UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 27, 1997
Commission File No.: 0-22192
PERFORMANCE FOOD GROUP COMPANY
(Exact Name of Registrant as Specified in Its Charter)
Tennessee 54-0402940
(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
6800 Paragon Place, Suite 500
Richmond, Virginia 23230
(Address of Principal Executive (Zip Code)
Offices)
Registrant's Telephone Number, Including Area Code (804) 285-7340
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
X Yes No
As of November 5, 1997, 12,482,860 shares of the Registrant's Common Stock
were outstanding.
Independent Accountants' Review Report
The Board of Directors and Shareholders
Performance Food Group Company:
We have reviewed the accompanying condensed consolidated balance sheet of
Performance Food Group Company and subsidiaries as of September 27, 1997,
and the related condensed consolidated statements of earnings for the three-
month and nine-month periods ended September 27, 1997 and September 28,
1996, and the condensed consolidated statements of cash flows for the nine-
month periods ended September 27, 1997 and September 28, 1996. These
condensed consolidated financial statements are the responsibility of the
Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the condensed consolidated financial statements referred to above
for them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Performance Food Group Company
and subsidiaries as of December 28, 1996, and the related consolidated
statements of earnings, shareholders' equity and cash flows for the year then
ended (not presented herein); and in our report dated February 7, 1997, we
expressed an unqualified opinion on those consolidated financial statements.In
our opinion, the information set forth in the accompanying condensed
consolidated balance sheet as of December 28, 1996 is fairly stated, in all
material respects, in relation to the consolidated balance sheet from which it
has been derived.
KPMG PEAT MARWICK LLP
Richmond, Virginia
October 27, 1997
PART I - FINANCIAL INFORMATION
Item 1.
Financial Statements.
PERFORMANCE FOOD GROUP COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
September 27, December 28,
1997 1996
(Unaudited)
Assets
Current assets:
Cash $ 4,896 $ 5,557
Trade accounts and notes receivable, net 68,550 55,689
Inventories 68,212 48,005
Other current assets 4,331 4,176
Total current assets 145,989 113,427
Property, plant and equipment, net 66,499 55,697
Intangible assets, net 41,283 12,751
Other assets 1,229 1,022
Total assets $255,000 $182,897
Liabilities and Shareholders' Equity
Current liabilities:
Outstanding checks in excess of deposits $ 16,576 $ 12,895
Current installments of long-term debt 665 650
Accounts payable 61,561 44,494
Other current liabilities 17,880 12,421
Total current liabilities 96,682 70,460
Long-term debt, excluding current installments 3,109 3,604
Note payable to bank 30,395 3,621
Deferred income taxes 4,077 4,077
Total liabilities 134,263 81,762
Shareholders' equity 120,737 101,135
Total liabilities and shareholders' equity $255,000 $182,897
See accompanying notes to unaudited condensed consolidated financial statements.
PERFORMANCE FOOD GROUP COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings (Unaudited)
(In thousands, except per share amounts)
Three Months Ended Nine Months Endeds
Sept. 27, Sept. 28, Sept. 27, Sept. 28,
1997 1996 1997 1996
Net sales $336,349 $202,401 $897,651 $567,911
Cost of goods sold 294,334 173,896 784,641 487,392
Gross profit 42,015 28,505 113,010 80,519
Operating expenses 35,486 23,266 95,951 66,892
Operating profit 6,529 5,239 17,059 13,627
Other income (expense):
Interest expense (514) (82) (1,385) (516)
Other, net 84 59 268 126
Other expense, net (430) (23) (1,117) (390)
Earnings before income taxes 6,099 5,216 15,942 13,237
Income tax expense 2,353 2,057 6,153 5,227
Net earnings $3,746 $3,159 $9,789 $8,010
Net earnings per common share $ 0.30 $ 0.26 $ 0.79 $ 0.69
Weighted average common shares
and common share equivalents
outstanding 12,673 12,083 12,344 11,567
See accompanying notes to unaudited condensed consolidated financial
statements.
