<PAGE>
May 14, 1999
Securities and Exchange Commission
Fiduciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Eagle Family Foods Holdings, Inc.
Eagle Family Foods, Inc.
Report on Form 10-Q/A
(File Nos. 333-50305 and 333-50305-01)
--------------------------------------
Ladies and Gentlemen:
Pursuant to the Securities Exchange Act of 1934, as amended, Eagle Family Foods
Holdings, Inc., a Delaware corporation, and Eagle Family Foods, Inc., a Delaware
corporation (the "Registrants") transmit herewith for filing with the Securities
and Exchange Commission (the "Commission") an amendment to the Registrants'
Report on Form 10-Q for the quarterly period ended September 26, 1998 (the "10-
Q/A").
The 10-Q/A is being filed to correct certain typographical errors in the
Registrants' historical Statements of Cash Flows for the three months ended
September 27, 1997.
This filing is being effected by direct transmission to the Commission's EDGAR
System.
If you have any questions or comments with respect to this filing, please do not
hesitate to contact the undersigned at (614) 225-7311.
Very truly yours,
/s/ Marc Currey
<PAGE>
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________
FORM 10-Q/A
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 26, 1998
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
FOR THE TRANSITION PERIOD FROM _______ TO _____
COMMISSION FILE NUMBERS 333-50305 AND 333-50305-01
___________
EAGLE FAMILY FOODS HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3983598
(State or other jurisdiction (IRS Employer
of Incorporation or organization) Identification Number)
EAGLE FAMILY FOODS, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3982757
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
220 White Plains Road 10591
TARRYTOWN, NY (Zip Code)
(Address of principal executive office)
REGISTRANTS' TELEPHONE NUMBER, INCLUDING AREA CODE: (914) 631-3100
Indicate by check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days.
Yes [X] No [_]
As of November 9, 1998, there were 970,880 shares of Common Stock, par value
$.01 per share, of Eagle Family Foods Holdings, Inc. and 10,000 shares of Common
Stock, par value $.01 per share, of Eagle Family Foods, Inc. outstanding,
respectively.
================================================================================
<PAGE>
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
ITEM 1. FINANCIAL STATEMENTS PAGE
----
<S> <C>
Eagle Family Foods, Inc.
Eagle Family Foods, Inc. Statements of Operations for the three months
ended September 26, 1998 and September 27, 1997............................................................. 2
Eagle Family Foods, Inc. Balance Sheets, as of September 26, 1998 and June 27, 1998............................. 3
Eagle Family Foods, Inc. Statements of Cash Flows for the three months
ended September 26, 1998 and September 27, 1997............................................................. 4
Eagle Family Foods Holdings, Inc.
Eagle Family Foods Holdings, Inc. Consolidated Statements of Operations for the three months
ended September 26, 1998 and September 27, 1997............................................................. 5
Eagle Family Foods Holdings, Inc. Consolidated Balance Sheets, as of September 26, 1998 and
September 27, 1997.......................................................................................... 6
Eagle Family Foods Holdings, Inc. Consolidated Statements of Cash Flows for the three months
ended September 26, 1998 and September 27, 1997............................................................. 7
Notes to the Financial Statements............................................................................... 8
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
EAGLE FAMILY FOODS, INC.
STATEMENTS OF OPERATIONS
For the Three Months Ended September 26, 1998
AND SEPTEMBER 27, 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 26, SEPTEMBER 27,
1998 1997
--------------- ---------------
Predecessor
<S> <C> <C>
Net sales........................................................................ $50,957 $52,833
Cost of goods sold............................................................... 22,558 25,290
--------------- ---------------
Gross profit..................................................................... 28,399 27,543
Distribution expense............................................................. 2,978 4,231
Marketing expense................................................................ 12,587 12,646
General and administrative expense............................................... 2,596 3,644
Amortization of intangibles...................................................... 7,113 731
--------------- ---------------
Operating income................................................................. 3,125 6,291
Interest expense, net............................................................ 6,976 -
--------------- ---------------
Income (loss) before income taxes................................................ (3,851) 6,291
Income tax expense (benefit)..................................................... (1,350) 2,615
--------------- ---------------
Net income (loss)................................................................ $(2,501) $ 3,676
=============== ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
EAGLE FAMILY FOODS, INC.
