FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Under Section 13 or 15 (d) of
The Securities and Exchange Act of 1934
QUARTER ENDED September 24, 1994 COMMISSION FILE NO. 0-6544
BRUNO'S, INC.
STATE OF INCORPORATION ALABAMA I.R.S. EMPLOYER I.D. NO. 63-0411801
ADDRESS OF PRINCIPAL EXECUTIVE OFFICE (INCLUDING ZIP CODE)
800 Lakeshore Parkway, Birmingham, Alabama 35211
REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE
Area Code 205 - 940-9400
OUTSTANDING COMMON STOCK AS OF September 24, 1994, IS 78,096,941
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, and
(2) has been subject to such filing requirements for the past 90
days.
YES (X) NO ( )
<PAGE>
BRUNO'S, INC.
Index
Page No.
Financial Statements:
Condensed Consolidated Balance Sheets
September 24, 1994, and July 2, 1994. 2
Condensed Consolidated Statements of Income
and Retained Earnings for the Twelve (12)
Week Periods Ended September 24, 1994, and
September 25, 1993. 3
Condensed Consolidated Statements of Cash
Flows for the Twelve (12) Week Periods
Ended September 24, 1994, and September 25,
1993. 4
Notes to Condensed Consolidated Financial
Statements. 5
Management's Discussion and Analysis of Financial
Condition and Results of Operations. 7
Other Information 11
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<TABLE>
Commission File No. 0-6544
BRUNO'S, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 24, 1994
AND JULY 2, 1994
(In Thousands Except Share And Per Share Amounts)
(Unaudited)
<CAPTION>
9-24-94 7-2-94
_________ _________
<S> <C> <C>
ASSETS
- - - ---------
Current Assets -
Cash and Cash Equivalents $ 2,410 $ 30,259
Receivables 40,278 34,770
Inventories at LIFO 259,521 255,047
Prepaid Expenses and Other 11,893 10,665
_________ _________
Total Current Assets 314,102 330,741
Property, Equipment, Leasehold Improvements,
Leasehold Interests and Investment in
Property under Capital Leases, Net 520,511 540,139
Intangibles and Other Assets 56,590 56,328
_________ _________
Total Assets 891,203 927,208
========= =========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
---------
Current Liabilities -
Current Portion of Long-Term Debt and
Capitalized Lease Obligations and
Short-Term Borrowings 2,627 4,092
Accounts Payable 99,227 108,712
Other Accrued Expenses 35,686 43,545
Accrued Income Taxes 6,321 --
_________ _________
Total Current Liabilities 143,861 156,349
_________ _________
Long-Term Debt and Capitalized
Lease Obligations 271,051 296,460
_________ _________
Deferred Income Taxes 51,136 51,136
_________ _________
Deferred Compensation 2,024 1,909
_________ _________
Shareholders' Investment -
Common Stock ($.01 par value, 200,000,000
shares authorized, 78,096,941 and
78,090,441 shares respectively,
issued and outstanding) 781 781
Paid-In Capital 41,999 41,999
Retained Earnings 358,030 378,574
_________ _________
427,810 421,354
Treasury Stock (595,000 shares) (4,679) --
_________ _________
Total Shareholders' Investment 423,131 421,354
_________ _________
Total Liabilities and Shareholders'
Investment 891,203 927,208
========= =========
<FN>
See accompanying notes to condensed consolidated financial statements.
</TABLE>
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<TABLE>
Commission File No. 0-6544
BRUNO'S, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE TWELVE WEEK PERIODS ENDED
SEPTEMBER 24, 1994, AND SEPTEMBER 25.1993
(In Thousands Except Per Share Amounts)
(Unaudited)
<CAPTION>
Twelve Weeks Ended
_____________________________
<S> <C> <C>
9-24-94 9-25-93
___________ ___________
Net Sales $ 653,621 $ 640,911
----------- -----------
Cost and Expenses:
Cost of Products Sold $ 497,576 $ 493,080
Store Operating, Selling and
Administrative Expenses 120,340 113,803
Depreciation and Amortization 12,686 11,611
Interest Expense 5,958 4,412
Interest Income (1,538) (421)
___________ ___________
$ 635,022 $ 622,485
___________ ___________
Income Before Provision For Income
Taxes and Extraordinary Item $ 18,599 $ 18,426
Provison For Income Taxes (Note 3) 7,067 9,226
----------- -----------
Income Before Extraordinary Item $ 11,532 $ 9,200
Extraordinary Item, Net (Note 5) -- (3,288)
___________ ___________
Net Income $ 11,532 $ 5,912
Cash Dividends (5,076) (4,684)
Retained Earnings, Beginning Of Period 378,574 360,022
___________ ___________
Retained Earnings, End Of Period $ 385,030 $ 361,250
=========== ===========
Earnings Per Common Share:
Income Before Extraordinary Item $ 0.15 $ 0.12
Extraordinary Item, Net -- (0.04)
___________ ___________
Net Income $ 0.15 $ 0.08
=========== ===========
Cash Dividends Per Common Share $ 0.065 $ 0.06
=========== ===========
<FN>
See accompanying notes to condensed consolidated financial statements.