PERFORMANCE FOOD GROUP COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
Nine Months Ended
Sept. 27, Sept. 28,
1997 1996
Cash flows from operating activities:
Net earnings $ 9,789 $ 8,010
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 5,841 4,141
ESOP contributions applied to principal of ESOP debt 349 303
Gain on disposal of property, plant and equipment (46) (49)
Gain on insurance settlement (1,300) - -
Loss on writedown of leasehold improvements 1,287 - -
Changes in operating assets and liabilities, net of
effects of companies purchased 4,287 (6,173)
Net cash provided by operating activities 20,207 6,232
Cash flows from investing activities:
Purchases of property, plant and equipment (6,167) (7,301)
Proceeds from sale of property, plant and equipment 133 128
Net cash paid for acquisitions (46,337) - -
Net proceeds from insurance settlement 4,200 - -
Increase in intangibles and other assets (155) (320)
Net cash used by investing activities (48,326) (7,493)
Cash flows from financing activities:
Increase (decrease) in outstanding checks in
excess of deposits 3,180 (110)
Net borrowings (payments) on note payable to bank 23,294 (2,517)
Principal payments on long-term debt (480) (30,527)
Proceeds from issuance of common stock - 33,329
Stock option, incentive and employee stock
purchase plans 1,464 888
Net cash provided by financing activities 27,458 1,063
Net decrease in cash (661) (198)
Cash at beginning of period 5,557 4,235
Cash at end of period $ 4,896 $ 4,037
See accompanying notes to unaudited condensed consolidated financial statements.
PERFORMANCE FOOD GROUP COMPANY AND
SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
September 27, 1997 and September 28, 1996
1. Basis of Presentation
The accompanying condensed consolidated financial statements of
Performance Food Group Company and subsidiaries (the "Company") are
unaudited, with the exception of the December 28, 1996 condensed
consolidated balance sheet, which was derived from the audited
consolidated balance sheet in the Company's latest annual report on Form
10-K. The unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial reporting, and in accordance with Rule 10-01 of
Regulation S-X.
In the opinion of management, the unaudited condensed
consolidated financial statements contained in this report reflect all
adjustments, consisting of only normal recurring accruals, which are
necessary for a fair presentation of the financial position and the results of
operations for the interim periods presented. The results of operations for
any interim period are not necessarily indicative of results for the full year.
These unaudited condensed consolidated financial statements, note
disclosures and other information should be read in conjunction with the
consolidated financial statements and notes thereto included in the
Company's latest annual report on Form 10-K.
2. Business Combinations
On December 30, 1996, the Company completed the acquisition of
certain net assets of McLane Foodservice-Temple, Inc. ("McLane
Foodservice"), a wholly-owned subsidiary of McLane Company, Inc.,
based in Temple, Texas. McLane Foodservice had 1996 net sales of
approximately $180 million. The acquired company operates as
Performance Food Group of Texas, LP ("PFG of Texas"), an indirect
wholly-owned subsidiary of the Company. PFG of Texas operates
distribution centers in Temple and Victoria, Texas and provides products
and services to traditional foodservice customers as well as multi-unit
chain restaurants and vending customers. The purchase price of
approximately $30 million, which is subject to certain post-closing
adjustments, was financed with proceeds from an existing credit facility.
Simultaneous with the closing, the Company also purchased the
distribution center located in Victoria, Texas from an independent third
party for approximately $1.5 million. The condensed consolidated
statements of earnings and cash flows reflect the results of PFG of Texas
from the date of acquisition through September 27, 1997.
On June 30, 1997, the Company completed the acquisition of all of
the outstanding capital stock of W. J. Powell Company, Inc. ("Powell"), a
foodservice distributor based in Thomasville, Georgia. Powell, with
distribution centers in Thomasville, Georgia and Dothan, Alabama, had
1996 net sales of approximately $44 million consisting primarily of sales
to traditional foodservice customers. The purchase price of approximately
$20 million, plus the assumption of approximately $3 million of debt, was
financed with proceeds from an existing credit facility and the issuance of
approximately 320,000 shares of the Company's common stock. The
aggregate consideration payable to the former Powell shareholders is
subject to increase in certain circumstances. The condensed consolidated
statements of earnings and cash flows reflect the results of Powell from the
date of acquisition thru September 27, 1997.
Additionally, the Company has completed the acquisition of
certain assets of two small foodservice distributors which are expected to
generate annual sales of approximately $20 million. The operations of
these distributors have been combined with the operations of certain of the
Company's existing subsidiaries.
