<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-16626
-----------------
7-ELEVEN, INC.
(Exact name of registrant as specified in its charter)
TEXAS 75-1085131
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2711 NORTH HASKELL AVE., DALLAS, TEXAS 75204-2906
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code, 214/828-7011
--------------
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
APPLICABLE ONLY TO CORPORATE ISSUERS:
104,761,730 shares of common stock, $.0001 par value (the issuer's only
class of common stock), were outstanding as of June 30, 2000.
<PAGE>
7-ELEVEN, INC.
INDEX
PAGE
NO.
----
Part I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS:
Condensed Consolidated Balance Sheets -
December 31, 1999 and June 30, 2000 1
Condensed Consolidated Statements of Earnings -
Three Months and Six Months Ended June 30, 1999 and 2000 2
Condensed Consolidated Statements of Cash Flows -
Six Months Ended June 30, 1999 and 2000 3
Notes to Condensed Consolidated Financial Statements 4
Report of Independent Accountants 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 8
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 17
Part II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 17
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 17
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 17
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 18
SIGNATURES 19
Exhibit (3) Copy of Articles of Amendment to the Second Restated Articles of
Incorporation, as filed with the Secretary of State of
Texas *
Exhibit (15) - Letter re Unaudited Interim Financial Information Tab 1
Exhibit (27) - Financial Data Schedule **
* Incorporated by reference from the Company's report on Form 10-Q filed for
the quarterly period ended March 31, 2000.
** Submitted in electronic format only
(i)
<PAGE>
<TABLE>
<CAPTION>
7-ELEVEN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER-SHARE DATA)
DECEMBER 31, JUNE 30,
1999 2000
------------- -------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 76,859 $ 100,777
Accounts receivable 179,039 193,339
Inventories 134,050 116,031
Other current assets 115,328 120,922
------------- -------------
Total current assets 505,276 531,069
Property and equipment 1,880,520 1,875,230
Other assets 299,870 281,727
------------- -------------
Total assets $ 2,685,666 $ 2,688,026
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Trade accounts payable $ 168,302 $ 187,372
Accrued expenses and other liabilities 401,216 404,153
Commercial paper 34,418 71,437
Long-term debt due within one year 207,413 100,238
------------- -------------
Total current liabilities 811,349 763,200
Deferred credits and other liabilities 251,073 245,883
Long-term debt 1,802,819 1,272,014
Convertible quarterly income debt securities 380,000 380,000
Commitments and contingencies
Shareholders' equity (deficit):
Preferred stock, $.01 par value - -
Common stock, $.0001 par value 8 10
Additional capital 625,761 1,166,140
Accumulated deficit (1,194,896) (1,141,676)
Accumulated other comprehensive earnings 9,552 2,455
------------- -------------
Total shareholders' equity (deficit) (559,575) 26,929
------------- -------------
Total liabilities and shareholders' equity (deficit) $ 2,685,666 $ 2,688,026
============= =============
</TABLE>
See notes to condensed consolidated financial statements.
1
<PAGE>
<TABLE>
<CAPTION>
7-ELEVEN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(DOLLARS IN THOUSANDS, EXCEPT PER-SHARE DATA)
(UNAUDITED)
THREE MONTHS SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
----------------------------- -------------------------
1999 2000 1999 2000
------------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
REVENUES:
Merchandise sales (Including $134,227, $153,710,
$253,033 and $297,128 in excise taxes) $ 1,585,206 $ 1,721,920 $ 2,946,956 $ 3,231,209
Gasoline sales (Including $155,753, $171,695,
$304,785 and $328,786 in excise taxes) 503,303 707,436 911,648 1,310,718
------------- ------------- ------------ ------------
Net sales 2,088,509 2,429,356 3,858,604 4,541,927
Other income 24,094 27,272 46,221 52,045
------------- ------------- ------------ ------------
Total revenues 2,112,603 2,456,628 3,904,825 4,593,972
------------- ------------- ------------ ------------
COSTS AND EXPENSES:
Merchandise cost of goods sold 1,031,790 1,113,447 1,941,770 2,107,945
Gasoline cost of goods sold 443,233 640,197 797,798 1,191,831
------------ -------------- ----------- -----------
Total cost of goods sold 1,475,023 1,753,644 2,739,568 3,299,776
Franchisee gross profit expense 158,413 175,068 287,112 321,820
Operating, selling, general and administrative expenses 406,037 446,760 777,816 860,451
Interest expense, net 25,588 18,537 49,671 45,429
------------- ------------- ----------- -----------
Total costs and expenses 2,065,061 2,394,009 3,854,167 4,527,476
------------- ------------- ----------- -----------
EARNINGS BEFORE INCOME TAX EXPENSE AND EXTRAORDINARY GAIN 47,542 62,619 50,658 66,496
INCOME TAX EXPENSE 18,817 24,235 20,050 13,276
------------- ------------- ----------- -----------
EARNINGS BEFORE EXTRAORDINARY GAIN 28,725 38,384 30,608 53,220
EXTRAORDINARY GAIN ON DEBT REDEMPTION (net of tax effect
of $2,743) - - 4,290 -
------------- ------------- ---------- -----------
NET EARNINGS $ 28,725 $ 38,384 $ 34,898 $ 53,220
============= ============= =========== ===========
NET EARNINGS PER COMMON SHARE:
BASIC
Earnings before extraordinary gain $ .35 $ .37 $ .38 $ .56
Extraordinary gain - - .05 -
------------- ------------- ----------- ------------
Net earnings $ .35 $ .37 $ .43 $ .56
============= ============= =========== ============
DILUTED
Earnings before extraordinary gain $ .30 $ .32 $ .35 $ .50
Extraordinary gain - - .04 -
------------- ------------- ----------- ------------
Net earnings $ .30 $ .32 $ .39 $ .50
============= ============= =========== ============
</TABLE>
See notes to condensed consolidated financial statements.
