<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
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 20, 1998
----------------
Atlantic Premium Brands, Ltd.
--------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 1-13747 36-3761400
- ---------------------------- ------------ -------------------
(State or Other Jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
650 Dundee Road, Suite 370, Northbrook, Illinois 60062
------------------------------------------------ ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (847) 480-4000
--------------
<PAGE> 2
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) The financial statements required by Item 7(a) relating to the acquisition
of J.C. Potter Sausage Company ("Potter") described in Item 2 of the
Current Report on Form 8-K of Atlantic Premium Brands, Ltd. (the "Company")
filed on April 17, 1998 are included in pages F-1 through F-13 of this
Amendment No. 1 to Form 8-K.
(b) The pro forma financial information required by Item 7(b) relating to the
acquisition of Potter described in Item 2 of the Company's Current Report
on Form 8-K filed on April 17, 1998 is included in pages F-14 through F-18
of this Amendment No. 1 to Form 8-K.
(c) Exhibits.
2 Asset Purchase Agreement dated as of March 6, 1998 among Potter's
Acquisition Corp., J.C. Potter Sausage Company, Potter's Farm, Inc.,
Potter Rendering Co. and Potter Leasing Company, Ltd.(1)
______________
(1) Filed as an exhibit to the Company's Annual Report on Form 10-K for the
year ended December 31, 1997 and incorporated herein by reference.
<PAGE> 3
J.C. POTTER SAUSAGE COMPANY, INC. AND AFFILIATES
INDEX TO COMBINED FINANCIAL STATEMENTS
Page
----
<TABLE>
<S> <C>
Report of Independent Public Accountants F-2
Combined Balance Sheets - as of June 30, 1996 and 1997 F-3
Combined Statements of Income - for the years ended
June 30, 1995, 1996 and 1997 F-4
Combined Statements of Changes in Stockholders' Equity for the
years ended June 30, 1995, 1996 and 1997 F-5
Combined Statements of Cash Flows - for the years ended
June 30, 1995, 1996 and 1997 F-6
Notes to Combined Financial Statements F-7
</TABLE>
F - 1
<PAGE> 4
[ Letterhead of Arthur Andersen LLP ]
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of
Atlantic Premium Brands, Ltd.:
We have audited the accompanying combined balance sheets of J.C. Potter Sausage
Company, Inc. and affiliates (an Oklahoma company) as of June 30, 1996 and
1997, and the related combined statements of income, changes in stockholders'
equity and cash flows for the years ended June 30, 1995, 1996 and 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used 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, the financial statements referred to above present fairly, in
all material respects, the combined financial position of J.C. Potter Sausage
Company, Inc. and affiliates as of June 30, 1996 and 1997, and the results of
its operations and its cash flows for the years ended June 30, 1995, 1996 and
1997, in conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
Baltimore, Maryland,
March 20, 1998
F-2
<PAGE> 5
J.C. POTTER SAUSAGE COMPANY, INC. AND AFFILIATES
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30,
------------------------------------- March 20,
1996 1997 1998
---- ---- ----
ASSETS (Unaudited)
------
<S> <C> <C> <C>
CURRENT ASSETS:
Cash $ 3,349,908 $ 3,936,961 $ 185,355
Accounts receivable, net of allowance for
doubtful accounts of $25,000 for each period 2,044,976 1,891,858 1,599,712
Inventory 1,956,600 1,877,423 1,752,466
Prepaid expenses and other assets 405,172 129,143 35,217
------------ ------------ -----------
Total current assets 7,756,656 7,835,385 3,572,750
PROPERTY, PLANT AND EQUIPMENT, net 5,363,338 5,313,867 4,722,860
------------ ------------ -----------
Total Assets $ 13,119,994 $ 13,149,252 $ 8,345,610
============ ============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 716,969 $ 508,422 $ 199,100
Notes payable - stockholders 85,000 285,000 -
Accrued legal expenses 975,000 825,000 150,000
Accrued expenses 215,060 42,162 86,565
Other liabilities 300,000 300,000 300,000
------------ ------------ -----------
Total Current Liabilities 2,292,029 1,960,584 735,665
LONG-TERM LIABILITIES 285,000 - -
------------ ------------ -----------
Total Liabilities 2,577,029 1,960,584 735,665
COMMITMENT AND CONTINGENCIES
STOCKHOLDERS' EQUITY 10,542,965 11,188,668 7,609,945
------------ ------------ -----------
Total Liabilities and Stockholders' equity $ 13,119,994 $ 13,149,252 $ 8,345,610
============ ============ ===========
</TABLE>
The accompanying notes are an integral part of these combined balance sheets.
