SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended July 1, 1995
Commission File Number 0-12923
Delchamps, Inc.
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(Exact name of registrant as
specified in its charter)
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Alabama 63-0245434
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(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification Number)
305 Delchamps Drive Mobile, AL 36602
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(Address of Principal executive (Zip Code)
offices)
(334) 433-0431
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(Registrant's telephone number,
including area code)
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Securities registered pursuant to Section 12 (g) of the
Act: Common Stock, $.01 par value.
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 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 if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in part III of this Form 10-K or any amendment to this
Form 10-K.
The aggregate market value of the voting stock held
by non-affilates ( affiliates being directors, executive officers
and holders of more than 5% of the Company's common stock) of the
Registrant at September 18, 1995 was approximately $80,000,000.
The number of shares of Registrant's common stock, par
value one cent ($.01) per share, outstanding at September 18, 1995,
was 7,108,781.
Documents incorporate by reference: Parts II and IV
incorporate by reference portions of the Company's Annual Report
to shareholders for 1995. The Company's definitive Proxy Statement
dated September 18, 1995 is incorporated by reference into Part III.
The exhibit Index is located on page 34 of this document.
Page 1 of 57
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PART I
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Item 1. Business
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(a) The Registrant, Delchamps, Inc. ("the Company") is a
corporation which was organized under the laws of the State of
Alabama in 1946; from the Company's founding in 1921 until it
was incorporated, it operated as a partnership. The Company
operates a chain of supermarkets under the name "Delchamps" in
Alabama, Florida, Louisiana, and Mississippi and has operated
continuously for over 70 years.
The number of supermarkets operated by the Company has
changed from 112 at June 29, 1991 to 118 at July 3, 1993 and
118 at July 1, 1995. In addition to regularly opening new
stores, the Company expands and remodels existing units, and
closes outmoded or unprofitable stores. During the five years
ended July 1, 1995, the Company closed 20 outdated or un-
profitable stores and opened 28 new stores that are all
considerably larger than the stores that were closed. The
Company also remodeled and expanded 25 stores that were closed. The
company also remodeled and expanded 22 stores during the same 5
year period.
The Company, in addition to operating supermarkets, operates
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twelve liquor stores in the State of Florida.
The Company's wholly-owned subsidiary, Supermarket Cigarette
Sales, Inc., functions as the purchasing agent and
distributor for cigarettes sold by the Company's supermarkets
in Louisiana, Mississippi, and Florida.
The 118 supermarkets operated by the Company at July 1,
1995 range in size from 12,000 square feet to 61,980 square
feet, and average 41,478 square feet. The average square
footage of selling area per supermarket increased from ap-
proximately 29,304 square feet at June 29, 1991, to approximately
31,805 at July 1, 1995, and the total sales area in all
stores increased from 3,282,000 to 3,753,000 square feet
during the same period. The Company's new stores will range
from approximately 35,000 to 48,000 square feet in size ( and
from approximately 26,000 to 36,000 square feet of selling
space) depending upon the size of the store's market area.
The Company plans to continue to expand the supermarket
chain through the addition of new supermarkets in its present
areas of operation, through expansion of existing stores, and
through renovation of existing stores.
The Company opened ten supermarkets (of which seven were
purchased from the Kroger Co.) during fiscal year 1995,
closed twelve supermarkets (of which two were sold to the Kroger Co.) ,
and has plans to open two additional supermarkets during fiscal year
1996. Five stores were expanded during the 1995 fiscal year, and the
Company plans to expand one existing supermarket and renovate up to
forty supermarkets in fiscal 1996.
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The following table sets forth certain statistical information
with respect to the Company's operations for the period indicated:
DELCHAMPS, INC.
Selected Financial Information
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Fiscal Year Ended
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July 1, July 2, July 3, June 27, June 29,
1995 1994 1993 1992 1991
52 Weeks 52 Weeks 53 Weeks 52 Weeks 52 Weeks
_________ _________ _________ _________ _________
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Sales (in thousands) $1,054,088 $1,067,191 $1,034,531 $949,849 $959,169
Number of supermarkets:
Opened in period 10 3 4 6 5
Closed in period 12 1 1 3 3
Total <FN1> 118 120 118 115 112
Average sales per supermarket
(in thousands) <FN2> $ 8,858 $ 8,968 $ 8,880 $ 8,369 $ 8,641
Total square feet of selling
space (in thousands):
Opened in period 362 155 167 241 178
Closed in period 348 22 19 65 53
Total 3,753 3,739 3,606 3,458 3,282
Total square feet of selling
space per supermarket <FN1> 31,805 31,158 30,559 30,070 29,304
Average sales per square foot
of selling space <FN3> $ 281 $ 291 $ 293 $ 282 $ 300
</TABLE>
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<FN1> At the end of period
<FN2> Sales for the period divided by the average number of supermarkets
for the period
<FN3> Sales for the period divided by the average square feet of selling
space for the period.
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The Company believes that a vital factor in a successful
supermarket expansion program is the careful selection of store
locations. The Company analyzes prospective locations on a continuous
basis, both internally and with assistance of outside
consultants, and locates stores primarily in suburban shopping
centers in areas with stable or growing middle and upper-middle
class populations. The Company enlarges, modernizes, relocates
or closes stores in light of their past performance and the
Company's assessment of their future potential.
(b) Financial information on industry segments and lines of
business is omitted because, apart from its principal business
of operating retail self-service food stores and liquor stores,
the Company had no other lines of business or industry segments.
(c) (i) Merchandising is the responsibility of the Senior Vice
President Sales and Merchandising who supervises the directors of
the five merchandising departments: Grocery; Meat; Produce;
Deli/bakery; and General Merchandise and Health and Beauty
Care. The department directors, in turn, supervise the twelve
category managers responsible for purchasing and merchandising
various lines of products.
The Company's principal merchandising strategies are to
maintain an overall value image and to achieve high sales
volume by offering quality products and services at
competitive prices. Since the Company's stores carry many of the
same products, centralized purchasing and distribution facilities
are essential. All purchases are made by specialized
category managers under central buying procedures, rather than
on a store-by-store basis, which allows the Company to maintain
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quality control of its products and to take advantage of
volume discounts. Inventories are adjusted on a frequent
basis to take into account seasonal changes in consumer demand.
Delchamps supermarkets operate on a self-service basis, and
are open seven days per week, except Christmas and Thanksgiving.
The supermarkets are clean, spacious, air conditioned,
well-lighted, colorfully decorated, well-stocked,
equipped with modern features and adjacent to offstreet
parking facilities. Except in selected locations, customers
carry their own purchases from the check-out counters to their
automobiles unless they ask for special assistance.
Delchamps supermarkets carry fresh meat and produce,
frozen and other convenience foods, dairy products, specialty
and gourmet products, and general grocery products, as well as
selected lines of non-grocery merchandise. All stores opened and
remodeled during the last several years have contained salad bars,
bakeries, delicatessens, service meat departments, seafood departments,
video departments and offer prepared ready-to-eat foods. The Company
also operates four pharmacies and may add pharmacies to selected
locations.
The Company's supermarkets offer a selection of national
and regional brand-name products, generic products and products
bearing brand names of Topco Associates, Inc. ("Topco"), a
cooperative purchasing organization of which the Company is a
shareholding member.
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The Company's affiliation with Topco, the largest cooperative
grocery products purchasing organization in the United
States, enables it to procure quality merchandise on a competitive
basis with larger, national food retailers. Topco's membership
of 32 retail grocery chains and wholesalers located
throughout the United States enables it to employ large volume
buying techniques on behalf of its members. Topco products are
sold under its own brand names, such as "Food Club", "Topco",
"Top Fresh" and "Top Frost", or under generic labels. Effective
in FY 94, the Company began using a Delchamps label to
replace these TOPCO labels on certain products. The
Company's purchases from or through Topco were approximately
19% of total inventory purchases in fiscal year 1995, 20%
in 1994, and 23% in 1993.
Advertising and promotion are important factors in the
Company's merchandising strategy. In fiscal year 1995, the
Company's advertising expenditures, including television, radio,
newspaper, magazine and circular advertising, were .98% of
sales. The Company's advertising program features a quality
image, emphasizing value with competitive prices and "bonus
buys" (merchandise purchased at reduced prices from vendors and
featured for resale with favorable retail prices). The Company
does not issue trading stamps at any of it stores and does not
expect to do so in the future.
Store operations are the responsibility of the Senior Vice
President, Operations, who supervises the Company's
two Zone Managers, who in turn supervise the Company's seven District
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Managers. Each District Manager is responsible for approximately 12
to 18 supermarkets in his area. District Managers regularly visit the
supermarkets under their jurisdiction, thereby providing continuous,
direct supervision of day-to-day store operations, including such
matters as quality of merchandise, adequacy of staffing levels and
adherence to Company policies. Each supermarket is individually
supervised by a store manager, assistant store managers, and
department managers. The Company's management monitors
the results of operations of each supermarket through the
close and direct supervision of the Zone Managers and
District Managers.
The Company stresses the importance of customer satisfaction
with its associates and insists that associates provide
courteous and efficient service. Customer satisfaction is also
achieved through rapid response to changing consumer tastes
and well-stocked stores. Additionally, it is the Company's
policy to have a management or supervisory associate respond
personally to customer complaints and comments.
Technology also enables the Company to more efficiently
serve its customers. The use of such technological advances
as computerized scanning check-out equipment, direct store
delivery systems, coupon scanning and time and attendance
systems are designed to enhance customer satisfaction and
employee productivity.
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The Company was among the first grocery chains
operating in the Southeast to install computerized scanning check-out
equipment in its stores and now has such equipment in all of
its stores. A computerized order entry system is used at each
of the Company's supermarkets to record merchandise orders and
transmit them electronically to the Company's central distribution
facilities. Restocking is achieved through frequent deliveries
from the Company's central distribution centers and from
local suppliers, thus minimizing the space required at each
store for warehousing inventory.
A computerized direct store delivery system has been implemented
in all of the Company's stores. This system improves
accounting for and control of the merchandise delivered directly
to the Company's supermarkets by suppliers, which represented
30% of total merchandise inventory purchases in fiscal year
1995. In addition, an electronic time, attendance and work
scheduling system, utilizing the same hardware as the direct
store delivery system, has been installed in the Company's
supermarkets. This latter system assists the Company in controlling
labor costs through more efficient use of manpower.
Advances in technology are important to the Company's
ability to improve productivity and keep costs in line and
emphasis will continue to be placed on innovations in this area.
The Company's supermarket products are purchased from over
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1,000 suppliers, of which Topco is by far the most significant,
supplying approximately 19% of the Company's total inventory
purchases during fiscal year 1995. No other supplier accounted
for more than 5% of the Company's purchases during the fiscal
year. During fiscal year 1995, approximately 70% of inventories
(valued at cost) were supplied to the Company's stores
through its central distribution facilities in Mobile and Hammond.
