-----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, BpGU+44njxkBK38DopENPw2bKTXeTJ5HJJBbpBiM7Xa8tF0c//F0RQScILcL9UAq +PfcYU4mBfxOXNb01kIOuA== 0000850309-95-000006.txt : 19951119 0000850309-95-000006.hdr.sgml : 19951119 ACCESSION NUMBER: 0000850309-95-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SMITHS FOOD & DRUG CENTERS INC CENTRAL INDEX KEY: 0000850309 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-GROCERY STORES [5411] IRS NUMBER: 870258768 STATE OF INCORPORATION: DE FISCAL YEAR END: 1229 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10252 FILM NUMBER: 95589135 BUSINESS ADDRESS: STREET 1: 1550 S REDWOOD RD CITY: SALT LAKE CITY STATE: UT ZIP: 84104 BUSINESS PHONE: 8019741400 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________________ FORM 10-Q [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1995 (thirteen weeks) 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: 001-10252 SMITH'S FOOD & DRUG CENTERS, INC. (Exact name of registrant as specified in its charter) Delaware 87-0258768 (State of Incorporation) (I.R.S. Employer Identification No.) 1550 South Redwood Road, Salt Lake City, UT 84104 (Address of principal executive offices) (Zip Code) (801) 974-1400 (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 Number of shares outstanding of each class of common stock as of September 30, 1995: Class A 11,665,567 Class B 13,405,088 TABLE OF CONTENTS PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited): Consolidated Statements of Income for the thirteen weeks ended September 30, 1995 and October 1, 1994 and the thirty-nine weeks ended September 30, 1995 and October 1, 1994 3 Consolidated Balance Sheets as of September 30, 1995 and December 31, 1994 4 Consolidated Statements of Cash Flows for the thirty-nine weeks ended September 30, 1995 and October 1, 1994 5 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 8 PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) SMITH'S FOOD & DRUG CENTERS, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (Dollar amounts in thousands, except per share data) Thirteen Thirteen Thirty-Nine Thirty-Nine Weeks Ended Weeks Ended Weeks Ended Weeks Ended Sept 30, Oct 1, Sept 30, Oct 1, 1995 1994 1995 1994 ---- ---- ---- ---- Net sales $768,335 $725,360 $2,285,413 $2,227,468 Cost of goods sold 595,891 561,815 1,775,066 1,736,506 -------- -------- ---------- ---------- 172,444 163,545 510,347 490,962 Expenses: Operating, selling and administrative 114,329 105,174 343,797 329,063 Depreciation and amortization 25,227 22,750 72,694 65,207 Interest 14,927 13,480 45,284 39,410 -------- -------- ---------- ---------- 154,483 141,404 461,775 433,680 INCOME BEFORE INCOME TAXES 17,961 22,141 48,572 57,282 Income taxes 6,900 8,800 19,000 22,700 -------- -------- ---------- ---------- NET INCOME $ 11,061 $ 13,341 $ 29,572 $ 34,582 ======== ======== ========== ========== Net income per share of Common Stock $ .44 $ .48 $ 1.17 $ 1.20 ======== ======== ========== ========== Dividends paid per share of Common Stock $ .15 $ .13 $ .45 $ .39 ======== ======== ========== ========== Average number of common shares outstanding (In thousands) 25,076 27,583 25,257 28,761 ======== ======== ========== ========== See notes to consolidated financial statements SMITH'S FOOD & DRUG CENTERS, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Dollar amounts in thousands) Sept 30, Dec. 31, 1995 1994 ---- ---- ASSETS CURRENT ASSETS Cash and cash equivalents $ 12,323 $ 14,188 Rebates and accounts receivable 23,045 25,596 Inventories 382,620 389,564 Prepaid expenses and deposits 32,585 17,258 ---------- ---------- TOTAL CURRENT ASSETS 450,573 446,606 PROPERTY AND EQUIPMENT Land 315,336 303,701 Buildings 645,733 619,056 Leasehold improvements 58,719 42,369 Fixtures and equipment 618,526 589,480 ---------- ---------- 1,638,314 1,554,606 Less allowances for depreciation and amortization 421,680 364,741 ---------- ---------- 1,216,634 1,189,865 OTHER ASSETS 17,100 16,996 ---------- ---------- $1,684,307 $1,653,467 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Trade accounts payable $ 215,094 $ 235,843 Accrued sales and other taxes 47,949 44,379 Accrued payroll and related benefits 89,443 84,083 Current maturities of long-term debt 20,460 19,011 Current maturities of Redeemable Preferred Stock 534 1,017 ---------- ---------- TOTAL CURRENT LIABILITIES 373,480 384,333 LONG-TERM DEBT, less current maturities 721,235 699,882 DEFERRED INCOME TAXES 94,500 89,500 REDEEMABLE PREFERRED STOCK, less current maturities 4,410 4,410 COMMON STOCKHOLDERS' EQUITY Convertible Class A Common Stock, par value $.01 per share: Authorized 20,000,000 shares; issued and outstanding, 11,665,567 shares in 1995 and 12,140,317 shares in 1994 116 121 