These acquisitions have been accounted for using the purchase
method and, accordingly, the acquired assets and liabilities have been
recorded at their estimated fair values at the date of acquisition. The
excess of the purchase price over the fair value of tangible net assets
acquired in these acquisitions was approximately $29.4 million and is
being amortized on a straight-line basis over estimated lives ranging from
5 to 40 years, based on the nature of the intangible asset. The cost
allocated to non-competition agreements is being amortized over their
contractual lives, which are generally 5 years. Cost allocated to customer
lists is being amortized over 15 years. The goodwill component of the
excess purchase price is being amortized over 40 years, which reflects
management's best estimate of the appropriate period over which to
amortize goodwill associated with these acquisitions.
3. Shareholders' Equity
In March 1996, the Company completed a secondary offering of
2,916,824 shares of common stock, of which the Company sold 2,255,455
shares with the remaining shares sold by selling shareholders. Net
proceeds of the offering were approximately $33.3 million, which were
used to repay a $30.0 million term loan and approximately $3.3 million
outstanding under the Company's credit facility.
4. Supplemental Cash Flow Information
Nine Months Ended
(amounts in thousands) Sept. 27, Sept. 28,
1997 1996
Cash paid during the period for:
Interest $ 1,233 $ 705
Income taxes $ 4,351 $ 4,151
Effects of purchase of companies:
Fair value of assets acquired,
inclusive of intangibles
of $29,354 $ 68,962 -
Liabilities assumed (14,625) -
Stock issued for acquisition (8,000) -
Net cash paid for acquisitions $ 46,337 $ -
5. Subsequent Event
On October 31, 1997, the Company acquired all of the outstanding
capital stock of AFI Food Service Distributors, Inc. ("AFI"), a foodservice
distributor based in Elizabeth, New Jersey, through the merger of AFI with
a newly formed, wholly owned subsidiary of the Company. AFI had 1996
net sales of approximately $69 million, consisting primarily of sales to
traditional foodservice customers. The purchase price of approximately
$16 million was financed by issuing 340,000 shares of the Company's
common stock and promissory notes, due January 2, 1998, of
approximately $7.3 million. In addition, the Company assumed
approximately $8.8 million of debt that was financed with proceeds from
an existing credit facility. The aggregate consideration payable to the
former AFI shareholders is subject to increase in certain circumstances.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
General
The Company derives its revenue primarily from the sale of food
and food-related products to the foodservice, or "away-from home eating,"
industry. The foodservice industry consists of two major customer types:
"traditional" foodservice customers, consisting of independent restaurants,
hotels, cafeterias, schools, healthcare facilities and other institutional
customers, and "multi-unit chain" customers, consisting of regional and
national quick-service restaurants and casual dining restaurants. Products
and services provided to the Company's traditional and multi-unit chain
customers are supported by identical physical facilities, vehicles,
equipment and personnel. The principal components of the Company's
expenses include cost of goods sold, which represents the amount paid to
manufacturers and growers for products sold, and operating expenses,
which include primarily labor-related expenses, delivery costs and
occupancy expenses.
Results of Operations
The following table sets forth, for the periods indicated, the components of
the condensed consolidated statements of earnings expressed as a
percentage of net sales:
Three Months Ended Nine Months Ended
Sept. 27, Sept. 28, Sept. 27, Sept. 28,
1997 1996 1997 1996
Net sales 100.0 % 100.0 % 100.0 % 100.0 %
Cost of goods sold 87.5 85.9 87.4 85.8
Gross profit 12.5 14.1 12.6 14.2
Operating expenses 10.6 11.5 10.7 11.8
Operating profit 1.9 2.6 1.9 2.4
Other expense, net 0.1 0.0 0.1 0.1
Earnings before income taxes 1.8 2.6 1.8 2.3
Income tax expense 0.7 1.0 0.7 0.9
Net earnings 1.1 % 1.6 % 1.1 % 1.4 %
Comparison of Periods Ended September 27, 1997 to September 28, 1996.
Net sales increased 66.2% to $336.3 million for the three months
ended September 27, 1997 (the "1997 quarter") from $202.4 million for
the three months ended September 28, 1996 (the "1996 quarter"). Net
sales increased 58.1% to $897.7 million for the nine months ended
September 27, 1997 (the "1997 period") from $567.9 million for the nine
months ended September 28, 1996 (the "1996 period"). Net sales in the
Company's existing operations increased 22% over the 1996 quarter while
acquisitions contributed an additional 44% to the Company's total sales
growth. Inflation amounted to less than 1.0% for the 1997 quarter and
approximately 1.0% for the 1997 period.
