FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Pursuant To Section 13 or 15 (d) of
The Securities and Exchange Act of 1934
QUARTER ENDED March 27, 1999 COMMISSION FILE NO. 33-80833
JITNEY-JUNGLE STORES OF AMERICA, INC.
(Exact name of registrant as specified in its charter)
STATE OF INCORPORATION I.R.S. EMPLOYER I.D. NO.
Mississippi 64-0280539
ADDRESS OF PRINCIPAL EXECUTIVE OFFICE
1770 Ellis Avenue, Suite 200, Jackson, MS 39204
REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE
601-965-8600
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months, and (2) has been subject to
such filing requirements for the past 90 days. YES (X) NO
The number of shares of Registrant's Common Stock, par value one
cent ($.01) per share, outstanding at May 17, 1999, was 425,180 shares.
CAUTIONARY NOTICE
This Quarterly Report on Form 10-Q may contain forward-
looking statements regarding future expectations about the Company's
business, management's plans for future operations or similar matters.
The Company's actual results could differ materially from those
anticipated in such forward-looking statements due to several important
factors including the following: deterioration in economic conditions
generally or in the Company's markets, unusual or unanticipated costs
or consequences relating to, or changes in any acquisition and/or
divestiture plans, demands placed on management by the substantial
increase in the Company's size due to the acquisition of Delchamps,
unanticipated or unusual distribution problems, breakdown of quality
control, competitive pressures, relationships with its major suppliers,
restrictions and costs associated with the Company's leveraged
capital structure and limitations imposed by its debt
agreements, labor disturbances, and customer dissatisfaction.
Forward-looking statements speak only as of the date made, and the
Company undertakes no obligation to update or revise such statements
to reflect new circumstances or unanticipated events as they may occur.
<PAGE>
JITNEY-JUNGLE STORES OF AMERICA, INC.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION Page
Item 1.Financial Statements:
Condensed Consolidated Balance Sheets
March 27, 1999 (Unaudited) and January 2, 1999 2
Condensed Consolidated Statements of Operations
Twelve (12) Week Period Ended
March 27, 1999 (Unaudited) and
Twelve (12) Week Period Ended
March 28, 1998 (Unaudited) 3
Condensed Consolidated Statements of Changes in
Stockholders' Deficit Twelve (12) Week Periods
Ended March 27, 1999 (Unaudited) and
March 28, 1998 (Unaudited) 4
Condensed Consolidated Statements of Cash Flows
Twelve (12) Week Periods Ended
March 27, 1999 (Unaudited) and
March 28, 1998 (Unaudited) 5
Notes to Condensed Consolidated Financial Statements
March 27, 1999 (Unaudited)
March 28, 1998 (Unaudited) 6-8
Item 2.Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-13
PART II.OTHER INFORMATION
Item 1.Legal Proceedings 12
Item 2.Change in Securities 12
Item 3.Defaults Upon Senior Securities 12
Item 4.Submission of Matters to a Vote of Security Hold 12
Item 5.Other Information 12
Item 6.Exhibits and Reports on Form 8-K 12-13
<PAGE>
<TABLE>
<CAPTION>
PART I. ITEM 1. FINANCIAL STATEMENTS
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands,except per share amounts)
March 27, January 2,
1999 1999
(Unaudited)
ASSETS ----------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 9,246 $ 18,041
Receivables 25,832 28,197
Refundable income taxes 4,046 16,862
Merchandise inventories 183,303 166,774
Prepaid expenses and other 1,269 5,655
---------- ----------
Total current assets 223,696 235,529
---------- ----------
PROPERTY AND EQUIPMENT - net 296,723 297,454
---------- ----------
Other assets
Goodwill, net of amortization of $5,186
at March 27, 1999
and $4,250 at January 2, 1999 130,244 131,206
Other assets - net 25,820 26,957
---------- ----------
Total other assets 156,064 158,163
---------- ----------
TOTAL ASSETS $ 676,483 $ 691,146
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 104,960 $ 138,087
Accrued expenses 71,333 69,995
Current portion of capitalized leases 5,789 5,789
Restructuring obligations 10,880 10,880
---------- ----------
Total current liabilities 192,962 224,751
Noncurrent liabilities:
Long-term debt 544,862 517,071
Obligations under capitalized leases,
excluding current installments 63,527 62,935
Restructuring obligations, excluding
current installments 20,049 21,407
---------- ----------
Total liabilities 821,400 826,164
Commitments and contingencies
Redeemable Preferred stock (aggregate liquidation
preference value of $75,332 at March 27, 1999 and
$73,279 at January 2, 1999) 73,553 71,452
Stockholders' deficit:
Class C Preferred stock - Series 1(at liquidation
value) 10,203 9,973
Common stock ($.01 par value, authorized 5,000,000
shares, issued and outstanding 425,180
and 425,280 shares, respectively) 4 4
Additional paid-in capital (302,305) (302,305)
Retained earnings 73,628 85,858
---------- ----------
Total (218,470) (206,470)
---------- ----------
Total stockholder's deficit (218,470) (206,470)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 676,483 $ 691,146
========= =========
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands except per share amounts)
Twelve Weeks Ended
March 27, March 28,
1999 1998
(Unaudited) (Unaudited)
---------- -----------
NET SALES $ 459,991 $ 474,209
---------- -----------
<S> <C> <C>
COSTS AND EXPENSES:
Cost of goods sold 338,027 358,122
Direct store expenses 93,495 94,223
Warehouse, administrative
and general expenses 21,270 18,121
Interest expense - net 17,100 15,223
Acquisition integration
costs and other
special charges 13,996
---------- -----------
Total costs and expenses 469,892 499,685
---------- -----------
Loss before taxes on income (9,901) (25,476)
Income tax benefit - (9,151)
---------- -----------
NET LOSS $ (9,901) $ (16,325)
========== ===========
LOSS PER COMMON SHARE $ (28.77) $ (43.57)
========== ===========
LOSS PER COMMON
SHARE-DILUTED $ (28.77) $ (43.57)
========== ===========
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
FOR THE TWELVE (12) WEEK PERIODS ENDED MARCH 27, 1999 (Unaudited)
AND MARCH 28, 1998 (Unaudited)
(Dollars in thousands)
Class C
Preferred Stock,
Series 1 Common Stock Additional Treasury
No. of No. of Paid-In Retained Stock at
Shares Amount Shares Amount Capital Earnings Cost
-------- -------- ------- ------- ------------ ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance
Jan 3, 1998 76,042 $ 9,071 425,000 $ 4 $ (302,326) $ 125,351 $ -
Net loss (16,325)
Purchase of 850 shares of
treasury stock (10)
Accretion of discount on Class A
Preferred stock (48)
Cumulation of dividends on
Preferred stock 208 (2,101)
Balance ------ -------- ------- ------- ------------ ----------- --------
March 28, 1998 76,042 $ 9,279 425,000 $ 4 $ (302,326) $ 106,877 $ (10)
====== ======== ======= ======= ============ =========== ========
Balance
Jan 2, 1999 76,042 $ 9,973 425,280 $ 4 $ (302,305) $ 85,858 $ -
Net loss (9,901)
Purchase of 100 shares of
treasury stock (100) (1)
Accretion of discount on Class A
Preferred stock (48)
Cumulation of dividends on
Preferred stock 230 (2,281)
Balance ------ -------- ------- ------- ------------ ----------- --------
March 27, 1999 76,042 $ 10,203 425,180 $ 4 $ (302,305) $ 73,628 $ (1)
