-----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, GcIgqPjfXVjJyU7Xr4bqV0DF62XDO/FOpd0BARdoT7zmRfSyPl0wTKQhXOADAadU JN1Y/Kf4rvqXeTOJ96jMXg== 0000891554-98-001630.txt : 20030213 0000891554-98-001630.hdr.sgml : 20030213 19981230165719 ACCESSION NUMBER: 0000891554-98-001630 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981016 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19981230 FILER: COMPANY DATA: COMPANY CONFORMED NAME: US HOME & GARDEN INC CENTRAL INDEX KEY: 0000879911 STANDARD INDUSTRIAL CLASSIFICATION: TEXTILE MILL PRODUCTS [2200] IRS NUMBER: 770262908 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-19899 FILM NUMBER: 98778663 BUSINESS ADDRESS: STREET 1: 655 MONTGOMERY ST STE 830 CITY: SAN FRANCISCO STATE: CA ZIP: 94111 BUSINESS PHONE: 4156168111 MAIL ADDRESS: STREET 1: 655 MONTGOMERY ST STREET 2: SUITE 830 CITY: SAN FRANCISCO STATE: CA ZIP: 94111 FORMER COMPANY: FORMER CONFORMED NAME: NATURAL EARTH TECHNOLOGIES INC DATE OF NAME CHANGE: 19930328 8-K/A 1 AMENDMENT NO. 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------- FORM 8-K/A (AMENDMENT NO. 1) CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of Earliest Event Reported): October 16, 1998 U.S. HOME & GARDEN INC. (Exact name of registrant as specified in its charter) DELAWARE 0-19899 77-0262908 (State or other jurisdiction (Commission (I.R.S. Employer of incorporation) File Number) Identification No.) 655 Montgomery Street, Suite 500, San Francisco, California 94111 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (415) 616-8111 - -------------------------------------------------------------------------------- Former name or former address, if changed since last report Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits. A. Financial Statements of Business Acquired Amturf Business (a Business Line of Ampro Industries, Inc.)
Financial Page No. ------------------ Report of Independent Certified Public Accountants F-1 Balance Sheet as of September 30, 1998 F-2-3 Statement of Operations and Business Line Equity for the Year ended September 30, 1998 F-4 Statement of Cash Flows for the year ended September 30, 1998 F-5 Summary of Accounting Policies F-6-8 Notes to Financial Statements F-9-13 B. Pro Forma Financial Statements Introduction PF-1 Pro Forma Condensed Balance Sheet as of September 30, 1998 PF-2 Pro Forma Condensed Statement of Operations For the three months ended September 30, 1998 PF-3 Pro Forma Condensed Statement of Operations For the year ended June 30, 1998 PF-5 Notes to the Pro Forma Condensed Financial Statements PF-5
C. Exhibits Exhibit 23 Consent of BDO Seidman, LLP -2- Report of Independent Certified Public Accountants Board of Directors U.S. Home & Garden, Inc. and Amturf Business (a business line of Ampro Industries, Inc.) We have audited the accompanying balance sheet of Amturf (the Business), a business line of Ampro Industries, Inc. (the Company), as of September 30, 1998, and the related statements of operations and business line equity and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Business at September 30, 1998, and the results of its operations and cash flows for the year then ended in conformity with generally accepted accounting principles applied on a consistent basis. /s/ BDO Seidman, LLP BDO Seidman, LLP Kalamazoo, Michigan December 21, 1998 F-1 Amturf Business (a business line of Ampro Industries, Inc.) Balance Sheet September 30, 1998 ================================================================================ Assets (Note 2) Current Assets: Receivables: Trade, less allowance for doubtful accounts and sales returns of $157,000 $ 389,703 Other 3,641 Inventories (Note 1) 3,461,263 Refundable federal income taxes 561,954 Prepaid expenses and other current assets 118,387 Deferred income taxes (Note 7) 381,000 - -------------------------------------------------------------------------------- Total Current Assets 4,915,948 - -------------------------------------------------------------------------------- Property and Equipment (Notes 2 and 3): Land and improvements 252,038 Buildings 4,631,065 Equipment 5,765,859 - -------------------------------------------------------------------------------- 10,648,962 Less accumulated depreciation 2,198,985 - -------------------------------------------------------------------------------- 8,449,977 - -------------------------------------------------------------------------------- Other Assets: Intangibles, less accumulated amortization of $215,000 90,912 Receivable from related parties (Note 4) 1,099,889 - -------------------------------------------------------------------------------- Total Other Assets 1,190,801 - -------------------------------------------------------------------------------- Total Assets $14,556,726 ================================================================================ See accompanying summary of accounting policies and notes to financial statements. F-2 Amturf Business (a business line of Ampro Industries, Inc.) Balance Sheet September 30, 1998 ================================================================================ Liabilities: Current Liabilities: Checks issued against future deposits $ 209,316 Accounts payable 2,512,264 Line-of-credit (Notes 2 and 10) 3,872,274 Accrued liabilities 1,288,034 Current portion of capital leases (Note 5) 100,000 Notes payable to banks (Notes 3 and 10) 4,785,748 - -------------------------------------------------------------------------------- Total Current Liabilities 12,767,636 Notes Payable to Related Parties (Note 4) 376,598 Deferred Income Taxes (Note 7) 345,000 Obligations Under Capital Leases, less current portion (Note 5) 241,145 Deferred Revenue (Note 8) 589,233 - -------------------------------------------------------------------------------- Total liabilities 14,319,612 - -------------------------------------------------------------------------------- Commitments (Notes 5 and 6) Business Line Equity 237,114 - -------------------------------------------------------------------------------- Total Liabilities and Business Line Equity $14,556,726 ================================================================================ See accompanying summary of accounting policies and notes to financial statements. F-3 Amturf Business (a business line of Ampro Industries, Inc.) Statement of Operations and Business Line Equity Year Ended September 30, 1998 ================================================================================ Net Sales $ 20,174,093 Cost of Products Sold 12,583,241 - -------------------------------------------------------------------------------- Gross Profit 7,590,852 - -------------------------------------------------------------------------------- Operating Expenses: Warehousing and shipping expenses 1,894,398 Administrative and general expenses 6,730,488 - -------------------------------------------------------------------------------- Total Operating Expenses 8,624,886 - -------------------------------------------------------------------------------- Loss From Operations (1,034,034) - -------------------------------------------------------------------------------- Other Expense: Interest expense - net (Note 4) 920,665 Miscellaneous 280,927 - -------------------------------------------------------------------------------- Total Other Expense 1,201,592 - -------------------------------------------------------------------------------- Loss Before Income Tax Benefit (2,235,626) Federal Income Tax Benefit (Note 7) 397,000 - -------------------------------------------------------------------------------- Net Loss (1,838,626) Contribution of equity 228,715 Business Line Equity, beginning of year 1,847,025 - -------------------------------------------------------------------------------- Business Line Equity, end of year $ 237,114 ================================================================================ See accompanying summary of accounting policies and notes to financial statements. F-4
Amturf Business (a business line of Ampro Industries, Inc.) Statement of Cash Flows Year Ended September 30, 1998 =================================================================================== Operating Activities: Net loss $(1,838,626) Adjustments to reconcile net loss to cash used in operating activities: Depreciation and amortization 818,345 Loss on disposal of property, equipment and intangibles 3,717 Deferred income taxes 66,000 Changes in operating assets and liabilities: Trade and other receivables (765,217) Inventories (14,475) Prepaid expenses and other current assets (102,412) Federal income taxes (888,395) Deferred revenue (98,208) Accounts payable 1,931,840 Accrued liabilities 788,827 - ----------------------------------------------------------------------------------- Cash Used in Operating Activities (98,604) - ----------------------------------------------------------------------------------- Investing Activities: Additions to property, equipment and intangibles (2,417,466) Proceeds from disposal of property and equipment 822 - ----------------------------------------------------------------------------------- Cash Used in Investing Activities (2,416,644) - ----------------------------------------------------------------------------------- Financing Activities: Checks issued against future deposits 108,881 Net proceeds from line-of-credit 445,627 Proceeds from long-term debt 3,379,223 Payments on long-term debt (875,529) Change in notes receivable from related parties (496,707) Change in notes payable