-----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, Bp3faYIFex0ZsG8T8S+3tsBDCNSqVJxLgnbjTjnEmBX5EWFjWACTYJfHTfwVIb65 7onV/fFU+cwScrUrYW2VfA== 0000929624-97-000383.txt : 19970404 0000929624-97-000383.hdr.sgml : 19970404 ACCESSION NUMBER: 0000929624-97-000383 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970120 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970403 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTRAL GARDEN & PET COMPANY CENTRAL INDEX KEY: 0000887733 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MISCELLANEOUS NONDURABLE GOODS [5190] IRS NUMBER: 680275553 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-20242 FILM NUMBER: 97574314 BUSINESS ADDRESS: STREET 1: 3697 MT DIABLO BLVD SUITE 300 CITY: LAFAYETTE STATE: CA ZIP: 94549 BUSINESS PHONE: 5102834573 MAIL ADDRESS: STREET 2: 3697 MT DIABLO BLVD SUITE 310 CITY: LAFAYETTE STATE: CA ZIP: 94549 8-K/A 1 AMENDMENT #1 TO FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ______________ FORM 8-K/A AMENDMENT NO. 1 CURRENT REPORT PURSUANT TO SECTION 13 OF 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) January 20, 1997 ------------------------------ Central Garden & Pet Company - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 0-20242 68-0275553 - -------------------------------------------------------------------------------- (State or other jurisdiction (Commission File (IRS Employer of incorporation) Number) Identification No.) 3697 Mt. Diablo Boulevard, Lafayette, California 94549 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (510) 283-4573 --------------------------- Inapplicable - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report) Exhibit Index located on page 3 The purpose of this Form 8-K/A is to amend the Form 8-K, which was filed on January 23, 1997, to change the number of shares reported in Item 2 and to provide the required financial statements. The complete text of Item 2 is set forth below. Item 2. Acquisition or Disposition of Assets ------------------------------------ On January 20, 1997, Central Garden & Pet Company ("Central") issued a press release announcing the consummation of the acquisition of the outstanding stock of Four Paws Products, Ltd. ("Four Paws") for $45 million in cash and $10 million in Central common stock (449,944 shares). All of such shares were issued to Allen Simon, the sole shareholder of Four Paws, and are subject to a lockup agreement which provides for certain restrictions on the resale of such shares for a period of two years. Four Paws is a manufacturer and distributor of branded pet supply products based in Hauppauge, New York. Item 7. Financial Statement and Exhibits -------------------------------- (a)(1) Financial Statements of Four Paws are attached as Exhibit 1.3 hereto. (a)(2) Independent Auditors' Report is included in Exhibit 1.3 hereto. (b)(1) Pro Forma Financial Information is attached as Exhibit 1.4 hereto. (c) See attached Exhibit Index. 2 EXHIBIT INDEX Number Exhibit - ------ ------- 1.1 Press Release dated January 20, 1997./*/ 1.2 Stock Purchase Agreement dated as of December 17, 1996./*/ 1.3 Financial Statements of Four Paws (including Independent Auditors' Report). 1.4 Pro Forma Financial Information. 1.5 Independent Auditors' Consent. /*/ Incorporated by reference to Exhibits 1.1 and 1.2, respectively, of the Company's Form 8-K Current Report filed on January 23, 1997. 3 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. CENTRAL GARDEN & PET COMPANY By /s/ Robert B. Jones --------------------------------- Robert B. Jones, Vice President and Chief Financial Officer Dated: April 2, 1997 4 EX-1.3 2 FINANCIAL STATEMENTS OF FOUR PAWS EXHIBIT 1.3 INDEPENDENT AUDITORS' REPORT To the Stockholder of Four Paws Products, Ltd. and subsidiaries: We have audited the accompanying consolidated balance sheet of Four Paws Products, Ltd. and subsidiaries ("Four Paws") as of December 31, 1996, and the related consolidated statements of income, stockholder's equity, and cash flows for the year then ended. These financial statements are the responsibility of Four Paws' 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 such consolidated financial statements present fairly, in all material respects, the financial position of Four Paws Products, Ltd. and subsidiaries as of December 31, 1996 and the results of their operations and their cash flows for the year then ended, in conformity with generally accepted accounting principles. DELOITTE & TOUCHE LLP San Francisco, California January 20, 1997 FOUR PAWS PRODUCTS, LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET DECEMBER 31, 1996 (IN THOUSANDS) ________________________________________________________________________________
