UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
----------------------------------
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 21, 1994
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 1-3657
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WINN-DIXIE STORES, INC.
(Exact name of registrant as specified in its charter)
Florida 59-0514290
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
5050 Edgewood Court, Jacksonville, Florida 32254-3699
(Address of registrant's principal executive offices)
(Zip Code)
(904) 783-5000
(Registrant's telephone number, including area code)
Unchanged
(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 (or for such 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
As of October 3, 1994, there were 74,094,329 shares outstanding of the
registrant's common stock, $1 par value.
PAGE
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WINN-DIXIE STORES, INC.
FORM 10-Q
TABLE OF CONTENTS
Part I: Financial Information
Page
Condensed Consolidated Statements of Earnings
(Unaudited), For the 12 Weeks Ended
September 21, 1994 and September 22, 1993 1
Condensed Consolidated Balance Sheets (Unaudited),
September 21, 1994 and June 29, 1994 2
Condensed Consolidated Statements of Cash Flows
(Unaudited), For the 12 Weeks Ended
September 21, 1994 and September 22, 1993 3
Notes to Condensed Consolidated Financial Statements
(Unaudited) 4-5
Management's Discussion and Analysis of Financial
Condition and Results of Operations 6-7
Part II: Other Information
Item 4. Submission of Matters to a Vote of Security Holders 8
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 9
Signatures 9
Computation of Earnings Per Share Exhibit 11.1
PAGE
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WINN-DIXIE STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
Amounts in thousands except per share data
For the 12 Weeks Ended
--------------------------------
Sept. 21, 1994 Sept. 22, 1993
-------------- --------------
Net sales $ 2,590,364 2,464,440
Cost of sales 1,999,818 1,908,355
------------ ------------
Gross profit 590,546 556,085
Operating & administrative expenses 547,252 516,796
------------ ------------
Operating income 43,294 39,289
Cash discounts & other income 22,676 22,694
Interest expense (3,400) (3,999)
------------ ------------
Earnings before income taxes 62,570 57,984
Provision for income taxes 22,525 22,033
============ ============
Net earnings $ 40,045 35,951
============ ============
Earnings per share $ 0.54 0.48
============ ============
Dividends per share $ 0.26 0.24
============ ============
See accompanying notes to Condensed Consolidated Financial Statements.
Page 1
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WINN-DIXIE STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
Amounts in thousands
ASSETS Sept. 21, 1994 June 29, 1994
--------------- ---------------
Cash and cash equivalents $ 29,701 31,451
Trade and other receivables 128,054 171,854
Associate stock loans 1,240 1,776
Merchandise inventories less LIFO reserve
of $207,872 ($205,172 at June 29, 1994) 1,061,810 1,058,883
Prepaid expenses 76,956 97,220
--------------- ---------------
Total current assets 1,297,761 1,361,184
--------------- ---------------
Investments and other assets 43,863 37,587
Prepaid income taxes 41,024 41,024
Net property, plant and equipment 731,746 706,779
--------------- ---------------
Total assets $ 2,114,394 2,146,574
=============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $ 496,393 516,806
Reserve for insurance claims and
self-insurance 55,780 60,510
Accrued wages and salaries 65,578 68,238
Accrued rent 59,371 58,313
Accrued expenses 104,610 126,550
Short-term borrowings - 9,500
Current obligations under
capital leases 3,765 3,462
Income taxes 45,744 29,787
--------------- ---------------
Total current liabilities 831,241 873,166
--------------- ---------------
Obligations under capital leases 84,520 85,374
Defined benefit plan 24,116 22,852
Reserve for insurance claims and
self-insurance 107,667 105,417
Other liabilities 2,294 2,304
Shareholders' equity:
Common stock 74,095 74,176
Retained earnings 990,461 983,285
--------------- ---------------
Total shareholders' equity 1,064,556 1,057,461
--------------- ---------------
Total liabilities and shareholders'
equity $ 2,114,394 2,146,574
=============== ===============
See accompanying notes to Condensed Consolidated Financial Statements.
