<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
(Amendment No. 1)
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
May 30, 1995
Date of Report (Date of earliest event reported)
THORN APPLE VALLEY, INC.
(Exact name of registrant as specified in its charter)
Michigan 0-6566 38-1964066
---------------------------- ----------- -------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
18700 West Ten Mile Road, Southfield, Michigan 48075
----------------------------------------------- ------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (810) 552-0700
Not Applicable
(Former name or former address, if changed since last report)
<PAGE> 2
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Wilson Brands.
Report of Independent Accountants
Combined Balance Sheets at April 1, 1995 (unaudited), December
31, 1994 and January 1, 1994
Combined Statements of Operations and Retained Earnings
(Deficit) for the three months ended April 1, 1995
(unaudited) and April 2, 1994 (unaudited) and for the fiscal
years ended December 31, 1994 and January 1, 1994
Combined Statement of Cash Flows for the three months ended
April 1, 1995 (unaudited) and April 2, 1994 (unaudited) and
for the fiscal years ended December 31, 1994 and January 1,
1994
Notes to Combined Financial Statements
(b) Pro Forma Financial Information.
Pro Forma Condensed Combined Balance Sheet (unaudited) at May
26, 1995
Pro Forma Condensed Combined Statement of Operations
(unaudited) for the fiscal year ended May 26, 1995
Notes to unaudited Pro Forma Condensed Combined Financial
Statements
(c) Exhibits.
27.1 Financial Data Schedule of Wilson Brands containing
financial information for the three months ended April 1,
1995
27.2 Financial Data Schedule of Wilson Brands containing
financial information for the three months ended April 2,
1994
27.3 Financial Data Schedule of Wilson Brands containing
financial information for the fiscal year ended December
31, 1994
27.4 Financial Data Schedule of Wilson Brands containing
financial information for the fiscal year ended January
1, 1994
2
<PAGE> 3
FORM 8-K/A
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this Amendment to this Report to be
signed on its behalf by the undersigned hereunto duly authorized.
THORN APPLE VALLEY, INC.
By: /s/ Louis Glazier
-------------------------
Louis Glazier
Executive Vice President
Finance and Administration
Dated: August 11, 1995
3
<PAGE> 4
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
Thorn Apple Valley, Inc.
Southfield, Michigan
We have audited the accompanying combined balance sheets of Wilson Brands (the
"Company", as described in Note 1) as of December 31, 1994 and January 1, 1994,
and the related combined statements of operations and retained earnings
(deficit) and cash flows for each of the two fiscal years ended December 31,
1994 and January 1, 1994. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits 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 misstatements. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in 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 our audits provide a reasonable basis for our
opinion.
As discussed in Note 1 to the financial statements, effective May 30, 1995, the
Company sold substantially all its operating assets subject to certain
liabilities to Thorn Apple Valley, Inc.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the combined financial position of Wilson Brands as of
December 31, 1994 and January 1, 1994, and the combined results of their
operations and cash flows for the two fiscal years ended December 31, 1994 and
January 1, 1994, in conformity with general accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
combined financial statements taken as a whole. The unaudited information
presented on pages 5, 6, and 7 is presented for purposes of additional analysis
and is not a required part of the basic financial statements. Such information
has not been subjected to the auditing procedures applied in the audit of the
basic combined financial statements and accordingly we express no opinion
on it.
Coopers & Lybrand L.L.P.
