SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
September 28, 2000
INTERFOODS OF AMERICA, INC.
---------------------------
(Exact name of registrant as specified in this charter)
Nevada 000-21093 59-3356011
------ --------- ------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation File Number) 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
=====================================================================
<PAGE>
Item 2. - ACQUISITION OR DISPOSITION OF ASSETS.
As reported on Form 8 - K dated, September 14, 2000, filed September 28, 2000,
the Company, pursuant to an Asset Purchase agreement dated May 11,2000, acquired
71 Popeye's Chicken & Biscuit and 2 Church's Chicken restaurants from RMS Family
Restaurants. In addition to acquiring the operating restaurants, the Company
acquired the land and buildings upon which 32 of the restaurants operate. The
cost of the acquisition was approximately $48.4 million of which $45.5 was
financed with the balance being paid in cash from funds of the Registrant.
This Form 8 - K/A includes the financial statements and pro forma financial
information required by Items 7 (a) and 7 (b) to Form 8 - K
Item 7. Financial Statement, Pro Forma Financial Information and Exhibits.
(A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
The following audited financial statements are filed with this report
POPEYES AND CHURCHS DIVISION OF RMS FAMILY RESTAURANTS, INC.
FINANCIAL STATEMENTS AS OF OCTOBER 31, 1999 AND THE TWO YEARS ENDED
OCTOBER 31, 1999 AND OCTOBER 25, 1998
(B) PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated financial
statements are filed with this report.
PRO FORMA CONSOLIDATED BALANCE SHEET
UNAUDITED AT SEPTEMBER 30, 1999
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
UNAUDITED FOR THE YEAR ENDED SEPTEMBER 30, 1999
(C) EXHIBITS
None.
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: January 8, 2001
<PAGE>
POPEYES AND CHURCHS DIVISION OF
RMS FAMILY RESTAURANTS, INC.
FINANCIAL STATEMENTS AS OF OCTOBER 31, 1999
TOGETHER WITH
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of
RMS Family Restaurants, Inc.:
We have audited the accompanying balance sheet of the Popeyes and Churchs
Division of RMS Family Restaurants, Inc. as of October 31, 1999, and the related
statements of income and parent's equity in division and cash flows for the
years ended October 31, 1999 and October 25, 1998. 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 auditing standards generally accepted
in the United States. 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 the Popeyes and Churchs
Division of RMS Family Restaurants, Inc. as of October 31, 1999, and the results
of its operations and its cash flows for the years ended October 31, 1999 and
October 25, 1998 in conformity with accounting principles generally accepted in
the United States.
Miami, Florida,
September 26, 2000.
<PAGE>
POPEYES AND CHURCHS DIVISION OF
RMS FAMILY RESTAURANTS, INC.
BALANCE SHEET
OCTOBER 31, 1999
ASSETS
CURRENT ASSETS:
Cash $ 62,900
Accounts receivable 42,312
Inventories 319,716
-----------
Total current assets 424,928
-----------
PROPERTY AND EQUIPMENT, net 21,083,696
-----------
OTHER ASSETS:
Present value of favorable leases, net of accumulated
amortization of $3,650,164 426,740
Franchise fees, net of accumulated amortization of $589,256 787,797
-----------
Total other assets 1,214,537
-----------
Total assets $22,723,161
===========
(Continued)
<PAGE>
POPEYES AND CHURCHS DIVISION OF
RMS FAMILY RESTAURANTS, INC.
BALANCE SHEET
OCTOBER 31, 1999
(Continued)
LIABILITIES AND PARENT'S EQUITY IN DIVISION
CURRENT LIABILITIES:
Accounts payable $ 2,283,677
Accrued compensation 448,374
Other accrued liabilities 1,453,077
Current portion of notes payable 183,415
Current portion of capital lease obligations 853,144
Reserve for loss on closed restaurants 355,143
-----------
Total current liabilities 5,576,830
NOTES PAYABLE, net of current portion 1,241,599
CAPITAL LEASE OBLIGATIONS, net of current portion 2,650,708
-----------
Total liabilities 9,469,137
COMMITMENTS (Notes 1 and 3)
PARENT'S EQUITY IN DIVISION 13,254,024
-----------
Total liabilities and parent's equity in division $22,723,161
===========
The accompanying notes are an integral part of this balance sheet.
