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 __March 31, 1994______
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to ___________.
For Quarter Ended March 31, 1994 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 (I.R.S. Employer
of 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 May 11, 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.
(Debtor-in-Possession as of December 18, 1992)
(Unaudited)
<CAPTION>
13 Wks Ended 13 Wks Ended
March 31, 1994 April 1, 1993
(as restated)
<S> <C> <C>
NET REVENUE $41,059,151 $49,273,944
Cost of sales and expenses:
Cost of goods sold..................... 31,658,392 39,022,653
Selling, general, and adminstrative.... 9,139,432 10,564,369
Interest expense, net of interest
income of $90,652 and $8,408 for the
first quarter of 1994 and 1993,
respectively........................... 352,786 126,692
41,150,610 49,713,714
LOSS BEFORE REORGANIZATION ITEMS
AND PROVISION FOR INCOME TAXES........... (91,459) (439,770)
REORGANIZATION ITEMS:
Professional fees....................... 290,429 999,939
Net gain from sale of property and
equipment.............................. (1,071,065) (2,080)
Restructuring charges................... 41,322 54,063
(739,314) 1,051,922
INCOME(LOSS) BEFORE PROVISION FOR INCOME
TAXES..................................... 647,855 (1,491,692)
PROVISION FOR INCOME TAXES:
Current................................... 103,571 0
Deferred.................................. 0 0
103,571 0
NET INCOME(LOSS).......................... $544,284 ($1,491,692)
INCOME(LOSS) PER COMMON SHARE:
Net Income(Loss)......................... $0.32 ($0.88)
</TABLE>
*See notes to condensed financial statements.
<TABLE>
BALANCE SHEETS
Sunshine-Jr. Stores, Inc.
(Debtor-in-possession as of
December 18, 1992)
(Unaudited)
<CAPTION>
March 31 December 30
1994 1993
(as restated)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Unrestricted cash and cash equivalents..... $9,638,467 $10,243,371
Restricted cash............................ 8,036,515 3,497,602
Accounts receivable, less allowances for
doubtful accounts of $16,000 and $18,000
in 1994 and 1993, respectively............ 2,044,907 2,277,532
Inventories:
Inventories - FIFO basis.................. 9,850,916 9,610,600
Less LIFO reserve......................... (2,490,730) (2,506,325)
Total inventories......................... 7,360,186 7,104,275
Properties held for sale................... 1,437,783 3,809,108
Deferred income tax asset.................. 894,000 894,000
Prepaid expenses and other current assets.. 1,309,984 1,761,005
TOTAL CURRENT ASSETS...................... 30,721,842 29,586,893
PROPERTY AND EQUIPMENT, at cost:
Land........................................ 7,136,400 7,459,790
Buildings................................... 12,666,217 13,442,282
Fixtures and equipment...................... 24,782,758 26,102,620
Leaseholds and improvements................. 4,613,660 4,985,764
49,199,035 51,990,456
Less allowances for depreciation and
amortization............................... (26,715,692) (27,864,894)
22,483,343 24,125,562
OTHER ASSETS:
Properties held for sale, net............... 3,367,762 3,777,876
Other....................................... 510,818 417,195
$57,083,765 $57,907,526
</TABLE>
*See notes to condensed financial statements.
<PAGE>
<TABLE>
BALANCE SHEETS
Sunshine-Jr. Stores, Inc.
(Debtor-in-possession as of
December 18, 1992)
(Unaudited)
<CAPTION>
March 31 December 30
1994 1993
(as restated)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS'EQUITY
CURRENT LIABILITIES (certain of which
may be subject to compromise):
Accounts payable and accrued expenses...... $15,657,377 $17,229,055
TOTAL CURRENT LIABILITIES................. 15,657,377 17,229,055
LIABILITIES SUBJECT TO COMPROMISE........... 29,606,524 29,402,891
DEFERRED INCOME TAXES....................... 894,000 894,000
NONCURRENT LIABILITIES (certain of which may
be subject to compromise).................. 770,000 770,000
COMMITMENTS AND CONTINGENCIES
(Note J)
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.......................... 4,861,454 4,317,170
TOTAL STOCKHOLDERS' EQUITY 10,155,864 9,611,580
$57,083,765 $57,907,526
</TABLE>
*See notes to condensed financial statements.
