-----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, GPMP//lcTM2pZrs97gVtgU8ZVeMqKpL6Ut86gzy9bCDiBcVV04ZSPDibH0vtREWO e3tgYjUx1kW2J1Lvr7NTwQ== 0000031364-95-000005.txt : 19951213 0000031364-95-000005.hdr.sgml : 19951213 ACCESSION NUMBER: 0000031364-95-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19951028 FILED AS OF DATE: 19951212 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ECKERD CORP CENTRAL INDEX KEY: 0000031364 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-DRUG STORES AND PROPRIETARY STORES [5912] IRS NUMBER: 133302437 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04844 FILM NUMBER: 95601074 BUSINESS ADDRESS: STREET 1: 8333 BRYAN DAIRY ROAD CITY: LARGOO STATE: FL ZIP: 34647 BUSINESS PHONE: 8133996000 MAIL ADDRESS: STREET 1: JACK ECKERD CORPORATION STREET 2: P O BOX 4689 CITY: CLEARWATER STATE: FL ZIP: 34618 FORMER COMPANY: FORMER CONFORMED NAME: ECKERD DRUGS OF FLORIDA INC DATE OF NAME CHANGE: 19700112 10-Q 1 10-Q: 3RD QTR ENDED OCTOBER 28, 1995 UNITED STATES 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 Thirty-Nine Weeks Ended October 28, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934 For the transition period from _______________ to ___________________ Commission File No. 1-4844 ECKERD CORPORATION (Exact name of registrant as specified in charter) DELAWARE 13-3302437 (State of incorporation) (I.R.S. Employer Identification No.) 8333 Bryan Dairy Road Largo, Florida 34647 (Address and zip code of principal executive offices) (813) 399-6000 (Registrant's telephone number, including area code) 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 ----- ----- As of November 25, 1995, 34,955,158 shares of Common Stock, $.01 par value, were outstanding.
ECKERD CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS EXCEPT SHARE DATA) Unaudited Audited ASSETS 10/28/95 1/28/95 Current assets: Cash and short-term interest bearing deposits $ 9,373 8,898 Receivables, less allowance for doubtful receivables of $3,000 67,049 52,487 Merchandise inventories 883,862 771,122 Prepaid expenses and other current assets 3,598 2,366 ----------- ----------- Total current assets 963,882 834,873 ----------- ----------- Property, plant and equipment, at cost 614,849 542,191 Less accumulated depreciation 277,365 249,214 ----------- ----------- Net property, plant and equipment 337,484 292,977 ----------- ----------- Excess of cost over net assets acquired, less accumulated amortization 62,756 27,667 Favorable lease interests, less accumulated amortization 139,063 153,664 Unamortized debt expense 8,109 10,138 Other assets 27,530 23,028 ----------- ----------- $ 1,538,824 1,342,347 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Bank debit balances $ 19,169 44,373 Current installments of long-term debt 1,456 1,452 Accounts payable 332,848 287,551 Accrued expenses 226,643 221,208 ----------- ----------- Total current liabilities 580,116 554,584 ----------- ----------- Other noncurrent liabilities 141,340 124,944 Long-term debt, excluding current installments 813,834 785,561 Stockholders' equity (deficit): Preferred stock of $.01 par value Authorized 20,000,000 shares; none issued -- -- Voting common stock of $.01 par value Authorized 96,481,272 shares; issued 34,950,857 and 32,105,774 349 321 Nonvoting common stock of $.01 par value Authorized 3,518,728 shares; none issued -- -- Capital in excess of par value 318,086 234,027 Retained deficit (314,901) (357,090) ----------- ----------- Total stockholders'equity (deficit) 3,534 (122,742) ----------- ----------- $ 1,538,824 1,342,347 =========== =========== See accompanying notes to condensed consolidated financial statements.
