-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, LJF54tT0rKAX93ve/hXQyvBhgfcYQAoYQlCnBj7NAHkUlfoVJv9dcto8mNL/xPcM iFn9fte4iqHrQsjN+oPPvA== 0000715633-95-000011.txt : 19950727 0000715633-95-000011.hdr.sgml : 19950727 ACCESSION NUMBER: 0000715633-95-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950618 FILED AS OF DATE: 19950726 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: VONS COMPANIES INC CENTRAL INDEX KEY: 0000715633 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-GROCERY STORES [5411] IRS NUMBER: 381623900 STATE OF INCORPORATION: MI FISCAL YEAR END: 1230 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08452 FILM NUMBER: 95556233 BUSINESS ADDRESS: STREET 1: 618 MICHILLINDA AVE CITY: ARCADIA STATE: CA ZIP: 91007 BUSINESS PHONE: 8188217000 MAIL ADDRESS: STREET 1: 618 MICHILLINDA AVENUE CITY: ARCADIA STATE: CA ZIP: 91007 FORMER COMPANY: FORMER CONFORMED NAME: ALLIED SUPERMARKETS INC /MI//NEW/ DATE OF NAME CHANGE: 19870805 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 --------------------- FORM 10-Q (Mark one) /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 18, 1995 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 1-8452 ----------------------- THE VONS COMPANIES, INC. (Exact name of registrant as specified in its charter) Michigan 38-1623900 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 618 Michillinda Avenue, Arcadia, California 91007 (Address of principal executive offices and zip code) Registrant's telephone number, Including area code (818) 821-7000 Not Applicable (Former name, former address and former fiscal year, if changed since last report) ------------------------ 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 --- --- Shares of common stock outstanding at July 24, 1995 - 43,501,031. PART I. FINANCIAL INFORMATION Item 1: Financial Statements THE VONS COMPANIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS All amounts except share data in millions of dollars and as a percentage of sales (Unaudited)
Twelve Weeks Ended Twenty-Four Weeks Ended --------------------------------------- --------------------------------------- June 18, 1995 June 19, 1994 June 18, 1995 June 19, 1994 ------------------ ------------------ ------------------ ------------------ Sales.............. $ 1,139.5 100.0% $ 1,160.2 100.0% $ 2,282.0 100.0% $ 2,304.2 100.0% ----------- ----- ----------- ----- ----------- ----- ----------- ----- Costs and expenses: Cost of sales, buying and occupancy...... 849.9 74.5 892.7 76.9 1,700.9 74.6 1,749.9 75.9 Selling and administrative expenses....... 243.3 21.4 238.7 20.6 489.2 21.4 489.3 21.3 Amortization of excess cost over net assets acquired....... 3.5 .3 3.5 .3 6.9 .3 7.0 .3 ----------- ----- ----------- ----- ----------- ----- ----------- ----- 1,096.7 96.2 1,134.9 97.8 2,197.0 96.3 2,246.2 97.5 ----------- ----- ----------- ----- ----------- ----- ----------- ----- Operating income... 42.8 3.8 25.3 2.2 85.0 3.7 58.0 2.5 Interest expense, net.............. 15.7 1.4 16.8 1.5 31.8 1.4 32.5 1.4 ----------- ----- ----------- ----- ----------- ----- ----------- ----- Income before income tax provision........ 27.1 2.4 8.5 .7 53.2 2.3 25.5 1.1 Income tax provision........ 12.6 1.1 4.0 .3 24.7 1.1 12.0 .5 ----------- ----- ----------- ----- ----------- ----- ----------- ----- Net income......... 14.5 1.3 4.5 .4 28.5 1.2 13.5 .6 ----- ----- ----- ----- ----- ----- ----- ----- Retained earnings - beginning of period........... 221.8 190.2 207.8 181.2 ----------- ----------- ----------- ----------- Retained earnings - end of period.... $ 236.3 $ 194.7 $ 236.3 $ 194.7 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Income per common share: Net income....... $ .33 $ .10 $ .65 $ .31 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Weighted average common shares and common share equivalents...... 43,817,000 43,516,000 43,785,000 43,496,000 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- See accompanying notes to these condensed consolidated financial statements.
