for the
eight stores acquired from RJE and the related immediate sale-leaseback
transactions with a financial institution on December 11, 1997. The net
effect of the purchase and sale-leaseback left the Company with equipment
of $670,000 which was the fair market value at the purchase date and a
deferred gain of approximately $530,000 from the sale-leaseback of the
land and buildings of six locations. The remaining two locations are
on long-term leases for the land and buildings. The following represents
the approximate detail of the transaction:
Purchase price $ 3,700,000
------------
Fair value of assets acquired:
Land and buildings 2,950,000
Equipment 670,000
Transfer fees 30,000
Inventories 50,000
------------
$ 3,700,000
============
Sale-leaseback:
Sales price $ 3,700,000
Land and buildings fair market value 2,950,000
------------
Unadjusted deferred gain 750,000
Closing costs 220,000
------------
Deferred income $ 530,000
============
3. Amount represents the reduction in rent cost as a result of the sale
leaseback transactions.
<PAGE>
4. Amount represents the reduction of general and administrative costs
associated with the Baton Rouge, LA, office cost that would not have
existed on a proforma basis for fiscal year ended September 30, 1997.
5. Amount represents the depreciation and amortization adjustment for the new
asset base after the purchase and sale-leaseback.
6. Amount represents the tax effect of proforma adjustments.
7. Amount represents the reversal of nonrecurring charges of $411,584 and the
reversal of a nonrecurring gain of approximately $1,000,000 on the sale of
a subsidiary of the Company, along with $29,504 representing statement of
operations items which were not purchased from RJE. See the Company's Form
10-QSB as filed for further discussion regarding nonrecurring items.
