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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 20, 2000
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 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 20, 2000, there were 139,553,678 shares outstanding of
the registrant's common stock, $1 par value.
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<PAGE>
WINN-DIXIE STORES, INC. AND SUBSIDIARIES
FORM 10-Q
TABLE OF CONTENTS
Part I: Financial Information
Page
Condensed Consolidated Statements of Operations
(Unaudited), For the 12 Weeks Ended
September 20, 2000 and September 22, 1999 1
Condensed Consolidated Balance Sheets (Unaudited),
September 20, 2000 and June 28, 2000 2
Condensed Consolidated Statements of Cash Flows
(Unaudited), For the 12 Weeks Ended
September 20, 2000 and September 22, 1999 3
Notes to Condensed Consolidated Financial Statements
(Unaudited) 4-8
Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-13
Part II: Other Information
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 15
<PAGE>
WINN-DIXIE STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Amounts in thousands except per share data
For the 12 Weeks Ended
----------------------------------------
Sept. 20, 2000 Sept. 22, 1999
------------------- -------------------
Net sales $ 2,940,862 3,162,171
Cost of sales 2,193,963 2,292,579
--------------- ---------------
Gross profit 746,899 869,592
Operating & administrative expenses 715,122 827,120
Restructuring and other non-recurring charges 8,953 -
--------------- ---------------
Operating income 22,824 42,472
Interest expense 7,518 6,587
--------------- ---------------
Earnings before income taxes 15,306 35,885
Income taxes 5,893 13,816
--------------- ---------------
Net earnings $ 9,413 22,069
=============== ===============
Basic earnings per share $ 0.07 0.15
=============== ===============
Diluted earnings per share $ 0.07 0.15
=============== ===============
Dividends per share $ 0.17 0.17
=============== ===============
See accompanying notes to Condensed Consolidated Financial Statements.
Page 1
<PAGE>
WINN-DIXIE STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
Amounts in thousands
ASSETS Sept. 20, 2000 June 28, 2000
------ -------------- -------------
Current Assets:
Cash and cash equivalents $ 23,822 29,576
Trade and other receivables 108,703 107,425
Merchandise inventories less
LIFO reserve of $235,368
($232,368 at June 28, 2000) 1,163,232 1,141,405
Prepaid expenses 30,417 58,739
Deferred income taxes 135,606 134,777
--------------- ------------------
Total current assets 1,461,780 1,471,922
--------------- ------------------
Cash surrender value of life insurance, net 10,088 14,035
Net property, plant and equipment 1,150,734 1,034,493
Intangible assets, net 18,431 18,795
Non-current deferred income taxes 162,243 166,449
Other assets 41,732 41,399
--------------- ------------------
$ 2,845,008 2,747,093
=============== ==================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 534,301 575,877
Short-term borrowings 465,000 235,000
Reserve for insurance claims
and self-insurance 96,944 101,874
Reserve for restructuring expenses 38,407 52,721
Accrued wages and salaries 104,123 114,883
Accrued rent 93,739 88,247
Accrued expenses 158,767 164,502
Current obligations under capital leases 2,857 2,843
Income taxes payable 64,111 85,606
--------------- ------------------
Total current liabilities 1,558,249 1,421,553
--------------- ------------------
Reserve for insurance claims
and self-insurance 140,801 141,251
Obligations under capital leases 31,634 32,239
Defined benefit plan 46,307 45,241
Long-term restructuring expenses 140,514 143,188
Other liabilities 99,909 95,786
--------------- ------------------
Shareholders' equity:
Common stock 139,553 140,830
Retained earnings 688,041 727,005
--------------- ------------------
Total shareholders' equity 827,594 867,835
--------------- ------------------
$ 2,845,008 2,747,093
=============== ==================
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. 20, 2000 Sept. 22, 1999
-----------------------------------
Cash flows from operating activities:
Net earnings $ 9,413 22,069
Adjustments to reconcile net earnings to net cash
(used in) provided by operating activities:
Depreciation and amortization 44,352 61,374
Deferred income taxes 3,377 6,362
Defined benefit plan 1,066 711
Non-cash restructuring and
other non-recurring charges 593 -
