<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
__________
Date of Report (Date of earliest event reported): April 19, 1996
IMPERIAL HOLLY CORPORATION
(Exact name of registrant as specified in its charter)
TEXAS
(State or other jurisdiction of incorporation)
1-10307 74-0704500
(Commission File Number) (IRS Employer
Identification No.)
One Imperial Square, Suite 200
P.O. Box 9, Sugar Land, Texas 77487
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code): (713) 491-9181
<PAGE>
This Form 8-K/A amends the Current Report on Form 8-K filed by Imperial
Holly Corporation on May 3, 1996.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On April 19, 1996, Imperial Holly Corporation ("Imperial Holly")
through its wholly-owned subsidiary Holly Sugar Corporation ("Holly") acquired,
pursuant to a Stock Purchase Agreement dated as of January 8, 1996 by and
between Holly and Spreckels Industries, Inc. ("Spreckels Industries"), all of
the outstanding capital stock of Spreckels Sugar Company, Inc. and Limestone
Products Company, Inc. (collectively "Spreckels Sugar"), a California based beet
sugar processor. The purchase price was the sum of (i) Spreckels Sugar's net
working capital at December 31, 1995, (ii) $3 million and (iii) net cash
advances made by Spreckels Industries between December 31, 1995 and closing.
$35.3 million of the purchase price was funded at closing by advances under
Imperial Holly's revolving credit line co-agented by Harris Trust and Savings
Bank and Texas Commerce Bank National Association. Spreckles Industries
calculated the total purchase price as $41.3 million, with a remaining balance
due of $6.0 million. As a result of a post-closing review performed by Holly
pursuant to the Stock Purchase Agreement, Holly has notified Spreckles
Industries that it calculates the purchase price as $29.3 million. Holly and
Spreckles Industries are presently attempting to resolve these differences.
Spreckels Sugar operates beet sugar processing plants in Woodland and
Mendota, California, which Holly will continue to operate. Holly did not acquire
Spreckels Sugar's Manteca California factory, which was distributed to another
subsidiary of Spreckels Industries prior to the acquisition by Holly. Spreckels
Industries has announced that the Manteca California factory will not operate as
a beet sugar factory.
ITEM 5. OTHER EVENTS
On April 22, 1996, Holly announced the closing of its Hamilton City,
California factory which will take place following completion of the spring
processing campaign.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired
<PAGE>
PREDECESSOR COMPANY
To Imperial Holly Corporation:
We have audited the accompanying combined statements of operations,
stockholders' equity and cash flows of Spreckels Sugar Company, Inc. and
Limestone Products Company, Inc. (Delaware corporations; collectively, the
Company) for the month ended July 31, 1993, and the year ended June 30, 1993.
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
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 audits provide a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the results of the Company's operations and
its cash flows for the month ended July 31, 1993, and the year ended June 30,
1993, in conformity with generally accepted accounting principles.
As discussed in Notes 8 and 10, the Company adopted Statements of Financial
Accounting Standards No. 106 and No. 109 effective July 1, 1993.
/s/ ARTHUR ANDERSEN LLP
San Francisco, California,
June 25, 1996
SUCCESSOR COMPANY
To Imperial Holly Corporation:
We have audited the accompanying combined balance sheets of Spreckels Sugar
Company, Inc. and Limestone Products Company, Inc. (Delaware corporations;
collectively, the Company) as of June 30, 1995 and 1994, and the related
combined statements of operations, stockholders' equity and cash flows for the
year ended June 30, 1995, and the 11 months ended June 30, 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
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 audits provide a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of the Company as of
June 30, 1995 and 1994, and the results of its operations and its cash flows for
the year ended June 30, 1995, and the 11 months ended June 30, 1994, in
conformity with generally accepted accounting principles.
/s/ ARTHUR ANDERSEN LLP
San Francisco, California,
June 25, 1996
<PAGE>
SPRECKELS SUGAR COMPANY, INC. AND LIMESTONE PRODUCTS COMPANY, INC.
------------------------------------------------------------------
COMBINED BALANCE SHEETS
-----------------------
AS OF JUNE 30, 1995 AND 1994
----------------------------
(dollars in thousands, except per-share amounts)
------------------------------------------------
<TABLE>
<CAPTION>
1995 1994
--------- ---------
ASSETS
------
<S> <C> <C>
Cash and cash equivalents $ 4,736 $ 629
Restricted cash - 1,200
Accounts receivable, net of allowance
for doubtful accounts
of $129 and $105 11,450 10,035
Grower accounts receivable 4,372 5,551
Inventories 59,032 50,507
Deferred maintenance 4,008 3,948
Other current assets 4,055 2,870
-------- --------
Total current assets 87,653 74,740
Property, plant and equipment, net 92,722 80,514
Other assets 1,735 1,755
-------- --------
Total assets $182,110 $157,009
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Bank overdraft $ 10,031 $ 1,568
Accounts payable 9,402 13,689
Short-term borrowings 35,265 23,387
Current portion of capital leases 1,374 -
Accrued payroll costs 3,644 3,861
Deferred taxes 12,592 12,432
Other current liabilities 7,414 6,573
-------- --------
Total current liabilities 79,722 61,510
Long-term debt 10,616 8,517
Capital leases, net of current portion 2,932 1,821
Due to affiliate 42,536 26,201
Postretirement benefit obligation 8,723 8,695
Pension 2,481 1,346
Deferred taxes 23,182 22,854
Insurance reserves 2,174 1,865
Other noncurrent liabilities 2,015 5,254
-------- --------
Total liabilities 174,381 138,063
-------- --------
Commitment and contingencies (Note 12) - -
Stockholders' equity:
Common stock, $1 par value; 2,000
shares authorized and 2 2
outstanding
Additional paid-in capital 23,551 23,551
Accumulated deficit (15,824) (4,607)
-------- --------
Total stockholders' equity 7,729 18,946
-------- --------
Total liabilities and
stockholders' equity $182,110 $157,009
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
SPRECKELS SUGAR COMPANY, INC. AND LIMESTONE PRODUCTS COMPANY, INC.
