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: JULY 27, 1996 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
(205) 940-9400
OUTSTANDING COMMON STOCK AS OF July 27, 1996 is 25,147,639
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>
Commission File No. 0-6544
BRUNO'S, INC.
Index
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets at
July 27, 1996 and January 27, 1996 2
Condensed Consolidated Statements of Income for the
Twenty-six (26) and Thirteen (13) Week Periods Ended July 27, 1996
and the Twenty-six (26) and Twelve (12) Week Periods Ended July 1,
1995 3
Condensed Consolidated Statements of Cash Flows for the
Twenty-six (26) Week Periods Ended July 27, 1996
and July 1, 1995 4
Notes to Condensed Consolidated Financial Statements 5-6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7-11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Change in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12-13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13-14
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<TABLE>
Commission File No. 0-6544
BRUNO'S, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF JULY 27, 1996 AND JANUARY 27, 1996
(In Thousands Except Share and Per Share Amounts)
- - -----------------------------------------------------------------------------------------
<CAPTION>
July 27, January 27,
1996 1996
(unaudited)
------------ ------------
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $ 61,595 $ 57,387
Receivables 23,965 25,294
Inventories, net of LIFO reserve of $10,405 and
and $8,905, respectively 205,348 215,589
Prepaid expenses 9,583 11,225
Deferred income taxes 7,352 6,733
------------ ------------
Total current assets 307,843 316,228
------------ ------------
Property and equipment, net 490,880 491,664
------------ ------------
Intangibles and other assets, net 62,012 65,254
------------ ------------
Total $ 860,735 $ 873,146
============ ============
LIABILITIES AND DEFICIENCY IN NET ASSETS:
Current liabilities:
Current maturities of long-term debt and capitalized
lease obligations $ 1,890 $ 1,938
Accounts payable 159,239 167,283
Accrued income taxes 1,457 583
Accrued payroll and related expenses 15,492 17,975
Other accrued expenses 67,161 62,736
------------ ------------
Total current liabilities 245,239 250,515
------------ ------------
Noncurrent liabilities:
Long-term debt 809,112 834,223
Capitalized lease obligations 17,156 17,963
Deferred income taxes 24,683 21,082
Other noncurrent liabilities 38,520 29,947
Deferred compensation 759 759
------------ ------------
Total noncurrent liabilities 890,230 903,974
------------ ------------
Deficiency in net assets:
Common Stock, $.01 par value, 60,000,000 251 250
shares authorized; 25,147,639 and 25,007,015
issued and outstanding, respectively
Paid-in capital (590,410) (592,096)
Retained earnings 315,425 310,503
------------ ------------
Total deficiency in net assets (274,734) (281,343)
------------ ------------
Total $ 860,735 $ 873,146
============ ============
<FN>
See notes to condensed consolidated financial statements.
</FN>
</TABLE>
2
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<TABLE>
Commission File No. 0-6544
BRUNO'S, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE TWENTY-SIX AND THIRTEEN WEEK PERIODS ENDED JULY 27, 1996
AND THE TWENTY-SIX AND TWELVE WEEK PERIODS ENDED JULY 1, 1995 (UNAUDITED)
(In Thousands Except Share and Per Share Amounts)
- - ----------------------------------------------------------------------------------------------------
<CAPTION>
July 27, July 1, July 27, July 1,
1996 1995 1996 1995
(26 Weeks) (26 Weeks) (13 Weeks) (12 Weeks)
<S> <C> <C> <C> <C>
NET SALES $ 1,452,497 $ 1,431,828 $ 719,775 $ 668,554
----------- ----------- ----------- -----------
COST AND EXPENSES:
Cost of products sold 1,100,842 1,099,986 546,718 511,740
Store operating, selling and administrative expenses 272,029 282,864 135,035 120,147
Depreciation and amortization 28,108 26,037 14,402 12,546
Interest expense, net 42,513 10,972 21,373 4,773
----------- ----------- ----------- -----------
Total cost and expenses 1,443,492 1,419,859 717,528 649,206
----------- ----------- ----------- -----------
Income before provision for income taxes 9,005 11,969 2,247 19,348
INCOME TAXES 3,422 4,229 854 7,033
----------- ----------- ----------- -----------
Income before extraordinary item 5,583 7,740 1,393 12,315
EXTRAORDINARY ITEM, NET 662 - 662 -
----------- ----------- ----------- -----------
Net income $ 4,921 $ 7,740 $ 731 $ 12,315
=========== =========== =========== ===========
EARNINGS (LOSS) PER COMMON SHARE:
Income before extraordinary item 0.22 0.10 0.06 0.16
Extraordinary Item, net (0.03) - (0.03) -
----------- ----------- ----------- -----------
Net Income $ 0.19 $ 0.10 $ 0.3 $ 0.16
=========== =========== =========== ===========
CASH DIVIDENDS PER COMMON SHARE $ - $ 0.30 $ - $ 0.24
============ =========== =========== ===========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 25,129,29 77,503,071 25,147,639 77,503,341
============ =========== =========== ===========
<FN>
See notes to condensed consolidated financial statements.
