0000928385-95-000395.txt : 19950914 0000928385-95-000395.hdr.sgml : 19950914 ACCESSION NUMBER: 0000928385-95-000395 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950729 FILED AS OF DATE: 19950912 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: 95573157 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 July 29, 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 six-month period ended July 29, 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, most of 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 SIX MONTHS ENDED JULY 29 , 1995 AND JULY 30, 1994 SALES: During the six months, consolidated sales increased $7,432,399 up 21.2% compared to a year ago.
Total Foodservice % of Egg % of Period Sales Division Total Division Total ---------------------- ------------ ------------- ---------- ------------- ------- 1995 $42,452,981 $28,792,481 67.8% $13,560,501 31.9% 1994 35,020,582 21,361,007 61.0% 13,519,237 38.6% Net change $ 7,432,399 $ 7,431,474 6.8% 41,264 (6.7%) Percent Change 21.2% 34.8%
Division Amount Reasons ----------------------------- ----------- ------------ Sheppard Foodservice $ 8,019,238 New division began 2/27/95. Gulf Coast Foodservice 1,280,830 Unit Sales up 18.5%. Sun City Produce 1,153,545 New Division, began 6/19/95. Certified Food Service,PA. (2,372,363) New Jersey Division closed. Certified Food Service, GA. (450,876) Transferred egg sales to Sun City Marketing in
GA. All Other (197,975) Unit sales down.
COST OF SALES: Cost of Sales include product cost, warehousing, distribution and egg processing costs. During the first six months, cost of sales rose $8,093,772 or 25.2%. This increase was generally in line with increases in sales. The rate of change is influenced by the Company's overall customer and product mix, as well as the changes in egg market prices which fluctuate significantly from year to year. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: Selling, general and administrative expenses as percentage of sales for 1995 and 1994 were 5.0% and 6.9%, 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 new Sheppard subsidiary. 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 $254,088 during the first six months of 1995. Of this increase $154,000 results directly from debt associated with the Sheppard and Gulf Coast acquisitions with the balance arising from increased borrowing and an effective 29.5% increase in short term interest rates on its primary line of credit, compared to 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 $1,731,000 expiring in the years 2005 through 2008. NET EARNINGS: During the first six months the Company incurred a net loss of $405,077 versus a profit of $172,889 for the same period the year before. Contributing to the loss was a $305,000 decrease in operating profit in the egg division, losses of $114,000 in the egg production joint ventures and an increase of $254,000 in interest expense which offset the improvements made by the newly acquired foodservice divisions. Contributing to the reduction in egg division operating profits was a decline in available egg supply arising when the company began to divest of it's egg production joint ventures, forcing the company to replace this supply at higher costs, creating lower gross profit margins and resulting in reduced profits. (LOSS) EARNINGS PER COMMON SHARE:
Six Months Ended July , 1995 1994 -------------------------------------------------------------------- (Loss) earnings per common and common equivalent share ($.28) $.12 Average shares used in the computation 1,438,952 1,503,525
LIQUIDITY AND CAPITAL RESOURCES: The Company now intends to consolidate its market share in the foodservice industry through it's 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 had decided to create a program with its egg division whereby it will continue its status as an egg marketing entity but at the same time will begin to divest itself of its egg production joint ventures and seek alternatives in the operation of its egg processing operations. Progress in this regard is expected sometime during the third quarter. During the Six Months ended July 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 now into a program whereby it will be changing the manner in which it will, in the future, operate its egg business. 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 egg operations. SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES ONSOLIDATED BALANCE SHEETS
JULY 29 JANUARY 28 1995 1995 ------------------------------------------------------------------------------- Cash and equivalents $ 346,618 $ 453,608 Accounts and trade notes receivable, less allowance for doubtful accounts of $305,422 and $178,600, respectively 7,160,177 6,053,550 Inventories 3,322,477 2,645,785 Notes Receivable-current portion 14,166 13,545 Prepaid Expenses 498,807 370,445 Investment in Joint Ventures 743,250 734,000 ----------- ----------- TOTAL CURRENT ASSETS 12,085,495 10,270,933 PROPERTY, PLANT AND EQUIPMENT: Land and Improvements 153,082 146,404 Buildings and Improvements 1,023,681 999,479 Machinery and equipment 5,662,969 5,722,264 ----------- ----------- 6,839,732 6,868,147 Less accumulated depreciation 3,712,444 3,720,607 ----------- ----------- 3,127,288 3,147,540 Properties held for sale 393,466 449,500 Long-term notes receivable 113,505 121,822 Excess of purchase price over fair value of net assets acquired 1,655,790 1,240,501 OTHER ASSETS 863,177 1,057,584 ----------- ----------- TOTAL $18,238,721 $16,287,880 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------------------------------------------------- CURRENT LIABILITIES: Accounts payable $ 5,274,841 $ 3,850,901 Accrued expenses 522,300 495,244 Current portion of long-term debt 541,357 687,640 Current portion of capital lease 62,805 62,805 Income taxes payable 2,000 8,000 ----------- ----------- TOTAL CURRENT LIABILITIES 6,403,303 5,104,590 DEFERRED COMPENSATION PAYABLE 472,760 444,160 LONG-TERM DEBT 8,205,470 7,199,174 CAPITAL LEASE 445,424 476,115 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 4,361,066 4,766,143 ----------- ----------- 5,658,964 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 2,711,764 3,063,841 ----------- ----------- TOTAL $18,238,721 $16,287,880 =========== ===========
