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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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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 5, 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)
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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 5, 2000 there were 144,498,517 shares outstanding of the
registrant's common stock, $1 par value.
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WINN-DIXIE STORES, INC. AND SUBSIDIARIES
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 5, 2000 and March 31, 1999 1
Condensed Consolidated Balance Sheets (Unaudited),
April 5, 2000 and June 30, 1999 2
Condensed Consolidated Statements of Cash Flows
(Unaudited), For the 40 Weeks Ended
April 5, 2000 and March 31, 1999 3
Notes to Condensed Consolidated Financial Statements
(Unaudited) 4-8
Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-12
Part II: Other Information
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
<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 5, 2000 March 31, 1999
------------------ ---------------------
Net sales $ 3,199,356 3,203,524
Cost of sales 2,353,408 2,330,865
------------------ ---------------------
Gross profit 845,948 872,659
Operating & administrative expenses 846,907 795,839
------------------ ---------------------
Operating income (loss) (959) 76,820
Cash discounts & other income 24,569 26,324
Interest expense (6,907) (7,505)
------------------ ---------------------
Earnings before income taxes 16,703 95,639
Provision for income taxes 6,430 36,821
------------------ ---------------------
Net earnings $ 10,273 58,818
================== =====================
Basic earnings per share $ 0.07 0.40
================== =====================
Diluted earnings per share $ 0.07 0.40
================== =====================
Dividends per share $ 0.255 0.255
================== =====================
For the 40 Weeks Ended
-------------------------------------------
FISCAL YEAR-TO-DATE April 5, 2000 March 31, 1999
------------------ ---------------------
Net sales $ 10,637,551 10,658,486
Cost of sales 7,802,647 7,788,552
------------------ ---------------------
Gross profit 2,834,904 2,869,934
Operating & administrative expenses 2,813,001 2,725,088
------------------ ---------------------
Operating income 21,903 144,846
Cash discounts & other income 89,855 86,385
Interest expense (Note H) (40,297) (26,797)
------------------ ---------------------
Earnings before income taxes 71,461 204,434
Provision for income taxes (Note H) 57,912 78,707
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Net earnings $ 13,549 125,727
================== =====================
Basic earnings per share $ 0.09 0.85
================== =====================
Diluted earnings per share $ 0.09 0.85
================== =====================
Dividends per share $ 0.765 0.765
================== =====================
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
--------------------
Current Assets:
Cash and cash equivalents $ 22,489 24,746
Trade and other receivables 140,199 188,314
Merchandise inventories less LIFO reserve 1,334,987 1,425,098
of $227,274 ($217,274 at June 30, 1999)
Deferred income taxes 119,173 112,869
Prepaid expenses 41,723 46,963
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Total current assets 1,658,571 1,797,990
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Investments and other assets 108,424 128,524
Net property, plant and equipment 1,203,179 1,222,633
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Total assets $ 2,970,174 3,149,147
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 603,747 662,172
Short-term borrowings 342,950 465,000
Reserve for insurance claims and
self-insurance 80,208 75,461
Accrued wages and salaries 121,025 108,826
Accrued rent 109,739 99,734
Accrued expenses 234,219 122,641
Current obligations under capital leases 2,686 2,751
Income taxes 26,628 10,739
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Total current liabilities 1,521,202 1,547,324
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Obligations under capital leases 36,589 38,493
Defined benefit plan 44,060 41,234
Reserve for insurance claims and
self-insurance 117,530 92,256
Other liabilities 18,604 18,072
Deferred income taxes 28,104 689
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Shareholders' equity:
Common stock 144,499 148,577
Retained earnings 1,059,638 1,259,597
Accumulated other comprehensive income - 3,069
Associates' stock loans (52) (164)
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Total shareholders' equity 1,204,085 1,411,079
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Total liabilities and shareholders' equity $ 2,970,174 3,149,147
============= =============
- --------------------------------------------------------------------------------
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 5, 2000 March 31, 1999
--------------- --------------
Cash flows from operating activities:
- -------------------------------------
Net earnings $ 13,549 125,727
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 200,679 229,695
Deferred income taxes 19,188 12,509
Defined benefit plan 2,826 3,094
Reserve for insurance claims and
self-insurance 30,021 (4,525)
Stock compensation plans 1,709 4,570
Change in cash from:
Receivables 48,115 (31,872)
