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 April 2, 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 April 29, 1994.
<PAGE>
DELCHAMPS, INC. AND SUBSIDIARY
Index
Page No.
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Part 1. Financial Information
Item 1. Financial Statements
Condensed Balance Sheets -
April 2, 1994 and July 3, 1993 1
Condensed Statements of Earnings -
Thirteen Weeks Ended April 2, 1994 and
March 27, 1993 2
Thirty-nine Weeks Ended April 2, 1994 and
March 27, 1993 2
Condensed Statements of Cash Flows -
Thirteen Weeks Ended April 2, 1994 and
March 27, 1993 3
Thirty-nine Weeks Ended April 2, 1994 and
March 27, 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 6
Signatures 6
<PAGE>
Part I. Financial Information
DELCHAMPS, INC. AND SUBSIDIARY
Condensed Balance Sheets - (In thousands)
(Unaudited)
April 2, 1994 July 3, 1993*
---------------- ------------------
Amount % Asset Amount % Asssets
------ ------- ------ ---------
ASSETS
Current assets:
Cash and cash equivalents $ 15,083 5.84 12,070 4.79
Trade accounts receivable 8,736 3.38 7,941 3.15
Merchandise inventories 99,793 38.66 97,083 38.52
Prepaid expenses 2,171 .84 1,242 .49
Deferred income taxes 1,976 .78 2,129 .84
------- ------ ------- ------
Total current assets 127,759 49.50 120,465 47.79
Property and equipment:
Land 6,312 2.45 6,495 2.58
Buildings and improvements 51,129 19.81 49,492 19.64
Fixtures and equipment 191,343 74.13 185,211 73.48
Construction in progress 7,936 3.07 3,339 1.32
------- ------ ------- ------
256,720 99.46 244,537 97.02
Less accumulated depreciation
and amortization -133,973 -51.91 -120,271 -47.72
------- ------ ------- ------
Net property and
equipment 122,747 47.55 124,266 49.30
Other assets 2,366 .92 1,954 .78
Goodwill 5,249 2.03 5,367 2.13
------- ------ ------- ------
Total assets $ 258,121 100.00 252,052 100.00
======= ====== ======= ======
LIABILITIES AND STOCKHOLERS' EQUITY
- - -----------------------------------
Current liabilities:
Notes Payable $ 9,288 3.60 3,847 1.53
Current portion of obligations
under capital leases 1,705 .66 1,705 .68
Current portion of long-term
debt 3,760 1.46 3,759 1.49
Current portion of guaranteed
ESOP debt 2,000 .77 2,000 .79
Accounts payable 41,004 15.89 39,785 15.78
Accrued expenses 14,861 5.76 18,427 7.31
Income taxes 789 .30 1,431 .57
------- ------ ------- ------
Total current liabilities 73,407 28.44 70,954 28.15
Obligations under capital leases,
excluding current portion 12,128 4.70 13,387 5.31
Long-term debt, excluding current
portion 19,297 7.48 22,116 8.77
Guaranteed ESOP debt, excluding
current portion 4,000 1.55 4,000 1.59
Deferred income taxes 14,781 5.73 14,785 5.87
Other liabilities 468 .17 548 .22
------- ------ ------- ------
Total liabilities 124,081 48.07 125,790 49.91
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 .03 71 .03
Additional paid-in capital 19,731 7.64 19,731 7.83
Retained earnings 121,228 46.97 113,611 45.07
------- ------ ------- ------
141,030 54.64 133,413 52.93
Less: Guaranteed ESOP debt -6,000 -2.32 -6,000 -2.38
Unamortized restricted
stock awards -990 -.39 -1,151 -.46
------- ------ ------- ------
Total stockholders' equity 134,040 51.93 126,262 50.09
Total liabilities and stockholders'
equity $ 258,121 100.00 252,052 100.00
======= ====== ======= ======
See accompanying notes to condensed financial statements.
* Condensed from Balance Sheet included in the 1993 Annual Report.