</FN>
</TABLE>
3
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<TABLE>
Commission File No. 0-6544
BRUNO'S, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWENTY-SIX WEEK PERIODS ENDED
JULY 27, 1996 AND JULY 1, 1995 (UNAUDITED)
(Amounts In Thousands)
- - ---------------------------------------------------------------------------------
<CAPTION>
July 27, July 1,
1996 1995
(26 Weeks) (26 Weeks)
------------- ------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 4,921 $ 7,740
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 28,108 26,037
LIFO provision 1,500 (529)
Change in assets and liabilities 20,906 59,439
------------- ------------
Total adjustments 50,514 84,947
------------- ------------
Net cash provided by operating activities 55,435 92,687
------------- ------------
INVESTING ACTIVITIES:
Proceeds from sale of property 1,400 6,447
Capital expenditures (28,348) (27,516)
------------- ------------
Net cash used in investing activities (26,948) (21,069)
------------- ------------
FINANCING ACTIVITIES:
Reductions of long-term debt (25,966) (41,132)
Sale of common stock 1,687 4
Dividends paid - (10,060)
------------- ------------
Net cash used in financing activities (24,279) (51,188)
------------- ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 4,208 20,430
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 57,387 5,486
------------- ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 61,595 $ 25,916
============= ============
<FN>
See notes to condensed consolidated financial statements.
</FN>
</TABLE>
4
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Commission File No. 0-6544
BRUNO'S, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE TWENTY-SIX AND THIRTEEN WEEK PERIODS ENDED JULY 27, 1996
AND THE TWENTY-SIX AND TWELVE WEEK PERIODS ENDED JULY 1, 1995
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements include the
accounts of Bruno's, Inc. and its wholly-owned subsidiaries. Significant
inter-company balances and transactions have been eliminated in consolidation.
In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments necessary for a fair statement
of the consolidated financial position and results of operations of the Company
for the interim periods. In December, 1995, the Company changed its fiscal
year to a 52 or 53 week year ending on the Saturday closest to January 31
from the Saturday closest to June 30. Due to the change in year end
described above, the consolidated statements of income compare the
twenty-six (26) and thirteen (13) week periods ended July 27, 1996 to the
twenty-six (26) and twelve (12) week periods ended July 1, 1995. The
results of operations of the Company for the twenty-six weeks ended July 27,
1996, are not necessarily indicative of the results which may be expected for
the entire year.
2. INCOME PER SHARE
Income per share was computed based on the weighted average number of common
shares outstanding during the respective periods. As a result of the merger of
Crimson Acquisition Corp. with and into the Company on August 18, 1995,
25,147,639 shares are outstanding at July 27, 1996. Stock options outstanding
are common stock equivalents but were excluded from income per common share
computations because their effect either was not material or would be
antidilutive to the calculation of net income per share.
3. CONTINGENCIES
In 1991, the Company received a favorable termination letter with respect to
the termination of the employee pension plan of a supermarket chain acquired
by the Company in 1989. Pursuant to that termination, distributions were made
to all participants of that employee pension plan. After all of the benefit
liabilities were paid, remaining plan assets of approximately $2.7 million were
transferred to the Company as a reversion of excess pension assets. On June
15, 1992, the Company received a letter from the Pension Benefit Guaranty
Corporation ("PBGC") contending that inappropriate actuarial assumptions were
used to determine the value of the benefits distributed and that additional
distributions must be made to numerous former participants in the plan.
In August 1994, the Company filed suit in the U.S. District Court for the
Northern District of Alabama challenging the PBGC's determination. In April
1995, the District Court entered summary judgment against the Company and in
favor of the PBGC. The Company appealed the District Court's ruling to the
5
<PAGE>
Commission File No. 0-6544
U.S. Court of Appeals for the Eleventh Circuit, which ruled against the
Company. At July 27, 1996, the Company had provided a $2.0 million
liability for this matter in its consolidated financial statements.
In addition, 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.
On May 23, 1996, the Company entered into an agreement to purchase Seesel
Holdings, Inc. ("SHI"), which owns and operates a retail supermarket business
in Memphis, Tennessee. SHI had formerly entered into an agreement with
Fleming Companies, Inc. ("Fleming") under which SHI gave Fleming the right of
first refusal to elect to acquire SHI on the same terms as the agreement with
the Company. There is currently a dispute involving SHI, Fleming and the
Company regarding whether Fleming properly exercised its right of first
refusal. This dispute is the subject of pending litigation in the United
States District Court for the Western District of Tennessee. The Company
contends that Fleming did not properly exercise its right of first refusal and,
as a result, that the Company has the right to complete the acquisition of SHI
pursuant to the terms of the agreement between the Company and SHI. Under such
agreement, the Company would purchase SHI for approximately $62 million in
cash.
The Company intends to pursue other acquisition opportunities as and when they
become available. The Company also has commenced an analysis of the return on
assets for each of the Company's existing stores. Based on the results of this
analysis, which the Company expects to complete during the quarter ended
October 26, 1996, the Company may sell or close certain of its existing stores.
6
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Commission File No. 0-6544
ITEM II
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. The quarter ended July 27,
1996 is a thirteen week period and the quarter ended July 1, 1995 is a twelve week period and accordingly, certain of
the period-to-period changes are a consequence of such difference.