====== ======== ======= ======= ============ =========== ========
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Twelve Weeks Ended
March 27, March 28,
1999 1998
OPERATING ACTIVITIES: ------------ -----------
<S> <C> <C>
Net loss $ (9,901) $ (16,325)
Adjustment to reconcile net
loss to net
cash used in
operating activities:
Depreciation and amortization 14,243 13,473
Amortization of deferred
loan costs 790 564
Gain on disposition of property
and other assets (39)
Deferred income tax benefit (4,462)
Changes in current assets and
liabilities, net of effects
of acquisition:
Receivables 2,365 (184)
Store and warehouse
inventories (16,529) 9,561
Refundable income taxes 12,816
Prepaid expenses 4,386 (1,339)
Accounts payable (33,127) (5,341)
Accrued expenses and other 925 (13,812)
Restructuring obligations (1,358) (4,027)
---------- ----------
Net cash used in
erating activities (25,390) (21,931)
---------- ----------
INVESTING ACTIVITIES:
Capital expenditures (10,062) (6,064)
Proceeds from sale of property
and other assets 920
Purchase of Delchamps, Inc. (9,559)
Change in other assets 349 (3,302)
---------- ----------
Net cash used in
investing activities (9,713) (18,005)
---------- ----------
FINANCING ACTIVITIES:
Proceeds (payments) on long-term
debt - net 27,791 40,283
Payments on capitalized lease
obligation (1,483) (1,312)
Other (806)
Purchase of treasury stock (10)
Restructuring obligations (1,358) (3,313)
---------- ----------
Net cash provided by
financing activities 24,950 34,842
---------- ----------
DECREASE IN CASH AND
CASH EQUIVALENTS (8,795) (1,781)
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD 18,041 11,984
---------- ----------
CASH AND CASH EQUIVALENTS - END
OF PERIOD $ 9,246 $ 10,203
========== ==========
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest $ 29,457 $ 25,534
========== ==========
Cash paid for income taxes, net
of refunds $ (12,851) $ 11
========== ==========
Noncash investing and financing
activities:
Capital lease obligations
incurred $ 2,075
==========
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 27, 1999 (Unaudited) AND MARCH 28, 1998 (Unaudited)
(Dollars in thousands)
1. BASIS OF PRESENTATION
The unaudited condensed consolidated financial statements include
those of Jitney-Jungle Stores of America, Inc. and its wholly-owned
subsidiaries, Southern Jitney Jungle Company, Interstate Jitney-
Jungle Stores, Inc., McCarty-Holman Co., Inc. and subsidiary,
Jitney-Jungle Bakery, Inc., Delchamps Inc. and subsidiary and JJ
Construction Corp. All material intercompany profits, transactions
and balances have been eliminated.
The condensed consolidated financial statements presented herein
have been prepared in accordance with the instructions to Form 10-Q
and do not include all of the information and note disclosures
required by generally accepted accounting principles. These
statements should be read in conjunction with the Form 10-K filed
by the Company for fiscal year ending January 2, 1999. The
accompanying condensed financial statements have not been audited
by independent accountants in accordance with generally accepted
auditing standards, but in the opinion of management such
condensed financial statements include all adjustments, consisting
only of normal recurring adjustments, necessary to summarize fairly
the Company's financial position and results of operations. The
results of operations of the Company for the twelve weeks ended
March 27, 1999, are not necessarily indicative of the results which
may be expected for the entire year.
2. ACQUISITION
In September 1997, the Company acquired the majority of the
common stock of Delchamps, Inc. Certain shareholders dissented
from the merger and indicated that they will pursue their appraisal
remedy under Alabama law. Management does not expect this
matter to have a material affect on operations or the price of the
acquisition. The acquisition was accounted for as a purchase and,
accordingly, Delchamps' results of operations were included in the
Company's consolidated financial statements subsequent to the
acquisition date. The purchase price could be affected by a final
determination of amounts to be paid to former shareholders of
Delchamps who dissented from the merger ( and related professional
fees).
The purchase price, net of cash acquired of $84 and including direct
acquisition costs, has been allocated to the assets acquired and
liabilities assumed based upon the fair values at the date of
acquisition, as set forth below.
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Receivables and other current assets $ 12,569
Inventory 101,199
Property, equipment and leasehold improvements 116,431
Deferred income tax asset 10,428
Other assets 2,106
Goodwill 135,454
Accounts payable and accrued expenses (74,643)
Notes payable and long-term debt , immediately repaid (14,463)
Capital lease obligations (10,794)
Restructuring obligation (41,967)
____________
Net purchase price $ 236,320
============
</TABLE>
3. ACQUSITION INTEGRATION COSTS AND OTHER SPECIAL CHARGES
The Company incurred significant costs during the year ended
January 2, 1999 as a result of integrating the Delchamps and
Jitney-Jungle operations. Certain of these costs (principally
related to store closures) were allocated to goodwill. However,
other costs attributable to the Delchamps acquisition, including
costs incurred in consolidating warehouse operations,
remerchandising of Delchamps stores, and training of
Delchamps employees have been expensed as acquisition
integration costs in accordance with the guidelines set forth in
EITF 95-3 ("Recognition of Liabilities in Connection with a
Purchase Business Combination"). Acquisition integration costs
and other special charges include the following: $13,452 of
business integration costs related to Delchamps, severance
benefits of $250 and loss of $294 on stores sold under the
consent decree with the Federal Trade Commission in the
Delchamps acquisition.
<PAGE>
4. LONG-TERM DEBT
Long-term debt consisted of the following:
<PAGE>
<TABLE>
<CAPTION>
March 27, January 2,
1999 1999
--------- ---------
<S> <C> <C>
Senior notes at 12%, maturing
in 2006 $ 200,000 $ 200,000
Senior subordinated notes
at 10.38% maturing in 2007 200,000 200,000
Senior Credit Facility 140,740 112,950
Other long-term debt 4,122 4,121
--------- ---------
Long-term debt $ 544,862 $ 517,071
========= =========
</TABLE>
The Company has available a Senior Credit Facility of $162.3
million under which letters of credit aggregating $6.3 million were
outstanding at March 27, 1999.
5. LOSS PER COMMON AND COMMON EQUIVALENT SHARE
Loss per common and common equivalent share is based on the
net income (loss) after preferred stock dividend requirements and
the weighted average number of shares outstanding during each
interim period. Cumulative dividends not declared or paid on
preferred shares amounted to $2,286 for the twelve weeks ended
March 27, 1999. The number of shares used in computing the
loss per share was 425,232 for the twelve weeks ended
March 27, 1999 and 424,150 for the twelve weeks ended March 28,
1998. Potential common shares attributed to outstanding warrants
were not included in the computation as their effect on the
loss per share would be antidilutive.
