-----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, Cc6PF8kzStzxdOaT9YM/RrAjMVMGXDq/yNkGfZVjJQOxY/nc2JZFlKit3W6r3hCH 2KMbS7iZ+ZM61Z/f/VEmXA== 0000871891-98-000003.txt : 19980513 0000871891-98-000003.hdr.sgml : 19980513 ACCESSION NUMBER: 0000871891-98-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980329 FILED AS OF DATE: 19980512 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CARR GOTTSTEIN FOODS CO CENTRAL INDEX KEY: 0000871891 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-GROCERY STORES [5411] IRS NUMBER: 920135158 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12116 FILM NUMBER: 98616517 BUSINESS ADDRESS: STREET 1: 6411 A ST CITY: ANCHORAGE STATE: AK ZIP: 99518 BUSINESS PHONE: 9075611944 MAIL ADDRESS: STREET 1: 6411 A ST CITY: ANCHORAGE STATE: AK ZIP: 99518 10-Q 1 FORM 10-Q 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 29, 1998 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 1-12116 CARR-GOTTSTEIN FOODS CO. (Exact name of registrant as specified in its charter) Delaware 920135158 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 6411 A Street Anchorage, Alaska 99518 (Address of principal executive offices) Registrant's telephone number, including area code: (907) 561-1944 Indicate by check mark whether the registrant (1) has filed all documents and reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for 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 [ ] The number of shares of the registrant's Common Stock outstanding at May 11, 1998 was 8,190,796 shares. EXHIBIT INDEX APPEARS AT PAGE 14 Page 1 of 16 CARR GOTTSTEIN FOODS CO. AND SUBSIDIARIES FORM 10-Q For the Quarterly Period Ended March 29, 1998 INDEX Part I. Financial Information Page Item 1. Financial Statements a) Consolidated Balance Sheets as of March 29, 1998 (unaudited) and December 28, 1997 1 b) Consolidated Statements of Operations for the 13 weeks ended March 29, 1998 (unaudited) and March 30, 1997 (unaudited) 2 c) Consolidated Statements of Cash Flows for the 13 weeks ended March 29, 1998 (unaudited) and March 30, 1997 (unaudited) 3 d) Notes to Consolidated Financial Statements (unaudited) 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (unaudited) 11 Item 3. Quantitative and Qualitative Disclosure about Market Risk 12 Part II. Other Information 13 Signatures 13
PART I - FINANCIAL INFORMATION Item 1. Financial Statements Carr-Gottstein Foods Co. and Subsidiaries Consolidated Balance Sheets - -------------------------------------------------------------------------------------------------------------------------- Amounts In Thousands - -------------------------------------------------------------------------------------------------------------------------- March 29, December 28, 1998 1997 - ----------------------------------------------------------------------------------- -------------------- ------------------ Assets (unaudited) Current assets: Cash and cash equivalents $ 8,008 $ 11,081 Accounts receivable, net 11,476 11,513 Income taxes receivable 778 949 Inventories 51,442 51,471 Deferred taxes 2,690 2,690 Prepaid expenses and other current assets 2,813 2,380 - ----------------------------------------------------------------------------------- -------------------- ------------------ Total current assets 77,207 80,084 Property, plant and equipment, at cost, net of accumulated depreciation 131,728 134,090 Intangible assets, net of accumulated amortization 88,271 88,973 Deferred taxes 783 783 Other assets 11,148 11,535 - ----------------------------------------------------------------------------------- -------------------- ------------------ $ 309,137 $ 315,465 =================================================================================== ==================== ================== Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 36,520 $ 37,187 Accrued expenses 21,025 22,797 Income taxes payable 40 - Current maturities of long-term debt 8,375 12,220 - ----------------------------------------------------------------------------------- -------------------- ------------------ Total current liabilities 65,960 72,204 Long-term debt, excluding current maturities 215,284 215,420 Other liabilities 3,486 3,527 - ----------------------------------------------------------------------------------- -------------------- ------------------ Total liabilities 284,730 291,151 - ----------------------------------------------------------------------------------- -------------------- ------------------ Stockholders' equity: Common stock, $.01 par value, authorized 25,000 shares, issued 9,680 shares 97 97 Additional paid in capital 51,123 52,088 Deficit (16,783) (16,149) - ----------------------------------------------------------------------------------- -------------------- ------------------ 34,437 36,036 Less treasury stock, 1,489 and 1,741 shares, respectively, at cost 10,030 11,722 - ----------------------------------------------------------------------------------- -------------------- ------------------ Total stockholders' equity 24,407 24,314 - ----------------------------------------------------------------------------------- -------------------- ------------------ Commitments and contingencies =================================================================================== ==================== ================== $ 309,137 $ 315,465 =================================================================================== ==================== ================== See accompanying notes to consolidated financial statements.
