<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from __________ to ___________
Commission file number 0-9904
ARDEN GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 95-3163136
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2020 South Central Avenue, Compton, California 90220
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (310) 638-2842
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Class A Common Stock
(Title of class)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes /X/ No / /
Indicate by a check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. /X/
The aggregate market value of the voting stock held by non-affiliates
of the registrant based on the closing price of such stock on March 10,
1995 was:
Class A Common Stock $35,099,007
The number of shares outstanding of the registrant's classes of common
stock as of March 10, 1995 was:
970,866 of Class A Common Stock
343,246 of Class B Common Stock
This report, including the Exhibits, contains a total of 52 pages. An
index to the Exhibits appears on pages 49 and 50, inclusive.
<PAGE>
PART I
ITEM 1. BUSINESS;
ITEM 2. PROPERTIES; AND
ITEM 3. LEGAL PROCEEDINGS
GENERAL
The Registrant, Arden Group, Inc. (sometimes hereinafter referred
to as the "Company"), is a holding company with certain real
estate holdings and with other operations through its wholly-
owned subsidiary, Arden-Mayfair, Inc. ("Arden-Mayfair"). Arden-
Mayfair's wholly-owned subsidiary, Gelson's Markets ("Gelson's"),
operates supermarkets in the greater Los Angeles, California
area. Another wholly-owned subsidiary of Arden-Mayfair, AMG
Holdings, Inc. ("AMG Holdings"), formerly known as Telautograph
Corporation ("Telautograph"), was engaged primarily in the
distribution and servicing in the United States and Canada of
facsimile and other communication equipment, and the sale of
parts and consumables related thereto. On September 17, 1993,
AMG Holdings sold its communication equipment business and
substantially all of the operating assets and certain of the
liabilities of such business. See "Disposition of Assets of
Discontinued Operations" below and Note 15 of Notes to Financial
Statements. AMG Holdings' wholly-owned subsidiary, GPS Pool
Supply, Inc. ("GPS"), which processes and distributes chemicals
and equipment and supplies for the maintenance of swimming pools,
was sold on May 27, 1994. See Note 16 of Notes to Financial
Statements.
Arden Group is headquartered at 2020 South Central Avenue, Compton,
California 90220 and its telephone number is (310) 638-2842.
BUSINESS AND PROPERTIES OF ARDEN-MAYFAIR AND GELSON'S
MARKET OPERATIONS
Gelson's operates 12 supermarkets in the greater Los Angeles,
California area; eight under the name "Gelson's" and four under
the name "Mayfair." Gelson's and Mayfair are self-service cash-
and-carry markets and offer a broad selection of local and
national brands as well as a number of private label items.
Gelson's is an upscale supermarket chain targeted at both the
discriminating and trend-conscious customer, while the Mayfair
markets offer a more traditional selection of goods. The Company
believes that all of the Gelson's and Mayfair stores are
distinguished by their superior customer service and merchandise
presentation, selection and quality.
The first Gelson's store was opened in Burbank, California in
1946. Gelson's was incorporated in California in 1959 and in
1965, Gelson's, which then consisted of three stores, was
acquired by Arden-Mayfair. Arden-Mayfair became a wholly-owned
subsidiary of the Company in a corporate restructuring completed
in December 1978.
The Mayfair markets were acquired in 1929 by Arden Farms, a dairy
operation founded in 1925. In 1964 and 1965 Arden Farms
underwent a corporate restructuring, and the name of the
1
<PAGE>
surviving corporation was changed to Arden-Mayfair, Inc. By the
mid-1970's, Arden-Mayfair owned or leased 190 grocery stores
located in five states. In the late 1970's and the 1980's, Arden-
Mayfair undertook a strategic review of its supermarket
operations and began divesting and closing stores, particularly
those located outside of the Southern California region.
Although the last phase of this plan of divestiture was completed
with the closing or sale of six Mayfair markets in 1988, two in
1989 and one in 1992, the Company continues to evaluate each
store's operation and financial contribution.
All of the stores currently operated by Gelson's are located in
the greater Los Angeles, California area. Management practices
and operating philosophies at the remaining Mayfair markets have
been shifted towards the Gelson's approach. Two new market
locations are planned, one of which is subject to the developer
fulfilling certain conditions.
STORE FORMATS AND BUSINESS STRATEGY
Gelson's business strategy is to offer a comfortable shopping
experience which is superior to its competitors in terms of
customer service and merchandise selection and presentation. The
goal of this strategy is to continue to develop and maintain
Gelson's loyal and committed base of customers. Central elements
of this strategy are as follows:
MERCHANDISE. The merchandise offerings in the Gelson's and
Mayfair markets are tailored in response to each store's customer
profile, while seeking economic efficiencies through centralized
purchasing, marketing and accounting operations. Gelson's stores,
which range in size from approximately 29,000 to approximately
37,000 square feet, typically carry a wide range of items,
including all of the traditional grocery categories such as
produce, dry groceries, meats, dairy, wine and liquor, and health
and beauty aids. Gelson's perishables are premium products,
which are rigorously maintained and culled as appropriate to
assure quality and freshness. Gelson's merchandising emphasizes
items such as imported foods and unusual delicatessen items, and
service departments such as seafood, delicatessens, sit-down
coffee areas and bakeries. Some Gelson's stores include
additional service departments such as flower departments, coffee
bars and outside seating areas. The two new stores are planning
on offering banking and pharmacy services.
Mayfair stores which, on average, are smaller than Gelson's
stores (approximately 18,000 to approximately 26,000 square
feet), offer a merchandise selection which is somewhat narrower
than at Gelson's. Produce and other perishables are purchased
along with Gelson's and therefore are of high quality.
SERVICE. Gelson's emphasizes customer service by operating a
variety of departments offering personal service including
seafood, delicatessen and bakery departments. Stores are staffed
so that even at peak times customer waiting in checkout lines is
minimized. In addition to checkers, there are personnel
dedicated full-time to bagging and carryout. All employees are
encouraged to know customers by name, develop a personal rapport
with them and assist them whenever possible. Both Gelson's and
Mayfair stores offer their own credit cards to qualified
customers as well as allowing customers the option of paying for
their purchases with bank credit and debit cards. Stores are
typically open as few as 12 hours to as many as 18 hours per day,
with hours of operation determined by local code or lease
provisions, or as appropriate for the business characteristics of
a specific area.
2
<PAGE>
PRESENTATION. Both Gelson's and Mayfair stores are maintained in
accordance with extremely high standards. Personnel continuously
fill and face shelves. Produce and other perishables are
aggressively culled to maintain appearance.
PRICING. The pricing strategy at both Gelson's and Mayfair is to
be competitive within their market niches on most products,
ranging from the more traditional or commodity in nature to the
more exotic, specialty or high-end items.
EXPANSION AND STORE DEVELOPMENT. Management regularly evaluates
the feasibility of opening new stores and remodeling existing
stores in order to maximize their appeal to consumers and their
profit potential. Total capital expenditures for market
operations in 1994, including the purchase of two existing
Mayfair Market locations, was $6,382,000. This amount also
includes remodeling costs, new equipment and leasehold
improvements.
ADVERTISING AND PROMOTION. Gelson's advertises only on a limited
basis in newspapers and on radio. Direct advertising is limited
(primarily newsletters and direct mail) and is typically "event"
rather than "price" oriented; emphasizing, for example, special
holiday selections, specialty items and services.
COMPETITION
The retail grocery business is very competitive nationwide. It
is especially intense in the greater Los Angeles area.
Competition in the supermarket business is based primarily upon
price, merchandise quality, service and location. The number of
stores, market share and availability of capital are also
important competitive factors. Gelson's is in direct competition
with numerous local outlets of regional and national supermarket
chains (most of which have greater resources and a larger market
share than Gelson's), independent grocery stores, convenience
stores, specialty and gourmet markets and food departments in
mass merchandise stores. Competition also exists from many other
types of retailers with respect to particular products. Gelson's
and Mayfair competes primarily by offering a combination of high-
quality products and superior customer service. The Company also
believes that Gelson's prime store locations and long-standing
reputation add to its competitive strength.
SEASONALITY
Gelson's business is somewhat seasonal, with sales tending to
increase during the last quarter of the year because of the
holiday season.
SUPPORT AND OTHER SERVICES
Each Gelson's and Mayfair store has on-site stockroom capacity,
however, the amount of which varies for each store. In addition,
Gelson's operates an 89,000 square foot warehouse in the City of
Commerce, California, which distributes fresh fruits and
vegetables, liquor, and a limited number of grocery, meat and
delicatessen items to both Gelson's and Mayfair stores.
The bulk of all merchandise purchasing is accomplished through
Gelson's office in Encino, California. Approximately one third
of the purchases are executed through the central warehouse;
3
<PAGE>
the remainder are delivered directly to the stores from manufacturers
or wholesalers. The central purchasing and distribution
operations are conducted based on electronic in-store ordering
systems. Stores place orders for merchandise an average of five
times per week, with perishable goods ordered daily.
The largest supplier for the Gelson's and Mayfair stores is
Certified Grocers, a cooperative wholesaler which has been a
supplier for over twenty years and which accounted for
approximately 22% of Gelson's purchases in 1994. No other
supplier accounts for a material percentage of Gelson's
purchases. The Company believes that the impact of a loss of
Certified Grocers as a supplier for Gelson's likely would be
minimized by a combination of events, which could include: (i)
purchasing for direct store delivery certain items currently
purchased through Gelson's warehouse, thereby freeing warehouse
capacity to allow new items to be purchased through that
warehouse, and (ii) purchasing certain products through other
wholesalers in the area. However, such a loss could have a short
term adverse effect on the performance of Gelson's.
EMPLOYEES
Gelson's has approximately 945 full-time and 615 part-time
employees. Most store level, warehouse and distribution
employees of Gelson's are covered by industry collective
bargaining agreements that require union membership and establish
rates of pay, hours of work, working conditions and procedures
for the orderly settlement of disputes. In general, these
agreements have been negotiated on an area-wide and industry-wide
basis. The Company believes that employee relations are good.
In addition, Arden-Mayfair has approximately 65 full-time
employees at its executive and headquarters offices of which
approximately 61 are in administration and four are in executive
officer positions.
GOVERNMENTAL REGULATION
Gelson's is subject to regulation by a variety of governmental
agencies, including the U.S. Food and Drug Administration, the
California Department of Alcoholic Beverage Control, and state
and local health departments. The Company believes that Gelson's
and Mayfair store operations materially comply with all federal,
state and local health, environmental and other laws and
regulations. Although the Company cannot predict the effect of
future laws or regulations on the operations of Gelson's,
expenditures for continued compliance with current laws are not
expected to have a material effect on capital expenditures,
earnings or Gelson's competitive position.
LEGAL PROCEEDINGS
The Company and certain of its subsidiaries are involved in a
number of pending legal and/or administrative proceedings. Such
proceedings are not expected individually or in the aggregate to
have a material adverse effect upon either the Company's
consolidated financial position or results of operations. See
"Management's Discussion and Analysis of Financial Condition and
Results of Operations." In addition, the Company is involved in
arbitration proceedings related to the sale of its communication
equipment business in fiscal 1993. See "Disposition of Assets of
Discontinued Operations" (Note 15 of Notes to Financial
Statements).
4
<PAGE>
PROPERTIES
The Company currently owns three and leases nine of its
supermarkets. Also leased is the warehouse and distribution
facility which services its markets. Supermarkets are leased for
terms which may include options of up to 40 years under leases
which generally stipulate a minimum rental against a percentage
of gross sales. The average term remaining on the supermarket
leases, including renewal options, is approximately 21 years.
The 12 markets range in size from approximately 18,000 to
approximately 37,000 square feet. Gelson's warehouse and
distribution facility in the City of Commerce, California,
consists of approximately 89,000 square feet. The term of the
lease for this facility, including renewal options, expires on
September 30, 1995 (recently extended to September 30, 2005).
In November 1993, the Company purchased a neighborhood shopping
center in Calabasas, California and plans, in 1995, to develop a
new neighborhood shopping center on the site which will include a
Gelson's store. In March 1994, the Company purchased the real
estate occupied by two of its Mayfair stores. The Company has
also signed a long-term lease to open a new Gelson's market
subject to the developer fulfilling certain conditions.