Class B Common Stock, par value $.01 per share: Authorized 100,000,000 shares; issued 18,296,444 shares in 1995 and 17,821,694 shares in 1994 183 178 Additional paid-in capital 285,399 285,592 Retained earnings 311,848 293,456 ---------- ---------- 597,546 579,347 Less Treasury Shares at cost (4,891,356 shares in 1995 and 4,772,822 shares in 1994) 106,864 104,005 ---------- ---------- 490,682 475,342 ---------- ---------- $1,684,307 $1,653,467 ========== ========== See notes to consolidated financial statements SMITH'S FOOD & DRUG CENTERS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Dollar amounts in thousands) Thirty-Nine Thirty-Nine Weeks Ended Weeks Ended Sept 30, Oct 1, 1995 1994 ---- ---- OPERATING ACTIVITIES: Net income $29,572 $34,582 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization (including amounts charged to cost of goods sold) 77,152 69,566 Deferred income taxes 6,400 9,100 Other 588 460 Changes in operating assets and liabilities: Rebates and accounts receivable 2,551 1,329 Inventories 6,944 11,774 Prepaid expenses and deposits (16,727) (4,626) Trade accounts payable (20,749) 19,648 Accrued sales and other taxes 3,570 8,556 Accrued payroll and related benefits 5,360 3,027 ------- ------- CASH PROVIDED BY OPERATING ACTIVITIES 94,661 153,416 INVESTING ACTIVITIES: Additions to property and equipment (106,616) (106,156) Sale/leaseback arrangements and other property sales 2,695 20,903 Other (104) (7,013) ------- ------- CASH USED IN INVESTING ACTIVITIES (104,025) (92,266) FINANCING ACTIVITIES: Additions to long-term debt 37,000 Payments on long-term debt (14,198) (30,309) Purchases of Treasury Stock (7,845) (68,584) Proceeds from sale of Treasury Stock 4,204 4,820 Redemptions of Preferred Stock (483) (417) Payment of dividends (11,179) (11,241) ------ ------- CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 7,499 (105,731) NET DECREASE IN CASH AND CASH EQUIVALENTS (1,865) (44,581) Cash and cash equivalents at beginning of year 14,188 61,921 ------- ------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $12,323 $17,340 ======= ======= See notes to consolidated financial statements SMITH'S FOOD & DRUG CENTERS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE A -- BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the thirteen and thirty-nine week periods ended September 30, 1995 are not necessarily indicative of the results that may be expected for the year ending December 30, 1995. For further information, refer to the consolidated financial statements and notes thereto incorporated by reference in the Company's annual report on Form 10-K for the year ended December 31, 1994. NOTE B -- SIGNIFICANT ACCOUNTING POLICIES Net Income per Share of Common Stock: Net income per share of Common Stock is computed by dividing net income by the weighted average number of shares of Common Stock outstanding. The weighted average number of common shares includes Common Stock equivalents in the form of stock options. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Net sales increased 5.9% in the third quarter of 1995 to $768 million compared to $725 million for the same period last year. For the first thirty-nine weeks of 1995, net sales increased to $2.29 billion from $2.23 billion for the same period last year, an increase of 2.6%. Same store sales decreased 1.8% compared with the prior year's third quarter and decreased 3.6% compared to the first nine months of the prior year. The weakness in net sales, despite new store openings, was mainly caused by a significant number of competitive store openings in most marketing areas. Aggressive price competition in the Company's marketing area in recession-plagued Southern California also contributed to the weakness. To the extent these conditions persist, the weakness in sales and same store sales may continue. During the first nine months of 1995, the Company opened nine large combination food and drug centers in Phoenix, Glendale, and two in Mesa, Arizona; Vista, California; Gallup and Hobbs, New Mexico; and Gardnerville and Elko, Nevada. One smaller store was closed in Las Vegas, Nevada. At September 30, 1995, the Company operated 148 stores totaling 9.8 million square feet compared to 134 stores totaling 8.9 million square feet at the end of the prior year's third quarter. During the remainder of fiscal 1995, the Company currently expects to open six additional stores in Arizona, California, Nevada, New Mexico, and Utah averaging approximately 54,000 square feet. The Company anticipates that future stores will range in size from 54,000 to 66,000 square feet. The Company opened four new retail warehouse format stores in Las Vegas, Nevada during the first nine months of 1995, including one