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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): May 15, 2000
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AURORA FOODS INC.
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(Exact Name of Registrant as Specified in Charter)
DELAWARE 333-50681 94-3303521
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(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
1000 St. Louis Union Station, Suite 300, St. Louis, MO 63103
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (314) 241-0303
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This is Page 1 of 4 Pages.
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ITEM 5. OTHER EVENTS
On May 15, 2000, Aurora Foods Inc. issued a press release with respect to
results for the first quarter ended March 31, 2000. A copy of the press release
is attached hereto as Exhibit 99.1.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
99.1 Press Release dated May 15, 2000.
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SIGNATURE
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.
AURORA FOODS INC.
By: /s/ Christopher T. Sortwell
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Name: Christopher T. Sortwell
Title: Chief Financial Officer
Date: May 18, 2000
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EXHIBIT INDEX
Exhibit No. Description of Exhibits
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99.1 Press Release dated May 15, 2000.
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EXHIBIT 99.1
AURORA FOODS INC.
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NEWS
Contact: Mark Kollar
Broadgate Consultants, Inc.
212-232-2222
FOR IMMEDIATE RELEASE
FINAL
AURORA FOODS REPORTS FIRST-QUARTER RESULTS
PROGRAM TO IMPROVE OPERATING EFFICIENCIES PROGRESSES
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ST. LOUIS, May 15, 2000 -- Aurora Foods Inc. (NYSE: AOR) today announced
financial results for the first quarter ending March 31, 2000, with net sales
rising 26.9% to $322.7 million, compared with $254.4 million in the same
year-ago period. Net sales were down 2.6% in the quarter, versus pro forma
results from a year ago. Pro forma results for the 1999 period reflect the
acquisitions of Chef's Choice(R) and Lender's(R) as if each occurred at the
beginning of the period.
The year-over-year pro forma sales decline was partially influenced by
the late Lenten season this year, particularly in the frozen seafood and Duncan
Hines(R) baking mix businesses, which typically hit consumption peaks during
this time. The sales decline was also influenced by the Company's efforts to
reduce excess inventory at retail, as year-ago sales were partially inflated due
to a consistent pattern of historical sales loading at the end of quarters, a
practice which has been discontinued for fiscal 2000.
The first-quarter 2000 adjusted EBITDA (excluding other income/expense,
transition expenses and other financial, legal and accounting expenses) was
$29.8 million, compared with prior-year adjusted EBITDA of $31.8 million and
prior-year adjusted pro forma EBITDA of $42.8 million. The performance relative
to prior-year adjusted pro forma EBITDA was primarily influenced by an increase
in marketing expenditures of $14.4 million for the Duncan Hines(R) and syrup
brands, which largely
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related to programs initiated in 1999 that carried over to the first quarter of
2000. In addition, first-quarter's performance was negatively impacted by
operational inefficiencies associated with freight and warehousing in the dry
division. While the Company does not anticipate that these factors will carry
over into subsequent quarters, the planned reduction in trade inventories will
impact the rest of the year, especially the second quarter. Adjusted EBITDA
excludes a $9.6 million expense that primarily relates to financing and
professional fees incurred in connection with the restatement of historical
financial results.
Despite these planned reductions in retail inventories, the Company
also said that total year EBITDA for 2000 (excluding other income/expense,
transition expenses and other financial, legal and accounting expenses) should
be up by 4% to 6%, versus 1999 adjusted pro forma EBITDA with total net sales
growth in the 3% range. This increase will be below expected consumption growth
as eliminating aggressive quarter-end loading reduces excess trade inventories.
Net income for the quarter was a loss of $15.8 million, or a loss of $0.24 per
share, compared with net income of $482,000, or $0.01 per share, in the same
1999 period.
By segment, dry grocery showed strong net sales growth of 8.6% in the
quarter, driven by an 11.5% increase in syrups and a 6.4% increase in Duncan
Hines(R). Frozen food net sales were down 7.3%, primarily reflecting seasonal
comparisons in seafood as a result of the late Lenten season as well as declines
in pizza and frozen waffles due to competitive pressure in the marketplace. For
the quarter, market share increased in syrup and Chef's Choice(R) and declined
in seafood, baking products, frozen breakfast products and frozen pizza.
