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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended September 30, 1996
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
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Commission file number 1-11556
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UNI-MARTS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 25-1311379
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
477 East Beaver Avenue, State College, PA 16801-5690
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (814) 234-6000
---------------------------
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
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Common Stock, $.10 Par Value American Stock Exchange
- ----------------------------------- -------------------------------
Securities registered pursuant to Section 12(g) of the Act:
None
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(Title of Class)
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Aggregate market value of the voting stock which consists solely of shares of
common stock held by non-affiliates of the registrant as of December 2, 1996,
computed by reference to the closing sale price of the registrant's common
stock on such date: $30,149,441.
6,636,095 shares of Common Stock were outstanding at December 2, 1996.
This Document Contains 73 Pages.
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DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of the Company's Proxy Statement, in connection with the Annual
Meeting of Stockholders expected to be held in February 1997, are
incorporated into Part III.
(2) A portion of the Company's Definitive Proxy Statement for the February
25, 1988 Annual Meeting of Stockholders, filed on January 28, 1988, is
incorporated into Part IV.
(3) A portion of the Company's Definitive Proxy Statement for the February
22, 1996 Annual Meeting of Stockholders, filed on January 25, 1996, is
incorporated into Part IV.
(4) Portions of the Company's Current Report on Form 8-K, dated December 20,
1991, are incorporated into Part IV.
(5) A portion of the Company's Annual Report on Form 10-K for the year ended
September 30, 1989, filed on December 27, 1989, is incorporated into
Part IV.
(6) A portion of the Company's Annual Report on Form 10-K for the year ended
September 30, 1990, filed on December 20, 1990, is incorporated into
Part IV.
(7) A portion of the Company's Annual Report on Form 10-K for the year ended
September 30, 1993, filed on December 29, 1993, is incorporated into
Part IV.
(8) Portions of the Company's Annual Report on Form 10-K for the year ended
September 30, 1994, filed on December 23, 1994, are incorporated into
Part IV.
(9) A portion of the Company's Annual Report on Form 10-K for the year ended
September 30, 1995, filed on December 29, 1995, is incorporated into Part
IV.
(10) Portions of the Company's Quarterly Report on Form 10-Q for the period
ended April 1, 1993, filed on May 15, 1993, are incorporated into Part
IV.
(11) Portions of the Company's Quarterly Report on Form 10-Q for the period
ended March 30, 1995, filed on May 12, 1995, are incorporated into Part
IV.
(12) A portion of the Company's Quarterly Report on Form 10-Q for the period
ended April 4, 1996, filed on May 15, 1996, is incorporated into Part IV.
(13) A portion of the Company's Registration Statement on Form S-8, File No.
33-9807, filed on July 10, 1991, is incorporated into Part IV.
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PART I.
ITEM 1. BUSINESS.
COMPANY OVERVIEW
Since its initial public offering in 1986, when it operated 208 convenience
stores, the Company has expanded, primarily through acquisitions of groups of
stores. The Company currently operates 405 convenience stores in Pennsylvania,
Virginia, New York, New Jersey, Delaware and Maryland, of which 298 sell
gasoline. Most of the stores are located in small towns and rural locations
where costs of operation are generally lower than in urban areas. Most Company
stores located in urban and suburban areas have been acquired and are generally
leased on a long-term basis.
The size of the Company's stores ranges from approximately 1,200 to 3,300
square feet, with newly constructed stores generally having over 3,000 square
feet. The Company's most recently opened location is 10,000 square feet in
size. Typically, the stores offer a complete line of over 3,000 popular
consumer items. In addition, the Company offers products designed to increase
store traffic, such as branded fast foods as well as services, including
lottery tickets, free check cashing and automated teller machines ("ATMs").
The Company allows store management to tailor the merchandise mix to fit the
needs of each store's community. The Company believes that this results in
customer loyalty and a more stable profit margin.
Certain statements contained in this report contain forward-looking
information. Although Uni-Marts, Inc. believes that its expectations are based
on reasonable assumptions within the bounds of its knowledge of its business
and operations, there can be no assurance that actual results will not differ
materially from its expectations. Factors that could cause actual results to
differ from expectations include volatility of gasoline prices, merchandise
margins, customer traffic and weather conditions.
The following table shows the geographic distribution of the Company's stores
as of September 30, 1996:
Company-
operated Franchise Total
Pennsylvania 285 27 312
Virginia 53 1 54
Western New York 23 23
Southern New Jersey 8 8
Delaware 5 5
Maryland 3 3
--- --- ---
369 36 405
=== === ===
The Company commenced its convenience store operations in 1972 and was
incorporated in Delaware in 1977. In 1986, the Company's shares were
distributed in a tax-free spin-off to the holders of the stock of Unico
Corporation, formerly the Company's parent. The Company's executive offices
are located at 477 East Beaver Avenue, State College, PA 16801-5690 and its
phone number is (814) 234-6000.
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THE CONVENIENCE STORE INDUSTRY
The convenience store industry is a retail service-oriented industry. It is
distinguished from other retail businesses by its emphasis on location and
convenience and a commitment to customers who need to purchase items quickly at
extended hours. Convenience stores feature a wide variety of items, including
groceries, dairy products, tobacco products, beverages, prepared and
self-service fast foods and health and beauty aids, and many sell gasoline on a
self-service basis. Stores are generally designed with ample customer parking
and quick checkout procedures to maximize convenience, as well as to encourage
impulse buying of high margin items.
The convenience store industry is extremely fragmented. Currently, there are
many external forces exerting considerable pressure on owners of independent
and small convenience store chains. One of the major forces is the need to
comply with environmental regulations for underground storage tanks. The large
capital expenditures required to comply with environmental regulations are also
affecting many operators of gasoline service stations. As a result of these
forces, there have been and continue to be significant opportunities for
consolidation in the industry.
Recent competitive trends across many retail sectors are having a positive
influence on the convenience store industry as it changes the typical
convenience store's merchandise mix in reaction to market conditions and
customer preferences. In addition, convenience stores compete not only with
other convenience stores but now also with gasoline distributors which have
converted to convenience stores. To compete for a broader customer base,
convenience stores are adding prepared foods and new services and improving
store layouts to attract new customers. As consumer preferences and government
regulations put pressure on tobacco sales, convenience store operators are
improving gasoline dispensing facilities and installing branded fast-food
outlets and ATMs. In addition, the convenience store industry has aggressively
closed or remodeled underperforming stores.
STRATEGY
Management believes that the Company is uniquely positioned to take advantage
of current trends in the convenience store industry. Its strategy is designed
to (i) expand the number of store locations by acquiring chains of convenience
stores and, on a limited basis, through internal growth and (ii) increase
customer traffic, sales volume and profit margins. Key elements of the
Company's strategy include the following:
FOCUS ON RURAL AND SMALL-TOWN LOCATIONS. Most of the Company's stores are
located in small towns and rural locations where costs of operation and levels
of competition are generally lower than in urban and suburban markets. The
Company's stores in these rural markets often serve as the community's "general
store," providing the convenience of one-stop shopping for customers. As a
result, the Company is able to provide a wide range of services and products at
favorable margins. In addition, there tends to be significantly less employee
turnover at the Company's rural and small-town stores.
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MAINTAIN DISCIPLINED EXPANSION PROGRAM. The Company believes that there
are many acquisition opportunities in its current and adjacent geographic
market areas. The Company has had and continues to maintain an expansion
program which has increased the number of convenience stores it operates
through acquisitions of existing chains and construction of new stores.
Potential acquisition candidates are carefully evaluated by the Company. In
particular, before pursuing an acquisition, the Company takes into account
whether an acquisition candidate is in compliance with applicable environmental
laws and the level of capital expenditures required for environmental
compliance and to bring the stores up to the Company's standards.
INSTALL BRANDED FAST-FOOD UNITS. The Company has been actively adding
fast-food units such as Burger King, Arby's and Blimpie Subs and Salads to
certain stores. The Company believes that the recognition associated with
these names increases foot traffic and attracts new customers. To date the
Company is operating 51 branded fast-food units within its stores, including 35
Blimpie Subs and Salads, 8 Arby's, 5 Burger Kings, 1 Taco Maker, 1 Fox's Pizza
and 1 Manhattan Bagel. Of the remaining stores, approximately 175 have the
potential to support fast-food units profitably. The Company plans to continue
adding fast-food units in its existing and newly constructed stores.
BUILD HIGH-VOLUME GASOLINE DISPENSING FACILITIES. The Company has been
replacing its traditional gasoline pumping stations with state-of-the-art,
multi-pump high-volume dispensing facilities, which include on-dispenser credit
card readers and large well-lit canopies. The new dispensers are spaced
farther apart and can dispense all grades of gasoline at a single dispenser,
thereby enabling several customers to fuel their automobiles at the same time.
In addition, the increased number of gasoline customers served by these new
high-volume dispensing facilities is expected to generate additional customer
traffic and merchandise sales. The Company has installed 30 high-volume
gasoline dispensing facilities to date and 130 of the Company's remaining
stores have the space necessary for these new high-volume facilities.
OFFER ADDITIONAL TRAFFIC ENHANCING SERVICES. The Company offers various
services at its stores, including the sale of lottery tickets, money orders and
prepaid telephone cards, free check cashing and utility bill payments. In
addition, the Company installed ATMs at 78 locations during fiscal year 1996
and plans to add additional locations in fiscal year 1997. The Company
believes that the addition of these ATMs, like the addition of branded
fast-food units and high-volume gasoline dispensing facilities, will serve to
increase merchandise and gasoline sales.
MERCHANDISING AND MARKETING
The Company's merchandising and marketing programs are designed to promote
convenience through store location, hours of operation, parking, customer
service, product selection and checkout procedures. Store hours are intended
to meet customer needs and the characteristics of the community in which each
store is located. Approximately one-half of the Company's stores are open 24
hours per day, while the majority of the remaining stores are open from 6:00
a.m. to 12:00 midnight. To alleviate checkout congestion, many of the
Company's products and services, such as certain prepared fast food, fountain
beverages and gasoline, are sold on a self-service basis. Most Company stores
provide parking for customers.
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Uni-Marts has a separate merchandising and marketing department which develops
and implements promotional and advertising programs, sometimes in conjunction
with suppliers. Television, radio and newspaper advertisements are used to
promote the Company's name and image. The Company maintains an employee
training program for all employees which emphasizes the importance of service
to customers and the development of merchandising and marketing skills for its
store managers and store personnel.
CONVENIENCE STORE MERCHANDISE SALES. The Company's stores offer dry
grocery items, health and beauty aids, newspapers and magazines, lottery
tickets, dairy products, candy, frozen foods, beverages, tobacco products,
delicatessen foods, fountain drinks and hot coffee. In recent years,
the Company has emphasized new merchandise sales such as prepared foods and
branded fast foods to increase sales volume and customer traffic. In addition,
the Company continues to add customer services, such as ATMs, prepaid telephone
cards, free check cashing, utility bill payments, lottery ticket sales and
money orders, all of which are designed to increase customer traffic. In
addition, some stores offer a video rental program, as well as a variety of
prepared and self-service fast foods, including freshly made sandwiches, hot
dogs, pizza, fried chicken, freshly baked goods, frozen sandwiches, nachos and
soups.
As part of the Company's strategy to increase branded fast foods, in fiscal
year 1994, the Company entered into an agreement with Blimpie International
("Blimpie") to become an area developer (franchisor) for Blimpie Subs and
Salads restaurants in Pennsylvania and western New York. During fiscal year
1996, the Company added 15 Blimpie branded installations to its stores. In
addition, the Company added one Taco Maker, one Fox's Pizza, one Manhattan
Bagel, two Burger Kings and five Arby's fast-food units to its stores in fiscal
year 1996. The Company intends to add more branded fast-food units to its
stores in the future.
CONVENIENCE STORE GASOLINE SALES. Convenience store operations and
merchandise sales are enhanced by self-service gasoline facilities, which the
Company plans to include in as many new locations as possible and to add to
existing stores where feasible. Sales of gasoline products at the Company's
stores are affected by wholesale and retail price volatility, competition and
marketing decisions. At September 30, 1996, the Company had 298 locations
offering unleaded gasoline, with 157 of these locations also offering kerosene.
All are branded self-service units, with 284 offering Getty gasoline pursuant
to a petroleum supply agreement, entered into with Getty Petroleum Corp.
("Getty") in December 1991, and the balance offering other major brands.
COMPANY OPERATIONS
STORE MANAGEMENT. Each Company-operated store is managed by a store
manager. Store managers are compensated by salary, as well as incentive
compensation programs on in-store sales volume and profitability. All Company
stores are divided into groups of approximately eight stores by geographic
area. Each group is managed by a store supervisor. A regional manager is
responsible for a number of groups and their store supervisors. The regional
managers report directly to the Director of Operations, who oversees the
day-to-day operations of the stores. Managers, supervisors and regional
managers are compensated in part through incentive programs which provide for
quarterly bonuses based on increased profitability of the stores. The number
of full-time and part-time employees per store depends on the sales volume of
the store and its hours of operation.
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FRANCHISES. The Company has 36 franchised stores which operate under
various franchise agreements. Under all franchise agreements, the franchisee
pays a royalty, which varies depending upon the agreement and whether the
Company or the franchisee owns the convenience food store equipment. The
royalty is based on the store's merchandise sales volume.
As part of its services to 26 franchise locations, the Company provides
accounting services, merchandising and advertising assistance, store layout and
design guidance, supplier and product selection and ongoing operational
assistance. These franchisees are required to use the same internal control
systems that the Company uses for the stores it operates. The Company's
financial statements include the sales and costs of sales of these 26
franchised stores. The Company does not provide these services for ten
franchise locations. The Company has periodically closed franchised stores and
does not intend to grant new franchises except in connection with new
acquisitions or in other special circumstances.
DISTRIBUTION AND SUPPLY
All 405 stores are serviced at least weekly by vendors. The Company does not
distribute products to its stores itself. In order to minimize costs and
facilitate deliveries, the Company utilizes a single wholesale distributor for
most products, pursuant to a seven-year supply agreement. The Company believes
that it could easily replace this distributor with one or more other
distributors. Certain products, such as bakery items, dairy products, snacks,
soft drinks, magazines and perishable products, are distributed by wholesale
route salespeople. As part of the sale of its dairy operation in 1994, the
Company entered into a 10-year supply agreement with the purchaser which
provides for the Company's purchase of all dairy products sold at most of its
Pennsylvania stores.
In 1991 the Company and Getty entered into a five-year gasoline supply
agreement pursuant to which Getty supplies gasoline products to substantially
all of the Company's convenience stores offering self-service gasoline. During
fiscal year 1996, the Company negotiated an extension of the petroleum supply
agreement with Getty that extends the agreement until December 31, 1997.
MANAGEMENT CONTROLS AND INFORMATION SYSTEMS
The Company is developing an internal automation system which includes
point-of-sale ("POS") scanning. The system is designed to improve the
timeliness and accuracy of management information, reduce paperwork at the
store level and enhance cash, pricing and inventory controls. As of September
30, 1996, installation of this new POS scanning system was completed in 39
stores, with plans to add additional locations during fiscal year 1997.
The Company utilizes its current computer systems for inventory and accounting
control, financial record-keeping and management reporting, allowing management
to monitor closely and evaluate store operations. The Company's computer
systems are also programmed to identify variances from budgeted amounts by
store on a monthly and year-to-date basis. In addition, profit and loss
statements by store compare the current year's results for the month and
year-to-date to the previous year's comparable periods.