6. COMMITMENTS AND CONTINGENCIES
The Company is a party to certain litigation incurred in the course of
business. In the opinion of management, the ultimate liability, if
any, which may result from this litigation will not have a material
adverse effect on the Company's financial position or results of
operations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands)
The following is management's discussion and analysis of significant
factors affecting the Company's earnings and liquidity during the
periods included in the accompanying condensed consolidated
statements of operations. This discussion and analysis should be read in
conjunction with the condensed consolidated financial statements
included in Item 1.
A table showing the percentage of net sales represented by certain items
in the Company's condensed consolidated statements of operations is as
follows:
<PAGE>
<TABLE>
<CAPTION>
Twelve Weeks Ended
March 27, March 28,
1999 1998
--------- ---------
<S> <C> <C>
Net sales 100.0 % 100.0 %
Gross profit 26.5 24.5
Direct store expenses 20.3 19.9
Warehouse, administrative
and general expenses 4.6 3.8
Operating income 1.6 0.8
Interest expense, net 3.7 3.2
Acquisition integration costs and other
special charges 3.0
Loss before income taxes (2.1) (5.4)
Income tax benefit 0.0 (1.9)
Net loss (2.1) (3.4)
EBITDA 4.7 3.6
</TABLE>
A summary of the period to period changes in certain items included in
the condensed consolidated statements of operations for the twelve
week periods ended March 27, 1999 and March 28, 1998 is as follows:
<TABLE>
<CAPTION>
Period-to-Period Changes
Twelve Weeks Ended
March 27, 1999
$ %
-------- --------
<S> <C> <C>
Net sales $(14,218) (3.0)%
Gross profit 5,877 5.1
Direct store expenses (728) (0.7)
Warehouse, administrative
and general expenses 3,147 17.4
Operating income 3,456 n/m
Interest expense, net 1,877 12.3
Acquisition integration and other
special charges (13,996) n/m
Loss before income taxes 15,577 n/m
Income tax benefit 9,151 n/m
Net loss 6,426 n/m
EBITDA 4,227 24.6
(n/m - not meaningful comparison)
</TABLE>
RESULTS OF OPERATIONS
NET SALES
Net sales decreased $14,218 or 3.0% in the twelve week period ended
March 27, 1999 compared to the corresponding period ended March
28, 1998. The net sales decrease was primarily attributable to closing
23 stores (17 of which were closed during the first quarter of the prior
year in connection with the Delchamps acquisition including 10 stores
<PAGE>
which were required to be sold by the Federal Trade Commission); 40
new competitive openings over the past four quarters; low overall price
inflation; and pricing and promotional changes by certain competitors
over the last year. Partially offsetting these factors were the impact of
opening 4 new "Premier" stores, remodeling 17 stores during the year,
and additional promotional activities during the quarter. Same store
sales decreased approximately 0.3% for the twelve week period ended
March 27, 1999. The Company's store count at the end of the quarter
was 198 supermarkets (21 combination stores, 161 conventional stores
and 16 discount stores) and 54 gasoline stations compared to 200
supermarkets (11 combination stores, 169 conventional stores and 20
discount stores) and 53 gasoline stations at March 29, 1997.
GROSS PROFIT
Gross profit for the first quarter of fiscal 1999 increased $5,877 to
$121,964, or 26.5% of net sales, compared to $116,087, or 24.5% of net
sales, for the first quarter of fiscal 1998. Gross margin improvements
were attributable to improved procurement costs as a result of the
Delchamps acquisition, partially offset by the increased promotional
activities, competitive influences and low inflation discussed above.
DIRECT STORE EXPENSES
Direct store expenses were $93,495, or 20.3% of net sales, and $94,223,
or 19.9% of net sales, for the twelve week period ended March 27, 1999
and March 28, 1998, respectively. Direct store expenses increased
primarily as a result of increased cash shortages, services and
supplies. They were partially offset by improvements in store
labor, repairs and maintenance, insurance and utilities (fewer
stores).
WAREHOUSE, ADMINISTRATIVE AND GENERAL EXPENSES
Warehouse, administrative and general expenses were $21,270, or 4.6%
of net sales and $18,121, or 3.8% of net sales, for the twelve week period
ended March 27, 1999 and March 28, 1998 respectively. Warehouse,
administrative and general expenses increased primarily due to
increased costs associated with the employer portion of group medical
expense, relocation expense, litigation settlements and increased
depreciation due to additional capital expenditures placed in service
during fiscal year 1998 and the beginning of 1999.
ACQUISITION INTEGRATION CHARGES AND OTHER SPECIAL CHARGES
The Company incurred significant costs during the year ended January 2,
1999 as a result of integrating the Delchamps and Jitney-Jungle operations.
Certain of these costs (principally related to store closures) were
allocated to goodwill. However, other costs attributable to the
Delchamps acquisition, including costs incurred in consolidating
warehourse operations, remerchandising of Delchamps stores, and
training of Delchamps employees have been expensed as acquisition
intergration costs in accordance with the guidelines set forth in
EITF 95-3 ("Recognition of Liabilities in Connection with a Purchase
Business Combination").
These Acquisition integration charges and other special charges were
$13,996 for the twelve week period ended March 28, 1998 consisting of
severance benefits of $250 and loss of $294 on stores sold under the
consent decree with the Federal Trade Commission in the Delchamps
acquisition and business integration costs of $13,452 related to
Delchamps. There were no acquisition integration charges and other
special charges during the first quarter of fiscal 1999.
OPERATING INCOME
Operating income was $7,199, or 1.6% of net sales for the twelve week
period ended March 27, 1999, as compared to $3,743, or 0.8% of net
sales for the twelve week period ended March 28, 1998. The increase
in operating income was due to the factors discussed above.
<PAGE>
EBITDA
EBITDA (net income before interest income, special charges, interest
expense, income taxes, depreciation and amortization and LIFO
charges/credits) was $21,444, or 4.7% of net sales, in the first quarter of
fiscal compared to $17,216, or 3.6% of net sales, in the first
quarter of fiscal 1998. 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.
NET INTEREST EXPENSE
Interest expense was $17,100 in the first quarter of fiscal 1999
compared to $15,223 in the first quarter of fiscal 1998. The increase in
interest expense was primarily due to interest expense on the credit
facility and capital leases.
INCOME TAX EXPENSE (BENEFIT)
The Company has not recorded an income tax benefit relating to
operating losses in 1999 since the Company's operating losses can no
longer be carried back and offset against earnings in earlier periods.
The Company has a net operating loss carryforward of approximately
$51,572 at March 27, 1999. Income taxes were ($9,151) with an
effective tax rate of 35.9% for the first quarter of fiscal 1998.
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 March 27, 1999, Jitney-Jungle had $645,107 of total
long-term commitments (including long-term debt, capitalized leases
and restructuring obligations) and shareholder deficit of $218,470.