<PAGE>
DELCHAMPS, INC. AND SUBSIDIARY
Condensed Statements of Earnings - (In thousands
except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Thirty-nine Weeks Ended
-------------------- -----------------------
April 2, 1994 March 27, 1993 April 2, 1994 March 27, 1993
------------------- ------------------ ---------------- -----------------
Amount % Sales Amount % Sales Amount % Sales Amount % Sales
------ ------- ------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales $ 265,146 100.00 246,521 100.00 806,222 100.00 752,123 100.00
Cost of sales 197,407 74.45 182,425 74.00 602,356 74.71 559,014 74.32
------- ------ ------- ------ ------- ------ ------- ------
Gross profit 67,739 25.55 64,096 26.00 203,866 25.29 193,109 25.68
Selling, general
and administrative
expenses 61,300 23.13 57,268 23.23 186,476 23.13 173,286 23.05
------- ------ ------- ------ ------- ------ ------- ------
Operating income 6,439 2.42 6,828 2.77 17,390 2.16 19,823 2.63
Other expenses 1,019 .38 1,321 .54 3,090 .38 3,994 .53
------- ------ ------- ------ ------- ------ ------- ------
Earnings before 5,420 2.04 5,507 2.23 14,300 1.78 15,829 2.10
income taxes and
cumulative effect
of change in
accounting for
income taxes
Income taxes 1,858 .70 1,973 .80 5,046 .63 5,769 .76
------- ------ ------- ------ ------- ------ ------- ------
Earnings before 3,562 1.34 3,534 1.43 9,254 1.15 10,060 1.34
cumulative effect
of change in
accounting for
income taxes
Cumulative effect
of change in
accounting for
income taxes - - - - 900 .11 - -
------- ------ ------- ------ ------- ------ ------- ------
Net earnings $ 3,562 1.34 3,534 1.43 10,154 1.26 10,060 1.34
======= ====== ======= ====== ======= ====== ======= ======
Earnings per
common share:
Earnings before
cumulative
effect of change
in accounting for
income taxes $ .50 .50 1.30 1.41
Cumulative effect
of change in
accounting for
income taxes - - .13 -
------- ------- ------- -------
Net earnings per
common share $ .50 .50 1.43 1.41
======= ======= ======= =======
Weighted average
number of common
shares 7,114 7,114 7,114 7,114
======= ======= ======= =======
Dividends declared
per common share $ .11 .11 .33 .33
======= ======= ======= =======
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)
Thirteen Weeks Ended Thirty-nine Weeks Ended
--------------------- -----------------------
04/02/94 03/27/93 04/02/94 03/27/93
-------- -------- -------- --------
Cash flows from operating
activities:
Net earnings $ 3,562 3,534 10,154 10,060
Adjustments to reconcile net
earnings to net cash provided by
operating activities:
Depreciation and amortization 4,630 4,541 14,061 13,465
Loss reserve on closed stores -27 -24 -80 -70
Restricted stock award
compensation expense 54 54 161 161
Cumulative effect of change in
accounting for income taxes - - -900 -
Decrease (increase) in
merchandise inventories 1,244 2,479 -2,710 1,990
Decrease in accounts payable
and accrued expesnes -4,014 -1,765 -2,536 -6,645
(Decrease) increase in income
taxes, net -180 -19 -489 2,298
Other, net 2,067 2,179 -1,242 -1,738
------ ------ ------ ------
Net cash flows provided by
operating activities 7,336 10,979 16,419 19,521
Cash flows from investing
activities:
Additions to property and
equipment -7,352 -5,386 -12,494 -21,630
Proceeds from sale of property
and equipment 29 412 71 437
------ ------ ------- -------
Net cash used in investing
activities -7,323 -4,974 -12,423 -21,193
Cash flows from financing
activities:
(Payments on) proceeds from
notes payable -82 -5,767 5,441 5,687
Principal payments on
obligations under capital leases -432 -478 -1,259 -1,392
Principal payments on long-term
debt -939 -1,130 -2,819 -3,391
Proceeds from long-term debt 750 750
Dividends paid -782 -782 -2,346 -2,346
------ ------ ------ ------
Net cash used in financing
activities -2,235 -7,407 -983 -692
Net (decrease) increase in cash
and cash equivalents -2,222 -1,402 3,013 -2,364
Beginning of period cash and cash
equivalents 17,305 10,361 12,070 11,323
------ ------ ------ ------
End of period cash and cash
equivalents $ 15,083 8,959 15,083 8,959
====== ====== ====== ======
Supplemental Disclosures of Cash Flow Information:
Cash paid for:
Interest expenses $ 1,055 1,383 3,204 4,146
====== ====== ====== ======
Income taxes $ 1,630 1,458 4,638 4,054
====== ====== ====== ======
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 1993 Annual Report.