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Store managers are responsible for placing orders for grocery, tobacco, frozen
food and non-food items directly into the central computer system of the
Company's wholesale supplier. The computer systems are designed to compare
current orders with historical order levels and to reject orders which appear
to be incorrect. Orders and receiving reports are reviewed by store
supervisors. Invoices are reviewed and compared to receiving reports by the
Company's accounting personnel and are paid centrally.
The Company's inventory control system is designed to ensure that stores are
adequately stocked, inventories are maintained at levels which minimize
carrying costs and slow-moving items are identified. As part of the inventory
control system, store management personnel conduct approximately 12 physical
inventories at each store per year. The physical inventory, coupled with the
computer systems, enables the Company to monitor each store's operating
performance on a continuing basis. In addition, the Company's internal audit
department, among other things, conducts periodic inventories at a sampling of
stores and reports the results to the Audit Committee of the Company's Board of
Directors.
The Company believes that its automated accounting and inventory control
systems provide the information required for management decisions and expense
control.
The Company believes that its existing and planned systems and controls can
accommodate significant expansion in the number of Company stores.
COMPETITION
The convenience store industry is highly competitive, fragmented and
regionalized. It is characterized by a few large companies, some medium-sized
companies, such as the Company, and many small independent companies. Several
competitors are substantially larger and have greater resources than the
Company. The Company's primary competitors include national chains such as
A-Plus Mini-Markets and Seven-Eleven and regional chains such as Sheetz, WaWa,
Stop-N-Go, Convenient Food Mart, Turkey Hill, Coastal and Co/Go. The Company
also competes with other convenience stores, small supermarkets, grocery stores
and major and independent gasoline distributors who have converted units to
convenience stores.
Competition for gasoline sales is based on price and location. The Company
competes primarily with self-service gasoline stations operated by independent
dealers and major oil companies in addition to other convenience stores.
ENVIRONMENTAL COMPLIANCE AND REGULATION
The Company's gasoline operations are subject to federal, state and local
environmental laws and regulations primarily relating to the underground
storage tanks. The United States Environmental Protection Agency (the "EPA")
has established standards for owners and operators of underground storage tanks
("USTs") relating to, among other things: (i) maintaining leak detection
systems; (ii) upgrading UST systems; (iii) implementing corrective action in
response to releases; (iv) closing out-of-use USTs to prevent future releases;
(v) maintaining appropriate records; and (vi) maintaining evidence of financial
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responsibility for corrective action and compensating third parties for bodily
injury and property damage resulting from UST releases. All states in which
the Company operates also have adopted these regulatory programs.
Under current federal and certain state regulatory programs, the Company is
obligated to upgrade or replace all noncomplying underground storage tanks it
owns or operates to meet corrosion protection and overfill/spill containment
standards by 1998. The Company has evaluated each of its stores which sell
gasoline to determine the type of expenditures required to comply with these
and other requirements under the federal and state UST regulatory programs.
Management believes that the Company is currently in material compliance with
all applicable federal and state laws and regulations. The Company has spent
substantial amounts of money to upgrade all of its underground storage tanks
to meet the applicable standards and requirements and intends to expend
approximately $2.0 million over the next two fiscal years to maintain
compliance. The Company has adopted a program to ensure that new gasoline
installations comply with federal and state regulations and that existing
locations are upgraded if required under these regulations. For a discussion
of the capital expenditures planned for environmental compliance, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
GOVERNMENTAL REGULATION
In addition to the laws and regulations referred to under "Environmental
Compliance and Regulation," certain other aspects of the Company's business are
governed by federal, state and local statutes. As a franchisor, the Company is
also subject to federal and state laws governing franchising, which include,
among other matters, the commencement and termination of franchises.
Management believes that the Company is currently in material compliance with
all applicable federal and state laws and regulations.
TRADEMARKS
The name "UNI-MART" and the Company's UNI-MART logo were registered with the
U.S. Patent and Trademark Office as of May 31, 1983, and are owned by and
licensed from Uni-Marts of America, Inc., a wholly owned subsidiary of the
Company.
EMPLOYEES
As of September 30, 1996, the Company had approximately 2,850 employees,
approximately 1,280 of which were full-time. The Company believes that its
employee relations are good. None of the Company's employees are covered by a
collective bargaining agreement.
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ITEM 2. PROPERTIES.
The following table sets forth certain information with respect to
administrative and storage facilities owned or leased by the Company as of
September 30, 1996:
Type of Square
Location Ownership Footage Use
- -------- --------- ------- ---
State College, PA Leased 26,500 Administrative offices
State College, PA Owned 5,400 Administrative offices
State College, PA Leased 2,800 State Gas & Oil offices and
garage
Oak Hall, PA Leased 19,400 Storage facility
Pittsburgh, PA Leased 3,400 Regional office and storage
facility
Camp Hill, PA Leased 3,700 Regional office and storage
facility
Lancaster, PA Leased 3,000 Regional office and storage
facility
Roanoke, VA Leased 500 Storage facility
The Company's above-referenced leased administrative offices and storage
facility in State College and Oak Hall, PA, respectively, are leased from HFL
Corporation. HFL Corporation is controlled by Henry D. Sahakian, the Company's
Chairman of the Board and Chief Executive Officer, and his brother, Daniel D.
Sahakian, a Director of the Company. The State Gas & Oil division offices and
garage are leased from Unico Corporation, which is also controlled by Henry D.
Sahakian and Daniel D. Sahakian.
Of the Company's 405 convenience store locations, 125 are owned by the Company,
10 are leased from affiliated parties and 270 are leased from unaffiliated
parties. Most leases are for initial terms of five to ten years with renewal
terms of five years available at the Company's option. Under most leases, the
Company is responsible for the payment of insurance, taxes and maintenance. Of
the leased locations, 10 are subleased to franchisees. Of the 270 stores
leased from unaffiliated parties, 115 were leased from Getty in December 1991,
of which 111 leases expire in December 1997. The Company also owns five
gasoline service stations which are leased to unaffiliated operators. As of
September 30, 1996, the Company had two stores under construction.
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The Company's store leases expire as follows:
Lease expiration date (1) Number of facilities
------------------------- --------------------
1997 12
1998 123
1999 3
2000 10
2001 and later 132
- ------------------
(1) Most of the Company's leases have one or more renewal options at an
agreed upon rental or fair market rental at the end of their initial
terms. The table assumes the exercise of these renewal options.
The Company has generally renewed its leases prior to their expiration. Where
renewals have not been available or the Company otherwise determines to change
location, the Company generally has been able to locate acceptable alternative
facilities.
The lease for the Company's executive offices in State College, Pennsylvania,
expires in December 2000.
Management considers all properties currently in use, owned or leased, to be in
good condition, well maintained and suitable for current operations.
ITEM 3. LEGAL PROCEEDINGS.
The Company is not a party to any pending material legal proceeding. Under its
risk-retention program, the Company is responsible for the first $300,000 of
any workers' compensation claim and the first $250,000 of most other liability
exposures.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not Applicable.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS.
The Company's Common Stock is listed on the American Stock Exchange under the
symbol "UNI." The transfer agent and registrar for shares of the Company's
Common Stock is ChaseMellon Shareholder Services, L.L.C., Ridgefield Park, New
Jersey. As of December 2, 1996, the Company had 6,636,095 shares of its Common
Stock outstanding.
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Set forth below is a table which shows the high and low sale prices as
reflected on the American Stock Exchange and dividends paid on Common Stock for
each quarter in the two most recent fiscal years.
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
1996
- ----
Cash Dividends per share $.0275 $.0300 $.0300 $.0300
Price Range:
High 9 5/8 8 5/8 8 3/8 8 1/4
Low 6 7/8 7 7/8 7 1/2 7 3/8
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
1995
- ----
Cash Dividends per share $.0275 $.0275 $.0275 $.0275
Price Range:
High 6 5 7/8 5 9/16 8
Low 4 3/4 5 1/8 5 1/4 5 3/4
Effective in January 1996, the Company elected to increase the quarterly
dividends on its Common Stock to the rate of $.03 per share. However, there
can be no assurance of future dividends because they are at the discretion of
the Company's Board of Directors and are dependent on future earnings, capital
requirements and financial condition. In addition, certain debt agreements may
restrict the Company's ability to declare and pay dividends on Common Stock.
The amount of retained earnings available for such dividends at September 30,
1996 was $7,106,400.
At December 2, 1996, the Company had approximately 414 stockholders of record
of Common Stock. The Company believes that approximately 47 percent of its
Common Stock is held in street or nominee names.
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ITEM 6. SELECTED FINANCIAL DATA.
<TABLE>
SELECTED CONSOLIDATED FINANCIAL DATA
(In thousands, except per share, per gallon and number of stores data)
The following table of selected consolidated financial data of the Company, except
for Operating Data, has been derived from the financial statements and related
notes of the Company which have been audited by Deloitte & Touche LLP, Independent
Auditors, as indicated in their report relating to the fiscal years ended September
30, 1996, 1995 and 1994, included elsewhere in this report. The data should be read
in conjunction with the financial statements, related notes and other financial
information included elsewhere in this report.
<CAPTION>
Fiscal Year Ended September 30,
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
STATEMENTS OF EARNINGS DATE:
Sales and other income by the
Company and its franchisees:
Merchandise sales $182,482 $180,343 $181,331 $185,560 $180,223
Gasoline sales 148,829 143,690 132,215 130,891 118,833
Dairy sales 0 0 10,495 20,328 21,749
Other income 2,501 2,978 2,575 2,597 3,520
-------- -------- -------- -------- --------
Total 333,812 327,011 326,616 339,376 324,325
Cost of sales 247,458 240,164 239,751 249,896 239,007
-------- -------- -------- -------- --------
Gross profit 86,354 86,847 86,865 89,480 85,318
Selling 65,823 64,416 65,904 67,324 65,127
General and administrative 6,971 6,915 6,462 6,889 6,394
Depreciation and amortization 6,058 5,533 5,660 6,667 6,709
Interest 2,854 3,323 3,297 4,061 4,791
-------- -------- -------- -------- --------
Earnings before income taxes 4,648 6,660 5,542 4,539 2,297
Income taxes 1,677 2,506 1,877 1,417 784
-------- -------- -------- -------- --------
Net earnings $ 2,971 $ 4,154 $ 3,665 $ 3,122 $ 1,513
======== ======== ======== ======== ========
Earnings per share $ .46 $ .66 $ .54 $ .46 $ .22
======== ======== ======== ======== ========
Dividends per share $ .1175 $ .1100 $ .1000 $ .1000 $ .1000
======== ======== ======== ======== ========
Weighted average shares
outstanding 6,509 6,297 6,813 6,858 6,909
======== ======== ======== ======== ========
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
OPERATING DATA (CONVENIENCE STORES
ONLY):
Average, per store, for stores open
two full years:
Merchandise sales $ 456 $ 448 $ 441 $ 426 $ 420
Gasoline sales $ 492 $ 478 $ 433 $ 399 $ 390
Gallons of gasoline sold 477 468 468 436 406
Gross profit per gallon of
gasoline $ .120 $ .132 $ .117 $ .106 $ .108
Total gallons of gasoline sold 144,059 139,842 139,512 136,820 119,032
Number of stores open at year
end 405 414 417 444 445
Stores added 2 3 3 2 2
Stores added by acquisition 141
Stores closed 11 6 30 3 37
BALANCE SHEET DATA:
Working capital $ 1,663 $ 2,330 $ 981 $ 2,923 $ 2,552
Total assets 105,038 95,670 93,036 105,353 104,089
Long-term obligations 38,964 33,343 32,954 40,028 45,781
Stockholders' equity 36,062 32,579 28,803 29,222 26,627
</TABLE>
14
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Matters discussed below should be read in conjunction with "Statements of
Earnings Data" and "Operating Data (Convenience Stores Only)" on the preceding
page.
The Company's revenues are derived primarily from sales of merchandise and
gasoline at its 405 convenience stores. In recent years the sale of gasoline
has become an increasingly significant part of the Company's revenues.
Gasoline sales as a percentage of total revenues have increased from 40.5% in
fiscal year 1994 to 43.9% in fiscal year 1995 to 44.6% in fiscal year 1996.
Average gasoline sales per store, for stores open two full years, have
increased from approximately $433,000 in fiscal year 1994 to approximately
$478,000 in fiscal year 1995 to approximately $492,000 in fiscal year 1996, as
a result of the increase in the selling price per gallon and the increase in
gallons sold. While the Company expects to sell more gallons as it continues
to implement its strategy of adding high-volume gasoline dispensing facilities,
the price of gasoline can be volatile, and there can be no assurance that an
increase in sales volume will result in higher revenues or gross profits.
Average merchandise sales per store, for stores open two full years, have
increased from approximately $441,000 in fiscal year 1994 to approximately
$448,000 in fiscal year 1995 to approximately $456,000 in fiscal year 1996.
This merchandise sales growth trend is primarily the result of increased sales
of branded fast-food items and the enhancement of in-store traffic enhancing
services, such as the sale of lottery tickets, money orders and prepaid
telephone cards, utility bill payments, ATMs and free check cashing. The
Company intends to continue to add fast-food units to its stores as well as
other services designed to enhance in-store traffic. Tobacco sales represented
approximately 27% of total merchandise sales in each of the last three fiscal
years. There has been volatility in selling prices as a result of competition
among cigarette manufacturers. Since the Company expects this volatility to
continue, it has sought increased sales of other merchandise to offset the
uncertainty in cigarette sales.
The Company has grown primarily through acquisitions of groups of convenience
stores. Following acquisitions, the Company consolidates by closing redundant
or underperforming stores. Periodically, the Company has converted franchised
stores to Company-operated locations. In general, the Company does not intend
to expand the number of franchised stores it operates, except in connection
with acquisitions or other special circumstances.
In connection with the Company's strategy to focus on expanding its convenience
stores, the Company made a strategic decision to dispose of its dairy
operation. In April 1994, the Company consummated the sale of the dairy
operation for approximately $6.4 million. The cash proceeds of the sale were
primarily used for capital expenditures, including remodeling, modernizing
stores and adding branded fast-food units.
15
<PAGE>
Convenience stores selling gasoline have been heavily affected by environmental
regulations principally concerning underground storage tanks, which require
large capital expenditures in order to achieve compliance. In the late 1980's,
the Company made significant expenditures to meet, and exceed, applicable
standards. Management believes that the Company is currently in compliance
with all applicable federal and state environmental laws and regulations and
expects to make necessary expenditures in the future to maintain compliance.
In addition, the Company has adopted a program to ensure that new gasoline
installations comply with federal and state regulations.
16
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth the percentage relationship of certain expense
items to total revenues. Since the Company's franchise agreements for 26 of
the Company's 36 franchise locations permit the Company to exercise complete
control over the operations of these 26 franchised stores and the Company bears
the attendant risks of ownership, the results of operations include sales and
related cost of sales of stores operated by these franchisees. It should be
noted that the primary factors influencing the percentage relationship of cost
of sales to revenues are the volatility of gasoline prices and the proportional
increase in the number of stores selling gasoline. On a percentage basis, the
gross profit on gasoline sales is significantly less than the gross profit on
merchandise sold in the convenience stores.
