<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 1, 1999
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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)
(8l4) 234-6000
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(Registrant's telephone number, including area code)
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(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
----- -----
6,890,492 Common Shares were outstanding at May 6, 1999.
This Document Contains 26 Pages.
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UNI-MARTS, INC. AND SUBSIDIARY
INDEX
PART I. FINANCIAL INFORMATION PAGE(S)
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Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
April 1, 1999 and September 30, 1998 3-4
Condensed Consolidated Statements of Operations -
Quarter Ended and Two Quarters ended
April 1, 1999 and April 2, 1998 5
Condensed Consolidated Statements of Cash Flows -
Two Quarters Ended April 1, 1999 and April 2, 1998 6-7
Notes to Condensed Consolidated Financial Statements 8-10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11-15
PART II. OTHER INFORMATION
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Item 4. Submission of Matters to a Vote of Security Holders 15-16
Item 6. Exhibits and Reports on Form 8-K 16-17
Exhibit Index 19
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNI-MARTS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
April 1, September 30,
1999 1998
------------ -------------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash $ 1,833,634 $ 5,838,318
Accounts receivable - less allowances of
$424,200 and $384,900 1,982,000 2,296,187
Tax refunds receivable 1,416,363 1,416,363
Inventories 10,965,308 10,628,307
Prepaid and current deferred taxes 2,370,869 1,975,802
Property held for sale 984,777 1,729,598
Prepaid expenses and other 703,722 929,304
Loan due from officer - current portion 60,000 200,000
----------- -----------
TOTAL CURRENT ASSETS 20,316,673 25,013,879
PROPERTY, EQUIPMENT AND IMPROVEMENTS -
at cost, less accumulated depreciation and
amortization of $49,582,200 and
$47,978,600 62,065,313 63,960,971
LOAN DUE FROM OFFICER 550,412 450,800
NET INTANGIBLE AND OTHER ASSETS 6,031,937 5,582,989
----------- -----------
TOTAL ASSETS $88,964,335 $95,008,639
=========== ===========
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UNI-MARTS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(CONTINUED)
April 1, September 30,
1999 1998
----------- -------------
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 8,734,439 $11,120,972
Gas taxes payable 1,998,027 2,324,299
Accrued expenses 4,638,492 5,304,579
Credit line payable 3,700,000 3,500,000
Current maturities of long-term debt 930,148 1,107,818
Current obligations under capital leases 70,810 70,810
----------- -----------
TOTAL CURRENT LIABILITIES 20,071,916 23,428,478
LONG-TERM DEBT, less current maturities 33,627,045 33,846,812
OBLIGATIONS UNDER CAPITAL LEASES,
less current maturities 440,209 474,826
DEFERRED TAXES 3,702,400 4,131,400
DEFERRED INCOME AND OTHER LIABILITIES 2,728,906 3,086,948
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common Stock, par value $.10 per share:
Authorized 15,000,000 shares
Issued 7,325,492 and 7,316,797
shares, respectively 732,549 731,680
Additional paid-in capital 24,169,411 24,189,258
Retained earnings 6,164,765 7,882,583
----------- -----------
31,066,725 32,803,521
Less treasury stock, at cost - 439,442
and 455,545 shares of Common Stock,
respectively ( 2,672,866) ( 2,763,346)
----------- -----------
28,393,859 30,040,175
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TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $88,964,335 $95,008,639
=========== ===========
See notes to consolidated financial statements
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UNI-MARTS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
QUARTER ENDED TWO QUARTERS ENDED
April 1, April 2, April 1, April 2,
1999 1998 1999 1998
------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
REVENUES:
Merchandise sales $34,687,471 $33,558,239 $ 70,085,958 $ 78,812,750
Gasoline sales 21,752,935 21,959,156 47,074,310 58,339,710
Other income 786,970 495,217 1,216,133 1,051,453
----------- ----------- ------------ ------------
57,227,376 56,012,612 118,376,401 138,203,913
----------- ----------- ------------ ------------
COSTS AND EXPENSES:
Cost of sales 41,529,327 39,523,856 85,499,089 101,087,299
Selling 13,337,200 12,730,979 26,554,478 29,427,740
General and administrative 1,902,559 1,665,363 3,682,406 3,376,814
Depreciation and amortization 1,512,034 1,641,225 3,084,695 3,226,574
Interest 973,648 1,023,083 1,982,551 2,148,823
Provision for asset impairment 100,000 0 100,000 0
----------- ----------- ------------ ------------
59,354,768 56,584,506 120,903,219 139,267,250
----------- ----------- ------------ ------------
LOSS BEFORE INCOME TAXES ( 2,127,392) ( 571,894) ( 2,526,818) ( 1,063,337)
INCOME TAX BENEFIT ( 698,700) ( 142,200) ( 809,000) ( 359,400)
----------- ----------- ------------ ------------
NET LOSS ($ 1,428,692) ($ 429,694) ($ 1,717,818) ($ 703,937)
=========== =========== ============ ============
NET LOSS PER SHARE ($ 0.21) ($ 0.06) ($ 0.25) ($ 0.11)
