UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
X SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended January 29, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OR THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number : 1-6914
Sun City Industries, Inc.
(Exact name of registrant as specified in its charter)
Delaware 59-0950777
(State or other jurisdiction of (IRS Employer ID. No.)
incorporation or organization)
5545 N.W. 35th Avenue, Fort Lauderdale, Florida 33309
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (305) 730-3333
Securities registered pursuant to Section 12 (b) of the Act:
Name of each exchange
Title of Each Class on which registered
Common Stock, American Stock Exchange
Par value $.10 per share
Securities registered pursuant to Section 12 (g) of the Act:None
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
YES X NO
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
As of April 21, 1994, the aggregate market value of the
Registrant's voting stock held by non-affiliates of the Registrant
was $3,670,279, (the price at which the stock was sold at the close
of business on April 21, 1994). For purposes of this calculation,
shares of Common Stock held by directors, officers and stockholders
whose ownership exceeds five percent of the Common Stock
outstanding at January 29, 1994 were excluded from the number of
shares held by non-affiliates. Exclusion of shares held by any
person should not be construed to indicate that such person
possesses the power, direct or indirect, to direct or cause the
direction of the management or policies of the registrant or that
such person is controlled by or under common control with the
registrant.
As of April 21, 1994 there were 1,435,702 shares of the
Registrant's $.10 par value Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
The Registrant's definitive proxy statement for its 1994
Annual Meeting of Stockholders to be held on June 23, 1994 is
incorporated by reference into Part III of this Form 10-K.
Total Number of Pages: 39 Exhibit Index: Page No. 37
<PAGE>
PART I
ITEM 1 - Business
As a result of a 1990 Stock Redemption, a new Executive
Management team took over operating control of Sun City
Industries, Inc. (the "Company"). The Executive Team
developed a business plan and began its implementation during
fiscal year 1993. The plan concentrates the Company's efforts
on the Company's foodservice operations where Management
believes opportunities exist for growth through mergers and
acquisitions as well as geographical and product line
expansion.
General Development of the Business
a) The Company was incorporated in Delaware in July 1961 as Sun
City Dairy Products, Inc., successor to a business founded in
1949; the present name being adopted in May 1969 which has
developed into a leading marketer of eggs, butter, cheese,
poultry and related products through internal growth and
acquisitions .
In March 1969, the Company acquired Certified Poultry & Egg
Co. for $240,000 in cash; Oak Crest Enterprises, Inc. and Oak
Crest Hatcheries, Inc. for an aggregate of 80,000 shares of
the Company's $.10 par value Common Stock.
On November 6, 1970, the Company acquired Nearby Producers Egg
& Poultry Marketing Corp. and Carlisle Poultry & Egg
Associates, Inc. for $81,083 and 118,504 shares of the
Company's $.10 par value Common Stock.
On August 3, 1987 the Company acquired the inventory and
certain other assets, including the trade name, from Hess
Foods of Lancaster County, Pa. for $250,000.
On February 4, 1991, the Company acquired the businesses of
William F. O'Brien Inc. and Diversified Foods, Inc. of Fort
Lauderdale, Florida for $490,200 in cash and the assumption of
certain liabilities.
On August 12, 1991, the Company acquired the business of
Gilley's Sausage Co., Inc. of Winston, Georgia for $116,300 in
cash and the assumption of certain liabilities.
On December 6, 1993, the Company acquired the business and
assets of Gulf Coast Food Distributors, Inc. for $796,895 in
cash and the assumption of certain liabilities.
b) The Company is engaged in the processing and marketing of
shell eggs and in the foodservice division in which the
Company distributes butter, eggs, cheese, poultry, and with
the acquisition of Gulf Coast, has added produce, meats,
seafood, groceries and paper goods.
In the Egg Division, the Company's customers are national and
regional supermarkets, local grocery and convenience stores
and U.S. military installations and bases. In the Foodservice
Division, the Company's customers are regional hotels,
restaurants, schools, hospitals, prisons, caterers and cruise
ship lines.
The Company's lines of business include the sale of eggs
(shell, frozen and pasteurized) butter, cheese (hard, soft,
domestic and imported) poultry, sausage provisions, produce,
meats and groceries. Other than eggs, no single line of
business has accounted for more than 10% of the Company's
total annual revenues, in any of the last three fiscal years.
c) The business of the Company is conducted through its wholly-
owned subsidiaries which are engaged principally in the
business of processing and marketing shell eggs and the
distribution of eggs, butter, cheese, poultry, sausage
provisions, produce, meats, groceries and other products.
Unless the context indicates otherwise, references to the
Company in this Report include the Company's subsidiaries.
1) The Company purchases shell eggs from producers
located in the states of Florida, Georgia, Maine,
New York, North Carolina, Indiana, Illinois, Ohio,
Pennsylvania, Maryland and South Carolina. Through
its trained personnel, the Company inspects farms
from which unprocessed eggs are purchased to ensure
that the Company's quality control standards are
complied with by the producers. The shell eggs
purchased are then processed by the Company's
plants located in the States of Virginia, North
Carolina, and Maryland.
The shell eggs processed and purchased by the
Company are sold to customers in the states of
Connecticut, Delaware, Florida, Georgia, Maryland,
Michigan, New Jersey, New York, North Carolina,
Pennsylvania, South Carolina, Virginia, West
Virginia and the District of Columbia. The
Company's customers include national and regional
supermarket chains, independent supermarkets,
hospitals, hotels, restaurants, educational
institutions, cruise ship lines, airline caterers,
educational and government facilities.
In Florida, New York, New Jersey, Pennsylvania,
Georgia, Maryland and Washington, D.C. the Company
sells butter, eggs, cheese, poultry and similar
products. None of the products mentioned in this
paragraph, except eggs, has represented more than
10.0% of the Company's consolidated sales in any of
the last three fiscal years.
Sales 1/29/94 1/31/93 1/31/92
Egg division 47.9% 48.3% 52.8%
Foodservice 51.7% 51.0% 46.7%
Other marketing 1.4% .7% .5%
During the Company's fiscal years ended January 29,
1994, and January 31, 1993 and 1992, the Company's
shell egg sales accounted for 64%, 62% and 67% of
its revenues, respectively. The Company processes
a substantial portion of all the shell eggs it
purchases. Consequently the Company does not
determine, and is unable to approximate
meaningfully, the portion of its total shell egg
income attributable to the Company's shell egg
processing and marketing operations.
2) Description of segments in development stages-None.
3) Sources and Availability of Raw Materials - The
Company believes that its relationships with its
suppliers are good and that alternative supplies of
eggs are generally available. However, in order to
realize the maximum potential in its egg
processing-marketing division during fiscal 1993,
the Company commenced a program of upgrading the
quality and quantity of its egg supply by making
investments in various egg producing joint
ventures. Although the size of each investment
varies between 15% and 25%, the Company will
receive 100% of the eggs produced by these joint
ventures. (See Management's Discussion and
Analysis - Liquidity and Capital Resources"). The
Company generally purchases its shell eggs from a
large number of producers including its joint
ventures, located in the general vicinity of the
Company's processing plants and distribution
centers. During fiscal 1994 the Company purchased
27.5% of the total eggs purchased from its own
joint ventures, 13.2% from Braswell Milling in
North Carolina; 10.9% from Agri-General of Croton,
Ohio and 9.7% from Bowman Egg Farms of Westminster,
Md. During fiscal 1993 and 1992 respectively the
Company purchased 21.1% and 18.0% from Bowman Egg
Farms; 21.0% and 15.5% from Braswell Milling and
12.0% and 11.8% from Agri-General. The remaining
38.7%, 45.9% and 54.7% of the eggs marketed by the
Company were purchased from a large number of other
producers located in the general vicinity of the
Company's plants. For the fiscal years 1994, 1993
and 1992 no other single independent producer
amounted to more than 10.0% of the Company's egg
purchases.
