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 17, 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 September 30, 1997 there were 148,891,318 shares outstanding of
the registrant's common stock, $1 par value.
<PAGE>
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 17, 1997 and September 18, 1996 1
Condensed Consolidated Balance Sheets (Unaudited),
September 17, 1997 and June 25, 1997 2
Condensed Consolidated Statements of Cash Flows
(Unaudited), For the 12 Weeks Ended
September 17, 1997 and September 18, 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 4. Submission of Matters to a Vote of Security Holders 8
Item 6. Exhibits and Reports on Form 8-K 9
Signatures 10
Articles of Amendment to the Restated Articles of
Incorporation of Winn-Dixie Stores, Inc. Exhibit 3.1.3
<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
Sept. 17, 1997 Sept. 18, 1996
---------------- ---------------
Net sales $ 3,056,203 2,985,702
Cost of sales 2,233,380 2,244,979
------------ ------------
Gross profit 822,823 740,723
Operating & administrative expenses 765,976 689,129
------------ ------------
Operating income 56,847 51,594
Cash discounts & other income 26,249 26,384
Interest expense (7,080) (4,489)
------------ ------------
Earnings before income taxes 76,016 73,489
Provision for income taxes 28,506 26,456
------------ ------------
Net earnings $ 47,510 47,033
============ ============
Earnings per share $ 0.32 0.31
============ ============
Dividends per share $ 0.17 0.16
============ ============
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. 17, 1997 June 25, 1997
---------------- --------------
Cash and cash equivalents $ 23,176 14,116
Trade and other receivables 169,057 175,679
Merchandise inventories less LIFO reserve
of $229,999 ($224,999 at June 25, 1997) 1,290,553 1,249,215
Prepaid expenses 133,220 148,961
----------- ----------
Total current assets 1,616,006 1,587,971
Investments and other assets 184,530 182,628
Deferred income taxes 21,151 22,129
Net property, plant and equipment 1,128,953 1,128,681
----------- ----------
Total assets $ 2,950,640 2,921,409
=========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $ 581,973 604,034
Short-term borrowings 376,000 380,000
Reserve for insurance claims and self-insurance 56,951 60,219
Accrued wages and salaries 96,643 98,771
Accrued rent 80,254 76,528
Accrued expenses 160,513 137,115
Current obligations under capital leases 3,031 3,023
Income taxes 54,450 32,923
----------- ----------
Total current liabilities 1,409,815 1,392,613
----------- ----------
Obligations under capital leases 53,431 54,026
Defined benefit plan 34,328 33,452
Reserve for insurance claims and self-insurance 94,783 94,783
Other liabilities 10,103 9,041
Shareholders' equity:
Common stock 148,889 148,876
Retained earnings 1,199,291 1,188,618
----------- ----------
Total shareholders' equity 1,348,180 1,337,494
----------- ----------
Total liabilities and shareholders'
equity $ 2,950,640 2,921,409
=========== ==========
See accompanying notes to Condensed Consolidated Financial Statements.
Page 2
<PAGE>
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. 17, 1997 Sept. 18, 1996
-------------- --------------
Cash flows from operating activities:
Net earnings $ 47,510 47,033
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 72,737 62,935
Deferred income taxes 4,025 (1,736)
Defined benefit plan 876 1,400
Reserve for insurance claims and self-insurance (3,268) (5,402)
Stock compensation plans 2,162 1,612
Change in cash from:
Receivables 6,622 9,823
Merchandise inventories (41,338) (45,880)
Prepaid expenses 17,058 30,616
Accounts payable (21,761) (28,627)
Income taxes 17,502 19,646
Other current accrued expenses 26,131 5,846
------------ ----------
Net cash provided by operating activities 128,256 97,266
------------ ----------
Cash flows from investing activities:
Purchases of property, plant and equipment, net (72,982) (95,189)
Increase in investments and other assets (2,749) (8,985)
------------ ----------
Net cash used in investing activities (75,731) (104,174)
------------ ----------
Cash flows from financing activities:
Increase (decrease) in short-term borrowings (4,000) 70,000
Payments on capital lease obligations (1,127) (622)
Purchase of common stock (2,809) (17,208)
Proceeds of sales under associates' stock purchase plan 2,460 3,198
Dividends paid (25,281) (24,228)
Other (12,708) (8,832)
------------ ----------
Net cash provided by (used in) financing activities (43,465) 22,308
------------ ----------
Increase in cash and cash equivalents 9,060 15,400
Cash and cash equivalents at beginning of year 14,116 32,208
------------ ----------
Cash and cash equivalents at end of period $ 23,176 47,608
============ ==========
Supplemental cash flow information:
Interest paid $ 3,644 2,795
Interest and dividends received $ 247 290
Income taxes paid $ 7,016 8,825
============ ==========
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 1997 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 90%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 $6.0 million in 1996. If the FIFO method had been
used, current quarter net earnings would have been $50.6 million or
$0.34 per share as compared with net earnings of $50.7 million or $0.33
per share in the previous year.