The Company also owns its 30,000 square foot corporate
headquarters office building in Compton, California. In
addition, AMG Holdings leases a 64,000 square foot building in
Los Angeles consisting of office and warehouse space, which is
currently vacant. The lease on this property expires in 2012,
including renewal options. The Company intends to sublease the
property.
BUSINESS OF GPS
The stock of GPS, a wholly-owned subsidiary of AMG Holdings, was
sold to Pioneer Chlor Alkali Investments, Inc. ("Pioneer") for
$3,515,000 on May 27, 1994, a substantial portion of which was
represented by a promissory note of Pioneer. The promissory note
was paid in full in March 1995. The Company recognized a pretax
gain on the sale of GPS, net of related expenses, of $9,000. GPS
processes, manufactures and distributes chemicals, primarily
chlorine and acid, manufactures and distributes equipment and
supplies for the maintenance of swimming pools and distributes
related chemical products to the industrial market. Revenues
generated by GPS constituted 1.9% and 4.3% of the Company's total
revenue in 1994 and 1993, respectively.
DISPOSITION OF ASSETS OF DISCONTINUED OPERATIONS
Pursuant to an Asset Purchase Agreement dated September 1, 1993
(the "Asset Purchase Agreement"), by and among Telautograph, the
Company and Danka Industries, Inc. (the "Purchaser") and Danka
Business Systems PLC ("Danka"), on September 17, 1993
Telautograph (now known as AMG Holdings) sold its communication
equipment business and substantially all the operating assets and
certain liabilities of such business to the Purchaser, a wholly-
owned indirect subsidiary of Danka, for a cash purchase price of
approximately $45,780,000 (which includes $1,000,000 received for
a covenant not-to-compete), subject to certain post-closing
adjustments. In fiscal 1993, AMG Holdings booked a gain related
to the sale of approximately $620,000, net of income taxes of
$424,000.
5
<PAGE>
The purchase price and the gain are subject to adjustment after
resolution of disputes which have arisen between AMG Holdings and
Purchaser concerning the assets and liabilities transferred to
the Purchaser. As a result of an arbitration hearing, in April
1994 the Company was awarded $1,750,000 for parts inventory which
was purchased by Purchaser as part of the sale of the Company's
communication equipment business in 1993. The valuation of such
inventory on the balance sheet at the date of sale had been in
dispute. No amount with respect to this inventory had been
included in the 1993 gain from the sale of such business.
Expenses related to the arbitration have not exceeded and will be
netted against the award. Additionally, there is a second
arbitration with regard to certain items on the closing balance
sheet of the communication equipment business which are being
disputed. The Company does not believe adjustments resulting
from the second arbitration, if any, will have a material adverse
impact on its financial position. However, due to the
uncertainty of the outcome of this arbitration, no income or
expenses related to the first arbitration award and no expenses
related to the second arbitration have been recognized in the
1994 statement of operations of the Company.
Excluded from the assets sold by Telautograph to the Purchaser
were, among other items, all the capital stock of GPS, cash and
cash equivalents, investments in the Class A Common Stock of the
Company, the real property lease at 8700 Bellanca, Los Angeles,
California and intercompany accounts.
The results of operations for the communication equipment
business of AMG Holdings has been presented separately as
discontinued operations.
6
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
(a) The Company's Class A Common Stock is traded over-the-
counter in the NASDAQ National Market System. During the
past two years, the range of high and low sales prices (not
including markups, markdowns or commissions) for each
quarterly period was, according to NASDAQ, the following:
<TABLE>
<CAPTION>
1994 1993
---- ----
High Low High Low
---- --- ---- ---
<S> <C> <C> <C> <C>
1st Quarter 54 44 36 27
2nd Quarter 51 38 44 33
3rd Quarter 55 32 49 39
4th Quarter 54-1/2 44 56 47
</TABLE>
There is no established public trading market for the
Company's Class B Common Stock, which is subject to various
restrictions on transfer.
(b) As of December 31, 1994, there were 1,839 holders of record
of the Company's Class A Common Stock, with aggregate
holdings of 970,866 shares of Class A Common Stock. This
does not include 339,300 shares of the Company's Class A
Common Stock which are owned by AMG Holdings. As of the
same date, there were 13 holders of record of the Company's
Class B Common Stock, with aggregate holdings of 343,246
shares of Class B Common Stock.
(c) No dividends have been paid on either Class A Common Stock
or Class B Common Stock during the past three years. Cash
or property dividends on Class B Common Stock are restricted
to an amount equal to 90% of any dividend paid on Class A
Common Stock.
7
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA OF ARDEN GROUP, INC.
(in thousands, except per share data and other data)
<TABLE>
<CAPTION>
Fifty-Three
Fifty-Two Weeks Weeks Fifty-Two Weeks
----------------------- ---------- ----------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Sales $246,199 $246,912 $250,367 $250,643 $252,273
-------- -------- -------- -------- --------
Gross profit 95,021 94,150 93,794 94,105 92,535
-------- -------- -------- -------- --------
Operating income 8,305 6,411 7,783 4,238 9,077
Other income (expense) (183) 50 (573) (2,275) 1,222
Income tax expense (3,273) (2,623) (2,936) (788) (4,205)
-------- -------- -------- -------- --------
Income from continuing operations,
net of income taxes 4,849 3,838 4,274 1,175 6,094
Income (loss) from discontinued
operations, net of income taxes 2,836 615 (1,409) 5,449
-------- -------- -------- -------- --------
Income (loss) before extraordinary item 4,849 6,674 4,889 (234) 11,543
Extraordinary item, net of income taxes (406)
-------- -------- -------- -------- --------
Net Income (loss) $ 4,849 $ 6,674 $ 4,483 $ (234) $ 11,543
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Depreciation on continuing operations $ 3,576 $ 4,110 $ 4,076 $ 4,067 $ 4,310
Number of supermarkets at year-end 12 12 12 13 13
FINANCIAL POSITION:
Total assets $ 91,322 $112,471 $107,226 $126,670 $126,761
Working capital $ 36,506 $ 51,549 $ 20,589 $ 14,182 $ 27,294
Long term debt $ 6,465 $ 7,654 $ 13,161 $ 14,607 $ 33,840
Stockholders' equity $ 57,836 $ 67,535 $ 60,873 $ 57,402 $ 56,834
Capital expenditures $ 6,948 $ 6,406 $ 2,449 $ 4,551 $ 3,387
Cash dividends paid:
Preferred stock None None None None $ 311
Common stock None None None None None
PER SHARE DATA:
Income from continuing operations $ 3.18 $ 2.38 $ 2.65 $ .73 $ 3.62
Income (loss) from discontinued operations 1.76 .38 (.88) 3.41
-------- -------- -------- -------- --------
Income (loss) before extraordinary item 3.18 4.14 3.03 (.15) 7.03
Extraordinary item ( .25)
-------- -------- -------- -------- --------
Net Income (loss) $ 3.18 $ 4.14 $ 2.78 $ (.15) $ 7.03
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Cash dividends paid:
Preferred stock None None None None $ 2.35
-------- -------- -------- -------- --------
Common stock None None None None None
-------- -------- -------- -------- --------
Weighted average shares outstanding 1,527,128 1,612,724 1,612,724 1,612,724 1,597,685
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
8
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
During 1993, the Company sold its communication equipment
business. See Note 15 of Notes to Financial Statements for a
discussion of the disposition of assets of discontinued
operations. The following Management's Discussion and Analysis
of Financial Condition and Results of Operations is a discussion
of the continuing operations of the Company.
RESULTS OF OPERATIONS
1994 COMPARED TO 1993
During 1994, the Company had net income from continuing
operations net of income taxes of $4,849,000 compared to
$3,838,000 during 1993. Pretax income from continuing operations
was $8,122,000 for 1994 compared to $6,461,000 for 1993.
During 1994, the Company's operating income from its market
operations was $8,492,000 compared to $6,243,000 during 1993
representing an increase of approximately 36%. Sales from the
Company's 12 supermarkets were $241,587,000 in 1994, an increase
of 3.2% from 1993 when sales were $234,209,000. Many supermarket
chains operating in Southern California have reported same store
sales decreases in 1994 compared to 1993 due to the continuing
recession, low levels of inflation and increased competition.
The Company operates supermarkets in the greater Los Angeles area
and periodically reviews the operations and contribution of each
store as part of the continuing business. The Company is
continually searching for additional store locations and is in
varying stages of discussions on various new locations. In
November 1993, the Company purchased a neighborhood shopping
center in Calabasas, California and plans, in 1995, to develop a
new neighborhood shopping center on the site which will include a
Gelson's market. The Company has also signed a long-term lease
to open a new Gelson's market subject to the developer fulfilling
certain conditions.
The Company's gross profit from market operations as a percentage
of sales was 38.9% in 1994 compared to 38.7% in 1993. Union wage
and benefit cost increases was one of the considerations which
resulted in the Company increasing its product pricing in 1994
and which also contributed to the increase in operating income.
Delivery, selling, general and administrative ("DSG&A") expenses
for the market operations were $85,451,000 in 1994 compared to
$84,380,000 in 1993. Expenses as a percentage of sales were 35.4%
in 1994 compared to 36.0% in 1993. As a result of negotiations for
new collective bargaining agreements completed in 1993 covering
retail clerks and meat cutters, Gelson's recognized $2,500,000
and $724,000 in credits in 1994 and 1993, respectively, against
health and welfare payments otherwise payable. A charge to
operations of $1,300,000 in the first quarter of 1994 for the
estimated uninsured portion of losses related to the January 17
earthquake centered in Northridge, California was offset in the
fourth quarter of 1994 with the recognition of anticipated
earthquake cost recoveries of $1,300,000. Additional recoveries
have been claimed and may be realized in 1995. The Company's
claim for earthquake damage is being reviewed by the insurer,
however, the exact amount of any recoveries is uncertain at
this time. In 1994 the Company recognized charges of
$1,080,000 to terminate a vacant store lease and to reserve for
9
<PAGE>
the remaining lease costs of two vacant stores located in Arizona.
Improved claims history resulted in lower workers' compensation
expense in 1994 compared to 1993.
The swimming pool chemical processing and distribution
operations, conducted by GPS, posted an operating loss of
$187,000 on sales of $4,612,000 prior to the sale of GPS on May
27, 1994. A pretax gain of $9,000 on the sale of GPS stock is
recorded as other income and is net of a $144,000 charge to
remediate soil contamination at GPS's facility in the City of
Industry. This compares to 1993 operating income of $168,000 on
sales of $12,703,000.
The Company's interest and dividend income was $3,050,000 in 1994
compared to $1,404,000 for the same period in 1993. This
increase in interest income was the result of an increased level
of short-term investments and marketable securities and an
increase in earnings rates on investments.
Interest expense for the Company was $946,000 in 1994 compared to
$1,486,000 for 1993. In 1994, the Company retired approximately
$5,310,000 in mortgage debt and reduced capital lease and fixture
financing debt by approximately $1,710,000.
In 1994, the market value of the Company's holdings in marketable
securities declined. Pursuant to Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments
in Debt and Equity Securities", net unrealized losses of
$1,786,000 related to marketable securities were reflected in
earnings. Net realized losses on the sale of securities were
$663,000 in 1994. No realized or unrealized losses on marketable
securities occurred in 1993.
For an analysis of the Company's provision for income taxes, see
Note 10 of Notes to Financial Statements. The adoption of
Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes", in 1993 did not have a material effect on
either the Company's results of operations or financial position.
Net income per share is based on the weighted average number of
common shares outstanding during the period. Due to the purchase
of Class A shares in 1994 the weighted average number of shares
will be reduced in the future resulting in an increase in
earnings per share.
10
<PAGE>
1993 COMPARED TO 1992
During 1993, the Company had income from continuing operations of
$3,838,000 compared to $3,868,000 during 1992. Pretax income
from continuing operations was $6,461,000 compared to pretax
income of $6,527,000 for 1992.
During 1993, the Company's operating income from its market
operations was $6,243,000 compared to $7,316,000 during 1992.
