-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, swvl+n/HPXI5DGm18NBD8chaHMtID/mYFaw4mRXOg2JA7HO/RoF8d15anYZbgOPT GwRAIPMshuc00WAeOHHjSA== 0000030908-94-000006.txt : 19941214 0000030908-94-000006.hdr.sgml : 19941214 ACCESSION NUMBER: 0000030908-94-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19941029 FILED AS OF DATE: 19941213 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: EAGLE FOOD CENTERS INC CENTRAL INDEX KEY: 0000030908 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-GROCERY STORES [5411] IRS NUMBER: 363548019 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-17871 FILM NUMBER: 94564454 BUSINESS ADDRESS: STREET 1: RTE 67 KNOXVILLE RD CITY: MILAN STATE: IL ZIP: 61264 BUSINESS PHONE: 3097877730 MAIL ADDRESS: STREET 1: PO BOX 6700 CITY: ROCK ISLAND STATE: IL ZIP: 61204-6700 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 29, 1994 Commission File Number 0-17871 EAGLE FOOD CENTERS, INC. (Exact name of registrant as specified in the charter) Delaware 36-3548019 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) Rt. 67 & Knoxville Rd., Milan, Illinois 61264 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (309) 787-7730 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 The number of shares of the Registrant's Common Stock, par value one cent ($0.01) per share, outstanding at November 30, 1994 was 11,051,994. Page 1 of 8 pages PART I - FINANCIAL INFORMATION Item 1: Financial Statements EAGLE FOOD CENTERS, INC. CONSOLIDATED STATEMENTS OF INCOME (Dollars in thousands, except per share data) (unaudited)
Quarter Ended Three Quarters Ended Oct 29, Oct 30, Oct 29, Oct 30, 1994 1993 1994 1993 Sales. . . . . . . . . . . $ 252,183 $ 260,085 $ 754,502 $ 792,851 Cost of Goods Sold . . . . 194,807 193,213 572,299 591,829 -------- -------- -------- -------- Gross Margin. . . . . . 57,376 66,872 182,203 201,022 Operating Expenses: Selling, General & Administrative . . 55,307 55,480 165,269 166,272 Voluntary Severance Program . . . . . . 0 0 6,917 0 Depreciation and Amortization. . . . 5,866 5,737 17,537 17,076 -------- -------- -------- -------- Operating Income (Loss). . (3,797) 5,655 (7,520) 17,674 Interest Expense . . . . . 3,692 3,457 10,758 10,679 -------- -------- -------- -------- Earnings (Loss) Before Income Taxes(Benefit) and Extraordinary Charge. . (7,489) 2,198 (18,278) 6,995 Income Taxes (Benefit) . . (66) 835 (4,166) 2,658 -------- -------- -------- -------- Earnings (Loss) Before Extraordinary Charge. . (7,423) 1,363 (14,112) 4,337 Extraordinary Charge . . . 0 0 0 3,969 -------- -------- -------- -------- Net Earnings (Loss). . . . $ (7,423) $ 1,363 $ (14,112) $ 368 ======== ======== ======== ======== Earnings (Loss) per Share: Before Extraordinary Charge. . . . . . . . . $ (0.67) $ 0.12 $ (1.28) $ 0.39 Extraordinary Charge. . 0 0 0 (0.36) ------- ------- ------- ------- Net Earnings (Loss) . . $ (0.67) $ 0.12 $ (1.28) $ 0.03 ======= ======= ======= ======= Weighted Average Common Shares Outstanding. . . . 11,051,994 11,043,794 11,051,994 11,112,171 See notes to financial statements.
