<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________
(Mark One) FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 3, 1996
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 1-1066
-----------------
GENERAL HOST CORPORATION
---------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
NEW YORK STATE 13-0762080
-------------------------------- -----------------------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
0ne Station Place, P.O. Box 10045, Stamford, Connecticut 06904
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number: (203) 357-9900
----------------------
- -------------------------------------------------------------------------
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 such
filing requirements for the past 90 days. Yes X No
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
required to be filed by Section 12, 13 or 15(d) of the Securities and Exchange
Act of 1934 subsequent to the distribution of securities under a plan confirmed
by a court. Yes ________ No ________
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of the latest practicable date: Common Stock, $1.00 par
value, 23,249,345 shares outstanding as of December 18, 1996.
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been
reviewed by Price Waterhouse LLP, independent accountants, whose
report thereon is included elsewhere in this Item 1. The review by
Price Waterhouse LLP was based on procedures adopted by the
American Institute of Certified Public Accountants and was not an
audit.
In the opinion of the Company, the accompanying consolidated
financial statements reflect all adjustments necessary to a fair
statement of the results for the interim periods presented herein.
In the opinion of management such adjustments consisted of normal
recurring items. Financial results of the interim period are not
necessarily indicative of results that may be expected for any
other interim period or for the fiscal year.
<PAGE> 3
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
- --------------------------------------------------------------------------------
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Twelve Weeks Ended Forty Weeks Ended
------------------ -----------------
NOVEMBER 3, November 5, NOVEMBER 3, November 5,
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES:
Sales $ 83,305 $ 95,976 $ 381,522 $ 424,715
Other income 75 419 579 2,528
---------- --------- --------- ---------
83,380 96,395 382,101 427,243
---------- --------- --------- ---------
COSTS AND EXPENSES:
Cost of sales, including
buying and occupancy 66,050 75,311 277,122 307,962
Selling, general and
administrative 27,595 28,330 100,358 105,480
Interest and debt expense 4,868 5,536 16,043 18,287
---------- --------- --------- ---------
98,513 109,177 393,523 431,729
---------- --------- --------- ---------
LOSS FROM CONTINUING OPERATIONS
BEFORE INCOME TAX BENEFIT (15,133) (12,782) (11,422) (4,486)
INCOME TAX BENEFIT (260) (883) (706)
---------- --------- --------- ---------
LOSS FROM CONTINUING OPERATIONS (14,873) (11,899) (11,422) (3,780)
LOSS FROM DISCONTINUED
OPERATIONS (2,793) (2,793)
---------- --------- --------- ---------
NET LOSS $ (14,873) $ (14,692) $ (11,422) $ (6,573)
========== ========= ========= =========
NET LOSS PER SHARE:
Loss from continuing
operations $ (.64) $ (.51) $ (.49) $ (.16)
Loss from discontinued
operations (.12) (.12)
---------- --------- --------- ---------
Net loss per share $ (.64) $ (.63) $ (.49) $ (.28)
========== ========= ========= =========
AVERAGE SHARES OUTSTANDING 23,249 23,252 23,249 23,252
========== ========= ========= =========
</TABLE>
See accompanying notes.
