<PAGE>
=================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM 8-K/A
AMENDMENT NO. 1 TO
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
December 14, 1995
_________________
UNITED GROCERS, INC.
(Exact name of Registrant as specified in charter)
Oregon
(State or other jurisdiction of incorporation)
2-60487
(Commission File No.)
93-0301970
(IRS Employer Identification No.)
6433 S.E. Lake Road (Milwaukie, Oregon)
Post Office Box 22187 97222
Portland, Oregon (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code:
(503) 833-1000
=============================================================
<PAGE>
The Registrant hereby amends Item 7 of its Current
Report on Form 8-K dated December 14, 1995, as follows:
Item 7. Required Financial Information
(a) Financial statements of business acquired.
The following financial statements of Market
Wholesale, a division of Bay Area Foods, Inc., and the
related notes to financial statements and independent
auditor's report are filed as part of this report:
Independent Auditor's Report
Statement of Net Assets as of January 28, 1995
Divisional Operating Income and Change in Net Assets
for the year ended January 28, 1995
Statement of Cash Flows for the year ended January 28,
1995
Notes to Financial Statements
(b) Pro forma financial information.
The following pro forma financial information is filed
as part of this report:
Introductory Paragraph
Pro Forma Consolidated Balance Sheet as of
September 29, 1995
Pro Forma Consolidated Statement of Income for the
year ended September 29, 1995
Explanatory Notes
(c) Exhibits.
The exhibits filed herewith are listed in the exhibit
index following the signature page of this report.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned hereunto
duly authorized.
UNITED GROCERS, INC.
Dated: February 23, 1996 By: /s/ John W. White
John W. White
Vice President
<PAGE>
EXHIBIT INDEX
2. Asset Purchase Agreement dated as of November 10,
1995, by and between United Grocers, Inc., and Bay
Area Foods, Inc. (previously filed)
<PAGE>
United Grocers, Inc.
Portland, Oregon
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying statement of net assets of
Market Wholesale (A Division of Bay Area Foods, Inc.) as of
January 28, 1995, and the related statements of divisional
operating income, change in net assets, and cash flows for
the year then ended. These financial statements are the
responsibility of the Division's management. Our
responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial
position of Market Wholesale (A Division of Bay Area Foods,
Inc.) as of January 28, 1995, and the change in its net
assets and its cash flows for the year then ended, in
conformity with generally accepted accounting principles.
See Note 3. regarding basis of presentation.
The purpose of this audit is only to satisfy the Form 8-K
filing requirements of the Securities and Exchange Commission
(SEC). Market Wholesale (A Division of Bay Area Foods, Inc.)
was previously audited as of January 28, 1995 as part of the
consolidated audit of the Parent Company by other auditors in
their report dated March 24, 1995.
Portland, Oregon
February 8, 1996 /s/DeLap, White & Raish
<PAGE>
MARKET WHOLESALE
(A DIVISION OF BAY AREA FOODS, INC.)
STATEMENT OF NET ASSETS
JANUARY 28, 1995
ASSETS
Current assets:
Cash $ 4,827
Accounts receivable, net of
allowance for doubtful accounts
of $642,122 9,317,484
Inventories 22,942,508
Prepaid expenses 311,937
-----------
Total assets 32,576,756
-----------
LIABILITIES AND NET ASSETS
Current liabilities:
Accounts payable $10,161,364
Accrued liabilities:
Salaries, wages and benefits 18,678,553
Vacation 678,395
Workers' compensation 1,361,677
Rebates 1,318,668
-----------
Total liabilities 32,198,657
-----------
Commitments and contingencies
Net assets $ 378,099
===========
The accompanying notes are an integral part of this financial
statement.
<PAGE>
MARKET WHOLESALE
(A DIVISION OF BAY AREA FOODS, INC.)
DIVISIONAL OPERATING INCOME AND CHANGE IN NET ASSETS
YEAR ENDED JANUARY 28, 1995
Net sales $309,738,126
Cost of goods sold 284,286,543
------------
Gross margin 25,451,583
------------
Operating expenses:
Compensation, variable and
fixed expenses 21,455,641
Depreciation and amortization 1,594,896
------------
Total operating expenses 23,050,537
------------
Operating income 2,401,046
------------
Other income (expense):
Other income 3,776,122
Inter-division allocated overhead (4,981,002)
Other expense (5,206)
------------
Other expense - net (1,210,086)
------------
Income before income taxes 1,190,960
Provision for income taxes --
------------
Net income 1,190,960
Net assets:
Balance, beginning of year 15,404,942
Inter-division account
transactions for the year (16,217,803)
------------
Balance, end of year $ 378,099
============
The accompanying notes are an integral part of this financial
statement.
