<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(Amendment No. 1)
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 28, 1999
THE PANTRY, INC.
(Exact name of registrant as specified in its charter)
Delaware 33-72574 56-1574463
(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation) Identification Number)
1801 Douglas Drive, P.O. Box 1410, Sanford, North Carolina 27330
(Address of principal executive offices)
(919) 774-6700
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
================================================================================
<PAGE>
ITEM 7 is hereby replaced as follows:
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
Combined financial statements of Miller Enterprises, Inc. ("Miller")
and Peninsular Petroleum Company as of April 3, 1997 and April 1, 1998, and
December 30, 1998 (unaudited), and for each of the three years in the period
ended April 1, 1998, and for the nine months ended December 25, 1997 (unaudited)
and December 30, 1998 (unaudited), and the notes thereto, and the statement of
net assets acquired from Miller Brothers and Circle Investments, Ltd. as of
January 28, 1999 and the notes thereto, were each previously filed, within the
meaning of Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as
amended, in the Company's Registration Statement on Form S-1, filed with the
Securities and Exchange Commission on March 11, 1999, as amended on April 2,
1999 (the "Registration Statement").
(b) PRO FORMA FINANCIAL INFORMATION.
The unaudited pro forma consolidated financial data provided below
have been derived by the application of pro forma adjustments to the historical
financial statements of the Company for the periods indicated. The adjustments,
which include adjustments reflecting the acquisition of Miller and the
acquisition on February 25, 1999 of the assets of Taylor Oil Company ("Taylor"
or "ETNA"), are described in the accompanying notes. The unaudited pro forma
consolidated financial data also give effect to (i) the estimated net proceeds
from the proposed public offering of common stock as contemplated in the
Registration Statement; (ii) other acquisitions by the Company in fiscal 1998
and fiscal 1999; and (iii) certain financing transactions in fiscal 1998 and
fiscal 1999 (each as described more fully in Items (1), (3) and (6) below). The
following unaudited pro forma consolidated financial data are provided below:
1) Introduction to Unaudited Pro Forma Financial Data
2) Unaudited Pro Forma Balance Sheet Data as of December 24, 1998
3) Notes to Unaudited Pro Forma Balance Sheet Data
4) Unaudited Pro Forma Statement of Operations Data for the
Quarter Ended December 24, 1998
5) Unaudited Pro Forma Statement of Operations Data for the Year
Ended September 24, 1998
6) Notes to Unaudited Pro Forma Statement of Operations Data
-2-
<PAGE>
INTRODUCTION TO UNAUDITED PRO FORMA FINANCIAL DATA
The following unaudited pro forma consolidated financial data have been
derived by the application of pro forma adjustments to the historical financial
statements of The Pantry, Inc. ("The Pantry") for the periods indicated. The
adjustments are described in the accompanying notes.
On January 28, 1999, The Pantry acquired 100% of the outstanding capital
stock of Miller Enterprises, Inc. ("Miller"), and certain other real estate
assets of certain affiliates of Miller (collectively referred to as "Handy Way
and Affiliates"). Handy Way is a leading operator of convenience stores
operating one hundred twenty-one (121) stores under the name "Handy Way" and
located primarily in central Florida. The purchase price was $82,000,000 in cash
plus certain working capital and other adjustments. The Company intends to
continue to operate the assets of Handy Way and Affiliates as they have
historically been operated. The source of funds for the acquisition was the
Amended Credit Facility (as defined below) and cash on hand.
On February 25, 1999, The Pantry acquired 60 convenience stores and
related assets from Taylor Oil Company ("ETNA"). The real property on which the
stores are located has been leased or subleased from ETNA or affiliated parties.
Of the 60 leases, 51 are for terms of 15 years with four five-year renewal
options. The remaining nine subleases are for terms ranging from three to 18
years, exclusive of renewal options. The acquired convenience stores are located
in North Carolina and Virginia. The purchase price was approximately $23,000,000
in cash plus certain adjustments. The Company intends to continue to operate the
assets of ETNA as they have historically been operated. The source of funds for
the acquisition was the Company's Amended Credit Facility and cash on hand.
On March 11, 1999, The Pantry filed a Registration Statement on Form S-1,
as amended on April 2, 1999 (the "Registration Statement"), relating to the
offering of shares of common stock. The unaudited pro forma financial data
reflect estimated net proceeds from the proposed offering of $92.0 million and
the application of such proceeds to (1) repay outstanding indebtedness under our
Amended Credit Facility of $69.4 million and (2) redeem preferred stock of $17.5
million and pay accrued dividends of $5.1 million.