<PAGE> 4
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
- --------------------------------------------------------------------------------
(Dollars in thousands)
<TABLE>
<CAPTION>
NOVEMBER 3, November 5, January 28,
1996 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 12,082 $ 26,431 $ 29,901
Accounts and notes receivable 3,425 3,251 3,823
Merchandise inventory 129,436 143,739 88,162
Prepaid expenses and other
current assets 11,243 12,932 9,417
--------- --------- ---------
Total current assets 156,186 186,353 131,303
--------- --------- ---------
PROPERTY, PLANT AND EQUIPMENT,
LESS ACCUMULATED DEPRECIATION
OF $169,953, $157,087 AND $154,830 224,958 241,665 237,803
INTANGIBLES, LESS ACCUMULATED
AMORTIZATION OF $10,462,
$9,537 AND $9,783 15,457 16,382 16,136
OTHER ASSETS AND DEFERRED CHARGES 10,262 9,609 10,543
--------- --------- ---------
$ 406,863 $ 454,009 $ 395,785
========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 53,063 $ 65,894 $ 47,776
Accrued expenses 32,247 29,628 33,012
Notes payable to banks 15,000
Provision for store closings and
other costs 1,689 3,260 3,347
Current portion of long-term debt 2,202 57,511 1,974
--------- --------- ---------
Total current liabilities 104,201 156,293 86,109
--------- --------- ---------
LONG-TERM DEBT:
Senior debt 128,262 111,359 124,898
Subordinated debt 65,000 65,000 65,000
--------- --------- ---------
Total long-term debt 193,262 176,359 189,898
--------- --------- ---------
OTHER LIABILITIES AND DEFERRED CREDITS 10,587 10,331 9,550
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock $1.00 par value,
100,000,000 shares authorized,
31,752,450 shares issued 31,752 31,752 31,752
Capital in excess of par value 81,186 81,206 81,186
Retained earnings 68,484 91,184 79,924
--------- --------- ---------
181,422 204,142 192,862
Cost of 8,503,105, 9,610,905
and 8,505,096 shares of
common stock in treasury (80,600) (91,100) (80,618)
Notes receivable from exercise of
stock options (2,009) (2,016) (2,016)
--------- --------- ---------
Total shareholders' equity 98,813 111,026 110,228
--------- --------- ---------
$ 406,863 $ 454,009 $ 395,785
========= ========= =========
</TABLE>
See accompanying notes.
<PAGE> 5
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
- -------------------------------------------------------------------------------
(Dollars in thousands)
<TABLE>
<CAPTION>
Forty Weeks Ended
------------------------
NOVEMBER 3, November 5,
1996 1995
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss from continuing operations $(11,422) $ (3,780)
Noncash adjustments:
Depreciation and amortization 17,043 17,488
Other 677 (144)
-------- --------
6,298 13,564
Changes in current assets and current liabilities:
Decrease in accounts and notes receivable 845 3,064
Increase in inventory (41,274) (56,501)
Increase in prepaid expenses (1,826) (4,343)
Increase in accounts payable 5,287 9,168
Decrease in accrued expenses (534) (12,172)
Decrease in provision for store closings and
other costs (1,603) (3,119)
-------- --------
Net cash used for continuing operations (32,807) (50,339)
Net cash used for discontinued operations (235) (1,601)
-------- --------
(33,042) (51,940)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (3,583) (4,465)
Other 653 604
-------- --------
Net cash used for investing activities (2,930) (3,861)
-------- --------
CASH FLOWS FROM FINANCIAL ACTIVITIES:
Issuance of long-term debt 5,137 20,717
Debt issue costs (439) (995)
Increase in notes payable to banks 15,000
Payment of long-term debt and capital lease
obligations (1,545) (20,852)
-------- --------
Net cash provided by (used for)
financing activities 18,153 (1,130)
-------- --------
Decrease in cash and cash equivalents (17,819) (56,931)
Cash and cash equivalents at beginning of year 29,901 83,362
-------- --------
Cash and cash equivalents at end of quarter $ 12,082 $ 26,431
======== ========
</TABLE>
See accompanying notes.
<PAGE> 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
- -------------------------------------------------------------------------------
NOTE I
On February 28, 1996 the Company declared a 5% stock dividend for shareholders
of record on March 15, 1996. The stock dividend representing 1,109,008 shares
was paid on April 5, 1996. Share and per share data for 1995 have been
restated to reflect the 5% stock dividend.
NOTE 2
The income tax provision for financial reporting purposes has been calculated
using an annual effective rate method. The difference between the statutory
rate for federal purposes and taxes provided for in 1996 and 1995 is due to the
utilization of previously unrecognized tax benefits. For the 1996 forty week
period the tax provision was unfavorably impacted by an increase in the
valuation allowance as a result of the current year loss not being benefitted.
Income taxes for the forty week period of 1995 included the elimination of
income tax reserves of $396,000, which were no longer required.
NOTE 3
In the 1995 third quarter the Company charged to discontinued operations an
after-tax loss of $2,793,000, or $.12 per share, which included $800,000 of
charges previously recorded in continuing operations. The loss resulted from
an October 1995 judgment in a 1991 saltwater pollution lawsuit of $1,030,000,
which together with approximately $1,130,000 in legal defense costs, $470,000
in related costs, principally for technical consulting and expert witnesses,
and $370,000 for future legal and related costs, totalled $3,000,000. The
Company has appealed.
