-----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, NjB294O+VMjPqk0nMr/ZnkJttracI3vAAJbwiJkzNdAmqXHL8MstqobOPtXNpSNe s/JmokzReFxgX1z/QRkmQg== 0000899243-96-000829.txt : 19960708 0000899243-96-000829.hdr.sgml : 19960708 ACCESSION NUMBER: 0000899243-96-000829 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960419 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960705 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: IMPERIAL HOLLY CORP CENTRAL INDEX KEY: 0000831327 STANDARD INDUSTRIAL CLASSIFICATION: SUGAR & CONFECTIONERY PRODUCTS [2060] IRS NUMBER: 740704500 STATE OF INCORPORATION: TX FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-10307 FILM NUMBER: 96591390 BUSINESS ADDRESS: STREET 1: ONE IMPERIAL SQ STE 200 STREET 2: P O BOX 9 CITY: SUGAR LAND STATE: TX ZIP: 77487 BUSINESS PHONE: 7134919181 FORMER COMPANY: FORMER CONFORMED NAME: IMPERIAL SUGAR CO /TX/ DATE OF NAME CHANGE: 19880606 8-K/A 1 FORM 8-K/A SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 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): April 19, 1996 IMPERIAL HOLLY CORPORATION (Exact name of registrant as specified in its charter) TEXAS (State or other jurisdiction of incorporation) 1-10307 74-0704500 (Commission File Number) (IRS Employer Identification No.) One Imperial Square, Suite 200 P.O. Box 9, Sugar Land, Texas 77487 (Address of principal executive offices) (Zip Code) (Registrant's telephone number, including area code): (713) 491-9181 This Form 8-K/A amends the Current Report on Form 8-K filed by Imperial Holly Corporation on May 3, 1996. ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS On April 19, 1996, Imperial Holly Corporation ("Imperial Holly") through its wholly-owned subsidiary Holly Sugar Corporation ("Holly") acquired, pursuant to a Stock Purchase Agreement dated as of January 8, 1996 by and between Holly and Spreckels Industries, Inc. ("Spreckels Industries"), all of the outstanding capital stock of Spreckels Sugar Company, Inc. and Limestone Products Company, Inc. (collectively "Spreckels Sugar"), a California based beet sugar processor. The purchase price was the sum of (i) Spreckels Sugar's net working capital at December 31, 1995, (ii) $3 million and (iii) net cash advances made by Spreckels Industries between December 31, 1995 and closing. $35.3 million of the purchase price was funded at closing by advances under Imperial Holly's revolving credit line co-agented by Harris Trust and Savings Bank and Texas Commerce Bank National Association. Spreckles Industries calculated the total purchase price as $41.3 million, with a remaining balance due of $6.0 million. As a result of a post-closing review performed by Holly pursuant to the Stock Purchase Agreement, Holly has notified Spreckles Industries that it calculates the purchase price as $29.3 million. Holly and Spreckles Industries are presently attempting to resolve these differences. Spreckels Sugar operates beet sugar processing plants in Woodland and Mendota, California, which Holly will continue to operate. Holly did not acquire Spreckels Sugar's Manteca California factory, which was distributed to another subsidiary of Spreckels Industries prior to the acquisition by Holly. Spreckels Industries has announced that the Manteca California factory will not operate as a beet sugar factory. ITEM 5. OTHER EVENTS On April 22, 1996, Holly announced the closing of its Hamilton City, California factory which will take place following completion of the spring processing campaign. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements of Businesses Acquired PREDECESSOR COMPANY To Imperial Holly Corporation: We have audited the accompanying combined statements of operations, stockholders' equity and cash flows of Spreckels Sugar Company, Inc. and Limestone Products Company, Inc. (Delaware corporations; collectively, the Company) for the month ended July 31, 1993, and the year ended June 30, 1993. 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 combined financial statements referred to above present fairly, in all material respects, the results of the Company's operations and its cash flows for the month ended July 31, 1993, and the year ended June 30, 1993, in conformity with generally accepted accounting principles. As discussed in Notes 8 and 10, the Company adopted Statements of Financial Accounting Standards No. 106 and No. 109 effective July 1, 1993. /s/ ARTHUR ANDERSEN LLP San Francisco, California, June 25, 1996 SUCCESSOR COMPANY To Imperial Holly Corporation: We have audited the accompanying combined balance sheets of Spreckels Sugar Company, Inc. and Limestone Products Company, Inc. (Delaware corporations; collectively, the Company) as of June 30, 1995 and 1994, and the related combined statements of operations, stockholders' equity and cash flows for the year ended June 30, 1995, and the 11 months ended June 30, 1994. 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 combined financial statements referred to above present fairly, in all material respects, the financial position of the Company as of June 30, 1995 and 1994, and the results of its operations and its cash flows for the year ended June 30, 1995, and the 11 months ended June 30, 1994, in conformity with generally accepted accounting principles. /s/ ARTHUR ANDERSEN LLP San Francisco, California, June 25, 1996 SPRECKELS SUGAR COMPANY, INC. AND LIMESTONE PRODUCTS COMPANY, INC. ------------------------------------------------------------------ COMBINED BALANCE SHEETS ----------------------- AS OF JUNE 30, 1995 AND 1994 ---------------------------- (dollars in thousands, except per-share amounts) ------------------------------------------------
1995 1994 --------- --------- ASSETS ------ Cash and cash equivalents $ 4,736 $ 629 Restricted cash - 1,200 Accounts receivable, net of allowance for doubtful accounts of $129 and $105 11,450 10,035 Grower accounts receivable 4,372 5,551 Inventories 59,032 50,507 Deferred maintenance 4,008 3,948 Other current assets 4,055 2,870 -------- -------- Total current assets 87,653 74,740 Property, plant and equipment, net 92,722 80,514 Other assets 1,735 1,755 -------- -------- Total assets $182,110 $157,009 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Bank overdraft $ 10,031 $ 1,568 Accounts payable 9,402 13,689 Short-term borrowings 35,265 23,387 Current portion of capital leases 1,374 - Accrued payroll costs 3,644 3,861 Deferred taxes 12,592 12,432 Other current liabilities 7,414 6,573 -------- -------- Total current liabilities 79,722 61,510 Long-term debt 10,616 8,517 Capital leases, net of current portion 2,932 1,821 Due to affiliate 42,536 26,201 Postretirement benefit obligation 8,723 8,695 Pension 2,481 1,346 Deferred taxes 23,182 22,854 Insurance reserves 2,174 1,865 Other noncurrent liabilities 2,015 5,254 -------- -------- Total liabilities 174,381 138,063 -------- -------- Commitment and contingencies (Note 12) - - Stockholders' equity: Common stock, $1 par value; 2,000 shares authorized and 2 2 outstanding Additional paid-in capital 23,551 23,551 Accumulated deficit (15,824) (4,607) -------- -------- Total stockholders' equity 7,729 18,946 -------- -------- Total liabilities and stockholders' equity $182,110 $157,009 ======== ========