(D) The Company has an authorized $500.0 million Commercial Paper program
and short-term lines of credit totaling $445.0 million. On September 17,
1997, there was $355.0 million in commercial paper and $21.0 million
from bank lines of credit outstanding as compared to $380.0 million in
commercial paper and none from bank lines of credit outstanding on June
25, 1997.
(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 for fiscal year 1998 is 37.5% as compared to 36.0% in 1997. The
effective tax rate during fiscal 1998 reflects a change made by the
Health Insurance Portability and Accountability Act of 1996 whereby
certain deductions for interest relating to indebtedness with respect to
certain Corporate Owned Life Insurance (COLI) policies are being phased
out over a three-year period.
(F) Earnings Per Share: The number of shares used in the calculations for
1998 and 1997 amounted to 149,133,641 and 151,571,793, respectively,
which is the weighted average number of shares of common stock
outstanding during the 12 week period ended September 17, 1997 and
September 18, 1996, respectively.
(G) Reclassification: Certain prior year amounts have been reclassified to
conform with the current year's presentation.
(H) 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.
Page 4
<PAGE>
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 first quarter totaled $3.1 billion, up $70.5 million, or 2.4%
over the previous year. For the first quarter, average store sales increased
2.2% and comparable store sales decreased 1.4%.
During the quarter, the Company opened 27 new stores, averaging 50,100 square
feet, closed 17 older stores averaging 29,800 square feet and enlarged or
remodeled 18 store locations, having 1,184 locations in operation on September
17, 1997, compared to 1,178 last year. As of September 17, 1997, retail space
totaled 48.7 million square feet, a 5.4% increase over the prior year. There
are 58 new stores and 65 store enlargements or remodels under construction.
Gross profit increased $82.1 million for the quarter. As a percent to sales,
gross profit for the current quarter was 26.9%, compared to 24.8% in the
previous year. The increase in gross profit margins is a result of an
improved inventory mix in our larger stores and an increase in retail prices
necessitated by rising store operating expenses attributed to our larger
stores.
Operating and administrative expenses increased $76.8 million for the current
quarter. As a percent to sales, operating and administrative expenses for the
current quarter were 25.1%, compared to 23.1% last year. Our increase in
operating and administrative expense is due to a higher payroll percentage in
our larger stores, occupancy cost and depreciation expense.
Cash discounts and other income totaled $26.2 million for the first quarter,
compared to $26.4 million last year. The decrease in cash discounts and other
income is a result of a decrease in miscellaneous income. Investment income
for the current quarter totaled $0.1 million compared to $0.1 million last
year.
Interest expense totaled $7.1 million for the current quarter compared to $4.5
million for the comparable period last year. The increase in interest expense
for the quarter is related to the increase in short-term borrowings.
Page 5
<PAGE>
Results of Operations, continued
Earnings before income taxes were $76.0 million for the current quarter
compared to $73.5 million in the previous year. The increase in pre-tax
earnings is primarily a result of the increase in gross profit as previously
mentioned. Income taxes have been accrued at an effective rate of 37.5% for
the current year and 36% for the previous year. This rate is expected to
approximate the effective rate for the full 1998 fiscal year. The effective
tax rate during fiscal 1998 reflects a change made by the Health Insurance
Portability and Accountability Act of 1996 whereby certain deductions for
interest relating to indebtedness with respect to certain Corporate Owned Life
Insurance (COLI) policies are being phased out over a three-year period.
Net earnings amounted to $47.5 million, or $0.32 per share for the current
quarter compared to $47.0 million, or $0.31 per share for the comparable
period last year. The LIFO charge reduced net earnings by $3.1 million, or
$0.02 per share for the current quarter compared to $3.7 million, or $0.02 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 $23.2 million at September 17, 1997, compared to $47.6
million at September 18, 1996. Net cash provided by operating activities
amounted to $128.3 million for the 12 weeks ended September 17, 1997, compared
to $97.3 million for the comparable period last year. Capital expenditures
totaled $73.0 million compared to $95.2 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 $850 million in
1998. The Company has no material construction or purchase commitments
outstanding as of September 17, 1997.
Working capital amounted to $206.2 million at September 17, 1997, compared to
$195.4 million at June 25, 1997.
The Company has an authorized $500.0 million Commercial Paper program. In
addition, the Company has $445.0 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 17, 1997,
$355.0 million of commercial paper was outstanding as compared to $380.0
million on June 25, 1997. The average interest rate on the commercial paper
outstanding on September 17, 1997 was 5.7% as compared to 5.7% on June 25,
1997. The Company had $21.0 million in short-term borrowings against bank
lines of credit as of September 17, 1997 as compared to none on June 25, 1997.
The interest rate on the bank lines of credit on September 17, 1997 was 5.7%.
Excluding capital leases, the Company had no outstanding long-term debt as of
either September 17, 1997 or June 25, 1997.
