-----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, Pbg2nqItqWLUE7rnFn7cUldib367SsqSURcbr6JN6mggmOdP6AnYOWdSDYoLKIE0 T7ouy+VneZCY/vGi3mlK7A== 0000948688-99-000008.txt : 19990420 0000948688-99-000008.hdr.sgml : 19990420 ACCESSION NUMBER: 0000948688-99-000008 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980328 FILED AS OF DATE: 19990419 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-Q/A SEC ACT: SEC FILE NUMBER: 033-80833 FILM NUMBER: 99596932 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-Q/A 1 FORM 10-Q/A UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Quarterly Report Pursuant To Section 13 or 15 (d) of The Securities and Exchange Act of 1934 QUARTER ENDED March 28, 1998 COMMISSION FILE NO. 33-80833 JITNEY-JUNGLE STORES OF AMERICA, INC. (Exact name of registrant as specified in its charter) STATE OF INCORPORATION I.R.S. EMPLOYER I.D. NO. Mississippi 64-0280539 ADDRESS OF PRINCIPAL EXECUTIVE OFFICE 1770 Ellis Avenue, Suite 200, Jackson, MS 39204 REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE 601-965-8600 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. YES (X) NO The number of shares of Registrant's Common Stock, par value one cent ($.01) per share, outstanding at May 1, 1998, was 424,150 shares.
JITNEY-JUNGLE STORES OF AMERICA, INC. TABLE OF CONTENTS PART I. FINANCIAL INFORMATION Page Item 1.Financial Statements: Condensed Consolidated Balance Sheets March 28, 1998 (restated) (Unaudited) and January 3, 1998 2 Condensed Consolidated Statements of Operations Twelve (12) Week Period Ended March 28, 1998 (restated) (Unaudited) and Twelve (12) Week Period Ended March 29, 1997 (Unaudited) 3 Condensed Consolidated Statements of Changes in Stockholders' Deficit Twelve (12) Week Periods Ended March 28, 1998 (restated) (Unaudited) and March 29, 1997 (Unaudited) 4 Condensed Consolidated Statements of Cash Flows Twelve (12) Week Periods Ended March 28, 1998 (restated)(Unaudited) and March 29, 1997 (Unaudited) 5 Notes to Condensed Consolidated Financial Statements March 28, 1998 (restated) (Unaudited) March 29, 1997 (Unaudited) 6-8 Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations 9-12 PART II.OTHER INFORMATION Item 1.Legal Proceedings 12 Item 2.Change in Securities 12 Item 3.Defaults Upon Senior Securities 12 Item 4.Submission of Matters to a Vote of Security Holders 12 Item 5.Other Information 12 Item 6.Exhibits and Reports on Form 8-K 12-13
PART I. ITEM 1. FINANCIAL STATEMENTS JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands) March 28, January 3, 1998 1998 (Unaudited) (as restated see note 8) ASSETS ----------- ----------- Current assets: Cash and cash equivalents $ 10,203 $ 11,984 Receivables 14,017 13,833 Merchandise inventories 154,005 162,786 Prepaid expenses and other 12,909 11,570 Deferred income taxes 10,917 15,681 ---------- ---------- Total current assets 202,105 215,854 ---------- ---------- PROPERTY AND EQUIPMENT - net 294,974 303,774 ---------- ---------- Other assets Goodwill, net of amortization of $1,831 at March 28, 1998 and $1,105 at January 3, 1998 126,773 142,415 Other assets - net 34,655 32,237 ---------- ---------- Total other assets 161,428 174,652 ---------- ---------- TOTAL ASSETS $ 658,507 $ 694,280 ========= ========= LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Accounts payable $ 107,300 $ 112,641 Accrued expenses 71,874 102,195 Current portion of capitalized leases 6,772 6,760 Restructuring obligations 11,194 14,927 ---------- ---------- Total current liabilities 197,140 236,523 Noncurrent liabilities: Long-term debt 490,114 449,831 Obligations under capitalized leases, excluding current installments 66,997 68,321 Restructuring obligations, excluding current installments 25,268 40,588 Other liabilities 181 Deferred income taxes - 3,875 ---------- ---------- Total liabilities 779,700 799,138 Commitments and contingencies Redeemable Preferred stock (aggregate liquidation preference value of $66,970 at March 28, 1998 and $65,077 at January 3, 1998) 64,983 63,042 Stockholders' deficit: Class C Preferred stock - Series 1(at liquidation value) 9,279 9,071 Common stock ($.01 par value, authorized 5,000,000 shares, issued 425,000 shares) 4 4 Additional paid-in capital (302,326) (302,326) Retained earnings 106,877 125,351 ---------- ---------- Total (186,166) (167,900) Less - 850 shares in 1998 held in treasury at cost (10) ---------- ---------- Total stockholder's deficit (186,176) (167,900) TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 658,507 $ 694,280 ========= ========= See notes to condensed consolidated financial statements.
