SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A
AMENDMENT NO. 1 TO
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
February 2, 1998
Date of Report (Date of earliest event reported):
FRESH AMERICA CORP.
(Exact Name of Registrant as Specified in Its Charter)
TEXAS 000-24124 76-0281274
(STATE OR OTHER JURISDICTION OF (COMMISSION FILE NUMBER) (IRS EMPLOYER
INCORPORATION) IDENTIFICATION NO.)
6600 LBJ Freeway, Suite 180
Dallas, Texas 75240
(Address of Principal Executive Offices) (Zip Code)
(972) 774-0575
Registrant's telephone number, including area code:
<PAGE>
Amendment No. 1 to Current Report on Form 8-K/A amends the Current Report
on Form 8-K (the "Form 8-K") of Fresh America for the event dated February 2,
1998, as filed with the Securities and Exchange Commission on February 17, 1998.
7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired.
The following financial statements of Francisco Distributing Company, LLC
are filed herewith as Item 7(a):
Audited financial statements as of December 31, 1997 and for the year then
ended, as follows:
-Independent Auditor's Report;
-Balance Sheet as of December 31, 1997;
-Statement of Income and Members' Equity for the year ended December
31, 1997;
-Statement of Cash Flows for the year ended December 31, 1997; and
-Notes to financial statements
(b) Pro Forma Financial Information.
The following pro forma financial information is being filed herewith as
Item 7(b):
-Unaudited Pro Forma Consolidated Condensed Balance Sheet as of January
2, 1998;
-Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet.
-Unaudited Pro Forma Consolidated Condensed Statement of Income for the
fiscal year ended January 2, 1998;
-Notes to Unaudited Pro Forma Consolidated Condensed Statement of
Income.
(c) Exhibits
*2.1 Asset Purchase Agreement, dated as of February 2, 1998, by and among
Francisco Acquisition Corp., a Texas corporation, Fresh America Corp., a
Texas corporation, Francisco Distributing Company, LLC a California
limited liability company, and the owners named therein.
*99.1 Restated Business Loan Agreement between Fresh America Corp. and Bank
of America Texas, N.A. dated February 2, 1998.
*Previously filed with the Registrant's Report on Form 8-K, as filed with the
Securities and Exchange Commission on February 17, 1998.
2
<PAGE>
ITEM 7 (a)
INDEPENDENT AUDITOR'S REPORT
To: The Members
Francisco Distributing Company, LLC
Norwalk, California
We have audited the accompanying balance sheet of Francisco Distributing Company
(a California Limited Liability Company) as of December 31, 1997, and the
related statements of income and members' equity, and cash flows for the year
then ended. 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Francisco Distributing Company
as of December 31, 1997, and the results of its operations and its cash flows
for the year then ended in conformity with generally accepted accounting
principles.
Beckman Kirkland & Whitney
Woodland Hills, California
February 20, 1998
3
<PAGE>
FRANCISCO DISTRIBUTING COMPANY, LLC
BALANCE SHEET
DECEMBER 31, 1997
ASSETS
CURRENT ASSETS:
Cash & Cash Equivalents $ 26,734
Accounts receivable, net of a
provision for doubtful accounts of $208,337 6,228,595
Produce inventory 277,981
Packaging supplies 21,897
Prepaid produce (Note 1) 1,590,930
Prepaid expenses 139,717
-----------
TOTAL CURRENT ASSETS 8,285,854
PROPERTY , PLANT AND EQUIPMENT, net of
Accumulated depreciation (Note 1 and 2) 197,574
OTHER ASSETS:
Deposits 32,670
Prepaid rent (Note 4) 132,500
-----------
TOTAL ASSETS $ 8,648,598
===========
See accompanying notes to financial statements.