Detroit, Michigan
August 4, 1995
4
<PAGE> 5
WILSON BRANDS
Combined Balance Sheets
(in thousands)
<TABLE>
<CAPTION>
UNAUDITED
April 1, December 31, January 1,
1995 1994 1994
---------- ------------ ----------
<S> <C> <C> <C>
Assets
Current assets:
Accounts receivable, net of allowance for doubtful accounts
(April 1, 1995, $9, Dec. 31, 1994, $49 , Jan. 1, 1994, $37) $9,592 $11,038 $13,832
Inventories 10,096 7,705 11,201
Prepaid expenses and other current assets 2,418 2,254 2,387
Deposits held in escrow 0 0 2,155
-------- -------- --------
Total current assets 22,106 20,997 29,575
Property, plant and equipment:
Land 361 361 333
Buildings and improvements 10,473 10,464 2,923
Machinery and equipment 16,079 15,848 5,780
Construction in progress 819 619 10,066
-------- -------- --------
27,732 27,292 19,102
Less accumulated depreciation 5,324 4,710 1,792
-------- -------- --------
22,408 22,582 17,310
-------- -------- --------
Intangible assets, net of accumulated amortization of $2,815 on April 1, 1995,
$2,615 on Dec. 31, 1994, and $1,815 on Jan. 1, 1994 13,185 13,385 14,185
Reorganization value in excess of amount allocable to identifiable assets,
net of accumulated amortization of $8,941 on April 1, 1995, $8,156 on
Dec. 31, 1994 and $5,714 on Jan. 1, 1994 42,640 43,425 45,867
-------- -------- --------
Total assets $100,339 $100,389 $106,937
======== ======== ========
Liabilities and Equity
Current liabilities:
Current portion - long term debt $1,415 $1,409 $702
Accounts payable 2,999 2,761 2,124
Accrued liabilities 3,540 4,487 2,874
-------- -------- --------
Total current liabilities 7,954 8,657 5,700
Long-term debt 6,265 6,623 5,203
Investments of and advances from Foodbrands 110,396 105,165 102,583
Retained earnings (deficit) (24,276) (20,056) (6,549)
-------- -------- --------
Total liabilities and equity $100,339 $100,389 $106,937
======== ======== ========
</TABLE>
The accompanying notes are an integral part of
the combined financial statements.
5
<PAGE> 6
WILSON BRANDS
Combined Statements of Operations
(in thousands)
<TABLE>
<CAPTION>
UNAUDITED
Three Months Ended Fiscal Years Ended
---------------------- ------------------------
April 1, April 2, Dec. 31, Jan. 1,
1995 1994 1994 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $44,806 $61,876 $238,308 $254,937
Operating costs and expenses:
Cost of goods sold 37,825 49,092 191,129 199,982
Selling 6,213 8,947 39,143 31,951
General and administrative 1,253 927 3,348 4,835
General and administrative expenses
allocated from Foodbrands 894 1,421 5,868 5,050
Depreciation 634 434 2,121 941
Amortization of intangible assets and reorganization
value allocated from Foodbrands 985 985 3,242 3,340
Restructuring charge 1,914
-------- ------- -------- -------
47,804 61,806 246,765 246,099
-------- ------- -------- -------
Income (loss) from operations (2,998) 70 (8,457) 8,838
Other Income (expense):
Interest (172) (121) (717) (31)
Interest allocated from Foodbrands (1,058) (1,186) (4,354) (4,578)
Other, net 8 9 21 (48)
-------- ------- -------- -------
(1,222) (1,298) (5,050) (4,657)
-------- ------- -------- -------
Income (loss) before income taxes (4,220) (1,228) (13,507) 4,181
Provision for income taxes - - - -
-------- ------- -------- -------
Net Income (loss) ($4,220) ($1,228) ($13,507) $4,181
Retained earnings (deficit), beginning
of period (20,056) (6,549) (6,549) (10,730)
-------- ------- -------- -------
Retained earnings (deficit), end
of period ($24,276) ($7,777) ($20,056) ($6,549)
======== ======= ======== =======
</TABLE>
The accompanying notes are an integral part of
the combined financial statements.