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in Thousands Except Per Share Amounts) Twelve Weeks Ended March 28, March 29, 1998 1997 (Unaudited) (Unaudited) (as restated, see note 8) ------------ ----------- NET SALES $ 474,209 $ 281,623 ------------ ----------- COSTS AND EXPENSES: Cost of goods sold 358,122 210,937 Direct store expenses 94,223 44,803 Warehouse, administrative and general expenses 18,121 16,246 Interest expense - net 15,223 8,355 Acquisition integration costs and other special charges 13,996 ----------- ----------- Total costs and expenses 499,685 280,341 ----------- ----------- Earnings (loss) before taxes on (25,476) 1,282 Income tax expense (benefit) (9,151) 477 ------------ ----------- NET EARNINGS (LOSS) $ (16,325) $ 805 ============ =========== EARNINGS (LOSS) PER COMMON SHARE - BASIC $ (43.57) $ (2.62) ============ =========== EARNINGS (LOSS) PER COMMON SHARE - DILUTED $ (43.57) $ (2.62) ============ =========== See notes to condensed consolidated financial statements.
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT FOR THE TWELVE (12) WEEK PERIODS ENDED MARCH 28, 1998 (Unaudited) AND MARCH 29, 1997 (Unaudited) (Dollars in thousands) Class C Preferred Stock Series 1 Common Stock Additional Treasury No. of No. of Paid-In Retained Stock at Shares Amount Shares Amount Capital Earnings Cost ------- ------ ------ ------ ---------- -------- -------- Balance Jan 4, 1997 76,042 $ 7,604 425,000 $ 4 $(302,312) $ 147,513 Net earnings 805 Accretion of discount on Class A Preferred stock (48) Cumulation of dividends on Class A Preferred stock (928) Merger costs (10) Balance ------- ------ ------- ------ --------- -------- -------- March 29, 1997 76,042 $ 7,604 425,000 $ 4 $(302,322) $ 147,342 $ - ======= ====== ======= ====== ========= ======== ======== Balance Jan 3, 1998 76,042 $ 9,071 425,000 $ 4 $(302,326) $ 125,351 $ - Net loss (as restated, see note 8) (16,325) Purchase of 850 shares of treasury stock (10) Accretion of discount on Class A Preferred stock (48) Cumulation of dividends on Preferred stock 208 (2,101) Balance ------ ------ ------- ------ --------- -------- -------- March 28, 1998 (as restated, see note 8) 76,042 $ 9,279 425,000 $ 4 $(302,326) $106,877 $ (10) ====== ====== ======= ====== ========= ======== ======== See notes to condensed consolidated financial statements.