Fiscal Year Ended September 30,
1996 1995 1994
------ ------ ------
Revenues:
Merchandise sales 54.7% 55.2% 55.5%
Gasoline sales 44.6 43.9 40.5
Dairy sales 0.0 0.0 3.2
Other income 0.7 0.9 0.8
----- ----- -----
Total revenues 100.0 100.0 100.0
Cost of sales 74.1 73.4 73.4
----- ----- -----
Gross profit:
Merchandise (as a percentage of
merchandise sales) 36.2 36.0 35.4
Gasoline (as a percentage of
gasoline sales) 11.9 13.2 12.9
Dairy products (as a percentage of
dairy sales) 0.0 0.0 29.8
Total gross profit 25.9 26.6 26.6
Costs and expenses:
Selling 19.7 19.7 20.2
General and administrative 2.1 2.1 2.0
Depreciation and amortization 1.8 1.7 1.7
Interest 0.9 1.0 1.0
----- ----- -----
Total expenses 24.5 24.5 24.9
----- ----- -----
Earnings before income taxes 1.4 2.1 1.7
Income taxes 0.5 0.8 0.6
----- ----- -----
Net earnings 0.9% 1.3% 1.1%
===== ===== =====
17
<PAGE>
FISCAL YEAR 1996 COMPARED TO FISCAL YEAR 1995
During fiscal year 1996, the Company opened two new stores including a 10,000
square foot location which includes several types of fast-food operations,
a mailing center, a bank and a car wash. The Company also closed ten
underperforming locations and one location which was replaced by one of the new
stores. Total revenues were $333.8 million in fiscal year 1996, compared to
$327.0 million in fiscal year 1995, an increase of $6.8 million, or 2.1%.
Although the Company had fewer stores in operation, merchandise sales increased
by $2.1 million, or 1.2%, to $182.5 million in the current fiscal year from
$180.3 million in fiscal year 1995. This increase is due to increased sales
levels per store which is partially due to additional fast-food locations.
Merchandise sales at comparable stores increased 1.1%.
Gasoline sales increased $5.1 million, or 3.6%, from $143.7 million in the
prior fiscal year to $148.8 million in fiscal year 1996. The gasoline sales
increase is due to the sale of additional gallons of gasoline as well as a
slight increase in the retail selling price per gallon.
In fiscal year 1996, gross profits on merchandise sales were $66.1 million
compared to $64.9 million in the prior fiscal year, an increase of $1.2
million, or 1.9%. This increase is due to the higher sales volume as well as
slightly higher gross profit rates.
Gross profits on gasoline sales declined $1.2 million, or 6.4%, from $19.0
million in fiscal year 1995 to $17.8 million in the current fiscal year. This
decline is the result of a decrease in gross profits per gallon of gasoline
sold at the Company's stores from $0.132 in fiscal year 1995 to $0.120 in
fiscal year 1996.
Other income decreased $500,000, to $2.5 million in fiscal year 1996 from $3.0
million in the prior fiscal year, largely due to lower rental income and
promotional allowances.
Selling expenses of $65.8 million in fiscal year 1996 were $1.4 million, or
2.2%, higher than selling expenses of $64.4 million in fiscal year 1995,
primarily the result of increased staffing and maintenance costs. General and
administrative expense increased by $56,000, or 0.8%, due largely to higher
professional fees. Depreciation and amortization expense increased $525,000,
or 9.5%, due to additional depreciation of convenience store capital
expenditures. Interest expense declined by $468,000, due largely to lower
interest rates, interest capitalization and lower average debt levels.
Primarily as a result of a $493,000 reduction in gross profits and the $1.4
million increase in selling expenses, earnings before income taxes in fiscal
year 1996 declined by $2.0 million, or 30.2%, from $6.7 million in fiscal year
1995 to $4.6 million in the current fiscal year. Income taxes decreased by
$829,000 due to lower pre-tax income. Net earnings declined by $1.2 million to
$3.0 million, or $0.46 per share, in fiscal year 1996 from $4.2 million, or
$0.66 per share, in fiscal year 1995.
18
<PAGE>
FISCAL YEAR 1995 COMPARED TO FISCAL YEAR 1994
The Company opened one new store during fiscal year 1995 and rebuilt two
locations. The Company also closed six locations in fiscal year 1995,
including three franchised locations. Total revenues were $327.0 million in
fiscal year 1995 compared to $326.6 million in fiscal year 1994. Fiscal year
1994 revenues included $10.5 million of dairy sales which were not included in
fiscal year 1995 since the Company's dairy operation was sold on April 1, 1994.
Exclusive of dairy sales, total revenues increased 3.4% from fiscal year 1994
to fiscal year 1995.
Because the Company had fewer stores in operation, merchandise sales decreased
by $987,000, or 0.5%, from $l81.3 million in fiscal year 1994 to $180.3 million
in fiscal year 1995. Merchandise sales at comparable stores increased by 0.9%.
Gasoline sales increased $11.5 million, or 8.7%, from $132.2 million in fiscal
year 1994 to $143.7 million in fiscal year 1995. The gasoline sales increase
is due primarily to higher retail selling prices per gallon sold.
Gross profits on merchandise sales in fiscal year 1995 were $725,000 higher
compared to fiscal year 1994 due to higher gross profit rates. As a percentage
of merchandise revenues, gross profits increased from 35.4% in fiscal year 1994
to 36.0% in fiscal year 1995, primarily as a result of a differing mix of
merchandise sold, which included higher margin items such as branded fast food.
Gross profits on gasoline sales increased by $2.0 million, or 11.6%, in fiscal
year 1995 compared to fiscal year 1994 as a result of an increase in gross
profits per gallon sold at the Company's convenience stores. Gross profits per
gallon sold increased from $0.117 in fiscal year 1994 to $0.132 in fiscal year
1995, the result of favorable trends in wholesale gasoline price fluctuations.
As a percentage of gasoline revenues, gross profits increased from 12.9% in
fiscal year 1994 to 13.2% in fiscal year 1995.
Other income, consisting primarily of rental income, promotional allowances and
franchise royalties, increased from $2.6 million in fiscal year 1994 to $3.0
million in fiscal year 1995. The increase was primarily due to a higher level
of promotional allowances, which offset decreases in other components of other
income.
Total operational expenses attributable to the Company's dairy operation
decreased from $2.6 million in fiscal year 1994 to no expense in fiscal year
1995. Excluding such expenses, selling expenses in fiscal 1995 of $64.4
million were $702,000, or 1.1%, higher than fiscal year 1994 selling expenses
of $63.7 million. This increase is the result of increased convenience store
expenses. General and administrative expense increased $453,000, or 7.0%,
primarily due to increased employee compensation and incentive programs.
Depreciation and amortization decreased by $127,000, or 2.2%, reflecting the
expense reduction due to the April 1994 dairy sale offset by additional
depreciation of convenience store capital improvements. Interest expense
remained relatively level as lower borrowing levels were offset by higher
interest rates.
19
<PAGE>
As a result of the factors mentioned above, earnings before income taxes in
fiscal year 1995 increased by $1.1 million, or 20.2%, from $5.5 million in
fiscal year 1994 to $6.7 million in fiscal year 1995. Income taxes increased
by $629,000 due to higher pre-tax income and a reduced level of tax credits.
Net earnings grew by $489,000 from $3.7 million, or $0.54 per share, in fiscal
year 1994 to $4.2 million, or $0.66 per share, in fiscal year 1995.
SEASONALITY AND QUARTERLY RESULTS
The Company's business has been subject to moderate seasonal influences with
higher sales in the third and fourth fiscal quarters of each year, since
customers tend to purchase more convenience items, such as ice, beverages and
fast food, and more gasoline during the warmer months. Due to adverse weather
conditions, merchandise sales for the second fiscal quarter have generally been
lower than other quarters. However, because of price volatility, gasoline
profit margins fluctuate significantly throughout the year.
<TABLE>
<CAPTION>
(In thousands, except per share data)
QUARTER ENDED
------------------------------------------------------------------------------------------
Dec. 29, Mar. 30, June 29, Sep. 30, Jan. 4, Apr. 4, July 4, Sep. 30,
1994 1995 1995 1995 1996 1996 1996 1996
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Merchandise sales $43,608 $40,163 $46,479 $50,093 $46,362 $42,050 $47,513 $46,557
Gasoline sales 35,749 32,299 37,049 38,593 37,219 33,550 40,833 37,227
Other income 547 689 1,398 344 553 998 479 471
------- ------- ------- ------- ------- ------- ------- -------
Total revenues 79,904 73,151 84,926 89,030 84,134 76,598 88,825 84,255
Cost of sales 58,421 52,645 63,176 65,922 61,192 56,493 66,351 63,422
------- ------- ------- ------- ------- ------- ------- -------
Gross profit 21,483 20,506 21,750 23,108 22,942 20,105 22,474 20,833
Costs and expenses:
Selling 15,628 15,783 16,444 16,561 16,833 15,961 16,636 16,393
General &
administrative 1,631 1,638 1,831 1,815 1,653 1,505 1,826 1,987
Depreciation &
amortization 1,337 1,346 1,386 1,464 1,453 1,467 1,498 1,640
Interest 787 833 796 907 785 773 793 503
------- ------- ------- ------- ------- ------- ------- -------
Earnings before
income taxes 2,100 906 1,293 2,361 2,218 399 1,721 310
Income taxes 756 345 500 905 820 145 609 103
------- ------- ------- ------- ------- ------- ------- -------
Net earnings $ 1,344 $ 561 $ 793 $ 1,456 $ 1,398 $ 254 $ 1,112 $ 207
======= ======= ======= ======= ======= ======= ======= =======
Earnings per share $ 0.21 $ 0.09 $ 0.13 $ 0.23 $ 0.22 $ 0.04 $ 0.16 $ 0.03
======= ======= ======= ======= ======= ======= ======= =======
Weighted average shares
outstanding 6,279 6,291 6,303 6,316 6,368 6,727 6,776 6,649
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $5.8 million for the year ended
September 30, 1996, as compared to $10.9 million for fiscal year 1995. The
decrease was principally due to lower net income in 1996 and increases in
inventories and prepaid expenses.
Net cash used in investing activities was $17.7 million for fiscal year 1996 as
compared to $8.4 million for fiscal year 1995. Purchases of property,
equipment and improvements, consisting primarily of building two new stores,
20
<PAGE>
remodeling existing stores and purchasing two existing stores, were $17.3
million in fiscal year 1996 and $8.6 million in fiscal year 1995.
Net cash provided by financing activities was $5.8 million in fiscal year 1996
as compared to cash used by financing activities of $3.7 million in fiscal year
1995. The difference of $9.5 million is largely due to additional borrowings
of $10.0 million in fiscal year 1996.
Most of the Company's sales are for cash and its inventory turns over rapidly.
As a result, the Company's daily operations do not require large amounts of
working capital. The Company has budgeted approximately $12 million in fiscal
year 1997 for capital expenditures, including construction of new stores,
remodeling and upgrading of existing stores and gasoline dispensing facilities
and environmental compliance. In addition, the Company anticipates debt and
capital lease payments of approximately $3.4 million in fiscal year 1997.
On December 26, 1995, the Company signed an agreement with its bank group to
borrow $10 million on an interest-only basis for a period of three years.
Proceeds from the loan were used to complete major remodels, including the
addition of branded fast-food units to existing stores, upgrading gasoline
dispensing facilities to high-volume pumping units, and new store construction.
The Company has available $5.8 million under existing credit agreements at
September 30, 1996.
The Company anticipates that cash presently available and cash generated from
operations and bank credit facilities will be sufficient to fulfill its cash
requirements in fiscal year 1997 and for the foreseeable future.
IMPACT OF INFLATION
The Company believes that inflation has not had a material effect on its
results of operations in recent years. Generally, increases in the Company's
cost of merchandise can be quickly reflected in higher prices of goods sold.
However, the upward movement of gasoline costs may have short-term negative
effects on profit margins, since the Company's ability to raise gasoline prices
can be limited due to competition from other self-service gasoline outlets. In
addition, fluctuation of gasoline prices can limit the ability of the Company
to maintain stable gross margins.
21
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
INDEPENDENT AUDITORS' REPORT
----------------------------
The Board of Directors and Stockholders
Uni-Marts, Inc.
State College, Pennsylvania
We have audited the accompanying consolidated balance sheets of Uni-Marts, Inc.
and subsidiaries as of September 30, 1996 and 1995, and the related
consolidated statements of earnings, stockholders' equity and cash flows for
each of the three years in the period ended September 30, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on the financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Uni-Marts, Inc. and subsidiaries
as of September 30, 1996 and 1995 and the results of their operations and their
cash flows for each of three years in the period ended September 30, 1996, in
conformity with generally accepted accounting principles.
