UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): December 3, 1998 (September 23, 1998)
PRO-FAC COOPERATIVE, INC.
(Exact Name of Registrant as Specified in Charter)
New York 0-20539 16-6036816
(State or other jurisdiction of incorporation) (Commission File Number)(IRS Employer Identification Number)
90 Linden Oaks, Rochester, New York 14625
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number Including Area Code: (716) 383-1850
Item 2. Acquisition or Disposition of Assets
The undersigned registrant hereby supplements the following item of its Current
Report on Form 8-K dated September 23, 1998, and filed on October 5, 1998, as
set forth in the pages attached hereto:
Item 7. Financial Statements and Exhibits:
(a) Financial statements
(i) Dean Foods Vegetable Company
Report of Independent Accountants
Consolidated Statements of Income for the years ended May 31,
1998, May 25, 1997 and May 26, 1996
Consolidated Balance Sheets as of May 31, 1998, May 25, 1997 and
May 26, 1996
Consolidated Statements of Cash Flows for the years ended May 31,
1998, May 25, 1997 and May 26, 1996
Notes to Consolidated Financial Statements
Unaudited Condensed Consolidated Statements of Income for the
three months ended August 30, 1998 and August 24, 1997
Unaudited Condensed Consolidated Balance Sheets as of August 30,
1998 and August 24, 1997
Unaudited Condensed Consolidated Statements of Cash Flows for the
three months ended August 30, 1998 and August 24, 1997
Notes to Unaudited Condensed Consolidated Financial Statements
(b) Pro Forma Financial Information
(i) Pro-Fac Cooperative, Inc.
Unaudited Pro Forma Condensed Consolidated Statement of
Operations for the year ended June 27, 1998
Notes to Unaudited Pro Forma Condensed Consolidated Statement of
Operations for the year ended June 27, 1998
Unaudited Pro Forma Condensed Consolidated Statement of
Operations for the quarter ended September 26, 1998
Notes to Unaudited Pro Forma Condensed Consolidated Statement of
Operations for the quarter ended September 26, 1998
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 thereunto duly authorized.
PRO-FAC COOPERATIVE, INC.
Date: December 3, 1998 BY: /s/ Earl L. Powers
---------------- -----------------------------
EARL L. POWERS,
VICE PRESIDENT FINANCE AND
ASSISTANT TREASURER
(Principal Financial Officer and
Principal Accounting Officer)
DEAN FOODS VEGETABLE COMPANY
(A DIVISION OF DEAN FOODS COMPANY)
CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MAY 31, 1998, MAY 25,
1997 AND MAY 26, 1996
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Dean Foods Company
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income and of cash flows present fairly, in all
material respects, the financial position of Dean Foods Vegetable Company and
subsidiaries ("DFVC"), a division of Dean Foods Company ("DFC"), at May 31,
1998, May 25, 1997 and May 26, 1996, and the results of their operations and
their cash flows for each of the three years in the period ended May 31, 1998,
in conformity with generally accepted accounting principles. 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 of these statements in accordance with
generally accepted auditing standards which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
PRICEWATERHOUSECOOPERS LLP
August 31, 1998
DEAN FOODS VEGETABLE COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands)
YEAR ENDED
May 31, May 25, May 26,
1998 1997 1996
---- ---- ----
NET SALES (Note 2) $541,243 $549,286 $569,836
OPERATING COSTS AND EXPENSES:
Cost of products sold (Note 2) 397,577 406,703 450,599
Selling, general and administrative
expenses (Note 3) 106,256 108,809 114,606
Special charge (Note 13) - 9,644 37,346
Interest expense - related parties (Note 3) 9,170 10,270 12,010
Other, net (1,193) (648) (560)
-------- -------- --------
511,810 534,778 614,001
-------- -------- --------
NET INCOME (LOSS) BEFORE INCOME TAXES 29,433 14,508 (44,165)
PROVISION (BENEFIT) FOR INCOME TAXES
(Notes 2 and 7) 11,773 5,803 (17,224)
-------- -------- --------
NET INCOME (LOSS) $ 17,660 $ 8,705 $(26,941)
======== ======== ========
DEAN FOODS VEGETABLE COMPANY
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
May 31, May 25, May 26,
1998 1997 1996
------- ------- -------
ASSETS
CURRENT ASSETS:
Cash (Note 2) $ 301 $ 235 $ 227
Accounts receivable, less allowance for doubtful accounts
of $500, $500 and $510, respectively (Notes 2 and 3) 32,451 35,315 36,758
Inventories (Notes 2 and 4) 125,717 143,561 158,390
Deferred tax assets (Notes 2 and 7) 12,868 15,450 18,697
Prepaid Slotting (Note 2) 5,092 3,677 3,576
Other 3,837 4,648 6,791
-------- -------- --------
TOTAL CURRENT ASSETS 180,266 202,886 224,439
-------- -------- --------
PROPERTY, PLANT AND EQUIPMENT, net (Notes 2 and 5) 133,276 145,374 150,595
OTHER ASSETS:
Goodwill, net of amortization of $2,570, $1,978 and
$1,397, respectively (Note 2) 20,673 21,265 21,846
Other intangible assets, net of amortization of $2,965,
$2,293 and $1,634, respectively (Note 2) 23,130 23,802 24,462
Other 2,400 2,844 3,971
-------- -------- --------
TOTAL ASSETS $359,745 $396,171 $425,313
======== ======== ========
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable $ 22,422 $ 28,432 $ 26,237
Accounts payable to related parties (Note 3) 23,943 11,220 15,521
Accrued liabilities (Notes 8 and 13) 32,244 31,869 35,408
Current Portion of note payable to related parties (Note 3) 5,370 5,056 8,633
Current portion of long-term debt (Note 9) 503 712 692
-------- -------- --------
TOTAL CURRENT LIABILITIES 84,482 77,289 86,491
-------- -------- --------
LONG-TERM LIABILITIES:
Long-term debt (Note 9) 2,450 2,995 3,669
Note payable to related parties (Note 3) 4,208 8,501 12,505
Deferred income taxes (Notes 2 and 7) 19,151 19,152 17,329
Other 3,257 2,824 2,664
