SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission file number 0-23048
LINCOLN SNACKS COMPANY
(exact name of registrant as specified in its charter)
Delaware 47-0758569 (State or other jurisdiction (IRS Employer Identification No.) of incorporation or organization) 4 High Ridge Park, Stamford, Connecticut 06905 (Address of principal executive offices) (zip code) |
(Registrant's telephone number, including area code) (203) 329-4545
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
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.
Yes X No
The number of shares of the issuer's Common Stock, $.01 par value, outstanding on May 6, 1998 was 6,331,790 shares.
LINCOLN SNACKS COMPANY
INDEX TO FORM 10-Q
PAGE Part I. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS Balance Sheets as of March 31, 1998 and June 30, 1997 3-4 Statements of Operations for the three months ended March 31, 1998 and March 31, 1997 5 Statements of Operations for the nine months ended March 31, 1998 and March 31, 1997 6 Statements of Changes in Stockholders' Equity for the nine months ended March 31, 1998 and March 31, 1997 7 Statements of Cash Flows for the nine months ended March 31, 1998 and March 31, 1997 8 Notes to Financial Statements 9-11 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 12-16 Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK 16 Part II. OTHER INFORMATION Item 1. LEGAL PROCEEDINGS 17 Item 2. CHANGES IN SECURITIES 17 Item 3. DEFAULTS UPON SENIOR SECURITIES 17 Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 17 Item 5. OTHER INFORMATION 17 Item 6. EXHIBITS AND REPORTS ON FORM 8-K 17 SIGNATURES 18 |
LINCOLN SNACKS COMPANY
BALANCE SHEETS
ASSETS
AS OF MARCH 31, 1998 AND JUNE 30, 1997
March 31, June 30, 1998 1997 ----------- ------------ ASSETS (Unaudited) CURRENT ASSETS: Cash $ 4,141,233 $ 1,606,357 Accounts receivable (net of allowance for doubtful accounts and cash discounts of $331,518 and $237,778 respectively) 1,757,859 1,951,937 Inventories 2,604,786 1,680,253 Prepaid and other current assets 39,331 29,023 ------------ ------------ Total current assets 8,543,209 5,267,570 PROPERTY, PLANT AND EQUIPMENT: Land 370,000 370,000 Building and leasehold improvements 1,780,742 1,526,705 Machinery and equipment 4,881,709 4,800,284 Construction in process 122,030 122,319 ------------ ------------ 7,154,481 6,819,308 Less: accumulated depreciation and amortization (2,712,281) (2,263,689) ------------ ------------ 4,442,200 4,555,619 INTANGIBLE AND OTHER ASSETS, net of accumulated amortization of $777,003 and $667,111 3,956,479 3,466,371 ------------ ------------ TOTAL ASSETS $ 16,941,888 $ 13,289,560 ============ ============ |
The accompanying notes to financial statements are an integral part of these balance sheets.
LINCOLN SNACKS COMPANY
BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
AS OF MARCH 31, 1998 AND JUNE 30, 1997
March 31, June 30, 1998 1997 ------------ ----------- LIABILITIES AND STOCKHOLDERS' EQUITY (Unaudited) CURRENT LIABILITIES: Short term note $ 458,333 $ 0 Accounts payable 1,400,007 1,357,170 Accrued expenses 1,181,779 1,178,601 Accrued trade promotions 1,399,260 675,585 Deferred gain-short term 13,434 13,434 ------------ ------------ Total current liabilities 4,452,813 3,224,790 Deferred Gain 106,093 115,784 ------------ ------------ TOTAL LIABILITIES 4,558,906 3,340,574 ------------ ------------ COMMITMENTS STOCKHOLDERS' EQUITY: Common stock, $0.01 par value, 20,000,000 shares authorized, 6,450,090 shares issued at March 31, 1998 and June 30, 1997 64,501 64,501 Special stock, $0.01 par value, 300,000 shares authorized, none outstanding 0 0 Additional paid-in capital 18,010,637 18,010,637 Accumulated deficit ( 5,666,130) ( 8,100,126) Less: cost of common stock in treasury 118,300 shares (26,026) (26,026) ------------ ------------ TOTAL STOCKHOLDERS' EQUITY 12,382,982 9,948,986 ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 16,941,888 $ 13,289,560 ============ ============ |
The accompanying notes to financial statements are an integral part of these balance sheets.
LINCOLN SNACKS COMPANY
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND MARCH 31, 1997
1998 1997 ------------- ------------- (Unaudited) (Unaudited) NET SALES $ 4,623,716 $ 4,309,514 COST OF SALES 3,386,474 3,396,964 ------------ ------------ Gross profit 1,237,242 912,550 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 1,632,009 870,563 ------------ ------------ Income (loss) from operations (394,767) 41,987 Interest (Income) Expense (51,605) 16,292 Other Income 0 (1,554) ------------ ------------ Income (loss) before provision for income taxes (343,162) 27,249 PROVISION FOR INCOME TAXES 10,000 10,000 ------------ ------------ Net income (loss) $ (353,162) $ 17,249 ============ ============ BASIC AND DILUTED NET INCOME (LOSS) PER SHARE $ (0.06) $ 0.003 ============ ============= BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 6,331,790 6,331,790 ============ ============ |
The accompanying notes to financial statements are an integral part of these statements.
