<PAGE>
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): March 28, 1997
--------------
GLACIER WATER SERVICES, INC.
----------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-11012 33-0493559
- -------------------------------------------------------------------------------
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification Number)
2261 Cosmos Court, Carlsbad, California 92009
- - -----------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(760) 930-2420
--------------
(Registrant's telephone number,
including area code)
N/A
------------------------------------------------------------
(Former name or former address, if changed since last report)
1
<PAGE>
The undersigned registrant, Glacier Water Services, Inc., a Delaware
corporation (the "Registrant"), hereby amends its Current Report on Form 8-K/A
dated March 28, 1997, and filed on June 11, 1997, to modify certain required
pro forma financial information relating to the registrant's acquisition of the
Aqua-Vend division of McKesson Water Products Company.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On March 28, 1997, Glacier Water Services, Inc., a Delaware
corporation (the "Registrant"), entered into and consummated an Asset Purchase
Agreement (the "Agreement") with McKesson Corporation, a Delaware corporation
("McKesson"), and a wholly-owned subsidiary of McKesson, McKesson Water Products
Company, a California corporation ("MWP," together with McKesson, the "Seller"),
for the sale of substantially all of the assets (the "Assets") of the Aqua-Vend
division of MWP, which acquisition included approximately 3,000 water vending
machines at various locations. The Assets consisted primarily of water vending
machines and related inventory, contracts rights under location agreements and
leases, intellectual property and other equipment. The purchase price of
$9,000,000 for the Assets was paid in cash to the Seller by the Registrant at
closing. The purchase price of the Assets was financed with borrowings under
the Registrant's $35,000,000 credit facility. The Registrant did not assume
substantial liabilities of the Seller pursuant to the Agreement other than
obligations under certain location agreements and leases of MWP. The Registrant
plans to use the Assets in its water vending business.
The consideration for the acquisition was determined by arm's-length
negotiations among the parties. There is no material relationship between the
Registrant and its affiliates, officers and directors (or any associate of any
such officers or directors), on the one hand, and McKesson, MWP or their
respective officers, directors or affiliates, on the other hand.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired
(1) Independent Auditors' Report
(2) Statements of Assets to Be Sold
(3) Statements of Revenues, Direct Expenses and Identified
Corporate Expenses Before Interest and Income Taxes
(4) Notes to Financial Statements
(b) Pro Forma Financial Statements
(1) Glacier Water Services, Inc. Consolidated Balance
Sheet
(2) Glacier Water Services, Inc. Pro Forma Consolidated
Statements of Operations
(3) Glacier Water Services, Inc. Notes to Pro Forma
Consolidated Statements of Operations
(c) Exhibits
2.1 Asset Purchase Agreement dated March 28, 1997, among Glacier
Water Services, Inc., as purchaser, and McKesson Corporation
and Mckesson Water Products Company, as seller.*
2
<PAGE>
- ---------------------------
* Incorporated by reference to the Registrant's Form 10-K for the year ended
December 31, 1996. (The schedules to the Asset Purchase Agreement have been
omitted from such filing, although each of the schedules and a brief
description of each of their contents are listed therein. The Registrant
hereby undertakes to furnish supplementally a copy of any omitted schedule
to the Commission upon request).
3
<PAGE>
TABLE OF CONTENTS
- -------------------------------------------------------------------------------
Page
FINANCIAL STATEMENTS OF BUSINESS ACQUIRED:
INDEPENDENT AUDITORS REPORT F-2
FINANCIAL STATMENTS:
Statements of Assets to Be Sold F-3
Statements of Revenues, Direct Expenses and Identified
Corporate Expenses Before Interest and Income Taxes F-4
Notes to Financial Statements F-5
PRO FORMA FINANCIAL STATEMENTS:
Summary Information Related to the Pro Forma Consolidated
Financial Information F-7
Consolidated Balance Sheet F-8
Pro Forma Consolidated Statements of Operations F-9
Notes to Pro Forma Consolidated Statements of Operations F-11
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
McKesson Corporation
San Francisco, California:
We have audited the accompanying statements of assets to be sold of the
Aqua-Vend Business ("Aqua-Vend"), which consist of certain operations of
McKesson Water Products Company ("MWPC"), a wholly owned subsidiary of McKesson
Corporation, as of March 31, 1996 and 1997 and the related statements of
revenues, direct expenses and identified corporate expenses before interest and
income taxes for the years then ended. These financial statements are the
responsibility of Aqua-Vend'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, such financial statements present fairly, in all material
respects, the assets to be sold of Aqua-Vend as of March 31, 1996 and 1997, and
its revenues, direct expenses, and identified corporate expenses before interest
and income taxes for the years ended March 31, 1996 and 1997 in conformity with
generally accepted accounting principles.
