-----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, AauKEsQ8hldjbcQc1VXP9hNW/Q1Yftyd4r1nenmJq7ZzkiKyD22J3knWlfBCmk63 iiU3Y0MvTOua2098rPHjSQ== 0000897069-98-000445.txt : 19980902 0000897069-98-000445.hdr.sgml : 19980902 ACCESSION NUMBER: 0000897069-98-000445 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980718 FILED AS OF DATE: 19980901 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: SEC FILE NUMBER: 000-00549 FILM NUMBER: 98702557 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-0 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 July 18, 1998 OR __ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to _________ Commission File Number 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 53081 SHEBOYGAN, WISCONSIN (Zip Code) (Address of principal executive offices) Registrant's telephone number including area code 920-457-4433 ________________________________________ Former name, former address and former fiscal year, if changed since last report Indicate by checkmark 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 checkmark 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 August 24, 1998, 6,812,779 shares of Common Stock, $0.05 par value, were issued and outstanding. SCHULTZ SAV-O STORES, INC. FORM 10-Q INDEX PAGE NUMBER PART I FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets 3 Unaudited Consolidated Statements of Earnings 4 Unaudited Consolidated Statements of Cash Flows 5 Notes to Unaudited Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders 10 Item 6. Exhibits and Reports on Form 8-K 11 SIGNATURES 11 PART I FINANCIAL INFORMATION Item 1. Financial Statements SCHULTZ SAV-O STORES, INC. CONSOLIDATED BALANCE SHEETS Unaudited Audited Assets July 18, 1998 January 3, 1998 Current assets: Cash and equivalents $ 31,160,000 $23,124,000 Receivables 8,547,000 9,718,000 Inventories 20,917,000 21,741,000 Other current assets 4,052,000 3,635,000 Deferred income taxes 4,496,000 4,131,000 ------------ ----------- Total current assets 69,172,000 62,349,000 Noncurrent receivable under capital subleases 7,000,000 7,270,000 Property under capital leases, net 2,631,000 2,786,000 Other noncurrent assets 3,821,000 3,782,000 Property and equipment, net 21,579,000 22,679,000 ------------ ----------- Total Assets $104,203,000 $98,866,000 ============ =========== Liabilities and Shareholders' Investment Current liabilities: Accounts payable $ 23,289,000 $21,305,000 Accrued salaries and benefits 4,781,000 4,395,000 Accrued insurance 3,588,000 3,095,000 Retail repositioning reserve 772,000 610,000 Other accrued liabilities 3,291,000 2,861,000 Current obligations under capital leases 711,000 665,000 Current maturities of long-term debt 131,000 201,000 ------------ ----------- Total current liabilities 36,563,000 33,132,000 Long-term obligations under capital leases 10,773,000 11,177,000 Long-term debt 3,078,000 3,165,000 Deferred income taxes 880,000 1,008,000 Shareholders' investment: Common stock 438,000 438,000 Additional paid-in capital 14,111,000 13,940,000 Retained earnings 54,080,000 51,299,000 Treasury stock (15,720,000) 15,293,000) ------------ ----------- Total shareholders' investment 52,909,000 50,384,000 Total Liabilities and Shareholders' Investment $104,203,000 $98,866,000 ============ =========== SCHULTZ SAV-O STORES, INC. UNAUDITED CONSOLIDATED STATEMENTS OF EARNINGS
For the 12-weeks ended For the 28-weeks ended July 18, July 12, July 18, July 12, 1998 1997 1998 1997 Net sales $114,068,000 $109,844,000 $256,210,000 $248,670,000 Costs and expenses: Cost of products sold 95,618,000 92,647,000 214,697,000 209,396,000 Operating and administrative expenses 15,244,000 14,364,000 35,545,000 33,864,000 ------------ ------------ ------------ ------------ Operating income 3,206,000 2,833,000 5,968,000 5,410,000 Interest income 285,000 274,000 590,000 540,000 Interest expense (182,000) (195,000) (453,000) (458,000) ------------ ------------ ------------ ------------ Earnings before income taxes 3,309,000 2,912,000 6,105,000 5,492,000 Provision for income taxes 1,284,000 1,121,000 2,369,000 2,114,000 ------------ ------------ ------------ ------------ Net earnings $ 2,025,000 $ 1,791,000 $ 3,736,000 $ 3,378,000 ============ ============ ============ ============ Basic earnings per share $0.30 $0.26 $0.55 $0.49 ===== ===== ===== ===== Diluted earnings per share $0.29 $0.25 $0.53 $0.47 ===== ===== ===== ===== Cash dividends paid per share $0.07 $0.066 $0.14 $0.13 ===== ===== ===== ===== Average common and equivalent shares 7,014,000 7,051,000 7,013,000 7,081,000 ============ ============ ============ ============
