<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 21, 1996 (August 7,
---------------------------
1996)
- -----
Silverado Foods, Inc.
(Exact name of registrant as specified in its charter)
Oklahoma 1-13260 73-1369218
- -------- ------- ----------
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification
Number)
6846 S. Canton, Suite 110 Tulsa, Oklahoma 74136
(Address of principal executive offices)
Registrant's telephone number, including area code (918) 496-2400
Not applicable
(Former name or former address, if changes since last report)
<PAGE>
Item 7. Financial Statement and Exhibits.
(a) Financial Statements of business acquired.
TBP HOLDINGS, INC.:
Report of Independent Public Accountants
Auditors' Report
Balance Sheets as of July 27,1996 and December 31, 1995
Statements of Operations and Accumulated Deficit for periods from
December 31, 1995 through July 27,1996 and from July 2, 1995 through
December 30,1995
Statements of Cash Flows for periods from December 31, 1995 through
July 27,1996 and from July 2, 1995 through December 30, 1995
Notes to Financial Statements
Pro Forma financial information
(b) SILVERADO FOODS, INC. AND SUBSIDIARIES
Unaudited Pro Forma Consolidated Statement of Operations for the Year ended
December 31, 1995
Unaudited Pro Forma Consolidated Statement of Operations for the Six Month
Period Ended June 30, 1996
Unaudited Pro Forma Consolidated Balance Sheet as of June 30, 1996
Notes to Unaudited Pro Forma Consolidated Financial Statements
(c) Exhibits
The following is a list of all exhibits filed as a part of this Form 8-K.
* 23.1 Consent of Arthur Andersen LLP
* Filed herewith
<PAGE>
TBP HOLDINGS, INC.
FINANCIAL STATEMENTS AS OF JULY 27, 1996 AND DECEMBER 30, 1995
TOGETHER WITH REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Silverado Foods, Inc.:
We have audited the accompanying balance sheets of TBP Holdings, Inc. (a
California corporation) (the Company) as of July 27, 1996 and December 30,
1995 and the related statements of operations and accumulated deficit and
cash flows for the periods from December 31, 1995 through July 27, 1996
and from July 2, 1995 through December 30, 1995, respectively. 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 stan-
dards. Those standards require that we plan and perform the audits 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 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 financial statements referred to above present fairly, in
all material respects, the financial position of TBP Holdings, Inc. as of July
27, 1996 and December 30, 1995, and the results of its operations and its cash
flows for the periods from December 31, 1995 through July 27, 1996 and from July
2, 1995 through December 30, 1995 in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Tulsa, Oklahoma
September 13, 1996
<PAGE>
TBP HOLDINGS, INC.
-----------------
BALANCE SHEETS
--------------
JULY 27, 1996 AND DECEMBER 30, 1995
-----------------------------------
<TABLE>
<CAPTION>
1996 1995
ASSETS ----------- -----------
------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 400,940 $ 158,690
Miscellaneous receivables 155,761 225,003
Inventories, net (Note 1) 568,685 1,010,271
Prepaid expenses 66,120 59,405
----------- -----------
Total current assets 1,191,506 1,453,369
PROPERTY, PLANT AND EQUIPMENT, net (Notes 1 and 2) 1,997,599 2,404,668
----------- -----------
$ 3,189,105 $ 3,858,037
=========== ===========
LIABILITIES AND SHAREHOLDER'S DEFICIT
-------------------------------------
CURRENT LIABILITIES:
Intercompany payables, net (Note 3) $19,963,706 $ 17,178,998
Trade accounts payable 341,340 1,409,169
Accrued liabilities 223,271 283,796
----------- ------------
Total current liabilities 20,528,317 18,871,963
----------- ------------
COMMITMENTS AND CONTINGENCIES (Note 5)
SHAREHOLDER'S DEFICIT:
Common stock, no par value, 20,000 shares authorized,
issued and outstanding 10,359,033 10,359,033
Accumulated deficit (27,698,245) (25,372,959)
----------- ------------
Total shareholder's deficit (17,339,212) (15,013,926)
----------- ------------
$ 3,189,105 $ 3,858,037
=========== ============
</TABLE>
The accompanying notes are an integral
part of these balance sheets.
<PAGE>
TBP HOLDINGS, INC.
