-----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, CP+2jgxditu+BbCjqK22KnVd8qBnHW75Yzq22MBPfUKS5OuLApmO/STs1Xb6eoSm lGe5IYX0REXOZai5LkHHXA== 0000912057-96-009776.txt : 19960619 0000912057-96-009776.hdr.sgml : 19960619 ACCESSION NUMBER: 0000912057-96-009776 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CARR GOTTSTEIN FOODS CO CENTRAL INDEX KEY: 0000871891 STANDARD INDUSTRIAL CLASSIFICATION: 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: 96565594 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 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 31, 1996 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 (I.R.S. Employer Identification No.) incorporation or organization) 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 10, 1996 was 7,809,496 shares. EXHIBIT INDEX APPEARS AT PAGE 10 Page 1 of 16 - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- CARR GOTTSTEIN FOODS CO. AND SUBSIDIARIES FORM 10-Q For the Quarterly Period Ended March 31, 1996 INDEX PART I. FINANCIAL INFORMATION Page Item 1. Financial Statements a) Consolidated Balance Sheets as of March 31, 1996 (unaudited) and December 31, 1995 1 b) Consolidated Statements of Operations for the 13 weeks ended March 31, 1996 (unaudited) and April 2, 1995 (unaudited) 2 c) Consolidated Statements of Cash Flows for the 13 weeks ended March 31, 1996 (unaudited) and April 2, 1995 (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 PART II. OTHER INFORMATION 13 SIGNATURES 14 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CARR-GOTTSTEIN FOODS CO. AND SUBSIDIARIES Consolidated Balance Sheets - - -------------------------------------------------------------------------------- AMOUNTS IN THOUSANDS - - -------------------------------------------------------------------------------- MARCH 31, DECEMBER 31, 1996 1995 - - -------------------------------------------------------------------------------- ASSETS (unaudited) Current assets: Cash and cash equivalents $ 4,343 $ 2,817 Accounts receivable, net 18,426 17,853 Income taxes receivable 674 164 Inventories 53,535 50,505 Deferred taxes 1,756 1,756 Prepaid expenses and other current assets 3,357 2,881 - - -------------------------------------------------------------------------------- Total current assets 82,091 75,976 Property, plant and equipment, at cost, net of accumulated depreciation 150,947 152,836 Intangible assets, net of accumulated amortization 93,872 94,589 Other assets 12,358 13,219 - - ------------------------------------------------------------------------------- $339,268 $336,620 - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 39,851 $ 35,986 Accrued expenses 15,640 7,352 Current maturities of long-term debt 3,359 3,551 Revolving line of credit 8,000 16,000 Estimated obligation for self-insurance 2,936 2,794 - - -------------------------------------------------------------------------------- Total current liabilities 69,786 65,683 Long-term debt, excluding current maturities 234,781 234,740 Estimated obligation for self-insurance 1,536 1,536 Deferred tax liability 488 488 Other liabilities 1,952 1,871 - - -------------------------------------------------------------------------------- Total liabilities 308,543 304,318 - - -------------------------------------------------------------------------------- Stockholders' equity: Common stock, $.01 par value, authorized 25,000 shares, issued 9,736 shares 97 97 Additional paid in capital 52,607 52,595 Stock subscriptions receivable - (44) Deficit (9,367) (7,734) - - -------------------------------------------------------------------------------- 43,337 44,914 Less treasury stock, 1,876 shares, at cost 12,612 12,612 - - -------------------------------------------------------------------------------- Total stockholders' equity 30,725 32,302 - - -------------------------------------------------------------------------------- Commitments and contingencies - - -------------------------------------------------------------------------------- $ 339,268 $ 336,620 - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 1 CARR-GOTTSTEIN FOODS CO. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS - - -------------------------------------------------------------------------------- AMOUNTS IN THOUSANDS (EXCEPT PER SHARE DATA) - - -------------------------------------------------------------------------------- MARCH 31, APRIL 2, 1996 1995 - - -------------------------------------------------------------------------------- (Unaudited) SALES $ 142,808 $ 139,069 Cost of merchandise sold, including warehousing and transportation expenses 102,705 95,497 - - -------------------------------------------------------------------------------- Gross profit 40,103 43,572 Operating and administrative expenses 35,435 37,598 - - -------------------------------------------------------------------------------- OPERATING INCOME 4,668 5,974 - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- Other income (expense): Interest expense, net (6,957) (3,417) Gain (loss) on disposals of property and equipment - (23) - - -------------------------------------------------------------------------------- Total other income (expense) (6,957) (3,440) - - -------------------------------------------------------------------------------- Earnings before income tax expense (benefit) (2,289) 2,534 Income tax (expense) benefit 656 (1,330) - - -------------------------------------------------------------------------------- Net earnings (loss) $ (1,633) $ 1,204 - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- Earnings (loss) per common share: Net earnings (loss) per share $ (0.21) $ .08 - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- Weighted average common shares outstanding 7,805 15,700 - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 2 CARR-GOTTSTEIN FOODS CO. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS - - -------------------------------------------------------------------------------- AMOUNTS IN THOUSANDS - - -------------------------------------------------------------------------------- MARCH 31, APRIL 2, 1996 1995 - - -------------------------------------------------------------------------------- (Unaudited) (Unaudited) OPERATING ACTIVITIES: Net income (loss) $ (1,633) $ 1,204 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation 3,630 3,290 Amortization of intangibles 717 885 Amortization of loan fees and discounts 365 132 Loss (gain) on disposal of property and equipment - 23 (Increase) decrease in current assets: Receivables (1,083) 197 Inventories (3,030) 886 Prepaid expenses (476) 1,137 Other assets 496 (2,800) (Decrease) increase in current liabilities: Accounts payable 3,866 (6,303) Accrued expenses 8,287 (981) Income taxes payable - 1,069 Other liabilities 223 (2,063) - - -------------------------------------------------------------------------------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 11,362 (3,324) - - -------------------------------------------------------------------------------- INVESTING ACTIVITIES: Additions to property and equipment (1,741) (5,593) Proceeds from sale of property and equipment - 61 Proceeds from sale of subsidiary - 983 - - -------------------------------------------------------------------------------- NET CASH USED IN INVESTING ACTIVITIES (1,741) (4,549) - - -------------------------------------------------------------------------------- FINANCING ACTIVITIES: Net borrowings (payments) under revolving line of credit (8,000) 8,000 Payments on long-term debt (151) (135) Change in stock subscriptions receivable 44 (1) Sale of treasury stock 11 - - - -------------------------------------------------------------------------------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (8,095) 7,864 - - -------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,526 (9) Cash and cash equivalents at beginning of period 2,817 321 - - -------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 4,343 $ 312 - - -------------------------------------------------------------------------------- SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest $ 3,319 $ 3,983 Income taxes - - - - -------------------------------------------------------------------------------- SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 3 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 31, 1995 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. 4 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 31, 1996 CGF PROPERTIES (COMBINED) ONLY ELIMINATION CONSOLIDATED - - ------------------------------------------------------------------------------------------------------------------------- ASSETS INVENTORIES $ - $ 5,201 $ 48,334 $ - $ 53,535 Other current assets 5,298 59,875 8,465 (45,046) 28,556 - - ------------------------------------------------------------------------------------------------------------------------- TOTAL CURRENT ASSETS 5,298 65,076 56,799 (45,046) 82,091 Property, plant and equipment, net 67,493 6,070 77,384 - 150,947 Intangible, net - - 93,872 - 93,872 Investments in subsidiaries - - 96,853 (96,853) - Other assets 65 483 11,810 - 12,358 - - ------------------------------------------------------------------------------------------------------------------------- $ 72,856 $ 71,629 $ 336,718 $ (141,899) $ 339,268 - - ------------------------------------------------------------------------------------------------------------------------- - - ------------------------------------------------------------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities $ 3,464 $ 1,737 $ 109,631 $ (45,046) $ 69,786 Long-term debt, excluding current maturities 42,395 - 192,386 - 234,781 Other liabilities - - 3,976 - 3,976 - - ------------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES 45,859 1,737 305,993 (45,046) 308,543 Common stock 10 44 97 (54) 97 Additional paid-in capital 28,966 39,381 52,607 (68,347) 52,607 Stock subscription receivable - - - - - Retained earnings (deficit) (1,979) 30,467 (9,367) (28,452) (9,367) - - ------------------------------------------------------------------------------------------------------------------------- 26,997 69,892 43,337 (96,853) 43,337 Less treasury stock - - 12,612 - 12,612 TOTAL STOCKHOLDERS' EQUITY 26,997 68,892 30,725 (96,853) 30,725 - - ------------------------------------------------------------------------------------------------------------------------- $ 72,856 $ 71,629 $ 336,718 $ (141,899) $ 339,268 - - ------------------------------------------------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------------------------------------------------