The unaudited pro forma financial data also give effect to the following:
Other Fiscal 1999 Acquisitions:
<TABLE>
<CAPTION>
Number
of
Date Acquired Company Locations Stores
------------- ------------ ------------------------------------------------ ------
<S> <C> <C> <C>
November 5, 1998 Express Stop Southeast North Carolina, Eastern South Carolina 22
October 22, 1998 Dash-N East-central North Carolina 10
</TABLE>
The aggregate cost of these acquisitions was $22.5 million and was funded
with borrowings under our bank credit facility and cash on hand.
3
<PAGE>
Fiscal 1999 Financing Transactions:
. January 28, 1999--we amended our bank credit facility (the "Amended
Credit Facility") and used the proceeds to (1) refinance $94.0 million of
existing bank debt, (2) redeem $49.0 million of senior notes and pay
approximately $2.0 million of related premium costs, (3) finance the
fiscal 1999 acquisitions and (4) pay related fees and accrued and unpaid
interest.
Fiscal 1998 Acquisitions:
<TABLE>
<CAPTION>
Number
of
Date Acquired Company Locations Stores
------------- ---------- ------------------------------------------------ ------
<S> <C> <C> <C>
July 15, 1998 Zip Mart Central North Carolina, Virginia 42
July 2, 1998 Quick Stop Southeast North Carolina, Coastal South Carolina 75
April 3, 1998 Sprint Gainesville, Florida 10
March 19, 1998 Kwik Mart Eastern North Carolina 23
October 23, 1997 Lil' Champ Northeast Florida 441(a)
</TABLE>
--------
(a) Net of the disposition of 48 convenience stores located throughout
eastern Georgia.
The aggregate cost of these acquisitions was $240 million, and was funded
with:
. proceeds from the issuance of our senior subordinated notes
. borrowings under our bank credit facility
. equity investments by existing shareholders
. cash on hand
Fiscal 1998 Financing Transactions:
. October 23, 1997--we issued $200.0 million of senior subordinated
notes at an interest rate of 10 1/4%
. October 23, 1997--we repurchased $51.0 million of senior notes and
paid related costs including a 10% repurchase premium, consent fee,
accrued interest and other expenses
. March 19, 1998 through July 15, 1998--we borrowed $78.0 million under
our bank credit facility
Pro Forma Adjustments:
The unaudited pro forma balance sheet gives effect to the Handy Way and
Affiliates and ETNA acquisitions and the fiscal 1999 financing transactions. The
fiscal 1998 acquisitions, the Dash-N and Express Stop acquisitions and the 1998
financing transactions are reflected in our historical unaudited balance sheet
data as of December 24, 1998.
The unaudited pro forma statement of operations for the quarter ended
December 24, 1998 gives effect to the Handy Way and Affiliates, ETNA and other
fiscal 1999 acquisitions, and the fiscal 1999 financing transactions, as if such
events occurred at the beginning of fiscal 1998. The fiscal 1998 acquisitions
and fiscal 1998 financing transactions are included in our historical results of
operations for the quarter.
The unaudited pro forma statement of operations for the year ended
September 24, 1998 gives effect to the 1998 acquisitions and disposition, the
1998 financing transactions, the Handy Way and Affiliates, ETNA and other fiscal
1999 acquisitions, and the fiscal 1999 financing, as if such events occurred at
the beginning of fiscal 1998.
The unaudited pro forma financial data are provided for informational
purposes only and do not represent our results of operations or financial
position had the transactions occurred on such dates, nor are they indicative
of our results of operations or financial position as of any future date or
period.
The unaudited pro forma financial data and accompanying notes should be
read in conjunction with the financial statements and accompanying notes thereto
and the other financial information included in the Registration Statement. The
financial statements of certain immaterial acquired entities were not audited or
reviewed by independent public accountants, and, therefore, the information
relating to these immaterial acquired entities is generally based on internally
prepared financial statements by the entity.
