FORM 10-Q/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT # 1
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended ____September 29, 1994__
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to __________.
Commission file number 1-7441
____________________Sunshine-Jr. Stores, Inc._______________
(Exact name of registrant as specified in its charter)
________Florida________________ _______59-0669576_________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
_____109 West Fifth Street, Panama City, FL 32402___________
(Address of principal offices) (Zip Code)
(Registrant's telephone number, including area code)
_____________(904) 769-1661_________________________
__________________________(Not Applicable)__________________
(Former name, 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 for that the
registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90
days. Yes X No __
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of November 5, 1994.
Common Stock $.10 Par Value 1,701,650 shares
<PAGE>
<TABLE>
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
STATEMENTS OF OPERATIONS
Sunshine-Jr. Stores, Inc.
(Unaudited)
<CAPTION>
13 Wks Ended 13 Wks Ended 39 Wks Ended 39 Wks Ended
Sep 29, 1994 Sep 30, 1993 Sep 29, 1994 Sep 30, 1993
(as restated) (as restated)
<S> <C> <C> <C> <C>
NET REVENUE $42,469,283 $55,645,209 $128,175,953 $163,114,027
Cost of sales and expenses:
Cost of goods sold................... 32,214,253 42,911,917 98,692,406 128,196,562
Selling, general, and administrative
expense............................. 9,183,372 11,269,617 27,824,964 32,807,380
Interest expense, net of interest
income of $87,547 and $26,977 for
the third quarters of 1994 and 1993
and $322,056 and $42,852 for year
to date 1994 and 1993, respectively. 318,547 28,459 1,004,691 237,689
41,716,172 54,209,993 127,522,061 161,241,631
INCOME (LOSS) BEFORE REORGANIZATION
ITEMS AND PROVISION FOR INCOME TAXES.. 753,111 1,435,216 653,892 1,872,396
REORGANIZATION ITEMS:
Professional fees..................... 86,570 1,137,854 735,146 2,827,945
Net (gain)loss from sale of property
and equipment........................ 46,956 5,518 (2,060,673) (9,166)
Restructuring charges................. 40,271 14,376 24,902 97,055
173,797 1,157,748 (1,300,625) 2,915,834
INCOME(LOSS) BEFORE PROVISION FOR
INCOME TAXES.......................... 579,314 277,468 1,954,517 (1,043,438)
PROVISION FOR INCOME TAXES:
Current............................... 255,862 0 422,903 0
Deferred.............................. 0 0 0 0
255,862 0 422,903 0
NET INCOME(LOSS)....................... $323,452 $277,468 $1,531,614 ($1,043,438)
INCOME (LOSS) PER COMMON SHARE:
Net Income(Loss)..................... $0.19 $0.17 $0.90 ($0.61)
</TABLE>
*See notes to condensed financial statements.
<PAGE>
<TABLE>
BALANCE SHEETS
Sunshine-Jr. Stores, Inc.
(Unaudited)
<CAPTION>
September 29 December 30
1994 1993
(as restated)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Unrestricted cash and cash equivalents..... $11,585,936 $10,243,371
Restricted cash............................ 487,660 3,497,602
Accounts receivable, less allowances for
doubtful accounts of $9,000 and $18,000
in 1994 and 1993, respectively............. 2,084,782 2,277,532
Inventories:
Inventories - FIFO basis................... 9,796,578 9,610,600
Less LIFO reserve.......................... (2,688,730) (2,506,325)
Total inventories.......................... 7,107,848 7,104,275
Properties held for sale................... 550,946 3,809,108
Deferred income tax asset.................. 894,000 894,000
Prepaid expenses and other current assets.. 1,362,221 1,761,005
TOTAL CURRENT ASSETS...................... 24,073,393 29,586,893
PROPERTY AND EQUIPMENT, at cost:
Land....................................... 6,927,541 7,459,790
Buildings.................................. 12,354,990 13,442,282
Fixtures and equipment..................... 22,534,336 26,102,620
Leaseholds and improvements................ 4,518,072 4,985,764
46,334,939 51,990,456
Less allowances for depreciation and
amortization.............................. (24,740,060) (27,864,894)
21,594,879 24,125,562
OTHER ASSETS:
Properties held for sale, net.............. 3,716,877 3,777,876
Other...................................... 621,992 417,195
$50,007,141 $57,907,526
</TABLE>
*See notes to condensed financial statements.
<PAGE>
<TABLE>
BALANCE SHEETS
Sunshine-Jr. Stores, Inc.
