-----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, AEyytgDxNeK2TtYSAOQaCLzGBHDP6hIJNA2dadOGJWL+HZi86n3qy85zZd3K6k8j u7hgJNbGDFJheKYJj+0B8w== 0000037912-98-000031.txt : 19980724 0000037912-98-000031.hdr.sgml : 19980724 ACCESSION NUMBER: 0000037912-98-000031 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980620 FILED AS OF DATE: 19980723 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FOOD LION INC CENTRAL INDEX KEY: 0000037912 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-GROCERY STORES [5411] IRS NUMBER: 560660192 STATE OF INCORPORATION: NC FISCAL YEAR END: 1228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-06080 FILM NUMBER: 98670314 BUSINESS ADDRESS: STREET 1: P O BOX 1330 STREET 2: 2110 EXECUTIVE DR CITY: SALISBURY STATE: NC ZIP: 28145 BUSINESS PHONE: 7046338250 MAIL ADDRESS: STREET 1: P O BOX 1330 STREET 2: 2110 EXECUTIVE DR CITY: SALISBURY STATE: NC ZIP: 28145 FORMER COMPANY: FORMER CONFORMED NAME: FOOD TOWN STORES INC DATE OF NAME CHANGE: 19830510 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 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 June 20,1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ........to........... Commission File number 0-6080 FOOD LION, INC. (Exact name of registrant as specified in its charter) NORTH CAROLINA 56-0660192 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) P.O. Box 1330, 2110 Executive Drive Salisbury, NC 28145-1330 (Address of principal executive office) (Zip Code) (704) 633-8250 (Registrant's telephone number) 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 registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Outstanding shares of common stock of the Registrant as of July 22, 1998. Class A Common Stock 250,667,996 Class B Common Stock 232,727,364 Page 1 of 19 The Exhibit index is located on page 17. FOOD LION, INC. INDEX TO FORM 10-Q June 20, 1998 Part I.FINANCIAL INFORMATION Page Item 1. Financial Statements Consolidated Statements of Income for the 12 and 24 weeks ended June 20, 1998 and June 14, 1997 3-4 Consolidated Balance sheets as of June 20, 1998, January 3, 1998 and June 14, 1997 5 Consolidated Statements of Cash Flows for 12 and 24 weeks ended June 20, 1998 and June 14, 1997 6 Notes to Consolidated Financial Statements 7-8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9-13 Part II. OTHER INFORMATION Item 1. Legal Proceedings 14 Item 2. Changes in Securities 15 Item 3. Defaults Upon Senior Securities 15 Item 4. Submission of Matters to a Vote of Security 15 Holders Item 5. Other Information 15 Item 6. Exhibits and Reports on Form 8-K 15 Signatures 16 Exhibit Index 17 -2- PART I. FINANCIAL INFORMATION Item 1. Financial Statements FOOD LION, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) For the 12 Weeks ended June 20, 1998 and June 14, 1997 (Dollars in thousands except per share data) Restated Restated June 20,1998 June 14,1997 June 20,1998 June 14,1997 % % Net sales $2,353,260 $2,324,719 100.00 100.00 Cost of goods sold 1,826,657 1,821,049 77.62 78.33 Gross profit 526,603 503,670 22.38 21.67 Selling and administrative expenses 352,609 345,413 14.98 14.87 Depreciation and amortization 54,012 52,150 2.30 2.24 Operating income 119,982 106,107 5.10 4.56 Interest expense 23,154 27,761 0.99 1.19 Income before income taxes 96,828 78,346 4.11 3.37 Provision for income taxes 36,795 30,555 1.56 1.31 Net income $ 60,033 $ 47,791 2.55 2.06 Basic and diluted earnings per share $ 0.13 $ 0.10 Dividends per share $ 0.04 $ 0.03 Weighted average number of shares outstanding: Class A 244,777,891 236,087,308 Class B 232,727,364 232,760,697 Total 477,505,255 468,848,005
-3- PART I. FINANCIAL INFORMATION Item 1. Financial Statements FOOD LION, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) For the 24 Weeks ended June 20, 1998 and June 14, 1997 (Dollars in thousands except per share data) Restated Restated June 20, 1998 June 14, 1997 June 20, 1998 June 14, 1997 % % Net sales $4,658,733 $4,601,465 100.00 100.00 Cost of goods sold 3,626,772 3,604,112 77.85 78.33 Gross profit 1,031,961 997,353 22.15 21.67 Selling and administrative expenses 688,904 692,254 14.79 15.04 Depreciation and amortization 106,430 100,847 2.28 2.19 Operating income 236,627 204,252 5.08 4.44 Interest expense 50,768 54,446 1.09 1.18 Income before income taxes 185,859 149,806 3.99 3.26 Provision for income taxes 70,592 58,424 1.52 1.27 Net income $ 115,267 $ 91,382 2.47 1.99 Basic and diluted earnings per share $ 0.24 $ 0.19 Dividends per share $ 0.07 $ 0.07 Weighted average number of shares outstanding: Class A 240,556,329 236,141,377 Class B 232,727,364 232,831,531 Total 473,283,693 468,972,908