4
<PAGE>
FRANCISCO DISTRIBUTING COMPANY, LLC
BALANCE SHEET
DECEMBER 31, 1997
LIABILITIES AND MEMBERS' EQUITY
CURRENT LIABILITIES:
Bank overdraft $ 635,400
Trade accounts payable 3,186,376
Accrued expenses 68,935
Payroll taxes payable 17,679
Note payable due bank (Note 3) 2,000,000
-----------
TOTAL CURRENT LIABILITIES 5,908,390
COMMITMENTS (Note 4)
MEMBERS' EQUITY 2,740,208
-----------
TOTAL LIABILITIES AND MEMBERS' EQUITY $ 8,648,598
===========
See accompanying notes to financial statements.
5
<PAGE>
FRANCISCO DISTRIBUTING COMPANY, LLC
STATEMENT OF INCOME AND MEMBERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1997
NET SALES $84,952,839
COST OF GOODS SOLD, Excluding depreciation and amortization 75,119,081
-----------
GROSS PROFIT 9,833,758
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Salaries and related cost 4,716,526
Rent, maintenance and related cost 1,473,134
Insurance expense 583,372
Automobile, travel and related expense 258,848
Advertising and promotion 344,132
Office expense 299,365
Provision for doubtful accounts 148,684
Other 302,203
Depreciation expense 67,315
-----------
8,193,579
INCOME FROM OPERATIONS 1,640,179
OTHER INCOME (EXPENSE)
Interest expense (277,409)
Interest income 36,722
Net realized gain on marketable securities (Note 6) 280,449
Loss on disposal of fixed assets (32,181)
-----------
7,581
NET INCOME 1,647,760
MEMBERS' DRAWS (4,950,731)
BEGINNING MEMBERS' EQUITY, JANUARY 1, 1997 6,043,179
-----------
ENDING MEMBERS' EQUITY, DECEMBER 31, 1997 $ 2,740,208
===========
See accompanying notes to financial statements.
6
<PAGE>
FRANCISCO DISTRIBUTING COMPANY, LLC
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME $ 1,647,760
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 67,315
Loss on disposal of fixed assets 32,181
Gain on sale of marketable securities (280,449)
Decrease in accounts receivable 1,035,952
Increase in inventories (138,178)
Decrease in produce prepayments 2,171,049
Decrease in prepaid expenses 39,739
Decrease in deposits 4,180
Decrease in prepaid rent 30,000
Increase in accounts payable 1,245,233
Increase in payroll taxes payable 15,565
Decrease in accrued expenses (235,500)
--------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 5,634,847
--------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable securities (11,214,073)
Proceeds from sale of marketable securities 12,292,872
Proceeds from sale of fixed assets 73,339
Purchase of property, plant and equipment (35,292)
Decrease in notes receivable 360,000
--------------
NET CASH PROVIDED BY INVESTING ACTIVITIES 1,476,846
--------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in securities margin account (257,757)
Decrease in bank overdraft (1,763,941)
Members' draws (4,950,731)
Repayment on notes (124,710)
--------------
NET CASH USED IN FINANCING ACTIVITIES (7,097,139)
--------------
NET CHANGE IN CASH 14,554
CASH AT BEGINNING OF YEAR 12,180
--------------
CASH AT END OF YEAR $ 26,734
==============
Total interest expense paid during the year ended December 31, 1997 was
$234,196.
See accompanying notes to financial statements.
7
<PAGE>
FRANCISCO DISTRIBUTING COMPANY, LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
BUSINESS ACTIVITY:
Francisco Distributing Company (the Company) operates a wholesale produce supply
company in Norwalk, California and Nogales, Arizona.
REVENUE RECOGNITION:
Sales are recognized at the time produce is shipped.
CASH AND CASH EQUIVALENTS:
For purposes of the statement of cash flows, the Company considers all highly
liquid cash or equivalent assets with original maturities of less than three
months to be cash and cash equivalents.
INCOME TAXES:
Since the Company is a limited liability company which elects to be taxed as a
partnership, income is passed through to the members and is taxed on their
respective individual and corporate income tax returns. Accordingly, no
provision has been made for income taxes.
