<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended April 2, 1998
------------------------------------------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
-------------------- ------------------------
Commission file number 1-11556
--------------------------------------------------------
UNI-MARTS, INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 25-1311379
- -------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
477 East Beaver Avenue, State College, PA 16801-5690
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(8l4) 234-6000
- -------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- -------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
6,820,029 Common Shares were outstanding at May 7, 1998.
This Document Contains 23 Pages.
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<TABLE>
UNI-MARTS, INC. AND SUBSIDIARY
INDEX
<CAPTION>
PART I. FINANCIAL INFORMATION
- ------------------------------ PAGE(S)
<S> <C> <C>
Item 1. Financial Statements
Consolidated Balance Sheets -
April 2, 1998 and September 30, 1997 3-4
Consolidated Statements of Operations -
Quarter Ended and Two Quarters Ended
April 2, 1998 and April 3, 1997 5
Consolidated Statements of Cash Flows -
Two Quarters Ended April 2, 1998 and
April 3, 1997 6-7
Notes to Consolidated Financial Statements 8-11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12-16
PART II. OTHER INFORMATION
- ---------------------------
Item 6. Exhibits and Reports on Form 8-K 16-18
Exhibit Index 20
</TABLE>
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<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
UNI-MARTS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<CAPTION>
April 2, September 30,
1998 1997
----------- -------------
(Unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash $ 3,623,277 $ 5,993,388
Marketable equity securities (at market,
cost $31,600 and $277,200) 39,878 407,475
Accounts receivable - less allowances of
$131,100 and $132,600 2,220,762 3,377,554
Tax refunds receivable 60,171 1,819,100
Inventories 10,941,652 15,683,330
Prepaid and current deferred taxes 3,134,490 3,359,490
Property held for sale 6,131,203 5,643,006
Prepaid expenses and other 1,100,086 796,668
Loan due from officer - current portion 200,000 150,000
----------- ------------
TOTAL CURRENT ASSETS 27,451,519 37,230,011
PROPERTY, EQUIPMENT AND IMPROVEMENTS -
at cost, less accumulated depreciation and
amortization of $46,955,600 and
$46,474,100 63,341,044 69,055,846
LOAN DUE FROM OFFICER 550,997 674,768
NET INTANGIBLE AND OTHER ASSETS 6,102,744 6,633,157
----------- ------------
TOTAL ASSETS $97,446,304 $113,593,782
=========== ============
</TABLE>
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<PAGE>
<TABLE>
UNI-MARTS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(CONTINUED)
<CAPTION>
April 2, September 30,
1998 1997
----------- -------------
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $11,724,534 $ 14,462,174
Gas taxes payable 2,080,973 2,424,641
Accrued expenses 5,367,357 6,806,632
Current maturities of long-term debt 20,022,112 12,722,649
Current obligations under capital leases 64,678 87,320
----------- ------------
TOTAL CURRENT LIABILITIES 39,259,654 36,503,416
LONG-TERM DEBT, less current maturities 21,744,210 39,852,947
OBLIGATIONS UNDER CAPITAL LEASES,
less current maturities 508,008 533,551
DEFERRED TAXES 3,950,600 4,036,000
DEFERRED INCOME AND OTHER LIABILITIES 2,409,704 3,120,923
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common Stock, par value $.10 a share:
Authorized 15,000,000 shares
Issued 7,309,657 and 7,286,657
shares, respectively 730,966 728,666
Additional paid-in capital 24,254,157 24,341,999
Retained earnings 7,550,601 8,254,538
----------- ------------
32,535,724 33,325,203
Less treasury stock, at cost - 491,871
and 639,980 shares of Common Stock,
respectively ( 2,961,596) ( 3,778,258)
----------- ------------
29,574,128 29,546,945
----------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $97,446,304 $113,593,782
=========== ============
</TABLE>
See notes to consolidated financial statements
-4-
<PAGE>
<TABLE>
UNI-MARTS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
QUARTER ENDED TWO QUARTERS ENDED
April 2, April 3, April 2, April 3,
1998 1997 1998 1997
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
REVENUES:
Merchandise sales $33,558,239 $42,608,745 $ 78,812,750 $ 89,081,491
Gasoline sales 21,959,156 38,218,098 58,339,710 80,538,022
Other income 495,217 588,758 1,051,453 1,205,115
----------- ----------- ------------ ------------
56,012,612 81,415,601 138,203,913 170,824,628
----------- ----------- ------------ ------------
COSTS AND EXPENSES:
Cost of sales 39,523,856 60,962,757 101,087,299 127,779,797