(Unaudited)
<CAPTION>
September 29 December 30
1994 1993
(as restated)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS'EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses...... $16,099,559 $17,229,055
Current portion of long-term debt.......... 1,011,634 0
TOTAL CURRENT LIABILITIES................. 17,111,193 17,229,055
LIABILITIES SUBJECT TO COMPROMISE........... 0 29,402,891
DEFERRED INCOME TAXES....................... 894,000 894,000
NONCURRENT LIABILITIES...................... 462,500 770,000
LONG-TERM DEBT, less current portion........ 20,396,254 0
COMMITMENTS AND CONTINGENCIES
(Note I)
STOCKHOLDERS' EQUITY:
Common stock, $.10 par value; 3,000,000
shares authorized, 1,701,650 shares issued
and outstanding........................... 170,165 170,165
Additional paid-in capital................. 5,124,245 5,124,245
Retained earnings.......................... 5,848,784 4,317,170
TOTAL STOCKHOLDERS' EQUITY 11,143,194 9,611,580
$50,007,141 $57,907,526
</TABLE>
*See notes to condensed financial statements.
<PAGE>
<TABLE>
STATEMENTS OF CASH FLOWS
Sunshine-Jr. Stores, Inc.
<CAPTION>
13 Wks Ended 13 Wks Ended 39 Wks Ended 39 Wks Ended
Sep 29, 1994 Sep 30, 1993 Sep 29, 1994 Sep 30, 1993
(as restated) (as restated)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income(loss) $323,452 $277,468 $1,531,614 ($1,043,438)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities before
reorganization and restructuring
items:
Depreciation and amortization.......... 679,643 869,305 2,076,975 2,686,924
Pre-confirmation interest expense on
Class 7 Notes Payable................. 0 0 705,890 0
Changes in assets and liabilities:
(Increase) decrease in accounts
receivable.......................... (137,834) (481,887) 192,750 (1,103,194)
(Increase) decrease in inventories.... 181,635 1,367,918 (3,573) 457,563
(Increase) decrease in prepaid
expenses and other assets............ (248,070) 442,772 160,800 1,069,554
Increase (decrease) in accounts
payable and accrued expenses......... (1,366,605) 2,874,158 (1,199,636) 3,934,365
Increase (decrease) in noncurrent
liabilities.......................... (106,469) 129,020 (307,500) (524,389)
Total adjustments before reorganization
and restructuring items................ (997,700) 5,201,286 1,625,706 6,520,823
Adjustments due to reorganization and
restructuring items:
(Gain) loss on sale of property and
equipment............................. 46,956 5,518 (2,060,673) (9,166)
Restructuring charges.................. 40,271 45,928 24,902 128,607
Payment of restructuring items and
professional fees related to
reorganization........................ (360,573) (23,660) (695,106) (23,660)
Professional fees incurred related to
reorganization........................ 86,570 1,129,962 735,146 2,820,053
Total adjustments due to reorganization
and restructuring items................ (186,776) 1,157,748 (1,995,731) 2,915,834
Total adjustments....................... (1,184,476) 6,359,034 (370,025) 9,436,657
Net cash provided by (used in)
operating activities.................. (861,024) 6,636,502 1,161,589 8,393,219
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment..... (959,445) (368,433) (1,791,984) (895,620)
Proceeds from sale of property and
equipment related to reorganization
items................................. 46,661 1,313,840 6,977,667 1,342,240
Collections of notes and loans
receivable, net....................... 1,500 2,882 33,187 78,945
Net cash provided by (used in)
investing activities................. (911,284) 948,289 5,218,870 525,565
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term
debt.................................. 0 0 0 0
Payments on long-term debt and
capital lease obligations............. (1,026,851) 0 (8,047,836) 0
Net cash used in financing activities. (1,026,851) 0 (8,047,836) 0
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS....................... (2,799,159) 7,584,791 (1,667,377) 8,918,784
UNRESTRICTED AND RESTRICTED CASH AND
CASH EQUIVALENTS, BEGINNING OF PERIOD.. 14,872,755 3,261,713 13,740,973 1,927,720
UNRESTRICTED AND RESTRICTED CASH AND
CASH EQUIVALENTS, END OF PERIOD........ $12,073,596 $10,846,504 $12,073,596 $10,846,504
</TABLE>
*See notes to condensed financial statements.
<PAGE>
SUNSHINE-JR. STORES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
September 29, 1994
Note A: Basis of Presentation
The accompanying unaudited financial statements of Sunshine-
Jr. Stores, Inc. (the "Company") have been prepared in
accordance with generally accepted accounting principles for
interim financial information and with the instructions to
Form 10-Q and Rule 10-01 of Regulation S-X. In the opinion
of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the
thirteen week period ended September 29, 1994 are not
necessarily indicative of the results that may be expected
for the year ending December 29, 1994. Certain
reclassifications have been made in the 1993 financial
statements to conform to the 1994 presentation. For further
information, refer to the audited financial statements and
footnotes attached thereto included in the Company's annual
report on Form 10-K for the year ended December 30, 1993.