Page 6
<PAGE>
Liquidity and Capital Resources, continued
The Company's cash flow from operations and available credit facilities 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 and
local regulations protecting the environment. Management is of the opinion
that any liability which might result from any such proceedings will not have
a material adverse effect on the Company's consolidated earnings or financial
position.
Impact of Inflation
The Company's primary costs, inventory and labor, increase with inflation.
Recovery of these costs 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 certain information that constitutes "forward-looking
statements" within the meaning of the Private Securities Litigation Reform
Act, which involves risks and uncertainties. Actual results may differ
materially from the results described in the forward-looking statements. When
used in this document, the words, "estimate," "project," "intend" and
"believe" and other similar expressions, as they relate to the Company, are
intended to identify such forward-looking statements. Such statements reflect
the current views of the Company and are subject to certain risks and
uncertainties that include, but are not limited to, growth, competition,
inflation, pricing and margin pressures, law and taxes. Please refer to
discussions of these and other factors in this Form 10-Q and other Company
filings with the Security and Exchange Commission. The Company disclaims any
intent or obligation to update publicly these forward-looking statements,
whether as a result of new information, future events or otherwise.
Page 7
<PAGE>
WINN-DIXIE STORES, INC. AND SUBSIDIARIES
Part II - Other Information
Item 4. Submission of Matters to a Vote of Security Holders
(a) The 1997 Annual Meeting of Shareholders of the Company took place on
October 1, 1997.
(b) Three matters were voted on at the meeting:
1. The election of four (4) Class II Directors for terms expiring in
2000;
2. Approval and ratification of an amendment to the Restated Articles
of Incorporation of the Company to increase the number of authorized
shares of Common Stock from 200,000,000 shares to 400,000,000
shares;
3. 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 26, 1997.
With respect to the election of Directors, the votes were as follows:
Class II, for terms expiring in 2000 Shares for Shares Withheld
------------------------------------ ------------ ---------------
Robert D. Davis 121,463,086 1,905,875
James Kufeldt 121,467,486 1,901,475
Charles H. McKellar 121,463,364 1,905,597
David F. Miller 121,406,039 1,962,922
With respect to approval and ratification of the amendment to the
Restated Articles of Incorporation of the Company to increase the number of
authorized shares of Common Stock from 200,000,000 shares to 400,000,000
shares; the vote was: 116,855,842 shares for; 5,635,298 shares against;
877,821 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 26, 1997, the vote was:
122,362,872 shares for; 224,765 shares against; 781,324 shares abstained.
There were zero broker non-votes.
Page 8
<PAGE>
WINN-DIXIE STORES, INC. AND SUBSIDIARIES
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K
Exhibits 3.1.3 Articles of Amendment to the Restated Articles of Incorporation
as adopted on October 1, 1997.
Report on Form 8-K
There were no reports on Form 8-K filed for the quarter ended September 17,
1997.
Page 9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WINN-DIXIE STORES, INC.
Date: October 6, 1997 RICHARD P. MCCOOK
--------------- -----------------
Richard P. McCook
Financial Vice President and
Principal Financial Officer
Date: October 6, 1997 DAVID H. BRAGIN
--------------- ------------------
David H. Bragin
Corporate Treasurer and
Principal Accounting Officer
Page 10
<PAGE>
EXHIBIT 3.1.3 ARTICLES OF AMENDMENT TO THE RESTATED
ARTICLES OF INCORPORATION
Exhibit 3.1.3
ARTICLES OF AMENDMENT
TO THE RESTATED ARTICLES OF INCORPORATION
OF
WINN-DIXIE STORES, INC.
1. The name of this Corporation is WINN-DIXIE STORES, INC.
2. The Restated Articles of Incorporation of the Corporation were filed
with the Florida Department of State on October 28,1991.
3. Articles of Amendment to the Restated Articles of Incorporation of
the Corporation were filed with the Florida Department of State on
October 13,1992 and October 17, 1994.
4. The first sentence of ARTICLE THIRD of the Restated Articles of
Incorporation of the Corporation is hereby amended by deleting such
sentence in its entirety and substituting in lieu thereof the
following:
"The total number of shares, including those previously
authorized, which the Company may have outstanding at any time
is 400,000,000 shares, all of which shall be Common Stock,
having a par value of $1.00 per share."
5. The foregoing amendment was adopted pursuant to Section 607.1003 of
the Florida Business Corporation Act, by the unanimous written consent
of the Board of Directors of the Corporation effective June 16, 1997,
and by the Shareholders of the Corporation at the Annual Meeting of
Shareholders on October 1, 1997.
6. The number of votes cast for the amendment by the Shareholders of
the Corporation was sufficient for approval of the amendment.
IN WITNESS WHEREOF, Winn-Dixie Stores, Inc. has caused these Articles of
Amendment to the Restated Articles of Incorporation of Winn-Dixie Stores, Inc.
to be executed in its name by its President on this 1st day of October, 1997.
WINN-DIXIE STORES, INC.
By JAMES KUFELDT
---------------------------
James Kufeldt
President
<PAGE>
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