F-3
<PAGE> 6
J.C. POTTER SAUSAGE COMPANY, INC. AND AFFILIATES
COMBINED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
For the Period
For the Year Ended June 30, For the Nine Months July 1, 1997
------------------------------------- Ended March 31, Through March 20,
1995 1996 1997 1997 1998
---- ---- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C> <C>
NET SALES $29,145,261 $32,871,810 $37,277,438 $ 27,647,260 $ 26,411,544
COST OF GOODS SOLD 21,195,419 26,101,154 30,835,110 24,677,291 19,744,782
----------- ----------- ----------- ------------- ------------
Gross profit 7,949,842 6,770,656 6,442,328 2,969,969 6,666,762
----------- ----------- ----------- ------------- ------------
SELLING, GENERAL AND
ADMINISTRATIVE
EXPENSES: 4,511,545 4,623,814 4,828,112 1,790,536 3,967,620
----------- ----------- ----------- ------------- ------------
Income from operations 3,438,297 2,146,842 1,614,216 1,179,433 2,699,142
INTEREST AND OTHER
INCOME 91,388 97,302 166,613 35,401 61,174
----------- ----------- ----------- ------------- ------------
Income before provision
for income taxes 3,529,685 2,244,144 1,780,829 1,214,834 2,760,316
PROVISION FOR INCOME
TAXES (804,213) (355,224) (147,479) (58,946) (590,017)
----------- ----------- ----------- ------------- ------------
Net income $2,725,472 $1,888,920 $1,633,350 $ 1,155,888 $ 2,170,299
=========== =========== =========== ============= ============
</TABLE>
The accompanying notes are an integral part of these combined statements.
F-4
<PAGE> 7
J.C. POTTER SAUSAGE COMPANY, INC. AND AFFILIATES
COMBINED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION> Additional
Common Common Paid-In Retained
Stock Stock Capital Earnings Total
----- ----- ------- -------- -----
<S> <C> <C> <C> <C> <C>
BALANCE, June 30, 1994 419,300 $419,300 $ - $7,730,626 $8,149,926
Net income - - - 2,725,472 2,725,472
Distributions to stockholders - - - (1,149,971) (1,149,971)
--------- --------- ---------- ----------- -----------
BALANCE, June 30, 1995 419,300 419,300 - 9,306,127 9,725,427
Net income - - - 1,888,920 1,888,920
Distributions to stockholders - - - (1,071,382) (1,071,382)
--------- --------- ---------- ----------- -----------
BALANCE, June 30, 1996 419,300 419,300 - 10,123,665 10,542,965
Net income - - - 1,633,350 1,633,350
Distributions to stockholders (150,300) (150,300) 150,300 (987,647) (987,647)
--------- --------- ---------- ----------- -----------
BALANCE, June 30, 1997 269,000 269,000 150,300 10,769,368 11,188,668
Net income (unaudited) - - - 2,170,299 2,170,299
Distributions to stockholders
(unaudited) - - - (5,749,022) (5,749,022)
--------- --------- ---------- ----------- -----------
BALANCE, March 20, 1998
(unaudited) 269,000 $269,000 $150,300 $7,190,645 $7,609,945
========= ========= ========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these combined statements.