2
ECKERD CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (IN THOUSANDS EXCEPT PER SHARE DATA) Thirteen Weeks Ended Thirty-Nine Weeks Ended -------------------------- -------------------------- 10/28/95 10/29/94 10/28/95 10/29/94 ----------- ----------- ----------- ----------- Sales and other operating revenue $ 1,164,907 1,071,036 3,523,225 3,274,121 ----------- ----------- ----------- ----------- Costs and expenses: Cost of sales, including store occupancy, warehousing and delivery expense 915,137 831,513 2,739,733 2,517,877 Operating and administrative expenses 224,301 215,476 666,724 649,089 ----------- ----------- ----------- ----------- Earnings before interest expense 25,469 24,047 116,768 107,155 Interest expense: Interest expense, net 18,266 21,514 57,147 66,515 Amortization of original issue discount and deferred debt expenses 454 1,896 1,522 5,287 ----------- ----------- ----------- ----------- Total interest expense 18,720 23,410 58,669 71,802 ----------- ----------- ----------- ----------- Earnings before income taxes and extraordinary items 6,749 637 58,099 35,353 Income tax provision 1,147 32 9,877 1,782 ----------- ----------- ----------- ----------- Earnings before extraordinary items 5,602 605 48,222 33,571 Extraordinary item-early retirement of debt net of tax benefit of $947, $1,401, $1,236 and $1,401 (5,012) (26,620) (6,033) (26,620) ----------- ----------- ----------- ----------- Net earnings for the period $ 590 (26,015) 42,189 6,951 =========== =========== =========== =========== Earnings per common share: Earnings before extraordinary item $ .16 .02 1.43 1.04 Extraordinary item (.14) (.82) (.18) (.82) ----------- ----------- ----------- ----------- Net earnings per common share $ .02 (.80) 1.25 .22 =========== =========== =========== =========== See accompanying notes to condensed consolidated financial statements.
3
ECKERD CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS) Thirty-Nine Weeks Ended ---------------------- 10/28/95 10/29/94 Cash flows from operating activities: --------- --------- Net earnings for the period $ 42,189 6,951 Adjustments to reconcile net earnings for the period to net cash provided by operating activities: Extraordinary charge related to early retirement of debt 7,269 28,021 Depreciation and amortization 61,460 57,331 Amortization of original issue discount and deferred debt expenses 1,522 5,287 Increase in receivables, merchandise inventories and prepaid expenses (111,044) (76,737) Increase (decrease) in accounts payable and accrued expenses 51,900 (1,880) --------- --------- Net cash provided by operating activities 53,296 18,973 --------- --------- Cash flows from investing activities: Additions to property, plant and equipment* (69,301) (36,883) Sale of property, plant and equipment 4,482 1,484 Acquisition of certain drug store assets (69,628) (4,446) Net cash proceeds from sale of Vision Group 5,231 22,624 Other (4,224) 2,633 --------- --------- Net cash used in investing activities (133,440) (14,588) --------- --------- Cash flows from financing activities: Decrease in bank debit balances (25,204) (24,794) Additions to long-term debt 667 842 Reductions of long-term debt (1,292) (1,554) Net additions under current credit agreement 117,860 25,811 Common stock sold in a public offering, net of expenses of sale 82,322 -- Redemption of 11.125% subordinated debentures (95,500) -- Other 1,766 (4,420) --------- --------- Net cash provided by (used in) financing activities 80,619 (4,115) --------- --------- Net increase in cash and cash equivalents 475 270 Cash and short-term interest bearing deposits at beginning of period 8,898 12,110 --------- --------- Cash and short-term interest bearing deposits at end of period $ 9,373 12,380 ========= =========
* Total capital expenditures for thirty-nine weeks ended October 28, 1995 and October 29, 1994 were $85,883 and $68,356, of which $16,582 and $31,473 were acquired under a deferred payment arrangement. See accompanying notes to condensed consolidated financial statements. 