-----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, Fql3QD4xOydU2WePGa10RY2MDRskrhNSUO2Oe/S5v7KJhOMEFnCisayc3T+Wa8dQ ww393y9Yji0RtvIyejureQ== 0000030908-94-000005.txt : 19940914 0000030908-94-000005.hdr.sgml : 19940914 ACCESSION NUMBER: 0000030908-94-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940730 FILED AS OF DATE: 19940913 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EAGLE FOOD CENTERS INC CENTRAL INDEX KEY: 0000030908 STANDARD INDUSTRIAL CLASSIFICATION: 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: 94548814 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 July 30, 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 ($0.01) per share, outstanding at August 30, 1994 was 11,051,994. Page 1 of 8 pages PART I - FINANCIAL INFORMATION Item 1: Financial Statements EAGLE FOOD CENTERS, INC. CONSOLIDATED STATEMENTS OF INCOME (Dollars in thousands, except per share data) (unaudited)
Quarter Ended Two Quarters July 30, July 31, July 30, July 31, 1994 1993 1994 1993 Sales. . . . . . . . . . .$ 252,222 $ 265,364 $ 502,319 $ 532,766 Cost of Goods Sold . . . . 189,917 198,161 377,492 398,616 -------- -------- -------- -------- Gross Margin. . . . . . 62,305 67,203 124,827 134,150 Operating Expenses: Selling, General & Administrative . . 56,375 57,028 109,962 110,792 Voluntary Severance Program . . . . . . 6,917 0 6,917 0 Depreciation and Amortization. . . . 5,847 5,754 11,671 11,339 -------- -------- -------- -------- Operating Income (Loss). . (6,834) 4,421 (3,723) 12,019 Interest Expense . . . . . 3,572 3,519 7,066 7,222 -------- -------- -------- -------- Earnings (Loss) Before Income Taxes (Benefit) and Extraordinary Charge. . (10,406) 902 (10,789) 4,797 Income Taxes (Benefit) . . (4,078) 343 (4,100) 1,823 -------- -------- -------- -------- Earnings (Loss) Before Extraordinary Charge. . (6,328) 559 (6,689) 2,974 Extraordinary Charge . . . 0 0 0 3,969 -------- -------- -------- -------- Net Earnings (Loss). . . .$ (6,328) $ 559 $ (6,689) $ (995) ======== ======== ======== ======== Earnings (Loss) per Share: Before Extraordinary Charge . . . . . . . .$ (0.58) $ 0.05 $ (0.61) $ 0.27 Extraordinary Charge. . 0 0 0 (0.36) ------ ------ ------ ------ Net Earnings (Loss) . .$ (0.58) $ 0.05 $ (0.61) $ (0.09) ====== ====== ====== ====== Weighted Average Common Shares Outstanding 11,051,994 11,128,424 11,051,994 11,146,359 See notes to financial statements.
EAGLE FOOD CENTERS, INC. CONSOLIDATED BALANCE SHEET (Dollars in thousands) ASSETS
July 30, 1994 January 29, 1994 (unaudited) (audited) Current assets: Cash and cash equivalents . . . . . . . . $ 6,414 $ 8,056 Accounts receivable . . . . . . . . . . . 15,244 18,195 Inventories . . . . . . . . . . . . . . . 96,424 101,010 Property held for resale. . . . . . . . . 14,630 0 Prepaid expenses and other. . . . . . . . 8,088 2,992 ------- ------- Total current assets . . . . . . . . 140,800 130,253 Property and equipment (net) . . . . . . . 177,133 194,777 Other assets: Deferred debt issuance costs. . . . . . . 3,277 3,409 Excess of cost over fair value of net assets acquired. . . . . . . . . . 2,690 2,731 Other . . . . . . . . . . . . . . . . . . 2,733 3,995 ------- ------- Total other assets . . . . . . . . . 8,700 10,135 ------- ------- Total assets . . . . . . . . . . . . $ 326,633 $ 335,165 ======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable. . . . . . . . . . . . . $ 56,274 $ 60,831 Payroll and employee benefits . . . . . . 14,700 13,850 Accrued liabilities . . . . . . . . . . . 17,319 19,272 Accrued taxes . . . . . . . . . . . . . . 8,255 7,762 Bank Revolving Credit Loan. . . . . . . . 8,000 0 Current portion of long-term debt . . . . 3,604 2,799 ------- ------- Total current liabilities. . . . . . 108,152 104,514 Long-term debt: Senior Notes. . . . . . . . . . . . . . . 100,000 100,000 Bank Revolving Credit Loan. . . . . . . . 0 3,000 Capital lease obligations . . . . . . . . 20,079 20,152 Other . . . . . . . . . . . . . . . . . . 142 175 ------- ------- Total long-term debt . . . . . . . . 120,221 123,327 Other liabilities: Reserve for closed stores and warehouse . 28,872 33,669 Other deferred liabilities. . . . . . . . 14,331 11,909 ------- ------- Total other liabilities. . . . . . . 43,203 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) Retained earnings . . . . . . . . . . . . 4,251 10,940 ------- ------- Total shareholders' equity . . . . . 55,057 61,746 ------- ------- Total liabilities and shareholders' equity . . . . . . $ 326,633 $ 335,165 ======= ======= See notes to financial statements.
