-----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, FrU8cX32VkNUkmx48eq4J2aDvmnN7WOLGTdYm2WKIqQLjKNVDx/+kbQ9nHuk72B+ eIItEkDaRuXXKmuWTO/vPg== 0000891554-97-001122.txt : 19971126 0000891554-97-001122.hdr.sgml : 19971126 ACCESSION NUMBER: 0000891554-97-001122 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971011 FILED AS OF DATE: 19971125 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GRAND UNION CO /DE/ CENTRAL INDEX KEY: 0000316236 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-GROCERY STORES [5411] IRS NUMBER: 221518276 STATE OF INCORPORATION: DE FISCAL YEAR END: 0328 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-07824 FILM NUMBER: 97728266 BUSINESS ADDRESS: STREET 1: 201 WILLOWBROOK BLVD CITY: WAYNE STATE: NJ ZIP: 07470-0966 BUSINESS PHONE: 2018906000 MAIL ADDRESS: STREET 1: 201 WILLOWBROOK BLVD CITY: WAYNE STATE: NJ ZIP: 07470 FORMER COMPANY: FORMER CONFORMED NAME: SUCCESSOR TO GRAND UNION CO/VA/ DATE OF NAME CHANGE: 19600201 10-Q 1 QUARTERLY REPORT FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 11, 1997 Commission File Number 0-26602 THE GRAND UNION COMPANY (Exact name of registrant as specified in its charter) Delaware 22 - 1518276 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 201 Willowbrook Boulevard, Wayne, New Jersey 07470 - 0966 (Address of principal executive offices) (Zip Code) 973-890-6000 (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 ___ . Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes _X_. No ___ . As of November 25, 1997, there were issued and outstanding 10,000,000 shares, par value $0.01 per share, of the Registrant's common stock. 1 THE GRAND UNION COMPANY INDEX PART I - FINANCIAL INFORMATION (Unaudited) Item 1. Financial Statements. Page No. Consolidated Statements of Operations - 12 weeks ended October 11, 1997 and October 12, 1996 and 28 weeks ended October 11, 1997 and October 12, 1996 3 Consolidated Balance Sheets - October 11, 1997 and March 29, 1997 4 Consolidated Statements of Cash Flows - 28 weeks ended 5 October 11, 1997 and October 12, 1996 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. 9 PART II - OTHER INFORMATION Item 5. Other Information 11 Item 6. Exhibits and Report on Form 8-K 11 All items which are not applicable or to which the answer is negative have been omitted from this report. 2 PART I - FINANCIAL INFORMATION Item 1. Financial Statements. THE GRAND UNION COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS (dollars in thousands, except per share data) (unaudited)
12 WEEKS ENDED 28 WEEKS ENDED -------------------------- -------------------------- October 11, October 12, October 11, October 12, 1997 1996 1997 1996 ----------- ----------- ----------- ----------- Sales $ 518,910 $ 533,412 $ 1,226,893 $ 1,260,235 Cost of sales (370,246) (371,254) (888,760) (876,178) ----------- ----------- ----------- ----------- Gross profit 148,664 162,158 338,133 384,057 Operating and administrative expenses (135,193) (131,809) (315,015) (312,687) Depreciation and amortization (20,309) (19,732) (44,776) (45,145) Amortization of excess reorganization value (24,076) (23,678) (56,178) (55,250) Interest expense, net (26,012) (24,574) (58,332) (56,861) ----------- ----------- ----------- ----------- Loss before income taxes (56,926) (37,635) (136,168) (85,886) Income tax benefit -- 6,982 -- 11,421 ----------- ----------- ----------- ----------- Net (loss) (56,926) (30,653) (136,168) (74,465) Accrued dividends on preferred stock (2,074) (243) (4,131) (243) ----------- ----------- ----------- ----------- Net (loss) applicable to common stock $ (59,000) $ (30,896) $ (140,299) $ (74,708) =========== =========== =========== =========== Net (loss) per common share $ (5.90) $ (3.09) $ (14.03) $ (7.47) =========== =========== =========== ===========
See accompanying notes to consolidated financial statements (unaudited). 3 THE GRAND UNION COMPANY CONSOLIDATED BALANCE SHEETS (dollars in thousands, except per share data) (unaudited)
