<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported)
April 29, 1994
NATIONAL CONVENIENCE STORES INCORPORATED
(Exact name of registrant as specified in its charter)
DELAWARE 1-7936 74-1361734
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
100 Waugh Drive, Houston, Texas 77007
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
(713) 863-2200
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On April 29, 1994, the Company completed the previously announced transaction
whereby the Company, (i) exchanged its 53 operating convenience stores in
Southern California, together with related inventories and equipment, for 88
operating convenience stores of The Circle K Corporation in the Dallas-Fort
Worth and Houston, Texas areas, together with related inventories and equipment
and, (ii) sold its 27 operating convenience stores in Atlanta, Georgia,
together with related inventories and equipment, for cash consideration of
$9,150,000 (herein referred to as the"Transaction"). The Company now operates
only in the State of Texas.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
See Index on page 4 of this report for, (a) financial statements of business
acquired and (b) pro forma financial information.
The following exhibits were previously filed with initial Form 8-K dated May
13, 1994:
10.10 - Asset Exchange Agreement By and Among National Convenience Stores
Incorporated, NCS Realty Company, The Circle K Corporation and Circle
K Properties, Inc. Dated as of April 20, 1994 and as amended on April
29, 1994.
10.11 - Asset Purchase Agreement By and Among National Convenience Stores
Incorporated, NCS Realty Company, Stop N Go Markets of Georgia, Inc.
The Circle K Corporation and Circle K Properties, Inc. Dated as of
April 20, 1994 and as amended on April 29, 1994.
<PAGE> 3
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 hereunto duly authorized.
Dated: July 13, 1994
NATIONAL CONVENIENCE STORES
INCORPORATED
By: /s/ A. J. Gallerano
A. J. Gallerano
Senior Vice President,
General Counsel
and Secretary
<PAGE> 4
NATIONAL CONVENIENCE STORES INCORPORATED AND SUBSIDIARIES
INDEX
FINANCIAL STATEMENTS OF BUSINESS ACQUIRED:
Report of Independent Accountants
Combined Balance Sheet as of April 29, 1994
Combined Statement of Operations for the
Period May 1, 1993 through April 29, 1994
Combined Statement of Cash Flows for the
Period May 1, 1993 through April 29, 1994
Notes to Combined Financial Statements
PRO FORMA FINANCIAL INFORMATION:
Unaudited Pro Forma Consolidated Statements of Operations
Year Ended June 30, 1993 and
Nine Months Ended March 31, 1994
Notes to Unaudited Pro Forma Consolidated Statements of Operations
<PAGE> 5
CIRCLE K NET ASSETS
-------------------------
FINANCIAL STATEMENTS
FOR THE PERIOD MAY 1, 1993 TO APRIL 29, 1994
<PAGE> 6
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
National Convenience Stores Incorporated
Houston, Texas
We have audited the accompanying combined balance sheet of certain stores of
The Circle K Corporation, collectively referred to as Circle K Net Assets (See
Note 1), as of April 29, 1994, and the related combined statements of
operations and cash flows for the period from May 1, 1993 to April 29, 1994.
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 audit.
We conducted our audit 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 audit provides a reasonable basis
for our opinion.
The accompanying combined financial statements have been prepared from the
separate records of the above described stores maintained by The Circle K
Corporation and may not necessarily be indicative of the conditions that would
have existed or the results of operations if Circle K Net Assets had operated
as an unaffiliated company from The Circle K Corporation. Portions of certain
assets, liabilities, revenues and expenses represent allocations from certain
operating areas, regions and corporate office functions of The Circle K
Corporation.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of Circle K Net Assets
as of April 29, 1994, and the results of its operations and its cash flows for
the period from May 1, 1993 to April 29, 1994 in conformity with generally
accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The accompanying supplementary information is
presented for the purpose of additional analysis and is not a required part of
the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
COOPERS & LYBRAND
Phoenix, Arizona
June 28, 1994
<PAGE> 7
CIRCLE K NET ASSETS
NOTES TO COMBINED FINANCIAL STATEMENTS
FOR THE PERIOD MAY 1, 1993 TO APRIL 29, 1994
-------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Reporting Entity
The accompanying financial statements represent the combined balance
sheet, operating results and cash flows of 88 convenience stores which
comprise substantially all of one operating area (Houston metropolitan
area) and a portion of another operating area (Dallas-Fort Worth
metropolitan area) of The Circle K Corporation and subsidiaries. The
accompanying financial statements include the assets, liabilities and
operating results which are specifically identified to these 88 stores,
along with allocations of other assets, liabilities and expenses of the
related operating areas, region and corporate office functions of The
Circle K Corporation, collectively referred to as "Circle K Net Assets."