LINCOLN SNACKS COMPANY
STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED MARCH 31, 1998 AND MARCH 31, 1997
1998 1997 ------------ ------------- (Unaudited) (Unaudited) NET SALES $ 17,495,477 $ 18,424,690 COST OF SALES 10,532,280 12,658,925 ------------ ------------ Gross profit 6,963,197 5,765,765 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 5,873,073 4,390,220 ------------ ------------ Income from operations 1,090,124 1,375,545 Net Planters Other Income (1,376,000) 0 Interest (Income) Expense (87,313) 124,786 Other (Income) Expense 19,441 (1,554) ------------ ------------ Income before provision for income taxes 2,533,996 1,252,313 PROVISION FOR INCOME TAXES 100,000 30,000 ------------ ------------ Net income $ 2,433,996 $ 1,222,313 ============ ============ BASIC AND DILUTED NET INCOME PER SHARE $ 0.38 $ 0.19 ============ ============ BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 6,331,790 6,331,790 ============ ============ |
The accompanying notes to financial statements are an integral part of these statements.
LINCOLN SNACKS COMPANY
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED MARCH 31, 1998 AND MARCH 31, 1997
(UNAUDITED)
Common Special Paid In Accumulated Treasury Stock Stock Capital Deficit Stock June 30, 1996 $64,501 $0 $18,010,637 ($9,542,721) ($26,026) Net income 1,222,313 ------- ------- ----------- ----------- ---------- March 31, 1997 $64,501 $0 $18,010,637 $( 8,320,408) $(26,026) ======= ======= =========== ============ ========== June 30, 1997 $64,501 $0 $18,010,637 ($ 8,100,126) ($26,026) Net income 2,433,996 ------- ------- ----------- ------------ ---------- March 31, 1998 $64,501 $0 $18,010,637 $( 5,666,130) $(26,026) ======= ======= =========== ============ ========== |
The accompanying notes to financial statements are an integral part of these statements.
LINCOLN SNACKS COMPANY
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED MARCH 31, 1998 AND MARCH 31, 1997
1998 1997 ------------- ------------ (Unaudited) (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 2,433,996 $ 1,222,313 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 558,484 617,584 Allowance for doubtful accounts and cash discounts, net 48,207 43,740 Changes in Assets and Liabilities: Decrease in accounts receivable 623,179 370,644 (Increase) decrease in inventories (701,681) 254,732 (Increase) decrease in prepaid and other current assets (10,308) 35,741 Increase (decrease) in accounts payable and accrued expenses 759,999 (722,076) ------------ ------------ Net cash provided by operating activities 3,711,876 1,822,678 ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (335,173) (148,071) Proceeds from sale of land 0 369,218 Acquisition (net of cash) (800,160) 0 ------------ ------------ Net cash provided by (used in) investing activities (1,135,333) 221,147 ------------- ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings (repayments) under revolver, net 0 (556,115) Repayments under term loan 0 (859,703) Repayments under short term note (41,667) 0 ------------- ------------ Net cash used in financing activities (41,667) (1,415,818) ------------- ------------ Net increase in cash 2,534,876 628,007 CASH, beginning of period 1,606,357 58,538 ------------- ------------ CASH, end of period $ 4,141,233 $ 686,545 ============= ============ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Interest paid $ 0 $ 114,941 ============ ============ Income taxes paid $ 80,715 $ 17,751 ============ ============ |
LINCOLN SNACKS COMPANY
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
(Unaudited)
Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted. It is suggested that these financial statements be read in conjunction with the financial statements included in the Annual Report. The results of operations for the three and nine months ending March 31, 1998 and March 31, 1997 are not necessarily indicative of the operating results for the full year.
The acquisition was accounted for as a purchase with the assets acquired recorded at their fair values at the date of acquisition. The excess of purchase price over net assets acquired is being amortized over a period of 10 years. The purchase price has been allocated as follows:
Accounts receivable $ 477,000 Inventory 223,000 Excess of purchase price over net assets acquired 600,000 |
The following is proforma information as if the Company's acquisition of Iroquois had occurred at the beginning of the respective fiscal periods. The incremental revenue reflected below consists primarily of sales to one customer. These results may not be indicative of what the actual results would have been or may be in the future.
Nine Months Ended ------------------------------ March 31, March 31, 1998 1997 -------------- ------------- Net sales $ 21,077,411 $ 21,118,706 Net income 3,251,210 1,616,433 Net income per share $ 0.51 $ 0.26 |
Options to purchase 662,550 shares of common stock were outstanding at March 31, 1998 but were not included in the computation of diluted earnings per share because the options' exercise price was greater than the average market price of the common shares.
March 31, June 30, 1998 1997 ----------- ------------ Raw materials and supplies $ 1,383,122 $ 1,293,280 Finished goods 1,221,664 386,973 ----------- ------------ $ 2,604,786 $ 1,680,253 =========== ============ |
On February 28, 1997, the Company and Planters entered into an amendment to the Distribution Agreement (the "Amendment"), which was further modified on May 9, 1997 (the "Letter Agreement"), pursuant to which the exclusive distribution arrangement with respect to the Company's Fiddle Faddle product was extended for an additional six month period expiring on December 31, 1997, at which time the arrangement terminated. Effective January 1, 1998 and May 1, 1997, Planters ceased, and the Company resumed, marketing and distributing the Company's Fiddle Faddle and Screaming Yellow Zonkers products, respectively.
