-----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, G+8wcLTD4buJFGSIhusd/04F4yaMWqO1H6UA658wenLE8S55W4dnuwsssLLf48ec 5iD0OfxAsbZg8d3Ro4ZoNg== 0000835582-97-000006.txt : 19970507 0000835582-97-000006.hdr.sgml : 19970507 ACCESSION NUMBER: 0000835582-97-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970322 FILED AS OF DATE: 19970506 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: HOMELAND HOLDING CORP CENTRAL INDEX KEY: 0000835582 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-GROCERY STORES [5411] IRS NUMBER: 731311075 STATE OF INCORPORATION: DE FISCAL YEAR END: 0101 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11555 FILM NUMBER: 97596520 BUSINESS ADDRESS: STREET 1: 400 N E 36TH ST CITY: OKLAHOMA CITY STATE: OK ZIP: 73105 BUSINESS PHONE: 4055575500 MAIL ADDRESS: STREET 1: 400 N E 36TH CITY: OKLAHOMA CITY STATE: OK ZIP: 73125 FORMER COMPANY: FORMER CONFORMED NAME: SWO HOLDING CORP DATE OF NAME CHANGE: 19901017 FORMER COMPANY: FORMER CONFORMED NAME: SWO ACQUISTION CORP DATE OF NAME CHANGE: 19890716 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) Quarterly Report Under Section 13 or 15 (d) of the Securities X Exchange Act of 1934 For the quarterly period ended: March 22, 1997 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 No.: 33-48862 HOMELAND HOLDING CORPORATION (Exact name of registrant as specified in its charter) Delaware 73-1311075 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2601 Northwest Expressway Oil Center-East, Suite 1100 Oklahoma City, Oklahoma 73112 (Address of principal executive offices) (Zip Code) (405) 879-6600 (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 by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15 (d) of the Securities Exchange Act of 1934 subsequent to the distribution under a plan confirmed by a court. Yes X No ___ Indicate the number of shares outstanding of each of the registrant's classes of common stock as of May 2, 1997: Homeland Holding Corporation Common Stock: 4,758,025 shares HOMELAND HOLDING CORPORATION FORM 10-Q FOR THE TWELVE WEEKS ENDED MARCH 22, 1997 INDEX Page PART I FINANCIAL INFORMATION ITEM 1. Financial Statements.......................................... 1 Consolidated Balance Sheets March 22, 1997, and December 28, 1996....................... 1 Consolidated Statements of Operations Twelve Weeks ended March 22, 1997 (Successor Company), and March 23, 1996 (Predecessor Company).................................................... 3 Consolidated Statements of Stockholders' Equity (Deficit) Twelve Weeks ended March 22, 1997 (Successor Company), and March 23, 1996 (Predecessor Company).................................................... 4 Consolidated Statements of Cash Flows Twelve Weeks ended March 22, 1997 (Successor Company), and March 23, 1996 (Predecessor Company).................................................... 5 Notes to Consolidated Financial Statements................... 6 ITEM 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations.................................... 7 PART II OTHER INFORMATION ITEM 5. Other Information............................................. 11 ITEM 6. Exhibits and Reports on Form 8-K.............................. 11 i PART I - FINANCIAL INFORMATION Item 1. Financial Statements HOMELAND HOLDING CORPORATION AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts) ASSETS March December 22, 28, 1997 1996 (unaudited) Current assets: Cash and cash equivalents $ 5,382 $ 1,492 Receivables, net of allowance for uncollectible 5,721 8,522 accounts of $1,471 and $1,587 Inventories 44,532 45,009 Prepaid expenses and other current assets 2,550 2,760 Total current assets 58,185 57,783 Property, plant and equipment: Land and land improvements 8,731 8,731 Buildings 18,183 18,124 Fixtures and equipment 15,980 15,078 Leasehold improvements 11,456 11,374 Software 2,931 2,930 Leased assets under capital leases 7,485 7,569 Construction in progress 2,923 2,675 67,689 66,481 Less, accumulated depreciation and amortization 4,716 3,012 Net property, plant and equipment 62,973 63,469 Reorganization value in excess of amounts allocable to identifiable assets, less accumulated amortization of $9,279 at March 22, 1997, and $5,819 at December 28, 1996 35,017 39,570 Other assets and deferred charges 7,715 7,664 Total assets $ 163,890 $ 168,486 Continued The accompanying notes are an integral part of these consolidated financial statements. 