<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Act of 1934
Date of Report (Date of earliest event reported): June 16, 1998
BOSTON CHICKEN, INC.
- - --------------------------------------------------------------------------------
(Exact name of registrant as specified in this charter)
Delaware 0-22802 36-3904053
- - --------------------------------------------------------------------------------
(State or other (Commission (IRS Employer
jurisdiction of File No.) Identification No.)
incorporation)
14123 Denver West Parkway, P.O. Box 4086, Golden, Colorado 80401-4086
- - --------------------------------------------------------------------------------
(Address of principal executive offices)
(303) 278-9500
- - --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not applicable
- - --------------------------------------------------------------------------------
(Former name or former address, if changes since last report)
<PAGE>
Item 5. Other Events.
On June 16, 1998, Boston Chicken, Inc. (the "Company"), in connection with
its previously announced proposal to acquire BC Equity Funding, L.L.C. ("BCEF")
and Market Partners, L.L.C. ("Market Partners"), funds that hold equity
interests in 11 of the Company's 13 area developers, circulated Supplement No. 1
to the Company's Joint Information Statement/Offering Memorandum, which
supplement includes certain unaudited pro forma consolidated financial
information of the Company for the Company's first quarter, giving effect to the
acquisition of BCEF and Market Partners and certain area developers of the
Company. Such information is filed as an exhibit to this Report.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this Report may constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties, and other factors which may cause the actual results or
achievements expressed or implied thereby to be materially different from any
future results or achievements. All forward-looking statements relating to the
proposed Merger and the related transactions discussed herein are subject to,
among other things, approval of the holders owning at least two-thirds of the
interests of each of BCEF and Market Partners. There can be no assurance that
the acquisition of BCEF and Market Partners will be achieved.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits.
See Exhibit Index appearing elsewhere herein, which is incorporated herein
by such reference.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
Dated: June 16, 1998
BOSTON CHICKEN, INC.
By: /s/ Michael R. Daigle
---------------------
By: Michael R. Daigle
Title: Senior Vice President
<PAGE>
BOSTON CHICKEN, INC.
EXHIBIT INDEX
Exhibit Number Description
99.1 Unaudited Pro Forma Consolidated Financial Information of
Boston Chicken, Inc. Giving Effect to the Acquisition of Market
Partners, L.L.C., BC Equity Funding, L.L.C. and Certain Area
Developers of Boston Chicken, Inc.
Ex-1
<PAGE>
Exhibit 99.1
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION OF
BOSTON CHICKEN, INC. GIVING EFFECT TO THE ACQUISITION OF
MARKET PARTNERS, L.L.C., BC EQUITY FUNDING, L.L.C. AND
CERTAIN AREA DEVELOPERS OF BOSTON CHICKEN, INC.
The pro forma consolidated financial information for Boston Chicken, Inc.
(the "Company") gives effect to the merger of Market Partners, L.L.C. ("Market
Partners") and BC Equity Funding, L.L.C. ("BC Equity Funding") into BCI
Acquisition Sub, L.L.C., a wholly-owned subsidiary of the Company and the
conversion of the Company's loans to the area developers of the Company which
have preferred equity investments from Market Partners and BC Equity Funding and
have waived the moratorium on their loan conversion (collectively, the "Merger
and loan conversions"). The adjusted pro forma statement of operations for the
Company gives effect to the Merger and loan conversion and the conversion of the
Company's loan to BC Great Lakes, L.L.C. ("BC Great Lakes"), which loan was
converted by the Company in March 1998. (The pro forma balance already includes
the financial position of BC Great Lakes.) The pro forma consolidated financial
statements of the Company are based upon the assumptions set forth in the
accompanying notes to such statements. The pro forma balance sheet assumes the
transactions occur as of April 19, 1998 and the pro forma results of operations
assume the transactions occurred at the beginning of the period presented. The
pro forma financial statements should be read in conjunction with the related
historical financial statements and are not necessarily indicative of the
results that would have actually occurred had the transactions been consummated
on the date or the period indicated or which may occur in the future.
