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Table of Contents
 

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 

 
FORM 10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the Quarterly Period Ended June 27, 2002
 
Commission File Number 33-72574
 

 
THE PANTRY, INC.
(Exact name of registrant as specified in its charter)
 
Delaware
 
56-1574463
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification Number)
 
1801 Douglas Drive
Sanford, North Carolina
27330-1410
(Address of principal executive offices)
 

 
Registrant’s telephone number, including area code: (919) 774-6700
 

 
N/A
(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 ¨
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
 
COMMON STOCK, $0.01 PAR VALUE
 
18,107,597 SHARES
(Class)
 
(Outstanding at August 5, 2002)
 


Table of Contents
 
THE PANTRY, INC.
 
FORM 10-Q
 
June 27, 2002
 
TABLE OF CONTENTS
 
    
Page

Part I—Financial Information
    
Item 1.    Financial Statements
    
  
3
  
4
  
5
  
6
  
16
  
28
Part II—Other Information
    
  
30
  
30

2


Table of Contents
 
PART I-FINANCIAL INFORMATION.
 
Item 1.    Financial Statements.
 
THE PANTRY, INC.
 
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
 
ASSETS
Current assets:
  
June 27,
2002

    
September 27, 2001

 
Cash and cash equivalents
  
$
36,283
 
  
$
50,611
 
Receivables, net
  
 
33,716
 
  
 
30,424
 
Inventories (Note 2)
  
 
81,736
 
  
 
81,687
 
Prepaid expenses
  
 
4,289
 
  
 
3,521
 
Property held for sale
  
 
633
 
  
 
1,644
 
Deferred income taxes
  
 
1,636
 
  
 
2,591
 
    


  


Total current assets
  
 
158,293
 
  
 
170,478
 
    


  


Property and equipment, net
  
 
438,802
 
  
 
470,678
 
    


  


Other assets:
                 
Goodwill (Note 3)
  
 
277,874
 
  
 
277,665
 
Deferred financing cost, net
  
 
9,523
 
  
 
10,299
 
Environmental receivables (Note 4)
  
 
11,369
 
  
 
10,428
 
Other noncurrent assets
  
 
10,103
 
  
 
10,444
 
    


  


Total other assets
  
 
308,869
 
  
 
308,836
 
    


  


Total assets
  
$
905,964
 
  
$
949,992
 
    


  


LIABILITIES AND SHAREHOLDERS’ EQUITY
                 
Current liabilities:
                 
Current maturities of long-term debt (Note 5)
  
$
42,129
 
  
$
40,000
 
Current maturities of capital lease obligations
  
 
1,363
 
  
 
1,363
 
Accounts payable
  
 
92,613
 
  
 
94,169
 
Accrued interest
  
 
7,289
 
  
 
11,163
 
Accrued compensation and related taxes
  
 
12,657
 
  
 
12,514
 
Income taxes payable
  
 
645
 
  
 
—  
 
Other accrued taxes
  
 
13,918
 
  
 
14,515
 
Accrued insurance
  
 
8,030
 
  
 
6,161
 
Other accrued liabilities (Notes 6 and 7)
  
 
11,555
 
  
 
20,423
 
    


  


Total current liabilities
  
 
190,199
 
  
 
200,308
 
    


  


Long-term debt (Note 5)
  
 
472,222
 
  
 
504,175
 
    


  


Other liabilities:
                 
Environmental reserves (Note 4)
  
 
13,207
 
  
 
12,207
 
Deferred income taxes
  
 
33,488
 
  
 
33,488
 
Deferred revenue
  
 
54,429
 
  
 
57,560
 
Capital lease obligations
  
 
13,181
 
  
 
14,020
 
Other noncurrent liabilities
  
 
16,223
 
  
 
17,093
 
    


  


Total other liabilities
  
 
130,528
 
  
 
134,368
 
    


  


Commitments and contingencies (Notes 4 and 5)
                 
Shareholders’ equity (Notes 6 and 9):
                 