The accompanying notes are an integral part of these statements. SPRECKELS SUGAR COMPANY, INC. AND LIMESTONE PRODUCTS COMPANY, INC. ------------------------------------------------------------------ COMBINED STATEMENTS OF OPERATIONS --------------------------------- FOR THE YEAR ENDED JUNE 30, 1995, THE 11 MONTHS ENDED JUNE 30, 1994, -------------------------------------------------------------------- THE MONTH ENDED JULY 31, 1993, AND THE YEAR ENDED JUNE 30, 1993 --------------------------------------------------------------- (dollars in thousands) ----------------------
Successor Company Predecessor Company -------------------- ------------------- Year 11 Months Month Year Ended Ended Ended Ended June 30, June 30, July 31, June 30, 1995 1994 1993 1993 --------- ---------- ---------- --------- NET SALES $176,433 $188,725 $16,022 $171,957 COST OF PRODUCTS SOLD 173,481 167,666 13,210 150,120 -------- -------- ------- ------- Gross profit 2,952 21,059 2,812 21,837 OPERATING EXPENSES: Selling, general and administrative expense 10,891 19,916 1,692 19,100 Other operating expense - - 49 597 -------- -------- ------- ------- Income (loss) from operations (7,939) 1,143 1,071 2,140 OTHER EXPENSE: Interest expense, net 9,619 5,726 551 7,321 Other nonoperating expense 1,466 3,231 106 5,625 -------- -------- ------- ------- Income (loss) before benefit for income taxes, fresh- start reporting adjustments and cumulative effect of changes in accounting principles (19,024) (7,814) 414 (10,806) PROVISION (BENEFIT) FOR INCOME TAXES (7,807) (3,207) 170 (4,385) -------- -------- ------- ------- Income (loss) before fresh-start reporting adjustments and cumulative effect of changes in accounting principles (11,217) (4,607) 244 (6,421) FRESH-START REPORTING ADJUSTMENTS, net of tax - - 18,687 - CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES, net of tax - - (4,700) - ------- -------- ------- ------- Net income (loss) $(11,217) $ (4,607) $14,231 $ (6,421) ======== ======== ======= ========
The accompanying notes are an integral part of these statements. SPRECKELS SUGAR COMPANY, INC. AND LIMESTONE PRODUCTS COMPANY, INC. ------------------------------------------------------------------ COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY ------------------------------------------- FOR THE YEARS ENDED JUNE 30, 1995, 1994 AND 1993 ------------------------------------------------ (dollars in thousands) ---------------------------------
Retained Additional Earnings Total Common Stock Paid-in (Accumulated Shareholders' Shares Amounts Capital Deficit) Equity ------ ------- ----------- ------------- -------------- BALANCE AT JUNE 30, 1992 2,000 $2 $28,996 $ (7,810) $ 21,188 Net loss - - - (6,421) (6,421) ----- -- ------- -------- -------- BALANCE AT JUNE 30, 1993 2,000 2 28,996 (14,231) 14,767 Income before fresh-start adjustments and cumulative effect of changes in accounting principles - - - 244 244 Cumulative effect of changes in accounting principles - - - (4,700) (4,700) ----- -- ------- -------- -------- BALANCE AT JULY 31, 1993 2,000 2 28,996 (18,687) 10,311 Fresh-start reporting adjustments - - (5,445) 18,687 13,242 ----- -- ------- -------- -------- BALANCE AT AUGUST 1, 1993 2,000 2 23,551 - 23,553 Net loss - - - (4,607) (4,607) ----- -- ------- -------- -------- BALANCE AT JUNE 30, 1994 2,000 2 23,551 (4,607) 18,946 Net loss - - - (11,217) (11,217) ----- -- ------- -------- -------- BALANCE AT JUNE 30, 1995 2,000 $2 $23,551 $(15,824) $ 7,729 ===== == ======= ======== ========
The accompanying notes are an integral part of these statements. SPRECKELS SUGAR COMPANY, INC. AND LIMESTONE PRODUCTS COMPANY, INC. ------------------------------------------------------------------ STATEMENTS OF CASH FLOWS ------------------------ FOR THE YEAR ENDED JUNE 30, 1995, THE 11 MONTHS ENDED JUNE 30, 1994, -------------------------------------------------------------------- THE MONTH ENDED JULY 31, 1993, AND THE YEAR ENDED JUNE 30, 1993 --------------------------------------------------------------- (dollars in thousands) ----------------------
Successor Company Predecessor Company -------------------- ------------------- Year 11 Months Month Year Ended Ended Ended Ended June 30, June 30, July 31, June 30, 1995 1994 1993 1993 --------- ---------- ---------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $(11,217) $ (4,607) $ 14,231 $ (6,421) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities before reorganization items- Depreciation and amortization 3,578 2,993 49 2,964 Deferred income tax 488 413 37,513 (4,385) Fresh-start adjustment - - (18,687) - Net changes in operating assets and liabilities- Receivable, prepaid expenses and other assets (1,461) 14,439 (1,764) 1,058 Inventories (8,525) 15,950 (19,245) (6,372) Trade payables and accrued expenses 22,288 960 14,756 (1,310) Other liabilities (2,920) (6,649) 663 6,402 Cumulative effect of changes in accounting principles - - 4,700 - ------- -------- -------- -------- Net cash provided by (used in) operating activities 2,231 23,499 32,216 (8,064) ------- -------- -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (13,301) (3,722) (38,934) (1,302) Purchase of Delta Sugar assets - (1,878) - - Purchase of emission credits from Delta Sugar Corporation - (1,122) - - ------- -------- -------- -------- Net cash used in investing activities (13,301) (6,722) (38,934) (1,302) ------- -------- -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Short-term borrowings, net 11,878 (8,010) (3,596) 27,180 Repayment of seasonal loan - (15,919) - (17,739) Borrowing- seasonal loan - - 8,658 - Borrowing- revolver 2,099 8,517 - - ------- -------- -------- -------- Net cash provided by (used in) financing activities 13,977 (15,412) 5,062 9,441 ------- -------- -------- -------- Net increase (decrease) in cash and cash equivalents 2,907 1,365 (1,656) 75 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,829 464 2,120 2,045 RESTRICTED CASH AT END OF PERIOD - 1,200 - - ------- -------- -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 4,736 $ 629 $ 464 $ 2,120 ======== ======== ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Noncash financing activities- Borrowing under capital lease obligations $ 4,306 $ 1,821 $ - $ - Cash paid during the year for- Interest 1,584 940 233 2,763 Taxes - - - -