<PAGE>
<TABLE>
STATEMENTS OF CASH FLOWS
Sunshine-Jr. Stores, Inc.
(Debtor-in-possession as of December 18,1992)
<CAPTION>
13 Wks Ended 13 Wks Ended
March 31, 1994 April 1, 1993
(as restated)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income(loss) $544,284 ($1,491,692)
Adjustments to reconcile net loss to net cash
provided by operating activities before
reorganization and restructuring items:
Depreciation and amortization.................... 713,683 915,392
Benefit for deferred income taxes............... 0 0
Gain on sale of property and equipment.......... 0 0
Changes in assets and liabilities:
Decrease in accounts receivable................. 232,625 48,901
(Increase) decrease in refundable income taxes.. 0 0
(Increase) decrease in inventories.............. (255,911) 596,804
Decrease in prepaid expenses and other assets... 328,634 540,433
Decrease in accounts payable and
accrued expenses............................... (1,603,970) (302,555)
Decrease in noncurrent liabilities.............. 0 (490,992)
Total adjustments before reorganization and
restructuring items.............................. (584,939) 1,307,983
Adjustments due to reorganization and
restructuring items:
Gain on sale of property and equipment........... (1,071,065) (2,080)
Restructuring charges............................ 41,322 54,063
Payment of restructuring charges................. (256,136) 0
Increase in professional fees payable related to
reorganization items............................. 290,429 999,939
Total adjustments due to reorganization and
restructuring items.............................. (995,450) 1,051,922
Total adjustments................................. (1,580,389) 2,359,905
Net cash provided by (used in) operating
activities...................................... (1,036,105) 868,213
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment............... (234,589) (144,252)
Proceeds from sale of property and equipment
related to reorganization items................. 5,147,489 13,700
Collections of notes and loans receivable, net... 28,764 4,370
Net cash provided by (used in) investing
activities..................................... 4,941,664 (126,182)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt......... 0 0
Payments on long-term debt and capital
lease obligations............................... 28,450 0
Net cash used in financing activities........... 28,450 0
NET INCREASE IN CASH AND CASH EQUIVALENTS......... 3,934,009 742,031
UNRESTRICTED AND RESTRICTED CASH AND CASH
EQUIVALENTS, BEGINNING OF PERIOD................. 13,740,973 1,927,720
UNRESTRICTED AND RESTRICTED CASH AND CASH
EQUIVALENTS, END OF PERIOD....................... $17,674,982 $2,669,751
</TABLE>
*See note to condensed financial statements.
<PAGE>
SUNSHINE-JR. STORES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
March 31, 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. The
accompanying financial statements were prepared on a going
concern basis, which contemplates continuity of operations,
realization of assets and liquidation of liabilities in the
ordinary course of business. As a result of the
reorganization proceeding, the Company may have to sell or
otherwise dispose of assets and liquidate or settle
liabilities for amounts other than those reflected in the
financial statements. The financial statements do not give
effect to adjustments to the carrying value of assets or
amount and classification of liabilities that might be
necessary as a consequence of the bankruptcy filing. The
appropriateness of using the going concern basis is
dependent upon, among other things, success of future
operations and the ability to generate sufficient cash from
operations and financing sources to meet obligations.