Carr-Gottstein Foods Co. and Subsidiaries - -------------------------------------------------------------------------------------------------------------------------- Consolidated Statements of Operations Amounts In Thousands (except per share data) - -------------------------------------------------------------------------------------------------------------------------- 13 Weeks Ended March 29, March 30, 1998 1997 - ------------------------------------------------------------------------------------ ------------------- ------------------ (unaudited) (unaudited) Sales $ 135,113 $ 141,467 Cost of merchandise sold, including warehousing and transportation expenses 95,647 100,475 - ------------------------------------------------------------------------------------ ------------------- ------------------ Gross profit 39,466 40,992 Operating and administrative expenses 33,557 35,514 - ------------------------------------------------------------------------------------ ------------------- ------------------ Operating income 5,909 5,478 - ------------------------------------------------------------------------------------ ------------------- ------------------ Other income (expense): Interest expense, net (6,514) (6,711) Other income 11 - - ------------------------------------------------------------------------------------ ------------------- ------------------ Total other expense (6,503) (6,711) - ------------------------------------------------------------------------------------ ------------------- ------------------ Net loss before income tax expense (594) (1,233) Income tax (expense) benefit (40) 214 - ------------------------------------------------------------------------------------ ------------------- ------------------ Net loss $ (634) $ (1,019) ==================================================================================== =================== ================== Basic loss per common share (0.08) (0.13) Diluted loss per common share (0.08) (0.13) ==================================================================================== =================== ================== Weighted average common shares outstanding - basic 8,147 7,884 Weighted average common shares outstanding - diluted 8,147 7,884 ==================================================================================== =================== ================== See accompanying notes to consolidated financial statements.
Carr-Gottstein Foods Co. and Subsidiaries Consolidated Statements of Cash Flows - ---------------------------------------------------------------------------------------------------------------------------- Amounts in Thousands - --------------------------------------------------------------------------------------------------------------------------- 13 Weeks Ended March 29, March 30, 1998 1997 - --------------------------------------------------------------------------------------------------------------------------- (unaudited) (unaudited) Operating activities: Net loss $ (634) $ (1,019) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 3,352 3,461 Amortization of intangibles 702 713 Amortization of loan fees and discounts 311 344 Gain on disposal of property and equipment (11) - (Increase) decrease in current assets: Income tax receivable 171 (499) Accounts receivable 37 (1,957) Inventories 29 258 Prepaid expenses (433) (403) Other assets 76 356 (Decrease) increase in current liabilities: Accounts payable (667) 1,845 Accrued expenses (1,772) 1,414 Income taxes payable 40 (298) Other liabilities (41) (82) - --------------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 1,160 4,133 - --------------------------------------------------------------------------------------------------------------------------- Investing activities: Additions to property and equipment (990) (474) Proceeds from sale of property and equipment 11 - - --------------------------------------------------------------------------------------------------------------------------- Net cash used in investing activities (979) (474) - --------------------------------------------------------------------------------------------------------------------------- Financing activities: Payments on short-term borrowings, net - (500) Payments on long-term debt (3,981) (2,963) Issuance of treasury stock 727 304 - --------------------------------------------------------------------------------------------------------------------------- Net cash used in financing activities (3,254) (3,159) - --------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents (3,073) 500 Cash and cash equivalents at beginning of period 11,081 8,655 - --------------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 8,008 $ 9,155 =========================================================================================================================== Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 3,479 $ 4,016 Income taxes - 501 =========================================================================================================================== See accompanying notes to consolidated financial statements.