Reserve for insurance claims and
self-insurance (5,379) 110
Stock compensation plans 2,919 688
Change in cash from:
Receivables (1,278) 86,819
Merchandise inventories (21,826) 40,329
Prepaid expenses 28,321 34,827
Accounts payable (41,593) (24,817)
Restructuring (14,970) -
Income taxes (21,495) 6,801
Other current accrued expenses (8,088) 52,181
----------------- ----------------
Net cash (used in) provided by
operating activities (24,588) 287,454
----------------- ----------------
Cash flows from investing activities:
Purchases of property, plant and
equipment, net (162,904) (46,538)
Decrease (increase) in investments and
other assets 3,717 (5,891)
----------------- ----------------
Net cash used in investing activities (159,187) (52,429)
----------------- ----------------
Cash flows from financing activities:
Increase (decrease) in short-term borrowings 230,000 (165,000)
Payments on capital lease obligations (642) (640)
Purchase of common stock (16,962) (61)
Proceeds of sales under associates'
stock purchase plan - 78
Dividends paid (24,525) (25,212)
Other (9,850) (12,665)
----------------- ----------------
Net cash provided by (used in)
financing activities 178,021 (203,500)
----------------- ----------------
(Decrease) increase in cash and cash equivalents (5,754) 31,525
Cash and cash equivalents at beginning of year 29,576 24,746
----------------- ----------------
Cash and cash equivalents at end of period $ 23,822 56,271
================= ================
Supplemental cash flow information:
Interest paid $ 7,906 4,233
Interest and dividends received $ 53 217
Income taxes paid $ 24,012 556
================= ================
See accompanying notes to Condensed Consolidated Financial Statements.
Page 3
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Dollar amounts in thousands except per share data, unless otherwise noted
(A) Basis of Presentation: 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 2000 Form 10-K Annual Report of the Company. The condensed
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) Inventories: Merchandise inventories are stated at the lower of cost or
market, approximately 84% of which are valued under the LIFO method.
(C) LIFO: Results for the quarter reflect a pre-tax LIFO inventory charge of
$3.0 million in fiscal 2001 and in fiscal 2000. If the FIFO method had been
used, current quarter net earnings would have been $11.3 million, or $0.08
per diluted share, as compared with net earnings of $23.9 million, or $0.16
per diluted share in the previous year. An actual valuation of inventory
under the LIFO method can be made only at the end of each year based on the
inventory levels and costs at that time. Accordingly, interim LIFO
calculations must necessarily be based on management's estimates of
expected year-end inventory levels and costs. Because these are subjected
to many forces beyond management's control, interim results are subject to
the final year-end LIFO inventory valuations.
(D) Comprehensive Income: The Company had no amounts from other comprehensive
income for the quarters ended September 20, 2000 and September 22, 1999.
Accordingly, comprehensive income equals net income for both years.
(E) Credit Arrangements: On January 4, 2000, the Company increased its
authorized commercial paper program from $500.0 million to $700.0 million.
In support of this program, or as an independent source of funds, the
Company entered into a $700.0 million revolving credit facility, which is
syndicated to a group of 17 banks, with The Chase Manhattan Bank as
administrative agent. The facility was entered into on November 17, 1999.
Outstanding amounts under the credit facility bear interest at certain
floating rates as specified by the credit facility. The credit facility
contains certain financial and non-financial covenants relating to the
Company's operations, including maintaining certain financial ratios.
In addition to the $700.0 million syndicated credit facility, the Company
also has $35.0 million available in short-term lines of credit. As of
September 20, 2000, the Company had $465.0 million in commercial paper and
no amounts from short-term lines of credit outstanding, as compared to
$235.0 million in commercial paper and no amounts from short-term lines of
credit outstanding on June 28, 2000. The average interest rate on the
commercial paper outstanding on September 20, 2000 and June 28, 2000 was
7.0%.