The remaining items were furnished directly to the stores.
by local distributors. Major product lines supplied in this
manner included beverages, bread and snack foods.
The Company's central distribution facilities are serviced
by rail and truck and are operated 24 hours per day, 7 days per
week. The majority of supermarkets receive deliveries 7 days per
week from the Mobile and Hammond facilities through a transportation
fleet leased by the Company. The Company believes that its
distribution system has an effective range of approximately
350 miles in all directions.
(ii) The Company has not publicly announced or otherwise made
public information about any new product or industry segment that
would require the investment of a material amount of the assets of
the Company or which otherwise is material.
(iii) Sources and availability of raw materials are factors
that do not directly affect the Company's business.
(iv) Patents and trademarks owned by the Company are not of
material importance to its operations.
(v) Seasonality does impact the Company, as sales tend to increase
in the summer season because certain of its stores are
located near Gulf Coast beaches.
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(vi) The Company has no unusual working capital requirements.
(vii) The business of the Company is not dependent upon a single
or a few customers. The Company does not sell goods or
services in an amount that equals 10 percent or more of the
company's consolidated revenue to any single customer or group
of customers under common control or to any affiliated group of
customers.
(viii) Backlog ordering is not a factor in the business of the Company.
(ix) No portion of the business of the Company is subject to
renegotiation of profits or termination of contracts or subcontracts
at the election of any government.
(x) The supermarket business is intensely competitive. The
number of competitors and the amount of competition experienced
by the Company's supermarkets vary by location. Principal competitive
factors include store location, price, service, convenience,
cleanliness and product quality and variety. Because the
supermarket business is characterized by narrow profit margins,
the Company's earnings depend primarily on the efficiency of its
operations and its ability to maintain a large sales volume.
The Company's principal competitors are the supermarket
chains operated by Winn-Dixie Stores, Inc., The Great Atlantic
and Pacific Tea Company, Bruno's, Inc., The Kroger Co. and
Albertson's, Inc., and other large regional and national food
store chains. Winn-Dixie, A&P, Wal-Mart, K-Mart and Sam's compete
with the Company throughout Alabama, Florida, Louisiana, and Mississippi.
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Bruno's supermarkets compete with the Company's Alabama,
Florida and Mississippi Gulf Coast supermarkets. Albertson's
competes with the Company in the Florida panhandle and
certain locations in Louisiana. Kroger has stores in Central
and Southwestern Louisiana. Delchamps supermarkets
also compete with local supermarkets, specialty and convenience
food stores and local chains that have significant market shares
in limited aeas, such as the Schwegmann Brothers' Giant
Supermarket chain in Southeastern Louisiana. Certain
of the company's major competitors have financial resources that
are substantially greater than those of the Company.
(xi) The Company did not spend a material amount on Company
sponsored research and development activities or on customer
sponsored research activities relating to the development of
new products, services or techniques, or the improvement of
existing products, services or techniques during fiscal years
1995, 1994, and 1993.
(xii) The Company 's compliance with federal, state, and local
provisions that have been enacted or adopted regulating the
discharge of materials into the environment, or otherwise
relating to the protection of the environment has not had, and
is not expected to have, a material effect upon its capital
expenditures, earnings or competitive position.
(xii) At the end of fiscal year 1995, the Company had approximately
3,929 full-time and 4,468 part-time employees, none of
whom is covered by a collective bargaining agreement.
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(d) The Company does not engage in any operations in foreign
countries, nor is any portion of its sales or revenue derived
from customers in any foreign country. All sales by the Company
occur at locations in Alabama, Florida, Louisiana and Mississippi.
Item 2. Properties
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The Company leases all of its supermarkets under standard
commercial leases, no one of which is material to the Company.
Most of these leases are for a period of 20 years,
and contain several renewal options. The leases provide for
fixed rentals ranging from $2.10 to $14.15 per square foot, with
an average rental of $7.60 per square foot. Nearly all of its leases,
including most of the leases negotiated in the last five years,
provide for the payment by the Company of taxes, insurance and
certain maintenance expenses, as well as additional rental based
on sales volume. One of the Company's store leases is
scheduled to expire during the 1996 fiscal year, and no
more than five leases will expire in any one year there after
until the year 2005.
When a store is closed, the Company attempts to sublease
or assign its lease. The Company is presently paying $343,940
in aggregate monthly rentals on seventeen leases of closed stores
that have not yet been sublet or assigned.
The Company owns the furnishings and fixtures in all
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supermarkets. It is anticipated that the Company will own the
furnishings and fixtures in its stores presently under construction.
The Company owns two warehouses in Mobile containing an
aggregate of 232,000 square feet of storage space formerly used
for dry groceries, dairy products, meats and perishables. Both
buildings are currently being offered for sale or lease; however,
the Mobile facilities are also being used to warehouse
merchandise inventories bought "on deal" under the Company's
forward buying program.
The Company's central distribution center is on a 272-acre
site in Hammond, Louisiana. The distribution facility comprises
approximately 662,000 square feet and has fully automated dry
grocery and frozen food warehouses. The center also contains a
perishables warehouse, an ice manufacturing plant, a remote
storage facility to house flammable items, and a transportation
facility.
The Company owns the 65,000 square foot building in which
its corporate headquarters is situated at 305 Delchamps Drive,
Mobile, Alabama, as well as a 2.7 acre parcel adjacent to the
headquarters which may be used for future office expansion and
parking. The Company also owns an undeveloped 6.8 acre parcel
of real estate and a 3 acre parcel upon which a Company
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supermarket is located; both were acquired from Western Supermarkets
in 1987 and are located near Birmingham, Alabama. In
addition, the company owns a one-half interest in a partnership
which has developed a 22 acre site near Mobile; the site cur-
rently has a Company supermarket, K-Mart, and other shops.
Further, the Company owns a one-half interest in land located
in Panama City, Florida. The Company intends to develop this land
for resale.
Item 3. Legal Proceedings
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The Company is the defendant in a number of legal proceedings
involving claims for money damages arising in the ordinary
course of business which are either covered by insurance or are
within the Company's self-insurance program, and in a number of
other proceedings otherwise not deemed material. In the opinion
of management, none of such litigation has resulted or will
result in any materially adverse effect on the financial position
or operations of the Company.
Item 4. Submission of Matters to a Vote of Security Holders
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The Company did not submit any matters to a vote of security
holders during the fourth quarter of its fiscal year ended
July 1, 1995.
Item 4. (a) Executive Officers of the Registrant
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All Executive Officers are appointed by the Board of
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Directors and, except in certain circumstances following a
change in control, may be removed at any time, with or without
cause by the Board.
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NAME POSITIONS HELD WITH COMPANY AGE
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David W. Morrow Chairman of the Board and Chief Executive 63
Richard W. La Trace President 58
Frank L. Bennen Senior Vice President, Operations 55
Patrick J. Curran Senior Vice President, Sales and Merchandising 43
Timothy E. Kullman Senior Vice President, Chief Financial Officer 39
Treasurer and Secretary
V. Lawrence Abreo Vice President 42
Management Information Services
Heidi E. Finchem Vice President, Public Relations and 37
Assistant Secretary
Larry S. Griffin Vice President, Real Estate 53
William D. Kruse Vice President and Zone Manager 51
Thomas R. Trebesh Vice President, Human Resources 46
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David W. Morrow began employment with the Company in April, 1995
and serves as Chairman of the Board and Chief Executive Officer. Prior
to Delchamps, Mr. Morrow served as Chairman, President, and Chief
Executive Officer of Pueblo XTRA International.
Richard W. La Trace began employment with the Company in June, 1995
and serves as President. Prior to Delchamps, Mr. La Trace served as
President and Chief Operating Officer of XTRA Super Foods, Inc.
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Mr. La Trace's experience also includes serving as President of Corporate
Retail at Wetterau, Inc. and Senior Vice President of Operations
at ABCO Markets, Inc.
Frank L. Bennen began employment with the Company in June, 1995
and serves as Senior Vice President of Operations. Prior to Delchamps,
Mr. Bennen served as President of Laneco, Inc., a chain of 52 retail
stores. Mr. Bennen's experience also includes prior service with Skaggs
Alpha Beta Company and Alpha Beta Company.
Patrick J. Curran began employment with the Company in
April, 1994 and serves as Senior Vice President, Sales and Merchandising.
Prior to Delchamps. Mr. Curran was employed by Acme Supermarkets
in Philadelphia, Pennsylvania, Bi-Lo Supermarkets in the
Carolina and Georgia markets, and Jewel Food Stores in Chicago,
Illinois.
Timothy E. Kullman began employment in August, 1994 and
serves as Senior Vice President, Chief Financial Officer, Treasurer
and Secretary. Mr. Kullman was previously with Farm Fresh, Inc.,
Norfolk, Virginia as Senior Vice President and Chief Financial Officer.
He was also associated with Blue Cross/Blue Shield of Michigan as well
as Deloitte, Haskins and Sells of Detroit, Michigan.
V. Lawrence Abreo has been employed by the Company since
1971. He serves as Vice President, Management and Information Services,
and was appointed to that position in January, 1992. Prior to that
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time, Mr. Abreo was Director of Management Information Services.
Heidi E. Finchem has been employed by the Company since
1982. She serves and Vice President, Public Relations and Assistant
Secretary, and was appointed to that position in July 1995. Prior
to that time, Mrs. Finchem served as Vice President, Benefits and
Corporate Secretary.
Larry S. Griffin has been employed by the Company since
1964. In July 1995, Mr. Griffin was named Vice President,
Real Estate. He was named Vice President, Planning and Development
in April 1994, Senior Vice President, Merchandising, in January,
1992, and Vice President, Merchandising, In July, 1988. In March 1987,
he was appointed Director, Merchandising and, prior to that time,
served as Director of Grocery Merchandising.
William D. Kruse has been employed by the Company since
1960. He serves as Vice President and Zone Manager, and was
appointed to that position in July 1995. Mr. Kruse served as Vice
President, Retail Operations in June 1993 and Director, Retail
Operations prior to June 1993.
Thomas R. Trebesh has been employed by the Company since
1978. He serves as Vice President, Human Resources, and was
appointed to that position in July 1995. Prior to that time Mr. Trebesh
served as Vice President , Personnel, and was appointed to that
position in June 1993.
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PART II
Item 5. Market for the Registrant's Common Stock and Related Matters
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"Management's Report on Dividends and Stock Prices" on
page 6 of the Company's Annual Report to Shareholders for
1995 is incorporated herein by reference.
As of August 5, 1995, there were 1,295 shareholders
of record of the Company's common stock.
The following table sets forth the cash dividends declared
on the Company's common stock for the two most recent fiscal
years. Future dividends will depend on the Company's earnings,
financial requirements and other relevant factors.