Note B: Restatement of Previously Reported Amounts
Subsequent to the issuance of its financial statements for
the thirteen weeks ended September 29, 1994, the Company
discovered an error in the workers' compensation expense
accrual. Accordingly, the September 29, 1994 financial
statements have been restated to correct this error, the
effect of which decreased the previously reported net income
for the thirteen weeks ended September 29, 1994 from
$603,452, or $.35 per share to $323,452 or $.19 per share.
For the thirty-nine weeks ended September 29, 1994, the
previously reported net income increased from $231,614, or
$.14 per share to $1,531,614, or $.90 per share.
Note C: Bankruptcy Proceeding and Restructuring
On December 18, 1992, the Company filed a voluntary petition
in the U.S. Bankruptcy Court for the Middle District of
Florida (Tampa Division) (the "Bankruptcy Court") for
reorganization under Chapter 11 of the Bankruptcy Code. On
August 27, 1993, the Company filed a Plan of Reorganization
which was later amended on January 7, 1994 and March 3, 1994
("Plan of Reorganization"). On April 26, 1994, the Plan of
Reorganization was confirmed by the Bankruptcy Court, and
the official confirmation order became effective on May 12,
1994. The Effective Date of the Plan of Reorganization (the
"Effective Date") occurred 40 days later on June 21, 1994.
The Plan of Reorganization provides for full payment of all
outstanding liabilities over specified periods with
interest, and allows shareholders to retain their equity
interests.
According to the Plan of Reorganization, administrative
claims as defined in the Bankruptcy Code were paid on or
about June 29, 1994, except for approximately $4,814,000 of
remaining claims as of September 29, 1994, that will be paid
within ten days after the entry of a final order allowing
such administrative claim. Priority tax claims will be
paid, together with post-confirmation interest at seven (7%)
percent per annum, over six years from the date of
assessment of each claim, or five years from the Effective
Date, whichever occurs first.
The secured claim of 7-Shine Corporation concerning ten
Mississippi convenience stores was handled by issuing three
secured promissory notes (A-Note, B-Note and Contingency
Note). The A-Note was issued in the original principal
amount of $1,821,917. It bears interest commencing
September 1, 1993, at the rate of seven (7%) percent per
annum, and is payable in equal monthly installments of
principal and interest of $12,121. The note will mature on
September 2, 2000, at which time all remaining principal and
interest will be due. The Company has been making monthly
payments in the amount of $12,121 since September 1, 1993,
and the balance of the A-Note has been reduced by the
$18,5252 portion of such payments attributable to principal.
The B-Note was issued in the original amount of $633,726.
Commencing September 1, 1994, the B-Note bears interest at
the rate of seven (7%) percent per annum, and no interest
accrued prior to September 1, 1994. Commencing October 1,
1994, the Company will pay monthly installments of principal
and interest of $4,259. The note will mature on September
1, 2000, at which time all remaining principal and interest
will be due. The Contingency Note was issued in the
original principal amount of $667,643. The original
liability and related asset have been reduced by the amount
of the Contingency Note and the amounts have been excluded
from the accompanying statements of cash flows. No amounts
will be due under this note unless there is a default of
either the A-Note or the B-Note. Upon such a default, the
entire principal balance and accrued interest at the rate of
seven (7%) percent per annum would be due.
Unsecured claims of $1,000 or less were paid in full on June
30, 1994. Creditors with unsecured claims greater than
$1,000 received promissory notes on June 30, 1994, for their
principal balance at the petition date plus accrued
interest. These notes were issued pursuant to a trust
indenture and are secured by certain real and personal
property owned by the Company. The notes call for the
following: (i) quarterly payments of interest at prime plus
1%, (ii) quarterly principal payments from available
proceeds of asset sales, if any, after certain deductions
described in the Plan of Reorganization, (iii) minimum
principal payments (including those from asset sales) of
$4,250,000 within six months of the confirmation date and
$6,700,000 cumulative within twelve months of the
confirmation date, (iv) annual principal payments beginning
April 30, 1995 of 75% of "Free Cash Flow" from the previous
fiscal year as specifically defined in the Plan of
Reorganization and (v) beginning one year after
confirmation, minimum quarterly payments of principal and
interest using a 20 year amortization schedule.
