-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, A+eSOEJFzr1vlpBu5OxO3naiJBU2eNnODm1ueXOf1/kFmX0zmcHNbP2iGwG4GIka 59OJ486vJlsT2rtN15Jzgw== 0000948688-98-000002.txt : 19980403 0000948688-98-000002.hdr.sgml : 19980403 ACCESSION NUMBER: 0000948688-98-000002 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19980103 FILED AS OF DATE: 19980402 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: JITNEY JUNGLE STORES OF AMERICA INC /MI/ CENTRAL INDEX KEY: 0001005408 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-GROCERY STORES [5411] IRS NUMBER: 640280539 STATE OF INCORPORATION: MI FISCAL YEAR END: 0103 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 033-80833 FILM NUMBER: 98586525 BUSINESS ADDRESS: STREET 1: 3800 I 55 NORTH STREET 2: STE 200 CITY: JACKSON STATE: MS ZIP: 39211 BUSINESS PHONE: 6019658625 MAIL ADDRESS: STREET 1: JITNEY JUNGLE STORES OF AMERICA INC STREET 2: 3800 I 55 NORTH CITY: JACKSON STATE: MS ZIP: 39211 FORMER COMPANY: FORMER CONFORMED NAME: JJ ACQUISITIONS CORP DATE OF NAME CHANGE: 19951227 10-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from May 4, 1997 to January 3, 1998 Commission file number 33-80833 JITNEY-JUNGLE STORES OF AMERICA, INC. (Exact name of registrant as specified in its charter) Mississippi 64-0280539 (State or other jurisdiction (I.R.S. Employer Identification Number) of incorporation or organization) 1770 Ellis Avenue, Suite 200, Jackson, MS 39204 (Address of principal executive offices) (Zip Code) (601) 965-8600 (Registrant's telephone number, including area code) SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE 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 Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this form 10-K. (X ) The Company is closely-held and is not actively traded; therefore, the aggregate market value of voting stock held by nonaffiliates is not applicable. The number of shares of registrant's Common Stock, par value one cent ($.01) per share, outstanding at January 3, 1998, was 425,000. CAUTIONARY NOTICE This Annual Report of Jitney-Jungle Stores of America, Inc. on Form 10-K contains forward-looking statements in which the Company's management shares its knowledge and judgment about factors that it believes may materially affect Company performance in the future. Terms expressing future expectations, including expectations concerning future sales, revenues and earnings, and like expressions typically identify such statements. All forward-looking statements, although made in good faith, are subject to the uncertainties inherent in predicting the future. They are necessarily speculative, and factors such as unusual distribution problems, breakdown of quality control, competitive pressures, customer dissatisfaction, and general deterioration in economic conditions may cause results to differ materially from any that are projected. Forward-looking statements speak only as of the date they are made, and readers are warned that the Company undertakes no obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur. Readers are urged to carefully review and consider disclosures made by the Company in this and other reports that discuss factors germane to the Company's business. See particularly the Company's reports on Forms 10-K, 10-Q and 8-K filed with the Securities and Exchange Commission. JITNEY-JUNGLE STORES OF AMERICA, INC. TABLE OF CONTENTS ITEM PAGE PART I 1. Business..................................................... 3 2. Properties................................................... 8 3. Legal Proceeding............................................. 9 4. Submission of Matters to a Vote of Security Holders.......... 10 PART II 5. Market for the Registrant's Common Equity and Related Stockholder Matters.......................... 10 6. Selected Financial Data...................................... 11 7. Management's Discussion and Analysis of Financial Condition and Results of Operations............................ 12 8. Financial Statements and Supplementary Data.................. 21 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure............................. 44 PART III 10. Directors and Executive Officers of the Registrant........... 44 11. Executive Compensation....................................... 48 12. Security Ownership of Certain Beneficial Owners and Management.......................................... 52 13. Certain Relationships and Related Transactions............... 54 PART IV 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K................................................. 56
Item 1. Business General Jitney-Jungle Stores of America, Inc. and subsidiaries (the "Company") is a leading operator of supermarkets in the Southeast. As of January 3, 1998 the Company operated 217 stores located throughout Mississippi, Alabama and Louisiana and in selected markets in Tennessee, Arkansas and Florida. The Company is the largest supermarket operator in Mississippi, with 89 stores. On July 8, 1997, the Company entered into a definitive merger agreement with Delchamps, Inc. ("Delchamps"), an Alabama corporation. On September 12, 1997, Delta Acquisition Corporation ("DAC") a wholly owned subsidiary of the Company, completed an all cash tender offer for shares of Delchamps and accepted for payment approximately 75% of such shares. On November 4, 1997, DAC was merged with and into Delchamps. Delchamps was the surviving corporation and became a wholly- owned subsidiary of the Company. In connection with the acquisition the Company, among other things, (i) issued and sold $200 million of unsecured senior subordinated notes due 2007 (the "Senior Subordinated Notes") and (ii) entered into a $150 million revolving credit agreement (the "Senior Credit Facility") with Fleet Bank, N.A., which replaced the then existing $100 million revolving credit agreement ("Credit Facility") with Fleet Bank, N.A. The proceeds from the sale of the Senior Subordinated Notes and the borrowing under the Senior Credit Facility and the use of existing cash balances of the Company were used to repay certain outstanding Delchamps indebtedness, purchase Common Stock from Delchamps shareholders and pay fees and expenses related to the acquisition of Delchamps. Through a public offering, the Company issued and sold the Senior Subordinated Notes which bear interest at a rate of 10 3/8% per annum, payable semi-annually on March 15 and September 15 of each year. In addition, the Company entered into a revolving credit agreement on March 5, 1996 which provided a $100 million Credit Facility and subsequently, on September 15, 1997 the Company amended and restated the agreement to provide a $150 million Senior Credit Facility. The borrowings outstanding under the Senior Credit Facility at January 3, 1998 were $49.8 million. The commitments under the Senior Credit Facility will terminate, and all loans outstanding thereunder will be required to be repaid in full on March 15, 2004. Both the Senior Subordinated Notes and the Senior Credit Facility restrict future payment of dividends. On November 16, 1995, the Company and JJ Acquisitions Corp. ("JJAC") entered into an Agreement and Plan of Exchange and of Merger (the "Merger"). In connection with the Merger on March 5, 1996, JJAC among other things, (i) issued and sold $200 million of unsecured senior notes due 2006 (the "Senior Notes"), (ii) entered into a $100 million revolving credit agreement ("the Credit Facility") with Fleet Bank, N.A. (formerly NatWest Bank, N.A.), (iii) issued and sold Common Stock and a warrant in the aggregate amount of $7.4 million, and (iv) issued and sold three classes of Preferred Stock in the aggregate amount of $57.6 million. The proceeds from the sale of the notes, the Common Stock, warrants and Preferred Stock, together with borrowing under the Credit Facility and the use of existing cash balances of the Company were used to repay certain outstanding indebtedness, 3 purchase Common Stock from existing shareholders and pay fees and expenses related to the Merger. JJAC was merged with and into the Company, with the Company continuing as the surviving corporation. Upon the completion of the Merger, Bruckmann, Rosser, Sherrill & Co., L.P., owned 356,250 shares or approximately 83.82% of the Company's outstanding Common Stock on an undiluted basis. Through a public offering, JJAC issued and sold the Senior Notes which bear interest at a rate of 12% per annum, payable semiannually on March 1 and September 1 of each year. In addition, on March 5, 1996, the Company entered into the Credit Facility (which has been replaced by the Senior Credit Facility). The Senior Notes restrict future payment of dividends. Store Formats Through its 79 years of operations in the Southeast, the Company has developed a strong consumer franchise, with many of its stores located in prime, high-traffic sites that provide significant competitive advantages. The Company currently operates supermarkets under three formats, each targeting specific market segments: (i) conventional supermarkets operating under the "Jitney-Jungle" and "Delchamps" name, (ii) combination food and drug supermarkets operating primarily under the "Jitney Premier" name and (iii) discount supermarkets operating primarily under the "Sack and Save" name. The Company currently operates 200 supermarkets (169 conventional stores averaging approximately 35,000 square feet, 11 combination stores averaging approximately 56,000 square feet and 20 discount stores averaging approximately 60,000 square feet), 53 gasoline stations and 10 liquor stores including recent changes made subsequent to fiscal year end. All of the Company's conventional and combination supermarkets utilize a "Hi-Lo" pricing strategy (featuring competitive prices on all product offerings as well as a selection of items that are promoted at lower prices to generate increased customer traffic), offer a wide range of specialty departments and deliver high levels of service to customers. The stores under the Jitney-Jungle name utilize the Jitney-Jungle Gold Card (a frequent shopper card) which was launched in January, 1997. Also, the 11 combination supermarkets offer expanded general and specialty merchandise, a wider range of full-service departments, expanded beauty care and pharmacy departments, superior customer service and are open 24 hours a day, seven days a week. The Company's 20 discount supermarkets utilize an everyday low price strategy (featuring consistently low prices aimed at the value conscious shopper). The discount supermarkets have lower operating costs than the conventional and combination supermarkets due to fewer service departments, lower customer service levels and enhanced productivity methods. The Company also operates 53 gasoline stations and 10 liquor stores at selected supermarket sites. The Company features nationally advertised and distributed merchandise, and also markets food products under a private label program. In July 1997 the Company began shifting a significant portion of its total advertising expenditures to television and radio media, focusing on a quality and service image, in order to reach a wider target audience. Competition The Company's business is highly competitive. Competition is based primarily on supermarket location, price, service, convenience, cleanliness and product quality and variety. There is direct competition from many supermarkets, including independent stores and local outlets of regional and national 4 chains. Competition also exists with respect to particular products from such retailers as convenience stores, warehouse stores, drugstores and nonfood superstores. Employees As of March 31, 1998, the Company employed approximately 18,000 people, of whom approximately 42% were full-time and 58% were part-time employees. None of the employees of the Company are covered by a collective bargaining agreement. The Company has an incentive compensation plan covering its key management staff under which incentive compensation for store operations is based upon the results of profitability of the operations within the scope of their management responsibility. Also, the Company has established a Stock Option Plan pursuant to which certain key management have been granted options to acquire shares of common stock of the Company (subject to certain restrictions) at a price determined at the time of issuance to be an estimate of fair market value. Trade Names, Service Marks, Trademarks and Franchises The Company uses a variety of trade names, service marks and trademarks. Except for "Jitney-Jungle", "Sack and Save", and "Pump And Save", the Company does not believe any of such trade names, service marks or trademarks are material to its business. "Jitney-Jungle" is registered with the U.S. patent office and "Sack and Save", and "Pump and Save" are registered in the various states where the company operates. The Company is in the process of registering Delchamps with the U.S. patent office. Environmental Matters The Company is subject to federal, state and local laws and regulations including those relating to environmental protection, workplace safety, public health and community right-to-know. The Company's supermarkets are not highly regulated under environmental laws since the Company does not engage in any industrial activities at these locations. The principal environmental requirements applicable to the Company's operations relate to the ownership or use of tanks for the storage of petroleum products, such as gasoline and diesel fuel, the operation of on-site paper trash incinerators, and the operation of an on-site printing facility. The Company operates 57 locations (including all 54 of the Pump and Save locations), and has retained responsibility for one former facility, at which petroleum products are stored in underground tanks. The Company has instituted an environmental compliance program designed to insure that these tanks are in compliance with applicable technical, operational and regulatory requirements, including periodic inventory reconciliation and integrity testing. The Company also operates small incinerators at 21 locations which burn paper trash and has air permits for these facilities. In addition, the Company's printing facility is subject to air and hazardous waste regulations. The Company's locations may have asbestos-containing materials which must be managed in accordance with environmental laws and regulations. However, the Company does not believe that the cost of such management will be material. The Company believes that the locations where it currently operates are in substantial compliance with regulatory requirements. 5 The Company has undertaken programs to comply with upcoming regulatory obligations. First, at five locations, the Company must comply with petroleum tank upgrade or closure requirements under the Resource Conservation and Recovery Act of 1980, as amended, ("RCRA") (including all applicable requirements of state regulatory agencies) which must be met by the end of 1998. Second, over the next several years, the Company is planning to complete retrofitting of its chlorofluorocarbons ("CFC") chiller units to utilize non-CFC based refrigerants pursuant to the phase-out of CFCs under the Clean Air Act. Future events, such as changes in existing laws and regulations or their interpretation and the approach of other compliance deadlines may or will give rise to additional compliance costs or liabilities. Compliance with more stringent laws or regulations, as well as different interpretations of existing laws, may require additional expenditures by the Company which may be material. The Company may also be subject to requirements related to the remediation of, or the liability for remediation of, substances that have been released to the environment at properties owned or operated by the Company or at properties to which the Company sends substances for treatment or disposal. Such remediation requirements may be imposed without regard to fault and liability for environmental remediation can be substantial. Other than one previously owned property for which the Company retained responsibility for a clean-up in progress at the time of the sale, the Company has not been notified of any such releases relating to off- site treatment or disposal or to previously owned properties. However, 16 of the Company's locations have been or currently are the subject of environmental investigations or remediation, 12 as a consequence of known or suspected petroleum-related leaks or spills from storage tanks and four for minor spills or releases unrelated to tank usage. Four (4) other properties have undergone investigation or remediation for minor spills unrelated to tank usage. The Company may be eligible for reimbursement or payment for remediation costs associated with future releases from its regulated underground storage tanks and has obtained such reimbursement in the past. The states in which the Company operates each maintain a fund to assist in the payment of remediation costs and injury or damage to third parties from releases from certain registered underground tanks. Subject to certain deductibles, the availability of funds, compliance status of the tanks and the nature of the release, these funds have been and may be available to the Company for use in remediating releases from its tank systems. Due to the availability of such funds, the Company's unreimbursed cost for remediation at all of the facilities which have had leaks or spills from underground storage tanks has not been material. All significant required expenditures in connection with the clean up of such leaks and spills have been made at such locations, except at three recently discovered locations which are still undergoing investigation and one location awaiting state approval of its remediation plan. Remediation expenses at all the locations which are currently the subject of environmental investigation or remediation are anticipated to cost up to $240,000 in fiscal 1998 and approximately $125,000 per year thereafter, substantially all of which is subject to reimbursement as described above. In addition, the Company has obtained insurance coverage for bodily injury, property damage and corrective action expenses resulting from releases of petroleum products from underground storage tanks during the covered period at all 58 underground storage tank locations. 6 Other than expenditures relating to the remediation of tank leaks and spills described above, the Company's expenditures to comply with environmental laws and regulations have primarily consisted of those related to tank upgrading and retrofitting CFC chiller units. The Company spent $130,000, $914,000, $468,000 and $515,000 for such activities during fiscal 1997 stub, fiscal 1997, 1996 and 1995, respectively. Between approximately $300,000 and $500,000 in expenditures are contemplated for retrofitting the CFC units and between approximately $455,000 and $755,000 in expenditures are contemplated for tank upgrading to comply with the 1998 tank standards or closure in fiscal 1998. These regulatory compliance costs are not covered by insurance. Governmental Regulation The Company is subject to regulation by a variety of governmental agencies, including but not limited to the United States Food and Drug Administration, the United States Department of Agriculture and other federal, state and local agencies. Fiscal Year Change The Company reports results of operations on a 52 or 53 week fiscal year. For fiscal years 1995, 1996 and 1997 the fiscal year ended on the Saturday nearest to April 30 of each year. The Company changed its fiscal year end on January 3, 1998 to the closest Saturday to December 31 of each year. This change created a "stub" year of 35 weeks for fiscal year ended January 3, 1998. 7 Item 2. Properties The following table recaps store data for fiscal 1997stub, 1997, 1996 and 1995:
Fiscal ________________________________________________________ 1997 stub(a) 1997 1996 1995 _________ ______ ______ _______ Stores Beginning of Year 105 103 106 106 Acquired 118 Opened 2 4 2 Closed 6 0 7 2 _________ ______ ______ _______ End of Year 217 105 103 106 ======== ====== ====== ======= Store Composition Conventional 185 76 72 71 at Year End Combination 11 2 2 1 Discount 21 27 29 34 _________ ______ ______ _______ Total 217 105 103 106 ========= ====== ====== ======= Average Square Feet Conventional 35,000 26,500 26,000 25,000 Combination 56,000 56,900 56,100 57,300 Discount 60,000 57,800 57,100 55,200 Store Locations Mississippi 89 73 71 72 at Year End Alabama 53 11 11 13 Arkansas 5 5 5 6 Florida 17 2 2 1 Tennessee 7 7 7 7 Louisiana 46 7 7 7 _________ ______ ______ _______ Total 217 105 103 106 ========= ====== ====== ======= Gasoline Stations Beginning of Year 53 46 37 31 Opened 2 7 11 6 Closed 1 0 2 _________ ______ ______ _______ End of Year 54 53 46 37 ========= ====== ====== ======= Gasoline Station Mississippi 45 43 38 28 Locations Louisiana 0 1 1 1 at Year End Tennessee 4 4 3 2 Alabama 2 2 2 4 Florida 1 1 1 1 Arkansas 2 2 1 1 _________ ______ ______ _______ Total 54 53 46 37 ========= ====== ====== =======
(a) Changes subsequent to fiscal year end not included above are one gas station and seventeen supermarkets (16 conventional and 1 discount) were closed or sold. All of the Company's store properties are leased, with the exception of one store. These leases generally obligate the Company to pay its proportionate share of real estate taxes, common area maintenance charges and insurance costs. In addition, such leases generally provide for percentage of sales rent 8 when sales from the store exceed a certain dollar amount. These leases are usually long-term, with one or more renewal options. With the exception of one lease, which will expire in 2001, all leases will expire between 2005 and 2036 if the Company exercises all its options to renew. The Company owns all of its furnishing and fixtures in all supermarkets except for approximately $3.2 million of supermarket "POS" equipment which is leased, and has made various leasehold improvements to these supermarket sites. It is anticipated that the Company will own the furnishings and fixtures in all supermarkets under construction. Certain parties affiliated with the Company hold 20 leases, representing approximately 23% of the dollar amount of the Company's capital leases. Management believes that each of these leases was contracted for on an arm's length basis and contains terms that are no less favorable to the Company than could have been obtained with non-affiliated parties at the time each was entered into. The Company owns all of its warehouse and distribution facilities except for its 120,000 square-foot dry grocery and health and beauty care facility. This facility is under a lease expiring July 31, 2004 (including all renewal options). The table below details Jitney-Jungle's warehousing and distribution facilities by function. These warehouses and distribution facilities are located in Jackson, Mississippi and Hammond, Louisiana.