1995 1994
---- ----
First Quarter $0.11 $0.11
Second Quarter 0.11 0.11
Third Quarter 0.11 0.11
Fourth Quarter 0.11 0.11
---- ----
TOTAL $0.44 $0.44
==== ====
Restrictions on the Company's paying of dividends are set
forth in Note 5 of the Company' financial statements on page 11
of the Company's 1995 Annual Report to Shareholders and is incorporated
herein by reference.
Item 6. Selected Financial Data
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The selected financial data of the Company are set forth
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under the caption "Five Year Financial Highlights" included in
the Company's Annual Report to Shareholders for 1995 and are
incorporated herein by reference. Such financial data should be
read in conjunction with the financial statements and accompanying
notes included under item 8, below.
Item. 7. Management's Discussion and Analysis of Results of
Operations and Financial Condition
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Management's Discussion and Analysis of Results of
Operations and Financial Condition" on pages 14, 15, and 16 of
the 1995 Annual Report to Shareholders is incorporated herein by
reference.
Item 8. Financial Statements and Supplementary Data
- ------- -------------------------------------------
The Company's financial statements, including the notes
thereto, and the report of KPMG Peat Marwick LLP are contained
on pages 6 through 14 of the Company's Annual Report to
Shareholders for 1995 and are incorporated herein by reference.
Item 9. Changes In and Disagreements with Accountants on
Accounting and Financial Disclosure
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There have been no changes in or disagreements on
accounting principles or practices or financial statement disclosure
between the Company and its independent certified
public accountants within the twenty-four months prior to July 1, 1995.
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PART III
Item 10. Directors and Executive Officers of the Registrant
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Information about nominees for election as Director and
the Directors of the Company appears on pages 1, 2, and 3 of the
Company's definitive Proxy Statement dated September 18, 1995,
under the caption "Election of Directors" and is incorporated
herein by reference. Certain information concerning the
Company's Executive Officers is included in Item 4 (a) of Part I
of this report.
Item 11. Executive Compensation
- -------- ----------------------
Information concerning executive compensation is contained
on pages 5 and 6 of the Company's definitive Proxy Statement
dated September 18, 1995, under the caption "Executive
Compensation", and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
- -------- --------------------------------------------------------------
Information concerning certain beneficial owners of the
Company's stock appears on pages 4 and 5 of the Company's definitive
Proxy Statement dated September 18, 1995, under the subcaption
"Security Holdings of Certain Beneficial Owners"; information
as to security ownership of management is contained on
page 4 of the Company's definitive Proxy Statement dated
September 18, 1995, under the subcaption "Security Holdings of
Directors and Executive Officers". All such information is in-
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corporated herein by reference.
Item 13. Certain Relationships and Related Transactions
- -------- ----------------------------------------------
Information concerning certain relationships and related
transactions appears on page 7 of the Company's definitive
Proxy Statement dated September 18, 1995, under the caption
"Compensation Committee Interlocks and Insider Participation."
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PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports and Form 8-K
- -------- -----------------------------------------------------------------
(a) Documents filed as part of this report:
(1) Financial Statements
The financial statements of Delchamps, Inc. listed below
are incorporated by reference from the Company's 1995 Annual
Report to Shareholders.
<TABLE>
<CAPTION>
Page In
Annual
Report
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Report of KPMG Peat Marwick LLP 6
Consolidated Balance Sheets as of 7
July 1, 1995 and July 2, 1994
Consolidated Statements of Earnings 8
for the fiscal years ended July 1,
1995, July 2, 1994 and July 3, 1993
Consolidated Statements of Stockholders' 8
Equity for the fiscal years ended
July 1, 1995, July 2, 1994 and
July 3, 1993
Consolidated Statements of Cash Flows 9
for the fiscal years ended July 1,
1995, July 2, 1994 and July 3, 1993
Notes to Consolidated Financial Statements 10
</TABLE>
(2) Financial Statement Schedules.
Schedules are omitted as the required information
is inapplicable or the information is presented in the
statements of the related notes.
(3) Exhibits.
The exhibits listed below and marked with an asterisk are
filed herewith and are listed in the attached Exhibit Index; the
other exhibits are incorporated herein by reference from the
document indicated:
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(b) Reports on Form 8-K - There were no reports filed on Form
8-K during the quarter ended July 1, 1995.
Exhibit No.
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3(a) Articles of Amendment to the Articles of Incorporation
and Restated Articles of Incorporation of the Company,
each dated October 5, 1984. (Exhibit 3 (a) to Form 10-K
for fiscal year ended June 29, 1985.)
3(b) The Company's By-Laws, as amended on July 28, 1989
(Exhibit 3 (b) to Form 10-K for fiscal year ended July 1, 1989.)
4(a) Specimen of Common Stock Certificate (Exhibit 4(a) to
Form 10-K for fiscal year ended June 30, 1990).
10(a) Membership and Licensing Agreement dated August 1, 1973
between Topco Associates, Inc. and Delchamps, Inc. and
attached copy of Articles of Incorporation and By-Laws of
Topco Associates, Inc. (Exhibit 10(a) to Registration
Statement on Form S-1, No. 2-86926).
10(b) 1987 Restricted Stock Plan, as amended (Exhibit 10 (i) to
Form 10-K for fiscal year ended July 2, 1988).
10(c) Indemnity Agreement dated November 24, 1987 between
Delchamps, Inc. and First Alabama Bank (Exhibit 10 (o) to
Form 10-K for fiscal year ended July 2, 1988).
10(d) Guaranty Agreement dated November 24, 1987 between
Delchamps, Inc. and First Alabama (Exhibit 10(p) to
Form 10-K for fiscal year ended July 2, 1988).
10(e) The Company's Share Purchase Rights Plan (Exhibit 1 to
Report on Form 8-K filed with the Securities and Exchange
Commission October 20, 1988.)
10(f) Form of Change of Control Severance Agreement between the
Company and certain of its officers and employees dated
September 11, 1989 (exhibit 10 (n) to Form 10-K for fiscal
year ended July 1, 1989).
10(g) Loan agreement dated June 30, 1993 between Delchamps,
Inc. and the Great West Life and Annuity, Mutual of Omaha
Insurance Company, and United of Omaha insurance Company.
13(a) The Company's Annual Report to Shareholders for 1995 included
as an exhibit (Deemed filed as to only those
portions specifically incorporated herein by reference).*
21 Subsidiary of the Registrant.*
-24-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ David W. Morrow
_______________________ Chairman of the Board, Sept. 12, 1995
David W. Morrow Chief Executive Officer
</TABLE>
-25-
<PAGE>
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Richard W. La Trace
_______________________ President Sept. 12, 1995
Richard W. La Trace
</TABLE>
-26-
<PAGE>
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Timothy E. Kullman
_______________________ Senior Vice President, Sept. 12, 1995
Timothy E. Kullman Chief Financial Officer,
Treasurer & Secretary
</TABLE>
-27-
<PAGE>
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report as been signed below by the following
persons on behalf of the Registrant and in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ J. Thomas Arendall, Jr. Director Sept. 12, 1995
_____________________
J. Thomas Arendall, Jr.
</TABLE>
-28-
<PAGE>
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report as been signed below by the following
persons on behalf of the Registrant and in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Carl F. Bailey Director Sept. 15, 1994
_____________________
Carl F. Bailey
</TABLE>
-29-
<PAGE>
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report as been signed below by the following
persons on behalf of the Registrant and in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ E. Eugene Bishop Director Sept. 15, 1994
_____________________
E. Eugene Bishop
</TABLE>
-30-
<PAGE>
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report as been signed below by the following
persons on behalf of the Registrant and in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ John A. Caddell Director Sept. 15, 1994
_____________________
John A. Caddell
</TABLE>
-31-
<PAGE>
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report as been signed below by the following
persons on behalf of the Registrant and in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ James M. Cain Director Sept. 15, 1994
_____________________
James M. Cain
</TABLE>
-32-
<PAGE>
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report as been signed below by the following
persons on behalf of the Registrant and in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ William W. Crawford Director Sept. 15, 1994
_____________________
William W. Crawford
</TABLE>
-33-
<PAGE>
KPMG Peat Marwick LLP
303 Peachtree Street, N.S. Telephone 404 222 3000 Telefax 404 222 3050
Suite 2000
Atlanta, GA 30308
Independent Auditors' Report
The Stockholders and Board of Directors
Delchamps, Inc.:
Under date of August 4,1 995, we reported on the consolidated balance sheets
of Delchamps, Inc. and subsidiary as of July 1, 1995 and July 2, 1994, and
the related consolidated statements of earnings, stockholders' equity, and
cash flows for each of the years in the three-year period ended July 1, 1995,
as contained in the 1995 annual report to stockholders. These finanical
statements and our report thereon are incorporated by reference in the annual
report on Form 10-K for the year 1995. In connection with our audits of the
aforementioned consolidated financial statements, we have also audited the
related supplementary financial statement schedules are the responsibility
of the Company's management. OUr responsibility is to express an opinion on
these supplementary financial statement schedules based on our audits.
In our opinion, such supplementary financial statement schedules, when
considered in relation to the basic consolidated financial statements taken
as a whole, present fairly, in all material respects, the information set
forth therein.
KPMG PEAT MARWICK LLP
August 4, 1995
-34-
<PAGE>
E X H I B I T I N D E X
<TABLE>
<CAPTION>
Sequentially
Exhibit Number
Number Description Page
- ------- ------------------------------------------ ------------
<S> <C> <C>
13 (a) The Company's Annual Report to Shareholder 37
for 1995 (Deemed filed as to only
those portions specifically incorporated
herein by reference).
22 Subsidiary of the Company 58
</TABLE>
-35-
<PAGE>
FIVE YEAR FINANCIAL HIGHLIGHTS
(In thousands except per share amounts)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
-----------------------------------------------------
JULY 1, JULY 2, JULY 3, JUNE 27, JUNE 29,
STATEMENT OF EARNINGS DATA: 1995 1994 1993 1992 1991
(52 WEEKS) (52 WEEKS) (53 WEEKS) (52 WEEKS) (52 WEEKS)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales $1,054,088 $1,067,191 $1,034,531 $949,849 $959,169
Operating (loss) income (34,991) 22,019 27,907 12,885 28,703
(Loss) earnings before income taxes
and cumulative effect of changes
in accounting principles (40,266) 17,858 22,738 8,005 23,299
Net (loss) earnings (25,666) 10,951 14,373 5,799 15,247
Net (loss) earnings per common share (3.61) 1.54 2.02 0.81 2.14
Dividends per common share 0.44 0.44 0.44 0.44 0.43
Weighted average shares outstanding 7,113 7,114 7,114 7,126 7,132
BALANCE SHEET DATA:
- -------------------------------------------------------------------------------------------------------------------
Working Capital $ 22,920 $ 54,926 $ 49,511 $ 38,448 $ 41,793
Total assets 269,412 263,269 252,052 246,725 223,857
Long-term debt and obligations under
capital leases, excluding current
installments 25,745 32,169 39,503 42,214 36,062
Stockholders' equity 110,042 136,300 126,262 112,800 107,873
</TABLE>
Delchamps, Inc., founded in 1921, operates 116 grocery stores in Alabama,
Florida, Louisiana and Mississippi. The Company also operates 10 liquor
stores in Florida. Distribution centers are located in Hammond, Louisiana and
Mobile, Alabama. Delchamps employs 8,900 people. The Company's stock is
traded on the Nasdaq National Market, under the symbol DLCH.