SCHULTZ SAV-O STORES, INC. UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS For the 28-weeks ended July 18, July 12, 1998 1997 CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 3,736,000 $ 3,378,000 Adjustments to reconcile net earnings to net cash flows from operating activities Depreciation and amortization 2,713,000 2,193,000 Changes in assets and liabilities Receivables 1,171,000 4,678,000) Inventories 824,000 2,479,000 Other current assets (663,000) (518,000) Accounts payable 1,984,000 1,818,000 Accrued liabilities 1,149,000 325,000 ---------- ---------- Net cash flows from operating activities 10,914,000 4,997,000 ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Expenditures for property and equipment (1,282,000) (887,000) Receipt of principal amounts under capital sublease agreements 239,000 271,000 Proceeds from asset sales 61,000 117,000 ---------- ---------- Net cash flows from investing activities (982,000) (499,000) ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Payment of cash dividends (954,000) (924,000) Payment for acquisition of treasury stock (659,000) 1,666,000) Principal payments under capital lease obligations (358,000) (377,000) Proceeds from exercise of stock options 232,000 164,000 Principal payments on long-term debt (157,000) (167,000) ---------- ---------- Net cash flows from financing activities (1,896,000) (2,970,000) ---------- ---------- CASH AND EQUIVALENTS: Net increase 8,036,000 1,528,000 Balance, beginning of period 23,124,000 27,531,000 ---------- ---------- Balance, end of period $31,160,000 $29,059,000 =========== =========== SUPPLEMENTAL CASH FLOW DISCLOSURES: Interest paid $ 458,000 $ 491,000 Income taxes paid 1,985,000 2,997,000 SCHULTZ SAV-O STORES, INC. NOTES TO UNAUDITED CONSOLIDATED 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 of a normal recurring nature, 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 1997 annual report to shareholders, as incorporated by reference in the Company's Form 10-K for the fiscal year ended January 3, 1998. (2) Interest Expense For the 12-weeks ended For the 28-weeks ended July 18, July 12, July 18, July 12, 1998 1997 1998 1997 Imputed - capital leases $109,000 $115,000 $254,000 $268,000 Long-term debt 73,000 80,000 173,000 190,000 Other - - 26,000 - -------- -------- -------- -------- Interest expense $182,000 $195,000 $453,000 $458,000 ======== ======== ======== ======== (3) Other Current Assets July 18, January 3, 1998 1998 Property held for resale $2,131,000 $1,663,000 Prepaid expenses 1,055,000 1,209,000 Receivable under capital subleases 474,000 443,000 Other assets 392,000 320,000 ---------- ---------- Other current assets $4,052,000 $3,635,000 ========== ========== 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 12-weeks ended For the 28-weeks ended July 18, July 12, July 18, July 12, 1998 1997 1998 1997 Cost of products sold 83.8% 84.3% 83.8% 84.2% Operating and administrative expenses 13.4 13.1 13.9 13.6 Earnings before income taxes 2.9 2.7 2.4 2.2 Net earnings 1.8 1.6 1.5 1.4 ----------------------------------------------------------------------- Net Sales Net sales for the 12- and 28-week periods ended July 18, 1998 were $114,068,000 and $256,210,000, respectively, compared to $109,844,000 and $248,670,000 in the same periods ended July 12, 1997, respectively. The increases of $4,224,000 and $7,540,000, or 3.8% and 3.0% were due primarily to increased wholesale business volume resulting from the Company's continued additions and enhancements to the "virtual chain" base of franchised and corporate retail supermarkets. Since July 12, 1997, the Company has completed one new market corporate store, one new market franchise store, two replacement franchise stores, and three additions to existing franchise stores. These completed projects, located in Appleton, Poynette, Evansville, Lomira, Waterloo, Howards Grove, and Waupaca, Wisconsin added approximately 108,000 square feet of aggregate store selling space. In addition to improved wholesale business volume, corporate retail sales also increased. Corporate stores open more than one year continued to show improved sales volume compared to the prior year. Retail sales also increased due to additional corporate stores in Appleton and Oshkosh, Wisconsin since July 12, 1997. The sales increase clearly shows a positive trend, and with the absence of price inflation, represents real growth. As of July 18, 1998, the Company had 69 franchised and 18 corporate supermarkets compared to 70 franchised and 16 corporate supermarkets at July 12, 1997. On August 19, 1998, the Company opened a new 32,000 square foot corporate store in Appleton, Wisconsin. This renovated store facility was one of the stores that Company acquired from Nash Finch Company in 1997. With the opening of this store, the Company closed its older corporate store on North Oneida Street in Appleton. The Company expects that the level of its wholesale and retail sales will continue to be strong for the remainder of 1998. Currently, there are expansion or renovation projects at five franchise retail operations in various phases of planning or construction. These projects involve four additions to existing store operations and one replacement supermarket. On an aggregate basis, these projects are expected to yield an additional 40,000 square feet of selling space. Cost of Products Sold Cost of products sold, as a percent of sales, decreased nominally to 83.8% for both the 12-and 28-week periods ended July 18, 