-------- -------- --------
TOTAL LONG-TERM LIABILITIES 29,066 33,472 36,167
-------- -------- --------
COMMITMENTS AND CONTINGENCIES (Note 15) - - -
-------- -------- --------
EQUITY:
Investments by and advances from DFC (Note 3) 246,197 285,410 302,655
-------- -------- --------
TOTAL EQUITY 246,197 285,410 302,655
-------- -------- --------
TOTAL LIABILITIES AND EQUITY $359,745 $396,171 $425,313
======== ======== ========
DEAN FOODS VEGETABLE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
YEAR ENDED
May 31, May 25, May 26,
1998 1997 1996
---- ---- ----
CASH FLOWS FROM OPERATIONS:
Net income (loss) $ 17,660 $ 8,705 $(26,941)
Adjustments to reconcile net income (loss) to net
cash provided from operations:
Depreciation and amortization 19,167 20,658 23,494
Deferred income taxes 2,581 5,070 (13,211)
Other current assets 10,485 8,195 4,981
Other long-term assets 444 1,127 (666)
Special charge - 9,644 37,346
Other 7,765 3,622 (6,287)
Change in working capital items:
Decrease in accounts receivable 2,864 1,443 6,807
(Increase) decrease in inventories 17,844 14,829 12,534
Increase in other current assets (11,089) (6,153) (9,830)
Increase (decrease) in accounts payable
and other accrued expense 4,745 (17,890) (2,647)
-------- -------- --------
NET CASH PROVIDED FROM
OPERATIONS 72,466 49,250 25,580
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (11,253) (15,373) (15,585)
Proceeds from dispositions of property,
plant and equipment 459 316 763
Acquisitions, net of cash received - - (21,748)
-------- -------- ---------
NET CASH USED IN INVESTING
ACTIVITIES (10,794) (15,057) (36,570)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt (754) (654) (636)
Net repayments of notes payable to related parties (3,979) (7,581) (17,614)
Increase (decrease) in advances from DFC (Note 3) (56,873) (25,950) 29,429
-------- -------- --------
NET CASH PROVIDED FROM (USED IN)
FINANCING ACTIVITIES (61,606) (34,185) 11,179
-------- -------- --------
NET INCREASE IN CASH 66 8 189
CASH, beginning of year 235 227 38
-------- -------- --------
CASH, end of year $ 301 $ 235 $ 227
======== ======== ========
DEAN FOODS VEGETABLE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
Dean Foods Vegetable Company and its subsidiaries ("DFVC") is a division of Dean
Foods Company ("DFC") and is principally engaged in the processing, distribution
and sales of frozen and canned vegetables in the United States. As part of a
reorganization of DFC in fiscal 1994, the vegetable businesses within DFC were
combined with the Birds Eye Frozen Vegetable business to form DFVC. The Birds
Eye Frozen Vegetable business was acquired from the All-American Gourmet
Company, a wholly-owned subsidiary of Kraft General Foods, Inc., on December 27,
1993.
The accompanying consolidated financial statements reflect the "carve-out"
financial position, results of operations and cash flows of DFVC and its
majority owned subsidiaries for the periods presented. All significant
intercompany accounts and transactions have been eliminated in consolidation.
The consolidated financial information included herein does not necessarily
reflect what the consolidated financial position and results of operations of
DFVC would have been had it operated as a stand alone entity during the periods
covered, and may not be indicative of future operations or financial position.
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 the disclosure of
contingent assets and liabilities at the date of the financial statements as
well as the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
DFVC's fiscal year ends on the last Sunday in May. There were 53 weeks in the
fiscal year ended May 1998, whereas there were 52 weeks in fiscal 1997 and 1996.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Temporary Cash Investments
DFVC considers temporary cash investments with an original maturity of three
months or less to be cash equivalents.
Receivables
Accounts receivable are presented net of certain promotional and marketing
allowances.
DEAN FOODS VEGETABLE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
Inventories
Inventories are stated at the lower of cost or market. Cost is determined by the
last-in, first-out (LIFO) method for finished frozen and canned products and by
the first-in, first-out (FIFO) method for all other inventories. The FIFO method
would approximate the actual cost. Market for raw materials is based on
replacement costs and for other inventory classifications on net realizable
value.
Prepaid Slotting
Slotting allowances are capitalized and amortized over twelve months.
Property, Plant and Equipment
Property, plant and equipment is stated at cost. Major renewals and betterments
are capitalized while repairs and maintenance which do not improve or extend
useful life are expensed currently. Upon sale, retirement, abandonment or other
disposition of property, the cost and related accumulated depreciation are
eliminated from the accounts and any gain or loss is reflected in income.
For financial statement purposes, depreciation is calculated by the
straight-line method over the following useful lives: buildings and
improvements, 10 to 40 years; machinery and equipment, 3 to 12 years;
transportation equipment, 4 years. For income tax purposes, depreciation is
calculated using accelerated methods for certain assets.
Certain land, buildings, and machinery and equipment having a net carrying value
of $6,796 were mortgaged or otherwise encumbered against related debt of $503 at
May 31, 1998.
Goodwill and Intangible Assets
Excess of cost over fair market value of net identifiable assets of acquired
companies and other intangible assets are amortized on a straight-line basis
over estimated useful lives not exceeding forty years.
