<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
or
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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 offices)
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 14, 2000, there were 1,116,704 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
<TABLE>
<CAPTION>
Part I - Financial Information
Item 1. Financial Statements Page
----
<S> <C>
Eagle Family Foods, Inc.
Eagle Family Foods, Inc. Statements of Operations and Comprehensive Loss for the thirteen week periods
ended September 30, 2000 and October 2, 1999....................................................................... 3
Eagle Family Foods, Inc. Balance Sheets as of September 30, 2000 and July 1, 2000.................................. 4
Eagle Family Foods, Inc. Statements of Cash Flows for the thirteen week periods ended September 30, 2000
and October 2, 1999................................................................................................ 5
Eagle Family Foods, Inc. Statement of Changes in Stockholder's Equity for the thirteen week period
ended September 30, 2000........................................................................................... 6
Eagle Family Foods Holdings, Inc.
Eagle Family Foods Holdings, Inc. Consolidated Statements of Operations and Comprehensive Loss for the
thirteen week periods ended September 30, 2000 and October 2, 1999................................................. 7
Eagle Family Foods Holdings, Inc. Consolidated Balance Sheets as of September 30, 2000 and July 1, 2000............ 8
Eagle Family Foods Holdings, Inc. Consolidated Statements of Cash Flows for the thirteen week periods
ended September 30, 2000 and October 2, 1999....................................................................... 9
Eagle Family Foods Holdings, Inc. Consolidated Statement of Changes in Stockholders' Deficit for the
thirteen week period ended September 30, 2000...................................................................... 10
Notes to the Financial Statements.................................................................................. 11
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations..................... 15
Item 3. Quantitative and Qualitative Disclosures About Market Risk................................................ 19
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K.......................................................................... 21
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
EAGLE FAMILY FOODS, INC.
Statements of Operations and Comprehensive Loss
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Week
Period Ended
September 30, October 2,
2000 1999
--------------- ---------------
<S> <C> <C>
Net sales........................................................... $ 51,232 $ 55,157
Cost of goods sold.................................................. 23,942 29,436
--------------- ---------------
Gross margin..................................................... 27,290 25,721
Distribution expense................................................ 3,375 3,594
Marketing expense................................................... 12,109 17,432
General and administrative expense.................................. 3,481 3,328
Amortization of intangibles......................................... 2,788 2,790
--------------- ---------------
Operating income (loss).......................................... 5,537 (1,423)
Interest expense, net............................................... 8,657 7,976
--------------- ---------------
Loss before income taxes......................................... (3,120) (9,399)
Income tax benefit.................................................. (1,140) (3,281)
--------------- ---------------
Net loss......................................................... $ (1,980) $ (6,118)
=============== ===============
Other comprehensive income (loss):
Cumulative effect of accounting change (net of
tax of $741)................................................ 1,262 --
Change in fair value of financial derivatives (net
of tax of $381)............................................ (649) --
Foreign translation adjustment................................... (22) (98)
--------------- ---------------
Comprehensive loss............................................... $ (1,389) $ (6,216)
=============== ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
EAGLE FAMILY FOODS, INC.
Balance Sheets
(Dollars in Thousands Except Share Data)
<TABLE>
<CAPTION>
September 30, July 1,
2000 2000
--------------- --------------
Assets (Unaudited)
<S> <C> <C>
Current assets
Cash and cash equivalents............................................................... $ 572 $ 1,197
Accounts receivable, net................................................................ 20,820 15,106
Inventories............................................................................. 33,624 33,780
Intercompany receivable................................................................. 423 423
Other current assets.................................................................... 2,656 1,279
--------------- --------------
Total current assets................................................................... 58,095 51,785
Property and equipment, net.............................................................. 32,658 33,775
Notes receivable from related parties.................................................... 316 308
Intangibles, net......................................................................... 268,953 271,738
Deferred income taxes.................................................................... 31,592 30,795
Other non-current assets................................................................. 8,272 8,269
--------------- --------------
Total assets............................................................................. $ 399,886 $ 396,670
=============== ==============
Liabilities and Stockholder's Equity
Current liabilities
Current portion of long-term debt....................................................... $ 1,000 $ 1,000
Accounts payable........................................................................ 9,144 12,015
Other accrued liabilities............................................................... 6,710 8,232
Accrued interest........................................................................ 6,699 8,951
--------------- --------------
Total current liabilities.............................................................. 23,553 30,198
Long-term debt........................................................................... 337,750 326,500
Commitments and contingencies
Stockholder's equity
Common stock, $0.01 par value, 250,000 shares authorized, 10,000 shares
issued and outstanding................................................................. 1 1
Additional paid-in capital.............................................................. 92,500 92,500
Accumulated deficit..................................................................... (54,519) (52,539)
Accumulated other comprehensive income.................................................. 601 10
--------------- --------------
Total stockholder's equity............................................................. 38,583 39,972
--------------- --------------
Total liabilities and stockholder's equity............................................... $ 399,886 $ 396,670
=============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
EAGLE FAMILY FOODS, INC.
