<PAGE>
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 February 3, 1996
OR
TRANSACTION 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
----- -----
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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 15, 1996, the aggregate market value of the Registrant's
voting stock held by non-affiliates of the Registrant was $2,746,165 (the price
at which the stock was sold at the close of business on April 15, 1996). 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 April 15, 1996 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 15, 1996 there were 1,447,902 shares of the Registrant's $.10 par
value Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
The Registrant's definitive proxy statement for its 1996 Annual
Meeting of Stockholders to be held on June 26, 1996 is incorporated by reference
into Part III of this Form 10-K.
Total Number of Pages: 47 Exhibit Index: Page No. 44
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PART I
------
Special Note Regarding Forward-Looking Statements
-------------------------------------------------
Certain statements in this Annual Report on Form 10-K (this "Form 10-K"),
including statements under "Item 1. Business" and "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 (the "Reform Act"). Such forward
looking statements involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or achievements of
Sun City Industries, Inc. (the "Company" or "Sun City") to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. Such factors include, but are
not limited to, the following: general economic and business conditions;
competition; success of operating initiatives; development and operating
costs; advertising and promotional efforts; the existence or absence of
adverse publicity; acceptance of new services; changing trends in customer
orders; changes in business strategy or development plans; quality of
management; availability, terms and deployment of capital; business
abilities and judgment of personnel; availability of qualified personnel;
labor and employee benefit costs; availability and cost of product and
supplies; changes in, or failure to comply with, government regulations;
the costs and other effects of legal and administrative proceedings; and
other factors referenced in this Form 10-K. The Company will not undertake
and specifically declines any obligation to publicly release the result of
any revisions which may be made to any forward-looking statements to
reflect events or circumstances after the date of such statements or to
reflect the occurrence of anticipated or unanticipated events.
ITEM 1 - Business
--------
As a result of a 1990 Stock Redemption, a new Executive Management team
took over operating control of Sun City. The Executive Team developed a
business plan and began its implementation during fiscal year 1993. The
plan concentrates on the Company's foodservice operations where Management
believes opportunities exist for growth through mergers and
3
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acquisitions as well as geographical and product line expansion.
1) General Development of the Business
-----------------------------------
a) The Company was founded in 1949 as an egg distributor. Sun City went
public in 1966 to raise cash to expand its basic business and make
acquisitions. Sun City made its first acquisitions in 1969, an egg producer
located in Florida and an egg processor located in Georgia. The Company
moved into foodservice distribution in late 1969 with the acquisition of
Certified Poultry & Egg Co. of Miami, Florida. In 1970 and 1971, Sun City
made several other acquisitions of egg distribution and processing
companies. During the late 1970's, Sun City acquired its second egg
production company located in Wilson, North Carolina. During this period,
Sun City's primary focus was the production, processing and marketing of
eggs.
b) Sun City's egg operations grew throughout the 1970's and 1980's. Sun City
also experienced rapid internal growth in its sole foodservice business
unit, which revenues grew from approximately $1.5 million in 1969 to over
$10 million by 1979. The Company expanded its foodservice operations by
opening an Orlando foodservice distribution center in 1982. Sun City
disposed of all its own egg production operations by 1989 due to the
volatile nature of the raw egg supply in the industry. In the early 1990's,
the Company's new management team began implementation of a plan to build a
network of foodservice companies serving the Southeastern United States with
a primary focus on Florida. In 1991, Sun City acquired William F. O'Brien,
Inc. and Diversified Foods, Inc., both of Fort Lauderdale, Florida and
Gilley's Sausage Co., Inc. of Winston, Georgia. In 1993, Sun City acquired
Gulf Coast Food Distributors, Inc. located in Port Richey, Florida.
c) In February 1995, Sun City acquired Sheppard Distributors, Inc. of
Auburndale, Florida. Sun City Produce, Inc. was founded in June 1995.
d) During fiscal year 1993, Sun City was faced with severe shortages in its
supply of eggs, creating substantial losses in its egg division. In an
attempt to protect the profitability of its egg division, Sun City developed
a program of investing in egg producing joint ventures, creating a steady
supply of eggs for the egg processing operations. Sun City completed the
joint venture program in fiscal year
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1993, resulting in increased profitability in its egg division in 1993 and
1994. However, the highly cyclical nature of the egg industry led to reduced
profitability during late 1994 and all of 1995. Company management,
realizing that Sun City's competitive position in the egg production and
processing business was declining, made the decision to exit the egg
business allowing management to focus its attention solely on the egg
marketing and foodservice distribution business. By January 1996, Sun City
divested all of its egg production joint ventures and egg processing
businesses.
e) Sun City's management continues to focus on growing its foodservice
operations. The Company has seen steady growth in its hotel, restaurant
(both chain and independent), and institutional (such as school systems and
prison systems) customers. Today, the Company has a customer base generating
annualized sales volume of approximately $70 million in highly desirable
markets. Sun City's primary areas of distribution span from Naples to the
Panhandle on the west coast of Florida, and from Tampa to Orlando to Daytona
in Central Florida. The Company's South Florida market area stretches along
the east coast from West Palm Beach to Dade, Broward and Monroe counties.
A summary of sales by business segment for the fiscal years 1996, 1995 and
1994 is as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----- ----- -----
<S> <C> <C> <C>
Foodservice Division 71.4% 59.2% 51.7%
Egg Division and Other 28.6% 40.8% 48.3%
</TABLE>
2) Description of segments in developmental stage - None.
3) Sources and Availability of Raw Materials - The Company believes that the
relationship with its suppliers is good and that alternative supplies are
generally available. During fiscal year 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 varied between 15% and 25%, the Company received 100% of the
eggs produced by these joint ventures. The Company generally purchased 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.
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The following is a summary of the major egg vendors for the fiscal years
1996, 1995 and 1994:
<TABLE>
<CAPTION>
1996 1995 1994
----- ----- -----
<S> <C> <C> <C>
Joint Ventures 52.9% 52.0%
Hemmelgarn 12.3
Braswell Milling 8.6 10.5 13.2%
Other 26.2 37.5 86.8
</TABLE>
4) Patents, trademarks, licenses, franchises held - None.
5) There are no significant seasonal effects on the Company's consolidated
business.
6) The Company was able to turn its resale inventory 34 times during the
fiscal year ended February 3, 1996 and maintain its outstanding average
receivables at the 26 day level.
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 February 3, 1996, January 28, 1995 and
January 29, 1994, sales to the Company's major customer were 7.5%, 9.5% and
10.4%, respectively, of consolidated sales; and sales to the next leading
customer were 1.2%, 4.2% and 4.6%, 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 February 3, 1996, approximately 71% of
Company's total sales were made to about 4,600 institutional customers
located in Florida, Georgia, Pennsylvania, New Jersey, New York, Washington
D.C. and Maryland. During fiscal years ended January 28, 1995 and January
29, 1994, these sales amounted to approximately 60% and 51%, respectively.
8) The Company has no backlog of orders.
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9) Government contracts subject to renegotiation or termination -None.
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 other lines of business are also highly competitive
industries comprised of a large number of competing entities. Management
does not believe 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 February 3, 1996, January 28, 1995, and January 29, 1994.