4
<PAGE>
UNAUDITED PRO FORMA BALANCE SHEET DATA
December 24, 1998
<TABLE>
<CAPTION>
Historical
----------------------------------------
Handy Way
and ETNA and
The Pantry Affiliates ETNA 1999 Handy Way and
December 24, December 31, December 31, Financing Affiliates IPO Total
1998 1998 1998 Adjustments Adjustments Adjustments Pro Forma
------------ ------------- ------------ ----------- ------------- ----------- ---------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Assets
Current assets:
Cash and cash
equivalents........... $ 15,069 $ 10,556 $ 3,116 $95,711 (a) $(95,000)(c) $ -- $ 22,906
(3,046)(d)
(3,500)(d)
Receivables, net....... 13,393 5,082 1,143 -- (443)(d) -- 19,175
Inventories............ 53,546 5,862 2,707 -- -- -- 62,115
Prepaid expenses....... 1,338 1,352 158 -- (158)(d) -- 2,690
Property held for
sale.................. 2,971 -- -- -- -- -- 2,971
Deferred income taxes.. 3,521 491 -- -- -- -- 4,012
-------- -------- -------- -------- ---------- -------- ---------
Total current
assets............... 89,838 23,343 7,124 95,711 (102,147) -- 113,869
-------- -------- ------- -------- --------- -------- ---------
Property and equipment,
net.................... 328,037 79,335 11,629 -- (5,964)(d) -- 413,037
Other assets:
Goodwill, net.......... 119,534 -- -- -- 31,996 (e) -- 151,530
Deferred lease cost,
net................... 258 -- -- -- -- -- 258
Deferred financing
cost, net............. 14,025 -- -- 3,210 (a) -- -- 13,829
(3,406)(b)
Environmental
receivables, net...... 12,783 -- -- -- -- -- 12,783
Other.................. 4,085 8,198 5,805 -- (12,349)(d) -- 5,739
-------- -------- ------- -------- --------- -------- ---------
Total other assets.... 150,685 8,198 5,805 (196) 19,647 -- 184,139
-------- -------- ------- -------- -------- -------- ---------
Total assets........ $568,560 $110,876 $24,558 $95,515 $(88,464) $ -- $711,045
======== ======== ======= ======== ======== ======== =========
</TABLE>
See Notes to Unaudited Pro Forma Balance Sheet Data
5
<PAGE>
UNAUDITED PRO FORMA BALANCE SHEET DATA
December 24, 1998
<TABLE>
<CAPTION>
Historical
---------------------------------------
Handy Way
and ETNA and
The Pantry Affiliates ETNA 1999 Handy Way and
December 24, December 31, December 31, Financing Affiliates IPO Total
1998 1998 1998 Adjustments Adjustments Adjustments Pro Forma
------------ ----------- ----------- ----------- ------------- ----------- ---------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Liabilities and
Shareholders' Equity
Current liabilities:
Current maturities of
long-term debt......... $ 39 $ 1,531 $ 291 $ -- $ (1,822)(d) $ -- $ 39
Current maturities of
capital lease
obligations............ 1,240 -- -- -- -- -- 1,240
Revolving credit........ 2,000 -- -- 5,000 (a) -- -- 7,000
Accounts payable........ 55,320 12,195 2,680 -- (2,680)(d) -- 67,515
Accrued expenses........ 49,359 8,095 1,628 (630)(a) (1,703)(d) -- 54,133
(454)(a)
(2,162)(f)
-------- -------- -------- ------- ------- -------- ---------
Total current
liabilities........... 107,958 21,821 4,599 1,754 (6,205) -- 129,927
-------- -------- -------- ------- ------- -------- --------
Senior subordinated
notes.................. 200,000 -- -- -- -- -- 200,000
Senior notes payable ... 48,995 -- -- (48,995)(a) -- -- --
Credit facility......... 94,000 -- -- (94,000)(a) -- -- --
Amended credit
facility............... -- -- -- 240,000 (a) 19,000 (c) (69,397)(g) 189,603
Other long-term debt.... 265 9,762 1,932 -- (11,694)(d) -- 265
-------- -------- -------- ------- ------- -------- --------
Total long-term debt... 343,260 9,762 1,932 97,005 7,306 (69,397) 389,868
-------- -------- -------- ------- ------- -------- --------
Other non-current
liabilities:
Environmental reserve... 17,291 -- -- -- -- -- 17,291
Capital lease
obligations............ 11,806 -- -- -- -- -- 11,806
Employment obligations.. 842 -- -- -- -- -- 842
Accrued dividends on
preferred stock........ 5,103 -- -- -- -- (5,103)(g) --
Deferred income taxes... 19,927 3,785 -- -- -- -- 23,712
Other non-current
liabilities............ 21,628 3,859 111 -- -- -- 25,598
-------- -------- -------- ------- ------- -------- --------
Total other non-current
liabilities........... 76,597 7,644 111 -- -- (5,103) 79,249
