-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Dsd47A6rENN0nzuB9wt3sUp/Gsf8EDlrNUbrmlQNAJ7Q4BKhjHgGVOGUrdP3gnlv Mschi+unr02wYiQ6mQkXAw== 0001004404-98-000027.txt : 19980827 0001004404-98-000027.hdr.sgml : 19980827 ACCESSION NUMBER: 0001004404-98-000027 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980826 ITEM INFORMATION: FILED AS OF DATE: 19980826 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: VACU DRY CO CENTRAL INDEX KEY: 0000102588 STANDARD INDUSTRIAL CLASSIFICATION: CANNED, FROZEN & PRESERVED FRUIT, VEG & FOOD SPECIALTIES [2030] IRS NUMBER: 941069729 STATE OF INCORPORATION: CA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-01912 FILM NUMBER: 98698280 BUSINESS ADDRESS: STREET 1: 7765 HEALDSBURG AVE STREET 2: P O BOX 2418 CITY: SEBASTOPOL STATE: CA ZIP: 95473-2418 BUSINESS PHONE: 7078294600 MAIL ADDRESS: STREET 1: P O BOX 2418 STREET 2: 7765 HEALDSBURG AVENUE CITY: SEBASTOPOL STATE: CA ZIP: 95473-2418 8-K/A 1 FORM 8-K/A SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K/A CURRENT REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported) August 26, 1998 --------------- VACU-DRY COMPANY - ------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in its Charter) California - ------------------------------------------------------------------------------- (State or Other Jurisdiction of Incorporation 01912 94-1069729 - ------------------------ ------------------------------------ (Commission File Number) (I.R.S. Employer Identification No.) 7765 Healdsburg Avenue, Sebastopol, California 95472 - ------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) (707) 829-4600 - ------------------------------------------------------------------------------- (Registrant's Telephone Number, Including Area Code) Not Applicable - ------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) The Registrant submits this Form 8-K/A in order to supply the financial statements and schedules with respect to the Registrant's acquisition of substantially all of the assets of Made In Nature, Inc. (Made In Nature) on June 11, 1998. Such assets consisted principally of inventory, accounts receivable, trademarks and contract rights. The consideration for the purchase consisted of cash of $336,000, the assumption of certain liabilities in an amount yet to be determined and the issuance of five year warrants to purchase 112,000 shares of the Registrant's common stock at $8.00 per share. The cash required to consummate the transaction was provided pursaunt to a credit facility from Wells Fargo Bank, N.A. The information should be read in conjunction with the Registrant's Form 8-K filed with the Commission on June 22, 1998. ITEM 7. Financial Statements and Exhibits --------------------------------- (a) Financial Statements of Made In Nature, Inc. Report of Independent Auditors Balance Sheets at December 31, 1997 and 1996 Statements of Revenues and Expenses for the Year ended December 31, 1997 and for the periods from April 8, 1996 to December 31, 1996 and from January 1, 1996 to April 7, 1996. Statements of Changes in Shareholders' Deficit for the Year Ended December 31, 1997 and for the periods from April 8, 1996 to December 31, 1996 and from January 1, 1996 to April 7, 1996 Statements of Cash Flows for the Years Ended December 31, 1997 and for the periods from April 8, 1996 to December 31, 1996 and from January 1, 1996 to April 7, 1996. Notes to Financial Statements (b) Unaudited Pro Forma Financial data for Vacu-dry Company and Subsidiary Unaudited Pro Forma Financial Data Unaudited Balance Sheet - March 31, 1998 Unaudited Pro Forma Consolidated Statement of Operations for the Nine Months Ended March 31, 1998 Unaudited Pro Forma Consolidated Statement of Operations Notes to Pro Forma Statements (c) Exhibits EXHIBIT 7.1 Consent of Independent Accountant (a) FINANCIAL STATEMENTS OF MADE IN NATURE, INC. REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Made In Nature, Inc.: We have audited the accompanying balance sheets of Made in Nature, Inc. (a California corporation) as of December 31, 1997 and 1996, and the related statements of revenues and expenses, changes in shareholders' deficit and cash flows for the year ended December 31, 1997 and for the periods from April 8, 1996 to December 31, 1996 for the successor company and from January 1, 1996 to April 7, 1996 for the predecessor company. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the 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 audits provide 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 Made in Nature, Inc. as of December 31, 1997 and 1996, and the results of its operations and its cash flows for the year ended December 31, 1997 and for the periods from April 8, 1996 to December 31, 1996 for the successor company and from January 1, 1996 to April 7, 1996 for the predecessor company in conformity with generally accepted accounting principles. San Francisco, California, July 28, 1998 MADE IN NATURE, INC. BALANCE SHEETS--DECEMBER 31, 1997 AND 1996 1997 1996 ----------------- ---------------- ASSETS CURRENT ASSETS: Cash $ 13,590 $ 894 Accounts receivable, less allowances for 396,063 295,679 uncollectible accounts of $10,000 and $24,600 in 1997 and 1996, respectively Inventories 585,723 2,382,696 Prepaid expenses 71,142 20,015 ----------------- ---------------- Total current assets 1,066,518 2,699,284 PROPERTY AND EQUIPMENT, net 79,081 65,282 GOODWILL, less accumulated amortization of $31,814 and $13,319 in 1997 and 1996, respectively 240,872 259,367 ================= ================ Total assets $ 1,386,471 $ 3,023,933 ================= ================ LIABILITIES AND SHAREHOLDERS' DEFICIT CURRENT LIABILITIES: Current maturities of long-term debt $ 295,108 $ 0 Accounts payable 1,617,368 1,811,611 Accrued payroll and related liabilities 27,207 15,617 Accrued interest 100,993 0 Customer deposits 1,048,063 929,840 ----------------- ---------------- Total current liabilities 3,088,739 2,757,068 ----------------- ---------------- LONG-TERM DEBT, net of current maturities 1,327,986 1,593,170 ----------------- ---------------- SHAREHOLDERS' DEFICIT: Common stock, no par value: Authorized shares--1,000 Issued and outstanding shares--1,000 0 0 Retained deficit (3,030,254) (1,326,305) ----------------- ---------------- Total shareholders' deficit (3,030,254) (1,326,305) ----------------- ---------------- Total liabilities and shareholders' deficit $ 1,386,471 $ 3,023,933 ================= ================ The accompanying notes are an integral part of these statements. MADE IN NATURE, INC. STATEMENTS OF REVENUES AND EXPENSES Successor Predecessor ----------------------------------- ----------------- Period from Year Ended Period from January 1, December 31, April 8, 1996, to 1996, to 1997 December 31, 1996 April 7, 1996 --------------- ------------------- ----------------- NET SALES $ 5,058,767 $ 3,319,141 $2,514,428 COST OF SALES 4,952,584 3,267,689 2,249,733 --------------- ------------------- ----------------- Gross margin 106,183 51,452 264,695 SELLING, GENERAL,AND ADMINISTRATIVE EXPENSES 1,660,297 1,279,917 524,421 --------------- ------------------- ----------------- Operating loss (1,554,114) (1,228,465) (259,726) INTEREST EXPENSE 149,035 97,040 0 --------------- ------------------- ----------------- Loss before provision for income taxes (1,703,149) (1,325,505) (259,726) PROVISION FOR INCOME TAXES 800 800 0 =============== =================== ================= Net loss $(1,703,949) $(1,326,305) $ (259,726) =============== =================== ================= The accompanying notes are an integral part of these statements. MADE IN NATURE, INC. STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIT Common Stock Total ------------------------------------------------------------------------ Additional Number Paid-In Retained Shareholders' of Shares Amount Capital Earnings Equity (Deficit) (Deficit) ------------ ----------- ------------ ----------------- ---------------- PREDECESSOR BALANCE, JANUARY 1, 1996 1,000 $1,000 $ 3,648,556 $(1,680,782) $1,968,774 Net loss 0 0 0 ( 259,726) (259,726) ------------------------------------------------------------------------ PREDECESSOR BALANCE, APRIL 7, 1996 1,000 1,000 3,648,556 (1,940,508) 1,709,048 Eliminate predecessor'S deficit 0 (1,000) (3,648,556) 1,940,508 (1,709,048) ------------------------------------------------------------------------ BALANCE, APRIL 8, 1996 1,000 0 0 0 0 Net loss 0 0 0 (1,326,305) (1,326,305) ------------------------------------------------------------------------ BALANCE, DECEMBER 31, 1996 1,000 0 0 (1,326,305) (1,326,305) Net loss 0 0 0 (1,703,949) (1,703,949) ======================================================================== BALANCE, DECEMBER 31, 1997 1,000 $ 0 $ 0 $(3,030,254) $(3,030,254) ========================================================================
