FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended October 11, 1997
Commission File Number 0-26602
THE GRAND UNION COMPANY
(Exact name of registrant as specified in its charter)
Delaware 22 - 1518276
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
201 Willowbrook Boulevard, Wayne, New Jersey 07470 - 0966
(Address of principal executive offices) (Zip Code)
973-890-6000
(Registrant's telephone number, including area code)
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 check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes _X_. No ___ .
As of November 25, 1997, there were issued and outstanding 10,000,000
shares, par value $0.01 per share, of the Registrant's common stock.
1
<PAGE>
THE GRAND UNION COMPANY
INDEX
PART I - FINANCIAL INFORMATION (Unaudited)
Item 1. Financial Statements.
Page No.
Consolidated Statements of Operations - 12 weeks ended
October 11, 1997 and October 12, 1996 and 28 weeks ended
October 11, 1997 and October 12, 1996 3
Consolidated Balance Sheets - October 11, 1997 and March 29, 1997 4
Consolidated Statements of Cash Flows - 28 weeks ended 5
October 11, 1997 and October 12, 1996
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations. 9
PART II - OTHER INFORMATION
Item 5. Other Information 11
Item 6. Exhibits and Report on Form 8-K 11
All items which are not applicable or to which the answer is negative have been
omitted from this report.
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
THE GRAND UNION COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
12 WEEKS ENDED 28 WEEKS ENDED
-------------------------- --------------------------
October 11, October 12, October 11, October 12,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales $ 518,910 $ 533,412 $ 1,226,893 $ 1,260,235
Cost of sales (370,246) (371,254) (888,760) (876,178)
----------- ----------- ----------- -----------
Gross profit 148,664 162,158 338,133 384,057
Operating and administrative expenses (135,193) (131,809) (315,015) (312,687)
Depreciation and amortization (20,309) (19,732) (44,776) (45,145)
Amortization of excess reorganization value (24,076) (23,678) (56,178) (55,250)
Interest expense, net (26,012) (24,574) (58,332) (56,861)
----------- ----------- ----------- -----------
Loss before income taxes (56,926) (37,635) (136,168) (85,886)
Income tax benefit -- 6,982 -- 11,421
----------- ----------- ----------- -----------
Net (loss) (56,926) (30,653) (136,168) (74,465)
Accrued dividends on preferred stock (2,074) (243) (4,131) (243)
----------- ----------- ----------- -----------
Net (loss) applicable to common stock $ (59,000) $ (30,896) $ (140,299) $ (74,708)
=========== =========== =========== ===========
Net (loss) per common share $ (5.90) $ (3.09) $ (14.03) $ (7.47)
=========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements (unaudited).
3
<PAGE>
THE GRAND UNION COMPANY
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
October 11, March 29,
1997 1997
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 29,688 $ 34,119
Receivables 293 17,975
Inventories 129,848 131,409
Other current assets 12,766 14,326
----------- -----------
Total current assets 172,595 197,829
Property, net 418,814 411,911
Excess reorganization value, net 278,887 335,065
Deferred tax asset 51,393 51,393
Beneficial leases, net 45,854 52,266
Other assets 20,292 12,375
----------- -----------
$ 987,835 $ 1,060,839
=========== ===========
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current liabilities:
Current maturities of long-term debt -- 46
Current portion of obligations under capital leases 7,495 8,045
Accounts payable and accrued liabilities 139,134 164,549
----------- -----------
Total current liabilities 146,629 172,640
Long-term debt 786,843 740,207
Obligations under capital leases 147,950 140,058
Other noncurrent liabilities 90,791 96,144
----------- -----------
Total liabilities $ 1,172,213 $ 1,149,049
----------- -----------
Redeemable Class A Preferred Stock, $1.00 par
value, 3,500,000 shares authorized, 1,300,566 shares
issued and outstanding, liquidation preference $67,994
and $65,000, respectively 67,994 65,000
----------- -----------
Redeemable Class B Preferred Stock, $1.00 par
value, 1,400,000 shares authorized, 800,000 shares
issued and outstanding, liquidation preference $41,137 41,137 --
----------- -----------
Stockholders' (deficit):
Common stock, $.01 par value; 60,000,000 shares
authorized, 10,000,000 shares issued and outstanding 100 100
Preferred stock, $1.00 par value; 10,000,000 shares
authorized, less amount authorized as Class A and Class
B preferred stock, no shares issued and outstanding -- --
Capital in excess of par value 135,769 139,900
Accumulated deficit (429,378) (293,210)
----------- -----------
Total stockholders' (deficit) (293,509) (153,210)
----------- ===========
$ 987,835 $ 1,060,839
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements (unaudited).