=========== =========== ============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 6,877,076 6,733,817 6,871,276 6,694,119
=========== =========== ============ ============
</TABLE>
See notes to consolidated financial statements
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UNI-MARTS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
TWO QUARTERS ENDED
April 1, April 2,
1999 1998
-------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers and others $117,223,077 $138,784,120
Cash paid to suppliers and employees ( 118,334,348) ( 134,261,707)
Net receipts for sales and purchases
of trading equity securities 0 797,340
Dividends and interest received 75,691 41,397
Interest paid ( 2,118,531) ( 2,269,887)
Income taxes (paid) received ( 15,067) 2,257,929
------------ ------------
NET CASH (USED) PROVIDED BY OPERATING
ACTIVITIES ( 3,169,178) 5,349,192
CASH FLOWS FROM INVESTING ACTIVITIES:
Receipts from sale of capital assets 1,500,122 3,872,943
Purchase of property, equipment and
Improvements ( 1,341,418) ( 1,831,843)
Note receivable from officer 40,388 73,771
Cash advanced for intangible and other
Assets ( 807,912) ( 150,000)
Cash received for intangible and other
assets 112,840 467,361
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NET CASH (USED) PROVIDED IN INVESTING
ACTIVITIES ( 495,980) 2,432,232
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowing (payments) under revolving credit
agreement 200,000 ( 4,000,000)
Principal payments on debt ( 532,997) ( 6,857,459)
Purchases of treasury stock ( 6,529) ( 32,576)
Proceeds from issuance of common stock 0 738,500
------------ ------------
NET CASH USED BY FINANCING ACTIVITIES ( 339,526) ( 10,151,535)
------------ ------------
NET DECREASE IN CASH ( 4,004,684) ( 2,370,111)
CASH:
Beginning of period 5,838,318 5,993,388
------------ ------------
End of period $ 1,833,634 $ 3,623,277
============ ============
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UNI-MARTS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
(Unaudited)
<TABLE>
<CAPTION>
TWO QUARTERS ENDED
April 1, April 2,
1999 1998
------------ ------------
<S> <C> <C>
RECONCILIATION OF NET LOSS TO NET CASH (USED)
PROVIDED BY OPERATING ACTIVITIES:
NET LOSS ($1,717,818) ($ 703,937)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH
(USED) PROVIDED BY OPERATING ACTIVITIES:
Depreciation and amortization 3,084,695 3,226,574
Net unrealized holding loss on trading
securities 259 122,032
Gain on sale of trading equity securities 0 ( 103,469)
(Gain) loss on sale of capital assets and other ( 276,471) 66,929
Provision for asset impairment 100,000 0
Changes in assets and liabilities:
(Increase) decrease in:
Trading equity securities 0 349,034
Accounts receivable 314,187 1,353,912
Tax refunds receivable 0 1,758,929
Inventories ( 337,001) 4,741,678
Prepaid expenses 223,972 ( 370,288)
Increase (decrease) in:
Accounts payable and accrued expenses ( 3,378,892) ( 4,520,583)
Deferred income taxes and other
liabilities ( 1,182,109) ( 571,619)
---------- ----------
TOTAL ADJUSTMENTS TO NET LOSS ( 1,451,360) 6,053,129
---------- ----------
NET CASH (USED) PROVIDED BY OPERATING ACTIVITIES ($3,169,178) $5,349,192
========== ==========
</TABLE>
See notes to consolidated financial statements
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<PAGE>
UNI-MARTS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
A. FINANCIAL STATEMENTS:
The consolidated balance sheet as of April 1, 1999, the consolidated
statements of operations and the consolidated statements of cash flows
for the two quarters ended April 1, 1999 and April 2, 1998 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 1, 1999 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, 1998.
Certain reclassifications have been made to the September 30, 1998
financial statements to conform to classifications used in fiscal year
1999. The results of operations for the interim periods are not
necessarily indicative of the results to be obtained for the full year.
B. INTANGIBLE AND OTHER ASSETS:
Intangible and other assets consist of the following:
April 1, September 30,
1999 1998
------------ -------------
Goodwill $5,803,443 $5,803,443
Lease acquisition costs 712,276 827,465
Other intangible assets 76,060 91,879
Other assets 2,012,140 1,428,071
---------- ----------
8,603,919 8,150,858
Less accumulated amortization 2,571,982 2,567,869
---------- ----------
$6,031,937 $5,582,989
========== ==========
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
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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.
C. SHORT-TERM CREDIT FACILITIES:
The Company has two short-term credit facilities, one of which has only a
$2.7 million letter of credit outstanding at April 1, 1999. This letter
of credit expires on June 30, 1999. The second short-term credit
acility is a secured $10.0 million revolving line of credit facility with
$3.0 million reserved for letters of credit. At April 1, 1999,
borrowings of $3.7 million were outstanding. This facility is renewable
annually and bears interest at a floating rate of LIBOR plus 2.75%. The
interest rate at April 1, 1999 was 7.687%. Management expects to
replace the expiring letter of credit from the new facility in June 1999.