Jim Smith, the newly appointed President and Chief Executive Officer of
Aurora Foods, said, "As expected, the first-quarter results were well below
year-ago levels, and we expect the same for the second quarter. As our planned
improvements take effect, and as we get the negative impact of trade deloading
behind us, we expect to see major improvements in the third and fourth quarters.
Currently, we are focused on developing
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and executing a comprehensive multi-year action plan to leverage the power of
our strong brands. This plan will concentrate on new products to expand the
usage of our brands, improved efficiencies to fund these initiatives and more
focused execution throughout our Company, including better management of
trade-promotion spending.
"Despite the lack of focused support over the last 12 months, our
brands have remained strong, attesting to their high awareness and trust levels
with consumers," Mr. Smith said. "The right product news will play to this
strength and will build awareness and long-term value for our shareholders. It
will take time to get all our newly planned initiatives into the market and for
our programs to work."
As part of the initiatives for the multi-year action plan, Mr. Smith
noted that the Company has recently launched a consolidation strategy that is
designed to carry Aurora to its next level of growth. "We have consolidated our
frozen food and dry grocery sales forces and have selected Marketing Specialists
Corporation as our national sales broker. This sales consolidation and
partnership with one of the largest food brokerages in the United States will
allow us to go to market more effectively by providing one face to our
customers," Mr. Smith said. "We are also centralizing operations in St. Louis to
eliminate redundant and unnecessary costs so our frozen food and dry grocery
divisions can work closely together to develop more focused and integrated
programs." The Company has also taken the important step of strengthening its
senior management team by hiring Paul Graven as Senior Vice President of Human
Resources. Mr. Graven has more than 30 years experience in Human Resources and
most recently worked with Mr. Smith at ConAgra Frozen Prepared Foods.
ABOUT AURORA FOODS
Aurora Foods Inc., which is based in St. Louis, is a leading producer
and marketer of premium branded food products including Duncan Hines(R) baking
mixes, Log Cabin(R) and Mrs. Butterworth's(R) syrup, Lender's(R) bagels, Van de
Kamp's(R) and Mrs. Paul's(R) frozen seafood, Aunt Jemima(R) frozen breakfast
products, Celeste(R) frozen pizza and Chef's Choice(R) skillet meals. Aurora's
products can be found in some of the
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fastest growing categories in the supermarket and command either the No.1 or No.
2 positions in their respective categories and/or markets.
Statements contained in this press release that are not historical facts are
forward-looking statements as that term is defined in the Private Securities
Litigation Reform Act of 1995. All forward-looking statements are subject to
risks and uncertainties which could cause actual results to differ from the
forward-looking statements contained in this release and that may affect the
Company's prospects in general are described in the Company's filing with the
Securities and Exchange Commission.
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AURORA FOODS INC.
CONSOLIDATED
BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
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ASSETS:
<S> <C> <C>
CASH & CASH EQUIVALENTS $ 659 $ 315
ACCOUNTS RECEIVABLE - NET 103,826 96,332
INVENTORIES 118,950 123,967
PREPAID EXPENSES AND OTHER CURRENT ASSETS 23,165 21,876
CURRENT DEFERRED TAX ASSETS 17,338 17,338
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TOTAL CURRENT ASSETS 263,938 259,828
PROPERTY, PLANT AND EQUIPMENT, NET 255,059 257,443
DEFERRED TAX ASSET 9,792 2,357
GOODWILL AND OTHER INTANGIBLE ASSETS, NET 1,294,358 1,294,995
ASSET HELD FOR SALE 800 800
OTHER ASSETS 36,017 35,693
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TOTAL ASSETS $ 1,859,964 $ 1,851,116
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LIABILITIES & STOCKHOLDERS' EQUITY:
SENIOR SECURED TERMS DEBT $ 565,812 $ 571,571
SENIOR SECURED REVOLVING FACILITY 170,600 105,600
SENIOR SUBORDINATED NOTES 402,000 402,049
ACCOUNTS PAYABLE 51,569 87,942
ACCRUED LIABILITIES 107,266 105,192
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TOTAL CURRENT LIABILITIES 1,297,247 1,272,354
OTHER LIABILITIES 2,260 2,504
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TOTAL LIABILITIES 1,299,507 1,274,858
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S EQUITY
PREFERRED STOCK 0 0
COMMON STOCK 670 670
PAID-IN CAPITAL 648,254 648,254
PROMISSORY NOTES (323) (323)
ACCUMULATED DEFICIT (88,144) (72,343)
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TOTAL STOCKHOLDERS' EQUITY 560,457 576,258
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,859,964 $ 1,851,116
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</TABLE>
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AURORA FOODS INC.
