UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended January 1, 1998
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-11556
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UNI-MARTS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 25-1311379
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
477 East Beaver Avenue, State College, PA 16801-5690
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(Address of principal executive offices) (Zip Code)
(8l4) 234-6000
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(Registrant's telephone number, including area code)
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(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 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
----- -----
6,672,445 Common Shares were outstanding at February 12, 1998.
This Document Contains 21 Pages.
-1-
UNI-MARTS, INC. AND SUBSIDIARY
INDEX
PART I. FINANCIAL INFORMATION
- ------------------------------
PAGE(S)
Item 1. Financial Statements
Consolidated Balance Sheets -
January 1, 1998 and September 30, 1997 3-4
Consolidated Statements of Operations -
Quarters Ended January 1, 1998 and
January 2, 1997 5
Consolidated Statements of Cash Flows -
Quarters Ended January 1, 1998 and
January 2, 1997 6-7
Notes to Consolidated Financial Statements 8-11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12-15
PART II. OTHER INFORMATION
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Item 6. Exhibits and Reports on Form 8-K 16
Exhibit Index 18
-2-
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNI-MARTS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
January 1, September 30,
1998 1997
------------ -------------
ASSETS
CURRENT ASSETS:
Cash $ 2,608,636 $ 5,993,388
Marketable equity securities (at market,
cost $91,100 and $277,200) 104,906 407,475
Account receivable from Getty Petroleum 2,686,005 0
Accounts receivable - less allowances of
$131,400 and $132,600 2,351,749 3,377,554
Tax refunds receivable 1,819,100 1,819,100
Inventories 11,379,542 15,683,330
Prepaid and current deferred taxes 3,028,800 3,359,490
Property held for sale 5,658,295 5,643,006
Prepaid expenses and other 656,980 796,668
Loan due from officer - current portion 200,000 150,000
------------ ------------
TOTAL CURRENT ASSETS 30,494,013 37,230,011
PROPERTY, EQUIPMENT AND IMPROVEMENTS -
at cost, less accumulated depreciation and
amortization of $47,882,300 and
$46,474,100 68,522,826 69,055,846
LOAN DUE FROM OFFICER 640,312 674,768
NET INTANGIBLE AND OTHER ASSETS 6,355,782 6,633,157
------------ ------------
TOTAL ASSETS $106,012,933 $113,593,782
============ ============
-3-
UNI-MARTS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(CONTINUED)
January 1, September 30,
1998 1997
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 11,359,175 $ 14,462,174
Gas taxes payable 2,412,869 2,424,641
Accrued expenses 6,716,813 6,806,632
Current maturities of long-term debt 12,797,181 12,722,649
Current obligations under capital leases 72,814 87,320
------------ ------------
TOTAL CURRENT LIABILITIES 33,358,852 36,503,416
LONG-TERM DEBT, less current maturities 35,896,105 39,852,947
OBLIGATIONS UNDER CAPITAL LEASES,
less current maturities 520,780 533,551
DEFERRED TAXES 3,991,900 4,036,000
DEFERRED INCOME AND OTHER LIABILITIES 2,904,358 3,120,923
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common Stock, par value $.10 a share:
Authorized 15,000,000 shares
Issued 7,306,657 and 7,286,657
shares, respectively 730,666 728,666
Additional paid-in capital 24,391,734 24,341,999
Retained earnings 7,980,295 8,254,538
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33,102,695 33,325,203
Less treasury stock, at cost - 637,142
and 639,980 shares of Common Stock,
respectively ( 3,761,757) ( 3,778,258)
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29,340,938 29,546,945
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $106,012,933 $113,593,782
============ ============
See notes to consolidated financial statements
-4-
UNI-MARTS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
January 1, January 2,
1998 1997
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REVENUES:
Merchandise sales $45,254,511 $46,472,746
Gasoline sales 36,380,554 42,319,924
Other income 556,236 616,357
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82,191,301 89,409,027
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COSTS AND EXPENSES:
Cost of sales 61,563,443 66,817,040
Selling 16,696,761 17,698,593
General and administrative 1,711,451 1,854,213
Depreciation and amortization 1,585,349 1,813,019
Interest 1,125,740 917,005
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82,682,744 89,099,870
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EARNINGS (LOSS) BEFORE INCOME TAXES AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGE ( 491,443) 309,157
INCOME TAXES ( 217,200) 115,646
----------- -----------
EARNINGS (LOSS) BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGE ( 274,243) 193,511
CUMULATIVE EFFECT OF ACCOUNTING CHANGE,
NET OF INCOME TAX BENEFIT OF $725,800 0 ( 1,468,140)
----------- -----------
NET EARNINGS (LOSS) ($ 274,243) ($ 1,274,629)