4) Patents, trademarks, licenses, franchises held -
None.
5) There are no significant seasonal effects on the
Company's consolidated business.
6) As a result of the Company's ability to turn its
resale inventory forty-two (42) times during the
fiscal year ended January 29, 1994 and maintain its
outstanding average receivables at the twenty-five
(25) day level, the Company's current need for
additional working capital arises principally when
egg markets experience sharp increases, and or when
unit sales expand during certain periods of the
year.
The Company does not maintain large amounts of
inventory to meet customer requirements nor does it
provide extended payment terms to its customers.
7) During the fiscal years ended January 29, 1994, and
January 31, 1993 and 1992, sales to the Company's
major customer were 10.4%, 11.2% and 13.6%
respectively of consolidated sales; and sales to
the next leading customer were 4.6%, 4.8% and 5.1%,
respectively, of consolidated sales.
Although the Company's relationships with many of
its major customers are long standing, the Company
generally does not have contracts with its
customers and, accordingly, such customers have no
legal obligation to continue purchasing from the
Company. The Company believes that its
relationships with its customers are good and that
the loss of one of its major customers would have
only a temporary adverse effect on its business.
During the fiscal year ended January 29, 1994,
approximately 51% of Company's total sales were
made to about 1,900 institutional customers located
in the states of Florida, Georgia, Pennsylvania,
New Jersey, New York, Washington D.C. and Maryland.
During fiscal years ended January 31, 1993 and
1992, these sales amounted to 52% and 47%,
respectively.
8) The Company has no backlog of orders.
9) Government contracts subject to renegotiation or
termination - None.
<PAGE>
10) The shell egg industry is both highly competitive
and comprised of a large number of competing
entities. The Company's management believes that
the Company is a significant factor in shell egg
marketing on the Eastern Seaboard. The Company's
lines of business other than its shell egg line of
business are also highly competitive industries
comprised of a large number of competing entities.
The Company's management does not believe that the
Company is a significant factor in any of its
nonshell egg lines of business.
11) The Company had no expenditures for research and
development during the fiscal years ended January
29, 1994 and January 31, 1993 and 1992.
12) The Company has not had to make any material
expenditures in connection with compliance with
environmental regulations.
13) During fiscal 1994 the Company (including its
wholly-owned subsidiaries) had 282 employees. It
had 374 and 445 employees at the end of fiscal
years 1993 and 1992, respectively.
d) Virtually all of the Company's sales have been domestic for
the current and past two fiscal years.
ITEM 2 - Description of Property
Location Owner/Tenant Facilities
1. Miami, Owner Plant complex comprising approx-
Florida imately 10,125 sq. ft. of land
and improvements. Currently,
the facility is not being
utilized and is being held for
sale.
2. Hawthorne, Owner A 203 acre farm complex
Florida consisting of 25 acres of
lakefront property including
three residences; one of 3,350
sq. ft. and two of 1,560 sq.
ft. each; 4.85 acres comprising
a 5,041 sq. ft. feed mill
complex including storage
tanks, a warehouse and its own
offices; and a 15,400 sq. ft.
refrigerated facility. During
the first quarter of fiscal
1993 all operations were
discontinued and the property
was listed for sale.
3. Burgaw, Owner Plant complex comprising approx-
North Carolina imately 18,300 sq. ft. of land
and improvements of which
12,100 sq. ft. is for general
operations, 5,200 sq. ft. is
refrigeration, and 1,000 sq.
ft. is office space. The
Company was a tenant of Pender
County Industrial Development
Corporation under purchase
option lease. During the 1993
fiscal year the debt on this
facility was paid in full and
as such title to the property
was deeded over to the Company
by the Pender County Industrial
Development Corporation. This
facility is adequate and being
fully utilized.
4. Jarratt, Owner Plant complex comprising approx-
Virginia imately 17,500 sq. ft. on 5.72
acres of land of which 12,000
sq. ft. is used for warehousing
and distribution, 4,400 sq. ft.
is refrigeration, and 1,100 sq.
ft. is office space. This
facility is adequate and being
fully utilized.
5. Orlando, Tenant Plant complex comprising approx-
Florida imately 7,200 sq. ft. of
warehouse. The Company is a
tenant at a monthly rental of
$1,590 under a lease expiring
on May 31, 1994. This facility
is adequate and being fully
utilized.
6. Westminster, Tenant Plant complex comprising approx-
Maryland imately 28,000 sq. ft. of which
20,000 sq. ft. is warehouse and
storage, 7,300 sq. ft. is
refrigeration and 700 sq. ft.
is office space. The Company is
a tenant at a monthly rental of
$2,625 under a lease expiring
September 30, 1994. This
facility is adequate and being
fully utilized.
7. New Holland, Tenant Plant complex comprising approx-
Pennsylvania imately 12,466 sq. ft. of
warehouse, coolers and offices.
The Company is a tenant at a
monthly rental of $3,405 under
a lease expiring on August 31,
1994. This facility is adequate
and being fully utilized.
8. Rochelle Park, Tenant Plant complex comprising approx-
New Jersey imately 10,000 sq. ft. of
warehouse, coolers and offices.
The Company is a tenant at a
net monthly rental of $6,250
expiring on December 31, 1995.
This facility is adequate and
being fully utilized.
9. Fort Lauderdale,Tenant Plant complex comprising 15,556
sq. ft. Florida including the
Company's executive and
administrative offices and its
Certified Poultry & Egg
foodservice operations. The
plant includes 5,000 sq. ft.
of refrigerated space, 4,608
sq. ft. of dry warehouse space
and 5,942 sq. ft. of operations
and administrative offices.
The Company is a tenant, at a
monthly rental of $8,146, under
a lease expiring in May 31,
1999. This facility is adequate
and is being fully utilized.
10. Atlanta, Owner Plant complex comprising approx-
Georgia imately 5,000 sq. ft. of
coolers, freezers and office
space on approximately 2.5
acres of land. This facility
is adequate and is being fully
utilized.
11. Port Richey, Tenant Plant complex comprising approx-
Florida imately 30,000 sq. ft. of which
10,000 sq. ft. is refrigerated,
7,000 refrigerated dock area,
11,500 sq. ft. dry warehouse
and 1,500 sq. ft. is office
space. The Company is a tenant
at a monthly rent of $5,600
until December 1994 and $9,000
a month until December 1996.
This facility is adequate and
being fully utilized.
ITEM 3 - Legal Proceedings
There are no material pending legal proceedings (other than
ordinary routine litigation incidental to the business) to which
the Company or any of its subsidiaries is a party or of which any
of their property is the subject.
ITEM 4 - Submission of Matters for Vote of Security Holders
There were no matters submitted to a vote of security holders
during the fourth quarter of the fiscal year covered by this
report, through the solicitation of proxies or otherwise.