The accompanying notes are an integral part of these statements. MADE IN NATURE, INC. STATEMENTS OF CASH FLOWS Successor Predecessor ---------------------------------------------------- Year Ended Period from Period from December 31, April 8, 1996, to January 1, 1996, 1997 December 31, 1996 to April 7, 1996 ---------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $(1,703,949) $ (1,326,305) $(259,726) Adjustments to reconcile net loss to net cash provided by (used for) operating activities: Depreciation and amortization expense 35,232 24,336 17,149 Changes in assets and liabilities: Decrease (increase) in accounts receivable, net (100,384) 631,127 55,555 Decrease (increase)in inventories 1,796,973 (1,598,615) 122,904 Increase in prepaid expenses (51,127) (10,171) (2,093) Increase (decrease) in accounts payable (194,243) 1,235,703 268,163 Increase (decrease) accrued payroll and related liabilities 11,590 (640) 124 Increase in accrued interest 100,993 0 0 ---------------------------------------------------- Net cash provided by (used for) operating activities (104,915) (1,044,565) 202,076 ---------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (30,536) (28,643) 0 ---------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Increase in customer deposits, net 118,223 929,840 0 Borrowings on notes payable 29,924 93,170 0 (Decrease) in payable to related parties 0 0 (90,478) ---------------------------------------------------- Net cash provided by (used for)financing activities 148,147 1,023,010 (90,478) ---------------------------------------------------- NET INCREASE (DECREASE) IN CASH 12,696 (50,198) 111,598 CASH (OVERDRAFT) AT BEGINNING OF PERIOD 894 51,092 (60,506) ==================================================== CASH AT END OF PERIOD $ 13,590 $ 894 $ 51,092 ==================================================== SUPPLEMENTAL DATA: Cash paid for interest $ 48,042 $ 0 $ 0 Cash paid for income taxes 800 0 0 Supplemental disclosure of non-cash activities Liabilities assumed and debt issued in connection with acquisition 0 2,106,290 0 The accompanying notes are an integral part of these statements. MADE IN NATURE, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: The accompanying financial statements have been prepared assuming that Made in Nature, Inc. (the Company or the Successor Company) will continue as a going concern due to the acquisition of the Company subsequent to year-end. The Company is engaged in the business of marketing certified organic, dried packaged foods, and organic beverages under its proprietary registered trademark "Made in Nature" brand through direct marketing and licensing agreements. The predecessor Company, which operated as a Dole Foods subsidiary (Dole Foods or the Predecessor Company) and was acquired by the current owners on April 8, 1996, in exchange for debt. The acquisition of the Company from Dole Foods was accounted for as a purchase. The excess of purchase price over the estimated fair market value of net assets acquired was allocated to goodwill. The financial statements include the results of the Predecessor Company from January 1, 1996, to April 7, 1996. The financial results of the Successor Company are presented for the period from April 8, 1996, to December 31, 1996, and for calendar year 1997. The Company competes in a single industry segment within the food industry. The organic food industry in the United States is comparatively small, with only a few organizations engaged in the marketing of organic dried fruits and juices. Concentration of Customers and Suppliers During 1997, the Company had three major customers that accounted for 51 percent of total sales. From April 8, 1996, to December 31, 1996, one of these customers accounted for 15 percent of total sales. Three vendors accounted for 50 percent of purchases for the period from April 8, 1996 to December 31, 1996. No vendor accounted for more than 10 percent of purchaes during the year ended December 31, 1997. Inventories The Company's inventories consist of organic juice and dried fruit products and packaging and supplies. Inventories are valued at the lower of cost (first-in, first-out method) or market. For the period from April 8, 1996 to December 31, 1996, provisions of $461,000 have been made to reduce excess and obsolete inventories to their net realizable value. Property and Equipment Property and equipment acquired on April 8, 1996, were recorded at estimated fair value as of that date. Subsequent additions are recorded at cost. These assets are depreciated on a straight-line basis over a the following estimated useful lives: Packaging equipment 5 years Furniture and fixtures 5 years Income Taxes The Company