Page 4
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED), continued
Dollar amounts in thousands except per share data, unless otherwise noted
(F) Income Taxes: 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 years 2001 and 2000 is 38.5%.
During fiscal 2000, the Company reserved $30.4 million for taxes and $19.7
million for interest ($42.5 million after tax, or $0.29 per diluted share)
after receiving an unfavorable opinion in October 1999 and a computational
decision on January 11, 2000 from the U.S. Tax Court. Additional interest
totaling $1.4 million ($0.9 million after tax, or $0.01 per diluted share)
was recorded in the current quarter. The Tax Court upheld the Internal
Revenue Service's position that interest related to loans on broad-based,
company owned life insurance policies in 1993 was not deductible for income
tax purposes. Congress passed legislation phasing out such deductions over
a three-year period in the fall of 1996. The Company held such policies and
deducted interest on outstanding loans from March 1993 through December
1997. Management disagrees with the Tax Court's decision and has appealed.
While the ultimate outcome of this litigation cannot be predicted with
certainty, in the opinion of management, the ultimate resolution of this
matter will not have any additional material adverse impact on the
Company's financial condition or results of operations.
(G) Earnings Per Share: The following weighted average number of shares of
common stock was used in the calculation for earnings per share. The
diluted weighted average number of shares includes the net shares that
would be issued upon the exercise of stock options using the treasury stock
method.
2001 2000
------ ------
Basic:
Quarter 139,359,455 148,337,967
Diluted:
Quarter 139,588,228 148,670,495
(H) Common Stock: On April 19, 2000, the Board of Directors authorized the
repurchase, in either open market or private transactions, of up to ten
million shares of the outstanding common stock in addition to the
five-million share repurchase program announced on October 6, 1999. From
October 6, 1999 through September 20, 2000, the Company has repurchased
9,034,400 shares having an aggregate cost of $179.0 million or $19.82 per
share.
Page 5
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED), continued
Dollar amounts in thousands except per share data, unless otherwise noted
(I) Business Reporting Segments: Based on the information monitored by the
Company's operating decision makers to manage the business, the Company has
identified that its operations are within one reportable segment.
Accordingly, financial information on industry segments is omitted because,
apart from the principal business of operating retail self-service food
stores, the Company has no other industry segments. All sales of the
Company are to customers within the United States and the Bahama Islands.
Sales and assets related to and located in the Bahama Islands represents
less than 1% of the Company's total sales and assets.
(J) Restructuring and Other Non-recurring Charges: On April 20, 2000, the Board
of Directors approved and the Company announced a major restructuring to
improve the support of the retail stores and the Company's overall
efficiency.
The restructuring plan includes the actions listed below that have been or
will be implemented. The plan includes certain exit costs and employee
termination benefits that will be incurred within one year from the
commitment date.
Status at
Action Sept. 20,2000
------------------------------------------------------------- ------------
Executive management reduction and realignment.............. Completed
Division management reduction and realignment............... Completed
Consolidation of division offices eliminating three division
offices - Tampa, Atlanta, and Midwest..................... Completed
Closing of one warehouse facility- Tampa.................... Completed
Closing of two manufacturing facilities - Detergent and
Bag Plants................................................ Completed
Centralization of procurement, marketing and merchandising.. Completed
Eliminating approximately 11,000 positions.................. Completed
Closing of 116 unprofitable stores.......................... Five stores
remain to be
closed
Retrofitting approximately 650 stores to improve efficiency
and customer service...................................... 21 completed
and 260
under
construction
Page 6
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED), continued
Dollar amounts in thousands except per share data, unless otherwise noted
(J) Restructuring and Other Non-recurring Charges: continued
As a result of the restructuring, the Company recorded expenses of
approximately $396 million ($256 million after tax or $1.76 per diluted
share) in the fourth quarter of fiscal 2000. Charges totaling $9.0 million
($5.5 million after tax or $0.04 per diluted share) were recorded in the
current quarter. A summary of the restructuring charges and the remaining
accrual follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Other Asset
Employee Lease Location Removal &
Termination Termination Closing Asset Related
Costs Costs Costs Impairment Costs Total
-------------- ------------- ---------- ------------ ----------- -----------
Additions $ 16,713 189,295 10,722 179,299 - $ 396,029
Utilization (7,546) (2,628) (10,647) (179,299) - (200,120)
-------- ---------- --------- ---------- ------ ----------
Balance at
6/28/00 $ 9,167 186,667 75 - - $ 195,909
Additions - - 3,050 2,611 5,310 10,971
Adjustments (2,018) - - - - (2,018)
Utilization (4,812) (10,124) (3,084) (2,611) (5,310) (25,941)
-------- ---------- --------- ---------- ------ ----------
Balance at
9/20/00 $ 2,337 176,543 41 - - $ 178,921
======== ========== ========= ========== ====== ==========
</TABLE>
The adjustment to employee termination costs represent the accrued
severance for employees in closed stores where the employees subsequently
became ineligible for severance. The addition to other location closing
costs includes travel expenses, inventory retagging and employee relocation
costs in connection with the restructuring. Asset removal and related costs
and asset impairments in the current quarter are the expenses involved in
the retrofit of selected stores.
