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 2, 1997
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 32254-3699
(Address of 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 April 15, 1997, there were 149,004,143 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 2, 1997 and April 3, 1996 1
Condensed Consolidated Balance Sheets (Unaudited),
April 2,1997 and June 26, 1996 2
Condensed Consolidated Statements of Cash Flows
(Unaudited), For the 40 Weeks Ended
April 2, 1997 and April 3, 1996 3
Notes to Condensed Consolidated Financial Statements
(Unaudited) 4
Management's Discussion and Analysis of Financial
Condition and Results of Operations 5-7
Part II: Other Information
Item 5. Other Information 8
Item 6. Exhibits and Reports on Form 8-K 8
Signatures 8
Computation of Earnings Per Share Exhibit 11.1
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<PAGE>
WINN-DIXIE STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
Amounts in thousands except per share data
For the 12 Weeks Ended
MOST RECENT QUARTER April 2, 1997 April 3,1996
Net sales $ 3,114,029 3,035,323
Cost of sales 2,323,771 2,292,503
--------- ---------
Gross profit 790,258 742,820
Operating & administrative expenses 722,288 665,947
--------- ---------
Operating income 67,970 76,873
Cash discounts & other income 27,308 25,203
Interest expense (5,681) (4,765)
--------- ---------
Earnings before income taxes 89,597 97,311
Provision for income taxes 32,254 34,059
--------- --------
Net earnings $ 57,343 63,252
========= ========
Earnings per share $ 0.38 0.42
========= ========
Dividends per share $ 0.240 0.225
========= ========
For the 40 Weeks Ended
FISCAL YEAR-TO-DATE April 2, 1997 April 3,1996
Net sales $ 10,156,905 9,942,844
Cost of sales 7,636,606 7,576,153
--------- ---------
Gross profit 2,520,299 2,366,691
Operating & administrative expenses 2,354,809 2,155,283
--------- ---------
Operating income 165,490 211,408
Cash discounts & other income 89,479 87,565
Interest expense (17,373) (19,605)
--------- ---------
Earnings before income taxes 237,596 279,368
Provision for income taxes 85,534 97,779
--------- ---------
Net earnings $ 152,062 181,589
========= ========
Earnings per share $ 1.01 1.20
========= ========
Dividends per share $ 0.720 0.660
========= ========
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 April 2, 1997 June 26, 1996
Cash and cash equivalents $ 12,942 32,208
Trade and other receivables 151,569 158,445
Merchandise inventories less LIFO reserve
of $239,341 ($222,341 at June 26, 1996) 1,274,116 1,179,126
Prepaid expenses 109,768 131,161
---------- ----------
Total current assets 1,548,395 1,500,940
---------- ----------
Investments and other assets 182,057 126,091
Deferred income taxes 18,934 22,732
Net property, plant and equipment 1,089,815 998,849
---------- ----------
Total assets $ 2,839,201 2,648,612
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $ 591,533 599,297
Short-term borrowings 298,000 110,000
Reserve for insurance claims and self-insurance 48,963 61,760
Accrued wages and salaries 110,891 84,691
Accrued rent 62,890 62,237
Accrued expenses 169,454 148,715
Current obligations under capital leases 3,149 2,974
Income taxes 37,593 42,554
---------- ----------
Total current liabilities 1,322,473 1,112,228
---------- ----------
Obligations under capital leases 58,872 60,853
Defined benefit plan 39,203 34,197
Reserve for insurance claims and self-insurance 104,709 97,209
Other liabilities 1,812 1,829
---------- ----------
Shareholders' equity:
Common stock 149,016 151,685
Retained earnings 1,163,116 1,190,611
---------- ----------
Total shareholders' equity 1,312,132 1,342,296
---------- ----------
Total liabilities and shareholders' equity $ 2,839,201 2,648,612
========== ==========
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 40 Weeks Ended
FISCAL YEAR-TO-DATE April 2, 1997 April 3, 1996
Cash flows from operating activities:
Net earnings $ 152,062 181,589
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 219,358 180,174
Deferred income taxes (5,787) 8,417
Defined benefit plan 5,006 4,150
Reserve for insurance claims and self-insurance (5,297) (5,614)
Change in cash from:
Receivables 6,875 4,616
Merchandise inventories (94,990) (86,121)
Prepaid expenses 25,192 (2,471)
Accounts payable (6,763) (6,355)
Income taxes 826 26,491
Other current accrued expenses 48,663 40,087
------- -------
Net cash provided by operating activities 345,145 344,963
------- -------
Cash flows from investing activities:
Purchases of property, plant and equipment, net (310,325) (254,956)
Decrease (increase) in investments and other assets (55,966) 3,046
------- -------
Net cash used in investing activities (366,291) (251,910)
------- -------
Cash flows from financing activities:
Increase in short-term borrowings 188,000 40,000
Payments on capital lease obligations (3,878) (2,086)
Purchase of common stock (89,811) (40,862)
Proceeds of sales under associates' stock
purchase plan 10,259 36,924
Dividends paid (108,108) (99,700)
Other 5,418 (8,097)
------- -------
Net cash provided (used) by financing activities 1,880 (73,821)
------- -------
Increase (decrease) in cash and cash equivalents (19,266) 19,232
Cash and cash equivalents at beginning of year 32,208 30,414
------- -------
Cash and cash equivalents at end of period $ 12,942 49,646
======= =======
Supplemental cash flow information:
Interest paid $ 11,445 18,441
Interest and dividends received $ 937 7,625
Income taxes paid $ 90,666 69,981
======= ======
See accompanying notes to Condensed Consolidated Financial Statements.