A table showing the percentage of net sales represented by certain items in the Company's condensed consolidated
statements of income is as follows:
COMPARISON OF:
---------------------------------------------------------
July 27, July 1, July 27, July 1,
1996 1995 1996 1995
(26 Weeks) (26 Weeks) (13 Weeks) (12 Weeks)
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales 100.00% 100.00% 100.00% 100.00%
Cost of products sold 75.79% 76.82% 75.96% 76.54%
Store operating, selling, and administrative expenses 18.73% 19.76% 18.76% 17.98%
--------- --------- --------- ---------
EBITDA 5.48% 3.42% 5.28% 5.48%
Depreciation and amortization 1.94% 1.82% 2.00% 1.88%
Interest expense, net 2.93% 0.77% 2.97% 0.71%
--------- --------- --------- ---------
Income before provision for income taxes and
extraordinary item 0.62% 0.84% 0.31% 2.89%
Income taxes 0.24% 0.30% 0.12% 1.05%
Extraordinary item, net 0.05% 0.00% 0.09% 0.00%
--------- --------- --------- ---------
Net income 0.34% 0.54% 0.10% 1.84%
========= ========= ========= =========
</TABLE>
<TABLE>
A summary of the period to period changes in certain items included in the condensed statements of income is as follows:
<CAPTION>
Increase (Decrease)
Twenty-six weeks ended Thirteen weeks ended July 27, 1996
July 27, 1996 and July 1, 1995 and twelve weeks ended July 1, 1995
------------------------- -----------------------------------
Dollars in Thousands Except Per Share Amounts
$ % Change $ % Change
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales 20,669 1.44% 51,221 7.66%
Cost of products sold 856 0.08% 34,978 6.84%
Store operating, selling, and administrative expenses 10,835) -3.83% 14,888 12.39%
--------- ---------
EBITDA 30,648 62.58% 1,355 3.70%
Depreciation and amortization 2,071 7.95% 1,856 14.79%
Interest expense, net 31,541 287.47% 16,600 347.80%
---------
Income before provision for income taxes and
extraordinary item (2,964) -24.77% (17,101) -88.39%
Income taxes (807) -19.08% (6,179) -87.86%
Extraordinary item, net 662 N/A 662 N/A
--------- ---------
Net income (2,819) -36.43% (11,584) -94.07%
========= =========
Net income per common share before
extraordinary items 0.12 120.00% (0.10) -62.50%
Net income per common share 0.09 90.00% (0.13) -81.25%
========= =========
</TABLE>
7
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Commission File No. 0-6544
BRUNO'S, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
COMPARISON OF OPERATIONS FOR THE TWENTY-SIX WEEK PERIOD ENDED JULY
27, 1996 TO THE TWENTY-SIX WEEK PERIOD ENDED JULY 1, 1995 (UNAUDITED)
Net Sales
Net sales increased $20.7 million or 1.4% for the period ended July 27, 1996, as
compared to the period ended July 1, 1995. The Company did not report results
of operations for the twenty-six week period ended July 29, 1995; however,
same store sales increased 0.5% for the period ended July 27, 1996 compared to
the period ended July 29, 1995.
Gross Profit
Gross profit (net sales less cost of products sold) as a percentage of net sales
was 24.2% in the period ended July 27, 1996, as compared to 23.2% in the period
ended July 1, 1995. The increase in gross profit was primarily due to improved
buying and pricing practices resulting from the implementation of a new
distribution center ordering system. Gross profit in the prior year was
adversely impacted by the Company recognizing a lower level of vendor allowances
in the 1995 period as compared to the 1996 period.
Store Operating, Selling and Administrative Expenses
Store operating, selling and administrative expenses as a percentage of net
sales was 18.7% for the period ended July 27, 1996, as compared to 19.8% for the
period ended July 1,1995. The decline was primarily the result of an unusual
adjustment recorded in the period ended July 1, 1995 to increase the self-
insurance reserve by $22.2 million.
Excluding the self-insurance adjustment, store operating, selling and
administrative expenses as a percentage of net sales increased to 18.7% for the
period ended July 27, 1996 from 18.2% for the period ended July 1, 1995 due to
costs associated with increased promotional activities.
Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)
EBITDA increased $30.6 million or 62.6% in the period ended July 27, 1996
compared to the period ended July 1, 1995. The period ended July 1, 1995
included the adjustment to increase the Company's self-insurance reserve and a
lower level of vendor allowances as compared to the 1996 period.
8
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Commission File No. 0-6544
Interest Expense, Net
The $31.5 million increase in net interest expense for the period ended July 27,
1996, compared to the period ended July 1, 1995 is due to the Company's increase
in long-term debt from $221.5 million at July 1, 1995 to $828.2 million at July
27, 1996. The increase in long-term debt is attributable to financing incurred
in connection with the Company's merger with Crimson Acquisition Corp. on August
18, 1995 (the "Merger").
Income Taxes
The Company's effective income tax rate remained at 38% during the periods ended
July 27, 1996 and July 1, 1995.
Extraordinary Item, Net
In July 1996, the Company prepaid $25 million in principal amount of its $475
million term loan facility entered into in connection with the Merger. As a
result of this repayment, the related debt issuance costs of $662,000 (net of
tax of $405,000) were written off in the period ended July 27, 1996.
COMPARISON OF OPERATIONS FOR THE THIRTEEN WEEK PERIOD ENDED JULY 27,
1996 TO THE TWELVE WEEK PERIOD ENDED JULY 1, 1995 (UNAUDITED)
Net Sales
Net sales increased $51.2 million or 7.7% in the thirteen-week period ended July
27, 1996 as compared to the twelve-week period ended July 1, 1995. Excluding
the impact of the thirteenth week in the period ended July 27, 1996, sales
decreased $1.1 million or 0.2%. The Company did not report results of
operations for the thirteen-week period ended July 29, 1995; however, same store
sales decreased 0.6% for the thirteen-week period ended July 27, 1996 as
compared to the thirteen-week period ended July 29, 1995 due to a number of
recent new store openings by competitors in the Company's trading areas.
Gross Profit
Gross profit (net sales less cost of products sold) as a percentage of net sales
was 24.0% in the period ended July 27, 1996, as compared to a gross profit
percentage of 23.5% for the period ended July 1, 1995. The increase in gross
profit was primarily due to improved buying and pricing practices resulting from
the implementation of a new distribution center ordering system.