-4- FOOD LION, INC. CONSOLIDATED BALANCE SHEETS (Dollars in thousands) (Unaudited) Restated June 20, 1998 January 3, 1998 June 14, 1997 Assets Current assets: Cash and cash equivalents $ 45,702 $ 56,147 $ 26,638 Receivables 157,905 166,790 142,006 Inventories 1,000,916 982,744 974,953 Prepaid expenses and other 52,631 28,234 67,794 Deferred tax asset 63,123 63,123 75,807 Total current assets 1,320,277 1,297,038 1,287,198 Property, at cost, less accumulated depreciation 1,832,946 1,842,269 1,831,187 Deferred tax asset 51,980 51,980 8,619 Intangible assets 267,046 267,656 274,117 Total assets $3,472,249 $3,458,943 $3,401,121 Liabilities and Shareholders' Equity Current Liabilities: Short-term borrowings $ - $ 80,000 $ - Accounts payable, trade 508,585 460,714 477,972 Accrued expenses 321,621 351,173 355,108 Capital lease obligations - current 21,229 20,427 20,872 Long term debt - current 2,646 2,525 905 Other liabilities - current 9,911 8,756 6,992 Total current liabilities 863,992 923,595 861,849 Long-term debt 470,797 586,355 633,905 Capital lease obligations 491,178 489,928 479,338 Other liabilities 120,686 125,880 143,202 Total liabilities 1,946,653 2,125,758 2,118,294 Shareholders' Equity: Class A non-voting common stock, $.50 par value 125,299 118,112 118,033 Class B voting common stock, $.50 par value 116,364 116,364 116,364 Additional capital 105,999 794 24 Retained earnings 1,177,934 1,097,915 1,048,406 Total shareholders' equity 1,525,596 1,333,185 1,282,827 Total liabilities and shareholders' equity $3,472,249 $3,458,943 $3,401,121
-5- FOOD LION, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) For the 24 Weeks ended June 20, 1998 and June 14, 1997 (Dollars in thousands) 24 Weeks Restated June 20,1998 June 14,1997 Cash flows from operating activities Net income $115,267 $91,382 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 106,430 100,847 (Gain) Loss on disposals of property (1,841) 1,057 Deferred income taxes - (5,850) Changes in operating assets and liabilities: Receivables 8,885 9,157 Inventories (18,172) 90,790 Prepaid expenses and other (24,397) (39,712) Accounts payable and accrued expenses 18,319 (16,074) Other liabilities (4,039) (11,358) Total adjustments 85,185 128,857 Net cash provided by operating activities 200,452 220,239 Cash flows from investing activities Capital expenditures (141,878) (145,846) Proceeds from disposal of property 66,895 5,121 Net cash used in investing activities ( 74,983) (140,725) Cash flows from financing activities Net payments under short-term borrowings (80,000) (250,010) Principal payments on long-term debt (4,992) (161,274) Proceeds from issuance of long-term debt - 300,000 Principal payments under capital lease obligations (17,621) (10,320) Dividends paid (35,248) (31,390) Repurchase of common stock - (2,960) Proceeds from issuance of common stock 1,947 707 Net cash used in financing activities (135,914) (155,247) Net decrease in cash and cash equivalents (10,445) (75,733) Cash and cash equivalents at beginning of period 56,147 102,371 Cash and cash equivalents at end of period $ 45,702 $ 26,638 -6- Notes to Consolidated Financial Statements (Dollars in thousands) 1) Basis of Presentation: The accompanying financial statements are presented in accordance with the requirements of Form 10-Q and, consequently, do not include all the disclosures normally required by generally accepted accounting principles or those normally made in the Annual Report on Form 10-K of Food Lion, Inc. (the "Company"). Accordingly, the reader of this Form 10-Q should refer to the Company's Form 10-K for the year ended January 3, 1998 for further information. The financial information has been prepared in accordance with the Company's customary accounting practices and has not been audited. In the opinion of management, the financial information includes all adjustments consisting of normal recurring adjustments necessary for a fair presentation of interim results. 2) Supplemental Disclosure of Cash Flow Information: Selected cash payments and non-cash activities incurred during the 24 week period of 1998 and 1997 were as follows: June 20, 1998 June 14,1997 Cash payments for income taxes $93,273 $101,676 Cash payments for interest, net of amounts capitalized 52,952 50,302 Non-cash investing and financing activities: Capitalized lease obligations incurred for store properties 31,975 31,594 Capitalized lease obligations terminated for store properties 12,302 12,069 Conversion of long-term debt to stock 110,445 0 The Company considers all highly liquid investment instruments purchased with an original maturity of three months or less to be cash equivalents. During the second quarter of 1998 the Company called for redemption its outstanding convertible subordinated debentures totaling $113.8 million through either (1) payment to the bond holders -7- at 101% of the principal together with accrued interest or (2) conversion of the debentures into shares of the Company's Class A Common Stock. Most bond holders elected conversion resulting in the issuance of 13,942,371 shares of Class A Common Stock. The Company paid $3.8 million in principal, premium and accrued interest to remaining bond holders. 