Carr-Gottstein Foods Co. and Subsidiaries Notes to Consolidated Financial Statements (unaudited) (1) During interim periods, Carr-Gottstein Foods Co. and subsidiaries (the "Company") follows the accounting policies set forth in its audited financial statements included in its Annual Report for the fiscal year ended December 28, 1997 filed with the Securities Exchange Commission. These consolidated interim financial statements should be read in conjunction with such audited consolidated financial statements and notes thereto. Management believes that the accompanying interim financial statements reflect all adjustments, which are necessary for a fair statement of the results of the interim period, presented. All adjustments made in the accompanying interim financial statements are of a normal recurring nature. (2) Statement Financial Accounting Standard No. 128 (SFAS 128), Earnings Per Share, which supersedes APB Opinion No. 15, Earnings Per Share, specifies the computation, presentation, and disclosure requirements for earnings per share (EPS) for entities with publicly held common stock or potential common stock. The statement replaces Primary EPS and Fully Diluted EPS with Basic EPS and Diluted EPS, respectively. Basic EPS, unlike Primary EPS, excludes all dilution while Diluted EPS, like Fully Diluted EPS, reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. The Company has adopted the provisions of SFAS No. 128 and has restated all prior period EPS amounts accordingly. Carr-Gottstein Foods Co. and Subsidiaries Notes to Consolidated Financial Statements (unaudited) - continued (2) CONDENSED CONSOLIDATING FINANCIAL INFORMATION The Company issued $100,000 of senior subordinated unsecured notes on November 15, 1995. CGF Properties, Inc. has not guaranteed the unsecured notes and financial information for this wholly owned subsidiary is presented separately. All of the Company's other direct and indirect subsidiaries, AOL Express, Inc., APR Forwarders, Inc., Oaken Keg Spirit Shops, Inc. and Alaska Advertisers, Inc. are wholly-owned and have fully and unconditionally guaranteed the unsecured notes on a joint and several basis and, accordingly, are presented on a combined basis. Parent company only information is presented for Carr-Gottstein Foods Co., which reflects only its business activity and its wholly owned subsidiaries accounted for using the equity method. Separate financial statements and other disclosures for the guarantor subsidiaries are not presented because in the opinion of management such information is not material. The following are condensed consolidating balance sheets:
Amounts in Thousands - ----------------------------------------------------------------------------------------------------------------------- Balance Sheet Non-Guarantor Guarantor Parent Subsidiary Subsidiaries Company March 29, 1998 CGF Properties (Combined) Only Elimination Consolidated - ----------------------------------------------------------------------------------------------------------------------- Assets Inventories $ - $ 3,228 $ 48,214 $ - $ 51,442 Other current assets 7,096 75,777 912 (58,020) 25,765 - ----------------------------------------------------------------------------------------------------------------------- Total current assets 7,096 79,005 49,126 (58,020) 77,207 Property, plant and equipment, net 63,575 4,620 63,533 - 131,728 Intangible assets, net - - 88,271 - 88,271 Investments in subsidiaries - - 109,702 (109,702) - Other assets 32 573 11,326 - 11,931 - ----------------------------------------------------------------------------------------------------------------------- $ 70,703 $ 84,198 $ 321,958 $ (167,722) $ 309,137 ======================================================================================================================= Liabilities and Stockholders' Equity Current liabilities $ 1,265 $ 2,993 $ 119,722 $ (58,020) $ 65,960 Long-term debt, excluding current maturities 40,941 - 174,343 - 215,284 Other liabilities - - 3,486 - 3,486 - ----------------------------------------------------------------------------------------------------------------------- Total liabilities 42,206 2,993 297,551 (58,020) 284,730 - ----------------------------------------------------------------------------------------------------------------------- Common stock 10 44 97 (54) 97 Additional paid-in capital 28,966 39,381 51,123 (68,347) 51,123 Retained earnings (deficit) (479) 41,780 (16,783) (41,301) (16,783) - ----------------------------------------------------------------------------------------------------------------------- 28,497 81,205 34,437 (109,702) 34,437 Less treasury stock - - (10,030) - (10,030) - ---------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------- Total stockholders' equity 28,497 81,205 24,407 (109,702) 24,407 - ----------------------------------------------------------------------------------------------------------------------- $ 70,703 $ 84,198 $ 321,958 $ (167,722) $ 309,137 =======================================================================================================================