Store Operating, Selling and Administrative Expenses
Store operating, selling and administrative expenses as a percentage of net
sales was 18.8% for the period ended July 27, 1996, as compared to 18.0% for the
period ended July 1, 1995 primarily due to costs associated with increased
promotional activities.
9
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Commission File No. 0-6544
Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)
EBITDA increased $1.4 million or 3.7% in the period ended July 27, 1996 compared
to the period ended July 1, 1995 due to the additional week in the current
year's period.
Interest Expense, Net
The $16.6 million increase in net interest expense for the period ended July 27,
1996, compared to the period ended July 1, 1995 is due to the Company's increase
in long-term debt from $221.5 million at July 1, 1995 to $828.2 million at July
27, 1996. The increase in long-term debt is attributable to financing incurred
in connection with the Merger.
Income Taxes
The Company's effective income tax rate remained at 38% during the periods ended
July 27, 1996 and July 1, 1995.
Extraordinary Item, Net
In July 1996, the Company prepaid $25 million in principal amount of its $475
million term loan facility entered into in connection with the Merger. As a
result of this repayment, the related debt issuance costs of $662,000 (net of
tax of $405,000) were written off in the period ended July 27, 1996.
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 generated $55.4 million and $92.7 million,
respectively, in cash in each of the periods ended July 27, 1996 and July 1,
1995. The Company believes that operating cash flows will be sufficient to fund
store expansion and working capital needs; however, if the Company needs
additional cash, it has a $125 million undrawn revolving credit facility
available. There were no borrowings outstanding under this facility during the
twenty-six week period ended July 27, 1996.
Cash flows used in investing activities were $26.9 million and $21.1 million for
the twenty-six week periods ended July 27, 1996 and July 1, 1995, respectively.
Proceeds from the sale of certain property totaled $1.4 million during the
twenty-six week period ended July 27, 1996 compared to $6.4 million during the
twenty-six week period ended July 1, 1995. Capital expenditures were $28.3 in
the twenty-six week period ended July 27, 1996 compared to $27.5 million in the
twenty-six week period ended July 1, 1995. The Company's capital expenditures
are primarily related to the opening of new and replacement stores and
investments in purchasing and warehousing systems technology. The Company
believes that capital expenditures for the remainder of fiscal 1996 will be
financed through cash flows from operations, existing cash balances and, if
necessary, borrowings under its revolving credit facility.
The primary use of cash in financing activities during the twenty-six week
period ended July 27, 1996, was $25.9 million in long-term debt repayments, of
which $25 million was a prepayment under the term loan facility. The Company
also generated $1.7 million through sales of shares of the Company's common
10
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Commission File No. 0-6544
stock to four senior executives of the Company.
The Company's financing arrangements contain certain restrictions which limit
its ability to make future borrowings beyond the amounts currently available.
On May 23, 1996, the Company entered into an agreement to purchase Seesel
Holdings, Inc. ("SHI"), which owns and operates a retail supermarket business in
Memphis, Tennessee. SHI had formerly entered into an agreement with Fleming
Companies, Inc. ("Fleming") under which SHI gave Fleming the right of first
refusal to elect to acquire SHI on the same terms as the agreement with the
Company. There is currently a dispute involving SHI, Fleming and the Company
regarding whether Fleming properly exercised its right of first refusal. This
dispute is the subject of pending litigation in the United States District
Court for the Western District of Tennessee. The Company contends that Fleming
did not properly exercise its right of first refusal and, as a result, that the
Company has the right to complete the acquisition of SHI pursuant to the terms
of the agreement between the Company and SHI. Under such agreement, the Company
would purchase SHI for approximately $62 million in cash, which would be
financed through existing cash balances and, if necessary, borrowings under its
revolving credit facility.
The Company intends to pursue other acquisition opportunities as and when they
become available. The Company also has commenced an analysis of the return on
assets for each of the Company's existing stores. Based on the results of this
analysis, which the Company expects to complete during the quarter ended October
26, 1996, the Company may sell or close certain of its existing stores.
11
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Commission File No. 0-6544
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
In 1991, the Company received a favorable termination letter with respect to
the termination of the employee pension plan of a supermarket chain acquired by
the Company in 1989. Pursuant to that termination, distributions were made to
all participants of that employee pension plan. After all of the benefit
liabilities were paid, remaining plan assets of approximately $2.7 million were
transferred to the Company as a reversion of excess pension assets. On June
15, 1992, the Company received a letter from the Pension Benefit Guaranty
Corporation ("PBGC") contending that inappropriate actuarial assumptions were
used to determine the value of the benefits distributed and that additional
distributions must be made to numerous former participants in the plan.
In August 1994, the Company filed suit in the U.S. District Court for the
Northern District of Alabama challenging the PBGC's determination. In April
1995, the District Court entered summary judgment against the Company and in
favor of the PBGC. The Company appealed the District Court's ruling to the
U.S. Court of Appeals for the Eleventh Circuit, which ruled against the
Company. At July 27, 1996, the Company has provided a $2.0 million
liability for this matter in its consolidated financial statements.
In addition, 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.
Item 2. Change In Securities
In connection with the Merger, the shareholders of the Company approved the
Company's Amended and Restated Articles of Incorporation, which among other
things reduced the authorized shares of the Company's common stock from
200,000,000 to 60,000,000. The rights of the holders of the Company's common
stock have not been materially modified.
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
The 1996 Annual Meeting of Stockholders of the Company was held on July 11,
1996 for the purpose of (i) electing eight directors of the Company, (ii)
ratifying the appointment of Deloitte & Touche LLP as the Company's independent
certified public accountants for the current fiscal year, and (iii) approving
the 1996 Stock Purchase and Option Plan for Key Employees of Bruno's, Inc. and
Subsidiaries.