Page 2
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WINN-DIXIE STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Amounts in thousands
For the 12 Weeks Ended
------------------------------
FISCAL YEAR-TO-DATE Sept. 21, 1994 Sept. 22, 1993
-------------- --------------
Cash flows from operating activities:
Net earnings $ 40,045 35,951
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 39,860 34,730
Prepaid income taxes - (2,780)
Defined benefit plan 1,264 778
Decrease in reserve for
self-insurance (2,480) (744)
Change in cash from:
Receivables 44,336 4,003
Merchandise inventories (2,927) 15,701
Prepaid expenses 20,264 24,815
Accounts payable (20,413) (6,644)
Income taxes 15,957 18,210
Other current accrued expenses (26,486) (1,045)
---------- ----------
Net cash provided by operating activities 109,420 122,975
---------- ----------
Cash flows from investing activities:
Purchases of property, plant
and equipment, net (64,826) (43,094)
Increase in investments
and other assets (6,276) (17,327)
----------- -----------
Net cash used in investing activities (71,102) (60,421)
----------- -----------
Cash flows from financing activities:
Decrease in short-term borrowings (9,500) (40,000)
Payments on capital lease obligations (551) (539)
Purchase of common stock and changes in
retained earnings (10,385) (4,155)
Dividends paid (19,622) (18,182)
Other (10) 20
----------- -----------
Net cash used
in financing activities (40,068) (62,856)
----------- -----------
Decrease in cash and cash equivalents (1,750) (302)
Cash and cash equivalents at beginning of year 31,451 22,302
----------- -----------
Cash and cash equivalents at end of period $ 29,701 22,000
=========== ===========
Supplemental cash flow information:
Interest paid $ 610 980
Interest and dividends received $ 267 542
Income taxes paid $ 1,480 4,007
=========== ===========
See accompanying notes to Condensed Consolidated Financial Statements.
Page 3
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WINN-DIXIE STORES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(A) Financial information reflects all adjustments which, in the opinion
of management, are necessary to reflect the results of operations and
financial position for the quarters shown. These condensed financial
statements should be read in conjunction with the fiscal 1994 Form
10-K Annual Report of the Company.
The consolidated financial statements include the accounts of Winn-
Dixie Stores, Inc. and its subsidiaries which operate as a major food
retailer in the southeastern and southwestern United States and
Bahamas Islands.
(B) Merchandise inventories are stated at the lower of cost or market,
approximately 92% of which are valued under the LIFO method.
(C) Results for the quarter reflect a pretax LIFO inventory charge of
$2.7 million in 1994 and in 1993. If the FIFO method had been used,
current quarter net earnings would have been $41.7 million or $0.56
per share as compared with net earnings of $37.6 million or $0.50
per share in the previous year.
(D) The Company has an authorized $200 million Commercial Paper Program
and short-term lines of credit totaling $235 million. There was no
commercial paper outstanding on either September 21, 1994 or June 29,
1994. On September 21, 1994 there were no amounts outstanding due to
borrowings against our bank lines of credit, as compared to $9.5
million on June 29, 1994.
(E) The provision for income taxes reflects management's best estimate of
the effective tax rate expected for the fiscal year. The effective
tax reate used for fiscal year 1995 is 36% as compared to 38% in
1994.
(F) Litigation: There are pending against the Company various claims
and lawsuits arising in the normal course of business, including
suits charging violations of certain civil rights laws.
The U.S. Environmental Protection Agency has notified the Company
that it is one of the many potentially responsible parties (PRPs)
for cleanup of two designated Superfund sites located in Tampa,
Florida, three such sites in Jacksonville (2 related sites) and one
site in Madison, Florida. The Company may be a PRP for cleanup of
one non-Superfund site in Tarrant County, Texas. Although cleanup
costs are believed to be substantial, accurate estimates will not
be available until studies have been completed at the sites.
The Company has entered into orders by consent with numerous other
PRPs to conduct studies and do cleanup for three of the Superfund
sites and is negotiating an agreement with PRPs who are under an
order at another Superfund site to determine the most cost-effective
way to clean up such sites. Although under federal statutes the
Company is jointly and severally liable for cleanup costs at each
location, the Company's share of total costs is estimated not to
exceed $350,000 for four of the Superfund sites and the Texas site.
The Company believes it is not a responsible party for cleanup of
the Madison, Florida, and Tarrant County, Texas, sites and has no
estimate of costs for those matters. Other than these two and the
New Mexico site mentioned below, these involve wastes the Company
paid to be properly disposed, and were mishandled by disposal
companies or public disposal sites.
Page 4
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NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) CONTINUED:
At one of the Tampa sites, the Company is one of 14 parties named as
respondents in a Unilateral Administrative Order for Remedial Design
and Remedial Action under 47 U.S.C. Section 9606(a) relating to a
disposal site formerly operated by Hillsborough County, Florida. The
parties are ordered to operate, maintain and monitor a water
cleaning system and perform Remedial Design for the site. The costs
to the Company are estimated at $150,000 in fiscal year 1995, with
additional annual costs for an indefinite period thereafter.