Selling 12,730,979 17,096,760 29,427,740 34,795,353
General and administrative 1,665,363 1,879,788 3,376,814 3,734,001
Depreciation and amortization 1,641,225 1,817,531 3,226,574 3,630,550
Interest 1,023,083 1,095,751 2,148,823 2,012,756
----------- ----------- ------------ ------------
56,584,506 82,852,587 139,267,250 171,952,457
----------- ----------- ------------ ------------
EARNINGS (LOSS) BEFORE INCOME
TAXES AND CUMULATIVE EFFECT OF
ACCOUNTING CHANGE ( 571,894) 1,436,986) ( 1,063,337) ( 1,127,829)
INCOME TAXES ( 142,200)( 511,444) ( 359,400) ( 395,798)
----------- ----------- ------------ ------------
EARNINGS (LOSS) BEFORE CUMULATIVE
EFFECT OF ACCOUNTING CHANGE ( 429,694)( 925,542) ( 703,937) ( 732,031)
CUMULATIVE EFFECT OF ACCOUNTING
CHANGE, NET OF INCOME TAX
BENEFIT OF $725,800 0 0 0 ( 1,468,140)
----------- ----------- ------------ ------------
NET EARNINGS (LOSS) ($ 429,694)($ 925,542) ($ 703,937) ($ 2,200,171)
=========== =========== ============ ============
BASIC EARNINGS (LOSS) PER SHARE:
EARNINGS (LOSS) PER SHARE BEFORE
CUMULATIVE EFFECT OF ACCOUNTING
CHANGE ($ 0.06)($ 0.14) ($ 0.11) ($ 0.11)
LOSS PER SHARE FROM CUMULATIVE
EFFECT OF ACCOUNTING CHANGE 0.00 0.00 0.00 ( 0.22)
----------- ----------- ------------ ------------
NET EARNINGS (LOSS) PER SHARE ($ 0.06)($ 0.14) ($ 0.11) ($ 0.33)
=========== =========== ============ ============
DILUTED EARNINGS (LOSS) PER SHARE:
EARNINGS (LOSS) PER SHARE BEFORE
CUMULATIVE EFFECT OF ACCOUNTING
CHANGE ($ 0.06)($ 0.14) ($ 0.11) ($ 0.11)
LOSS PER SHARE FROM CUMULATIVE
EFFECT OF ACCOUNTING CHANGE 0.00 0.00 0.00 ( 0.22)
----------- ----------- ------------ ------------
NET EARNINGS (LOSS) PER SHARE ($ 0.06)($ 0.14) ($ 0.11) ($ 0.33)
=========== =========== ============ ============
DIVIDENDS PER SHARE $ 0.00 $ 0.03 $ 0.00 $ 0.06
=========== =========== ============ ============
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 6,733,817 6,635,876 6,694,119 6,639,216
=========== =========== ============ ============
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING ASSUMING
DILUTION 6,733,817 6,635,876 6,694,119 6,639,216
=========== =========== ============ ============
</TABLE>
See notes to consolidated financial statements
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<PAGE>
<TABLE>
UNI-MARTS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
TWO QUARTERS ENDED
April 2, April 3,
1998 1997
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers and others $138,784,120 $169,843,656
Cash paid to suppliers and employees ( 134,261,707) ( 164,391,784)
Net receipts for sales and purchases
of trading equity securities 797,340 0
Dividends and interest received 41,397 18,761
Interest paid (net of capitalized interest
of $0 and $57,400) ( 2,269,887) ( 1,955,668)
Income taxes received 2,257,929 703,500
------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 5,349,192 4,218,465
CASH FLOWS FROM INVESTING ACTIVITIES:
Receipts from sale of capital assets 3,872,943 71,999
Purchase of property, equipment and
improvements ( 1,831,843) ( 9,768,619)
Payments for purchases of available-for-sale
securities 0 ( 183,668)
Note receivable from officer 73,771 0
Cash advanced for intangible and other
assets ( 150,000) ( 334,078)
Cash received for intangible and other
assets 467,361 8,776
------------ ------------
NET CASH PROVIDED (USED) IN INVESTING
ACTIVITIES 2,432,232 ( 10,205,590)
CASH FLOWS FROM FINANCING ACTIVITIES:
(Payments) borrowings on revolving credit
agreement ( 4,000,000) 3,000,000
Additional long-term borrowings 0 10,000,000
Principal payments on debt ( 6,857,459) ( 1,691,241)
Purchases of treasury stock ( 32,576) ( 352,349)
Proceeds from issuance of common stock 738,500 0
Dividends paid to stockholders 0 ( 397,986)
------------ ------------
NET CASH (USED) PROVIDED BY FINANCING
ACTIVITIES ( 10,151,535) 10,558,424
------------ ------------
NET (DECREASE) INCREASE IN CASH ( 2,370,111) 4,571,299
CASH:
Beginning of period 5,993,388 1,207,929
------------ ------------
End of period $ 3,623,277 $ 5,779,228
============ ============
</TABLE>
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<PAGE>
<TABLE>
UNI-MARTS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
(Unaudited)
<CAPTION>
TWO QUARTERS ENDED
April 2, April 3,
1998 1997
---------- ----------
<S> <C> <C>
RECONCILIATION OF NET EARNINGS (LOSS) TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
NET EARNINGS (LOSS) ($ 703,937) ($2,200,171)
ADJUSTMENTS TO RECONCILE NET EARNINGS (LOSS) TO
NET CASH PROVIDED BY OPERATING ACTIVITIES:
Depreciation and amortization 3,226,574 3,630,550
Net unrealized holding loss on trading
securities 122,032 0
Gain on sale of trading equity securities ( 103,469) 0