12
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Commission File No. 0-6544
The persons who were elected as directors of the Company and the vote for each such
person are set forth below:
<CAPTION>
Director For Authority Withheld
-------- ------ ------------------
<S> <C> <C>
William J. Bolton 24,229,467 19,152
Henry R. Kravis 24,229,250 19,369
George R. Roberts 24,228,874 19,745
Paul E. Raether 24,229,251 19,368
James H. Greene, Jr. 24,229,209 19,410
Nils P. Brous 24,229,307 19,312
Ronald G. Bruno 24,232,210 16,409
Robert G. Tobin 24,229,596 19,023
</TABLE>
<TABLE>
The voting results with respect to the ratification of the appointment of Deloitte &
Touche LLP as the Company's independent certified public accountants for the current
fiscal year are set forth below:
<CAPTION>
For Against Abstain
----- ------- -------
<C> <C> <C>
24,226,334 7,183 15,102
</TABLE>
<TABLE>
The following is a summary of the voting results with respect to the approval of the 1996
Stock Purchase and Option Plan for Key Employees of Bruno's, Inc. and Subsidiaries:
<CAPTION>
For Against Abstain
----- ------- -------
<C> <C> <C>
23,523,024 38,897 22,306
</TABLE>
No other matters were submitted to a vote of the Company's stockholders,
through the solicitation of proxies or otherwise, during the period covered by
this report.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number Description
--------- -------------------
27 Financial Data Schedule (for SEC use only)
10.32 1996 Stock Purchase and Option Plan for Key Employees of
Bruno's, Inc. and Subsidiaries
13
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Commission File No. 0-6544
(b) Reports on Form 8-K
None
14
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Commission File No. 0-6544
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BRUNO'S, INC.
_________________
James J. Hagan,
Senior Vice President-Finance and
Chief Financial Officer
Dated: September 10, 1996
15
<PAGE>
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</TABLE>
Commission File No. 0-6544
1996 STOCK PURCHASE AND OPTION PLAN
FOR KEY EMPLOYEES OF
BRUNO'S, INC. AND SUBSIDIARIES
1. Purpose of Plan
The 1996 Stock Purchase and Option Plan for Key Employees of
Bruno's, Inc. and Subsidiaries (the "Plan") is designed:
(a) to promote the long term financial interests and growth
of Bruno's, Inc. (the "Corporation") and its subsidiaries by
attracting and retaining management personnel with the training,
experience and ability to enable them to make a substantial
contribution to the success of the Corporation's business;
(b) to motivate management personnel by means of growth-
related incentives to achieve long range goals; and
(c) to further the alignment of interests of participants
with those of the stockholders of the Corporation through
opportunities for increased stock, or stock-based, ownership in
the Corporation.
2. Definitions
As used in the Plan, the following words shall have the
following meanings:
(a) "Grant" means an award made to a Participant pursuant
to the Plan and described in Paragraph 5, including, without
limitation, an award of an Incentive Stock Option, Stock Option,
Stock Appreciation Right, Dividend Equivalent Right, Restricted
Stock, Purchase Stock, Performance Units, Performance Shares or
Other Stock Based Grant or any combination of the foregoing.
(b) "Grant Agreement" means an agreement between the
Corporation and a Participant that sets forth the terms,
conditions and limitations applicable to a Grant.
(c) "Board of Directors" means the Board of Directors of
the Corporation.
(d) "Committee" means the Compensation Committee of the
Board of Directors.
(e) "Common Stock" or "Share" means common stock of the
Corporation which may be authorized but unissued, or issued and
reacquired.
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Commission File No. 0-6544
(f) "Employee" means a person, including an officer, in the
regular full-time employment of the Corporation or one of its
Subsidiaries who, in the opinion of the Committee, is, or is
expected to be, primarily responsible for the management, growth
or protection of some part or all of the business of the
Corporation.
(g) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
(h) "Fair Market Value" means such value of a Share as
reported for stock exchange transactions and/or determined in
accordance with any applicable resolutions or regulations of the
Committee in effect at the relevant time.
(i) "Participant" means an Employee, or other person having
a unique relationship with the Corporation or one of its
Subsidiaries, to whom one or more Grants have been made and such
Grants have not all been forfeited or terminated under the Plan;
provided, however, a non-employee director of the Corporation or
one of its Subsidiaries may not be a Participant.
(j) "Stock-Based Grants" means the collective reference to
the grant of Stock Appreciation Rights, Dividend Equivalent
Rights, Restricted Stock, Performance Units, Performance Shares
and Other Stock Based Grants.
(k) "Stock Options" means the collective reference to
"Incentive Stock Options" and "Other Stock Options".
(l) "Subsidiary" shall mean any corporation in an unbroken
chain of corporations beginning with the Corporation if each of
the corporations, or group of commonly controlled corporations,
other than the last corporation in the unbroken chain then owns
stock possessing 50% or more of the total combined voting power
of all classes of stock in one of the other corporations in such
chain.
3. Administration of Plan
(a) The Plan shall be administered by the Committee. None
of the members of the Committee shall be eligible to be selected
for Grants under the Plan, or have been so eligible for selection
within one year prior thereto; provided, however, that the
members of the Committee shall qualify to administer the Plan for
purposes of Rule 16b-3 (and any other applicable rule)
promulgated under Section 16(b) of the Exchange Act to the extent
that the Corporation is subject to such rule. The Committee may
adopt its own rules of procedure, and action of a majority of the
members of the Committee taken at a meeting, or action taken
without a meeting by unanimous written consent, shall constitute
action by the Committee. The Committee shall have the power and
authority to administer, construe and interpret the Plan, to make
rules for carrying it out and to make changes in such rules. Any
such interpretations, rules, and administration shall be
consistent with the basic purposes of the Plan.