5 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 31, 1995 CGF PROPERTIES (COMBINED) ONLY ELIMINATION CONSOLIDATED - - ------------------------------------------------------------------------------------------------------------------------- ASSETS Inventories $ - $ 3,986 $ 46,519 $ - $ 50,505 Other current assets 5,397 57,859 7,261 (45,046) 25,471 - - ------------------------------------------------------------------------------------------------------------------------- TOTAL CURRENT ASSETS 5,397 61,845 53,780 (45,046) 75,976 Property, plant and equipment, net 67,921 6,336 78,579 - 152,836 Intangible, net - - 94,589 - 94,589 Investments in subsidiaries - - 96,229 (96,229) - Other assets 33 509 12,677 - 13,219 - - ------------------------------------------------------------------------------------------------------------------------- $ 73,351 $ 68,690 $ 335,854 $ (141,275) $ 336,620 - - ------------------------------------------------------------------------------------------------------------------------- - - ------------------------------------------------------------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities $ 3,332 $ - $ 107,397 $ (45,046) $ 65,683 Long-term debt, excluding current Maturities 42,480 - 192,260 - 234,740 Other liabilities - - 3,895 - 3,895 - - ------------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES 45,812 - 303,552 (45,046) 304,318 Common stock 10 44 97 (54) 97 Additional paid-in capital 28,966 39,381 52,595 (68,347) 52,595 Stock subscription receivable - - (44) - (44) Retained earnings (deficit) (1,437) 29,265 (7,734) (27,828) (7,734) - - ------------------------------------------------------------------------------------------------------------------------- 27,539 68,690 44,914 (96,229) 44,914 Less treasury stock - - 12,612 - 12,612 TOTAL STOCKHOLDERS' EQUITY 27,539 68,690 32,302 (96,229) 32,302 - - ------------------------------------------------------------------------------------------------------------------------- $ 73,351 $ 68,690 $ 335,854 $ (141,275) $ 336,620 - - ------------------------------------------------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------------------------------------------------
6 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 1996 CGF PROPERTIES (COMBINED) ONLY ELIMINATION CONSOLIDATED - - ------------------------------------------------------------------------------------------------------------------------- SALES $ - $ 17,415 $ 133,443 $ (8,050) $ 142,808 Cost of merchandise sold, including warehousing and transportation expenses - 12,263 98,493 (8,050) 102,705 - - ------------------------------------------------------------------------------------------------------------------------- GROSS PROFIT - 5,152 34,950 - 40,103 OPERATING AND ADMINISTRATIVE expenses (215) 3,112 32,537 - 35,435 - - ------------------------------------------------------------------------------------------------------------------------- OPERATING INCOME 215 2,040 2,413 - 4,668 INTEREST EXPENSE, NET (1,135) - (5,822) - (6,957) GAIN (LOSS) ON DISPOSAL OF FIXED ASSETS - - - - - Equity in subsidiary earnings - - 660 (660) - - - ------------------------------------------------------------------------------------------------------------------------- EARNINGS BEFORE INCOME TAX (920) 2,040 (2,749) (660) (2,289) Income tax (expense) benefit 378 (838) 1,116 - 656 - - ------------------------------------------------------------------------------------------------------------------------- NET EARNINGS $ (542) $ 1,202 $ (1,633) $ (660) $ (1,633) - - ------------------------------------------------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------------------------------------------------
7 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 1995 CGF PROPERTIES (COMBINED) ONLY ELIMINATION CONSOLIDATED - - ------------------------------------------------------------------------------------------------------------------------- Sales $ - $ 16,028 $ 131,059 $ (8,028) $ 139,069 Cost of merchandise sold - 10,997 92,518 (8,028) 95,487 - - ------------------------------------------------------------------------------------------------------------------------- GROSS PROFIT - 5,031 38,541 - 43,572 Operating and administrative expenses (1,220) 2,530 36,288 - 37,598 - - ------------------------------------------------------------------------------------------------------------------------- OPERATING INCOME 1,220 2,501 2,253 - 5,974 Interest expense, net (1,150) - (2,267) - (3,417) Gain (loss) on disposal of fixed assets 2 - (25) - (23) Equity in subsidiary earnings - - 1,515 (1,515) - - - ------------------------------------------------------------------------------------------------------------------------- EARNINGS BEFORE INCOME TAX 72 2,501 1,476 (1,515) 2,534 Income tax expense (30) (1,028) (272) - 1,330 - - ------------------------------------------------------------------------------------------------------------------------- NET EARNINGS $ 42 $ 1,473 $ 1,204 $ (1,515) $ 1,204 - - ------------------------------------------------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------------------------------------------------
