<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ________________ TO ________________
COMMISSION FILE NUMBER: 1-11556
UNI-MARTS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 25-1311379
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
477 EAST BEAVER AVENUE 16801-5690
STATE COLLEGE, PA (Zip Code)
(Address of principal executive offices)
</TABLE>
Registrant's telephone number, including area code: (814) 234-6000
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
------------------- -----------------------------------------
<S> <C>
Common Stock, $.10 Par Value American Stock Exchange
</TABLE>
Securities registered pursuant to Section 12(g) of the Act:
None
Title of Class
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 __
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Aggregate market value of the voting stock which consists solely of shares
of common stock held by non-affiliates of the registrant as of December 5, 2000,
computed by reference to the closing sale price of the registrant's common stock
on such date: $7,520,625.
7,040,666 shares of Common Stock were outstanding at December 5, 2000.
This Document Contains 41 Pages.
<PAGE> 2
PART I.
ITEM 1. BUSINESS.
COMPANY OVERVIEW
Uni-Marts, Inc. (the "Company" or "Uni-Marts") is an independent operator
of convenience stores and discount tobacco stores. At September 30, 2000, the
Company operated 298 convenience stores and Choice Cigarette Discount Outlets
("Choice") in Pennsylvania, New York, Delaware, Maryland and Virginia, of which
237 stores sold gasoline. See "Business -- Merchandising and Marketing." Most of
the stores are located in small towns and rural locations where costs of
operation are generally lower than in urban areas. Most Company stores located
in urban and suburban areas have been acquired and are generally leased on a
long-term basis.
In the fiscal year ended September 30, 2000, the Company purchased the
operating assets and business of Orloski Service Station, Inc. ("OSSI") for
$42.7 million. OSSI was the operator of a 43-store chain of convenience stores
and gasoline dispensing stations in northeastern Pennsylvania. The acquisition
included 39 fee properties and eight leased locations. Two of the properties are
leased to third party gasoline retailers and two sites were acquired for
development.
The Company currently purchases gasoline for 73 locations from Amoco,
Exxon, Mobil and Texaco and from other independent suppliers for 163 locations.
Gasoline is sold at one location on a commission basis.
The size of the Company's stores generally ranges from approximately 1,200
to 3,300 square feet with newer constructed stores generally having over 3,000
square feet. The Company's largest location is 10,000 square feet in size.
Typically, the stores offer a complete line of over 3,000 popular consumer
items. In addition, the Company offers products designed to increase store
traffic, such as branded fast foods, as well as services, including lottery
tickets, the acceptance of personal checks and automated teller machines
("ATMs").
The Company commenced its convenience store operations in 1972 and was
incorporated in Delaware in 1977. In 1986, the Company's shares were distributed
in a tax-free spin-off to the holders of the stock of Unico Corporation,
formerly the Company's parent.
The Company's executive offices are located at 477 East Beaver Avenue,
State College, PA 16801-5690, and its phone number is (814) 234-6000.
THE CONVENIENCE STORE INDUSTRY
The convenience store industry is a retail, service-oriented industry. It
is distinguished from other retail businesses by its emphasis on location and
convenience and a commitment to customers who need to purchase items quickly at
extended hours. Convenience stores feature a wide variety of items, including
groceries, dairy products, tobacco products, beverages, prepared and
self-service fast foods and health and beauty aids. In addition, many of the
stores sell gasoline on a self-service basis. The stores are generally designed
with ample customer parking and quick checkout procedures to maximize
convenience, as well as to encourage impulse buying of high margin items.
The convenience store industry is extremely fragmented. Currently, there
are many external forces exerting pressure on owners of independent and small
convenience store chains such as volatile fuel prices, margin pressures on
gasoline and tobacco sales, and increasing competition. As a result of these
forces, there have been and continue to be significant opportunities for
consolidation in the industry.
Recent competitive trends across many retail sectors are having a positive
influence on the convenience store industry as it changes the typical
convenience stores' merchandise mix in reaction to
2
<PAGE> 3
market conditions and customer preferences. In addition, convenience stores
compete not only with other convenience stores, but with gasoline distributors
which have converted retail outlets to convenience stores. To compete for a
broader customer base, convenience stores are increasing the variety and quality
of their food service products, adding new services and improving store layouts
to attract new customers. As consumer preferences and government regulations put
pressure on tobacco sales, convenience store operators are continuing to focus
on the improvement of gasoline dispensing facilities and increased customer
services. In addition, many convenience store operators are remodeling existing
sites and opening new locations.
STRATEGY
In fiscal year 2000, the Company continued to evaluate its strategies to
enhance its current operations. The Company's key strategies include the
following:
Development of a New Image for the Company and its Stores. The Company has
designed a new logo and is working on the development of new exterior and
interior store designs. New proprietary products have been and continue to be
developed. The Company continues to develop new advertising messages and
designs.
Enhancement of Store Accessibility. Store sites will be easy to locate
with easy ingress and egress and ample parking. Stores are designed to speed
transactions and be equipped with modern, low maintenance equipment.
Emphasis on Merchandising and Marketing. The Company has enhanced its
category maintenance capabilities to deliver appealing, high quality, reasonably
priced packaged products. Food service products are being developed to lower
employee involvement in preparation, ease customer efforts in selection and
reduce transaction time. The Company also continues to expand its proprietary
product line.
Upgrade Business Process Efficiency. The Company is in the process of
updating its business systems and technology to streamline key business
processes. Completion of this process will allow more effective and efficient
store management and provide greater flexibility to respond quickly to
marketplace changes.
Evaluation of Underperforming Stores. The Company continues to evaluate
underperforming convenience stores and to convert these locations to cigarette
discount outlets to enhance their profitability. The Company will convert or
close other locations as conditions warrant.
The Company is continuing its emphasis on customer satisfaction, upgrading
retail gasoline facilities and developing stores in small towns and rural areas.
MERCHANDISING AND MARKETING
The Company's merchandising and marketing programs are designed to promote
convenience through store location, hours of operation, parking, customer
service, product selection and checkout procedures. Store hours are intended to
meet customer needs and the characteristics of the community in which each store
is located. Approximately 60% of the Company's convenience stores are open 24
hours per day, while the majority of the remaining stores are open from 5:00
a.m. to 12:30 a.m. To alleviate checkout congestion, most of the Company's
products and services are sold on a self-service basis. Most Company stores
provide parking for customers.
Uni-Marts has a merchandising and marketing department, which develops and
implements promotional and advertising programs, sometimes in conjunction with
suppliers. In fiscal year 1999,
3
<PAGE> 4
the Company utilized a marketing and communications firm experienced in the
convenience store industry. Television, radio, billboard and newspaper
advertisements are designed to generate sales, increase customer traffic and
promote the Company's name and image. The Company maintains an employee training
program that emphasizes the importance of service to customers and the
development of merchandising and marketing skills for its store managers and
store personnel.
Convenience Store Merchandise Sales. The Company's stores offer dry
grocery items, health and beauty aids, newspapers and magazines, dairy products,
candy, frozen foods, beverages, tobacco products, fountain drinks and
freshly-ground coffee and cappuccino products. In recent years, the Company has
emphasized new merchandise products such as prepared foods and branded fast
foods to increase sales volume and customer traffic. In addition, the Company
continues to add customer services, such as ATMs, prepaid telephone cards, the
acceptance of personal checks and lottery ticket and money order sales, all of
which are designed to increase customer traffic. Many stores also offer a
variety of prepared and self-service fast foods, including freshly made
sandwiches, hot dogs, pizzas, fresh baked goods and nachos.
In fiscal year 1994, as part of its strategy to increase sales of branded
fast foods, the Company entered into an agreement with Blimpie International
("Blimpie") to become an area developer (franchisor) for Blimpie Subs and Salads
restaurants in Pennsylvania and western New York. The Company presently operates
30 Blimpie locations and has franchised 16 locations with third parties. The
Company receives a commission on these franchise sales.
Convenience Store Gasoline Sales. Convenience store operations and
merchandise sales are enhanced by self-service gasoline facilities, which the
Company plans to include in as many new locations as possible. Sales of gasoline
products at the Company's stores are affected by wholesale and retail price
volatility, competition and marketing decisions. At September 30, 2000, the
Company had 237 locations offering gasoline, with 141 of these locations also
offering kerosene and 8 offering diesel fuel.
The Company offers Amoco gasoline at 34 locations, Exxon gasoline at 21
locations, Mobil gasoline at 11 locations, Texaco gasoline at 7 locations and
Uni-Mart branded gasoline at 163 locations. One location sells branded gasoline
on a commission basis.
Choice Cigarette Discount Outlets. During fiscal year 2000, the Company
converted 15 underperforming convenience store locations to discount tobacco
stores operating under the name of Choice Cigarette Discount Outlets ("Choice").
At September 30, 2000, the Company operated 40 Choice stores, with 28 of these
locations offering gasoline. The Company expects to sell gasoline at these
converted locations if gasoline was sold there prior to conversion. Other
convenience store locations will be converted if conditions warrant. In general,
profitability has improved at locations converted to Choice stores.
COMPANY OPERATIONS
Store Management. Each Company-operated store is managed by a store
manager. All Company stores are divided into groups of approximately nine stores
by geographic area. Each group is managed by a store supervisor. A regional
manager is responsible for a number of groups and their group supervisors. The
regional managers report directly to the Vice President of Operations, who
oversees the day-to-day operations of the stores. Managers, supervisors and
regional managers are compensated in part through incentive programs which
provide for quarterly bonuses based primarily on achievement of specific
financial targets. The number of full-time and part-time employees per store
depends on the sales volume of the store and its hours of operation.
4
<PAGE> 5
Franchises. At September 30, 2000, the Company had seven franchise stores
which operate under various franchise agreements. Under all franchise
agreements, the franchisee pays a royalty, which varies depending upon the
agreement and whether the Company or the franchisee owns the convenience food
store equipment. The royalty is based on the store's merchandise sales volume.
As part of its services to six franchise locations, the Company provides
accounting services, merchandising and advertising assistance, store layout and
design guidance, supplier and product selection and ongoing operational
assistance. These franchisees are required to use the same internal control
systems that the Company uses for the stores it operates. The Company does not
provide these services for one franchise location. The Company has periodically
closed franchised stores and does not intend to grant new franchises except in
connection with acquisitions or in other special circumstances.
Dealers. At September 30, 2000, the Company supplied gasoline to 17
dealers on a commission basis.
SEASONALITY
The Company's business generally has been subject to moderate seasonal
influences with higher sales in the third and fourth quarters of each fiscal
year, since customers tend to purchase more convenience items and gasoline
during the warmer months. Due to adverse weather conditions, merchandise sales
for the second fiscal quarter have generally been lower than other quarters. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Seasonality and Unaudited Quarterly Results."
DISTRIBUTION AND SUPPLY
All stores are serviced at least weekly by vendors. The Company does not
distribute products to its stores itself. In order to minimize costs and
facilitate deliveries, the Company utilizes a single wholesale distributor for
most in-store merchandise, pursuant to a five-year supply agreement that expires
in July 2005. The Company believes that it could easily replace this distributor
with one or more other distributors. Certain products, such as bakery items,
dairy products, snacks, soft drinks, magazines and perishable products, are
distributed by wholesale route salespeople. As part of the sale of its dairy
operation in fiscal 1994, the Company entered into a 10-year supply agreement
with the purchaser which provides for the Company's purchase of all dairy
products sold at most of its Pennsylvania stores. In fiscal year 1998, the
Company entered into 10-year gasoline supply agreements with Exxon and Mobil for
stores that sell approximately 23% of the Company's gasoline volume. In fiscal
year 2000, the Company entered into agreements with Amoco and Texaco as part of
the purchase of the OSSI stores. Sales at these branded locations represented
approximately 14% of the Company's gasoline volume in fiscal year 2000. Gasoline
is purchased for the remaining stores from various suppliers. A gasoline
shortage, although unlikely, could adversely affect the Company's ability to
sell gasoline at these locations.
