FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Pursuant To Section 13 or 15 (d)of
The Securities and Exchange Act of 1934
QUARTER ENDED January 4, 1997 COMMISSION FILE NO. 33-80833
JITNEY-JUNGLE STORES OF AMERICA, INC.
(Exact name of registrant as specified in its charter)
STATE OF INCORPORATION I.R.S. EMPLOYER I.D. NO.
Mississippi 64-0280539
ADDRESS OF PRINCIPAL EXECUTIVE OFFICE
1770 Ellis Avenue, Suite 200, Jackson, MS 39204
REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE
601-965-8600
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, and (2) has been subject to such filing
requirements for the past 90 days. YES (X) NO
The number of shares of Registrant's Common Stock, par value one cent ($.01) per
share, outstanding at January 4, 1997, was 425,000.
JITNEY-JUNGLE STORES OF AMERICA, INC.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION Page
----
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets
January 4, 1997 (Unaudited) and April 27, 1996 2
Condensed Consolidated Statements of Operations
Thirty-six (36) and Twelve (12) Week Periods Ended
January 4, 1997 (Unaudited) and
Thirty-six (36) and Twelve (12) Week Periods Ended
January 6, 1996 (Unaudited) 3
Condensed Consolidated Statements of Changes in
Stockholders' Deficit
Thirty-six (36) Week Periods Ended
January 4, 1997 (Unaudited) and
January 6, 1996 (Unaudited) 4
Condensed Consolidated Statements of Cash Flows
Thirty-six (36) Week Periods Ended January 4, 1997
(Unaudited) and January 6, 1996 (Unaudited) 5
Notes to Condensed Consolidated Financial Statements
January 4, 1997 (Unaudited) and
January 6, 1996 (Unaudited) 6-7
Item 2.Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Change in Securities 11
Item 3. Defaults Upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
PART I. ITEM 1. FINANCIAL STATEMENTS
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
January 4, April 27,
1997 1996
(Unaudited)
----------- ----------
ASSETS
Current assets:
Cash and cash equivalents $ 7,642 $ 5,676
Short-term investments 337
Receivables 7,638 4,892
Inventories at LIFO 80,623 77,445
Prepaid expenses and other 4,777 6,783
Deferred income taxes 376 376
--------- ---------
Total current assets 101,056 95,509
--------- ---------
PROPERTY AND EQUIPMENT - net 171,642 173,787
--------- ---------
OTHER ASSETS - net 8,858 9,707
--------- ---------
TOTAL ASSETS $ 281,556 $ 279,003
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 47,014 $ 44,118
Accrued expenses 26,420 19,055
Current portion of capitalized leases 4,260 4,259
--------- ---------
Total current liabilities 77,694 67,432
--------- ---------
Noncurrent liabilities:
Long-term debt 233,590 239,059
Obligations under capitalized leases 56,746 59,143
Deferred income taxes 7,986 8,196
--------- ---------
Total noncurrent liabilities 298,322 306,398
--------- ---------
Commitments and contingencies
Redeemable Preferred stock (aggregate liquidation
preference value of $54,929) 52,718 49,988
--------- ---------
Stockholders' deficit:
Class C Preferred stock - Series 1 7,604 7,604
Common stock ($.01 par value, authorized 5,000,000
shares, issued and outstanding 425,000 shares) 4 4
Additional paid-in capital (302,312) (302,326)
Retained earnings 147,526 149,903
--------- ---------
Total stockholders' deficit (147,178) (144,815)
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 281,556 $ 279,003
========= =========
<FN>
See notes to condensed consolidated financial statements.
</FN>
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JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands Except Per Share Amounts)
Thirty-six Weeks Ended Twelve Weeks Ended
------------------------ ------------------------
January 4, January 6, January 4, January 6,
1997 1996 1997 1996
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- ----------- ----------- -----------
NET SALES $ 832,905 $ 822,513 $ 279,905 $ 278,162
---------- ---------- ---------- ----------
COSTS AND EXPENSES:
Cost of goods sold 637,296 629,474 214,915 211,067
Direct store, warehouse
and administrative expenses 169,839 169,067 56,767 57,204
Interest expense - net 25,207 7,057 8,478 2,368
---------- ---------- ---------- ----------
Total costs and expenses 832,342 805,598 280,160 270,639
---------- ---------- ---------- ----------
Earnings (loss) before taxes
on income 563 16,915 (255) 7,523
Income tax expense (benefit) 210 6,341 (95) 2,821
---------- ---------- ----------- ----------
NET EARNINGS (LOSS) $ 353 $ 10,574 $ (160) $ 4,702
========== ========== ========== ==========
EARNINGS (LOSS) PER COMMON AND
COMMON EQUIVALENT SHARE $ (11.08) $ 519.15 $ (4.41) $ 230.85
========== ========== ========== ==========
<FN>
See notes to condensed consolidated financial statements.