4
<PAGE>
THE GRAND UNION COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
28 Weeks Ended
------------------------
October 11, October 12,
1997 1996
---------- -----------
OPERATING ACTIVITIES:
Net (loss) $(136,168) $ (74,465)
Adjustments to reconcile net (loss) to
net cash (used for) operating
activities before reorganization items paid:
Depreciation and amortization 100,954 100,395
Deferred taxes -- (11,421)
Noncash interest 158 (102)
Net changes in assets and liabilities:
Receivables 17,682 (5,107)
Inventories 1,561 (4,566)
Other current assets 1,560 158
Accounts payable and accrued liabilities (23,702) (17,525)
Other (6,953) (2,183)
--------- ---------
Net cash (used for) operating
activities before reorganization items paid (44,908) (14,816)
Reorganization items paid (3,431) (3,720)
--------- ---------
Net cash (used for) operating activities (48,339) (18,536)
--------- ---------
INVESTMENT ACTIVITIES:
Capital expenditures (28,712) (18,226)
Disposals of property 60 7,901
--------- ---------
Net cash (used for) investment activities (28,652) (10,325)
--------- ---------
FINANCING ACTIVITIES:
Net proceeds from sale of preferred stock 40,000 28,000
Proceeds from long-term debt 77,978 6,000
Loan placement fees (9,446) --
Obligations under capital leases discharged (4,926) (6,600)
Repayment of long-term debt (31,046) (6,425)
--------- ---------
Net cash provided by financing activities 72,560 20,975
--------- ---------
(Decrease) in cash and temporary investments (4,431) (7,886)
Cash and temporary investments at beginning of year 34,119 39,425
--------- ---------
Cash $ 29,688 $ 31,539
========= =========
Supplemental disclosure of cash flow information:
Interest payments $ 55,644 $ 55,034
Capital lease obligations incurred 12,268 15,999
Accrued dividends 4,131 243
See accompanying notes to consolidated financial statements (unaudited).
5
<PAGE>
THE GRAND UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 1 - Basis of Accounting
The accompanying interim consolidated financial statements of The Grand
Union Company (the "Company") include the accounts of the Company and its
subsidiaries, all of which are wholly-owned. In the opinion of management, the
consolidated financial statements include all adjustments, which consist only of
normal recurring adjustments necessary for a fair presentation of operating
results for the interim periods.
These consolidated financial statements should be read in conjunction with
the consolidated financial statements and related notes contained in the
Company's Annual Report on Form 10-K for the 52 weeks ended March 29, 1997, and
the Company's Quarterly Report on Form 10-Q for the 16 weeks ended July 19,
1997. Operating results for the periods presented are not necessarily indicative
of results for the full fiscal year.
Certain items reported on the Consolidated Statements of Cash Flows have
been reclassified from last year's presentation for comparative purposes.
NOTE 2 - Preferred Stock Issuances
In a series of related transactions commencing on July 30, 1996, Trefoil
Capital Purchasers II, L. P., a Delaware limited partnership, and GE Investment
Private Placement Partners II, A Limited Partnership, a Delaware limited
partnership (collectively, the "Purchasers"), acquired beneficial ownership of
an aggregate of approximately 70.77% of the Company's outstanding voting stock.
On July 30, 1996, the Company entered into a definitive agreement (the "Stock
Purchase Agreement") to sell $100 million of Preferred Stock A to the
Purchasers. Each share of the Preferred Stock A was to be convertible at the
option of the holder, at any time, into 6.8966 shares of Common Stock. Pursuant
to the Stock Purchase Agreement, the Purchasers agreed to purchase, and the
Company agreed to sell, an aggregate of 2,000,000 shares of Preferred Stock A at
a purchase price of $50 per share (the "Stated Value") in stages through
February 25, 1998. On September 17, 1996, the first stage of the transaction was
closed, and the Purchasers acquired 800,000 shares of Preferred Stock A for an
aggregate purchase price of $40 million.
At a subsequent closing held on February 25, 1997, the Purchasers purchased
an additional 400,000 shares of Preferred Stock A for an aggregate purchase
price of $20 million. Additional subsequent closings were scheduled for August
25, 1997 and February 25, 1998 (the "Subsequent Closings"). At the Subsequent
Closings, the Purchasers would have been required to purchase an additional
800,000 shares of Preferred Stock A for an aggregate purchase price of $40
million.
