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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): November 13, 1998
GORGES/QUIK-TO-FIX FOODS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 333-20155 58-2263508
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
9441 LBJ FREEWAY
SUITE 214
DALLAS, TEXAS 75243
(Address of Principal Executive Offices)
972-690-7675
(Registrant's telephone number, including area code)
Page 1 of 4
Index to Exhibits on Page 4
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ITEM 5. OTHER EVENTS.
On November 13, 1998, Gorges/Quik-to-Fix Foods, Inc. (the "Company") issued a
press release announcing its results for the fiscal quarter and fiscal year
ended October 3, 1998. The press release issued in connection therewith is
filed herewith as Exhibit 99.1.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Exhibits
--------
Exhibit No. Description
---------- -----------
99.1 Press Release of the Company dated November 13, 1998
2
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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.
GORGES/QUIK-TO-FIX FOODS, INC.
(Registrant)
Date: November 13, 1998 By /s/ A. Scott Letier
--------------------------------
A. Scott Letier
Chief Financial Officer
3
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INDEX TO EXHIBITS
-----------------
Exhibit
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99.1 Press Release of the Company dated November 13, 1998
4
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EXHIBIT 99.1
Press Release of the Company dated November 13, 1998
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EXHIBIT 99.1
GORGES/QUIK-TO-FIX FOODS, INC., ANNOUNCES RESULTS OF THE FISCAL FOURTH QUARTER,
AND ANNUAL RESULTS FOR FISCAL 1998
Dallas--Gorges/Quik-to-Fix Foods, Inc. today announced that its sales increased
approximately $0.1 million, or 0.2%, from $56.9 million in the thirteen week
quarter ended September 27, 1997 to approximately $57.0 million in the fourteen
week quarter ended October 3, 1998. Sales in pounds for the fiscal fourth
quarter decreased approximately 1.1 million pounds, or 2.5%, from 44.7 million
pounds in the thirteen week quarter ended September 27, 1997 to approximately
43.6 million pounds in the fourteen week quarter ended October 3, 1998. Value
added product sales decreased approximately 0.1 million pounds, or 0.4%, from
25.6 million pounds in the thirteen week quarter ended September 27, 1997 to
approximately 25.5 million pounds in the fourteen week quarter ended October 3,
1998, primarily a result of lost national account business. Ground beef product
sales decreased approximately 1.0 million pounds, or 5.2%, from 19.1 million
pounds in the thirteen week quarter ended September 27, 1997 to approximately
18.1 million pounds in the fourteen week quarter ended October 3, 1998,
primarily a result of a large club store customer not renewing its contract with
the Company.
Sales decreased approximately $3.1 million, or 1.5%, from $204.7 million in the
pro-forma fifty-two week year ended September 27, 1997 to approximately $201.6
million in the fifty-three week year ended October 3, 1998. This decrease
reflects decreased sales volume of value-added products, partially offset by
increased sales volume of ground beef products and the additional week in fiscal
1998. Ground beef sales increased approximately 1.6 million pounds, or 2.6%,
from 62.1 million pounds in the pro-forma fiscal year ended September 27, 1997
to approximately 63.7 million pounds in the fiscal year ended October 3, 1998.
Value added product sales decreased approximately 1.1 million pounds, or 1.2%,
from 93.6 million pounds in the fiscal year ended September 27, 1997 to
approximately 92.5 million pounds in the fiscal year ended October 3, 1998. The
decrease in value added product sales reflects weakness in the Company's
national accounts segment partially offset by an increase in lower margin sales
of co-pack product (product manufactured for sale to other manufacturers or
marketers).
Operating income/(loss) (income before interest, taxes and other non-operating
items) decreased approximately $21.1 million from $4.1 million in the thirteen
week quarter ended September 27, 1997 to approximately ($17.0) million in the
fourteen week quarter ended October 3, 1998. EBITDA (earnings before interest,
taxes, depreciation and amortization), decreased approximately $6.8 million, or
96.0%, from $7.1 million in the thirteen week quarter ended September 27, 1997
to approximately $0.3 million in the fourteen week quarter ended October 3,
1998.
The decreases in operating income and EBITDA are partially the result of lower
sales levels and the Company's efforts to reduce inventories, which has resulted
in lower production volumes and increased per pound plant conversion costs. The
Company has reduced levels of inventory by approximately $13.4 million, or
45.7%, since December 27, 1997, including a reduction of approximately $6.5
million in the in the fourteen week
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quarter ended October 3, 1998, a 28.7% reduction from June 27, 1998. The
decreases in operating income and EBITDA were also the result of a lower of cost
or market inventory re-valuation resulting from substantial declines in
inventory value caused by a decline in commodity beef prices in the second half
of the current fiscal year and an adjustment in the Company's accounting
estimates for sales, promotional and bid activity.
The Company's results for the fiscal year and fourteen week quarter ended
October 3, 1998 include a restructuring charge of approximately $13.9 million
resulting from the start of a plan of restructuring and the related impairment
of the value of its Orange City, Iowa, ground beef facility. Excluding this
charge, operating income decreased approximately $7.2 million from $4.1 million
in the thirteen week quarter ended September 27, 1997 to approximately ($3.1)
million in the fourteen week quarter ended October 3, 1998. The Company
previously has announced its intent to discontinue production of raw ground
beef. The Company has not yet completed the plan of restructuring, and
anticipates that it may be required to take additional charges related to the
plan in the first quarter of fiscal 1999.
