<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
--- EXCHANGE ACT OF 1934
For the quarterly period ended April 1, 1995
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OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission file number 0-9904
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ARDEN GROUP, INC.
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(Exact name of registrant as specified in its charter)
Delaware 95-3163136
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2020 South Central Avenue, Compton, California 90220
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (310) 638-2842
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No Change
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Former name, former address and former fiscal year,
if changed since last report.
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 the filing requirements for at least the past 90 days.
Yes X No .
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The number of shares outstanding of the registrant's classes of common
stock as of April 1, 1995 was:
970,866 of Class A common stock
343,246 of Class B common stock
This report contains a total of 12 pages including exhibits.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ARDEN GROUP, INC. AND CONSOLIDATED SUBSIDIARY
BALANCE SHEETS (Unaudited)
(In Thousands)
A S S E T S
<TABLE>
<CAPTION>
April 1, December 31,
1995 1994
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<S> <C> <C>
Current assets:
Cash and cash equivalents $24,564 $19,241
Marketable securities 17,922 19,700
Notes and accounts receivable, net 6,865 8,580
Inventories 9,710 10,665
Prepaid and other 2,278 2,181
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Total current assets 61,339 60,367
Notes and contracts receivable 112 1,366
Property for resale or sublease, at lower
of cost or market 1,554 1,539
Property, plant and equipment, at cost less
accumulated depreciation and amortization
of $23,386 and $22,713, respectively 26,483 26,225
Other assets 1,796 1,825
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Total assets $91,284 $91,322
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</TABLE>
See Notes to Financial Statements
2
<PAGE>
PART I. FINANCIAL INFORMATION, Continued
ARDEN GROUP, INC. AND CONSOLIDATED SUBSIDIARY
BALANCE SHEETS (Unaudited)
(In Thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
April 1, December 31,
1995 1994
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<S> <C> <C>
Current liabilities:
Accounts payable, trade $9,112 $9,994
Other current liabilities 12,930 13,193
Current portion of long-term debt 649 674
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Total current liabilities 22,691 23,861
Long-term debt, including obligations under capital
leases of $4,444 and $4,541, respectively 6,318 6,465
Deferred income taxes 1,200 1,109
Other liabilities 1,815 2,051
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Total liabilities 32,024 33,486
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Commitments and contingent liabilities
Stockholders' equity:
Class A common stock 327 327
Class B common stock 86 86
Capital surplus 6,413 6,413
Notes receivable from officer/director (443) (442)
Retained earnings 56,630 55,205
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63,013 61,589
Less: treasury stock, at cost 3,753 3,753
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Total stockholders' equity 59,260 57,836
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Total liabilities and stockholders' equity $91,284 $91,322
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</TABLE>
See Notes to Financial Statements
3
<PAGE>
PART I. FINANCIAL INFORMATION, Continued
ARDEN GROUP, INC. AND CONSOLIDATED SUBSIDIARY
STATEMENTS OF OPERATIONS (Unaudited)
(In Thousands Except Per Share and Other Data)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
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April 1, 1995 April 2, 1994
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<S> <C> <C>
Sales $59,941 $63,151
Cost of sales 36,732 39,225
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Gross profit 23,209 23,926
Delivery, selling, general and administrative expenses 21,727 22,342
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Operating income 1,482 1,584
Interest, dividend and other income (expense), net 92 222
Net unrealized gain (loss) on marketable securities 761 (893)
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Income before income taxes 2,335 913
Income tax provision 910 366
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Net income $1,425 $547
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Net income per common share $1.08 $ .34
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Weighted average common shares outstanding 1,314,112 1,612,724
========= =========
</TABLE>
See Notes to Financial Statements
4
<PAGE>
PART I. FINANCIAL INFORMATION, Continued
ARDEN GROUP, INC. AND CONSOLIDATED SUBSIDIARY
STATEMENTS OF CASH FLOWS (Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
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April 1, 1995 April 2, 1994
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<S> <C> <C>
Cash flows from operating activities:
Cash received from customers $60,579 $63,739
Cash paid to suppliers and employees (58,668) (61,275)
Interest and dividends received 629 693
Interest paid (207) (395)
Income taxes paid (305) (19)
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Net cash provided by operating activities 2,028 2,743
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Cash flows from investing activities:
Capital expenditures (1,085) (3,579)
Investment in marketable securities 2,046 (2,374)
Proceeds from sale of GPS 2,500