EXECUTIVE OFFICERS OF THE REGISTRANT
The names and ages of the executive officers of the Company as
of January 29, 1994:
Name Age Position and Date Commenced
Malvin Avchen 60 Chief Executive Officer since April 1990
Gustave Minkin 62 President and Secretary since April 1990
Saul Zalka 59 Chief Operating Officer since April 1990
Vance Weibley 57 Executive Vice President since April 1990
Syed Jafri 49 Treasurer and Controller since April 1990
Set forth below is a biographical description of each
executive officer based on information supplied by them:
Mr. Malvin Avchen served as Treasurer from 1969 to April 1990,
and as a Director of the Company since 1972. Mr. Avchen has been
a Certified Public Accountant since 1963 and is currently a member
of the American Institute of C.P.A.'s and Florida Institute of
C.P.A.'s.
Mr. Gustave Minkin served as Vice President of Marketing from
1970 to April 1990, and as Director of the Company since 1972.
Mr. Saul Zalka served as Vice President of Institutional
operations from 1970 to April 1990 and as a Director of Company
since 1981.
Mr. Vance Weibley served as Vice President of Egg operations
from 1971 to April 1990.
Mr. Syed Jafri served as Controller from 1975 to present.
PART II
ITEM 5 - Market For Registrant's Common Stock and Related
Stockholder Matters
a) The Company's Common Stock is listed and traded on the
American Stock Exchange under the ticker symbol SNI. The
sales prices for the Common Stock for each full quarterly
period within the two most recent fiscal years were as
follows:
Fiscal 1994 Fiscal 1993
Cash Cash
Quarter HIGH LOW DIVIDENDS QUARTER HIGH LOW DIVIDENDS
1 $3.38 $3.00 NONE 1 $5.25 $4.25 NONE
2 3.13 2.63 NONE 2 4.88 4.00 NONE
3 2.88 2.63 NONE 3 4.13 3.50 NONE
4 2.94 2.63 NONE 4 4.00 3.00 NONE
b) There were approximately 157 stockholders of record on April
21, 1994. This total does not include stockholders listed
with brokers or their agents in street name.
c) As of April 21, 1994, both the high and low sales prices for
the Common Stock were $3.69.
<PAGE>
<TABLE>
ITEM 6
SELECTED FINANCIAL DATA
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES
<CAPTION>
Years Ended
January 29, January 31, January 31, January 31, January 31,
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS:
Sales $66,098,210 $61,255,226 $68,428,646 $70,543,418 #72,635,633
Earnings (Loss) Before Income Taxes 237,950 (270,301) 371,337(c) (370,961) (1,618,756)(b)
Net Earnings (Loss) 221,950 (333,001) 354,337(c) (352,761) (1,677,610)(b)
Net Earnings (Loss) per share (a):
Primary .15 (.23) .24(c) (.22) (.74)(b)
Fully Diluted .15 (.23) .24(c) (.22) (.74)(b)
Shares Used in Computation (a):
Primary 1,477,260 1,435,633 1,467,493 1,580,228 2,272,914
Fully Diluted 1,505,000 1,435,633 1,580,420 1,580,228 2,272,914
BALANCE SHEET
DATA AT YEAR END (d):
Working capital $5,058,817 $2,309,211 $4,536,949 $3,296,938 $4,057,187
Working capital ratio 1.97 to 1 1.47 to 1 2.03 to 1 1.67 to 1 1.58 to 1
Total assets 14,011,244 10,852,814 12,494,872 10,602,375 13,208,358
Long-term obligations 5,400,235 2,880,291 4,821,238 2,818,767 3,062,500
Stockholders' equity 3,086,968 2,812,018 3,148,097 2,740,760 3,072,419
Net book value per common share (a) 2.15 1.96 2.19 1.91 2.14
Market price per common share (a) 2.88 4.13 4.13 2.42 2.67
Shares outstanding at year end (a) 1,435,702 1,435,702 1,435,652 1,435,689 1,229,589
<FN>
(a) Adjusted to reflect 3 for 2 stock split on July 26, 1991.
(b) Includes after tax termination expenses of former officers of $2,003,178 or $.88 per share.
(c) Includes after tax non-recurring expense of $47,088 or $.03 per share.
(d) There were no cash dividends paid during the five year period ended January 29, 1994.
</TABLE>
<PAGE>
ITEM 7 - Management's Discussion and Analysis of Financial
Condition and Results of Operations
The following discussion provides information which management
believes is relevant to an assessment and understanding of the
Company's operations and financial condition. This discussion
should be read in conjunction with the financial statements and
notes thereto appearing elsewhere herein.
COMPANY PROFILE:
Sun City Industries, Inc. (the "Company"), is a leader in the
processing and marketing of eggs along the eastern seaboard of the
U.S.
The Company which began in 1949 is engaged in the processing and
marketing of shell eggs and provides foodservice marketing and
distribution throughout much of the eastern seaboard of the United
States. The Company intends to expand its market share through
internal sales growth and acquisition of related companies in the
foodservice distribution business.
In 1990 the Company began a program of expansion as a foodservice
distributor that now includes three centers in Florida covering
Orlando and Central Florida, the West Coast of Florida and
Southeast Florida from Key West to West Palm Beach. In addition,
the Company has operations covering Atlanta, Ga., Baltimore, Md.,
Philadelphia, Pa. and metropolitan New York City.
The Company's customers include national and regional supermarkets,
U.S. military installations, hotels, restaurants, airline caterers
and cruise ship lines.
Sun City's goal is to build a network of foodservice companies
throughout the heavily populated eastern seaboard of the United
States.
Years Ended January 29, 1994 and January 31, 1993 and 1992
SALES:
Sales for the fiscal years 1992 through 1994 were as follows:
% Increase
Year Sales (Decrease)
1994 $66,098,210 7.9%
1993 61,255,226 (10.5%)
1992 68,428,646 ( 3.0%)
For the fiscal year ended January 29, 1994, consolidated sales
amounted to $66.1 million, or 7.9% above the prior fiscal year.
Increases of $2.8 million in the egg division and $2.0 in the
foodservice division aided by stronger egg markets during the year
were the key factors for the improved sales.
For the fiscal year ended January 31, 1993, consolidated sales
declined $7.2 million, or 10.5%, from the prior fiscal year. Of
this amount, $5.2 million resulted from a 12.2% decrease in egg
market prices which in turn resulted in lower egg selling prices.
The remaining $2.0 million resulted from a decrease in unit sales
which were impacted by negative economic conditions that existed
during the second half of the fiscal year (see "NET EARNINGS").
COST OF SALES:
Cost of sales continue to mirror the increase and decrease in sales
revenues. During fiscal 1994 cost of sales rose 8.5% and for
fiscal 1993, cost of sales dropped 10.4%.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
Selling, general and administrative expenses as a percentage of
sales for fiscal 1994, 1993 and 1992, were 5.9%, 7.2% and 6.2%.
The decrease in S, G & A for fiscal 1994 amounted to $542,447 or
12.2%. This reduction results from the Company's efforts initiated
in fiscal 1993 to reduce administrative overhead which included
executive salaries and the number of administrative personnel. The
increase for fiscal 1993 was for the most part a direct result of
the increase costs associated with the additional businesses
acquired during fiscal 1992 while the Company's consolidated sales
were decreasing.
INTEREST EXPENSE:
Interest expense for fiscal 1994 rose $32,092 to $422,087
reflecting a slightly higher level of borrowing during most of the
year. The increase was brought about with the Company's increased
participation in its Joint Venture program and two months of debt
service associated with the new Gulf Coast Foodservice acquisition
made in December 1993.
During fiscal 1993 interest expense was $389,995, a decrease of
$87,937 or 18.4% below fiscal 1992. This was the result of a
reduction in the amount of debt as well as lower interest rates
throughout most of the year.