As discussed in Note 2 to the financial statements, Aqua-Vend consists of
certain operations of MWPC. Aqua-Vend receives managerial and administrative
services from MWPC. Certain expenses included in the financial statements
represent allocations of amounts applicable to McKesson Corporation and MWPC.
As a result, Aqua-Vend's assets to be sold and its revenues, direct expenses and
identified corporate expenses before interest and income taxes may not be
indicative of conditions that would have existed or results that would have
occurred had Aqua-Vend operated as a stand-alone entity.
/s/ Deloitte & Touche LLP
San Francisco, California
May 9, 1997
F-2
<PAGE>
STATEMENTS OF ASSETS TO BE SOLD
MARCH 31, 1996 AND 1997
- -------------------------------------------------------------------------------
1996 1997
ASSETS TO BE SOLD
CURRENT ASSETS -
Prepaid expenses and other assets $ 1,054,000 $ 488,000
PROPERTY, PLANT AND EQUIPMENT, Net (Note 4) 13,756,000 6,189,000
OTHER ASSETS 1,695,000 1,229,000
----------- ---------
ASSETS TO BE SOLD $ 16,505,000 $7,906,000
------------ ----------
------------ ----------
See notes to financial statements.
F-3
<PAGE>
STATEMENTS OF REVENUES, DIRECT EXPENSES AND IDENTIFIED
CORPORATE EXPENSES BEFORE INTEREST AND INCOME TAXES
YEARS ENDED MARCH 31, 1996 AND 1997
- -------------------------------------------------------------------------------
1996 1997
REVENUES $18,416,000 $15,956,000
COST OF SALES 15,675,000 13,671,000
----------- -----------
GROSS MARGIN 2,741,000 2,285,000
SELLING, GENERAL AND ADMINISTRATIVE (Note 5) 5,080,000 4,716,000
REDUCTION IN CARRYING VALUE OF PROPERTY,
PLANT AND EQUIPMENT (Note 4) -- 7,000,000
---------- -----------
LOSS BEFORE INTEREST AND INCOME TAXES $(2,339,000) $ (9,431,000)
----------- ------------
----------- ------------
See notes to financial statements.
F-4
<PAGE>
NOTES TO FINANCIAL STATMENTS
YEARS ENDED MARCH 31, 1996 AND 1997
- -------------------------------------------------------------------------------
1. ORGANIZATION AND OPERATIONS
The Aqua-Vend Business ("Aqua-Vend"), which consists of certain operations
of McKesson Water Products Company ("MWPC"), a wholly owned subsidiary of
McKesson Corporation ("McKesson"), owns and operates water vending machines
throughout the United States.
On March 28, 1997 McKesson and MWPC entered into an asset purchase
agreement with Glacier Water Services Inc. ("Glacier") whereby Glacier
purchased for $9 million in cash certain assets and assumed certain real
and personal property lease obligations of Aqua-Vend.
2. BASIS OF PRESENTATION
Aqua-Vend has no separate legal status but rather is owned and operated by
McKesson through its wholly owned subsidiary, MWPC. The accompanying
financial statements have been prepared from the books and records of MWPC
and present substantially all of the operations of Aqua-Vend (including
corporate allocations) for the years ended March 31, 1996 and 1997 and the
assets that MWPC sold to Glacier as they existed at March 31, 1996 and
1997.
The statements of revenues, direct expenses and identified corporate
expenses before interest and income taxes may not necessarily be indicative
of the results of operations that would have resulted had Aqua-Vend been
operated as a stand-alone entity and include allocations of certain MWPC
and McKesson corporate expenses. Such allocations are based on formulas
and include compensation, facilities, administrative and other corporate
costs (see Note 5).
Payroll, capital expenditures and all other expenditures are funded by
McKesson. Sales are collected and deposited by Aqua-Vend but immediately
swept into McKesson cash accounts. Accordingly, Aqua-Vend maintains only a
minimal petty cash balance. Statements of cash flows are not presented as
separate and complete cash flow information is not maintained.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
YEAR-END - McKesson sold Aqua-Vend on March 28, 1997. Aqua-Vend describes
its operations through and as of the sale date as March 31, 1997.
PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment is
initially recorded at cost. Depreciation is provided for using the
straight-line method over the estimated useful lives of the assets,
generally eight to twelve years. The carrying amount of long-lived
assets is evaluated whenever events or changes in circumstances have
indicated that such amounts may not be recoverable (see Note 4).
OTHER ASSETS - Included in other assets are costs incurred to obtain sites
for water vending machines. These costs are amortized over the contract
period.
REVENUE RECOGNITION - Sales are recorded at the time of the water vend.
Commissions and other revenue sharing costs are included in cost of sales.
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 amounts of assets and
disclosure of contingent assets and reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
F-5
<PAGE>
4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment primarily consist of water vending machines.
Purchases of equipment for the years ended March 31, 1996 and 1997 were
$4,676,000 and $1,564,000, respectively. Depreciation expense for the
years ended March 1996 and 1997 was $1,807,000 and $1,846,000,
respectively, and is included in cost of sales. Accumulated depreciation
for the years ended March 31, 1996 and 1997 were $13,917,000 and
$12,557,000, respectively.
During fiscal 1997, MWPC reviewed the carrying value of Aqua-Vend's assets
for recoverability in connection with the possible sale of Aqua-Vend and
determined that the carrying value should be reduced by $7.0 million to
reflect the fair value of the assets less costs to sell. Such charge was
included in accumulated depreciation at March 31, 1997.
5. CORPORATE ALLOCATIONS
Aqua-Vend does not maintain stand-alone corporate treasury, legal, tax and
other similar corporate support functions. Aqua-Vend does record certain
direct expenses related primarily to employee payroll and benefits,
insurance and corporate facilities costs. For purposes of preparing the
Aqua-Vend statements of revenues, direct expenses and identified corporate
expenses before interest and income taxes, certain expenses of MWPC and
McKesson were allocated based upon a variety of factors, which included
Aqua-Vend sales, the number of Aqua-Vend employees, Aqua-Vend facility
usage and the identification of costs specifically attributable to
Aqua-Vend. Allocated costs include employee benefit expenses, such as
pension and postretirement, of $171,000 and $170,000 for the years ended
March 31, 1996 and 1997. MWPC management believes that these allocations
are reasonable; however, they are not necessarily indicative of expenses
that would have been incurred by Aqua-Vend on a stand-alone basis.
The following represents a summary of the corporate costs allocated to
Aqua-Vend which were included in the statements of revenues, direct
expenses and identified corporate expenses before interest and income
taxes:
YEAR ENDED MARCH 31,
1996 1997
Selling, general and administrative:
McKesson costs allocated through MWPC to
Aqua-Vend $ 659,000 $ 633,000
MWPC costs allocated to Aqua-Vend 1,051,000 1,009,000
F-6
<PAGE>
GLACIER WATER SERVICES, INC.
SUMMARY INFORMATION RELATED TO THE PRO FORMA
CONSOLIDATED FINANCIAL INFORMATION
The unaudited pro forma consolidated financial information presented herein
reflects the pro forma effect of Glacier Water Services, Inc.'s purchase of
substantially all of the assets of the Aqua-Vend division of McKesson Water
Products Company ("Aqua-Vend"), a wholly-owned subsidiary of McKesson
Corporation effective as of March 28, 1997 (the "Acquisition").
The accompanying historical balance sheet of Glacier Water Services, Inc.
as of April 4, 1997, reflects the Acquisition, accordingly, no pro forma
adjustments are necessary. The unaudited pro forma consolidated statements of
operations present the historical operations of Glacier Water Services, Inc. and
Aqua-Vend for the quarter and year ended April 4, 1997 and December 31, 1996,
respectively, as if the Acquisition had been consummated on January 1, 1996.
The unaudited pro forma consolidated statements of operations are not
necessarily indicative of either the results of operations that might have
occurred had the Acquisition actually occurred on January 1, 1996, or the
results of operations of Glacier Water Services, Inc. for any future period.
F-7
<PAGE>
<TABLE>
<CAPTION>
GLACIER WATER SERVICES, INC.
