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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
March 13, 1997 (December 29, 1996)
PERFORMANCE FOOD GROUP COMPANY
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Tennessee 0-22192 54-0402940
- ---------------------------------------------- ----------------------- ------------------
(State or other jurisdiction of incorporation) (Commission File Number) (I.R.S. Employer
Identification No.)
6800 Paragon Place, Suite 500, Richmond, Virginia 23230
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (804) 285-7340
Not Applicable
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
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This Current Report on Form 8-K/A amends and supersedes "Item 7. Financial
Statements, Pro Forma Information and Exhibits" of Registrant's Current Report
on Form 8-K, dated January 13, 1997.
Item 7. Financial Statements, Pro Forma Information and Exhibits.
- --------------------------------------------------------------------------------
(a) Financial Statements of Business Acquired
Independent Auditors' Report
Balance Sheet at November 1, 1996
Statement of Earnings for the ten fiscal periods ended November 1, 1996
Statement of Shareholder's Equity for the ten fiscal periods ended
November 1, 1996
Statement of Cash Flows for the ten fiscal periods
ended November 1, 1996
Notes to Financial Statements
(b) Unaudited Pro Forma Consolidated Financial Information
Unaudited Pro Forma Consolidated Financial Information
Unaudited Pro Forma Consolidated Balance Sheet at September 28, 1996
Unaudited Pro Forma Consolidated Statement of Earnings for the nine
months ended September 28, 1996
Unaudited Pro Forma Consolidated Statement of Earnings for the fiscal
year ended December 30, 1995
(c) Exhibits:
(2) Asset Purchase Agreement, dated October 22, 1996 by and among
Performance Food Group Company, McLane Foodservice -- Temple,
Inc., and McLane Company, Inc. and an amendment thereto
(Pursuant to Item 601(b)(2) of Regulation S-K, the schedules
of this agreement are omitted, but will be provided
supplementally to the Commission upon request.)*
(10) Escrow Agreement, dated December 29, 1996, by and among
Performance Food Group Company, McLane Company, Inc., McLane
Foodservice -- Temple, Inc., and First Union National Bank of
Virginia.*
- -----------------------
*previously filed
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INDEPENDENT AUDITORS' REPORT
The Board of Directors
McLane Foodservice -- Temple, Inc.:
We have audited the accompanying balance sheet of McLane Foodservice -- Temple,
Inc. (a wholly-owned subsidiary of McLane Company, Inc.) of November 1, 1996,
and the related statements of earnings, shareholder's equity and cash flows for
the ten fiscal periods then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of McLane Foodservice -- Temple,
Inc. as of November 1, 1996, and the results of its operations and its cash
flows for the ten fiscal periods then ended, in conformity with generally
accepted accounting principles.
/s/ KPMG PEAT MARWICK LLP
Richmond, Virginia
December 18, 1996, except as to note 10,
which is as of December 29, 1996
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MCLANE FOODSERVICE -- TEMPLE, INC.
BALANCE SHEET
November 1, 1996
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ASSETS
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Current assets:
Cash $ 4,645
Trade accounts and current portion of note receivable, less allowance for
doubtful accounts of $895,000 (note 2) 12,097,628
Inventories (note 3) 11,024,929
Prepaid expenses and other current assets 187,985
Deferred income taxes (note 6) 449,000
- ---------------------------------------------------------------------------------------------
Total current assets 23,764,187
- ---------------------------------------------------------------------------------------------
Property and equipment, net (notes 4 and 5) 7,722,369
Note receivable, less current portion (note 2) 80,205
- ---------------------------------------------------------------------------------------------
Total assets $31,566,761
=============================================================================================
LIABILITIES AND SHAREHOLDER'S EQUITY
- ---------------------------------------------------------------------------------------------
Current liabilities:
Outstanding checks in excess of deposits $ 180,734
Current installments of obligation under capital lease (note 5) 129,928
Trade accounts payable 8,215,932
Accrued expenses 1,306,243
Payable to Parent (note 7) 15,713,751
Income taxes payable to Parent 1,523,000
- ---------------------------------------------------------------------------------------------
Total current liabilities 27,069,588
- ---------------------------------------------------------------------------------------------
Obligation under capital lease, excluding current installments (note 5) 792,452
Deferred income taxes (note 6) 702,000
- ---------------------------------------------------------------------------------------------
Total liabilities 28,564,040
- ---------------------------------------------------------------------------------------------
Shareholder's equity:
Common stock, $1.00 par value; 500,000 shares authorized; 50,000
shares issued and outstanding 50,000
Additional paid-in capital 231,858
Retained earnings 2,720,863
- ---------------------------------------------------------------------------------------------
Total shareholder's equity 3,002,721
Commitments and contingencies (notes 5 and 10)
- ---------------------------------------------------------------------------------------------
Total liabilities and shareholder's equity $31,566,761
=============================================================================================
See accompanying notes to financial statements.
