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 January 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 January 31, 1994.
<PAGE>2
DELCHAMPS, INC. AND SUBSIDIARY
INDEX
Page No.
--------
Part 1. Financial Information
Item 1. Financial Statements
Condensed Balance Sheets -
January 1, 1994 and July 3, 1993 3-4
Condensed Statements of Earnings -
Thirteen Weeks Ended January 1, 1994 and
December 26, 1992 5-6
Twenty-six Weeks Ended January 1, 1994 and
December 26, 1992 5-6
Condensed Statements of Cash Flows -
Thirteen Weeks Ended January 1, 1994 and
December 26, 1992 7-8
Twenty-six Weeks Ended January 1, 1994 and
December 26, 1992 7-8
Notes to Condensed Financial Statements 9
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition 10-11
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 12
<PAGE>3-4
<TABLE>
<CAPTION>
Part I. Financial Information
DELCHAMPS, INC. AND SUBSIDIARY
Condensed Balance Sheets - (In thousands)
(Unaudited)
January 1, 1994 July 3, 1993 *
_______________ _______________
Amount % Assets Amount % Assets
<S> <C> <C> <C> <C>
ASSETS
______
Current assets:
Cash and cash equivalents $17,305 6.65 12,070 4.79
Trade accounts receivable 9,663 3.71 7,941 3.15
Merchandise inventories 101,037 38.82 97,083 38.52
Prepaid expenses 2,622 1.01 1,242 0.49
Deferred income taxes 1,976 0.75 2,129 0.84
_______ _____ _______ ______
Total current assets 132,603 50.94 120,465 47.79
Property and equipment:
Land 6,352 2.44 6,495 2.58
Buildings and improvements 51,119 19.64 49,492 19.64
Fixtures and equipment 189,798 72.92 185,211 73.48
Construction in progress 2,221 0.85 3,339 1.32
_______ _____ _______ ______
249,490 95.85 244,537 97.02
Less accumulated depreciation
and amortization (129,475) (49.74) (120,271) (47.72)
_______ _____ _______ ______
Net property and equipment 120,015 46.11 124,266 49.30
Other assets 2,387 0.92 1,954 0.78
Goodwill 5,288 2.03 5,367 2.13
_______ _____ _______ ______
Total assets $260,293 100.00 252,052 100.00
======== ====== ======= ======
LIABILITES AND STOCKHOLDERS' EQUITY
___________________________________
Current liabilities:
Notes payable $9,370 3.60 3,847 1.53
Current portion of obligations
under capital leases 1,705 0.66 1,705 0.68
Current portion of long-term debt 3,760 1.44 3,759 1.49
Current portion of guaranteed
ESOP debt 2,000 0.77 2,000 0.79
Accounts payable 44,256 17.00 39,785 15.78
Accrued expenses 15,623 6.00 18,427 7.31
Income taxes 969 0.37 1,431 0.57
_______ _____ _______ ______
Total current liabilities 77,683 29.84 70,954 28.15
Obligations under capital leases,
excluding current portion 12,560 4.83 13,387 5.31
Long-term debt, excluding current
portion 20,236 7.77 22,116 8.77
Guaranteed ESOP debt, excluding
current portion 4,000 1.54 4,000 1.59
Deferred income taxes 14,112 5.42 14,785 5.87
Other liabilities 495 0.19 548 0.22
_______ _____ _______ ______
Total liabilities 129,086 49.59 125,790 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 0.03 71 0.03
Additional paid-in capital 19,731 7.58 19,731 7.83
Retained earnings 118,449 45.51 113,611 45.07
_______ _____ _______ ______
Total stockholders' equity 138,251 53.11 133,413 52.93
Less: Guaranteed ESOP debt
Unamortized restricted (6,000) (2.31) (6,000) (2.38)
stock awards (1,044) (0.40) (1,151) (0.46)
_______ _____ _______ ______
Total stockholders' equity 131,207 50.41 126,262 50.09
Total liabilities and stockholders'
equity $260,293 100.00 252,052 100.00
======= ====== ======= ======
</TABLE>
See accompanying notes to condensed financial statements.
*Condensed from Balance Sheet included in the 1993 Annual Report.
