UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 8, 1999
NEW WORK COFFEE & BAGELS, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 0-27148 13-3690261
-------------- --------------- ----------------
(State or other jurisdiction (Commission File No.) (IRS Employer Identification
of incorporation) Number)
379 WEST BROADWAY, NEW YORK, NEW YORK 11746
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (212) 343-0552
<PAGE>
ITEM 7. Financial Statements and Exhibits.
a) Pro Forma Financial Information. In conjunction with the filing of Form
8-K on December 7, 1998, the pro forma financial information required by Article
11 of Regulation S-X is provided herewith as Exhibit 99.15.
b) Exhibits. The following exhibits are hereby filed with this Form 8-K:
Exhibit
Number Description
- ----------- --------------
99.15 Pro Forma Financial Information
SIGNATURES
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 hereunto duly authorized.
NEW WORLD COFFEE
& BAGELS, INC.
By: /s/JEROLD E. NOVACK
----------------------------
JEROLD E. NOVACK
Vice President - Finance
Date: February 8, 1999
<PAGE>
New World Coffee & Bagels, Inc. and Mahhattan Bagel Company, Inc.
Pro Forma Balance Sheet - Assets
As of September 27, 1998 (New World) and September 30, 1998 (MBC)
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma
New World MBC Adjustments Combined
--------- --- ----------- --------
ASSETS
- ------
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,017,000 $ 3,745,000 $ 5,000,000 (a) $ 4,362,000
(8,000,000) (b)
2,600,000 (h)
Accounts receivable, net - 1,744,000 (1,044,000) (c) 700,000
Franchise fee receivable area developers, net - 240,000 (240,000) (c) -
Current maturities of notes receivable, net 2,603,000 656,000 3,259,000
Inventories 579,000 1,012,000 (250,000) (c) 1,341,000
Prepaid expenses and other current assets 165,000 601,000 (601,000) (c) 165,000
----------------- ---------------- ----------------
Total current assets 4,364,000 7,998,000 9,827,000
----------------- ---------------- ----------------
PROPERTY AND EQUIPMENT, net 4,777,000 11,763,000 (3,145,000) (c) 13,395,000
----------------- ---------------- ----------------
OTHER ASSETS:
Long term receivables 1,239,000 470,000 (470,000) (c) 1,239,000
Franchise fee receivables from area developers,
long term, net - 200,000 (200,000) (c) -
Notes receivable long term, net - 6,288,000 (5,444,000) (c) 844,000
Deposits and other assets, net 1,119,000 1,374,000 (1,374,000) (c) 1,319,000
200,000 (h)
Investment in stores, net - 1,072,000 (778,000) (c) 294,000
Goodwill, net of accumulated amortization 3,123,000 - 22,250,000 (b) 7,687,000
13,546,000 (c)
(17,847,000) (d)
5,500,000 (e)
(8,885,000) (f)
(10,000,000)(g)
Trademarks - - 10,000,000 (g) 10,000,000
----------------- ---------------- ----------------
$ 14,622,000 $ 29,165,000 $ 44,605,000
================= ================ ================
</TABLE>
<PAGE>
New World Coffee & Bagels, Inc. and Manhattan Bagel Company, Inc.
Pro Forma Balance Sheeet - Liabilities and Shareholders' Equity
As of September 27, 1998 (New World) and September 30, 1998 (MBC)
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma
New World MBC Adjustments Combined
----------- ------ -------------- ------------
<S> <C> <C> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 1,494,000 $ 5,306,000 $ 3,600,000 (b) $ 12,534,000
(3,366,000) (d)
5,500,000 (e)
Current portion of notes payable 193,000 - 193,000
Current portion of capital leases obligations 231,000 15,000 246,000
Unearned franchise fee income and franchise deposits - 379,000 379,000
Other current liabilities 177,000 - 177,000
-------------- --------------- ----------------
Total current liabilities 2,095,000 5,700,000 13,529,000
-------------- --------------- ----------------
DEFERRED RENT 254,000 - 254,000
-------------- --------------- ----------------
LONG-TERM DEBT, net of current 1,364,000 - 5,000,000 (a) 14,664,000
5,500,000 (b)
2,800,000 (h)
-------------- ---------------
CAPITAL LEASES OBLIGATIONS, net of current 26,000 19,000 45,000
-------------- ----------------- ---------------
SECURITY DEPOSITS AND OTHER
NON-CURRENT LIABILITIES - 563,000 (483,000) (d) 80,000
-------------- ----------------- ---------------
LIABILITIES SUBJECT TO SETTLEMENT:
Long-term debt - 5,134,000 (5,134,000) (d) -
Accounts payable and accrued expenses and capital
lease obligations - 8,864,000 (8,864,000) (d) -
-------------- ----------------- ---------------
- 13,998,000 -
-------------- ----------------- ---------------
SHAREHOLDERS' EQUITY:
Preferred stock - - -
Common stock 15,000 41,105,000 3,000 (b) 18,000
(41,105,000) (f)
Additional paid-in capital 27,931,000 - 5,147,000 (b) 33,078,000
Accumulated deficit (17,063,000) (32,220,000) 32,220,000 (f) (17,063,000)
--------------- ----------------- ---------------
Total shareholders' equity 10,883,000 8,885,000 16,033,000
--------------- ----------------- ---------------
$ 14,622,000 $ 29,165,000 $ 44,605,000
=============== ================= ===============
</TABLE>
<PAGE>
New World Coffee & Bagels, Inc. and Manhattan Bagel Company, Inc.