CONSOLIDATED
INCOME STATEMENT
(in thousands, except per share data)
<TABLE>
<CAPTION>
MARCH 31, MARCH 31,
2000 1999
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<S> <C> <C>
NET SALES $ 322,748 $ 254,264
COST OF GOODS SOLD 138,402 104,703
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GROSS PROFIT 184,346 149,561
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BROKERAGE, DISTRIBUTION AND MARKETING EXPENSES
BROKERAGE AND DISTRIBUTION 38,733 21,930
TRADE PROMOTIONS 77,745 69,508
CONSUMER MARKETING 32,160 21,677
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TOTAL BROKERAGE, DISTRIBUTION AND MARKETING EXPENSES 148,638 113,115
AMORTIZATION OF GOODWILL AND OTHER INTANGIBLES 10,751 8,872
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 12,061 7,568
OTHER FINANCIAL, LEGAL AND ACCOUNTING EXPENSES 9,601 0
TRANSITION EXPENSES 1,365 4,277
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TOTAL OPERATING EXPENSES 182,416 133,832
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OPERATING INCOME 1,930 15,729
INTEREST EXPENSE, NET 24,371 14,582
AMORTIZATION OF DEFERRED FINANCING EXPENSES 708 396
OTHER BANK AND FINANCING EXPENSES 87 52
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INCOME (LOSS) BEFORE INCOME TAXES (23,236) 699
INCOME TAX EXPENSE (7,435) 217
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NET INCOME $ (15,801) $ 482
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BASIC AND DILUTED EARNINGS (LOSS) PER SHARE $ (0.24) $ 0.01
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WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 67,050 67,016
</TABLE>
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AURORA FOODS INC.
CONSOLIDATED
CASH FLOW STATEMENT
(in thousands)
<TABLE>
<CAPTION>
MARCH 31, MARCH 31,
2000 1999
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<S> <C> <C>
CASH FROM OPERATIONS:
NET INCOME (LOSS) $(15,801) $ 482
ADD BACK ITEMS NOT AFFECTING CASH
DEPRECIATION AND AMORTIZATION EXPENSE 17,484 12,148
DEFERRED INCOME TAXES (7,435) 217
CHANGES TO CERTAIN ASSETS AND LIABILITIES:
RECEIVABLES (7,494) (2,647)
INVENTORIES 5,016 4,020
PREPAID EXPENSES AND OTHER CURRENT ASSETS (1,373) (6,550)
ACCOUNTS PAYABLE (36,572) 451
ACCRUED EXPENSES (7,134) (9,058)
OTHER NONCURRENT LIABILITIES (244) 0
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NET CASH USED IN OPERATIONS (53,553) (937)
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CASH FLOWS FROM INVESTING ACTIVITIES
ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT, NET (3,536) (6,404)
CHANGES TO OTHER NONCURRENT ASSETS AND LIABILITIES (1,640) (1,648)
PAYMENT FOR ACQUISITION OF BUSINESSES (36) (15,280)
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NET CASH (USED FOR) INVESTMENT ACTIVITIES (5,212) (23,332)
CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES:
PROCEEDS FROM SENIOR SECURED REVOLVING AND TERM DEBT 65,000 29,150
REPAYMENT OF BORROWINGS (5,759) (5,000)
CAPITAL CONTRIBUTIONS, NET OF OFFICER PROMISSORY NOTES 0 17
DEBT ISSUANCE AND EQUITY RAISING COSTS (132) 0
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NET CASH FROM FINANCING ACTIVITIES 59,109 24,167
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NET CHANGE IN CASH 344 (102)
BEGINNING CASH AND CASH EQUIVALENTS 315 354
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ENDING CASH AND CASH EQUIVALENTS $ 659 $ 252
======== ========
</TABLE>
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