Page 3<PAGE>
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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 1996 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 fourteen states and the Bahama
Islands.
(B) Merchandise inventories are stated at the lower of cost or market,
approximately 91% of which are valued under the LIFO method.
(C) Results for the quarter reflect a pretax LIFO inventory charge of $5.0
million in 1997 and $3.0 million in 1996. The cumulative current year
charge is $17.0 million as compared with $13.0 million in 1996. If the
FIFO method had been used, current quarter net earnings would have been
$60.4 million or $0.40 per share as compared with net earnings of $65.1
million or $0.43 per share in the previous year. The cumulative year net
earnings would have been $162.4 million, or $1.08 per share as compared
with $189.5 million, or $1.25 per share.
(D) The Company increased its authorized Commercial Paper Program from $300
million to $500 million. The Company also has short-term lines of credit
totaling $415 million. On April 2, 1997, there was $275.0 million in
commercial paper and $23.0 million from bank lines of credit outstanding
as compared to $110.0 million in commercial paper and none from bank
lines of credit outstanding on June 26, 1996.
(E) The provision for income taxes reflects management's best estimate of the
effective tax rate expected for the fiscal year. The effective tax rate
used for fiscal year 1997 is 36% as compared to 35% in 1996.
(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. In addition, the
Company is a party to various proceedings arising under federal, state or
local regulations protecting the environment. Management is of the
opinion that any liability which might result from any such claim,
lawsuit or proceeding will not have a material adverse effect on the
Company's consolidated earnings or financial position.
(G) Reclassification: Certain prior year amounts have been reclassified to
conform with the presentation adopted in 1996.
Page 4
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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 $3.1 billion, a $78.7 million increase, or
2.6% over the comparable quarter ended April 3, 1996. Year-to-date, sales were
$10.2 billion, a $214.1 million increase, or 2.2% over the comparable period
last year. Identical store sales decreased 0.4% for the quarter and 0.7%
year-to-date. Average store sales increased 2.5% for the quarter and 2.0%
year-to-date.
The Company opened 61 new stores, averaging 50,000 square feet, enlarged or
remodeled 63 stores, and closed 58 older stores, averaging 29,000 square feet.
As of April 2, 1997, retail space totaled 47.5 million square feet, a 4.6%
increase over the prior year. The Company has 1,181 stores in operation
compared with 1,180 stores last year. Of the 1,181 stores, 875, or 74.1%,
are larger than 35,000 square feet. Currently, 68 new stores are under
construction. The Company plans to open 85 new stores and will enlarge or
remodel 90 existing stores in the current fiscal year.
Gross profit increased $47.4 million for the quarter and $153.6 million,
year-to-date. As a percent to sales, gross profit for the current quarter was
25.4%, compared to 24.5% in the previous year. Year-to-date, gross profit as
a percent to sales was 24.8% in the current year, compared to 23.8% in the
previous year. The increase in gross profit margins is a result of an improved
inventory mix in our larger stores.
Operating and administrative expenses increased $56.3 million for the current
quarter and $199.5 million year-to-date. As a percent to sales, operating and
administrative expenses for the current quarter were 23.2%, compared to 21.9%
last year. Year-to-date, operating and administrative expenses, as a percent
to sales were 23.2% for the current year and 21.7% for the previous year. Our
increase in operating and administrative expense is due to a higher payroll
percentage in the larger stores, occupancy cost and depreciation expense.
Cash discounts and other income totaled $27.3 million for the third quarter,
compared to $25.2 million for the same quarter last year. Year-to-date, cash
discounts and other income totaled $89.5 million compared to $87.6 million
last year. Investment income for the current quarter totaled $0.1 million
compared to $0.5 million last year. Year-to-date, investment income totaled
$0.4 million for the current year, compared to $1.6 million in the previous
year. The decrease in investment income is a result of a decrease in funds
available for investment.
Page 5
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Results of Operations, continued
Interest expense totaled $5.7 million for the current quarter compared to $4.8
million for the comparable period last year. Year-to-date, interest expense
totaled $17.4 million for the current year compared to $19.6 million in the
previous year. The decrease in interest expense for the year is related to
the reduction in the Company's obligations under capital leases.