Pro Forma Statement of Operations
For the Three Quarters Ended Setpember 27, 1998 (New World)
and September 30, 1998 (MBC)
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma
New World MBC Adjustments Combined
-------------- -------------- -------------- --------------
REVENUES
- --------
<S> <C> <C> <C> <C>
Store sales $ 9,539,000 $ 2,269,000 $ 11,808,000
Product sales - 19,067,000 19,067,000
Franchise & license related income 2,304,000 2,028,000 4,332,000
-------------- -------------- --------------
11,843,000 23,364,000 35,207,000
-------------- -------------- --------------
COSTS AND EXPENSES
Cost of sales, occupancy and other store operating expenses 8,235,000 15,659,000 23,894,000
Selling, general and administrative expenses 2,228,000 5,763,000 7,991,000
Depreciation and amortization 1,006,000 1,241,000 (426,930) (k) 2,350,680
230,610 (l)
300,000 (m)
-------------- -------------- --------------
11,469,000 22,663,000 34,235,680
-------------- -------------- --------------
Income from operations 374,000 701,000 971,320
INTEREST AND OTHER INCOME - 413,000 413,000
INTEREST EXPENSES (158,000) (283,000) (1,010,250) (j) (1,451,250)
REORGANIZATION EXPENSES - (2,238,000) 2,238,000 (i) -
-------------- -------------- --------------
Income (loss) before provision for income taxes 216,000 (1,407,000) (66,930)
PROVISION FOR INCOME TAXES - - -
-------------- -------------- --------------
Net income (loss) $ 216,000 $ (1,407,000) $ (66,930)
============== ============== ==============
NET (LOSS) PER SHARE - BASIC AND DILUTED $ 0.02 $ (0.00)
============== ==============
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING - BASIC AND DILUTED 12,872,019 16,103,837 (n)
============== ==============
</TABLE>
<PAGE>
New World Coffee & Bagels, Inc. and Manhattan Bagel Company, Inc.
Pro Forma Statement of Operations
For the Years Ended Decedmber 28, 1997 (New World) and December 31, 1997 (MBC)
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma
New World MBC Adjustments Combined
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
REVENUES
Store sales $ 15,047,000 $ 6,704,000 $ 21,751,000
Product sales - 26,552,000 26,552,000
Franchise and license related income 820,000 6,315,000 7,135,000
-------------- -------------- --------------
15,867,000 39,571,000 55,438,000
-------------- -------------- --------------
COSTS AND EXPENSES
Cost of sales, occupancy and other store
operating expenses 13,138,000 22,805,000 35,943,000
Selling, general and administrative expenses 2,979,000 19,952,000 22,931,000
Depreciation and amortization 2,281,000 1,948,000 (803,510)(k) 4,132,970
307,480 (l)
400,000 (m)
Provision for store closings and reorganization costs 300,000 - 300,000
Non-cash charges & write-off of investment 3,481,000 20,004,000 23,485,000
-------------- -------------- --------------
22,179,000 64,709,000 86,791,970
-------------- -------------- --------------
(Loss) from operations (6,312,000) (25,138,000) (31,353,970)
INTEREST AND OTHER INCOME 51,000 1,513,000 1,564,000
INTEREST EXPENSE (475,000) (703,000) (1,347,000) (j) (2,525,000)
REORGANIZATION EXPENSES - (1,442,000) 1,442,000 (i) -
-------------- -------------- --------------
(Loss) before provision for income taxes (6,736,000) (25,770,000) (32,314,970)
PROVISION FOR INCOME TAXES - - -
-------------- -------------- --------------
Net (loss) $ (6,736,000) $ (25,770,000) $ (32,314,970)
============== ============== ==============
NET (LOSS) PER SHARE - BASIC AND DILUTED $ (0.80) $ (2.77)
============== ==============
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING - BASIC AND DILUTED 8,442,198 11,674,016 (n)
============== ==============
</TABLE>
<PAGE>
NEW WORLD COFFEE & BAGELS, INC. AND MANHATTAN BAGEL COMPANY, INC.