ASSETS CURRENT ASSETS: Cash $ 2,502 Marketable securities 5,522 Accounts receivable (less allowance for doubtful accounts of $272) 3,222 Inventories: Raw materials and work in process 3,629 Finished goods 4,400 Prepaid expenses and other assets 943 ------- Total current assets 20,218 BUILDING, IMPROVEMENTS AND EQUIPMENT - Net 2,821 DEFERRED INCOME TAXES 440 ------- TOTAL ASSETS $23,479 ======= LIABILITIES AND STOCKHOLDER'S EQUITY CURRENT LIABILITIES: Accounts payable $ 909 Accrued expenses 663 Current portion of notes payable 994 Note payable to officer 500 ------- Total current liabilities 3,066 ------- NOTES PAYABLE 2,087 ------- COMMITMENTS AND CONTINGENCIES (Notes 7 and 9) STOCKHOLDER'S EQUITY: Common stock: Class A, no par value, 150 shares authorized and issued, 140 shares outstanding; Class B nonvoting, no par value, 50 shares authorized and issued, 40 shares outstanding 38 Retained earnings 19,511 Less treasury stock, at cost (1,223) ------- Total stockholder's equity 18,326 ------- TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $23,479 =======
See notes to consolidated financial statements. -2- FOUR PAWS PRODUCTS, LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME YEAR ENDED DECEMBER 31, 1996 (IN THOUSANDS) ________________________________________________________________________________
NET SALES $28,554 COST OF GOODS SOLD 14,883 ------- GROSS PROFIT 13,671 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 8,497 WRITE-OFF OF GOODWILL 1,402 ------- INCOME FROM OPERATIONS 3,772 OTHER INCOME (EXPENSE) - Net 311 ------- INCOME BEFORE INCOME TAXES 4,083 INCOME TAXES 2,405 ------- NET INCOME $ 1,678 =======
See notes to consolidated financial statements. -3- FOUR PAWS PRODUCTS, LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY YEAR ENDED DECEMBER 31, 1996 (IN THOUSANDS) ________________________________________________________________________________
TOTAL COMMON RETAINED TREASURY STOCKHOLDER'S STOCK EARNINGS STOCK EQUITY BALANCE, JANUARY 1, 1996 $38 $17,833 $(1,223) $16,648 NET INCOME 1,678 1,678 --- ------- ------- ------- BALANCE, DECEMBER 31, 1996 $38 $19,511 $(1,223) $18,326 === ======= ======= =======
See notes to consolidated financial statements. -4- FOUR PAWS PRODUCTS, LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 1996 (IN THOUSANDS) ________________________________________________________________________________
CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 1,678 Adjustments to reconcile net income to net cash provided by operating activities: Write-off of goodwill 1,402 Increase in inventory reserves 90 Provision for doubtful accounts 93 Depreciation and amortization 538 Deferred income taxes (157) Change in assets and liabilities: Accounts receivable 1,437 Inventories 1,572 Prepaid expenses and other assets (424) Accounts payable (1,032) Accrued expenses (665) ------- Net cash provided by operating activities 4,532 ------- CASH FLOWS FROM INVESTING ACTIVITIES: Cash paid for the acquisition of Mustang Products, Inc. (1,222) Purchases of leasehold improvements and equipment (220) Purchases of marketable securities (9,027) Maturities of marketable securities 8,242 ------- Net cash used in investing activities (2,227) ------- CASH FLOWS FROM FINANCING ACTIVITIES: Notes payable borrowings 900 Repayments of notes payable (2,044) ------- Net cash used in financing activities (1,144) ------- NET INCREASE IN CASH 1,161 CASH, BEGINNING OF YEAR 1,341 ------- CASH, END OF YEAR $ 2,502 ======= SUPPLEMENTAL CASH FLOW INFORMATION: Interest paid $ 276 Income taxes paid 4,409 CASH PAID FOR THE ACQUISITION OF MUSTANG PRODUCTS, INC.: Purchase of working capital, other than cash (1,457) Purchase of property - net (278) Purchase of other noncurrent assets (29) Excess of purchase price over net assets acquired (1,683) Assumption of notes payable 1,125 Issuance of notes payable 1,100 ------- TOTAL $(1,222) =======
See notes to consolidated financial statements. -5- FOUR PAWS PRODUCTS, LTD. AND SUBSIDIARIES. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 1996 (IN THOUSANDS) ________________________________________________________________________________ 1. ORGANIZATION AND OPERATIONS Four Paws Products, Ltd. and subsidiaries ("Four Paws" or the "Company") is a manufacturer and distributor of branded pet supply products based in Hauppauge, New York. Four Paws manufactures and/or distributes dog, cat, reptile and small animal products in New York and Ohio, under brand names which include Magic Coat, Four Paws and Wee-Wee Pads. Four Paws products are distributed throughout the United States, Canada, Europe and Asia. Approximately 5% of sales are to foreign customers. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONSOLIDATED FINANCIAL STATEMENTS - The accompanying consolidated financial statements include Four Paws Products, Ltd. and its two wholly owned consolidated subsidiaries, Cynal Corporation and Mustang Products, Inc. ("Mustang") as well as Pet Life, Inc. ("Pet Life"). The sole shareholder of Four Paws Products, Ltd. is also the sole shareholder of Pet Life. MARKETABLE SECURITIES consist primarily of U.S. government debt securities which are valued at amortized cost (which approximates market at December 31, 1996). These securities mature in January 1997. Four Paws intends to hold these securities to maturity. INVENTORIES - Inventories are stated at the lower of cost (first-in, first- out) or market. BUILDING, IMPROVEMENTS AND EQUIPMENT are recorded at cost. Depreciation is provided using a straight line method over the estimated useful lives of the assets. The carrying amount of long-lived assets is evaluated annually to determine if adjustment to the depreciation period or to the unamortized balance is warranted. Ranges of estimated useful lives for computing depreciation are as follows: Building 39 years Machinery and equipment 5-12 years Furniture and fixtures 7 years Leasehold improvements and other 5-12 years REVENUE RECOGNITION - Sales are recorded at the date of shipment. INCOME TAXES are accounted for in accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." Under this method, deferred income taxes are recognized for temporary differences by applying enacted statutory rates applicable to future years to differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. USE OF ESTIMATES - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. -6- 3. ACQUISITION OF MUSTANG PRODUCTS, INC. Effective June 1, 1996, Four Paws acquired Mustang, a manufacturer and distributor of pet collars and leashes located in Ohio. The purchase price of $2,322 consisted of cash of $1,222 and two notes payable totaling $1,100 bearing interest at 8.25%. The acquisition was accounted for as a purchase. The results of Four Paws include the results of Mustang for the seven months ended December 31, 1996. The allocation of the total purchase price to the net assets of Mustang is based upon the estimated fair values of the net assets acquired, and is summarized as follows:
Inventory $ 1,324 Receivables 728 Prepaids and other current assets 60 Property - net 278 Other noncurrent assets 29 Accounts payable (495) Accrued expenses (160) Notes payable (1,125) Goodwill 1,683 ------- Total $ 2,322 =======
The goodwill was initially being amortized over a three year period. However, in November 1996, Four Paws management determined that the goodwill would not be recoverable from future operations and should be written off. This is primarily due to a failed major product line, the loss of Mustang's largest customer in July 1996, and future projected losses from the Mustang business. The unamortized balance of goodwill written off was $1,402. For the year ended December 31, 1996, the pro forma unaudited revenues and net income for Four Paws would have been approximately $30,098 and $1,649, respectively, if Mustang had been acquired as of January 1, 1996. 4. BUILDING, IMPROVEMENTS AND EQUIPMENT Building, improvements and equipment at December 31, 1996 includes the following:
Building $ 2,343 Machinery and equipment 1,802 Furniture and fixtures 676 Leasehold improvements 412 Other 175 ------- Total 5,408 Less accumulated depreciation and amortization (2,587) ------- Net building, improvements and equipment $ 2,821 =======
-7- 5. NOTES PAYABLE Notes payable at December 31, 1996 consist of the following:
Mortgage note payable, interest at 8.25%, payable monthly through June 2003 $1,350 Bank note payable, interest at 8.25%, payable monthly through July 1998 713 Note payable to an employee and a former owner of Mustang, interest at 8.25%, payable in quarterly installments through July 1999 305 Note payable to an estate (a former owner of Mustang), interest at 8.25%, payable quarterly through July 1999 713 ------ Total 3,081 Less current portion 994 ------ Long-term portion $2,087 ======
The mortgage note is secured by a building. In addition, the Company has a $500 note payable to an officer of the Company incurred in connection with a Class B common stock buyback, bearing interest at 4.6%, which was repaid in January 1997. Notes payable at December 31, 1996 mature as follows:
MORTGAGE BANK OTHER NOTE NOTE NOTES TOTAL Years ending December 31: 1997 $ 200 $450 $ 844 $1,494 1998 200 263 373 836 1999 200 301 501 2000 200 200 2001 200 200 Thereafter 350 350 ------ ---- ------ ------ Total $1,350 $713 $1,518 $3,581 ====== ==== ====== ======
