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 April 06, 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
_____________________
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
(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 t No o
As of April 21,1994, there were 74,443,076 shares outstanding of the
registrant's common stock, $1 par value.
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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 and 40 Weeks Ended
April 06, 1994 and March 31, 1993 1
Condensed Consolidated Balance Sheets (Unaudited),
April 06, 1994 and June 30, 1993 2
Condensed Consolidated Statements of Cash Flows
(Unaudited), For the 40 Weeks Ended
April 06, 1994 and March 31, 1993 3
Notes to Condensed Consolidated Financial Statements
(Unaudited) 4-5
Management's Discussion and Analysis of Financial
Condition and Results of Operations 6-8
Part II: Other Information
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
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WINN-DIXIE STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
Amounts in thousands except per share data
MOST RECENT QUARTER
For the 12 Weeks Ended
--------------------------------
April 6, 1994 March 31, 1993
-------------- --------------
Net sales $ 2,651,491 2,504,214
Cost of sales 2,047,577 1,937,599
------------ ------------
Gross profit 603,914 566,615
Operating & administrative expenses 536,614 500,240
------------ ------------
Operating income 67,300 66,375
Cash discounts & other income 20,349 27,103
Interest expense (3,729) (5,480)
------------ ------------
Earnings before income taxes 83,920 87,998
Provision for income taxes 31,888 30,799
============ ============
Net earnings $ 52,032 57,199
============ ============
Earnings per share $ 0.70 0.75
============ ============
Dividends per share $ 0.36 0.33
============ ============
FISCAL YEAR-TO-DATE
For the 40 Weeks Ended
----------------------
April 6, 1994 March 31, 1993
-------------- --------------
Net sales $ 8,496,917 8,141,015
Cost of sales 6,570,457 6,316,828
------------ ------------
Gross profit 1,926,460 1,824,187
Operating & administrative expenses 1,747,746 1,672,941
------------ ------------
Operating income 178,714 151,246
Cash discounts & other income 78,919 99,624
Interest expense (12,860) (14,552)
------------ ------------
Earnings before income taxes 244,773 236,318
Provision for income taxes 93,009 82,711
------------ ------------
Net earnings $ 151,764 153,607
============ ============
Earnings per share $ 2.03 2.01
============ ============
Dividends per share $ 1.08 0.99
============ ============
See accompanying notes to Condensed Consolidated Financial Statements.
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WINN-DIXIE STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
Amounts in thousands
ASSETS April 6, 1994 June 30, 1993
--------------- ---------------
Cash and cash equivalents $ 30,180 22,302
Short-term investments 107,927 85,482
--------------- ---------------
138,107 107,784
Trade and other receivables 178,139 162,590
Associate stock loans 2,308 4,647
Merchandise inventories less LIFO reserve
of $216,201 ($207,201 at June 30, 1993) 1,086,038 1,041,451
Prepaid expenses 84,689 96,728
--------------- ---------------
Total current assets 1,489,281 1,413,200
--------------- ---------------
Investments and other assets 31,310 15,043
Prepaid income taxes 50,464 47,684
Net property, plant and equipment 659,006 586,633
--------------- ---------------
Total assets $ 2,230,061 2,062,560
=============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $ 542,812 493,190
Reserve for insurance claims and
self-insurance 60,964 65,134
Accrued wages and salaries 79,639 66,821
Accrued rent 58,250 57,557
Accrued expenses 101,936 84,893
Short-term borrowings 100,000 80,000
Current obligations under
capital leases 3,320 2,989
Income taxes 37,165 17,962
--------------- ---------------
Total current liabilities 984,086 868,546
--------------- ---------------
Obligations under capital leases 84,253 87,153
Defined benefit plan 22,401 19,454
Reserve for insurance claims and
self-insurance 107,669 100,169
Other liabilities 2,200 2,273
Shareholders' equity:
Common stock 74,391 74,956
Retained earnings 955,061 910,009
--------------- ---------------
Total shareholders' equity 1,029,452 984,965
--------------- ---------------
Total liabilities and shareholders'
equity $ 2,230,061 2,062,560
=============== ===============
See accompanying notes to Condensed Consolidated Financial Statements.