2
<Page
<TABLE>
<CAPTION>
7-ELEVEN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30
-------------------------------
1999 2000
------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 34,898 $ 53,220
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Extraordinary gain on debt redemption (4,290) -
Depreciation and amortization of property and equipment 92,120 105,757
Other amortization 9,980 10,020
Deferred income taxes 14,667 3,417
Noncash interest expense 806 833
Other noncash income (2,992) (1,130)
Net loss (gain) on property and equipment 1,268 (1,532)
Increase in accounts receivable (13,191) (14,122)
(Increase) decrease in inventories (3,649) 18,019
Increase in other assets (19,244) (8,803)
Increase (decrease) in trade accounts payable and other liabilities 10,396 (9,853)
------------- -------------
Net cash provided by operating activities 120,769 155,826
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for purchase of property and equipment (226,740) (145,159)
Proceeds from sale of property and equipment 4,244 76,137
Proceeds from sale of domestic securities 2,515 2,512
Other 6,291 (1,482)
------------- -------------
Net cash used in investing activities (213,690) (67,992)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from commercial paper and revolving credit facilities 2,386,556 2,054,443
Payments under commercial paper and revolving credit facilities (2,212,537) (2,510,494)
Principal payments under long-term debt agreements (72,780) (158,873)
(Decrease) increase in outstanding checks in excess of cash in bank (13,653) 11,230
Net proceeds from issuance of common stock - 539,778
Other (904) -
------------- -------------
Net cash provided by (used in) financing activities 86,682 (63,916)
------------- -------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (6,239) 23,918
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 87,115 76,859
------------- -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 80,876 $ 100,777
============= =============
RELATED DISCLOSURES FOR CASH FLOW REPORTING:
Interest paid, excluding SFAS No.15 Interest $ (63,486) $ (55,694)
============= =============
Net income taxes paid $ (6,247) $ (10,430)
============= =============
Assets obtained by entering into capital leases $ 26,090 $ 20,364
============= =============
See notes to condensed consolidated financial statements.
3
</TABLE>
<PAGE>
7-ELEVEN, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2000
(DOLLARS IN THOUSANDS, EXCEPT PER-SHARE DATA)
(UNAUDITED)
1. BASIS OF PRESENTATION
The condensed consolidated balance sheet as of June 30, 2000, and the
condensed consolidated statements of earnings for the three-month and six-month
periods ended June 30, 1999 and 2000, and the condensed consolidated statements
of cash flows for the six-month periods ended June 30, 1999 and 2000, have been
prepared by the Company without audit. In the opinion of management, all
adjustments necessary to present fairly the financial position at June 30, 2000,
and the results of operations and cash flows for all periods presented have been
made. Certain prior-period amounts have been reclassified to conform to current-
period presentation. The results of operations for the interim periods are not
necessarily indicative of the operating results for the full year.
The reported results include the 5,700 convenience stores that are operated
or franchised in the United States and Canada by 7-Eleven, Inc., along with
royalty income only from worldwide 7-Eleven area licensees. Sales and cost of
goods sold of stores operated by franchisees are consolidated with the
results of Company-operated stores in the condensed consolidated statements
of earnings. Gross profit from franchise stores is split between the Company
and its franchisees pursuant to the terms of franchise agreements.
The condensed consolidated balance sheet as of December 31, 1999, is
derived from the audited financial statements but does not include all
disclosures required by generally accepted accounting principles. The notes
accompanying the consolidated financial statements in the Company's Annual
Report on Form 10-K for the year ended December 31, 1999, include accounting
policies and additional information pertinent to an understanding of both the
December 31, 1999, balance sheet and the interim financial statements. The
information has not changed except as a result of normal transactions in the
six months ended June 30, 2000, and as discussed in the following notes.
2. EQUITY TRANSACTIONS
On March 16, 2000, the Company issued 22,736,842 shares of common stock at
$23.75 per share to IYG Holding Company in a private placement transaction,
which increased their ownership in the Company to 72.7%. The net proceeds of
$539,425 were used to repay the outstanding balance on the Company's bank term
loan of $112,500 and to reduce the Company's revolving credit facility by
approximately $250 million and commercial paper facility by approximately
$177 million.
On April 26, 2000, the shareholders of the Company approved a reverse stock
split of one share of common for five shares of common, which was effective
May 1, 2000. Accordingly, all references to share or per-share data in the
accompanying condensed consolidated financial statements and related notes
reflect the reverse stock split.
On May 23, 2000, the Company granted options for 2,023,424 shares under
the 1995 Stock Incentive Plan. The options were granted at an exercise price
of $19.00 per share, which was equal to the fair market value of the
Company's common stock on the date of grant.