Statements of Cash Flows
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Week
Period Ended
September 30, October 2,
2000 1999
-------------- ------------
<S> <C> <C>
Cash flows from (used in) operating activities:
Net loss............................................................................... $ (1,980) $ (6,118)
Adjustments to reconcile net loss to net cash from (used in) operating activities:
Depreciation and amortization......................................................... 4,292 4,423
Amortization of deferred financing costs.............................................. 470 432
Loss on retirement of fixed assets.................................................... 5 2
Deferred taxes........................................................................ (797) (3,294)
Net change in assets and liabilities:
Accounts receivable, net.............................................................. (5,714) (3,851)
Inventories........................................................................... 156 7,115
Accounts payable...................................................................... (2,871) (5,304)
Other assets.......................................................................... (1,861) 1,295
Other liabilities..................................................................... (3,165) (4,396)
-------------- ------------
Cash used in operating activities....................................................... (11,465) (9,696)
Cash used in investing activities:
Capital expenditures................................................................... (410) (778)
-------------- ------------
Cash used in investing activities...................................................... (410) (778)
Cash from (used in) financing activities:
Payment under term loan facility....................................................... (250) (250)
Borrowings under revolving credit facility............................................. 18,000 15,000
Other financing costs.................................................................. -- (859)
Payments under revolving credit facility............................................... (6,500) (13,000)
Capital contribution................................................................... -- 10,000
-------------- ------------
Cash from financing activities......................................................... 11,250 10,891
Increase (decrease) in cash and cash equivalents........................................ (625) 417
Cash and cash equivalents at beginning of period........................................ 1,197 972
-------------- ------------
Cash and cash equivalents at end of period.............................................. $ 572 $ 1,389
============== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
EAGLE FAMILY FOODS, INC.
Statement of Changes in Stockholder's Equity
For the Thirteen Week Period Ended September 30, 2000
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Accumulated
Additional Other
Common Paid- Accumulated Comprehensive
Stock In Capital Deficit Income (Loss) Total
----------- ------------ ------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Balance, July 1, 2000............... $ 1 $ 92,500 $ (52,539) $ 10 $ 39,972
Net loss............................ -- -- (1,980) -- (1,980)
Other comprehensive income (loss):
Cumulative effect of accounting
change......................... -- -- -- 1,262 1,262
Change in fair value of financial
derivatives................... -- -- -- (649) (649)
Foreign translation adjustment.... -- -- -- (22) (22)
----------- ------------ ------------- --------------- -------------
Balance, September 30, 2000......... $ 1 $ 92,500 $ (54,519) $ 601 $ 38,583
=========== ============ ============= =============== =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
EAGLE FAMILY FOODS HOLDINGS, INC.
Consolidated Statements of Operations and Comprehensive Loss
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Week
Period Ended
September 30, October 2,
2000 1999
--------------- ---------------
<S> <C> <C>
Net sales................................................................ $ 51,232 $ 55,157
Cost of goods sold....................................................... 23,942 29,436
--------------- ---------------
Gross margin.......................................................... 27,290 25,721
Distribution expense..................................................... 3,375 3,594
Marketing expense........................................................ 12,109 17,432
General and administrative expense....................................... 3,483 3,335
Amortization of intangibles.............................................. 2,788 2,790
--------------- ---------------
Operating income (loss)............................................... 5,535 (1,430)
Interest expense, net.................................................... 8,657 7,976
--------------- ---------------
Loss before income taxes.............................................. (3,122) (9,406)
Income tax benefit....................................................... (1,140) (3,281)
--------------- ---------------
Net loss.............................................................. $ (1,982) $ (6,125)
=============== ===============
Other comprehensive income (loss):
Cumulative effect of accounting change (net of deferred
tax of $741)....................................................... 1,262 --
Change in fair value of financial derivatives (net of
tax of $381). ..................................................... (649) --
Foreign translation adjustment........................................ (22) (98)
--------------- ---------------
Comprehensive loss.................................................... $ (1,391) $ (6,223)
=============== ===============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
7
<PAGE>
EAGLE FAMILY FOODS HOLDINGS, INC.
Consolidated Balance Sheets
(Dollars in Thousands Except Share Data)
<TABLE>
<CAPTION>
September 30, July 1,
2000 2000
-------------- --------------
Assets (unaudited)
<S> <C> <C>
Current assets
Cash and cash equivalents............................................................... $ 572 $ 1,197
Accounts receivable, net................................................................ 20,820 15,106
Inventories............................................................................. 33,624 33,780
Other current assets.................................................................... 2,656 1,279
-------------- --------------
Total current assets................................................................... 57,672 51,362
Property and equipment, net.............................................................. 32,658 33,775
Intangibles, net......................................................................... 268,953 271,738
Deferred income taxes.................................................................... 31,592 30,795
Other non-current assets................................................................. 8,272 8,269
-------------- --------------
Total assets............................................................................. $ 399,147 $ 395,939
============== ==============
Liabilities and Stockholders' Deficit
Current liabilities
Current portion of long-term debt....................................................... $ 1,000 $ 1,000
Accounts payable........................................................................ 9,144 12,015
Other accrued liabilities............................................................... 6,710 8,232
Accrued interest........................................................................ 6,699 8,951
-------------- --------------
Total current liabilities.............................................................. 23,553 30,198
Long-term debt........................................................................... 337,750 326,500
Commitments and contingencies
Redeemable preferred stock, 1,000,000 shares authorized:
Series A preferred stock, $100 stated value, 816,750 shares issued and
outstanding, at redemption value....................................................... 106,188 103,616
Treasury stock, 3,438 shares, at cost................................................... (423) (423)
Subscription receivable................................................................. (312) (305)
-------------- --------------
105,453 102,888
Series B preferred stock, $100,000 stated value, 99 shares issued and
outstanding, at redemption value....................................................... 10,933 10,667
-------------- --------------
Total redeemable preferred stock....................................................... 116,386 113,555
Stockholders' deficit
Common stock $0.01 par value, 1,200,000 shares authorized, 1,116,704 and
1,063,559 shares issued and outstanding, respectively.................................. 11 11
Additional paid-in capital.............................................................. 1,001 1,001
Accumulated deficit..................................................................... (80,129) (75,309)
Unearned compensation................................................................... (22) (24)
Subscription receivable................................................................. (4) (3)
Accumulated other comprehensive income.................................................. 601 10
-------------- --------------
Total stockholders' deficit............................................................ (78,542) (74,314)
-------------- --------------
Total liabilities and stockholders' deficit.............................................. $ 399,147 $ 395,939
============== ==============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
8
<PAGE>
EAGLE FAMILY FOODS HOLDINGS, INC.
