-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, lpEeqOyRGJl6siBScUU250b38XXyJHuyJk+RWLxgcQgB/1P3/uvUN109wE8592RV wdxh+qKOfo9ddLvlz7fOsQ== 0000897069-95-000070.txt : 19950606 0000897069-95-000070.hdr.sgml : 19950606 ACCESSION NUMBER: 0000897069-95-000070 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950422 FILED AS OF DATE: 19950605 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SCHULTZ SAV O STORES INC CENTRAL INDEX KEY: 0000087588 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-GROCERY STORES [5411] IRS NUMBER: 390600405 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-00549 FILM NUMBER: 95544999 BUSINESS ADDRESS: STREET 1: 2215 UNION AVE CITY: SHEBOYGAN STATE: WI ZIP: 53081 BUSINESS PHONE: 4144574433 MAIL ADDRESS: STREET 1: 2215 UNION AVE CITY: SHEBOYGAN STATE: WI ZIP: 53081 10-Q 1 SCHULTZ SAV-O STORES, INC. FORM 10-Q 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 April 22, 1995 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 0-549 SCHULTZ SAV-O STORES, INC. (Exact Name of Registrant as Specified in its Charter) WISCONSIN 39-0600405 (State or other jurisdiction (I.R.S. Employer of incorporation of organization) Identification No.) 2215 UNION AVENUE 53082-0419 SHEBOYGAN, WISCONSIN (Zip Code) (Address of principal executive offices) Registrant's telephone number including area code 414-457-4433 Former name, former address and former fiscal year, if changed since last report Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (of for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days. Yes X NO APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes NO APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. As of May 30, 1995, 2,401,789 shares of common stock, $0.05 par value, were issued and outstanding. SCHULTZ SAV-O STORES, INC. INDEX PAGE NUMBER PART I - FINANCIAL INFORMATION: Item 1. - Financial Statements Condensed Balance Sheets 3 Unaudited Condensed Statements of Earnings 4 Unaudited Statements of Cash Flows 5 Notes to Unaudited Financial Statements 6 Item 2. - Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II - OTHER INFORMATION Item 6. - Exhibits and Reports on Form 8-K. 9 SIGNATURES 9 PART I - FINANCIAL INFORMATION Item 1. Financial Statements SCHULTZ SAV-O STORES, INC. CONDENSED BALANCE SHEETS (Unaudited) April 22 December 31 ASSETS 1995 1994 CURRENT ASSETS: Cash and equivalents $17,247,000 $14,310,000 Accounts receivable 8,590,000 7,453,000 Inventories 20,264,000 21,327,000 Prepaid expenses and other 2,296,000 2,344,000 Deferred income taxes 4,868,000 3,875,000 ---------- ---------- Total currents assets 53,265,000 49,309,000 OTHER ASSETS, net 1,302,000 1,331,000 AMOUNTS RECEIVABLE UNDER CAPITAL SUBLEASE AGREEMENTS 9,784,000 9,943,000 LEASED PROPERTY UNDER CAPITAL LEASES, net 3,285,000 3,372,000 PROPERTY AND EQUIPMENT, net 23,861,000 25,144,000 ----------- ----------- Total assets $91,497,000 $89,099,000 ========== ========== LIABILITIES AND SHAREHOLDERS' INVESTMENT CURRENT LIABILITIES: Accounts payable $14,215,000 $11,356,000 Accrued liabilities- Salaries and wages 513,000 532,000 Vacation pay 2,090,000 1,710,000 Retail facilities and operations 4,872,000 5,046,000 Insurance related 2,172,000 2,316,000 Other 4,477,000 6,115,000 Current maturities of long-term debt 304,000 323,000 Current obligations under capital leases 714,000 714,000 ----------- ----------- Total current liabilities 29,357,000 28,112,000 ----------- ----------- DEFERRED INCOME TAXES 2,427,000 1,428,000 LONG-TERM DEBT 3,968,000 4,056,000 CAPITAL LEASE OBLIGATIONS 13,826,000 14,046,000 SHAREHOLDERS' INVESTMENT: Preferred stock 300,000 300,000 Common stock 146,000 146,000 Additional paid-in capital 12,680,000 12,680,000 Retained earnings 37,261,000 36,179,000 ----------- ----------- Total 50,387,000 49,305,000 Less treasury stock (8,468,000) (7,848,000) ----------- ---------- Total shareholders' investment $41,919,000 $41,457,000 ----------- ----------- Total liabilities and shareholders' investment $91,497,000 $89,099,000 ========== =========== SCHULTZ SAV-O STORES, INC. UNAUDITED CONDENSED STATEMENTS OF EARNINGS For the 16-Weeks Ended April 