------------------------------------------------------------------
COMBINED STATEMENTS OF OPERATIONS
---------------------------------
FOR THE YEAR ENDED JUNE 30, 1995, THE 11 MONTHS ENDED JUNE 30, 1994,
--------------------------------------------------------------------
THE MONTH ENDED JULY 31, 1993, AND THE YEAR ENDED JUNE 30, 1993
---------------------------------------------------------------
(dollars in thousands)
----------------------
<TABLE>
<CAPTION>
Successor Company Predecessor Company
-------------------- -------------------
Year 11 Months Month Year
Ended Ended Ended Ended
June 30, June 30, July 31, June 30,
1995 1994 1993 1993
--------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
NET SALES $176,433 $188,725 $16,022 $171,957
COST OF PRODUCTS SOLD 173,481 167,666 13,210 150,120
-------- -------- ------- -------
Gross profit 2,952 21,059 2,812 21,837
OPERATING EXPENSES:
Selling, general and administrative
expense 10,891 19,916 1,692 19,100
Other operating expense - - 49 597
-------- -------- ------- -------
Income (loss) from operations (7,939) 1,143 1,071 2,140
OTHER EXPENSE:
Interest expense, net 9,619 5,726 551 7,321
Other nonoperating expense 1,466 3,231 106 5,625
-------- -------- ------- -------
Income (loss) before benefit
for income taxes, fresh-
start reporting adjustments
and cumulative effect of
changes in accounting
principles (19,024) (7,814) 414 (10,806)
PROVISION (BENEFIT) FOR INCOME TAXES (7,807) (3,207) 170 (4,385)
-------- -------- ------- -------
Income (loss) before
fresh-start reporting
adjustments and cumulative
effect of changes in
accounting principles (11,217) (4,607) 244 (6,421)
FRESH-START REPORTING ADJUSTMENTS, net
of tax - - 18,687 -
CUMULATIVE EFFECT OF CHANGES IN
ACCOUNTING PRINCIPLES, net of tax - - (4,700) -
------- -------- ------- -------
Net income (loss) $(11,217) $ (4,607) $14,231 $ (6,421)
======== ======== ======= ========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
SPRECKELS SUGAR COMPANY, INC. AND LIMESTONE PRODUCTS COMPANY, INC.
------------------------------------------------------------------
COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY
-------------------------------------------
FOR THE YEARS ENDED JUNE 30, 1995, 1994 AND 1993
------------------------------------------------
(dollars in thousands)
---------------------------------
<TABLE>
<CAPTION>
Retained
Additional Earnings Total
Common Stock Paid-in (Accumulated Shareholders'
Shares Amounts Capital Deficit) Equity
------ ------- ----------- ------------- --------------
<S> <C> <C> <C> <C> <C>
BALANCE AT JUNE 30, 1992 2,000 $2 $28,996 $ (7,810) $ 21,188
Net loss - - - (6,421) (6,421)
----- -- ------- -------- --------
BALANCE AT JUNE 30, 1993 2,000 2 28,996 (14,231) 14,767
Income before fresh-start adjustments
and cumulative effect of changes in
accounting principles - - - 244 244
Cumulative effect of changes in
accounting principles - - - (4,700) (4,700)
----- -- ------- -------- --------
BALANCE AT JULY 31, 1993 2,000 2 28,996 (18,687) 10,311
Fresh-start reporting adjustments - - (5,445) 18,687 13,242
----- -- ------- -------- --------
BALANCE AT AUGUST 1, 1993 2,000 2 23,551 - 23,553
Net loss - - - (4,607) (4,607)
----- -- ------- -------- --------
BALANCE AT JUNE 30, 1994 2,000 2 23,551 (4,607) 18,946
Net loss - - - (11,217) (11,217)
----- -- ------- -------- --------
BALANCE AT JUNE 30, 1995 2,000 $2 $23,551 $(15,824) $ 7,729
===== == ======= ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
SPRECKELS SUGAR COMPANY, INC. AND LIMESTONE PRODUCTS COMPANY, INC.
------------------------------------------------------------------
STATEMENTS OF CASH FLOWS
------------------------
FOR THE YEAR ENDED JUNE 30, 1995, THE 11 MONTHS ENDED JUNE 30, 1994,
--------------------------------------------------------------------
THE MONTH ENDED JULY 31, 1993, AND THE YEAR ENDED JUNE 30, 1993
---------------------------------------------------------------
(dollars in thousands)
----------------------
<TABLE>
<CAPTION>
Successor Company Predecessor Company
-------------------- -------------------
Year 11 Months Month Year
Ended Ended Ended Ended
June 30, June 30, July 31, June 30,
1995 1994 1993 1993
--------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(11,217) $ (4,607) $ 14,231 $ (6,421)
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities
before reorganization items-
Depreciation and amortization 3,578 2,993 49 2,964
Deferred income tax 488 413 37,513 (4,385)
Fresh-start adjustment - - (18,687) -
Net changes in operating assets and
liabilities-
Receivable, prepaid expenses and
other assets (1,461) 14,439 (1,764) 1,058
Inventories (8,525) 15,950 (19,245) (6,372)
Trade payables and accrued expenses 22,288 960 14,756 (1,310)
Other liabilities (2,920) (6,649) 663 6,402
Cumulative effect of changes in
accounting principles - - 4,700 -
------- -------- -------- --------
Net cash provided by (used in)
operating activities 2,231 23,499 32,216 (8,064)
------- -------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (13,301) (3,722) (38,934) (1,302)
Purchase of Delta Sugar assets - (1,878) - -
Purchase of emission credits from
Delta Sugar Corporation - (1,122) - -
------- -------- -------- --------
Net cash used in investing
activities (13,301) (6,722) (38,934) (1,302)
------- -------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Short-term borrowings, net 11,878 (8,010) (3,596) 27,180
Repayment of seasonal loan - (15,919) - (17,739)
Borrowing- seasonal loan - - 8,658 -
Borrowing- revolver 2,099 8,517 - -
------- -------- -------- --------
Net cash provided by (used in)
financing activities 13,977 (15,412) 5,062 9,441
------- -------- -------- --------
Net increase (decrease) in cash and
cash equivalents 2,907 1,365 (1,656) 75
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 1,829 464 2,120 2,045
RESTRICTED CASH AT END OF PERIOD - 1,200 - -
------- -------- -------- --------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $ 4,736 $ 629 $ 464 $ 2,120
======== ======== ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Noncash financing activities-
Borrowing under capital lease
obligations $ 4,306 $ 1,821 $ - $ -
Cash paid during the year for-
Interest 1,584 940 233 2,763
Taxes - - - -
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
SPRECKELS SUGAR COMPANY, INC. AND LIMESTONE PRODUCTS COMPANY, INC.
