-----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, CTBDPgedS8O6TZ97vRykQO5OHOL41ShrQQhOmaXJwyXKx5DSJBfGbpWE60aZyu8o /EDB1KyxajKZwb+Eb1WBOA== 0000945800-96-000006.txt : 19960619 0000945800-96-000006.hdr.sgml : 19960619 ACCESSION NUMBER: 0000945800-96-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960413 FILED AS OF DATE: 19960528 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DOMINICKS FINER FOODS INC /DE/ CENTRAL INDEX KEY: 0000945800 STANDARD INDUSTRIAL CLASSIFICATION: 5411 IRS NUMBER: 363168270 STATE OF INCORPORATION: DE FISCAL YEAR END: 1029 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-92700 FILM NUMBER: 96573000 BUSINESS ADDRESS: STREET 1: 505 RAILROAD AVE CITY: NORTHLAKE STATE: IL ZIP: 60164 BUSINESS PHONE: 7085621000 MAIL ADDRESS: STREET 1: 505 RAILROAD AVE CITY: NORTHLAKE STATE: IL ZIP: 60164 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended April 13, 1996 Commission file number 33-92700 DOMINICK'S FINER FOODS, INC. (Exact name of registrant as specified in charter) Delaware 36-3168270 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification Number) 505 Railroad Avenue Northlake, Illinois 60164 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (708) 562-1000 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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for at least the past 90 days. YES [X] NO [ ]. At May 23, 1996, there were 1,000 shares of Common Stock outstanding. As of such date, all of the outstanding shares of Common Stock were held by DFF Supermarkets, Inc. and there was no public market for the Common Stock. TABLE OF CONTENTS PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated balance sheets as of April 13, 1996 (unaudited) and October 28, 1995 . . . . . . . . . 1 Consolidated statements of operations for the 12 weeks ended April 13, 1996 ("Company"), the 4 weeks ended April 15, 1995 ("Company"), and the 8 weeks ended March 21, 1995 ("Predecessor") (unaudited) . . . . . . . . . . . . . . . . . . 2 Consolidated statements of operations for the 24 weeks ended April 13, 1996 ("Company"), the 4 weeks ended April 15, 1995 ("Company") (unaudited), and the 20 weeks ended March 21, 1995 ("Predecessor") . . . . . . . . . . . . . . . . . . . . . . 3 Consolidated statements of cash flows for the 24 weeks ended April 13, 1996 ("Company"), the 4 weeks ended April 15, 1995 ("Company") (unaudited), and the 20 weeks ended March 21, 1995 ("Predecessor") . . . . . . . . . . . . . . . . . . . . . . 4 Notes to consolidated financial statements . . . . . . . . . . . 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . 7 PART II. OTHER INFORMATION Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . 11 Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . . . . 11 Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . . . . . . 11 Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . 11 Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . . . . 11 Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . 11 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 PART I. FINANCIAL INFORMATION Item 1. Financial Statements DOMINICK'S FINER FOODS, INC. CONSOLIDATED BALANCE SHEET (in thousands except per share data) ASSETS April 13, 1996 October 28,1995 (unaudited) Current assets: Cash and cash equivalents $ 54,926 $ 55,551 Receivables, net 17,520 25,314 Inventories 177,120 182,880 Prepaid expenses and other 12,795 10,573 Total current assets 262,361 274,318 Property and equipment, net 340,760 353,015 Other assets: Deferred financing costs, net 21,379 22,567 Goodwill, net 426,372 419,298 Other 30,183 31,011 Total other assets 477,934 472,876 Total assets $ 1,081,055 $ 1,100,209 LIABILITIES AND STOCKHOLDER'S EQUITY Current liabilities: Accounts payable $ 145,837 $ 171,209 Accrued payroll and related liabilities 28,743 31,579 Taxes payable 17,425 7,958 Other accrued liabilities 79,513 83,422 Current portion of long-term debt 2,103 9,771 Current portion of capital lease obligations 7,232 4,565 Total current liabilities 280,853 308,504 Long-term debt: Term loans 274,337 281,109 Senior subordinated debt 200,000 200,000 Capital lease obligations 121,054 103,921 Deferred income taxes and other liabilities 63,511 66,976 Stockholder's equity: Common stock - $.01 par value, 1,000 shares authorized and issued - - Additional paid-in capital 147,851 147,647 Accumulated deficit (6,551) (7,948) Total stockholder's equity 141,300 139,699 Total Liabilities and Stockholder's Equity $ 1,081,055 $ 1,100,209 The accompanying notes are an integral part of these consolidated statements.
