<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
PURSUANT TO SECTION 13 OF 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) January 20, 1997
------------------------------
Central Garden & Pet Company
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-20242 68-0275553
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
3697 Mt. Diablo Boulevard, Lafayette, California 94549
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (510) 283-4573
---------------------------
Inapplicable
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
Exhibit Index located on page 3
<PAGE>
The purpose of this Form 8-K/A is to amend the Form 8-K, which was
filed on January 23, 1997, to change the number of shares reported in Item 2 and
to provide the required financial statements. The complete text of Item 2 is
set forth below.
Item 2. Acquisition or Disposition of Assets
------------------------------------
On January 20, 1997, Central Garden & Pet Company ("Central") issued a
press release announcing the consummation of the acquisition of the
outstanding stock of Four Paws Products, Ltd. ("Four Paws") for $45
million in cash and $10 million in Central common stock (449,944
shares). All of such shares were issued to Allen Simon, the sole
shareholder of Four Paws, and are subject to a lockup agreement which
provides for certain restrictions on the resale of such shares for a
period of two years. Four Paws is a manufacturer and distributor of
branded pet supply products based in Hauppauge, New York.
Item 7. Financial Statement and Exhibits
--------------------------------
(a)(1) Financial Statements of Four Paws are attached as Exhibit
1.3 hereto.
(a)(2) Independent Auditors' Report is included in Exhibit 1.3
hereto.
(b)(1) Pro Forma Financial Information is attached as Exhibit 1.4
hereto.
(c) See attached Exhibit Index.
2
<PAGE>
EXHIBIT INDEX
Number Exhibit
- ------ -------
1.1 Press Release dated January 20, 1997./*/
1.2 Stock Purchase Agreement dated as of
December 17, 1996./*/
1.3 Financial Statements of Four Paws (including
Independent Auditors' Report).
1.4 Pro Forma Financial Information.
1.5 Independent Auditors' Consent.
/*/ Incorporated by reference to Exhibits 1.1 and 1.2, respectively, of the
Company's Form 8-K Current Report filed on January 23, 1997.
3
<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.
CENTRAL GARDEN & PET COMPANY
By /s/ Robert B. Jones
---------------------------------
Robert B. Jones, Vice President
and Chief Financial Officer
Dated: April 2, 1997
4
<PAGE>
EXHIBIT 1.3
INDEPENDENT AUDITORS' REPORT
To the Stockholder of Four Paws
Products, Ltd. and subsidiaries:
We have audited the accompanying consolidated balance sheet of Four Paws
Products, Ltd. and subsidiaries ("Four Paws") as of December 31, 1996, and the
related consolidated statements of income, stockholder's equity, and cash flows
for the year then ended. These financial statements are the responsibility of
Four Paws' 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 such consolidated financial statements present fairly, in all
material respects, the financial position of Four Paws Products, Ltd. and
subsidiaries as of December 31, 1996 and the results of their operations and
their cash flows for the year then ended, in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE LLP
San Francisco, California
January 20, 1997
<PAGE>
FOUR PAWS PRODUCTS, LTD.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996 (IN THOUSANDS)
________________________________________________________________________________
<TABLE>
<CAPTION>
ASSETS
<S> <C>
CURRENT ASSETS:
Cash $ 2,502
Marketable securities 5,522
Accounts receivable (less allowance for doubtful accounts of $272) 3,222
Inventories:
Raw materials and work in process 3,629
Finished goods 4,400
Prepaid expenses and other assets 943
-------
Total current assets 20,218
BUILDING, IMPROVEMENTS AND EQUIPMENT - Net 2,821
DEFERRED INCOME TAXES 440
-------
TOTAL ASSETS $23,479
=======
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable $ 909
Accrued expenses 663
Current portion of notes payable 994
Note payable to officer 500
-------
Total current liabilities 3,066
-------
NOTES PAYABLE 2,087
-------
COMMITMENTS AND CONTINGENCIES (Notes 7 and 9)
STOCKHOLDER'S EQUITY:
Common stock: Class A, no par value, 150 shares authorized and
issued, 140 shares outstanding; Class B nonvoting, no par
value, 50 shares authorized and issued, 40 shares outstanding 38
Retained earnings 19,511
Less treasury stock, at cost (1,223)
-------
Total stockholder's equity 18,326
-------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $23,479
=======
</TABLE>
See notes to consolidated financial statements.