to related parties (183,693) Payments on capital lease obligations (91,269) Contribution of additional equity 228,715 - ----------------------------------------------------------------------------------- Cash Provided by Financing Activities 2,515,248 - ----------------------------------------------------------------------------------- Change in Cash and Cash Equivalents -- - ----------------------------------------------------------------------------------- Cash and Cash Equivalents, beginning of year -- - ----------------------------------------------------------------------------------- Cash and Cash Equivalents, end of year $ -- ===================================================================================
See accompanying summary of accounting policies and notes to financial statements. F-5 Amturf Business (a business line of Ampro Industries, Inc.) Summary of Accounting Policies ================================================================================ Basis of Presentation The shareholders of Ampro Industries, Inc. (the Company) entered into an agreement, dated October 15, 1998, to sell the common stock of Ampro Industries, Inc. Prior to the sales agreement, the Company operated several different business lines under the Ampro Industries, Inc. corporate structure. The Company's main business line (Amturf) manufactured lawn and flower patch, mulch, and animal litter. Under the terms of the purchase agreement all operations not related to Amturf were transferred on October 15, 1998 to the former shareholders of Ampro Industries, Inc. During the year ended September 30, 1998, Amturf was not a separate legal entity, but was an integral part of the Company's overall operations. Separate financial statements were not prepared for Amturf. The accompanying financial statements have been prepared from the books and records of Ampro Industries, Inc., and present the financial position, results of operation and cash flows for Amturf as of and for the year ended September 30, 1998. Certain corporate administrative expenses incurred by the Company in the amount of $315,000 were allocated to other business lines of the Company. These expenses consisted of management and administrative salaries and other corporate overhead items. The allocation for these expense items was based on estimated time devoted to the other business lines, the relationship of their operations to total operation or their specific identification. Interest expense was changed to Amturf based on Amturf's specific borrowing levels. Income taxes have been provided, as if Amturf filed a separate tax return. Ampro Industries, Inc.'s management believes the allocations are reasonable, however, these allocated expenses are not necessarily indicative of expenses that would have been incurred by the business on a stand alone basis. Business The Company's Amturf division is a manufacturer of combination grass and flower patch products, mulch and animal litter, dealing primarily with retail stores in the United States and Canada. The Company also operated a wholesale landscape business and maintained a yacht for business entertainment, whose operations were not included in these F-6 Amturf Business (a business line of Ampro Industries, Inc.) Summary of Accounting Policies ================================================================================ financial statements. The Business performs periodic credit evaluations of its customers and generally does not require collateral. An allowance for doubtful accounts is maintained at a level which management believes is sufficient to cover potential credit losses. During 1998, sales to one customer approximated 20% of total sales. Cash Equivalents The Business considers investments with a maturity date of three months or less when purchased to be cash equivalents. The carrying amount of cash equivalents approximates fair value. Inventories Inventories, which consist of consumer products, raw, packaging and finished goods are stated at the lower of cost or market, determined by the first-in, first-out (FIFO) method. Advertising The Business expenses the costs of advertising as incurred. Advertising expense was $1,372,000 in 1998. Intangible Assets Intangible assets are carried at cost. Amortization is computed using the straight-line method over the estimated useful lives, which is generally three years. Property and Equipment Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Maintenance and repairs are expensed as incurred and improvements are capitalized. Revenue Recognition Sales are recorded as products are shipped to customers. Interest Expense Ampro did not historically allocate interest expense to its business units. Interest expense has been allocated to the Business