LINCOLN SNACKS COMPANY
4 High Ridge Park
Stamford, CT 06905
VIA EDGAR
May 10, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549-1004
Attn: Filing Desk, Stop 1-4
Re: Live Filing of the Quarterly Report on
Form 10-Q of Lincoln Snacks Company for the
Quarterly Period Ended March 30, 1996
Gentlemen:
On behalf of Lincoln Snacks Company (the "Registrant"), enclosed
herewith is a live filing of the Quarterly Report on Form 10-Q of the
Registrant for the quarterly period ended March 30, 1996.
Please acknowledge receipt of this live submission of four documents
consisting of this cover letter, the 10-Q, and two (2) exhibits by return
copy.
Very truly yours,
LINCOLN SNACKS COMPANY
Kristine A. Crabs
Enclosures
cc: National Association of Securities Dealers, Inc.
Mark P. Cawley
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
----------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission file number 0-23048
LINCOLN SNACKS COMPANY
(exact name of registrant as specified in its charter)
Delaware 47-0758569
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
4 High Ridge Park, Stamford, Connecticut 06905
(Address of principal executive offices) (zip code)
(Registrant's telephone number, including area code) (203) 329-4545
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
The number of shares of the issuer's Common Stock, $.01 par value,
outstanding on May 8, 1996 was 6,331,790 shares.<PAGE>
LINCOLN SNACKS COMPANY
INDEX TO FORM 10-Q
PAGE
Part I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Balance Sheets as of March 30, 1996 and
June 30, 1995 3-4
Statements of Operations for the three months
ended March 30, 1996 and April 1, 1995 5
Statements of Operations for the nine months
ended March 30, 1996 and April 1, 1995 6
Statements of Changes in Stockholders'
Equity for the nine months ended
March 30, 1996 and April 1, 1995 7
Statements of Cash Flows for the nine months
ended March 30, 1996 and April 1, 1995 8
Notes to Financial Statements 9-10
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 11-14
Part II. OTHER INFORMATION
Item 1-4. OTHER INFORMATION 15
Item 5. OTHER INFORMATION 15
Item 6. EXHIBITS AND REPORTS ON FORM 8-K 15
Signatures 16
- 2 -<PAGE>
LINCOLN SNACKS COMPANY
BALANCE SHEETS
ASSETS
AS OF MARCH 30, 1996 AND JUNE 30, 1995
March 30, June 30,
1996 1995
ASSETS (Unaudited)
CURRENT ASSETS:
Cash $ 53,158 $ 80,212
Accounts receivable (net of allowance
for doubtful accounts and cash discounts
of $179,912 and $257,963 respectively) 3,060,695 1,522,222
Inventories 2,036,187 2,363,481
Prepaid and other current assets 154,164 99,028
Total current assets 5,304,204 4,064,943
PROPERTY, PLANT AND EQUIPMENT:
Land 610,000 610,000
Building and leasehold improvements 1,555,985 1,460,888
Machinery and equipment 5,127,232 4,922,241
Furniture and fixtures 62,291 62,291
Construction in process 10,203 209,059
7,365,711 7,264,479
Less: accumulated depreciation
and amortization (1,807,869) (1,338,414)
5,557,842 5,926,065
INTANGIBLE AND OTHER ASSETS,
net of accumulated amortization of
$724,587 and $558,637 3,697,938 3,859,170
TOTAL ASSETS $14,559,984 $13,850,178
The accompanying notes to financial statements
are an integral part of these balance sheets.
- 3 -<PAGE>
LINCOLN SNACKS COMPANY
BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
AS OF MARCH 30, 1996 AND JUNE 30, 1995
March 30, June 30,
1996 1995
LIABILITIES AND STOCKHOLDERS' EQUITY (Unaudited)
CURRENT LIABILITIES:
Current portion of term loan $ 800,004 800,004
Borrowings under revolving
line of credit 1,004,488 941,591
Accrued interest 19,841 33,643
Accounts payable 1,730,522 775,540
Accrued trade promotions 1,040,595 1,000,964
Income taxes payable 38,175 28,035
Accrued expenses 939,508 1,176,382
Total current liabilities 5,573,133 4,756,159
Term Loan Payable 509,323 1,109,326
TOTAL LIABILITIES 6,082,456 5,865,485
COMMITMENTS
STOCKHOLDERS' EQUITY:
Common stock, $0.01 par value,
20,000,000 shares authorized, and
6,450,090 shares issued at March 30,
1996 and June 30, 1995 $ 64,501 $ 64,501
Special stock, $0.01 par value, 300,000
shares authorized, none outstanding 0 0
Additional paid-in capital 18,010,637 17,997,746
Accumulated deficit (9,571,584) (10,053,530)
Less: cost of common stock in
treasury 118,300 shares (26,026) (24,024)
TOTAL STOCKHOLDERS' EQUITY $ 8,477,528 $ 7,984,693
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $14,559,984 $13,850,178
The accompanying notes to financial statements
are an integral part of these balance sheets.
