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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 26, 1996
JP Foodservice, Inc.
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(Exact name of registrant as specified in its charter)
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Delaware 0-24954 52-1634568
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(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) Identification No.)
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9830 Patuxent Woods Drive, Columbia, Maryland 21046
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(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code: 410-312-7100
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ITEM 5. OTHER EVENTS.
The Registrant hereby incorporates by reference the information
contained in Attachment A hereto, which presents first quarter fiscal 1997
restated historical financial information reflecting the Registrant's
acquisition of Squeri Food Service, Inc. and its affiliate.
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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.
JP FOODSERVICE, INC.
By: /s/ Lewis Hay, III
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Lewis Hay, III
Senior Vice President and
Chief Financial Officer
Date: November 26, 1996
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Attachment A
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JP FOODSERVICE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
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ASSETS JUNE 29, SEPTEMBER 28,
1996 1996
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Current assets
Cash and cash equivalents $ 12,224 $ 9,486
Receivables, net 154,405 184,476
Inventories 84,138 105,899
Other current assets 9,076 14,510
Current deferred tax asset 480 1,650
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Total current assets 260,323 316,021
Property and equipment, net 104,258 129,034
Goodwill and other noncurrent assets 83,698 108,760
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Total assets $ 448,279 $ 553,815
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current obligations under capital leases $ 5,072 $ 6,065
Revolving bank line of credit 5,300
Current portion of long-term debt 895 216
Current portion of subordinated debt
with related parties 3,622 3,005
Accounts payable 110,230 101,033
Accrued expenses 14,338 25,503
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Total current liabilities 139,457 135,822
Noncurrent liabilities
Long-term debt 145,040 183,030
Subordinated debt with related parties 5,958 4,467
Obligations under capital leases 17,649 20,978
Noncurrent deferred tax liability 12,026 12,305
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Total noncurrent liabilities 180,673 220,780
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Total liabilities 320,130 356,602
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Commitments and contingent liabilities
Stockholders' equity
Common stock 189 222
Paid-in-capital 190,636 259,966
Accumulated deficit (17,733) (18,032)
Distribution in excess of net book value of
continuing stockholder's interest (44,943) (44,943)
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Total stockholders' equity 128,149 197,213
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Total liabilities and stockholders' equity $ 448,279 $ 553,815
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SEE ACCOMPANYING NOTES TO THE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
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JP FOODSERVICE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
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THREE MONTHS ENDED
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SEPTEMBER 30, SEPTEMBER 28,
1995 1996
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Net sales $ 356,323 $ 414,362
Cost of sales 295,561 343,631
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Gross profit 60,762 70,731
Operating expenses 50,152 57,667
Amortization of intangible assets 565 597
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Income from operations 10,045 12,467
Interest expense 3,551 3,654
Other expenses 42
Nonrecurring charge 5,300
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Income before income taxes 6,452 3,513
Provision for income taxes (2,765) (1,459)
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Net income 3,687 2,054
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Net income per common share $ 0.20 $ 0.10
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Weighted average number of shares
of common stock outstanding 18,756,818 20,639,681
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SEE ACCOMPANYING NOTES TO THE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
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JP FOODSERVICE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
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THREE MONTHS ENDED
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SEPTEMBER 30, SEPTEMBER 28,
1995 1996
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Net cash provided by (used in) operating activities $ (6,056) $ (51,859)
Cash flows from investing activities
Additions to property and equipment (4,173) (22,832)
Cost of businesses acquired (29,104)
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Net cash used in investing activities (4,173) (51,936)
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Cash flows from financing activities
Proceeds from public stock offering 67,274
Increase in long term debt 6,056 29,862
Proceeds from note receivable 5,500
Proceeds from employee stock purchases 169 389
Principal payments under capital lease obligations (1,393) (1,306)
Distributions to stockholders of acquired businesses (347) (662)
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Net cash provided by financing activities 4,485 101,057
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Net decrease in cash and cash equivalents (5,744) (2,738)
Cash and cash equivalents
Beginning of period 15,690 12,224
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End of period $ 9,946 $ 9,486
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SEE ACCOMPANYING NOTES TO THE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
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JP FOODSERVICE, INC.
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The Condensed Consolidated Financial Statements of JP Foodservice, Inc.