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MCLANE FOODSERVICE -- TEMPLE, INC.
STATEMENT OF EARNINGS
Ten fiscal periods ended November 1, 1996
- ---------------------------------------------------------------------------------------------
Net sales $138,494,565
Cost of goods sold 121,140,650
- ---------------------------------------------------------------------------------------------
Gross profit 17,353,915
Operating expenses (notes 5, 7 and 8) 15,970,330
- ---------------------------------------------------------------------------------------------
Operating profit 1,383,585
- ---------------------------------------------------------------------------------------------
Other income (expense):
Interest expense (note 7) (1,218,598)
Interest income 11,267
Other, net 261,646
- ---------------------------------------------------------------------------------------------
Other expense, net (945,685)
- ---------------------------------------------------------------------------------------------
Earnings before income taxes 437,900
Income tax expense (note 6) 173,000
- ---------------------------------------------------------------------------------------------
Net earnings $ 264,900
=============================================================================================
See accompanying notes to financial statements.
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MCLANE FOODSERVICE -- TEMPLE, INC.
STATEMENT OF SHAREHOLDER'S EQUITY
Ten fiscal periods ended November 1, 1996
- ---------------------------------------------------------------------------------------------------
Additional Total
Common paid-in Retained shareholder's
stock capital earnings equity
- ---------------------------------------------------------------------------------------------------
Balances at January 26, 1996 $50,000 231,858 2,455,963 2,737,821
Net earnings -- -- 264,900 264,900
- ---------------------------------------------------------------------------------------------------
Balances at November 1, 1996 $50,000 231,858 2,720,863 3,002,721
===================================================================================================
See accompanying notes to financial statements.
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MCLANE FOODSERVICE -- TEMPLE, INC.
STATEMENT OF CASH FLOWS
Ten fiscal periods ended November 1, 1996
- ---------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net earnings $ 264,900
Adjustments to reconcile net earnings to net cash provided by operating
activities:
Depreciation and amortization 963,528
Gain on sale of equipment (177,914)
Decrease in allowance for doubtful accounts (80,579)
Provision for LIFO inventories 140,577
Deferred income taxes 77,000
Changes in operating assets and liabilities:
Increase in trade accounts receivable (1,405,942)
Increase in inventories (1,560,682)
Decrease in prepaid expenses and other current assets 10,801
Increase in trade accounts payable 1,976,762
Decrease in accrued expenses (84,479)
Increase in income taxes payable to Parent 96,000
- ---------------------------------------------------------------------------------------------
Total adjustments (44,928)
- ---------------------------------------------------------------------------------------------
Net cash provided by operating activities 219,972
- ---------------------------------------------------------------------------------------------
Cash flows from investing activities:
Purchases of property and equipment (606,938)
Proceeds from sale of equipment 177,914
Principal payments received on notes receivable 49,081
- ---------------------------------------------------------------------------------------------
Net cash used in investing activities (379,943)
- ---------------------------------------------------------------------------------------------
Cash flows from financing activities:
Decrease in outstanding checks in excess of deposits (128,212)
Principal payments on obligation under capital lease (99,450)
Net increase in payable to Parent 390,192
- ---------------------------------------------------------------------------------------------
Net cash provided by financing activities 162,530
- ---------------------------------------------------------------------------------------------
Net increase in cash 2,559
Cash at beginning of year 2,086
- ---------------------------------------------------------------------------------------------
Cash at end of year 4,645
=============================================================================================
Supplementary disclosure of cash flow information -- cash paid for interest $1,218,598
- ---------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
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MCLANE FOODSERVICE -- TEMPLE, INC.
