-----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, F7n7srU/y00weoX2uT3T9AajUE7iA6iPtDSfVTDunlrUJMjOxZ7lzA+ipHhF6eRY g4PRaIZS2Hl42xNAp9FlXA== 0000948688-97-000001.txt : 19970222 0000948688-97-000001.hdr.sgml : 19970222 ACCESSION NUMBER: 0000948688-97-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961228 FILED AS OF DATE: 19970212 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: 97526537 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 December 28, 1996 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. 7,118,879 shares at February 4, 1997. DELCHAMPS, INC. AND SUBSIDIARY INDEX Page No. -------- Part 1. Financial Information Item 1. Financial Statements Condensed Balance Sheets - December 28, 1996 and June 29, 1996 1 Condensed Statements of Earnings - Thirteen Weeks Ended December 28, 1996 and December 30, 1995 2 Twenty-six Weeks Ended December 28, 1996 and December 30, 1995 2 Condensed Statements of Cash Flows - Thirteen Weeks Ended December 28, 1996 and December 30, 1995 3 Twenty-six Weeks Ended December 28, 1996 and December 30, 1995 3 Notes to Condensed Financial Statements 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 5 Part II. Other Information Item 1. Legal Proceedings 7 Item 2. Changes in Securities 7 Item 3. Default upon Senior Securities 7 Item 4. Submission of Matters to a Vote of Security Holders 7 Item 5. Other Information 7 Item 6. Exhibits and Reports on Form 8-K 7 Signatures 8
Part I. Financial Information DELCHAMPS, INC. AND SUBSIDIARY Condensed Balance Sheets - (In thousands) (Unaudited) December 28, 1996 June 29, 1996* _________________ ________________ Amount % Assets Amount % Assets ______ ________ ______ ________ ASSETS Current assets: Cash and cash equivalents $13,892 5.47 10,503 4.12 Trade accounts receivable 10,791 4.25 8,422 3.30 Merchandise inventories 90,852 35.80 90,797 35.58 Prepaid expenses 2,393 0.94 1,376 0.54 Income taxes receivable 510 0.20 764 0.30 Deferred income taxes 3,878 1.54 3,878 1.52 _______ _____ _______ _____ Total current assets 122,316 48.20 115,740 45.36 Property and equipment: Land 15,017 5.92 15,210 5.96 Buildings and improvements 58,627 23.10 58,111 22.77 Fixtures and equipment 230,692 90.91 221,090 86.64 Construction in progress 941 0.37 9,771 3.83 _______ _____ _______ _____ 305,277 120.30 304,182 119.20 Less accumulated depreciation and amortization (175,958) (69.34) (166,931) (65.42) _______ _____ _______ _____ Net property and equipment 129,319 50.96 137,251 53.78 Other assets 2,135 0.84 2,192 0.86 _______ _____ _______ _____ Total assets $253,770 100.00 $255,183 100.00 ======== ====== ======== ====== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable $27,000 10.64 14,000 5.49 Current portion of obligations under capital leases 749 0.30 749 0.29 Current portion of long-term debt 3,744 1.48 3,760 1.47 Current portion of restructure obligation 3,996 1.57 3,996 1.57 Accounts payable 39,371 15.50 48,308 18.93 Accrued expenses 23,513 9.27 22,860 8.96 _______ _____ _______ _____ Total current liabilities 98,373 38.76 93,673 36.71 Obligations under capital leases, excluding current portion 10,035 3.95 10,398 4.07 Long-term debt, excluding current portion 8,975 3.54 10,839 4.25 Restructure obligation, excluding current portion 13,929 5.49 15,668 6.14 Deferred income taxes 8,352 3.29 9,225 3.62 Other liabilities 2,304 0.91 2,455 0.96 _______ _____ _______ _____ Total liabilities 141,968 55.94 142,258 55.75 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 7,113,536 shares at December 28, 1996 and 7,112,320 shares at June 29, 1996 71 0.03 71 0.03 Additional paid-in capital 19,683 7.76 19,657 7.70 Retained earnings 92,174 36.32 93,359 36.59 _______ _____ _______ _____ 111,928 44.11 113,087 44.32 Less: Unamortized restricted stock awards (126) (0.05) (162) (0.07) _______ _____ _______ _____ Total stockholders' equity 111,802 44.06 112,925 44.25 Total liabilities and stockholders' equity $253,770 100.00 $255,183 100.00 ======== ====== ======== ====== See accompanying notes to condensed financial statements. * Condensed from Balance Sheet included in the 1996 Annual Report.