Function Square Feet ________ ___________ Jackson Hammond _______ _______ Dry Grocery............................... 415,000 456,200 Meat and Dairy............................ 90,000 101,300 Dry Grocery and Health and Beauty Care.... 120,000 --- Transportation and Damage Reclaim......... 73,000 13,800 Produce, Eggs and Floral.................. 67,000 --- Frozen Foods.............................. 79,000 62,900 _______ _______ Total Jackson Warehouse................... 844,000 634,200 ======= =======
Due to the acquisition of Delchamps, the Company owns a 65,000 square-foot building which houses the corporate headquarters of Delchamps in Mobile, Alabama (including a 2.7 acre parcel adjacent to such headquarters), the Hammond warehouse (including a 165-acre parcel adjacent to such warehouse) and interest in six additional parcels, some of which are undeveloped. In connection with the acquisition, Management is in the process of consolidating the corporate headquarters of the Company's combined operations in the existing corporate headquarters of Jitney-Jungle in Jackson, Mississippi. A divisional office is being opened in Mobile and the Delchamps Mobile headquarters will be closed. Management has discontinued all shipments to stores from the Hammond warehouse, and the Company may determine to sell, or develop for sale, certain of such parcels of real estate. Item 3. Legal Proceedings The Company is not a party to any material pending legal proceedings, other than ordinary litigation incidental to the conduct of its business and the ownership of its properties. 9 Item 4. Submission of Matters to a Vote of Security Holders There were no matters submitted to a vote of security holders during the third quarter of its fiscal period ended January 3, 1998. PART II Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters The Company is closely held and is not actively traded at this time; therefore, there is not a current market. As of January 3, 1998, there were thirty-three (33) holders of record of Common Stock. There were no dividends paid by Jitney-Jungle to its shareholders during thirty-five weeks ended and the past fiscal years. The Senior Subordinated Notes and the Senior Credit Facility entered into by the Company restrict future payment of dividends. 10
Item 6. Selected Financial Data (35 weeks) (53 weeks) (52 weeks) (52 weeks) (52 weeks) (52 weeks) (Dollars in Thousands) January 3, May 3, April 27, April 29, April 30, May 1, Except Per Share Amounts) 1998 1997 1996 1995 1994 1993 __________________________________________________________________________________________________________________________________ Operating Results: Net Sales $1,145,129 $1,228,533 $1,179,318 $1,173,927 $1,152,333 $1,070,693 Gross Profit 285,669 303,087 292,063 288,188 276,546 250,999 Interest expense (net): Debt 25,596 27,117 4,232 1,606 2,916 1,723 Capitalized lease obligations 6,012 9,098 8,768 9,217 8,710 8,194 Earnings (loss) before income taxes and extraordinary item (13,131) 1,085 24,977 30,220 27,135 26,471 Income taxes (benefit) (3,224) 339 9,062 11,417 9,956 9,354 Earnings (loss) before extraordinary item (9,907) 746 15,915 18,803 17,179 17,117 Extraordinary item (net of tax) (870) (1,456) Net Earnings (loss) ($10,777) $746 $14,459 $18,803 $17,179 $17,117 Net Earnings (loss) as a percent of sales (0.94%) 0.06% 1.23% 1.60% 1.49% 1.60% _____________________________________________________________________________________ Common Stock Data: Earnings (loss) per common share-assuming dilution: Earnings (loss) before extraordinary item ($36.39) ($16.26) $162.88 $923.15 $843.42 $840.37 Extraordinary item (2.05) (15.96) Net Earnings (loss) ($38.44) ($16.26) $146.92 $923.15 $843.42 $840.37 _____________________________________________________________________________________ Financial Position: Total assets $694,280 $267,845 $279,003 $312,415 $296,803 $269,798 Working Capital (20,669) (92) 26,449 71,929 60,385 60,108 Long-term debt 449,831 208,000 239,059 38,727 40,628 42,476 Capitalized lease obligations (including current) 75,081 62,260 62,165 60,471 62,186 56,189 Restructuring Obligations (including current) 55,515 2,202 1,237 Redeemable preferred stock 63,042 57,921 49,988 Stockholders' Equity (Deficit) (167,900) (152,002) (144,815) 140,216 124,857 111,099 _____________________________________________________________________________________
11 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion of the Company's results of operations and of its liquidity and capital resources should be read in conjunction with the Consolidated Financial Statements and the notes thereto contained elsewhere in this report. Results of Operations General As of January 3, 1998 the Company operated a chain of 217 supermarkets and 54 gasoline stations. Net sales from gasoline stations during fiscal 1997 stub, 1997, and 1996 were 7.1%, 6.9%, and 5.2%, respectively, of the Company's net sales for such periods. The Company reports results of operations on a 52 or 53 week fiscal year. For fiscal years 1995, 1996 and 1997 the fiscal year ended on the Saturday nearest to April 30 of each year. The Company changed its fiscal year end on January 3, 1998 to the closest Saturday to December 31 of each year. This change created a "stub" year of 35 weeks for fiscal year ended January 3, 1998. The Company's first three fiscal quarters are 12 weeks, and the last quarter is 16 or 17 weeks. The consolidated statements of operations include 35 weeks for a short year for January 3, 1998, 53 weeks of operations for fiscal 1997 and 52 weeks for fiscal 1996 and 1995. The following sets forth, for the periods indicated, selected financial information expressed as a percentage of net sales.
FISCAL YEAR _________________________________________ 1997stub 1997 1996 1995 (35 Wks) (53 Wks) (52 Wks) (52 Wks) _______ _______ _______ ______ Net sales........................ 100.00% 100.00% 100.00% 100.00% Gross profit..................... 24.95 24.67 24.77 24.55 Direct store, warehouse and administrative expenses and special charges............ 23.33 21.63 21.55 21.05 _______ _______ _______ ______ Operating income................. 1.62 3.04 3.22 3.50 Interest expense, net............ 2.76 2.95 1.10 .92 _______ _______ _______ ______ Earnings (loss) before income taxes and extraordinary item........................... (1.14) 0.09 2.12 2.58 Provision for (benefit from) income taxes................... (0.28) 0.03 0.77 .98 Extraordinary item (net of income tax benefit)............ (0.08) 0.00 0.12 0.00 _______ _______ _______ ______ Net earnings (loss).............. (0.94)% 0.06% 1.23% 1.60 ======= ======= ======= ======
12 Approximately 18% of the Company's non-perishable sales result from its private label program. Private label products generally have a lower unit sales price than national brands, but provide a higher gross margin to the Company due to lower unit costs. During the past three years, an overall lack of inflation in food prices and increasingly competitive markets have made it difficult for the Company and other supermarket operators to achieve comparable store sales gains. Because sales growth has been difficult to attain, many operators, including the Company, have attempted to maintain market share through increased levels of promotional activities and discount pricing, creating a more difficult environment in which to increase year-over-year sales gains consistently. In addition, because of the growth in the Southeast market, many supermarket operators, including the Company, have opened new stores, resulting in declines in same store sales for the other stores in those areas. Net Sales The following sets forth, for the periods indicated, net sales of the Company.
(dollars in millions) ____________________________________________ 1997stub 1997 1996 1995 (35 Wks) (53 Wks) (52 Wks) (52 Wks) _______ _______ _______ _______ Net sales ...............................$1,145.1 $1,228.5 $1,179.3 $1,173.9 Increase (decrease) from prior year...... ($83.4) $49.2 $5.4 $21.6 Percentage increase over prior year...... n/m 4.2% 0.5% 1.9% Percentage increase (decrease) in same store sales............................ 0.34% 0.20% (0.01%) (0.56%)
The net sales decrease of $83.4 million in 1997 stub was due to the "stub" year having only 35 weeks. The net sales increase of 4.2% in 1997 was primarily due to the opening of two supermarkets, the opening of seven new gasoline stations and the extra "53rd" week. Without this extra "53rd" week, sales would have increased approximately 2.2%. In addition, the Jitney-Jungle Gold Card (a frequent shopper card program) was launched at the beginning of the 4th quarter in January 1997 and, as a result, sales and customer count have increased. The net sales increase of 0.5% in 1996 was primarily due to the opening of four grocery supermarkets and the opening of eleven new gasoline stations, partially offset by the effect of closing seven supermarkets and two gasoline stations in fiscal 1996. 13 Gross Profit The following sets forth, for the periods indicated, gross profit of the Company.
(dollars in millions) _____________________________________________ 1997stub 1997 1996 1995 (35 Wks) (53 Wks) (52 Wks) (52 Wks) ________ _______ ________ _______ Gross profit...................... $285.7 $303.1 $292.1 $288.2 Increase from prior year.......... n/m $11.0 $3.9 $11.6 Gross profit percentage........... 24.9% 24.7% 24.8% 24.5% Increase (decrease) from prior year............................ 0.2% (0.1%) 0.3% 0.5%
The increase in gross profit as a percent of sales for fiscal 1997 stub was due to (i) an increase in sales due to the Delchamps acquisition and (ii) improved procurement results due to utilizing better buying decisions at better prices. The decrease in gross profit as a percentage of net sales of 0.1% for fiscal 1997 was principally due to discounts associated with the offering of the new Jitney-Jungle Gold Card (frequent shopper card) which was launched in January 1997. The increase in gross profit as a percentage of net sales of 0.3% for fiscal 1996 was due to (i) improved procurement results due to continued enhancements and improved utilization of the Company's information systems, which resulted in better buying decisions at better prices and (ii) the re-negotiation of a supply contract with Fleming Companies, Inc. in January 1996. Direct Store, Warehouse and Administrative Expenses The following sets forth, for the periods indicated, direct store, warehouse and administrative expenses for the Company.
(dollars in millions) ____________________________________________ 1997stub 1997 1996 1995 (35 Wks) (53 Wks) (52 Wks) (52 Wks) ________ ________ ________ ________ Direct store, warehouse and administrative expenses (including special charges)........$267.2 $265.8 $254.1 $247.1 Increase from prior year...................... n/m $11.7 $7.0 $9.4 Percentage increase from prior year........... n/m 4.6% 2.8% 4.0 Expenses as a percentage of sales............. 23.3% 21.6% 21.6% 21.1%
In fiscal 1997 stub, direct store, warehouse and administrative expenses increased as a percent of sales principally due to the amortization of debt issue costs and goodwill related to the acquisition of Delchamps which was accounted for using the purchase method. 14 In fiscal 1997, direct store, warehouse and administrative expenses increased $11.7 million principally due to the "53rd" week, while such expenses as a percentage of net sales remained the same at 21.6%. In fiscal 1997, personnel costs, the largest single component of store operating, selling and administrative expenses, were $152.9 million, or 12.4% of net sales, compared to $146.6 million or 12.4% of net sales for fiscal 1996. Depreciation and amortization increased $4.0 million principally due to acquisitions of property and equipment (including capital leases) associated with the Company's remodeling program, acquisition of new stores and gasoline stations and increased debt issue costs related to the Merger. Group insurance expense increased $.5 million principally due to an increase in medical claims paid during the year by the self-insured plan. Closed Operations expense increased $.7 million and included a provision for the closing of one conventional supermarket and one gasoline station in July 1997. The increases in SG&A were offset by reductions in store supplies and advertising costs and by an increase in backhaul income. In addition SG&A included the charge to expense of $2.7 million for costs associated with the employment contract of the Company's former Chief Executive Officer and the severance pay of various associates (a) who retired early or (b) whose positions were eliminated. In fiscal 1996, personnel costs, the largest single component of store operating, selling and administrative expenses, were $146.6 million, or 12.4% of net sales, compared to $143.5 million, or 12.2% of net sales for fiscal 1995. In addition to personnel costs, other increases in operating expenses for fiscal 1996 were principally due to increases in insurance expense ($0.8 million) as a result of a larger provision for workers compensation and general liability insurance, repairs and maintenance ($0.4 million), certain non-recurring legal and professional fees, and also depreciation and amortization expense which amounted to $27.3 million in fiscal 1996, or 2.3% of net sales, compared to $25.4 million for fiscal 1995, or 2.2% of net sales. The increase in depreciation and amortization in fiscal 1996 was primarily a result of increased capital expenditures relating to the remodeling of stores in fiscal 1995 and increased debt issue costs related to the Merger. Operating Income As a percentage of net sales, operating income for fiscal 1997 stub, 1997 and 1996 was 1.6%, 3.0% and 3.2%, respectively. The decrease in operating income for fiscal 1997 stub as a percent of sales was principally due to bridge fees and amortization of debt issue cost and goodwill related to the acquisition of Delchamps. 15 EBITDA The following sets forth, for the periods indicated, EBITDA of the Company.
(dollars in millions) ____________________________________________ 1997stub 1997 1996 1995 (35 Wks) (53 Wks) (52 Wks) (52 Wks) ________ ________ ________ ________ EBITDA.................................. $51.8 $70.3 $64.9 $65.2 Increase (decrease) from prior year..... n/m ($5.4) ($0.3) $1.8 EBITDA as a percentage of net sales....... 4.5% 5.7% 5.5% 5.6%
As a percentage of net sales, EBITDA for fiscal 1997 stub, 1997, 1996 and 1995 was 4.5%, 5.7%, 5.5%, and 5.6%, respectively. EBITDA represents income before interest, income taxes, depreciation, amortization and LIFO charges. Fiscal 1997 stub and fiscal 1997 are calculated before any deduction for certain special charges totaling $3.1 million and $2.7 million, 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. However, management believes it to be a useful measure and therefore it has been presented. Net Interest Expense The following sets forth, for the periods indicated, net interest expense of the Company.