-8- 6. INCOME TAXES The provision for income taxes for the year ended December 31, 1996 consists of:
Current: Federal $1,893 State 669 ------ Total current 2,562 ------ Deferred: Federal (152) State (5) ------ Total deferred (157) ------ $2,405 ======
The deferred income tax benefit reflects the tax effect of changes in the amounts of temporary differences during the year ended December 31, 1996. As of December 31, 1996, Four Paws had gross deferred temporary differences of $1,048. Deferred tax assets primarily consist of bad debt reserves, inventory reserves, other nondeductible reserves, and depreciation. A reconciliation of the federal statutory income tax rate with Four Paws effective income tax rate is as follows:
Federal statutory rate 34% State income taxes, net of federal benefit 7 Nondeductible expenses, primarily amortization and write off of goodwill 18 -- Effective tax rate 59% ==
-9- 7. LEASE COMMITMENTS Four Paws has long-term noncancellable operating leases for the use of two buildings. One of the buildings is leased from a Four Paws employee who is the former owner of Mustang. The other building is leased from the Company's sole shareholder and has a five year renewal option. Total rent expense under such agreements amounted to $922 for the year ended December 31, 1996. At December 31, 1996, the future minimum lease payments under such leases are as follows:
FORMER FOUR PAWS MUSTANG OWNER SHAREHOLDER TOTAL Years ending December 31: 1997 $ 75 $ 420 $ 495 1998 75 420 495 1999 38 420 458 2000 439 439 2001 441 441 Thereafter 37 37 ---- ------ ------ Total $188 $2,177 $2,365 ==== ====== ======
8. EMPLOYEE BENEFIT PLANS Eligible employees participate in a defined benefit pension plan sponsored by Four Paws. The following table sets forth the funded status of the plan and amounts recognized in Four Paws' financial statements as of and for the year ended December 31, 1996:
Actuarial present value of benefit obligation: Vested $(1,119) Nonvested -- ------- Total accumulated benefit obligation $(1,119) ======= Projected benefit obligation $(1,291) Plan assets at fair value 1,225 ------- Projected benefit obligation in excess of plan assets (66) Unrecognized net loss 33 Unrecognized net transition obligation 137 ------- Prepaid pension cost $ 104 ======= Components of net periodic pension cost for the year: Service cost - benefits earned during the year $ 115 Interest cost on projected benefit obligation 81 Return on plan assets 22 Net amortization and deferral (103) ------- Net periodic pension cost for the year $ 115 =======
-10- Four Paws' policy is to contribute amounts required by applicable ERISA regulations. Plan assets are primarily invested in money market funds, stocks and bonds. The actuarial cost method used for determining the benefit obligations is the projected unit credit method. Assumptions underlying the actuarial valuation of the plan included the following: Discount rate 7.5% Long-term rate of return 8.0% Increase in future compensation levels 3.0% Four Paws also sponsors a noncontributory 401(k) plan for all eligible employees. 9. CONTINGENCIES The Company is party to various legal actions in the normal course of business. Although the ultimate outcome of these matters is not presently determinable, management believes that the resolution of all such pending matters will not have a material adverse effect on the Company's financial position or results of operations. 10. SALE OF FOUR PAWS On January 20, 1997, Four Paws was acquired by Central Garden & Pet Company ("Central") for $55,000; $45,000 in cash and $10,000 in Central common stock. In connection with the acquisition, Allen Simon, the shareholder of Four Paws, entered into a five year employment agreement with Central and entered into an operating lease agreement with Central to lease his building in New York presently used by Four Paws through January 2002 (see Note 7). This lease contains a five year renewal option. Four Paws recognized sales of $5,943 (21% of total sales) to Central for the year ended December 31, 1996. ****** -11- EX-1.4 3 PRO FORMA FINANCIAL INFORMATION EXHIBIT 1.4 UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION Central Garden & Pet Company's (the "Company") acquisition of Four Paws Products, Ltd. and subsidiaries ("Four Paws") will be accounted for under the "purchase" method of accounting which requires the purchase price to be allocated to the acquired assets and liabilities of Four Paws on the basis of their estimated fair values as of the date of acquisition. The following unaudited pro forma consolidated condensed balance sheet gives effect to the acquisition of Four Paws as if it occurred on December 28, 1996 and the pro forma consolidated condensed statements of income