------------------
STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
------------------------------------------------
FOR THE PERIODS FROM DECEMBER 31, 1995 THROUGH JULY 27, 1996
------------------------------------------------------------
AND FROM JULY 2, 1995 THROUGH DECEMBER 30, 1995
-----------------------------------------------
<TABLE>
<CAPTION>
1996 1995
-------------- --------------
<S> <C> <C>
NET SALES $ 7,155,374 $ 11,631,567
COST OF SALES 5,197,890 8,239,088
-------------- --------------
Gross profit 1,957,484 3,392,479
-------------- --------------
OPERATING EXPENSES:
Selling, general and administrative 3,142,438 3,023,984
Amortization of goodwill and other intangibles (Note 1) - 292,168
Write-off of goodwill and other intangibles (Note 1) - 20,253,039
Intercompany charges, net (Note 3) 1,118,301 1,353,683
-------------- --------------
4,260,739 24,922,874
-------------- --------------
OPERATING LOSS (2,303,255) (21,530,395)
-------------- --------------
OTHER INCOME (EXPENSE):
Discount on accounts receivable sold (Note 1) (40,722) (75,162)
Other 18,691 (7,752)
-------------- --------------
(22,031) (82,914)
-------------- --------------
NET LOSS (2,325,286) (21,613,309)
ACCUMULATED DEFICIT, beginning of period (25,372,959) (3,759,650)
-------------- --------------
ACCUMULATED DEFICIT, end of period $(27,698,245) $(25,372,959)
============== ==============
NET LOSS PER SHARE $ (116.26) $ (1,080.67)
============== ==============
</TABLE>
The accompanying notes are an integral
part of these statements.
<PAGE>
TBP HOLDINGS, INC.
------------------
STATEMENTS OF CASH FLOWS
------------------------
FOR THE PERIODS FROM DECEMBER 31, 1995 THROUGH JULY 27, 1996
------------------------------------------------------------
AND FROM JULY 2, 1995 THROUGH DECEMBER 30, 1995
-----------------------------------------------
<TABLE>
<CAPTION>
1996 1995
--------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (2,325,286) $ (21,613,309)
--------------- ----------------
Adjustments to reconcile net loss to cash (used in) provided
by operating activities:
Depreciation and amortization 332,284 604,970
Write-off of goodwill and other intangibles - 20,253,039
Loss on sale and disposition of assets, net 107,850 27,567
Change in assets and liabilities:
Decrease in miscellaneous receivables 69,242 2,268,349
Decrease in inventories 441,586 634,553
Increase in prepaid expenses (6,715) (29,843)
Decrease in trade accounts payable and accrued liabilities (1,128,354) (206,758)
--------------- ----------------
Total adjustments (184,107) 23,551,877
--------------- ----------------
Cash (used in) provided by operating activities (2,509,393) 1,938,568
--------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of assets - 448,330
Capital expenditures (33,065) (436,947)
--------------- ----------------
Cash (used in) provided by investing activities (33,065) 11,383
--------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in intercompany payables, net 2,784,708 (2,305,411)
--------------- ----------------
NET INCREASE (DECREASE) IN CASH: 242,250 (355,460)
CASH, beginning of period 158,690 514,150
--------------- ----------------
CASH, end of period $ 400,940 $ 158,690
=============== ================
</TABLE>
The accompanying notes are an integral
part of these statements.
<PAGE>
TBP HOLDINGS, INC.
------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
JULY 27, 1996 AND DECEMBER 30, 1995
-----------------------------------
1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
--------------------------------------------------------
Business
- --------
The Bagel Place, Inc. (the Bagel Place), a California corporation, is a wholly
owned subsidiary of Specialty Foods Corporation (SFC or the Parent). The Bagel
Place is engaged in the manufacturing of baked food products. Sales are made to
retail food markets throughout the United States and Canada.
In July 1996, the Bagel Place changed its name (as required by its agreement to
sell certain of its assets - see Note 8) to TBP Holdings, Inc. (TBP or the
Company).
Fiscal Year
- -----------
The Company's fiscal year is a 52-53 week year ending on the last Saturday in
December.