(dollars in millions) ____________________________________________ 1997stub 1997 1996 1995 (35 Wks) (53 Wks) (52 Wks) (52 Wks) ________ ________ ________ ________ Net interest expense......................$31.6 $36.2 $13.0 $10.8 Increase (decrease) from prior year.......($4.6) $23.2 $2.2 ($0.9) Percentage increase over prior year....... n/m 178.5% 2.0% (7.7%)
The decrease in net interest expense of $4.6 million was due to fiscal 1997 stub only having 35 weeks. The increase in net interest expense for fiscal 1997 was primarily due to interest expense on the Senior Notes and the Credit facility, which were in place all of fiscal 1997 and only two months of fiscal 1996. The increase in net interest expense for fiscal 1996 was primarily due to interest expense of $3.6 million on the Senior Notes and $0.5 million on the Credit Facility which was partially offset by the decrease in interest expense as a result of repayment of historical debt prior to maturity and increase in interest income to $2.4 million for fiscal 1996 from $1.7 million for fiscal 1995. 16 Income Taxes The following sets forth, for the periods indicated, income taxes of the Company.
(dollars in millions) ____________________________________________ 1997stub 1997 1996 1995 (35 Wks) (53 Wks) (52 Wks) (52 Wks) ________ ________ ________ ________ Income tax expense (benefit)..............($3.2) $.3 $9.1 $11.4 Income tax (benefit) effective rate.......(24.5%) 31.2% 36.3% 37.8 Increase (decrease) in rate from prior year.................................... n/m (5.1%) (1.5%) 1.1%
The decrease in income taxes for fiscal 1997 stub was due to a loss in pretax earnings. The decrease in income taxes for fiscal 1997 principally resulted from lower pretax earnings and a decrease in the effective tax rate which was primarily due to credits applicable to state income taxes. The decrease in income taxes for fiscal 1996 principally resulted from lower pretax earnings and a decrease in the effective tax rate which was principally due to the elimination of inter-company profit of a wholly owned subsidiary which previously was not included in the consolidated tax return. Extraordinary Item In the second quarter of fiscal 1997 stub, in connection with the acquisition of Delchamps, the Company incurred cost of $1.4 million for the early retirement of debt, net of an income tax benefit of $0.5 million. In the fourth quarter of 1996 in connection with the Merger, the Company retired $35.7 million in long-term debt prior to its scheduled maturity. Prepayment penalties associated with early retirement of this debt resulted in an extraordinary loss of $1.5 million, net of an income tax benefit of $0.9 million. Net Earnings (Loss) The following sets forth, for the periods indicated, net operations of the Company.
(dollars in millions) ____________________________________________ 1997stub 1997 1996 1995 (35 Wks) (53 Wks) (52 Wks) (52 Wks) ________ ________ ________ ________ Net earnings (loss)..................... ($10.8) $.7 $14.5 $18.8 Increase (decrease) from prior year..... n/m ($13.8) ($4.3) $1.6 Net earnings (loss) percentage of net sales............................. (0.94%) 0.06% 1.2% 1.6%
17 Changes in net earnings are due to the factors reflected above. 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 and acquisition of Delchamps, however, the Company has become highly leveraged and has certain restrictions on its operations. At January 3, 1998, the Company had $524.9 million of total long-term debt (including capitalized leases and current installments) and a shareholders' deficit of $167.9 million. The Company's principal sources of liquidity are expected to be cash flow from operations and borrowings under the Senior Credit Facility. The Company has outstanding $7.5 million in letters of credit issued under the Senior Credit Facility principally to secure obligations pursuant to a capitalized lease. Borrowings outstanding at January 3, 1998 under the Senior Credit Facility were $49.8 million. The commitments under the Senior Credit Facility will terminate, and all loans outstanding thereunder will be required to be repaid in full on March 15, 2004. Borrowings under the Senior Credit Facility, including revolving loans and up to $30 million in letters of credit, will not exceed the lesser of (i) the "Total Commitment", which initially will be $150.0 million, and (ii) an amount equal to the sum of (A) up to 65% of eligible inventory (valued at the lesser of FIFO cost or market value) of the Company and (B) the "Supplemental Availability", which initially is $53.0 million. Each of the Total Commitment and the Supplemental Availability will be reduced on a quarterly basis commencing September 1998. Cash provided by operating activities during fiscal 1997 stub was $37.2 million compared to $66.4 million for fiscal 1997 and $55.5 million for fiscal 1996. In fiscal 1997 stub, cash provided by operating activities decreased primarily due to the operating loss. In fiscal year 1997, inventories decreased due to an inventory reduction plan implemented by management and accounts payable increased by improving vendor terms to industry standards. These working capital improvements were partially offset by the reduction in net earnings due principally to the increase in cash interest expense as a result of additional borrowing activities discussed above. The principal reason for the increase of cash provided by operating activities for fiscal 1996 was a decrease in inventories due, in part, to store closings and a decrease in receivables which reflects a reduction in the uncollected billbacks due from vendors. Net cash used in investing activities was $239.2 million in fiscal 1997 stub, $22.3 million for fiscal 1997 and $4.2 million for fiscal 1996. Cash invested for fiscal 1997 stub was primarily used for the purchase of Delchamps. Capital expenditures were $36.9 million for fiscal 1997 stub, $24.1 million for fiscal 1997 and $30.1 million for fiscal 1996. In addition to capital expenditures related to new stores opened in fiscal years 1997 and 1996 the Company had several significant expansion and conversion projects in fiscal 1997 stub, 1997 and 1996. Net cash provided by financing activities was $199.6 18 million in fiscal 1997 stub. Net cash used in financing activities was $35.4 million for fiscal 1997 and $65.8 million for fiscal 1996. The principal source of funds in financing activities in fiscal 1997 stub was the issuance of the Senior Subordinated Notes and the restated $150 million Senior Credit Facility. The principal uses of funds in financing activities for fiscal 1997 were the payment of long-term debt and capital lease obligations. The main uses of funds in financing activities in fiscal year 1996 were the redemption of Common Stock and related merger costs, principal payments on debt and capital lease obligations and payments of dividends to stockholders. New stores, remodels, and conversions will continue to be the most significant portion of planned capital expenditures. Capital expenditure plans of the Company are frequently reviewed and are modified from time to time depending on cash availability and other economic factors. The Company's expenditures to comply with environmental laws and regulations at its grocery stores primarily consist of those related to remediation of underground storage tank leaks and spills and retrofitting chlorofluorocarbon ("CFC") chiller units. The Company's unreimbursed cost for remediation at the 16 facilities which have had leaks or spills has not been material. All significant required expenditures in connection with the cleanup of such leaks and spills have been made at such locations except at three recently discovered locations which are still undergoing investigation and one location awaiting state approval of its remediation plan. In addition, the Company has obtained insurance coverage for bodily injury, property damage and corrective action expenses resulting from releases of petroleum products from underground storage tanks during the covered period at all 58 locations. The Company spent $130,000, $914,000, $468,000 and $515,000 for retrofitting CFC- containing chiller units during fiscal 1997 stub, fiscal 1997, fiscal 1996 and fiscal 1995, respectively. Between approximately $300,000 and $500,000 in expenditures are contemplated for retrofitting the CFC units and between approximately $455,000 and $755,000 in expenditures are contemplated for tank upgrading to comply with 1998 tank standards or closure in fiscal 1998. These regulatory compliance costs are not covered by insurance. Cost Reduction Opportunities As part of its ongoing process of reviewing and controlling operating costs, management has begun to implement initiatives designed to result in cost savings. Areas which the Company believes offer the greatest potential for such savings include, but are not necessarily limited to, improved labor scheduling, which the Company is currently implementing across its stores, inventory category management programs, which the Company began implementing during fiscal year 1997 and will continue to implement over the next 12 months, reductions in inventories held primarily at store level and improved terms with various merchandise suppliers, which was implemented successfully in fiscal 1997, and a reduction in annual overhead spending related to headcount reductions that the Company began implementing in May 1997. There can be no assurance that any cost savings will be achieved by the Company as a result of such initiatives. 19 Inflation As is typical of the supermarket industry, the Company has adjusted its retail prices in response to price trends. During the past three years, there has been an overall lack of inflation in food prices. Year 2000 The Company has initiated a company-wide program to identify and address issues associated with the ability of its date- sensitive information and business systems to properly recognize the year 2000 in order to avoid interruption of the operations of the Company. Systems are being reviewed by a management information services team, which is coordinating the efforts of internal resources as well as third party vendors in making the necessary changes to the Company's systems. Based on preliminary information, under current costs estimates for these changes will not have a material effect on the Company's financial statements. However, if the Company or its vendors are unable to resolve such processing issues in a timely manner, it could result in material risk. 20
Item 8. Financial Statements and Supplementary Data JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in Thousands Except Per Share Amounts) _______________________________________________________________________________ January 3, May 3, April 27, ASSETS 1998 1997 1996 CURRENT ASSETS: Cash and cash equivalents $11,984 $14,426 $5,676 Investments in debt securities 337 Receivables 13,833 5,463 4,892 Merchandise inventories 162,786 64,619 77,445 Prepaid expenses and other 11,570 1,213 5,155 Deferred income taxes 15,681 2,152 376 _________ ________ ________ Total current assets 215,854 87,873 93,881 PROPERTY AND EQUIPMENT, at cost: Land 14,442 2,648 2,782 Buildings 34,776 26,370 22,537 Fixtures and equipment 264,192 167,241 165,202 Property under capital leases 88,995 74,089 76,371 Leasehold improvements 67,414 41,518 39,003 _________ ________ ________ Total 469,819 311,866 305,895 Less accumulated depreciation 166,045 140,378 130,480 _________ ________ ________ Net property and equip 303,774 171,488 175,415 _________ ________ ________ GOODWILL, net of amortization of 142,415 OTHER ASSETS 32,237 8,484 9,707 _________ ________ ________ TOTAL ASSETS $694,280 $267,845 $279,003 ========= ======== ======== See notes to consolidated financial statements.
21
______________________________________________________________________________________ January 3, May 3, April 27, LIABILITIES AND STOCKHOLDERS' DEFICIT 1998 1997 1996 CURRENT LIABILITIES: Accounts payable $112,641 $49,978 $40,008 Accrued expenses: Personnel costs 13,823 9,350 6,042 Payable to dissenting former shareholders of Delchamps, Inc. 26,637 Taxes, other than income taxes 17,956 8,436 6,738 Insurance claims 19,886 5,972 4,110 Interest 15,017 4,298 3,742 Other 8,876 5,032 2,533 Current portion of capital leases 6,760 4,899 4,259 Current portion of restructuring obligation 14,927 ________ ________ ________ Total current liabilities 236,523 87,965 67,432 Long-term debt 449,831 208,000 239,059 Obligations under capital leases, excluding current installments 68,321 57,361 57,906 Restructuring obligation, excluding current installments 40,588 2,202 1,237 Deferred income taxes 3,875 6,398 8,196 ________ ________ ________ Total liabilities 799,138 361,926 373,830 COMMITMENTS AND CONTINGENCIES (Notes 8, 9, 12 and 20) REDEEMABLE PREFERRED STOCK, aggregate liquidation preference value of $65,077 (1998), $60,086 (1997) and $52,342 (1996) 63,042 57,921 49,988 STOCKHOLDERS' DEFICIT: Class C Preferred Stock - Series 1 (at liquidation preference value) 9,071 8,502 7,604 Common stock ($.01 par value, authorized 5,000,000 shares, issued and outstanding 425,000 shares) 4 4 4 Additional paid-in capital (302,326) (302,326) (302,326) Retained earnings 125,351 141,818 149,903 ________ ________ ________ Total stockholders' deficit (167,900) (152,002) (144,815) ________ ________ ________ TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $694,280 $267,845 $279,003 ========= ======== ========
22
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars In Thousands Except Per Share Amounts) _______________________________________________________________________________________________________________________________ Year Ended 35 Weeks _______________________________________________________________ Ended Jan- May 3, April 27, April 29, uary 3, 1998 1997 1996 1995 NET SALES $1,145,129 $1,228,533 $1,179,318 $1,173,927 COSTS AND EXPENSES: Cost of sales 859,460 925,446 887,255 885,739 Direct store expenses 206,945 205,250 198,579 193,875 Warehouse, administrative and general 57,130 57,800 55,507 53,270 Interest expense, net 31,608 36,215 13,000 10,823 Special charges 3,117 2,737 __________ __________ __________ __________ Total cost and expenses 1,158,260 1,227,448 1,154,341 1,143,707 __________ __________ __________ __________ Earnings (loss) before income taxes and extraordinary item (13,131) 1,085 24,977 30,220 INCOME TAX EXPENSE (BENEFIT) (3,224) 339 9,062 11,417 __________ __________ __________ __________ Earnings (loss) before extraordinary item (9,907) 746 15,915 18,803 EXTRAORDINARY ITEM, net of income tax benefit of $518 (1998) and $866 (1996) (870) (1,456) __________ __________ __________ __________ NET EARNINGS (LOSS) ($10,777) $746 $14,459 $18,803 ========== ========== ========== ========== EARNINGS (LOSS) PER COMMON SHARE: Before extraordinary item ($36.39) ($16.26) $185.85 $923.15 Extraordinary item (2.05) (18.13) __________ __________ __________ __________ Net earnings (loss) per common share ($38.44) ($16.26) $167.72 $923.15 ========== ========== ========== ========== EARNINGS (LOSS) PER COMMON SHARE - ASSUMING DILUTION: Before extraordinary item ($36.39) ($16.26) $162.88 $923.15 Extraordinary item (2.05) (15.96) __________ __________ __________ __________ Net earnings (loss) per common share - assuming dilution ($38.44) ($16.26) $146.92 $923.15 ========== ========== ========== ========== See notes to consolidated financial statements.
23
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Dollars In Thousands Except Per Share Amounts) _______________________________________________________________________________________________________ Class C Preferred Stock, Series 1 Common Stock Additional _________________ _________________ Number Number Paid-in Retained of Share Amount of Share Amount Capital Earnings BALANCE, APRIL 30, 1994 20,368 $1,061 $1,807 $121,989 Cash dividends ($169.09 per share) (3,444) Net earnings 18,803 _______ ______ ________ ________ BALANCE, APRIL 29, 1995 20,368 1,061 1,807 137,348 Cash dividends ($92.15 per share) (1,877) Net earnings 14,459 Issuance 76,042 $7,604 425,000 4 7,377 Redempti (20,368) (1,061) (311,510) Accretion of discount on Class A Preferred Stock (27) _______ _____ _______ _____ ________ _______ BALANCE, APRIL 27, 1996 76,042 7,604 425,000 4 (302,326) 149,903 Net earnings 746 Accretion of discount on Class A Preferred Stock (189) Cumulation of dividends on Preferred Stock 898 (8,642) _______ _____ _______ _____ ________ _______ BALANCE, MAY 3, 1997 76,042 8,502 425,000 4 (302,326) 141,818 Net loss (10,777) Accretion of discount on Class A Preferred Stock (130) Cumulation of dividends on Preferred Stock 569 (5,560) _______ _____ _______ _____ ________ _______ BALANCE, JANUARY 3, 1998 76,042 $9,071 425,000 $4 $(302,326) 125,351 ======= ===== ======= ===== ======== ======= See notes to consolidated financial statements.