3) Inventories Inventories are stated at the lower of cost or market. Inventories valued using the last-in, first-out(LIFO) method comprised approximately 84% and 83% of inventories, in 1998 and 1997, respectively. Meat, produce and deli inventories are valued on the first-in, first-out (FIFO) method. If the FIFO method were used entirely, inventories would have been $119.9 million and $110.6 million greater at June 20, 1998 and June 14, 1997, respectively. Application of the LIFO method resulted in increases in the cost of goods sold of $5.5 million and $6.2 million for the 24 weeks ended June 20, 1998 and June 14, 1997, respectively. 4) Restatement of 1997 Financial Statements The Company previously determined that its financial statements for the quarter and the 24 weeks ended June 14, 1997 should be restated to reflect adjustments related to the acquisition of Kash n' Karry and store closing costs. The impact of the restatement on the consolidated statement of income for the second quarter and year to date ended June 14, 1997 is as follows: Amounts Restated Amounts Restated Previously Amounts - Previously Amounts Reported - Second Reported - - YTD Second Quarter YTD Quarter Operating income $109,284 $106,107 $210,608 $204,252 Net income 49,729 47,791 95,259 91,382 Basic earnings per share $0.11 $0.10 $0.20 $0.19 5) Reclassification Certain financial statement items have been reclassified to conform to the current year's format. 6) Year 2000 Disclosure The Company has and will continue to make certain investments in software systems and applications to ensure the Company is year 2000 compliant. The financial impact to the Company has not been and is not anticipated to be material to its financial position or results of operations in any given year. -8- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. RESULTS OF OPERATIONS (12 and 24 weeks ended June 20, 1998 compared to 12 and 24 weeks ended June 14, 1997) The Company's sales for the second quarter and year to date of 1998 were $2.4 billion and $4.7 billion, respectively, resulting in increases of 1.2% over the corresponding periods of 1997. During the second quarter of 1998 total sales were impacted by a change in the method of collecting sales tax on products discounted through the MVP customer(MVP)and Preferred Customer (PCC) loyalty card programs. Beginning in May 1998, after receiving permission from all state departments of revenue, the Company began collecting sales tax on the net sales price, after considering the MVP/PCC discount granted, rather than on the full retail price of the MVP/PCC items. The related impact on the quarter was to reduce reported sales by approximately $26 million. This change does not impact the same store sales calculation or the Company's net income, as gross profit and expense dollars are the same under either method. The only difference is that under the new method the discount granted is reflected in sales as opposed to cost of goods sold under the original method. The following table illustrates the impact of the change. Second Quarter 1998 Dollars Dollars % % (Dollars in thousands) As Reported Adjusted As Adjusted (New Method) (Original Reported (Original Method) (New Method) Method) Net sales $2,353,260 $2,379,642 100.00 100.00 Cost of goods sold 1,826,657 1,853,039 77.62 77.87 Gross profit 526,603 526,603 22.38 22.13 Selling and administrative 352,609 352,609 14.98 14.82 expenses Depreciation and 54,012 54,012 2.30 2.27 amortization Operating income 119,982 119,982 5.10 5.04 Interest expense 23,154 23,154 0.99 0.97 Income before income taxes 96,828 96,828 4.11 4.07 Provision for income taxes 36,795 36,795 1.56 1.55 Net income 60,033 60,033 2.55 2.52 Basic and diluted earning $0.13 $0.13 per share Weighted average number of 477,505 477,505 shares outstanding -9- This change will reduce sales reported in future quarters by approximately two percent. The adjusted percentage of sales figures included in the table above are more comparable to figures