DOMINICK'S FINER FOODS, INC. CONSOLIDATED STATEMENT OF OPERATIONS (in thousands) (unaudited) Predecessor Company Company 12 Weeks 4 Weeks 8 Weeks Ended Ended Ended April 13, April 15, March 21, 1996 1995 1995 Sales $ 556,880 $ 191,314 $ 372,799 Cost of sales 427,872 148,813 288,626 Gross profit 129,008 42,501 84,173 Selling, general and administrative expenses 110,121 38,154 77,552 Operating income 18,887 4,347 6,621 Interest expense: Cash 13,979 5,007 4,625 Non-cash 1,278 - - Amortization of deferred financing costs 559 431 27 --------- --------- ----------- 15,816 5,438 4,652 SAR's termination costs - - 26,152 Income (loss) before income taxes 3,071 (1,091) (24,183) Income tax expense (benefit) 2,343 (110) (9,419) Net income (loss) $ 728 $ (981) $ (14,764) The accompanying notes are an integral part of these consolidated statements.
DOMINICK'S FINER FOODS, INC. CONSOLIDATED STATEMENT OF OPERATIONS (in thousands) Predecessor Company Company 24 Weeks 4 Weeks 20 Weeks Ended Ended Ended April 13, April 15, March 21, 1996 1995 1995 (unaudited) (audited) Sales $ 1,141,242 $ 191,314 $ 958,742 Cost of sales 880,282 148,813 747,468 Gross profit 260,960 42,501 211,274 Selling, general and administrative expenses 222,744 38,154 192,092 Operating income 38,216 4,347 19,182 Interest expense: Cash 28,401 5,007 11,238 Non-cash 2,558 - - Amortization of deferred financing costs 1,371 431 69 ----------- --------- ---------- 32,330 5,438 11,307 SAR's termination costs - - 26,152 Income (loss) before income taxes 5,886 (1,091) (18,277) Income tax expense (benefit) 4,489 (110) (7,135) Net income (loss) $ 1,397 $ (981) $ (11,142) The accompanying notes are an integral part of these consolidated statements.
DOMINICK'S FINER FOODS, INC. CONSOLIDATED STATEMENT OF CASH FLOWS Predecessor Company Company 24 Weeks 4 Weeks 20 Weeks Ended Ended Ended April 13, April 15, March 21, 1996 1995 1995 (unaudited) (audited) Cash flows from operating activities: Net income (loss) $ 1,397 $ (981) $ (11,142) Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: Depreciation and amortization 20,599 3,930 20,499 Amortization of deferred financing costs 1,371 431 69 SAR's termination costs - - 26,152 Deferred income taxes - - (3,890) Loss (gain) on disposal of assets - - 1,149 Changes in operating assets and liabilities, net of acquisition: Receivables 7,695 (2,937) 2,546 Inventories 5,760 6,856 7,209 Prepaid expenses (2,197) 220 (1,890) Accounts payable (25,372) (7,438) (10,217) Accrued liabilities and taxes payable (6,656) 1,615 (10,474) Total adjustments 1,199 2,677 31,153 Net cash provided by operating activities 2,597 1,696 20,011 Cash flows from investing activities: Capital expenditures (7,657) (1,850) (22,423) Proceeds from sale of assets 201 - 7,680 Business acquisition cost, net of cash required - (442,777) - Other - net - 170 116 Net cash used in investing activities (7,456) (444,457) (14,627) Cash flows from financing activities: Principal payments for long-term debt and capital lease obligations (17,260) (90,437) (5,363) Proceeds from debt issuances - 480,000 - Proceeds from issuance of capital stock - 100,000 - Proceeds from sale leaseback of assets 21,903 - - Increase in revolving debt - (37,000) - Deferred financing costs and other (410) - (791) Net cash provided by (used in) financing activities 4,234 452,563 (6,154) Net increase (decrease) in cash and cash equivalents (625) 9,802 (770) Cash and cash equivalents at beginning of period 55,551 17,324 18,094 Cash and cash equivalents at end of period $ 54,926 $ 27,126 $ 17,324
Supplemental schedule of non-cash investing and financing activities Acquisition of business (including final purchase price allocation): Fair value of assets acquired, net of cash acquired $ 3,238 $1,053,465 $ - Net cash paid in acquisition - (442,777) - Exchange of capital stock - (40,000) - Management equity investment - (5,000) - Liabilities assumed $ 3,238 $ 565,688 $ - The accompanying notes are an integral part of these consolidated statements. DOMINICK'S FINER FOODS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 1. Summary of Significant Accounting Policies Basis of Presentation The consolidated balance sheet of Dominick's Finer Foods, Inc. ("Company") as of April 13, 1996, and the consolidated statements of operations and cash flows for the 12 week and 24 week period ended April 13, 1996, the 4 week period ended April 15, 1995, and the 8 weeks period ended March 21, 1995, are unaudited, but include all adjustments (consisting of only normal recurring accruals) which the Company considers necessary for a fair presentation of its consolidated