Long-Lived Assets
DFVC continually reviews intangible assets and property plant and equipment for
impairment whenever events or changes in circumstances indicate that the
carrying amount of the asset may not be recoverable. An estimate of the
undiscounted future cash flows or, in the case of goodwill, undiscounted
operating earnings, over the remaining life of the asset is compared to the
carrying amount to determine whether an impairment exists. DFVC believes that no
indicators of impairment of long-lived assets existed at May 31, 1998.
DEAN FOODS VEGETABLE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
Income Taxes
DFVC is included in the consolidated U.S. federal and state income tax returns
of DFC. The provision for income taxes has been determined as if DFVC had filed
separate tax returns under its existing structure for the periods presented.
Accordingly, the effective tax rate of DFVC in future years could vary from its
historical effective rates depending on DFVC's future legal structure and tax
elections. All income taxes are settled with DFC on a current basis through the
"Investments by and advances from DFC" account.
Provision has been made for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes."
Revenue Recognition
Revenues are recognized when products are shipped.
Cost of Products Sold
Cost of products sold includes raw materials, labor and overhead.
Advertising Expenses
DFVC expenses all costs associated with advertising as incurred or when the
advertising takes place. Advertising expense was $13,918, $14,252 and $15,344
for the years ended 1998, 1997 and 1996, respectively.
Fair Value of Financial Instruments
The carrying amount of DFVC's financial instruments, which primarily include
cash, accounts receivable, accounts payable and accrued expenses, approximates
fair value due to the relatively short maturity of such instruments.
Concentrations of Credit Risk
Financing instruments, which potentially subject DFVC to significant
concentrations of credit risk, consist principally of trade accounts receivable.
Concentrations of credit risk with respect to trade accounts receivable are
limited due to the large number of customers and their dispersion across many
geographic areas. DFVC had gross sales in excess of 10% to one customer in 1998
amounting to approximately $55,700.
DEAN FOODS VEGETABLE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
NOTE 3 - RELATED PARTY TRANSACTIONS
DFC provides DFVC certain purchasing, credit, legal, accounting, treasury and
tax services. An allocation of the estimated costs, which in the opinion of DFC
management approximates actual costs, of these services is charged directly to
DFVC each month by DFC corporate using varying historical allocation bases. The
allocation process is consistent with the methodology used by DFC corporate to
allocate costs of similar services provided to its other business units. In the
opinion of management, these allocated costs are reasonable; however, the terms
of these transactions may differ from those that would result from transactions
among unrelated parties. The allocated costs of these services, which aggregated
$2,808, $2,648 and $2,743 for the fiscal years ended May 1998, 1997 and 1996,
respectively, were reflected in selling, general and administrative expenses in
the accompanying consolidated statements of income.
DFC maintains a transportation and distribution division that is used by DFVC
and other of DFC's divisions. DFVC is charged for shipments at estimated
standard carrier rates which may differ from prices that would result from
transactions among unrelated parties. The allocated costs for these services,
which aggregated $11,330, $8,950 and $9,307 for the fiscal years ended May 1998,
1997 and 1996, respectively, were reflected in selling, general and
administrative expenses in the accompanying consolidated statements of income.
DFVC incurs an annual charge for interest expense from DFC based on a formula
which takes into consideration its percentage of certain assets and liabilities
in relation to the total for DFC of these assets and liabilities (net invested
capital). Management believes that the basis used for allocating corporate
interest is reasonable; however, the terms of these transactions may differ from
those that would result from transactions among unrelated parties. Interest
expense is reflected as a separate component in the accompanying consolidated
statements of income.
DFC maintains a centralized cash management system and substantially all cash
receipts and disbursements are recorded at the corporate level. DFVC is charged
or credited for the net of cash receipts and disbursements each month.
DFVC and DFC's other divisions engage in transactions with certain of the same
customers. In certain instances, due to the resulting collections from these
customers, related party receivables and payables arise. Related party payables
also arise from DFVC's relationship with DFC's transportation and distribution
division. Also, DFVC has related party notes payable to DFC. All of these
relationships are reflected in the accompanying consolidated balance sheet.
DEAN FOODS VEGETABLE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
The aforementioned related party activity is primarily settled through the
Investments by and advancements from DFC account. The following table sets forth
the net activity in the Investments by and advances from DFC account for the
fiscal years ended May 1998, 1997 and 1996:
1998 1997 1996
---- ---- ----
Balance, beginning of year $285,410 $302,655 $300,167
Net income (loss) 17,660 8,705 (26,941)
(Charges) advances from DFC, net (56,873) (25,950) 29,429
-------- -------- --------
Balance, end of year $246,197 $285,410 $302,655
======== ======== ========
NOTE 4 - INVENTORIES
Inventories at May 31, 1998, May 25, 1997 and May 26, 1996 consisted of the
following:
1998 1997 1996
---- ---- ----
Raw materials $ 15,126 $ 16,167 $ 18,960
Work-in-process 31,518 43,520 50,986
Finished goods 84,474 92,011 92,913
-------- -------- --------
FIFO Inventory 131,118 151,698 162,859
LIFO Reserve (5,401) (8,137) (4,469)
-------- -------- --------
LIFO Inventory $125,717 $143,561 $158,390
======== ======== ========
During fiscal 1998 and 1997, LIFO inventory quantities were reduced resulting in
a partial liquidation of the LIFO basis, the effect of which was not
significant.
