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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended June 28, 1997 Commission File No. 1-1790
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DI GIORGIO CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 94-0431833
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
380 Middlesex Avenue 07008
Carteret, New Jersey (Zip Code)
(Address of principal executive offices)
Registrant's telephone number including area code: (732) 541-5555
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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 ____
As of August 1, 1997, there were 101.62 shares of Class A Common Stock and 100
shares of Class B Common Stock, par value of each class $.01, outstanding.
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<PAGE>
DI GIORGIO CORPORATION AND SUBSIDIARIES
INDEX
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets,
December 28, 1996 and June 28, 1997 (Unaudited)................... 1
Consolidated Condensed Statements of Operations,
Twenty-Six Weeks and Thirteen Weeks Ended
June 29, 1996 and June 28, 1997 (Unaudited) ..................... 2
Consolidated Condensed Statement of Stockholders' Equity/(Deficit),
Twenty-Six Weeks Ended June 28, 1997 (Unaudited) ................. 3
Consolidated Condensed Statements of Cash Flows,
Twenty-Six Weeks Ended June 29, 1996 and June 28, 1997
(Unaudited) ...................................................... 4
Notes to Consolidated Condensed Financial Statements ................ 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations ................................... 7
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K .............................. 12
Signatures.............................................................. 13
<PAGE>
DI GIORGIO CORPORATION and SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
December 28, June 28,
1996 1997
(Unaudited)
ASSETS
Current Assets:
Cash...................................... $1,749 $1,989
Accounts and notes receivable-net......... 61,550 65,889
Inventories............................... 49,563 51,103
Prepaid expenses.......................... 3,706 4,677
----- -----
Total current assets................ 116,568 123,658
------- -------
Property, Plant & Equipment
Cost...................................... 71,785 73,486
Accumulated depreciation.................. (15,515) (18,367)
------ ------
Net....................................... 56,270 55,119
------ ------
Long-term notes receivable.................. 19,276 7,196
Other assets................................ 12,216 22,928
Deferred financing costs.................... 4,172 6,165
Excess of costs over net assets acquired.... 92,567 91,229
------ ------
$301,069 $306,295
======== ========
LIABILITIES & STOCKHOLDERS' EQUITY/(DEFICIT)
Current Liabilities:
Notes payable............................. $26,719 $30,170
Accounts payable.......................... 49,468 48,777
Accrued expenses.......................... 24,362 22,516
Current installment long-term obligations. 3,677 2,456
----- -----
Total current liabilities........... 104,226 103,919
------- -------
Long-term debt.............................. 153,389 171,640
Capital lease liability..................... 31,523 30,702
Other long-term liabilities................. 7,826 7,456
Stockholders' Equity/(Deficit)
Common stock.............................. - -
Additional paid-in-capital................ 17,225 13,002
Accumulated deficit....................... (13,120) (20,424)
------ ------
Total stockholders' equity/(deficit). 4,105 (7,422)
------ -----
$301,069 $306,295
======== ========
See Notes to Consolidated Condensed Financial Statements
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DI GIORGIO CORPORATION and SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(in thousands)
(unaudited)
Thirteen weeks ended Twenty-six weeks ended
-------------------- ----------------------
June 29, June 28, June 29, June 28,
1996 1997 1996 1997
Revenue:
Net Sales....................... $258,322 $252,188 $522,183 $516,566
Other Revenue................... 1,412 1,691 2,425 3,286
----- ----- ----- -----
Total Revenue............. 259,734 253,879 524,608 519,852
Cost of products sold............. 230,491 225,882 467,214 463,062
------- ------- ------- -------
Gross Profit-exclusive of
warehouse expense shown below.... 29,243 27,997 57,394 56,790
Warehouse expense............... 10,173 10,641 20,596 21,250
Transportation expense.......... 5,330 5,252 10,955 10,674
Selling, general and
administrative expense.......... 5,889 5,781 11,791 11,305
Amortization-excess of cost
over net assets acquired........ 723 669 1,446 1,338
----- ----- ----- -----
Operating Income.................. 7,128 5,654 12,606 12,223
Interest expense................ 5,889 5,326 12,027 11,035
Amortization-deferred financing
costs.......................... 284 363 568 651
Other (income)-net.............. (761) (1,158) (1,537) (2,201)
--- ----- ----- -----
Income before income taxes and
extraordinary items.............. 1,716 1,123 1,548 2,738
Income taxes...................... 0 689 0 1,575
--- --- --- -----
Income before extraordinary items. 1,716 434 1,548 1,163
Extraordinary gain (loss) on