financial position, results of operations, and cash flows for these periods. These interim financial statements do not include all disclosures required by generally accepted accounting principles, and, therefore, should be read in conjunction with the Company's financial statements and notes thereto included in the Company's Form 10-K. Results of operations for interim periods are not necessarily indicative of the results for a full fiscal year. The Company was acquired by Dominick's Supermarkets, Inc. ("Supermarkets") on March 22, 1995 for total consideration of approximately $693 million (excluding acquisition costs) in a transaction accounted for as a purchase (the "Acquisition"). Supermarkets effected the Acquisition by acquiring 100% of the capital stock of the Company's parent for $346.6 million in cash and $40 million of Supermarkets' 15% Redeemable Exchangeable Cumulative Preferred Stock ("Parent Preferred Stock"). The principal sources of cash to finance the Acquisition were (i) $330 million in term loans consisting of $140 million of six-year amortizing Tranche A Loans, $60 million of seven-year amortizing Tranche B Loans, $65 million of eight-year amortizing Tranche C Loans and $65 million of eight and one-half year amortizing Tranche D Loans (collectively, the "Term Loan Facilities"); (ii) a $150 million unsecured senior subordinated credit facility; and (iii) a $105 million equity investment in Supermarkets common stock by certain affiliates of The Yucaipa Companies, certain other institutional and private investors and certain members of the Company's management. On May 4, 1995, the Company used the proceeds of an offering of $200 million of 10.875% Senior Subordinated Notes due 2005 (the "Senior Subordinated Notes") to repay the $150 million unsecured senior subordinated credit facility and to prepay $50 million of the Term Loan Facilities. In addition, the Company has a $100 million revolving credit facility (the "Revolving Credit Facility") available for working capital and general corporate purposes (together with the Term Loan Facilities, the "Senior Credit Facilities"). The Acquisition was accounted for as a purchase of the Company by Supermarkets. As a result, all financial statements for periods subsequent to March 22, 1995, the date the Acquisition was consummated, reflect the Company's assets and liabilities at their estimated fair market values as of March 22, 1995. The purchase price in excess of the fair market value of the Company's assets was recorded as goodwill and is being amortized over a 40- year period. For purposes of the financial statement presentation set forth herein, the Predecessor Company refers to the Company prior to the consummation of the Acquisition. The Parent Preferred Stock has been pushed down for accounting purposes to the Company with such amount included in the Company's additional paid-in capital. Dividends on the Parent Preferred Stock accrue cumulatively at a rate of 15% per annum and are payable by Supermarkets when and if declared by the Board of Directors of Supermarkets. The Company's principal debt instruments permit the Company to distribute cash to Supermarkets, following the sixth anniversary of the Acquisition, for the purpose of permitting Supermarkets to pay cash dividends on the Parent Preferred Stock if certain financial requirements are satisfied. The Company, an indirect wholly-owned subsidiary of Supermarkets, uses a 52-53 week fiscal year ending on the Saturday closest to October 31. The Company operates supermarkets in Chicago, Illinois and its suburbs. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Inventories Inventories are stated at the lower of cost, primarily using the last-in, first-out (LIFO) method, or market. If inventories had been valued using replacement cost, inventories would have been higher by $3,137,000 and $1,937,000 at April 13, 1996 and October 28, 1995, respectively, and gross profit and operating income would have been greater by $900,000, $450,000, $150,000, $750,000 and $300,000 for the 24 weeks and 12 weeks ended April 13, 1996, the 4 weeks ended April 15, 1995, and the 20 weeks and 8 weeks ended March 21, 1995, respectively. Reclassifications Certain prior period amounts in the consolidated financial statements have been reclassified to conform to the April 13, 1996 presentation. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations The Company was acquired by Supermarkets on March 22, 1995, for total consideration of approximately $693 million (excluding acquisition costs). The Acquisition was accounted for as a purchase of the Company by Supermarkets. The Company's final purchase price allocation resulted in a reduction in the fair market value of its fixed assets of approximately $83 million and it recorded goodwill of approximately $438 million. The Company's total debt also increased from approximately $250 million at March 21, 1995 to $600 million on the date of the Acquisition. As a result of these changes, the Company anticipates that its results of operations will reflect reduced levels of depreciation and increased levels of amortization of intangibles and interest expense as compared to pre-Acquisition results. The following table sets forth the historical results of the Company for the 12 weeks ended April 13, 1996, the combined historical operating results of the Predecessor Company for the 8 weeks ended March 21, 1995 and the successor Company for the 4 weeks ended April 15, 1995, the 24 weeks ended April 13, 1996 and the combined historical operating results of the Predecessor Company for the 20 weeks ended March 21, 1995 and the successor Company for the 4 weeks ended April 15, 1995.
12 Weeks Ended 24 Weeks Ended April 13, April 15, April 13, April 15, 1996 1995 1996 1995 (dollars in millions) (unaudited) Sales $556.9 100.0 % $564.1 100.0 % $1,141.2 100.0 % $1,150.1 100.0 % Gross profit 129.0 23.2 % 126.7 22.5 % 261.0 22.9 % 253.8 22.1 % Selling, general and administrative expenses 110.1 19.8 % 115.7 20.5 % 222.7 19.5 % 230.2 20.0 % Operating income 18.9 3.4 % 11.0 2.0 % 38.2 3.3 % 23.5 2.0 % Interest expense, excluding amortization of deferred financing costs 15.3 2.7 % 9.6 1.7 % 31.0 2.7 % 16.2 1.4 % SAR's termination costs - - % 26.2 4.6 % - - % 26.2 2.3 % Income tax expense (benefit) 2.3 0.4 % (9.5) (1.7)% 4.5 0.4 % (7.2) (0.6)% Net income (loss) 0.7 0.1 % (15.7) (2.8)% 1.4 0.1 % (12.1) (1.1)%
Comparison of Results of Operations for the 12 Weeks Ended April 13, 1996 (Company) with the 12 Weeks Ended April 15, 1995 (Predecessor Company) Sales: Sales decreased $7.2 million, or 1.3%, from $564.1 million in the 12 weeks ended April 15, 1995, to $556.9 million in the 12 weeks ended April 13, 1996. The decrease in sales in the fiscal 1996 period was primarily attributable to the inclusion of the week following Easter (which is a historically weak sales week for the Company) in the fiscal 1996 period and its exclusion in the fiscal 1995 period and the impact of the closure of three conventional stores during fiscal 1995, subsequent to the end of the first quarter. Comparable store sales decreased 1.0%. Excluding the impact of the post Easter week, comparable store sales increased 0.1%. Gross Profit: Gross profit increased $2.3 million, or 1.8%, from $126.7 million in the 12 weeks ended April 15, 1995, to $129.0 million in the 12 weeks ended April 13, 1996. Gross profit as a percentage of sales increased from 22.5% in the 12 weeks ended April 15, 1995, to 23.2% in the 12 weeks ended April 13, 1996, due primarily to the reduction of product costs resulting from purchasing improvements and reduced depreciation expense. Selling, General and Administrative Expense: Selling, general and administrative expense ("SG&A") decreased $5.6 million, or 4.8%, from $115.7 million in the 12 weeks ended April 15, 1995 to $110.1 million in the 12 weeks ended April 13, 1996. SG&A decreased from 20.5% of sales in the 12 weeks ended April 15, 1995, to 19.8% of sales in the 12 weeks ended April 13, 1996. The decrease in SG&A reflects the Company's reduced overhead costs, better management of store-level labor costs and the inclusion in the fiscal 1995 period of certain non-recurring costs related to the 1995 acquisition of the company. Operating Income: Operating income for the 12 weeks ended April 13, 1996 increased $7.9 million, or 71.8%, from $11.0 million in the 12 weeks ended April 15, 1995, to $18.9 million as a result of the factors discussed above. Interest Expense: Interest expense increased from $9.6 million in the 12 weeks ended April 15, 1995 to $15.3 million in the 12 weeks ended April 13, 1996. The increase in interest expense was due to the increased indebtedness outstanding following the Acquisition. SAR's Termination Costs: In connection with the Acquisition, the Company discharged certain obligations under its SAR's plan by making payments to plan participants and recorded a charge of $26.2 million. Net Income: Net income increased from a net loss of $15.7 million in the 12 weeks ended April 15, 1995 to a net income of $0.7 million in the 12 weeks ended April 13, 1996, as a result of the factors discussed above. Comparison of Results of Operations for the 24 