(b) The Committee may delegate to the Chief Executive
Officer and to other senior officers of the Corporation its
duties under the Plan subject to such conditions and limitations
as the Committee shall prescribe except that only the Committee
may designate and make Grants to
Participants who are subject to Section 16 of the Exchange Act.
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Commission File No. 0-6544
(c) The Committee may employ attorneys, consultants,
accountants, appraisers, brokers or other persons. The
Committee, the Corporation, and the officers and directors of the
Corporation shall be entitled to rely upon the advice, opinions
or valuations of any such persons. All actions taken and all
interpretations and determinations made by the Committee in good
faith shall be final and binding upon all Participants, the
Corporation and all other interested persons. No member of the
Committee shall be personally liable for any action,
determination or interpretation made in good faith with respect
to the Plan or the Grants, and all members of the Committee shall
be fully protected by the Corporation with respect to any such
action, determination or interpretation.
4. Eligibility
The Committee may from time to time make Grants under the
Plan to such Employees, or other persons having a unique
relationship with Corporation or any of its Subsidiaries, and in
such form and having such terms, conditions and limitations as
the Committee may determine. No Grants may be made under this
Plan to non-employee directors of Corporation or any of its
Subsidiaries. Grants may be granted singly, in combination or in
tandem. The terms, conditions and limitations of each Grant
under the Plan shall be set forth in a Grant Agreement, in a form
approved by the Committee, consistent, however, with the terms of
the Plan; provided, however, such Grant Agreement shall contain
provisions dealing with the treatment of Grants in the event of
the termination, death or disability of a Participant, and may
also include provisions concerning the treatment of Grants in the
event of a change of control of Corporation.
5. Grants
From time to time, the Committee will determine the forms
and amounts of Grants for Participants. Such Grants may take the
following forms in the Committee's sole discretion:
(a) Incentive Stock Options - These are stock options
within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended ("Code"), to purchase Common Stock. In addition
to other restrictions contained in the Plan, an option granted
under this Paragraph 5(a), (i) may not be exercised more than 10
years after the date it is granted, (ii) may not have an option
price less than the Fair Market Value of Common Stock on the date
the option is granted, (iii) must otherwise comply with Code
Section 422, and (iv) must be designated as an "Incentive Stock
Option" by the Committee. The maximum aggregate Fair Market
Value of Common Stock (determined at the time of each Grant) with
respect to which Incentive Stock Options are first exercisable
with respect to any participant under this Plan and any Incentive
Stock Options granted to the Participant for such year under any
plans of the Corporation or any Subsidiary in any calendar year
is $100,000. Payment of the option price shall be made in cash
or in shares of Common Stock, or a combination thereof, in
accordance with the terms of the Plan, the Grant Agreement, and
of any applicable guidelines of the Committee in effect at the
time.
(b) Other Stock Options - These are options to purchase
Common Stock which are not designated by the Committee as
"Incentive Stock Options". At the time of the Grant the
Committee shall determine, and shall include in the Grant
Agreement or other Plan rules, the option exercise period, the
option price, and such other conditions or restrictions on the
grant or
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Commission File No. 0-6544
exercise of the option as the Committee deems appropriate, which
may include the requirement that the grant of options is
predicated on the acquisition of Purchase Shares under Paragraph
5(e) by the Optionee. In addition to other restrictions
contained in the Plan, an option granted under this Paragraph
5(b), (i) may not be exercised more than 10 years after the date
it is granted and (ii) may not have an option exercise price less
than 50% of the Fair Market Value of Common Stock on the date the
option is granted. Payment of the option price shall be made in
cash or in shares of Common Stock, or a combination thereof, in
accordance with the terms of the Plan, the Grant Agreement and of
any applicable guidelines of the Committee in effect at the time.
(c) Stock Appreciation Rights - These are rights that on
exercise entitle the holder to receive the excess of (i) the Fair
Market Value of a share of Common Stock on the date of exercise
over (ii) the Fair Market Value on the date of Grant (the "base
value") multiplied by (iii) the number of rights exercised as
determined by the Committee. Stock Appreciation Rights granted
under the Plan may, but need not be, granted in conjunction with
an Option under Paragraph 5(a) or 5(b). The Committee, in the
Grant Agreement or by other Plan rules, may impose such
conditions or restrictions on the exercise of Stock Appreciation
Rights as it deems appropriate, and may terminate, amend, or
suspend such Stock Appreciation Rights at any time. No Stock
Appreciation Right granted under this Plan may be exercised less
than 6 months or more than 10 years after the date it is granted
except in the event of death or disability of a Participant. To
the extent that any Stock Appreciation Right that shall have
become exercisable, but shall not have been exercised or
cancelled or, by reason of any termination of employment, shall
have become non-exercisable, it shall be deemed to have been
exercised automatically, without any notice of exercise, on the
last day on which it is exercisable, provided that any conditions
or limitations on its exercise are satisfied (other than (i)
notice of exercise and (ii) exercise or election to exercise
during the period prescribed) and the Stock Appreciation Right
shall then have value. Such exercise shall be deemed to specify
that the holder elects to receive cash and that such exercise of
a Stock Appreciation Right shall be effective as of the time of
automatic exercise.