MANAGEMENT CONTROLS AND INFORMATION SYSTEMS
In fiscal year 2000 the Company initiated a multi-year program to improve
the efficiency of its operational process and management controls through a
program of process reengineering and investment in Information Systems. The
Company has budgeted $1.0 million in fiscal year 2001 to expand the current
pilot back office system to 100 stores as well as upgrading the existing head
office financial systems. These systems are designed to improve the timeliness
and accuracy of management information, reduce paperwork and enhance pricing,
inventory and cash controls.
5
<PAGE> 6
The Company utilizes its current computer systems for inventory and
accounting control, financial record-keeping and management reporting, allowing
management to monitor and evaluate store operations. The Company's computer
systems are also programmed to identify variances from budgeted amounts by store
on a monthly and year-to-date basis. In addition, profit and loss statements by
store compare the current year's results for the month and year-to-date to the
previous year's results.
Store managers are responsible for placing orders for grocery, tobacco,
frozen food and non-food items directly into the central computer system of the
Company's wholesale supplier. The computer systems are designed to compare
current orders with historical order levels and to reject orders that appear to
be incorrect. Orders and receiving reports are reviewed by store supervisors.
Invoices are reviewed and compared to receiving reports by the Company's
accounting personnel and are paid centrally.
The Company believes that its existing and planned systems and controls can
accommodate significant expansion in the number of Company stores.
COMPETITION
The convenience store industry is highly competitive, fragmented and
regionalized. It is characterized by a few large companies, some medium-sized
companies, such as the Company, and many small independent companies. Several
competitors are substantially larger and have greater resources than the
Company. The Company's primary competitors include national chains such as
A-Plus and 7-Eleven and regional chains such as Sheetz, WaWa, Stop-N-Go,
Convenient Food Mart, Turkey Hill, Coastal and Co/Go. The Company also competes
with other convenience stores, small supermarkets, grocery stores and major and
independent gasoline distributors who have converted units to convenience
stores.
Competition for gasoline sales is based on price and location. The Company
competes primarily with self-service gasoline stations operated by independent
dealers and major oil companies in addition to other convenience stores.
ENVIRONMENTAL COMPLIANCE AND REGULATION
The Company's gasoline operations are subject to federal, state and local
environmental laws and regulations primarily relating to the underground storage
tanks. The United States Environmental Protection Agency (the "EPA") has
established standards for owners and operators of underground storage tanks
("USTs") relating to, among other things: (i) maintaining leak detection
systems; (ii) upgrading UST systems; (iii) implementing corrective action in
response to releases; (iv) closing out-of-use USTs to prevent future releases;
(v) maintaining appropriate records; and (vi) maintaining evidence of financial
responsibility for corrective action and compensating third parties for bodily
injury and property damage resulting from UST releases. All states in which the
Company operates also have adopted these regulatory programs.
Under current federal and certain state regulatory programs, the Company
was obligated to upgrade or replace all noncomplying underground storage tanks
it owns or operates to meet corrosion protection and overfill/spill containment
standards by December 1998. The Company had evaluated each of its stores which
sell gasoline to determine the type of expenditures required to comply with
these and other requirements under the federal and state UST regulatory
programs. In the last twelve years, the Company has spent substantial amounts of
money to upgrade its underground storage tanks to meet the applicable standards
and requirements.
6
<PAGE> 7
The Company does not expect expenditures in fiscal year 2001 to maintain
compliance at its locations to have a material adverse effect on the Company's
financial position, results of operations or cash flows. The Company has adopted
a program to ensure that new gasoline installations comply with federal and
state regulations and that existing locations are upgraded if required under
these regulations. Management believes that the Company is currently in material
compliance with all applicable federal and state environmental laws and
regulations.
GOVERNMENTAL REGULATION
In addition to the laws and regulations referred to under "Environmental
Compliance and Regulation," certain other aspects of the Company's business are
governed by federal, state and local statutes. As a franchisor, the Company is
also subject to federal and state laws governing franchising, which include,
among other matters, the commencement and termination of franchises.
A significant portion, approximately 35%, of the Company's merchandise
sales is derived from the sale of cigarettes at its locations. If the government
were to impose significant regulations or restrictions on the sale of tobacco
products, it could have a material adverse effect on the Company.
Management believes that the Company is currently in material compliance
with all applicable federal and state laws and regulations.
TRADEMARKS
The name "UNI-MART" and the Company's UNI-MART logo were registered with
the U.S. Patent and Trademark Office as of May 13, 1997, and are owned by and
licensed from Uni-Marts of America, Inc., a wholly owned subsidiary of the
Company.
EMPLOYEES
As of September 30, 2000, the Company had approximately 2,750 employees,
approximately 1,250 of whom were full-time. The Company believes that its
employee relations are good. None of the Company's employees are covered by a
collective bargaining agreement.
ITEM 2. PROPERTIES.
The following table sets forth certain information with respect to
administrative and storage facilities owned or leased by the Company as of
September 30, 2000:
<TABLE>
<CAPTION>
TYPE OF SQUARE
LOCATION OWNERSHIP FOOTAGE USE
-------- --------- ------- ---
<S> <C> <C> <C>
State College, PA............ Leased 26,500 Administrative offices
State College, PA............ Owned 5,400 Administrative offices
Oak Hall, PA................. Leased 19,400 Storage facility
Pittsburgh, PA............... Leased 2,700 Regional office and storage facility
Camp Hill, PA................ Leased 3,700 Regional office and storage facility
Bradford, PA................. Leased 500 Regional office
Wilkes-Barre, PA............. Leased 10,900 Regional office
Wilkes-Barre, PA............. Leased 16,000 Maintenance warehouse
</TABLE>
The Company's above-referenced leased administrative offices and storage
facility in State College and Oak Hall, Pennsylvania, respectively, are leased
from HFL Corporation. HFL Corporation
7
<PAGE> 8
is controlled by Henry D. Sahakian, the Company's Chairman of the Board and
Chief Executive Officer, and his brother, Daniel D. Sahakian, a Director of the
Company.
Of the Company's 298 locations, 165 are owned by the Company, seven are
leased from affiliated parties and 126 are leased from unaffiliated parties.
Most leases are for initial terms of five to ten years with renewal terms of
five years available at the Company's option. Under most leases, the Company is
responsible for the payment of insurance, taxes and maintenance. Of the leased
locations, seven are subleased to franchisees. The Company also owns three
gasoline service stations, which are leased to unaffiliated operators. As of
September 30, 2000, the Company had two stores under construction.
The Company's store leases expire as follows:
<TABLE>
<CAPTION>
FISCAL YEAR OF
LEASE EXPIRATION (1) NUMBER OF FACILITIES
-------------------- --------------------
<S> <C>
2001 11
2002 6
2003 12
2004 8
2005 and later 96
</TABLE>
---------------
(1) Most of the Company's leases have one or more renewal options at an agreed
upon rental or fair market rental at the end of their initial terms.
The Company has generally renewed its leases prior to their expiration.
Where renewals have not been available or the Company otherwise determines to
change location, the Company generally has been able to locate acceptable
alternative facilities.
The lease for the Company's administrative offices in State College,
Pennsylvania expires in December 2010.
Management considers all properties currently in use, owned or leased, to
be in good condition, well-maintained and suitable for current operations.
ITEM 3. LEGAL PROCEEDINGS.
The Company is 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.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
8
<PAGE> 9
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS.
The Company's Common Stock is listed on the American Stock Exchange under
the symbol "UNI." The transfer agent and registrar for shares of the Company's
Common Stock is Mellon Investor Services LLC, Ridgefield Park, New Jersey. As of
December 5, 2000, the Company had 7,040,666 shares of its Common Stock
outstanding.
Set forth below is a table which shows the high and low sale prices as
reflected on the American Stock Exchange and dividends paid on Common Stock for
each quarter in the two most recent fiscal years.
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
<S> <C> <C> <C> <C>
2000
Cash Dividends per share........................... $.00 $.00 $.00 $.00
Price Range:
High............................................ 1 1/2 4 1/8 2 13/16 2 5/16
Low............................................. 11/16 3/4 1 15/16 1 3/4
1999
Cash Dividends per share........................... $.00 $.00 $.00 $.00
Price Range:
High............................................ 3 3/8 3 2 3/8 1 5/16
Low............................................. 2 5/8 2 1/4 1 3/8 1 1/8
</TABLE>
In April 1997, the Company's Board of Directors elected to temporarily
suspend the quarterly dividends on its Common Stock. The dividend will be
considered for reinstatement upon the Company's return to profitability.
However, there can be no assurance of future dividends because they are
dependent not only on future earnings, but also capital requirements and
financial condition. Certain of the Company's debt agreements require the
Company to maintain a minimum tangible net worth of $18.7 million, which could
possibly restrict the Company's ability to pay dividends on its Common Stock in
the future.
At December 5, 2000, the Company had approximately 352 stockholders of
record of Common Stock. The Company believes that approximately 45 percent of
its Common Stock is held in street or nominee names.
9
<PAGE> 10
ITEM 6. SELECTED FINANCIAL DATA.
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE, PER GALLON AND NUMBER OF STORES DATA)
The following table of selected consolidated financial data of the Company,
except for Operating Data and pro forma information, has been derived from the
financial statements and related notes of the Company which have been audited by
Deloitte & Touche LLP, Independent Auditors, as indicated in their report
relating to the fiscal years ended September 30, 2000, 1999 and 1998, included
elsewhere in this report. The data should be read in conjunction with the
financial statements, related notes and other financial information included
elsewhere in this report.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA: (1)
Sales and other income by the Company
and its franchisees:
Merchandise sales................. $172,209 $146,718 $154,097 $188,936 $182,482
Gasoline sales.................... 174,586 103,418 109,425 160,701 148,829
Other income...................... 1,909 2,170 2,847 2,563 2,501
-------- -------- -------- -------- --------
Total........................... 348,704 252,306 266,369 352,200 333,812
Cost of sales.......................... 272,754 185,285 194,704 267,325 247,458
-------- -------- -------- -------- --------
Gross profit........................... 75,950 67,021 71,665 84,875 86,354
Selling................................ 55,334 52,569 54,267 69,271 65,823
General and administrative............. 6,731 7,509 6,981 8,181 6,971
Depreciation and amortization.......... 6,652 5,968 6,388 7,339 6,058
Interest............................... 5,621 3,951 4,042 4,234 2,854
Provision for loss on disposal......... 0 0 0 1,625 0
Provision for asset impairment......... 160 208 352 1,063 0
-------- -------- -------- -------- --------
Earnings (loss) before income taxes,
extraordinary item and cumulative
effect of accounting change.......... 1,452 (3,184) (365) (6,838) 4,648
Income tax provision (benefit)......... 572 (948) (237) (2,262) 1,677
-------- -------- -------- -------- --------
Earnings (loss) before extraordinary
item and cumulative effect of
accounting change.................... 880 (2,236) (128) (4,576) 2,971
Extraordinary item-loss from debt
extinguishment, net of income tax
benefit of $126...................... 0 0 (244) 0 0
Cumulative effect of accounting change,
net of income tax benefit of $726.... 0 0 0 (1,468) 0
-------- -------- -------- -------- --------
Net earnings (loss).................... $ 880 $ (2,236) $ (372) $ (6,044) $ 2,971
======== ======== ======== ======== ========
Earnings (loss) per share before
extraordinary item and cumulative
effect of accounting change.......... $ 0.13 $ (0.32) $ (0.02) $ (0.69) $ 0.46
Loss per share from extraordinary
item................................. 0.00 0.00 (0.03) 0.00 0.00
Loss per share from cumulative effect
of accounting change................. 0.00 0.00 0.00 (0.22) 0.00
-------- -------- -------- -------- --------
Net earnings (loss) per share.......... $ 0.13 $ (0.32) $ (0.05) $ (0.91) $ 0.46
======== ======== ======== ======== ========
Dividends per share.................... $ 0.0000 $ 0.0000 $ 0.0000 $ 0.0600 $ 0.1175
======== ======== ======== ======== ========
Weighted average shares outstanding.... 6,989 6,887 6,764 6,642 6,509
======== ======== ======== ======== ========
</TABLE>
10
<PAGE> 11
ITEM 6. SELECTED FINANCIAL DATA (CONTINUED)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
OPERATING DATA (RETAIL LOCATIONS ONLY):
Average, per store, for stores open two
full years:
Merchandise sales................. $ 606 $ 552 $ 492 $ 474 $ 456
Gasoline sales.................... $ 754 $ 520 $ 492 $ 526 $ 492
Gallons of gasoline sold.......... 635 623 566 496 477
Gross profit per gallon of gasoline.... $ 0.115 $ 0.103 $ 0.108 $ 0.112 $ 0.120
Total gallons of gasoline sold......... 144,924 122,130 123,144 150,005 144,059
STORE INFORMATION:
Company-operated stores................ 291 246 265 369 369
Franchisee-operated stores............. 7 10 11 32 36
Locations with self-service gasoline... 237 194 206 299 298
BALANCE SHEET DATA:
Working capital........................ $ 3,500 $ (541) $ 1,590 $ 727 $ 1,663
Total assets........................... 144,238 88,475 95,009 113,594 105,038
Long-term obligations.................. 75,006 34,141 34,322 40,386 38,964
Stockholders' equity................... 28,968 27,946 30,040 29,547 36,062
</TABLE>
---------------
(1) In fiscal year 1997, the Company changed its method of calculating ending
merchandise inventories under the retail inventory method. The cumulative
effect of this accounting change, net of the income tax benefit, was
approximately $1.5 million. The pro forma effect as if the accounting change
was in effect in each of the years presented is as follows:
<TABLE>
<CAPTION>
PRO FORMA FOR THE YEAR
ENDED
SEPTEMBER 30,
----------------------
1997 1996
-------- --------
<S> <C> <C>
Revenues............................................ $352,200 $333,812
Gross profit........................................ 84,875 85,097
Net earnings (loss)................................. (4,576) 2,168
Earnings (loss) per share........................... (0.69) 0.33
</TABLE>
11
<PAGE> 12
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Matters discussed below should be read in conjunction with "Statements of
Operations Data" and "Operating Data (Retail Locations Only)" on the preceding
pages.