6
<PAGE> 7
WILSON BRANDS
Combined Statements of Cash Flows
(in thousands)
<TABLE>
<CAPTION>
UNAUDITED
Three Months Ended Fiscal Years Ended
------------------- ---------------------
April 1 April 2, Dec. 31, Jan. 1,
1995 1994 1994 1994
--------- -------- -------- -------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) ($4,220) ($1,228) ($13,507) $4,181
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 634 434 2,121 941
Amortization allocated from Foodbrands 985 985 3,242 3,340
Restructuring charge 1,914
Changes in assets and liabilities:
Accounts receivable 1,446 546 2,794 533
Inventories (2,391) 1,105 3,496 (1,166)
Prepaid expenses and other current assets (164) (751) 133 (1,377)
Accounts payable 238 78 637 1,077
Accrued liabilities (947) 2,204 1,613 664
------ ------- ------- -------
Net cash provided by (used in) operations (4,419) 3,373 2,443 8,193
------ ------- ------- -------
Cash flows used in investing activities:
Capital expenditures, net (555) (4,224) (6,151) (10,820)
------ ------- ------- -------
Cash flows from financing activities:
(Deposits to) withdrawals from escrow account 2,155 2,155 (2,155)
Principal payments of long-term debt (257) (825) (1,029) (372)
Investments of and advances from Foodbrands 5,231 (479) 2,582 (3,461)
Proceeds from issuance of debt 5,800
------ ------- ------- -------
Net cash provided by (used in) financing activities 4,974 851 3,708 (188)
------ ------- ------- -------
Net decrease in cash 0 0 0 (2,815)
Cash, beginning of period 0 0 0 2,815
------ ------- ------- -------
Cash, end of period $0 $0 $0 $0
====== ======= ======= =======
Supplemental disclosure of cash flows information:
Interest paid during the year $165 $41 $662 $31
====== ======= ======= =======
</TABLE>
Supplemental Schedule of Noncash Financing and Investing Activities:
In 1994, capital leases obligations totaling $2.9 million were incurred when
the company entered into various leases for equipment.
The accompanying notes are an integral part of
the combined financial statements.
7
<PAGE> 8
WILSON BRANDS
NOTES TO COMBINED FINANCIAL STATEMENTS
(in thousands, except where otherwise indicated)
1. Background and Basis of Presentation:
On May 30, 1995, Thorn Apple Valley, Inc. ("TAV") purchased certain
assets from Foodbrands America, Inc. and subsidiaries ("Foodbrands" or
the "Sellers"). TAV acquired substantially all of the assets used by
the Sellers in their business of producing and marketing retail meat
products. The assets acquired by TAV include three manufacturing
facilities located in Missouri, Arkansas and Louisiana, machinery,
equipment, tools, supplies, inventory, receivables, certain trademarks
and trade names, customer purchase orders and other intangibles
assets.
The aggregate purchase price for the assets acquired and the
assumption of certain liabilities was approximately $65.8 million.
This amount is subject to adjustment based on the actual value of
certain of the assets and certain of the liabilities assumed, as of
May 29, 1995. During the next five years, Sellers have the right to
receive from TAV up to an additional $10 million in accordance with
what is being referred to as an Earnout Agreement.
The combined financial statements include selected accounts of the
Retail Division of Foodbrands in order to represent the historical
financial position and results of operations of the business purchased
by TAV (herein referred to as the "Company" or "Wilson Brands").
Investments of and advances from parent as presented in the financial
statements represent the net position of the following types of
transactions between the Sellers and the Company:
-- Allocated expenses for services provided to the Company by
Foodbrands. Such services include operating and
administrative costs of the Foodbrands central distribution
center and certain expenses related to office services.
-- Allocations of certain expenses that have been accounted
for by Foodbrands and historically have not been allocated to
the Company by Foodbrands. These expenses include corporate
administrative expenses, interest, amortization of intangible
assets and a restructuring charge. Corporate administrative
expenses were allocated based on a ratio of Company sales to
Foodbrands sales for each period presented. The methods used
to allocate other expenses are described elsewhere in the
notes to the financial statements. The management of
Foodbrands believes that the allocation methods are based on
assumptions that are reasonable under the circumstances.