The Amendment and Letter Agreement required Planters to purchase a specified number of manufactured cases of the Products and for Planters to compensate the Company for the remaining contract minimums for the twelve month period ended June 30, 1997. The Amendment and Letter Agreement required Planters to compensate the Company for contract minimums for the six month period ended December 31, 1997 (six month minimums). Planters compensated the Company in the six months ended December 31, 1997 for contract minimums, which were 27% less than case sales made to Planters for the six month period ended December 31, 1996.
The Amendment also required Planters to compensate the Company in the event that certain sales levels were not achieved during the calendar year ending December 31, 1997. These sales levels were not achieved during the calendar year ending December 31, 1997 resulting in Planters compensating the Company $1.88 million which is partially offset on the Company's Statement of Operations by approximately $500,000 in non-recurring charges associated with initial efforts to rebuild the Fiddle Faddle brand ("Net Planters Other Income").
Although the Amendment contains provisions designed to effect a smooth transfer of the distribution business back to the Company, there can be no assurance as to the long term effects of the transition.
In July and October, 1997, the Company entered into five year Trademark License Agreements with Nabisco, Inc. granting the Company, subject to the terms of the License Agreements, the right to use, commencing January 1, 1998, the Planters' trademarks in connection with the sales and marketing of the Company's Fiddle Faddle products in the United States and Canada.
There were no sales to Planters for the three months ended March 31, 1998. Net sales to Planters were 68% of net sales for the three months ended March 31, 1997. Net sales to Planters were 12% and 47% of net sales for the nine months period ended March 31, 1998 and March 31, 1997, respectively. Sales to Planters during the six months period ended December 31, 1997 represented payments, in lieu of manufactured cases, at predetermined rates which are lower than the rates Planters paid for manufactured cases. Sales to Planters during the quarter and the nine month period ended March 31, 1997 represented manufactured cases.
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED)
On July 17, 1995, Planters Company, a unit of Nabisco, Inc. ("Planters"), began exclusively distributing the Company's Fiddle Faddle and Screaming Yellow Zonkers products (the "Products") pursuant to a distribution agreement dated June 6, 1995 (the "Distribution Agreement") for an initial term which was originally scheduled to expire on June 30, 1997 unless renewed for additional one year periods. The Distribution Agreement required Planters to purchase an annual minimum number of equivalent cases of the Products during the initial term.
On February 28, 1997, the Company and Planters entered into an amendment to the Distribution Agreement (the "Amendment"), which was further modified on May 9, 1997 (the "Letter Agreement"), pursuant to which the exclusive distribution arrangement with respect to the Company's Fiddle Faddle product was extended for an additional six month period expiring on December 31, 1997, at which time the arrangement terminated. Effective January 1, 1998 and May 1, 1997, Planters ceased, and the Company resumed, marketing and distributing the Company's Fiddle Faddle and Screaming Yellow Zonkers products, respectively.
The Amendment and Letter Agreement required Planters to purchase a specified number of manufactured cases of the Products and for Planters to compensate the Company for the remaining contract minimums for the twelve month period ended June 30, 1997. The Amendment and Letter Agreement required Planters to compensate the Company for contract minimums for the six month period ended December 31, 1997 (six month minimums). Planters has compensated the Company for contract minimums, which were 24% and 27% less than case sales made to Planters for the quarter and the six month period ended December 31, 1996, respectively.
The Amendment also required Planters to compensate the Company in the event that certain sales levels were not achieved during the calendar year ending December 31, 1997. These sales levels were not achieved during the calendar year ending December 31, 1997 resulting in Planters compensating the Company $1.88 million which is partially offset on the Company's Statement of Operations by approximately $500,000 in non-recurring charges associated with initial efforts to rebuild the Fiddle Faddle brand ("Net Planters Other Income").
Although the Amendment contains provisions designed to effect a smooth transfer of the distribution business back to the Company, there can be no assurance as to the long term effects of the transition.
In July and October, 1997, the Company entered into five year Trademark License Agreements with Nabisco, Inc. granting the Company, subject to the terms of the License Agreements, the right to use, commencing January 1, 1998, the Planters' trademarks in connection with the sales and marketing of the Company's Fiddle Faddle products in the United States and Canada.
There were no sales to Planters for the three months ended March 31, 1998. Net sales to Planters were 68% for the three months ended March 31, 1997. Net sales to Planters were 12% and 47% of net sales for the nine months period ended March 31, 1998 and March 31, 1997, respectively. Sales to Planters during the six months period ended December 31, 1997 represented payments, in lieu of manufactured cases, at predetermined rates which are lower than the rates Planters paid for manufactured cases. Sales to Planters during the quarter and the nine month period ended March 31, 1997 represented manufactured cases.
Under the Agreement, which required Planters to purchase a minimum number of cases during the fiscal year, the Company sold the Products to Planters at a selling price which was reduced from the Company's historical customer selling prices. Planters in turn was responsible for the sales and distribution of the Products to its customers, therefore, the Company did not have any selling, marketing or distribution costs associated with these Products. The financial impact of the Agreement versus historical results was reflected in reductions in revenue and gross profit which were offset by reduced selling, marketing and distribution costs.
