-----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, MFc3kG8XJNY5NcF7QvTGX7z7p7Q5dMiPIGo4lBVcsYN6X9OQ+bjAubB38fk89cE0 /X4pfERXAGm9dl4bDFYPQw== 0000095302-96-000003.txt : 19960614 0000095302-96-000003.hdr.sgml : 19960614 ACCESSION NUMBER: 0000095302-96-000003 CONFORMED SUBMISSION TYPE: 10-Q CONFIRMING COPY: PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960504 FILED AS OF DATE: 19960613 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUN CITY INDUSTRIES INC CENTRAL INDEX KEY: 0000095302 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-GROCERIES & RELATED PRODUCTS [5140] IRS NUMBER: 590950777 STATE OF INCORPORATION: DE FISCAL YEAR END: 0203 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06914 FILM NUMBER: 00000000 BUSINESS ADDRESS: STREET 1: 5545 NW 35TH AVE CITY: FORT LAUDERDALE STATE: FL ZIP: 33309 BUSINESS PHONE: 3057303333 MAIL ADDRESS: STREET 1: P O BOX 8848 CITY: FT LAUDERDALE STATE: FL ZIP: 33310-8848 FORMER COMPANY: FORMER CONFORMED NAME: SUN CITY DAIRY PRODUCTS INC DATE OF NAME CHANGE: 19690727 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended May 4, 1996 Commission File No. 1-6914 SUN CITY INDUSTRIES, INC. (Exact name of registrant as specified in its charter) Delaware 59-0950777 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 5545 N.W. 35 Ave. Fort Lauderdale, FL 33309 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (954) 730-3333 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_____ FINANCIAL INFORMATION The consolidated financial statements included herein have been prepared by the Company, without audit, according to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. The financial statements reflect, in the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to represent fairly the financial position and results of operations as of and for the periods indicated. The statements should be read in conjunction with the financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended February 3, 1996. The results of operations for the three-month period ended May 4, 1996, are not necessarily indicative of results to be expected for the entire year ending February 1, 1997. SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
May 4, February 3, ASSETS 1996 1996 CURRENT ASSETS: Cash and equivalents $458,858 $760,885 Accounts and trade notes receivable, less allowance for doubtful accounts of approximately $255,000 and $186,000 in 1996 and 1995, respectively 5,660,340 6,779,193 Inventories 3,259,559 2,755,593 Notes receivable - current portion 15,165 14,816 Prepaid expenses 360,098 210,029 TOTAL CURRENT ASSETS 9,754,020 10,520,516 PROPERTY, PLANT AND EQUIPMENT: Land and improvements 108,133 108,133 Buildings and improvements 439,836 438,077 Machinery and equipment 2,038,160 2,017,272 2,586,129 2,563,482 Less accumulated depreciation (1,115,848) (1,025,723) 1,470,281 1,537,759 Properties held for sale 572,583 596,318 Long-term notes receivable 102,015 105,930 Excess of purchase price over fair value of net assets acquired 1,597,984 1,615,611 OTHER ASSETS 799,078 792,565 TOTAL $14,295,961 $15,168,699 May 4, February 3, LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1996 CURRENT LIABILITIES: Accounts payable $5,074,312 $5,318,812 Accrued expenses 639,910 563,584 Current portion of long-term debt 383,089 496,056 TOTAL CURRENT LIABILITIES 6,097,311 6,378,452 DEFERRED COMPENSATION PAYABLE 344,283 337,913 LONG-TERM DEBT 7,382,212 8,096,798 STOCKHOLDERS' EQUITY: Common stock, $.10 par value 3,000,000 shares authorized; 2,276,116 shared issued in 1996 and 1995 227,612 227,612 Capital in excess of par value 1,041,721 1,070,286 Retained earnings 2,121,382 2,004,838 3,390,715 3,302,736 Less: Treasury stock at cost, 828,214 and 837,164 shares in 1996 and 1995, respectively (2,653,560) (2,682,200) Less: Receivable for common stock sold to ESOP (265,000) (265,000) TOTAL STOCKHOLDERS' EQUITY 472,155 355,536 TOTAL $14,295,961 $15,168,699