NON-RECURRING LOSSES:
During fiscal 1994 the Company had no non-recurring losses.
However, the Company incurred a net non-recurring loss of $28,239
for the fiscal year ended January 31, 1993. During fiscal 1993,
the Company completed the sale of three properties for a gain of
$724,000. This non-recurring gain was offset by certain non-
recurring losses. The Company bought out two long-term employment
contracts for a total cost of $501,000. Additionally, the Company
closed some of its Hawthorne, Florida operations resulting in a
loss of $169,000. Losses of $82,000 were also incurred as a result
of consolidating two foodservice operations into one South Florida
location.
NET EARNINGS:
As a result of the benefits derived from the new egg production
joint venture programs implemented during late fiscal 1993, the
positive results as a consequence of the acquisition of Gulf Coast
Foodservice in December 1993 and the reduced S, G & A expense, the
Company's net earnings improved $554,951 from a net loss of
$333,001 in fiscal 1993 to a net profit of $221,950 in fiscal 1994.
When the Company began fiscal 1993, Management expected to repeat
fiscal 1992's positive performance. Management was optimistic
since it had just turned the Company around after three consecutive
years of losses. However, during fiscal 1993 operating profits in
the egg division declined 31%, directly related to poor egg supply
(quantity, quality and price) and taken together with an 18%
reduction in profits from the foodservice division (the result of
difficulties experienced in the Company's South Florida operations;
namely Hurricane Andrew, generally poor economic conditions in the
South Florida foodservice industry as well as that of the
customers served), the net loss amounted to $333,001 as compared to
net earnings of $354,337 for the prior fiscal year.
EARNINGS (LOSS) PER COMMON SHARE:
Fiscal Year 1994 1993 1993
Earnings (Loss) per common
and common equivalent share $.15 $(.23) $.24
Earnings (Loss) per common
share assuming full dilution $.15 $(.23) $.22
Average shares used
in the computation -
primary 1,477,260 1,435,633 1,467,493
Average shares used
in the computation -
fully diluted 1,505,000 1,435,633 1,580,420
LIQUIDITY AND CAPITAL RESOURCES:
The Company intends to expand its market share through internal
sales growth, acquisition of related companies and modernization
of its egg processing operations.
<PAGE>
During fiscal 1994 the Company:
Expanded its credit facility with its major lender from $5
million to $6.5 million and extended the term of the loan
until March 30, 1998.
Completed the acquisition of Gulf Coast Foodservice, Inc. for
an initial cash payment of $796,895.
Increased its cash investment in egg production joint ventures
by $498,000.
Formed a real estate joint venture to construct a 26,000
square foot egg processing plant in Spring Grove, Pa., where
the Company will be the sole tenant under a 15 year lease.
The Company has a 14.3% equity in the joint venture for which
it has invested $50,000.
Subsequent to year end, on March 18, 1994 the Company completed its
first private placement offering by raising $700,000 in five year
Senior Subordinated Convertible Debentures carrying a fixed 8%
rate. The debentures are convertible at $3.25 per share,
representing an 18.2% premium above the market price of $2.75 at
the date the transaction was agreed upon.
In fiscal 1993, the Company commenced a program of upgrading the
quality, quantity and consistency of its egg supply by investing in
egg producing joint ventures. The size of each investment varies
from a low of 15% to a maximum of 25%. At the same time the
Company will be receiving 100% of the eggs produced. Through the
end of fiscal 1994 and 1993, the Company had invested $670,000 and
$172,000 respectively.
During fiscal 1993 the Company:
Completed and closed the sale of three properties for a net
gain of $724,000.
Purchased two long-term employment contracts for a total cost
of $501,000.
Reduced long-term debt by $1.5 million.
In addition, the Company has listed its Hawthorne, Florida
property for sale or lease.
As part of the Company's business plan, the Company is actively
engaged in the selling of its properties which no longer fulfill
its primary business objectives.
During fiscal 1993, the Company sold its Carlisle, Pennsylvania
property for $650,000 (all cash) and recognized a gain of $534,000,
sold its Owlkill, New York property in two separate sales. The
first sale in the amount of $110,000 was completed January 30, 1992
and a gain of $92,000 was recognized. The second sale in the
amount of $100,000 (all cash) was completed in fiscal 1993 and a
gain of $67,000 was recognized. Additionally, during fiscal 1993,
the Company sold its Clermont, Florida property in the amount of
$200,000 ($35,000 in cash and a $165,000 note), and recognized a
gain of $123,000.
COMMITMENTS:
As of January 29, 1994, the Company had the following commitments
for capital expenditures:
As a direct result of the newly formed real estate joint
venture to construct an egg processing plant whereby the
Company will be the sole tenant, the Company has entered
into a contract with Diamond Systems to acquire a new, state
of the art, high speed (300 cases an hour) 8300 ES egg
processing system. The Company will put up 25% or $185,000
and finance the balance of $560,000 with a seven year lease.
<PAGE>
ITEM 8 - Consolidated Financial Statements and Supplementary Data
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Independent Auditors' Report 19
Consolidated Balance Sheets 20
Consolidated Statements of Operations 21
Consolidated Statements of Stockholders' Equity 22
Consolidated Statements of Cash Flows 23 - 25
Notes to Consolidated Financial Statements 26 - 35
All financial statements schedules are omitted because of the
absence of the conditions under which they are required, or because
all information required to be reported is included in the
Consolidated Financial Statements or notes thereto.