Gross profit increased 36% or $.32 million to $1.24 million for the quarter ended March 31, 1998 versus $.91 million in the corresponding period of 1997. Gross profit increased due to new copacking business and increased selling prices to historical levels resulting from the Company resuming distribution of Fiddle Faddle. These increases were partially offset by decreased profits relating to the decline in Fiddle Faddle case volume.
Selling, general and administrative expenses increased 87% or $.76 million to $1.63 million in the quarter ended March 31, 1998 versus $.87 million the same period in 1997. These expenses increased as a result of the Company resuming the marketing and distribution of Fiddle Faddle.
The increase in gross profit was offset by the increase in selling, general and administrative expenses and resulted in a decrease in net income of $.37 million to a $.35 million net loss for the quarter ended March 31, 1998 versus a $.02 million net income in the corresponding period in 1997.
Gross profit increased 21% or $1.20 million to $6.96 million for the nine months ended March 31, 1998 versus $5.77 million in the corresponding period of 1997. Gross profit increased due to new copacking business, increased selling prices to historical levels resulting from the Company resuming distribution of Fiddle Faddle and Screaming Yellow Zonkers, and lower raw material costs. These increases were partially offset by decreased Planters gross profits resulting from decreased case volume.
Selling, general and administrative expenses increased 34% or $1.48 million to $5.87 million for the nine months ended March 31, 1998 versus $4.39 million for the same period in 1997. These expenses primarily increased during this period due to the Company resuming the marketing and distribution of the Fiddle Faddle and Screaming Yellow Zonkers business. In addition, expenses increased relating to consumer promotions for the Company's other branded products.
Net Planters Other Income of $1.38 million represents Planters compensation of $1.88 million to the Company for failing to achieve certain sales levels during the calendar year ending December 31, 1997 which was partially offset by approximately $.50 million in non-recurring charges associated with initial efforts to rebuild the Fiddle Faddle brand.
The increase in gross profit coupled with Net Planters Other Income and the decrease in interest expense was partially offset by the increase in selling, general and administrative expenses and resulted in an increase in the net income of $1.21 million to $2.43 million for the nine months ended March 31, 1998 versus $1.22 million in the corresponding period in 1997.
The Company currently meets its short-term liquidity needs from its revolving credit facility which facility is secured by a first priority, perfected security interest in substantially all of the Company's existing and after-acquired assets. The Company presently believes that this facility is adequate to meet its needs for the next twelve months.
Management continues to focus on increasing product distribution and continues to review all operating costs with the objective of increasing profitability and ensuring future liquidity. However, there can be no assurance that any of these objectives will be achieved in future periods. Although the Amendment contained provisions designed to effect a smooth transfer of the distribution of the Fiddle Faddle business back to the Company, there can be no assurance as to the long term effects of the transition. Management has secured new copack and private label business which partially offsets the decrease in Fiddle Faddle sales, however, there can be no assurance that this business will continue.
The Company's short term liquidity is affected by seasonal increases in inventory and accounts receivable levels, payment terms in excess of 60 days granted in some situations during certain months of the year, and seasonality of sales. Inventory and accounts receivable levels increase substantially during the latter part of the third calendar quarter and during the remainder of the calendar year.
Nine Months Ended ------------------------ March 31, March 31, 1998 1997 --------- --------- (in thousands) Net cash provided by operating activities $ 3,712 $ 1,823 Net cash provided by (used in) investing activities (1,135) 221 Net cash used in financing activities (42) (1,416) |
Net cash provided by operating activities increased to $3.71 million during the nine months ended March 31, 1998 compared to $1.82 million in 1997. The increase is primarily due to an increase in net income of $1.21 million for the nine months ended March 31, 1998 versus March 31, 1997. The increase in net cash provided by operating activities also increased due to decreases in accounts receivables and increases in inventories due to the timing of sales coupled with an increase in accounts payable due to the timing of expenses.
Net cash used in investing activities of $1.14 million for the nine months ended March 31, 1998 is comprised of the $.80 million acquisition of certain assets of Iroquois and $.33 million in capital expenditures. Net cash provided by investing activities of $.22 million during the nine months ended March 31, 1997 represents proceeds from the sale of land and is partially offset by capital expenditures.
Net cash used in financing activities for the period ended March 31, 1998 represents payments under the short term note. Net cash used in financing activities for the period ended March 31, 1997 was $1.42 million, which consisted of revolver repayments under its credit agreement of $.56 million and term loan repayments of $.86 million.
ITEM 3. - QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Not Applicable.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings Not Applicable Item 2. Changes in Securities Not Applicable Item 3. Defaults Upon Senior Securities Not Applicable Item 4. Submission of Matters to a Vote of Security Holders Not Applicable Item 5. Other Information Not Applicable Item 6. Exhibits and Reports on Form 8-K |
a Exhibits
(2) Not Applicable
(3) Articles of Incorporation and By-Laws
(a) Certificate of Incorporation, as amended and as currently in effect (Incorporated by reference to Exhibit 3(A), filed by the Company with the Registration Statement on Form S-1 (33-71432)).
(b) By-Laws as currently in effect (Incorporated by reference to Exhibit 3(B) filed by the Company with the Registration Statement on Form S-1 (33-71432)).
