UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended------------------July 5, 2001-----------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from-----------------------to----------------------
Commission file number--------------------------1-11556----------------------
-----------------------------------UNI-MARTS, INC.---------------------------
(Exact name of registrant as specified in its charter)
----Delaware----------------------------------------------------25-1311379---
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
477 East Beaver Avenue, State College, PA--------------------------16801-5690
(Address of principal executive offices) (Zip Code)
----------------------------------(8l4) 234-6000-----------------------------
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed sincelast
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--
7,064,808 Common Shares were outstanding at August 10, 2001.
This Document Contains 20 Pages.
-1-
UNI-MARTS, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
------------------------------
PAGE(S)
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets -
July 5, 2001 and September 30, 2000 3-4
Condensed Consolidated Statements of Operations -
Quarter Ended and Three Quarters Ended
July 5, 2001 and June 29, 2000 5
Condensed Consolidated Statements of Cash Flows -
Three Quarters Ended July 5, 2001 and June 29, 2000 6-7
Notes to Condensed Consolidated Financial Statements 8-11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12-15
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 16
PART II. OTHER INFORMATION
---------------------------
Item 6. Exhibits and Reports on Form 8-K 17-18
Exhibit Index 20
-2-
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNI-MARTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
July 5, September 30,
2001 2000
------------ -------------
ASSETS
CURRENT ASSETS:
Cash $ 5,959,226 $ 7,881,674
Accounts receivable - less allowances of
$251,400 and $226,200 6,196,412 6,106,062
Inventories 17,619,491 16,235,721
Prepaid and current deferred taxes 1,934,513 1,856,208
Property held for sale 1,046,839 1,603,421
Prepaid expenses and other 916,980 1,204,554
Loan due from officer - current portion 0 60,000
------------ -------------
TOTAL CURRENT ASSETS 33,673,461 34,947,640
PROPERTY, EQUIPMENT AND IMPROVEMENTS -
at cost, less accumulated depreciation and
amortization of $58,074,100 and
$53,681,900 105,034,144 100,701,217
LOAN DUE FROM OFFICER 420,389 420,291
NET INTANGIBLE AND OTHER ASSETS 7,885,537 8,168,366
------------ ------------
TOTAL ASSETS $147,013,531 $144,237,514
============ ============
(CONTINUED)
-3-
UNI-MARTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(CONTINUED)
July 5, September 30,
2001 2000
------------ --------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 14,343,368 $ 18,400,556
Gas taxes payable 4,105,337 3,399,429
Accrued expenses 6,266,592 7,028,709
Current maturities of long-term debt 2,191,031 2,232,728
Current obligations under capital leases 387,518 385,918
------------ ------------
TOTAL CURRENT LIABILITIES 27,293,846 31,447,340
LONG-TERM DEBT, less current maturities 81,997,991 74,219,620
OBLIGATIONS UNDER CAPITAL LEASES,
less current maturities 454,715 786,205
DEFERRED TAXES 2,915,100 2,956,300
DEFERRED INCOME AND OTHER LIABILITIES 5,392,175 5,859,928
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common Stock, par value $.10 per share:
Authorized 15,000,000 shares
Issued 7,386,183 and 7,361,123
shares, respectively 738,618 736,112
Additional paid-in capital 23,830,146 23,816,387
Retained earnings 6,447,605 6,527,095
------------ ------------
31,016,369 31,079,594
Less treasury stock, at cost - 323,275
and 333,714 shares of Common Stock,
respectively ( 2,056,665) ( 2,111,473)
------------ ------------
28,959,704 28,968,121
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $147,013,531 $144,237,514
============ ============
See notes to condensed consolidated financial statements
-4-
UNI-MARTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
QUARTER ENDED THREE QUARTERS ENDED
July 5, June 29, July 5, June 29,
2001 2000 2001 2000
------------- ----------- ------------ ------------
REVENUES:
Merchandise sales $ 53,734,213 $47,997,857 $151,335,062 $119,896,689
Gasoline sales 58,087,908 50,755,430 165,789,157 116,800,351
Other income 441,707 432,807 1,510,316 1,364,476
112,263,828 99,186,094 318,634,535 238,061,516
COSTS AND EXPENSES:
Cost of sales 88,433,832 78,351,125 251,204,563 185,440,836
Selling 16,827,200 14,802,586 49,897,645 39,225,105
General and administrative 2,021,363 1,623,497 5,628,000 4,785,358
Depreciation and amortization 2,055,858 1,800,352 6,064,521 4,679,070