Gain on sale of available-for-sale securities 0 ( 3,001)
Loss on sale of capital assets and other 66,929 234,463
Cumulative effect of accounting change 0 1,468,140
Change in assets and liabilities:
(Increase) decrease in:
Trading equity securities 349,034 0
Accounts receivable 1,353,912 ( 979,953)
Tax refunds receivable 1,758,929 0
Inventories 4,741,678 ( 1,579,286)
Prepaid expenses ( 370,288) 614,701
Increase (decrease) in:
Accounts payable and accrued expenses ( 4,520,583) 1,953,971
Deferred income taxes and other
liabilities ( 571,619) 1,079,051
---------- ----------
TOTAL ADJUSTMENTS TO NET EARNINGS (LOSS) 6,053,129 6,418,636
---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES $5,349,192 $4,218,465
========== ==========
</TABLE>
See notes to consolidated financial statements
-7-
<PAGE>
UNI-MARTS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
A. FINANCIAL STATEMENTS:
The consolidated balance sheet as of April 2, 1998, the consolidated
statements of operations and the consolidated statements of cash flows
for the two quarters ended April 2, 1998 and April 3, 1997 have been
prepared by Uni-Marts, Inc. (the "Company") without audit. In the
opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial position
of the Company at April 2, 1998 and the results of operations and cash
flows for all periods presented have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested
that these consolidated financial statements be read in conjunction with
the financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the fiscal year ended September 30, 1997.
The results of operations for the interim periods are not necessarily
indicative of the results to be obtained for the full year.
B. OPERATIONS:
The Company incurred a loss of $704,000 in the first two quarters of
fiscal year 1998. This loss was primarily due to lower gross profits on
merchandise and lower than anticipated profit contributions from newly
constructed and remodeled stores. Also, as a result of amendments to the
Company's various debt agreements, the Company's debt service
requirements for the current fiscal year represent a significant increase
from requirements in prior years. In addition, these amendments restrict
the Company's capital expenditures to $3,000,000 in the current fiscal
year and place certain restrictions on any additional borrowing by the
Company.
Management's plans for the balance of fiscal year 1998 include purchasing
gasoline from more competitive sources in order to improve margins. In
addition, the Company expects to continue to improve the operating
results of its existing fast-food merchandising units. The Company
anticipates that cash presently available and cash to be generated from
operations and asset sales will be sufficient to meet its cash
requirements during the balance of fiscal year 1998.
C. In fiscal year 1997, the Company changed its method of valuing its
merchandise inventories. The Company formerly valued its merchandise
inventories at the lower of cost (first-in, first-out method) or market,
as determined by the retail inventory method utilizing a single category
of merchandise. The Company now values its merchandise inventories at
the lower of cost (first-in, first-out method) or market, as determined
by the retail inventory method utilizing eight categories of merchandise.
This change caused a one-time charge to earnings of $1,468,140, net of
the income tax benefit of $725,800. The statement of operations for the
first two quarters of fiscal year 1997 have been restated to reflect
retroactive application of this change.
-8-
<PAGE>
D. INTANGIBLE AND OTHER ASSETS:
Intangible and other assets consist of the following:
April 2, September 30,
1998 1997
---------- -------------
Goodwill $5,998,351 $ 5,998,351
Lease acquisition costs 933,956 1,187,174
Non-competition agreements 0 1,213,040
Other 1,907,109 2,268,850
---------- -----------
8,839,416 10,667,415
Less accumulated amortization 2,736,672 4,034,258
---------- -----------
$6,102,744 $ 6,633,157
========== ===========
Goodwill represents the excess of costs over the fair value of net
assets acquired in business combinations and is amortized on a straight-
line basis over periods of 13 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. 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.
E. INTERIM CREDIT FACILITIES:
The Company has a $13.5 million revolving credit agreement with a b ank
group at the bank's prime rate or a fixed rate option at the Com pany'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, 1999 or a later date as approved by
the bank group. At April 2, 1998, borrowings of $6.0 million and letters
of credit of $2.7 million were outstanding under the agreement.