The Company is also involved in the cleanup of a fuel tank leak at a
New Mexico site formerly owned by it. The cleanup costs are to be
prorated with others on the basis of the total time of ownership of
the participants. The Company's share is 15% of the total costs
estimated to be less than $150,000, with minimal annual monitoring
costs thereafter.
It is the Company's policy to accrue and charge against earnings,
the environmental cleanup costs when it is probable that a liability
has been incurred and an amount can be reasonably estimated,
including evaluation of the other PRPs' ability to pay. The Company
believes its ultimate liability as to these environmental matters
will not necessitate significant capital outlays, will not
materially affect the annual earnings of the Company, nor cause
material changes in the Company's business. It is not possible to
quantify future environmental costs because many issues relate to
actions by third parties or changes in environmental regulation.
Although the amount of liability with respect to all other claims
and lawsuits cannot be ascertained, management is of the opinion
that any resulting liability will not have a material affect on the
Company's consolidated earnings or financial position.
Page 5
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WINN-DIXIE STORES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This analysis should be read in conjunction with the Condensed Con-
solidated Financial Statements.
Results of Operations
Sales for the current quarter were $2.6 billion, a $125.9 million
increase, or 5.1% over the comparable quarter ended September 22,
1993. Sales increases resulted primarily from a 6.2% increase in
average store sales. As of September 21, 1994, identical store sales
for the quarter reflected a 3.4% increase in the current year compared
to a 1.1% increase in the prior fiscal year.
The Company opened 16 new stores, averaging 45,300 square feet,
enlarged or remodeled 19 stores, and closed 20 older stores, averaging
27,300 square feet. As of September 21, 1994, retail space totaled
41.0 million square feet. Currently, 64 new stores are under
construction. The Company plans to open 75 new stores in the current
fiscal year. The Company has 1,155 stores in operation compared with
1,169 stores last year. Of the 1,155 stores, 640 are larger than
35,000 square feet. Stores not performing up to expectations were
closed, which resulted in a reduction in the total number of stores.
Gross profit increased $34.5 million for the quarter. As a percent to
sales, gross profit for the current quarter was 22.8%, compared to
22.6% in the previous year. The increase in gross profit is a result
of our computerized buying and our forward buy purchasing program.
Also, the larger stores have a different inventory mix which has an
improved gross profit percentage.
Operating and administrative expenses increased 5.9% for the current
quarter. As a percent to sales, operating and administrative expenses
for the current quarter were 21.1% as compared to 21.0% last year. Our
major increase in operating and administrative expense is due to the
Corporate Owned Life Insurance Program (COLI).
Cash discounts and other income totaled $22.7 million the first
quarter in both the current and previous fiscal year. Investment
income for the current quarter totaled $0.2 million compared to $0.9
million last year. The decrease in investment income is due to a
reduction in funds available for investment.
Interest expense totaled $3.4 million for the current quarter compared
to $4.0 million for the comparable period last year. The decrease in
interest expense for the quarter is due to a reduction in the issuance
of commercial paper.
Earnings before income taxes were $62.6 million for the current
quarter compared to $58.0 million in the previous year. The increase
in pretax earnings is primarily a result of the increase in gross
profit as previously mentioned. Income taxes have been accrued at an
effective rate of 36% for the current year and 38.0% for the previous
year. This rate is expected to approximate the effective rate for the
full 1995 fiscal year.
Net earnings amounted to $40.0 million, or $0.54 per share for the
current quarter compared to $36.0 million, or $0.48 per share for the
comparable period last year. The LIFO charge reduced net earnings by
$1.7 million, or $0.02 per share for the current
quarter compared to $1.7 million, or $0.02 per share in the previous
year.
Page 6
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Liquidity and Capital Resources
The Company's financial condition remains very sound and very strong.
Cash, cash equivalents and short-term investments amounted to $29.7
million at September 21, 1994. Net cash provided by operating
activities amounted to $109.4 million for the 12 weeks ended September
21, 1994, compared to $123.0 million for the comparable period last
year. Capital expenditures totaled $64.8 million compared to $43.1
million for the comparable period last year. These expenditures were
for new store locations, remodeling and enlargement of store locations
and maintenance and expansion of support facilities. Total capital
investment in Company retail and support facilities, including
operating leases, is estimated to be $600.0 million in 1995. The
Company has no material construction or purchase commitments
outstanding as of September 21, 1994.
Working capital amounted to $466.5 million at September 21, 1994, com-
pared to $488.0 million at June 29, 1994.
The Company has an authorized $200 million Commercial Paper Program.