Merchandise inventories 90,111 (44,948)
Prepaid expenses 5,240 29,536
Accounts payable (58,361) (33,579)
Income taxes 15,889 32,652
Other current accrued expenses 133,964 64,393
-------------- -------------
Net cash provided by
operating activities 502,930 387,252
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Cash flows from investing activities:
Purchases of property, plant and equipment, net (177,999) (262,083)
Decrease in investments and other assets 15,734 7,520
-------------- -------------
Net cash used in investing activities (162,265) (254,563)
-------------- -------------
Cash flows from financing activities:
Decrease in short-term borrowings (122,050) (26,000)
Payments on capital lease obligations (2,131) (2,315)
Purchase of common stock (106,672) (224)
Proceeds of sales under associates'
stock purchase plan 112 2,579
Dividends paid (112,338) (113,411)
Other 157 7,245
-------------- -------------
Net cash used in financing activities (342,922) (132,126)
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Increase (decrease) in cash and cash equivalents (2,257) 563
Cash and cash equivalents at beginning of year 24,746 23,566
-------------- -------------
Cash and cash equivalents at end of period $ 22,489 24,129
============== =============
Supplemental cash flow information:
Interest paid $ 18,727 17,254
Interest and dividends received $ 519 476
Income taxes paid $ 20,912 33,472
============== =============
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) 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 1999 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) Change in Estimated Lives: During the second quarter of fiscal 1999, the
Company increased the estimated useful lives used to compute depreciation
for certain assets, principally store equipment (5 to 8 years) and
leaseholds (8 to 15 years). Store equipment and leaseholds associated with
larger, full-service store formats are expected to have a longer life
because of the types of equipment and the expected timing of store
remodels. In addition, the change results in useful lives more consistent
with the predominant industry practices for these types of assets. The
change has been accounted for as a change in estimate and resulted in an
increase in earnings before income tax of $14.4 million ($8.8 million after
tax, or $0.06 per diluted share) for the 40 weeks ended April 5, 2000.
(C) Impact of Franks and Sliced Luncheon Meat Recall: During the second quarter
of fiscal 1999, the Company voluntarily recalled certain franks and sliced
luncheon meats manufactured by its wholly-owned subsidiary, Dixie Packers,
Inc. As a result of this recall, sales and profits were negatively
impacted. The impact on earnings was approximately $10.5 million pre-tax
($6.4 million after tax, or $0.04 per diluted share).
(D) Inventories: Merchandise inventories are stated at the lower of cost or
market, approximately 86% of which are valued under the LIFO method.
(E) LIFO: Results for the quarter reflect a pre-tax LIFO inventory charge of
$3.0 million in fiscal 2000 and $3.0 million in fiscal 1999. The cumulative
current year LIFO charge is $10.0 million, as compared with $11.0 million
in fiscal 1999. If the FIFO method had been used, current quarter net
earnings would have been $12.1 million, or $0.08 per diluted share, as
compared with net earnings of $60.7 million, or $0.41 per diluted share in
the previous year. The cumulative current year net earnings would have been
$19.7 million, or $0.13 per diluted share, as compared with $132.4 million,
or $0.89 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 are 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.
Page 4
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WINN-DIXIE STORES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) cont'd.
(F) Comprehensive Income: Comprehensive income for the quarters ended April 5,
2000 and March 31, 1999 was approximately $10.3 million and $57.8 million,
respectively. Year-to-date, comprehensive income at April 5, 2000 and March
31, 1999 was approximately $10.5 million and $125.2 million, respectively.
These amounts differ from net income due to changes in the net unrealized
holding gains (losses) generated from available-for-sale securities.
(G) 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
and is renewable on an annual basis. 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 April 5, 2000, the Company had $343.0 million in
commercial paper and no amounts from short-term lines of credit
outstanding, as compared to $300.0 million in commercial paper and $165.0
from short-term lines of credit outstanding on June 30, 1999.
(H) 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 2000 and 1999 is 38.5%.
The Company reserved $30.4 million for taxes and $17.5 million for interest
($41.2 million after tax, or $0.28 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. 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.
Page 5
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WINN-DIXIE STORES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) cont'd.
(I) Earnings Per Share: The following weighted average number of shares of
common stock was used in the calculation of 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.
Due to the loss reported for the second quarter of fiscal 2000, dilutive
shares for the second quarter are not included in the current year-to-date
calculation of the diluted weighted average.
