-----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, TLj0+fIQmFlcP2UAa1DJZsyXyH0XETtLzeFdiID3vwdQTtfM+c25phlSLhIXgSQH eQVlvcLpoLuxADUhgzgOJg== 0000871891-97-000008.txt : 19970814 0000871891-97-000008.hdr.sgml : 19970814 ACCESSION NUMBER: 0000871891-97-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970629 FILED AS OF DATE: 19970813 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: 1934 Act SEC FILE NUMBER: 001-12116 FILM NUMBER: 97657610 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 June 29, 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 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 August 11, 1997 was 7,933,296 shares. EXHIBIT INDEX APPEARS AT PAGE 18 Page 1 of 20 CARR-GOTTSTEIN FOODS CO. AND SUBSIDIARIES FORM 10-Q For the Quarterly Period Ended June 29, 1997 INDEX Part I. Financial Information Page Item 1. Financial Statements a) Consolidated Balance Sheets as of June 29, 1997 (unaudited) and December 29, 1996 1 b) Consolidated Statements of Operations for the 13 weeks and 26 weeks ended June 29, 1997 (unaudited) and June 30, 1996 (unaudited) 2 c) Consolidated Statements of Cash Flows for the 13 weeks ended June 29, 1997 (unaudited) and June 30, 1996 (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) 13 Part II. Other Information 16 Signatures 17
PART I - FINANCIAL INFORMATION Item 1. Financial Statements Carr-Gottstein Foods Co. and Subsidiaries Consolidated Balance Sheets - -------------------------------------------------------------------------------------------------------------------------- Amounts In Thousands - -------------------------------------------------------------------------------------------------------------------------- June 29, December 29, 1997 1996 - ----------------------------------------------------------------------------------- -------------------- ------------------ (unaudited) (unaudited) Cash and cash equivalents $ 10,744 $ 8,655 Accounts receivable, net 18,258 16,650 Income taxes receivable 911 - Inventories 56,509 54,232 Deferred taxes 5,027 1,918 Prepaid expenses and other current assets 2,921 2,809 - ----------------------------------------------------------------------------------- -------------------- ------------------ Total current assets 94,370 84,264 Property, plant and equipment, at cost, net of accumulated depreciation 137,288 142,179 Intangible assets, net of accumulated amortization 90,304 91,731 Deferred taxes 334 334 Other assets 11,232 12,336 - ----------------------------------------------------------------------------------- -------------------- ------------------ $ 333,528 $ 330,844 =================================================================================== ==================== ================== Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 40,962 $ 38,467 Accrued expenses 23,780 15,145 Income taxes payable - 298 Current maturities of long-term debt 8,317 7,281 Revolving line of credit 7,900 7,000 Estimated obligation for self-insurance 1,854 1,958 - ----------------------------------------------------------------------------------- -------------------- ------------------ Total current liabilities 82,813 70,149 Long-term debt, excluding current maturities 223,472 227,640 Estimated obligation for self-insurance 1,536 1,536 Other liabilities 1,894 1,921 - ----------------------------------------------------------------------------------- -------------------- ------------------ Total liabilities 309,715 301,246 - ----------------------------------------------------------------------------------- -------------------- ------------------ Stockholders' equity: Common stock, $.01 par value, authorized 25,000 shares, issued 9,680 shares 97 97 Additional paid in capital 52,103 52,513 Deficit (16,638) (10,544) - ----------------------------------------------------------------------------------- -------------------- ------------------ 35,562 42,066 Less treasury stock, 1,747 and 1,835 shares, at cost 11,749 12,468 - ----------------------------------------------------------------------------------- -------------------- ------------------ Total stockholders' equity 23,813 29,598 - ----------------------------------------------------------------------------------- -------------------- ------------------ Commitments and contingencies =================================================================================== ==================== ================== $ 333,528 $ 330,844 =================================================================================== ==================== ================== 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 26 Weeks Ended June 29, June 30, June 29, June 30, 1997 1996 1997 1996 - -------------------------------------------------------------- -------------- ----------------- --------------- ---------------- (unaudited) (unaudited) - ------------------------------------------------------------------------------------------------------------------------------- Sales $ 152,029 $ 160,953 $ 293,495 $ 303,762 Cost of merchandise sold, including warehousing and transportation expenses 108,329 117,117 208,803 219,823 - -------------------------------------------------------------- -------------- ----------------- --------------- ---------------- Gross profit 43,700 43,836 84,692 83,939 Operating and administrative expenses 36,173 37,009 71,687 72,444 Non-recurring charge 8,949 - 8,949 - - -------------------------------------------------------------- -------------- ----------------- --------------- ---------------- Operating income (loss) (1,422) 6,827 4,056 11,495 Other expenses: Interest expense, net (6,704) (7,056) (13,415) (14,013) - -------------------------------------------------------------- -------------- ----------------- --------------- ---------------- Net loss before taxes (8,126) (229) (9,359) (2,518) Income tax (expense) benefit 3,051 (186) 3,265 470 - -------------------------------------------------------------- -------------- ----------------- --------------- ---------------- Net loss $ (5,075) $ (415) $ (6,094) $ (2,048) ============================================================== ============== ================= =============== ================ Loss per common share: Net loss per share $ (0.64) $ (0.05) $ (0.77) $ (0.26) ============================================================== ============== ================= =============== ================ Weighted average common shares outstanding 7,932 7,808 7,908 7,807 ============================================================== ============== ================= =============== ================ See accompanying notes to consolidated financial statements.
Carr-Gottstein Foods Co. and Subsidiaries Consolidated Statements of Cash Flows - ---------------------------------------------------------------------------------------------------------------------------- Amounts in Thousands - --------------------------------------------------------------------------------------------------------------------------- 26 weeks Ended June 29, June 30, 1997 1996 - --------------------------------------------------------------------------------------------------------------------------- (unaudited) (unaudited) Operating activities: Net loss $ (6,094) $ (2,048) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 6,836 7,242 Amortization of intangibles 1,427 1,431 Amortization of loan fees and discounts 687 730 (Increase) decrease in assets: Income tax receivable (911) (620) Receivables (1,608) (2,233) Inventories (2,277) (5,780) Prepaid expenses (112) (1,257) Deferred taxes (3,109) - Other assets 417 642 (Decrease) increase in liabilities: Accounts payable 2,495 2,323 Accrued expenses 8,635 8,439 Income taxes payable (298) - Self insurance reserve (104) (186) Other liabilities (27) (241) - --------------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 5,957 8,442 - --------------------------------------------------------------------------------------------------------------------------- Investing activities: Additions to property and equipment (1,945) (2,690) - ----------------------------------------------------------------------------------------------------------------------------- Net cash used in investing activities (1,945) (2,690) - --------------------------------------------------------------------------------------------------------------------------- Financing activities: Payments on long-term debt (3,132) (3,053) Short term borrowings (payments), net 900 (200) Issuance of treasury stock 309 12 Change in stock subscriptions receivable - 44 - --------------------------------------------------------------------------------------------------------------------------- Net cash used in financing activities (1,923) (3,197) - --------------------------------------------------------------------------------------------------------------------------- Net increase in cash and cash equivalents 2,089 2,555 Cash and cash equivalents at beginning of period 8,655 2,817 - --------------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 10,744 $ 5,372 =========================================================================================================================== Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 12,584 $ 11,851 Income taxes 971 - =========================================================================================================================== 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 29, 1996 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) Financial Accounting