Common stock, $.01 par value, 50,000,000 shares authorized; 18,114,737 issued and outstanding at September 27, 2001 and 18,107,597 at June 27, 2002
  
 
182
 
  
 
182
 
Additional paid-in capital
  
 
128,043
 
  
 
128,043
 
Shareholder loans
  
 
(827
)
  
 
(837
)
Accumulated other comprehensive deficit, net
  
 
(2,820
)
  
 
(4,283
)
Accumulated deficit
  
 
(11,563
)
  
 
(11,964
)
    


  


Total shareholders’ equity
  
 
113,015
 
  
 
111,141
 
    


  


Total liabilities and shareholders’ equity
  
$
905,964
 
  
$
949,992
 
    


  


 
See Notes to Consolidated Financial Statements

3


Table of Contents
 
THE PANTRY, INC.
 
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per share data)
 
    
Three Months Ended

    
Nine Months Ended

 
    
June 27, 2002

    
June 28, 2001

    
June 27,
2002

    
June 28,
2001

 
    
(13 weeks)
    
(13 weeks)
    
(39 weeks)
    
(39 weeks)
 
Revenues:
                                   
Merchandise sales
  
$
265,074
 
  
$
256,254
 
  
$
734,789
 
  
$
714,464
 
Gasoline sales
  
 
409,693
 
  
 
446,508
 
  
 
1,066,021
 
  
 
1,247,090
 
Commissions
  
 
6,541
 
  
 
5,195
 
  
 
18,716
 
  
 
16,349
 
    


  


  


  


Total revenues
  
 
681,308
 
  
 
707,957
 
  
 
1,819,526
 
  
 
1,977,903
 
    


  


  


  


Cost of sales:
                                   
Merchandise (Note 2)
  
 
178,013
 
  
 
171,558
 
  
 
494,060
 
  
 
473,349
 
Gasoline (Note 2)
  
 
376,270
 
  
 
407,603
 
  
 
974,862
 
  
 
1,140,553
 
    


  


  


  


Total cost of sales
  
 
554,283
 
  
 
579,161
 
  
 
1,468,922
 
  
 
1,613,902
 
    


  


  


  


Gross profit
  
 
127,025
 
  
 
128,796
 
  
 
350,604
 
  
 
364,001
 
    


  


  


  


Operating expenses:
                                   
Operating, general and administrative expenses
  
 
93,005
 
  
 
92,473
 
  
 
271,943
 
  
 
270,921
 
Restructuring and other charges (Note 7)
  
 
—  
 
  
 
254
 
  
 
—  
 
  
 
3,724
 
Depreciation and amortization (Note 3)
  
 
13,517
 
  
 
15,958
 
  
 
40,421
 
  
 
46,893
 
    


  


  


  


Total operating expenses
  
 
106,522
 
  
 
108,685
 
  
 
312,364
 
  
 
321,538
 
    


  


  


  


Income from operations
  
 
20,503
 
  
 
20,111
 
  
 
38,240
 
  
 
42,463
 
    


  


  


  


Other income (expense):
                                   
Interest expense (Note 8)
  
 
(13,904
)
  
 
(13,910
)
  
 
(38,070
)
  
 
(42,579
)
Miscellaneous
  
 
174
 
  
 
383
 
  
 
501
 
  
 
1,423
 
    


  


  


  


Total other expense
  
 
(13,730
)
  
 
(13,527
)
  
 
(37,569
)
  
 
(41,156
)
    


  


  


  


Income before income taxes
  
 
6,773
 
  
 
6,584
 
  
 
671
 
  
 
1,307
 
Income tax expense
  
 
(2,709
)
  
 
(2,968
)
  
 
(270
)
  
 
(673
)
    


  


  


  


Net income
  
$
4,064
 
  
$
3,616
 
  
$
401
 
  
$
634
 
    


  


  


  


Earnings per share (Note 9):
                                   
Basic
  
$
0.22
 
  
$
0.20
 
  
$
0.02
 
  
$
0.04
 
Diluted
  
$
0.22
 
  
$
0.20