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WINN-DIXIE STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Amounts in thousands
For the 40 Weeks Ended
------------------------------
FISCAL YEAR-TO-DATE April 6, 1994 March 31, 1993
-------------- --------------
Cash flows from operating activities:
Net earnings $ 151,764 153,607
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 122,934 109,164
Prepaid income taxes (2,780) -
Defined benefit plan 2,947 2,583
Increase in reserve for
self-insurance 3,330 3,105
Change in cash from:
Receivables (13,210) (32,447)
Merchandise inventories (44,587) (83,849)
Prepaid expenses 12,039 14,767
Accounts payable 49,622 72,106
Income taxes 19,203 (16,147)
Other current accrued expenses 36,139 (39,515)
---------- ----------
Net cash provided by operating activities 337,401 183,374
---------- ----------
Cash flows from investing activities:
Purchases of property, plant
and equipment, net (195,306) (143,327)
Decrease (increase) in investments
and other assets (38,712) 115,110
----------- -----------
Net cash used in investing activities (234,018) (28,217)
----------- -----------
Cash flows from financing activities:
Increase in short-term borrowings 20,000 -
Payments on capital lease obligations (2,569) (3,032)
Purchase of common stock and changes in
retained earnings (32,232) (87,100)
Dividends paid (80,631) (75,785)
Other (73) -
----------- -----------
Net cash used
in financing activities (95,505) (165,917)
----------- -----------
Increase (decrease) in cash and cash equivalents 7,878 (10,760)
Cash and cash equivalents at beginning of year 22,302 19,466
----------- -----------
Cash and cash equivalents at end of period $ 30,180 8,706
=========== ===========
Supplemental cash flow information:
Interest paid $ 12,447 11,620
Interest and dividends received $ 2,041 15,126
Income taxes paid $ 74,041 98,933
=========== ===========
See accompanying notes to Condensed Consolidated Financial Statements.
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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 quar ters shown. These condensed financial
statements should be read in conjunction with the fiscal 1993 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.
Effective July 1, 1993, the Company consolidated its Bahamas statements of
earnings in accordance with generally accepted accounting principles. The
retroactive consolidation of the Bahamas operating results would have had
an insignificant impact on the prior statements of earnings. Accordingly,
the 1993 statement of earnings has not been restated.
(B) Merchandise inventories are stated at the lower of cost or market,
approximately 94% 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 $2.7 million in 1993. The cumulative current year
charge is $9.0 million as compared with $9.1 million in 1993. If the FIFO
method had been used, current quarter net earnings would have been $53.7
million or $0.72 per share as compared with net earnings of $58.9 million
or $0.77 per share in the previous year. The cumulative year net earnings
would have been $157.4 million, or $2.11 per share as compared with $159.4
million, or $2.09 per share.
(D) The Company has an authorized $200 million Commercial Paper Program and
short-term lines of credit totaling $250 million. As of April 06, 1994,
$100 million of commercial paper was outstanding.
(E) The provision for income taxes reflects management's best estimate of the
effective tax rate expected for the fiscal year. The increase in the
federal corporate income tax rate from 34% to 35%, effective January 1,
1993, resulted in additional income tax expense in the current quarter and
year to date.
(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.
Under the Provisions of U. S. Environmental Protection laws, the
Environmental Protection Agency (EPA) has notified the Company that it is
one of many Potentially Responsible Parties (PRPs) for cleanup of two
designated "Superfund" sites located in Tampa, Florida, and three such
sites in Jacksonville (2 related sites), and one site each in Madison and
Baldwin, Florida. It has also notified the Company that it is 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.
Page 4
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED), CONTINUED
The Company has entered into orders by consent with numerous other PRPs to
conduct studies and do certain cleanup for three of the "Superfund"
locations and is negotiating an agreement with other PRPs who are under an
order at other "Superfund" sites 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
three of the "Superfund" sites and the Texas site. No estimate of cleanup
costs for the Madison, Florida, site is possible at this time, and the
Company believes it is not a responsible party for cleanup of the
Madison, Florida site nor for the site at Tarrant County, Texas.
At one "Superfund" site in Tampa, Florida, 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 1994, with additional
annual costs for an indefinite period thereafter.
The Company is also participating in the cost of 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 pro-ration is 15%. Total costs are estimated at
less than $150,000, with minimal annual monitoring costs thereafter.
The Company believes its ultimate liability as to these environmental
matters will not necessitate significant capital outlays, will not
materially affect the earning power of the Company, nor cause material
changes in the Company's business.
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 effect 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 Consolidated
Financial Statements.
Results of Operations
Sales for the current quarter were $2.7 billion, a $147.3 million increase,
or 5.9% over the comparable quarter ended March 31, 1993. Year-to-date,
sales were $8.5 billion, an increase of $355.9 million, or 4.4%, increase
over the comparable period last year. Sales increases resulted primarily
from an increase in average store sales and identical store sales. Sales
were also positively impacted by the Easter holiday which fell in the third
quarter this year versus the fourth quarter last year. The increase in
identical store sales was 3.5% for the quarter and 2.4% year to date.
Average store sales increased 6.2% for the quarter and 5.3% year to date.
The Company opened 40 new stores, averaging 42,200 square feet, acquired 5
stores, averaging 43,600 square feet, enlarged or remodeled 50 stores, and
closed 49 older stores, averaging 26,600 square feet. As of April 06, 1994,
retail space totaled 40.2 million square feet. Currently, 26 new stores are
under construction. The Company plans to open 15 new stores in the current
fiscal year. The Company has 1,161 stores in operation compared with
1,165 stores last year. Of the 1,161 stores, 596 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 $37.3 million for the quarter and $102.3 million,
year-to-date. As a percent to sales, gross profit for the current quarter
was 22.8%, compared to 22.6% in the previous year. Year-to-date, gross
profit as a percent to sales was 22.7% in the current year, compared to
22.4% in the previous year. The increase in gross profit is a result of
our computerized buying, our forward buy purchasing program and a lower
LIFO inventory charge.
