JG INDUSTRIES INC/IL/
10-Q, 1997-12-09
FURNITURE STORES
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<PAGE>

 
                      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 25, 1997
                              --------------------------------------------------

                                      OR



          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
              15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from_________________________to_______________________

     Commission File number                   1-258
                           -----------------------------------------------------

                              JG INDUSTRIES, INC.
- --------------------------------------------------------------------------------
            (Exact name of registrant as specified in its charter)


            ILLINOIS                                     36-1141010
- -------------------------------------        -----------------------------------
  (State or other jurisdiction of                    (I.R.S. Employer
  incorporation or organization)                     Identification No.)

   5630 WEST BELMONT AVENUE                       CHICAGO, IL  60634
- --------------------------------------------------------------------------------
                   (Address of principal executive offices)
                                  (Zip Code)

                                (773) 481-5410
- --------------------------------------------------------------------------------
             (Registrant's telephone number, including area code)


- --------------------------------------------------------------------------------
                (Former name, former address and former fiscal
                      year, if changed since last report)


  Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirement for the past 90 days.

  Yes  X   No
      ---    --- 

Common Stock outstanding as of October 25, 1997 - 1,060,670 shares
- -------------------------------------------------------------------------------

                                       1
<PAGE>
 
                        PART I - FINANCIAL INFORMATION
                        ------------------------------

                         ITEM 1. FINANCIAL STATEMENTS



Company or group of companies for which report is filed:


                JG INDUSTRIES, INC. AND SUBSIDIARIES (Company)
                ----------------------------------------------



In the opinion of management, all adjustments necessary to fairly present the
condensed consolidated financial position of the Company as of October 25, 1997,
January 25, 1997, and October 26, 1996 and the results of its operations and its
cash flows for the thirteen and thirty-nine week periods ended October 25, 1997
(fiscal 1998) and October 26, 1996 (fiscal 1997) have been included. These
adjustments consist solely of normal recurring accruals. The results of
operations for such interim periods are not necessarily indicative of results
for the full year.

Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted, although the Company believes that the
disclosures are adequate to make the information presented not misleading. It is
suggested that these condensed consolidated financial statements be read in
conjunction with the consolidated financial statements and notes thereto in the
Company's latest Annual Report on Form 10-K.

                                       2
<PAGE>
 
                     JG INDUSTRIES, INC. AND SUBSIDIARIES
                     ------------------------------------
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                     ------------------------------------- 
                       (in thousands, except share data)
                                  (unaudited)
<TABLE> 
<CAPTION> 

                                                            October 25,      January 25,       October 26,    
                                                               1997             1997              1996       
                                                            -----------      -----------       -----------   
<S>                                                         <C>              <C>               <C> 
ASSETS 
                                                                                                              
Current Assets:                                                                                               
  Cash and cash equivalents                                 $      164       $    1,714        $    3,515         
  Receivables, net                                                 666              290               815         
  Merchandise inventories                                        8,918            6,305             9,090         
  Other current assets                                             358              224               661         
                                                            -----------      -----------       -----------   
     Total current assets                                       10,106            8,533            14,081         
                                                            -----------      -----------       -----------        
Land, buildings and                                                                                               
 equipment, at cost                                             15,300           14,908            14,538         
                                                                                                                  
Less accumulated depreciation                                                                                     
 and amortization                                               10,125            9,395             9,074         
                                                            -----------      -----------       -----------        
                                                                 5,175            5,513             5,464         
                                                            -----------      -----------       -----------        
Leasehold rights, net                                               29               32                33         
                                                                                                                  
Due from Jupiter                                                                                    1,265         
                                                                                                                  
Other assets                                                     1,622            1,597             1,478         
                                                            -----------      -----------       -----------        
                                                                16,932       $   15,675        $   22,321         
LIABILITIES, COMMON STOCK AND                               ===========      ===========       ===========        
 OTHER SHAREHOLDERS' EQUITY                                                                                       
                                                                                                                  
Current Liabilities:                                                                                              
  Notes payable                                             $    1,175                         $      750         
  Current portion of long-term debt                                582       $      582                           
  Accounts payable                                               4,658            1,999             4,957         
  Accrued liabilities                                            2,165            2,505             2,693         
  Accrued dividends                                                  5                5                           
                                                            -----------      -----------       -----------        
     Total current liabilities                                   8,585            5,091             8,400         
                                                            -----------      -----------       -----------        
Long-term debt, less current portion                             1,164            1,164                           
                                                                                                                  