/S/ DELOITTE & TOUCHE LLP
October 24, 1996
22
<PAGE>
<TABLE>
UNI-MARTS, INC. AND SUBSIDIARIES
--------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
<CAPTION>
September 30,
1996 1995
------------ -----------
A S S E T S
-----------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 1,207,929 $ 7,325,513
Marketable equity securities 387,282 434,508
Accounts receivable - less allowances of
$74,600 and $123,800 2,826,887 2,411,984
Inventories 17,807,998 15,564,752
Prepaid and current deferred taxes 2,491,978 1,563,670
Prepaid expenses and other 1,560,816 885,684
------------ -----------
TOTAL CURRENT ASSETS 26,282,890 28,186,111
NET PROPERTY, EQUIPMENT AND IMPROVEMENTS 71,794,100 60,258,913
NET INTANGIBLE AND OTHER ASSETS 6,960,752 7,224,839
------------ -----------
TOTAL ASSETS $105,037,742 $95,669,863
============ ===========
</TABLE>
23
<PAGE>
<TABLE>
UNI-MARTS, INC. AND SUBSIDIARIES
--------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
(Continued)
<CAPTION>
September 30,
1996 1995
------------ -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 15,389,440 $15,915,088
Accrued expenses 5,852,143 6,560,360
Current maturities of long-term debt 3,272,957 3,272,958
Current obligations under capital leases 105,071 108,053
------------ -----------
TOTAL CURRENT LIABILITIES 24,619,611 25,856,459
LONG-TERM DEBT, less current maturities 38,343,024 32,616,236
OBLIGATIONS UNDER CAPITAL LEASES,
less current maturities 620,871 726,545
DEFERRED TAXES 2,394,700 2,876,400
DEFERRED INCOME AND OTHER LIABILITIES 2,997,125 1,015,521
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common Stock, par value $.10 a share:
Authorized 15,000,000 shares
Issued 7,279,684 and 7,042,886
shares, respectively 727,968 704,289
Additional paid-in capital 24,287,858 23,134,580
Retained earnings 14,696,776 12,494,863
Less unrealized loss on securities ( 54,401) 0
------------ -----------
39,658,201 36,333,732
Less treasury stock, at cost - 621,197
and 697,421 shares of Common Stock,
respectively ( 3,595,790)( 3,755,030)
------------ -----------
36,062,411 32,578,702
------------ -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $105,037,742 $95,669,863
============ ===========
</TABLE>
See notes to consolidated financial statements
24
<PAGE>
<TABLE>
UNI-MARTS, INC. AND SUBSIDIARIES
--------------------------------
CONSOLIDATED STATEMENTS OF EARNINGS
-----------------------------------
<CAPTION>
Year Ended September 30,
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
REVENUES:
Merchandise sales $182,481,748 $180,343,639 $181,330,700
Gasoline sales 148,829,207 143,689,680 132,215,444
Dairy sales 0 0 10,494,832
Other income 2,501,324 2,978,052 2,574,932
------------ ------------ ------------
333,812,279 327,011,371 326,615,908
------------ ------------ ------------
COSTS AND EXPENSES:
Cost of sales 247,457,964 240,164,720 239,750,829
Selling 65,822,709 64,416,108 65,904,333
General and administrative 6,970,780 6,915,288 6,462,162
Depreciation and amortization 6,058,030 5,532,744 5,659,881
Interest 2,854,552 3,322,550 3,296,480
------------ ------------ ------------
329,164,035 320,351,410 321,073,685
------------ ------------ ------------
EARNINGS BEFORE INCOME TAXES 4,648,244 6,659,961 5,542,223
INCOME TAXES 1,677,200 2,506,200 1,877,100
------------ ------------ ------------
NET EARNINGS $ 2,971,044 $ 4,153,761 $ 3,665,123
============ ============ ============
EARNINGS PER SHARE $.46 $.66 $.54
==== ==== ====
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 6,509,458 6,297,362 6,813,408
========= ========= =========
</TABLE>
See notes to consolidated financial statements
25
<PAGE>
<TABLE>
UNI-MARTS, INC. AND SUBSIDIARIES
--------------------------------
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
-----------------------------------------------
<CAPTION>
Common Stock
Par Value $.10
a share
Authorized 15,000,000 Unrealized Additional
Shares Loss On Paid-In Retained Treasury Stock
Shares Amount Securities Capital Earnings Shares Amount
--------- -------- ---------- ----------- ------------ ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance -October 1, 1993 6,973,498 $697,350 $22,757,888 $ 6,042,889 92,049 ($ 276,148)
Purchase of treasury stock 661,670 ( 3,647,779)
Issuance of common stock 23,000 2,300 139,916 ( 31,481) 94,446
Net earnings 3,665,123
Dividends ($.1000 per share) ( 672,962)
--------- -------- ------- ----------- ----------- ------- ----------
Balance - September 30, 1994 6,996,498 699,650 0 22,897,804 9,035,050 722,238 ( 3,829,481)
Issuance of common stock 46,388 4,639 236,776 ( 24,817) 74,451
Net earnings 4,153,761
Dividends ($.1100 per share) ( 693,948)
--------- -------- ------- ----------- ----------- ------- ----------
Balance - September 30, 1995 7,042,886 704,289 0 23,134,580 12,494,863 697,421 ( 3,755,030)
Purchase of treasury stock 94,075 ( 754,457)
Issuance of common stock 236,798 23,679 1,153,278 (170,299) 913,697
Unrealized loss on securities ( 54,401)
Net earnings 2,971,044
Dividends ($.1175 per share) ( 769,131)
--------- -------- ------- ----------- ----------- ------- ----------
Balance - September 30, 1996 7,279,684 $727,968 ($54,401) $24,287,858 $14,696,776 621,197 ($3,595,790)
========= ======== ======= =========== =========== ======= ==========
</TABLE>
See notes to consolidated financial statements
26
<PAGE>
<TABLE>
UNI-MARTS, INC. AND SUBSIDIARIES
--------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
<CAPTION>
Year Ended September 30,
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers and others $335,079,196 $326,516,241 $328,770,047
Cash paid to suppliers and employees ( 325,132,418)( 309,676,039) ( 314,018,227)
Net receipts for sales and purchases
of trading equity securities 455,289 45,267
Dividends and interest received 44,675 112,393 235,198
Interest paid (net of capitalized
interest of $297,000 in 1996) ( 2,892,365)( 3,258,761) ( 3,342,457)
Income taxes paid ( 1,778,900)( 2,862,500) ( 2,488,500)
------------ ------------ ------------
NET CASH PROVIDED BY OPERATING
ACTIVITIES 5,775,477 10,876,601 9,156,061
CASH FLOWS FROM INVESTING ACTIVITIES:
Receipts from sale of capital assets 268,124 297,939 4,195,118
Purchase of property, equipment and
improvements ( 17,296,373)( 8,637,466) ( 5,112,481)
(Payments) receipts for sales and
purchases of available-for-sale
securities ( 441,683) 231,849
Cash advanced for intangible and
other assets ( 371,287)( 260,965) ( 368,112)
Cash received for intangible and
other assets 116,058 250,112 47,960
------------ ------------ ------------
NET CASH USED IN INVESTING ACTIVITIES ( 17,725,161)( 8,350,380) ( 1,005,666)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on revolving credit agreement ( 1,000,000)
Additional long-term borrowings 10,000,000 250,000
Principal payments on debt ( 3,381,869)( 3,430,753) ( 7,100,539)
Purchases of treasury stock ( 79,457) ( 1,684,734)
Proceeds from issuance of common stock 1,062,557 140,728 62,000
Dividends paid to stockholders ( 769,131)( 693,948) ( 672,962)
------------ ------------ ------------
NET CASH PROVIDED (USED) BY
FINANCING ACTIVITIES 5,832,100 ( 3,733,973) ( 9,396,235)
------------ ------------ ------------
NET DECREASE IN CASH ( 6,117,584)( 1,207,752) ( 1,245,840)
CASH AT BEGINNING OF YEAR 7,325,513 8,533,265 9,779,105
------------ ------------ ------------
CASH AT END OF YEAR $ 1,207,929 $ 7,325,513 $ 8,533,265
============ ============ ============
</TABLE>
27
<PAGE>
<TABLE>
UNI-MARTS, INC. AND SUBSIDIARIES
--------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(Continued)
<CAPTION>
Year Ended September 30,
1996 1995 1994
---------- ----------- ----------
<S> <C> <C> <C>
RECONCILIATION OF NET EARNINGS TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
NET EARNINGS $2,971,044 $ 4,153,761 $3,665,123
ADJUSTMENTS TO RECONCILE NET EARNINGS TO
NET CASH PROVIDED BY OPERATING ACTIVITIES:
Depreciation and amortization 6,058,030 5,532,744 5,659,881
Net unrealized holding loss on trading
securities 49,251
Gain on sale of marketable securities ( 120,515)
Loss on sale of capital assets and other 150,545 143,668 280,651
Change in assets and liabilities:
(Increase) decrease in:
Trading equity securities 434,508 88,407
Accounts receivable ( 414,903)( 243,335) 2,594,958
Inventories ( 2,243,246)( 456,295) 1,413,586
Prepaid expenses ( 1,669,640)( 4,199) 499,954
Increase (decrease) in:
Accounts payable and accrued expenses( 1,233,865) 2,004,689 ( 4,114,311)
Deferred income taxes and other
liabilities 1,723,004 ( 392,090)( 723,266)
---------- ----------- ----------
TOTAL ADJUSTMENTS TO NET EARNINGS 2,804,433 6,722,840 5,490,938
---------- ----------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES $5,775,477 $10,876,601 $9,156,061
========== =========== ==========
</TABLE>
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
During fiscal 1994, the Company accepted $1,308,000 worth of the Company's
Common Stock as repayment of a note receivable from an officer.
(See Note G)
See notes to consolidated financial statements
28
<PAGE>
UNI-MARTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
------------------------------------------
The Company is an independent operator of convenience stores located in
Pennsylvania, Virginia, New York, New Jersey, Delaware and Maryland.
(1) Principles of Consolidation -- The consolidated financial
statements include the accounts of the Company and its wholly
owned subsidiaries. All material intercompany balances and
transactions have been eliminated.
(2) Marketable Equity Securities -- Pursuant to Statement of
Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," ("SFAS 115") the
Company's marketable equity securities are stated at fair value
based on published quotes. Management determines the proper
classification of investments in marketable equity securities at
the time of purchase and reevaluates such designations as of each
balance sheet date. At September 30, 1996 all securities were
designated as available-for-sale, with unrealized gains and losses
reported as a separate component of stockholders' equity.
Realized gains and losses on sales of investments, as determined
on a specific identification basis, are included in the
consolidated Statements of Earnings. At September 30, 1995 all
securities were designated as trading securities under the
provisions of SFAS 115 and unrealized holding gains and losses
are reflected in earnings. Marketable securities include the
following:
September 30,
1996 1995
-------- --------
Available-for-sale securities:
Cost $441,683 $ 0
Less unrealized holding losses 54,401 0
-------- --------
Fair value $387,282 $ 0
======== ========
Trading equity securities:
Cost $ 0 $483,759
Less unrealized holding losses 0 49,251
-------- --------
Fair value $ 0 $434,508
======== ========
(3) Inventories -- The Company values its merchandise inventories at the
lower of cost (first-in, first-out method) or market, as determined
by the retail inventory method. Gasoline inventories are valued at
the lower of cost (first-in, first-out method) or market.
29
<PAGE>
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
------------------------------------------------------
(4) Property, Equipment and Improvements -- Depreciation and
amortization are calculated using the straight-line method over the
useful lives of the related assets. Amortization of improvements to
leased properties is based on the remaining terms of the leases or
the estimated useful lives of such improvements, whichever is
shorter. Interest costs incurred on borrowed funds during the
period of construction of capital assets are capitalized as a
component of the cost of acquiring those assets. The amount of
interest capitalized in fiscal year 1996 was $297,000.
(5) Intangible and Other Assets -- Intangible and other assets consist
of the following:
September 30,
1996 1995
----------- -----------
Goodwill $ 6,498,671 $ 6,498,671
Lease acquisition costs 1,296,637 1,639,505
Non-competition agreements 1,213,040 1,213,040
Other 1,986,989 1,694,767
----------- -----------
10,995,337 11,045,983
Less accumulated
amortization 4,034,585 3,821,144
----------- -----------
$ 6,960,752 $ 7,224,839
=========== ===========
Goodwill represents the excess of cost over the fair value of net
assets acquired in business combinations and is amortized on a
straight-line basis over periods of 5 to 40 years. Lease
acquisition costs are the bargain element of acquired leases and are
being amortized on a straight-line basis over the related lease
terms. Non-competition agreements are amortized over the terms of
the particular agreements. It is the Company's policy to
periodically review and evaluate the recoverability of the
intangible assets by assessing current and future profitability and
cash flows and to determine whether the amortization of the balances
over their remaining lives can be recovered through expected future
results and cash flows. The Company must adopt Statement of
Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed
Of," ("SFAS 121") in fiscal year 1997. Adoption of SFAS 121 is not
expected to have a significant effect on the financial position or
results of operations of the Company.
(6) Self-Insurance Reserves -- The Company assumes the risks for general
liability and workers' compensation insurance exposures up to
certain loss thresholds set forth in separate insurance contracts.
The Company has established self-insurance reserves for these risks,
which are recorded on a present value basis using the risk-free
treasury rate of 6.0%, using actuarial valuations provided by
independent companies. At September 30, 1996 and 1995, the Company
had self-insurance reserves totaling $2,460,300 and $2,705,600,
respectively.
30
<PAGE>
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
------------------------------------------------------
(7) Income Taxes -- The Company accounts for income taxes under the
provisions of Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," ("SFAS 109"). SFAS 109 requires the
Company to compute deferred taxes on the difference between the
financial statement and tax basis of assets and liabilities using
enacted tax rates.
(8) Operations -- The Company operates 405 convenience stores, 36 of
which are operated by franchisees (39 in 1995 and 46 in 1994).
During fiscal 1996, the results of operations include sales and
costs of sales of 26 of these franchisees for which the Company
exercises complete control and bears the attendant risks of
ownership (28 in 1995 and 33 in 1994). Net sales of stores operated
by these franchisees were $11,597,000 (1996), $13,057,200 (1995) and
$14,163,600 (1994).
(9) Earnings Per Share -- Earnings per share for the years ended
September 30, 1996, 1995 and 1994 were calculated based on the
weighted average number of shares of common stock outstanding.
Common stock equivalents were not considered in the computation of
earnings per share as the effect was not significant to the
Company.
(10) Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts
of assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the
reporting period. Actual results may differ from those estimates
and assumptions.
(11) New Accounting Pronouncements -- In October 1995, the Financial
Accounting Board issued Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation," ("SFAS 123"),
which will be adopted by the Company in fiscal year 1997 as
required by the statement. The Company has elected to continue to
measure such compensation expense using the method prescribed by
Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees," as permitted by SFAS 123. When adopted, SFAS
123 will not have a significant effect on the Company's financial
position or results of operations but will require the Company to
provide expanded disclosure regarding its stock-based employee
compensation plans.
(12) Reclassifications -- Certain reclassifications have been made to the
1995 and 1994 financial statements to conform to the
classifications used in 1996.
31
<PAGE>
B. PROPERTY, EQUIPMENT AND IMPROVEMENTS - AT COST:
----------------------------------------------
Estimated
September 30, Life in
1996 1995 Years
------------ ----------- ---------
Land $ 15,618,241 $14,823,317
Buildings 39,324,176 34,952,245 30-35
Machinery and equipment 41,197,286 34,823,917 3-20
Capitalized property and
equipment leases 1,643,775 1,643,775 5-25
Leasehold improvements 12,770,219 10,575,655 1-20
Construction in progress 3,055,772 854,219
------------ -----------
113,609,469 97,673,128
Less accumulated depreciation
and amortization 41,815,369 37,414,215
------------ -----------
$ 71,794,100 $60,258,913
============ ===========
C. INTERIM CREDIT FACILITIES:
-------------------------
The Company has a $13.5 million revolving credit agreement with a bank
group at the bank's prime rate or a fixed rate option at the Company's
election, with a maximum of $3.5 million available for issuance of
letters of credit. The revolving credit facility is committed for a
two-year period expiring February 28, 1998, or a later date as approved
by the bank group. At September 30, 1996, borrowings of $5.0 million and
letters of credit of $2.7 million were outstanding under the agreement.
32
<PAGE>
D. LONG-TERM DEBT:
--------------
September 30,
1996 1995
----------- -----------
Term Loan. Interest is paid at least quarterly.
Principal on the note will be repaid in 16
quarterly installments beginning October 31,
1997. The interest rate was 7.82% at
September 30, 1996. $16,741,488 $16,741,488
Term Loan. Interest is paid at least quarterly.
Principal on the note will be repaid in fiscal
1999. The interest rate was 7.82% at
September 30, 1996. 10,000,000
Senior Notes of the Company. Interest is paid
in semiannual installments at a blended rate
of 10.50%. Principal on the notes will be
repaid in five semiannual installments. 7,570,068 10,636,735
Revolving Credit Agreement. Interest is paid
quarterly. The interest rate was 8.25% at
September 30, 1996. (See Note C) 5,000,000 6,000,000
Mortgage Loans Payable. Principal and interest
are paid in monthly installments. The loans
expire in years 1999 through 2010 with interest
ranging from 8.25% to 9.00%. The blended
interest rate was 8.57% at September 30, 1996. 2,304,425 2,510,971
----------- -----------
41,615,981 35,889,194
Less current maturities 3,272,957 3,272,958
----------- -----------
$38,343,024 $32,616,236
=========== ===========
The mortgage loans are collateralized by $7,206,000 of property, at cost.
Aggregate maturities of long-term debt during the next five years,
including payments due in connection with the senior notes and the term
loans, are as follows:
September 30,
1997 $ 3,273,000
1998 12,529,900
1999 16,157,700
2000 4,691,600
2001 4,131,200
Thereafter 832,581
-----------
$41,615,981
===========
Certain of the Company's debt agreements contain covenants which provide
for the maintenance of minimum working capital and net worth as well as
limitations on future indebtedness, sales and leasebacks and dispositions
of assets. These agreements may restrict the Company's ability to
declare and pay dividends on common stock. The amount of retained
earnings available for such dividends at September 30, 1996 was
$7,106,400.
33
<PAGE>
E. COMMITMENTS AND CONTINGENCIES:
-----------------------------
(1) Leases -- The Company leases its corporate headquarters, a majority
of its store locations and certain equipment. Future minimum
lease payments under capital leases and noncancellable operating
leases with initial or remaining terms in excess of one year at
September 30, 1996 are shown below. Some of the leases provide for
additional rentals when sales exceed a specified amount and contain
variable renewal options and escalation clauses. Rental income in
connection with the lease of certain properties is also provided.