</FN>
-3-
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
FOR THE THIRTY-SIX (36) WEEK PERIODS ENDED JANUARY 4, 1997 (Unaudited)
AND JANUARY 6, 1996 (Unaudited)
(Dollars in thousands)
Class C
Redeemable Preferred Stock,
Preferred Stock Series 1 Common Stock Additional
No. of No. of No. of Paid-In Retained
Shares Amount Shares Amount Shares Amount Capital Earnings
------ ------ ------ ------ ------ ------ --------- --------
Balance Apr 29, 1995 20,368 $1,061 $ 1,807 $137,348
Net earnings 10,574
Dividends paid (1,878)
------- ------ --------- --------
Balance Jan 6, 1996 20,368 $1,061 $ 1,807 $146,044
======= ====== ========= ========
Balance Apr 27, 1996 523,418 $49,988 76,042 $7,604 425,000 $ 4 $(302,326) $149,903
Net earnings 353
Accretion of
discount on
Class A Preferred
stock 143 (143)
Cumulation of
dividends on
Class A Preferred
stock 2,587 (2,587)
Merger costs 14
------- ------- ------ ------ ------- ------ --------- --------
Balance Jan 4, 1997 523,418 $52,718 76,042 $7,604 425,000 $ 4 $(302,312) $147,526
======= ======= ====== ====== ======= ====== ========= ========
<FN>
See notes to condensed consolidated financial statements.
</FN>
-4-
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Thirty-six Weeks Ended
-------------------------
January 4, January 6,
1997 1996
(Unaudited) (Unaudited)
OPERATING ACTIVITIES: ----------- -----------
Net earnings $ 353 $ 10,574
Adjustment to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 21,531 18,217
Gain (loss) on disposition of property and other assets (87) 479
Deferred income tax expense 970
Changes in assets and liabilities (net):
Notes and accounts receivable (2,746) (3,259)
Store and warehouse inventories (3,178) 4,164
Prepaid expenses 2,006 1,852
Accounts payable 2,896 (3,217)
Accrued expenses 7,390 2,692
--------- ---------
Net cash provided by operating activities 28,165 32,472
--------- ---------
INVESTING ACTIVITIES:
Capital expenditures (19,836) (17,504)
Disposal of property and other assets 1,151 1,268
Purchases of short-term investments (23,000)
Maturities of short-term investments 337 27,300
--------- ---------
Net cash used in investing activities (18,348) (11,936)
--------- ---------
FINANCING ACTIVITIES:
Payments on long-term debt - net (5,469) (3,486)
Merger costs 14
Payments on capitalized lease obligations (2,396) (3,526)
Dividends paid (1,878)
--------- ---------
Net cash used in financing activities (7,851) (8,890)
--------- ---------
INCREASE IN CASH AND CASH EQUIVALENTS 1,966 11,646
CASH AND CASH EQUIVALENTS - BEGINNING 5,676 20,159
--------- ---------
CASH AND CASH EQUIVALENTS - ENDING $ 7,642 $ 31,805
========= =========
<FN>
See notes to condensed consolidated financial statements.
</FN>
-5-
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 4, 1997 (Unaudited) AND JANUARY 6, 1996 (Unaudited)
(Dollars in thousands)
1. BASIS OF PRESENTATION
The unaudited condensed consolidated financial statements include those of
Jitney-Jungle Stores of America, Inc. and its wholly-owned subsidiaries,
Southern Jitney Jungle Company, Interstate Jitney-Jungle Stores, Inc.,
McCarty-Holman Co., Inc. and subsidiary, and Jitney-Jungle Bakery, Inc. All
material intercompany profits, transactions and balances have been
eliminated.
