-----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, NaBw96C/I7E0jK3R5U7S+X6YLkTvY7ZHn5TrjUiQBrWkcezF7TbNfKrYigY37JKf dvCuapUOMA79IWHeb0pStw== 0000871891-97-000009.txt : 19971114 0000871891-97-000009.hdr.sgml : 19971114 ACCESSION NUMBER: 0000871891-97-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970928 FILED AS OF DATE: 19971112 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: 97713350 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 September 28, 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 November 10, 1997 was 7,937,296 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 September 28, 1997 INDEX Part I. Financial Information Page Item 1. Financial Statements a) Consolidated Balance Sheets as of September 28, 1997 (unaudited) and December 29, 1996 1 b) Consolidated Statements of Operations for the 13 weeks and 39 weeks ended September 28, 1997 (unaudited) and September 29, 1996 (unaudited) 2 c) Consolidated Statements of Cash Flows for the 39 weeks ended September 28, 1997 (unaudited) and September 29, 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 - -------------------------------------------------------------------------------------------------------------------------- September 28, December 29, 1997 1996 - ----------------------------------------------------------------------------------- -------------------- ------------------ Assets (unaudited) Current assets: Cash and cash equivalents $ 7,841 $ 8,655 Accounts receivable, net 16,763 16,650 Income taxes receivable 911 - Inventories 55,240 54,232 Deferred taxes 4,292 1,918 Prepaid expenses and other current assets 2,843 2,809 - ----------------------------------------------------------------------------------- -------------------- ------------------ Total current assets 87,890 84,264 Property, plant and equipment, at cost, net of accumulated depreciation 134,488 142,179 Intangible assets, net of accumulated amortization 89,688 91,731 Deferred taxes 334 334 Other assets 11,405 12,336 - ----------------------------------------------------------------------------------- -------------------- ------------------ $ 323,805 $ 330,844 =================================================================================== ==================== ================== Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 39,816 $ 38,467 Accrued expenses 24,340 15,145 Income taxes payable - 298 Current maturities of long-term debt 8,336 7,281 Revolving line of credit 2,000 7,000 Estimated obligation for self-insurance 2,188 1,958 - ----------------------------------------------------------------------------------- -------------------- ------------------ Total current liabilities 76,680 70,149 Long-term debt, excluding current maturities 219,481 227,640 Estimated obligation for self-insurance 1,536 1,536 Other liabilities 1,944 1,921 - ----------------------------------------------------------------------------------- -------------------- ------------------ Total liabilities 299,641 301,246 - ----------------------------------------------------------------------------------- -------------------- ------------------ Stockholders' equity: Common stock, $.01 par value, authorized 25,000 shares, issued 9,680 shares 97 97 Additional paid in capital 52,088 52,513 Deficit (16,299) (10,544) - ----------------------------------------------------------------------------------- -------------------- ------------------ 35,886 42,066 Less treasury stock, 1,743 and 1,855 shares, at cost 11,722 12,468 - ----------------------------------------------------------------------------------- -------------------- ------------------ Total stockholders' equity 24,164 29,598 - ----------------------------------------------------------------------------------- -------------------- ------------------ Commitments and contingencies =================================================================================== ==================== ================== $ 323,805 $ 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 39 Weeks Ended Sept. 28, Sept. 29, Sept. 28, Sept. 29, 1997 1996 1997 1996 - -------------------------------------------------------------- -------------- ----------------- --------------- ---------------- (unaudited) (unaudited) - ------------------------------------------------------------------------------------------------------------------------------- Sales $ 152,007 $ 158,506 $ 445,503 $ 462,268 Cost of merchandise sold, including warehousing and transportation expenses 108,576 114,233 317,380 334,056 - ------------------------------------------------------------- --------------- ---------------- ---------------- ---------------- Gross profit 43,431 44,273 128,123 128,212 Operating and administrative expenses 35,467 37,101 107,154 109,545 Non-recurring charge - - 8,949 - - ------------------------------------------------------------- --------------- ---------------- ---------------- ---------------- Operating income 7,964 7,172 12,020 18,667 Other expenses: Interest expense, net (6,687) (6,805) (20,102) (20,820) Other income (expense) (218) 73 (218) 75 - ------------------------------------------------------------- --------------- ---------------- ---------------- ---------------- Net income (loss) before taxes 1,059 440 (8,300) (2,078) Income tax (expense) benefit (720) (504) 2,545 (34) - ------------------------------------------------------------- --------------- ---------------- ---------------- ---------------- Net income (loss) $ 339 $ (64) $ (5,755) $ (2,112) ============================================================= =============== ================ ================ ================ Income (loss) per common share: Net income (loss) per share $ 0.04 $ (0.01) $ (0.73) $ (0.27) ============================================================= =============== ================ ================ ================ Weighted average common shares outstanding 7,934 7,815 7,916 7,810 ============================================================= =============== ================ ================ ================ See accompanying notes to consolidated financial statements.