<PAGE>
MARKET WHOLESALE
(A DIVISION OF BAY AREA FOODS, INC.)
STATEMENTS OF CASH FLOWS
YEAR ENDED JANUARY 28, 1995
Cash flows from operating activities:
Net income $ 1,190,960
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation and amortization 1,594,896
(Increase) decrease in non-cash
current assets:
Accounts receivable 1,491,264
Inventories (915,830)
Prepaid expenses (7,076)
Increase (decrease) in non-cash
current liabilities:
Accounts payable (1,743,615)
Accrued salaries, wages and benefits (10,613,296)
Accrued vacation 74,146
Accrued workers' compensation (96,897)
Accrued rebates (1,379,357)
-----------
Net cash used in operating activities (10,404,805)
Cash flows used in investing activities -
capital expenditures (409,216)
Cash flows from financing activities -
inter-division account 10,813,498
-----------
Net decrease in cash (523)
Cash at beginning of year 5,350
-----------
Cash at end of year $ 4,827
===========
Supplemental schedule of noncash investing
and financing activities:
Transfer of property held for sale to BAF $24,887,660
===========
Bargain Purchase allocation - write
down of property $ 2,143,641
===========
The accompanying notes are an integral part of this financial
statement.
<PAGE>
MARKET WHOLESALE
(A DIVISION OF BAY AREA FOODS, INC.)
NOTES TO FINANCIAL STATEMENTS
JANUARY 28, 1995
1. Organization
------------
Market Wholesale (the Division) is operated as a division
of Bay Area Foods, Inc. (BAF). BAF, formerly Provigo
Corp., is a subsidiary of Bay Area Holdings, Inc.
(Holdings). Holdings was incorporated for the purpose of
acquiring in January, 1995 the stock of the old Provigo
Corp. The acquisition (Purchase Transaction) was
accounted for using the purchase method and resulted in a
bargain purchase as the net asset values exceeded the
cost.
2. Description of business
-----------------------
The Division is engaged in the wholesale distribution of
grocery, frozen food and delicatessen products to
independent grocery stores and supermarket chains
primarily located in Central California.
3. Summary of significant accounting policies
------------------------------------------
Basis of presentation
---------------------
The accompanying statement of net assets and statement of
divisional operating income have been prepared from the
books and records maintained by the Division and BAF. The
statement of divisional operating income may not
necessarily be indicative of the results of operations
that would have been obtained if the Division had been
operated as an independent entity. The statement of
divisional operating income includes allocation of certain
expenses which are material in amount. Such expenses are
allocations for corporate services and overhead.
Accounting period
-----------------
The Division's fiscal year ends on the last Saturday in
January (January 28, 1995) and covers the preceding 52
weeks since the prior year's last Saturday in January
(January 29, 1994).
The Purchase Transaction has been recorded as of January
28, 1995. The balance sheet of the Division as of January
28, 1995, reflects the effects of purchase accounting.
The statements of divisional operating income, change in
net assets and cash flows for the year ended January 28,
1995, do not reflect the effects of the Purchase
Transaction.
Inventories
-----------
Inventories at January 28, 1995, and cost of goods sold
for the year then ended, were determined by valuing
wholesale inventories at the lower of first-in, first-out
cost or market value. Write downs for obsolescence for
the year included in cost of goods sold was approximately
$1,250,000.
<PAGE>
MARKET WHOLESALE
(A DIVISION OF BAY AREA FOODS, INC.)
NOTES TO FINANCIAL STATEMENTS
JANUARY 28, 1995
3. Summary of significant accounting policies (continued)
------------------------------------------------------
Depreciation and amortization
Depreciation expense for the year was recorded on a
straight-line basis as follows:
Buildings 20-40 years
Warehouse equipment 10 years
Computer and office equipment 3-5 years
Leasehold and building improvements Lesser of
useful life
or term of
the lease
Major repairs or renewals that enhance the value or
increase the life of the underlying fixed asset are
capitalized and depreciated over the estimated remaining
useful life. Maintenance, repairs and minor renewals are
expensed as incurred. When properties are retired or
otherwise disposed of, the related cost and accumulated
depreciation are removed from the accounts.