- 4 -<PAGE>
LINCOLN SNACKS COMPANY
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 30, 1996 AND APRIL 1, 1995
1996 1995
(Unaudited) (Unaudited)
NET SALES $ 4,266,652 $ 4,504,806
COST OF SALES 3,240,675 2,967,705
Gross profit 1,025,977 1,537,101
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 994,979 2,158,983
Income (loss) from operations 30,998 (621,882)
OTHER:
Interest Expense 69,242 125,585
Loss before provision
for income taxes (38,244) (747,467)
PROVISION FOR INCOME TAXES 2,000 33,000
Net Loss $ (40,244) $ (780,467)
NET LOSS PER SHARE $ (0.01) $ (0.12)
Weighted Average Number of
Shares Outstanding 6,331,790 6,340,890
The accompanying notes to financial statements
are an integral part of these statements.
- 5 -<PAGE>
LINCOLN SNACKS COMPANY
STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED MARCH 30, 1996 AND APRIL 1, 1995
1996 1995
(Unaudited) (Unaudited)
NET SALES $18,579,534 $21,741,005
COST OF SALES 13,186,000 12,800,827
Gross profit 5,393,534 8,940,178
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 4,602,770 8,765,995
Income from operations 790,764 174,183
OTHER:
Interest Expense 281,818 388,376
Other Income, Net 0 (5,415)
Income (loss) before provision
for income taxes 508,946 (208,778)
PROVISION FOR INCOME TAXES 27,000 57,000
Net Income (Loss) $ 481,946 $ (265,778)
NET INCOME (LOSS) PER SHARE $ 0.08 $ (0.04)
Weighted Average Number of
Shares Outstanding 6,335,757 6,340,890
The accompanying notes to financial statements
are an integral part of these statements.
- 6 -<PAGE>
LINCOLN SNACKS COMPANY
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED MARCH 30, 1996 AND APRIL 1, 1995
(UNAUDITED)
Common Special Paid In Accumulated Treasury
Stock Stock Capital Deficit Stock
June 30, 1994 $64,501 $0 $17,764,746 ($ 8,451,147) ($24,024)
Net loss (265,778)
Noel payment
under tax
agreement 233,000
April 1, 1995 $64,501 $0 $17,997,746 ($ 8,716,925) ($24,024)
June 30, 1995 $64,501 $0 $17,997,746 ($10,053,530) ($24,024)
Net income 481,946
Purchase of
9,100 shares
of treasury (2,002)
Noel payment
under tax
agreement 12,891
March 30, 1996 $64,501 $0 $18,010,637 ($ 9,571,584) ($26,026)
The accompanying notes to financial statements
are an integral part of these statements.
- 7 -<PAGE>
LINCOLN SNACKS COMPANY
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED MARCH 30, 1996 AND APRIL 1, 1995
1996 1995
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ 481,946 $ (265,778)
Adjustments to Reconcile Net Income
(Loss) to Cash Provided By (Used In)
Operating Activities:
Depreciation and amortization 635,405 889,347
Allowance for doubtful accounts and
cash discounts, net (78,051) 45,005
Changes in Assets and Liabilities:
(Increase) decrease in accounts
receivable (1,460,422) (124,420)
Increase (decrease) in inventories 327,294 215,969
Increase (decrease) in prepaid and
other current assets (59,855) (28,224)
Increase (decrease) in accounts
payable and accrued expenses 754,078 (917,093)
Net cash provided by (used in)
operating activities $ 600,395 $ (185,194)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (101,232) (352,137)
Net cash used in investing activities $ (101,232) $ (352,137)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings (repayments) under
revolver, net 62,897 901,829
Repayments under term loan (600,003) (600,005)
Noel payment under tax agreement 12,891 233,000
Repurchase of treasury shares (2,002) 0
Net cash provided by (used in)
financing activities $ (526,217) $ 534,824
Net decrease in cash (27,054) (2,507)
CASH, beginning of period 80,212 52,763
CASH, end of period 53,158 50,256
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $ 245,535 $ 334,801
Income taxes paid $ 16,860 $ 16,941
- 8 -<PAGE>
LINCOLN SNACKS COMPANY
NOTES TO FINANCIAL STATEMENTS
MARCH 30, 1996
(Unaudited)
(1) The Company:
Lincoln Snacks Company ("Lincoln" or the "Company"), formerly Lincoln
Foods Inc., is a Delaware corporation and is a majority-owned
subsidiary of Noel Group, Inc. (the "Parent"). Lincoln is engaged in
the manufacture and marketing of caramelized pre-popped popcorn and
glazed popcorn/nut mixes. Sales of the Company's products are subject
to seasonal trends with a significant portion of sales occurring in
the last four months of the calendar year.
