FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended April 30, 1995 Commission File No. 34-025260
KASH N' KARRY FOOD STORES, INC.
(Exact name of registrant as specified in charter)
Delaware 95-4161591
(State of incorporation) (IRS employer identification
number)
6422 Harney Road, Tampa, Florida 33610
(Address of registrant's principal executive offices)
(813) 621-0200
(Registrant's telephone number, including area code)
The registrant 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 and has been subject to such filing
requirements for the past 90 days. The registrant has filed all
documents and reports required to be filed by Sections 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
As of June 12, 1995, there were 3,100,000 shares outstanding
of the registrant's common stock, $0.01 par value.
Page 1 of 34 pages.
(Exhibit Index appears on page 25).
KASH N' KARRY FOOD STORES, INC.
BALANCE SHEETS
(Dollar Amounts in Thousands, Except Per Share Amounts)
ASSETS
Reorganized Predecessor
Company Company
------------ -----------
April 30, July 31,
1995 1994
------------ -----------
(Unaudited)
(Note 1)
Current assets:
Cash and cash equivalents $ 7,244 $ 6,852
Accounts receivable 6,745 8,084
Inventories 83,206 76,094
Prepaid expenses and other current assets 3,433 12,805
--------- ---------
Total current assets 100,628 103,835
Property and equipment, at cost, less
accumulated depreciation 140,496 160,491
Favorable lease interests, less accumulated
amortization of $692 and $13,543 29,262 12,312
Deferred financing costs, less accumulated
amortization of $242 and $22,572 3,983 12,630
Reorganization value in excess of amounts allocable
to identifiable assets, less accumulated
amortization of $1,757 at April 30, 1995 97,573 --
Excess of cost over net assets acquired, less
accumulated amortization of $16,288 at
July 31, 1994 -- 96,758
Other assets 2,923 3,867
--------- ---------
Total assets $374,865 $389,893
========= =========
See accompanying notes to condensed financial statements.
2
KASH N' KARRY FOOD STORES, INC.
BALANCE SHEETS
(Dollar Amounts in Thousands, Except Per Share Amounts)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Reorganized Predecessor
Company Company
------------ -----------
April 30, July 31,
1995 1994
------------ -----------
(Unaudited)
(Note 1)
Current liabilities:
Current portion of long-term debt $ 5,583 $ 42,740
Accounts payable 40,900 34,908
Accrued payroll and benefits 9,308 5,579
Accrued interest 6,889 15,849
Taxes, other than income 4,578 6,056
Other accrued expenses 21,751 11,450
--------- ---------
Total current liabilities 89,009 116,582
Long-term debt, less current obligations 220,091 317,381
Other long-term liabilities 15,742 12,334
Old Series B Cumulative Preferred Stock of $.01 par
value and a stated value of $100 a share.
Authorized 50,000 shares; 38,750 shares
outstanding at July 31, 1994. -- 3,875
Old Series C Convertible Preferred Stock of
$.01 par value. Authorized 100,000 shares;
77,500 shares outstanding at July 31, 1994. -- 775
Stockholders' equity (deficit):
New Common Stock of $.01 par value.
Authorized 5,500,000 shares; 3,100,000
shares outstanding at April 30, 1995. 31 --
Old Common Stock of $.01 par value.
Authorized 4,000,000 shares; 2,819,589
shares outstanding at July 31, 1994. -- 28
Capital in excess of par value 46,464 77,695
Retained earnings (deficit) 3,528 (138,740)
Less cost of treasury stock - 2,437 shares
at July 31, 1994 -- (37)
--------- ---------
Total stockholders' equity (deficit) 50,023 (61,054)
--------- ---------
Total liabilities & stockholders' equity $374,865 $389,893
========= =========
See accompanying notes to condensed financial statements.
3
KASH N' KARRY FOOD STORES, INC.
CONDENSED STATEMENTS OF OPERATIONS
(In Thousands)
(Unaudited)
Reorganized Predecessor
Company Company
----------- --------------
Thirteen Thirteen
Weeks Ended Weeks Ended
April 30, May 1,
1995 1994
----------- -----------
Sales $269,927 $279,806
Cost of sales 211,722 221,608
--------- -----------
Gross profit 58,205 58,198
Selling, general and
administrative expenses 38,896 43,719
Depreciation and amortization 6,457 6,055
--------- -----------
Operating income 12,852 8,424
Interest expense 6,942 11,244
--------- -----------
Income (loss) before income taxes 5,910 (2,820)
Provision for income taxes 3,189 --
--------- ----------
Net income (loss) $ 2,721 $ (2,820)
========= ==========
Net income per common share (A)(B) $ 0.88
=========
(A) Based on a weighted average number of shares of common stock of
3,100,000 outstanding.
(B) Net income per common share is not meaningful prior to January 1, 1995
due to the significant change in the capital structure in connection
with the Restructuring.
See accompanying notes to condensed financial statements.
4
KASH N' KARRY FOOD STORES, INC.
CONDENSED STATEMENTS OF OPERATIONS
(In Thousands)
(Unaudited)
Reorganized Predecessor
Company Company
----------- --------------------------
Seventeen Twenty-Two Thirty-Nine
Weeks Ended Weeks Ended Weeks Ended
April 30, January 1, May 1,
1995 1995 1994
----------- ----------- -----------
Sales $356,281 $426,681 $814,607
Cost of sales 280,662 340,802 647,524
--------- ----------- ----------
Gross profit 75,619 85,879 167,083
Selling, general and
administrative expenses 51,122 68,819 133,846
Depreciation and amortization 8,436 10,234 18,166
Store closing and other costs -- -- 11,016
--------- --------- ----------
Operating income 16,061 6,826 4,055
Interest expense 9,344 13,719 33,757
--------- --------- ----------
Income (loss) before reorganization
items, income taxes, extra-
ordinary item and change in
accounting principle 6,717 (6,893) (29,702)
Reorganization items -- (219) --
--------- --------- ----------
Income (loss) before income taxes,
extraordinary item and change
in accounting principle 6,717 (7,112) (29,702)
Provision for income taxes 3,189 -- --
--------- --------- ----------
Income (loss) before extra-
ordinary item and change
in accounting principle 3,528 (7,112) (29,702)
Extraordinary item - gain on
debt discharge -- 70,166 --
Cumulative effect of change in
accounting principle -
postretirement medical benefits -- (2,000) --
--------- --------- ----------
Net income (loss) $ 3,528 $ 61,054 $ (29,702)
========= ========= ==========
Net income per common share (A)(B) $ 1.14
=========
(A) Based on a weighted average number of shares of common stock of 3,100,000
outstanding.