Accounts Receivable
- -------------------
In 1995, the Company entered into an agreement to sell at a discount all of its
trade accounts receivables, without recourse, to Specialty Foods Finance
Corporation, a separate and wholly owned subsidiary of SFC. The discounts
(based on rates established by SFC), related to the sale of receivables under
this agreement, of $41,000 and $75,000 in the 1996 and 1995 periods,
respectively, have been classified as other expenses in the statements of
operations.
Inventories
- -----------
Inventories consist primarily of finished goods, packaging supplies and
ingredients which are stated at the lower of cost (first-in, first-out basis) or
market as follows:
<TABLE>
<CAPTION>
July 27, 1996 December 30, 1995
------------- -----------------
<S> <C> <C>
Raw materials $ 484,559 $ 590,266
Finished goods 98,556 420,005
------------- -----------------
583,115 1,010,271
Less: allowance for excess
and obsolete inventory 14,430 -
------------- -----------------
$ 568,685 $ 1,010,271
============= =================
</TABLE>
<PAGE>
Property, Plant and Equipment
- -----------------------------
Property, plant and equipment are stated at cost. Depreciation on property,
plant and equipment is provided using the straight-line method over estimated
service lives ranging from three-to-thirty years. Maintenance, repairs and
betterments, including replacement of minor items of physical properties are
charged to expense. Major additions to physical properties are capitalized.
The cost of the assets retired or sold is credited to the asset accounts and the
related accumulated depreciation is charged to the accumulated depreciation
accounts. The gain or loss from the sale or retirement of property, if any, is
included in other income (expense) in the statements of operations.
Goodwill and Other Intangibles
- ------------------------------
Goodwill and other intangibles were recorded in conjunction with SFC's May 1994
acquisition of TBP. Amortization was provided using the straight-line method
over estimated lives of forty years and five years, respectively. Due to
increased competition and raw material prices, TBP wrote off its remaining
goodwill and other intangibles as of December 30, 1995.
Impact of SFAS No. 121
- ----------------------
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 121, Accounting for the Impairment of
--------------------------------
Long-lived Assets and for the Impairment of Long-lived Assets to be Disposed of.
- -------------------------------------------------------------------------------
The Company was required to adopt this standard effective December 31, 1995.
Management has determined that this statement does not have a material impact on
the Company's financial position or results of operations.
Advertising Costs
- -----------------
The Company expenses advertising costs as incurred. These costs (which were
included in selling, general and administrative expenses in the statement of
operations) were approximately $1,522,000 and $2,105,000, in the 1996 and 1995
periods, respectively.
Income Taxes
- ------------
SFC accounts for income taxes in accordance with SFAS No. 109, Accounting for
--------------
Income Taxes, which uses the liability method of accounting for income taxes.
- ------------
Under the liability method, deferred tax assets and liabilities are determined
based on differences between financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws in effect or
that will be in effect when the differences are expected to reverse.
The Company files consolidated federal and state income tax returns with its
Parent and, as agreed, consolidated taxes payable are allocated between the
Parent and its subsidiaries, including the Company, based on their respective
contributions to consolidated taxable income. The Parent has been in a
consolidated net operating loss position and had no taxes payable for either of
the last two fiscal years.
<PAGE>
Concentration of Risk
- ---------------------
A majority of the Company's sales are generated by a limited number of customers
(see Note 7). The Company lost its business with one of these customers in
1996 which had a significant impact on its revenues.
Cash Flows Information
- ----------------------
For purposes of the statements of cash flows, all highly liquid investments
purchased with a maturity of three months or less are considered to be cash
equivalents.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amount 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. PROPERTY, PLANT AND EQUIPMENT:
------------------------------
<TABLE>
<CAPTION>
Depreciation
Period July 27, 1996 December 30, 1995
-------------- --------------- -------------------
<S> <C> <C> <C>
Land and improvements 6 years $ 88,382 $ 88,382
Machinery and equipment 7-30 years 2,624,022 2,567,146
Office equipment and other 3-10 years 394,943 526,601
--------------- -------------------
3,107,347 3,182,129
Less: accumulated depreciation 1,109,748 777,461
--------------- -------------------
$ 1,997,599 $ 2,404,668
=============== ===================
</TABLE>
3. RELATED PARTY TRANSACTIONS:
---------------------------
During the periods ended July 27, 1996 and December 30, 1995, the Company
entered into numerous related party transactions. Significant related party
transactions are summarized below.