F-5
<PAGE> 8
J.C. POTTER SAUSAGE COMPANY, INC. AND AFFILIATES
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Period
For the Year Ended June 30, For the Nine Months July 1, 1997
------------------------------------ Ended March 31, Through March 20,
1995 1996 1997 1997 1998
---- ---- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $2,725,472 $1,888,920 $1,633,350 $1,155,888 $2,170,299
Adjustments to reconcile net income to
cash flows provided by operating
activities-
Depreciation 778,156 875,836 846,992 572,098 612,060
(Increase) decrease in accounts
receivable (378,394) (401,335) 153,118 (725,628) 292,146
(Increase) decrease in inventory (10,495) (399,247) 79,177 (77,409) 124,957
(Increase) decrease in prepaid
expenses and other assets (299,751) (21,541) 276,029 172,570 93,926
Increase (decrease) in accounts
payable 131,182 259,307 (208,547) (404,692) (309,322)
Increase (decrease) in accrued
expenses 581,936 (95,994) (172,898) (139,725) (22,538)
(Decrease) in notes payable -
stockholder (317,999) (14,566) (85,000) (30,000) (285,000)
(Decrease) in accrued legal expenses (78,895) (235,706) (150,000) (112,500) (375,000)
----------- ----------- ---------- -------------- --------------
Net cash flows provided by
operating activities 3,131,212 1,855,674 2,372,221 410,602 2,301,528
----------- ----------- ---------- -------------- --------------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of equipment (1,634,597) (458,644) (797,521) (635,342) (304,112)
----------- ----------- ---------- -------------- --------------
Net cash flows used in investing
activities (1,634,597) (458,644) (797,521) (635,342) (304,112)
----------- ----------- ---------- -------------- --------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Distributions to stockholders (1,149,971) (1,071,382) (987,647) - (5,749,022)
----------- ----------- ---------- -------------- --------------
Net cash used in financing
activities (1,149,971) (1,071,382) (987,647) - (5,749,022)
----------- ----------- ---------- -------------- --------------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 346,644 325,648 587,053 (224,740) (3,751,606)
CASH, beginning of period 2,677,616 3,024,260 3,349,908 3,349,908 3,936,961
----------- ----------- ---------- -------------- --------------
CASH, end of period $3,024,260 $3,349,908 $3,936,961 $3,125,168 $ 185,355
=========== =========== ========== ============== ==============
</TABLE>
The accompanying notes are an integral part of these combined statements.
F-6
<PAGE> 9
J.C. POTTER SAUSAGE COMPANY, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
JUNE 30, 1995 AND 1996 AND 1997
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation
The accompanying combined financial statements present the accounts of J.C.
Potter Sausage Company, Inc. (Sales), Potter Sausage Processing Company, Inc.
(Processing), Potter's Farm, Inc. (Farm), Potter Rendering Company, Inc.
(Rendering), and Potter Leasing Company, LLP (Leasing) (collectively "J.C.
Potter Sausage Company, Inc. and Affiliates" or "the Company"), which produce
and distribute sausage and related products primarily in Oklahoma and
surrounding states. The accompanying balance sheets reflect the combined
financial position as of June 30, 1996 and 1997, and the unaudited combined
financial position as of March 20, 1998. The accompanying statements of
income, stockholders' equity and cash flows reflect the combined results of
operations for the twelve months ended June 30, 1995, 1996, and 1997, and the
unaudited combined results of operations for the nine months ended March 31,
1997, and the period from July 1, 1997 through March 20, 1998. The companies
are held by common shareholders.
These financial statements have been prepared pursuant to an Asset Purchase
Agreement between the stockholders and Atlantic Premium Brands, Ltd.
("Atlantic") whereby Atlantic is expected to acquire substantially all assets
and assume certain liabilities of the Company.
Revenue Recognition
The Company records sales when product is delivered to its customers.
Inventory
Inventory is stated at the lower of cost or market and is comprised primarily
of packaged meat products, raw materials to be processed and packaging supplies
and ingredients. Cost is determined using the first-in, first-out (FIFO)
method.
Property, Plant and Equipment
Property, plant and equipment consists of land, buildings and building
improvements, office and warehouse equipment and delivery vehicles and is
stated at cost. Depreciation is provided under the straight-line and various
accelerated methods over the following estimated useful lives:
<TABLE>
<S> <C>
Buildings and improvements 10 years
Furniture and fixture 3-5 years
Machinery and equipment 3-5 years
Vehicles 3-5 years
</TABLE>
F-7
<PAGE> 10
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions.
These estimates and assumptions affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues, expenses, gains
and losses during the reporting periods. Actual results could differ from
these estimates.
Fair Value of Financial Instruments
Statement of Financial Accounting Standards No. 107, Disclosure about Fair
Value of Financial Instruments" (SFAS No. 107), requires disclosures of fair
value information about financial instruments, whether or not recognised in the
balance sheet, for which it is practicable to estimate that value. In cases
where quoted market prices are not available, fair values are based on
estimates of future cash flows. SFAS No. 107 excludes certain financial
instruments and all nonfinancial instruments from its disclosure requirements.