Sales during the 52 week period of 1993 were $234,209,000, a
decrease of 1.0% from the 53 week period of 1992 when sales were
$236,597,000. In May 1992, the Company sold its Mayfair market
located in Malibu, California. On a comparable 52 week basis,
same store sales increased 1.9% in 1993 compared to 1992. Many
supermarket chains operating in Southern California have reported
significant same store sales decreases in 1993 compared to 1992
due to the continuing recession, low levels of inflation and
increased competition.
The Company's gross profit from market operations as a percentage
of sales was 38.7% in 1993 compared to 38.1% in 1992. Union wage
and benefit cost increases was one of the considerations which
resulted in an overall increase in product pricing in 1993.
Delivery, selling, general and administrative ("DSG&A") expenses
for the market operations were $84,380,000 in 1993 compared to
$82,754,000 in 1992. Expenses as a percentage of sales were
36.0% in 1993 compared to 35.0% in 1992. A claim by a union
pension plan trustee to satisfy an alleged withdrawal liability
associated with Arizona was settled for a lower amount than
accrued in 1991 resulting in an expense adjustment reducing DSG&A
expense in 1992 by $657,000. Additionally, a pretax gain of
$500,000 in 1992 on the sale of the Malibu store fixtures and
leasehold interest reduced 1992 DSG&A expense. Increased
workers' compensation and general liability insurance expense,
union pension costs and bank credit card service fees in 1993 was
partially offset by a reduction in union health and welfare
expense. As a result of negotiations for new collective
bargaining agreements completed in 1993 covering retail clerks
and meat cutters, Gelson's took $724,000 in credits against
health and welfare payments otherwise payable in 1993.
The swimming pool chemical processing and distribution
operations, conducted by GPS, posted operating income of $168,000
in 1993 compared to an operating income of $467,000 for 1992.
GPS's sales during the 52 week period of 1993 were $12,703,000,
down 7.8% from $13,771,000 in the 53 week period of 1992. On a
comparative 52 week basis, sales decreased 6.9% in 1993 compared
to 1992. The sales decrease is due, in part, to an increased
competitive environment in 1993 compared to 1992. Also, Southern
California experienced a cooler spring and summer in 1993
compared to 1992. The pool supply business is strongly affected
by seasonal factors, with most sales generated during the spring
and summer months.
GPS's gross profit as a percentage of sales was 27.8% for 1993
compared to 27.0% for 1992 due to productivity improvements in
its processing operations and lower costs on raw materials used
in producing liquid chlorine.
DSG&A expense for GPS was $3,359,000 for 1993, compared to
$3,257,000 for 1992. Higher administrative expenses were
partially offset by lower warehousing and selling expenses.
11
<PAGE>
Interest and dividend income for the Company was $1,404,000 in
1993 compared to $879,000 for 1992. The increase in interest
income was the result of an increased level of short-term
investments and marketable securities due to the sale of the
Company's communication equipment business, offset partially by a
decline in interest rates in 1993 compared to 1992.
Interest expense for the Company was $1,486,000 in 1993 compared
to $1,541,000 for 1992. On March 1, 1992 the Company used cash-
on-hand to redeem, at face value, all of its 13% Debentures due
September 1, 1997. Interest expense relating to the 13%
Debentures was $400,000 in 1992. The debenture redemption
resulted in an extraordinary loss due to the write-off of the
remaining debt discount of $683,000.
LIQUIDITY AND CAPITAL RESOURCES
The Company has an ongoing program to remodel existing
supermarket locations and to add new locations, although it has
not opened a new store since 1989. In November 1993, the Company
purchased a neighborhood shopping center in Calabasas, California
and plans, in 1995, to build a new shopping center on the site
which will include a Gelson's market. At December 31, 1994,
store capital expenditure commitments, including the costs of
developing the Calabasas center and fixture costs of the new
Calabasas Gelson's store, are approximately $9,000,000, with
additional projects anticipated for commencement during 1995.
The Company and its subsidiaries are subject to a myriad of
environmental laws and regulations regarding air, water and land
use, and the use, storage and disposal of hazardous materials.
The Company believes it substantially complies, and has in the
past substantially complied, with federal, state, and local
environmental laws and regulations. However, three claims have
been made against the Company in connection with real properties
previously owned or leased by the Company or a subsidiary thereof
by the current owner of such properties. In each such instance,
the Company has been asked to pay for a portion of the cost of
remediation of hazardous substances allegedly existing on such
properties. The Company cannot at this time estimate the expenses
it ultimately may incur in connection with these claims, however,
it believes such expenses will not be of a material amount.
Although unexpected violations may occur in the future and
although the Company cannot predict the effect of future laws or
regulations on the Company's operations, expenditures for
continued compliance with current laws are not expected to have a
material impact on its capital expenditures, earnings or
competitive position.
The Company has a revolving loan agreement with a bank totaling
$9,000,000, and a revolving line of credit with another bank in
the amount of $3,000,000, none of which had been utilized as of
December 31, 1994. The Company's current cash position including
marketable securities, the lines of credit and net cash provided
by operating activities (approximately $9,000,000 for 1994) are
the primary resources of funds available to maintain the
Company's current liquidity requirements. See Note 7 of Notes to
Financial Statements for a description of the Company's credit
lines.
In the first quarter of 1994, the Company used approximately
$3,000,000 of cash on hand to purchase the properties upon which
two existing Mayfair markets are located. Additionally, the
Company paid off at maturity the $634,000 balance of the mortgage
on its headquarters facility in Compton. In the second quarter
of 1994, the Company used approximately $4,663,000 of cash
12
<PAGE>
on hand to pay off, at maturity, the balance of the mortgage on its
Pacific Palisades Gelson's location.
In September 1994, the Company used approximately $14,829,000 to
purchase 285,172 shares of its Class A Common Stock. In the
fourth quarter, the Company purchased an additional 13,437 shares
for approximately $659,000.
The Company's total liabilities to equity ratio improved to .58
at December 31, 1994 compared to .66 at January 1, 1994. The
Company's current ratio was 2.53 at December 31, 1994 and 2.61
at January 1, 1994.
The Company's cash position, including marketable securities, at
the end of 1994 was $38,941,000 as compared to $62,564,000 at the
end of 1993. Cash not required for the immediate needs of the
Company has been temporarily invested in high-grade marketable
securities. See Note 1 of Notes to Financial Statements. The
Company is actively investigating opportunities for the use of
these funds, including the expansion of its supermarket
operations.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Index to Consolidated Financial Statements, Supporting
Schedules and Supplemental Data.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
13
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) Identification of Directors
Below is set forth certain information about each of the
directors of the Company as of March 10, 1995. Certain of
this information has been supplied by the persons shown.
<TABLE>
<CAPTION>
Principal Occupation (1) Director Term
Name Age and Other Directorships Since Expires
---- --- ------------------------- -------- -------
<S> <C> <C> <C> <C>
Bernard Briskin 70 Chairman of the Board 1970 1995
of Directors, President
and Chief Executive
Officer of the Company
and Arden-Mayfair,
Inc., a subsidiary of
the Company, and
Chairman of the Board
of AMG Holdings, Inc.
and Gelson's Markets,
both subsidiaries of
Arden-Mayfair.
Robert A. Davidow 52 Director of WHX 1993 1996
Corporation since
January 1991;
private investor;
Senior Vice President
and Director of
Research of the High
Yield and Convertible
Bond Department of
Drexel, Burnham,
Lambert, Incorporated
from January 1980
through January 1990.
Stuart A. Krieger 77 Business Consultant. 1978 1997
Director of American
Rocket Co.
Daniel Lembark 70 Financial consultant 1978 1995
and Certified Public
Accountant.
Curtis H. Palmer 86 Director of the Company 1974 1995
and Chairman Emeritus.
Chairman of the Board
of the Company from
1976 to June 1994.
Frederick A. Schnell 84 President (retired), 1975 1996
Western Operations, The
Prudential Insurance
Company of America.
Ben Winters 74 Business Consultant. 1978 1997
</TABLE>
14
<PAGE>
(1) Unless otherwise indicated, principal occupation or
occupations shown have been such for a period of at least
five years in the aggregate.
(2) Date shown for term of service indicates commencement of
service as a director of the Company or Arden-Mayfair.
(b) Identification of Executive Officers
Below is set forth certain information about each of the
executive officers of the Company as of March 10, 1995:
<TABLE>
<CAPTION>
Name Age Position(s)
---- --- -----------
<S> <C> <C>
Bernard Briskin 70 Chairman of the Board of Directors,
President and Chief Executive
Officer of the Company and Arden-
Mayfair, and Chairman of the Board
of AMG Holdings and Gelson's
Markets.
Milton H. Barker 77 Vice President of the Company and
Arden-Mayfair.
Ernest T. Klinger 59 Vice President Finance and
Administration and Chief Financial
Officer of the Company and Arden-
Mayfair, and Secretary/Treasurer of
AMG Holdings and Gelson's Markets.
Curtis H. Palmer 86 Director of the Company and Chairman
Emeritus.
</TABLE>
Mr. Briskin served as Chairman of the Executive Committee of the
Board of Directors of Arden-Mayfair until August 1978, when he
was elected President and Chief Executive Officer of Arden-
Mayfair. In November 1978, Mr. Briskin was elected President and
Chief Executive Officer of the Company and in June 1994 he was
elected Chairman of the Board of the Company. Mr. Briskin serves
as Chairman of the Board, President and Chief Executive Officer
of the Company and Arden-Mayfair, and Chairman of the Board and
Chief Executive Officer of AMG Holdings and Gelson's Markets,
pursuant to an employment agreement which expires on January 1,
2001, although the term will be automatically extended for
successive one year periods unless certain termination notices
are given by either Mr. Briskin or the employers. See "Item 11.
Executive Compensation".
Mr. Barker has been associated with Arden-Mayfair and the Company
in various legal and executive capacities for over 50 years.
Mr. Klinger has been Vice President Finance and Administration
and Chief Financial Officer of the Company since October 1986.
Between January 1983 and September 1986 he held the position of
Vice President Finance and Treasurer and Chief Financial Officer
of the Company. In 1989, he was appointed Secretary/Treasurer of
Gelson's Markets and in 1993 was appointed Secretary/Treasurer of
AMG Holdings, Inc.
Mr. Palmer was Chairman of the Board of the Company from 1976 to
June 1994 at which time he became Chairman Emeritus. Prior to
1976 he was a principal executive officer and a director of City
National Bank.
15
<PAGE>
Except for Mr. Briskin, who has an employment agreement, all
officers serve at the pleasure of the Board of Directors.
ITEM 11. EXECUTIVE COMPENSATION
General
The following table sets forth the total annual and
long-term compensation paid or accrued by the Company and
its subsidiaries in connection with all businesses of the
Company and its subsidiaries to or for the account of the
Chief Executive Officer of the Company and each other
executive officer of the Company whose total annual salary
and bonus for the fiscal year ended December 31, 1994
exceeded in the aggregate $100,000.
<TABLE>
<CAPTION>
Long Term Compensation
----------------------------------
Annual Compensation Awards Payouts
------------------------------------------- --------------------------- --------------------
Securities-
Restricted Underlying All Other
Name and Other Stock Award Options/ LTIP Compen-
Principal Compensation (s) SARS Payouts sation
Position Year Salary ($) Bonus ($) ($) (4) (#)(4) (4) ($)(6)
--------- ---- ---------- --------- ------------ ----------- ------------ ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bernard Briskin, 1994 440,000 273,068 41,791(3) 3,000(5)
Chief Executive 1993 350,000 2,248,019(2) 994,609(3) -0-
Officer 1992 350,000 193,804 43,611(3) -0-
Ernest T. Klinger, 1994 190,000(1) -0- (7) 3,000(5)
CFO, VP Finance 1993 190,000(1) -0- (7) 9,450(5)
and Administration 1992 193,654(1) -0- (7) -0-
<FN>
(1) Salary covers compensation for 52 weeks in both 1994 and
1993 and 53 weeks in 1992.
(2) Includes a one time bonus to Mr. Briskin of $1,911,827
related to the sale of the Company's communication equipment
business.
(3) Includes for fiscal 1993 a payment of $941,676 to Mr.
Briskin under a deferred compensation arrangement. Also
includes payments to Mr. Briskin of $30,242, $42,085 and
$34,035 for fiscal years 1994, 1993 and 1992, respectively,
for the purpose of enabling him to purchase life insurance.