-2-
<PAGE>
FOUR PAWS PRODUCTS, LTD.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1996 (IN THOUSANDS)
________________________________________________________________________________
<TABLE>
<CAPTION>
<S> <C>
NET SALES $28,554
COST OF GOODS SOLD 14,883
-------
GROSS PROFIT 13,671
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 8,497
WRITE-OFF OF GOODWILL 1,402
-------
INCOME FROM OPERATIONS 3,772
OTHER INCOME (EXPENSE) - Net 311
-------
INCOME BEFORE INCOME TAXES 4,083
INCOME TAXES 2,405
-------
NET INCOME $ 1,678
=======
</TABLE>
See notes to consolidated financial statements.
-3-
<PAGE>
FOUR PAWS PRODUCTS, LTD.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
YEAR ENDED DECEMBER 31, 1996 (IN THOUSANDS)
________________________________________________________________________________
<TABLE>
<CAPTION>
TOTAL
COMMON RETAINED TREASURY STOCKHOLDER'S
STOCK EARNINGS STOCK EQUITY
<S> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1996 $38 $17,833 $(1,223) $16,648
NET INCOME 1,678 1,678
--- ------- ------- -------
BALANCE, DECEMBER 31, 1996 $38 $19,511 $(1,223) $18,326
=== ======= ======= =======
</TABLE>
See notes to consolidated financial statements.
-4-
<PAGE>
FOUR PAWS PRODUCTS, LTD.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1996 (IN THOUSANDS)
________________________________________________________________________________
<TABLE>
<CAPTION>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,678
Adjustments to reconcile net income to net cash
provided by operating activities:
Write-off of goodwill 1,402
Increase in inventory reserves 90
Provision for doubtful accounts 93
Depreciation and amortization 538
Deferred income taxes (157)
Change in assets and liabilities:
Accounts receivable 1,437
Inventories 1,572
Prepaid expenses and other assets (424)
Accounts payable (1,032)
Accrued expenses (665)
-------
Net cash provided by operating activities 4,532
-------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for the acquisition of Mustang Products, Inc. (1,222)
Purchases of leasehold improvements and equipment (220)
Purchases of marketable securities (9,027)
Maturities of marketable securities 8,242
-------
Net cash used in investing activities (2,227)
-------
CASH FLOWS FROM FINANCING ACTIVITIES:
Notes payable borrowings 900
Repayments of notes payable (2,044)
-------
Net cash used in financing activities (1,144)
-------
NET INCREASE IN CASH 1,161
CASH, BEGINNING OF YEAR 1,341
-------
CASH, END OF YEAR $ 2,502
=======
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 276
Income taxes paid 4,409
CASH PAID FOR THE ACQUISITION OF MUSTANG PRODUCTS, INC.:
Purchase of working capital, other than cash (1,457)
Purchase of property - net (278)
Purchase of other noncurrent assets (29)
Excess of purchase price over net assets acquired (1,683)
Assumption of notes payable 1,125
Issuance of notes payable 1,100
-------
TOTAL $(1,222)
=======
</TABLE>
See notes to consolidated financial statements.
-5-
<PAGE>
FOUR PAWS PRODUCTS, LTD.