(d) Restricted Stock - Restricted Stock is Common Stock
delivered to a Participant with or without payment of
consideration with restrictions or conditions on the
Participant's right to transfer or sell such stock; provided that
the price of any Restricted Stock delivered for consideration and
not as bonus stock may not be less than 50% of the Fair Market
Value of Common Stock on the date such Restricted Stock is
granted or the price of such Restricted Stock may be the par
value. If a Participant irrevocably elects in writing in the
calendar year preceding a Grant of Restricted Stock, dividends
paid on the Restricted Stock granted may be paid in shares of
Restricted Stock equal to the cash dividend paid on Common Stock.
The number of shares of Restricted Stock and the restrictions or
conditions on such shares shall be as the Committee determines,
in the Grant Agreement or by other Plan rules, and the
certificate for the Restricted Stock shall bear evidence of the
restrictions or conditions. No Restricted Stock may have a
restriction period of less than 6 months, other than in the case
of death or disability.
(e) Purchase Stock - Purchase Stock refers to shares of
Common Stock offered to a Participant at such price as determined
by the Committee, the acquisition of which will make him eligible
to receive under the Plan, including, but not limited to, Other
Stock Options; provided, however, that the price of such Purchase
Shares may not be less than 50% of the Fair Market Value of the
Common Stock on the date such shares of Purchase Stock are
offered.
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Commission File No. 0-6544
(f) Dividend Equivalent Rights - These are rights to receive
cash payments from the Corporation at the same time and in the
same amount as any cash dividends paid on an equal number of
shares of Common Stock to shareholders of record during the
period such rights are effective. The Committee, in the Grant
Agreement or by other Plan rules, may impose such restrictions
and conditions on the Dividend Equivalent Rights, including the
date such rights will terminate, as it deems appropriate, and may
terminate, amend, or suspend such Dividend Equivalent Rights at
any time.
(g) Performance Units - These are rights to receive at a
specified future date payment in cash of an amount equal to all
or a portion of the value of a unit granted by the Committee. At
the time of the Grant, in the Grant Agreement or by other Plan
rules, the Committee must determine the base value of the unit,
the performance factors applicable to the determination of the
ultimate payment value of the unit and the period over which the
Corporation's performance will be measured. These factors must
include a minimum performance standard for the Corporation below
which no payment will be made and a maximum performance level
above which no increased payment will be made. The term over
which the Corporation's performance will be measured shall be not
less than six months.
(h) Performance Shares - These are rights to receive at a
specified future date payment in cash or Common Stock, as
determined by the Committee, of an amount equal to all or a
portion of the average Fair Market Value for all days that the
Common Stock is traded during the last forty-five (45) days of
the specified period of performance of a specified number of
shares of Common Stock at the end of a specified period based on
the Corporation's performance during the period. At the time of
the Grant, the Committee, in the Grant Agreement or by Plan
rules, will determine the factors which will govern the portion
of the rights so payable and the period over which the
Corporation's performance will be measured. The factors will be
based on the Corporation's performance and must include a minimum
performance standard for the Corporation below which no payment
will be made and a maximum performance level above which no
increased payment will be made. The term over which the
Corporation's performance will be measured shall be not less than
six months. Performance Shares will be granted for no
consideration.
(i) Other Stock-Based Grants - The Committee may make other
Grants under the Plan pursuant to which shares of Common Stock
(which may, but need not, be shares of Restricted Stock pursuant
to Paragraph 5(d)) or other equity securities of the Corporation
are or may in the future be acquired, or Grants denominated in
stock units, including ones valued using measures other than
market value. Other Stock-Based Grants may be granted with or
without consideration; provided, however, that the price of any
such Grant made for consideration that provides for the
acquisition of shares of Common Stock or other equity securities
of the Corporation may not be less than 50% of the Fair Market
Value of the Common Stock or such other equity securities on the
date of grant of such Grant. Such Other Stock-Based Grants may
be made alone, in addition to or in tandem with any Grant of any
type made under the Plan and must be consistent with the purposes
of the Plan.
5
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Commission File No. 0-6544
6. Limitations and Conditions
(a) The number of Shares available for Grants under this
Plan shall be 2,050,000 shares of the authorized Common Stock as
of the effective date of the Plan. The number of Shares subject
to Grants under this Plan to any one Participant shall not be
more than 456,530 shares. Unless restricted by applicable law,
Shares related to Grants that are forfeited, terminated,
cancelled or expire unexercised, shall immediately become
available for Grants.
(b) No Grants shall be made under the Plan beyond ten years
after the effective date of the Plan, but the terms of Grants
made on or before the expiration of the Plan may extend beyond
such expiration. At the time a Grant is made or amended or the
terms or conditions of a Grant are changed, the Committee may
provide for limitations or conditions on such Grant.
(c) Nothing contained herein shall affect the right of the
Corporation to terminate any Participant's employment at any time
or for any reason.
(d) Deferrals of Grant payouts may be provided for, at the
sole discretion of the Committee, in the Grant Agreements.
(e) Except as otherwise prescribed by the Committee, the
amounts of the Grants for any employee of a Subsidiary, along
with interest, dividend, and other expenses accrued on deferred
Grants, shall be charged to the Participant's employer during the
period for which the Grant is made. If the Participant is
employed by more than one Subsidiary or by both the Corporation
and a Subsidiary during the period for which the Grant is made,
the Participant's Grant and related expenses will be allocated
between the companies employing the Participant in a manner
prescribed by the Committee.
(f) Other than as specifically provided with regard to the
death of a Participant, no benefit under the Plan shall be
subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, or charge, and any
attempt to do so shall be void. No such benefit shall, prior to
receipt thereof by the Participant, be in any manner liable for
or subject to the debts, contracts, liabilities, engagements, or
torts of the Participant.
