<PAGE>
SECURITIES AND EXCHANGE COMMISSION
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Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter April 29, 1995 Commission File no. 1-6914
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SUN CITY INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 59-0950777
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5545 N.W. 35 Ave. Fort Lauderdale, FL 33309
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (305) 730-3333
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Same Name; Former Address-8600 Doral Blvd., #304, Miami, FL 33166 Former name,
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former address and former fiscal year, if changed since last report.
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
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FINANCIAL INFORMATION
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The consolidated financial statements included herein have been prepared by the
Company, without audit, according to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to such rules and regulations.
The financial statements reflect, in the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to represent fairly
the financial position and results of operations as of and for the periods
indicated. The statements should be read in conjunction with the financial
statements and the notes thereto included in the Company's Annual Report on Form
10-K for the year ended January 28, 1995.
The results of operations for the three-month period ended April 29, 1995, are
not necessarily indicative of results to be expected for the entire year ending
February 03, 1996.
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SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES
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CONSOLIDATED BALANCE SHEETS
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<TABLE>
<CAPTION>
April 29, January 28,
ASSETS 1995 1995
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<S> <C> <C>
CURRENT ASSETS:
Cash and equivalents $ 506,560 $ 453,608
Accounts and trade notes receivable, less allowance for
doubtful accounts of $245,260 and $178,600 in 1995
and 1994, respectively 6,628,775 6,053,550
Inventories 3,354,680 2,645,785
Notes Receivable - current portion 13,749 13,545
Prepaid expenses 453,016 370,445
Investment in Joint Ventures 816,060 734,000
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TOTAL CURRENT ASSETS 11,772,840 10,270,933
PROPERTY, PLANT AND EQUIPMENT:
Land and Improvements 153,082 146,404
Buildings and Improvements 1,012,230 999,479
Machinery and equipment 5,835,539 5,722,264
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7,000,851 6,868,147
Less accumulated depreciation 3,892,309 3,720,607
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3,108,542 3,147,540
Properties held for sale 399,420 449,500
Long-term notes receivable 118,369 121,822
Excess of purchase price over fair value of net assets acquired 1,675,396 1,240,501
OTHER ASSETS 940,325 1,057,584
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TOTAL $18,014,892 $16,287,880
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LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES:
Accounts payable $ 3,643,395 $ 3,850,901
Accrued expenses 508,311 495,244
Current portion of long term debt 587,869 687,640
Current portion of capital lease 62,805 62,805
Income taxes payable 2,000 8,000
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TOTAL CURRENT LIABILITIES 4,804,380 5,104,590
DEFERRED COMPENSATION PAYABLE 472,760 444,160
LONG-TERM DEBT 9,063,157 7,199,174
CAPITAL LEASE 460,941 476,115
STOCKHOLDERS' EQUITY:
Common stock, $.10 par value 3,000,000 shares authorized;
2,276,116 share issued in 1995 and 1994 227,612 227,612
Capital in excess of par value 1,070,286 1,070,286
Retained earnings 4,862,956 4,766,143
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6,160,854 6,064,041
Less: Treasury stock at cost, 837,164 shares
in 1995 and 1994 (2,682,200) (2,682,200)
Loan Receivable for common stock sold to ESOP (265,000) (318,000)
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Total Stockholders' Equity 3,213,654 3,063,841
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TOTAL $18,014,892 $16,287,880
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</TABLE>
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SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENT OF OPERATIONS
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<TABLE>
<CAPTION>
Three Months Ended
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April 29, April 30,
1995 1994
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<S> <C> <C>
Sales $21,819,325 $19,671,388
Costs and Expenses
Cost of Sales 20,273,150 18,200,560
Selling, general and administrative
expenses 1,196,118 1,254,738
Interest expense 261,656 134,457
Other (income), net (10,411) (9,165)
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Total Costs and Expenses 21,720,513 19,580,590
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Earnings From Operation
Before Income Taxes $ 98,812 $ 90,798
Provision For Income Taxes 2,000 4,150
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Net Earnings 96,812 86,648
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Earnings Per Common and
Common Equivalent Share $.07 $.06
==== ====
Earnings Per Common Share
Assuming Full Dilution $.07 $.05
==== ====
</TABLE>
<PAGE>
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF CASH FLOW
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<TABLE>
<CAPTION>
Three Months Ended
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April 29, April 30,
1995 1994
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<S> <C> <C>