(4) The Company did not grant to Mr. Briskin or Mr. Klinger any
restricted stock, stock options or stock appreciation rights
("SARs") and made no payout to them on any long-term
incentive plan in fiscal years 1994, 1993 or 1992.
(5) The amount of the Company contribution to the Arden Group,
Inc. 401(k) Retirement Savings Plan allocated to the named
executive officer.
(6) Does not include retirement benefits from the Telautograph
Pension Plan or benefits allocable under the Company Stock
Bonus Plan.
(7) Perquisites and other personal benefits did not exceed the
lesser of $50,000 or 10% of the compensation received by Mr.
Klinger in any of the years for which compensation
information is reported.
</TABLE>
16
<PAGE>
Compensation Pursuant to Plans
Due to the sale of the communications business in fiscal
1993, the Telautograph Defined Benefit Retirement Income
Plan ("the Plan"), which covered certain eligible nonunion
former employees of Telautograph, was terminated and all of
the assets of the Plan were distributed to the participants
in December 1993. Each Plan participant was given a choice
of receiving the distribution in the form of a lump sum
payment with a rollover option or an annuity to begin at
retirement age (as defined by the Plan). The plan was fully
funded at the termination date. The only executive officers
of the Company who were entitled to participate in the Plan
were Messrs. Briskin and Klinger. As a result of the
termination of the Plan, Mr. Briskin elected to receive a
joint survivor annuity of $178,092 per year and Mr. Klinger
elected a lump sum payment of $172,630.
The compensation of Mr. Bernard Briskin, the Chief Executive
Officer of the Company, is established under an Employment
Agreement dated May 13, 1988 (the "Employment Agreement")
which was amended in April 1994, effective January 1, 1994
(the "Amended Employment Agreement"). The Amended
Employment Agreement provides, in pertinent part, that Mr.
Briskin will retain the same positions and would become
Chairman of the Board not later than January 1, 1995. The
term of the Amended Employment Agreement expires January 1,
2001. Effective January 1, 1994, his base salary was
increased from $350,000 per year to $440,000 per year. The
base salary was increased effective January 1, 1995 to
$444,400 and will be increased on January 1 of each
succeeding year of the term of the Amended Employment
Agreement based upon increases in the Consumer Price Index
subject, however to a maximum annual increase. His annual
bonus will equal 2-1/2% of the Company's first $2,000,000 of
Pre-Tax Profits (as defined in the Amended Employment
Agreement) plus 3-1/2% of Pre-Tax Profits in excess of
$2,000,000. The Amended Agreement also provides for certain
expense reimbursement and personal benefits, including
payment or reimbursement for uninsured medical expenses of
Mr. Briskin and his immediate family up to a maximum of
$100,000 during any calendar year. In addition, if he
becomes permanently disabled, dies or his employment is
terminated prior to January 1, 2001, the unpaid portion of
two notes from Mr. Briskin to the Company in the amounts of
$182,143 and $260,357, respectively (see Item 13), will be
forgiven. In addition, the maturity dates of the two notes
were extended to December 31, 2000 with approximately equal
repayments of principal annually prior thereto, plus interest
at 6% per annum, which is also payable annually.
Remuneration of Directors
Non-employee directors are compensated for their services as
directors at an annual rate of $12,000, plus $750 for each
Board meeting attended and $750 for attendance at each
committee meeting. Non-employee directors who serve as
committee chairmen are entitled to an additional $3,000 per
year. Mr. Briskin and Mr. Palmer are employees of the
Company and do not receive the compensation otherwise
payable to directors.
17
<PAGE>
Compensation Committee Interlocks and Insider Participation
The Board of Directors has a Compensation Committee. In
1994 the Compensation Committee was comprised of the
following directors:
Daniel Lembark, Chairman
Robert A. Davidow
Frederick A. Schnell
Ben Winters
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners
The following table sets forth information as of March
10, 1995 relating to the stockholdings of persons known
to the Company to be the beneficial owner of more than
5% of any class of the Company's voting securities: (1)
<TABLE>
<CAPTION>
Amount and Nature
Name and Address of of Beneficial Percent of Percent of
Beneficial Owner Title of Class Ownership Class Total Vote
--------------------- -------------------- ------------------ ---------- ----------
<S> <C> <C> <C> <C>
City National Bank, Class A Common Stock 238,412(2) 24.5% 5.4%
as Trustee of the
Company's Stock Bonus
Plan and Trust (the
"Stock Bonus Plan")
120 S.Spalding Drive
Beverly Hills, CA
90213
Bernard Briskin Class A Common Stock 145,007(3) 15.0% 3.3%
Arden Group, Inc.
9595 Wilshire Blvd.
Suite 411
Beverly Hills, CA
90212
Southeastern Asset Class A Common Stock 165,229(4) 17.0% 3.8%
Management, Inc.
860 Ridgelake Blvd.
Suite 301
Memphis, TN 38120
Lazard Freres & Co. Class A Common Stock 55,300(5) 5.7% 1.3%
One Rockefeller Plaza
New York, NY 10020
Bernard Briskin Class B Common Stock 340,624 99.2% 77.4%
18
<PAGE>
<FN>
(1) Unless otherwise indicated to the contrary, all beneficial
owners have sole investment and voting power. For purposes
of this table, 339,300 shares of Company Class A Common
Stock, which are held by AMG Holdings, are not deemed to be
outstanding.
(2) This amount includes the shares stated in note (3) below to
be held for the account of Mr. Briskin in the Company Stock
Bonus Plan (the Plan), for which City National Bank (CNB)
acts as Trustee. CNB, as trustee of the Plan, is required
to take all action authorized or permitted by a beneficial
owner of all securities owned by the trust created under the
Plan, including voting on or consenting (or withholding
consent) to all matters or actions requiring or permitting a
vote of the security holders. If, however, CNB has
knowledge of any contested solicitation of votes or
consents, then it will vote or otherwise act with respect to
such contested matter pursuant to instructions from each
participant in the Plan (or, if deceased, the beneficiary
thereof) to whom securities have been allocated. Any
undirected allocated securities and any unallocated
securities shall be voted for and against the action being
voted or acted upon in the same ratio that responding
participants have directed CNB to vote or act on such
action.
(3) This amount includes the following shares: (i) 54,199
shares owned by Mr. Briskin's wife; (ii) 46,524 shares held
in trust (of which Mr. Briskin is a trustee) for the benefit
of Mr. Briskin, his children and his mother, and (iii)
12,284 shares held in the Company Stock Bonus Plan for the
account of Mr. Briskin. Mr. Briskin disclaims any
beneficial ownership of the shares set forth in clause (i)
hereof. Mr. Briskin shares voting and investment power with
respect to the shares referred to in clause (ii), shares
voting power but has no investment power with respect to
the shares set forth in clause (iii), and denies that he has
or shares investment power with respect to the shares
referred to in clause (i). Nothing herein should be
construed as an admission that Mr. Briskin is in fact the
beneficial owner of any of these shares.
(4) Based upon information contained in Amendment No. 4 to
Schedule 13G dated February 13, 1995 filed with the
Securities and Exchange Commission by Southeastern Asset
Management, Inc.
(5) Based upon information contained in Amendment No. 4 to
Schedule 13G dated February 14, 1995 filed with the
Securities and Exchange Commission by Lazard Freres & Co.
Includes 54,900 shares owned by Lazard Special Equity Fund,
Inc., an investment company registered under the Investment
Company Act of 1940.
</TABLE>
Except as set forth in the notes to the table, the beneficial
owners hold sole investment and voting power with respect to the
shares listed in the above table.
(b) Security Ownership of Management
The following table shows, as of March 10, 1995, the
beneficial ownership of the Company's equity securities
by each director, executive officer and by all
directors and executive officers as a group: (1)
19
<PAGE>
<TABLE>
<CAPTION>
Amount and
Nature of Percent
Beneficial Percent of Total
Name of Beneficial Owner Title of Class Ownership of Class Vote
------------------------ -------------- ---------- -------- ---------
<S> <C> <C> <C> <C>
Bernard Briskin Class A Common Stock 145,007(2)(3) 15.0% 3.3%
Class B Common Stock 340,624 99.2% 77.4%
Robert A. Davidow Class A Common Stock 0
Ernest T. Klinger Class A Common Stock 316(3) (4) (5)
Stuart A. Krieger Class A Common Stock 0
Daniel Lembark Class A Common Stock 0
Curtis H. Palmer Class A Common Stock 212(3) (4) (5)
Frederick A. Schnell Class A Common Stock 0
Ben Winters Class A Common Stock 100 (4) (5)
All directors and executive Class A Common Stock 156,602(3) 16.1% 3.6%
officers as a group (9 persons) Class B Common Stock 340,624 99.2% 77.4%
<FN>
(1) Unless otherwise indicated to the contrary, all beneficial
owners have sole investment and voting power. The number
of outstanding shares of Company Class A Common Stock on
which the percentages shown in this table are based does
not include 339,300 shares of Company Class A Common Stock
held by AMG Holdings.
(2) See notes (2) and (3) to the table under "Security Ownership
of Certain Beneficial Owners" set forth above.
(3) Includes shares held in the Company Stock Bonus Plan for the
accounts of the named individuals.
(4) Did not exceed 1% of the outstanding shares of the class.
(5) Did not exceed 1% of the total vote.
</TABLE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with the purchase by Mr. Briskin of shares of the
Company's Class A Common Stock in 1979 and 1980, the Company
loaned Mr. Briskin $212,500 and $303,750, respectively. The
notes mature on December 31, 2000 with approximately equal
repayment of principal annually prior thereto with interest at 6%
per annum also payable annually. The cumulative outstanding
balance of the two loans as of December 31, 1994 was $442,500.
20
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) Exhibits and Financial Statements and Schedules
(1) Financial Statements
See Index to Consolidated Financial Statements,
Supporting Schedules and Supplementary Data
(2) Financial Statement Schedules
See Index to Consolidated Financial Statements,
Supporting Schedules and Supplementary Data
(3) Exhibits
See Index to Exhibits
(b) Reports on Form 8-K
No reports were filed on Form 8-K during the last
quarter of the period covered by this report.
(c) Exhibits
See Index to Exhibits
(d) Other Financial Schedules
See Index to Consolidated Financial Statements,
Supporting Schedules and Supplementary Data
21
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
ARDEN GROUP, INC.
By BERNARD BRISKIN 3/28/95
--------------------------------------------------- -------
Bernard Briskin, President, Chief Executive Officer Date
By ERNEST T. KLINGER 3/28/95
--------------------------------------------------- -------
Ernest T. Klinger, Vice President Finance and Date
Administration and Chief Financial Officer
(Principal Financial and Principal Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the date
indicated. The undersigned have also relied upon the reports of
the registrant's independent accountants at page 24.
By BERNARD BRISKIN 3/28/95
--------------------------------------------------- -------
Bernard Briskin, Director and Chairman of the Board Date
By ROBERT A. DAVIDOW 3/28/95
--------------------------------------------------- -------
Robert A. Davidow, Director Date
By STUART A. KRIEGER 3/28/95
--------------------------------------------------- -------
Stuart A. Krieger, Director Date
By DANIEL LEMBARK 3/28/95
--------------------------------------------------- -------
Daniel Lembark, Director Date
By
--------------------------------------------------- -------
Curtis H. Palmer, Director Date
By FREDERICK A. SCHNELL 3/28/95
--------------------------------------------------- -------
Frederick A. Schnell, Director Date
By BEN WINTERS 3/28/95
--------------------------------------------------- -------
Ben Winters, Director Date
22
<PAGE>
ARDEN GROUP, INC.
AND CONSOLIDATED SUBSIDIARY
INDEX TO FINANCIAL STATEMENTS, SUPPORTING SCHEDULES
AND SUPPLEMENTAL DATA
_______________
Page
Report of Independent Accountants..................................... 24
Financial Statements:
Balance Sheets, December 31, 1994 and January 1, 1994............ 25
Statements of Operations for fiscal years 1994, 1993 and 1992.... 27
Statements of Stockholders' Equity for fiscal years 1994,
1993 and 1992.................................................... 28
Statements of Cash Flows for fiscal years 1994, 1993 and 1992.... 29
Notes to Financial Statements.................................... 31
The financial statements include the
Registrant's subsidiary (Arden-Mayfair, Inc.)
and the subsidiaries of Arden-Mayfair, Inc.