Other long-term liabilities                                        835              867               931         
                                                                                                                  
Minority interest                                                1,331            1,262             1,242         
                                                                                                                  
Redeemable preferred stock, including accrued                                                                     
 dividends of $1,100                                                                                4,283         
                                                                                                                  
Common stock and other shareholders' equity:                                                                      
  Common shares; no par value;                                                                                    
   authorized 10,000,000 shares;                                                                                  
   issued 2,405,770 shares                                      11,246           11,246            11,246         
  Paid-in capital                                                5,939            5,939             4,775         
  Convertible preferred stock; no par                                                                             
   value; authorized and issued 1,500 shares                     1,500            1,500                           
  Accumulated deficit                                          (10,055)          (7,781)           (7,271)        
  Treasury shares - 1,345,100, 1,345,065 and                                                                      
   51,807 shares at cost, respectively                          (3,613)          (3,613)           (1,285)
                                                            -----------      -----------       -----------
                                                                 5,017            7,291             7,465 
                                                            -----------      -----------       -----------
                                                            $   16,932       $   15,675        $   22,321
                                                            ===========      ===========       ===========   
</TABLE> 

             The accompanying notes are an integral part of these 
                 condensed consolidated financial statements.
                                                             
                                       3
<PAGE>


                     JG INDUSTRIES, INC. AND SUBSIDIARIES 
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
             FOR THE THIRTEEN AND THIRTY NINE WEEK PERIODS ENDED 
                     OCTOBER 25, 1997 AND OCTOBER 26, 1996
                       (in thousands, except share data)
                                  (unaudited)
                      -----------------------------------

<TABLE>
<CAPTION>
                                                     13 Weeks Ended            39 Weeks Ended
                                                 -----------------------   -----------------------
                                                 October 25   October 26   October 25   October 26
                                                    1997         1996         1997         1996
                                                 ----------   ----------   ----------   ----------
<S>                                              <C>          <C>          <C>          <C>
Net sales                                        $   12,930   $   13,996   $   37,373   $   45,072

Cost of sales                                         8,441        9,072       25,105       30,161
                                                 ----------   ----------   ----------   ----------

  Gross profit                                        4,489        4,924       12,268       14,911

Selling, general and administrative expenses          4,805        5,135       14,261       17,036

Provision for store closing                                           28                       435
                                                 ----------   ----------   ----------   ----------

  Operating loss                                       (316)        (239)      (1,993)      (2,560)

Interest income (expense), net                          (47)          44          (82)          13

Gain (loss) on sale of asset                                         (79)                      933

Minority interest in net income of subsidiary           (23)         (23)         (69)         (69)
                                                 ----------   ----------   ----------   ----------

  Loss before income tax provision                     (386)        (297)      (2,144)      (1,683)

Income tax provision                                     (9)         (12)         (29)         (38)
                                                 ----------   ----------   ----------   ----------

  Net loss                                       $     (395)  $     (309)  $   (2,173)  $   (1,721)
                                                 ==========   ==========   ==========   ==========

Net loss applicable to common and common
  equivalent shares                              $     (429)  $     (429)  $   (2,274)  $   (2,067)
                                                 ==========   ==========   ==========   ==========

Net loss per common share                        $    (0.40)        (.18)     $ (2.14)        (.88)
                                                 ==========   ==========   ==========   ==========
Weighted average number of common and
  common equivalent shares outstanding            1,060,670    2,353,963    1,060,676    2,353,967
                                                 ==========   ==========   ==========   ==========
</TABLE>

             The accompanying notes are an integral part of these
                 condensed consolidated financial statements.

                                       4
<PAGE>
 

                     JG INDUSTRIES, INC. AND SUBSIDIARIES 

    CONSOLIDATED STATEMENTS OF COMMON STOCK AND OTHER SHAREHOLDERS' EQUITY

                  for the fiscal year ended January 25, 1997,
            and the thirty-nine week period ended October 25, 1997

                       (in thousands, except share data)
                                  (unaudited)
                      -----------------------------------

<TABLE>
<CAPTION>
                                                                                                                          Total
                                          Common        Paid-In       Preferred       Accumulated       Treasury      Shareholders'
                                          Shares        Capital         Stock           Deficit          Stock           Equity
                                          -------       -------       ---------       -----------       --------      -------------
<S>                                       <C>           <C>           <C>             <C>               <C>           <C>
Balances, January 27, 1996                $11,246       $ 4,775                       $    (5,204)      $ (1,285)     $       9,532