THE VONS COMPANIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS All amounts in millions of dollars (Unaudited)
June 18, January 1, 1995 1995 ---------- ---------- ASSETS Current assets: Cash...................................... $ 5.8 $ 9.0 Accounts receivable....................... 36.9 45.4 Inventories............................... 322.3 359.3 Other..................................... 48.0 54.1 ---------- ---------- Total current assets.................... 413.0 467.8 Property and equipment, net................. 1,194.7 1,203.0 Excess of cost over net assets acquired..... 490.9 497.8 Other....................................... 57.5 53.4 ---------- ---------- TOTAL ASSETS................................ $ 2,156.1 $ 2,222.0 ---------- ---------- ---------- ---------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current maturities of capital lease obligations and long-term debt.......... $ 8.8 $ 8.7 Accounts payable.......................... 272.9 308.4 Accrued liabilities....................... 237.8 246.8 ---------- ---------- Total current liabilities............... 519.5 563.9 Accrued self-insurance ..................... 117.0 110.9 Deferred income taxes....................... 124.6 121.9 Other noncurrent liabilities................ 68.8 69.1 Senior debt and capital lease obligations... 423.5 484.2 Subordinated debt, net...................... 319.9 319.6 ---------- ---------- Total liabilities....................... 1,573.3 1,669.6 ---------- ---------- Shareholders' equity: Common stock.............................. 4.3 4.3 Paid-in capital........................... 342.3 340.4 Retained earnings......................... 236.3 207.8 Notes receivable for stock................ (.1) (.1) ---------- ---------- Total shareholders' equity.............. 582.8 552.4 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.. $ 2,156.1 $ 2,222.0 ---------- ---------- ---------- ---------- See accompanying notes to these condensed consolidated financial statements.
THE VONS COMPANIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS All amounts in millions of dollars (Unaudited)
Twelve Weeks Ended Twenty-Four Weeks Ended ---------------------- ----------------------- June 18, June 19, June 18, June 19, 1995 1994 1995 1994 --------- --------- --------- --------- Cash flows from operating activities: Net income......................... $ 14.5 $ 4.5 $ 28.5 $ 13.5 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization of property and capital leases....................... 22.8 23.6 45.9 46.9 Amortization of excess cost over net assets acquired and other assets................. 3.8 3.7 7.4 7.4 Amortization of debt discount and deferred financing costs. 1.6 1.5 3.1 2.9 LIFO charge (credit)........... .8 (.5) 1.6 .8 Deferred income taxes.......... 6.4 2.3 13.1 2.5 Change in assets and liabilities: (Increase) decrease in accounts receivable...... (.9) 8.2 8.5 (10.6) (Increase) decrease in inventories at FIFO costs 16.6 27.3 35.4 39.9 (Increase) decrease in other current assets..... 3.8 8.4 (4.3) 4.2 (Increase) decrease in noncurrent assets........ (2.3) (10.8) (4.0) (15.7) Increase (decrease) in accounts payable......... 22.5 (10.2) 6.2 (58.3) Increase (decrease) in accrued liabilities...... (22.3) (12.6) (9.0) 12.7 Increase (decrease) in noncurrent liabilities... 1.4 2.7 5.8 1.5 --------- --------- --------- --------- Net cash provided by operating activities......................... 68.7 48.1 138.2 47.7 --------- --------- --------- --------- Cash flows from investing activities: Addition of property and equipment. (24.3) (24.9) (41.0) (56.4) Disposal of property and equipment. 1.4 1.1 3.4 2.2 --------- --------- --------- --------- Net cash used for investing activities......................... (22.9) (23.8) (37.6) (54.2) --------- --------- --------- --------- Cash flows from financing activities: Net borrowings (payments) on revolving debt................... (19.0) (13.5) (56.9) 10.5 Decrease in net outstanding drafts. (27.3) (8.8) (41.7) (2.7) Repurchases of senior subordinated debentures.......... - - (1.4) - Payments on other debt and capital lease obligations and other...... (.2) (2.0) (3.8) (3.7) --------- --------- --------- --------- Net cash provided (used) by financing activities......................... (46.5) (24.3) (103.8) 4.1 --------- --------- --------- --------- Net cash decrease.................... (.7) - (3.2) (2.4) Cash at beginning of period.......... 6.5 6.1 9.0 8.5 --------- --------- --------- --------- Cash at end of period................ $ 5.8 $ 6.1 $ 5.8 $ 6.1 --------- --------- --------- --------- --------- --------- --------- --------- Supplemental disclosures of cash flow information: Cash paid during the period for: Interest......................... $ 21.7 $ 23.1 $ 29.9 $ 30.8 --------- --------- --------- --------- --------- --------- --------- --------- Income taxes..................... $ 14.9 $ 10.9 $ 15.6 $ 14.5 --------- --------- --------- --------- --------- --------- --------- --------- Supplemental disclosures of non-cash investing and financing activity: Capital leases................... $ - $ - $ - $ .3 --------- --------- --------- --------- --------- --------- --------- --------- See accompanying notes to these condensed consolidated financial statements.
