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 April 9, 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 April 9, 1994, IS 78,090,441
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 ( )
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Commission File No. 0-6544
BRUNO'S, INC.
Index
Page No.
Financial Statements:
Condensed Consolidated Balance Sheets
April 9, 1994, and July 3, 1993. 2
Condensed Consolidated Statements of Income
and Retained Earnings for the Forty (40)
and Fourteen (14) Week Periods Ended
April 9, 1994, and April 3, 1993. 3
Condensed Consolidated Statements of Cash
Flows for the Forty (40) Week Periods
Ended April 9, 1994, and April 3, 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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Commission File No. 0-6544
BRUNO'S, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS AS OF APRIL 9, 1994
AND JULY 3, 1993
(In Thousands Except Share And Per Share Amounts)
(Unaudited)
<CAPTION>
4-9-94 7-3-93
_________ _________
<S> <C> <C>
ASSETS
- - ------
Current Assets -
Cash and Cash Equivalents $ 33,161 $ 20,093
Receivables 29,286 25,303
Inventories at LIFO 261,900 259,239
Prepaid Expenses and Other 10,266 9,276
_________ _________
Total Current Assets 334,613 313,911
Property, Equipment, Leasehold Improvements,
Leasehold Interests and Investment in
Property under Capital Leases, Net 546,403 543,877
Intangibles and Other Assets 57,527 59,135
_________ _________
Total Assets 938,543 916,923
========= =========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
- - ----------------------------------------
Current Liabilities -
Current Portion of Long-Term Debt and
Capitalized Lease Obligations and
Short-Term Borrowings 4,485 38,133
Accounts Payable 109,624 116,752
Other Accrued Expenses 36,138 40,963
Accrued Income Taxes 996 553
_________ _________
Total Current Liabilities 151,243 196,401
_________ _________
Long-Term Debt and Capitalized
Lease Obligations 322,621 269,046
_________ _________
Deferred Income Taxes 48,900 46,955
_________ _________
Deferred Compensation 2,238 1,854
_________ _________
Shareholders' Investment -
Common Stock ($.01 par value, 200,000,000
shares authorized, 78,090,441 and
78,047,341 shares respectively,
issued and outstanding) 781 780
Paid-In Capital 42,191 42,072
Retained Earnings 370,641 360,022
_________ _________
413,613 402,874
Deferred Compensation (72) (207)
_________ _________
Total Shareholders' Investment 413,541 402,667
_________ _________
Total Liabilities and Shareholders'
Investment 938,543 916,923
========= =========
<FN>
See accompanying notes to condensed consolidated financial statements.
</TABLE>
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Commission File No. 0-6544
BRUNO'S, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE FORTY AND FOURTEEN WEEK PERIODS ENDING
APRIL 9, 1994, AND APRIL 3, 1993
(In Thousands Except Per Share Amounts)
(Unaudited)
<CAPTION>
Forty Weeks Ended Fourteen Weeks Ended
_____________________________ _____________________________
<S> <C> <C> <C> <C>
4-9-94 4-3-93 4-9-94 4-3-93
___________ ___________ ___________ ___________
Net Sales $ 2,173,757 $ 2,150,680 $ 764,602 $ 762,089
----------- ----------- ----------- -----------
Cost and Expenses:
Cost of Products Sold $ 1,679,689 $ 1,679,759 $ 591,243 $ 604,199
Store Operating, Selling and
Administrative Expenses 391,436 367,642 138,891 132,746
Depreciation and Amortization 41,228 36,952 14,922 13,267
Interest Expense 15,930 14,004 5,753 5,159
Interest Income (3,213) (287) (1,435) (136)
___________ ___________ ___________ ___________
$ 2,125,070 $ 2,098,070 $ 749,374 $ 755,235
___________ ___________ ___________ ___________
Income Before Provision For Income
Taxes and Extraordinary Item $ 48,687 $ 52,610 $ 15,228 $ 6,854
Provison For Income Taxes (Note 3) 20,725 18,992 5,787 2,474
----------- ----------- ----------- -----------
Income Before Extraordinary Item $ 27,962 $ 33,618 $ 9,441 $ 4,380
Extraordinary Item, Net (Note 5) (3,288) -- -- --
___________ ___________ ___________ ___________
Net Income $ 24,674 $ 33,618 $ 9,441 $ 4,380
Cash Dividends (14,055) (13,090) (4,685) (4,295)
Retained Earnings, Beginning Of Period 360,022 330,511 365,885 350,954
___________ ___________ ___________ ___________
Retained Earnings, End Of Period $ 370,641 $ 351,039 $ 370,641 $ 351,039
=========== =========== =========== ===========
Earnings Per Common Share:
Income Before Extraordinary Item $ 0.36 $ 0.43 $ 0.12 $ 0.06
Extraordinary Item, Net (0.04) -- -- --
___________ ___________ ___________ ___________
Net Income $ 0.32 $ 0.43 $ 0.12 $ 0.06
=========== =========== =========== ===========
Cash Dividends Per Common Share $ 0.18 $ 0.165 $ 0.06 $ 0.055
=========== =========== =========== ===========
<FN>
See accompanying notes to condensed consolidated financial statements.