(B) Net income per common share is not meaningful prior to January 1, 1995
due to the significant change in the capital structure in connection with
the Restructuring.
See accompanying notes to condensed financial statements.
5
KASH N' KARRY FOOD STORES, INC.
STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
Reorganized Predecessor
Company Company
------------ -----------------------
Seventeen Twenty-Two Thirty-Nine
Weeks Ended Weeks Ended Weeks Ended
April 30, January 1, May 1,
1995 1995 1994
----------- ----------- -----------
Net cash flow from operating activities:
Net income (loss) $ 3,528 $61,054 $(29,702)
Adjustments to reconcile net income
(loss) to net cash provided
by operating activities:
Depreciation and amortization,
excluding deferred financing costs 8,436 10,234 18,166
Store closing and other costs -- -- 11,016
Amortization of deferred financing costs 494 1,152 2,190
Provision for income taxes 3,189 -- --
Reorganization items -- 219 --
Change in accounting principle -- 2,000 --
Gain on discharge of debt -- (70,166) --
(Increase) decrease in assets:
Accounts receivable (983) 2,322 3,591
Inventories 3,908 (5,917) 11,366
Prepaid expenses and other assets (403) (194) (418)
Increase (decrease) in liabilities:
Accounts payable 4,192 1,800 (1,515)
Accrued expenses and other
liabilities 3,309 9,083 (8,841)
--------- -------- ---------
Net cash provided (used) by
operating activities 25,670 11,587 5,853
---------- -------- ---------
Cash used by investing activities:
Additions to property and equipment (1,509) (665) (8,322)
Leased/financed asset additions -- -- (4,519)
Proceeds from sale of property and
equipment -- -- 429
---------- -------- ---------
Net cash used by investing
activities (1,509) (665) (12,412)
---------- -------- ---------
See accompanying notes to condensed financial statements.
6
KASH N' KARRY FOOD STORES, INC.
STATEMENTS OF CASH FLOWS
(Continued)
(In Thousands)
(Unaudited)
Reorganized Predecessor
Company Company
------------ -----------------------
Seventeen Twenty-Two Thirty-Nine
Weeks Ended Weeks Ended Weeks Ended
April 30, January 1, May 1,
1995 1995 1994
----------- ----------- -----------
Cash provided (used) by financing activities:
Borrowings under revolving loan facility $ 4,200 $ 15,800 $ 15,700
Borrowings under term loan facility -- 35,000 --
Additions to obligations under
capital leases and notes payable -- -- 7,146
Repayments on revolving loan facility (11,168) (43,700) (2,900)
Repayments on term loan facility (8,750) (17,228) (2,925)
Repayments of other long-term liabilities (1,937) (7,363) (6,076)
Sale of Common Stock -- 10,000 --
Other financing activities (251) (9,294) (980)
--------- --------- ----------
Net cash provided (used) by
financing activities (17,906) (16,785) 9,965
--------- --------- ----------
Net increase (decrease) in cash
and cash equivalents 6,255 (5,863) 3,406
Cash and cash equivalents at beginning
of period 989 6,852 2,145
--------- --------- ----------
Cash and cash equivalents at end of period $ 7,244 $ 989 $ 5,551
========= ========= ==========
See accompanying notes to condensed financial statements.
7
KASH N' KARRY FOOD STORES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(In Thousands)
(Unaudited)
1. On September 3, 1994, the Company began to solicit acceptances of all
impaired parties of a restructuring of the Company which would be implemented
through the consummation of a "prepackaged" plan of reorganization under
Chapter 11 of the United States Bankruptcy Code (the "Restructuring"). As a
result of this solicitation, the voting requirements prescribed by Section
1126 of the Bankruptcy Code were satisfied, and on November 9, 1994 (the
"Petition Date") the Company filed with the Bankruptcy Court a voluntary
petition for reorganization under Chapter 11 of the Bankruptcy Code. On
December 12, 1994, the Bankruptcy Court confirmed the plan of reorganization,
and the Company emerged from bankruptcy on December 29, 1994 (the "Effective
Date"). During the pendency of the bankruptcy case, the Company, with the
Bankruptcy Court's approval, operated its business in the ordinary course,
and paid all pre-petition and post-petition claims of the Company's general
unsecured creditors, trade creditors and employees in full. In connection
with the Restructuring:
(i) Each $1,000 principal amount of the Company's Old Senior Floating
Rate Notes was exchanged for (a) new Senior Floating Rate Notes due February
1, 2003 (the "New Senior Floating Rate Notes") in an original principal
amount equal to $1,000 plus 100% of the accrued interest under the Old Senior
Floating Rate Notes from and including February 3, 1994, through but not
including the Petition Date, or, at such holder's election, (b) new 11.5%
Senior Fixed Rate Notes due February 1, 2003 (the "New Senior Fixed Rate
Notes") in the same original principal amount, or, at such holder's election,
(c) an amount of New Senior Floating Rate Notes and an amount of New Senior
Fixed Rate Notes equal, in the aggregate, to 100% of such claim;
(ii) Each $1,000 principal amount of the Company's Old Senior Fixed
Rate Notes was exchanged for (a) New Senior Floating Rate Notes in an
original principal amount equal to $1,000 plus 100% of the accrued interest
under the Old Senior Fixed Rate Notes from and including February 2, 1994,
through but not including the Petition Date, or, at such holder's election,
(b) New Senior Fixed Rate Notes in the same original principal amount, or, at
such holder's election, (c) an amount of New Senior Floating Rate Notes and
an amount of New Senior Fixed Rate Notes equal, in the aggregate, to 100% of
such claim;
(iii) the Old Subordinated Debentures were exchanged for newly-issued
common stock of the Company representing 85 percent of the common stock
outstanding on the Effective Date;
(iv) Green Equity Investors, L.P. invested $10,000 cash in exchange for
newly-issued common stock of the Company representing 15 percent of the
common stock outstanding on the Effective Date;
(v) the Company entered into a new credit agreement with The CIT
Group/Business Credit, Inc. as Administrative Agent, and the lenders under
its old bank credit agreement; and
8
KASH N' KARRY FOOD STORES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(In Thousands)
(Unaudited)
(vi) all of the existing preferred stock, common stock, and options and
warrants to purchase common stock of the Company was extinguished.