F-1
<PAGE>
BOSTON CHICKEN, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
GIVING EFFECT TO THE ACQUISITION OF MARKET PARTNERS, L.L.C.,
BC EQUITY FUNDING, L.L.C.
AND CERTAIN AREA DEVELOPERS OF BOSTON CHICKEN, INC.
FOR THE QUARTER ENDED APRIL 19, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Bc Equity Market
Boston Funding, Partners, Total Area Pro Forma BC Great Pro Forma
Chicken, Inc. L.L.C. L.L.C. Developers Adjustments Pro Forma Lakes, L.L.C. Adjustments
------------- --------- --------- ---------- ----------- --------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Stores............ $ 203,929 $ -- $ -- $148,800 $ 352,729 $25,573
Royalties and
franchise related
fees.............. 4,542 -- -- -- 4,542 -- $(1,109)(12)
Interest income... 3,221 -- -- -- 3,221 -- (879)(12)
--------- -------- -------- -------- -------- --------- ------- -------
Total revenue... 211,692 -- -- 148,800 360,492 25,573 (1,988)
Costs and Expenses:
Store operations:
Food and paper.. 72,209 -- -- 53,775 125,984 9,328
Labor........... 59,019 -- -- 39,424 98,443 6,787
Other controllable
costs........... 22,127 -- -- 24,072 46,199 3,807
Rent, occupancy
and related..... 19,447 -- -- 24,114 43,561 3,375
Contractual and
discretionary
marketing....... 11,078 -- -- 11,553 22,631 1,797
General and
administrative.... 53,704 5 23 57,385 $(21,278)(4) 89,839 3,711 (3,219)(12)
Depreciation and
amortization
(excluding
goodwill
amortization)..... 16,806 -- -- 7,005 (2,275)(5) 21,536 1,209 (672)(13)
Goodwill
amortization...... 5,954 -- -- 1,918 320 (5) 8,192 360 57 (13)
Provision for
loan losses....... 202,000 -- -- -- (96,872)(6) 105,128 --
Losses of Boston
Chicken, Inc.'s
area developers.... 58,079 -- -- -- (49,857)(3) 8,222 --
--------- -------- -------- -------- -------- --------- ------- -------
Total costs and
expenses........ 520,423 5 23 219,246 (169,962) 569,735 30,374 (3,834)
--------- -------- -------- -------- -------- --------- ------- -------
Loss from
Operations......... (308,731) (5) (23) (70,446) 169,962 (209,243) (4,801) 1,846
Other Income
(Expense):
Investment
income............ -- 4 10 -- 14 --
Interest expense,
net............... (16,767) -- -- (15,768) 15,647 (4) (16,888) (2,551) 2,553 (12)
Loss on issuances
of subsidiary's
stock............. (17) -- -- -- (17) --
Other income
(expense), net.... 1,010 -- -- 20 1,030 38
Unrealized
depreciation on
investments....... -- (26,463) (29,685) -- 56,148 (2) -- --
--------- -------- -------- -------- -------- --------- ------- -------
Total other
income
(expense)....... (15,774) (26,459) (29,675) (15,748) 71,795 (15,861) (2,513) 2,553
--------- -------- -------- -------- -------- --------- ------- -------
Loss Before Income
Taxes and Minority
Interest........... (324,505) (26,464) (29,698) (86,194) 241,757 (225,104) (7,314) 4,399
Income Tax Benefit. -- -- -- -- -- -- --
Minority Interest
in Losses of
Subsidiaries....... 11,948 -- -- -- 18,958 (7) 30,906 -- 1,097 (14)
--------- -------- -------- -------- -------- --------- ------- -------
Net Loss........... (312,557) (26,464) (29,698) (86,194) 260,715 (194,198) (7,314) 5,496
Dividends on
Preferred Stock.... -- -- -- -- (3,170)(9) (3,170) -- --
--------- -------- -------- -------- -------- --------- ------- -------
Net Loss Applicable
to Common Stock.... $(312,557) $(26,464) $(29,698) $(86,194) $257,545 $(197,368) $(7,314) $ 5,496
========== ======== ======== ======== ======== ========= ======= =======
Basic Loss Per
Share.............. $ (4.38) $ (2.66)(10)
========= =========
Diluted Loss Per
Share.............. $ (4.38) $ (2.66)(10)
========= =========
Weighted Average
Number of Common