BALANCE SHEETS
AS OF SEPTEMBER 26, 1998 AND JUNE 27, 1998
(DOLLARS IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
SEPTEMBER JUNE 27,
26, 1998 1998
-------------- --------------
ASSETS (Unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents.............................................................. $ 2,258 $ 1,812
Accounts receivable, net............................................................... 16,046 12,368
Inventories (Note 3).................................................................. 34,684 32,001
Other current assets................................................................... 3,030 261
------------- -------------
Total Current Assets................................................................ 56,018 46,442
Property and Equipment, Net (Note 4)..................................................... 27,274 24,791
Notes Receivable from Related Parties (Note 7)........................................... 825 825
Intangibles, Net (Note 5)............................................................... 296,841 303,950
Deferred Income Taxes.................................................................... 15,626 14,246
Other Noncurrent Assets.................................................................. 8,761 8,986
------------- -------------
Total Assets............................................................................. $405,345 $399,240
============= =============
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Current portion of long-term debt (Note 6)............................................. $ 1,250 $ 1,250
Accounts payable....................................................................... 9,008 9,665
Other accrued liabilities.............................................................. 11,791 8,122
Accrued interest....................................................................... 4,816 7,209
------------- -------------
Total Current Liabilities................................................................ 26,865 26,246
------------- -------------
Long-Term Debt (Note 6).................................................................. 325,250 317,000
------------- -------------
Commitments and Contingencies
Stockholder's Equity:
Common stock, $0.1 par value, 250,000 shares authorized, 10,000 shares
issued and outstanding.............................................................. 1 1
Additional paid-in capital............................................................. 82,500 82,500
Accumulated deficit.................................................................... (28,945) (26,444)
Accumulated translation adjustment..................................................... (326) (63)
------------- -------------
Total Stockholder's Equity.......................................................... 53,230 55,994
------------- -------------
Total Liabilities and Stockholder's Equity............................................... $405,345 $399,240
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
EAGLE FAMILY FOODS, INC.
Statements of Cash Flows
FOR THE THREE MONTHS ENDED SEPTEMBER 26, 1998
AND SEPTEMBER 27, 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 26, SEPTEMBER 27,
1998 1997
--------------- ---------------
Predecessor
<S> <C> <C>
Cash Flows Used In Operating Activities:
Net income (loss)........................................................................... $(2,501) $ 3,676
Adjustments to reconcile net income (loss) to net cash from (used in) operating activities
Depreciation and amortization............................................................ 8,047 1,551
Deferred taxes........................................................................... (1,380) -
Net change in current assets and liabilities
Accounts receivable.................................................................... (3,678) (3,728)
Inventories............................................................................ (2,683) 7,170
Accounts payable....................................................................... (657) 98
Other assets........................................................................... (2,769) (290)
Other liabilities...................................................................... 1,078 (141)
------------ ------------
Cash used in operating activities........................................................... (4,543) 8,336
------------ ------------
Cash Used In Investing Activities:
Capital expenditures........................................................................ (3,261) (1,025)
------------ ------------
Cash used in investing activities........................................................... (3,261) (1,025)
------------ ------------
Cash From Financing Activities:
Proceeds from long-term debt................................................................ 8,500 -
Payment of long-term debt................................................................... (250) -
Net increase in intercompany investment..................................................... - (7,311)
------------ ------------
Cash from financing activities.............................................................. 8,250 (7,311)
------------ ------------
Increase (decrease) in cash and cash equivalents.............................................. 446 0
Cash and cash equivalents at beginning of period.............................................. 1,812 4
------------ ------------
Cash and cash equivalents at end of period.................................................... $ 2,258 $ 4
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
EAGLE FAMILY FOODS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 26, 1998
AND SEPTEMBER 27, 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 26, SEPTEMBER 27,
1998 1997
-------------- --------------
(Predecessor)
<S> <C> <C>
Net sales........................................................................ $ 50,957 $ 52,833
Cost of goods sold............................................................... 22,558 25,290
------------- -------------
Gross profit..................................................................... 28,399 27,543
Distribution expense............................................................. 2,978 4,231
Marketing expense................................................................ 12,587 12,646
General and administrative expense............................................... 2,603 3,644
Amortization of intangibles...................................................... 7,113 731
------------- -------------
Operating income................................................................. 3,118 6,291