INVENTORY:
Inventory is valued at the lower of cost or market price, based on the first-in
first-out method.
PREPAID PRODUCE:
Prepaid produce represents advances to farmers for the exclusive right to their
crops.
PROPERTY AND EQUIPMENT:
Equipment and leasehold improvements are carried at cost. Depreciation is
calculated using the straight-line method using the following estimated useful
lives:
YEARS
5 - 7 Dock and plant equipment
5 - 7 Office equipment
3 - 5 Transportation equipment
10 Leasehold improvements
USE OF ESTIMATES:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
8
<PAGE>
FRANCISCO DISTRIBUTING COMPANY, LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 2 - EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Equipment and leasehold improvements are comprised of the following and
collateralized as described in Note 3.
Dock and plant equipment $ 325,999
Office equipment 449,136
Transportation equipment 241,744
Leasehold improvements 168,562
----------
1,185,441
Accumulated depreciation (987,867)
----------
$ 197,574
==========
NOTE 3 - NOTE PAYABLE DUE BANK
The Company had a bank line of credit for $5,000,000, with interest payable
monthly at the bank's floating prime rate (which was 8.5% as of December 31,
1997), due July 1998. The note was guaranteed by the members and secured by
substantially all the assets of the Company. The outstanding balance at December
31, 1997 was $2,000,000. This line of credit was paid off and canceled in its
entirety in February of 1998.
NOTE 4 - COMMITMENTS
The Company leases its principal facility under a noncancelable operating lease
which expires on August 31, 2003. In addition, the Company leases a property
next to its principal facility under a noncancelable operating lease which
expires on November 30, 1998. A portion of this property is being subleased for
$6,250 per month.
The future minimum lease commitments as of December 31, 1997 are as follows:
YEARS ENDING
DECEMBER 31, AMOUNT
----------- ----------
1998 $ 943,980
1999 769,080
2000 769,080
2001 769,080
2002 769,080
Thereafter 451,130
----------
Total minimum lease payments $4,471,430
==========
9
<PAGE>
FRANCISCO DISTRIBUTING COMPANY, LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 4 - COMMITMENTS (CONTINUED)
Rent expense totaled $882,383 for the year ended December 31, 1997.
Under the lease agreement, the Company paid $300,000 in prepaid rent. This
amount is being amortized over the life of the lease. The unamortized balance at
December 31, 1997 was $162,500. Of this amount, $30,000 is included in prepaid
expenses.
On January 1, 1994 the Company entered into a five year consulting agreement
with a former partner. Under the terms of the agreement he is compensated
$26,000 per month. This agreement was due to expire in December 1998. In January
of 1998, the Company paid $265,980 to terminate the remainder of the consulting
agreement.
NOTE 5 - MAJOR CUSTOMER
During the year ended December 31, 1997, Ralphs/Food For Less accounted for
approximately 25% of the Company's sales. Accounts receivable from Ralphs/Food
For Less totaled $1,825,192 at December 31, 1997. Ralphs acquired Food For Less
during 1997. Prior to the acquisition, the Company sold to each customer
individually.
Accounts receivable from Lucky Stores Inc. totaled $646,728 at December 31,
1997.
NOTE 6 - MARKETABLE SECURITIES
At December 31, 1996 the Company had net unrealized gains of $82,580 on
marketable equity securities. As of December 31, 1997, all marketable equity
securities had been sold. The Company recognized net gains of $280,449 for the
year ended December 31, 1997. All marketable securities held by the Company are
classified as trading securities. Gains and losses are determined based on
specific identification of securities sold.
NOTE 7 - SUBSEQUENT EVENTS
On February 3, 1998 substantially all the assets of the Company and its
continuing business operations were acquired by Fresh America Corporation for
cash and common stock. The two members of the Company each signed a two year
employment contract with Fresh America Corporation.