------------------------------------------------------------------
NOTES TO COMBINED FINANCIAL STATEMENTS
--------------------------------------
JUNE 30, 1995, 1994 AND 1993
----------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
-------------------------------------------
Nature of Operations
--------------------
Spreckels Sugar Company, Inc. (Sugar) is a processor of refined sugar.
Through its three California manufacturing facilities, it produces and markets
refined beet and cane sugar into a full line of industrial, grocery and food-
service sweetener products.
Limestone Products Company, Inc. (Limestone), located in Cool, California,
mines limestone that is sold to Sugar, for use in manufacturing processes, and
to other third parties.
Principles of Combination
-------------------------
The accompanying financial statements include the combined accounts of Sugar
and Limestone (collectively, the Company). Sugar and Limestone are wholly
owned by Yale International, Inc. (Yale), formally known as Spreckels
Industries, Inc. (see Note 14 regarding a change in ownership subsequent to
June 30, 1995). Yale is a holding company that was founded in 1987 and is
principally comprised of Duff-Norton Company, Inc. (Duff-Norton) and its
subsidiaries and the Company. As discussed in Note 2, the accompanying
financial statements reflect the effects of fresh-start reporting as of August
1, 1993, with periods prior to August 1, 1993, reflecting the "Predecessor
Company," and periods subsequent to July 31, 1993, reflecting the "Successor
Company."
The preparation of financial statements in conformity with generally accepted
accounting principles requires 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.
All significant intercompany transactions and accounts have been eliminated in
combination.
Cash and Cash Equivalents
-------------------------
Cash and cash equivalents consist of highly liquid investments with original
maturities of three months or less.
<PAGE>
Restricted Cash
---------------
Restricted cash is the amount remaining from the financing of ion exclusion
equipment through a capital lease. These funds are specifically restricted to
be used for the cost of funding the remaining ion exclusion equipment.
Property, Plant and Equipment
-----------------------------
Property, plant and equipment are depreciated using the straight-line method
over their estimated useful lives, ranging from 15 to 30 years for buildings
and structures and from 7 to 18 years for machinery and equipment.
Expenditures for repairs and maintenance are charged against income as
incurred. Beginning in 1994, the Company capitalized certain manufacturing
preparation costs incurred between sugar production periods, principally
repairs and maintenance. Such costs are deferred and allocated to the
following processing period.
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard (SFAS) No. 121, "Accounting for Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." This
statement requires that long-lived assets be reported at the lower of carrying
amount or fair value. The Company plans to adopt SFAS No. 121 in fiscal year
1997 and believes that the adoption of this new accounting standard would not
have a significant impact on its financial position and results of operations.
Revenue Recognition
-------------------
Revenue is recognized as products are shipped or when risk of loss has passed,
or when services are provided.
Income Taxes
------------
Deferred income taxes are recorded for transactions that are reported in one
period for financial statement purposes and in another for income tax
purposes.
The Company is included in the consolidated tax returns of Yale. The
liabilities incurred or benefit received by Yale as a result of taxable income
or losses generated by the Company are allocated back to the Company as if the
Company filed a separate combined federal tax return.
Fair Value of Financial Instruments
-----------------------------------
Unless otherwise disclosed, the carrying amount of all financial instruments
approximates estimated fair value.
2. REORGANIZATION PROCEEDINGS:
---------------------------
In October 1992, Yale filed a voluntary petition for reorganization under
Chapter 11 of Title 11 of the United States Bankruptcy Code. Yale's
subsidiaries, including Sugar and Limestone, did not file similar petitions
and were not debtors in any insolvency proceedings. On August 4, 1993 (the
Confirmation Date), the Bankruptcy Court entered an order confirming the plan
of reorganization (the Plan), which became effective on September 2, 1993.
The effects of the Plan were recorded as of July 31, 1993, the fiscal month-
end closest to the Confirmation Date.
<PAGE>
Yale, and therefore, the Company implemented the accounting for entities
emerging from Chapter 11 reorganization, including the application of fresh-
start reporting, set forth by the American Institute of Certified Public
Accountants Statement of Position 90-7, "Financial Reporting by Entities in
Reorganization under the Bankruptcy Code" (SOP 90-7). The June 30, 1995 and
1994, combined balance sheets reflect the adoption of SOP 90-7.
Under fresh-start reporting, the reorganization value of the entity was
allocated to the reorganized Company's assets on the basis of their estimated
fair market values as of July 31, 1993. Revaluation of assets and liabilities
pursuant to the adoption of fresh-start reporting included the following (in
thousands):
<TABLE>
<CAPTION>
<S> <C>
Write-up of assets to estimated fair values $ 49,716
Write-up of other assets 8,469
Adjust liabilities (4,713)
Tax impact of fresh-start reporting (40,040)
Other 5,255
--------
Total fresh-start adjustments $ 18,687
========
</TABLE>
Under fresh-start reporting, the final combined balance sheet as of July 31,
1993 (the Predecessor Company), became the opening balance sheet on August 1,
1993, of the reorganized company (the Successor Company). Since fresh-start
reporting is reflected in the accompanying financial statements for the year
ended June 30, 1995, and for the 11-month period ended June 30, 1994, the
accompanying combined financial statements as of that date are not comparable
in all material respects to any such statements as of any prior date or for
any prior period.
3. INVENTORIES:
------------
Inventories are valued at the lower of cost or market using the last-in,
first-out method (LIFO). The excess of current cost over the LIFO cost was
$1.3 million and $0 at June 30, 1995 and 1994, respectively.
Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
June 30
-----------------
1995 1994
-------- --------
<S> <C> <C>
Stock in progress $ 2,022 $ 2,600
Raw cane sugar 2,953 5,837
Finished beet sugar products 43,103 32,537
Materials, supplies and other 10,954 9,533
------- -------
Total inventories $59,032 $50,507
======= =======
</TABLE>
<PAGE>
4. PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment consist of the following (in thousands):
June 30
-----------------
1995 1994
------- -------
Land $23,628 $22,035
Buildings and structures 5,957 8,419
Machinery and equipment 69,707 53,053
------ ------
99,292 83,507
Less- Accumulated depreciation (6,570) (2,993)
------ ------
Total property,plant and $92,722 $80,514
equipment ======= =======
5. DEBT:
-----
Short-term Borrowings
---------------------
Short-term borrowings at June 30, 1995 and 1994, consist of The Commodity
Credit Corporation (CCC) advances totaling $35.3 million and $23.4 million,
respectively. Borrowings under CCC advances at June 30, 1995, bore interest
at the weighted average rate of 5.5 percent and were due on July 31, 1995,
August 31, 1995, and September 30, 1995.