=========== ===========
BASIC EARNINGS (LOSS) PER SHARE:
EARNINGS (LOSS) PER SHARE BEFORE CUMULATIVE
EFFECT OF ACCOUNTING CHANGE ($ 0.04) $ 0.03
LOSS PER SHARE FROM CUMULATIVE EFFECT
OF ACCOUNTING CHANGE 0.00 ( 0.22)
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NET EARNINGS (LOSS) PER SHARE ($ 0.04) ($ 0.19)
=========== ===========
DILUTED EARNINGS (LOSS) PER SHARE:
EARNINGS (LOSS) PER SHARE BEFORE CUMULATIVE
EFFECT OF ACCOUNTING CHANGE ($ 0.04) $ 0.03
LOSS PER SHARE FROM CUMULATIVE EFFECT
OF ACCOUNTING CHANGE 0.00 ( 0.22)
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NET EARNINGS (LOSS) PER SHARE ($ 0.04) ($ 0.19)
=========== ===========
DIVIDENDS PER SHARE $ 0.00 $ 0.03
=========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING 6,655,275 6,642,450
=========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING ASSUMING DILUTION 6,655,275 6,731,892
=========== ===========
See notes to consolidated financial statements
-5-
UNI-MARTS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
January 1, January 2,
1998 1997
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CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers and others $80,009,909 $88,055,110
Cash paid to suppliers and employees ( 78,884,923) ( 85,112,878)
Net receipts for sales and purchases
of trading equity securities 715,908 0
Dividends and interest received 21,251 8,982
Interest paid (net of capitalized interest
of $0 and $57,400) ( 1,104,223) ( 1,077,252)
Income taxes received 503,790 42,200
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,261,712 1,916,162
CASH FLOWS FROM INVESTING ACTIVITIES:
Receipts from sale of capital assets 1,671 23,187
Purchase of property, equipment and
improvements ( 929,932) ( 4,521,246)
Payments for purchases of available-for-sale
securities 0 ( 189,060)
Note receivable from officer ( 15,544) 0
Cash advanced for intangible and other
assets ( 13,419) ( 39,965)
Cash received for intangible and other
assets 165,347 19,208
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NET CASH USED IN INVESTING ACTIVITIES ( 791,877) ( 4,707,876)
CASH FLOWS FROM FINANCING ACTIVITIES:
(Payments) borrowings on revolving credit
agreement ( 2,000,000) 5,000,000
Additional long-term borrowings 0 4,500,000
Principal payments on debt ( 1,909,587) ( 1,613,147)
Purchases of treasury stock 0 ( 292,665)
Proceeds from issuance of common stock 55,000 0
Dividends paid to stockholders 0 ( 199,127)
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NET CASH (USED) PROVIDED BY FINANCING
ACTIVITIES ( 3,854,587) 7,395,061
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NET (DECREASE) INCREASE IN CASH ( 3,384,752) 4,603,347
CASH:
Beginning of period 5,993,388 1,207,929
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End of period $ 2,608,636 $ 5,811,276
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-6-
UNI-MARTS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
(Unaudited)
January 1, January 2,
1998 1997
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RECONCILIATION OF NET EARNINGS (LOSS) TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
NET EARNINGS (LOSS) ($ 274,243) ($1,274,629)
ADJUSTMENTS TO RECONCILE NET EARNINGS (LOSS) TO
NET CASH PROVIDED BY OPERATING ACTIVITIES:
Depreciation and amortization 1,585,349 1,813,019
Net unrealized holding loss on trading
securities 116,540 0
Gain on sale of trading equity securities ( 81,573) 0
Loss on sale of capital assets and other 31,956 124,822
Cumulative effect of accounting change 0 1,468,140
Change in assets and liabilities:
(Increase) decrease in:
Trading equity securities 267,602 0
Accounts receivable ( 1,660,200) ( 1,438,983)
Inventories 4,303,788 ( 2,261,254)
Prepaid expenses 107,058 1,380,459
Increase (decrease) in:
Accounts payable and accrued expenses ( 3,204,590) 1,838,314
Deferred income taxes and other
liabilities 70,025 266,274
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TOTAL ADJUSTMENTS TO NET EARNINGS (LOSS) 1,535,955 3,190,791
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NET CASH PROVIDED BY OPERATING ACTIVITIES $1,261,712 $1,916,162
========== ==========
See notes to consolidated financial statements
-7-
UNI-MARTS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
A. FINANCIAL STATEMENTS:
The consolidated balance sheet as of January 1, 1998, the consolidated
statements of operations and the consolidated statements of cash flows
for the quarters ended January 1, 1998 and January 2, 1997 have been
prepared by Uni-Marts, Inc. (the "Company") without audit. In the opinion
of management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position of the
Company at January 1, 1998 and the results of operations and cash flows for
all periods presented have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested
that these consolidated financial statements be read in conjunction with
the financial statements and notes thereto included in the Company's Annual
Report on Form 10-K for the fiscal year ended September 30, 1997. The
results of operations for the interim periods are not necessarily
indicative of the results to be obtained for the full year.