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTHS ENDED THREE MONTHS ENDED ------------------------------- ------------------------------ July 29 July 30 July 29 July 30 1995 1994 1995 1994 ------------- ------------- ------------- ------------- Sales $42,452,981 $35,020,582 $20,633,656 $15,349,194 Costs and Expenses Cost of Sales 40,235,198 32,141,426 19,962,048 13,940,866 Selling, general and administrative expenses 2,099,503 2,427,943 903,385 1,173,205 Interest expense 540,882 286,794 279,226 152,337 Other (income), net (19,525) (15,760) (9,114) (6,595) ------------ ------------ ------------ ------------ Total Costs and Expenses 42,856,058 34,840,403 21,135,545 15,259,813 ------------ ------------ ------------ ------------ Earning From Operations Before Income Taxes $ (403,077) $ 180,179 $ (501,889) $ 89,381 Provisions For Income Taxes 2,000 7,290 -- 3,140 ------------ ------------ ------------ ------------ Net Earnings (405,077) 172,889 (501,889) 86,241 ------------ ------------ ------------ ------------ Earnings Per Common and Common Equivalent Share ($ .28) $ .12 ($ .35) $ .06 Earnings Per Common Share Assuming Full Dilution ($ .28) $ .11 ($ .35) $ .06
SUN CITY INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOW
Six Months Ended July 29 July 30 1995 1994 ----------- ----------- Cash Flows From Operating Activities: Net Earnings ($405,077) $ 172,889 ----------------------------------------------------------------------------------- Adjustments To Reconcile Net Earnings To Net Cash (Used In) Or Provided By Operating Activities: ----------------------------------------------------------------------------------- Depreciation 353,684 240,137 Amortization of excess of purchase price over fair market value of net assets acquired 34,711 15,066 Provisions for losses on accounts receivable 126,822 81,307 ----------------------------------------------------------------------------------- Change in assets and liabilities: (Increase) decrease in accounts and trade notes receivable (1,233,449) 1,524,642 (Increase) decrease in inventories (676,692) 286,643 (Increase) in prepaid expenses (128,363) (117,997) (Increase) in investment in joint venture (9,250) (194,000) (Increase) decrease in other assets (255,593) (386,800) (Decrease) increase in accounts payable 1,423,940 (1,978,871) Increase in accrued expenses 27,056 566,867 (Decrease) increase in income taxes payable (6,000) (8,710) Increase in deferred compensation payable 28,600 57,200 ----------------------------------------------------------------------------------- Total Adjustments (314,534) 85,484 ----------------------------------------------------------------------------------- Net Cash (Used In) Or Provided By Operating Activities (719,611) 258,373 ----------------------------------------------------------------------------------- Cash Flow From Investing Activities: Capital Expenditures (277,398) (220,809) ----------------------------------------------------------------------------------- Net Cash (Used In) Investing Activities: (277,398) (220,809) ----------------------------------------------------------------------------------- Cash Flows From Financing Activities: Proceeds from notes payable 1,488,739 732,744 Repayments on notes receivable 7,697 Principal payments on notes payable (1,359,417) (803,935) Proceeds from subordinated debt 700,000 -- Proceeds from loan receivable from ESOP 53,000 53,000 ----------------------------------------------------------------------------------- Net Cash Provided By Or (Used In) Financing Activities 890,019 (18,191) ----------------------------------------------------------------------------------- Net Increase (Decrease) In Cash and Equivalents (106,990) 19,373 ----------------------------------------------------------------------------------- Cash and Equivalents, Beginning of Year 453,608 531,608 ----------------------------------------------------------------------------------- Cash and Equivalents, End of Year $ 346,618 $ 550,981 -----------------------------------------------------------------------------------
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: 09-12-95 Malvin Avchen ------------------------ ------------------------- Malvin Avchen, C.E.O. DATE: 09-12-95 Syed Jafri ------------------------ ------------------------- Syed Jafri, Treasurer The financial statements for the six months ended July 29, 1995 and July 30, 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. EX-27 2 ARTICLE 5 FDS 2D QTR
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SUN CITY INDUSTRIES, INC. FINANCIAL STATEMENTS F.P.E. 07-29-95 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS FEB-03-1996 JAN-29-1995 JUL-29-1995 346,618 0 7,160,177 305,422 3,322,477 12,085,495 6,839,732 3,712,444 18,238,721 6,403,303 9,123,654 227,612 0 0 2,484,152 18,238,721 42,452,981 42,452,981 40,235,198 42,856,058 2,620,860 121,091 540,882 (403,077) 2,000 (405,077) 0 0 0 (405,077) (.28) (.28)