Carr-Gottstein Foods Co. and Subsidiaries Consolidated Statements of Cash Flows - ---------------------------------------------------------------------------------------------------------------------------- Amounts in Thousands - --------------------------------------------------------------------------------------------------------------------------- 39 weeks Ended Sept. 28, Sept. 29, 1997 1996 - --------------------------------------------------------------------------------------------------------------------------- (unaudited) (unaudited) Operating activities: Net loss $ (5,755) $ (2,112) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 10,235 10,889 Amortization of intangibles 2,143 2,144 Amortization of loan fees and discounts 1,016 1,084 Gain on disposal of property and equipment (40) (72) (Increase) decrease in assets: Income tax receivable (911) (48) Accounts receivable (113) (3,565) Inventories (1,008) (6,676) Prepaid expenses (34) 199 Deferred taxes (2,374) - Other assets (85) 681 (Decrease) increase in liabilities: Accounts payable 1,349 2,138 Accrued expenses 9,195 9,277 Income taxes payable (298) - Self insurance reserve 230 (317) Other liabilities 23 (142) - --------------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 13,573 13,480 - --------------------------------------------------------------------------------------------------------------------------- Investing activities: Additions to property and equipment (3,192) (3,216) Proceeds from sale of property and equipment 588 232 - ----------------------------------------------------------------------------------------------------------------------------- Net cash used in investing activities (2,604) (2,984) - --------------------------------------------------------------------------------------------------------------------------- Financing activities: Payments on long-term debt (7,104) (3,210) Short term payments, net (5,000) (5,900) Issuance of treasury stock 321 62 Change in stock subscriptions receivable - 44 - --------------------------------------------------------------------------------------------------------------------------- Net cash used in financing activities (11,783) (9,004) - --------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents (814) 1,492 Cash and cash equivalents at beginning of period 8,655 2,817 - --------------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 7,841 $ 4,309 =========================================================================================================================== Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 16,083 $ 15,298 Income taxes 956 - =========================================================================================================================== 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 and 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 September 28, 1997 CGF Properties (Combined) Only Elimination Consolidated - ----------------------------------------------------------------------------------------------------------------------- Assets Inventories $ - $ 3,514 $ 51,726 $ - $ 55,240 Other current assets 7,303 72,942 3,200 (50,795) 32,650 - ----------------------------------------------------------------------------------------------------------------------- Total current assets 7,303 76,456 54,926 (50,795) 87,890 Property, plant and equipment, net 63,301 5,127 66,060 - 134,488 Intangible, net - - 89,688 - 89,688 Investments in subsidiaries - - 106,664 (106,664) - Other assets 32 573 11,134 - 11,739 - ----------------------------------------------------------------------------------------------------------------------- $ 70,636 $ 82,156 $ 328,472 $ (157,459) $ 323,805 ======================================================================================================================= Liabilities and Stockholders' Equity Current liabilities $ 1,071 $3,729 $ 122,675 $ (50,795) $ 76,680 Long-term debt, excluding current maturities 41,328 - 178,153 - 219,481 Other liabilities - - 3,480 - 3,480 - ----------------------------------------------------------------------------------------------------------------------- Total liabilities 42,399 3,729 304,308 (50,795) 299,641 Common stock 10 44 97 (54) 97 Additional paid-in capital 28,966 39,381 52,088 (68,347) 52,088 Retained earnings (deficit) (739) 39,002 (16,299) (38,263) (16,299) - ----------------------------------------------------------------------------------------------------------------------- 28,237 78,427 35,886 (106,664) 35,886 Less treasury stock - - 11,722 - 11,722 - --------------------------------------------------------------------------------------------------------------------- Total stockholders' equity 28,237 78,427 24,164 (106,664) 24,164 - ----------------------------------------------------------------------------------------------------------------------- $ 70,636 $ 82,156 $ 328,472 $ (157,459) $ 323,805 =======================================================================================================================