extinguishment of debt-net of tax. 219 (8,467) 219 (8,467)
--- ----- --- -----
Net income (loss)................. $1,935 ($8,033) $1,767 ($7,304)
====== ====== ====== ======
See Notes to Consolidated Condensed Financial Statements
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DI GIORGIO CORPORATION and SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY/(DEFICIT)
(in thousands, except share data)
(unaudited)
Additional
Class A Class B Paid-In (Accumulated
Common Stock Common Stock Capital Deficit) Total
------------ ------------ ------- ------- ------
Shares Amount Shares Amount
Balance at
December 28,
1996 101.62 $ -- 100.00 $ -- $17,225 ($13,120) $4,105
Net loss -- -- -- -- -- (7,304) (7,304)
------ ---- ------ ---- ------- ------ -----
Dividend to
stockholders -- -- -- -- (4,223) -- (4,223)
------ ---- ------ ---- ------- ------- -----
Balance at
June 28, 1997 101.62 $ -- 100.00 $ -- $13,002 ($20,424) ($7,422)
====== ==== ====== ==== ======= ======= ======
See Notes to Consolidated Condensed Financial Statements
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DI GIORGIO CORPORATION and SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Twenty-six weeks ended
----------------------
June 29, June 28,
1996 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)............................... $1,767 ($7,304)
Adjustments to reconcile net income to net cash
used in operating activities
Extraordinary (gain) loss on extinguishment
of debt...................................... (219) 8,467
Depreciation and amortization................ 2,315 2,436
Amortization................................. 2,277 2,320
Provision for bad debts...................... 1,300 750
Increase in prepaid pension cost............. (210) (150)
Accretion of 12 3/4% senior discount notes... 2,853 3,010
Noncash interest income...................... (473) 0
Changes in assets and liabilities:
(Increase) decrease in:
Accounts & notes receivable.................. 5,242 (5,089)
Inventory.................................... 2,211 (1,540)
Prepaid expenses............................. (204) (901)
Long-term receivables........................ (1,759) (572)
Other assets................................. 322 (10,972)
(Decrease) increase in:
Accounts payable, accrued expenses and
other liabilities........................... (12,370) 2,040
------ -----
Net cash provided by (used by) operating
activities..................................... 3,052 (7,505)
----- -----
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant, & equipment....... (342) (1,702)
--- -----
Net cash used in investing activities........... (342) (1,702)
--- -----
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings under revolving line-of-credit... 3,684 3,451
Capital lease payments.......................... (1,101) (2,065)
Premiums on completed tender offers............. 0 (10,829)
Repayment of Rose Partner note receivable....... 0 8,917
Dividend paid................................... 0 (61)
Finance fees paid............................... 0 (5,230)
New note offering............................... 0 155,000
Long-term debt payments......................... (5,020) (139,736)
----- -------
Net cash (used in) provided by financing
activities.................................... (2,437) 9,447
----- -----
Increase in cash................................ 273 240
Cash at beginning of period..................... 365 1,749
--- -----
Cash at end of period........................... $638 $1,989
=== =====
Supplemental Disclosure of Cash Flow Information
Cash paid during the period:
Interest.................................... $9,604 $14,427
===== ======
Income Taxes................................ $71 $185
=== ====
Non-cash dividend of notes receivable and
land held for sale............................. $4,162
=====
See Notes to Consolidated Condensed Financial Statements
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DI GIORGIO CORPORATION AND SUBSIDIARIES
NOTES TO
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (UNAUDITED)
1. BASIS OF PRESENTATION
On June 20, 1997, the Company and White Rose Foods, Inc ("White Rose"), its
parent company, consummated a merger in which White Rose was merged with and
into the Company, with the Company as the survivor (the "Merger"). Since the
stockholders of the Company are identical to the stockholders of White Rose, the
exchange of shares was a transfer of interest among entities under common
control, and is being accounted for at historical cost in a manner similar to
pooling-of-interests accounting. Accordingly, the consolidated financial
statements presented herein reflect the assets and liabilities and related
results of operations for the combined entity for all periods. Revenue for the
twenty-six weeks ended June 29, 1996 and June 28, 1997 were the same for the
separate entities prior to the combination. Income before extraordinary items
would have been approximately $1.5 million and $281,000 higher for Di Giorgio
than White Rose for the twenty-six weeks ended June 28, 1997 and June 29, 1996,
respectively, prior to the combination due to additional White Rose net interest
expense. See Note 2 for information relating to the refinancing actions taken in
connection with the merger.