4 ECKERD CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA) Note 1. ------- The condensed consolidated financial statements include the accounts of the Company and its subsidiaries, and were prepared from the books and records of the Company without audit or verification and in the opinion of management include all adjustments (none of which were other than recurring accruals) necessary to present a fair statement of results for such periods. It is suggested that these condensed consolidated financial statements should be read in conjunction with the financial statements and notes filed as part of the Form 10-K405 report for the fiscal year ended January 28, 1995. The results of operations of the periods indicated should not be considered as necessarily indicative of operations for the full year. Note 2. ------- Substantially all inventories are determined on a last-in, first-out (LIFO) cost basis. At October 28, 1995 and January 28, 1995 inventories would have been greater by approximately $86,700 and $76,900, respectively, if inventories were valued on a first-in, first-out (FIFO) cost basis. The cost of merchandise sold is calculated primarily on estimated inventory values and inflation rates based on physical inventories taken at all locations at least once during the fiscal year. Note 3. ------- The weighted average number of shares outstanding for thirteen weeks and thirty-nine weeks ended October 28, 1995 and October 29, 1994 were 35,621 and 33,777 in 1995 and 32,422 and 32,297 in 1994. Note 4. ------- Certain amounts have been reclassified in the fiscal 1994 condensed consolidated statements of operations and statements of cash flows to conform to the fiscal 1995 condensed consolidated financial statement presentation. Note 5. ------- On August 2, 1995 the Company completed the public offering of 6,175,500 shares of Company common stock, par value $.01 per share, for $32.25 per share. Of the shares offered, 2,675,000 shares were sold by the Company and 3,500,500 shares were sold by certain stockholders of the Company. The net proceeds to the Company after the underwriting discount of $1.27 per share and other expenses related to the public offering was approximately $82,322. 5
ECKERD CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 6. ECKERD CORPORATION AND SUBSIDIARIES - ------- CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Thirteen Weeks Ended Thirty-Nine Weeks Ended ----------------------------------------- ------------------------------------- October 28, 1995 October 29, 1994 October 29, 1994 October 28, 1995 ---------------- ---------------- ---------------- ------------------- Actual Actual(A) Adjusted(B) Actual Actual(A) Adjusted(B) ----------- ---------- ---------- ---------- ---------- ---------- Sales and other operating revenue $ 1,164,907 1,071,036 1,042,707 3,523,225 3,274,121 3,190,081 Cost of sales 915,137 831,513 812,853 2,739,733 2,517,877 2,461,912 Operating and administrative expenses 215,229 206,995 198,960 641,980 624,830 601,353 Amortization of intangibles 9,072 8,481 8,395 24,744 24,259 24,007 ----------- ---------- ---------- ---------- ---------- ---------- Operating profit 25,469 24,047 22,499 116,768 107,155 102,809 Interest expense 18,720 23,410 21,273 58,669 71,802 65,398 ----------- ---------- ---------- ---------- ---------- ---------- Earnings before income taxes and extraordinary item 6,749 637 1,226 58,099 35,353 37,411 Income taxes 1,147 32 106 9,877 1,782 1,916 ----------- ---------- ---------- ---------- ---------- ---------- Earnings before extraordinary item 5,602 605 1,120 48,222 33,571 35,495 Extraordinary item (5,012) (26,620) (26,620) (6,033) (26,620) (26,620) ----------- ---------- ---------- ---------- ---------- ---------- Net earnings (loss) $ 590 (26,015) (25,500) 42,189 6,951 8,875 =========== ========== ========== ========== ========== ========== Earnings per common share before extraordinary item $ .16 .02 .03 1.43 1.04 1.10 Net earnings (loss) per common share $ .02 (.80) (.79) 1.25 .22 .27 Weighted average number of shares outstanding 35,621 32,422 32,422 33,777 32,297 32,297 Earnings before interest, income taxes, extraordinary item, depreciation and amortization $ 47,368 44,085 42,046 178,228 164,486 158,788 (EBITDA)
(A) Certain amounts have been reclassified to conform to the 1995 actual financial statement presentation. (B) The adjusted financial data is based on the historical financial statements of the Company (after the reclassification in (A) above), adjusted to give effect to the Company's sale of the Insta-Care Pharmacy Services operations which was sold effective November 15, 1994, and the use of the net proceeds therefrom as if such transaction had occurred as of the beginning of the thirty-nine week period ended October 29, 1994. 