D. LONG-TERM DEBT:
April 1, September 30,
1999 1998
----------- -------------
Mortgage Loan. Principal and interest will
be paid in 231 monthly installments. The
loan bears interest at a rate of 9.08%. $33,853,062 $34,140,001
Equipment Loan. Principal and interest are
paid in monthly installments. The loan
expires in 2001 and bears interest at
at a rate of 9.5%. 489,431 594,309
Mortgage Loan. Principal and interest are
paid in monthly installments. The loan
expires in 2010 and bears interest at the
prime rate, adjustable annually. The
interest rate at April 1, 1999 was 7.75%. 214,700 220,320
----------- -----------
34,557,193 34,954,630
Less current maturities 930,148 1,107,818
----------- -----------
$33,627,045 $33,846,812
=========== ===========
The mortgage loans are collateralized by $47,407,900 of property, at
cost.
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F. NEW ACCOUNTING PRONOUNCEMENTS:
Effective October 1, 1998, the Company adopted Statement Nos. 130 and 132
of the Financial Accounting Standards Board ("FASB"). FASB Statement
No. 130, "Reporting Comprehensive Income," was adopted although the
Company had no transactions involving other comprehensive income in any
of the periods presented. FASB Statement No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits," was
adopted by the Company although its prior disclosures were in compliance
with this statement. The Financial Accounting Standards Board 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 stockholders. 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 the end of 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 June 1998, the Financial Accounting Standards Board issued Statement
No. 133, "Accounting for Derivative Instruments and Hedging Activities."
The Statement establishes accounting and reporting standards for
derivative instruments. The Company is not required to adopt this
standard until fiscal year 2000 but expects that the adoption will have a
minimal effect on the Company's financial statements.
G. CONTINGENCIES:
Litigation - The Company is involved in litigation and other legal
matters which have arisen in the normal course of business. Although the
ultimate results of these matters are not currently determinable,
management does not expect that they will have a material adverse effect
on the Company's consolidated financial position, results of operations
or cash flows.
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ITEM 2.
UNI-MARTS, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
<TABLE>
Set forth below are selected unaudited consolidated financial data of the Company for the periods
indicated:
<CAPTION>
QUARTER ENDED TWO QUARTERS ENDED
April 1, April 2, April 1, April 2,
1999 1998 1999 1998
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Merchandise sales 60.6% 59.9% 59.2% 57.0%
Gasoline sales 38.0 39.2 39.8 42.2
Other income 1.4 0.9 1.0 0.8
----- ----- ----- -----
Total revenues 100.0 100.0 100.0 100.0
Cost of sales 72.6 70.6 72.2 73.1
----- ----- ----- -----
Gross profit:
Merchandise (as a percentage of
merchandise sales) 33.8 38.6 35.5 36.1
Gasoline (as a percentage of
gasoline sales) 14.7 13.9 14.5 13.0
Total gross profit 27.4 29.4 27.8 26.9
Costs and expenses:
Selling 23.3 22.7 22.4 21.3
General and administrative 3.3 3.0 3.1 2.5
Depreciation and amortization 2.6 2.9 2.6 2.3
Interest 1.7 1.8 1.7 1.6
Provision for asset impairment 0.2 0.0 0.1 0.0
----- ----- ----- -----
Total expenses 31.1 30.4 29.9 27.7
Loss before income taxes ( 3.7) ( 1.0) ( 2.1) ( 0.8)
Income tax benefit ( 1.2) ( 0.3) ( 0.7) ( 0.3)
----- ----- ----- -----
Net loss ( 2.5)% ( 0.7)% ( 1.4)% ( 0.5)%
===== ===== ==== =====
OPERATING DATA (CONVENIENCE STORES ("C-STORES") ONLY):
Average, per store, for stores open two
full comparable periods:
Merchandise sales $ 126,204 $ 117,349 $ 254,235 $ 242,275
Gasoline sales $ 105,402 $ 106,436 $ 230,141 $ 242,440
Gallons of gasoline sold 146,483 125,647 308,915 264,589
Total gallons of gasoline sold 29,461,401 25,250,073 61,910,162 61,381,658
Gross profit per gallon of
gasoline $ 0.102 $ 0.115 $ 0.105 $ 0.119
C-Stores at beginning of period 254 287 256 384
C-Stores added 0 0 0 0
C-Stores closed 11 14 12 110
C-Stores converted to Choice
locations 0 1 1 2
C-Stores at end of period 243 272 243 272
Company-operated stores 232 251 232 251
Franchisee-operated stores 11 21 11 21
Choice Cigarette Discount Outlets 21 19 21 19
Locations with self-service gasoline 197 208 197 208
</TABLE>
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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, such as statements regarding the Company's plans and strategies or
future financial performance. Although the Company believes that its
expectations are based on reasonable assumptions within the bounds of its
knowledge, investors and prospective investors are cautioned that such
statements are only projections and that actual events or results may differ
materially from those expressed in any such forward-looking statements. In
addition to the factors discussed elsewhere in this report, the Company's
actual consolidated quarterly or annual operating results have been affected in
the past, or could be affected in the future, by additional factors, including,
without limitation, general economic, business and market conditions;
environmental, tax and tobacco legislation or regulation; volatility of
gasoline prices, margins and supplies; merchandising margins; customer,
traffic; weather conditions; labor costs and the level of capital expenditures.