The accompanying notes are an integral part of these statements. SPRECKELS SUGAR COMPANY, INC. AND LIMESTONE PRODUCTS COMPANY, INC. ------------------------------------------------------------------ NOTES TO COMBINED FINANCIAL STATEMENTS -------------------------------------- JUNE 30, 1995, 1994 AND 1993 ---------------------------- 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: ------------------------------------------- Nature of Operations -------------------- Spreckels Sugar Company, Inc. (Sugar) is a processor of refined sugar. Through its three California manufacturing facilities, it produces and markets refined beet and cane sugar into a full line of industrial, grocery and food- service sweetener products. Limestone Products Company, Inc. (Limestone), located in Cool, California, mines limestone that is sold to Sugar, for use in manufacturing processes, and to other third parties. Principles of Combination ------------------------- The accompanying financial statements include the combined accounts of Sugar and Limestone (collectively, the Company). Sugar and Limestone are wholly owned by Yale International, Inc. (Yale), formally known as Spreckels Industries, Inc. (see Note 14 regarding a change in ownership subsequent to June 30, 1995). Yale is a holding company that was founded in 1987 and is principally comprised of Duff-Norton Company, Inc. (Duff-Norton) and its subsidiaries and the Company. As discussed in Note 2, the accompanying financial statements reflect the effects of fresh-start reporting as of August 1, 1993, with periods prior to August 1, 1993, reflecting the "Predecessor Company," and periods subsequent to July 31, 1993, reflecting the "Successor Company." 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. All significant intercompany transactions and accounts have been eliminated in combination. Cash and Cash Equivalents ------------------------- Cash and cash equivalents consist of highly liquid investments with original maturities of three months or less. Restricted Cash --------------- Restricted cash is the amount remaining from the financing of ion exclusion equipment through a capital lease. These funds are specifically restricted to be used for the cost of funding the remaining ion exclusion equipment. Property, Plant and Equipment ----------------------------- Property, plant and equipment are depreciated using the straight-line method over their estimated useful lives, ranging from 15 to 30 years for buildings and structures and from 7 to 18 years for machinery and equipment. Expenditures for repairs and maintenance are charged against income as incurred. Beginning in 1994, the Company capitalized certain manufacturing preparation costs incurred between sugar production periods, principally repairs and maintenance. Such costs are deferred and allocated to the following processing period. In March 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard (SFAS) No. 121, "Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." This statement requires that long-lived assets be reported at the lower of carrying amount or fair value. The Company plans to adopt SFAS No. 121 in fiscal year 1997 and believes that the adoption of this new accounting standard would not have a significant impact on its financial position and results of operations. Revenue Recognition ------------------- Revenue is recognized as products are shipped or when risk of loss has passed, or when services are provided. Income Taxes ------------ Deferred income taxes are recorded for transactions that are reported in one period for financial statement purposes and in another for income tax purposes. The Company is included in the consolidated tax returns of Yale. The liabilities incurred or benefit received by Yale as a result of taxable income or losses generated by the Company are allocated back to the Company as if the Company filed a separate combined federal tax return. Fair Value of Financial Instruments ----------------------------------- Unless otherwise disclosed, the carrying amount of all financial instruments approximates estimated fair value. 2. REORGANIZATION PROCEEDINGS: --------------------------- In October 1992, Yale filed a voluntary petition for reorganization under Chapter 11 of Title 11 of the United States Bankruptcy Code. Yale's subsidiaries, including Sugar and Limestone, did not file similar petitions and were not debtors in any insolvency proceedings. On August 4, 1993 (the Confirmation Date), the Bankruptcy Court entered an order confirming the plan of reorganization (the Plan), which became effective on September 2, 1993. The effects of the Plan were recorded as of July 31, 1993, the fiscal month- end closest to the Confirmation Date. Yale, and therefore, the Company implemented the accounting for entities emerging from Chapter 11 reorganization, including the application of fresh- start reporting, set forth by the American Institute of Certified Public Accountants Statement of Position 90-7, "Financial Reporting by Entities in Reorganization under the Bankruptcy Code" (SOP 90-7). The June 30, 1995 and 1994, combined balance sheets reflect the adoption of SOP 90-7. Under fresh-start reporting, the reorganization value of the entity was allocated to the reorganized Company's assets on the basis of their estimated fair market values as of July 31, 1993. Revaluation of assets and liabilities pursuant to the adoption of fresh-start reporting included the following (in thousands):
Write-up of assets to estimated fair values $ 49,716 Write-up of other assets 8,469 Adjust liabilities (4,713) Tax impact of fresh-start reporting (40,040) Other 5,255 -------- Total fresh-start adjustments $ 18,687 ========
Under fresh-start reporting, the final combined balance sheet as of July 31, 1993 (the Predecessor Company), became the opening balance sheet on August 1, 1993, of the reorganized company (the Successor Company). Since fresh-start reporting is reflected in the accompanying financial statements for the year ended June 30, 1995, and for the 11-month period ended June 30, 1994, the accompanying combined financial statements as of that date are not comparable in all material respects to any such statements as of any prior date or for any prior period. 3. INVENTORIES: ------------ Inventories are valued at the lower of cost or market using the last-in, first-out method (LIFO). The excess of current cost over the LIFO cost was $1.3 million and $0 at June 30, 1995 and 1994, respectively. Inventories consist of the following (in thousands):
