UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from May 4, 1997 to January 3, 1998
Commission file number 33-80833
JITNEY-JUNGLE STORES OF AMERICA, INC.
(Exact name of registrant as specified in its charter)
Mississippi 64-0280539
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
1770 Ellis Avenue, Suite 200, Jackson, MS 39204
(Address of principal executive offices) (Zip Code)
(601) 965-8600
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
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
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this form 10-K. (X )
The Company is closely-held and is not actively traded; therefore,
the aggregate market value of voting stock held by nonaffiliates is
not applicable.
The number of shares of registrant's Common Stock, par value one
cent ($.01) per share, outstanding at January 3, 1998, was 425,000.
<PAGE>
CAUTIONARY NOTICE
This Annual Report of Jitney-Jungle Stores of America,
Inc. on Form 10-K contains forward-looking statements in which
the Company's management shares its knowledge and judgment
about factors that it believes may materially affect Company
performance in the future. Terms expressing future expectations,
including expectations concerning future sales, revenues and
earnings, and like expressions typically identify such statements.
All forward-looking statements, although made in good
faith, are subject to the uncertainties inherent in predicting the
future. They are necessarily speculative, and factors such as
unusual distribution problems, breakdown of quality control,
competitive pressures, customer dissatisfaction, and general
deterioration in economic conditions may cause results to differ
materially from any that are projected.
Forward-looking statements speak only as of the date they
are made, and readers are warned that the Company undertakes no
obligation to update or revise such statements to reflect new
circumstances or unanticipated events as they occur.
Readers are urged to carefully review and consider
disclosures made by the Company in this and other reports that
discuss factors germane to the Company's business. See
particularly the Company's reports on Forms 10-K, 10-Q and 8-K
filed with the Securities and Exchange Commission.
<PAGE>
<TABLE>
JITNEY-JUNGLE STORES OF AMERICA, INC.
TABLE OF CONTENTS
ITEM PAGE
PART I
<S> <C> <C>
1. Business..................................................... 3
2. Properties................................................... 8
3. Legal Proceeding............................................. 9
4. Submission of Matters to a Vote of Security Holders.......... 10
PART II
5. Market for the Registrant's Common Equity and
Related Stockholder Matters.......................... 10
6. Selected Financial Data...................................... 11
7. Management's Discussion and Analysis of Financial Condition
and Results of Operations............................ 12
8. Financial Statements and Supplementary Data.................. 21
9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure............................. 44
PART III
10. Directors and Executive Officers of the Registrant........... 44
11. Executive Compensation....................................... 48
12. Security Ownership of Certain Beneficial Owners and
Management.......................................... 52
13. Certain Relationships and Related Transactions............... 54
PART IV
14. Exhibits, Financial Statement Schedules and Reports on Form
8-K................................................. 56
</TABLE>
<PAGE>
Item 1. Business
General
Jitney-Jungle Stores of America, Inc. and subsidiaries (the
"Company") is a leading operator of supermarkets in the Southeast.
As of January 3, 1998 the Company operated 217 stores located
throughout Mississippi, Alabama and Louisiana and in selected
markets in Tennessee, Arkansas and Florida. The Company is the
largest supermarket operator in Mississippi, with 89 stores.
On July 8, 1997, the Company entered into a definitive
merger agreement with Delchamps, Inc. ("Delchamps"), an
Alabama corporation. On September 12, 1997, Delta Acquisition
Corporation ("DAC") a wholly owned subsidiary of the Company,
completed an all cash tender offer for shares of Delchamps and
accepted for payment approximately 75% of such shares. On
November 4, 1997, DAC was merged with and into Delchamps.
Delchamps was the surviving corporation and became a wholly-
owned subsidiary of the Company. In connection with the
acquisition the Company, among other things, (i) issued and sold
$200 million of unsecured senior subordinated notes due 2007 (the
"Senior Subordinated Notes") and (ii) entered into a $150 million
revolving credit agreement (the "Senior Credit Facility") with Fleet
Bank, N.A., which replaced the then existing $100 million
revolving credit agreement ("Credit Facility") with Fleet Bank,
N.A.
The proceeds from the sale of the Senior Subordinated
Notes and the borrowing under the Senior Credit Facility and the
use of existing cash balances of the Company were used to repay
certain outstanding Delchamps indebtedness, purchase Common
Stock from Delchamps shareholders and pay fees and expenses
related to the acquisition of Delchamps.
Through a public offering, the Company issued and sold
the Senior Subordinated Notes which bear interest at a rate of 10
3/8% per annum, payable semi-annually on March 15 and
September 15 of each year. In addition, the Company entered into
a revolving credit agreement on March 5, 1996 which provided a
$100 million Credit Facility and subsequently, on September 15,
1997 the Company amended and restated the agreement to provide
a $150 million Senior Credit Facility. The borrowings outstanding
under the Senior Credit Facility at January 3, 1998 were $49.8
million. The commitments under the Senior Credit Facility will
terminate, and all loans outstanding thereunder will be required to
be repaid in full on March 15, 2004. Both the Senior Subordinated
Notes and the Senior Credit Facility restrict future payment of
dividends.
On November 16, 1995, the Company and JJ Acquisitions
Corp. ("JJAC") entered into an Agreement and Plan of Exchange
and of Merger (the "Merger"). In connection with the Merger on
March 5, 1996, JJAC among other things, (i) issued and sold $200
million of unsecured senior notes due 2006 (the "Senior Notes"),
(ii) entered into a $100 million revolving credit agreement ("the
Credit Facility") with Fleet Bank, N.A. (formerly NatWest Bank,
N.A.), (iii) issued and sold Common Stock and a warrant in the
aggregate amount of $7.4 million, and (iv) issued and sold three
classes of Preferred Stock in the aggregate amount of $57.6
million. The proceeds from the sale of the notes, the Common
Stock, warrants and Preferred Stock, together with borrowing
under the Credit Facility and the use of existing cash balances of
the Company were used to repay certain outstanding indebtedness,
3
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purchase Common Stock from existing shareholders and pay fees
and expenses related to the Merger. JJAC was merged with and
into the Company, with the Company continuing as the surviving
corporation. Upon the completion of the Merger, Bruckmann,
Rosser, Sherrill & Co., L.P., owned 356,250 shares or
approximately 83.82% of the Company's outstanding Common
Stock on an undiluted basis.
Through a public offering, JJAC issued and sold the Senior
Notes which bear interest at a rate of 12% per annum, payable
semiannually on March 1 and September 1 of each year. In
addition, on March 5, 1996, the Company entered into the Credit
Facility (which has been replaced by the Senior Credit Facility).
The Senior Notes restrict future payment of dividends.
Store Formats
Through its 79 years of operations in the Southeast, the
Company has developed a strong consumer franchise, with many
of its stores located in prime, high-traffic sites that provide
significant competitive advantages. The Company currently
operates supermarkets under three formats, each targeting specific
market segments: (i) conventional supermarkets operating under
the "Jitney-Jungle" and "Delchamps" name, (ii) combination food
and drug supermarkets operating primarily under the "Jitney
Premier" name and (iii) discount supermarkets operating primarily
under the "Sack and Save" name. The Company currently operates
200 supermarkets (169 conventional stores averaging
approximately 35,000 square feet, 11 combination stores averaging
approximately 56,000 square feet and 20 discount stores averaging
approximately 60,000 square feet), 53 gasoline stations and 10
liquor stores including recent changes made subsequent to fiscal
year end. All of the Company's conventional and combination
supermarkets utilize a "Hi-Lo" pricing strategy (featuring
competitive prices on all product offerings as well as a selection of
items that are promoted at lower prices to generate increased
customer traffic), offer a wide range of specialty departments and
deliver high levels of service to customers. The stores under the
Jitney-Jungle name utilize the Jitney-Jungle Gold Card (a frequent
shopper card) which was launched in January, 1997. Also, the 11
combination supermarkets offer expanded general and specialty
merchandise, a wider range of full-service departments, expanded
beauty care and pharmacy departments, superior customer service
and are open 24 hours a day, seven days a week. The Company's
20 discount supermarkets utilize an everyday low price strategy
(featuring consistently low prices aimed at the value conscious
shopper). The discount supermarkets have lower operating costs
than the conventional and combination supermarkets due to fewer
service departments, lower customer service levels and enhanced
productivity methods. The Company also operates 53 gasoline
stations and 10 liquor stores at selected supermarket sites. The
Company features nationally advertised and distributed
merchandise, and also markets food products under a private label
program. In July 1997 the Company began shifting a significant
portion of its total advertising expenditures to television and radio
media, focusing on a quality and service image, in order to reach a
wider target audience.
Competition
The Company's business is highly competitive.
Competition is based primarily on supermarket location, price,
service, convenience, cleanliness and product quality and variety.
There is direct competition from many supermarkets, including
independent stores and local outlets of regional and national
4
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chains. Competition also exists with respect to particular products
from such retailers as convenience stores, warehouse stores,
drugstores and nonfood superstores.
Employees
As of March 31, 1998, the Company employed
approximately 18,000 people, of whom approximately 42% were
full-time and 58% were part-time employees. None of the
employees of the Company are covered by a collective bargaining
agreement.
The Company has an incentive compensation plan covering
its key management staff under which incentive compensation for
store operations is based upon the results of profitability of the
operations within the scope of their management responsibility.
Also, the Company has established a Stock Option Plan pursuant
to which certain key management have been granted options to
acquire shares of common stock of the Company (subject to certain
restrictions) at a price determined at the time of issuance to be an
estimate of fair market value.
Trade Names, Service Marks, Trademarks and Franchises
The Company uses a variety of trade names, service marks
and trademarks. Except for "Jitney-Jungle", "Sack and Save", and
"Pump And Save", the Company does not believe any of such
trade names, service marks or trademarks are material to its
business. "Jitney-Jungle" is registered with the U.S. patent office
and "Sack and Save", and "Pump and Save" are registered in the
various states where the company operates. The Company is in the
process of registering Delchamps with the U.S. patent office.
Environmental Matters
The Company is subject to federal, state and local laws and
regulations including those relating to environmental protection,
workplace safety, public health and community right-to-know.
The Company's supermarkets are not highly regulated under
environmental laws since the Company does not engage in any
industrial activities at these locations. The principal environmental
requirements applicable to the Company's operations relate to the
ownership or use of tanks for the storage of petroleum products,
such as gasoline and diesel fuel, the operation of on-site paper trash
incinerators, and the operation of an on-site printing facility. The
Company operates 57 locations (including all 54 of the Pump and
Save locations), and has retained responsibility for one former
facility, at which petroleum products are stored in underground
tanks. The Company has instituted an environmental compliance
program designed to insure that these tanks are in compliance with
applicable technical, operational and regulatory requirements,
including periodic inventory reconciliation and integrity testing.
The Company also operates small incinerators at 21 locations
which burn paper trash and has air permits for these facilities. In
addition, the Company's printing facility is subject to air and
hazardous waste regulations. The Company's locations may have
asbestos-containing materials which must be managed in
accordance with environmental laws and regulations. However,
the Company does not believe that the cost of such management
will be material. The Company believes that the locations where it
currently operates are in substantial compliance with regulatory
requirements.
5
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The Company has undertaken programs to comply with
upcoming regulatory obligations. First, at five locations, the
Company must comply with petroleum tank upgrade or closure
requirements under the Resource Conservation and Recovery Act
of 1980, as amended, ("RCRA") (including all applicable
requirements of state regulatory agencies) which must be met by
the end of 1998. Second, over the next several years, the Company
is planning to complete retrofitting of its chlorofluorocarbons
("CFC") chiller units to utilize non-CFC based refrigerants
pursuant to the phase-out of CFCs under the Clean Air Act. Future
events, such as changes in existing laws and regulations or their
interpretation and the approach of other compliance deadlines may
or will give rise to additional compliance costs or liabilities.
Compliance with more stringent laws or regulations, as well as
different interpretations of existing laws, may require additional
expenditures by the Company which may be material.
The Company may also be subject to requirements related
to the remediation of, or the liability for remediation of, substances
that have been released to the environment at properties owned or
operated by the Company or at properties to which the Company
sends substances for treatment or disposal. Such remediation
requirements may be imposed without regard to fault and liability
for environmental remediation can be substantial. Other than one
previously owned property for which the Company retained
responsibility for a clean-up in progress at the time of the sale, the
Company has not been notified of any such releases relating to off-
site treatment or disposal or to previously owned properties.
However, 16 of the Company's locations have been or currently are
the subject of environmental investigations or remediation, 12 as a
consequence of known or suspected petroleum-related leaks or
spills from storage tanks and four for minor spills or releases
unrelated to tank usage. Four (4) other properties have undergone
investigation or remediation for minor spills unrelated to tank
usage.
The Company may be eligible for reimbursement or
payment for remediation costs associated with future releases from
its regulated underground storage tanks and has obtained such
reimbursement in the past. The states in which the Company
operates each maintain a fund to assist in the payment of
remediation costs and injury or damage to third parties from
releases from certain registered underground tanks. Subject to
certain deductibles, the availability of funds, compliance status of
the tanks and the nature of the release, these funds have been and
may be available to the Company for use in remediating releases
from its tank systems. Due to the availability of such funds, the
Company's unreimbursed cost for remediation at all of the facilities
which have had leaks or spills from underground storage tanks has
not been material. All significant required expenditures in
connection with the clean up of such leaks and spills have been
made at such locations, except at three recently discovered
locations which are still undergoing investigation and one location
awaiting state approval of its remediation plan. Remediation
expenses at all the locations which are currently the subject of
environmental investigation or remediation are anticipated to cost
up to $240,000 in fiscal 1998 and approximately $125,000 per year
thereafter, substantially all of which is subject to reimbursement as
described above. In addition, the Company has obtained insurance
coverage for bodily injury, property damage and corrective action
expenses resulting from releases of petroleum products from
underground storage tanks during the covered period at all 58
underground storage tank locations.
6
<PAGE>
Other than expenditures relating to the remediation of tank
leaks and spills described above, the Company's expenditures to
comply with environmental laws and regulations have primarily
consisted of those related to tank upgrading and retrofitting CFC
chiller units. The Company spent $130,000, $914,000, $468,000
and $515,000 for such activities during fiscal 1997 stub, fiscal
1997, 1996 and 1995, respectively. Between approximately
$300,000 and $500,000 in expenditures are contemplated for
retrofitting the CFC units and between approximately $455,000
and $755,000 in expenditures are contemplated for tank upgrading
to comply with the 1998 tank standards or closure in fiscal 1998.
These regulatory compliance costs are not covered by insurance.
Governmental Regulation
The Company is subject to regulation by a variety of
governmental agencies, including but not limited to the United
States Food and Drug Administration, the United States
Department of Agriculture and other federal, state and local
agencies.
Fiscal Year Change
The Company reports results of operations on a 52 or 53
week fiscal year. For fiscal years 1995, 1996 and 1997 the fiscal
year ended on the Saturday nearest to April 30 of each year. The
Company changed its fiscal year end on January 3, 1998 to the
closest Saturday to December 31 of each year. This change created
a "stub" year of 35 weeks for fiscal year ended January 3, 1998.
7
<PAGE>
Item 2. Properties
The following table recaps store data for fiscal 1997stub,
1997, 1996 and 1995:
<TABLE>
<CAPTION>
Fiscal
________________________________________________________
1997 stub(a) 1997 1996 1995
_________ ______ ______ _______
<S> <C> <C> <C> <C> <C>
Stores Beginning of Year 105 103 106 106
Acquired 118
Opened 2 4 2
Closed 6 0 7 2
_________ ______ ______ _______
End of Year 217 105 103 106
======== ====== ====== =======
Store Composition Conventional 185 76 72 71
at Year End Combination 11 2 2 1
Discount 21 27 29 34
_________ ______ ______ _______
Total 217 105 103 106
========= ====== ====== =======
Average Square Feet Conventional 35,000 26,500 26,000 25,000
Combination 56,000 56,900 56,100 57,300
Discount 60,000 57,800 57,100 55,200
Store Locations Mississippi 89 73 71 72
at Year End Alabama 53 11 11 13
Arkansas 5 5 5 6
Florida 17 2 2 1
Tennessee 7 7 7 7
Louisiana 46 7 7 7
_________ ______ ______ _______
Total 217 105 103 106
========= ====== ====== =======
Gasoline Stations Beginning of Year 53 46 37 31
Opened 2 7 11 6
Closed 1 0 2
_________ ______ ______ _______
End of Year 54 53 46 37
========= ====== ====== =======
Gasoline Station Mississippi 45 43 38 28
Locations Louisiana 0 1 1 1
at Year End Tennessee 4 4 3 2
Alabama 2 2 2 4
Florida 1 1 1 1
Arkansas 2 2 1 1
_________ ______ ______ _______
Total 54 53 46 37
========= ====== ====== =======
</TABLE>
(a) Changes subsequent to fiscal year end not included above are
one gas station and seventeen supermarkets (16 conventional
and 1 discount) were closed or sold.
All of the Company's store properties are leased, with the
exception of one store. These leases generally obligate the
Company to pay its proportionate share of real estate taxes,
common area maintenance charges and insurance costs. In
addition, such leases generally provide for percentage of sales rent
8
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when sales from the store exceed a certain dollar amount. These
leases are usually long-term, with one or more renewal options.