Selected Quarterly Financial Data..................................... 47
Financial Statement Schedule:
VIII Valuation and Qualifying Accounts and Reserves for the...... 48
fiscal years ended December 31, 1994, January 1, 1994
and January 2, 1993
Schedules other than those listed above are omitted because of
the absence of the conditions under which they are required.
23
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
____________
To the Stockholders of
Arden Group, Inc.
We have audited the consolidated financial statements and the
financial statement schedule of Arden Group, Inc. and its
subsidiary listed in the index on page 23 of this Form 10-K.
These financial statements and financial statement schedule are
the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Arden Group, Inc. and its subsidiary at
December 31, 1994 and January 1, 1994, and the consolidated
results of their operations and their cash flows for each of the
three fiscal years in the period ended December 31, 1994 in
conformity with generally accepted accounting principles. In
addition, in our opinion, the financial statement schedule
referred to above, when considered in relation to the basic
financial statements taken as a whole, present fairly, in all
material respects, the information required to be included
therein.
As discussed in Note 1 to the consolidated financial statements,
the Company changed its method of accounting for certain
investments in debt and equity securities in 1994.
COOPERS & LYBRAND L.L.P.
Los Angeles, California
March 24, 1995
24
<PAGE>
ARDEN GROUP, INC.
AND CONSOLIDATED SUBSIDIARY
BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
A S S E T S
<TABLE>
<CAPTION>
December 31, 1994 January 1, 1994
----------------- ---------------
<S> <C> <C>
Current assets:
Cash $19,241 $39,526
Marketable securities 19,700 23,038
Notes and accounts receivable, net 8,580 9,007
Inventories 10,665 10,902
Other current assets 2,181 1,040
------- -------
Total current assets 60,367 83,513
Notes and contracts receivable 1,366 459
Property for resale or sublease, at lower
of cost or market 1,539 1,877
Property, plant and equipment, at cost, less
accumulated depreciation and amortization 26,225 24,867
Other assets 1,825 1,755
------- -------
Total assets $91,322 $112,471
------- -------
------- -------
</TABLE>
The accompanying notes are an integral part of these statements.
25
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
December 31, 1994 January 1, 1994
----------------- ---------------
<S> <C> <C>
Current liabilities:
Accounts payable, trade $ 9,994 $13,221
Other current liabilities 13,193 12,242
Current portion of long-term debt 674 6,501
------- -------
Total current liabilities 23,861 31,964
Long-term debt 6,465 7,654
Deferred income taxes 1,109 1,926
Other liabilities 2,051 3,392
------- -------
Total liabilities 33,486 44,936
------- -------
Commitments and contingent liabilities
Stockholders' equity:
Common stock, Class A, $ .25 par value;
1,310,166 and 1,608,708 shares issued,
respectively, including 339,300 treasury shares 327 402
Common stock, Class B, $ .25 par value;
343,246 and 343,316 shares issued and
outstanding, respectively 86 86
Capital surplus 6,413 7,571
Notes receivable from officer/director (442) (1,502)
Retained earnings 55,205 64,731
------- -------
61,589 71,288
Less, treasury stock, at cost 3,753 3,753
------- -------
Total stockholders' equity 57,836 67,535
------- -------
Total liabilities and stockholders'
equity $91,322 $112,471
------- -------
------- -------
</TABLE>
The accompanying notes are an integral part of these statements.
26
<PAGE>
ARDEN GROUP, INC.
and consolidated subsidiary
STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Fifty-Two Fifty-Two Fifty-Three
Weeks Weeks Weeks
--------- --------- -----------
1994 1993 1992
--------- --------- -----------
<S> <C> <C> <C>
Sales $246,199 $246,912 $250,367
Cost of Sales 151,178 152,762 156,573
--------- --------- -----------
Gross profit 95,021 94,150 93,794
Delivery, selling, general and
administrative expenses 86,716 87,739 86,011
--------- --------- -----------
Operating income 8,305 6,411 7,783
Interest and dividend income 3,050 1,404 879
Other income (expense), net (501) 132 89
Interest expense (946) (1,486) (1,541)
Net unrealized loss on marketable
securities (1,786)
--------- --------- -----------
Income from continuing operations,
before income taxes 8,122 6,461 7,210
Income tax provision 3,273 2,623 2,936
--------- --------- -----------
Income from continuing operations,
net of income taxes 4,849 3,838 4,274
Discontinued operations:
Income from operations, net of income
tax expense of $1,496 and $433,
respectively 2,216 615
Gain on sale of Telautograph net
assets, net of income taxes of $424 620
--------- --------- -----------
Income before extraordinary item 4,849 6,674 4,889
Extraordinary item, net of income tax
benefit of $277 (406)
--------- --------- -----------
Net income $4,849 $6,674 $4,483
--------- --------- -----------
--------- --------- -----------
Income per common share (computed on
weighted average common shares
outstanding):
Income from continuing operations $3.18 $2.38 $2.65
Income from discontinued operations 1.76 .38
--------- --------- -----------
Income before extraordinary item 3.18 4.14 3.03
Extraordinary item (.25)
--------- --------- -----------
Net income $3.18 $4.14 $2.78
--------- --------- -----------
--------- --------- -----------
</TABLE>
The accompanying notes are an integral part of these statements.
27
<PAGE>
ARDEN GROUP, INC.
and consolidated subsidiary
STATEMENTS OF STOCKHOLDERS' EQUITY
(In Thousands)
<TABLE>
<CAPTION>
Fifty-Two Fifty-Two Fifty-Three
Weeks Weeks Weeks
---------- ---------- -----------
1994 1993 1992
---------- ---------- -----------
<S> <C> <C> <C>
Common stock, Class A:
Balance, beginning of year $402 $871 $871
Purchase and retirement of stock (298,612 shares) (75)
Retirement of treasury stock (1,875,462 shares) (469)
---------- ---------- -----------
Balance, end of year $327 $402 $871
---------- ---------- -----------
Common stock, Class B:
Balance, beginning and end of year $86 $86 $86
---------- ---------- -----------
Capital surplus:
Balance, beginning of year $7,571 $14,845 $14,845
Purchase and retirement of common stock (1,158)
Retirement of treasury stock (7,274)
---------- ---------- -----------
Balance, end of year $6,413 $7,571 $14,845
---------- ---------- -----------
Notes receivable from officer/director:
Balance, beginning of year $(1,502) $(1,490) $(478)
Principal paid 1,074
Loan to officer/director (1,000)
Amortization of present value discount (14) (12) (12)
---------- ---------- -----------
Balance, end of year $(442) $(1,502) $(1,490)
---------- ---------- -----------
Retained earnings:
Balance, beginning of year $64,731 $67,416 $62,933
Net income for the year 4,849 6,674 4,483
Purchase and retirement of common stock (14,375)
Retirement of treasury stock (9,359)
---------- ---------- -----------
Balance, end of year $55,205 $64,731 $67,416
---------- ---------- -----------
Stockholders' equity before treasury stock $61,589 $71,288 $81,728
Treasury stock, at cost 3,753 3,753 20,855
---------- ---------- -----------
Total stockholders' equity $57,836 $67,535 $60,873
---------- ---------- -----------
---------- ---------- -----------
</TABLE>
The accompanying notes are an integral part of these statements.
28
<PAGE>
ARDEN GROUP, INC.
and consolidated subsidiary
STATEMENTS OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
Fifty-Two Fifty-Two Fifty-Three
Weeks Weeks Weeks
--------- --------- -----------
1994 1993 1992
--------- --------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Cash received from customers $244,598 $248,654 $250,852
Cash paid to suppliers and employees (235,228) (235,732) (239,263)
Interest and dividends received 3,166 1,168 1,048
Interest paid (934) (1,586) (2,609)
Income taxes (paid)/refunded (2,606) (3,895) 480
--------- --------- -----------
Net cash provided by operating activities 8,996 8,609 10,508
--------- --------- -----------
Cash flows from investing activities:
Capital expenditures (6,948) (6,406) (2,450)
Proceeds from the sale of Telautograph 45,425
Investment in marketable securities 880 (23,038)
Net cash from sale of GPS 818
Proceeds from the sale of property, plant and
equipment, liquor licenses and leasehold
interests 55 109 357
Payments received on notes from the sale of
property, plant and equipment and liquor
licenses 20 163 25
--------- --------- -----------
Net cash (used) provided in investing activities (5,175) 16,253 (2,068)
--------- --------- -----------
Cash flows from financing activities:
Purchase and retirement of stock (15,608)
Principal payments on long-term debt (5,486) (86) (24)
Transfer from/(to) discontinued operations (2,556) (5,807) 3,803
Principal payments under capital lease obligations (1,530) (1,418) (1,425)
Loan payments from/(to) officer/director 1,074 (1,000)
Proceeds from equipment financing 1,021
Retirement of 13% debentures (19,342)
--------- --------- -----------
Net cash used in financing activities (24,106) (6,290) (17,988)
--------- --------- -----------
Net increase (decrease) in cash (20,285) 18,572 (9,548)
Cash at beginning of year 39,526 20,954 30,502
--------- --------- -----------
Cash at end of year $19,241 $39,526 $20,954
--------- --------- -----------
--------- --------- -----------
</TABLE>
The accompanying notes are an integral part of these statements.
29
<PAGE>
Reconciliation of net income to net cash provided by operating activities:
<TABLE>
<CAPTION>
Fifty-Two Fifty-Two Fifty-Three
Weeks Weeks Weeks
--------- --------- -----------
1994 1993 1992
--------- --------- -----------
<S> <C> <C> <C>
Net income $4,849 $6,674 $4,483
Adjustments to reconcile net income to net cash
provided by operating activities:
Income from discontinued operations (2,836) (615)
Depreciation and amortization 3,659 4,176 4,153
Unrealized loss on marketable securities 1,786
Loss on sale of marketable securities 672
Provision for losses on accounts and
notes receivable 348 560 190
Net loss (gain) from the sale of property,
plant and equipment, liquor licenses
and early lease terminations 67 (25) (577)
Gain on sale of GPS (9)
Note receivable from officer/director (14) (12) (12)
Non-compete payment on sale of GPS (217)
Original issue discount amortization -
13% debentures 695
Interest differential on note payable 26 23
Change in assets and liabilities net of effects from
noncash investment and financing activities:
(Increase) decrease in assets:
Notes and accounts receivable (950) 879 3,271
Inventories (904) 983 820
Other current assets (1,244) 80 97
Other assets 222 (545) 822
Increase (decrease) in liabilities:
Accounts payable and other accrued expenses 3,044 1,101 (1,361)
Deferred income taxes (972) (1,394) (59)
Other liabilities (1,341) (1,058) (1,422)
--------- --------- -----------
$8,996 $8,609 $10,508
--------- --------- -----------
--------- --------- -----------
</TABLE>
The accompanying notes are an integral part of these statements.
30
<PAGE>
ARDEN GROUP, INC.
and consolidated subsidiary
NOTES TO FINANCIAL STATEMENTS
_____________
1. Accounting Policies:
The following is a summary of significant accounting policies
followed in the preparation of these financial statements.
BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
The consolidated financial statements of Arden Group, Inc.
(the "Company") include the accounts of the Company and its
direct and indirect subsidiaries except for Telautograph
Corporation, an indirect wholly-owned subsidiary of the
Company ("Telautograph"), which was carried at equity in net
assets of discontinued operations through September 17, 1993
when the communications business was sold. Intercompany
balances and transactions are eliminated. On May 27, 1994,
the Company sold GPS Pool Supply, Inc. ("GPS") (see Note 16).
As a result, after the sale of GPS, the Company operates
exclusively in the supermarket business.
FISCAL YEAR
The Company operates on a fiscal year ending on the Saturday
closest to December 31. Fiscal years for the financial
statements included herein ended on December 31, 1994,
January 1, 1994 and January 2, 1993.