Such rental income was $1,128,500 in 1996, $1,221,700 in 1995 and
$1,245,300 in 1994.
Capital Operating Rental
Leases Leases Income
---------- ----------- ----------
1997 $ 196,400 $ 8,711,600 $ 816,500
1998 167,700 4,826,100 471,100
1999 132,100 2,655,600 210,100
2000 139,900 1,988,800 171,700
2001 125,000 1,417,600 101,600
Thereafter 416,000 5,787,700 178,700
---------- ----------- ----------
Total future minimum
lease payments 1,177,100 $25,387,400 $1,949,700
Less amount =========== ==========
representing interest 451,100
----------
Present value of future
payments 726,000
Less current maturities 105,100
----------
$ 620,900
==========
Rental expense under operating leases was as follows:
Year Ended September 30,
1996 1995 1994
----------- ----------- -----------
Minimum rentals $10,871,700 $10,537,700 $10,503,400
Contingent rentals 84,500 98,800 87,500
----------- ----------- -----------
$10,956,200 $10,636,500 $10,590,900
=========== =========== ===========
(2) Change of Control Agreements -- The Company has change of control
agreements with its four executive officers pursuant to which each
executive officer will receive remuneration of 2.99 times his base
compensation if his employment is terminated due to a change of
control as defined in the agreements. Remuneration which might be
payable under these agreements has not been accrued in the
consolidated financial statements as a change of control has not
occurred.
34
<PAGE>
F. INCOME TAXES:
------------
The provision for income taxes includes the following:
Year Ended September 30,
1996 1995 1994
---------- ---------- ----------
Current tax expense:
Federal $1,895,800 $2,572,400 $2,129,600
State 40,000 290,100 358,900
---------- ---------- ----------
1,935,800 2,862,500 2,488,500
---------- ---------- ----------
Deferred tax expense:
Federal ( 126,200)( 214,200)( 343,300)
State ( 132,400)( 142,100)( 268,100)
---------- ---------- ----------
( 258,600)( 356,300)( 611,400)
---------- ---------- ----------
$1,677,200 $2,506,200 $1,877,100
========== ========== ==========
Deferred tax liabilities (assets) are comprised of the following at
September 30:
1996 1995 1994
---------- ---------- ----------
Depreciation $3,928,900 $3,512,500 $3,460,800
---------- ---------- ----------
Gross deferred tax
liabilities 3,928,900 3,512,500 3,460,800
---------- ---------- ----------
Insurance reserves ( 1,085,400)( 1,120,100)( 766,400)
Capital leases ( 107,600)( 119,600)( 130,700)
Deferred compensation ( 268,100)( 211,900)( 171,500)
Deferred income ( 816,300)( 91,600)( 173,800)
Intangible assets ( 182,400)( 155,000)( 132,300)
Deferred tax payments ( 96,200)
Other ( 110,500)( 100,900)( 112,600)
---------- ---------- ----------
Gross deferred tax
assets ( 2,570,300)( 1,895,300)( 1,487,300)
---------- ---------- ----------
$1,358,600 $1,617,200 $1,973,500
========== ========== ==========
The financial statements include noncurrent deferred tax liabilities of
$2,394,700 and $2,876,400 in 1996 and 1995, respectively, and current
deferred tax assets of $1,036,100 and $1,259,200 which are included in
prepaid and current deferred taxes. No valuation allowance is required
because, based upon the weight of available evidence, it is more
likely than not that all of the deferred tax assets will be realized.
35
<PAGE>
F. INCOME TAXES (CONTINUED):
------------------------
A reconciliation of the provision for income taxes to an amount
determined by application of the statutory federal income tax rate
follows:
Year Ended September 30,
1996 1995 1994
---------- ---------- ----------
Statutory rate $1,580,400 $2,264,400 $1,884,400
Increase (decrease)
resulting from:
Tax credits ( 82,500)
Nondeductible items 66,200 83,000 76,800
State taxes (net) ( 61,000) 97,700 59,900
Other (net) 91,600 61,100 ( 61,500)
---------- ---------- ----------
Tax provision $1,677,200 $2,506,200 $1,877,100
========== ========== ==========
G. RELATED PARTY TRANSACTIONS:
--------------------------
On September 2, 1994, the Company purchased 315,000 shares of its Common
Stock from Henry D. Sahakian, Chairman of the Company's Board, at $5.25
per share. The closing price of the Company's Common Stock on the
American Stock Exchange on that date was $5.375 per share. On this date,
amounts due to the Company from Mr. Sahakian of $1,308,000 were paid.
Certain directors and officers of the Company are also directors,
officers and shareholders of Unico Corporation ("Unico"), formerly the
Company's parent, and other affiliated companies. The following is a
summary of significant transactions with these entities:
(1) The Company leases six stores and certain other locations from Unico
and leases it corporate headquarters and four additional locations
from affiliates of Unico. Aggregate rentals in connection with these
leases were $693,400 (1996), $700,300 (1995) and $887,000 (1994).
(2) The Company charges an affiliate of Unico for general and
administrative services provided. Such charges amounted to $11,100
(1996), $10,400 (1995) and $9,900 (1994).
(3) During fiscal year 1996, the Company purchased a store location from
Unico at fair market value for $116,200.
The Company received commissions from Coinfone Telecommunications, Inc.
("CTI") for coin-operated telephones installed at convenience store
locations. The majority of the stock of CTI is beneficially owned or
controlled by persons related to Henry D. Sahakian. Commissions received
from CTI were $445,000 (1996), $310,300 (1995) and $241,400 (1994).
In fiscal year 1995, the Company acquired property for $1,605,300 by
exercising a property option that was controlled by Whitehall Associates,
a partnership in which the Company was a partner. Bruce K. Heim, a
director of the Company, is also a partner in a partnership which
controls 75% of Whitehall Associates. The Company also paid rents to
Whitehall Associates in the amounts of $86,300 (1995) and $129,800
(1994).
36
<PAGE>
G. RELATED PARTY TRANSACTIONS (CONTINUED):
-------------------------------------
In fiscal year 1996, the Company paid rents of $40,000 to Nicholas, Heim
and Kissinger Associates, a partnership in which Bruce K. Heim is also a
partner. The Company has also signed a commitment to purchase this
property for $1,500,000 if certain conditions are met.
H. RETRIEMENT SAVINGS AND INCENTIVE PLAN:
-------------------------------------
The Company has a contributory retirement savings plan covering all
employees meeting minimum age and service requirements. The Company will
match one-half of employee contributions up to 3% of the employee's
compensation. The Company's contributions are invested in the Company's
Common Stock. The Board of Directors may elect to make additional
contributions to be allocated among all eligible employees in accordance
with provisions of the plan. The retirement savings plan expense, which
is funded currently, was $113,800 (1996), $111,100 (1995) and $116,000
(1994).
I. DEFERRED COMPENSATION PLAN AND PERFORMANCE UNIT PLAN:
----------------------------------------------------
The Company has a nonqualified unfunded deferred compensation plan which
permits key executives to elect annually (via individual contracts) to
defer a portion of their compensation until their retirement, death or
disability. The Company makes a 50% matching contribution not exceeding
$5,000 annually per executive. The deferred compensation expense was
$28,200, $27,000 and $24,700 for the years ended September 30, 1996, 1995
and 1994, respectively.
The Company has recorded the assets and liabilities for the deferred
compensation plan in the consolidated balance sheets because such assets
and liabilities belong to the Company rather than to any plan or trust.
The asset and matching liability of $747,500 and $568,000 at September
30, 1996 and 1995, respectively, include employee deferrals, accrued
earnings and matching contributions of the Company.
The Company also has a Performance Unit Plan to provide long-term
incentives to senior executives. Under the Performance Unit Plan, the
amount of compensation is determined over the succeeding three-year
period based upon performance of the Company as well as individual goals
for the senior executives. Compensation expense recognized under this
plan was $99,200 and $100,000 for fiscal years 1996 and 1995,
respectively.
J. EQUITY COMPENSATION PLANS:
-------------------------
The Company has reserved 326,277 shares of common stock which can be
issued in accordance with the terms of the Company's Equity Compensation
Plan, as amended (the "Plan"). The Plan terminated on September 26, 1996
and was replaced by the 1996 Equity Compensation Plan (the "1996 Plan")
discussed below.
At the Annual Meeting of Stockholders held on February 22, 1996, the 1996
Plan was approved. The provisions of the 1996 Plan are similar to those
of the Plan. The aggregate number of shares of common stock which may be
issued shall not exceed 1,000,000 shares.
Both the Plan and the 1996 Plan are collectively discussed as the "Plans"
on the following page.
37
<PAGE>
J. EQUITY COMPENSATION PLANS (CONTINUED):
-------------------------------------
A committee of the Board of Directors has authority to administer the
Plans, and the committee may grant qualified incentive stock options to
employees of the Company, including officers, whether or not they are
directors. The Plans also provide that all nonemployee directors will
receive annual nonqualified stock option grants for 2,000 shares of
common stock plus 500 shares for each full year the director has served
as a member of the board, up to a maximum of 4,000 shares per grant, on
the date of each annual meeting. Nonemployee directors will also receive
grants of stock equal in value to and in lieu of two-thirds of the
retainer due to such director. The Company granted 4,116 and 6,223
shares of common stock to nonemployee directors under the Plans during
fiscal years 1996 and 1995, respectively. The exercise price of all
options granted under the Plans may not be less than the fair market
value of the common stock on the date of grant and the maximum allowable
term of each option is ten years. For qualified stock options granted to
any person who holds more than 10% of the voting power of the outstanding
stock, the exercise price may not be less than 110% of the fair market
value and the maximum allowable term is five years.
Information regarding outstanding options is presented below. All
options outstanding are exercisable except for options granted during the
year ended September 30, 1996.
Outstanding Options for Shares of Common Stock:
Outstanding Options Price Per Share
------------------- ---------------
Balance, October 1, 1993 410,229 $2.50 to $7.00
Granted 58,770 $5.38 to $5.91
Exercised ( 23,000) $2.50 to $3.50
Canceled ( 14,925) $3.50 to $7.00
-------
Balance, September 30, 1994 431,074 $2.50 to $6.36
Granted 73,000 $5.38 to $5.63
Exercised ( 40,165) $2.50 to $6.36
Canceled 0
-------
Balance, September 30, 1995 463,909 $2.50 to $6.36
Granted 96,260 $7.00 to $8.50
Exercised (232,682) $2.50 to $6.36
Canceled ( 1,210) $5.37
-------
Balance, September 30, 1996 326,277 $2.50 to $8.50
=======
Exercisable at
September 30, 1996 230,017 $2.50 to $6.36
=======
Balance of Shares Reserved for
Grant at September 30, 1996 0
=======
38
<PAGE>
K. NONQUALIFIED STOCK OPTIONS:
--------------------------
On February 26, 1993, the Company made a one-time, special grant of
nonqualified stock options to Henry D. Sahakian and Daniel D. Sahakian
each to purchase 150,000 shares of common stock of the Company at a price
of $4.50 per share in exchange for their relinquishment of effective
voting control of the Company as a result of the elimination of the
super-majority voting provisions of the Class B Common Stock. These
nonqualified stock options are not related to the Company's Equity
Compensation Plan. Henry D. Sahakian exercised his option during fiscal
year 1996 by exchanging 84,375 shares of the Company's Common Stock
valued at $675,000. Daniel D. Sahakian's stock option expires on
February 25, 1998.
L. SALE OF DAIRY OPERATION:
-----------------------
In April 1994, the Company sold the net assets of its dairy operation for
approximately $6,438,000 and received a cash payment of $5,788,000 and
105,906 shares of its common stock valued at $650,000. The sale resulted
in a pre-tax loss of $245,000 which is included as a reduction of other
income. The total effect of the sale on net earnings was a loss of
$51,000.
39
<PAGE>
<TABLE>
SUPPLEMENTARY FINANCIAL INFORMATION
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED):
<CAPTION>
1ST 2ND 3RD 4TH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
<S> <C> <C> <C> <C>
Year Ended September 30, 1996
- -----------------------------
Revenues $84,134,611 $76,597,479 $88,824,832 $84,255,357
Gross Profits 22,942,204 20,104,958 22,473,655 20,833,498
Net Earnings 1,398,228 254,278 1,111,807 206,731
Earnings Per Share $ .22 $ .04 $ .16 $ .03
Year Ended September 30, 1995
- -----------------------------
Revenues $79,903,832 $73,151,798 $84,925,491 $89,030,250
Gross Profit 21,483,072 20,506,236 21,749,543 23,107,800
Net Earnings 1,343,526 561,237 793,208 1,455,790
Earnings Per Share $ .21 $ .09 $ .13 $ .23
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not Applicable
PART III
In accordance with Instruction G(3), the information called for by Items 10,
11, 12 and 13 is incorporated by reference from the Registrant's Definitive
Proxy Statement pursuant to Regulation 14A, to be filed with the Commission not
later than 120 days after September 30, 1996, the end of the fiscal year covered
by this report.
40
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K.
(A) Financial Statements
The Financial Statements listed below are filed as part of this Annual Report
on Form 10-K.
PAGE(S)
Report of Deloitte & Touche LLP, Independent Auditors 22
Consolidated Balance Sheets - September 30, 1996 and 1995 23-24
Consolidated Statements of Earnings for the years ended
September 30, 1996, 1995 and 1994 25
Consolidated Statements of Stockholders' Equity for the years
ended September 30, 1996, 1995 and 1994 26
Consolidated Statements of Cash Flows for the years ended
September 30, 1996, 1995 and 1994 27-28
Notes to Consolidated Financial Statements 29-39
Supplementary Financial Information - Selected Quarterly
Financial Data (Unaudited) 40
(B) Reports on Form 8-K
Uni-Marts, Inc. filed no reports on Form 8-K with the Securities and Exchange
Commission during the last quarter of the fiscal year ended September 30, 1996.
(C) Exhibits
3.1 Amended and Restated Certificate of Incorporation of the Company
(Filed as Exhibit 3.1 to the Company's Quarterly Report on Form
10-Q for the period ended March 30, 1995 and incorporated herein
by reference thereto).
3.2 By-Laws of the Company (Filed as Exhibit 3.2 to the Company's
Quarterly Report on Form 10-Q for the period ended March 30, 1995
and incorporated herein by reference thereto).
4.1 Form of the Company's Common Stock Certificate (Filed as Exhibit
4.3 to the Company's Quarterly Report on Form 10-Q for the period
ended April 1, 1993 and incorporated herein by reference thereto).
10.1 Uni-Marts, Inc. Amended and Restated Equity Compensation Plan
(Filed as Exhibit 10.1 to the Company's Quarterly Report on Form
10-Q for the period ended March 30, 1995 and incorporated herein
by reference hereto).
10.2 Uni-Marts, Inc. Stock Option Plan for Nonqualified Stock Options
dated as of February 26, 1993 (Filed as exhibit 10.2 to the Annual
Report of Uni-Marts, Inc. for the year ended September 30, 1993 and
incorporated herein by reference thereto).
41
<PAGE>
10.3 Uni-Marts, Inc. Retirement Savings & Incentive Plan (Filed as
Exhibit 4.2 to the Company's Registration Statement on Form S-8,
File No. 33-9807, and incorporated herein by reference thereto).
10.4 Composite Conformed Copy of Note Agreements dated August 29, 1989
between four insurance companies and Uni-Marts, Inc. (Filed as
Exhibit 10.14 to the Annual Report of Uni-Marts, Inc. on Form 10-K
for the year ended September 30, 1989 and incorporated herein by
reference thereto).