give effect to the acquisition as if it occurred on October 1, 1995 and include adjustments directly attributable to the acquisition and expected to have a continuing impact on the combined company (collectively, the "Unaudited Pro Forma Financial Information"). As the Unaudited Pro Forma Financial Information has been prepared based on preliminary estimates of fair values, amounts actually recorded may change upon determination of the total purchase price and additional analysis of individual assets and liabilities assumed. The Unaudited Pro Forma Financial Information and related notes are provided for informational purposes only and are not necessarily indicative of the consolidated financial position or results of operations of the Company as they may be in the future or as they might have been had the acquisition been effected on the assumed dates. The Unaudited Pro Forma Financial Information should be read in conjunction with the historical consolidated financial statements of the Company, and the related notes thereto, which are included in the Company's Annual Report on Form 10-K for the year ended September 28, 1996 and the Company's Quarterly Results on Form 10-Q, for the three months ended December 28, 1996, and the historical financial statements of Four Paws, and the related notes thereto, presented elsewhere in this Current Report on Form 8-K. See Exhibit 1.3 attached hereto. UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET DECEMBER 28, 1996 (In thousands, except per share data)
Historical Pro Forma -------------------------- ------------------------- Central Garden Four Paws Adjustments Combined -------------- --------- ----------- -------- ASSETS: Cash $ 73,826 $ 2,502 $ (45,500)(a) $ 30,828 Inventories 219,696 8,029 1,915 (b) 229,640 Other current assets 85,853 9,687 (455)(c) 95,085 Land, buildings, improvements and equipment - net 11,721 2,821 14,542 Other assets 34,906 440 34,759 (d) 70,105 -------- ------- --------- -------- Total $426,002 $23,479 $ (9,281) $440,200 ======== ======= ========= ======== LIABILITIES AND SHAREHOLDERS' EQUITY: Current liabilities $181,554 $ 3,066 $ (455)(c) $184,165 Long-term debt 115,000 2,087 (500)(e) 116,587 Deferred items 1,670 1,670 Shareholders' equity 127,778 18,326 (8,326)(f) 137,778 -------- ------- --------- -------- Total $426,002 $23,479 $ (9,281) $440,200 ======== ======= ========= ========
Notes to Unaudited Pro Forma Consolidated Condensed Balance Sheet - ----------------------------------------------------------------- (a) Adjustment to reflect the following:
Elimination of cash used to acquire Four Paws. $(45,000) Elimination of cash to repay note payable to former Four Paws shareholder required to be repaid as a result of the Four Paws acquisition. (500) -------- Net adjustment $(45,500) ========
(b) Adjustment to record acquired inventories at estimated fair value. (c) To eliminate trade account balances between the Company and Four Paws. (d) Adjustment to record the excess of purchase price over the fair value of identifiable net assets acquired. (e) To eliminate note payable to former Four Paws shareholder required to be repaid as a result of the Four Paws acquisition. (f) Adjustment to reflect the following: Issuance of the Company's common stock to acquire Four Paws. $ 10,000 Elimination of Four Paws shareholder's equity. (18,326) -------- Net adjustment $ (8,326) ======== -2- UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF INCOME FOR THE FISCAL YEAR ENDED SEPTEMBER 28, 1996 (In thousands, except per share data)
Historical Pro Forma -------------------------- ------------------------- Central Garden Four Paws Adjustments Combined -------------- --------- ----------- -------- Net sales $619,622 $30,531 $(6,005)(a) $644,148 Cost of goods sold and occupancy 535,189 15,143 (3,303)(a) 547,029 -------- ------- ------- -------- Gross profit 84,433 15,388 (2,702) 97,119 Selling, general and administrative expenses 66,945 8,233 (695)(b) 74,483 -------- ------- ------- -------- Income from operations 17,488 7,155 (2,007) 22,636 Interest and other expenses (income) 3,023 (490) 2,659 (c) 5,192 -------- ------- ------- -------- Income before income taxes 14,465 7,645 (4,666) 17,444 Income taxes 6,017 3,211 (1,913)(d) 7,315 -------- ------- ------- -------- Net income $ 8,448 $ 4,434 $(2,753) $ 10,129 ======== ======= ======= ======== Net income per common and common equivalent share: Fully diluted $ 0.71 $ 0.82 Primary $ 0.72 $ 0.83 Weighted average common and common equivalent shares outstanding: Fully diluted 11,904 450 (e) 12,354 Primary 11,702 450 (e) 12,152
