Securities And Exchange Commission
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the 13-Week Period Ended October 1, 1994
Commission File Number 0-12923
Delchamps, Inc.
-----------------------------------------
(Exact name of registrant as
specified in its charter)
Alabama 63-0245434
------------------------------- ---------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
305 Delchamps Drive, Mobile, AL 36602
------------------------------- ---------------
(Address of principal executive (Zip code)
offices)
(205) 433-0431
-------------------------------
(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 the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date. 7,113,581
shares at October 31, 1994.
<PAGE>
DELCHAMPS, INC. AND SUBSIDIARY
Index
Page No.
--------
Part 1. Financial Information
Item 1. Financial Statements
Condensed Balance Sheets -
October 1, 1994 and July 2, 1994 1
Condensed Statements of Earnings -
Thirteen Weeks Ended October 1, 1994 and
October 2, 1993 2
Condensed Statements of Cash Flows -
Thirteen Weeks Ended October 1, 1994 and
October 2, 1993 3
Notes to Condensed Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 5
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 7
Signatures 7
<PAGE>
Part I. Financial Information
DELCHAMPS, INC. AND SUBSIDIARY
Condensed Balance Sheets - (In thousands)
(Unaudited)
<TABLE>
<CAPTION>
October 1, 1994 July 2, 1994*
----------------- -----------------
Amount %Assets Amount %Assets
------ ------- ------ -------
<S> <C> <C> <C> <C>
ASSETS
------
Current assets:
Cash and cash equivalents $ 14,614 5.41 15,378 5.84
Trade accounts receivable 10,148 3.75 9,475 3.60
Merchandise inventories 105,701 39.10 105,663 40.13
Prepaid expenses 1,307 .48 443 .17
Deferred income taxes 1,529 .56 1,587 .61
------- ------- ------- -------
Total current assets 133,299 49.30 132,546 50.35
Property and equipment:
Land 7,964 2.95 6,312 2.40
Buildings and improvements 51,748 19.14 51,742 19.65
Fixtures and equipment 201,464 74.52 198,746 75.49
Construction in progress 11,130 4.11 4,972 1.89
------- ------- ------- -------
272,306 100.72 261,772 99.43
Less accumulated depreciation and amortization -142,826 -52.83 -138,643 -52.66
------- ------- ------- -------
Net property and equipment 129,480 47.89 123,129 46.77
Other assets 2,414 .89 2,384 .91
Goodwill 5,171 1.92 5,210 1.97
------- ------- ------- -------
Total assets $ 270,364 100.00 263,269 100.00
======= ======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Notes payable $ 19,604 7.25 11,574 4.40
Current portion of obligations under capital leases 1,258 .47 1,576 .60
Current portion of long-term debt 3,760 1.39 3,760 1.43
Current portion of guaranteed ESOP debt 2,000 .74 2,000 .76
Accounts payable 40,866 15.12 43,578 16.55
Accrued expenses 16,174 5.98 15,132 5.74
Income taxes 1,911 .70 - -
------- ------- ------- -------
Total current liabilities 85,573 31.65 77,620 29.48
Obligations under capital leases, excluding current
portion 11,670 4.32 11,811 4.49
Long-term debt, excluding current portion 17,417 6.44 18,358 6.97
Guaranteed ESOP debt, excluding current portion 2,000 .74 2,000 .76
Deferred income taxes 13,850 5.12 14,154 5.38
Other liabilities 2,998 1.11 3,026 1.15
------- ------- ------- -------
Total liabilities 133,508 49.38 126,969 48.23
Stockholders' equity:
Junior participating preferred stock of no par
value-authorized 5,000,000 shares; no shares
issued - - - -
Common stock of $.01 par value - authorized
25,000,000 shares; issued 7,113,581 shares 71 .02 71 .03
Additional paid-in capital 19,731 7.30 19,731 7.49
Retained earnings 121,934 45.10 121,434 46.13
------- ------- ------- -------
141,736 52.42 141,236 53.65
Less: Guaranteed ESOP debt -4,000 -1.48 -4,000 -1.52
Unamortized restricted stock awards -880 -.32 -936 -.36
------- ------- ------- -------
Total stockholders' equity 136,856 50.62 136,300 51.77
Total liabilities and stockholders' equity $ 270,364 100.00 263,269 100.00
======= ======= ======= =======
</TABLE>
See accompanying notes to condensed financial statements.
* Condensed from Balance Sheet included in the 1994 Annual Report.
