SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM 8-K/A
(AMENDMENT NO. 2)
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 16, 1998
U.S. HOME & GARDEN INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-19899 77-0262908
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
655 Montgomery Street, Suite 500, San Francisco, California 94111
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (415) 616-8111
- --------------------------------------------------------------------------------
Former name or former address, if changed since last report
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits.
A. Financial Statements of Business Acquired
Amturf Business (a Business Line of Ampro Industries, Inc.)
<TABLE>
<CAPTION>
Financial Page No.
------------------
<S> <C>
Report of Independent Certified Public Accountants F-1
Balance Sheet as of September 30, 1998 F-2-3
Statement of Operations and Business Line Equity for the
Year ended September 30, 1998 F-4
Statement of Cash Flows for the year ended
September 30, 1998 F-5
Summary of Accounting Policies F-6-8
Notes to Financial Statements F-9-13
B. Pro Forma Financial Statements
Introduction PF-1
Pro Forma Condensed Balance Sheet as of
September 30, 1998 PF-2
Pro Forma Condensed Statement of Operations
For the three months ended September 30, 1998 PF-3
Pro Forma Condensed Statement of Operations
For the year ended June 30, 1998 PF-4
Notes to the Pro Forma Condensed Financial Statements PF-5
</TABLE>
C. Exhibits
Exhibit 23 Consent of BDO Seidman, LLP
-2-
<PAGE>
Report of Independent Certified Public Accountants
Board of Directors
U.S. Home & Garden, Inc. and Amturf Business
(a business line of Ampro Industries, Inc.)
We have audited the accompanying balance sheet of Amturf (the Business), a
business line of Ampro Industries, Inc. (the Company), as of September 30, 1998,
and the related statements of operations and business line equity and cash flows
for the year then ended. 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Business at September 30,
1998, and the results of its operations and cash flows for the year then ended
in conformity with generally accepted accounting principles applied on a
consistent basis.
/s/ BDO Seidman, LLP
BDO Seidman, LLP
Kalamazoo, Michigan
December 21, 1998
F-1
<PAGE>
Amturf Business
(a business line of Ampro Industries, Inc.)
Balance Sheet
September 30, 1998
================================================================================
Assets (Note 2)
Current Assets:
Receivables:
Trade, less allowance for doubtful accounts and sales
returns of $157,000 $ 389,703
Other 3,641
Inventories (Note 1) 3,461,263
Refundable federal income taxes 561,954
Prepaid expenses and other current assets 118,387
Deferred income taxes (Note 7) 381,000
- --------------------------------------------------------------------------------
Total Current Assets 4,915,948
- --------------------------------------------------------------------------------
Property and Equipment (Notes 2 and 3):
Land and improvements 252,038
Buildings 4,631,065
Equipment 5,765,859
- --------------------------------------------------------------------------------
10,648,962
Less accumulated depreciation 2,198,985
- --------------------------------------------------------------------------------
8,449,977
- --------------------------------------------------------------------------------
Other Assets:
Intangibles, less accumulated amortization of $215,000 90,912
Receivable from related parties (Note 4) 1,099,889
- --------------------------------------------------------------------------------
Total Other Assets 1,190,801
- --------------------------------------------------------------------------------
Total Assets $14,556,726
================================================================================
See accompanying summary of accounting policies and
notes to financial statements.
F-2
<PAGE>
Amturf Business
(a business line of Ampro Industries, Inc.)
Balance Sheet
September 30, 1998
================================================================================
Liabilities:
Current Liabilities:
Checks issued against future deposits $ 209,316
Accounts payable 2,512,264
Line-of-credit (Notes 2 and 10) 3,872,274
Accrued liabilities 1,288,034
Current portion of capital leases (Note 5) 100,000
Notes payable to banks (Notes 3 and 10) 4,785,748
- --------------------------------------------------------------------------------
Total Current Liabilities 12,767,636
Notes Payable to Related Parties (Note 4) 376,598
Deferred Income Taxes (Note 7) 345,000
Obligations Under Capital Leases, less current portion (Note 5) 241,145
Deferred Revenue (Note 8) 589,233
- --------------------------------------------------------------------------------
Total liabilities 14,319,612
- --------------------------------------------------------------------------------
Commitments (Notes 5 and 6)
Business Line Equity 237,114
- --------------------------------------------------------------------------------
Total Liabilities and Business Line Equity $14,556,726
================================================================================
See accompanying summary of accounting policies and
notes to financial statements.