<PAGE>
POPEYES AND CHURCHS DIVISION OF
RMS FAMILY RESTAURANTS, INC.
STATEMENTS OF INCOME AND
PARENT'S EQUITY IN DIVISION
<TABLE>
<CAPTION>
For the Year Ended
-----------------------------
October 31, October 25,
1999 1998
------------ ------------
<S> <C> <C>
NET SALES $ 61,508,174 $ 53,381,819
------------ ------------
COSTS AND OPERATING EXPENSES:
Cost of restaurant operations 51,905,624 45,811,277
General and administrative expenses 3,699,006 3,127,274
Depreciation and amortization 2,364,168 1,665,605
------------ ------------
Total cost and expenses 57,968,798 50,604,156
------------ ------------
Income from operations 3,539,376 2,777,663
------------ ------------
OTHER INCOME (EXPENSE):
Interest expense (377,452) (777,908)
Interest income 2,443 2,316
Other, net (143,129) (15,571)
Gain on sale of property and equipment 121,253 10,060
------------ ------------
Total other (expense) (396,885) (781,103)
------------ ------------
Income before income taxes (Note 1) 3,142,491 1,996,560
PARENT'S EQUITY IN DIVISION, beginning of year 6,077,774 (2,101,659)
TRANSFERS FROM PARENT 4,033,759 6,182,873
------------ ------------
PARENT'S EQUITY IN DIVISION, end of year $ 13,254,024 $ 6,077,774
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
POPEYES AND CHURCHS DIVISION OF
RMS FAMILY RESTAURANTS, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Year Ended
----------------------------
October 31, October 25,
1999 1998
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income before income taxes $ 3,142,491 $ 1,996,560
Adjustments to reconcile income before income taxes
to net cash provided by operating activities-
Depreciation and amortization 2,364,168 1,665,605
Gain on sale of property and equipment (121,253) (10,060)
Changes in operating assets and liabilities:
Accounts receivable 224,784 (217,854)
Inventories 13,860 (107,479)
Prepaid expenses 11,692 5,076
Accounts payable 431,652 488,994
Accrued expenses 215,005 (141,716)
Reserve for loss on closed restaurants 180,281 14,862
----------- -----------
Net cash provided by operating activities 6,462,680 3,693,988
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment of franchise fees (145,000) (242,500)
Capital expenditures (6,432,363) (5,517,345)
Proceeds from sale of property and equipment 180,000 --
----------- -----------
Net cash used in investing activities (6,397,363) (5,759,845)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Transfers from parent 4,033,759 6,182,873
Repayments of capital lease obligations (348,482) (333,892)
Proceeds from issuance of notes payable -- 1,474,121
Repayment of notes payable (3,745,594) (5,252,945)
----------- -----------
Net cash provided by (used in) financing activities (60,317) 2,070,157
----------- -----------
Net increase in cash 5,000 4,300
CASH, beginning of year 57,900 53,600
----------- -----------
CASH, end of year $ 62,900 $ 57,900
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the year for interest $ 462,035 $ 784,379
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
POPEYES AND CHURCHS DIVISION OF
RMS FAMILY RESTAURANTS, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
----------------------------------------
Organization
The Popeyes and Churchs Division (the "Division") of RMS Family Restaurants,
Inc. ("RMS") is 100% owned by RMS, which is incorporated in the State of
Georgia. The Division operates 71 "Popeyes" and two "Churchs" chicken
restaurants throughout Florida and Georgia.
Related Party Transactions
Due to the nature of the Division's operations, certain balance sheet and income
statement accounts have been allocated from the parent, RMS, to the Division
based upon various and ratable methods. All allocated amounts and the methods of
allocation are more fully described in Note 4, "Related Party Transactions."
Cash Equivalents
Cash equivalents include all highly liquid investments with an original maturity
of three months or less. There were no cash equivalents at October 31, 1999.
Inventories
Inventories are stated at the lower of cost or market. Cost is determined using
the first-in, first-out method. Perishable food inventories represent $316,431
of total inventories at October 31, 1999.
