-----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, PjhYKzjcPsGjAYPqKefjLE2plGPCRUvIU96q2088rkiwfovVOFk2IzPMNXfdIjng yyhJeC0soMJunmXOeMnuKA== 0000715633-96-000007.txt : 19960501 0000715633-96-000007.hdr.sgml : 19960501 ACCESSION NUMBER: 0000715633-96-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960324 FILED AS OF DATE: 19960430 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: 96553595 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 March 24, 1996 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 April 24, 1996 - 43,694,395 PART 1. 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 ----------------------------------------------- March 24, 1996 March 26, 1995 -------------------- -------------------- Sales................................. $ 1,205.6 100.0% $ 1,142.5 100.0% ----------- ------ ----------- ------ Costs and expenses: Cost of sales, buying and occupancy. 898.3 74.5 851.0 74.5 Selling and administrative expenses. 258.5 21.4 245.9 21.5 Amortization of excess cost over net assets acquired............... 3.5 .3 3.4 .3 ----------- ------ ----------- ------ 1,160.3 96.2 1,100.3 96.3 ----------- ------ ----------- ------ Operating income...................... 45.3 3.8 42.2 3.7 Interest expense, net................. 13.5 1.2 16.1 1.4 ----------- ------ ----------- ------ Income before income tax provision.... 31.8 2.6 26.1 2.3 Income tax provision.................. 14.3 1.1 12.1 1.1 ----------- ------ ----------- ------ Net income............................ 17.5 1.5 14.0 1.2 ------ ------ ------ ------ Retained earnings - beginning of period.............................. 275.9 207.8 ----------- ----------- Retained earnings - end of period..... $ 293.4 $ 221.8 ----------- ----------- ----------- ----------- Income per common and common equivalent share: Net income.......................... $ .39 $ .32 ----------- ----------- ----------- ----------- Weighted average common and common equivalent shares................... 44,503,000 43,753,000 ----------- ----------- ----------- ----------- 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) ASSETS
March 24, December 31, 1996 1995 --------- ------------ Current assets: Cash...................................... $ 7.0 $ 9.4 Accounts receivable....................... 36.8 31.7 Inventories............................... 341.2 350.7 Other..................................... 60.5 60.5 --------- ------------ Total current assets.................... 445.5 452.3 Property and equipment, net................. 1,195.4 1,192.5 Excess of cost over net assets acquired..... 479.3 482.8 Other....................................... 58.8 58.9 --------- ------------ TOTAL ASSETS................................ $ 2,179.0 $ 2,186.5 --------- ------------ --------- ------------ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current maturities of long term debt and capital lease obligations............... $ 24.5 $ 25.7 Accounts payable.......................... 297.6 304.2 Accrued liabilities....................... 291.5 263.5 --------- ------------ Total current liabilities............... 613.6 593.4 Accrued self-insurance...................... 131.8 128.0 Deferred income taxes....................... 121.2 118.9 Other noncurrent liabilities................ 63.6 65.0 Senior debt and capital lease obligations... 298.7 352.2 Subordinated debt, net...................... 306.4 305.7 --------- ------------ Total liabilities......................... 1,535.3 1,563.2 --------- ------------ Shareholders' equity: Common stock.............................. 4.4 4.3 Paid-in capital........................... 346.0 343.2 Retained earnings......................... 293.4 275.9 Notes receivable for stock................ (.1) (.1) --------- ------------ Total shareholders' equity.............. 643.7 623.3 --------- ------------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.. $ 2,179.0 $ 2,186.5 --------- ------------ --------- ------------ 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 ----------------------- March 24, March 26, 1996 1995 --------- --------- Cash flows from operating activities: Net income.................................................. $ 17.5 $ 14.0 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization of property and capital leases................................................ 22.9 23.1 Amortization of excess cost over net assets acquired and other assets...................................... 3.7 3.6 Amortization of debt discount and deferred financing costs................................................. 1.5 1.5 LIFO charge............................................. 1.6 .8 Deferred income taxes................................... 2.3 6.7 Change in assets and liabilities: (Increase) decrease in accounts receivable.......... (5.1) 9.4 (Increase) decrease in inventories at FIFO costs.... 7.9 18.8 (Increase) decrease in other current assets......... - (8.1) (Increase) decrease in noncurrent assets............ (1.5) (1.7) Increase (decrease) in accounts payable............. (5.5) (16.3) Increase (decrease) in accrued liabilities.......... 28.0 13.3 Increase (decrease) in noncurrent liabilities....... 2.4 4.4 --------- --------- Net cash provided by operating activities..................... 