On April 29, 1994, The Circle K Corporation consummated the transaction
and transferred the 88 stores comprising Circle K Net Assets to National
Convenience Stores, Inc. ("NCS"). The accompanying financial statements
do not reflect any adjustments to the historical cost values of assets
and liabilities to give effect to this transaction. In addition, certain
of the assets and liabilities in the accompanying balance sheet are not
included in the transaction with NCS.
The operating results of Circle K Net Assets presented in the
accompanying financial statements do not necessarily reflect the
operating results which would have occurred had Circle K Net Assets been
an unaffiliated entity for the period presented.
Basis of Reporting
The accompanying combined financial statements have been prepared on the
historical cost basis of accounting reflected in the financial and
accounting records of The Circle K Corporation, and not on the allocation
of the consideration paid by NCS.
On July 26, 1993, The Circle K Corporation was acquired by a third party
in a transaction accounted for by the purchase method of accounting.
Accordingly, certain assets and liabilities of Circle K Net Assets
(primarily property and equipment) were adjusted to reflect their
estimated fair values with a corresponding adjustment to Equity in Circle
K Net Assets.
Allocation of Assets, Liabilities, Revenues and Expenses
Specifically identifiable assets, liabilities, revenues and expenses of
the Circle K Net Assets stores were allocated based on individual
accounting records maintained for each store location. Administrative
expenses, advertising costs, assets and liabilities of the operating
areas, region and corporate office functions were allocated to Circle K
Net Assets based on a ratio of the number of Circle K Net Asset stores to
the respective total stores. Corporate offices consist of executive,
marketing, accounting, treasury, information systems, legal and human
resource functions. Expenses, assets and liabilities related to medical,
workers' compensation and general liability programs were allocated to
Circle K Net Assets based on the number of employees or on a
state-by-state allocation based on claims experience, then based on a
ratio of the number of stores.
<PAGE> 8
CIRCLE K NET ASSETS
NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)
FOR THE PERIOD MAY 1, 1993 TO APRIL 29, 1994
-------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)
Cash and Cash Equivalents
Cash and cash equivalents include cash items on hand in the stores.
Circle K Net Assets participates in The Circle K Corporation's cash
management system whereby the nightly deposits are swept into a Circle K
Corporation concentration account. See "Equity in Circle K Net Assets."
Inventories
Inventories are stated at the lower of cost or market. The cost of store
merchandise inventories is determined by the retail method and the cost
of gasoline inventories approximated cost determined by the first-in,
first-out method.
Property and Equipment
Property and equipment are stated at cost. Depreciation and amortization
are computed using the straight-line method over the estimated useful
lives or, for assets under capital leases, the lease terms if shorter.
The estimated useful lives average approximately 25 years for buildings,
five years for store equipment and 10-20 years for gasoline storage
equipment. Leasehold improvements are amortized over the remaining lease
term.
Equity in Circle K Net Assets
The Circle K Corporation contributed substantially all of the working
capital, property and equipment, and other operating requirements of
Circle K Net Assets through cash advances. All transactions with The
Circle K Corporation, whether current or noncurrent, have been recorded
in the Equity of Circle K Net Assets account since there is no provision
for specific settlement of these transactions. Also, no interest expense
has been recognized related to this account due to its long-term,
investment nature.
Income Taxes
Circle K Net Assets is not a separate taxable entity for federal or state
income tax reporting purposes. The operations of Circle K Net Assets are
included in The Circle K Corporation's consolidated federal income tax
return and various state returns. No portion of The Circle K
Corporation's income tax expense has been allocated to Circle K Net
Assets.