NOTE 4
During the 1995 third quarter the Company arranged new mortgage financings
which amounted to $20,717,000. As a part of securing the new financing in the
1995 third quarter, the Company repaid $15,325,000 of the existing mortgage
notes due March 29, 1996. The Company repaid the remaining balance of
$55,925,000 at the end of fiscal 1995.
<PAGE> 7
NOTE 5
Certain reclassifications have been made to the prior years' financial
statements to conform to the 1996 presentation.
Interest payments amounted to $8,442,000 and $18,506,000 for the twelve and
forty weeks ended November 3, 1996, and $9,062,000 and $21,363,000 for the
twelve and forty weeks ended November 5, 1995. Tax payments amounted to
$15,000 and $55,000 for the twelve and forty weeks ended November 3, 1996, and
$27,000 and $449,000 for the twelve and forty weeks ended November 5, 1995.
<PAGE> 8
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
General Host Corporation
We have reviewed the accompanying consolidated balance sheets of General Host
Corporation and its subsidiaries as of November 3, 1996 and November 5, 1995,
and the related consolidated statements of income and of cash flows for the
twelve and forty week periods ended November 3, 1996 and November 5, 1995.
This financial information is the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial information for it to be in conformity
with generally accepted accounting principles.
We previously audited in accordance with generally accepted auditing standards,
the consolidated balance sheet as of January 28, 1996, and the related
consolidated statements of income, of changes in shareholders' equity, and of
cash flows for the year then ended (not presented herein), and in our report
dated February 28, 1996 we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth
in the accompanying consolidated balance sheet information as of January 28,
1996, is fairly stated in all material respects in relation to the consolidated
balance sheet from which it has been derived.
Price Waterhouse LLP
Detroit, Michigan
December 4, 1996
<PAGE> 9
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Third quarter of 1996 compared with third quarter 1995
Results of Operations
Sales
Sales for the Company's principal operating subsidiary, Frank's Nursery &
Crafts, Inc., decreased 13.2% to $83,305,000 for the twelve weeks ended
November 3, 1996 compared with $95,976,000 in the 1995 third quarter which
ended on November 5, 1995. Same-store sales (stores open for a full year in
both years) decreased 13% for the 1996 third quarter as the Company's marketing
and merchandising efforts did not produce sufficient demand.
Earnings
The loss from continuing operations for the third quarter of 1996 was
$14,873,000 compared to $11,899,000 in the 1995 third quarter.
Cost of sales, including buying and occupancy, decreased $9,261,000 to
$66,050,000 in the third quarter of 1996 compared to $75,311,000 in 1995. As a
percentage of sales, cost of sales increased 0.8 of a percentage point.
Merchandise margins, as a percentage of sales, improved by 1.6 percentage
points. The improved merchandise margins reflected a less promotional strategy
and tighter inventory management. Buying and occupancy costs for the 1996
third quarter decreased by $258,000, but as a percentage of sales increased by
2.4 percentage points compared to the 1995 third quarter.
Selling, general and administrative expenses decreased 2.6% or $735,000 to
$27,595,000 in the third quarter of 1996 compared to $28,330,000 in 1995 as the
Company continues its focus on reducing expenses. As a percentage of sales,
selling, general and administrative expenses were 33.1% in the 1996 third
quarter compared to 29.5% in the 1995 quarter.
Other income, primarily interest income, decreased $344,000 to $75,000 in
the third quarter of 1996 compared to $419,000 in 1995. The decrease was due
to lower levels of cash equivalents compared to 1995.
Interest and debt expense decreased $668,000 to $4,868,000 in the third
quarter of 1996 compared to $5,536,000 in 1995 due primarily to the Company's
repayment of the Adjustable Rate First Mortgage Notes at the end of fiscal
1995, the balance of which was $55,925,000 at the end of the 1995 third
quarter, offset in part by $39,195,000 of new mortgage financings.
<PAGE> 10
The income tax provision for financial reporting purposes has been
calculated using an annual effective rate method. The difference between the
statutory rate for federal purposes and taxes provided for in 1996 and 1995 is
due to the utilization of previously unrecognized tax benefits. The tax
provision for the 1996 quarter was impacted by an increase in the valuation
allowance as a result of the current year to date loss not being benefitted.