AND SUBSIDIARIES.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1996 (IN THOUSANDS)
________________________________________________________________________________
1. ORGANIZATION AND OPERATIONS
Four Paws Products, Ltd. and subsidiaries ("Four Paws" or the "Company") is a
manufacturer and distributor of branded pet supply products based in
Hauppauge, New York. Four Paws manufactures and/or distributes dog, cat,
reptile and small animal products in New York and Ohio, under brand names
which include Magic Coat, Four Paws and Wee-Wee Pads. Four Paws products are
distributed throughout the United States, Canada, Europe and Asia.
Approximately 5% of sales are to foreign customers.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATED FINANCIAL STATEMENTS - The accompanying consolidated financial
statements include Four Paws Products, Ltd. and its two wholly owned
consolidated subsidiaries, Cynal Corporation and Mustang Products, Inc.
("Mustang") as well as Pet Life, Inc. ("Pet Life"). The sole shareholder of
Four Paws Products, Ltd. is also the sole shareholder of Pet Life.
MARKETABLE SECURITIES consist primarily of U.S. government debt securities
which are valued at amortized cost (which approximates market at December 31,
1996). These securities mature in January 1997. Four Paws intends to hold
these securities to maturity.
INVENTORIES - Inventories are stated at the lower of cost (first-in, first-
out) or market.
BUILDING, IMPROVEMENTS AND EQUIPMENT are recorded at cost. Depreciation is
provided using a straight line method over the estimated useful lives of the
assets. The carrying amount of long-lived assets is evaluated annually to
determine if adjustment to the depreciation period or to the unamortized
balance is warranted. Ranges of estimated useful lives for computing
depreciation are as follows:
Building 39 years
Machinery and equipment 5-12 years
Furniture and fixtures 7 years
Leasehold improvements and other 5-12 years
REVENUE RECOGNITION - Sales are recorded at the date of shipment.
INCOME TAXES are accounted for in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes." Under this
method, deferred income taxes are recognized for temporary differences by
applying enacted statutory rates applicable to future years to differences
between the financial statement carrying amounts and the tax basis of
existing assets and liabilities. The effect on deferred taxes of a change in
tax rates is recognized in income in the period that includes the enactment
date.
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
liabilities and disclosure of contingent assets and liabilities and reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
-6-
<PAGE>
3. ACQUISITION OF MUSTANG PRODUCTS, INC.
Effective June 1, 1996, Four Paws acquired Mustang, a manufacturer and
distributor of pet collars and leashes located in Ohio. The purchase price
of $2,322 consisted of cash of $1,222 and two notes payable totaling $1,100
bearing interest at 8.25%. The acquisition was accounted for as a purchase.
The results of Four Paws include the results of Mustang for the seven months
ended December 31, 1996. The allocation of the total purchase price to the
net assets of Mustang is based upon the estimated fair values of the net
assets acquired, and is summarized as follows:
<TABLE>
<CAPTION>
<S> <C>
Inventory $ 1,324
Receivables 728
Prepaids and other current assets 60
Property - net 278
Other noncurrent assets 29
Accounts payable (495)
Accrued expenses (160)
Notes payable (1,125)
Goodwill 1,683
-------
Total $ 2,322
=======
</TABLE>
The goodwill was initially being amortized over a three year period.
However, in November 1996, Four Paws management determined that the goodwill
would not be recoverable from future operations and should be written off.
This is primarily due to a failed major product line, the loss of Mustang's
largest customer in July 1996, and future projected losses from the Mustang
business. The unamortized balance of goodwill written off was $1,402.
For the year ended December 31, 1996, the pro forma unaudited revenues and
net income for Four Paws would have been approximately $30,098 and $1,649,
respectively, if Mustang had been acquired as of January 1, 1996.