6 ECKERD CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations The Company sold its Insta-Care Pharmacy Services, Inc. ("Insta-Care") operations effective November 15, 1994. The following results of operations discussion will compare the third quarter and thirty-nine weeks of fiscal 1995 to the adjusted third quarter and thirty-nine weeks of fiscal 1994 (thirteen and thirty-nine weeks ended October 28, 1995 and October 29, 1994) which gives effect to the Company's sale of the Insta-Care operations and reflects the reclassification of certain amounts to conform to the 1995 financial statement presentation. See Note 6 of Notes to Condensed Consolidated Financial Statements. The Company's sales and other operating revenue for the third quarter and thirty-nine weeks of fiscal 1995 were $1,164.9 million and $3,523.2 million, an 11.7% and 10.4% increase over the third quarter and thirty-nine weeks of fiscal 1994, respectively. Sales benefited from significant increases in prescription sales in the third quarter and thirty-nine weeks as well as from increases in front end sales and from the acquisition of certain Florida drug stores from Rite Aid (the "Florida Rite Aid Acquisition") at the beginning of the third quarter. Prescription sales for the third quarter and thirty-nine weeks of fiscal 1995 were $652.6 million and $1,909.5 million, an 18.5% and 16.7% increase over the third quarter and thirty-nine weeks of fiscal 1994, respectively. In addition, front end sales increased to $510.2 million and $1,607.0 million, a 4.2% and 3.9% increase over the third quarter and thirty-nine weeks of fiscal 1994, respectively. Front end sales in the third quarter and thirty-nine weeks of fiscal 1995 were positively affected primarily by increased sales of non-prescription items in the health, greeting card, convenience food and photofinishing categories. Comparable drug store sales (stores open for one year or more, excluding relocated stores open less than one year) increased 10.2% and 9.2% for the third quarter and thirty-nine weeks of fiscal 1995, compared to a 9.4% and 8.4% increase for the third quarter and thirty-nine weeks of fiscal 1994. Prescription sales as a percentage of drug store sales were approximately 56.1% and 54.3% for the third quarter and thirty-nine weeks of fiscal 1995 as compared with approximately 52.9% and 51.4% for the third quarter and thirty-nine weeks of fiscal 1994, respectively. The growth in prescription sales for the third quarter and thirty-nine weeks of fiscal 1995 was primarily the result of increased third-party prescription sales, the Company's competitive cash pricing strategy and the Florida Rite Aid Acquisition. 7 These strong sales were aided by a more severe cough, cold and flu season in the first quarter of fiscal 1995 compared to the first quarter of fiscal 1994. Third-party prescription sales increased to approximately 71.1% and 70.0% of the Company's prescription sales for the third quarter and thirty-nine weeks of fiscal 1995 from approximately 65.2% and 63.9% in fiscal 1994. The Company expects prescription sales to third-party payors, in terms of both dollar volume and as a percentage of total prescription sales, to continue to increase in fiscal 1995 and for the foreseeable future. Third-party payors typically negotiate lower prescription prices than those on non third-party prescriptions, resulting in decreasing gross profit margins on the Company's prescription sales. However, contracts with third-party payors generally increase the volume of prescription sales and gross profit dollars. Cost of sales and related expenses for the third quarter and thirty-nine weeks of fiscal 1995 were $915.1 million and $2,739.7 million, a 12.6% and 11.3% increase over the third quarter and thirty-nine weeks of fiscal 1994, respectively. As a percentage of sales, cost of sales and related expenses were 78.6% and 77.8% compared to 78.0% and 77.2% for the third quarter and thirty-nine weeks of fiscal 1995 and 1994, respectively. The increase in cost of sales and related expenses as a percentage of sales resulted primarily from the continued increase in third-party prescription sales with typically lower gross profit margins than non third-party prescription sales. The LIFO charge was $3.8 million and $9.8 million compared to $2.6 million and $7.4 million for the third quarter and thirty-nine weeks of fiscal 1995 and 1994, respectively. Operating and administrative expenses for the third quarter and thirty-nine weeks of fiscal 1995 were $224.3 million and $666.7 million, an 8.2% and 6.6% increase over the third quarter and thirty-nine weeks of fiscal 1994, respectively. As a percentage of sales, operating and administrative expenses decreased to 19.3% and 18.9% for the third quarter and thirty-nine weeks of fiscal 1995 from 19.9% and 19.6% for the third quarter and thirty-nine weeks of fiscal 1994, respectively. The decrease in operating and administrative expenses as a percentage of sales resulted primarily from operating efficiencies related to higher sales (including the benefits from the near completion of the underperforming store closings program), and cost controls which helped produce lower costs as a percentage of sales in such expense categories as payroll and insurance. Non-cash tax deductible amortization of intangibles included in operating and administrative expenses for the third quarter and thirty-nine weeks of fiscal 1995 and 1994 was $9.1 million and $24.7 million, compared to $8.4 million and $24.0 million, respectively, an increase of 8.1% and 3.1%, respectively. 