-9-
<PAGE>
F. LONG-TERM DEBT:
April 2, September 30,
1998 1997
------------ -------------
Term Loan. Interest is paid at least
quarterly at the rate of 8.80%. Principal
on the note will be repaid in eight quarterly
installments. $13,772,686 $16,741,488
Term Loan. Interest is paid at least
quarterly. Principal on the note will
be repaid on December 31, 1999, or earlier
if certain conditions are met. The blended
interest rate was 8.01% at April 2, 1998. 20,000,000 20,000,000
Revolving Credit Agreement. Interest is
paid quarterly at the bank's prime rate plus
0.25% or a fixed rate option at the Company's
election. The blended interest rate was 7.71%
at April 2, 1998. (See Note E) 6,000,000 10,000,000
Senior Notes of the Company. Principal was
repaid in February 1998. 0 3,736,735
Mortgage Loans Payable. Principal and
interest are paid in monthly installments.
The loans expire in years 1999 through
2010 with interest ranging from 8.50% to
8.75%. The blended interest rate was 8.54%
at April 2, 1998. 1,993,636 2,097,373
----------- -----------
41,766,322 52,575,596
Less current maturities 20,022,112 12,722,649
----------- -----------
$21,744,210 $39,852,947
=========== ===========
The mortgage loans are collateralized by $7,326,100 of property, at cost.
Certain of the Company's debt agreements contain covenants which provide
for the maintenance of minimum net worth as well as limitations on future
indebtedness, sales and leasebacks and dispositions of assets, among
other things. 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 April 2, 1998 was $500,300.
G. NEW ACCOUNTING PRONOUNCEMENTS:
In June 1997, the Financial Accounting Standards Board issued Statement
No. 130, "Reporting Comprehensive Income," which will result in
disclosure of comprehensive income and its components (revenues,
expenses, gains and losses) in a full set of general-purpose financial
statements. The Company is not required to adopt this standard until
fiscal year 1999. At this time, the Company has not determined the
impact this statement will have on the Company's financial statements but
expects that the effect will not be material.
-10-
<PAGE>
The Financial Accounting Standards Board also issued Statement No. 131,
"Disclosures about Segments of an Enterprise and Related Information,"
in June 1997. The Statement establishes standards for the way public
business enterprises report information about operating segments in
annual financial statements and requires that those enterprises report
selected information about operating segments in interim financial
reports issued to shareholders. It also establishes standards for
related disclosures about products and services, geographic areas and
major customers. The Company is not required to adopt this standard
until fiscal year 1999. At this time, the Company has not determined the
impact this standard will have on the Company's financial statements but
does not expect the effect to be material.
In February 1998, the Financial Accounting Standards Board issued
Statement No. 132, "Employers' Disclosures about Pensions and Other
Postretirement Benefits." The Statement standardizes the disclosure
requirements for pensions and other benefits to the extent practicable
and requires disclosure of certain other information. The Company is not
required to adopt this standard until fiscal year 1999 but expects that
the adoption will have a minimal effect on the Company's financial
statements.
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<PAGE>
<TABLE>
ITEM 2.
UNI-MARTS, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Set forth below are selected unaudited consolidated financial data of the Company for the
periods indicated:
<CAPTION>
QUARTER ENDED TWO QUARTERS ENDED
April 2, April 3, April 2, April 3,
1998 1997 1998 1997
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Sales and other income by the
Company and its franchisees:
Merchandise sales $33,558,239 $42,608,745 $ 78,812,750 $ 89,081,491
Gasoline sales 21,959,156 38,218,098 58,339,710 80,538,022
Other income 495,217 588,758 1,051,453 1,205,115
----------- ----------- ------------ ------------
Total 56,012,612 81,415,601 138,203,913 170,824,628
Cost of sales 39,523,856 60,962,757 101,087,299 127,779,797
----------- ----------- ------------ ------------
Gross Profit 16,488,756 20,452,844 37,116,614 43,044,831
Selling 12,730,979 17,096,760 29,427,740 34,795,353
General and administrative 1,665,363 1,879,788 3,376,814 3,734,001
Depreciation and amortization 1,641,225 1,817,531 3,226,574 3,630,550
Interest 1,023,083 1,095,751 2,148,823 2,012,756
----------- ----------- ------------ ------------
Earnings (loss) before income taxes
and cumulative effect of accounting