The Company paid the entire required first year principal
payment of $6,700,000 on these promissory notes on June 30,
1994. Of this amount, $253,000 was held in reserve by the
Trustee for potential payments against disputed claims
which, when resolved, may result in issuance of future
notes. In accordance with the Plan of Reorganization,
institutional lenders (banks) received 36% of the payment,
which was approximately 19% of the principal amount of their
notes. Non-institutional creditors received 64% of the
payment, which was approximately 39% of the principal amount
of their notes. On September 29, 1994, the Company paid an
additional $855,000 from asset sale proceeds against the
principal amount of notes and reserves, with $32,000 of this
amount held in reserve by the Trustee for potential payments
against future notes. In accordance with the Plan of
Reorganization, all creditors (both institutional and non-
institutional creditors) received pro-rata payments based on
their current principal balances.
The notes will mature five years from the confirmation date.
They have been issued under an indenture governed by the
Trust Indenture Act of 1939, and this indenture requires the
Company to comply with certain financial and other covenants
until the notes are paid in full.
The original total long-term debt balance of approximately
$29.4 million was reclassed from liabilities subject to
compromise to long-term debt on the Effective Date. This
transaction has been excluded from the accompanying
statements of cash flows for the thirty-nine weeks ended
September 29, 1994.
<PAGE>
Note D: Inventories
<TABLE>
Inventories consist of the following:
<CAPTION>
Sep 29, 1994 Dec 30, 1993
<S> <C> <C>
Merchandise $7,224,443 $7,255,543
Gasoline 2,572,135 2,355,057
Total Inventories FIFO Basis 9,796,578 9,610,600
Excess of FIFO cost over LIFO values (2,688,730) (2,506,325)
Total Inventories LIFO Basis $7,107,848 $7,104,275
</TABLE>
Note E: Accounting Policies
There have been no changes in accounting policies from those
stated in the 1993 annual report.
Note F: Long-Term Debt:
<TABLE>
Long-term debt consisted of the following at
September 29, 1994:
<CAPTION>
<S> <C>
Secured notes payable to holders of Class 7
General Unsecured Claims as defined in the
Company's Plan of Reorganization. $15,220,886
Estimated liability for Class 7 General Unsecured
Claims that are contested as of September 29, 1994. 468,353
Notes payable to holders of Class 2 Priority Tax
Claims as defined in the Company's Plan of
Reorganization with quarterly principal payments
through December 1998, interest at 7.0%. 3,283,114
Secured notes payable with monthly principal payments
and interest at 7.0% for the purchase of 10 stores
previously leased under capitalized leases. 2,435,535
$21,407,888
Less Current Portion (1,011,634)
Total $20,396,254
</TABLE>
See Note C to the Condensed Financial Statements for a more
detailed discussion of the above note issuances.
Note G: Accounts Payable and Accrued Expenses
As of September 29, 1994, accounts payable and accrued
expenses include Chapter 11 administrative professional fees
totaling $4,814,000 which will be required to be paid within
ten days after the entry of a final order allowing such
administrative claim.
Note H: Litigation
On July 29, 1994, the Company finalized a settlement
agreement that resolved Wright v. Winn-Dixie et al. without
any material cost to the Company by allowing the Company a
credit against state sales taxes equal to the settlement
amount.
Four of the Company's former officers have filed
administrative claims totaling approximately $850,000
against the Company resulting from the alleged breach of
employment contracts. The Company has filed objections to
the claims and these matters are still pending before the
Bankruptcy Court. The Bankruptcy Court has denied the
Motions for Administrative Claims of Mike Dreggors and James
Burkhalter. Messrs. Dreggors and Burkhalter have filed a
Motion for Leave to File an Interlocutory Appeal. This
Motion is pending before the Bankruptcy Court. Although the
Bankruptcy Court has denied Messrs. Dreggors and
Burkhalter's request to treat their claims as priority
administrative claims, the Bankruptcy Court has not ruled on
the validity of the claims. In addition, Lenard Miller has
filed an appeal of the July 21, 1994 Bankruptcy Court's
order which permitted to Company to reject the unassumed
provision of Miller's employment contract, including
Miller's severance provisions. Cross-motions for summary
judgment are also pending before the Bankruptcy Court with
regard to the administrative claim of Lenard Miller, the
Company's former President. The Company has tentatively
reached a settlement with regard to the workers'
compensation and administrative claim of Peter Freix for
$30,000. A motion to compromise the controversy has been
filed with the Bankruptcy Court. In the event the
Bankruptcy Court determines that Mr. Miller's claim is an
administrative claim or in the event Messrs. Dreggors and
Burkhalter's Motion is granted and they prevail on appeal,
the claims will be entitled to priority status for purposes
of payment under the Company's Plan or Reorganization
confirmed by the Bankruptcy Court on May 12, 1994. In the
event the Bankruptcy Court finds that the claims are not
entitled to administrative priority status, then the claims
will be treated as general unsecured claims and may be
subject to certain reductions by virtue of the limitations
imposed by the Bankruptcy Code or other applicable law.