Carr-Gottstein Foods Co. and Subsidiaries Notes to Consolidated Financial Statements (unaudited) - continued
Amounts in Thousands - ----------------------------------------------------------------------------------------------------------------------- Balance Sheet Non-Guarantor Guarantor Parent Subsidiary Subsidiaries Company March 30, 1997 CGF Properties (Combined) Only Elimination Consolidated - ----------------------------------------------------------------------------------------------------------------------- Assets Inventories $ - $ 4,476 $ 49,498 $ - $ 53,974 Other current assets 6,159 66,743 4,884 (44,395) 33,391 - ----------------------------------------------------------------------------------------------------------------------- Total current assets 6,159 71,219 54,382 (44,395) 87,365 Property, plant and equipment, net 64,561 5,523 69,108 - 139,192 Intangible assets, net - - 91,018 - 91,018 Investments in subsidiaries - - 103,152 (103,152) - Other assets 32 483 11,455 - 11,970 - ----------------------------------------------------------------------------------------------------------------------- $ 70,752 $ 77,225 $ 329,115 $ (147,547) $ 329,545 ======================================================================================================================= Liabilities and Stockholders' Equity Current liabilities $ 1,114 $ 2,016 $ 114,893 $ (44,395) $ 73,628 Long-term debt, excluding current maturities 41,695 - 181,964 - 223,659 Other liabilities - - 3,375 - 3,375 - ----------------------------------------------------------------------------------------------------------------------- Total liabilities 42,809 2,016 300,232 (44,395) 300,662 - ----------------------------------------------------------------------------------------------------------------------- Common stock 10 44 97 (54) 97 Additional paid-in capital 28,966 39,381 52,111 (68,347) 52,111 Retained earnings (deficit) (1,033) 35,784 (11,563) (34,751) (11,563) - ----------------------------------------------------------------------------------------------------------------------- 27,943 75,209 40,645 (103,152) 40,645 Less treasury stock - - 11,762 - 11,762 - ----------------------------------------------------------------------------------------------------------------------- Total stockholders' equity 27,943 75,209 28,883 (103,152) 28,883 - ----------------------------------------------------------------------------------------------------------------------- $ 70,752 $ 77,225 $ 329,115 $ (147,547) $ 329,545 =======================================================================================================================
Carr-Gottstein Foods Co. and Subsidiaries Notes to Consolidated Financial Statements (unaudited) - continued The following are condensed consolidating statements of operations:
Amounts in Thousands - -------------------------------------------------------------------------------------------------------------------------- Statement of Operations Non-Guarantor Guarantor Parent Subsidiary Subsidiaries Company First Quarter 1998 CGF Properties (Combined) Only Elimination Consolidated - -------------------------------------------------------------------------------------------------------------------------- Sales $ - $ 18,449 $ 126,135 $ (9,471) $ 135,113 Cost of merchandise sold, including warehousing and transportation expenses - 13,613 91,505 (9,471) 95,647 - -------------------------------------------------------------------------------------------------------------------------- Gross profit - 4,836 34,630 - 39,466 Operating and administrative expenses (income) (1,332) 2,531 32,358 - 33,557 - -------------------------------------------------------------------------------------------------------------------------- Operating income 1,332 2,305 2,272 - 5,909 Interest expense, net (1,103) - (5,411) - (6,514) Other income - - 11 - 11 Equity in subsidiary earnings - - 1,495 (1,495) - - -------------------------------------------------------------------------------------------------------------------------- Earnings before income tax 229 2,305 (1,633) (1,495) (594) Income tax (expense) benefit (94) (945) 999 - (40) - -------------------------------------------------------------------------------------------------------------------------- Net earnings (loss) $ 135 $ 1,360 $ (634) $ (1,495) $ (634) ==========================================================================================================================
