FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15 (d) of
The Securities and Exchange Act of 1934
QUARTER ENDED July 20, 1996 COMMISSION FILE NO. 33-80833
JITNEY-JUNGLE STORES OF AMERICA, INC.
(Exact name of registrant as specified in its charter)
STATE OF INCORPORATION I.R.S. EMPLOYER I.D. NO.
Mississippi 64-0280539
ADDRESS OF PRINCIPAL EXECUTIVE OFFICE (INCLUDING ZIP CODE)
1770 Ellis Avenue, Suite 200, Jackson, MS 39204
REGISTRANT'S TELEPHONE NUMBER (INCLUDING AREA CODE)
601-965-8600
The number of shares of Registrant's Common Stock, par value one cent ($.01) per
share, outstanding at July 20, 1996, was 425,000.
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, and (2) has been subject to such filing
requirements for the past 90 days. YES (X) NO
<PAGE>
JITNEY-JUNGLE STORES OF AMERICA, INC.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
ITEM PAGE
1. Financial Statements:
Condensed Consolidated Balance Sheets
at July 20, 1996 (Unaudited) and April 27, 1996 2
Condensed Consolidated Statements of Earnings
for the Twelve(12) Week Periods Ended July 20, 1996
(Unaudited) and July 22, 1995 (Unaudited) 3
Condensed Consolidated Statements of Changes in Stockholders'
Equity for the Twelve (12) Week Periods Ended
July 20, 1996 (Unaudited) and July 22, 1995 (Unaudited) 4
Condensed Consolidated Statements of Cash Flows
for the Twelve (12) Week Periods Ended
July 20, 1996 (Unaudited) and July 22, 1995 (Unaudited) 5
Notes to Condensed Consolidated Financial Statements
July 20, 1996 (Unaudited) and July 22, 1995 (Unaudited) 6-7
2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8-10
PART II - OTHER INFORMATION
1. Legal Proceedings 11
2. Change in Securities 11
3. Defaults Upon Senior Securities 11
4. Submission of Matters to a Vote of Securityholders 11
5. Other Information 11
6. Exhibits and Reports on Form 8-K 12
<PAGE>
PART I. ITEM 1. FINANCIAL STATEMENTS
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands) July 20, April 27,
1996 1996
(Unaudited)
ASSETS ----------- ----------
Current assets:
Cash and cash equivalents $ 3,033 $ 5,676
Short-term investments 337
Receivables 5,599 4,892
Inventories at LIFO 79,479 77,445
Prepaid expenses and other 4,091 6,783
Deferred income taxes 377 376
---------- ----------
Total current assets 92,579 95,509
---------- ----------
PROPERTY AND EQUIPMENT - net 172,144 173,787
---------- ----------
OTHER ASSETS - net 9,288 9,707
---------- ----------
TOTAL ASSETS $ 274,011 $ 279,003
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 49,671 $ 44,118
Accrued expenses 23,087 19,055
Current portion of capitalized leases 4,260 4,259
---------- ----------
Total current liabilities 77,018 67,432
---------- ----------
Noncurrent liabilities:
Long-term debt 223,233 239,059
Obligations under capitalized leases 58,879 59,143
Deferred income taxes 8,126 8,196
---------- ----------
Total noncurrent liabilities 290,238 306,398
---------- ----------
Commitments and contingencies
Redeemable Preferred stock (aggregate liquidation
preference value of $52,342) 50,035 49,988
---------- ----------
Stockholders' equity (deficit):
Class C Preferred stock - Series 1 7,604 7,604
Common stock ($.01 par value, authorized 5,000,000
shares, issued and outstanding 425,000 shares) 4 4
Additional paid-in capital (302,296) (302,326)
Retained earnings 151,408 149,903
---------- ----------
Total stockholders' equity (deficit) (143,280) (144,815)
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 274,011 $ 279,003
========== ==========
See notes to condensed consolidated financial statements.