Interest 1,952,383 1,715,631 5,936,745 3,628,039
Provision for asset impairment 23,751 56,397 23,751 56,397
111,314,387 98,349,588 318,755,225 237,814,805
NET EARNINGS (LOSS) BEFORE
INCOME TAXES 949,441 836,506 ( 120,690) 246,711
INCOME TAX PROVISION (BENEFIT) 322,700 251,000 ( 41,200) 74,100
NET EARNINGS (LOSS) $ 626,741 $ 585,506 ($ 79,490) $ 172,611
BASIC EARNINGS (LOSS)
PER SHARE $ 0.09 $ 0.08 ($ 0.01) $ 0.02
DILUTED EARNINGS (LOSS)
PER SHARE $ 0.09 $ 0.08 ($ 0.01) $ 0.02
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 7,062,194 7,008,384 7,049,043 6,977,873
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
ASSUMING DILUTION 7,097,082 7,069,185 7,083,686 7,003,124
See notes to condensed consolidated financial statements
-5-
UNI-MARTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
THREE QUARTERS ENDED
July 5, June 29,
2001 2000
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers and others $318,010,331 $237,324,468
Cash paid to suppliers and employees ( 311,306,790) ( 223,615,148)
Dividends and interest received 61,873 61,481
Interest paid (net of capitalized
interest of $287,100 and $0) ( 6,256,059) ( 3,157,063)
Income taxes (paid) received ( 78,305) 15,376
------------ ------------
NET CASH PROVIDED BY OPERATING
ACTIVITIES 431,050 10,629,114
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of business 0 ( 41,239,924)
Receipts from sale of capital assets 389,320 492,128
Purchase of property, equipment and
improvements ( 9,940,190) ( 4,147,829)
Note receivable from officer 59,902 60,000
Cash advanced for intangible and other
assets ( 176,485) ( 171,650)
Cash received for intangible and other
assets 56,065 606,793
------------ ------------
NET CASH USED IN INVESTING ACTIVITIES ( 9,611,388) ( 44,400,482)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings (payments) on revolving credit
agreement 4,768,613 ( 1,800,000)
Additional long-term borrowings 4,899,776 39,809,551
Principal payments on debt ( 2,419,562) ( 1,149,623)
Proceeds from issuance of common stock 9,063 4,338
------------ ------------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 7,257,890 36,864,266
------------ ------------
NET (DECREASE) INCREASE IN CASH ( 1,922,448) 3,092,898
CASH:
Beginning of period 7,881,674 1,944,358
------------ ------------
End of period $ 5,959,226 $ 5,037,256
============ ============
-6-
UNI-MARTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(CONTINUED)
THREE QUARTERS ENDED
July 5, June 29,
2001 2000
----------- ----------
RECONCILIATION OF NET (LOSS) EARNINGS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
NET (LOSS) EARNINGS ($ 79,490) $ 172,611
ADJUSTMENTS TO RECONCILE NET (LOSS) EARNINGS
TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
Depreciation and amortization 6,064,521 4,679,070
Loss on sale of capital assets and other 309,469 136,986
Provision for asset impairment 23,751 56,397
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable ( 90,350) ( 2,913,807)
Inventories ( 1,383,770) ( 2,348,344)
Prepaid expenses 287,574 498,472
Increase (decrease) in:
Accounts payable and accrued expenses ( 4,113,397) 8,130,340
Deferred income taxes and other liabilities ( 587,258) 2,217,389
----------- -----------
TOTAL ADJUSTMENTS TO NET (LOSS) EARNINGS 510,540 10,456,503
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 431,050 $10,629,114
=========== ===========
Supplemental schedule of noncash investing activities:
Liabilities assumed in acquisition $ 0 $2,500,000
Fixed assets acquired under capital leases $ 0 $ 426,143
See notes to condensed consolidated financial statements
-7-
UNI-MARTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
A. FINANCIAL STATEMENTS:
The condensed consolidated balance sheet as of July 5, 2001, the
condensed consolidated statements of operations and the condensed
consolidated statements of cash flows for the quarter ended and
three quarters ended July 5, 2001 and June 29, 2000, respectively, have
been prepared by Uni-Marts, Inc. (the "Company") without audit. In the
opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial position of
the Company at July 5, 2001 and the results of operations and cash
flows for all periods presented have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested that
these consolidated financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's Annual
Report on Form 10-K for the fiscal year ended September 30, 2000. Certain
reclassifications have been made to the September 30, 2000 financial
statements to conform to classifications used in fiscal year 2001. The
results of operations for the interim periods are not necessarily
indicative of the results to be obtained for the full year.