Carr-Gottstein Foods Co. and Subsidiaries Notes to Consolidated Financial Statements (unaudited) - continued The following are condensed consolidating statements of operations:
Amounts in Thousands - -------------------------------------------------------------------------------------------------------------------------- Statement of Operations Non-Guarantor Guarantor Parent Subsidiary Subsidiaries Company First Quarter 1997 CGF Properties (Combined) Only Elimination Consolidated - -------------------------------------------------------------------------------------------------------------------------- Sales $ - $ 17,044 $ 133,058 $ (8,635) $ 141,467 Cost of merchandise sold, including warehousing and transportation expenses - 12,191 96,919 (8,635) 100,475 - -------------------------------------------------------------------------------------------------------------------------- Gross profit - 4,853 36,139 - 40,992 Operating and administrative expenses (income) (1,249) 2,818 33,945 - 35,514 - -------------------------------------------------------------------------------------------------------------------------- Operating income 1,249 2,035 2,194 - 5,478 Interest expense, net (1,196) - (5,515) - (6,711) Equity in subsidiary earnings - - 1,232 (1,232) - - -------------------------------------------------------------------------------------------------------------------------- Earnings before income tax 53 2,035 (2,089) (1,232) (1,233) Income tax (expense) benefit (22) (834) 1,070 - 214 - -------------------------------------------------------------------------------------------------------------------------- Net earnings (loss) $ 31 1,201 $ (1,019) $ (1,232) $ (1,019) ==========================================================================================================================
Carr-Gottstein Foods Co. and Subsidiaries Notes to Consolidated Financial Statements (unaudited) - continued The following is condensed consolidating cash flow information. The consolidated Company's cash and cash equivalents is positive at each balance sheet date so negative balances for individual subsidiaries are not classified as liabilities. The net cash provided by operating activities fluctuates due to changes in intercompany receivables and payables from the transfer of cash to and from the parent company.
Amounts in Thousands - -------------------------------------------------------------------------------------------------------------------------- Statement of Cash Flows Non-Guarantor Guarantor Parent Subsidiary Subsidiaries Company First Quarter 1998 CGF Properties (Combined) Only Consolidated - -------------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities $ 399 $ 3 $ 758 $ 1,160 - -------------------------------------------------------------------------------------------------------------------------- Investing activities Additions to property and equipment (223) (3) (764) (990) Proceeds from sale of property and equipment - - 11 11 - -------------------------------------------------------------------------------------------------------------------------- Net cash used in investing activities (223) (3) (753) (979) - -------------------------------------------------------------------------------------------------------------------------- Financing activities Payments on long-term debt (176) - (3,805) (3,981) Issuance of treasury stock - - 727 727 - ------------------------------------------------------------------------------------------------------------------------- Net cash used in financing activities (176) - (3,078) (3,254) - ------------------------------------------------------------------------------------------------------------------------- Net decrease in cash and cash equivalents - - (3,073) (3,073) Cash and cash equivalents at beginning of period 53 106 10,922 11,081 - ------------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 53 $ 106 $ 7,849 $ 8,008 =========================================================================================================================
Carr-Gottstein Foods Co. and Subsidiaries Notes to Consolidated Financial Statements (unaudited) - continued The following is condensed consolidating cash flow information. The consolidated Company's cash and cash equivalents is positive at each balance sheet date so negative balances for individual subsidiaries are not classified as liabilities. The net cash provided by operating activities fluctuates due to changes in intercompany receivables and payables from the transfer of cash to and from the parent company.