<PAGE>5-6
<TABLE>
<CAPTION>
DELCHAMPS, INC. AND SUBSIDIARY
Condensed Statements of Earnings - (In thousands except per share amounts)
(Unaudited)
Thirteen Weeks Ended Twenty-six Weeks Ended
_____________________________________ ____________________________________
January 1, 1994 December 26, 1992 January 1, 1994 December 26, 1992
_______________ _________________ _______________ _________________
Amount %Sales Amount %Sales Amount %Sales Amount %Sales
______ ______ ______ ______ ______ ______ ______ ______
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales $274,506 100.00 250,228 100.00 541,076 100.00 505,602 100.00
Cost of sales 207,139 75.46 184,915 73.90 404,949 74.84 376,589 74.48
_______ ______ _______ ______ _______ ______ _______ ______
Gross profit 67,367 24.54 65,313 26.10 136,127 25.16 129,013 25.52
Selling, general and
administrative
expense 62,557 22.79 58,344 23.32 125,176 23.13 116,018 22.95
_______ ______ _______ ______ _______ ______ _______ ______
Operating income 4,810 1.75 6,969 2.79 10,951 2.02 12,995 2.57
Other expense 1,023 0.37 1,353 0.54 2,071 0.38 2,673 0.53
_______ ______ _______ ______ _______ ______ _______ _____
Earnings before income
taxes and cumulative
effect of change in
accounting for income
taxes 3,787 1.38 5,616 2.24 8,880 1.64 10,322 2.04
Income taxes 1,316 0.48 2,088 0.83 3,188 0.59 3,796 0.75
_______ ______ _______ ______ _______ ______ _______ ______
Earnings before
cumulative effect of
change in accounting
for income taxes 2,471 0.90 3,528 1.41 5,692 1.05 6,526 1.29
Cumulative effect of
change in accounting
for income taxes - - - - 900 0.17 - -
_______ ______ _______ ______ _______ ______ _______ ______
Net earnings $ 2,471 0.90 3,528 1.41 6,592 1.22 6,526 1.29
======= ====== ======= ====== ======= ====== ======= ======
Earnings per common
share:
Earnings before
cumulative effect
of change in
accounting for
income taxes $ 0.35 0.50 0.80 0.92
Cumulative effect
of change in
accounting for
income taxes - - 0.13 -
_______ _______ _______ ______
Net earnings per
common share $ 0.35 0.50 0.93 0.92
======= ======= ======= ======
Weighted average number
of common shares 7,114 7,114 7,114 7,114
======= ======= ======= ======
Dividends declared
per common share $ 0.11 0.11 0.22 0.22
======= ======= ======= ======
</TABLE>
See accompanying notes to condensed financial statements.
<PAGE>7-8
DELCHAMPS, INC. AND SUBSIDIARY
Condensed Statements of Cash Flows - (In thousands)
Increase (Decrease) in Cash and Cash Equivalents -(Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-six Weeks Ended
_______________________ ________________________
01/01/94 12/26/92 01/01/94 12/26/92
__________ __________ __________ __________
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 2,471 3,528 6,592 6,526
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 4,655 4,498 9,430 8,924
Loss reserve on closed stores (27) (23) (53) (46)
Restricted stock award compensation expense 53 54 107 107
Cumulative effect of change in accounting
for income taxes (900)
Increase in merchandise inventories (373) (1,558) (3,954) (489)
(Decrease) increase in accounts payable and
accured expenses (1,014) 9,356 1,478 (4,880)
(Decrease) increase in income taxes, net (1,144) (154) (309) 2,317
Other, net (931) (658) (3,308) (3,917)
________ ________ ________ ________
Net cash flows provided by operating
activities 3,690 15,043 9,083 8,542
Cash flows from investing activities:
Additions to property and equipment (2,402) (8,414) (5,142) (16,244)
Proceeds from sale of property and
equipment 10 25 42 25
________ ________ ________ ________
Net cash used in investing activities (2,392) (8,389) (5,100) (16,219)
Cash flows from financing activities:
Proceeds from notes payable 4,640 6,237 5,523 11,454
Principal payments on obligations
capital leases (420) (464) (827) (914)
Principal payments on long-term debt (941) (1,130) (1,880) (2,261)
Dividends paid (782) (782) (1,564) (1,564)
________ ________ ________ ________
Net cash provided by financing activities 2,497 3,861 1,252 6,715
Net increase (decrease) in cash and
cash equivalents 3,795 10,515 5,235 (962)
Beginning of period cash and cash equivalents 13,510 (154) 12,070 11,323
________ ________ ________ ________
End of period cash and cash equivalents $ 17,305 10,361 17,305 10,361
======== ======== ======== ========
Supplemental Disclosures of Cash Flow
Information:
_____________________________________
Cash paid for:
Interest expenses $ 1,032 1,367 2,149 2,763
======== ======== ======== ========
Income taxes $ 2,571 1,318 3,008 2,596
======== ======== ======== ========
</TABLE>
See accompanying notes to condensed financial statements.