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited) Twelve Weeks Ended March 28, March 29, 1998 1997 (as restated see note 8) OPERATING ACTIVITIES: ----------- ----------- Net earnings (loss) $ (16,325) $ 805 Adjustment to reconcile net earnings (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 14,037 7,533 Gain on disposition of property and ot (39) (39) Deferred income tax expense (benefit) (4,462) 49 Changes in current assets and liabilities, net of effects of acquisition: Receivables (184) 1,869 Store and warehouse inventories 9,561 180 Prepaid expenses (1,339) 2,669 Accounts payable (5,341) 11,834 Accrued expenses (13,812) (5,168) Restructuring obligations (714) ---------- ---------- Net cash provided by (used in) (18,618) 19,732 operating activities ---------- ---------- INVESTING ACTIVITIES: Capital expenditures (6,064) (3,093) Proceeds from sale of property and other assets 920 345 Purchase of Delchamps, Inc. (9,559) Increase in other assets (3,302) ---------- ---------- Net cash used in investing activities (18,005) (2,748) ---------- ---------- FINANCING ACTIVITIES: Proceeds (payments) on long-term debt - net 40,283 (15,824) Payments on capitalized lease obligations (1,312) (991) Other (806) Merger cost (10) Purchase of treasury stock (10) Restructuring obligations (3,313) ---------- ---------- Net cash provided by (used in) 34,842 (16,825) financing activities ---------- ---------- (INCREASE) DECREASE IN CASH AND CASH EQUIVALENTS (1,781) 159 CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 11,984 7,642 ---------- ---------- CASH AND CASH EQUIVALENTS - END OF PERIOD $ 10,203 $ 7,801 ========== ========== SUPPLEMENTAL DISCLOSURES: Cash paid for interest $ 25,534 $ 14,555 ========== ========== Cash paid for income taxes, net of refunds $ 11 $ 5 ========== ========== See notes to condensed consolidated financial statements.
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 28, 1998 (Unaudited) AND MARCH 29, 1997 (Unaudited) (Dollars in thousands) 1. BASIS OF PRESENTATION The unaudited condensed consolidated financial statements include those of Jitney-Jungle Stores of America, Inc. and its wholly-owned subsidiaries, Southern Jitney Jungle Company, Interstate Jitney-Jungle Stores, Inc., McCarty-Holman Co., Inc. and subsidiary, Jitney-Jungle Bakery, Inc., Delchamps Inc. and subsidiary and JJ Construction Corp. All material intercompany profits, transactions and balances have been eliminated. These interim financial statements have been prepared on the basis of accounting principles used in the annual financial statements for the 35 weeks ended January 3, 1998. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (all of which were of a normal recurring nature) necessary for a fair statement of consolidated financial position and results of operations of the Company for the interim periods. The results of operations of the Company for the twelve weeks ended March 28, 1998, are not necessarily indicative of the results which may be expected for the entire year. The Company changed its fiscal year end on January 3, 1998 to the closest Saturday to December 31. Previously, the Company reported its fiscal year end results as of the Saturday nearest to April 30. Data included herein for the first quarter of fiscal 1997 reflects the unaudited results of operations for the twelve weeks ended March 29, 1997. 2. ACQUISITION In September 1997, the Company acquired the majority of the common stock of Delchamps, Inc. Certain shareholders dissented from the merger and indicated that they will pursue their appraisal remedy under Alabama law. Management does not expect this matter to have a material affect on operations or the price of the acquisition. The acquisition was accounted for as a purchase and, accordingly, Delchamps' results of operations were included in the Company's consolidated financial statements subsequent to the acquisition date. The purchase price, net of cash acquired of $84, has been allocated to the assets acquired and liabilities assumed based upon the estimated fair values at the date of acquisition, as set forth below. Any variation between such amounts and the final allocation will change the amount of goodwill recognized in connection with the Delchamps acquisition and the related amortization expense. The allocation could be affected by, among other things, a final determination of amounts to be paid to former shareholders of Delchamps who dissented from the merger (and related professional fees) and of costs to be incurred related to Delchamps facilities identified by management for closure. Management believes, however that when the final valuation of the net assets acquired is complete, the allocation of the purchase price will not differ materially from the amounts shown herein.