(4) Not Applicable
(10) (a) Amendment No. 9 dated March 11, 1998 To Revolving Credit, Term Loan and Security Agreement.
(11) Statement regarding computation of per share earnings is not required because the relevant computation can be determined from the material contained in the Financial Statements included herein.
(15) Not Applicable
(18) Not Applicable
(19) Not Applicable
(22) Not Applicable
(23) Not Applicable
(24) Not Applicable
(27) Financial Data Schedule
(99) Not Applicable
b Reports on Form 8-K Not Applicable
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.
May 11, 1998 Lincoln Snacks Company
(Registrant)
By: /s/Karen Brenner Name: Karen Brenner Title: Chairman of the Board and Chief Executive Officer; Director (Principal Executive Officer) By: /s/Kristine A. Crabs Name: Kristine A. Crabs Title: Vice President and Chief Financial Officer, Secretary and Treasurer (Principal Financial Officer and Principal Accounting Officer) |
ARTICLE 5 |
This schedule contains summary financial information extracted from Lincoln Snacks Company financial statements and is qualified in its entirety by reference to such financial statements. |
MULTIPLIER: 1 |
PERIOD TYPE | 9 MOS | |
FISCAL YEAR END | JUN 30 1998 | |
PERIOD END | APR 04 1998 | |
CASH | 4,141,233 | |
SECURITIES | 0 | |
RECEIVABLES | 2,089,377 | |
ALLOWANCES | 331,518 | |
INVENTORY | 2,604,786 | |
CURRENT ASSETS | 39,331 | |
PP&E | 7,154,481 | |
DEPRECIATION | 2,712,281 | |
TOTAL ASSETS | 16,941,888 | |
CURRENT LIABILITIES | 4,452,813 | |
BONDS | 0 | |
PREFERRED MANDATORY | 0 | |
PREFERRED | 0 | |
COMMON | 64,501 | |
OTHER SE | 12,318,481 | |
TOTAL LIABILITY AND EQUITY | 16,941,888 | |
SALES | 17,495,477 | |
TOTAL REVENUES | 17,495,477 | |
CGS | 10,532,280 | |
TOTAL COSTS | 10,532,280 | |
OTHER EXPENSES | 5,873,073 | |
LOSS PROVISION | 46,000 | |
INTEREST EXPENSE | (87,313) | |
INCOME PRETAX | 2,533,996 | |
INCOME TAX | 100,000 | |
INCOME CONTINUING | 0 | |
DISCONTINUED | 0 | |
EXTRAORDINARY | 0 | |
CHANGES | 0 | |
NET INCOME | 2,433,996 | 1 |
EPS PRIMARY | .38 | |
EPS DILUTED | .38 |
1 | Net income includes $1,376,000 of Net Planters Other Income, see financial statements. |
EXHIBIT 10(A)
AMENDMENT NO. 9
TO
REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NO. 9 ("Amendment") is entered into as of March 11, 1998, by and between Lincoln Snacks Company, a Delaware corporation, having its principal place of business at 4 High Ridge Park, Stamford, Connecticut 06905 ("Borrower") and BNY Financial Corporation, as successor-in-interest to The Bank of New York Commercial Corporation, having offices at 1290 Avenue of the Americas, New York, New York 10104 ("Lender").
Borrower has requested that Lender amend the Loan Agreement and Lender is willing to do so on the terms and conditions hereafter set forth.
NOW, THEREFORE, in consideration of any loan or advance or grant of credit heretofore or hereafter made to or for the account of Borrower by Lender, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Definitions. All capitalized terms not otherwise defined herein shall have the meanings given to them in the Loan Agreement.
2. Amendment to Loan Agreement. Subject to satisfaction of the conditions precedent set forth in Section 3 below, the Loan Agreement is hereby amended as follows:
(a) The following defined term is added to Section 1.2 of the Loan Agreement in the appropriate alphabetical order to provide as follows:
""BNY Letters of Credit" shall have the meaning set forth in
Section 2.12 hereof."
(b) New Sections 2.12, 2.13 and 2.14 are added to the Loan Agreement and provide as follows:
"2.12 Letters of Credit. Subject to the terms and conditions hereof, Lender shall issue or cause the issuance of letters of credit ("BNY Letters of Credit") provided, however, that Lender will not be required to issue or cause to be issued any BNY Letters of Credit to the extent that the face amount of such BNY Letters of Credit would then cause the sum of the outstanding Revolving Advances plus outstanding BNY Letters of Credit to exceed the lesser of (x) the Maximum Revolving Advance Amount minus the FX Reserve or (y) the Formula Amount. All disbursements or payments related to BNY Letters of Credit shall be deemed to be Revolving Advances and shall bear interest at the Revolving Interest Rate. BNY Letters of Credit that have not been drawn upon shall not bear interest. BNY Letters of Credit shall be subject to the terms and conditions set forth in the Letter of Credit Financing Supplement attached hereto as Exhibit 2.12."
"2.13 Issuance of BNY Letters of Credit.
(a) Borrower may request Lender to issue or cause the issuance of a BNY Letter of Credit by delivering to Lender at the Payment Office, Lender's standard form of Letter of Credit Financing Supplement and the Lender's or the Bank's standard form of Letter of Credit Application (collectively, the "Letter of Credit Application") completed to the satisfaction of Lender, together with such other certificates, documents and other papers and information as Lender may reasonably request.