QUARTERS ENDED APRIL 1, 1999 AND APRIL 2, 1998
- ----------------------------------------------
Total revenues in the quarter ended April 1, 1999 were $57.2 million, an
increase of $1.2 million, or 2.2%, over revenues of $56.0 million in the
quarter ended April 2, 1998. During the quarter ended April 1, 1999, the
Company closed or sold 11 underperforming convenience store locations.
Merchandise sales in the second quarter of fiscal year 1999 were $34.7 million
compared to $33.6 million in the same quarter of fiscal year 1998, an increase
of $1.1 million, or 3.4%, as increases in merchandise sales per store offset
the sales loss resulting from fewer stores in operation. Gasoline sales in the
quarter ended April 1, 1999 were $206,000 lower than in the comparable quarter
of fiscal year 1998 although the Company sold 4.2 million more gallons at its
gasoline locations. The decline in gasoline sales dollars is due to a decline
of 12.8 cents in the average retail price per gallon. Other income increased
by $292,000.
Gross profits on merchandise sales decreased $1.2 million in the quarter ended
April 1, 1999 to $11.7 million from $12.9 million in the quarter ended April 2,
1998. The 9.5% decline is due entirely to lower gross profit rates. Gross
profits on gasoline sales increased by $144,000, or 4.7%, in the same period.
This increase is largely the result of additional sales of 4.2 million gallons
at the Company's gasoline locations but was offset to a large degree by lower
gross profits per gallon sold.
Selling expenses increased $606,000, or 4.8%, due primarily to higher labor
costs due to increased staffing at stores. Selling expenses were $13.3 million
in the second quarter of fiscal year 1999 compared to $12.7 million in the
second quarter of fiscal year 1998. General and administrative expense in the
second quarter of fiscal year 1999 compared to the same quarter of fiscal year
1998 increased by $237,000, or 14.2%, due to staffing increases and higher
salary levels. Depreciation and amortization expense was $129,000, or 7.9%,
lower in the quarter ended April 1, 1999 compared to the quarter ended April 2,
1998. Interest expense declined by $49,000, or 4.8%, due to lower borrowing
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levels. In the second quarter of fiscal year 1999, the Company recorded a
$100,000 provision for impairment of long-lived assets to comply with
provisions of FASB Statement No. 121.
The Company incurred a pre-tax loss of $2.1 million in the second quarter of
fiscal year 1999 compared to a pre-tax loss of $572,000 in second quarter of
fiscal year 1998. An income tax benefit of $699,000 was recorded in the current
year's second fiscal quarter compared to a $142,000 income tax benefit in the
same quarter of fiscal year 1998. The net loss for the second quarter of
fiscal year 1999 was $1.4 million, or $0.21 per share, and $430,000, or $0.06
per share, in the comparable quarter of fiscal year 1998.
TWO QUARTERS ENDED APRIL 1, 1999 AND APRIL 2, 1998
- --------------------------------------------------
Total revenues for the first two quarters of fiscal year 1999 were $118.4
million compared to $138.2 million in the first two quarters of fiscal year
1998, a decline of $19.8 million, or 14.3%. The Company terminated a lease
agreement for 105 stores with Getty Petroleum Corp. during the first half of
fiscal year 1998 and has closed 28 underperforming convenience stores since
April 2, 1998 and converted one convenience store to a Choice location.
Merchandise sales in the first half of fiscal year 1999 were $70.1 million
compared to $78.8 million in the same period of fiscal year 1998, a decrease of
$8.7 million, or 11.1%. This decline is due to fewer stores in operation.
Merchandise sales at stores open during both periods increased 4.9%. Gasoline
sales declined $11.2 million, or 19.3%, from $58.3 million in the first half of
fiscal year 1998 to $47.1 million in the comparable period of fiscal year 1999.
This decline in gasoline dollar sales is due to lower retail prices per gallon
sold. Although gasoline was sold at fewer locations, the Company sold 500,000
additional gallons at its stores in the first half of fiscal year 1999 in
comparison to the same period in fiscal year 1998. Gasoline gallons sold at
locations that were open during both periods increased 16.8% in fiscal year
1999. Other income increased by $165,000.
Gross profits on merchandise sales declined $3.6 million, or 12.7%, due both to
lower aggregate sales volumes and lower gross profit rates. Gross profits on
gasoline sales declined by $782,000, or 10.3%, in the first two quarters of
fiscal year 1999 in comparison to the first half of fiscal year 1998 due to
lower gross profits per gallon sold.
Selling expenses in the first two quarters of fiscal year 1999 were $2.9
million, or 9.8%, lower than in the first two quarters of fiscal year 1998.