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS
Three Months Ended May 4, April 29, 1996 1995 Sales $19,301,698 $21,819,325 Costs and Expenses Cost of goods sold 16,411,838 18,238,243 Operating expenses 1,377,138 2,034,907 Selling, general and administrative expenses 1,186,051 1,196,118 Interest expense 216,257 261,656 Other (income), net (6,130) (10,411) Total Cost and Expenses 19,185,154 21,720,513 Earnings From Operations Before Income Taxes 116,544 98,812 Provision For Income Taxes -0- 2,000 Net Earnings $ 116,544 $ 96,812 Earnings Per Common and Common Equivalent Share $ .08 $ .07 Earnings Per Common Share Assuming Full Dilution $ .07 $ .07
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended May 4, April 29, CASH FLOWS FROM OPERATING ACTIVITIES: 1996 1995 Net earnings $ 116,544 $ 96,812 Adjustments To Reconcile Net Earnings To Net Cash (Used In) Or Provided By Operating Activities: Depreciation 93,611 171,702 Amortization of excess of purchase price over fair market value of net assets acquired 17,627 15,105 Provision for losses on accounts receivable 69,098 66,660 Change in assets and liabilities: Decrease (increase) in accounts and trade notes receivable 1,049,756 (641,886) (Increase) decrease in inventories (503,966) (708,895) (Increase) in prepaid expenses (150,069) (82,571) (Increase) decrease in other assets (6,513) (414,801) (Decrease) increase in accounts payable (244,500) (207,506) Increase (Decrease) in accrued expenses 76,326 13,067 (Decrease) increase in income taxes payable -0- (6,000) Increase in deferred compensation payable 6,370 28,600 Total Adjustments 407,740 (1,766,525) Net Cash Provided By Or (Used In) Operating Activities $ 524,284 $(1,669,713) Cash Flows From Investing Activities: Capital expenditures (2,399) (82,622) Cash (Used In) Or Provided By Investing Activities (2,399) (82,622) Cash Flows From Financing Activities: Proceeds from notes payable -0- 1,439,619 Repayments on notes receivable 3,566 3,249 Principal payments on notes payable (827,553) (390,581) Proceeds from subordinated debentures -0- 700,000 Proceeds from receivable from ESOP -0- 53,000 Proceeds from exercise of options 75 -0- Net Cash (Used In) Or Provided By Financing Activities (823,912) 1,805,287 Net (Decrease) Increase In Cash and Equivalents (302,027) 52,952 Cash and Equivalents, Beginning of Year 760,885 453,608 Cash and Equivalents, End of Year $ 458,858 $ 506,560
[/CAPTION] Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion provides information which management believes is relevant to an assessment and understanding of the Company's operations and financial condition. This discussion should be read in conjunction with the financial statements. COMPANY PROFILE: Sun City Industries, Inc. (the "Company"), which began in 1949 as an egg processing and marketing company, has now moved into the foodservice marketing and distribution business throughout much of the eastern seaboard of the United States with a heavy concentration in Florida. The Company intends to expand its market share through internal sales growth and the acquisition of related companies in the foodservice distribution business. In 1990, the Company began its expansion as a foodservice distributor that now includes five centers in Florida covering the West Coast of Florida, Central Florida and Southeast Florida. In addition, the Company has operations that distribute to markets in Atlanta, Georgia, Baltimore, Maryland, Philadelphia, Pennsylvania and throughout New Jersey. The Company's clientele includes hotels, restaurants, airline caterers, country clubs and cruiseship lines. The Company's goal is to build a network of foodservice companies throughout the heavily populated eastern seaboard of the United States with a major focus on the State of Florida. RESULT OF OPERATIONS: FOR THE QUARTERS ENDED MAY 4, 1996 AND APRIL 28, 1995 SALES:
During the first quarter, consolidated sales decreased $2,517,627, down 11.5% compared to a year ago. First Total Foodservice% of Egg % of Quarter Sales Division Total Division Total 1996 $19,301,698 $17,610,03791.2% $1,691,661 8.8% 1995 21,819,325 14,454,76566.2 7,296,010 33.4 Net change $(2,517,627) $3,155,272 25.0% $(5,604,349) (24.6%)
Reasons: Division Amount Explanations Foodservice: Produce Co. $3,480,201 New division started June 19, 1995. Sheppard 932,935 Acquired February 27, 1995, three months this year vs. two months a year ago. Gulf Coast (1,471,668) Switched a portion of its business to warehouse and distribution servicing. All Others 213,804 Generally greater average sales prices. Net Increase $3,155,272 Eggs: Egg Marketing 458,286 Includes consulting and rent income resulting from the sale of the three egg business es in fiscal 1996. Egg Processing (6,062,635) Results from the sale of the three egg processing divisions in fiscal 1996. Net Decrease$(5,604,349)
[/CAPTION] COST OF GOODS SOLD: Cost of goods sold include product cost and freight in costs. During the first quarter, cost of goods sold decreased $1,826,405 or 10.0%. This decrease was generally in line with the change in our business resulting from the sale and elimination of the three egg processing divisions. The rate of change is influenced by the Company's overall customer and product mix, as well as the changes in market prices which fluctuate from year to year. OPERATING EXPENSES: Operating expenses include warehousing and distribution costs and for the prior year the cost of processing within the three egg operations. During the first quarter operating expenses decreased $657,769 a drop of 32.3% reflecting the change in our business as compared to the first quarter of the prior year. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: Selling, general and administrative expenses were down $10,067. The change reflects: Increase of the newly formed produce division $169,352 Increases in other foodservice divisions 63,330 Elimination of the three egg divisions (148,019) Reduction in headquarters administrative costs (94,730) Net Change $ (10,067)
INTEREST EXPENSE: Interest expense decreased by $45,399 during the first quarter of 1996. This drop reflects a decrease in the average outstanding debt of $1.1 million for the current quarter compared to the corresponding quarter a year earlier. INCOME TAXES: The Company accounts for income taxes in accordance with SFAS 109, under which deferred tax liabilities are recognized for future taxable amounts and deferred tax assets are recognized for future deductions and operating loss carryforwards. A valuation allowance is recognized to reduce net deferred tax assets to the amounts that are more likely than not to be realized. The Company estimates that, after filing its fiscal 1996 tax return, it will have tax loss carryforwards of approximately $4,700,000 expiring in the years 2005 through 2009. NET EARNINGS: Net Earnings increased 20.4% from $96,812 to $116,544. Earnings per share improved 14.3% to $.08 versus $.07 per share reported for the first quarter a year ago. Improvement in net earnings was due to contributions of the newly formed Sun City Produce division and improved earnings of Sheppard Foodservice as well as a drop in interest expense when compared to the first quarter the year before. EARNINGS PER COMMON SHARE: May 4, April 29, First Quarter Ended 1996 1995 Earnings per common and common equivalent share $ .08 $ .07 Earnings per common share assuming full dilution $ .07 $ .07 Average shares used in computation: Common equivalent shares 1,531,092 1,438,952 Fully diluted shares 1,746,476 1,654,336
