UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
AMENDMENT NO. 1 TO
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 1, 1998
LUCOR, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 0-25164 65-0195259
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
790 Pershing Road, Raleigh, North Carolina 27608
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: 919-828-9511
<PAGE>
This is an amendment to a Form 8-K of Lucor, Inc. dated April 1, 1998
filed with the Securities and Exchange Commission on April 15, 1998.
Item 2. Acquisition or Disposition of Assets
On April 1, 1998, pursuant to Purchase Agreements dated January 30, 1998,
between Lucor, Inc. (the "Company") and Tidewater Lubes Ventures, Inc. ("TLV")
and the Company and Lube Ventures East, Inc. ("LVE"), the Company acquired
substantially all of the assets of TLV and LVE.
The Company operates 102 "Jiffy Lube" service centers in six different
states comprising seven different DMA's (geographic Designated Marketing
Areas) as of March 31, 1998. TLV operated 21 "Jiffy Lube" service centers in
the Tidewater and Richmond, Virginia DMA's, which borders the Company's
Raleigh/Durham, North Carolina DMA. LVE operated 2 "Jiffy Lube" service
centers in Jacksonville, North Carolina and Greenville, North Carolina. The
Company purchased the 23 service centers of TLV and LVE for $13.5 million.
The purchase price for the assets of TLV and LVE was funded primarily
through funds borrowed through a loan and security agreement with Enterprise
Mortgage Acceptance Company, LLC. The loans totaled $13.3 million and carry
an interest rate of 8.54% ($10.9 million) and 8.67% ($2.4 million) to be
repaid in 180 months.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Business Acquired. Attached to this report
are the audited financial statements of Tidewater Lube Ventures, Inc. for the
years ended December 31, 1997 and 1996.
(b) Pro Forma Financial Information. Attached to this report are the
pro forma combined balance sheet as of March 31, 1998 and the pro forma
combined statements of income (loss) for the three months ended March 31, 1998
and for the year ended December 31, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: June 12, 1998 Lucor, Inc.
By: /s/ Kendall A. Carr
___________________________________
Kendall A. Carr
Chief Financial Officer
<PAGE>
TIDEWATER LUBE VENTURES, INC.
Financial Statements
December 31, 1997 and 1996
(With Independent Auditors' Report Thereon)
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Board of Directors
Tidewater Lube Ventures, Inc.:
We have audited the accompanying balance sheets of Tidewater Lube
Ventures, Inc. as of December 31, 1997 and 1996, and the related
statements of income, stockholders' equity, and cash flows for the
years then ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Tidewater
Lube Ventures, Inc. as of December 31, 1997 and 1996, and the results
of its operations and its cash flows for each of the years then ended
in conformity with generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Raleigh, North Carolina
May 15, 1998
<PAGE>
<TABLE>
TIDEWATER LUBE VENTURES, INC.
Balance Sheets
December 31, 1997 and 1996
Assets 1997 1996
------ ---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,328,080 $ 1,025,043
Accounts receivable, trade 90,155 76,796
Accounts receivable, other (note 4) 56,210 44,247
Inventories 399,349 413,460
Prepaid expenses (note 4) 35,751 22,461
Notes receivable - 5,000
------------ ------------
Total current assets 1,909,545 1,587,007
------------ ------------
Property and equipment, net of accumulated
depreciation (notes 3 and 5) 1,913,880 2,053,060
------------ ------------
Other assets:
Goodwill, net of accumulated amortization of $1,145,805 and
$970,601 at December 31, 1997 and 1996, respectively 1,482,252 1,657,456
License fees, lease costs, loan acquisition costs, non-compete
agreements and organization costs, net of accumulated
amortization of $339,675 and $248,424 at December 31,
1997 and 1996, respectively 438,695 597,363
Other 37,100 39,540
------------ ------------
1,958,047 2,294,359
------------ ------------
$ 5,781,472 $ 5,934,426
============ ============
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Current portion of long-term debt (note 5) $ - $ 138,427
Current portion of capital lease (note 7) 60,946 53,820
Accounts payable 363,284 345,967
Accrued expenses:
Payroll 206,899 174,564
Other 149,244 240,284
------------ ------------
Total current liabilities 780,373 953,062
------------ ------------
Long-term debt, net of current portion (note 5) - 237,106
Capital lease, net of current portion (note 7) 950,321 1,011,267
------------ ------------
Total long-term liabilities 950,321 1,248,373
------------ ------------
Stockholders' equity (note 8):
Common stock, $1.00 par value, 100,000 shares
authorized, 13,636 shares issued and outstanding
at December 31, 1997 and 1996 13,636 13,636
Additional paid-in capital 1,346,364 1,346,364
Retained earnings 2,690,778 2,372,991
------------ ------------
Total stockholders' equity 4,050,778 3,732,991
------------ ------------
Commitments and contingencies (notes 6 and 7)
$ 5,781,472 $ 5,934,426
============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
TIDEWATER LUBE VENTURES, INC.