75.7 69.5 --------- --------- Cash flows from investing activities: Addition of property and equipment.......................... (27.1) (16.7) Disposal of property and equipment.......................... 1.9 2.0 --------- --------- Net cash used by investing activities......................... (25.2) (14.7) --------- --------- Cash flows from financing activities: Net payments on revolving debt.............................. (50.8) (37.9) Decrease in net outstanding drafts.......................... (1.1) (14.4) Repurchases of senior subordinated debentures............... - (1.4) Payments on other debt, capital lease obligations and other. (1.0) (3.6) --------- --------- Net cash used by financing activities......................... (52.9) (57.3) --------- --------- Net cash decrease............................................. (2.4) (2.5) Cash at beginning of period................................... 9.4 9.0 --------- --------- Cash at end of period......................................... $ 7.0 $ 6.5 --------- --------- --------- --------- Supplemental disclosures of cash flow information: Cash paid during the period for: Interest................................................ $ 7.0 $ 8.2 --------- --------- --------- --------- Income taxes............................................ $ 2.1 $ .7 --------- --------- --------- --------- Supplemental disclosures of non-cash investing and financing activity: Capital leases.......................................... $ 5.7 $ - --------- --------- --------- --------- 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 March 24, 1996 and December 31, 1995 and the consolidated results of operations and cash flows for the twelve weeks ended March 24, 1996 and March 26, 1995 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 twelve weeks ended March 24, 1996 should not be considered as indicative of the results to be expected for a full year. At March 24, 1996, the Company operated 329 supermarket and food and drug combination retail stores, under the names Vons and Pavilions. The Company's marketing territory includes Southern and Central California and Clark County, Nevada. 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 to support the store network. Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations (Unaudited) Results of Operations Twelve Weeks Ended March 24, 1996 Compared with the Twelve Weeks Ended March 26, 1995 Sales. First quarter 1996 sales were $1,205.6 million, an increase of $63.1 million, or 5.5%, over first quarter 1995 sales. Same store sales increased 4.2% over first quarter 1995 sales. The increase in sales reflects the favorable consumer response to improved customer service, the "Vons Is Value" marketing campaign and the improving economic environment in Southern California. Since March 26, 1995, the Company has opened 16 stores, closed 12 stores and completed 34 store remodel projects. Costs and Expenses. Cost of sales and buying and occupancy expenses as a percentage of sales in first quarter 1996 of 74.5% were flat compared with first quarter 1995. The cost of increased promotional activities in first quarter 1996 was offset by benefits achieved from category management and increased private brand sales. Selling and administrative expenses as a percentage of sales decreased by 0.1 percentage point to 21.4% in first quarter 1996. The cost of higher store service levels was fully offset by a more efficient mix of store labor. Operating Income. First quarter 1996 operating income was $45.3 million, or 3.8% of sales, versus $42.2 million, or 3.7% of sales. Operating income before depreciation and amortization of property, amortization of goodwill and other assets and LIFO charge ("FIFO EBITDA") was $73.5 million, or 6.1% of sales, in first quarter 1996 compared with $69.7 million, or 6.1% of sales, in first quarter 1995. Interest Expense. First quarter 1996 net interest expense was $13.5 million, a decrease of $2.6 million, or 16.1%, from first quarter 1995. This decrease was due primarily to lower average debt borrowings. Income Tax Provision. First quarter 1996 income tax provision was $14.3 million, or a 45.0% effective tax rate. First quarter 1995 income tax provision was $12.1 million, or a 46.3% effective tax rate. The decrease in the first quarter 1996 effective tax rate reflects the increase in income before income tax provision. The effective tax rate is impacted by amortization of excess cost over net assets acquired, the majority of which is not deductible for tax purposes. Income. First quarter 1996 net income was $17.5 million, or $.39 per share, compared with $14.0 million, or $.32 per share, in first quarter 1995. Liquidity and Capital Resources The Company's primary sources of liquidity are cash flows from operations and available credit under its Revolving Loan. Management believes that these sources adequately provide for its working capital, capital expenditure and debt service needs. Net cash provided by operating activities was $75.7 million in first quarter 1996 compared with $69.5 million in first quarter 1995. The ratio of current assets to current liabilities was 0.73 to 1 at March 24, 1996 compared with 0.76 to 1 at December 31, 1995. Net cash used by investing activities