Interest expense, net............................................................ 6,976 -
------------- -------------
Income (loss) before income taxes................................................ (3,858) 6,291
Income tax expense (benefit)..................................................... (1,350) 2,615
------------- -------------
Net income (loss)................................................................ $ (2,508) $ 3,676
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
EAGLE FAMILY FOODS HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 26, 1998 AND JUNE 27, 1998
(DOLLARS IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
SEPTEMBER JUNE 27,
26, 1998 1998
-------------- --------------
ASSETS (Unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents.............................................................. $ 2,258 $ 1,812
Accounts receivable, net............................................................... 16,046 12,368
Inventories (Note 3).................................................................. 34,684 32,001
Other current assets................................................................... 3,030 261
------------ ------------
Total Current Assets................................................................ 56,018 46,442
Property and Equipment, Net (Note 4)..................................................... 27,274 24,791
Intangibles, Net (Note 5)............................................................... 296,841 303,950
Deferred Income Taxes.................................................................... 15,626 14,246
Other Noncurrent Assets.................................................................. 8,761 8,986
------------ ------------
Total Assets............................................................................. $ 404,520 $ 398,415
============ ============
Liabilities and Stockholders' Deficit
Current Liabilities:
Current portion of long-term debt (Note 6)............................................. $ 1,250 $ 1,250
Accounts payable....................................................................... 9,009 9,666
Other accrued liabilities.............................................................. 11,791 8,122
Accrued interest....................................................................... 4,816 7,209
------------ ------------
Total Current Liabilities................................................................ 26,866 26,247
------------ ------------
Long-Term Debt (Note 6).................................................................. 325,250 317,000
------------ ------------
Commitments and Contingencies
Redeemable Preferred Stock:
Series A preferred stock, $100 stated value,
1,000,000 shares authorized, 816,750 shares
issued and outstanding, at redemption
value............................................................................... 87,180 85,144
Subscription receivable (Note 7)....................................................... (817) (817)
------------ ------------
86,363 84,327
------------ ------------
Stockholders' Deficit:
Common stock, $0.1 par value, 1,200,000 shares authorized, 970,880 shares
issued and outstanding.............................................................. 10 10
Additional paid-in capital............................................................. 962 962
Unearned Compensation.................................................................. (128) (135)
Accumulated deficit.................................................................... (34,469) (29,925)
Subscription receivables............................................................... (8) (8)
Accumulated translation adjustment..................................................... (326) (63)
------------ ------------
Total Stockholders' Deficit......................................................... (33,959) (29,159)
------------ ------------
Total Liabilities and Stockholders' Deficit............................................... $ 404,520 $ 398,415
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
EAGLE FAMILY FOODS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED SEPTEMBER 26, 1998
AND SEPTEMBER 27, 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 26, SEPTEMBER 27,
1998 1997
-------------- --------------
Predecessor
<S> <C> <C>
Cash Flows Used In Operating Activities:
Net income (loss)........................................................................... $ (2,508) $ 3,676
Adjustments to reconcile net income (loss) to net cash from (used in) operating activities
Depreciation and amortization............................................................ 8,054 1,551
Deferred taxes........................................................................... (1,380) -
Net change in current assets and liabilities
Accounts receivable.................................................................... (3,678) (3,728)
Inventories............................................................................ (2,683) 7,170
Accounts payable....................................................................... (657) 98
Other assets........................................................................... (2,769) (290)
Other liabilities...................................................................... 1,078 (141)
------------ ------------
Cash used in operating activities........................................................... (4,543) 8,336
------------ ------------
Cash Used In Investing Activities:
Capital expenditures........................................................................ (3,261) (1,025)
------------ ------------
Cash used in investing activities........................................................... (3,261) (1,025)
------------ ------------
Cash From Financing Activities:
Proceeds from long-term debt................................................................ 8,500 -
Payment of long-term debt................................................................... (250) -
Net increase in intercompany investment..................................................... - (7,311)
------------ ------------
Cash from financing activities.............................................................. 8,250 (7,311)
------------ ------------
Increase (decrease) in cash and cash equivalents.............................................. 446 0
Cash and cash equivalents at beginning of period.............................................. 1,812 4
------------ ------------
Cash and cash equivalents at end of period.................................................... $ 2,258 $ 4
============ ============
</TABLE>
7
<PAGE>
EAGLE FAMILY FOODS, INC.