CASH AND CASH EQUIVALENTS
The Statements of Cash Flows classify changes in cash or cash
equivalents (short-term, highly liquid investments readily
convertible into cash with an original maturity of three
months or less) according to operating, investing or financing
activities. Financial instruments which potentially subject
the Company to concentrations of credit risk consist
principally of cash and temporary cash investments. At times,
cash balances held at financial institutions were in excess of
FDIC insurance limits. The Company places its temporary cash
investments with high-credit, quality financial institutions
and, by policy, limits the amount of credit exposure to any
one financial institution. The Company believes no
significant concentration of credit risk exists with respect
to these cash investments.
MARKETABLE SECURITIES
Marketable securities consist of fixed-income securities
having maturities of up to three years, preferred stock,
convertible preferred stock, common stock, mortgage backed
government securities and collateralized mortgage obligations.
Marketable securities are stated at market value. By policy,
the Company invests primarily in high-grade marketable securities.
All marketable securities are defined as trading securities
under the provisions of
31
<PAGE>
Statement of Financial Accounting Standards No. 115, "Accounting
for Certain Investments in Debt and Equity Securities" (SFAS 115)
and unrealized holding gains and losses are reflected in earnings.
Market value is determined by the most recently traded price
of the security at the balance sheet date. Net realized gains or
losses are determined on the specific identification cost method.
Prior to December 31, 1994, marketable securities were carried
at cost, which approximated market value.
INVENTORIES
The cost of supermarket nonperishable inventories is
determined by the retail inventory method using the last-in,
first-out (LIFO) method, which is lower than market.
Perishable supermarket and other inventories are valued at the
lower of cost (first-in/first-out, or average) or market.
PROPERTY FOR RESALE OR SUBLEASE
It is the Company's policy to make available for sale or
sublease property considered by management as excess and no
longer necessary for the operations of the Company. The
aggregate carrying values of such owned property and property
under capital leases are periodically reviewed and adjusted
downward to market, when appropriate.
PROPERTY, PLANT AND EQUIPMENT
Owned property, plant and equipment is valued at cost.
Depreciation is provided on the straight-line method at rates
based on the estimated useful lives of individual assets or
classes of assets. Improvements to leased properties or
fixtures are amortized over the estimated useful life or
period of lease, whichever is shorter.
Leased property meeting certain criteria is capitalized and
the present value of the related lease payments is recorded as
a liability. Amortization of capitalized leased assets is
computed on the straight-line method over the term of the
lease.
Normal repairs and maintenance are expensed as incurred.
Expenditures which materially increase values, change
capacities or extend useful lives are capitalized.
Replacements are capitalized and the property, plant and
equipment accounts are relieved of the items being replaced.
The related costs and accumulated reserves for depreciation of
disposed assets are eliminated and any gain or loss on
disposition is included in income.
ENVIRONMENTAL COSTS
Costs incurred to investigate and remediate contaminated sites
are expensed.
32
<PAGE>
INCOME TAXES
Effective January 3, 1993, the Company changed its method of
accounting for income taxes by adopting the provisions of
Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" ("SFAS 109"). The new statement
supersedes the Company's previous accounting practice of
accounting for income taxes under Accounting Principles Board
Opinion No. 11, "Accounting for Income Taxes" ("APB 11").
Under APB 11, deferred income taxes were provided in
recognition of timing differences in reporting certain items
of income and expense for income tax and financial statement
purposes (principally capitalization of costs of inventory,
depreciation, lease costs, valuation and self-insurance
reserves and gain on debenture exchanges). Under SFAS 109,
deferred tax liabilities and assets are determined based on
the difference between the financial statement and tax bases
of assets and liabilities, using enacted tax rates in effect
for the year in which the differences are expected to reverse.
The adoption of this statement did not have a material effect
on either the Company's results of operations or financial
position.
NET INCOME PER SHARE
Net income per share is based on the weighted average number
of common shares outstanding during the period.
2. Marketable Securities:
As of December 31, 1994:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
Balance
Sheet
Unrealized Amount
(in thousands) Cost Loss (Market Value)
-------------------------------------------------------------------------------------
<S> <C> <C> <C>
Trading Securities:
Fixed income securities $13,050 ($375) $12,675
Equity securities 8,218 (1,409) 6,809
Mortgage-backed government securities 149 149
Collateralized mortgage obligations 69 (2) 67
------- -------- -------
Total $21,486 ($1,786) $19,700
------- -------- -------
------- -------- -------
</TABLE>
Investments held at January 1, 1994 were $23,038,000, and
were stated at cost, which approximated market value.
33
<PAGE>
3. Notes and Accounts Receivable:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
(in thousands) December 31, 1994 January 1, 1994
---------------------------------------------------------------------------------
<S> <C> <C>
Accounts receivable, trade $4,600 $6,871
Notes and contracts receivable 1,974 731
Income taxes receivable 583
Other accounts receivable 2,714 1,461
------ ------
9,288 9,646
Less: Allowance for doubtful
notes and accounts receivable (708) (639)
------ ------
$8,580 $9,007
------ ------
------ ------
</TABLE>
The provision for doubtful notes and accounts receivable in
1994, 1993 and 1992 was approximately $348,000, $560,000 and
$190,000, respectively.
4. Inventories:
Inventories valued by the LIFO method ($9,461,000 in 1994,
$8,910,000 in 1993, $9,433,000 in 1992) would have been
$2,147,000, $2,116,000 and $2,121,000 higher at December 31,
1994, January 1, 1994 and January 2, 1993, respectively, if
they had been stated at the lower of FIFO cost or market. The
effect on net income and income per share in 1994 was a
decrease of approximately $31,000 ($ .02 per share), and in
1993 and 1992 was an increase of approximately $6,000 (no
change per share) and $17,000 ($.01 per share), respectively.
34
<PAGE>
5. Property, Plant, Equipment and Accumulated Depreciation:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
(in thousands) December 31, 1994 January 1, 1994
-------------------------------------------------------------------------------------
<S> <C> <C>
Land $ 6,416 $ 4,111
Buildings 6,510 5,481
Store fixtures and office equipment 10,409 8,914
Delivery equipment 1,353 2,525
Machinery and equipment 872 6,157
Leaseholds and improvements to leased
property 18,869 19,600
Assets under capital leases 4,401 7,686
Assets not placed in service 108 8
------- -------
48,938 54,482
Accumulated depreciation and amortization (22,713) (29,615)
------- --------
$26,225 $24,867
------- --------
------- --------
</TABLE>
6. Other Current Liabilities:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
(in thousands) December 31, 1994 January 1, 1994
-------------------------------------------------------------------------------------
<S> <C> <C>
Compensated absences $2,534 $2,564
Taxes (including taxes
collected from others of $946 and $1,000,
respectively) 3,184 2,188
Other 7,475 7,490
------- -------
$13,193 $12,242
------- -------
------- -------
</TABLE>
35
<PAGE>
7. Long-Term Debt:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
Current Non-Current
------------------------- -------------------------
December 31, January 1, December 31, January 1,
(in thousands) 1994 1994 1994 1994
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Notes and contracts payable $190 $5,486 $611 $801
Obligations under capital leases 484 1,015 4,541 5,540
7% Subordinated income
debentures due
September 1, 2014 1,313 1,313
---- ------ ------ ------
$674 $6,501 $6,465 $7,654
---- ------ ------ ------
---- ------ ------ ------
</TABLE>
At December 31, 1994, the approximate principal payments
required on long-term debt for each year are as follows (in
thousands):
<TABLE>
<CAPTION>
1995 1996 1997 1998 1999 Subsequent
---- ---- ---- ---- ---- ----------
<S> <C> <C> <C> <C> <C>
$674 $553 $450 $441 $287 $4,734
</TABLE>
During 1994 the Company entered into a one year loan agreement
for a credit facility with a bank establishing a revolving
line of credit in the amount of $9,000,000 with a standby
letter of credit subfacility in the amount of $5,000,000.
Major provisions of the agreement include interest on the
revolving loan at the bank's cost of funds rate plus 1% or at
the LIBOR rate plus 1% and certain minimum requirements as to
the Company's equity, working capital and debt-to-equity
relationships. The Company also has a one year revolving line
of credit with another bank in the amount of $3,000,000 with
interest at the bank's reference rate. There were no amounts
borrowed under either of the revolving lines of credit in 1994
or 1993.
Notes and contracts payable: At January 1, 1994 this caption
includes $5,309,000 for mortgages on two Company-owned
properties. Interest rates were 9% and 9-1/4%, respectively.
In 1994, the Company paid the outstanding debt on both of
these properties. In 1993, the Company financed $1,021,000 of
supermarket equipment with five year, fully amortized notes
bearing an average interest rate of 7.5%. The obligations are
collateralized by the equipment. The balance of the equipment
notes at December 31, 1994 was $801,000.
Debentures: The indenture relating to the 7% (6% prior to
November 7, 1978) subordinated income debentures ("7%
Debentures"), due September 1, 2014, provides for interest
payable semiannually on March 1 and September 1 to the extent
that current annual net income (consolidated net income before
income taxes and interest accrued on the 7% Debentures) is
sufficient therefor, or at the discretion of the Company, out
of available retained earnings. No accrued interest was in
arrears as of December 31, 1994.
36
<PAGE>
In December 1991, the Company elected to redeem at face value
all of the issued and outstanding 13% debentures on March 2,
1992. The transaction resulted in an extraordinary loss due
to the write-off of the remaining debt discount of $683,000 at
March 2, 1992.
8. Capital Stock:
Class A Common Stock: The Company is authorized to issue
5,000,000 shares of Class A common stock, par value $.25 per
share. At December 31, 1994 and January 1, 1994, shares
issued were 1,310,166 and 1,608,708, respectively, including
339,300 treasury shares at the end of each year. On September
16, 1994 the Company completed a self-tender offer by
purchasing 285,172 shares of its Class A common stock at $52
per share in cash. Another 13,440 shares were purchased at
various prices, ranging from $48 to $52 per share, and retired
during the fourth quarter of 1994. The Class A common stock
has one vote per share on all matters on which stockholders
are entitled to vote or consent.
Class B Common Stock: The Company is authorized to issue
500,000 shares of Class B common stock, par value $.25 per
share. At December 31, 1994 and January 1, 1994 there were
343,246 and 343,316 shares, respectively, issued and
outstanding. The Class B common stock has ten votes per share
on virtually all matters on which shareholders are entitled to
vote or consent. Transfer of Class B common stock is
restricted to other Class B stockholders and certain other
classes of transferees. Class B common stock is convertible,
at the option of the holder into Class A common stock on a
share-for-share basis. The Class B common stock is also
automatically converted into Class A common stock under
certain circumstances, including upon the transfer of such
stock to a transferee other than another Class B stockholder
and certain other classes of transferees. The number of
shares of Class B common stock converted to Class A common
stock were 84 shares in 1991, none in 1992, 100 shares in 1993
and 70 shares in 1994. Cash or property dividends on Class B
common stock are restricted to an amount equal to 90% of any
dividend paid on Class A common stock.
9. Retirement Plans:
The Company contributes to multi-employer union pension plans
administered by various trustees. Contributions to these
plans are based upon negotiated wage contracts. These plans
may be deemed to be defined benefit plans. Information
relating to accumulated benefits and fund assets as they may
be allocable to the participants at December 31, 1994 is not
available. The Company's total union pension expense for all
plans for 1994, 1993 and 1992 amounted to $1,208,000,
$1,696,000 and $455,000, respectively. Through all of 1992
and the first part of 1993 the Retail Clerks and Meatcutters
Unions contractually suspended employer contributions to their
pension plans. Although the contributions were reinstituted
in May 1993, they were again suspended as of April 1994, which
suspension continued through the remainder of 1994.
The Company has a noncontributory, trusteed stock bonus plan
which is qualified under Section 401 of the Internal Revenue
Code of 1986, as amended. All nonunion employees over 18
years of age who complete 1,000 hours of service within the
year ending on the anniversary date of employment are eligible
to become participating employees in the plan. Contributions
to the plan for any fiscal year, as determined by the Board of
Directors, are
37
<PAGE>
discretionary, but in no event will they exceed
15% of the annual aggregate salaries of those employees
eligible for participation in the plan. Contributions must be
invested in the Company's Class A common stock with excess
cash being invested in certain government backed securities.