EAGLE FOOD CENTERS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (unaudited)
Two Quarters Ended July 30, 1994 July 31, 1993 Cash flows from operating activities: Net earnings (loss) . . . . . . . . . . . . . $ (6,689) $ (995) Adjustments to reconcile net earnings (loss) to cash provided from operating activities: Depreciation and amortization . . . . . . . . 11,671 11,339 LIFO charge . . . . . . . . . . . . . . . . . 250 400 Deferred charges and credits. . . . . . . . . 2,774 2,992 (Gain) loss on disposal of assets . . . . . . 174 (1,215) Changes in assets and liabilities: Receivables and other assets. . . . . . . . . (2,386) 3,425 Inventories . . . . . . . . . . . . . . . . . 4,336 12,160 Accounts payable. . . . . . . . . . . . . . . (4,557) (4,774) Accrued and other liabilities . . . . . . . . 1,724 (8,315) Reserve for closed stores and warehouse . . . (3,793) (1,950) -------- -------- Net cash provided by operating activities . 3,504 13,067 Cash flows from investing activities: Additions to property and equipment . . . . . (8,378) (14,541) Property held for sale/leaseback. . . . . . . (864) 0 Cash proceeds from dispositions of property and equipment. . . . . . . . . . . 648 871 -------- -------- Net cash used in investing activities. . (8,594) (13,670) Cash flows from financing activities: Proceeds from new debt . . . . . . . . . . . 0 100,000 Retirement of debt. . . . . . . . . . . . . . (30) (69,074) Net revolving credit borrowing. . . . . . . . 5,000 (21,000) Principal payments of capital lease obligations . . . . . . . . . . . . . (1,347) (1,262) Purchase of treasury stock. . . . . . . . . . 0 (841) Deferred financing costs. . . . . . . . . . . (175) (4,204) -------- -------- Net cash provided by financing activities . . . . . . . . . . . . . . 3,448 3,619 Increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . (1,642) 3,016 Cash and cash equivalents at beginning of period. . . . . . . . . . . . 8,056 11,554 -------- -------- Cash and cash equivalents at end of period. . $ 6,414 $ 14,570 ======== ======== Supplemental disclosures of cash flow information: Cash paid for interest. . . . . . . . . . . $ 6,713 $ 8,510 Cash paid for income taxes. . . . . . . . . $ (1,360) $ 2,097 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 necessary for a fair statement of the results of operations and financial position for the interim periods presented. Operating results for the 26 weeks ended July 30, 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 to the financial statements. 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 $8.0 million in borrowings outstanding against the Revolving Credit Agreement as of July 29, 1994, which has been reclassified 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 second quarter and has obtained a waiver of such defaults through October 29, 1994. The company intends to repay amounts outstanding under the Revolving Credit Agreement in the third quarter of 1994 with funds to be generated from an expected sale/leaseback transaction. Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Sales for the Company's second fiscal quarter ended July 30, 1994 were $252.2 million, a decrease of $13.1 million or 5.0% from the second quarter of 1993. Same store sales for the quarter declined 3.8%. For the two quarters ended July 30, 1994 sales were $502.3 million, a decrease of $30.4 million or 5.7% from the first two quarters of 1993. Same store sales for the two quarters decreased 3.8% compared to 1993. Management believes the sales decline was primarily due to a number of new competitive store openings in the Company's markets and that the Company is operating six fewer stores as of the end of the second quarter of 1994 compared to 1993. Gross margin was 24.70% of sales for the quarter ended July 30, 1994 compared to 25.32% in the comparable quarter of 1993. The decrease in gross margin is primarily due to increased promotional expenditures in an attempt to increase market share. For the two quarters ended July 30, 1994 gross margin was 24.85% compared to 25.18% for the same time period in 1993. Selling, general and administrative expenses were 22.35% of sales for the quarter ended July 30, 1994 compared to 21.49% in the comparable quarter of 1993. For the two quarters ended July 30, 1994, selling, general and administrative expenses were 21.89% versus 20.80% 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 