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
Sun City Industries, Inc. and subsidiaries
Fort Lauderdale, Florida
We have audited the accompanying consolidated
balance sheets of Sun City Industries, Inc. and
subsidiaries as of January 29, 1994 and January 31, 1993,
and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the
three years in the period ended January 29, 1994. These
financial statements are the responsibility of the
Company's management. Our responsibility is to express
an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require
that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free
of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also
includes assessing the accounting principles used and
significant estimates made by management, as well as
evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, such consolidated financial
statements present fairly, in all material respects, the
financial position of Sun City Industries, Inc. and
subsidiaries as of January 29, 1994 and January 31, 1993,
and the results of their operations and their cash flows
for each of the three years in the period ended January
29, 1994, in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE
Certified Public Accountants
Fort Lauderdale, Florida
April 15, 1994
<PAGE>
<TABLE>
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
January 29, January 31, Liabilities and January 29, January 31,
ASSETS 1994 1993 Stockholders'Equity 1994 1993
<S> <C> <C> <S> <C> <C>
CURRENT ASSETS: Current Liabilities:
Cash and equivalents $531,608 $616,524 Accounts payable $4,118,900 $3,572,225
Accounts and trade notes Accrued expenses 507,714 391,210
receivable, less allowance for Current portion of long-term
doubtful accounts - $178,800 debt (Note D) 551,667 938,117
and $133,800 in 1994 and 1993, Income taxes payable 16,000 40,412
respectively (Note D) 6,285,576 4,617,380 ---------- ----------
Inventories (Note B and D) 2,345,759 1,626,438 Total Current Liabilities 5,194,281 4,941,964
Notes receivable-current portion 12,384 100,702
Prepaid expenses 367,771 118,131 Deferred Compensation Payable 329,760 218,541
Investment in Joint Ventures 670,000 172,000
--------- --------- Long-Term Debt (Note D) 5,400,235 2,880,291
TOTAL CURRENT ASSETS 10,213,098 7,251,175
Commitments (Note F)
PROPERTY, PLANT AND EQUIPMENT
(Note D): Stockholders' Equity (Note G)
Land and improvements 150,072 187,034 Preferred stock, no par value;
Buildings and improvements 880,495 873,819 authorized 300,000 shares;
Machinery and equipment 4,082,595 3,655,959 issued - none
--------- --------- Common stock, $.10 par value
5,113,162 4,716,812 3,000,000 shares authorized;
2,276,116 shaes issued in
Less accumulated depreciation 3,228,898 2,965,947 1994 and 1993 227,612 227,612
--------- --------- Capital in excess of par value 1,070,286 1,070,286
1,884,264 1,750,865 Retained earnings 4,852,290 4,630,340
--------- ---------
PROPERTIES HELD FOR SALE 470,000 449,000 6,150,188 5,928,238
Less: Treasury Stock at cost,
LONG -TERM NOTES RECEIVABLE 134,292 146,450 840,414 shares in
1994 and 1993 (2,692,220) (2,692,220)
EXCESS OF PURCHASE PRICE OVER
FAIR VALUE OF NET ASSETS ACQUIRED 450,053 260,410
Loan Receivable for Common
OTHER ASSETS (Note C) 859,537 994,914 Stock sold to ESOP (Note K) (371,000) (424,000)
------------ ------------
3,086,968 2,812,018
----------- ----------- ------------ ------------
TOTAL $14,011,244 $10,852,814 Total $14,011,244 $10,852,814
=========== =========== =========== ============
<FN>
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
Years Ended
January 29, January 31, January 31,
1994 1993 1992
<S> <C> <C> <C>
SALES $66,098,210 $61,255,226 $68,428,646
COSTS AND EXPENSES:
Cost of sales 61,594,887 56,752,918 63,346,020
Selling, general and administrative expenses 3,897,172 4,439,619 4,217,158
Interest expense 422,087 389,995 477,932
Other (income), net (53,886) (85,244) (30,890)
Non - recurring losses (Note H) 28,239 47,089
------------ ------------ ------------
TOTAL COSTS AND EXPENSES 65,860,260 61,525,527 68,057,309
------------ ------------ ------------
EARNINGS (LOSS) FROM OPERATIONS
BEFORE INCOME TAXES 237,950 (270,301) 371,337
PROVISION FOR INCOME TAXES (Note E): 16,000 62,700 17,000
------------ ------------ ------------
NET EARNINGS (LOSS) $ 21,950 $ (333,001) $ 354,337
============ ============ ============
NET EARNINGS (LOSS) PER SHARE(Note J):
EARNINGS (LOSS) PER COMMON AND
COMMON EQUIVALENT SHARE $.15 $(.23) $.24
====== ======= ======
EARNINGS (LOSS) PER COMMON SHARE
ASSUMING FULL DILUTION $.15 $(.23) $.22
====== ======= ======
<FN>
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCK HOLDERS' EQUITY
<CAPTION>
Common Stock Treasury Stock
Shares Capital in Retained Loan to
Outstanding Amount excess of par earnings Shares Amount ESOP
<S> <C> <C> <C> <C> <C> <C> <C>
Balance January 31, 1991 2,276,116 $227,612 $1,070,286 $4,640,568 840,464 $2,667,706 $530,000
Payment of ESOP loan (53,000)
Net Income 354,337
---------- --------- ---------- ---------- -------- ----------- ----------
Balance, January 31, 1992 2,276,116 227,612 1,070,286 4,994,905 840,464 2,667,706 477,000
Purchase of Treasury Shares 16,000 74,001
Exercise of Stock Options (31,564) (16,050) (49,487)
Payment of ESOP loan (53,000)
Net Loss (333,001)
---------- --------- ---------- ---------- --------- ----------- ----------
Balance, January 31, 1993 2,276,116 227,612 1,070,286 4,630,340 840,414 2,692,220 424,000
Payment of ESOP loan (53,000)
Net Income 221,950
---------- --------- ----------- ---------- --------- ----------- ----------
Balance, January 29, 1994 2,276,116 $227,612 $1,070,286 $4,852,290 840,414 $2,692,220 $371,000
========== ========= =========== ========== ========= =========== ==========
<FN>
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
January 29, January 31, January 31,
1994 1993 1992
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Earnings (Loss) $221,950 $(333,001) $354,337
ADJUSTMENTS TO RECONCILE NET EARNINGS
(LOSS) TO NET CASH (USED IN) OR PROVIDED
BY OPERATING ACTIVITIES:
Depreciation 436,729 390,022 447,279
Amortization of excess of purchase
price over fair value of net
assets acquired 15,447 12,118 12,943
Provision for losses on accounts receivable 18,456 126,622 31,657
(Gain) on sale of fixed assets (731,368) (97,438)
Change in assets and liabilities net of
effects from acquisitions:
(Increase) decrease in accounts and
trade notes receivable (973,071) 701,219 49,319
(Increase) decrease in inventories (85,586) 297,408 46,959
(Increase) decrease in prepaid expenses (159,607) 23,398 (38,730)
Decrease in income tax refund receivable 173,568 2,552
(Increase) in other assets (362,910) (118,636) (147,422)
(Decrease) increase in accounts payable (153,847) 93,568 (1,108,116)
(Decrease) increase in accrued expenses (6,602) (68,583) 166,352
(Decrease) increase in income taxes payable (24,412) 40,412
Increase in deferred compensation payable 111,219 82,454 12,750
----------- ---------- -----------
TOTAL ADJUSTMENTS (1,184,184) 1,022,202 (621,895)
----------- ---------- -----------
NET CASH (USED IN) OR PROVIDED BY
OPERATING ACTIVITIES $ (962,234) $ 689,201 $ (267,558)
----------- --------- -----------
<FN>
See notes to consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
(CONTINUED)
January 29, January 31, January 31,
1994 1993 1992
<S> <C> <C> <C>
NET CASH (USED IN) OR PROVIDED BY
OPERATING ACTIVITIES $(962,234) $ 689,201 $ (267,558)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of fixed assets 52,523 810,381 33,000
Capital expenditures (465,278) (558,233) (1,071,938)
Payment for acquisitions (796,895) (606,559)
---------- ----------- -----------
NET CASH (USED IN) OR PROVIDED BY
INVESTING ACTIVITIES (1,209,650) 252,148 (1,645,497)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable 2,396,677 287,500 2,292,000
Repayments on notes receivable 100,474 7,848
Principal payments on notes payable (463,183) (1,741,330) (375,355)
Proceeds from loan receivable from ESOP 53,000 53,000 53,000
Proceeds from exercise of options 17,923
Payment for purchase of treasury stock (74,001)
---------- ----------- -----------
NET CASH PROVIDED BY OR (USED IN)
FINANCING ACTIVITIES 2,086,968 (1,449,060) 1,969,645
---------- ----------- -----------
NET (DECREASE) INCREASE IN CASH AND
EQUIVALENTS (84,916) (507,711) 56,590
CASH AND EQUIVALENTS,
Beginning of year 616,524 1,124,235 1,067,645
CASH AND EQUIVALENTS, ---------- ----------- ----------
End of year $ 531,608 $ 616,524 $1,124,235
========== =========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the year for
Interest $ 422,087 $ 383,167 $ 474,682
=========== =========== ==========
Income taxes $0 $ 20,756 $ 15,544
=========== =========== ==========
<FN>
See notes to consolidated financial statements.