2. The condensed financial statements presented herein have been prepared
in accordance with the instructions to Form 10-Q and do not include all of
the information and note disclosures required by generally accepted
accounting principles. These statements should be read in conjunction with
the fiscal 1994 Form 10-K filed by the Company. The accompanying condensed
financial statements have not been audited by independent accountants in
accordance with generally accepted auditing standards, but in the opinion of
management the condensed financial statements for the period ended May 1,
1994 includes all adjustments, consisting only of normal recurring
adjustments, necessary to summarize fairly the Company's financial position
and results of operations.
The condensed financial statements as of and for the period ended April
30, 1995 reflect the Company's emergence from Chapter 11 and were prepared
according to the principles of fresh start reporting contained in American
Institute of Certified Public Accountants' Statement of Position 90-7
"Financial Reporting by Entities in Reorganization Under the Bankruptcy Code"
("SOP 90-7"). Operations during the period from the Effective Date through
January 1, 1995 had no significant impact on the emergence transactions and
as a result have not been separately identified. As a result of the
implementation of fresh start accounting, the Company's condensed financial
statements as of and for the period ending April 30, 1995 are not comparable
to the Company's condensed financial statements of prior periods. Results
for the periods ended April 30, 1995 or January 1, 1995 are not necessarily
indicative of the results to be attained for the full year.
The total reorganization value assigned to the Company's assets was
estimated based on a ten-year projection of cash flow before debt service
requirements discounted back to present value using a discount rate of 13.3%
(representing the estimated weighted cost of capital), as well as by
analyzing market cash flow multiples and applying a cash flow multiple of six
to the Company's adjusted 12-month trailing cash flows. After extensive
negotiations between independent investment banking firms representing the
Company and an ad hoc committee of bondholders, the reorganization value was
agreed to by the parties and confirmed by the Bankruptcy Court. The excess
of the reorganization value over the value of the identifiable assets is
reported as "Reorganization Value in Excess of Amounts Allocable to
Identifiable Assets" and is being amortized over twenty years. Under the
principles of fresh start accounting, the Company's total assets were
recorded at this assumed reorganization value, with the reorganization value
allocated to identifiable tangible and intangible assets on the basis of
their estimated fair value. In addition, the Company's accumulated deficit
was eliminated.
The effect of the Restructuring and the implementation of fresh start
accounting on the Company's condensed balance sheet as of January 1, 1995 was
as follows:
9
KASH N' KARRY FOOD STORES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(In Thousands)
(Unaudited)
Fresh
Start
Pre-Fresh Balance
Start Balance Adjustments Sheet
Sheet January of Fair Value January
1, 1995 Restructuring Adjustment 1, 1995
(A) (B)
------------- ------------- ---------- --------
Cash and cash equivalents $ 9,166 $ (8,177) $ -- $ 989
Accounts receivable 5,762 -- -- 5,762
Inventories 82,011 -- 5,104 87,115
Prepaid expenses and other
current assets 3,088 -- -- 3,088
--------- --------- --------- --------
Total current assets 100,027 (8,177) 5,104 96,954
Property and equipment, net 162,754 -- (17,775) 144,979
Favorable lease interests, net 11,673 -- 18,280 29,953
Deferred financing costs 17,769 (7,456) (6,088) 4,225
Reorganization value in
excess of amounts alloc-
able to identifiable
assets -- -- 102,519 102,519
Excess of cost over net
assets acquired 95,560 -- (95,560) --
Other assets 4,360 -- (1,498) 2,862
--------- --------- --------- --------
Total assets $392,143 $(15,633) $ 4,982 $381,492
========= ========== ========= ========
Current liabilities, excluding
current portion of long-
term debt $ 82,983 $(12,617) $ 6,779 $ 77,145
Long-term debt, including
current obligations 366,231 (119,486) (3,959) 242,786
Other long-term liabilities 6,226 -- 8,840 15,066
Redeemable preferred stock 4,650 (4,650) -- --
Common stock 28 3 -- 31
Treasury stock (37) 37 -- --
Capital in excess of par value 77,695 (31,231) 46,464
Accumulated deficit (145,633) 152,311 (6,678) --
--------- --------- --------- --------
Total liabilities
and stockholders'
equity $392,143 $(15,633) $ 4,982 $381,492
========= ========== ========= ========
(A) To record the transactions applicable to the Restructuring as
outlined in footnote 1 and eliminate the deficit in accumulated deficit.
(B) To record the adjustments to state assets and liabilities at fair
value, and to record the cumulative effect of $2,000 of adopting SFAS No.
106 as of the Effective Date in accordance with SOP 90-7.
10
KASH N' KARRY FOOD STORES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(In Thousands)
(Unaudited)
3. Inventories consist of merchandise held for resale and are stated at the
lower of cost or market; cost is determined using average cost, which
approximates the first-in, first-out (FIFO) method.
4. The Company had a policy of classifying capital expenditures to be
refinanced within one year as prepaid expenses and other current assets.
These amounts have been classified as property and equipment at April 30,
1995. At July 31, 1994, prepaid expenses and other current assets included
$9,987 of expenditures for construction in progress expected to be financed
within one year.
5. Long-term debt consists of the following:
April 30, July 31,
1995 1994
----------- --------
New term loan and revolving
credit facilities (A) $ 33,782 $ --
Old bank term and revolving
credit facilities (A) -- 59,629
New Senior Floating
Rate Notes (B) 22,953 --
New Senior Fixed Rate
Notes (C) 121,162 --
Old Senior Floating
Rate Notes (B) -- 85,000
Old Senior Fixed
Rate Notes (C) -- 50,000
Subordinated Debentures -- 105,000
Mortgages payable 32,397 34,368
Capital lease obligations and other 15,380 26,124
--------- ---------
Long-term debt including
current portion 225,674 360,121
Less current portion (D) (5,583) (42,740)
--------- ---------
Long-term debt $220,091 $317,381
========= =========
(A) In connection with the Restructuring, the Company entered into a new
term loan and revolving credit agreement (the "New Credit Agreement") on
December 29, 1994. At April 30, 1995, the Company's New Credit Agreement
provides for borrowings of up to $26,250 under a term loan facility (with
quarterly principal repayments of $1,750 and a $14,000 repayment due when the
facility terminates on December 29, 1997) and a $50,000 revolving credit
facility with a $25,000 sublimit for letters of credit. At April 30, 1995,
the Company had $7,532 in borrowings under the working capital line, and had
$12,558 of letters of credit issued against the revolving credit facility.