Pursuant to an Acceleration and Exchange Agreement (the "Acceleration
Agreement"), dated June 12, 1997, among the Company and the Purchasers, the
Company and the Purchasers agreed to accelerate the sale and purchase of the
800,000 shares of Preferred Stock A to have occurred at the Subsequent Closings
(the "Accelerated Shares") to June 12, 1997 (the "Accelerated Closing") and to
exchange the Accelerated Shares for 800,000 shares of Preferred Stock B (the
"Exchange"). At the Accelerated Closing, the Company received the $40 million
purchase price for the sale of the Accelerated Shares. Immediately following the
Accelerated Closing, the Purchasers completed the Exchange pursuant to which
they received an aggregate of 800,000 shares of the Preferred Stock B, in
consideration for their surrender of the Accelerated Shares. Each share of
Preferred Stock B is convertible at the option of the holder, at any time, into
20.8333 shares of Common Stock. This conversion ratio is to be reset to a
conversion ratio based upon a 20% premium to the average trading price of Common
Stock during a twenty-day period following the earlier of: (i) three days after
the release of the January 3, 1998 quarterly results, or (ii) February 20, 1998.
The Purchasers obtained the necessary funds to purchase the Preferred Stock from
capital contributions from their respective partners.
On March 20, 1997, the Company consummated the sale to The Roger Stangeland
Family Limited Partnership (the "Stangeland Partnership") of 60,000 shares of
Preferred Stock A at a purchase price of $50.00 per share (the "Stangeland
Shares"), pursuant to the terms of a Stock Purchase Agreement, dated February
25, 1997, as amended by Amendment No. 1 thereto dated as of March 20, 1997 (as
so amended, the "Stangeland Stock Purchase Agreement"), between the Company and
Mr. Stangeland. Pursuant to a Stockholder Agreement dated February 25, 1997 (the
"Stangeland Stockholder Agreement"), among the Purchasers, Mr. Stangeland and
the Company, Mr. Stangeland has granted the Purchasers certain take-along
rights, the Purchasers have granted Mr. Stangeland certain tag-along rights, and
the Purchasers and the Company have granted Mr. Stangeland certain registration
rights related to the Stangeland Shares and any shares of Preferred Stock A, and
Common Stock, if any, paid as dividends with respect to the Preferred Stock A
(collectively, "Securities"). Pursuant to an Addendum, dated as of March 20,
1997, to the Stangeland Stockholder Agreement, the Stangeland Partnership has
succeeded to all of the rights, and has assumed all of the obligations, of Mr.
6
<PAGE>
Stangeland pursuant to the Stangeland Stockholder Agreement. The Purchasers
disclaim any and all ownership of the Stangeland Shares or any additional
Securities acquired by the Partnership in respect of the Stangeland Shares.
At October 11, 1997, there were a total of 1,300,566 outstanding shares of
Preferred Stock A, which were convertible into an aggregate of 8,969,483 shares
of Common Stock, and a total of 800,000 outstanding shares of Preferred Stock B,
which were convertible into an aggregate of 16,666,640 shares of Common Stock.
Together, the aggregate shares of Preferred Stock A and Preferred Stock B
account for approximately 71.94% of the Company's outstanding voting stock.
The Class A Preferred Stock and Class B Preferred Stock have been
classified as redeemable Class A Preferred Stock and Class B Preferred Stock in
the accompanying Consolidated Balance Sheets. On March 31, 1997, the Company
paid dividends on the Class A Preferred Stock through the issuance of 20,866
shares of Class A Preferred Stock, with an aggregate Stated Value of $1,043,300.
The Company elected to suspend the declaration of the dividends payable June 30,
1997 and September 30, 1997. The dividends on the Class A Preferred Stock and
the Class B Preferred Stock and the accrued and unpaid dividends through October
11, 1997 have been accounted for by a charge against Capital in Excess of Par
Value and a corresponding increase in the carrying amounts of the Class A
Preferred Stock and Class B Preferred Stock. The Class A and Class B Preferred
Stock have a Liquidation Preference over the Common Stock equal to the Stated
Value of the outstanding shares of the Preferred Stock plus all accrued, unpaid
dividends.
NOTE 3 - Net Loss Per Share
The Company's outstanding warrants and options to purchase Common Stock
under the Company's 1995 Non-Employee Director's Stock Option Plan and 1995
Equity Incentive Plan are considered common stock equivalents. The inclusion of
these common stock equivalents in the Company's primary net loss per share
calculation would have been anti-dilutive for the periods presented.