Standards No. 128, Earnings Per Share, 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. Due to an immaterial difference between Primary and Fully Diluted EPS, the Company has historically presented only a single EPS. The Company in the future will present both Basic and Diluted EPS for income (loss) from continuing operations and net income (loss). The statement is effective for financial statements for both interim and annual periods ending after December 15, 1997. After adoption, all prior periods EPS data will be restated. The adoption of the new statement is expected to have minimal effect on the Company's EPS. Carr-Gottstein Foods Co. and Subsidiaries Notes to Consolidated Financial Statements (unaudited) - continued (2) CONDENSED CONSOLIDATING FINANCIAL INFORMATION The Company issued $100,000,000 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 June 29, 1997 CGF Properties (Combined) Only Elimination Consolidated - ----------------------------------------------------------------------------------------------------------------------- Assets Inventories $ - $ 3,757 $ 52,752 $ - $ 56,509 Other current assets 6,608 70,523 5,125 (44,395) 37,861 - ----------------------------------------------------------------------------------------------------------------------- Total current assets 6,608 74,280 57,877 (44,395) 94,370 Property, plant and equipment, net 63,931 5,318 68,039 - 137,288 Intangible, net - - 90,304 - 90,304 Investments in subsidiaries - - 105,025 (105,025) - Other assets 32 483 11,051 - 11,566 - ----------------------------------------------------------------------------------------------------------------------- $ 70,571 $ 80,081 $ 332,296 $ (149,420) $ 333,528 ======================================================================================================================= Liabilities and Stockholders' Equity Current liabilities $ 966 $3,147 $ 123,095 $ (44,395) $ 82,813 Long-term debt, excluding current maturities 41,514 - 181,958 - 223,472 Other liabilities - - 3,430 - 3,430 - ----------------------------------------------------------------------------------------------------------------------- Total liabilities 42,480 3,147 308,483 (44,395) 309,715 Common stock 10 44 97 (54) 97 Additional paid-in capital 28,966 39,381 52,103 (68,347) 52,103 Retained earnings (deficit) (885) 37,509 (16,638) (36,624) (16,638) - ----------------------------------------------------------------------------------------------------------------------- 28,091 76,934 35,562 (105,025) 35,562 Less treasury stock - - 11,749 - 11,749 - --------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------- Total stockholders' equity 28,091 76,934 23,813 (105,025) 23,813 - ----------------------------------------------------------------------------------------------------------------------- $ 70,571 $ 80,081 $ 332,296 $ (149,420) $ 333,528 =======================================================================================================================
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 December 29, 1996 CGF Properties (Combined) Only Elimination Consolidated - ----------------------------------------------------------------------------------------------------------------------- Assets Inventories $ - $ 4,690 $ 49,542 $ - $ 54,232 Other current assets 5,526 63,389 6,117 (45,000) 30,032 - ----------------------------------------------------------------------------------------------------------------------- Total current assets 5,526 68,079 55,659 (45,000) 84,264 Property, plant and equipment, net 65,191 5,725 71,263 - 142,179 Intangible, net - - 91,731 - 91,731 Investments in subsidiaries - - 101,920 (101,920) - Other assets 32 483 12,155 - 12,670 - ----------------------------------------------------------------------------------------------------------------------- $ 70,749 $ 74,287 $ 332,728 $ (146,920) $ 330,844 ======================================================================================================================= Liabilities and Stockholders' Equity Current liabilities $ 966 $ 279 $ 113,904 $ (45,000) $ 70,149 Long-term debt, excluding current maturities 41,871 - 185,769 - 227,640 Other liabilities - - 3,457 - 3,457 - ----------------------------------------------------------------------------------------------------------------------- Total liabilities 42,837 - 303,130 (45,000) 301,246 Common stock 10 44 97 (54) 97 Additional paid-in capital 28,966 39,381 52,513 (68,347) 52,513 Stock subscription receivable - - - - - Retained earnings (deficit) (1,064) 34,583 (10,544) (33,519) (10,544) - ----------------------------------------------------------------------------------------------------------------------- 27,912 74,008 42,066 (101,920) 42,066 Less treasury stock - - 12,468 - 12,468 - --------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------- Total stockholders' equity 27,912 74,008 29,598 (101,920) 29,598 - ----------------------------------------------------------------------------------------------------------------------- $ 70,749 $ 74,287 $ 332,728 $ (146,920) $ 330,844 =======================================================================================================================