The Company's revenues are derived primarily from sales of merchandise and
gasoline at its convenience and discount tobacco stores. These revenues
increased substantially in fiscal year 2000 in comparison to fiscal year 1999
due to the April 2000 acquisition of 43 convenience stores in northeastern
Pennsylvania and a 44% increase in the average price per gallon of gasoline
sold. Also, average annual merchandise sales for stores open two full years
increased to $606,000 in fiscal year 2000 from $552,000 in fiscal year 1999 and
$492,000 in fiscal year 1998. Average gallons of gasoline sold at the Company's
stores open two full years were 635,000 gallons in fiscal year 2000 compared to
623,000 gallons in fiscal year 1999 and 566,000 gallons in fiscal year 1998.
This merchandise sales growth trend is primarily the result of increased
sales of fast-food items and the addition of in-store traffic enhancing
services, such as the sale of lottery tickets, money orders and prepaid
telephone cards; ATMs; and the acceptance of personal checks. Cigarette sales
represented approximately 35% of total merchandise sales in each of the last
three fiscal years. There has been volatility in selling prices as a result of
competition among cigarette manufacturers. Since the Company expects this trend
to continue, it has sought increased sales of other merchandise to mitigate the
volatility.
Convenience stores selling gasoline have been heavily affected by
environmental regulations, principally concerning underground storage tanks,
which require large capital expenditures in order to achieve compliance. In the
late 1980s, the Company began making significant expenditures to meet, and
exceed, applicable standards. Management believes that the Company is currently
in compliance with all applicable federal and state environmental laws and
regulations and expects minimum expenditures in fiscal year 2001 to maintain
compliance. In addition, the Company has adopted a program to ensure that new
gasoline installations comply with federal and state regulations.
The Company terminated its relationship with Getty Petroleum Corp.
("Getty") and its affiliates during fiscal year 1998. The Company is no longer
required to purchase petroleum products from Getty and no longer operates 105
stores which were leased to the Company by Getty. In fiscal year 1998, these
stores generated merchandise sales of $9.1 million and sold 7.9 million gallons
of gasoline for total sales of $17.7 million.
Termination of the relationship with Getty permits the Company to purchase
petroleum products from a variety of competing sources. The Company sells
gasoline at 237 locations, including one location where gasoline is sold on a
commission basis. Branded gasoline is purchased under supply agreements for 74
locations and unbranded gasoline is purchased from various sources for 163
locations. These arrangements provide for purchases of gasoline at cost levels
which are less than those offered by Getty. However, gasoline margins have
historically been volatile and there can be no assurance that the Company's
gasoline margins will be enhanced by purchasing such products from competitive
sources.
RESULTS OF OPERATIONS
The following table sets forth the percentage relationship of certain
expense items to total revenues. It should be noted that the primary factors
influencing the percentage relationship of cost of sales to revenues are the
volatility of gasoline prices, gross profits and a proportional increase in the
12
<PAGE> 13
number of stores selling gasoline. On a percentage basis, the gross profit on
gasoline sales is significantly less than the gross profit on merchandise sold
in the convenience stores.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SEPTEMBER 30,
-------------------------------
2000 1999 1998
------- ------- -------
<S> <C> <C> <C>
Revenues:
Merchandise sales......................................... 49.4% 58.1% 57.9%
Gasoline sales............................................ 50.1 41.0 41.0
Other income.............................................. 0.5 0.9 1.1
----- ----- -----
Total revenues.................................... 100.0 100.0 100.0
Cost of sales............................................... 78.2 73.4 73.1
----- ----- -----
Gross profit:
Merchandise (as a percentage of merchandise sales)........ 33.3 35.5 35.8
Gasoline (as a percentage of gasoline sales).............. 9.5 12.5 12.5
Total gross profit................................ 21.8 26.6 26.9
Costs and expenses:
Selling................................................... 15.9 20.8 20.4
General and administrative................................ 1.9 3.0 2.6
Depreciation and amortization............................. 1.9 2.4 2.4
Interest.................................................. 1.6 1.6 1.5
Provision for asset impairment............................ 0.0 0.1 0.1
----- ----- -----
Total expenses.................................... 21.3 27.9 27.0
----- ----- -----
Earnings (loss) before income taxes and extraordinary
item...................................................... 0.5 (1.3) (0.1)
Income tax provision (benefit).............................. 0.2 (0.4) (0.1)
----- ----- -----
Earnings (loss) before extraordinary item................... 0.3 (0.9) 0.0
Extraordinary item-loss from debt extinguishment, net of
income tax benefit........................................ 0.0 0.0 (0.1)
----- ----- -----
Net earnings (loss)......................................... 0.3% (0.9)% (0.1)%
===== ===== =====
</TABLE>
FISCAL YEAR 2000 COMPARED TO FISCAL YEAR 1999
The Company operated 298 stores at September 30, 2000, including seven
franchised locations and 237 locations with self-service gasoline. During fiscal
year 2000, the Company acquired 44 stores, constructed three stores, reopened
two closed stores and closed seven underperforming stores. Total revenues in
fiscal year 2000 were $348.7 million, an increase of $96.4 million, or 38.2%,
compared to total revenues of $252.3 million in fiscal year 1999. This increase
is due largely to substantial increases in the number of stores in operation and
the average retail price per gallon of gasoline sold.
Merchandise sales increased from $146.7 million in fiscal year 1999 to
$172.2 million in fiscal year 2000. This increase of $25.5 million, or 17.4%, is
the result of sales at additional stores and an increase in merchandise sales at
comparable stores of 4.7%.
Gasoline sales increased $71.2 million, or 68.8%, to $174.6 million in
fiscal year 2000 from $103.4 million in fiscal year 1999. Over 70% of this
increase is due to a $0.368 increase in the average price per gallon sold at the
Company's stores. The remaining increase is the result of gallons sold at the
additional stores in operation.
Gross profits on merchandise sales were $57.4 million in fiscal year 2000,
an increase of $5.4 million, or 10.4%, in comparison to merchandise gross
profits of $52.0 million in fiscal year 1999. This increase was primarily the
result of higher sales volumes in fiscal year 2000.
Gasoline gross profits were $16.6 million in fiscal year 2000 compared to
$12.9 million in fiscal year 1999. This increase of $3.7 million, or 28.9%, is
the result of the sale of 22.8 million additional
13
<PAGE> 14
gallons at the Company's stores and larger gross profits per gallon of gasoline
sold. Approximately 90% of the increase in gallons sold was due to the
additional stores in operation resulting from the acquisition of the Orloski
stores in April 2000.
In fiscal year 2000, selling expenses were $55.3 million, an increase of
$2.8 million, or 5.3%, over fiscal year 1999 selling expenses of $52.6 million.
This increase is the result of the higher number of stores in operation in
fiscal year 2000 but reflects lower expense levels per store resulting from cost
controls implemented by the Company. General and administrative expense declined
$778,000, or 10.4%, due largely to fewer officers employed by the Company in
fiscal year 2000. Depreciation and amortization expense increased by $684,000,
or 11.5%, due primarily to the stores added by the Company in fiscal year 2000.
Interest expense increased by $1.7 million, or 42.3%, due to higher borrowing
levels and interest rates. The Company recorded a $160,000 provision for asset
impairment in fiscal year 2000 compared to $208,000 in fiscal year 1999.
The Company had pre-tax earnings of $1.5 million in fiscal year 2000,
compared to a pre-tax loss of $3.2 million in fiscal year 1999, a difference of
$4.7 million. The Company recorded an income tax provision of $572,000 for the
fiscal year 2000 earnings and an income tax benefit of $948,000 for the fiscal
year 1999 loss. Net earnings for fiscal year 2000 were $880,000, or $0.13 per
share, compared to a fiscal year 1999 net loss of $2.2 million, or $0.32 per
share.
FISCAL YEAR 1999 COMPARED TO FISCAL YEAR 1998
The Company operated 256 stores at September 30, 1999. During fiscal year
1999, the Company closed or sold 20 convenience stores. Total revenues in fiscal
year 1999 were $252.3 million, a decline of $14.1 million, or 5.3%, in
comparison to total revenues in fiscal year 1998 of $266.4 million. This decline
is due largely to the operation of fewer stores and lower retail gasoline prices
during fiscal year 1999.
Merchandise sales in fiscal year 1999 were $146.7 million compared to
$154.1 million in fiscal year 1998, a decline of $7.4 million, or 4.8%. This
decline is primarily the result of fewer stores in operation. Merchandise sales
at comparable stores increased 5.8%.
Gasoline sales declined $6.0 million, or 5.5%, from $109.4 million in
fiscal year 1998 to $103.4 million in fiscal year 1999, primarily as a result of
lower sales prices per gallon sold. Gasoline gallons sold at comparable stores
increased 8.1% in fiscal year 1999.
Gross profits on merchandise sales in fiscal year 1999 declined $3.1
million compared to fiscal year 1998. The decline of 5.7% was primarily the
result of the lower sales volumes caused by the operation of fewer stores.
Merchandise gross profits were $52.1 million in fiscal year 1999 and $55.2
million in fiscal year 1998.
Gasoline gross profits declined in fiscal year 1999 by $819,000, or 6.0%,
in comparison to fiscal year 1998. The decrease from $13.7 million in fiscal
year 1998 to $12.9 million in fiscal year 1999 is the result of lower gross
profits per gallon of gasoline sold and, to a lesser degree, a slight decline in
the total number of gallons sold. These decreases are the result of competitive
pressures and fewer stores in operation.
Selling expenses were $52.6 million in fiscal year 1999 compared to $54.3
million in fiscal year 1998, a decline of $1.7 million, or 3.1%. This decline
was the result of fewer stores in operation. Expense levels per average store
increased, however, due to higher labor and maintenance costs. General and
administrative expense increased $528,000, or 7.6%. Certain executive officers
were hired near the end of fiscal year 1998 and their salaries were reflected in
expense for a full year in 1999 compared to a partial year in 1998. Depreciation
and amortization expense declined by $420,000, or
14
<PAGE> 15
6.6%, due to the operation of fewer stores. Interest expense also declined by
$91,000, or 2.3%, primarily as a result of lower borrowing levels. The Company
recorded a $208,000 provision for impairment of long-lived assets in fiscal year
1999 compared to $352,000 in fiscal year 1998.