This decline was primarily the result of the December 31, 1997 termination of
the lease agreement with Getty Petroleum Corp. for 105 stores and the sale or
closure of other underperforming stores. General and administrative expenses
increased by $306,000, or 9.0%, in the two quarters ended April 1, 1999 in
comparison to the same period in fiscal year 1998. This increase is due
primarily to staffing increases and higher salary levels. Depreciation and
amortization declined $142,000, or 4.4%, in the first half of fiscal year 1999
compared to the first half of fiscal year 1998. Interest expense also declined
$166,000, or 7.7%, due to lower borrowing levels. The Company recorded a
$100,000 provision for impairment of long-lived assets to comply with
provisions of FASB Statement No. 121.
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The Company recorded a pre-tax loss of $2.5 million in the first two quarters
of fiscal year 1999 compared to a $1.1 million pre-tax loss in the same period
of fiscal year 1998. The income tax benefit of these losses was $809,000 in
fiscal year 1999 and $359,000 in fiscal year 1998. The net loss for the first
half of fiscal year 1999 was $1.7 million, or $0.25 per share, and a net loss
of $704,000, or $0.11 per share, in the first half of fiscal year 1998.
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 to acquire and construct new stores and
renovate existing locations.
On December 30, 1998, the Company entered into a $10.0 million revolving credit
facility with a bank, with $3.0 million reserved for letters of credit. The
Company utilized $3.5 million of this facility to repay its existing revolving
credit facility and property loan. The Company intends to utilize this
facility to replace its outstanding $2.7 million letter of credit which expires
June 30, 1999.
Capital requirements for debt service and capital leases for the remainder of
fiscal year 1999 are approximately $369,000 and capital expenditures of
approximately $4.4 million for acquisition and development, remodeling costs
and upgrades of gasoline-dispensing equipment are anticipated. Funds for these
items will be supplied from internal cash from operations or financing.
Certain equipment replacement will be funded by operating leases. Management
believes that cash presently available, cash generated from operations and cash
from the Company's revolving line of credit and new financing will be
sufficient to fulfill its cash requirements for the foreseeable future.
THE YEAR 2000 ("Y2K") PROBLEM:
Update on the Company's Y2K Program:
- -----------------------------------
The Company has completed identification of Y2K problems and modifications to
correct those problems in its mainframe computer hardware and related systems
software and applications software. Testing of these modifications is nearly
done with completion expected in June 1999. Personal computer hardware and
software located in the corporate offices has been tested and any needed
modifications or replacement is underway. Testing of personal computer
hardware and software located in stores and regional offices is underway.
Other date-sensitive hardware utilized by the Company will be tested and
replaced or modified as necessary. The Company has also begun the process of
identifying suppliers of goods and services whose Y2K failure could be
disruptive to the Company's business and soliciting written statements from
them regarding the status of their Y2K compliance. The Company anticipates the
completion of testing and modifications in June 1999, with contingency planning
completion scheduled in September 1999. Total costs are expected to be
approximately $400,000.
-14-
<PAGE>
Risks/Contingency Plans:
- -----------------------
Based on its assessment and corrective efforts to date, the Company does not
expect material difficulties with the Y2K problem in its internal computer
systems. In addition, the Company does not expect material Y2K problems with
other date-sensitive hardware or materially disruptive Y2K failures of its
suppliers of merchandise and services. The Company's stores are geographically
dispersed, and it has a diverse supplier base. Although the Company has a
diverse supplier base, it does deal with a limited number of large suppliers
whose Y2K failure could have a material effect on the Company's business. The
Company believes that it could easily find alternative suppliers and that these
factors will moderate any material adverse effects of the Y2K problem. In
management's opinion, the largest risks facing the Company are the inability of
the Company's stores to process retail sales transactions or obtain merchandise
to sell as well as the potential failure of public utility systems. The
Company expects to develop appropriate contingency plans pending the outcome of
future events.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Stockholders of Uni-Marts, Inc. was held on February 25,
1999 at which the following matters were voted upon:
(1) Election of two directors to serve until the Annual Meeting of
Stockholders in 200l.
(2) Approval of Employee Stock Purchase Plan.
(3) Ratification of the appointment of independent auditors.
The results of the votes on the matters considered at the Annual Meeting of
Stockholders are set forth below:
Election of Directors:
Votes Votes Broker
"For" "Withheld" Non-Votes
--------- ---------- ---------
M. Michael Arjmand 4,390,769 877,852 0
Daniel D. Sahakian 4,388,659 879,962 0
Approval of Employee Stock Purchase Plan:
Votes Votes Votes Broker
"For" "Against" "Abstain" Non-Votes
--------- --------- --------- ---------
3,738,430 1,116,426 5,121 408,644
-15-
<PAGE>
Ratification of appointment of independent auditors:
Votes Votes Votes Broker
"For" "Against" "Abstain" Non-Votes
--------- --------- --------- ---------
4,170,178 1,097,218 1,225 0
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, File No. 1-11556, 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 thereto).
10.2 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, filed on July 10, 1991, and incorporated herein by
reference thereto).