2000 1999
-------- ------
Basic:
Quarter 144,376,340 148,322,564
Year-to-Date 146,396,906 148,312,179
Diluted:
Quarter 144,620,686 148,697,412
Year-to-Date 146,569,969 148,689,831
(J) Common Stock: In April 2000, the Board of Directors authorized the
repurchase, in either the open market or private transactions, of up to ten
million shares of the Company's outstanding common stock. This is in
addition to the five million share repurchase program announced on October
6, 1999. The Company can use its discretion on the timing of purchases
based on open market conditions and available funds. To facilitate this
program, the Company sold 1,000,000 put warrants, each of which entitles
the holder to purchase one share of common stock at prices between $32.47
and $34.68. These warrants were exercised in December 1999. As of April 5,
2000, the Company had purchased 4.3 million shares of common stock under
the repurchase program having an aggregate value of $106.7 million or
$25.07 per share.
(K) Business Reporting Segments: During fiscal 1999, the Company adopted
Statement of Financial Accounting Standards No. 131, "Disclosure about
Segments of an Enterprise and Related Information" ("SFAS 131"). SFAS 131
provides for the disclosure of financial information disaggregated by the
way management organizes the segments of the enterprise for making
operating decisions. Based on the information monitored by the Company's
operating decision-makers to manage the business, the Company has
identified that its operations were 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.
All assets of the Company are located within the United States and the
Bahama Islands. Sales and assets related to and located in the Bahama
Islands represent less than 1% of the Company's total sales and assets.
Page 6
<PAGE>
WINN-DIXIE STORES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) cont'd.
(L) New Accounting Pronouncements: In June 1998, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities" ("SFAS
133"). SFAS 133 establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded
in other contracts, and hedging activities. The Company intends to adopt
SFAS 133 in the first quarter of fiscal year 2001. The Company is still
determining how SFAS 133 will impact the financial statements.
(M) Sale of Business: In November 1999, the Company agreed to sell
substantially all of the assets of its wholly-owned subsidiary, Winn-Dixie
Texas, Inc., to The Kroger Co. for cash. The assets consist of 69 stores in
Texas, 5 stores in Oklahoma and the distribution center and a dairy plant
in Fort Worth. Completion of the sale is subject to receipt of governmental
approvals and the satisfaction of other customary conditions.
(N) 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.
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.
Page 7
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WINN-DIXIE STORES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) cont'd.
(N) Litigation, continued:
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, and the process of implementation will
begin upon receipt of signed authorization from the Court. The settlement
amount is approximately $33.0 million, which the Company will pay from
accruals over the next seven years. In the opinion of management, the
settlement will not have a material impact on the Company's financial
condition or results of operations.
See note (H) "Income Taxes" with respect to certain litigation pending
before the U.S. Tax Court.
(O) Subsequent Event: On April 19, 2000, the Board of Directors adopted
management's "Plan of Restructuring". As a result of the restructuring, the
Company will record a pre-tax charge of approximately $450 to $550 million
($275 to $336 million after tax, or $1.87 to $2.29 per diluted share).
Approximately $400 million of the pre-tax charge ($245 million after tax,
or $1.66 per diluted share) will be recorded in the fourth quarter of
fiscal year 2000 with the balance in fiscal year 2001. The Company expects
a reduction in expenses of approximately $400 million per year ($245
million after tax, or $1.66 per diluted share) one year following
restructuring and going forward.
Page 8
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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 third quarter of fiscal 2000 were $3.2 billion, down $4.2
million, or 0.1%, compared with the same quarter last year. Year-to-date,
sales were $10.6 billion, a $20.9 million decrease, or 0.2%, under the prior
year. Identical store sales decreased 2.5% for the quarter and decreased 2.8%
year-to-date. Comparable store sales, which include replacement stores,
decreased 1.6% for the quarter and decreased 1.8% year-to-date. Average store
sales decreased 0.7% for the quarter and decreased 1.0% year-to-date.
For the 40 weeks ended April 5, 2000, the Company opened 30 new stores,
averaging 53,800 square feet, closed 29 older stores, averaging 37,700 square
feet and enlarged or remodeled 32 store locations, for a total of 1,189
locations in operation on April 5, 2000, compared to 1,182 last year. As of
April 5, 2000, retail space totaled 52.7 million square feet, a 2.6% increase
over the prior year. The Company plans to open 18 new stores and enlarge or
remodel 19 stores during the fourth quarter.
Gross profit decreased $26.7 million for the quarter and $35.0 million
year-to-date. As a percent to sales, gross profit for the current quarter was
26.4%, compared to 27.2% in the same quarter of the previous year.
