-----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, nuXr2rd0hcf/WWwm3OPNkdVaHjavWxbosipoXBxnCETu3dTNuKHnTvtyEyVu6Tw6 pLQ0gDw3Tbd2AQWYDUHkmg== 0000906280-95-000043.txt : 19950516 0000906280-95-000043.hdr.sgml : 19950516 ACCESSION NUMBER: 0000906280-95-000043 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DELCHAMPS INC CENTRAL INDEX KEY: 0000729970 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-GROCERY STORES [5411] IRS NUMBER: 630245434 STATE OF INCORPORATION: AL FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-12923 FILM NUMBER: 95539757 BUSINESS ADDRESS: STREET 1: 305 DELCHAMPS DR STREET 2: P O BOX 1668 CITY: MOBILE STATE: AL ZIP: 36602 BUSINESS PHONE: 2054330431 MAIL ADDRESS: STREET 1: 305 DELCHAMPS DR STREET 2: PO BOX 1668 CITY: MOBILE STATE: AL ZIP: 36602 10-Q 1 Securities And Exchange Commission Washington, D.C. 20549 FORM 10-Q Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the 13-Week Period Ended April 1, 1995 Commission File Number 0-12923 Delchamps, Inc. ----------------------------------------- (Exact name of registrant as specified in its charter) Alabama 63-0245434 ---------------------------- --------------------- (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification number) 305 Delchamps Drive, Mobile, AL 36602 ------------------------------- --------------------- (Address of principal executive (Zip code) offices) (334) 433-0431 ------------------------------- (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 the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date. 7,113,581 shares at May 5, 1995. DELCHAMPS, INC. AND SUBSIDIARY Index Page No. -------- Part 1. Financial Information Item 1. Financial Statements Condensed Balance Sheets - April 1, 1995 and July 2, 1994 1 Condensed Statements of Earnings - Thirteen Weeks Ended April 1, 1995 and April 2, 1994 2 Thirty-nine Weeks Ended April 1, 1995 and April 2, 1994 2 Condensed Statements of Cash Flows - Thirteen Weeks Ended April 1, 1995 and April 2, 1994 3 Thirty-nine Weeks Ended April 1, 1995 and April 2, 1994 3 Notes to Condensed Financial Statements4 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 5 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K 7 Signatures 7 Part I. Financial Information DELCHAMPS, INC. AND SUBSIDIARY Condensed Balance Sheets - (In thousands) (Unaudited)
April 1, 1995 July 2, 1994* ___________________ _____________________ Amount %Assets Amount %Assets ______ _______ ______ _______ ASSETS Current assets: Cash and cash equivalents $ 4,491 1.70 15,378 5.84 Trade accounts receivable 8,434 3.20 9,475 3.60 Merchandise inventories 99,810 37.83 105,663 40.13 Prepaid expenses 1,813 .69 443 .17 Deferred income taxes 1,529 .58 1,587 .61 ________ ________ ________ _________ Total current assets 116,077 44.00 132,546 50.35 Property and equipment: Land 13,237 5.02 6,312 2.40 Buildings and improvements 54,240 20.56 51,742 19.65 Fixtures and equipment 217,303 82.37 198,746 75.49 Construction in progress 6,011 2.27 4,972 1.89 ________ ________ ________ _________ 290,791 110.22 261,772 99.43 Less accumulated depreciation and (150,654) (57.10) (138,643) (52.66) amortization ________ ________ ________ _________ Net property and equipment 140,137 53.12 123,129 46.77 Other assets 2,513 .95 2,384 .91 Goodwill 5,092 1.93 5,210 1.97 ________ ________ ________ _________ Total assets $ 263,819 100.00 263,269 100.00 ======== ======== ======== ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable $ 27,584 10.46 11,574 4.40 Current portion of obligations under 591 .22 1,576 .60 capital leases Current portion of long-term debt 3,760 1.43 3,760 1.43 Current portion of guaranteed ESOP debt 2,000 .76 2,000 .76 Accounts payable 36,235 13.73 43,578 16.55 Accrued expenses 17,786 6.74 15,132 5.74 Income taxes (3,224) (1.22) - - ________ ________ ________ _________ Total current liabilities 