8 Earnings before interest expense, income taxes and extraordinary item were $25.5 million and $116.8 million for the third quarter and thirty-nine weeks of fiscal 1995, a 13.2% and 13.6% increase over the third quarter and thirty-nine weeks of fiscal 1994, respectively. The increase in earnings before interest expense, income taxes and extraordinary item was due primarily to the increase in gross profit dollars as a result of higher sales and other operating revenue, and the decrease in operating and administrative expenses as a percentage of sales in the third quarter and thirty-nine weeks of fiscal 1995 compared to the third quarter and thirty-nine weeks of fiscal 1994. Total interest expense was $18.7 million and $58.7 million for the third quarter and thirty-nine weeks of fiscal 1995, a decrease of 12.0% and 10.3% from the third quarter and thirty-nine weeks of fiscal 1994, respectively. The decrease was due primarily to lower average borrowings in the third quarter and thirty-nine weeks of fiscal 1995 compared to the third quarter and thirty-nine weeks of fiscal 1994. The average interest rate on borrowings in the third quarter and thirty-nine weeks of fiscal 1995 and 1994 was substantially the same. Income taxes for the thirty-nine weeks of fiscal 1995 and 1994 were $9.9 million and $1.9 million, respectively. The effective income tax rate of 17% for the third quarter and thirty-nine weeks of fiscal 1995 was higher than the third quarter and thirty-nine weeks of fiscal 1994 (5%). Income taxes include alternative minimum and state income taxes for the Company, and reflect the utilization of net operating loss carryforwards. As a result of the foregoing factors, the Company had net earnings before extraordinary item for the third quarter and thirty-nine weeks of fiscal 1995 of $5.6 million and $48.2 million, compared to $1.1 million and $35.5 million for the third quarter and thirty-nine weeks of fiscal 1994, an increase of $4.5 million and $12.7 million or 400.2% and 35.9%, respectively. At October 28, 1995 the Company operated 1,704 Eckerd Drug stores and 510 Eckerd Express Photo labs. Financial Condition and Liquidity With respect to the balance sheet at October 28, 1995 compared to the balance sheet at January 28, 1995, merchandise inventories increased $112.7 million (net of the LIFO charge of $9.8 million) to $883.9 million, accounts receivable increased $14.6 million to $67.0 million 9 and property, plant and equipment increased $72.7 million to $614.8 million. The inventory increase is a result of higher inventory to support strong sales in the first three quarters of fiscal 1995, but is primarily from the customary Christmas seasonal inventory buildup. The receivables increase is attributable primarily to the increase in receivables from third-party prescription sales and the timing of cash collections on such receivables. Additions to property, plant and equipment of $85.9 million were primarily due to the installation of point-of-sale product scanning equipment along with other improvements to existing stores and facilities, relocation of stores and the addition of new and acquired stores. At October 28, 1995, the Company had $573.2 million in borrowings outstanding under its bank credit agreement ($405.7 million under the term loan facility and $167.5 million under the revolving loan facility) and the Company had unused and available borrowing commitments under the revolving loan facility of $94.5 million which is net of $88.0 million of letters of credit. On November 29, 1995, the Company completed an amendment to the credit agreement. Pursuant to the amended credit agreement, the principal amount of the term and revolving loan borrowings available is $750.0 million. The term loan facility of $405.7 million was decreased to $250.0 million and the revolving loan facility of $350.0 million was increased to $500.0 million. Certain of the financial and restrictive covenants were revised, and the calculation of the interest rate was adjusted. As a result of such adjustment, the Company's interest rate in the last two months of the fourth quarter of fiscal 1995 will be LIBOR