Intercompany payables, net
- --------------------------
Intercompany payables are primarily comprised of net amounts owed to other SFC
subsidiaries as well as debt incurred by SFC as a result of its acquisition of
the Bagel Place. SFC makes all payments related to this debt.
<PAGE>
Net Sales
- ---------
Included in net sales in the statement of operations is approximately $134,000
and $687,000 for the 1996 and 1995 periods, respectively, of sales to other
subsidiaries of SFC.
Cost of Sales
- -------------
Included in cost of sales in the 1995 period is approximately $159,000 for items
purchased from other subsidiaries of SFC.
Intercompany Charges
- --------------------
Intercompany charges consist primarily of interest charges on the SFC
acquisition debt and management fees owed to SFC and one of its other
subsidiaries. Interest charges were approximately $623,000 and $753,000 for the
1996 and 1995 periods, respectively. Management fees were approximately
$498,000 and $605,000 for the 1996 and 1995 periods, respectively.
4. INCOME TAXES:
-------------
The Company paid no income taxes and recorded no income tax expense or benefit
for the 1996 and 1995 periods. Therefore, the effective tax rate is 0% in each
reporting period versus the 34% statutory rate.
Deferred income taxes reflect the net tax effects of (i) temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes, and (ii) operating loss and tax credit carryforwards. The effects of
significant items comprising the Company's net deferred tax assets are as
follows:
July 27, 1996 December 30, 1995
----------------- -----------------
Deferred tax liabilities:
Fixed asset basis differences $ (319,000) $ (335,000)
----------------- -----------------
Deferred tax assets:
Net operating loss carryforwards 3,724,000 2,444,000
Reserves not currently deductible 37,000 37,000
----------------- -----------------
Total deferred tax assets 3,761,000 2,481,000
Valuation allowance for deferred
tax assets (3,442,000) (2,146,000)
----------------- -----------------
Net deferred tax assets $ 319,000 $ 335,000
================= =================
5. COMMITMENTS AND CONTINGENCIES:
------------------------------
The Company leases certain office and warehouse space on a month to month basis.
<PAGE>
6. CONSULTING AGREEMENTS:
----------------------
In conjunction with SFC's 1994 acquisition of TBP, TBP entered into three-year
consulting and four-year noncompete agreements with the former owners of TBP.
These agreements call for the former owners to provide consulting services as
requested by TBP.
7. SIGNIFICANT CUSTOMERS:
----------------------
The Company had sales to two and three customers which represented approximately
64% and 73% of total net sales during the 1996 and 1995 periods, respectively.
8. SUBSEQUENT EVENTS:
------------------
As discussed in Note 1, in August 1996, SFC and Silverado Foods, Inc.
(Silverado) entered into an agreement whereby Silverado agreed to acquire
certain assets and assume certain liabilities of the Company for approximately
$2,780,000.
<PAGE>
SILVERADO FOODS, INC. AND SUBSIDIARIES
--------------------------------------
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
--------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Pro forma
December 31, Business Pro forma December 31,
1995 to be Acquired Adjustments 1995
---- -------------- ----------- ----
(Audited)
<S> <C> <C> <C> <C> <C>
NET SALES $ 41,010,993 $ 18,475,114 $ (1,767,656) (6) $ 57,718,451
COST OF SALES 27,656,567 13,082,912 (1,376,370) (6) 39,363,109
------------- -------------- ------------- -------------
Gross Profit 13,354,426 5,392,202 (391,286) 18,355,342
------------- -------------- ------------- -------------
OPERATING EXPENSES:
General and administrative 7,297,209 3,313,715 (2,325,764) (7) 8,285,160
Selling and marketing 8,871,974 4,771,856 (1,078,910) (8) 12,564,920
Depreciation 239,769 149,292 103,186 (9) 492,247
Write-off of goodwill - 20,253,039 (20,253,039)(10) -
Amortization of goodwill and other intangibles 869,791 292,168 (292,168)(10) 869,791
------------- -------------- ------------- -------------
17,278,743 28,780,070 (23,846,695) 22,212,118
------------- -------------- ------------- -------------
OPERATING LOSS (3,924,317) (23,387,868) 23,455,409 (3,856,776)
OTHER INCOME (EXPENSE):
Interest (787,093) - (277,541)(11) (1,064,634)