Shares Outstanding:
Basic............. 71,438 3,500 (8) 74,938
========= ======== =========
Diluted........... 71,438 3,500 (8) 74,938
========= ======== =========
<CAPTION>
Adjusted
Pro Forma
---------
<S> <C>
Revenue:
Stores............ $ 378,302
Royalties and
franchise related
fees.............. 3,433
Interest income... 2,342
---------
Total revenue... 384,077
Costs and Expenses:
Store operations:
Food and paper.. 135,312
Labor........... 105,230
Other controllable
costs.......... 50,006
Rent, occupancy
and related..... 46,936
Contractual and
discretionary
marketing....... 24,428
General and
administrative.... 90,331
Depreciation and
amortization
(excluding
goodwill
amortization)..... 22,073
Goodwill
amortization...... 8,609
Provision for
loan losses....... 105,128
Losses of Boston
Chicken, Inc.'s
area developers.... 8,222
---------
Total costs and
expenses........ 596,275
---------
Loss from
Operations......... (212,198)
Other Income
(Expense):
Investment
income............ 14
Interest expense,
net............... (16,886)
Loss on issuances
of subsidiary's
stock............. (17)
Other income
(expense), net.... 1,068
Unrealized
depreciation on
investments....... --
---------
Total other
income
(expense)....... (15,821)
---------
Loss Before Income
Taxes and Minority
Interest........... (228,019)
Income Tax Benefit. --
Minority Interest
in Losses of
Subsidiaries....... 32,003
---------
Net Loss........... (196,016)
Dividends on
Preferred Stock.... (3,170)
---------
Net Loss Applicable
to Common Stock.... $(199,186)
=========
Basic Loss Per
Share.............. $ (2.69)(10)
=========
Diluted Loss Per
Share.............. $ (2.69)(10)
=========
Weighted Average
Number of Common
Shares Outstanding:
Basic............. 74,938
=========
Diluted........... 74,938
=========
</TABLE>
F-2
<PAGE>
BOSTON CHICKEN, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
GIVING EFFECT TO THE ACQUISITION OF MARKET PARTNERS, L.L.C.,
BC EQUITY FUNDING, L.L.C. AND CERTAIN AREA DEVELOPERS
OF BOSTON CHICKEN, INC.
APRIL 19, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
BC
BOSTON EQUITY MARKET
CHICKEN, FUNDING, PARTNERS, TOTAL AREA PRO FORMA
INC. L.L.C. L.L.C. DEVELOPERS ADJUSTMENTS PRO FORMA
---------- -------- --------- ---------- ----------- ----------
ASSETS
------
<S> <C> <C> <C> <C> <C> <C>
Current Assets:
Cash and cash
equivalents.......... $ 32,698 $ 234 $ 505 $ 2,435 $ (10,000)(8) $ 25,872
Accounts receivable,
net.................. 9,765 -- -- -- (5,646)(4) 4,119
Inventories........... 16,530 -- -- 9,688 26,218
Prepaid expenses and
other current assets. 777 1 2 1,276 2,056
Deferred income taxes. 2,353 -- -- -- 2,353
---------- ------- ------- -------- --------- ----------
Total Current
Assets............. 62,123 235 507 13,399 (15,646) 60,618
Property and Equipment,
net.................... 559,170 -- -- 166,365 (13,847)(11) 711,688
Investments in Boston
Chicken, Inc. Area
Developers............. -- 24,378 28,243 -- (52,621)(11) --
Notes Receivable, net... 276,553 -- -- -- (213,823)(11) 62,730
Deferred Financing
Costs, net............. 23,255 -- -- -- 23,255
Goodwill, net........... 696,057 -- -- 57,358 180,550 (11) 933,965
Other Assets, net....... 76,918 38 262 6,400 (300)(8) 83,318
---------- ------- ------- -------- --------- ----------
Total Assets........ $1,694,076 $24,651 $29,012 $243,522 $(115,687) $1,875,574
========== ======= ======= ======== ========= ==========
</TABLE>
F-3
<PAGE>
BOSTON CHICKEN, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
GIVING EFFECT TO THE ACQUISITION OF MARKET PARTNERS, L.L.C.,
BC EQUITY FUNDING, L.L.C. AND CERTAIN AREA DEVELOPERS
OF BOSTON CHICKEN, INC.