- ---------------------------------------------------------------------------
On Front Cover - From Left: Thomas R. Trebesh, V. Lawrence Abreo,
Larry S. Griffin, Timothy E. Kullman, Heidi E. Finchem, William D. Kruse,
David W. Morrow, Frank L. Bennen, Richard W. La Trace, Patrick J. Curran,
Kevin Burckhardt
- ---------------------------------------------------------------------------
<PAGE>
TO OUR STOCKHOLDERS:
As we enter our seventy-fifth year of operation, we are excited about
the changes underway throughout our Company. Although the financial results
for the year were less favorable than we are accustomed to, fourth quarter
trends indicate that our aggressive restructuring and business plan are having
a positive impact.
Total sales for the year were $1,054,088,000, 1.2% less than the previous
year. Net losses for the year were $25,666,000. Same store sales were 3.69%
behind last year, however, fourth quarter same store sales were 2.94% ahead
of last year's comparable quarter, ending four consecutive quarters of
declining same store sales. This is an encouraging step at the end of a
difficult year.
During the year just ended, Delchamps experienced a number of changes
in our management group. In April, Randy Delchamps stepped down as
Chairman of the Board, President and Chief Executive Officer. Joining our
executive management were: Frank L. Bennen , Senior Vice President,
Operations; Timothy E. Kullman, Senior Vice President , Chief Financial
Officer, Secretary and Treasurer; Richard W. La Trace, President and myself
as your Chairman of the Board and Chief Executive Officer. No strangers to
the grocery industry, our new executives have 157 years combined manage-
ment experience in the industry.
We have undertaken a very aggressive restructuring plan at Delchamps.
The changes can be seen in our corporate offices, our stores and our
distribution centers. We've changed the way we do business: from the way
we merchandise to the way we unload a truck; from our distribution operations
to the appearance of our stores. These changes will improve our efficiency
and reduce our cost of doing business.
As part of our overall restructuring plan, several stores were closed in
Fiscal 1995. Four stores along the Mississippi Gulf Coast, located near the
stores acquired from Kroger, were closed - consolidating our operations in the
area. One antiquated store in Biloxi, Mississippi was replaced by a new store.
Four stores in Louisiana, two stores in Florida (including the adjacent liquor
stores), and one store in Alabama, all unprofitable operations, were closed.
These closings were the first moves in a comprehensive plan to restore
Delchamps to profitability. We recognize that such turnarounds seldom
happen overnight. Understanding the challenge ahead, our management
is charged with the greatest sense of urgency to return the Company to the
level of profitability expected by our shareholders.
Equally important in our business plan is a return to Delchamps'
tradition of low prices. We expect this change will increase store traffic
by attracting many new customers as well as satisfying our current ones.
Our new advertising campaign highlights our return to low prices and
exceptional value.
As part of the capital investment strategy, in addition to major
remodels and expansions, we will renovate and re-decor forty stores in
Fiscal 1996. These stores have not undergone renovation in as many as ten
years. We anticipate that this renovation program, in conjunction with our
low price position, will help improve our market share and improve the sales
in each of the forty stores we update.
We have restructured our organization with an eye to productivity,
efficiency and accountability. We were successful in hiring several senior
executives with proven track records in the grocery industry. Their combined
expertise and experience will provide leadership and training opportunities
for our employees.
In summary, we have dedicated ourselves to providing value; value for
the customers and value for our shareholders. We are encouraged by the
prospects and our vision for the future of our Company. At the same time,
we fully recognize the magnitude of the challenge before us. I am confident
that with our new management and our sharpened business focus, Delchamps will
rise to its preeminent position of preferred grocer in the Gulf-Southeast.
We are looking forward to our seventy-fifth year of excellence and
tradition and are grateful for the continued support of our employees and
shareholders.
David W. Morrow
Chairman of the Board and Chief Executive Officer
<PAGE>
A CHANGE IN BUSINESS FOCUS
We have changed our business focus and sharpened our marketing
approach. Our focus for Fiscal 1996 is Value. Value to our customers
in the form of low prices, superior selection and high service levels;
Value to our shareholders in the form of increased profitability and
return on investment.
At Delchamps our competitive advantage has always been our
people. This continues to be the case. We have added specialists in
several business areas to help us improve our quality control and
training. We have increased the responsibilities of our District Managers,
placing more eyes on our business and improving service and efficiency.
Our added merchandising, training and quality control specialists will
greatly enhance our efforts in preparing our employees for all aspects
of their jobs with the goal of dramatically enhancing our customer service.
Our focus on customer value is the theme of our new advertising
campaign. As our slogan says, "So many things for so much less."
We have developed a new marketing approach that puts emphasis on
our low prices and recognizes local market preferences and tastes of
products carried in our stores. Prices, and with them margins, have been
reduced on thousands of products, discounts offered on pre-priced
merchandise and coupons doubled up to fifty cents, all to increase store
traffic. In support of our low price theme, we have added "comparable
market basket" price information to our advertising campaign. By
comparing our prices with our competitors, we are able to demonstrate to
our customers that Delchamps is dedicated to re-establishing a lower
price image.
We have continued our newsprint, electronic media and direct mail
advertising in all our market areas. Outdoor advertising, store signage
and "point of sale" hand bills were redesigned to incorporate our new
advertising slogans.
We are excited about all of the changes at Delchamps and proud of the
progress already made. We are looking forward to Fiscal 1996 as we
prepare for our seventy-fifth year of operations and continue to position
ourselves for the twenty-first century.
This chart is a bar graph of sales by year for the years 1991 through
1995. In the years 1991, 1992, 1993, 1994 and 1995 sales were $959
million, $950 million, $1,035 million, $1,067 and $1,054 million,
respectively.
<PAGE>
OUR NEW LOOK FOR 1996
During Fiscal 1995, we opened three new stores. These new
store units are located in Spanish Fort, Alabama and Biloxi and
Pass Christian, Mississippi. We also purchased seven stores from
Kroger, Inc., thus eliminating a competitor along the Gulf Coast
of Mississippi and in central and southern Alabama.
In addition to new stores opened, we remodeled and expanded
five stores during Fiscal 1995. These newly remodeled and
expanded stores are located in Fairhope, Bay Minette, and Birmingham,
Alabama; and New Orleans and Slidell, Louisiana. Our program of
expanding and remodeling existing store units has been extremely
successful, adding an average 35% same store sales increase to a well
established store base.
For Fiscal 1996, our business plan calls for an extremely aggressive
forty store re-decor and renovation program. Forty units over ten years
in age, that have not undergone renovation, are targeted in this program.
This program will take place over the next twelve months and will
feature a new interior decor package offering a bright and fresh look.
Our goal is to increase same store sales, as a result of these renovations
for these specific stores, by as much as 10%.
A major renovation and expansion of a store in Theodore, Alabama
is currently underway. This renovation will be completed later in the
fiscal year, adding over 20,000 square feet to the facility, thereby
increasing its size to 49,259 square feet.
Two new stores are planned for the current fiscal year. One store
in Pensacola, Florida will be 45,978 square feet in size with an adjacent
4,000 square foot liquor store. A second new store will open in
Robertsdale, Alabama later this year approximating 30,000 square feet
in size.
This chart is a bar graph of stores opened and closed by year for the
years 1991 through 1995 and an estimate for the 1996 year. In 1991
three stores were closed and five were opened, in 1992 three stores were
closed and six were opened, in 1993 one store was closed and four were
opened, in 1994 one store was closed and three were opened, in 1995
twelve stores were closed and ten were opened. It is estimated in 1996
that no stores will be closed and two stores will be opened.
<PAGE>
NEW FACES
In addition to the changes in the Company's executive group, four new
management level individuals have joined the Company. Kenneth A. Easton,
Director of Distribution and Transportation, has assumed the responsibility
for the Company's distribution, transportation and warehouse operations in
the Hammond Distribution Center and the Mobile forward buying warehouse
facilities.
New to our merchandising operations are: Louis Kertesz, Director of
Produce Merchandising, and Donald E. Admire, Director of Deli-Bakery
Merchandising. Both have a wealth of experience in supermarket merchandising
and offer fresh and creative approaches to our merchandising efforts.
George W. Yurcisin joined Delchamps' management as Corporate Advertising
Manager. A former advertising agency associate, he has been instrumental in
delivering our new low price message and is an integral part of our new
advertising campaign.
A new management level has been added to support our retail stores and
district managers. Two zone managers, one based in our western operations
and one based in our eastern operations will supervise all retail efforts.
William D. Kruse has been given the responsibilities for our Louisiana and
Mississippi operations and Kevin E. Burckhardt is responsible for our Alabama
and Florida operations.
This chart is a bar graph of net earnings (loss) per common share by
year for the years 1991 through 1995. In 1991, 1992, 1993 and 1994 net
earnings were $2.14, $.81, $2.02, $1.54, respectively. In 1995 the net
loss was $3.61.
<PAGE>
The first chart is a bar graph of capital structure of total shareholder
investment, capital leases and long-term debt by year for the years 1991
through 1995. In 1991 total shareholder investments were 75%, capital
leases 12% and long-term debt 13%. In 1992 total shareholder
investments were 73%, capital leases 10% and long-term debt 17%. In
1993 total shareholder investments were 76%, capital leases 8% and long-
term debt 16%. In 1994 total shareholder investments were 81%, capital
leases 7% and long-term debt 12%. In 1995 total shareholder investments
were 81%, capital leases 8% and long-term debt 11%.
The second chart is a bar graph of total number of food stores at year
end by year for the years 1991 through 1995 and an estimate for the 1996
year. In 1991, 1992, 1993, 1994 and 1995 total number of food stores
were 112, 115, 118, 120 and 118, respectively. It is estimated that in
1996 there will be a total of 120 food stores.
The third chart is a bar graph of net earnings (loss) in millions by
year for the years 1991 through 1995. In 1991, 1992, 1993, 1994 net
earnings were $15.25 million, $5.80 million, $14.37 million and $10.95
million, respectively. In 1995 net losses were $25.67.
The fourth chart is a bar graph of total square feet of selling space in
thousands by year for the years 1991 through 1995 and an estimate for
the 1996 year. In 1991, 1992, 1993, 1994 and 1995 total square feet of
selling space was 3,282, 3,458, 3,606, 3,739 and 3,753, respectively.
It is estimated that in 1996 there will be 3,815 total square feet of
selling space.