B. BUSINESS ACQUISITION:
In the Company's fiscal year 2000, pursuant to an asset purchase
agreement, the Company purchased the operating assets of Orloski
Service Station, Inc. and its owners (collectively "OSSI") for
approximately $42.7 million in cash. The transaction was accounted
for as a purchase, and accordingly, operations of the acquired OSSI
assets are included in the consolidated financial statements from
the date of acquisition.
The following table summarizes, on an unaudited pro forma basis, the
estimated combined statements of operations for the three quarters ended
June 29, 2000 as though the acquisition took place on October 1, 1999.
This pro forma information does not purport to be indicative of the results
of operations that would actually have been obtained if the acquisition had
been effective on the date indicated.
Three
Quarters Ended
June 29,
2000
--------------
Revenues $286,416,000
Earnings before income taxes $ 252,000
Net earnings $ 151,000
Pro forma earnings per share $ 0.02
-8-
C. INTANGIBLE AND OTHER ASSETS:
Intangible and other assets consist of the following:
July 5, September 30,
2001 2000
---------- -------------
Goodwill $8,874,157 $8,874,157
Lease acquisition costs 377,933 439,153
Noncompete agreements 250,000 250,000
Other intangible assets 217,750 175,395
---------- ----------
9,719,840 9,738,705
Less accumulated amortization 2,887,685 2,601,107
---------- ----------
6,832,155 7,137,598
Other assets 1,053,382 1,030,768
---------- ----------
$7,885,537 $8,168,366
========== ==========
Goodwill represents the excess of costs over the fair value of net
assets acquired in business combinations and is amortized on a straight-
line basis over periods of 13 to 40 years. Lease acquisition costs are the
bargain element of acquired leases and are being amortized on a straight-
line basis over the related lease terms. It is the Company's policy to
periodically review and evaluate the recoverability of the intangible
assets by assessing current and future profitability and cash flows and
to determine whether the amortization of the balances over their remaining
lives can be recovered through expected future results and cash flows.
D. REVOLVING CREDIT AGREEMENT:
On April 20, 2000, the Company executed a 3-year secured $10.0 million
revolving loan agreement (the "Agreement") with $3.5 million available for
letters of credit. During the second quarter of fiscal year 2001, the
Company amended the Agreement to increase the total credit line to $13.0
million, with $3.5 million available for letters of credit, and amend
certain financial covenants. Provisions of the Agreement require the
maintenance of certain covenants relating to minimum tangible net worth,
interest and fixed charge coverage ratios. The Company was in compliance
with these covenants as of July 5, 2001. At July 5, 2001, $4.1 million was
available for borrowings under the Agreement. This Agreement expires on
April 19, 2003. Borrowings of $5.9 million and letters of credit of $3.0
million were outstanding at July 5, 2001. This facility bears interest at
the Company's option based on a rate of either prime plus 1.0% or LIBOR plus
3.0%. The interest rate at July 5, 2001 was 7.75%. The Agreement is
collateralized by substantially all of the Company's eligible inventories
and eligible receivables and selected properties. The net book value of
these selected properties at July 5, 2001 was $2,472,000.
-9-
E. LONG-TERM DEBT:
July 5, September 30,
2001 2000
----------- --------------
Mortgage Loan. Principal and interest will
be paid in 206 monthly installments. At
July 5, 2001, the coupon rate was 9.08%
and the effective interest rate was 10.24%,
net of unamortized fees of $1,361,966
($1,425,995 in 2000). $32,439,635 $33,047,242
Mortgage Loan. Principal and interest will
be paid in 227 monthly installments. The
loan bears interest at LIBOR plus 3.75%.