APRIL 19, 1998 (CONTINUED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
BC
BOSTON EQUITY MARKET
CHICKEN, FUNDING, PARTNERS, TOTAL AREA PRO FORMA
INC. L.L.C. L.L.C. DEVELOPERS ADJUSTMENTS PRO FORMA
---------- -------- --------- ---------- ----------- ----------
LIABILITIES AND
STOCKHOLDERS'/PARTNERS'/
MEMBERS' EQUITY (DEFICIT)
-------------------------
<S> <C> <C> <C> <C> <C> <C>
Current Liabilities:
Accounts payable....................$ 21,409 $ -- $ -- $ 2,439 $ (1,724)(4) $ 22,124
Accrued expenses.................... 87,441 -- -- 52,787 (3,922)(4) 133,912
(2,394)(11)
Other current liabilities........... 14,611 -- -- -- 14,611
---------- ------- ------- --------- --------- ----------
Total Current Liabilities......... 123,461 -- -- 55,226 (8,040) 170,647
Deferred Franchise Revenue............ 5,268 -- -- -- (3,265)(11) 2,003
Convertible Subordinated Debt--
Boston Chicken, Inc.................. 417,020 -- -- -- 417,020
Convertible Subordinated Debt--
Einstein/Noah Bagel Corp............. 125,000 -- -- -- 125,000
Liquid Yield Option Notes............. 202,270 -- -- -- 202,270
Senior Secured Revolver--Boston
Chicken, Inc......................... 10,000 -- -- -- 10,000
Senior Term Loan--Einstein/Noah
Bagel Corp........................... 22,500 -- -- -- 22,500
Long-Term Debt........................ -- -- -- 542,239 (537,284)(11) 4,955
Deferred Income Taxes................. 2,353 -- -- -- 2,353
Other Noncurrent Liabilities.......... 45,396 -- -- 14,418 (8)(11) 59,806
Mandatorily Redeemable Preferred
Stock................................ -- -- -- -- 82,905 (8) 82,905
Minority Interests.................... 250,238 -- -- -- 18,715 (11) 268,953
Stockholders'/Partners'/Members'
Equity/(Deficit): --
Preferred stock..................... -- -- -- -- --
Common stock........................ 715 -- -- -- 35 (8) 750
Additional paid-in capital.......... 918,717 -- -- -- 16,537 (8) 935,274
Partners'/Members' equity (deficit). -- 24,651 29,012 (368,361) 368,361 (11) --
(53,663)(8)
Accumulated deficit................. (428,862) -- -- -- (428,862)
---------- ------- ------- --------- --------- ----------
Total Equity (Deficit)............ 490,570 24,651 29,012 (368,361) 331,290 507,162
---------- ------- ------- --------- --------- ----------
Total Liabilities and
Stockholders'/Partners'/Members'
Equity (Deficit).................$1,694,076 $24,651 $29,012 $ 243,522 $(115,687) $1,875,574
========== ======= ======= ========= ========= ==========
</TABLE>
F-4
<PAGE>
BOSTON CHICKEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS GIVING EFFECT TO THE
ACQUISITION OF MARKET PARTNERS, L.L.C., BC EQUITY FUNDING, L.L.C. AND
CERTAIN AREA DEVELOPERS OF BOSTON CHICKEN, INC.