Contributions to the plan are allocated among eligible
participants in the proportions of their salaries to the
salaries of all participants. Contributions accrued for the
plan in 1994 and 1992 were $328,000 and $383,000,
respectively. No contribution was accrued for the plan in 1993.
Effective January 1, 1992, the Company's Board adopted the
Arden Group, Inc. 401(k) Retirement Savings Plan (the "Company
Savings Plan"). All non-union employees of the Company and
its subsidiaries (except employees of Telautograph) who have
attained the age of 18 and have completed at least one year of
service with any of such companies are entitled to
participate in the Company Savings Plan. The Company Savings
Plan provides that, with certain limitations, a participating
employee may elect to contribute up to 15% of such employee's
annual compensation to the Company Savings Plan on a tax-
deferred basis, subject to a limitation that the annual
elective contribution may not exceed an annual indexed dollar
limit determined pursuant to the Internal Revenue Code ($8,994
in 1993). Annual matching contributions are made by the
Company in a discretionary amount as determined by the Company
each year for those participants whose annualized gross
earnings for the previous year were $45,000 or less, and such
matching contribution was $10,000 in 1994 and 1993 and $9,000
in 1992. An additional $130,000 was accrued in 1994 to be
contributed to the plan in early 1995. Similarly $329,000 was
accrued in 1993 and contributed in early 1994.
38
<PAGE>
10. Income Taxes:
Income (loss) before income taxes and the related income tax
expense (benefit) are as follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
(in thousands) 1994 1993 1992
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Income (loss) before income tax:
Continuing operations $8,122 $ 6,461 $7,210
Discontinued operations:
Income from operations 3,712 1,048
Gain on sale of Telautograph net assets 1,044
Extraordinary item (683)
------ ------- ------
Total $8,122 $11,217 $7,575
------ ------- ------
------ ------- ------
Income tax expense (benefit):
Continuing operations $3,273 $2,623 $2,936
Discontinued operations:
Income from operations 1,496 433
Sale of Telautograph net assets 424
Extraordinary item (277)
------ ------- ------
Total $3,273 $4,543 $3,092
------ ------- ------
------ ------- ------
</TABLE>
The composition of federal and state income tax expense
(benefit) is as follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
(in thousands) 1994 1993 1992
---------------------------------------------------------------------------------
<S> <C> <C> <C>
Current
Federal $3,167 $4,761 $1,608
State 923 1,311 514
------ ------- ------
Total 4,090 6,072 2,122
Deferred
Federal (669) (1,604) 508
State (148) 75 462
------ ------- ------
Total (817) (1,529) 970
------ ------- ------
Total income tax expense $3,273 $4,543 $3,092
------ ------- ------
------ ------- ------
</TABLE>
39
<PAGE>
The Company's deferred income taxes liabilities (assets) were
attributable to the following:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------
December 31, January 1,
(in thousands) 1994 1994
----------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax liabilities
Deferred gain on debenture exchange $4,987 $4,715
Property leased under capital leases, net of
accumulated depreciation 1,625 2,012
Other 330 291
------ ------
Deferred tax liabilities 6,942 7,018
Deferred tax assets
Debt under capital leases (2,196) (2,631)
Book accruals not recognized for tax until paid (1,332) (1,128)
Unrealized loss on marketable securities (774)
Excess of book over tax depreciation (689) (582)
State tax expense recognized in current period
for books but in following year for tax (302) (301)
Bad debt allowance not deductible for tax
until year of write-off (332) (256)
Other (208) (194)
------ ------
Deferred tax assets (5,833) (5,092)
------ ------
Deferred income taxes, net $1,109 $1,926
------ ------
------ ------
</TABLE>
Reconciliation of the statutory federal rate and effective
rate is as follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
1994 1993 1992
------------- ------------- -------------
(in thousands, except
percentage amounts) Amount Rate Amount Rate Amount Rate
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Federal tax at statutory
rate $2,761 34.0% $3,814 34.0% $2,576 34.0%
State income taxes, net of
federal tax benefits 512 6.3% 729 6.5% 516 6.8%
------------- ------------- -------------
$3,273 40.3% $4,543 40.5% $3,092 40.8%
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
40
<PAGE>
11. Leases:
The principal kinds of property leased by the Company and its
subsidiaries are supermarket buildings, fixtures and delivery
equipment. The most significant obligations assumed under the
lease terms, other than rental payments, are the upkeep of the
facilities, insurance and property taxes. Most supermarket
leases contain contingent rental provisions based on sales
volume.
All leases and subleases with an initial term greater than one
year are accounted for under Statement of Financial Accounting
Standards No. 13, "Accounting for Leases". These leases are
classified as either capital leases, operating leases or
subleases, as appropriate.
Assets Under Capital Leases: Assets under capital leases are
capitalized using interest rates appropriate at the inception
of each lease. Contingent rents associated with capital
leases in 1994, 1993 and 1992 were $143,000, $167,000 and
$170,000, respectively, and accordingly have been charged to
expense as incurred. Following is an analysis of assets under
capital leases:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
(in thousands) December 31, 1994 January 1, 1994
--------------------------------------------------------------------------
<S> <C> <C>
Buildings $3,058 $4,353
Equipment 1,343 3,333
------ ------
4,401 7,686
Accumulated amortization (2,583) (5,052)
------ ------
$1,818 $2,634
------ ------
------ ------
</TABLE>
41
<PAGE>
Future minimum lease payments for the above assets under
capital leases at December 31, 1994 are as follows:
<TABLE>
<CAPTION>
-------------------------------------------------------------
(in thousands)
-------------------------------------------------------------
<S> <C>
1995 $1,015
1996 846
1997 700
1998 700
1999 699
Remainder 5,136
-------------
Total minimum obligations 9,096
Executory costs (71)
-------------
Net minimum obligations 9,025
Interest (4,000)
-------------
Present value of net minimum obligations 5,025
Current portions (484)
-------------
Long-term obligations at December 31, 1994 $4,541
-------------
-------------
</TABLE>
Executory costs include such items as property taxes and
insurance.
Operating Leases and Subleases: Future minimum lease payments
for all noncancelable operating leases having a remaining term
in excess of one year at December 31, 1994 are as follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------------
Deduct Net
Sublease Rental
(in thousands) Commitments Rentals Commitments
---------------------------------------------------------------------
<S> <C> <C> <C>
1995 $2,796 $351 $2,445
1996 2,687 230 2,457
1997 2,597 138 2,459
1998 2,468 138 2,330
1999 2,233 138 2,095
Remainder 15,142 104 15,038
------- ----- -------
$27,923 $1,099 $26,824
------- ----- -------
------- ----- -------
</TABLE>
42
<PAGE>
Rent expense under operating leases is as follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------------
(in thousands) 1994 1993 1992
---------------------------------------------------------------------
<S> <C> <C> <C>
Minimum rent $5,375 $4,803 $4,856
Contingent rent 1,063 1,274 1,172
------ ------ ------
6,438 6,077 6,028
Sublease rentals (1,398) (1,330) (1,412)
------ ------ ------
$5,040 $4,747 $4,616
------ ------ ------
------ ------ ------
</TABLE>
12. Fourth Quarter Adjustments:
The Company recognized in the fourth quarter 1994 insured cost
recoveries of $1,300,000 related to the January 17, 1994
earthquake centered in Northridge, California. Additional
recoveries have been claimed and may be realized in 1995. The
Company's claim for earthquake damage is being reviewed by the
insurer, however, the exact amount of any recoveries is
uncertain at this time. The Company also recognized fourth
quarter charges of $762,000 to reserve for the remaining lease
costs of two vacant stores located in Arizona.
13. Related Party Transactions:
A former director of the Company is associated with a law firm
that rendered various legal services for the Company. The
Company and its subsidiaries paid the firm, during the term of
the director, approximately $166,000 and $717,000 during 1993
and 1992, respectively, for legal services.
At January 1, 1994, the Company held three notes receivable
for a total of $1,516,250 from an officer/director of the
Company. Two notes arose from transactions in 1979 and 1980
whereby the Company loaned the officer/director money to
purchase an aggregate of 200,000 shares of the Company's Class
A common stock at the then fair market value. These notes,
which bear interest at the rate of 6% per annum, are due in
full on December 31, 2000 with approximately equal repayment
of principal annually prior thereto. If the officer's
employment is terminated prior to January 1, 2001, the unpaid
portion of the two notes would be forgiven. A third loan for
$1,000,000 made to the officer/director in 1992 and related to
his exercise in 1991 of 100,000 shares of the Company's Class
A common stock, which were granted to him under a stock option,
was repaid in 1994. The loans are collateralized by 180,000
shares of Class B common stock. The amount of the receivable
is shown on the balance sheets as a reduction in equity, and
reflects the above amount discounted for the difference
between the face value interest rate and the market rate at
the transaction dates.
43
<PAGE>
14. Commitments and Contingent Liabilities:
The Company has an employment agreement with a key executive
officer which expires on January 1, 2001. In addition to a
base salary, the agreement provides for a bonus based on pre-
tax earnings. No maximum compensation limit exists. The
compensation expensed in 1994, 1993 and 1992 was $730,000,
$3,012,000 and $577,000, respectively.
The Company is contingently liable as a guarantor of certain
leases which it has either assigned or subleased. Any
liability arising as a result of these guarantees would have
no significant effect on either the Company's results of
operations or consolidated financial position of the Company.
The Company and its subsidiaries are subject to a myriad of
environmental laws and regulations regarding air, water and
land use, and the use, storage and disposal of hazardous
materials. The Company believes it substantially complies, and
has in the past substantially complied, with federal, state,
and local environmental laws and regulations. However, three
claims have been made against the Company in connection with
real properties previously owned or leased by the Company or a
subsidiary thereof by the current owner of such properties. In
each such instance, the Company has been asked to pay for a
portion of the cost of remediation of hazardous substances
allegedly existing on such properties. The Company cannot at
this time estimate the expenses it ultimately may incur in
connection with these claims, however, it believes such
expenses will not be of a material amount. Although unexpected
violations may occur in the future and although the Company
cannot predict the effect of future laws or regulations on the
Company's operations, expenditures for continued compliance
with current laws are not expected to have a material impact
on its capital expenditures, earnings or competitive position.
The Company or its subsidiaries are defendants in a number of
cases currently in litigation, being vigorously defended, in
which the complaints pray for monetary damages. As of the
date hereof, no estimate of potential liability, if any, is
possible. Based upon current information, management, after
consultation with legal counsel defending the Company's
interests in the cases, believes the ultimate disposition
thereof will have no material effect upon either the Company's
results of operations or the consolidated financial position.
15. Disposition of Assets of Discontinued Operations:
Pursuant to an Asset Purchase Agreement dated September 1,
1993 (the "Asset Purchase Agreement"), by and among
Telautograph, the Company and Danka Industries, Inc. (the
"Purchaser") and Danka Business Systems PLC ("Danka"), on
September 17, 1993 Telautograph (now known as AMG Holdings)
sold its communication equipment business and substantially
all the operating assets and certain liabilities of such
business to the Purchaser, a wholly-owned indirect subsidiary
of Danka, for a cash purchase price of approximately
$45,780,000 (which includes $1,000,000 received for a covenant
not-to-compete), subject to certain post-closing adjustments.
In 1993 AMG Holdings booked a gain related to the sale of
approximately $620,000, net of income taxes of $424,000.
44
<PAGE>
The purchase price and the gain are subject to adjustment
after resolution of disputes which have arisen between AMG
Holdings and Danka concerning the assets and liabilities
transferred to the Purchaser. As a result of an arbitration
hearing in April 1994, the Company was awarded $1,750,000 for
parts inventory which was purchased by Danka Industries, Inc.
as part of the sale of the Company's communication equipment
business in 1993. The valuation of such inventory on the
balance sheet at the date of sale had been in dispute. No
amount with respect to this inventory had been included in the
1993 gain from the sale of such business. Expenses related to
the arbitration have not exceeded and will be netted against
the award. Additionally, there is a second arbitration with
regard to certain items on the closing balance sheet of the
communication equipment business which are being disputed.
The Company does not believe adjustments resulting from the
second arbitration, if any, will have a material adverse
impact on its financial position. However, due to the
uncertainty of the outcome of this arbitration, no income or
expenses from the first arbitration award and no expenses
related to the second arbitration have been recognized in the
1994 statement of operations of the Company.