<PAGE>
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Dollars in Thousands Except Per Share Amounts)
Twelve Weeks Ended
July 20, July 22,
1996 1995
(Unaudited) (Unaudited)
----------- -----------
NET SALES $ 282,166 $ 280,170
---------- ----------
COSTS AND EXPENSES:
Cost of goods sold 214,016 217,228
Direct store, warehouse and administrative expenses 57,299 57,310
Interest expense - net 8,378 2,405
---------- ----------
Total costs and expenses 279,693 276,943
---------- ----------
Earnings before taxes on income 2,473 3,227
TAXES ON INCOME 921 1,209
---------- ----------
NET EARNINGS $ 1,552 $ 2,018
========== ==========
EARNINGS (LOSS) PER COMMON AND COMMON
EQUIVALENT SHARE $ (0.12) $ 99.08
========== ==========
See notes to condensed consolidated financial statements.
<PAGE>
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE TWELVE WEEK PERIODS ENDED JULY 20, 1996
AND JULY 22, 1995 (Unaudited)
(Dollars in thousands)
Class C
Preferred Stock,
Series 1 Common Stock Additional
No. of No. of Paid-In Retained
Shares Amount Shares Amount Capital Earnings
------ ------ ------- ------ ---------- ---------
BALANCE APRIL 29, 1995 20,368 $1,061 $ 1,807 $137,348
Net earnings 2,018
------- ------ ---------- ---------
BALANCE JULY 22, 1995 20,368 $1,061 $ 1,807 $139,366
======= ====== ========== =========
BALANCE APRIL 27, 1996 76,041 $7,604 425,000 $ 4 $(302,326) $149,903
Net earnings 1,552
Accretion of discount on
Class A Preferred stock (47)
Merger costs 30
------ ------ ------- ------ ---------- ---------
BALANCE JULY 20, 1996 76,041 $7,604 425,000 $ 4 $(302,296) $151,408
====== ====== ======= ====== ========== =========
See notes to condensed consolidated financial statements.
<PAGE>
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Twelve Weeks Ended
July 20, July 22,
1996 1995
(Unaudited) (Unaudited)
OPERATING ACTIVITIES: ----------- -----------
Net earnings $ 1,552 $ 2,018
Adjustment to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 7,062 6,092
Gain on disposition of property and other assets (46) (2)
Deferred income tax expense (benefit) (11)
Changes in assets and liabilities (net):
Notes and accounts receivable (707) 1,733
Store and warehouse inventories (2,034) 768
Prepaid expenses 2,692 1,904
Accounts payable 5,553 (2,594)
Accrued expenses 4,057 (893)
---------- ----------
Net cash provided by operating activities 18,129 9,015
---------- ----------
INVESTING ACTIVITIES:
Capital expenditures (6,122) (3,368)
Disposal of property and other assets 1,072 73
Purchases of short-term investments (14,000)
Maturities of short-term investments 337 7,300
---------- ----------
Net cash used in investing activities (4,713) (9,995)
---------- ----------
FINANCING ACTIVITIES:
Payments on long-term debt - net (15,826) (2,494)
Merger costs 30
Payments on capitalized lease obligations (263) (893)
---------- ----------
Net cash used in financing activities (16,059) (3,387)
---------- ----------
DECREASE IN CASH AND CASH EQUIVALENTS (2,643) (4,367)
CASH AND CASH EQUIVALENTS - BEGINNING 5,676 20,159
---------- ----------
CASH AND CASH EQUIVALENTS - ENDING $ 3,033 $ 15,792
========== ==========
See notes to condensed consolidated financial statements.
<PAGE>
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JULY 20, 1996 AND JULY 22, 1995 (Unaudited)
(Dollars in thousands)
1. BASIS OF PRESENTATION
The consolidated financial statements include those of Jitney-Jungle Stores
of America, Inc. and its wholly-owned subsidiaries, Southern Jitney Jungle
Company, Interstate Jitney-Jungle, Inc., McCarty-Holman Co., Inc. and
subsidiary, and Jitney-Jungle Bakery, Inc. All material intercompany
profits, transactions and balances have been eliminated.