8 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 1996 CGF PROPERTIES (COMBINED) ONLY CONSOLIDATED - - ----------------------------------------------------------------------------------------------------------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $ 87 $ 26 $ 11,250 $ 11,363 - - ----------------------------------------------------------------------------------------------------------- INVESTING ACTIVITIES Addition to property and equipment - - (1,741) (1,741) Addition to intangible assets - - - - Proceeds from sale of subsidiary - - - - Other - - - - - - ----------------------------------------------------------------------------------------------------------- NET CASH USED IN INVESTING ACTIVITIES - - (1,741) (1,741) - - ----------------------------------------------------------------------------------------------------------- FINANCING ACTIVITIES Proceeds from issuance of debt - - - - Net borrowings (payments) under line of credit - - (8,000) (8,000) Payments on long-term debt (85) - (66) (151) Purchase and retirement of common stock - - - - Purchase of treasury stock - - 11 11 Change in Stock Subscription receivable - - 44 44 - - ----------------------------------------------------------------------------------------------------------- NET CASH USED BY FINANCING ACTIVITIES (85) - (8,011) (8,096) - - ----------------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2 26 1,498 1,526 Cash and cash equivalents at beginning of period 53 57 2,707 2,817 - - ----------------------------------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 55 $ 83 $ 4,205 $ 4,343 - - ----------------------------------------------------------------------------------------------------------- - - -----------------------------------------------------------------------------------------------------------
9 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 1995 CGF PROPERTIES (COMBINED) ONLY CONSOLIDATED - - ----------------------------------------------------------------------------------------------------------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $ 1,631 $ 1,040 $ (5,995) $ (3,324) - - ----------------------------------------------------------------------------------------------------------- INVESTING ACTIVITIES Addition to property and equipment - - (5,593) (5,593) Addition to intangible assets - - - - Proceeds from sale of subsidiary - - 983 983 Other 2 - 59 61 - - ----------------------------------------------------------------------------------------------------------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 2 - (4,551) (4,549) - - ----------------------------------------------------------------------------------------------------------- FINANCING ACTIVITIES Proceeds from issuance of debt - - - - Net borrowings under line of credit - - 8,000 8,000 Payments on long-term debt (130) - (5) (135) Purchase and retirement of common stock - - - - Purchase of treasury stock - - - - Other - - (1) (1) - - ----------------------------------------------------------------------------------------------------------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (130) - 7,994 7,864 - - ----------------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,503 1,040 (2,552) (9) Cash and cash equivalents at beginning of period - 42 279 321 - - ----------------------------------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,503 $ 1,082 $ (2,273) $ 312 - - ----------------------------------------------------------------------------------------------------------- - - -----------------------------------------------------------------------------------------------------------
10 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 31, 1996 COMPARED TO 13 WEEKS ENDED APRIL 2, 1995 SALES. Sales for the 13 weeks ended March 31, 1996 were $142.8 million compared to $139.1 million for the 13 weeks ended April 2, 1995. The 2.7% increase was due in part to a new Carrs Store opened in Juneau, Alaska which was cycled late in March coupled with sales improvement from the Eagle Quality Centers (the "Eagle Stores") and increases attributable to Wholesale operations. The increase in sales for the 13 weeks of 1996 reflects a 2.1% decrease and 1.3% increase in comparable store sales for the Carrs Quality Centers (the "Carrs Stores") and Eagle Stores, respectively. The Carrs locations were impacted by several factors, including increased competitor promotional activity and competitive openings which have not yet cycled. GROSS PROFIT. Gross profit for the 13 weeks ended March 31, 1996 was $40.1 million compared to $43.6 million for the 13 weeks ended April 2, 1995. The decrease in gross margin dollars is primarily attributable to the allocation of warehousing and distribution expenses to cost of goods sold. In