Statements of Income
Years ended December 31, 1997 and 1996
1997 1996
---- ----
<S> <C> <C>
Net sales $ 11,997,905 $ 12,147,788
Cost of sales 2,554,695 2,793,596
------------- -------------
Gross profit 9,443,210 9,354,192
------------- -------------
Costs and expenses:
Operating (note 4) 6,511,441 6,708,378
Depreciation and amortization 657,177 565,466
Selling, general and administrative 1,057,182 1,004,812
------------- -------------
8,225,800 8,278,656
------------- -------------
Income from operations 1,217,410 1,075,536
------------- -------------
Interest expense (136,463) (142,511)
Other income (note 10) 188,857 39,867
Gain (loss) on disposal of assets 22,983 (35,478)
------------- -------------
75,377 (138,122)
------------- -------------
Net income $ 1,292,787 $ 937,414
============= =============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
TIDEWATER LUBE VENTURES, INC.
Statements of Stockholders' Equity
Years ended December 31, 1997 and 1996
Additional Total
Common paid-in Retained stockholders'
stock capital earnings equity
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Balance at December 31, 1995 (unaudited) $ 13,636 1,346,364 1,920,577 3,280,577
Common stock dividend - - (485,000) (485,000)
Net income - - 937,414 937,414
--------- --------- --------- ---------
Balance at December 31, 1996 13,636 1,346,364 2,372,991 3,732,991
Common stock dividend - - (975,000) (975,000)
Net income - - 1,292,787 1,292,787
--------- --------- --------- ---------
Balance at December 31, 1997 $ 13,636 1,346,364 2,690,778 4,050,778
========= ========= ========= =========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
TIDEWATER LUBE VENTURES, INC.
Statements of Cash Flows
Years ended December 31, 1997 and 1996
1997 1996
---- ----
<S>
Cash flows from operations: <C> <C>
Net income $ 1,292,787 $ 937,414
Adjustments to reconcile net income to
net cash provided by operating activities:
Loss on sale of property and equipment 793 35,478
Gain on sale of service center (23,776) -
Depreciation of property and equipment 341,902 323,873
Amortization of intangible assets 315,275 241,593
Changes in assets and liabilities, net of effects from
sale of service center:
Increase in accounts receivable, trade (13,359) (18,228)
Decrease (increase) in accounts receivable, other (11,963) 11,897
Decrease in inventories 14,111 70,921
Decrease (increase) prepaid expenses (13,290) 34,392
Decrease in notes receivable 5,000 11,500
Increase (decrease) in accounts payable and accrued expenses (41,388) 9,630
------------ -------------
Net cash provided by operating activities 1,866,092 1,658,470
------------ -------------
Cash flows from investing activities:
Purchase of property and equipment (224,217) (269,922)
Acquisition of additional service centers and related equipment - (559,708)
Acquisition of franchise fees and other intangible assets - (3,500)
Decrease (increase) in other 2,440 4,850
Net proceeds from sale of service center 63,075 -
------------ -------------
Net cash used in investing activities (158,702) (828,280)
------------ -------------
Cash flows from financing activities:
Loan origination costs - (5,666)
Dividend paid (975,000) (485,000)
Repayments of capital lease (53,820) (44,390)
Proceeds from borrowings - 350,000
Repayments of debt (375,533) (584,266)
------------ -------------
Net cash used in financing activities (1,404,353) (769,322)
------------ -------------
Increase in cash and cash equivalents 303,037 60,868
Cash and cash equivalents at beginning of period 1,025,043 964,175
------------ -------------
Cash and cash equivalents at end of period $ 1,328,080 $ 1,025,043
============ =============
Supplementary disclosures:
Interest paid $ 136,463 $ 142,511
============ =============
Acquisition of units:
Inventory acquired $ - $ 7,508
Fair value of property and equipment acquired - 80,000
Non-compete agreement - 252,200
Goodwill - 220,000
------------ -------------
Cash paid $ - $ 559,708
============ =============
Supplementary schedule of non-cash financing
and investing activities:
Capital lease $ - $ 310,367
============ =============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
TIDEWATER LUBE VENTURES, INC.