These interim financial statements have been prepared on the basis of
accounting principles used in the annual financial statements ended April
27, 1996. In the opinion of management, the accompanying unaudited
consolidated financial statements contain all adjustments (all of which
were of a normal recurring nature) necessary for a fair statement of
consolidated financial position and results of operations of the Company
for the interim periods. The results of operations of the Company for the
twelve (12) weeks ended July 20, 1996, are not necessarily indicative of
the results which may be expected for the entire year.
2. MERGER
On March 5, 1996, JJ Acquisitions Corp. ("JJAC") merged with and into the
Company with the Company continuing as the surviving corporation (the
"Merger"). JJAC was a wholly-owned subsidiary of Bruckmann, Rosser,
Sherrill & Co., L.P. (the "Fund"). Upon consummation of the Merger, the
Fund and related investors received 83.82% of the Company's Common Stock
and 11.76% was retained by the shareholders at the time of the Merger. The
Merger was accounted for as a recapitalization which resulted in a charge
to equity of $312,541 to reflect the redemption of Common Stock of the
Company outstanding immediately prior to the Merger and related merger
costs, including a closing fee of $4,000 paid to the Fund Manager, an
affiliate of the Fund's sole General Partner.
3. ACCOUNTING STANDARD ADOPTED
In 1995, the Financial Accounting Standards Board issued SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of", which is effective for fiscal years beginning
after December 15, 1995, and accordingly the Company adopted this Statement
after the fiscal year ended April 27, 1996. This Statement requires that
long-lived assets and certain identifiable intangibles to be held and used
by an entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. The adoption of SFAS No. 121 has not had a material effect on
the Company's consolidated financial statements.
<PAGE>
4. LONG-TERM DEBT
Long-term debt consisted of the following:
July 20, April 27,
1996 1996
--------- ---------
Senior notes @ 12%, maturing in 2006 ........ $ 200,000 $ 200,000
Revolving credit loans ...................... 23,233 39,059
--------- ---------
Long-term debt .............................. $ 223,233 $ 239,059
========= =========
The Company has available a Credit Facility of $100,000 (under which
letters of credit aggregating $10,481 and borrowings of $23,233 were
outstanding at July 20, 1996).
5. EARNINGS (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE
Earnings per common and common equivalent share is based on net income
after preferred stock dividend requirements and the weighted average number
of shares outstanding during each interim period after giving effect to
incremental shares attributed to outstanding warrants to purchase common
stock. Cumulative dividends not declared or paid on preferred shares
amounted to $1,641 for the twelve weeks ended July 20, 1996. The number of
shares used in computing the earnings per share was 499,953 for the quarter
ended July 20, 1996 and 20,368 for the quarter ended July 22, 1995.
6. COMMITMENTS AND CONTINGENCIES
The Company is a party to certain litigation incurred in the normal course
of business. In the opinion of management, the ultimate liability, if any,
which may result from this litigation will not have a material adverse
effect on the Company's financial position or results of operations.
In May, 1996, the Company sold the operating assets of its bakery
subsidiary for $750 and received $5,250 as consideration for entering into
a five year supply agreement with the purchaser of such operating assets.
The total proceeds were applied against loans outstanding under the Credit
Facility and will be reinvested in the construction of the new produce
warehouse.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands)
The following is management's discussion and analysis of significant factors
affecting the Company's earnings during the periods included in the accompanying
consolidated statements of operations.