Amounts outstanding under the
11
KASH N' KARRY FOOD STORES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(In Thousands)
(Unaudited)
term facility bear interest (11.5% at April 30, 1995) equal to the prime rate
(as defined) plus 250 basis points. Amounts outstanding under the revolving
credit facility bear interest (10.0% at April 30, 1995) equal to the prime
rate plus 100 basis points.
(B) The New Senior Floating Rate Notes mature on February 1, 2003, and bear
interest (7.31% at April 30, 1995) payable August 1, 1995 and semiannually
thereafter, at a rate equal to six-month LIBOR (as defined in the New Senior
Floating Rate Note Indenture) plus 200 basis points. The New Senior Floating
Rate Notes are redeemable in whole or in part, at the option of the Company,
on not less than 30 nor more than 60 days' prior notice in amounts of $1,000
or an integral multiple thereof, at 100% of the principal amount and unpaid
interest, if any, to the redemption date. Through August 1, 1995, all
interest on the New Senior Floating Rate Notes may, at the option of the
Company, be paid by issuing in lieu of cash additional New Senior Floating
Rate Notes in an aggregate principal amount equal to the amount of interest
due. The Old Senior Floating Rate Notes bore interest (5.88% at July 31,
1994) payable semiannually, at a rate equal to six-month LIBOR plus 250 basis
points.
(C) The New Senior Fixed Rate Notes mature on February 1, 2003, and bear
interest at 11.5% per annum, payable August 1, 1995 and semiannually
thereafter. The New Senior Fixed Rate Notes are redeemable in whole or in
part, at the option of the Company, on not less than 30 nor more than 60
days' prior notice in amounts of $1,000 or an integral multiple thereof, at
100% of the principal amount and unpaid interest, if any, to the redemption
date. Through February 1, 1996, all interest on the New Senior Fixed Rate
Notes may, at the option of the Company, be paid by issuing in lieu of cash
additional New Senior Fixed Rate Notes in an aggregate principal amount equal
to the amount of interest due. The Old Senior Fixed Rate Notes bore
interest, payable semiannually, at an annual rate of 12.375%.
(D) The Company has prepaid the term loan through May 1, 1996. Therefore,
there is no current portion of the term loan.
6. Reorganization items included in the condensed statements of operations
consist of the following items:
Adjustments to fair
value $ 5,551
Gain on extinguishment
of preferred stock 4,650
Provision for store
closing costs (2,500)
Provision for severance
benefits (3,220)
Provision for other
restructuring activities (3,180)
Professional fees (1,520)
--------
$( 219)
12
KASH N' KARRY FOOD STORES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(In Thousands)
(Unaudited)
7. The Company has a retiree medical plan under which medical coverage is
available to current retirees and those active employees who, on August 1,
1993, had attained age 65 with at least 15 years of service. In accordance
with SOP 90-7, which the Company adopted on the Effective Date of the
Restructuring, the provisions of Financial Accounting Standards Board
Statement 106 "Employers' Accounting for Postretirement Benefits Other Than
Pensions" were also adopted as of that date. The following table sets
forth the projected actuarial present value of unfunded postretirement
benefit obligations for the plan at April 30, 1995:
Accumulated postretirement
benefit obligation:
Retirees $1,908
Fully eligible active
plan participants 85
-------
Accrued postretirement
benefit obligation $1,993
=======
The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 8.0%.
8. The difference between the provision for income taxes as reported and
the amount calculated by applying the statutory federal and state rates to
net income before taxes primarily relates to the tax effect of the
amortization of Reorganization Value in Excess of Amounts Allocable to
Identifiable Assets.
9. Certain items in the condensed statement of cash flows for the
twenty-two weeks ended January 1, 1995 have been reclassified.
10. During the first quarter of fiscal 1994, the Company recorded a
non-recurring charge of $11,016 which reflects expenses associated with a
program of closing twelve under performing stores and expensing costs
associated with unsuccessful financing activities.
13
KASH N' KARRY FOOD STORES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
This analysis should be read in conjunction with the condensed financial
statements and related notes thereto included elsewhere in this document.
The Company follows a 52/53 week fiscal year ending on the Sunday nearest to
July 31. Historical results of operations are given for the thirteen weeks
ended April 30, 1995 (the "1995 Three-Month Period"); the thirteen weeks
ended May 1, 1994 (the "1994 Three-Month Period"); the seventeen weeks ended
April 30, 1995 and the twenty-two weeks ended January 1, 1995, (combined, the
"1995 Nine-Month Period"); and the thirty-nine weeks ended May 1, 1994 (the
"1994 Nine-Month Period"). On November 9, 1994 (the "Petition Date"), the
Company filed with the United States Bankruptcy Court a voluntary petition
for reorganization under Chapter 11 of the Bankruptcy Code; on December 12,
1994, the Bankruptcy Court confirmed the Company's plan of reorganization
(the "Restructuring"); and the Restructuring became effective on December 29,
1994 (the "Effective Date") when the Company emerged from bankruptcy. The
financial statements as of April 30, 1995 and for the period then ended
reflect the Company's emergence from Chapter 11 and were prepared according
to the principles of fresh start reporting contained in American Institute of
Certified Public Accountant's Statement of Position 90-7 "Financial Reporting
by Entities in Reorganization Under the Bankruptcy Code" ("SOP 90-7").
Results of Operations
The discussion below compares the results of operations for the 1995
Three-Month Period with the 1994 Three-Month Period; and the 1995 Nine-Month
Period with the 1994 Nine-Month Period. Except as specifically acknowledged
below, management believes that the impact of the Restructuring and the
implementation of fresh start reporting did not significantly affect the
results of operations for the 1995 Three-Month Period or the 1995 Nine-Month
Period, and that the combined operating results of the individual seventeen
week period and twenty-two week period ended April 30, 1995 and January 1,
1995, respectively, is indicative of the results of operations of the
thirty-nine week period ended April 30, 1995. The following table compares
certain income and expense line items as a percentage of sales:
1995 1994 1995 1994
Three- Three- Nine- Nine-
Month Month Month Month
Period Period Period Period
------ ------ ------ ------
Sales 100.0% 100.0% 100.0% 100.0%
Gross Profit 21.6% 20.8% 20.6% 20.5%
Selling, General and
administrative expenses 14.4% 15.6% 15.3% 16.4%
Depreciation and amortization 2.4% 2.2% 2.4% 2.2%
Operating income 4.8% 3.0% 2.9% 0.5%
Interest expense 2.6% 4.0% 2.9% 4.1%
Pre-tax income (loss) 2.2% (1.0%) 0.0% (3.6%)
Net income (loss) 1.0% (1.0%) (1) (3.6%)(2)
14
KASH N' KARRY FOOD STORES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(1) Net income for the 1995 Nine-Month Period is not meaningful for
comparison purposes due to the gain on debt discharge and other
reorganization items recorded for the twenty-two week period ended
January 1, 1995. Net income, as a percentage of sales, for the seventeen
weeks ended April 30, 1995 (post-Restructuring) was 1.0%.