Net loss, fiscal 1997                                                                      (2,150)                           (2,150)

Foregiveness of preferred                                                                                         
  stock dividends by Jupiter                              1,164                                                               1,164 
                                                                                                                  
Issuance of 1,500 shares of                                                                                       
  Series B Preferred Stock                                                1,500                                               1,500 
                                                                                                                  
Purchase of 1,293,258 common shares                                                                       (2,328)            (2,328)
                                                                                                                  
Dividends accrued on redeemable and                                                                               
  convertible preferred stock                                                                (427)                             (427)
                                          -------       -------       ---------       -----------       --------      -------------
                                                                                                                  
Balances, January 25, 1997                 11,246         5,939           1,500            (7,781)        (3,613)             7,291 
                                                                                                                  
Net loss, thirty-nine week period                                                                                 
  ended October 25, 1997                                                                   (2,173)                           (2,173)
                                                                                                                  
Dividends accrued and paid on                                                                                     
  convertible preferred stock                                                                (101)                             (101)
                                          -------       -------       ---------       -----------       --------      -------------
                                                                                                                  
Balances, October 25, 1997                $11,246       $ 5,939       $   1,500       $   (10,055)      $ (3,613)     $       5,017 
                                          =======       =======       =========       ===========       ========      =============
</TABLE> 

                  The accompanying notes are an integral part
            of these condensed consolidated financial statements. 

                                       5
<PAGE>


                     JG INDUSTRIES, INC. AND SUBSIDIARIES
                     ------------------------------------ 
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                -----------------------------------------------
 FOR THE THIRTY-NINE WEEK PERIODS ENDED OCTOBER 25, 1997 AND OCTOBER 26, 1996
 ----------------------------------------------------------------------------
                                (in thousands)
                                --------------
                                  (Unaudited)
                                  -----------

<TABLE>
<CAPTION>
                                                                         39 Weeks Ended
                                                                   --------------------------
                                                                   October 25      October 26
                                                                      1997            1996
                                                                   ----------      ----------
<S>                                                                <C>             <C>
Cash flows from operating activities:                          
  Net loss                                                         $   (2,173)     $   (1,721)
  Adjustments to reconcile net loss to net cash                
    used in operating activities:                              
      Depreciation and amortization                                       733             894
      Minority interest                                                    69              69
      Gain on sale of asset                                                              (933)
      Provision for store closing                                                         435
  Changes in assets and liabilities:                           
      Accounts receivables                                               (376)           (530)
      Merchandise inventories                                          (2,613)         (2,648)
      Other assets (current)                                             (134)            (40)
      Other assets (noncurrent)                                            (4)            (11)
      Accounts payable and accrued liabilities                          2,319             276
      Other liabilities (noncurrent)                                      (32)              3
                                                                   ----------      ----------
                                                               
        Net cash used in operating activities                          (2,211)         (4,206)
                                                                   ----------      ----------
                                                               
  Cash flows from investing activities:                        
      Proceeds from sale of assets                                                      6,544
      Capital expenditures                                               (392)           (690)
      Purchase of annuity contract                                        (21)
                                                                   ----------      ----------
                                                               
        Net cash (used in) provided by investing activities              (413)          5,854
                                                                   ----------      ----------
                                                               
  Cash flows from financing activities:                        
      Borrowings under line of credit                                   1,675           5,950
      Repayments under line of credit                                    (500)         (5,400)
      Principal payments of long-term debt                                             (2,475)
      Dividends paid on convertible preferred stock                      (101)
                                                                   ----------      ----------
                                                               
        Net cash provided by (used in) financing activities             1,074          (1,925)
                                                                   ----------      ----------
                                                               
  Net (decrease) increase in cash and cash equivalents                 (1,550)           (277)
                                                               
  Cash and cash equivalents at beginning of year                        1,714           3,792
                                                                   ----------      ----------
                                                               
  Cash and cash equivalents at end of thirty-nine week period      $      164      $    3,515
                                                                   ==========      ==========
</TABLE>

             The accompanying notes are an integral part of these 
                 condensed consolidated financial statements.

                                       6
<PAGE>

                     JG INDUSTRIES, INC. AND SUBSIDIARIES
                     ------------------------------------
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
             ----------------------------------------------------
                                  (UNAUDITED)
                                  -----------
 

1)   Merchandise inventories are stated at the lower of cost or market. Cost is
     determined on the last-in, first-out (LIFO) basis for approximately 87% of
     the inventory as of October 25, 1997, January 25, 1997 and October 26,
     1996, using the retail method. The remaining inventory is valued on the
     first-in, first-out (FIFO) basis using the retail method. If the FIFO
     method had been used to value all inventories, cost would have been
     $466,000, $430,000, and $469,000 higher at October 25, 1997, January 25,
     1997 and October 26, 1996, respectively.