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 13 Weeks Ended June 29, 1997 CGF Properties (Combined) Only Elimination Consolidated - ----------------------------------------------------------------------------------------------------------------------- Sales $ - $ 20,736 $ 142,395 $ (11,102) $ 152,029 Cost of merchandise sold, including - ----------------------------------------------------------------------------------------------------------------------- warehousing and transportation - ----------------------------------------------------------------------------------------------------------------------- expenses - 15,101 104,330 (11,102) 108,329 Gross profit - 5,635 38,065 - 43,700 Operating and administrative (income) expenses (1,420) 2,712 34,881 - 36,173 - ----------------------------------------------------------------------------------------------------------------------- Non-recurring charge - - 8,949 - 8,949 - ----------------------------------------------------------------------------------------------------------------------- Operating income (loss) 1,420 2,923 (5,765) - (1,422) Interest expense, net (1,116) - (5,588) - (6,704) Equity in subsidiary earnings - - 1,904 (1,904) - - ----------------------------------------------------------------------------------------------------------------------- Earnings before income tax 304 2,923 (9,449) (1,904) (8,126) Income tax (expense) benefit (125) (1,198) 4,374 - 3,051 - ----------------------------------------------------------------------------------------------------------------------- ======================================================================================================================= Net earnings (loss) $ 179 $ 1,725 $ (5,075) $ (1,904) $ (5,075) =======================================================================================================================
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 26 Weeks Ended June 29, 1997 CGF Properties (Combined) Only Elimination Consolidated - ----------------------------------------------------------------------------------------------------------------------- Sales $ - $ 37,780 $ 275,453 $ (19,737) $ 293,495 Cost of merchandise sold, including - ----------------------------------------------------------------------------------------------------------------------- warehousing and transportation - ----------------------------------------------------------------------------------------------------------------------- expenses - 27,292 201,249 (19,737) 208,803 Gross profit - 10,488 74,204 - 84,692 Operating and administrative (income) expenses (2,669) 5,530 68,826 - 71,687 - ----------------------------------------------------------------------------------------------------------------------- Non-recurring charge - - 8,949 - 8,949 - ----------------------------------------------------------------------------------------------------------------------- Operating income (loss) 2,669 4,958 (3,571) - 4,056 Interest expense, net (2,312) - (11,103) - (13,415) Equity in subsidiary earnings - - 3,136 (3,136) - - ----------------------------------------------------------------------------------------------------------------------- Earnings before income tax 357 4,958 (11,538) (3,136) (9,359) Income tax (expense) benefit (147) (2,032) 5,444 - 3,265 - ----------------------------------------------------------------------------------------------------------------------- ======================================================================================================================= Net earnings (loss) $ 210 $ 2,926 $ (6,094) $ (3,136) $ (6,094) =======================================================================================================================