EAGLE FOOD CENTERS, INC. CONSOLIDATED BALANCE SHEET (Dollars in thousands) ASSETS
October 29, 1994 January 29, 1994 (unaudited) (audited) Current assets: Cash and cash equivalents . . . . . . . . $ 5,606 $ 8,056 Marketable securities, at market. . . . . 4,623 0 Accounts receivable . . . . . . . . . . . 12,079 18,195 Inventories . . . . . . . . . . . . . . . 101,462 101,010 Property held for resale. . . . . . . . . 16,826 0 Prepaid expenses and other. . . . . . . . 8,362 2,992 --------- --------- Total current assets . . . . . . . . 148,958 130,253 Property and equipment (net) . . . . . . . 170,238 194,777 Other assets: Deferred debt issuance costs. . . . . . . 3,118 3,409 Excess of cost over fair value of net assets acquired. . . . . . . . . . 2,670 2,731 Property held for resale. . . . . . . . . 5,961 0 Other . . . . . . . . . . . . . . . . . . 2,380 3,995 --------- --------- Total other assets . . . . . . . . . 14,129 10,135 --------- --------- Total assets . . . . . . . . . . . . . . . $ 333,325 $ 335,165 ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable. . . . . . . . . . . . . $ 66,446 $ 60,831 Payroll and employee benefits . . . . . . 14,316 13,850 Accrued liabilities . . . . . . . . . . . 15,627 19,272 Accrued taxes . . . . . . . . . . . . . . 7,685 7,762 Bank Revolving Credit Loan. . . . . . . . 19,000 0 Current portion of long-term debt . . . . 3,599 2,799 --------- --------- Total current liabilities. . . . . . 126,673 104,514 Long-term debt: Senior Notes. . . . . . . . . . . . . . . 100,000 100,000 Bank Revolving Credit Loan. . . . . . . . 0 3,000 Capital lease obligations . . . . . . . . 19,337 20,152 Other . . . . . . . . . . . . . . . . . . 0 175 --------- --------- Total long-term debt . . . . . . . . 119,337 123,327 Other liabilities: Reserve for closed stores and warehouse . 25,877 33,669 Other deferred liabilities. . . . . . . . 13,926 11,909 --------- --------- Total other liabilities. . . . . . . 39,803 45,578 Shareholders' equity: Preferred stock, $0.01 par value, 100,000 shares authorized. . . . . . . . . . . 0 0 Common stock, $0.01 par value, 18,000,000 shares authorized, 11,500,000 shares issued 115 115 Capital in excess of par value. . . . . . 53,541 53,541 Common stock in treasury, at cost, 448,006 and 448,006 shares . . . . . . . . . . (2,850) (2,850) Net unrealized loss on marketable securities . . . . . . . . (122) 0 Retained earnings (deficit) . . . . . . . (3,172) 10,940 --------- --------- Total shareholders' equity . . . . . 47,512 61,746 --------- --------- Total liabilities and shareholders' equity $ 333,325 $ 335,165 ========= ========= See notes to financial statements.
EAGLE FOOD CENTERS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (unaudited)
Three Quarters Ended Oct 29, 1994 Oct 30, 1993 Cash flows from operating activities: Net earnings (loss) . . . . . . . . . . . . . $ (14,112) $ 368 Adjustments to reconcile net earnings (loss) to cash provided from operating activities: Depreciation and amortization . . . . . . . . 17,537 17,076 Extraordinary loss on retirement of debt. . . 0 3,969 LIFO charge . . . . . . . . . . . . . . . . . 350 500 Deferred charges and credits. . . . . . . . . 3,688 2,176 (Gain) loss on disposal of assets . . . . . . 652 (1,153) Changes in assets and liabilities: Receivables and other assets. . . . . . . . . 618 2,684 Inventories . . . . . . . . . . . . . . . . . (802) 2,126 Accounts payable. . . . . . . . . . . . . . . 5,615 (190) Accrued and other liabilities . . . . . . . . (1,373) (9,804) Reserve for closed stores and warehouse . . . (7,257) (5,001) -------- -------- Net cash provided by operating activities . 4,916 12,751 Cash flows from investing activities: Additions to property and equipment . . . . . (7,931) (22,051) Property held for sale/leaseback. . . . . . . (9,021) 0 Increase in marketable securities . . . . . . (4,745) 0 Cash proceeds from dispositions of property and equipment. . . . . . . . . . . 772 1,087 -------- -------- Net cash used in investing activities. . (20,925) (20,964) Cash flows from financing activities: Proceeds from new debt . . . . . . . . . . . 0 100,000 Retirement of debt. . . . . . . . . . . . . . (237) (71,730) Net revolving credit borrowing (repayment). . 16,000 (21,000) Principal payments of capital lease obligations . . . . . . . . . (2,029) (1,901) Purchase of treasury stock. . . . . . . . . . 0 (841) Deferred financing costs. . . . . . . . . . . (175) (4,191) -------- -------- Net cash provided by financing activities . . . . . . . . . . . . . . 13,559 377 Increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . (2,450) (7,876) Cash and cash equivalents at beginning of period. . . . . . . . . . . . 