4
<PAGE>
3. EARNINGS PER SHARE
Computations for basic and diluted earnings per share are presented
below (shares in thousands):
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
--------------------- -------------------
1999 2000 1999 2000
-------- -------- ------ ------
<S> <C> <C> <C> <C>
BASIC:
Earnings before extraordinary gain $ 28,725 $ 38,384 $ 30,608 $ 53,220
Earnings on extraordinary gain - - 4,290 -
--------- --------- -------- ---------
Net earnings $ 28,725 $ 38,384 $ 34,898 $ 53,220
========== ========= ======== =========
Weighted-average common shares outstanding 81,992 104,762 81,990 95,260
========== ======== ======== ========
Earnings per common share before extraordinary gain $ .35 $ .37 $ .38 $ .56
Earnings per common share on extraordinary gain - - .05 -
---------- --------- ------- -------
Net earnings per common share $ .35 $ .37 $ .43 $ .56
========== ========= ======== ========
DILUTED:
Earnings before extraordinary gain $ 28,725 $ 38,384 $ 30,608 $ 53,220
Add interest on convertible quarterly
income debt securities, net of tax 2,626 2,630 5,252 5,259
---------- -------- --------- --------
Earnings before extraordinary gain plus
assumed conversions 31,351 41,014 35,860 58,479
Earnings on extraordinary gain - - 4,290 -
--------- -------- -------- --------
Net earnings plus assumed conversions $ 31,351 $ 41,014 $ 40,150 $ 58,479
========= ========= ======== ========
Weighted-average common shares outstanding (Basic) 81,992 104,762 81,990 95,260
Add effects of assumed conversions:
Stock options 114 829 57 706
Convertible quarterly income debt securities 20,924 20,924 20,924 20,924
--------- -------- -------- -------
Weighted-average common shares outstanding
plus shares from assumed conversions (Diluted) 103,030 126,515 102,971 116,890
========= ======== ======== ========
Earnings per common share before extraordinary gain $ .30 $ .32 $ .35 $ .50
Earnings per common share on extraordinary gain - - .04 -
--------- --------- ------- --------
Net earnings per common share $ .30 $ .32 $ .39 $ .50
========= ========= ======== ========
</TABLE>
5
<PAGE>
4. INCOME TAX EXPENSE/BENEFIT
On March 27, 2000, the Company received notice of approval from the
Internal Revenue Service regarding the settlement of certain outstanding tax
issues relating to audits of the Company's federal income tax returns for the
1992 through 1995 tax years. As a result of the settlement, the Company
recorded an income tax benefit of $12.5 million in the first quarter. This
benefit reduced the Company's income tax expense for the six months ended
June 30,2000, from $25.8 million to $13.3 million.
5. COMPREHENSIVE EARNINGS
The components of comprehensive earnings of the Company for the periods
presented are as follows:
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
----------------- ------------------
1999 2000 1999 2000
------------------ ------------------
<S> <C> <C> <C> <C>
Net earnings $ 28,725 $ 38,384 $ 34,898 $ 53,220
Other comprehensive earnings:
Unrealized gains (losses) on
equity securities, net of tax 796 (1,008) 1,345 (3,150)
Reclassification adjustments for
gains included in net earnings
(net of $985, $396, $985 and $1,181
tax expense) (1,541) (620) (1,541) (1,848)
Foreign currency translation
adjustments 1,794 (1,861) 2,840 (2,099)
--------- --------- --------- ---------
Other comprehensive earnings 1,049 (3,489) 2,644 (7,097)
--------- --------- --------- ---------
Total comprehensive earnings $ 29,774 $ 34,895 $ 37,542 $ 46,123
========= ========= ========= =========
</TABLE>
6. SFAS NO. 133
The Company is currently reviewing SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities." The statement establishes
accounting and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts, and for hedging
activities. SFAS No. 133 becomes effective for all fiscal quarters of fiscal
years beginning after June 15, 2000, and earlier application is permitted as
of the beginning ofany fiscal quarter. The Company intends to adopt the
provisions of this statement as of January 1, 2001. The impact of the
adoption of SFAS No. 133has not been determined at this time due to the
Company's continuinginvestigation of its financial instruments and the
applicability of SFASNo. 133 to them.
6
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
7-Eleven, Inc.:
We have reviewed the accompanying condensed consolidated balance sheet of
7-Eleven, Inc. and Subsidiaries as of June 30, 2000, and the related
condensed consolidated statements of earnings for the three-month and
six-month periods ended June 30, 1999 and 2000, and the condensed consolidated
statements of cash flows for the six-month periods ended June 30, 1999 and
2000. These financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with auditing standards generally accepted in the
United States, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial statements of 7-Eleven, Inc. and
Subsidiaries for them to be in conformity with accounting principles
generally accepted in the United States.
We have previously audited, in accordance with auditing standards generally
accepted in the United States, the consolidated balance sheet as of December
31, 1999, and the related consolidated statements of earnings, shareholders'
equity (deficit), and cash flows for the year then ended (not presented
herein), and in our report dated February 3, 2000, except as to the
information included in the fourth paragraph of Note 13, for which the date
is March 2, 2000, and the information included in Note 2, for which the date
is March 16, 2000, we expressed an unqualified opinion on those consolidated
financial statements. In our opinion, the information set forth in the
accompanying condensed consolidated balance sheet information as of December
31, 1999, is fairly stated, in all material respects, in relation to the
consolidated balance sheet from which it has been derived.
PRICEWATERHOUSECOOPERS LLP
Dallas, Texas
July 27, 2000
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THIS QUARTERLY REPORT INCLUDES CERTAIN STATEMENTS THAT ARE "FORWARD-
LOOKING STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995. ANY STATEMENT IN THIS REPORT THAT IS NOT A STATEMENT OF
HISTORICAL FACT MAY BE DEEMED TO BE A FORWARD-LOOKING STATEMENT. WE OFTEN
USE THESE TYPES OF STATEMENTS WHEN DISCUSSING OUR PLANS AND STRATEGIES, OUR
ANTICIPATION OF REVENUES FROM DESIGNATED MARKETS AND STATEMENTS REGARDING THE
DEVELOPMENT OF OUR BUSINESSES, THE MARKETS FOR OUR SERVICES AND PRODUCTS, OUR
ANTICIPATED CAPITAL EXPENDITURES, OPERATIONS, SUPPORT SYSTEMS, CHANGES IN
REGULATORY REQUIREMENTS AND OTHER STATEMENTS CONTAINED IN THE QUARTERLY REPORT
REGARDING MATTERS THAT ARE NOT HISTORICAL FACTS. WHEN USED IN THIS QUARTERLY
REPORT, THE WORDS "EXPECT," "ANTICIPATE," "INTEND," "PLAN," "BELIEVE," "SEEK,
"ESTIMATE," AND OTHER SIMILAR EXPRESSIONS ARE GENERALLY INTENDED TO IDENTIFY
FORWARD-LOOKING STATEMENTS. BECAUSE THESE FORWARD-LOOKING STATEMENTS INVOLVE
RISKS AND UNCERTAINTIES, ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE
EXPRESSED OR IMPLIED BY THESE FORWARD-LOOKING STATEMENTS. THERE CAN BE NO
ASSURANCE THAT: (I) WE HAVE CORRECTLY MEASURED OR IDENTIFIED ALL OF THE
FACTORS AFFECTING THESE MARKETS OR THE EXTENT OF THEIR LIKELY IMPACT; (II)
THE PUBLICLY AVAILABLE INFORMATION WITH RESPECT TO THESE FACTORS ON WHICH
OUR ANALYSIS IS BASED IS COMPLETE OR ACCURATE; (III) OUR ANALYSIS IS CORRECT
OR (IV) OUR STRATEGY, WHICH IS BASED IN PART ON THIS ANALYSIS, WILL BE
SUCCESSFUL. WE DO NOT INTEND TO UPDATE OR REVISE ANY FORWARD-LOOKING
STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR
OTHERWISE.