DELCHAMPS, INC. AND SUBSIDIARY Condensed Statements of Earnings - (In thousands except per share amounts) (Unaudited) Thirteen Weeks Ended Twenty-six Weeks Ended __________________________________ _________________________________ 12/28/96 12/30/95 12/28/96 12/30/95 _________________ ________________ ________________ ________________ Amount % Sales Amount % Sales Amount % Sales Amount % Sales ______ _______ ______ _______ ______ _______ ______ _______ Sales $272,601 100.00 277,053 100.00 562,300 100.00 561,742 100.00 Cost of sales 207,484 76.11 212,379 76.66 431,816 76.79 433,375 77.15 ________ ______ _______ ______ _______ ______ _______ ______ Gross profit 65,117 23.89 64,674 23.34 130,484 23.21 128,367 22.85 Selling, general and administrative expenses 63,394 23.26 61,544 22.21 127,115 22.61 124,577 22.18 ________ ______ _______ ______ _______ ______ _______ ______ Operating income 1,723 0.63 3,130 1.13 3,369 0.60 3,790 0.67 Interest expense, net 1,402 0.51 1,841 0.66 2,705 0.48 3,625 0.65 ________ ______ _______ ______ _______ ______ _______ ______ Earnings before income tax 321 0.12 1,289 0.47 664 0.12 165 0.02 Income tax expense 145 0.06 481 0.18 284 0.05 113 0.01 ________ ______ _______ ______ _______ ______ _______ ______ Net earnings $176 0.06 808 0.29 380 0.07 52 0.01 ======== ====== ======= ====== ======= ====== ======= ====== Net earnings per common share $0.02 0.11 0.05 0.01 ======== ======== ======= ======== Weighted average number of common shares 7,114 7,109 7,113 7,109 ======== ======== ======= ======== Dividends declared per common share $0.11 0.11 0.22 0.22 ======== ======== ======= ======== See accompanying notes to condensed financial statements.
DELCHAMPS, INC. AND SUBSIDIARY Condensed Statements of Cash Flows - (In thousands) Increase (Decrease) In Cash and Cash Equivalents (Unaudited) Thirteen Weeks Ended Twenty-six Weeks Ended ____________________ _____________________ 12/29/96 12/30/95 12/28/96 12/30/95 Cash flows from operating activities: Net earnings $176 808 380 52 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 5,134 5,590 10,160 10,523 (Gain) loss on sale of property and equipment (7) (205) 12 (289) Loss reserve on closed stores (57) (92) (151) (256) Restricted stock award compensation expense 18 47 36 67 Restructure obligation payments (994) (2,160) (1,739) (3,322) Decrease (increase) in merchandise inventories 88 (3,010) (55) (941) (Decrease) increase in accounts payable and accrued expenses (3,800) 3,041 (8,284) (2,522) (Increase) decrease in income taxes receivable, net (942) (279) 254 672 Other, net 1,229 352 (955) (2,048) ______ ______ _______ ______ Net cash flows provided by (used in) operating activities 845 4,092 (342) 1,936 Cash flows from investing activities: Additions to property and equipment (3,531) (4,336) (5,760) (8,905) Proceeds from sale of property and equipment 12 312 298 499 ______ ______ _______ ______ Net cash used in investing activities (3,519) (4,024) (5,462) (8,406) Cash flows from financing activities: Proceeds from notes payable 12,000 2,000 13,000 2,000 Principal payments on obligations under capital leases (184) (164) (363) (323) Principal payments on long-term debt (939) (940) (1,880) (1,880) Dividends paid (782) (782) (1,564) (1,564) ______ ______ _______ ______ Net cash provided by (used in) financing activities 10,095 114 9,193 (1,767) Net increase (decrease) in cash and cash equivalents 7,421 182 3,389 (8,237) Beginning of period cash and cash equivalents 6,471 7,487 10,503 15,906 ______ ______ _______ ______ End of period cash and cash equivalents $13,892 7,669 13,892 7,669 ====== ====== ======= ====== Supplemental Disclosures of Cash Flow Information: Cash paid for: Interest expenses $1,400 1,872 2,812 3,752 ====== ====== ======= ====== Income taxes $542 44 1,107 44 ====== ====== ======= ====== 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 1996 Annual Report. The balance sheet at June 29, 1996 has been taken from the audited financial statements at that date. (B) Reclassifications Certain reclassifications have been made in the prior year's financial statements to conform to classifications used in the current year. Management's Discussion And Analysis Of Financial Condition And Results Of Operations RESULTS OF OPERATIONS Sales: Sales decreased 1.61% for the thirteen-week period and increased 0.10% for the twenty-six week period, compared with corresponding periods last year. Sales for stores open during the current and prior year periods ("same store sales") decreased 3.32% for the thirteen-week period and decreased 1.58% for the twenty-six week period. The decreases in same store sales resulted from increased levels of promotional activity by competitors, new supermarket openings by competitors, and last year's periods included a promotion by the Company in which retail prices were lowered on thousands of items. Last year's same store sales increased 6.97% and 6.87% for the thirteen and twenty-six week periods, respectively. At December 28, 1996, the Company operated 119 supermarkets and ten liquor stores compared with 117 supermarkets and ten liquor stores at December 30, 1995. During the current thirteen-week period, the Company expanded one supermarket. During the current twenty-six week period, the Company opened one new supermarket, acquired one supermarket, and expanded one supermarket. Gross Profit: Gross profit as a percentage of sales increased from 23.34% to 23.89% for the thirteen-week period and increased from 22.85% to 23.21% for the twenty-six week period. The increases for both periods were the result of increased levels of purchase allowances from vendors (which resulted in a lower cost of merchandise inventories) and selective retail price adjustments. Selling, General and