THE VONS COMPANIES,INC. AND SUBSIDIARIES NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation The financial data included herein have been prepared by the Company without audit. In the opinion of management, all adjustments of a normal recurring nature necessary to present fairly the Company's consolidated financial position at June 18, 1995 and January 1, 1995 and the consolidated results of operations and cash flows for the twelve and twenty-four weeks ended June 18, 1995 and June 19, 1994 have been made. This interim information should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's latest annual report filed on Form 10-K. Due to seasonality and other market conditions, the results for the twenty-four weeks ended June 18, 1995 should not be considered as indicative of the results to be expected for a full year. At June 18, 1995, the Company operated 326 supermarket and food and drug combination stores, primarily in Southern California, under the names Vons and Pavilions. The Company also operates a fluid milk processing facility, an ice cream plant, a bakery, and distribution facilities for meat, grocery, produce and general merchandise. Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations (Unaudited) Results of Operations For the majority of 1994, the focus of the Company's marketing efforts was communicating the lowering of shelf prices on more than 12,000 items. In 1995, the marketing focus is being placed on Vons entire customer offering, which combines high quality products and customer service with competitive prices. This "Vons Is Value" campaign was introduced in January 1995. Substantially all of the cost containment and strategic restructuring initiatives have been executed which included the closing of 26 stores and the elimination of 700 administrative and support positions. With the closure of the San Diego distribution facility in the third quarter of 1995, the cost containment and strategic restructuring program will be complete. The Company's marketing focus and its commitment to a low cost structure are long-term strategies, which are initially intended to benefit sales by funding lower prices, which in turn will improve the Company's ability to achieve strong, sustainable earnings growth. The merger of two of the Company's major competitors, Food 4 Less and Ralphs, was completed on June 14, 1995. This merger will result in a change in the composition of the Company's competitors as certain trade names are eliminated and store format conversions occur. However, the Company does not believe that the merger or its effect on the already competitive marketplace will have a material impact on the Company's sales and earnings prospects. Twelve Weeks Ended June 18, 1995 Compared with the Twelve Weeks Ended June 19, 1994 Sales. Second quarter 1995 sales were $1,139.5 million, a decrease of $20.7 million, or 1.8%, from second quarter 1994 sales reflecting the operation of 18 fewer stores. Same store sales increased 1.8% over second quarter 1994 sales. This represents the seventh consecutive quarter of an improving same store sales trend. Sales for second quarter 1995 were impacted by the "Vons Is Value" marketing campaign and the slowly improving economic environment in Southern California offset by competitive new store and remodel activity. Since June 19, 1994, the Company has opened seven stores, closed 25 stores and completed 26 store remodel projects. Costs and Expenses. Costs and expenses were $1,096.7 million for second quarter 1995, a decrease of $38.2 million, or 3.4%, from second quarter 1994. Cost of sales, buying and occupancy expenses as a percentage of sales decreased by 2.4 percentage points to 74.5% in second quarter 1995. The impact of lower prices has been offset by decreased product costs achieved through better utilization of category management, more effective promotional offerings and increased private brand sales. Selling and administrative expenses as a percentage of sales increased by 0.8 percentage points to 21.4% in second quarter 1995. This primarily reflects increased store labor expenses due to negotiated union wage rate increases effective October 1994 which were partially offset by improvements in sales per labor hour. Operating Income. Second quarter 1995 operating income was $42.8 million, an increase of $17.5 million over second quarter 1994. Operating margin increased to 3.8% in second quarter 1995 versus 2.2% in second quarter 1994. These increases primarily reflect improvements in gross margin partially offset by increased selling and administrative expenses. Operating income before depreciation and amortization of property, amortization of goodwill and other assets and LIFO charge, FIFO EBITDA, was $70.2 million, or 6.2% of sales, in second quarter 1995 compared with $52.1 million, or 4.5% of sales, in second quarter 1994. Interest Expense. Second quarter 1995 net