10.3 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, File No. 0-15164, and incorporated herein by
reference thereto).
10.4 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, File No. 0-15164, and incorporated herein
by reference thereto).
10.5 Uni-Marts, Inc. Executive Annual Bonus Plan (Filed as Exhibit 10.5
to the Company's Quarterly Report on Form 10-Q for the period
ended December 31, 1998 and incorporated herein by reference
thereto).
10.6 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).
-16-
<PAGE>
10.7 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).
10.8 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).
10.9 Amendment 1998-1 to the Uni-Marts, Inc. Equity Compensation Plan
(Filed as Exhibit 10.10 to the Annual Report of Uni-Marts, Inc. on
Form 10-K for the year ended September 30, 1998 and incorporated
herein by reference thereto).
10.10 Amended and Restated Note between Henry D. Sahakian and
Uni-Marts, Inc. dated January 25, 1999.
10.11 Loan Agreement between FFCA Acquisition Corporation and
Uni-Marts, Inc. dated June 30, 1998 (filed as Exhibit 10.10 to the
Company's Quarterly Report on Form 10-Q for the period ended on July
2, 1998 and incorporated herein by reference thereto).
10.12 Revolving Loan Agreement between FFCA Acquisition Corporation and
Uni-Marts, Inc. dated June 30, 1998 (filed as Exhibit 10.11 to the
Company's Quarterly Report on Form 10-Q for the period ended on July
2, 1998 and incorporated herein by reference thereto).
10.13 Revolving Credit Loan Agreement between U.S. Bank and Uni-Marts,
Inc. dated December 30, 1998 (Filed as Exhibit 10.13 to the
Company's Quarterly Report on Form 10-Q for the period ended on
December 31, 1998 and incorporated herein by reference thereto).
10.14 Uni-Marts, Inc. Employee Stock Purchase Plan (Filed as Exhibit A to
the Company's Definitive Proxy Statement for the February 25, 1999
Annual Meeting of Stockholders 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 1, 1999.
-17-
<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)
/S/ HENRY D. SAHAKIAN
Date May 17, 1999 ----------------------------------
---------------- Henry D. Sahakian
Chairman of the Board
(Principal Executive Officer)
/S/ J. KIRK GALLAHER
Date May 17, 1999 ----------------------------------
---------------- J. Kirk Gallaher
Executive Vice President, Director
and Chief Financial Officer
(Principal Accounting Officer)
(Principal Financial Officer)
-18-
<PAGE>
UNI-MARTS, INC. AND SUBSIDIARY
EXHIBIT INDEX
Number Description Page(s)
- ------ ----------- -------
10.11 Amended and Restated Note between Henry D.
Sahakian and Uni-Marts, Inc. 20-23
11 Statement regarding computation of per
share earnings (loss). 24-25
27 Financial Data Schedule. 26
-19-
<PAGE> 20
AMENDED AND RESTATED NOTE
$600,000.00 State College, Pennsylvania
January 25, 1999
FOR VALUE RECEIVED, Henry D. Sahakian, an individual with a residence
at 180 Haymaker Circle, State College, PA 16801 (the "Maker"), promises to
pay, in accordance with the schedule attached hereto, to the order of
Uni-Marts, Inc., a Delaware corporation with its principal place of
business at 477 East Beaver Avenue, State College, Pennsylvania 16801-5690
(the "Payee"), without defalcation or setoff, the principal sum of SIX
HUNDRED THOUSAND DOLLARS ($600,000.00) lawful money of the United States of
America, together with interest on the unpaid principal balance at the
Brokerage Call Rate, plus fifty basis points, (the "Rate") then in effect.
The Rate shall change contemporaneously with changes to the Brokerage Call
Rate. Interest shall be calculated on the basis of a 360-day year,
counting the actual number of days elapsed, and shall be payable in arrears
to the Payee on the last day of each of its fiscal quarters.
All payments of principal hereunder shall be payable to Payee in
accordance with the schedule attached hereto. Payment shall be made to
Payee in immediately available funds at the above address or at such other
place as the Payee or any other holder may from time to time designate.
In the event the due date of any payment hereunder is not a Business
Day, such payment shall be due on the next succeeding Business Day,
provided that any such payment bearing interest shall continue to accrue
interest until paid. "Business Day" shall mean any day other than
Saturday, Sunday, or a legal holiday in the Commonwealth of Pennsylvania;
provided that, if at any time four consecutive days are not Business Days,
the day next following such four days shall be deemed a Business Day.
This Note is secured by a certain Pledge and Security Agreement of
even date herewith in the form attached hereto (the "Pledge Agreement")
between Maker and Payee, as the same may be amended from time to time.