The after-tax loss from discontinued operations in the 1995 third quarter
of $2,793,000, or $.12 per share, is the result of the court's entry of a
judgment against the Company in a 1991 saltwater pollution lawsuit. The
lawsuit involves claims by farmers in Rice County, Kansas who alleged that
saltwater pollution of the ground water by the American Salt Company, a former
subsidiary of the Company, rendered it unfit for irrigation. In August 1995, a
jury verdict awarded the plaintiffs $480,000 in compensatory damages for the
period 1989 to 1995 and in October 1995 the plaintiffs were awarded $550,000 in
punitive damages and the judgment was entered. The judgment, together with
approximately $1,130,000 in legal defense costs, $470,000 in related costs,
principally for technical consulting and expert witnesses, and $370,000 for
future legal and related costs, totalled $3,000,000. The Company has appealed
the case.
First three quarters of 1996 compared with the first three quarters
of 1995
Results of Operations
Sales
Sales were $381,522,000 for the forty weeks ended November 3, 1996 (the
"1996 three quarters") compared with $424,715,000 for the forty weeks ended
November 5, 1995 (the "1995 three quarters"). Same-store sales for the 1996
three quarters decreased 10% compared to the 1995 three quarters due to a 14.3%
drop in the 1996 first quarter, when the Company experienced unseasonably cold
and wet weather throughout its 16-state operating area during most of the 1996
first quarter and the 13% decrease recorded in the 1996 third quarter.
Earnings
The loss from continuing operations for the 1996 three quarters was
$11,422,000 compared to $3,780,000 in the 1995 three quarters.
Cost of sales, including buying and occupancy, decreased $30,840,000 in
the 1996 three quarters to $277,122,000 compared to $307,962,000 in 1995. As a
percentage of sales, cost of sales increased 0.1 of a percentage point.
Merchandise margins, as a percentage of sales, improved by 1.3 percentage
points due to a
<PAGE> 11
less promotional strategy and tighter inventory management. Buying and
occupancy costs for the 1996 three quarters decreased $466,000, but as a
percentage of sales increased by 1.4 percentage points compared to the 1995
three quarters.
Selling, general and administrative expenses decreased 4.9% or $5,122,000
to $100,358,000 in the 1996 three quarters compared to $105,480,000 in 1995 as
the Company continued its focus on reducing expenses. As a percentage of
sales, selling, general and administrative expenses were 26.3% in the 1996
three quarters compared to 24.8% in the 1995 three quarters.
Other income decreased $1,949,000 to $579,000 in the 1996 three quarters
compared to $2,528,000 in the 1995 three quarters. The decrease was due to
lower levels of cash equivalents compared to 1995, the write-off of leasehold
improvements incurred in the closing of one leased store and a loss on the sale
of an unprofitable store in the 1996 first quarter as well as a 1995 second
quarter gain from the sale of real estate.
Interest and debt expense decreased $2,244,000 to $16,043,000 in the 1996
three quarters compared to $18,287,000 in the 1995 three quarters due to the
Company's repayment of the Adjustable Rate First Mortgage Notes at the end of
fiscal 1995, the balance of which was $55,925,000 at the end of the 1995 three
quarters. The Company replaced this financing, in part, with new mortgage
financings which totaled $39,195,000 at November 3, 1996.
The income tax provision for financial reporting purposes has been
calculated using an annual effective rate method. The difference between the
statutory rate for federal purposes and taxes provided for in 1996 and 1995 is
due to the utilization of previously unrecognized tax benefits. For the 1996
three quarters the tax provision was unfavorably impacted by an increase in the
valuation allowance as a result of the current year loss not being benefitted.
Income taxes for the 1995 three quarters included the elimination of income tax
reserves of $396,000, which were no longer required.
The after-tax loss from discontinued operations in the 1995 three quarters
of $2,793,000, or $.12 per share, resulted from an October 1995 judgment
against the Company in a 1991 saltwater pollution lawsuit as previously
mentioned.
New Accounting Pronouncements
The implementation of Statement of Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" sets forth standards for accounting
for stock-based compensation under which the Company intends to continue to
account for stock-based compensation in accordance with APB Opinion No. 25 and
provide the additional disclosure in the notes to the financial statements.