June 30 ----------------- 1995 1994 -------- -------- Stock in progress $ 2,022 $ 2,600 Raw cane sugar 2,953 5,837 Finished beet sugar products 43,103 32,537 Materials, supplies and other 10,954 9,533 ------- ------- Total inventories $59,032 $50,507 ======= =======
4. PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment consist of the following (in thousands): June 30 ----------------- 1995 1994 ------- ------- Land $23,628 $22,035 Buildings and structures 5,957 8,419 Machinery and equipment 69,707 53,053 ------ ------ 99,292 83,507 Less- Accumulated depreciation (6,570) (2,993) ------ ------ Total property,plant and $92,722 $80,514 equipment ======= ======= 5. DEBT: ----- Short-term Borrowings --------------------- Short-term borrowings at June 30, 1995 and 1994, consist of The Commodity Credit Corporation (CCC) advances totaling $35.3 million and $23.4 million, respectively. Borrowings under CCC advances at June 30, 1995, bore interest at the weighted average rate of 5.5 percent and were due on July 31, 1995, August 31, 1995, and September 30, 1995. CCC advances represent nonrecourse loans under a federal program secured by refined beet sugar inventories. Under the program, the Company may borrow up to an amount based on beet sugar inventories produced during the current year. Long-term Debt -------------- On July 22, 1994, Yale entered into a Secured Revolving Credit Agreement (the Credit Agreement) with Harris Trust and Savings Bank. The Credit Agreement allows funding for Sugar up to a maximum of $25.0 million, and funding may be extended to Duff-Norton up to a maximum of $15.0 million, but the total funding extended to both Sugar and Duff-Norton cannot at any time exceed the maximum amount of the credit agreement, which is $40.0 million, including a $6 million sublimit for letters of credit through June 30, 1997. The Credit Agreement is secured by accounts receivable, inventories and bank deposits of Sugar and Duff-Norton. Interest rates under the Credit Agreement are at prime plus 0.75 percent for domestic loans and LIBOR plus 2.25 percent for Eurodollar loans. Borrowings under the Company's seasonal revolving credit facility at June 30, 1995 and 1994, were $10.6 million and $8.5 million, respectively. At June 30, 1995, Yale was in default of a net worth covenant and a fixed charges covenant related to Sugar. However, Harris Trust and Savings subsequently waived these defaults. At June 30, 1995, virtually all assets of the Company, other than property, plant, equipment, and beet sugar inventories secured by CCC advances, are pledged as security under the Credit Agreement. Long-term debt consists of the following (in thousands):
June 30 --------------- 1995 1994 ------- ------ Old bank agreement- Revolving loans interest at prime (7.25 percent at June 30, 1994), plus 1.75 percent, paid in full during 1995 $ - $8,517 Credit Agreement- Revolving loans due July 1, 1997, interest at prime (9.0 percent at June 30, 1995), plus 0.75 percent 10,617 - ------- ------ Total $10,617 $8,517 ======= ======
Guarantees ---------- On September 2, 1993, Yale issued 11.5 percent New Series Secured Notes (the Guarantees) that are guaranteed by each of Yale's directly held subsidiaries, including Sugar and Limestone. Each Guarantee is a senior unsecured obligation of the subsidiary providing such Guarantee and ranks pari passu with all other senior unsecured indebtedness of the subsidiary. In addition, the Company and Yale's other domestic subsidiaries have guaranteed the indebtedness outstanding under the Credit Agreement. The obligations of the Company under the Credit Agreement are secured in general by the cash, cash equivalents, accounts receivable and inventory of the Company and Yale's other domestic subsidiaries, and therefore effectively rank senior to the Guarantees. 6. ACQUISITION: ------------ The Company acquired selected assets of Delta Sugar Corporation (Delta) in September 1993, including certain sugar beet processing equipment and USDA marketing allocations. Delta also transferred to the Company its contracts with growers of sugar beets covering the fall 1993 and spring 1994 harvest periods. The purchase price was $3.0 million, payable in three installments ending on July 31, 1996. At June 30, 1995, the Company owed Delta $1.2 million, reflected in other current liabilities on the accompanying balance sheet. In addition, the Company agreed to pay to Delta's growers a $1.00 per ton incentive payment for beets harvested during the fall of 1993 and through the spring of 1996. 7. LEASE COMMITMENTS: ------------------ The Company leases office space, production facilities, warehouses, transportation, and other equipment under operating leases extending for varying periods of time. Rental expense amounted to $1.9 million for the year ended June 30, 1995, $1.9 million for the 11 months ended June 30, 1994, $0.2 million for the month ended July 31, 1993, and $1.5 million for the year ended June 30, 1993, respectively. The Company also has a capital lease arrangement to finance its ion exclusion program. The capital leases were entered into on March 1, 1994, and July 29, 1994, at an interest rate of 9.83 percent and 10.00 percent per annum, respectively, and expire in 1998. At June 30, 1995, remaining lease commitments under noncancelable leases are as follows (in thousands):
Operating Capital ---------- --------- 1996 $ 1,442 $1,699 1997 893 1,741 1998 446 1,473 1999 388 114 2000 406 - Thereafter 1,004 - ------- ------ Total minimum lease payments $ 4,579 5,027 ======= Less- Imputed interest 721 ------ Present value of net minimum lease payments $4,306 ====== 8. INCOME TAXES: ------------- The Company's provision (benefit) for income taxes comprises the following: Successor Company Predecessor Company ------------------- ------------------ Year 11 Months Month Year Ended Ended Ended Ended June 30, June 30, July 31, June 30, 1995 1994 1993 1993 ------- ------- --------- -------- Deferred tax provision (benefit)- Federal $ 415 $ 351 $(2,148) $(3,727) State 73 62 (379) (658) ------- ------- ------- ------- 488 413 (2,527) (4,385) ------- ------- ------- ------- Current tax provision (benefit)- Federal (7,051) (3,077) 2,292 - State (1,244) (543) 405 - ------- ------- ------- ------- (8,295) (3,620) 2,697 - ------- ------- ------- ------- Total provision (benefit) $(7,807) $(3,207) $ 170 $(4,385) ======= ======= ======= =======
The Company adopted SFAS No. 109 as of July 1, 1993. The components of deferred tax assets and liabilities on the balance sheets at June 30, 1995 and 1994, are as follows:
June 30 ---------------- 1995 1994 ------- ------- Deferred tax assets- Postretirement health benefit accrual $ 3,524 $ 3,627 Insurance reserves 1,301 1,130 Real property lease valuation reserves 231 461 Pension reserves 1,970 1,271 Plant closure reserves 543 1,618 Vacation reserves 1,438 1,335 Environmental reserves 1,023 1,042 Other 1,873 1,969 ------ ------ Total deferred tax assets 11,903 12,453 ------ ------ Deferred tax liabilities- Deferred tax on difference between book and tax basis of inventories 11,060 11,060 Deferred tax on difference between book and tax basis of fixed assets and land 28,797 29,402 Gain on property exchange 1,480 1,480 State tax 3,079 3,047 Deferred repairs and maintenance 1,643 1,619 Other 1,618 1,131 ------- ------- Total deferred tax liabilities 47,677 47,739 ------- ------- Net deferred tax liability $35,774 $35,286 ======= =======
Deferred tax assets and liabilities in the balance sheets are classified in accordance with SFAS No. 109, which generally requires that the classification be based on the related asset or liability creating the deferred tax. Deferred taxes not related to a specific asset or liability are classified based on the estimated period of reversal. The reconciliation between the statutory federal tax expense and recorded tax expense is as follows (in thousands):
Successor Company Predecessor Company ------------------- ------------------- June 30, June 30, July 31, June 30, 1995 1994 1993 1993 --------- --------- --------- --------- Statutory federal income tax expense (benefit) $(6,658) $(2,734) $ 145 $(3,782) State income taxes net of federal benefit (1,138) (468) 25 (579) Other items (11) (5) - (24) ------- ------- ---- ------- Tax expense (benefit) $(7,807) $(3,207) $ 170 $(4,385) ======= ======= ==== =======
9. RETIREMENT PLANS: ----------------- The Company has a noncontributory, defined-benefit pension plan covering substantially all employees. This plan provides pension benefits based on years of service and on compensation at the date benefits are earned. Plan assets include U.S. government securities, federal agency obligations, corporate debt instruments, common stock, other fixed income securities and cash equivalents. The Company's funding policy is to contribute annually the minimum amount required under ERISA. Net periodic pension cost components (in thousands) and assumptions used in accounting are:
Successor Company Predecessor Company ------------------- ------------------- 11 Months Year Ended Ended Month Ended Year Ended June 30, June 30, July 31, June 30, 1995 1994 1993 1993 --------- --------- ---------- --------- Service cost- benefits earned during the period $ 929 $ 745 $ 68 $ 716 Interest cost of projected benefit obligation 2,927 2,471 225 2,539 Actual return on assets 2,776 2,705 246 2,794 Net amortization and deferral 55 - - 76 ------ ------- ----- ------ $1,135 $ 511 $ 47 $ 537 ====== ====== ===== ====== Discount rates 8% 8% 8% 9% Rates of increase in compensation levels 4% 4% 4% 4% Expected long-term rates of return on assets 9% 9% 9% 9%
The following table sets forth the plan's status and amounts recorded in the balance sheets at June 30, 1995 and 1994, for the Company's defined benefit pension plan (in thousands):
June 30 ----------------- 1995 1994 -------- -------- Actuarial present value of benefit obligations- Vested benefit obligation $36,388 $33,620 ======= ======= Accumulated benefit obligation $36,726 $33,950 ======= ======= Projected benefit obligation $40,098 $36,452 Plan assets at fair value 34,877 31,631 ------- ------- Plan assets less than projected benefit obligation 5,221 4,821 Unrecognized net loss (2,387) (3,567) Prior service cost (353) 92 ------- ------- Pension liability $ 2,481 $ 1,346 ======= =======
10. POSTRETIREMENT BENEFIT OBLIGATION: ---------------------------------- On July 1, 1993, the Company adopted SFAS No. 106. Under SFAS No. 106, the Company recognizes the cost of providing healthcare and other benefits to retirees over the term of the employee's service, which is a change from the Company's previous method of recognizing these costs when paid. The adoption of this pronouncement resulted in the recording of an incremental initial liability of approximately $7.8 million, or $4.7 million net of tax, that is included in the amount shown as cumulative effect of changes in accounting principles, net of tax, in the accompanying combined statement of operations for the period ended July 31, 1993. The Company sponsors defined-benefit postretirement healthcare plans that provide medical and life insurance coverage to retirees and their dependents. The Company pays most of the medical costs for retirees and their spouses who are under age 65. For retirees and dependents of retirees who retired prior to January 1, 1989, and are age 65 and over, the Company contributes 100 percent toward the American Association of Retired Persons (AARP) premium frozen at the 1992 level. For retirees and dependents of retirees who retired after January 1, 1989, the Company contributes $35 per month toward the AARP premium. The life insurance plan is noncontributory. The following table sets forth the plan's accumulated benefit obligation included in the Company's balance sheet at June 30, 1995 and 1994. Accumulated postretirement health benefit obligation (in thousands):
1995 1994 ------ ------ Actives not fully eligible $2,007 $1,744 Actives fully eligible 1,167 1,080 Retirees and dependents 5,549 5,871 ----- ----- Accumulated postretirement benefit obligation in excess of plan assets $8,723 $8,695 ===== =====
The Company's postretirement health benefit plans are not funded. Net periodic postretirement benefit cost for the year ended June 30, 1995, included the following components (in thousands): Service cost- benefits attributed to service during the period $123 Interest cost on accumulated postretirement benefit obligation $678