The consolidated condensed balance sheet as of June 28, 1997, the consolidated
condensed statements of operations for the twenty-six weeks and thirteen weeks
ended June 29, 1996 and June 28, 1997, the consolidated condensed statements of
cash flows and stockholders' equity/(deficit) for the twenty-six weeks ended
June 28, 1997, and related notes are unaudited and have been prepared in
accordance with generally accepted accounting principles for interim financial
information and pursuant to the rules and regulations of the Securities and
Exchange Commission. Accordingly, certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been omitted pursuant to such rules and
regulations. The accompanying unaudited interim consolidated condensed financial
statements and related notes should be read in conjunction with the financial
statements and related notes included in the Form 10-K for the fiscal year ended
December 28, 1996, Form 10-Q for the quarter ended March 29, 1997 and Amendment
1 to Form S-4 dated July 16, 1997 filed with the Securities and Exchange
Commission. The information furnished reflects, in the opinion of the management
of the Company, all adjustments, consisting of normal recurring accruals, which
are necessary to present a fair statement of the results for the interim periods
presented.
Previously, the Company classified as other income reclamation service fees,
label income and other customer related services. Commencing in the year ended
December 28, 1996, the Company is classifying these items as other revenue.
Prior year amounts have been reclassified accordingly. The change in
classification has no effect on previously reported net income.
The interim figures are not necessarily indicative of the results to be expected
for the full fiscal year.
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<PAGE>
2. Refinancing
On June 20, 1997, the Company completed a refinancing (the "Refinancing") of
itself and White Rose, intended to extend debt maturities, reduce interest
expense and improve financial flexibility. The components of the Refinancing
were (i) the offering of $155 million 10% senior notes (the "10% Notes") due
2007 (the "Offering"), (ii) the modification of the Company's bank credit
facility (the "Bank Credit Facility"), (iii) the receipt of an $8.9 million
payment for the extinguishment of a note held by the Company from Rose Partners,
LP ("Rose Partners"), which owns 98.54% of the Company, (iv) the consummation of
the tender offers and consent solicitations commenced by the Company (the
"Company Tender Offer") and White Rose (the "White Rose Tender Offer," and
together with the Company Tender Offer, the "Tender Offers") on May 16, 1997 in
respect of the Company's 12% Senior Notes due 2003 (the "12% Notes") and White
Rose's 12-3/4% Senior Discount Notes due 1998 (the "12-3/4% Notes"),
respectively, (v) the $4.2 million dividend by the Company to White Rose of
certain non-cash assets which were unrelated to the Company's primary business
and the subsequent dividend of those assets to White Rose's stockholders and
(vi) the Merger.
Immediately following the Refinancing and as of June 28, 1997, no 12-3/4% Notes
remained outstanding and $7.45 million aggregate principal amount of 12% Notes
remained outstanding; however, the Indenture pursuant to which the 12% Notes
were issued has been substantially amended effective as of June 9, 1997 pursuant
to the Company Tender Offer.