The Company was formed in August 1992 and has a limited operating
history as an independent company.
In January 1994, the Company sold 2,472,500 shares of common stock as
part of an initial public offering. The Company received net proceeds
of approximately $9,600,000 from the sale of this stock.
(2) Basis of Presentation:
The balance sheet as of March 30, 1996, and the related statements of
operations for the three and nine months ended March 30, 1996 and
April 1, 1995, changes in stockholders' equity and cash flows for the
nine months ended March 30, 1996 and April 1, 1995, have been
prepared by the Company without audit. In the opinion of management,
all adjustments necessary to present fairly the financial position,
results of operations and cash flows at March 30, 1996 and April 1,
1995 have been made. During the interim periods reported on, the
accounting policies followed are in conformity with generally accepted
accounting principles and are consistent with those applied for annual
periods and described in the Company's annual report on Form 10-K
filed with the Securities and Exchange Commission on September 28,
1995 (the "Annual Report").
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been omitted. It is suggested that these
financial statements be read in conjunction with the financial
statements included in the Company's Annual Report for the twelve
months ended June 30, 1995. The results of operations for the nine
months ending March 30, 1996 and April 1, 1995 are not necessarily
indicative of the operating results for the full year.
(3) Credit Facility:
The Company has a revolving credit and term loan facility, as amended,
which provides for up to $5.9 million in revolver borrowings and a
$1.9 million term loan ($1.0 million was outstanding under the
revolver and $1.3 million was outstanding under the term loan, as of
March 30, 1996). This facility is collateralized by substantially all
of the Company's assets.
- 9 -<PAGE>
(4) Inventory:
Inventory consists of the following:
March 30, June 30,
1996 1995
Raw materials and supplies $1,695,455 $1,138,982
Finished Goods 340,732 1,224,499
$2,036,187 $2,363,481
(5) Significant Customer:
On June 6, 1995, the Company entered into an exclusive distribution
agreement with Planters Company ("Planters"), a division of Nabisco,
Inc., commencing on July 17, 1995, for the sales and distribution of
Fiddle Faddle and Screaming Yellow Zonkers (the "Products"). Under
the agreement, which requires Planters to purchase a minimum number of
cases during the fiscal year, the Company sells the Products to
Planters at a selling price which is reduced from the Company's
historical customer selling prices. Planters in turn is responsible
for the sales and distribution of the Products to its customers,
therefore, the Company does not have any selling, marketing or
distribution costs associated with these Products. The financial
impact of the agreement versus historical results is reductions in
revenue and gross profit which are offset by reduced selling,
marketing and distribution costs. Net sales to Planters were greater
than 10% of total company sales for the quarter ended March 30, 1996.
For the six months ended December 31, 1995 and the three months ended
March 30, 1996, Planters failed to deliver a production schedule in
accordance with the minimums in the Planters Agreement due to lower
than expected sales levels. In a letter dated December 18, 1995,
Lincoln and Planters agreed that Lincoln would manufacture and sell in
December 286,200 equivalent cases to allow Planters to be more in
compliance with the minimums per the Planters Agreement. Planters
also agreed to make up, during the quarters ending March 31, 1996 and
June 30, 1996, the shortfall for the six month period ended December
31, 1995 of 110,413 equivalent cases from its contract minimums, which
amount represents approximately 6% of the minimum number of equivalent
cases required to be purchased during the fiscal year. In a letter
dated February 5, 1996, Lincoln and Planters agreed that Lincoln would
manufacture and sell 557,913 equivalent cases during February and
March, 1996 to allow Planters to be more in compliance with the
minimums per the Planters Agreement. Net sales to Planters for the
nine month period ended March 30, 1996 represented approximately 73%
of the minimum number of cases required to be purchased during the
fiscal year. Planters has purchased significantly more equivalent
cases from Lincoln than it has sold to its customers for the nine
month period ended March 30, 1996. A material breach of the Planters
Agreement by Planters, including, without limitation, a failure to
achieve or make up its contract minimums, could have a material
adverse effect on the Company.
