-----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, SlESYNCULiFrBHCYk6RJgaCwZTbawMsKg4OBZGvzDdXl2k9WC6KQDi4xESQqcwYy NXbJaSwymacslOPTLMtXnw== 0000928385-95-000580.txt : 19951213 0000928385-95-000580.hdr.sgml : 19951213 ACCESSION NUMBER: 0000928385-95-000580 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951028 FILED AS OF DATE: 19951212 SROS: AMEX 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: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06914 FILM NUMBER: 95601040 BUSINESS ADDRESS: STREET 1: 5545 NW 35TH AVE STREET 2: DRAWER OFFICE BOX 8848 CITY: FORT LAUDERDALE STATE: FL ZIP: 33309 BUSINESS PHONE: 3057303333 FORMER COMPANY: FORMER CONFORMED NAME: SUN CITY DAIRY PRODUCTS INC DATE OF NAME CHANGE: 19690727 10-Q 1 FORM 10-Q 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 October 28, 1995 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 (305) 730-3333 --------------- Same Name; Former Address-8600 Doral Blvd., #304, Miami, FL 33166 - ------------------------------------------------------------------ Former name, former address and former fiscal year, if changed since last report. 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 January 28, 1995. The results of operations for the nine-month period ended October 28, 1995, are not necessarily indicative of results to be expected for the entire year ending February 03, 1996. 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. The Company, which began in 1949 as an egg processing and marketing company, is now also a foodservice marketing and distribution company 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 the development of internal sales and the acquisition of related companies in the foodservice distribution business. The Company began its expansion as a foodservice distributor in 1990 and now includes four distribution centers in Florida covering the Orlando-Disney World area, the West Coast of Florida, the central Florida area and Southeast Florida from Key West to West Palm Beach. In addition, the Company has distribution operations that cover markets in Atlanta, GA, Baltimore, MD, Philadelphia, PA and New Jersey. The Company's customers include national and regional supermarkets, U.S. military installations, hotels, restaurants, airline caterers, cruise ship lines, schools and state facilities. 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 in the State of Florida. FOR THE NINE MONTHS ENDED OCTOBER 28, 1995 AND OCTOBER 29, 1994 ---------------------------------------------------------------- SALES: During the nine months, consolidated sales increased $14,605,551 up 22.0% compared to a year ago.
TOTAL FOODSERVICE % OF EGG % OF PERIOD SALES DIVISION TOTAL DIVISION TOTAL - --------- ------------ ------------ ----------- -------------- ----------- 1995 $66,369,435 $46,342,011 69.8% $19,894,942 30.0% 1994 51,763,884 31,279,817 60.4% 20,281,120 39.2% Net Change 14,605,551 15,062,194 (386,178) Percent Change 22.0% 48.2% (1.9%)
DIVISION AMOUNT REASONS - -------- ------- ------- Sheppard Foodservice $12,290,405 New division, began 2/27/95. Sun City Produce 4,312,949 New Division, began 6/19/95. Gulf Coast Foodservice 1,933,885 Unit Sales up 18.6%. Certified Food Service, PA. (2,965,304) New Jersey Division closed 7/31/94. Certified Food Service, GA. (437,215) Transferred divisions chain store egg sales to Company's Egg Division. Egg Division (386,178) Sold Spring Grove, PA during third quarter 1995. All Other (142,991) ----------- $14,605,551
COST OF SALES: Cost of Sales include product cost, warehousing, distribution and egg processing costs. 2 During the nine months, the cost of sales rose $16,149,335 or 34.0%. This increase reflects the higher costs incurred with the egg production joint ventures; the increased cost of egg supply associated with the corresponding decline in regular egg supply and the higher cost of operating due to the inefficiencies associated with phasing out of egg operations. Additionally, cost of sales associated with the newly acquired Sheppard Foodservice and new start up division, Sun City Produce are generally higher as a percent of sales than existing operations. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: Selling, general and administrative expenses as percentage of sales for 1995 and 1994 were 5.3% and 7.0%, respectively. Changes in the percentage relationship of selling, general and administrative expenses to sales result from an interplay of both direct costs associated with the operation of each division as well as the home office administrative cost. During 1995 these costs decreased due to marginal selling, general and administrative expenses associated with the relatively high sales volume of the new Sheppard and Sun City Produce subsidiaries. Management expects that as the Company's operations become more foodservice oriented, future direct selling, general and administrative expenses as a percentage of sales will reflect the levels typically experienced in the foodservice industry. INTEREST EXPENSE: Interest expense increased $348,446 during the first nine months of 1995. Of this increase $240,000 results directly from debt associated with the Sheppard and Gulf Coast acquisitions with the balance arising from an effective 21% increase in short term interest rates during the nine months as compared to the same period a year earlier. INCOME TAXES: During Fiscal 1994, the Company adopted SFAS 109, Accounting for Income Taxes, effective February 1, 1993. Under SFAS 109, deferred tax liabilities are recognized for future taxable amounts and deferred tax assets are recognized for future deductions and operating loss carry forwards. 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 1995 tax return, it will have tax loss carry forwards of approximately $2,208,000 expiring in the years 2005 through 2008. 3 NET EARNINGS: During the first nine months the Company incurred a total net loss of $1,576,383 versus a profit of $259,106 for the same period the year before. Contributing to the loss was a $1,225,000 turnaround in the egg division profits going from a $800,000 profit last year to a $425,000 loss this year. Reasons for the decline were:
Joint venture losses $ 476,000 Reduced profits resulting from the decline in egg supply, lower volume and the closing of Spring Grove 607,000 Loss on disposition of Spring Grove 155,000 Increased interest costs 348,000 (LOSS) EARNINGS PER COMMON SHARE: Nine Months Ended October: 1995 1994 - -------------------------------------- --------- ---------- (Loss) earnings per common and common equivalent share ($1.10) $ .17 Average shares used in the computation 1,438,952 1,525,350
LIQUIDITY AND CAPITAL RESOURCES: The Company now intends to consolidate its market share in the foodservice industry through its recent acquisitions and newly developed produce division. These companies have strong management teams and are situated in strategic locations that will enable the Company to expand its product lines and increase sales through internal growth. In order to accomplish this goal, the Company has developed a program to divest itself of its egg production joint ventures and sell or lease its egg processing operations while continuing its base strength as an egg marketing entity. During the third quarter the Company completed its first sale, that of the Spring Grove, Pennsylvania location whereby it disposed of certain business assets comprising a major portion of its egg production joint venture investments and a portion of its egg processing business. Nearby Eggs, Inc., a Pennsylvania subsidiary of the Company, sold its operating assets, consisting primarily of inventory, equipment and goodwill, to Hillandale Farms East, Inc., a Pennsylvania corporation and subleased its egg processing facility in Spring Grove, Pennsylvania to Hillandale. The Company will be released from the prime lease after the four-year sublease expires. The sale price was approximately $351,000, paid at closing and the buyer's assumption of certain designated liabilities relating to leased egg processing equipment and transportation equipment. 