change ( 571,894)( 1,436,986)( 1,063,337)( 1,127,829)
Income taxes ( 142,200)( 511,444)( 359,400)( 395,798)
----------- ----------- ------------ ------------
Earnings (loss) before cumulative
effect of accounting change ( 429,694)( 925,542)( 703,937)( 732,031)
Cumulative effect of accounting
change, net of income tax benefit
of $725,800 0 0 0 ( 1,468,140)
----------- ----------- ------------ ------------
Net earnings (loss) ($ 429,694)($ 925,542)($ 703,937)($ 2,200,171)
=========== =========== ============ ============
Basic earnings (loss) per share:
Earnings (loss) per share before
cumulative effect of accounting
change ($ 0.06)($ 0.14)($ 0.11)($ 0.11)
Loss per share from cumulative
effect of accounting change 0.00 0.00 0.00 ( 0.22)
----------- ----------- ------------ ------------
Net earnings (loss) per share ($ 0.06)($ 0.14)($ 0.11)($ 0.33)
=========== =========== ============ ============
Diluted earnings (loss) per share:
Earnings (loss) per share before
cumulative effect of accounting
change ($ 0.06)($ 0.14)($ 0.11)($ 0.11)
Loss per share from cumulative
effect of accounting change 0.00 0.00 0.00 ( 0.22)
----------- ----------- ------------ ------------
Net earnings (loss) per share ($ 0.06)($ 0.14)($ 0.11)($ 0.33)
=========== =========== ============ ============
</TABLE>
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<PAGE>
<TABLE>
ITEM 2. CONTINUED
<CAPTION>
<S> <C> <C> <C> <C>
OPERATING DATA (CONVENIENCE STORES ONLY):
Average, per store, for stores open two
full comparable periods:
Merchandise sales $ 112,085 $ 108,800 $ 230,696 $ 224,701
Gasoline sales $ 105,112 $ 132,433 $ 237,639 $ 278,072
Gallons of gasoline sold 123,815 123,307 257,783 258,878
Total gallons of gasoline sold 25,250,073 34,520,157 61,381,658 73,166,222
Gross profit per gallon of gasoline $ 0.115 $ 0.127 $ 0.119 $ 0.115
C-Stores at beginning of period 287 402 384 405
C-Stores added 0 0 0 2
C-Stores closed 14 2 110 6
C-Stores converted to Choice
locations 1 2 2 3
C-Stores at end of period 272 398 272 398
Company-operated stores 251 364 251 364
Franchisee-operated stores 21 34 21 34
Choice Cigarette Discount Outlets 19 6 19 6
Locations with self-service
gasoline 208 300 208 300
</TABLE>
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<PAGE>
RESULTS OF OPERATIONS:
Matters discussed below should be read in conjunction with "Statements of
Operations Data" and "Operating Data (Convenience Stores Only)" on the
preceding pages. Certain statements contained in this report are forward
looking. 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 general economic, business and market
conditions, volatility of gasoline prices, merchandise margins, customer
traffic, weather conditions, labor costs and the level of capital expenditures.
For other important factors that may cause actual results to differ materially
from expectations and underlying assumptions, see the Company's periodic
filings with the Securities and Exchange Commission.
QUARTERS ENDED APRIL 2, 1998 AND APRIL 3, 1997
- ----------------------------------------------
Total revenues in the quarter ended April 2, 1998 were $56.0 million, a decline
of $25.4 million, or 31.2%, from total revenues in the same quarter of fiscal
year 1997. This decline is largely the result of 126 fewer convenience stores
in operation at April 2, 1998, 105 of which were formerly leased from Getty
Petroleum Corp. ("Getty) and 13 of which were converted to Choice Cigarette
Discount Outlets ("Choice"). The Company operated 19 Choice stores at April 2,
1998, and merchandise sales discussed herein include sales of tobacco products
at these locations. Merchandise sales declined by $9.0 million, or 21.2%, to
$33.6 million in the second quarter of fiscal year 1998 compared to $42.6
million in the second quarter of fiscal year 1997, primarily as a result of
fewer stores in operation. Merchandise sales at comparable stores increased by
3.0%. Gasoline sales declined by $16.3 million due to lower volumes from fewer
stores in operation as well as a significant decrease in the average retail
price per gallon sold. Other income declined by $94,000.
Gross profits on merchandise sales declined due to the decline in merchandise
sales, but at a lesser rate due to a 2.7% increase in the gross profit rate on
those sales. In the second quarter of fiscal year 1998, gross profits on
merchandise sales were $12.9 million compared to $15.3 million in the
corresponding quarter of the prior fiscal year, a decrease of $2.4 million, or
15.4%. Gross profits on gasoline sales declined $1.5 million, or 33.1%, due
primarily to the sale of 9.3 million fewer gallons of gasoline at the Company's
stores as well as lower gross profits per gallon sold.