was $25.2 million in first quarter 1996 compared with $14.7 million in first quarter 1995. The Company opened four stores, closed three stores and completed seven store remodel projects during the twelve weeks ended March 24, 1996. Capital expenditures in 1996 have been and will continue to be funded out of cash provided by operations, the Revolving Loan 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 for financing activities was $52.9 million in first quarter 1996 compared with $57.3 million in first quarter 1995. The level of borrowings under the Company's revolving debt is dependent primarily upon net cash provided by operating activities and capital expenditure requirements. At March 24, 1996, the Company's revolving debt borrowings totaled $127.0 million compared with the December 31, 1995 revolving debt borrowings of $177.8 million. This decrease primarily reflects the excess of cash provided from operating activities of $75.7 million over capital expenditures of $27.1 million. At March 24, 1996, the Company had available unused credit of $497.9 million under its Revolving Loan. For the twelve weeks ended March 24, 1996, the weighted average interest cost on revolving debt was 7.2%; the corresponding bank prime rate at March 24, 1996 was 8.25%. Cautionary Statement for Purposes of "Safe Harbor Provisions" of the Private Securities Litigation Reform Act of 1995 Except for historical facts, all matters discussed in this report which are forward looking involve risks and uncertainties. Potential risks and uncertainties include, but are not limited to, competitive pressures from other major supermarket operators, economic conditions in the Company's primary markets and the other uncertainties detailed from time to time in the Company's Securities and Exchange Commission filings. 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 Not applicable. Item 5. Other Information Not applicable Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. 10.11.2 Amendment 1996-1 dated February 20, 1996 to The Vons Companies, Inc, 401(k) Wraparound Plan effective January 1, 1996. 27 Financial Data Schedule. (b) Reports on Form 8-K. No reports on Form 8-K were filed during the quarter ended March 24, 1996. 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: April 26, 1996 /s/ LAWRENCE A. DEL SANTO -- ----------------------------------- Lawrence A. Del Santo Chairman and Chief Executive Officer Date: April 26, 1996 /s/ PAMELA K. KNOUS -- ----------------------------------- Pamela K. Knous Executive Vice President, Chief Financial Officer and Treasurer EX-27 2
5 This schedule contains summary financial information extracted from the Company's Consolidated Statement of Operations for the twelve weeks ended March 24, 1996, the Consolidated Balance Sheet as of March 24, 1996 and the accopanying notes thereto and is qualified in its entirety by reference to such financial statements. 1,000 3-MOS DEC-31-1995 JAN-01-1996 MAR-24-1996 7,000 0 36,800 0 341,200 445,500 1,732,500 537,100 2,179,000 613,600 605,100 0 0 4,400 639,300 2,179,000 1,205,600 1,205,600 898,300 1,160,300 0 0 13,500 31,800 14,300 17,500 0 0 0 17,500 0.39 0.39
EX-10.11.2 3 EXHIBIT 10.11.2 AMENDMENT 1996-1 THE VONS COMPANIES,INC. 401(k) WRAPAROUND PLAN WHEREAS, The Vons Companies, Inc. ("Company") maintains The Vons Companies, Inc, 401(k) Wraparound Plan ("Plan"); WHEREAS, the Compensation Committee has the right to amend the Plan; and WHEREAS, the Compensation Committee now desires to amend the Plan to provide that newly-hired officers may participate in the Plan in their initial year of employment, without regard to whether their compensation will exceed the limit under Section 401(a)(17) of the Internal Revenue Code, and to conform with certain changes made to Vons Personal Choice Profit Sharing Plan; NOW, THEREFORE, this Amendment 1996-1 is hereby adopted effective January 1, 1996, except as specified below: 1. The definition of Account contained in Section 2.1 is amended to read as follows: "Account shall mean the account maintained for each ------- Participant to reflect (i) the Compensation (and, prior to 1995, the Profit-related Flexdollar Contributions) deferred by the Participant, (ii) the Company Match, (iii) the Discretionary Company Match, (iv) the Make-up Company Contribution, and (v) Investment Equivalents." 2. The definition of Company Match is amended to read as follows: "Company Match shall mean the additional amount credited ------------- to a Participant's Account as described in Section 5.2." 3. The definition of Compensation contained in Section 2.1 is amended by adding the following to the end of the definition: "Effective January 1, 1995, Compensation means Compensation as defined in the Profit Sharing Plan, but including amounts deferred under this Plan, and without regard to the limitation under Code Section 401(a)(17)." 4. The following new definition of Make-up Company Contribution is hereby added to Section 2.1: "Make-up Company Contribution shall mean the amount credited ---------------------------- to a Participant's Account as described in Section 5.6." 