A table showing the percentage of net sales represented by certain items in the
Company's consolidated statements of operations is as follows:
Twelve Weeks Ended
July 20, July 22,
1996 1995
-------- --------
Net sales .................................... 100.0% 100.0%
Gross profit ................................. 24.2 22.5
Direct store, warehouse
and administrative expenses ............... 20.3 20.4
Operating income ............................. 3.9 2.1
Interest expense, net ........................ 3.0 .9
Earnings before income taxes ................. .9 1.2
Provision for income taxes ................... .3 .4
Net income ................................... .6 .7
A summary of the period to period changes in certain items included in the
consolidated statements of operations for the twelve week periods ended July 20,
1996 and July 22, 1995 is as follows:
Increase (Decrease)
$ %
------ ------
Net sales .................................... $ 1,996 .71%
Gross profit ................................. 5,208 8.27
Direct store, warehouse and administrative
and administrative expenses ........... (11) (.02)
Operating income ............................. 5,219 92.67
Interest expense, net ........................ 5,973 248.36
Earnings before income taxes ................. (754) (23.37)
Provision for income taxes ................... (288) (23.82)
Net income ................................... (466) (23.09)
RESULTS OF OPERATIONS
NET SALES
Net sales increased $1,996 or .71% in the twelve week period ended July 20, 1996
as compared to the twelve week period ended July 22, 1995. The net sales
increase was primarily attributable to the opening of new grocery stores and new
gasoline stations. Same store sales decreased approximately .7% for the quarter.
The Company's store count at July 20, 1996 was 104 grocery stores and 49
gasoline stations.
<PAGE>
GROSS PROFIT
Gross profit as a percentage of net sales was 24.2% for the first quarter of
fiscal 1997 as compared to 22.5% for the first quarter of fiscal 1996. The
increase in gross profit was due to (1) improved procurement results due to
continued enhancements and improved utilization of the Company's information
systems, (2) the renegotiation of a supply contract with Fleming Companies, Inc.
in January 1996 and (3) the implementation of a more traditional sales program
in the first quarter 1997 as compared to the first quarter 1996. In addition,
the current year LIFO provision was a credit of $100 at July 20, 1996, compared
to a charge of $300 at July 22, 1995.
DIRECT STORE, WAREHOUSE AND ADMINISTRATIVE EXPENSES
Direct store, warehouse and administrative expenses were $57,299, or 20.3% of
net sales and $57,310, or 20.4% of net sales for the twelve week period ended
July 20, 1996 and July 22, 1995, respectively. The increase in depreciation and
amortization ($7,062 in the first quarter 1997 as compared to $6,092 in the
first quarter 1996) was offset by decreases in other direct store, warehouse and
administrative expenses including advertising costs and supply expense to hold
direct store, warehouse and administrative expenses flat in the first quarter of
fiscal 1997 as compared to the first quarter of fiscal 1996.
EBITDA
EBITDA (net earnings before depreciation and amortization, interest expense,
LIFO provision and income taxes) was $17,813, or 6.3% of net sales in the first
quarter of fiscal 1997 as compared to $12,024 or 4.3% of net sales in the first
quarter of fiscal 1996. The increase in EBITDA is due primarily to the
improvement in gross profit as stated above.
NET INTEREST EXPENSE
Interest expense was $8,378 in the first quarter of fiscal 1997 as compared to
$2,405 in the first quarter of fiscal 1996. This increase in interest expense is
the result of the Company's long-term debt increasing from $34,247 at July 22,
1995 to $223,233 million at July 20, 1996 as a result of the Merger and the
decrease in interest income which was approximately $53 and $580 for the twelve
week periods ended July 20, 1996 and July 22,1995, respectively.
INCOME TAXES
Income taxes were $921 with an effective tax rate of 37.3% for the first quarter
1997 and $1,209 with an effective tax rate of 37.5% for the first quarter 1996.
The decrease in income taxes for the first quarter 1997 was principally due to
lower pretax earnings.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company has funded its working capital requirements, capital
expenditures and other needs principally from operating cash flows. Due to the
Merger, however, the Company has become highly leveraged and has certain
restrictions on its operations. The Company's principal sources of liquidity are
expected to be cash flow from operations and borrowings under the $100,000
Credit Facility (under which letters of credit aggregating $10,481 and
borrowings of $23,233 were outstanding at July 20, 1996).
Cash provided by operating activities during the twelve week period ended July
20, 1996 was $18,129 compared to $9,015 for the twelve week period ended July
22, 1995. The increase in the first quarter 1997 was primarily the result of the
receipt of $5,250 as consideration for entering into a five year supply
agreement with the purchaser of the bakery assets and also the improved
management of working capital.