8
<PAGE> 9
-- In addition to the various allocated costs and expenses
described above and in Notes 2 and 5, the Company has recorded
sales to Foodbrands in the amount of $8,239 and $3,623 in
each of the fiscal years ended December 31, 1994 and
January 1, 1994, respectively.
-- Receipts, disbursements and the net cash position of the
Company have been managed by Foodbrands through a centralized
cash management system. Accordingly, both cash generated by,
and cash requirements of, the Company flow through
Foodbrands.
All significant intercompany accounts and transactions have been
eliminated.
2. Summary of Significant Accounting Policies:
Concentrations of credit risk:
The concentrations of credit risk with respect to trade receivables
are, in Foodbrands' management opinion, considered minimal due to the
Company's diverse customer base. The Company sells to customers
located throughout the United States and in certain foreign countries.
Credit evaluations of its customers' financial conditions are
performed periodically, and the Company generally does not require
collateral from its customers.
Inventories:
Inventories are stated at lower of cost or market. Cost is determined
on a first-in, first-out method (FIFO).
Property, plant and equipment:
Property, plant and equipment are stated at cost if acquired after
September 28, 1991, the date the Sellers implemented Fresh Start
Reporting as set forth in Statement of Position 90-7, "Financial
Reporting by Entities in Reorganization Under the Bankruptcy Code"
("SOP 90-7"), issued by the American Institute of Certified Public
Accountants. Upon retirement or disposal of property, plant and
equipment, the cost and accumulated depreciation are removed from the
accounts and any gain or loss is included in other income.
Depreciation is computed for financial reporting purposes generally on
the straight-line basis over the estimated useful lives of the assets
(3-40 years) or, for capital leases, the term of the related leases.
9
<PAGE> 10
Intangibles assets:
Intangible assets represent trademarks and tradenames which are being
amortized over 20 years.
Reorganization value:
Foodbrands recorded a reorganization value in conformity with the
procedures specified by SOP 90-7. The portion of the reorganization
value which cannot be attributed to specific tangible or identifiable
intangible assets of Foodbrands has been reported as "Reorganization
Value in Excess of Amounts Allocable to Identifiable Assets".
Foodbrands has allocated $51.6 million of the reorganization value to
the Company. The Company is amortizing the reorganization value
using the straight-line method over 20 years.
Restructuring charge:
In December 1994, Foodbrands announced a restructuring program that
resulted in a charge against operating income in 1994. The charge
included costs incurred prior to year-end associated with a corporate
legal restructuring and to change the corporate name. Foodbrands has
allocated $1.9 million of this charge to the Company based on the
specific identification of costs associated with the Company.
Fiscal year:
The Company's annual reporting periods end on the Saturday nearest
December 31. The annual reporting periods ended December 31, 1994
and January 1, 1994 contained 52 weeks.
Income Taxes:
The Company is not a separate taxable entity for federal, state, or
local income tax purposes. The Company's operations are included in
the consolidated Foodbrands tax returns. Foodbrands has not
historically allocated income taxes to the Company. The calculation
of a provision for income taxes does not result in an expense to be
allocated, therefore, a provision does not appear in the financial
statements.
3. Inventories:
<TABLE>
<CAPTION>
Dec. 31, Jan. 1,
1994 1994
---- ----
<S> <C> <C>
Supplies $1,536 $ 952
Raw materials 2,903 652
Work in process 512 457
Finished goods 2,754 9,140
------ -------
$7,705 $11,201
====== =======
</TABLE>
10
<PAGE> 11
4. Long-term debt:
The Company was indebted on long-term debt as follows:
<TABLE>
<CAPTION>
Dec. 31, Jan. 1,
1994 1994
-------- -------
<S> <C> <C>
A. Industrial revenue bond $3,320 $3,766
B. Note payable 1,675 1,776
C. Obligations under capital leases 3,037 363
------ ------
Less current portion 1,409 702
------ ------
$6,623 $5,203
====== ======
</TABLE>
A. In July 1993, Foodbrands entered into an agreement with the
Arkansas Development Finance Authority to borrow $4 million
using industrial revenue bonds. The interest rate is 6%.