Notes to Unaudited Pro Forma Consolidated Condensed Statement of Income - ----------------------------------------------------------------------- (a) Adjustment to eliminate sales and cost of sales for historical sales from Four Paws to the Company. (b) Adjustment to reflect the following: Reduction in operating lease costs in connection with lease agreement entered into with the former owner of Four Paws. $ (464) Reduction in salary expense in connection with employment agreement entered into with the former owner of Four Paws. (574) Amortization of the excess of purchase price over the net assets acquired. 869 Elimination of forgiveness of loans to Four Paws shareholder and family in connection with December 1996 asset purchase agreement between the Company and Four Paws (526) ------- Net adjustment $ (695) ======= (c) Adjustment to reflect the following: To increase interest expense associated with the issuance of 6% convertible subordinated notes issued to finance the acquisition of Four Paws. $ 2,700 To reduce interest expense on note payable to former shareholder required to be repaid in connection with the acquisition of Four Paws. (41) ------- Net adjustment $ 2,659 ======= (d) Adjustment to the historical provision for income taxes to give effect to the pro forma adjustments discussed in (a), (b) and (c) above. (e) To record issuance of 450 shares of the Company's common stock to acquire Four Paws. -3- UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF INCOME FOR THE THREE MONTHS ENDED DECEMBER 28, 1996 (In thousands, except per share data)
Historical Pro Forma -------------------------- ------------------------- Central Garden Four Paws Adjustments Combined -------------- --------- ----------- -------- Net sales $100,144 $ 6,880 $(1,368)(a) $105,656 Cost of goods sold and occupancy 82,690 3,561 (752)(a) 85,499 -------- ------- ------- -------- Gross profit 17,454 3,319 (616) 20,157 Selling, general and administrative expenses 19,633 3,067 (569)(b) 22,131 Write-off of goodwill 1,402 1,402 -------- ------- ------- -------- Loss from operations (2,179) (1,150) (47) (3,376) Interest and other expenses (income) 937 (54) 610 (c) 1,493 -------- ------- ------- -------- Loss before income taxes (3,116) (1,096) (657) (4,869) Income taxes (1,309) 164 (269)(d) (1,414) -------- ------- ------- -------- Net Loss $ (1,807) $(1,260) $ (388) $ (3,455) ======== ======= ======= ======== Net loss per common and common equivalent share: Fully diluted $ (0.12) $ (0.23) Primary $ (0.12) $ (0.23) Weighted average common and common equivalent shares outstanding: Fully diluted 14,474 450 (e) 14,924 Primary 14,474 450 (e) 14,924
Notes to Unaudited Pro Forma Consolidated Condensed Statement of Income - ----------------------------------------------------------------------- (a) Adjustment to eliminate sales and cost of sales for historical sales from Four Paws to the Company. (b) Adjustment to reflect the following: Reduction in operating lease costs in connection with lease agreement entered into with the former owner of Four Paws. $ (116) Reduction in salary expense in connection with employment agreement entered into with the former owner of Four Paws. (144) Amortization of the excess of purchase price over the net assets acquired. 217 Elimination of forgiveness of loans to Four Paws shareholder and family in connection with December 1996 asset purchase agreement between the Company and Four Paws. (526) ------- Net adjustment $ (569) ======= (c) Adjustment to reflect the following: To increase interest expense associated with the issuance of 6% convertible subordinated notes issued to finance the acquisition of Four Paws. $ 355 To reduce interest expense on note payable to former shareholder required to be repaid in connection with the acquisition of Four Paws. (10) To reduce interest income on proceeds of 6% convertible subordinated notes used to finance the acquisition of Four Paws. 265 ------- Net adjustment $ 610 ======= (d) Adjustment to the historical provision for income taxes to give effect to the pro forma adjustments discussed in (a), (b) and (c) above. (e) To record issuance of 450 shares of the Company's common stock to acquire Four Paws. -4- EX-1.5 4 INDEPENDENT AUDITORS' CONSENT EXHIBIT 1.5 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Central Garden & Pet Company's Registration Statement Nos. 333-09865, 333-01238, 33-96816, 33-89216 and 33-72326 on Forms S-8, Registration Statement Nos. 333-05261 and 333-22209 on Forms S-4 and Registration Statement Nos. 33-86284 and 333-21603 on Forms S-3 of our report on Four Paws Products, Ltd. and subsidiaries dated January 20, 1997 appearing in this Current Report on Form 8-K/A of Central Garden & Pet Company. DELOITTE & TOUCHE LLP San Francisco, California April 2, 1997 -----END PRIVACY-ENHANCED MESSAGE-----