Consolidated Statements of Cash Flows
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Week
Period Ended
September 30, October 2,
2000 1999
--------------- ------------
<S> <C> <C>
Cash flows from (used in) operating activities:
Net loss.............................................................................. $ (1,982) $ (6,125)
Adjustments to reconcile net loss to net cash from (used in) operating activities:
Depreciation and amortization........................................................ 4,294 4,430
Amortization of deferred financing costs............................................. 470 432
Loss on retirement of fixed assets................................................... 5 2
Deferred taxes....................................................................... (797) (3,294)
Net change in assets and liabilities:
Accounts receivable, net............................................................. (5,714) (3,851)
Inventories.......................................................................... 156 7,115
Accounts payable..................................................................... (2,871) (5,304)
Other assets......................................................................... (1,861) 1,295
Other liabilities.................................................................... (3,165) (4,396)
--------------- ------------
Cash used in operating activities..................................................... (11,465) (9,696)
Cash used in investing activities:
Capital expenditures.................................................................. (410) (778)
--------------- ------------
Cash used in investing activities..................................................... (410) (778)
Cash from (used in) financing activities:
Payment under term loan facility...................................................... (250) (250)
Borrowings under revolving credit facility............................................ 18,000 15,000
Payments under revolving credit facility.............................................. (6,500) (13,000)
Other financing costs................................................................. -- (859)
Issuance of Series B Preferred Stock and Common Stock................................. -- 10,000
--------------- ------------
Cash from financing activities........................................................ 11,250 10,891
Increase (decrease) in cash and cash equivalents....................................... (625) 417
Cash and cash equivalents at beginning of period....................................... 1,197 972
--------------- ------------
Cash and cash equivalents at end of period............................................. $ 572 $ 1,389
=============== ============
Supplemental disclosure:
Non-cash financing activities including dividends accrued on redeemable
preferred stock...................................................................... $ 2,838 $ 2,355
=============== ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
9
<PAGE>
EAGLE FAMILY FOODS HOLDINGS, INC.
Consolidated Statement of Changes in Stockholders' Deficit
For the Thirteen Week Period Ended September 30, 2000
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Accumulated
Additional Other
Common Paid - Unearned Accumulated Subscription Comprehensive
Stock In Capital Compensation Deficit Receivable Income (Loss) Total
-------- ------------ -------------- ------------- -------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, July 1, 2000......... $ 11 $ 1,001 $ (24) $ (75,309) $ (3) $ 10 $ (74,314)
Net loss...................... -- -- -- (1,982) -- -- (1,982)
Preferred stock dividend...... -- -- -- (2,838) -- -- (2,838)
Subscription receivable:
Interest income............ -- -- -- -- (1) -- (1)
Amortization of unearned
compensation............... -- -- 2 -- -- -- 2
Other comprehensive income
(loss):
Cumulative effect of
accounting change........ -- -- -- -- -- 1,262 1,262
Change in fair value of
financial derivatives.... -- -- -- -- -- (649) (649)
Foreign translation
adjustment............... -- -- -- -- -- (22) (22)
-------- ------------ -------------- ------------- -------------- ------------- ---------
Balance, September 30, 2000... $ 11 $ 1,001 $ (22) $ (80,129) $ (4) $ 601 $ (78,542)
======== ============ ============== ============= ============== ============= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
10
<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. ("Eagle") and
the consolidated financial position, results of operations and cash flows of
Eagle Family Foods Holdings, Inc. ("Holdings") and its wholly-owned subsidiary,
Eagle. Eagle 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 financial statements as of September 30, 2000 and October 2, 1999 and
for the thirteen week periods ended September 30, 2000 and October 2, 1999 are
unaudited and are presented pursuant to the rules and regulations of the
Securities and Exchange Commission. Accordingly, these financial statements
should be read in conjunction with the financial statements and notes thereto
contained in the Annual Report on Form 10-K of Holdings and Eagle for the year
ended July 1, 2000. In the opinion of management, the accompanying 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. Inventories:
Inventories are stated at the lower of cost or market at September 30, 2000
and July 1, 2000 and consisted of the following (in thousands):
September 30, July 1,
2000 2000
------------- -------------
Finished goods...................... $ 31,200 $ 30,811
Raw materials....................... 2,424 2,969
------------- -------------
Total inventories................. $ 33,624 $ 33,780
============= =============
3. Property and Equipment:
Property and equipment is recorded at cost at September 30, 2000 and July
1, 2000 and consisted of the following (in thousands):
September 30, July 1,
2000 2000
------------- -------------
Land................................. $ 470 $ 470
Buildings and improvements........... 7,609 7,393
Machinery and equipment.............. 22,756 22,495
Computer equipment and software...... 11,539 11,375
Construction in progress............. 4,039 4,280
------------- -------------
Total property and equipment....... 46,413 46,013
Accumulated depreciation............. (13,755) (12,238)
------------- -------------
Property and equipment, net........ $ 32,658 $ 33,775
============= =============
11
<PAGE>
EAGLE FAMILY FOODS, INC.
EAGLE FAMILY FOODS HOLDINGS, INC.