Notes to Financial Statements
December 31, 1997 and 1996
(1) Nature of Business
Tidewater Lube Ventures, Inc. (the "Company") is a franchisee of Jiffy
Lube International, Inc. ("JLI"). These franchises consist of automotive
fast oil change, fluid maintenance, lubrication, and general preventative
maintenance service centers under the name "Jiffy Lube". As of December
31, 1997, the Company operated twenty-one service centers in Virginia, in
the Richmond area and Tidewater Basin. The Company has entered into
franchise agreements with JLI which generally require a monthly royalty
fee of 5% of sales. The royalty fee is reduced to 4% of sales when the
fee for a given month is paid in full by the fifteenth of the following
month, a practice followed by the Company. The Company leases these
service centers. The Company operated 21 and 22 service centers at
December 31, 1997 and 1996, respectively.
(2) Summary of Significant Accounting Policies
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents.
Inventories
Inventories of oil, lubricants and other automobile supplies are stated at
the lower of cost (first-in, first-out) or market.
Property and Equipment
Property and equipment are recorded at cost. Depreciation is computed
using the straight-line method over the estimated useful lives of
individual assets.
Goodwill
The Company evaluates, when circumstances warrant, the recoverability of
its goodwill on the basis of undiscounted cash flow projections and
through the use of various other measures, which include, among other
things, a review of its image, market share and business plans.
Amortization
Amortization of other assets is being computed using the straight-line
method over the following lives:
Years
-----
Goodwill 15
License fees Term of agreement
Organization costs 5
Loan acquisition costs Term of loan
Non-compete agreements Term of agreement
Lease costs Term of agreement
(2) Summary of Significant Accounting Policies, Continued
Advertising
The Company expenses the cost of advertising as incurred.
Loan Acquisition Costs
The costs related to the issuance of debt are capitalized and amortized
over the lives of the related debt.
Income Taxes
The Company operates as an S corporation under the provisions of the
Internal Revenue Code for federal and state income tax purposes. As a
result, operations of the Company are reported by the stockholders on
their individual income tax returns. The difference between the Company's
tax basis in assets and the basis under generally accepted accounting
principles is immaterial.
Use of 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 could differ
from those estimates.
(3) Property and Equipment
Major classifications of property and equipment together with their
estimated useful lives are summarized below:
<TABLE>
Lives
1997 1996 (years)
---- ---- -------
<S> <C> <C> <C>
Building $ 1,216,501 1,216,501 Lease term
Furniture and fixtures 248,226 241,783 5 and 7
Leasehold improvements 1,417,933 1,348,168 7,10,15 and 31.5
Lubrication equipment 657,523 585,110 7
Signs 106,803 113,415 7
------------ ----------
3,646,986 3,504,977
Accumulated depreciation (1,733,106) (1,451,917)
------------ ----------
$ 1,913,880 2,053,060
============ ==========
</TABLE>
(4) Related Party Transactions
The Company has capital leases with related parties, owned by certain
stockholders of the Company for buildings and improvements with a net book
value of $697,302 and $778,399 at December 31, 1997 and 1996,
respectively. The capital lease obligation and future minimum lease
payments under operating leases due to related parties is disclosed in
note 7.