In the normal course of conducting its business, the Company
is involved in various other litigation arising from general
liability, workers' compensation, equal employment and other
claims. In the opinion of management, the resolution of
these cases will not have a material adverse effect on the
financial position, liquidity or results of operations of
the Company.
Note I: Commitments and Contingencies
Reorganization Proceeding Under Chapter 11
See Note C.
Environmental Compliance
The ownership and/or operation of USTs is subject to
federal, state and local laws and regulations. Federal
regulations include requirements for (a) maintaining a
release detection system, (b) upgrading tank systems, (c)
taking corrective action in response to releases, (d)
closing tanks to prevent future releases, (e) keeping
appropriate records and (f) maintaining evidence of
financial responsibility for taking corrective action and
compensating third parties for bodily injury and property
damage resulting from a release.
The Company is required under EPA regulations to maintain
evidence of financial responsibility for taking corrective
action and compensating third parties for bodily injury and
property damage resulting from releases in the amount of $1
million per occurrence, with an annual aggregate coverage
limit of $2 million. The Company has third-party
environmental insurance coverage in the State of Florida.
Third party liability coverage is provided by trust funds in
the other states in which the Company operates.
The Company estimates that it will incur approximately
$3,500,000 in capital expenditures related to tank
replacements, overfill and spill protection and release
detectors during the next five years to comply with UST
detection and prevention requirements at all of the
Company's stores in operation at December 30, 1993. The
Company estimates $650,000 of these expenditures will be
spent in fiscal 1994. The Company's estimated cost to
comply with the UST requirements may increase if certain
prevention efforts at particular sites fail, thus requiring
the subsequent replacement of USTs at these sites.
During 1992, the Company engaged an environmental
engineering firm to perform an assessment of its sites. As
a result of this firm's findings, the Company has accrued
approximately $1,107,000 at September 29, 1994 for costs to
be incurred by the Company for site assessment and
remediation services which are not eligible for
reimbursement under the state trust funds. The Company's
accrual is based on estimates made by the independent
environmental engineering firm and internal environmental
staff with regard to the cost of assessment and remediation
required at particular sites. As of September 29, 1994,
future costs are estimated as follows:
<TABLE>
<CAPTION>
<S> <C>
Remainder of 1994 $337,000
1995 410,000
1996 120,000
1997 120,000
1998 120,000
Total $1,107,000
</TABLE>
In addition to the above, the Company's outside
environmental engineering and consulting firm has estimated
that total costs for assessment and remediation services at
open and closed sites which are eligible for reimbursement
under the state trust funds will total approximately
$18,300,000 through 1998. These costs relate primarily to
existing contamination from overfill, spill and release
incidents. The Company has executed agreements with three
third party remediation contractors (the "Contractors")
which will be responsible for assessment and remediation of
these contaminated sites as well as filing the appropriate
applications for state trust fund reimbursements. Under the
terms of the agreements, the Contractors will be compensated
for services out of the state trust fund reimbursements and
the Company will only be responsible for the payment of
interest for costs the Contractors have invested if certain
contingencies occur under a state trust fund which would
preclude interest payments by the fund, and for assessment
and remediation costs for sites determined to be ineligible
for trust fund reimbursement.
Note J: Gain on Sale of Property and Equipment
The third quarter 1994 loss on sale of property and
equipment of $47,000 is primarily a result of the
finalization of the Company's closing and sale of assets of
11 of its store locations sold as a group in June. A gain
of $1,037,000 recorded in second quarter 1994 was primarily
the result of the Company's closing and sale of assets of 21
of its locations and the disposal of the Company aircraft.
A similar gain of $1,071,000 was recognized by the Company
in first quarter 1994 when the Company sold the assets at 25
locations located primarily in the central Florida area.
Note K: Reorganization Items
In connection with its Chapter 11 filing, the Company
recorded third quarter reorganization items which included a
gain on sale of property and equipment (See Note J), $87,000
in professional fees related to the Company's reorganization
efforts, and other restructuring charges of $40,000
resulting from the Company's continued process of
reconciliation of creditor claims.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
FINANCIAL CONDITION AND LIQUIDITY
Cash flow for the third quarter of 1994 was approximately a
negative $2,799,000, after the use of approximately
$1,027,000 for payment of long-term debt, approximately
$911,000 for investing activities, primarily the purchase of
property and equipment, and approximately $861,000 for
operating activities. The use of cash for operating
activities is due primarily to a decrease in accounts
payable and accrued expenses of approximately $1,562,000.
For a description of the Company's successful emergence from
Chapter 11 of the Federal Bankruptcy Code and the
restructuring of the Company's liabilities effected by its
Plan of Reorganization, see Notes C and F of the Notes to
Condensed Financial Statements.