The Company recorded a pre-tax loss of $3.2 million in fiscal year 1999
compared to a pre-tax loss of $365,000 in fiscal year 1998. The income tax
benefit of these losses was $948,000 in fiscal year 1999 and $237,000 in fiscal
year 1998. In connection with refinancing most of its long-term debt in fiscal
year 1998, the Company recorded an extraordinary loss from debt extinguishment
of $244,000, net of the income tax benefit of $126,000. The net loss for fiscal
year 1999 was $2.2 million, or $0.32 per share, compared to a net loss in fiscal
year 1998 of $372,000, or $0.05 per share.
SEASONALITY AND UNAUDITED QUARTERLY RESULTS
The Company's business generally has been subject to moderate seasonal
influences with higher sales in the third and fourth fiscal quarters of each
year, since customers tend to purchase more convenience items, such as ice,
beverages and fast food, and more gasoline during the warmer months. Due to
adverse weather conditions, merchandise sales for the second fiscal quarter have
generally been lower than other quarters. However, because of price volatility,
gasoline profit margins fluctuate significantly throughout the year. The
acquisition of 43 stores in April 2000 increased sales and operating expenses
for the remainder of fiscal year 2000.
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
FISCAL YEAR 2000 FISCAL YEAR 1999
QUARTER ENDED QUARTER ENDED
----------------------------------------- ---------------------------------------
DEC. 30, MAR. 30, JUNE 29, SEP. 30, DEC. 31, APR. 1, JULY 1, SEP. 30,
1999 2000 2000 2000 1998 1999 1999 1999
-------- -------- -------- -------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Merchandise sales.......... $36,493 $35,406 $47,998 $52,313 $35,399 $34,687 $37,735 $38,897
Gasoline sales............. 33,478 32,566 50,755 57,786 25,321 21,753 26,595 29,749
Other income............... 270 662 433 544 429 787 271 683
------- ------- ------- ------- ------- ------- ------- -------
Total revenues...... 70,241 68,634 99,186 110,643 61,149 57,227 64,601 69,329
Cost of sales................ 53,780 53,310 78,351 87,313 43,970 41,529 47,946 51,840
------- ------- ------- ------- ------- ------- ------- -------
Gross profit................. 16,461 15,324 20,835 23,330 17,179 15,698 16,655 17,489
Costs and expenses:
Selling.................... 12,075 12,347 14,803 16,109 13,217 13,337 13,015 13,000
General & administrative... 1,553 1,609 1,624 1,945 1,780 1,903 1,840 1,986
Depreciation &
amortization............. 1,432 1,447 1,800 1,973 1,572 1,512 1,452 1,432
Interest................... 928 984 1,716 1,993 1,009 974 961 1,007
Provision for asset
impairment............... 0 0 56 104 0 100 100 8
------- ------- ------- ------- ------- ------- ------- -------
Earnings (loss) before income
taxes and extraordinary
item....................... 473 (1,063) 836 1,206 (399) (2,128) (713) 56
Income tax provision
(benefit).................. 142 (319) 251 498 (110) (699) (180) 41
------- ------- ------- ------- ------- ------- ------- -------
Net earnings (loss).......... $ 331 $ (744) $ 585 $ 708 $ (289) $(1,429) $ (533) $ 15
======= ======= ======= ======= ======= ======= ======= =======
Net earnings (loss) per
share...................... $ 0.05 $ (0.11) $ 0.08 $ 0.10 $ (0.04) $ (0.21) $ (0.08) $ 0.00
======= ======= ======= ======= ======= ======= ======= =======
Weighted average shares
outstanding................ 6,943 6,982 7,008 7,023 6,866 6,877 6,894 6,911
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
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.
15
<PAGE> 16
On April 20, 2000, the Company terminated its $10.0 million revolving loan
agreement with a bank and repaid amounts outstanding under this facility with
borrowings from a new $10.0 million revolving loan agreement with another bank.
(See Note F to the consolidated financial statements for a description of the
terms of this new revolving loan facility)
On April 21, 2000, the Company purchased most of the operating assets and
business of Orloski Service Station, Inc. and its owners (collectively "OSSI")
for approximately $41.2 million in cash and assumption of a gasoline supplier
agreement. In September 2000, the Company purchased an additional OSSI property
for approximately $1.5 million. OSSI was the operator of a 43-store chain of
convenience stores and gasoline dispensing stations in northeastern
Pennsylvania. This acquisition was financed with mortgage and equipment loans
aggregating $41.0 million. The mortgages will be repaid over 20 years and the
equipment loans will be repaid over 10 years.
Also in fiscal year 2000, the Company had additional capital expenditures
of $7.5 million, of which $1.7 million was financed with bank loans and $426,000
was financed with capital leases. The balance was funded from cash flow from
operations.
Management believes that cash from operations and the available credit
facilities will be sufficient to meet the Company's obligations for the
foreseeable future.
Capital requirements for debt service and capital leases for fiscal year
2001 are approximately $2.6 million. The Company anticipates capital
expenditures in fiscal year 2001 of $10.7 million, for which the Company has
committed financing of $5.7 million with the remainder funded from cash flow
from operations. These capital expenditures include construction of new stores,
remodeling of stores, upgrades of store equipment and gasoline-dispensing
equipment and upgrading of the Company's data processing systems.
IMPACT OF INFLATION
The Company believes that inflation has not had a material effect on its
results of operations in recent years. Generally, increases in the Company's
cost of merchandise can be quickly reflected in higher prices of goods sold.
However, any upward movement of gasoline costs may have short-term negative
effects on profit margins, since the Company's ability to raise gasoline prices
can be limited due to competition from other self-service gasoline outlets. In
addition, fluctuation of gasoline prices can limit the ability of the Company to
maintain stable gross margins.
FORWARD-LOOKING STATEMENTS
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.
16
<PAGE> 17
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company uses its revolving credit facility and its mortgage and
equipment loans to finance a significant portion of its operations. These
on-balance sheet financial instruments, to the extent they provide for variable
rates of interest, expose the Company to interest rate risk resulting from
changes in the LIBOR or prime rate.
To the extent that the Company's financial instruments expose the Company
to interest rate risk, they are presented in the table below. The table presents
principal cash flows and related interest rates by year of maturity for the
Company's revolving credit facility, mortgage loans and equipment loans at
September 30, 2000. Notes F, G and H to the consolidated financial statements
should be read in conjunction with the table below (dollar amounts in
thousands).
<TABLE>
<CAPTION>
FISCAL YEAR OF MATURITY TOTAL FAIR
---------------------------------------------- DUE AT VALUE AT
2001 2002 2003 2004 2005 THEREAFTER MATURITY 9/30/00
---- ------ ------ ------ ------ ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INTEREST-RATE SENSITIVE
ASSETS:
Noninterest-bearing
checking accounts........ $7,309 $ 0 $ 0 $ 0 $ 0 $ 0 $ 7,309 $ 7,309
Interest-bearing checking
accounts................. $ 573 $ 0 $ 0 $ 0 $ 0 $ 0 $ 573 $ 573
Average interest rate...... 5.98% 5.98%
------ ------ ------ ------ ------ ------- ------- -------
$7,882 $ 7,882 $ 7,882
0.43% 0.43% --
INTEREST-RATE SENSITIVE
LIABILITIES:
Variable-rate borrowings... $1,173 $1,162 $2,402 $1,400 $1,557 $25,919 $33,613 $35,328
Average interest rate...... 10.37% 10.37% 10.37% 10.37% 10.37% 10.37% 10.37% --
Fixed-rate borrowings...... $1,060 $1,088 $1,143 $1,271 $1,411 $36,866 $42,839 $44,614
Average interest rate...... 9.36% 9.36% 9.36% 9.36% 9.36% 9.36% 9.36% --
------ ------ ------ ------ ------ ------- ------- -------
$2,233 $2,250 $3,545 $2,671 $2,968 $62,785 $76,452 $79,942
9.80% 9.80% 9.80% 9.78% 9.78% 9.78% 9.80% --
</TABLE>
17
<PAGE> 18
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders of
Uni-Marts, Inc.
State College, Pennsylvania
We have audited the accompanying consolidated balance sheets of Uni-Marts,
Inc. and subsidiaries (the "Company") as of September 30, 2000 and 1999, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the three years in the period ended September 30, 2000. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on the financial statements based on our
audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Uni-Marts, Inc. and
subsidiaries as of September 30, 2000 and 1999, and the results of their
operations and their cash flows for each of the three years in the period ended
September 30, 2000, in conformity with accounting principles generally accepted
in the United States of America.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Philadelphia, Pennsylvania
November 10, 2000
18
<PAGE> 19
UNI-MARTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30,
---------------------------
2000 1999
------------ -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash...................................................... $ 7,881,674 $ 1,944,358
Accounts receivable -- less allowances of $226,200 and
$288,000............................................... 6,106,062 2,524,734
Inventories............................................... 16,235,721 11,737,029
Prepaid and current deferred taxes........................ 1,856,208 2,079,155
Property held for sale.................................... 1,603,421 1,410,810
Prepaid expenses and other................................ 1,204,554 1,099,484
Loan due from officer -- current portion.................. 60,000 60,000
------------ -----------
Total Current Assets.............................. 34,947,640 20,855,570
Net Property, Equipment and Improvements.................... 100,701,217 61,713,278
Loan Due from Officer....................................... 420,291 480,000
Net Intangible and Other Assets............................. 8,168,366 5,425,771
------------ -----------
Total Assets...................................... $144,237,514 $88,474,619
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable.......................................... $ 18,400,556 $10,967,476
Gas taxes payable......................................... 3,399,429 2,183,410
Accrued expenses.......................................... 7,028,709 5,222,855
Credit line payable....................................... 0 1,800,000
Current maturities of long-term debt...................... 2,232,728 958,811
Current obligations under capital leases.................. 385,918 264,310
------------ -----------
Total Current Liabilities......................... 31,447,340 21,396,862
Long-Term Debt, less current maturities..................... 74,219,620 33,264,639
Obligations under Capital Leases, less current maturities... 786,205 875,977
Deferred Taxes.............................................. 2,956,300 2,561,500
Deferred Income and Other Liabilities....................... 5,859,928 2,429,835
Commitments and Contingencies
Stockholders' Equity:
Common Stock, par value $.10 a share:
Authorized 15,000,000 shares
Issued 7,361,123 and 7,327,088 shares, respectively.... 736,112 732,709
Additional paid-in capital................................ 23,816,387 24,030,665
Retained earnings......................................... 6,527,095 5,646,956
------------ -----------
31,079,594 30,410,330
Less treasury stock, at cost -- 333,714 and 400,962 shares
of Common Stock, respectively.......................... (2,111,473) (2,464,524)
------------ -----------
28,968,121 27,945,806
------------ -----------
Total Liabilities and Stockholders' Equity........ $144,237,514 $88,474,619
============ ===========
</TABLE>
See notes to consolidated financial statements
19
<PAGE> 20
UNI-MARTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------------------------
2000 1999 1998
------------ ------------ ------------
<S> <C> <C> <C>
REVENUES:
Merchandise sales............................. $172,209,610 $146,718,301 $154,097,184
Gasoline sales................................ 174,585,614 103,417,555 109,424,633
Other income.................................. 1,908,917 2,169,901 2,846,896
------------ ------------ ------------
348,704,141 252,305,757 266,368,713
------------ ------------ ------------
COSTS AND EXPENSES:
Cost of sales................................. 272,753,563 185,285,307 194,703,534
Selling....................................... 55,334,246 52,568,471 54,267,079
General and administrative.................... 6,730,719 7,508,747 6,981,006
Depreciation and amortization................. 6,652,381 5,968,188 6,388,426
Interest...................................... 5,621,023 3,950,533 4,041,719
Provision for asset impairment................ 159,770 208,338 351,989
------------ ------------ ------------
347,251,702 255,489,584 266,733,753
------------ ------------ ------------
Earnings (loss) before income taxes and
extraordinary item............................ 1,452,439 (3,183,827) (365,040)
Income tax provision (benefit).................. 572,300 (948,200) (237,400)
------------ ------------ ------------