Notes to the Financial Statements
(Unaudited)
4. 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>
Estimated
September 30, July 1, Useful
2000 2000 Lives
------------- ------------- -------------
<S> <C> <C> <C>
Tradenames............................ $ 141,000 $ 141,000 40 years
Goodwill.............................. 136,664 136,664 40 years
Covenant not to compete............... 21,000 21,000 5 years
------------- -------------
Total intangible assets............. 298,664 298,664
Accumulated amortization.............. (29,711) (26,926)
------------- -------------
Intangible assets, net.............. $ 268,953 $ 271,738
============= =============
</TABLE>
5. Debt:
Debt consisted of the following (in thousands):
<TABLE>
<CAPTION>
September 30, July 1,
2000 2000
------------- -------------
<S> <C> <C>
Term loan facility due December 31, 2005.......................... $ 172,250 $ 172,500
Senior subordinated notes due January 15, 2008.................... 115,000 115,000
Revolving credit facility due December 31, 2004................... 51,000 40,000
Revolving credit facility swingline loan due December 31, 2004.... 500 --
------------- -------------
Total debt...................................................... 338,750 327,500
Less current portion of long-term debt............................ (1,000) (1,000)
------------- -------------
Long-term debt.................................................. $ 337,750 $ 326,500
============= =============
</TABLE>
Senior Credit Facilities
Eagle received senior bank financing from a group of lenders in an
aggregate principal amount of up to $245.0 million (the "Senior Credit
Facilities") on January 23, 1998. The Senior Credit Facilities consist of (1) a
$70.0 million seven-year revolving credit facility including a $10.0 million
swingline loan (the "Revolving Credit Facility") and (2) a $175.0 million eight-
year term loan (the "Term Loan Facility"). The Revolving Credit Facility bears
interest at LIBOR plus 3.50%, with the swingline loan portion bearing interest
at Prime plus 2.50%. The Term Loan Facility bears interest at LIBOR plus 3.75%.
The Senior Credit Facilities are guaranteed by Holdings and all future domestic
subsidiaries of the Company.
The obligations of Eagle under the Senior Credit Facilities are
collateralized by (1) 100% of the capital stock of Eagle and each of its
subsidiaries and (2) a first priority collateral interest in substantially all
assets and properties of Eagle and its future domestic subsidiaries. The fair
market value of the Senior Credit Facilities at September 30, 2000 approximated
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. These
swap agreements commenced on July 23, 1998 and fix the LIBOR rate at 5.905% on
$25.0 million and 5.955% on $75 million of the $175.0 million Term Loan
Facility. These swap agreements expire on December 29, 2000 and December 31,
2002, respectively. The fair value of the interest rate swaps at September 30,
2000 and July 1, 2000 totaled approximately $1.0 million and $2.0 million,
respectively. For the thirteen weeks ended September 30, 2000, interest rate
swaps decreased interest expense by $211,000.
12
<PAGE>
EAGLE FAMILY FOODS, INC.
EAGLE FAMILY FOODS HOLDINGS, INC.
Notes to the Financial Statements
(Unaudited)
Senior Subordinated Notes
Eagle issued $115.0 million of senior subordinated notes (the "Notes") and
received cash proceeds of approximately $112.0 million net of underwriting
discount on January 23, 1998. The Notes are due January 15, 2008 and bear
interest of 8.75% per annum payable on January 15 and July 15, commencing July
15, 1998. The fair market value of the Notes was approximately $60.4 million at
September 30, 2000.
6. Derivative Instruments and Hedging Activities:
The Company uses derivative financial instruments in order to manage or
reduce market risk for interest rates and commodity prices. The Company's
interest rate risk management strategy uses derivative instruments to minimize
earnings fluctuations caused by interest rate volatility associated with the
Company's variable rate debt. Its commodity price risk management strategy uses
derivative instruments to minimize earnings fluctuations caused by commodity
price volatility associated with purchases of milk, a key ingredient in the
production of sweetened condensed milk. The derivative activities are authorized
by the Company's Board of Directors and are executed and monitored by the
Company's Chief Financial Officer. The Company limits the interest rate swap
agreements to 50% of its outstanding debt and limits the hedging activity for
milk to no greater than its annual sweetened condensed milk production.
Effective July 2, 2000 the Company adopted Statement of Financial
Accounting Standard ("SFAS") No. 133, Accounting for Derivative Instruments and
Hedging Activities, and SFAS No. 138, an amendment to SFAS No. 133, which
established new accounting and reporting guidelines for derivative instruments
and hedging activities. SFAS No. 133 and SFAS No. 138 are collectively referred
to herein as "SFAS 133." SFAS 133 requires that all derivative instruments be
recognized as assets and liabilities in the financial statements at fair value.
The accounting for changes in the fair value of a derivative depends on the
intended use of the derivative and the resulting designation as a fair value
hedge or a cash flow hedge. Designation is established at the inception of a
derivative, but redesignation is permitted. For derivatives designated as cash
flow hedges, changes in fair value are recognized in other comprehensive income
until the hedged item is recognized in earnings. Hedge effectiveness is measured
at least quarterly based on the relative change in fair value between the
derivative contract and the hedged item over time. Any change in fair value
resulting from ineffectiveness, as defined by SFAS 133, is recognized
immediately in earnings. Upon the Company's assessment of the derivatives and
hedging activities as prescribed in SFAS 133, applicable financial derivative
instruments include interest rate swap agreements and commodity future
contracts. The Company had no commodity future contracts outstanding during the
period ended September 30, 2000. The Company's interest rate swaps are
designated as cash flow hedges. The Company believes the swaps have been
effective in achieving the risk management objectives for which they were
intended since inception and will continue to be effective for the remaining
term of the contract.
The estimated fair value of the interest rate swap agreements upon initial
adoption of SFAS 133 was $2,003,000, and in accordance with the transition
provisions of SFAS 133, the Company recorded a net of tax cumulative effect type
adjustment of $1,262,000 in accumulated other comprehensive income to recognize
at fair value the interest rate swap derivatives designated as cash flow hedging
instruments. The corresponding asset for the fair value of the interest rate
swap agreement is included in its respective classification of other current
assets and other non-current assets. The estimated fair value of the interest
rate swap agreements at September 30, 2000 was $972,000. The change in fair
value of the interest rate swaps primarily resulted from a decrease in market
rates during the quarter. The Company expects to reclassify as earnings during
the next twelve months $474,000 from accumulated other comprehensive income as
the periodic interest rate swap net payments are settled.