provides for income taxes in accordance with Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes." SFAS No. 109 requires the asset and liability method of accounting for income taxes. Under this method, deferred income taxes are recognized for the tax consequences of "temporary differences" by applying the statutory tax rate to the difference between the financial statement carrying amounts and the tax basis of existing assets and liabilities (see Note 5). Deferred taxes are recorded based upon differences between the financial statement and tax bases of assets and liabilities and available tax credit carryforwards. Goodwill The Company amortizes goodwill on a straight-line basis over 15 years. The Predecessor Company amortized goodwill on a straight-line basis over 40 years. Amortization expense for the year ended December 31, 1997, for the period from April 8, 1996, to December 31, 1996, and for the period from January 1, 1996, to April 7, 1996, was $18,495, $13,319 and $16,270, respectively. Revenue The Company recognizes revenue upon shipment of the product. 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 and disclosure of contingent 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. 2. ACQUISITION OF MADE IN NATURE, INC.: On April 8, 1996, Made In Nature, Inc. was acquired from Dole Foods in exchange for a $1,500,000 note payable to Dole Foods. The acquisition was accounted for as a purchase. The excess of the purchase price over the estimated fair value of assets assumed of $268,000 was recorded as goodwill and is amortized on a straight-line basis over 15 years. The estimated fair value of assets acquired and liabilities assumed is summarized as follows: Assets: Current assets $1,819,000 Property and equipment 14,000 Other assets 5,000 ---------- Total assets 1,838,000 Liabilities: other current liabilities 606,000 ---------- Net assets acquired 1,232,000 ========== Goodwill is calculated as follows: Payable to Dole $1,500,000 Less: Net assets acquired 1,232,000 ---------- Goodwill $ 268,000 ========== 3. PROPERTY EQUIPMENT: Property and equipment consist of the following: 1997 1996 ------------- ------------- Packaging equipment $ 100,799 $ 70,263 Furniture and fixtures 6,038 6,038 ------------- ------------- Total property and equipment 106,837 76,301 Accumulated depreciation (27,756) (11,019) ------------- ------------- Property and equipment, net $ 79,081 $ 65,282 ============= ============= Depreciation expense for the year ended December 31, 1997, for the period from April 8, 1996, to December 31, 1996, and for the period from January 1, 1996, to April 7, 1996, was $16,737, $11,019, and $4,107, respectively. 4. LONG-TERM DEBT: Long-term debt consists of the following: 1997 1996 --------------- --------------- Note payable to Dole Foods: interest at 8.0 percent; interest through March 31, 1997, added to principal; subsequent interest due quarterly commencing July 1, 1997, with principal due in semiannual installments of $147,554 from April 1, 1998 to 2003, secured by the Company brand name $ 1,623,094 $ 1,593,170 Less: Current maturities (295,108) 0 --------------- --------------- Long-term debt $ 1,327,986 $ 1,593,170 =============== ================ Maturities of long-term debt are as follows: Year Ending December 31 ----------- 1998 $ 295,108 1999 295,108 2000 295,108 2001 295,108 2002 295,108 Thereafter 147,554 ------------- Total $ 1,623,094 ============= 5. INCOME TAXES: Under SFAS No. 109, deferred taxes are recorded for differences in the timing of the recognition of revenues and expenses for financial reporting and income tax purposes. Deferred taxes result primarily from the accounting for depreciation and reserves for accounts receivable and inventories. Provision for income taxes for the year ended December 31, 1997 and for the period from April 8, 1996 to December 31, 1996 consist of California minimum taxes. Due to the subsequent sale of the Company, no tax benefit was allocated to the Company from Dole Foods during the period from January 1, 1996 to April 7, 1996. Accordingly, provision for income taxes is zero during this period. The Company has U.S. federal and California net operating loss carryforwards available at December 31, 1997, of approximately $3,200,000 and $1,600,000, respectively, that expire in 2011 and 2012. A deferred tax asset is recognized for all deductible temporary differences and operating loss and tax credit carryforwards. A valuation allowance is recognized if it is more likely than not that