Receivables and other current assets $ 12,569 Inventory 101,199 Property, equipment and leasehold improvements 116,431 Deferred income tax asset 10,428 Other assets 2,106 Goodwill 135,454 Accounts payable and accrued expenses (74,643) Notes payable and long-term debt, immediately repaid (14,463) Capital lease obligations (10,794) Restructuring obligation (41,967) ____________ Net purchase price $ 236,320 ============
3. RESTRUCTURING OBLIGATIONS In connection with the Delchamps acquisition, the Company recorded a restructuring obligation of $42,860 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 $42,860 consists of future rental payments, severance costs, loss on divestiture of fixed assets, and miscellaneous expenses related mainly to the shutdown of the Mobile and Hammond facilities. Of the total restructuring costs, $41,967 was recorded as goodwill as part of the purchase price allocation in the Delchamps acquisition and $893 was included as a special charge in the statement of operations, $599 in the 35 weeks ended 1-3-98 and $294 in the first quarter of fiscal 1998. 4. ACQUISITION INTEGRATION COSTS AND OTHER SPECIAL CHARGES Acquisition integration costs and other special charges consisted of $13,452 of business integration costs related to Delchamps, severance benefits of $250 and loss of $294 on stores sold under the consent decree with the Federal Trade Commission in the Delchamps acquisition. 5. LONG-TERM DEBT Long-term debt consisted of the following:
March 28, January 3, 1998 1998 --------- --------- Senior notes at 12%, maturing in 2006 $ 200,000 $ 200,000 Senior subordinated notes at 10.38% 200,000 200,000 maturing in 2007 Senior Credit Facility 90,114 49,831 --------- --------- Long-term debt $ 490,114 $ 449,831 ========= =========
The Company has available a Senior Credit Facility of $150 million under which letters of credit aggregating $12,152 were outstanding at March 28, 1998. 6. EARNINGS (LOSS) PER COMMON SHARE Earnings (loss) per common share is based on net income (loss) after preferred stock dividend requirements and the weighted average number of shares outstanding during each interim period. Cumulative dividends not declared or paid on preferred shares amounted to $2,101 for the twelve weeks ended March 28, 1998. The number of shares used in computing basic and diluted earnings (loss) per share was 424,150 for the twelve weeks ended March 28, 1998 and 425,000 for the twelve weeks ended March 29, 1997. Potential common shares attributed to outstanding warrants were not included in the computation of diluted earnings per share as their effect on earnings (loss) per share would be antidilutive. 7. COMMITMENTS AND CONTINGENCIES The Company is a party to certain litigation incurred in the course of business. In the opinion of management, the ultimate liability, if any, which may result from this litigation will not have a material adverse effect on the Company's financial position or results of operations. 8. RESTATEMENT Subsequent to the issuance of the Company's Quarterly Report on Form 10-Q for the 12 weeks ended March 28, 1998, the Company determined that certain amounts recorded in connection with the Delchamps acquisition, during the quarter ended March 28, 1998, should have been charged to expense as incurred. During the 12 weeks ended March 28, 1998, the Company recorded additional goodwill and restructuring obligations related primarily to consolidating warehouse and office facilities, remerchandising of Delchamps stores, training of Delchamps employees, and other related items. Such amounts should have been recognized as cost of goods sold and expenses as incurred. A summary of the significant effects of the restatement are as follows:
As Previously As Reported Restated At March 28, 1998 Goodwill $ 150,982 $ 126,773 Restructuring obligations, current 12,780 11,194 Restructuring obligations, excluding current portion 37,275 25,268 Retained earnings 117,780 106,877 For the twelve weeks ended March 28, 1998 Cost of goods sold 356,052 358,122 Acquisition integration costs and other special charges 544 13,996 Total costs and expenses 482,891 499,685 Earnings before taxes on income (8,682) (25,476) Income tax benefit (3,260) (9,151) Net earnings (5,422) (16,325) Net loss per share - basic and diluted $ (17.73) $ (43.57)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollars in thousands) The following is management's discussion and analysis of significant factors affecting the Company's earnings during