The following table shows the number of people that are eligible for
severance under the restructuring plan.
Manufacturing
and Support
Retail Facilities Total
-------- --------------- -------
Eligible for severance 3,351 655 4,006
Number paid 636 240 876
Became ineligible 1,275 63 1,338
-------- --------------- -------
Number eligible at June 28, 2000 1,440 352 1,792
Number paid 416 233 649
Became ineligible 902 53 955
-------- --------------- -------
Number eligible at September 20, 2000 122 66 188
======== =============== =======
Page 7
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED), continued
Dollar amounts in thousands except per share data, unless otherwise noted
(K) Reclassification: Cash discounts and other income have been reclassified as
a reduction of cost of sales and operating and administrative expenses,
respectively. The reclassification reduced cost of sales in fiscal years
1998, 1999 and 2000 by $105.5 million, $102.4 million and $87.2 million,
respectively. This reclassification is consistent with industry practice.
Certain prior year amounts have been reclassified to conform to the current
year's presentation.
(L) 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 and various proceedings arising
under federal, state or local regulations protecting the environment.
Among the suits charging violations of certain civil rights laws, there are
actions that purport to be class actions, and which allege sexual
harassment, retaliation and/or a pattern and practice of race-based and
gender-based discriminatory treatment of employees and applicants. The
plaintiffs seek, among other relief, certification of the suits as proper
class actions, declaratory judgment that the Company's practices are
unlawful, back pay, front pay, benefits and other compensatory damages,
punitive damages, injunctive relief and reimbursement of attorneys' fees
and costs. The Company is committed to full compliance with all applicable
civil rights laws. Consistent with this commitment, the Company has firm
and long-standing policies in place prohibiting discrimination and
harassment. The Company denies the allegations of the various complaints
and is vigorously defending the actions.
In July 1999, the Company, without admitting any wrongdoing, reached a
settlement with the named plaintiffs in a discrimination class action
lawsuit filed on behalf of certain female and African-American present and
former associates. The settlement has been approved by the U. S. District
Court in Jacksonville, Florida. Implementation of the settlement has been
stayed pending the expiration of the appeal period of the 11th Circuit
Court of Appeal's decision upholding the denial of a motion to intervene by
a third party. The settlement amount is approximately $33.0 million, which
the Company will pay from accruals over the next seven years.
While the ultimate outcome of litigation cannot be predicted with
certainty, in the opinion of management, the ultimate resolution of these
actions will not have a material adverse effect on the Company's financial
condition or results of operations.
See Note (F) "Income Taxes" with respect to certain litigation pending
before the U.S. Tax Court.