reported in previous quarters. Current year sales increased 4.8% and 4.9% over the second quarter and year to date 1997, respectively, excluding 1997 sales for stores in the Company's Southwest market which closed during the fourth quarter of 1997. Same store sales increased 2.7% for second quarter and 2.2% year to date. The Company's 1998 business plan includes opening 75 new stores, closing 32 stores (approximately 14 of these closings will be relocations) and renovating approximately 133 existing stores. With this growth plan, the Company anticipates a net increase in store square footage of 8.0% in 1998. As of June 20, 1998, the Company had opened 33 new stores, closed 15 stores (of which seven were relocations), and completed renovations to 56 existing stores. Gross profits of 22.38% for the second quarter and 22.15% year to date (or 22.13% and 22.03%, respectively, adjusted to reflect the original method of collecting sales tax), compared favorably against prior year gross profits of 21.67% both in the second quarter and year to date. The increase in gross profit is due to continued category management initiatives and solid results in higher margin areas such as perishables and frozen foods. The second quarter LIFO charge was $2.1 million. The Company's internal testing for the second quarter indicated a minimal inflation rate of 0.5% stemming primarily from an increase in tobacco and paper prices, an increase in dairy prices due to the rising cost of butterfat, and an increase in canned tuna and pineapple prices resulting from the impact of poor weather conditions (El Nino). These increases were offset by deflation in the grocery category primarily due to a decrease in coffee and juice prices. All other significant merchandise categories had no inflation. The current LIFO provision ($5.5 million year to date) is adequate to cover this level of inflation. For the second quarter of 1998, selling and administrative expenses were $352.6 million or 14.98% of sales (14.82% adjusted to reflect the original method of collecting sales tax) as compared to $345.4 million or 14.87% of sales in the corresponding period of the prior year. Selling and administrative expenses include the write-off of $1.4 million in debt issuance costs related to the convertible subordinated debentures which were redeemed during second quarter. Year to date selling and administrative expenses of 14.79% improved over last year resulting from (1) a continued focus on cost containment, (2) improved sales performance, (3) the fourth quarter 1997 closing of the under-performing stores in the Company's Southwest market, and (4) improvement in the cost structure at Kash n' Karry due to the integration of all administrative functions during 1997. -10- During the quarter the Company recorded $3.9 million in store closing costs (included in Selling and Administrative Expenses on the Company's Consolidated Statement of Income), related to planned store closings. These costs are included in "Additions" in the table below. Store Closing Costs Reduction of Asset Lease Accrued (Dollars in millions) Values Liabilities Expenses Total Balance at March 28,1998 $38.6 $125.6 $8.6 $172.8 Additions 0.0 3.5 0.4 3.9 Reductions -0.2 -6.1 -6.0 -12.3 Reclassifications 1.3 -2.5 1.2 0.0 Recognition of unused 0.0 0.0 0.0 0.0 reserves Balance at June 20, 1998 $39.7 $120.5 $4.2 $164.4 Significant reductions in the Company's store closing costs primarily include fees for lease terminations and on-going rent payments made on remaining lease obligations. The Company continues to market the remaining closed stores and distribution center in the Southwest market, which the Company exited in the fourth quarter of 1997. At the end of the second quarter 1998, 52 of the 61 stores in the Southwest market had been disposed. As of June 20, 1998 the Company has received $85.1 million in proceeds related to these disposition efforts since closing the stores in November of 1997. At the end of the second quarter of 1998 the Company had $164.4 million in store closing costs related to 154 stores (149 leased and 5 owned) and two distribution centers. Disposition efforts on the properties related to these stores(leases, equipment and store buildings) began immediately following the store closing and will continue until all related properties are disposed. Depreciation and amortization of $54.0 million was 2.30% of sales compared to 2.24% of sales in the second quarter of 1997. Year to date depreciation and amortization was $106.4 million or 2.28% of sales. The quarter and year to date increases are primarily due to leasehold