24
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands) Year Ended 35 Weeks ___________________________________________________________ Ended Jan- May 3, April 27, April 29, uary 3, 1998 1997 1996 1995 OPERATING ACTIVITIES: Net earnings (loss) ($10,777) $746 $14,459 $18,803 Adjustment to reconcile net earnings (loss) to net cash provided by operating activities: Extraordinary item 870 1,456 Depreciation and amortization 31,243 31,319 27,323 25,444 Loss (gain) on disposition of property and other assets (250) 1,899 817 1,037 Deferred income tax expense (benefit) (585) (3,574) 2,577 2,260 Decrease in restructuring obligation (453) Changes in assets and liabilities: Receivables (1,933) (571) 5,866 43 Inventories (3,520) 12,826 5,826 (3,621) Prepaid expenses and other (6,599) 3,941 (2,011) (1,630) Accounts payable 18,861 9,970 1,562 2,690 Accrued expenses 10,304 9,923 (2,356) 644 _________ _________ ________ _________ Net cash provided by operating activities 37,161 66,479 55,519 45,670 _________ _________ ________ _________ INVESTING ACTIVITIES: Capital expenditures (36,951) (24,099) (30,111) (23,921) Proceeds from sale of property and other assets 1,069 1,477 2,617 1,210 Purchase of Delchamps, Inc., net of cash acquired (204,036) Purchase of investments in debt securities (23,026) (65,416) Maturities of investments in debt securities 738 337 46,301 42,096 _________ _________ ________ _________ Net cash used in investing activities (239,180) (22,285) (4,219) (46,031) _________ _________ ________ _________ FINANCING ACTIVITIES: Proceeds from issuance of long-term debt 249,831 239,059 Proceeds from issuance of stock and warrants 35,840 Redemption of common stock (286,824) Payments on long-term debt (22,463) (31,059) (38,412) (2,431) Debt issue costs (24,852) (8,214) Payments on capital lease obligations (2,939) (4,385) (5,355) (4,342) Dividends paid (1,877 (3,444) _________ _________ ________ _________ Net cash provided by (used in) financing activities 199,577 (35,444) (65,783) (10,217) _________ _________ ________ _________ INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,442) 8,750 (14,483) (10,578) CASH AND CASH EQUIVALENTS: Beginning of period 14,426 5,676 20,159 30,737 _________ _________ ________ _________ End of period $11,984 $14,426 $5,676 $20,159 ========= ========= ======== ========= (Continued)
25
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands) _______________________________________________________________________________________________________________________________ Year Ended 35 Weeks _______________________________________________ Ended Jan- May 3, April 27, April 29, uary 3, 1998 1997 1996 1995 NON-CASH INVESTING AND FINANCING ACTIVITIES: Payable to dissenting former shareholders of Delchamps, Inc. $ 26,637 Accrued direct acquisition costs of ========= Delchamps, Inc. $ 5,704 ========= Capital lease obligations incurred $ 3,538 $ 7,971 $ 3,158 Preferred stock issued during Recapitalization: ========= ======== ======== in exchange for receivables and common stock $ 184 in settlement of deferred compensation obligation 712 in redemption of common stock 27,446 Common stock issued during Recapitalization: in exchange for notes receivable 176 in redemption of common stock 588 ________ $ 29,106 ======== SUPPLEMENTAL DISCLOSURES: Cash paid for interest $ 21,021 $ 35,902 $ 12,915 $ 12,534 ========= ========= ======== ======== Cash paid for income taxes, net of refunds $ 4,799 $ (1,521) $ 7,700 $ 10,283 ========= ========= ======== ======== See notes to consolidated financial statements. (Concluded)
26 JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THIRTY-FIVE WEEKS ENDED JANUARY 3, 1998 AND THE YEARS ENDED MAY 3, 1997, APRIL 27, 1996 AND APRIL 29, 1995 (Dollars in Thousands Except Per Share Amounts) ________________________________________________________________________ 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. Nature of Operations and Basis of Presentation - The Company operates supermarkets and gasoline stations located in six southeastern states primarily using distribution centers located in Jackson, Mississippi. The consolidated financial statements include those of Jitney- Jungle Stores of America, Inc. and its wholly-owned subsidiaries, Delchamps, Inc., 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. b. Use of Estimates - The consolidated financial statements are prepared in conformity with generally accepted accounting principles which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. c. Investments in Debt Securities - Debt securities have been categorized as available for sale and as a result are stated at fair value. The cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization and interest are included in interest income. Realized gains and losses are included in other income or expense. The cost of securities sold is based on the specific identification method. d. Inventories - Substantially all inventories are stated at the lower of cost using the last-in, first-out method or market. e. Capitalization, Depreciation and Amortization - The cost of property, fixtures, equipment and improvements is depreciated and amortized by the straight-line method over the estimated useful lives of the assets. The estimated useful lives of buildings range up to forty years and the estimated useful life of fixtures and equipment is eight years. Assets under capital leases are recorded at the lower of fair value or the present value of future minimum lease payments. These assets and leasehold improvements are amortized by the straight-line method over their primary lease term. License and franchise rights are amortized by the straight-line method over twenty years. Debt issue costs are amortized over the life of the related debt by the interest method. At each balance sheet date the Company evaluates the recoverability of property, equipment and other long-term assets based upon expectations of nondiscounted cash flows and operating income. f. Goodwill - Goodwill relates primarily to the excess of purchase price over fair value of net assets acquired in the acquisition of Delchamps, Inc. Such costs are being amortized over 40 years by the straight-line method. 27 g. Store Opening/Closing Costs - Non-capital expenditures incurred for new or remodeled retail stores are expensed as incurred. When a store is closed, the remaining investment in fixtures and leasehold improvements, net of expected salvage, is charged against earnings; any remaining lease liability, net of expected sublease recovery, is also expensed. h. Income Taxes - Deferred tax liabilities and assets are determined based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. i. Cash Equivalents - For purposes of reporting cash flows, cash equivalents include investments with maturities of three months or less when purchased. j. Per Share Amounts - Earnings (loss) per common share and earnings (loss) per common share - assuming dilution are based on net income (loss) after preferred stock dividend requirements and the weighted average number of shares outstanding during each period. Earnings (loss) per common share - assuming dilution includes shares attributed to outstanding warrants and options granted to purchase common stock unless inclusion results in antidilution of per share amounts. k. Reclassifications - Certain reclassifications have been made in the prior years' consolidated financial statements to conform to the method of presentation used in the current period. 2. TRANSITIONAL PERIOD FINANCIAL DATA In September 1997, the Company elected to change its fiscal year end from the Saturday nearest April 30 to the Saturday nearest December 31. The change of fiscal year resulted in a transition period of thirty-five weeks beginning May 4, 1997 and ending January 3, 1998, whereas the fiscal year ended May 3, 1997 includes the operations of fifty-three weeks and the fiscal years ended April 27, 1996 and April 29, 1995 include the operations of fifty-two weeks. Presented below are the unaudited consolidated results of operations for the comparable thirty-six week period ended January 4, 1997.
Net sales $ 832,905 Cost of sales 630,129 Direct store expense 139,740 Warehouse, administrative and general expense 37,266 Interest expense, net 25,207 __________ Earnings before income taxes 563 Income taxes 210 __________ Net earnings $ 353 ========== Loss per common share $ (11.26) ==========
3. DELCHAMPS ACQUISITION On September 12, 1997, Delta Acquisition Corporation ("DAC"), a wholly-owned subsidiary of the Company, completed an all cash tender offer for shares of Delchamps, Inc. ("Delchamps"), an Alabama corporation, and accepted for payment approximately 75% of such shares. On November 4, 1997, DAC was merged with and into Delchamps. Delchamps was the surviving corporation and 28 became a wholly-owned subsidiary of the Company. Delchamps is engaged in the business of retail food distribution through supermarkets located in Alabama, Florida, Louisiana, and Mississippi. This acquisition has been accounted for under the purchase method. Holders of certain Delchamps shares dissented from the merger and indicated their intent to pursue their legal remedy under Alabama law. At January 3, 1998, the Company had a remaining liability of $26,637 representing approximately 888,000 shares (this includes dissenting shareholders and other unredeemed shares). The purchase price for the Delchamps acquisition was $236,377, including direct acquisition costs. An affiliate of the Company's majority shareholder was paid fees of approximately $4,000 for services rendered in connection with the acquisition, including the arranging of financing. The excess of the purchase price over the fair values of the net assets acquired was $143,520 and has been recorded as goodwill, which is being amortized on the straight-line basis over forty years. The results of operations of Delchamps have been included in the Company's consolidated financial statements since September 12, 1997. The purchase price, net of cash acquired of $84, has been allocated to the assets acquired and liabilities assumed based upon the fair values at the date of acquisition, as follows:
Receivables and other current assets $12,597 Inventory 95,516 Property, equipment and leasehold improvements 123,606 Deferred income tax assets 15,468 Other assets 2,106 Goodwill 143,520 Accounts payable and accrued expenses (72,448) Notes payable and long-term debt, immediately r (14,463) Capital lease obligations (15,760) Restructuring obligation (53,765) ________ Purchase price $236,377 ========
The following unaudited pro forma information presents a summary of consolidated results of operations of the Company and Delchamps as if the acquisition had occurred at the beginning of the periods presented.
35 Weeks Year Ended Ended Jan- May 3, uary 3, 1998 1997 Net sales $1,434,059 $2,159,542 Cost of sales 1,071,595 1,596,277 Expenses, net of interest 324,792 492,250 Interest expense, net 42,945 67,816 Income tax expense (benefit) (130) 2,994 __________________________________ Net (earnings) loss $ ($5,143) $ $205 ========== ========== Loss per common share $ ($25.18) $ ($17.53) ========== ==========
29 These unaudited pro forma results have been prepared for comparative purposes only and include certain adjustments, such as additional depreciation expense as a result of the step-up in the basis of fixed assets, additional amortization of goodwill, increased interest expense on acquisition debt and certain synergies expected to result from the integration of Delchamps' operations with those of the Company. They do not purport to be indicative of the results of operations that would have occurred if the acquisition had been made as of those dates. In addition, the pro forma information is not intended to be a projection of future results. 4. RECAPITALIZATION On March 5, 1996, JJ Acquisitions Corp. ("JJAC") merged with and into the Company with the Company continuing as the surviving corporation (the "Recapitalization"). JJAC was a wholly- owned subsidiary of Bruckmann, Rosser, Sherrill & Co., L.P. (the "Fund"). Upon consummation of the Recapitalization, 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 Recapitalization. The Recapitalization was accounted for by a charge to equity of $312,571 to reflect the redemption of common stock of the Company outstanding immediately prior to the Recapitalization. A closing fee of $4,000 was paid to the Fund Manager in connection with the Recapitalization. Prior to the Recapitalization JJAC issued 425,000 shares of common stock for an aggregate of $6,500, issued an aggregate of $22,500 in liquidation preference of Class A Preferred Stock, issued $10,000 in liquidation preference of Class C Preferred Stock, and issued warrants to purchase 75,000 shares of common stock to the then holder (along with related investors) of 100% of the Class A Preferred Stock and 15% of the Class C Preferred Stock. The Company issued $27,446 in liquidation preference of Class B Preferred Stock as part of the consideration to shareholders at the time of the Recapitalization. In the Recapitalization the common stock, Class A Preferred Stock, and Class C Preferred Stock issued by JJAC were converted into like shares of the Company and the Company assumed the obligations of JJAC under the warrants. 5. INVESTMENTS IN DEBT SECURITIES Investments in debt securities consisted of U.S. Treasury securities which matured in fiscal year 1997. Proceeds from sale of investments in debt securities were approximately $13,000 (1996) and $6,100 (1995). Losses of $43 (1996) and gains of $14 (1995) were realized on those sales. 6. INVENTORIES Had the cost for all inventories been determined on the first-in, first-out method, inventories would have been higher by approximately $16,497 at January 3, 1998, $17,245 at May 3, 1997 and $18,227 at April 27, 1996. LIFO liquidations resulted in an increase in net earnings of $708 and $148 in the 35 weeks ended January 3, 1998 and the fiscal year ended May 3, 1997, respectively. The effect on net earnings of LIFO liquidations in fiscal years 1996 and 1995 was not material. 30 7. OTHER ASSETS Other assets, net of accumulated amortization of $6,862 (1998), $3,916 (1997) and $3,059 (1996), consisted of the following:
January 3, May 3, April 27, 1998 1997 1996 Debt issue costs $ 27,770 $ 6,913 $ 7,917 License and franchise rights 1,749 746 838 Other 2,718 825 952 ________ ________ ________ Total $ 32,237 $ 8,484 $ 9,707 ======== ======== ========
8. PROPERTY UNDER CAPITAL LEASES AND LEASE COMMITMENTS Leased property capitalized in the financial statements is summarized as follows:
January 3, May 3, April 27, 1998 1997 1996 Store property $85,826 $70,920 $76,371 Computer equipment 3,169 3,169 Less accumulated depreciation (34,925) (32,112) (32,993) _______ _______ _______ $54,070 $41,977 $43,378 ======= ======= =======
Most store leases provide for contingent rentals based on percentages of sales in excess of stipulated amounts. The leases have primary terms ranging from five to twenty years and generally contain renewal options. Portions of store space are sublet under leases. The present value of future minimum lease payments relative to capital leases is included in the financial statements as obligations under capital leases. Lease liabilities are amortized over the lease term using the interest method. The future minimum rental commitments for capital leases and noncancelable operating leases as of January 3, 1998, were as follows:
Capital Operating Leases Leases 1998 $ 16,553 $ 40,546 1999 16,010 39,211 2000 15,492 37,551 2001 13,783 35,421 2002 12,871 34,279 Remaining balance 71,053 219,362 _________ __________ Total minimum lease commitments 145,762 $ 406,370 ==========
31
Capital Lease Less amount representing estimated executory costs (taxes, maintenance and insurance) $ 1,707 _________ Net minimum lease commitments 144,05 Less amount representing imputed interest 68,974 _________ Present value of minimum lease commitments 75,081 Current portion of obligations under capitalized leases 6,760 _________ Obligations under capitalized leases, less current $ 68,321 =========
Minimum rental commitments have not been reduced by minimum sublease rentals of $1,149 applicable to capital leases and $969 applicable to operating leases due in the future under noncancelable subleases. The following schedule shows the composition of total rental expense for all operating leases:
Year Ended 35 Weeks ____________________________________________ Ended Jan- May 3, April 27, April 29, uary 3, 1998 1997 1996 1995 Minimum rentals $17,612 $10,717 $10,211 $10,075 Contingent rentals 230 325 346 328 Less: Sublease rentals (262) (288) (219) (323) _______ _______ _______ _______ $17,580 $10,754 $10,338 $10,080 ======= ======= ======= =======
Rents, net of sublease income, paid to affiliated partnerships under long-term lease commitments were as follows:
Capital leases $1,999 $3,062 $3,017 $3,001 Operating leases 369 331 334 321 ______ ______ ______ ______ $2,368 $3,393 $3,351 $3,322 ====== ====== ====== ======
Obligations to affiliated partnerships under capital leases were $11,639 at January 3, 1998, $8,602 at May 3, 1997 and $9,150 at April 27, 1996. 9. LONG-TERM DEBT Long-term debt consisted of the following: 32
Senior Notes $200,000 $200,000 $200,000 Senior Subordinated Notes 200,000 Senior Credit Facility 49,831 8,000 39,059 ________ _________ ________ $449,831 $208,000 $239,059 ======== ======== ========