October 11, March 29, 1997 1997 ----------- ----------- ASSETS Current assets: Cash $ 29,688 $ 34,119 Receivables 293 17,975 Inventories 129,848 131,409 Other current assets 12,766 14,326 ----------- ----------- Total current assets 172,595 197,829 Property, net 418,814 411,911 Excess reorganization value, net 278,887 335,065 Deferred tax asset 51,393 51,393 Beneficial leases, net 45,854 52,266 Other assets 20,292 12,375 ----------- ----------- $ 987,835 $ 1,060,839 =========== =========== LIABILITIES AND STOCKHOLDERS' (DEFICIT) Current liabilities: Current maturities of long-term debt -- 46 Current portion of obligations under capital leases 7,495 8,045 Accounts payable and accrued liabilities 139,134 164,549 ----------- ----------- Total current liabilities 146,629 172,640 Long-term debt 786,843 740,207 Obligations under capital leases 147,950 140,058 Other noncurrent liabilities 90,791 96,144 ----------- ----------- Total liabilities $ 1,172,213 $ 1,149,049 ----------- ----------- Redeemable Class A Preferred Stock, $1.00 par value, 3,500,000 shares authorized, 1,300,566 shares issued and outstanding, liquidation preference $67,994 and $65,000, respectively 67,994 65,000 ----------- ----------- Redeemable Class B Preferred Stock, $1.00 par value, 1,400,000 shares authorized, 800,000 shares issued and outstanding, liquidation preference $41,137 41,137 -- ----------- ----------- Stockholders' (deficit): Common stock, $.01 par value; 60,000,000 shares authorized, 10,000,000 shares issued and outstanding 100 100 Preferred stock, $1.00 par value; 10,000,000 shares authorized, less amount authorized as Class A and Class B preferred stock, no shares issued and outstanding -- -- Capital in excess of par value 135,769 139,900 Accumulated deficit (429,378) (293,210) ----------- ----------- Total stockholders' (deficit) (293,509) (153,210) ----------- =========== $ 987,835 $ 1,060,839 =========== ===========
See accompanying notes to consolidated financial statements (unaudited). 4 THE GRAND UNION COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands) (unaudited) 28 Weeks Ended ------------------------ October 11, October 12, 1997 1996 ---------- ----------- OPERATING ACTIVITIES: Net (loss) $(136,168) $ (74,465) Adjustments to reconcile net (loss) to net cash (used for) operating activities before reorganization items paid: Depreciation and amortization 100,954 100,395 Deferred taxes -- (11,421) Noncash interest 158 (102) Net changes in assets and liabilities: Receivables 17,682 (5,107) Inventories 1,561 (4,566) Other current assets 1,560 158 Accounts payable and accrued liabilities (23,702) (17,525) Other (6,953) (2,183) --------- --------- Net cash (used for) operating activities before reorganization items paid (44,908) (14,816) Reorganization items paid (3,431) (3,720) --------- --------- Net cash (used for) operating activities (48,339) (18,536) --------- --------- INVESTMENT ACTIVITIES: Capital expenditures (28,712) (18,226) Disposals of property 60 7,901 --------- --------- Net cash (used for) investment activities (28,652) (10,325) --------- --------- FINANCING ACTIVITIES: Net proceeds from sale of preferred stock 40,000 28,000 Proceeds from long-term debt 77,978 6,000 Loan placement fees (9,446) -- Obligations under capital leases discharged (4,926) (6,600) Repayment of long-term debt (31,046) (6,425) --------- --------- Net cash provided by financing activities 72,560 20,975 --------- --------- (Decrease) in cash and temporary investments (4,431) (7,886) Cash and temporary investments at beginning of year 34,119 39,425 --------- --------- Cash $ 29,688 $ 31,539 ========= ========= Supplemental disclosure of cash flow information: Interest payments $ 55,644 $ 55,034 Capital lease obligations incurred 12,268 15,999 Accrued dividends 4,131 243 See accompanying notes to consolidated financial statements (unaudited). 