Selling expenses decreased $4.4 million, or 25.5%, in the second quarter of
fiscal year 1998 compared to the second quarter of fiscal year 1997 due to
fewer stores in operation. General and administrative expense declined by
$214,000, or 11.4%, largely as a result of previous staffing reductions and
other cost-cutting measures. Depreciation and amortization expense declined by
$176,000, or 9.7%, reflecting operations at fewer stores. Interest expense
declined by $73,000, or 6.6%, due largely to lower borrowing levels in the
second quarter of fiscal year 1998 compared to the second quarter of fiscal
year 1997.
The Company incurred a pre-tax loss of $572,000 in the second quarter of the
current fiscal year compared to a loss of $1,437,000 in the second quarter of
fiscal year 1997. The net loss in the second quarter of fiscal year 1998 was
$430,000, or $0.06 per share, a decline from the net loss in the second quarter
of fiscal year 1997 of $926,000, or $0.14 per share.
-14-
<PAGE>
TWO QUARTERS ENDED APRIL 2, 1998 AND APRIL 3, 1997
- --------------------------------------------------
Total revenues in the first two quarters of fiscal year 1998 declined $32.6
million, or 19.1%, from total revenues in the same period of fiscal year 1997.
This decrease results from the operation of 126 fewer convenience stores, 105
of which were leased from Getty and 13 of which were converted to Choice. The
Company operated 19 Choice stores at April 2, 1998, and merchandise sales
discussed herein include sales at these locations. Merchandise sales declined
$10.3 million, or 11.5%, in the first half of fiscal year 1998 compared to the
first of half of fiscal year 1997 due to fewer stores in operation.
Merchandise sales at comparable stores increased by 2.7%. The sale of 11.8
million fewer gallons of gasoline at the Company's stores and a decline of
$0.15 in the average retail price per gallon sold caused a decline of $22.2
million in gasoline sales in the first two quarters of fiscal year 1998
compared to the corresponding period of fiscal year 1997. Other income
declined by $154,000.
In the first two quarters of fiscal year 1998, gross profits on merchandise
sales were $28.5 million compared to $33.2 million in the same period of fiscal
year 1997, a decline of $4.7 million, or 14.1%. This decline is largely the
result of lower merchandise sales. Gross profits on gasoline sales declined by
$1.1 million, or 12.5%, as the result of fewer gallons sold.
Selling expenses were $29.4 million in the first two quarters of fiscal year
1998 compared to $34.8 million in the first two quarters of fiscal year 1997.
This decline of $5.4 million, or 15.4%, is primarily due to fewer stores in
operation. General and administrative expense declined by $357,000, or 9.6%,
largely a result of staff reductions. Depreciation and amortization expense
declined by $404,000, or 11.1%, reflecting operations at fewer stores.
Interest expense increased by $136,000, or 6.8%, in the first half of fiscal
year 1998 due to higher average borrowing levels and a slight increase in
average interest rates.
The Company incurred a loss of $1,063,000 before income taxes and cumulative
effect of an accounting change compared to a loss of $1,128,000 in the first
two quarters of fiscal year 1997. In the first two quarters of the current
fiscal year, the Company recorded an income tax benefit of $359,000 due to the
loss incurred compared to an income tax benefit of $396,000 in the same two
quarters of fiscal year 1997. As a result of an accounting change, in fiscal
year 1997 the Company recorded a charge to earnings of $1.5 million, net of the
income tax benefit of $0.7 million. Operating results for the first two
quarters of fiscal year 1997 have been restated to reflect the retroactive
application of this change. The Company recorded a net loss of $704,000, or
$0.11 per share, in the first two quarters of fiscal year 1998 compared to a
net loss of $2,200,000, or $0.33 per share, in the first two quarters of fiscal
year 1997.
LIQUIDITY AND CAPITAL RESOURCES:
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 generally require large
amounts of working capital. From time to time, the Company utilizes
substantial portions of its cash and interim credit facilities to acquire and
construct new stores and renovate existing locations.
Capital requirements for the balance of fiscal year 1998 include debt and
capital lease payments of approximately $5.9 million and capital expenditures
of approximately $1.2 million to remodel existing stores and upgrade gasoline
marketing facilities. As of April 2, 1998, the Company had cash balances of
$3.6 million and additional borrowing capacity of $4.0 million available under
-15-
<PAGE>
its existing credit agreements. The Company expects to utilize approximately
$2.0 million in proceeds from asset disposals for a portion of the debt service
requirement. Management believes these sources of cash and cash generated from
operations will be sufficient to fulfill its cash requirements.
YEAR 2000 PROBLEM:
An internal review has been conducted by the Company of all software used in
its data processing equipment to determine its exposure, if any, to the "year
2000 problem." This problem may cause significant difficulties with the
electronic processing of information in the year 2000 and subsequent years due
to the inability of many computer programs to differentiate between the years
1900 and 2000. Based on its review, the Company believes the incremental costs
to make the necessary corrections to prevent such difficulties will not have a
material effect on the Company's consolidated financial statements.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) 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).