Proceeds from the sale of property, plant and
equipment, liquor licenses and leasehold interests 6 5
Payments received on notes from the sale of property,
plant and equipment and liquor licenses 16
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Net cash provided by (used in) investing activities 3,467 (5,932)
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Cash flows from financing activities:
Payments related to sale of discontinued operations (2,314)
Principal payments under capital lease obligations (126) (263)
Payment of loan from officer/director 1,000
Principal payments on long-term debt (46) (684)
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Net cash used in financing activities (172) (2,261)
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Net increase (decrease) in cash 5,323 (5,450)
Cash at beginning of year 19,241 39,526
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Cash at end of quarter $24,564 $34,076
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</TABLE>
See Notes to Financial Statements
5
<PAGE>
PART I. FINANCIAL INFORMATION, Continued
ARDEN GROUP, INC. AND CONSOLIDATED SUBSIDIARY
STATEMENTS OF CASH FLOWS (Unaudited)
(In Thousands)
Reconciliation of net income to net cash provided by operating activities:
- -------------------------------------------------------------------------
<TABLE>
<CAPTION>
Thirteen Weeks Ended
------------------------------
April 1, 1995 April 2, 1994
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<S> <C> <C>
Net income $1,425 $547
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 841 988
Unrealized (gain) loss on marketable securities (761) 893
Loss on sale of marketable securities 493 67
Noncompete payment on sale of GPS (75)
Provision for losses on accounts and notes receivable 26 44
Net (gain) loss from the sale of property, plant and equipment,
liquor licenses and early lease terminations 2 (2)
Notes receivable from officer/director (1) (4)
Change in assets and liabilities net of effects from noncash
investing and financing activities:
(Increase) decrease in assets:
Notes and accounts receivable 518 1,191
Inventories 955 288
Prepaid expenses (97) (519)
Other assets (8) (62)
Increase (decrease) in liabilities:
Accounts payable and other current liabilities (1,145) (50)
Deferred income taxes (236) (453)
Other liabilities 91 (185)
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Net cash provided by operating activities $2,028 $2,743
====== ======
</TABLE>
See Notes to Financial Statements
6
<PAGE>
PART I. FINANCIAL INFORMATION, Continued
ARDEN GROUP, INC. AND CONSOLIDATED SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
These financial statements reflect all adjustments which are, in the opinion
of management, necessary to a fair statement of the results of operations
for the periods presented.
1. Basis of Presentation and Principles of Consolidation:
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The consolidated financial statements of Arden Group, Inc. (the Company")
include the accounts of the Company and its direct and indirect
subsidiaries. Intercompany balances and transactions are eliminated. On
May 27, 1994, the Company sold GPS Pool Supply, Inc. ("GPS") and therefore,
after that date, operates exclusively in the supermarket business.
2. Arbitration Award:
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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 had been in dispute. No amount with
respect to this inventory had been included in the 1993 gain from the sale
of such business. 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 and no expenses related to the second arbitration have been
recognized in the statements of operations of the Company.
3. Net Income Per Share:
---------------------
Net income per share is based on the weighted average number of common
shares outstanding during the period. Due to the purchase of 298,612 shares
Class A common stock in 1994, the weighted average number of shares is
reduced in the first quarter of 1995 compared to the first quarter of 1994
which calculation resulted in higher earnings per share in the first quarter
of 1995 as compared to the first quarter of 1994.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
First Quarter Analysis
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During the first quarter of 1995, the Company had net income of $1,425,000
compared to net income of $547,000 during the first quarter of 1994. Pretax
income was $2,335,000 for the first quarter of 1995 compared to pretax income
of $913,000 for the first quarter of 1994. As described below, included in the
7
<PAGE>
PART I. FINANCIAL INFORMATION, Continued
first quarter of 1995 income is $761,000 of net unrealized gains related to
marketable securities as compared to net unrealized losses of $893,000 in the
first quarter of 1994.
During the first quarter of 1995, the Company's operating income from its
supermarket operations was $1,482,000 compared to operating income of
$1,796,000 during the first quarter of 1994. Sales from the Company's
12 supermarkets in the greater Los Angeles area were $59,941,000 in the first
quarter of 1995, a decrease of 1.4% from the first quarter of 1994, when sales
were $60,813,000. Part of the sales decrease is attributable to the timing
of the Passover/Easter holidays which occurred in the second quarter in 1995
versus the first quarter of 1994. Additionally, sales have been negatively
impacted by competitors opening new stores. 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 two long-term leases to
open new Gelson's markets subject to the Company's due diligence receipt of
necessary entitlements and the developer fulfilling certain conditions. The
Company is continually searching for additional store locations.