Interest on the 10% Notes is payable semi-annually, in arrears, on June 15 and
December 15 of each year, commencing December 15, 1997. The 10% Notes mature on
June 15, 2007. The Company may redeem the 10% Notes, in whole or in part at any
time on or after June 15, 2002 at redemption prices further defined in the
indenture governing the 10% Notes (the "Indenture"). In addition, on or prior to
June 15, 2000, the Company may redeem up to 35% of the notes under conditions as
so defined in the Indenture.
As a result of the Refinancing, the Company recorded an $8.5 million
extraordinary charge, net of a tax benefit of $5.6 million, on the
extinguishment of debt relating to premiums paid as a result of the Tender
Offers and the write-off of the deferred financing fees associated with the 12%
Notes and 12-3/4 % Notes.
3. Subsequent Event
In August 1997, the Company completed the sale of the option it held on its
Farmingdale facility, the site of its former grocery warehouse and headquarters,
which had been under lease to a third party. The Company realized net cash
proceeds of approximately $7.3 million after the repayment of a mortgage
included in the Company's balance sheet at June 28, 1997 in the amount of
approximately $5.3 million. For book purposes the Company does not expect to
recognize any gain or loss due to the original valuation of the property
although the Company expects to use its net operating loss carryforwards to
offset an approximate $12.0 million taxable gain.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
Certain statements contained herein are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 and are thus
subject to risks, uncertainties and other factors which could cause actual
results to differ materially from future results expressed or implied by such
forward-looking statements.
General
On June 20, 1997, the Company consummated the Refinancing. The following
discussion assumes that the Merger between White Rose and the Company had taken
place as of December 30, 1995. Since the stockholders of the Company are
identical to the stockholders of White Rose, the exchange of shares was a
transfer of interest among entities under common control, and is being accounted
for at historical cost in a manner similar to pooling-of-interests accounting.
Accordingly, the discussion presented herein reflect the assets and liabilities
and related results of operations for the combined entity for all periods.
Results of Operations
Thirteen weeks ended June 28, 1997 and June 29, 1996
Net sales for the thirteen weeks ended June 28, 1997 were $252.2 million as
compared to $258.3 million for the thirteen weeks ended June 29, 1996, as a
$15.8 million decrease in sales to a customer which terminated its contract for
dairy division products in the fourth quarter of 1996 was partially offset by
sales to existing and new customers. In August 1997, the Company began shipping
frozen food products to an additional division of the Great Atlantic and Pacific
Tea Company ("A&P") that it did not previously supply. Sales to this division
are estimated to be in excess of $75 million annually.
Other revenue, consisting of recurring customer related services, increased to
$1.7 million for the thirteen weeks ended June 28, 1997 as compared to $1.4
million in the prior period primarily due to providing a produce distribution
service for a particular customer which began in the first quarter of 1997 and
ended in June 1997. Excluding this produce service, other revenue would have
been $1.5 million for the thirteen weeks ended June 28, 1997 as compared to $1.4
million in the prior period.
Gross margin (excluding warehouse expense) decreased to 11.1% of net sales or
$28.0 million for the thirteen weeks ended June 28, 1997 as compared to 11.3% of
net sales or $29.2 million for the prior period as a result of a change in mix
of product sold. The Company has, and will continue to, take steps to maintain
and improve its margins; however, as indicated by the comparative decrease in
gross margin, there can be no assurance that factors such as the decrease in
promotional activities, changes in product mix, or competitive pricing pressures
will not continue to have an adverse effect on gross margin in the future.
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<PAGE>
Warehouse expense increased to 4.2% of net sales or $10.6 million for the
thirteen weeks ended June 28, 1997 as compared to 3.9% of net sales or $10.2
million for the prior period, because of the effect of fixed costs spread over
lower sales and higher costs associated with the produce distribution business.