The Company's Plan of Reorganization calls for a smaller
reorganized entity, operating at lower relative overhead
levels. The Plan of Reorganization calls for the sale of
all of the Company's non-operating real property, the sale,
sublease or closure of approximately 29 more stores
beginning with the store count of 206 at September 29, 1994,
and full payment of all pre-petition creditors over time.
Payments to these creditors are to be made from the proceeds
of future asset sales, after deduction of certain items
described in the Plan of Reorganization, and from future
cash flow from operations. In furtherance of this Plan of
Reorganization, on February 1, 1994, the Company sold 21
stores in central Florida for aggregate consideration of
approximately $5,000,000. The Company also sold 11 stores
in Georgia on June 1, 1994, for aggregate consideration of
$1,200,000, and has sold several other individual stores for
small dollar amounts. The Company believes that its current
cash on hand and funds to be generated from operations and
asset sales will be adequate to cover its operations and
required Plan of Reorganization payments. Remaining Plan of
Reorganization payments include estimated Chapter 11
administrative items of approximately $4,814,000, which the
Company anticipates paying later in 1994 and in the first
half of 1995. However, the long-term liquidity and adequacy
of the Company's capital resources cannot be determined.
RESULTS OF OPERATIONS
Revenues
During the last quarter of 1993 and the first three quarters
of 1994, no stores were opened while 56 convenience stores
were closed or sold. The average number of stores in
operation during the third quarter of 1994 was 206 compared
to 272 in the third quarter of 1993. Data discussed below
as "same store" includes data from the same stores during
the comparable periods. On September 29, 1994, the Company
operated 206 convenience stores in Florida, Alabama,
Mississippi, Georgia and Louisiana.
<PAGE>
<TABLE>
Total Revenues
(In Thousands)
<CAPTION>
Thirteen Weeks Ended Thirty-Nine Weeks Ended
Sep 29, Sep 30, % of Sep 29, Sep 30, % of
1994 1993 Change 1994 1993 Change
<S> <C> <C> <C> <C> <C> <C>
Merchandise and Other
Revenue Items $22,594 $29,564 (23.6%) $68,457 $87,864 (22.1%)
Gasoline Revenues 19,875 26,081 (23.8%) 59,719 75,220 (20.6%)
Total Revenues $42,469 $55,645 (23.7%) $128,176 $163,114 (21.4%)
Gas Gallons 18,368 25,456 (27.8%) 58,673 73,333 (20.0%)
</TABLE>
During the thirteen weeks ended September 29, 1994, total
revenues decreased approximately $13,176,000 compared to the
same period of the previous year. Gasoline sales decreased
approximately $6,206,000 due primarily to a decrease in the
number of stores. Merchandise revenues decreased
approximately $6,970,000 due primarily to the closing or
sale of 56 convenience stores and the sale of the Company's
four supermarkets during the third quarter of 1993.
Merchandise revenues include merchandise sales as well as
revenues from amusement machines, video rentals, service
charges, money order commissions, lottery commissions,
telephone commissions and other miscellaneous items. The
$6,970,000 decrease in merchandise revenues for the thirteen
week period is comprised of a $6,700,000 decrease in
merchandise sales coupled with a decrease in other revenue
items of approximately $270,000. On a same store basis,
merchandise revenues increased approximately $73,000 or .3%
over the comparable period of the prior year. This increase
is comprised of an increase in merchandise sales of
approximately $131,000 partially offset by a decrease in
other revenue items of approximately $58,000. Merchandise
revenues for the third quarter of 1994 were negatively
impacted by Tropical Storm Alberto. The storm hit the
panhandle of Florida on the July 4th holiday weekend,
lingered in North Florida, South Georgia and Alabama for
several days, and caused extensive flooding in these areas.
In addition, a tropical depression hit this same geographic
area on the labor day holiday weekend and had a negative
impact on sales.
The decrease in other revenue items is due primarily to
decreases in lottery commissions, video rentals, telephone
commissions and money order commissions of approximately
$142,000, $62,000, $30,000 and $23,000, respectively.
Gasoline revenues accounted for 46.8% of total revenues in
the third quarter of 1994 compared to 46.9% in the third
quarter of 1993. The 23.8% decrease in gasoline revenues
for the thirteen week period ended September 29, 1994, is
due to a decrease in volume. The decrease in volume is
partially a result of fewer locations selling gasoline. The
number of gallons sold decreased by approximately 7,088,000
gallons in the third quarter of 1994 compared to the prior
year. On a same store basis, gasoline revenues decreased
approximately $487,000 or 2.4% and gasoline gallons
decreased approximately 1,314,000 or 6.7% over the
comparable period of 1993. Tropical Storm Alberto and the
tropical depression discussed above also had a negative
impact on gasoline gallons sold during the quarter.