the periods included in the accompanying condensed consolidated statements of operations. Subsequent to the issuance of the Company's Quarterly Report on Form 10-Q for the 12 weeks ended March 28, 1998, the Company determined that certain amounts recorded in connection with the Delchamps acquisition, during the quarter ended March 28, 1998, should have been charged to expense as incurred. During the 12 weeks ended March 28, 1998, the Company recorded additional goodwill and certain of these costs (princpally related to store closures) have not been restated while other costs attributable to the Delchamps acquisition, including costs incurred in consolidating warehouse operations, remerchandising of Delchamps stores, and training of Delchamps employees have been expensed as acquisition integration costs in accordance with the guidelines set forth in Emerging Issues Task Force (EITF) Releases 94-3 ("Recognite of Liabilities in connection with a Purchase Business Combination"). The effects of the restatement are presented in Note 8 of Notes to Condensed Consolidated Financial Statements and have been reflected herein. A table showing the percentage of net sales represented by certain items in the Company's condensed consolidated statements of operations is as follows:
Twelve Weeks Ended March 28, March 29, 1998 1997 --------- --------- Net sales 100.0 % 100.0 % Gross profit 24.5 25.1 Direct store expenses 19.9 15.9 Warehouse, administrative and general expenses 3.8 5.8 Operating income 0.8 3.4 Interest expense, net 3.2 3.0 Acquisition integration costs and other 3.0 special charges Earnings (loss) before income taxes (5.4) 0.5 Provisions for income taxes (1.9) 0.2 Net earnings (loss) (3.4) 0.3 EBITDA 3.6 6.1
A summary of the period to period changes in certain items included in the condensed consolidated statements of operations for the twelve week periods ended March 28, 1998 and March 29, 1997 is as follows:
Period-to-Period Changes Twelve Weeks Ended March 28, 1998 $ % -------- -------- Net sales $ 192,586 68.4 % Gross profit 45,401 n/m Direct store expenses 49,420 n/m Warehouse, administrative and general expenses 1,875 7.0 Operating income (5,894) (61.2) Interest expense, net 6,868 82.2 Acquisition integration and other 13,996 n/m special charges Earnings (loss) before income taxes (26,758) n/m Provision for income taxes (9,628) n/m Net earnings (loss) (17,130) n/m EBITDA 437 2.5 (n/m - not meaningful comparison)
RESULTS OF OPERATIONS NET SALES Net sales increased $192,586 or 68.4% in the twelve week period ended March 28, 1998 as compared to the corresponding period ended March 29, 1997. The net sales increase was primarily attributable to the acquisition of Delchamps, Inc. Same store sales decreased approximately 6.3% for the twelve week period ended March 28, 1998. Same store sales were impacted by Easter being in March last year and April this year. In addition, sales for this quarter are matching up against strong sales for the same period last year due to the launching of a frequent shopper card in approximately 79 supermarkets in January 1997. Additionally, toward the end of the first quarter of fiscal 1998, the Company launched the frequent shopper card in 52 Delchamps supermarkets and has launched the frequent shopper card in the remaining Delchamps stores subsequent to the end of the quarter. Another factor which affected sales included 17 stores which were sold or closed during the first quarter ended March 28, 1998 including 10 stores which were required to be sold by the Federal Trade Commission due to the Delchamps acquisition. The Company's store count at the end of the quarter was 200 supermarkets (20 discount stores, 169 conventional stores and 11 combination stores) and 53 gasoline stations as compared to 105 supermarkets (27 discount stores, 76 conventional stores and 2 combination stores) and 52 gasoline stations at March 29, 1997. GROSS PROFIT Gross profit for the first quarter of fiscal 1998 increased $45,401 to $116,087, or 24.5% of net sales, compared to $70,686, or 25.1% of net sales, for the first quarter of fiscal 1997. Gross profit increased primarily due to the increase in net sales (due to the Delchamps acquisition). The decrease in gross profit as a percentage of net sales is principally due to having a different product mix this year compared to last year. In addition, in the first quarter of 1998, $2,070 was charged to excess shrink associated with Delchamps acquisition in the consolidated statement