8,056 11,554 -------- -------- Cash and cash equivalents at end of period. . $ 5,606 $ 3,678 ======== ======== Supplemental disclosures of cash flow information: Cash paid for interest. . . . . . . . . . . $ 12,662 $ 14,192 Cash paid for income taxes. . . . . . . . . $ (1,482) $ 2,114 Noncash investing and financing activities Capital lease obligations retired . . . . . $ 0 $ 1,190 Treasury stock issued for performance share plan participants . . . . . . . . $ 0 $ 906 Capital lease additions . . . . . . . . . . $ 2,076 $ 0 See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) ACCOUNTING POLICIES The accompanying unaudited financial statements have been prepared in accordance with the summary of significant accounting policies set forth in the notes to the audited financial statements contained in the Company's Form 10-K filed with the Securities and Exchange Commission on April 29, 1994. In the opinion of management, the accompanying unaudited financial statements reflect all adjustments of a normal recurring nature necessary for a fair statement of the results of operations and financial position for the interim periods presented. Operating results for the 39 weeks ended October 29, 1994 are not necessarily indicative of the results that may be expected for the fiscal year ending January 28, 1995. POST EMPLOYMENT BENEFITS The Company currently provides certain health care benefits for disabled employees. On January 30, 1994, the Company adopted Statement of Financial Accounting Standards No. 112, Employer's Accounting for Postemployment Benefits (SFAS 112). SFAS 112 requires the accrual of the expected cost of providing postemployment benefits for former or inactive employees after employment but before retirement. The adoption of SFAS 112 did not have a material impact on the financial statements. INCOME TAX For the nine months ended October 29, 1994, the income tax benefit has been provided on the year to date loss at an effective rate of approximately 22.8%, representing the anticipated cash refund to be received from the carryback of the loss. EXTRAORDINARY CHARGE During the first quarter of fiscal 1993 the Company completed a Senior Note offering of $100 million at 8 5/8%. The proceeds were used to defease the $69.1 million of 13 1/2% Senior Subordinated Notes callable June 1, 1993. Related to the early retirement of the 13 1/2% Notes is an extraordinary charge of $4.0 million (net of tax). This charge represents the premium to call the 13 1/2% Notes, unamortized issuance costs and net interest during the overlap of Notes. BANK REVOLVING CREDIT LOAN There was $19.0 million in borrowings outstanding against the Revolving Credit Agreement as of October 29, 1994, which has been classified as a current liability. The Company was in default of certain financial ratio requirements on the Revolving Credit Agreement as of the end of the third quarter and has obtained a waiver of such defaults through January 28, 1995. The Company intends to repay amounts outstanding under the Revolving Credit Agreement in the next six months with funds expected to be generated from a proposed sale/leaseback transaction. The Company and its lenders intend to amend covenant levels for fiscal 1995 and beyond, once the sale/leaseback financing is completed. ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Sales for the Company's third fiscal quarter ended October 29, 1994 were $252.2 million, a decrease of $7.9 million or 3.0% from the third quarter of 1993. Same store sales for the quarter declined 2.2%. For the three quarters ended October 29, 1994 sales were $754.5 million, a decrease of $38.3 million or 4.8% from the first three quarters of 1993. Same store sales for the three quarters decreased 3.3% compared to 1993. Management believes the sales decline was primarily due to thirteen new competitive store openings, including five supercenters, in the Company's markets and that the Company is operating six fewer stores as of the end of the third quarter of 1994 compared to 1993. Gross margin was 22.75% of sales for the quarter ended October 29, 1994 compared to 25.71% in the comparable quarter of 1993. The significant decrease in gross margin is primarily due to increased product markdowns in an attempt to stop sales erosion. For the three quarters ended October 29, 1994 gross margin was 24.15% compared to 25.35% for the same time period in 1993. Selling, general and administrative expenses were 21.93% of sales for the quarter ended October 29, 1994 compared to 21.33% in the comparable quarter of 1993. For the three quarters ended October 29, 1994, selling, general and administrative expenses were 21.90% versus 20.97% for the same period in 1993. The increase in expense rate was primarily due to inability to reduce expenses proportionately to sales declines in the three quarters. The Company used most of the savings associated with the voluntary severance program which occurred earlier in the year for additional customer service hours and increased advertising. Depreciation and amortization expenses increased slightly to $5.9 million or 2.33% of sales compared to $5.7 million or 2.21% of sales in the same quarter in 1993. For the three quarters ended October 29, 1994, depreciation and amortization expenses increased to $17.5 million or 2.32% of sales compared to $17.1 million or 2.15% of sales for the same period in 1993. The higher depreciation expenses are primarily related to five new stores that were opened since the third quarter of 1993. Net interest expense increased to $3.7 million or 1.46% of sales compared to $3.5 million or 1.33% of sales in the comparable quarter of 1993. The increase in interest expense was due to short term borrowings under the Revolving Credit Agreement. Net interest