<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 24, 1995
COMMISSION FILE NUMBER 0-20449
PRICE ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 33-0628740
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4649 MORENA BOULEVARD
SAN DIEGO, CALIFORNIA 92117
(Address of principal executive offices)
(619) 581-4530
(Registrant's telephone number, including area code)
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
--- ---
The registrant had 23,234,866 common shares, par value $.0001, outstanding at
January 10, 1996.
<PAGE>
PRICE ENTERPRISES, INC.
AND SUBSIDIARIES
INDEX TO FORM 10-Q
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS PAGE
Consolidated Balance Sheets...............................................3
Consolidated Statements of Income.........................................4
Consolidated Statements of Cash Flows.....................................5
Notes to Consolidated Financial Statements................................6
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS................................10
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS..................................................13
ITEM 2 - CHANGES IN SECURITIES..............................................13
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES....................................13
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS............................................................13
ITEM 5 - OTHER INFORMATION..................................................13
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K...................................13
Exhibit (15.1) - Independent Accountants' Review Report.............15
Exhibit (15.2) - Letter of Ernst & Young LLP
RE: Unaudited Interim Financial Information........16
Exhibit (27) - Financial Data Schedules.............................17
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 24, AUGUST 31,
1995 1995
------------ ------------
ASSETS (unaudited) (Note)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 5,429 $ -
Accounts receivable, net 8,505 5,776
Merchandise inventories 4,094 7,385
Prepaid expenses 1,848 1,499
------------ ------------
Total current assets 19,876 14,660
Real estate assets:
Land and land improvements 181,830 179,794
Building and improvements 177,095 168,808
Fixtures and equipment 7,412 7,928
Construction in progress 2,435 6,457
------------ ------------
368,772 362,987
Less accumulated depreciation (31,058) (28,233)
------------ ------------
337,714 334,754
Other assets:
Property held for sale, net 93,051 100,035
City notes receivable 30,603 30,835
Atlas and other notes receivable 46,139 45,790
Deferred income taxes 27,943 29,315
Deferred rents and leasing costs, net 12,794 11,932
------------ ------------
210,530 217,907
------------ ------------
Total assets
$568,120 $567,321
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,667 $ 2,592
Accrued expenses 3,991 6,186
Other current liabilities 5,934 6,095
------------ ------------
Total current liabilities 15,592 14,873
Note payable to PriceCostco 15,425 15,425
Minority interest of PriceCostco 2,915 4,938
Stockholders' equity:
Common stock 2 2
Additional paid-in capital 548,715 548,705
Retained earnings (deficit) 896 (1,197)
Treasury stock (15,425) (15,425)
------------ ------------
534,188 532,085
------------ ------------
Total liabilities and stockholders' equity $568,120 $567,321
------------ ------------
------------ ------------
</TABLE>
Note: The balance sheet at August 31, 1995 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
SEE ACCOMPANYING NOTES.