10.5 Credit Agreement between the Bank Group and Uni-Marts, Inc. dated
as of March 1, 1993 (Filed as Exhibit 19 to the Company's Quarterly
Report on Form 10-Q for the period ended April 1, 1993 and
incorporated herein by reference thereto).
10.5(a) Amendment No. 1 to Credit Agreement between the Bank Group and Uni-
Marts, Inc. dated as of March 21, 1994 (Filed as Exhibit 10.5(a) to
the Annual Report of Uni-Marts, Inc. on Form 10-K for the year
ended September 30, 1994 and incorporated herein by reference
thereto).
10.5(b) Amendment No. 2 to Credit Agreement between the Bank Group and Uni-
Marts, Inc. dated as of July 1, 1994 (Filed as Exhibit 10.5(b) to
the Annual Report of Uni-Marts, Inc. on Form 10-K for the year
ended September 30, 1994 and incorporated herein by reference
thereto).
10.5(c) Third Amendment to Credit Agreement between the Bank Group and Uni-
Marts, Inc. dated as of October 26, 1994 (Filed as Exhibit 10.5(c)
to the Annual Report of Uni-Marts, Inc. on Form 10-K for the year
ended September 30, 1994 and incorporated herein by reference
thereto).
10.5(d) Amendment No. 4 to Credit Agreement between the Bank Group and Uni-
Marts, Inc. dated as of March 27, 1995 (Filed as Exhibit 10.2 to
the Company's Quarterly Report on Form 10-Q for the period ended
March 30, 1995 and incorporated herein by reference thereto).
10.5(e) Amendment No. 5 to Credit Agreement between the Bank Group and Uni-
Marts, Inc. dated as of December 26, 1995 (Filed as Exhibit 10.5(e)
to the Company's Annual Report on Form 10-K for the period ended
September 30, 1995 and incorporated herein by reference thereto).
10.5(f) Amendment No. 6 to the Credit Agreement between the Bank Group and
Uni-Marts, Inc. dated as of March 28, 1996 (Filed as Exhibit 10 to
the Company's Quarterly Report on Form 10-Q for the period ended
April 4, 1996 and incorporated herein by reference thereto).
10.6 Form of Indemnification Agreement between Uni-Marts, Inc. and each
of its Directors (Filed as Exhibit A to the Company's Definitive
Proxy Statement for the February 25, 1988 Annual Meeting of
Stockholders and incorporated herein by reference thereto).
10.7 Uni-Marts, Inc. Deferred Compensation Plan (Filed as Exhibit 10.8
to the Annual Report of Uni-Marts, Inc. on Form 10-K for the year
ended September 30, 1990 and incorporated herein by reference
thereto).
10.8 Uni-Marts, Inc. Annual Bonus Plan (Filed as Exhibit 10.8 to the
Annual Report of Uni-Marts, Inc. on Form 10-K for the year ended
September 30, 1994 and incorporated herein by reference thereto).
42
<PAGE>
10.9 Uni-Marts, Inc. Performance Unit Plan (Filed as Exhibit 10.9 to the
Annual Report of Uni-Marts, Inc. on Form 10-K for the year ended
September 30, 1994 and incorporated herein by reference thereto).
10.10 Composite copy of Change in Control Agreements between Uni-Marts,
Inc. and its executive officers (Filed as Exhibit 10.10 to the
Annual Report of Uni-Marts, Inc. on Form 10-K for the year ended
September 30, 1994 and incorporated herein by reference thereto).
10.11 Agreement to Lease Properties and Sell Assets between Getty and the
Company dated October 31, 1991 with amendment dated December 5,
1991 (Filed as Exhibit 2.1 to the Company's Current Report on Form
8-K dated December 20, 1991 and incorporated herein by reference
thereto).
10.12 Getty Petroleum Corp./Uni-Marts, Inc. Supply Agreement dated
December 6, 1991 (Filed as Exhibit 28.1 to the Company's Current
Report on Form 8-K dated December 20, 1991 and incorporated herein
by reference thereto).
10.13 Second Amendment to Agreement to Lease Properties and Sell Assets
between Getty and the Company dated June 28, 1996.
10.14 Uni-Marts, Inc. 1996 Equity Compensation Plan (Filed as Exhibit A
to Company's Definitive Proxy Statement for the February 22, 1996
Annual Meeting of Stockholders and incorporated herein by reference
thereto).
11 Statement regarding computation of per share earnings.
21 Subsidiary of the registrant.
23 Consent of Deloitte & Touche LLP.
27 Financial data schedule.
99 Report on Form 11-K.
43
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
UNI-MARTS, INC.
(Registrant)
/S/ HENRY D. SAHAKIAN
By: ------------------------------
Henry D. Sahakian
Chairman of the Board
(Principal Executive Officer)
/S/ J. KIRK GALLAHER
By: ------------------------------
J. Kirk Gallaher
Executive Vice President and
Chief Financial Officer
(Principal Accounting Officer)
(Principal Financial Officer)
DATED: December 17, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated:
SIGNATURE TITLE DATE
--------- ----- ----
/S/ HENRY D. SAHAKIAN
- ----------------------------- Chairman of the Board December 17, 1996
Henry D. Sahakian
/S/ CHARLES R. MARKHAM
- ----------------------------- President and Director December 17, 1996
Charles R. Markham
/S/ J. KIRK GALLAHER
- ----------------------------- Executive Vice President December 17, 1996
J. Kirk Gallaher and Director
/S/ G. DAVID GEARHART
- ----------------------------- Director December 17, 1996
G. David Gearhart
/S/ BRUCE K. HEIM
- ----------------------------- Director December 17, 1996
Bruce K. Heim
/S/ JEREMIAH A. KEATING
- ----------------------------- Director December 17, 1996
Jeremiah A. Keating
/S/ JOSEPH V. PATERNO
- ----------------------------- Director December 17, 1996
Joseph V. Paterno
/S/ CHARLES C. PEARSON, JR.
- ----------------------------- Director December 17, 1996
Charles C. Pearson, Jr.
/S/ DANIEL D. SAHAKIAN
- ----------------------------- Director December 17, 1996
Daniel D. Sahakian
/S/ MICHAEL J. SERVENTI
- ----------------------------- Director December 17, 1996
Michael J. Serventi
44
<PAGE>
UNI-MARTS, INC. AND SUBSIDIARIES
EXHIBIT INDEX
Number Description Page(s)
- ------ ----------- -------
10.13 Second Amendment to Agreement to Lease Properties
and Sell Assets between Getty and the Company
dated June 28, 1996. 46-52
11 Statement regarding computation of per share
earnings for the years ended September 30, 1995,
1994 and 1993. 53
21 Subsidiary of the registrant. 54
23 Consent of Deloitte & Touche LLP 55
27 Financial Data Schedule 56
99 Report on Form 11-K 57-73
45
<PAGE> 46
Second Amendment to Agreement to Lease
--------------------------------------
Properties and Sell Assets
--------------------------
This Second Amendment to Agreement to Lease Properties and Sell
Assets entered into as of this 28th day of June, 1996 by and among Getty
Petroleum Corp., a Delaware corporation ("Getty"), GettyMart Inc., a
Delaware corporation ("GettyMart"), Reco Petroleum, Inc., a Pennsylvania
corporation, and Leemilt's Petroleum, Inc., a New York corporation
(collectively, "Sellers", and each a "Seller" or "Landlord") and Uni-Marts,
Inc., a Delaware corporation ("Buyer" or "Tenant").
Recitals
--------
A. The parties have entered into an Agreement to Lease Properties
and Sell Assets dated as of October 31, 1991 (the "Agreement"), which
Agreement was amended on December 5, 1991 (the "First Amendment") and as
amended, remains in full force and effect.
B. Mr. Food Inc. and Berkshire Construction Company, Inc. both
Sellers under the Agreement have been merged into and become a part of
Leemilt's Petroleum, Inc., also a Seller under the Agreement and as Seller
under this Second Amendment Leemilt's Petroleum, Inc. is the successor to
all of the obligations and liabilities of, and benefits inuring to, the
aforementioned two merged companies.
C. The parties hereto desire to further amend the Agreement, the
Supply Agreement and all of the agreements ancillary to this Agreement
(collectively the "Contracts") as set forth below and acknowledge and agree
that Frederick I. Sahakian is no longer a party to the Agreement for any
purpose. To facilitate the amendment to and the extension of the Agreement
and the Contracts, Sellers state that they intend to spend the capital
necessary (approximately $5 million) to upgrade the underground tanks and
related systems ("UST's") at the Stores subject to Leases to meet 1998
standards, Buyer states that it intends to spend in 1996 and 1997
approximately $3 million of capital to improve the above ground petroleum
marketing facilities including gasoline dispensing equipment, and will
otherwise from time to time during the lease term expend each year an
amount equal to the ratio of the Stores to the total number of Buyer's
locations times Buyer's total annual capital expenditures (exclusive of
expenditures for new locations) but in no event less than $500,000 per
year, to improve the above ground petroleum marketing facilities to meet
Getty standards for service stations and for in-Store improvements.
NOW THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties hereto agree as
follows:
-1-
<PAGE> 47
1. The Sellers (some of which are also Landlords under the Leases
and Subleases dated December 6, 1991 between each applicable Landlord and
Buyer as Tenant) and Buyer have entered into the Amendments to Leases and
Amendments to Subleases of even date herewith covering the properties
listed on Schedule A and B hereto. Each Seller and the Buyer agree that,
commencing on January 1, 1997 and on the first day of each calendar quarter
thereafter through October 1, 2000, Buyer shall pay to Getty $37,500.00 as
additional rent for the properties listed on Schedules A and B hereto, such
aggregate amount being $600,000.00. In the event that this Agreement and
the Leases and Subleases expire before October 1, 2000, Buyer shall pay to
Getty on the termination date an amount equal to $600,000.00 less the total
amount paid prior thereto pursuant to the foregoing sentence. Each Seller
and the Buyer agree that the notices of termination referred to in Section
36 of each Lease and Section 35 of each Sublease can only be given if
notice is given contemporaneously for all Leases and Subleases then in
effect between the applicable Landlords and Tenant at the time of giving
notice. Failure to give notice of termination for all of the Leases and
Subleases then in effect will result in automatic renewal of all Leases and
Subleases as provided in said Section 36 and Section 35, respectively.
2. In addition to the rent due and payable by Tenant to each
Landlord under the Subleases, Tenant agrees to pay to Getty as a fee for
administering the Underlying Leases (defined as "Existing Leases" in the
Agreement) $5,000.00 per month commencing on January 1, 1997 and continuing
during the Sublease term and any renewals or extensions thereof, it being
fully understood that the foregoing amount will not diminish if any
Sublease(s) expire or are terminated.
3. Section 9.4 of the Agreement, pertaining to "Mutual Rights of
First Offer," is hereby amended so as to delete the references to "the
fifth anniversary of the Closing Date" and to insert in lieu thereof
December 31, 1997."
4. Section 9.7 of the Agreement and Section 1 of the First
Amendment are deleted in their entirety and the following is inserted in
lieu thereof:
"9.7 Cheltenham Beverage Corp. shall be retained by Buyer and on or
before January 1, 1997 Buyer shall pay to Getty $25,000.00 for the
corporation and the beer and wine license formerly owned by it."
5. Section 9.11 of the Agreement is hereby amended so as to
provide that all references to "the fifth anniversary of the Closing Date"
shall be deleted and "December 31, 1997" inserted in lieu thereof.
Existing Leases, as used in Section 9.11, are third-party leases for the
locations listed on Schedule B hereto. In addition, effective on December
1, 1996, the Leases and Subleases for the locations listed on Schedule C
hereto shall be terminated.
-2-
<PAGE> 48
Section 9.11 of the Agreement is further amended to provide that, in
the event that an Existing Lease is scheduled to expire during the Sublease
term and underground storage tanks and related systems ("UST") replacement
or upgrade ("upgrade") would be required for the continued sale of motor
fuels, Buyer shall advise Getty not less than 90 days prior to such
Existing Lease expiration (i) if it desires to continue subleasing such
Store (ii) if it does not desire to continue subleasing such store with or
without a UST upgrade, or (iii) if it desires to continue subleasing such
store without any gasoline facilities if it is permitted under such
Existing Lease. If Buyer so desires to renew the Sublease pursuant to
clause (i) above, Getty shall provide to Buyer the terms of such renewal
and the estimated cost of the UST upgrade. If the Buyer is dissatisfied
with the estimate, Buyer may make its own cost estimate and, provided that
the Buyers's contractor is approved by Getty (such approval not to be
unreasonably withheld), the upgrade shall be performed by such contractor
selected by Buyer. Buyer shall pay for the total cost of the upgrade and,
in the event that the upgrade is performed by Getty's approved contractor,
Buyer shall reimburse Getty for such total cost within 10 days of receipt
of invoice therefor.
In the event that Buyer is dissatisfied with the lease renewal terms
and/or the estimated cost of the upgrade, Buyer shall immediately so advise
Getty and Getty will not renew the Existing Lease for the benefit of Buyer
but may renew for Getty's own business purposes. In the event that the
Buyer elects not to renew, Getty shall have no obligation to renew the
Existing Lease. In the case of an election by Buyer under clause (iii)
above, Getty shall first have the right to elect to renew the Existing
Lease for its own business purposes without subleasing the Store to Buyer
and, if Getty elects not to renew for its own business purposes, Buyer
shall then have the right to negotiate directly with the lessor of the
Existing Lease free and clear of this Agreement, any such new lease to
commence upon the expiration of the applicable Sublease. If, however, the
lessor will not contract directly with the Buyer, Getty will attempt to
negotiate with such lessor for the benefit of Buyer and sublease the
non-gasoline premises to Buyer with no cost to Getty.
6. Section 4 of the First Amendment is hereby modified as follows:
Buyer agrees that it will either purchase the Equipment or extend its
Equipment Lease with PNC Leasing Corp. for a term of sufficient length, so
that the Getty Equipment Lease Agreement dated as of December 6, 1991
between PNC Leasing Corp. and Getty will not come into effect. Buyer
represents and warrants to Seller that it has fully performed all of its
obligations under its agreements with PNC Leasing Corp. and that Sellers
have no obligations, direct, contingent, or otherwise, to PNC Leasing Corp.
Getty shall have the right and option to purchase the Equipment at the end
of the term of the Leases and Subleases, as provided in Section 4 of the
First Amendment and at fair market value, either from PNC Leasing Corp., or
if Buyer has purchased the Equipment, from Buyer.
Getty shall also have the right and option to purchase at the end of
the term of the Leases and Subleases all of Buyer's other equipment (both
petroleum marketing and in-Store). Except for the Improvements referred to
in Section 11 hereof, the purchase price for the PNC Equipment and all
other equipment shall be fair market value, to be determined by an
appraiser mutually selected by Getty and Buyer the cost to be shared
equally.
-3-
<PAGE> 49
7. Getty and Buyer agree that the Supply Agreement effective as of
December 6, 1991, and all of the other Contracts, shall be amended and
extended on the same terms and conditions (unless otherwise provided
herein) until December 31,1997, or such later date as the Leases and
Subleases may be extended pursuant to Section 1 hereof and Section 36 of
the Leases and Section 35 of the Subleases. The Supply Agreement and the
other Contracts shall terminate on the same date as the termination of the
Leases and Subleases. All references to "Stores" in the Supply Agreement
shall hereinafter be referred to as "Getty Stores" which are all of the
locations which Getty is presently supplying and may hereafter supply
pursuant to Section 12 hereof.