- 10 -<PAGE>
LINCOLN SNACKS COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Unaudited)
Results of Operations:
Introduction
The Company's net sales are subject to significant seasonal variation,
consequently, results from operations will fluctuate due to these trends.
The Company's business is seasonal due to customers' buying patterns of
Poppycock and nut products during the traditional holiday season. As a
result, third and fourth calendar quarter sales account for a significant
portion of the Company's annual sales.
On June 6, 1995, the Company entered into an exclusive distribution
agreement with Planters Company ("the Planters Agreement"), a division of
Nabisco, Inc., commencing on July 17, 1995, for the sales and distribution
of Fiddle Faddle and Screaming Yellow Zonkers (the "Products"). Under the
agreement, which requires Planters to purchase a minimum number of cases
during the fiscal year, the Company sells the Products to Planters at a
selling price which is reduced from the Company's historical customer
selling prices. Planters in turn is responsible for the sales and
distribution of the Products to its customers, therefore, the Company does
not have any selling, marketing or distribution costs associated with these
Products. The financial impact of the agreement versus historical results
is reductions in revenue and gross profit which are offset by reduced
selling, marketing and distribution costs.
For the six months ended December 31, 1995 and the three months ended
March 30, 1996, Planters failed to deliver a production schedule in
accordance with the minimums in the Planters Agreement due to lower than
expected sales levels. In a letter dated December 18, 1995, Lincoln and
Planters agreed that Lincoln would manufacture and sell in December 286,200
equivalent cases to allow Planters to be more in compliance with the
minimums per the Planters Agreement. Planters also agreed to make up,
during the quarters ending March 31, 1996 and June 30, 1996, the shortfall
for the six month period ended December 31, 1995 of 110,413 equivalent cases
from its contract minimums, which amount represents approximately 6% of the
minimum number of equivalent cases required to be purchased during the
fiscal year. In a letter dated February 5, 1996, Lincoln and Planters
agreed that Lincoln would manufacture and sell 557,913 equivalent cases
during February and March, 1996 to allow Planters to be more in compliance
with the minimums per the Planters Agreement. Net sales to Planters for the
nine month period ended March 30, 1996 represented approximately 73% of the
minimum number of cases required to be purchased during the fiscal year.
Planters has purchased significantly more equivalent cases from Lincoln than
it has sold to its customers for the nine month period ended March 30, 1996.
A material breach of the Planters Agreement by Planters, including, without
limitation, a failure to achieve or make up its contract minimums, could
have a material adverse effect on the Company.
- 11 -<PAGE>
Three months ended March 30, 1996 versus April 1, 1995
Net sales decreased 5% or $.24 million to $4.27 million for the
quarter ended March 30, 1996 versus $4.50 million in the corresponding
period of 1995. Combined case sales of Fiddle Faddle and Screaming Yellow
Zonkers related to the Planters Agreement were 101% higher than the
corresponding period in 1995 while revenue dollars increased $.38 million or
15% due to lower selling prices resulting from the Planters Agreement.
Lincoln Snack sales, excluding sales relating to the Planters Agreement,
decreased 27% or $.61 million primarily due to decreased liquidation sales
over the prior period and reduced Nut Division sales.
Gross profit decreased $.51 million to $1.03 million for the quarter
ended March 30, 1996 versus $1.54 million in the corresponding period of
1995. Gross profit decreased as a result of lower selling prices under the
Planters Agreement.
Selling, general and administrative expenses decreased $1.16 million
to $1.0 million in the quarter ended March 30, 1996 versus $2.16 million the
same period in 1995. These expenses decreased during this period primarily
due to cost reductions resulting from the Planters Agreement.
The decline in gross profits, offset by significantly lower selling,
general and administrative expenses, resulted in a decrease in the net loss
of $.74 million to $.04 million for the quarter ended March 30, 1996 versus
$.78 million in the corresponding period in 1995.
Nine months ended March 30, 1996 versus April 1, 1995
Net sales decreased 15% or $3.16 million to $18.58 million for the
nine months ended March 30, 1996 versus $21.74 million in the corresponding
period of 1995. Combined case sales of Fiddle Faddle and Screaming Yellow
Zonkers related to the Planters Agreement were 43% higher than the
corresponding period in 1995 while revenue dollars declined $1.58 million
primarily due to the lower selling prices resulting from the Planters
Agreement. Case sales during the nine months ended March 30, 1996 to
Planters represented 73% of the minimum number of cases required to be
purchased during the fiscal year. Lincoln Snack sales, excluding sales
relating to the Planters Agreement, decreased 14% or $1.78 million versus
the same period in 1995 primarily due to a decline in Export sales
attributable to changing market conditions in the Far East and a decline in
Domestic sales resulting from increased competition.