For the thirty-nine week period ending September 29, 1994,
merchandise revenues decreased approximately $19,437,000, a
function of fewer operating locations. This decrease
consists of a decrease in merchandise sales of approximately
$18,620,000 or 22.0% and a decrease in other revenue items
of approximately $817,000 or 26.0%. On a same store basis,
merchandise revenues increased approximately $1,671,000 or
2.7%. This consists of an increase in merchandise sales of
approximately $1,844,000 or 3.1%, partially offset by a
decrease in other revenue items of approximately $173,000 or
8.5%.
For the thirty-nine week period ending September 29, 1994,
gasoline revenues decreased approximately $15,501,000. The
number of gallons sold decreased by approximately 14,660,000
gallons. On a same store basis, gasoline revenues decreased
approximately $1,532,000 or 2.7% and gallons sold decreased
by approximately 945,000 gallons or 1.7%.
Gross Profit
<TABLE>
Total Gross Margin Rate
<CAPTION>
Thirteen Weeks Ended Thirty-Nine Weeks Ended
Sep 29, Sep 30, Sep 29, Sep 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Merchandise and Other Revenue Items 34.6% 31.0% 33.5% 30.6%
Gasoline 12.3% 13.6% 10.9% 10.6%
Total 24.2% 22.9% 23.0% 21.4%
Gasoline Gross Margin/Gallon $0.133 $0.140 $0.111 $0.109
</TABLE>
Gross profit on merchandise sales and other revenue items
for the third quarter of 1994 decreased approximately
$1,363,000 as compared to the third quarter of 1993. The
decrease is a result of a decrease in gross profit from
merchandise sales of approximately $1,177,000, coupled with
a decrease in gross profit from other revenue items of
approximately $186,000. The decrease in gross profit as
compared to the prior year for merchandise sales is due
primarily to the closing or sale of 56 convenience stores
along with the sale of the Company's four supermarkets which
resulted in a reduced sales base. However, the Company is
experiencing higher gross margin percentages due to the sale
of the supermarkets (which had significantly lower gross
margin percentages than the convenience stores), together
with actions and programs the Company began implementing in
the second half of 1993. These actions include developing
new product categories and expanding and improving the
product mix in existing product categories, changing store
and walk-in cooler layouts to encourage the purchase of
higher margin items and training of field and store
management on proper purchasing procedures to lower costs.
On a same store basis, gross profit on merchandise sales and
other revenue items increased approximately $702,000 or
10.0%. The increase is a result of an increase of
approximately $712,000 or 11.0% in gross profit from
merchandise sales partially offset by a decrease of
approximately $10,000 or 1.9% in gross profit from other
revenue items.
Gross profit from gasoline sales decreased approximately
$1,115,000 in the third quarter of 1994 as compared to 1993.
This decrease is a function of a decrease in volume sold.
On a same store basis, gasoline gross profit decreased
approximately $335,000 or 12.0%. This decrease is a
function of reduced volume and a $.008 decrease in gross
profit per gallon. The gasoline market is significantly
influenced by external factors affecting world petroleum
markets which causes gross profit per gallon to be extremely
volatile. A similar decrease in gross profit per gallon was
experienced industry wide in the areas in which the Company
operates.
For the thirty-nine week period ending September 29, 1994,
gross profit from merchandise sales and other revenue items
decreased approximately $3,962,000 or 14.7%. This decreased
is comprised of decreases in gross profit from merchandise
sales and other revenue items of approximately $3,347,000
and $615,000, respectively. On a same store basis, gross
profit on merchandise sales and other revenue items
increased approximately $1,630,000 or 8.3%. This increase
is comprised of an increase in gross profit from merchandise
sales of approximately $1,713,000 partially offset by a
decrease in gross profit from other revenue items of
approximately $83,000.
For the thirty-nine week period ending September 29, 1994,
gross profit from gasoline sales decreased approximately
$1,472,000 or 18.4%. On a same store basis, gross profit
from gasoline sales decreased approximately $67,000 or 1.1%.
Selling, General and Administrative Expenses
Selling, general and administrative expenses were 21.6% of
total revenues in the third quarter of 1994 compared to
20.3% during the same period of the previous year. This
increase is primarily due to some loss of economies of scale
associated with the closing of 56 convenience stores and the
sale of the Company's four supermarkets..
Although selling, general and administrative expenses as a
percent of revenues increased, selling, general and
administrative expenses for the third quarter decreased
approximately $2,087,000 compared to the third quarter of
1993. Selling, general and administrative expenses for the
third quarter of 1994 were approximately $9,183,000 compared
to approximately $11,270,000 for the third quarter of 1993.