NOTE 8 - YEAR 2000
In 1997, the Company developed a plan to deal with the year 2000 problem. During
1998, the Company will begin converting its computer system to be year 2000
compliant. The plan provides for the conversion efforts to be completed by the
end of 1999. The year 2000 problem is the result of computer programs being
written using two digits rather than four to define the applicable year.
10
<PAGE>
ITEM 7 (b)
On February 2, 1998, Fresh America Corp. (the "Registrant" or the
"Company"), through a wholly-owned acquisition subsidiary, completed the
acquisition of substantially all of the net assets of Francisco Distributing
Company, LLC, a California limited liability company ("Francisco"), for (subject
to adjustment and excluding transaction costs) approximately $5.6 million in
cash, $5.5 million in Company common stock and certain contingent payments.
Subject to an aggregate floor and ceiling of approximately $2.5 million and
$16.5 million, respectively, the Company has agreed to pay Francisco contingent
payments (payable at the Company's option in cash, or a combination of cash and
common stock) based upon a multiple of Francisco's pre-tax earnings in excess of
certain minimum thresholds in each of fiscal 1998 and 1999. Francisco sells,
distributes, transports and repacks fresh produce primarily in southern
California and Arizona.
The unaudited pro forma financial statements are based on assumptions the
Company believes are reasonable and which the Company believes are both
factually supportable and directly attributable to the acquisition. Such
unaudited pro forma financial statements and accompanying notes should be read
in conjunction with the audited Consolidated Financial Statements of the Company
and the related notes thereto which are included in the Company's Annual Report
on Form 10-K for its year ended January 2, 1998, its Current Report on Form 8-K
dated February 2, 1998 (all filed with the Securities and Exchange Commission)
and the Financial Statements of Francisco for the year ended December 31, 1997
and the respective accompanying notes thereto included in Item 7 (a) of this
Report.
The following pro forma financial data are not necessarily indicative of
the Company's results of operations that might have occurred had the transaction
been completed at the beginning of the period specified, and do not purport to
represent what the Company's consolidated results of operations might be for any
future period.
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
The following Unaudited Pro Forma Consolidated Condensed Balance Sheet as
of January 2, 1998 reflects the historical consolidated balance sheets of the
Company and Francisco adjusted to give effect to the acquisition of
substantially all of the net assets of Francisco, as if the acquisition had
occurred at January 2, 1998. The Unaudited Pro Forma Consolidated Condensed
Balance Sheet combines the financial position of the Company as of January 2,
1998 and the financial position of Francisco as of December 31, 1997.
The Company has accounted for the acquisition as a purchase and all
required purchase accounting adjustments to record assets and liabilities at
their estimated fair values have been made based on the actual allocation price
and actual levels of Francisco assets acquired and liabilities assumed on the
acquisition date. The acquisition price is subject to certain adjustments. Any
adjustment to the purchase price will affect the amount allocated to intangible
assets and will affect the amortization of intangibles in subsequent periods.
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF INCOME
The following Unaudited Pro Forma Consolidated Condensed Statement of
Income for the year ended January 2, 1998 is based on the respective historical
consolidated statements of income of the Company and Francisco, adjusted to give
effect to the acquisition of substantially all of the net assets of Francisco,
as if the acquisition had occurred on January 4, 1997. The Unaudited Pro Forma
Consolidated Condensed Statement of Income for the year ended January 2, 1998
combines the results of operations of the Company for the year ended January 2,
1998 with the results of operations of Francisco for the year ended December 31,
1997.