Gross profit decreased $3.55 million to $5.39 million for the nine
months ended March 30, 1996 versus $8.94 million in the corresponding period
of 1995. Gross profit decreased as a result of lower selling prices under
the Planters Agreement and higher raw material costs.
Selling, general and administrative expenses decreased $4.16 million
to $4.60 million in the nine months ended March 30, 1996 versus $8.77
million the same period in 1995. These expenses decreased during this
period primarily due to cost reductions resulting from the Planters
Agreement.
The decline in gross profits, more than offset by significantly lower
selling, general and administrative expenses, resulted in an increase in net
income of $.75 million to $.48 million for the nine months ended March 30,
1996 versus a $.27 million net loss in the corresponding period in 1995.
- 12 -<PAGE>
Liquidity and Capital Resources
As of March 30, 1996, the Company has a working capital deficit of $.27
million compared to $.69 million at June 30, 1995 (the Company's fiscal year
end), a decrease of $.42 million. The increase in working capital is primarily
attributable to the Company's net profit of $.48 million for the nine months
ended March 30, 1996.
The Company currently meets its short-term liquidity needs from its
revolving credit facility which facilities are secured by a first priority,
perfected security interest in substantially all of the Company's existing and
after-acquired assets. The Company presently believes that this facility is
adequate to meet its needs for the next twelve months. On May 8, 1996, the
credit and term loan facilities were amended to lower the Company's interest
rate .50% on June 30, 1996 and .50% on September 30, 1996 if the Company is in
compliance with its bank covenants for each respective period. The Amendment
extends the facilities to December 2, 1999 and also gives the Company an option
to borrow at an Average Monthly Eurodollar Rate.
Management continues to focus on increasing product distribution and
continues to review all operating costs with the objective of increasing
profitability and ensuring future liquidity. However, there can be no
assurance that any of these objectives will be achieved. The execution of the
Planters Agreement is intended to be consistent with management's objectives.
The Company's short term liquidity is affected by seasonal increases in
inventory and accounts receivable levels, payment terms in excess of 60 days
granted in some situations during certain months of the year, and seasonality
of sales. Inventory and accounts receivable levels increase substantially
during the latter part of the third calendar quarter and during the remainder
of the calendar year.
The following chart represents the net funds provided by or used in
operating, financing and investment activities for each period as indicated.
Nine Months Ended
(in thousands)
March 30, April 1,
1996 1995
Net cash provided by (used in)
operating activities $ 600 $( 185)
Net cash used in investing activities ( 101) ( 352)
Net cash provided by (used in)
financing activities ( 526) 535
Net cash provided by operating activities increased to $.60 million
during the nine months ended March 30, 1996 compared to a use of $.19 million
in 1995. The increase is primarily due to the increase in net income of $.74
million for the nine months ended March 30, 1996 versus 1995.
Net cash used in investing activities of $.10 million and $.35 million
for the nine months ended March 30, 1996 and April 1, 1995, respectively,
represents capital expenditures.
- 13 -<PAGE>
Net cash used in financing activities was $.53 million for the nine
months ended March 30, 1996, which consisted of revolver borrowings under its
credit agreement of $.06 million which was offset by term loan repayments of
$.60 million. Net cash provided by financing activities for the period ended
April 1, 1995 was $.54 million, which consisted of revolver borrowings under
its credit agreement of $.90 million which was offset by term loan repayments
of $.60 million.
- 14 -<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings Not Applicable
Item 2. Changes in Securities Not Applicable
Item 3. Defaults Upon Senior Securities Not Applicable
Item 4. Submission of Matters
to a Vote of Security Holders Not Applicable
Item 5. Other Information Not Applicable
Item 6. Exhibits and Reports on Form 8-K
a Exhibits
(2) Not Applicable
(3) Articles of Incorporation and By-Laws
(a) Certificate of Incorporation, as amended and as
currently in effect (Incorporated by reference
to Exhibit 3(A), filed by the Company with the
Registration Statement on Form S-1 (33-71432)).
(b) By-Laws as currently in effect (Incorporated by
reference to Exhibit 3(B) filed by the Company
with the Registration Statement on Form S-1 (33-
71432)).
(4) Not Applicable
(10) (a) Letter dated February 5, 1996 between Lincoln
Snacks Company and Planters relating to the
revised production schedule.
(b) Amendment No. 6 dated May 8, 1996, to Revolving
Credit, Term Loan and Security Agreement.