-------- -------- -------- ------- ------- -------- --------
Shareholders' equity:
Preferred stock......... -- -- -- -- -- -- --
Common stock............ 2 3,831 2,000 -- (5,831) -- 2
Additional paid-in
capital................ 69,925 1,020 1,363 -- (2,383) 92,000 (g) 144,425
(17,500)(g)
Shareholder loan........ (937) -- -- -- -- -- (937)
Retained earnings....... (28,245) 66,798 14,553 (2,000)(a) (81,351) -- (31,489)
(3,406)(b)
2,162 (f)
-------- -------- -------- ------- -------- -------- --------
Total shareholders'
equity................ 40,745 71,649 17,916 (3,244) (89,565)(e) 74,500 112,001
-------- -------- -------- ------- -------- -------- --------
Total liabilities and
shareholders' equity.. $568,560 $110,876 $ 24,558 $95,515 $(88,464) $ -- $711,045
======== ======== ======== ======= ======== ======== ========
</TABLE>
See Notes to Unaudited Pro Forma Balance Sheet Data
6
<PAGE>
NOTES TO UNAUDITED PRO FORMA BALANCE SHEET DATA
(dollars in thousands)
(a) Sources and Uses
<TABLE>
<S> <C>
Sources:
Revolving credit ................................................. $ 5,000
Amended credit facility........................................... 240,000
--------
Total sources.................................................... $245,000
========
Uses:
Redemption of senior notes........................................ $ 48,995
Refinance credit facility......................................... 94,000
Accrued interest--senior notes.................................... 630
Accrued interest--credit facility................................. 454
Redemption premium................................................ 2,000
Deferred financing cost........................................... 3,210
--------
Total uses...................................................... $149,289
========
Increase in cash and cash equivalents............................. $ 95,711
========
</TABLE>
(b) Write-off of $3,406 of unamortized deferred financing costs related to our
bank credit facility and our senior notes.
(c) Reflects acquisition costs of Handy Way and Affiliates funded by cash of
$95,000 and borrowings under our bank credit facility of $19,000 to fund the
ETNA acquisition (see note a).
(d) Reflects the elimination of certain assets and liabilities we did not
acquire in connection with the ETNA and Handy Way and Affiliates
acquisitions:
Handy Way
and
Affiliates ETNA Total
---------- -------- ---------
Cash...................................... $ -- $(3,046) $ (3,046)
Receivables............................... -- (443) (443)
Prepaid expenses.......................... -- (158) (158)
Property and equipment.................... -- (5,964) (5,964)
Other assets.............................. (7,702) (4,647) (12,349)
Current maturities of long-term debt...... 1,531 291 1,822
Accounts payable.......................... -- 2,680 2,680
Other accrued liabilities................. -- 1,703 1,703
Other long-term debt...................... 9,762 1,932 11,694
------- ------- --------
Total................................... $ 3,591 $(7,652) $ (4,061)
======= ======= ========
Additionally, we used approximately $3,500 of cash on hand to partially
fund the ETNA acquisition.
(e) Goodwill related to the ETNA and Handy Way and Affiliates acquisitions has
been determined as follows:
Handy Way
and
Affiliates ETNA Total
---------- -------- ---------
Aggregate purchase price................. $ 95,000 $ 22,500 $117,500
Less shareholders' equity................ (71,649) (17,916) (89,565)
Elimination of certain net assets not
acquired by The Pantry (see note d)..... (3,591) 7,652 4,061
-------- -------- --------
Total.................................. $ 19,760 $ 12,236 $ 31,996
======== ======== ========
(f) Reflects a $2,162 tax benefit related to the premium paid in connection
with the redemption of our senior notes and the write-off of unamortized
deferred financing costs (see notes a and b).
(g) Reflects estimated net proceeds from the proposed offering of $92,000 and
the application of such proceeds to (1) repay outstanding indebtedness under
our Amended Credit Facility of $69,397 and (2) redeem preferred stock of
$17,500 and pay accrued dividends of $5,103.