The Company's principal uses of liquidity have been to fund working
capital, meet debt service requirements and finance Jitney-Jungle's
strategic plans. The Company's principal sources of liquidity have been
cash flow from operations and borrowings under the Senior Credit
Facility. Outstanding borrowings at March 27, 1999 were $140,740
under the Senior Credit Facility. At March 27, 1999, the Company
breached the leverage ratio in its Senior Credit Facility and such
breach has been waived by its senior lenders. As of March 27, 1999,
the Company was in compliance with the covenants under its aggreements.
Cash used in operating activities during the twelve week period ended
March 27, 1999 was $25,390. Cash used by operating activities during
the twelve week period ended March 28, 1998 was $21,931. The increase
in the cash used in operating activities was primarily attributable to
increased inventory levels (new and remodeled stores, buildup in
anticipation of the Easter Holiday), reduced accounts payable (cut-off
timing difference at year-end and repayment during the quarter of
year-end holiday merchandise); partially offset by a smaller net
loss and the collection of income tax refunds.
Net cash used in investing activities was $9,713 and $18,005 for the
twelve week period ended March 27, 1999 and March 28, 1998, respectively.
One new store was completed and six remodels were in progress during
the first quarter of 1999. Cash used in investing activities included
amounts associated with the purchase of Delchamps, Inc. in the prior year.
Net cash provided by financing activities was $26,308 and $38,155 for
the twelve week period ended March 27, 1999 and March 28, 1998,
respectively. The principal sources of funds in financing activities
for both periods were borrowings under the Senior Credit Facility.
In order for the Company to grow and achieve its long-term operating
objectives, it requires sufficient capital resources to build new stores and
remodel existing stores in its highly competitive markets. In addition,
the Company must maintain its existing facilities, and requires the
financial flexibility both to take advantage of inventory acquisition
opportunities and to withstand short-term economic and competitive
pressures. The Company's capital expenditure program for the
remainder of 1999 is subject to various factors including, but not limited
to, availability of capital, restrictions under various of the Company's
debt instruments, and working capital requirements. In the near term,
if the Company were to significantly reduce or postpone its new store
and remodel program, there would be no substantial impact on current
operations and it is likely that more cash would be available for debt
servicing. In the long term, if these programs were substantially
reduced, in the Company's opinion, its operating business and ultimately
its cash flow would be adversely impacted.
To enable the Company to continue to fulfill its
working capital needs and to implement its capital expenditure
program, the Company and its subsidiaries are currently arranging
a $35,000,000 supplemental secured credit facility (the "New
Facility") which will be secured by a second lien on
substantially all of the Company's and its subsidiaries'
assets. The New Facility will be further supported by
the guaranty of Bruckmann, Rosser,
Sherrill & Co., L.P., the Company's principal
shareholder. Completion of arrangements for the New Facility
is subject to completion of documentation acceptable
to the lenders under the New Facility and the Company,
to the consent of the Company's existing secured
lenders and to other customary conditions precedent to
the extension of a secured credit facility. The Company
believes that the New Facility will be available to the Company
and will permit it to borrow
enough to meet all of its currently anticipated working
capital and capital expenditure needs.
An important factor in the Company's liquidity is its relationship with
its trade suppliers, and management believes that the Company's credit
terms with its major suppliers are consistent with those terms offered
throughout the industry. Management does not expect that there will be any
significant change in the aggregate in credit terms with its major
suppliers in the future; however, if credit is curtailed, the Company's
liquidity would decrease.
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 two locations which are undergoing remediation
and three locations which are geing monitored only. 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 $5,000, $170,000, $130,000, $914,000 and
$468,000 for retrofitting CFC-containing chiller units during the first
quarter of 1999, fiscal 1998, 1997 stub, fiscal 1997 and fiscal 1996,
respectively. Between approximately $175,000 and $200,000 in expenditures
are contemplated for retrofitting the CFC units in fiscal 1999. All
expenditures necessary to upgrade all Pump and Save tanks to comply with
1998 tank standards were completed in fiscal 1998. These regulatory
compliance costs are not covered by insurance.
INFLATION
The Company's primary costs, inventory and labor, are affected by
a number of factors that are beyond its control, including
availability and price of merchandise, the competitive climate and
general and regional economic conditions. As is typical of the
supermarket industry, the Company has generally been able to
maintain margins by adjusting its retail prices, but competitive
conditions may from time to time render it unable to do so while
maintaining its market share.
<PAGE>
SEASONALITY
No material portion of the Company's business is affected by
seasonal fluctuations, except that sales are generally stronger in the
fourth quarter as a result of the Thanksgiving, Christmas and New
Year's Day holidays.
YEAR 2000
During calendar years 1996, 1997 and 1998, the
Company's Information Services Department conducted an
extensive information services system review of all primary
systems, such as financial, payroll, human resources, employee
benefits, purchasing, merchandising, retail/pricing, warehousing
and store management as well as secondary systems such as
catering, damage reclamation and loss prevention. This review
evaluated these systems in terms of their Year 2000 compliance,
flexibility to absorb Delchamps' operations, capacity, general
efficiency, compatibility and competitive advantage. The
Information Services Department recommended, and the Company
is implementing, the replacement or upgrading of all the
Company's primary and secondary systems, most of which were 10
to 15 years old. From March 1997 to January 2, 1999, the
Company spent, excluding license fees, approximately $2,600,000
to replace its financial, payroll, human resources and employee
benefits systems. The Company's other primary systems
(purchasing, merchandising, retail/pricing, warehousing and store
management) are scheduled to be replaced and/or remediated by
October 1, 1999, at an estimated cost of $2,850,000, at which time
all potential Year 2000 problems in the Company's primary systems
should be resolved. Although the Company's operations are not
dependent on its secondary systems, the Company has been
upgrading these systems and anticipates completing that project by
the end of September 1999, at which time all potential Year 2000
problems in the Company's secondary systems should be resolved.
No assurances can be given, however, that all Year 2000 problems
will be effectively resolved on schedule or before the Year 2000.
Any such problems, if not resolved, could have a material adverse
effect on the Company's business, financial condition and results of
operations.
The Company has sent a survey to its third party suppliers,
financial institutions and insurance companies (i) inquiring into
their Year 2000 compliance status, (ii) seeking commitments of
their intention to become Year 2000 compliant and (iii) gathering
information to assess the effect of any non-compliance on the
Company's operations. No assurances can be given that these third
parties will become Year 2000 compliant. Any such non-
compliance could have a material adverse effect on the Company's
business, financial condition and results of operations.
The most reasonably likely worst case Year 2000 scenario
would result in the failure to order or acquire new products for
warehouse or store replenishment. The Company has established a
disaster recovery plan that is available as a reasonable contingency
plan. Through this disaster recovery plan, manual processes are
outlined that will enable the Company to order and obtain available
products for delivery to the stores without reliance on existing
primary technology normally used by the Company.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is a party to certain litigation incurred in the course of
business. In the opinion of management, the ultimate liability, if any,
which may result from this litigation will not have a material adverse
effect on the Company's financial position or results of operations.