Year-to-date, gross profit as a percent to sales was 26.6% in the current
year, compared to 26.9% in the previous year. The decrease in the gross
profit margins reflects an increase in cost of goods and an increase in
promotional activity. During the second quarter of fiscal 1999, the Company
voluntarily recalled certain franks and sliced luncheon meats manufactured by
its wholly-owned subsidiary, Dixie Packers, Inc. As a result of this recall,
the previous year operating margins were negatively impacted by approximately
$10.5 million.
Operating and administrative expenses increased $51.1 million for the current
quarter and $87.9 million year-to-date. As a percent to sales, operating and
administrative expenses for the current quarter were 26.5%, compared to 24.8%
last year. Year-to-date, operating and administrative expenses, as a percent
to sales, were 26.4% for the current year and 25.6% for the previous year.
The increase for the quarter, as well as year-to-date, is primarily due to an
increase in payroll and occupancy costs relating to new and enlarged stores
and an increase in the number of pharmacies. During the second quarter of
fiscal 1999, the Company increased the estimated useful lives used to compute
depreciation for certain assets, principally store equipment (5 to 8 years)
and leaseholds (8 to 15 years). Store equipment and leaseholds associated
with larger, full-service store formats are expected to have a longer life
because of the types of equipment
Page 9
<PAGE>
Results of Operations, continued
and the expected timing of store remodels. In addition, the change resulted
in useful lives more consistent with the predominant industry practices for
these types of assets. The change has been accounted for as a change in
estimate and resulted in a reduction in operating and administrative expenses
of $14.4 million for the 40 weeks ended April 5, 2000.
Cash discounts and other income totaled $24.6 million for the third quarter,
compared to $26.3 million last year. Year-to-date, cash discounts and other
income totaled $89.9 million, compared to $86.4 million last year. The
increase in cash discounts and other income reflects a $5.2 million gain
generated in the second quarter of fiscal 2000 from the sale of
available-for-sale securities and a decrease in cash discounts as a result of
a decrease in purchases of product for resale.
Interest expense totaled $6.9 million for the current quarter, compared to
$7.5 million for the comparable period last year. Year-to-date, interest
expense totaled $40.3 million for the current year, compared to $26.8 million
in the previous year. The increase in interest expense for the year reflects
a $17.5 million interest reserve booked after receiving an unfavorable
opinion from the U.S. Tax Court in October 1999. See note (H) "Income Tax."
Earnings before income taxes were $16.7 million for the current quarter,
compared to $95.6 million for the comparable period last year. Year-to-date,
earnings before income taxes were $71.5 million and $204.4 million in the
previous year. The decrease in pre-tax earnings is primarily a result of a
decrease in the gross profit margin and an increase in the operating and
administrative expenses as previously mentioned. Income taxes have been
accrued at an effective rate of 38.5% for the current and previous years.
This rate is expected to approximate the effective rate for the full 2000
fiscal year. The Company reserved $30.4 million for taxes after receiving an
unfavorable opinion in October 1999 and a computational decision on January
11, 2000 from the U.S. Tax Court. See note (H) "Income Tax."
Net earnings amounted to $10.3 million, or $0.07 per diluted share for the
current quarter, compared to $58.8 million, or $0.40 per diluted share, for
the comparable period last year. Year-to-date, net earnings amounted to $13.5
million, or $0.09 per diluted share, compared to $125.7 million, or $0.85 per
diluted share, for the previous year. The LIFO charge reduced net earnings by
$1.8 million, or $0.01 per diluted share, for the current quarter, compared
to $1.8 million, or $0.01 per diluted share, in the previous year.
Year-to-date, the LIFO charge reduced net earnings by $6.2 million, or $0.04
per diluted share, compared to $6.7 million, or $0.04 per diluted share, in
the previous year.
Page 10
<PAGE>
Liquidity and Capital Resources
The Company's financial condition remains sound and strong. Cash and cash
equivalents amounted to $22.5 million at April 5, 2000, compared to $24.1
million at March 31, 1999. Net cash provided by operating activities amounted
to $502.9 million for the 40 weeks ended April 5, 2000, compared to $387.3
million for the comparable period last year. Capital expenditures totaled
$178.0 million, compared to $262.1 million for the comparable period last
year. These expenditures were for new store locations, remodeling and
enlargement of store locations, and maintenance and expansion of support
facilities. Total capital investment in Company retail and support
facilities, including operating leases, is estimated to be $500.0 million in
2000. The Company has no material construction or purchase commitments
outstanding as of April 5, 2000.
Working capital amounted to $137.4 million at April 5, 2000, compared to
$250.7 million at June 30, 1999.