Notes to Financial Statements
November 1, 1996
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(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES
DESCRIPTION OF BUSINESS
McLane Foodservice -- Temple, Inc. (the Company) is a wholly-owned
subsidiary of McLane Company, Inc. (the Parent), which is itself a
wholly-owned subsidiary of Wal-Mart Stores, Inc. The Company is engaged
in the marketing and distribution of a wide range of food and
food-related products to the foodservice, or "away-from-home eating,"
industry, including both traditional foodservice customers and chain
restaurants. Traditional foodservice customers include independent
restaurants, hospitals, schools, hotels and industrial caterers. The
Company's chain restaurant customers include regional and national
hamburger, chicken and cafeteria operations. The Company is also
engaged, to a limited extent, in the marketing and distribution of
vending products to independent vending distributors and office coffee
service companies. The Company operates out of distribution centers in
Temple and Victoria, Texas. The majority of the Company's customers are
located in Texas. The Company is not dependent on a single supplier or
only a few suppliers.
The Company uses a 52/53 week fiscal year ending on the last Friday in
January, consisting of thirteen four-week periods. The accompanying
financial statements and related notes are presented as of and for the
ten fiscal periods ended November 1, 1996.
TRADE ACCOUNTS AND NOTES RECEIVABLE
Trade accounts and notes receivable represent amounts due from
customers in the ordinary course of business. At November 1, 1996,
trade accounts receivables from America's Favorite Chicken, Inc. (AFC)
and Dairy Queen International (Dairy Queen) comprised 23% and 13%,
respectively, of the total trade accounts and notes receivable balance.
INVENTORIES
Inventories consist of food and food-related products held for resale
and are valued at the lower of cost or market, with the cost of
approximately 65% of inventories determined using the last-in,
first-out (LIFO) method. Cost for the remaining inventories is
determined using the first-in, first-out (FIFO) method.
(Continued)
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MCLANE FOODSERVICE -- TEMPLE, INC.
Notes to Financial Statements
November 1, 1996
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(1) CONTINUED
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Equipment under capital
leases are stated at the lesser of the estimated fair value of the
leased equipment or the present value of minimum lease payments at the
inception of the lease. Maintenance, repairs and minor renewals are
charged to earnings when they are incurred. Upon sale or retirement of
an asset, accumulated depreciation is deducted from the original cost,
compared to proceeds and any gain or loss is reflected in current
earnings.
Depreciation on property and equipment is calculated on the
straight-line method over the estimated useful lives of the assets.
Equipment held under capital leases is amortized straight-line over the
shorter of the lease term or estimated useful life of the asset. In
general, the estimated useful lives for computing depreciation and
amortization are: 3 to 40 years for buildings and improvements; 3 to 8
years for transportation equipment; 3 to 10 years for warehouse and
plant equipment; 3 to 10 years for office equipment, furniture and
fixtures; and 7 years for equipment held under capital leases.
REVENUE RECOGNITION
Sales are recognized upon shipment of goods to the customer. The
following customers each accounted for more than 5% of net sales for
the ten fiscal periods ended November 1, 1996:
Percentage
Customer of net sales
- --------------------------------------------------------------------------------
AFC 30%
Dairy Queen 13%
Triangle Foodservice Corporation 6%
- --------------------------------------------------------------------------------
(Continued)
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MCLANE FOODSERVICE -- TEMPLE, INC.
Notes to Financial Statements
November 1, 1996
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(1) CONTINUED
INCOME TAXES
The Company files consolidated federal and state income tax returns
with Wal-Mart Stores, Inc. Income taxes are computed using the separate
return method which incorporates the recognition and measurement
criteria of Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes (Statement 109). Under the asset and
liability method of Statement 109, deferred tax assets and liabilities
are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in years in which those
temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates
is recognized in income in the period that includes the enactment date.
USE OF ESTIMATES
Management of the Company has made a number of 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 and the reported amounts of revenues and
expenses during the reporting period to prepare these financial
statements in conformity with generally accepted accounting principles.
Actual results could differ from these estimates.
(2) NOTE RECEIVABLE
The Company's note receivable is due from a customer and relates to
financing of inventory purchases. The related operating profit
generated from this financing activity is not significant. The note
bears interest at 9% and has a remaining term of approximately two
years. The note is unsecured. The note receivable shown in current
assets totals approximately $62,000 at November 1, 1996.