For measurement purposes, a 12 percent annual rate of increase in the per- capita cost of postretirement medical benefits was assumed for 1993 for retirees who are younger than age 65; the rate was assumed to decrease gradually to 6.5 percent by 2009 and remain at that level thereafter. The discount rate used in determining the accumulated postretirement benefit obligation was 8.0 percent. 11. SUGAR PRICE SUPPORTS: --------------------- The Company is significantly affected by market factors, including domestic prices for refined sugar and raw cane sugar. These market factors are influenced by a variety of external forces, including the number of domestic acres contracted to grow sugar cane and sugar beets, prices of competing crops, weather conditions, and U.S. farm and trade policy. Federal legislation and regulations provide for mechanisms designed to support the price of domestic sugar crops, principally the limitations on importation of raw cane sugar for domestic consumption. In addition, agricultural conditions in the Company's growing areas may materially affect the quality and quantity of sugar beets available for purchase, as well as the unit costs of raw materials and processing. The current price support program requires the CCC to make loans available to domestic sugar producers (Note 5). These loans are nonrecourse and mature over a nine-month period. At the end of each loan period, the Company may elect to turn over certain collateral (sugar inventory) to the CCC in lieu of paying the principal and accrued interest charges on such loans. In addition, the Company is paid for storage costs of the sugar until it is removed from the Company's facilities by the CCC. The market price for sugar in California at June 30, 1994, would have generated a lower return to the Company than forfeiture to the CCC. As a result, the Company forfeited to the CCC 163,000 cwt. of refined sugar on June 30, 1994, and an additional 86,000 cwt. at August 31, 1994, in lieu of repaying CCC loans related to that sugar. 12. COMMITMENTS AND CONTINGENCIES: ------------------------------ The Company is party to litigation and claims that are normal in the course of its operations; while the results of such litigation and claims cannot be predicted with certainty, the Company believes that the final outcome of such matters will not have a materially adverse effect on its results of operations or combined financial position. The Company leases certain facilities and equipment under cancelable and noncancelable operating leases and capital leases (Note 7). 13. RELATED-PARTY TRANSACTIONS: --------------------------- Yale provides the Company with personnel, insurance, legal, accounting, financial and certain other services. Yale is compensated by the Company through the payment of a fee representing the reimbursement of actual out-of- pocket expenses incurred by Yale, including, but not limited to, the labor costs of Yale personnel rendering services to the Company. Charges by Yale for such services were $1,279,000, $1,560,000, $102,000 and $1,035,000 for the year ended June 30, 1995, for the 11 months ended June 30, 1994, for the month ended July 31, 1993, and for the year ended June 30, 1993. In addition, Yale charges the Company for interest related to amounts borrowed, shown as due to affiliate in the accompanying combined balance sheets. Interest charges by Yale were $8,035,000, $4,786,000, $318,000 and $4,558,000 for the year ended June 30, 1995, for the 11 months ended June 30, 1994, for the month ended July 31, 1993, and for the year ended June 30, 1993. 14. SUBSEQUENT EVENT: ----------------- On November 13, 1995, the Board of Directors of Yale approved management's plan to sell the operations of the Company. On April 19, 1996, Imperial Holly Corporation, through its wholly owned subsidiary Holly Sugar Corporation (Holly), acquired all of the outstanding common stock of the Company pursuant to a stock purchase agreement dated January 8, 1996, by and between Holly and Yale. The purchase price comprises the sum of (i) the Company's net working capital at December 31, 1995, (ii) $3 million, and (iii) the net cash advances made by Yale between December 31, 1995, and the closing; such purchase price is subject to adjustment based on a postclosing review. In conjunction with this transaction, the Company recorded a provision for realization of property, plant and equipment of $31.9 million, net of tax, during the nine months ended March 31, 1996. SPRECKELS SUGAR COMPANY, INC. AND LIMESTONE PRODUCTS COMPANY, INC. ------------------------------------------------------------------ COMBINED BALANCE SHEETS--MARCH 31, 1996 AND JUNE 30, 1995 --------------------------------------------------------- (unaudited) ----------- (dollars in thousands, except per-share amounts) ------------------------------------------------
March 31, June 30, 1996 1995 ---------- --------- ASSETS Cash and cash equivalents $ 293 $ 4,736 Accounts receivable, net of allowance for doubtful accounts of $110 and $105 5,675 11,450 Grower accounts receivable 6,833 4,372 Inventories- Stock in progress 1,542 2,022 Raw cane sugar 5,465 2,953 Finished beet sugar products 23,308 43,103 Materials, supplies and other 9,039 10,954 Deferred maintenance 3,794 4,008 Other current assets 1,865 4,055 -------- -------- Total current assets 57,814 87,653 Property, plant and equipment, net of accumulated depreciation of $9,759 and $6,570 37,366 92,722 Other assets 1,392 1,735 -------- -------- Total assets $ 96,572 $182,110 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Bank overdraft $ 407 $ 10,031 Accounts payable 11,713 9,402 Short-term borrowings 4,719 35,265 Current portion of capital leases 1,577 1,374 Accrued payroll costs 3,094 3,644 Deferred taxes 7,806 12,592 Other current liabilities 67 7,414 -------- -------- Total current liabilities 29,383 79,722 Long-term debt - 10,616 Capital leases, net of current portion 2,203 2,932 Due to affiliate 77,595 42,536 Postretirement benefit obligation 8,122 8,723 Pension 2,481 2,481 Deferred taxes 2,325 23,182 Other noncurrent liabilities 4,418 4,189 -------- -------- Total liabilities 126,527 174,381 -------- -------- Stockholders' equity (deficit): Common stock, $1 par value; 2,000 shares authorized and outstanding 2 2 Additional paid-in capital 23,551 23,551 Accumulated deficit (53,508) (15,824) -------- -------- Total stockholders' equity (deficit) (29,955) 7,729 -------- -------- Total liabilities and stockholders' equity $ 96,572 $182,110 ======== ========
The accompanying notes are an integral part of these statements. SPRECKELS SUGAR COMPANY, INC. AND LIMESTONE PRODUCTS COMPANY, INC. ------------------------------------------------------------------ COMBINED STATEMENTS OF OPERATIONS --------------------------------- FOR THE NINE MONTHS ENDED MARCH 31, 1996 AND 1995 ------------------------------------------------- (unaudited) ----------- (dollars in thousands) ----------------------
1996 1995 --------- --------- NET SALES $139,021 $129,211 COST OF PRODUCTS SOLD 136,068 120,752 -------- -------- Gross profit 2,953 8,459 SELLING, GENERAL AND ADMINISTRATIVE EXPENSE 6,946 8,167 OTHER EXPENSE: Interest expense, net 5,546 7,106 Provision for realization of property, plant and equipment 53,113 - Other nonoperating expense 1,196 1,036 -------- -------- Loss before benefit for income taxes (63,848) (7,850) BENEFIT FOR INCOME TAXES (26,164) (3,222) -------- -------- NET LOSS $(37,684) $ (4,628) ========= =========