GENERAL
7-Eleven is the world's largest operator, franchisor and licensor of
convenience stores. 7-Eleven is also the largest convenience store chain in
North America. Over the last several years we have transformed our business
model to take advantage of our extensive store base, our widely recognized
brand identity and the best practices developed by our affiliate and largest
area licensee, Seven-Eleven Japan Co., Ltd. The key elements of our business
model are:
* a differentiated merchandising strategy;
* utilization of sophisticated retail information
technology;
* efficiently managing distribution to our
stores;
* providing an attractive shopping experience;
and
* a unique franchise model.
EXCEPT WHERE NOTED, ALL PER STORE NUMBERS REFER TO AN AVERAGE OF ALL
STORES RATHER THAN ONLY STORES OPEN MORE THAN ONE YEAR. IN ADDITION, ALL
REFERENCES TO SHARE DATA REFLECT A ONE-FOR-FIVE REVERSE SPLIT OF OUR COMMON
STOCK EFFECTED MAY 1, 2000.
COMPARISON OF THREE MONTHS ENDED JUNE 30, 2000 TO THREE
MONTHS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
NET SALES
Three Months Ended June 30
--------------------------
1999 2000
------ ------
<S> <C> <C>
Net Sales: (in millions)
Merchandise sales $1,585.2 $1,721.9
Gasoline sales 503.3 707.4
-------- --------
Total net sales $2,088.5 $2,429.3
Merchandise sales growth-U.S. same store 8.7% 7.6%
Gasoline gallon sales change-per store 4.1% 3.9%
Average retail price of gasoline per gallon $ 1.20 $ 1.55
</TABLE>
8
<PAGE>
Merchandise sales for the three months ended June 30, 2000 were $1,721.9
million, an increase of $136.7 million, or 8.6%, from $1,585.2 million for
the three months ended June 30, 1999. This increase was primarily
attributable to U.S. same-store merchandise sales growth of 7.6% and our
operating an average of 61 additional stores in the three months ended June
30, 2000 as compared to the same period in 1999. Wholesale cigarette cost
increases, which were reflected in higher retail prices, accounted for less
than two percentage points of the increase in U.S. same-store merchandise
sales, while contributing almost 5% to the 1999 growth. Categories
contributing to the merchandise sales growth were beer/wine, prepaid phone
cards, non-carbonated beverages and snacks.
Gasoline sales for the three months ended June 30, 2000 were $707.4
million, an increase of $204.1 million, or 40.6%, from $503.3 million for the
three months ended June 30, 1999. This increase was primarily attributable
to a higher average retail price of gasoline and our operating an average of
99 additional stores that sell gasoline during the comparable periods. The
average retail price of gasoline was $1.55 per gallon during the quarter, a
$0.35 increase over the comparable quarter. Average gallons sold per store
increased 3.9% over the comparable quarter, primarily the result of adding
new gasoline outlets, which tend to pump higher volumes than existing stores.
We sold 456.1 million gallons in the three months ended June 30, 2000, an
increase of 36.0 million gallons, or 8.6%, from 420.1 million gallons for the
same period in 1999.
<TABLE>
<CAPTION>
GROSS PROFIT
Three Months Ended June 30
--------------------------
1999 2000
------ ------
<S> <C> <C>
Gross Profit (in millions)
Merchandise gross profit $ 553.4 $ 608.5
Gasoline gross profit 60.1 67.2
-------- --------
Total gross profit $ 613.5 $ 675.7
Merchandise gross profit margin 34.9% 35.3%
Merchandise gross profit growth-per store 7.1% 8.8%
Gasoline gross profit margin-cents per gallon 14.30 14.74
Gasoline gross profit change-per store 29.1% 7.1%
</TABLE>
Merchandise gross profit for the three months ended June 30, 2000 was
$608.5 million, an increase of $55.1 million, or 9.9%, from $553.4 million
for the three months ended June 30, 1999. This increase was primarily
attributable to higher U.S. same-store merchandise sales, an improved margin
and our operating more stores. Gross profit margin increased to 35.3% for
the three months ended June 30, 2000 from 34.9% for the same period in 1999.
The margin improvement was primarily attributable to increased sales in
several higher margin categories, combined with incremental cigarette
manufacturer allowances. The higher margin categories included non-
carbonated beverages, fountain and snacks. The impact of the incremental
cigarette allowances we have experienced throughout the year should diminish,
since they are now fully cycled with the completion of the second quarter.
As a result of the factors discussed above, merchandise gross profits per
store increased 8.8% for the comparable periods.
Gasoline gross profit for the three months ended June 30, 2000 was $67.2
million, an increase of $7.1 million, or 11.9%, from $60.1 million for the
three months ended June 30, 1999. This increase in gasoline gross profit was
the result of the combination of more store months, increased gallon sales
per-store and improved gasoline gross profit margin to 14.74 cents per gallon
from 14.30 cents per gallon. As a result, gasoline gross profits per store
increased 7.1% for the three months ended June 30, 2000 as compared to the
same period in
9
<PAGE>
1999. Market conditions were volatile during the quarter due to concerns
regarding OPEC production levels, low industry gasoline inventories, combined
with refinery maintenance and pipeline delivery problems. These conditions
began to stabilize late in the second quarter and we expect market conditions
to return to a more normal pattern for the third quarter.