The Company formally documents relationships between hedging instruments
and hedged items, as well as its risk management objectives and strategies for
undertaking the hedging transactions. This process includes linking all
derivatives that are designated as fair value or cash flow hedges to specific
assets and liabilities on the balance sheet or to forecasted transactions. An
assessment is made at the hedging transaction's inception and on an ongoing
basis to determine whether the
13
<PAGE>
EAGLE FAMILY FOODS, INC.
EAGLE FAMILY FOODS HOLDINGS, INC.
Notes to the Financial Statements
(Unaudited)
derivatives that are used in hedging transactions are highly effective in
offsetting changes in fair values or cash flows of hedged items.
When it is determined that a derivative is not highly effective or that it
has ceased to be a highly effective hedge, the Company will discontinue hedge
accounting prospectively. This will occur when (1) offsetting changes in the
fair value or cash flows of the hedged items are no longer effective; (2) the
derivative expires or is sold, terminated, or exercised; (3) the derivative is
dedesignated as a hedged instrument, because it is unlikely that a forecasted
transaction will occur; or (4) management determines that designation of the
derivative as a hedged instrument is no longer appropriate. When hedge
accounting is discontinued because an interest rate swap qualifying as a cash
flow hedge is liquidated or sold prior to maturity, the gain or loss on the
interest rate swap at the time of termination remains in accumulated other
comprehensive income and is recognized as an adjustment to interest expense over
the original contract term. When hedge accounting is discontinued because it is
probable that a forecasted transaction will not occur, the derivative will
continue to be carried on the balance sheet at its fair value, and gains and
losses that were accumulated in other comprehensive income will be recognized
immediately in earnings. In all other situations in which hedge accounting is
discontinued, the derivative will be carried at its fair value on the balance
sheet, with changes in its fair value recognized in current period earnings.
7. Discontinued Product Line
In May 2000, the Company committed to a plan (the "Plan") to exit the
retail lemonade liquid concentrate market as a result of disappointing
ReaLemonade financial results. The Company plans to exit this market and
complete the Plan during the fiscal year ending June 30, 2001. Costs incurred
during the fiscal year ended July 1, 2000 related to the Plan totaled
approximately $1,095,000, and were related to unfulfilled purchase commitments,
impaired assets and other contractual obligations. Cash requirements of the Plan
during the fiscal year ending June 30, 2001 were estimated to be approximately
$630,000 with the reserve for the Plan as of September 30, 2000 totaling
$562,000.
8. Other Information
The Company was advised by GE Investment Private Placement Partners II, a
Limited Partnership ("GE") and Warburg, Pincus Ventures, L.P. ("WP"), the
Company's principal stockholders, that as of November 13, 2000, they each owned
$14,000,000 in aggregate principal amount of Notes.
On November 9, 2000 the Company sold its interest rate swap positions for a
fair market gain of $873,000. Pursuant to SFAS 133, the gains on the interest
rate swap will remain in other comprehensive income and be recognized as
interest income over the original terms of the interest rate swap agreements.
14
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
General
Set forth below is a discussion of the financial condition and results of
operations for the thirteen week periods ended September 30, 2000 and October 2,
1999. The following discussion should be read in conjunction with the financial
statements of the Company and the notes thereto included elsewhere in this
Quarterly Report on Form 10-Q. The following table sets forth the results of
operations as a percentage of net sales for the thirteen week periods ended
September 30, 2000 and October 2, 1999 and sets forth both actual results of
operations and results of operations excluding the retail ReaLemonade
discontinued product line. As stated in its Annual Report on Form 10-K for the
year ended July 1, 2000, the Company determined that it could not achieve the
necessary return on the retail ReaLemonade product line, which was launched in
the prior fiscal year, and, therefore, discontinued sales in the retail channel
after the calendar year 2000 summer selling season.
<TABLE>
<CAPTION>
Results of Operations
---------------------------------------------------------------
Excluding Retail ReaLemonade
Actual Discontinued Product Line
---------------------------- ------------------------------
Thirteen Week Period Ended Thirteen Week Period Ended
September 30, October 2, September 30, October 2,
2000 1999 2000 1999
------------- ---------- ------------- ----------
<S> <C> <C> <C> <C>
Net sales............................. 100.0% 100.0% 100.0% 100.0%
Cost of goods sold.................... 46.7 53.4 46.8 45.8
------------ ---------- ------------- ----------
Gross margin.......................... 53.3 46.6 53.2 54.2
Distribution expense.................. 6.6 6.5 6.5 6.4
Marketing expense..................... 23.6 31.6 24.3 23.3
General and administrative expense.... 6.8 6.0 6.8 6.4
Amortization of intangibles........... 5.5 5.1 5.5 5.4
------------ ---------- ------------- ----------
Operating income (loss)............... 10.8% (2.6)% 10.1% 12.7%
============ ========== ============= ==========
</TABLE>
Results of Operations
Thirteen Week Periods ended September 30, 2000 ("first quarter 2001") and
October 2, 1999 ("first quarter 2000") (Unaudited)
Net Sales. The Company's net sales for first quarter 2001 were $51.2
million as compared to $55.2 million for first quarter 2000, a decrease of $4.0
million, or 7.2%. The table below sets forth the Company's net sales data for
each of the Company's product lines for first quarter 2001 and first quarter
2000 (dollars in millions):
<TABLE>
<CAPTION>
Net Sales Net Sales
First Percentage First Percentage
Quarter of Quarter of
Product Line Company's Principal Brands 2001 Net Sales 2000 Net Sales
--------------------------- ---------------------------------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
Sweetened condensed milk Eagle Brand, Meadow Gold,
Magnolia, Star and other........... $ 25.0 48.8% $ 24.4 44.2%
Lemon and lime juice ReaLemon and ReaLime............... 16.2 31.6 16.3 29.5
Non-dairy creamer Cremora, Cremora Royale and other.. 7.7 15.0 7.7 14.0
Shelf-stable eggnog Borden............................. 0.6 1.2 1.1 2.0
Mincemeat pie filling None Such.......................... 0.7 1.4 1.0 1.8
Acid neutralized coffee Kava............................... 0.8 1.6 0.9 1.6
--------- ---------- --------- ----------
Total net sales excluding ReaLemonade............................ 51.0 99.6 51.4 93.1
Lemonade liquid concentrate ReaLemonade........................ 0.2 0.4 3.8 6.9
--------- ---------- --------- ----------
Total net sales.................................................. $ 51.2 100.0% $ 55.2 100.0%
========= ========== ========= ==========
</TABLE>
The decrease in net sales of $4.0 million from first quarter 2001 compared
to first quarter 2000 was primarily due to the $3.6 million of reduced net sales
of the retail ReaLemonade product line. As previously stated, this product line
was discontinued after the calendar year 2000 summer selling season. Also net
sales of shelf-stable eggnog and mincemeat pie
15
<PAGE>
filling decreased by $0.8 million due to customer holiday orders being shipped
this fiscal year in October as compared to orders being shipped in the prior
fiscal year during September. Offsetting these decreases was an increase in net
sales of sweetened condensed milk of $0.6 million due primarily to a substantial
increase in net sales in the ethnic brands of sweetened condensed milk.