Operating and administrative expenses increased $36.4 million for the
current quarter and $74.8 million year-to-date. As a percent to sales,
operating and administrative expenses for the current quarter were 20.2%,
compared to 20.0% last year. Year-to-date, operating and administrative
expenses, as a percent to sales were 20.6% for the current year and 20.6%
for the previous year. We have been able to control the increase in
operating and administrative expenses through effective cost reduction
programs (increased productivity through improved work planning at the
retail level and the reduction of the number of store deliveries).
Page 6<PAGE>
Results of Operations, continued
Cash discounts and other income decreased $6.8 million for the current
quarter and $20.7 million year-to-date. Cash discounts increased primarily
due to greater volume of merchandise purchased. Investment income (loss)
for the current quarter totaled $(1.5) million compared to $1.1 million
last year. Year-to-date, investment income totaled $0.7 million for the
current year, compared to $12.1 million in the previous year. The decrease
in investment income is due primarily to lower interest rates in the
current year and no sales of marketable securities in the current year. In
the previous year there were $4.5 million in gains on the sale of
marketable securities.
Interest expense totaled $3.7 million for the current quarter compared to
$5.5 million for the comparable period last year. Year-to-date, interest
expense totaled $12.9 million in the current year and $14.6 million in the
previous year.
Earnings before income taxes were $83.9 million for the current quarter
compared to $88.0 million in the previous year. Year-to-date, earnings
before income taxes were $244.8 million in the current year and $236.3
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 38% for the current year
and 35% for the previous year. This rate is expected to approximate the
effective rate for the full 1994 fiscal year.
The retroactive increase in the Federal corporate income tax rate from 34%
to 35%, effective January 1, 1993, resulted in additional income tax
expense in the current year. This increase in income tax expense was offset
by an increase in prepaid income taxes resulting from the Federal income
tax rate increase as required by Statement of Financial Accounting
Standards No.109, "Accounting for Income Taxes."
Net earnings amounted to $52.0 million, or $0.70 per share for the current
quarter compared to $57.2 million, or $0.75 per share for the comparable
period last year. Year-to-date, net earnings amounted to $151.8 million, or
$2.03 per share compared to $153.6 million, or $2.01 per share for the
previous 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. Year-to-date, the LIFO charge reduced net
earnings $5.6 million, $0.08 per share as compared to $5.8 million or $0.08
per share in the previous year.
Page 7
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Results of Operations, continued
Liquidity and Capital Resources
The Company's financial condition remains very sound and very strong.
Cash, cash equivalents and short-term investments amounted to $138.1
million at April 06, 1994. Net cash provided by operating activities
amounted to $337.4 million for the 40 weeks ended April 06, 1994, compared
to $183.4 million for the comparable period last year. Capital
expenditures totaled $195.3 million compared to $143.3 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 $650 million in 1994. The Company has no material construction or
purchase commitments outstanding as of April 06, 1994.
Working capital amounted to $505.2 million at April 06, 1994 compared to
$544.7 million at June 30, 1993.
The Company has an authorized $200 million Commercial Paper Program. In
addition, the Company has $250 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
April 06, 1994, $100 million of commercial paper was outstanding.
Excluding capital leases, the Company had no outstanding long-term debt as
of either April 06, 1994 or June 30, 1993.
The Company's available credit facilities and cash flow from operations are
considered adequate to fund the short-term and long -term capital needs of
the Company.
The Company has been notified as one of the many Potentially Responsible
Parties (PRPs) by the Environmental Protection Agency (EPA) with respect to
the clean up of hazardous waste at seven "Superfund" sites and one
additional site. The Company is in the process of determining the potential
liability and the most cost effective way to clean up such sites. The
Company does not believe that the ultimate liability will materially affect
the earning power of the Company.
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 8
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WINN-DIXIE STORES, INC. AND SUBSIDIARIES
Part II - Other Information
Item 5. Other Information
A.C. Webb, 53, Director of Services and Mark Sellers,40,
Director of Produce and Floral Operations were elected
Vice Presidents of the Company on April 20, 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 April 06,
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.
Date: April 27, 1994 RICHARD P. MCCOOK
_________________
Richard P. McCook
Financial Vice President and
Principal Financial Officer
Date: April 27, 1994 DAVID H. BRAGIN
_________________
David H. Bragin
Corporate Treasurer and
Principal Accounting Officer
Page 9
Exhibit 11.1
------------
WINN-DIXIE STORES, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
Dollars in thousands except per share data
For the 40 Weeks Ended April 6, 1994 March 31, 1993
---------------- ----------------
Average number of shares
outstanding 74,752,261 76,435,578
================ ================
Net earnings $ 151,764 153,607
================ ================
Earnings per share $ 2.03 2.01
================ ================
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