F-3
<PAGE>
Amturf Business
(a business line of Ampro Industries, Inc.)
Statement of Operations and Business Line Equity
Year Ended September 30, 1998
================================================================================
Net Sales $ 20,174,093
Cost of Products Sold 12,583,241
- --------------------------------------------------------------------------------
Gross Profit 7,590,852
- --------------------------------------------------------------------------------
Operating Expenses:
Warehousing and shipping expenses 1,894,398
Administrative and general expenses 6,730,488
- --------------------------------------------------------------------------------
Total Operating Expenses 8,624,886
- --------------------------------------------------------------------------------
Loss From Operations (1,034,034)
- --------------------------------------------------------------------------------
Other Expense:
Interest expense - net (Note 4) 920,665
Miscellaneous 280,927
- --------------------------------------------------------------------------------
Total Other Expense 1,201,592
- --------------------------------------------------------------------------------
Loss Before Income Tax Benefit (2,235,626)
Federal Income Tax Benefit (Note 7) 397,000
- --------------------------------------------------------------------------------
Net Loss (1,838,626)
Contribution of equity 228,715
Business Line Equity, beginning of year 1,847,025
- --------------------------------------------------------------------------------
Business Line Equity, end of year $ 237,114
================================================================================
See accompanying summary of accounting policies and
notes to financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
Amturf Business
(a business line of Ampro Industries, Inc.)
Statement of Cash Flows
Year Ended September 30, 1998
===================================================================================
<S> <C>
Operating Activities:
Net loss $(1,838,626)
Adjustments to reconcile net loss to cash used in
operating activities:
Depreciation and amortization 818,345
Loss on disposal of property, equipment and intangibles
3,717
Deferred income taxes 66,000
Changes in operating assets and liabilities:
Trade and other receivables (765,217)
Inventories (14,475)
Prepaid expenses and other current assets (102,412)
Federal income taxes (888,395)
Deferred revenue (98,208)
Accounts payable 1,931,840
Accrued liabilities 788,827
- -----------------------------------------------------------------------------------
Cash Used in Operating Activities (98,604)
- -----------------------------------------------------------------------------------
Investing Activities:
Additions to property, equipment and intangibles (2,417,466)
Proceeds from disposal of property and equipment 822
- -----------------------------------------------------------------------------------
Cash Used in Investing Activities (2,416,644)
- -----------------------------------------------------------------------------------
Financing Activities:
Checks issued against future deposits 108,881
Net proceeds from line-of-credit 445,627
Proceeds from long-term debt 3,379,223
Payments on long-term debt (875,529)
Change in notes receivable from related parties (496,707)
Change in notes payable to related parties (183,693)
Payments on capital lease obligations (91,269)
Contribution of additional equity 228,715
- -----------------------------------------------------------------------------------
Cash Provided by Financing Activities 2,515,248
- -----------------------------------------------------------------------------------
Change in Cash and Cash Equivalents --
- -----------------------------------------------------------------------------------
Cash and Cash Equivalents, beginning of year --
- -----------------------------------------------------------------------------------
Cash and Cash Equivalents, end of year $ --
===================================================================================
</TABLE>
See accompanying summary of accounting policies and
notes to financial statements.
F-5
<PAGE>
Amturf Business
(a business line of Ampro Industries, Inc.)
Summary of Accounting Policies
================================================================================
Basis of
Presentation The shareholders of Ampro Industries, Inc. (the Company)
entered into an agreement, dated October 15, 1998, to sell
the common stock of Ampro Industries, Inc. Prior to the
sales agreement, the Company operated several different
business lines under the Ampro Industries, Inc. corporate
structure. The Company's main business line (Amturf)
manufactured lawn and flower patch, mulch, and animal
litter. Under the terms of the purchase agreement all
operations not related to Amturf were transferred on October
15, 1998 to the former shareholders of Ampro Industries,
Inc. During the year ended September 30, 1998, Amturf was
not a separate legal entity, but was an integral part of the
Company's overall operations. Separate financial statements
were not prepared for Amturf. The accompanying financial
statements have been prepared from the books and records of
Ampro Industries, Inc., and present the financial position,
results of operation and cash flows for Amturf as of and for
the year ended September 30, 1998.