DEAN FOODS VEGETABLE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
NOTE 5 - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at May 31, 1998, May 25, 1997 and May 26, 1996
consisted of the following:
1998 1997 1996
---- ---- ----
Land $ 8,114 $ 8,574 $ 8,444
Buildings and improvements 69,324 68,028 64,259
Machinery and equipment 182,821 192,423 184,332
Transportation equipment 1,782 1,980 1,988
Construction in progress 5,416 11,047 10,589
-------- -------- --------
267,457 282,052 269,612
Less: Accumulated depreciation (134,181) (136,678) (119,017)
-------- -------- --------
$133,276 $145,374 $150,595
======== ======== ========
NOTE 6 - OPERATING LEASES
DFVC leases manufacturing, warehouse and office facilities and certain
equipment. Future minimum lease payments required under leases having initial or
remaining noncancelable leases terms in excess of one year are set forth below.
Sublease rental income is not significant.
Operating Leases
1999 $ 948
2000 908
2001 829
2002 124
2003 45
Thereafter 52
------
Total minimum rentals $2,906
======
Rental expense under all operating leases for the years ended 1998, 1997 and
1996 was $3,499, $3,602 and $4,263, respectively.
DEAN FOODS VEGETABLE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
NOTE 7 - INCOME TAXES
The provision (benefit) for income taxes for the fiscal years ended May 1998,
1997 and 1996 was as follows:
1998 1997 1996
---- ---- ----
Current tax expense (benefit):
Federal $ 7,583 $ 605 $ (3,311)
State 1,609 128 (702)
------- ------ --------
9,192 733 (4,013)
Deferred tax expense (benefit):
Federal 2,129 4,183 (10,899)
State 452 887 (2,312)
------- ------ --------
2,581 5,070 (13,211)
------- ------ --------
Provision (benefit) for income taxes $11,773 $5,803 $(17,224)
======= ====== ========
The effective tax rate differs from the prevailing statutory federal rate for
the fiscal years ended May 1998, 1997 and 1996 as follows:
1998 1997 1996
---- ---- ----
Statutory federal tax rate 35.0% 35.0% (35.0)%
State, net of federal benefit 4.6 4.6 (4.4)
Other, net 0.4 0.4 0.4
---- ---- -----
Effective tax rate 40.0% 40.0% (39.0)%
==== ==== =====
DEAN FOODS VEGETABLE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
The components of the deferred income tax assets and liabilities at May 31,
1998, May 25, 1997 and May 26, 1996 were as follows:
1998 1997 1996
---- ---- ----
Deferred tax assets (net):
Accounts receivable $ (478) $ 108 $ 1,395
Inventory 3,698 4,215 4,611
Employee benefits 1,871 2,344 3,743
Vacation pay 658 538 1,095
Marketing accruals 6,604 4,542 4,220
Future benefit of special charge (525) 1,009 3,576
Other 1,040 2,694 57
-------- -------- --------
Total deferred tax assets (net) $ 12,868 $ 15,450 $ 18,697
======== ======== ========
Deferred tax liabilities (net):
Fixed assets $(13,115) $(15,138) $(14,560)
Deferred compensation 302 362 913
Intangibles (6,299) (5,662) (5,251)
Future benefit of special charge (361) 960 1,216
Other 322 326 353
-------- -------- --------
Total deferred tax liabilities (net) $(19,151) $(19,152) $(17,329)
======== ======== ========
NOTE 8 - ACCRUED LIABILITIES
The components of accrued liabilities at May 31, 1998, May 25, 1997 and May 26,
1996 were as follows:
1998 1997 1996
---- ---- ----
Special charge (Note 13) $ 4,597 $ 5,793 $10,357
Accrued payroll and employee benefits 8,176 7,942 7,619
Accrued bonuses 2,508 3,529 2,049
Workers' compensation liability 3,929 4,159 4,494
Accrued coupons and marketing 5,676 5,780 4,918
Other 7,358 4,666 5,971
------- ------- -------
$32,244 $31,869 $35,408
======= ======= =======
DEAN FOODS VEGETABLE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
NOTE 9 - DEBT
The long-term obligations outstanding at May 31, 1998, May 25, 1997 and May 26,
1996 primarily relate to a $2,450 floating interest rate industrial revenue bond
which matures on February 1, 2000. The average borrowing rates during fiscal
1998, 1997 and 1996 were 3.76%, 3.52% and 3.73%, respectively. The obligation is
guaranteed by DFC.
DFVC also has a note payable which matures in various installments through
December 1, 1998 and bears interest at 9.00%. The long-term portion of the notes
payable was $473 and $983 at May 25, 1997 and May 26, 1996, respectively.
NOTE 10 - PENSION LIABILITIES
DFVC's salaried employees are included in DFC-sponsored defined benefit plans
which cover substantially all of the salaried employees of the divisions of DFC.
DFVC's hourly employees are included in DFC-sponsored defined benefit or
multi-employer union plans. Net periodic pension expense is based upon
determinations made by independent actuaries. The funded status of the plans
relative to DFVC's participation is not separately determined and accordingly,
no pension obligation other than current expense allocations are included in the
accompanying financial statements.
The DFC-sponsored plans covering defined benefit plans are based on employees'
years of service and compensation during employment with DFVC. The majority of
pension benefits are based upon the participant's highest average "total
compensation" paid during any sixty consecutive months out of the last 180
months of service accumulated for each year of service. DFVC through DFC makes
contributions to the defined benefit plans at least equal to the minimum funding
requirements under the Employee Retirement Income Security Act of 1974 (ERISA).
Plan assets are primarily invested in bonds, stocks and real estate. DFVC's
pension cost for these defined benefit plans was $3,218, $1,397 and $1,905 for
the fiscal years ended May 1998, 1997 and 1996, respectively.
The DFC-sponsored multi-employer plans principally cover production workers.
DFVC's pension expense under these plans was $868, $951 and $1,162 for the
fiscal years ended May 1998, 1997 and 1996, respectively.