11
<PAGE>
FRESH AMERICA CORP. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
JANUARY 2, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
------------------------------------------------
FRESH FRANCISCO
AMERICA DISTRIBUTING
CORP. COMPANY ADJUSTMENTS COMBINED
------- ------------ ----------- --------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 936 $ 26 $ (250)(A) $ 712
Accounts Receivable, net 33,197 6,229 39,426
Inventories 3,536 300 3,836
Prepaid expenses 1,309 1,731 3,040
Deferred income taxes 362 -- 362
------- -------- -------
Total current assets 39,340 8,286 47,376
Property, plant and equipment, net 10,749 198 10,947
Notes receivable from
shareholders 166 -- 166
Intangible assets, net 9,138 -- 10,623(A) 19,761
Other assets 738 165 (77)(A) 826
------- -------- -------- -------
$60,131 $ 8,649 $ 10,296 $79,076
======= ======== ======== =======
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current Liabilities:
Current portion of long-term debt $ 1,642 $ 2,000 $ 5,000(A) $ 7,568
(2,000)(B)
926(A)
Accounts payable 22,546 3,822 26,368
Accrued salaries and wages 609 18 627
Other accrued expenses 893 69 962
Income taxes payable 332 -- 332
------- -------- -------
Total current liabilities 26,022 5,909 35,857
Long-term debt, less current portion 6,193 -- 317(A) 9,803
2,000(B)
1,293(A)
Deferred income taxes 198 -- 198
Other liabilities 99 -- 99
------- -------- -------
Total liabilities 32,512 5,909 45,957
------- -------- -------
Shareholders' Equity:
Common stock 39 -- 3(A) 42
Additional paid-in capital 16,345 -- 5,497(A) 21,842
Members' equity 2,740 (2,740)(A) --
Retained earnings 11,235 -- 11,235
------- -------- -------
Total shareholders' equity 27,619 2,740 33,119
------- -------- -------
Commitments and contingencies
------- -------- -------- -------
$60,131 $ 8,649 $ 10,296 $79,076
======= ======== ======== =======
</TABLE>
See accompanying notes to unaudited pro forma consolidated condensed financial
statements.
12
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
(In thousands)
(A) The following table sets forth the calculation of the Company's
acquisition costs and its preliminary allocation of Francisco's assets
and liabilities assuming the transaction occurred on January 2, 1998
using the estimated purchase accounting adjustments, which are subject
to post-closing adjustments and to further revisions once appraisals
and other studies of the fair value of Francisco's assets and
liabilities are completed. Final purchase accounting adjustments may
differ from the amounts shown below. Under the terms of the asset
purchase agreement, the estimated purchase price of Francisco as of
February 2, 1998 was $13.4 million.
Calculation of Acquisition Cost:
Cash $ 5,567*
Company Common Stock (285,437
shares at $19.27 per share) 5,500
Minimum contingent consideration
payable in cash or a combination
of cash and common stock at
the election of the Company 2,219**
Related acquisition expenses 77
---------
13,363
Net book value of net assets acquired (2,740)
---------
Excess of cost over net book value $ 10,623
=========
*Includes $250 in cash, $317 borrowed under the Company's revolving line
of credit and a $5,000 bridge loan due on September 30, 1998.
**Such guaranteed payments include $1,000 due at the end of fiscal 1998
and $1,500 due at the end of fiscal 1999. The Company recorded these
payments at their net present value discounted at 8%. As a result, $926
and $1,293 are included as debt on the pro forma balance sheet.
Allocation of purchase price:
Accounts receivable $ 6,229
Prepaid expenses 1,731
Other current assets 326
Other non-current assets 363
Accounts payable (3,822)
Bank line of credit (2,000)
Other current liabilities (87)
Intangible assets 10,623
---------
$13,363
=========
(B) On the acquisition date, Francisco's bank line of credit was paid off
using funds borrowed on the Company's revolving line of credit.