(11) Statement regarding computation of per share earnings
is not required because the relevant computation can
be determined from the material contained in the
Financial Statements included herein.
(15) Not Applicable
(18) Not Applicable
(19) Not Applicable
(22) Not Applicable
(23) Not Applicable
(24) Not Applicable
(27) Not Applicable
(99) Not Applicable
b Reports on Form 8-K Not Applicable
- 15 -<PAGE>
SIGNATURE
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 thereunto duly authorized.
May 10, 1996 Lincoln Snacks Company
(Registrant)
By: /s/Karen Brenner
Name: Karen Brenner
Title: Chairman of the Board and
Chief Executive Officer; Director
(Principal Executive Officer)
By: /s/Kristine A. Crabs
Name: Kristine A. Crabs
Title: Vice President-Finance and
Administration, Secretary and
Treasurer (Principal Financial
Officer and Principal Accounting
Officer)
- 16 - <PAGE>
EXHIBIT 10(a)
February 5, 1996
Mr. Edward Lyons
PLANTERS COMPANY, A UNIT OF NABISCO, INC.
1100 Reynolds Boulevard
Winston-Salem, NC 27102
Dear Ed,
This letter outlines the basis of our discussions/agreement held on January
19, 1996 regarding the issues arising from the quarterly minimum production
requirements of Planters' and Lincoln's sales and distribution agreement
dated June 6, 1995.
Planters and Lincoln agree that during the period February-March 1996,
Lincoln will produce and ship a minimum of 557,913 equivalent cases.
Planters has provided a production schedule as follows:
Item Number of Number of
Number Actual Cases Equivalent Cases
98214 16,000 32,000
98216 900 4,500
98228 5,000 15,000
98231 45,000 45,000
98232 225 2,250
98233 12,000 24,000
98247 2,500 7,500
98250 52,500 52,500
98251 450 4,500
98319 1,000 3,000
98331 70,400 70,400
98407 384 1,920
98408 384 3,840
98431 108,800 108,800
98433 38,200 76,400
98447 6,600 19,800
98493 5,660 5,660
98501 67,500 67,500
98503 67,500 67,500
501,003 612,070
Planters will be invoiced for the cases produced in February-March 1996 on
the earlier of (i) shipment of the goods, or (ii) March 31, 1996. It is
understood between the parties that title to the goods will pass to Planters
as the goods are invoiced. Planters will make every attempt to take
- 1 -<PAGE>
delivery of the cases produced in February-March 1996 from the Lincoln
warehouse by March 31, 1996. It is understood, this temporary deviation in
the normal title transfer method has been agreed to by the parties because
of the production schedule shortfall prior to our January 19, 1996 meeting.
Very truly yours,
LINCOLN SNACKS COMPANY
PLANTERS COMPANY, a unit of
NABISCO, INC.
Karen Brenner
Chairman and Chief
Executive Officer By: _____________________________
Edward Lyons
Director, Financial Planning
& Analysis, Nabisco, Inc.
Date:_____________________________
KB/saf
- 2 -<PAGE>
EXHIBIT 10(b)
AMENDMENT NO. 6
TO
REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NO. 6 ("Amendment") is entered into as of May 8,
1996, by and between Lincoln Snacks Company, a Delaware corporation, having
its principal place of business at 4 High Ridge Park, Stamford, Connecticut
06905 ("Borrower") and The Bank of New York Commercial Corporation, having
offices at 1290 Avenue of the Americas, New York, New York 10104 ("Lender").
BACKGROUND
Borrower and Lender are parties to a Revolving Credit, Term Loan
and Security Agreement dated December 3, 1993, as amended by Amendment No. 1
to Revolving Credit, Term Loan and Security Agreement dated as of March 24,
1994, Amendment No. 2 to Revolving Credit, Term Loan and Security Agreement
dated as of September 14, 1994, Amendment No. 3 to Revolving Credit and
Security Agreement dated as of March 31, 1995, Amendment No. 4 to Revolving
Credit, Term Loan and Security Agreement dated as of June 29, 1995 and
Amendment No. 5 to Revolving Credit, Term Loan and Security Agreement dated
as of November 7, 1995 (as further amended, restated, supplemented or
otherwise modified from time to time, the "Loan Agreement") pursuant to
which Lender provided Borrower with certain financial accommodations.
Borrower has requested that Lender amend the Loan Agreement and
Lender is willing to do so on the terms and conditions hereafter set forth.
NOW, THEREFORE, in consideration of any loan or advance or grant
of credit heretofore or hereafter made to or for the account of Borrower by
Lender, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:
1. Definitions. All capitalized terms not otherwise defined
herein shall have the meanings given to them in the Loan Agreement.