CCC advances represent nonrecourse loans under a federal program secured by
refined beet sugar inventories. Under the program, the Company may borrow up
to an amount based on beet sugar inventories produced during the current
year.
Long-term Debt
--------------
On July 22, 1994, Yale entered into a Secured Revolving Credit Agreement (the
Credit Agreement) with Harris Trust and Savings Bank. The Credit Agreement
allows funding for Sugar up to a maximum of $25.0 million, and funding may be
extended to Duff-Norton up to a maximum of $15.0 million, but the total
funding extended to both Sugar and Duff-Norton cannot at any time exceed the
maximum amount of the credit agreement, which is $40.0 million, including a
$6 million sublimit for letters of credit through June 30, 1997. The Credit
Agreement is secured by accounts receivable, inventories and bank deposits of
Sugar and Duff-Norton. Interest rates under the Credit Agreement are at prime
plus 0.75 percent for domestic loans and LIBOR plus 2.25 percent for
Eurodollar loans.
Borrowings under the Company's seasonal revolving credit facility at June 30,
1995 and 1994, were $10.6 million and $8.5 million, respectively.
At June 30, 1995, Yale was in default of a net worth covenant and a fixed
charges covenant related to Sugar. However, Harris Trust and Savings
subsequently waived these defaults.
<PAGE>
At June 30, 1995, virtually all assets of the Company, other than property,
plant, equipment, and beet sugar inventories secured by CCC advances, are
pledged as security under the Credit Agreement.
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
June 30
---------------
1995 1994
------- ------
<S> <C> <C>
Old bank agreement-
Revolving loans interest at prime
(7.25 percent at June 30, 1994),
plus 1.75 percent, paid in full
during 1995 $ - $8,517
Credit Agreement-
Revolving loans due July 1, 1997,
interest at prime (9.0 percent at
June 30, 1995), plus 0.75 percent 10,617 -
------- ------
Total $10,617 $8,517
======= ======
</TABLE>
Guarantees
----------
On September 2, 1993, Yale issued 11.5 percent New Series Secured Notes (the
Guarantees) that are guaranteed by each of Yale's directly held subsidiaries,
including Sugar and Limestone. Each Guarantee is a senior unsecured
obligation of the subsidiary providing such Guarantee and ranks pari passu
with all other senior unsecured indebtedness of the subsidiary. In addition,
the Company and Yale's other domestic subsidiaries have guaranteed the
indebtedness outstanding under the Credit Agreement. The obligations of the
Company under the Credit Agreement are secured in general by the cash, cash
equivalents, accounts receivable and inventory of the Company and Yale's other
domestic subsidiaries, and therefore effectively rank senior to the
Guarantees.
6. ACQUISITION:
------------
The Company acquired selected assets of Delta Sugar Corporation (Delta) in
September 1993, including certain sugar beet processing equipment and USDA
marketing allocations. Delta also transferred to the Company its contracts
with growers of sugar beets covering the fall 1993 and spring 1994 harvest
periods. The purchase price was $3.0 million, payable in three installments
ending on July 31, 1996. At June 30, 1995, the Company owed Delta $1.2
million, reflected in other current liabilities on the accompanying balance
sheet. In addition, the Company agreed to pay to Delta's growers a $1.00 per
ton incentive payment for beets harvested during the fall of 1993 and through
the spring of 1996.
7. LEASE COMMITMENTS:
------------------
The Company leases office space, production facilities, warehouses,
transportation, and other equipment under operating leases extending for
varying periods of time. Rental expense amounted to $1.9 million for the year
ended June 30, 1995, $1.9 million for the 11 months ended June 30, 1994, $0.2
million
<PAGE>
for the month ended July 31, 1993, and $1.5 million for the year ended
June 30, 1993, respectively.
The Company also has a capital lease arrangement to finance its ion exclusion
program. The capital leases were entered into on March 1, 1994, and July 29,
1994, at an interest rate of 9.83 percent and 10.00 percent per annum,
respectively, and expire in 1998.
At June 30, 1995, remaining lease commitments under noncancelable leases are
as follows (in thousands):
<TABLE>
<CAPTION>
Operating Capital
---------- ---------
<S> <C> <C>
1996 $ 1,442 $1,699
1997 893 1,741
1998 446 1,473
1999 388 114
2000 406 -
Thereafter 1,004 -
------- ------
Total minimum lease payments $ 4,579 5,027
=======
Less- Imputed interest 721
------
Present value of net minimum lease payments $4,306
======
8. INCOME TAXES:
-------------
The Company's provision (benefit) for income taxes comprises the following:
Successor Company Predecessor Company
------------------- ------------------
Year 11 Months Month Year
Ended Ended Ended Ended
June 30, June 30, July 31, June 30,
1995 1994 1993 1993
------- ------- --------- --------
<S> <C> <C> <C> <C>
Deferred tax provision (benefit)-
Federal $ 415 $ 351 $(2,148) $(3,727)
State 73 62 (379) (658)
------- ------- ------- -------
488 413 (2,527) (4,385)
------- ------- ------- -------
Current tax provision (benefit)-
Federal (7,051) (3,077) 2,292 -
State (1,244) (543) 405 -
------- ------- ------- -------
(8,295) (3,620) 2,697 -
------- ------- ------- -------
Total provision (benefit) $(7,807) $(3,207) $ 170 $(4,385)
======= ======= ======= =======
</TABLE>
The Company adopted SFAS No. 109 as of July 1, 1993.
<PAGE>
The components of deferred tax assets and liabilities on the balance sheets at
June 30, 1995 and 1994, are as follows:
<TABLE>
<CAPTION>
June 30
----------------
1995 1994
------- -------
<S> <C> <C>
Deferred tax assets-
Postretirement health
benefit accrual $ 3,524 $ 3,627
Insurance reserves 1,301 1,130
Real property lease
valuation reserves 231 461
Pension reserves 1,970 1,271
Plant closure reserves 543 1,618
Vacation reserves 1,438 1,335
Environmental reserves 1,023 1,042
Other 1,873 1,969
------ ------
Total deferred tax assets 11,903 12,453
------ ------
Deferred tax liabilities-
Deferred tax on difference
between book and tax basis
of inventories 11,060 11,060
Deferred tax on difference
between book and tax basis
of fixed assets and land 28,797 29,402
Gain on property exchange 1,480 1,480
State tax 3,079 3,047
Deferred repairs and
maintenance 1,643 1,619
Other 1,618 1,131
------- -------
Total deferred tax
liabilities 47,677 47,739
------- -------
Net deferred tax liability $35,774 $35,286
======= =======
</TABLE>
Deferred tax assets and liabilities in the balance sheets are classified in
accordance with SFAS No. 109, which generally requires that the classification
be based on the related asset or liability creating the deferred tax.