8. Buyer agrees that during the term of this Agreement all of its
advertising within the Market Area which refers to any petroleum products
shall include a reference to either the "Getty" trade name or trademark,
and in the case of the latter, using the registrada ("R"). Such
advertising shall only utilize Getty colors and trade dress. Any
variations therefrom shall require the written consent of Getty (which
shall not unreasonably be withheld) and such use shall be subject to the
terms and conditions of the license granted by the Supply Agreement. Buyer
agrees that it will only sell at the Getty Stores motor fuels (including
diesel but excluding kerosene) purchased from Getty.
9. In addition to those rights set forth in Section 7(b) of the
Supply Agreement, Seller shall also have the right in its sole discretion
at any time and from time to time to eliminate credit terms or modify the
payment and/or credit terms set forth in Section 7 of the Supply Agreement.
In those instances where credit terms have been eliminated or modified,
Buyer may prepay Seller or provide to Seller an irrevocable letter of
credit ("LC") in an amount which is at all times greater than the amount by
which Buyer exceeds such credit limit, such LC to be in a form, and issued
by a bank, acceptable to Seller. In the event that payment and/or credit
terms are eliminated or materially modified by Seller for any reason other
than those referred to in Section 7(b) of the Supply Agreement (which
permit withdrawal of payment and/or credit terms) and Buyer is not in
default under the Leases, Subleases, Supply Agreement or any other
Contract, then not later than 30 days after Buyer has been notified of such
elimination or material modification Buyer shall have the right to
terminate all of the Leases, Subleases, Supply Agreement and other
Contracts, such notice to specify termination of all of the foregoing
Contracts and to be effective 90 days after the receipt of such notice. In
the event that Buyer does not give notice of termination within the
foregoing 30 day period, the Contracts shall remain in full force and
effect until such future time as Seller notifies Buyer of elimination or
further material modification (more restrictive upon Buyer) as aforesaid.
Notwithstanding the foregoing 30-day notice period, the effective date of
elimination or modification of payment and/or credit terms shall be the
date specified by Seller. The establishment by Seller of a credit limit of
not less than $3.5 million, or a change in payment terms reflecting a
change generally applied by motor fuels suppliers to distributors in the
Market Area, shall be deemed not to be a material modification in payment
or credit terms.
-4-
<PAGE> 50
10. Section 24 of the Supply Agreement, and the Distributor Credit
Card and Equipment Lease Agreement shall be amended herein as follows (and
may hereafter be unilaterally amended by Getty from time to time to reflect
changes made in the credit card program for all distributors in the Market
Area):
a) To also include the following credit cards: American Express,
Diners Club, Voyager, P H & H, International Automotive and certain debit
cards.
b) To provide that the POS credit card machine monthly rental of
$74.00 is to be increased to $96.00 retroactive to January 1, 1996.
c) To charge a processing fee for Pay-at-Pump transactions in an
amount to be determined by Seller from time to time.
d) To charge, in addition to those charges set forth on Appendix
One to the Credit Card Agreement, 50 cents for all transactions that are
$5.00 or less.
11. Seller agrees that at the end of the Lease Term or any
extensions or renewals thereof it will reimburse Buyer for the then
unamortized costs of Improvements made by Buyer. "Improvements," for
purposes of this Section 11, shall mean the UST replacements or upgrades
referred to in Section 5 hereof, new or expanded islands, canopies, pumps,
dispensers and fuel computers installed at a Store and shall not include
repaving or any other form of site enhancements or any of the obligations
which are the responsibility of Tenant under the Leases and Subleases.
If Buyer desires that an Improvement be eligible for reimbursement
hereunder, Buyer shall seek prior approval from Seller for such
Improvement, which approval shall not be unreasonably withheld.
Furthermore, Buyer will endeavor to construct any island and canopy
Improvements at the same time the Landlord is making repairs to or
replacements of the UST's in furtherance of its obligation as Landlord
under the Leases. For purposes of calculating the remaining unamortized
costs at the end of the Lease Term, the following depreciation (on a
straight-line basis) schedule shall apply:
Improvement Years
----------- -----
New UST's 16
Upgraded UST's 10
Islands 15
Canopies 15
Pumps 10
Dispensers 10
Fuel Computers 10
-5-
<PAGE> 51
Upon payment of the amount due hereunder, Buyer shall deliver a Bill
of Sale to Seller transferring title to the Improvements, free and clear of
any liens and encumbrances. Any amount due to Buyer hereunder shall be
reduced by any amount(s) owed by Tenant to Landlord under the Leases and
Subleases.
12. In the event that Buyer opens any new locations in the Market
Area which will sell motor fuels, Getty shall have the right of first
refusal to supply motor fuels to each such location by matching the terms
offered by any other potential supplier. Buyer shall provide such terms to
Getty and Getty shall have sixty (60) days in which to exercise the
foregoing right. Buyer shall not enter into any supply agreement for such
new locations without first offering to Getty the right of first refusal.
The right of refusal shall continue throughout the Lease Term and any
extensions and renewals thereof and shall remain in effect on a
location-by-location basis even though Getty may have elected not to match
a proposal for a location on a previous occasion. All planned new
locations are listed on Schedule D hereto, together with their addresses
and Buyer will advise Getty of all other planned new locations promptly
after they have been planned. Buyer will advise Getty of the dates all new
locations equipped for motor fuels are scheduled to open promptly after
such dates have been determined.
13. This Agreement, the Supply Agreement and the other Contracts
may be assigned to "Getty Petroleum Marketing Inc.," if and when such
corporation is spun-off to Getty's stockholders. Upon execution of an
assignment and assumption agreement, Getty shall be relieved from all
obligations and liabilities under this Agreement, the Supply Agreement and
the other Contracts.
14. The Agreement and the Contracts, as amended by the First
Amendment and by this Second Amendment to Lease Properties and Sell Assets,
are hereby ratified, agreed to and affirmed.
-6-
<PAGE> 52
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed on their respective behalf by their respective officers
thereunto duly authorized, as of the day and year first above written.
GETTY PETROLEUM CORP.
("SELLER")
By: /S/ LEO LIEBOWITZ
-------------------------------------------
Its: President
-------------------------------------------
GETTYMART INC.
("SELLER")
By: /S/ AL SMITH
-------------------------------------------
Its: Senior Vice President
-------------------------------------------
RECO PETROLEUM, INC.
("SELLER")
By: /S/ LEO LIEBOWITZ
-------------------------------------------
Its: President
-------------------------------------------
LEEMILT'S PETROLEUM, INC.
("SELLER")
By: /S/ SAMUEL M. JONES
-------------------------------------------
Its: Vice President
-------------------------------------------
UNI-MARTS, INC.
("BUYER")
By: /S/ HENRY D. SAHAKIAN
-------------------------------------------
Its: Chairman of the Board and CEO
-------------------------------------------
-7-
<PAGE>
EXHIBIT (11)
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS:
(A) Computation of the weighted average number of shares of common stock
outstanding for the years ended September 30, 1996, 1995 and 1994:
<TABLE>
<CAPTION>
WEIGHTED
SHARES OF NUMBER OF DAYS NUMBER OF SHARES
COMMON STOCK OUTSTANDING SHARE DAYS OUTSTANDING
------------ -------------- --------------- ----------------
<S> <C> <C> <C> <C>
1996
- ----
October 1 - September 30 6,345,465 366 2,322,440,346
Treasury Stock Purchases ( 94,075) Various ( 8,164,523)
Shares Issued 407,097 Various 68,185,760
--------- -------------
6,658,487 2,382,461,583 6,509,458
========= ============= =========
1995
- ----
October 1 - September 30 6,274,260 365 2,290,105,018
Shares Issued 71,205 Various 8,432,227
--------- -------------
6,345,465 2,298,537,245 6,297,362
========= ============= =========
1994
- ----
October 1 - September 30 6,881,449 365 2,511,728,756
Treasury Stock Purchases ( 661,670) Various ( 36,167,603)
Shares Issued 54,481 Various 11,332,906
--------- -------------
6,274,260 2,486,894,059 6,813,408
========= ============= =========
</TABLE>
(B) Computation of Earnings Per Share:
Computation of earnings per share is net earnings divided by the
weighted average number of shares of common stock outstanding for the
years ended September 30,
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Net Earnings $2,971,044 $4,153,761 $3,665,123
Weighted average number of
shares of common stock
outstanding 6,509,458 6,297,362 6,813,408
Earnings Per Share $.46 $.66 $.54
==== ==== ====
</TABLE>
53
<PAGE>
EXHIBIT (21)
SUBSIDIARY OF THE REGISTRANT
STATE OF
NAME INCORPORATION
---- -------------
Uni-Marts of America, Inc. Delaware
Uni-Marts of America, Inc. does business only under its legal corporate name.
54
<PAGE>
INDEPENDENT AUDITORS' CONSENT
Board of Directors and Stockholders of Uni-Marts, Inc.
State College, Pennsylvania
We consent to the incorporation by reference in Registration Statements
No. 33-69136 and No. 33-07697 of Uni-Marts, Inc. on Form S-8 of our report
dated October 24, 1996 appearing in the Annual Report on Form 10-K of
Uni-Marts, Inc. for the year ended September 30, 1996.
/S/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Philadelphia, Pennsylvania
December 12, 1996
55
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET DATED SEPTEMBER 30, 1996 AND THE STATEMENT OF EARNINGS FOR THE FISCAL YEAR
ENDED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000805020
<NAME> UNI-MARTS, INC.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> SEP-30-1996
<CASH> 1,207,929
<SECURITIES> 387,282
<RECEIVABLES> 2,901,487
<ALLOWANCES> 74,600
<INVENTORY> 17,807,998
<CURRENT-ASSETS> 26,282,890
<PP&E> 113,609,469
<DEPRECIATION> 41,815,369
<TOTAL-ASSETS> 105,037,742
<CURRENT-LIABILITIES> 24,619,611
<BONDS> 38,963,895
0
0
<COMMON> 727,968
<OTHER-SE> 35,334,443
<TOTAL-LIABILITY-AND-EQUITY> 105,037,742
<SALES> 331,310,955
<TOTAL-REVENUES> 333,812,279
<CGS> 247,457,964
<TOTAL-COSTS> 329,164,035
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 37,000
<INTEREST-EXPENSE> 2,854,552
<INCOME-PRETAX> 4,648,244
<INCOME-TAX> 1,677,200
<INCOME-CONTINUING> 2,971,044
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,971,044
<EPS-PRIMARY> .46
<EPS-DILUTED> .46
</TABLE>
<PAGE> 57
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [FEE REQUIRED]
For the fiscal year ended September 30, 1996
----------------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
-------------------- --------------------
Commission file number 1-11556
-------------------------------------------------------
UNI-MARTS, INC. RETIREMENT SAVINGS & INCENTIVE PLAN
- -------------------------------------------------------------------------------
(Full title of the plan)
UNI-MARTS, INC.
- -------------------------------------------------------------------------------
(Name of issuer of the securities held pursuant to the plan)
477 East Beaver Avenue, State College, PA 16801-5690
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
This Document Contains 17 Pages.
Exhibit Index on Page 16.
1
<PAGE> 58
UNI-MARTS, INC.
RETIREMENT SAVINGS & INCENTIVE PLAN
TABLE OF CONTENTS
- -------------------------------------------------------------------------------
Page
INDEPENDENT AUDITORS' REPORT 3
FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 1996 AND 1995 AND FOR THE
THREE YEARS IN THE PERIOD ENDED SEPTEMBER 30, 1996:
Statements of Net Assets Available for Benefits 4-5
Statements of Changes in Net Assets Available for Benefits 6-8
Notes to Financial Statements 9-12
SUPPLEMENTAL SCHEDULES AS OF SEPTEMBER 30, 1996
AND FOR THE YEAR THEN ENDED:
Item 27a - Schedule of Assets Held for Investment Purposes 13
Item 27d - Schedule of Reportable Transactions Involving
Securities of the Same Issue Where the Aggregate Amount
Exceeds 5% of Beginning Plan Value 14
Supplemental schedules not included herein are omitted because
of the absence of conditions under which they are required.
2
<PAGE> 59
INDEPENDENT AUDITORS' REPORT
To the Trustees and Participants of
Uni-Marts, Inc. Retirement Savings & Incentive Plan
State College, Pennsylvania
We have audited the accompanying statements of net assets available for
benefits of Uni-Marts, Inc. Retirement Savings & Incentive Plan as of September
30, 1996 and 1995, and the related statements of changes in net assets
available for benefits for each of the three years in the period ended
September 30, 1996. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of September 30,
1996 and 1995, and the changes in net assets available for benefits for each of
the three years in the period ended September 30, 1996 in conformity with
generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules listed in
the Table of Contents are presented for the purpose of additional analysis and
are not a required part of the basic financial statements, but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The supplemental information by fund in the statements
of net assets available for benefits and statements of changes in net assets
available for benefits is presented for the purpose of additional analysis
rather than to present information regarding the net assets available for
benefits and changes in net assets available for benefits of the individual
funds, and is not a required part of the basic financial statements. The
supplemental schedules and supplemental information by fund are the
responsibility of the Plan's management. Such supplemental schedules and
supplemental information by fund have been subjected to the auditing procedures
applied in our audits of the basic financial statements and, in our opinion,
except for the omission of certain historical cost information in the
supplemental schedules, are fairly stated in all material respects when
considered in relation to the basic financial statements taken as a whole.
/S/ DELOITTE & TOUCHE LLP
November 20, 1996
3
<PAGE> 60
UNI-MARTS, INC.
RETIREMENT SAVINGS & INCENTIVE PLAN
<TABLE>
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
SEPTEMBER 30, 1996
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
Supplementary Information by Fund
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Uni-Marts,
Inc.
Money Government Capital High Common
Market Income Growth Income Stock Total
ASSETS Fund Fund Fund Fund Fund
Cash $ 36,078 $ 5,017 $ 5,022 $ 6,168 $ 52,285
-------- -------- ---------- -------- ----------
Investments, at fair value:
Uni-Marts, Inc. Common Stock,
131,942 shares: $1,088,524 1,088,524
Pooled funds 484,119 648,414 1,576,769 555,407 3,264,709
Participant loans 49,845 49,845
-------- -------- ---------- -------- ---------- ----------
Total investments 533,964 648,414 1,576,769 555,407 1,088,524 4,403,078
-------- -------- ---------- -------- ---------- ----------
Contributions receivable 2,812 2,216 4,924 2,132 12,084
Interfund receivable (payable) (30) 60 (30) 0
-------- -------- ---------- -------- ---------- ----------
2,782 2,276 4,894 2,132 12,084
-------- -------- ---------- -------- ---------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $572,824 $655,707 $1,586,685 $563,707 $1,088,524 $4,467,447
======== ======== ========== ======== ========== ==========
See notes to financial statements.
</TABLE>
4
<PAGE> 61
UNI-MARTS, INC.
RETIREMENT SAVINGS & INCENTIVE PLAN
<TABLE>
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
SEPTEMBER 30, 1995
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
Supplementary Information by Fund
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Uni-Marts,
Inc.
Money Government Capital High Common
Market Income Growth Income Stock Total
ASSETS Fund Fund Fund Fund Fund
Cash $ 18,625 $ 5,044 $ 5,101 $ 4,947 $ 33,717
-------- -------- ---------- -------- ----------
Investments, at fair value:
Uni-Marts, Inc. Common Stock,
121,345 shares: $849,414 849,414
Pooled funds 592,318 553,433 1,243,344 449,527 2,838,622
Participant loans 58,607 58,607
-------- -------- ---------- -------- -------- ----------
Total investments 650,925 553,433 1,243,344 449,527 849,414 3,746,643
-------- -------- ---------- -------- -------- ----------
Contributions receivable 2,909 2,211 3,823 1,841 10,784
Interfund receivable (payable) (5,435) 10,188 (1,554) (3,199) 0
-------- -------- ---------- -------- -------- ----------
(2,526) 12,399 2,269 (1,358) 10,784
-------- -------- ---------- -------- -------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $667,024 $570,876 $1,250,714 $453,116 $849,414 $3,791,144
======== ======== ========== ======== ======== ==========
See notes to financial statements.