Page 8
<PAGE>
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. Sales for the first quarter of fiscal 2001 were $2.9 billion, a decrease
of $221.3 million or 7.0% compared with the same quarter last year. Average
store sales increased 2.0%. Identical store sales decreased 3.2% and comparable
store sales, which includes replacement stores, decreased 2.8% in part due to
the elimination of unprofitable sales departments, including melon bars, salad
bars, deli-cafe's, dry cleaners, and photo processing. In addition, the Company
had a reduction in the number of 24-hour stores and construction disruptions
from numerous store modifications (retrofits). During the first quarter of
fiscal 2001, 281 locations had construction in progress due to the retrofit
activity. It is anticipated that these factors will adversely affect the
Company's sales for the balance of fiscal 2001.
During the first quarter of fiscal 2001, the Company opened 3 new stores
averaging 47,600 square feet and closed 3 older stores averaging 27,300 square
feet, which resulted in a total of 1,079 locations in operation on September 20,
2000, compared to 1,184 on September 22, 1999. As of September 20, 2000, retail
space totaled 48.1 million square feet, a 7.4% decrease from the prior year.
Excluding stores closed in connection with the restructuring, retail space
increased 1.7% as compared to the first quarter of fiscal 2000. The Company has
13 new stores and 11 store enlargements or remodels under construction unrelated
to the retrofits.
Gross Profit. Gross profit decreased $122.7 million for the first quarter of
fiscal 2001 as compared to the corresponding period in fiscal 2000. As a
percentage of sales, gross profit for the 12 week period was 25.4%, compared to
27.5% in the same period of the previous year. Gross profit dollars have
decreased partially as a result of the closing of 111 stores as part of
management's plan of restructuring. In addition, gross profit has been
negatively impacted by the elimination of high gross profit, yet unprofitable,
sales departments. Higher cost of goods sold was incurred during the Company's
transition to centralized merchandise procurement. The Company expects an
improvement in the cost of goods as its central procurement operation matures
and achieves more effective buying and enhanced promotional activity.
Operating and administrative expenses. Operating and administrative expenses
decreased $112.0 million for the first quarter of fiscal 2001 as compared to the
corresponding period in fiscal 2000. As a percentage of sales, operating and
administrative expenses were 24.3% for the current year, as compared to 26.2% in
the same period of the previous year. The decrease in operating and
administrative expenses was primarily due to a decrease in retail and
administrative operating expenses, such as payroll, depreciation, rent and
leasehold improvement amortization. The expense reduction was an expected result
of the restructuring and came primarily from the closing of the three division
offices, 111 stores and the elimination of high labor cost service departments.
Page 9
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations, continued
Interest expense. Interest expense totaled $7.5 million for the first quarter of
fiscal 2001, compared to $6.6 million for the corresponding period in fiscal
2000. Interest expense is primarily interest on capital leases and interest on
short-term debt. The increase in interest expense reflects a $1.4 million
interest reserve recorded after receiving an unfavorable opinion from the U.S.
Tax Court in October 1999 relating to company owned life insurance (see Note (F)
"Income Taxes").
During the first quarter of fiscal 2001, the Company capitalized interest
totaling $2.2 million related to construction of new stores and a warehouse
facility in Jacksonville, Florida.
Earnings before income taxes. Earnings before income taxes were $15.3 million
for the current quarter, compared to $35.9 million in the previous year. The
reduction in pretax earnings for fiscal 2001 is primarily due to the decrease in
gross profit and partially offset by a decline in operating and administrative
expenses.
Income taxes have been accrued at an effective tax rate of 38.5% for fiscal 2001
and 2000. This rate is expected to approximate the effective rate for the full
2001 fiscal year.
Net earnings for the first quarter of fiscal 2001 amounted to $9.4 million, or
$0.07 per diluted share as compared to net earnings of $22.1 million, or $0.15
per diluted share, for the corresponding period of the previous year. During the
first quarter of fiscal 2001, the LIFO charge reduced net earnings by $1.9
million, or $0.01 per diluted share, compared to a reduction in earnings of $1.8
million, or $0.01 per diluted share, in the corresponding period of fiscal 2000.
Restructuring Plan
Part of the restructuring plan involves store modifications (retrofits) that
combine certain service departments in approximately 650 stores to improve
efficiency and customer service. As of September 20, 2000, 260 locations were
under construction and 21 were completed. Capital expenditures related to the
retrofits are estimated to be approximately $85 million.