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
Introduction to Pro Forma Financial Statements (Unaudited)
The accompanying unaudited pro forma balance sheets of New World Coffee &
Bagels, Inc. ("New World") and Manhattan Bagel Company, Inc. ("MBC") as of
September 27, 1998 and September 30, 1998, respectively, presents the combined
financial position of the Companies, assuming the acquisition of MBC by New
World (the "Acquisition") had been completed as of September 30, 1998. The
unaudited pro forma statements of operations of New World and MBC for the three
quarters ended September 27, 1998, and September 30, 1998, respectively, and for
the fiscal years ended December 28, 1997, and December 31, 1997, respectively,
reflect the Acquisition as if it had been consummated on January 1, 1997.
The Acquisition was made pursuant to a First Amended Joint Plan of
Reorganization (the "Plan") under the federal bankruptcy code for MBC and its
principal subsidiary, and the Plan was approved by the United States Bankruptcy
Court for the District of New Jersey.
In the Acquisition, New World acquired all of the capital stock of MBC for
a total purchase price of approximately $22,250,000, consisting of $8,000,000 in
cash, $5,500,000 in notes payable, $5,150,000 of equity and $3,600,000 of
accruals. In order to obtain the necessary financing, New World raised an
estimated $5 million in debt. New World will account for the Acquisition as a
purchase.
New World's management has designated a 25-year amortization period to be
appropriate based on the historical operations of MBC and the anticipated future
results of MBC. Management will periodically evaluate the relative fair market
value of the intangible assets acquired as compared to the carrying value of the
related assets, and impairments, if any, will be charged to operations when
identified.
The pro forma financial information does not purport to be indicative of
the results which would have actually have been obtained had such transactions
been completed as of the assumed dates and for the periods presented or which
may be obtained in the future. The pro forma adjustments described in the notes
to the pro forma financial statements reflect the preliminary allocation of the
purchase price to net assets and is subject to final determination.
<PAGE>
Notes to Pro Forma Financial Statements (Unaudited)
Basis of Presentation
The unaudited pro forma balance sheet combines the balance sheets of New
World and MBC as of September 27, 1998 and September 30, 1998, respectively, and
is presented as if the Acquisition of MBC by New World had occurred as of
September 30, 1998. The unaudited pro forma statements of operations of New
World and MBC for the three quarters ended September 27, 1998, and September 30,
1998, respectively, and for the fiscal years ended December 28, 1997, and
December 31, 1997, respectively, reflect the Acquisition as if it had been
consummated on January 1, 1997.
The historical balance sheets and statements of operations as of and for
the three quarters ended September 27, 1998 and September 30, 1998, used in the
preparation of the pro forma financial statements have been derived from the
respective unaudited financial statements of New World and MBC. The historical
statements of operations for the fiscal years ended December 28, 1997, and
December 31, 1997, have been derived from the Companies' respective audited
financial statements.
Liabilities not subject to settlement as presented in MBC's
debtor-in-possession balance sheet as of September 30, 1998, have been presented
within current liabilities in the accompanying unaudited pro forma balance
sheet.
The adjustments recorded to the carrying values of MBC's assets and
liabilities in the accompanying unaudited pro forma adjustments represent
estimated fresh-start adjustments at September 30, 1998, to restate the balance
sheet accounts at their net realizable value.
Unaudited Pro Forma Adjustments
Descriptions of the adjustments included in the unaudited pro forma
financial statements are as follows:
Balance Sheet Adjustments
(a) Reflects long-term debt entered into by New World to finance the
Acquisition.
(b) Reflects the accounting for the Acquisition of MBCs common stock for a
total purchase price of $22,250,000, consisting of $8,000,000 in cash,
$5,500,000 in notes payable, $5,150,000 of equity and $3,600,000 of accruals.
(c) Reflects the write-down of the carrying value of the assets acquired
based on their estimated fair market values at the time of the Acquisition.
(d) Reflects the reduction of the remaining liabilities of MBC that are not
a part of the Acquisition.
(e) Reflects estimated accruals required at the time of the Acquisition.
<PAGE>
(f) Reflects the recapitalization of MBC's equity accounts upon
consolidation.
(g) Reflects the allocation of a portion of the purchase price to the value
of the trademarks acquired in the Acquisition.
(h) Reflects additional debt in the form of the refinancing of an EDA bond,
originally issued by MBC, subsequent to the Acquisition, net of debt financing
expenses.
Income Statement Adjustments
(i) Eliminates reorganization expenses incurred by MBC in the periods
presented.
(j) Reflects the increase in interest expense in connection with the new
debt incurred to support the outflow of cash for the acquisition.
(k) Reflects the adjustment of depreciation expense of MBC for the periods
presented based on the fair values assigned to property and equipment in
purchase accounting.
(l) Reflects the amortization of the excess of the purchase price over the
fair value of the net assets acquired using a 25-year amortization period.
(m) Reflects the amortization of the value associated to the trademarks
over a 25-year amortization period.
(n) Reflects the weighted average number of shares outstanding for the
periods presented, after giving effect to the Acquisition, calculated as the
historical weighted average common shares for the periods presented for New
World (12,872,019 and 8,442,198, for the three quarters ended September 27,
1998, and the year ended December 31, 1997, respectively), plus shares issued in
connection with the Acquisition.