OTHER INCOME
Other income for the three months ended June 30, 2000 was $27.3 million,
an increase of $3.2 million, or 13.2%, from $24.1 million for the three
months ended June 30, 1999. This increase was attributable to increased
franchise fees associated with more stores being franchised. In addition,
royalty income from our area licensees increased as a result of higher sales
at stores operated by licensees and an increase in the number of such stores.
Looking forward, we expect to receive approximately $58 million of royalties
from area license agreements with Seven-Eleven Japan during the 2000 calendar
year. One year following the final repayment of our 1988 Yen-denominated
loan, currently projected for the third quarter of 2001, royalty payments
from Seven-Eleven Japan will be reduced by approximately 70% in accordance
with the terms of the amended license agreement.
FRANCHISEE GROSS PROFIT EXPENSE
We report all sales and gross profit from franchised stores in our
consolidated results and record as an expense a percentage of the gross
profits generated by the franchised stores. Franchisee gross profit expense
for the three months ended June 30, 2000 was $175.1 million, an increase of
$16.7 million, or 10.5%, from $158.4 million for the three months ended June
30, 1999. The increase was primarily attributable to higher per store gross
profits at franchised stores and an increase in the number of stores operated
by franchisees.
OPERATING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSE ("OSG&A")
OSG&A for the three months ended June 30, 2000 was $446.8 million, an
increase of $40.8 million, or 10.0%, from $406.0 million for the three months
ended June 30, 1999. This increase was primarily attributable to the cost of
operating more stores, approximately $9 million of incremental costs related
to the implementation of our proprietary retail information system and higher
costs associated with processing credit card charges, due in part to
significantly higher gasoline prices.
The ratio of OSG&A to net sales decreased to 18.4% for the three months
ended June 30, 2000 from 19.4% for the three months ended June 30, 1999.
Assuming that the average retail price of gasoline in the three months ended
June 30, 2000 was reduced to the level that prevailed in the three months
ended June 30, 1999, the ratio of OSG&A to net sales would have increased to
19.7% for the three months ended June 30, 2000 from 19.4% for the same
period in 1999.
INTEREST EXPENSE, NET
Net interest expense for the three months ended June 30, 2000 was $18.5
million, a decrease of $7.1 million, or 27.6%, from $25.6 million for the
three months ended June 30, 1999. This decrease was primarily due to the
repayment of borrowings with proceeds from our sale of common stock to IYG
Holding Company on March 16, 2000. As a result of these proceeds, we expect
net interest expense in 2000 to decrease by approximately $21 million,
compared to 1999, based on anticipated levels of debt and interest rate
projections. See "Liquidity and Capital Resources" for more information.
10
<PAGE>
In accordance with Statement of Financial Accounting Standards No. 15
("SFAS No. 15"), we do not recognize interest expense on our debentures in
our statement of earnings. These debentures are recorded at an amount equal
to the future undiscounted cash payments, both principal and interest.
Accordingly, the cash interest payments are charged against the recorded
amount of the debentures and are not treated as interest expense.
INCOME TAX EXPENSE
Income tax expense for the three months ended June 30, 2000 was $24.2
million, compared to $18.8 million for the three months ended June 30, 1999.
Our effective tax rate was 38.7% for the three months ended June 30, 2000
compared to 39.6% for the same period in 1999.
NET EARNINGS
Net earnings for the three months ended June 30, 2000 were $38.4 million
($0.32 per diluted share), an increase of $9.7 million, or 33.6%, from $28.7
million ($0.30 per diluted share) for the three months ended June 30, 1999.
Earnings per share now reflects the addition of the 22.7 million shares as a
result of the March 2000 private placement. See "-Liquidity and Capital
Resources" for more information.
COMPARISON OF SIX MONTHS ENDED JUNE 30, 2000 TO SIX MONTHS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
NET SALES
Six Months Ended June 30
--------------------------
1999 2000
------ ------
<S> <C> <C>
Net Sales: (in millions)
Merchandise sales $2,947.0 $3,231.2
Gasoline sales 911.6 1,310.7
-------- --------
Total net sales $3,858.6 $4,541.9
Merchandise sales growth-U.S. same store 9.2% 8.3%
Gasoline gallon sales change-per store 5.4% 1.7%
Average retail price of gasoline per gallon $ 1.11 $ 1.50
</TABLE>
Merchandise sales for the six months ended June 30, 2000 were $3,231.2
million, an increase of $284.2 million, or 9.6%, from $2,947.0 million for
the six months ended June 30, 1999. This increase was primarily attributable
to U.S. same-store merchandise sales growth of 8.3% and our operating an
average of 65 additional stores. Wholesale cigarette cost increases, which
were reflected in higher retail prices, accounted for less than two
percentage points of the increase in U.S. same-store merchandise sales,
while contributing just over five percentage points to the 1999 growth.
Categories contributing to merchandise sales growth were non-carbonated
beverages, beer/wine, trading cards, prepaid cards, snacks and coffee.
Gasoline sales for the six months ended June 30, 2000 were $1,310.7
million, an increase of $399.1 million, or 43.8%, from $911.6 million for the
six months ended June 30, 1999. This increase was primarily attributable to
a higher average retail price of gasoline and our operating an average of
102 additional stores that sell gasoline. During the six months ended
June 30, 2000, the average retail price of gasoline was $1.50 per gallon, a
$0.39 increase from $1.11 per gallon for the same period in 1999.
Average gallons sold
11
<PAGE>
per store increased 1.7% during the six months ended June 30, 2000, as
compared to the same period in 1999. This increase was primarily the result
of adding new gasoline outlets, which tend to pump higher volumes than
existing stores. We sold 875.2 million gallons in the six
months ended June 30, 2000, an increase of 52.9 million gallons, or 6.4%,
from 822.3 million gallons for the same period in 1999.