The Company paid rent in the following amounts to related parties during
the years ended December 31:
1997 1996
---- ----
Lube Ventures Real Estate Company, L.P. $ 342,331 307,990
Second Lube Ventures Real Estate Company, L.P. 70,500 70,500
Third Lube Ventures Real Estate Company, L.P 78,000 78,000
Included in rent expense in 1997 are overpayments of rent to Lube Ventures
Real Estate Company, L.P. in the amount of $6,003. This prepaid amount
was forgiven by the Company.
Included in operating expenses in both 1997 and 1996 are payments to
related parties in the amount of $35,400 for repayments of debt held by
the related parties.
The Company paid $157,800 and $65,500 to Lube Ventures East, Inc., and
$133,806 and $190,238 to Compuventures of Pitt County, Inc., which are
owned by a stockholder of the Company, for personnel and fringe
reimbursement, shared office expenses, and computer repair and maintenance
during the years ended December 31, 1997 and 1996, respectively.
The Company received loan repayments of $1,000 and $2,000 from Lube
Ventures, Inc. during the years ended December 31, 1997 and 1996,
respectively. The $1,000 repayment in 1997 was included in accounts
receivable - other at December 31, 1996.
Also included in accounts receivable - other at December 31, 1997 and 1996
were amounts due from Third Lube Ventures Real Estate Company, L.P. of
$500 and $6,000, respectively.
(5) Long-Term Debt
Long-term debt consists of:
<TABLE>
December 31,
1997 1996
---- ----
<S> <C> <C>
Note payable, Nationsbank, in monthly installments
of $2,604, including interest of prime (8.5% at
December 31, 1997) plus 1/2%, maturing on
December 31, 2003. The loan was secured by
property and equipment and was repaid in 1997 $ - 55,533
Note payable, Nationsbank, in monthly installments
of $10,000, plus interest equal to LIBOR (5.7%
at December 31, 1997) plus 275 basis points,
maturing on September 1, 1999. The loan was secured
by property and equipment and was repaid in 1997. - 320,000
------------ --------
- 375,533
Less current portion - (138,427)
------------ --------
$ - 237,106
============ ========
</TABLE>
(6) License Agreements
The Company operates Jiffy Lube service centers under individual franchise
agreements, some of which are part of a broader exclusive development
agreement with JLI, the franchisor. The exclusive development agreement
requires the Company to identify sites for and develop a specific number
of service centers in specific territories and the separate franchise
agreements each provide the Company the right to operate a specific
service center for a period of 20 years, with two, 10-year renewal
options.
The development agreement grants the Company exclusive rights to develop
and operate a specific number of service centers within a defined
geographic area, provided that a certain number of service centers are
opened over scheduled intervals.
Virginia
The Company has satisfied its obligations to develop service centers under
its Area Development Agreement for the Tidewater Basin market area, and
currently has a right of first refusal to develop any additional service
centers which JLI may propose to develop or offer to others in this
market. This right extends to the year 2002. The Company does not have
an exclusive development agreement in the Richmond area.
(7) Commitments and Contingencies
The Company has entered into operating and capital leases for the land,
buildings and improvements used in the service centers. Substantially all
of the leases are net leases. Several of the leases stipulate rent
increases based on various formulas for cost of living, percentage of
sales, and cost of money increases. Lease terms range from 3 to 18 years
with options to renew at varying terms.
Future minimum lease payments under noncancellable operating leases and
the present value of future minimum capital lease payments at December 31,
1997 are:
<TABLE>
Operating Operating Capital Capital
leases leases leases leases
with with with with
non-related related non-related related
parties parties parties parties
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
1998 $ 587,440 $ 303,611 $ 43,200 $ 140,742
1999 588,692 293,388 43,200 144,259
2000 473,469 306,597 43,200 161,848
2001 481,789 272,691 44,280 161,848
2002 488,908 266,951 47,520 161,848
Thereafter 2,178,539 1,376,010 439,560 296,723
------------ ------------ ----------- -----------
Total minimum lease payments $ 4,798,837 $ 2,819,248 660,960 1,067,268
Less amounts representing interest (at 12.50%) 356,519 360,442
----------- -----------
Present value of future minimum lease payments 304,441 706,826
Less current portion of obligations under
capital leases 5,450 55,496
----------- -----------
Capital lease obligations, less current portion $ 298,991 $ 651,330
=========== ===========
</TABLE>
Rent expense, including contingent rentals, for the years ended December
31, 1997 and 1996 was $1,150,697 and $1,299,113, respectively.