7
<PAGE>
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS DATA
Quarter Ended December 24, 1998
<TABLE>
<CAPTION>
Historical
---------------------------------------------------------
Three Months
Quarter Ended Three Months
Ended December 31, Ended Other Acquisition
December 24, 1998 December 31, Fiscal and
1998 Handy Way 1998 1999 Financing IPO Total
The Pantry and Affiliates ETNA Acquisitions Adjustments Adjustments Pro Forma
------------ -------------- ------------ ------------- ----------- ----------- ---------
(dollars in thousands except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Merchandise sales...... $139,390 $27,818 $ 6,732 $2,313 $ -- $ -- $176,253
Gasoline sales......... 171,789 35,003 21,414 3,442 -- -- 231,648
Commissions............ 4,428 510 61 249 -- -- 5,248
-------- ------- ------- ------ ------- ------ --------
Total revenue......... 315,607 63,331 28,207 6,004 -- -- 413,149
-------- ------- ------- ------- ------- ------ --------
Cost of Sales:
Merchandise............ 94,453 17,013 4,331 1,693 -- -- 117,490
Gasoline............... 148,774 30,611 18,727 3,141 -- -- 201,253
-------- ------- ------- ------ ------- ------ --------
Total cost of sales... 243,227 47,624 23,058 4,834 -- -- 318,743
-------- ------- ------- ------ ------- ------ --------
Gross profit............ 72,380 15,707 5,149 1,170 -- -- 94,406
-------- ------- ------- ------ ------- ------ --------
Store operating
expenses............... 43,729 11,007 2,881 682 (1,106)(k) -- 57,193
General and
administrative
expenses............... 9,968 2,666 600 113 (162)(1) -- 13,185
Impairment of long-lived
assets................. -- -- 55 -- -- -- 55
Depreciation and
amortization........... 8,190 946 497 70 414 (b) -- 10,476
421 (c)
(62)(d)
-------- ------- ------- ------ ------- ------ --------
Total operating
expense............... 61,887 14,619 4,033 865 (495) -- 80,909
-------- ------- ------- ------ ------- ------ --------
Income from operations.. 10,493 1,088 1,116 305 495 -- 13,497
-------- ------- ------- ------ ------- ------ --------
Other Income (Expense):
Interest............... (8,912) (91) (13) (5) (2,341)(e) 1,418 (h) (9,477)
531 (e)
(64)(e)
Miscellaneous.......... (184) 2 79 23 (13)(a) -- (93)
-------- ------- ------- ------ ------- ------ --------
Total other expense... (9,096) (89) 66 18 (1,887) 1,418 (9,570)
-------- ------- ------- ------ ------- ------ --------
Income (loss) before
income taxes........... 1,397 999 1,182 323 (1,392) 1,418 3,927
Income tax expense
(benefit).............. 332 385 -- -- 287 (f) 567 (f) 1,571
-------- ------- ------- ------- ------- ------ --------
Net income (loss) before
extraordinary item..... $ 1,065 $ 614 $1,182 $ 323 $(1,679)(g) $ 851 $ 2,356
======== ======= ======= ======= ======== ======= =========
</TABLE>
See Notes to Unaudited Pro Forma Statement of Operations Data
8
<PAGE>
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS DATA
Year Ended September 24, 1998
<TABLE>
<CAPTION>
Historical
-------------------------------------------------------------------
Latest Twelve
Months Ended
Year Ended 1998 September 30, Year Ended Other
September 24, Acquisitions 1998 December 31, Fiscal Acquisition and
1998 and Handy Way 1998 1999 Financing IPO Total
The Pantry Disposition and Affiliates ETNA Acquisitions Adjustments Adjustments Pro Forma
------------- ------------ -------------- ------------ ------------ --------------- ----------- ----------
(dollars in thousands except per share data)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Merchandise sales...... $460,798 $ 75,593 $100,338 $ 25,587 $ 30,302 $ (402)(a) $ -- $ 692,216
Gasoline sales......... 509,958 181,814 139,734 84,592 44,693 (15,823)(a) -- 944,968
Commissions............ 14,128 3,633 1,988 267 2,962 (467)(a) -- 22,511
-------- -------- -------- -------- -------- -------- ------ ----------
Total revenues...... 984,884 261,040 242,060 110,446 77,957 (16,692) -- 1,659,695
-------- -------- -------- -------- -------- -------- ------ ----------
Cost of Sales:
Merchandise............ 303,968 54,219 63,387 17,022 22,688 (207)(a) -- 461,077