(b) Each BNY Letter of Credit shall, among other things,
(i) provide for the payment of sight drafts when presented for
honor thereunder in accordance with the terms thereof and when
accompanied by the documents described therein and (ii) have an
expiry date not later than twelve months after such BNY Letter of
Credit's date of issuance and in no event later than the last day
of the Term. Each Letter of Credit Application and each BNY
Letter of Credit shall be subject to the Uniform Customs and
Practice for Documentary Credits (1993 Revision), International
Chamber of Commerce Publication No. 500, and any amendments or
revisions thereof and, to the extent not inconsistent therewith,
the laws of the State of New York."
"2.14 Requirements for Issuance of BNY Letters of Credit.
(a) In connection with the issuance or creation of any BNY Letter of Credit, Borrower shall indemnify, save and hold Lender harmless from any loss, cost, expense or liability, including, without limitation, payments made by Lender, and expenses and reasonable attorneys' fees incurred by Lender arising out of, or in connection with, any BNY Letter of Credit to be issued or created for Borrower. Borrower shall be bound by Lender's or any issuing or accepting bank's regulations and good faith interpretations of any BNY Letter of Credit issued or created for Borrower's account, although this interpretation may be different from Borrower's own; and neither Lender nor any of its correspondents shall be liable for any error, negligence, or mistake, whether by omission or commission, in following Borrower's instructions or those contained in any BNY Letter of Credit or of any modifications, amendments or supplements thereto or in creating or paying any BNY Letter of Credit, except for Lender's or such correspondent's willful misconduct.
(b) Borrower shall authorize and direct any bank which issues a BNY Letter of Credit to name Borrower as the "Account Party" therein and to deliver to Lender all instruments, documents, and other writings and property received by the bank pursuant to the BNY Letter of Credit or in connection with any acceptance and to accept and rely upon Lender's instructions and agreements with respect to all matters arising in connection with the BNY Letter of Credit, the application therefor or any acceptance therefor.
(c) In connection with all BNY Letters of Credit issued or created by Lender under this Agreement, Borrower hereby appoints Lender, or its designee, as its attorney, with full power and authority (a) to sign and/or endorse Borrower's name upon any warehouse or other receipts, letter of credit applications and acceptances; (b) to sign Borrower's name on bills of lading; (c) to clear Inventory through Customs in the name of Borrower or Lender or Lender's designee, and to sign and deliver to Customs Officials powers of attorney in the name of Borrower for such purpose; and (d) to complete in Borrower's or Lender's name, or in the name of Lender's designee, any order, sale or transaction, obtain the necessary documents in connection therewith, and collect the proceeds thereof. Neither Lender nor its attorneys will be liable for any acts or omissions nor for any error of judgement or mistakes of fact or law, except for Lender's or its attorneys' willful misconduct. This power, being coupled with an interest, is irrevocable as long as any BNY Letters of Credit remain outstanding."
(c) A new Section 3.2(d) is added to the Loan Agreement and provides as follows:
"(d) Letter of Credit Fees. Borrower shall pay Lender (i) for issuing or causing the issuance of a BNY Letter of Credit, a fee equal to one-quarter of one percent (0.25%) per month on the outstanding amount thereof from time to time (such fees being referred to as "Letter of Credit Fees") and (ii) any bank's other customary charges payable in connection with BNY Letters of Credit as in effect from time to time (which charges shall be furnished to Borrower by Lender upon request). Borrower shall also pay in connection with the issuance of a BNY Letter of Credit the fees and charges specified in the Letter of Credit Financing Supplement to this Agreement. Such fees and charges shall be payable (i) in the case of any BNY Letter of Credit, on its opening, (ii) in the case of a standby BNY Letter of Credit, (A) monthly thereafter in advance and (B) upon each increase in the outstanding amount thereof, and (iii) in the case of any BNY Letter of Credit that is not a standby BNY Letter of Credit, at the time of each increase in the face amount thereof. Any such charge in effect at the time of a particular transaction shall be the charge for that transaction, notwithstanding any subsequent change in the Bank's prevailing charges for that type of transaction. All Letter of Credit Fees payable hereunder shall be deemed earned in full on the date when the same are due and payable hereunder and shall not be subject to rebate or proration upon the termination of this Agreement for any reason."
3. Conditions of Effectiveness. This Amendment shall become effective upon receipt by Lender of four (4) copies of this Amendment executed by Borrower.
4. Representations and Warranties. Borrower hereby represents and warrants as follows:
(a) This Amendment and the Loan Agreement, as amended hereby, constitute legal, valid and binding obligations of Borrower and are enforceable against Borrower in accordance with their respective terms.
(b) No Event of Default has occurred and is continuing or would exist after giving effect to this Amendment.
(c) Borrower has no defense, counterclaim or offset with respect to the Loan Agreement or the Obligations thereunder.
5. Effect on the Loan Agreement.
(a) Upon the effectiveness of Section 2 hereof, each reference in the Loan Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of like import shall mean and be a reference to the Loan Agreement as amended hereby.