Certain corporate administrative expenses incurred by the
Company in the amount of $315,000 were allocated to other
business lines of the Company. These expenses consisted of
management and administrative salaries and other corporate
overhead items. The allocation for these expense items was
based on estimated time devoted to the other business lines,
the relationship of their operations to total operation or
their specific identification. Interest expense was changed
to Amturf based on Amturf's specific borrowing levels.
Income taxes have been provided, as if Amturf filed a
separate tax return.
Ampro Industries, Inc.'s management believes the allocations
are reasonable, however, these allocated expenses are not
necessarily indicative of expenses that would have been
incurred by the business on a stand alone basis.
Business The Company's Amturf division is a manufacturer of
combination grass and flower patch products, mulch and
animal litter, dealing primarily with retail stores in the
United States and Canada. The Company also operated a
wholesale landscape business and maintained a yacht for
business entertainment, whose operations were not included
in these
F-6
<PAGE>
Amturf Business
(a business line of Ampro Industries, Inc.)
Summary of Accounting Policies
================================================================================
financial statements. The Business performs periodic credit
evaluations of its customers and generally does not require
collateral. An allowance for doubtful accounts is maintained
at a level which management believes is sufficient to cover
potential credit losses. During 1998, sales to one customer
approximated 20% of total sales.
Cash Equivalents The Business considers investments with a maturity date of
three months or less when purchased to be cash equivalents.
The carrying amount of cash equivalents approximates fair
value.
Inventories Inventories, which consist of consumer products, raw,
packaging and finished goods are stated at the lower of cost
or market, determined by the first-in, first-out (FIFO)
method.
Advertising The Business expenses the costs of advertising as incurred.
Advertising expense was $1,372,000 in 1998.
Intangible Assets Intangible assets are carried at cost. Amortization is
computed using the straight-line method over the estimated
useful lives, which is generally three years.
Property and
Equipment Property and equipment are stated at cost. Depreciation is
computed using the straight-line method over the estimated
useful lives of the assets. Maintenance and repairs are
expensed as incurred and improvements are capitalized.
Revenue
Recognition Sales are recorded as products are shipped to customers.
Interest Expense Ampro did not historically allocate interest expense to its
business units. Interest expense has been allocated to the
Business based on the average borrowing for the period
presented. Ampro management believes this allocation is
reasonable, but is not necessarily indicative of the
interest cost that would have been incurred if Amturf had
been operated as a separate entity.
F-7
<PAGE>
Amturf Business
(a business line of Ampro Industries, Inc.)
Summary of Accounting Policies
================================================================================
Income Taxes For the period presented, the taxable loss of the Business
will be included in the consolidated tax returns of Ampro
Industries, Inc. Accordingly, separate income tax returns
will not be prepared or filed for the Business. The income
tax benefit for the Business taxable loss has been
separately determined by applying the asset and liability
approach as if the Business was a separate taxpaying entity.
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 amounts
reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
Long-Lived Assets Long-lived assets are evaluated for possible impairment
whenever events or changes in circumstances indicate that
the carrying amounts may not be recoverable, or whenever
management has committed to a plan to dispose of the assets.
Such assets are carried at the lower of book value or fair
value as estimated by management based on appraisals,
current market value, and comparable sales value, as
appropriate. Assets to be held and used affected by such
impairment loss are depreciated at their new carrying amount
over the remaining estimated life. Assets to be paid or
otherwise disposed of are not subject to further
depreciation. In determining whether impairment exists, the
Business uses undiscounted future cash flows compared to the
carrying value of the asset.
F-8
<PAGE>
Amturf Business
(a business line of Ampro Industries, Inc.)
Notes to Financial Statements
================================================================================
1. Inventories
Inventories consist of the following at September 30, 1998:
Raw materials $ 2,723,264
Finished goods 1,353,359
Obsolence reserve (615,360)
---------------------------------------------------------------------------
Total Inventories $ 3,461,263
===========================================================================
2. Line-of-Credit
The Business has revolving lines-of-credit with a financial institution
which expire October 31, 1998 and provide for maximum advances of
$14,800,000. Interest on the outstanding balance is calculated at rates
ranging from prime plus .5% to prime plus 2% (effectively 9.0% to 10.5% at
September 30, 1998). Borrowings are secured by all assets of the Business.
At September 30, 1998, the Business had outstanding borrowings of
$3,872,274. As discussed in Note 3, the Business was in violation with the
loan covenants as of September 30, 1998. See Note 10 for subsequent event.
