-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LQ2TzsoFAQRhT3YpUySkaYbmoEAE0QUNSVuyOh5ZF48oboyz/iBOanLoU2W7963E SA0nWsSfqp5TaMQiELfu5g== 0000950131-98-003879.txt : 19980617 0000950131-98-003879.hdr.sgml : 19980617 ACCESSION NUMBER: 0000950131-98-003879 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980502 FILED AS OF DATE: 19980616 SROS: NASD 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: SEC FILE NUMBER: 000-17871 FILM NUMBER: 98648682 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 QUARTERLY REPORT FOR PERIOD ENDED 05/02/1998 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 May 2, 1998 -------------------- OR ___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________________ 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) 787-7700 -------------- 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 June 3, 1998 was 10,948,036. Page 1 of 9 pages PART I - FINANCIAL INFORMATION Item 1: Financial Statements -------------------- EAGLE FOOD CENTERS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share data) (unaudited)
Quarter Ended May 2, 1998 May 3, 1998 ----------- ----------- Sales............................................ $ 231,568 $ 239,937 Cost of goods sold............................... 173,844 177,950 ---------- ---------- Gross margin................................... 57,724 61,987 Operating expenses: Selling, general and administrative............ 50,301 52,346 Depreciation and amortization.................. 4,377 4,889 ---------- ---------- Operating income.............................. 3,046 4,752 Interest expense................................. 2,922 2,964 ---------- ---------- Earnings before income tax ...................... 124 1,788 Income taxes..................................... --- --- ---------- ---------- Net earnings..................................... $ 124 $ 1,788 ========== ========== Earnings per share: Basic net earnings............................. $ 0.01 $ 0.16 ========== ========== Diluted net earnings........................... $ 0.01 $ 0.16 ========== ========== Weighted average shares and potential common shares outstanding............................... 11,205,000 11,260,000
See notes to consolidated financial statements. 2 EAGLE FOOD CENTERS, INC. CONSOLIDATED BALANCE SHEETS (Dollars in thousands except per share data) (unaudited)
ASSETS May 2, January 31, 1998 1998 ------ ---- Current assets: Cash and cash equivalents $ 9,977 $ 5,113 Restricted assets - marketable securities, at fair value 10,364 10,349 Accounts receivable 14,460 11,819 Inventories 73,538 83,841 Prepaid expenses and other 3,312 1,595 -------- --------- Total current assets 111,651 112,717 Property and equipment (net) 121,539 113,124 Other assets: Deferred debt issuance costs 947 1,070 Excess of cost over fair value of net assets acquired 2,386 2,406 Property held for resale 10,043 18,769 Other 12,992 13,538 -------- --------- Total other assets 26,368 35,783 -------- --------- Total assets $259,558 $261,624 ======== ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 43,462 $ 43,078 Payroll and associate benefits 15,405 16,982 Accrued liabilities 14,813 19,258 Reserved for closed stores 3,271 3,271 Accrued taxes 8,887 9,131 Bank revolving credit facility 27 7,208 Current portion of long-term debt 1,863 841 -------- --------- Total current liabilities 87,728 99,769 Long-term debt: Senior Notes 100,000 100,000 Capital lease obligations 23,555 13,959 -------- --------- Total long-term debt 123,555 113,959 Other liabilities: Reserve for closed stores and warehouse 6,313 6,397 Other deferred liabilities 9,574 9,262 -------- --------- Total other liabilities 15,887 15,659 Shareholders' equity: Preferred stock, $.01 par value, 100,000 shares authorized -- -- Common stock, $.01 par value, 18,000,000 shares authorized, 11,500,000 shares issued 115 115 Capital in excess of par value 53,336 53,336 Common stock in treasury, at cost, 551,227 shares and 553,127 shares (2,251) (2,259) Other (179) (199) Retained earnings (deficit) (18,633) (18,756) -------- --------- Total shareholders' equity 32,388 32,237 -------- --------- Total liabilities and shareholders' equity $259,558 $261,624 ======== =========
See notes to consolidated financial statements. 3 EAGLE FOOD CENTERS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (unaudited)