12) The Company has not had to make any material expenditures in connection
with compliance with environmental regulations.
13) The Company (including its wholly-owned subsidiaries) had 300, 310 and 282
employees at the end of fiscal years 1996, 1995 and 1994, respectively,
Virtually all of the Company's sales have been domestic for the current and
past two fiscal years.
ITEM 2 - Description of Property
-----------------------
<TABLE>
<CAPTION>
Location Owner/Tenant Facilities
-------- ------------ -----------------------------------
<S> <C> <C> <C>
1. Miami, Owner Plant complex comprising
Florida approximately 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
</TABLE>
7
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<TABLE>
<S> <C> <C> <C>
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
North Carolina approximately 18,300 sq. ft. of land
and improvements of which 12,100 sq.
ft. is for general operations, 5,200
sq. ft. is refrigerated, 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.
Operations ceased during December
1995. This facility is currently
being leased out.
4. Jarratt, Owner Plant complex comprising
Virginia approximately 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. Operations ceased on
January 31, 1996. This property has
been listed for sale.
5. Orlando, Tenant Plant complex comprising
Florida approximately 7,200 sq. ft. of
warehouse. The Company is a tenant
at a monthly rental of $1,770 under
a lease expiring on November 30,
1996. This facility is adequate and
being fully utilized.
6. Fort Lauderdale, Tenant Plant complex comprising
Florida 15,556 sq. ft. including the
Company's executive and
administrative offices and its
</TABLE>
8
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<TABLE>
<S> <C> <C> <C>
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
$8,554, under a lease expiring on
May 31, 1999. This facility is
adequate and is being fully
utilized.
7. Atlanta, Owner Plant complex comprising
Georgia approximately 5,000 sq. ft. of
coolers, freezers and office space
on 2.5 acres of land. This facility
is adequate and is being fully
utilized.
8. Port Richey, Tenant Plant complex comprising
Florida approximately 30,000 sq. ft. of
which 10,000 sq. ft. is
refrigerated, 7,000 sq. ft. is a
refrigerated dock area, 11,500 sq.
ft. is a dry warehouse and 1,500 sq.
ft. is office space. The Company is
a tenant at a monthly rent of $9,000
until December 1996. This facility
is adequate and being fully utilized.
9. Auburndale, Tenant Plant complex comprising
Florida approximately 15,000 sq. ft. of
which 10,000 sq. ft. is
refrigerated, 3,000 sq. ft. is
warehouse and 2,000 sq. ft. is
office space. The Company is a
tenant, at a monthly rent of $3,500
under a lease expiring February 26,
1998. This facility is adequate and
being fully utilized.
10. Burlington, Tenant Plant complex comprising
New Jersey approximately 14,900 sq. ft. of
which 7,000 sq. ft. is refrigerated,
5,400 sq. ft. is warehouse and 2,500
</TABLE>
9
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<TABLE>
<S> <C> <C> <C>
sq. ft. is office space. The
Company is a tenant, at a monthly
rent of $2,607 under a lease
expiring August 31, 1997. This
facility is adequate and being fully
utilized.
11. Pompano Beach, Tenant Plant complex comprising
Florida approximately 10,000 sq. ft. of
which 8,000 sq. ft. is refrigerated
and 2,000 is warehouse and office
space. The Company is a tenant, at
a monthly rent of $8,500 under a
lease expiring June 30, 1996. This
facility is adequate and being fully
utilized.
</TABLE>
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
February 3, 1996:
<TABLE>
<CAPTION>
Name Age Position and Date Commenced
---- --- ---------------------------
<S> <C> <C>
Malvin Avchen 62 Chief Executive Officer since April 1990
Gustave Minkin 64 President and Secretary since April 1990
Saul Zalka 61 Chief Operating Officer since April 1990
Syed Jafri 51 Treasurer since April 1990
</TABLE>
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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. Syed Jafri served as Controller since 1975.
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PART II
-------
ITEM 5 - Market for Registrant's Common Stock and Related
------------------------------------------------
Stockholders' Matters
---------------------
a) The Company's Common Stock is listed and traded on the American Stock
Exchange under the ticker symbol SNI. The sales price of the Common Stock
for each full quarterly period within the two most recent fiscal years were
as follows:
<TABLE>
<CAPTION>
Fiscal 1996 Fiscal 1995
------------------------------- -------------------------------
Cash Cash
Quarter High Low Dividends Quarter High Low Dividends
<S> <C> <C> <C> <C> <C> <C> <C>
1 $5.38 $4.38 None 1 $4.25 $2.88 None
2 4.88 3.38 None 2 4.75 2.88 None
3 4.38 3.25 None 3 6.50 3.75 None
4 3.63 2.00 None 4 6.88 5.13 None
</TABLE>
b) There were approximately 200 stockholders of record on April 15, 1996. This
total does not include stockholders listed with brokers or their agents in
street name.
c) As of April 15, 1996, the high and low sales price for the Common Stock was
$2.50.
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ITEM 6 - SELECTED FINANCIAL DATA
-----------------------
<TABLE>
<CAPTION>
Years Ended
------------------------------------------------------------------------
February 3, January 28, January 29, January 31, January 31,
1996 1995 1994 1993 1992
------------ ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS:
Sales $91,084,629 $69,351,205 $66,098,210 $61,255,226 $68,428,646
(Loss) Earnings Before
Income Taxes (2,761,305) (74,078) 237,950 (270,301) 371,337(a)
Net (Loss) Earnings (2,761,305) (82,078) 221,950 (333,001) 354,337(a)
Net (Loss) Earnings
per share:
Primary (1.92) (.06) .15 (.23) .24(a)
Fully Diluted (1.92) (.06) .15 (.23) .22(a)
Shares Used in
Computation:
Primary 1,438,952 1,437,165 1,477,260 1,435,633 1,467,493
Fully Diluted 1,438,952 1,437,165 1,505,000 1,435,633 1,580,420
BALANCE SHEET
DATA AT YEAR END:
Working capital 4,142,064 5,166,343 5,058,817 2,309,211 4,536,949
Working capital ratio 1.65 to 1 2.01 to 1 1.97 to 1 1.47 to 1 2.03 to 1
Total assets 15,168,699 16,287,880 14,011,244 10,852,814 12,494,872
Long-term obligations 8,096,798 7,675,289 5,400,233 2,880,291 4,821,238
Stockholders' equity (b) 355,536 3,063,841 3,086,968 2,812,018 3,148,097
Market price per common
share 2.00 5.125 2.88 4.13 4.13
Shares outstanding at year
end 1,438,952 1,438,952 1,435,702 1,435,702 1,435,652
</TABLE>
(a) Includes after tax non-recurring expense of $47,088 or $.03 per share.
(b) There were no cash dividends paid during the five year period ended February
3, 1996.
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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
consolidated financial statements and notes appearing herein.
COMPANY PROFILE:
Sun City Industries, Inc. (the "Company"), which began in 1949 as an egg
processing and marketing company, has now moved into the foodservice marketing
and distribution business 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 internal sales growth and the acquisition of related
companies in the foodservice distribution business.