4. BUILDING, IMPROVEMENTS AND EQUIPMENT
Building, improvements and equipment at December 31, 1996 includes the
following:
<TABLE>
<CAPTION>
<S> <C>
Building $ 2,343
Machinery and equipment 1,802
Furniture and fixtures 676
Leasehold improvements 412
Other 175
-------
Total 5,408
Less accumulated depreciation and amortization (2,587)
-------
Net building, improvements and equipment $ 2,821
=======
</TABLE>
-7-
<PAGE>
5. NOTES PAYABLE
Notes payable at December 31, 1996 consist of the following:
<TABLE>
<CAPTION>
<S> <C>
Mortgage note payable, interest at 8.25%, payable monthly through June 2003 $1,350
Bank note payable, interest at 8.25%, payable monthly through July 1998 713
Note payable to an employee and a former owner of Mustang, interest at 8.25%,
payable in quarterly installments through July 1999 305
Note payable to an estate (a former owner of Mustang), interest at 8.25%,
payable quarterly through July 1999 713
------
Total 3,081
Less current portion 994
------
Long-term portion $2,087
======
</TABLE>
The mortgage note is secured by a building.
In addition, the Company has a $500 note payable to an officer of the Company
incurred in connection with a Class B common stock buyback, bearing interest
at 4.6%, which was repaid in January 1997.
Notes payable at December 31, 1996 mature as follows:
<TABLE>
<CAPTION>
MORTGAGE BANK OTHER
NOTE NOTE NOTES TOTAL
<S> <C> <C> <C> <C>
Years ending December 31:
1997 $ 200 $450 $ 844 $1,494
1998 200 263 373 836
1999 200 301 501
2000 200 200
2001 200 200
Thereafter 350 350
------ ---- ------ ------
Total $1,350 $713 $1,518 $3,581
====== ==== ====== ======
</TABLE>
-8-
<PAGE>
6. INCOME TAXES
The provision for income taxes for the year ended December 31, 1996 consists
of:
<TABLE>
<CAPTION>
<S> <C>
Current:
Federal $1,893
State 669
------
Total current 2,562
------
Deferred:
Federal (152)
State (5)
------
Total deferred (157)
------
$2,405
======
</TABLE>
The deferred income tax benefit reflects the tax effect of changes in the
amounts of temporary differences during the year ended December 31, 1996. As
of December 31, 1996, Four Paws had gross deferred temporary differences of
$1,048. Deferred tax assets primarily consist of bad debt reserves, inventory
reserves, other nondeductible reserves, and depreciation.
A reconciliation of the federal statutory income tax rate with Four Paws
effective income tax rate is as follows:
<TABLE>
<CAPTION>
<S> <C>
Federal statutory rate 34%
State income taxes, net of federal benefit 7
Nondeductible expenses, primarily amortization
and write off of goodwill 18
--
Effective tax rate 59%
==
</TABLE>
-9-
<PAGE>
7. LEASE COMMITMENTS
Four Paws has long-term noncancellable operating leases for the use of two
buildings. One of the buildings is leased from a Four Paws employee who is
the former owner of Mustang. The other building is leased from the Company's
sole shareholder and has a five year renewal option. Total rent expense
under such agreements amounted to $922 for the year ended December 31, 1996.
At December 31, 1996, the future minimum lease payments under such leases are
as follows:
<TABLE>
<CAPTION>
FORMER FOUR PAWS
MUSTANG OWNER SHAREHOLDER TOTAL
<S> <C> <C> <C>
Years ending December 31:
1997 $ 75 $ 420 $ 495
1998 75 420 495
1999 38 420 458
2000 439 439
2001 441 441
Thereafter 37 37
---- ------ ------
Total $188 $2,177 $2,365
==== ====== ======
</TABLE>
8. EMPLOYEE BENEFIT PLANS
Eligible employees participate in a defined benefit pension plan sponsored by
Four Paws. The following table sets forth the funded status of the plan and
amounts recognized in Four Paws' financial statements as of and for the year
ended December 31, 1996:
<TABLE>
<CAPTION>
<S> <C>
Actuarial present value of benefit obligation:
Vested $(1,119)
Nonvested --
-------
Total accumulated benefit obligation $(1,119)
=======
Projected benefit obligation $(1,291)
Plan assets at fair value 1,225
-------
Projected benefit obligation in excess of plan assets (66)
Unrecognized net loss 33
Unrecognized net transition obligation 137
-------
Prepaid pension cost $ 104
=======
Components of net periodic pension cost for the year:
Service cost - benefits earned during the year $ 115
Interest cost on projected benefit obligation 81
Return on plan assets 22
Net amortization and deferral (103)
-------
Net periodic pension cost for the year $ 115
=======
</TABLE>
-10-
<PAGE>
Four Paws' policy is to contribute amounts required by applicable ERISA
regulations. Plan assets are primarily invested in money market funds,
stocks and bonds. The actuarial cost method used for determining the benefit
obligations is the projected unit credit method. Assumptions underlying the
actuarial valuation of the plan included the following:
Discount rate 7.5%
Long-term rate of return 8.0%
Increase in future compensation levels 3.0%
Four Paws also sponsors a noncontributory 401(k) plan for all eligible
employees.