NOTE 11 - PROFIT SHARING PLAN
DFC maintains noncontributory profit sharing plans for certain of DFVC's
employees. DFVC contributions under these plans are made at the discretion of
DFC's Board of Directors. Expense for these plans was $1,405, $1,317 and $1,295
in 1998, 1997 and 1996, respectively. In addition, certain DFVC employees
participate in DFC employee stock option plans.
DEAN FOODS VEGETABLE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
NOTE 12 - POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
DFC sponsors healthcare and life insurance benefit plans for certain of DFVC's
retired employees and eligible dependents. Employees are eligible for such
benefits subject to minimum age and service requirements. Eligible employees
that retire before the normal retirement age, along with their dependents, are
entitled to benefits on a shared contribution basis. Substantially all benefits
terminate at age sixty-five. DFC maintains the right to modify or eliminate
these benefits.
The net postretirement benefit expense for active employees is based on an
actuarial valuation. For purposes of these financial statements, the net
postretirement benefit expense for retired employees of DFVC participating in
the DFC-sponsored plans was computed based on the active employees at DFVC.
Management believes that this method of allocation is reasonable.
The net postretirement benefit expense for 1998, 1997 and 1996 was not
significant.
The accumulated postretirement benefit obligation for active employees of DFVC
included in DFC-sponsored plans was approximately $665, $655 and $565 at May 31,
1998, May 25, 1997 and May 26, 1996, respectively. The accumulated benefit
obligation for retirees of DFVC included in DFC-sponsored plans was
approximately $1,400, $1,250 and $1,000 at May 31, 1998, May 25, 1997 and May
26, 1996, respectively. The accumulated postretirement benefit obligation was
determined by an actuarial valuation which used a discount rate of 7.25% in 1998
and 8.00% in 1997 and 1996, respectively, and an assumed compensation increase
of 5.00% for each year. The health care cost trend rates were assumed to be
7.00% in 1998, gradually declining to 5.00% over four years and remaining at
that level thereafter. In 1997, the cost trend rates were assumed to be 7.50%,
gradually declining to 5.00% over five years. In 1996, the cost trend rates were
assumed to be 8.00%, gradually declining to 5.00% over six years. A one
percentage point increase in the assumed health care cost trend rates would not
significantly impact the accumulated postretirement benefit obligation or the
net periodic benefit expense in any of the three years ended May 31, 1998. The
short-term and long-term portions of the postretirement benefit obligation as of
May 31, 1998, May 25, 1997 and May 26, 1996 were reflected in the accompanying
consolidated balance sheets.
NOTE 13 - SPECIAL CHARGE
In May 1996, DFVC adopted a plan to reduce costs, rationalize production
capacity and provide for projected severance costs which reduced fiscal 1996
income before taxes by $37,346. The implementation of the plan included the
elimination of more than 200 manufacturing and administrative positions, closure
of five manufacturing facilities and the disposition of certain assets held by
two other facilities. In fiscal 1997, DFVC recorded an additional charge of
$9,644 to provide for employee and asset relocation costs associated with plant
consolidation.
DEAN FOODS VEGETABLE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
As of May 1998, DVFC had disposed of or closed five manufacturing facilities and
eliminated 413 positions. The remaining reserves are anticipated to be used for
continuing severance benefits and certain exit costs related to a facility in
the process of being closed.
The following table sets forth the activity for the special charge reserve for
1998, 1997 and 1996 and the reserve balances at May 31, 1998, May 25, 1997 and
May 26, 1996 which are included in accrued liabilities in the accompanying
balance sheets.
Employee
Plant Asset Related
closure costs write-offs Costs Total
1996 charge $ 5,677 $29,450 $ 2,219 $37,346
Cash payments (753) - (51) (804)
Non-cash charges - (26,185) - (26,185)
-------- ------- ------- -------
Balance at May 26, 1996 4,924 3,265 2,168 10,357
Provision 8,935 - 709 9,644
Cash payments (9,733) - - (9,733)
Non-cash charges 42 (3,253) (1,264) (4,475)
-------- ------- ------- -------
Balance at May 25, 1997 4,168 12 1,613 5,793
Cash payments (10,021) - (1,060) (11,081)
Non-cash charges - (5,782) - (5,782)
Net transfers (to) from DFC 8,353 5,770 1,544 15,667
-------- ------- ------- -------
Balance at May 31, 1998 $ 2,500 $ - $ 2,097 $ 4,597
======== ======= ======= =======
NOTE 14 - BUSINESS ACQUISITIONS
In August 1995, DFVC purchased substantially all of the assets of a frozen
vegetable processor and distributor with annual sales of approximately $40.0
million. The acquisition was accounted for by the purchase method and the
purchase price of $21.7 million was allocated primarily to inventory and fixed
assets. The results of operations of the acquisition have been included in the
consolidated financial statements of DFVC from the acquisition date. On a pro
forma basis, the results of operations (unaudited) of the company acquired would
not have had a material effect on DFVC's net income in fiscal 1996.
DEAN FOODS VEGETABLE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
NOTE 15 - COMMITMENTS AND CONTINGENCIES
DFVC is involved in litigation and in administrative proceedings and
investigations in various jurisdictions relating to certain civil,
environmental, product liability and employment matters. It is DFVC's policy to
accrue for legal and environmental matters when it is probable that a liability
has been incurred and an amount is reasonably estimable. DFVC believes that
recorded reserves are sufficient to provide for exposures meeting this
definition.
An action has been brought against DFVC for damages and lost profits related to
an alleged breach of contract. The plaintiff filed a suit claiming that DFVC had
entered into an outputs or requirements contract subject to the Uniform
Commercial Code related to the hauling of vegetable "by-product" from the
Hartford, Michigan processing plant of DFVC and that the closure of the
Hartford, Michigan facility was not in good faith. DFVC terminated its
relationship with the plaintiff upon the closure of the Hartford facility as
part of the rationalization of production capacity discussed in Note 13. In
August 1998, a final judgment against DFVC was rendered in favor of the
plaintiff in the amount of $2.5 million. At May 31, 1998, management believes
that DFVC had adequate reserves allocated to this contingency in the special
charge reserve discussed in Note 13.