2)   Receivables are presented net of allowances for doubtful accounts of
     approximately $36,000 at October 25, 1997 and $42,000 at January 25, 1997
     and October 26, 1996.

3)   Leasehold rights are shown net of accumulated amortization of $21,000 at
     October 25, 1997, $18,000 at January 25, 1997 and $17,000 at October 26,
     1996.

4)   Certain reclassifications have been made to the October 26, 1996 amounts in
     order to conform to classifications at October 25, 1997 and January 25,
     1997.

5)   On December 13, 1996, the Company, pursuant to the terms of a certain Stock
     Purchase Agreement, by and among Jupiter Industries, Inc. ("Jupiter") and
     the Company, purchased from Jupiter, (i) 1,293,258 shares of the Company's
     Common Stock, and (ii) 445 shares of the Company's Series A Preferred
     Stock, for an aggregate purchase price of $5,510,864 of which $2,500,108
     was paid in cash, $1,264,858 was paid by offset against liabilities of
     Jupiter to the Company, and $1,745,898 was paid by delivery of a promissory
     note payable in three annual installments ending December 13, 1999. In
     connection with this acquisition, Jupiter also waived accrued dividends of
     $1,164,000. The gain related to the waiver was recorded as an increase to
     paid-in capital.

     The Jupiter promissory note provides that under certain circumstances, at
     the option of the holder, the outstanding principal amount plus all accrued
     but unpaid interest may be converted into Common Stock of the Company. The
     note is subordinated to Senior Debt of the Company and is payable in full
     upon change of ownership or control. The payment of dividends and the
     purchase of Common Stock is restricted by terms of the Agreement.

6)   As of January 27, 1996, Goldblatt's Department Stores, Inc. ("Goldblatt's",
     a wholly-owned subsidiary of the Company) had a $3,500,000 revolving line
     of credit. Interest was payable at the certificate of deposit rate plus 1%.
     The line was guaranteed by the Company and was collateralized by a
     certificate of deposit and commercial paper, totaling $3,500,000 as of
     October 26, 1996, and $1,500,000 as of January 25, 1997. The amount of the
     collateral was restricted to the extent of outstanding borrowing on the
     line, which was $750,000 as of October 26, 1996 and $0 as of January 25,
     1997.

     Effective April 23, 1997 a new Revolving Credit Agreement was executed. The
     agreement provides a line of credit of up to $2,000,000 through May 1, 1998
     based on availability of a borrowing base equal to 45% of merchandise
     inventory. The line is collateralized by Goldblatt's inventory and cash and
     cash equivalents. The line of credit agreement requires that Goldblatt's
     maintain a tangible net worth of $5,500,000 and an inventory level of
     $5,500,000. Interest is payable at the prime rate plus 1%. The amount of
     the collateral was restricted to the extent of outstanding borrowing on the
     line, which was $1,175,000 as of October 25, 1997.

                                       7
<PAGE>

                     JG INDUSTRIES, INC. AND SUBSIDIARIES
                     ------------------------------------
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
             ----------------------------------------------------
                                  (UNAUDITED)
                                  -----------
 
7)   On December 13, 1996, the Company, pursuant to the terms of a certain
     Series B Convertible Preferred Purchase Agreement (the "Series B Preferred
     Stock Purchase Agreement"), by and among certain officers and a director of
     the Company (collectively, the "Purchasers") and the Company, issued and
     sold to the Purchasers, through a private placement, 1,500 shares of Series
     B Convertible Preferred Stock of the Company, no par value per share (the
     "Series B Preferred Shares"), for an aggregate purchase price of
     $1,500,000. Holders of Series B Preferred Shares are entitled to vote with
     the holders of Common Stock on all matters submitted to a vote of the
     Company's shareholders as a single class. Currently, each share of Series B
     Preferred Stock is entitled to 444.44 votes.

     Dividends on Series B Preferred Stock accrue daily at a rate equal to 9%
     per annum. Dividends accumulate until paid, and are paid when and as
     declared by the Board of Directors. At any time prior to the fifth
     anniversary of issuance (automatic conversion), holders of Series B
     Preferred Stock may convert such shares into a number of shares of the
     Company's Common Stock. The current conversion price is $2.25 per share.