(b) Except as specifically amended herein, the Loan Agreement, and all other documents, instruments and agreements executed and/or delivered in connection therewith, shall remain in full force and effect, and are hereby ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of Lender, nor constitute a waiver of any provision of the Loan Agreement, or any other documents, instruments or agreements executed and/or delivered under or in connection therewith.
6. Governing Law. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns and shall be governed by and construed in accordance with the laws of the State of New York.
7. Headings. Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose.
8. Counterparts. This Amendment may be executed by the parties hereto in one or more counterparts, each of which shall be deemed an original and all of which taken together shall be deemed to constitute one and the same agreement.
IN WITNESS WHEREOF, this Amendment No. 9 has been duly executed as of the day and year first written above.
LINCOLN SNACKS COMPANY
By: /s/ Kristine A. Crabs Name: Kristine A. Crabs Title: Chief Financial Officer |
BNY FINANCIAL CORPORATION
By: /s/ Carl Giordano Name: Carl Giordano Title: Assistant Vice President |
EXHIBIT 2.12
BNY FINANCIAL CORPORATION LETTERHEAD
BNY FINANCIAL CORPORATION
1290 Avenue of the Americas
New York, NY 10104
212-408-7000
Date: March 11, 1998
Lincoln Snacks Company
4 High Ridge Park
Stamford, Connecticut 06905
Re: LETTER OF CREDIT FINANCING SUPPLEMENT TO REVOLVING
CREDIT, TERM LOAN AND SECURITY AGREEMENT
Gentlemen:
Reference is made to the Revolving Credit, Term Loan and Security Agreement between us dated December 3,1993, as supplemented and amended (the "Agreement"). Capitalized terms hereinafter appearing but not otherwise defined herein shall have the meanings given in the Agreement.
From time to time, in order to assist you in establishing or opening Letters of Credit with a bank or trust company (herein the "Bank") to cover the importation of goods or inventory or for other purposes, you may request us to join in the applications for such Letters of Credit, and/or guarantee payment or performance of such Letters and any drafts or acceptances thereunder, thereby lending our credit to you. These arrangements shall be handled by us subject to the following terms and conditions.
A. Our assistance in this matter shall at all times and in all respects be in our sole discretion. The amount and extent of the Letters of Credit and the terms and conditions thereof and of any drafts or acceptances thereunder, shall in all respect be determined solely by us and shall be subject to change, modification and revision by us, at any time and from time to time.
B. Any indebtedness, liability or obligation of any sort whatsoever, arising or incurred in connection with any Letters of Credit, guarantees, drafts or acceptances thereunder or otherwise, including without limitation all amounts due or which may become due under said Letters of Credit, guarantees or any drafts or acceptances thereunder; all amounts charged or chargeable to you or to us by any Bank, other financial institutions or correspondent bank which opens, issues or is involved with such Letters of Credit; any other bank charges; fees and commissions; duties and taxes; costs of insurance; all such other charges and expenses which may pertain either directly or indirectly to such Letters of Credit, drafts, acceptances, guarantees or to the goods or documents relating thereto, and our charges as herein provided, shall be incurred solely as an accommodation to you and for your account, shall constitute Obligations as defined in the Agreement, may be charged by us to your account thereunder at any time without notice to you, shall be secured by all collateral in which you have heretofore granted to us or hereafter grant to us a security interest (including without limitation all inventory acquired under the Letters of Credit, all documents evidencing such inventory, and the proceeds thereof), shall bear interest at the rate provided in the Agreement, and shall be repayable to us on demand. All Obligations are to be repaid to us solely in United States currency.
C. You warrant and represent that any Letters of Credit opened hereunder in connection with the importation of goods and inventory shall cover actual goods and inventory imported solely for your account, and said goods and inventory will not be sold or transferred, other than to customers in the ordinary course of business, without our specific, prior written consent.
D. You unconditionally agree to indemnify us and hold us harmless from and against any and all loss, claim or liability arising from any transactions, occurrences, errors or omissions relating to Letters of Credit established or opened for your account; the goods acquired thereunder (the "Goods"); the documents evidencing the Goods (the "Documents"); any discrepant or nonconforming provisions thereof; steamship or airway guaranties, releases, indemnities or delivery orders or similar documents; any drafts or acceptances; and all Obligations hereunder, including, but not limited to, any such loss, claim or liability due to any action errors or omissions attributable to any Bank, us, any other entity, or any other cause. Your unconditional obligation to us hereunder shall not be modified or diminished for any reason or in any manner whatsoever. You agree that any charges made by us for your account by the Bank shall be conclusive on us and may be charged to your account.
E. We shall not be responsible for: the existence, character, quality, quantity, condition, packing, value or delivery of the goods purporting to be represented by any documents; any difference or variation in the character, quality, quantity, condition, packing, value or delivery of the goods from that expressed in the documents; the validity, sufficiency, or genuineness of any documents or of any endorsements thereon, even if such documents should in fact provide to be in any or all respects invalid, insufficient, fraudulent or forged; any discrepant or nonconforming provisions in any Documents; the time, place, manner or order in which shipment is made; partial or incomplete shipment, or failure or omission to ship any or all of the goods referred to in the Letters of Credit or documents; any deviation from instructions; delay, default, or fraud by the shipper and/or anyone else in connection with the Goods or the shipping thereof; or any breach of contract between the shipper or vendors and yourselves. Furthermore, without being limited by the foregoing, we shall not be responsible for any act or omission with respect to or in connection with any of the Goods or the Documents.