These interim financial statements have been prepared on the basis of
accounting principles used in the annual financial statements ended April
27, 1996. In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments (all of which were
of a normal recurring nature) necessary for a fair statement of consolidated
financial position and results of operations of the Company for the interim
periods. The results of operations of the Company for the thirty-six weeks
ended January 4, 1997, are not necessarily indicative of the results which
may be expected for the entire year.
2. MERGER
On March 5, 1996, JJ Acquisitions Corp. ("JJAC") merged with and into the
Company with the Company continuing as the surviving corporation (the
"Merger"). JJAC was a wholly-owned subsidiary of Bruckmann, Rosser, Sherrill
& Co., L. P. (the "Fund"). Upon consummation of the Merger, the Fund and
related investors received 83.82% of the Company's Common Stock and 11.76%
was retained by the shareholders at the time of the Merger. The Merger was
accounted for as a recapitalization which resulted in a charge to equity of
$312,541 to reflect the redemption of Common Stock of the Company
outstanding immediately prior to the Merger and related merger costs,
including a closing fee of $4,000 paid to the Fund Manager, an affiliate of
the Fund's sole General Partner.
-6-
3. LONG-TERM DEBT
Long-term debt consisted of the following:
January 4, April 27,
1997 1996
--------- ---------
Senior notes @ 12%, maturing in 2006 ............... $ 200,000 $ 200,000
Revolving credit loans ............................. 33,590 39,059
--------- ---------
Long-term debt ..................................... $ 233,590 $ 239,059
========= =========
The Company has available a Credit Facility of $98,750 (the original total
commitment of $100,000 reduced by $1,250 on December 31, 1996 as per the
terms of the revolving credit agreement) under which letters of credit
aggregating $10,481 and borrowings of $33,590 were outstanding at January 4,
1997.
4. EARNINGS (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE
Earnings (loss) per common and common equivalent share is based on net
income (loss) after preferred stock dividend requirements and the weighted
average number of shares outstanding during each interim period. Cumulative
dividends not declared or paid on preferred shares amounted to $5,060 for
the thirty-six weeks ended January 4, 1997. The number of shares used in
computing the earnings per share was 425,000 for the thirty-six weeks and
the twelve weeks ended January 4, 1997 and 20,368 for the thirty-six weeks
and the twelve weeks ended January 6, 1996. Incremental shares attributed to
outstanding warrants were not included in the computation as their effect on
earnings (loss) per share would be antidilutive.
5. COMMITMENTS AND CONTINGENCIES
The Company is a party to certain litigation incurred in the normal course
of business. In the opinion of management, the ultimate liability, if any,
which may result from this litigation will not have a material adverse
effect on the Company's financial position or results of operations.
In connection with the Merger, the Company entered into an agreement whereby
the Fund Manager is entitled to receive $250 per year from the Company as a
management fee for the performance of strategic and financial planning
services. The amount of the annual management fee may be increased by up to
an additional $750 per year based upon certain performance criteria.
-7-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands)
The following is management's discussion and analysis of significant factors
affecting the Company's earnings during the periods included in the accompanying
condensed consolidated statements of operations.