The occurrence of any of the following events with respect to Maker
shall constitute an event of default hereunder (an "Event of Default"):
(a) if any payment of principal or interest as aforesaid shall not be paid
when due, and shall continue unpaid for a period of fifteen (15) days
following written notice thereof from Payee; or (b) if Maker shall be
unable to pay his debts as they become due, or shall become insolvent; or
(c) if Maker shall make an assignment for the benefit of creditors, or file
a voluntary petition under the Bankruptcy Code, as amended, or any other
Federal or state insolvency law or apply for or consent to the appointment
of a receiver, trustee or custodian for all or a part of his property; or
1
<PAGE> 21
(d) if Maker shall file an answer admitting the jurisdiction of the court
and the material allegations of an involuntary petition filed against him
under the Bankruptcy Code, as amended, or any other Federal or state
insolvency law, or shall fail to have such a petition dismissed within
thirty (30) days after its filing; or (e) if an order for relief shall be
entered following the filing of an involuntary petition against Maker under
the Bankruptcy Code, as amended, or any other Federal or state insolvency
law, or if an order shall be entered appointing a trustee, receiver or
custodian of all or part of his property.
Upon the occurrence of an Event of Default hereunder, the entire
unpaid amount of principal and interest hereunder shall, at the option of
Payee or any other holder hereof, become immediately due and payable
without notice or demand. In addition, upon the occurrence of an Event of
Default hereunder, Payee shall have all rights and remedies provided under
all applicable laws and Payee shall have the right, immediately and without
notice or further action by it, to set off against this Note all money owed
by Payee in any capacity to Maker, whether or not due.
The Maker hereby waives demand, presentment, protests, and notice of
demand and non-payment in connection with the delivery, acceptance,
performance or enforcement of this Note. Any failure or delay of Payee to
exercise any right hereunder shall not operate or be construed as a waiver
of the right to exercise the same or any other right at any other time or
times. The waiver by Payee of a breach or default of any provisions of
this Note shall not operate or be construed as a waiver of any subsequent
breach or default thereof. The Maker agrees to reimburse Payee for all
expenses, including reasonable attorneys' fees, incurred by Payee to
enforce the provisions hereof and collect the Maker's obligations
hereunder.
THE MAKER HEREBY AUTHORIZES AND EMPOWERS ANY ATTORNEY OF ANY COURT OF
RECORD UPON THE OCCURRENCE OF ANY EVENT OF DEFAULT (AS DEFINED HEREIN) TO
APPEAR FOR AND CONFESS JUDGMENT AGAINST THE MAKER, WITHOUT PRIOR NOTICE TO
THE MAKER OR PRIOR OPPORTUNITY TO BE HEARD, FOR SUCH SUMS AS SHALL HAVE
BECOME DUE UNDER THIS NOTE; IN EITHER CASE WITH OR WITHOUT DECLARATION,
WITH COSTS OF SUIT AND RELEASE OF ERROR, WITHOUT STAY OR EXECUTION AND WITH
REASONABLE ATTORNEYS? FEES AND OTHER EXPENSES OR COLLECTION ADDED; AND ALSO
WAIVES AND RELEASES ALL RELIEF FROM ANY AND ALL APPRAISEMENT, STAY OR
EXEMPTION LAW OF ANY STATE NOW IN FORCE OR HEREAFTER ENACTED. IF A COPY OF
THIS NOTE, VERIFIED BY AFFIDAVIT OF PAYEE OR SOMEONE ON BEHALF OF PAYEE,
SHALL HAVE BEEN FILED IN SUCH ACTION, IT SHALL NOT BE NECESSARY TO FILE THE
ORIGINAL NOTE AS A WARRANT OF ATTORNEY. THE AUTHORITY AND POWER TO APPEAR
FOR AND ENTER JUDGMENT AGAINST THE MAKER SHALL NOT BE EXHAUSTED BY ONE OR
MORE EXERCISES THEREOF, OR BY AN IMPERFECT EXERCISE THEREOF, AND SHALL NOT
BE EXTINGUISHED BY ANY JUDGMENT ENTERED PURSUANT THERETO; THE AUTHORITY AND
2
<PAGE> 22
POWER MAY BE EXERCISED ON ONE OR MORE OCCASIONS, FROM TIME TO TIME, IN THE
SAME OR DIFFERENT JURISDICTIONS, AS OFTEN AS PAYEE SHALL DEEM NECESSARY OR
DESIRABLE, FOR ALL OF WHICH THIS NOTE SHALL BE SUFFICIENT WARRANT.
This Amended and Restated Note replaces and supersedes the Amended
and Restated Note made by the Maker dated January 7, 1998 (the ?Prior
Note?). To the extent that the principal balance of this Note includes the
Borrower?s indebtedness hitherto evidenced by the Prior Note, this Note (i)
merely re-evidences the indebtedness hitherto evidenced by the Prior Note,
(ii) is given as substitution for, and not as payment of, the Prior Note,
(iii) is in no way intended to constitute a novation of the Prior Note.
This Note shall be construed according to, and shall be governed by,
the laws of the Commonwealth of Pennsylvania. The provisions of this Note
shall be deemed severable, so that if any provision hereof is declared
invalid under the laws of any state where it is in effect, or of the United
States, all other provisions of this Note shall continue in full force and
effect. This Note may be amended only by a writing signed on behalf of
each party.