Accordingly, the aggregate fair value amounts presented do not represent the
underlying value of the Company.
The carrying values of current assets and current liabilities approximate fair
value because of the relatively short maturities of these instruments. The
fair value of the Company's note payable is estimated using a discounted cash
flow analysis based on the Company's borrowing cost for similar credit
facilities at February 28, 1998. Unless otherwise indicated, management
believes the carrying value of all financial instruments approximates fair
value.
This disclosure related to financial instruments only. The fair value
assumptions were based upon subjective estimates of market conditions and
perceived risks of the financial instruments.
Significant Customers
During the years ended June 30, 1995, 1996 and 1997, sales to one customer were
approximately 10% of net sales for each year.
Income Taxes
Potter Leasing Company and Potter Farm, Inc. are subchapter S corporations for
income tax purposes and, as such, taxable income or loss from these companies
for the periods was included in the individual income tax returns of its owners
for federal and state income tax purposes. As a result, no provision for
income taxes has been included in the accompanying combined statements of
income for Potter.
J.C. Potter Sausage Company, Inc., Potter Sausage Processing Company, Inc., and
Potter Rendering Company, Inc. are C corporations for income tax purposes and,
as a result, accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 (SFAS 109) for income taxes.
F-8
<PAGE> 11
Accounting Pronouncements
During June 1997, the FASB issued Statement No. 130 (SFAS No. 130), "Reporting
Comprehensive Income," which establishes standards for reporting and display of
comprehensive income and its components in a full set of general purpose
financial statements. SFAS No. 130 is effective for fiscal years beginning
after December 15, 1997. Management has not determined that the implementation
of SFAS No. 130 will have any impact on the Company's financial statements.
During July 1997, the FASB issued Statement No. 131 (SFAS No. 131),
"Disclosures About Segments of an Enterprise and Related Information," which
establishes a new approach for determining segments within a company and
reporting information on those segments. SFAS No. 131 is effective for fiscal
years beginning after December 15, 1997. Management has not yet determined
whether the implementation of SFAS No. 131 will have any impact on the
Company's current method of disclosing business segment information.
Management has not determined that the implementation of SFAS No. 131 will have
any impact on the Company's current method of disclosing business segment
information.
2. INVENTORY:
Inventories consisted of the following as of:
<TABLE>
June 30,
---------------------- March 20,
1996 1997 1998
---- ---- ----
(Unaudited)
<S> <C> <C> <C>
Raw materials $ 822,320 $ 873,393 $ 875,636
Work-in-process 64,474 105,355 66,454
Finished products 1,069,806 898,675 810,376
---------- ---------- -----------
Total $1,956,600 $1,877,423 $1,752,466
========== =========== ===========
</TABLE>
F-9
<PAGE> 12
3. PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment consisted of the following as of:
<TABLE>
<CAPTION>
June 30,
---------------------- March 20,
1996 1997 1998
---- ---- ----
(Unaudited)
<S> <C> <C> <C>
Land $ 27,076 $ 27,076 $ 27,076
Buildings and improvements 3,625,368 3,625,368 3,625,368
Furniture and fixtures 1,657,958 1,703,503 1,701,866
Machinery and equipment 5,701,565 6,028,019 6,063,960
Vehicles 3,237,114 3,618,652 3,655,401
----------- ----------- ------------
14,249,081 15,002,618 15,073,671
Less - Accumulated depreciation (8,885,743) (9,688,751) (10,300,811)
----------- ----------- ------------
Property, plant and equipment, net $5,363,338 $5,313,867 $4,722,860
=========== =========== ============
</TABLE>
Depreciation expense for the years ended June 30, 1995, 1996 and 1997, and for
the nine months ended March 31, 1997, and for the period from July 1, 1997
through March 20, 1998, was $778,156, $875,836, $846,992, $572,098 and
$612,060, respectively.
4. NOTES PAYABLE TO RELATED PARTIES:
Interest rates on unsecured notes payable to stockholders range from 6% to 10%.