2 5. The following is hereby added to the end of the definition of "Profit-related Flexdollar Contribution" contained in Section 1.2: "Effective January 1, 1995, there shall be no further Profit-related Flexdollar Contributions to this Plan. Any reference to Profit-related Flexdollar Contributions shall apply only to such contributions made prior to January 1, 1995." 6. The following is hereby added to the end of Article III: "The Compensation Committee may designate any officer of the Company who is a management or highly compensated employee as being eligible for participation in the Plan for the Plan Year during which such officer was initially employed by the Company, notwithstanding the fact that such officer's Compensation for such Plan Year does not exceed the limit under Section 401(a)(17) of the Code. Such an officer shall be considered eligible to participate in the Plan as of the date specified by the Compensation Committee, and may make the mid-year deferral election described in Section 4.2. For 1995 only, the Compensation Committee may also designate any officer as a Participant for purposes of the contribution described in Section 5.7; provided that officers so designated shall no be entitled to make other 3 deferral or receive allocation of other contributions for 1995." 7. Section 4.1(d) is deleted. 8. Section 5.1 is amended by adding the following to the end of the section: "Effective for Plan Years commencing on or after January 1, 1995, the Account for each Participant shall be credited with the Make-up Company Contribution calculated pursuant to Section 5.6." 9. Section 5.2 is amended by adding the following to the end of the section: "Effective January 1, 1996, the Company Match shall be equal to 1% of the Participant's Contribution in excess of the limitation under Code Section 401(a)(17) applicable for the Plan Year. The Company Match shall only be allocated to Participants who contribute, for the entire Plan Year, at least 1% of their Compensation in excess of the limitation under Code Section 401(a)(17). Effective January 1, 1996, the Company Match shall be credited to the Participant's Account as of the December 31 of the Plan Year in which such amount is earned; provided, however, that the Investment Equivalents on such amounts shall commence to be credited as 4 of the following January 1. No Company Match shall be credited for 1995." 10. The following is hereby added at the end of the first paragraph of Section 5.4: "The new rate of return established by the Compensation Committee as a Investment Equivalent shall apply to the Make-up Company Contribution for the Plan Year for which the new rate of return is established, as well as the Make-up Company Contribution previously credited for previous Plan Years." 11. The following new Section 5.6 is hereby added to the Plan: "5.6 Make-up Company Contribution. The Plan Committee shall ---------------------------- credit the Account of each Participant described below with a Make-up Company Contribution equal to 5% (6% for 1995 only) of the Participant's Compensation in excess of the limitation under Code Section 401(a)(17) applicable to the Plan Year. A Participant is eligible for the Make-up Company Contribution in a Plan Year only if he is eligible to receive the Company contribution under the Profit Sharing Plan for such year. The Make-up Company Contribution shall be credited to the Participant's Account as of December 31 of the relevant Plan Year; provided, however, that the 5 Investment Equivalents on such amounts shall commence to be credited as of the following January 1." 12. The following new Section 5.7 is hereby added to the Plan: "5.7 Company Contribution for Newly Hired Officers. The --------------------------------------------- Plan Committee shall credit to the Account of those newly- hired officers who were designated by the Compensation Committee (pursuant to Article III) for participation in the Plan for the Plan Year during which they were initially employed, with an amount equal to 5% of all of the Participant's Compensation, plus an additional 1% of the Participant's Compensation, but the additional 1% shall only be credited if the Participant contributes at least 1% of Compensation to the Plan for the entire Plan Year. The contributions credited under this Section 5.7 shall be in lieu of the Company Match under Section 5.2 and the Make-up Company Contribution under Section 5.6. For 1995 only, an officer designated by the Compensation Committee as being eligible for the contribution described in this Section shall have 6% of his 1995 Compensation allocated to his Account." 13. Article VI is hereby amended by adding the following to the end of the section: 6 "The Discretionary Company Match, and the Investment Equivalents attributed thereto, if any, credited to a Participant's Account shall vest at such times as provided under the vesting schedule contained in the Profit Sharing Plan as of January 1, 1994, without respect to any subsequent amendments to the Profit Sharing Plan." IN WITNESS WHEREOF, this Amendment 1996-1 is hereby adopted this 20th day of February, 1996. ---- THE VONS COMPANIES, INC. By /s/ TERRENCE J. WALLOCK -------------------------------------- Terrence J. Wallock Its Executive Vice President, ------------------------------------- General Counsel and Secretary 4 -----END PRIVACY-ENHANCED MESSAGE-----