This Note shall be binding upon the heirs, personal representatives,
successors and assigns of Maker, and shall inure to the benefit of and be
enforceable by the successors and assigns of Payee or any other holder
hereof. This Note is intended to take effect as an instrument under seal.
MAKER ACKNOWLEDGES THAT HE HAS HAD THE ASSISTANCE OF COUNSEL IN THE
REVIEW AND EXECUTION OF THIS NOTE AND FURTHER ACKNOWLEDGES THAT THE MEANING
AND EFFECT OF THE CONFESSION OF JUDGMENT HAVE BEEN FULLY EXPLAINED TO MAKER
BY SUCH COUNSEL.
IN WITNESS WHEREOF, the undersigned has duly executed, sealed and
delivered this Note the day and year first above written.
WITNESS: HENRY D. SAHAKIAN
/S/ JUDY L. TREASTER /S/ HENRY D. SAHAKIAN
- ----------------------------- -----------------------------
3
<PAGE> 23
PAYMENT SCHEDULE
November 1, 1999 $60,000
November 1, 2000 $60,000
November 1, 2001 $60,000
November 1, 2002 $60,000
November 1, 2003 $60,000
November 1, 2004 $300,000
4
<PAGE> 24
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:
<TABLE>
<CAPTION>
QUARTERS ENDED APRIL 1, 1999 AND APRIL 2, 1998
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 1, 1999
- ---------------------------
January 1 - April 1 6,868,614 91 625,043,852
Treasury Stock Purchases ( 2,374) Various ( 2,374)
Shares Issued 19,810 Various 772,451
--------- -----------
6,886,050 625,813,929 6,877,076
========= =========== =========
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
========= =========== =========
<CAPTION>
TWO QUARTERS ENDED APRIL 1, 1999 AND APRIL 2, 1998
SHARES OF NUMBER OF DAYS NUMBER OF NUMBER OF SHARES
COMMON STOCK OUTSTANDING SHARE DAYS OUTSTANDING
------------- -------------- --------------- ----------------
<S> <C> <C> <C> <C>
Period Ended April 1, 1999
- --------------------------
October 1 - April 1 6,861,252 183 1,255,609,116
Treasury Stock Purchases ( 2,374) Various ( 2,374)
Shares Issued 27,172 Various 1,836,710
--------- -------------
6,886,050 1,257,443,452 6,871,276
========= ============= =========
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
========= ============= =========
</TABLE>
1
<PAGE> 25
(B) Computation of Earnings (Loss) Per Share:
<TABLE>
Computation of earnings (loss) per share is net earnings (loss) divided by the
weighted average number of shares of common stock outstanding for the periods
indicated:
<CAPTION>
QUARTER ENDED TWO QUARTERS ENDED
April 1, April 2, April 1, April 2,
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Basic:
Weighted average number of shares
of common stock outstanding 6,877,076 6,733,817 6,871,276 6,694,119
---------- ----------- ----------- -----------
Net loss ($1,428,692) ($ 429,694) ($1,717,818) ($ 703,937)
---------- ----------- ---------- ----------
Net loss per share ($ 0.21) ($ 0.06) ($ 0.25) ($ 0.11)
========== ========== ========== ==========
Assuming dilution:
Weighted average number of shares
of common stock outstanding 6,877,076 6,733,817 6,871,276 6,694,119
Net effect of dilutive stock
options-not included if the
effect was antidilutive 0 0 0 0
--------- --------- ---------- ----------
Total 6,877,076 6,733,817 6,871,276 6,694,119
--------- --------- --------- ---------
Net loss ($1,428,692) ($ 429,694) ($1,717,818) ($ 703,937)
---------- ---------- ---------- ----------
Net loss per share ($ 0.21) ($ 0.06) ($ 0.25) ($ 0.11)
========== ========== ========== ==========
</TABLE>
2
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET DATED APRIL 1, 1999 AND THE STATEMENT OF OPERATIONS FOR THE FISCAL
QUARTER ENDED APRIL 1, 1999 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-30-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> APR-01-1999
<CASH> 1,833,634
<SECURITIES> 0
<RECEIVABLES> 2,406,200
<ALLOWANCES> 424,200
<INVENTORY> 10,965,308
<CURRENT-ASSETS> 20,316,673
<PP&E> 111,647,513
<DEPRECIATION> 49,582,200
<TOTAL-ASSETS> 88,964,335
<CURRENT-LIABILITIES> 20,071,916
<BONDS> 34,067,254
0
0
<COMMON> 732,549
<OTHER-SE> 27,661,310
<TOTAL-LIABILITY-AND-EQUITY> 88,964,335
<SALES> 117,160,268
<TOTAL-REVENUES> 118,376,401
<CGS> 85,499,089
<TOTAL-COSTS> 120,903,219
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 47,600
<INTEREST-EXPENSE> 1,982,551
<INCOME-PRETAX> (2,526,818)
<INCOME-TAX> (809,000)
<INCOME-CONTINUING> (1,717,818)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,717,818)
<EPS-PRIMARY> (.25)
<EPS-DILUTED> (.25)
</TABLE>