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 Sept. 28, 1997 CGF Properties (Combined) Only Elimination Consolidated - ----------------------------------------------------------------------------------------------------------------------- Sales $ - $ 20,447 $ 142,662 $ (11,102) $ 152,007 Cost of merchandise sold, including warehousing and transportation expenses - 15,132 104,546 (11,102) 108,576 - ----------------------------------------------------------------------------------------------------------------------- Gross profit - 5,315 38,116 - 43,431 Operating and administrative (income) expenses (1,360) 2,785 34,042 - 35,467 - ----------------------------------------------------------------------------------------------------------------------- Operating income (loss) 1,360 2,530 4,074 - 7,964 Interest expense, net (1,112) - (5,575) - (6,687) Other income (expense) - - (218) - (218) Equity in subsidiary earnings - - 1,639 (1,639) - - ----------------------------------------------------------------------------------------------------------------------- Earnings (loss) before income tax 248 2,530 (80) (1,639) 1,059 Income tax (expense) benefit (102) (1,037) 419 - (720) - ----------------------------------------------------------------------------------------------------------------------- Net earnings (loss) $ 146 $ 1,493 $ 339 $ (1,639) $ 339 =======================================================================================================================
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 39 Weeks Ended Sept. 28, 1997 CGF Properties (Combined) Only Elimination Consolidated - ----------------------------------------------------------------------------------------------------------------------- Sales $ - $ 58,227 $ 418,115 $ (30,839) $ 445,503 Cost of merchandise sold, including warehousing and transportation expenses - 42,424 305,795 (30,839) 317,380 - ----------------------------------------------------------------------------------------------------------------------- Gross profit - 15,803 112,320 - 128,123 Operating and administrative (income) expenses (4,029) 8,315 102,868 - 107,154 Non-recurring charge - - 8,949 - 8,949 - ----------------------------------------------------------------------------------------------------------------------- Operating income 4,029 7,488 503 - 12,020 Interest expense, net (3,424) - (16,678) - (20,102) Other income (expense) - - (218) - (218) Equity in subsidiary earnings - - 4,775 (4,775) - - ----------------------------------------------------------------------------------------------------------------------- Earnings (loss) before income tax 605 7,488 (11,618) (4,775) (8,300) Income tax (expense) benefit (249) (3,069) 5,863 - 2,545 - ----------------------------------------------------------------------------------------------------------------------- ======================================================================================================================= Net earnings (loss) $ 356 $ 4,419 $ (5,755) $ (4,775) $ (5,755) =======================================================================================================================
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 Sept. 29, 1996 CGF Properties (Combined) Only Elimination Consolidated - ----------------------------------------------------------------------------------------------------------------------- Sales $ - $ 19,022 $ 148,472 $ (8,988) $ 158,506 Cost of merchandise sold, including warehousing and transportation expenses - 13,844 109,377 (8,988) 114,233 - ----------------------------------------------------------------------------------------------------------------------- Gross profit - 5,178 39,095 - 44,273 Operating and administrative expenses (242) 3,104 34,239 - 37,101 - ----------------------------------------------------------------------------------------------------------------------- Operating income 242 2,074 4,856 - 7,172 Interest expense, net (1,127) - (5,678) - (6,805) Other income - - 73 - 73 Equity in subsidiary earnings - - 702 (702) - - ----------------------------------------------------------------------------------------------------------------------- Earnings (loss) before income tax (885) 2,074 (47) (702) 440 Income tax (expense) benefit 363 (850) (17) - (504) - ----------------------------------------------------------------------------------------------------------------------- ======================================================================================================================= Net earnings (loss) $ (522) $ 1,224 $ (65) $ (702) $ (64) =======================================================================================================================
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 39 Weeks Ended Sept. 29, 1996 CGF Properties (Combined) Only Elimination Consolidated - ----------------------------------------------------------------------------------------------------------------------- Sales $ - $ 56,650 $ 432,682 $ (27,064) $ 462,268 Cost of merchandise sold, including warehousing and transportation expenses - 40,733 320,387 (27,064) 334,056 - ----------------------------------------------------------------------------------------------------------------------- Gross profit - 15,917 112,295 - 128,012 Operating and administrative (income) expenses (714) 9,298 100,961 - 109,545 - ----------------------------------------------------------------------------------------------------------------------- Operating income 714 6,619 11,334 - 18,667 Interest expense, net (3,393) - (17,427) - (20,820) Other income - - 75 - 75 Equity in subsidiary earnings - - 2,324 (2,324) - - ----------------------------------------------------------------------------------------------------------------------- Earnings (loss) before income tax (2,679) 6,619 (3,694) (2,324) (2,078) Income tax (expense) benefit 1,099 (2,715) 1,582 - (34) - ----------------------------------------------------------------------------------------------------------------------- ======================================================================================================================= Net earnings (loss) $ (1,580) $ 3,904 $ (2,112) $ (2,324) $ (2,112) =======================================================================================================================