<PAGE> 12
Capital Resources and Liquidity
Net cash used for continuing operations was $32,807,000 in the 1996
three quarters compared to $50,339,000 in the 1995 three quarters. Inventory
increased $41,274,000 for the 1996 three quarters compared to an increase of
$56,501,000 in 1995 while accounts payable increased $5,287,000 in 1996
compared to $9,168,000 in 1995. The increase in inventory for 1995 is due
primarily to planned earlier receipts of Christmas merchandise. The accounts
payable change for 1996 and 1995, described above, included no amounts payable
to brokers at November 3, 1996 compared to $19,997,000 at the end of fiscal
1995, and $9,997,000 at November 5, 1995 compared to $14,998,000 at the end of
fiscal 1994. The decrease in accrued expenses for 1996 of $534,000 compared to
$12,172,000 for 1995 was due to timing of payments. At November 3, 1996 the
remaining store closing reserve of $2,689,000 primarily represented lease
termination costs for the remaining five store locations and estimated losses
associated with the sale and or sublease of real estate. The Company utilized
net cash of $1,603,000 in the 1996 three quarters to pay lease commitments,
lease termination costs, brokers fees and legal costs.
Net cash used for discontinued operations in the 1996 three quarters
related to payments for operations disposed of in prior years. Net cash used
of $1,601,000 in the 1995 three quarters related primarily to 1995 payments for
legal expenditures incurred to defend the Company in a 1991 saltwater pollution
lawsuit.
Net cash used for investing activities was $2,930,000 in the 1996 three
quarters which included $3,583,000 for the addition of property, plant and
equipment. Net cash used in the 1995 three quarters was $3,861,000.
Net cash provided by financing activities was $18,153,000 in the 1996
three quarters which included additional new mortgage financings of $5,137,000
and bank borrowings, under our revolving credit line, of $15,000,000. The 1995
three quarters used net cash of $1,130,000. In the 1995 third quarter the
Company received gross proceeds of $20,717,000 from the issuance of new
mortgage financings that constituted a part of the new mortgage financing plan,
the proceeds of which were used to repay the Adjustable Rate First Mortgage
Notes ("maturing mortgage notes") due March 29, 1996 that were fully repaid at
the end of fiscal 1995. The 1995 three quarters included payments of
$4,750,000 for the maturing mortgage notes and repayment of $15,325,000 of
maturing mortgage notes as part of securing the new financing.
On February 28, 1996 the Company declared a 5% stock dividend for
shareholders of record on March 15, 1996. The stock dividend representing
1,109,008 shares was paid on April 5, 1996. Share and per share data for 1995
have been restated to reflect the 5% stock dividend.
Working capital at November 3, 1996 was $51,985,000 or
<PAGE> 13
$6,791,000 higher than the $45,194,000 working capital level at January 28,
1996.
The Company had a $25,000,000 unsecured credit agreement at November 3,
1996, which was scheduled to expire on December 31, 1996. At November 3, 1996
the Company had $15,000,000 outstanding under this credit agreement. All
amounts were repaid as of December 2, 1996. The unsecured credit agreement
required the Company, among other things, to maintain minimum levels of
earnings, tangible net worth and certain minimum financial ratios. Effective
November 3, 1996 the Company obtained a waiver of the fixed charge coverage
ratio and tangible net worth covenant. The waiver enabled the Company to
comply with the aforementioned covenants at November 3, 1996.
On November 29, 1996 the Company replaced the above mentioned agreement by
entering into a $25,000,000 secured credit agreement ("the agreement") with a
bank which will expire on June 30, 1997. The agreement is secured by mortgages
on retail properties owned by the Company's principal operating subsidiary,
Frank's Nursery & Crafts, Inc. The agreement requires the Company, among other
things, to maintain minimum levels of earnings, tangible net worth and certain
minimum financial ratios. The Company borrowed $10,000,000 under the agreement
on December 2, 1996 and repaid all outstanding amounts on December 6, 1996.
Under the most restrictive provisions of any of the Company's debt
agreements, total shareholders' equity available to pay cash dividends or
purchase treasury stock was below the required minimum level by $21,386,000 at
November 3, 1996.