Gross profit increased 47.4% to $42.0 million in the 1997 quarter
from $28.5 million in the 1996 quarter. Gross profit increased 40.4% to
$113.0 million in the 1997 period from $80.5 million in the 1996 period.
Gross profit margin decreased to 12.5% in the 1997 quarter compared to
14.1% in the 1996 quarter and to 12.6% for the 1997 period from 14.2% in
the 1996 period. The decline in gross profit margin was due primarily to
the following two factors. Sales increased during 1997 to certain of the
Company's large multi-unit chain customers which generally are higher-
volume, lower gross-margin accounts but also allow for more efficient
deliveries and use of capital, resulting in lower operating expenses. Gross
profit margins also declined as a result of the acquisition of PFG of Texas,
whose margins are currently lower than those in many of the Company's
other subsidiaries, due in part to their customer mix which includes a
greater concentration of multi-unit chain customers.
Operating expenses increased 52.5% to $35.5 million in the 1997
quarter compared with $23.3 million in the 1996 quarter. Operating
expenses increased 43.4% to $96.0 million in the 1997 period from $66.9
million in the 1996 period. As a percentage of net sales, operating
expenses declined to 10.6% in the 1997 quarter from 11.5% in the 1996
quarter and to 10.7% in the 1997 period from 11.8% in the 1996 period.
The decrease in operating expenses as a percent of net sales primarily
reflects better use of the Company's facilities at the increased level of sales
and the continued shift in mix of sales to certain of the Company's rapidly
growing multi-unit chain customers discussed above. These
improvements in utilization were offset in part by increased labor costs
including recruiting and training additional personnel, primarily in the
transportation area which is an integral part of the Company's distribution
service. The Company expects these increased labor costs to continue for
the next several quarters. Additionally, the 1996 period was negatively
impacted by increased costs related to the severe weather experienced in
the East and Midwest during the first quarter of 1996. The Company
leased a 75,000 square foot distribution center in Belcamp, Maryland to
service the continued growth of certain of the Company's multi-unit chain
customers, which became operational in February 1997, and completed
construction of a 75,000 square foot distribution center in Dallas, Texas
which became operational in February 1996. The Company incurred
certain start-up expenses for these facilities, the impacts of which are
approximately comparable. Additionally, the Company intends to expand
certain of its distribution centers that support its rapidly growing multi-
unit chain customers during 1998.
Operating profit increased 24.6% to $6.5 million in the 1997
quarter from $5.2 million in the 1996 quarter. Additionally, operating
profit increased 25.2% to $17.1 million in the 1997 period from $13.6
million in the 1996 period. Operating profit margin declined to 1.9% for
the 1997 quarter from 2.6% for the 1996 quarter and to 1.9% for the 1997
period from 2.4% for the 1996 period.
Other expense increased to $430,000 in the 1997 quarter from
$23,000 in the 1996 quarter and to $1.1 million in the 1997 period from
$390,000 in the 1996 period. Other expense includes interest expense,
which increased to $514,000 in the 1997 quarter from $82,000 in the 1996
quarter. Interest expense increased to $1.4 million in the 1997 period from
$516,000 in the 1996 period. The increase in interest expense is due to
higher debt levels in the 1997 quarter and period as a result of the
Company's various acquisitions. Other expense during the 1997 period
also includes a $1.3 million gain from insurance proceeds related to
covered assets at one of the Company's processing and distribution
facilities which offset a $1.3 million writedown of certain leasehold
improvements associated with the termination of the lease on one of the
Company's distribution facilities.
Income tax expense increased to $2.4 million in the 1997 quarter
from $2.1 million in the 1996 quarter and to $6.2 million in the 1997
period from $5.2 million in the 1996 period, as a result of higher pre-tax
earnings. As a percentage of earnings before income taxes, the provision
for income taxes was 38.6% and 39.5% for the 1997 and 1996 quarters
and periods, respectively.
Net earnings increased 18.6% to $3.7 million in the 1997 quarter
compared to $3.2 million in the 1996 quarter. Net earnings increased
22.2% to $9.8 million in the 1997 period from $8.0 million in the 1997
period. As a percentage of net sales, net earnings decreased to 1.1% in the
1997 quarter versus 1.6% in the 1996 quarter and to 1.1% in the 1997
period from 1.4% in the 1996 period.