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 March 31, 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 with 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 March 31, 1994, the Company
discovered an error in the workers' compensation expense
accrual. Accordingly, the March 31, 1994 financial
statements have been restated to correct this error, the
effect of which increased the previously reported net income
from $144,284, or $.08 per share to $544,284, or $.32 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. The
Effective Date of the Plan of Reorganization (the "Effective
Date") has not been set, but is expected to occur during the
third week of June. 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 would be paid: (a)
in full, on or before the later of (i) the Effective Date,
or (ii) ten days after the entry of a final order allowing
such administrative claim, or (b) under such other terms as
may be agreed upon by both the holder of such claim and the
Company. Priority tax claims would 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 would be handled by issuing
three secured promissory notes (A-Note, B-Note and
Contingency Note). The A-Note will be in the original
principal amount of $1,821,917. It will bear interest
commencing September 1, 1993, at the rate of seven (7%)
percent per annum, and will be 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 payments in the amount of $12,121 since
September 1, 1993, and the balance of the A-Note will be
reduced by the portion of such payments attributable to
principal. The principal remaining as of March 31, 1994 was
$1,800,273. The B-Note will be in the original amount of
$633,726. Commencing September 1, 1994, the B-Note will
bear interest at the rate of seven (7%) percent per annum,
and no interest will accrue 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 2, 2000, at which time all
remaining principal and interest will be due. The
Contingency Note will be in the original principal amount of
$667,643. 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 will be paid in full on
the Effective Date. Creditors with unsecured claims greater
than $1,000 will receive promissory notes for their
principal balance at the petition date plus accrued
interest. These notes will be secured by certain real and
personal property owned by the Company. The notes will 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. With
respect to the first $6,700,000 of principal payments,
institutional lenders will receive 36% of such principal
payments (allocated among these lenders pro rata based upon
their respective holdings at the time of such payment), and
the trade creditors will receive 64% of the principal
payments (allocated among these creditors pro rata based on
their respective holdings at the time of such payment). The
notes will mature five years from the confirmation date.
They will be issued under an indenture governed by the Trust
Indenture Act of 1939, and this indenture will require the
Company to comply with certain financial and other covenants
until the notes are paid in full.
<PAGE>
The following table shows the breakdown of Liabilities
Subject to Compromise as of March 31, 1994 as reported and
on a pro forma basis to reflect the classification effects
of confirmation of the Plan of Reorganization.
<TABLE>
<CAPTION>
March 31, 1994
As Reported Pro Forma
<S> <C> <C>
Liabilities Subject to Compromise:
Capital Lease Obligations $3,085,692
Fuel, State and Local 3,583,874
Taxes Payable
Notes Payable to Institutions 10,880,732
Trade Vendor Payables and 10,051,861
Other Liabilities
Interest Payable 2,004,365
Total Liabilities Subject $29,606,524
to Compromise
Current Liabilities to be Paid
on Effective Date:
Real Estate Taxes on
Leased Stores $95,000
Trade Creditor Claims 160,000
Less Than $1,000 Each
Total to be Paid on Effective $255,000
Date
Current Maturities of Long-Term
Debt:
7-Shine Notes A and B $23,498
Priority Tax Claim Notes 448,963
Institutional Lender Notes 2,412,000
Trade Creditor Notes 4,288,000
Capitalized Leases 68,920
Current Maturities of Long $7,241,381
Term Debt
Long Term Debt:
7-Shine Notes A and B (Prior $2,433,999
Capitalized Leases)
Priority Tax Claim Notes 3,488,874
Institutional Lender Notes 11,980,732
(Including Interest)
Trade Creditor Notes 10,796,226
(Including Interest)
Capitalized Leases 68,920
Total Long Term Debt $28,768,751
Less Current Portion (7,241,381)
Long Term Portion of Debt $21,527,370
Grand Totals $29,606,524 $29,023,751
</TABLE>
Liabilities subject to compromise as reported at March 31,
1994, differ from the pro forma amounts due to the effect of
restructuring the secured claim of 7-Shine Corporation (as
previously discussed). The purchase of these assets
currently recorded as a capital lease obligation will result
in a reduction of the obligation. In accordance with
Statement of Financial Accounting Standards No. 13, the
recorded fixed asset amounts for the 7-Shine stores will be
reduced to the extent the related obligation is reduced.