Amounts in Thousands - -------------------------------------------------------------------------------------------------------------------------- Statement of Cash Flows Non-Guarantor Guarantor Parent Subsidiary Subsidiaries Company First Quarter 1997 CGF Properties (Combined) Only Consolidated - -------------------------------------------------------------------------------------------------------------------------- Net cash provided by (used in) operating activities $ 130 $ (24) $ 4,027 $ 4,133 - -------------------------------------------------------------------------------------------------------------------------- Investing activities Additions to property and equipment - (9) (465) (474) - -------------------------------------------------------------------------------------------------------------------------- Net cash used in investing activities - (9) (465) (474) - -------------------------------------------------------------------------------------------------------------------------- Financing activities Payments on short-term borrowings, net - - (500) (500) Payments on long-term debt (128) - (2,835) (2,963) Issuance of treasury stock - - 304 304 - -------------------------------------------------------------------------------------------------------------------------- Net cash used in financing activities (128) - (3,031) (3,159) - -------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents 2 (33) 531 500 Cash and cash equivalents at beginning of period 53 106 8,496 8,655 - -------------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 55 $ 73 $ 9,027 $ 9,155 ==========================================================================================================================
Carr-Gottstein Foods Co. and Subsidiaries Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. (Unaudited) The following discussion should be read in conjunction with the financial statements and related notes included elsewhere in this Form 10-Q. General Carr Gottstein Foods Co. is the leading retail and wholesale food company in Alaska operating full-service supermarkets and wine and liquor stores as well as the only full-line food warehouse and distribution center (under the J.B. Gottstein name) in the state. Results of Operations 13 Weeks Ended March 29, 1998 Compared to 13 Weeks Ended March 30, 1997 Sales. Sales for the 13 weeks ended March 29, 1998 were $135.1 million compared to $141.5 million for the 13 weeks ended March 30, 1997. The 4.5% decrease was due primarily to the closure of YES Foods, which closed in the third quarter of 1997, and the change in the Easter holiday, which fell into the second quarter of 1998 versus the first quarter of 1997. Excluding the impact of YES Foods, sales decreased $0.6 million, or 0.4%. Retail comparable store sales for the 13 weeks of 1998, decreased 0.6% from the 13 week period in 1997. Gross Profit. Gross profit for the 13 weeks ended March 29, 1998 was $39.5 million compared to $41.0 million for the 13 weeks ended March 30, 1997. As a percentage of sales, gross profit was 29.2% for the 13 weeks 1998 compared to 29.0% for the 13 weeks 1997. Gross profit as a percentage of sales for the 13 weeks 1998 increased primarily due to the closure of YES Foods, which was operating at lower average gross margins during the 1997 period. Operating and Administrative Expenses. Operating and administrative expenses for the 13 weeks ended March 29, 1998 were $33.6 million compared to $35.5 million for the 13 weeks ended March 30, 1997. Operating and administrative expenses as a percentage of sales were 24.8% for the 13 weeks 1998 compared to 25.1% for the 13 weeks 1997. Operating expenses for the 1998 quarter decreased as compared to the 1997 quarter primarily due to effective expense control and the closure of YES Foods. Operating Income. Operating income for the 13 weeks ended March 29, 1998 increased to $5.9 million from $5.5 million for the 13 weeks ended March 30, 1997. The increase in the quarter was due to improved gross margin, effective expense control and the elimination of expenses attributable to YES Foods. Other Income and Expense. Net interest expense was $6.5 million for the 13 weeks ended March 29, 1998 compared to $6.7 million for the 13 weeks ended March 30, 1997. The decrease in interest expense was due primarily to lower average debt balances in the quarter. Income Taxes. The