Under $4,950,000 of mortgage financings, the Company is required to
maintain a minimum credit facility of $15,000,000 until May 31, 1997. If the
facility has a remaining term of 30 days or less the Company is required to
deposit $4,950,000 with the lender. In the event of expiration or termination
of the credit facility prior to May 31, 1997, the loan shall become due and
payable upon demand by the lender. The deposit may then be liquidated by the
lender and applied toward the repayment of the loan. The Company is permitted
to withdraw the deposit when the credit facility is renewed, extended or
replaced with a similar facility with a maturity longer than 30 days.
The Company expects to have sufficient cash and cash equivalents when
coupled with the availability of its credit line and to generate sufficient
cash flow from operations to meet its seasonal working capital needs, pay
approximately $4,900,000 of fixed interest charges and fund capital
expenditures of approximately $1,000,000 for the remainder of fiscal 1996. At
this time there are no relocations or new store openings planned for the
balance of fiscal 1996 or in the first quarter of fiscal 1997.
<PAGE> 14
PART II - OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(11) Additional Earnings Per Share Information.
(15) Letter regarding unaudited interim financial information.
(b) Reports on Form 8-K
During the quarter and through the date of this Report, the
Registrant filed no reports on Form 8-K.
<PAGE> 15
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.
GENERAL HOST CORPORATION
By: /s/ J. Theodore Everingham
-------------------------------
J. Theodore Everingham
Vice President, General Counsel
and Secretary
By: /s/ James R. Simpson
------------------------------
James R. Simpson
Vice President and Controller
Dated: December 18, 1996
<PAGE> 16
EXHIBIT INDEX
Exhibit Number Description of Exhibit
-------------- ----------------------
(11) Additional Earnings Per Share Information.
(15) Letter regarding unaudited interim financial
information.
(27) Financial Data Schedule.
<PAGE> 1
EXHIBIT 11
GENERAL HOST CORPORATION
ADDITIONAL EARNINGS PER SHARE INFORMATION (UNAUDITED)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Twelve Weeks Ended Forty Weeks Ended
------------------------- -------------------------
November 3, November 5, November 3, November 5,
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Earnings (loss) for full dilution:
Loss from continuing operations $ (14,873) $ (11,899) $ (11,422) $ (3,780)
Add interest on 8% Convertible
Debentures, net of tax effect 1,180 1,117 4,000 3,370
--------- --------- --------- ---------
Income (loss) from continuing
operations, as adjusted (13,693) (10,782) (7,422) (410)
Loss from discontinued operations (2,793) (2,793)
--------- --------- --------- ---------
Net income (loss), as adjusted $ (13,693) $ (13,575) $ (7,422) $ (3,203)
========= ========= ========= =========
Shares used for calculating primary
earnings per share 23,249 23,252 23,249 23,252
Additional shares resulting from
assumed conversion of 8% Convertible
Debentures 7,254 7,254 7,254 7,254
Additional shares resulting from
assumed exercise of stock options 0 5 0 6
--------- --------- --------- ---------
30,503 30,511 30,503 30,512
========= ========= ========= =========
Fully diluted earnings (loss) per share:
Income (loss) from continuing
operations $ (.45) $ (.35) $ (.24) $ (.01)
Loss from discontinued operations (.09) (.09)
--------- --------- --------- ---------
Fully diluted income (loss) per share $ (.45)(1) $ (.44)(1) $ (.24)(1) $ (.10)(1)
========= ========= ========= =========
</TABLE>
(1) This calculation is submitted in accordance with Regulation S-K item
601(b)(11) although it is contrary to paragraph 40 of APB Opinion 15
because it produces an anti-dilutive result.
<PAGE> 1
EXHIBIT 15
December 4, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sirs:
We are aware that the November 3, 1996 Quarterly Report on Form 10-Q of General
Host Corporation which includes our report dated December 4, 1996 (issued
pursuant to the provisions of Statements on Auditing Standards No. 71 and 42),
is incorporated by reference in its Registration Statement No. 33-50020 on Form
S-8 filed on July 27, 1992. We are also aware of our responsibilities under
the Securities Act of 1933.
Yours very truly,
Price Waterhouse LLP
Detroit, Michigan
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
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0
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