A table showing the percentage of net sales represented by certain items in the
Company's condensed consolidated statements of operations is as follows:
Thirty-six Weeks Ended Twelve Weeks Ended
January 4, January 6, January 4, January 6,
1997 1996 1997 1996
--------- --------- --------- ---------
Net sales ........................... 100.0% 100.0% 100.0% 100.0%
Gross profit ........................ 23.5 23.5 23.2 24.1
Direct store, warehouse and
administrative expenses ............ 20.4 20.6 20.3 20.6
Operating income .................... 3.1 2.9 2.9 3.6
Interest expense, net ............... 3.0 0.9 3.0 0.9
Earnings (loss) before income taxes . 0.1 2.1 (0.1) 2.7
Provisions for income taxes ......... 0.8 1.0
Net earnings (loss) ................. 0.1 1.3 (0.1) 1.7
EBITDA .............................. 5.7 5.1 5.5 5.5
A summary of the period to period changes in certain items included in the
condensed consolidated statements of operations for the thirty-six week periods
and twelve week periods ended January 4, 1997 and January 6, 1996 is as follows:
Period-to-Period Changes
Thirty-six Weeks Ended Twelve Weeks Ended
January 4, 1997 January 4, 1997
$ % $ %
-------- ------- ------- -------
Net sales ........................... $ 10,392 1.26% $ 1,743 0.63%
Gross profit ........................ 2,570 1.33 (2,105) (3.14)
Direct store, warehouse and
administrative expenses ........... 772 0.46 (437) (0.76)
Operating income .................... 1,798 7.50 (1,668) (16.86)
Interest expense, net ............... 18,150 n/m 6,110 n/m
Earnings (loss) before income taxes . (16,352) n/m (7,778) n/m
Provision for income taxes .......... (6,131) n/m (2,916) n/m
Net earnings (loss) ................. (10,221) n/m (4,862) n/m
EBITDA .............................. 5,369 12.87 210 1.37
<FN>
(n/m = not meaningful comparison)
</FN>
-8-
RESULTS OF OPERATIONS
NET SALES
Net sales increased $1,743 or .63% in the twelve week period and $10,392 or
1.26% in the thirty-six week period ended January 4, 1997 as compared to the
corresponding periods ended January 6, 1996. The net sales increase was
primarily attributable to the opening of new grocery stores and gasoline
stations (three supermarkets were opened and three were closed and 10 gasoline
stations were opened and one closed since January 6, 1996). Same store sales
decreased approximately 1.4% for the twelve week period and decreased
approximately .7% for the thirty-six week period ended January 4, 1997. The
Company's store count at January 4, 1997 was 105 supermarkets (27 discount
stores and 78 conventional stores) and 51 gasoline stations as compared to 105
supermarkets (32 discount stores and 73 conventional stores) and 42 gasoline
stations at January 6, 1996.
The Company is focusing on a new frequent shopper program which was launched
subsequent to the end of the third quarter. While the Company believes that this
program will bring about increased sales and improved gross margins, there can
be no assurances of these results.
GROSS PROFIT
Gross profit as a percentage of net sales was 23.2% for the third quarter ended
January 4, 1997 as compared to 24.1% for the same quarter of the preceding year.
The decrease in gross profit was primarily due to increased promotional
activities and a LIFO credit of $757 or .3% of sales in the prior year third
quarter. The gross profit percentage was even at 23.5% of net sales for the
thirty-six week period ended January 4, 1997 and for the corresponding period
ended January 6, 1996. The current year LIFO provision was a credit of $200 at
January 4, 1997 compared to a credit of $457 at January 6, 1996.
DIRECT STORE, WAREHOUSE AND ADMINISTRATIVE EXPENSES
Direct store, warehouse and administrative expenses were $56,767, or 20.3% of
net sales and $57,204, or 20.6% of net sales for the twelve week period and were
$169,839 or 20.4% of net sales and $169,067 or 20.6% of net sales for the
thirty-six week period ended January 4, 1997 and January 6, 1996, respectively.
The Company's continued implementation of cost reductions and improvements in
many areas including reductions in advertising expense and store supplies
expense and improvements in warehouse backhaul income has helped to control
direct store, warehouse and administrative expenses as a percentage of sales.
EBITDA
EBITDA (net income before interest income, interest expense, income taxes,
depreciation and amortization and LIFO charges/credits) was $15,511, or 5.5% of
net sales in the third quarter of fiscal 1997 as compared to $15,301 or 5.5% of
net sales in the third quarter of fiscal 1996. EBITDA was $47,101 or 5.7% of net
-9-
sales and $41,732 or 5.1% of net sales for the thirty-six week period ended
January 4, 1997 and January 6, 1996, respectively. EBITDA as presented is
consistent with the definition used for covenant purposes contained in the
Indenture. EBITDA is a widely accepted financial indicator of a company's
ability to service debt. However, EBITDA should not be construed as an
alternative to operating income, net income or cash flows from operating
activities (as determined in accordance with generally accepted accounting
principles) and should not be construed as an indication of the Company's
operating performance or as a measure of liquidity.
NET INTEREST EXPENSE
Interest expense was $8,478 in the third quarter of fiscal 1997 as compared to
$2,368 in the third quarter of fiscal 1996 and was $25,207 and $7,057 for the
thirty-six week period ended January 4, 1997 and January 6, 1996, respectively.