<PAGE>
PRICE ENTERPRISES, INC
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited - amounts in thousands, except per share date)
<TABLE>
<CAPTION>
16 WEEKS ENDED
-----------------------------
DECEMBER 24, DECEMBER 18,
1995 1994
------------ ------------
Revenues
<S> <C> <C>
Real estate $13,135 $11,771
Gain on sale of real estate, net 478 -
Merchandise sales 17,497 29,908
Other revenues 373 406
------------ ------------
Total revenues 31,483 42,085
Operating Expenses
Real estate:
Operating, maintenance and administrative 2,458 2,041
Property taxes 1,916 2,094
Depreciation and amortization 2,492 1,983
Merchandising:
Cost of sales 15,968 27,958
Operating expenses 6,671 5,612
General and administrative 940 971
------------ ------------
Total operating expenses 30,445 40,659
------------ ------------
Operating income 1,038 1,426
Interest and Other
Interest income, net 1,688 1,462
Equity in earnings of Price Club Mexico joint - 376
venture
Minority interest 2,023 750
------------ ------------
Total interest and other 3,711 2,588
------------ ------------
Income before provision for income taxes 4,749 4,014
Provision for income taxes 2,656 1,338
------------ ------------
Net income $ 2,093 $ 2,676
------------ ------------
------------ ------------
Net income per share $ .09 $ .10
------------ ------------
------------ ------------
Average number of shares outstanding 23,235 27,000
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE>
PRICE ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - amounts in thousands)
<TABLE>
<CAPTION>
16 WEEKS ENDED
-----------------------------
DECEMBER 24, DECEMBER 18,
1995 1994
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $2,093 $2,676
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 2,992 2,823
Gain on sale of real estate assets (478) -
Equity in earnings of Price Club Mexico joint - (376)
venture
Minority interest of PriceCostco (2,023) 219
Change in accounts receivable and other assets 1,585 1,177
Change in accounts payable and other 1,720 13,064
liabilities
Deferred rents and leasing costs (862) (1,128)
Other - (406)
------------ ------------
Net cash flows provided by operating 5,027 18,049
activities
INVESTING ACTIVITIES
Additions to real estate assets (6,736) (9,913)
Proceeds from sale of real estate assets 8,246 210
Investment in Price Club Mexico joint venture - (2,949)
Additions to notes receivable (655) -
Payments of notes receivable 538 181
------------ ------------
Net cash flows provided by (used in)
investing activities 1,393 (12,471)
FINANCING ACTIVITIES
Line of credit repayments (1,001) -
Proceeds from exercise of stock options
including tax benefit 10 -
Equity adjustment arising from exchange
agreement - (8,764)
------------ ------------
Net cash flows used in financing activities
(991) (8,764)
Net increase (decrease) in cash 5,429 (3,186)
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD - 1,644
------------ ------------
CASH AND CASH EQUIVALENTS, LESS BANK CHECKS
OUTSTANDING, AT END OF PERIOD $5,429 $(1,542)
------------ ------------
------------ ------------
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE>
PRICE ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
December 24, 1995
NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
Price Enterprises, Inc. (PEI or the Company) became a publicly-traded company on
December 21, 1994, following an exchange offer in which approximately 23.2
million shares of PriceCostco, Inc. were exchanged for shares of PEI. However,
since August 31, 1994 PEI has operated as a separate company.
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the 16 weeks ended December 24, 1995 are not necessarily
indicative of the results that may be expected for the year ended August 31,
1996.
The preparation of the 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 and
disclosure of contingent 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.
BUSINESS SEGMENTS AND FISCAL YEAR
The Company has investments in two business segments: (1) real estate
operations, and (2) certain merchandising businesses. The Company's real estate
business reports on a fiscal year which ends on August 31; whereas, the
merchandising businesses report on a 52/53 week fiscal year which ends on the
Sunday nearest August 31. For ease of presentation, all fiscal years in this
report are referred to as having ended on August 31.
With respect to the real estate segment, each fiscal quarter includes three
calendar months of operating results; however, the merchandising segment's
fiscal quarters are as follows: first quarter -- 16 weeks, second quarter -- 12
weeks, third quarter -- 12 weeks, fourth quarter -- 12 or 13 weeks, depending
upon whether the fiscal year has 52 or 53 weeks. Fiscal 1995 included 53 weeks.
<PAGE>
PRICE ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
REAL ESTATE ASSETS
Real estate assets are recorded at PEI's historical costs as
adjusted for recognition of impairment losses.
Real estate assets are depreciated using the straight-line method over their
estimated useful lives, which are as follows:
Land improvements 15 - 25 years
Buildings and improvements 10 - 25 years
Tenant improvements Term of related lease
Fixtures and equipment 5 years
Certain Price Quest MIS assets 3 years
Property held for sale is recorded at the lower of cost or management's
estimates of the expected net proceeds to be received from the eventual sale.
MERCHANDISE INVENTORIES
Merchandise inventories, which include merchandise for resale and display
samples, are valued at the lower of cost (first-in, first-out) or market.
REAL ESTATE RENTALS AND DEFERRED RENTS
All leases are classified as operating leases. Rentals are recognized using the
straight-line method over the terms of the leases. Deferred rents represent the
excess of real estate rentals recognized on the straight-line basis over cash
received under the applicable lease provisions. Common area maintenance fees
are included in rental income.