Interest expense related to these notes for the years ended June 30, 1995,
1996 and 1997, and for the nine months ended March 31, 1997, and for the period
ended March 20, 1998, was $26,400, $28,275, $27,300, $17,550 and $-0-,
respectively. Based on the borrowing rates available to the Company for bank
loans with similar terms and average maturities, the face value of the notes
approximate fair value.
F-10
<PAGE> 13
5. INCOME TAXES:
The (provision) benefit for income taxes in the accompanying combined statement
of income were comprised of the following:
<TABLE>
<CAPTION>
For the Year Ended June 30,
----------------------------------
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Current:
Federal $ (612,828) $ (318,730) $ (156,708)
State (98,818) (56,853) (13,017)
---------- ---------- ----------
(711,646) (375,583) (169,725)
---------- ---------- ----------
Deferred:
Federal (75,780) 16,667 20,689
State (16,787) 3,692 1,557
---------- ---------- ----------
(92,567) 20,359 22,246
---------- ---------- ----------
Total $ (804,213) $ (355,224) $ (147,479)
========== ========== ==========
</TABLE>
Deferred tax assets (liabilities) were comprised of the following as of:
<TABLE>
<CAPTION>
June 30,
----------------------
1996 1997
---- ----
<S> <C> <C>
Accounts Receivable $ (16,382) $ (20,630)
Inventory (24,781) (14,159)
Property, plant and equipment (458,011) (542,620)
Accrued legal expenses 376,350 318,450
Other (43,258) 115,123
---------- ----------
Total $ (166,082) $(143,836)
========== ==========
</TABLE>
F-11
<PAGE> 14
The statutory federal income tax rate, reconciled to the effective income tax
rate as recorded in the accompanying combined financial statements is as
follows:
<TABLE>
<CAPTION>
For the Years Ended June 30,
----------------------------------
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Statutory Federal
income tax rate 34.0% 34.0% 34.0%
Income from
S-corporation
operations, not
subject to income
taxes (20.3) (25.9) (30.0)
State income taxes,
net of federal
benefits 4.6 4.6 4.6
Other 4.5 3.1 (0.3)
------- ------- -------
22.8% 15.8% 8.3%
====== ====== =======
</TABLE>
Income taxes - Pro Forma (unaudited)
The provision for income taxes included in the accompanying combined statement
of income would have been higher by approximately $558,000, $511,000, $540,000,
$410,000 and $475,000, respectively, for the years ended June 30, 1995, 1996
and 1997, and for the nine months ended March 31, 1997, and for the period from
July 1, 1997 through March 20, 1998, if all of the operations had been subject
to federal and state income taxes (see Note 1).
6. CONTINGENCIES:
Through December 1, 1996, the Company was self-insured for workers'
compensation claims. As of June 30, 1996, the Company had several outstanding
claims that are in various stages. The accompanying financial statements
reflect a liability for management's estimate of claims to be paid. However,
actual results could differ from the amount recorded.
In August 1997, the Company reached a settlement in a lawsuit brought against
the Company in 1992. The Company settled for $675,000 and incurred legal fees
all of which had been accrued or paid as of June 30, 1997.
F-12
<PAGE> 15
7. SUMMARIZED COMBINING FINANCIAL INFORMATION (unaudited):
Summarized combining financial information (before eliminations):
<TABLE>
For the Year Ended June 30, 1997
--------------------------------------------------------------------------------------
Sales Farm Rendering Leasing
----- ---- --------- -------
<S> <C> <C> <C> <C>
Current assets $ 6,932,090 $ 680,676 $ 204,221 $ 18,398
Noncurrent assets 3,908,116 11,839 109,461 1,284,451
Current liabilities 1,638,903 74,993 41,688 205,000
Equity 9,201,303 617,522 271,994 1,097,849
Net sales 36,406,899 15,114,029 870,539 336,707
Income from operations 525,339 226,952 299,111 166,828
Net income $ 513,798 $ 613,004 $ 310,270 $ 196,278
<CAPTION>
For the Year Ended June 30, 1996
---------------------------------------------------------------------------------------------------
Sales Processing Farm Rendering Leasing
----- ---------- ---- --------- -------
<S> <C> <C> <C> <C> <C>
Current assets $ 4,157,415 $ 2,516,516 $ 448,730 $ 300,679 $ 333,316
Noncurrent assets 965,816 3,210,966 11,475 141,826 1,033,255
Current liabilities 1,970,475 192,733 103,124 25,697 -
Noncurrent liabilities - - - 80,000 205,000
Equity 3,152,756 5,534,749 357,081 336,808 1,161,571
Net sales 31,882,666 20,774,110 12,109,172 989,144 503,529
Income from operations 1,364,081 (242,582) 108,152 412,108 310,296
Net income $ 995,316 $ (125,408) $ 303,067 $ 415,154 $ 300,791
</TABLE>
8. 401(k) SAVINGS PLAN:
The Company maintains a 401(k) savings plan for all of its employees who have
completed one year of service. The Company provides matching contributions
equal to 50% of an employee's contribution up to such employee's 6%
contribution. During the twelve months ended June 30, 1995, 1996 and 1997, and
the nine months ended March 31, 1997, and for the period from July 1, 1997,
through March 20, 1998, the Company's expense under this plan was $74,088,
$76,993, $62,784, $30,597 and $50,296, respectively.