Revenue recognition
-------------------
Wholesale sales are recognized at the time an order is
shipped.
Use of estimates
----------------
The preparation of financial statements in conformity with
generally accepted accounting principles require
management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts
of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Self-insurance reserves
-----------------------
Prior to the Purchase Transaction, the Division was
partially self-insured for medical and other health and
welfare costs. Liabilities have been recorded for known
and estimated incurred but unreported claims. These
programs were substantially revised and the self-insurance
provisions were eliminated at the time of the acquisition.
Income taxes
------------
The Division records deferred income taxes that arise from
temporary differences between items of income or expense
reported in the financial statements from those reported
for income tax purposes and for net operating loss and tax
credit carryforwards. Valuation allowances are
established to the extent that future tax benefits related
to the tax assets do not appear realizable. At January
28, 1995, a valuation allowance has been established for
100 percent of the net deferred tax asset (see Note 5).
<PAGE>
MARKET WHOLESALE
(A DIVISION OF BAY AREA FOODS, INC.)
NOTES TO FINANCIAL STATEMENTS
JANUARY 28, 1995
3. Summary of significant accounting policies (continued)
------------------------------------------------------
Property held for sale
----------------------
Subsequent to the Purchase Transaction, BAF entered into
transactions to sell several building and trucks of the
Division and lease them back. The approximate book value
of these assets transferred from the Division to BAF was
$25,000,000 with expected proceeds from these
sale/leaseback transactions to be approximately
$24,000,000 (see Note 8).
Cash and cash equivalents
-------------------------
For purposes of the statement of cash flows, the Division
considers all highly liquid current debt instruments
purchased with a maturity of three months or less to be
cash equivalents.
4. Accounts receivable and concentrations of credit
------------------------------------------------
Accounts receivable at January 28, 1995 consist of:
Accounts receivable:
Trade $9,807,840
Other 151,766
----------
9,959,606
Allowance for doubtful accounts (642,122)
----------
Total $9,317,484
==========
The trade accounts receivable represent sales to various
grocery stores and supermarket chains located primarily in
Central California with no significant customer
concentrations. See Note 6 for transactions with
affiliates.
5. Income taxes
------------
The Division's statement of divisional operating income
for the year ended January 28, 1995 does not reflect a
provision or benefit for income taxes because BAF
consolidated for fiscal 1995 has a net loss. The computed
income tax benefit for fiscal 1995 because of NOL's and
restructuring costs was entirely offset by a valuation
allowance of approximately $400,000. The utilization of
the recorded deferred tax asset is dependent on taxable
income during the NOL carryforward and deduction periods.
BAF has operated at a loss for several years and expects
to operate at a loss in fiscal 1996. Accordingly,
management has recorded a 100 percent valuation allowance
for the recorded deferred tax asset because of the
uncertainty of their realization.
<PAGE>
MARKET WHOLESALE
(A DIVISION OF BAY AREA FOODS, INC.)
NOTES TO FINANCIAL STATEMENTS
JANUARY 28, 1995
5. Income taxes (continued)
------------------------
For tax accounting and reporting purposes, the basis of
BAF's assets and liabilities did not change as a result of
the Purchase Transaction. Because of the nature of the
Purchase Transaction, however, BAF is subject to Internal
Revenue Code Section 382 (the IRC and Section 382,
respectively). There are significant restrictions under
Section 382 regarding the BAF's ability to deduct in the
future the full amount of purchased net operating loss
carryforwards (NOLs), "built-in losses" and "built-in
deductions" as defined by the IRC. Under the provisions
of Section 382, in each of the next five years, BAF may
deduct in each of its federal and state tax returns up to
a maximum of $820,000 of the combined purchased NOLs,
losses and deductions utilized in those years. The state
NOLs expire before the end of the five-year limitation
period in 1997, 1998 and 1999. The federal NOLs expire
after the five-year limitation period beginning in 2006
through 2009.
6. Transactions with affiliates
----------------------------
The Division provides products to various related retail
distributors of BAF. An approximate summary of aggregate
transactions with these affiliates for 1995 are as
follows:
At year end:
Trade accounts receivable $ 655,292
During the year ended:
Sales to affiliates $82,754,521
Rebates to affiliates 171,428
Overhead charges by BAF
to the Division 4,981,002
7. Employee benefit plans
----------------------
Approximately 70 percent of the Division's employees are
covered by defined benefit pension plans, administered by
their respective unions, to which the Division contributed
approximately $707,000 in fiscal 1995. The contributions
are determined in accordance with provisions of negotiated
labor contracts. Information with respect to the
Division's proportionate share of the excess, if any, of
the actual computed value of vested benefits over the
total of the pension plans' net assets is not available
from the plans' administrators as of January 28, 1995.