Other, net (1,601) (103,542) - (105,143)
------------- -------------- ------------- -------------
(788,694) (103,542) (277,541) (1,169,777)
------------- -------------- ------------- -------------
LOSS BEFORE INCOME TAXES (4,713,011) (23,491,410) 23,177,868 (5,026,553)
PROVISION FOR INCOME TAXES - - - -
------------- -------------- ------------- -------------
NET LOSS $ (4,713,011) $ (23,491,410) $ 23,177,868 $ (5,026,553)
============= ============== ============= =============
LOSS PER COMMON AND
COMMON EQUIVALENT SHARE $ (0.81) $ (0.86)
============= =============
</TABLE>
See notes to Unaudited Pro Forma Financial Statements
<PAGE>
SILVERADO FOODS, INC. AND SUBSIDIARIES
--------------------------------------
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
--------------------------------------------------------
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Pro forma
June 30, Business Pro forma June 30,
1996 to be Acquired Adjustments 1996
---- -------------- ----------- ----
<S> <C> <C> <C> <C>
NET SALES $ 21,738,045 $ 6,843,547 $ - $ 28,581,592
COST OF SALES 14,215,295 4,843,824 - 19,059,119
------------- --------------- ------------ -------------
Gross Profit 7,522,750 1,999,723 - 9,522,473
------------- --------------- ------------ -------------
OPERATING EXPENSES:
General and administrative 3,716,907 1,960,032 (972,081)(7) 4,704,858
Selling and marketing 4,693,278 1,827,723 - 6,521,001
Depreciation 151,839 69,441 56,798 (9) 278,078
Amortization of goodwill and other
intangibles 647,030 - - 647,030
------------- --------------- ------------ -------------
9,209,054 3,857,196 (915,283) 12,150,967
------------- --------------- ------------ -------------
OPERATING LOSS (1,686,304) (1,857,473) 915,283 (2,628,494)
OTHER INCOME (EXPENSE):
Interest (631,540) - (138,771)(11) (770,311)
Other, net (44,066) (20,628) (64,694)
------------- --------------- ------------ -------------
(675,606) (20,628) (138,771) (835,005)
------------- --------------- ------------ -------------
LOSS BEFORE INCOME TAXES (2,361,910) (1,878,101) 776,512 (3,463,499)
PROVISION FOR INCOME TAXES - - - -
------------- --------------- ------------ -------------
NET LOSS (2,361,910) (1,878,101) 776,512 (3,463,499)
Accretion of common stock subject to price
guarantee or put option (131,250) (131,250)
------------- --------------- ------------ -------------
LOSS APPLICABLE TO COMMON SHAREHOLDERS $ (2,493,160) $ (1,878,101) $ 776,512 $ (3,594,749)
============= =============== ============ =============
LOSS PER COMMON AND
COMMON EQUIVALENT SHARE $ (0.40) $ (0.58)
============= =============
</TABLE>
See notes to Unaudited Pro Forma Financial Statements
<PAGE>
SILVERADO FOODS, INC. AND SUBSIDIARIES
--------------------------------------
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
----------------------------------------------
JUNE 30, 1996
<TABLE>
<CAPTION>
Pro forma
June 30, Pro forma June 30,
ASSETS 1996 Adjustments 1996
------ ---- ----------- ----
<S> <C> <C> <C>
CURRENT ASSETS:
Cash $ 143,141 $ - $ 143,141
Accounts receivable 3,840,537 - 3,840,537
Inventories, net 5,922,051 519,407 (1) 6,441,458
Prepaid expenses and other 568,734 32,354 (2) 601,088
Deferred tax assets 16,663 - 16,663
----------- ----------- ------------
Total current assets 10,491,126 551,761 11,042,887
----------- ----------- ------------
NOTE RECEIVABLE 1,361,034 - 1,361,034
PROPERTY, PLANT AND EQUIPMENT, net 6,754,192 2,524,774 (3) 9,278,966
GOODWILL AND OTHER INTANGIBLES, net 11,275,698 - 11,275,698
----------- ----------- -------------
Total Assets $29,882,050 $ 3,076,535 $ 32,958,585
=========== =========== =============
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Current maturities of long-term debt $ 5,307,675 $ 2,775,414 (4) $ 8,083,089
Trade accounts payable 7,577,959 301,121 (5) 7,879,080
Accrued liabilities 1,437,077 - 1,437,077
Other liabilities 63,288 - 63,288
----------- ----------- -------------
Total current liabilities 14,385,999 3,076,535 17,462,534
----------- ----------- -------------
LONG-TERM DEBT, less current maturities 12,079,831 - 12,079,831
----------- ----------- -------------
DEFERRED TAX LIABILITIES 16,663 - 16,663
----------- ----------- -------------
OTHER 43,570 - 43,570
----------- ----------- -------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY (DEFICIT):
Common stock, $.01 par value, 20,000,000 shares