1 HOMELAND HOLDING CORPORATION AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS, Continued (In thousands, except share and per share amounts) LIABILITIES AND STOCKHOLDERS' EQUITY March December 22, 28, 1997 1996 (unaudited) Current liabilities: Accounts payable - trade $ 16,857 $ 17,416 Salaries and wages 2,667 3,499 Taxes 3,051 2,903 Accrued interest payable 1,176 2,689 Other current liabilities 7,208 8,470 Current portion of long-term 894 894 debt Current portion of obligations under capital leases 1,343 1,343 Total current liabilities 33,196 37,214 Long-term obligations: Long-term debt 74,664 72,724 Obligations under capital leases 2,659 3,005 Other noncurrent liabilities 2,688 2,602 Total long-term obligations 80,011 78,331 Stockholders' equity: Common Stock Class A, $0.01 par value, authorized - 7,500,000 shares, issued 4,758,025 shares at March 22, 1997, and December 28, 1996 48 48 Additional paid-in capital 56,013 56,013 Accumulated deficit (5,378) (3,120) Total stockholders' equity 50,683 52,941 Total liabilities and stockholders' equity 163,890 168,486 The accompanying notes are an integral part of these consolidated financial statements. 2 HOMELAND HOLDING CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENT OF OPERATIONS (In thousands, except share and per share amounts) (Unaudited) Successor Predecessor Company Company 12 12 weeks weeks ended ended March 22, March 23, 1997 1996 Sales, net $ 120,050 $ 124,350 Cost of sales 90,878 94,207 Gross profit 29,172 30,143 Selling and administrative expenses 25,187 27,980 Financial restructuring costs - 1,350 Amortization of excess reorganization value 3,460 - Operating profit 525 813 Interest expense 1,982 3,156 Loss before income taxes (1,457) (2,343) Income tax expense 801 - Net loss $ (2,258) $ (2,343) Net loss per common share $ (0.47) $ (0.07) Weighted average shares outstanding 4,758,025 32,599,707 The accompanying notes are an integral part of these consolidated financial statements. 3 HOMELAND HOLDING CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (In thousands, except share and per share amounts) (Unaudited)
part 1 of 2 Common Stock Additional Successor Predecessor Paid-In Accumulated Shares Shares Amount Capital Deficit Balance, December 30, 1995 - 33,748,482 $337 $55,886 $ (80,188) Net Loss - - - - (2,343) Balance, March 23, 1996 - 33,748,482 $337 $55,886 $ (82,531) Balance, December 28, 1996 4,758,025 - $ 48 $56,013 $ (3,120) Net Loss - - - - (2,258) Balance, March 22, 1997 4,758,025 - $ 48 $56,013 $ (5,378)
part 2 of 2 Minimum Pension Total Liability Treasury Stock Stockholders' Adjustment Shares Amount Equity (Deficit) Balance, December 30, 1995 $ (1,327) 2,869,493 $ (2,814) $ (28,106) Net Loss - - - (2,343) Balance, March 23, 1996 $ (1,327) 2,869,493 $ (2,814) $ (30,449) Balance, December 28, 1996 - - - $ 52,941 Net Loss - - - (2,258) Balance, March 22, 4997 - - - $ 50,683
The accompanying notes are an integral part of these consolidated financial statements. 4 HOMELAND HOLDING CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENT OF CASH FLOWS (In thousands, except share and per share amounts) (Unaudited) Successor Predecessor Company Company 12 weeks 12 weeks ended ended March 22, March 23, 1997 1996 Cash flows from operating activities: Net loss $ (2,258) $ (2,343) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 1,717 1,658 Amortization of excess reorganization value 3,460 - Amortization of financing costs 14 186 Loss (gain) on disposal of assets 7 (78) Amortization of beneficial interest in operating leases 28 30 Adjustment to excess reorganization value 292 - Deferred income taxes 801 - Change in assets and liabilities: Decrease in receivables 2,801 1,422 Decrease in inventories 477 2,353 Decrease in prepaid expenses and other current assets 210 287 Increase in other assets and deferred charges (101) (117) Decrease in accounts payable - trade (559) (213) Decrease in salaries and wages (832) (362) Increase (decrease) in taxes 148 (1,318) Increase (decrease) in accrued interest payable (1,513) 2,307 Decrease in other current