NOTE 16 - SUBSEQUENT EVENT
On July 25, 1998, Agrilink Foods, Inc. ("Agrilink"), a wholly-owned subsidiary
of Pro-Fac Cooperative, Inc., acquired from DFC substantially all of the net
operating assets of DFVC for cash of approximately $400.0 million and Agrilink's
aseptic food business. Agrilink's aseptic food business has annual sales of
approximately $100.0 million. Upon completion of this transaction, DFC will no
longer actively sell products in the frozen and canned vegetables markets.
DEAN FOODS VEGETABLE COMPANY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED
AUGUST 30, 1998 AND AUGUST 24, 1997
(In Thousands)
Three Months Ended
---------------------------
August 30, August 24,
1998 1997
---------- ----------
Net sales $106,440 $109,575
Costs of products sold 81,199 89,166
Selling, general and
administrative expenses 26,126 23,476
Interest expense 2,002 2,077
Other income 180 201
-------- --------
Loss before income taxes (2,707) (4,943)
Income tax benefit (1,083) (1,977)
--------- ---------
Net loss $ (1,624) $ (2,966)
======== =========
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
DEAN FOODS VEGETABLE COMPANY
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
AUGUST 30, 1998 AND AUGUST 24, 1997
(In Thousands)
Three Months Ended
-------------------------
August 30, August 24,
1998 1997
---------- ----------
ASSETS
CURRENT ASSETS: $ 575 $ 385
Cash
Accounts receivable,
less allowance for doubtful
accounts of $500 in 1998 and 1997 28,317 25,273
Inventories 166,009 154,762
Other current assets 21,862 27,853
-------- --------
Total Current Assets 216,763 208,273
-------- --------
PROPERTIES:
Property, plant and equipment, net 131,855 138,769
OTHER ASSETS 45,521 47,306
-------- --------
Total Assets $394,139 $394,348
======== ========
LIABILITIES AND EQUITY
CURRENT LIABILITIES: $ 83,224 $ 73,366
Accounts payable and accrued liabilities
Accounts payable to related parties 27,008 11,965
Current portion of note payable to related parties 5,438 5,143
Current portion of long-term debt 344 731
-------- --------
Total Current Liabilities 116,014 91,205
-------- --------
LONG-TERM LIABILITIES
Long-term debt 2,449 2,794
Note payable to related parties 3,087 7,455
Deferred income taxes and other liabilities 22,386 22,476
-------- --------
Total Long-Term Liabilities 27,922 32,725
-------- --------
EQUITY - Investments by and advances from DFC 250,203 270,418
-------- --------
Total Liabilities and Equity $394,139 $394,348
======== ========
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
DEAN FOODS VEGETABLE COMPANY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED
AUGUST 30, 1998 AND AUGUST 24, 1997
(In Thousands)
Three Months Ended
----------------------
August 30, August 24,
1998 1997
--------- ----------
Net cash (used by)/provided from operations $ (956) $ 17,673
--------- --------
Cash flows from investing activities:
Capital expenditures (3,187) (4,356)
-------- ---------
Net cash used in investing activities (3,187) (4,356)
-------- ---------
Cash flows from financing activities
Repayment of long-term debt (159) (182)
Net repayments of notes payable to related parties (1,054) (959)
Increase (decrease) in advances from DFC 5,630 (12,026)
------- ---------
Net cash provided by (used for) financing activities 4,417 (13,167)
------- --------
Increase in cash 274 150
Cash - beginning of period 301 235
------- --------
Cash - end of period $ 575 $ 385
======= ========
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
DEAN FOODS VEGETABLE COMPANY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
Dean Foods Vegetable Company and its subsidiaries ("DFVC") is a division of Dean
Foods Company ("DFC") and is principally engaged in the processing, distribution
and sales of frozen and canned vegetables in the United States. As part of a
reorganization of DFC in fiscal 1994, the vegetable businesses within DFC were
combined with the Birds Eye Frozen Vegetable business to form DFVC. The Birds
Eye Frozen Vegetable business was acquired from the All-American Gourmet
Company, a wholly-owned subsidiary of Kraft General Foods, Inc., on December 27,
1993.
The accompanying condensed consolidated financial statements reflect the
"carve-out" financial position, results of operations and cash flows of DFVC and
its majority owned subsidiaries for the periods presented. All significant
intercompany accounts and transactions have been eliminated in consolidation.
The condensed consolidated financial information included herein does not
necessarily reflect what the consolidated financial position and results of
operations of DFVC would have been had it operated as a stand alone entity
during the periods covered, and may not be indicative of future operations or
financial position.
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 the disclosure of
contingent assets and liabilities at the date of the financial statements as
well as the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
NOTE 2 - UNAUDITED QUARTERLY INFORMATION
In the opinion of the Company, all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of the unaudited
condensed consolidated financial statements have been included herein. Certain
information and footnote disclosures normally included in the financial
statements have been omitted. These unaudited condensed consolidated financial
statements should be read in conjunction with the Company's Consolidated
Financial Statements for the year ended May 31, 1998.
DEAN FOODS VEGETABLE COMPANY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 - INVENTORIES
The following is an unaudited tabulation of inventories by class at August 30,
1998 and August 24, 1997 (In Thousands).