3. Long-Term Debt
Long-term debt consists of the following at September 30, 1998:
Note payable to a bank, maturing February, 2003, with
monthly payments of $15,834 plus interest at the bank's
prime rate plus .75% (effectively 9.25% at September 30,
1998), secured by real estate 1,804,996
Note payable to a bank, maturing in 2001 with a balloon
payment of approximately $740,000, with monthly payments
of $15,480, including interest at 9.75%, secured by real
estate and equipment 962,254
Note payable to a bank, maturing February, 2003 with
monthly payments of $16,667 plus interest at the bank's
prime rate plus .75% (effectively 9.25% at September 30,
1998), secured by equipment 899,998
Note payable to a bank, maturing in 2002, with monthly
payments of $3,934, plus interest at the bank's prime
rate plus 1% (effectively 9.5% at September 30, 1998)
secured by real estate 404,056
F-9
<PAGE>
Amturf Business
(a business line of Ampro Industries, Inc.)
Notes to Financial Statements
================================================================================
Note payable to a bank maturing February, 2001, with
monthly payments of $9,723 plus interest at the bank's
prime rate plus .75% (effectively 9.25% at September 30,
1998), secured by equipment 291,662
Note payable to a bank, maturing in 2002, with
monthly payments of $5,000 plus interest at
the bank's prime rate plus 1% (effectively
9.5%), secured by real estate
210,000
Note payable to a bank, maturing in 2000 with monthly
payments of $12,938, including interest at 9.5%, secured
by real estate 175,981
Other 36,801
---------------------------------------------------------------------------
Total $4,785,748
---------------------------------------------------------------------------
Under the above agreements, the Business is required to maintain covenants
relating to debt service coverage, tangible net worth and leverage. At
September 30, 1998, the Business was in violation of these covenants as a
result of the above debt has been classified as current in the statement of
net assets.
If the Business was not in violation of its covenants then the annual
maturities of long-term debt for each of the next five years and thereafter
would be as follows:
1999 $ 890,000
2000 752,000
2001 1,317,000
2002 467,000
2003 1,192,000
Thereafter 168,000
---------------------------------------------------------
Total $4,786,000
=========================================================
See Note 10 for subsequent event.
F-10
<PAGE>
Amturf Business
(a business line of Ampro Industries, Inc.)
Notes to Financial Statements
================================================================================
4. Notes Receivable and
Payable to Related
Parties
Loans between the Company and related parties are evidenced by notes
bearing interest at 9.5%. The loans are due on demand after September 30,
1998. Interest income and expense from related parties approximated $70,000
and $40,000 during 1998.
5. Lease Commitments
The Business leases certain equipment under noncancellable agreements.
Lease expense charged to operations approximated $324,000 in 1998,
including $240,000 to an affiliated entity, which will not be renewed.
The Business has entered into capital leases for equipment with original
cost of $618,000 and net book value of $477,000 at September 30, 1998.
Amortization expense related to these capital leases has been included with
depreciation expense.
As of September 30, 1998, future net minimum lease payments required under
the capital and operating leases that have initial or remaining
noncancellable terms in excess of one year are as follows:
Capital Operating
Year Ending September 30, Leases Leases
---------------------------------------------------------------------------
1999 $125,000 $ 45,000
2000 123,000 45,000
2001 100,000 45,000
2002 46,000 45,000
2003 24,000 45.000
---------------------------------------------------------------------------
Total Minimum Lease Payments 418,000 $225,000
==========
Amount representing interest 76,855
--------------------------------------------------------
Present Value of Net Minimum Lease
Payments 341,145
Less current maturities 100,000
--------------------------------------------------------
Total Long-Term Debt $241,145
========================================================
F-11
<PAGE>
Amturf Business
(a business line of Ampro Industries, Inc.)
Notes to Financial Statements
================================================================================
6. Retirement Plan
The Business has a defined contribution 401(k) profit-sharing plan which
covers all full-time employees who have attained age 21, completed at least
1,000 hours of credited service, and one year of employment.
Participants are permitted to make contributions in any amount up to 15% of
their compensation. Participant contributions to the plan are limited to
the maximum amount allowed under the Internal Revenue Code. Discretionary
contributions may be made annually by the Company. The Business contributed
25% of employee contributions (approximately $46,000) during the year ended
September 30, 1998. All contributions are fully vested.