With the exception of one lease, which will expire in 2001, all
leases will expire between 2005 and 2036 if the Company
exercises all its options to renew. The Company owns all of its
furnishing and fixtures in all supermarkets except for
approximately $3.2 million of supermarket "POS" equipment
which is leased, and has made various leasehold improvements to
these supermarket sites. It is anticipated that the Company will
own the furnishings and fixtures in all supermarkets under
construction.
Certain parties affiliated with the Company hold 20 leases,
representing approximately 23% of the dollar amount of the
Company's capital leases. Management believes that each of these
leases was contracted for on an arm's length basis and contains
terms that are no less favorable to the Company than could have
been obtained with non-affiliated parties at the time each was
entered into.
The Company owns all of its warehouse and distribution
facilities except for its 120,000 square-foot dry grocery and health
and beauty care facility. This facility is under a lease expiring July
31, 2004 (including all renewal options). The table below details
Jitney-Jungle's warehousing and distribution facilities by function.
These warehouses and distribution facilities are located in
Jackson, Mississippi and Hammond, Louisiana.
<TABLE>
<CAPTION>
Function Square Feet
________ ___________
Jackson Hammond
_______ _______
<S> <C> <C>
Dry Grocery............................... 415,000 456,200
Meat and Dairy............................ 90,000 101,300
Dry Grocery and Health and Beauty Care.... 120,000 ---
Transportation and Damage Reclaim......... 73,000 13,800
Produce, Eggs and Floral.................. 67,000 ---
Frozen Foods.............................. 79,000 62,900
_______ _______
Total Jackson Warehouse................... 844,000 634,200
======= =======
</TABLE>
Due to the acquisition of Delchamps, the Company owns a
65,000 square-foot building which houses the corporate
headquarters of Delchamps in Mobile, Alabama (including a 2.7
acre parcel adjacent to such headquarters), the Hammond
warehouse (including a 165-acre parcel adjacent to such
warehouse) and interest in six additional parcels, some of which
are undeveloped. In connection with the acquisition, Management
is in the process of consolidating the corporate headquarters of the
Company's combined operations in the existing corporate
headquarters of Jitney-Jungle in Jackson, Mississippi. A divisional
office is being opened in Mobile and the Delchamps Mobile
headquarters will be closed. Management has discontinued all
shipments to stores from the Hammond warehouse, and the
Company may determine to sell, or develop for sale, certain of
such parcels of real estate.
Item 3. Legal Proceedings
The Company is not a party to any material pending legal
proceedings, other than ordinary litigation incidental to the conduct
of its business and the ownership of its properties.
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Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security
holders during the third quarter of its fiscal period ended January 3,
1998.
PART II
Item 5. Market for the Registrant's Common Equity and
Related Stockholder Matters
The Company is closely held and is not actively traded at
this time; therefore, there is not a current market.
As of January 3, 1998, there were thirty-three (33) holders
of record of Common Stock.
There were no dividends paid by Jitney-Jungle to its
shareholders during thirty-five weeks ended and the past fiscal
years. The Senior Subordinated Notes and the Senior Credit
Facility entered into by the Company restrict future payment of
dividends.
10
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<TABLE>
<CAPTION>
Item 6. Selected Financial Data
(35 weeks) (53 weeks) (52 weeks) (52 weeks) (52 weeks) (52 weeks)
(Dollars in Thousands) January 3, May 3, April 27, April 29, April 30, May 1,
Except Per Share Amounts) 1998 1997 1996 1995 1994 1993
__________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Operating Results:
Net Sales $1,145,129 $1,228,533 $1,179,318 $1,173,927 $1,152,333 $1,070,693
Gross Profit 285,669 303,087 292,063 288,188 276,546 250,999
Interest expense (net):
Debt 25,596 27,117 4,232 1,606 2,916 1,723
Capitalized lease obligations 6,012 9,098 8,768 9,217 8,710 8,194
Earnings (loss) before income taxes
and extraordinary item (13,131) 1,085 24,977 30,220 27,135 26,471
Income taxes (benefit) (3,224) 339 9,062 11,417 9,956 9,354
Earnings (loss) before
extraordinary item (9,907) 746 15,915 18,803 17,179 17,117
Extraordinary item (net of tax) (870) (1,456)
Net Earnings (loss) ($10,777) $746 $14,459 $18,803 $17,179 $17,117
Net Earnings (loss) as a percent
of sales (0.94%) 0.06% 1.23% 1.60% 1.49% 1.60%
_____________________________________________________________________________________
Common Stock Data:
Earnings (loss) per common
share-assuming dilution:
Earnings (loss) before
extraordinary item ($36.39) ($16.26) $162.88 $923.15 $843.42 $840.37
Extraordinary item (2.05) (15.96)
Net Earnings (loss) ($38.44) ($16.26) $146.92 $923.15 $843.42 $840.37
_____________________________________________________________________________________
Financial Position:
Total assets $694,280 $267,845 $279,003 $312,415 $296,803 $269,798
Working Capital (20,669) (92) 26,449 71,929 60,385 60,108
Long-term debt 449,831 208,000 239,059 38,727 40,628 42,476
Capitalized lease
obligations (including current) 75,081 62,260 62,165 60,471 62,186 56,189
Restructuring Obligations
(including current) 55,515 2,202 1,237
Redeemable preferred stock 63,042 57,921 49,988
Stockholders' Equity (Deficit) (167,900) (152,002) (144,815) 140,216 124,857 111,099
_____________________________________________________________________________________
</TABLE>
11
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Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The following discussion of the Company's results of
operations and of its liquidity and capital resources should be read
in conjunction with the Consolidated Financial Statements and the
notes thereto contained elsewhere in this report.
Results of Operations
General
As of January 3, 1998 the Company operated a chain of
217 supermarkets and 54 gasoline stations. Net sales from
gasoline stations during fiscal 1997 stub, 1997, and 1996 were
7.1%, 6.9%, and 5.2%, respectively, of the Company's net sales
for such periods. The Company reports results of operations on a
52 or 53 week fiscal year. For fiscal years 1995, 1996 and 1997
the fiscal year ended on the Saturday nearest to April 30 of each
year. The Company changed its fiscal year end on January 3, 1998
to the closest Saturday to December 31 of each year. This change
created a "stub" year of 35 weeks for fiscal year ended January 3,
1998. The Company's first three fiscal quarters are 12 weeks, and
the last quarter is 16 or 17 weeks. The consolidated statements of
operations include 35 weeks for a short year for January 3, 1998,
53 weeks of operations for fiscal 1997 and 52 weeks for fiscal
1996 and 1995.
The following sets forth, for the periods indicated, selected
financial information expressed as a percentage of net sales.
<TABLE>
<CAPTION>
FISCAL YEAR
_________________________________________
1997stub 1997 1996 1995
(35 Wks) (53 Wks) (52 Wks) (52 Wks)
_______ _______ _______ ______
<S> <C> <C> <C> <C>
Net sales........................ 100.00% 100.00% 100.00% 100.00%
Gross profit..................... 24.95 24.67 24.77 24.55
Direct store, warehouse and
administrative expenses
and special charges............ 23.33 21.63 21.55 21.05
_______ _______ _______ ______
Operating income................. 1.62 3.04 3.22 3.50
Interest expense, net............ 2.76 2.95 1.10 .92
_______ _______ _______ ______
Earnings (loss) before income
taxes and extraordinary
item........................... (1.14) 0.09 2.12 2.58
Provision for (benefit from)
income taxes................... (0.28) 0.03 0.77 .98
Extraordinary item (net of
income tax benefit)............ (0.08) 0.00 0.12 0.00
_______ _______ _______ ______
Net earnings (loss).............. (0.94)% 0.06% 1.23% 1.60
======= ======= ======= ======
</TABLE>
12
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Approximately 18% of the Company's non-perishable sales
result from its private label program. Private label products
generally have a lower unit sales price than national brands, but
provide a higher gross margin to the Company due to lower unit
costs.
During the past three years, an overall lack of inflation in
food prices and increasingly competitive markets have made it
difficult for the Company and other supermarket operators to
achieve comparable store sales gains. Because sales growth has
been difficult to attain, many operators, including the Company,
have attempted to maintain market share through increased levels
of promotional activities and discount pricing, creating a more
difficult environment in which to increase year-over-year sales
gains consistently. In addition, because of the growth in the
Southeast market, many supermarket operators, including the
Company, have opened new stores, resulting in declines in same
store sales for the other stores in those areas.
Net Sales
The following sets forth, for the periods indicated, net sales
of the Company.
<TABLE>
<CAPTION>
(dollars in millions)
____________________________________________
1997stub 1997 1996 1995
(35 Wks) (53 Wks) (52 Wks) (52 Wks)
_______ _______ _______ _______
<S> <C> <C> <C> <C>
Net sales ...............................$1,145.1 $1,228.5 $1,179.3 $1,173.9
Increase (decrease) from prior year...... ($83.4) $49.2 $5.4 $21.6
Percentage increase over prior year...... n/m 4.2% 0.5% 1.9%
Percentage increase (decrease) in same
store sales............................ 0.34% 0.20% (0.01%) (0.56%)
</TABLE>
The net sales decrease of $83.4 million in 1997 stub was
due to the "stub" year having only 35 weeks.
The net sales increase of 4.2% in 1997 was primarily due to
the opening of two supermarkets, the opening of seven new
gasoline stations and the extra "53rd" week. Without this extra
"53rd" week, sales would have increased approximately 2.2%. In
addition, the Jitney-Jungle Gold Card (a frequent shopper card
program) was launched at the beginning of the 4th quarter in
January 1997 and, as a result, sales and customer count have
increased.
The net sales increase of 0.5% in 1996 was primarily due to
the opening of four grocery supermarkets and the opening of
eleven new gasoline stations, partially offset by the effect of
closing seven supermarkets and two gasoline stations in fiscal
1996.
13
<PAGE>
Gross Profit
The following sets forth, for the periods indicated, gross
profit of the Company.
<TABLE>
<CAPTION>
(dollars in millions)
_____________________________________________
1997stub 1997 1996 1995
(35 Wks) (53 Wks) (52 Wks) (52 Wks)
________ _______ ________ _______
<S> <C> <C> <C> <C>
Gross profit...................... $285.7 $303.1 $292.1 $288.2
Increase from prior year.......... n/m $11.0 $3.9 $11.6
Gross profit percentage........... 24.9% 24.7% 24.8% 24.5%
Increase (decrease) from prior
year............................ 0.2% (0.1%) 0.3% 0.5%
</TABLE>
The increase in gross profit as a percent of sales for fiscal
1997 stub was due to (i) an increase in sales due to the Delchamps
acquisition and (ii) improved procurement results due to utilizing
better buying decisions at better prices.
The decrease in gross profit as a percentage of net sales
of 0.1% for fiscal 1997 was principally due to discounts
associated with the offering of the new Jitney-Jungle Gold Card
(frequent shopper card) which was launched in January 1997.
The increase in gross profit as a percentage of net sales
of 0.3% for fiscal 1996 was due to (i) improved procurement
results due to continued enhancements and improved utilization
of the Company's information systems, which resulted in better
buying decisions at better prices and (ii) the re-negotiation of a
supply contract with Fleming Companies, Inc. in January 1996.
Direct Store, Warehouse and Administrative Expenses
The following sets forth, for the periods indicated, direct
store, warehouse and administrative expenses for the Company.
<TABLE>
<CAPTION>
(dollars in millions)
____________________________________________
1997stub 1997 1996 1995
(35 Wks) (53 Wks) (52 Wks) (52 Wks)
________ ________ ________ ________
<S> <C> <C> <C> <C>
Direct store, warehouse and administrative
expenses (including special charges)........$267.2 $265.8 $254.1 $247.1
Increase from prior year...................... n/m $11.7 $7.0 $9.4
Percentage increase from prior year........... n/m 4.6% 2.8% 4.0
Expenses as a percentage of sales............. 23.3% 21.6% 21.6% 21.1%
</TABLE>
In fiscal 1997 stub, direct store, warehouse and
administrative expenses increased as a percent of sales
principally due to the amortization of debt issue costs and
goodwill related to the acquisition of Delchamps which was
accounted for using the purchase method.
14
<PAGE>
In fiscal 1997, direct store, warehouse and
administrative expenses increased $11.7 million principally due
to the "53rd" week, while such expenses as a percentage of net
sales remained the same at 21.6%. In fiscal 1997, personnel
costs, the largest single component of store operating, selling
and administrative expenses, were $152.9 million, or 12.4% of
net sales, compared to $146.6 million or 12.4% of net sales for
fiscal 1996. Depreciation and amortization increased $4.0
million principally due to acquisitions of property and
equipment (including capital leases) associated with the
Company's remodeling program, acquisition of new stores and
gasoline stations and increased debt issue costs related to the
Merger. Group insurance expense increased $.5 million
principally due to an increase in medical claims paid during the
year by the self-insured plan. Closed Operations expense
increased $.7 million and included a provision for the closing of
one conventional supermarket and one gasoline station in July
1997. The increases in SG&A were offset by reductions in
store supplies and advertising costs and by an increase in
backhaul income. In addition SG&A included the charge to
expense of $2.7 million for costs associated with the
employment contract of the Company's former Chief Executive
Officer and the severance pay of various associates (a) who
retired early or (b) whose positions were eliminated.
In fiscal 1996, personnel costs, the largest single
component of store operating, selling and administrative
expenses, were $146.6 million, or 12.4% of net sales, compared
to $143.5 million, or 12.2% of net sales for fiscal 1995. In
addition to personnel costs, other increases in operating
expenses for fiscal 1996 were principally due to increases in
insurance expense ($0.8 million) as a result of a larger provision
for workers compensation and general liability insurance,
repairs and maintenance ($0.4 million), certain non-recurring
legal and professional fees, and also depreciation and
amortization expense which amounted to $27.3 million in fiscal
1996, or 2.3% of net sales, compared to $25.4 million for fiscal
1995, or 2.2% of net sales. The increase in depreciation and
amortization in fiscal 1996 was primarily a result of increased
capital expenditures relating to the remodeling of stores in fiscal
1995 and increased debt issue costs related to the Merger.
Operating Income
As a percentage of net sales, operating income for fiscal
1997 stub, 1997 and 1996 was 1.6%, 3.0% and 3.2%,
respectively. The decrease in operating income for fiscal 1997
stub as a percent of sales was principally due to bridge fees and
amortization of debt issue cost and goodwill related to the
acquisition of Delchamps.
15
<PAGE>
EBITDA
The following sets forth, for the periods indicated, EBITDA of
the Company.
<TABLE>
<CAPTION>
(dollars in millions)
____________________________________________
1997stub 1997 1996 1995
(35 Wks) (53 Wks) (52 Wks) (52 Wks)
________ ________ ________ ________
<S> <C> <C> <C> <C>
EBITDA.................................. $51.8 $70.3 $64.9 $65.2
Increase (decrease) from prior year..... n/m ($5.4) ($0.3) $1.8
EBITDA as a percentage of net sales....... 4.5% 5.7% 5.5% 5.6%
</TABLE>
As a percentage of net sales, EBITDA for fiscal 1997
stub, 1997, 1996 and 1995 was 4.5%, 5.7%, 5.5%, and 5.6%,
respectively. EBITDA represents income before interest,
income taxes, depreciation, amortization and LIFO charges.
Fiscal 1997 stub and fiscal 1997 are calculated before any
deduction for certain special charges totaling $3.1 million and
$2.7 million, respectively. EBITDA as presented is consistent
with the definition used for covenant purposes contained in the
Indenture. EBITDA is a widely accepted financial indicator of
a company's ability to service debt. However, EBITDA should
not be construed as an alternative to operating income, net
income, or cash flows from operating activities (as determined
in accordance with generally accepted accounting principles)
and should not be construed as an indication of the Company's
operating performance or as a measure of liquidity. However,
management believes it to be a useful measure and therefore it
has been presented.
Net Interest Expense
The following sets forth, for the periods indicated, net
interest expense of the Company.
<TABLE>
<CAPTION>
(dollars in millions)
____________________________________________
1997stub 1997 1996 1995
(35 Wks) (53 Wks) (52 Wks) (52 Wks)
________ ________ ________ ________
<S> <C> <C> <C> <C>
Net interest expense......................$31.6 $36.2 $13.0 $10.8
Increase (decrease) from prior year.......($4.6) $23.2 $2.2 ($0.9)
Percentage increase over prior year....... n/m 178.5% 2.0% (7.7%)
</TABLE>
The decrease in net interest expense of $4.6 million was
due to fiscal 1997 stub only having 35 weeks.
The increase in net interest expense for fiscal 1997 was
primarily due to interest expense on the Senior Notes and the
Credit facility, which were in place all of fiscal 1997 and only
two months of fiscal 1996.
The increase in net interest expense for fiscal 1996 was
primarily due to interest expense of $3.6 million on the Senior
Notes and $0.5 million on the Credit Facility which was
partially offset by the decrease in interest expense as a result of
repayment of historical debt prior to maturity and increase in
interest income to $2.4 million for fiscal 1996 from $1.7 million
for fiscal 1995.
16
<PAGE>
Income Taxes
The following sets forth, for the periods indicated, income taxes
of the Company.