(3) INVENTORIES
At November 1, 1996, approximately 65% of total inventories were valued
using the LIFO method. Costs for the remaining inventories were
determined using the FIFO method. If all inventories were valued at the
lower of FIFO cost or market, inventories would have been higher by
approximately $475,000 at November 1, 1996, and net earnings would have
been higher by approximately $141,000 for the ten fiscal periods ended
November 1, 1996. FIFO value of inventories approximates their
replacement cost.
(Continued)
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MCLANE FOODSERVICE -- TEMPLE, INC.
Notes to Financial Statements
November 1, 1996
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(4) PROPERTY AND EQUIPMENT
Property and equipment as of November 1, 1996 consists of the
following:
Land $ 44,774
Buildings and improvements 5,791,956
Transportation equipment (note 5) 2,207,860
Warehouse and plant equipment 3,601,643
Office equipment, furniture and fixtures 1,849,866
---------------------------------------------------------------------
13,496,099
Less accumulated depreciation and amortization 5,773,730
---------------------------------------------------------------------
Property and equipment, net 7,722,369
=====================================================================
(5) LEASES
The Company is obligated under a capital lease that expires in October
2002 with the Parent for transportation equipment. At November 1, 1996,
the gross amount of transportation equipment and related accumulated
amortization recorded under the capital lease was as follows:
Cost of transportation equipment $1,049,371
Less accumulated amortization 142,861
-----------------------------------------------------------------------
$ 906,510
=======================================================================
Amortization of assets held under the capital lease is included with
depreciation expense and is included in operating expenses in the
statement of earnings.
(Continued)
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MCLANE FOODSERVICE -- TEMPLE, INC.
Notes to Financial Statements
November 1, 1996
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(5) CONTINUED
Future minimum capital lease payments as of November 1, 1996 are as
follows:
Fourteen fiscal periods ending November 1,
------------------------------------------------------------------------------
1997 $ 171,720
1998 171,720
1999 171,720
2000 171,720
2001 171,720
Thereafter 257,580
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Total minimum lease payments 1,116,180
Less amounts representing interest at 6.5% 193,800
------------------------------------------------------------------------------
Present value of minimum lease payments 922,380
Less current installments of obligation under capital lease 129,928
------------------------------------------------------------------------------
Obligation under capital lease, excluding current installments $ 792,452
------------------------------------------------------------------------------
The Company leases the Victoria facility and certain transportation
equipment from the Parent under various month-to-month operating
leases. The Company is required to pay all maintenance on the facility
and transportation equipment. Total rent expense for the ten fiscal
periods ended November 1, 1996 under these leases totaled approximately
$802,000 and is included in operating expenses. Additionally, the
Company leases certain warehouse, plant and office equipment under
various month-to-month operating leases from third parties. Total rent
expense for the ten fiscal periods ended November 1, 1996 under these
leases totaled approximately $83,000 and is included in operating
expenses.
(Continued)
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MCLANE FOODSERVICE -- TEMPLE, INC.
Notes to Financial Statements
November 1, 1996
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(5) CONTINUED
It is expected that in the normal course of business, leases that
expire will be renewed or replaced by other leases. Thus, it is
anticipated that future rent expense will not be less than the amounts
for the ten fiscal periods ended November 1, 1996.
(6) INCOME TAXES
The provision for income taxes consisted of the following for the ten
fiscal periods ended November 1, 1996:
Current:
Federal $ 84,000
State 12,000
-----------------------------------------------------------------------
96,000
-----------------------------------------------------------------------
Deferred:
Federal 67,000
State 10,000
-----------------------------------------------------------------------
77,000
-----------------------------------------------------------------------
Total income tax expense $173,000
=======================================================================
The actual income tax expense differs from the expected income tax
expense (computed by applying the applicable U.S. Federal corporate
income tax rate of 34% to earnings before income taxes) as follows:
Federal income taxes computed at statutory rate $149,000
Increase in income taxes resulting from:
State income taxes, net of Federal income tax benefit 15,000
Other, net 9,000
-----------------------------------------------------------------------
Total income tax expense $173,000
=======================================================================
(Continued)
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MCLANE FOODSERVICE -- TEMPLE, INC.