improvements and equipment purchases for new stores and renovations since the second quarter of last year. Interest expense of $23.2 million for the second quarter of 1998 and $50.8 million year to date decreased $4.6 million and $3.7 million, respectively, compared to the same periods of 1997 primarily due the pre-payment of $50 million in note purchase agreements during the fourth quarter of 1997, offset by an increase in interest expense on store capital leases resulting from new store openings and renovations. -11- Net income for the quarter was $60.0 million or 2.55% of sales as compared to 2.06% of sales in the restated second quarter of the prior year. Basic and diluted earnings per share were $.13 as compared to $.10 restated last year. Liquidity and Capital Resources Cash provided by operating activities totaled $200.5 million for the 24 weeks ended June 20, 1998 compared with $220.2 million for the same period last year. The decrease was primarily due to an increase in inventory levels offset by an increase in accounts payable and accrued expenses. Capital expenditures totaled $141.9 million for the 24 weeks ended June 20, 1998 compared with $145.8 million for the same period in 1997. The Company opened 33 new stores, closed 15 stores (including seven relocations), and completed the renovation of 56 existing stores through the end of second quarter of 1998. Food Lion plans to open a total of 75 new stores in 1998 and to renovate approximately 133 stores. The Company anticipates that the majority of the new stores will be opened under conventional leasing arrangements. Capital expenditures are projected to total approximately $360 million in 1998. These capital expenditures will be financed through funds generated from operations, existing bank and credit lines, and other debt, if necessary. The Company maintains the following bank and credit lines: $250 million commercial paper program under which no borrowings were outstanding during the first and second quarters of 1998 and 1997. A revolving credit facility with a syndicate of commercial banks providing $700 million in committed lines of credit, of which $350 million expires in December, 1998 and the remaining $350 million will expire in December, 2001. There were no outstanding borrowings as the end of the second quarter of 1998 or during 1997. Additional short-term committed lines of credit totaling $35 million which are available when needed. The Company is not required to maintain compensating balances related to these lines of credit, and borrowings may occur periodically. There were no borrowings as of June 20, 1998 or June 14, 1997. During the second quarter of 1998, the Company had average borrowings of $6.4 million at a daily weighted average interest rate of 5.6% with a maximum amount outstanding of $23 million. -12- Periodic short-term borrowings may be placed under informal credit arrangements, which are available to the Company at the discretion of the lender. Borrowings for the second quarter were as follows (see table below): Informal Credit Arrangements (dollars in millions) 1998 1997 Outstanding borrowings at end of second quarter $0 $0 Average borrowings $15.8 $13.4 Maximum amount outstanding $72.0 $55.0 Daily weighted average interest rate 5.62% 5.72% During the second quarter of 1998, the Company did not purchase any shares of Class A or Class B stock under the Company's $100 million stock repurchase plan which expires in May of 1999. The Company is currently preserving its liquidity for growth opportunities. Other Information provided by the Company, including written or oral statements made by its representatives, may contain forward-looking information as defined in the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, which address activities, events or developments that the Company expects or anticipates will or may occur in the future, including such things as expansion and growth of the Company's business, future capital expenditures and the Company's business strategy, are forward-looking statements. In reviewing such information it should be kept in mind that actual results may differ materially from those projected or suggested in such forward-looking statements. This forward-looking information is based on various factors and was derived utilizing numerous assumptions. Many of these factors have previously been identified in filings or statements made by or on behalf of the Company, including filings with the Securities and Exchange Commission of Forms 10-Q, 10-K and 8-K. Important assumptions and other important factors that could cause actual results to