<TABLE>
<CAPTION>
(dollars in millions)
____________________________________________
1997stub 1997 1996 1995
(35 Wks) (53 Wks) (52 Wks) (52 Wks)
________ ________ ________ ________
<S> <C> <C> <C> <C>
Income tax expense (benefit)..............($3.2) $.3 $9.1 $11.4
Income tax (benefit) effective rate.......(24.5%) 31.2% 36.3% 37.8
Increase (decrease) in rate from prior
year.................................... n/m (5.1%) (1.5%) 1.1%
</TABLE>
The decrease in income taxes for fiscal 1997 stub was
due to a loss in pretax earnings.
The decrease in income taxes for fiscal 1997 principally
resulted from lower pretax earnings and a decrease in the
effective tax rate which was primarily due to credits applicable
to state income taxes.
The decrease in income taxes for fiscal 1996 principally
resulted from lower pretax earnings and a decrease in the
effective tax rate which was principally due to the elimination
of inter-company profit of a wholly owned subsidiary which
previously was not included in the consolidated tax return.
Extraordinary Item
In the second quarter of fiscal 1997 stub, in connection
with the acquisition of Delchamps, the Company incurred cost
of $1.4 million for the early retirement of debt, net of an income
tax benefit of $0.5 million.
In the fourth quarter of 1996 in connection with the
Merger, the Company retired $35.7 million in long-term debt
prior to its scheduled maturity. Prepayment penalties associated
with early retirement of this debt resulted in an extraordinary
loss of $1.5 million, net of an income tax benefit of $0.9
million.
Net Earnings (Loss)
The following sets forth, for the periods indicated, net
operations of the Company.
<TABLE>
<CAPTION>
(dollars in millions)
____________________________________________
1997stub 1997 1996 1995
(35 Wks) (53 Wks) (52 Wks) (52 Wks)
________ ________ ________ ________
<S> <C> <C> <C> <C>
Net earnings (loss)..................... ($10.8) $.7 $14.5 $18.8
Increase (decrease) from prior year..... n/m ($13.8) ($4.3) $1.6
Net earnings (loss) percentage of
net sales............................. (0.94%) 0.06% 1.2% 1.6%
</TABLE>
17
<PAGE>
Changes in net earnings are due to the factors reflected
above.
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 and
acquisition of Delchamps, however, the Company has become
highly leveraged and has certain restrictions on its operations.
At January 3, 1998, the Company had $524.9 million of total
long-term debt (including capitalized leases and current
installments) and a shareholders' deficit of $167.9 million.
The Company's principal sources of liquidity are
expected to be cash flow from operations and borrowings under
the Senior Credit Facility. The Company has outstanding $7.5
million in letters of credit issued under the Senior Credit
Facility principally to secure obligations pursuant to a
capitalized lease. Borrowings outstanding at January 3, 1998
under the Senior Credit Facility were $49.8 million. The
commitments under the Senior Credit Facility will terminate,
and all loans outstanding thereunder will be required to be
repaid in full on March 15, 2004. Borrowings under the Senior
Credit Facility, including revolving loans and up to $30 million
in letters of credit, will not exceed the lesser of (i) the "Total
Commitment", which initially will be $150.0 million, and (ii)
an amount equal to the sum of (A) up to 65% of eligible
inventory (valued at the lesser of FIFO cost or market value) of
the Company and (B) the "Supplemental Availability", which
initially is $53.0 million. Each of the Total Commitment and
the Supplemental Availability will be reduced on a quarterly
basis commencing September 1998.
Cash provided by operating activities during fiscal 1997
stub was $37.2 million compared to $66.4 million for fiscal
1997 and $55.5 million for fiscal 1996. In fiscal 1997 stub,
cash provided by operating activities decreased primarily due
to the operating loss. In fiscal year 1997, inventories decreased
due to an inventory reduction plan implemented by
management and accounts payable increased by improving
vendor terms to industry standards. These working capital
improvements were partially offset by the reduction in net
earnings due principally to the increase in cash interest expense
as a result of additional borrowing activities discussed above.
The principal reason for the increase of cash provided by
operating activities for fiscal 1996 was a decrease in
inventories due, in part, to store closings and a decrease in
receivables which reflects a reduction in the uncollected
billbacks due from vendors.
Net cash used in investing activities was $239.2 million
in fiscal 1997 stub, $22.3 million for fiscal 1997 and $4.2
million for fiscal 1996. Cash invested for fiscal 1997 stub was
primarily used for the purchase of Delchamps. Capital
expenditures were $36.9 million for fiscal 1997 stub, $24.1
million for fiscal 1997 and $30.1 million for fiscal 1996. In
addition to capital expenditures related to new stores opened in
fiscal years 1997 and 1996 the Company had several
significant expansion and conversion projects in fiscal 1997
stub, 1997 and 1996.
Net cash provided by financing activities was $199.6
18
<PAGE>
million in fiscal 1997 stub. Net cash used in financing
activities was $35.4 million for fiscal 1997 and $65.8 million
for fiscal 1996. The principal source of funds in financing
activities in fiscal 1997 stub was the issuance of the Senior
Subordinated Notes and the restated $150 million Senior Credit
Facility. The principal uses of funds in financing activities for
fiscal 1997 were the payment of long-term debt and capital
lease obligations. The main uses of funds in financing activities
in fiscal year 1996 were the redemption of Common Stock and
related merger costs, principal payments on debt and capital
lease obligations and payments of dividends to stockholders.
New stores, remodels, and conversions will continue to
be the most significant portion of planned capital expenditures.
Capital expenditure plans of the Company are frequently
reviewed and are modified from time to time depending on
cash availability and other economic factors.
The Company's expenditures to comply with
environmental laws and regulations at its grocery stores
primarily consist of those related to remediation of
underground storage tank leaks and spills and retrofitting
chlorofluorocarbon ("CFC") chiller units. The Company's
unreimbursed cost for remediation at the 16 facilities which
have had leaks or spills has not been material. All significant
required expenditures in connection with the cleanup of such
leaks and spills have been made at such locations except at
three recently discovered locations which are still undergoing
investigation and one location awaiting state approval of its
remediation plan. In addition, the Company has obtained
insurance coverage for bodily injury, property damage and
corrective action expenses resulting from releases of petroleum
products from underground storage tanks during the covered
period at all 58 locations. The Company spent $130,000,
$914,000, $468,000 and $515,000 for retrofitting CFC-
containing chiller units during fiscal 1997 stub, fiscal 1997,
fiscal 1996 and fiscal 1995, respectively. Between
approximately $300,000 and $500,000 in expenditures are
contemplated for retrofitting the CFC units and between
approximately $455,000 and $755,000 in expenditures are
contemplated for tank upgrading to comply with 1998 tank
standards or closure in fiscal 1998. These regulatory
compliance costs are not covered by insurance.
Cost Reduction Opportunities
As part of its ongoing process of reviewing and
controlling operating costs, management has begun to
implement initiatives designed to result in cost savings. Areas
which the Company believes offer the greatest potential for
such savings include, but are not necessarily limited to,
improved labor scheduling, which the Company is currently
implementing across its stores, inventory category management
programs, which the Company began implementing during
fiscal year 1997 and will continue to implement over the next
12 months, reductions in inventories held primarily at store
level and improved terms with various merchandise suppliers,
which was implemented successfully in fiscal 1997, and a
reduction in annual overhead spending related to headcount
reductions that the Company began implementing in May
1997. There can be no assurance that any cost savings will be
achieved by the Company as a result of such initiatives.
19
<PAGE>
Inflation
As is typical of the supermarket industry, the Company
has adjusted its retail prices in response to price trends. During
the past three years, there has been an overall lack of inflation
in food prices.
Year 2000
The Company has initiated a company-wide program to
identify and address issues associated with the ability of its date-
sensitive information and business systems to properly recognize
the year 2000 in order to avoid interruption of the operations of the
Company. Systems are being reviewed by a management
information services team, which is coordinating the efforts of
internal resources as well as third party vendors in making the
necessary changes to the Company's systems. Based on
preliminary information, under current costs estimates for these
changes will not have a material effect on the Company's financial
statements. However, if the Company or its vendors are unable to
resolve such processing issues in a timely manner, it could result in
material risk.
20
<PAGE>
<TABLE>
<CAPTION>
Item 8. Financial Statements and Supplementary Data
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands Except Per Share Amounts)
_______________________________________________________________________________
January 3, May 3, April 27,
ASSETS 1998 1997 1996
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $11,984 $14,426 $5,676
Investments in debt securities 337
Receivables 13,833 5,463 4,892
Merchandise inventories 162,786 64,619 77,445
Prepaid expenses and other 11,570 1,213 5,155
Deferred income taxes 15,681 2,152 376
_________ ________ ________
Total current assets 215,854 87,873 93,881
PROPERTY AND EQUIPMENT, at cost:
Land 14,442 2,648 2,782
Buildings 34,776 26,370 22,537
Fixtures and equipment 264,192 167,241 165,202
Property under capital leases 88,995 74,089 76,371
Leasehold improvements 67,414 41,518 39,003
_________ ________ ________
Total 469,819 311,866 305,895
Less accumulated depreciation 166,045 140,378 130,480
_________ ________ ________
Net property and equip 303,774 171,488 175,415
_________ ________ ________
GOODWILL, net of amortization of 142,415
OTHER ASSETS 32,237 8,484 9,707
_________ ________ ________
TOTAL ASSETS $694,280 $267,845 $279,003
========= ======== ========
See notes to consolidated financial statements.
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
______________________________________________________________________________________
January 3, May 3, April 27,
LIABILITIES AND STOCKHOLDERS' DEFICIT 1998 1997 1996
<S> <C> <C> <C>
CURRENT LIABILITIES:
Accounts payable $112,641 $49,978 $40,008
Accrued expenses:
Personnel costs 13,823 9,350 6,042
Payable to dissenting former shareholders of
Delchamps, Inc. 26,637
Taxes, other than income taxes 17,956 8,436 6,738
Insurance claims 19,886 5,972 4,110
Interest 15,017 4,298 3,742
Other 8,876 5,032 2,533
Current portion of capital leases 6,760 4,899 4,259
Current portion of restructuring obligation 14,927
________ ________ ________
Total current liabilities 236,523 87,965 67,432
Long-term debt 449,831 208,000 239,059
Obligations under capital leases, excluding
current installments 68,321 57,361 57,906
Restructuring obligation, excluding current
installments 40,588 2,202 1,237
Deferred income taxes 3,875 6,398 8,196
________ ________ ________
Total liabilities 799,138 361,926 373,830
COMMITMENTS AND CONTINGENCIES (Notes 8, 9, 12 and 20)
REDEEMABLE PREFERRED STOCK, aggregate
liquidation preference value of $65,077 (1998),
$60,086 (1997) and $52,342 (1996) 63,042 57,921 49,988
STOCKHOLDERS' DEFICIT:
Class C Preferred Stock - Series 1 (at
liquidation preference value) 9,071 8,502 7,604
Common stock ($.01 par value, authorized 5,000,000
shares, issued and outstanding 425,000 shares) 4 4 4
Additional paid-in capital (302,326) (302,326) (302,326)
Retained earnings 125,351 141,818 149,903
________ ________ ________
Total stockholders' deficit (167,900) (152,002) (144,815)
________ ________ ________
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $694,280 $267,845 $279,003
========= ======== ========
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars In Thousands Except Per Share Amounts)
_______________________________________________________________________________________________________________________________
Year Ended
35 Weeks _______________________________________________________________
Ended Jan- May 3, April 27, April 29,
uary 3, 1998 1997 1996 1995
<S> <C> <C> <C> <C>
NET SALES $1,145,129 $1,228,533 $1,179,318 $1,173,927
COSTS AND EXPENSES:
Cost of sales 859,460 925,446 887,255 885,739
Direct store expenses 206,945 205,250 198,579 193,875
Warehouse, administrative and general 57,130 57,800 55,507 53,270
Interest expense, net 31,608 36,215 13,000 10,823
Special charges 3,117 2,737
__________ __________ __________ __________
Total cost and expenses 1,158,260 1,227,448 1,154,341 1,143,707
__________ __________ __________ __________
Earnings (loss) before income taxes
and extraordinary item (13,131) 1,085 24,977 30,220
INCOME TAX EXPENSE (BENEFIT) (3,224) 339 9,062 11,417
__________ __________ __________ __________
Earnings (loss) before extraordinary item (9,907) 746 15,915 18,803
EXTRAORDINARY ITEM, net of
income tax benefit of $518 (1998)
and $866 (1996) (870) (1,456)
__________ __________ __________ __________
NET EARNINGS (LOSS) ($10,777) $746 $14,459 $18,803
========== ========== ========== ==========
EARNINGS (LOSS) PER
COMMON SHARE:
Before extraordinary item ($36.39) ($16.26) $185.85 $923.15
Extraordinary item (2.05) (18.13)
__________ __________ __________ __________
Net earnings (loss) per common share ($38.44) ($16.26) $167.72 $923.15
========== ========== ========== ==========
EARNINGS (LOSS) PER COMMON
SHARE - ASSUMING DILUTION:
Before extraordinary item ($36.39) ($16.26) $162.88 $923.15
Extraordinary item (2.05) (15.96)
__________ __________ __________ __________
Net earnings (loss) per common
share - assuming dilution ($38.44) ($16.26) $146.92 $923.15
========== ========== ========== ==========
See notes to consolidated financial statements.
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Dollars In Thousands Except Per Share Amounts)
_______________________________________________________________________________________________________
Class C Preferred
Stock, Series 1 Common Stock Additional
_________________ _________________
Number Number Paid-in Retained
of Share Amount of Share Amount Capital Earnings
<S> <C> <C> <C> <C> <C> <C>
BALANCE, APRIL 30, 1994 20,368 $1,061 $1,807 $121,989
Cash dividends ($169.09 per share) (3,444)
Net earnings 18,803
_______ ______ ________ ________
BALANCE, APRIL 29, 1995 20,368 1,061 1,807 137,348
Cash dividends ($92.15 per share) (1,877)
Net earnings 14,459
Issuance 76,042 $7,604 425,000 4 7,377
Redempti (20,368) (1,061) (311,510)
Accretion of discount on Class A
Preferred Stock (27)
_______ _____ _______ _____ ________ _______
BALANCE, APRIL 27, 1996 76,042 7,604 425,000 4 (302,326) 149,903
Net earnings 746
Accretion of discount on Class A
Preferred Stock (189)
Cumulation of dividends on
Preferred Stock 898 (8,642)
_______ _____ _______ _____ ________ _______
BALANCE, MAY 3, 1997 76,042 8,502 425,000 4 (302,326) 141,818
Net loss (10,777)
Accretion of discount on Class A
Preferred Stock (130)
Cumulation of dividends on
Preferred Stock 569 (5,560)
_______ _____ _______ _____ ________ _______
BALANCE, JANUARY 3, 1998 76,042 $9,071 425,000 $4 $(302,326) 125,351
======= ===== ======= ===== ======== =======
See notes to consolidated financial statements.
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
Year Ended
35 Weeks ___________________________________________________________
Ended Jan- May 3, April 27, April 29,
uary 3, 1998 1997 1996 1995
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net earnings (loss) ($10,777) $746 $14,459 $18,803
Adjustment to reconcile net earnings (loss) to
net cash provided by operating activities:
Extraordinary item 870 1,456
Depreciation and amortization 31,243 31,319 27,323 25,444
Loss (gain) on disposition of property
and other assets (250) 1,899 817 1,037
Deferred income tax expense (benefit) (585) (3,574) 2,577 2,260
Decrease in restructuring obligation (453)
Changes in assets and liabilities:
Receivables (1,933) (571) 5,866 43
Inventories (3,520) 12,826 5,826 (3,621)
Prepaid expenses and other (6,599) 3,941 (2,011) (1,630)
Accounts payable 18,861 9,970 1,562 2,690
Accrued expenses 10,304 9,923 (2,356) 644
_________ _________ ________ _________
Net cash provided by operating
activities 37,161 66,479 55,519 45,670
_________ _________ ________ _________
INVESTING ACTIVITIES:
Capital expenditures (36,951) (24,099) (30,111) (23,921)
Proceeds from sale of property and other assets 1,069 1,477 2,617 1,210
Purchase of Delchamps, Inc., net
of cash acquired (204,036)
Purchase of investments in debt securities (23,026) (65,416)
Maturities of investments in debt securities 738 337 46,301 42,096
_________ _________ ________ _________
Net cash used in investing activities (239,180) (22,285) (4,219) (46,031)
_________ _________ ________ _________
FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt 249,831 239,059
Proceeds from issuance of stock and warrants 35,840
Redemption of common stock (286,824)
Payments on long-term debt (22,463) (31,059) (38,412) (2,431)
Debt issue costs (24,852) (8,214)
Payments on capital lease obligations (2,939) (4,385) (5,355) (4,342)
Dividends paid (1,877 (3,444)
_________ _________ ________ _________
Net cash provided by (used in)
financing activities 199,577 (35,444) (65,783) (10,217)
_________ _________ ________ _________
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (2,442) 8,750 (14,483) (10,578)
CASH AND CASH EQUIVALENTS:
Beginning of period 14,426 5,676 20,159 30,737
_________ _________ ________ _________
End of period $11,984 $14,426 $5,676 $20,159
========= ========= ======== =========
(Continued)
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
_______________________________________________________________________________________________________________________________
Year Ended
35 Weeks _______________________________________________
Ended Jan- May 3, April 27, April 29,
uary 3, 1998 1997 1996 1995
<S> <C> <C> <C> <C>
NON-CASH INVESTING AND FINANCING
ACTIVITIES:
Payable to dissenting former shareholders
of Delchamps, Inc. $ 26,637
Accrued direct acquisition costs of =========
Delchamps, Inc. $ 5,704
=========
Capital lease obligations incurred $ 3,538 $ 7,971 $ 3,158
Preferred stock issued during Recapitalization: ========= ======== ========
in exchange for receivables and common stock $ 184
in settlement of deferred compensation obligation 712
in redemption of common stock 27,446
Common stock issued during Recapitalization:
in exchange for notes receivable 176
in redemption of common stock 588
________
$ 29,106
========
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest $ 21,021 $ 35,902 $ 12,915 $ 12,534
========= ========= ======== ========
Cash paid for income taxes, net of refunds $ 4,799 $ (1,521) $ 7,700 $ 10,283
========= ========= ======== ========
See notes to consolidated financial statements. (Concluded)
</TABLE>
26
<PAGE>
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THIRTY-FIVE WEEKS ENDED JANUARY 3, 1998 AND THE YEARS ENDED MAY 3, 1997,
APRIL 27, 1996 AND APRIL 29, 1995
(Dollars in Thousands Except Per Share Amounts)
________________________________________________________________________
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Nature of Operations and Basis of Presentation - The
Company operates supermarkets and gasoline stations located
in six southeastern states primarily using distribution centers
located in Jackson, Mississippi.