CONSOLIDATED BALANCE SHEET
(in thousands, except share data)
(unaudited)
APRIL 4,
1997
-----------
<S>
ASSETS <C>
Current assets:
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11
Accounts receivable . . . . . . . . . . . . . . . . . . . . . 320
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . 2,244
Prepaid commissions and other . . . . . . . . . . . . . . . . 1,390
--------
Total current assets . . . . . . . . . . . . . . . . . . 3,965
Property and equipment, net of accumulated depreciation. . . . . . 47,298
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,507
--------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 57,770
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . $ 806
Accrued commissions . . . . . . . . . . . . . . . . . . . . . 1,421
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . 1,725
--------
Total current liabilities. . . . . . . . . . . . . . . . 3,952
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . 26,958
Deferred income taxes. . . . . . . . . . . . . . . . . . . . . . . 2,979
Stockholders' equity:
Preferred stock, $.01 par value;
100,000 shares authorized,
no shares issued or outstanding . . . . . . . . . . . . . -
Common stock, $.01 par value;
10,000,000 shares authorized, 3,209,075 shares issued
and outstanding . . . . . . . . . . . . . . . . . . . . . 34
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . 15,290
Retained earnings. . . . . . . . . . . . . . . . . . . . . . . . . 12,120
Treasury stock; 170,500 shares, at cost . . . . . . . . . . . . . (3,563)
--------
Total stockholders' equity . . . . . . . . . . . . . . . . . . 23,881
--------
Total liabilities and stockholders' equity . . . . . . . . . . . . $ 57,770
========
</TABLE>
F-8
<PAGE>
GLACIER WATER SERVICES, INC.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
QUARTER ENDED APRIL 4, 1997
(in thousands, except shares and per share data)
(unaudited)
<TABLE>
<CAPTION>
Glacier
Water
Services Aqua- Pro Forma Pro Forma
Inc. Vend Adjustment Consolidated
---- ---- ---------- ------------
<S> <C> <C> <C> <C>
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . $ 11,176 $ 3,228 $ (71) $ 14,333
Operating costs and expenses:
Operating expenses. . . . . . . . . . . . . . . . . . . 7,075 2,962 (61) 9,976
Selling, general and administrative expenses. . . . . . 1,613 789 (35) 2,367
Depreciation and amortization . . . . . . . . . . . . . 1,880 485 (237) 2,128
Non-recurring charges . . . . . . . . . . . . . . . . . 471 -- -- 471
--------- ------- ------- ---------
Total operating costs and expenses . . . . . . . . 11,039 4,236 (333) 14,942
--------- ------- ------- ---------
Income (loss) from operations . . . . . . . . . . . . . . . 137 (1,008) 262 (609)
Interest expense (net) and other. . . . . . . . . . . . . . 314 -- 183 497
--------- ------- ------- ---------
Income (loss) before income taxes . . . . . . . . . . . . . (177) (1,008) 79 (1,106)
Income tax provision (benefit). . . . . . . . . . . . . . . (66) -- (349) (415)
--------- ------- ------- ---------
Net income (loss) . . . . . . . . . . . . . . . . . . . . . $ (111) $ (1,008) $ 428 $ (691)
--------- ------- ------- ---------
Net income (loss) per common and common equivalent share. . $ (.03) $ (.21)
--------- ---------
--------- ---------
Weighted average common and
common equivalent shares outstanding. . . . . . . . . . 3,316,391 3,316,391
--------- ---------
--------- ---------
</TABLE>
See notes to pro forma consolidated statements of operations
F-9
<PAGE>
GLACIER WATER SERVICES, INC.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
(in thousands, except shares and per share data)
(unaudited)
<TABLE>
<CAPTION>
Glacier
Water
Services Aqua- Pro Forma Pro Forma
Inc. Vend Adjustment Consolidated
---- ---- ----------- -------------
<S> <C> <C> <C> <C>
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . $ 46,091 $ 16,810 $ (227) $ 62,674
Operating costs and expenses:
Operating expenses. . . . . . . . . . . . . . . . . . . 28,095 14,110 (227) 41,978
Selling, general and administrative expenses. . . . . . 5,726 3,207 (69) 8,864
Reduction in carrying value of equipment. . . . . . . . -- 7,000 -- 7,000
Depreciation and amortization . . . . . . . . . . . . . 6,769 1,838 (846) 7,761
--------- --------- -------- ---------
Total operating costs and expenses . . . . . . . . 40,590 26,155 (1,142) 65,603
--------- --------- -------- ---------
Income from operations. . . . . . . . . . . . . . . . . . . 5,501 (9,345) 915 (2,929)
Interest expense (net) and other. . . . . . . . . . . . . . 783 -- 753 1,536
--------- --------- -------- ---------
Income (loss) before income taxes . . . . . . . . . . . . . 4,718 (9,345) 162 (4,465)
Income tax provision (benefit). . . . . . . . . . . . . . . 1,415 -- (2,888) (1,473)
--------- --------- -------- ---------
Net income (loss) . . . . . . . . . . . . . . . . . . . . . $ 3,303 $ (9,345) $ 3,050 $ (2,992) (1)
--------- --------- -------- ---------
--------- --------- -------- ---------
Net income (loss) per common and common equivalent share. . $ .98 $ (.89) (1)
--------- ---------
--------- ---------
Weighted average common and
common equivalent shares outstanding. . . . . . . . . . 3,374,482 3,374,482
--------- ---------
--------- ---------
</TABLE>
(1) Excluding the $7.0 million charge for reduction in carrying value of
equipment, pro forma consolidated net income and pro forma net income per
common and common equivalent share would be $1,698,000 and $.50
respectively.