Deferred taxes not related to a specific asset or liability are classified
based on the estimated period of reversal. The reconciliation between the
statutory federal tax expense and recorded tax expense is as follows (in
thousands):
<TABLE>
<CAPTION>
Successor Company Predecessor Company
------------------- -------------------
June 30, June 30, July 31, June 30,
1995 1994 1993 1993
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Statutory federal income
tax expense (benefit) $(6,658) $(2,734) $ 145 $(3,782)
State income taxes net of
federal benefit (1,138) (468) 25 (579)
Other items (11) (5) - (24)
------- ------- ---- -------
Tax expense (benefit) $(7,807) $(3,207) $ 170 $(4,385)
======= ======= ==== =======
</TABLE>
<PAGE>
9. RETIREMENT PLANS:
-----------------
The Company has a noncontributory, defined-benefit pension plan covering
substantially all employees. This plan provides pension benefits based on
years of service and on compensation at the date benefits are earned. Plan
assets include U.S. government securities, federal agency obligations,
corporate debt instruments, common stock, other fixed income securities and
cash equivalents. The Company's funding policy is to contribute annually the
minimum amount required under ERISA.
Net periodic pension cost components (in thousands) and assumptions used in
accounting are:
<TABLE>
<CAPTION>
Successor Company Predecessor Company
------------------- -------------------
11 Months
Year Ended Ended Month Ended Year Ended
June 30, June 30, July 31, June 30,
1995 1994 1993 1993
--------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Service cost- benefits
earned during the period $ 929 $ 745 $ 68 $ 716
Interest cost of projected
benefit obligation 2,927 2,471 225 2,539
Actual return on assets 2,776 2,705 246 2,794
Net amortization and
deferral 55 - - 76
------ ------- ----- ------
$1,135 $ 511 $ 47 $ 537
====== ====== ===== ======
Discount rates 8% 8% 8% 9%
Rates of increase in
compensation levels 4% 4% 4% 4%
Expected long-term rates of
return on assets 9% 9% 9% 9%
</TABLE>
<PAGE>
The following table sets forth the plan's status and amounts recorded in the
balance sheets at June 30, 1995 and 1994, for the Company's defined benefit
pension plan (in thousands):
<TABLE>
<CAPTION>
June 30
-----------------
1995 1994
-------- --------
Actuarial present value of benefit
obligations-
<S> <C> <C>
Vested benefit obligation $36,388 $33,620
======= =======
Accumulated benefit obligation $36,726 $33,950
======= =======
Projected benefit obligation $40,098 $36,452
Plan assets at fair value 34,877 31,631
------- -------
Plan assets less than projected
benefit obligation 5,221 4,821
Unrecognized net loss (2,387) (3,567)
Prior service cost (353) 92
------- -------
Pension liability $ 2,481 $ 1,346
======= =======
</TABLE>
10. POSTRETIREMENT BENEFIT OBLIGATION:
----------------------------------
On July 1, 1993, the Company adopted SFAS No. 106. Under SFAS No. 106, the
Company recognizes the cost of providing healthcare and other benefits to
retirees over the term of the employee's service, which is a change from the
Company's previous method of recognizing these costs when paid. The adoption
of this pronouncement resulted in the recording of an incremental initial
liability of approximately $7.8 million, or $4.7 million net of tax, that is
included in the amount shown as cumulative effect of changes in accounting
principles, net of tax, in the accompanying combined statement of operations
for the period ended July 31, 1993.
The Company sponsors defined-benefit postretirement healthcare plans that
provide medical and life insurance coverage to retirees and their dependents.
The Company pays most of the medical costs for retirees and their spouses who
are under age 65. For retirees and dependents of retirees who retired prior
to January 1, 1989, and are age 65 and over, the Company contributes 100
percent toward the American Association of Retired Persons (AARP) premium
frozen at the 1992 level. For retirees and dependents of retirees who retired
after January 1, 1989, the Company contributes $35 per month toward the AARP
premium. The life insurance plan is noncontributory.
The following table sets forth the plan's accumulated benefit obligation
included in the Company's balance sheet at June 30, 1995 and 1994.
<PAGE>
Accumulated postretirement health benefit obligation (in thousands):
<TABLE>
<CAPTION>
1995 1994
------ ------
<S> <C> <C>
Actives not fully eligible $2,007 $1,744
Actives fully eligible 1,167 1,080
Retirees and dependents 5,549 5,871
----- -----
Accumulated
postretirement
benefit obligation
in excess of plan
assets $8,723 $8,695
===== =====
</TABLE>
The Company's postretirement health benefit plans are not funded. Net
periodic postretirement benefit cost for the year ended June 30, 1995,
included the following components (in thousands):
<TABLE>
<S> <C>
Service cost- benefits attributed to service
during the period $123
Interest cost on accumulated postretirement
benefit obligation $678
</TABLE>
For measurement purposes, a 12 percent annual rate of increase in the per-
capita cost of postretirement medical benefits was assumed for 1993 for
retirees who are younger than age 65; the rate was assumed to decrease
gradually to 6.5 percent by 2009 and remain at that level thereafter. The
discount rate used in determining the accumulated postretirement benefit
obligation was 8.0 percent.
11. SUGAR PRICE SUPPORTS:
---------------------
The Company is significantly affected by market factors, including domestic
prices for refined sugar and raw cane sugar. These market factors are
influenced by a variety of external forces, including the number of domestic
acres contracted to grow sugar cane and sugar beets, prices of competing
crops, weather conditions, and U.S. farm and trade policy. Federal
legislation and regulations provide for mechanisms designed to support the
price of domestic sugar crops, principally the limitations on importation of
raw cane sugar for domestic consumption. In addition, agricultural conditions
in the Company's growing areas may materially affect the quality and quantity
of sugar beets available for purchase, as well as the unit costs of raw
materials and processing.