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 39 Weeks Ended September 28, 1997 CGF Properties (Combined) Only Consolidated - ----------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities $ 490 $ 12 $ 13,071 $ 13,573 - ----------------------------------------------------------------------------------------------------------------------- Investing activities Addition to property and equipment - (12) (3,080) (3,092) Proceeds from sale of property and equipment - - 588 588 Additions to intangible assets - - (100) (100) - ----------------------------------------------------------------------------------------------------------------------- Net cash used in investing activities - (12) (2,592) (2,604) Financing activities Payments on long-term debt (488) - (6,616) (7,104) Short term borrowings (payments), net - - (5,000) (5,000) Issuance of treasury stock - - 321 321 - ----------------------------------------------------------------------------------------------------------------------- Net cash used by financing activities (488) - (11,295) (11,783) - ----------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents 2 - (816) (814) - ----------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at beginning of period 53 106 8,496 8,655 - ----------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 55 $ 106 $ 7,680 $ 7,841 =======================================================================================================================
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 39 Weeks Ended September 29, 1996 CGF Properties (Combined) Only Consolidated - ----------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities $ 393 $ 4 $ 13,083 $ 13,480 - ----------------------------------------------------------------------------------------------------------------------- Investing activities Addition to property and equipment - (4) (3,212) (3,216) Proceeds from sale of property and equipment - - 232 232 - ----------------------------------------------------------------------------------------------------------------------- Net cash used in investing activities - - (4) (2,984) - ----------------------------------------------------------------------------------------------------------------------- Financing activities Payments on long-term debt (393) - (2,817) (3,210) Short term borrowings, net - - (5,900) (5,900) Purchase of treasury stock - - 62 62 Change in stock subscription receivable - - 44 44 - ----------------------------------------------------------------------------------------------------------------------- Net cash used in financing activities (393) - (8,611) (9,004) - ----------------------------------------------------------------------------------------------------------------------- Net increase in cash and cash equivalents - - 1,492 1,492 - ----------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at beginning of period 55 83 2,679 2,817 - ----------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 55 $ 83 $ 4,171 $ 4,309 =======================================================================================================================
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 September 28, 1997 Compared to 13 Weeks Ended September 29, 1996 Sales. Sales for the 13 weeks ended September 28, 1997 were $152.0 million compared to $158.5 million for the 13 weeks ended September 29, 1996. The 4.1% decrease was due primarily to decreases at the wholesale and freight divisions resulting from the closure of the YES Foods institutional food service business and the discontinuance of service to a Russian export business as well as generally softer comparable store sales at the retail division. Sales at the retail division were impacted by increased competitive activity and strong comparable sales in the prior year period. The decrease in sales for the third quarter of 1997 reflects a 2.1% decrease in comparable store sales at the retail division. Gross Profit. Gross profit for the 13 weeks ended September 28, 1997 was $43.4 million compared to $44.3 million for the 13 weeks ended September 29, 1996. The decrease in gross margin dollars is primarily attributable to the decrease in sales. As a percentage of sales, gross profit was 28.6% for the 13 weeks 1997 compared to 27.9% 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 September 28, 1997 were $35.5 million compared to $37.1 million for the 13 weeks ended September 29, 1996. Operating and administrative expenses as a percentage of sales were 23.3% for the 13 weeks 1997 compared to 23.4% for the 13 weeks 1996. Operating Income. Operating income for the 13 weeks ended September 28, 1997 increased $0.8 million from $7.2 million in the third quarter of 1996 to $8.0 million in the third 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 September 28, 1997 compared to $6.8 million for the 13 weeks ended September 29, 1996. The decrease in interest expense was due primarily to lower average debt balances in the 1997 quarter. Income Taxes. Income tax expense for the 13 weeks ended September 28, 1997 was $0.7 million compared to $0.5 million for the 13 weeks ended September 29, 1996. Net Income. Net income for the 13 weeks ended September 28, was $0.3 million, or $0.04 per share, versus a net loss of $0.1 million, or $0.01 per share for the 13 weeks ended September 29, 1996. 