plus .625 percent, compared to LIBOR plus 1.250 percent prior to the amendment to the credit agreement. The term loan facility of $250.0 million amortizes in quarterly payments of $10.0 million at the end of each of the first three quarters and $20.0 million at the end of the fourth quarter of each fiscal year for a total amortization of $50.0 million annually, and matures in full in November 2000. The revolving loan facility of $500.0 million matures in full in November 2000. At October 28, 1995 the Company had excess availability under the revolving loan commitment and accordingly did not treat the required amortization repayments as current. On October 28, 1995 the Company had working capital of $383.8 million and a current ratio of 1.7 to 1 compared to $280.3 million and 1.5 to 1 at January 28, 1995. Cash flow provided by operating activities increased $34.3 million to $53.3 million for thirty-nine weeks of fiscal 1995 compared to $19.0 million for thirty-nine weeks of fiscal 1994. This increase was due to higher earnings for the thirty-nine weeks of fiscal 1995 compared to fiscal 1994. In addition, the increase was due to the impact of the higher than normal cash payments to merchandise vendors in the first quarter of fiscal 1994, resulting in the reduction of accounts payable from an abnormally high balance at 10 January 29, 1994 primarily from the timing of vendor payment due dates. This increase was offset partially by an increase in inventory and receivables from third-party prescription sales in fiscal 1995. Investing activities for the thirty-nine weeks of fiscal 1995 and 1994 used $133.4 million and $14.6 million of cash, respectively. Uses of cash were principally for capital expenditures of $69.3 million and $36.9 million for fiscal 1995 and 1994, respectively, for point-of-sale product scanning equipment along with other improvements to existing stores and facilities, relocation of stores and the addition of new stores. In addition, in fiscal 1995, $69.6 million of cash was used for the acquisition of drug store assets including the Florida Rite Aid Acquisition. Also, in fiscal 1994, additions to property, plant and equipment included the installation of satellite communication equipment, and a source of cash to the Company from investing activities was provided by a partial payment for the sale of the Vision Group operations. Capital improvements for fiscal 1995, including those to be acquired under a deferred payment arrangement and through operating leases, which total $85.9 million for thirty-nine weeks, are expected to total approximately $119.0 million on an annual basis. Funds for the cash capital expenditures are expected to come from cash flow from operating activities and available borrowings, if necessary. Financing activities for the thirty-nine weeks of fiscal 1995 provided $80.6 million. A source of cash to the Company came from the August 2, 1995 public offering (discussed below) which provided $82.3 million. Funds were also provided by $117.9 million of bank borrowings which were primarily used to redeem an aggregate of $95.5 million of the 11-1/8% Subordinated Debentures due 2001 ("11-1/8% Debentures"), of which $16.6 million was redeemed on May 12, 1995 and $78.9 million was redeemed on September 5, 1995 (discussed below), and for the reduction of $25.2 million of bank debit balances. Financing activities for the thirty-nine weeks of fiscal 1994 used $4.1 million primarily for the reduction of $24.8 million of bank debit balances, of which funds were provided for by $25.8 million of bank borrowings. On August 2, 1995 the Company completed the public offering of 6,175,500 shares of Company common stock for $32.25 per share. Of the shares offered, 2,675,000 shares were sold by the Company and 3,500,500 shares were sold by certain stockholders of the Company. The net proceeds to the Company after the underwriting discount of $1.27 per share and other expenses related to the public offering was approximately $82.3 million. 