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 and is renewable on an annual basis. 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 April 5, 2000, the Company had
$343.0 million in commercial paper outstanding, as compared to $300.0 million
in commercial paper outstanding on June 30, 1999. The average interest rate
on the commercial paper outstanding on April 5, 2000 was 6.2%, as compared to
5.4% on June 30, 1999. The Company had no amounts in borrowings against
short-term lines of credit as of April 5, 2000, as compared to $165.0 million
on June 30, 1999. The interest rate on the short-term lines of credit on June
30, 1999 was 5.5%.
Excluding capital leases, the Company had no outstanding long-term debt as
of either April 5, 2000 or June 30, 1999.
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 that might result from any such proceedings will
not have a material adverse effect on the Company's consolidated earnings or
financial position.
Page 11
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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.
Year 2000 Compliance
In 1996, the Company created a Year 2000 Project Office to address potential
problems within the Company's operations that could result from the century
change in the Year 2000. The Project Office identified the critical
computer-based systems and applications (including embedded systems) that
might not be Year 2000 compliant. Before the end of 1999, the Project Office
implemented revisions or replacements necessary to make these critical
systems compliant, conducted tests of the revised systems and transitioned
the compliant systems into the everyday operations of the Company. The
Company also examined its relationships with certain key outside vendors and
others with whom it had significant business relationships regarding their
Year 2000 compliance and developed strategies for working with them through
the century change.
The Company expenditure was approximately $27.1 million to address the Year
2000 issues, which included the estimated costs of all systems modifications,
the salaries of associates and the fees of consultants addressing the issues.
As of the date of this filing, the Company has not experienced any material
adverse effects on the operations or results of operations of the Company
relating to the Year 2000 issues associated with its systems or those of
third parties with whom it has significant business relationships.
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 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 12
<PAGE>
WINN-DIXIE STORES, INC. AND SUBSIDIARIES
Part II - Other Information
Item 5. Other Information
The following retirements were announced effective June 28, 2000:
Roy J. Brocato, Senior Vice President and Director of
Merchandising; Howard E. Hess, Senior Vice President and Regional
Director; Ron A. Sevin, Senior Vice President and Regional
Director; Charles E. Winge, Senior Vice President and Regional
Director; William C. Calkins, Vice President and President of
Jacksonville Division; Harold E. Miller, Vice President and
President of Montgomery Division; James Schlosser, Vice President
and President of Midwest Division; Joe T. White, Vice President
and President of Atlanta Division; and David H. Bragin,
Treasurer.
In April 2000, the following officers were elected: Dan G.
Lafever, Senior Vice President and Director of Operations;
Richard P. McCook, Senior Vice President and Chief Financial
Officer; John R. Sheehan, Senior Vice President and Director of
Sales and Procurement; August B. Toscano, Senior Vice President
and Director of Human Resources; E. Ellis Zahra, Jr., Senior Vice
President and General Counsel; Daniel J. Richardson, Vice
President and President of Montgomery Division; Mark A. Sellers,
Vice President and President of Orlando Division; and Don A.
Weaver, Vice President and President of Jacksonville Division.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(b) Report on Form 8-K
There were no reports on Form 8-K filed for the quarter
ended April 5, 2000.
Page 13
<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: April 26, 2000 RICHARD P MC COOK
----------------------------
Richard P. McCook
Senior Vice President and
Chief Financial Officer
Date: April 26, 2000 D. MICHAEL BYRUM
----------------------------
D. Michael Byrum
Corporate Controller and
Chief Accounting Officer
Page 14
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<ARTICLE> 5
<LEGEND> All amounts in thousands except per share data.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-28-2000
<PERIOD-END> Apr-05-2000
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<SECURITIES> 0
<RECEIVABLES> 140,199
<ALLOWANCES> 0
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<PP&E> 1,203,179
<DEPRECIATION> 0
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<CURRENT-LIABILITIES> 1,521,202
<BONDS> 0
0
0
<COMMON> 144,499
<OTHER-SE> 1,059,638
<TOTAL-LIABILITY-AND-EQUITY> 2,970,174
<SALES> 10,637,551
<TOTAL-REVENUES> 10,637,551
<CGS> 7,802,647
<TOTAL-COSTS> 2,813,001
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 40,297
<INCOME-PRETAX> 71,461
<INCOME-TAX> 57,912
<INCOME-CONTINUING> 13,549
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<NET-INCOME> 13,549
<EPS-BASIC> 0.09
<EPS-DILUTED> 0.09
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