(2) Net income for the 1994 Nine-Month Period included expenses of
$11,016, or 1.4% of sales, applicable to store closing and other costs.
Sales. Sales for the 1995 Three-Month Period were $269.9 million, or
$9.9 million less than the 1994 Three-Month Period. The decrease was
attributable to a same store sales decrease of 1.85% combined with the net
impact of three store closings and one new store opening during the last
year. Sales for the 1995 Nine-Month Period were $783.0 million, or $31.6
million below the 1994 Nine-Month Period. Same store sales decreased 0.79%
for the 1995 Nine-Month Period. In addition, the Company closed eighteen
stores and opened two new stores in the 1994 fiscal year which had a net
adverse impact on 1995 fiscal year sales.
Gross Profit. The improvement in gross profit, as a percentage of
sales, for the 1995 Three-Month Period and the 1995 Nine-Month Period was
primarily due to improved perishable margins and increased efficiencies in
store-level product preparation and handling costs. Partially offsetting
these improvements was the receipt of substantially less promotional funds
due in part to the credit restrictions placed on the Company by its vendors
during the nine-month period preceding the Company's emergence from
bankruptcy.
Selling, General and Administrative Expenses. The reductions of
selling, general and administrative expenses were due to lower store labor
costs (approximately 0.3% of sales for the Three-Month Period and 0.2% of
sales for the Nine-Month Period), reduced corporate overhead expenses
(approximately 0.3% of sales for both the Three-Month Period and the
Nine-Month Period) and lower advertising expenditures (approximately 0.6% of
sales for the Three-Month Period and 0.5% of sales for the Nine-Month Period)
associated with a comprehensive operational restructuring of the Company
initiated during the year; and the elimination of operating costs associated
with stores that were closed during the prior fiscal year. These
improvements were partially offset by an increase in workers' compensation
insurance reserves.
Depreciation and Amortization. The increase in depreciation and
amortization expenses is primarily attributable to increased amortization of
intangible assets.
Store Closing and Other Costs. During the first quarter of fiscal 1994,
the Company recorded a non-recurring charge of $11.0 million. This charge
included $1.9 million of costs associated with an unsuccessful bond offering,
$4.2 million of favorable lease interests written off in connection with the
closing of twelve underperforming stores, $4.0 million representing an
adjustment to the expected lease liability on closed stores, net of sublease
income, and $.9 million of other store closing and related expenses.
15
KASH N' KARRY FOOD STORES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Interest Expense. Interest expense for the 1994 Three-Month Period and
the 1994 Nine-Month Period was primarily comprised of interest under the Old
Bank Credit Agreement, the Old Senior Floating Rate Notes, the Old Senior
Fixed Rate Notes, the Subordinated Debentures, and various mortgages and
capital leases. For the 1995 Three-Month Period and the 1995 Nine-Month
Period, interest expense was incurred on the Old Senior Floating Rate Notes,
the Old Senior Fixed Rate Notes, and the Subordinated Debentures through, but
not including, the Petition Date; and interest expense was incurred on the
New Senior Floating Rate Notes and the New Senior Fixed Rate Notes from the
Effective Date through April 30, 1995. In accordance with the provisions of
the Restructuring, no interest was due to the holders of the Old Senior
Floating Rate Notes, Old Senior Fixed Rate Notes, or Subordinated Debentures
for the period between the Petition Date and the Effective Date, and
therefore no interest expense was recorded for this period. As provided in
the Restructuring, interest accrued from February 2, 1994, in the case of the
Old Senior Fixed Rate Notes, and from February 3, 1994, in the case of the
Senior Floating Rate Notes, through the Petition Date, was paid by issuing
additional New Senior Floating Rate Notes and New Senior Fixed Rate Notes.
Interest accrued on the Subordinated Debentures from February 1, 1994 through
the Petition Date was converted into shareholders' equity.
Reorganization Costs. In accordance with SOP 90-7, income and expenses
directly related to the reorganization have been segregated and are
separately disclosed. The major components consist of adjustments to fair
value, gain on extinguishment of preferred stock, provision for store closing
costs, provision for severance benefits, provision for other restructuring
activities, and professional fees.
Gain on Debt Discharge. The gain on debt discharge reflects the
conversion of $105.0 million of Subordinated Debentures, plus accrued
interest from February 1, 1994 through the Petition Date, into $39.5 million
of shareholders' equity, resulting in a $70.2 million gain. The gain is
presented net of the write-off of deferred financing costs associated with
the debt discharged.
Financial Condition
Prior to the Petition Date, the Company's Old Bank Credit Agreement
provided for a revolving credit facility with individual sublimits of $30.0
million for working capital loans and $25.0 million for letters of credit,
with a maximum of $50.0 million outstanding under the total facility at any
one time. During the weeks immediately preceding the bankruptcy filing, the
Company, with the approval of its bank lenders, increased its cash position
by fully drawing the remaining availability under its working capital line.
On the Petition Date, the Bankruptcy Court approved the use of cash
collateral and a letter of credit facility of $17.7 million under the Old
Bank Credit Agreement, and additional debtor-in-possession financing provided
by BankAmerica Business Credit, Inc. of $11.2 million, subject to certain
terms and conditions. The Company entered into a new term loan and revolving
credit agreement with The CIT Group/Business Credit Inc. and other lenders to
provide a 3-year $35 million term loan facility and a 3-year $50 million
revolving credit facility which took effect on the Effective Date.