9. CONTINGENCIES
The Company is party to various legal actions in the normal course of
business. Although the ultimate outcome of these matters is not presently
determinable, management believes that the resolution of all such pending
matters will not have a material adverse effect on the Company's financial
position or results of operations.
10. SALE OF FOUR PAWS
On January 20, 1997, Four Paws was acquired by Central Garden & Pet Company
("Central") for $55,000; $45,000 in cash and $10,000 in Central common
stock. In connection with the acquisition, Allen Simon, the shareholder of
Four Paws, entered into a five year employment agreement with Central and
entered into an operating lease agreement with Central to lease his building
in New York presently used by Four Paws through January 2002 (see Note 7).
This lease contains a five year renewal option. Four Paws recognized sales
of $5,943 (21% of total sales) to Central for the year ended December 31,
1996.
******
-11-
<PAGE>
EXHIBIT 1.4
UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
Central Garden & Pet Company's (the "Company") acquisition of Four Paws
Products, Ltd. and subsidiaries ("Four Paws") will be accounted for under the
"purchase" method of accounting which requires the purchase price to be
allocated to the acquired assets and liabilities of Four Paws on the basis of
their estimated fair values as of the date of acquisition. The following
unaudited pro forma consolidated condensed balance sheet gives effect to the
acquisition of Four Paws as if it occurred on December 28, 1996 and the pro
forma consolidated condensed statements of income give effect to the acquisition
as if it occurred on October 1, 1995 and include adjustments directly
attributable to the acquisition and expected to have a continuing impact on the
combined company (collectively, the "Unaudited Pro Forma Financial
Information"). As the Unaudited Pro Forma Financial Information has been
prepared based on preliminary estimates of fair values, amounts actually
recorded may change upon determination of the total purchase price and
additional analysis of individual assets and liabilities assumed.
The Unaudited Pro Forma Financial Information and related notes are provided for
informational purposes only and are not necessarily indicative of the
consolidated financial position or results of operations of the Company as they
may be in the future or as they might have been had the acquisition been
effected on the assumed dates. The Unaudited Pro Forma Financial Information
should be read in conjunction with the historical consolidated financial
statements of the Company, and the related notes thereto, which are included in
the Company's Annual Report on Form 10-K for the year ended September 28, 1996
and the Company's Quarterly Results on Form 10-Q, for the three months ended
December 28, 1996, and the historical financial statements of Four Paws, and the
related notes thereto, presented elsewhere in this Current Report on Form 8-K.
See Exhibit 1.3 attached hereto.