In 1990, the Company began its expansion as a foodservice distributor that now
includes four centers in Florida covering the West Coast of Florida, Central
Florida and Southeast Florida from Key West to West Palm Beach. In addition,
the Company has operations that distribute to markets in Atlanta, Georgia,
Baltimore, Maryland, Philadelphia, Pennsylvania and throughout New Jersey.
The Company's clientele includes national and regional supermarkets, U.S.
military installations, hotels, restaurants, airline caterers and cruise lines.
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 on
the State of Florida.
RESULTS OF OPERATIONS:
SALES:
Sales for the fiscal years 1996, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
Year Sales % Increase
------ ----------- ----------
<S> <C> <C>
1996 $91,084,629 31.3%
1995 69,351,205 4.9%
1994 66,098,210 7.9%
</TABLE>
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For the fiscal year ended February 3, 1996, consolidated sales increased $21.7
million or 31.3%. Sales increased $16.9 million as a result of the acquisition
of Sheppard Foodservice on February 27, 1995. Sales increased $7.6 million
resulting from the start up of the Sun City Produce division on June 19, 1995.
Offsetting these increases was a $2.2 million decrease in sales in the
discontinued egg division, resulting in a 7.7 million decrease in units sold.
For the fiscal year ended January 28, 1995, consolidated sales increased $3.3
million or 4.9%. Sales increased $12.0 million as a result of reporting sales
for Gulf Coast Foodservice for a full fiscal year versus two months of the prior
year, partially offset by decreases of $4.4 million in egg division sales,
reflecting a 5.5% drop in unit sales and a 6.6% decrease in average egg market
prices. During fiscal 1995, the Company closed its New Jersey distribution
center, eliminated that center's non-profitable customers and combined the
remainder of their customer base with its New Holland, PA division, resulting in
a $4.0 million decrease in consolidated sales.
COST OF SALES:
Cost of sales include product cost, warehousing, distribution and egg processing
costs. Cost of sales as a percentage of sales was 95.2% in fiscal 1996, 92.3%
in fiscal 1995 and 93.2% in fiscal year 1994. Margins are influenced by the
Company's overall customer and product mix shifting from primarily an egg
company to that of a foodservice company. The increase in the cost of sales
percent in fiscal year 1996 was also the result of disposing of the Company's
egg production operations and joint venture investments.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
Selling, general and administrative expenses as a percentage of sales for fiscal
1996, 1995 and 1994, were 6.5%, 6.9% and 5.9%, respectively. Changes in the
percentage relationship of selling, general and administrative expenses to sales
resulted from an interplay of both direct costs associated with the operation of
each division as well as the home office administrative cost. During fiscal
1996, overall selling, general and administrative expenses increased due to the
addition of Sheppard Foodservice and Sun City Produce.
During fiscal 1995, these costs increased due to the additional selling, general
and administrative expenses directly related to the new Gulf Coast subsidiary.
Management expects that as the
15
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Company's operations become more foodservice oriented, future direct selling,
general and administrative expenses as a percentage of sales will increase to
those higher levels typically experienced in the foodservice industry.
INTEREST EXPENSE:
Interest expense increased $392,396 in fiscal 1996. This increase relates to
debt associated with the Sheppard acquisition, the issuance of an additional
$700,000 in Convertible Bonds in February 1995 and a 2.5% effective increase in
average interest rates for fiscal year 1996 of 11.0% versus 8.5% for fiscal year
1995 associated with the Line of Credit.
Interest expense increased $229,960 in fiscal 1995. The higher interest costs
result from the debt associated with the Gulf Coast acquisition, fixed asset
acquisitions which were financed, additional working capital requirements and a
1.5% increase in average interest rates experienced during 1995 versus 1994.
DISPOSITION OF EGG OPERATIONS:
During 1995, management implemented several strategic measures. These measures
included the disposition of three egg operations and related egg production
joint venture investments.
In September 1995, the Company disposed of its Spring Grove, Pennsylvania egg
operations and related joint venture investment. In December 1995, the Company
disposed of its Burgaw, North Carolina egg operations and related joint venture
investment and in January 1996, the Company disposed of its Jarratt, Virginia
egg operations.
As a result of these sales and the operating losses sustained by these
operations during the year, the Company recorded losses of approximately
$1,600,000 of which approximately $720,000 resulted from the disposition of
approximately $3,100,000 of assets. During the year these operations generated
approximately $19,900,000 in sales revenues.
The Company will continue to operate its growing foodservice operations and an
egg marketing division that will include the marketing of eggs on a regional
basis. The egg marketing operation will generate consulting and royalty income
for the next four to five years resulting from the sales and disposition of the
three egg operations.
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INCOME TAXES:
The Company accounts for income taxes in accordance with SFAS 109, under which
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 Company estimates that, after filing its 1996 tax return, it will have tax
loss carryforwards of approximately $4,700,000 expiring in the years 2005
through 2009.
NET (LOSS) EARNINGS:
For the fiscal year ended February 3, 1996, the net loss increased by
$2,679,227. Losses incurred as a result of the disposal of assets relating to
the egg division was the primary reason for the increased losses. During fiscal
year 1996, egg operations, including the joint ventures which were disposed of
during fiscal 1996, recorded a $1,628,000 loss versus a corresponding $451,000
profit for fiscal year 1995. Contributing to the loss were approximately
$420,000 of higher administrative costs mainly associated with the management
and disposition of the egg operations and increased interest expense of
$392,000.
For the fiscal year ended January 28, 1995, net earnings decreased by $304,000.
The operating profits of the Foodservice division, led by Gulf Coast
Foodservice, improved 63% over the previous year on a 23.2% increase in sales.
However, these positive results were more than offset by the negative year
experienced in the egg division. Results from the egg production joint ventures
turned negative and by year end the Company incurred losses of $105,000 and was
forced to reduce carrying values of its joint venture investment by an
additional $210,000. In addition, there was a 30% decrease in results from the
egg processing operations and higher interest expense.
Earnings per common share for the fiscal years 1996, 1995 and 1994 were as
follows:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
(Loss) Earnings per common and
common equivalent share ($1.92) ($.06) $ .15
Average shares used in the
computation 1,438,952 1,437,165 1,477,260
</TABLE>
17
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES:
The fiscal 1996 loss has depleted substantially all of the Company's capital.
Management plans to return the Company to profitability by focusing its efforts
on developing the foodservice business. However, the strategy of expanding the
Company's market share in the foodservice industry through the acquisition of
small to mid-sized foodservice distribution companies has been curtailed at this
time as a result of the expanded losses incurred during fiscal 1996. The
Company no longer has the capital to seek expansion through acquisitions. The
Company has disposed of its egg production and processing operations and has
instituted efforts to reduce administrative expenses. Management will
concentrate its efforts on the existing foodservice business with a goal to
improve each operation and grow internally until it can become profitable enough
to seek other acquisitions. There can be no assurance, however, that
management's efforts will ultimately be successful.
During fiscal 1996, the Company:
Disposed of property, plant and equipment and related joint venture investments
relating to its Spring Grove, Pennsylvania, Burgaw, North Carolina, and Jarratt,
Virginia, egg production and processing operations. This resulted in a
reduction in fixed assets and capital lease obligations of $1,543,663 and
$503,031, respectively.
Acquired Sheppard Distributors, Inc. of Auburndale, Florida for $1,350,000.