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 13 Weeks Ended June 30, 1996 CGF Properties (Combined) Only Elimination Consolidated - ----------------------------------------------------------------------------------------------------------------------- Sales $ - $ 20,213 $ 150,766 $ (10,026) $ 160,953 Cost of merchandise sold, including - ----------------------------------------------------------------------------------------------------------------------- warehousing and transportation expenses - 14,626 112,517 (10,026) 117,117 Gross profit - 5,587 38,249 - 43,836 Operating and administrative expenses (257) 3,082 34,184 - 37,009 - ----------------------------------------------------------------------------------------------------------------------- Operating income 257 2,505 4,065 - 6,827 Interest expense, net (1,131) - (5,925) - (7,056) Equity in subsidiary earnings - - 962 (962) - - ----------------------------------------------------------------------------------------------------------------------- Earnings before income tax (874) 2,505 (898) (962) (229) Income tax (expense) benefit 358 (1,027) 483 - (186) - ----------------------------------------------------------------------------------------------------------------------- ======================================================================================================================= Net earnings (loss) $ (516) $ 1,478 $ (415) $ (962) $ (415) =======================================================================================================================
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 26 Weeks Ended June 30, 1996 CGF Properties (Combined) Only Elimination Consolidated - ----------------------------------------------------------------------------------------------------------------------- Sales $ - $ 37,628 $ 284,210 $ (18,076) $ 303,762 Cost of merchandise sold, including - ----------------------------------------------------------------------------------------------------------------------- warehousing and transportation expenses - 26,889 211,041 (18,076) 219,823 Gross profit - 10,739 73,169 - 83,939 Operating and administrative (income) expenses (472) 6,194 66,691 - 72,444 - ----------------------------------------------------------------------------------------------------------------------- Operating income 472 4,545 6,478 - 11,495 Interest expense, net (2,266) - (11,747) - (14,013) Equity in subsidiary earnings - - 1,622 (1,622) - - ----------------------------------------------------------------------------------------------------------------------- Earnings before income tax (1,794) 4,545 (3,647) (1,622) (2,518) Income tax (expense) benefit 736 (1,865) 1,599 - 470 - ----------------------------------------------------------------------------------------------------------------------- ======================================================================================================================= Net earnings (loss) $ (1,058) $ 2,680 $ (2,048) $ (1,622) $ (2,048) =======================================================================================================================
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 26 Weeks Ended June 29, 1997 CGF Properties (Combined) Only Consolidated - ----------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities $ 324 $ 10 $ 5,623 $ 5,957 - ----------------------------------------------------------------------------------------------------------------------- Investing activities Addition to property and equipment - (10) (1,935) (1,945) - ---------------------------------------------------------------------------------------------------------------------- Net cash used in investing activities - (10) (1,935) (1,945) - ----------------------------------------------------------------------------------------------------------------------- Financing activities Payments on long-term debt (322) - (2,810) (3,132) Short term borrowings, net - - 900 900 Issuance of treasury stock - - 309 309 - ------------------------------------------------------------------------------------------------------------------------- Net cash used by financing activities(322) - (1,601) (1,923) - ----------------------------------------------------------------------------------------------------------------------- Net increase in cash and cash equivalents 2 - 2,087 2,089 - ----------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at beginning of period 53 106 8,496 8,655 ======================================================================================================================= Cash and cash equivalents at end of period $ 55 $ 106 $ 10,583 $ 10,744