conversion of a smaller Smith's store. These new price-impact stores are called PriceRite Grocery Warehouse. Gross margins as a percentage of net sales decreased slightly to 22.4% during the third quarter of 1995 from 22.5% during the same period last year. For the first thirty-nine weeks of 1995, gross margins increased to 22.3% from 22.0% for the same period last year. This increase is due primarily to reduced charges for inventory shrinkage and more effective promotional offerings. The Company anticipates that new stores recently opened and planned to open, as in the past, will apply pressure on its gross margins until the stores become established in their respective markets. The pretax LIFO charge was $1.0 million for the third quarter of 1995 compared to $750,000 for the same period last year and $3.0 million for the first nine months of 1995 compared to $3.75 million for the same period last year. Operating, selling and administrative expenses as a percentage of net sales increased to 14.9% during the third quarter of 1995 from 14.5% during the third quarter of 1994. For the first nine months of the year compared to last year, operating, selling and administrative expenses increased to 15.0% from 14.8%. This increase was caused mainly by the store opening costs related to the thirteen stores opened during the first nine months of the year. The decrease in same store sales also contributed to the increase of operating, selling and administrative expenses as a percentage of net sales. Depreciation and amortization expenses increased 10.9% for the third quarter and 11.5% for the first nine months of 1995 compared to the same respective periods last year due to the increase in the number of new combination stores and equipment replacements in remodeled stores. Interest expense increased 10.7% for the third quarter and 14.9% for the first nine months of 1995 compared to the same respective periods last year. The increase was due to the increase in debt incurred primarily to finance new stores. Liquidity and Capital Resources Cash and cash equivalents decreased $1.9 million during the first nine months of 1995. Working capital was $77.1 million at September 30, 1995, an increase of $14.8 million compared to December 31, 1994. During the first nine months of 1995, cash provided by operating activities was $94.7 million reflecting a prepayment of health and medical expenses and a decrease in accounts payable which were partially offset by a decrease in inventories. Cash used in investing activities was $104.0 million for the first nine months of 1995 reflecting the Company's ongoing expansion program. The Company anticipates investing approximately $30 million during the remainder of 1995 for the development and construction of new food and drug centers, remodeling of existing stores and replacing equipment. However, the actual timing and amount of capital expenditures may vary depending upon a number of factors. Cash provided by financing activities totaled $7.5 million for the first nine months of 1995 as a result of increasing long-term debt. Management believes that the financial resources available to it, including proceeds from sale/leaseback transactions, amounts available under existing and future bank lines of credit, additional long-term financings, and internally generated funds, will be sufficient to meet planned capital expansion and working capital requirements for the foreseeable future, including debt and lease servicing requirements. The Company may, however, use additional sources of funds for such purposes, including the issuance of debt or equity securities and leasing rather than owning buildings and equipment. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) The exhibits listed in the accompanying index to exhibits are filed as part of the Form 10-Q. (b) There were no reports on Form 8-K filed during the third quarter. INDEX TO EXHIBITS Exhibit Number Document 27 Financial Data Schedule 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. SMITH'S FOOD & DRUG CENTERS, INC. (Registrant) Date: 11/9/95 /s/ Matthew G. Tezak Matthew G. Tezak, Senior Vice President and Chief Financial Officer (Principal Accounting Officer) EX-27 2
5 Article 5 FDS for 3rd Quarter 10-Q 1000 3-MOS 9-MOS DEC-30-1995 DEC-30-1995 SEP-30-1995 SEP-30-1995 12,323 12,323 0 0 23,045 23,045 0 0 382,620 382,620 450,573 450,573 1,638,314 1,638,314 421,680 421,680 1,684,307 1,684,307 373,480 373,480 0 0 299 299 4,410 4,410 0 0 597,247 597,247 1,684,307 1,684,307 768,335 2,285,413 768,335 2,285,413 595,891 1,775,066 595,891 1,775,066 0 0 0 0 14,927 45,284 17,961 48,572 6,900 19,000 11,061 29,572 0 0 0 0 0 0 11,061 29,572 .44 1.17 .44 1.17
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