Liquidity and Capital Resources
The Company has historically financed its operations and growth
primarily with cash flow from operations, borrowings under its credit
facility, operating leases, normal trade credit terms and the sale of the
Company's common stock. Despite the Company's large sales volume,
working capital needs are minimized because the Company's investment in
inventory is financed principally with accounts payable.
Cash provided by operating activities was $20.2 million and $6.2
million for the 1997 and 1996 periods, respectively. The increase in cash
provided by operating activities resulted primarily from higher net
earnings and decreased levels of trade receivables offset in part by
increased levels of inventories net of trade payables.
Cash used by investing activities was $48.3 million and $7.5
million for the 1997 and 1996 periods, respectively. Investing activities
consist primarily of additions to and disposals of property, plant and
equipment and the acquisition of businesses. The Company's total capital
expenditures for the 1997 period were $6.2 million including
approximately $1.2 million for expansion of the distribution center in
Houma, Louisiana. The Company anticipates that its total capital
expenditures, other than for acquisitions, for fiscal 1997 will be
approximately $8 million. Investing activities during the 1997 period also
included $46.3 million for the acquisition of companies, net of cash on
hand at those companies, and $4.2 million from insurance proceeds related
to covered losses associated with one of the Company's processing and
distribution facilities. Acquisitions during the period, net of cash on hand
at the acquired companies, included approximately $32.1 million for PFG
of Texas and $11.6 million for Powell.
Cash flows from financing activities was $27.5 million and $1.1
million for the 1997 and 1996 periods, respectively. Cash flows in the
1997 period included net borrowings on a revolving credit facility ("Credit
Facility") of $23.3 million. The Credit Facility was used to finance the
$46.3 million of acquisitions discussed above, net of $23.0 million of
repayments as a result of the reduced working capital needs. In March
1996, the Company completed a secondary offering of 2.9 million shares
of common stock, of which the Company sold 2.3 million shares with the
remainder sold by selling shareholders. The net proceeds to the Company
from the offering were approximately $33.3 million which was used to
repay a $30.0 million term loan and to repay approximately $3.3 million
outstanding on the Company's line of credit.
The Company has $50.0 million of borrowing capacity under its
Credit Facility with a commercial bank which expires in July 1999.
Approximately $30.4 million was outstanding under the Credit Facility at
September 27, 1997. The Credit Facility also supports up to $5.0 million
of letters of credit. At September 27, 1997, the Company was
contingently liable for $2.2 million of outstanding letters of credit which
reduce amounts available under the Credit Facility. At September 27,
1997, the Company had $17.4 million available under the Credit Facility.
The Credit Facility bears interest at LIBOR plus a spread over LIBOR,
which varies based on the ratio of funded debt to total capital. At
September 27, 1997, the Credit Facility bore interest at 5.67%.
Additionally, the Credit Facility requires the maintenance of certain
financial ratios, as defined, regarding debt to tangible net worth, cash flow
coverage and current assets to current liabilities. Subsequent to quarter
end, the Company borrowed approximately $8.8 million under the Credit
Facility to refinance debt assumed in the acquisition of AFI on October 31,
1997 and obtained an additional $7.3 million of letters of credit to secure
amounts owed under promissory notes to the former AFI shareholders as
part of the purchase price.
On September 12, 1997, the Company completed a $42.0 million
operating lease agreement to construct new distribution centers planned to
become operational in 1998. Under this agreement, the lessor owns the
distribution centers, incurs the related debt to construct the facilities and
thereafter leases each facility to the Company. The Company has entered
into a commitment to lease each facility for a period beginning upon the
completion of each property and ending on September 12, 2002, including
extensions. Upon the expiration of each lease, the Company has the
option to purchase the facility at its original cost. If the Company does not
exercise its purchase options, the Company has significant residual value
guarantees of each property. The Company expects the fair value of the
properties included in this agreement to eliminate or substantially reduce
the Company's exposure under the residual value guarantee. At
September 27, 1997, construction has commenced on one facility with
expenditures to date of approximately $610,000. Total expenditures for
this facility are anticipated to be approximately $13 million.
The Company believes that cash flows from operations,
borrowings under its credit facility and operating leases will be sufficient
to finance its operations and anticipated growth for the foreseeable future.