5 THE GRAND UNION COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) NOTE 1 - Basis of Accounting The accompanying interim consolidated financial statements of The Grand Union Company (the "Company") include the accounts of the Company and its subsidiaries, all of which are wholly-owned. In the opinion of management, the consolidated financial statements include all adjustments, which consist only of normal recurring adjustments necessary for a fair presentation of operating results for the interim periods. These consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes contained in the Company's Annual Report on Form 10-K for the 52 weeks ended March 29, 1997, and the Company's Quarterly Report on Form 10-Q for the 16 weeks ended July 19, 1997. Operating results for the periods presented are not necessarily indicative of results for the full fiscal year. Certain items reported on the Consolidated Statements of Cash Flows have been reclassified from last year's presentation for comparative purposes. NOTE 2 - Preferred Stock Issuances In a series of related transactions commencing on July 30, 1996, Trefoil Capital Purchasers II, L. P., a Delaware limited partnership, and GE Investment Private Placement Partners II, A Limited Partnership, a Delaware limited partnership (collectively, the "Purchasers"), acquired beneficial ownership of an aggregate of approximately 70.77% of the Company's outstanding voting stock. On July 30, 1996, the Company entered into a definitive agreement (the "Stock Purchase Agreement") to sell $100 million of Preferred Stock A to the Purchasers. Each share of the Preferred Stock A was to be convertible at the option of the holder, at any time, into 6.8966 shares of Common Stock. Pursuant to the Stock Purchase Agreement, the Purchasers agreed to purchase, and the Company agreed to sell, an aggregate of 2,000,000 shares of Preferred Stock A at a purchase price of $50 per share (the "Stated Value") in stages through February 25, 1998. On September 17, 1996, the first stage of the transaction was closed, and the Purchasers acquired 800,000 shares of Preferred Stock A for an aggregate purchase price of $40 million. At a subsequent closing held on February 25, 1997, the Purchasers purchased an additional 400,000 shares of Preferred Stock A for an aggregate purchase price of $20 million. Additional subsequent closings were scheduled for August 25, 1997 and February 25, 1998 (the "Subsequent Closings"). At the Subsequent Closings, the Purchasers would have been required to purchase an additional 800,000 shares of Preferred Stock A for an aggregate purchase price of $40 million. Pursuant to an Acceleration and Exchange Agreement (the "Acceleration Agreement"), dated June 12, 1997, among the Company and the Purchasers, the Company and the Purchasers agreed to accelerate the sale and purchase of the 800,000 shares of Preferred Stock A to have occurred at the Subsequent Closings (the "Accelerated Shares") to June 12, 1997 (the "Accelerated Closing") and to exchange the Accelerated Shares for 800,000 shares of Preferred Stock B (the "Exchange"). At the Accelerated Closing, the Company received the $40 million purchase price for the sale of the Accelerated Shares. Immediately following the Accelerated Closing, the Purchasers completed the Exchange pursuant to which they received an aggregate of 800,000 shares of the Preferred Stock B, in consideration for their surrender of the Accelerated Shares. Each share of Preferred Stock B is convertible at the option of the holder, at any time, into 20.8333 shares of Common Stock. This conversion ratio is to be reset to a conversion ratio based upon a 20% premium to the average trading price of Common Stock during a twenty-day period following the earlier of: (i) three days after the release of the January 3, 1998 quarterly results, or (ii) February 20, 1998. The Purchasers obtained the necessary funds to purchase the Preferred Stock from capital contributions from their respective partners. On March 20, 1997, the Company consummated the sale to The Roger Stangeland Family Limited Partnership (the "Stangeland