<PAGE>
ITEM 2. CHANGE IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No.
--------------
* 4.14 Waier Agreement dated May 17, 1999 to the Amended and
Restated Revolving Credit Agreement dated September 15,
1997 by and among Fleet Capital Corporation and the
Company
* 10.19 Employement Agreement effective as of 1/4/99 by and among
the Company and Richard D. Coleman **
* 27.1 Financial Data Schedule
* Filed herewith.
** Portions of this exhibit have been omitted and filed
seperately with the Securities and Exchange Commission
pursuant to a request for confidential treatment.
(b) Reports on Form 8-K
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
JITNEY-JUNGLE STORES OF AMERICA, INC.
(Registrant)
/s/ Richard D. Coleman
-----------------------
Richard D. Coleman
Executive Vice President,
Chief Financial Officer
Dated: May 17, 1999
WAIVER AGREEMENT
TO
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
WAIVER AGREEMENT dated as of May
17, 1999 to the Amended and Restated Revolving Credit
Agreement dated as of September 15, 1997 (as heretofore
amended, and as may be further amended, restated,
modified or supplemented from time to time, the "Credit
Agreement") among Jitney-Jungle Stores of America, Inc.
("Jitney Jungle"), Southern Jitney Jungle Company,
McCarty-Holman Co., Inc., Jitney-Jungle Bakery, Inc.,
Pump and Save, Inc., Interstate Jitney Jungle Stores, Inc.,
and Delchamps, Inc. ("Delchamps") (each a "Borrower"
and collectively, the "Borrowers"), the guarantors named
therein, the lenders named therein (the "Lenders") and
Fleet Capital Corporation, as agent for the Lenders (the
"Agent"). Capitalized terms used herein and not defined
shall have the respective meanings assigned to such terms
in the Credit Agreement.
WHEREAS the Borrowers have requested
that the Agent and the Required Lenders agree to waive
certain provisions in the Credit Agreement;
WHEREAS the Agent and the Required
Lenders are willing to waive such provisions of the Credit
Agreement on the terms and conditions contained herein;
NOW, THEREFORE, the Borrowers, the
Guarantors, the Required Lenders and the Agent hereby
agree as follows:
1. Waiver. Pursuant to the terms and
conditions contained herein, the Agent and the
Required Lenders hereby agree to waive
compliance with Section 7.09 of the Credit
Agreement solely as it pertains to the Fiscal Quarter
ended March 27, 1999.
2. Effective Date. This Agreement shall become
effective upon compliance with the conditions set
forth immediately below:
(a) The Agent shall have received an
original counterpart of this Waiver, duly executed and
delivered by the Borrowers, the Guarantors and the
Required Lenders.
(b) After giving effect to this Waiver no
Default or Event of Default shall have occurred.
3. Ratification. Except as expressly waived
herein, all terms and conditions of the Credit
Agreement and all other Loan Documents remain in
full force and effect. All collateral security and
guarantees in connection with the Credit Agreement
and/or the Loan Documents are hereby confirmed and
ratified in all respects.
4. Counterparts. This Waiver may be executed
in counterparts, each of which shall constitute an
original but all of which when taken together shall
constitute one contract, and shall become effective
when copies hereof which, when taken together, bear
the signatures of each of the parties hereto shall be
delivered to the Agent. Delivery of an executed
<PAGE>
counterpart of a signature page to this Waiver by
telecopier shall be effective as delivery of a manually
executed signature page hereto.
5. Governing Law. THIS WAIVER SHALL
BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK (OTHER
THAN THE CONFLICTS OF LAWS PRINCIPLES
THEREOF).
[Remainder of page intentionally left blank.]
<PAGE>
IN WITNESS WHEREOF, the parties have
caused this Waiver Agreement to be executed by their
respective officers thereunto duly authorized, as to the date
first above written.
JITNEY-JUNGLE STORES OF AMERICA, INC.,
as Borrower and as Guarantor
By__________________________________
Name:
Title:
SOUTHERN JITNEY JUNGLE COMPANY,
as Borrower and as Guarantor
By_________________________________
Name:
Title:
McCARTY-HOLMAN CO., INC.,
as Borrower and as Guarantor
By_________________________________
Name:
Title:
JITNEY-JUNGLE BAKERY, INC.,
as Borrower and as Guarantor
By_________________________________
Name:
Title:
<PAGE>
PUMP AND SAVE, INC.,
as Borrower and as Guarantor
By_________________________________
Name:
Title:
INTERSTATE JITNEY JUNGLE STORES, INC.,
as Borrower and as Guarantor
By_________________________________
Name:
Title:
DELCHAMPS, INC.,
as Borrower and as Guarantor
By_________________________________
Name:
Title:
JJ CONSTRUCTION CORP.,
as Guarantor
By_________________________________
Name:
Title:
SUPERMARKET CIGARETTE SALES, INC.,
as Guarantor
By_________________________________
Name:
Title:
<PAGE>
FLEET CAPITAL CORPORATION,
as Agent
By_________________________________
Name:
Title:
FLEET CAPITAL CORPORATION,
as Lender
By________________________________
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION,
as Lender
By________________________________
Name:
Title:
HELLER FINANCIAL INC.,
as Lender
By________________________________
Name:
Title:
IBJ WHITEHALL BUSINESS CREDIT CORP.,
as Lender
By________________________________
Name:
Title:
<PAGE>
NATIONAL BANK OF CANADA, a Canadian
Chartered Bank, as Lender
By________________________________
Name:
Title:
NATIONAL BANK OF CANADA, a Canadian
Chartered Bank, as Lender
By________________________________
Name:
Title:
NATIONAL CITY BANK, as Lender
By________________________________
Name:
Title:
DEUTSCHE FINANCIAL SERVICES CORPORATION,
as Lender
By________________________________
Name:
Title:
FLEET BANK, N.A., as a Letter of
Credit Issuer
By________________________________
Name:
Title:
EMPLOYMENT AGREEMENT
This Employment Agreement dated effective as of
January __, 1999, is made and entered into by and between
Jitney-Jungle Stores of America, Inc., a Mississippi corporation
(the "Company"), and Richard D. Coleman (the
"Executive"), an individual residing at 5005 Garrick Court,
Tampa, Florida 33624.
RECITALS
The Company desires to employ the Executive in the
business operated by the Company, according to the terms,
covenants and conditions hereinafter set forth.
NOW, THEREFORE, the Company and the Executive
hereto agree as follows:
1. Employment and Duties. Subject to the terms
hereof, the Company employs Executive as Chief Financial
Officer and Executive Vice President of the Company and in
such capacities with its affiliates and subsidiaries as the
Company shall designate, with such duties as are commensurate
and normally associated with the position of Chief Financial
Officer, subject to the direction of the Company's Chief
Executive Officer and Board of Directors. Executive accepts
such employment and agrees to devote substantially his entire
professional time, attention and energies to the business of the
Company and to perform such additional responsibilities and
duties consistent with his position as provided in the Bylaws and
as may be assigned to him from time to time by the Board of
Directors. Executive shall work at the principal office of the
Company located in or near the Jackson, Mississippi
metropolitan area or at such other location in or near the
Jackson, Mississippi metropolitan area as the Board of Directors,
in its discretion, may select.