Notes to Financial Statements
November 1, 1996
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(6) CONTINUED
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at
November 1, 1996 are as follows:
Deferred tax assets:
Allowance for doubtful accounts $ 332,000
Inventories, principally due to additional costs inventoried for
tax purposes pursuant to the Tax Reform Act of 1986 90,000
Various accrued expenses not deductible until paid 117,000
Other 6,000
------------------------------------------------------------------------------------
Total gross deferred tax assets 545,000
------------------------------------------------------------------------------------
Deferred tax liabilities:
Property and equipment, principally due to differences in
depreciation (708,000)
Inventories, principally due to differences in the LIFO
calculation for financial statement and tax purposes (90,000)
------------------------------------------------------------------------------------
Total gross deferred tax liabilities (798,000)
------------------------------------------------------------------------------------
Net deferred tax liability $(253,000)
====================================================================================
The net deferred tax liability is presented in the November 1, 1996
balance sheet as follows:
Current deferred tax asset $ 449,000
Noncurrent deferred tax liability (702,000)
------------------------------------------------------------------------------------
Net deferred tax liability (253,000)
====================================================================================
The Company has sufficient taxable income and future taxable income
from reversing taxable temporary differences to realize substantially
all of its deferred tax assets at November 1, 1996. Management
believes, based on the Company's history of generating earnings and
expectations of future earnings, that it is more likely than not that
all deferred tax assets will be realized. Therefore, no valuation
allowance is considered necessary.
(Continued)
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MCLANE FOODSERVICE -- TEMPLE, INC.
Notes to Financial Statements
November 1, 1996
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(7) RELATED PARTY TRANSACTIONS
The Parent provides certain treasury/cash management services,
administrative support and computer processing services to the Company.
For the ten fiscal periods ended November 1, 1996, amounts allocated
and charged to the Company for such services totaled $472,000 and are
included in operating expenses. Such allocations and charges are based
upon specific utilization of such services by the Company. Where
determinations based on utilization alone have been impracticable,
other methods and criteria were used that management believes are
equitable and provide a reasonable estimate of the costs attributable
to the Company. It is management's opinion that such charges fairly
represent the costs of services provided to the Company, however, the
terms of the transactions may differ from those that would result from
transactions among unrelated parties.
The Company's cash is managed as part of the Parent's centralized cash
management system. The net cash collected or disbursed by the Company
is transferred to the Parent on a daily basis. Transactions such as the
reimbursement and allocation of expenses incurred by the Parent on
behalf of the Company are also recorded through the payable to Parent
account. The Company is assessed interest each month on amounts payable
to the Parent, calculated at 7.5% per annum of property and equipment
and other assets (mainly prepaid expenses) and 9% per annum of all
other assets and liabilities, excluding payables to the Parent. For the
ten fiscal periods ended November 1, 1996, the Company paid
approximately $1,219,000 in interest charges to the Parent.
The Company leases the Victoria facility and certain transportation
equipment from the Parent under operating and capital leases (see note
5). Management of the Company believes that the Victoria facility's
monthly lease payment of approximately $11,000 is below the current
market rental. The current market rental is estimated to be
approximately $22,000 per month.
(8) EMPLOYEE BENEFIT PLAN
The Company maintains a profit sharing savings plan which covers
substantially all employees who have been employed by the Company for
at least one year. Participating employees may elect to contribute 3%
to 10% of their qualified salary under the provisions of Internal
Revenue Code Section 401(k). Contributions to the plan by the Company
are discretionary and amounted to approximately $400,000 for the ten
fiscal periods ended November 1, 1996, and are included in operating
expenses.
(9) FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, Disclosures About
Fair Value of Financial Instruments, requires the disclosure of fair
value information about financial instruments, whether or not
recognized in the balance sheet, for which it is practicable to
estimate that value.
(Continued)
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MCLANE FOODSERVICE -- TEMPLE, INC.
Notes to Financial Statements
November 1, 1996
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(9) CONTINUED
As of November 1, 1996, the carrying value of cash, trade accounts and
note receivable, outstanding checks in excess of deposits, trade
accounts payable and accrued expenses approximate fair value because of
the short maturity of those instruments.
Based on the borrowing rates currently available to the Company,
management believes that the carrying value of payable to Parent and
income taxes payable to Parent approximates fair value.
(10) SUBSEQUENT EVENT (UNAUDITED)
On December 29, 1996, the Parent consummated the sale of substantially
all of the net assets of the Company to Performance Food Group Company
of Texas, L.P. (Performance Food) for approximately $30 million,
subject to certain closing adjustments. In addition, Performance Food
purchased the Victoria facility from a third party for approximately
$1.5 million.