22 April 23 1995 1994 NET SALES $132,278,000 $135,180,000 COSTS AND EXPENSES: Cost of products sold 110,989,000 113,078,000 Operating and administrative expenses 19,255,000 20,193,000 Interest expense, net 22,000 152,000 ----------- ----------- Earnings before income taxes 2,012,000 1,757,000 PROVISION FOR INCOME TAXES 775,000 647,000 ----------- ------------ Net earnings $ 1,237,000 $ 1,110,000 =========== =========== NET EARNINGS PER SHARE - PRIMARY AND FULLY DILUTED $ 0.50 $ 0.41 =========== =========== CASH DIVIDENDS PAID PER SHARE OF COMMON STOCK $ 0.06 $ 0.04 =========== =========== AVERAGE OUTSTANDING COMMON AND EQUIVALENT SHARES 2,492,000 2,729,000 ========== =========== SCHULTZ SAV-O STORES, INC. UNAUDITED STATEMENTS OF CASH FLOWS For the 16-Weeks Ended April 22 April 23 1995 1994 CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 1,237,000 $ 1,110,000 Adjustments to reconcile net earnings to net cash flows from operating activities- Depreciation and amortization 1,408,000 1,464,000 Other non-cash items 154,000 - Changes in assets and liabilities- (Increase) in receivables (1,137,000) (1,932,000) Decrease in inventories 1,063,000 2,388,000 Decrease (increase) in prepaid and other assets 48,000 (358,000) Increase in accounts payable 2,859,000 273,000 (Decrease) increase in accrued liabilities (1,614,000) 578,000 ------------ ----------- Net cash flows from operating activities 4,018,000 3,523,000 ------------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Expenditures for property and equipment (716,000) (703,000) Proceeds from asset sales 559,000 - Receipt of principal amounts under capital sublease agreements and notes receivable 159,000 182,000 ------------ ----------- Net cash flows from investing activities 2,000 (521,000) ---------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Payment for acquisition of treasury stock (620,000) (448,000) Principal payments under capital lease obligations (220,000) (254,000) Payment of cash dividends (155,000) (117,000) Principal payments on long-term debt (88,000) (88,000) ----------- ----------- Net cash flows from financing activities (1,083,000) (907,000) ----------- ----------- CASH AND EQUIVALENTS: Net increase 2,937,000 2,095,000 Balance, beginning of period 14,310,000 6,014,000 ------------ ------------ Balance, end of period $17,247,000 $ 8,109,000 ============ ============ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for- Interest, net $ 27,000 $ 168,000 Income taxes, net of refunds 2,043,000 314,000 ========== =========== SCHULTZ SAV-O STORES, INC. NOTES TO UNAUDITED FINANCIAL STATEMENTS (1) Basis of Presentation The financial statements included herein have been prepared by the Company, without audit. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted, although the Company believes that the disclosures are adequate to make the information presented not misleading. The interim financial statements furnished with this report reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. It is suggested that these financial statements be read in conjunction with the audited financial statements and the notes thereto included in the Company's 1994 annual report to shareholders, as incorporated by reference in the Company's Form 10-K for the fiscal year ended December 31, 1994. (2) Interest Expense, net Interest expense, net consists of the following: For the 16-Weeks Ended April 22 April 23 1995 1994 Interest expense: Long-term debt $ 131,000 $ 40,000 Imputed - capital leases 156,000 179,000 Interest income (265,000) (67,000) ---------- --------- Interest expense, net $ 22,000 $ 152,000 ========== ========== (3) Prepaid Expenses and Other Prepaid expenses and other consists of following: April 22 December 31 1995 1994 Land and building held for resale $ 824,000 $ 733,000 Prepaid expenses and other assets 1,472,000 1,611,000 ---------- ---------- Prepaid expenses and other $2,296,000 $2,344,000 =========== ========== Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Selected costs and results as a percent of net sales: For the 16-Weeks Ended April 22 April 23 1995 1994 Cost of products sold . . . . . . . . . . . 