Earnings (loss) before extraordinary item....... 880,139 (2,235,627) (127,640)
Extraordinary item-loss from debt
extinguishment, net of income tax benefit of
$125,800...................................... 0 0 (244,315)
------------ ------------ ------------
Net earnings (loss)............................. $ 880,139 $ (2,235,627) $ (371,955)
============ ============ ============
Basic earnings (loss) per share:
Earnings (loss) per share before extraordinary
item....................................... $ 0.13 $ (0.32) $ (0.02)
Loss per share from extraordinary item........ 0.00 0.00 (0.03)
------------ ------------ ------------
Net earnings (loss) per share................. $ 0.13 $ (0.32) $ (0.05)
============ ============ ============
Diluted earnings (loss) per share:
Earnings (loss) per share before extraordinary
item....................................... $ 0.13 $ (0.32) $ (0.02)
Loss per share from extraordinary item........ 0.00 0.00 (0.03)
------------ ------------ ------------
Net earnings (loss) per share................. $ 0.13 $ (0.32) $ (0.05)
============ ============ ============
Weighted average number of common shares
outstanding................................... 6,989,281 6,886,774 6,763,768
============ ============ ============
Weighted average number of common shares
outstanding assuming dilution................. 7,020,630 6,886,774 6,763,768
============ ============ ============
</TABLE>
See notes to consolidated financial statements
20
<PAGE> 21
UNI-MARTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK
PAR VALUE $.10
A SHARE
AUTHORIZED 15,000,000
SHARES ADDITIONAL TREASURY STOCK
---------------------- PAID-IN RETAINED ----------------------
SHARES AMOUNT CAPITAL EARNINGS SHARES AMOUNT
---------- --------- ----------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE -- OCTOBER 1, 1997........... 7,286,657 $728,666 $24,341,999 $ 8,254,538 639,980 $(3,778,258)
Purchase of treasury stock......... 12,421 (49,285)
Issuance of common stock........... 30,140 3,014 (152,741) (196,856) 1,064,197
Net loss........................... (371,955)
--------- -------- ----------- ----------- -------- -----------
BALANCE -- SEPTEMBER 30, 1998........ 7,316,797 731,680 24,189,258 7,882,583 455,545 (2,763,346)
Purchase of treasury stock......... 4,119 (9,364)
Issuance of common stock........... 10,291 1,029 (158,593) (58,702) 308,186
Net loss........................... (2,235,627)
--------- -------- ----------- ----------- -------- -----------
BALANCE -- SEPTEMBER 30, 1999........ 7,327,088 732,709 24,030,665 5,646,956 400,962 (2,464,524)
Issuance of common stock........... 34,035 3,403 (214,278) (67,248) 353,051
Net earnings....................... 880,139
--------- -------- ----------- ----------- -------- -----------
BALANCE -- SEPTEMBER 30, 2000........ 7,361,123 $736,112 $23,816,387 $ 6,527,095 333,714 $(2,111,473)
========= ======== =========== =========== ======== ===========
</TABLE>
See notes to consolidated financial statements
21
<PAGE> 22
UNI-MARTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
---------------------------------------------
2000 1999 1998
------------- ------------- -------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers and others......... $ 348,512,574 $ 250,705,501 $ 266,814,682
Cash paid to suppliers and employees............ (329,222,353) (247,104,574) (256,330,886)
Net receipts for sales and purchases of trading
equity securities............................ 0 0 831,826
Dividends and interest received................. 108,252 111,774 138,277
Interest paid (net of capitalized interest of
$31,900, $0 and $0).......................... (5,100,108) (3,640,701) (4,359,976)
Income taxes received........................... 45,447 691,310 2,245,025
------------- ------------- -------------
Net Cash Provided by Operating
Activities.............................. 14,343,812 763,310 9,338,948
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of business......................... (42,745,111) 0 0
Receipts from sale of capital assets............ 993,239 2,313,119 7,567,051
Purchase of property, equipment and
improvements................................. (7,036,517) (4,800,187) (4,234,049)
Note receivable from officer.................... 59,709 110,800 173,968
Cash advanced for intangible and other assets... (190,828) (508,752) (359,800)
Cash received for intangible and other assets... 633,069 238,678 813,535
------------- ------------- -------------
Net Cash (Used in) Provided by Investing
Activities.............................. (48,286,439) (2,646,342) 3,960,705
CASH FLOWS FROM FINANCING ACTIVITIES:
(Payments) on revolving credit agreement........ (656,598) 0 (10,000,000)
Additional long-term borrowings................. 42,237,885 721,618 34,895,954
(Payments) borrowings on line of credit......... 0 (1,700,000) 3,500,000
Principal payments on debt...................... (1,709,644) (1,026,123) (42,647,892)
Purchases of treasury stock..................... 0 (9,364) (49,285)
Proceeds from issuance of common stock.......... 8,300 2,941 846,500
------------- ------------- -------------
Net Cash Provided by (Used in) Financing
Activities.............................. 39,879,943 (2,010,928) (13,454,723)
------------- ------------- -------------
Net increase (decrease) in cash................... 5,937,316 (3,893,960) (155,070)
Cash at beginning of year......................... 1,944,358 5,838,318 5,993,388
------------- ------------- -------------
Cash at end of year............................... $ 7,881,674 $ 1,944,358 $ 5,838,318
============= ============= =============
</TABLE>
22
<PAGE> 23
UNI-MARTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
----------------------------------------
2000 1999 1998
------------ ----------- -----------
<S> <C> <C> <C>
RECONCILIATION OF NET EARNINGS (LOSS) TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net Earnings (Loss).................................... $ 880,139 $(2,235,627) $ (371,955)
Adjustments to Reconcile Net Earnings (Loss) to Net
Cash Provided by Operating Activities:
Depreciation and amortization..................... 6,652,381 5,968,188 6,388,426
Provision for asset impairment.................... 159,770 208,338 351,989
Net unrealized holding loss on trading
securities...................................... 0 0 130,355
Gain on sale of trading equity securities......... 0 0 (110,662)
Loss (gain) on sale of capital assets and other... 197,282 (378,418) (348,209)
Change in assets and liabilities:
(Increase) decrease in:
Trading equity securities.................... 0 0 383,520
Accounts receivable.......................... (3,574,028) (228,547) 1,223,694
Tax refunds receivable....................... 0 1,416,363 402,737
Inventories.................................. (4,498,692) (1,108,722) 5,055,023
Prepaid expenses............................. 24,167 (171,790) (267,486)
Increase (decrease) in:
Accounts payable and accrued expenses........ 10,454,953 (376,109) (4,943,597)
Deferred income taxes and other
liabilities................................ 4,047,840 (2,330,366) 1,445,113
------------ ----------- -----------
Total Adjustments to Net Earnings (Loss).......... 13,463,673 2,998,937 9,710,903
------------ ----------- -----------
Net Cash Provided by Operating Activities.............. $ 14,343,812 $ 763,310 $ 9,338,948
============ =========== ===========
SUPPLEMENTAL SCHEDULE OF NONCASH OPERATING ACTIVITY:
Liabilities Assumed in Acquisition..................... $ 2,500,000 $ 0 $ 0
Assets Acquired Under Capital Leases................... $ 426,143 $ 0 $ 0
</TABLE>
See notes to consolidated financial statements
23
<PAGE> 24
UNI-MARTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2000, 1999 AND 1998
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The Company is an independent operator of convenience stores and discount
tobacco stores located in Pennsylvania, New York, Delaware, Maryland and
Virginia.
(1) Principles of Consolidation -- The consolidated financial statements
include the accounts of Uni-Marts, Inc. and its wholly owned
subsidiaries (the "Company"). All material intercompany balances and
transactions have been eliminated.
(2) Inventories -- The Company values its merchandise inventories at the
lower of cost (first-in, first-out method) or market, as determined by
the retail inventory method. Gasoline inventories are valued at the
lower of cost (first-in, first-out method) or market (see Note C).
(3) Property, Equipment and Improvements -- Depreciation and amortization
are calculated using the straight-line method over the useful lives of
the related assets. Amortization of improvements to leased properties
is based on the remaining terms of the leases or the estimated useful
lives of such improvements, whichever is shorter. Interest costs
incurred on borrowed funds during the period of construction of capital
assets are capitalized as a component of the cost of acquiring those
assets. The amount of interest capitalized in fiscal year 2000 was
$31,900. No interest was capitalized in fiscal years 1999 and 1998.
(4) Intangible and Other Assets -- Intangible and other assets consist of
the following:
<TABLE>
<CAPTION>
ACCUMULATED NET BOOK USEFUL
COST AMORTIZATION VALUE LIVES
----------- ------------ ---------- ------
<S> <C> <C> <C> <C>
FOR THE YEAR ENDED SEPTEMBER 30, 2000:
Goodwill............................... $ 8,874,157 $2,239,500 $6,634,657 13-40
Lease acquisition costs................ 439,153 334,972 104,181 12-25
Noncompete agreements.................. 250,000 21,154 228,846 5
Other intangibles...................... 175,395 5,481 169,914 15-16
Other assets........................... 1,030,768 0 1,030,768
----------- ---------- ----------
$10,769,473.. $2,601,107 $8,168,366
=========== ========== ==========
FOR THE YEAR ENDED SEPTEMBER 30, 1999:
Goodwill............................... $ 5,803,443 $2,069,953 $3,733,490 13-40
Lease acquisition costs................ 674,570 519,489 155,081 12-25
Other intangibles...................... 99,111 44,949 54,162 15-16
Other assets........................... 1,483,038 0 1,483,038
----------- ---------- ----------
$8,060,162.. $2,634,391 $5,425,771
=========== ========== ==========
</TABLE>
Goodwill represents the excess of cost over the fair value of net
assets acquired in business combinations and is amortized on a
straight-line basis. Lease acquisition costs are the bargain element of
acquired leases and are being amortized on a straight-line basis over
the related lease terms. Amortization expense was $345,800 (2000),
$267,500 (1999) and $439,500 (1998).
(5) Asset Impairment -- Long-lived assets and certain identifiable
intangibles are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability is assessed based on the future cash flows
expected to result from the use of the asset and its eventual
disposition. If the sum of the undiscounted cash flows is less than the
carrying value of the asset, an impairment loss is
24
<PAGE> 25
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
recognized. Any impairment loss, if indicated, is measured as the
amount by which the carrying amount of the asset exceeds the estimated
fair value of the asset. The Company recorded provisions of
approximately $159,800 (2000), $208,300 (1999) and $352,000 (1998) for
asset impairment for certain real estate, leasehold improvements, store
and gasoline equipment and goodwill at certain closed or
underperforming stores.
(6) Self-Insurance Reserves -- The Company assumes the risks for general
liability and workers' compensation insurance exposures up to certain
loss thresholds set forth in separate insurance contracts. The Company
has established self-insurance reserves for these risks, which are
recorded on a present value basis using a risk-free discount rate of
7.0%, using actuarial valuations provided by independent companies. At
September 30, 2000 and 1999, the Company had self-insurance reserves
totaling $2,678,800 and $2,868,900, respectively.
(7) Income Taxes -- The Company recognizes deferred tax assets and
liabilities for temporary differences between the financial statement
and tax basis of assets and liabilities using enacted tax rates.
(8) Deferred Income and Other Liabilities -- The Company generally records
revenues when products are sold or services rendered. In certain
instances, the Company receives advance payments for purchase
commitments or other services and records revenue from such payments in
accordance with the terms of the related contractual arrangements.
Deferred income and other liabilities includes the following:
<TABLE>
<CAPTION>
SEPTEMBER 30,
2000 1999
---------- ----------
<S> <C> <C>
Deferred income................................... $5,773,889 $2,165,651
Deferred compensation............................. 28,100 237,571
Other noncurrent liabilities...................... 57,939 26,613
---------- ----------
$5,859,928 $2,429,835
========== ==========
</TABLE>
(9) Earnings Per Share -- Earnings per share for the years ended September
30, 2000, 1999 and 1998 were calculated based on the weighted-average
number of shares of common stock outstanding. Diluted earnings per
share were calculated in fiscal year 2000. Although there were
potentially dilutive stock options for 576,441 and 535,566 shares
outstanding in fiscal years 1999 and 1998, respectively, they were not
included as the effect was antidilutive.