B. OPERATIONS:
The Company incurred a loss of $274,000 in the first quarter of fiscal year
1998. This loss was primarily due to lower gross profits on merchandise
and lower than anticipated profit contributions from newly constructed and
remodeled stores. Also, as a result of amendments to the Company's various
debt agreements, the Company's debt service requirements for the current
fiscal year represent a significant increase from requirements in prior
years. In addition, these amendments restrict the Company's capital
expenditures to $3,000,000 in the current fiscal year and place certain
restrictions on any additional borrowing by the Company.
Management's plans for the balance of fiscal year 1998 include purchasing
gasoline from more competitive sources in order to improve margins. In
addition, the Company expects to continue to improve the operating results
of its existing fast-food merchandising units. The Company anticipates that
cash presently available and cash to be generated from operations, tax
refunds and asset sales will be sufficient to meet its cash requirements
during the balance of fiscal year 1998.
C. CHANGE IN ACCOUNTING METHOD:
In fiscal year 1997, the Company changed its method of valuing its
merchandise inventories. The Company formerly valued its merchandise
inventories at the lower of cost (first-in, first-out method) or market,
as determined by the retail inventory method utilizing a single category
of merchandise. The Company now values its merchandise inventories at
the lower of cost (first-in, first-out method) or market, as determined
by the retail inventory method utilizing eight categories of merchandise.
This change caused a one-time charge to earnings of $1,468,140, net of the
income tax benefit of $725,800. The statement of operations for the first
quarter of fiscal year 1997 has been restated to reflect retroactive
application of this change.
-8-
D. TERMINATION OF GETTY LEASE AGREEMENT:
During the first quarter of fiscal year 1998, the Company discontinued
operating 96 stores, 92 of which were formerly leased from Getty Petroleum
Corp. ("Getty"). Getty has also agreed to purchase certain store and
gasoline equipment and inventories at these 92 stores and 13 additional
stores subsequently transferred to Getty.
E. INTANGIBLE AND OTHER ASSETS:
Intangible and other assets consist of the following:
January 1, September 30,
1998 1997
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Goodwill $5,999,680 $ 5,998,351
Lease acquisition costs 1,009,531 1,187,174
Non-competition agreements 0 1,213,040
Other 2,098,535 2,268,850
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9,107,746 10,667,415
Less accumulated amortization 2,751,964 4,034,258
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$6,355,782 $ 6,633,157
========== ===========
Goodwill represents the excess of costs over the fair value of net
assets acquired in business combinations and is amortized on a straight-
line basis over periods of 13 to 40 years. Lease acquisition costs are
the bargain element of acquired leases and are being amortized on a
straight-line basis over the related lease terms. Non-competition
agreements are amortized over the terms of the particular agreements.
It is the Company's policy to periodically review and evaluate the
recoverability of the intangible assets by assessing current and future
profitability and cash flows and to determine whether the amortization of
the balances over their remaining lives can be recovered through expected
future results and cash flows.
F. INTERIM CREDIT FACILITIES:
The Company has a $13.5 million revolving credit agreement with a bank
group at the bank's prime rate or a fixed rate option at the Company's
election, with a maximum of $3.5 million available for issuance of
letters of credit. The revolving credit facility is committed for a
two-year period expiring February 28, 1999 or a later date as approved
by the bank group. At January 1, 1998, borrowings of $8.0 million and
letters of credit of $2.7 million were outstanding under the agreement.