DEFERRED LEASING COSTS
Costs incurred in connection with leasing are deferred and amortized using the
straight-line method over the term of the related lease. Unamortized leasing
costs are charged to expense upon early termination of the lease.
INCOME TAXES
Income taxes have been provided for in accordance with Statement of Financial
Accounting Standard (SFAS) No. 109, "Accounting for Income Taxes." SFAS No. 109
requires companies to account for deferred taxes using the asset and liability
method and, accordingly, deferred income taxes are provided to reflect temporary
differences between financial and tax reporting.
<PAGE>
PRICE ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
INCOME TAXES (CONTINUED)
The operations of the Company for the first quarter ended December 18, 1994 are
included in the consolidated tax returns of PriceCostco. The provision for
income taxes since that date have been computed for PEI as a stand-alone entity,
therefore, losses incurred by 51% owned subsidiaries were not accorded any tax
benefit. As of November 27, 1995 both Price Quest and Price Global were
restructured as limited liability companies which are treated as partnerships
for income tax purposes.
NOTE 2 - NOTES RECEIVABLE
Notes receivable are recorded at PEI's historical cost as
adjusted for recognition of impairment losses. They include amounts loaned to
municipalities and agencies (City Notes) to facilitate real property
acquisitions and improvements. The City Notes bear interest at rates which
range from 7% to 10%. Repayment of the majority of these notes is generally
based on that municipality's allocation of sales tax revenues generated by
retail businesses located on a particular property associated with such City
Note.
The Company holds a note receivable from Atlas Hotels, Inc. (Atlas) which is
collateralized by hotel property in San Diego, California. On April 3, 1995 the
debt obligation was restructured and now requires repayment after five years of
all outstanding indebtedness, with interest accruing on the outstanding
principal at 10% per annum. Interest is payable monthly at a rate equal to the
six month LIBOR rate plus 2.5% per annum (not to exceed 8% per annum through
December 1, 1996), and the interest not currently payable is added to the
principal amount of the loan.
NOTE 3 - COMMITMENTS AND CONTINGENCIES
On December 19, 1994 and January 4, 1995 Complaints were filed in the United
States District Court, Western District of Washington (entitled SNYDER V
PRICE/COSTCO, INC. ET. AL., Case #C94-1874 and BALSAM V PRICE/COSTCO, INC. ET.
AL., Case #C95-0009, respectively) against defendants including the Company and
certain of its directors. The two suits have been consolidated for all
purposes. In November 1995, a Second Amended Complaint was filed. The
Complaint alleges violation of certain laws and asserts certain related claims,
arising from the exchange offer transaction. The Company believes that the suit
is without merit and will vigorously defend against the suit. The Company does
not believe that the ultimate outcome of such litigation will have a material
adverse effect on the Company's financial position or results of operations.
<PAGE>
PRICE ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 4 - LINE OF CREDIT FACILITY
The Company has a revolving credit facility with a commercial bank for up to $25
million in unsecured advances through June 29, 1997. Interest is charged at the
bank's base rate, or at rates slightly higher than LIBOR pricing, at the
Company's election. There were no outstanding borrowings on this facility as of
December 24, 1995.
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis compares the results of operations for
the first quarter of fiscal 1996 ended December 24, 1995 to the first quarter of
fiscal 1995 ended December 18, 1994. The Company invests in real estate and
related assets, in addition to certain merchandising businesses which include
Price Quest, Price Global Trading and Price Ventures activities. Where
appropriate, the financial results for these two business segments are discussed
separately. In those instances where changes are attributed to more than one
factor, the factors are presented in descending order of importance. All dollar
amounts are in thousands. The following discussion should be read in
conjunction with the consolidated financial statements and the notes thereto.