The Multiemployer Pension Plan Amendments Act of 1980 (the
Act) significantly increased the responsibilities of
participating employers. Under the provisions of the Act,
if the plans terminate or BAF withdraws, the Division
could be subject to a substantial withdrawal liability.
As of January 28, 1995, management does not believe it has
any withdrawal liability associated with the plans and has
no intention of undertaking any action that could subject
the Division to an obligation.
<PAGE>
MARKET WHOLESALE
(A DIVISION OF BAY AREA FOODS, INC.)
NOTES TO FINANCIAL STATEMENTS
JANUARY 28, 1995
7. Employee benefit plans (continued)
----------------------------------
The Division participates in a 401(k) tax savings plan
sponsored by BAF for all nonunion employees. The plan is
a defined contribution plan covering substantially all of
its nonunion employees. Under the plan, employees with a
minimum of three months of qualified service can elect to
participate by contributing a minimum of 4 percent of
their gross earnings, up to a maximum of 10 percent. For
those eligible plan participants employed at each December
31, the Division contributes a matching amount up to 8
percent of each participant's gross earnings. During the
fiscal year ended January 28, 1995, the Division's
contribution to the plan for the plan year ended December
31, 1994, was approximately $185,000. Employee
contributions are fully vested. Employer contributions
are subject to certain vesting requirements and are
forfeitable. Provigo will reimburse BAF for the fiscal
1995 contribution; such amount is reflected as a
receivable by BAF. In April 1995, BAF prospectively
changed the contribution provision from an 8 percent gross
earnings matching contribution to a discretionary
contribution.
8. Commitments and contingencies
-----------------------------
As of April 18, 1995, BAF signed an agreement with third
parties to sell and lease back three owned warehouses and
trucks used in the Division's wholesale distribution
business. The net sales price for the warehouses and
trucks is $23,902,000 and has been transferred to BAF as
property held for sale at January 28, 1995. The warehouse
leaseback and the truck leaseback agreements call for
annual lease payments of $2,876,000 and approximately
$196,000, respectively.
Future minimum lease payments related to this leaseback as
of January 28, 1995 are as follows:
<PAGE>
<TABLE>
<CAPTION>
Year ending Warehouse Trucks Total
----------- ----------- ---------- -----------
<S> <C> <C> <C>
1996 $ 1,437,948 $ 161,740 $ 1,599,688
1997 2,875,896 171,388 3,047,284
1998 2,875,896 118,540 2,994,436
1999 2,875,896 105,648 2,981,544
2000 2,875,896 82,012 2,957,908
Thereafter 15,817,428 116,222 15,933,650
----------- ---------- -----------
Total $28,758,960 $ 755,550 $29,514,510
=========== ========== ===========
</TABLE>
From time to time, the Division enters into contracts to
purchase goods from several of its vendors. As of January 28,
1995, the Division was obligated to purchase $9,800,000 under
agreements with expiration dates not beyond fiscal 1996.
<PAGE>
MARKET WHOLESALE
(A DIVISION OF BAY AREA FOODS, INC.)
NOTES TO FINANCIAL STATEMENTS
JANUARY 28, 1995
8. Commitments and contingencies (continued)
-----------------------------------------
The Division is a party to litigation and claims arising in
the ordinary course of business. While the ultimate effect
of such actions cannot be predicted with certainty, the
Division expects that the outcome of these matters will not
result in a material adverse effect on the Division's
financial position or results of operations.
9. Subsequent event
----------------
In December 1995 BAF entered into a transaction with United
Grocers, Inc. for the sale of the Division and its certain
assets in consideration of approximately $21,000,000 and the
assumption of the Division's certain liabilities and
property leases.
<PAGE>
UNITED GROCERS, INC.
------------------
PRO FORMA FINANCIAL STATEMENTS
YEAR ENDED SEPTEMBER 29, 1995
-----------------------------
Introductory paragraph
- ----------------------
1. The transaction and the entities involved
-----------------------------------------
On December 14, 1995, United Grocers, Inc. ("Company"),
acquired certain assets of the Market Wholesale ("Market")
grocery division operations of Bay Area Foods, Inc. ("Bay
Area Foods"), for a cash purchase price of approximately $21
million. The Company assumed certain liabilities including
obligations under certain real and personal property leases
relating to Bay Area Foods', three leased warehouse
locations and leased tractor and trailer equipment.