Quarter Ended May 2, 1998 May 3, 1997 ----------- ----------- Cash flows from operating activities: Net earnings.......................................................... $ 124 $ 1,788 Adjustments to reconcile net earnings to net cash flows from operating activities: Depreciation and amortization......................................... 4,377 4,889 LIFO charge........................................................... 250 250 Deferred charges and credits.......................................... 474 419 Gain on disposal of assets............................................ (1,111) (31) Changes in assets and liabilities: Receivable and other assets........................................... (2,830) (3,318) Inventories........................................................... 10,053 7,222 Accounts payable...................................................... 384 (643) Accrued and other liabilities......................................... (5,954) (1,934) Reserve for closed stores............................................. (241) (618) ----------- ----------- Net cash flows from operating activities......................... 5,526 8,024 Cash flows from investing activities: Additions to property and equipment................................... (1,950) (3,334) Changes in property held for resale................................... 8,473 1,108 Purchases (maturities) of marketable securities....................... 5 (515) Cash proceeds from dispositions of property and equipment............. 159 442 ----------- ----------- Net cash flows from investing activities......................... 6,687 (2,299) Cash flows from financing activities: Net bank revolving credit............................................. (7,181) -- Deferred financing costs.............................................. (50) -- Principal payments on capital lease obligations....................... (126) (737) Purchase of treasury stock............................................ 8 -- ----------- ----------- Net cash flows from financing activities......................... (7,349) (737) ----------- ----------- Increase in cash and cash equivalents................................. 4,864 4,988 Cash and cash equivalents at beginning of period...................... 5,113 9,134 ----------- ----------- Cash and cash equivalents at end of period............................ $ 9,977 $ 14,122 =========== =========== Supplemental disclosures of cash flow information: Cash paid for interest.............................................. $ 5,130 $ 4,901 Cash paid for income taxes.......................................... $50 $ -- Noncash investing and financing activities: Unrealized (loss) gain on marketable securities..................... $ 20 $ (45) Additions to property and the equipment & capital lease liability in connection with sale/leaseback transactions..... $ 10,744 $ -- Accounts receivable for the sale of company assets.................. $ 1,557 $ --
See notes to consolidated financial statements. 4 NOTES TO CONSOLIDATED 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 May 1, 1998. 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 thirteen weeks ended May 2, 1998 are not necessarily indicative of the results that may be expected for the fiscal year ending January 30, 1999. Litigation A complaint alleging discrimination in employment was filed against the Company in 1994 in the United States District Court for the Central District of Illinois by two current and one former associates individually and as representative of a class of all individuals who are similarly situated. The Plaintiffs moved for class certification and their motion was granted. Subsequently, the Court granted the Company's motion to narrow the scope of the class. The Company denies all substantive allegations of the Plaintiffs and of the class. The Company is subject to various other unresolved legal actions which arise in the normal course of its business. It is not possible to predict with certainty the outcome of these unresolved legal actions or the range of the possible loss. Earnings Per Share Earnings per share ("EPS") are computed in accordance with Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share." Basic EPS is computed by dividing consolidated net earnings by the weighted average number of common shares outstanding. Diluted EPS is computed by dividing consolidated net earnings by the sum of the weighted average number of common shares outstanding and the weighted average number of potential common shares outstanding. Potential common shares consist solely of outstanding options under the Company's stock option plans. The computation of basic and diluted EPS are as follows: (in thousands except per share amounts)
Quarter Ended May 2, 1998 May 3, 1997 ----------- ----------- Net Earnings: $ 124 $ 1,788 ======== ======== Basic EPS: Weighted average common shares outstanding 10,948 10,877 ======== ======== $ 0.01 $ 0.16 ======== ======== Diluted EPS: Weighted average common shares outstanding 10,948 10,877 ======== ======== Effect of dilutive securities - stock options 257 383 -------- -------- Shares applicable to diluted earnings 11,205 11,260 ======== ======== $ 0.01 $ 0.16 ======== ========