EAGLE FAMILY FOODS HOLDINGS, INC.
NOTES TO THE FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION:
The accompanying financial statements present the financial position,
results of operations and cash flows of Eagle Family Foods, Inc. ("EFFI" or the
"Company") and the consolidated financial position, results of operations and
cash flows of Eagle Family Foods Holdings, Inc. ("Holdings") and its wholly-
owned subsidiary, EFFI. EFFI and Holdings are collectively referred to as the
"Company," unless the context indicates otherwise. All significant intercompany
balances and transactions have been eliminated in consolidation.
The consolidated financial statements as of September 26, 1998 and
September 27, 1997 and for the three month periods ended September 26, 1998 and
September 27, 1997 are unaudited and are presented pursuant to the rules and
regulations of the Securities and Exchange Commission. Accordingly, these
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto contained in the Annual
Report on Form 10-K of Holdings and EFFI for the year ended June 27, 1998. In
the opinion of management, the accompanying consolidated financial statements
reflect all adjustments (which are of a normal recurring nature) necessary to
present fairly the financial position and results of operations and cash flows
for the interim periods, but are not necessarily indicative of the results of
operations for a full fiscal year.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Comprehensive Income
A reconciliation of comprehensive loss for the three months ended September
26, 1998 consists of (in thousands):
<TABLE>
<CAPTION>
EAGLE FAMILY
FOODS HOLDINGS, EAGLE FAMILY
Inc. FOODS, INC.
------------------ ------------------
<S> <C> <C>
Net loss.............................................................. $ (2,508) $ (2,501)
Foreign currency translation.......................................... (263) (263)
------------------ ------------------
Comprehensive Loss.................................................. $ (2,771) $ (2,764)
================== ==================
</TABLE>
As the effect of the other comprehensive income item was not material, a
separate statement of comprehensive income has not been presented.
3. INVENTORIES:
Inventories are stated at lower of cost or market at September 26, 1998 and
at June 27, 1998 and consisted of the following (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 26, JUNE 27,
1998 1998
-------------------- -------------------
<S> <C> <C>
Finished goods...................................................... $32,191 $29,717
Raw material........................................................ 2,493 2,284
-------------------- -------------------
Total inventories................................................. $34,684 $32,001
==================== ===================
</TABLE>
8
<PAGE>
EAGLE FAMILY FOODS, INC.
EAGLE FAMILY FOODS HOLDINGS, INC.
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
4. PROPERTY AND EQUIPMENT:
Property and equipment is recorded at cost on September 26, 1998 and June
27, 1998, and consisted of the following (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 26, JUNE 27,
1998 1998
---------------- --------------
<S> <C> <C>
Land................................................................................ $ 470 $ 470
Buildings and improvements.......................................................... 6,279 6,185
Machinery and equipment............................................................. 18,316 18,159
Construction in progress............................................................ 4,444 1,505
---------------- --------------
Total property and equipment...................................................... 29,509 26,319
Accumulated depreciation............................................................ (2,235) (1,528)
---------------- --------------
Net property and equipment........................................................ $27,274 $24,791
================ ==============
</TABLE>
5. INTANGIBLE ASSETS:
Intangible assets are amortized on a straight-line basis over their
estimated useful lives and consisted of the following (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 26, JUNE 27, ESTIMATED
1998 1998 USEFUL
LIVES
--------------- ---------------- ------------
<S> <C> <C> <C>
Tradenames........................................ $141,000 $141,000 40 years
Goodwill.......................................... 136,499 136,505 40 years
Covenant not to compete........................... 21,000 21,000 5 years
Master customer services agreement................ 17,300 17,300 1 year
--------------- ----------------
Total intangible assets........................ 315,799 315,805
Accumulated amortization.......................... (18,958) (11,855)
--------------- ----------------
Net intangible assets.......................... $296,841 $303,950
=============== ================
</TABLE>
6. DEBT OBLIGATIONS:
Debt obligations consisted of the following (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 26, JUNE 27,
1998 1998
--------------- ---------------
<S> <C> <C>
7.875% term loan facility due December 31, 2005............................ $ 174,500 $ 174,750
8.750% senior subordinated notes due January 15, 2008...................... 115,000 115,000
7.625% revolving credit facility due December 31, 2004..................... 37,000 28,500
--------------- ---------------
Total debt obligations.............................................. 326,500 318,250
Less current portion of long-term debt............................ (1,250) (1,250)
--------------- ---------------
Long-term debt obligations.......................................... $ 325,250 $ 317,000
=============== ===============
</TABLE>
9
<PAGE>
EAGLE FAMILY FOODS, INC.