some portion or all of the deferred tax asset will not be recognized. Deferred tax assets consist of the following as of December 31, 1997 and 1996: 1997 1996 ---------------- -------------- Deferred tax assets: Inventory reserves $ 141,000 $ 321,000 Allowance for uncollectible accounts 4,000 10,000 Net operating loss carryforwards 1,186,000 376,000 ---------------- -------------- 1,331,000 707,000 Less: Valuation allowance (1,331,000) (707,000) ================ ============== Net deferred tax asset $ 0 $ 0 ================ ============== 6. COMMITMENTS: The Company has purchase agreements with certain growers and processors to provide the Company with products and services to be used in its normal operations. The aggregate purchase commitment as of December 31, 1997, under these agreements was approximately $4,879,000. Most of the agreements provide for multiple-year future purchases at fixed prices. The Company has pledged its accounts receivable, inventory, and cash to a customer to secure the advance customer deposit payments made to the Company. Customer deposits have been presented on the balance sheets equivalent to the cash received less any reductions in liability for shipments made to the customer. All unapplied amounts bear interest at 3 percent annually. The Company leases office space on a month-to-month basis and various other equipment under operating lease agreements. Minimum future rental commitments under equipment operating leases with terms greater than one year at December 31, 1997, are as follows: Year Ending December 31 ------------ 1998 $2,808 1999 2,808 ------ Total $5,616 ====== Rental expense under operating leases for the year ended December 31, 1997, for the period from April 8, 1996, to December 31, 1996, and for the period from January 1, 1996 to April 7, 1996, was $43,032, $32,976, and $19,655, respectively. 7. SUBSEQUENT EVENTS AND TRANSACTIONS: On June 11, 1998, the Company entered into an agreement to sell all of the Company's assets and certain liabilities to a dried-fruit processor for $336,000 in cash plus warrants to purchase 112,000 shares of the acquirer's common stock over the next five years. The exercise price of the warrants was equal to the acquirer's stock price on the acquisition date. In addition, prior to this transaction, the Company negotiated or is in process of finalizing negotiations for certain reductions of approximately $410,000 in accounts payable as well as a reduction in the note payable to Dole Foods and accrued interest thereon to $500,000. Also, in connection with this transaction, the customer that the Company owed $1,048,000 for customer deposits as of December 31, 1997 forgave a portion of this liability and converted the remaining $517,000 into a 15 percent equity interest in the new company. This transaction was completed on June 11, 1998. (b) PRO FORMA FINANCIAL STATEMENTS FOR VACU-DRY COMPANY UNAUDITED PRO FORMA FINANCIAL DATA The following unaudited pro forma consolidated balance sheet as of March 31, 1998, gives effect to the Made In Nature, Inc. (Made In Nature) acquisition as if the acquisition occurred on March 31, 1998. The following unaudited pro forma consolidated statements of operations for the nine months ended March 31, 1998, and for the year ended June 30, 1997, give effect to the Made In Nature acquisition as if the acquisition occurred on July 1, 1996. Made In Nature operates on a calendar year-end. The unaudited pro forma consolidated statement of operations for the nine months ended March 31, 1998, and for the year ended June 30, 1997, include the accounts of Made In Nature for the nine months ended March 31, 1998, and for the year ended March 31, 1997, respectively. Due to the differences in year-ends, the accounts of Made In Nature for the three months ended June 30, 1997, have not been incorporated into the pro forma statements of operations. Sales and net income (loss) for the three months ended June 30, 1997, were $937,000 and $(277,000), respectively. The unaudited pro forma financial data are based on the unaudited historical financial statements for Vacu-dry Company (Vacu-dry) and Made In Nature and the assumptions and adjustments described in the accompanying notes. The unaudited pro forma financial statements referred to above do not purport to represent what the Company's results of operations actually would have been if the events described above had occurred as of the dates indicated or what such results will be for any future period. The pro forma adjustments