Payments of approximately $58, principal and interest, are due monthly
through July 2000.
B. A note payable, dated July 1993, of approximately $1.8 million is
collateralized by a mortgage with the City of Forrest City, Arkansas.
The interest rate on the note is 7%. Interest only for the first year
was due in July 1994 and quarterly payments of approximately $91,
principal and interest, began in September 1994 and are due through
September 2000.
The aggregate maturity of long-term debt (excluding obligations under
capital leases) during the next five years subsequent to December 31,
1994 are:
<TABLE>
<S> <C>
1995 $254
1996 $273
1997 $292
1998 $313
1999 $336
</TABLE>
C. The Company leases certain equipment under agreements which are
classified as capital leases. Most equipment leases have purchase
options at the end of the original lease term. Leased capital assets
included in property, plant and equipment are as follows:
<TABLE>
<CAPTION>
Dec. 31, Jan. 1,
1994 1994
-------- -------
<S> <C> <C>
Machinery and equipment $3,951 $621
Less accumulated amortization 1,033 282
------ ----
$2,918 $339
====== ====
</TABLE>
11
<PAGE> 12
Future minimum payments, by year and in the aggregate, under
noncancelable capital leases and operating leases with initial or
remaining terms of one year or more consist of the following at
December 31, 1994:
<TABLE>
<CAPTION>
Capital Operating
Leases Leases
------ ------
<S> <C> <C>
1995 $ 917 $108
1996 828 63
1997 769 51
1998 654 34
1999 615 29
Future years 0 268
------ ----
Total minimum lease payments 3,783 $553
====
Amounts representing interest 746
------
Present value of net minimum
payments 3,037
Current portion 639
------
$2,398
======
</TABLE>
The Company's rental expense for operating leases was $271 and $307
for the fiscal years ended December 31, 1994, and January 1, 1994,
respectively.
5. Interest expense:
The Company incurred interest expense on the debt described in Note 4.
However, the interest expense reflected in the Statements of
Operations also includes an allocation of Foodbrands' interest expense
based upon the ratio of the Company's assets to total Foodbrands
assets. Management believes that this method provides a reasonable
basis for allocation within the Company's historical Statements of
Operations.
6. Employee benefit plans:
The Company participates in Foodbrands' defined benefit plans. Those
Foodbrands' employees who accept employment with Wilson Brands,
subsequent to the purchase transaction, will terminate from Foodbrands
and will maintain their vested rights in the retirement plans, with
liability remaining with Foodbrands. Total pension cost was $309 and
$535 for the fiscal years ending December 31, 1994 and January 1,
1994, respectively.
The Company also participates in a 401(k) plan sponsored by
Foodbrands. The Company makes contributions on behalf of each
participant of a matching amount not to exceed the employee's
contribution or 3% of such employee's salary.
12
<PAGE> 13
7. Commitments:
The Company was committed under two agreements made on its behalf by
Foodbrands.
The Private Label Manufacturing Agreement, dated May 13, 1992, with a
term of approximately 5 years, provides the Company with certain meat
products under the Company's private label. During the term of the
agreement, the Company is required to purchase specific products at
predetermined volumes on a monthly basis (approximately 25 million
pounds per year). The product price is the actual cost, including all
freight, storage, overhead and other costs of the products.
The Production Agreement, dated October 13, 1993, with a seven year
term, requires the Company to purchase meat products from an outside
manufacturer. The other party to the agreement agreed to construct,
maintain and operate the facility for the exclusive use of producing
product for the Company. The Company agreed to pay the other party
the products' standard cost and the actual fixed cost for the facility.