13
<PAGE>
FRESH AMERICA CORP. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF INCOME
FOR THE FISCAL YEAR ENDED JANUARY 2, 1998
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
----------------------- -----------------------
FRESH FRANCISCO
AMERICA DISTRIBUTING
CORP. COMPANY ADJUSTMENTS COMBINED
----------- --------- ---------- ----------
<S> <C> <C> <C>
Net sales $ 349,304 $ 84,953 $ 434,257
Cost of goods sold 312,444 75,119 387,563
----------- --------- ----------
Gross profit 36,860 9,834 46,694
----------- --------- ----------
Selling, general and administrative
expenses:
Salaries and related costs 17,581 4,717 22,298
Rent, maintenance and
related costs 5,622 1,633 7,255
Insurance expense 1,003 583 1,586
Automobile, travel and
related costs 990 259 1,249
Communication expense 1,026 140 1,166
Depreciation and
amortization 1,657 67 708(A) 2,432
Other 1,578 795 (312)(B) 2,061
----------- --------- ---------- ----------
29,457 8,194 396 38,047
----------- --------- ---------- ----------
Operating income 7,403 1,640 (396) 8,647
----------- --------- ---------- ----------
Other income (expense):
Interest expense (233) (277) (629)(C) (1,139)
Interest income 225 37 262
Other, net 192 248 440
----------- --------- ---------- ----------
184 8 (629) (437)
----------- --------- ---------- ----------
(1,025)
Income before income taxes 7,587 1,648 8,210
Provision for income taxes 2,874 - 659(D) 3,133
(400)(E)
----------- --------- ---------- ----------
Net income $ 4,713 $ 1,648 $ (1,284) $ 5,077
=========== ========= ========== ==========
Earnings per share:
Basic $ 1.25 $ 1.25
=========== ==========
Diluted $ 1.17 $ 1.17(G)
=========== ==========
CALCULATION OF SHARE DATA:
Weighted average common shares
outstanding - basic 3,766 285(F) 4,051
Dilutive securities 263 69(G) 332
----------- ---------- ----------
Weighted average common shares
outstanding - diluted 4,029 354 4,383
=========== ========== ==========
</TABLE>
See accompanying notes to unaudited pro forma consolidated condensed financial
statements.
14
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
(In thousands)
A. Reflects amortization of intangible assets resulting from the acquisition of
the net assets of Francisco on a straight-line basis over 15 years.
B. Reflects the elimination of expense related to a consulting agreement with a
former partner of Francisco. The agreement was paid off and terminated prior
to the acquisition of Francisco by the Company.
C. Represents additional interest expense recognized due to the $5,000 bridge
loan at 8.5%, $317 in borrowings under the Company's revolving line of credit
at 8.5% and the guaranteed payments of $1,000 and $1,500 due to the former
owners of Francisco at the end of fiscal 1998 and 1999, respectively. Such
future payments were discounted at 8% to a present value of $926 and $1,293,
respectively.
D. Represents adjustment for Francisco's income tax provision at an effective
rate of 40%. Since Francisco, prior to acquisition, was a limited liability
company that elected to be taxed as a partnership, no provision for taxes had
been made on historical financial statements.
E. Represents the tax effect of pro forma adjustment (A) through (C) above,
using the Company's pro forma effective tax rate of 39%.
F. Represents shares issued in connection with the acquisition of substantially
all of the net assets of Francisco as if the shares had been issued on
January 4, 1997. The adjustment does not include shares contingently issuable
as a result of the conversion of the guaranteed payments of $1,000 and $1,500
due at the end of fiscal 1998 and 1999 as discussed in Note C above.
G. For the purpose of computing diluted earnings per share, adjustments were
made to weighted average common shares and net income assuming the maximum
allowed conversion of 50% of the guaranteed payments (see C above) into
shares of common stock per the purchase agreement. The assumed number of
shares was calculated by dividing 50% of the guaranteed payments ([$1,000
+$1,500]*50%) by the average stock price of the Registrant for fiscal 1997
($18.05). Net income was adjusted to reduce interest expense as follows:
Present value of guaranteed payments ($926+$1,293) $ 2,219
Assumed percentage of conversion to common stock 50%
------------
$ 1,110
Interest rate 8%
------------
Interest expense $ 89
Tax effect at 39% (35)
============
Total adjustment to net income $ 54
============
15
<PAGE>
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.
Dated: FEBRUARY 17, 1998 FRESH AMERICA CORP.
By:/s/ ROBERT C. KIEHNLE
Robert C. Kiehnle
Chief Financial Officer
16