</TABLE>
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Commission File No. 0-6544
BRUNO'S, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE FORTY WEEK PERIODS ENDING
APRIL 9, 1994, AND APRIL 3, 1993
(In Thousands)
(Unaudited)
<CAPTION>
________________________
4-9-94 4-3-94
_________ _________
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 24,674 $ 33,618
_________ _________
Adjustments to reconcile net income
to net cash provided by operating
activities-
Depreciation & amortization $ 41,228 $ 36,952
LIFO provision (credit) (590) (1,642)
Change in assets and liabilities (14,616) (28,851)
_________ _________
Total adjustments $ 26,022 $ 6,459
_________ _________
Net cash provided by operating $ 50,696 $ 40,077
activities _________ _________
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property $ 8,899 $ --
Capital expenditures (52,653) (100,557)
_________ _________
Net cash used in investing
activities $ (43,754) $ (100,557)
_________ _________
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings (repayments) line of credit, net $ (35,000) $ 10,000
Purchase of stock -- (49,569)
Proceeds form issuance of stock 255 1,335
Dividends paid (14,056) (13,090)
Reductions of long-term debt (145,073) (2,212)
Proceeds from issuance of long-term debt 200,000 100,000
_________ _________
Net cash provided by
financing activities $ 6,126 $ 46,464
_________ _________
Net increase (decrease) in cash $ 13,068 $ (14,016)
Cash beginning of period 20,093 19,507
_________ _________
Cash end of period $ 33,161 $ 5,491
========= =========
<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
APRIL 9, 1994 AND APRIL 3, 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 forty (40) weeks ended
April 9, 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
(78,087,000 and 78,936,000 for the forty week periods,
respectively and 78,092,000 and 78,048,000 for the fourteen
week periods, respectively).
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 required an adjustment of
approximately $2,200 to retroactively restate the current and
deferred income tax liabilities. This adjustment combined with
the increased effective tax rate, resulted in an effective
income tax rate for the forty weeks ended April 9, 1994 of
42.6%.
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Commission File No. 0-6544
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 is contingently liable for rent payments for three
store sites sold during fiscal 1992 should these stores be closed
during the initial term of the remaining lease and not subleased to
another party. The contingent liability for two of the stores is
$1,514 per year through 2014, while the third store has not yet
been leased.
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 $1,700, net of income taxes.
5. Debt Restructure
On September 1, 1993, the Company redeemed the $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 fiscal 1994 statements 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>
FORTY WEEKS ENDED FOURTEEN WEEKS ENDED
_______________________ _______________________
4-9-94 4-3-93 4-9-94 4-3-93
________ ________ ________ ________
<S> <C> <C> <C> <C>
Net Sales 100.0 % 100.0 % 100.0 % 100.0 %
Cost Of Products Sold 77.3 78.1 77.3 79.3
________ ________ ________ ________
Gross Profit 22.7 % 21.9 % 22.7 % 20.7 %
Store Operating, Selling, and
Administrative Expenses 18.0 17.1 18.2 17.4
Depreciation and Amortization 1.9 1.7 1.9 1.7
Net Interest Expense 0.6 0.6 0.6 0.7
________ ________ ________ ________
Income Before Provision For Income
Taxes and Extraordinary Item 2.2 % 2.5 % 2.0 % 0.9 %
Provision for Income Taxes 0.9 0.9 0.8 0.3
________ ________ ________ ________
Income Before Extraordinary Item 1.3 % 1.6 % 1.2 % 0.6 %
Extraordinary Item, Net (0.2) -- -- --
________ ________ ________ ________
Net Income 1.1 % 1.6 % 1.2 % 0.6 %
======== ======== ======== ========
</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
________________________________________________________________
FORTY WEEKS ENDED FOURTEEN WEEKS ENDED
4-9-94 and 4-3-93 4-9-94 and 4-3-93
________________________________________________________________
Increase (Decrease)
(Dollars in Thousands Except Per Share Amounts)
<S> <C> <C> <C> <C>
Net Sales $ 23,077 1.1 % $ 2,513 0.3 %
Cost Of Products Sold (70) 0.0 (12,956) (2.1)
Store Operating, Selling, and
Administrative Expenses 23,794 6.5 6,145 4.6
Depreciation and Amortization 4,276 11.6 1,655 12.5
Net Interest Expense (1,000) (7.3) (705) (14.0)
Income Before Extraordinary Item (5,656) (16.8) 5,061 115.5
Extraordinary Item, Net 3,288 100.0 -- --
Net Income (8,944) (26.6) 5,061 115.5
Income Per Common Share Before
Extraordinary Item (0.07) (16.3) 0.06 100.0
Net Income Per Common Share (0.11) (25.6) 0.06 100.0
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Commission File No. 0-6544
BRUNO'S, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollar Amounts In Thousands)
RESULTS OF OPERATIONS
Net sales increased 1.1% ($23,077) and .3% ($2,513), respectively, in
the forty and fourteen week periods ended April 9, 1994, as compared to
the applicable periods in the prior year. The net sales increase was
primarily attributed to the thirteen new stores opened in the past year
which more than offset closed and relocated stores. Same store sales
decreased 1% during the third quarter of fiscal 1994 as compared with
the same period in fiscal 1993.