August 30, August 24,
1998 1997
---------- ----------
Raw materials and supplies $ 12,989 $ 14,207
Materials in process 49,017 50,329
Finished goods 108,937 97,613
-------- --------
170,943 162,149
Less: Excess of current cost over stated
value of last-in, first-out
inventories 4,934 7,387
-------- --------
Total inventories $166,009 $154,762
======== ========
NOTE 4 - SALE OF COMPANY
On September 22, 1998, Agrilink Foods, Inc. ("Agrilink"), a wholly-owned
subsidiary of Pro-Fac Cooperative, Inc., acquired from Dean Foods Company (DFC)
substantially all of the net operating assets of the Company for cash of
approximately $400.0 million and Agrilink's aseptic food business.
PRO-FAC COOPERATIVE, INC. AND
CONSOLIDATED SUBSIDIARY -- AGRILINK FOODS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 27, 1998
PRO FORMA
--------------------------------------------
ASEPTIC TRANSACTIONS
BUSINESS AND
PRO-FAC DFVC DISPOSAL OFFERING
(HISTORICAL) (HISTORICAL) ADJUSTMENTS(a) ADJUSTMENTS TOTAL
------------ ------------ -------------- ----------- -----
(DOLLARS IN MILLIONS)
Net sales............................................. $ 719.7 $ 541.2 ($97.9) $ 79.0 (b) $1,242.0
Cost of sales......................................... (524.1) (397.6) 81.3 (25.0)(c) (865.4)
------- ------- ------ ------ --------
Gross profit..................................... 195.6 143.6 (16.6) 54.0 376.6
Selling, administrative and general................... (141.9) (104.9) 0.1 (41.7)(d) (288.4)
Income from Great Lakes Kraut Company................. 1.9 -- -- -- 1.9
Amortization of unallocated excess of purchase cost
over -- net assets acquired......................... -- -- -- (10.4)(e) (10.4)
------- ------- ------ ------ --------
Operating income before extraordinary items...... 55.6 38.7 (16.5) 1.9 79.7
Interest expense...................................... (30.7) (9.2) 1.4 (34.5)(f) (73.0)
------- ------- ------ ------ --------
Pretax income before extraordinary items and
dividends and allocation of net proceeds....... 24.9 29.5 (15.1) (32.6) 6.7
(Provision) benefit for taxes......................... (7.8) (11.8) 3.4 12.1 (g) (4.1)
------- ------- ------ ------ --------
Income (loss) before extraordinary items........ $ 17.1 $ 17.7 ($11.7) ($20.5) $ 2.6
======= ======= ====== ====== ========
<FN>
See accompanying notes to the Unaudited Pro Forma Condensed
Consolidated Financial Statements.
</FN>
PRO-FAC COOPERATIVE, INC. AND
CONSOLIDATED SUBSIDIARY -- AGRILINK FOODS, INC.
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 27, 1998
(a) To reflect the sale of the Aseptic Business to Dean Foods. In conjunction with this transaction, it is
anticipated Agrilink will recognize a gain. Such gain has not been reflected in the unaudited Pro Forma Condensed Consolidated
Statement of Operations as the gain is considered nonrecurring.
(b) Represents a reclassification of promotional expenses of DFVC to conform presentation to that of Agrilink. Such
amount is equal to the adjustment of selling, administrative and general expenses in pro forma adjustment (d) below.
(c) To reflect the net of (dollars in millions):
Cost savings anticipated under existing contracts with the suppliers of product
packaging.............................................................................. $ 2.5
Reclassification of warehousing expenses of DFVC to conform presentation to that of
Agrilink. Such amount is equal to the adjustment of selling, administrative and
general expenses in pro forma adjustment (d) below..................................... (27.5)
------
$(25.0)
======
(d) To reflect the net of (dollars in millions):
Reclassification of promotional expenses of DFVC to conform presentation to that of
Agrilink. Such amount is equal to the adjustment to the net sales in pro forma
adjustment (b) above................................................................... $(79.0)
Reclassification of warehousing expenses to conform presentation to that of Agrilink.
Such amount is equal to the adjustment to the net sales in pro forma adjustment (c)
above.................................................................................. 27.5
To reflect the anticipated cost reductions under the plan formulated by management to
eliminate duplicate administrative costs, including primarily sales and marketing
functions, finance functions and logistics functions. Because both the Agrilink and
DFVC personnel currently contact the same customers, it is anticipated that no
material negative impact to sales will occur. The plan outlined is to be executed
within one year from the consummation date of the Acquisition.......................... 9.8
------
$(41.7)
======
(e) To reflect $10.4 million of additional goodwill amortization relating to the Acquisition assuming an
amortization period of 20 years. Depreciation and amortization recorded by the Company subsequent to the Acquisition
will be determined based upon the fair values of acquired assets and their related lives as ultimately recorded under purchase
accounting.
(f) To reflect the net adjustment to interest expense as follows (dollars in millions):
Notes at an interest rate of 11.875%.................................................... $ 23.8
Borrowings under the New Credit Facility (at the rates applicable upon syndication
thereof)................................................................................ 40.1
Subordinated Promissory Note at an interest rate of 5.0% (noncash)...................... 1.5
Amortization of debt issuance costs..................................................... 3.2
Less historical interest expense net adjustment......................................... (33.3)
Less amortization of debt issuance costs related to debt repaid......................... (0.8)
------
$ 34.5
======
The elimination of debt issuance costs and premiums to be paid to extinguish existing debt will be recognized as an
extraordinary item ($18.0 million net of a $10.5 million tax benefit) in Pro-Fac's statement of operations for the first fiscal
quarter of 1999. Such charge has not been reflected in the unaudited Pro Forma Condensed Consolidated Statement of Operations.
Fees associated with obtaining commitments for the Bridge Facility have not been reflected in the unaudited Pro Forma
Consolidated Statement of Operations as they are considered nonrecurring. Such fees, which will be reflected in Pro-Fac's
1999 second fiscal quarter, are estimated to be approximately $5.6 million before taxes.