2. ACCOUNTS RECEIVABLE:
Accounts receivable consist of the following:
<TABLE>
<S> <C>
Vendors $ 447,484
Other 113,052
----------
560,536
Less allowance for doubtful accounts (24,710)
----------
$ 535,826
==========
</TABLE>
<PAGE> 9
CIRCLE K NET ASSETS
NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)
FOR THE PERIOD MAY 1, 1993 TO APRIL 29, 1994
-------------------------
3. INVENTORIES:
Inventories consist of the following:
<TABLE>
<S> <C>
Merchandise $ 2,842,062
Gasoline 778,925
-----------
$ 3,620,987
===========
</TABLE>
4. PROPERTY AND EQUIPMENT:
Property and equipment consist of the following:
<TABLE>
<S> <C>
Land $ 1,781,750
Buildings 1,077,478
Store fixtures and equipment 8,981,751
Leasehold improvements 1,379,914
Assets under capital lease (primarily buildings) 1,407,493
-----------
14,628,386
Less accumulated depreciation and amortization (1,544,092)
-----------
$13,084,294
===========
</TABLE>
Accumulated depreciation and amortization includes accumulated
amortization of assets under capital lease of $408,246.
5. ACCRUED LIABILITIES:
Accrued liabilities consist of the following:
<TABLE>
<S> <C>
Salaries and bonuses $ 282,800
Vacations and benefits 100,909
Rent and property taxes 352,095
Environmental remediation 67,026
General liability 253,650
Lottery 349,333
Other 394,580
-----------
$ 1,800,393
===========
</TABLE>
<PAGE> 10
CIRCLE K NET ASSETS
NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)
FOR THE PERIOD MAY 1, 1993 TO APRIL 29, 1994
-------------------------
6. LONG-TERM OBLIGATIONS:
Long-term obligations include a note payable related to a real estate
installment purchase for $3,556,667 and capital lease obligations of
$1,075,429 (see "Leases"). The note payable bears interest of 9% and
matures on September 30, 2007.
Maturities of the note payable are as follows:
<TABLE>
<CAPTION>
Year Ending April 30,
---------------------
<S> <C>
1995 $ 91,368
1996 106,857
1997 122,048
1998 133,497
1999 146,020
</TABLE>
Substantially all accounts receivable, inventories, and property and
equipment are collateral for certain debt of The Circle K Corporation and
subsidiaries; such debt has not been allocated to Circle K Net Assets.
7. OTHER LIABILITIES:
Other liabilities consist of the following:
<TABLE>
<S> <C>
Environmental remediation $ 1,321,481
Workers' compensation 340,933
General liability 512,664
Other 573,333
-----------
$ 2,748,411
===========
</TABLE>
8. LEASES:
Fifty-eight of Circle K Net Assets stores are leased. The store leases
usually have primary terms of up to twenty-five years with one to three
renewal options for additional five to fifteen year periods. Under
certain of these leases, there are additional rents based upon a
percentage of sales. The leases for equipment are for terms up to 8
years. Most of the leases require the payment of real estate taxes,
repairs and maintenance and insurance.
<PAGE> 11
CIRCLE K NET ASSETS
NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)
FOR THE PERIOD MAY 1, 1993 TO APRIL 29, 1994
-------------------------
8. LEASES: (Continued)
Future minimum rental payments due under operating and capital leases are
as follows:
<TABLE>
<CAPTION>
Operating Capital
Years Ending April 30, Leases Leases
---------------------- ------------- ------------
<S> <C> <C>
1995 $ 1,457,292 $ 179,742
1996 1,409,610 175,979
1997 1,372,918 188,791
1998 1,350,014 110,448
1999 1,362,016 106,761
Thereafter 13,447,571 1,790,436
------------- ------------
Total minimum lease payments $ 20,399,421 2,552,157
=============
Less estimated executory costs (33,961)
------------
Net minimum lease payments 2,518,196
Less imputed interest (1,393,555)
------------
Present value of net minimum lease payments 1,124,641
Less current maturities (49,212)
------------
Capital lease obligations long-term $ 1,075,429
============
</TABLE>
Minimum lease rental expenses and percentage rental expense for the
period ended April 29, 1994 were as follows:
<TABLE>
<S> <C>
Minimum rentals $ 1,480,687
Percentage rentals $ 43,623
</TABLE>
9. ENVIRONMENTAL COMPLIANCE:
Circle K Net Assets is subject to environmental laws and regulations
which include obligations to remove or mitigate the effects on the
environment of releases from underground gasoline storage tanks (UST).