4 Nearby Eggs, Inc. retained its accounts receivables and trade account payables. Affiliate Sun City Marketing Corp. entered into a Consulting Agreement with the buyer, to provide certain egg marketing services after the closing for a four year period. At the same time, another affiliate, Nearby Producers Egg and Poultry Marketing Corp. sold to R.D. Bowman and Sons, Inc., a Maryland corporation, its interests in various egg production joint ventures, for a purchase price approximately equal to applicable liabilities. The Company is currently involved in negotiations for the sale of its remaining egg processing businesses in North Carolina and Virginia and the final unit of its egg production joint ventures in North Carolina. If these transactions are successfully completed, the Company will have made a transition in its egg operations from that of an egg processor-distributor to exclusively that of an egg marketing entity. During the Nine Months Ended October 28, 1995: Created the Sun City Produce division which is a unit that services the many produce distributors and retailers in South Florida. Completed the acquisition of Sheppard Foodservice, Inc. in February, 1995 for an initial cash payment of $1,350,000. Completed its second private placement offering by raising $700,000 in five year Senior Subordinated Convertible Debentures carrying a fixed 9% 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 primarily for the Company's increasing working capital needs, including that associated with new acquisitions. The Company's liquidity condition has been negatively impacted by the operations of its egg division. However, management is engaged in a program whereby it is changing the manner in which it will, in the future, operate its egg division. If successful, the Company would eliminate its focus on egg processing and egg production joint ventures to that of being an egg marketing entity and as a result should reduce its debt load and eliminate the negative results associated with its current operations. 5 SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
OCTOBER 28, JANUARY 28, ASSETS 1995 1995 - ----------------------------------------------------------------------------- Cash and equivalents $ 306,232 $ 453,608 Accounts and trade notes receivable, less allowance for doubtful accounts of $326,679 and $178,600, respectively 8,236,426 6,053,550 Inventories 3,852,630 2,645,785 Notes Receivable-current portion 14,487 13,545 Prepaid Expenses 435,024 370,445 Investment in Joint Ventures 207,000 734,000 ----------- ----------- TOTAL CURRENT ASSETS 13,051,799 10,270,933 ----------- ----------- PROPERTY, PLANT AND EQUIPMENT: Land and Improvements 146,404 146,404 Buildings and Improvements 974,846 999,479 Machinery and equipment 4,663,078 5,722,264 ----------- ----------- 5,784,328 6,868,147 Less accumulated depreciation 3,443,729 3,720,607 ----------- ----------- 2,340,599 3,147,540 Properties held for sale 388,736 449,500 Long-term notes receivable 109,766 121,822 Excess of purchase price over fair value of net assets acquired 1,636,184 1,240,501 OTHER ASSETS 956,235 1,057,584 ----------- ----------- TOTAL $18,483,319 $16,287,880 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY - ---------------------------------------------------------------------------- CURRENT LIABILITIES: Accounts payable 6,994,942 $ 3,850,901 Accrued expenses 475,300 495,244 Current portion of long-term debt 417,112 687,640 Current portion of capital lease - 62,805 Income taxes payable 2,000 8,000 ----------- ----------- TOTAL CURRENT LIABILITIES 7,889,354 5,104,590 DEFERRED COMPENSATION PAYABLE 529,960 444,160 LONG-TERM DEBT 8,523,544 7,199,174 CAPITAL LEASE - 476,115 STOCKHOLDERS' EQUITY: Common stock, $.10 par value 3,000,000 shares authorized; 2,276,116 shares issued, respectively in 1995 and 1994 227,612 227,612 Capital in excess of par value 1,070,286 1,070,286 Retained earnings 3,189,763 4,766,143 ----------- ----------- 4,487,661 6,064,041 Less: Treasury stock at cost, 837,164 and 840,414 shares in 1995 and 1994, respectively (2,682,200) (2,682,200) Loan Receivable for common stock sold to ESOP (265,000) (318,000) ----------- ----------- Total Stockholders' Equity 1,540,461 3,063,841 ----------- ----------- TOTAL $18,483,319 $16,287,880 =========== ===========