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 26 Weeks Ended June 30, 1996 CGF Properties (Combined) Only Consolidated - ----------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities $ 148 $ 4 $ 8,290 $ 8,442 - ----------------------------------------------------------------------------------------------------------------------- Investing activities Addition to property and equipment - (4) (2,686) (2,690) - ----------------------------------------------------------------------------------------------------------------------- Net cash used in investing activities - (4) (2,686) (2,690) - ----------------------------------------------------------------------------------------------------------------------- Financing activities Payments on long-term debt (148) - (2,905) (3,053) Short term borrowings, net - - (200) (200) Purchase of treasury stock - - 12 12 Change in stock subscription receivable - - 44 44 - ----------------------------------------------------------------------------------------------------------------------- Net cash used in financing activities (148) - (3,049) (3,197) - ----------------------------------------------------------------------------------------------------------------------- Net increase in cash and cash equivalents - - 2,555 2,555 - ----------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at beginning of period 55 83 2,679 2,817 ======================================================================================================================= Cash and cash equivalents at end of period $ 55 $ 83 $ 5,234 $ 5,372
Carr-Gottstein Foods Co. and Subsidiaries Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. The following discussion should be read in conjunction with the unaudited 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 June 29, 1997 Compared to 13 Weeks Ended June 30, 1996 Sales. Sales for the 13 weeks ended June 29, 1997 were $152.0 million compared to $161.0 million for the 13 weeks ended June 30, 1996. The 5.5% decrease was due in part to decreases at the wholesale and freight divisions as well as generally softer comparable store sales at the retail division. Sales at the retail division were impacted by the change in the Easter holiday sales which fell into the first quarter of 1997 versus the second quarter of the prior year, increased competitive activity and the strong sales in the prior year period due to the kick-off of the "Carrs Plus" electronic marketing campaign. The decrease in sales for the second 13 weeks of 1997 reflects a 3.9% decrease in comparable store sales at the retail division. Gross Profit. Gross profit for the 13 weeks ended June 29, 1997 was $43.7 million compared to $43.8 million for the 13 weeks ended June 30, 1996. The decrease in gross margin dollars is primarily attributable to the decrease in sales. As a percentage of sales, gross profit was 28.7% for the 13 weeks 1997 compared to 27.2% for the 13 weeks 1996. Gross profit as a percentage of sales for the 13 weeks 1997 increased primarily as the result of improved buying practices during the period coupled with improved margins at the wholesale division. Operating and Administrative Expenses. Operating and administrative expenses for the 13 weeks ended June 29, 1997 were $36.2 million compared to $37.0 million for the 13 weeks ended June 30, 1996. Operating and administrative expenses as a percentage of sales were 23.8% for the 13 weeks 1997 compared to 23.0% for the 13 weeks 1996. Operating Income. Operating income for the 13 weeks ended June 29, 1997 increased $0.7 million from $6.8 million in the second quarter of 1996 to $7.5 million in the second quarter of 1997. This increase in operating income was due primarily to the improvements in gross profit margin and the effective expense control in the quarter. Other Income and Expense. Net interest expense was $6.7 million for the 13 weeks ended June 29, 1997 compared to $7.1 million for the 13 weeks ended June 30, 1996. The decrease in interest expense was due primarily to lower average debt balances in the quarter. In June 1997, the Company recognized a non-recurring pre-tax restructuring charge of $8.9 million, principally associated with its decision to close its YES Foods institutional food service business along with the discontinuance of its wholesaling services to a Russian export business. Income Taxes. Income tax benefit for the 13 weeks ended June 29, 1997 was $3.1 million compared to a $0.2 million expense for the 13 weeks ended June 30, 1996. Net Loss. Net income for the 13 weeks ended June 29, 1997 before the non-recurring pre-tax restructuring charge of $8.9 million was $0.2 million, or $0.02 per share, versus a net loss of $0.4 million, or $0.05 per share for the 13 weeks ended June 30, 1996. The net loss for the 13 weeks 1997 including the non-recurring charge was $5.1 million, or $0.64 per share. 