-9-
G. LONG-TERM DEBT:
January 1, September 30,
1998 1997
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Term Loan. Interest is paid at least
quarterly at the rate of 8.80%. Principal
on the note will be repaid in nine quarterly
installments. $15,677,686 $16,741,488
Term Loan. Interest is paid at least
quarterly. Principal on the note will
be repaid on December 31, 1999, or earlier
if certain conditions are met. The blended
interest rate was 8.30% at January 1, 1998. 20,000,000 20,000,000
Revolving Credit Agreement. Interest is
paid quarterly at the bank's prime rate plus
0.25% or a fixed rate option at the Company's
election. The blended interest rate was 8.19%
at January 1, 1998. (See Note F) 8,000,000 10,000,000
Senior Notes of the Company. Interest
is paid in quarterly installments
at a blended rate of 10.50%. Principal
is due on February 2, 1998. 2,970,069 3,736,735
Mortgage Loans Payable. Principal and
interest are paid in monthly installments.
The loans expire in years 1999 through
2010 with interest ranging from 8.50% to
8.75%. The blended interest rate was 8.54%
at January 1, 1998. 2,045,531 2,097,373
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48,693,286 52,575,596
Less current maturities 12,797,181 12,722,649
----------- -----------
$35,896,105 $39,852,947
=========== ===========
The mortgage loans are collateralized by $7,326,100 of property, at cost.
Certain of the Company's debt agreements contain covenants which provide
for the maintenance of minimum net worth as well as limitations on future
indebtedness, sales and leasebacks and dispositions of assets, among other
things. These agreements may restrict the Company's ability to declare
and pay dividends on common stock. The amount of retained earnings
available for such dividends at January 1, 1998 was $267,100.
H. NEW ACCOUNTING PRONOUNCEMENTS:
In the first quarter of fiscal year 1998, the Company adopted Financial
Accounting Standards Board Statement No. 128, "Earnings Per Share." The
adoption of this statement did not have a material effect on the Company's
financial statements.
-10-
In June 1997, the Financial Accounting Standards Board issued Statement
No. 130, "Reporting Comprehensive Income," which will result in disclosure
of comprehensive income and its components (revenues, expenses, gains
and losses) in a full set of general-purpose financial statements. The
Company is not required to adopt this standard until fiscal year 1999. At
this time, the Company has not determined the impact this statement will
have on the Company's financial statements but expects that the effect will
not be material.
The Financial Accounting Standards Board also issued Statement No. 131,
"Disclosures about Segments of an Enterprise and Related Information,"
in June 1997. The Statement establishes standards for the way public
business enterprises report information about operating segments in annual
financial statements and requires that those enterprises report selected
information about operating segments in interim financial reports issued
to shareholders. It also establishes standards for related disclosures
about products and services, geographic areas and major customers. The
Company is not required to adopt this standard until fiscal year 1999. At
this time, the Company has not determined the impact this standard will
have on the Company's financial statements but does not expect the effect
to be material.
-11-
ITEM 2.