Net cash used in investing activities was $4,713 and $9,995 for the twelve week
period ended July 20, 1996 and July 22, 1995, respectively. Cash was primarily
used for capital expenditures for the first quarter 1997. Capital expenditures
were $6,122 and $3,368 for the twelve week periods ended July 20, 1996 and July
22, 1995, respectively.
Net cash used in financing activities was $16,059 and $3,387 for the twelve week
period ended July 20, 1996 and July 22, 1995, respectively. The primary use of
funds in financing activities for the first quarter 1997 was the payment of
principal on long-term debt and capital lease obligations.
The Company believes that capital expenditures for the remainder of fiscal 1997
will be financed through cash flow from operations and borrowings under its
Credit Facility. Capital expenditures for the remainder of fiscal 1997 are
expected to be approximately $18,000, of which approximately $5,500 will be used
to fund construction of a new produce warehouse in Jackson, Mississippi. The
balance of such planned capital expenditures primarily relates to new store
openings, remodels, expansions of existing stores and to complete implementation
of the Company's MIS upgrade. Capital expenditure plans are continuously
evaluated and modified from time to time depending on cash availability and
other economic factors.
<PAGE>
PART II. OTHER INFORMATION
(Dollars in thousands)
ITEM 1. LEGAL PROCEEDINGS
The Company is a party to certain litigation incurred in the normal course of
business. In the opinion of management, the ultimate liability, if any, which
may result from this litigation will not have a material adverse effect on the
Company's financial position or results of operations.
ITEM 2. CHANGE IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS
None.
ITEM 5. OTHER INFORMATION
In May 1996, the Company sold the operating assets of its bakery for $750 and
received $5,250 as consideration for entering into a five-year supply agreement
with the purchaser of such assets. The Company's future operating results no
longer include the net income of the bakery (approximately $200 in fiscal 1996),
and the Company will incur costs to purchase additional bread products from
outside suppliers. However, the Company believes that it will realize a
recurring benefit from a reduction in delivery expense associated with the
bakery's operations (which represented a charge to the bakery primarily for use
of the Company's transportation equipment and personnel). For fiscal 1996, the
bakery's delivery expense was approximately $1,400. In addition, the sale of the
bakery released certain transportation equipment of the Company for use in
delivering the dry grocery and frozen food products which, until January 1996,
had been delivered by Fleming Companies, Inc. under a supply contract. The total
proceeds were applied against loans outstanding under the Credit Facility and
will be reinvested in the construction of a new produce warehouse which is
currently under construction and is expected to be completed in September 1996.
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No.
-----------
* 27.1 Financial Data Schedule
* Filed herewith.
(b) Reports on Form 8-K
There were no reports filed on Form 8-K during the quarter ended July 20,
1996.
<PAGE>
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.
JITNEY-JUNGLE STORES OF AMERICA, INC.
(Registrant)
/s/ David R. Black
------------------
David R. Black
Senior Vice President - Finance,
Chief Financial Officer
Dated: August 28, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> MAY-03-1997
<PERIOD-START> APR-28-1996
<PERIOD-END> JUL-20-1996
<CASH> 3,033
<SECURITIES> 0
<RECEIVABLES> 5,599
<ALLOWANCES> 0
<INVENTORY> 79,479
<CURRENT-ASSETS> 92,579
<PP&E> 172,144
<DEPRECIATION> 7,062
<TOTAL-ASSETS> 274,011
<CURRENT-LIABILITIES> 77,018
<BONDS> 0
50,035
7,604
<COMMON> 4
<OTHER-SE> (150,888)
<TOTAL-LIABILITY-AND-EQUITY> 274,011
<SALES> 282,166
<TOTAL-REVENUES> 282,166
<CGS> 214,016
<TOTAL-COSTS> 57,299
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,378
<INCOME-PRETAX> 2,473
<INCOME-TAX> 921
<INCOME-CONTINUING> 1,552
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,552
<EPS-PRIMARY> (.12)
<EPS-DILUTED> (.12)
</TABLE>