</TABLE>
<PAGE>
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
During fiscal 1994, the Company purchased a business for cash and
assumption of liabilities as follows:
Fair value of assets acquired $1,620,523
Cash paid (796,895)
___________
Assumption of liabilities 823,628
=========
In addition, the Company agreed to pay the former Gulf Coast shareholders a
minimum of $200,000 based on the results of first year operations of the
acquired company. The amount will be determined during fiscal 1995 and paid
over a five-year period.
During fiscal 1993, the Company sold property for $200,000 as follows:
Sales price $ 200,000
Cash received ( 35,000)
_________
Mortgage receivable $ 165,000
=========
During fiscal 1992, the Company purchased three businesses for cash and
assumption of liabilities as follows:
Fair value of assets acquired $1,270,560
Cash paid (606,559)
_________
$ 664,001
Assumption of liabilities =========
A capital lease obligation of $166,742 was incurred during fiscal 1992 when
the Company was assigned the lease for a building in connection with the
O'Brien/Diversified acquisition.
During fiscal 1992, the Company sold property for $110,000 as follows:
Sales price $110,000
Cash received (20,000)
________
Mortgage receivable $ 90,000
========
See notes to consolidated financial statements.
<PAGE>
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JANUARY 29, 1994, JANUARY 31, 1993 AND JANUARY 31, 1992
A. Significant Accounting Policies:
1) Principles of Consolidation - The financial statements include the
accounts of Sun City Industries, Inc. and its subsidiaries (the
"Company"). All material intercompany profits, transactions and balances
have been eliminated.
2) Cash and Equivalents - Cash and equivalents include cash on hand and
short-term investments purchased with a maturity of three months or
less.
3) Inventories - All inventories are stated at the lower of cost (first-in,
first-out method) or market.
4) Investment in Joint Ventures - Investments in the Company's egg
producing joint ventures are recorded at cost. Amounts received as
distributions of the operations of these joint ventures are recorded as
recoveries of such cost. Any gains from the final settlement of these
joint ventures are recorded only after all cost is recovered; any losses
are accrued at the time such losses are reasonably estimatible. These
joint ventures generally have lives of approximately one year.
5) Property, Plant and Equipment - Property, plant and equipment are stated
at cost. Depreciation is computed principally on the straight-line
method over the estimated useful lives of the assets as follows:
Land improvements 10 to 20 years
Buildings 17 to 33 1/3 years
Building improvements 3 to 20 years
Machinery and equipment 3 to 20 years
6) Excess of Purchase Price over Fair Value of Net Assets Acquired - The
excess of the purchase price over the fair value of the tangible and
identifiable intangible net assets acquired is being amortized over a
period of twenty years using the straight-line method.
7) Income Taxes - The Company recognizes certain income and expenses in
different periods for financial reporting and income tax purposes.
During fiscal 1994, the Company adopted Statement of Financial
Accounting Standards No. 109 (SFAS 109), Accounting for Income Taxes,
effective February 1, 1993. Previously, the Company had accounted for
income taxes based on Statement of Financial Standards No. 96. Adoption
of SFAS 109 had no effect on the Company's fiscal 1994 operations or
financial position.
<PAGE>
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JANUARY 29, 1994, JANUARY 31, 1993 AND JANUARY 31, 1992
A. Significant Accounting Policies (Continued):
8) Change in Accounting Period - During fiscal 1994 the Company changed its
accounting period from a year ending January 31 to 13 four week
accounting periods ending on the Saturday nearest to January 31.
9) Reclassification in Prior Period Statements - Certain reclassifications
of prior period amounts have been made to conform with the current
reporting presentation.
B. Inventories:
The major components of inventory are as follows:
1994 1993
Butter, dairy, and related products $1,923,792 $1,147,272
Eggs and packaging materials 96,290 427,329
Layer flocks, feed and miscellaneous 25,677 51,837
----------- ----------
Total $2,345,759 $1,626,438
=========== ==========
C. Other Assets:
Other assets consist of the following:
1994 1993
Officers' Life Insurance $ 475,940 $ 643,330
Organizational Costs 147,477 52,625
Non- compete Costs 40,088 50,089
Recoverable Deposits 30,604 61,224
Prepaid Lease Costs 35,183 72,898
Other 130,245 114,748
----------- -----------
Total $ 859,537 $ 994,914
=========== ===========
The Company pays the premiums on certain life insurance policies that insure
the lives of key executives and are payable to the officers' designated
beneficiaries in the event of their deaths. The policies, with total face
amount of $1,660,000 have been assigned to the Company to the extent
necessary to repay all premiums. The above officers' life insurance is net
of a $300,000 loan against the policies.
<PAGE>
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JANUARY 29, 1994, JANUARY 31, 1993 AND JANUARY 31, 1992
D. Debt:
Long-term debt consists of the following:
1994 1993
Mortgage note payable, interest at 9.5%.
Due in varying amounts through 1999,
collateralized by property with a carrying
value of approximately $429,000 at
January 29, 1994. $ 337,500 $ 412,500
$6,500,000 line of credit; expires March
1998; collateralized by the Company's
accounts receivable, inventory and
machinery and equipment, interest at 2.25%
over prime (8.25% at
January 29, 1994). 4,966,666 3,091,666
Notes payable, interest at 7.5%. Due in equal
installments through 1995. Collateralized by
machinery and leasehold improvements with a
carrying value of approximately $240,000
at January 29, 1994. 195,969 239,595
Notes payable, interest at 7.2%. Due in
installments through October 1996.
Collateralized by truck with a carrying
value of approximately $22,000 at
January 29, 1994. 20,625 28,125
Notes payable to former Gulf Coast
shareholders. Due in equal installments
over the next five years. 200,000 -
Notes payable, interest at the lender's
commercial base plus 1.5% (8% at January 29,
1994). Due in installments through March 1997.
Collateralized by machinery and equipment
with a carrying value of approximately
$36,000 at January 29, 1994. 28,952 -
Notes payable, interest at 8%. Due in
installments through December 1995.
Collateralized by trucks with a carrying
value of approximately $35,000 at
January 29, 1994. 35,432 -
Notes payable, interest at 7.2%. Due in installments
through July 1997. Collateralized by trucks with a
carrying value of approximately $54,000 at
January 29, 1994. 51,523 -
<PAGE>
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JANUARY 29, 1994, JANUARY 31, 1993 AND JANUARY 31, 1992
D. Debt (Continued) :
1994 1993
Notes payable, interest at prime lending
rate plus 1.5% (7.5% at January 29,1994).
Due in installments through December 1998.
Collateralized by machinery and equipment
with a carrying value of $55,000 at
January 29, 1994. 30,573 -
Notes payable, interest at 7%. Due in
installments through October 1994. Col-
lateralized by layer flocks with a carry-
ing value of $184,000. 84,662 -
Notes payable, interest at the lender's
commercial base plus 1.5%. - 28,800
Notes payable, interest rates ranging from
12% to 14.5%. - 5,722
Revolving note payable, interest at bank's
prime rate. - 12,000
------------ -----------
Total debt 5,951,902 3,818,408
Less current portion 551,667 938,117
------------ -----------
Total long-term debt $5,400,235 $2,880,291
=========== ===========
The above mortgage and line of credit contain certain restrictive
covenants, the more significant of which require the Company to maintain
certain minimum levels of working capital, net worth and net tangible
assets. During fiscal 1994, the line of credit facility was expanded
from $5 million to $6.5 million and the term was extended to March 30,
1998.