(10) Advertising Costs -- The Company expenses advertising costs in the
period in which they are incurred. The Company incurred advertising
costs of $1,228,000, $1,894,600 and $2,084,800 in fiscal years 2000,
1999 and 1998, respectively.
(11) Estimates -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results may differ from those estimates and assumptions.
(12) Segment Disclosures -- In fiscal year 1999, the Company adopted
Statement of Financial Accounting Standards ("SFAS") No. 131
"Disclosures about Segments of an Enterprise and Related Information."
The Company has only one reportable segment.
(13) New Accounting Pronouncements -- In June 1998, the Financial Accounting
Standards Board issued Statement No. 133, "Accounting for Derivative
Instruments and Hedging Activities."
25
<PAGE> 26
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
The Statement establishes accounting and reporting standards for
derivative instruments including certain derivative instruments
embedded in other contracts (collectively referred to as derivatives),
and for hedging activities. It requires that an entity recognize all
derivatives as either assets or liabilities in the balance sheet and
measure those instruments at fair value. This statement, as amended by
SFAS 137, "Accounting for Derivative Instruments and Hedging Activities
- Deferral of the Effective Date of FASB Statement No. 133," and SFAS
No. 138, "Accounting for Certain Derivative Instruments and Certain
Hedging Activities," is effective for all fiscal quarters of fiscal
years beginning after June 15, 2000. The Company adopted this
accounting standard October 1, 2000. The adoption of this standard had
no effect on the Company's financial statements.
(14) Classifications -- Certain reclassifications have been made to the 1999
and 1998 financial statements to conform to the classifications used in
2000.
B. BUSINESS ACQUISITION:
In April 2000, pursuant to an asset purchase agreement (the "Purchase
Agreement") the Company purchased the operating assets of Orloski Service
Station, Inc. and its owners (collectively "OSSI") for approximately $41.2
million in cash. In September 2000, the Company purchased an additional OSSI
property in accordance with the Purchase Agreement for approximately $1.5
million in cash. The transaction was accounted for as a purchase, and
accordingly, operations of the acquired OSSI assets are included in the
consolidated financial statements from the date of acquisition. The Company also
assumed a $2.5 million agreement with a gasoline supplier for partial funding of
gasoline equipment which is included in deferred income and other liabilities on
the balance sheet and is being amortized into income as gallons are purchased
and sold. If the Company terminates this agreement before the expiration date,
part of this funding must be repaid to the supplier. Goodwill of $3.2 million
was acquired in connection with the acquisition and is being amortized on a
straight-line basis over fifteen years.
The following table summarizes, on an unaudited pro forma basis, the estimated
combined statements of operations for the fiscal years ended September 30, 2000
and September 30, 1999 as though the acquisition took place on October 1, 1998.
This pro forma information does not purport to be indicative of the results of
operations that would have been obtained if the acquisition had occurred on
October 1, 1998.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
-----------------------------
SEPTEMBER 30, SEPTEMBER 30,
2000 1999
------------- -------------
<S> <C> <C>
Revenues......................................... $397,059,000 $330,018,000
Net earnings (loss).............................. $ 858,000 $ (1,213,000)
Net earnings (loss) per share.................... $ 0.12 $ (0.18)
</TABLE>
C. INVENTORIES:
The following is a summary of inventories at September 30:
<TABLE>
<CAPTION>
2000 1999
------------- -------------
<S> <C> <C>
Merchandise...................................... $ 12,684,054 $ 9,549,642
Gasoline......................................... 3,551,667 2,187,387
------------ ------------
$ 16,235,721 $ 11,737,029
============ ============
</TABLE>
26
<PAGE> 27
D. PROPERTY HELD FOR SALE:
Property held for sale is carried at the lower of cost or net realizable value.
The properties have been classified as current assets because the Company
expects the properties to be sold within the next fiscal year. The properties
are undeveloped land, rental properties and closed convenience stores.
E. PROPERTY, EQUIPMENT AND IMPROVEMENTS -- AT COST:
<TABLE>
<CAPTION>
ESTIMATED
ACCUMULATED NET BOOK LIFE IN
COST DEPRECIATION VALUE YEARS
------------ ------------ ------------ ---------
<S> <C> <C> <C> <C>
SEPTEMBER 30, 2000:
Land....................................... $ 21,628,524 $ 0 $ 21,628,524
Buildings.................................. 65,992,579 16,587,340 49,405,239 29-35
Machinery and equipment.................... 43,797,424 24,352,799 19,444,625 3-10
Machinery and equipment.................... 6,569,224 3,464,379 3,104,845 11-20
Capitalized property and equipment
leases................................... 1,878,958 750,721 1,128,237 5-25
Leasehold improvements..................... 11,213,372 8,166,927 3,046,445 1-10
Leasehold improvements..................... 434,137 359,776 74,361 11-20
Construction in progress................... 2,868,941 0 2,868,941
------------ ----------- ------------
$154,383,159 $53,681,942 $100,701,217
============ =========== ============
SEPTEMBER 30, 1999:
Land....................................... $ 15,268,264 $ 0 $ 15,268,264
Buildings.................................. 43,036,470 15,106,372 27,930,098 29-35
Machinery and equipment.................... 34,210,894 23,641,022 10,569,872 3-10
Machinery and equipment.................... 6,300,426 3,062,605 3,237,821 11-20
Capitalized property and equipment
leases................................... 1,452,816 577,431 875,385 5-25
Leasehold improvements..................... 10,603,225 7,674,710 2,928,515 1-10
Leasehold improvements..................... 461,053 362,555 98,498 11-20
Construction in progress................... 804,825 0 804,825
------------ ----------- ------------
$112,137,973 $50,424,695 $ 61,713,278
============ =========== ============
</TABLE>
Depreciation expense in fiscal years 2000, 1999 and 1998 was $6,306,600,
$5,700,700 and $5,948,900, respectively, including the amortization of
capitalized property and equipment leases.
F. REVOLVING CREDIT AGREEMENT:
On April 20, 2000, the Company executed a 3-year secured $10.0 million revolving
loan agreement (the "Agreement") with $3.5 million available for letters of
credit. The Agreement replaced a secured $10.0 million revolving agreement the
Company previously had with a different bank, which was terminated in April
2000. At September 30, 2000, $5.9 million was available for borrowings under the
Agreement. This Agreement expires on April 19, 2003. Provisions of the revolving
loan Agreement require the maintenance of certain covenants relating to minimum
tangible net worth, interest and fixed charge coverage ratios. The Company was
in compliance with these covenants as of September 30, 2000. Borrowings of $1.1
million and letters of credit of $3.0 million were outstanding at September 30,
2000. This facility bears interest at the Company's option based on a rate of
either prime plus 1% or LIBOR plus 3.0%. The interest rate at September 30, 2000
was 10.5%. The Agreement is collateralized by substantially all of the Company's
eligible inventories and eligible receivables and selected properties. The net
book value of these selected properties at September 30, 2000 was $2,506,800.
27
<PAGE> 28
G. LONG-TERM DEBT:
<TABLE>
<CAPTION>
SEPTEMBER 30,
-------------------------
2000 1999
----------- -----------
<S> <C> <C>
Mortgage Loan. Principal and interest will be paid in 214
monthly installments. The effective interest rate at
September 30, 2000, was 10.23%, net of unamortized fees of
$1,425,995 ($1,584,907 in 1999)........................... $33,047,242 $33,630,236
Mortgage Loan. Principal and interest will be paid in 236
monthly installments. The loan bears interest at LIBOR
plus 3.75%. The effective interest rate at September 30,
2000 was 10.83%, net of unamortized fees of $437,653 ($0
in 1999).................................................. 21,804,203 0
Mortgage Loan. Principal and interest will be paid in 236
monthly installments. The effective interest rate at
September 30, 2000 was 11.24%, net of unamortized fees of
$135,298 ($0 in 1999)..................................... 6,729,704 0
Mortgage Loans. Principal and interest are paid in monthly
installments. The loans expire in 2009, 2010 and 2020.
Interest ranges from the prime rate to LIBOR plus 3.75%.
The blended interest rate at September 30, 2000 was
9.98%..................................................... 3,466,311 208,661
Revolving Credit Agreement. Interest is paid monthly. The
interest rate at September 30, 2000 was 10.5%. (See Note
F)........................................................ 1,143,402 0
Equipment Loan. Principal and interest will be paid in 116
monthly installments. The loan expires in 2010 and bears
interest at LIBOR plus 3.75%. The effective interest rate
at September 30, 2000 was 11.04%, net of unamortized fees
of $176,414 ($0 in 1999).................................. 9,028,276 0
Equipment Loan. Principal and interest will be paid in 116
monthly installments. The loan expires in 2010. The
effective interest rate at September 30, 2000 was 11.82%,
net of unamortized fees of $20,713 ($0 in 1999)........... 1,058,413 0
Equipment Loan. Principal and interest are paid in monthly
installments. The loan expires in 2001 and bears interest
at a rate of 10.00%....................................... 174,797 384,553
----------- -----------
76,452,348 34,223,450
Less current maturities..................................... 2,232,728 958,811
----------- -----------
$74,219,620 $33,264,639
=========== ===========
</TABLE>
The mortgage loans are collateralized by $65,701,500 of property, at net book
value, and the equipment loans are collateralized by $4,761,400 of equipment, at
net book value.
Aggregate maturities of long-term debt during the next five years are as
follows:
<TABLE>
<S> <C>
September 30,
2001................................................... $ 2,232,728
2002................................................... 2,250,000
2003................................................... 3,545,300
2004................................................... 2,671,300
2005................................................... 2,968,000
Thereafter............................................. 62,785,020
-----------
$76,452,348
===========
</TABLE>
In April and September 2000, the Company, through special purpose consolidated
entities, completed 20-year mortgage loans with Franchise Finance Corporation of
America ("FFCA") aggregating $30.5 million and equipment loans of $10.5 million
to finance the purchase of assets from OSSI. The Company has a financing
commitment from FFCA for $7.0 million to finance the development of and
28
<PAGE> 29
G. LONG-TERM DEBT (CONTINUED):
equipment for two store sites and a travel center. The Company has made
construction draws on one store site and the travel center for approximately
$1.1 million to date. As of September 30, 2000, $5.9 million of this commitment
remains available.
Certain provisions of the loan agreements with FFCA require the Company's
maintenance of a minimum net worth of $20.0 million and an aggregate fixed
charge ratio of 1.25:1. The Company was in compliance with these covenants as of
September 30, 2000. These agreements restrict the Company's ability to declare
and pay dividends on its common stock in certain instances as defined in the
agreements.
H. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS:
The carrying amounts of cash, short-term debt and long-term, variable-rate debt
approximate fair value. The Company estimates the fair value of its long-term,
fixed-rate debt generally using discounted cash flow analysis based on the
Company's current borrowing rates for debt with similar maturities.
Fair value of capital lease obligations is estimated based on current rates
offered to the Company for similar debt.
The estimated fair values of the Company's financial instrument liabilities are
as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, 2000 SEPTEMBER 30, 1999
------------------------- -------------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Long-term debt.................. $76,452,348 $79,942,095 $34,223,450 $35,087,637
Obligations under capital
leases........................ 1,172,123 1,222,120 1,140,287 1,181,204
</TABLE>
I. COMMITMENTS AND CONTINGENCIES:
(1) Leases -- The Company leases its corporate headquarters, a majority of its
store locations and certain equipment. Future minimum lease payments under
capital leases and noncancellable operating leases with initial or remaining
terms in excess of one year at September 30, 2000 are shown below. Some of
the leases provide for additional rentals when sales exceed a specified
amount and contain variable renewal options and escalation clauses. Rental
income in connection with the leases of certain properties is also provided.
Such rental income was $811,900 in 2000, $549,100 in 1999 and $1,330,000 in
1998.