The current price support program requires the CCC to make loans available to
domestic sugar producers (Note 5). These loans are nonrecourse and mature
over a nine-month period. At the end of each loan period, the Company may
elect to turn over certain collateral (sugar inventory) to the CCC in lieu of
paying the principal and accrued interest charges on such loans. In addition,
the Company is paid for storage costs of the sugar until it is removed from
the Company's facilities by the CCC. The market price for sugar in California
at June 30, 1994, would have generated a lower return to the Company than
forfeiture to the CCC. As a result, the Company forfeited to the CCC 163,000
cwt. of refined sugar on June 30, 1994, and an additional 86,000 cwt. at
August 31, 1994, in lieu of repaying CCC loans related to that sugar.
<PAGE>
12. COMMITMENTS AND CONTINGENCIES:
------------------------------
The Company is party to litigation and claims that are normal in the course of
its operations; while the results of such litigation and claims cannot be
predicted with certainty, the Company believes that the final outcome of such
matters will not have a materially adverse effect on its results of operations
or combined financial position.
The Company leases certain facilities and equipment under cancelable and
noncancelable operating leases and capital leases (Note 7).
13. RELATED-PARTY TRANSACTIONS:
---------------------------
Yale provides the Company with personnel, insurance, legal, accounting,
financial and certain other services. Yale is compensated by the Company
through the payment of a fee representing the reimbursement of actual out-of-
pocket expenses incurred by Yale, including, but not limited to, the labor
costs of Yale personnel rendering services to the Company. Charges by Yale
for such services were $1,279,000, $1,560,000, $102,000 and $1,035,000 for the
year ended June 30, 1995, for the 11 months ended June 30, 1994, for the month
ended July 31, 1993, and for the year ended June 30, 1993.
In addition, Yale charges the Company for interest related to amounts
borrowed, shown as due to affiliate in the accompanying combined balance
sheets. Interest charges by Yale were $8,035,000, $4,786,000, $318,000 and
$4,558,000 for the year ended June 30, 1995, for the 11 months ended June 30,
1994, for the month ended July 31, 1993, and for the year ended June 30, 1993.
14. SUBSEQUENT EVENT:
-----------------
On November 13, 1995, the Board of Directors of Yale approved management's
plan to sell the operations of the Company. On April 19, 1996, Imperial Holly
Corporation, through its wholly owned subsidiary Holly Sugar Corporation
(Holly), acquired all of the outstanding common stock of the Company pursuant
to a stock purchase agreement dated January 8, 1996, by and between Holly and
Yale. The purchase price comprises the sum of (i) the Company's net working
capital at December 31, 1995, (ii) $3 million, and (iii) the net cash advances
made by Yale between December 31, 1995, and the closing; such purchase price
is subject to adjustment based on a postclosing review. In conjunction with
this transaction, the Company recorded a provision for realization of
property, plant and equipment of $31.9 million, net of tax, during the nine
months ended March 31, 1996.
<PAGE>
SPRECKELS SUGAR COMPANY, INC. AND LIMESTONE PRODUCTS COMPANY, INC.
------------------------------------------------------------------
COMBINED BALANCE SHEETS--MARCH 31, 1996 AND JUNE 30, 1995
---------------------------------------------------------
(unaudited)
-----------
(dollars in thousands, except per-share amounts)
------------------------------------------------
<TABLE>
<CAPTION>
March 31, June 30,
1996 1995
---------- ---------
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 293 $ 4,736
Accounts receivable, net of allowance
for doubtful accounts of
$110 and $105 5,675 11,450
Grower accounts receivable 6,833 4,372
Inventories-
Stock in progress 1,542 2,022
Raw cane sugar 5,465 2,953
Finished beet sugar products 23,308 43,103
Materials, supplies and other 9,039 10,954
Deferred maintenance 3,794 4,008
Other current assets 1,865 4,055
-------- --------
Total current assets 57,814 87,653
Property, plant and equipment, net of
accumulated depreciation
of $9,759 and $6,570 37,366 92,722
Other assets 1,392 1,735
-------- --------
Total assets $ 96,572 $182,110
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Bank overdraft $ 407 $ 10,031
Accounts payable 11,713 9,402
Short-term borrowings 4,719 35,265
Current portion of capital leases 1,577 1,374
Accrued payroll costs 3,094 3,644
Deferred taxes 7,806 12,592
Other current liabilities 67 7,414
-------- --------
Total current liabilities 29,383 79,722
Long-term debt - 10,616
Capital leases, net of current portion 2,203 2,932
Due to affiliate 77,595 42,536
Postretirement benefit obligation 8,122 8,723
Pension 2,481 2,481
Deferred taxes 2,325 23,182
Other noncurrent liabilities 4,418 4,189
-------- --------
Total liabilities 126,527 174,381
-------- --------
Stockholders' equity (deficit):
Common stock, $1 par value; 2,000
shares authorized and outstanding 2 2
Additional paid-in capital 23,551 23,551
Accumulated deficit (53,508) (15,824)
-------- --------
Total stockholders' equity
(deficit) (29,955) 7,729
-------- --------
Total liabilities and
stockholders' equity $ 96,572 $182,110
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
SPRECKELS SUGAR COMPANY, INC. AND LIMESTONE PRODUCTS COMPANY, INC.
------------------------------------------------------------------
COMBINED STATEMENTS OF OPERATIONS
---------------------------------
FOR THE NINE MONTHS ENDED MARCH 31, 1996 AND 1995
-------------------------------------------------
(unaudited)
-----------
(dollars in thousands)
----------------------
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
NET SALES $139,021 $129,211
COST OF PRODUCTS SOLD 136,068 120,752
-------- --------
Gross profit 2,953 8,459
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSE 6,946 8,167
OTHER EXPENSE:
Interest expense, net 5,546 7,106
Provision for realization of
property, plant and equipment 53,113 -
Other nonoperating expense 1,196 1,036
-------- --------
Loss before benefit for income taxes (63,848) (7,850)
BENEFIT FOR INCOME TAXES (26,164) (3,222)
-------- --------
NET LOSS $(37,684) $ (4,628)
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
SPRECKELS SUGAR COMPANY, INC. AND LIMESTONE PRODUCTS COMPANY, INC.