of operations. DIRECT STORE EXPENSES Direct store expenses were $94,223 or 19.9% of net sales and $44,803 or 15.9% of net sales for the twelve week period ended March 28, 1998 and March 29, 1997, respectively. Direct store expenses increased primarily due to an increase in net sales (due to the Delchamps acquisition). The increase in direct store expenses as a percentage of net sales in the first quarter of fiscal 1998 was primarily in the areas of rent, labor and advertising expense. Rent expense in the Delchamps stores is more than twice that of the other Company stores. The store labor increase as a percentage of sales was principally due to the Delchamps transition. The increase in advertising as a percentage of sales was primarily due to the launching of the frequent shopper card in the Delchamps stores and also attributable to running two advertising departments (one in Mobile, AL and the other in Jackson, MS) for part of the quarter. The advertising department in Mobile was closed in the first quarter of fiscal 1998. WAREHOUSE, ADMINISTRATIVE AND GENERAL EXPENSES Warehouse, administrative and general expenses were $18,121 or 3.8% of net sales and $16,246 or 5.8% of net sales for the twelve week period ended March 28, 1998 and March 29, 1997 respectively. The decrease in warehouse, administrative and general expenses as a percent of sales was primarily due to (i) additional sales, (ii) a decrease in warehouse costs as a result of the closing of the Hammond, LA distribution center during the quarter and (iii) a decrease in administrative expenses as a result of the closing of the Mobile headquarters (which was approximately 80% complete at the end of the first quarter of fiscal 1998). ACQUISITION INTEGRATION COSTS AND OTHER SPECIAL CHARGES Acquisition integration costs and other special charges were $13,996 for the twelve week period ended March 28, 1998. The Company incurred significant costs as a result of combining the Delchamps and Jitney-Jungle operations. In accordance with EITF Releases 94-3 and 95-3 the Company has allocated certain of these costs to goodwill. However, certain other costs attributable to the Delchamps acquisition, including costs incurred in consolidating warehouse operations, remerchandising of the Delchamps stores, and training of Delchamps employees have been written off as acquisition costs in accordance with the EITF guidelines. Other special charges included severance benefits of $250 and loss of $294 on stores sold under the consent decree with the Federal Trade Commission in the Delchamps acquisition and business integration costs of $13,452 related to Delchamps. OPERATING INCOME Operating income was $3,743 or 0.8% of net sales for the twelve week period ended March 28, 1998 as compared to $9,637 or 3.4% of net sales for the twelve week period ended March 29, 1997. The decrease in operating income was due to the factors discussed above. EBITDA EBITDA (net income before interest income, special charges, interest expense, income taxes, depreciation and amortization and LIFO charges/credits) was $17,607 or 3.7% of net sales in the first quarter of fiscal 1998 as compared to $17,170 or 6.1% of net sales in the first quarter of fiscal 1997. EBITDA as presented is consistent with the definition used for covenant purposes contained in the Indenture. EBITDA is a widely accepted financial indicator of a company's ability to service debt. However, EBITDA should not be construed as an alternative to operating income, net income or cash flows from operating activities (as determined in accordance with generally accepted accounting principles) and should not be construed as an indication of the Company's operating performance or as a measure of liquidity. NET INTEREST EXPENSE Interest expense was $15,222 in the first quarter of fiscal 1998 as compared to $8,355 in the first quarter of fiscal 1997. The increase in interest expense was primarily due to interest expense on the $200 million Senior subordinated notes issued in September 1997. INCOME TAX EXPENSE (BENEFIT) Income taxes were ($9,151) with an effective tax rate of 35.9% for the first quarter of fiscal 1998 and $477 with an effective tax rate of 37.2% for the first quarter of fiscal 1997. The decrease in income taxes was principally due to lower pretax earnings. LIQUIDITY AND CAPITAL RESOURCES Historically, the Company has funded its working capital requirements, capital expenditures and other needs principally from operating cash flows. Due to the