based on the average borrowing for the period presented. Ampro management believes this allocation is reasonable, but is not necessarily indicative of the interest cost that would have been incurred if Amturf had been operated as a separate entity. F-7 Amturf Business (a business line of Ampro Industries, Inc.) Summary of Accounting Policies ================================================================================ Income Taxes For the period presented, the taxable loss of the Business will be included in the consolidated tax returns of Ampro Industries, Inc. Accordingly, separate income tax returns will not be prepared or filed for the Business. The income tax benefit for the Business taxable loss has been separately determined by applying the asset and liability approach as if the Business was a separate taxpaying entity. 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 amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Long-Lived Assets Long-lived assets are evaluated for possible impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable, or whenever management has committed to a plan to dispose of the assets. Such assets are carried at the lower of book value or fair value as estimated by management based on appraisals, current market value, and comparable sales value, as appropriate. Assets to be held and used affected by such impairment loss are depreciated at their new carrying amount over the remaining estimated life. Assets to be paid or otherwise disposed of are not subject to further depreciation. In determining whether impairment exists, the Business uses undiscounted future cash flows compared to the carrying value of the asset. F-8 Amturf Business (a business line of Ampro Industries, Inc.) Notes to Financial Statements ================================================================================ 1. Inventories Inventories consist of the following at September 30, 1998: Raw materials $ 2,723,264 Finished goods 1,353,359 Obsolence reserve (615,360) --------------------------------------------------------------------------- Total Inventories $ 3,461,263 =========================================================================== 2. Line-of-Credit The Business has revolving lines-of-credit with a financial institution which expire October 31, 1998 and provide for maximum advances of $14,800,000. Interest on the outstanding balance is calculated at rates ranging from prime plus .5% to prime plus 2% (effectively 9.0% to 10.5% at September 30, 1998). Borrowings are secured by all assets of the Business. At September 30, 1998, the Business had outstanding borrowings of $3,872,274. As discussed in Note 3, the Business was in violation with the loan covenants as of September 30, 1998. See Note 10 for subsequent event. 3. Long-Term Debt Long-term debt consists of the following at September 30, 1998: Note payable to a bank, maturing February, 2003, with monthly payments of $15,834 plus interest at the bank's prime rate plus .75% (effectively 9.25% at September 30, 1998), secured by real estate 1,804,996 Note payable to a bank, maturing in 2001 with a balloon payment of approximately $740,000, with monthly payments of $15,480, including interest at 9.75%, secured by real estate and equipment 962,254 Note payable to a bank, maturing February, 2003 with monthly payments of $16,667 plus interest at the bank's prime rate plus .75% (effectively 9.25% at September 30, 1998), secured by equipment 899,998 Note payable to a bank, maturing in 2002, with monthly payments of $3,934, plus interest at the bank's prime rate plus 1% (effectively 9.5% at September 30, 1998) secured by real estate 404,056 F-9 Amturf Business (a business line of Ampro Industries, Inc.) Notes to Financial Statements ================================================================================ Note payable to a bank maturing February, 2001, with monthly payments of $9,723 plus interest at the bank's prime rate plus .75% (effectively 9.25% at September 30, 1998), secured by equipment 291,662 Note payable to a bank, maturing in 2002, with monthly payments of $5,000 plus interest at the bank's prime rate plus 1% (effectively 9.5%), secured by real estate 210,000 Note payable to a bank, maturing in 2000 with monthly payments of $12,938, including interest at 9.5%, secured by real estate 175,981 Other 36,801 --------------------------------------------------------------------------- Total $4,785,748 --------------------------------------------------------------------------- Under the above agreements, the Business is required to maintain covenants relating to debt service coverage, tangible net worth and leverage. At September 30, 1998, the Business was in violation of these covenants as a result of the above