At July 5, 2001, the coupon rate was 7.89%
and the effective interest rate was 10.09%,
net of unamortized fees of $412,247,
($437,653 in 2000). 21,403,180 21,804,203
Mortgage Loan. Principal and interest will
be paid in 227 monthly installments. At
July 5, 2001, the coupon rate was 10.39%
and the effective interest rate was 11.25%,
net of unamortized fees of $127,500
($135,298 in 2000). 6,644,541 6,729,704
Mortgage Loans. Principal and interest
are paid in monthly installments. The loans
expire in 2009, 2010, 2020 and 2021.
Interest ranges from the prime rate to LIBOR
plus 3.75%. At July 5, 2001, the blended
coupon rate was 8.25% and the effective
interest rate was 9.64%, net of unamortized
fees of $117,336 ($0 in 2000). 7,636,557 3,466,311
Revolving Credit Agreement. Interest is paid
monthly. The interest rate at July 5, 2001
was 7.75%. (See Note D) 5,912,015 1,143,402
Equipment Loans. Principal and interest will be
paid in monthly installments. The loans
expire in 2010 and 2011 and bear interest at
LIBOR plus 3.75%. At July 5, 2001, the blended
coupon rate was 7.89% and the effective interest
rate was 10.01%, net of unamortized fees of
$170,291 ($176,414 in 2000). 9,130,065 9,028,276
Equipment Loan. Principal and interest will be
paid in 108 monthly installments. The loan
expires in 2010. At July 5, 2001, the coupon
rate was 10.73% and the effective interest
rate was 11.80%, net of unamortized fees of
$18,021 ($20,713 in 2000). 1,005,549 1,058,413
Equipment Loan. Principal and interest are
paid in monthly installments. The loan
expires in 2001 and bears interest at a rate
of 10.00%. 17,480 174,797
----------- -----------
84,189,022 76,452,348
Less current maturities 2,191,031 2,232,728
----------- -----------
$81,997,991 $74,219,620
=========== ===========
-10-
E. LONG-TERM DEBT (CONTINUED):
The mortgage loans are collateralized by $70,179,800 of property
at net book value, and the equipment loans are collateralized by
$6,007,100 of equipment, at net book value.
F. CONTINGENCIES:
Litigation - The Company is involved in litigation and other legal matters
which have arisen in the normal course of business. Although the ultimate
results of these matters are not currently determinable, management does not
expect that they will have a material adverse effect on the Company's
consolidated financial position, results of operations or cash flows.
-11-
ITEM 2.
UNI-MARTS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Set forth below are selected unaudited consolidated financial data of the
Company for the periods indicated:
QUARTER ENDED THREE QUARTERS ENDED
July 5, June 29, July 5, June 29,
2001 2000 2001 2000
----------- ----------- ------------ ------------
Revenues:
Merchandise sales 47.9% 48.4% 47.5% 50.4%
Gasoline sales 51.7 51.2 52.0 49.0
Other income 0.4 0.4 0.5 0.6
Total revenues 100.0 100.0 100.0 100.0
----- ----- ----- -----
Cost of sales 78.8 79.0 78.8 77.9
----- ----- ----- -----
Gross profit:
Merchandise (as a percentage of
merchandise sales) 32.1 33.1 32.5 33.5
Gasoline (as a percentage of
gasoline sales) 10.6 8.9 10.1 9.5
Total gross profit 21.2 21.0 21.2 22.1
Costs and expenses:
Selling 15.0 14.9 15.6 16.5
General and administrative 1.8 1.6 1.8 2.0
Depreciation and amortization 1.8 1.8 1.9 2.0
Interest 1.7 1.7 1.9 1.5
Provision for asset impairment 0.0 0.1 0.0 0.0
----- ----- ----- -----
Total expenses 20.3 20.1 21.2 22.0
Earnings (loss) before
income taxes 0.9 0.9 0.0 0.1
Income tax provision (benefit) 0.3 0.3 0.0 0.0
----- ----- ----- -----
Net earnings (loss) 0.6% 0.6% 0.0% 0.1%
===== ===== ===== =====
OPERATING DATA (RETAIL LOCATIONS ONLY):
Average, per store, for stores open
two full comparable periods:
Merchandise sales $ 171,978 $ 162,959 $ 472,294 $ 458,126
Gasoline sales $ 205,662 $ 195,185 $ 591,474 $ 547,906
Gallons of gasoline sold 153,234 156,483 463,637 473,882
Total gallons of gasoline sold 43,857,879 40,793,444 130,531,508 100,342,155
Gross profit per gallon of
gasoline $ 0.140 $ 0.111 $ 0.128 $ 0.111
STORE INFORMATION:
Company-operated stores 294 289 294 289
Franchisee-operated stores 7 7 7 7
Locations with self-service
gasoline 237 235 237 235
-12-
RESULTS OF OPERATIONS:
Matters discussed below should be read in conjunction with "Operating
Data (Retail Locations Only)" on the preceding page. Certain statements
contained in this report are forward looking, such as statements regarding
the Company's plans and strategies or future financial performance. Although
the Company believes that its expectations are based on reasonable assumptions
within the bounds of its knowledge, investors and prospective investors are
cautioned that such statements are only projections and that actual events or
results may differ materially from those expressed in any such forward-looking
statements. In addition to the factors discussed elsewhere in this report, the
Company's actual consolidated quarterly or annual operating results have been
affected in the past, or could be affected in the future, by additional factors,
including, without limitation, general economic, business and market conditions;
environmental, tax and tobacco legislation or regulation; volatility of gasoline
prices, margins and supplies; merchandising margins; customer traffic; weather
conditions; labor costs and the level of capital expenditures.