------------------------------------------------------------------
COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY
-------------------------------------------
FOR THE NINE MONTHS ENDED MARCH 31, 1996
----------------------------------------
(unaudited)
-----------
(dollars in thousands)
----------------------
<TABLE>
<CAPTION>
Total
Additional Stockholders'
Common Stock Paid-in Accumulated Equity
Shares Amounts Capital Deficit (Deficit)
------ ------- ---------- ------------ --------------
<S> <C> <C> <C> <C> <C>
BALANCE AT JUNE 30, 1995 2,000 $2 $23,551 $(15,824) $ 7,729
Net loss - - - (37,684) (37,684)
----- -- ------- -------- --------
BALANCE AT MARCH 31, 1996 2,000 $2 $23,551 $(53,508) $(29,955)
===== == ======= ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
SPRECKELS SUGAR COMPANY, INC. AND LIMESTONE PRODUCTS COMPANY, INC.
------------------------------------------------------------------
STATEMENTS OF CASH FLOWS
------------------------
FOR THE NINE MONTHS ENDED MARCH 31, 1996 AND 1995
-------------------------------------------------
(unaudited)
-----------
(dollars in thousands)
----------------------
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(37,684) $ (4,628)
Adjustments to reconcile net loss
to net cash provided by operating
activities-
Provision for realization of
property, plant and equipment 53,113 -
Depreciation and amortization 3,189 2,580
Deferred income tax (27,968) 1,635
Net changes in operating assets and
liabilities-
Decrease in receivable, prepaid
expenses and other assets 6,061 1,226
Decrease (increase) in inventories 19,678 (1,189)
Increase in trade payables and
accrued expenses 17,523 8,180
Increase in other liabilities 2,807 14,864
-------- --------
Net cash provided by operating
activities 36,719 22,668
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES-
Capital expenditures - (8,235)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Short-term borrowings, net (30,546) (17,082)
Repayment of revolving loan (10,616) -
Net borrowing-revolver - 7,991
-------- --------
Net cash used in financing
activities (41,162) (9,091)
-------- --------
Net increase (decrease) in cash
and cash equivalents (4,443) 5,342
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 4,736 1,829
-------- --------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $ 293 $ 7,171
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Noncash financing activities-
Borrowing under capital lease
obligations $ 3,780 $ 4,615
Cash paid during the period for-
Interest 1,042 1,148
Taxes - -
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
SPRECKELS SUGAR COMPANY, INC. AND LIMESTONE PRODUCTS COMPANY, INC.
------------------------------------------------------------------
NOTES TO UNAUDITED COMBINED FINANCIAL STATEMENTS
------------------------------------------------
MARCH 31, 1996 AND 1995
-----------------------
1. BASIS OF PRESENTATION:
----------------------
The unaudited combined financial statements included herein have been prepared
in accordance with the instructions of Securities and Exchange Commission Form
10-Q and do not include all of the information and footnotes required by
generally accepted accounting principles for complete combined financial
statements. In the opinion of management, all material adjustments of a normal
and recurring nature considered necessary for a fair presentation of the
combined financial position and results of operations for the interim periods
have been included. The combined results of operations for the nine months
ended March 31, 1996, are not necessarily indicative of the results
that may be expected for the year ended June 30, 1996. These combined financial
statements include the accounts of Spreckels Sugar Company, Inc. and Limestone
Products Company, Inc. (collectively, the Company). All significant
intercompany balances and transactions have been eliminated in combination. The
combined financial statements included herein should be read in conjunction with
the Company's combined financial statements and notes thereto as of June 30,
1995 and 1994.
The preparation of financial statements in conformity with generally accepted
accounting principles requires 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.
2. COST OF SALES:
--------------
Payments to growers for sugar beets are based in part upon the Company's average
net return for sugar sold (as defined in the participating contract with
growers) during the grower contract years, which end June 30. The contracts
provide for the sharing of the net selling price (gross sales price less certain
marketing costs, including packaging costs, brokerage, freight expense and
amortization of costs for certain facilities used in connection with marketing)
with growers. Cost of sales includes an accrual for estimated additional
amounts to be paid to growers based on the average net return realized for sugar
sold in each of the contract years through March 31. The final cost of sugar
beets cannot be determined until the end of the contract year for each growing
area. Manufacturing costs prior to production are deferred and allocated to
production costs based on estimated total units of production for each sugar
manufacturing campaign. Additionally, the Company's sugar inventories, which
are accounted for on a LIFO basis, are periodically reduced at interim dates to
levels below those of the beginning of the fiscal year. When such interim LIFO
liquidations are expected to be restored prior to fiscal year-end, the estimated
replacement cost of the liquidated layers is utilized as the basis of the cost
of sugar sold from beginning-of-the-year inventory. Accordingly, the cost of
sugar utilized in the
<PAGE>
determination of cost of sales for interim periods includes estimates that may
require adjustment in future fiscal periods.
3. Acquisition
-----------
On November 13, 1995, the Board of Directors of Yale approved management's plan
to sell the operations of the Company. On April 19, 1996, Imperial Holly
Corporation, through its wholly owned subsidiary Holly Sugar Corporation
(Holly), acquired all of the outstanding common stock of the Company pursuant to
a stock purchase agreement dated January 8, 1996, by and between Holly and Yale.
The purchase price comprises the sum of (i) the Company's net working capital at
December 31, 1995, (ii) $3 million, and (iii) the net cash advances made by Yale
between December 31, 1995, and the closing; such purchase price is subject to
adjustment based on a postclosing review. In conjunction with this
transaction, the Company recorded a provision for realization of property, plant
and equipment of $31.9 million, net of tax, during the nine months ended March
31, 1996.
<PAGE>
(b) Pro Forma Financial Information
The following unaudited pro forma condensed balance sheet presents the
combined financial position of Imperial Holly and Spreckels Sugar as of March
31, 1996, using the purchase method of accounting assuming the acquisition was
completed on March 31, 1996. This unaudited pro forma condensed balance sheet
does not purport to be indicative of the financial conditions that would
actually have resulted had these transactions been effected on such date. The
following unaudited pro forma condensed income statement gives effect to the
acquisition using the purchase method of accounting for the year ended March 31,
1996, assuming the acquisition was completed on April 1, 1995. The unaudited pro
forma adjustments shown below reflect the effect of events expected to have a
continuing impact that are directly attributable to the acquisition and that are
factually supportable. This unaudited pro forma condensed income statement does
not purport to be indicative of results of operations that would actually have
been obtained had these transactions been effected on such date or that may be
obtained in the future.