Cash Flows From Operating Activities:
Net earnings $ 96,812 $ 86,648
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Adjustments To Reconcile Net Earnings
To Net Cash (Used In) Or Provided By
Operating Activities:
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Depreciation 171,702 121,094
Amortization of excess of purchase price
over fair market value of net assets acquired 15,105 6,773
Provision for losses on accounts receivable 66,660 (3,055)
Change in assets and liabilities:
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(Increase) decrease in accounts
and trade notes receivable (641,886) 580,031
(Increase) decrease in inventories (708,895) 53,044
(Increase) in prepaid expenses ( 82,571) (31,765)
(Increase) decrease in other assets (414,801) (168,704)
(Decrease) increase in accounts payable (207,506) (1,440,548)
Increase (Decrease) in accrued expenses 13,067 362,219
(Decrease) increase in income taxes payable (6,000) (11,850)
Increase in deferred compensation payable 28,600 28,600
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Total Adjustments (1,766,525) (504,161)
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Net Cash (Used In) Or Provided By
Operating Activities $(1,669,713) $ (417,513)
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Cash Flows From Investing Activities:
Capital expenditures (82,622) (106,322)
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Cash (Used In) Or Provided By
Investing Activities (82,622) (106,322)
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Cash Flows From Financing Activities:
Proceeds from notes payable 1,439,619 732,744
Repayments on notes receivable 3,249 2,993
Principal payments on notes payable (390,581) (441,043)
Proceeds from subordinated debtures 700,000
Proceeds from loan receivable from ESOP 53,000
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Net Cash Provided By Or (Used In)
Financing Activities 1,805,287 294,694
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Net Increase (Decrease) In Cash
and Equivalents 52,952 (229,141)
Cash and Equivalents, Beginning of Year 453,608 531,608
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Cash and Equivalents, End of Year $ 506,560 $ 302,467
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</TABLE>
<PAGE>
Management's Discussion and Analysis of Financial
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Condition and Results of Operations
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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.
The Company, which began in 1949 as an egg processing and marketing company, is
now also a foodservice marketing and distribution company throughout much of the
eastern seaboard of the United States with a heavy concentration in Florida.
The Company intends to expand its market share through the development of
internal sales and the acquisition of related companies in the foodservice
distribution business.
The Company began its expansion as a foodservice distributor in 1990 and now
includes four distribution centers in Florida covering the Orlando-Disney World
area, most of the West Coast of Florida, the central Florida area and Southeast
Florida from Key West to West Palm Beach. In addition, the Company has
distribution operations that cover markets in Atlanta, GA, Baltimore, MD,
Philadelphia, PA and New Jersey.
The Company's customers include national and regional supermarkets, U.S.
military installations, hotels, restaurants, airline caterers, cruise ship
lines, schools and state facilities.
The Company's goal is to build a network of foodservice companies throughout the
heavily populated eastern seaboard of the United States with a major focus in
the State of Florida.
FOR THE QUARTERS ENDED APRIL 28, 1995 AND APRIL 30, 1994
SALES:
During the first quarter, consolidated sales increased $2,147,937 up 10.9%
compared to a year ago.
<TABLE>
<CAPTION>
First Total Foodservice % of Egg % of
Quarter Sales Division Total Division Total
- ------- ----- ----------- ----- -------- -----
<S> <C> <C> <C> <C> <C>
1995 $21,819,325 $14,454,765 66.2% $7,296,010 33.4%
1994 19,671,388 11,781,348 60.0 7,818,256 39.7
Net change $ 2,147,937 $ 2,673,417 6.2% (522,246) (6.3%)
</TABLE>
<TABLE>
<CAPTION>
Division Amount Reasons
- -------- ------ ------
<S> <C> <C>
Sheppard Foodservice $ 3,463,379 New division began 2/27/95.
Gulf Coast Foodservice 739,155 Unit Sales up 19.5%.
Certified Food Service,PA. (1,295,244) New Jersey Division closed.
Egg Division (522,246) Market prices down 7.1%.
All Other (237,107) Unit sales down.
</TABLE>
<PAGE>
COST OF SALES:
Cost of Sales include product cost, warehousing, distribution and egg processing
costs.
During the first quarter, cost of sales rose $2,072,590 or 11.4%. This increase
were generally in line with increases in sales. The rate of change is
influenced by the Company's overall customer and product mix, as well as the
changes in egg market prices which fluctuate significantly from year to year.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
Selling, general and administrative expenses as percentage of sales for 1995
and 1994 were 5.5% and 6.4%, respectively. Changes in the percentage
relationship of selling, general and administrative expenses to sales result
from an interplay of both direct costs associated with the operation of each
division as well as the home office administrative cost. During 1995 these
costs decreased due to marginal selling, general and administrative expenses
associated with the new Sheppard subsidiary. Management expects that as the
Company's operations become more foodservice oriented, future direct selling,
general and administrative expenses as a percentage of sales will reflect the
levels typically experienced in the foodservice industry.