BUSINESS ACQUISITION
--------------------
On April 21, 2000, the Company acquired the operating assets and business of
Orloski Service Station, Inc. and its affiliates (collectively "OSSI"). OSSI
operated a chain of 43 convenience stores in northeastern Pennsylvania. The
acquisition has had a significant impact on levels of revenues and expenses in
the quarter ended July 5, 2001 in comparison to the quarter ended June 29, 2000
and the three quarter periods ending on the same dates. Total revenues
generated by these locations were $23.4 million and $69.3 million for the
quarter ended July 5, 2001 and three quarters ended July 5, 2001, respectively.
Gross profits at these locations were $5.2 million for the third fiscal quarter
and $15.3 million for the nine months ended July 5, 2001.
QUARTERS ENDED JULY 5, 2001 AND JUNE 29, 2000
---------------------------------------------
In the Company's third fiscal quarter ended July 5, 2001, total revenues
increased by $13.1 million, or 13.2%, from $99.2 million in the third quarter
of fiscal year 2000 to $112.3 million in the third quarter of fiscal year 2001.
The primary reasons for this increase were the increase in the average number
of stores in noperation due to the acquisition of the OSSI assets discussed
above and higher retail prices for gasoline. The Company currently operates
five more stores than it did one year ago. The stores acquired in April 2000
were operated by the Company for the entire third quarter of fiscal year 2001
and only ten weeks of the third quarter of fiscal year 2000. Merchandise sales
were $53.7 million in the current fiscal year's third quarter compared to $48.0
million in the third quarter of fiscal year 2000, an increase of $5.7 million,
or 12.0%. Merchandise sales at stores open for the entire third quarter of
each fiscal year increased by 5.5%. Gasoline sales in the quarter ended
July 5, 2001 increased by $7.3 million, or 14.4%, in comparison to the quarter
ended June 29, 2000. While gasoline gallons sold at stores open for the entire
third quarter of each fiscal year declined by 2.1%, total gallons sold increased
by 3.1 million gallons during the quarter. The sales increases were a result of
the increase in the average number of stores open during the quarter and a
$0.080 increase in the average retail selling price per gallon of gasoline sold
during the third quarter of fiscal year 2001.
Gross profits on merchandise sales in the third quarter of fiscal year 2001 were
$17.2 million compared to $15.9 million in the same quarter of fiscal year 2000,
an increase of $1.3 million, or 8.5%, as a result of higher sales levels. Gross
profits on merchandise sales as a percentage of merchandise sales, however,
declined from 33.1% to 32.1% due to an increased mix of competitively priced
-13-
products. Gross profits on gasoline sales grew by $1.6 million, or 36.2%, from
4.5 million in the quarter ended June 29, 2000 to $6.1 million in the quarter
ended July 5, 2001. While the sale of an additional 3.1 million gallons in
fiscal year 2001 contributed to this increase, the primary reason for the
increase is a $0.03 increase in the gross profit per gallon sold.