<TABLE>
<CAPTION>
GROSS PROFIT
Six Months Ended June 30
--------------------------
1999 2000
------ ------
<S> <C> <C>
Gross Profit (in millions)
Merchandise gross profit $1,005.2 $1,123.3
Gasoline gross profit 113.9 118.9
-------- --------
Total gross profit $1,119.1 $1,242.2
Merchandise gross profit margin 34.1% 34.8%
Merchandise gross profit growth-per store 6.6% 10.5%
Gasoline gross profit margin-cents per gallon 13.85 13.58
Gasoline gross profit change-per store 21.9% (0.2%)
</TABLE>
Merchandise gross profit for the six months ended June 30, 2000 was
$1,123.3 million, an increase of $118.1 million, or 11.7%, from $1,005.2
million for the six months ended June 30, 1999. This increase was primarily
attributable to higher U.S. same-store merchandise sales, a higher
merchandise gross profit margin and our operating more stores. Gross profit
margin increased to 34.8% for the six months ended June 30, 2000 from 34.1%
for the same period in 1999. The margin increase was primarily attributable
to increased sales in several higher margin categories, including
trading cards, coffee, services and non-carbonated beverages, combined with
incremental cigarette manufacturer allowances. Merchandise gross profits per
store increased 10.5% for the six months ended June 30, 2000 as compared to
the same period in 1999.
Gasoline gross profit for the six months ended June 30, 2000 was $118.9
million, an increase of $5.0 million, or 4.4%, from $113.9 million for the
six months ended June 30, 1999. This increase in gasoline gross profit was
the result of more store months and increased gallon sales per-store, as
gasoline gross profit margin declined to 13.58 cents per gallon from 13.85.
OTHER INCOME
Other income for the six months ended June 30, 2000 was $52.0 million,
an increase of $5.8 million, or 12.6%, from $46.2 million for the six months
ended June 30, 1999. This increase was attributable to increased franchise
fees associated with a greater number of stores being franchised. In
addition, royalty income from our area licensees increased as a result of
higher sales at stores operated by licensees and an increase in the number of
such stores.
FRANCHISEE GROSS PROFIT EXPENSE
Franchisee gross profit expense for the six months ended June 30, 2000
was $321.8 million, an increase of $34.7 million, or 12.1%, from $287.1
million for the six months ended June 30, 1999. The increase was primarily
attributable to higher per store gross profits at franchised stores and an
increase in the number of stores operated by franchisees.
12
<PAGE>
OPERATING, SELLING, GENERAL AND ADMINISTRATIVE EXPENSE
OSG&A for the six months ended June 30, 2000 was $860.5 million, an
increase of $82.7 million, or 10.6%, from $777.8 million for the six months
ended June 30, 1999. This increase was primarily attributable to the cost of
operating more stores, approximately $20 million of incremental costs
related to the implementation of our proprietary retail information system,
and higher costs associated with processing credit card charges, due in part
to significantly higher gasoline prices.
The ratio of OSG&A to net sales decreased to 18.9% for the six months
ended June 30, 2000 from 20.2% for the six months ended June 30, 1999.
Assuming that the average retail price of gasoline in the six months ended
June 30, 2000 was reduced to the level which prevailed in the six months ended
June 30, 1999, the ratio of OSG&A to net sales would have increased to 20.5%
for the six months ended June 30, 2000 from 20.2% for the same period in 1999.
INTEREST EXPENSE, NET
Net interest expense for the six months ended June 30, 2000 was $45.4
million, a decrease of $4.3 million, or 8.5%, from $49.7 million for the six
months ended June 30, 1999. This decrease was primarily due to the repayment
of borrowings with proceeds from our sale of common stock to IYG Holding
Company on March 16, 2000.
INCOME TAX EXPENSE
Income tax expense for the six months ended June 30, 2000 was $13.3
million, compared to $20.1 million for the six months ended June 30, 1999.
This decrease was primarily attributable to a non-recurring benefit of $12.5
million recorded in the first quarter of 2000, which resulted from a
settlement with the Internal Revenue Service related to audits of our federal
income taxes for the 1992 through 1995 tax years. Excluding the
non-recurring benefit, our effective tax rate was 38.8% for the six months
ended June 30, 2000 compared to 39.6% for the same period in 1999.
EXTRAORDINARY GAIN
In the first quarter of 1999, we redeemed $19.4 million of our
debentures resulting in a $4.3 million after-tax gain. This gain resulted
from the retirement of future undiscounted interest payments as recorded
under SFAS No. 15, combined with repurchasing a portion of the debentures
below their face amount.
NET EARNINGS
Net earnings for the six months ended June 30, 2000 were $53.2 million
($0.50 per diluted share), an increase of $18.3 million, or 52.5%, from $34.9
million ($0.35 per diluted share) for the six months ended June 30, 1999.
Net earnings for the six months ended June 30, 2000 included the
$12.5 million tax benefit discussed above. Net earnings for the six months
ended June 30, 1999 included the non-recurring $4.3 million extraordinary
gain discussed above. Excluding these non-recurring items, net earnings were
$40.7 million for the six months ended June 30, 2000, an increase of $10.1
million, or 33.1%, from $30.6 million for the same period in 1999.
13
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The majority of our working capital is provided from three sources:
* cash flows generated from our operating
activities;
* a $650 million commercial paper facility,
guaranteed by Ito-Yokado Co., Ltd.; and
* short-term seasonal borrowings of up to $400
million under our revolving credit facility.
We believe that operating activities, coupled with available short-term
working capital facilities, will provide sufficient liquidity to fund
operating and capital expenditure programs, as well as to service debt
requirements. The outstanding balance at June 30, 2000 for commercial paper
was $421.4 million, while there were no amounts outstanding under the
revolver. We expect capital expenditures for 2000, excluding lease
commitments, to be in excess of $350 million.