Under a sales agreement with Pennzoil Lube Center, the Company agrees that
at least 85% of its petroleum product purchases will be of "Pennzoil"
brand products.
(8) Common Stock
Common stock has one vote per share, but may be voted only in connection
with: (i) the election of directors; and (ii) the sale, lease, exchange,
or other disposition of all, or substantially all, of the Company's
assets.
(9) Concentration of Credit Risk
The Company maintains cash balances at several banks. Accounts at each
institution are insured by the Federal Deposit Insurance Corporation up to
$100,000. At December 31, 1997, cash balances held at financial
institutions in excess of the insurance limits totalled $1,593,517.
(10) Sale of Service Center
During February 1997, the Company sold its Roanoke, Virginia service
center to an independent third party. The Company recognized a gain on
the sale of the service center of approximately $24,000. In addition to
the sale of the service center, the Company recognized approximately
$135,000 in other income for consulting services and compensation for a
covenant not to compete in the Roanoke, Virginia area.
(11) Subsequent Event
In April 1998, the Company sold all of its assets to Lucor, Inc., the
largest franchisee of JLI in the United States, for approximately
$11,500,000.
<PAGE>
LUCOR, INC., TIDEWATER LUBE VENTURES, INC., AND LUBE VENTURES EAST, INC.
PRO FORMA COMBINED CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma consolidated financial information
combines the historical financial information of Lucor, Inc. and
subsidiaries (the "Company"), Tidewater Lube Ventures, Inc. ("Tidewater"),
and Lube Ventures East, Inc. ("Lube Ventures").
On January 30, 1998, the Company entered into an agreement with Tidewater
and Lube Ventures to acquire 23 Jiffy Lube service centers in the Virginia
markets of Richmond and Tidewater Basin, and the North Carolina markets of
Greenville and Jacksonville, referred to herein as the "Tidewater/Lube
Ventures Acquisition." The Tidewater/Lube Ventures Acquisition was
completed on April 1, 1998, and was effective immediately after the close
of business on March 31, 1998. The purchase price was approximately
$13,500,000. The Tidewater/Lube Ventures Acquisition is being accounted
for by the Company as a purchase.
The unaudited Pro Forma Combined Consolidated Condensed Balance Sheet
combines the March 31, 1998 historical consolidated balance sheet of the
Company and the historical balance sheets of Tidewater and Lube. The
balance sheets are combined on a pro forma basis as if the Tidewater/Lube
Venture Acquisition had been effective as of March 31, 1998, after giving
effect to various accounting adjustments for purchase accounting rules as
well as the financing of the transaction.
The unaudited Pro Forma Combined Consolidated Condensed Statements of Income
(Loss) combines the March 31, 1998 historical results of operations of the
Company, Tidewater, and Lube Ventures for the three months ended March 31, 1998
and for the fiscal year ended December 31, 1997, as if the final closing of the
acquisition had been effective on January 1, 1997, after giving the effect to
various accounting adjustments.
The unaudited pro forma combined financial information has been prepared using
the assumptions set forth in the Notes to the Pro Forma Financial Information
and should be read in conjunction with the Company's Consolidated Financial
Statements and notes thereto, which have been previously filed with the
Securities and Exchange Commission in the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1997 and the Quarterly Report on Form 10-
Q for the period ended March 31, 1998 and with the financial statements of
Tidewater and notes thereto filed herewith.
The unaudited pro forma combined financial information is intended for
informational purposes and is not necessarily indicative of the future financial
position or future results of operations of the Company after the aforementioned
transactions in fact had occurred on such date or at the beginning of the period
indicated or to project the Company's financial position or results of
operations at any future date or for any future period.
<PAGE>
<TABLE>
LUCOR, INC., TIDEWATER LUBE VENTURES, INC., AND LUBE VENTURES EAST, INC.