<PAGE>
DELCHAMPS, INC. AND SUBSIDIARY
Reports of Independent Auditors and Management
- ----------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Delchamps, Inc.:
We have audited the accompanying consolidated balance sheets of
Delchamps, Inc. and subsidiary as of July 1,1995 and July 2, 1994, and
the related consolidated statements of earnings, stockholders' equity,
and cash flows for each of the years in the three-year period ended July 1,
1995. These consolidated financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Delchamps, Inc. and subsidiary at July 1, 1995 and July 2, 1994 and the
results of their operations and their cash flows for each of the years in
the three-year period ended July 1, 1995, in conformity with generally
accepted accounting principles.
As discussed in note 9 to the consolidated financial statements, the
Company changed its method of accounting for postemployment benefits in 1994
to adopt the provisions of the Financial Accounting Standards Board's
Statement of Financial Accounting Standards No. 112, "Employers' Accounting
for Postemployment Benefits." As discussed in note 10 to the consolidated
financial statements, the Company changed its method of accounting for income
taxes in 1994 to adopt the provisions of the Financial Accounting Standards
Board's Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes."
August 4, 1995 KPMG PEAT MARWICK LLP
Atlanta, Georgia
MANAGEMENT'S REPORT ON FINANCIAL STATEMENTS
The Management of Delchamps, Inc. and subsidiary (the "Company") is
responsible for the preparation, integrity, and objectivity of the
consolidated financial statements and related information appearing in the
Annual Report. The consolidated financial statements were prepared in
accordance with generally accepted accounting principles and include amounts
and interpretations that are based on Management's best estimates and
judgments.
The Company maintains a system of internal accounting control which
provides reasonable assurance that financial records are reliable for
preparation of financial statements and that assets are properly accounted
for and safeguarded.
The consolidated financial statements were audited by KPMG Peat Marwick
LLP, independent auditors appointed by the Stockholders of the Company upon
the recommendation of the Board of Directors. Their audits provide an
independent review of Management's discharge of its responsibilities for
reporting the Company's financial condition and results of operations. The
Audit and Finance Committee of the Board of Directors, the majority of whom
are outside directors, meets periodically with the internal and independent
auditors to review their accounting, financial and audit reports and any
recommendations they have for improvements in the system of internal
accounting control.
MANAGEMENT'S REPORT ON DIVIDENDS AND STOCK PRICES
The common stock of Delchamps, Inc. is traded on the Nasdaq National
Market under the symbol DLCH. Trading commenced with the Company's Inital
Public Offering on November 23, 1983. The following information represents
the high and low sales prices on the Nasdaq's National Market.
Fiscal Year Ended
July 1, 1995 High Low
First Quarter 24 21.5
Second Quarter 21 14.5
Third Quarter 18.5 14.75
Fourth Quarter 22.5 17.75
Fiscal Year Ended
July 2, 1994 High Low
First Quarter 24 19
Second Quarter 24.5 20.5
Third Quarter 24 20.75
Fourth Quarter 22.5 20.5
The Company has paid a regular quarterly dividend of $.07 per share from
November 1, 1983 through August 1988, $.09 per share from September 1988
through August 1989, $.10 per share from September 1989 through August 1990,
and $.11 per share thereafter.
As of August 5, 1995, there were approximately 1,295 shareholders of
record.
<PAGE>
DELCHAMPS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
July 1, 1994 and July 2, 1994
(in thousands except share data)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
Assets 1995 1994
- ----------------------------------------------------------------------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 2) $ 15,906 15,378
Trade and other accounts receivable 9,214 9,475
Merchandise inventories (note 3) 93,808 105,663
Prepaid expenses 1,420 443
Income taxes receivable (note 10) 6,549 58
Deferred income taxes (note 10) 2,045 1,529
-------- --------
Total current assets 128,942 132,546
-------- --------
Property and equipment (notes 4 and 5)
Land 13,312 6,312
Buildings and improvements 56,632 51,742
Fixtures and equipment 220,903 198,746
Construction in progress 2,649 4,972
-------- --------
293,496 261,772
Less accumulated depreciation and amortization 155,411 138,643
-------- --------
Net property and equipment 138,085 123,129
-------- --------
Cost in excess of fair value of assets acquired, net
of accumulated amortization of $1,062 in 1994 --- 5,210
Other assets 2,385 2,384
-------- --------
Total assets $ 269,412 263,269
======== ========
- ---------------------------------------------------------------------------------
Liabilities and Stockholders' Equity 1995 1994
- ---------------------------------------------------------------------------------
Current liabilities:
Current installments of obligations under capital
leases (note 4) $ 665 1,576
Current installments of long-term debt (note 5) 3,760 3,760
Notes payable (note 6) 30,000 11,574
Current installments of guaranteed ESOP debt (note 7) 2,000 2,000
Current installments of restructure reserve (note 12) 6,364 ---
Accounts payable 45,063 43,578
Accrued expenses:
Salaries and wages 3,019 2,007
Licenses and other taxes 7,738 7,185
Other 7,413 5,940
-------- --------
Total accrued expenses 18,170 15,132
-------- --------
Total current liabilities 106,022 77,620
-------- --------
Obligations under capital leases, excluding current
installments (note 4) 11,147 11,811
Long-term debt, excluding current installments (note 5) 14,598 18,358
Guaranteed ESOP debt, excluding current installments (note 7) --- 2,000
Restructure reserve, excluding current installments (note 12) 19,219 ---
Deferred income taxes (note 10) 5,464 14,154
Other Liabilities 2,920 3,026
-------- --------
Total Liabilities 159,370 126,969
-------- --------
Stockholders' equity (notes 5 and 11):
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 7,108,781 shares in 1995 and
7,113,581 shares 1994 71 71
Additional paid-in capital 19,603 19,731
Retained earnings 92,637 121,434
-------- --------
112,311 141,236
Less:
Guaranteed ESOP debt (note 7) 2,000 4,000
Unamortized restricted stock award compensation
(note 8) 269 936
-------- --------
Total stockholders' equity 110,042 136,300
-------- --------
Commitments and contingencies (notes 4, 8, and 13)
Total Liabilities and stockholders' equity $ 269,412 263,269
======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
DELCHAMPS, INC. AND SUBSIDIARY
Consolidated Statements of Earnings
Years ended July 1, 1995 and July 2, 1994 and July 3, 1993
(in thousands except share data)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
1995 1994 1993
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales $ 1,054,088 1,067,191 1,034,531
Cost of Sales (note 3) 798,537 796,364 770,457
--------- --------- ---------
Gross Profit 255,551 270,827 264,074
Selling, general and administrative expenses ("S G & A"):
Restructuring charge (note 12) 28,779 --- ---
Other S G & A 261,763 248,808 236,167
--------- --------- ---------
Total S G & A 290,542 248,808 236,167
--------- --------- ---------
Operating (loss) income (34,991) 22,019 27,907
--------- --------- ---------
Interest (expense) income:
Interest Expense (5,375) (4,298) (5,389)
Interest Income 100 137 220
--------- --------- ---------
(5,275) (4,161) (5,169)
--------- --------- ---------
(Loss) earnings before income taxes and cumulative effect of
changes in accounting principles (40,266) 17,858 22,738
Income tax expense (benefit) (note 10) (14,600) 6,207 8,365
--------- --------- ---------
(Loss) earnings before cumulative effect of changes in accounting
principles (25,666) 11,651 14,373
Cumulative effect of change in accounting for income taxes (note 10) --- 900 ---
Cumulative effect of change in accounting for postemployment benefits
(net of income tax benefits of $1,000) (note 9) --- (1,600) ---
--------- --------- ---------
Net (loss) earnings $ (25,666) 10,951 14,373
========= ========= =========
(Loss) earnings per common share:
(Loss) earnings before cumulative effect of changes in accounting
principles $ (3.61) 1.64 2.02
Cumulative effect of change in accounting for income taxes --- 0.12 ---
Cumulative effect of change in accounting for postemployment benefits --- (0.22) ---
--------- --------- ---------
Net (loss) earnings per common share $ (3.61) 1.54 2.02
========= ========= =========
Weighted average number of common shares 7,113 7,114 7,114
========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
Consolidated Statements of Stockholders' Equity
Years ended July 1, 1995 and July 2, 1994 and July 3, 1993
(in thousands)
<TABLE>
<CAPTION>
=============================================================================================================================
Common Stock
---------------
Issued Additional Restricted Total
--------------- Paid-In Retained Guaranteed Stock Stockholders'
Shares Amount Capital Earnings ESOP Debt Awards Equity
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at June 27, 1992 7,114 $71 $19,731 $102,368 $(8,000) $(1,370) $112,800
Amortization of restricted stock awards --- --- --- --- --- 219 219
Reduction of guaranteed ESOP debt --- --- --- --- 2,000 --- 2,000
Net earnings --- --- --- 14,373 --- --- 14,373
Dividends declared of $.44 per share --- --- --- (3,130) --- --- (3,130)
------ ----- ------- -------- ------- ------- -------
Balances at July 3, 1993 7,114 71 19,731 113,611 (6,000) (1,151) 126,262
Amortization of restricted stock awards --- --- --- --- --- 215 215
Reduction of guaranteed ESOP debt --- --- --- --- 2,000 --- 2,000
Net earnings --- --- --- 10,951 --- --- 10,951
Dividends declared of $.44 per share --- --- --- (3,128) --- --- (3,128)
------ ----- ------- -------- ------- ------- -------
Balances at July 2, 1994 7,114 71 19,731 121,434 (4,000) (936) 136,300
Amortization of restricted stock awards --- --- --- --- --- 539 539
Forfeiture of restricted stock awards (5) --- (128) --- --- 128 ---
Reduction of guaranteed ESOP debt --- --- --- --- (2,000) --- 2,000
Net loss --- --- --- (25,666) --- --- (25,666)
Dividends declared of $.44 per share --- --- --- (3,131) --- --- (3,131)
------ ----- ------- -------- ------- ------- -------
Balances at July 1, 1995 7,109 $71 $19,603 $92,637 $(2,000) $(269) $110,042
====== ===== ======= ======== ======= ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
DELCHAMPS, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
Years ended July 1, 1995 and July 2, 1994 and July 3, 1993
(in thousands)
<TABLE>
<CAPTIION>
- -------------------------------------------------------------------------------------------------
1995 1994 1993
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net (loss) earnings $ (25,666) 10,951 14,373
Adjustments to reconcile net (loss) earnings
to net cash provided by operating activities:
Depreciation and amortization 19,472 18,770 18,099
Write-off of cost in excess of fair value
of assets acquired 5,050 --- ---
(Loss) gain on sale of property and equipment 231 (115) 12
Restricted stock award amortization 667 215 219
Deferred income tax (benefit) expense (9,206) (631) 2,117
Cumulative effect of change in accounting for
income taxed --- (900) ---
Cumulative effect of change in accounting for
postretirement benefits --- 1,600 ---
Decrease (increase) in merchandise inventories 11,855 (8,580) (1,663)
Increase (decrease) in accounts payable,
accrued expenses and current installments of
restructure reserve 10,887 501 (884)
(Decrease) increase in income taxes, net (6,491) (889) 1,760
Increase (decrease) in other liabilities and
restructure reserve 19,113 700 (1,131)
Increase in other assets (716) --- ---
------- ------ ------
Net cash flows provided by operating activities 25,196 21,622 32,902
Cash flows from investing activities:
Additions to property and equipment (35,239) (17,705) (20,824)
Proceeds from sale of property and equipment, net 611 256 507
------- ------ ------
Net cash used in investing activities (34,628) (17,449) (20,317)
Cash flows from financing activities:
Principal payments on obligations under capital leases (1,576) (1,705) (1,812)
Principal payments on long-term debt and notes payable (15,333) (7,606) (39,118)
Proceeds from issuance of long-term debt and notes
payable 30,000 11,574 32,222
Dividends paid (3,131) (3,128) (3,130)
------- ------ ------
Net cash provided by (used in) financing
activities 9,960 (865) (11,838)
Net increase in cash and cash equivalents 528 3,308 747
Cash and cash equivalents at beginning of year 15,378 12,070 11,323
------- ------ ------
Cash and cash equivalents at end of year $ 15,906 15,378 12,070
======= ====== ======
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
DELCHAMPS, INC. AND SUBSIDIARY
Notes To Consolidated Financial Statements
July 1, 1995, July 2, 1994, and July 3, 1994
===========================================================================
(1) Summary of Significant Accounting Policies
(a) Description of Business
Delchamps, Inc. and subsidiary ("the Company") are
engaged in the business of retail food distribution through
the Company's supermarkets located in Alabama, Florida
Louisiana, and Mississippi.