The accompanying notes are an integral part of these statements. SPRECKELS SUGAR COMPANY, INC. AND LIMESTONE PRODUCTS COMPANY, INC. ------------------------------------------------------------------ COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY ------------------------------------------- FOR THE NINE MONTHS ENDED MARCH 31, 1996 ---------------------------------------- (unaudited) ----------- (dollars in thousands) ----------------------
Total Additional Stockholders' Common Stock Paid-in Accumulated Equity Shares Amounts Capital Deficit (Deficit) ------ ------- ---------- ------------ -------------- BALANCE AT JUNE 30, 1995 2,000 $2 $23,551 $(15,824) $ 7,729 Net loss - - - (37,684) (37,684) ----- -- ------- -------- -------- BALANCE AT MARCH 31, 1996 2,000 $2 $23,551 $(53,508) $(29,955) ===== == ======= ========= =========
The accompanying notes are an integral part of these statements. SPRECKELS SUGAR COMPANY, INC. AND LIMESTONE PRODUCTS COMPANY, INC. ------------------------------------------------------------------ STATEMENTS OF CASH FLOWS ------------------------ FOR THE NINE MONTHS ENDED MARCH 31, 1996 AND 1995 ------------------------------------------------- (unaudited) ----------- (dollars in thousands) ----------------------
1996 1995 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $(37,684) $ (4,628) Adjustments to reconcile net loss to net cash provided by operating activities- Provision for realization of property, plant and equipment 53,113 - Depreciation and amortization 3,189 2,580 Deferred income tax (27,968) 1,635 Net changes in operating assets and liabilities- Decrease in receivable, prepaid expenses and other assets 6,061 1,226 Decrease (increase) in inventories 19,678 (1,189) Increase in trade payables and accrued expenses 17,523 8,180 Increase in other liabilities 2,807 14,864 -------- -------- Net cash provided by operating activities 36,719 22,668 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES- Capital expenditures - (8,235) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Short-term borrowings, net (30,546) (17,082) Repayment of revolving loan (10,616) - Net borrowing-revolver - 7,991 -------- -------- Net cash used in financing activities (41,162) (9,091) -------- -------- Net increase (decrease) in cash and cash equivalents (4,443) 5,342 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 4,736 1,829 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 293 $ 7,171 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Noncash financing activities- Borrowing under capital lease obligations $ 3,780 $ 4,615 Cash paid during the period for- Interest 1,042 1,148 Taxes - -
The accompanying notes are an integral part of these statements. SPRECKELS SUGAR COMPANY, INC. AND LIMESTONE PRODUCTS COMPANY, INC. ------------------------------------------------------------------ NOTES TO UNAUDITED COMBINED FINANCIAL STATEMENTS ------------------------------------------------ MARCH 31, 1996 AND 1995 ----------------------- 1. BASIS OF PRESENTATION: ---------------------- The unaudited combined financial statements included herein have been prepared in accordance with the instructions of Securities and Exchange Commission Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete combined financial statements. In the opinion of management, all material adjustments of a normal and recurring nature considered necessary for a fair presentation of the combined financial position and results of operations for the interim periods have been included. The combined results of operations for the nine months ended March 31, 1996, are not necessarily indicative of the results that may be expected for the year ended June 30, 1996. These combined financial statements include the accounts of Spreckels Sugar Company, Inc. and Limestone Products Company, Inc. (collectively, the Company). All significant intercompany balances and transactions have been eliminated in combination. The combined financial statements included herein should be read in conjunction with the Company's combined financial statements and notes thereto as of June 30, 1995 and 1994. 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. COST OF SALES: -------------- Payments to growers for sugar beets are based in part upon the Company's average net return for sugar sold (as defined in the participating contract with growers) during the grower contract years, which end June 30. The contracts provide for the sharing of the net selling price (gross sales price less certain marketing costs, including packaging costs, brokerage, freight expense and amortization of costs for certain facilities used in connection with marketing) with growers. Cost of sales includes an accrual for estimated additional amounts to be paid to growers based on the average net return realized for sugar sold in each of the contract years through March 31. The final cost of sugar beets cannot be determined until the end of the contract year for each growing area. Manufacturing costs prior to production are deferred and allocated to production costs based on estimated total units of production for each sugar manufacturing campaign. Additionally, the Company's sugar inventories, which are accounted for on a LIFO basis, are periodically reduced at interim dates to levels below those of the beginning of the fiscal year. When such interim LIFO liquidations are expected to be restored prior to fiscal year-end, the estimated replacement cost of the liquidated layers is utilized as the basis of the cost of sugar sold from beginning-of-the-year inventory. Accordingly, the cost of sugar utilized in the determination of cost of sales for interim periods includes estimates that may require adjustment in future fiscal periods. 