LIQUIDITY AND CAPITAL RESOURCES: The fiscal 1996 loss has depleted substantially all of the Company's capital. Management expects the Company to return to profitability by focusing its efforts on developing the foodservice business. However, the strategy of expanding the Company's market share in the foodservice industry through the acquisition of small to mid-sized foodservice distribution companies has been curtailed at this time as a result of the expanded losses incurred during fiscal 1996. The Company no longer has the capital to seek expansion through acquisitions. The Company has disposed of its egg production and processing operations and has instituted efforts to reduce administrative expenses. Management will concentrate its efforts on the existing foodservice business with a goal to improve each operation and grow internally until it can become profitable enough to seek other acquisitions. There can be no assurance, however, that management's efforts will ultimately be successful. During fiscal 1996, the Company: Disposed of property, plant and equipment and related joint venture investments relating to its Spring Grove, Pennsylvania, Burgaw, North Carolina, and Jarratt, Virginia, egg production and processing operations. This resulted in a reduction in fixed assets and capital lease obligations of $1,543,663 and $503,031, respectively. Acquired Sheppard Distributors, Inc. of Auburndale, Florida for $1,350,000. This resulted in goodwill of $450,000. Surrendered certain key man life insurance policies, the net proceeds of which were used to purchase new split dollar and paid up deferred compensation policies. Completed its second private placement offering by raising an additional $700,000 in five year Senior Subordinated Convertible Debentures carrying a fixed 9% interest rate, convertible at $5.125 per share. Expanded its credit facility with its major lender from $7.0 million to $7.5 million. The credit facility is solely for the Company's working capital needs. As of February 3, 1996, the Company did not meet the minimum net worth requirement required by its lending arrangement. The Company has obtained a waiver from the creditor regarding this covenant through March 31, 1997. In conjunction with the granting of this waiver, the lender increased the interest rate on the line of credit by an additional quarter of one percent. The ability of the Company to meet its long-term cash requirements is dependent upon its ability to obtain and sustain sufficient cash flows from operations supplemented as necessary by potential financings to the extent obtainable. 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. SUN CITY INDUSTRIES, INC. REGISTRANT DATE: June 13, 1996 Malvin Avchen Malvin Avchen, C.E.O. DATE: June 13, 1996 Syed Jafri Syed Jafri, Treasurer The financial statements for the three months ended May 4, 1996 and April 29, 1995, respectively, are unaudited but are prepared in conformity with accounting principles used at our last fiscal year end and include all adjustments which the Company considers necessary for a fair presentation. [DESCRIPTION] ARTICLE 5 FDS FOR 1ST QUARTER 10-Q [LEGEND] THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SUN CITY INDUSTRIES, INC. FINANCIAL STATEMENTS F.P.E. 5-04-96 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. [/LEGEND] [PERIOD-TYPE] 3-MOS [FISCAL-YEAR-END] FEB-01-1997 [PERIOD-START] FEB-04-1996 [PERIOD-END] MAY-04-1996 [CASH] 458,858 [SECURITIES] 0 [RECEIVABLES] 5,930,505 [ALLOWANCES] 255,000 [INVENTORY] 3,259,559 [CURRENT-ASSETS] 9,754,020 [PP&E] 2,286,129 [DEPRECIATION] 1,115,848 [TOTAL-ASSETS] 14,295,961 [CURRENT-LIABILITIES] 6,097,311 [BONDS] 7,382,212 [COMMON] 227,612 [PREFERRED-MANDATORY] 0 [PREFERRED] 0 [OTHER-SE] 244,543 [TOTAL-LIABILITY-AND-EQUITY] 14,295,961 [SALES] 19,301,698 [TOTAL-REVENUES] 19,301,698 [CGS] 17,788,976 [TOTAL-COSTS] 19,185,154 [OTHER-EXPENSES] 1,396,178 [LOSS-PROVISION] 59,397 [INTEREST-EXPENSE] 216,257 [INCOME-PRETAX] 116,544 [INCOME-TAX] 0 [INCOME-CONTINUING] 116,544 [DISCONTINUED] 0 [EXTRAORDINARY] 0 [CHANGES] 0 [NET-INCOME] 116,544 [EPS-PRIMARY] .08 [EPS-DILUTED] .07
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