two quarters. Depreciation and amortization expenses increased slightly to $5.8 million or 2.32% of sales compared to $5.8 million or 2.17% of sales in the same quarter in 1993. For the two quarters ended July 30, 1994, depreciation and amortization expenses increased to $11.7 million or 2.32% of sales compared to $11.3 million or 2.13% of sales for the same period in 1993. The higher depreciation expenses are primarily related to four new stores that were opened since the second quarter of 1993. Net interest expense increased slightly to $3.6 million or 1.42% 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 two quarters ended July 30, 1994 was $7.1 million or 1.41% of sales compared to $7.2 million or 1.36% of sales in the comparable 1993 time period. There were $8.0 million of borrowings outstanding against the Revolving Credit Agreement as of July 30, 1994. Operations for the second quarter ended July 30, 1994 resulted in a loss of $6.3 million or $0.58 per share compared to net earnings of $559,000 or $0.05 per share for the comparable 1993 period. The 1994 loss includes a $6.9 million pretax, or $4.3 million after tax, charge for a voluntary severance program for 600 clerks in the Chicago area. Management expects that such severance costs should be offset in less than twelve months as a result of lower wage and benefit costs of replacement employees. Results of operations for the two quarters ended July 30, 1994 resulted in a net loss of $6.7 million or $0.61 cents per share compared to a net loss of $1.0 million or $0.09 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. Excluding the voluntary separation expense and the extraordinary charge in the respective years, results of operations for the first two quarters would have been a loss of $0.22 cents per share in 1994 compared to earnings of $0.27 per share in 1993. The Company expects to continue the more aggressive marketing programs that were initiated during the second quarter to attempt to stop the erosion of same store sales. These efforts will cause continued pressure on gross margin rates, expense rates, and operating profit for the forseeable future. LIQUIDITY AND CAPITAL RESOURCES Cash provided by operating activities totaled $3.5 million for the two quarters ended July 30, 1994 compared to cash provided of $13.1 million in the comparable two quarters of 1993. The voluntary severance program accounts for $4.3 million of the decline of cash provided year to year. Reductions in inventory and accounts receivable provided $4.3 million and $1.7 million, respectively, in cash for the 1994 period. Capital expenditures for the two quarters ended July 30, 1994 totaled $8.4 million compared to $14.5 million in the first two quarters of 1993. Capital expenditures in both years are primarily for new stores. Two new stores and one Country Market remodel have been completed in the first six months of 1994. Construction is currently in progress on two new stores, both of which are replacements of existing stores. The Company expects to complete a sale/leaseback transaction in the third quarter for approximately $40 million. 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 $20 million for capital expenditures in fiscal 1994. Working capital at July 30, 1994 was at $32.6 million and the current ratio was 1.30 to 1, compared to $37.4 million and 1.44 to 1 at July 31, 1993 and $25.7 million or 1.25 to 1 at January 29, 1994. There was $8.0 million in borrowings outstanding against the Revolving Credit Agreement as of July 30, 1994, which has been reclassified 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 second quarter and has since obtained waiver of such defaults through October 29, 1994. 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: September 9, 1994 /s/ Pasquale V. Petitti Pasquale V. Petitti President and Chief Executive Officer Dated: September 9, 1994 /s/ Herbert T. Dotterer Herbert T. Dotterer Sr. Vice President - Finance and Chief Financial Officer EX-27 2
5 0000030908 EAGLE FOOD CENTERS, INC. QTR-2 JAN-28-1995 JUL-30-1994 (877,000) 7,291,000 13,259,000 266,000 96,424,000 140,800,000 293,435,000 116,302,000 326,633,000 108,152,000 100,000,000 115,000 0 0 54,942,000 326,633,000 502,319,000 502,319,000 377,492,000 377,492,000 0 60,000 7,066,000 (10,789,000) (4,100,000) (6,689,000) 0 0 0 (6,689,000) (0.61) (0.61)
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