The balance sheet at July 3, 1993 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 increased 7.56% for the thirteen-week period
and 7.19% for the thirty-nine week period, compared with
corresponding periods last year. Sales for stores open during
the current and prior year periods increased 3.94% for the
thirteen-weeek period and 3.08% for the thirty-nine week period.
The increase in same store sales growth for both periods was
primarily the result of increased promotional activities. These
activities included featuring certain products at reduced retail
prices and introducing a line of soft drink products with
Delchamps as the brand name. Same store sales were also
favorably impacted by the timing of the Easter holiday.
At April 2, 1994, the Company operated 119 supermarkets and
eleven liquor stores compared with 116 supermarkets and ten
liquor stores at March 27, 1993. During the thirty-nine week
period, the Company opened one supermarket, expanded three
supermarkets, and opened one liquor store.
Gross Profit:
- - ------------
Gross profit as a percentage of sales decreased from 26.00%
to 25.55% for the thirteen-week period and decreased from 25.68%
to 25.29% for the thirty-nine week period. The decreases for
both periods were the result of markdowns related to the
promotional activities noted above.
Selling, General and Administrative Expenses:
- - --------------------------------------------
Selling, general and administrative ("S G & A") expenses as
a percentage of sales were relatively unchanged for the thirteen-
week and thirty-nine week periods. S G & A as a percentage of
sales decreased from 23.23% to 23.13% for the thirteen-week
period and increased from 23.05% to 23.13% for the thirty-nine
week period.
Other Expense:
- - -------------
Other expense decreased $302,000 and $904,000 for the
thirteen and thirty-nine week periods, respectively. The
decreases result from lower interest expense which was caused by
the Company refinancing a significant portion of long-term debt,
lower levels of indebtedness, and a decline in interest rates.
Income Taxes:
- - ------------
The effective rate for income taxes decreased from 35.83%
to 34.28% for the thirteen-week period and decreased from 36.45%
to 35.29% for the thirty-nine week period. The effective rates
decreased for both periods because of greater levels of targeted
jobs tax credits. The effective rates were below the statutory
rate because of targeted jobs tax credits.
Other:
- - -----
During the first quarter of the current fiscal year, the
Company implemented Statement of Financial Accounting Standard
No. 109, "Accounting For Income Taxes" ("SFAS No. 109"). SFAS
No. 109 superseded SFAS No. 96 and requires that deferred taxes
be recorded using the liability method and restricts the
conditions under which a deferred tax asset may be recorded. The
cumulative effect on the financial statements of adopting SFAS
No. 109 was to increase net earnings $900,000.
LIQUIDITY AND CAPITAL RESOURCES
The Company leases its store locations, but 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 $105.0 million in credit lines from financial
institutions of which $96.0 million is available for future use.
These credit lines expire at various times throughout fiscal
years 1994 and 1995, though the Company expects most to be
renewed.
Working capital increased from $49,511,000 at July 3, 1993
to $54,352,000 as of April 2, 1994. Additions to property and
equipment were $12,494,000 during the same period and consisted
primarily of purchases of store equipment.
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 April 2, 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.
Date: May 11, 1994 /s/ Randy Delchamps
Randy Delchamps, Chairman, President,
and Chief Executive Officer
Date: May 11, 1994 /s/ Roy W. Henderson
Roy W. Henderson, Vice President,
Finance, and Treasurer
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