liabilities (1,262) (1,875) Decrease in noncurrent restructuring reserve - (12) Increase (decrease) in other noncurrent liabilities 108 (825) Net cash provided by operating activities 3,538 1,100 Cash flow used in investing activities: Capital expenditures (1,254) (307) Cash received from sale of assets 12 60 Net cash used in investing activities (1,242) (247) Cash flows used by financing activities: Borrowings under revolving credit loans 29,595 25,067 Payments under revolving credit loans (27,640) (27,373) Principal payments under note payable (15) - Principal payments under capital lease obligations (346) (621) Net cash provided by (used in) financing activities 1,594 (2,927) Net increase (decrease) in cash and cash equivalents 3,890 (2,074) Cash and cash equivalents at beginning of period 1,492 (6,357) Cash and cash equivalents at end of period $ 5,382 $ 4,283 Supplemental information: Cash paid during the period for interest $ 3,490 $ 604 The accompanying notes are an integral part of these consolidated financial statements. 5 HOMELAND HOLDING CORPORATION AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Preparation of Consolidated Financial Statements: The accompanying unaudited interim consolidated financial statements of Homeland Holding Corporation ("Holding") and its Subsidiary, Homeland Stores, Inc. ("Stores" and, together with Holding, the "Company"), reflect all adjustments, which consist only of normal and recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the consolidated financial position and the consolidated results of operations and cash flows for the periods presented. The consolidated financial statements as of and for the periods subsequent to August 10, 1996, were prepared in accordance with the American Institute of Certified Public Accountants Statement of Position No. 90-7, "Financial Reporting by Entities in Reorganization under the Bankruptcy Code" ("SOP No. 90-7"). The accounting under SOP No. 90-7 resulted in "fresh-start" reporting for the Company in which a new entity was created for financial reporting purposes. The periods prior to August 10, 1996, have been designated "Predecessor Company" and the periods subsequent to August 10, 1996, have been designated "Successor Company." These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company for the period ended December 28, 1996, and the notes thereto. 2. Accounting Policies: The significant accounting policies of the Company are summarized in the consolidated financial statements of the Company for the 52 weeks ended December 28, 1996, and the notes thereto. 6 Item 2. Management"s Discussion and Analysis of Financial Conditions and Results of Operations General The Company's plan of reorganization became effective on August 2, 1996. For financial reporting purposes, the Company accounted for the consummation of the reorganization effective as of August 10, 1996. As a result of the adoption of "fresh-start" reporting and the consummation of the reorganization, the periods prior to and subsequent to August 10, 1996, for financial reporting purposes are not necessarily comparable. The table below sets forth selected items from the Company's consolidated income statement as a percentage of net sales for the periods indicated: 12 weeks ended March March 22, 23, 1997 1996 Net sales 100.0% 100.0% Cost of sales 75.7 75.8 Gross profit 24.3 24.2 Selling and administrative 21.0 22.5 Financial restructuring cost - 1.1 Amortization of excess reorganization value 2.9 - Operating profit 0.4 0.6 Interest expense 1.6 2.5 Loss before income taxes (1.2) (1.9) Income tax provision 0.7 - Net loss (1.9) (1.9) Results of Operations Net sales for the first quarter ended March 22, 1997, were $120.1 million, a 3.5% decline over the corresponding period of 1996. The decrease in net sales was due primarily to the sale of the Ponca City, Oklahoma store in April 1996, and the closing of two stores during the reorganization which was partly offset by a new store that was opened in December 1996. Comparable store sales decreased by 1.1% versus the corresponding period of 1996. The decrease in comparable store sales was primarily due to increased competitive promotional activities. In addition, more stringent eligibility requirements for food stamps have had a negative impact on the Company's sales to food stamp recipients. 