26 Weeks Ended June 29, 1997 Compared to 26 Weeks Ended June 30, 1996 Sales. Sales for the 26 weeks ended June 29, 1997 were $293.5 million compared to $303.8 million for the 26 weeks ended June 30, 1996. The decrease in sales for the 26 weeks of 1997 reflects a decrease of 1.6% in total retail comparable store sales. Gross Profit. Gross profit for the 26 weeks ended June 29, 1997 was $84.7 million compared to $83.9 million for the 26 weeks ended June 30, 1996. The increase in gross margin dollars is partially attributable to improved buying practices and to improved gross margins at the wholesale division. As a percentage of sales, gross profit was 28.9% for the 26 weeks 1997 compared to 27.6% for the 26 weeks 1996. Operating and Administrative Expenses. Operating and administrative expenses for the 26 weeks ended June 29, 1997 were $71.7 million compared to $72.4 million for the 26 weeks ended June 30, 1996. Operating and administrative expenses as a percentage of sales were 24.4% for the 26 weeks 1997 compared to 23.8% for the 26 weeks 1996. The decrease in operating expense dollars is due partially to the reduction in sales coupled with the effective expense control during the first half of 1997. Operating Income. Operating income for the 26 weeks ended June 29, 1997 increased $1.5 million from $11.5 million, or 3.8% of sales, in 1996 to $13.0 million, or 4.4% of sales in 1997 due to improved gross profit margin and expense control. Other Income and Expense. Net interest expense was $13.4 million for the 26 weeks ended June 29, 1997 compared to $14.0 million for the 26 weeks ended June 30, 1996. The decrease in interest expense is due to lower average debt balances during the first half of 1997. In June 1997, the Company recognized a non-recurring pre-tax restructuring charge of $8.9 million, principally associated with its decision to close its YES Foods institutional feed service business along with the discontinuance of its wholesaling services to a Russian export business. Income Taxes. The Company recognized an income tax benefit for the 26 weeks ended June 29, 1997 of $3.3 million compared to a $0.5 million benefit for the 26 weeks ended June 30, 1996. Net Loss. Net loss for the 26 weeks ended June 29, 1997 before its non-recurring pre-tax restructuring charge of $8.9 million was $0.8 million, or $0.10 per share, versus a net loss $2.0 million, or $0.26 per share for the 26 weeks ended June 30, 1996. The net loss for the 26 weeks 1997 including the non-recurring charge was $6.1 million, or $0.77 per share. 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 $6.0 million for the 26 weeks ended June 29, 1997 compared to net cash provided by operating activities of $8.4 million for the same period in 1996. The change in the 26 weeks 1997 compared to 1996 was due primarily to the increased net loss recorded during this period. Capital expenditures for the 26 weeks ending June 29, 1997 were $1.9 million. Capital expenditures are expected to range between $6.0 and $8.0 million for fiscal 1997. It is anticipated that the balance of 1997 capital expenditures will be funded out of cash provided by operations and borrowings under the working capital revolver. Net cash used by financing activities for the 26 weeks ending June 29, 1997 was $1.9 million. During this time period, the Company increased its borrowings under its revolving line of credit by $0.9 million and made payments against its long-term debt in the amount of $3.1 million. 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 expenditures. At June 29, 1997 there was $7.9 million outstanding on the revolving debt. The Company had available unused credit of $27.1 million. Funds borrowed under the revolving credit portion of the Company's credit facility are restricted to working capital and general corporate purposes. 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 The Annual Meeting of Shareholders for Carr-Gottstein Foods Co. was held in Anchorage, Alaska on May 16, 1997, at the Z.J. Loussac Library. The only issue presented for a vote of the shareholders was the election of Directors. The following individuals were elected to the Board of Directors with the vote tabulation indicated opposite their respective names: For Withheld John J. Cairns 5,031,137 19,655 Lawrence H. Hayward 5,032,137 18,655 Leonard I. Green 5,030,087 20,705 Jonathan D. Sokoloff 5,031,137 19,655 Gregory J. Annick 5,030,136 20,656 E. Dean Werries 5,029,635 21,157 Donald E. Gallegos 5,030,137 20,655 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 18 hereof are filed with this quarterly report on Form 10-Q. (b) No reports were filed on Form 8-K during the quarter ended June 29, 1997. 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: August 11, 1997 By: s/s Donald J. Anderson Donald J. Anderson Senior Vice-President and Chief Financial Officer Date: August 11, 1997 CARR-GOTTSTEIN FOODS CO. Exhibit Index The following exhibits are attached as indicated: Exhibit Number Description of Exhibit 27.1 Financial Data Schedule EX-27 2 FINANCIAL DATA SCHEDULE
5 6-MOS DEC-28-1997 JUN-29-1997 10744 0 20398 2140 56509 94370 216122 78834 333528 82813 0 0 0 97 23716 333528 152029 152029 108329 36173 0 0 6704 (8126) (3051) (5075) 0 0 0 (5075) (0.64) 0
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