7. Income Taxes
The Business has provided for income benefit as follows:
September 30 1998
---------------------------------------------------------------------------
Current:
Federal $ 463,000
---------------------------------------------------------------------------
463,000
Deferred (66,000
---------------------------------------------------------------------------
Benefit $ 397,000
===========================================================================
Significant components of the Business's deferred income tax assets and
liabilities are as follows at September 30, 1998:
Deferred Income Tax Assets:
Accounts receivable reserves $ 53,000
Inventories 246,000
Accrued expenses 82,000
Net operation loss carryforwards 282,000
---------------------------------------------------------------------------
663,000
Valuation Allowance (282,000)
---------------------------------------------------------------------------
Net Deferred Income Tax Asset $ 381,000
---------------------------------------------------------------------------
Deferred Income Tax Liabilities -
Fixed assets $ 345,000
===========================================================================
F-12
<PAGE>
Amturf Business
(a business line of Ampro Industries, Inc.)
Notes to Financial Statements
================================================================================
The difference between the Business's effective income tax rate and the
statutory rate is primarily due the valuation allowance recorded at
September 30, 1998.
The Business has net operating loss carryforwards available for use of
approximately $393,000, which expire in 2010, and $436,000, which expire in
2013.
8. Deferred Revenue -
Government Grant
During fiscal 1994, the Business received a grant of $982,000 from the
Michigan Department of Natural Resources (MDNR). The grant proceeds were
used to construct a mulch plant facility in which the MDNR has a security
interest over the grant period of ten years. The grant proceeds have been
recorded as deferred revenue and will be amortized over the grant period.
9. Supplemental Disclosure of
Cash Flow Information
Supplemental information of cash flows is as follows for the year ended of
September 30, 1998:
Operating Activities:
Interest paid $1,132,000
---------------------------------------------------------------------------
Interest received $ 60,000
---------------------------------------------------------------------------
Income taxes paid $ 425,000
---------------------------------------------------------------------------
Non-cash investing and financing activity -
Capital expenditures financed by capital
lease obligations $ 149,000
---------------------------------------------------------------------------
10. Subsequent Event
On October 16, 1998, U.S. Home & Garden Inc. acquired all of the stock of
the Business for approximately $21.5 million. In connection with the sale
of the Business' stock, all of the outstanding lines of credit, notes
payable to banks, and stockholders were repaid in full and all the notes
receivable from stockholders were liquidated.
F-13
<PAGE>
U.S. Home & Garden Inc. and Subsidiaries
Pro Forma Condensed Consolidated Financial Statements
(Unaudited)
================================================================================
On October 16, 1998, U.S. Home & Garden Inc. (the Company) acquired all of the
outstanding common stock of Ampro Industries, Inc. (Ampro), a lawn and garden
care company, for approximately $21.5 million, plus $1 million for a covenant
not to compete. The Company satisfied the purchase price by increasing its bank
borrowings and using existing cash. Prior to the common stock sales agreement,
Ampro operated several different entities under the Ampro Industries, Inc.
corporate structure. Ampro's main business (Amturf) manufactures lawn and flower
patch, mulch and animal litter. Under the terms of the stock purchase agreement,
all operations not related to Amturf were transferred on October 15, 1998, to
the former shareholders of Ampro Industries, Inc. The accompanying financial
statements of Amturf represent the ongoing operations, which will be operated by
U.S. Home and Garden, Inc.
The acquisition was accounted for as a purchase, with the assets acquired and
liabilities assumed recorded at fair values. The results of Amturf's operations
will be included in the Company's consolidated financial statements from the
date of acquisition.
The accompanying condensed pro forma consolidated financial statements
illustrate the effect of the acquisition on the Company's financial position at
September 30, 1998 and the results of operations for the year ended June 30,
1998 and three months ended September 30, 1998, as if the acquisition had taken
place on September 30, 1998 with respect to the balance sheet and July 1, 1997
and 1998 with respect to the statements of operations. The operating results for
the Amturf business for the year ended September 30, 1998 were used to prepare
the unaudited pro forma condensed statement of operations for U.S. Home &
Garden's fiscal year ended June 30, 1998. Accordingly, the unaudited operating
results for the Amturf business for the three months ended September 30, 1998
have been included in both periods presented.
The pro forma condensed consolidated results of operations may not be indicative
of the actual results of the acquisition. In particular, the pro forma condensed
consolidated financial statements are based upon management's current estimates
of the allocation of the purchase price, the actual allocation which could
differ. The pro forma condensed consolidated results of operations may not be
indicative of the actual result, which would have been obtained if the
acquisition had occurred on July 1, 1997.