Transportation expense remained constant at 2.1% of net sales or $5.3 million
for the thirteen weeks ended June 28, 1997 as well as the prior period.
Selling, general and administrative expense remained unchanged as a percentage
of net sales at 2.3% or $5.8 million for the thirteen weeks ended June 28, 1997
as compared to 2.3% or $5.9 million for the prior period.
Other income, net of other expenses, increased to $1.2 million for the thirteen
weeks ended June 28, 1997 as compared to $761,000 for the prior period primarily
due to increased interest income.
Interest expense decreased to $5.3 million for the thirteen weeks ended June 28,
1997 from $5.9 million for the prior period. The comparative decrease in the
1996 period represents a decline in the average outstanding level of the
Company's funded debt.
The Company recorded an income tax provision of $689,000 resulting in an
effective income tax rate of 61% for the thirteen weeks ended June 28, 1997 as
compared to an effective tax rate of 0% for the prior period. The Company's
estimated effective tax rate is higher than its statutory tax rate primarily
because of the nondeductibility of certain of the Company's amortization of the
excess of cost over net assets acquired; however, due to net operating loss
carryforwards for tax purposes, the Company does not expect to pay federal
income tax for the current year with the exception of an alternative minimum
tax.
At June 28, 1997, the Company is continuing to fully reserve its net deferred
tax assets relating to its tax net operating loss. The valuation allowance will
be adjusted when and if, in the opinion of management, significant positive
evidence exits which indicates that it is more likely than not that the Company
will be able to realize the tax net operating losses.
The Company recorded a net loss for the thirteen weeks ended June 28, 1997 of
$8.0 million, including an extraordinary loss on the extinguishment of debt, net
of tax, of $8.5 million as compared to net income of $1.9 million for the prior
period which included a $219,000 gain on the extinguishment of debt.
Twenty-six weeks ended June 28, 1997 and June 29, 1996
Net sales for the twenty-six weeks ended June 28, 1997 were $516.6 million as
compared to $522.2 million for the twenty-six weeks ended June 29, 1996 as a
$32.7 million decrease in sales to a customer which terminated its contract for
dairy division products in the fourth quarter of 1996 was partially offset by a
temporary supplemental third party supply arrangement and increased sales to
existing customers.
Other revenue, consisting of recurring customer related services, increased
35.5% to $3.3 million for the twenty-six weeks ended June 28, 1997 as compared
to $2.4 million in the prior period primarily due to providing a produce
distribution service for a particular customer which
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<PAGE>
ended in June 1997. Excluding this produce service, other revenue would have
been $2.7 million for the twenty-six weeks ended June 28, 1997 as compared to
$2.4 million in the prior period.
Gross margin (excluding warehouse expense) remained constant at 11.0% of net
sales or $56.8 million for the twenty-six weeks ended June 28, 1997 as compared
to 11.0% of net sales or $57.4 million for the prior period as a result of a
change in mix of product sold. The Company has, and will continue to, take steps
to maintain and improve its margins; however, there can be no assurance that
factors such as the decrease in promotional activities, changes in product mix,
or competitive pricing pressures will not have an adverse effect on gross margin
in the future.
Warehouse expense increased to 4.1% of net sales or $21.3 million for the
twenty-six weeks ended June 28, 1997 as compared to 3.9% of net sales or $20.6
million for the prior period, because of the effect of fixed costs spread over
lower sales and higher costs associated with the produce distribution business.
Transportation expense remained constant at 2.1% of net sales or $10.7 million
for the twenty-six weeks ended June 28, 1997 as compared to 2.1% of net sales or
$11.0 million in the prior period.
Selling, general and administrative expense decreased to 2.2% of net sales or
$11.3 million for the twenty-six weeks ended June 28, 1997 as compared to 2.3%
of net sales or $11.8 million for the prior period primarily due to a reduction
in the provision for doubtful accounts as a result of both a significant decline
in credit exposure to a former customer and an overall improvement in the credit
quality of the portfolio.