1998, compared to the 84.3% and 84.2%, respectively, for the same periods in 1997. This decrease was a direct result of an increase in higher margin retail sales from additional corporate stores in Appleton and Oshkosh, Wisconsin opened since July 12, 1997. With these additional corporate stores, the Company's percentage of higher margin retail sales volume continued to increase relative to the lower margin wholesale sales. Operating and Administrative Expenses Operating and administrative expenses, as a percent of sales, amounted to 13.4% and 13.9% for the 12- and 28-week periods ended July 18, 1998, compared to 13.1% and 13.6% for the same periods in 1997. Total operating and administrative expenses increased primarily because of increased wages, benefits and general operating costs for the new corporate supermarkets in Appleton and Oshkosh, Wisconsin. Additionally, the Company incurred and expensed certain store pre-opening and administrative costs in the newly-renovated and opened corporate store in Appleton, Wisconsin. Due to the highly competitive nature of the industry, certain Company franchise operators and corporate retail supermarkets continue to experience operational difficulties in their respective marketplaces. The Company continues to evaluate various business alternatives relating to underperforming operations. The Company's business alternatives include, but are not limited to, the sale and subsequent conversion of corporate stores to franchise units, closing stores, or implementing other operational changes. Similar to certain prior periods, the Company has incurred certain repositioning charges regarding the termination costs of replaced, closed or sold stores. These actions can negatively impact net earnings in the short-term, but management believes that such actions will help improve the Company's long-term profitability. Net Earnings After applying the effective tax rate to earnings before income taxes, net earnings for the 12-and 28-week periods ended July 18, 1998, compared to the same periods in 1997, increased 13.1% and 10.6% to $2,025,000 and $3,736,000, respectively. Diluted earnings per share for the 12-and 28- week periods ended July 18, 1998 increased 16.0% to $0.29 compared with $0.25 in 1997, and 12.8% to $0.53 compared with $0.47 in 1997. The number of consecutive quarters showing increases in net earnings over the prior year's quarter has been extended to 22. Liquidity and Capital Resources The Company's favorable 1998 year to date operating results continued to enhance its strong financial position. As was the case in the prior year, the primary source of liquidity for the 28-week period ended July 18, 1998 was cash generated from operating activities. Cash provided by operating activities was $10,914,000, an increase of $5,917,000 over the prior year 28-week period ended July 12, 1997 cash inflow of $4,997,000. The increase in cash flows from operations was due primarily to the timing of cash receipts, cash payments, and changes in short-term financing to its wholesale customers for the purchase of new equipment. Net cash outflows from investing activities for the 28-week period ended July 18, 1998 totaled $982,000, compared to $499,000 during the same period in 1997. The change was due primarily to an increase in capital expenditures compared to the same period in 1997. The Company has a 1998 capital budget of $4,300,000, of which approximately $3,000,000 remains available for future expenditures. The Company anticipates financing these needs from internally generated capital. Net cash outflows from financing activities for the 28-week period ended July 18, 1998 was $1,896,000, compared to $2,970,000 during the same period in 1997. The decrease in cash outflows was due principally to the reduction in common stock repurchased by the Company during the first half of 1998, compared to the first half of 1997. The Company maintains a revolving credit facility agreement with two lending institutions to provide up to $16 million of borrowings at rates not to exceed the bank's prime rates. At July 18, 1998 and July 12, 1997, the Company had no borrowings outstanding under these agreements. The Company's Board of Directors declared a 14.3% increase in its third quarter cash dividend on common stock. Cash dividends will increase to $0.08 from $0.07 per share. The dividend will be payable on September 11, 1998 to shareholders of record as of August 28, 1998. Robert W. Baird & Co., Inc. reported in its 1998 Financial Briefs of Wisconsin that Schultz Sav-O Stores' 31.0% annual dividend growth rate over the last five years ranks first among all Wisconsin publicly-held companies. In summary, cash and equivalents increased $8,036,000 during the first half of 1998, compared to an increase of $1,528,000 during the same period in 1997. Due to the Company's significant cash and other liquid assets, its consistent ability to generate cash flows from operations and availability of external financing, the Company foresees no difficulty in providing financing necessary to fund