F. You agree that any action taken by us, or any action taken by any Bank if taken in good faith, under or in connection with the Letters of Credit, the guarantees, the drafts or acceptances, or the Goods or the Documents, shall be binding on you and shall not put us in any resulting liability to you. In furtherance thereof, we shall have the full right and authority to take any of the following actions in our name or yours (and you agree that you shall not have the right to take any such action without our express written endorsement in writing): to clear and resolve any questions of non-compliance of documents; to give any instructions as to acceptance or rejection of any documents or goods; to execute any and all applications for steamship or airways guarantees, releases, indemnities or delivery orders or similar documents; to grant any extensions of the maturity of, time of payment for, or time of presentation of, any drafts, acceptances, or documents; and to agree to any amendments, renewals, extensions, modifications, changes or cancellations of any of the terms or conditions of any of the applications, Letters of Credit, drafts or acceptances, all in our sole name; and the Bank shall be entitled to comply with and honor any and all such documents or instructions executed by or received solely from us, all without any notice to or any consent from you.
G. You agree that any necessary import, export or other licenses or certificates for the import or handling of the Goods will have been promptly procured; all foreign and domestic governmental laws and regulations in regard to the shipment and importation of the Goods, or the financing thereof will have been promptly and fully complied with; and any certificates in that regard that we may at any time request will be promptly furnished. In this connection, you warrant and represent that any Letters of Credit established or opened hereunder shall be in full compliance with the governmental laws and regulations of all countries involved and are not prohibited by any such laws and regulations, and that all shipments made under any such Letters of Credit are in accordance with the governmental laws and regulations of the countries in which the shipments originate and terminate, and are not prohibited by any such laws and regulations. You assume all risk, liability for, and agree to pay and discharge, all present and further local, state, federal or foreign taxes, duties or levies. Any embargo, restriction, laws, customs or regulations of any country, state, city or other political subdivision, where the Goods are or may be located, or wherein payments are to be made, or wherein drafts may be drawn, negotiated, accepted, or paid, shall be solely your risk, liability and responsibility.
H. Any rights, remedies, duties or obligations granted or undertaken by you to any Bank in any application for Letters of Credit, or any standing agreement relating to Letters of Credit or otherwise, shall be deemed to have been granted to us and apply in all respects to us and shall be in addition to any rights, remedies, duties or obligations container herein.
I. You hereby agree that prior to your repayment of all Obligations to us, we may be deemed to be the absolute owner of, with unqualified rights to possession and disposition of, the Goods and the Documents, all of which may be held by us as security as herein provided. Should possession of any Goods or Documents be transferred to you, they shall continue to serve as security as herein provided, and may be sold, transferred or disposed of only as hereinabove provided.
J. The terms and provisions of all agreements executed by you in our favor granting collateral security for the Obligations shall apply with equal force to the Goods and the Documents, including without limitation provisions relating to the insurance, maintenance and surrender or other dispositions of any such collateral, and the proceeds thereof.
K. On breach by you of any of the terms or provisions of this agreement, the Agreement or any other agreement or arrangement now or hereafter entered into between us, or on the non-payment when due of any Obligations, we shall have all of the rights and remedies of a Secured Party under the Uniform Commercial Code or granted to us under the Agreement or any of such other agreements.
L. In addition to any charges, fees or expenses charged to us for your account by any Bank in connection with these transactions (all of which will be charged to your account and when made by the Bank shall be conclusive on us), we shall be entitled to charge your account for our services hereunder with the following:
1. UCC filing and search fees.
2. A commission at the Applicable Rate, as set forth below (minimum fee in any event $75). However, where "time" drafts are involved, we shall be entitled to the Applicable Rate herein described for the term of such drafts remaining unpaid beyond the expiry date of the Letter of Credit. The Applicable Rate shall be one quarter of one percent (1/4%) per month on the face amount of each Letter of Credit, either opened or amended (as to expiry date or dollar amount) for the entire term of said Letter of Credit.
3. Upon and after the occurrence of an Event of Default, and during the continuation thereof a commission of one sixth percent (1/6%) in excess of the Applicable Rate.
For the purpose of the preceding subdivision 2, Letters of Credit will be deemed to include not only Letters of Credit established or opened for you with our assistance as hereinabove provided, but also other letters of credit established or opened for you by other institutions with respect to which we are or hereafter become obligated to indemnify such institutions.
This agreement, which is subject to modification only in writing, is supplementary to, and is to be considered as a part of, the Agreement and shall take effect when dated, accepted and signed in New York State by one of our officers. If the foregoing is in accordance with your understanding, please so indicate by signing and returning the enclosed copies of this letter, after which we will return a fully executed copy to you for your files.
Very truly yours,
BNY FINANCIAL CORPORATION
By: /s/ Carl Giordano Title: Assistant Vice President READ AND AGREED TO: LINCOLN SNACKS COMPANY By: /s/ Kristine A. Crabs Title: Chief Financial Officer Accepted as of March 11, 1998, at New York, New York |
BNY FINANCIAL CORPORATION
By: /s/ Carl Giordano Title: Assistant Vice President |