Property and Equipment
Property and equipment is recorded at cost. Depreciation is provided using the
straight-line method over the estimated useful lives of the related assets.
Maintenance and repairs are charged to expense when incurred; betterments are
capitalized. Upon the sale or retirement of assets, the cost and accumulated
depreciation are removed from the accounts and any gain or loss is recognized in
income.
<PAGE>
Present Value of Favorable Leases
Present value of favorable leases represents the present value of the excess of
market rental rates over actual rents under the Division's operating leases of
restaurant locations acquired in business combinations. This asset is being
amortized using the straight-line method over the lives of the favorable leases,
which average 20 years. Amortization expense amounted to $166,326 during 1999
and 1998.
Income Taxes
The Division accounts for income taxes under the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes."
Deferred income taxes are determined based on the estimated future tax effects
of differences between the financial statement and the tax basis of assets and
liabilities given the provisions of enacted tax laws. Deferred income tax
provisions and benefits are based on the changes to the asset or liability from
period to period.
The Division files its taxes as part of RMS. Therefore, no tax provision has
been provided for in the accompanying statements of income and parent's equity
in division.
Franchise Fees
Franchise fees are recorded at cost and are being amortized using the
straight-line method over the life of the agreement. Amortization expense
amounted to $75,363 and $83,200 for 1999 and 1998, respectively.
Impairment of Long-Lived Assets
Management of the Division periodically reviews its valuation for long-lived
assets used in operations when indicators of impairment are present. If the
undiscounted cash flows estimated to be generated by those assets are less than
the assets' carrying amount, the Division records an impairment as required
under accounting principles generally accepted in the United States. No such
impairment losses were incurred for the periods presented.
Reserve for Loss on Closed Restaurants
The reserve for loss on closed restaurants represents future obligations on
closed stores that the Company decided to close during 1999 and 1998. These
obligations consist primarily of future lease commitments and restaurant closing
costs for closed stores. The related provision for loss on closed restaurants
for the years ended October 31, 1999 and October 25, 1998 amounted to $180,281
and $14,862, respectively.
Revenue Recognition
Restaurant sales are recognized at time of sale and delivery of product to
customer.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management of the Division to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
<PAGE>
2. PROPERTY AND EQUIPMENT
Property and equipment consist of the following as of October 3, 1999:
<TABLE>
<CAPTION>
Useful
Description Life
--------------------------------------- -----------
<S> <C> <C>
Land - $ 2,553,712
Buildings 31-39 years 8,941,350
Leasehold improvements 7-31 years 10,425,722
Machinery and equipment 7 years 17,328,590
Furniture and fixtures 7 years 705,127
Construction in progress - 397,493
------------
40,351,994
Less- accumulated depreciation (19,268,298)
------------
$ 21,083,696
</TABLE>
Depreciation expense amounted to $2,122,479 and $1,416,079 during 1999 and 1998,
respectively.
3. COMMITMENTS
The Division leases certain operating equipment, furnitures and fixtures and
restaurant locations under noncancellable leases that expire on various dates
through 2017. Rent expense amounted to approximately $3,025,000 and $2,758,000
for 1999 and 1998, respectively.
Future minimum lease payments for all leases are as follows as of October 31,
1999:
<TABLE>
<CAPTION>
Capital Operating
Year Leases Leases
------------------------------------------- -------------- --------------
<S> <C> <C>
2000 $ 1,490,075 $ 2,134,119
2001 1,012,878 2,134,119
2002 532,493 2,134,119
2003 371,169 2,134,119
2004 266,402 2,134,119
Thereafter 1,150,781 32,011,787
----------- ------------
Total minimum lease payments 4,823,798 $ 42,682,382
============
Less amount representing interest (1,319,946)
-----------
Lease obligations reflected as current
($853,144) and noncurrent ($2,650,708)
at October 31, 1999 $ 3,503,852
===========
</TABLE>
<PAGE>
4. RELATED PARTY TRANSACTIONS
The following expenses and liability have been allocated to the Division from
RMS:
1999 1998
-------------- -------------
General and administrative expenses $ 3,631,751 $ 3,172,764
Interest expense on notes payable 115,140 474,715
Accounts payable 2,283,677 -
General and administrative expenses include the expenses of centralized
maintenance, accounting, marketing and other functions that serve the Division's
operators and are allocated by specific identification or proportionately to
revenues of the Division. Interest expense on notes payable was allocated based
on RMS' consolidated average interest rate.
