UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported): December 8, 2005
GALAXY NUTRITIONAL FOODS, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 1-15345 25-1391475
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
2441 Viscount Row 32809
Orlando, Florida (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (407) 855-5500
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Section 2 - Financial Information.
Item 2.01 Completion of Acquisition or Disposition of Assets.
On June 30, 2005, Galaxy Nutritional Foods, Inc. (the "Company") entered into a
definitive agreement (the "Asset Purchase Agreement") for the sale of
substantially all of our manufacturing and production equipment to Schreiber
Foods, Inc., a Wisconsin corporation ("Schreiber"), for $8.7 million in cash.
Schreiber is a privately held cheese manufacturing company with annual sales
exceeding $2 billion. Schreiber's main business is contract manufacturing
cheese, cheese alternative and other dairy products for many well-known
companies and brands.
In connection with the Asset Purchase Agreement, we also entered into a Supply
Agreement with Schreiber (the "Supply Agreement") on June 30, 2005. Pursuant to
the Supply Agreement, Schreiber has become our sole source of supply of
substantially all of our products and we purchase our requirements of
substantially all of our products exclusively from Schreiber. As of November 14,
2005, Schreiber began to deliver such products directly to our customers. The
prices for such products are based on cost conversions determined by the parties
from time to time. Other material terms of the Supply Agreement are as follows:
o The initial term of the Supply Agreement is for a period of five
years from the effective date of September 1, 2005 and is renewable
at our option for up to two additional five-year periods (for a
total term of up to fifteen years). Since October 2005, Schreiber
has begun to purchase our remaining raw materials, ingredients and
packaging at our cost. If we do not exercise our first option to
extend the term, then we will be obligated to pay Schreiber
$1,500,000. If we have exercised the first option to extend the
term, but we do not exercise our second option to extend the term,
then we will be obligated to pay Schreiber $750,000.
o The Supply Agreement provides for a contingent short-fall payment
obligation by our Company if a specified production level is not met
during the one-year period from September 1, 2006 to August 31,
2007. If a contingent short-fall payment is accrued after such
one-year period, it may be reduced by the amount by which production
levels in the one-year period from September 1, 2007 to August 31,
2008 exceeds the specified target level of production, if any.
On December 8, 2005, we completed the sale of substantially all of our
manufacturing and production equipment to Schreiber. This sale was approved by
our shareholders at a Special Meeting held on December 5, 2005. The $8,700,000
in proceeds were used to pay $1,319,582.70 to the Orange County Tax Collector
for tangible personal property taxes due primarily on the sold assets and
$7,374,298.98 to Beltway Capital Partners LLC (successor by assignment of
Wachovia Bank, N.A.) for the termination of our term loan. The remaining
proceeds balance of $6,118.32 was paid to reduce our asset-based line of credit
from Textron Financial Corporation.
The unaudited pro forma condensed financial information attached as Exhibit 99.1
to this report illustrates the effects of this sale and the use of proceeds
therefrom on the Company's historical financial condition and operating results.
On December 9, 2005, we issued a press release announcing the matters discussed
above. The full text of the press release is attached as Exhibit 99.2 to this
report.
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Section 9 - Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits
99.1 Unaudited Pro Forma Condensed Financial Information (Filed
herewith).
99.2 Press Release regarding sale of assets to issued by the Company on
December 9, 2005 (Filed herewith).
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.
GALAXY NUTRITIONAL FOODS, INC.
December 14, 2005 By: /s/ Michael E. Broll
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Name: Michael E. Broll
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Title: Chief Executive Officer
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