(b) Definition of Fiscal year
The Company's fiscal year ends on the Saturday
closest to June 30. Fiscal years 1995 and 1994 comprised
52 weeks while fiscal year 1993 comprised 53 weeks.
(c) Principles of Consolidation
The consolidated financial statements include the
acconts of Delchamps, Inc. and its wholly owned
wholesale subsidiary. All significant intercompany balances
and transactions were eliminated in consolidation.
(d) Cash Equivalents
For purposes of the consolidated statements of
cash flows, the Company considers all highly liquid debt
instuments purchased with a maturiity of three months or
less to be cash equivalents.
(e) Merchandise Inventories
Inventories are stated at the lower of cost or market.
Cost is determined on the last-in, first-out ("LIFO") basis for
87% of inventories in 1995 and in 1994, and 85% in 1993.
With respect to the remaining inventories, primarily produce
and market, cost is determined on the first-in, first-out ("FIFO:)
basis. Inventories developed from the retail method
comprised approximately 55% of total inventories in 1995,
50% in 1994, and 52% in 1993.
(f) Property and Equipment
Property and equipment are stated at cost. Buildings
and equipment acquired prior to July 1, 1984 are depreciated
over the estimated useful lives of the respective assets using
primarily the double-declining-balance method. Buildings
and equipment acquired subsequent to July 1, 1984, are
depreciated over the estimated useful lives of the respective
assets using the straight-line method.
Buildings and equipment under capital leases are
stated at the lower of the present value of the minimum
lease payments at the beginning of the lease term or fair
value of the property at the inception of the lease. Assets
leased under capital leases and leasehold improvements
are amortized using the straight-line method over the lesser
of the lease term or the estimated useful lives of the related
assets. The Company uses the following periods for depre-
ciating and amortizing property and equipment:
Buildings...................................................... 10-50 years
Leasehold improvements.............................................10 years
Fixtures and equipment...........................................5-10 years
(g) Cost in Excess of Fair value of Assets Acquired
Cost in excess of fair value of assets acquired arose
from the purchase of three supermarkets and real estate in
fiscal year 1988. For fiscal years 1988 through 1994, amortization
was recorded over a 40 year period on a straight-line basis.
Since the acquisition in fiscal year 1988, the acquired property
has not achieved sales and earnings projections prepared at the time
of the acquisition. The primary cause of the shortfall in the Company's
projections was because of competitors increasing promotional activity,
competitors opening new supermarkets, and competitors expanding
existing supermarkets. The Company determined, based on the trend
of operating results for 1988 through 1995, that the projected results
of the acquired property would not support the future amortization of
the remaining balance of the cost in excess of fair value of assets
acquired of $5.1 million in the fourth quarter of fiscal year 1995.
(h) Income Taxes
Deferred income taxes are recognized for all
significant temporary differences between the tax basis and
financial statement amount of assets and liabilities. The tax
consequences of those differences expected to occur in
the subsequent year are classified as a current asset
or liability.
Job credits are recorded as a reduction of the pro-
vision for Federal income taxes in the year realized.
In February 1992, the Financial Accounting Standards
Board ("FASB") issued Statement of Accounting Standards
No. 109, "Accounting for Income Taxes" ("SFAS no. 109")
which supersedes SFAS No. 96. Under the asset and
liability method of SFAS NO. 109, deferred tax assets and
liabilities are recognized for the future tax consequences
attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to tax-
able income in the years in which those temporary differences
are expected to be recovered or settled. Under SFAS No. 109,
the effect on deferred tax assets and liabilities of a change in
tax rates is recognized in income in the period that includes
the enactment date.
In fiscal year 1994, the Company adopted SFAS No. 109,
and has reported the cumulative effect of that change in the
method of accounting for income taxes in the 1994 consoli-
dated statements of earnings.
(i) Earnings Per Share
Earnings per share are computed by dividing net
earnings by the weighted average number of shares of
common stock outstanding.
(j) Recent Accounting Pronouncements
In December 1993, Statement of Position 93-7,
"Reporting on Advertising Costs," became effective which
requires certain accounting treatment for advertising costs.
In June 1993, SFAS No. 116, "Accounting for Contributions
Received and Contributions Made" became effective which
requires certain accounting treatment for contributions.
The Company believes that results of operations will not be
significantly impacted from the above pronouncements.
(2) Cash Equivalents
Cash equivalents are stated at cost which
approximates market value. Cash equivalents at July 1, 1995 and
July 2, 1994 consisted of the following:
(In thousands)
1995 1994
---- ----
Euro Dollar Time Deposits $6,995 ---
Marketable Unit Investment Fund 928 933
Cash Management Tax Exempt Fund 36 171
----- -----
$7,959 1,104
===== =====
(3) Merchandise Inventories
The Company uses the LIFO method of valuing
certain of its merchandise inventories to minimize inflation
induced inventory profits and to achieve a better matching of
current costs with current revenues. Inventories would
increase by approximately $13,358,000 at July 1, 1995 and
$13,012,000 at July 2, 1994 if all of the Company's inven-
tories were stated at cost determined by the first-in, first-out
<PAGE>
method. Further, net earnings would increase by approxi-
mately $322,000 in fiscal year 1995, decrease by $24,000 in
fiscal year 1994, and increase by $130,000 in fiscal year
1993, after applying the Company's marginal tax rate and
without assuming an investment return on the applicable
income tax savings.
The Company is a member of a cooperative asso-
ciation from which it purchases private label merchandise
for resale and certain store equipment. Merchandise inven-
tories purchased from this cooperative association approxi-
mated 19% of total inventory purchases in 1995, 20% in
1994, and 23% in 1993.
(4) Leases
The Company leases certain store properties and
equipment under capital leases that expire over the next 12
years. The Company also leases warehouses, store proper-
ties, and store equipment under noncancellable
operating leases that expire over the next 22 years.
Contingent rentals on store properties are paid as a
percentage of sales in excess of a stipulated minimum. In
the normal course of business, it is expected that most
leases will be renewed or replaced by leases on other
properties and equipment.
Included in property and equipment are the following
amounts applicable to capital leases:
<TABLE>
<CAPTION>
(In thousands)
1995 1994
------ ------
<S> <C> <C>
Buildings $13,998 13,998
Fixtures and equipment 19,040 19,040
------ ------
33,038 33,038
Less accumulated amortization 26,197 24,975
------ ------
$ 6,841 8,063
====== ======
</TABLE>
Future minimum lease payments under
noncancellable operating leases and the present value of
future minimum capital lease payments as of July 1,1995
are as follows:
<TABLE>
<CAPTION>
(In thousands)
Capital Operating
Fiscal Year Leases Leases
-------- ---------
<S> <C> <C>
1996 $ 2,079 39,611
1997 2,081 38,843
1998 2,081 37,948
1999 2,081 37,387
2000 2,081 36,754
Later years 11,009 303,671
------ -------
Total minimum lease payments 21,412 494,214
Less amount representing interest 9,600 =======
------
Present value of net minimum capital
lease payments 11,812
Less current installment of obligations
under capital leases 665
------
Long-term obligations under capital
leases $11,147
======
</TABLE>
Rental expense and contingent rentals for operating
leases are as follows:
<TABLE>
<CAPTION>
(In thousands)
1995 1994 1993
-------- ------- -------
<S> <C> <C> <C>
Minimum rentals $ 43,552 40,979 38,201
Contingent rentals 99 110 105
-------- ------- -------
$ 43,651 41,089 38,306
======== ======= =======
</TABLE>
Most of the Company's leases stipulate that the
Company pay taxes, maintenance, insurance, and certain
other operating expenses applicable to the leased property.
As of July 1, 1995 the Company had entered into
additional lease commitments for 4 store properties. The
following table summarizes the approximate rentals which
will be required of the store property leases for the next
20 years.
<TABLE>
<CAPTION>
(In thousands)
Fiscal year Rent
----------- --------------
<S> <C>
1996 $1,045
1997 1,045
1998 1,045
1999 1,045
2000 1,045
2001-2015 15,675
</TABLE>
(5) Long-term Debt
Long-term debt as of July 1, 1995 and July 2, 1994
consisted of the following:
<TABLE>
<CAPTION>
(In thousands)
1995 1994
---- ----
<S> <C> <C>
5.51% note payable, due in 84 monthly
installments of $297,619 in principal
plus interest, with the final installment
due July 1, 2000, unsecured $ 17,858 21,430
Note payable, with interest rates based
on LIBOR + 1.5%, due in 60 monthly
installments of $15,625 in principal plus
interest with the final installment due
March 1, 1998, secured by deposit accounts
with the lender 500 688
------ ------
Total long-term debt 18,358 22,118
Less current installments 3,760 3,760
------ ------
Long-term debt, excluding current
installments $ 14,598 18,358
====== ======
</TABLE>
Agreements underlying the long-term debt contain
restrictive covenants which limit the payment of dividends,
additional debt, lease rental, and transactions with affiliates,
and require maintenance of certain working capital and
equity levels. At July 1, 1995, the Company was in compliance
with all covenants. At July 1,1995, approximately $5,309,000
of the Company's retained earnings was available for the
payment of dividends under such restrictive provisions.