REAL ESTATE RENTAL OPERATIONS
<TABLE>
<CAPTION>
Revenue Percent Operating Percent
Amount Change Income Change Change
----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
1st Quarter - FY 1996 $13,135 12% $6,269 $616 11%
1st Quarter - FY 1995 11,771 -- 5,653 -- --
</TABLE>
Each fiscal quarter reflects 3 calendar months of activity for the real
estate segment. Operating income is defined as rental revenue, including common
area expense reimbursements, less the related real estate expenses including
unreimburseable expenses for unimproved land and certain developed properties
with vacant space, and depreciation.
The increase in revenue and operating income was due to the opening of the
Pentagon City (VA) center during the second quarter of fiscal 1995 and increases
in rental revenue from properties located in Mapleshade (NJ), Worcester (MA),
and Contra Costa (CA), somewhat offset by a decline in rental revenue in Phoenix
(AZ) due to the sale of the property in March of 1995.
ADJUSTED FUNDS FROM OPERATIONS
<TABLE>
<CAPTION>
Less Add Adjusted
Operating Straight-line Depreciation Funds from Percent
Income Rentals Expense Operations Change
----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
1st Quarter - FY 1996 $6,269 $(780) $2,492 $7,981 17%
1st Quarter - FY 1995 5,653 (800) 1,983 6,836 --
</TABLE>
Real estate industry analysts generally consider funds from operations
(FFO) to be a measure of performance for real estate-oriented companies. As
defined by the National Association for Real Estate Investment Trusts (NAREIT),
it is the pre-tax income determined in accordance with GAAP, excluding gains
(losses) from sales of property, after adding back depreciation and amortization
expense. Due to the significance of straight-line rent accruals, which
represent noncash revenues associated with fixed future minimum rent increases,
the Company has adjusted the NAREIT definition to eliminate straight-line rents
when computing its adjusted FFO.
Adjusted FFO does not represent cash flows from operations as defined by
generally accepted accounting principles and should not be considered as an
alternative to net income as an indicator of the Company's operating performance
or to cash flows as a measure of liquidity.
The growth in adjusted FFO reflects many of the factors mentioned in the
operating income discussion above.
<PAGE>
GAINS ON SALE OF REAL ESTATE
<TABLE>
<CAPTION>
Percent
Amount Change Change
----------- ---------- ----------
<S> <C> <C> <C>
1st Quarter - FY 1996 $478 $478 100%
1st Quarter - FY 1995 0 -- --
</TABLE>
Gains on the sale of real estate related to the sales of properties in S.W.
Denver (CO), North Highlands (CA), Sunnyvale (CA), and Palm Harbor (FL),
somewhat offset by a loss on the sale of property in West Palm Beach (FL).
MERCHANDISING OPERATIONS
<TABLE>
<CAPTION>
Sales Percent Gross % of Percent
Amount Change Margin Sales Change
----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
1st Quarter - FY 1996 $17,497 -41% $1,529 8.7% -22%
1st Quarter - FY 1995 29,908 --- 1,950 6.5% ---
</TABLE>
Merchandise sales include Price Quest and international trading
businesses. Gross margin is defined as merchandise sales less the related
merchandise costs. In fiscal 1996, the decrease in sales is attributed to a
51% decrease in sales for Price Quest, from $12.1 million in first quarter
fiscal 1995 to $5.9 million for the same period in fiscal 1996, primarily as
a result of eliminating merchandise displays. Price Global Trading sales
declined 42% compared to the prior year due to the continued loss of sales
from certain international trading customers in Hong Kong and Mexico. These
decreases were somewhat offset by an increase in sales by Price Ventures of
$1.3 million.
The increase in gross margin as a percent of sales during first quarter
fiscal 1996 was primarily due to the impact of sales generated by ancillary
Price Quest businesses at gross margins higher than last year. Somewhat
offsetting to this margin increase was the shifting of sales from Price Quest to
the international businesses which typically have a lower gross margin
structure.
<TABLE>
<CAPTION>
MERCHANDISING OPERATING EXPENSES
Percent
Amount Change Change
---------- ---------- ----------
<S> <C> <C> <C>
1st Quarter - FY 1996 $6,671 $1,059 19%
1st Quarter - FY 1995 5,612 --- ---
</TABLE>
The increase in merchandising operating expenses was primarily due to the
shifting of expenses to Price Ventures and Price Global Trading subsequent to
the sale of Price Club Mexico during April of 1995. Previously these expenses
were reimbursed by the Mexican joint venture. These increases were partially
offset by a slight decrease in expenses for Price Quest.