Accordingly, only the weighted average number of common shares outstanding,
totaling 10,000,000, were included in the calculation.
The Company's Class A Preferred Stock and Class B Preferred Stock are not
deemed to be common stock equivalents. A fully diluted net loss per share
calculation is not presented because inclusion of the Class A Preferred Stock
and Class B Preferred Stock in the calculation would have been anti-dilutive for
the periods presented.
NOTE 4 - Stock Option Grants
On August 1, 1997, the Board of Directors elected J. Wayne Harris Chairman
of the Board and Chief Executive Office of the Company. In connection with such
appointment, the Company granted Mr. Harris options to purchase up to 1,250,000
shares of the Company's Common Stock, pursuant to the 1995 Equity Incentive
Plan, subject to stockholder approval. The exercise price for the options ranges
from $1.375 to $4.375 per share. The options expire on July 31, 2007, although
their expiration may be accelerated by certain events.
The Board of Directors, pursuant to the 1995 Equity Incentive Plan,
authorized a stock option grant of 1,800,000 shares of common stock to certain
associates of the Company, including store managers, management personnel and
other bi-weekly, exempt associates. On October 1, 1997, eligible associates were
granted options at an exercise price of $1.84375 and the options will expire on
September 30, 2007, although their expiration may be accelerated by certain
events.
On October 3, 1997, the Board of Directors elected Gary M. Philbin
President and Chief Merchandising Officer of the Company. In connection with
such appointment, the Company granted Mr. Philbin options to purchase up to
450,000 shares of the Company's Common Stock, pursuant to the 1995 Equity
Incentive Plan, subject to stockholder approval. The exercise price for the
options ranges from $2.125 to $4.315 per share. The options expire on October 2,
2007, although their expiration may be accelerated by certain events.
NOTE 5 - Amendment to Bank Facility
Effective August 29, 1997, the Company executed an amended and restated
Bank Facility (as amended and restated, the "Bank Facility") to eliminate
existing technical defaults and relax covenants relating to the Company's
performance in the future, thereby providing the Company access to the Revolving
Credit Facility. The Bank Facility also provides for a new term loan facility of
approximately $78 million. The amount available to the Company under the
Revolving Credit Facility was reduced to approximately $68 million. The
additional funds made available to the Company through the Bank Facility raise
the Company's total secured credit facility to $250 million. For additional
information regarding the Bank Facility, please see the Company's Report on Form
8-K filed on September 4, 1997.
7
<PAGE>
NOTE 6 - Related Party Transactions
Mr. Geoffrey T. Moore, a director, is a managing director and executive
officer of Shamrock Capital Advisors, Inc. ("SCA"). Pursuant to a three-year
management services agreement (the "Services Agreement") dated July 30, 1996,
between the Company and SCA, SCA shall consult with and provide advice to the
officers and management of the Company concerning matters relating to the
Company's financial policies, development and implementation of business plans
and general business affairs. The Services Agreement expires by its terms in
September 1999. SCA's compensation for such management and consulting services
under the Services Agreement was $300,000 in the fiscal year ending in 1997 and
will be $400,000 for the fiscal year ending in 1998. The Company also reimburses
SCA for its reasonable out-of-pocket costs and expenses incurred in connection
with the performance of its services under the Services Agreement. The Company
has agreed to indemnify SCA against all claims, liabilities, expenses, losses or
damages (or actions in respect thereof) related to or arising out of actions
taken (or omitted to be taken) by SCA pursuant to the terms of the Services
Agreement; provided that such liabilities did not result primarily from actions
taken, or omitted to be taken, by SCA in bad faith or due to SCA's gross
negligence.
NOTE 7 - Common Stock Traded on Nasdaq SmallCap Market
On September 19, 1997, the Nasdaq Listing Qualifications Panel determined
that the Company's Common Stock no longer qualified for trading on the Nasdaq
National Market and would be transferred to the Nasdaq SmallCap Market. The
transfer to the SmallCap Market was completed as of the close of business on
October 21, 1997.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Results of Operations
The following table sets forth certain statements of operations and other
data (all dollars in millions).