previous quarters, these expenses were not charged to the cost of goods sold but were classified as operating expenses. As a percentage of sales, gross profit was 28.1% for the 13 weeks 1996 compared to 31.3% for the 13 weeks 1995. Gross profit as a percentage of sales for the 13 weeks 1996 decreased primarily as a result of the allocation of warehousing and distribution expenses and partially as the result of increased promotional expenses during the quarter. OPERATING AND ADMINISTRATIVE EXPENSES. Operating and administrative expenses for the 13 weeks ended March 31, 1996 were $35.4 million compared to $37.6 million for the 13 weeks ended April 2, 1995. Operating and administrative expenses as a percentage of sales were 24.8% for the 13 weeks 1996 compared to 27.0% for the 13 weeks 1995. The decrease in operating expenses is primarily attributable to the allocation of warehousing and transportation expenses to the cost of goods sold section, increases in expenses due to a full quarter of expenses from the new Carrs Store opened in Juneau in March 1995 and additional expenses related to the "Fusion" corporate re- engineering project that was brought to a conclusion in March of 1996. OPERATING INCOME. Operating income for the 13 weeks ended March 31, 1996 decreased to $4.7 million from $6.0 million for the 13 weeks ended April 2, 1995. This decrease was due in part to the full quarter of expenses from the new Carrs Store opened in Juneau in March 1995, increases in depreciation, a slight reduction in operating income due to the increase in promotional spending and the impact of the additional expenses associated with the "Fusion" project as discussed above. OTHER INCOME AND EXPENSE. Net interest expense was $7.0 million for the 13 weeks ended March 31, 1996 compared to $3.4 million for the 13 weeks ended April 2, 1995. The increase in interest expense is primarily attributable to the full quarter impact of the increased interest costs related to the borrowings associated with the self stock tender completed by the Company in November of 1995. 11 INCOME TAXES. The Company recognized an income tax benefit for the 13 weeks ended March 31, 1996 of $0.7 million compared to a $1.3 million expense (a 52.4% effective tax rate) for the 13 weeks ended April 2, 1995. The high effective tax rate in 1995 resulted from the amortization of intangible assets for which no tax benefit was available. NET INCOME. Net loss for the 13 weeks ended March 31, 1996 was $1.6 million, or $0.21 per share, versus net income of $1.2 million, or $0.08 per share for the 13 weeks ended April 2, 1995. 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 $11.4 million for the 13 weeks ended March 31, 1996 compared to net cash used from operating activities of $3.3 million for the same period in 1995. The change in the 13 weeks 1996 compared to 1995 was due primarily to increased inventories and receivables offset by larger increases in accounts payable and accrued expenses. Capital expenditures for the 13 weeks ending March 31, 1996 were $1.7 million. The majority of these expenditures were related to the "Fusion" project and other projects started in the previous year. Although the company will consider opportunities for new store construction or acquisition, should they arise, capital expenditures are expected to be approximately $6.0 million for fiscal 1996. It is anticipated that the balance of 1996 capital expenditures will be funded out of cash provided by operations and borrowings under the working capital revolver. Net cash used for financing activities the 13 weeks ending March 31, 1996 was $8.1 million. During this time period, the Company reduced its borrowings under its revolving line of credit by $8.0 million and made payments against its long-term debt in the amount of $0.2 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 March 31, 1996 there was $8.0 million outstanding on the revolving debt borrowings and $0.3 million outstanding for standby letters of credit. The Company had available unused credit of $27.0 million. Funds borrowed under the revolving credit portion of the Company's credit facility are restricted to working capital and general corporate purposes. 12 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 31, 1996. 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 Mark R. Williams ------------------------------------------------- Mark R. Williams President and Chief Executive Officer Date: May 13, 1996 By: s/s Donald J. Anderson ------------------------------------------------- Donald J. Anderson Senior Vice-President and Chief Financial Officer Date: May 13, 1996 13 CARR-GOTTSTEIN FOODS CO. Exhibit Index The following exhibits are attached as indicated: Exhibit Number Description of Exhibit - - ----------------------------- 27.1 Financial Data Schedule 14 EX-27 2 EXHIBIT 27
5 1,000 3-MOS DEC-29-1996 JAN-01-1996 MAR-31-1996 4,343 0 18,781 (355) 53,535 82,451 213,371 (62,424) 339,628 69,786 234,781 0 0 97 43,239 339,628 142,808 142,808 102,705 102,705 35,435 0 6,957 (2,289) 656 (1,633) 0 0 0 (1,633) (.21) (.21)
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