Company's income tax expense for the 13 weeks ended March 29, 1998 of $40,000 compared to a $0.2 million benefit for the 13 weeks ended March 30, 1997. Net Loss. Net loss for the 13 weeks ended March 29, 1998 was $0.6 million, or $0.08 per share, versus a net loss of $1.0 million, or $0.13 per share for the 13 weeks ended March 30, 1997. Liquidity and Capital Resources The Company's primary sources of liquidity are cash flows from operations and its working capital revolving credit facility, which are considered to be adequate for anticipated cash needs. Primary uses are capital expenditures, debt service and lease payments. Net cash provided by operating activities was $1.2 million for the 13 weeks ended March 29, 1998 compared to net cash provided by operating activities of $4.1 million for the same period in 1997. The change in the 13 weeks 1998 compared to 1997 was due primarily to decreases in accrued expenses and accounts payable. Capital expenditures for the 13 weeks ended March 29, 1998 were $1.0 million. Capital expenditures are expected to range between $8.0 and $12.0 million for fiscal 1998. It is anticipated that the balance of 1998 capital expenditures will be funded out of cash provided by operations and borrowings under the working capital revolver. Net cash used in financing activities for the 13 weeks ended March 29, 1998 was $3.3 million. During this time period, the Company made payments against its long-term debt in the amount of $4.0 million. At March 29, 1998 there were no borrowings outstanding on the revolving debt. The Company had available unused credit of $35.0 million. Funds borrowed under the revolving credit portion of the Company's credit facility are restricted to working capital and general corporate purposes. The level of borrowings under the Company's revolving debt is dependent primarily upon cash flows from operations, the timing of disbursements, long-term borrowing activity and capital expenditure requirements. On April 9, 1998 the Company completed a transaction whereby it purchased the fixtures, equipment and inventory of the three retail locations of Market Basket, Inc. located in Fairbanks and North Pole, Alaska. The transaction also included the purchase of certain real estate in Fairbanks. As part of the agreement, the Company entered into a long-term lease for the store in North Pole, Alaska. On April 17, 1998 the Company amended its Senior Credit Agreement. The amendment reduced the Company's borrowing rates by 50 basis points on its $35.0 working capital revolver and $23.0 million Term A facilities, and by 75 basis points on its $58.8 million Term B facility. The amendment also modified certain financial covenants and restrictions. Item 2. Quantitative and Qualitative Disclosure about Market Risk Not applicable PART II. OTHER INFORMATION Item 1. Legal Proceedings - None. 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 - None Item 6. Exhibits and Reports on Form 8-K (a) The exhibits set forth in the Exhibit Index on page 14 hereof are filed with this quarterly report on Form 10-Q. (b) No reports were filed on Form 8-K during the quarter ended March 29, 1998. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CARR-GOTTSTEIN FOODS CO. By: s/s Lawrence H. Hayward Lawrence H. Hayward President and Chief Executive Officer Date: May 11, 1998 By: s/s Donald J. Anderson Donald J. Anderson Senior Vice-President and Chief Financial Officer Date: May 11, 1998 CARR-GOTTSTEIN FOODS CO. Exhibit Index The following exhibits are attached as indicated: Exhibit Number Description of Exhibit 27 Financial Data Schedule 27.1 Restated financial Data Schedule EX-27 2 FINANCIAL DATA SCHEDULE
5 1000 3-MOS JAN-03-1999 DEC-29-1998 MAR-29-1998 8008 0 12771 1295 51442 77207 219586 87858 309137 65960 0 0 0 97 24310 309137 135113 135113 95647 95647 33568 0 6514 (594) 40 0 0 0 0 (634) (0.08) (0.08)
EX-27.1 3 RESTATED FINANCIAL DATA SCHEDULE
5 1000 3-MOS DEC-28-1997 DEC-30-1996 MAR-30-1997 9155 0 19096 489 53974 87365 214650 75458 329545 73628 0 0 0 97 28786 329545 141467 141467 100475 100475 35514 0 6711 (1233) (214) 0 0 0 0 (1019) (0.13) (0.13) Restated to be consistent with 1998 presentation. Restated to reflect adoption in fourth quarter 1997 of FAS 128 which is a new standard of computing and presenting both basic and diluted net income per share.
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