<TABLE>
<CAPTION>
12 Weeks Ended 28 Weeks Ended
---------------------------- -----------------------------
October 11, October 12, October 11, October 12,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales $518.9 $533.4 $1,226.9 $1,260.2
Gross profit 148.7 162.2 338.1 384.1
Operating and administrative expenses (135.2) (131.8) (315.0) (312.7)
Depreciation and amortization (20.3) (19.7) (44.8) (45.1)
Amortization of excess reorganization value (24.1) (23.7) (56.2) (55.3)
Interest expense, net (26.0) (24.6) (58.3) (56.9)
Income tax benefit -- 7.0 -- 11.4
Net (loss) (56.9) (30.7) (136.2) (74.5)
Sales percentage increase (decrease) (2.7%) 1.9% (2.6%) 1.3%
Same store sales percentage increase (decrease) (1.6%) 2.0% (1.7%) 1.4%
Gross profit as a percentage of sales 28.7 30.4 27.6 30.5
Operating and administrative
expenses as a percentage of sales 26.1 24.7 25.7 24.8
</TABLE>
Sales for the 12 (the "second quarter") and 28 (the "year to date") weeks
ended October 11, 1997, decreased $14.5 million, or 2.7%, and $33.3 million, or
2.6%, respectively, as compared to the 12 and 28 weeks ended October 12, 1996.
Comparable store sales, including replacement stores, decreased 1.6% and 1.7%
during the second quarter and year to date, respectively, compared to the prior
year. The Company opened one new and two replacement stores and closed seven
stores (one due to fire) during the 28 weeks ended October 11, 1997. Same store
sales decreased for the second quarter and year to date resulting primarily from
continued competitive activity within the Company's operating area offset by new
marketing strategies. The Company opened one new and one replacement store and
closed three stores during the 28 weeks ended October 12, 1996.
Gross profit, as a percentage of sales, decreased to 28.7% in the second
quarter compared to the prior year mainly due to a reduction in promotional
income. Gross profit, as a percentage of sales, decreased to 27.6% for the 28
weeks ended October 11, 1997, compared to the prior year.
Operating and administrative expenses, as a percentage of sales, increased
to 26.1% for the second quarter, which resulted primarily from the Company's
occupancy costs being affected by new stores in the current quarter. Operating
and administrative expenses, as a percentage of sales, increased to 25.7% for
the 28 weeks ended October 11, 1997, compared to the prior year.
Depreciation and amortization increased to $20.3 million for the second
quarter and decreased to $44.8 million for the year to date. The increase for
the quarter is due primarily to the asset values in the newly opened and
replacement stores.
Interest expense increased to $26.0 million and $58.3 million for the
second quarter and year to date periods, respectively. The second quarter
increase is principally a result of additional interest expense from the Bank
Facility as amended and restated on August 29, 1997.
The Company recorded no net income tax benefit or provision during the 1998
second quarter and year to date periods. A tax benefit related to the potential
use of operating loss carryforwards was offset by a valuation allowance.
The Company has made progress in stabilizing its financial, merchandising
and operational performance. Overall margins and advertising/promotional
allowance income funds have returned to more normalized levels and excessive
inventory has been reduced. Also, sales in the latter part of the quarter ended
October 11, 1997, showed improvement in the Company's Southern Division.
9
<PAGE>
Liquidity and Capital Resources
The Company continues to be highly leveraged. Cash interest payments
totaled approximately $56 million for the 28 weeks ended October 11, 1997, and
will be approximately $113 million for the fiscal year ending March 28, 1998
("Fiscal 1998"). Capital expenditures totaled approximately $29 million for the
28 weeks ended October 11, 1997, and are expected to total between $35 and $38
million for Fiscal 1998.
The Company plans to finance its working capital, debt and capital lease
repayments, and capital expenditure requirements from proceeds received from the
sale of convertible preferred stock, operations, its Bank Facility dated August
29, 1997, and, to a limited extent, equipment leases or purchase money
mortgages. The Company's ability to fund the payment of interest, capital
expenditures, and other obligations when due is dependent principally on cash
generated from its operations, net of cash capital expenditures. The Company's
ability to complete its capital expenditure program is dependent on operating
performance. There are no significant debt principal repayments scheduled prior
to June 2000.
The Bank Facility provides the Company with a revolving line of credit of
approximately $68 million. Of that amount, $44 million is extended on letters of
credit and $5 million has been drawn at the end of the quarter. The additional
funds made available to the Company through the Bank Facility raise the
Company's total secured credit facility to a total of $250 million. The majority
of interest payments due during the balance of Fiscal Year 1998 are payable on
March 2, 1998. Approximately $36 million will be due on the Company's 12% Senior
Notes and approximately $6 million will be due on the Bank Facility.