This resulted in goodwill of $450,000.
Surrendered certain key man life insurance policies, the net proceeds of which
were used to purchase new split dollar and paid up deferred compensation
policies.
Completed its second private placement offering by raising an additional
$700,000 in five year Senior Subordinated Convertible Debentures carrying a
fixed 9% interest 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 solely for the Company's working capital needs.
As of February 3, 1996, the Company did not meet the minimum net worth
requirement required by its lending arrangement. The Company has obtained a
waiver from the creditor regarding this covenant
18
<PAGE>
through March 31, 1997. In conjunction with the granting of this waiver, the
lender increased the interest rate on the line of credit by an additional
quarter of one percent.
The ability of the Company to meet its long-term cash requirements is dependent
upon its ability to obtain and sustain sufficient cash flows from operations
supplemented as necessary by potential financings to the extent obtainable.
COMMITMENTS:
As of February 3, 1996, the Company had no commitments for capital expenditures.
ITEM 8 - Consolidated Financial Statements and Supplementary Data
--------------------------------------------------------
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
Page
----
Independent Auditors' Report 20
Consolidated Balance Sheets 21
Consolidated Statements of Operations 22
Consolidated Statements of Stockholders' Equity 23
Consolidated Statements of Cash Flows 24
Notes to Consolidated Financial Statements 27
19
<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 February 3, 1996 and January 28,
1995, and the related statements of consolidated operations, stockholders'
equity and cash flows for each of the three years in the period ended February
3, 1996. 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 February 3, 1996, and January 28, 1995, and the results
of their operations and their cash flows for each of the three years in the
period ended February 3, 1996, in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Fort Lauderdale, Florida
May 10, 1996
20
<PAGE>
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES
------------------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
<TABLE>
<CAPTION>
February 3, January 28, LIABILITIES AND February 3,
January 28,
ASSETS 1996 1995 STOCKHOLDERS' EQUITY 1996 1995
------- ---------- ---------- -------------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
CURRENT ASSETS: CURRENT LIABILITIES:
Cash and equivalents $ 760,885 $ 453,608 Accounts payable $ 5,318,812 $ 3,850,901
Accounts and trade notes Accrued expenses 563,584 495,244
receivable, less allow- Current portion of
ance for doubtful long-term debt
accounts of approximate- (Note F) 496,056 687,640
ly $186,000 and $179,000 Current portion of
in 1996 and 1995, respec- capital lease
tively (Notes C and F) 6,779,193 6,053,550 obligation (Note F) 62,805
Inventories (Notes D Income taxes payable
and F) 2,755,593 2,645,785 (Note G) 8,000
---------- -----------
Notes receivable- TOTAL CURRENT
current portion 14,816 13,545 LIABILITIES 6,378,452 5,104,590
Prepaid expenses 210,029 370,445
Investment in Joint DEFERRED COMPENSATION
Ventures (Note K) 734,000 PAYABLE 337,913 444,160
----------- ----------- LONG-TERM DEBT
TOTAL CURRENT ASSETS 10,520,516 10,270,933 (Note F) 8,096,798 7,199,174
CAPITAL LEASE
PROPERTY, PLANT AND OBLIGATION (Note F) 476,115
EQUIPMENT (Notes F, K):
Land and Improvements 108,133 146,404 COMMITMENTS (Note H)
Buildings and Improve-
ments 438,077 999,479 STOCKHOLDERS' EQUITY
Machinery and equipment 2,017,272 5,722,264 (Note I):
----------- ----------- Common stock, $.10 par
2,563,482 6,868,147 value 3,000,000 shares
authorized; 2,276,116
Less: Accumulated shares issued in 1996
depreciation (1,025,723) (3,720,607) and 1995 227,612 227,612
----------- ----------- Capital in excess of
1,537,759 3,147,540 par value 1,070,286 1,070,286
Retained earnings 2,004,838 4,766,143
----------- -----------
Properties held for 3,302,736 6,064,041
sale 596,318 449,500 Less: Treasury stock
Long-term notes at cost, 837,164
receivable 105,930 121,822 shares in 1996
Excess of purchase 1995, respectively (2,682,200) (2,682,200)
price over fair ----------- -----------
value of net
assets acquired 1,615,611 1,240,501 Less Receivable for
common stock sold to
ESOP (Note M) (265,000) (318,000)
OTHER ASSETS (Note E) 792,565 1,057,584 ----------- -----------
----------- -----------
Total Stockholders'
Equity 355,536 3,063,841
----------- -----------
TOTAL $15,168,699 $16,287,880 TOTAL $15,168,699 $16,287,880
=========== =========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
21
<PAGE>
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES
------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
<TABLE>
<CAPTION>
February 3, January 28, January 29,
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
SALES, net $ 91,084,629 $69,351,205 $66,098,210
COSTS AND EXPENSES:
Cost of sales 86,752,375 64,032,260 61,594,887
Selling, general and administrative expenses 5,941,599 4,759,843 3,897,172
Interest expense (Note F) 1,044,443 652,047 422,087
Other expense (income), net 107,517 (18,867) (53,886)
------------ ----------- -----------
TOTAL COSTS AND EXPENSES 93,845,934 69,425,283 65,860,260
(LOSS) EARNINGS FROM OPERATIONS
BEFORE INCOME TAXES (2,761,305) (74,078) 237,950
PROVISION FOR INCOME TAXES (Note G): -- 8,000 16,000
------------ ----------- -----------
NET (LOSS) EARNINGS (Note J): ($2,761,305) $ (82,078) $ 221,950
============ =========== ===========
NET (LOSS) EARNINGS PER SHARE (Notes J, L):
NET (LOSS) EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE ($1.92) $ (.06) $ .15
============ =========== ===========
NET (LOSS) EARNINGS PER COMMON SHARE
ASSUMING FULL DILUTION ($1.92) $ (.06) $ .15
============ =========== ===========
</TABLE>
See notes to consolidated financial statements.
22
<PAGE>
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES
------------------------------------------
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
-----------------------------------------------
<TABLE>
<CAPTION>
Common Stock
---------------------------------------- Treasury
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, 1993 2,276,116 $227,612 $1,070,286 $ 4,630,340 840,414 $2,692,220 $424,000
Payment of ESOP loan (Note M) (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
Exercise of Stock Options (4,069) (3,250) (10,020)
Payment of ESOP loan (Note M) (53,000)
Net Loss (82,078)
--------- -------- ---------- ----------- ------- ---------- --------
Balance, January 28, 1995 2,276,116 227,612 1,070,286 4,766,143 837,164 2,682,200 318,000
Payment of ESOP loan (Note M) (53,000)
Net Loss (2,761,305)
--------- -------- ---------- ----------- ------- ---------- --------
Balance, February 3, 1996 2,276,116 $227,612 $1,070,286 $ 2,004,838 837,164 $2,682,200 $265,000
========= ======== ========== =========== ======= ========== ========
</TABLE>
See notes to consolidated financial statements.