Other income, net of other expenses, increased to $2.2 million for the
twenty-six weeks ended June 28, 1997 as compared to $1.5 million for the prior
period primarily due to increased interest income.
Interest expense decreased to $11.0 million for the twenty-six weeks ended June
28, 1997 from $12.0 million for the prior period. The comparative decrease in
the 1996 period represents a decline in the average outstanding level of the
Company's funded debt.
The Company recorded an income tax provision of $1.6 million resulting in an
effective income tax rate of 58% for the twenty-six weeks ended June 28, 1997 as
compared to an effective tax rate of 0% for the prior period. The Company's
estimated effective tax rate is higher than its statutory tax rate primarily
because of the nondeductibility of certain of the Company's amortization of the
excess of cost over net assets acquired; however, due to net operating loss
carryforwards for tax purposes, the Company does not expect to pay federal
income tax for the current year with the exception of an alternative minimum
tax.
The Company recorded a net loss for the twenty-six weeks ended June 28, 1997 of
$7.3 million, including an extraordinary loss on the extinguishment of debt, net
of tax, of $8.5 million as compared to net income of $1.8 million for the prior
period which included a $219,000 gain on the extinguishment of debt.
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<PAGE>
Liquidity and Capital Resources
Cash flow from operations and amounts available under the Company's Bank Credit
Facility are the Company's principal sources of liquidity. The Company's Bank
Credit Facility will mature on June 30, 2000 and bears interest at a rate per
annum equal to (at the Company's option): (i) the Euro Dollar Offering Rate plus
2.25% or (ii) Bankers Trust Company's prime rate plus 0.75%. Borrowings under
the Company's revolving bank credit facility were $30.2 million at June 28,
1997. Additional borrowing capacity of $42.3 million was available at that time
under the Company's borrowing base formula. The Company believes that these
sources will be adequate to meet its anticipated working capital needs, capital
expenditures, and debt service requirements during fiscal 1997.
During the twenty-six weeks ended June 28, 1997, cash flow used in operating
activities was $7.5 million, consisting primarily of cash generated from income
before extraordinary items and non-cash expenses, which were offset by an
increase in net receivable levels of $5.1 million and an increase in other
assets of $11.0 million, which included a deferred tax asset of $5.6 million, as
a result of the extraordinary charge on extinguishment of debt.
Cash flow used in investing activities during the twenty-six weeks ended June
28, 1997 was approximately $1.7 million, all of which was used for capital
expenditures. Net cash provided by financing activities was approximately $9.4
million as a result of the refinancing discussed more fully below.
Earnings before interest expense, income taxes, depreciation and amortization,
non-recurring charges such as extraordinary gains or losses ("EBITDA"), was
$18.5 million during the twenty-six weeks ended June 28, 1997 as compared to
$17.7 million in the comparable prior year period.
The consolidated indebtedness of the Company increased $11.4 million to $235.0
million at June 28, 1997 as compared to $223.6 million at June 29, 1996
primarily as a result of the Company funding, as part of the Refinancing,
premiums to repay high cost long-term debt and the cash expenses of the
transaction. The Company raised an aggregate of $155.0 million through the
issuance of the 10% Notes and received $8.9 million as repayment of the Rose
Partners note which was used (i) to fund the purchase of $85.4 million of the
12% Notes leaving $7.5 million outstanding, (ii) to fund the purchase of $53.7
million of the 12 3/4% Notes leaving $0.0 outstanding, (iii) to pay premiums of
$10.8 million related to such purchases and (iv) to pay accrued interest and the
fees and expenses of the Refinancing, with the remaining $4.9 million used to
reduce the Bank Credit Facility.
Stockholders' equity/(deficit) decreased $11.1 million to a deficit of $7.4
million on June 28, 1997 from $3.7 million of equity on June 29, 1996. The
decrease was the result of the $8.5 million extraordinary charge, net of tax, on
the extinguishment of debt relating to premiums paid as a result of the Tender
Offers and the write-off of the deferred financing fees associated with the 12%
Notes and the 12-3/4% Notes. In addition, the Company dividended non-cash,
non-core assets consisting of land in Colorado and notes receivable with a book
value of approximately $4.2 million and $61,400 in cash to its stockholders on
June 20, 1997.