</TABLE>
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<TABLE>
Commission File No. 0-6544
BRUNO'S, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWELVE WEEK PERIODS ENDED
SEPTEMBER 24, 1994, AND SEPTEMBER 25,1993
(In Thousands)
(Unaudited)
<CAPTION>
________________________
9-24-94 9-25-93
_________ _________
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 11,532 $ 5,912
_________ _________
Adjustments to reconcile net income
to net cash provided by operating
activities-
Depreciation & amortization $ 12,686 $ 11,611
LIFO provision (credit) 615 (1,062)
Change in assets and liabilities (22,995) (13,360)
_________ _________
Total adjustments $ (9,694) $ (2,811)
_________ _________
Net cash provided by operating $ 1,838 $ 3,101
activities _________ _________
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property $ 17,875 $ 7,763
Capital expenditures (10,933) (19,810)
_________ _________
Net cash provided by (used in)
investing activities $ 6,942 $ (12,047)
_________ _________
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings (repayments) line of credit, net $ -- $ (35,000)
Reduction of long-term debt (26,874) (143,470)
Proceeds form issuance of long-term debt -- 200,000
Purchase of treasury stock (4,679) --
Proceeds from issuance of stock -- 167
Dividends paid (5,076) (4,684)
_________ _________
Net cash provided by (used in)
financing activities $ (36,629) $ 17,013
_________ _________
Net increase (decrease) in cash $ (27,849) $ 8,067
Cash beginning of period 30,259 20,093
_________ _________
Cash end of period $ 2,410 $ 28,160
========= =========
<FN>
See accompanying notes to condensed consolidated financial statements.
</TABLE>
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Commission File No. 0-6544
BRUNO'S, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 24, 1994 AND SEPTEMBER 25, 1993
(Dollar Amounts in Thousands)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements
include the accounts of Bruno's, Inc. and its wholly owned sub-
sidiaries. Significant intercompany balances and transactions
have been eliminated in consolidation.
In the opinion of management, the accompanying unaudited
consolidated financial statements contain all adjustments
(consisting only of normal recurring adjustments) necessary for
a fair statement of the consolidated financial position and
results of operations of the Company for the interim periods.
The results of operations for the twelve (12) weeks ended
September 24, 1994, are not necessarily indicative of the
results which may be expected for the entire year.
2. EARNINGS PER SHARE
Earnings per share was computed on the weighted average number
of common shares outstanding during the respective periods
(77,797,000 and 78,048,000, respectively). Outstanding stock
options are common stock equivalents but were excluded from
earnings per common share computations as their effect was
either not material or antidilutive.
3. INCOME TAXES
On August 10, 1993, the Omnibus Budget Reconciliation Act of
1993, was signed into law which increased Federal income tax
rates from 34% to 35% for the Company retroactively effective
to January 1, 1993. The new law changed the Company's
effective income tax rate to approximately 38% and required an
adjustment in the first quarter 1994 of approximately $2,200 to
retroactively restate the current and deferred income tax
liabilities. This adjustment combined with the increased tax
rate, resulted in an effective income tax rate for the first
quarter of fiscal 1994 of 50%.
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Commission File No. 06544
4. CONTINGENCIES
The Company is a party to various legal and taxing authority
proceedings incidental to its business. In the opinion of
management, the ultimate liability with respect to these actions
will not materially affect the financial position or results of
operations of the Company.
The Company has received a notice from the Pension Benefit Guaranty
Corporation ("PBGC") contending that inappropriate actuarial
assumptions were used in connection with final distributions of a
previously terminated plan. As such, the PBGC has taken a position
that additional distributions must be made to former participants.
The amount of the Company's liability, if any, and the ultimate
outcome is unknown at the present time, but is not expected to
exceed $2,700.
5. DEBT RESTRUCTURE
On September 1, 1993, the Company redeemed $142,750 of 6.5%
Convertible Subordinated Debentures at 103.9% of face value in
accordance with the terms of the related indenture. The redemption
was financed with the proceeds of a $200,000 term loan which will
amortize over 10 to 15 years at rates ranging from 6.6% to 7.1%.