debt has been classified as current in the statement of net assets. If the Business was not in violation of its covenants then the annual maturities of long-term debt for each of the next five years and thereafter would be as follows: 1999 $ 890,000 2000 752,000 2001 1,317,000 2002 467,000 2003 1,192,000 Thereafter 168,000 --------------------------------------------------------- Total $4,786,000 ========================================================= See Note 10 for subsequent event. F-10 Amturf Business (a business line of Ampro Industries, Inc.) Notes to Financial Statements ================================================================================ 4. Notes Receivable and Payable to Related Parties Loans between the Company and related parties are evidenced by notes bearing interest at 9.5%. The loans are due on demand after September 30, 1998. Interest income and expense from related parties approximated $70,000 and $40,000 during 1998. 5. Lease Commitments The Business leases certain equipment under noncancellable agreements. Lease expense charged to operations approximated $324,000 in 1998, including $240,000 to an affiliated entity, which will not be renewed. The Business has entered into capital leases for equipment with original cost of $618,000 and net book value of $477,000 at September 30, 1998. Amortization expense related to these capital leases has been included with depreciation expense. As of September 30, 1998, future net minimum lease payments required under the capital and operating leases that have initial or remaining noncancellable terms in excess of one year are as follows: Capital Operating Year Ending September 30, Leases Leases --------------------------------------------------------------------------- 1999 $125,000 $ 45,000 2000 123,000 45,000 2001 100,000 45,000 2002 46,000 45,000 2003 24,000 45.000 --------------------------------------------------------------------------- Total Minimum Lease Payments 418,000 $225,000 ========== Amount representing interest 76,855 -------------------------------------------------------- Present Value of Net Minimum Lease Payments 341,145 Less current maturities 100,000 -------------------------------------------------------- Total Long-Term Debt $241,145 ======================================================== F-11 Amturf Business (a business line of Ampro Industries, Inc.) Notes to Financial Statements ================================================================================ 6. Retirement Plan The Business has a defined contribution 401(k) profit-sharing plan which covers all full-time employees who have attained age 21, completed at least 1,000 hours of credited service, and one year of employment. Participants are permitted to make contributions in any amount up to 15% of their compensation. Participant contributions to the plan are limited to the maximum amount allowed under the Internal Revenue Code. Discretionary contributions may be made annually by the Company. The Business contributed 25% of employee contributions (approximately $46,000) during the year ended September 30, 1998. All contributions are fully vested. 7. Income Taxes The Business has provided for income benefit as follows: September 30 1998 --------------------------------------------------------------------------- Current: Federal $ 463,000 --------------------------------------------------------------------------- 463,000 Deferred (66,000 --------------------------------------------------------------------------- Benefit $ 397,000 =========================================================================== Significant components of the Business's deferred income tax assets and liabilities are as follows at September 30, 1998: Deferred Income Tax Assets: Accounts receivable reserves $ 53,000 Inventories 246,000 Accrued expenses 82,000 Net operation loss carryforwards 282,000 --------------------------------------------------------------------------- 663,000 Valuation Allowance (282,000) --------------------------------------------------------------------------- Net Deferred Income Tax Asset $ 381,000 --------------------------------------------------------------------------- Deferred Income Tax Liabilities - Fixed assets $ 345,000 =========================================================================== F-12 Amturf Business (a business line of Ampro Industries, Inc.) Notes to Financial Statements ================================================================================ The difference between the Business's effective income tax rate and the statutory rate is primarily due the valuation allowance recorded at September 30, 1998. The Business has net operating loss carryforwards available for use of approximately $393,000, which expire in 2010, and $436,000, which expire in 2013. 