1. The following details the financial position and results of operations of
the Boston Chicken area developers acquired in the accompanying pro forma
balance sheet and statement of operations (in thousands):
<TABLE>
<CAPTION>
BC
P&L FOOD BC BCE GOLDEN FINEST BC BC B.C.B.M. BC TRI- R&A FOOD
SERVICES, BOSTON, WEST, GATE, FOODSERVICE, SUPERIOR, HEARTLAND, SOUTHWEST, STATES, SERVICES,
ASSETS L.L.C. L.P. L.P. L.L.C. L.L.C. L.L.C. L.L.C. L.P. L.L.C. L.P.
------ --------- ------- ------- ------- ------------ --------- ---------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Current Assets:
Cash and cash
equivalents....... $ 225 $ -- $ -- $ 256 $ 484 $ 57 $ 170 $ 641 $ -- $ 602
Inventories....... 1,042 984 822 1,028 1,315 734 312 1,298 304 1,849
Prepaid expenses
and other current
assets............ 195 258 138 245 95 34 -- 14 38 259
------- ------- ------- ------- ------- ------- ------ ------- ------- -------
Total Current
Assets.......... 1,462 1,242 960 1,529 1,894 825 482 1,953 342 2,710
Property and
Equipment, net..... 22,328 18,184 14,178 15,866 12,774 10,351 6,568 22,146 11,315 32,655
Goodwill, net...... 1,415 4,673 2,739 2,430 15,526 10,960 -- -- 19,615 --
Other Assets, net.. 366 115 120 1,115 819 340 270 317 627 2,311
------- ------- ------- ------- ------- ------- ------ ------- ------- -------
Total Assets.... $25,571 $24,214 $17,997 $20,940 $31,013 $22,476 $7,320 $24,416 $31,899 $37,676
======= ======= ======= ======= ======= ======= ====== ======= ======= =======
<CAPTION>
LIABILITIES AND PARTNERS'/MEMBERS' (DEFICIT)
- - --------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Current
Liabilities:
Accounts payable.. $ 295 $ 61 $ 241 $ 256 $ 165 $ 236 $ 30 $ 111 $ 301 $ 743
Accrued expenses.. 3,807 3,461 2,800 3,953 8,232 12,867 1,034 4,737 940 10,956
------- ------- ------- ------- ------- ------- ------ ------- ------- -------
Total Current
Liabilities..... 4,102 3,522 3,041 4,209 8,397 13,103 1,064 4,848 1,241 11,699
Long-Term Debt..... 52,162 49,492 45,192 53,566 84,129 53,335 7,252 58,067 40,691 98,353
Other Noncurrent
Liabilities........ 898 1,084 1,086 2,307 2,848 1,245 440 1,880 38 2,592
Partners'/Members'
Deficit............ (31,591) (29,884) (31,322) (39,142) (64,361) (45,207) (1,436) (40,379) (10,071) (74,968)
------- ------- ------- ------- ------- ------- ------ ------- ------- -------
Total
Liabilities and
Partners'/Members'
Deficit ........ $25,571 $24,214 $17,997 $20,940 $31,013 $22,476 $7,320 $24,416 $31,899 $37,676
======= ======= ======= ======= ======= ======= ====== ======= ======= =======
<CAPTION>
TOTAL AREA
ASSETS DEVELOPERS
------ ----------
<S> <C>
Current Assets:
Cash and cash
equivalents....... $ 2,435
Inventories....... 9,688
Prepaid expenses
and other current
assets............ 1,276
----------
Total Current
Assets.......... 13,399
Property and
Equipment, net..... 166,365
Goodwill, net...... 57,358
Other Assets, net.. 6,400
----------
Total Assets.... $243,522
==========
<CAPTION>
LIABILITIES AND PARTNERS'/MEMBERS' (DEFICIT)
- - --------------------------------------------
<S> <C>
Current
Liabilities:
Accounts payable.. $ 2,439
Accrued expenses.. 52,787
----------
Total Current
Liabilities..... 55,226
Long-Term Debt..... 542,239
Other Noncurrent
Liabilities........ 14,418
Partners'/Members'
Deficit............ (368,361)
----------
Total
Liabilities and
Partners'/Members'
Deficit ........ $243,522
==========
</TABLE>
F-5
<PAGE>
BOSTON CHICKEN, INC.