The 10% Notes also provide that the Company may repurchase, and retire into
treasury (i) up to $5 million of its outstanding Common Stock if the Company
converts the capital lease relating to
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<PAGE>
its Carteret, New Jersey distribution facility into an operating lease and (ii)
additional Common stock up to an amount equal to the net proceeds from its sale
of its Farmingdale facility or the Farmingdale Option. Currently the Bank Credit
Facility only permits (i) but not (ii).
Under the terms of the Company's revolving Bank Credit Facility, the Company is
required to meet certain financial tests, including minimum interest coverage
ratios and minimum net worth. As of June 28, 1997, the Company was in compliance
with its covenants.
The indenture governing the Company's 10% Notes, as well as the agreement
governing the Bank Credit Facility, impose various restrictions upon the
Company, including, among other things, limitations on the occurrence of
additional debt and the making of certain payments and investments.
From time to time when the Company considers market conditions attractive, the
Company has purchased a portion of its 12% Notes and may in the future purchase
and retire a portion of the 10% Notes or any remaining . In addition, the
Company continuously reviews its capital structure, including its funded debt
and capital leases, to determine if it can better finance its operations.
In 1996, the Company entered the produce distribution business for one specific
customer which lasted until June of 1997. The Company continues to study the
feasibility of offering produce to all of its customers. In addition, in
December 1996, the Company entered into a temporary supplemental supply
arrangement with a customer from another geographic region which lasted
approximately six weeks.
In August 1997, the Company completed the sale of the option it held on its
Farmingdale facility, the site of its former grocery warehouse and headquarters,
which had been under lease to a third party. The Company realized net cash
proceeds of approximately $7.3 million after the repayment of a mortgage
included in the Company's balance sheet at June 28, 1997 in the amount of
approximately $5.3 million. For book purposes the Company does not expect to
recognize any gain or loss due to the original valuation of the property
although the Company expects to use its net operating loss carryforwards to
offset an approximate $12.0 million taxable gain.
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<PAGE>
Part II-OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K. None
-12-
<PAGE>
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 hereunto duly authorized.
DI GIORGIO CORPORATION
By: /s/ Arthur M. Goldberg
-----------------------------
Arthur M. Goldberg
Chairman, President and Chief
Executive Officer
By: /s/ Richard B.Neff
-----------------------------
Richard B. Neff
Executive Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
Date: August 7, 1997
-13-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED BALANCE SHEETS, STATEMENTS OF INCOME, STATEMENT OF
STOCKHOLDERS' EQUITY AND STATEMENT OF CASH FLOWS FROM FORM 10Q FOR THE PERIOD
ENDED JUNE 28, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Dec-27-1997
<PERIOD-END> Jun-28-1997
<CASH> 1,989
<SECURITIES> 0
<RECEIVABLES> 70,228
<ALLOWANCES> 4,339
<INVENTORY> 51,103
<CURRENT-ASSETS> 4,677
<PP&E> 73,486
<DEPRECIATION> 18,367
<TOTAL-ASSETS> 306,295
<CURRENT-LIABILITIES> 103,919
<BONDS> 155,000
0
0
<COMMON> 0
<OTHER-SE> (7,422)
<TOTAL-LIABILITY-AND-EQUITY> 306,295
<SALES> 516,566
<TOTAL-REVENUES> 519,852
<CGS> 463,062
<TOTAL-COSTS> 506,291
<OTHER-EXPENSES> (212)
<LOSS-PROVISION> 750
<INTEREST-EXPENSE> 11,035
<INCOME-PRETAX> 2,738
<INCOME-TAX> 1,575
<INCOME-CONTINUING> 1,163
<DISCONTINUED> 0
<EXTRAORDINARY> (8,467)
<CHANGES> 0
<NET-INCOME> (7,304)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