This redemption resulted in a loss of $3,288 (net of the applicable
income tax benefit of $2,015) which is classified as an
extraordinary item in the accompanying first quarter of fiscal 1994
statement of income and retained earnings.
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Commission File No. 0-6544
BRUNO'S, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of
significant factors affecting the Company's earnings during
the periods included in the accompanying condensed consolidated
statements of income.
A table showing the percentage of net sales represented by
certain items in the Company's condensed consolidated state-
ments of income is as follows:
<CAPTION>
TWELVE WEEKS ENDED
_______________________
9-24-94 9-25-93
________ ________
<S> <C> <C>
Net Sales 100.0 % 100.0 %
Cost Of Products Sold 76.1 76.9
________ ________
Gross Profit 23.9 % 23.1 %
Store Operating, Selling, and
Administrative Expenses 18.4 17.8
Depreciation and Amortization 1.9 1.8
Net Interest Expense 0.8 0.6
________ ________
Income Before Provision For Income
Taxes and Extraordinary Item 2.8 % 2.9 %
Provision for Income Taxes 1.0 1.5
________ ________
Income Before Extraordinary Item 1.8 % 1.4 %
Extraordinary Item, Net 0.0 (0.5)
________ ________
Net Income 1.8 % 0.9 %
======== ========
</TABLE>
<TABLE>
A summary of the period to period changes in certain items
included in the condensed statements of income is as follows:
<CAPTION>
COMPARISON OF 12 WEEKS ENDED
9-24-94 and 9-25-93
______________________________
Increase (Decrease)
(Dollars in Thousands Except
Per Share Amounts)
<S> <C> <C>
Net Sales $ 12,710 2.0
Cost Of Products Sold 4,496 0.9
Store Operating, Selling, and
Administrative Expenses 6,537 5.7
Depreciation and Amortization 1,075 9.3
Net Interest Expense 429 10.7
Income Before Extraordinary Item 2,332 25.3
Extraordinary Item, Net (3,288) 100.0
Net Income 5,620 95.1
Income Per Common Share Before
Extraordinary Item 0.03 25.0
Net Income Per Common Share 0.07 87.5
</TABLE>
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Commission File No. 0-6544
BRUNO'S, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net sales increased $12.7 million or 2.0% in the twelve week period
ended September 24, 1994, as compared to the twelve week period ended
September 25, 1993. The net sales increase was primarily attributable to
the Company's recent focus on existing stores and stressing the
importance of customer service. This strategy has resulted in positive
same store sales growth despite continued competitive pressures. In
addition, sales for the 1994 fourth of July holiday weekend are included
in the first quarter of fiscal 1995 sales while a majority of the 1993
fourth of July holiday weekend sales were included in the fourth quarter
of fiscal 1993.
Gross profit as a percentage of net sales was 23.9% for the first
quarter of fiscal 1995 as compared to 23.1% for the first quarter of
fiscal 1994. The increase in gross profit percentage from the first
quarter of the prior year is due to increased retail prices over the
prior year and the continued decline in the cost of grocery and meat
prices.
Store operating, selling and administrative expenses as a percentage of
net sales increased from 17.8% for the twelve weeks ended September 25,
1993, to 18.4% for the twelve weeks ended September 24, 1994. This
increase as a percentage of net sales is primarily due to increased
costs associated with new store openings and the Company's concerted
efforts at improving customer service by maintaining more personnel in
certain format stores and renovating certain existing stores to a
different more customer service oriented store format.
The $1.1 million increase in depreciation and amortization expense in
the first quarter of fiscal 1995 as compared to the first quarter of
fiscal 1994 is the result of an increase in the Company's depreciable
asset base due to new store openings and store renovations.
The increase in net interest expense of $429,000 from the first quarter
level in 1994 to the first quarter level in 1995 is due to an increase
in interest rates which effected the Company's net interest position on
its $80 million notional interest rate swap. The Company paid
approximately $26.9 million on long-term debt at the end of the first
quarter of fiscal 1995 which did not effect interest expense in that
quarter but will serve to reduce interest expense in future periods.
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Commission File No. 0-6544
The decrease in the provision for income taxes as a percentage of sales
from 1.5% in the first quarter of fiscal 1994 to 1.0% in the first
quarter of fiscal 1995 results from the fiscal 1994 increase in
statutory rates which became effective retroactively to January 1, 1994.
See Note 3 of the Notes to Condensed Consolidated Financial Statements
for a further discussion of the increased statutory rates and impact on
the Company's effective tax rate.