2. Extent of Services. Executive shall devote
substantially all his working time (during normal business hours)
and attention (other than during any illness and vacations) and
give his good faith efforts, skills and abilities to the management
and operations of the Company; it being understood and agreed
that Executive shall be permitted to manage his own personal
affairs and serve as director or officer of any trade association,
civic, corporate, educational or charitable organization or
governmental entity, provided that Executive's service does not
materially interfere with Executive's performance of his duties
hereunder. Notwithstanding the above, the Executive shall not
be required to perform any duties or responsibilities which
would be likely to result in non-compliance with or violation of
any applicable law or regulation.
3. Term. The initial term of this Agreement shall
commence as of the effective date hereof and, unless earlier
terminated pursuant to Section 8, shall continue thereafter until
the earliest of (a) December 31, 1999, (b) until terminated by
either party upon the giving of at least thirty (30) days' advance
written notice, or (c) the day following the consummation of a
transaction giving rise to a Change of Control Event (as defined
in Section 8(e) of the Agreement).
4. Compensation. Executive's compensation
under this Agreement shall be as follows:
(a) Base Salary. Company shall pay
Executive a base salary ("Base Salary") at a rate of no
less than $200,000.00 per year from the date hereof.
The Base Salary shall be inclusive of all compensation
for any services Executive may be elected or selected to
perform (i) as a member of the Board of Directors of the
Company and/or any of its affiliates and subsidiaries, or
(ii) as a member of any appointed committees of such
Boards of Directors, including the Executive Committee.
Executive's Base Salary shall be paid in installments in
accordance with the Company's normal payment
schedule for its senior management. All payments shall
be subject to the deduction of payroll taxes and similar
assessments as required by law.
(b) Bonus. In addition to the Base Salary,
Executive shall be paid on December 31, 1999 a cash
bonus of $300,000.00 provided any of the following
occur: (i) Executive remains employed with Company
as the Chief Financial Officer through December 31,
1999; (ii) the Company terminates this Agreement
without Cause (as hereinafter defined); or (iii) the
Executive terminates this Agreement for Good Reason
(as hereinafter defined).
5. Fringe Benefits.
(a) The Company agrees to furnish an
automobile to Executive and to make such automobile
available for the Executive's exclusive use during the
period of his employment with the Company. All
maintenance, taxes and other operating costs shall be
paid by the Company, subject to appropriate withholding
requirements.
(b) The Company shall also make available
to Executive those benefits which are made available to
the executive officers of the Company as a group, which
benefits currently include, without limitation, 401(k)
plans, profit sharing plans, and health, dental, and
disability insurance.
(c) The Company shall also furnish
Executive with suitable living arrangements in Jackson,
Mississippi.
6. Vacation. Executive shall be entitled to take
three weeks of paid vacation during each fiscal year in which he
is employed. Accrued but unused vacation shall be carried over
only in accordance with the Company's standard policies.
7. Expense Reimbursement. In addition to the
compensation and benefits provided in Sections 4, 5 and 6
hereof, the Company shall, upon receipt of appropriate
documentation, reimburse Executive for his reasonable travel,
lodging, entertainment, and other ordinary and necessary
business expenses incurred in the course of his duties on behalf
of the Company, including weekly travel to and from
Executive's home in Tampa, Florida.
8. Termination of Employment.
(a) Either party may terminate Executive's
employment under this Agreement for any reason by
giving thirty (30) days' written notice to the other party.
In the event of a termination by the Company, the
Company may elect that the Executive cease all services
and leave the premises immediately. Following the
termination of Executive's employment for any reason,
Executive shall remain entitled to (i) the portion of his
Base Salary then due through the date of such
termination, (ii) reimbursement for any reimbursable
expenses incurred by Executive prior to such
termination and (iii) all benefits which are accrued,
vested and earned up to the termination date under the
terms of any existing benefit plan of the Company, such
as the vested balance of Executive's account under any
retirement or deferred compensation plan and any
benefits which are legally required to be provided after
termination, such as COBRA benefits. If the Company
terminates Executive's employment without Cause
pursuant to this Section 8(a) or if the Executive resigns
at the request (without Cause) of the Board of Directors
or terminates his employment for Good Reason,
Executive shall be paid, in addition to any amounts
described in the preceding sentence, an amount equal to
the sum of (x) the balance of the Base Salary that
otherwise would be paid through December 31, 1999,
plus (y) the bonus to which Executive would be entitled
pursuant to Section 4(b) of this Agreement. The
Executive shall continue to receive all benefits under the
health benefit plans, practices, policies and programs
provided by the Company to the extent applicable
generally to other peer executives of the Company
through the earlier of December 31, 1999, or until the
date Executive becomes re-employed with another
employer and is eligible to receive medical or other
welfare benefits under another employer provided plan.
All cash severance compensation amounts owed
pursuant to this Section 8(a) shall be paid through
December 31, 1999 following the effective date of
Executive's termination in the normal payment schedule
as if Executive remained employed except that the bonus
deemed earned by Executive on the date of termination
specified above in this Section 8(a) shall be paid in a
lump sum within thirty (30) days following the effective
date of Executive's termination. If Executive notifies
the Company of his intention to terminate his
employment pursuant to this Section 8(a) for any reason,
the Company shall have the right to accelerate the date
of termination to a date on or after the date of
Executive's notice. The Executive's termination of
employment is deemed for "Good Reason," if any of
the following occurs without the Executive's written
consent: (i) the assignment to Executive of any duties
materially inconsistent with, or the substantial reduction
of powers or functions associated with, his positions,
duties, responsibilities and status with the Company
(other than changes in reporting or management
responsibilities required by applicable federal or state
law); (ii) a reduction by the Company of Executive's
salary or a material reduction in other benefits taken as a
whole (except to the extent such benefits are no longer
generally available to members of management of the
Company), except in connection with the termination of
such Executive's employment by the Company for
Cause (it being understood that failure to receive bonus
payments at the same level as in prior years or periods
shall not be deemed to be a reduction in salary); (iii) a
change in Executive's principal work location, except
for required travel on the Company's business; or (iv)
the willful and continuing failure by the Company
substantially to perform its obligations under this
Agreement; provided, however, "Good Reason" shall
not be deemed to exist hereunder unless the Company
shall have failed to cure any breach or nonperformance
within thirty (30) days after receipt by the Company of
written notice thereof from the Executive, which notice
shall be given by Executive promptly and in any event
within fifteen (15) days after any event that the
Executive believes constitutes "Good Reason." It is
hereby expressly acknowledged that the foregoing
definition of "Good Reason" shall be effective solely
for purposes of this Agreement and shall not be
applicable to any other agreement or understanding
between Executive and the Company. "Cause" when
used in connection with the termination of Executive's
employment with the Company, means (A) act or acts of
dishonesty or conviction of a felony by Executive;
provided acts of "dishonesty" shall not extend to
expense account items to the extent the items involved
are nominal and any error is attributable to carelessness
or committed in good faith within reasonable
interpretation of the Company's policies, (B) failure by
the Executive in any material respect as to his
obligations, services or duties hereunder, which
determination shall be made by the Board of Directors of
the Company acting in good faith; provided, however,
"Cause" shall not be deemed to exist hereunder unless
the Executive shall have failed to cure any such breach
or nonperformance within thirty (30) days after receipt
by the Executive of written notice thereof from the
Company, (C) willful and deliberate violations of
Executive's obligations (whether such obligations are
designated by the Board of Directors or are set forth
herein) to the Company that result in material injury to
the Company and (D) misappropriation or
embezzlement of any funds or property of the Company
by the Executive. For purposes of this definition of
Cause, no act or failure to act, shall be considered
"willful" unless done, or omitted to be done, (1) in bad
faith and without reasonable belief that the action or
omission was in the best interest of the Company or, (2)
in the event the direction of the Board of Directors is
unclear, without the reasonable belief that the action or
omission was in the best interest of the Company. In the
event that there is a disagreement regarding the
existence of Good Reason or Cause (other than for
conviction of a felony), either party may submit such
disagreement to arbitration under the rules of the
American Arbitration Association or such other
procedure as the parties may agree. The ruling of the
arbitration shall be final and binding on both parties.