are based on currently available information and upon certain assumptions that management believes are reasonable under the circumstances. VACU-DRY COMPANY AND SUBSIDIARY UNAUDITED BALANCE SHEET-MARCH 31, 1998 Unaudited --------------------------------------------------------------------- Made In Pro Forma Pro Forma Vacu-dry Nature Adjustments Consolidated --------------------------------------------------------------------- ASSETS CURRENT ASSETS: Cash $ 194,000 $ 59,000 $ 0 $ 253,000 Accounts receivable, net 2,570,000 685,000 0 3,255,000 Other receivables 16,000 0 0 16,000 Inventories, net 7,853,000 594,000 0 8,447,000 Prepaid expenses 17,000 89,000 0 106,000 Current deferred taxes 240,000 0 109,000 (a) 349,000 --------------------------------------------------------------------- Total current assets 10,890,000 1,427,000 109,000 12,426,000 LONG-TERM ASSETS: Net property, plant, and equipment 6,665,000 80,000 0 6,745,000 Intangibles, net 0 342,000 2,225,000 (g) 2,567,000 ===================================================================== Total assets $ 17,555,000 $ 1,849,000 $ 2,334,000 $ 21,738,000 ===================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Borrowings under line of credit $ 750,000 $ 0 $ 0 $ 750,000 Current maturities of long-term debt 595,000 0 0 595,000 Accounts payable 1,369,000 1,741,000 (410,000) (b) 2,700,000 Accrued payroll and related liabilities 761,000 41,000 0 802,000 Accrued interest 0 255,000 (255,000) (c) 0 Accrued expenses 318,000 214,000 100,000 (d) 632,000 Payable to related party 0 1,303,000 (1,303,000) (e) 0 Payable to seller 0 0 336,000 (f) 336,000 Income taxes payable 30,000 0 0 30,000 --------------------------------------------------------------------- Total current liabilities 3,823,000 3,554,000 (1,532,000) 5,845,000 --------------------------------------------------------------------- LONG-TERM LIABILITIES: Borrowings under line of credit 1,850,000 0 0 1,850,000 Long-term debt net of current maturities 2,185,000 1,500,000 (1,000,000) (c) 2,685,000 --------------------------------------------------------------------- Total long-term liabilities 4,035,000 1,500,000 (1,000,000) 4,535,000 --------------------------------------------------------------------- Deferred income taxes 826,000 0 0 826,000 --------------------------------------------------------------------- Minority interest 0 0 517,000 (e) 517,000 --------------------------------------------------------------------- SHAREHOLDERS' EQUITY: Capital stock 2,826,000 0 0 2,826,000 Paid in capital: warrants 0 0 446,000 (f) 446,000 Retained earnings 6,045,000 (3,205,000) 3,903,000 6,743,000 --------------------------------------------------------------------- Total shareholders' equity 8,871,000 (3,205,000) 4,349,000 10,015,000 --------------------------------------------------------------------- Total liabilities and shareholders' equity $ 17,555,000 $ 1,849,000 $ 2,334,000 $ 21,738,000 =====================================================================
VACU-DRY COMPANY AND SUBSIDIARY UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED MARCH 31, 1998 Unaudited ------------------------------------------------------------------------------------------ Consolidated before Pro Forma Pro Forma Pro Forma Vacu-dry Made In Nature Adjustments Adjustments Consolidated ------------------------------------------------------------------------------------------ REVENUES: Net sales $19,897,000 $ 3,980,000 $ 23,877,000 $ 0 $ 23,877,000 Other 342,000 0 342,000 0 342,000 ------------------------------------------------------------------------------------------ Total revenues 20,239,000 3,980,000 24,219,000 0 24,219,000 ------------------------------------------------------------------------------------------ COSTS AND EXPENSES: Cost of sales 16,465,000 3,822,000 20,287,000 0 20,287,000 Selling, general, and administrative 2,270,000 1,420,000 3,690,000 96,000 (h) 3,786,000 Interest 215,000 54,000 269,000 0 269,000 ------------------------------------------------------------------------------------------ Total costs and expenses 18,950,000 5,296,000 24,246,000 96,000 24,342,000 ------------------------------------------------------------------------------------------ EARNINGS (LOSS) BEFORE PROVISION FOR INCOME TAXES 1,289,000 (1,316,000) (27,000) (96,000) (123,000) Provision (benefit) for income taxes 438,000 1,000 439,000 (479,000) (i) (40,000) ========================================================================================== Net earning (loss) $ 851,000 $(1,317,000) $ (466,000) $ 383,000 $ (83,000) ==========================================================================================