Business Combinations
On December 30, 1996, the Company acquired certain net assets of
McLane Foodservice, a wholly-owned subsidiary of McLane Company,
Inc., based in Temple, Texas. McLane Foodservice had 1996 net sales of
approximately $180 million. The acquired company operates as PFG of
Texas, an indirect wholly-owned subsidiary of the Company. PFG of
Texas operates distribution centers in Temple and Victoria, Texas and
provides products and services to traditional foodservice customers as well
as multi-unit chain restaurants and vending customers. The purchase price
of approximately $30 million, which is subject to certain post-closing
adjustments, was financed with proceeds from an existing credit facility.
Simultaneous with the closing, the Company also purchased the
distribution center located in Victoria, Texas from an independent third
party for approximately $1.5 million. The condensed consolidated
statements of earnings and cash flows reflect the results of PFG of Texas
from the date of acquisition through September 27, 1997.
On June 30, 1997, the Company acquired all of the outstanding
capital stock of Powell, based in Thomasville, Georgia. Powell, with
distribution centers in Thomasville, Georgia and Dothan, Alabama, had
1996 net sales of approximately $44 million consisting primarily of sales
to traditional foodservice customers. The purchase price of approximately
$20 million, plus the assumption of approximately $3 million of debt, was
financed with proceeds from an existing credit facility and the issuance of
approximately 320,000 shares of the Company's common stock. The
aggregate consideration payable to the former Powell shareholders is
subject to increase in certain circumstances. The condensed consolidated
statement of earnings and cash flows reflect the results of Powell from the
date of acquisition thru September 27, 1997.
Additionally, the Company has completed the acquisition of certain assets of
two small foodservice distributors which are expected to generate annual
sales of approximately $20 million. The operations of these distributors
have been combined with the operations of certain of the Company's existing
subsidiaries.
These acquisitions have been accounted for using the purchase method and,
accordingly, the acquired assets and liabilities have been recorded at their
estimated fair values at the date of acquisition. The excess of the purchase
price over the fair value of tangible net assets acquired was approximately
$29.4 million and is being amortized on a straight-line basis over estimated
lives ranging from 5 to 40 years.
Subsequent to quarter end, the Company acquired all of the outstanding
capital stock of AFI, based in Elizabeth, New Jersey. AFI had 1996 net
sales of approximately $69 million, consisting primarily of sales to
traditional foodservice customers. The purchase price of approximately
$16 million was financed by issuing 340,000 shares of the Company's common
stock and promissory notes, due January 2, 1998, of approximately
$7.3 million. The aggregate consideration payable to the former AFI
shareholders is subject to increase in certain circumstances. In addition,
the Company assumed approximately $8.8 million of debt in the transaction.
Recently Issued Accounting Pronouncements
During the 1997 period the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards (SFAS) No. 128,
Earnings Per Share, and SFAS No. 129, Disclosure of Information About
Capital Structure, which are effective for periods ending after December
15, 1997 and issued SFAS No. 130, Reporting Comprehensive Income,
and SFAS No. 131, Disclosures About Segments of an Enterprise and
Related Information, which are effective for periods beginning after
December 15, 1997. The impact of these accounting pronouncements is
not expected to have a material impact on the Company's financial
statements.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of security holders
during the quarter ended September 27, 1997.
Item 6. Exhibits and Reports on Form 8-K.
(a.) Exhibits:
10.32 Amendment No. 1 to Revolving Credit
Agreement dated as of August 28, 1997 by and
among Performance Food Group Company and
First Union National Bank.
10.33 Participation Agreement dated as of August
29, 1997 among Performance Food Group
Company, First Security Bank, National
Association and First Union National Bank (as
agent for the Lenders and Holders).
10.34 Lease Agreement dated as of August 29,
1997 between First Security Bank, National
Association and Performance Food Group
Company.
15 Letter regarding unaudited financial
information from KPMG Peat Marwick LLP.
27 Financial Data Schedule (SEC only)
(b.) No reports on Form 8-K were filed during the
quarter ended September 27, 1997.
Signature
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.
PERFORMANCE FOOD GROUP COMPANY
(Registrant)
By: /s/ Roger L. Boeve
Roger L. Boeve
Executive Vice President &
Chief Financial Officer
Date: November 10, 1997