The Company's gross profit from supermarket operations as a percentage of
sales was 38.7% in the first quarter of 1995 compared to 38.6% in the same
period of 1994.
Delivery, selling, general and administrative ("DSG&A") expenses for
supermarket operations as a percentage of sales were 36.2% in the first
quarter of 1995 compared to 35.6% the first quarter of 1994. In the first
quarter of 1994 the Company recorded a charge to operations of $1,300,000
to cover the estimated uninsured portion of losses related to the January
17, 1994 earthquake centered in Northridge, California. This increase in
DSG&A expense was partially offset by contractual credits taken against
health and welfare payments due the retail clerks and meat cutters unions
of approximately $1,100,000 (non-recurring in 1995). In 1995, the Company
experienced higher supply costs due to increased paper cost and higher
union medical and pension costs.
The swimming pool chemical processing and distribution operations, conducted
by GPS, was sold on May 27, 1994; therefore, the first quarter of 1995 does
not reflect any GPS operating results. The first quarter of 1994 reflects a
GPS operating loss of $212,000 on sales of $2,338,000.
Interest and dividend income was $688,000 in the first quarter of 1995
compared to $676,000 for the same period in 1994. Decreased levels of
short-term investments were offset by an increase in earnings rates.
Interest expense decreased to $184,000 in the first quarter of 1995 from
$360,000 in the first quarter of 1994. The Company paid off, at maturity,
the $634,000 balance of a mortgage in the first quarter of 1994 and the
$4,663,000 balance of another mortgage in the second quarter of 1994.
Other income (expense) includes realized losses on the sale of marketable
securities of $493,000 and $67,000 in the first quarters of 1995 and 1994,
respectively.
In the first quarter of 1995, the market value of the Company's holdings
in marketable securities increased. The Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities" ("SFAS 115"), which became effective for fiscal years beginning
after December 15, 1993, requires that unrealized holding gains and losses
for certain marketable securities shall be included in
8
<PAGE>
PART I. FINANCIAL INFORMATION, Continued
the determination of net income. As a result, net unrealized gains of
$761,000 related to marketable securities were recognized in the first
quarter of 1995 compared to net unrealized losses of $893,000 in the first
quarter of 1994.
CAPITAL EXPENDITURES/LIQUIDITY
The Company plans to utilize cash-on-hand (including marketable
securities) and cash flow from operations to fund capital expenditures in
1995. There have been no material changes in the utilization of the
Company's lines of credit.
In March 1995, the $2,425,000 outstanding balance of the promissory note
due the Company by the purchaser of GPS Pool Supply, Inc. was paid in full.
9
<PAGE>
PART II. OTHER INFORMATION
Items 1. through 5.
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Not applicable.
Item 6. Exhibits and Reports on Form 8-K
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(a) Exhibits:
Exhibit 27 - Financial Data Schedules
(b) Reports on Form 8-K:
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ARDEN GROUP, INC.
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Registrant
Date May 15, 1995 ERNEST T. KLINGER
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Ernest T. Klinger
Vice President Finance and Administration
and Chief Financial Officer
(Authorized Signatory)
10
<PAGE>
ARDEN GROUP, INC.
and consolidated subsidiary
INDEX TO EXHIBITS
Exhibit
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27. Financial Data Schedules.
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-END> APR-01-1995
<CASH> 24,564
<SECURITIES> 17,922
<RECEIVABLES> 7,574
<ALLOWANCES> 709
<INVENTORY> 9,710
<CURRENT-ASSETS> 61,339
<PP&E> 49,869
<DEPRECIATION> 23,386
<TOTAL-ASSETS> 91,284
<CURRENT-LIABILITIES> 22,691
<BONDS> 6,318
<COMMON> 413
0
0
<OTHER-SE> 58,847
<TOTAL-LIABILITY-AND-EQUITY> 91,284
<SALES> 59,941
<TOTAL-REVENUES> 59,941
<CGS> 36,732
<TOTAL-COSTS> 36,732
<OTHER-EXPENSES> 21,701
<LOSS-PROVISION> 26
<INTEREST-EXPENSE> 184
<INCOME-PRETAX> 2,335
<INCOME-TAX> 910
<INCOME-CONTINUING> 1,425
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,425
<EPS-PRIMARY> 1.08
<EPS-DILUTED> 1.08
</TABLE>