The consolidated financial statements include those of Jitney-
Jungle Stores of America, Inc. and its wholly-owned
subsidiaries, Delchamps, Inc., Southern Jitney Jungle
Company, Interstate Jitney Jungle Stores, Inc., McCarty-
Holman Co., Inc. and subsidiary, and Jitney Jungle Bakery,
Inc. All material intercompany profits, transactions and
balances have been eliminated.
b. Use of Estimates - The consolidated financial statements are
prepared in conformity with generally accepted accounting
principles which require management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and 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. Actual
results could differ from those estimates.
c. Investments in Debt Securities - Debt securities have been
categorized as available for sale and as a result are stated at
fair value. The cost of debt securities is adjusted for
amortization of premiums and accretion of discounts to
maturity. Such amortization and interest are included in
interest income. Realized gains and losses are included in
other income or expense. The cost of securities sold is based
on the specific identification method.
d. Inventories - Substantially all inventories are stated at the
lower of cost using the last-in, first-out method or market.
e. Capitalization, Depreciation and Amortization - The cost of
property, fixtures, equipment and improvements is
depreciated and amortized by the straight-line method over
the estimated useful lives of the assets. The estimated useful
lives of buildings range up to forty years and the estimated
useful life of fixtures and equipment is eight years. Assets
under capital leases are recorded at the lower of fair value or
the present value of future minimum lease payments. These
assets and leasehold improvements are amortized by the
straight-line method over their primary lease term. License
and franchise rights are amortized by the straight-line method
over twenty years. Debt issue costs are amortized over the
life of the related debt by the interest method. At each
balance sheet date the Company evaluates the recoverability
of property, equipment and other long-term assets based upon
expectations of nondiscounted cash flows and operating
income.
f. Goodwill - Goodwill relates primarily to the excess of
purchase price over fair value of net assets acquired in the
acquisition of Delchamps, Inc. Such costs are being
amortized over 40 years by the straight-line method.
27
<PAGE>
g. Store Opening/Closing Costs - Non-capital expenditures
incurred for new or remodeled retail stores are expensed as
incurred. When a store is closed, the remaining investment in
fixtures and leasehold improvements, net of expected salvage,
is charged against earnings; any remaining lease liability, net
of expected sublease recovery, is also expensed.
h. Income Taxes - Deferred tax liabilities and assets are
determined based on the differences between the financial
statement and tax bases of assets and liabilities using enacted
tax rates in effect in the years in which the differences are
expected to reverse.
i. Cash Equivalents - For purposes of reporting cash flows,
cash equivalents include investments with maturities of three
months or less when purchased.
j. Per Share Amounts - Earnings (loss) per common share and
earnings (loss) per common share - assuming dilution are
based on net income (loss) after preferred stock dividend
requirements and the weighted average number of shares
outstanding during each period. Earnings (loss) per common
share - assuming dilution includes shares attributed to
outstanding warrants and options granted to purchase
common stock unless inclusion results in antidilution of per
share amounts.
k. Reclassifications - Certain reclassifications have been made
in the prior years' consolidated financial statements to
conform to the method of presentation used in the current
period.
2. TRANSITIONAL PERIOD FINANCIAL DATA
In September 1997, the Company elected to change its fiscal year
end from the Saturday nearest April 30 to the Saturday nearest
December 31. The change of fiscal year resulted in a transition
period of thirty-five weeks beginning May 4, 1997 and ending
January 3, 1998, whereas the fiscal year ended May 3, 1997
includes the operations of fifty-three weeks and the fiscal years
ended April 27, 1996 and April 29, 1995 include the operations of
fifty-two weeks.
Presented below are the unaudited consolidated results of
operations for the comparable thirty-six week period ended
January 4, 1997.
<TABLE>
<CAPTION>
<S> <C>
Net sales $ 832,905
Cost of sales 630,129
Direct store expense 139,740
Warehouse, administrative and general
expense 37,266
Interest expense, net 25,207
__________
Earnings before income taxes 563
Income taxes 210
__________
Net earnings $ 353
==========
Loss per common share $ (11.26)
==========
</TABLE>
3. DELCHAMPS ACQUISITION
On September 12, 1997, Delta Acquisition Corporation ("DAC"), a
wholly-owned subsidiary of the Company, completed an all cash
tender offer for shares of Delchamps, Inc. ("Delchamps"), an
Alabama corporation, and accepted for payment approximately
75% of such shares. On November 4, 1997, DAC was merged with
and into Delchamps. Delchamps was the surviving corporation and
28
<PAGE>
became a wholly-owned subsidiary of the Company. Delchamps is
engaged in the business of retail food distribution through
supermarkets located in Alabama, Florida, Louisiana, and
Mississippi. This acquisition has been accounted for under the
purchase method.
Holders of certain Delchamps shares dissented from the merger and
indicated their intent to pursue their legal remedy under Alabama
law. At January 3, 1998, the Company had a remaining liability of
$26,637 representing approximately 888,000 shares (this includes
dissenting shareholders and other unredeemed shares).
The purchase price for the Delchamps acquisition was $236,377,
including direct acquisition costs. An affiliate of the Company's
majority shareholder was paid fees of approximately $4,000 for
services rendered in connection with the acquisition, including the
arranging of financing. The excess of the purchase price over the
fair values of the net assets acquired was $143,520 and has been
recorded as goodwill, which is being amortized on the straight-line
basis over forty years.
The results of operations of Delchamps have been included in the
Company's consolidated financial statements since September 12,
1997. The purchase price, net of cash acquired of $84, has been
allocated to the assets acquired and liabilities assumed based upon
the fair values at the date of acquisition, as follows:
<TABLE>
<CAPTION>
<S> <C>
Receivables and other current assets $12,597
Inventory 95,516
Property, equipment and leasehold improvements 123,606
Deferred income tax assets 15,468
Other assets 2,106
Goodwill 143,520
Accounts payable and accrued expenses (72,448)
Notes payable and long-term debt, immediately r (14,463)
Capital lease obligations (15,760)
Restructuring obligation (53,765)
________
Purchase price $236,377
========
</TABLE>
The following unaudited pro forma information presents a
summary of consolidated results of operations of the Company and
Delchamps as if the acquisition had occurred at the beginning of
the periods presented.
<TABLE>
<CAPTION>
35 Weeks Year Ended
Ended Jan- May 3,
uary 3, 1998 1997
<S> <C> <C>
Net sales $1,434,059 $2,159,542
Cost of sales 1,071,595 1,596,277
Expenses, net of interest 324,792 492,250
Interest expense, net 42,945 67,816
Income tax expense (benefit) (130) 2,994
__________________________________
Net (earnings) loss $ ($5,143) $ $205
========== ==========
Loss per common share $ ($25.18) $ ($17.53)
========== ==========
</TABLE>
29
<PAGE>
These unaudited pro forma results have been prepared for
comparative purposes only and include certain adjustments, such as
additional depreciation expense as a result of the step-up in the
basis of fixed assets, additional amortization of goodwill, increased
interest expense on acquisition debt and certain synergies expected
to result from the integration of Delchamps' operations with those
of the Company. They do not purport to be indicative of the results
of operations that would have occurred if the acquisition had been
made as of those dates. In addition, the pro forma information is
not intended to be a projection of future results.
4. RECAPITALIZATION
On March 5, 1996, JJ Acquisitions Corp. ("JJAC") merged with
and into the Company with the Company continuing as the
surviving corporation (the "Recapitalization"). JJAC was a wholly-
owned subsidiary of Bruckmann, Rosser, Sherrill & Co., L.P. (the
"Fund"). Upon consummation of the Recapitalization, 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 Recapitalization.
The Recapitalization was accounted for by a charge to equity of
$312,571 to reflect the redemption of common stock of the
Company outstanding immediately prior to the Recapitalization. A
closing fee of $4,000 was paid to the Fund Manager in connection
with the Recapitalization.
Prior to the Recapitalization JJAC issued 425,000 shares of
common stock for an aggregate of $6,500, issued an aggregate of
$22,500 in liquidation preference of Class A Preferred Stock,
issued $10,000 in liquidation preference of Class C Preferred
Stock, and issued warrants to purchase 75,000 shares of common
stock to the then holder (along with related investors) of 100% of
the Class A Preferred Stock and 15% of the Class C Preferred
Stock. The Company issued $27,446 in liquidation preference of
Class B Preferred Stock as part of the consideration to shareholders
at the time of the Recapitalization. In the Recapitalization the
common stock, Class A Preferred Stock, and Class C Preferred
Stock issued by JJAC were converted into like shares of the
Company and the Company assumed the obligations of JJAC under
the warrants.
5. INVESTMENTS IN DEBT SECURITIES
Investments in debt securities consisted of U.S. Treasury securities
which matured in fiscal year 1997. Proceeds from sale of
investments in debt securities were approximately $13,000 (1996)
and $6,100 (1995). Losses of $43 (1996) and gains of $14 (1995)
were realized on those sales.
6. INVENTORIES
Had the cost for all inventories been determined on the first-in,
first-out method, inventories would have been higher by
approximately $16,497 at January 3, 1998, $17,245 at May 3, 1997
and $18,227 at April 27, 1996. LIFO liquidations resulted in an
increase in net earnings of $708 and $148 in the 35 weeks ended
January 3, 1998 and the fiscal year ended May 3, 1997,
respectively. The effect on net earnings of LIFO liquidations in
fiscal years 1996 and 1995 was not material.
30
<PAGE>
7. OTHER ASSETS
Other assets, net of accumulated amortization of $6,862 (1998),
$3,916 (1997) and $3,059 (1996), consisted of the following:
<TABLE>
<CAPTION>
January 3, May 3, April 27,
1998 1997 1996
<S> <C> <C> <C>
Debt issue costs $ 27,770 $ 6,913 $ 7,917
License and franchise rights 1,749 746 838
Other 2,718 825 952
________ ________ ________
Total $ 32,237 $ 8,484 $ 9,707
======== ======== ========
</TABLE>
8. PROPERTY UNDER CAPITAL LEASES AND LEASE COMMITMENTS
Leased property capitalized in the financial statements is
summarized as follows:
<TABLE>
<CAPTION>
January 3, May 3, April 27,
1998 1997 1996
<S> <C> <C> <C>
Store property $85,826 $70,920 $76,371
Computer equipment 3,169 3,169
Less accumulated depreciation (34,925) (32,112) (32,993)
_______ _______ _______
$54,070 $41,977 $43,378
======= ======= =======
</TABLE>
Most store leases provide for contingent rentals based on
percentages of sales in excess of stipulated amounts. The leases
have primary terms ranging from five to twenty years and generally
contain renewal options. Portions of store space are sublet under
leases. The present value of future minimum lease payments
relative to capital leases is included in the financial statements as
obligations under capital leases. Lease liabilities are amortized
over the lease term using the interest method.
The future minimum rental commitments for capital leases and
noncancelable operating leases as of January 3, 1998, were as
follows:
<TABLE>
<CAPTION>
Capital Operating
Leases Leases
<S> <C> <C>
1998 $ 16,553 $ 40,546
1999 16,010 39,211
2000 15,492 37,551
2001 13,783 35,421
2002 12,871 34,279
Remaining balance 71,053 219,362
_________ __________
Total minimum lease commitments 145,762 $ 406,370
==========
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
Capital
Lease
<S> <C>
Less amount representing estimated
executory costs (taxes,
maintenance and insurance) $ 1,707
_________
Net minimum lease commitments 144,05
Less amount representing imputed interest 68,974
_________
Present value of minimum lease commitments 75,081
Current portion of obligations under
capitalized leases 6,760
_________
Obligations under capitalized leases,
less current $ 68,321
=========
</TABLE>
Minimum rental commitments have not been reduced by minimum
sublease rentals of $1,149 applicable to capital leases and $969
applicable to operating leases due in the future under noncancelable
subleases.
The following schedule shows the composition of total rental
expense for all operating leases:
<TABLE>
<CAPTION>
Year Ended
35 Weeks ____________________________________________
Ended Jan- May 3, April 27, April 29,
uary 3, 1998 1997 1996 1995
<S> <C> <C> <C> <C>
Minimum rentals $17,612 $10,717 $10,211 $10,075
Contingent rentals 230 325 346 328
Less: Sublease rentals (262) (288) (219) (323)
_______ _______ _______ _______
$17,580 $10,754 $10,338 $10,080
======= ======= ======= =======
</TABLE>
Rents, net of sublease income, paid to affiliated partnerships under
long-term lease commitments were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Capital leases $1,999 $3,062 $3,017 $3,001
Operating leases 369 331 334 321
______ ______ ______ ______
$2,368 $3,393 $3,351 $3,322
====== ====== ====== ======
</TABLE>
Obligations to affiliated partnerships under capital leases were
$11,639 at January 3, 1998, $8,602 at May 3, 1997 and $9,150 at
April 27, 1996.
9. LONG-TERM DEBT
Long-term debt consisted of the following:
32
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Senior Notes $200,000 $200,000 $200,000
Senior Subordinated Notes 200,000
Senior Credit Facility 49,831 8,000 39,059
________ _________ ________
$449,831 $208,000 $239,059
======== ======== ========
</TABLE>
Aggregate maturities of long-term debt for the fiscal years
following January 3, 1998 are as follows:
2004 $ 49,831
2006 200,000
2007 200,000
__________
$ 449,831
==========
In September, 1997 the Company issued $200,000 of unsecured
Senior Subordinated Notes which mature on September 15, 2007
and accrue interest at the rate of 10 3/8% per annum payable semi-
annually. The proceeds from issuance of the Senior Subordinated
Notes were used to fund a portion of the Delchamps acquisition
consideration (see Note 3). The Senior Subordinated Notes are
subordinated in right of payment to the Senior Notes and the Senior
Credit Facility. Except under certain conditions, the Senior
Subordinated Notes are not redeemable at the Company's option
prior to September 15, 2002. Thereafter, the Senior Subordinated
Notes are subject to redemption at the option of the Company at
105.188% of principal amount if redeemed during the twelve-
month period beginning September 15, 2002 decreasing to 100% of
the principal amount if redeemed during the twelve-month period
beginning September 15, 2005 and thereafter plus accrued and
unpaid interest thereon.
In March, 1996 the Company issued $200,000 of unsecured Senior
Notes which mature on March 1, 2006 and accrue interest at the
rate of 12% per annum payable semi-annually. The proceeds from
issuance of the Senior Notes were used to fund a portion of the
Recapitalization consideration (see Note 4). Except under certain
conditions, the Senior Notes are not redeemable at the Company's
option prior to March 1, 2001. Thereafter, the Senior Notes are
subject to redemption at the option of the Company at 106% of
principal amount if redeemed during the twelve-month period
beginning March 1, 2001 decreasing to 100% of the principal
amount if redeemed during the twelve-month period beginning
March 1, 2004 and thereafter plus accrued and unpaid interest
thereon.
In the event of a change of control as defined in the Indenture,
holders of Senior Notes and the Senior Subordinated Notes have
the right to require the Company to repurchase all or any part of
such holder's notes at a price in cash equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid interest
thereon.