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PERFORMANCE FOOD GROUP COMPANY
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma consolidated financial information is
based upon the consolidated financial statements of Performance Food Group
Company (the "Company") combined with the financial statements of McLane
Foodservice -- Temple, Inc. ("McLane") to give effect to the acquisition (the
"Acquisition") of substantially all of the net assets of McLane, completed on
December 29, 1996. The unaudited pro forma consolidated balance sheet as of
September 28, 1996 gives effect to the Acquisition as if it had occurred on
such date. The unaudited pro forma consolidated statements of earnings for the
nine months ended September 28, 1996 and the fiscal year ended December 30,
1995 give effect to the Acquisition as if it occurred at the beginning of each
period presented. In presenting the transaction on a pro forma basis, McLane's
financial statements for the ten fiscal periods beginning January 27, 1996 and
ending November 1, 1996 were combined with the Company's consolidated financial
statements for the nine months ended September 28, 1996. McLane's unaudited
financial statements for the fiscal year ended January 26, 1996 were combined
with the Company's consolidated financial statements for the fiscal year ended
December 30, 1995 in presenting the transaction on a pro forma basis for that
period. The pro forma information is based on the historical financial
statements of the Company and McLane, giving effect to the transaction under
the purchase method of accounting, and the assumptions and adjustments in the
accompanying notes to the pro forma financial information. The Company has not
yet completed its purchase price allocation for this acquisition.
The unaudited pro forma consolidated financial information has been
prepared and included as required by the rules and regulations of the Securities
and Exchange Commission and does not purport to be indicative of the results
that actually would have been obtained if the transaction had been in effect on
the date indicated or of the results which may be obtained in the future. The
unaudited pro forma consolidated financial information should be read in
conjunction with the historical financial information of McLane contained
elsewhere herein.
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PERFORMANCE FOOD GROUP COMPANY
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 28, 1996
(AMOUNTS IN THOUSANDS)
PRO FORMA PRO FORMA
PFG MCLANE ADJUSTMENTS TOTAL
-------- ------- ----------- ---------
ASSETS
Cash $ 4,037 $ 5 $ (5)(1) $ 4,037
Trade accounts and notes receivable, net 48,729 12,098 60,827
Inventories 45,914 11,025 475(2) 57,414
Other current assets 3,223 637 (637)(1) 3,223
- --------------------------------------------------------------------------------------------------------
Total current assets 101,903 23,765 (167) 125,501
Property, plant & equipment, net 55,177 7,722 (907)(1) 66,592
3,100(2)
1,500(3)
Intangible assets, net 12,905 - 6,525(2) 19,430
Other assets 926 80 1,006
- --------------------------------------------------------------------------------------------------------
Total assets 170,911 31,567 10,051 212,529
========================================================================================================
LIABILITIES & SHAREHOLDERS' EQUITY
Outstanding checks in excess of deposits 13,681 181 (181)(1) 13,681
Current portion of long-term debt 641 130 (130)(1) 641
Accounts payable 37,337 8,216 45,553
Due to parent - 17,237 (17,237)(1) 0
Accrued expenses and other current liabilities 11,291 1,306 (906)(1) 11,691
- --------------------------------------------------------------------------------------------------------
Total current liabilities 62,950 27,070 (18,454) 71,566
Long-term debt, excluding current portion 3,808 792 (792)(1) 3,808
Note payable to bank 2,726 - 31,502(2) 35,728
1,500(3)
Deferred income taxes 3,106 702 (702)(1) 3,106
- --------------------------------------------------------------------------------------------------------
Total liabilities 72,590 28,564 13,054 114,208
Shareholders' equity 98,321 3,003 (3,003)(1) 98,321
- --------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $170,911 $31,567 $ 10,051 $212,529
========================================================================================================
(1) Eliminate assets, liabilities and shareholders' equity not purchased in
accordance with the Asset Purchase Agreement.
(2) Record purchase of net assets of McLane Foodservice-Temple, including $3.1
million for certain assets of McLane Company. The total consideration
was $31.5 million, financed with borrowings under the Company's credit
facility. The Company has not yet completed its allocation of the purchase
price, which is subject to adjustment when additional information
concerning asset valuations is obtained. The allocation does include an
adjustment to convert from LIFO to FIFO inventory method. Any changes to
the final purchase price allocation are not expected to have a material
effect on the Company's consolidated financial position.
(3) Purchase Victoria facility from third party for $1.5 million simultaneously
with closing.