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
DECEMBER 28, 1996
(In thousands, except per share data)
<TABLE>
<CAPTION>
Historical Pro Forma
-------------------------- -------------------------
Central Garden Four Paws Adjustments Combined
-------------- --------- ----------- --------
<S> <C> <C> <C> <C>
ASSETS:
Cash $ 73,826 $ 2,502 $ (45,500)(a) $ 30,828
Inventories 219,696 8,029 1,915 (b) 229,640
Other current assets 85,853 9,687 (455)(c) 95,085
Land, buildings, improvements
and equipment - net 11,721 2,821 14,542
Other assets 34,906 440 34,759 (d) 70,105
-------- ------- --------- --------
Total $426,002 $23,479 $ (9,281) $440,200
======== ======= ========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities $181,554 $ 3,066 $ (455)(c) $184,165
Long-term debt 115,000 2,087 (500)(e) 116,587
Deferred items 1,670 1,670
Shareholders' equity 127,778 18,326 (8,326)(f) 137,778
-------- ------- --------- --------
Total $426,002 $23,479 $ (9,281) $440,200
======== ======= ========= ========
</TABLE>
Notes to Unaudited Pro Forma Consolidated Condensed Balance Sheet
- -----------------------------------------------------------------
(a) Adjustment to reflect the following:
<TABLE>
<CAPTION>
<S> <C>
Elimination of cash used to acquire Four Paws. $(45,000)
Elimination of cash to repay note payable to former Four Paws shareholder
required to be repaid as a result of the Four Paws acquisition. (500)
--------
Net adjustment $(45,500)
========
</TABLE>
(b) Adjustment to record acquired inventories at estimated fair value.
(c) To eliminate trade account balances between the Company and Four Paws.
(d) Adjustment to record the excess of purchase price over the fair value of
identifiable net assets acquired.
(e) To eliminate note payable to former Four Paws shareholder required to be
repaid as a result of the Four Paws acquisition.
(f) Adjustment to reflect the following:
Issuance of the Company's common stock to acquire Four Paws. $ 10,000
Elimination of Four Paws shareholder's equity. (18,326)
--------
Net adjustment $ (8,326)
========
-2-
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF INCOME
FOR THE FISCAL YEAR ENDED SEPTEMBER 28, 1996
(In thousands, except per share data)
<TABLE>
<CAPTION>
Historical Pro Forma
-------------------------- -------------------------
Central Garden Four Paws Adjustments Combined
-------------- --------- ----------- --------
<S> <C> <C> <C> <C>
Net sales $619,622 $30,531 $(6,005)(a) $644,148
Cost of goods sold and occupancy 535,189 15,143 (3,303)(a) 547,029
-------- ------- ------- --------
Gross profit 84,433 15,388 (2,702) 97,119
Selling, general and administrative expenses 66,945 8,233 (695)(b) 74,483
-------- ------- ------- --------
Income from operations 17,488 7,155 (2,007) 22,636
Interest and other expenses (income) 3,023 (490) 2,659 (c) 5,192
-------- ------- ------- --------
Income before income taxes 14,465 7,645 (4,666) 17,444
Income taxes 6,017 3,211 (1,913)(d) 7,315
-------- ------- ------- --------
Net income $ 8,448 $ 4,434 $(2,753) $ 10,129
======== ======= ======= ========
Net income per common and common equivalent share:
Fully diluted $ 0.71 $ 0.82
Primary $ 0.72 $ 0.83
Weighted average common and common equivalent
shares outstanding:
Fully diluted 11,904 450 (e) 12,354
Primary 11,702 450 (e) 12,152
</TABLE>
Notes to Unaudited Pro Forma Consolidated Condensed Statement of Income
- -----------------------------------------------------------------------
(a) Adjustment to eliminate sales and cost of sales for historical sales from
Four Paws to the Company.
(b) Adjustment to reflect the following:
Reduction in operating lease costs in connection with lease
agreement entered into with the former owner of Four Paws. $ (464)
Reduction in salary expense in connection with employment
agreement entered into with the former owner of Four Paws. (574)
Amortization of the excess of purchase price over the net
assets acquired. 869
Elimination of forgiveness of loans to Four Paws shareholder
and family in connection with December 1996 asset purchase
agreement between the Company and Four Paws (526)
-------
Net adjustment $ (695)
=======
(c) Adjustment to reflect the following:
To increase interest expense associated with the issuance of
6% convertible subordinated notes issued to finance the
acquisition of Four Paws. $ 2,700
To reduce interest expense on note payable to former shareholder
required to be repaid in connection with the acquisition
of Four Paws. (41)
-------
Net adjustment $ 2,659
=======
(d) Adjustment to the historical provision for income taxes to give effect to
the pro forma adjustments discussed in (a), (b) and (c) above.