83.9% 83.6% Operating and administrative expenses . . . 14.6 14.9 Earnings before income taxes . . . . . . . 1.5 1.3 Net earnings . . . . . . . . . . . . . . . 0.9 0.8 Net sales for the 16-week period ended April 22, 1995 were $132,278,000 compared to the 16-week period ended April 23, 1994 net sales of $135,180,000. The decrease of $2,902,000, or 2.1%, was due primarily to the continuing increase in the relative percentage of wholesale sales to retail sales, as the Company continues to dispose of underperforming or noncompetitive corporate retail stores through conversion to franchise units or closures. In February 1994, the Company terminated its relationship with one multi-store wholesale customer. Since April 23, 1994, the Company sold one corporate retail supermarket and converted it into a franchised unit. The Company closed its underperforming corporate Palatine, Illinois retail supermarket in February 1995 after the Company determined that the supermarket was likely to continue incurring significant operating losses. These actions were the principal factors underlying the Company's reduced sales levels, in addition to continued intense retail competition. As of April 22, 1995, the Company had 65 franchised and 19 corporate supermarkets compared to 64 franchised and 21 corporate supermarkets at April 23, 1994 and 60 franchised and 26 corporate supermarkets at April 24, 1993. Consistent with the Company's business strategy to expand its wholesale business volume, the Company expects that the level of its wholesale sales will continue to increase relative to its total sales for the remainder of 1995. Towards this end, there are expansion or renovation projects at seven franchise retail projects currently in various phases of planning or construction, with completions scheduled from the second quarter of 1995 through the fourth quarter of 1995. These projects involve five additions to existing stores, one replacement supermarket and one new market franchise unit. Upon completion, the aggregate increase in size of these stores will exceed 74,000 square feet. Cost of products sold, as a percent of sales, increased by 0.3% to 83.9% for the 16-week period ended April 22, 1995, compared to the same period in 1994. While the percentage increased, total cost of products sold decreased $2,089,000 for the first quarter of 1995 compared to the first quarter of 1994. The increased percentage was a direct result of a reduction in the amount of higher margin retail sales compared to lower margin wholesale sales. The lower margins associated with wholesale sales continued in the first quarter of 1995 to be more than offset by significantly reduced operating and administrative expenses realized from the prior closure or sale of underperforming corporate retail supermarkets. Operating and administrative expenses, as a percent of sales, decreased by 0.3% to 14.6% for the 16-week period ended April 22, 1995, compared to the same period in 1994. The decrease of $938,000 was due primarily to the elimination of operating expenses (consisting of payroll, supplies, rent, utilities, depreciation and other administrative expenses) associated with the corporate retail supermarkets that have either been closed or sold and converted into franchise units. The effective income tax rate for the 16-week period ended April 22, 1995 increased to 38.5%, compared to 36.8% for the same period in 1994. The provision for income taxes during the 16-week periods ended April 22, 1995 and April 23, 1994 was $775,000 and $647,000, respectively. As a result of the foregoing, net earnings for the 16-weeks ended April 22, 1995 totaled $1,237,000, compared to $1,110,000 for the same period in 1994, or an increase of 11.4%. The Company's 1995 first quarter earnings per share increased by $0.09, or 22.0%, compared to the same period in 1994. Earnings per share increased on a percentage basis more than net earnings as a result of treasury share purchases during the first 16 weeks of 1995 which reduced the number of average shares outstanding for the quarter. The decrease in the average outstanding shares for