Partnership") of 60,000 shares of Preferred Stock A at a purchase price of $50.00 per share (the "Stangeland Shares"), pursuant to the terms of a Stock Purchase Agreement, dated February 25, 1997, as amended by Amendment No. 1 thereto dated as of March 20, 1997 (as so amended, the "Stangeland Stock Purchase Agreement"), between the Company and Mr. Stangeland. Pursuant to a Stockholder Agreement dated February 25, 1997 (the "Stangeland Stockholder Agreement"), among the Purchasers, Mr. Stangeland and the Company, Mr. Stangeland has granted the Purchasers certain take-along rights, the Purchasers have granted Mr. Stangeland certain tag-along rights, and the Purchasers and the Company have granted Mr. Stangeland certain registration rights related to the Stangeland Shares and any shares of Preferred Stock A, and Common Stock, if any, paid as dividends with respect to the Preferred Stock A (collectively, "Securities"). Pursuant to an Addendum, dated as of March 20, 1997, to the Stangeland Stockholder Agreement, the Stangeland Partnership has succeeded to all of the rights, and has assumed all of the obligations, of Mr. 6 Stangeland pursuant to the Stangeland Stockholder Agreement. The Purchasers disclaim any and all ownership of the Stangeland Shares or any additional Securities acquired by the Partnership in respect of the Stangeland Shares. At October 11, 1997, there were a total of 1,300,566 outstanding shares of Preferred Stock A, which were convertible into an aggregate of 8,969,483 shares of Common Stock, and a total of 800,000 outstanding shares of Preferred Stock B, which were convertible into an aggregate of 16,666,640 shares of Common Stock. Together, the aggregate shares of Preferred Stock A and Preferred Stock B account for approximately 71.94% of the Company's outstanding voting stock. The Class A Preferred Stock and Class B Preferred Stock have been classified as redeemable Class A Preferred Stock and Class B Preferred Stock in the accompanying Consolidated Balance Sheets. On March 31, 1997, the Company paid dividends on the Class A Preferred Stock through the issuance of 20,866 shares of Class A Preferred Stock, with an aggregate Stated Value of $1,043,300. The Company elected to suspend the declaration of the dividends payable June 30, 1997 and September 30, 1997. The dividends on the Class A Preferred Stock and the Class B Preferred Stock and the accrued and unpaid dividends through October 11, 1997 have been accounted for by a charge against Capital in Excess of Par Value and a corresponding increase in the carrying amounts of the Class A Preferred Stock and Class B Preferred Stock. The Class A and Class B Preferred Stock have a Liquidation Preference over the Common Stock equal to the Stated Value of the outstanding shares of the Preferred Stock plus all accrued, unpaid dividends. NOTE 3 - Net Loss Per Share The Company's outstanding warrants and options to purchase Common Stock under the Company's 1995 Non-Employee Director's Stock Option Plan and 1995 Equity Incentive Plan are considered common stock equivalents. The inclusion of these common stock equivalents in the Company's primary net loss per share calculation would have been anti-dilutive for the periods presented. Accordingly, only the weighted average number of common shares outstanding, totaling 10,000,000, were included in the calculation. The Company's Class A Preferred Stock and Class B Preferred Stock are not deemed to be common stock equivalents. A fully diluted net loss per share calculation is not presented because inclusion of the Class A Preferred Stock and Class B Preferred Stock in the calculation would have been anti-dilutive for the periods presented. NOTE 4 - Stock Option Grants On August 1, 1997, the Board of Directors elected J. Wayne Harris Chairman of the Board and Chief Executive Office of the Company. In connection with such appointment, the Company granted Mr. Harris options to purchase up to 1,250,000 shares of the Company's Common