interest expense was $15.7 million, a decrease from second quarter 1994 net interest expense of $16.8 million. Income Tax Provision. Second quarter 1995 income tax provision was $12.6 million, or a 46.5% effective tax rate. Second quarter 1994 income tax provision was $4.0 million, or a 47.1% effective tax rate. The decrease in the second quarter 1995 effective tax rate reflects the increase in income before income tax provision. Income. Second quarter 1995 net income was $14.5 million, or $.33 per share, compared with $4.5 million, or $.10 per share, in second quarter 1994. Twenty-Four Weeks Ended June 18, 1995 Compared with the Twenty-Four Weeks June 19, 1994 Sales. Sales for the twenty-four weeks ended June 18, 1995 were $2,282.0 million, a decrease of $22.2 million, or 1.0%, from the twenty-four weeks ended June 19, 1994 reflecting the operation of fewer stores. The 1995 year-to-date same store sales increased 1.7% over the 1994 year-to-date sales. Sales were impacted by the "Vons Is Value" marketing campaign and the slowly improving economic environment in Southern California offset by competitive new store and remodel activity. Costs and Expenses. Costs and expenses for the twenty-four weeks ended June 18, 1995 were $2,197.0 million, a decrease of $49.2 million, or 2.2%, from the comparable 1994 period. Cost of sales, buying and occupancy expenses as a percentage of sales were 74.6% for the twenty-four weeks ended June 18, 1995 a decrease of 1.3 percentage points compared with the twenty-four weeks ended June 19, 1994. The impact of lower prices has been offset by decreased product costs achieved through better utilization of category management, more effective promotional offerings and increased private brand sales. Selling and administrative expenses as a percentage of sales were 21.4% for the twenty-four weeks ended June 18, 1995, an increase of 0.1 percentage point over the comparable 1994 period which included a $5.0 million insurance deductible charge related to the Northridge earthquake. The increase in the year-to-date 1995 selling and administrative expenses over the comparable 1994 period primarily reflects increased store labor expenses due to negotiated union wage rate increases partially offset by improvements in sales per labor hour. Operating Income. Operating income for the twenty-four weeks ended June 18, 1995 was $85.0 million, an increase of $27.0 million over the comparable 1994 period. Operating margin increased to 3.7% in the twenty-four weeks ended June 18, 1995 versus 2.5% in the twenty-four weeks ended June 19, 1994. These increases primarily reflect the increase in gross margin. Operating income before depreciation and amortization of property, amortization of goodwill and other assets, LIFO charge and earthquake insurance deductible, FIFO EBITDA, was $139.9 million, or 6.1% of sales, for the twenty-four weeks ended June 18, 1995 compared with $118.1 million, or 5.1% of sales, for the twenty-four weeks ended June 19, 1994. Interest Expense. Net interest expense for the twenty-four weeks ended June 18, 1995 was $31.8 million, a decrease of $.7 million, from the twenty-four weeks ended June 19, 1994. Income Tax Provision. The income tax provision for the twenty-four weeks ended June 18, 1995 was $24.7 million, or a 46.4% effective tax rate. The income tax provision for the twenty-four weeks ended June 19, 1994 was $12.0 million, or a 47.1% effective tax rate. The decrease in the year-to-date 1995 effective tax rate reflects the increase in income before income tax provision. Income. Net income for the twenty-four weeks ended June 18, 1995 was $28.5 million, or $.65 per share, compared with $13.5 million, or $.31 per share, for the twenty-four weeks ended June 19, 1994. Net income for year-to-date 1994 includes a $5.0 million, or $.07 per share, insurance deductible charge related to the Northridge earthquake. Liquidity and Capital Resources The Company's primary sources of liquidity are cash flows from operations and available credit under its revolving debt. Management believes that these sources adequately provide for its working capital, capital expenditure and debt service needs. Net cash provided by operating activities was $68.7 million in second quarter 1995 compared with $48.1 million in second quarter 1994 and $138.2 million for the twenty-four weeks ended June 18, 1995 compared with $47.7 million for the twenty-four weeks ended June 19, 1994. These increases were due primarily to an increase in net income and changes in assets and liabilities generally reflecting the timing of receipts and disbursements. The ratio of current assets to current liabilities was 0.79 to 1 at June 18, 1995 compared with 0.83 to 1 at January 1, 1995. Net cash used for investing activities was $22.9 million in second quarter 1995 compared with $23.8 million in second quarter 1994 and $37.6 million for the twenty-four weeks