23
<PAGE>
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES
------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------------------
<TABLE>
<CAPTION>
February 3, January 28, January 29,
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (Loss) Earnings $(2,761,305) $ (82,078) $ 221,950
ADJUSTMENTS TO RECONCILE NET (LOSS) EARNINGS
TO NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES:
Depreciation and Amortization 822,516 645,004 452,176
Provision for losses on accounts receivable 324,818 123,549 18,456
Loss on sale of fixed assets 153,885
Change in assets and liabilities net of
effects from acquisitions:
Accounts and trade notes receivable (91,790) 119,786 (973,071)
Inventories 667,844 (300,026) (85,586)
Prepaid expenses 176,912 (2,674) (159,607)
Other assets 944,327 (262,047) (362,910)
Accounts payable 878,721 (611,577) (153,847)
Accrued expenses 68,340 (103,128) (6,602)
Income taxes payable (8,000) (8,000) (24,412)
Deferred compensation payable (106,247) 114,400 111,219
----------- --------- -----------
TOTAL ADJUSTMENTS 3,831,326 (284,713) (1,184,184)
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES $ 1,070,021 $(366,791) $ (962,234)
----------- --------- -----------
</TABLE>
See notes to consolidated financial statements
24
<PAGE>
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES
------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------------------
(CONTINUED)
<TABLE>
<CAPTION>
February 3, January 28, January 29,
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES $ 1,070,021 $ (366,791) $ (962,234)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of fixed assets 1,214,255 52,523
Capital expenditures (589,232) (949,100) (465,278)
Payment for acquisitions (350,000) (796,895)
Repayment of notes receivable 14,621
----------- ---------- -----------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES 289,644 (949,100) (1,209,650)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable and
subordinated debt 556,052 1,462,479 2,396,677
Repayments on notes receivable 100,474
Principal payments on notes payable (1,661,440) (283,539) (463,183)
Proceeds from loan receivable from ESOP 53,000 53,000 53,000
Proceeds from exercise of options 5,951
----------- ---------- -----------
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES (1,052,388) 1,237,891 2,086,968
----------- ---------- -----------
NET DECREASE IN CASH AND
EQUIVALENTS (307,277) (78,000) (84,916)
CASH AND EQUIVALENTS,
Beginning of year 453,608 531,608 616,524
CASH AND EQUIVALENTS,
End of year $ 760,885 $ 453,608 $ 531,608
=========== ========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the year for
Interest $ 1,044,443 $ 652,047 $ 422,087
=========== ========== ===========
Income taxes $ 0 $ 17,000 $ 0
=========== ========== ===========
</TABLE>
See notes to consolidated financial statements.
25
<PAGE>
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES
------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------------------
(CONTINUED)
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
During fiscal year 1996, the Company acquired Sheppard Food Service, Inc. for
$1,350,000. The cost in excess of the fair value of the net assets acquired was
$450,000. The following is a summary of the net assets acquired:
<TABLE>
<CAPTION>
<S> <C>
Accounts Receivable $ 958,671
Inventories 777,652
Prepaid Expenses 16,496
Fixed Assets, net 5,779
Other Assets 3,100
----------
1,761,698
Assumption of Liabilities (861,698)
----------
Cash Paid $ 900,000
==========
</TABLE>
During fiscal year 1995, the Company determined the final purchase price for the
business purchased in fiscal year 1994. The Company signed a note payable in the
amount of $731,442 payable over the next five years.
During fiscal year 1995, the Company entered into a capital lease agreement in
the amount of $555,374 for an egg processor.
During fiscal year 1994, the Company purchased a business for cash and
assumption of liabilities as follows:
<TABLE>
<CAPTION>
<S> <C>
Fair value of assets acquired $1,620,523
Cash paid (796,895)
-----------
Assumption of liabilities $ 823,628
===========
</TABLE>
In addition, the Company agreed to pay the former shareholders a minimum of
$200,000 based on the results of first year operations of the acquired company.
See notes to consolidated financial statements.
26
<PAGE>
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES
------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
YEARS ENDED FEBRUARY 3, 1996, JANUARY 28, 1995 & JANUARY 29, 1994
-----------------------------------------------------------------
A. Nature of Operations:
--------------------
Sun City Industries, Inc. (referred to herein as "Sun City" or the
"Company") and its subsidiaries distribute a broad line of food and related
products through operating centers in New Jersey, Georgia and principally in
Florida.
The fiscal year 1996 loss has depleted substantially all of the Company's
capital. Management plans to return the Company to profitability by focusing
its efforts on developing the foodservice business. However, the strategy of
expanding the Company's market share in the foodservice industry through the
acquisition of small to mid-sized foodservice distribution companies has
been curtailed at this time as a result of the expanded losses incurred
during fiscal 1996. The Company no longer has the capital to seek expansion
through acquisitions. The Company has disposed of its egg production and
processing operations and has instituted efforts to reduce administrative
expenses. Management will concentrate its efforts on the existing
foodservice business with a goal to improve each operation and grow
internally until it can become profitable enough to seek other acquisitions.
There can be no assurance, however, that management's efforts will
ultimately be successful.
The Company has one significant customer which accounted for 7.5%, 9.5% and
10.4% of net sales for the fiscal years 1996, 1995 and 1994, respectively.
The Company believes that its vulnerability to risk concentrations related
to significant vendors and sources of its raw materials is not significant.
Risk of geographical concentrations is also not significant.
B. Significant Accounting Policies:
--------------------------------
1) Principles of Consolidation
The consolidated financial statements include the accounts of Sun City
Industries, Inc. and its wholly-owned subsidiaries. All significant
intercompany profits, transactions and balances have been eliminated.
27
<PAGE>
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES
------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
YEARS ENDED FEBRUARY 3, 1996, JANUARY 28, 1995 & JANUARY 29, 1994
-----------------------------------------------------------------
2) Use of Estimates
The preparation of consolidated 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 consolidated financial statements and the reported amount of revenues
and expenses during the reporting period. Actual results could differ from
those estimates.
3) Cash and Equivalents
Cash and equivalents include cash on hand and short-term investments
purchased with a maturity of three months or less.
4) Inventories
All inventories are stated at the lower of cost (using the first-in, first-
out and weighted average methods) or market.
5) 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 can be reasonably
estimated.
During fiscal 1996, the Company disposed of its interests in these joint
ventures.
6) Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation is computed
utilizing the straight-line method over the estimated useful lives of the
assets as follows:
28
<PAGE>
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES
------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
YEARS ENDED FEBRUARY 3, 1996, JANUARY 28, 1995 & JANUARY 29, 1994
-----------------------------------------------------------------
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
Gains and losses arising from disposals of properties are included in
current operations.
7) Unamortized Costs in Excess of Net Assets Acquired
Cost in excess of net assets acquired ("Goodwill") are being amortized using
the straight-line method over 20 to 25 years. Aggregate accumulated
amortization of Goodwill was $74,890 and $31,652 as of February 3, 1996 and
January 28, 1995, respectively. The amount of impairment, if any, in
unamortized Goodwill is measured based on projected future results of
operations. To the extent future results of operations through the period
such Goodwill is being amortized are sufficient to absorb the amortization
of Goodwill, the Company has deemed there to be no impairment of Goodwill.