The Company entered into a revolving credit agreement in March
1996 with several banks which provided a $100,000 Credit Facility
and subsequently, in September 1997, the Company amended and
restated the agreement to provide a $150,000 Senior Credit
Facility. The Credit Facility and the Senior Credit Facility were
used to finance a portion of the Delchamps acquisition and the
Recapitalization consideration, to refinance certain indebtedness,
and to provide for working capital requirements. The
commitments under the Senior Credit Facility will terminate and all
loans outstanding thereunder will be required to be repaid in full in
March, 2004. Borrowings under the Senior Credit Facility,
33
<PAGE>
including revolving loans and up to $30,000 in letters of credit, are
limited to the lesser of (i) the "total commitment" which initially
was $150,000 and (ii) an amount equal to the sum of (a) up to 65%
of eligible inventory (valued at the lesser of FIFO cost or current
market) and (b) the "supplemental availability" which initially was
$53,000. Each of the total commitment and the supplemental
availability will be reduced on a quarterly basis, commencing
September 1998. The interest rates on borrowings under the Senior
Credit Facility are, at the Company's option, a function of the
bank's prime rate or LIBOR. The weighted average interest rate of
loans under the Senior Credit Facility was 8.89% at January 3,
1998, 8.44% at May 3, 1997 and 8.62% at April 27, 1996. The
agreement requires the Company to pay a facility fee at an annual
rate of .425% (.50% before March 31, 1997) of the unused amount
available under the Senior Credit Facility. Letters of credit
aggregating $7,461 at January 3, 1998 and $10,481 at May 3, 1997
and April 27, 1996 were outstanding under the Senior Credit
Facility.
The Senior Notes and Senior Subordinated Notes are guaranteed on
a full, unconditional and joint and several basis by each of the
Company's subsidiaries. The Senior Credit Facility is guaranteed
by each of the Company's subsidiaries. In addition, obligations
under the Senior Credit Facility are secured by a first lien on all of
the Company's and its subsidiaries' assets.
The Senior Credit Facility and the Indenture pursuant to which the
Senior Notes and Senior Subordinated Notes were issued contain
numerous covenants which, among other things, restrict or limit the
incurrence of indebtedness, payments of dividends and
distributions, and capital expenditures. The Senior Credit Facility
also contains numerous financial covenants, the more significant of
which relate to leverage ratio, interest coverage ratio and cash
flows. As of January 3, 1998 the Company was in compliance with
the covenants under its debt agreements.
10. RESTRUCTURING OBLIGATION
In connection with the Delchamps acquisition, the Company
recorded a restructuring obligation of $54,364 relating to (i) stores
closed by Delchamps prior to the acquisition; (ii) Delchamps stores
to be closed after the acquisition because of unprofitability; (iii)
Company and Delchamps stores required to be divested under a
consent decree with the Federal Trade Commission; (iv) closure of
the Delchamps headquarters in Mobile, Alabama; and (v) closure of
the Delchamps warehouse facility in Hammond, Louisiana. The
$54,364 consists of $45,291 of future rental payments, $1,591 of
severance costs, $474 of loss on divestiture of fixed assets, and
$7,008 of miscellaneous expenses related mainly to the shutdown
of the Mobile and Hammond facilities.
Of the total restructuring costs, $53,765 was recorded as goodwill
as part of the purchase price allocation in the Delchamps acquisition
and $599 was included as a special charge in the 1998 statement of
operations. Charges against the restructuring obligation in 1998
were $770, consisting mainly of lease payments.
The obligations at May 3, 1997 and April 27, 1996 represent
remaining payments under leases related to stores closed in prior
years.
Since January 3, 1998, seventeen supermarkets and one gasoline
station have been closed or sold, including ten stores that were
required to be sold pursuant to the consent agreement with the
Federal Trade Commission.
34
<PAGE>
11. INCOME TAXES
Income taxes were composed of the following:
<TABLE>
<CAPTION>
Year Ended
35 Weeks ___________________________________
Ended Jan- May 3, April 27, April 29,
uary 3, 1998 1997 1996 1995
<S> <C> <C> <C> <C>
Current provision (benefit) ($3,157) $3,913 $6,485 $9,157
Deferred provision (benefit) (585) (3,574) 2,577 2,260
_______ ______ ______ _______
Total ($3,742) $339 $9,062 $11,417
======= ====== ====== =======
</TABLE>
The income tax provision (benefit) varied from the federal statutory
rate of 35% as follows:
<TABLE>
<CAPTION>
Year Ended
35 Weeks __________________________________________
Ended Jan- May 3, April 27, April 29,
uary 3, 1998 1997 1996 1995
<S> <C> <C> <C> <C>
Federal tax (benefit) at statutory rate ($5,081) $380 $8,742 $10,577
State income taxes (benefit),
net of federal tax effect (291) (25) 400 665
Non-deductible amortization 574
IRS assessments 428
Other 628 (16) (80) 175
________ _____ ______ _______
Income tax provision (benefit) ($3,742) $339 $9,062 $11,417
======== ===== ====== =======
</TABLE>
The sources of temporary differences and the related deferred
income tax effects were as follows:
<TABLE>
<CAPTION>
January 3, May 3, April 27,
1998 1997 1996
<S> <C> <C> <C>
CURRENT DEFERRED TAX ASSETS (LIABILITIES):
Inventory ($4,445) ($2,512) ($1,739)
Restructuring obligation 5,433
Accrued compensation and benefits 1,697 562 571
Deferred income 1,303 1,567
Accrued estimated insurance claims 6,766 2,228 1,538
Other 4,927 307 436
_______ _______ _______
Total net current deferred tax asset $15,681 $2,152 $376
======= ======= =======
NONCURRENT DEFERRED TAX (ASSETS) LIABILITIES:
Property and equipment $25,310 $12,975 $13,651
Restructuring obligation (15,447)
Capital leases (6,069) (6,710) (5,706)
Other 81 133 251
_______ _______ _______
Total net noncurrent deferred
tax liability $3,875 $6,398 $8,196
======= ======= =======
</TABLE>
35
<PAGE>
Refundable income taxes of $5,663 at January 3, 1998 and $3,890
at April 27, 1996 represent the carryback of the tax net operating
loss and the overpayment of estimated taxes, respectively. Such
amounts are included in prepaid expenses and other in the balance
sheet. Currently payable income taxes of $1,835 at May 3, 1997 are
included in accrued expenses.
The Company's income tax returns through fiscal year 1994 have
been examined by the Internal Revenue Service.
12. CAPITAL STOCK
Preferred Stock
Preferred stock consisted of the following:
<TABLE>
<CAPTION>
January 3, 1998 May 3, 1997 April 27, 1996
_____________________________________________________________________
Dividend Outstanding Liquidation Carrying Liquidation Carrying Liquidation Carrying
Class Rate Shares Preference Amount Preference Amount Preference Amount
<S> <C> <C> <C> <C> <C> <C> <C> <C>
A 15% 225,000 $ 29,479 $ 27,444 $ 26,722 $ 24,557 $ 22,500 $ 20,146
B 10% 274,460 32,740 32,740 30,685 30,685 27,446 27,446
C - Series 2 10% 23,958 2,858 2,858 2,679 2,679 2,396 2,396
_________ ________ _________ ________ _________ ________
Total Mandatorily Redeemable $ 65,077 $ 63,042 $ 60,086 $ 57,921 $ 52,342 $ 49,988
========= ======== ========= ======== ========= ========
C - Series 1 10% 76,042 $ 9,071 $ 9,071 $ 8,502 $ 8,502 $ 7,604 $ 7,604
========= ======== ========= ======== ========= ========
</TABLE>
The excess of liquidation preference over the carrying amount of
the Class A Preferred Stock is being accreted by periodic charges to
retained earnings to the mandatory redemption date.
Dividends on Class A Preferred Stock are payable quarterly.
Through March, 2001, such dividends are payable, at the
Company's option, either by cumulation to liquidation preference
or in cash and thereafter are payable in cash. Dividends on Class B
Preferred Stock and Class C Preferred Stock cumulate on an annual
compounding basis until paid. Cumulative dividends not declared
or paid on preferred shares aggregated $14,202 at January 3, 1998.
The Class A Preferred Stock is redeemable at the Company's
option, (i) at any time after March 1, 2001 at a price equal to the
then applicable liquidation preference plus accrued and unpaid
dividends and a prepayment premium or (ii) on or prior to March 1,
1999 with the proceeds of a public offering of common stock at a
price per share equal to 114% of the then applicable liquidation
preference plus accrued and unpaid dividends thereon. All of the
Class A Preferred Stock is required to be redeemed on or before
March, 2008 at a price per share equal to the then applicable
liquidation preference, plus accrued and unpaid dividends thereon.
The Class B Preferred Stock and Class C Preferred Stock, Series 2,
are redeemable at the Company's option at any time, in whole or in
part, at a price per share equal to the then applicable liquidation
preference, plus accrued and unpaid dividends. All of the Class B
Preferred Stock and all of the Class C Preferred Stock, Series 2, are
required to be redeemed in March, 2010 and March, 2011,
respectively, at a price per share equal to the then applicable
liquidation preference plus accrued and unpaid dividends
(including cumulated dividends). The Class C Preferred Stock,
Series 1, is not redeemable by the Company at any time.
36
<PAGE>
Under certain conditions, as defined, the Company is required to
offer to repurchase all shares of preferred stock. Upon a change in
control, the Company is required to offer to repurchase all shares of
the Class A Preferred Stock at 101% of the then applicable
liquidation preference plus accrued and unpaid dividends and all
shares of Class B Preferred Stock and all shares of Class C
Preferred Stock, Series 1 and Series 2, at 100% of the liquidation
preference thereof plus accrued and unpaid dividends. In addition,
the Company is required to offer to apply, subject to certain
limitations, net proceeds raised through a primary issuance of
securities junior to Class B Preferred Stock to repurchase shares of
Class B Preferred Stock.
Except as required by law and with respect to certain specified
matters, Class A Preferred Stock has no voting rights. Neither the
Class B Preferred Stock nor the Class C Preferred Stock has any
voting rights, except as required by law.
The Class A Preferred Stock is exchangeable (with cumulated
dividends) at the Company's option, in whole but not in part, for
subordinated exchange debentures of the Company. The exchange
debentures will pay interest from the date of the exchange at the
rate of 15% per annum, consisting of, at the Company's option,
additional exchange debentures or cash on or prior to March, 2001
and cash thereafter. The exchange debentures will mature in
March, 2008.
Class A Preferred Stock ranks senior to Class B Preferred Stock
and Class C Preferred Stock in right of payment of cash dividends,
liquidation preference and redemption (both mandatory and
optional). The Class C Preferred Stock ranks junior to the Class B
Preferred Stock in right of such cash payments.
The Senior Credit Facility and the Indenture (see Note 9) restrict
the Company's ability to pay cash dividends, exchange Class A
Preferred Stock for exchange debentures and redeem or repurchase
Class A Preferred Stock, Class B Preferred Stock, Class C
Preferred Stock and exchange debentures.
Warrants
Warrants to purchase 75,000 shares of common stock were issued
in conjunction with the Recapitalization (see Note 4) and were
outstanding as of May 3, 1997 and April 27, 1996. The warrants
were recorded at fair value of $881 at date of issue. The warrants
have an exercise price of $.01 per share and will expire in 2008.
13. STOCK OPTION PLAN
On October 25, 1996, the Board of Directors of the Company, who
also hold a majority of the Company's issued and outstanding
common stock, authorized the grant of stock options to certain
executives and key officers. During the period ended January 3,
1998, the Company adopted the Jitney-Jungle Stores of America,
Inc. 1997 Stock Plan (the "1997 Plan"). The 1997 Plan authorizes
grants of stock options covering 50,000 shares of the Company's
common stock. Grants under the 1997 Plan may take the form of
incentive or non-qualified stock options. Options vest one-third
each year. With certain exceptions, the options are granted for a
term of ten years.
Grants under the 1997 Plan are made at a price that is not less than
the fair market value as determined by the Board of Directors or a
Committee of the Board at the effective date of grant.
37
<PAGE>
The following is a summary of the stock option activity:
<TABLE>
<CAPTION>
Options Weighted Average
Outstanding Exercise Price
<S> <C> <C>
Balance at May 3, 1997 0 $0
Granted 37,660 98.57
______ ______
Balance at January 3, 1998 37,660 $98.57
====== ======
</TABLE>
The following table summarizes information about stock options
outstanding at January 3, 1998:
<TABLE>
<CAPTION>
Exercise Options Weighted Average Weighted Average
Price Range Outstanding Remaining Contractual Exercise Price
<S> <C> <C> <C>
$62.50 to $72.50 17,700 9.1 Years $69.90
$124.00 19,960 10.0 Years $124.00
</TABLE>
At January 3, 1998, options covering 1,533 shares were exercisable
at a price of $62.50 per share.
During the period ended January 3, 1998, The Company adopted
Statement of Financial Accounting Standards ("SFAS") No. 123,
"Accounting for Stock-Based Compensation," which requires
companies to estimate the fair value for stock options on the date of
grant. Under SFAS No. 123, the Company is required to record the
estimated fair value of stock options issued as compensation
expense in its statements of earnings over the related service
periods or, alternatively, continue to apply the accounting
methodologies as prescribed by Accounting Principles Board
("APB") Opinion No. 25, "Accounting for Stock Issued to
Employees," and disclose the pro forma effects of the estimated fair
value of stock options issued in the accompanying footnotes to its
financial statements. In adopting SFAS No. 123, the Company
decided to follow the accounting methodologies as prescribed by
APB Opinion No. 25.
The pro forma effects of the total compensation expense that would
have been recognized during the period ended January 3, 1998
under SFAS No. 123 are as follows:
<TABLE>
<CAPTION>
<S> <C>
Net loss, as reported $10,777
Pro forma net loss $10,870
Loss per share, as reported $38.44
Pro forma loss per share $38.66
</TABLE>
In adopting SFAS No. 123, the Company estimated the fair value of
stock options granted using the following assumptions:
<TABLE>
<CAPTION>
<S> <C>
Expected dividend yield None
Expected option life 6 Years
Risk-free interest rate 6.14%
</TABLE>
Based on the results of the computations, the weighted-average fair
value per option on the effective date of grant was $30.10
38
<PAGE>
14. EMPLOYEE BENEFIT AND COMPENSATION PLANS
The Company has a profit-sharing plan covering substantially all
employees with one or more years' service. Contributions are
made at the discretion of the Board of Directors of the Company.
Such expense totaled $1,013 in the 35 weeks ended January 3, 1998
and $1,200 in fiscal years ended in 1997, 1996, and 1995.
Prior to March 1996, the Company had a Phantom Stock Plan for
certain key officers whereby deferred compensation units
(expressed in shares of common stock) were earned to the extent
that performance targets (expressed in terms of growth in
stockholders' equity) were met. The amounts payable in
accordance with the provisions of the Phantom Stock Plan became
fully vested and immediately payable at the time of the
Recapitalization (see Note 4). Effective with the Recapitalization
$4,252 was paid to the participants and $712 was applied against
the purchase price for shares of Class C Preferred Stock acquired
by them in connection with the Recapitalization.
Effective with the Recapitalization the Phantom Stock Plan was
amended and restated and renamed the Deferred Compensation
Plan for Jitney-Jungle Stores of America, Inc. Under the amended
plan no further awards may be made and no other individuals will
become participants. Units credited to the participants consist of a
cash amount payable in accordance with the terms of the Phantom
Stock Plan before its amendment and an amount that will continue
to be credited under the terms of the plan to an account, the value
of which will be equal to the value of the number of shares of Class
C Preferred Stock of the Company that could be acquired with that
amount.
With respect to the amounts that continue to be credited under the
plan as amended, an amount equal to the amount of any cash
dividends that would have been paid on the number of shares of
preferred stock credited to each participant's account will be paid to
the participant at the same time as any cash dividends actually are
paid on the preferred stock. Payment otherwise will be made under
the amended plan at the same time as the preferred stock is
redeemed, in an amount equal to the redemption price times the
number (or proportionate number, in the event of a partial
redemption) of shares of preferred stock credited to the
participant's account.
15. SPECIAL CHARGES
Special charges consisted of the following:
<TABLE>
<CAPTION)
35 Weeks
Ended Jan- Year Ended
uary 3, 1998 3-May-97
<S> <C> <C>
Severance benefits $510 $958
Amounts due former chief executive officer 1,779
Fees related to bridge financing in the Delchamps acquisition 2,008
Loss on stores to be sold under the consent decree with the
Federal Trade Commission in the Delchamps acquisition 599
______ ______
$3,117 $2,737
====== ======
</TABLE>
39
<PAGE>
The $1,779 is attributable to the employment agreement with the
Company's then Chairman and Chief Executive Officer who, in
January 1997, relinquished his position and duties as Chief
Executive Officer. Payments to be made under the employment
agreement were deemed not to relate to future services to be
provided by the Chairman and, accordingly, such amounts were
charged to expense.
16. EXTRAORDINARY ITEM
In connection with the Delchamps acquisition in the 35 week
period ended January 3, 1998 and the Recapitalization in the fiscal
year ended April 27, 1996, the Company retired certain long-term
debt prior to its scheduled maturity. Early retirement of such debt
resulted in extraordinary losses of $870 (1998) and $1,456 (1996),
net of income tax benefits of $518 and $866, respectively.
17. EARNINGS (LOSS) PER COMMON SHARE
During the period ended January 3, 1998, the Company adopted
Statement of Financial Accounting Standards ("SFAS") No. 128,
"Earnings per Share." The adoption of SFAS No. 128 had no
effect on the previously reported earnings (loss) per common share
for prior years.
The following is a reconciliation of earnings (loss) before
extraordinary item as reported in the accompanying statements of
operations to earnings (loss) attributable to common stockholders
used in computing earnings (loss) per common share and in
computing earnings (loss) per common share - assuming dilution.