Circle K Net Assets has established accruals for those sites where it is
probable that a loss has been incurred and the amount of the loss can be
reasonably estimated. The reliability of the loss estimates are affected
by numerous factors such as differing strategies of site evaluation and
improving leak detection technology. Accruals are adjusted based on new
incidents and updated information and are impacted by a number of factors
including changes in technology, new developments and interpretation of
government policy, soil conditions, and other factors. At April 29,
1994, Circle K Net Assets had environmental remediation accruals for
sites of approximately $1,388,000.
<PAGE> 12
CIRCLE K NET ASSETS
NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)
FOR THE PERIOD MAY 1, 1993 TO APRIL 29, 1994
-------------------------
9. ENVIRONMENTAL COMPLIANCE: (Continued)
Circle K Net Assets has recorded an asset related to estimated future
claims for reimbursements of remediation costs from the Texas trust fund
program of approximately $84,000 for sites with known contamination. The
Texas trust fund program has been submitted to or approved by the EPA,
with a variety of mechanisms for sharing or reimbursing corrective-action
(remediation) costs, many including third-party compensation. A variety
of fees are paid to participate in the trust fund program for remediation
activities. The asset related to estimated trust fund reimbursements
recorded at April 29, 1994 has been recorded because future reimbursement
is believed to be probable.
10. EMPLOYEE BENEFIT PLAN:
The employees of Circle K Net Assets are eligible to participate in a
savings plan of The Circle K Corporation. Employee contributions to the
plan are tax deductible under Section 401(k) of the Internal Revenue
Code. Certain employee contributions are matched by The Circle K
Corporation. For the period May 1, 1993 to April 29, 1994, $28,416 was
contributed by The Circle K Corporation and is reflected in "Operating
and Administrative Expenses - Stores" in the accompanying financial
statements.
11. CHANGE IN NET ASSETS:
<TABLE>
<S> <C>
Equity in Circle K Net Assets
May 1, 1993 $ 4,694,599
Net loss (1,801,571)
-------------
Equity in Circle K Net Assets
April 29, 1994 $ 2,893,028
=============
</TABLE>
<PAGE> 13
SUPPLEMENTARY
INFORMATION
<PAGE> 14
CIRCLE K NET ASSETS
COMBINED SCHEDULE OF ALLOCATED AND
STORE SPECIFIC ASSETS AND LIABILITIES
APRIL 29, 1994
-------------------------
<TABLE>
<CAPTION>
Total
Circle K Store
Net Assets Specific Allocated
-------------- --------------- ----------------
<S> <C> <C> <C>
ASSETS
Cash $ 44,000 $ 44,000 $ -
Accounts receivable 535,826 - 535,826
Inventories 3,620,987 3,620,987 -
Prepaids and other current assets 544,075 29,192 514,883
Property and equipment 13,084,294 13,084,294 -
-------------- --------------- ----------------
17,829,182 16,778,473 1,050,709
-------------- --------------- ----------------
LIABILITIES
Current maturities of long-term
obligations 140,580 140,580 -
Accounts payable 2,534,096 555,996 1,978,100
Accrued liabilities 1,800,393 741,895 1,058,498
Money orders sold 3,080,578 3,080,578 -
Long-term obligations 4,632,096 4,632,096 -
Other liabilities 2,748,411 195,561 2,552,850
-------------- --------------- ----------------
14,936,154 9,346,706 5,589,448
-------------- --------------- ----------------
Equity of Circle K Net Assets $ 2,893,028 $ 7,431,767 $ (4,538,739)
============== =============== ================
</TABLE>
The accompanying notes to financial statements
are an integral part of this schedule.
<PAGE> 15
CIRCLE K NET ASSETS
COMBINED SCHEDULE OF ALLOCATED
OPERATING AND ADMINISTRATIVE EXPENSES
FOR THE PERIOD MAY 1, 1993 TO APRIL 29, 1994
-------------------------
<TABLE>
<S> <C>
Advertising $ 309,083
General liability insurance 376,433
Workers compensation 912,835
Other 220,850
General and administrative:
Corporate 2,616,691
Regional and operating area 1,427,913
-----------
$ 5,863,805
===========
</TABLE>
The accompanying notes to financial statements
are an integral part of this schedule.