8)   On December 13, 1996, the Company also declared a one-for-three reverse
     stock split, effective December 27, 1996. Accordingly, all references in
     this report to number of shares, prices per share and per share amounts
     have been retroactively restated to reflect the reduced number of common
     shares outstanding, unless otherwise noted.

9)   Loss per share applicable to common and common equivalent shares is
     computed after recognition of the dividend requirements on the redeemable
     and convertible preferred stock of $101,000 in fiscal 1998 and $346,000 in
     fiscal 1997.

                                       8
<PAGE>
                     JG INDUSTRIES, INC. AND SUBSIDIARIES
                     ------------------------------------
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
             ----------------------------------------------------
                                  (UNAUDITED)
                                  -----------
 
                ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                -----------------------------------------------
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                 ---------------------------------------------

                        LIQUIDITY AND CAPITAL RESOURCES
                        -------------------------------


Cash and cash equivalents decreased by $1,550,000 during the nine months ended
October 25, 1997, which included approximately $2,211,000 of net cash used in
operating activities. Accounts receivable increased by $376,000 due primarily to
an increase in layaway receivables. Inventories increased by approximately
$2,613,000, which is attributable to normal seasonal increases in the
merchandise product lines. Accordingly, trade accounts payable increased by
$2,622,000 to coincide with the heightened inventory levels.

Goldblatt's spent approximately $390,000 on capital expenditures during the
thirty-nine weeks ended October 25, 1997 related to normal capital maintenance.
Goldblatt's capital expenditures for the balance of fiscal 1998 will be minimal
as no new store openings or major store renovations are planned.

Effective April 23, 1997, Goldblatt's entered into a new revolving credit
agreement which provides a line of credit of up to $2,000,000 through May 1,
1998 based on availability of a borrowing base equal to 45% of merchandise
inventory. The line is collateralized by Goldblatt's inventory and cash and cash
equivalents. The line of credit agreement requires that Goldblatt's maintain a
tangible net worth of $5,500,000 and an inventory level of $5,500,000. Interest
is payable at the prime rate plus 1%. The amount of the collateral was
restricted to the extent of outstanding borrowing on the line, which was
$1,175,000 as of October 25, 1997.

As of October 25, 1997, Goldblatt's has working capital of $2,362,000 and line
of credit availability of $825,000. No new store openings or acquisitions are
planned for the remainder of fiscal 1998, and capital expenditure spending will
be minimal. The Company plans to focus its efforts on strengthening the core
Goldblatt's operation over the rest of the year. Particular emphasis will be
given to programs enhancing sales development and inventory control.

                                       9
<PAGE>

                     JG INDUSTRIES, INC. AND SUBSIDIARIES
                     ------------------------------------
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
             ----------------------------------------------------
                                  (UNAUDITED)
                                  -----------
 
                ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                -----------------------------------------------
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                 ---------------------------------------------

                             RESULTS OF OPERATIONS
                             ---------------------

Thirteen Weeks Ended October 25, 1997 (fiscal 1998) vs.
- -------------------------------------------------------
Thirteen Weeks Ended October 26, 1996 (fiscal 1997)
- ---------------------------------------------------

Comparable store sales posted a modest 0.2% sales increase for the third quarter
as compared to the prior year. The sales were tempered by unseasonably warm
weather experienced at the onset of the fall selling season. However, the sales
increase continues to build on the upward sales trend established in the first
and second quarters of this year. The net sales decrease of $1,066,000 during
the quarter as compared to the previous year is the result of one store closing
since the third quarter of fiscal 1997.

Gross profit percentage decreased to 34.7% of sales from 35.2% of sales in the
third quarter of fiscal 1997. This decrease is attributable to higher freight
costs as a percent of inventory purchases as well as an increase in retail
markdowns to help spur sales.

Selling, general and administrative expenses ("SG&A") decreased by approximately
$330,000, or 6.4%, as compared to the third quarter of fiscal 1997 due primarily
to cost savings associated with the closed store. SG&A expenses increased to
37.2% of sales as compared to 36.7% in the prior year, which is attributable
primarily to increases in the federal minimum wage and increased health
insurance expenses.

Net interest expense increased as compared to the previous year due to a higher
level of short-term borrowings. Also, the Company generated additional interest
income last year from the $3,500,000 of cash and cash equivalents held as
collateral against the revolving line of credit in effect at that time.