<PAGE>9
DELCHAMPS, INC. AND SUBSIDIARY
Notes to Condensed Financial Statements
(Unaudited)
(A) The condensed financial statements for the thirteen and
twenty-six week periods ended January 1, 1994 and December 26,
1992 are unaudited. In the opinion of management, all
adjustments (consisting only of normal recurring adjustments)
necessary for the fair presentation of the financial position and
results of operations for the periods presented have been
included. Results of operations for interim periods are not
necessarily indicative of results for the entire year.
<PAGE>10-11
Management's Discussion And Analysis Of Results
Of Operations And Financial Condition
The following discussion should be read in conjunction with the
condensed financial statements and notes thereto included elsewhere herein.
Results Of Operations
Sales:
_____
Sales increased 9.70% for the thirteen-week period and 7.02% for
the twenty-six week period, compared with corresponding periods
last year. Sales for stores open during the current and prior
year periods increased 4.38% for the thirteen-week period and
2.59% for the twenty-six week period.
The increase in same store sales growth for both periods was the
result of increased promotional activities. These activities
included featuring certain products at reduced retail prices,
implementing a dish program which promoted plates and completer
pieces, and introducing a line of soft drink products with
Delchamps as the brand name. In addition, the Company has
continued its Double Coupon Program (under which the Company
doubles coupons that have a face value of up to sixty cents) and
its Cash Back For School Program (under which the Company makes
cash donations to schools equal to 1% of the total cash register
receipts collected by each school).
At January 1, 1994, the Company operated 119 supermarkets and
eleven liquor stores compared with 115 supermarkets and ten
liquor stores at December 26, 1992. During the thirteen-week
period, the Company opened one liquor store and expanded one
supermarket. During the twenty-six 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 26.10% to
24.54% for the thirteen-week period and decreased from 25.52% to
25.16% for the twenty-six week period. The decreases for both
periods were the result of markdowns related to the promotional
activities noted above.
Selling, General and Administration Expenses:
____________________________________________
Selling, general and administration expenses as a percentage of
sales decreased from 23.32% to 22.79% for the thirteen-week
period and increased from 22.95% to 23.13% for the twenty-six
week period. The decrease for the thirteen-week period was
because of increased sales volume which was up 9.70% as noted
above. The increase for the twenty-six week period was because
of increased expenses related to the promotional activities noted
above.
Other Expense:
_____________
Other expense decreased $330,000 and $602,000 for the thirteen
and twenty-six week periods, respectively. The decreases result
form 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 37.18% to
34.75% for the thirteen-week period and decreased from 36.78% to
35.90% for the twenty-six week period. The effective rates
decreased for both periods because of lower pretax earnings
combined with 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
supersedes 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 $98.5 million is available for future use.
These credit lines expire at various times throughout fiscal year
1994, though the Company expects most to be renewed.
Working capital increased form $49,511,000 at July 3, 1993 to
$54,920,000 as of January 1, 1994. Additions to property and
equipment were $5,142,000 during the same period and consisted
primarily of purchases of store equipment.
<PAGE>12
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 January 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.
_______________
Date: February 14, 1994 /s/ Randy Delchamps
____________________________________
Randy Delchamps, Chairman, President,
and Chief Executive Officer
Date: February 14, 1994 /s/ Roy W. Henderson
_____________________________________
Roy W. Henderson, Vice President,
Finance, and Treasurer