The Company and the Executive shall each pay their
own arbitration costs unless the arbitrator's award
determines otherwise, in which case such costs,
expenses, and fees shall be paid in accordance with the
arbitrator's award. The arbitration proceeding shall be
conducted in Atlanta, Georgia.
(b) Notwithstanding anything to the
contrary in Section 8(a), the Company may terminate
Executive's employment, effective immediately upon
written notice to Executive or on any other dates
specified in such notice, for Cause. Termination by the
Company of Executive's employment for any other
reason shall be deemed for the purposes of this
Agreement to be without Cause.
(c) Executive's employment hereunder
shall terminate immediately upon his death or disability
except as to any right which Executive's estate or
dependents may have under COBRA or any other
federal or state law or which are derived independent of
this Agreement by reason of his participation in any plan
maintained by the Company. For purposes of this
Section 8(c), Executive shall be deemed to be disabled
if, on account of illness or other incapacity, he has been
unable to perform his duties for seventy-five (75)
consecutive days and, in the good faith judgment of the
Board of Directors, will be unable to perform his duties
hereunder for a period of twelve (12) consecutive
months. The Company shall continue to pay Executive
his base salary and other employment benefits hereunder
prior to the termination by the Board of Directors
pursuant to this Section 8(c) even though Executive is
disabled during that period of time.
(d) Severance payments due under Section
8(a) shall be paid when due regardless whether
Executive accepts employment with a new employer.
(e) In the event (x) a Change of Control
Event occurs prior to the later of (i) December 31, 1999,
or (ii) the date that is six (6) months after the termination
of Executive's employment, and (y) at the time of the
Change of Control Event the Executive's employment
has not been terminated by the Company for Cause or
the Executive has not terminated his employment
without Good Reason, the Company agrees to pay to
Executive a transaction bonus in the sum set forth on
Schedule "A" less the bonus paid or payable to
Executive, if any, pursuant to Section 4(b) above (the
"Transaction Bonus"). For purposes of this Agreement,
the term "Change of Control Event" shall mean the first
to occur of any of the following events:
(i) the entry by the Company
or any of its shareholders
into a binding agreement to
effect any transaction or
series of related transactions
(including, but not limited
to, any tender officer,
exchange offer, merger or
other business combination
or other similar transaction),
the result of which is that
less than a majority of the
combined voting power of
the then outstanding
securities of the Company,
or any successor to the
Company resulting from
such transaction or series of
related transactions, would
be held in the aggregate by
holders of the Company's
securities immediately prior
to such transaction or the
beginning of the series of
related transactions; or
(ii) the entry by the Company
into a binding agreement to
sell, lease, exchange or
otherwise transfer (in one
transaction or a series of
related transactions) all or
substantially all of the assets
of the Company.
The Transaction Bonus to which Executive is
entitled pursuant to this Section 8(e) shall be due and
payable in a lump sum on the closing of the transaction
giving rise to the Change in Control Event.
Notwithstanding anything herein to the contrary,
however, the provisions of this Section 8(e) shall not be
effective, and shall be of no force or effect, unless and
until such provisions are approved by the separate vote
of the holders of more than seventy five percent (75%)
of the voting power of all of the outstanding stock of the
Company.
(f) Excess Parachute Payments. In the
event that any payment to be received by Executive
hereunder would be subject to an excise tax pursuant to
Section 4999 of the Code, whether in whole or in part, as
a result of being an "excess parachute payment" within
the meaning of such term in Section 280G(b) of the
Internal Revenue Code, then the amount payable under
this Agreement shall be reduced (if necessary) to an
amount that results in the greatest after-tax proceeds to
Executive.
9. Confidentiality. From and after the date hereof,
Executive shall, and shall cause his affiliates and representatives
to, keep confidential and not disclose to any other person or use
for his own benefit or the benefit of any other person any trade
secrets or other confidential proprietary information in his or
their possession or control regarding the Company or its
affiliates or their respective businesses and operations. The
obligation of Executive under this Section 9 shall not apply to
information which (i) is or becomes generally available to the
public without breach of the commitment provided for in this
Section; or (ii) is required to be disclosed by law, order or
regulation of a court or tribunal or governmental authority;
provided, however, that, in any such case, Executive shall notify
the Company as early as reasonably practicable prior to
disclosure to allow the Company to take appropriate measures to
preserve the confidentiality of such information.
10. Competition; Solicitation. Executive hereby
agrees that during the Term he will not, unless authorized in
writing to do so by the Company, (a) directly or indirectly own,
manage, operate, join, control or participate in the ownership,
management, operation or control of, or be employed or
otherwise connected in any substantial manner with any business
which directly or indirectly competes to a material extent with
any line of business of the Company or its subsidiaries;
provided, that nothing in this Agreement shall prohibit Executive
from acquiring up to 2% of any class of outstanding equity
securities of any corporation whose equity securities are
regularly traded on a national securities exchange or in the
"over-the-counter market"; (b) recruit any employee of the
Company or solicit or induce, or attempt to solicit or induce, any
employee of the Company to terminate his or her employment
with, or otherwise cease his or her relationship with, the
Company; or (c) solicit, divert or take away, or attempt to solicit,
divert or to take away, the business or patronage of any of the
clients, customers or accounts as prospective clients, customers
or accounts, of the Company. Provided that the Company pays
the Executive (i) the severance payment due to Executive in
accordance with Section 8(a) hereof or, (ii) an amount equal to
the Section 8(a) severance payment within thirty (30) days
following the effective date of Executive's termination, the
covenants contained in the preceding sentence regarding
competition and solicitation shall extend for a period of one year
from the termination or expiration of the Term in consideration
for such payment. For purposes of the post-termination
covenants under this Section 10, the restriction shall be limited
to the geographic area in which the Company conducts business
as of the day immediately prior to the date of termination of
Executive's employment or the Change of Control Event,
whichever is earlier.