(the "Company") at September 28, 1996 and for the three months ended September
30, 1995 and September 28, 1996, included herein are unaudited, but include all
adjustments (consisting only of normal recurring entries) which the Company's
management believes to be necessary for the fair presentation of the financial
position, results of operations and cash flows of the Company at and for the
periods presented. Interim results are not necessarily indicative of results
that may be expected for the full year. The Condensed Consolidated Financial
Statements and related notes give retroactive effect to the merger with Valley
Industries, Inc. (together with its affiliates, "Valley") and Squeri Food
Service, Inc. (together with its affiliate, "Squeri") for all periods
presented, accounted for under the pooling of interests method. The condensed
consolidated balance sheets as of June 29, 1996 and September 28, 1996 include
the accounts of Valley as of January 31, 1996 and September 28, 1996,
respectively, and the accounts of Squeri as of December 31, 1995 and September
28, 1996, respectively, and the condensed consolidated statements of income and
of cash flows for the three-month period ended September 30, 1995 and September
28, 1996 include the results of Valley for the three-month period ended April
30, 1995 and the eight-month period ended September 28, 1996, respectively, and
the results of Squeri for the three-month period ended March 31, 1995 and the
nine-month period ended September 28, 1996, respectively, (see Note 3 - Merger
with Valley and Note 4 - Merger with Squeri). The "Company" as used in these
Condensed Consolidated Financial Statements refers to JP Foodservice, Inc. and
its subsidiaries, including Valley and Squeri.
NOTE 2 - NET INCOME PER COMMON SHARE
Net income per common share is based on the weighted average number of
common and common equivalent shares outstanding during the period.
NOTE 3 - MERGER WITH VALLEY
On August 30, 1996, the Company completed a merger with Valley, a broadline
foodservice distributor located in Las Vegas, Nevada, for a purchase price of
$40.7 million (net of indebtedness assumed or discharged). Under the terms of
the merger, which is accounted for as a pooling of interests, the Company
exchanged 1,936,494 common shares for all of Valley's common shares and
ownership interests of an affiliate.
Effective June 30, 1996, the fiscal year of Valley was conformed to the
Company's fiscal year. Accordingly, an adjustment of $2.1 million has been
made to the combined Company's retained earnings on June 30, 1996 to reflect
changes in Valley's retained earnings from February 1, 1996 to June 29, 1996.
All periods presented have been retroactively restated (See Note 1 - Basis of
Presentation).
Transaction costs related to the merger of $5.3 million ($3.3 million net of
tax or $0.16 per common share) were charged to income during the quarter and
consisted primarily of investment banking, legal and accounting fees and
printing, mailing and registration expenses.
NOTE 4 - MERGER WITH SQUERI
Effective September 30, 1996, the Company completed a merger with Squeri, a
broadline foodservice distributor located in Cincinnati, Ohio, for a purchase
price of approximately $26.1 million (net of indebtedness assumed or
discharged). Under the terms of the merger, accounted for as a pooling of
interests, the Company exchanged 1,079,875 common shares for all of Squeri's
common shares.
Effective June 30, 1996, the fiscal year of Squeri was conformed to the
Company's fiscal year. Accordingly, an adjustment has been made to the
combined Company's retained earnings on June 30, 1996 to reflect changes in
Squeri's retained earnings from January 1, 1996 to June 29, 1996. All periods
presented have been retroactively restated (see Note 1 - Basis of
Presentation).
Transaction costs related to the merger of $2.0 million ($1.2 million net of
tax) will be charged to income during the second quarter of fiscal 1997 and
will consist primarily of investment banking, legal and accounting fees and
printing, mailing and registration expenses.
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NOTE 5 - ARROW ACQUISITION
Effective August 31, 1996, the Company completed the acquisition of Arrow Paper
and Supply Co., Inc. (together with its affiliate, "Arrow"), a broadline
foodservice distributor located in Norwich, Connecticut. Under the terms of
the agreement, which is accounted for as a purchase, the Company purchased
certain assets, assumed or discharged certain liabilities and paid
consideration of $29.6 million. Approximately $1.7 million of the
consideration was paid in the form of common stock and the remainder was paid
in cash. The excess of purchase price over the fair value of net assets is
approximately $28.5 million and will be amortized using the straight-line
method over 40 years. Unaudited pro forma information for the three-month
periods ended September 28, 1996 and September 30, 1995, as if the acquisition
had occurred on the first day of those periods, is shown below.
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Three Months Ended
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(In thousands, except per share data) September 30, 1995 September 28, 1996
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Actual Pro forma Actual Pro forma
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Revenue $ 356,323 $ 375,923 $ 414,362 $ 432,049
Income from operations 10,045 10,618 12,467 13,229
Net income 3,687 3,944 2,054 2,433
Net income per common share $ 0.20 $ 0.21 $ 0.10 $ 0.12
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NOTE 6 - STOCK OFFERING
In August 1996, the Company completed the sale of 3,000,000 shares of common
stock in a public offering (the "Offering") and generated $65.7 million in net
proceeds. The net proceeds of the Offering were used to fund the cash portion
of the Arrow purchase price and to repay indebtedness assumed or discharged by
the Company in connection with its acquisitions of Valley and Arrow, as
discussed above. In September 1996, the Company received additional net
proceeds of $1.6 million in the Offering from the sale of 75,000 shares to
cover over-allotments.
NOTE 7 - CONTINGENCIES
From time to time, the Company is involved in litigation and proceedings
arising out of the ordinary course of business. There are no pending material
legal proceedings or environmental investigations to which the Company is a
party or to which the property of the Company is subject at this time.