8) Fair Value of Financial Investments
Statement of Financial Accounting Standards ("SFAS") No. 107, "Disclosure
about Fair Value of Financial Instruments," requires disclosure of the fair
value of financial instruments, both assets and liabilities, recognized and
not recognized in the consolidated balance sheets of the Company, for which
it is practicable to estimate fair value. The estimated fair values of
financial instruments which are presented herein have been determined by the
Company using available market information and appropriate valuation
methodologies. However, considerable judgement is required in interpreting
market data to develop estimates of fair value. Accordingly, the estimates
presented herein are not necessarily indicative of amounts the Company could
realize in a current market exchange.
The following methods and assumptions were used to estimate fair value:
29
<PAGE>
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES
------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
YEARS ENDED FEBRUARY 3, 1996, JANUARY 28, 1995 & JANUARY 29, 1994
-----------------------------------------------------------------
- the carrying amounts of cash and cash equivalents, receivables and
accounts payable approximate fair value due to their short term nature;
- the carrying amounts of short-term and long-term debt approximate fair
value as the majority of such debt bears interest based on the prime
interest rate.
9) Long-Lived Assets
The Company will adopt SFAS No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed Of" in fiscal year
1997. This standard requires that long-lived assets and certain identifiable
intangibles held and used by an entity be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. The adoption of this standard is not expected
to have a significant effect on the Company's consolidated results of
operations or financial position.
10) Stock-Based Compensation
The Company currently accounts for its stock-based compensation plans using
the provisions of Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees" ("APB 25").
In 1995, the Financial Accounting Standards Board issued SFAS No. 123,
"Accounting for Stock-Based Compensation". Under the provisions of SFAS No.
123, companies can elect to account for stock-based compensation plans using
a fair-value-based method or continue measuring compensation expense for
those plans using the intrinsic value method prescribed in APB 25. SFAS No.
123 requires that companies electing to continue using the intrinsic value
method must make pro forma disclosures of net income and earnings per share
as if the fair-value-based method of accounting had been applied. The
adoption of SFAS No. 123 will be reflected in the Company's 1997
consolidated financial statements.
30
<PAGE>
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES
------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
YEARS ENDED FEBRUARY 3, 1996, JANUARY 28, 1995 & JANUARY 29, 1994
-----------------------------------------------------------------
As the Company anticipates continuing to account for stock-based
compensation using the intrinsic value method, SFAS No. 123 is not expected
to have a significant impact on the Company's results of operations or
financial position.
11) Income Taxes
The Company recognizes certain income and expenses in different periods for
financial reporting and income tax purposes in accordance with SFAS No.
109, "Accounting for Income Taxes".
C. Accounts and Notes Receivable:
-----------------------------
Trade accounts and notes receivable consist of the following:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Receivables:
Trade $6,395,496 $5,746,558
Other 569,597 485,611
---------- ----------
6,965,093 6,232,169
Less: Allowances for
doubtful accounts (185,900) (178,619)
---------- ----------
$6,779,193 $6,053,550
========== ==========
</TABLE>
The following is an analysis of the allowance for doubtful
accounts for the fiscal years 1996, 1995 and 1994:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Balance, beginning of year $178,619 $178,763 $169,377
Provision for doubtful
accounts 324,818 123,549 18,456
Uncollectible accounts
written off (317,537) (123,693) (9,070)
-------- -------- --------
Balance, end of year $185,900 $178,619 $178,763
======== ======== ========
</TABLE>
The long-term note receivable consists of a mortgage note bearing interest
at 9% payable monthly. As of February 3, 1996, the carrying amount of the
note receivable approximated its fair value.
31
<PAGE>
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES
------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
YEARS ENDED FEBRUARY 3, 1996, JANUARY 28, 1995 & JANUARY 29, 1994
-----------------------------------------------------------------
Substantially all receivables are pledged as collateral for certain debt
(see Note F).
D. Inventories:
------------
The major components of inventories are as follows:
<TABLE>
<CAPTION>
1996 1995
------------- ----------
<S> <C> <C>
Dairy and related products $2,391,803 $2,173,292
Produce 318,717 -
Eggs and packaging materials 45,073 455,168
Miscellaneous - 17,325
---------- ----------
Total $2,755,593 $2,645,785
========== ==========
</TABLE>
Substantially all inventories are pledged as collateral for certain debt
(see Note F).
E. Other Assets:
-------------
Other assets consist of the following components:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Officers' Life Insurance $ 367,066 $ 620,155
Organizational Costs 84,588 125,420
Non-compete Costs 19,832 30,061
Recoverable Deposits 114,612 29,335
Prepaid Lease Costs - 28,586
Other 206,467 224,027
---------- ----------
Total $ 792,565 $1,057,584
========== ==========
</TABLE>
The Company pays the premiums on certain life insurance policies that
insure the lives of key executives and are payable to the officer's
designated beneficiaries in the event of their deaths. The policies, with
a total face amount of $1,925,000 have been assigned to the Company to the
extent necessary to repay all premiums.
In addition, the Company pays the premiums for other executives' policies
as a means to fund certain deferred compensation obligations.
32
<PAGE>
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES
------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
YEARS ENDED FEBRUARY 3, 1996, JANUARY 28, 1995 & JANUARY 29, 1994
-----------------------------------------------------------------
F. Debt and Capital Leases:
------------------------
Long-term debt consists of the following:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
$7,500,000 line of credit, expires
March 1998, interest at 2.25% over
prime (10.75% at February 3, 1996)
payable monthly, collateralized by
the Company's accounts receivable,
inventory, machinery and equipment. $5,950,000 $5,480,000
Mortgage note payable, interest at
9.5% payable monthly, due in April
1997, collateralized by property with
a carrying value of approximately
$387,000 at February 3, 1996. 117,074 262,500
Notes payable, interest at 9.5%
payable monthly, due in installments
through October 1997, collateralized
by machinery and leasehold improvements
with a carrying value of approximately
$200,000 at February 3, 1996 102,200 150,084
Notes payable to former Gulf Coast
shareholders, interest at 7.75% payable
quarterly in equal installments
commencing March 1996 through
December 1999. 745,154 931,442
Notes payable, interest at 8.0% payable
monthly, due in installments through
December 1998, collateralized by
computer system with a carrying
value of $30,000 at February 3, 1996. 22,056 28,055
</TABLE>
33
<PAGE>
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES
------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
YEARS ENDED FEBRUARY 3, 1996, JANUARY 28, 1995 & JANUARY 29, 1994
-----------------------------------------------------------------
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Notes payable, bearing interest
between 8.5% and 10.25% payable monthly,
due in installments through April 1998,
collateralized by trucks and equipment
with a carrying value of $300,000 at
February 3, 1996. 236,624 194,337
Notes payable, interest at 1.5% over
prime (10.0% at February 3, 1996),
payable monthly, due in installments
through December 1998, collateralized
by equipment with a carrying value of
$21,000 at February 3, 1996. 19,746 45,011
Notes payable, bearing interest
at 7% to 9.5% payable monthly,
collateralized by layer flock.
Note paid in full in September 1995. 95,385
Five year, Senior Subordinated
Convertible Debentures, interest
at 8% payable semi-annually,
convertible into common stock at
$3.25 per share. 700,000 700,000
Five year, Senior Subordinated
Convertible Debentures, interest
at 9% payable semi-annually,
convertible into common stock at
$5.125 per share. 700,000
----------
Total debt 8,592,854 7,886,814
Less current portion 496,056 687,640
---------- ----------
Total long-term debt $8,096,798 $7,199,174
========== ==========
</TABLE>
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 and net worth.