authorized 62,528 - 62,528
Treasury Stock (64,652) - (64,652)
Warrants 46,549 - 46,549
Additional paid-in-capital 16,118,871 - 16,118,871
Deficit (12,807,309) - (12,807,309)
----------- ----------- -------------
Total shareholders' equity (deficit) 3,355,987 - 3,355,987
----------- ----------- -------------
Total Liabilities and shareholders'
equity (deficit) $29,882,050 $ 3,076,535 $ 32,958,585
=========== =========== =============
</TABLE>
See notes to Unaudited Pro Forma Financial Statements
<PAGE>
Silverado Foods, Inc and Subisidaries
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
For the Year ended December 31, 1995 and for the Six Months ended June 30, 1996
The accompanying unaudited pro forma financial statements give effect to the
acquisition of The Bagel Place, Inc., a subsidiary of Specialty Foods
Corporation (Acquired Business) on August 7, 1996 for approximately $3,076,000.
The pro forma balance sheet as of June 30,1996 gives effect to the acquisition
as if it took place at that date. The pro forma consolidated statement of
operations for the six months ended June 30,1996 gives effect to the acquisition
as if it occurred on January 1, 1996. The pro forma consolidated statement of
operations for the year ended December 31, 1995 is intended to present results
of operations as if the acquisition was completed at January 1, 1995. However,
because of the unavailability of reliable financial information for the period
January 1 through June 30,1995, the results of the acquired business included in
such 1995 pro forma statements are for the period July 1, 1995 to June 30, 1996.
The unaudited pro forma consolidated financial statements do not purport to
present the financial position or results of operations of the Company had the
acquisition described above actually been completed as of the dates indicated.
In addition, the unaudited pro forma consolidated financial statements are not
necessarily indicative of the results of future operations of the Company and
should be read in conjunction with the audited and unaudited historical
financial statements of the Company and the notes thereto.
The following describes the assumptions used in determining the pro forma
adjustments necessary to give effect on a pro forma basis to the transactions
described above:
1) The adjustment to Inventories represents the fair market value, less a profit
margin and allowance for selling and marketing expenses, of the inventories
acquired.
2) The adjustment to Prepaid expenses represents deposits for leased property.
3) The adjustment to Property, plant and equipment represents the fair market
value of the property acquired.
4) The adjustment to Current maturities of long-term debt represents the debt
incurred in order to fund the acquired business.
5) The adjustment to Trade accounts payable represents the liabilities of the
acquired business which were assumed by the Company.
6) The adjustment to Sales and Cost of sales represents the elimination of
Direct Sales Delivery activity for the routes which were sold in October, 1995.
7) The adjustment to General and administrative expenses represents the
elimination of intercompany charges including interest charges from Specialty
Foods Corporation to the acquired business.
<PAGE>
8) The adjustment to Selling and marketing expenses represents the elimination
of sales and marketing expenses related to brands which the Company did not
acquire from Specialty Foods Corporation.
9) The adjustment to Depreciation is due to a reduction in the remaining
estimated useful lives of the equipment, furniture and fixtures acquired.
10) The adjustment to Amortization of goodwill and other intangibles is due to
the elimination of the amortization and write off related to Specialty Food
Corporation's purchase price in excess of the assets acquired.
11) The adjustment to Interest expense represents the increase in interest
expense for debt incurred in connection with the business acquired.
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Form 8-K of our report dated September 13, 1996 on the
financial statements of TBP Holdings, Inc. It should be noted that we have not
audited any financial statements of the company subsequent to July 27, 1996 or
performed any audit procedures subsequent to the date of our report.
/s/ ARTHUR ANDERSEN LLP
Tulsa, Oklahoma
October 21, 1996