In connection with the transaction, the Purchaser paid
severance payments to various employees of Telautograph.
Included among these payments was a payment of $100,000 to the
Vice President Finance and Administration and Chief Financial
Officer of the Company on account of his past services to
Telautograph.
Excluded from the assets sold by Telautograph to the Purchaser
were, among other items, all the capital stock of GPS, cash
and cash equivalents, investments in the Class A common stock
of the Company, the real property lease at the
headquarters/warehouse facility in Los Angeles, California and
intercompany accounts.
As a result of the consummation of this transaction, the
previously announced spin-off of the communication equipment
business of Telautograph and all the capital stock of GPS to
the stockholders of the Company was abandoned.
The results of operations for the communication equipment
business of AMG Holdings has been presented separately as
discontinued operations and the book value of the Company's
net assets in such business is disclosed on the balance sheet
on January 2, 1993.
45
<PAGE>
Summarized financial information of the Company's
communication equipment business follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------
1993 1992
(in thousands) (37 Weeks) (53 Weeks)
-----------------------------------------------------------------------
<S> <C> <C>
Revenue $51,492 $68,833
Costs and expenses 47,780 67,785
------- -------
Income before taxes 3,712 1,048
Income tax expense 1,496 433
------- -------
Income from operations--discontinued
operations $2,216 $615
------- -------
------- -------
</TABLE>
The increase in income in 1993 compared to 1992 is primarily
attributable to a reduction of general and administrative
expenses at Telautograph's headquarters office and a $550,000
favorable adjustment to income to correct an overaccrual in
pension liability.
The components of the gain on sale of the communication
equipment business follows:
<TABLE>
<CAPTION>
-------------------------------------------------------------
(in thousands)
-------------------------------------------------------------
<S> <C>
Cash proceeds $45,780
Less: Net assets sold (at net book value) (39,604)
Costs associated with the sale (5,132)
Related income tax expense (424)
--------
Gain on sale of discontinued operations $620
--------
--------
</TABLE>
16. Sale of GPS:
On May 27, 1994, the Company sold all of the outstanding
shares of capital stock of GPS to Pioneer Chlor Alkali
Investments, Inc. ("Pioneer") for approximately $3,515,000, of
which a substantial portion was represented by a promissory
note of Pioneer. The promissory note, secured by the assets
of GPS and by a pledge of the GPS stock, was paid in full in
March 1995. In 1994, the Company recognized a pretax gain on
the sale of GPS stock, net of related expenses, of $9,000.
In addition, the Company recorded additional consideration
from Pioneer of $217,000 in 1994 for a covenant not to
compete, the amount of which was based on revenue of GPS.
46
<PAGE>
ARDEN GROUP, INC.
and consolidated subsidiary
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
(In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Discontinued Operations (2)
-----------------------------------
Continuing Operations Operations Net Gain On Sale
----------------------------------- ------------------------------------
Income Income Income (Loss) Net Net Income
Gross Income (Loss) Income (Loss) Income (Loss) Extraordinary Per Income (Loss)
Quarter Sales Profit (Loss) Per Share (Loss) Per Share (Loss) Per Share Item Share (Loss) Per Share
------- ----- ------- ------- --------- ------ --------- ------ --------- ------------- ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1992
First $60,382 $22,319 $ (30) $(.02) $ (394) $ (.25) $(406) $(.25) $ (770) $ (.48)
Second 62,093 23,120 934 .58 512 .32 1,446 .90
Third 62,114 23,530 1,139 .71 214 .13 1,353 .84
Fourth 65,778 24,825 2,171 1.35 283 .17 2,454 1.52
1993
First $60,261 $22,247 $ 596 $ .37 $ 475 $ .29 $1,071 $ .66
Second 61,869 23,481 1,053 .65 526 .33 1,579 .98
Third 61,719 24,037 1,239 .77 1,019 .63 1,838 1.14 4,096 2.54
Fourth 63,063 24,385 950 .59 196 .12 (1,218) (.75) (72) (.04)
1994
First $63,151 $23,926 $ 547 $ .34 $ 547 $ .34
Second 61,625 23,790 1,667 1.03 1,667 1.03
Third 59,702 23,374 1,254 .81 1,254 .81
Fourth 61,721 23,931 1,381(3) 1.04 1,381 1.04(1)
<FN>
(1) Earnings per share is calculated on the weighted average outstanding shares in
the quarter. The outstanding shares were reduced at the end of the third quarter
of 1994 by the shares purchased by the Company pursuant to its self-tender offer.
(2) See Note 15 of Notes to Financial Statements.
(3) See Note 12 of Notes to Financial Statements.
</TABLE>
47
<PAGE>
ARDEN GROUP, INC.
and consolidated subsidiary
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(In Thousands)
<TABLE>
<CAPTION>
Additions Charged to
Balance at --------------------
Beginning Other Balance at
Description of Year Expenses Accounts Deductions End of Year
------------------------------------ ---------- -------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Fiscal Year Ended December 31, 1994:
Allowance for doubtful notes and
accounts receivable (1) $639 $348 $138(2) $708
141(3)
Fiscal Year Ended January 1, 1994:
Allowance for doubtful notes and
accounts receivable (1) $354 $560 $275(2) $639
Fiscal Year Ended January 2, 1993:
Allowance for doubtful notes and
accounts receivable (1) $256 $190 $92(2) $354
<FN>
(1) These reserves are deducted from the related items in the balance sheet.
(2) Specific items charged to qualifying accounts and reserves.
(3) Transferred to buyer upon sale of subsidiary.
</TABLE>
48
<PAGE>
ARDEN GROUP, INC.
and consolidated subsidiary
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
-------
<C> <S>
2.1 Asset Purchase Agreement dated September 1, 1993 by and
among Telautograph Corporation, Arden Group, Inc., Danka
Industries, Inc. and Danka Business Systems PLC filed as
Exhibit 2.1 to the Form 8-K of Arden Group, Inc. dated
September 30, 1993 and incorporated herein by reference.
3.1 Restated Certificate of Incorporation of Arden Group, Inc.
dated November 7, 1988 filed as Exhibit 3.1 to the Annual
Report on Form 10-K of Arden Group, Inc. for the fiscal
year ended December 31, 1988 and incorporated herein by
reference.
3.2 Amended and Restated By-Laws of Arden Group, Inc. (as
amended and restated as of June 25, 1991) filed as Exhibit
3.2 to the Annual Report on Form 10-K of Arden Group, Inc.
for the fiscal year ended January 2, 1993 and incorporated
herein by reference.
4.1 Indenture dated as of September 1, 1964 between Arden Farms
Co. and Security First National Bank, as Trustee,
pertaining to 6% Subordinated Income Debentures, due
September 1, 2014, filed as Exhibit 4.2 to Registration
Statement on Form S-1 of Arden Group, Inc. and Arden-
Mayfair, Inc., Registration No. 2-58687, and incorporated
herein by reference.
4.1.1 First Supplemental Indenture dated as of November 7, 1978,
to Indenture which is Exhibit 4.2, filed as Exhibit 7 to
the Annual Report on Form 10-K of Arden Group, Inc. for the
fiscal year ended December 30, 1978 and incorporated herein
by reference.
4.1.2 Second Supplemental Indenture dated as of November 7, 1978,
to Indenture which is Exhibit 4.2, filed as Exhibit 8 to
the Annual Report on Form 10-K of Arden Group, Inc. for the
fiscal year ended December 30, 1978 and incorporated herein
by reference.
4.1.3 Third Supplemental Indenture dated April 24, 1981, to
Indenture which is Exhibit 4.2, filed as Exhibit 4.2.3 to
the Quarterly Report on Form 10-Q of Arden Group, Inc. for
the quarter ended April 4, 1981 and incorporated herein by
reference.
10.1* Employment Agreement dated May 13, 1988 by and among Arden
Group, Inc., Arden-Mayfair, Inc., Telautograph Corporation
and Gelson's Markets and Bernard Briskin, filed as Exhibit
10 to the Quarterly Report on Form 10-Q of Arden Group,
Inc. for the quarter ended July 2, 1988 and incorporated
herein by reference.
</TABLE>
49
<PAGE>
<TABLE>
<CAPTION>
Exhibit
-------
<S> <C>
10.2* Amendment to Employment Agreement dated April 27, 1994 by
and between Arden Group, Inc., Arden-Mayfair, Inc., AMG
Holdings, Inc. and Gelson's Markets and Bernard Briskin,
filed as Exhibit 10.7 to the Quarterly Report on Form 10-Q
of Arden Group, Inc. for the quarter ended April 2, 1994
and incorporated herein by reference.
10.3* Extension Agreement dated January 4, 1981 regarding
promissory notes held by the Registrant between Arden
Group, Inc. and Bernard Briskin, filed as Exhibit 10.2 to
the Quarterly Report on Form 10-Q of Arden Group, Inc. for
the quarter ended July 4, 1981 and incorporated herein by
reference.
10.4* Extension Agreement dated January 1, 1984 regarding
promissory notes held by the Registrant between Arden
Group, Inc. and Bernard Briskin filed as Exhibit 19.1 to
the Quarterly Report on Form 10-Q of Arden Group, Inc. for
the quarter ended September 29, 1984 and incorporated
herein by reference.
10.5* Extension Agreement dated May 13, 1988 regarding promissory
notes held by the Registrant between Arden Group, Inc. and
Bernard Briskin filed as Exhibit 10.11 to the Annual Report
on Form 10-K of Arden Group, Inc. for the fiscal year ended
December 31, 1988 and incorporated herein by reference.
10.6* Modification and Fourth Extension Agreement dated as of
January 1, 1994 regarding promissory notes held by the
Registrant between Arden Group, Inc. and Bernard Briskin,
filed as Exhibit 10.8 to the Quarterly Report on Form 10-Q
of Arden Group, Inc. for the quarter ended April 2, 1994
and incorporated herein by reference.
10.7 Form of Indemnification Agreement between the Registrant
and the Directors and certain officers, filed as Exhibit
10.13 to the Annual Report on Form 10-K of Arden Group,
Inc. for the year ended December 29, 1990 and incorporated
herein by reference.
10.8* Amended Loan and Stock Pledge Agreement dated November 4,
1993 regarding promissory notes held by the Registrant
between Arden Group, Inc. and Bernard Briskin, filed as
Exhibit 10.6 to the Annual Report on Form 10-K of Arden
Group, Inc. for the year ended January 1, 1994 and
incorporated herein by reference.
21. Subsidiaries of Registrant.
27. Financial Data Schedules.
<FN>
* Indicates management contracts or compensatory plans or
arrangements required to be filed as an exhibit to this
report.
</TABLE>
50
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF REGISTRANT
The following are subsidiaries of the Registrant:
State or Province
of Incorporation
------------------
Arden-Mayfair, Inc. Delaware
Gelson's Markets California
AMG Holdings, Inc.
(formerly Telautograph Corporation) Virginia
Arden-Mayfair, Inc. (Arden) is a wholly-owned subsidiary of
the Registrant. Gelson's Markets and AMG Holdings, Inc. are
wholly-owned subsidiaries of Arden. All of the subsidiaries
listed above are included in the consolidated financial
statements of the Registrant.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 19,241
<SECURITIES> 19,700
<RECEIVABLES> 9,288
<ALLOWANCES> 708
<INVENTORY> 10,665
<CURRENT-ASSETS> 60,367
<PP&E> 48,938
<DEPRECIATION> 22,713
<TOTAL-ASSETS> 91,322
<CURRENT-LIABILITIES> 23,861
<BONDS> 6,465
<COMMON> 413
0
0
<OTHER-SE> 57,423
<TOTAL-LIABILITY-AND-EQUITY> 91,322
<SALES> 246,199
<TOTAL-REVENUES> 246,199
<CGS> 151,178
<TOTAL-COSTS> 151,178
<OTHER-EXPENSES> 86,368
<LOSS-PROVISION> 348
<INTEREST-EXPENSE> 946
<INCOME-PRETAX> 8,122
<INCOME-TAX> 3,273
<INCOME-CONTINUING> 4,849
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,849
<EPS-PRIMARY> 3.18
<EPS-DILUTED> 3.18
</TABLE>