its capital commitments and working capital needs for the foreseeable future. The Company has assessed and continues to assess the impact of the Year 2000 issue on its operations, including estimates for development costs, and the extent of programming changes required to address this issue. The Company also continues to assess the impact of this issue with its key vendors and suppliers. Although final cost estimates have not been fully determined, based on current information available, the Company anticipates that its Year 2000 costs will result in an immaterial increase in the Company's expenses for the remainder of 1998. ----------------------------------------------------------------------- Special Note Regarding Forward-Looking Statements Certain matters discussed in this Form 10-Q are "forward-looking statements" intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such because the context of the statement will include words such as the Company "believes," "anticipates," "expects" or words of similar import. Similarly, statements that describe the Company's future plans, objectives, strategies or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which are described in close proximity to such statements and which could cause actual results to differ materially from those currently anticipated. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward- looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are only made as of the date of this report and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. ----------------------------------------------------------------------- PART II OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders The Company's 1998 annual meeting of shareholders was held on Wednesday, May 13, 1998. At the meeting, the shareholders re-elected James H. Dickelman and William K. Jacobson and newly elected Steven R. Barth to the Company's Board of Directors for three-year terms expiring at the Company's 2001 annual meeting of shareholders and until their successors are duly qualified and elected. As of the March 25, 1998 recorded date for the annual meeting, 6,812,779 shares of Common Stock were outstanding and eligible to vote. Of these, 5,595,282 shares of Common Stock voted at the meeting in person or by proxy. The following votes were recorded for each nominee: For Withheld Votes Percentage Votes Percentage James H. Dickelman 5,576,351 99.7% 18,931 0.3% William K. Jacobson 5,577,251 99.7% 18,031 0.3% Steven R. Barth 5,572,338 99.6% 22,944 0.4% The tabulation of votes for the election of directors resulted in no broker non-votes or abstentions. Of the 5,595,282 shares of Common Stock voted at the meeting in person or by proxy, the following votes were recorded for approval of the ratification of Arthur Andersen LLP as the Company's 1998 independent public accountants: For Against Abstained Votes Percentage Votes Percentage Votes Percentage 5,568,888 99.5% 16,823 0.3% 9,571 0.2% No other matters were brought before the meeting for a shareholder vote. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. 10.13 Form of Amendment to Key Executive Employment and Severance Agreement, dated as of July 27, 1998 between the Company and each of James H. Dickelman, John H. Dahly, Michael R. Houser and William K. Jacobson. 27 Financial Data Schedule. (b) No reports of Form 8-K were filed by the Company during the first half of fiscal 1998. 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) August 26, 1998 /s/ Armand C. Go (Date) Armand C. Go, Treasurer and Chief Accounting Officer EXHIBIT INDEX 10.13 Form of Amendment to Key Executive Employment and Severance Agreement, as of July 27, 1998 between the Company and each of James H. Dickelman, John H. Dahly, Michael R. Houser and William K. Jacobson. 27 Financial Data Schedule. EX-10.13 2 AMENDMENT TO KEY EXECUTIVE EMPLOYMENT AGREEMENT Exhibit 10.13 AMENDMENT TO KEY EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENT THIS AMENDMENT ("Amendment"), dated as of July 27, 1998, supplements and amends the existing Key Employment and Severance Agreement ("Agreement") by and between SCHULTZ SAV-O STORES, INC., a Wisconsin corporation ("Company"), and the named executive set forth above ("Executive"). All defined terms used herein and not defined shall have the same meaning as in the Agreement. W I T N E S S E T H: WHEREAS, pursuant to Section 19 of the Agreement, the Executive and the Company desire to supplement and amend the Agreement as specifically set forth in this Amendment. WHEREAS, the Board of Directors of the Company believes it is in the best interests of the Company to allow the Executive the right to exercise a "discretionary termination" at any time within one year after a Change in Control for any reason and be eligible to receive his Termination Payment. NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements herein set forth, and for other valuable consideration the parties hereto covenant and agree as follows: 1. The first paragraph of Section 1(m) and paragraph (E) of Section 1(m) of the Agreement