16
KASH N' KARRY FOOD STORES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Beginning August 1, 1994, the Company implemented a short-term business
strategy to improve the Company's financial performance. The focus of this
strategy was to conserve capital, reduce administrative and operating
expenses, and direct management attention toward the operation of existing
stores. During fiscal 1995 the Company has significantly improved its
liquidity as a result of the payment moratorium on interest due on the Old
Senior Fixed Rate Notes, Old Senior Floating Rate Notes, and Subordinated
Debentures; managing working capital; reducing operating expenses by $12.0
million on an annualized basis; and limiting capital expenditures. During
the pendency of its bankruptcy case, the Company operated its business in the
ordinary course, and paid all pre-petition and post-petition claims of the
Company's general unsecured creditors, trade creditors, and employees in
full. The provisions of the Restructuring, which are discussed in footnote
1 to the accompanying condensed financial statements, had an immediate
beneficial impact on the Company's financial condition, primarily as a result
of significantly deleveraging the Company's balance sheet, as indicated
below:
April 30, July 31,
1995 1994
--------- ---------
(Dollar Amounts in Thousands)
Current portion of long-term debt $ 5,583 $ 42,740
Total long-term debt 225,674 360,121
Operating cash flow
(adjusted EBITDA) (1) 50,943 42,623
Total interest expense 27,600 (2) 45,390
Cash interest expense 11,600 (2) 42,440
Capital expenditures 4,729 15,471
Long-term debt/operating cash flow 4.43 8.45
Operating cash flow/total interest expense 1.85 0.94
Operating cash flow/cash interest expense 4.39 1.00
(1) Represents twelve month trailing earnings before net interest
expense (which includes amortization of deferred financing costs),
provision for income taxes, depreciation and amortization, store
closing and other costs, reorganization items, extraordinary items,
and cumulative effect of change in accounting principle. Operating
cash flow (adjusted EBITDA) is presented here as a measure of the
Company's debt service ability and should not be construed as an
alternative to operating income (as determined in accordance with
generally accepted accounting principles) or to cash flows from operating
activities (as determined on the Statements of Cash Flows in the
Company's financial statements).
(2) Interest expense for the trailing twelve-month period is not
meaningful due to the payment moratorium on the old senior notes and
subordinated debentures. Therefore, total interest expense and cash
interest expense as shown here represent annualized proforma amounts
based on reported interest expense for the third quarter of 1995.
17
KASH N' KARRY FOOD STORES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
As a result of its increased liquidity, the Company has made prepayments
totaling $15.8 million on its term loan facility (of which $8.8 million was
paid subsequent to April 30, 1995). As of June 13, 1995, the outstanding
principal balance under the term loan facility was $15.8 million, and the
Company had $13.3 million in borrowings and $12.6 million in letters of
credit outstanding under its revolving credit facility.
The Company is still actively pursuing a sale-leaseback transaction on
its eleven fee-owned store properties, which could provide up to $13 million
of net proceeds to substantially eliminate the term loan. In addition, the
Company expects to exercise its option of paying interest in kind on the New
Floating Rate Notes and the New Fixed Rate Notes through August 1, 1995, and
has the option of paying in kind the next subsequent semiannual interest
payment on the New Senior Fixed Rates Notes, if necessary. The Company
intends to repay the balance of the term loan subject to the closing of a
sale-leaseback transaction as discussed above. However, if a sale-leaseback
transaction is not completed, in order to offset the cash impact of the term
loan principal repayments, the Company may exercise its option to pay in kind
the interest due on the Senior Fixed Rate Notes through February 1, 1996.
Consistent with its short-term business strategy, the Company does not
anticipate opening or acquiring any new stores during the current fiscal
year, but expects that capital expenditures of approximately $6.0 million
will be used to upgrade its existing store facilities, including minor
remodeling projects at 41 stores. The Company's tentative capital
expenditure plans through the end of fiscal 1996 include the completion of
two expansion remodels, eight major remodels, up to 40 minor remodeling
projects and the construction of two new stores.
The Company has entered into an interest rate swap through August 1995
to reduce its exposure to increases in short-term interest rates on the
majority of its floating rate debt. The full exposure of the swap has been
accrued in the condensed Company's condensed financial statements and there
would be no material impact on the accompanying condensed financial
statements as of April 30, 1995 by liquidating this contract.
Based upon the Company's ability to generate working capital through its
operations and its new $50.0 million revolving credit facility, the Company
believes that it has the financial resources necessary to pay its capital
obligations and implement its business plan.
Effects of Inflation
The Company's primary costs, inventory and labor, are affected by a
number of factors that are beyond its control, including availability and
price of merchandise, the competitive climate and general and regional
economic conditions. As is typical of the supermarket industry, the Company
has generally been able to maintain margins by adjusting its retail prices,
but competitive conditions may from time to time render it unable to do so
while maintaining its market share.
18
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
In its Quarterly Report on Form 10-Q for the quarter ended
January 29, 1995, the Company reported that Ronald J. Floto, its
former chief executive officer, filed a proof of claim in the
bankruptcy proceeding styled In re: Kash n' Karry Food Stores,
Inc., Case No. 94-1082 (HSB), pending in the United States District
Court for the District of Delaware. Mr. Floto's claim seeks
benefits allegedly owed to him in connection with his severance
from the Company under certain employee benefit plans (the "Floto
Agreements") and other compensation agreements between Mr. Floto
and the Company. The total principal amount of Mr. Floto's claim
is less than $1.5 million.
On March 9, 1995, the Board of Directors of the Company
appointed a committee to act as Plan Administrator under the Floto
Agreements (the "Plan Administration Committee"). In response to
the Company's objection to the proof of claim, on May 18, 1995, the
bankruptcy judge entered an order holding Mr. Floto's claims in
abeyance pending exhaustion of the claims review procedure set
forth in the Floto Agreements. On June 9, 1995 the Plan
Administration Committee rendered its written determination denying
benefits to Mr. Floto. In accordance with the claims review
procedure, Mr. Floto has the right to seek a review by the Plan
Administration Committee of its decision. After Mr. Floto exhausts
the claims review procedure, Mr. Floto could refer his claim back
to the bankruptcy court for final determination.
Except for the pending proof of claim, there are no material
legal proceedings to which the Company is a party or to which any
of its property is subject. The Company is a party to ordinary and
routine litigation incidental to its business.
Item 5. Other Information.
On June 14, 1995 the Board of Directors of the Company
declared a 50% stock dividend payable on July 17, 1995 to the
holders of record of Common Stock on June 26, 1995 at the rate of
one (1) share of such Common Stock for each two (2) shares of such
Common Stock outstanding on June 26, 1995.
19
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
Exhibit
No. Description
2 First Amended Plan of Reorganization filed by the Company
with the United States Bankruptcy Court of the District
of Delaware on November 9, 1994, as amended by notices of
technical modifications thereto filed on November 9,
1994, and December 12, 1994 (previously filed as Exhibit
2 to the Company's Quarterly Report on Form 10-Q for the
period ended October 30, 1994).