This unaudited pro forma condensed financial information should be read in
conjunction with the notes to unaudited pro forma condensed financial
information and in conjunction with the combined financial statements and notes
thereto of Spreckels Sugar included in this current report on Form 8-K/A, as
well as the consolidated financial statements of Imperial Holly included in its
annual report on Form 10-K for the year ended March 31, 1996.
<PAGE>
PRO FORMA CONDENSED BALANCE SHEET
March 31, 1996
(In Thousands of Dollars)
<TABLE>
<CAPTION>
Unaudited Unaudited Unaudited
Imperial Spreckels Pro Forma Pro Forma
Holly Sugar Adjustments Combined
<S> <C> <C> <C> <C>
ASSETS
======
Cash and Temporary Investments $ 1,930 $ 293 $ 2,223
Marketable Securities 37,373 - 37,373
Accounts Receivable 38,736 12,508 (a) $ (17) 51,227
Inventories 89,755 39,354 129,109
Manufacturing Costs Prior to Production 12,476 3,794 16,270
Prepaid Expenses 3,260 1,865 5,125
-------- -------- --------
Total Current Assets 183,530 57,814 241,327
Notes Receivable 1,195 - 1,195
Other Investments 6,702 - 6,702
Property, Plant and Equipment 267,725 47,125 (a) (36,352) 273,096
(b) (5,402)
Accumulated Depreciation 143,622 9,759 (a) (2,916) 143,622
(b) (6,843)
Other Assets 9,789 1,392 (b) (1,392) 9,789
-------- -------- --------
Total Assets $325,319 $ 96,572 $388,487
======== ======== ========
</TABLE>
<PAGE>
PRO FORMA CONDENSED BALANCE SHEET
March 31, 1996
(In Thousands of Dollars)
<TABLE>
<CAPTION>
Unaudited Unaudited Unaudited
Imperial Spreckels Pro Forma Pro Forma
Holly Sugar Adjustments Combined
<S> <C> <C> <C> <C>
LIABILITIES & EQUITY
====================
Accounts Payable $ 37,937 $ 12,120 (a) $ (245) $ 49,812
Short-Term Borrowings 31,839 4,719 (b) 29,100 65,658
Current Maturities of Long-Term Debt 8 1,577 1,585
Other Current Liabilities 32,020 10,967 (a) (388) 42,599
-------- -------- --------
Total Current Liabilities 101,804 29,383 159,654
Long-Term Debt 89,800 2,203 92,003
Due to Affiliate - 77,595 (a) (77,595) -
Deferred Credits 22,672 17,346 (a) (14,231) 25,787
Common Stock 32,276 2 (b) (2) 32,276
Additional Paid-in Capital - 23,551 (a) 59,023 -
(b) (82,574)
Retained Earnings 69,829 (53,508) (b) 53,508 69,829
Unrealized Securities Gains-Net 8,938 - 8,938
-------- -------- --------
Total Shareholders' Equity 111,043 (29,955) 111,043
-------- -------- --------
Total Liabilities & Shareholders' Equity $325,319 $ 96,572 $388,487
======== ======== ========
</TABLE>
<PAGE>
PRO FORMA CONDENSED INCOME STATEMENT
Year Ended March 31, 1996
(In Thousands of Dollars)
<TABLE>
<CAPTION>
Unaudited
Imperial Spreckels Unaudited Unaudited
Holly Sugar Pro Forma Pro Forma
Adjustments Combined
<S> <C> <C> <C> <C>
Net Sales $616,450 $181,179 $797,629
--------------------------- --------
Cost of Sales 561,878 177,950 (c) (2,212) 734,704
(d) (301)
(e) (761)
(f) (1,850)
Selling, General & Administrative 54,778 15,453 (e) (50) 68,889
(h) (1,292)
Restructuring Charges 2,225 - 2,225
--------------------------- --------
Operating Income (Loss) (2,431) (12,224) (8,189)
Interest Expense (11,207) (8,059) (19,266)
Provision For Realization of
Property, Plant and Equipment - (53,113) (g) 53,113 -
Other Income (Expense) 8,562 (1,626) 6,936
--------------------------- --------
Income (Loss) Before Income Taxes
and Extraordinary Item (5,076) (75,022) (20,519)
Provision (Credit) for Income Taxes (1,858) (30,749) (i) 23,832 (8,775)
--------------------------- --------
Net Income (Loss) $(3,218) $(44,273) $(11,744)
========================== ========
</TABLE>
NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
Year Ended March 31, 1996
(a) To record the distribution of certain assets and liabilities by the seller
concurrent with the acquisition closing.
(b) To record borrowing of cash portion of purchase price, eliminate Spreckels
Sugar's equity, and adjust assets to fair value.
(c) To adjust cost of sales to reflect Imperial Holly's manufacturing cost
allocation methods.
(d) To adjust costs for property taxes on distributed assets.
(e) To adjust costs for depreciation of distributed assets.
(f) To adjust depreciation for effect of purchase accounting on asset basis.
(g) To eliminate provision for realization of property, plant & equipment.
(h) To eliminate intercompany management fee charged by seller.
(i) To record tax effect of Pro Forma entries.
(c) Exhibits
Exhibit No. Description
----------- -----------
Exhibit 2.1 Stock Purchase Agreement dated as of January 8, 1996
by and between Holly Sugar Corporation and Spreckels
Industries, Inc. (incorporated by reference to Exhibit 4
to the Company's quarterly report on 10-Q for the
quarter ended December 31, 1995).
Exhibit 2.2 Amendment and Extension of the Stock Purchase Agreement
dated March 18, 1996 (incorporated by reference to Exhibit
2.2 to the Company's Current Report on Form 8-K dated April
19, 1996)
Exhibit 23 Independent Auditors Consent
Exhibit 99 Press Release the Company of April 22, 1996 (incorporated
by reference to Exhibit 99 to the Company's Current Report
on Form 8-K dated April 19, 1996)
<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.
IMPERIAL HOLLY CORPORATION
Date: July 3, 1996 By: /s/ James C. Kempner
--------------------
James C. Kempner
President
and Chief Executive Officer
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our reports included in this Form 8-K, into Imperial Holly Corporation
previously filed Registration Statement File No. 33-30328, Registration
Statement File No. 33-41769 and Registration File No. 33-68896.
/s/ Arthur Andersen LLP
June 25, 1996
San Francisco, California