9. SUBSEQUENT EVENT:
On March 20, 1998, substantially all of the assets and certain liabilities of
the Company were acquired by a wholly owned subsidiary of Atlantic Premium
Brands, Ltd. As a result, a new basis of accounting was established in
accordance with the purchase method.
F-13
<PAGE> 16
PRO FORMA CONSOLIDATED FINANCIAL DATA
The following Pro Forma Consolidated Financial Data includes the unaudited
Pro Forma Consolidated Statement of Operations for the year ended December 31,
1997 and the three months ended March 31, 1998. The unaudited Pro Forma
Consolidated Statement of Operations are adjusted to give effect to (i) the
consummation of the acquisition of the J.C. Potter Sausage Company, Inc., (ii)
the acquisition of new debt to complete the transaction described in (i) and
(iii) the retirement of existing debt. An unaudited pro forma balance sheet
has not been prepared since the acquisition of the above company was reflected
in the company's balance sheet of March 31, 1998 as filed in its current report
on Form 10-Q.
The pro forma adjustments are based upon available information and certain
assumptions that the Company believes are reasonable. The Pro Forma
Consolidated Financial Data should be read in conjunction with the Company's
Financial Statements and related notes thereto and the financial statements
and related notes of J.C. Potter Sausage Company, Inc. The unaudited Pro Forma
Consolidated Financial Data do not purport to represent what the Company's
results of operations or financial position would have been had any of the
above events occurred on January 1, 1997, or to project the Company's results
of operations or financial position for or at any future period or date.
F-14
<PAGE> 17
ATLANTIC PREMIUM BRANDS
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
J.C. Potter Pro Forma Pro Forma
The Company Sausage Adjustments Combined
----------- ---------- ------------ ----------
<S> <C> <C> <C> <C>
Net Sales 41,349,414 7,446,259 (285,894)(a) 48,509,779
Cost Sales 35,949,078 5,108,207 (285,894)(a) 40,771,391
----------- ---------- --------- ----------
Gross profit 5,400,336 2,338,052 - 7,738,388
----------- ---------- --------- ----------
Selling, general and
administrative expenses:
Salaries and benefits 2,117,714 372,045 - 2,489,759
Other operating expenses 2,184,844 804,374 - 2,989,218
Depreciation and amortization 428,057 152,793 47,981(b) 628,831
----------- ---------- --------- ----------
Total operating expense 4,730,615 1,329,212 47,981 6,107,808
----------- ---------- --------- ----------
Income from operations 669,721 1,008,840 (47,981) 1,630,580
Interest income (expense) (363,827) 28,338 (264,951)(c) (600,400)
Other income 122,582 - - 122,582
----------- ---------- --------- ----------
Total nonoperating income (expense) (241,245) 28,338 (264,951) (477,858)
----------- ---------- --------- ----------
Income before income tax (provision) 428,476 1,037,178 (312,932) 1,152,722
Income tax benefit (provision) 315,500 (369,602) (30,749)(d) (84,851)
----------- ---------- --------- ----------
Net income before extraordinary loss 743,976 667,576 (343,681) 1,067,871
Extraordinary loss on early extinguishment
of debt, net of income tax benefit 194,993 - - 194,933
----------- ---------- --------- ----------
Net income 548,983 667,576 (343,681) 872,878
========== ========== ========= ==========
</TABLE>
F-15
<PAGE> 18
NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
<TABLE>
<S> <C> <C>
(a) Adjustment to eliminate sales between J.C. Potter Sausage and Atlantic Premium Brands
subsidiaries
(b) To reflect the impact of the different bases of acquired property, plant and equipment as
calculated below:
Depreciation expense on acquired assets $ 200,774
Less: Depreciation expense recorded by
acquired company (152,793)
--------------
$ 47,981
==============
(c) To reflect interest expense in connection with the debt refinancing
Interest on term debt $ (255,313)
Interest on senior subordinated note (162,500)
Amortization of discount on senior subordinated note (51,250)
Interest on line of credit (159,716)
Interest expense on old debt 363,827
--------------
$ (264,951)
==============
(d) Income tax provision on full pre-tax income
</TABLE>
F-16
<PAGE> 19
ATLANTIC PREMIUM BRANDS
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
J.C. Potter Pro Forma Pro Forma
The Company Sausage Adjustments Combined
----------- ---------- ------------ ----------
<S> <C> <C> <C> <C>
Net Sales 172,198,494 37,028,436 (1,143,576)(a) 208,083,354
Cost Sales 152,608,121 29,920,230 (1,143,576)(a) 181,384,775
----------- ---------- ---------- ----------
Gross profit 19,590,373 7,108,206 - 26,698,579
----------- ---------- ---------- ----------
Selling, general and
administrative expenses:
Salaries and benefits 7,997,062 1,402,721 - 9,399,783
Other operating expenses 8,493,832 2,719,638 - 11,213,470
Depreciation and amortization 1,381,221 821,043 (17,948)(b) 2,184,316
----------- ---------- ---------- ----------
Total operating expense 17,872,115 4,943,402 (17,948) 22,797,569
----------- ---------- ---------- ----------
Income from operations 1,718,258 2,164,804 17,948 3,901,010
Interest income (expense) (1,692,610) 63,705 (822,503)(c) (2,451,408)
Other income 381,209 568,180 - 949,389
----------- ---------- ---------- ----------
Total nonoperating income (expense) (1,311,401) 631,885 (822,503) (1,502,019)
----------- ---------- ---------- ----------
Income before income tax provision 406,857 2,796,689 (804,555) 2,398,991
Income tax provision 50,000 513,725 565,797(d) 1,129,522
----------- ---------- ---------- ----------
Net income 356,857 2,282,964 (1,370,352) 1,269,469
=========== ========== ========== ==========
</TABLE>
F-17
<PAGE> 20
NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<S> <C> <C>
(a) Adjustment to eliminate sales between J.C. Potter Sausage and Atlantic Premium Brands
subsidiaries
(b) To reflect the impact of the different bases of acquired property, plant and equipment as
calculated below:
Depreciation expense on acquired assets $ 803,095
Less: Depreciation expense recorded by
acquired company (821,043)
-------------------
$ (17,948)
===================
(c) To reflect interest expense in connection with the debt refinancing
Interest on term debt $ (1,021,250)
Interest on senior subordinated note (650,000)
Amortization of discount on senior subordinated note (205,000)
Interest on line of credit (638,863)
Interest expense on old debt (1,692,610)
-------------------
$ (4,207,723)
===================
(d) Income tax provision on full pre-tax income
</TABLE>
F-18
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this Amendment No. 1 to Form 8-K to be signed on
its behalf by the undersigned hereunto duly authorized.
ATLANTIC PREMIUM BRANDS, LTD.
By: /s/ Thomas M. Dalton
---------------------
Name: Thomas M. Dalton
Title: Chief Financial Officer
Dated: June 4, 1998
<PAGE> 22
Exhibit Index
-------------
Exhibit # Description
- --------- -----------------------------------------------------------------
2 Asset Purchase Agreement dated as of March 6, 1998 among Potter's
Acquisition Corp., J.C. Potter Sausage Company, Potter's Farm,
Inc., Potter Rendering Co. and Potter Leasing Company, Ltd. (1)
__________________
(1) Filed as an exhibit to the Company's Annual Report on Form 10-K for the
year ended December 31, 1997 and incorporated herein by reference.