The Company estimates restructuring charges during fiscal 2001 to be
approximately $144 million ($88.6 million after tax or $0.63 per diluted share).
The charges are for asset impairments and asset removal and related costs for
the store retrofits and location closing costs. Of that amount, charges totaling
$9.0 million ($5.5 million after tax or $0.04 per diluted share) were recorded
in the first quarter of fiscal 2001.
The Company expects a reduction in expenses from labor savings, reduced
inventory shrink and other expense reductions approximately one year following
completion of the restructuring.
Page 10
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Restructuring, continued
The following table shows the effect on the quarter of the restructuring charges
(see Note (J) "Restructuring and Other Non-recurring Charges") and interest on
the reserve recorded in connection with the tax court's decision regarding
company owned life insurance (see Note (F) "Income Taxes").
Non- Excluding
Quarter ending recurring Non-
September 20, 2000 As Reported Charges recurring
----------------------------- ------------ --------- -----------
Net sales ................... $ 2,940,862 - 2,940,862
Cost of sales ............... 2,193,963 - 2,193,963
------------ --------- -----------
Gross profit on sales ....... 746,899 - 746,899
Operating and
administrative expenses .... 715,122 - 715,122
Restructuring and other
non-recurring charges ...... 8,953 8,953 -
------------ --------- -----------
Operating income ............ 22,824 (8,953) 31,777
Interest expense ............ 7,518 1,387 6,131
------------ --------- -----------
Earnings before income tax .. 15,306 (10,340) 25,646
Income taxes ................ 5,893 (3,981) 9,874
------------ --------- -----------
Net earnings $ 9,413 (6,359) 15,772
============ ========= ===========
Basic earnings per share $ 0.07 (0.04) 0.11
============ ========= ===========
Diluted earnings per share $ 0.07 (0.04) 0.11
============ ========= ===========
Liquidity and Capital Resources
Cash and cash equivalents amounted to $23.8 million at September 20, 2000
compared to $56.3 million at September 22, 1999. Net cash used in operating
activities amounted to $24.6 million for the 12 weeks ended September 20, 2000.
Capital expenditures in the first quarter of fiscal 2001 totaled $162.9 million
for the quarter ended September 20.2000 compared to $46.5 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. Included in the current year expenditures are amounts
related to retrofits, new store construction and for construction of the
distribution and retail support center in Jacksonville, Florida. The Company
estimates that total capital investment in Company retail and support
facilities, including operating leases, will be $450.0 million in 2001. The
Company has no material construction or purchase commitments outstanding as of
September 20, 2000.
Page 11
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources, continued
Working capital amounted to $(96.5) million at September 20, 2000, compared to
$50.4 million at June 28, 2000. The decrease was primarily due to the capital
expenditures as previously discussed.
The Company has an authorized $700.0 million commercial paper program. In
addition, the Company has $35.0 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 20, 2000, $465.0 million of commercial paper was outstanding as
compared to $235.0 million on June 28, 2000. The average interest rate on the
commercial paper outstanding on September 20, 2000 and June 28, 2000 was 7.0%.
The Company had no amounts in short-term borrowings against bank lines of credit
as of September 20, 2000 or as of June 28, 2000.
Excluding capital leases, the Company had no outstanding long-term debt as of
either September 20, 2000 or June 28, 2000.
In September 2000, Standard & Poor's Ratings Service and Moody's Investors
Service, Inc. lowered the Company's long term debt ratings to BBB- and Baa3,
respectively, and its commercial paper ratings to A-3 and P-3, respectively. The
ratings from Standard & Poor's are currently on negative outlook. These actions
have adversely affected the cost and availability of commercial paper as a
source of current financing. Therefore, the Company intends to replace its
commercial paper borrowings with borrowings under its $700 million revolving
credit facility (the "Facility") or other debt issuances. The Facility permits a
one-year term loan of up to $700 million, which the Company will borrow on or
before November 15, 2000. The current rates under the Facility are higher than
the commercial paper rates currently paid.