GENERAL AND ADMINISTRATIVE EXPENSES
Percent
Amount Change Change
---------- ---------- ----------
1st Quarter - FY 1996 $940 $(31) -3%
1st Quarter - FY 1995 971 --- ---
The decrease in expenses is due to the inclusion of certain start-up
expenses in the first quarter of fiscal 1995.
<PAGE>
INTEREST INCOME (NET)
Percent
Amount Change Change
---------- ---------- ----------
1st Quarter - FY 1996 $1,688 $226 15%
1st Quarter - FY 1995 1,462 --- ---
The increase in interest income was due to higher interest income on the
Atlas note receivable.
MINORITY INTEREST
Percent
Amount Change Change
---------- ---------- ----------
1st Quarter - FY 1996 $2,023 $1,273 170%
1st Quarter - FY 1995 750 --- ---
Minority interest reflects PriceCostco's share of the net after-tax losses
generated by Price Quest, Price Global Trading and Mexico Clubs LLC. In fiscal
1996, the increase in minority interest was due to higher losses from these
subsidiaries and the impact of not being able to deduct, for income tax
purposes, the related net operating losses.
PROVISION FOR INCOME TAXES
Percent
Amount Change Change
---------- ---------- ----------
1st Quarter - FY 1996 $2,656 $1,318 99%
1st Quarter - FY 1995 1,338 -- --
During the first quarter of fiscal 1995, losses incurred by the 51%-owned
subsidiaries prior to December 21, 1994 were tax deductible by PriceCostco, and
the corresponding benefits were transferred to these subsidiaries in accordance
with certain tax sharing agreements. Losses after that date were not
deductible; therefore, income tax expense for the first quarter of fiscal 1996
is higher than the prior year level. Recently, these subsidiaries were
restructured as limited liability companies which are treated as partnerships
for income tax purposes. PEI recognizes a tax benefit for tax losses occurring
subsequent to the restructuring date.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
While the Company is well positioned to finance its business activities
through a variety of sources, it expects to satisfy short-term liquidity
requirements through net cash provided by real estate operations and through
borrowings under the unsecured revolving line of credit facility. Approximately
$93 million of the Company's real estate assets are being held for sale, and the
cash flow that may ultimately be generated by sales of these properties
represents a major source of additional capital resources. To the extent that
investment opportunities exceed available cash flow from these sources, the
Company's unleveraged balance sheet should enable it to access significant
amounts of capital through bank credit facilities and/or securitized debt
offerings, or the Company may choose to seek additional funds through future
public equity offerings.
The Company has a revolving credit facility with a commercial bank for up to
$25 million in unsecured advances through June 29, 1997. Advances bear
interest, at the Company's option, at either LIBOR plus 0.40% or the bank's Base
Rate, as defined. The agreement requires that the Company not sell or pledge
certain property with a net book value of $180 million as of August 31, 1995,
that the Company maintain certain net worth and debt-to-equity ratios, and that
a facility fee of 0.15% of the commitment amount be paid annually. As of
December 24, 1995, there was no outstanding balance on the credit facility.
Consistent with historical trends, operating income from real estate
activities increases as properties are developed and declines as properties are
sold. The Company's liquidity is primarily affected by the timing and magnitude
of rental property acquisition, development and disposition.
INFLATION
Because a substantial number of the Company's leases contain provisions for
rent increases based on changes in various consumer price indices, based on
fixed rate increases, or based on percentage rent if tenant sales exceed certain
base amounts, inflation is not expected to have a significant material impact on
future net income or cash flow from developed and operating properties. In
addition, substantially all leases are "triple net," whereby specific operating
expenses and property taxes are passed through to the tenant. For undeveloped
or under-developed properties, inflation could increase the Company's cost of
carrying and developing the properties; however, inflation would likely increase
the future sales value of the properties.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS ---
On December 19, 1994 and January 4, 1995 Complaints were filed in the United
States District Court, Western District of Washington (entitled SNYDER V
PRICE/COSTCO, INC. ET. AL., Case #C94-1874 and BALSAM V PRICE/COSTCO, INC. ET.