In addition, the Company has $235 million of short-term lines of
credit. These lines of credit are available when needed during the
year and are renewable on an annual basis. The Company is not
required to maintain compensating bank balances in connection with
these lines of credit. As of September 21, 1994, and June 29, 1994,
no commercial paper was outstanding. Short-term borrowings against
our bank lines of credit were none as of September 21, 1994 as
compared to $9.5 million on June 29, 1994.
Excluding capital leases, the Company had no outstanding long-term
debt as of either September 21,1994 or June 29, 1994.
The Company's available credit facilities and cash flow from opera-
tions are considered adequate to fund the short-term and long-term
capital needs of the Company.
The U.S. Environmental Protection Agency has notified the Company that
it is one of the many potentially responsible parties (PRPs) for
cleanup of two designated Superfund sites located in Tampa, Florida,
three such sites in Jacksonville (2 related sites) and one site in
Madison, Florida. The Company may be a PRP for cleanup of one non-
Superfund site in Tarrant County, Texas. Although cleanup costs are
believed to be substantial, accurate estimates will not be available
until studies have been completed at the sites.
Impact of Inflation
The Company's primary costs, which are inventory and labor, increase
with inflation. Recovery of these increases has to come from improved
operating efficiencies and, to the extent permitted by our
competition, through improved gross profit margins.
Page 7
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WINN-DIXIE STORES, INC. AND SUBSIDIARIES
Part II - Other Information
Item 4. Submission of Matters to a Vote of Security Holders
(a) The 1994 Annual Meeting of Shareholders of the Company took
place on October 5, 1994.
(b) Four matters were voted on at the meeting:
1. The election of four (4) Class II Directors for terms
expiring in 1997 and one (1) Class III Director for a term
expiring in 1996;
2. Approval and ratification of an amendment increasing the
number of shares available for grant under and enlarging the
group of eligible employees under the Company's Key Employee
Stock Option Plan;
3. Ratification of an amendment increasing the number of
authorized shares of Common Stock which the Company may have
outstanding at any time to 200,000,000 shares from
100,000,000;
4. And for ratification of the appointment by the Board of
Directors of the Company of KPMG Peat Marwick LLP as auditors
of the Company for the fiscal year commencing June 30, 1994.
With respect to the election of Directors, the votes were as
follows:
Class II, for terms expiring in 1997
Shares for Shares Withheld
Robert D. Davis 63,218,070 538,884
James Kufeldt 63,217,467 539,487
Charles H. McKellar 63,173,794 583,160
David F. Miller 63,170,471 586,483
Class III, for term expiring in 1996:
Shares for Shares Withheld
Julia (Judi) B. North 63,167,036 589,618
With respect to approval and ratification of the amendments to the
Company's Key Employee Stock Option Plan, the vote was: 62,120,170
shares for; 1,263,599 shares against; 418,411 shares abstain.
There were zero broker non-votes.
With respect to the ratification of amendment increasing the
authorized number of authorized shares of Common Stock which the
Company may have outstanding at any time to 200,000,000 shares from
100,000,000 shares, the vote was: 60,266,616 shares for; 3,234,699
shares against; 300,906 shares abstained. There were zero broker
non-votes.
With respect to the appointment of KPMG Peat Marwick LLP as
auditors of the Company for the fiscal year commencing June 30.
1994, the vote was: 63,408,601 shares for; 162,838 shares against;
230,807 shares abstain. There were zero broker non-votes.
Page 8
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Item 5. Other Information
Wayne E. Ripley, Jr., Vice President, General Counsel and
Secretary of the Company, passed away on October 9, 1994.
Item 6. Exhibits and Reports on Form 8-K
Exhibits
11.1 Computation of Earnings Per Share
Report on Form 8-K
There were no reports on Form 8-K filed for the quarter ended
September 21, 1994.
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.
WINN-DIXIE STORES, INC.
Date: October 17, 1994 RICHARD MCCOOK
-----------------------------
Richard P. McCook
Financial Vice President and
Principal Financial Officer
Date: October 17, 1994 DAVID H. BRAGIN
-----------------------------
David H. Bragin
Corporate Treasurer and
Principal Accounting Officer
Page 9
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Exhibit 11.1
------------
WINN-DIXIE STORES, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
Dollars in thousands except per share data
For the 12 Weeks Ended Sept. 21, 1994 Sept. 22, 1993
---------------- ----------------
Average number of shares
outstanding 74,108,688 74,951,659
================ ================
Net earnings $ 40,045 35,951
================ ================
Earnings per share $ 0.54 0.48
================ ================
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