39 Weeks Ended September 28, 1997 Compared to 39 Weeks Ended September 29, 1996 Sales. Sales for the 39 weeks ended September 28, 1997 were $445.5 million compared to $462.3 million for the 39 weeks ended September 29, 1996. The decrease in sales for the 39 weeks of 1997 reflects a decrease of 1.8% in total retail comparable store sales. The decrease was due primarily to decreases at the wholesale and freight divisions resulting from the closure of the YES Foods institutional food service business and the discontinuance of service to a Russian export business as well as generally softer comparable store sales at the retail division. Sales at the retail division were impacted by increased competitive activity and strong comparable sales in the prior year period. Gross Profit. Gross profit for the 39 weeks ended September 28, 1997 was $128.1 million compared to $128.2 million for the 39 weeks ended September 29, 1996. As a percentage of sales, gross profit was 28.8% for the 39 weeks 1997 compared to 27.7% for the 39 weeks 1996. The improvement in the 1997 gross margin rate is partially attributable to improved buying practices and to improved gross margins at the wholesale division. Operating and Administrative Expenses. Operating and administrative expenses for the 39 weeks ended September 28, 1997 were $107.2 million compared to $109.5 million for the 39 weeks ended September 29, 1996. Operating and administrative expenses as a percentage of sales were 24.1% for the 39 weeks 1997 compared to 23.7% for the 39 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 nine months of 1997. Operating Income. Operating income for the 39 weeks ended September 28, 1997, before the non-recurring pre-tax restructuring charge of $8.9 million recognized in June 1997, increased $2.3 million from $18.7 million, or 4.0% of sales, in 1996 to $21.0 million, or 4.7% of sales in 1997. The improvement was due primarily to the improved gross profit margin rate and effective expense control. The non-recurring pre-tax charge was principally associated with the Company's decision to close its YES Foods institutional food service business and discontinue its wholesaling services to a Russian export business. Other Income and Expense. Net interest expense was $20.1 million for the 39 weeks ended September 28, 1997 compared to $20.8 million for the 39 weeks ended September 29, 1996. The decrease in interest expense is due to lower average debt balances during the first nine months of 1997. Income Taxes. The Company recognized an income tax benefit for the 39 weeks ended September 28, 1997 of $2.5 million compared to a $34,000 expense for the 39 weeks ended September 29, 1996. Net Loss. Net loss for the 39 weeks ended September 28, 1997 before the non-recurring pre-tax restructuring charge of $8.9 million was $0.5 million, or $0.06 per share, versus a net loss of $2.1 million, or $0.27 per share for the 39 weeks ended September 29, 1996. The net loss for the 39 weeks 1997 including the non-recurring charge was $5.8 million, or $0.73 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 for capital expenditures, debt service, and lease payments. Net cash provided by operating activities was $13.6 million for the 39 weeks ended September 28, 1997 compared to net cash provided by operating activities of $13.5 million for the same period in 1996. The slight increase in the 39 weeks 1997 compared to 1996 was due primarily to smaller increases in inventories, receivables and larger increases in accrued expenses offset in part by the increased net loss for the period. Capital expenditures for the 39 weeks ended September 28, 1997 were $3.2 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 39 weeks ended September 28, 1997 was $11.8 million. During this time period, the Company decreased its borrowings under its revolving line of credit by $5.0 million and made payments against its long-term debt in the amount of $7.1 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 September 28, 1997 there was $2.0 million outstanding on the revolving debt. The Company had available unused credit of $33.0 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 - 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 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 September 28, 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: November 11, 1997 By: s/s Donald J. Anderson Donald J. Anderson Senior Vice-President and Chief Financial Officer Date: November 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 1000 9-MOS DEC-28-1997 SEP-28-1997 7841 0 17595 832 55240 87890 216517 82029 323805 76680 0 0 0 97 24067 323805 152007 152007 108567 35467 218 0 6687 1059 720 339 0 0 0 339 0.04 0
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