AL., Case #C95-0009, respectively) against defendants including the Company and
certain of its directors. The two suits have been consolidated for all
purposes. In November 1995, a Second Amended Complaint was filed. The
Complaint alleges violation of certain laws and asserts certain related claims,
arising from the exchange offer transaction. The Company believes that the suit
is without merit and will vigorously defend against the suit. The Company does
not believe that the ultimate outcome of such litigation will have a material
adverse effect on the Company's financial position or results of operations.
The Company is a party to other routine litigation incident to its business
and to which its property is subject. The Company's management does not believe
that the ultimate resolution of any of these matters will have a material
adverse impact on the financial position of the Company.
ITEM 2. CHANGES IN SECURITIES ---
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES ---
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ---
None.
ITEM 5. OTHER INFORMATION ---
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ---
(a) The following exhibits are included herein or incorporated by reference:
(15.1) Independent Accountant's Review Report
(15.2) Letter of Ernst & Young LLP re: Unaudited Interim Financial
Information
(27) Financial Data Schedules
(b) No reports on Form 8-K were filed for the 16 weeks ended December 24,
1995.
<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.
PRICE ENTERPRISES, INC.
REGISTRANT
Date: January 11, 1996 /s/ Robert E. Price
-------------------
Robert E. Price
PRESIDENT & CHIEF EXECUTIVE OFFICER
Date: January 11, 1996 /s/ Daniel T. Carter
--------------------
Daniel T. Carter
EXECUTIVE VICE PRESIDENT,
CHIEF FINANCIAL OFFICER
<PAGE>
EXHIBIT 15.1 -- INDEPENDENT ACCOUNTANTS' REVIEW REPORT
Board of Directors
Price Enterprises, Inc.
We have reviewed the accompanying consolidated balance sheet of Price
Enterprises, Inc. as of December 24, 1995, and the related consolidated
statements of income and cash flows for the sixteen week periods ended December
24, 1995 and December 18, 1994. These financial statements are the
responsibility of the Company's management.
We conducted our reviews 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 generally accepted auditing standards, which will be
performed for the full year with the objective of expressing an opinion
regarding the financial statements taken as a whole. Accordingly, we do
not express such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying consolidated financial statements referred
to above for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Price Enterprises, Inc. as of
August 31, 1995, and the related statements of income, stockholders' equity,
and cash flows for the year then ended (not presented herein) and in our
report dated October 10, 1995, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth
in the accompanying consolidated balance sheet as of August 31, 1995, is
fairly stated, in all material respects, in relation to the consolidated
balance sheet from which it has been derived.
ERNST & YOUNG LLP
San Diego, California
January 9, 1996
<PAGE>
EXHIBIT 15.2 -- LETTER RE: UNAUDITED INTERIM FINANCIAL INFORMATION
Board of Directors
Price Enterprises, Inc.
We are aware of the incorporation by reference in Registration Statement
(Form S-8 No. 33-60999) pertaining to the Price Enterprises 1995 Combined
Stock Grant and Stock Option Plan and the Price Enterprises Directors' 1995
Stock Option Plan of our report dated January 9, 1996 relating to the
unaudited consolidated interim financial statements of Price Enterprises,
Inc. which are included in its Form 10-Q for the quarter ended December 24,
1995.
Pursuant to Rule 436(c) of the Securities Act of 1933 our report is not a
part of a registration statement prepared or certified by accountants within
the meaning of Section 7 or 11 of the Securities Act of 1933.
ERNST & YOUNG LLP
San Diego, California
January 9, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> SEP-01-1996
<PERIOD-START> SEP-04-1995
<PERIOD-END> DEC-24-1995
<CASH> 5429
<SECURITIES> 0
<RECEIVABLES> 85247
<ALLOWANCES> 0
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