11 On September 5, 1995 the Company redeemed the remaining $78.9 million of the 11-1/8% Debentures with proceeds from the August 2, 1995 public offering and bank borrowings, which proceeds were also used to finance the Florida Rite Aid Acquisition. The Company anticipates that the combination of amortization of intangibles and interest on debt will have a negative impact upon future earnings and, to a lesser degree, cash flow from operating activities. The Company does not believe, however, that the impact of such planned amortization and interest expense upon earnings indicates a present or future impairment of liquidity. Based upon the Company's ability to generate cash flow from operating activities, the available unused portion of the revolving loan facility under the bank credit agreement and other existing sources, the Company believes that it will have the funds necessary to meet the principal and interest payments on its debt as they become due and to operate and expand its businesses. REVIEW BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS The Company's independent public accountants have made a limited review of the financial information furnished herein in accordance with standards established by the American Institute of Certified Public Accountants. The Accountants' Report is presented on page 13 of this report. 12 Accountants' Report The Board of Directors Eckerd Corporation: We have reviewed the condensed consolidated balance sheet of Eckerd Corporation and subsidiaries as of October 28, 1995, and the related condensed consolidated statements of operations and cash flows for the thirteen and thirty-nine weeks ended October 28, 1995 and October 29, 1994. These condensed consolidated financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying condensed consolidated financial statements for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet as of January 28, 1995, and the related consolidated statements of operations, stockholders' equity (deficit), and cash flows, for the year then ended (not presented herein); and in our report dated March 20, 1995, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of January 28, 1995 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. KPMG PEAT MARWICK LLP December 6, 1995 13 Item 6. Exhibits and Reports on Form 8-K ----------------------------------------- (a) Exhibits 4.1 Amendment Agreement dated as of November 29, 1995 to the Credit Agreement dated as of June 14, 1993, as amended and restated as of August 3, 1994, among the Company, the lenders named therein, Chemical Bank and NationsBank of Florida, N.A., as managing agents and swingline lenders, and Chemical Bank as administrative agent and NationsBank of Florida, N.A. as documentation agent (incorporated by reference to Exhibit 4.4 to the Registration Statement on Form S-3 of the Company (No. 33-64409)). 15.1 Letter re unaudited interim financial information 27 Financial Data Schedule (b) Reports on Form 8-K The Company filed a report on Form 8-K dated November 28, 1995 incorporating the Company's press release which announced earnings for the thirteen and thirty-nine weeks ended October 28, 1995. 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. ECKERD CORPORATION (Registrant) December 12, 1995 /s/ Samuel G. Wright ---------------------- Samuel G. Wright Executive Vice President/ Chief Financial Officer (Principal Accounting Officer) 14 Exhibit Index Eckerd Corporation Form 10-Q Exhibit No. Description of Exhibit Page ----------- ---------------------- ---- 4.1 Amendment Agreement dated as of November 29, 1995 to the Credit Agreement dated as of June 14, 1993, as amended and restated as of August 3, 1994. * 15.1 Letter re unaudited interim financial information 27 Financial Data Schedule - --------------------- *Previously filed by incorporation by reference. 15 EX-15 2 LETTER: ACCOUNTANTS' AWARENESS EXHIBIT 15.1 Eckerd Corporation and Subsidiaries 8333 Bryan Dairy Road Largo, Florida 34647 Gentlemen: RE: Registration Statement on Form S-3 (No. 33-50223) Registration Statement on Form S-8 (No. 33-49977) Registration Statement on Form S-8 (No. 33-50755) Registration Statement on Form S-3 (No. 33-56261) Registration Statement on Form S-8 (No. 33-60175) Registration Statement on Form S-3 (No. 33-64409) Registration Statement on Form S-3 (No. 33-64837) With respect to the above referenced registration statements, we acknowledge our awareness of the incorporation by reference therein of our report dated December 6, 1995 related to our review of interim financial information, which report was included in the Form 10-Q of Eckerd Corporation and Subsidiaries for the thirteen and thirty-nine weeks ended October 28, 1995. Pursuant to Rule 436(c) under the Securities Act of 1933, such report is not considered a part of a registration statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of the Act. KPMG PEAT MARWICK LLP Tampa, Florida December 11, 1995 EX-27 3
5 0000031364 ECKERD CORPORATION 1,000 9-MOS FEB-03-1996 OCT-28-1995 9,373 0 70,049 3,000 883,862 963,882 614,849 277,365 1,538,824 580,116 813,834 349 0 0 3,185 1,538,824 3,523,225 3,523,225 2,739,733 2,739,733 663,935 2,789 58,669 58,099 9,877 48,222 0 (6,033) 0 42,189 1.25 1.25
-----END PRIVACY-ENHANCED MESSAGE-----