6 SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED THREE MONTHS ENDED -------------------------- ------------------------- Oct. 28, Oct. 29, Oct. 28, Oct. 29, 1995 1994 1995 1994 ----------- ------------ ----------- ----------- Sales $66,369,435 $51,763,884 $23,916,454 $16,743,302 Costs and Expenses Cost of Sales 63,556,805 47,407,470 23,321,607 15,266,044 Selling, general and administrative expenses 3,486,999 3,652,838 1,387,496 1,224,895 Interest expense 806,372 457,926 265,490 171,132 Other (income), net 93,642 (24,246) 113,167 (8,486) ----------- ----------- ----------- ----------- Total Costs and Expenses 67,943,818 51,493,988 25,087,760 16,653,585 ----------- ----------- ----------- ----------- Earnings From Operation Before Income Taxes (1,574,383) 269,896 (1,171,306) 89,717 Provision For Income Taxes (2,000) (10,790) - (3,500) ----------- ----------- ----------- ----------- Net Earnings (1,576,383) 259,106 (1,171,306) 86,217 ----------- ----------- ----------- ----------- Earnings Per Common and Common Equivalent Share $ (1.10) $ .17 $ ( .81) $ .06 Earnings Per Common Share Assuming Full Dilution $ (1.10) $ .17 $ ( .81) $ .06
7 SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOW
NINE MONTHS ENDED OCT. 28, OCT. 29, 1995 1994 ---------- ---------- Cash Flows From Operating Activities: Net Earnings $(1,576,383) 259,106 ----------- ---------- Adjustments To Reconcile Net Earnings To Net Cash (Used In) Or Provided By Operating Activities: Depreciation 518,744 371,679 Amortization of purchase price over fair market value of net asset acquired 54,317 23,359 Provisions for losses on accounts receivable 148,079 86,646 ----------- ---------- Change in assets and liabilities: (Increase) decrease in accounts and trade notes receivable (2,330,955) 635,782 (Increase) decrease in inventories (1,206,845) 42,142 (Increase) in prepaid expenses (64,579) (93,997) Decrease (Increase) in investment in joint venture 527,000 (291,840) (Increase) decrease in other assets (348,651) (210,255) Increase (Decrease) in accounts payable 3,144,041 (1,746,860) Increase (Decrease) in accrued expenses (19,944) 1,411,552 (Decrease) increase in income taxes payable (6,000) (5,210) Increase in deferred compensation payable 85,800 85,800 ----------- ---------- Total Adjustments 501,007 308,798 ----------- ---------- Net Cash (Used In) Or Provided By Operating Activities (1,075,376) 567,904 ----------- ---------- Cash Flow From Investing Activities: Capital Expenditures 348,961 (1,115,739) ----------- ---------- Net Cash (Used In) Investing Activities: 348,961 (1,115,739) ----------- ---------- Cash Flows From Financing Activities: Principal payments on long term debt (1,673,817) (914,490) Proceeds from long term debt 1,488,739 1,407,744 Proceeds from loan receivable from ESOP 53,000 53,000 Proceeds from exercise of options - 3,899 Proceeds from notes receivable 11,117 - Proceeds from subordinated debt 700,000 224 ----------- ---------- Net Cash Provided By Or (Used In) Financing Activities 579,039 550,377 ----------- ---------- Net Increase (Decrease) In Cash and Equivalents (147,376) 2,542 ----------- ---------- Cash and Equivalents, Beginning of Year 453,608 531,608 ----------- ---------- Cash and Equivalents, End of Year 306,232 534,150 ----------- ----------
8 Sun City Industries, Inc. and Subsidiaries SALES OF UNREGISTERED SECURITIES (DEBT OR EQUITY) - ------------------------------------------------- On February 10, 1995 the Company completed a private placement offering by raising $700,000 in five year Senior Subordinated Convertible Debentures carrying a fixed rate of 9%. The debentures are convertible in common stock at $5.12 per share. 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: Malvin Avchen --------------------- --------------------------- Malvin Avchen, C.E.O. DATE: Syed Jafri --------------------- -------------------------- Syed Jafri, Treasurer The financial statements for the nine months ended october 28, 1995 and October 29, 1994, 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. 9 EX-27 2 FINANCIAL DATA SCHEDULE
5 The schedule contains summary financial information extracted from Sun City Industries, Inc. Financial Statements fiscal period ended 07-29-95 and is qualified in its entirety by reference to such financial statements. 9-MOS FEB-03-1996 JAN-29-1995 OCT-28-1995 306,232 0 8,236,426 326,679 3,852,630 13,051,799 5,784,328 3,443,729 18,483,319 7,889,354 9,053,504 227,612 0 0 1,312,849 18,483,319 66,369,435 66,369,435 63,556,805 67,943,818 4,387,013 148,079 806,372 (1,574,383) 2,000 (1,576,383) 0 0 0 (1,576,383) (1.10) (1.10)
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