In return for building and operating the facility, the other party
receives an amount that is equal to 25% of its capital invested, or
$1.4 million dollars per year. Also, as part of the agreement, the
other party agreed to provide and the Company agreed to accept roughly
400,000 pounds of boneless ham muscle per week or approximately 20
million pounds a year.
13
<PAGE> 14
THORN APPLE VALLEY, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following pro forma condensed combined financial statements give effect to
the following transaction that was accounted for as a purchase:
* Acquisition of certain assets from Foodbrands America, Inc. and
subsidiaries ("Foodbrands") on May 30, 1995 for approximately $65.8
million and the assumption of certain liabilities.
The pro forma condensed combined balance sheet combines the financial position
of Thorn Apple Valley, Inc. at May 26, 1995 and Wilson Brands at April 1, 1995.
The pro forma combined balance sheet presents the financial position of Thorn
Apple Valley, Inc. at May 26, 1995 and gives effect to all events of the
purchase.
The pro forma condensed combined statement of operations for the fiscal year
ended May 26, 1995 reflects the acquisition as if it had been completed as of
June 1, 1994. The pro forma condensed combined statement of operations includes
the operating results of Thorn Apple Valley, Inc. for the twelve months ending
May 26, 1995 and Wilson Brands operating results for the twelve months ending
April 1, 1995 (Wilson Brands historical fiscal year ending as of December 31,
1994 was adjusted by adding the three month subsequent interim unaudited period
results ending April 1, 1995 and subtracting the previous three month interim
unaudited period ending April 2, 1994).
The unaudited pro forma data does not purport to be indicative of the results
which would actually have been reported if this transaction had occurred on
such date or which may be reported in the future.
14
<PAGE> 15
THORN APPLE VALLEY, INC.
Pro Forma Condensed Combined Balance Sheet
At May 26, 1995 (in thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
Thorn Apple Wilson Pro Forma Pro Forma
Valley Brands Adjustments Combined
----------- -------- ----------- ----------
<S> <C> <C> <C> <C>
Assets
Current Assets:
Accounts receivable, net $40,084 $9,592 $615 (a) $50,291
Inventory 44,801 10,096 (1,561)(a) 53,336
Prepaid expenses and other current assets 13,200 2,418 (1,542)(a) 14,076
-------- -------- -------- --------
Total current assets 98,085 22,106 (2,488) 117,703
Property, plant and equipment:
Land 1,140 361 1,501
Buildings and improvements 37,695 10,473 (946)(a) 47,222
Machinery and equipment 117,712 12,136 (2,767)(a) 127,081
Transportation equipment 7,530 10 (a) 7,540
Property under capital leases 7,429 3,943 (1,020)(a) 10,352
Construction in progress 22,206 819 (264)(a) 22,761
-------- -------- -------- --------
193,712 27,732 (4,987) 216,457
Less accumulated depreciation 95,644 5,324 (5,324)(a) 95,644
-------- -------- -------- --------
98,068 22,408 337 120,813
-------- -------- -------- --------
Intangible assets, net of accumulated amortization 13,185 (13,185)(b)
Reorganization value in excess of amount allocable
to identifiable assets, net of accumulated amortization 42,640 (42,640)(b)
Goodwill 33,572 (d) 33,572
Other assets 8,143 - 175 (c) 8,318
-------- -------- -------- --------
Total assets $204,296 $100,339 ($24,229) $280,406
======== ======== ======== ========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $32,474 $2,999 ($2,999)(e) $32,474
Accrued liabilities 23,378 3,540 (696)(f) 26,222
Other liabilities 10,476 1,415 21,835 (f)(g) 33,726
-------- -------- -------- --------
Total current liabilities 66,328 7,954 18,140 92,422
-------- -------- -------- --------
Long-term debt 35,465 6,265 43,751 (f)(h) 85,481
Deferred income taxes 3,908 3,908
Investments of and advances from parent - 110,396 (110,396)(i)
Shareholders' equity / retained earnings (deficit) 98,595 (24,276) 24,276 (i) 98,595
-------- -------- -------- --------
Total liabilities and shareholders' equity $204,296 $100,339 ($24,229) $280,406
======== ======== ======== ========
</TABLE>
See notes to unaudited pro forma condensed combined financial statements.