The aggregate maturities of long-term debt are as follows:
Fiscal Year ending
1995 551,667
1996 587,522
1997 395,368
1998 373,176
1999 4,044,166
-----------
Total $5,951,902
===========
<PAGE>
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JANUARY 29, 1994, JANUARY 31, 1993 AND JANUARY 31,1992
E. Income Taxes:
During fiscal 1994, the Company adopted SFAS 109, Accounting for Income
Taxes, effective February 1, 1993. Under SFAS 109, deferred tax liabilities
are recognized for future taxable amounts and deferred tax assets are
recognized for future deductions and operating loss carryforwards. A
valuation allowance is recognized to reduce net deferred tax assets to the
amounts that are more likely than not to be realized.
The deferred tax balance at January 29, 1994 consists of:
Assets Liabilities Total
Excess tax amortization for $124,700 - $124,700
non-compete agreement
Tax loss carryforwards 626,100 - 626,100
Accelerated depreciation for
tax purposes - $(166,400) (166,400)
Allowance for bad debts 60,800 - 60,800
Capitalization for tax purposes
of inventory related costs 28,700 - 28,700
Deferred compensation 112,100 _ 112,100
Less: Valuation allowance (786,00) - (786,000)
-------- ------------ ---------
Total $166,400 $(166,400) $0
======== ============ =========
The valuation allowance as of January 29, 1994 and January 31, 1993 was
$786,000 and $869,000, respectively.
The provision for income taxes is comprised of the following:
1994 1993 1992
State:
Current $16,000 $62,700 $17,000
-------- ------- -------
Total $16,000 $62,700 $17,000
======== ======= =======
<PAGE>
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JANUARY 29, 1994, JANUARY 31, 1993 AND JANUARY 31, 1992
Reconciliations of the effective income tax rates to the U.S. statutory rates
are summarized as follows:
1994 1993 1992
Statutory rate 34.0% (34.0)% 34.0%
Reduction in valuation
allowance (34.8)
Net operating loss carryovers 39.7 (33.7)
Amortization of excess of
purchase price over fair
value of net assets
acquired (2.8) 1.9 1.2
State income taxes 4.4 15.3 3.0
Other 0.3 0.3 0.1
------ ------ ------
Total 6.7% 23.2% 4.6%
====== ======= ======
The Company estimates that, after filing its 1993 tax return, it will
have tax loss carryforwards of approximately $1,841,000 expiring in the
years 2005 through 2008.
F. Commitments
Lease Commitments - Aggregate minimum rental commitments at January 29, 1994
are $2,536,211. Minimum annual rentals are payable as follows:
Delivery
Buildings and other
Fiscal Years ending and land equipment Total
1995 $ 291,605 $ 451,317 $ 742,922
1996 260,884 382,397 643,281
1997 242,400 283,876 526,276
1998 145,914 215,143 361,057
1999 145,914 116,761 262,675
Total $1,086,717 $1,449,494 $2,536,211
========== ========== ==========
The above amounts include rentals under renewal options where management
contemplates, with a high degree of assurance, that the option will be
exercised. Lease terms require, in certain instances, that the Company pay
property taxes, insurance, mileage charges and maintenance cost on the leased
property. Rent expense for the years ended January 29, 1994, January 31,
1993 and January 31, 1992 was $912,773, $1,050,650 and 1,090,634,
respectively, excluding mileage charges and other executory costs. These
expenses are included in selling, administrative, and general expenses in the
accompanying consolidated statements of operations.
<PAGE>
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JANUARY 29, 1994, JANUARY 31, 1993 AND JANUARY 31, 1992
G. Stockholders' Equity:
1) 1982 Stock Option Plan -
In June 1982, the stockholders approved an incentive stock option plan
for officers and key employees. Under the plan, options for 295,313
common shares could have been granted to purchase common shares at no
less than 100% of the fair market value at date of grant. The options
terminated except to a limited extent, in the event of retirement,
disability, death of the optionee or termination of employment.
During fiscal 1993, options for 15,150 were exercised at $1.074 per
share. No options were exercised during fiscal 1992.
Options granted under the plan were exercisable at $1.074 per share and
became exercisable at the rate of 20% each year beginning one year after
date of grant and expired June 1992.
2) 1990 Stock Option Plan -
In June 1990, the stockholders approved another incentive stock option
plan for officers, directors, and key employees. Under the plan,
options for 262,500 common shares may be granted to purchase common
shares at no less than 100% of the fair market value at date of grant.
Options terminate, except to a limited extent, in the event of
retirement, disability, death of the optionee or termination of
employment.
Options granted under the plan are exercisable at various amounts per
share and become exercisable at the rate of 20% each year beginning one
year after date of grant and expire ten years after date of grant.
As of January 29, 1994, January 31, 1993 and January 31, 1992, 262,500
shares of common stock were reserved under the plan; 30,000 options were
granted at $2.875 per common share with a grant date of December 6,
1993, 22,500 options were granted at $3.50 per common share with a grant
date of August 28, 1991; 234,000 options were granted at $1.833 per
common share with a grant date of November 7, 1990. During fiscal 1994,
no options were exercised and 41,250 were canceled. During fiscal 1993,
900 options were exercised and 3,600 options were canceled. No options
were exercised or canceled during fiscal 1992. At January 29, 1994,
options for 240,750 shares were outstanding and 121,950 shares were
exercisable.
<PAGE>
SUN CITY INDUSTRIES, INC. SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JANUARY 29, 1994, JANUARY 31, 1993 AND JANUARY 31, 1992
H. Non-Recurring Losses:
During fiscal 1993, the Company completed the sale of three properties
for a gain of $724,000. This non-recurring gain was offset by the
following non-recurring losses:
The Company bought out two long-term employment contracts for a
total of $501,000. Additionally, the Company closed its
Hawthorne, Florida operations resulting in a loss of $169,000.
Losses of $82,000 were also incurred as a result of streamlining
two foodservice operations into one South Florida location.
During fiscal 1992, the Company closed one of its foodservice locations
due to low profitability levels. As a result, a loss of $138,000 was
incurred. This loss was partially offset by a $91,000 gain on the sale
of a parcel of land and improvements in New York.
I. Acquisitions:
Effective December 6, 1993 the Company acquired substantially all the
assets and liabilities of Gulf Coast Food Distributors, Inc. ("Gulf
Coast") which was accounted for by the purchase method of accounting.
Gulf Coast is a foodservice company serving a broad range of customers.
Product lines include produce, meats, seafood, dairy, groceries, and
paper products. The initial purchase price consisted of the acquisition
of 1,620,523 in assets payable $796,895 in cash and the assumption of
$823,628 in liabilities. The results of operations of Gulf Coast are
included in the consolidated statements of operations from the date of
acquisition.
The following unaudited pro forma consolidated results of operations
give effect to the acquisition of Gulf Coast as though it had occurred
on February 1, 1992:
Fiscal Years Ended 1994 1993
Sales and operating revenues $77,206,693 $74,549,849
Net earnings (loss) $ 282,737 $ (314,055)
Earnings (loss) per share:
Primary $.19 $(.22)
Fully Diluted $.19 $(.22)
The unaudited pro forma information is not necessarily indicative of
results of operations that would have occurred had the purchase been
made at February 1, 1992, or of future results of operations of the
Company.