The decrease is attributable to the closing of 56
convenience stores and the sale of the four supermarkets.
Large decreases were experienced in salaries and wages,
environmental expense, electricity, depreciation and repairs
and maintenance included in selling, general and
administrative expenses of approximately $1,085,000,
$240,000, $233,000, $189,000 and $142,000, respectively,
when compared to the previous year. These decreases coupled
with smaller decreases in other expense items were partially
offset by an increase in advertising expense of
approximately $166,000.
Selling, general and administrative expenses for the thirty-
nine week period ended September 29, 1994, decreased
approximately $4,982,000 compared to the same period of the
previous year.
Interest Expense
Interest expense, net of interest income, in the third
quarter of 1994 increased by approximately $290,000 from the
third quarter of 1993. For the thirty-nine week period
ending September 29, 1994, interest expense, net of interest
income, increased approximately $767,000 over the prior
year. In accordance with the Plan of Reorganization, during
1994 the Company is accruing interest on Class 7 General
Unsecured Claims. Beginning May 12, 1994, the Confirmation
Date, interest is also being accrued on notes payable to
holders of Class 2 Priority Tax Claims. See Note F of the
Notes to Condensed Financial Statements.
Reorganization Items
The reorganization expenses relate to the various
administrative and other costs of operating under Chapter
11. The Company recorded an expense on reorganization items
of approximately $174,000 for the third quarter of 1994
compared to an expense of approximately $1,158,000 for the
third quarter of 1993. The decrease is primarily
attributable to a decrease in professional fees of
approximately $1,051,000 partially offset by increases in
restructuring charges and loss from sale of property and
equipment of approximately $26,000 and $41,000,
respectively. For the thirty-nine week period ending
September 29, 1994, the Company recorded income on
reorganization items of approximately $1,301,000 compared to
an expense of approximately $2,916,000 in the previous year.
The decrease is attributable to a decrease in professional
fees of approximately $2,093,000 coupled with an increase in
gain from sale of property and equipment of approximately
$2,052,000 and a decrease in restructuring charges of
approximately $72,000.
Income Taxes
The Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 109, "Accounting for Income Taxes",
effective January 1, 1993. SFAS No. 109 provides that
deferred tax assets and liabilities are recorded based on
the difference between the tax bases of assets and
liabilities and their carrying amounts for financial
reporting purposes, referred to as temporary differences.
Deferred tax assets or liabilities at the end of each period
are determined using the currently enacted tax rates to
apply to taxable income in the periods in which the deferred
asset or liability is expected to be settled or realized.
The adoption of SFAS No. 109 had no impact on net income.
The Company recorded a provision for income taxes of
approximately $256,000 for the thirteen week period ended
September 29, 1994. The provision is due principally to the
Company's alternative minimum tax position. No provision
for income taxes was recorded for the thirteen week period
ended September 30, 1993 as the Company did not anticipate
incurring a tax liability in 1993. For the thirty-nine week
period ending September 29, 1994, the Company recorded a
provision for income taxes of approximately $423,000.
Net Earnings/Loss
The Company reported net income for the third quarter of
1994 of approximately $323,000 or $.19 per share compared to
net income of approximately $277,000 or $.17 per share in
the third quarter of 1993. The Company reported net income
for the thirty-nine week period ended September 29, 1994, of
approximately $1,532,000 or $.90 per share compared to a net
loss of approximately $1,043,000 or $.61 per share for the
thirty-nine week period ended September 30, 1993. Earnings
per share is based on average outstanding common shares of
1,701,650 for all periods.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
For a description of the status of the Company's Chapter 11
proceeding, see Note C to Condensed Financial Statements.
ITEM 2. CHANGES IN SECURITIES
For information concerning $22,484,567 of secured notes
issued pursuant to an indenture governed by the Trust
Indenture Act of 1939, see Notes C and F of Notes to
Condensed Financial Statements included elsewhere herein.
This indenture contains various restrictions and
limitations, including among others: requirements that the
Company maintain Net Working Capital (as defined) greater
than $1 million at all times, minimum levels of operating
income and net worth, and minimum ratios of Debt (as
defined) to Consolidated Total Capitalization (as defined);
a limitation on capital expenditures; a prohibition against
dividends with respect to the Company's common stock; and a
prohibition against incurrence of certain liens and Debt.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
None
(b) Reports of Form 8-K.
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed on behalf by the undersigned thereunto duly
authorized
Sunshine-Jr. Stores, Inc.
Registrant
April 28, 1995 By: R. M. Shouse
_______________________________
R. M. Shouse
President and Chief Executive
Officer
April 28, 1995 By: Michael G. Ware
_______________________________
Michael G. Ware
Principal Financial and
Accounting Officer