Cash payments for interest were approximately
$5,368,000, $4,312,000, and $5,383,000 in 1995, 1994
and 1993, respectively.
Aggregate annual maturities on long-term debt for
fiscal years after July 1, 1995 are approximately as follows:
<TABLE>
<CAPTION>
(In thousands)
Fiscal year Annual maturities
----------- -----------------
<S> <C>
1996 $ 3,760
1997 3,760
1998 3,696
1999 3,571
2000 3,571
------
$ 18,358
======
</TABLE>
Based on the borrowing rates currently available
to the Company for long-term debt with similar terms and
maturities, the fair value of the long-term debt outstanding
at July 1, 1994 approximates the carrying value.
(6) Notes Payable
Notes payable as of July 1, 1995 and July 2, 1994
consisted of the following:
<PAGE>
<TABLE>
<CAPTION>
(In thousands)
1995 1994
---- ----
<S> <C> <C>
Revolving loan commitments,
due on various dates throughout
fiscal 1996, with interest rates
based on LIBOR + 1.25%,
secured by all of the Company's
merchandise inventories $ 30,000 ---
Unsecured borrowings under lines
of credit, due on various dates
throughout fiscal 1995, with
floating interest rates that are
currently less than the prime rate --- 11,574
------- -------
$ 30,000 11,574
======= =======
</TABLE>
On June 29, 1995, the Company entered into a
$75,000,000 revolving loan credit agreement. The revolving
loan agreement is committed through June, 1998. There is a
commitment fee of .45 of 1% on the unused portion. At the
Company's option, interest under the agreement may be
based on LIBOR or the prime rate. The credit agreement
requires the Company to maintain minimum levels of earnings
and to comply with stated debt covenants. At July 1, 1995, the
Company was in compliance with all covenants.
(7) Leveraged Employee Stock Ownership Plan
In November 1987, the Company leveraged its
existing Employee Stock Ownership Plan ("ESOP"). The
ESOP used the proceeds of the loan to purchase approxi-
matley 1,097,000 shares of the Company's common stock.
The common stock is held by the ESOP trustee in a
"suspense account" and these shares serve as collateral for
the loan. Each year the Company will make a contribution to
the ESOP which the trustee will use to make principal
payments. With each loan payment a portion of the common
stock is released from the "suspense account" and allocated
to participating employees. The Company is required to pay
interest on the loan in excess of any dividends received on
unallocated shares.
The Company guaranteed $20 million of ESOP debt
under the loan agreement. The loan is repayable in 10 equal
annual installments of principal, with the final installment due
in June 1996. Interest is payable quarterly at a rate equal to
80% of the prime rate. The loan obligation of the ESOP
is considered an unearned employee profit sharing trust con-
tribution and is recorded as a reduction of the Company's
stockholders' equity. Both the loan obligation and the unearned
employee profit sharing trust contribution are reduced by the
amount of any loan repayments made by the ESOP.
(8) Employee Benefit and Incentive Plans
The Company has an Employee Stock Ownership Plan
and a Profit Sharing Plan pursuant to section 401(k) of
the Internal Revenue Code which cover substantially all
employees who have completed two years of service. The
Profit Sharing Plan was implemented in fiscal year 1995.
Participants may contribute a percentage of compensation,
but not in excess of the maximum allowed under the Code.
The plan provides for a matching contribution by the Company.
The total annual contributions of these plans for fiscal years
1995, 1994, and 1993 were as follows:
<TABLE>
<CAPTION>
(In thousands)
1995 1994 1993
----- ----- -----
<S> <C> <C> <C>
Employee Stock Ownership Plan $ 2,000 2,000 2,000
Profit Sharing Plan 1,421 --- ---
----- ----- -----
$ 3,421 2,000 2,000
===== ===== =====
</TABLE>
The Company has an incentive compensation plan for
certain management personnel tied to the Company's overall
performance. There was no charge to operations for this plan
in 1995 and 1994, and $2,274,000 was charged to operations
in 1993.
In fiscal 1988, the Company adopted, with stock-
holder approval, a Restricted Stock Award Plan. The plan
provides that a maximum of 150,000 shares of common
stock be awarded to key executives. During 1989 , 138,000
shares were awarded to key executives at a price of $.01 per
share. No shares have been awarded since 1989. These
awarded shares are held by the Company for future distribution
in accordance with the provisions of the plan. Total
compensation expense to be charged to operations over the
term of the plan is approximately $3,209,000. Total
compensation expense associated with the plan was determined
based on the difference between the market value and the
purchase price of the stock at the date of award, and is
being amortized on a straight-line basis over the period
the restrictions lapse. Charges to operations for this plan
were approximately $667,000 in 1995 (of which $374,000 was
charged against the restructuring reserve), $215,000 in 1994,
and $219,000 in 1993.
(9) Postemployment Benefits Other Than Pensions
Effective for fiscal year 1994 the Company adopted
Statement of Financial Accounting Standards No. 112,
("SFAS No. 112"), Employers' Accounting for Postemployment
Benefits." Under SFAS No. 112, the cost of employment
benefits must be recognized on an accrual basis as
employees perform services to earn the benefits.
The Company provides a postemployment longevity
bonus to associates who leave employment after either
attaining age 55 or completing 25 years of service. The
amount of longevity bonus is based on length of service.
The Company previously expensed the cost of these
benefits as paid. The Company has elected to recognize
this change in accounting principle on the immediate recog-
nition basis. The cumulative effect for fiscal year 1994 of
adopting SFAS No. 112 was an increase in accrued postemploy-
ment benefit costs of $2,600,000 ($1,600,000 after the income
tax benefit or $.22 per share).
(10) Income Taxes
As discussed in note 1, the Company adopted
Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" ("SFAS No. 109") for fiscal
1994. The cumulative effect of this change in accounting for
income taxes of $900,000 is determined as of July 4, 1993
and is reported separately in the consolidated statements of
earnings for the year ended July 2, 1994. Prior years'
financial statements have not been restated to apply the
provisions of SFAS No. 109.
The components of income tax (benefit) expense are
as follows:
<TABLE>
<CAPTION>
(In thousands)
Current Deferred Total
------- -------- -------
<S> <C> <C> <C>
1995
Federal $(4,746) (8,101) (12,847)
State (648) (1,105) (1,753)
------ ------ ------
$(5,394) (9,206) (14,600)
====== ====== ======
1994
Federal $ 5,304 176 5,480
State 706 21 727
------ ------ ------
$ 6,010 197 6,207
====== ====== ======
1993
Federal $ 5,519 1,869 7,388
State 729 248 977
------ ------ ------
$ 6,248 2,117 8,365
====== ====== ======
</TABLE>
<PAGE>
The actual income tax expense differs from the statutory
tax rate for all years (computed by applying the U.S. Federal
corporate rate to earnings before income taxes and cumulative
effect of changes in accounting principles) as follows:
<TABLE>
<CAPTION>
(In thousands)
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Statutory tax rate $(13,690) 6,072 7,731
Increase (reduction) in
income taxes resulting
from:
State income taxes,
net of Federal income
tax benefit (2,219) 480 645
Targeted jobs tax credits (385) (507) (157)
Cost in excess of fair
value of assets acquired 1,771 53 53
Other, net (77) 109 93
Actual tax (benefit)
expense $(14,600) 6,207 8,365
======= ====== ======
Effective tax rate 36.3% 34.8 36.8
======= ====== ======
</TABLE>
The tax effects of temporary differences that give rise
to the deferred tax assets and deferred tax liabilities at
July 1, 1995 are as follows (in thousands):
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Deferred Tax Assets:
Restructure reserve $ 9,977 ---
Capital lease obligation 1,939 2,043
Accrued self-insurance 1,937 1,391
Accrued postemployment benefits 1,026 998
Other accrued liabilites 1,779 1,825
------ -----
Net deferred tax assets 16,658 6,257
------ ------
Deferred Tax Liabilities:
Accelerated depreciation 19,915 18,723
Other 162 159
Total gross deferred liabilities 20,077 18,882
------ ------
Net deferred tax liability $ 3,419 12,625
====== ======
</TABLE>
No valuation allowance was recorded against the
deferred tax assets at July 1, 1995. The Company's manage-
ment believes the existing net deductible temporary differences
comprising the total gross deferred tax assets will reverse
during the periods in which the Company generates net
taxable income.
The sources of deferred income taxes and their tax
effects are as follows:
<TABLE>
<CAPTION>
(In thousands)
1993
---------------
<S> <C>
Excess tax depreciation over financial
statement depreciation $ 1,658
Excess financial statement interest and
amortization over tax rent expense on
capitalized leases 203
Accrued expenses recognized for
financial statement purposes, but
not for tax purposes 258
Other (2)
------
$ 2,117
======
</TABLE>
Cash payments for income taxes were approximately
$1,437,000, $5,741,000, and $5,452,000 in 1995, 1994,
and 1993, respectively.
(11) Share Purchase Rights Plan
In October 1988, the Company adopted a Share
Purchase Rights Plan and declared a dividend distribution
of one Right for each outstanding share of common stock.
Under certain conditions, each Right may be exercised to
purchase one one-hundredth of a share of Junior Participat-
ing Preferred Stock at a purchase price of $70, subject to
adjustment. The Company will be entitled to redeem the
Rights at $.01 per Right at any time prior to the earlier of the
expiration of the Rights in October 1998 or ten days following
the time a person or group acquires or obtains the right to
acquire a 15% ownership in the Company. The Rights do not
have voting or dividend privileges. Until such time as they
become exercisable, the Rights have no dilutive effect on the
earnings per share of the Company.
(12) Restructuring Charge
During fiscal year 1995, the Company recorded a pretax
restructuring charge of $28.8 million. The charge reflected
anticipated costs associated with a program to close certain
underperforming stores which could not be subleased in
in whole or in part and, to a lesser extent, severance costs
related to the termination of employment of former executives.
Of the total $28.8 million restructuring reserve, $3.2 million of
costs and payments have been charged against the reserve as
of the end of fiscal year 1995.
(13) Commitments and Contingencies
The Company is a defendant in various claims and
legal actions considered to be in the normal course of busi-
ness. Management intends to vigorously default these claims
and believes that the ultimate disposition of these matters
will not have a material adverse effect on the Company's
consolidated financial condition.
In fiscal 1989, and subsequently, the Company has
entered into certain agreements with officers and key man-
agement. The agreements contain provisions entitling each
officer or employee covered by these agreements to receive
from 1 to 3 times his annual compensation (as defined) if
there is a change in control of the Company (as defined) and
a termination of employment. The agreements also pro-
vide for severance benefits under certain other circumstances.
The agreements do not constitute employment contracts and
only apply in circumstances following a change in control of
the Company. In the event of a change in control of the
Company and termination of all persons covered by these
agreements, the cost would be approximately $10,000,000.