This increase in interest expense was due to the Company's long-term debt
increasing from $34,740 at April 29, 1995 to $233,590 at January 4, 1997 as a
result of the Merger and the decrease in interest income which was approximately
$81 and $2,224 for the thirty-six week period ended January 4, 1997 and January
6, 1996, respectively.
INCOME TAX EXPENSE (BENEFIT)
Income taxes were ($95) with an effective tax rate of 37.3% for the third
quarter of fiscal 1997 and $2,821 with an effective tax rate of 37.5% for the
third quarter of fiscal 1996. Income taxes were $210 with an effective tax rate
of 37.3% and $6,341 with an effective tax rate of 37.5% for the thirty-six week
period ended January 4, 1997 and January 6, 1996, respectively. The decrease in
income taxes was principally due to lower pretax earnings.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company has funded its working capital requirements, capital
expenditures and other needs principally from operating cash flows. Due to the
Merger, however, the Company has become highly leveraged and has certain
restrictions on its operations. The Company's principal sources of liquidity are
expected to be cash flow from operations and borrowings under the $98,750 Credit
Facility (under which letters of credit aggregating $10,481 and borrowings of
$33,590 were outstanding at January 4, 1997).
Cash provided by operating activities during the thirty-six week period ended
January 4, 1997 was $28,165 compared to $32,472 for the thirty-six week period
ended January 6, 1996. The largest component of the change in cash provided by
operating activities was the decrease in net income due primarily to the
increase in cash interest expense this year as a result of additional borrowing
activities discussed above. In addition, inventory increased $3,178 this year as
compared to a decrease of $4,164 last year. The Company also received $5,250 in
May, 1996 as consideration for entering into a five year supply agreement with
the purchaser of certain bakery assets from the Company. Additionally, accrued
expenses increased $4,698 primarily due to an increase in accrued interest as a
result of additional borrowing activities discussed above.
Net cash used in investing activities was $18,348 and $11,936 for the thirty-six
week period ended January 4, 1997 and January 6, 1996, respectively. Cash was
-10-
primarily used for capital expenditures. Capital expenditures were $19,836 and
$17,504 for the thirty-six week period ended January 4, 1997 and January 6,
1996, respectively.
Net cash used in financing activities was $7,851 and $8,890 for the thirty-six
week period ended January 4, 1997 and January 6, 1996, respectively. The
principal use of funds in financing activities for the thirty-six week period
ended January 4, 1997 was the payment of principal on long-term debt (including
the Credit Facility) and capital lease obligations.
The Company believes that capital expenditures for the remainder of fiscal 1997
will be financed through cash flows from operations and borrowings under its
Credit Facility. Capital expenditures for the remainder of fiscal 1997 are
expected to be approximately $5,000 which will include expenditures primarily
for store remodels, new gasoline stations and for the completion of the
Company's MIS upgrade. Capital expenditure plans are continuously evaluated and
modified from time to time depending on cash availability and other economic
factors.
PART II. OTHER INFORMATION
(Dollars in thousands)
ITEM 1. LEGAL PROCEEDINGS
The Company is a party to certain litigation incurred in the normal course of
business. In the opinion of management, the ultimate liability, if any, which
may result from this litigation will not have a material adverse effect on the
Company's financial position or results of operations.
ITEM 2. CHANGE IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its annual meeting of shareholders on October 25, 1996. At the
meeting, the number of directors was set at eleven. The shareholders also
elected W. H. Holman, Jr., Roger P. Friou, Bruce C. Bruckmann, Harold O. Rosser,
II, Stephen C. Sherrill, Michael E. Julian, John M. Moriarty, Jr., Peter T.
Grauer, Robert R. Onstead, Ronald E. Johnson, and Bernard E. Ebbers to serve as
directors until the date of the next annual shareholders meeting. Both the
resolutions were approved by a vote of 424,150 shares "For", none "Against" and
850 shares "Absent".
-11-
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No.
-----------
* 27.1 Financial Data Schedule
* Filed herewith.
(b) Reports on Form 8-K
None.
-12-
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.
JITNEY-JUNGLE STORES OF AMERICA, INC.
(Registrant)
/s/ David R. Black
-----------------------
David R. Black
Senior Vice President - Finance,
Chief Financial Officer
Dated: February 10, 1997