Gasoline............... 447,565 161,074 124,258 74,422 40,213 (13,004)(a) -- 834,528
-------- -------- -------- -------- -------- -------- ------ ----------
Total cost of
sales.............. 751,533 215,293 187,645 91,444 62,901 (13,211) -- 1,295,605
-------- -------- -------- -------- -------- -------- ------ ----------
Gross profit............ 233,351 45,747 54,415 19,002 15,056 (3,481) -- 364,090
-------- -------- -------- -------- -------- -------- ------ ----------
Store operating
expenses............... 140,089 27,164 40,173 11,110 8,713 (3,015)(a) -- 220,098
(4,424)(k)
288 (i)
General and
administrative
expenses............... 32,761 7,506 8,703 1,927 1,541 (356)(a) -- 51,779
(42)(j)
(261)(1)
Restructuring charges... 1,016 -- -- -- -- -- -- 1,016
Impairment of long-lived
assets................. -- -- -- 219 -- -- -- 219
Depreciation and
amortization........... 27,642 5,189 3,214 1,987 903 (169)(a) -- 41,476
3,136 (b)
144 (b)
(389)(c)
(181)(d)
-------- -------- -------- -------- -------- -------- ------ ----------
Total operating
expense................ 201,508 39,859 52,090 15,243 11,157 (5,269) -- 314,588
-------- -------- -------- -------- -------- -------- ------ ----------
Income from operations.. 31,843 5,888 2,325 3,759 3,899 1,788 -- 49,502
-------- -------- -------- -------- -------- -------- ------ ----------
Other Income (Expense):
Interest............... (28,946) (1,687) (305) (55) (125) (13,787)(e) 5,670 (h) (37,369)
2,122 (e)
(256)(e)
Miscellaneous.......... 1,776 137 356 328 271 (193)(a) -- 2,675
-------- -------- -------- -------- -------- -------- ------ ----------
Total other
expense............ (27,170) (1,550) 51 273 146 (12,114) 5,670 (34,694)
-------- -------- -------- -------- -------- -------- ------ ----------
Income (loss) before
income taxes........... 4,673 4,338 2,376 4,032 4,045 (10,326) 5,670 14,808
Income tax expense...... -- 364 915 -- -- 2,376 (f) 2,268 (f) 5,923
-------- -------- -------- -------- -------- -------- ------ ----------
Net income (loss) before
extraordinary item..... $ 4,673 $ 3,974 $ 1,461 $ 4,032 $ 4,045 $(12,702)(g) $3,402 $ 8,885
======== ======== ======== ======== ======== ======== ====== ==========
</TABLE>
See Notes to Unaudited Pro Forma Statement of Operations Data
9
<PAGE>
NOTES TO UNAUDITED PRO FORMA STATEMENT OF OPERATIONS DATA
(dollars in thousands)
(a) Reflects the elimination of certain operations not acquired as follows:
<TABLE>
<CAPTION>
Quarter Ended Year Ended
December 24, September 24,
1998 1998
-------------------- --------------------
Decrease in expenses (decrease in income)
<S> <C> <C>
Fiscal 1998 Acquisitions:
Merchandise sales.......... $ -- $ (402)
Gasoline sales............. -- (15,823)
Commissions................ -- (467)
Merchandise cost of sales.. -- 207
Gasoline cost of sales..... -- 13,004
Store operating expenses... -- 3,015
General and administrative
expenses.................. -- 356
Depreciation and
amortization.............. -- 169
Other Fiscal 1999 Acquisitions:
Miscellaneous income...... (13) (193)
</TABLE>
(b) The 1998 and 1999 acquisitions have been accounted for using the purchase
method of accounting. Purchase price allocations for the Lil' Champ
acquisition, the Kwik Mart acquisition, and the Sprint acquisition have
been finalized. Purchase price allocations for the Quick Stop acquisition,
the Zip Mart acquisition, the Dash-N acquisition, the Express Stop
acquisition, the Handy Way and Affiliates acquisition, and the ETNA
acquisition are based on available information and certain assumptions we
believe are reasonable. For each acquisition, the purchase price will be
allocated to the tangible and intangible assets acquired and liabilities
assumed based upon their respective fair values as of the time the
acquisitions were consummated pending completion of appraisals of property
and equipment acquired; the excess of the purchase price over the historical
basis of the net assets acquired has not been allocated in the accompanying
unaudited pro forma financial data. The actual allocation of the purchase
cost, however, and the resulting effect on income from operations may differ
significantly from the pro forma amounts included herein. For purposes of