EAGLE FAMILY FOODS HOLDINGS, INC.
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
Senior Credit Facilities
EFFI received senior bank financing from a group of lenders in an aggregate
principal amount of up to $245.0 million (the "Senior Credit Facilities"). The
Senior Credit Facilities consist of (i) a $70.0 million seven-year revolving
credit facility (the "Revolving Credit Facility") and (ii) a $175.0 million
eight-year term loan (the "Term Loan Facility"). The Senior Credit Facilities
are guaranteed by Holdings and all future domestic subsidiaries of the Company.
The obligations of EFFI under the Senior Credit Facilities are collateralized
by (i) 100% of the capital stock of EFFI and each of its subsidiaries and (ii) a
first priority collateral interest in substantially all assets and properties of
EFFI and its future domestic subsidiaries. The fair market value of the senior
credit facilities at September 26, 1998 approximates the carrying value.
On April 22, 1998, the Company entered into interest rate swap agreements in
order to fix the interest rate on a portion of the Term Loan Facility. The Term
Loan Facility bears interest at LIBOR plus 2.250%. These swap agreements
commenced on July 23, 1998 and fixed the LIBOR rate at 5.955% on $75.0 million
and 5.905% on $25.0 million of the $175.0 million Term Loan Facility. These swap
agreements expire on December 29, 2000 and December 31, 2002, respectively. The
estimated cost to cancel the interest rate swap agreements at September 26, 1998
was approximately $3.5 million based on current interest rates for similar
instruments.
Senior Subordinated Notes
EFFI issued $115.0 million of senior subordinated notes (the "Notes") and
received cash proceeds of approximately $112.0 million net of underwriting
discount. The Notes are due January 15, 2008 and bear interest of 8.75% per
annum payable on January 15 and July 15, which commenced July 15, 1998. The
fair market value of the senior subordinated notes was approximately $104.0
million at September 26, 1998.
Annual principal payments for the next five calendar years and thereafter
consist of the following (in thousands):
<TABLE>
<S> <C>
1999...................................................................... $ 1,000
2000...................................................................... 1,000
2001...................................................................... 1,000
2002...................................................................... 1,000
2003...................................................................... 10,000
Thereafter................................................................ 312,500
------------
$326,500
============
</TABLE>
10
<PAGE>
EAGLE FAMILY FOODS, INC.
EAGLE FAMILY FOODS HOLDINGS, INC.
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
7. STOCK SUBSCRIPTION AGREEMENT
On January 23, 1998, GEI, Warburg, and several officers of Holdings
subscribed to purchase a combined 816,750 shares of preferred stock at $100 per
share and 825,000 shares of common stock at $1 per share. Full payment for the
stock was received from all but two of the officers, who subscribed to purchase
an aggregate of 13,117.5 shares of preferred stock and 13,250 shares of common
stock. Notes aggregating $825,000 were received from the two officers as partial
consideration for the subscription. These notes are collateralized by the shares
issued. They have a stated interest rate of prime (as defined) plus .5%, with a
maturity date of January 23, 2003. The notes have been assigned between common
and preferred stock in accordance with the management subscription agreements.
Accordingly, notes related to common stock have been presented in the
consolidated balance sheet as a reduction of Stockholders' Equity while notes
related to the preferred stock have been presented as a reduction of redeemable
preferred stock.
11
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrants have duly caused this report to be signed on their behalf by the
undersigned thereunto duly authorized.
EAGLE FAMILY FOODS HOLDINGS, INC.
EAGLE FAMILY FOODS, INC.
By: /s/ John O'C Nugent
-------------------------------
John O'C Nugent
President and Chief Executive
Officer
By: /s/ Craig A. Steinke
-------------------------------
Craig A. Steinke
Vice President and Chief Financial
Officer
Date: May 14, 1999
12