34
<PAGE>
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES
------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
YEARS ENDED FEBRUARY 3, 1996, JANUARY 28, 1995 & JANUARY 29, 1994
-----------------------------------------------------------------
As of February 3, 1996, the Company did not meet its minimum net worth
requirement. The Company has obtained a waiver from the creditor regarding this
covenant through March 31, 1997. In conjunction with the granting of this
waiver, the lender increased the interest rate on the line of credit to 2.5%
over prime. During fiscal 1996, the line of credit facility was expanded from
$7 million to $7.5 million.
The above carrying cost approximates the fair market value of long-term debt as
of February 3, 1996.
The aggregate maturities of long-term debt are as follows:
<TABLE>
<CAPTION>
Fiscal year ending
------------------
<S> <C>
1997 $ 496,056
1998 308,525
1999 6,901,317
2000 886,956
Thereafter
----------
Total $8,592,854
==========
</TABLE>
During fiscal year 1995, the Company had a commitment under a capital lease
obligation relating to certain egg processing equipment. As of February 3,
1996, the lease obligation was satisfied in full.
G. Income Taxes:
-------------
The Company provides for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes". Under SFAS No. 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 provision for income taxes is comprised of the following:
35
<PAGE>
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES
------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
YEARS ENDED FEBRUARY 3, 1996, JANUARY 28, 1995 & JANUARY 29, 1994
-----------------------------------------------------------------
<TABLE>
<CAPTION>
1996 1995 1994
----------- ---------- ----------
<S> <C> <C> <C>
Current State Tax $ 0 $8,000 $16,000
======= ====== =======
</TABLE>
The net deferred tax balance at February 3, 1996 consisted of:
<TABLE>
<CAPTION>
Assets Liabilities Total
------ ----------- -----
<S> <C> <C> <C>
Excess tax amortization
for non-compete agreement $ 19,267 $ 19,267
Tax loss carryforwards 1,589,710 1,589,710
Accelerated depreciation
for tax purposes $ (95,661) (95,661)
Allowance for bad debts 63,212 63,212
Capitalization for tax
purposes of inventory
related costs 20,401 20,401
Deferred Compensation 120,757 120,757
Other (14,905) (14,905)
Less: Valuation Allowance (1,702,781) (1,702,781)
---------- --------- -----------
Total $ 110,566 $(110,566) $ 0
========== ========= ===========
</TABLE>
The net deferred tax balance at January 28, 1995 consisted of:
<TABLE>
<CAPTION>
Assets Liabilities Total
------ ----------- -----
<S> <C> <C> <C>
Excess tax amortization for
non-compete agreement $ 117,900 $ 117,900
Tax loss carryforwards 588,700 588,700
Accelerated depreciation for
tax purposes $(174,300) (174,300)
Allowance for bad debts 60,800 60,800
Capitalization for tax purposes
of inventory related costs 46,600 46,600
Deferred compensation 151,000 151,000
Investment in Joint Ventures (58,900) (58,900)
Other (2,200) (2,200)
Less: Valuation allowance (729,600) (729,600)
--------- --------- ----------
Total $ 235,400 $(235,400) $ 0
========= ========= ==========
</TABLE>
Reconciliations of the effective income tax rates to the U.S.
statutory rates are summarized as follows:
36
<PAGE>
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES
------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
YEARS ENDED FEBRUARY 3, 1996, JANUARY 28, 1995 & JANUARY 29, 1994
-----------------------------------------------------------------
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Statutory rate (34.0%) (34.0%) 34.0%
Increase (reduction) in
valuation allowance 35.2 26.0 (35.2)
Amortization of excess of
purchase price over fair
value of net assets
acquired .9 10.2 3.2
State income taxes 7.1 4.4
Other (2.1) 1.5 0.3
----- ----- ----
Total 0% 10.8% 6.7%
====== ===== ====
</TABLE>
The Company estimates that, after filing its 1996 tax return, it will have tax
loss carryforwards of approximately $4,700,000 expiring in the years 2005
through 2009.
H. Commitments:
------------
The Company leases land, building and equipment.
As of February 3, 1996, the Company's future minimum rental payments and
sublease rental income for leases having an initial lease term in excess of one
year were as follows:
<TABLE>
<CAPTION>
Delivery
Buildings and other Sublease
Fiscal Years ending and land equipment Income
------------------- --------- --------- --------
<S> <C> <C> <C>
1997 $ 427,242 $303,918 $161,220
1998 246,328 240,735 161,220
1999 190,972 135,131 161,220
2000 159,732 107,480
Thereafter
---------- -------- --------
Total $1,024,274 $679,784 $591,140
========== ======== ========
</TABLE>
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 February 3, 1996, January 28, 1995
and
37
<PAGE>
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES
------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
YEARS ENDED FEBRUARY 3, 1996, JANUARY 28, 1995 & JANUARY 29, 1994
-----------------------------------------------------------------
January 29, 1994 was $1,062,407, $917,422 and $912,773, respectively, excluding
mileage charges and other executory costs. These expenses are included in
selling, general and administrative expenses in the accompanying consolidated
statements of operations. For the year ended February 3, 1996, sublease income
was $67,175. There was no sublease income in fiscal years 1995 and 1994.
I. Stockholders' Equity:
---------------------
1) 1982 Stock Option Plan -
In June 1982, the stockholders approved an 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. As of February 3, 1996, January 28,
1995 and January 29, 1994, 262,500 shares of common stock were reserved
under the plan.
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.
Activity relating to this option plan is summarized as follows:
<TABLE>
<CAPTION>
Price Per
Shares Share
-------- ------------
<S> <C> <C>
Outstanding at January 31, 1993 252,000 $ 1.833-3.50
Granted 30,000 2.875
Cancelled (41,250) 1.833
-------
Outstanding at January 29, 1994 240,750 1.833-3.50
Granted 20,000 3.00-5.00
Exercised (3,250) 1.833
Cancelled (1,500) 1.833
-------
Outstanding at January 28, 1995 256,000 1.833-5.00
</TABLE>
38
<PAGE>
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES
------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
YEARS ENDED FEBRUARY 3, 1996, JANUARY 28, 1995 & JANUARY 29, 1994
-----------------------------------------------------------------
<TABLE>
<S> <C> <C>
Cancelled (37,500) 1.833-2.875
-------
Outstanding at February 3, 1996 218,500 $ 1.833-5.00
=======
</TABLE>
At February 3, 1996, January 28, 1995 and January 29, 1994, options for 198,000,
166,300 and 121,950 shares, respectively, were exercisable.
2) 1994 Stock Option Plan -
In June 1994, the stockholders approved another incentive stock option plan
for officers, directors, and key employees. Under the plan, options for
225,000 common shares may be granted to purchase common shares at no less
than 100% of the fair market value at the 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.