Stock, pursuant to the 1995 Equity Incentive Plan, subject to stockholder approval. The exercise price for the options ranges from $1.375 to $4.375 per share. The options expire on July 31, 2007, although their expiration may be accelerated by certain events. The Board of Directors, pursuant to the 1995 Equity Incentive Plan, authorized a stock option grant of 1,800,000 shares of common stock to certain associates of the Company, including store managers, management personnel and other bi-weekly, exempt associates. On October 1, 1997, eligible associates were granted options at an exercise price of $1.84375 and the options will expire on September 30, 2007, although their expiration may be accelerated by certain events. On October 3, 1997, the Board of Directors elected Gary M. Philbin President and Chief Merchandising Officer of the Company. In connection with such appointment, the Company granted Mr. Philbin options to purchase up to 450,000 shares of the Company's Common Stock, pursuant to the 1995 Equity Incentive Plan, subject to stockholder approval. The exercise price for the options ranges from $2.125 to $4.315 per share. The options expire on October 2, 2007, although their expiration may be accelerated by certain events. NOTE 5 - Amendment to Bank Facility Effective August 29, 1997, the Company executed an amended and restated Bank Facility (as amended and restated, the "Bank Facility") to eliminate existing technical defaults and relax covenants relating to the Company's performance in the future, thereby providing the Company access to the Revolving Credit Facility. The Bank Facility also provides for a new term loan facility of approximately $78 million. The amount available to the Company under the Revolving Credit Facility was reduced to approximately $68 million. The additional funds made available to the Company through the Bank Facility raise the Company's total secured credit facility to $250 million. For additional information regarding the Bank Facility, please see the Company's Report on Form 8-K filed on September 4, 1997. 7 NOTE 6 - Related Party Transactions Mr. Geoffrey T. Moore, a director, is a managing director and executive officer of Shamrock Capital Advisors, Inc. ("SCA"). Pursuant to a three-year management services agreement (the "Services Agreement") dated July 30, 1996, between the Company and SCA, SCA shall consult with and provide advice to the officers and management of the Company concerning matters relating to the Company's financial policies, development and implementation of business plans and general business affairs. The Services Agreement expires by its terms in September 1999. SCA's compensation for such management and consulting services under the Services Agreement was $300,000 in the fiscal year ending in 1997 and will be $400,000 for the fiscal year ending in 1998. The Company also reimburses SCA for its reasonable out-of-pocket costs and expenses incurred in connection with the performance of its services under the Services Agreement. The Company has agreed to indemnify SCA against all claims, liabilities, expenses, losses or damages (or actions in respect thereof) related to or arising out of actions taken (or omitted to be taken) by SCA pursuant to the terms of the Services Agreement; provided that such liabilities did not result primarily from actions taken, or omitted to be taken, by SCA in bad faith or due to SCA's gross negligence. NOTE 7 - Common Stock Traded on Nasdaq SmallCap Market On September 19, 1997, the Nasdaq Listing Qualifications Panel determined that the Company's Common Stock no longer qualified for trading on the Nasdaq National Market and would be transferred to the Nasdaq SmallCap Market. The transfer to the SmallCap Market was completed as of the close of business on October 21, 1997. 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Results of Operations The following table sets forth certain statements of operations and other data (all dollars in millions).