As discussed in Note 5 of Notes to Condensed Consolidated Financial
Statements, the Company redeemed its 6.5% Convertible Debentures at
103.9% of face value during the first quarter of fiscal 1994. This
redemption resulted in an extraordinary loss of $3.3 million (net
of the applicable income tax benefit of $2.0 million).
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company has funded working capital requirements,
capital expenditures and other cash requirements primarily through cash
flow from operations. Operating activities have generated $1.8 million
and $3.1 million, respectively, in cash in each of the periods ended
September 24, 1994, and September 25, 1993. The Company has at its
disposal a $75 million unsecured line of credit (no amounts outstanding
at September 24, 1994) to meet any short-term cash requirements.
Cash flow provided by (used in) investing activities were $6.9 million
and ($12.0) million for the twelve weeks ended September 24, 1994 and
September 25, 1993, respectively. Proceeds from the sale of certain
property totaled $17.9 million during the first quarter of fiscal 1995
compared to $7.8 million during the first quarter of fiscal 1994. There
were no material gains or losses generated from these sales. The
Company has continued its expansion and remodeling of stores programs
during fiscal 1995. Capital expenditures were $10.9 million compared
with $19.8 million in the first quarter of fiscal 1995 and fiscal 1994,
respectively. Capital expenditures were financed with internally
generated funds.
The Company plans to continue to expand through the opening of new
stores and may acquire existing stores or one or more supermarket
chains, if attractive acquisition opportunities become available. The
Company anticipates that funds necessary for the expansion of its
business during the foreseeable future will be financed through
available cash reserves, internally generated funds and short-term
borrowings. However, the Company may use for such purposes additional
sources of financing, which may include long-term borrowings and the
issuance of additional debt or equity securities.
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Commission File No. 0-6544
The Company estimates capital expenditures for the remainder of fiscal
1995 to be approximately $49 million and plans to finance these
expenditures through internally generated funds or other available
resources. These estimated capital expenditures are primarily related
to the opening of new stores and the remodeling of existing stores.
Management continuously evaluates all stores based upon volume,
profitability, location, age, demographics, etc. and makes closure
decisions based upon the evaluations.
The primary uses of cash in financing activities during the first
quarter of fiscal 1995 were a $26.9 million reduction in long-term debt,
$5.1 million in cash dividends paid, and $4.7 million purchase of
595,000 shares of treasury stock. As fully discussed in Note 5 of Notes
to Condensed Consolidated Financial Statements, during the first quarter
of fiscal 1994, the Company redeemed its 6.5% Convertible Subordinated
Debentures with proceeds of a $200 million term loan. In addition,
during the first quarter of fiscal 1994, the Company paid off its line
of credit borrowings of $35 million and paid cash dividends of $4.7
million.
OTHER
On July 22, 1994, the Company's Board of Directors approved the
repurchase on the open market of up to $25 million of the Company's
common stock. As noted above, during the first quarter of fiscal 1995
the Company purchased 595,000 shares at a total price of $4.7 million.
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Commission File No. 0-6544
BRUNO'S, INC.
OTHER INFORMATION
The Company was not required to report material unusual
charges or credits to income pursuant to Item 10 (a) or a change
in independent accountants pursuant to Item 12 of Form 8-K for
any of the twelve (12) weeks ended September 24, 1994.
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.
_______________BRUNO'S,INC.__________
REGISTRANT
_____________________________________
_____________________________________
Glenn J. Griffin
Executive Vice President, and
Chief Financial Officer *
*Both duly authorized officer and principal financial officer.
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<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> QTR-1
<FISCAL-YEAR-END> JUL-02-1994
<PERIOD-START> JUL-03-1994
<PERIOD-END> SEP-24-1994
<CASH> 2,410
<SECURITIES> 0
<RECEIVABLES> 40,278
<ALLOWANCES> 0
<INVENTORY> 259,521
<CURRENT-ASSETS> 314,102
<PP&E> 805,923
<DEPRECIATION> 285,412
<TOTAL-ASSETS> 891,203
<CURRENT-LIABILITIES> 143,861
<BONDS> 271,051
<COMMON> 781
0
0
<OTHER-SE> 395,350
<TOTAL-LIABILITY-AND-EQUITY> 891,203
<SALES> 653,621
<TOTAL-REVENUES> 653,621
<CGS> 497,576
<TOTAL-COSTS> 497,576
<OTHER-EXPENSES> 137,446
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,958
<INCOME-PRETAX> 18,599
<INCOME-TAX> 7,067
<INCOME-CONTINUING> 11,532
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,532
<EPS-PRIMARY> .15
<EPS-DILUTED> .15
</TABLE>