the pro forma information, the excess of the purchase price over the
historical net assets acquired has been considered to be goodwill and other
intangible assets, pending the completion of appraisals and other purchase
price allocation adjustments. The following table summarizes the additional
amortization expense to be incurred in connection with the various 1998 and
1999 transactions described above:
10
<PAGE>
<TABLE>
<CAPTION>
Estimated Quarter Ended Year Ended
Recorded Useful Life December 24, September 24,
Acquisitions Goodwill (in years) 1998 1998
------------ -------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
1998 acquisitions.......... $101,567 30 $ -- $1,527
1999 acquisitions:
Handy Way and Affiliates.. 19,760 30 165 659
ETNA...................... 12,236 30 102 408
Other Fiscal 1999
acquisitions............. 18,044 30 147 602
---- ------
Subtotal.................. 414 3,196
Less historical recorded
predecessor amounts - 1998
acquisitions.............. -- 60
---- ------
Adjustment................. $414 $3,136
==== ======
</TABLE>
Additionally, depreciation and amortization for the year ended September 24,
1998 includes $144 for deferred loan cost amortization related to the
issuance of our $200,000 senior subordinated notes and our bank credit
facility entered into in October 1997.
(c) Reflects additional depreciation expense in connection with the various
1998 and 1999 acquisition and financing transactions as follows:
<TABLE>
<CAPTION>
Recorded
Fair Value of
Property and Estimated Quarter Ended Year Ended
Equipment Useful Life December 24, September 24,
Acquisitions Acquired (in years) 1998 1998
------------ ------------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
1998 acquisitions....... $203,695 10-35 $ -- $ 3,454
1999 acquisitions:
Handy Way and
Affiliates............ 79,335 10-35 1,308 4,667
ETNA................... 5,665 10-35 497 1,987
Other Fiscal 1999
acquisitions.......... 4,750 10-35 119 476
------ -------
Subtotal............... 1,924 10,584
Less historical recorded
amounts:
1998 acquisitions....... -- 4,904
1999 acquisitions:
Handy Way and
Affiliates............ 945 3,214
ETNA................... 497 1,987
Other Fiscal 1999
acquisitions.......... 61 868
------ -------
1,503 10,973
------ -------
Adjustment.............. $ 421 $ (389)
====== =======
</TABLE>
(d) Reflects reduction in amortization of deferred financing costs related to
our Amended Credit Facility, net of amortization recorded related to our
senior notes and our bank credit facility, of $62 for the three months
ended December 24, 1998 and $181 for the year ended September 24, 1998. The
financing costs, which approximate $3,210, are being amortized over the
weighted-average life of our Amended Credit Facility of 6 years.
(e) Reflects additional interest expense in connection with the various 1998
and 1999 financing and acquisitions transactions as follows:
<TABLE>
<CAPTION>
Quarter
Principal Interest Ended Year Ended
Borrowed Rate December 24, September 24,
Acquisition/Financing (Retired) (per annum) 1998 1998
--------------------- --------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Issuance of senior
subordinated notes........ $200,000 10.25% $ -- $ 1,708
Redemption of senior
notes..................... (51,000) 12.50 -- (531)
1998 acquisitions.......... 78,000 8.17 -- 4,148
1999 acquisitions:
Handy Way and Affiliates.. 95,000 8.17 1,940 7,762
ETNA...................... 19,000 8.19 388 1,552
Other Fiscal 1999
acquisitions............. 16,000 8.17 109 1,307
------ -------
Subtotal.................. 2,437 15,946
Less historical recorded
amounts related to
indebtedness not assumed:
1998 acquisitions.......... -- 1,673
1999 acquisitions:
Handy Way and Affiliates.. 91 305
ETNA...................... -- 55
Other Fiscal 1999
acquisitions............. 5 126
------ -------
96 2,159
------ -------
Adjustment................. $2,341 $13,787
====== =======
</TABLE>
Also reflects additional interest expense related to the cost of the
financing transactions of $64 for the quarter ended December 24, 1998 and
$256 for the year ended September 24, 1998.