Weeks Ended April 13, 1996 (Company) with the 24 Weeks Ended April 15, 1995 (Predecessor Company) Sales: Sales decreased $8.9 million, or 0.8%, from $1,150.1 million in the 24 weeks ended April 15, 1995, to $1,141.2 million in the 24 weeks ended April 13, 1996. The decrease in sales in the fiscal 1996 period was primarily attributable to the impact of the closure of four conventional stores during fiscal 1995 and the inclusion of the week following Easter (which is a historically weak sales week for the Company) in the fiscal 1996 period and its exclusion in the fiscal 1995 period, offset by an increase in comparable store sales of 0.1%. Excluding the impact of the post Easter week, comparable store sales increased 0.6%. Gross Profit: Gross profit increased $7.2 million, or 2.8%, from $253.8 million in the 24 weeks ended April 15, 1995, to $261.0 million in the 24 weeks ended April 13, 1996. Gross profit as a percentage of sales increased from 22.1% in the 24 weeks ended April 15, 1995, to 22.9% in the 24 weeks ended April 13, 1996, due primarily to the reduction of product costs resulting from purchasing improvements, improved drug and perishable department margins and reduced depreciation expense. Selling, General and Administrative Expense: Selling, general and administrative expense ("SG&A") decreased $7.5 million, or 3.3%, from $230.2 million in the 24 weeks ended April 15, 1995 to $222.7 million in the 24 weeks ended April 13, 1996. SG&A decreased from 20.0% of sales in the 24 weeks ended April 15, 1995, to 19.5% of sales in the 24 weeks ended April 13, 1996. The decrease in SG&A reflects the Company's reduced overhead costs, better management of store-level labor costs and the inclusion in the fiscal 1995 period of certain non-recurring costs related to the 1995 acquisition of the Company. Operating Income: Operating income for the 24 weeks ended April 13, 1996 increased $14.7 million, or 62.6%, from $23.5 million in the 24 weeks ended April 15, 1995, to $38.2 million as a result of the factors discussed above. Interest Expense: Interest expense increased from $16.2 million in the 24 weeks ended April 15, 1995 to $31.0 million in the 24 weeks ended April 13, 1996. The increase in interest expense was due to the increased indebtedness outstanding following the Acquisition. SAR's Termination Costs: In connection with the Acquisition, the Company discharged certain obligations under its SAR's plan by making payments to plan participants and recorded a charge of $26.2 million. Net Income: Net income increased from a net loss of $12.1 million in the 24 weeks ended April 15, 1995 to a net income of $1.4 million in the 24 weeks ended April 13, 1996, as a result of the factors discussed above. Liquidity and Capital Resources The Company's principal sources of liquidity are cash flow from operations, borrowings under the Revolving Credit Facility and capital and operating leases. The Company's principal uses of liquidity are to provide working capital, finance capital expenditures and meet debt service requirements. The Senior Credit Facilities consist of the $100 million six-year Revolving Credit Facility and the $330 million Term Loan Facilities. The Term Loan Facilities were initially comprised of the $140 million six year amortizing Tranche A Loans, the $60 million seven-year amortizing Tranche B Loans, the $65 million eight-year amortizing Tranche C Loans and the $65 million nine- year amortizing Tranche D Loans and have been subsequently reduced as a result of debt repayments. The Revolving Credit Facility is available for ongoing working capital needs and for up to $30 million of commercial or standby letters of credit. The letters of credit are used to cover workers' compensation contingencies and for other purposes permitted under the Senior Credit Facilities. Letters of credit for approximately $17.2 million were issued under the Revolving Credit Facility at April 13, 1996, of which $13.5 were to support the Company's workers' compensation self-insurance program. The Company generated approximately $2.6 million of cash for operating activities during the 24 weeks ended April 13, 1996 as compared to $21.7 million during the 24 weeks ended April 15, 1995. The cash generated in the 24 weeks ended April 13, 1996, reflects a reduction in accounts payable of $25 million related to an unusually high accounts payable balance at the end of fiscal 1995, which was due primarily to the implementation of a new accounts payable system. Typically, supermarket operators require small amounts of working capital for inventory purchases since inventory is