Aggregate maturities of long-term debt for the fiscal years following January 3, 1998 are as follows: 2004 $ 49,831 2006 200,000 2007 200,000 __________ $ 449,831 ========== In September, 1997 the Company issued $200,000 of unsecured Senior Subordinated Notes which mature on September 15, 2007 and accrue interest at the rate of 10 3/8% per annum payable semi- annually. The proceeds from issuance of the Senior Subordinated Notes were used to fund a portion of the Delchamps acquisition consideration (see Note 3). The Senior Subordinated Notes are subordinated in right of payment to the Senior Notes and the Senior Credit Facility. Except under certain conditions, the Senior Subordinated Notes are not redeemable at the Company's option prior to September 15, 2002. Thereafter, the Senior Subordinated Notes are subject to redemption at the option of the Company at 105.188% of principal amount if redeemed during the twelve- month period beginning September 15, 2002 decreasing to 100% of the principal amount if redeemed during the twelve-month period beginning September 15, 2005 and thereafter plus accrued and unpaid interest thereon. In March, 1996 the Company issued $200,000 of unsecured Senior Notes which mature on March 1, 2006 and accrue interest at the rate of 12% per annum payable semi-annually. The proceeds from issuance of the Senior Notes were used to fund a portion of the Recapitalization consideration (see Note 4). Except under certain conditions, the Senior Notes are not redeemable at the Company's option prior to March 1, 2001. Thereafter, the Senior Notes are subject to redemption at the option of the Company at 106% of principal amount if redeemed during the twelve-month period beginning March 1, 2001 decreasing to 100% of the principal amount if redeemed during the twelve-month period beginning March 1, 2004 and thereafter plus accrued and unpaid interest thereon. In the event of a change of control as defined in the Indenture, holders of Senior Notes and the Senior Subordinated Notes have the right to require the Company to repurchase all or any part of such holder's notes at a price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest thereon. The Company entered into a revolving credit agreement in March 1996 with several banks which provided a $100,000 Credit Facility and subsequently, in September 1997, the Company amended and restated the agreement to provide a $150,000 Senior Credit Facility. The Credit Facility and the Senior Credit Facility were used to finance a portion of the Delchamps acquisition and the Recapitalization consideration, to refinance certain indebtedness, and to provide for working capital requirements. The commitments under the Senior Credit Facility will terminate and all loans outstanding thereunder will be required to be repaid in full in March, 2004. Borrowings under the Senior Credit Facility, 33 including revolving loans and up to $30,000 in letters of credit, are limited to the lesser of (i) the "total commitment" which initially was $150,000 and (ii) an amount equal to the sum of (a) up to 65% of eligible inventory (valued at the lesser of FIFO cost or current market) and (b) the "supplemental availability" which initially was $53,000. Each of the total commitment and the supplemental availability will be reduced on a quarterly basis, commencing September 1998. The interest rates on borrowings under the Senior Credit Facility are, at the Company's option, a function of the bank's prime rate or LIBOR. The weighted average interest rate of loans under the Senior Credit Facility was 8.89% at January 3, 1998, 8.44% at May 3, 1997 and 8.62% at April 27, 1996. The agreement requires the Company to pay a facility fee at an annual rate of .425% (.50% before March 31, 1997) of the unused amount available under the Senior Credit Facility. Letters of credit aggregating $7,461 at January 3, 1998 and $10,481 at May 3, 1997 and April 27, 1996 were outstanding under the Senior Credit Facility. The Senior Notes and Senior Subordinated Notes are guaranteed on a full, unconditional and joint and several basis by each of the Company's subsidiaries. The Senior Credit Facility is guaranteed by each of the Company's subsidiaries. In addition, obligations under the Senior Credit Facility are secured by a first lien on all of the Company's and its subsidiaries' assets. The Senior Credit Facility and the Indenture pursuant to which the Senior Notes and Senior Subordinated Notes were issued contain numerous covenants which, among other things, restrict or limit the incurrence of indebtedness, payments of dividends and distributions, and capital expenditures. The Senior Credit Facility also contains numerous financial covenants, the more significant of which relate to leverage ratio, interest coverage ratio and cash flows. As of January 3, 1998 the Company was in compliance with the covenants under its debt agreements. 10. RESTRUCTURING OBLIGATION In connection with the Delchamps acquisition, the Company recorded a restructuring obligation of $54,364 relating to (i) stores closed by Delchamps prior to the acquisition; (ii) Delchamps stores to be closed after the acquisition because of unprofitability; (iii) Company and Delchamps stores required to be divested under a consent decree with the Federal Trade Commission; (iv) closure of the Delchamps headquarters in Mobile, Alabama; and (v) closure of the Delchamps warehouse facility in Hammond, Louisiana. The $54,364 consists of $45,291 of future rental payments, $1,591 of severance costs, $474 of loss on divestiture of fixed assets, and $7,008 of miscellaneous expenses related mainly to the shutdown of the Mobile and Hammond facilities. Of the total restructuring costs, $53,765 was recorded as goodwill as part of the purchase price allocation in the Delchamps acquisition and $599 was included as a special charge in the 1998 statement of operations. Charges against the restructuring obligation in 1998 were $770, consisting mainly of lease payments. The obligations at May 3, 1997 and April 27, 1996 represent remaining payments under leases related to stores closed in prior years. Since January 3, 1998, seventeen supermarkets and one gasoline station have been closed or sold, including ten stores that were required to be sold pursuant to the consent agreement with the Federal Trade Commission. 34 11. INCOME TAXES Income taxes were composed of the following:
Year Ended 35 Weeks ___________________________________ Ended Jan- May 3, April 27, April 29, uary 3, 1998 1997 1996 1995 Current provision (benefit) ($3,157) $3,913 $6,485 $9,157 Deferred provision (benefit) (585) (3,574) 2,577 2,260 _______ ______ ______ _______ Total ($3,742) $339 $9,062 $11,417 ======= ====== ====== =======
The income tax provision (benefit) varied from the federal statutory rate of 35% as follows:
Year Ended 35 Weeks __________________________________________ Ended Jan- May 3, April 27, April 29, uary 3, 1998 1997 1996 1995 Federal tax (benefit) at statutory rate ($5,081) $380 $8,742 $10,577 State income taxes (benefit), net of federal tax effect (291) (25) 400 665 Non-deductible amortization 574 IRS assessments 428 Other 628 (16) (80) 175 ________ _____ ______ _______ Income tax provision (benefit) ($3,742) $339 $9,062 $11,417 ======== ===== ====== =======
The sources of temporary differences and the related deferred income tax effects were as follows:
January 3, May 3, April 27, 1998 1997 1996 CURRENT DEFERRED TAX ASSETS (LIABILITIES): Inventory ($4,445) ($2,512) ($1,739) Restructuring obligation 5,433 Accrued compensation and benefits 1,697 562 571 Deferred income 1,303 1,567 Accrued estimated insurance claims 6,766 2,228 1,538 Other 4,927 307 436 _______ _______ _______ Total net current deferred tax asset $15,681 $2,152 $376 ======= ======= ======= NONCURRENT DEFERRED TAX (ASSETS) LIABILITIES: Property and equipment $25,310 $12,975 $13,651 Restructuring obligation (15,447) Capital leases (6,069) (6,710) (5,706) Other 81 133 251 _______ _______ _______ Total net noncurrent deferred tax liability $3,875 $6,398 $8,196 ======= ======= =======
35 Refundable income taxes of $5,663 at January 3, 1998 and $3,890 at April 27, 1996 represent the carryback of the tax net operating loss and the overpayment of estimated taxes, respectively. Such amounts are included in prepaid expenses and other in the balance sheet. Currently payable income taxes of $1,835 at May 3, 1997 are included in accrued expenses. The Company's income tax returns through fiscal year 1994 have been examined by the Internal Revenue Service. 12. CAPITAL STOCK Preferred Stock Preferred stock consisted of the following:
January 3, 1998 May 3, 1997 April 27, 1996 _____________________________________________________________________ Dividend Outstanding Liquidation Carrying Liquidation Carrying Liquidation Carrying Class Rate Shares Preference Amount Preference Amount Preference Amount A 15% 225,000 $ 29,479 $ 27,444 $ 26,722 $ 24,557 $ 22,500 $ 20,146 B 10% 274,460 32,740 32,740 30,685 30,685 27,446 27,446 C - Series 2 10% 23,958 2,858 2,858 2,679 2,679 2,396 2,396 _________ ________ _________ ________ _________ ________ Total Mandatorily Redeemable $ 65,077 $ 63,042 $ 60,086 $ 57,921 $ 52,342 $ 49,988 ========= ======== ========= ======== ========= ======== C - Series 1 10% 76,042 $ 9,071 $ 9,071 $ 8,502 $ 8,502 $ 7,604 $ 7,604 ========= ======== ========= ======== ========= ========
The excess of liquidation preference over the carrying amount of the Class A Preferred Stock is being accreted by periodic charges to retained earnings to the mandatory redemption date. Dividends on Class A Preferred Stock are payable quarterly. Through March, 2001, such dividends are payable, at the Company's option, either by cumulation to liquidation preference or in cash and thereafter are payable in cash. Dividends on Class B Preferred Stock and Class C Preferred Stock cumulate on an annual compounding basis until paid. Cumulative dividends not declared or paid on preferred shares aggregated $14,202 at January 3, 1998. The Class A Preferred Stock is redeemable at the Company's option, (i) at any time after March 1, 2001 at a price equal to the then applicable liquidation preference plus accrued and unpaid dividends and a prepayment premium or (ii) on or prior to March 1, 1999 with the proceeds of a public offering of common stock at a price per share equal to 114% of the then applicable liquidation preference plus accrued and unpaid dividends thereon. All of the Class A Preferred Stock is required to be redeemed on or before March, 2008 at a price per share equal to the then applicable liquidation preference, plus accrued and unpaid dividends thereon. The Class B Preferred Stock and Class C Preferred Stock, Series 2, are redeemable at the Company's option at any time, in whole or in part, at a price per share equal to the then applicable liquidation preference, plus accrued and unpaid dividends. All of the Class B Preferred Stock and all of the Class C Preferred Stock, Series 2, are required to be redeemed in March, 2010 and March, 2011, respectively, at a price per share equal to the then applicable liquidation preference plus accrued and unpaid dividends (including cumulated dividends). The Class C Preferred Stock, Series 1, is not redeemable by the Company at any time. 36 Under certain conditions, as defined, the Company is required to offer to repurchase all shares of preferred stock. Upon a change in control, the Company is required to offer to repurchase all shares of the Class A Preferred Stock at 101% of the then applicable liquidation preference plus accrued and unpaid dividends and all shares of Class B Preferred Stock and all shares of Class C Preferred Stock, Series 1 and Series 2, at 100% of the liquidation preference thereof plus accrued and unpaid dividends. In addition, the Company is required to offer to apply, subject to certain limitations, net proceeds raised through a primary issuance of securities junior to Class B Preferred Stock to repurchase shares of Class B Preferred Stock. Except as required by law and with respect to certain specified matters, Class A Preferred Stock has no voting rights. Neither the Class B Preferred Stock nor the Class C Preferred Stock has any voting rights, except as required by law. The Class A Preferred Stock is exchangeable (with cumulated dividends) at the Company's option, in whole but not in part, for subordinated exchange debentures of the Company. The exchange debentures will pay interest from the date of the exchange at the rate of 15% per annum, consisting of, at the Company's option, additional exchange debentures or cash on or prior to March, 2001 and cash thereafter. The exchange debentures will mature in March, 2008. Class A Preferred Stock ranks senior to Class B Preferred Stock and Class C Preferred Stock in right of payment of cash dividends, liquidation preference and redemption (both mandatory and optional). The Class C Preferred Stock ranks junior to the Class B Preferred Stock in right of such cash payments. The Senior Credit Facility and the Indenture (see Note 9) restrict the Company's ability to pay cash dividends, exchange Class A Preferred Stock for exchange debentures and redeem or repurchase Class A Preferred Stock, Class B Preferred Stock, Class C Preferred Stock and exchange debentures. Warrants Warrants to purchase 75,000 shares of common stock were issued in conjunction with the Recapitalization (see Note 4) and were outstanding as of May 3, 1997 and April 27, 1996. The warrants were recorded at fair value of $881 at date of issue. The warrants have an exercise price of $.01 per share and will expire in 2008. 13. STOCK OPTION PLAN On October 25, 1996, the Board of Directors of the Company, who also hold a majority of the Company's issued and outstanding common stock, authorized the grant of stock options to certain executives and key officers. During the period ended January 3, 1998, the Company adopted the Jitney-Jungle Stores of America, Inc. 1997 Stock Plan (the "1997 Plan"). The 1997 Plan authorizes grants of stock options covering 50,000 shares of the Company's common stock. Grants under the 1997 Plan may take the form of incentive or non-qualified stock options. Options vest one-third each year. With certain exceptions, the options are granted for a term of ten years. Grants under the 1997 Plan are made at a price that is not less than the fair market value as determined by the Board of Directors or a Committee of the Board at the effective date of grant. 37 The following is a summary of the stock option activity:
Options Weighted Average Outstanding Exercise Price Balance at May 3, 1997 0 $0 Granted 37,660 98.57 ______ ______ Balance at January 3, 1998 37,660 $98.57 ====== ======
The following table summarizes information about stock options outstanding at January 3, 1998:
Exercise Options Weighted Average Weighted Average Price Range Outstanding Remaining Contractual Exercise Price $62.50 to $72.50 17,700 9.1 Years $69.90 $124.00 19,960 10.0 Years $124.00
At January 3, 1998, options covering 1,533 shares were exercisable at a price of $62.50 per share. During the period ended January 3, 1998, The Company adopted Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation," which requires companies to estimate the fair value for stock options on the date of grant. Under SFAS No. 123, the Company is required to record the estimated fair value of stock options issued as compensation expense in its statements of earnings over the related service periods or, alternatively, continue to apply the accounting methodologies as prescribed by Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees," and disclose the pro forma effects of the estimated fair value of stock options issued in the accompanying footnotes to its financial statements. In adopting SFAS No. 123, the Company decided to follow the accounting methodologies as prescribed by APB Opinion No. 25. The pro forma effects of the total compensation expense that would have been recognized during the period ended January 3, 1998 under SFAS No. 123 are as follows:
Net loss, as reported $10,777 Pro forma net loss $10,870 Loss per share, as reported $38.44 Pro forma loss per share $38.66
In adopting SFAS No. 123, the Company estimated the fair value of stock options granted using the following assumptions:
Expected dividend yield None Expected option life 6 Years Risk-free interest rate 6.14%
Based on the results of the computations, the weighted-average fair value per option on the effective date of grant was $30.10 38 14. EMPLOYEE BENEFIT AND COMPENSATION PLANS The Company has a profit-sharing plan covering substantially all employees with one or more years' service. Contributions are made at the discretion of the Board of Directors of the Company. Such expense totaled $1,013 in the 35 weeks ended January 3, 1998 and $1,200 in fiscal years ended in 1997, 1996, and 1995. Prior to March 1996, the Company had a Phantom Stock Plan for certain key officers whereby deferred compensation units (expressed in shares of common stock) were earned to the extent that performance targets (expressed in terms of growth in stockholders' equity) were met. The amounts payable in accordance with the provisions of the Phantom Stock Plan became fully vested and immediately payable at the time of the Recapitalization (see Note 4). Effective with the Recapitalization $4,252 was paid to the participants and $712 was applied against the purchase price for shares of Class C Preferred Stock acquired by them in connection with the Recapitalization. Effective with the Recapitalization the Phantom Stock Plan was amended and restated and renamed the Deferred Compensation Plan for Jitney-Jungle Stores of America, Inc. Under the amended plan no further awards may be made and no other individuals will become participants. Units credited to the participants consist of a cash amount payable in accordance with the terms of the Phantom Stock Plan before its amendment and an amount that will continue to be credited under the terms of the plan to an account, the value of which will be equal to the value of the number of shares of Class C Preferred Stock of the Company that could be acquired with that amount. With respect to the amounts that continue to be credited under the plan as amended, an amount equal to the amount of any cash dividends that would have been paid on the number of shares of preferred stock credited to each participant's account will be paid to the participant at the same time as any cash dividends actually are paid on the preferred stock. Payment otherwise will be made under the amended plan at the same time as the preferred stock is redeemed, in an amount equal to the redemption price times the number (or proportionate number, in the event of a partial redemption) of shares of preferred stock credited to the participant's account. 15. SPECIAL CHARGES Special charges consisted of the following: Severance benefits $510 $958 Amounts due former chief executive officer 1,779 Fees related to bridge financing in the Delchamps acquisition 2,008 Loss on stores to be sold under the consent decree with the Federal Trade Commission in the Delchamps acquisition 599 ______ ______ $3,117 $2,737 ====== ======
39 The $1,779 is attributable to the employment agreement with the Company's then Chairman and Chief Executive Officer who, in January 1997, relinquished his position and duties as Chief Executive Officer. Payments to be made under the employment agreement were deemed not to relate to future services to be provided by the Chairman and, accordingly, such amounts were charged to expense. 16. EXTRAORDINARY ITEM In connection with the Delchamps acquisition in the 35 week period ended January 3, 1998 and the Recapitalization in the fiscal year ended April 27, 1996, the Company retired certain long-term debt prior to its scheduled maturity. Early retirement of such debt resulted in extraordinary losses of $870 (1998) and $1,456 (1996), net of income tax benefits of $518 and $866, respectively. 17. EARNINGS (LOSS) PER COMMON SHARE During the period ended January 3, 1998, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share." The adoption of SFAS No. 128 had no effect on the previously reported earnings (loss) per common share for prior years. The following is a reconciliation of earnings (loss) before extraordinary item as reported in the accompanying statements of operations to earnings (loss) attributable to common stockholders used in computing earnings (loss) per common share and in computing earnings (loss) per common share - assuming dilution. Also presented is a reconciliation of weighted average common shares outstanding used in computing earnings (loss) per common share to weighted average common shares used in computing earnings (loss) per common share - assuming dilution.