Additionally, reflects reduction in interest expense related to the
redemption of our senior notes of $531 for the quarter ended December 24,
1998 and $2,122 for the year ended September 24, 1998.
11
<PAGE>
Assuming a 0.125% increase or decrease in the variable rate Amended Credit
Facility, interest expense, net of taxes, would increase or decrease by $60
for the quarter ended December 24, 1998 and $240 for the year ended
September 24, 1998.
(f) Adjusts income tax expense for an assumed tax rate of 40% for each of the
periods presented.
(g) For each period presented, net income (loss) excludes extraordinary charges
of approximately $3,244, net of income tax benefit of $2,162, related to
the redemption of $48,995 of senior notes and the amendment of our bank
credit facility. Net income (loss) before extraordinary items for the year
ended September 24, 1998 excludes charges of approximately $7,998 incurred
related to the costs of the redemption of $51,000 of senior notes.
(h) Reflects the application of net proceeds of approximately $69,397 to repay
outstanding indebtedness at the weighted-average rate of 8.17%.
(i) Reflects an increase in store rental expense of $288 for the year ended
September 24, 1998 in connection with an obligation to lease certain stores
from the former owners of Quick Stop, a fiscal 1998 acquisition. The rent
increase was effective concurrent with the Quick Stop acquisition.
(j) Historically, Lil' Champ paid Docks U.S.A., Inc., Lil' Champ's parent
company, service agreement fees. The service agreement was terminated
concurrent with the acquisition of Lil' Champ. Consequently, $42 of service
agreement fees have been eliminated for the year ended September 24, 1998.
(k) Historically, Handy Way incurred rental expense related to stores leased
from its affiliates. These stores were acquired by us in connection with
the Handy Way and Affiliates acquisition and all leases with Handy Way
affiliates were terminated. As a result, rental expenses of $1,106 for the
quarter ended December 24, 1998 and $4,424 for the year ended September 24,
1998 have been eliminated.
(l) Reflects the elimination of transaction costs incurred by Handy Way in
connection with the Handy Way acquisition of $162 for the quarter ended
December 24, 1998 and $261 for the year ended September 24, 1998.
12
<PAGE>
(c) EXHIBITS.
Exhibit No. Description of Exhibit
----------- ----------------------
2.1* Purchase Agreement dated November 30, 1998 among Lil
Champ Food Stores, Inc. and the Selling Shareholders of
Miller: Thomas A. Miller, Joseph E. Miller, The Miller
Investments Trust U/A dated October 11, 1995 and the
George C. Miller, Jr. Estate Trust U/A dated June 30,
1989, and Miller Brothers and Circle Investments, Ltd.
and Miller (asterisks located within the exhibit denote
information which has been deleted pursuant to a request
for confidential treatment filed with the Securities and
Exchange Commission)
2.2* List of Exhibits and Schedules omitted from the Purchase
Agreement referenced in Exhibit 2.1 hereof
10.1* Amended and Restated Credit Agreement dated as of January
28, 1999 among the Company, the Lenders, First Union, as
administrative agent, and CIBC, as syndication agent for
the Lenders
- ------------
* Previously Filed.
-13-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: April 8, 1999
THE PANTRY, INC.
By: /s/ William T. Flyg
-------------------------------------------
William T. Flyg
Senior Vice President Finance and Secretary
-14-
<PAGE>
EXHIBIT INDEX
Exhibit No. Description of Exhibit
- ----------- ----------------------
2.1* Purchase Agreement dated November 30, 1998 among Lil Champ Food
Stores, Inc. and the Selling Shareholders of Miller: Thomas A.
Miller, Joseph E. Miller, The Miller Investments Trust U/A dated
October 11, 1995 and the George C. Miller, Jr. Estate Trust U/A
dated June 30, 1989, and Miller Brothers and Circle Investments,
Ltd. and Miller (asterisks located within the exhibit denote
information which has been deleted pursuant to a request for
confidential treatment filed with the Securities and Exchange
Commission)
2.2* List of Exhibits and Schedules omitted from the Purchase Agreement
referenced in Exhibit 2.1 hereof
10.1* Amended and Restated Credit Agreement dated as of January 28, 1999
among the Company, the Lenders, First Union, as administrative
agent, and CIBC, as syndication agent for the Lenders
- ------------
* Previously Filed.
-15-