Selling expenses increased by $2.0 million, or 13.7%, in the third quarter of
fiscal year 2001 to $16.8 million from $14.8 million, due primarily to the
increase in the average number of stores in operation. General and
administrative expense increased by $398,000, or 24.5%, due primarily to
increased salary and staffing levels as well as higher provisions for franchise
and state sales taxes. Depreciation and amortization increased by $256,000,
or 14.2%, as a result of new store construction, store remodels, gasoline
facility upgrades and, in the current year, a full quarter of depreciation of
the stores acquired in April 2000. Although interest rates on the Company's
variable-rate debt have declined, interest expense increased by $237,000, or
13.8%, due to higher borrowing levels.
Earnings before income taxes in the quarter ended July 5, 2001 were $949,000,
an increase of $113,000, or 13.5%, from pre-tax earnings of $836,000 in the
quarter ended June 29, 2000. The provision for income taxes increased by
$72,000 for the same period. The Company had net earnings of $627,000, or
$0.09 per share, in the quarter ended July 5, 2001 compared to net earnings
of $586,000, or $0.08 per share, in the quarter ended June 29, 2000.
THREE QUARTERS ENDED JULY 5, 2001 AND JUNE 29, 2000
---------------------------------------------------
The Company's total revenues in the first three quarters of fiscal year 2001
were $318.6 million compared to $238.1 million in the first three quarters of
fiscal year 2000, an increase of $80.6 million, or 33.8%. The increase is
the result of additional stores in operation in the current fiscal year and
higher retail selling prices for gasoline. Merchandise sales grew by $31.4
million, or 26.2%. Merchandise sales at stores open during both periods
increased by 3.1%. Gasoline sales increased by $49.0 million, or 41.9%,
due primarily to the sale of an additional 30.2 million gallons of gasoline
and a retail price increase of $0.106 per gallon sold.
Gross profits on merchandise sales in the three quarters ended July 5, 2001 were
$9.1 million, or 22.6%, higher than in the three quarters ended June 29, 2000.
This increase is the result of the higher sales levels due to the increased
number of stores in operation during the period. The gross profit rate declined
from 33.5% to 32.5% in the current fiscal year, reflecting increased sales at
the Company's discount tobacco stores. Gross profits on gasoline sales grew by
$5.6 million, or 50.1%, in the first three quarters of fiscal year 2001 versus
the comparable period in fiscal year 2000. This increase is due both to the
sale of an additional 30.2 million gallons and a $0.017 increase in the gross
profit per gallon sold.
Selling expenses increased in the current year by $10.7 million, or 27.2%, as a
result of additional stores in operation in fiscal year 2001. The stores
acquired in April 2000 were operated for the entire first three quarters of
fiscal year 2001 and only ten weeks of the comparable period of fiscal year
2000. General and administrative expense grew by $843,000, or 17.6%, in the
first three quarters of the current year, primarily due to additional staffing,
higher salary levels and incentive programs. Due to the acquired assets and
newly constructed stores in fiscal year 2001, depreciation and amortization
increased by $1.4 million, or 29.6%. Interest expense increased by $2.3
million, or 63.6%, due to higher borrowing levels from construction and
acquisition financing.
-14-
The Company incurred a pre-tax loss in the first three quarters of fiscal year
2001 of $121,000 compared to pre-tax earnings of $247,000 in the same period of
fiscal year 2000. The income tax benefit of the loss in the current year was
$41,000 compared to a provision for income taxes of $74,000 in the prior year.
The net loss in the first three quarters of fiscal year 2001 was $79,000, or
$0.01 per share, compared to net earnings in the first three quarters of fiscal
year 2000 of $173,000, or $0.02 per share.
LIQUIDITY AND CAPITAL RESOURCES:
Most of the Company's sales are for cash and its inventory turns over rapidly.
As a result, the Company's daily operations do not generally require large
amounts of working capital. From time to time, the Company utilizes substantial
portions of its cash to acquire and construct new stores and renovate existing
locations.
In the first three quarters of fiscal year 2001, the Company had capital
expenditures of $9.9 million, including $6.1 million for new store construction
and $3.8 million for remodeling and modernizing existing store locations. These
expenditures were financed with $5.2 million of secured mortgage and equipment
loans and $4.7 million from existing cash balances. Capital requirements for
debt service and capital leases for the remaining quarter of fiscal year 2001
are approximately $0.7 million. The Company also anticipates capital
expenditures of $0.3 million during this period for store remodeling. During
the second quarter, the Company amended its revolving credit agreement to
increase the total credit line to $13.0 million. Management believes that
cash from operations and the available credit facilities will be sufficient to
meet the Company's obligations for the foreseeable future.