84,732 32.12 77,620 29.48 Obligations under capital leases, excluding 11,375 4.31 11,811 4.49 current portion Long-term debt, excluding current portion 15,537 5.89 18,358 6.97 Guaranteed ESOP debt, excluding current portion 2,000 .76 2,000 .76 Restructure obligation 14,369 5.45 - - Deferred income taxes 8,866 3.36 14,154 5.38 Other liabilities 2,978 1.12 3,026 1.15 ________ ________ ________ _________ Total liabilities 139,857 53.01 126,969 48.23 Stockholders' equity: Junior participating preferred stock of no par value - authorized 5,000,000 shares; no shares issued - - - - Common stock of $.01 par value - authorized 25,000,000 shares; issued 7,113,581 shares 71 .03 71 .03 Additional paid-in capital 19,731 7.48 19,731 7.49 Retained earnings 108,894 41.27 121,434 46.13 ________ ________ ________ _________ 128,696 48.78 141,236 53.65 Less: Guaranteed ESOP debt (4,000) (1.52) (4,000) (1.52) Unamortized restricted stock awards (734) (.27) (936) (.36) ________ ________ ________ _________ Total stockholders' equity 123,962 46.99 136,300 51.77 Total liabilities and stockholders' equity $ 263,819 100.00 263,269 100.00 ======== ======== ======== =========
See accompanying notes to condensed financial statements. * Condensed from Balance Sheet included in the 1994 Annual Report. DELCHAMPS, INC. AND SUBSIDIARY Condensed Statements of Earnings - (In thousands except per share amounts) (Unaudited)
Thirteen Weeks Ended Thirty-nine Weeks Ended ____________________ _______________________ April 1, 1995 April 2, 1994 April 1, 1995 April 2, 1994 _____________ _____________ _____________ _____________ Amount % Sales Amount % Sales Amount % Sales Amount % Sales ______ _______ ______ _______ ______ _______ ______ _______ Sales $255,592 100.00 265,146 100.00 782,249 100.00 806,222 100.00 Cost of sales 194,636 76.15 197,407 74.45 590,579 75.50 602,356 74.71 ________ _______ _______ _______ _______ _______ _______ _______ Gross profit 60,956 23.85 67,739 25.55 191,670 24.50 203,866 25.29 Selling, general and administrative expenses 79,454 31.09 61,300 23.12 205,329 26.25 186,476 23.13 ________ _______ _______ _______ _______ _______ _______ _______ Operating (loss) income (18,498) (7.24) 6,439 2.43 (13,659) (1.75) 17,390 2.16 Other expenses 1,254 .49 1,019 .38 3,662 .47 3,090 .38 ________ _______ _______ _______ _______ _______ _______ _______ (Loss) earnings before income taxes and cummulative effect of changes in accounting principles (19,752) (7.73) 5,420 2.04 (17,321) (2.22) 14,300 1.78 Income (benefit) taxes (8,107) (3.17) 1,858 .70 (7,319) (.94) 5,046 .63 ________ _______ _______ _______ _______ _______ _______ _______ (Loss) earnings before cummulative effect of changes in accounting principles (11,645) (4.56) 3,562 1.34 (10,002) (1.28) 9,254 1.15 Cummulative effect of change in accounting for income taxes - - - - - - 900 .11 Cumulative effect of change in accounting for postemployment benefits (net of income tax benefits of $1,000) - - - - - - (1,600) (.20) ________ _______ _______ _______ _______ _______ _______ _______ Net (loss) earnings $(11,645) (4.56) 3,562 1.34 (10,002) (1.28) 8,554 1.06 ======== ======= ======= ======= ======= ======== ======= ======= (Loss) earnings per common share: (Loss) earnings before cummulative effect of changes in accounting principles $ (1.64) .50 (1.41) 1.30 Cumulative effect of change in accounting for income taxes - - - .12 Cummulative effect of change in accounting for postemployment benefits - - - (.22) ________ _______ _______ _______ Net (loss) earnings per common share $ (1.64) .50 (1.41) 1.20 ======== ======== ======= ======== Weighted average number of common shares 7,114 7,114 7,114 7,114 ======== ======== ====== ======== Dividends declared per common share $ .11 .11 .33 .33 ======== ======== ====== ======== See accompanying notes to condensed finanical statements.