The table below sets forth the Company's net sales data by sales channel
for first quarter 2001 and first quarter 2000 (dollars in millions):
<TABLE>
<CAPTION>
Net Sales Net Sales
First Percentage First Percentage
Quarter of Quarter of
2001 Net Sales 2000 Net Sales
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
U.S. Retail
Sweetened condensed milk................................ $ 19.4 37.9% $ 19.4 35.1%
Lemon and lime juice.................................... 11.9 23.2 11.8 21.4
Cremora non-dairy creamer............................... 5.5 10.7 5.5 10.0
Other products.......................................... 2.1 4.1 3.0 5.4
Private label non-dairy creamer......................... 0.8 1.6 1.1 2.0
--------- ---------- --------- ----------
U.S. Retail total....................................... 39.7 77.5 40.8 73.9
U.S. Foodservice/Industrial............................... 6.7 13.1 6.3 11.4
International............................................. 4.6 9.0 4.5 8.2
--------- ---------- --------- ----------
Total net sales excluding U.S. Retail ReaLemonade 51.0 99.6 51.6 93.5
U.S. Retail lemonade liquid concentrate................... 0.2 0.4 3.6 6.5
--------- ---------- --------- ----------
Total net sales......................................... $ 51.2 100.0% $ 55.2 100.0%
========= ========== ========= ==========
</TABLE>
U.S. retail net sales were $39.7 for first quarter 2001 compared to $40.8
million for first quarter 2000, a decrease of $1.1 million, or 2.7%. The
decrease was due primarily to $0.6 million of lower net sales in other products,
specifically eggnog and mincemeat pie filling due to a shift in timing of
customer holiday shipments as described above, and $0.3 million in lower net
sales of private label non-dairy creamer.
U.S. foodservice/industrial net sales were $6.7 million for first quarter
2001 compared to $6.3 for first quarter 2000, an increase of $0.4 million, or
6.3%. The increase was primarily driven by increased non-dairy creamer sales to
certain industrial customers. First quarter 2000 industrial non-dairy creamer
sales were adversely affected by approximately $0.6 million from a temporary
disruption in production due to a June 1999 fire at the Company's Chester, South
Carolina manufacturing plant.
International net sales were $4.6 million for first quarter 2001 compared
to $4.5 million for first quarter 2000, an increase of $0.1 million, or 2.2%.
Cost of Goods Sold. Cost of goods sold was $23.9 million for first quarter
2001 as compared to $29.4 million for first quarter 2000, a decrease of $5.5
million, or 18.7%, and was primarily due to reduced Realemonade sales.
Expressed as a percentage of net sales, cost of goods sold for first quarter
2001 decreased to 46.7% from 53.4% for first quarter 2000. Excluding the
results of retail ReaLemonade for first quarter 2001 and first quarter 2000,
cost of goods sold was $23.9 million for first quarter 2001 as compared to $23.6
million for first quarter 2000, an increase of $0.3 million, or 1.3%. Expressed
as a percentage of net sales, excluding the results of retail ReaLemonade for
the reported periods, cost of goods sold for first quarter 2001 increased to
46.8% from 45.8% for first quarter 2000 due to higher raw material costs,
principally lemon concentrate used in production of lemon and lime juice
products.
Distribution Expense. Distribution expense was $3.4 million for first
quarter 2001 as compared to $3.6 million for first quarter 2000, a decrease of
$0.2 million, or 5.6%. Expressed as a percentage of net sales, distribution
expense for first quarter 2001 increased to 6.6% from 6.5% for first quarter
2000. The decrease of $0.2 million reflected the reduced warehousing costs due
to the lower levels of inventory, primarily from reduced retail ReaLemonade
inventory.
Marketing Expense. Marketing expense was $12.1 million for first quarter
2001 as compared to $17.4 million for first quarter 2000, a decrease of $5.3
million, or 30.5%. Expressed as a percentage of net sales, marketing expense for
first quarter 2001 decreased to 23.6% from 31.6% for first quarter 2000.
Excluding the results of retail ReaLemonade for first quarter 2001 and first
quarter 2000, marketing expense was $12.4 million for first quarter 2001 as
compared to $12.0 million for first quarter 2000, an increase of $0.4 million,
or 3.3%. Expressed as a percentage of net sales, excluding the results of retail
ReaLemonade
16
<PAGE>
for the reported periods, marketing expense for first quarter 2001 increased to
24.3% from 23.3% for first quarter 2000. The increase was due to higher trade
marketing expense to support expansion of the Company's presence within the club
store channel with sweetened condensed milk and higher consumer promotion for
Kava acid neutralized coffee to support targeted marketing efforts. The increase
is offset by lower consumer promotion expense, primarily in sweetened condensed
milk and lemon and lime juice.