<PAGE> 16
PRO FORMA FINANCIAL INFORMATION
The pro forma statements of operations of the Company for the year ended June
30, 1993 and the nine months ended March 31, 1994, presented below, reflects
the effect of adjustments to the historical results of operations of the
Company necessary to give pro forma effect to the Transaction as if it had
occurred at the beginning of the period presented. The pro forma statements of
operations and accompanying notes should be read in conjunction with the
Company's Annual Report on Form 10-K/A for the year ended June 30, 1993 and
the Quarterly Report on Form 10-Q for the nine months ended March 31, 1994.
A pro forma balance sheet as of March 31, 1994 has not been presented due to
the minimal number of adjustments required to reflect the effect of the
Transaction. The pro forma effects of the Transaction on the Consolidated
Balance Sheet are narratively described as follows, (i) an increase in cash of
$4,660,000, which is net of debt reduction of $2,677,000 and transaction costs
of $1,813,000, (ii) a reduction in property and equipment of $2,539,000 and
other assets of $1,009,000, and (iii) a $1,823,000 (net of tax) increase in
stockholders' equity resulting from the gain recorded in conjunction with the
Transaction.
Management believes that the assumptions used provide a reasonable basis on
which to present the pro forma financial data. The pro forma financial
information is provided for informational purposes only and should not be
construed to be indicative of the Company's results of operations had the
Transaction been consummated on the dates assumed and are not intended to
project the Company's results of operations for any future period.
<PAGE> 17
NATIONAL CONVENIENCE STORES INCORPORATED
Unaudited Pro Forma Consolidated Statement of Operations
Year Ended June 30, 1993
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
NCS Circle K Exchange
---------------------------------------- ----------------------------
Divested Acquired
Reorganization Reorganization NCS Circle K Pro Forma
Historical Adjustments(a) Pro Forma Operations(b) Operations(c) Adjustments Pro Forma
---------- -------------- -------------- ------------- ------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Sales . . . . . . . . . . . . . . . . $ 878,852 $ - $878,852 $(120,576) $ 99,652 $3,627 (d) $861,555
Costs and Expenses:
Cost of sales . . . . . . . . . . . 651,658 - 651,658 (93,404) 76,239 3,074 (d) 637,567
Operating expenses . . . . . . . . 162,519 1,067 163,586 (20,931) 20,228 (1,534)(e) 161,349
General and administrative expenses 31,775 - 31,775 (1,654) 2,237 (971)(f) 31,387
Interest expense . . . . . . . . . 4,410 5,940 10,350 - - (316)(g) 10,034
Special charge . . . . . . . . . . 6,561 - 6,561 - - - 6,561
--------- -------- -------- --------- -------- ------- --------
856,923 7,007 863,930 (115,989) 98,704 253 846,898
--------- -------- -------- --------- -------- ------- --------
Earnings (Loss) Before Reorganization
Expenses, Fresh-Start Adjustments,
Income Taxes and Extraordinary
Gain. . . . . . . . . . . . . . . . 21,929 (7,007) 14,922 (4,587) 948 3,374 14,657
Reorganization Expenses, net. . . . . 8,124 (8,124) - - - - -
--------- -------- -------- --------- -------- ------- --------
Earnings Before Fresh-Start
Adjustments, Income Taxes
and Extraordinary Gain. . . . . . . 13,805 1,117 14,922 (4,587) 948 3,374 14,657
Fresh-Start Adjustments . . . . . . . 382 (382) - - - - -
--------- -------- -------- --------- -------- ------- --------
Earnings Before Income Taxes and
Extraordinary Gain . . . . . . . . 14,187 735 14,922 (4,587) 948 3,374 14,657
Income Tax Expense . . . . . . . . . 3,002 3,102 6,104 (1,876) 387 1,380 5,995
--------- -------- -------- --------- -------- ------- --------
Earnings Before Extraordinary Gain. . 11,185 (2,367) 8,818 (2,711) 561 1,994 8,662
Extraordinary Gain . . . . . . . . . 61,493 (61,493) - - - - -
--------- -------- -------- --------- -------- ------- --------
Net Earnings (Loss) . . . . . . . . . $ 72,678 $(63,860) $ 8,818 $ (2,711) $ 561 $ 1,994 $ 8,662
========= ======== ======== ========= ======== ======= ========
Earnings Per Share . . . . . . . . . $ 1.35 $ 1.33
======== ========
Weighted Average Common and Common
Equivalent Shares Outstanding . . . 6,855 6,855
======== ========
</TABLE>
See Notes to Unaudited Pro Forma Consolidated Statements of Operations.