Our $400 million revolving credit facility was made available to us
under an unsecured credit agreement with a group of lenders. A sub-limit of
$150 million for letters of credit is included in the revolving credit
facility. To the extent outstanding letters of credit are less than the
$150 million maximum, the excess availability can be used for additional
borrowings under the revolving credit facility. The credit agreement also
included a $225 million term loan, the balance of which was paid in full on
March 16, 2000. The covenant levels established by the credit agreement
generally require continuing improvement in our financial condition.
On March 16, 2000, IYG Holding Company purchased 22,736,842 newly issued
shares of our common stock for $540 million, or $23.75 per share, in a
private placement transaction. We used the net proceeds from this
transaction to repay the outstanding balance on our bank term loan, to repay
the outstanding balance of our bank revolver and to reduce indebtedness under
our commercial paper facility.
In January 2000, we entered into a sale-leaseback agreement for 33 of
our store properties whereby we sold land, buildings and related
improvements, which were then leased back to us. We received net proceeds of
$71.9 million on the sale. The sale resulted in approximately $12 million
of deferred gains, which we will recognize on a straight-line basis over the
initial term of the leases. We used all of the proceeds from this
transaction to pay down our revolving credit facility.
In August 1999, we entered into a leasing facility that provides up to
$100 million of off-balance-sheet financing to be used for the construction
of new stores. Funding under this facility is available through August of
2001 with a final maturity of the leases of February 2005. As of June 30,
2000, $55.0 million was funded under this facility.
CASH FROM OPERATING ACTIVITIES
Net cash provided by operating activities was $155.8 million for the six
months ended June 30, 2000 compared to $120.8 million for the six months
ended June 30, 1999, an increase of $35.0 million. This increase can be
primarily attributed to increased levels of net earnings as adjusted for
non-cash items and changes in certain balance sheet amounts.
14
<PAGE>
CASH FROM INVESTING ACTIVITIES
Net cash used in investing activities was $68.0 million for the six
months ended June 30, 2000 compared to $213.7 million for the six months
ended June 30, 1999. Payments for capital expenditures were $145.2 million
for the six months ended June 30, 2000 compared to $226.7 million
for the same period in 1999. In addition, we received $71.9 million of net
proceeds from a sale-leaseback transaction during the six months ended June
30, 2000.
Capital expenditures for each of the periods were used for new store
development, continued implementation of our retail information system, new
equipment to support merchandising initiatives, maintaining, remodeling and
upgrading store and gasoline facilities' image and equipment and compliance
with environmental regulations.
CASH FROM FINANCING ACTIVITIES
Net cash used in financing activities was $63.9 million for the six
months ended June 30, 2000, compared to net cash provided by financing
activities of $86.7 million for the six months ended June 30, 1999.
Net repayments under commercial paper and revolving credit facilities
totaled $456.1 million for the six months ended June 30, 2000, compared to
net borrowings of $174.0 million for the same period in 1999. Net long-term
debt repayments for the six months ended June 30, 2000 were $158.9 million
compared to $72.8 million for the same period in 1999. Cash from financing
activities for the six months ended June 30, 2000 also included $539.8
million in net proceeds from issuance of common stock that we used to pay
down debt.
OTHER ISSUES
ENVIRONMENTAL
In December 1988, we closed our chemical manufacturing facility in New
Jersey. We are required to conduct environmental remediation at the
facility, including groundwater monitoring and treatment for a projected
15-year period, which commenced in 1998. We have recorded undiscounted
liabilities, representing our best estimates of the clean-up costs, of $6.1
million at June 30, 2000. In 1991, we entered into a settlement agreement
with the former owner of the facility pursuant to which the former owner
agreed to pay a substantial portion of the clean-up costs. Based on the
terms of the settlement agreement and the financial resources of the former
owner, we have a receivable recorded of $3.6 million at June 30, 2000.
Additionally, we accrue for the anticipated future costs and the related
probable state reimbursement amounts for remediation activities at our
existing andpreviously operated gasoline sites where releases of regulated
substanceshave been detected. At June 30, 2000, our estimated undiscounted
liabilityfor these sites was $28.4 million. This estimate is based on our
prior experience with gasoline sites and contractors who perform environmental
assessment and remediation work as well as other factors such as the age of
the tanks and the location of tank sites. We anticipate that substantially
all of the future remediation costs for detected releases of regulated
substances at these sites as of June 30, 2000 will be incurred within the
next four to five years.
15
<PAGE>
Under state reimbursement programs, we are eligible to receive
reimbursement for a portion of future remediation costs, as well as a portion
of remediation costs previously paid. Accordingly, at June 30, 2000, we had
recorded a net receivable of $49.1 million based on the estimated state
reimbursements. In assessing the probability of state reimbursements, we
take into consideration each state's fund balance, revenue sources, existing
claim backlog, status of clean-up activity and claim ranking systems. As a
result of these assessments, the recorded receivable amount is net of an
allowance of $7.6 million.
While there is no assurance of the timing of the receipt of state
reimbursement funds, based on our experience we expect to receive the
majority of state reimbursement funds, except from California, within one to
three years after our payment of eligible remediation expenses. This time
period assumes that the state administrative procedures for processing such
reimbursements have been fully developed. Because of recent legislative
changes in California, we estimate that we will receive state reimbursement
funds within one to ten years after our payment of eligible remediation
expenses. As a result of the timing for reimbursements, we have present-
valued the portion of the recorded receivable amount that relates to
remediation activities that have already been completed at a discount rate of
approximately 6.4%. Thus, the recorded receivable amount is also net of a
discount of $14.3 million.
The estimated future assessment and remediation expenditures and related
state reimbursement amounts could change within the near future as govern-
mental requirements and state reimbursement programs continue to be
implemented or revised.