UNI-MARTS, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Set forth below are selected unaudited consolidated financial data of the
Company for the periods indicated:
QUARTER ENDED
January 1, January 2,
1998 1997
------------ ------------
STATEMENTS OF OPERATIONS DATA:
Sales and other income by the
Company and its franchisees:
Merchandise sales $45,254,511 $46,472,746
Gasoline sales 36,380,554 42,319,924
Other income 556,236 616,357
----------- -----------
Total 82,191,301 89,409,027
Cost of sales 61,563,443 66,817,040
----------- -----------
Gross Profit 20,627,858 22,591,987
Selling 16,696,761 17,698,593
General and administrative 1,711,451 1,854,213
Depreciation and amortization 1,585,349 1,813,019
Interest 1,125,740 917,005
----------- -----------
Earnings (loss) before income taxes and
cumulative effect of accounting change ( 491,443) 309,157
Income taxes ( 217,200) 115,646
----------- -----------
Earnings (loss) before cumulative effect
of accounting change ( 274,243) 193,511
Cumulative effect of accounting change, net
of income tax benefit of $725,800 0 ( 1,468,140)
----------- -----------
Net earnings (loss) ($ 274,243) ($ 1,274,629)
=========== ===========
Basic earnings (loss) per share:
Earnings (loss) per share before cumulative
effect of accounting change ($ 0.04) $ 0.03
Loss per share from cumulative effect of
accounting change 0.00 ( 0.22)
----------- -----------
Net earnings (loss) per share ($ 0.04) ($ 0.19)
=========== ===========
Diluted earnings (loss) per share:
Earnings (loss) per share before cumulative
effect of accounting change ($ 0.04) $ 0.03
Loss per share from cumulative effect of
accounting change 0.00 ( 0.22)
----------- -----------
Net earnings (loss) per share ($ 0.04) ($ 0.19)
=========== ===========
-12-
ITEM 2. CONTINUED
OPERATING DATA (CONVENIENCE STORES ONLY):
Average, per store, for stores open two
full comparable periods:
Merchandise sales $ 155,998 $ 153,808
Gasoline sales $ 134,132 $ 148,047
Gallons of gasoline sold 136,476 138,430
Total gallons of gasoline sold 36,131,585 38,646,065
Gross profit per gallon of gasoline $ 0.122 $ 0.104
C-Stores at beginning of period 384 405
C-Stores added 0 2
C-Stores closed 96 4
C-Stores converted to Choice locations 1 1
C-Stores at end of period 287 402
Company-operated stores 264 368
Franchisee-operated stores 23 34
Choice Cigarette Discount Outlets 18 4
Locations with self-service gasoline 217 301
-13-
RESULTS OF OPERATIONS:
Matters discussed below should be read in conjunction with "Statements of
Operations Data" and "Operating Data (Convenience Stores Only)" on the
preceding pages. Certain statements contained in this report are forward
looking. Although Uni-Marts, Inc. believes that its expectations are based on
reasonable assumptions within the bounds of its knowledge of its business and
operations, there can be no assurance that actual results will not differ
materially from its expectations. Factors that could cause actual results to
differ from expectations include general economic, business and market
conditions, volatility of gasoline prices, merchandise margins, customer
traffic, weather conditions, labor costs and the level of capital expenditures.
For other important factors that may cause actual results to differ materially
from expectations and underlying assumptions, see the Company's periodic
filings with the Securities and Exchange Commission.
QUARTERS ENDED JANUARY 1, 1998 AND JANUARY 2, 1997
- --------------------------------------------------
Total revenues in the first quarter of fiscal year 1998 were $82.2 million
compared to $89.4 million in the first quarter of fiscal year 1997. This
decline of $7.2 million, or 8.1%, is the result of the operation of 96 fewer
stores, 92 of which were formerly leased from Getty Petroleum Corp., during the
quarter. The Company operated 18 Choice Cigarette Discount Outlets at
January 1, 1998 and merchandise sales discussed herein include sales of tobacco
products at these locations. Merchandise sales declined $1.2 million, or 2.6%,
to $45.3 million in the first quarter of fiscal year 1998 compared to $46.5
million in the comparable period of fiscal year 1997 due primarily to fewer
stores in operation. Gasoline sales declined by $5.9 million, or 14.0%, due to
an 8.0% decline in retail prices per gallon sold and the sale of 2.5 million
fewer gallons at the Company's convenience stores, largely as a result of fewer
stores in operation. Other income decreased by $60,000.
In fiscal year 1997, the Company changed its method of valuing its merchandise
inventories. The Company formerly valued its merchandise inventories at the
lower of cost (first-in, first-out method) or market, as determined by the
retail inventory method utilizing a single category of merchandise. The
Company now values its merchandise inventories at the lower of cost (first-in,
first-out method) or market, as determined by the retail inventory method
utilizing eight categories of merchandise. This change is expected to improve
the measurement of the Company's results of operations based upon a changing
product mix. This change caused a one-time charge to earnings of $1,468,140,
net of the income tax benefit of $725,800.
Gross profits on merchandise sales in the first quarter of fiscal year 1998
were $15.5 million, a decline of $2.4 million, or 13.1%, from merchandise
profits of $17.9 million in the comparable quarter of fiscal year 1997. This
decline is primarily due to lower gross profit rates but also due in part to
lower merchandise sales. Although the Company sold 2.5 million gallons less
gasoline at its convenience stores in the first quarter of fiscal year 1998,
gasoline gross profits increased by $421,000, or 10.2%, due to an increase in
the gross profits per gallon sold.