The allocation percentage of accounts payable was based on the Division's cost
of restaurant operations in relation to RMS' consolidated cost of restaurant
operations.
5. NOTES PAYABLE
Notes payable consist of borrowings used primarily to finance the purchase of
restaurant equipment. These borrowings bear interest at various rates ranging
from 9.1% to 9.4% and have 15 year terms. Aggregate maturities of notes payable
are as follows: 2000- $183,415; 2001- $183,415; 2002- $183,415; 2003- $183,415;
2004- $183,415.
6. SUBSEQUENT EVENT
On September 14, 2000, RMS entered into an asset purchase agreement with
Sailormen, Inc. to sell the Division for cash of approximately $38 million.
<PAGE>
INTERFOODS OF AMERICA, INC.
PRO FORMA CONSOLIDATED FINANCIAL DATA
UNAUDITED
The unaudited proforma financial statements gives effect to the asset purchase
by Interfoods of America, Inc. (the "Company") of the RMS Popeye's and Church's
Restaurant Division and also the additional purchase of real estate from some of
it's landlords in the amount of approximately $48.4 million. The Company
financed the acquisition with additional debt. The unaudited proforma Balance
Sheet as of September 30, 1999 and the unaudited proforma Statement of
Operations for the year ended September 30,1999 reflect adjustments to the RMS
historical Balance Sheet as of October 31, 1999 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, 1999,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 Consolidated Financial Statements have been included
<PAGE>
INTERFOODS OF AMERICA, INC.AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
UNAUDITED
SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
INTERFOODS OF RMS PROFORMA PROFORMA
AMERICA, INC. RESTAURANTS ADJUSTMENTS
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 367,910 $ 62,900 (62,900) 1 $ 367,910
Accounts receivable 17,198 42,312 (43,312) 1 17,198
Inventories 278,169 319,716 (319,716) 1 278,169
Prepaid expenses 70,193 -- -- 70,193
------------ ------------ ------------ ------------
Total current assets 733,470 424,928 (424,928) 733,470
------------ ------------ ------------ ------------
Property and equipment, net 11,303,129 21,083,696 16,962,304 2 49,349,129
------------ ------------ ------------ ------------
Other assets:
Deposits 342,832 -- 342,832
Goodwill, net 6,998,611 -- 8,000,000 2 14,998,6
Present value of favorable leases -- 426,740 (426,740) 1
Other intangible assets, net 427,119 787,797 193,203 2 1,408,119
Investment in JRECK 217,191 -- 217,191
Debt issuance costs 310,590 -- 1,191,000 2 1,501,590
Other assets 55,000 -- 137,000 2 192,000
------------ ------------ ------------ ------------
Total other assets 8,351,343 1,214,537 9,094,463 18,660,343
------------ ------------ ------------ ------------
Total assets $ 20,387,942 $ 22,723,161 $ 25,631,839 $ 68,742,942
============ ============ ============ ============
</TABLE>
(Continued)
<PAGE>
INTERFOODS OF AMERICA, INC.AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
UNAUDITED
SEPTEMBER 30, 1999
(Continued)
<TABLE>
<CAPTION>
INTERFOODS OF RMS PROFORMA PROFORMA
AMERICA, INC. RESTAURANTS ADJUSTMENTS
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 3,149,618 $ 4,185,128 (3,535,128) 2 3,799,618
Current portion of long-term debt 794,923 183,415 4,674,585 2 5,652,923
Current portion of capital leases obligations -- 853,144 (351,144) 2 502,000
Current portion of deferred income on
sale-leaseback transactions 45,248 -- 45,248
Reserve for loss on closed restaurants 355,143 (355,143) 1 --
------------ ------------ ------------ ------------
Total current liabilities 3,989,789 5,576,830 433,170 9,999,789
Long-term debt, net of current portion 12,043,867 1,241,599 40,934,401 2 54,219,867
Deferred taxes 79,565 -- 79,565
Capital lease Obligation -- 2,650,708 (2,481,708) 2 169,000
Deferred income on sale-leaseback transactions,
net of current portion 753,665 -- -- 753,665
------------ ------------ ------------ ------------
Total liabilities 16,866,886 9,469,137 38,885,863 65,221,886
------------ ------------ ------------ ------------
Mandatorily redeemable Class B preferred stock: 285,000 -- -- 285,000
------------ ------------ ------------ ------------
Stockholders' equity:
Common stock, 8,271 -- 8,271
Additional paid-in capital 4,349,093 -- 4,349,093
Accumulated equity (deficit) (393,040) 13,254,024 (13,254,024) 1 (393,040)
Treasury stock, at cost (728,268) -- -- (728,268)
------------ ------------ ------------ ------------
Total stockholders' equity 3,236,056 13,254,024 (13,254,024) 3,236,056
------------ ------------ ------------ ------------
Total liabilities and stockholders' equity $ 20,387,942 $ 22,723,161 $ 25,631,839 $ 68,742,942
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of this pro forma
consolidated balance sheet.