7 Gross profit as a percentage of net sales increased to 24.3% in the first quarter of 1997 compared with 24.2% in the first quarter of 1996. The slight improvement was primarily due to reduced redemption of manufacturer coupons which the Company doubles as part of its marketing activities. Selling and administrative expenses decreased by 1.5%, as a percentage of net sales, to 21.0% in the first quarter of 1997 from 22.5% in the first quarter of 1996. The decline is due to lower labor costs associated with the new union agreements and lower occupancy costs resulting from renegotiated leases, all commencing as of August 1996. The Company's continued focus on cost controls and reduction of certain corporate support functions primarily in its computer operations also contributed to overall reduction in selling and administrative expenses. In the first quarter of 1996, the Company incurred $1.4 million of financial restructuring expenses, primarily professional fees. These costs were related to the reorganization consummated in August 1996, and are not recurring. The Company amortized $3.5 million of excess reorganization value, which was recorded as part of "fresh-start" accounting, in the first quarter of 1997. The amortization of the excess reorganization value will have the effect of increasing the Company's expenses and reducing its net income for the next ten quarters. Interest expense for the first quarter of 1997 decreased to $2.0 million from $3.2 million in the first quarter of 1996, due primarily to the reduction in debt levels upon consummation of the reorganization in August 1996. The Company recorded an income tax provision of $0.8 million for the first quarter of 1997. The effective tax rate differs from the statutory rate due to amortization of excess reorganization value, which is not deductible for income tax purposes. The effective tax rate was calculated on the projected taxable income for the full fiscal year and the anticipated changes in the deferred tax assets and deferred tax liabilities. The net operating loss carryforwards available for utilization in 1997 are limited to approximately $4.5 million, the benefit of which is being recorded as a reduction of excess reorganization value rather than a reduction of income tax expense. 8 EBITDA (as defined hereinafter) before financial restructuring expense amounted to $5.7 million or 4.8% of net sales in the first quarter of 1997 as compared to $3.9 million or 3.1% of net sales for the first quarter of 1996. The improvement in EBITDA is due primarily to the reduced selling and administrative expenses and was somewhat offset by the reduced gross margin contribution that was a result of reduced sales. Liquidity and Capital Resources The primary sources of liquidity and capital for the Company's operations have been borrowings under the revolving credit facility and internally-generated funds. The Company's EBITDA (earnings before interest, taxes, depreciation and amortization) before financial restructuring costs, as presented below, is the Company's measurement of internally- generated cash for working capital needs, capital expenditures and payment of debt obligations: 12 weeks ended March March 22, 23, 1997 1996 Loss before income taxes (1,457) (2,343) Interest expense 1,982 3,156 Amortization of reorganization value 3,460 - Financial restructuring costs - 1,350 Depreciation and amortization 1,745 1,688 EBITDA 5,730 3,851 As a percentage of sales 4.77% 3.10% As a multiple of interest expense 2.89x 1.22x The cash flow from operations provided $3.5 million for the 12 weeks ended March 22, 1997, and $1.1 million for the 12 weeks ended March 23, 1996. The improvement in cash flow from operations for the 12 weeks ended March 22, 1997, was primarily due to a decrease in the selling and administrative expense and the decrease in receivables resulting from the annual rebate payments received from Associated Wholesale Grocers, Inc., the primary supplier to the Company. These items were partially offset by the semi-annual interest payment on the $60.0 million unsecured notes issued in the reorganization. 