Selling expenses in the first quarter of fiscal year 1998 declined by $1.0
million, or 5.7%, compared to the first quarter of fiscal year 1997, primarily
as a result of the operation of fewer stores. General and administrative
expense declined in the current year's first quarter by $143,000, or 7.7%, in
comparison to the first quarter of fiscal year 1997. This decline is primarily
the result of staffing reductions due to terminations and retirements.
Depreciation and amortization declined by $228,000, or 12.6%, due largely to
reduced depreciation and amortization reflecting operations at fewer stores.
-14-
Interest expense increased by $209,000 due to higher average borrowing levels
in the current fiscal year.
The Company incurred a loss of $491,000 before income taxes and cumulative
effect of an accounting change compared to earnings of $309,000 in the first
quarter of fiscal year 1997. In the first quarter of the current fiscal year,
the Company recorded an income tax benefit of $217,000 due to the loss incurred
compared to income tax expense of $116,000 in the same quarter of fiscal year
1997. As a result of the accounting change discussed previously, in fiscal
year 1997 the Company recorded a charge to earnings of $1.5 million, net of
income tax benefit of $0.7 million. Operating results for the first quarter of
fiscal year 1997 have been restated to reflect the retroactive application of
this change. The Company recorded a net loss of $274,000, or $0.04 per share,
in the first quarter of fiscal year 1998 compared to a net loss of $1,275,000,
or $0.19 per share, in the first quarter of fiscal year 1997.
LIQUIDITY AND CAPITAL RESOURCES:
Most of the Company's sales are for cash and its inventory turns over rapidly.
As a result, the Company's daily operations do not generally require large
amounts of working capital. From time to time, the Company utilizes
substantial portions of its cash and interim credit facilities to acquire and
construct new stores and renovate existing locations.
At September 30, 1997, the Company was not in compliance with certain
financial covenants contained in both its Senior Note Agreements and its
bank term loans and revolving credit agreement. The Senior Note Agreements
and bank term loans and revolving credit agreement were amended in December
1997 to waive this covenant noncompliance, modify certain existing covenants
and add new covenants. As a result of these amendments, the Company agreed to
repay the remaining Senior Note outstanding principal on February 2, 1998,
which payment has been made. Also the new schedule of bank term loan principal
payments beginning on February 2, 1998, requires quarterly payments of
$1,905,000 through October 1, 1998 and $2,000,000 through October 1, 1999, with
the remaining balance due on December 31, 1999. In addition, the Company must
make mandatory prepayments if specified cash flow targets are met or if the
Company receives proceeds from the sale of certain assets. The rate of
interest paid by the Company to the banks for the Revolving Credit Loan was
increased by 0.25% per annum. In addition, the amendment restricts the
Company's capital expenditures to $3.0 million in fiscal year 1998 and places
certain restrictions on any additional borrowing by the Company.
Capital requirements for the balance of fiscal year 1998 include debt and
capital lease payments of approximately $10.8 million and capital expenditures
of approximately $2.1 million to remodel existing stores and upgrade gasoline
marketing facilities. As of January 1, 1998, the Company had cash balances of
$2.6 million and additional borrowing capacity of $2.0 million available under
its existing credit agreements. The Company expects to utilize approximately
$8.0 million in proceeds from tax refunds and asset disposals for a portion of
the debt service requirement. Management believes these sources of cash and
cash generated from operations will be sufficient to fulfill its cash
requirements.
-15-
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
11 Statement regarding computation of per share earnings (loss).
27 Financial Data Schedule.
(b) REPORTS ON FORM 8-K
The Company did not file any reports on Form 8-K during the quarter
ended January 1, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Uni-Marts, Inc.
-----------------------------------
(Registrant)
Date February 17, 1998 /S/ HENRY D. SAHAKIAN
----------------- -----------------------------------
Henry D. Sahakian
Chairman of the Board
(Principal Executive Officer)
Date February 17, 1998 /S/ J. KIRK GALLAHER
----------------- -----------------------------------
J. Kirk Gallaher
Executive Vice President, Director
and Chief Financial Officer
(Principal Accounting Officer)
(Principal Financial Officer)
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UNI-MARTS, INC. AND SUBSIDIARY
EXHIBIT INDEX
Number Description Page(s)
- ------ ----------- -------
11 Statement regarding computation of per
share earnings (loss). 19-20
27 Financial Data Schedule. 21
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