<PAGE>
Note D: Inventories
Inventories consist of the following:
<TABLE>
<CAPTION>
Mar 31, 1994 Dec 30, 1993
<S> <C> <C>
Merchandise $7,624,619 $7,255,543
Gasoline 2,226,297 2,355,057
Total Inventories FIFO Basis 9,850,916 9,610,600
Excess of FIFO cost over LIFO
values (2,490,730) (2,506,325)
Total Inventories LIFO Basis $7,360,186 $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
On December 18, 1992, the Company filed a voluntary petition
for reorganization under Chapter 11 of the Bankruptcy Code.
At the time of the filing, most of the Company's
indebtedness had become currently due as the result of
violations of various financial and other covenants and is
included in liabilities subject to compromise. Under
Chapter 11, the Company is stayed from accruing or paying
interest on these obligations and no interest was accrued
during the first quarter of 1993. Had the Company not been
under Chapter 11, interest expense, net of interest income,
for the thirteen weeks ended April 1, 1993 would have been
$358,208. However in accordance with the Plan of
Reorganization, the Company accrued interest on general
unsecured claims during the first quarter of 1994. See also
Note C for a pro forma presentation of liabilities subject
to compromise to reflect the effects of confirmation of the
Plan of Reorganization.
Note G: Accounts Payable and Accrued Expenses
As of March 31, 1994, accounts payable and accrued expenses
include Chapter 11 administrative professional fees totaling
$5,031,000 which will be required to be paid on the
Effective Date.
Note H: Liabilities Subject to Compromise
Substantially all of the Company's liabilities as of the
petition date are subject to settlement under a plan of
reorganization. The Company is generally not permitted to
make payments with respect to its pre-petition liabilities
until the Effective Date of a plan of reorganization which
has been confirmed by the Bankruptcy Court. See Note C for
a pro forma presentation of liabilities subject to
compromise to reflect the effects of the confirmation of the
Plan of Reorganization.
Note I: Litigation
In January 1991, the Company was named in a lawsuit filed in
the Circuit Court of Montgomery County, Alabama, under the
caption of Wright vs. Winn Dixie, et al. The complaint
brings a class action on behalf of all consumers who have
purchased either beer, wine or tobacco products against
virtually every retailer in the State of Alabama which sells
these products. The complaint alleges that a substantial
portion of the "retail price" of beer, wine and tobacco
products is state beer, wine or tobacco taxes. The
complaint alleges that these state taxes are customarily
incorporated into the "retail price" of such products. The
defendants each charged consumer state and local sales taxes
on the "retail price" without first deducting other state
taxes which the complaint alleges results in "double
taxation" in violation of state law. The complaint seeks
injunctive relief and money damages. There is no specific
amount requested in the plaintiff's complaint. The court
granted the plaintiffs a summary judgment by ruling that the
Company, as well as the other defendants, had been
improperly assessing sales tax upon excise taxes. However,
the court did not have sufficient facts to determine if the
plaintiffs had a legal remedy and, therefore, did not award
damages. The Supreme Court of Alabama affirmed the trial
court decision and remanded the case to the trial court for
further proceedings. In April 1992, after the court's
decision, the Alabama legislature passed an act, effective
immediately and to be applied retroactively, clarifying that
retailers, have historically collected sales tax in the
proper manner and are to continue to collect sales tax in
the same manner. The application of this act to the Company
and other defendants is in doubt due to the judgment
previously entered against the Company in this case. The
defendants have filed third-party complaints against the
State of Alabama, Department of Revenue, so that if the
Company were liable for damages, relief can be sought from
the State. A Settlement Agreement has been signed on behalf
of all of the parties which will resolve this case without
any additional material out-of-pocket cost to the Company,
as the state will allow the Company a credit against sales
taxes due to the state and the amount of the credit will be
paid by the Company to settle the case. Accordingly, no
provision for any liability that may result has been made in
the accompanying financial statements. The Settlement
Agreement is subject to Bankruptcy Court approval and
approval by the Alabama trial court.