Year Ended 35 Weeks ________________________________________ Ended Jan- May 3, April 27, April 29, uary 3, 1998 1997 1996 1995 Earnings (loss) before extra ($9,907) $746 $15,915 $18,803 Preferred stock dividends (5,560) (7,655) (987) ________ _______ _______ _______ Earnings (loss) attributable to common stockholders ($15,467) ($6,909) $14,928 $18,803 ======== ======= ======= ======= Weighted average common shares outstanding 425,000 425,000 80,321 20,368 Warrants 10,920 ________ _______ _______ _______ Weighted average common shares outstanding - assuming dilution 425,000 425,000 91,241 20,368 ======== ======= ======= =======
Warrants issued in 1996 to purchase 75,000 shares of common stock have not been included in 1997 and 1998 and options granted in the 35 weeks ended January 3, 1998 to certain executives and key officers to purchase 37,660 shares of common stock have not been included in 1998 to calculate the weighted average common shares used in computing earnings (loss) per common share - assuming dilution because to do so would have been antidilutive for those periods. 40 18. FAIR VALUES OF FINANCIAL INSTRUMENTS In accordance with Statement of Financial Accounting Standards (SFAS) No. 107, "Disclosures About Fair Value of Financial Instruments", information is provided about the fair value of certain financial instruments for which it is practicable to estimate that value. The fair value amounts disclosed represent management's best estimate of fair value. Certain financial instruments and all nonfinancial instruments are excluded, in accordance with SFAS No. 107. The aggregate fair value amounts presented are not intended to represent the underlying aggregate fair value of the Company. The estimated fair values are significantly affected by assumptions used, principally the timing of future cash flows, the discount rate, judgments regarding current economic conditions, risk characteristics of various financial instruments and other factors. Because assumptions are inherently subjective in nature, the estimated fair values cannot be substantiated by comparison to independent quotes and, in many cases, the estimated fair values could not necessarily be realized in an immediate sale or settlement of the instrument. The following methods and assumptions were used by the Company in estimating fair value disclosures for financial instruments: Cash and cash equivalents: The carrying amount reported in the balance sheet approximates fair value. Investments in debt securities: The securities are carried at fair value and are based on quoted market prices. Receivables, accounts payable and accrued expenses: The carrying amount reported in the balance sheet approximates fair value. Long-term debt: The fair value of the Company's Senior Notes and Subordinated Notes is based on quoted market prices. The interest rates on borrowings under the Senior Credit Facility reset periodically. Consequently, the carrying value of borrowings under the Senior Credit Facility approximates fair value. Redeemable preferred stock: The fair value of redeemable preferred stock is estimated at carrying value as such stock is not traded in the open market and a market price is not readily available. The carrying amounts and fair values of the Company's financial instruments were as follows: 41
January 3, 1998 May 3, 1997 April 27, 1996 _________________________________________________________________________________ Carrying Fair Carrying Fair Carrying Fair Amount Value Amount Value Amount Value Cash and cash equivalents $11,984 $11,984 $14,426 $14,426 $5,676 $5,676 Investments in debt securities 337 337 Receivables 13,833 13,833 5,463 5,463 4,892 4,892 Accounts payable 112,641 112,641 49,978 49,978 40,008 40,008 Accrued expenses 102,195 102,195 33,088 33,088 23,165 23,165 Long-term debt: Senior Notes 200,000 237,182 200,000 217,000 200,000 204,700 Senior Subordinated Notes 200,000 210,867 Senior Credit Facility 49,831 49,831 8,000 8,000 39,059 39,059 Redeemable preferred stock 63,042 63,042 57,921 57,921 49,988 49,988
19. ACCOUNTING STANDARD TO BE ADOPTED IN THE FUTURE In June 1997, the Financial Accounting Standards Board issued SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information" which is effective for fiscal years beginning after December 15, 1997. SFAS No. 131 redefines how operating segments are defined and requires disclosure of certain financial and descriptive information about a company's operating segments. The Company has not yet completed its analysis of which operating segments it will report on. 20. COMMITMENTS AND CONTINGENCIES The Company is defendant in certain litigation incurred in the normal course of business. Management, after consulting legal counsel, is of the opinion that the 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 1996, the Company entered into a five-year supply agreement, which replaced a previously existing agreement, relating to merchandise purchases for stores located in Memphis, Tennessee and Little Rock and Pine Bluff, Arkansas. In April 1997, the Company sold the operating assets of its bakery subsidiary for $750 and received $5,250 as consideration for entering into a five-year supply agreement with the purchaser of such operating assets. The $5,250 is being amortized over the term of the supply agreement. In connection with the Delchamps acquisition, the Company amended a pre-existing agreement whereby the Fund Manager is entitled to receive $1,000 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 up to one percent of the Company's earnings before interest, income taxes, depreciation, amortization and certain special charges, computed on a quarterly basis. Management fees for the 35 weeks ended January 3, 1998 and the fiscal year ended May 3, 1997 approximated $484 and $250, respectively. * * * * * * 42 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Stockholders of Jitney-Jungle Stores of America, Inc.: We have audited the accompanying consolidated balance sheets of Jitney-Jungle Stores of America, Inc. and subsidiaries ("the Company") as of January 3, 1998, May 3, 1997 and April 27, 1996, and the related consolidated statements of operations, changes in stockholders' equity, and cash flows for the thirty-five weeks ended January 3, 1998 and for each of the three fiscal years in the period ended May 3, 1997. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Jitney-Jungle Stores of America, Inc. and subsidiaries as of January 3, 1998, May 3, 1997 and April 26, 1996, and the results of their operations and their cash flows for the thirty-five weeks ended January 3, 1998, and for each of the three fiscal years in the period ended May 3, 1997, in conformity with generally accepted accounting principles. /s/ Deloitte & Touche LLP Jackson, Mississippi March 6, 1998 43 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure There has been no change of accountants or reporting disagreements on any matters of accounting principle, practice, financial statement disclosure or auditing scope or procedure during the 35 weeks ended January 3, 1998 and the two most recent fiscal years. PART III Item 10. Directors and Executive Officers of the Registrant Directors and Executive Officers Name Age Position W. H. Holman, Jr. 67 Chairman of the Board since 1967. Chief Executive Officer of the Company from 1967 until January 1997. Member of the Board of two private companies. Michael E. Julian 47 Chief Executive Officer since January 1997 and formerly President of the Company from May 1997 to December 1997. Director of the Company since April 1996. Prior to January 1997 served as Chairman, President and Chief Executive Officer of Farm Fresh, Inc. since 1988. Mr. Julian is a member of the Compensation committee. Ronald E. Johnson 48 President and Chief Operating Officer since December 1997. Director of the Company since May 1996. Previously served as Retail Grocery- President and Chief Executive Officer of Farm Fresh, Inc. from January 1997 to December 1997, Retail Grocery - Chairman, President and Chief Executive Officer of Kash n' Karry from 1995 to 1997 and Retail Grocery - Executive Vice President and Chief Operating Officer of Farm Fresh, Inc. from 1988 to 1995. Mr. Johnson is a member of the Audit committee. Donald D. Bennett 61 Director of the Company since September 1997. Chairman of the Board of Rich Food Holding, Inc. since 1980. Member of the Board of Directors of Rich Food Holdings, Inc. 44 Directors and Executive Officers (Continued) Name Age Position Bruce C. Bruckmann 44 Director of the Company since March 1996 and a principal in BRS. He was an officer and subsequently a Managing Director of Citicorp Venture Capital, Ltd. ("CVC") from 1983 through 1994. Member of the Board of Directors or Chairman of the Board of AmeriSource Distribution Corp., CORT Business Services Corp., Chromcraft Revington, Inc., Mohawk Industries, Inc., Town Sports International Inc. and Anvil Knitwear Inc. as well as several private companies. Bernard J. Ebbers 56 Director of the Company since August 1996. President and Chief Executive Officer of WorldCom, Inc. since 1983. Member of the Board of Directors of WorldCom, Inc. Mr. Ebbers is a member of the Compensation committee. Roger P. Friou 63 Director of the Company since June 1984. Private investor since 1997. Prior to May 1997, served as President of the Company from March 1996 and as Vice Chairman, Chief Financial Officer, and Secretary of the Company since 1991. Member of the Board of Directors of Parkway Properties Inc. Mr. Friou is a member of the Audit and Compensation committees. John M. Moriarty, Jr. 41 Director of the Company since April 1996. A Managing Director of Donaldson, Lufkin & Jenrette Securities Corporation since 1989 and a Managing Director of DLJ Merchant Banking, Inc. since January 1996. Member of the Board of Directors of a private company. Mr. Moriarty is a member of Audit Committee. Harold O. Rosser, II 49 Director of the Company since March 1996 and a principal in BRS. He was an officer and subsequently a Managing Director of Citicorp Venture Capital, Ltd. ("CVC") from 1987 through 1995. Member of the Board of Directors of Davco Restaurants, Inc., as well as a private company. Mr. Rosser is the Chairman of the Compensation committee. 45 Directors and Executive Officers (Continued) Name Age Position Stephen C. Sherrill 45 Director of the Company since March 1996 and a principal in BRS. He was an officer and a Managing Director of Citicorp Venture Capital, Ltd. from 1983 through 1995. Member of the Board of Directors of Galey & Lord, Inc., and of several private companies. Mr. Sherrill is the Chairman of the Audit committee. David R. Black 45 Senior Vice President - Finance/Chief Financial Officer since 1996. Previously served as Treasurer and Controller from 1986. R. Barry Cannada 42 Executive Vice President - General Counsel and Assistant Secretary since January, 1998. Previously served as a Partner with the law firm of Butler, Snow, O'Mara, Stevens & Cannada, PLLC from 1981 to 1997. David K. Essary 48 Executive Vice President from March 1996 until January 1998 (resigned January 1998). Previously served as Executive Vice President - Retail Operations from 1991. Harold D. Evans 53 Senior Vice President - Store Operations from 1993 until March 1998 (resigned March 1998). Previously served as Vice President - Store Operations from 1986. J. R. Hansbrough 42 Senior Vice President - Information Services from January 1996 to January 1998 (resigned January 1998). Previously served as Vice President - Information Services from 1994. Prior to that was a consultant and marketing representative with IBM Corporation from 1982. Stephen R. Harmon 45 Executive Vice President - Marketing and Merchandising since June 1997. Previously served as Retail Grocery - Senior Vice President - Merchandising of Farm Fresh, Inc. from 1982 to June 1997. W. H. Holman, III 34 Secretary of the Company since 1996 and also serves as President of Pump And Save, Inc. Previously served as Senior Vice President - Sales and Marketing from 1992 and Vice President - Sales and Marketing from 1991 and is the son of W. H. Holman, Jr. Member of the Board of Directors of one private company. 46 Directors and Executive Officers (Continued) Name Age Position Jerry L. Jones 46 Senior Vice President - Administrative Operations since April 1997. Senior Vice President - Retail Operations March 1996 to April 1997. Previously served as Senior Vice President - Human Resources since 1991. Prior to that, served as Vice President, Human Resources from 1989. James P. Riley 48 Senior Vice President - Engineering since 1996. Previously served as Vice President - Engineering from 1991 and Director of Engineering Services from 1985. Clyde D. Staley 60 Senior Vice President - Real Estate since 1996. Previously served as Vice President - Real Estate from 1985. Albert J. Wanzelak 47 Senior Vice President - Human Resources since August 1997. Prior to that served as Retail Grocery - Vice President - Human Resources of Farm Fresh, Inc. from August 1987 to August 1997. 47 Item 11. Executive Compensation The following table summarizes the compensation paid to or accrued by the Company for the chief executive officer and the other four most highly compensated executive officers of the Company during fiscal 1997 stub.