2. Amendment to Loan Agreement. Subject to satisfaction of
the conditions precedent set forth in Section 3 below, the Loan Agreement is
hereby amended as follows:
(a) The following defined term in Section 1.2 of the
Loan Agreement is hereby amended in its entirety to provide as follows:
"Revolving Interest Rate" shall mean an interest rate per
annum equal to, as applicable, (a) the sum of the
Alternate Base Rate plus the Applicable Margin, (b) the
sum of the Eurodollar Rate plus the Applicable Margin with
respect to Eurodollar Rate Loans (other than Eurodollar
Rate Loans made pursuant to Section 2.2(h) hereof), or (c)
the sum of the Average Eurodollar Rate plus the Applicable
Margin with respect to Eurodollar Rate Loans made pursuant
to Section 2.2(h) hereof.
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"Term" shall mean the Closing Date through December 2,
1999, as the same may be extended in accordance with the
provisions of Section 13.1.
"Term Loan Rate" shall mean an interest rate per annum
equal to, as applicable, (a) the sum of the Alternate Base
Rate plus the Applicable Margin with respect to Domestic
Rate Loans, (b) the sum of the Eurodollar Rate plus the
Applicable Margin with respect to Eurodollar Rate Loans
(other than Eurodollar Rate Loans made pursuant to Section
2.2(h) hereof), or (c) the sum of the Average Eurodollar
Rate plus the Applicable Margin with respect to Eurodollar
Rate Loans made pursuant to Section 2.2(h) hereof.
(b) The following defined terms are hereby added to
Section 1.2 of the Loan Agreement in their appropriate alphabetical order to
provide as follows:
"Amendment No. 6" shall mean Amendment No. 6 to Revolving
Credit, Term Loan and Security Agreement dated as of May
8, 1996 by and between Borrower and Lender.
"Applicable Margin" shall mean (i) for Domestic Rate Loans
(x) one and one-half percent (1.50%) with respect to
Revolving Advances and one and three quarters percent
(1.75%) with respect to the Term Loan, and (ii) for
Eurodollar Rate Loans (x) three percent (3%) with respect
to Revolving Advances and (y) three and one-quarter
percent (3-1/4%) with respect to the Term Loan, in each
case subject to Section 3.1(b) hereof.
"Average Monthly Eurodollar Rate" shall mean, as to any
one month Interest Period, the average one month LIBOR as
published in the Wall Street Journal over the course of
such one month Interest Period.
"Prepayment Date" shall have the meaning given to it in
Section 13.1 hereof.
(c) The defined term "Termination Date" is hereby
deleted.
(d) Section 2.2 of the Loan Agreement is hereby
amended by adding subsections (h) and (i) at the end thereof which provide
as follows:
(h) Anything in Section 2.2(b) to the contrary
notwithstanding, Borrower may obtain a Eurodollar Rate
Loan upon at least three (3) Business Days' prior written
notice for an Interest Period of one month with interest
on such Eurodollar Rate Loans to be charged at the Average
Monthly Eurodollar Rate. Borrower shall specifically
provide in the prior written notice that interest is to be
charged at the Average Monthly Eurodollar Rate; otherwise,
interest shall be charged at the Eurodollar Rate for
Eurodollar Rate Loans having an Interest Period of one
month.
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(i) Anything in this Agreement to the contrary
notwithstanding, unless Borrower provides Lender with
three (3) Business Days prior written notice to the
contrary, all Advances shall bear interest at the Average
Monthly Eurodollar Rate.
(e) Section 3.1 of the Loan Agreement is hereby
amended by adding "(a)" after the caption and adding clauses (b) and (c)
which provide as follows:
(b) (i) The Applicable Margin shall be reduced by one-half
of one percent (.50%) effective five (5) Business Days
following receipt by Lender of the June 30, 1996 financial
statements in the event (x) no Event of Default shall have
occurred and be continuing, and (y) (A) the Tangible Net
Worth of Borrower at such date was equal to or greater
than $3,700,000 and (B) EBITDA for the period July 1, 1995
through June 30, 1996 shall be equal to or greater than
$1,100,000.
(ii) The Applicable Margin shall be reduced by one-half of
one percent (.50%) effective five (5) Business Days
following receipt by Lender of the September 30, 1996
financial statements in the event (x) no Event of Default
shall have occurred and be continuing, and (y) (A) the
Tangible Net Worth of Borrower at such date was equal to
or greater than $3,100,000 and (B) EBITDA for the period
July 1, 1996 through September 30, 1996 shall be equal to
or greater than ($100,000).
