U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 1997
Commission File Number 2-96510-N.Y. -----------------
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DG LIQUIDATION, INC.
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(Exact name of Registrant as specified in its Charter)
New Jersey 11-2269958
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(State of other jurisdiction of (I. R. S. Employer
in corporation or organization) Identification No.)
6 Industrial Way West, Eatontown New Jersey 07724
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 732-542-2300
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_Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 of 15 (d) of the Securities Exchange Act of
1934 during the 12 preceding 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 NO X
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Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock as of the most recent practicable date:
As of October 31, 1997 there were outstanding 9,551,798 shares of the
Registrant's Common Stock, par value $1.00, and 1122.98 shares of the
Registrant's Preferred Stock, $100.00 par value.
Page 1 of Pages
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<CAPTION>
DG LIQUIDATION, INC.
STATEMENT OF NET ASSETS IN LIQUIDATION
(amounts in thousands, except per share amounts)
October 31, July 31,
1997 1997
(Unaudited)
ASSETS
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<S> <C> <C>
Cash and cash equivalents $1162 $230
United States Treasury bills at cost which approximates market value 2016 3803
Notes receivable, including interest of $19 and $68 10931 11484
Insurance claim receivable 1000 1000
Accrued interest receivable and other assets 489 287
Delivery trucks held for sale at estimated net realizable value 427 427
Tax refund receivable 243
Deferred tax asset 127 127
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16395 17358
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LIABILITIES
Notes payable 72 80
Estimated liquidation expenses 1855 1924
Accrued expenses and taxes 451 433
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2378 2437
Redeemable preferred stock; authorized 250,000shares, $100 par value;
issued and outstanding 1123 shares at redemption value 1123 2262
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3501 4699
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NET ASSETS IN LIQUIDATION $12894 $12659
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NUMBER OF COMMON SHARES OUTSTANDING 9552 9552
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NET ASSETS IN LIQUIDATION PER COMMON SHARE (based on 9,552,000
shares outstanding) $1.35 $1.33
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</TABLE>
See notes to financial statements
2
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<TABLE>
<CAPTION>
DG LIQUIDATION, INC.
STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION
(in thousands)
(Unaudited)
Three Month
Period Ended
October 31, 1997
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<S> <C>
Net assets at July 31,1997 $12,659
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Interest income 271
Truck rental income 91
Other adjustments to net assets (6)
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Increase in net assets before income taxes 356
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Provision for income taxes 121
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Increase in estimated liquidation value of assets over liabilities 235
NET ASSETS IN LIQUIDATION AT OCTOBER 31, 1997 $12,894
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</TABLE>
See notes to financial statements
3
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DG LIQUIDATION, INC.
NOTES TO THE FINANCIAL STATEMENTS
Note 1 - Financial Statements :
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for the interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, such information reflects
all adjustments (consisting only of normal recurring accruals) necessary to a
fair presentation for the period being reported
On June 27, 1997, the Stockholders of the Company approved a Plan of
Liquidation (the "Plan"). Subsequently, the Company has adopted the liquidation
basis of accounting. Accordingly, the net assets of the Company at October 31,
1997 are stated at liquidation value whereby assets are stated at their
estimated net realizable value and liabilities, which include estimated
liquidation expenses to be incurred through the date of final dissolution of the
Company, are stated at their anticipated settlement amounts. For further
information, refer to the financial statements and footnotes thereto
incorporated by reference in the Company's Annual Report on Form 10-K for the
fiscal year ended July 31, 1997.
*Financial statements for the quarter ended October 31, 1996 are not presented
since those statements are presented on a going concern basis and are no longer
significant to the Company's ongoing activities.
4
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ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
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The Board of Directors adopted, and the stockholders approved on June
27, 1997, a Plan of Liquidation of the Company. Since July 1, 1997, the Company
has been operating under the Plan and its financial reporting is being made in
accordance with the liquidation basis of accounting. Therefore, the following
discussion relates to financial statements presented on a liquidation basis
since statements presented on a going concern basis are no longer material to
stockholder value.
STATEMENT OF NET ASSETS IN LIQUIDATION
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Pursuant to the Liquidation Plan, the Company sold substantially all of
its operating assets on July 3, 1997, subject to substantially all of the
Company's liabilities, for an aggregate price of $4,000,000 in cash paid at the
closing, an unsecured, non interest bearing note for $1,000,000 due June 30,
2001 and an adjustable value promissory note recorded at $10,646,000 payable
over four years with interest at 1% above the 180 day London Interbank offering
rates and collateralized by an irrevocable standby letter of credit. The
$1,000,000 promissory note has been recorded at its present value of
approximately $766,000. The purchase price is subject to adjustment based on
the final valuation of the assets and liabilities sold. In addition the buyer
has the right to return any receivables not paid after one year from the sale.
As of April 25, 2000 final adjustments of the purchase price had not been
determined. Any adjustment will be recognized in the period in which the
adjustment is determined.
The Company has set aside as accrued and estimated liquidation expenses an
amount believed to be adequate for payment of all expenses and other known
liabilities as well as likely and quantifiable contingent obligations,
including potential tax obligations. In the event this accrued and estimated
liquidation expense is not adequate for payment of the Company's expenses and
liabilities, each stockholder could be held liable for pro rata payments to
creditors in an amount not to exceed the stockholder's prior distribution from
the Company. The Company has therefore adopted a conservative policy in
retaining sufficient assets to insure against any unforeseen and
non-quantifiable contingencies.
Statement of Changes in Net Assets in Liquidation
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As of October 31, 1997 the Company had net assets in liquidation of
$12,894,000. This represented an increase of $356,000 before taxes from the
net assets at July 31, 1997. This change before taxes of $121,000 was
attributed to interest income of $271,000 and truck rental income of $91,000.
Under the terms of sale of the net assets the Company will receive payments
of interest on notes from the buyer. In addition, as a result of the Company's
conservative policy of retaining assets, the Company will earn interest income.
The estimated interest income from these sources (until July 31, 2002 estimated
date of final liquidation) is $2,500,000. The terms of sale also provide for the
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buyer to lease trucks from the Company for one year for $365,000. The estimated
interest income and the truck rental are not included in the October 31,1997
Statement of Changes in Net Assets.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act
of 1934, the Registrant has duly caused this report to be executed on its
behalf by the undersigned, thereunto duly authorized, in the City of Secaucus,
State of New Jersey, on May 4, 2000.
DG LIQUIDATION, INC.
By: /s/ Harold Blumenkrantz
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Harold Blumenkrantz, President
and Chief Executive Officer
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<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> AUG-01-1997
<PERIOD-END> OCT-31-1997
<CASH> 1162
<SECURITIES> 2016
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 16395
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 16395
<CURRENT-LIABILITIES> 2378
<BONDS> 0
1123
0
<COMMON> 0
<OTHER-SE> 12894
<TOTAL-LIABILITY-AND-EQUITY> 16395
<SALES> 356
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 356
<INCOME-TAX> 121
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 235
<EPS-BASIC> 1.35
<EPS-DILUTED> 1.35
</TABLE>