Activity relating to this option plan is summarized as follows:
<TABLE>
<CAPTION>
Price Per
Shares Share
------- --------------
<S> <C> <C>
Granted 75,000 $ 3.875
------- -----
Outstanding at January 28, 1995 75,000 3.875
Granted 45,000 4.125 - 5.125
-------
Outstanding at February 3, 1996 120,000 $3.875 - 5.125
=======
</TABLE>
At February 3, 1996, options for 15,000 shares were exercisable.
39
<PAGE>
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES
------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
YEARS ENDED FEBRUARY 3, 1996, JANUARY 28, 1995 & JANUARY 29, 1994
-----------------------------------------------------------------
J. Acquisitions:
-------------
Effective February 27, 1995, the Company acquired substantially all the assets
and liabilities of Sheppard Distributors, Inc. ("Sheppard") which was accounted
for using the purchase method of accounting. Sheppard is a foodservice company
serving a broad range of customers. Product lines include seafood, meats,
poultry, produce and various frozen foods. The initial purchase price consisted
of the acquisition of $1,761,698 in assets, payable $900,000 in cash and the
assumption of $861,698 in liabilities. The results of operations of Sheppard are
included in the consolidated statement of operations from the date of
acquisition.
The following unaudited pro-forma consolidated results of operations for fiscal
1996 give effect to the acquisition of Sheppard as though it had occurred on
January 29, 1995:
<TABLE>
<S> <C>
Sales and operating revenues $91,876,376
Net (loss) ($2,797,860)
(Loss) per share:
Primary ($1.94)
Fully Diluted ($1.94)
</TABLE>
The unaudited pro-forma information is not necessarily indicative of results of
operations that would have occurred had the purchase been made at January 29,
1995, or of future results of operations of the Company.
The initial purchase price was funded through borrowings under the Company's
revolving credit and term loan agreement. The Company is obligated to pay an
additional amount to the sellers based on net profits earned by this division
computed as four and one-half times the average annual net profit up to
$400,000, and five and one-half times the average annual net profit over
$400,000, generated by this division over the three year period beginning on the
acquisition date. This amount is payable in annual increments of twenty-five
percent of the net aggregate price at the end of the first and second years
after closing, fifty percent of the
40
<PAGE>
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES
------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
YEARS ENDED FEBRUARY 3, 1996, JANUARY 28, 1995 & JANUARY 29, 1994
-----------------------------------------------------------------
recomputed net aggregate price at the end of the third year after closing and
the balance payable one year after the final computation, secured by fixed
assets and guaranteed by the Company.
The excess of the purchase price over the fair value of the tangible and
identifiable intangible net assets acquired is being amortized over twenty-five
years using the straight-line method.
K. Disposal of Assets:
------------------
During 1995, management implemented several strategic measures. These measures
included the disposition of three egg operations and related egg production
joint venture investments.
In September 1995, the Company disposed of its Spring Grove, Pennsylvania egg
operations and related joint venture investment. In December 1995, the Company
disposed of its Burgaw, North Carolina egg operations and related joint venture
investment and in January 1996, the Company disposed of its Jarratt, Virginia
egg operations.
As a result of these sales and the operating losses sustained by these
operations during the year, the Company recorded losses of approximately
$1,600,000 of which approximately $720,000 resulted from the disposition of
approximately $3,100,000 of assets. During the year these operations generated
approximately $19,900,000 in sales revenues.
L. Net (Loss) Earnings Per Share:
------------------------------
Net (loss) earnings per common share and common equivalent share is based on the
treasury stock method computed by dividing net (loss) earnings 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 (loss) income per common share were
1,438,952, 1,437,165 and 1,477,260 for years ending February 3, 1996, January
28, 1995 and January 29, 1994, respectively.
41
<PAGE>
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES
------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
YEARS ENDED FEBRUARY 3, 1996, JANUARY 28, 1995 & JANUARY 29, 1994
-----------------------------------------------------------------
Common stock equivalents were excluded from the calculation of net loss per
share for the years ending February 3, 1996 and January 28, 1995 because the
effect would have been antidilutive.
M. 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. Contributions to the Plan are made at the discretion of the Board
of Directors. During fiscal year 1996, the Company contributed $90,000. During
fiscal years 1995 and 1994, the Company contributed $120,000 each year to the
plan. 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 the same rate charged to the Company by its primary lender.
N. Segment Reporting:
------------------
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:
<TABLE>
<CAPTION>
1996 1995 1994
----- ----- -----
<S> <C> <C> <C>
Foodservice 71.4% 59.2% 51.7%
Egg division & other 28.6 40.8 48.3
</TABLE>
O. Legal Matters:
--------------
The Company is engaged in ordinary routine litigation incidental to its
business. The Company does not believe that the ultimate outcome of such
litigation will have a material adverse effect on its consolidated financial
position or results of operations.
42
<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 26, 1996
(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".
43
<PAGE>
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) Schedules
All financial statement 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.
(3) Exhibits
See Exhibits Index below.
EXHIBITS INDEX
--------------
No.(3) Articles of Incorporation and By-laws.
There have been no changes in the articles of incorporation or by-laws
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.
44
<PAGE>
No.(10) Material contracts.
During the current year, there were no material
contracts.
No.(11) Statement re: Computation of per share earnings.
Not applicable.
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 February
3, 1996.
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.
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.
45
<PAGE>
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 October 3, 1995, the registrant filed Form 8-k for the disposition
of the business assets of Nearby Eggs, Inc. (Pa.) and certain egg production
joint ventures.
On January 3, 1996, the registrant filed Form 8-k for the disposition
of the business assets of Carlisle Poultry and Egg Associates, Inc. and Nearby
Eggs, Inc. (Va.) and the remaining egg production joint ventures.
46
<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.
May , 1996
-----------------------
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
------------------ ----------------------- --------------
Chief Executive Officer May , 1996
------------------ and Director
Malvin Avchen
President and Director May , 1996
------------------
Gustave Minkin
Treasurer and Controller May , 1996
------------------
Syed Jafri
Chief Operating Officer May , 1996
------------------ and Director
Saul Zalka
47
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SUN CITY
INDUSTRIES, INC. FINANCIAL STATEMENTS F.P.I. 02-03-96 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-03-1996
<PERIOD-START> JAN-29-1995
<PERIOD-END> FEB-03-1996
<CASH> 760,995
<SECURITIES> 0
<RECEIVABLES> 6,979,909
<ALLOWANCES> 186,000
<INVENTORY> 2,755,593
<CURRENT-ASSETS> 10,520,516
<PP&E> 2,563,492
<DEPRECIATION> 1,025,723
<TOTAL-ASSETS> 15,169,699
<CURRENT-LIABILITIES> 6,378,452
<BONDS> 8,096,798
0
0
<COMMON> 227,612
<OTHER-SE> 127,924
<TOTAL-LIABILITY-AND-EQUITY> 15,166,699
<SALES> 91,094,629
<TOTAL-REVENUES> 91,094,629
<CGS> 86,752,375
<TOTAL-COSTS> 93,845,934
<OTHER-EXPENSES> 7,093,559
<LOSS-PROVISION> 324,818
<INTEREST-EXPENSE> 1,044,443
<INCOME-PRETAX> (2,761,305)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,761,305)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,761,305)
<EPS-PRIMARY> (1.92)
<EPS-DILUTED> (1.92)
</TABLE>