<PAGE>
INTERFOODS OF AMERICA, INC. AND SUBSIDIARIES
PRO FORMA STATEMENT OF OPERATIONS
UNAUDITED
FOR THE YEAR ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
INTERFOODS OF RMS PROFORMA PROFORMA
AMERICA, INC. RESTAURANTS ADJUSTMENTS
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues: $ 37,796,392 $ 61,508,174 99,304,566
Costs and operating expenses:
Cost of restaurant operations 31,738,872 51,905,624 (915,901) 3 82,728,595
General and administrative expenses 3,992,330 3,699,006 (1,672,362) 4 6,018,974
Depreciation and amortization 778,051 2,364,168 (393,646) 5 2,748,573
------------ ------------ ------------ ------------
Total costs and operating expenses 36,509,253 57,968,798 (2,981,909) 91,496,142
------------ ------------ ------------ ------------
Operating profit 1,287,139 3,539,376 2,981,909 7,808,424
------------ ------------
Other income (expense):
Write down of investment in JRECK (182,809) -- (182,809)
Interest expense (892,906) (377,452) (3,579,598) 6 (4,849,956)
Other expense (227,378) (19,433) -- (246,811)
------------ ------------ ------------ ------------
Total other expense (1,303,093) (396,885) (3,579,598) (5,279,576)
------------ ------------ ------------ ------------
Income (Loss) before income tax provision (15,954) 3,142,491 (597,689) 2,528,848
Income tax provision (130,370) -- (729,438) 7 (859,808)
------------ ------------ ------------ ------------
Net loss $ (146,324) $ 3,142,491 (1,327,127) 1,669,040
============ ============ ============ ============
Net loss per share - basic and diluted $ (0.03) $ 0.29
============ ============
Weighted average shares outstanding:
Basic and diluted 5,713,658 5,713,658
============ ============
</TABLE>
The accompanying notes are an integral part of this pro forma
consolidated financial statement.
<PAGE>
INTERFOODS OF AMERICA, INC.
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENT
1. Amounts represent balance sheet and related statement of operations items
which were not purchased from RMS.
2. Amount represents the net effect of the purchase of the assets for the
Seventy-three stores acquired from RMS as well as additional land and
buildings purchased from its third party landlords. The following
represents the approximate detail of the transaction:
Liabilities $ 48,355,000
------------
Purchase price $ 48,355,000
------------
Fair value of assets acquired:
Land and buildings 19,463,000
Equipment and Leasehold Improvements 18,583,000
Goodwill 8,000,000
Deferred debt issuance costs 1,191,000
Franchise and transfer fees 981,000
Development Rights 137,000
------------
$ 48,355,000
============
3. Amount represents the reduction in rent cost as a result of the asset
purchase transaction.
4. Amount represents the reduction of general and administrative costs
associated with reduction of the RMS' s office cost that would not have
existed on a proforma basis for fiscal year ended September 30, 1999.
5. Amount represents the depreciation and amortization adjustment for the new
assets acquired from the purchase.
6. Amount reflects additional interest incurred by the acquisition.
7. Amount represents the tax effect at 34% on the proforma results.