Summary Compensation Table ________________________________________________________________________________________ Long-Term Annual Compensation Compensation _________________________________ ____________ Other Annual All Other Bonus Compen- LTIP Compen- Salary and/or sation Payouts sation Name and Principal Position Year Severancs ___________________________ ____ _____ _________ _______ __________ ________ W.H. Holman, Jr., Chairman 97stub $235,577 $117,788 $1,988 $10,583 1997 331,182 162,920 2,633 15,795 1996 315,100 121,193 2,216 $1,894,039 15,840 Michael E. Julian, CEO 97stub 253,846 248,077 1,353 263 1997 57,692 75,000 David K. Essary, Executive 97stub 127,212 263,606 1,627 102,384 Vice President 1997 192,463 89,653 2,251 103,485 (Resigned January 1998) 1996 176,700 67,307 1,745 110,229 103,425 John R. Hansbrough, Senior 97stub 86,981 151,390 1,326 1,847 Vice President Information 1997 125,077 7,846 1,564 2,756 Services 1996 120,000 9,046 1,455 2,051 (Resigned January 1998) David R. Black, Senior Vice 97stub 94,330 76,775 1,112 2,024 President Finance 1997 125,000 9,865 1,513 2,834 1996 120,768 13,846 1,327 2,820 Jerry L. Jones, Senior Vice 97stub 92,896 46,448 1,422 2,253 President Administrative 1997 133,000 33,250 1,790 3,149 Operations 1996 125,200 23,654 1,727 3,141
The amounts shown in this column include amounts contributed as salary deferral contributions under the Jitney-Jungle Stores of America, Inc. and Affiliates Profit Sharing Plan and Trust (the "401 (k) Plan"). Other annual compensation includes the annual estimated value of an automobile furnished by the Company. Includes distributions from the Phantom Stock Plan. Includes Company matching contributions under the 401(k) Plan, Company profit sharing contributions under the 401(k) Plan and premiums for group term life insurance. During fiscal 1997, the Company recognized a special charge of approximately $1.8 million attributable to an employment agreement which allows future payments to be received by Mr. Holman, of which $365,936 was received by Mr. Holman in fiscal 1997 stub. Includes annual installments of $100,000 per year as per an employment agreement with Mr. Essary. 48 STOCK OPTION PLAN The Company has in effect an employee stock option plan pursuant to which options to purchase Common Stock of the Company are granted to certain executives and key officers of the Company. The following table shows option grants in the 1997 stub to the named executive officers:
OPTION GRANTS IN 35 WEEKS ENDED JANUARY 3, 1998 ___________________________________________________________________________________________________________ POTENTIAL REALIZABLE VALUE AT ASSUMED ANNUAL RATES OF STOCK PRICE APPRECIATION FOR INDIVIDUAL GRANTS OPTION TERMS _____________________________________________ __________________________________ Number of Securities % of Total Exercise Underlying Options or Base Option Granted to Price Expiration Name Grants Employees ($/Sh) Date 0% 5% 10% ____ ___________ __________ _______ _________ _________ _________ _________ Michael E. Julian 13,100 34.8% $72.50 2/23/07 949,750 1,547,043 2,463,407 David R. Black 850 2.3% $62.50 10/24/06 53,125 156,083 349,212 Jerry Jones 1,200 3.2% $62.50 10/24/06 75,000 190,018 400,792 Other executive 20,385 54.1% 2,370,915 3,751,736 5,814,44 officers Other officers 2,125 5.6% 263,500 482,444 845,265
All of the stock options granted to the officers are non- qualified options and have a term of ten years from the date of grant. Options granted to each officer become exercisable based on length of service with the Company. The assumptions set forth in the chart above are merely examples and do not represent predictions of future stock prices or a forecast by the Company with regard to stock prices. The dollar gains shown in these columns reflect a future value based upon growth at the prescribed rates. The column labeled 0% shows the value at the date of grant of stock options whose exercise price was below the market price of the Company's Common Stock at the date of grant. No options were exercised during the fiscal year ended May 3, 1997. 49 Directors Fees Directors who are employees of the Company do not receive additional compensation as directors. Directors who are not employees receive directors' fees of $12,000 per year plus $1,000 for each Board of Directors' meeting attended and $500 for each committee meeting attended. Committees and Meetings of the Board of Directors The Board of Directors held four regular meetings during fiscal 1997 stub. All directors attended at least 75% of the total meetings of the Board of Directors and the committees of which they were members. The Company has an Audit Committee, which is a standing committee of the Board of Directors, presently consisting of three members who are Stephen C. Sherrill, Chairman, John M. Moriarty, Jr. and Roger P. Friou. Audit Committee's responsibilities include: (i) reviewing the plan, (ii) scope and results of the independent audit and reporting to the full Board whether financial information is fairly presented and whether generally accepted accounting principles are followed, (iii) monitoring the internal accounting and financial functions of the Company to assure quality of staff and proper internal controls, (iv) investigating conflicts of interest, (v) compliance with ethical standards and compliance with laws and regulations. There were no meetings of the Audit Committee during fiscal 1997 stub. The Company has a Compensation Committee, which is a standing committee of the Board or Directors, presently consisting of Harold O. Rosser, Chairman, Roger P. Friou and Bernard J. Ebbers. The Compensation Committee's responsibilities are to determine annual salaries and bonuses to the Company's senior management and to administer the Company's stock option and benefit programs. There was one meeting of the Compensation Committee during fiscal 1997 stub. Employment Agreements W. H. Holman, Jr. has an employment contract with the Company covering the period through February 28, 2001. The agreement provides that Mr. Holman, Jr. will serve as Chairman of the Board and as Chief Executive Officer, at the discretion of the Board of Directors. The Board of Directors elected Michael E. Julian as Chief Executive Officer in January 1997. If Mr. Holman, Jr. ceases to be Chairman of the Board prior to February 28, 2001, he will continue to serve on the Board of Directors as Chairman Emeritus until February 28, 2001, with a salary equal to his base salary then in effect until February 28, 1999, and 50% of such base salary thereafter. Mr. Holman, Jr. is also eligible for a bonus through February 28, 1999. Mr. Essary has an employment contract with the Company providing for a base salary of approximately $186,000 per year for the period from March 1, 1995 through February 28, 1998. He is eligible for a bonus of up to 50% of his base salary less $11,000. A provision in his employment contract states that upon change in control of the Company, Mr. Essary will be 50 awarded a payment of up to $300,000 to be paid in annual installments of $100,000, beginning February 28, 1996. Mr. Essary became entitled to receive such payments, with the first $100,000 installment thereof paid in March 1996 after the consummation of the Merger, the second installment paid in March 1997 and the third installment was included in Mr. Essary's severance payment. In January 1998, Mr. Essary resigned from the Company. W. H. Holman, III has an employment contract with the Company covering the period through February 28, 1998 and will serve, at the discretion of the Board of Directors, as Secretary of the Company and as President of Pump and Save, Inc. Mr. Holman, III will receive a base salary of no less than $110,000 per year through February 28, 1998, subject to periodic increases as determined by the Board of Directors. Mr. Holman, III is also entitled to a bonus of up to 50% of his base salary less $11,000. 401(k) Plan The Company maintains the Jitney-Jungle Stores of America, Inc. and Affiliates Profit Sharing Plan and Trust (the "401(k) Plan") for the benefit of its employees who have satisfied the plan's eligibility requirements. Participants are permitted to make pretax salary reduction contributions, up to the amount permitted under applicable tax law. The Company makes a matching contribution equal to 50% of each participant's salary reduction contribution, up to a maximum of 2% of the participant's compensation. In addition, the Company may make additional profit sharing contributions in its discretion. Although in prior years the Company has made discretionary profit sharing contributions, it has no obligation to do so in the future. Company contributions become vested when the participant has been credited with five years of service. In March 1996, shares of Common Stock of the Company held under the 401(k) Plan were surrendered in connection with the Merger, and exchanged for cash and Class B Preferred Stock as provided in the Merger Agreement. In addition, the plan acquired Common Stock and Class C Preferred Stock for cash consideration. The Company's 401(k) Plan and the Delchamps Profit Sharing Plan are currently being merged into one plan. The estimated completion date for this transaction is the summer of 1998. At the time of the merger, the 401(k) Plan will be amended to bring it into compliance with the new statutory changes and the plan year will be changed to a calendar year. 51 Item 12. Security Ownership of Certain Beneficial Owners and Management The following table sets forth certain information regarding the beneficial ownership of Common and Preferred Stocks as of January 3, 1998, by (i) each director, (ii) the chief executive officer and each of other most highly compensated executive officers of the Company, (iii) all executive officers and directors as a group and (iv) the Company's principal stockholders. Other than as set forth in the table below, there are no persons known to the Company to beneficially own more than 5% of the Common Stock. No Company securities are owned by John M. Moriarty, Jr., Bernard J. Ebbers, Donald D. Bennett or Ronald E. Johnson, each of whom is a director of the Company (Mr. Johnson is also an executive officer of the Company).
Number and Number and Number and Number and Name and Address Percentage of Percentage of Percentage of Percentage of for Beneficial Shares of Shares of Class A Shares of Class B Shares of Class C Owners over 5% Common Stock Preferred Stock Preferred Stock Preferred Stock ________________ __________________ _________________ _________________ _________________ Bruckmann, Rosser, Sherrill & Co., L.P. 353,750/83.24% ---- ---- 75,508/75.51% 126 East 56th Street New York, NY 10022 W. H. Holman, Jr. 29,699/6.99% ---- 21,516/7.84% 4,742/4.72% Jitney-Jungle Stores of America, Inc. P. O. Box 3409 Jackson, MS 39207 DLJ Merchant 1,252/1.25% Bruce C. Bruckmann 353,7250/83.24% ---- ---- 75,508/75.51% Harold O. Rosser, II 353,750/83.24% ---- ---- 75,508/75.51% Stephen C. Sherrill 353,750/83.24% ---- ---- 75,508/75.51% David K. Essary 11,250/2.65% ---- ---- 1,125/1.13% John R. Hansbrough 850/* ---- ---- 85/* David R. Black 850/* ---- ---- 85/* Jerry L. Jones 1,200/ * ---- ---- 120/* All directors and executive officers as a group (18) 421,359/99.14% ---- 26,729/9.74% 92,207/92.21%
*Owns less than 1% of the total outstanding Common Stock, Class B Preferred Stock and Class C Preferred Stock. 52 Includes 331,732 shares of common stock owned directly by Bruckmann, Rosser, Sherrill & Co., Inc., L.P. ("BRS") and 22,018 shares to which BRS possesses sole voting power. BRS is a limited partnership, the sole general partner of which is BRS Partners and the manager of which is BRS. The sole general partner of BRS Partners is BRSE Associates. Bruce C. Bruckmann, Harold O. Rosser, II, Stephen C. Sherrill and Stephen F. Edwards are the only stockholders of BRS and BRSE Associates and may be deemed to share beneficial ownership of the shares shown as beneficially owned by the Fund. Such individuals disclaim beneficial ownership of any such shares. Includes 10,000 shares of common stock owned directly and 19,699 shares to which Mr. Holman possesses sole voting power. All shares of Class B Preferred Stock are owned by Trustmark National Bank ("Trustmark") pursuant to an escrow agreement by and among Trustmark, the Company and former Common Stock shareholders of the Company. Certain of the officers of the Company own an interest in the escrow account through which they have a beneficial interest in the number of shares of Class B Preferred Stock listed in this table. DLJ Merchant Banking Partners, L.P. ("DLJ") and related investors have received outstanding warrants to purchase 15.0%, on a fully diluted basis, of the outstanding Common Stock of the Company as outlined in the Shareholders Agreement referred to under Item 13. Includes 6,605 shares of common stock owned directly and 347,145 shares to which BRS possesses sole voting power. Includes 1,326 shares of common stock owned directly and 352,383 shares to which BRS possesses sole voting power. Includes 4,423 shares of common stock owned directly and 349,327 shares to which BRS possesses sole voting power. Mr. Essary resigned January 1998. Mr. Hansbrough resigned January 1998. 53 Item 13. Certain Relationships and Related Transactions. BRS received a closing fee of $4.0 million at the consummation of the acquisition of Delchamps. They also received $4.0 million in connection with the Merger in 1996. In addition, BRS is entitled to receive 1% of earnings before interest, income taxes, depreciation, amortization and certain special charges annually, with a minimum of $1.0 million per year, computed on a quarterly basis from the Company as a management fee for the performance of strategic and financial planning services in the future. In the 1997 stub and fiscal year 1997, BRS received $.48 million and $.25 million, respectively. Messrs. Bruckmann, Rosser, Sherrill and Edwards (not a director of the Company) are the only stockholders of BRS and BRSE Associates. BRSE Associates is the sole general partner of BRS Partners, which is the sole general partner of Bruckmann, Rosser, Sherrill & Co., L.P. (the "Fund"). The Fund is the majority stockholder of the Company. DLJ Merchant Banking Partners, L.P. ("DLJ") and related investors received $6.0 million underwriting discount and commission from the acquisition of Delchamps and public offering of Senior Subordinated Notes in 1997. They also received $6.0 million in connection with the Merger in 1996. Mr. Moriarty, a director in the Company, is an officer with DLJ. Pursuant to an agreement with the Company, McCarty- Holman Co., L.P. (the "Partnership") is the exclusive agent for the Company to rent, lease, operate and manage all locations where the Company has sublet space to various tenants and where it has space vacant and available for subleasing. W. H. Holman, Jr. owns a noncontrolling interest in the Partnership. Under the agreement, the Partnership is entitled to fees as follows: (i) for management: 4% of all rental/lease collections; (ii) fees for leasing: 6% of the annual rent (for a month-to- month tenancy; one-half of the first month's rent); and (iii) fees for services other than as delineated above are negotiated. In the 1997 stub and fiscal year 1997, the Partnership received approximately $37,000 and $41,000 respectively, in fees pursuant to this agreement. Management believes that the agreement is on an arm's length basis and is on terms that are no less favorable to the Company than could have been obtained with non-affiliated parties at the time the agreement was entered into. W. H. Holman, Jr., W. H. Holman, III, Clyde Staley and Roger P. Friou own in the aggregate noncontrolling interests in certain partnerships that are landlords under twenty (20) leases (involvement is Holman, Jr., 18 leases; Holman, III, 6 leases; Staley, 5 leases; and Friou, 8 leases) for stores or other facilities where the Company and its subsidiaries are the tenants. In the 1997 stub and fiscal year 1997, the Company paid a combined total rent under these twenty (20) leases of approximately $2.6 million and $3.6 million, respectively. Management believes that each of these leases is on an arm's length basis and is on terms that are no less favorable to the Company than could have been obtained with non-affiliated parties at the time each lease was entered into. David K. Essary, Executive Vice President, had an outstanding loan for the purchase of Common Stock from the Company in the amount of $79,906 as of January 3, 1998. This note was paid subsequent to year end. The seven (7) other executive officers have combined loans outstanding of $64,412 which were used for the purchase of the Company's Common 54 Stock and Class C Preferred Stock. Two (2) other executive officers have combined loans outstanding of $51,000 which are for real estate property . Certain shareholders of the Company, entered into a Shareholders Agreement which contains certain agreements among such shareholders with respect to the capital stock and corporate governance of the Company. The shareholders involved are Bruckmann, Rosser, Sherrill & Co., L.P., DLJ Merchant Banking Partners, L.P., and Messrs. W. H. Holman, Jr., Roger P. Friou, and W. H. Holman, III. Agreements regarding corporate governance and the capital stock of the Company were also entered into by the Company, Bruckmann, Rosser, Sherrill & Co., L.P., and Messrs. W.H. Holman, Jr., Roger Friou, W.H. Holman, III, David Essary, Jerry Jones, Stephen R. Harmon, David R. Black, Harold D. Evans, James P. Riley, J.R. Hansbrough, and Clyde D. Staley in the Securities Purchase and Holders Agreement. Pursuant to an agreement with the Company, Michael E. Julian received a fee of $170,000 in fiscal year 1997 for certain consulting services provided to the Company. 