11. Equitable Relief. The Company and Executive
confirm that the restrictions contained in Sections hereof are, in
view of the nature of the business of the Company, reasonable
and necessary to protect the legitimate interests of the Company
and that any violation of any provision of Sections will result in
irreparable injury to the Company. Executive hereby agrees
that, in the event of any breach or threatened breach of the terms
or conditions of this Agreement by Executive, the Company's
remedies at law will be inadequate and, in any such event, the
Company shall be entitled to commence an action for
preliminary and permanent injunctive relief and other equitable
relief in any court of competent jurisdiction.
12. Indemnity. The Company agrees to indemnify
Executive against all costs, charges and expenses incurred or
sustained by Executive in connection with any action, suit or
proceeding to which he may be a party by reason of being or
having been a director, officer or employee at the request of the
Company to the fullest extent permitted by applicable law.
13. Amendment. This Agreement contains and its
terms constitute the entire Agreement of the parties and
supersedes all prior Agreements regarding employment, and may
be amended only by a written document signed by both parties to
this Agreement
14. Governing Law. This Agreement shall be
governed by the laws of the State of Mississippi. The parties
hereby irrevocably consent to, and waive any objection to the
exercise of, personal jurisdiction by the state and federal courts
located in the State of Mississippi with respect to any action or
proceeding arising out of this Agreement.
15. Attorneys' Fees. The Company agrees to pay,
to the full extent permitted by law, all legal fees and expenses
which the Executive may reasonably incur as a result of any
contest (only to the extent the Executive prevails in the outcome
thereof) by the Company of the validity or enforceability of, or
liability under, any provision of this Agreement (including as a
result of any contest by the Executive about the amount of any
payment pursuant to this Agreement).
16. Severability. Should any provision hereof be
deemed, for any reason whatsoever, to be invalid or inoperative,
that provision shall be deemed severable and shall not affect the
force and validity of all other provisions of this Agreement.
17. Survival. All provisions which may reasonably
be interpreted or construed to survive the expiration or
termination of this Agreement shall survive the expiration or
termination of this Agreement.
18. Notices. Any notice, request or instruction to be
given hereunder shall be in writing and shall be deemed given
when personally delivered or three (3) days after being sent by
certified mail, postage prepaid, to the other party at such party's
address set forth below.
IF TO EXECUTIVE:
Richard D. Coleman
c/o Jitney-Jungle Stores of America, Inc.
P. O. Box 3409
Jackson, Mississippi 39207-3409
IF TO COMPANY:
Jitney-Jungle Stores of America, Inc.
P. O. Box 3409
Jackson, Mississippi 39207-3409
Attention: Michael E. Julian
with a copy to:
Bruckmann, Rosser, Sherrill & Co., Inc.
126 East 56th Street, 29th Floor
New York, New York 10022
Attention: Harold O. Rosser II
Each party may change the address to which notices from the
other party are to be sent by notifying such party of its new
address in accordance with this Section 18.
19. Waiver. No waiver of any condition, obligation
or term hereof shall constitute a waiver of any other or a waiver
of a subsequent right to demand strict compliance with all
conditions, obligations and terms hereof.
20. Successors. This Agreement, including the
documents and instruments referred to herein, shall inure to the
benefit of and be binding upon and enforceable against the heirs,
legal representatives, successors, and assigns of the parties
hereto.
21. Delegation of Duties. Executive may not
delegate or assign any of his duties or obligations hereunder.
With the exception of assigning duties to the Executive relating
to the business of the affiliates or any subsidiaries of the
Company and with the exception of an assignment to any
acquiror in connection with (i) an acquisition of 50% or more of
the Company's voting stock, (ii) a merger or consolidation of
the Company resulting in the holders of the Company's voting
stock immediately prior to such transaction holding less than
50% of the total voting common stock of the surviving
corporation after such termination or (iii) a sale or exchange of
all or substantially all of the property or assets of the Company,
the Company shall have no right to assign this Agreement
without Executive's written consent.
22. Partial Invalidity. If any provision in this
Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remaining provisions shall,
nevertheless, continue in full force and without being impaired
or invalidated in any way.
23. Entire Agreement. This Agreement contains the
entire agreement between the parties hereto with respect to the
transactions contemplated hereby and supersedes all prior
arrangements or understandings with respect thereto.
Executed as of the day and year first above written.
JITNEY-JUNGLE STORES OF AMERICA, INC.
("Company")
By:
Name:
Title:
RICHARD D. COLEMAN
("Executive")
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE "A"
Executive shall be paid the sum indicated in Column A (less the bonus
paid, if any, pursuant to Section 4(b) of the Employment Agreement) if
the common stock shareholders receive the net purchase price in cash or
marketable securities for all common shares (the "Equity Value") of the
amounts listed in Column B.
<C> <C>
A ($000) B ($mm)
*** ***
*** ***
*** ***
*** ***
*** ***
*** ***
*** ***
*** ***
*** ***
*** ***
*** ***
*** ***
*** ***
*** ***
*** ***
*** ***
*** ***
</TABLE>
To the extent the Equity Value paid shareholders
exceeds an identified level in Column B, the payment specified
in Column A shall be adjusted pro rata. For example, if the
Equity Value is ***, the payment under Column A would be *** (***).
In the event that a Change of Control Event occurs and the
Equity Value is less than ***, Executive shall still be entitled to
a payment of *** less any bonus paid pursuant to Section 4(b). In no
event shall the payment calculated pursuant to Schedule "A" exceed ***.
*** This information has been omitted and filed separately with
the Securities and Exchange Commission and is subject to a confidential
treatment request with respect thereto.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> JAN-02-1999
<PERIOD-START> JAN-03-1999
<PERIOD-END> MAR-27-1999
<CASH> 9,246
<SECURITIES> 0
<RECEIVABLES> 25,832
<ALLOWANCES> 0
<INVENTORY> 183,303
<CURRENT-ASSETS> 223,696
<PP&E> 485,052
<DEPRECIATION> 188,329
<TOTAL-ASSETS> 676,483
<CURRENT-LIABILITIES> 192,962
<BONDS> 0
73,553
10,203
<COMMON> 4
<OTHER-SE> (228,677)
<TOTAL-LIABILITY-AND-EQUITY> 676,483
<SALES> 459,991
<TOTAL-REVENUES> 459,991
<CGS> 338,027
<TOTAL-COSTS> 469,892
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,100
<INCOME-PRETAX> (9,901)
<INCOME-TAX> 0
<INCOME-CONTINUING> (9,901)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,901)
<EPS-PRIMARY> (28.77)
<EPS-DILUTED> (28.77)
</TABLE>