8. Deferred Revenue - Government Grant During fiscal 1994, the Business received a grant of $982,000 from the Michigan Department of Natural Resources (MDNR). The grant proceeds were used to construct a mulch plant facility in which the MDNR has a security interest over the grant period of ten years. The grant proceeds have been recorded as deferred revenue and will be amortized over the grant period. 9. Supplemental Disclosure of Cash Flow Information Supplemental information of cash flows is as follows for the year ended of September 30, 1998: Operating Activities: Interest paid $1,132,000 --------------------------------------------------------------------------- Interest received $ 60,000 --------------------------------------------------------------------------- Income taxes paid $ 425,000 --------------------------------------------------------------------------- Non-cash investing and financing activity - Capital expenditures financed by capital lease obligations $ 149,000 --------------------------------------------------------------------------- 10. Subsequent Event On October 16, 1998, U.S. Home & Garden Inc. acquired all of the stock of the Business for approximately $21.5 million. In connection with the sale of the Business' stock, all of the outstanding lines of credit, notes payable to banks, and stockholders were repaid in full and all the notes receivable from stockholders were liquidated. F-13 U.S. Home & Garden Inc. and Subsidiaries Pro Forma Condensed Consolidated Financial Statements (Unaudited) ================================================================================ On October 16, 1998, U.S. Home & Garden Inc. (the Company) acquired all of the outstanding common stock of Ampro Industries, Inc. (Ampro), a lawn and garden care company, for approximately $21.5 million, plus $1 million for a covenant not to compete. The Company satisfied the purchase price by increasing its bank borrowings and using existing cash. Prior to the common stock sales agreement, Ampro operated several different entities under the Ampro Industries, Inc. corporate structure. Ampro's main business (Amturf) manufactures lawn and flower patch, mulch and animal litter. Under the terms of the stock purchase agreement, all operations not related to Amturf were transferred on October 15, 1998, to the former shareholders of Ampro Industries, Inc. The accompanying financial statements of Amturf represent the ongoing operations, which will be operated by U.S. Home and Garden, Inc. The acquisition was accounted for as a purchase, with the assets acquired and liabilities assumed recorded at fair values. The results of Amturf's operations will be included in the Company's consolidated financial statements from the date of acquisition. The accompanying condensed pro forma consolidated financial statements illustrate the effect of the acquisition on the Company's financial position at September 30, 1998 and the results of operations for the year ended June 30, 1998 and three months ended September 30, 1998, as if the acquisition had taken place on September 30, 1998 with respect to the balance sheet and July 1, 1997 and 1998 with respect to the statements of operations. The operating results for the Amturf business for the year ended September 30, 1998 were used to prepare the unaudited pro forma condensed statement of operations for U.S. Home & Garden's fiscal year ended June 30, 1998. Accordingly, the unaudited operating results for the Amturf business for the three months ended September 30, 1998 have been included in both periods presented. The pro forma condensed consolidated results of operations may not be indicative of the actual results of the acquisition. In particular, the pro forma condensed consolidated financial statements are based upon management's current estimates of the allocation of the purchase price, the actual allocation which could differ. The pro forma condensed consolidated results of operations may not be indicative of the actual result, which would have been obtained if the acquisition had occurred on July 1, 1997. The unaudited pro forma financial statements should be read in conjunction with U.S. Home & Garden's historical consolidated financial statements and notes thereto contained in the Company's 1998 Annual Report on Form 10-K and the Quarterly Report on Form 10-Q for the quarter ended September 30, 1998, and the financial statements of Amturf business presented herein. PF-1 U.S. Home & Garden Inc. and Subsidiaries Pro Forma Condensed Consolidated Balance Sheet September 30, 1998 (Unaudited) (Dollars in Thousands) ================================================================================