3(i)(a) Restated Certificate of Incorporation filed with the
Delaware Secretary of State on December 29, 1994
(previously filed as Exhibit 3(i) to the Company's
Quarterly Report on Form 10-Q for the period ended
January 29, 1995, which exhibit is hereby incorporated by
reference).
3(i)(b) Certificate of Designations of Series A Junior
Participating Preferred Stock filed with the Secretary of
State of the State of Delaware on April 26, 1995
(previously filed as Exhibit 3(i)(b) to the Company's
Registration Statement on Form S-1, Registration No. 33-
58999, which exhibit is hereby incorporated by
reference).
3(ii)(a) Bylaws adopted October 12, 1988 (previously filed as
Exhibit 3(ii)(a) to the Company's Quarterly Report on
Form 10-Q for the period ended January 29, 1995, which
exhibit is hereby incorporated by reference).
3(ii)(b) First Amendment to Bylaws adopted July 30, 1991
(previously filed as Exhibit 3(ii)(b) to the Company's
Quarterly Report on Form 10-Q for the period ended
January 29, 1995, which exhibit is hereby incorporated by
reference).
3(ii)(c) Second Amendment to Bylaws adopted December 29, 1994
(previously filed as Exhibit 3(ii)(c) to the Company's
Quarterly Report on Form 10-Q for the period ended
January 29, 1995, which exhibit is hereby incorporated by
reference).
3(ii)(d) Third Amendment to Bylaws adopted April 13, 1995 (filed
herewith).
20
Exhibit
No. Description
4.1 Indenture dated as of December 29, 1994, between the
Company and Shawmut Bank Connecticut, N.A., as Trustee,
relating to 11.5% Senior Fixed Rate Notes due 2003
(previously filed as Exhibit 4.1 to the Company's
Quarterly Report on Form 10-Q for the period ended
January 29, 1995, which exhibit is hereby incorporated by
reference).
4.2 Indenture dated as of December 29, 1994, between the
Company and IBJ Schroder Bank & Trust Company, as
Trustee, relating to Senior Floating Rate Notes due 2003
(previously filed as Exhibit 4.2 to the Company's
Quarterly Report on Form 10-Q for the period ended
January 29, 1995, which exhibit is hereby incorporated by
reference).
4.3(a) Rights Agreement dated as of April 13, 1995 between the
Company and Shawmut Bank Connecticut, N.A., as Rights
Agent (previously filed as Exhibit 1 to the Company's
Current Report on Form 8-K dated April 13, 1995, which
exhibit is hereby incorporated by reference).
4.3(b) First Amendment to Rights Agreement dated as of June 13,
1995 (filed herewith).
4.4 Specimen form of Common Stock certificate (previously
filed as Exhibit 4.4 to the Company's Registration
Statement on Form S-1, Registration No. 33-58999, which
exhibit is hereby incorporated by reference).
10.1(a) Services Agreement dated as of March 1, 1995 between the
Company and GSI Outsourcing Corporation (previously filed
as Exhibit 10.5(a) to the Company's Registration
Statement on Form S-1, Registration No. 33-58999, which
exhibit is hereby incorporated by reference).
10.1(b) First Amendment to Services Agreement between the Company
and GSI Outsourcing Corporation (previously filed as
Exhibit 10.5(b) to the Company's Registration Statement
on Form S-1, Registration No. 33-58999, which exhibit is
hereby incorporated by reference).
10.2(a) 1995 Non-Employee Director Stock Option Plan adopted on
March 9, 1995 (previously filed as Exhibit 10.7(a) to the
Company's Registration Statement on Form S-1,
Registration No. 33-58999, which exhibit is hereby
incorporated by reference).
21
Exhibit
No. Description
10.2(b) Form of Non-Qualified Stock Option Agreement entered into
between the Company and certain directors, as optionees,
pursuant to the 1995 Non-Employee Director Stock Option
Plan (previously filed as Exhibit 10.7(b) to the
Company's Registration Statement on Form S-1,
Registration No. 33-58999, which exhibit is hereby
incorporated by reference).
10.3 Non-Qualified Stock Option Agreement dated as of January
17, 1995, between the Company and Green Equity Investors,
L.P. (previously filed as Exhibit 10.8 to the Company's
Registration Statement on Form S-1, Registration No. 33-
58999, which exhibit is hereby incorporated by
reference).
10.4 Employment Agreement dated as of March 6, 1995, between
the Company and Gary M. Shell (previously filed as
Exhibit 10.11 to the Company's Registration Statement on
Form S-1, Registration No. 33-58999, which exhibit is
hereby incorporated by reference).
10.5 Employment Agreement dated as of March 16, 1995, between
the Company and Cliff Smith (previously filed as Exhibit
10.12 to the Company's Registration Statement on Form S-
1, Registration No. 33-58999, which exhibit is hereby
incorporated by reference).
10.6(a) 1995 Key Employee Stock Option Plan (previously filed as
Exhibit 10.16(a) to the Company's Registration Statement
on Form S-1, Registration No. 33-58999, which exhibit is
hereby incorporated by reference).
10.6(b) Non-Qualified Stock Option Agreement dated March 9, 1995
between the Company and Ronald E. Johnson (previously
filed as Exhibit 10.16(b) to the Company's Registration
Statement on Form S-1, Registration No. 33-58999, which
exhibit is hereby incorporated by reference).
10.6(c) Form of Non-Qualified Stock Option Agreement entered into
between the Company and certain key employees, as
optionees, pursuant to the 1995 Key Employee Stock Option
Plan (previously filed as Exhibit 10.16(c) to the
Company's Registration Statement on Form S-1,
Registration No. 33-58999, which exhibit is hereby
incorporated by reference).
11 Statement re computation of per share earnings (filed herewith).
27 Financial Data Schedule (filed herewith).
22
(b) Reports on Form 8-K:
On a Form 8-K dated April 13, 1995, the Company reported that
it had adopted a preferred stock purchase rights plan, and on a
Form 8-K dated February 17, 1995, the Company reported on its
dismissal of KPMG Peat Marwick LLP, and its engagement of Coopers
& Lybrand, as its principal accountants.
23
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.
KASH N' KARRY FOOD STORES, INC.