General and Administrative ("G&A") Expense. G&A expense was $3.5 million
for first quarter 2001, as compared to $3.3 million for first quarter 2000, an
increase of $0.2 million, or 6.1%. Expressed as a percentage of net sales, G&A
expense for first quarter 2001 increased to 6.8% from 6.0% for first quarter
2000.
Amortization of Intangibles. Amortization of intangibles remained at $2.8
million for first quarter 2001.
Operating Income. Operating income was $5.5 million for first quarter 2001
as compared to operating loss of $1.4 million for first quarter 2000, an
increase of $6.9 million. The increase in operating income was primarily due to
a reduction of the investment in ReaLemonade and a result of discontinuing the
retail ReaLemonade product line.
Interest Expense. Net interest expense was $8.7 million for first quarter
2001 as compared to net interest expense of $8.0 million for first quarter 2000,
an increase of $0.7 million. The increase was primarily due to $0.9 million
from higher interest rates during first quarter 2000 offset by $0.2 million of
lower interest as a result of a decrease in the average outstanding balance of
the Revolving Credit Facility during first quarter 2001.
Income Taxes. The Company recorded an income tax benefit of $1.1 million
for first quarter 2001 as compared to a $3.3 million income tax benefit for
first quarter 2000.
Liquidity and Capital Resources
Borrowings under the Term Loan Facility of the Senior Credit Facilities
were $172.3 million and $172.5 million at September 30, 2000 and July 1, 2000,
respectively. The Term Loan Facility matures $0.8 million in the remainder of
fiscal year 2001 and fiscal year 2002, and $3.2 million, $27.5 million, $80.0
million and $60.0 million in the fiscal years 2003 through 2006, respectively.
In addition, the Senior Credit Facilities include the $70.0 million Revolving
Credit Facility and $10.0 million swingline loan maturing in 2004, of which
$51.5 million and $52.0 million were outstanding at September 30, 2000 and
October 2, 1999, respectively.
Interest payments on the Notes and interest and principal payments under
the Senior Credit Facilities represent significant cash requirements for the
Company. Borrowings under the Senior Credit Facilities bear interest at floating
rates and require interest payments on varying dates. Interest rate swap
agreements are in effect on $100 million of the Term Note Facility to fix the
interest rates. The swap agreements terminate at various times beginning
December 29, 2000.
The Company's remaining liquidity needs are for capital expenditures and
increases in working capital. The Company spent $0.4 million on capital
projects in first quarter 2001 to fund expenditures at existing facilities and
for information systems initiatives. The Company expects to spend approximately
$5.0 million on capital projects in fiscal year 2001 to fund expenditures at
existing facilities, information system initiatives and discretionary capital
projects associated with new products. The Company's primary sources of
liquidity are cash flows from operations and available borrowings under the
Revolving Credit Facility.
Net cash used in operating activities for first quarter 2001 and first
quarter 2000 was $11.5 million and $9.7 million, respectively.
Cash provided by financing activities in first quarter 2001 and first
quarter 2000 was $11.3 million and $10.9 million, respectively. Net proceeds of
$11.3 million for first quarter 2001 represented borrowings under the Revolving
Credit Facility, whereas the net proceeds of $10.9 million for first quarter
2000 represented primarily $2.0 million of borrowings under the Revolving Credit
Facility and $10.0 million received by Holdings from GE and WP in exchange for
shares of a series of Holdings preferred stock and Holdings common stock.
Management believes that cash generated from operations and borrowings
under the Senior Credit Facilities will be sufficient to satisfy working capital
requirements and required capital expenditures. Further expansion of the
business through acquisitions may require the Company to incur additional
indebtedness or to issue additional equity securities.
17
<PAGE>
Adoption of Financial Accounting Standard
The Company enters into derivative financial instrument transactions in
order to manage or reduce market risk for interest rates and commodity prices.
The Company's interest rate risk management strategy uses derivative instruments
to minimize earnings fluctuations caused by interest rate volatility associated
with the Company's variable rate debt. Its commodity price risk management
strategy uses derivative instruments to minimize earnings fluctuations caused by
commodity price volatility associated with purchases of milk, a key ingredient
in the production of sweetened condensed milk.
Effective July 2, 2000, the Company adopted SFAS 133. The estimated fair
value of the interest rate swap agreements upon initial adoption of SFAS 133 was
$2.0 million, and in accordance with the transition provisions of SFAS 133, the
Company recorded a net of tax cumulative effect type adjustment of $1.3 million
in accumulated other comprehensive income to recognize at fair value the
interest rate swap derivatives designated as cash flow hedging instruments. The
estimated fair value of the interest rate swap agreements at September 30, 2000
was $1.0 million. The change in fair value of the interest rate swaps primarily
resulted from a decrease in market rates during the quarter. The Company
expects to reclassify as earnings during the next twelve months $0.5 million
from accumulated other comprehensive income as the interest rate swap agreements
are settled.
The Company has been advised by GE and WP, the Company's principal
stockholders, that as of November 13, 2000, they each owned $14.0 million in
aggregate principal amount of Notes.
Seasonality
The Company's net sales, net income and cash flows are affected by a
seasonal bias toward the fourth quarter of the calendar year due to increased
sales during the holiday season. Three of the Company's six major product lines
(Eagle Brand and the Company's other sweetened condensed milk products, Borden
eggnog and None Such mincemeat pie filling) are consumed primarily during the
November and December holiday season. In recent years, approximately 43% of the
Company's net sales have occurred in the last quarter of the calendar year. As a
result of this seasonality, the Company's working capital needs have
historically increased throughout the year, normally peaking in the
September/October period, requiring the Company to draw additional amounts on
its Revolving Credit Facility during this period.