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 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).
-16-
<PAGE>
10.4(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).
10.4(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).
10.4(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).
10.4(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).
10.4(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).
10.4(f) Amendment No. 6 to the Credit Agreement betw een the Bank Group
and Uni-Marts, Inc. dated as of March 28, 1996 (Filed as Exhibit
10 to the Company's Quarterly R eport on Form 10-Q for the period
ended April 4, 1996 and incorporated herein by reference
thereto).
10.4(g) Amendment No. 7 to Credit Agreement between the Bank Group and
Uni-Marts, Inc. dated as of December 31, 1996 (Filed as Exhibit
10.1 to the Company's Quarterly Report on Form 10-Q for the
period ended April 3, 1997 and incorporated herein by reference
thereto).
10.4(h) Amendment No. 8 to Credit Agreement between the Bank Group and
Uni-Marts, Inc. dated as of February 20, 1997 (Filed as Exhibit
10.2 to the Company's Quarterly Report on Form 10-Q for the
period ended April 3, 1997 and incorporated herein by reference
thereto).
10.4(i) Amendment No. 9 to Credit Agreement between the Bank Group and
Uni-Marts, Inc. dated as of April 15, 1997 (Filed as Exhibit
10.3 to the Company's Quarterly Report on Form 10-Q for the
period ended April 3, 1997 and incorporated herein by reference
thereto).
10.4(j) Amendment No. 10 to Credit Agreement between the Bank Group and
Uni-Marts, Inc. dated as of December 29, 1997. (Filed as
Exhibit 10.5(j) to the Company's Annual Report on Form 10-K for
the period ended September 30, 1997 and incorporated herein by
reference thereto).
-17-
<PAGE>
10.5 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).
10.6 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).
10.7 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).
10.8 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).
10.9 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).
10.10 Uni-Marts, Inc. 1996 Equity Compensation Plan (Filed as
Exhibit A to the Company's Definitive Proxy Statement for the
February 22, 1996 Annual Meeting of Stockholders and
incorporated herein by reference thereto).
10.11 Amended and Restated Note between Henry D. Sahakian and
Uni-Marts, Inc. dated January 7, 1998 (Filed as Exhibit 10.16 to
the Company's Annual Report on Form 10-K for the period ended
September 30, 1997 and incorporated herein by reference
thereto).
11 Statement regarding computation of per share earnings (loss).
27 Financial Data Schedule.
(b) REPORTS ON FORM 8-K
The Company did not file any reports on Form 8-K during the quarter
ended April 2, 1998.
-18-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Uni-Marts, Inc.
-----------------------------------
(Registrant)
Date May 18, 1998 /S/ HENRY D. SAHAKIAN
------------ -----------------------------------
Henry D. Sahakian
Chairman of the Board
(Principal Executive Officer)
Date May 18, 1998 /S/ J. KIRK GALLAHER
------------ -----------------------------------
J. Kirk Gallaher
Executive Vice President, Director
and Chief Financial Officer
(Principal Accounting Officer)
(Principal Financial Officer)
-19-
<PAGE>
UNI-MARTS, INC. AND SUBSIDIARY
EXHIBIT INDEX
Number Description Page(s)
- ------ ----------- -------
11 Statement regarding computation of per
share earnings (loss). 21-22
27 Financial Data Schedule. 23
-20-
<PAGE>
<TABLE>
EXHIBIT (11)
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS (LOSS):
(A) Computation of the weighted average number of shares of common stock
outstanding for the periods indicated:
<CAPTION>
QUARTERS ENDED APRIL 2, 1998 AND APRIL 3, 1997
WEIGHTED
SHARES OF NUMBER OF DAYS NUMBER OF NUMBER OF SHARES
COMMON STOCK OUTSTANDING SHARE DAYS OUTSTANDING
------------ -------------- ------------- ----------------
<S> <C> <C> <C> <C>
Quarter Ended April 2, 1998
- ---------------------------
January 2 - April 2 6,669,515 91 606,925,893
Treasury Stock Purchases ( 7,801) Various ( 23,403)
Shares Issued 156,072 Various 5,874,894
--------- -----------
6,817,786 612,777,384 6,733,817
========= =========== =========
Quarter Ended April 3, 1997