<PAGE>
DELCHAMPS, INC. AND SUBSIDIARY
Condensed Statements of Earnings - (In thousands
except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
---------------------------------------
October 1, 1994 October 2, 1993
----------------- -----------------
Amount % Sales Amount % Sales
------ ------- ------ -------
<S> <C> <C> <C> <C>
Sales $ 266,205 100.00 266,570 100.00
Cost of sales 200,403 75.28 197,810 74.21
------- ------- ------- -------
Gross profit 65,802 24.72 68,760 25.79
Selling, general and
administrative expenses 62,454 23.46 62,619 23.49
------- ------- ------- -------
Operating income 3,348 1.26 6,141 2.30
Other expenses 1,119 .42 1,048 .39
------- ------- ------- -------
Earnings before income taxes
and cumulative effect of changes
in accounting principles 2,229 .83 5,093 1.91
Income taxes 754 .28 1,872 .70
------- ------- ------- -------
Earnings before cumulative
effect of changes in
accounting principles 1,475 .55 3,221 1.21
Cumulative effect of change
in accounting for income taxes - - 900 .34
Cumulative effect of change
in accounting for postemployment benefits
(net of income tax benefits of $1,000) - - -1,600 -.60
------- ------- ------- -------
Net earnings $ 1,475 .55 2,521 .95
======= ======= ======= =======
Earnings per common share:
Earnings before cumulative
effect of changes in accounting principles .21 .45
Cumulative effect of change
in accounting for income taxes - .12
Cumulative effect of change
in accounting for postemployment benefits - -.22
------- -------
Net earnings per common share $ .21 .35
======= =======
Weighted average number of
common shares 7,114 7,114
======= =======
Dividends declared per common share $ .11 .11
======= =======
</TABLE>
See accompanying notes to condensed financial statements.
<PAGE>
DELCHAMPS, INC. AND SUBSIDIARY
Condensed Statements of Cash Flows - (In thousands)
Increase (Decrease) In Cash and Cash Equivalents
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
--------------------
10/01/94 10/02/93
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 1,475 2,521
Adjustments to reconcile net earnings to net cash
rovided by operating activities:
Depreciation and amortization 4,827 4,775
Loss reserve on closed stores -28 -26
Restricted stock award compensation expense 56 54
Cumulative effect of change in accounting for
income taxes - -900
Cumulative effect of change in accounting for
postemployment benefits - 1,600
Increase in merchandise inventories -38 -3,581
(Decrease) increase in accounts payable and
accrued expenses -1,862 2,492
Increase in income taxes, net 1,969 835
Other, net -1,872 -2,377
------- -------
Net cash flows provided by operating activities 4,527 5,393
Cash flows from investing activities:
Additions to property and equipment -11,319 -2,740
Proceeds from sale of property and equipment 180 32
------- -------
Net cash used in investing activities -11,139 -2,708
Cash flows from financing activities:
Proceeds from notes payable 8,030 883
Principal payments on obligations under capital
leases -459 -407
Principal payments on long-term debt -941 -939
Dividends paid -782 -782
------- -------
Net cash provided by (used in ) financing activities 5,848 -1,245
Net (decrease) increase in cash and cash equivalents -764 1,440
Beginning of period cash and cash equivalents 15,378 12,070
------- -------
End of period cash and cash equivalents $ 14,614 13,510
======= =======
Supplemental Disclosures of Cash Flow Information:
--------------------------------------------------
Cash paid for:
Interest expense $ 1,145 1,117
======= =======
Income taxes $ 6 437
======= =======
</TABLE>
See accompanying notes to condensed financial statements.
<PAGE>
DELCHAMPS, INC. AND SUBSIDIARY
Notes to Condensed Financial Statements
(Unaudited)
(A) Basis of Presentation
---------------------
The accompanying unaudited consolidated financial statements
include the results of operations, account balances and cash flows
of the Company and its wholly-owned subsidiary. All material
intercompany balances have been eliminated.
In the opinion of management, the accompanying unaudited
consolidated financial statements include all adjustments necessary
to present fairly, in all material respects, the results of
operations of the Company for the periods presented. The statements
have been prepared by the Company pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures included in annual financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. It is suggested that these consolidated financial
statements be read in conjunction with the consolidated financial
statements and the accompanying notes included in the Company's 1994
Annual Report.
The balance sheet at July 2, 1994 has been taken from the
audited financial statements at that date.
<PAGE>
Management's Discussion And Analysis Of Financial Condition
And Results Of Operations
RESULTS OF OPERATIONS
Sales:
-----
Sales decreased 0.14% for the thirteen-week period compared
with the corresponding period last year. Since last year's quarter
ended October 2, 1993, the Company has opened two supermarkets, of
which one was a replacement for a smaller unit, and remodeled and
expanded two supermarkets. At the end of the current thirteen-week
period, the Company operated 120 supermarkets and twelve liquor
stores compared with 119 supermarkets and ten liquor stores at the
end of last year's quarter.