UNAUDITED PRO FORMA COMBINED CONSOLIDATED CONDENSED BALANCE SHEET
AS OF MARCH 31, 1998
Historical Pro Forma
----------------------------------------- ------------------------------
Tidewater Lube
Lube Ventures
Lucor Ventures East Adjustments Combined
Assets ----- --------- -------- ----------- --------
<S>
Current assets: <C> <C> <C> <C> <C>
Cash and cash equivalents $ 4,049,995 $ 1,397,227 $ 150,249 $ (224,153) (a) $ 5,373,318
Accounts receivable 992,731 89,780 20,398 1,102,909
Income tax receivable 794,006 - - 794,006
Inventories 1,974,417 372,495 28,225 2,375,137
Prepaid expenses 309,909 37,698 1,605 349,212
------------ ------------ ---------- ------------ ------------
Total current assets 8,121,058 1,897,200 200,477 (224,153) 9,994,582
Property and equipment, net
of accumulated depreciation 21,703,278 1,707,404 530,468 1,164,571 (b) 25,105,721
Intangibles, net of
accumulated amortization 4,780,901 2,051,057 8,750 6,934,961 (b) 13,775,669
------------ ------------ ---------- ------------ ------------
Total assets $ 34,605,237 $ 5,655,661 $ 739,695 $ 7,875,379 $ 48,875,972
============ ============ ========== ============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term
debt $ 453,897 $ 26,675 $ (26,675) (f) $ 453,897
Current portion of capital lease 26,235 $ 60,949 87,184
Accounts payable 3,123,842 418,318 35,808 (454,126) (f) 3,123,842
Accrued expenses 1,487,451 259,025 56,839 (315,864) (f) 1,487,451
------------ ------------ ---------- ------------ ------------
Total current liabilities 5,091,425 738,292 119,322 (796,665) 5,152,374
------------ ------------ ---------- ------------ ------------
Long-term debt, net of current
portion 20,274,360 13,274,000 (a) 33,548,360
Capital lease, net of current
portion 16,781 935,786 952,567
Deferred taxes 189,000 189,000
------------ ------------ ---------- ------------ ------------
Total long-term liabilities 20,480,141 935,786 13,274,000 34,689,927
------------ ------------ ---------- ------------ ------------
Redeemable preferred stock 2,000,000 2,000,000
------------ ------------ ---------- ------------ ------------
Stockholders' equity 7,033,671 3,981,583 620,373 (4,601,956) (f) 7,033,671
------------ ------------ ---------- ------------ ------------
$ 34,605,237 $ 5,655,661 $ 739,695 $ 7,875,379 $ 48,875,972
============ ============= ========== ============ ============
</TABLE>
<PAGE>
<TABLE>
LUCOR, INC., TIDEWATER LUBE VENTURES, INC., AND LUBE VENTURES EAST, INC.
UNAUDITED PRO FORMA COMBINED CONSOLIDATED CONDENSED STATEMENTS OF INCOME (LOSS)
THREE MONTH ENDING MARCH 31, 1998
Historical Pro Forma
----------------------------------------------- -----------------------------
Tidewater Lube
Lube Ventures
Lucor Ventures East Adjustments Combined
----- --------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
Net sales $ 10,728,483 $ 2,817,420 $ 359,890 $ 13,905,793
Cost of sales 2,521,806 632,889 78,122 3,232,817
------------- ------------- -------------- ------------ -------------
Gross profit 8,206,677 2,184,531 281,768 10,672,976
------------- ------------- -------------- ------------ -------------
Costs and expenses:
Direct 4,255,216 4,255,216
Operating 2,352,948 1,571,298 168,485 4,092,731
Depreciation and amortization 398,563 223,588 11,800 $ 72,458 (c) 706,409
Selling, general and administrative 1,602,954 208,158 27,101 1,838,213
------------- ------------- -------------- ------------ -------------
8,609,681 2,003,044 207,386 72,458 10,892,569
------------- ------------- -------------- ------------ -------------
Income (loss) from operations (403,004) 181,487 74,382 (72,458) (219,593)
------------- ------------- -------------- ------------ -------------
Other income 30,845 18,264 98 49,207
Interest expense (449,158) (31,452) (857) (321,642)(d) (803,109)
------------- ------------- -------------- ------------ -------------
Income (loss) before provision
for income taxes (821,317) 168,299 73,623 (394,100) (973,495)
Income tax benefit 282,578 52,358 (e) 334,936
------------- ------------- -------------- ------------ -------------
Net income (loss) (538,739) $ 168,299 $ 73,623 $ (341,742) (638,559)
------------- ============= ============== ============ -------------
Preferred dividend (35,000) (35,000)
Loss available to common shareholders $ (573,739) $ (673,559)
============= =============
Weighted average number of shares
outstanding - basic and diluted 2,847,888 2,847,888
============= =============
Basic and diluted loss per common
share outstanding $ (0.20) $ (0.24)
============= =============
</TABLE>
<PAGE>
<TABLE>
LUCOR, INC., TIDEWATER LUBE VENTURES, INC., AND LUBE VENTURES EAST, INC.