(e) To record issuance of 450 shares of the Company's common stock to acquire
Four Paws.
-3-
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED DECEMBER 28, 1996
(In thousands, except per share data)
<TABLE>
<CAPTION>
Historical Pro Forma
-------------------------- -------------------------
Central Garden Four Paws Adjustments Combined
-------------- --------- ----------- --------
<S> <C> <C> <C> <C>
Net sales $100,144 $ 6,880 $(1,368)(a) $105,656
Cost of goods sold and occupancy 82,690 3,561 (752)(a) 85,499
-------- ------- ------- --------
Gross profit 17,454 3,319 (616) 20,157
Selling, general and administrative expenses 19,633 3,067 (569)(b) 22,131
Write-off of goodwill 1,402 1,402
-------- ------- ------- --------
Loss from operations (2,179) (1,150) (47) (3,376)
Interest and other expenses (income) 937 (54) 610 (c) 1,493
-------- ------- ------- --------
Loss before income taxes (3,116) (1,096) (657) (4,869)
Income taxes (1,309) 164 (269)(d) (1,414)
-------- ------- ------- --------
Net Loss $ (1,807) $(1,260) $ (388) $ (3,455)
======== ======= ======= ========
Net loss per common and common equivalent share:
Fully diluted $ (0.12) $ (0.23)
Primary $ (0.12) $ (0.23)
Weighted average common and common equivalent
shares outstanding:
Fully diluted 14,474 450 (e) 14,924
Primary 14,474 450 (e) 14,924
</TABLE>
Notes to Unaudited Pro Forma Consolidated Condensed Statement of Income
- -----------------------------------------------------------------------
(a) Adjustment to eliminate sales and cost of sales for historical sales from
Four Paws to the Company.
(b) Adjustment to reflect the following:
Reduction in operating lease costs in connection with lease
agreement entered into with the former owner of Four Paws. $ (116)
Reduction in salary expense in connection with employment
agreement entered into with the former owner of Four Paws. (144)
Amortization of the excess of purchase price over the net
assets acquired. 217
Elimination of forgiveness of loans to Four Paws shareholder
and family in connection with December 1996 asset purchase
agreement between the Company and Four Paws. (526)
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Net adjustment $ (569)
=======
(c) Adjustment to reflect the following:
To increase interest expense associated with the issuance of
6% convertible subordinated notes issued to finance the
acquisition of Four Paws. $ 355
To reduce interest expense on note payable to former shareholder
required to be repaid in connection with the acquisition
of Four Paws. (10)
To reduce interest income on proceeds of 6% convertible
subordinated notes used to finance the acquisition of
Four Paws. 265
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Net adjustment $ 610
=======
(d) Adjustment to the historical provision for income taxes to give effect to
the pro forma adjustments discussed in (a), (b) and (c) above.
(e) To record issuance of 450 shares of the Company's common stock to acquire
Four Paws.
-4-
<PAGE>
EXHIBIT 1.5
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Central Garden & Pet Company's
Registration Statement Nos. 333-09865, 333-01238, 33-96816, 33-89216 and
33-72326 on Forms S-8, Registration Statement Nos. 333-05261 and 333-22209 on
Forms S-4 and Registration Statement Nos. 33-86284 and 333-21603 on Forms S-3 of
our report on Four Paws Products, Ltd. and subsidiaries dated January 20, 1997
appearing in this Current Report on Form 8-K/A of Central Garden & Pet Company.
DELOITTE & TOUCHE LLP
San Francisco, California
April 2, 1997