Gross profit as a percentage of net sales was 22.7%, in the forty and
fourteen week periods ended April 9, 1994, as compared to a gross profit
percentage of 21.9% and 20.7% for the applicable periods in fiscal 1993.
The increase in gross profit percentages for the forty and fourteen week
periods ended April 9, 1994 as compared to the same periods in fiscal
1993 are primarily due to a reduced margin pricing strategy inplace
during in the third quarter of 1993. The Company did not extend the
reduced margin strategy to fiscal year 1994, and thus margins have
improved.
Store operating, selling and administrative expenses as a percentage of
net sales increased from 17.4% for the fourteen weeks ended April 3,
1993, to 18.2% for the fourteen weeks ended April 9, 1994. This
increase as a percentage of net sales is a continuing trend of increased
costs associated with new store openings and store renovations, coupled
with slower sales growth.
The increase in depreciation and amortization expense as a percentage of
sales in fiscal 1994 over fiscal 1993 is the result of store growth (and
the related growth in depreciable assets) exceeding the applicable sales
growth.
Net interest expense has decreased for the fourteen weeks ended April 9,
1994 as compared to the same period in 1993 due to lower levels of
short-term borrowings.
The Company's effective income tax rate increased from 36.1% in the
third quarter of fiscal 1993 to 38.0% in the third quarter of fiscal
1994, and increased from 36.1% for the forty week periods ended April 3,
1993, to 42.6% for the same period in fiscal 1994. See Note 3 of Notes
to Condensed Consolidated Financial Statements for a complete discussion
of the increased provision for income taxes related to increased
statutory Federal income tax rates.
-8-
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Commission File No. 0-6544
As completely 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 $3,288 (net
of the applicable income tax benefit of $2,015).
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 $50,696 and
$40,077, respectively, in cash in each of the forty week periods ended
April 9, 1994, and April 3, 1993. Additional working capital was raised
in the first quarter of fiscal 1993 and 1994 through proceeds from the
issuance of term loans. Also, the Company has at its disposal a $75
million unsecured line of credit to meet any short-term cash
requirements.
The primary use of cash in investing activities relates to the Company's
capital expenditures. While the Company has decreased these activities,
the Company has continued its expanding and remodeling of stores during
fiscal 1994. Capital expenditures were $52,653 compared with $100,557
in fiscal 1994 and fiscal 1993, respectively. The fiscal 1994 capital
expenditures were financed primarily with internally generated funds.
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.
The Company estimates capital expenditures for the remainder of fiscal
1994 to be approximately $10,000 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.
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Commission File No. 0-6544
As stated earlier, the Company has at its disposal a $75 million
unsecured line of credit to meet short-term cash requirements. At July
3, 1993, $35 million of borrowings was outstanding under this line of
credit, while no borrowings were outstanding at April 9, 1994. The
other primary use of cash in financing activities relates to the payment
of cash dividends which aggregated $14,056 and $13,090 during the first
two quarters of fiscal 1994 and 1993, respectively.
During the first quarter of fiscal 1993, the Company issued a term bank
loan for $100,000 to finance a stock repurchase and repay short-term
borrowings. 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 the proceeds of a $200,000 term loan.
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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 forty (40) weeks ended April 9, 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
Date
May 20, 1994
Glenn J. Griffin
Glenn J. Griffin
Executive Vice President, and
Chief Financial Officer *
*Both duly authorized officer and principal financial officer.
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