LITIGATION
We are a defendant in two legal actions, which are referred to as the
7-Eleven Owners for Fair Franchising and the Valente cases, filed by
franchisees in 1993 and 1996, respectively. A nationwide settlement was
negotiated in 1997, and, in connection with the settlement, these two cases
were combined on behalf of a class of all persons who franchised 7-Eleven
convenience stores from us in the United States at any time between January
1, 1987 and July 31, 1997. A total of 98.5% of the class members have
approved the settlement, and the court presiding over the settlement process
gave its final approval of the settlement on April 24, 1998. The settlement
provides that class members who are former franchisees will share in a
settlement fund, that we will make certain changes to the franchise
agreements of class members who are current franchisees and that we will pay
certain attorney fees.
Notices of appeal of the order approving the settlement were filed on
behalf of three of the attorneys who represented the class and six former and
two current franchisees who were members of the class. One of these current
franchisees has dismissed his appeal. The settlement agreement will not
become effective until the appeals are resolved. However, the settlement
agreement provides that while the appeals are pending we will pay certain
maintenance and supply expenses relating to the cash registers and retail
information system equipment of current franchisees that are members of the
settlement class. If the settlement is overturned on appeal, we have the
right to require franchisees to repay the amounts that we paid for these
expenses. Our accruals are sufficient to cover the total settlement costs,
including payments due to former franchisees when the settlement becomes
effective.
16
<PAGE>
RECENTLY ISSUED ACCOUNTING STANDARD
We are currently reviewing SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." The statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. SFAS
No. 133 becomes effective for all fiscal quarters of fiscal years beginning
after June 15, 2000, and earlier application is permitted as of the beginning
of any fiscal quarter. We intend to adopt the provisions of this statement
as of January 1, 2001. The impact of the adoption of SFAS No. 133 has not
been determined at this time due to our continuing investigation of our
financial instruments and the applicability of SFAS No. 133 to them.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
There are no material quantitative changes in market risk exposure at
June 30, 2000, when compared to the update included in our report on Form
10-Q for the quarterly period ended March 31, 2000.
PART II.
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
There are no other reportable suits or proceedings pending or threatened
against the Company other than as previously reported.
ITEM 2. CHANGES IN SECURITIES.
On April 26, 2000, the Company's shareholders approved Articles of
Amendment to the Company's Second Restated and Amended Articles of
Incorporation. The Articles of Amendment effected a one-for-five reverse
split of the Company's common stock as of May 1, 2000. The CUSIP number for
the Company's common stock is now 817826 29 0.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On April 26, 2000, the Company held its annual meeting of shareholders.
Each of the thirteen nominated directors were elected without contest. In
addition,the shareholders ratified the approval of PricewaterhouseCoopers LLP
to bethe Company's independent auditors for 2000 and approved Articles of
Amendment to the Company's Second Restated and Amended Articles of
Incorporation to effect a one-for-five reverse split of the Company's common
stock, as described above in "Item 2."
(a) The votes for and the votes withheld for each of the nominees for
director were as follows:
NOMINEE FOR WITHHELD
------------------------------------------------------
Masatoshi Ito 346,400,440 851,674
Toshifumi Suzuki 346,400,386 851,728
Clark J. Matthews, II 346,376,165 875,949
Yoshitami Arai 346,305,615 946,499
Masaaki Asakura 346,308,715 943,399
Timothy N. Ashida 346,309,215 942,899
Jay W. Chai 346,398,046 854,068
Gary J. Fernandes 346,401,735 850,379
Masaaki Kamata 346,404,515 847,599
17
<PAGE>
NOMINEE FOR WITHHELD
-----------------------------------------------------
James W. Keyes 346,403,541 848,573
Kazuo Otsuka 346,308,965 943,149
Asher O. Pacholder 346,378,192 873,922
Nobutake Sato 346,404,165 847,949
(b) The votes for, against, abstaining and broker non-votes in
connection with the ratification of the appointment of PricewaterhouseCoopers
LLP to be the independent auditors of the Company for 2000 were as follows:
347,105,071 shares were voted for; 90,589 shares were voted against;
56,454 shares abstained from voting; and no broker non-votes were received.
(c) The votes for, against, abstaining and broker non-votes in
connection with the approval of the Articles of Amendment to the Company's
Second Restated and Amended Articles of Incorporation to effect a one-for-
five reverse split of the Company's common stock were as follows:
340,331,661 shares were voted for; 6,843,358 shares were voted against;
77,095 shares abstained from voting; and no broker non-votes were received.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
Exhibit (3) Copy of Articles of Amendment to the Second Restated
Articles of Incorporation, as filed with the Scretary of State of Texas.
Incorporated by reference from the Company's Form 10-Q for the quarterly
period ended March 31, 2000.
Exhibit (15) - Letter re Unaudited Interim Financial Information
Exhibit (27) - Financial Data Schedule
Submitted in electronic format only.
(b) 8-K Reports:
On June 1, 2000, the Company filed a report on Form 8-K to disclose the
filing of Amendment No. 1 to its Registration Statement on Form S-3, file
No. 333-36496, for the public sale of up to 11,500,000 shares of its common
stock. In the report on Form 8-K, the Company incorporated by reference the
sections under the headings "Risk Factors," "Management's Discussion and
Analysis of Financial Condition and Results of Operations," "Business,"
"Management," and "Principal Shareholders" contained in Amendment No. 1. On
July 27, 2000, the Company announced its plans to withdraw the Registration
Statement, and on August 1, 2000, the Company filed notice of the withdrawal
with the Securities and Exchange Commission.
18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
7-ELEVEN, INC.
--------------------------
(Registrant)
Date: August 3, 2000 /s/ James W. Keyes
--------------- ----------------------------
(Officer)
James W. Keyes
President and Chief Executive Officer
Date: August 3, 2000 /s/ Ezra Shashoua
-------------- -----------------------------
(Principal Financial Officer)
Ezra Shashoua
Vice President, Chief Financial
Officer and Treasurer
19