<TABLE>
<CAPTION>
CAPITAL OPERATING RENTAL
LEASES LEASES INCOME
---------- ----------- ----------
<S> <C> <C> <C>
2001........................................ $ 494,900 $ 4,133,500 $ 820,800
2002........................................ 483,200 3,671,900 605,400
2003........................................ 188,900 3,255,800 492,800
2004........................................ 140,100 2,000,400 349,000
2005........................................ 31,200 1,633,300 314,900
Thereafter.................................. 83,200 5,443,500 513,800
---------- ----------- ----------
Total future minimum lease
payments........................ 1,421,500 $20,138,400 $3,096,700
=========== ==========
Less amount representing interest........... 249,377
----------
Present value of future payments............ 1,172,123
Less current maturities..................... 385,918
----------
$ 786,205
==========
</TABLE>
29
<PAGE> 30
I. COMMITMENTS AND CONTINGENCIES (CONTINUED):
Rental expense under operating leases was as follows:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------------------
2000 1999 1998
---------- ---------- ----------
<S> <C> <C> <C>
Minimum rentals.............................. $4,481,100 $4,539,000 $5,929,900
Contingent rentals........................... 46,600 45,000 39,000
---------- ---------- ----------
$4,527,700 $4,584,000 $5,968,900
========== ========== ==========
</TABLE>
(2) Change of Control Agreements -- The Company has change of control agreements
with its executive officers pursuant to which each executive officer will
receive remuneration of 2.99 times his base compensation if his employment
is terminated due to a change of control as defined in the agreements.
Remuneration which might be payable under these agreements has not been
accrued in the consolidated financial statements as a change of control has
not occurred.
(3) Pursuant to ten-year agreements with four gasoline suppliers, the Company
receives from the suppliers partial funding of the cost of the aboveground
gasoline equipment and rebates for the purchase of gasoline. As of September
30, 2000, the total funding subject to these arrangements is $6,696,200. If
the Company terminates these agreements before the expiration of the ten
years, part of this funding must be repaid to the suppliers.
(4) The Company has commitments with various contractors totaling $5.5 million
for the construction of a travel center in Milroy, Pennsylvania. At
September 30, 2000, the Company has made payments to these contractors in
the amount of $2.4 million.
(5) 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.
J. INCOME TAXES:
The provision for income taxes includes the following:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-------------------------------------
2000 1999 1998
-------- ---------- -----------
<S> <C> <C> <C>
Current tax expense (credit):
Federal........................... $ 0 $ 0 $(1,362,300)
State............................. 1,900 (18,200) 18,400
-------- ---------- -----------
1,900 (18,200) (1,343,900)
-------- ---------- -----------
Deferred tax expense (credit):
Federal........................... 550,000 (1,020,300) 1,259,300
State............................. 20,400 90,300 (278,600)
-------- ---------- -----------
570,400 (930,000) 980,700
-------- ---------- -----------
572,300 (948,200) (363,200)
Less portion included in extraordinary
item................................. 0 0 125,800
-------- ---------- -----------
$572,300 $ (948,200) $ (237,400)
======== ========== ===========
</TABLE>
The tax provision for fiscal year 2000 includes the benefit of net operating
loss carryforwards of $1,994,800 for federal income tax purposes and $496,200
for state income tax purposes. During fiscal
30
<PAGE> 31
J. INCOME TAXES (CONTINUED):
year 1999, the Company received tax refunds of approximately $753,700 resulting
from the filing of its tax returns for fiscal years 1998 and 1997.
Deferred tax liabilities (assets) are comprised of the following at September
30:
<TABLE>
<CAPTION>
2000 1999 1998
----------- ----------- -----------
<S> <C> <C> <C>
Depreciation........................ $ 6,742,500 $ 6,087,200 $ 5,907,400
----------- ----------- -----------
Gross deferred tax liabilities...... 6,742,500 6,087,200 5,907,400
----------- ----------- -----------
Insurance reserves.................. (1,128,100) (1,212,000) (1,093,800)
Change in accounting method......... (221,900) (444,100) (667,200)
Capital leases...................... (9,100) (80,300) (96,800)
Deferred compensation............... (11,500) (22,800) (107,700)
Deferred income..................... (1,364,700) (876,600) (1,037,700)
Intangible assets................... 0 0 (82,400)
Net operating loss carryforward..... (2,515,900) (3,098,500) (707,100)
Other............................... (400,200) (278,900) (253,100)
----------- ----------- -----------
Gross deferred tax assets........... (5,651,400) (6,013,200) (4,045,800)
Less valuation allowance............ 24,900 452,600 302,500
----------- ----------- -----------
Net deferred tax assets............. (5,626,500) (5,560,600) (3,743,300)
----------- ----------- -----------
$ 1,116,000 $ 526,600 $ 2,164,100
=========== =========== ===========
</TABLE>
The financial statements include noncurrent deferred tax liabilities of
$2,956,300 and $2,561,500 in 2000 and 1999, respectively, and current deferred
tax assets of $1,840,300 and $2,034,900 which are included in prepaid and
current deferred taxes.
A reconciliation of the provision for income taxes to an amount determined by
application of the statutory federal income tax rate follows:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
----------------------------------
2000 1999 1998
-------- ----------- ---------
<S> <C> <C> <C>
Statutory rate............................. $493,800 $(1,082,500) $(250,000)
Increase (decrease) resulting from:
Tax credits........................... 1,600 0 0
Nondeductible items................... 61,400 68,500 67,500
State taxes (net)..................... 14,700 59,600 (171,700)
Other (net)........................... 800 6,200 (9,000)
-------- ----------- ---------
Tax provision (benefit).................... $572,300 $ (948,200) $(363,200)
======== =========== =========
</TABLE>
K. RELATED PARTY TRANSACTIONS:
During fiscal year 1997, the Company granted a loan of $800,000 to the Company's
Chairman of the Board and Chief Executive Officer. Beginning in January 1999,
the loan bears interest at the brokerage call rate plus 0.5% (8.75% at September
30, 2000) and requires payments of $60,000 plus interest on November 1, 1999,
2000, 2001, 2002 and 2003. A final payment of $300,000 is due on November 1,
2004. The loan is collateralized by 303,397 shares of the Company's Common Stock
and 73,000 shares of the common stock of Unico Corporation.
Certain directors and officers of the Company are also directors, officers and
shareholders of Unico Corporation ("Unico"), formerly the Company's parent, and
other affiliated companies. The following is a summary of significant
transactions with these entities:
31
<PAGE> 32
K. RELATED PARTY TRANSACTIONS (CONTINUED):
(1) The Company leases three stores and certain other locations from Unico
and leases its corporate headquarters and four additional locations
from affiliates of Unico. Aggregate rentals in connection with these
leases were $655,700 (2000), $646,300 (1999) and $629,800 (1998).
(2) The Company charges an affiliate of Unico for general and
administrative services provided. Such charges amounted to $11,500
(2000), $12,300 (1999) and $8,500 (1998).
The Company received commissions from TeleBeam Incorporated ("TeleBeam") for
coin-operated telephones installed at convenience store locations and for the
sale of prepaid telephone cards. Payments received from TeleBeam were $171,600
(2000), $213,900 (1999) and $296,700 (1998). The Company also made payments to
TeleBeam for discounted prepaid telephone cards and telephone service. Payments
made to TeleBeam were $1,187,800 (2000), $1,199,600 (1999) and $748,700 (1998).
Until its sale in January 2000, the majority of the stock of TeleBeam was
beneficially owned or controlled by persons related to the Company's Chairman
and Chief Executive Officer.
The Company made payments of approximately $80,100 and $81,000 to a director of
the Company during fiscal years 2000 and 1999, respectively, for consulting fees
and reimbursement of expenses.
L. RETIREMENT SAVINGS AND INCENTIVE PLAN:
The Company has a contributory retirement savings plan covering all employees
meeting minimum age and service requirements. The Company will match one-half of
employee contributions up to 3% of the employee's compensation. The Company's
contributions are invested in the Company's Common Stock. The Board of Directors
may elect to make additional contributions to be allocated among all eligible
employees in accordance with provisions of the plan. The retirement savings plan
expense, which is funded currently, was $98,100 (2000), $96,600 (1999) and
$110,300 (1998).
M. DEFERRED COMPENSATION PLAN AND PERFORMANCE UNIT PLAN:
The Company has a nonqualified deferred compensation plan which permits key
executives to elect annually (via individual contracts) to defer a portion of
their compensation until their retirement, death or disability. The Company
makes a 50% matching contribution not exceeding $5,000 annually per executive.
The deferred compensation expense was $27,900, $21,300 and $15,600 for the years
ended September 30, 2000, 1999 and 1998, respectively.
The Company has recorded the assets and liabilities for the deferred
compensation plan in the consolidated balance sheets because such assets and
liabilities belong to the Company rather than to any plan or trust. The asset
and matching liability of $28,100 and $237,600 at September 30, 2000 and 1999,
respectively, include employee deferrals, accrued earnings and matching
contributions of the Company. The asset amount is included in net intangible and
other assets and the liability amount is included in deferred income and other
liabilities.
The Company also has a Performance Unit Plan to provide long-term incentives to
senior executives. Under the Performance Unit Plan, the amount of compensation
is determined over the succeeding three-year period based upon performance of
the Company as well as individual goals for the senior executives. Compensation
expense recognized under this plan was $0, $0 and $29,000 for fiscal years 2000,
1999 and 1998, respectively.
N. EQUITY COMPENSATION PLANS:
The Company has an Equity Compensation Plan, pursuant to which no additional
stock options may be granted, and a 1996 Equity Compensation Plan, which became
effective November 1, 1996. The Company has reserved 75,440 shares of common
stock which can be issued in accordance with the
32
<PAGE> 33
N. EQUITY COMPENSATION PLANS (CONTINUED):
terms of the Equity Compensation Plan and 950,167 shares of common stock which
can be issued in accordance with the terms of the 1996 Equity Compensation Plan.
Both the Equity Compensation Plan and the 1996 Equity Compensation Plan are
collectively discussed as the "Plans" below.
A committee of the Board of Directors has authority to administer the Plans, and
the committee may grant qualified incentive stock options to employees of the
Company, including officers, whether or not they are directors. The Plans also
provide that all nonemployee directors will receive annual nonqualified stock
option grants for 2,000 shares of common stock plus 500 shares for each full
year the director has served as a member of the board, up to a maximum of 4,000
shares per grant, on the date of each annual meeting. In addition, newly
appointed or elected nonemployee directors receive an initial grant for 5,000
shares. Nonemployee directors will also receive grants of stock equal in value
to and in lieu of two-thirds of the retainer due to such director. The Company
granted options to purchase 33,000, 14,000 and 32,000 shares of common stock to
nonemployee directors under the Plans during fiscal years 2000, 1999 and 1998,
respectively. The Company also issued 27,775, 8,695 and 7,140 shares of common
stock to nonemployee directors during fiscal years 2000, 1999 and 1998,
respectively, as part of their annual retainer.
The exercise price of all options granted under the Plans may not be less than
the fair market value of the common stock on the date of grant, and the maximum
allowable term of each option is ten years. For qualified stock options granted
to any person who holds more than 10% of the voting power of the outstanding
stock, the exercise price may not be less than 110% of the fair market value,
and the maximum allowable term is five years. Options granted under the Plans
generally have various vesting schedules.
33
<PAGE> 34
N. EQUITY COMPENSATION PLANS (CONTINUED):
Information regarding outstanding options is presented below. All options
outstanding are exercisable according to their vesting schedule.