<PAGE> 18
NATIONAL CONVENIENCE STORES INCORPORATED
Unaudited Pro Forma Consolidated Statement of Operations
Nine Months Ended March 31, 1994
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Historicals
----------------------------------------------------
Divested Acquired
NCS Circle K Pro Forma
NCS Operations(b) Operations(c) Adjustments Pro Forma
--------- ---------- ---------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Sales . . . . . . . . . . . . . . . . . $652,666 $ (88,561) $ 78,530 $ 2,859 (d) $645,494
Costs and Expenses:
Cost of sales . . . . . . . . . . . . 483,268 (67,527) 60,493 2,406 (d) 478,640
Operating expenses . . . . . . . . . 126,638 (15,849) 16,185 (1,063)(e) 125,911
General and administrative expenses . 27,861 (1,296) 1,047 (223)(f) 27,389
Interest expense . . . . . . . . . . 7,173 - - (251)(g) 6,922
-------- --------- --------- ------- --------
644,940 (84,672) 77,725 869 638,862
-------- --------- --------- ------- --------
Earnings (Loss) Before Income Taxes . . 7,726 (3,889) 805 1,990 6,632
Income Tax Expense . . . . . . . . . . 3,010 (1,515) 314 775 2,584
-------- --------- --------- ------- --------
Net Earnings (Loss) . . . . . . . . . . $ 4,716 $ (2,374) $ 491 $ 1,215 $ 4,048
======== ========= ========= ======= ========
Earnings Per Share . . . . . . . . . . $ 0.74 $ 0.64
======== ========
Weighted Average Common and Common
Equivalent Shares Outstanding . . . . 6,576 6,576
======== ========
</TABLE>
See Notes to Unaudited Pro Forma Consolidated Statements of Operations.
<PAGE> 19
NATIONAL CONVENIENCE STORES INCORPORATED
Notes to Unaudited Pro Forma Statements of Operations
(a) Represents the reorganization adjustments necessary to reflect
operating results of the Company as if its Plan of Reorganization and
the adoption of SOP 90-7 had been effective at the beginning of the
period reported. See note 3 of the notes to the financial statements,
included in the 1993 Annual Report on Form 10-K/A, for additional
information.
(b) Represents the historical operating results of the divested Southern
California and Atlanta, Georgia convenience stores of the Company. The
results for the year ended June 30, 1993 exclude a one-time cost
reduction in gasoline purchases in the Southern California market of
$1.7 million.
(c) Represents the historical operating results of the acquired Dallas-Fort
Worth and Houston, Texas convenience stores of The Circle K
Corporation.
(d) Adjusts historical gasoline sales ($3,016,000 for the year ended June
30, 1993 and $2,376,000 for the nine months ended March 31, 1994) and
merchandise sales ($611,000 for the year ended June 30, 1993 and
$482,000 for the nine months ended March 31, 1994) of the acquired
operations to reflect the Company's aggressive marketing strategy and
benefits expected from increased market presence. Additionally, the
cost of sales of the acquired operations are adjusted to reflect
historical gross profit margins.
(e) Adjusts historical operating expenses of the acquired operations to
reflect lower depreciation expense, consistent with the reduced
property and equipment recorded in conjunction with the Transaction.
Additionally, historical rent expense of the acquired operations was
reduced for the year ended June 30, 1993, to reflect renegotiated lease
rates.
(f) Adjusts historical general and administrative expenses of the acquired
operations to reflect reduced field and divisional operations expenses
resulting from the reduction of duplicate functions.
(g) Adjusts historical interest expense to reflect reduced interest
associated with the $2,677,000 debt reduction discussed above, coupled
with interest income earned on the net cash proceeds of $4,660,000,
also discussed above.