See notes to pro forma consolidated statements of operations
F-10
<PAGE>
GLACIER WATER SERVICES, INC.
NOTES TO PRO FORMA CONSOLIDATED
STATEMENTS OF OPERATIONS
APRIL 4, 1997 AND DECEMBER 31, 1996
The unaudited pro forma consolidated statements of operations for the quarter
and year ended April 4, 1997 and December 31, 1996 combine the following:
(a) The historical consolidated statements of operations of Glacier Water
Services, Inc. for the quarter and year ended April 4, 1997 and
December 31, 1996, respectively.
(b) The historical statements of operations of Aqua-Vend for the quarter
and year ended March 28, 1997 and December 31, 1996, respectively.
(c) Pro forma adjustments.
These unaudited pro forma statements of operations reflect the consolidated
results of operations of Glacier Water Services, Inc. for the quarter and year
ended April 4, 1997 and December 31, 1996, respectively, (through the income
(loss) before income taxes financial statement line item) as if the Acquisition
had been consummated on January 1, 1996. These statements are not necessarily
indicative of the results which would have been obtained had the Acquisition
actually been consummated at such date. The pro forma adjustments relating to
the Acquisition set forth in the accompanying pro forma consolidated statements
of operations for the quarter and year ended April 4, 1997 and December 31,
1996, respectively, were made to reflect the following ( in thousands):
Quarter Ended Year Ended
April 4, 1997 December 31, 1996
------------- -----------------
Decrease in revenue to reflect the elimination
of revenue generated by Aqua-Vend assets and
operations not acquired $ (71) $(227)
Decrease in operating expenses representing
costs incurred related specifically to the
Aqua-Vend assets and operations not acquired (61) (227)
Decrease in selling, general and
administrative expenses representing certain
expenses allocated to Aqua-Vend from McKesson
Corporation that do not relate to the assets
and operations acquired (35) (69)
Pro forma adjustment reducing depreciation
expense to reflect calculation under Glacier's
methodology, based on the fair value of the
assets acquired (237) (846)
Pro forma adjustment to reflect interest
expense on the additional borrowing under the
line of credit made in conjunction with the
Acquisition 188 753
Pro forma adjustment to income taxes to record
the tax benefit of the Aqua-Vend loss before
income taxes and the pro forma adjustments
above (351) (2,888)
F-11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Glacier Water Services, Inc.
Date: January 21, 1998 By: /s/ Jerry A. Gordon
---------------- -------------------------------
Jerry A. Gordon
President and Chief Operating
Officer
Date: January 21, 1998 By: /s/ Brenda K Foster
---------------- --------------------------------
Brenda K. Foster
Vice President, Controller
<PAGE>
EXHIBIT INDEX
No. Exhibit
- -------- -------------------------------------------------------------
2.1 Asset Purchase Agreement dated March 28, 1997, among Glacier
Water Services, Inc., as purchaser, and McKesson Corporation
and Mckesson Water Products Company, as seller (Incorporated
by reference to the Registrant's Form 10-K for the year ended
December 31, 1996. The schedules to the Asset Purchase
Agreement have been omitted from such filing, although each
of the schedules and a brief description of each of their
contents are listed therein. The Registrant hereby
undertakes to furnish supplementally a copy of any omitted
schedule to the Commission upon request).