5 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Sales for the Company's first fiscal quarter ended May 2, 1998 were $231.6 million, a decrease of $8.4 million or 3.5% from the first quarter of 1997. Same store sales for the quarter decreased 3.1%. There were 90 stores operating during the first quarter of 1998 compared to 92 stores operating in the first quarter of 1997. The decline in total sales was caused primarily by competitive activity during the quarter and the decrease in store count. This decrease reflects the impact of competitive store openings including five during the first quarter of 1998 and 17 during fiscal year 1997. The gross margin rate was 24.9% of sales for the quarter ended May 2, 1998 compared to 25.8% in the comparable quarter of 1997. The decrease in the gross margin rate is primarily related to increased promotional activity during the quarter. Selling, general and administrative expenses declined by $2.0 million from the first quarter of 1997 and decreased as a percentage of sales from 21.8% in the first quarter of 1997 to 21.7% during the same period of 1998. The decrease in dollars is primarily due to a gain of $1.0 million on the sale of the Company's bakery, increased associate productivity and lower associate benefit costs. Depreciation and amortization expenses decreased to $4.4 million or 1.9% of sales compared to $4.9 million or 2.0% of sales in the prior year. This decrease was due to lower levels of new asset acquisitions during the past few years and to certain other assets being fully depreciated. Interest expense decreased to $2.9 million or 1.3% of sales from $3.0 million or 1.2% of sales in the prior year. Earnings for the first quarter of fiscal 1998 were $124,000 or $0.01 per share on a diluted basis compared to $1.8 million or $0.16 per share in the same quarter of fiscal 1997. There was no tax provision in either year as tax loss carryforwards are being utilized. Liquidity and Capital Resources Cash flow from operating activities was $5.5 million for the quarter ended May 2, 1998 compared to $8.0 million in the comparable quarter of 1997. Earnings and non-cash charges generated $4.1 million of cash and working capital changes provided $1.4 million, primarily in decreased inventory, partially offset by a reduction in liabilities and an increase in receivables. Additions to property and equipment for the quarter were $1.9 million compared to $3.3 million in the first quarter of 1997. Two of the properties held for resale were sold for $10.8 million and leased back during the quarter. In addition, the Company's bakery was sold with a gain of $1.0 million. No stores were opened or closed during the first quarter of fiscal 1998. Working capital at May 2, 1998 was $23.9 million and the current ratio was 1.27 to 1 compared to $12.9 million and 1.13 to 1 at January 31, 1998 and $13.7 million and 1.14 to 1 at May 3, 1997. There was $27,000 borrowed against the Revolving Credit Agreement at May 2,1998 with no Letters of Credit issued. 6 Safe Harbor Statements Under the Private Securities Litigation Reform Act of 1995 The statements under Management's Discussion and Analysis of Financial Condition and Results of Operations and the other statements in this Form 10-Q which are not historical facts are forward looking statements. These forward looking statements involve risks and uncertainties that could render them materially different, including, but not limited to, the effect of economic conditions, the impact of competitive stores and pricing, availability and costs of inventory, the rate of technology change, the availability of capital, supply constraints or difficulties, the effect of the Company's accounting policies, the effect of regulatory and legal developments, and other risks detailed in the Company's Securities and Exchange Commission filings. PART II: OTHER INFORMATION: Item 1: Legal Proceedings Not Applicable Item 2: Change in Securities and Use of Proceeds Not Applicable Item 3: Defaults Upon Senior Securities Not Applicable Item 4: Submitted Matters to a Vote of Security Holders Not Applicable Item 5: Other Not Applicable Item 6: Exhibits and Reports on Form 8K Exhibit 27 : Financial Data Schedule (see page 9) 7 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: June 10, 1998 /s/ Robert J. Kelly ------------------------------- Robert J. Kelly Chairman and Chief Executive Officer Dated: June 10, 1998 /s/ S. Patric Plumley ------------------------------- S. Patric Plumley Vice President - Chief Financial Officer 8 EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS JAN-30-1999 MAY-02-1998 9,977,000 10,364,000 14,460,000 1,076,621 73,538,000 111,651,000 282,515,000 160,976,000 259,558,000 87,728,000 100,000,000 0 0 115,000 32,273,000 259,558,000 231,568,000 231,568,000 173,844,000 173,844,000 54,678,000 0 2,922,000 124,000 0 124,000 0 0 0 124,000 0.01 0.01
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