Sales decreased 3.14% for stores which were open during both
the current and prior year periods. During last year's quarter,
same store sales increased 0.69%. Same store sales in the current
year's quarter were negatively impacted by the entry of new
competition into Delchamps' market area. In an effort to increase
sales, the Company implemented a new promotional program which
features products classified as "Price Busters". Under this
program, selected products are offered for sale at substantially
reduced retail prices.
Gross Profit:
------------
Gross profit as a percentage of sales decreased from 25.79% last
year to 24.72% for the current thirteen-week period. This decrease
was the result of the new "Price Buster" program noted above and an
increase in the amount of inventory shrinkage.
Selling, General and Administrative Expenses:
--------------------------------------------
Selling, general and administrative ("SG and A") expenses as a
percentage of sales decreased slightly from 23.49% last year to
23.46% for the current thirteen-week period. This decrease in SG
and A percentage occurred even though the current quarter's sales
levels were below last year. The reduction in SG and A percentage
occurred as a result of an ongoing cost control program which
reduced expenses primarily through revisions to labor scheduling,
reductions in supply costs, and reductions in advertising costs
through increased levels of co-op income from vendors.
The dollar amount of selling, general and administrative
expenses decreased form $62,619,000 last year to $62,454,000 for
the current thirteen-week period. This decrease occurred even
though the Company operated one additional supermarket, two
additional liquor stores, and additional service departments which
resulted from the expansions of two supermarkets. The decrease in
SG and A dollars was the result of savings from the cost control
program noted above.
Other Expense:
-------------
Other expense increased by $71,000 over last year's thirteen-
week period. This increase resulted from increased interest
expense which was higher in the current year because of higher
interest rates and increased levels of short-term indebtedness.
Income Taxes:
------------
The effective rate for income taxes decreased from 36.76% to
33.83% for the current thirteen-week period as a result of the
impact of targeted jobs tax credits on lower pretax earnings. The
effective rates were below the statutory rate because of targeted
jobs tax credits.
LIQUIDITY AND CAPITAL RESOURCES
Although the Company's supermarket locations are leased, the
Company makes substantial expenditures to equip new and expanded
supermarkets. In addition, the Company makes substantial
expenditures for distribution facilities and equipment. The
Company plans to finance its capital expenditures with funds
provided by operations. However, if an insufficient amount of
funds are generated, the Company may draw on short-term credit
lines. The Company has $105 million in credit lines from financial
institutions of which $82 million is available for future use.
While these credit lines expire throughout fiscal year 1995, the
Company expects the majority of these credit lines to be extended
annually as they are deemed necessary.
Working capital decreased from $54,926,000 at July 2,1994 to
$47,726,000 as of October 1, 1994. Additions to property and
equipment were $11,319,000 during the same time period and
consisted primarily of purchases of store equipment.
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
Reports on Form 8-K
There were no reports on Form 8-K filed during the 13-weeks
ended October 1, 1994.
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.
Delchamps, Inc.
----------------
Registrant
Date: November 14, 1994 /s/ Randy Delchamps
----------------------------
Randy Delchamps, Chairman of
the Board,President, and
Chief Executive Officer
Date: November 14, 1994 /s/ Timothy E. Kullman
----------------------------
Timothy E. Kullman, Senior
Vice Presidentand Chief
Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
FINANCIAL STATEMENTS FOR THE PERIOD ENDING OCTOBER 1, 1994 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANICAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> QTR-1
<FISCAL-YEAR-END> JUL-02-1994
<PERIOD-END> OCT-01-1994
<CASH> 14,614,000
<SECURITIES> 0
<RECEIVABLES> 10,148,000
<ALLOWANCES> 0
<INVENTORY> 105,701,000
<CURRENT-ASSETS> 133,299,000
<PP&E> 272,306,000
<DEPRECIATION> 142,826,000
<TOTAL-ASSETS> 270,364,000
<CURRENT-LIABILITIES> 85,573,000
<BONDS> 31,087,000
<COMMON> 71,000
0
0
<OTHER-SE> 136,785,000
<TOTAL-LIABILITY-AND-EQUITY> 270,364,000
<SALES> 266,205,000
<TOTAL-REVENUES> 266,205,000
<CGS> 200,403,000
<TOTAL-COSTS> 62,454,000
<OTHER-EXPENSES> 1,119,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,229,000
<INCOME-TAX> 754,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,475,000
<EPS-PRIMARY> .21
<EPS-DILUTED> 0
</TABLE>