15
<PAGE> 16
THORN APPLE VALLEY, INC.
Pro Forma Condensed Combined Statement of Operations
For The Fiscal Year Ending May 26, 1995 (in thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
Thorn Apple Wilson Pro Forma Pro Forma
Valley Brands Adjustments Combined
--------- -------- ----------- ---------
<S> <C> <C> <C> <C>
Net Sales $744,542 $221,238 $965,780
Operating costs and expenses:
Cost of goods sold 669,068 179,862 848,930
Selling 25,377 36,409 ($2,174)(i) 59,612
General and administrative 22,912 3,674 (225)(e)(h) 26,361
General and administrative expenses
allocated from Foodbrands 5,341 (5,341)(c)
Depreciation 9,830 2,321 (323)(b) 11,828
Amortization of intangible assets and reorganization
value allocated from Foodbrands 3,242 (3,242)(f)
Restructuring charge 7,857 1,914 (1,914)(g) 7,857
--------- -------- ------- ---------
735,044 232,763 (13,219) 954,588
Income (loss) from operations 9,498 (11,525) 13,219 11,192
--------- -------- ------- ---------
Other Income (expense):
Interest (2,259) (768) (4,593)(d) (7,620)
Interest allocated from Foodbrands (4,226) 4,226 (d)
Amortization of goodwill (839)(a) (839)
Other, net 961 20 981
--------- -------- ------- ---------
(1,298) (4,974) (1,206) (7,478)
--------- -------- ------- ---------
Income (loss) before income taxes 8,200 (16,499) 12,013 3,714
Provision (benefit) for income taxes 2,945 - (1,608)(j) 1,337
--------- -------- ------- ---------
Net Income (loss) $5,255 ($16,499) $13,621 $2,377
========= ======== ======= =========
Earnings per share $0.91 $0.41
========= =========
Weighted average share outstanding 5,754,726 5,754,726
========= =========
</TABLE>
See notes to unaudited pro forma condensed combined financial statements.
16
<PAGE> 17
(b) Pro Forma Financial Information
THORN APPLE VALLEY, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
1. Pro Forma Balance Sheet Adjustments
The following adjustments were made to prepare the pro forma combined
balance sheet.
a. Adjust to fair value, at May 29, 1995, of Wilson Brands assets acquired
by TAV.
b. Eliminate historical net book value of Wilson Brands' Intangible
assets.
c. Record other long-term assets acquired by TAV.
d. Record goodwill determined by application of purchase price accounting.
e. Eliminate liabilities of Wilson Brands not acquired by TAV.
f. Adjust to fair value, at May 29, 1995, of Wilson Brands' liabilities
assumed by TAV.
g. Record borrowings under lines of credit used to purchase assets.
h. Record long-term notes issued to purchase assets.
i. Eliminate investments of and advances from Foodbrands and retained
earnings (deficit) of Wilson Brands.
2. Pro Forma Statement of Operations Adjustments
The following adjustments were made to prepare the pro forma combined
statement of operations.
a. Amortization of goodwill over 40 years.
b. Decrease in depreciation expense resulting primarily from certain
assets not acquired.
c. Eliminate general and administrative expenses, allocated by Foodbrands
for services provided to Wilson Brands.
d. Eliminate interest expense allocated by Foodbrands to
Wilson Brands and recognition of TAV's interest expense on funds
borrowed to finance the acquisition. The interest rate on the long-term
debt to be incurred in connection with the acquisition was fixed at
7.58%, per annum.
e. Record general and administrative expenses of $1.0 million allocated by
TAV to Wilson Brands.