(g) Participants shall not be, and shall not have any of
the rights or privileges of, stockholders of the Corporation in
respect of any Shares purchasable in connection with any Grant
unless and until certificates representing any such Shares have
been issued by the Corporation to such Participants.
(h) No election as to benefits or exercise of Stock
Options, Stock Appreciation Rights, or other rights may be made
during a Participant's lifetime by anyone other than the
Participant except by a legal representative appointed for or by
the Participant.
(i) Absent express provisions to the contrary, any grant
under this Plan shall not be deemed compensation for purposes of
computing benefits or contributions under any retirement plan of
the Corporation or its Subsidiaries and shall not affect any
benefits under any other benefit plan of any kind now or
subsequently in effect under which the availability or amount of
benefits is related to level of compensation. This Plan is not a
"Retirement Plan" or "Welfare Plan" under the Employee Retirement
Income Security Act of 1974, as amended.
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Commission File No. 0-6544
(j) Unless the Committee determines otherwise, no benefit
or promise under the Plan shall be secured by any specific assets
of the Corporation or any of its Subsidiaries, nor shall any
assets of the Corporation or any of its Subsidiaries be
designated as attributable or allocated to the satisfaction of
the Corporation's obligations under the Plan.
7. Transfers and Leaves of Absence
For purposes of the Plan, unless the Committee determines
otherwise: (a) a transfer of a Participant's employment without
an intervening period of separation among the Corporation and any
Subsidiary shall not be deemed a termination of employment, and
(b) a Participant who is granted in writing a leave of absence
shall be deemed to have remained in the employ of the Corporation
during such leave of absence.
8. Adjustments
In the event of any change in the outstanding Common Stock
by reason of a stock split, spin-off, stock dividend, stock
combination or reclassification, recapitalization or merger,
change of control, or similar event, the Committee may adjust
appropriately the number of Shares subject to the Plan and
available for or covered by Grants and Share prices related to
outstanding Grants and make such other revisions to outstanding
Grants as it deems are equitably required.
9. Merger, Consolidation, Exchange,
Acquisition, Liquidation or Dissolution
In its absolute discretion, and on such terms and conditions
as it deems appropriate, coincident with or after the grant of
any Stock Option or any Stock-Based Grant, the Committee may
provide that such Stock Option or Stock-Based Grant cannot be
exercised after the merger or consolidation of the Corporation
into another corporation, the exchange of all or substantially
all of the assets of the Corporation for the securities of
another corporation, the acquisition by another corporation of
80% or more of the Corporation's then outstanding shares of
voting stock or the recapitalization, reclassification,
liquidation or dissolution of the Corporation, and if the
Committee so provides, it may, in its absolute discretion and on
such terms and conditions as it deems appropriate, also provide,
either by the terms of such Stock Option or Stock-Based Grant or
by a resolution adopted prior to the occurrence of such merger,
consolidation, exchange, acquisition, recapitalization,
reclassification, liquidation or dissolution, that, for some
period of time prior to such event, such Stock Option or Stock-
Based Grant shall be exercisable as to all shares subject
thereto, notwithstanding anything to the contrary herein (but
subject to the provisions of Paragraph 6(b)) and that, upon the
occurrence of such event, such Stock Option or Stock-Based Grant
shall terminate and be of no further force or effect; provided,
however, that the Committee may also provide, in its absolute
discretion, that even if the Stock Option or Stock-Based Grant
shall remain exercisable after any such event, from and after
such event, any such Stock Option or Stock-Based Grant shall be
exercisable only for the kind and amount of securities and/or
other property, or the cash equivalent thereof, receivable as a
result of such event by the holder of a number of shares of stock
for which such Stock Option or Stock-Based Grant could have been
exercised immediately prior to such event.
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Commission File No. 0-6544
10. Amendment and Termination
The Committee shall have the authority to make such
amendments to any terms and conditions applicable to outstanding
Grants as are consistent with this Plan provided that, except for
adjustments under Paragraph 8 or 9 hereof, no such action shall
modify such Grant in a manner adverse to the Participant without
the Participant's consent except as such modification is provided
for or contemplated in the terms of the Grant.
The Board of Directors may amend, suspend or terminate the
Plan except that no such action, other than an action under
Paragraph 8 or 9 hereof, may be taken which would, without
shareholder approval, increase the aggregate number of Shares
available for Grants under the Plan, decrease the price of
outstanding Options or Stock Appreciation Rights, change the
requirements relating to the Committee or extend the term of the
Plan.
11. Foreign Options and Rights
The Committee may make Grants to Employees who are
subject to the laws of nations other than the United States,
which Grants may have terms and conditions that differ from the
terms thereof as provided elsewhere in the Plan for the purpose
of complying with foreign laws.
12. Withholding Taxes
The Corporation shall have the right to deduct from any cash
payment made under the Plan any federal, state or local income or
other taxes required by law to be withheld with respect to such
payment. It shall be a condition to the obligation of the
Corporation to deliver shares upon the exercise of an Option or
Stock Appreciation Right, upon payment of Performance units or
shares, upon delivery of Restricted Stock or upon exercise,
settlement or payment of any Other Stock-Based Grant that the
Participant pay to the Corporation such amount as may be
requested by the Corporation for the purpose of satisfying any
liability for such withholding taxes. Any Grant Agreement may
provide that the Participant may elect, in accordance with any
conditions set forth in such Grant Agreement, to pay a portion or
all of such withholding taxes in shares of Common Stock.
13. Effective Date and Termination Dates
The Plan shall be effective on and as of the date of its
approval by the stockholders of the Corporation and shall
terminate ten years later, subject to earlier termination by the
Board of Directors pursuant to Paragraph 10.
8