U.S. Home & Garden, Inc. Amturf Adjustments Pro Forma - ------------------------------------------------------------------------------------------------------------------------------------ Assets Current Cash $ 27,130 $ -- $ (9,172)(1) $ 17,958 Accounts receivable, net 17,350 394 -- 17,744 Inventories 11,763 3,461 -- 15,224 Prepaid and other current assets 1,652 1,061 -- 2,713 - ------------------------------------------------------------------------------------------------------------------------------------ Total Current Assets 57,895 4,916 (9,172) 53,639 Furniture, Fixtures and Equipment, net 3,590 8,450 500(1) 12,540 Intangibles Excess of cost over net assets, net 58,864 -- 14,500(1) 73,364 Other intangibles, net 4,531 91 1,000(1) 5,622 Other Assets 1,933 1,100 (1,100)(1) 1,933 - ------------------------------------------------------------------------------------------------------------------------------------ Total Assets $ 126,813 $ 14,557 $ 5,728 $ 147,098 - ------------------------------------------------------------------------------------------------------------------------------------ Liabilities and Equity Current Line of credit $ -- $ 3,872 $ (3,872)(1) $ -- Current maturities of notes payable -- 4,886 (4,786)(1) 100 Accounts payable 4,501 2,512 -- 7,013 Accrued expenses 6,651 1,497 -- 8,148 - ------------------------------------------------------------------------------------------------------------------------------------ Total Current Liabilities 11,152 12,767 (8,658) 15,261 Notes Payables 63,250 618 15,000 (1) 78,491 (377)(1) Other Liabilities 812 935 1,747 Stockholders' Equity 51,599 237 (237)(1) 51,599 - ------------------------------------------------------------------------------------------------------------------------------------ $ 126,813 $ 14,557 $ 5,728 $ 147,098 ====================================================================================================================================
PF-2 U.S. Home & Garden Inc. and Subsidiaries Pro Forma Condensed Consolidated Statement of Operations Three Months Ended September 30, 1998 (Unaudited) (Dollars in Thousands) ===============================================================================================
U.S. Home & Garden, Inc. Amturf Adjustments Pro Forma - ----------------------------------------------------------------------------------------------- Net Sales $ 10,768 $ 676 $ -- $ 11,444 Cost of Sales 5,312 778 -- 6,090 - ----------------------------------------------------------------------------------------------- Gross Profit (Loss) 5,456 (102) -- 5,354 Operating Expenses Selling and general administrative 6,439 1,917 154(2) 7,993 (517)(5) - ----------------------------------------------------------------------------------------------- Loss from Operations (983) (2,019) 363 (2,639) Interest Expense, net (1,160) (134) (307)(3) (1,601) Other Expense -- (28) -- (28) - ----------------------------------------------------------------------------------------------- Loss before Income Tax (2,143) (2,181) 56 (4,268) Income Tax Benefit 920 449 466(4) 1,835 - ----------------------------------------------------------------------------------------------- Net Loss $ (1,223) $ (1,732) $ 522 $ (2,433) - ----------------------------------------------------------------------------------------------- Basic and Diluted Loss per Common Share $ (.06) $ (.12) - ----------------------------------------------------------------------------------------------- Weighted Average Common and Common Equivalent Shares Outstanding 20,143,000 20,143,000 ===============================================================================================
PF-3 U.S. Home & Garden Inc. and Subsidiaries Pro Forma Condensed Consolidated Statement of Operations Fiscal Year Ended June 30, 1998 (Unaudited) (Dollars in Thousands) ================================================================================
U.S. Home & Amturf Garden, Inc. Year ended Year ended September 30, June 30, 1998 1998 Adjustments Pro Forma - ------------------------------------------------------------------------------------------------------------------------------------ Net Sales $ 67,149 $ 20,174 $ -- $ 87,323 Cost of Sales 30,431 12,583 -- 43,014 - ------------------------------------------------------------------------------------------------------------------------------------ Gross Profit 36,718 7,591 -- 44,309 Operating Expenses Selling and general administrative 23,065 8,625 617(2) 30,237 (2,070)(5) - ------------------------------------------------------------------------------------------------------------------------------------ Income (Loss) from Operations 13,653 (1,034) 1,453 14,072 Interest Expense, net (3,077) (921) (1,229)(3) (5,227) Other Expense -- (281) -- (281) - ------------------------------------------------------------------------------------------------------------------------------------ Income (Loss) before Income Tax 10,576 (2,236) 224 8,564 Income Tax Benefit (Expense) (3,600) 397 290(4) (2,913) - ------------------------------------------------------------------------------------------------------------------------------------ Income (Loss) before Extraordinary Expense 6,976 (1,839) 514 5,651 Extraordinary Expense, net of tax benefit (1,450) -- -- (1,450) - ------------------------------------------------------------------------------------------------------------------------------------ Net Income (Loss) $ 5,526 $ (1,839) $ 514 $ 4,201 - ------------------------------------------------------------------------------------------------------------------------------------ Basic Earnings per Share Income per common before extraordinary expense $ .39 $ .32 Extraordinary expense (.08) (.08) - ------------------------------------------------------------------------------------------------------------------------------------ Net income per common share $ .31 $ .24 - ------------------------------------------------------------------------------------------------------------------------------------ Diluted Earnings per Share Income per common before extraordinary expense $ .31 $ .25 Extraordinary expense (.07) (.07) - ------------------------------------------------------------------------------------------------------------------------------------ Net income per common share $ .24 $ .18 - ------------------------------------------------------------------------------------------------------------------------------------ Basic Weighted Average Common Shares Outstanding 17,776,000 Options and Warrants 5,032,000 - ----------------------------------------------------------------------------- Diluted Weighted Average Common Shares Outstanding 22,808,000 - -----------------------------------------------------------------------------
PF-4 U.S. Home & Garden Inc. and Subsidiaries Notes to Pro Forma Condensed Consolidated Financial Statements (Unaudited) (Dollars in Thousands) ================================================================================ Note A-Basis of Reference is made to the introduction at page PF-1. Presentation Note B-Pro Forma The pro forma adjustment to the condensed consolidated Adjustments balance sheet is as follows: (1) To reflect the acquisition of Amturf and the allocation of purchase price on the basis of fair values of the assets acquired and the liabilities assumed. The components of purchase price and its allocation of assets and liabilities of Ampro are as follows: ------------------------------------------------------------ Components of Purchase Price: Cash from the Company $ 9,172 Debt 15,000 ------------------------------------------------------------ $24,172 ------------------------------------------------------------ Allocation of Purchase Price: Payment of Amturf debt 9,035 Fair value of property 500 Covenant not to compete 1,000 Equity of assets acquired 237 Elimination of related party receivables (1,100) Goodwill 14,500 ------------------------------------------------------------ $24,172 ============================================================ The pro forma adjustments to the condensed consolidated statement of operations are as follows: (2) Amortization of excess of cost over fair value of net assets acquired over 30 years, plus additional depreciation expense for adjusted basis in property and equipment and amortization of covenant not to compete. (3) Interest expense has been adjusted to reflect the notes payable, incurred in connection with the acquisition, and the payoff of Ampro's notes payable and line of credit. (4) Income taxes (benefits) have been adjusted to reflect the Company's statutory tax rates. (5) Reduction of owner and officer salaries of Amturf due to termination. PF-5 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this amended report to be signed on its behalf by the undersigned thereunto duly authorized. U.S. HOME & GARDEN INC. By: /s/ Richard Raleigh ------------------------------------------ Richard Raleigh, Chief Operating Officer Date: December 30, 1998 -3- EX-23 2 CONSENT CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS U.S. Home & Garden Inc. San Francisco, California As independent certified public accountants, we hereby consent to the incorporation of our report included in this Form 8-K/A, into U.S. Home & Garden Inc.'s previously filed Registration Statements Nos. 33-82758, 33-89800, 33-94924 and 333-21667 on Form S-3 and Nos. 33-55020, 33-71978 and 333-44459 on Form S-8. /s/ BDO SEIDMAN, LLP BDO Seidman, LLP San Francisco, California December 29, 1998 -----END PRIVACY-ENHANCED MESSAGE-----