Also presented is a reconciliation of weighted average common
shares outstanding used in computing earnings (loss) per common
share to weighted average common shares used in computing
earnings (loss) per common share - assuming dilution.
<TABLE>
<CAPTION>
Year Ended
35 Weeks ________________________________________
Ended Jan- May 3, April 27, April 29,
uary 3, 1998 1997 1996 1995
<S> <C> <C> <C> <C>
Earnings (loss) before extra ($9,907) $746 $15,915 $18,803
Preferred stock dividends (5,560) (7,655) (987)
________ _______ _______ _______
Earnings (loss) attributable
to common stockholders ($15,467) ($6,909) $14,928 $18,803
======== ======= ======= =======
Weighted average common
shares outstanding 425,000 425,000 80,321 20,368
Warrants 10,920
________ _______ _______ _______
Weighted average common shares
outstanding - assuming
dilution 425,000 425,000 91,241 20,368
======== ======= ======= =======
</TABLE>
Warrants issued in 1996 to purchase 75,000 shares of common
stock have not been included in 1997 and 1998 and options granted
in the 35 weeks ended January 3, 1998 to certain executives and
key officers to purchase 37,660 shares of common stock have not
been included in 1998 to calculate the weighted average common
shares used in computing earnings (loss) per common share -
assuming dilution because to do so would have been antidilutive for
those periods.
40
<PAGE>
18. FAIR VALUES OF FINANCIAL INSTRUMENTS
In accordance with Statement of Financial Accounting Standards
(SFAS) No. 107, "Disclosures About Fair Value of Financial
Instruments", information is provided about the fair value of certain
financial instruments for which it is practicable to estimate that
value. The fair value amounts disclosed represent management's
best estimate of fair value. Certain financial instruments and all
nonfinancial instruments are excluded, in accordance with SFAS
No. 107. The aggregate fair value amounts presented are not
intended to represent the underlying aggregate fair value of the
Company.
The estimated fair values are significantly affected by assumptions
used, principally the timing of future cash flows, the discount rate,
judgments regarding current economic conditions, risk
characteristics of various financial instruments and other factors.
Because assumptions are inherently subjective in nature, the
estimated fair values cannot be substantiated by comparison to
independent quotes and, in many cases, the estimated fair values
could not necessarily be realized in an immediate sale or settlement
of the instrument. The following methods and assumptions were
used by the Company in estimating fair value disclosures for
financial instruments:
Cash and cash equivalents: The carrying amount reported in the
balance sheet approximates fair value.
Investments in debt securities: The securities are carried at fair
value and are based on quoted market prices.
Receivables, accounts payable and accrued expenses: The
carrying amount reported in the balance sheet approximates fair value.
Long-term debt: The fair value of the Company's Senior Notes
and Subordinated Notes is based on quoted market prices. The
interest rates on borrowings under the Senior Credit
Facility reset periodically. Consequently, the carrying value of
borrowings under the Senior Credit Facility approximates fair
value.
Redeemable preferred stock: The fair value of redeemable
preferred stock is estimated at carrying value as such stock is
not traded in the open market and a market price is not readily
available.
The carrying amounts and fair values of the Company's financial
instruments were as follows:
41
<PAGE>
<TABLE>
<CAPTION>
January 3, 1998 May 3, 1997 April 27, 1996
_________________________________________________________________________________
Carrying Fair Carrying Fair Carrying Fair
Amount Value Amount Value Amount Value
<S> <C> <C> <C> <C> <C> <C>
Cash and cash equivalents $11,984 $11,984 $14,426 $14,426 $5,676 $5,676
Investments in debt
securities 337 337
Receivables 13,833 13,833 5,463 5,463 4,892 4,892
Accounts payable 112,641 112,641 49,978 49,978 40,008 40,008
Accrued expenses 102,195 102,195 33,088 33,088 23,165 23,165
Long-term debt:
Senior Notes 200,000 237,182 200,000 217,000 200,000 204,700
Senior Subordinated Notes 200,000 210,867
Senior Credit Facility 49,831 49,831 8,000 8,000 39,059 39,059
Redeemable preferred stock 63,042 63,042 57,921 57,921 49,988 49,988
</TABLE>
19. ACCOUNTING STANDARD TO BE ADOPTED IN THE FUTURE
In June 1997, the Financial Accounting Standards Board issued
SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information" which is effective for fiscal years beginning
after December 15, 1997. SFAS No. 131 redefines how operating
segments are defined and requires disclosure of certain financial
and descriptive information about a company's operating segments.
The Company has not yet completed its analysis of which
operating segments it will report on.
20. COMMITMENTS AND CONTINGENCIES
The Company is defendant in certain litigation incurred in the
normal course of business. Management, after consulting legal
counsel, is of the opinion that the 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 1996, the Company entered into a five-year supply agreement,
which replaced a previously existing agreement, relating to
merchandise purchases for stores located in Memphis, Tennessee
and Little Rock and Pine Bluff, Arkansas.
In April 1997, 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 $5,250 is being amortized over the term
of the supply agreement.
In connection with the Delchamps acquisition, the Company
amended a pre-existing agreement whereby the Fund Manager is
entitled to receive $1,000 per year from the Company as a
management fee for the performance of strategic and financial
planning services. The amount of the annual management fee may
be increased up to one percent of the Company's earnings before
interest, income taxes, depreciation, amortization and certain
special charges, computed on a quarterly basis. Management fees
for the 35 weeks ended January 3, 1998 and the fiscal year ended
May 3, 1997 approximated $484 and $250, respectively.
* * * * * *
42
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Jitney-Jungle Stores of America, Inc.:
We have audited the accompanying consolidated balance sheets of
Jitney-Jungle Stores of America, Inc. and subsidiaries ("the Company")
as of January 3, 1998, May 3, 1997 and April 27, 1996, and the related
consolidated statements of operations, changes in stockholders' equity,
and cash flows for the thirty-five weeks ended January 3, 1998 and for
each of the three fiscal years in the period ended May 3, 1997. 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 audits.
We conducted our audits 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 audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Jitney-Jungle Stores of
America, Inc. and subsidiaries as of January 3, 1998, May 3, 1997 and
April 26, 1996, and the results of their operations and their cash flows
for the thirty-five weeks ended January 3, 1998, and for each of the three
fiscal years in the period ended May 3, 1997, in conformity with
generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Jackson, Mississippi
March 6, 1998
43
<PAGE>
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
There has been no change of accountants or reporting
disagreements on any matters of accounting principle, practice,
financial statement disclosure or auditing scope or procedure
during the 35 weeks ended January 3, 1998 and the two most
recent fiscal years.
PART III
Item 10. Directors and Executive Officers of the Registrant
Directors and Executive Officers
Name Age Position
W. H. Holman, Jr. 67 Chairman of the Board since 1967. Chief
Executive Officer of the Company from 1967
until January 1997. Member of the Board of
two private companies.
Michael E. Julian 47 Chief Executive Officer since January 1997
and formerly President of the
Company from May 1997 to December 1997.
Director of the Company since April 1996.
Prior to January 1997 served as
Chairman, President and Chief Executive
Officer of Farm Fresh, Inc. since 1988.
Mr. Julian is a member of the Compensation
committee.
Ronald E. Johnson 48 President and Chief Operating Officer since
December 1997. Director of the Company since
May 1996. Previously served as Retail
Grocery- President and Chief Executive Officer
of Farm Fresh, Inc. from January 1997 to
December 1997, Retail Grocery - Chairman,
President and Chief Executive Officer of
Kash n' Karry from 1995 to 1997 and Retail
Grocery - Executive Vice President
and Chief Operating Officer of Farm Fresh, Inc.
from 1988 to 1995. Mr. Johnson is a member of
the Audit committee.
Donald D. Bennett 61 Director of the Company since September 1997.
Chairman of the Board of Rich Food Holding,
Inc. since 1980. Member of the Board of
Directors of Rich Food Holdings, Inc.
44
<PAGE>
Directors and Executive Officers (Continued)
Name Age Position
Bruce C. Bruckmann 44 Director of the Company since March 1996 and a
principal in BRS. He was an officer and
subsequently a Managing Director of
Citicorp Venture Capital, Ltd. ("CVC") from
1983 through 1994. Member of the Board of
Directors or Chairman of the Board of
AmeriSource Distribution Corp., CORT Business
Services Corp., Chromcraft Revington, Inc.,
Mohawk Industries, Inc., Town Sports
International Inc. and Anvil Knitwear Inc. as
well as several private companies.
Bernard J. Ebbers 56 Director of the Company since August 1996.
President and Chief Executive Officer of
WorldCom, Inc. since 1983. Member of the
Board of Directors of WorldCom, Inc. Mr.
Ebbers is a member of the Compensation
committee.
Roger P. Friou 63 Director of the Company since June 1984.
Private investor since 1997. Prior to May
1997, served as President of the Company
from March 1996 and as Vice Chairman, Chief
Financial Officer, and Secretary of the
Company since 1991. Member of the Board of
Directors of Parkway Properties Inc.
Mr. Friou is a member of the Audit and
Compensation committees.
John M. Moriarty, Jr. 41 Director of the Company since April 1996. A
Managing Director of Donaldson, Lufkin &
Jenrette Securities Corporation since 1989
and a Managing Director of DLJ Merchant
Banking, Inc. since January 1996. Member of
the Board of Directors of a private company.
Mr. Moriarty is a member of Audit Committee.
Harold O. Rosser, II 49 Director of the Company since March 1996 and
a principal in BRS. He was an officer and
subsequently a Managing Director of
Citicorp Venture Capital, Ltd. ("CVC") from
1987 through 1995. Member of the Board of
Directors of Davco Restaurants, Inc., as
well as a private company. Mr. Rosser is the
Chairman of the Compensation committee.
45
<PAGE>
Directors and Executive Officers (Continued)
Name Age Position
Stephen C. Sherrill 45 Director of the Company since March 1996
and a principal in BRS. He was an officer
and a Managing Director of Citicorp Venture
Capital, Ltd. from 1983 through 1995. Member
of the Board of Directors of Galey & Lord,
Inc., and of several private companies. Mr.
Sherrill is the Chairman of the Audit
committee.
David R. Black 45 Senior Vice President - Finance/Chief
Financial Officer since 1996. Previously
served as Treasurer and Controller from 1986.
R. Barry Cannada 42 Executive Vice President - General Counsel
and Assistant Secretary since January, 1998.
Previously served as a Partner with the
law firm of Butler, Snow, O'Mara, Stevens &
Cannada, PLLC from 1981 to 1997.
David K. Essary 48 Executive Vice President from March 1996 until
January 1998 (resigned January 1998).
Previously served as Executive Vice President
- Retail Operations from 1991.
Harold D. Evans 53 Senior Vice President - Store Operations from
1993 until March 1998 (resigned March 1998).
Previously served as Vice President - Store
Operations from 1986.
J. R. Hansbrough 42 Senior Vice President - Information Services
from January 1996 to January 1998 (resigned
January 1998). Previously served as Vice
President - Information Services from 1994.
Prior to that was a consultant and marketing
representative with IBM Corporation from 1982.
Stephen R. Harmon 45 Executive Vice President - Marketing and
Merchandising since June 1997. Previously
served as Retail Grocery - Senior Vice
President - Merchandising of Farm Fresh, Inc.
from 1982 to June 1997.
W. H. Holman, III 34 Secretary of the Company since 1996 and also
serves as President of Pump And Save, Inc.
Previously served as Senior Vice President -
Sales and Marketing from 1992 and Vice
President - Sales and Marketing from 1991
and is the son of W. H. Holman, Jr. Member
of the Board of Directors of one private
company.
46
<PAGE>
Directors and Executive Officers (Continued)
Name Age Position
Jerry L. Jones 46 Senior Vice President - Administrative
Operations since April 1997. Senior Vice
President - Retail Operations March 1996
to April 1997. Previously served as Senior
Vice President - Human Resources since 1991.
Prior to that, served as Vice President,
Human Resources from 1989.
James P. Riley 48 Senior Vice President - Engineering since
1996. Previously served as Vice President
- Engineering from 1991 and Director of
Engineering Services from 1985.
Clyde D. Staley 60 Senior Vice President - Real Estate since
1996. Previously served as Vice President
- Real Estate from 1985.
Albert J. Wanzelak 47 Senior Vice President - Human Resources
since August 1997. Prior to that served
as Retail Grocery - Vice President - Human
Resources of Farm Fresh, Inc. from August
1987 to August 1997.
47
<PAGE>
Item 11. Executive Compensation
The following table summarizes the compensation paid to
or accrued by the Company for the chief executive officer and the
other four most highly compensated executive officers of the
Company during fiscal 1997 stub.
<TABLE>
<CAPTION>
Summary Compensation Table
________________________________________________________________________________________
Long-Term
Annual Compensation Compensation
_________________________________ ____________
Other
Annual All Other
Bonus Compen- LTIP Compen-
Salary and/or sation Payouts sation
Name and Principal Position Year <FN1> Severancs <FN2> <FN3> <FN4>
___________________________ ____ _____ _________ _______ __________ ________
<S> <C> <C> <C> <C> <C> <C>
W.H. Holman, Jr., Chairman 97stub $235,577 $117,788 $1,988 $10,583
<FN5> 1997 331,182 162,920 2,633 15,795
1996 315,100 121,193 2,216 $1,894,039 15,840
Michael E. Julian, CEO 97stub 253,846 248,077 1,353 263
1997 57,692 75,000
David K. Essary, Executive 97stub 127,212 263,606 1,627 102,384<FN6>
Vice President 1997 192,463 89,653 2,251 103,485<FN6>
(Resigned January 1998) 1996 176,700 67,307 1,745 110,229 103,425<FN6>
John R. Hansbrough, Senior 97stub 86,981 151,390 1,326 1,847
Vice President Information 1997 125,077 7,846 1,564 2,756
Services 1996 120,000 9,046 1,455 2,051
(Resigned January 1998)
David R. Black, Senior Vice 97stub 94,330 76,775 1,112 2,024
President Finance 1997 125,000 9,865 1,513 2,834
1996 120,768 13,846 1,327 2,820
Jerry L. Jones, Senior Vice 97stub 92,896 46,448 1,422 2,253
President Administrative 1997 133,000 33,250 1,790 3,149
Operations 1996 125,200 23,654 1,727 3,141
</TABLE>
<FN1> The amounts shown in this column include amounts contributed as salary
deferral contributions under the Jitney-Jungle Stores of America, Inc.
and Affiliates Profit Sharing Plan and Trust (the "401 (k) Plan").
<FN2> Other annual compensation includes the annual estimated value of an
automobile furnished by the Company.
<FN3> Includes distributions from the Phantom Stock Plan.
<FN4> Includes Company matching contributions under the 401(k) Plan,
Company profit sharing contributions under the 401(k) Plan and
premiums for group term life insurance.
<FN5> During fiscal 1997, the Company recognized a special charge of
approximately $1.8 million attributable to an employment agreement
which allows future payments to be received by Mr. Holman, of which
$365,936 was received by Mr. Holman in fiscal 1997 stub.
<FN6> Includes annual installments of $100,000 per year as per an employment
agreement with Mr. Essary.
48
<PAGE>
STOCK OPTION PLAN
The Company has in effect an employee stock option plan
pursuant to which options to purchase Common Stock of the
Company are granted to certain executives and key officers of the
Company. The following table shows option grants in the 1997
stub to the named executive officers:
<TABLE>
<CAPTION>
OPTION GRANTS IN 35 WEEKS ENDED JANUARY 3, 1998
___________________________________________________________________________________________________________
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERMS
_____________________________________________ __________________________________
Number of
Securities % of Total Exercise
Underlying Options or Base
Option Granted to Price Expiration
Name Grants <FN1> Employees ($/Sh) Date 0% <FN2> 5% <FN2> 10% <FN2>
____ ___________ __________ _______ _________ _________ _________ _________
<S> <S> <C> <C> <C> <C> <C> <C>
Michael E. Julian 13,100 34.8% $72.50 2/23/07 949,750 1,547,043 2,463,407
David R. Black 850 2.3% $62.50 10/24/06 53,125 156,083 349,212
Jerry Jones 1,200 3.2% $62.50 10/24/06 75,000 190,018 400,792
Other executive 20,385 54.1% 2,370,915 3,751,736 5,814,44
officers
Other officers 2,125 5.6% 263,500 482,444 845,265
</TABLE>
<FN1> All of the stock options granted to the officers are non-
qualified options and have a term of ten years from the date of
grant. Options granted to each officer become exercisable
based on length of service with the Company.
<FN2> The assumptions set forth in the chart above are merely
examples and do not represent predictions of future stock
prices or a forecast by the Company with regard to stock
prices. The dollar gains shown in these columns reflect a
future value based upon growth at the prescribed rates. The
column labeled 0% shows the value at the date of grant of
stock options whose exercise price was below the market
price of the Company's Common Stock at the date of grant.
No options were exercised during the fiscal year ended May 3,
1997.
49
<PAGE>
Directors Fees
Directors who are employees of the Company do not
receive additional compensation as directors. Directors who are
not employees receive directors' fees of $12,000 per year plus
$1,000 for each Board of Directors' meeting attended and $500 for
each committee meeting attended.