The unaudited pro forma financial statements should be read in conjunction with
U.S. Home & Garden's historical consolidated financial statements and notes
thereto contained in the Company's 1998 Annual Report on Form 10-K and the
Quarterly Report on Form 10-Q for the quarter ended September 30, 1998, and the
financial statements of Amturf business presented herein.
PF-1
<PAGE>
U.S. Home & Garden Inc. and Subsidiaries
Pro Forma Condensed Consolidated Balance Sheet
September 30, 1998 (Unaudited)
(Dollars in Thousands)
================================================================================
<TABLE>
<CAPTION>
U.S. Home &
Garden, Inc. Amturf Adjustments Pro Forma
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
Current
Cash $ 26,277 $ -- $ (9,172)(1) $ 17,105
Accounts receivable, net 6,937 394 -- 7,331
Inventories 13,193 3,461 -- 16,654
Prepaid and other current assets 1,654 1,061 -- 2,715
- ------------------------------------------------------------------------------------------------------------------------------------
Total Current Assets 48,061 4,916 (9,172) 43,805
Furniture, Fixtures and Equipment, net 3,791 8,450 500(1) 12,741
Intangibles
Excess of cost over net assets, net 58,494 -- 14,500(1) 72,994
Other intangibles, net 4,673 91 1,000(1) 5,764
Other Assets 1,918 1,100 (1,100)(1) 1,918
- ------------------------------------------------------------------------------------------------------------------------------------
Total Assets $ 116,937 $ 14,557 $ 5,728 $ 137,222
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities and Equity
Current
Line of credit $ -- $ 3,872 $ (3,872)(1) $ --
Current maturities of notes payable -- 4,886 (4,786)(1) 100
Accounts payable 2,615 2,512 -- 5,127
Accrued expenses 2,578 1,497 -- 4,075
- ------------------------------------------------------------------------------------------------------------------------------------
Total Current Liabilities 5,193 12,767 (8,658) 9,302
Notes Payables 63,250 618 15,000 (1) 78,491
(377)(1)
Other Liabilities 875 935 1,810
Stockholders' Equity 47,619 237 (237)(1) 47,619
- ------------------------------------------------------------------------------------------------------------------------------------
$ 116,937 $ 14,557 $ 5,728 $ 137,222
====================================================================================================================================
</TABLE>
PF-2
<PAGE>
<TABLE>
U.S. Home & Garden Inc. and Subsidiaries
Pro Forma Condensed Consolidated Statement of Operations
Three Months Ended September 30, 1998 (Unaudited)
(Dollars in Thousands)
===============================================================================================
<CAPTION>
U.S. Home &
Garden, Inc. Amturf Adjustments Pro Forma
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Sales $ 10,768 $ 676 $ -- $ 11,444
Cost of Sales 5,312 778 -- 6,090
- -----------------------------------------------------------------------------------------------
Gross Profit (Loss) 5,456 (102) -- 5,354
Operating Expenses
Selling and general administrative 6,439 1,917 154(2) 7,993
(517)(5)
- -----------------------------------------------------------------------------------------------
Loss from Operations (983) (2,019) 363 (2,639)
Interest Expense, net (1,160) (134) (307)(3) (1,601)
Other Expense -- (28) -- (28)
- -----------------------------------------------------------------------------------------------
Loss before Income Tax (2,143) (2,181) 56 (4,268)
Income Tax Benefit 920 449 466(4) 1,835
- -----------------------------------------------------------------------------------------------
Net Loss $ (1,223) $ (1,732) $ 522 $ (2,433)
- -----------------------------------------------------------------------------------------------
Basic and Diluted Loss per Common Share $ (.06) $ (.12)
- -----------------------------------------------------------------------------------------------
Weighted Average Common and Common Equivalent
Shares Outstanding 20,143,000 20,143,000
===============================================================================================
</TABLE>
PF-3
<PAGE>
U.S. Home & Garden Inc. and Subsidiaries
Pro Forma Condensed Consolidated Statement of Operations
Fiscal Year Ended June 30, 1998 (Unaudited)
(Dollars in Thousands)
================================================================================
<TABLE>
<CAPTION>
U.S. Home & Amturf
Garden, Inc. Year ended
Year ended September 30,
June 30, 1998 1998 Adjustments Pro Forma
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Sales $ 67,149 $ 20,174 $ -- $ 87,323
Cost of Sales 30,431 12,583 -- 43,014
- ------------------------------------------------------------------------------------------------------------------------------------
Gross Profit 36,718 7,591 -- 44,309
Operating Expenses
Selling and general administrative 23,065 8,625 617(2) 30,237