ended June 18, 1995 compared with $54.2 million for the twenty-four weeks ended June 19, 1994. The Company opened four stores, closed 12 stores and completed 17 store remodel projects during the twenty-four weeks ended June 18, 1995. The Company anticipates that total 1995 capital expenditures will be approximately $175 million of which approximately $155 million will be cash capital expenditures. Capital expenditures in 1995 have been and will continue to be funded out of cash provided by operations, revolving debt and/or through operating leases. The capital expenditure program has substantial flexibility and is subject to revision based on various factors including, but not limited to, business conditions, changing time constraints, cash flow requirements and competitive factors. In the near term, if the Company were to reduce substantially or postpone these programs, there would be no substantial impact on current operations and it is likely that more cash would be available for debt servicing. In the long term, if these programs were substantially reduced, in the Company's opinion, its operating business and ultimately its cash flow would be adversely impacted. Net cash used by financing activities was $46.5 million in second quarter 1995 compared with $24.3 million in second quarter 1994. Net cash used by financing activities was $103.8 million for the twenty-four weeks ended June 18, 1995 compared with net cash provided by financing activities of $4.1 million for the twenty-four weeks ended June 19, 1994. The level of borrowings under the Company's revolving debt is dependent primarily upon net cash provided by operating activities, long-term borrowing activity and capital expenditure requirements. At June 18, 1995, the Company's revolving debt borrowings totaled $242.8 million compared with the June 19, 1994 revolving debt borrowings of $228.3 million. This change reflects the replacement of the $150 million Term Loan Facility with revolving debt borrowings and borrowings relating to the capital expenditure program offset by increased income from operations and net payments on debt. At June 18, 1995, the Company had available unused credit of $381.6 million under its Revolving Loan, an increase of $130.4 million since January 1, 1995. This increase is due to decreased total borrowings as well as the issuance, outside of the Revolving Loan, of a $70.4 million letter of credit which previously had been issued under the Revolving Loan. For the twenty-four weeks ended June 18, 1995, the weighted average interest cost on revolving debt was 7.5%; the corresponding bank prime rate at June 18, 1995 was 9.0%. PART II. OTHER INFORMATION Item 1. Legal Proceedings Not applicable. Item 2. Changes in Securities Not applicable. Item 3. Defaults upon Senior Securities Not applicable. Item 4. Submission of Matters to a Vote of Security Holders On May 3, 1995, the Company held its Annual Meeting of Shareholders in Arcadia, California. At that meeting, the shareholders elected all four directors nominated by the Board of Directors. The number of votes cast for, against or withheld for each elected director were as follows:
Number of Votes Cast --------------------------------- For Against Withheld ---------- -------- --------- Lawrence A. Del Santo 40,711,391 - 323,731 Robert I. MacDonnell 40,575,320 - 459,802 Peter A. Magowan 40,668,645 - 366,477 William Y. Tauscher 40,698,634 - 336,488
The other directors whose term of office as a director continued after the meeting are as follows: Steven A. Burd William S. Davila Fritz L. Duda James H. Greene, Jr. John M. Lillie Charles E. Rickershauser, Jr. Roger E. Stangeland There was no other business brought to the meeting. Item 5. Other Information Not applicable. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. 27 Financial Data Schedule (b) Reports on Form 8-K. No reports on Form 8-K were filed during the quarter ended June 18, 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. THE VONS COMPANIES, INC. Date: July 25, 1995 /s/ LAWRENCE A. DEL SANTO ---------------------------------- Lawrence A. Del Santo Chairman and Chief Executive Officer Date: July 25, 1995 /s/ PAMELA K. KNOUS ---------------------------------- Pamela K. Knous Executive Vice President and Chief Financial Officer EX-27 2
5 This schedule contains summary financial information extracted from the Company's consolidated Statement of Operations for the twenty-four weeks ended June 18, 1995, the Consolidated Balance Sheet as of June 18, 1995 and the accompanying notes thereto and is qualified in its entirety by reference to such financial statements. 1,000 6-MOS JAN-01-1995 JUN-18-1995 5,800 0 36,900 0 322,300 413,000 1,682,100 487,400 2,156,100 519,500 743,400 4,300 0 0 578,500 2,156,100 2,282,000 2,282,000 1,700,900 2,197,000 0 0 31,800 53,200 24,700 28,500 0 0 0 28,500 0.65 0.65
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