12 Weeks Ended 28 Weeks Ended ---------------------------- ----------------------------- October 11, October 12, October 11, October 12, 1997 1996 1997 1996 ----------- ----------- ----------- ----------- Sales $518.9 $533.4 $1,226.9 $1,260.2 Gross profit 148.7 162.2 338.1 384.1 Operating and administrative expenses (135.2) (131.8) (315.0) (312.7) Depreciation and amortization (20.3) (19.7) (44.8) (45.1) Amortization of excess reorganization value (24.1) (23.7) (56.2) (55.3) Interest expense, net (26.0) (24.6) (58.3) (56.9) Income tax benefit -- 7.0 -- 11.4 Net (loss) (56.9) (30.7) (136.2) (74.5) Sales percentage increase (decrease) (2.7%) 1.9% (2.6%) 1.3% Same store sales percentage increase (decrease) (1.6%) 2.0% (1.7%) 1.4% Gross profit as a percentage of sales 28.7 30.4 27.6 30.5 Operating and administrative expenses as a percentage of sales 26.1 24.7 25.7 24.8
Sales for the 12 (the "second quarter") and 28 (the "year to date") weeks ended October 11, 1997, decreased $14.5 million, or 2.7%, and $33.3 million, or 2.6%, respectively, as compared to the 12 and 28 weeks ended October 12, 1996. Comparable store sales, including replacement stores, decreased 1.6% and 1.7% during the second quarter and year to date, respectively, compared to the prior year. The Company opened one new and two replacement stores and closed seven stores (one due to fire) during the 28 weeks ended October 11, 1997. Same store sales decreased for the second quarter and year to date resulting primarily from continued competitive activity within the Company's operating area offset by new marketing strategies. The Company opened one new and one replacement store and closed three stores during the 28 weeks ended October 12, 1996. Gross profit, as a percentage of sales, decreased to 28.7% in the second quarter compared to the prior year mainly due to a reduction in promotional income. Gross profit, as a percentage of sales, decreased to 27.6% for the 28 weeks ended October 11, 1997, compared to the prior year. Operating and administrative expenses, as a percentage of sales, increased to 26.1% for the second quarter, which resulted primarily from the Company's occupancy costs being affected by new stores in the current quarter. Operating and administrative expenses, as a percentage of sales, increased to 25.7% for the 28 weeks ended October 11, 1997, compared to the prior year. Depreciation and amortization increased to $20.3 million for the second quarter and decreased to $44.8 million for the year to date. The increase for the quarter is due primarily to the asset values in the newly opened and replacement stores. Interest expense increased to $26.0 million and $58.3 million for the second quarter and year to date periods, respectively. The second quarter increase is principally a result of additional interest expense from the Bank Facility as amended and restated on August 29, 1997. The Company recorded no net income tax benefit or provision during the 1998 second quarter and year to date periods. A tax benefit related to the potential use of operating loss carryforwards was offset by a valuation allowance. The Company has made progress in stabilizing its financial, merchandising and operational performance. Overall margins and advertising/promotional allowance income funds have returned to more normalized levels and excessive inventory has been reduced. Also, sales in the latter part of the quarter ended October 11, 1997, showed improvement in the Company's Southern Division. 9 Liquidity and Capital Resources The Company continues to be highly leveraged. Cash interest payments totaled approximately $56 million for the 28 weeks ended October 11, 1997, and will be approximately $113 million for the fiscal year ending March 28, 1998 ("Fiscal 1998"). Capital expenditures totaled approximately $29 million for the 28 weeks ended October 11, 1997, and are expected to total between $35 and $38 million for Fiscal 1998. The Company plans to finance its working capital, debt and capital lease repayments, and capital expenditure requirements from proceeds received from the sale of convertible preferred stock, operations, its Bank Facility dated August 29, 1997, and, to a limited extent, equipment leases or purchase money mortgages. The Company's ability to fund the payment of interest, capital expenditures, and other obligations when due is dependent principally on cash generated from its operations, net of cash capital expenditures. The Company's ability to complete its capital expenditure program is dependent on operating performance. There are no significant debt principal repayments scheduled prior to June 2000. The Bank Facility provides the Company with a revolving line of credit of approximately $68 million. Of that amount, $44 million