differ materially from those set forth in the forward - looking statements include: changes in the general economy or in the Company's primary markets, changes in consumer spending, competitive factors, the nature and extent of continued consolidation in the industry, changes in the rate of inflation, changes in state or federal legislation or regulation, adverse determinations with respect to litigation or other claims, inability to develop new stores or complete remodels as rapidly as planned, stability of product costs - supply or quality control problems with the Company's vendors, and uncertainties detailed from time-to-time in the Company's filings with the Securities and Exchange Commission. In addition, with respect to the anticipated proceeds from the disposition of assets in the Southwest, additional factors that could cause results to differ materially include conditions in the real estate market and general economic conditions in the local communities where the assets are located. -13- Part II OTHER INFORMATION Item 1. Legal Proceedings Longman et al. v. Food Lion,Inc. and Tom E.Smith,4:92 CV 696 (M.D.N.C.)(complaint filed November 12, 1992, and amended January 23, 1993)("Longman");and Feinman et al. v. Food Lion, Inc. and Tom E. Smith,4:92 CV 705(M.D.N.C.)(complaint filed November 13, 1992)("Feinman"). The Longman and Feinman actions asserted claims against the Company and Tom E.Smith under Section 10(b) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 for securities fraud and claims of common law fraud and negligent misrepresentation. The actions had been consolidated for discovery and trial purposes. On June 18, 1998, the court granted Food Lion's and Mr. Smith's motions for summary judgment, and dismissed these actions in their entirety as to both Food Lion and Mr.Smith.The plaintiffs have filed a notice of appeal in these actions. In re Food Lion, Inc. Fair Labor Standards Act "Effective Scheduling" Litigation In re Food Lion, Inc., Fair Labor Standards Act "Effective Scheduling" litigation, MDL Docket No. 929 involves a number of actions against the Company which were transferred by the Multi-District Litigation Panel to the United States District Court for the Eastern District of North Carolina for pretrial proceedings (the "Multi-District Action"). The pretrial proceedings are complete and pursuant thereto, a number of claims were dismissed. Other cases settled (North Carolina, 1994 and 1995; Virginia, 1993 and 1994; Tennessee,1994; Florida, 1997; and South Carolina, 1998) in an aggregate amount (inclusive of attorneys' fees where awarded) not material to the Company's financial condition or results of operations. Approximately 67 claims dismissed from the North Carolina cases were consolidated and certified for appeal to the United States Court of Appeals for the Fourth Circuit. A number of claims dismissed from the South Carolina and Florida cases were added to the appeal. On June 4, 1998, the Fourth Circuit decided in favor of Food Lion on all appeals, upholding the District Court's dismissal of claims from the Multi-District Action (In re: Food Lion, Incorporated, Fair Labor Standards Act "Effective Scheduling" Litigation, No.MISC-92-198-5-F, CA-92-503-2 (4th Cir. June 4, 1998)(per curian).In the first quarter of 1998, a petition for attorneys' fees was filed with respect to the Florida claims and remains pending. Based upon currently available information, the Company believes that any resulting liability will not have a material adverse effect on the financial condition or results of operations of the Company. -14- Item 2. Change in Securities This item is not applicable. Item 3. Defaults Upon Senior Securities This item is not applicable. Item 4. Submission of Matters to a Vote of Security Holders This item is not applicable. Item 5. Other Information This item is not applicable. Item 6. Exhibits and Reports on Form 8-K (a). Exhibits 27 Financial Data Schedule (b). The Company did not file a report on Form 8-K for the period ended June 20, 1998. -15- 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. FOOD LION, INC. Registrant DATE July 23, 1998 BY: Laura Kendall Laura Kendall Vice President of Finance Chief Financial Officer Principal Financial Officer -16- EXHIBIT INDEX SEQ. PAGE Exhibit # DESCRIPTION NO. 27 Financial Data Schedule 18-19 -17- EX-27 2
5 1,000 6-MOS JAN-02-1999 JUN-20-1998 45702 0 157905 0 1000916 1320277 2911016 1078070 3472249 863992 470797 0 0 347662 1177934 3472249 4658733 4658733 3626772 3626772 0 0 50768 185859 70592 115267 0 0 0 115267 .24 .24
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