Recently Issued Accounting Statements
In May 2000, Financial Accounting Standards Board Emerging Issues Task
Force ("EITF") issued EITF Issue No. 00-14, "Accounting for Certain Sales
Incentives" ("Issue 00-14"). Issue 00-14 addresses the recognition, measurement,
and income statement classification for sales incentives offered voluntarily by
a vendor without charge to customers that can be used in, or that are
exercisable by a customer as a result of, a single exchange transaction. The
Company is evaluating this pronouncement and has not yet determined its impact
on future financial statements. The pronouncement will be adopted during the
fourth quarter of the fiscal year ending June 30, 2001.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements within this section may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 which involve known and unknown risks and uncertainties. The Company's
actual results, performance or achievements in the future could differ
significantly from the results, performance or achievements discussed or implied
in such forward-looking statements. Factors that could cause or contribute to
such differences include, but are not limited to, the effect on financial
performance of increased competition in the dry-grocery food industry, potential
future competition, competitive pricing for products, general economic and
business conditions, industry trends, raw material costs, dependence on the
Company's labor force, the success of new product innovations and changes in, or
the failure or inability to comply with, government rules and regulations,
including, without limitation, Food and Drug Administration and environmental
rules and regulations.
Statements concerning interest rate swap and other financial instrument
fair values and their estimated contribution to the Company's future results of
operations are based upon market information as of a specific date. This market
information is often a function of significant judgment and estimation. Further,
market interest rates and commodity prices are subject to significant
volatility.
18
<PAGE>
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Interest Rates
The following table presents descriptions of the financial instruments and
derivative instruments that were held by the Company at September 30, 2000 and
which are sensitive to changes in interest rates, including interest rate swaps
and debt obligations. In the ordinary course of business, the Company uses
derivative financial instruments in order to manage or reduce market risk. It
does not enter into derivative financial instruments for speculative purposes.
Under interest rate swaps, the Company agrees with other parties to
exchange, at specified intervals, the difference between fixed rate and floating
rate interest amounts calculated by reference to an agreed notional principal
amount. The Company has 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 3.75%. These swap agreements commenced on
July 23, 1998 and fixed the LIBOR rate at 5.905% on $25.0 million and 5.955% on
$75.0 million of the $175.0 million Term Loan Facility. These swap agreements
expire on December 29, 2000 and December 31, 2002, respectively, and have been
reflected in the table below.
For each interest rate swap, the differential between the fixed rate and
the floating rate multiplied by the notional amount is the swap gain or loss.
Such gain or loss is included in interest expense in the period for which the
interest rate exposure was hedged. Pursuant to SFAS 133, if an interest rate
swap qualifying as a cash flow hedge is liquidated or sold prior to maturity,
the gain or loss on the interest rate swap at the time of termination remains in
accumulated other comprehensive income, to be recognized as an adjustment to
interest expense over the original contract term. For the quarter ended
September 30, 2000, interest rate swaps decreased interest expense by $0.2
million.
The estimated fair value of the interest rate swap agreements upon initial
adoption of SFAS 133 was $2.0 million, and in accordance with the transition
provisions of SFAS 133, the Company recorded a net of tax cumulative effect type
adjustment of $1.3 million in accumulated other comprehensive income to
recognize at fair value the interest rate swap derivatives designated as cash
flow hedging instruments. The estimated fair value of the interest rate swap
agreements at September 30, 2000 was $1.0 million.
For the liabilities, the table represents principal fiscal year cash flows
that exist by maturity date and the related average interest rate. For the
interest rate derivatives, the table presents the notional amounts and expected
interest rates that exist by contractual dates. The notional amount is used to
calculate the contractual payments to be exchanged under the contract. The
variable rates are estimated based upon the six month forward LIBOR rate. The
fair value of the Company's swaps and debt are based on quoted market prices of
comparable instruments or, if none available, on pricing models or formulas
using current assumptions.
All amounts, except percentage rates, are reflected in U.S. dollars (in
thousands).
<TABLE>
<CAPTION>
Balance at
September Fair
2001 2002 2003 2004 2005 Thereafter 30, 2000 Value
--------- --------- -------- -------- -------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Liabilities
Fixed rate.................. $ 115,000 $ 115,000 $ 60,375
Average interest rate....... 8.750% 8.750%
Variable rate............... $ 750 $ 750 $ 3,250 $ 27,500 $ 80,000 $ 111,500 $ 223,750 $ 223,750
Average interest rate....... 10.500% 10.500% 10.500% 10.500% 10.500% 10.334% 10.417%
Interest-Rate Derivatives
Variable to fixed:
Notional amount at the
beginning of fiscal year... $ 100,000 $ 75,000 $ 75,000 $ 100,000 $ 972
Maturities.................. 25,000 75,000
Average pay rate............ 5.943% 5.955% 5.955% 5.948%
Average receive rate........ 6.720% 6.720% 6.720% 6.720%
</TABLE>
19
<PAGE>
Milk Hedging
The Company uses milk as a major ingredient in its sweetened condensed milk
product line and is subject to the risk of rising milk prices that increase
manufacturing costs and erode profit margins. By purchasing futures contracts,
however, the Company establishes a known price for future milk purchases in
order to protect against fluctuating milk prices. During the quarter ended
September 30, 2000, the Company had no outstanding milk futures contracts.
20
<PAGE>
PART II - OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27.1 Financial Data Schedule of Eagle Family Foods Holdings, Inc.
27.2 Financial Data Schedule of Eagle Family Foods, Inc.
(b) Reports on Form 8-K
None.
21
<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
Chief Financial Officer and Senior
Vice President of Operations
Date: November 14, 2000
22
<PAGE>
EXHIBIT INDEX
27.1 Financial Data Schedule of Eagle Family Foods Holdings, Inc.
27.2 Financial Data Schedule of Eagle Family Foods, Inc.