Outstanding Options for Shares of Common Stock:
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
WEIGHTED AVERAGE REMAINING
OUTSTANDING EXERCISE EXERCISE PRICE CONTRACTUAL
OPTIONS PRICE PER SHARE PER SHARE LIFE
----------- --------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Balance, October 1, 1997......... 405,035 $2.50 to $8.50 $5.95
Granted.......................... 318,556 $3.13 to $5.78 $3.82
Exercised........................ (23,000) $2.50 to $3.50 $2.76
Canceled......................... (165,025) $3.50 to $8.50 $6.29
--------
Balance, September 30, 1998...... 535,566 $2.50 to $8.50 $4.70
Granted.......................... 156,500 $1.38 to $2.89 $1.52
Canceled......................... (115,625) $3.13 to $7.00 $4.50
--------
Balance, September 30, 1999...... 576,441 $1.38 to $8.50 $5.03
Granted.......................... 304,000 $1.13 to $2.31 $1.96
Canceled......................... (164,931) $1.50 to $7.00 $3.86
--------
Balance, September 30, 2000...... 715,510
========
573,250 $1.13 to $3.75 $2.29 8.5 years
71,410 $3.76 to $6.13 $5.41 4.9 years
70,850 $6.14 to $8.50 $6.94 3.7 years
--------
715,510 $1.13 to $8.50 $3.06 7.7 years
========
Exercisable at September 30,
2000........................... 308,600 $1.38 to $8.50 $4.32
========
Balance of Shares Reserved for
Grant at September 30, 2000.... 310,097
========
</TABLE>
The weighted average fair value of the stock options granted during fiscal years
2000, 1999 and 1998 were $1.54, $1.03 and $1.88, respectively. The fair value of
each stock option granted is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted average
assumptions used for grants in the years ended September 30,
<TABLE>
<CAPTION>
2000 1999 1998
-------- -------- --------
<S> <C> <C> <C>
Risk-free interest rate.................. 5.8% 5.9% 4.8%
Expected volatility...................... 69.6% 52.2% 37.9%
Expected life in years................... 9.0 9.0 7.9
Contractual life in years................ 10.0 10.0 8.9
Fair value of options granted............ $468,581 $160,620 $597,578
</TABLE>
The Company accounts for the Plans in accordance with Accounting Principles
Board Opinion No. 25, under which no compensation cost has been recognized for
stock option awards. Had compensation cost for the Plans been determined in
accordance with Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation" (SFAS 123), the Company's pro forma net
34
<PAGE> 35
N. EQUITY COMPENSATION PLANS (CONTINUED):
earnings (loss) and earnings (loss) per share for the fiscal years ended
September 30, 2000, 1999 and 1998 would have been as follows:
<TABLE>
<CAPTION>
2000 1999 1998
-------- ----------- ---------
<S> <C> <C> <C>
Net earnings (loss):
As reported........................ $880,139 $(2,235,627) $(371,955)
Pro forma.......................... $867,201 $(2,243,113) $(466,503)
Basic earnings (loss) per share:
As reported........................ $ 0.13 $ (0.32) $ (0.05)
Pro forma.......................... $ 0.12 $ (0.33) $ (0.07)
Diluted earnings (loss) per share:
As reported........................ $ 0.13 $ (0.32) $ (0.05)
Pro forma.......................... $ 0.12 $ (0.33) $ (0.07)
</TABLE>
O. EMPLOYEE STOCK PURCHASE PLAN:
In February 1999, the Company's stockholders approved a stock purchase plan.
Under the stock purchase plan, eligible employees may purchase common stock in
quarterly offering periods through payroll deductions of up to 25% of
compensation. The price per share is 90% of the average market price throughout
the quarter but not less than 90% of the lower of the market price at the
beginning or end of the market period. The stock purchase plan provides for
purchases by employees of up to an aggregate of 500,000 shares. During fiscal
years 2000 and 1999, employees purchased 6,260 and 2,004 shares, respectively,
pursuant to the stock purchase plan.
P. NONQUALIFIED STOCK OPTIONS:
On February 26, 1993, the Company made a one-time, special grant of nonqualified
stock options to each of Henry D. Sahakian and Daniel D. Sahakian to purchase
150,000 shares of common stock of the Company at a price of $4.50 per share in
exchange for their relinquishment of effective voting control of the Company as
a result of the elimination of the super-majority voting provisions of the Class
B Common Stock. These nonqualified stock options are not related to the
Company's Equity Compensation Plan. Henry D. Sahakian exercised his option
during fiscal year 1996 by exchanging 84,375 shares of the Company's Common
Stock valued at $675,000. Daniel D. Sahakian exercised his option during fiscal
year 1998 for a cash payment to the Company of $675,000.
35
<PAGE> 36
SUPPLEMENTARY FINANCIAL INFORMATION
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED):
<TABLE>
<CAPTION>
1ST 2ND 3RD 4TH
QUARTER QUARTER QUARTER QUARTER
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
YEAR ENDED SEPTEMBER 30, 2000
Revenues............................ $70,241,235 $68,634,187 $99,186,094 $110,642,625
Gross Profits....................... 16,461,857 15,323,854 20,834,969 23,329,898
Net Earnings (Loss)................. $ 331,368 $ (744,263) $ 585,506 $ 707,528
=========== =========== =========== ============
Net Earnings (Loss) Per Share....... $ 0.05 $ (0.11) $ 0.08 $ 0.10
=========== =========== =========== ============
YEAR ENDED SEPTEMBER 30, 1999
Revenues............................ $61,149,025 $57,227,376 $64,600,629 $ 69,328,727
Gross Profits....................... 17,179,263 15,698,049 16,654,521 17,488,617
Net Earnings (Loss)................. $ (289,126) $(1,428,692) $ (533,180) $ 15,371
=========== =========== =========== ============
Net Earnings (Loss) Per Share....... $ (0.04) $ (0.21) $ (0.08) $ 0.00
=========== =========== =========== ============
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
36
<PAGE> 37
PART III
In accordance with Instruction G(3), the information called for by Items
10, 11, 12 and 13 is incorporated by reference from the Registrant's Definitive
Proxy Statement pursuant to Regulation 14A, to be filed with the Commission not
later than 120 days after September 30, 2000, the end of the fiscal year covered
by this report.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K.
(A) FINANCIAL STATEMENTS AND SCHEDULES
The Financial Statements listed below are filed as part of this Annual Report on
Form 10-K.
(1) Financial Statements
<TABLE>
<CAPTION>
PAGE(S)
-------
<S> <C>
Report of Deloitte & Touche LLP, Independent Auditors....... 18
Consolidated Balance Sheets -- September 30, 2000 and
1999...................................................... 19
Consolidated Statements of Operations for the years ended
September 30, 2000, 1999 and 1998......................... 20
Consolidated Statements of Stockholders' Equity for the
years ended September 30, 2000, 1999 and 1998............. 21
Consolidated Statements of Cash Flows for the years ended
September 30, 2000, 1999 and 1998......................... 22-23
Notes to Consolidated Financial Statements.................. 24-35
Supplementary Financial Information -- Selected Quarterly
Financial Data (Unaudited)................................ 36
</TABLE>
(2) Financial Statement Schedules
The following financial statement schedule should be read in conjunction with
the financial statements and notes thereto included in this report. Schedules
not included below have been omitted because they are not applicable or required
or because the required information is not material or is included in the
financial statements or notes thereto.
The following schedule for the years ended September 30, 2000, 1999 and 1998 is
included in this report:
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Schedule II -- Valuation and Qualifying Accounts............ 41
</TABLE>
(B) REPORTS ON FORM 8-K
Uni-Marts, Inc. filed no reports on Form 8-K with the Securities and Exchange
Commission during the last quarter of the fiscal year ended September 30, 2000.
37
<PAGE> 38
(C) EXHIBITS
<TABLE>
<S> <C>
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. 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).
10.6 Composite copy of Change of 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).
10.7 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).
10.8 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).
10.9 Amended and Restated Note between Henry D. Sahakian and
Uni-Marts, Inc. dated January 25, 1999 (Filed as Exhibit
10.10 to the Company's Quarterly Report on Form 10-Q for the
period ended April 1, 1999 and incorporated herein by
reference thereto).
10.10 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 July 2, 1998 and incorporated herein by
reference thereto).
10.11 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).
10.12 Loan Agreement between FFCA Acquisition Corporation and Uni
Realty of Wilkes Barre, L.P. dated April 21, 2000 (Filed as
Exhibit 20.1 to the Company's Form 8-K filed on May 8, 2000
and incorporated herein by reference thereto).
10.13 Loan Agreement between FFCA Funding Corporation and Uni
Realty of Luzerne, L.P. dated April 21, 2000 (Filed as
Exhibit 20.2 to the Company's Form 8-K filed on May 8, 2000
and incorporated herein by reference thereto).
</TABLE>
38
<PAGE> 39
<TABLE>
<S> <C>
10.14 Equipment Loan Agreement between FFCA Acquisition
Corporation and Uni-Marts, Inc. dated April 21, 2000 (Filed
as Exhibit 20.3 to the Company's Form 8-K filed on May 8,
2000 and incorporated herein by reference thereto).
10.15 Equipment Loan Agreement between FFCA Funding Corporation
and Uni-Marts, Inc. dated April 21, 2000 (Filed as Exhibit
20.4 to the Company's Form 8-K filed on May 8, 2000 and
incorporated herein by reference thereto).
10.16 Revolving Credit Loan Agreement between Provident Bank and
Uni-Marts, Inc. dated April 20, 2000 (Filed as Exhibit 10.15
to the Company's Quarterly Report on Form 10-Q for the
period ended June 29, 2000 and incorporated herein by
reference thereto).
11 Statement regarding computation of per share earnings.
21 Subsidiaries of the registrant.
23 Consent of Deloitte & Touche LLP.
27 Financial data schedule.
99 Report on Form 11-K.
</TABLE>
(D) SCHEDULES
The schedules listed in Item 14(A) are filed as part of this Annual Report on
Form 10-K.
39
<PAGE> 40
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
UNI-MARTS, INC.
(Registrant)
By: /s/ HENRY D. SAHAKIAN
------------------------------------
Henry D. Sahakian
Chairman of the Board
(Principal Executive Officer)
By: /s/ N. GREGORY PETRICK
------------------------------------
N. Gregory Petrick
Executive Vice President and
Chief Financial Officer
(Principal Accounting Officer)
(Principal Financial Officer)
Dated: December 27, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ HENRY D. SAHAKIAN Chairman of the Board December 27, 2000
-----------------------------------
Henry D. Sahakian
/s/ M. MICHAEL ARJMAND Director December 27, 2000
-----------------------------------
M. Michael Arjmand
/s/ HERBERT C. GRAVES Director December 27, 2000
-----------------------------------
Herbert C. Graves
/s/ STEPHEN B. KRUMHOLZ Director December 27, 2000
-----------------------------------
Stephen B. Krumholz
/s/ JACK G. NAJARIAN Director December 27, 2000
-----------------------------------
Jack G. Najarian
/s/ FRANK R. ORLOSKI, SR. Director December 27, 2000
-----------------------------------
Frank R. Orloski, Sr.
/s/ ANTHONY S. REGENSBURG Director December 27, 2000
-----------------------------------
Anthony S. Regensburg
/s/ DANIEL D. SAHAKIAN Director December 27, 2000
-----------------------------------
Daniel D. Sahakian
/s/ GEROLD C. SHEA Director December 27, 2000
-----------------------------------
Gerold C. Shea
</TABLE>
40
<PAGE> 41
UNI-MARTS, INC. AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
ADDITIONS
-----------------------
CHARGED CHARGED TO
BALANCE AT TO OTHER BALANCE AT
BEGINNING COSTS AND ACCOUNTS- DEDUCTIONS- END OF
DESCRIPTION OF PERIOD EXPENSES DESCRIBE DESCRIBE(1) PERIOD
----------- ---------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
YEAR ENDED SEPTEMBER 30, 2000:
Allowance for doubtful accounts..... $384,900 $ 51,000 $0 $(209,700) $226,200
======== ======== == ========= ========
YEAR ENDED SEPTEMBER 30, 1999:
Allowance for doubtful accounts..... $384,900 $ 58,600 $0 $(155,500) $288,000
======== ======== == ========= ========
YEAR ENDED SEPTEMBER 30, 1998:
Allowance for doubtful accounts..... $132,600 $304,500 $0 $ (52,200) $384,900
======== ======== == ========= ========
</TABLE>
---------------
(1) Specific account or note receivable written off to allowance.
41
<PAGE> 42
UNI-MARTS, INC. AND SUBSIDIARIES
EXHIBIT INDEX
<TABLE>
<CAPTION>
NUMBER DESCRIPTION PAGE(S)
------ ------------------------------------------------------------ -------
<S> <C> <C>
11 Statement regarding computation of per share earnings for
the years ended September 30, 2000, 1999 and 1998........... 43-44
21 Subsidiaries of the registrant.............................. 45
23 Consent of Deloitte & Touche LLP............................ 46
27 Financial Data Schedule..................................... 47
99 Report on Form 11-K......................................... 48-63
</TABLE>
42