(2,070)(5)
- ------------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Operations 13,653 (1,034) 1,453 14,072
Interest Expense, net (3,077) (921) (1,229)(3) (5,227)
Other Expense -- (281) -- (281)
- ------------------------------------------------------------------------------------------------------------------------------------
Income (Loss) before Income Tax 10,576 (2,236) 224 8,564
Income Tax Benefit (Expense) (3,600) 397 290(4) (2,913)
- ------------------------------------------------------------------------------------------------------------------------------------
Income (Loss) before Extraordinary Expense 6,976 (1,839) 514 5,651
Extraordinary Expense, net of tax benefit (1,450) -- -- (1,450)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Income (Loss) $ 5,526 $ (1,839) $ 514 $ 4,201
- ------------------------------------------------------------------------------------------------------------------------------------
Basic Earnings per Share
Income per common before extraordinary expense $ .39 $ .32
Extraordinary expense (.08) (.08)
- ------------------------------------------------------------------------------------------------------------------------------------
Net income per common share $ .31 $ .24
- ------------------------------------------------------------------------------------------------------------------------------------
Diluted Earnings per Share
Income per common before extraordinary expense $ .31 $ .25
Extraordinary expense (.07) (.07)
- ------------------------------------------------------------------------------------------------------------------------------------
Net income per common share $ .24 $ .18
- ------------------------------------------------------------------------------------------------------------------------------------
Basic Weighted Average Common Shares Outstanding 17,776,000
Options and Warrants 5,032,000
- -----------------------------------------------------------------------------
Diluted Weighted Average Common Shares Outstanding 22,808,000
- -----------------------------------------------------------------------------
</TABLE>
PF-4
<PAGE>
U.S. Home & Garden Inc. and Subsidiaries
Notes to Pro Forma Condensed Consolidated Financial Statements
(Unaudited)
(Dollars in Thousands)
================================================================================
Note A-Basis of Reference is made to the introduction at page PF-1.
Presentation
Note B-Pro Forma The pro forma adjustment to the condensed consolidated
Adjustments balance sheet is as follows:
(1) To reflect the acquisition of Amturf and the allocation
of purchase price on the basis of fair values of the
assets acquired and the liabilities assumed. The
components of purchase price and its allocation of
assets and liabilities of Ampro are as follows:
------------------------------------------------------------
Components of Purchase Price:
Cash from the Company $ 9,172
Debt 15,000
------------------------------------------------------------
$24,172
------------------------------------------------------------
Allocation of Purchase Price:
Payment of Amturf debt 9,035
Fair value of property 500
Covenant not to compete 1,000
Equity of assets acquired 237
Elimination of related party receivables (1,100)
Goodwill 14,500
------------------------------------------------------------
$24,172
============================================================
The pro forma adjustments to the condensed consolidated
statement of operations are as follows:
(2) Amortization of excess of cost over fair value of net
assets acquired over 30 years, plus additional
depreciation expense for adjusted basis in property and
equipment and amortization of covenant not to compete.
(3) Interest expense has been adjusted to reflect the notes
payable, incurred in connection with the acquisition,
and the payoff of Ampro's notes payable and line of
credit.
(4) Income taxes (benefits) have been adjusted to reflect
the Company's statutory tax rates.
(5) Reduction of owner and officer salaries of Amturf due
to termination.
PF-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amended report to be signed on its behalf by the
undersigned thereunto duly authorized.
U.S. HOME & GARDEN INC.
By: /s/ Richard Raleigh
------------------------------------------
Richard Raleigh, Chief Operating Officer
Date: December 30, 1998
-3-
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
U.S. Home & Garden Inc.
San Francisco, California
As independent certified public accountants, we hereby consent to the
incorporation of our report included in this Form 8-K/A, into U.S. Home & Garden
Inc.'s previously filed Registration Statements Nos. 33-82758, 33-89800,
33-94924 and 333-21667 on Form S-3 and Nos. 33-55020, 33-71978 and 333-44459 on
Form S-8.
/s/ BDO SEIDMAN, LLP
BDO Seidman, LLP
San Francisco, California
December 29, 1998