are each hereby amended and restated to read in their respective entirety as follows: "(o) Termination Date. For purposes of this Agreement, except as otherwise provided in Section 10(b) and Section 17(a) hereof or as set forth below, the term `Termination Date' means (i) if the Executive's employment is terminated by the Executive's death, the date of death; (ii) if the Executive's employment is terminated by reason of voluntary early retirement, as agreed in writing by the Company and the Executive, the effective date of such early retirement which is set forth in such written agreement; (iii) if the Executive's employment is terminated by reason of disability pursuant to Section 12 hereof, the earlier of thirty (30) days after the Notice of Termination is given or one day prior to the end of the Employment Period; (iv) if the Executive's employment is terminated by the Executive voluntarily (other than for Good Reason), the date the Notice of Termination is given; (v) if the Executive's employment is terminated by the Executive pursuant to a Discretionary Termination, the date the Notice of Termination is given, but not later than the first anniversary after the occurrence of the Change in Control of the Company; and (vi) if the Executive's employment is terminated by the Company (other than by reason of disability pursuant to Section 12 hereof) or by the Executive for Good Reason, the earlier of thirty (30) days after the Notice of Termination is given or one day prior to the end of the Employment Period. Notwithstanding the foregoing, ..." [Remainder of existing Section 1(m) to remain as written in Agreement, except for paragraph (E) as provided below.] "(E) Except as provided in Paragraphs (B) and (C) above and other than a Discretionary Termination (which cannot be subject to dispute by the Company), if the party receiving the Notice of Termination in good faith notifies the other party that a dispute exists concerning the termination within the fifteen (15) day period following receipt thereof and it is finally determined that the reason asserted in such Notice of Termination did not exist, then (1) if such Notice was delivered by the Executive, the Executive will be deemed to have voluntarily terminated his employment and (2) if delivered by the Company, the Company will be deemed to have terminated the Executive other than by reason of death, disability or Cause." 2. New Section 1(n) of the Agreement is hereby added to the Agreement in its entirety as follows: "(n) Discretionary Termination. For purposes of this Agreement, `Discretionary Termination' means the determination by the Executive at any time during the one- year period after the occurrence of a Change in Control of the Company, as evidenced by the Executive's delivery to the Company of a Notice of Termination during such period, to terminate this Agreement and his employment hereunder for any reason whatsoever in his sole discretion, with or without good faith, and regardless of whether the Company has terminated or is terminating Executive for any reason, including for `Cause.'" 3. Section 3 of the Agreement is hereby amended and restated in its entirety to read as follows: "3. Employment Period. If a Change in Control of the Company occurs when the Executive is employed by the Company, the Company will continue thereafter to employ the Executive during the Employment Period, and the Executive will remain in the employ of the Company, in accordance with and subject to the terms and provisions of this Agreement (including, without limitation, the Executive's right to exercise a Discretionary Termination), and the terms of this Agreement shall expressly supersede the terms and conditions of any other then existing employment arrangement or agreement between the Company and the Executive." 4. Section 7 of the Agreement is hereby amended and restated in its entirety to read as follows: "7. Termination For Cause or Without Good Reason. If there is a Covered Termination for Cause or due to the Executive's voluntarily terminating his employment, other than for Good Reason or a Discretionary Termination (any such terminations to be subject to the procedures set forth in Section 13 hereof), then the Executive shall be entitled to receive only Accrued Benefits pursuant to Section 9(a) hereof." 5. Section 8(b) of the Agreement is hereby amended and restated in its entirety to read as follows: "(a) If there is a Covered Termination by the Executive for Good Reason or a Discretionary Termination, or by the Company other than by reason of (i) death, (ii) disability pursuant to Section 12 hereof, or (iii) Cause, then the Executive shall be entitled to receive, and the Company shall promptly pay, Accrued Benefits pursuant to Section 9(a) hereof and, in lieu of further base salary for periods following the Termination Date, as liquidated damages and severance pay, the Termination Payment pursuant to Section 9(b) hereof." 