INTEREST EXPENSE:
Interest expense increased $127,199 during the first quarter of 1995. Of this
increase $77,000 results directly from debt associated with the Sheppard and
Gulf Coast acquisitions with the balance arising from an effective 35% increase
in short term interest rates during the first quarter compared to a year
earlier.
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 carry forwards. A valuation allowance
is recognized to reduce net deferred tax assets to the amounts that are more
likely than not to be realized.
The Company estimates that, after filing its 1995 tax return, it will have tax
loss carryforwards of approximately $1,731,000 expiring in the years 2005
through 2008.
NET EARNINGS:
Net Earnings increased 11.7% from $86,648 to $96,812. Earnings per share
improved 16.7% to $.07 versus $.06 per share reported for the first quarter a
year ago.
Improvement in net earnings was due to contributions of newly acquired Sheppard
Foodservice, improved earnings of the Gulf Coast Foodservice and a turnaround
in earnings of the Certified Food Service, Pa. division compared to the first
quarter the year before.
<PAGE>
EARNINGS PER COMMON SHARE:
<TABLE>
<CAPTION>
First Quarter Ended April , 1995 1994
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<S> <C> <C>
Earnings per common and
common equivalent share $.07 $.06
Average shares used in the
computation 1,438,952 1,506,792
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES:
The Company intends to expand its market share in the foodservice industry
through the acquisition of small to mid-sized foodservice companies that have
strong management teams, are situated in strategic locations and will enable the
Company to expand its product lines. Additionally, the Company expects to
increase sales through profitable internal growth.
In order to accomplish this goal, the Company had decided to create a program
with its egg division whereby it will continue its status as an egg marketing
entity but at the same time will begin to divest itself of its egg production
joint ventures and seek alternatives in the operation of its egg processing
operations.
During the First Quarter ended April 29, 1995:
Completed the acquisition of Sheppard Foodservice, Inc. for an initial cash
payment of $1,350,000.
Completed its second private placement offering by raising $700,000 in five year
Senior Subordinated Convertible Debentures carrying a fixed 9% rate, convertible
at $5.125 per share.
Expanded its credit facility with its major lender from $7.0 million to $7.5
million. The credit facility is primarily for the Company's increasing working
capital needs, including that associated with new acquisitions.
The Company's liquidity condition has been negatively impacted by the operations
of its egg division. However, management is contemplating a program whereby it
is considering changing the manner in which it will, in the future, operate its
egg division. If successful, the Company would eliminate its focus on egg
processing and egg production joint ventures to that of being an egg marketing
entity and as a result should reduce its debt load and eliminate the negative
results associated with its current operations.
<PAGE>
Sun City Industries, Inc. and Subsidiaries
SALES OF UNREGISTERED SECURITIES (DEBT OR EQUITY)
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On February 10, 1995 the Company completed a private placement offering by
raising $700,000 in five year Senior Subordinated Convertible Debentures
carrying a fixed rate of 9%. The debentures are convertible in common stock at
$5.12 per share.
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.
SUN CITY INDUSTRIES, INC.
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REGISTRANT
DATE: 6/13/95 /s/ Malvin Avchen
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Malvin Avchen, C.E.O.
DATE: 6/13/95 /s/ Syed Jafri
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Syed Jafri, Treasurer
The financial statements for the three months ended April 29, 1995 and April 30,
1994, respectively, are unaudited but are prepared in conformity with accounting
principles used at our last fiscal year end and include all adjustments which
the Company considers necessary for a fair presentation.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SUN CITY
INDUSTRIES, INC. FINANCIAL STATEMENTS F.P.E. 4-29-95 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-03-1996
<PERIOD-START> JAN-29-1995
<PERIOD-END> APR-29-1995
<CASH> 506,560
<SECURITIES> 0
<RECEIVABLES> 6,887,784
<ALLOWANCES> 245,260
<INVENTORY> 3,354,680
<CURRENT-ASSETS> 11,772,840
<PP&E> 7,000,851
<DEPRECIATION> 3,892,309
<TOTAL-ASSETS> 18,014,892
<CURRENT-LIABILITIES> 4,804,380
<BONDS> 9,063,157
<COMMON> 227,612
0
0
<OTHER-SE> 2,986,042
<TOTAL-LIABILITY-AND-EQUITY> 18,014,892
<SALES> 21,819,325
<TOTAL-REVENUES> 21,819,325
<CGS> 20,273,150
<TOTAL-COSTS> 21,720,513
<OTHER-EXPENSES> 1,447,363
<LOSS-PROVISION> 66,660
<INTEREST-EXPENSE> 261,656
<INCOME-PRETAX> 98,812
<INCOME-TAX> 2,000
<INCOME-CONTINUING> 96,812
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 96,812
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