is extended on letters of credit and $5 million has been drawn at the end of the quarter. The additional funds made available to the Company through the Bank Facility raise the Company's total secured credit facility to a total of $250 million. The majority of interest payments due during the balance of Fiscal Year 1998 are payable on March 2, 1998. Approximately $36 million will be due on the Company's 12% Senior Notes and approximately $6 million will be due on the Bank Facility. Impact of New Accounting Standards In February 1997, the FASB issued FAS No. 128, "Earnings Per Share", which is effective for interim and year end periods ending after December 15, 1997. This Statement requires entities to present, on the face of the income statement for all periods presented, basic and diluted per share amounts for income from continuing operations and for net income. Basic earnings per share ("EPS") is computed by dividing income available to common stockholders by the weighted average number of shares outstanding. Fully diluted EPS has been renamed diluted EPS with a few changes in the computation methodology. Diluted EPS gives effect to all dilutive potential common shares that were outstanding during the reporting period. The computation excludes security conversions that have an anti-dilutive effect on EPS. FAS No. 128 currently has no impact upon the Company's reported per share results as all common stock equivalents are anti-dilutive. With the exception of historical information, some matters discussed herein are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to, the competitive environment in which the Company operates, and the general economic conditions in the geographic areas in which the Company operates. For additional information about the Company and its operating and financial condition, please see the Company's most recent Form 10-K for the year ended March 29, 1997, as filed with the SEC. 10 PART II - OTHER INFORMATION Item 5. Other Information On July 28, 1997, the Company filed a Proxy Statement with the Securities and Exchange Commission ("SEC") relating to an annual meeting of stockholders for its fiscal year ended March 29, 1997. The Proxy Statement was not mailed to stockholders and the annual meeting originally scheduled to be held on September 25, 1997, was re-scheduled for November 20, 1997. An amended Proxy Statement was filed with the SEC on October 31, 1997, and mailed to stockholders on November 3, 1997. During the quarter, three directors of the Company, David Y. Ying, Daniel E. Josephs and William G. Kagler, resigned. On August 1, 1997, Mr. Harris was named Chairman of the Board and Mr. Stangeland, the former Chairman, was named Chairman Emeritus. Additionally, on October 30, 1997, the Board elected four new Directors. They are: 1) Mr. Philbin, who was earlier named President and Chief Merchandising Officer of the Company on October 3, 1997; 2) Jordan H. Krimstein, retired Executive Vice President and Executive Creative Director of Campbell, Mithun Esty, Inc., a large advertising agency headquartered in Minneapolis, Minnesota; 3) Mark H. Manski, President and Founder of the RoundHill Group, Ltd., a strategic, operational, management and financial advisory firm located in Norwalk, Connecticut, and; 4) Martha A. Pritchard, a Principal with Bick Capital Advisors, Inc., a financial advisory firm located in Chapel Hill, North Carolina. Also during the quarter, the Board of Directors announced the commencement, on November 1, 1997, subject to shareholder approval, of the Associate Stock Purchase Plan (the "ASPP"). The ASPP provides associates of the Company with the opportunity to purchase the Company's Common Stock at a 15% discount through the convenience of payroll deductions. One million shares of Common Stock have been allocated to the ASPP. Item 6. Exhibits and Report on Form 8-K. (a) Exhibits Exhibit Number 27.1 Financial Data Schedule (b) Report on Form 8-K dated August 29, 1997 as filed with the SEC on September 4, 1997. 11 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. THE GRAND UNION COMPANY (Registrant) /s/ Jeffrey P. Freimark ------------------------------------------ Jeffrey P. Freimark, Executive Vice President, Chief Financial and Administrative Officer Date: November 25, 1997 12 EX-27 2 FDS --
5 This schedule contains summary financial information extracted from the consolidated financial statements and is qualified in its entirety by reference to such financial statements. 6-MOS MAR-28-1998 OCT-11-1997 29,688 0 293 0 129,848 172,595 939,383 474,715 987,835 146,629 599,721 0 0 100 (293,509) 987,835 1,226,893 1,226,893 888,760 888,760 415,969 0 58,332 (136,168) 0 (136,168) 0 0 0 (136,168) (14.03) 0
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