</TABLE>
5
<PAGE> 62
UNI-MARTS, INC.
RETIREMENT SAVINGS & INCENTIVE PLAN
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED SEPTEMBER 30, 1996
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
Supplementary Information by Fund
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Uni-Marts,
Inc.
Money Government Capital High Common
Market Income Growth Income Stock Total
Fund Fund Fund Fund Fund
NET ASSETS AVAILABLE FOR BENEFITS,
BEGINNING OF YEAR $667,024 $570,876 $1,250,714 $453,116 $849,414 $3,791,144
-------- -------- ---------- -------- ---------- ----------
ADDITIONS:
Participant Contributions 79,445 60,281 124,149 53,502 70,602 387,979
Employer Contributions 113,641 113,641
Interest and dividend income 30,421 39,924 133,891 42,192 15,018 261,446
Net appreciation (depreciation)
in fair value of plan assets (15,122) 114,239 3,125 156,720 258,962
Interfund transfers (137,004) 49,394 40,067 61,000 (13,457) 0
-------- -------- ---------- --------- ---------- -----------
Total additions (27,138) 134,477 412,346 159,819 342,524 1,022,028
-------- -------- ---------- --------- ---------- -----------
DEDUCTIONS:
Payments to beneficiaries (67,025) (49,646) (76,375) (49,228) (103,414) (345,688)
Other (37) (37)
-------- -------- ---------- --------- ---------- -----------
Total deductions (67,062) (49,646) (76,375) (49,228) (103,414) (345,725)
-------- -------- ---------- --------- ---------- -----------
(DECREASE) INCREASE IN NET ASSETS (94,200) 84,831 335,971 110,591 239,110 676,303
-------- -------- ---------- --------- ---------- -----------
NET ASSETS AVAILABLE FOR BENEFITS,
END OF YEAR $572,824 $655,707 $1,586,685 $563,707 $1,088,524 $4,467,447
======== ======== ========== ========= ========== ===========
See notes to financial statements
</TABLE>
6
<PAGE> 63
UNI-MARTS, INC.
RETIREMENT SAVINGS & INCENTIVE PLAN
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED SEPTEMBER 30, 1995
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
Supplementary Information by Fund
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Uni-Marts,
Inc.
Money Government Capital High Common
Market Income Growth Income Stock Total
Fund Fund Fund Fund Fund
NET ASSETS AVAILABLE FOR BENEFITS,
BEGINNING OF YEAR $533,061 $512,489 $ 956,595 $394,186 $487,208 $2,883,539
-------- -------- ---------- -------- -------- ----------
ADDITIONS:
Participant Contributions 81,419 63,675 109,106 52,439 53,421 360,060
Employer Contributions 111,139 111,139
Interest and dividend income 27,003 35,691 35,691 38,747 12,420 149,552
Net appreciation in fair value
of plan assets 29,949 219,302 20,257 226,142 495,650
Interfund transfers 62,973 (24,801) (31,962) (8,423) 2,213 0
Rollover contribution 1,033 344 172 172 1,721
-------- -------- ---------- -------- -------- ----------
Total additions 172,428 104,858 332,137 103,192 405,507 1,118,122
-------- -------- ---------- -------- -------- ----------
DEDUCTIONS:
Payments to beneficiaries (38,362) (46,471) (38,018) (44,247) (43,301) (210,399)
Other (103) (15) (118)
-------- -------- ---------- -------- -------- ----------
Total deductions (38,465) (46,471) (38,018) (44,262) (43,301) (210,517)
-------- -------- ---------- -------- -------- ----------
INCREASE IN NET ASSETS 133,963 58,387 294,119 58,930 362,206 907,605
-------- -------- ---------- -------- -------- ----------
NET ASSETS AVAILABLE FOR BENEFITS,
END OF YEAR $667,024 $570,876 $1,250,714 $453,116 $849,414 $3,791,144
======== ======== ========== ======== ======== ==========
See notes to financial statements
</TABLE>
7
<PAGE> 64
UNI-MARTS, INC.
RETIREMENT SAVINGS & INCENTIVE PLAN
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED SEPTEMBER 30, 1994
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
Supplementary Information by Fund
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Uni-Marts,
Inc.
Money Government Capital High Common
Market Income Growth Income Stock Total
Fund Fund Fund Fund Fund
NET ASSETS AVAILABLE FOR BENEFITS,
BEGINNING OF YEAR $542,221 $602,764 $989,257 $419,214 $415,914 $2,969,370
-------- -------- -------- -------- -------- ----------
ADDITIONS:
Participant Contributions 82,850 73,631 117,590 55,477 46,974 376,522
Employer Contributions 113,811 113,811
Interest and dividend income 18,067 37,342 74,336 35,512 9,271 174,528
Net (depreciation) in fair value
of plan asset (54,480) (58,703) (35,611) (15,762) (164,556)
Interfund transfers 61,378 (46,793) (30,860) 13,678 2,597 0
-------- -------- -------- -------- -------- ----------
Total additions 162,295 9,700 102,363 69,056 156,891 500,305
-------- -------- -------- -------- -------- ----------
DEDUCTIONS:
Payments to beneficiaries (170,657) (99,975) (135,017) (94,076) (85,597) (585,322)
Other (798) (8) (8) (814)
-------- -------- -------- -------- -------- ----------
Total deductions (171,455) (99,975) (135,025) (94,084) (85,597) (586,136)
-------- -------- -------- -------- -------- ----------
(DECREASE) INCREASE IN NET ASSETS (9,160) (90,275) (32,662) (25,028) 71,294 (85,831)
-------- -------- -------- -------- -------- ----------
NET ASSETS AVAILABLE FOR BENEFITS,
END OF YEAR $533,061 $512,489 $956,595 $394,186 $487,208 $2,883,539
======== ======== ======== ======== ======== ==========
See notes to financial statements
</TABLE>
8
<PAGE> 65
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1996 AND 1995
- -------------------------------------------------------------------------------
1. THE PLAN
Uni-Marts, Inc. Retirement Savings & Incentive Plan (the "Plan"), a
defined contribution plan, was established October 1, 1983 to include all
full-time employees of the former parent of Uni-Marts, Inc. and certain
of its subsidiaries and related companies. Effective October 1, 1987,
the Plan was amended and restated to include only the employees of
Uni-Marts, Inc. and its affiliates (the "Company"). The assets of the
Plan attributable to employees of the former parent and related companies
were spun off from the Plan effective the date of the amendment.
Uni-Marts, Inc. is the Trustee of the Plan.
Effective October 1, 1992, the Plan was amended and restated. The
effect of this amendment is to reflect the merger of the Valley Farms,
Inc. (a subsidiary of Uni-Marts, Inc.) Cash or Deferred Profit Sharing
Plan with and into the Plan and to incorporate the amendments necessary
to comply with regulations issued by the Internal Revenue Service (IRS).
The following is a summary description of the Plan. Participants should
refer to the Plan document for a complete description of the Plan.
Employees are eligible to participate after attainment of age 21, and
completion of at least 1,000 hours of service in one eligibility
computation period. Employees whose wages and conditions of employment
are subject to agreement with a collective bargaining agent are not
eligible to participate unless provided by the collective bargaining
agreement. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA).
All eligible employees may direct the Company to contribute from 1% to 3%
of their compensation to the Plan on their behalf as a basic
contribution. An additional amount up to 12% of compensation may be
deposited as a supplemental contribution. Total individual employee
contributions are indexed annually for inflation and may not exceed
$9,500, $9,240, and $8,994 per Plan year ended 1996, 1995 and 1994,
respectively, as provided in the Plan. The Company will make matching
contributions equal to $.50 for each $1.00 of basic contribution and may
make an optional contribution at the discretion of the Board of
Directors. No optional contributions were made in the Plan years 1996,
1995 and 1994. Each participant has at all times a 100% nonforfeitable
interest in their account balance.
Each employee directs that his/her contribution be invested and
reinvested in one or more of the investment funds selected by the Trustee
and/or in the Company's common stock. The Trustee determines how all
amounts credited to a member's optional contribution account, if any,
will be invested. All income, expenses, gains or losses attributable to
assets held in each investment fund are reflected therein exclusively.
9
<PAGE> 66
Participants' accounts may be withdrawn upon separation from the Company,
death, disability or retirement (regular - age 65; early - age 55).
Withdrawals, except for hardship withdrawals, are distributed in lump
sums, including earnings. A participant may request a loan or apply for
a hardship withdrawal in accordance with the provisions of the Plan. The
Company has the right to terminate the Plan subject to the provisions of
ERISA.
2. ADMINISTRATION OF THE PLAN
The Company is the administrator of the Plan. All fees related to the
Plan's administration and recordkeeping are paid by the Company and
therefore are not reported as an expense of the Plan.
3. INVESTMENTS
Investments representing units of funds maintained by diversified,
open-end management investment companies are stated at fair value as
determined by published market prices. Uni-Marts, Inc. common stock is
valued at the closing market price. Income and expenses relating to
these investments are recorded on the accrual basis of accounting.
10
<PAGE> 67
INVESTMENTS AT SEPTEMBER 30, ARE AS FOLLOWS:
<TABLE>
<CAPTION>
<S> <C> <C>
1996 1995
Money Market Fund:
Massachusetts Financial Services
Cash Reserve Class B $ 27,171
Rushmore Money Market Fund $ 484,119 565,147
---------- ----------
484,119 592,318
---------- ----------
Government Income Fund:
Massachusetts Financial Services
Government Mortgage Class A 85,699 82,269
Massachusetts Financial Services
Government Mortgage Class B 136,377 198,105
Franklin U.S. Government Securiti 426,338 273,059
---------- ----------
648,414 553,433
---------- ----------
Capital Growth Fund:
Massachusetts Financial Services
Capital Growth Class A 295,431 249,338
Massachusetts Financial Services
Capital Growth Class B 429,331 422,739
Janus Fund 852,007 571,267
---------- ----------
1,576,769 1,243,344
---------- ----------
High Income Fund:
Massachusetts Financial Services
High Income Class A 65,835 59,309
Massachusetts Financial Services
High Income Class B 96,902 123,814
Franklin Income Fund 392,670 266,404
---------- ----------
555,407 449,527
---------- ----------
Uni-Marts, Inc. Common Stock 1,088,524 849,414
---------- ----------
Investments 4,353,233 3,688,036
Participant Loans 49,845 58,607
---------- ----------
Total Investments $4,403,078 $3,746,643
========== ==========
</TABLE>
11
<PAGE> 68
During 1996, 1995 and 1994, the Plan purchased from Uni-Marts, Inc.
23,361; 29,054 and 28,937 shares of its common stock at a cost of
$184,243; $164,560 and $160,785, respectively. The price paid for these
shares was the average of the bid and ask price per share on the date
purchased for the portion of the 1994 Plan year that the stock was traded
on the over-the-counter market. For the 1996 and 1995 Plan years and the
portion of the 1994 Plan year that the stock was traded on the American
Stock Exchange, the price paid for the shares was as traded on the
American Stock Exchange.
4. TAX STATUS
The trust established under the Plan to hold the Plan's assets is
qualified pursuant to the appropriate section of the Internal Revenue
Code (IRC), and, accordingly, the trust's net investment income is exempt
from income taxes. The Plan obtained its latest determination letter on
September 9, 1993, in which the IRS stated that the Plan, as then
designed, was in compliance with the applicable requirements of the IRC.
The Plan has been amended since receiving the determination letter.
However, the Plan administrator and the Plan's tax counsel believe that
the Plan is currently designed and being operated in compliance with the
applicable requirements of the IRC. Therefore, they believe that the
Plan was qualified and the related trust was tax exempt as of the
financial statement date.
*****
12
<PAGE> 69
UNI-MARTS, INC.
RETIREMENT SAVINGS & INCENTIVE PLAN
<TABLE>
<CAPTION>
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
SEPTEMBER 30, 1996
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
DESCRIPTION OF INVESTMENT INCLUDING
MATURITY DATE, RATE OF INTEREST, CURRENT
IDENTITY OF ISSUE COLLATERAL, PAR OR MATURITY VALUE COST VALUE
Massachusetts Financial Services:
Government Mortgage Class Government Bond Mutual Fund, 13,084 shares * $85,699
Government Mortgage Class Government Bond Mutual Fund, 20,821 shares * 136,377
Capital Growth Class A Stock Mutual Fund, 17,523 shares * 295,431
Capital Growth Class B Stock Mutual Fund, 25,525 shares * 429,331
High Income Class A Corporate Bond Mutual Fund, 12,375 shares * 65,835
High Income Class B Corporate Bond Mutual Fund, 18,215 shares * 96,902
Rushmore Money Market Fund Money Market Account, 484,119 shares 484,119 484,119
Franklin U.S. Government
Securities Government Bond Mutual Fund, 63,443 shares * 426,338
Janus Fund Stock Mutual Fund, 31,756 shares * 852,007
Franklin Income Fund Corporate Bond Mutual Fund, 170,726 shares * 392,670
Uni-Marts, Inc. Common Stock Company Common Stock, 131,942 shares 523,602 1,088,524
Employee Loans Receivable Maturing 1998 - 2010, interest from 7% to 8.5 49,845 49,845
----------
Total $4,403,078
==========
*Cost information is not available
</TABLE>
13
<PAGE> 70
UNI-MARTS, INC.
RETIREMENT SAVINGS & INCENTIVE PLAN
<TABLE>
<CAPTION>
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS INVOLVING SECURITIES
OF THE SAME ISSUE WHERE THE AGGREGATE AMOUNT EXCEEDS 5% OF
BEGINNING PLAN VALUE
YEAR ENDED SEPTEMBER 30, 1996
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CURRENT VALUE
EXPENSE OF ASSET ON
IDENTITY OF PURCHASE SELLING INCURRED WITH COST OF TRANSACTION NET GAIN
PARTY INVOLVED DESCRIPTION OF ASSET PRICE PRICE TRANSACTION ASSET DATE (LOSS)
Uni-Marts, Inc. Uni-Marts, Inc. Various N/A None $184,243 $184,243 N/A
common stock
</TABLE>
14
<PAGE> 71
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this Annual Report to be signed on its behalf by the
undersigned hereunto duly authorized.
UNI-MARTS, INC.
RETIREMENT SAVINGS & INCENTIVE PLAN
/S/ J. KIRK GALLAHER
------------------------------------
J. Kirk Gallaher
Executive Vice President
15
<PAGE> 72
EXHIBIT INDEX
Page(s)
23 Consent of Independent Certified Public Accountants. 17
16
<PAGE> 73
EXHIBIT
INDEPENDENT AUDITORS' CONSENT
Board of Directors and Stockholders of Uni-Marts, Inc.
State College, Pennsylvania
We consent to the incorporation by reference in the Registration Statement No.
33-9807 of Uni-Marts, Inc. on Form S-8 of our report dated November 20, 1996
appearing in this Annual Report on Form 11-K of Uni-Marts, Inc. Retirement
Savings and Incentive Plan for the year ended September 30, 1996.
/S/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Philadelphia, Pennsylvania
December 12, 1996
17