17
<PAGE> 18
f. Eliminate amortization expense of intangible assets allocated by
Foodbrands to Wilson Brands.
g. Eliminate 1994 restructuring charge allocated by Foodbrands to Wilson
Brands.
h. Eliminate duplicate corporate general and administrative expenses of
Wilson Brands, $1.2 million.
i. Eliminate duplicate sales functions.
j. Record provision for income taxes to reflect a combined federal and
state tax rate of 36 percent.
18
<PAGE> 19
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Page No.
------ ------- --------
<S> <C> <C>
27.1 Financial Data Schedule of Wilson Brands containing financial information
for the three months ended April 1, 1995
27.2 Financial Data Schedule of Wilson Brands containing financial information
for the three months ended April 2, 1994
27.3 Financial Data Schedule of Wilson Brands containing financial information
for the fiscal year ended December 31, 1994
27.4 Financial Data Schedule of Wilson Brands containing financial information
for the fiscal year ended January 1, 1994
</TABLE>
19
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> APR-01-1995
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 9,601
<ALLOWANCES> 9
<INVENTORY> 10,096
<CURRENT-ASSETS> 22,106
<PP&E> 27,732
<DEPRECIATION> 5,324
<TOTAL-ASSETS> 100,339
<CURRENT-LIABILITIES> 7,954
<BONDS> 6,265
<COMMON> 0
0
0
<OTHER-SE> (24,276)
<TOTAL-LIABILITY-AND-EQUITY> 100,339
<SALES> 44,806
<TOTAL-REVENUES> 44,806
<CGS> 37,825
<TOTAL-COSTS> 37,825
<OTHER-EXPENSES> 9,979
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,230
<INCOME-PRETAX> (4,220)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,220)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,220)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> APR-02-1994
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 61,876
<TOTAL-REVENUES> 61,876
<CGS> 49,092
<TOTAL-COSTS> 49,092
<OTHER-EXPENSES> 12,714
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,307
<INCOME-PRETAX> (1,228)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,228)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,228)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-02-1994
<PERIOD-END> DEC-31-1994
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 11,087
<ALLOWANCES> 49
<INVENTORY> 7,705
<CURRENT-ASSETS> 20,997
<PP&E> 27,291
<DEPRECIATION> 4,710
<TOTAL-ASSETS> 100,389
<CURRENT-LIABILITIES> 8,657
<BONDS> 6,623
<COMMON> 0
0
0
<OTHER-SE> (20,056)
<TOTAL-LIABILITY-AND-EQUITY> 100,389
<SALES> 238,308
<TOTAL-REVENUES> 238,308
<CGS> 191,129
<TOTAL-COSTS> 191,129
<OTHER-EXPENSES> 55,636
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,071
<INCOME-PRETAX> (13,507)
<INCOME-TAX> 0
<INCOME-CONTINUING> (13,507)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (13,507)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-01-1994
<PERIOD-START> DEC-31-1992
<PERIOD-END> JAN-01-1994
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 13,869
<ALLOWANCES> 37
<INVENTORY> 11,201
<CURRENT-ASSETS> 29,575
<PP&E> 19,102
<DEPRECIATION> 1,792
<TOTAL-ASSETS> 106,937
<CURRENT-LIABILITIES> 5,700
<BONDS> 5,203
<COMMON> 0
0
0
<OTHER-SE> (6,549)
<TOTAL-LIABILITY-AND-EQUITY> 106,937
<SALES> 254,937
<TOTAL-REVENUES> 254,937
<CGS> 199,982
<TOTAL-COSTS> 199,982
<OTHER-EXPENSES> 46,117
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,609
<INCOME-PRETAX> 4,181
<INCOME-TAX> 0
<INCOME-CONTINUING> 4,181
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,181
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