(c) (i) Anything in the Agreement to the contrary
notwithstanding (expect for the last sentence of Section
3.1(a) hereof), (x) the Eurodollar Rate for any Eurodollar
Rate Loan made pursuant to Section 2.2(h) hereof shall be
the Average Eurodollar Rate for each applicable one month
Interest Period, and (y) such Average Eurodollar Rate
shall be utilized in determining the appropriate Contract
Rate to be applied to the outstanding amount of the
applicable Eurodollar Rate Loan in order to determine the
interest charges on each such Eurodollar Rate Loan.
(ii) In the event there is a change in the Applicable
Margin during any one month Interest Period with respect
to Eurodollar Rate Loans made pursuant to Section 2.2(h)
hereof, or during any Interest Period with respect all
other Eurodollar Rate Loans, the calculation of the
applicable Contract Rate for affected Eurodollar Rate
Loans shall be appropriately adjusted to determine the
applicable interest charges for such Eurodollar Rate
Loans.
(f) Section 13.1 is hereby amended in its entirety to provide
as follows:
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Term. This Agreement, which shall inure to the benefit of
and shall be binding upon the respective successors and
permitted assigns of each of Borrower and Lender, shall
become effective on the date hereof and shall continue in
full force and effect until December 2, 1999 unless sooner
terminated as herein provided. The Term shall be
automatically extended for successive periods of one (1)
year each unless terminated by either party at the end of
such initial Term or any successive Term by giving the
other party ninety (90) days prior written notice.
Borrower may terminate this Agreement at any time upon
ninety (90) days' prior written notice upon payment in
full of the Obligations. In the event the Obligations are
prepaid in full prior to the last day of the Term (the
date of such prepayment hereinafter referred to as the
"Prepayment Date") Borrower shall pay an early termination
fee in an amount equal to (x) 1.2% of the amount repaid if
the Prepayment Date occurs to and including December 1,
1997, (y) .8% of the amount repaid if the Payment Date
occurs from December 2, 1997 to and including December 1,
1998 and (z) .3% of the amount repaid if the Prepayment
Date occurs from December 2, 1998 to and including
December 1, 1999. Notwithstanding the foregoing, if the
Borrower prepays the Obligations directly with the
proceeds of a refinancing with The Bank of New York
Company or any of its Affiliates, then the early
termination fee shall be $0.
3. Conditions of Effectiveness. This Amendment shall become
effective upon receipt by Lender of four (4) copies of this Amendment
executed by Borrower.
4. Representations and Warranties. Borrower hereby
represents and warrants as follows:
(a) This Amendment and the Loan Agreement, as amended
hereby, constitute legal, valid and binding obligations of Borrower and are
enforceable against Borrower in accordance with their respective terms.
(b) No Event of Default has occurred and is
continuing or would exist after giving effect to this Amendment.
(c) Borrower has no defense, counterclaim or offset
with respect to the Loan Agreement or the Obligations thereunder.
5. Effect on the Loan Agreement.
(a) Upon the effectiveness of Section 2 hereof, each
reference in the Loan Agreement to "this Agreement," "hereunder," "hereof,"
"herein" or words of like import shall mean and be a reference to the Loan
Agreement as amended hereby.
(b) Except as specifically amended herein, the Loan
Agreement, and all other documents, instruments and agreements executed
and/or delivered in connection therewith, shall remain in full force and
effect, and are hereby ratified and confirmed.
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(c) The execution, delivery and effectiveness of this
Amendment shall not operate as a waiver of any right, power or remedy of
Lender, nor constitute a waiver of any provision of the Loan Agreement, or
any other documents, instruments or agreements executed and/or delivered
under or in connection therewith.
6. Governing Law. This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors
and assigns and shall be governed by and construed in accordance with the
laws of the State of New York.
7. Headings. Section headings in this Amendment are included
herein for convenience of reference only and shall not constitute a part of
this Amendment for any other purpose.
8. Counterparts. This Amendment may be executed by the
parties hereto in two or more counterparts, each of which shall be deemed an
original and which taken together shall be deemed to constitute one and the
same agreement.
IN WITNESS WHEREOF, this Amendment No. 6 has been duly executed
as of the day and year first written above.
LINCOLN SNACKS COMPANY
By: /s/Kristine A. Crabs
Name: Kristine A. Crabs
Title: Vice President, Finance
and Administration
THE BANK OF NEW YORK
COMMERCIAL CORPORATION
By: /s/C. Michelle Stanley-Nurse
Name: C. Michelle Stanley-Nurse
Title: Assistant Vice President
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