Committees and Meetings of the Board of Directors
The Board of Directors held four regular meetings during
fiscal 1997 stub. All directors attended at least 75% of the total
meetings of the Board of Directors and the committees of which
they were members.
The Company has an Audit Committee, which is a standing
committee of the Board of Directors, presently consisting of three
members who are Stephen C. Sherrill, Chairman, John M.
Moriarty, Jr. and Roger P. Friou. Audit Committee's
responsibilities include: (i) reviewing the plan, (ii)
scope and results of the independent audit and reporting to the full
Board whether financial information is fairly presented and
whether generally accepted accounting principles are followed, (iii)
monitoring the internal accounting and financial functions of the
Company to assure quality of staff and proper internal controls,
(iv) investigating conflicts of interest, (v) compliance with ethical
standards and compliance with laws and regulations. There were
no meetings of the Audit Committee during fiscal 1997 stub.
The Company has a Compensation Committee, which is a
standing committee of the Board or Directors, presently consisting
of Harold O. Rosser, Chairman, Roger P. Friou and Bernard J. Ebbers.
The Compensation Committee's responsibilities are to determine
annual salaries and bonuses to the Company's senior management
and to administer the Company's stock option and benefit programs.
There was one meeting of the Compensation Committee during fiscal
1997 stub.
Employment Agreements
W. H. Holman, Jr. has an employment contract with the
Company covering the period through February 28, 2001. The
agreement provides that Mr. Holman, Jr. will serve as Chairman
of the Board and as Chief Executive Officer, at the discretion of
the Board of Directors. The Board of Directors elected Michael
E. Julian as Chief Executive Officer in January 1997. If Mr.
Holman, Jr. ceases to be Chairman of the Board prior to February
28, 2001, he will continue to serve on the Board of Directors as
Chairman Emeritus until February 28, 2001, with a salary equal
to his base salary then in effect until February 28, 1999, and 50%
of such base salary thereafter. Mr. Holman, Jr. is also eligible for
a bonus through February 28, 1999.
Mr. Essary has an employment contract with the
Company providing for a base salary of approximately $186,000
per year for the period from March 1, 1995 through February 28,
1998. He is eligible for a bonus of up to 50% of his base salary
less $11,000. A provision in his employment contract states that
upon change in control of the Company, Mr. Essary will be
50
<PAGE>
awarded a payment of up to $300,000 to be paid in annual
installments of $100,000, beginning February 28, 1996. Mr.
Essary became entitled to receive such payments, with the first
$100,000 installment thereof paid in March 1996 after the
consummation of the Merger, the second installment paid in
March 1997 and the third installment was included in Mr.
Essary's severance payment. In January 1998, Mr. Essary
resigned from the Company.
W. H. Holman, III has an employment contract with the
Company covering the period through February 28, 1998 and will
serve, at the discretion of the Board of Directors, as Secretary of
the Company and as President of Pump and Save, Inc. Mr.
Holman, III will receive a base salary of no less than $110,000
per year through February 28, 1998, subject to periodic increases
as determined by the Board of Directors. Mr. Holman, III is also
entitled to a bonus of up to 50% of his base salary less $11,000.
401(k) Plan
The Company maintains the Jitney-Jungle Stores of
America, Inc. and Affiliates Profit Sharing Plan and Trust (the
"401(k) Plan") for the benefit of its employees who have satisfied
the plan's eligibility requirements. Participants are permitted to
make pretax salary reduction contributions, up to the amount
permitted under applicable tax law. The Company makes a
matching contribution equal to 50% of each participant's salary
reduction contribution, up to a maximum of 2% of the
participant's compensation. In addition, the Company may make
additional profit sharing contributions in its discretion. Although
in prior years the Company has made discretionary profit sharing
contributions, it has no obligation to do so in the future.
Company contributions become vested when the participant has
been credited with five years of service. In March 1996, shares
of Common Stock of the Company held under the 401(k) Plan
were surrendered in connection with the Merger, and exchanged
for cash and Class B Preferred Stock as provided in the Merger
Agreement. In addition, the plan acquired Common Stock and
Class C Preferred Stock for cash consideration.
The Company's 401(k) Plan and the Delchamps Profit
Sharing Plan are currently being merged into one plan. The
estimated completion date for this transaction is the summer of
1998. At the time of the merger, the 401(k) Plan will be amended
to bring it into compliance with the new statutory changes and the
plan year will be changed to a calendar year.
51
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners
and Management
The following table sets forth certain information
regarding the beneficial ownership of Common and Preferred
Stocks as of January 3, 1998, by (i) each director, (ii) the chief
executive officer and each of other most highly compensated
executive officers of the Company, (iii) all executive officers and
directors as a group and (iv) the Company's principal
stockholders. Other than as set forth in the table below, there are
no persons known to the Company to beneficially own more than
5% of the Common Stock. No Company securities are owned by
John M. Moriarty, Jr., Bernard J. Ebbers, Donald D. Bennett or
Ronald E. Johnson, each of whom is a director of the Company
(Mr. Johnson is also an executive officer of the Company).
<TABLE>
<CAPTION>
Number and Number and Number and Number and
Name and Address Percentage of Percentage of Percentage of Percentage of
for Beneficial Shares of Shares of Class A Shares of Class B Shares of Class C
Owners over 5% Common Stock Preferred Stock Preferred Stock Preferred Stock
________________ __________________ _________________ _________________ _________________
<S> <C> <C> <C> <C>
Bruckmann, Rosser,
Sherrill & Co., L.P. 353,750/83.24%<FN1> ---- ---- 75,508/75.51%
126 East 56th Street
New York, NY 10022
W. H. Holman, Jr. 29,699/6.99%<FN2> ---- 21,516/7.84%<FN3> 4,742/4.72%
Jitney-Jungle Stores
of America, Inc.
P. O. Box 3409
Jackson, MS 39207
DLJ Merchant <FN4) ---- ---- 15,000/15.00%
Banking Partners,
L.P. and related investors
277 Park Avenue
New York, NY 10172
Michael E. Julian 2,500/* ---- ---- 534/*
Roger P. Friou 12,510/2.94% ---- 14/* <FN3> 1,252/1.25%
Bruce C. Bruckmann 353,7250/83.24%<FN1><FN5> ---- ---- 75,508/75.51%
Harold O. Rosser, II 353,750/83.24% <FN1><FN6> ---- ---- 75,508/75.51%
Stephen C. Sherrill 353,750/83.24% <FN1><FN7> ---- ---- 75,508/75.51%
David K. Essary 11,250/2.65% <FN8> ---- ---- 1,125/1.13%
John R. Hansbrough 850/* <FN9> ---- ---- 85/*
David R. Black 850/* <FN9> ---- ---- 85/*
Jerry L. Jones 1,200/ * ---- ---- 120/*
All directors and
executive officers
as a group (18) 421,359/99.14% ---- 26,729/9.74% <FN3> 92,207/92.21%
</TABLE>
*Owns less than 1% of the total outstanding Common Stock, Class B Preferred
Stock and Class C Preferred Stock.
52
<PAGE>
<FN1> Includes 331,732 shares of common stock owned directly by
Bruckmann, Rosser, Sherrill & Co., Inc., L.P. ("BRS") and
22,018 shares to which BRS possesses sole voting power.
BRS is a limited partnership, the sole general partner of
which is BRS Partners and the manager of which is BRS.
The sole general partner of BRS Partners is BRSE
Associates. Bruce C. Bruckmann, Harold O. Rosser, II,
Stephen C. Sherrill and Stephen F. Edwards are the only
stockholders of BRS and BRSE Associates and may be
deemed to share beneficial ownership of the shares shown as
beneficially owned by the Fund. Such individuals disclaim
beneficial ownership of any such shares.
<FN2> Includes 10,000 shares of common stock owned directly and
19,699 shares to which Mr. Holman possesses sole voting
power.
<FN3> All shares of Class B Preferred Stock are owned by
Trustmark National Bank ("Trustmark") pursuant to an
escrow agreement by and among Trustmark, the Company
and former Common Stock shareholders of the Company.
Certain of the officers of the Company own an interest in
the escrow account through which they have a beneficial
interest in the number of shares of Class B Preferred Stock
listed in this table.
<FN4> DLJ Merchant Banking Partners, L.P. ("DLJ") and related
investors have received outstanding warrants to purchase
15.0%, on a fully diluted basis, of the outstanding Common
Stock of the Company as outlined in the Shareholders
Agreement referred to under Item 13.
<FN5> Includes 6,605 shares of common stock owned directly
and 347,145 shares to which BRS possesses sole voting
power.
<FN6> Includes 1,326 shares of common stock owned directly
and 352,383 shares to which BRS possesses sole voting
power.
<FN7> Includes 4,423 shares of common stock owned directly and
349,327 shares to which BRS possesses sole voting
power.
<FN8> Mr. Essary resigned January 1998.
<FN9> Mr. Hansbrough resigned January 1998.
53
<PAGE>
Item 13. Certain Relationships and Related Transactions.
BRS received a closing fee of $4.0 million at the
consummation of the acquisition of Delchamps. They also
received $4.0 million in connection with the Merger in 1996. In
addition, BRS is entitled to receive 1% of earnings before
interest, income taxes, depreciation, amortization and certain
special charges annually, with a minimum of $1.0 million per
year, computed on a quarterly basis from the Company as a
management fee for the performance of strategic and financial
planning services in the future. In the 1997 stub and fiscal year
1997, BRS received $.48 million and $.25 million, respectively.
Messrs. Bruckmann, Rosser, Sherrill and Edwards (not a
director of the Company) are the only stockholders of BRS and
BRSE Associates. BRSE Associates is the sole general partner
of BRS Partners, which is the sole general partner of
Bruckmann, Rosser, Sherrill & Co., L.P. (the "Fund"). The
Fund is the majority stockholder of the Company.
DLJ Merchant Banking Partners, L.P. ("DLJ") and
related investors received $6.0 million underwriting discount
and commission from the acquisition of Delchamps and public
offering of Senior Subordinated Notes in 1997. They also
received $6.0 million in connection with the Merger in 1996.
Mr. Moriarty, a director in the Company, is an officer with
DLJ.
Pursuant to an agreement with the Company, McCarty-
Holman Co., L.P. (the "Partnership") is the exclusive agent for
the Company to rent, lease, operate and manage all locations
where the Company has sublet space to various tenants and
where it has space vacant and available for subleasing. W. H.
Holman, Jr. owns a noncontrolling interest in the Partnership.
Under the agreement, the Partnership is entitled to fees as
follows: (i) for management: 4% of all rental/lease collections;
(ii) fees for leasing: 6% of the annual rent (for a month-to-
month tenancy; one-half of the first month's rent); and (iii) fees
for services other than as delineated above are negotiated. In
the 1997 stub and fiscal year 1997, the Partnership received
approximately $37,000 and $41,000 respectively, in fees
pursuant to this agreement. Management believes that the
agreement is on an arm's length basis and is on terms that are no
less favorable to the Company than could have been obtained
with non-affiliated parties at the time the agreement was entered
into.
W. H. Holman, Jr., W. H. Holman, III, Clyde Staley and
Roger P. Friou own in the aggregate noncontrolling interests in
certain partnerships that are landlords under twenty (20) leases
(involvement is Holman, Jr., 18 leases; Holman, III, 6 leases;
Staley, 5 leases; and Friou, 8 leases) for stores or other facilities
where the Company and its subsidiaries are the tenants. In the
1997 stub and fiscal year 1997, the Company paid a combined
total rent under these twenty (20) leases of approximately $2.6
million and $3.6 million, respectively. Management believes
that each of these leases is on an arm's length basis and is on
terms that are no less favorable to the Company than could have
been obtained with non-affiliated parties at the time each lease
was entered into.
David K. Essary, Executive Vice President, had an
outstanding loan for the purchase of Common Stock from the
Company in the amount of $79,906 as of January 3, 1998. This
note was paid subsequent to year end. The seven (7) other
executive officers have combined loans outstanding of $64,412
which were used for the purchase of the Company's Common
54
<PAGE>
Stock and Class C Preferred Stock. Two (2) other executive
officers have combined loans outstanding of $51,000 which are
for real estate property .
Certain shareholders of the Company, entered into a
Shareholders Agreement which contains certain agreements
among such shareholders with respect to the capital stock and
corporate governance of the Company. The shareholders
involved are Bruckmann, Rosser, Sherrill & Co., L.P., DLJ
Merchant Banking Partners, L.P., and Messrs. W. H. Holman,
Jr., Roger P. Friou, and W. H. Holman, III. Agreements
regarding corporate governance and the capital stock of the
Company were also entered into by the Company, Bruckmann,
Rosser, Sherrill & Co., L.P., and Messrs. W.H. Holman, Jr.,
Roger Friou, W.H. Holman, III, David Essary, Jerry Jones,
Stephen R. Harmon, David R. Black, Harold D. Evans, James P.
Riley, J.R. Hansbrough, and Clyde D. Staley in the Securities
Purchase and Holders Agreement.
Pursuant to an agreement with the Company, Michael E.
Julian received a fee of $170,000 in fiscal year 1997 for certain
consulting services provided to the Company.
55
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
The following is an index of the financial statements,
schedules and exhibits included in this Report or Incorporated
herein by reference:
(a) 1. Financial Statements:
Consolidated Balance Sheets as of January 3, 1998,
May 3, 1997 and April 27, 1996.
Consolidated Statements of Operations for the thirty-
five weeks ended January 3, 1998 and for each of the
three fiscal years in the period ended May 3, 1997.
Consolidated Statements of Changes in Stockholders'
Equity for the thirty-five weeks ended January 3, 1998
and for each of the three fiscal years in the period
ended May 3, 1997.
Consolidated Statements of Cash Flows for the thirty-
five weeks ended January 3, 1998 and for each of the
three fiscal years in the period ended May 3, 1997.
Notes to Consolidated Financial Statements
Independent Auditors' Report
2. Financial Statement Schedules:
There are no Financial Statement Schedules included
with this filing for the reason that they are not
applicable, are not required, or the information is
included in the financial statements or notes thereto.
3. Exhibits
The following is an index of the exhibits included in
this Annual Report on Form 10-K or incorporated
herein by reference:
Exhibit No.
*2.1 Agreement and Plan of Exchange and of
Merger, dated as of November 16, 1995 by and
among JJ Acquisitions Corp. and Jitney-Jungle
Stores of America, Inc., Southern Jitney Jungle
Company, McCarty-Holman Co., Inc. and
Jitney-Jungle Bakery, Inc. (incorporated by
reference to Exhibit No. 2.1 to Amendment
No. 2 to Form S-1 [No. 33-80833] of JJ
Acquisitions Corp. filed with the Commission
on February 27, 1996).
56
<PAGE>
*2.2 Agreement and Plan of Merger dated July 8,
1997 by and among the Company, Delchamps,
Inc. and Delta Acquisition Corporation
(incorporated by reference to Exhibit 2 to Form
8-K [No. 33-80833] of the Company dated July
14, 1997).
*3.1 Amended and Restated Articles of
Incorporation of Jitney-Jungle Stores of
America, Inc. (including designation of Class
B Preferred Stock) (incorporated by reference
to Exhibit No.3.3 to Amendment No. 2 to
Form S-1 [No. 33-80833] of JJ Acquisitions
Corp. filed with the Commission on February
27, 1996).
*3.2 Restated by-laws of Jitney-Jungle Stores of
America, Inc. (incorporated by reference to
Exhibit No. 3.6 to Amendment No. 2 to Form
S-1 [No. 33-80833] of JJ Acquisitions Corp.
filed with the Commission on February 27,
1996).
*3.3 Composite Amended and Restated Articles of
Incorporation of Delchamps, Inc. (incorporated by
reference to Exhibit 3.1 to Form 10-Q of
Delchamps, Inc. for the quarter ended September
28, 1996).
*3.4 Composite of By-Laws of Delchamps, Inc.
(incorporated by reference to Exhibit 3.2 to Form
10-Q of Delchamps, Inc. for the quarter ended
September 28, 1996.
*3.5 Amended and Restated Articles of Incorporation
of Interstate Jitney-Jungle Stores Inc.
(incorporated by reference to Exhibit 3.5 to
Amendment No. 1 to Form S-4 [No. 333-38957]
of Jitney-Jungle Stores of America, Inc. filed with
the Commission on November 7, 1997).
*3.6 Restated By-Laws of Interstate Jitney-Jungle
Stores, Inc. (incorporated by reference to Exhibit
3.6 to Amendment No. 1 to Form S-4 [No. 333-
38957] of Jitney-Jungle Stores of America, Inc.
filed with the Commission on November 7, 1997).
*3.7 Amended and Restated Articles of Incorporation
of McCarty-Holman Co., Inc. (incorporated by
reference to Exhibit 3.7 to Amendment No. 1 to
Form S-4 [No. 333-38957] of Jitney-Jungle Stores
of America, Inc. filed with the Commission on
November 7, 1997).
*3.8 Restated By-Laws of McCarty-Holman Co., Inc.
(incorporated by reference to Exhibit 3.8 to
Amendment No. 1 to Form S-4 [No. 333-38957]
of Jitney-Jungle Stores of America, Inc. filed with
the Commission on November 7, 1997).