3. Acquisition ----------- On November 13, 1995, the Board of Directors of Yale approved management's plan to sell the operations of the Company. On April 19, 1996, Imperial Holly Corporation, through its wholly owned subsidiary Holly Sugar Corporation (Holly), acquired all of the outstanding common stock of the Company pursuant to a stock purchase agreement dated January 8, 1996, by and between Holly and Yale. The purchase price comprises the sum of (i) the Company's net working capital at December 31, 1995, (ii) $3 million, and (iii) the net cash advances made by Yale between December 31, 1995, and the closing; such purchase price is subject to adjustment based on a postclosing review. In conjunction with this transaction, the Company recorded a provision for realization of property, plant and equipment of $31.9 million, net of tax, during the nine months ended March 31, 1996. (b) Pro Forma Financial Information The following unaudited pro forma condensed balance sheet presents the combined financial position of Imperial Holly and Spreckels Sugar as of March 31, 1996, using the purchase method of accounting assuming the acquisition was completed on March 31, 1996. This unaudited pro forma condensed balance sheet does not purport to be indicative of the financial conditions that would actually have resulted had these transactions been effected on such date. The following unaudited pro forma condensed income statement gives effect to the acquisition using the purchase method of accounting for the year ended March 31, 1996, assuming the acquisition was completed on April 1, 1995. The unaudited pro forma adjustments shown below reflect the effect of events expected to have a continuing impact that are directly attributable to the acquisition and that are factually supportable. This unaudited pro forma condensed income statement does not purport to be indicative of results of operations that would actually have been obtained had these transactions been effected on such date or that may be obtained in the future. This unaudited pro forma condensed financial information should be read in conjunction with the notes to unaudited pro forma condensed financial information and in conjunction with the combined financial statements and notes thereto of Spreckels Sugar included in this current report on Form 8-K/A, as well as the consolidated financial statements of Imperial Holly included in its annual report on Form 10-K for the year ended March 31, 1996. PRO FORMA CONDENSED BALANCE SHEET March 31, 1996 (In Thousands of Dollars)
Unaudited Unaudited Unaudited Imperial Spreckels Pro Forma Pro Forma Holly Sugar Adjustments Combined ASSETS ====== Cash and Temporary Investments $ 1,930 $ 293 $ 2,223 Marketable Securities 37,373 - 37,373 Accounts Receivable 38,736 12,508 (a) $ (17) 51,227 Inventories 89,755 39,354 129,109 Manufacturing Costs Prior to Production 12,476 3,794 16,270 Prepaid Expenses 3,260 1,865 5,125 -------- -------- -------- Total Current Assets 183,530 57,814 241,327 Notes Receivable 1,195 - 1,195 Other Investments 6,702 - 6,702 Property, Plant and Equipment 267,725 47,125 (a) (36,352) 273,096 (b) (5,402) Accumulated Depreciation 143,622 9,759 (a) (2,916) 143,622 (b) (6,843) Other Assets 9,789 1,392 (b) (1,392) 9,789 -------- -------- -------- Total Assets $325,319 $ 96,572 $388,487 ======== ======== ========
PRO FORMA CONDENSED BALANCE SHEET March 31, 1996 (In Thousands of Dollars)
Unaudited Unaudited Unaudited Imperial Spreckels Pro Forma Pro Forma Holly Sugar Adjustments Combined LIABILITIES & EQUITY ==================== Accounts Payable $ 37,937 $ 12,120 (a) $ (245) $ 49,812 Short-Term Borrowings 31,839 4,719 (b) 29,100 65,658 Current Maturities of Long-Term Debt 8 1,577 1,585 Other Current Liabilities 32,020 10,967 (a) (388) 42,599 -------- -------- -------- Total Current Liabilities 101,804 29,383 159,654 Long-Term Debt 89,800 2,203 92,003 Due to Affiliate - 77,595 (a) (77,595) - Deferred Credits 22,672 17,346 (a) (14,231) 25,787 Common Stock 32,276 2 (b) (2) 32,276 Additional Paid-in Capital - 23,551 (a) 59,023 - (b) (82,574) Retained Earnings 69,829 (53,508) (b) 53,508 69,829 Unrealized Securities Gains-Net 8,938 - 8,938 -------- -------- -------- Total Shareholders' Equity 111,043 (29,955) 111,043 -------- -------- -------- Total Liabilities & Shareholders' Equity $325,319 $ 96,572 $388,487 ======== ======== ========
PRO FORMA CONDENSED INCOME STATEMENT Year Ended March 31, 1996 (In Thousands of Dollars)
Unaudited Imperial Spreckels Unaudited Unaudited Holly Sugar Pro Forma Pro Forma Adjustments Combined Net Sales $616,450 $181,179 $797,629 --------------------------- -------- Cost of Sales 561,878 177,950 (c) (2,212) 734,704 (d) (301) (e) (761) (f) (1,850) Selling, General & Administrative 54,778 15,453 (e) (50) 68,889 (h) (1,292) Restructuring Charges 2,225 - 2,225 --------------------------- -------- Operating Income (Loss) (2,431) (12,224) (8,189) Interest Expense (11,207) (8,059) (19,266) Provision For Realization of Property, Plant and Equipment - (53,113) (g) 53,113 - Other Income (Expense) 8,562 (1,626) 6,936 --------------------------- -------- Income (Loss) Before Income Taxes and Extraordinary Item (5,076) (75,022) (20,519) Provision (Credit) for Income Taxes (1,858) (30,749) (i) 23,832 (8,775) --------------------------- -------- Net Income (Loss) $(3,218) $(44,273) $(11,744) ========================== ========
NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION Year Ended March 31, 1996 (a) To record the distribution of certain assets and liabilities by the seller concurrent with the acquisition closing. (b) To record borrowing of cash portion of purchase price, eliminate Spreckels Sugar's equity, and adjust assets to fair value. (c) To adjust cost of sales to reflect Imperial Holly's manufacturing cost allocation methods. (d) To adjust costs for property taxes on distributed assets. (e) To adjust costs for depreciation of distributed assets. (f) To adjust depreciation for effect of purchase accounting on asset basis. (g) To eliminate provision for realization of property, plant & equipment. (h) To eliminate intercompany management fee charged by seller. (i) To record tax effect of Pro Forma entries. (c) Exhibits Exhibit No. Description ----------- ----------- Exhibit 2.1 Stock Purchase Agreement dated as of January 8, 1996 by and between Holly Sugar Corporation and Spreckels Industries, Inc. (incorporated by reference to Exhibit 4 to the Company's quarterly report on 10-Q for the quarter ended December 31, 1995). Exhibit 2.2 Amendment and Extension of the Stock Purchase Agreement dated March 18, 1996 (incorporated by reference to Exhibit 2.2 to the Company's Current Report on Form 8-K dated April 19, 1996) Exhibit 23 Independent Auditors Consent Exhibit 99 Press Release the Company of April 22, 1996 (incorporated by reference to Exhibit 99 to the Company's Current Report on Form 8-K dated April 19, 1996) 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. IMPERIAL HOLLY CORPORATION Date: July 3, 1996 By: /s/ James C. Kempner -------------------- James C. Kempner President and Chief Executive Officer EX-23 2 EXHIBIT 23 EXHIBIT 23 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our reports included in this Form 8-K, into Imperial Holly Corporation previously filed Registration Statement File No. 33-30328, Registration Statement File No. 33-41769 and Registration File No. 33-68896. /s/ Arthur Andersen LLP June 25, 1996 San Francisco, California -----END PRIVACY-ENHANCED MESSAGE-----