- ---------------------------
January 3 - April 3 6,636,450 91 603,916,967
Treasury Stock Purchases ( 10,557) Various ( 647,328)
Shares Issued 12,248 Various 595,069
--------- -----------
6,638,141 603,864,708 6,635,876
========= =========== =========
<CAPTION>
TWO QUARTERS ENDED APRIL 2, 1998 AND APRIL 3, 1997
WEIGHTED
SHARES OF NUMBER OF DAYS NUMBER OF NUMBER OF SHARES
COMMON STOCK OUTSTANDING SHARE DAYS OUTSTANDING
------------ -------------- ------------- ----------------
<S> <C> <C> <C> <C>
Period Ended April 2, 1998
- --------------------------
October 1 - April 2 6,646,677 184 1,222,988,544
Treasury Stock Purchases ( 7,801) Various ( 23,403)
Shares Issued 178,910 Various 8,752,829
--------- -------------
6,817,786 1,231,717,970 6,694,119
========= ============= =========
Period Ended April 3, 1997
- --------------------------
October 1 - April 3 6,658,487 185 1,231,820,076
Treasury Stock Purchases ( 47,939) Various ( 6,502,222)
Shares Issued 27,593 Various 2,937,187
--------- -------------
6,638,141 1,228,255,041 6,639,216
========= ============= =========
</TABLE>
-21-
<PAGE>
<TABLE>
(B) Computation of Earnings (Loss) Per Share:
Computation of earnings (loss) per share is net earnings divided by the
weighted average number of shares of common stock outstanding for the
periods indicated:
<CAPTION>
QUARTER ENDED TWO QUARTERS ENDED
April 2, April 3, April 2, April 3,
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Basic:
Weighted average number of shares
of common stock outstanding 6,733,817 6,635,876 6,694,119 6,639,216
---------- ---------- ---------- ----------
Earnings (loss) before cumulative
effect of accounting change ($ 429,694) ($ 925,542) ($ 703,937) ($ 732,031)
Cumulative effect of accounting
change 0 0 0 ( 1,468,140)
---------- ---------- ---------- ----------
Net earnings (loss) ($ 429,694) ($ 925,542) ($ 703,937) ($2,200,171)
---------- ---------- ---------- ----------
Earnings (loss) per share before
cumulative effect of accounting
change ($ 0.06) ($ 0.14) ($ 0.11) ($ 0.11)
Loss per share from cumulative
effect of accounting change 0.00 0.00 0.00 ( 0.22)
---------- ---------- ---------- ----------
Net earnings (loss) per share ($ 0.06) ($ 0.14) ($ 0.11) ($ 0.33)
========== ========== ========== ==========
Assumuming dilution:
Weighted average number of shares
of common stock outstanding 6,733,817 6,635,876 6,694,119 6,639,216
Net effect of dilutive stock
options - not included as the
effect was antidilutive 0 0 0 0
---------- ---------- ---------- ----------
Total 6,733,817 6,635,876 6,694,119 6,639,216
---------- ---------- ---------- ----------
Earnings (loss) before cumulative
effect of accounting change ($ 429,694) ($ 925,542) ($ 703,937) ($ 732,031)
Cumulative effect of accounting
change 0 0 0 ( 1,468,140)
---------- ---------- ---------- ----------
Net earnings (loss) ($ 429,694) ($ 925,542) ($ 703,937) ($2,200,171)
---------- ---------- ---------- ----------
Earnings (loss) per share before
cumulative effect of accounting
change ($ 0.06) ($ 0.14) ($ 0.11) ($ 0.11)
Loss per share from cumulative
effect of accounting change 0.00 0.00 0.00 ( 0.22)
---------- ---------- ---------- ----------
Net earnings (loss) per share ($ 0.06) ($ 0.14) ($ 0.11) ($ 0.33)
========== ========== ========== ==========
</TABLE>
-22-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET DATED APRIL 2, 1998 AND THE STATEMENT OF OPERATIONS FOR THE QUARTER ENDED
APRIL 2, 1998 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> 6-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> APR-02-1998
<CASH> 3,623,277
<SECURITIES> 39,878
<RECEIVABLES> 2,351,862
<ALLOWANCES> 131,100
<INVENTORY> 10,941,652
<CURRENT-ASSETS> 27,451,519
<PP&E> 110,296,644
<DEPRECIATION> 46,955,600
<TOTAL-ASSETS> 97,446,304
<CURRENT-LIABILITIES> 39,259,654
<BONDS> 22,252,218
0
0
<COMMON> 730,966
<OTHER-SE> 28,843,162
<TOTAL-LIABILITY-AND-EQUITY> 97,446,304
<SALES> 137,152,460
<TOTAL-REVENUES> 138,203,913
<CGS> 101,087,299
<TOTAL-COSTS> 139,267,250
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 51,980
<INTEREST-EXPENSE> 2,148,823
<INCOME-PRETAX> (1,063,337)
<INCOME-TAX> (359,400)
<INCOME-CONTINUING> (703,937)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (703,937)
<EPS-PRIMARY> (.11)
<EPS-DILUTED> (.11)
</TABLE>