VACU-DRY COMPANY AND SUBSIDIARY UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS Unaudited --------------------------------------------------------------------------- Made In Nature Consolidated for Pro Forma Vacu-dry for for the Period the Twelve Months Consolidated the Twelve from April 8, Ended March 31, for the Twelve Months Ended 1996, to 1997, before Pro Pro Forma Months Ended June 30, 1997 March 31, 1997 Forma Adjustments Adjustments June 30, 1997 -------------------------------------------------------------------------------------------- REVENUES: Net sales $23,798,000 $ 4,899,000 $ 28,697,000 $ 0 $ 28,697,000 Other 635,000 0 635,000 0 635,000 -------------------------------------------------------------------------------------------- Total revenues 24,433,000 4,899,000 29,332,000 0 29,332,000 -------------------------------------------------------------------------------------------- COSTS AND EXPENSES: Cost of sales 21,258,000 4,814,000 26,072,000 0 26,072,000 Selling, general, and administrative 2,154,000 1,593,000 3,747,000 128,000 (h) 3,875,000 Interest 272,000 222,000 494,000 0 494,000 -------------------------------------------------------------------------------------------- Total costs and expenses 23,684,000 6,629,000 30,313,000 128,000 30,441,000 -------------------------------------------------------------------------------------------- EARNINGS (LOSS) BEFORE PROVISION FOR INCOME TAXES 749,000 (1,730,000) (981,000) (128,000) (1,109,000) Provision (benefit) for income taxes 232,000 1,000 233,000 (575,000) (i) (342,000) ============================================================================================ Net earning (loss) $ 517,000 $(1,731,000) $ (1,214,000) $ 447,000 $ (767,000) ============================================================================================
NOTES TO PRO FORMA STATEMENTS (a) Adjustment of $109,000 to reflect deferred tax assets resulting from inventory and accounts receivable reserves that are not deductible for tax purposes until realized. Prior to the acquisition of Made In Nature, a valuation allowance was recorded against the deferred tax asset due to uncertainties regarding realization. (b) Reflects actual and estimated reductions in accounts payable that have occurred or are under negotiation with vendors. These amounts will be revised as additional information is obtained. (c) Reflects the forgiveness of notes payable from a related party. (d) Reflects accrual for acquisition costs. (e) Reflects the forgiveness of a portion of a Made In Nature creditor's customer deposits and other payables and conversion of the remaining balance into 15 percent equity in Made In Nature. (f) Reflects the cash payment due to the seller and 112,000 warrants issued for the acquisition of Made In Nature. (g) Adjustment of $2,225,000 to reflect excess of purchase price over estimated fair value of the net assets acquired. (h) Adjustment to reflect goodwill amortization. The Company amortizes goodwill on a straight-line basis over its estimated useful life of 20 years. (i) Adjustment to record benefit for income taxes. Prior to the acquisition of Made In Nature, a valuation allowance was recorded against all tax assets due to uncertainties regarding realization. After the acquisition, Vacu-dry and Made In Nature will file consolidated tax returns. If the acquisition had taken place on July 1, 1996, losses incurred by Made In Nature could have been offset against income of Vacu-dry and Vacu-dry's available tax carrybacks. Accordingly, a tax benefit has been recognized in the unaudited pro forma consolidated statements of operations for the nine months ended March 31, 1998, and for the year ended July 30, 1997. 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. VACU-DRY COMPANY By: /s/ Thomas R. Eakin -------------------------------------- Date: August 26, 1998 Thomas R. Eakin Its: Vice President - Finance and Chief Financial Officer (c) EXHIBITS EXHIBIT 7.1 CONSENT OF INDEPENDENT ACCOUNTANT As independent public accountants, we hereby consent to the incorporation in this form 8-K/A of our report on Made In Nature, Inc. dated July 28, 1998 included in this filing under Commission file No. 01912. It should be noted that we have not audited any financial statements subsequent to December 31, 1997. ARTHUR ANDERSEN LLP AUGUST 25, 1998 -----END PRIVACY-ENHANCED MESSAGE-----