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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company uses its revolving credit facility and its mortgage and
equipment loans to finance a significant portion of its operations
and capital expenditures. These on-balance sheet financial instruments,
to the extent they provide for variable rates of interest, expose the
Company to interest rate risk resulting from changes in the LIBOR or prime rate.
To the extent that the Company's financial instruments expose the Company to
interest rate risk, they are presented in the table below. The table
presents principal cash flows and related interest rates by year of maturity
for the Company's revolving credit facility, mortgage loans and equipment loans
at July 5, 2001.
Fiscal Year of Maturity
(dollar amounts in thousands)
Total Fair
Due At Value at
2001 2002 2003 2004 2005 Thereafter Maturity 7/5/01
------ ------- ------- ------ ------ ---------- -------- ------
Interest-rate sensitive assets:
-------------------------------
Noninterest-bearing
checking accounts $3,719 $ 0 $ 0 $ 0 $ 0 $ 0 $ 3,719 $ 3,719
Interest-bearing
checking accounts $2,240 $ 0 $ 0 $ 0 $ 0 $ 0 $ 2,240 $ 2,240
Average interest rate 3.25% 5.90% --
-------------------------------------------------------------------------
$5,959 $ 5,959 $ 5,959
1.22% 0.43% --
Interest-rate sensitive liabilities:
------------------------------------
Variable-rate borrowings $ 392 $2,358 $7,213 $1,448 $1,612 $29,368 $42,391 $43,091
Average interest rate 7.86% 7.86% 7.86% 7.88% 7.88% 7.88% 7.88% --
Fixed-rate borrowings $ 243 $1,069 $1,123 $1,248 $1,385 $36,730 $41,798 $44,758
Average interest rate 9.36% 9.36% 9.36% 9.36% 9.36% 9.36% 9.36% --
-------------------------------------------------------------------------
$ 635 $3,427 $8,336 $2,696 $2,997 $66,098 $84,189 $87,849
8.60% 8.61% 8.62% 8.69% 8.70% 8.70% 8.70% --
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
3.1 Amended and Restated Certificate of Incorporation of the Company
(Filed as Exhibit 3.1 to the Company's Quarterly Report on Form
10-Q for the period ended March 30, 1995 and incorporated herein
by reference thereto).
3.2 By-Laws of the Company (Filed as Exhibit 3.2 to the Company's
Quarterly Report on Form 10-Q for the period ended March 30,
1995 and incorporated herein by reference thereto).
4.1 Form of the Company's Common Stock Certificate (Filed as Exhibit
4.3 to the Company's Quarterly Report on Form 10-Q for the period
ended April 1, 1993, File No. 1-11556, and incorporated herein by
reference thereto).
10.1 Uni-Marts, Inc. Amended and Restated Equity Compensation Plan
(Filed as Exhibit 10.1 to the Company's Quarterly Report on Form
10-Q for the period ended March 30, 1995 and incorporated herein
by reference hereto).
10.2 Uni-Marts, Inc. Retirement Savings & Incentive Plan (Filed as
Exhibit 4.2 to the Company's Registration Statement on Form S-8,
File No. 33-9807, filed on July 10, 1991, and incorporated herein
by reference thereto).
10.3 Form of Indemnification Agreement between Uni-Marts, Inc. and each
of its Directors (Filed as Exhibit A to the Company's Definitive
Proxy Statement for the February 25, 1988 Annual Meeting of
Stockholders, File No. 0-15164, and incorporated herein by
reference thereto).
10.4 Uni-Marts, Inc. Deferred Compensation Plan (Filed as Exhibit 10.8
to the Annual Report of Uni-Marts, Inc. on Form 10-K for the year
ended September 30, 1990, File No. 0-15164, and incorporated
herein by reference thereto).
10.5 Uni-Marts, Inc. Performance Unit Plan (Filed as Exhibit 10.9 to
the Annual Report of Uni-Marts, Inc. on Form 10-K for year ended
September 30, 1994 and incorporated herein by reference thereto).