Administrative ("SG & A") Expenses: Selling, general and administrative expenses in dollars increased $1.850 million for the thirteen-week period and increased $2.538 million for the twenty-six week period, as compared to last year's corresponding periods. The increases in SG & A dollars for both periods were the result of higher costs for advertising (which increased because of costs from the introduction of a new beef program and a new advertising program featuring price comparisons with competitors), legal fees (which increased because of costs associated with defense of law suits and a union organization attempt at the Company's distribution facility), and acquisition expenses (which included costs for possible acquisitions of supermarkets by the Company.) The Company has continued implementing cost reductions in all other areas of the business. Specifically, labor costs, bag costs, and store supply costs all decreased as compared to last year's periods (even though the Company operated additional supermarkets in the current periods.) Selling, general and administrative expenses as a percentage of sales increased from 22.21% to 23.26% for the thirteen-week period and increased from 22.18% to 22.61% for the twenty-six week period. SG & A as a percentage of sales increased in the thirteen-week period because of lower sales combined with increased levels of expenses. The increase in the twenty-six week period was because of increased levels of expenses. Interest Expense, Net: Interest expense, net decreased $439,000 for the thirteen-week period and decreased $920,000 for the twenty- six week period, as compared to corresponding periods from last year. Interest expense decreased for both periods because of lower levels of long-term indebtedness. Income Taxes: The effective rate for income taxes increased from 37.32% to 45.17% for the thirteen-week period and decreased from 68.48% to 42.77% for the twenty-six week period. The effective rates in the current year's periods exceed the statutory tax rate because of the low levels of earnings combined with certain expenses which were not deductible for tax purposes. Management's Discussion And Analysis Of Financial Condition And Results Of Operations LIQUIDITY AND CAPITAL RESOURCES Cash flows generated by (used in) operating activities were $.845 million for the thirteen week period and ($.342) million for the twenty-six week period. Last year's corresponding amounts were $4.092 million and $1.936 million for the thirteen and twenty-six week periods, respectively. Historically, the Company has funded working capital requirements, capital requirements, and other cash requirements primarily through cash flows from operations. However, if an insufficient amount of cash flows are generated, the Company may draw on a short-term revolving loan. The Company may borrow up to $75 million under the revolving loan of which $48 million is available for future use. The revolving loan expires June, 1998. Cash used in investing activities was $3.519 million and $5.462 million for the current thirteen and twenty-six week periods, respectively. Corresponding amounts from last year's periods were $4.024 million and $8.406 million for the thirteen and twenty-six week periods, respectively. The decreases in investing activities for both periods were because of reductions in purchases of equipment for new supermarkets, reductions in purchases of equipment for expanded supermarkets, and reductions in purchases of equipment for the Company's distribution facility. Cash provided by (used in) financing activities was $10.095 million and $9.193 million for the current thirteen and twenty-six week periods, respectively. Corresponding amounts from last year's periods were $.114 million and ($1.767) million, respectively. The increases in cash provided by financing activities were because of increased borrowing (as compared to last year's periods) under the Company's short-term borrowing facilities. At the end of the quarter ended December 28, 1996, the Company was in compliance with all financial covenants under the revolving loan agreement and its long-term debt agreement. PART II. OTHER INFORMATION Item 1. Legal Proceedings For the thirteen week period ended December 28, 1996, the Company had no significant developments related to legal matters. The Company is involved in various claims, administrative proceedings, and other legal proceedings which arise from time to time in connection with the ordinary conduct of the Company's business. Item 2. Changes in Securities - None Item 3. Defaults upon Senior Securities - None Item 4. Submission of Matters to a Vote of Security Holders - None Item 5. Other Information On December 20, 1996, the employees at the Company's distribution center voted to become organized through the United Commercial Food Workers Union. It is uncertain as to when negotiations of the contract will be completed and a union contract in effect. Approximately 350 employees will be affected by this new union contract. Item 6. Exhibits and Reports on Form 8-K - None 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: February 10, 1997 /s/ David W. Morrow David W. Morrow, Chairman of the Board and Chief Executive Officer Date: February 10, 1997 /s/ Richard W. LaTrace Richard W. La Trace, President Date: February 10, 1997 /s/ Timothy E. Kullman Timothy E. Kullman, Senior Vice President, Chief Financial Officer, Treasurer and Secretary EX-27 2
5 6-MOS JUN-29-1996 DEC-28-1996 13,892,000 0 10,791,000 0 90,852,000 122,316,000 305,277,000 (175,958,000) 253,770,000 98,373,000 8,975,000 71,000 0 0 (126,000) 253,770,000 272,601,000 0 207,484,000 63,394,000 0 0 1,402,000 321,000 145,000 0 0 0 0 176,000 .02 0
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