6. The first paragraph of Section 9(b) of the Agreement shall be amended and restated in its entirety as follows: "(b) Termination Payment. The Termination Payment shall be an amount equal to the Executive's monthly base salary, as in effect immediately prior to the Change in Control of the Company, as adjusted upward from time to time pursuant to Section 6 hereof, multiplied by the greater of the number of months (which shall include fractions of months rounded up to the next highest whole number) remaining in the Employment Period or twelve (12). Except as otherwise provided herein, the Termination Payment shall be paid to the Executive in cash no later than ten (10) business days after the Termination Date; provided, however, the Termination Payment shall be paid immediately upon receipt by the Company of a Notice of Termination relating to a Discretionary Termination (regardless of any differing effective date of the Executive's employment termination). The Executive shall not be required to mitigate the amount of the Termination Payment by securing other employment or otherwise, nor will such Termination Payment be reduced by reason of the Executive securing other employment or for any other reason." [Remainder of existing Section 9(b) to remain as written in the Agreement.] 7. Section 10(b) of the Agreement shall be amended and restated in its entirety as follows: "(b) In the event the Executive dies after a Notice of Termination is given (i) by the Company, other than by reason of disability, or (ii) by the Executive for Good Reason or a Discretionary Termination, the Executive's estate, heirs and beneficiaries shall be entitled to the benefits described in Section 10(a) hereof and, subject to the provisions of this Agreement, to such Termination Payment as the Executive would have been entitled to had the Executive lived. For purposes of this Section 10(b), the Termination Date shall be the earlier of thirty (30) days following the giving of the Notice of Termination or one day prior to the end of the Employment Period, subject to delay pursuant to Section 1(m) hereof." 8. Section 11 of the Agreement shall be amended and restated in its entirety as follows: "11. Retirement. If, during the Employment Period, the Executive and the Company shall execute an agreement providing for the early retirement of the Executive from the Company, or the Executive shall otherwise give notice that he is voluntarily choosing to retire early from the Company, the Executive shall receive Accrued Benefits through the Termination Date; provided, that if the Executive's employment is terminated by the Executive for Good Reason or a Discretionary Termination or by the Company other than by reason of death, disability or Cause and the Executive also, in connection with such termination, elects voluntary early retirement, the Executive shall also be entitled to receive a Termination Payment pursuant to Section 9(b) hereof." 9. Section 13(a) and (d) of the Agreement shall be amended and restated in their respective entirety as follows: "(a) If such termination is for disability, Cause or Good Reason, the Notice of Termination shall indicate in reasonable detail the facts and circumstances alleged to provide a basis for such termination. (No such detail need be provided for a Discretionary Termination.)" "(d) The recipient of the Notice of Termination shall personally deliver or mail in accordance with Section 23 hereof written notice of any dispute relating to such Notice of Termination to the party giving such Notice within fifteen (15) days after receipt thereof; provided, however, that a Notice of Termination relating to a Discretionary Termination shall not be subject to dispute for any reason by the Company or otherwise. After the expiration of such fifteen (15) days (or immediately upon receipt of a Notice of Termination relating to a Discretionary Termination), the contents of the Notice of Termination shall become final and not subject to dispute." 10. Except as specifically set forth above, all other terms and conditions of the Agreement shall continue in full force and effect, unaffected by this Amendment. This Amendment shall be effective for all purposes immediately as of the date first written above. IN WITNESS WHEREOF, the Executive and the Company have set their hands hereto as of the date above. EXECUTIVE SCHULTZ SAV-O STORES, INC. ________________ By:___________________________________ James H. Dickelman Chairman, President and Chief Executive Officer EX-27 3 FINANCIAL DATA SCHEDULE
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF SCHULTZ SAV-O STORES, INC. AS OF AND FOR THE PERIOD ENDED JULY 18, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1 OTHER JAN-02-1999 JAN-04-1998 JUL-18-1998 31,160,000 0 8,547,000 0 20,917,000 69,172,000 58,594,000 37,015,000 104,203,000 36,563,000 3,078,000 0 0 438,000 52,471,000 104,203,000 256,210,000 256,210,000 214,697,000 0 35,545,000 0 453,000 6,105,000 2,369,000 3,736,000 0 0 0 3,736,000 0.55 0.53 Net of "Allowances for doubtful accounts". Amounts included in "Other costs and expenses". Period is 28 weeks.
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