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS GIVING EFFECT TO THE
ACQUISITION OF MARKET PARTNERS, L.L.C, BC EQUITY FUNDING, L.L.C. AND
CERTAIN AREA DEVELOPERS OF BOSTON CHICKEN, INC.
<TABLE>
<CAPTION>
BC
P&L FOOD BC BCE GOLDEN FINEST BC BC B.C.B.M. BC TRI- R&A FOOD
SERVICES, BOSTON, WEST, GATE, FOODSERVICE, SUPERIOR, HEARTLAND, SOUTHWEST, STATES, SERVICES,
L.L.C. L.P. L.P. L.L.C. L.L.C. L.L.C. L.L.C. L.P. L.L.C. L.P.
--------- ------- ------- -------- ------------ --------- ---------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue............ $15,129 $15,846 $12,575 $ 14,686 $ 17,277 $ 8,479 $ 5,094 $20,690 $ 5,422 $33,602
Costs and Expenses:
Store Operations:
Food and paper.... 5,458 5,825 4,380 5,150 6,568 3,206 1,871 7,484 1,946 11,887
Labor............. 4,161 4,154 3,156 3,873 4,835 2,696 1,398 5,419 1,450 8,282
Other
controllable
costs............. 2,480 2,846 1,965 2,494 2,813 1,593 740 2,959 1,015 5,167
Rent, occupancy
and related....... 1,905 2,024 2,218 3,249 4,172 1,994 886 2,921 634 4,111
Contractual and
discretionary
marketing......... 1,192 1,140 857 1,433 1,385 586 396 1,707 388 2,469
General and
administrative.... 5,089 4,107 1,126 7,834 9,025 12,101 372 3,299 10,071 4,361
Depreciation and
amortization
(excluding
goodwill
amortization)..... 793 710 545 725 585 427 300 1,000 572 1,348
Goodwill
amortization...... 39 147 78 78 492 488 -- -- 596 --
------- ------- ------- -------- -------- -------- ------- ------- -------- -------
Total costs and
expenses........ 21,117 20,953 14,325 24,836 29,875 23,091 5,963 24,789 16,672 37,625
------- ------- ------- -------- -------- -------- ------- ------- -------- -------
Loss from
Operations......... (5,988) (5,107) (1,750) (10,150) (12,598) (14,612) (869) (4,099) (11,250) (4,023)
Other Income
(Expense):
Interest expense,
net............... (1,517) (1,437) (1,335) (1,541) (2,451) (1,565) (228) (1,693) (1,162) (2,839)
Other income
(expense), net.... 23 (2) 6 64 (133) 5 4 2 24 27
------- ------- ------- -------- -------- -------- ------- ------- -------- -------
Total other
income
(expense)....... (1,494) (1,439) (1,329) (1,477) (2,584) (1,560) (224) (1,691) (1,138) (2,812)
------- ------- ------- -------- -------- -------- ------- ------- -------- -------
Net Loss........... $(7,482) $(6,546) $(3,079) $(11,627) $(15,182) $(16,172) $(1,093) $(5,790) $(12,388) $(6,835)
======= ======= ======= ======== ======== ======== ======= ======= ======== =======
<CAPTION>
TOTAL
AREA
DEVELOPERS
----------
<S> <C>
Revenue............ $148,800
Costs and Expenses:
Store Operations:
Food and paper.... 53,775
Labor............. 39,424
Other
controllable
costs............. 24,072
Rent, occupancy
and related....... 24,114
Contractual and
discretionary
marketing......... 11,553
General and
administrative.... 57,385
Depreciation and
amortization
(excluding
goodwill
amortization)..... 7,005
Goodwill
amortization...... 1,918
----------
Total costs and
expenses........ 219,246
----------
Loss from
Operations......... (70,446)
Other Income
(Expense):
Interest expense,
net............... (15,768)
Other income
(expense), net.... 20
----------
Total other
income
(expense)....... (15,748)
----------
Net Loss........... $(86,194)
==========
</TABLE>
F-6
<PAGE>
BOSTON CHICKEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
GIVING EFFECT TO THE ACQUISITION OF
MARKET PARTNERS, L.L.C., BC EQUITY FUNDING, L.L.C. AND
CERTAIN AREA DEVELOPERS OF BOSTON CHICKEN, INC.