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. In the event the Bankruptcy Court
determines that the claims are administrative in nature,
then the claims will have to be paid upon confirmation of
the Company's Amended Plan of Reorganization. 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 J: 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 $1,197,000 at March 31, 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 March 31, 1994, future costs are estimated as
follows:
<TABLE>
<CAPTION>
<S> <C>
1994 $427,000
1995 410,000
1996 120,000
1997 120,000
1998 120,000
Total $1,197,000
</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 an agreement with a
third party remediation contractor (the "Contractor") which
would 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 agreement, the Contractor 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 Contractor has 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.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
FINANCIAL CONDITION AND LIQUIDITY
Cash flow for the first quarter of 1994 was approximately a
positive $3,934,000, after the use of approximately
$1,036,000 for operating activities. The $1,036,000 used in
operating activities was used primarily to decrease accounts
payable and accrued expenses. This was offset by
approximately $4,942,000 provided by investing activities,
principally from the sale of 21 stores for $5,000,000 in
cash.
The Company has sufficient liquidity to meet its needs
without any debtor-in-possession financing.
For a description of the status of the Company's Chapter 11
proceeding and the terms of the Company's Plan of
Reorganization, see Note C of Notes to Condensed Financial
Statements.
RESULTS OF OPERATIONS
Revenues
During the last three quarters of 1993 and the first quarter
of 1994, no stores were opened while four supermarkets and
45 convenience stores were closed or sold. The average
number of stores in operation during the first quarter of
1994 was 240 compared to 282 in the first quarter of 1993.
Data discussed below as "same store" includes data from the
same stores during the comparable periods. On March 31,
1994, the Company operates 232 convenience stores in
Florida, Alabama, Mississippi, Georgia and Louisiana.
During the thirteen weeks ended March 31, 1994, total
revenues decreased approximately $8,215,000 compared to the
same period of the previous year. Gasoline sales decreased
approximately $2,922,000 due primarily to a decrease in the
number of stores, coupled with a decrease in the average
retail selling price of gasoline, and merchandise revenues
decreased approximately $5,923,000 primarily due to the sale
of the Company's four supermarkets and the closing or sale
of 45 convenience stores.
<TABLE>
Total Revenues
(In Thousands)
<CAPTION>
Thirteen Weeks Ended
Mar. 31, Apr. 1, % of
1994 1993 Change
<S> <C> <C> <C>
Merchandise and Other $21,743 $27,037 (19.6%)
Revenue Items
Gasoline 19,316 22,237 (13.1%)
Total $41,059 $49,274 (16.7%)
Gas Gallons 19,965 21,959 (9.08%)
</TABLE>
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
$5,293,000 decrease in merchandise revenues for the thirteen
week period is comprised of a $4,808,000 decrease in
merchandise sales coupled with a decrease in other revenue
items of $485,000. On a same store basis, merchandise
revenues increased approximately $1,203,000 or 6.1% over the
comparable period of the prior year. This increase is
comprised of an increase in merchandise sales of
approximately $1,335,000, partially offset by a decrease of
approximately $132,000 in other revenue items.
The decrease in other revenue items is due primarily to a
decrease in lottery commissions of approximately $151,000,
offset by increases in money order commissions and telephone
commissions of approximately $18,000 and $22,000,
respectively.
Gasoline revenues accounted for 47.0% of total revenues in
the first quarter of 1994 compared to 45.1% in the first
quarter of 1993. The 13.1% decrease in gasoline revenues
for the thirteen week period ended March 31, 1994, is due to
a decrease in volume and a reduced average retail selling
price. The decrease in volume is a result of fewer
locations selling gasoline. The number of gallons sold
decreased by approximately 1,993,000 gallons in the first
quarter of 1994 compared to the prior year. On a same store
basis, gasoline revenues increased approximately $170,000 or
.9% and gasoline gallons increased approximately 1,001,000
or 5.6% over the comparable period of 1993.