<PAGE>
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JANUARY 29, 1994, JANUARY 31, 1993 AND JANUARY 31, 1992
I. Acquisitions (Continued):
The initial purchase price was funded through borrowings under the Company's
revolving credit and term loan agreement. The Company is also obligated to
pay an additional amount to the sellers to be determined as $2 for every $1
of the first year's pre-tax profits of Gulf Coast, such additional
consideration being subject to a minimum of $200,000 and a maximum of
$700,000. Further additional consideration above the amount of $700,000 is
provided for, at an amount of $.50 for every $1 of the first year's pre-tax
profits of Gulf Coast in excess of $350,000. The excess of the purchase
price over the fair value of the tangible and identifiable intangible net
assets acquired is being amortized over a period of twenty years using the
straight-line method.
J. Net Earnings (Loss) Per Share:
Net earnings (loss) per common share and common equivalent share is based on
the treasury stock method computed by dividing net earnings (loss) by the
weighted average number of common shares outstanding including common stock
equivalents for dilutive stock options and average market prices.
The average shares used in calculating net income per common share were
1,477,260 for the year ending January 29, 1994. In June 1991, the Board of
Directors approved a 3 for 2 stock split, effected in the form of a stock
dividend payable July 26, 1991 to shareholders of record July 19, 1991.
Accordingly, all amounts per share for the year ending January 31, 1992
included in the consolidated financial statements have been retroactively
adjusted to reflect the split. The average shares used in calculating net
earnings per common and common equivalent share restated to reflect the stock
split were 1,467,493 for the year ending January 31, 1992. The average
shares used in calculating fully diluted earnings per share were 1,580,420
for the year ending January 31, 1992.
Common stock equivalents were excluded from the calculation of net loss per
share for the year ending January 31, 1993 because the effect would have been
antidilutive.
K. Employee Benefit Plans:
The Company has established an Employee Stock Ownership Plan ("ESOP") to
acquire shares of the Company's stock for the future benefit of its
employees. The ESOP covers all permanent employees who satisfied the age and
length of service requirements. The Company contributes, at the discretion
of the Board of Directors, a portion of its net earnings annually. During
fiscal 1994, 1993 and 1992, the Company contributed $120,000, $82,000, and
$120,000 to the plan, respectively. During fiscal 1991, the Company sold
187,500 shares of its common stock to the ESOP for $531,125 financed with a
ten year $530,000 term loan with interest at 2.75% over prime and contributed
$120,000 to the plan.
<PAGE>
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JANUARY 29, 1994, JANUARY 31, 1993 AND JANUARY 31, 1992
L. Segment Reporting and Significant Customers:
The Company is principally engaged in the business of distributing basic
food products. Revenues from the Company's customers, which includes
national and regional supermarket chains and various United States
military installations, were as follows for the three fiscal years:
Sales 1994 1993 1992
Egg division 47.9% 48.3% 52.8%
Foodservice 51.7 51.0 46.7
Other marketing 1.4 .7 .5
During fiscal years ended January 29, 1994 and January 31, 1993 and
January 31, 1992, sales to the Company's major customer were 10.4%,
11.2% and 13.6% respectively of consolidated sales.
M. Subsequent Event:
On March 18, 1994 the Company completed a private placement offering by
raising $700,000 in five year Senior Subordinated Convertible Debentures
carrying a fixed rate of 8%. The debentures are convertible into common
stock at $3.25 per share.
<PAGE>
ITEM 9 - Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures
None.
PART III
Pursuant to General Instruction G (3) of Form 10-K, the information
called for by Items 10,11,12, and 13 of this Part III is hereby incorporated
by reference from the Registrant's definitive proxy statement relating to
Registrant's Annual Meeting of Stockholders to be held on June 24, 1993
(hereinafter referred to as the "Proxy Statement"). The aforementioned
information shall be set forth under the following captions in the Proxy
Statement:
ITEM 10 - Directors and Executive Officers of the Registrant
See "Election of Directors", "Nominees; Current Board Members"
"Executive Officers", and "Compliance with Section 16 (a) of the Exchange
Act".
ITEM 11 - Executive Compensation
See "Executive Compensation and Other Information" and "Information
Concerning the Board of Directors and Its Committees - Directors'
Compensation".
ITEM 12 - Security Ownership of Certain Beneficial Owners and Management
See "Certain Information as to Security Ownership", "Security Ownership
of Management", and "Outstanding Stock and Voting at the Meeting".
ITEM 13 - Certain Relationships and Related Transactions
See "Certain Relationships and Related Transactions".
Part IV
ITEM 14a - Exhibits, Financial Schedules, and Reports on Form 8-K
The following documents are filed with, and as part of, this Annual
Report on Form 10-K.
(1) Consolidated Financial Statements
The Index to the consolidated financial statements has been
included as part of Item 8 hereof.
(2) Exhibits
(a) See Exhibits Index on the next page.
<PAGE>
EXHIBITS INDEX
Exhibits
No. (3) Articles of Incorporation and By-laws.
There have been no changes in the articles of incorporation or by-
law since our filing with the Securities and Exchange Commission,
Washington, D.C. under the Securities Act of 1933 in the June 1966
registration statement, 2-24901.
No. (4) Instruments defining the rights of security holders, including
indentures.
There are no obligations in existence that would require disclosure
of such instruments.
No. (9) Voting trust agreement.
No. (10) Material contracts.
During the current year, there were no material contracts.
No. (11) Statement re: Computation of per share earnings.
Included in our 1994 Annual Report on Form 10-K, pages 15 and 21,
and page 34 (note J) as filed with the Securities and Exchange
Commission.
No. (12) Statement re: Computation of ratios.
The Company has no requirement for the reporting of such ratios.
No. (13) Annual report to security holders, Form 10-Q or quarterly report to
security holders.
All such reports have been filed with the Securities and Exchange
Commission, Washington, D.C. for all periods, including the year
ended January 29, 1994.
No. (16) Letter re: Changes in certifying accountant.
There have been no letters regarding change in certifying
accountant.
No. (18) Letter re: Change in Accounting Principles.
There have been no changes in accounting principles.
No. (19) Previously Unfiled Documents.
There are no unfiled documents.
<PAGE>
No. (22) Subsidiaries of the Registrant.
Filed as Exhibit number 1, Form 8, Amendment number 2, fiscal year
ended January 31, 1986.
No. (23) Published report regarding matters submitted to vote of security
holders.
All such reports requiring vote by security holders are filed with
the Securities and Exchange Commission, including in our Annual
Proxy for security holders.
At the last annual meeting of security holders, the vote was for
the election of the Board of Directors and appointment of Auditors,
both of which were uncontested.
No. (24) Consents of Experts and Counsel.
All such consents have been filed with the Securities and Exchange
Commissions as follows:
Auditors: Each Annual Report, Form 10-K and the Registration
Statements of June 1966 and February 1972.
Counsel: Included in the Registration Statements of June 1966 and
February 1972.
No. (25) Power of Attorney.
Power of attorney has not been used in any filing with the
Securities and Exchange Commission.
No. (28) Additional Exhibits.
There are no additional exhibits to be filed.
No. (29) Information from reports furnished to state insurance regulatory
authorities.
There are no such reports required to be filed.
ITEM 14b - Reports on Form 8-K
On December 6, 1993 the registrant filed Form 8-K for the
acquisition of the business assets of Gulf Coast, Inc.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, Sun City Industries, Inc. has duly caused this report
to be signed on its behalf by the undersized, thereunto duly authorized.
April 27, 1994 __________________________
Malvin Avchen
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
Signature Title Date
____________________
Malvin Avchen Chief Executive Officer April 27, 1994
and Director
____________________
Gustave Minkin President and Director April 27, 1994
____________________
Syed Jafri Treasurer and Controller April 27, 1994
____________________
Saul Zalka Chief Operating Officer April 27, 1994
and Director