The approximate values allocated to the assets acquired,
amount of liabilities assumed, and net value of assets
acquired, are stated below:
Acquired assets Amount
--------------- -----------
Accounts receivable and
customer loans $13,300,000
Inventories 19,600,000
Deposits and prepaid expenses 1,000,000
Equipment 3,100,000
-----------
Total acquired assets 37,000,000
-----------
Assumed liabilities
-------------------
Accounts payable 14,400,000
Customer rebates and
employee accruals 1,900,000
-----------
Total assumed liabilities 16,300,000
-----------
Net value of assets acquired $20,700,000
===========
In connection with the acquisition, the Company entered into a five-
year supply agreement with certain retail stores owned and operated
by Bay Area Foods. These retail stores account for approximately 20
percent of the total warehouse volume of the acquired operations.
Funding for the acquisition was provided by increased short-term bank
credit from United States National Bank of Oregon and Seattle-First
National Bank. The Company anticipates refinancing the additional
bank credit with new senior debt, or the securitization of eligible
trade accounts receivable.
The assets acquired include all owned warehouse equipment, furniture,
and fixtures of the market operations of Bay Area Foods, such as
forklifts, warehouse racking, office equipment and computers, and
software. The Company intends to continue to utilize these assets in
the wholesale grocery distribution business in substantially the same
manner as used by Bay Area Foods.
UNITED GROCERS, INC.
--------------------
PRO FORMA FINANCIAL STATEMENTS
YEAR ENDED SEPTEMBER 29, 1995
-----------------------------
Introductory paragraph - continued
- ----------------------------------
2. The periods presented
---------------------
a) The pro forma financial statements are presented on the reporting
year of the Company which is as of and for the year ended
September 29, 1995. The fiscal closing date of the Company is the
Friday nearest September 30.
b) Market's fiscal year end has been on the last Saturday in January
on a basis of thirteen accounting periods. For these pro forma
financial statements, the thirteen accounting periods ended
October 7, 1995 have been used.
3. Pro forma presentation
----------------------
The proforma presentation attempts to show the Company and Market
combined and operating as one business unit using historical
financial statements as if the transaction had been consummated at
the beginning of the year that ended September 29, 1995. See
"Explanatory notes" on page 6 for the pro forma adjustments made in
order to try and achieve this result.
<PAGE>
UNITED GROCERS, INC.
--------------------
PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 29, 1995
------------------
ASSETS
------
<TABLE>
<CAPTION>
Historical Pro forma Pro forma
--------------------------
United Market adjustments results
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 13,045,456 $ -- $ -- $ 13,045,456
Investments maintained for
insurance reserves 40,809,762 -- -- 40,809,762
Accounts and notes receivable 70,706,049 11,531,000 -- 82,237,049
Inventories 81,477,754 19,623,000 -- 101,100,754
Other current assets 3,870,703 397,000 -- 4,267,703
Deferred income taxes 2,537,323 -- -- 2,537,323
------------ ------------ ------------ ------------
Total current assets 212,447,047 31,551,000 -- 243,998,047
------------ ------------ ------------ ------------
Non-current assets:
Notes receivable 21,950,478 1,796,000 -- 23,746,478
Investment in and accounts
with affiliated companies 8,392,281 -- -- 8,392,281
Other receivables and investments 6,869,895 -- -- 6,869,895
Other non-current assets 11,668,590 650,000 -- 12,318,590
------------ ------------ ------------ ------------
Total non-current assets 48,881,244 2,446,000 -- 51,327,244
------------ ------------ ------------ ------------
Property, plant and equipment -
(net of accumulated depreciation) 61,127,772 -- (a) 3,082,000 64,209,772
------------ ------------ ------------ ------------
Tot
al $322,456,063 $ 33,997,000 $ 3,082,000 $359,535,063
============ ============ ============ ------------
</TABLE>
The accompanying introductory paragraph and explanatory notes should
be read as part of this financial statement.
<PAGE>
<TABLE>
<CAPTION>
UNITED GROCERS, INC.