Thirty-nine Weeks Ended October 25, 1997 (fiscal 1998) vs.
- ----------------------------------------------------------
Thirty-nine Weeks Ended October 26, 1996 (fiscal 1997)
- ------------------------------------------------------

Comparable store sales have shown a 3.1% increase year to date as compared to
the prior year. These increased sales are the result of a more aggressive sales
promotion program, and particularly strong sales gains during the second quarter
of fiscal 1998. The net sales decrease of $7,699,000 as compared to last year is
due to the closing of four stores in fiscal 1997.

Gross profit percentage dropped slightly to 32.8% of sales from 33.1% of sales
in the preceding year. This decrease is attributable to a higher level of
inventory shrinkage experienced for the first six months of fiscal 1998.
Tightened inventory control measures have since been formulated in response to
the shrinkage.

SG&A expenses decreased by approximately $2,775,000 as compared to fiscal 1997
due primarily to cost savings associated with the closed stores and corporate
overhead expense reductions. Overall, SG&A expenses increased slightly to 38.2%
of sales as compared to 37.8% of sales in the prior year, which is attributable
primarily to increases in the federal minimum wage and increased health
insurance expenses this year.

Net interest expense increased as compared to the previous year due primarily to
the additional interest income generated last year from the investment of the
$3,500,000 of cash and cash equivalents held as collateral against the revolving
line of credit in effect at that time.

                                      10
<PAGE>

                     JG INDUSTRIES, INC. AND SUBSIDIARIES
                     ------------------------------------
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
             ----------------------------------------------------
                                  (UNAUDITED)
                                  -----------


 
PART II - OTHER INFORMATION
- ---------------------------

Item 5 - Other Information

         None

Item 6 - Exhibits and Reports on Form 8-K

  (a)  Exhibits

         Exhibit 27 - Financial Data Schedule

  (b)  Reports on Form 8-K - None

                                      11
<PAGE>

                     JG INDUSTRIES, INC. AND SUBSIDIARIES
                     ------------------------------------
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
             ----------------------------------------------------
                                  (UNAUDITED)
                                  -----------

                                  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 under-
signed thereunto fully authorized.


                                    JG INDUSTRIES, INC.
                                    -------------------
                                    (Registrant)



Date: December 8, 1997              /s/ Clarence Farrar
      ----------------              -------------------
                                    CLARENCE FARRAR
                                    President

                                    /s/ Clifford Gutmann
                                    ---------------------
                                    CLIFFORD GUTMANN
                                    Chief Financial Officer

                                      12

<TABLE> <S> <C>

<PAGE>
 
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from 
the JG Industries, Inc. Form 10-Q for the third quarter of fiscal year 1998 and 
is qualified in its entirety by reference to such financial statements. 
</LEGEND>
<MULTIPLIER> 1,000
       
<S>                             <C>
<PERIOD-TYPE>                   9-MOS
<FISCAL-YEAR-END>                         JAN-31-1998
<PERIOD-START>                            JAN-26-1997
<PERIOD-END>                              OCT-25-1997
<CASH>                                            164
<SECURITIES>                                        0         
<RECEIVABLES>                                     702
<ALLOWANCES>                                       36
<INVENTORY>                                     8,918
<CURRENT-ASSETS>                               10,106 
<PP&E>                                         15,300
<DEPRECIATION>                                 10,125
<TOTAL-ASSETS>                                 16,932
<CURRENT-LIABILITIES>                           8,585
<BONDS>                                         1,164
                               0
                                     1,500
<COMMON>                                       11,246
<OTHER-SE>                                    (7,729)
<TOTAL-LIABILITY-AND-EQUITY>                   16,932
<SALES>                                        37,373 
<TOTAL-REVENUES>                               37,373
<CGS>                                          25,105         
<TOTAL-COSTS>                                  25,105 
<OTHER-EXPENSES>                               14,261
<LOSS-PROVISION>                                    0
<INTEREST-EXPENSE>                                 82
<INCOME-PRETAX>                               (2,144)
<INCOME-TAX>                                       29
<INCOME-CONTINUING>                           (2,173)
<DISCONTINUED>                                      0 
<EXTRAORDINARY>                                     0
<CHANGES>                                           0 
<NET-INCOME>                                  (2,173)
<EPS-PRIMARY>                                  (2.14)
<EPS-DILUTED>                                       0<F1>
<FN>

<F1> In accordance with current financial statement presentation requirements, 
this information is not included in the Company's consolidated financial 
statements.

</FN>
        

</TABLE>


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