With respect to any references made to ratings assigned to the Company's debt
securities, there can be no assurance that the Company will be successful in
maintaining its credit quality, or that such credit ratings will continue for
any given period of time, or that they will not be revised downward or withdrawn
entirely by the rating agencies. Credit ratings reflect only the view of the
rating agencies, whose methodology and the significance of their ratings may be
obtained from them.
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.
Page 12
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Impact of Inflation
The Company's primary costs, inventory and labor, increase with inflation.
Recovery of these costs must 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:
o the Company's ability to successfully complete the restructuring of
our management and retail operations and to realize the cost savings
and other benefits of such program;
o pricing pressures and other competitive factors;
o general business and economic conditions in ou operating regions,
including the rate of inflation/deflation and changes in population,
consumer demands and spending, types of employment and numbers of
jobs;
o changes in federal, state or local legislation or regulations
affecting the retail food and food distribution industries (including
environmental compliance);
o the availability and integration of potential acquisitions; and
o the availability and terms of financing.
Please refer to discussions of these and other factors in this Form 10-Q and
other Company filings with the Securities 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 13
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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 2000 Annual Meeting of Shareholders of the Company took place on
October 4, 2000.
(b) Four matters were voted on at the meeting:
1. The election of two (2) Class II Directors for terms expiring in
2003;
2. Approval of the amendment to increase the number of shares
available for sale under the Revised Winn-Dixie Stock Purchase
Plan for Employees and to reapprove and adopt such Plan, as
amended;
3. Approval of the amendment to increase the number of shares
available for sale pursuant to options granted under the Key
Employee Stock Option Plan and to reapprove and adopt such Plan,
as amended;
4. Ratification of the appointment by the Board of Directors of the
Company of KPMG LLP as auditors of the Company for the fiscal
year commencing June 29, 2000.
With respect to the election of Directors, the votes were as follows:
Class II, for terms Shares Broker
expiring in 2003 Shares for Withheld Non-vote
-----------------------------------------------------------------
Allen R. Rowland 116,111,637 3,001,688 257
Ronald Townsend 115,936,554 3,176,771 257
With respect to approval of the amendment to the Revised Winn-Dixie
Stock Purchase Plan for Employees, the vote was: 102,847,889 shares
for; 3,823,499 shares against; 948,152 shares abstained. There were
11,494,042 broker non-votes.
With respect to approval of the amendment to the Key Employee Stock
Option Plan, the vote was: 101,958,99 shares for; 4,579,821 shares
against; 1,080,720 shares abstained. There were 11,494,042 broker
non-votes.
With respect to the appointment of KPMG LLP as auditors of the Company
for the fiscal year commencing June 29, 2000, the vote was:
117,678,455 shares for; 629,223 shares against; 805,647 shares
abstained. There were 257 broker non-votes.
Page 14
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WINN-DIXIE STORES, INC. AND SUBSIDIARIES
Part II - Other Information, continued
Item 5. Other Information
Senior Vice President: Dennis M. Sheehan, formerly a private real
estate developer for grocery and other retail facilities in the
Southeast, was elected Senior Vice President and Director of Real
Estate.
Gooding's acquisition: In October 2000, the Company completed the
acquisition of nine Orlando, FL area stores from Gooding's
Supermarkets, Inc.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.3 Key Employee Stock Option Plan effective January 24, 1990 as
amended through August 9, 2000.
10.7 Winn-Dixie Stores, Inc. Directors' Deferred Fee Plan as amended
through October 4, 2000.
10.8 Winn-Dixie Stores, Inc. Stock Plan for Directors effective
October 4, 2000.
(b) Report on Form 8-K
There were no reports on Form 8-K filed for the quarter ended
September 20, 2000.
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 24, 2000 RICHARD P. MC COOK
------------------------------
Richard P. McCook
Senior Vice President and
Chief Financial Officer
Date: October 24, 2000 D. MICHAEL BYRUM
------------------------------
D. Michael Byrum
Vice President, Corporate
Controller and
Chief Accounting Officer
Page 15