--------------------
PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 29, 1995
------------------
LIABILITIES AND MEMBERS' EQUITY
-------------------------------
Historical Pro forma Pro forma
--------------------------
United Market adjustments results
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Current liabilities:
Notes payable - bank $ 48,515,543 $ -- $ -- $ 48,515,543
Accounts payable 60,461,117 14,436,000 -- 74,897,117
Insurance reserves supported
by investments 29,958,678 -- -- 29,958,678
Compensation and taxes payable 3,118,827 956,000 -- 4,074,827
Other accrued expenses 3,662,495 921,000 -- 4,583,495
Members' patronage payable 6,646,867 -- -- 6,646,867
Current installments on long-term
liabilities 7,573,215 -- -- 7,573,215
------------ ------------ ------------ ------------
Total current liabilities 159,936,742 16,313,000 -- 176,249,742
Long-term liabilities 115,623,670 17,684,000 (a) 3,082,000 136,389,670
Deferred income taxes 3,651,247 -- -- 3,651,247
Deferred income 886,917 -- -- 886,917
------------ ------------ ------------ ------------
Total liabilities 280,098,576 33,997,000 3,082,000 317,177,576
------------ ------------ ------------ ------------
Members' equity:
Common stock (authorized, 10,000,000
shares at $5.00 par value; issued
and outstanding, 655,663 shares) 3,278,315 -- -- 3,278,315
Additional paid-in capital 23,956,797 -- -- 23,956,797
Retained earnings 14,923,491 -- -- 14,923,491
Unrealized gain on investments 198,884 -- -- 198,884
------------ ------------ ------------ ------------
Total members' equity 42,357,487 -- -- 42,357,487
------------ ------------ ------------ ------------
Total $322,456,063 $ 33,997,000 $ 3,082,000 $359,535,063
------------ ------------ ------------ ------------
</TABLE>
The accompanying introductory paragraph and explanatory notes should
be read as part of this financial statement.
<PAGE>
<TABLE>
<CAPTION>
UNITED GROCERS, INC.
--------------------
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED SEPTEMBER 29, 1995
-----------------------------
Historical Pro forma Pro forma
------------------------------ -------------- --------------
United Market adjustments results
<S> <C> <C> <C> <C>
Net sales and operations $1,018,248,456 $ 308,274,343 $ -- $1,326,522,799
-------------- -------------- -------------- --------------
Costs and expenses:
Cost of sales 870,097,228 279,889,325 -- 1,149,986,553
Operating expenses 101,029,068 22,381,774 (c) 2,643,270 126,054,112
Selling and administrative
expenses 10,872,432 5,920,433 (d) (5,087,433) 11,705,432
Depreciation 5,952,576 533,059 (b) (92,773) 6,392,862
Interest:
Interest expense 12,773,947 -- (e) 1,401,705 14,175,652
Interest income (4,494,053) -- -- (4,494,053)
-------------- -------------- -------------- --------------
Interest expense, net 8,279,894 -- 1,401,705 9,681,599
-------------- -------------- -------------- --------------
Total costs and expenses 996,231,198 308,724,591 (1,135,231) 1,303,820,558
-------------- -------------- -------------- --------------
Income (loss) before members'
allowances and patronage
dividends, and income taxes 22,017,258 (450,248) 1,135,231 22,702,241
Members' allowances (11,513,784) -- -- (11,513,784)
Members' patronage dividends (8,350,000) -- -- (8,350,000)
-------------- -------------- -------------- --------------
Income (loss) before
income taxes 2,153,474 (450,248) 1,135,231 2,838,457
Provision for income taxes (774,469) -- (f) (246,594) (1,021,063)
-------------- -------------- -------------- --------------
Net income (loss) $ 1,379,005 $ (450,248) $ 888,637 $ 1,817,394
============== ============== ============== ==============
</TABLE>
The accompanying introductory paragraph and explanatory notes should
be read as part of this financial statement.
<PAGE>
UNITED GROCERS, INC.
--------------------
PRO FORMA FINANCIAL STATEMENTS
YEAR ENDED SEPTEMBER 29, 1995
-----------------------------
Explanatory notes
- -----------------
The following explains the pro forma adjustments made to the
pro forma financial statements:
a) To record the purchase of warehouse equipment,
furniture, and fixtures of Market which had
previously been written off as a result of a bargain
purchase agreement by Bay Area Foods.
b) To adjust depreciation to annual amount on property
acquired.
c) To reflect annual lease payments on vehicles and real
estate.
d) To adjust intercompany charge to estimated general
and administrative expense for Market.
e) To record interest charge on borrowing to finance the
purchase of Market.
f) To record additional provision for income taxes using
Company's effective rate of 36%.