2. To eliminate the unrealized depreciation recognized on Market Partners'
and BC Equity Funding's investments. In lieu of recording the change in
the investments' market value, the Company either recognizes the
operations of the area developers in which Market Partners and BC Equity
Funding have preferred equity investments or, as a result of the loan
conversions, consolidates their results of operations.
3. To eliminate the losses of the Boston Chicken area developers which had
been recognized by the Company. As a result of the loan conversions, in
lieu of recording the area developers' losses in a single line item on the
statement of operations, the Company has consolidated their results of
operations.
4. To eliminate intercompany transactions between the Company, Market
Partners, BC Equity Funding and the Boston Chicken area developers.
5. To amortize goodwill resulting from the conversions over a 35-year period
and adjust depreciation on assets acquired based upon their estimated fair
market value.
6. To reverse the provision for loan losses for the area developers whose
loans are being converted. In lieu of such loan losses, the pro forma
financial statements reflect the net losses of the area developers.
7. To allocate the portion of the area developers' losses applicable to the
minority interests.
8. To record the issuance, at estimated market value, the consideration for
the acquisition of Market Partners and BC Equity Funding and adjust
acquired assets to their estimated market value. The estimated market
value of the common stock was based upon the market value of the Company's
common stock measured over a period of time prior to and after the
agreement in principle to acquire BCEF and Market Partners was reached and
publicly announced. The estimated market value of the series A
exchangeable preferred stock was determined based upon a discounted cash
flow analysis of the dividend and principle payments of the instrument.
The analysis utilized a discount rate equal to the yield of the Company's
publicly-traded debentures measured over a period of time prior to and
after the agreement in principle to acquire BCEF and Market Partners was
reached and publicly announced.
9. To record the dividend on the series A exchangeable preferred stock issued
in the transaction.
10. The net loss has been increased by $2.0 million in the calculation of
basic and diluted loss per share as a result of the accretion of the
series A exchangeable preferred stock to its redemption value.
11. To record the conversion of the outstanding balance of the convertible
secured loans and elimination of the nonconvertible loans from the Company
to the area developers (reflected as $537.3 million on the balance sheet
of the area developers and reflected as $210.5 million on the balance
sheet of the Company), record acquired assets and liabilities at their
estimated fair market value, and recognize the minority interests in the
area developers. Additionally, the $52.6 million investment in the area
developers by Market Partners and BC Equity Funding is eliminated as the
area developers are now accounted for on a consolidated basis.
F-7
<PAGE>
BOSTON CHICKEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
GIVING EFFECT TO THE ACQUISITION OF
MARKET PARTNERS, L.L.C., BC EQUITY FUNDING, L.L.C. AND
CERTAIN AREA DEVELOPERS OF BOSTON CHICKEN, INC.
12. To eliminate intercompany transactions between the Company and BC Great
Lakes.
13. To amortize goodwill resulting from the conversions over a 35-year period
and adjust depreciation on assets acquired based upon their estimated fair
market value.
14. To allocate the portion of BC Great Lakes' losses applicable to the
minority interests.
F-8