UNAUDITED PRO FORMA COMBINED CONSOLIDATED CONDENSED STATEMENTS OF INCOME (LOSS)
YEAR ENDING DECEMBER 31, 1997
Historical Pro Forma
---------------------------------------------- -----------------------------
Tidewater Lube
Lube Ventures
Lucor Ventures East Adjustments Combined
----- ---------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
Net sales $ 42,678,313 $ 11,997,905 $ 1,430,308 $ 56,106,526
Cost of sales 9,979,363 2,554,695 308,772 12,842,830
------------- ------------- ------------- ------------ -------------
Gross profit 32,698,950 9,443,210 1,121,536 43,263,696
------------- ------------- ------------- ------------ -------------
Costs and expenses:
Direct 16,494,374 16,494,374
Operating 8,923,880 6,511,441 661,450 16,096,771
Depreciation and amortization 2,056,059 657,177 21,660 $ 289,831 (c) 3,024,727
Selling, general and administrative 5,928,152 1,057,182 180,050 7,165,384
------------- ------------- ------------- ------------ -------------
33,402,465 8,225,800 863,160 289,831 42,781,256
------------- ------------- ------------- ------------ -------------
Income (loss) from operations (703,515) 1,217,410 258,376 (289,831) 482,440
------------- ------------- ------------- ------------ -------------
Other income 62,156 211,840 12,013 286,009
Interest expense (1,480,679) (136,463) (11,489) (1,271,408)(d) (2,900,039)
------------- ------------- ------------- ------------ -------------
Income (loss) before provision
for income taxes and
extraordinary item (2,122,038) 1,292,787 258,900 (1,561,239) (2,131,590)
Income tax benefit 540,595 2,433 (e) 543,028
------------- ------------- -------------- ------------ -------------
Income (loss) before
extraordinary item (1,581,443) $ 1,292,787 $ 258,900 $ (1,558,806) (1,588,562)
------------- ============= ============= ============ -------------
Preferred dividend (140,000) (140,000)
Loss available to common shareholders
before extraordinary item $ (1,721,443) $ (1,728,562)
============= =============
Weighted average number of shares
outstanding - basic and diluted 2,847,888 2,847,888
============= =============
Basic and diluted loss per common share:
Loss before extraordinary item
available to common shareholders $ (0.61) $ (0.61)
============= =============
</TABLE>
<PAGE>
LUCOR, INC., TIDEWATER LUBE VENTURES, INC., AND LUBE VENTURES EAST, INC.
NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION
(a) Reflects the borrowings obtained and cash paid in connection with the
Tidewater/Lube Ventures Acquisition.
(b) The purchase price and estimated fair market value are based, in part, on
the value of net assets, as defined in the asset purchase agreement.
Purchase Cost:
Cash purchase price $ 13,498,153
Capital lease obligation 996,735
-------------
Total purchase cost 14,494,888
Fair market value of assets purchased 7,559,927
-------------
Excess of purchase cost over fair market
value of assets acquired $ 6,934,961
=============
(c) Reflects the adjusted amortization expense for intangible assets and
depreciation expense for property and equipment. These assets have been
recorded at their estimated fair market value and amortized using the
Company's amortization methods over their estimated useful lives.
(d) Reflects an increase in interest expense related to the debt incurred to
finance the Tidewater/Lube Venture Acquisition.
(e) Reflects the additional tax benefit calculated using the Company's combined
federal and state income tax rate.
(f) Reflects to adjustment for liabilities and equity not assumed by the
Company.