expense for the three quarters ended October 29, 1994 was $10.8 million or 1.43% of sales compared to $10.7 million or 1.35% of sales in the comparable 1993 time period. There were $19.0 million of borrowings outstanding against the Revolving Credit Agreement as of October 29, 1994. Operations for the third quarter ended October 29, 1994 resulted in a loss of $7.4 million or $0.67 per share compared to net earnings of $1.4 million or $0.12 per share for the comparable 1993 period. Results of operations for the three quarters ended October 29, 1994 resulted in a net loss of $14.1 million or $1.28 cents per share compared to net earnings of $368,000 or $0.03 per share in the comparable 1993 period which included an extraordinary charge net of tax of $4.0 million or $0.36 per share. The extraordinary charge in 1993 was related to the early retirement of debt. The 1994 year to date loss includes a $6.9 million pretax charge for a voluntary severance program for 600 clerks in the Chicago area. For the nine months ended October 29, 1994, the income tax benefit has been provided on the year to date loss at an effective rate of approximately 22.8%, representing the anticipated cash refund to be received from the carryback of the loss. The Company has closed five stores this fiscal year. The Company had previously established a store closing reserve to cover costs related to these closings. Five additional closings have been announced for late November and early December in Rockford, Champaign and Peoria, Illinois. It is management's opinion that the previously reserved amount will be adequate to cover these costs plus other anticipated closings. Eight of these ten stores had a combined loss of approximately $1.4 million in 1993, the other two stores were profitable and replaced by new stores. The Company expects to continue the more aggressive marketing programs and use of additional customer service hours that were initiated during the second quarter to attempt to stop the erosion of same store sales. Approximately 300 additional basis points of gross margin were invested in product markdowns in the third quarter. Although management does not anticipate as large of a reduction of margin in the fourth quarter as in the third, these efforts will cause continued pressure on gross margin rates, expense rates, and operating profit for the foreseeable future. LIQUIDITY AND CAPITAL RESOURES Cash provided by operating activities totaled $4.9 million for the three quarters ended October 29, 1994 compared to cash provided of $12.8 million in the comparable three quarters of 1993. Cash decreased primarily due to the loss from operations including the voluntary severance program which accounts for $5.3 million of the decline of cash provided year to year. Increases in accounts payable provided $5.6 million in cash for the 1994 period. Capital expenditures for the three quarters ended October 29, 1994 totaled $7.9 million, and $9.0 million in additions to property held for resale compared to a combined total of $22.1 million in the first three quarters of 1993. Such items in both years are primarily for new stores. Three new stores and one Country Market remodel have been completed in the first nine months of 1994. Construction is currently in progress on one new store, which is a replacement of an existing store. The Company expects to complete sale/leaseback transactions over the next six months. The funds made available by the sale/leaseback are intended to be used to repay short term borrowings under the Revolving Credit Agreement and fund future capital expenditures. The Company expects to spend approximately $12 million for capital expenditures in fiscal 1994. Working capital at October 29, 1994 was at $22.3 million and the current ratio was 1.18 to 1, compared to $33.0 million and 1.37 to 1 at October 30, 1993 and $25.7 million or 1.25 to 1 at January 29, 1994. Ther was $19.0 million in borrowings outstanding against the Revolving Credit Agreement as of October 29, 1994, which has been classified as a current liability. The Company was in default of certain financial ratio requirements on the Revolving Credit Agreement as of the end of the third quarter and has since obtained waiver of such defaults through January 28, 1995. The Company and its lenders intend to amend covenant levels for fiscal 1995 and beyond, once the sale/leaseback financing is completed. PART II - OTHER INFORMATION None SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized: EAGLE FOOD CENTERS, INC. Dated: December 9, 1994 /s/ Pasquale V. Petitti ----------------------- Pasquale V. Petitti President and Chief Executive Officer Dated: December 9, 1994 /s/ Hebert T. Dotterer ----------------------- Herbert T. Dotterer Sr. Vice President - Finance and Chief Financial Officer EX-27 2
5 0000030908 EAGLE FOOD CENTERS, INC QTR-3 JAN-28-1995 OCT-29-1994 5,606,000 4,623,000 12,378,000 299,000 101,462,000 148,958,000 287,771,000 117,533,000 333,325,000 126,673,000 100,000,000 115,000 0 0 47,397,000 333,325,000 754,502,000 754,502,000 572,299,000 572,299,000 0 89,400 10,758,000 (18,278,000) (4,166,000) (14,112,000) 0 0 0 (14,112,000) (1.28) (1.28)
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