9 The investing activities of the Company used net cash of $1.2 million and $0.2 million for the 12 weeks ended March 22, 1997, and March 23, 1996, respectively. The funds for the first quarter 1997 investing activities were provided by the revolving credit facility and internally-generated cash. Financing activities of the Company provided net cash of $1.6 million for the 12 weeks ended March 22, 1997, and used net cash of $2.9 million for the 12 weeks ended March 23, 1996. As of April 21, 1997, the Company had $1.4 million of borrowings and $5.7 million of letters of credit outstanding under its $27.5 million revolving credit facility. Management believes that the revolving credit facility and cash flow from operations will be adequate for the Company's short-term requirements. As of March 22, 1997, the Company has 23 ongoing major and minor remodeling projects on its stores. The Company intends to improve certain store facilities through its capital expenditure program to maintain its market competitiveness. Cash capital expenditures for 1997 are expected to be at $11.6 million. The credit agreement limits the Company to $12.0 million and $13.0 million of cash capital expenditures for 1997 and 1998, respectively. The Company is also limited to $7.0 million of new capital leases each year. The Company currently projects that it will have two new stores by the end of 1998. 10 PART II - OTHER INFORMATION Item 5. Other Information On March 31, 1997, Holding's common stock ("Common Stock") was approved by NASDAQ National Market System for listing. Accordingly, the Common Stock was listed in NASDAQ National Market System effective as of April 14, 1997, under the symbol "HMLD." Item 6. Exhibits and Reports on Form 8-K (a) Exhibit: The following exhibit is filed as part of this report: Exhibit No. Description 27 Financial Data Schedule. 99 Press release of April 8, 1997, issued by the Company announcing its NASDAQ National Market System listing. (b) Report on Form 8-K: The Company did not file any Form 8-K during the quarter ended March 22, 1997. 11 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. HOMELAND HOLDING CORPORATION Date: May 6, 1997 By: /s/ James A. Demme_____________________ James A. Demme, Chairman, President, Chief Executive Officer and Director (Principal Executive Officer) Date: May 6, 1997 By: /s/ Larry W. Kordisch__________________ Larry W. Kordisch, Executive Vice President/ Finance, Chief Financial Officer and Secretary (Principal Financial Officer) EX-27 2
5 3-MOS JAN-03-1998 MAR-22-1997 5,382 0 7,192 1,471 44,532 58,185 67,689 4,716 163,890 33,196 60,000 0 0 48 50,635 163,890 120,050 120,050 90,878 90,878 28,647 0 1,982 (1,457) 801 (2,258) 0 0 0 (2,258) (.47) (.47)
EX-99 3 FOR IMMEDIATE RELEASE NEWS Contact: James A. Demme, Chairman (405) 879-6600 HOMELAND HOLDING CORPORATION SHARES WILL TRADE IN NASDAQ NATIONAL MARKET OKLAHOMA CITY, OK, April 8, 1997 -- The common stock of Homeland Holding Corporation ("Homeland") will begin trading on April 14, 1997, in the Nasdaq National Market, James A. Demme, Chairman, President and Chief Executive Officer announced. Homeland, whose trading symbol is HMLD, is a leading supermarket chain with 66 stores in the Oklahoma, southern Kansas and Texas panhandle region. James A. Demme noted that Homeland's entry into the Nasdaq National Market provides brokers and others with immediate access to the best bid and ask prices and other information about the company's shares throughout the trading day. Those prices are available in over more than 200,000 electronic terminals in brokers' offices throughout the United States and the world. Homeland achieved sales of $527.8 million and EBITDA of $19.5 million or approximately 4% of sales in 1996. The company's comparable store sales for the stores in operation throughout 1996 increased by 0.3%. Mr. Demme stated that Homeland is pleased with the results of its recent restructuring that lowered its operating and occupancy costs and enabled it to better compete in the marketplace. The current market makers for Homeland's common stock are Donaldson, Lufkin and Jenrette of New York, New York; Barron Chase Securities of Tulsa, Oklahoma; and Herzog, Heine and Geduld, of Jersey City, New Jersey. -----END PRIVACY-ENHANCED MESSAGE-----