Date: June 14, 1995 By: /s/ Raymond P. Springer
---------------------------
Raymond P. Springer
Senior Vice President,
Administration
Date: June 14, 1995 By: /s/ Richard D. Coleman
---------------------------
Richard D. Coleman
Vice President, Controller
24
EXHIBIT INDEX
Sequentially
Exhibit Numbered
No. Description of Exhibit Page
2 First Amended Plan of Reorganization filed by
the Company with the United States Bankruptcy
Court of the District of Delaware on November
9, 1994, as amended by notices of technical
modifications thereto filed on November 9,
1994, and December 12, 1994 (previously filed
as Exhibit 2 to the Company's Quarterly Report
on Form 10-Q for the period ended October 30,
1994).
3(i)(a) Restated Certificate of Incorporation filed
with the Delaware Secretary of State on
December 29, 1994 (previously filed as Exhibit
3(i) to the Company's Quarterly Report on Form
10-Q for the period ended January 29, 1995,
which exhibit is hereby incorporated by
reference).
3(i)(b) Certificate of Designations of Series A Junior
Participating Preferred Stock filed with the
Secretary of State of the State of Delaware on
April 26, 1995 (previously filed as Exhibit
3(i)(b) to the Company's Registration
Statement on Form S-1, Registration No. 33-
58999, which exhibit is hereby incorporated by
reference).
3(ii)(a) Bylaws adopted October 12, 1988 (previously
filed as Exhibit 3(ii)(a) to the Company's
Quarterly Report on Form 10-Q for the period
ended January 29, 1995, which exhibit is
hereby incorporated by reference).
3(ii)(b) First Amendment to Bylaws adopted July 30,
1991 (previously filed as Exhibit 3(ii)(b) to
the Company's Quarterly Report on Form 10-Q
for the period ended January 29, 1995, which
exhibit is hereby incorporated by reference).
3(ii)(c) Second Amendment to Bylaws adopted December
29, 1994 (previously filed as Exhibit 3(ii)(c)
to the Company's Quarterly Report on Form 10-Q
for the period ended January 29, 1995, which
exhibit is hereby incorporated by reference).
25
Sequentially
Exhibit Numbered
No. Description of Exhibit Page
3(ii)(d) Third Amendment to Bylaws adopted April 13, 29
1995 (filed herewith).
4.1 Indenture dated as of December 29, 1994,
between the Company and Shawmut Bank
Connecticut, N.A., as Trustee, relating to
11.5% Senior Fixed Rate Notes due 2003
(previously filed as Exhibit 4.1 to the
Company's Quarterly Report on Form 10-Q for
the period ended January 29, 1995, which
exhibit is hereby incorporated by reference).
4.2 Indenture dated as of December 29, 1994,
between the Company and IBJ Schroder Bank &
Trust Company, as Trustee, relating to Senior
Floating Rate Notes due 2003 (previously filed
as Exhibit 4.2 to the Company's Quarterly
Report on Form 10-Q for the period ended
January 29, 1995, which exhibit is hereby
incorporated by reference).
4.3(a) Rights Agreement dated as of April 13, 1995
between the Company and Shawmut Bank
Connecticut, N.A., as Rights Agent (previously
filed as Exhibit 1 to the Company's Current
Report on Form 8-K dated April 13, 1995, which
exhibit is hereby incorporated by reference).
4.3(b) First Amendment to Rights Agreement dated as 30
of June 13, 1995 (filed herewith).
4.4 Specimen form of Common Stock certificate
(previously filed as Exhibit 4.4 to the
Company's Registration Statement on Form S-1,
Registration No. 33-58999, which exhibit is
hereby incorporated by reference).
10.1(a) Services Agreement dated as of March 1, 1995
between the Company and GSI Outsourcing
Corporation (previously filed as Exhibit
10.5(a) to the Company's Registration
Statement on Form S-1, Registration No. 33-
58999, which exhibit is hereby incorporated by
reference).
26
Sequentially
Exhibit Numbered
No. Description of Exhibit Page
10.1(b) First Amendment to Services Agreement between
the Company and GSI Outsourcing Corporation
(previously filed as Exhibit 10.5(b) to the
Company's Registration Statement on Form S-1,
Registration No. 33-58999, which exhibit is
hereby incorporated by reference).
10.2(a) 1995 Non-Employee Director Stock Option Plan
adopted on March 9, 1995 (previously filed as
Exhibit 10.7(a) to the Company's Registration
Statement on Form S-1, Registration No. 33-
58999, which exhibit is hereby incorporated by
reference).
10.2(b) Form of Non-Qualified Stock Option Agreement
entered into between the Company and certain
directors, as optionees, pursuant to the 1995
Non-Employee Director Stock Option Plan
(previously filed as Exhibit 10.7(b) to the
Company's Registration Statement on Form S-1,
Registration No. 33-58999, which exhibit is
hereby incorporated by reference).
10.3 Non-Qualified Stock Option Agreement dated as
of January 17, 1995, between the Company and
Green Equity Investors, L.P. (previously filed
as Exhibit 10.8 to the Company's Registration
Statement on Form S-1, Registration No. 33-
58999, which exhibit is hereby incorporated by
reference).
10.4 Employment Agreement dated as of March 6,
1995, between the Company and Gary M. Shell
(previously filed as Exhibit 10.11 to the
Company's Registration Statement on Form S-1,
Registration No. 33-58999, which exhibit is
hereby incorporated by reference).
10.5 Employment Agreement dated as of March 16,
1995, between the Company and Cliff Smith
(previously filed as Exhibit 10.12 to the
Company's Registration Statement on Form S-1,
Registration No. 33-58999, which exhibit is
hereby incorporated by reference).
27
Sequentially
Exhibit Numbered
No. Description of Exhibit Page
10.6(a) 1995 Key Employee Stock Option Plan
(previously filed as Exhibit 10.16(a) to the
Company's Registration Statement on Form S-1,
Registration No. 33-58999, which exhibit is
hereby incorporated by reference).
10.6(b) Non-Qualified Stock Option Agreement dated
March 9, 1995 between the Company and Ronald
E. Johnson (previously filed as Exhibit
10.16(b) to the Company's Registration
Statement on Form S-1, Registration No. 33-
58999, which exhibit is hereby incorporated by
reference).
10.6(c) Form of Non-Qualified Stock Option Agreement
entered into between the Company and certain
key employees, as optionees, pursuant to the
1995 Key Employee Stock Option Plan
(previously filed as Exhibit 10.16(c) to the
Company's Registration Statement on Form S-1,
Registration No. 33-58999, which exhibit is
hereby incorporated by reference).
11 Statement re computation of per share earnings 33
(filed herewith).
27 Financial Data Schedule (filed herewith). 34
28