*3.9 Amended and Restated Articles of Incorporation
of Southern Jitney Jungle Company (incorporated
by reference to Exhibit 3.9 to Amendment No. 1
to Form S-4 [No. 333-38957] of Jitney-Jungle
Stores of America, Inc. filed with the Commission
on November 7, 1997).
57
<PAGE>
*3.10 Restated By-Laws of Southern Jitney Jungle
Company (incorporated by reference to Exhibit
3.10 to Amendment No. 1 to Form S-4 [No. 333-
38957] of Jitney-Jungle Stores of America, Inc.
filed with the Commission on November 7, 1997).
*3.11 Amended and Restated Articles of Incorporation
of Pump and Save, Inc. (incorporated by reference
to Exhibit 3.11 to Amendment No. 1 to Form S-4
[No. 333-38957] of Jitney-Jungle Stores of
America, Inc. filed with the Commission on
November 7, 1997).
*3.12 Restates By-Laws of Pump and Save, Inc.
(incorporated by reference to Exhibit 3.12 to
Amendment No. 1 to Form S-4 [No. 333-38957]
of Jitney-Jungle Stores of America, Inc. filed with
the Commission on November 7, 1997).
*3.13 Amended and Restated Articles of Incorporation
of Supermarket Cigarettes Sales, Inc.
(incorporated by reference to Exhibit 3.13 to
Amendment No. 1 to Form S-4 [No. 333-38957]
of Jitney-Jungle Stores of America, Inc. filed with
the Commission on November 7, 1997).
*3.14 By-Laws of Supermarket Cigarettes Sales, Inc.
(incorporated by reference to Exhibit 3.14 to
Amendment No. 1 to Form S-4 [No. 333-38957]
of Jitney-Jungle Stores of America, Inc. filed with
the Commission on November 7, 1997).
*3.15 Amended and Restated Articles of Incorporation
of Jitney-Jungle Bakery, Inc. (incorporated by
reference to Exhibit 3.15 to Amendment No. 1 to
Form S-4 [No. 333-38957] of Jitney-Jungle Stores
of America, Inc. filed with the Commission on
November 7, 1997).
*3.16 Restated By-Laws of Jitney-Jungle Bakery, Inc.
(incorporated by reference to Exhibit 3.16 to
Amendment No. 1 to Form S-4 [No. 333-38957]
of Jitney-Jungle Stores of America, Inc. filed with
the Commission on November 7, 1997).
*4.1 Indenture dated as of September 15, 1997 among
the Company, the Subsidiary Guarantors from
Marine Midland Bank as Trustee, Donaldson
Lufkin & Jenrette Securities Corporation and
Credit Suisse First Boston (incorporated by
reference to Exhibit 4.1 to Form S-4 [No. 333-
38957] of Jitney-Jungle Stores of America, Inc.
filed with the Commission on October 29, 1997).
*4.2 Registration Rights Agreement dated as of
September 15, 1997 among the Company, the
Subsidiary Grantors, Donaldson, Lufkin &
Jenrette Securities Corporation and Credit Suisse
First Boston (incorporated by reference to Exhibit
4.2 to Form S-4 [No. 333-38957] of Jitney-Jungle
Stores of America, Inc. filed with the Commission
on October 29, 1997).
58
<PAGE>
*4.3 Form of the Company's 10 3/8% Senior
Subordinated Notes due 2007 (included in Exhibit
4.1) (incorporated by reference to Exhibit 4.3 to
Form S-4 [No. 333-38957] of Jitney-Jungle Stores
of America, Inc. filed with the Commission on
October 29, 1997).
*4.4 Revolving Credit Agreement dated September 15,
1997 by and among Fleet Capital Corporation and
the Company (incorporated by reference to
Exhibit 4.4 to Form S-4 [No. 333-38957] of
Jitney-Jungle Stores of America, Inc. filed with
the Commission on October 29, 1997).
*4.5 Indenture dated March 5, 1996 between the
Company and Marine Midland Bank, as Trustee,
relating to the issuance and sale of $200,000,000
aggregate principal amount of 12% Senior Notes
due 2006 (incorporated by reference to Exhibit
No. 4.2 Amendment No. 2 to Form S-1 [No. 33-
80833] of JJ Acquisition Corp. filed with the
Commission on February 27, 1996).
*4.6 Warrant dated March 4, 1996 to purchase
75,000 shares of Common Stock of the
Company by DLJ Merchant Banking Partners,
L.P. and related investors (incorporated by
reference to Exhibit No.4.3 to Amendment No.
2 to Amendment No. 2 to Form S-1 [No. 33-
80833] of JJ Acquisitions Corp. filed with the
Commission on February 27, 1996).
*4.7 Memorandum of Agreement dated October 15,
1985 by and among the City of Jackson,
Mississippi and McCarty-Holman Co., Inc.
($3,650,000) (incorporated by reference to
Exhibit No.4.8 to Amendment No. 2 to Form
S-1 [No. 33-80833] of JJ Acquisitions Corp.
filed with the Commission on February 27,
1996).
*5.1 Opinion of Dechert Price & Rhoads (incorporated
by reference to Exhibit 5.1 to Amendment No. 1
to Form S-4 [No. 333-38957] of Jitney-Jungle
Stores of America, Inc. filed with the Commission
on November 7, 1997).
*9.1 Voting Trust Agreement dated November 1,
1990 by and among Carolyn Holman Kroeze,
as Executrix and the parties named therein
(incorporated by reference to Exhibit No. 9.1 to
Amendment No. 2 to Form S-1 [No. 33-
80833] of JJ Acquisitions Corp. filed with the
Commission on February 27, 1996).
*10.1 Purchase Agreement dated September 10, 1997
among the Company, Donaldson, Lufkin &
Jenrette Securities Corporation and Credit Suisse
First Boston with respect to the 10 3/8% Senior
Subordinated Notes due 2007 (incorporated by
reference to Exhibit 10.1 to Form S-4 [No. 333-
38957] of Jitney-Jungle Stores of America, Inc.
filed with the Commission on October 29, 1997).
59
<PAGE>
*10.2 Supply Agreement dated March 19, 1989 as
amended, by and among Fleming Companies
Inc. (successor in interest to Malone & Hyde,
Inc.), the Company and Interstate Jitney-Jungle
Stores, Inc. (incorporated by reference to
Exhibit No. 10.2 to Amendment No. 2 to Form
S-1 [No. 33-80833] of JJ Acquisitions Corp.
filed with the Commission on February 27,
1996).
*10.3 Membership in Topco Associates, Inc.
(Cooperative) by ownership of six hundred
(600) shares of Common Stock, such stock
certificate being dated July 1, 1991
(incorporated by reference to Exhibit No. 10.3
to Amendment No. 2 to Form S-1 [No. 33-
80833] of JJ Acquisitions Corp. filed with the
Commission on February 27, 1996).
*10.4 Flour Sale Confirmation and Contract dated
July 19, 1995 by and among Cargill,
Incorporated and Jitney-Jungle Bakery, Inc.
(incorporated by reference to Exhibit No.
10.4 to Amendment No. 2 to Form S-1 [No.
33-80833] of JJ Acquisitions Corp. filed with
the Commission on February 27, 1996).
*10.5 Employment Agreement dated as of February
15, 1995 by and among the Company Roger
P. Friou (incorporated by reference to Exhibit
10.6 to Amendment No. 2 to Form S-1 [No.
33-80833] of JJ Acquisitions Corp. filed with
the Commission on February 27, 1996).
*10.6 Employment Agreement dated as of February
24, 1995 by and among the Company and
David K. Essary (incorporated by reference
to Exhibit 10.7 to Amendment No. 2 to Form
S-1 [No. 33-80833] of JJ Acquisitions Corp.
filed with the Commission on February 27,
1996).
*10.7 Employment Agreement dated as of March 5,
1996 by and among the Company and W. H.
Holman, Jr. (incorporated by reference to
Exhibit 10.6 to the Company's Annual
Report on Form 10-K, dated July 24, 1996).
*10.8 Employment Agreement dated as of March 5,
1996 by and among the Company and W. H.
Holman, III. (incorporated by reference to
Exhibit 10.7 to the Company's Annual
Report on Form 10-K, dated July 24, 1996).
*10.9 Restatement and Amendment by the Entirety
of the Jitney-Jungle Stores of America, Inc.
and Affiliates Profit Sharing Plan and Trust
(incorporated by reference to Exhibit No.
10.8 to Amendment No. 2 to Form S-1 [No.
33-80833] of JJ Acquisitions Corp. filed with
the Commission on February 27, 1996).
*10.10 Deferred Compensation Plan for the
Company dated as of November 16, 1995 by
and among Jitney-Jungle Stores of America,
Inc., Southern Jitney Jungle Company,
Jitney-Jungle Bakery, Inc., McCarty-Holman
Co., Inc. and W. H. Holman, Jr., Roger P.
Friou and David K. Essary (incorporated by
reference to Exhibit No. 10.9 to Amendment
No. 2 to Form S-1 [No. 33-80833] of JJ
Acquisitions Corp. filed with the
Commission on February 27, 1996).
60
<PAGE>
*10.11 Shareholders Agreement dated as of March
5, 1996 by and among DLJ Merchant
Banking Partners, L.P. JJ Acquisitions Corp.,
and certain other signatories party thereto
(incorporated by reference to Exhibit No.
10.10 to Amendment No. 2 to Form S-1
[No. 33-80833] of JJ Acquisitions Corp. filed
with the Commission on February 27, 1996).
*10.12 Securities Purchase and Holders Agreement
dated as of March 5, 1996 by and among JJ
Acquisitions Corp., Bruckmann, Rosser,
Sherrill & Co., L.P. and other parties thereto
(incorporated by reference to Exhibit No.
10.12 to Amendment No. 2 to Form S-1
[No. 33-80833] of JJ Acquisitions Corp. filed
with the Commission on February 27, 1996).
*10.13 Registration Rights Agreement dated as of
March 5, 1996 by and among the Company
and other parties named therein (incorporated
by reference to Exhibit No. 10.13 to
Amendment No. 2 to Form S-1 [No. 33-
80833] of JJ Acquisitions Corp. filed with
the Commission on February 27, 1996).
*10.14 Membership and Licensing Agreement dated
August 1, 1973 between Topco Associates,
Inc. and Delchamps, Inc. and attached copy
of Articles of Incorporation and By-Laws of
Topco Associates, Inc. (incorporated by
reference to Exhibit 10(a) to the Registration
Statement on Form S-1 [No. 2-86926] of
Delchamps, Inc.)
*10.15 Agreement for Termination of Employment
dated as of September 19, 1997 between
Delchamps, Inc. and David W. Morrow
(incorporated by reference to Exhibit 10(j) to
Form 10-K of Delchamps, Inc. for fiscal year
ended June 28, 1997).
*10.16 Form of Director Indemnity Agreement of
Delchamps, Inc. (incorporated by reference to
Exhibit 10 to Form 10-Q of Delchamps, Inc. for
the quarter ended September 28, 1996).
*12.1 Statement of Ratio of Earnings to Fixed Charges
(incorporated by reference to Exhibit 12.1 to
Form S-4 [No. 333-38957] of Jitney-Jungle
Stores of America, Inc. filed with the
Commission on October 29, 1997).
21.1 Subsidiaries of the Company.
23.1 Consent of Dechert Price & Rhoads (included in
Exhibit 5.1) (incorporated by reference to Exhibit
23.1 to Form S-4 [No. 333-38957] of Jitney-
Jungle Stores of America, Inc. filed with the
Commission on October 29, 1997).
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<PAGE>
*23.2 Consent of Deloitte & Touche LLP (incorporated
by reference to Exhibit 23.2 to Amendment No. 1
to Form S-4 [No. 333-38957] of Jitney-Jungle
Stores of America, Inc. filed with the
Commission on November 7, 1997).
*23.3 Consent of KPMG Peat Marwick (incorporated
by reference to Exhibit 23.3 to Form S-4 [No.
333-38957] of Jitney-Jungle Stores of America,
Inc. filed with the Commission on October 29,
1997).
*24 Power of Attorney (incorporated by
reference to Exhibit 24 to Form S-4 [No. 333-
38957] of Jitney-Jungle Stores of America, Inc.
filed with the Commission on October 29, 1997).
*25 Statement of Eligibility and Qualifications, Form
T-1, of Marine Midland Bank (incorporated by
reference to Exhibit 25 to Form S-4 [No. 333-
38957] of Jitney-Jungle Stores of America, Inc.
filed with the Commission on October 29, 1997).
27.1 Financial Data Schedule.
*99.1 Form of Letter of Transmittal (incorporated by
reference to Exhibit 23.2 to Amendment No. 1 to
Form S-4 [No. 333-38957] of Jitney-Jungle
Stores of America, Inc. filed with the
Commission on November 7, 1997).
*99.2 Form of Notice of Guaranteed Delivery
(incorporated by reference to Exhibit 23.2 to
Amendment No. 1 to Form S-4 [No. 333-38957]
of Jitney-Jungle Stores of America, Inc. filed
with the Commission on November 7, 1997).
*Previously filed as indicated.
(b) Reports on Form 8-K.
On November 19, 1997, the Company filed a Current Report
on Form 8-K stating under "Item 5. Other Items" that on
November 4, 1997 Delta Acquisition Corporation ("Delta"), an
Alabama corporation and wholly owned subsidiary of Jitney-
Jungle Stores of America, Inc. (Jitney-Jungle) merged with and
into Delchamps, Inc., an Alabama corporation ("Delchamps").
Delchamps is now a wholly owned subsidiary of Jitney-Jungle. As
of November 4, 1997, Delchamps' shareholders representing
approximately 620,749 shares, or 8.8% of the outstanding shares of
Delchamps, purportedly indicated their intention to exercise
dissenters' rights with respect to the merger.
62
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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)
By /s/ Michael E. Julian
_____________________
(Michael E. Julian
President and
Chief Executive Officer)
(Principal Executive Officer)
Date April 2, 1998
____________________
By /s/ David R. Black
_____________________
(David R. Black
Senior Vice President -
Finance,
Chief Financial Officer)
(Principal Financial and
Accounting Officer)
Date April 2, 1998
_____________________
63
<PAGE>
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the following
persons on behalf of the Company and in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
Signatures Position Date
______________________ __________________________ _____________
<S> <C> <C>
/s/ W. H. Holman, Jr. Chairman of the Board April 2, 1998
(W. H. Holman, Jr.)
/s/ Michael E. Julian Director, President and Chief April 2, 1998
(Michael E. Julian) Executive Officer
/s/ Roger P. Friou Director April 2, 1998
(Roger P. Friou)
/s/ Bruce C. Bruckmann Director April 2, 1998
(Bruce C. Bruckmann)
/s/ Harold O. Rosser, II Director April 2, 1998
(Harold O. Rosser, II)
/s/ Stephen C. Sherrill Director April 2, 1998
(Stephen C. Sherrill)
/s/ John M. Moriarty, Jr. Director April 2, 1998
(John M. Moriarty, Jr.)
/s/ Bernard J. Ebbers Director April 2, 1998
(Bernard J. Ebbers)
/s/ Ronald E. Johnson Director April 2, 1998
(Ronald E. Johnson)
/s/ Donald D. Bennett Director April 2, 1998
(Donald D. Bennett)
</TABLE>
64
Exhibit 21.1
SUBSIDIARIES OF JITNEY-JUNGLE STORES OF
AMERICA, INC.
<TABLE>
<CAPTION>
Percentage
of Voting
Securities
Jurisdiction of Owned by
Name Incorporation Registrant
_____________________________________ _______________ __________
<S> <C> <C>
Interstate Jitney-Jungle Stores, Inc. Alabama 100%
Southern Jitney Jungle Company Mississippi 100%
McCarty-Holman Co., Inc. Mississippi 100%
Jitney-Jungle Bakery, Inc. Mississippi 100%
Delchamps, Inc. Alabama 100%
</TABLE>
Exhibit 21.1
SUBSIDIARIES OF JITNEY-JUNGLE STORES OF AMERICA, INC.
SUBSIDIARIES OF MCCARTY-HOLMAN CO., INC.
<TABLE>
<CAPTION>
Jurisdiction of
Name Incorporation
_____________________________ _______________
<S> <C>
Pump and Save, Inc. Mississippi
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-START> MAY-04-1997
<PERIOD-END> JAN-03-1998
<CASH> 11,984
<SECURITIES> 0
<RECEIVABLES> 13,833
<ALLOWANCES> 0
<INVENTORY> 162,786
<CURRENT-ASSETS> 215,854
<PP&E> 469,819
<DEPRECIATION> 166,045
<TOTAL-ASSETS> 694,280
<CURRENT-LIABILITIES> 236,523
<BONDS> 0
63,042
9,071
<COMMON> 4
<OTHER-SE> (176,975)
<TOTAL-LIABILITY-AND-EQUITY> 694,280
<SALES> 1,145,129
<TOTAL-REVENUES> 1,145,129
<CGS> 285,669
<TOTAL-COSTS> 1,123,535
<OTHER-EXPENSES> 3,117
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 31,608
<INCOME-PRETAX> (13,131)
<INCOME-TAX> (3,224)
<INCOME-CONTINUING> (9,907)
<DISCONTINUED> 0
<EXTRAORDINARY> (870)
<CHANGES> 0
<NET-INCOME> (10,777)
<EPS-PRIMARY> (38.44)
<EPS-DILUTED> (38.44)