Gross Profit
<TABLE>
Total Gross Margin Rate
<CAPTION>
Thirteen Weeks Ended
Mar. 31, Apr. 1,
1994 1993
<S> <C> <C>
Merchandise and Other Revenue Items 33.0% 30.2%
Gasoline 11.6% 9.3%
Total 22.9% 20.8%
Gasoline Gross Margin/Gallon $0.112 $0.095
</TABLE>
Gross profit on merchandise sales and other revenue items
for the first quarter of 1994 decreased approximately
$1,011,000 as compared to the first quarter of 1993. The
decrease is a result of a decrease in gross profit from
merchandise sales of approximately $585,000, coupled with a
decrease in gross profit from other revenue items of
$426,000. The decrease in gross profit as compared to the
prior year for merchandise sales is due primarily to the
sale of the Company's four supermarkets and the closing or
sale of 45 convenience stores 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.
Gross profit from gasoline sales increased approximately
$161,000 in the first quarter of 1994 as compared to 1993.
This increase is a function of a $.017 increase in gross
profit per gallon, partially offset by a decrease in volume
sold. On a same store basis, gasoline gross profit
increased approximately $421,000 or 23.4%. The gasoline
market is extremely volatile in gross profit per gallon and
significantly influenced by external factors affecting world
petroleum markets. A similar increase was in gross profit
per gallon experienced industry wide.
Selling, General and Administrative Expenses
For the thirteen week period ended March 31, 1994, selling,
general and administrative expenses were 22.3% of total
revenues as compared to 21.4% during the same period of the
previous year.
Selling, general and administrative expenses for the first
quarter of 1994 were approximately $9,139,000 compared to
approximately $10,564,000 for the first quarter of 1993. The
decrease of approximately $1,425,000 is primarily
attributable to five items. Salaries and wages,
depreciation, group health, electricity and repairs and
maintenance included in selling, general and administrative
expenses decreased approximately $775,000, $178,000,
$144,000, $138,000 and $133,000, respectively, when compared
to the previous year. The Company experienced a decrease in
salaries and wages as a result of closing 45 convenience
stores, the sale of the supermarkets and cutbacks in
corporate overhead positions in the latter part of 1993.
The decreases in depreciation, electricity and repairs and
maintenance were also a result of fewer operating locations.
The decrease experienced in group health costs is due to the
Company's implementation of a new group health program.
These decreases were partially offset by an increase in
environmental expense of approximately $258,000. The
increase in environmental expense is attributable to the
Company's ongoing program of environmental upgrades to
comply with state and federal regulations.
Interest Expense
Interest expense in the first quarter of 1994 increased by
approximately $226,000 from the first quarter of 1993. In
accordance with the Plan of Reorganization, the Company is
accruing interest on general unsecured claims.
Reorganization Items
The reorganization expenses relate to the various
administrative and other costs of operating under Chapter
11. The Company recorded a gain on reorganization items of
approximately $739,000 for the first quarter of 1994
compared to an expense of approximately $1,052,000 for the
first quarter of 1993. The decrease is primarily
attributable to a decrease in professional fees of
approximately $710,000 and an increase in gain from sale of
property and equipment of approximately $1,069,000. The
increase in gain from sale of property and equipment is due
primarily to the sale of 21 stores in the central Florida
area.
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 $104,000 for the thirteen week period ended
March 31, 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 April 1, 1993 as the Company did not anticipate
incurring a tax liability in 1993.
Net Earnings/Loss
The Company reported net income for the first quarter of
1994 of approximately $544,000 or $.32 per share as
compared to a net loss of approximately $1,492,000 or $.88
per share in the first quarter of 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
On December 18, 1992, the Company filed a voluntary petition
in the U.S. Bankruptcy Court for the Middle District of
Florida (Tampa Division) 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 United States Bankruptcy
Court for the Middle District of Florida in Tampa, Florida
(the "Bankruptcy Court"). The Effective Date of the Plan of
Reorganization has not been set yet, but is expected to
occur during the third week of June. 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. 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
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
As stated in Note F, the Company is in default under the
terms of substantially all of its debt agreements.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) A Form 8-K was filed on April 11, 1994, which provided
Exhibit 28.01, Monthly Financial Report for month
ending March 3, 1994.
A Form 8-K was filed on May 2, 1994, which
provided Exhibit 28.01, Monthly Financial Report for
month ending March 31, 1994.
<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