the 16-week periods ended April 22, 1995 and April 23, 1994 was partially reduced due to the dilutive effect of stock options which were treated as common stock equivalents under the treasury stock method. Some of the Company's corporate retail supermarkets continue to be underperforming or noncompetitive in their respective marketplaces and, as a result, continue to incur operating losses. In order to further improve the Company's results of operations, the Company is currently evaluating various business alternatives relating to these operations, including, but not limited to, selling these corporate stores and converting them into franchise supermarkets, closing the stores or implementing other operational changes. Similar to prior fiscal years, implementation of these actions will likely result in the Company incurring certain repositioning charges involving the termination costs of replaced, closed or sold stores. While these charges may reduce the Company's reported net earnings for the period or periods in which the actions are taken, the Company believes that such actions will improve the Company's long-term profitability. Liquidity and Capital Resources Net cash inflows from operating activities for the 16-week period ended April 22, 1995 were $4,018,000, an increase of $495,000 over the prior year 16-week period ended April 23, 1994. The increase was attributable primarily to an increase in accounts payable due to timing of payments and, to a lesser extent, the effect of higher net earnings. These increases were offset by a reduction in accrued liabilities due to significant tax payments made by the Company during the first quarter of 1995. Net cash inflows from investing activities for the first quarter of 1995 totaled $2,000, compared to net cash outflows of $521,000 during the same period in 1994. The change was due primarily to proceeds from asset sales of $559,000 during the first quarter of 1995. Capital expenditures for property and equipment during the first quarter of 1995 totaled $716,000, which approximated 1994 same period total of $703,000. Net cash outflows from financing activities for the 16-week period ended April 22, 1995 were $1,083,000, compared to $907,000 during the same period in 1994. The increase in cash outflows was due principally to the $172,000 incremental cost of repurchasing common stock during the first quarter of 1995, compared to the first quarter of 1994. As a result of the foregoing, net cash increased $2,937,000 during the 16- weeks ended April 22, 1995, compared to an increase of $2,095,000 during the same period in 1994. The Company believes that its financial condition provides it with adequate long-term flexibility to finance anticipated capital requirements without adversely impacting its financial position or liquidity. The Company is currently evaluating the purchase of a computer system to improve its distribution capabilities. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. Exhibit 27 - Financial Data Schedule. (b) No reports of Form 8-K were filed by the Company during the first quarter of fiscal 1995. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. SCHULTZ SAV-O STORES, INC. (Registrant) May 31, 1995 /s/ John H. Dahly (Date) John H. Dahly, Executive Vice President, Chief Financial Officer and Treasurer EXHIBIT INDEX Exhibit No. Description 27 Financial Data Schedule EX-27 2 FINANCIAL DATA SCHEDULE FOR SCHULTZ SAV-O STORES, INC.
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED FINANCIAL STATEMENTS OF SCHULTZ SAV-O STORES, INC. AS OF AND FOR THE QUARTER ENDED APRIL 22, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1 OTHER DEC-30-1995 JAN-01-1995 APR-22-1995 17,247,000 0 8,590,000 0 20,264,000 53,265,000 55,907,000 32,046,000 91,497,000 29,357,000 3,968,000 146,000 300,000 0 41,473,000 91,497,000 132,278,000 132,278,000 110,989,000 0 19,255,000 0 22,000 2,012,000 775,000 1,237,000 0 0 0 1,237,000 0.50 0.50 Amounts included in "other costs and expenses." Net of interest income. Net of "allowances for doubtful accounts." 1st Quarter is 16 weeks.
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