55 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K The following is an index of the financial statements, schedules and exhibits included in this Report or Incorporated herein by reference: (a) 1. Financial Statements: Consolidated Balance Sheets as of January 3, 1998, May 3, 1997 and April 27, 1996. Consolidated Statements of Operations for the thirty- five weeks ended January 3, 1998 and for each of the three fiscal years in the period ended May 3, 1997. Consolidated Statements of Changes in Stockholders' Equity for the thirty-five weeks ended January 3, 1998 and for each of the three fiscal years in the period ended May 3, 1997. Consolidated Statements of Cash Flows for the thirty- five weeks ended January 3, 1998 and for each of the three fiscal years in the period ended May 3, 1997. Notes to Consolidated Financial Statements Independent Auditors' Report 2. Financial Statement Schedules: There are no Financial Statement Schedules included with this filing for the reason that they are not applicable, are not required, or the information is included in the financial statements or notes thereto. 3. Exhibits The following is an index of the exhibits included in this Annual Report on Form 10-K or incorporated herein by reference: Exhibit No. *2.1 Agreement and Plan of Exchange and of Merger, dated as of November 16, 1995 by and among JJ Acquisitions Corp. and Jitney-Jungle Stores of America, Inc., Southern Jitney Jungle Company, McCarty-Holman Co., Inc. and Jitney-Jungle Bakery, Inc. (incorporated by reference to Exhibit No. 2.1 to Amendment No. 2 to Form S-1 [No. 33-80833] of JJ Acquisitions Corp. filed with the Commission on February 27, 1996). 56 *2.2 Agreement and Plan of Merger dated July 8, 1997 by and among the Company, Delchamps, Inc. and Delta Acquisition Corporation (incorporated by reference to Exhibit 2 to Form 8-K [No. 33-80833] of the Company dated July 14, 1997). *3.1 Amended and Restated Articles of Incorporation of Jitney-Jungle Stores of America, Inc. (including designation of Class B Preferred Stock) (incorporated by reference to Exhibit No.3.3 to Amendment No. 2 to Form S-1 [No. 33-80833] of JJ Acquisitions Corp. filed with the Commission on February 27, 1996). *3.2 Restated by-laws of Jitney-Jungle Stores of America, Inc. (incorporated by reference to Exhibit No. 3.6 to Amendment No. 2 to Form S-1 [No. 33-80833] of JJ Acquisitions Corp. filed with the Commission on February 27, 1996). *3.3 Composite Amended and Restated Articles of Incorporation of Delchamps, Inc. (incorporated by reference to Exhibit 3.1 to Form 10-Q of Delchamps, Inc. for the quarter ended September 28, 1996). *3.4 Composite of By-Laws of Delchamps, Inc. (incorporated by reference to Exhibit 3.2 to Form 10-Q of Delchamps, Inc. for the quarter ended September 28, 1996. *3.5 Amended and Restated Articles of Incorporation of Interstate Jitney-Jungle Stores Inc. (incorporated by reference to Exhibit 3.5 to Amendment No. 1 to Form S-4 [No. 333-38957] of Jitney-Jungle Stores of America, Inc. filed with the Commission on November 7, 1997). *3.6 Restated By-Laws of Interstate Jitney-Jungle Stores, Inc. (incorporated by reference to Exhibit 3.6 to Amendment No. 1 to Form S-4 [No. 333- 38957] of Jitney-Jungle Stores of America, Inc. filed with the Commission on November 7, 1997). *3.7 Amended and Restated Articles of Incorporation of McCarty-Holman Co., Inc. (incorporated by reference to Exhibit 3.7 to Amendment No. 1 to Form S-4 [No. 333-38957] of Jitney-Jungle Stores of America, Inc. filed with the Commission on November 7, 1997). *3.8 Restated By-Laws of McCarty-Holman Co., Inc. (incorporated by reference to Exhibit 3.8 to Amendment No. 1 to Form S-4 [No. 333-38957] of Jitney-Jungle Stores of America, Inc. filed with the Commission on November 7, 1997). *3.9 Amended and Restated Articles of Incorporation of Southern Jitney Jungle Company (incorporated by reference to Exhibit 3.9 to Amendment No. 1 to Form S-4 [No. 333-38957] of Jitney-Jungle Stores of America, Inc. filed with the Commission on November 7, 1997). 57 *3.10 Restated By-Laws of Southern Jitney Jungle Company (incorporated by reference to Exhibit 3.10 to Amendment No. 1 to Form S-4 [No. 333- 38957] of Jitney-Jungle Stores of America, Inc. filed with the Commission on November 7, 1997). *3.11 Amended and Restated Articles of Incorporation of Pump and Save, Inc. (incorporated by reference to Exhibit 3.11 to Amendment No. 1 to Form S-4 [No. 333-38957] of Jitney-Jungle Stores of America, Inc. filed with the Commission on November 7, 1997). *3.12 Restates By-Laws of Pump and Save, Inc. (incorporated by reference to Exhibit 3.12 to Amendment No. 1 to Form S-4 [No. 333-38957] of Jitney-Jungle Stores of America, Inc. filed with the Commission on November 7, 1997). *3.13 Amended and Restated Articles of Incorporation of Supermarket Cigarettes Sales, Inc. (incorporated by reference to Exhibit 3.13 to Amendment No. 1 to Form S-4 [No. 333-38957] of Jitney-Jungle Stores of America, Inc. filed with the Commission on November 7, 1997). *3.14 By-Laws of Supermarket Cigarettes Sales, Inc. (incorporated by reference to Exhibit 3.14 to Amendment No. 1 to Form S-4 [No. 333-38957] of Jitney-Jungle Stores of America, Inc. filed with the Commission on November 7, 1997). *3.15 Amended and Restated Articles of Incorporation of Jitney-Jungle Bakery, Inc. (incorporated by reference to Exhibit 3.15 to Amendment No. 1 to Form S-4 [No. 333-38957] of Jitney-Jungle Stores of America, Inc. filed with the Commission on November 7, 1997). *3.16 Restated By-Laws of Jitney-Jungle Bakery, Inc. (incorporated by reference to Exhibit 3.16 to Amendment No. 1 to Form S-4 [No. 333-38957] of Jitney-Jungle Stores of America, Inc. filed with the Commission on November 7, 1997). *4.1 Indenture dated as of September 15, 1997 among the Company, the Subsidiary Guarantors from Marine Midland Bank as Trustee, Donaldson Lufkin & Jenrette Securities Corporation and Credit Suisse First Boston (incorporated by reference to Exhibit 4.1 to Form S-4 [No. 333- 38957] of Jitney-Jungle Stores of America, Inc. filed with the Commission on October 29, 1997). *4.2 Registration Rights Agreement dated as of September 15, 1997 among the Company, the Subsidiary Grantors, Donaldson, Lufkin & Jenrette Securities Corporation and Credit Suisse First Boston (incorporated by reference to Exhibit 4.2 to Form S-4 [No. 333-38957] of Jitney-Jungle Stores of America, Inc. filed with the Commission on October 29, 1997). 58 *4.3 Form of the Company's 10 3/8% Senior Subordinated Notes due 2007 (included in Exhibit 4.1) (incorporated by reference to Exhibit 4.3 to Form S-4 [No. 333-38957] of Jitney-Jungle Stores of America, Inc. filed with the Commission on October 29, 1997). *4.4 Revolving Credit Agreement dated September 15, 1997 by and among Fleet Capital Corporation and the Company (incorporated by reference to Exhibit 4.4 to Form S-4 [No. 333-38957] of Jitney-Jungle Stores of America, Inc. filed with the Commission on October 29, 1997). *4.5 Indenture dated March 5, 1996 between the Company and Marine Midland Bank, as Trustee, relating to the issuance and sale of $200,000,000 aggregate principal amount of 12% Senior Notes due 2006 (incorporated by reference to Exhibit No. 4.2 Amendment No. 2 to Form S-1 [No. 33- 80833] of JJ Acquisition Corp. filed with the Commission on February 27, 1996). *4.6 Warrant dated March 4, 1996 to purchase 75,000 shares of Common Stock of the Company by DLJ Merchant Banking Partners, L.P. and related investors (incorporated by reference to Exhibit No.4.3 to Amendment No. 2 to Amendment No. 2 to Form S-1 [No. 33- 80833] of JJ Acquisitions Corp. filed with the Commission on February 27, 1996). *4.7 Memorandum of Agreement dated October 15, 1985 by and among the City of Jackson, Mississippi and McCarty-Holman Co., Inc. ($3,650,000) (incorporated by reference to Exhibit No.4.8 to Amendment No. 2 to Form S-1 [No. 33-80833] of JJ Acquisitions Corp. filed with the Commission on February 27, 1996). *5.1 Opinion of Dechert Price & Rhoads (incorporated by reference to Exhibit 5.1 to Amendment No. 1 to Form S-4 [No. 333-38957] of Jitney-Jungle Stores of America, Inc. filed with the Commission on November 7, 1997). *9.1 Voting Trust Agreement dated November 1, 1990 by and among Carolyn Holman Kroeze, as Executrix and the parties named therein (incorporated by reference to Exhibit No. 9.1 to Amendment No. 2 to Form S-1 [No. 33- 80833] of JJ Acquisitions Corp. filed with the Commission on February 27, 1996). *10.1 Purchase Agreement dated September 10, 1997 among the Company, Donaldson, Lufkin & Jenrette Securities Corporation and Credit Suisse First Boston with respect to the 10 3/8% Senior Subordinated Notes due 2007 (incorporated by reference to Exhibit 10.1 to Form S-4 [No. 333- 38957] of Jitney-Jungle Stores of America, Inc. filed with the Commission on October 29, 1997). 59 *10.2 Supply Agreement dated March 19, 1989 as amended, by and among Fleming Companies Inc. (successor in interest to Malone & Hyde, Inc.), the Company and Interstate Jitney-Jungle Stores, Inc. (incorporated by reference to Exhibit No. 10.2 to Amendment No. 2 to Form S-1 [No. 33-80833] of JJ Acquisitions Corp. filed with the Commission on February 27, 1996). *10.3 Membership in Topco Associates, Inc. (Cooperative) by ownership of six hundred (600) shares of Common Stock, such stock certificate being dated July 1, 1991 (incorporated by reference to Exhibit No. 10.3 to Amendment No. 2 to Form S-1 [No. 33- 80833] of JJ Acquisitions Corp. filed with the Commission on February 27, 1996). *10.4 Flour Sale Confirmation and Contract dated July 19, 1995 by and among Cargill, Incorporated and Jitney-Jungle Bakery, Inc. (incorporated by reference to Exhibit No. 10.4 to Amendment No. 2 to Form S-1 [No. 33-80833] of JJ Acquisitions Corp. filed with the Commission on February 27, 1996). *10.5 Employment Agreement dated as of February 15, 1995 by and among the Company Roger P. Friou (incorporated by reference to Exhibit 10.6 to Amendment No. 2 to Form S-1 [No. 33-80833] of JJ Acquisitions Corp. filed with the Commission on February 27, 1996). *10.6 Employment Agreement dated as of February 24, 1995 by and among the Company and David K. Essary (incorporated by reference to Exhibit 10.7 to Amendment No. 2 to Form S-1 [No. 33-80833] of JJ Acquisitions Corp. filed with the Commission on February 27, 1996). *10.7 Employment Agreement dated as of March 5, 1996 by and among the Company and W. H. Holman, Jr. (incorporated by reference to Exhibit 10.6 to the Company's Annual Report on Form 10-K, dated July 24, 1996). *10.8 Employment Agreement dated as of March 5, 1996 by and among the Company and W. H. Holman, III. (incorporated by reference to Exhibit 10.7 to the Company's Annual Report on Form 10-K, dated July 24, 1996). *10.9 Restatement and Amendment by the Entirety of the Jitney-Jungle Stores of America, Inc. and Affiliates Profit Sharing Plan and Trust (incorporated by reference to Exhibit No. 10.8 to Amendment No. 2 to Form S-1 [No. 33-80833] of JJ Acquisitions Corp. filed with the Commission on February 27, 1996). *10.10 Deferred Compensation Plan for the Company dated as of November 16, 1995 by and among Jitney-Jungle Stores of America, Inc., Southern Jitney Jungle Company, Jitney-Jungle Bakery, Inc., McCarty-Holman Co., Inc. and W. H. Holman, Jr., Roger P. Friou and David K. Essary (incorporated by reference to Exhibit No. 10.9 to Amendment No. 2 to Form S-1 [No. 33-80833] of JJ Acquisitions Corp. filed with the Commission on February 27, 1996). 60 *10.11 Shareholders Agreement dated as of March 5, 1996 by and among DLJ Merchant Banking Partners, L.P. JJ Acquisitions Corp., and certain other signatories party thereto (incorporated by reference to Exhibit No. 10.10 to Amendment No. 2 to Form S-1 [No. 33-80833] of JJ Acquisitions Corp. filed with the Commission on February 27, 1996). *10.12 Securities Purchase and Holders Agreement dated as of March 5, 1996 by and among JJ Acquisitions Corp., Bruckmann, Rosser, Sherrill & Co., L.P. and other parties thereto (incorporated by reference to Exhibit No. 10.12 to Amendment No. 2 to Form S-1 [No. 33-80833] of JJ Acquisitions Corp. filed with the Commission on February 27, 1996). *10.13 Registration Rights Agreement dated as of March 5, 1996 by and among the Company and other parties named therein (incorporated by reference to Exhibit No. 10.13 to Amendment No. 2 to Form S-1 [No. 33- 80833] of JJ Acquisitions Corp. filed with the Commission on February 27, 1996). *10.14 Membership and Licensing Agreement dated August 1, 1973 between Topco Associates, Inc. and Delchamps, Inc. and attached copy of Articles of Incorporation and By-Laws of Topco Associates, Inc. (incorporated by reference to Exhibit 10(a) to the Registration Statement on Form S-1 [No. 2-86926] of Delchamps, Inc.) *10.15 Agreement for Termination of Employment dated as of September 19, 1997 between Delchamps, Inc. and David W. Morrow (incorporated by reference to Exhibit 10(j) to Form 10-K of Delchamps, Inc. for fiscal year ended June 28, 1997). *10.16 Form of Director Indemnity Agreement of Delchamps, Inc. (incorporated by reference to Exhibit 10 to Form 10-Q of Delchamps, Inc. for the quarter ended September 28, 1996). *12.1 Statement of Ratio of Earnings to Fixed Charges (incorporated by reference to Exhibit 12.1 to Form S-4 [No. 333-38957] of Jitney-Jungle Stores of America, Inc. filed with the Commission on October 29, 1997). 21.1 Subsidiaries of the Company. 23.1 Consent of Dechert Price & Rhoads (included in Exhibit 5.1) (incorporated by reference to Exhibit 23.1 to Form S-4 [No. 333-38957] of Jitney- Jungle Stores of America, Inc. filed with the Commission on October 29, 1997). 61 *23.2 Consent of Deloitte & Touche LLP (incorporated by reference to Exhibit 23.2 to Amendment No. 1 to Form S-4 [No. 333-38957] of Jitney-Jungle Stores of America, Inc. filed with the Commission on November 7, 1997). *23.3 Consent of KPMG Peat Marwick (incorporated by reference to Exhibit 23.3 to Form S-4 [No. 333-38957] of Jitney-Jungle Stores of America, Inc. filed with the Commission on October 29, 1997). *24 Power of Attorney (incorporated by reference to Exhibit 24 to Form S-4 [No. 333- 38957] of Jitney-Jungle Stores of America, Inc. filed with the Commission on October 29, 1997). *25 Statement of Eligibility and Qualifications, Form T-1, of Marine Midland Bank (incorporated by reference to Exhibit 25 to Form S-4 [No. 333- 38957] of Jitney-Jungle Stores of America, Inc. filed with the Commission on October 29, 1997). 27.1 Financial Data Schedule. *99.1 Form of Letter of Transmittal (incorporated by reference to Exhibit 23.2 to Amendment No. 1 to Form S-4 [No. 333-38957] of Jitney-Jungle Stores of America, Inc. filed with the Commission on November 7, 1997). *99.2 Form of Notice of Guaranteed Delivery (incorporated by reference to Exhibit 23.2 to Amendment No. 1 to Form S-4 [No. 333-38957] of Jitney-Jungle Stores of America, Inc. filed with the Commission on November 7, 1997). *Previously filed as indicated. (b) Reports on Form 8-K. On November 19, 1997, the Company filed a Current Report on Form 8-K stating under "Item 5. Other Items" that on November 4, 1997 Delta Acquisition Corporation ("Delta"), an Alabama corporation and wholly owned subsidiary of Jitney- Jungle Stores of America, Inc. (Jitney-Jungle) merged with and into Delchamps, Inc., an Alabama corporation ("Delchamps"). Delchamps is now a wholly owned subsidiary of Jitney-Jungle. As of November 4, 1997, Delchamps' shareholders representing approximately 620,749 shares, or 8.8% of the outstanding shares of Delchamps, purportedly indicated their intention to exercise dissenters' rights with respect to the merger. 62 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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) By /s/ Michael E. Julian _____________________ (Michael E. Julian President and Chief Executive Officer) (Principal Executive Officer) Date April 2, 1998 ____________________ By /s/ David R. Black _____________________ (David R. Black Senior Vice President - Finance, Chief Financial Officer) (Principal Financial and Accounting Officer) Date April 2, 1998 _____________________ 63 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated.
Signatures Position Date ______________________ __________________________ _____________ /s/ W. H. Holman, Jr. Chairman of the Board April 2, 1998 (W. H. Holman, Jr.) /s/ Michael E. Julian Director, President and Chief April 2, 1998 (Michael E. Julian) Executive Officer /s/ Roger P. Friou Director April 2, 1998 (Roger P. Friou) /s/ Bruce C. Bruckmann Director April 2, 1998 (Bruce C. Bruckmann) /s/ Harold O. Rosser, II Director April 2, 1998 (Harold O. Rosser, II) /s/ Stephen C. Sherrill Director April 2, 1998 (Stephen C. Sherrill) /s/ John M. Moriarty, Jr. Director April 2, 1998 (John M. Moriarty, Jr.) /s/ Bernard J. Ebbers Director April 2, 1998 (Bernard J. Ebbers) /s/ Ronald E. Johnson Director April 2, 1998 (Ronald E. Johnson) /s/ Donald D. Bennett Director April 2, 1998 (Donald D. Bennett)
64 EX-21 2 Exhibit 21.1 SUBSIDIARIES OF JITNEY-JUNGLE STORES OF AMERICA, INC.
Percentage of Voting Securities Jurisdiction of Owned by Name Incorporation Registrant _____________________________________ _______________ __________ Interstate Jitney-Jungle Stores, Inc. Alabama 100% Southern Jitney Jungle Company Mississippi 100% McCarty-Holman Co., Inc. Mississippi 100% Jitney-Jungle Bakery, Inc. Mississippi 100% Delchamps, Inc. Alabama 100%
EX-21 3 Exhibit 21.1 SUBSIDIARIES OF JITNEY-JUNGLE STORES OF AMERICA, INC. SUBSIDIARIES OF MCCARTY-HOLMAN CO., INC.
Jurisdiction of Name Incorporation _____________________________ _______________ Pump and Save, Inc. Mississippi
EX-27 4
5 1,000 OTHER JAN-03-1998 MAY-04-1997 JAN-03-1998 11,984 0 13,833 0 162,786 215,854 469,819 166,045 694,280 236,523 0 63,042 9,071 4 (176,975) 694,280 1,145,129 1,145,129 285,669 1,123,535 3,117 0 31,608 (13,131) (3,224) (9,907) 0 (870) 0 (10,777) (38.44) (38.44) -----END PRIVACY-ENHANCED MESSAGE-----