Earnings before income taxes were $89.6 million for the current quarter
compared to $97.3 million in the previous year. Year-to-date, earnings before
income taxes were $237.6 million in the current year and $279.4 million in
the previous year. The decrease in pre-tax earnings is primarily a result of
the increase in operating expenses as previously mentioned. Income taxes have
been accrued at an effective rate of 36% for the current year and 35% for the
previous year. This rate is expected to approximate the effective rate for the
full 1997 fiscal year.
Net earnings amounted to $57.3 million, or $0.38 per share, for the current
quarter compared to $63.3 million, or $0.42 per share, for the comparable
period last year. Year-to-date, net earnings amounted to $152.1 million, or
$1.01 per share, compared to $181.6 million, or $1.20 per share, for the
previous year. The LIFO charge reduced net earnings by $3.1 million, or $0.02
per share, for the current quarter compared to $1.8 million, or $0.01 per
share, in the previous year. Year-to-date, the LIFO charge reduced net
earnings by $10.4 million, or $0.07 per share, compared to $7.9 million, or
$0.05 per share, in the previous year.
Liquidity and Capital Resources
The Company's financial condition remains sound and strong. Cash and cash
equivalents amounted to $12.9 million at April 2, 1997, compared to $49.6
million at April 3, 1996. The reduction in cash and cash equivalents is
reflected in the increase in investments and other assets due to investing
cash in investments with a maturity greater than three months and for the
repurchase of shares of the Company's common stock. Net cash provided by
operating activities amounted to $345.1 million for the 40 weeks ended April
2, 1997 compared to $345.0 million for the comparable period last year.
Capital expenditures totaled $310.3 million compared to $255.0 million for the
comparable period last year. These expenditures were for new store locations,
remodeling and enlargement of existing store locations and the expansion of
support facilities. Total capital investment in Company retail and support
facilities, including operating leases, is estimated to be $750 million in
1997. The Company has no material construction or purchase commitments
outstanding as of April 2, 1997.
Working capital amounted to $225.9 million at April 2, 1997 compared to
$388.7 million at June 26, 1996. The decrease in working capital reflects
an increase in short-term borrowings to fund the Company's facilities
improvement program and to repurchase shares of the Company's common stock.
Page 6
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Liquidity and Capital Resources, continued
The Company has an authorized $500 million Commercial Paper Program. In
addition, the Company has $415 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 2, 1997,
$275.0 million of commercial paper was outstanding as compared to $110.0
million on June 26, 1996. The average interest rate on the commercial paper
outstanding on April 2,1997 was 5.5%, as compared to 5.5% on June 26, 1996.
Short-term borrowings against our bank lines of credit were $23.0 million as
of April 2, 1997 as compared to none on June 26, 1996.
Excluding capital leases, the Company had no outstanding long-term debt as of
April 2, 1997 or June 26, 1996.
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 is a party to various proceedings arising under federal, state or
local regulations protecting the environment. Management is of the opinion
that any liability which might result from any such proceeding will not have a
material adverse effect on the Company's consolidated earnings or financial
position.
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.
Cautionary Statement Regarding Forward-Looking Information and Statements
This Form 10-Q contains forward-looking information and statements that
involve risks and uncertainties that could cause actual results to differ
materially from those projected. Therefore, this Form 10-Q should be read in
conjunction with the reports the Company has filed with the Securities and
Exchange Commission.
Page 7
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WINN-DIXIE STORES, INC. AND SUBSIDIARIES
Part II - Other Information
Item 5. Other Information
Mr. James R. Pownall, Vice President of the Company and President of
Winn-Dixie Atlanta, Inc., retired after 42 years of service. Mr. Roy J.
Brocato, Vice President of the Company and President of Winn-Dixie Louisiana,
Inc., returned to Winn-Dixie Atlanta, Inc. as President. Mr. Raymond C. Lunn,
Jr., Retail Operations Superintendent of Winn-Dixie Louisiana, Inc., was
promoted to President of that company.
Item 6. Exhibits and Reports on Form 8-K
Exhibits
11.1 Computation of Earnings Per Share
Reports on Form 8-K
There were no reports on Form 8-K for the quarter ended April 2,1997.
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 21, 1997 RICHARD P. MCCOOK
-------------------
Richard P. McCook
Financial Vice President and
Principal Financial Officer
Date: April 21, 1997 DAVID H. BRAGIN
-------------------
David H. Bragin
Corporate Treasurer and
Principal Accounting Officer
Page 8
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 2, 1997 April 3, 1996
Average number of shares outstanding 150,554,875 151,491,280
Net earnings $ 152,062 181,589
Earnings per share $ 1.01 1.20
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> All amounts in thousands except per share data.
</LEGEND>
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