merger and acquisition of Delchamps, however, the Company has become highly leveraged and has certain restrictions on its operations. At March 28, 1998, Jitney-Jungle had $563,883 of total long-term debt (including capitalized leases and current installments) and a shareholders deficit of $186,176. The Company's principal uses of liquidity have been to fund working capital, meet debt service requirements and finance Jitney- Jungle's strategic plans. The Company's principal sources of liquidity have been cash flow from operations and borrowings under the Senior Credit Facility. Outstanding borrowings at March 28, 1998 were $90,114 under the Senior Credit Facility. Cash used in operating activities during the twelve week period ended March 28, 1998 was $18,618. Cash provided by operating activities during the twelve week period ended March 29, 1997 was $19,732. Accrued expenses decreased during the first quarter primarily due to the payment of interest on Senior Notes, Senior Subordinated Notes and the Senior Credit Facility. Inventories decreased due to the consolidation of the warehouses and the closure or sale of certain stores during the first quarter. Net cash used in investing activities was $18,005 and $2,748 for the twelve week period ended March 28, 1998 and March 29, 1997, respectively. Cash was primarily used for the purchase of Delchamps, Inc. and capital expenditures. Net cash provided by financing activities was $34,842 for the twelve week period ended March 28, 1998 and net cash used was $16,825 for the twelve week period ended March 29, 1997. The principal sources of funds in financing activities for the first quarter of fiscal 1998 were the proceeds of principal on long-term debt. The principal uses of funds in financing activities for the first quarter of fiscal 1998 were the payment of capital lease obligations and restructuring obligations. The Company believes that capital expenditures for the remainder of fiscal 1998 will be financed through cash flows from operations and borrowings under its Senior Credit Facility. Capital expenditure plans are continuously evaluated and modified from time to time depending on cash availability and other economic factors. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company is a party to certain litigation incurred in the course of business. In the opinion of management, the ultimate liability, if any, which may result from this litigation will not have a material adverse effect on the Company's financial position or results of operations. ITEM 2. CHANGE IN SECURITIES None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit No. -------------- * 27.1 Financial Data Schedule * Filed herewith. (b) Reports on Form 8-K On February 25, 1998, the Company filed a Current Report on Form 8-K stating under "Item 2. Acquisition or Disposition of Assets" that Jitney-Jungle sold ten grocery stores to Supervalu Holdings, Inc. and affiliated companies (Supervalu") and four grocery stores to Bruno's, Inc. (Bruno's). The sale to Supervalu was finalized as of February 12, 1998. The sale to Bruno's was finalized as of February 18, 1998. SUPERVALU paid approximately $7.4 million in cash for the equipment and inventory of ten stores located in Gulfport (three stores), Hattiesburg (two stores), Biloxi, Vicksburg and Waveland, Mississippi, and Pensacola, FL (two stores). Bruno's paid approximately $2.3 million in cash for the equipment and inventory of four stores located in Montgomery (two stores), Prattville and Tuscaloosa, Alabama. The sale to SUPERVALU was made pursuant to a Federal Trade Commission ("FTC") Consent Order dated January 29, 1998, approving the Agreement containing Consent Order entered into on September 11, 1997, by and among Jitney-Jungle, Delchamps, Inc., Bruckmann, Rosser Sherrill & Co., L.P., Delta Acquisition Corporation and the FTC in connection with the merger of Jitney- Jungle and Delchamps, Inc. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. JITNEY-JUNGLE STORES OF AMERICA, INC. (Registrant) /s/ Richard D. Coleman ----------------------- Richard D. Coleman (Executive Vice President, Chief Financial Officer) (Principal Financial and Accounting Officer) Dated: May 12, 1998 EX-27 2
5 OTHER JAN-02-1999 JAN-04-1998 MAR-28-1998 10,203 0 14,017 0 154,005 202,105 650,895 355,921 658,507 197,140 0 64,983 9,279 4 (195,459) 658,507 474,209 474,209 358,122 494,685 13,996 0 15,223 (25,476) (9,151) (16,325) 0 0 0 (16,325) (43.57) (43.57)
-----END PRIVACY-ENHANCED MESSAGE-----