As previously announced, the Company intends to exit the raw ground beef
business and sell its raw ground beef production facility. The Company has made
an offer to purchase for cash (the "Tender Offer") not less than $36,000,000
(the "Minimum Tender Condition") and up to $46,000,000 aggregate principal
amount of its Senior Subordinated Notes Due 2006, Series B (the "Notes"). The
consummation of the Tender Offer is subject to the satisfaction of a number of
conditions, including: (a) the effectiveness of an amendment to the Company's
credit facility, (b) the receipt by the Company through the Company's parent,
Gorges Holding Corporation ("GHC"), of an equity contribution from CGW Southeast
Partners III, L.P. ("CGW"), the majority shareholder of GHC, of not less than
$11.5 million or such greater amount as is necessary to finance the payment of
the Tender Offer consideration, (c) CGW providing to GHC up to $3.0 million,
which will be provided to the Company and used to finance the December 1, 1998
interest payment on Notes outstanding after consummation of the Offer, (d) there
having been validly tendered (and not withdrawn) prior to November 30, 1998,
Notes representing not less than the Minimum Tender Condition, and (e) certain
other conditions. All the conditions are mutually dependent, and all must be
satisfied. Additional information about the Tender Offer and the Company's
restructuring plan is available in the Company's Current Report on Form 8-K,
dated October 29, 1998.
The financial information included in this press release is preliminary and has
not been audited. The Company's audited financial statements for the fiscal
year ended October 3, 1998 will be included in the Company's Annual Report on
Form 10-K which the Company intends to file prior to January 1, 1999. The
financial information included herein may be different from the final audited
financial statements.
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RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED FOURTEEN WEEKS ENDED
QUARTER ENDED 9/27/97 10/3/98
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Sales $56,898 $ 56,988
Gross Profit $10,790 $ 6,482
Operating Income/Loss (pre
Restructuring charges)(A) $ 4,101 $ (3,111)
Operating Income/loss $ 4,101 $(17,011)
Interest expense $ 4,042 $ 4,616
EBITDA $ 7,134 $ 282
</TABLE>
<TABLE>
<CAPTION>
PRO-FORMA (B)
FISCAL YEAR ENDED 52 WEEKS ENDED 9/27/97 53 WEEKS ENDED 10/3/98
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Sales $204,704 $201,581
Gross Profit $ 38,008 $ 29,835
Operating Income (pre
Restructuring charges)(A) $ 12,098 $ (1,339)
Operating Income $ 12,098 $(15,239)
Interest expense $ 16,398 $ 17,243
EBITDA $ 24,037 $ 11,477
</TABLE>
(A) Charges related to the overall restructuring of the Company including the
exiting of the ground beef business and the related plant sale/closing.
(B) Pro-forma adjusted to include the two months of fiscal 1997, when the
Company's operations were a part of Tyson Foods, Inc.
CAPITALIZATION TABLE
<TABLE>
<CAPTION>
PRE TENDER OFFER PRO-FORMA(4)
ACTUAL POST TENDER OFFER
OCTOBER 3, TENDER OFFER OCTOBER 3,
1998 ADJUSTMENTS 1998
---------------- ------------ -----------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Current debt:
Revolving credit facility $ 19,000 $(19,000)(1)
Term credit facility 28,850 (20,350)(1) $ 8,500
Long term debt:
Revolving credit facility 19,000 (1) 19,000
Term credit facility 20,350 (1) 20,350
11.5% Senior Subordinated Notes 100,000 (5) (48,000)(2) 52,000
-------- -------- -------
Total debt 147,850 (48,000) 99,850
Stockholders' equity 10,572 44,514 (3) 55,086
-------- -------- --------
Total capitalization $158,422 (3,486) $154,936
======== ======== ========
</TABLE>
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(1) To reflect changes in debt maturity based on the amendment negotiated to
the Senior Credit Facilities, assumes the successful completion of the
Tender Offer.
(2) To reflect the retirement of the minimum amount of the Notes to be
purchased under terms of the Tender Offer, plus the conversion of the Notes
already owned by the Company's majority shareholder.
(3) To reflect the equity effects of the successful completion of the minimum
Tender Offer. The adjustments reflect an equity contribution from the
current stockholders of $17.8 million, a $30.4 million gain on the early
retirement of $48 million aggregate principle amount of the Notes, and an
estimated $3.7 million in transaction expenses and write-off of origination
fees related to the Notes and the Company's Senior Credit Facilities.
(4) Assumes that the above items in (1), (2) and (3) occurred on or before
October 3, 1998.
(5) Assumes no defaults occur prior to the issuance of the Company's 10-K.
Gorges/Quik-to-Fix Foods, Inc., is a leading producer, marketer and distributor
of quality value added processed frozen food products; beef, and to a lesser
extent pork and poultry products supplied primarily to the foodservice industry
under its Gorges(R) and Quik-to-Fix(R) brands. In addition, the Company co-
packs a variety of products for the retail trade as well as other foodservice
outlets, and is also a converter of protein products under the USDA Commodity
Reprocessing Program.
Certain statements in this press release regarding future expectations and
financial performance, other than historical information, may be regarded as
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements are based on an assessment of a
variety of factors, contingencies and uncertainties deemed relevant by
management, including technological changes, competitive products and services,
management issues, as well as risks described from time to time in the Company's
Annual Report of Form 10-K for the fiscal year ended September 27, 1997, and its
periodic reports to the Securities and Exchange Commission, including Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K. As a result, the actual
results realized by the Company could differ materially from the statements made
herein. Also, there can be no assurance that the Tender Offer will be
consummated. Consummation of the Tender Offer and satisfaction of the
conditions to the Tender Offer are necessary to address the Company's long term
financing needs. Readers of this report are cautioned not to place undue
reliance on the forward-looking statements made in this press release.
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