DELCHAMPS, INC. AND SUBSIDIARY Condensed Statements of Cash Flows - (In thousands) Increase (Decrease) In Cash and Cash Equivalents (Unaudited)
Thirteen Weeks Ended Thirty-nine Weeks Ended ____________________ _______________________ 04/01/95 04/02/94 04/01/95 04/02/94 ________ ________ ________ ________ Cash flows from operating activities: Net (loss) earnings $(11,645) 3,562 (10,002) 8,554 Adjustments to reconcile net (loss) earnings to net cash provided by operating activities: Depreciation and amortization 4,888 4,630 14,610 14,062 Loss reserve on closed stores 10 (27) (48) (80) Restricted stock award compenstion expense 90 54 202 161 Cumulative effect of change in accounting for postemployment benefits - - - 1,600 Cumulative effect of change in accounting for income taxes - - - (900) Restructure obligation 14,369 - 14,369 - Decrease (income) in merchandise inventories 798 1,244 5,853 (2,710) Income (decrease) in accounts payable and accrued exp 3,652 (4,014) (4,881) (2,536) Decrease in income taxes, net (3,089) (180) (3,166) (489) Other, net (4,551) 2,067 (5,744) (1,243) ________ ________ ________ ________ Net cash flows provided by operating activities 4,522 7,336 11,193 16,419 Cash flows form investing activities: Additions to property and equipment (9,337) (7,352) (32,405) (12,494) Proceeds from sale of property and equipment 682 29 903 71 ________ ________ ________ ________ Net cash used in investing activities (8,655) (7,323) (31,502) (12,423) Cash flows from financing activities: Proceeds from (payments on) notes payable 7,610 (82) 16,010 5,441 Principal payments on obligations under capital leases (488) (432) (1,421) (1,259) Principal payments on Long-term debt (941) (939) (2,821) (2,819) Dividends paid (782) (782) (2,346) (2,346) ________ ________ ________ ________ Net cash provided by (used in) financing activities 5,399 (2,235) 9,422 (983) Net increase (decrease) in cash and cash equivalents 1,266 (2,222) (10,887) 3,013 Beginning of period cash and cash equivalents 3,225 17,305 15,378 12,070 ________ ________ ________ ________ End of period cash and cash equivalents $ 4,491 15,083 4,491 15,083 ======== ======= ======== ====== Supplemental Disclosures of Cash Flow Information: Cash paid for: Interest expenses $ 1,364 1,005 3,720 3,204 ======== ======= ======== ====== Income taxes $ 70 1,630 1,437 4,638 ======== ======= ======== ====== See accompanying notes to condensed financial statements.
DELCHAMPS, INC. AND SUBSIDIARY Notes to Condensed Financial Statements (Unaudited) (A) Basis of Presentation --------------------- The accompanying unaudited consolidated financial statements include the results of operations, account balances and cash flows of the Company and its wholly-owned subsidiary. All material intercompany balances have been eliminated. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments necessary to present fairly, in all material respects, the results of operations of the Company for the periods presented. The statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and the accompanying notes included in the Company's 1994 Annual Report. The Balance Sheet at July 2, 1994 has been taken from the audited financial statements at that date. (B) Restructuring Plan ------------------ For the third quarter ending April 1, 1995, the Company recorded a pre-tax restructuring charge in the amount of $15 million. The restructuring charge relates primarily to closed stores that the Company has been unable to sell or sublease in whole or in part and includes costs for the writedown of store assets, the unrealizable portion of the present value of remaining rent payments, and other costs associated with store closings. The restructuring charge is included in selling, general and administrative expenses on the Income Statements. Management's Discussion And Analysis Of Results Of Operations And Financial Condition RESULTS OF OPERATIONS Sales: - ----- Sales decreased 3.60% for the thirteen-week period and 2.97% for the thirty-nine week period, compared with corresponding periods last year. Sales for stores open during the current and prior year periods decreased 6.32% for the thirteen-week period and 5.76% for the thirty-nine week period. The decrease in sales for both periods was primarily the result of heavy competitive activity which included competitors opening new supermarkets and expanding existing supermarkets. Sales were also negatively impacted by the timing of the Easter holiday which will occur in the fourth quarter of the current year and occurred in the third quarter of the prior year. In an effort to improve sales trends, the Company implemented a business plan titled "Strategy 2000." This business plan includes price reductions on thousands of items, an increase from forty-nine cents to fifty cents in the Company's double coupon program (under which coupons that have a face value up to fifty cents are doubled), and a new advertising campaign to communicate these changes. Implementation of this business plan began in the later part of the Company's third quarter. For the plan to be successful, sales volume will have to increase substantially to offset the reduced margins resulting from the price reductions. Such volume increases, if achieved at all, are not likely to be achieved with the fourth quarter of the current fiscal year. Accordingly, the Company does not expect fourth quarter results to be profitable. At April 1, 