10.6 Composite copy of Change in Control Agreements between Uni-Marts,
Inc. and its executive officers (Filed as Exhibit 10.10 to the
Annual Report of Uni-Marts, Inc. on Form 10-K for the year ended
September 30, 1994 and incorporated herein by reference thereto).
10.7 Uni-Marts, Inc. 1996 Equity Compensation Plan (Filed as Exhibit A
to the Company's Definitive Proxy Statement for the February 22,
1996 Annual Meeting of Stockholders and incorporated herein by
reference thereto).
10.8 Amendment 1998-1 to the Uni-Marts, Inc. Equity Compensation Plan
(Filed as Exhibit 10.10 to the Annual Report of Uni Marts, Inc. on
Form 10-K for the year ended September 30, 1998 and incorporated
herein by reference thereto).
10.9 Amended and Restated Note between Henry D. Sahakian and Uni-Marts,
Inc. dated January 25, 1999 (Filed as Exhibit 10.10 to the
Company's Quarterly Report on Form 10-Q for the period ended
April 1, 1999 and incorporated herein by reference thereto).
-17-
10.10 Loan Agreement between FFCA Acquisition Corporation and Uni-Marts,
Inc. dated June 30, 1998 (filed as Exhibit 10.10 to the Company's
Quarterly Report on Form 10-Q for the period ended on July 2, 1998
and incorporated herein by reference thereto).
10.11 Uni-Marts, Inc. Employee Stock Purchase Plan (Filed as Exhibit A
to the Company's Definitive Proxy Statement for the February 25,
1999 Annual Meeting of Stockholders and incorporated herein by
reference thereto).
10.12 Loan Agreement between FFCA Acquisition Corporation and Uni Realty
of Wilkes-Barre, L.P. dated April 21, 2000 (Filed as Exhibit 20.1
to the Company's Form 8-K filed on May 8, 2000 and incorporated
herein by reference thereto).
10.13 Loan Agreement between FFCA Funding Corporation and Uni Realty of
Luzerne, L.P. dated April 21, 2000 (Filed as Exhibit 20.2 to the
Company's Form 8-K filed on May 8, 2000 and incorporated herein by
reference thereto).
10.14 Equipment Loan Agreement between FFCA Acquisiton Corporation and
Uni-Marts, Inc. dated April 21, 2000 (Filed as Exhibit 20.3 to the
Company's Form 8-K filed on May 8, 2000 and incorporated herein by
reference thereto).
10.15 Equipment Loan Agreement between FFCA Funding Corporation and Uni-
Marts, Inc. dated April 21, 2000 (Filed as Exhibit 20.4 to the
Company Form 8-K filed on May 8, 2000 and incorporated herein by
reference thereto).
10.16 Revolving Credit Loan Agreement between Provident Bank and
Uni-Marts, Inc. dated April 20, 2000 (Filed as Exhibit 10.15 to
the Company's Quarterly Report on Form 10-Q for the period ended
June 29, 2000 and incorporated herein by reference thereto).
10.17 Amendment to the Revolving Credit Loan Agreement between
Provident Bank and the Company dated January 16, 2001 (Filed as
Exhibit 10.17 to the Company's Quarterly Report on Form 10-Q for
the period ended April 5, 2001 and incorporated herein by
reference thereto).
10.18 Amendment to the Revolving Credit Loan Agreement between
Provident Bank and the Company dated March 31, 2001 (Filed as
Exhibit 10.18 to the Company's Quarterly Report on Form 10-Q for
the period ended April 5, 2001 and incorporated herein by
reference thereto).
11 Statement regarding computation of per share earnings (loss).
(b) REPORTS ON FORM 8-K
The Company did not file any reports on Form 8-K during the quarter ended
July 5, 2001.
-18-
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.
Uni-Marts, Inc.
---------------------------------
(Registrant)
Date August 2001 /s/ Henry D. Sahakian
------------- ---------------------------------
Henry D. Sahakian
Chairman of the Board (Principal
Executive Officer)
Date August 2001 /s/ N. Gregory Petrick
------------- ---------------------------------
N. Gregory Petrick
Executive Vice President and
Chief Financial Officer
(Principal Accounting Officer)
(Principal Financial Officer)
-19-
UNI-MARTS, INC. AND SUBSIDIARIES
EXHIBIT INDEX
Number Description Page(s)
------ ----------- -------
11 Statement regarding computation
of per share earnings (loss). 21-22
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