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PERFORMANCE FOOD GROUP COMPANY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
NINE MONTHS ENDED SEPTEMBER 28, 1996
(AMOUNTS IN THOUSANDS)
PRO FORMA PRO FORMA
PFG MCLANE ADJUSTMENTS TOTAL
-------- ---------- ----------- ---------
Net sales $567,911 $138,495 $706,406
Cost of goods sold 487,392 121,141 (141)(4) 608,392
- ---------------------------------------------------------------------------------------------------
Gross profit 80,519 17,354 141 98,014
(88)(5)
Operating expenses 66,892 15,970 122(1) 82,896
- ---------------------------------------------------------------------------------------------------
Operating profit 13,627 1,384 107 15,118
Other income (expense):
Interest expense (516) (1,219) (1,733)(2) (2,249)
1,219(3)
Interest income - 11 11
Other, net 126 262 388
- ---------------------------------------------------------------------------------------------------
Other expense, net (390) (946) (514) (1,850)
- ---------------------------------------------------------------------------------------------------
Earnings before income taxes 13,237 438 (407) 13,268
Income tax expense 5,227 173 (161)(6) 5,239
- ---------------------------------------------------------------------------------------------------
Net earnings $ 8,010 $ 265 $ (246) $ 8,029
===================================================================================================
Weighted average shares outstanding 12,083 12,083
Net earnings per common share $ 0.66 $ 0.66
(1) Record amortization of excess purchase price over 40 years.
(2) Record interest on total acquisition debt of approximately $33 million
at 7%.
(3) Eliminate interest on debt not assumed.
(4) Adjustment to convert from LIFO to FIFO inventory method.
(5) Eliminate rent and record depreciation on Victoria facility.
(6) Adjust effective tax rate giving effect to pro forma adjustments.
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PERFORMANCE FOOD GROUP COMPANY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
FISCAL YEAR ENDED DECEMBER 30, 1995
(AMOUNTS IN THOUSANDS)
PRO FORMA PRO FORMA
PFG MCLANE ADJUSTMENTS TOTAL
-------- -------- ----------- ---------
Net sales $664,123 $163,938 $828,061
Cost of goods sold 568,097 143,944 712,041
- ------------------------------------------------------------------------------------------------
Gross profit 96,026 19,994 116,020
(114)(4)
Operating expenses 80,302 20,451 175(1) 100,814
- ------------------------------------------------------------------------------------------------
Operating profit 15,724 (457) (61) 15,206
Other income (expense):
Interest expense (2,727) (1,269) (2,279)(2) (5,006)
1,269(3)
Interest income 16 6 22
Other, net (2) 45 43
- ------------------------------------------------------------------------------------------------
Other expense, net (2,713) (1,218) (1,010) (4,941)
- ------------------------------------------------------------------------------------------------
Earnings before income taxes 13,011 (1,675) (1,071) 10,265
Income tax expense 5,088 (1,085)(5) 4,003
- ------------------------------------------------------------------------------------------------
Net earnings $ 7,923 $ (1,675) $ 14 $ 6,262
================================================================================================
Weighted average shares outstanding 9,631 9,631
Net earnings per common share $ 0.82 $ 0.65
(1) Record amortization of excess purchase price over 40 years.
(2) Record interest on total acquisition debt of approximately $33 million
at 7%.
(3) Eliminate interest on debt not assumed.
(4) Eliminate rent and record depreciation on Victoria facility.
(5) Record estimated tax provision based on 1996 effective rate.
20
21
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.
PERFORMANCE FOOD GROUP COMPANY
Date: March 13, 1997 By: /s/ Roger L. Boeve
----------------------------
Roger L. Boeve
Executive Vice President and
Chief Financial Officer
22
EXHIBIT INDEX
NO. EXHIBIT
--- ---------------------------------------------------
2 Asset Purchase Agreement, dated October 22, 1996
by and among Performance Food Group Company,
McLane Foodservice--Temple, Inc., and McLane
Company, Inc. and an amendment thereto (Pursuant
to Item 601(b)(2) of Registration S-K, the schedules
of this agreement are omitted, but will be provided
supplementally to the Commission upon request.)*
10 Escrow Agreement, dated December 29, 1996, by
and among Performance Food Group Company,
McLane Company, Inc., McLane Foodservice--
Temple, Inc., and First Union National Bank of
Virginia.*
- ----------------------
*previously filed