1995, the Company operated 118 supermarkets and twelve liquor stores compared with 119 supermarkets and eleven liquor stores at April 2, 1994. During the thirty-nine week period, the Company purchased seven supermarkets from the Kroger Co., opened two supermarkets, closed nine supermarkets, sold two supermarkets to the Kroger Co., and remodeled and expanded four supermarkets. Gross Profit: - ------------ Gross profit as a percentage of sales decreased from 25.55% to 23.85% for the thirteen-week period and decreased from 25.29% to 24.50% for the thirty-nine week period. The decreases for both periods were the result of inventory markdowns related to the price reductions for the "Strategy 2000" business plan, increased inventory markdowns related to the Company's bonus buy promotional program (under which certain products are featured at reduced retail prices), and increased levels of inventory shrinkage. Selling, General and Administrative Expenses: - -------------------------------------------- Selling, general and administrative ("S G & A") expenses as a percentage of sales increased from 23.12% to 31.09% for the thirteen-week period and increased from 23.13% to 26.25% for the thirty-nine week period. The increases for both periods were the result of lower sales in the current periods combined with a restructuring charge in the amount of $15.0 million in the current periods. The restructuring charge relates primarily to closed stores that could not be subleased in whole or in part. S G & A increased $18.2 million for the thirteen-week period and increased $18.9 million for the thirty-nine week period, including the $15.0 million restructuring charge. The remaining increases for both periods resulted from increases in the Company's wages, rent expense, and depreciation expense. Other Expense: - ------------- Other expense increased $235,000 and $572,000 for the thirteen and thirty-nine week periods, respectively. The increases resulted from increased interest expense, which was higher in the current year because of higher interest rates and increased levels of short-term indebtedness. Income Taxes: - ------------ The effective rate for income taxes decreased from 34.28% to (41.04%) for the thirteen-week period and decreased from 35.29% to (42.26%) for the thirty-nine week period. The effective rates in the current periods represent income tax benefits which resulted from the loss in earnings before taxes. The effective rates were below the statutory rate because of targeted jobs tax credits. Other: - ----- On April 14, 1995, Randy Delchamps resigned as Chairman, Chief Executive Officer, and President of the Company in order to pursue other business interests. David W. Morrow, a director of the Company, has been elected Chairman of the Board. Mr. Morrow has over 40 years of experience in the supermarket industry. Most recently, he served as Chairman of the Board, President and Chief Executive Officer of Pueblo International, Inc. Pueblo is comparable in size to Delchamps and has supermarkets operating in Puerto Rico, the U.S. Virgin Islands, and Florida. Mr. Morrow's grocery career includes 28 years of service with Albertson's, where he rose from stock clerk to President and Chief Executive Officer . In 1977, Mr. Morrow became President and Chief Operating Officer of The Great Atlantic and Pacific Tea Company. Mr. Morrow will serve as President and Chief Executive Officer of Delchamps on an interim basis while the Board of Directors searches for a permanent President and Chief Executive Officer. LIQUIDITY AND CAPITAL RESOURCES The Company leases its store locations, but makes substantial expenditures to equip new and expanded supermarkets. In addition, the Company makes substantial expenditures for distribution facilities and equipment. The Company plans to finance its capital expenditures with funds provided by operations. However, if an insufficient amount of funds are generated, the Company may draw on short-term credit lines. The Company has $65.0 million in credit lines from financial institutions of which $36.2 million is available for future use. These credit lines expire at various times throughout fiscal years 1995 and 1996, though the Company expects most to be renewed. Working capital decreased form $54,926,000 at July 2, 1994 to $31,345,000 as of April 1, 1995. Additions to property and equipment were $32,405,000 during the same period and consisted primarily of purchases of store equipment. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. Reports on Form 8-K There were no reports on Form 8-K filed during the 13-weeks ended April 1, 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. Delchamps, Inc. _______________ Registrant Date: May 12, 1995 /s/ David W. Morrow ______________________ David W. Morrow, Chairman, President, and Chief Executive Officer Date: May 12, 1995 /s/ Timothy E. Kullman _______________________ Timothy E. Kullman, Senior Vice President and Chief Financial Officer EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDING DECEMBER 31, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS DEC-31-1994 DEC-31-1995 4,491,000 0 8,434,000 0 99,810,000 116,077,000 290,791,000 (150,654,000) 263,819,000 84,732,000 28,912,000 71,000 0 0 (4,734,000) 263,819,000 255,592,000 255,592,000 194,636,000 79,454,000 0 0 1,254,000 (19,752,000) (8,107,000) 0 0 0 0 (11,645,000) (1.64) 0
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