(g) To reflect the income tax effect of the pro forma adjustments based on an assumed statutory income tax rate of 39.0%.
PRO-FAC COOPERATIVE, INC. AND
CONSOLIDATED SUBSIDIARY -- AGRILINK FOODS, INC.
UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE QUARTER ENDED SEPTEMBER 26, 1998
PRO FORMA
----------------------------------------------
ASEPTIC TRANSACTIONS
BUSINESS AND
PRO-FAC DFVC DISPOSAL OFFERING
(HISTORICAL) (HISTORICAL) ADJUSTMENTS(a) ADJUSTMENTS TOTAL
------------ ------------ -------------- ----------- -------
(DOLLARS IN MILLIONS)
Net sales............................................ $ 182.6 $106.4 $(24.9) $ 15.5 (b) $ 279.6
Cost of sales........................................ (135.9) (81.2) 20.8 (5.5)(c) (201.8)
------- ------ ------ ------ -------
Gross profit.................................... 46.7 25.2 (4.1) 10.0 77.8
Selling, administrative and general........ (34.9) (25.9) -- (6.9)(d) (67.7)
Income from Great Lakes Kraut Company... 0.6 -- -- -- 0.6
Gain on the sale of the Aseptic Business............. 64.2 -- -- (64.2)(e) --
Amortization of unallocated excess of purchase cost
over net assets acquired........................... -- -- -- (2.4)(f) (2.4)
------- ------ ------ ------ -------
Operating income before extra-ordinary items.... 76.6 (0.7) (4.1) (63.5) 8.3
Interest expense..................................... (8.3) (2.0) 0.4 (9.3)(g) (19.2)
------- ------ ------ ------ -------
Pre-tax income before extraordinary items and
dividends and allocation of net proceeds........ 68.3 (2.7) (3.7) (72.8) (10.9)
(Provision) benefit for taxes........................ (25.0) 1.1 0.8 24.8(e)(h) 1.7
------- ------ ------ ------ -------
Income (loss) before extraordinary items........ $ 43.3 $ (1.6) $ (2.9) $(48.0) $ (9.2)
======= ====== ====== ====== =======
<FN>
See accompanying notes to the Unaudited Pro Forma Condensed
Consolidated Financial Statements.
</FN>
PRO-FAC COOPERATIVE, INC. AND
CONSOLIDATED SUBSIDIARY -- AGRILINK FOODS, INC.
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE QUARTER ENDED SEPTEMBER 26, 1998
(a) To reflect the sale of the Aseptic Business to Dean Foods which was completed in conjunction with the transaction.
(b) Represents a reclassification of promotional expenses of DFVC to conform presentation to that of Agrilink. Such
amount is equal to the adjustment of selling, administrative and general expenses in pro forma adjustment (d) below.
(c) To reflect the net of (dollars in millions):
Cost savings anticipated under existing contracts with the suppliers of product packaging.... $ 0.6
Reclassification of warehousing expenses of DFVC to conform presentation to that of
Agrilink. Such amount is equal to the adjustment of selling, administrative and general
expenses in pro forma adjustment (d) below................................................... (6.1)
-----
$(5.5)
=====
(d) To reflect the net of (dollars in millions):
Reclassification of promotional expenses of DFVC to conform presentation to that of
Agrilink. Such amount is equal to the adjustment to the net sales in pro forma
adjustment (b) above........................................................................ $(15.5)
Reclassification of warehousing expenses to conform presentation to that of Agrilink.
Such amount is equal to the adjustment to the net sales in pro forma adjustment (c)
above....................................................................................... 6.1
To reflect the anticipated cost reductions achievable under the plan formulated by
management to eliminate duplicate administrative costs, including primarily sales and
marketing functions, finance functions and logistics functions. Because both the
Agrilink and DFVC personnel currently contact the same customers, it is anticipated
that no material negative impact to sales will occur. The plan outlined is to be
executed within one year from the consummation date of the Acquisition...................... 2.5
------
$ (6.9)
======
(e) To eliminate the gain recognized on the sale of the Aseptic Business to Dean Foods (net of income taxes of
$25.0 million). Such income has not been reflected in the unaudited Pro Forma Condensed Consolidated Statement of Operations, as
the gain is considered nonrecurring.
(f) To reflect $2.4 million of additional goodwill amortization relating to the Acquisition assuming an
amortization period of 20 years. Depreciation and amortization recorded by the Company subsequent to the Acquisition
will be determined based upon the fair values of acquired assets and their related lives as ultimately recorded under purchase
accounting.
(g) To reflect the net adjustment to interest expense as follows (dollars in millions):
Notes at an interest rate of 11.875%................................................... $ 5.9
Borrowings under the New Credit Facility (at the rates applicable upon syndication
thereof)............................................................................... 10.3
Subordinated Promissory Note at an interest rate of 5.0% (non-cash).................... 0.4
Amortization of debt issuance costs.................................................... 0.8
Less historical interest expense net adjustment........................................ (7.9)
Less amortization of debt issuance costs related to debt repaid........................ (0.2)
------
$ 9.3
======
The elimination of debt issuance costs and premiums to be paid to extinguish existing debt have been recognized as
an extraordinary item in the Statement of Operations for the quarter ended September 26, 1998. Such charge has not been reflected
in the unaudited Pro Forma Condensed Consolidated Statement of Operations.
Fees associated with obtaining commitments for the Bridge Facility have not been reflected in the unaudited Pro Forma
Consolidated Statement of Operations as they are considered nonrecurring. Such fees, which will be reflected in Pro-Fac's
1999 second fiscal quarter, are estimated to be approximately $5.6 million before taxes.
(h) To reflect the income tax effect of the pro forma adjustments based on an assumed statutory income tax rate of 39.0%.