Impact of New Accounting Standards
In February 1997, the FASB issued FAS No. 128, "Earnings Per Share", which
is effective for interim and year end periods ending after December 15, 1997.
This Statement requires entities to present, on the face of the income statement
for all periods presented, basic and diluted per share amounts for income from
continuing operations and for net income. Basic earnings per share ("EPS") is
computed by dividing income available to common stockholders by the weighted
average number of shares outstanding. Fully diluted EPS has been renamed diluted
EPS with a few changes in the computation methodology. Diluted EPS gives effect
to all dilutive potential common shares that were outstanding during the
reporting period. The computation excludes security conversions that have an
anti-dilutive effect on EPS. FAS No. 128 currently has no impact upon the
Company's reported per share results as all common stock equivalents are
anti-dilutive.
With the exception of historical information, some matters discussed herein
are "forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements are 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. Potential risks and uncertainties include, but are
not limited to, the competitive environment in which the Company operates, and
the general economic conditions in the geographic areas in which the Company
operates. For additional information about the Company and its operating and
financial condition, please see the Company's most recent Form 10-K for the year
ended March 29, 1997, as filed with the SEC.
10
<PAGE>
PART II - OTHER INFORMATION
Item 5. Other Information
On July 28, 1997, the Company filed a Proxy Statement with the Securities
and Exchange Commission ("SEC") relating to an annual meeting of stockholders
for its fiscal year ended March 29, 1997. The Proxy Statement was not mailed to
stockholders and the annual meeting originally scheduled to be held on September
25, 1997, was re-scheduled for November 20, 1997. An amended Proxy Statement was
filed with the SEC on October 31, 1997, and mailed to stockholders on November
3, 1997.
During the quarter, three directors of the Company, David Y. Ying, Daniel
E. Josephs and William G. Kagler, resigned. On August 1, 1997, Mr. Harris was
named Chairman of the Board and Mr. Stangeland, the former Chairman, was named
Chairman Emeritus. Additionally, on October 30, 1997, the Board elected four new
Directors. They are: 1) Mr. Philbin, who was earlier named President and Chief
Merchandising Officer of the Company on October 3, 1997; 2) Jordan H. Krimstein,
retired Executive Vice President and Executive Creative Director of Campbell,
Mithun Esty, Inc., a large advertising agency headquartered in Minneapolis,
Minnesota; 3) Mark H. Manski, President and Founder of the RoundHill Group,
Ltd., a strategic, operational, management and financial advisory firm located
in Norwalk, Connecticut, and; 4) Martha A. Pritchard, a Principal with Bick
Capital Advisors, Inc., a financial advisory firm located in Chapel Hill, North
Carolina.
Also during the quarter, the Board of Directors announced the commencement,
on November 1, 1997, subject to shareholder approval, of the Associate Stock
Purchase Plan (the "ASPP"). The ASPP provides associates of the Company with the
opportunity to purchase the Company's Common Stock at a 15% discount through the
convenience of payroll deductions. One million shares of Common Stock have been
allocated to the ASPP.
Item 6. Exhibits and Report on Form 8-K.
(a) Exhibits
Exhibit Number
27.1 Financial Data Schedule
(b) Report on Form 8-K dated August 29, 1997 as filed with the SEC on
September 4, 1997.
11
<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, thereunto duly authorized.
THE GRAND UNION COMPANY
(Registrant)
/s/ Jeffrey P. Freimark
------------------------------------------
Jeffrey P. Freimark,
Executive Vice President,
Chief Financial and Administrative Officer
Date: November 25, 1997
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated financial statements and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-28-1998
<PERIOD-END> OCT-11-1997
<CASH> 29,688
<SECURITIES> 0
<RECEIVABLES> 293
<ALLOWANCES> 0
<INVENTORY> 129,848
<CURRENT-ASSETS> 172,595
<PP&E> 939,383
<DEPRECIATION> 474,715
<TOTAL-ASSETS> 987,835
<CURRENT-LIABILITIES> 146,629
<BONDS> 599,721
0
0
<COMMON> 100
<OTHER-SE> (293,509)
<TOTAL-LIABILITY-AND-EQUITY> 987,835
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<INCOME-PRETAX> (136,168)
<INCOME-TAX> 0
<INCOME-CONTINUING> (136,168)
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<EXTRAORDINARY> 0
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<NET-INCOME> (136,168)
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</TABLE>