generally sold prior to the time that payments to suppliers are due. This reduces the need for short-term borrowings and allows cash from operations to be used for non-current purposes such as financing capital expenditures and other investing activities. Consistent with this pattern, the Company had a working capital deficit of $18.5 million at April 13, 1996. The Company's cash used in investing activities for the 24 weeks ended April 13, 1996, was $7.5 million, consisting of $7.7 million of capital expenditures, offset in part by the proceeds from the sale of assets. Capital expenditures related primarily to store expenditures, and, to a lesser extent, expenditures for warehousing, distribution and manufacturing facilities and equipment, including data processing and computer systems. The Company plans to make gross capital expenditures of approximately $38 million (or $16 million net of expected capital leases) during the remainder of fiscal 1996. Such expenditures consist of approximately $29 million related to remodels and new stores, as well as ongoing store expenditures for equipment and maintenance and approximately $9 million related to warehousing, distribution and manufacturing facilities and equipment, including data processing and computer systems. Management expects that these capital expenditures will be financed primarily through cash flow from operations and capital leases. The capital expenditure budget for fiscal 1996 does not include certain environmental remediation costs which have been accrued for in the Company's financial statements and are expected to be incurred over the next several years. In the 24 weeks ended April 13, 1996, the Company has sold and leased back under capital leases approximately $22 million of certain existing owned equipment. The capital expenditure plans discussed above do not include potential acquisitions which the Company could make to expand within its existing market or to enter contiguous markets. The Company may consider such acquisition opportunities from time to time. Any such future acquisition may require the Company to seek additional debt or equity financing. The Company is a wholly owned subsidiary of DFF Supermarkets, Inc. ("DFF") which is, in turn, a wholly owned subsidiary of Supermarkets. The Company's principal debt instruments permit the Company to make distributions to DFF and Supermarkets under certain circumstances, including for the payment of taxes and, subject to limitations, for general and administrative purposes. After the sixth anniversary of the Acquisition, the Company's principal debt instruments permit the Company, subject to certain financial tests, to make distributions to permit Supermarkets to pay cash dividends on the Parent Preferred Stock. The Company is highly leveraged. Based upon current levels of operations and anticipated cost savings and future growth, the Company believes that its cash flows from operations, together with available borrowings under the Revolving Credit Facility and its other sources of liquidity (including capital and operating leases) will be adequate to meet its anticipated requirements for working capital, debt service and capital expenditures over the next few years. However, there can be no assurance that the Company will generate sufficient cash flow from operations or that it will be able to make future borrowings under the Revolving Credit Facility. Effects of Inflation The Company's primary costs, inventory and labor, are affected by a number of factors that are beyond its control, including the availability and price of merchandise, the competitive climate and general and regional economic conditions. As is typical of the supermarket industry, the Company has generally been able to maintain gross profit margins by adjusting its retail prices, but competitive conditions may from time to time render it unable to do so while maintaining its market share. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K Exhibit 27 - Financial Data Schedule. SIGNATURES Pursuant to the requirements of the Securities Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: May 28, 1996 DOMINICK'S FINER FOODS, INC. /s/Robert A. Mariano Robert A. Mariano President and Chief Executive Officer /s/ Darren W. Karst Darren W. Karst Executive Vice President and Chief Financial Officer EX-27 2
5 1,000 6-MOS NOV-02-1996 APR-13-1996 54,926 0 17,520 0 177,120 12,795 340,760 0 1,081,055 280,853 0 0 0 0 141,300 1,081,055 1,141,242 1,141,242 880,282 880,282 0 0 32,330 5,886 4,489 1,397 0 0 0 1,397 1,397 1,397
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