(14) Selected Quarterly Financial Data (unaudited)
Selected quarterly financial data for the years ended
July 1, 1995 and July 2, 1994 is summarized as follows:
<TABLE>
<CAPTION>
(In thousands except per share amounts)
Fiscal quarters
-----------------------------------
1995 Fourth Third Second First
------ ----- ------ -----
<S> <C> <C> <C> <C>
Sales $ 271,839 255,592 260,452 266,205
Gross profit 63,881 60,956 64,912 65,802
(Loss) earnings
before tax (22,945) (19,752) 202 2,229
Net (loss) earnings (15,664) (11,645) 168 1,475
Net (loss) earnings per
common share $ (2.20) (1.64) 0.02 0.21
Dividends declared
per common share $ 0.11 0.11 0.11 0.11
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
(In thousands except per share amounts)
Fiscal Quarters
-----------------------------------
1994 Fourth Third Second First
------ ----- ------ -----
<S> <C> <C> <C> <C>
Sales $ 260,969 265,146 274,506 266,570
Gross profit 66,961 67,739 67,367 68,760
Earnings before
income taxes
and cumulative
effect of changes
in accounting
principles 3,558 5,420 3,787 5,093
Earnings before
cumulative effect
of changes in
in accounting
principles 2,397 3,562 2,471 3,221
Cumulative effect
of change
in accounting for
income taxes - - - 900
Cumulative effect
of change
in accounting for
postemployment
benefits - - - (1,600)
Net earnings 2,397 3,562 2,471 2,521
Earnings per common
share:
Earnings before
cumulative effect
of changes in
in accounting
principles $ 0.34 0.50 0.35 0.45
Cumulative effect
of change
in accounting for
income taxes - - - 0.12
Cumulative effect
of change
postemployment
benefits - - - (0.22)
Net earnings per
common share 0.34 0.50 0.35 0.35
Dividends declared
per common share $ 0.11 0.11 0.11 0.11
</TABLE>
=================================================================
Management's Discussion and Analysis of Results of Operations and
Financial Condition
=================================================================
The following discussion should be read in con-
junction with the financial statement and notes thereto
contained herein.
RESULTS OF OPERATIONS
At the end of the 1995 fiscal year Delchamps operated
118 supermarkets in Alabama Florida, Mississippi and
Louisiana, compared with 120 at the end of the 1994 fiscal
year and 118 at the end of fiscal year 1993. The Company
also operated twelve liquor stores in Florida at the end
of fiscal year 1995 and 1994 and ten liquor stores at the
end of the 1993 fiscal year. Results of operations set
forth in the following tables and narrative are for 52-week
periods in fiscal years 1995 and 1994 and for a 53-week
period in fiscal year 1993. The Company's fiscal year ends
on the Saturday closest to June 30.
<TABLE>
<CAPTION>
Sales
(dollars in thousands)
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Sales $1,054,088 1,067,191 1,034,531
Decrease (increase) from
prior year (13,103) 32,660 84,682
Percentage decrease (increase)
from prior year (1.2%) 3.2% 8.9%
Percentage decrease (increase)
in same store sales (3.7%) 1.2% 3.2%
</TABLE>
Sales decreased in 1995 because the Company operated fewer
supermarkets (118 at the end of fiscal 1995 compared to 120 at
the end of fiscal 1994) and same store sales decreased 3.7%. The
decrease in same store sales was primarily because of competitors
operning new supermarkets and expanding existing supermarkets.
In order to improve same stores sales trends, the Company
implemented a new strategic plan titled "Strategy 2000"
in the fourth quarter of fiscal 1995. The "Strategy 2000" program
included retail price reductions on thousands of items, an increase
in the amount of which coupons are doubled (from $.49 to $.50),
and a new advertising campaign to promote these changes. Same
store sales in the fourth quarter increased 2.9% compared to decreases
of 3.1%, 7.8%, and 6.3% for the first, second, and third quarters of
fiscal 1995, respectively.
Sales increased in 1994 because of the addition
of new supermarkets (three were opened in 1994 and four
were opened in 1993), the expansion of supermarkets (four
were expanded in 1994 and seven were expanded in 1993),
and same store sales increased 1.2% based on a compa-
rable 52 week period in fiscal year 1993. Same store
sales increased because of supermarket expansions
and increased sale from promotional activities. Promo-
tional activities include increased "Bonus Buy" promotions
(in which certain products are featured at reduced retail
prices), implementing a dish program which promoted dinner
plates, soup bowls and other dinnerware at discount prices
and introducing a line of soft drink products with Delchamps
as the brand name. In addition, there was significant
growth in the existing Cash Back For School program (in
which the Company makes cash donations to schools
equal to 1% of the total cash register receipts collected
by each school).
Sales increased in 1993 because of the addition of
new supermarkets (four were opened in 1993 and six were
opened in 1992), the expansion of supermarkets (seven
were expanded in 1993 and five were expanded in 1992),
the extra week in the 1993 53-week period compared to the
1992 52-week period, and same store sales increased 3.2%
based on a comparable 53-week period for fiscal year 1992.
Same store sales increased in 1993 because of supermarket
expansions and success from promotional activities. Promo-
tional activities included Double Coupons (implemented
during fiscal year 1992 under which the Company doubled
coupons which have a face value of up to sixty cents), Triple
Coupons (implemented in selected markets during fiscal
year 1993 under which the Company tripled coupons which
have a face value of up to thirty-four cents), and Cash Back
For Schools (implemented during fiscal year 1992).
<TABLE>
<CAPTION>
Gross Profit
(dollars in thousands)
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Gross profit $ 255,551 270,827 264,074
Gross profit percentage 24.2% 25.4% 25.5%
(Decrease) increase from prior year (1.2%) (0.1%) 0.7%
</TABLE>
Gross profit percentage decreased in 1995 primarily
because of retail price reductions on thouands of items as
part of the "Strategy 2000" program noted above.
Gross profit percentage decreased slightly in 1994
because of increased markdowns (retail price reductions)
from the "Bonus Buy" promotional program.
Gross profit percentage increased in 1993 because
of increased buying allowances, increased sales of higher
margin products located in the specialty departments of
the Company's newer and expanded supermarkets, and
increased sales of private label products (which have higher
margins than brand name products.)
<PAGE>
<TABLE>
<CAPTION>
Selling, General and Administrative Expenses
(dollars in thousands)
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Selling, general and
administrative ("S G &A") $ 290,542 248,808 236,167
Increase from prior year 41,734 12,641 13,068
S G & A as a percentage of sales 27.6% 23.3% 22.8%
Increase (decrease) in percentage
from prior year 4.3% 0.5% 0.7%
</TABLE>
S G & A expense increased in 1995 because restructuring
charges of $28.8 million were recorded which resulted primarily
from closed stores that could not be subleased in whole or in
part, goodwill of $5.1 million was written-off (which related to an
acquisition in fiscal 1988) because the acquired assets were
consistently producing negative results, and the Company
implemented a 401(k) program in fiscal 1995 which required
Company contributions of $1.4 million.
S G & A expense increased in 1994 because of
increased supermarket expenses which occurred primarily
as a result of new and expanded supermarkets. Supermarket
expenses which increased over the 1993 period include the
following: wages and salaries increased $3.5 million, utilities
increased $1.2 million, expenses relating to the
Double Coupon program and dish program (described
in the sales section) increased $2.2 million, and building rent
increased $2.7 million. Wages and salaries, utilities and rent
increased because of new and expanded supermarkets.
Expenses for double coupons and the dish program increased
because of the implementation of the dish program in 1994.
S G & A increased as a percentage of sales over the 1993 fiscal
year because the 1993 period included 53-weeks; therefore, in
1993 fixed costs such as rent and depreciation were divided into
sales for a 53-week period.
S G & A expense increased in 1993 because of added
costs of new and expanded supermarkets and the extra
week in the 1993 53-week period compared to the 1992
52-week period. S G & A as a percentage of sales decreased
in 1993 as a result of the additional week in 1993. The decline
was also attributable to savings from an ongoing cost con-
trol program which improved labor scheduling, reduced
advertising and improved the utilization of supplies.
<TABLE>
<CAPTION>
Interest Expense and Income
(in thousands)
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Interest expense $5,375 4,298 5,389
Increase (decrease) from
prior year 1,077 (1,091) 131
Interest income 100 137 220
Decrease from prior year (37) (83) (158)
</TABLE>
Interest expense increased in 1995 because of higher
levels of indebtedness on the Company's credit lines which
was caused primarily by increased capital expenditures ($35.2
million in 1995 compared to $17.7 million in 1994) and because
of interest related to the restructure reserve incurred in fiscal 1995.
Interest expense decreased in 1994 primarily
because the Company refinanced $25 million of long-term
debt at the end of the 1993 fiscal year. The interest rate on
this debt was reduced to 5.51% from 7.70% The decrease
in interest expense was also caused by lower levels in
indebtedness and a general decline in interest rates.
Interest expense increased in 1993 because of
increased levels of short-term indebtedness under the
Company's lines of credit.
Interest income decreased in the 1995, 1994, and
1993 periods. These decreases resulted from lower levels
of invested cash and reductions in interest rates.
<TABLE>
<CAPTION>
Income Taxes
(dollars in thousands)
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Income tax (benefit) expense $(14,600) 6,207 8,365
Income tax effective rate 36.3% 34.8% 36.8%
Increase (decrease) in rate from
prior year 1.5% (2.0%) 9.2%
</TABLE>
In fiscal year 1995, the Company recorded an income tax
benefit as a result of the loss in earnings before taxes. The
effective tax rate was negatively affected by the goodwill write-
off of $5.1 million (goodwill expense is not deductible for income
tax purposes) and positively affected by targeted jobs tax credits.
In fiscal year 1994, the Company's effective income tax rate
decreased from the 1993 level because earnings decreased
(in 1994 the majority of earnings were taxed at a Federal rate of
34% and in 1993 the majority of earnings were taxed at a Federal
rate of 35%) and targeted jobs tax credits were reinstated by the
Revenue Reconciliation Act of 1993.
In fiscal year 1993, the Company's efffective income tax rate
increased because of the expiration of targeted jobs tax credits.
The effective rate in 1993 approximates the combined Federal
and states statutory rates.
<TABLE>
<CAPTION>
Cumulative Effect of Changes in Accounting Principles
(in thousands)
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Cumulative effect of
change in accounting
for income taxes - $ 900 -
Cumulative effect of
change in accounting for
postemployment benefits - (1,600) -
</TABLE>
The Financial Accounting Standards Board issued
Statement of Accounting Standards No. 109,
"Accounting for Income Taxes", ("SFAS No. 109") which
supersedes SFAS No. 96. The Company implemented
SFAS No. 109 in fiscal year 1994. The cumulative effect of
implementing SFAS No. 109 was to increase earnings $900,000.
The Financial Accounting Standards Board issued
Statement of Accounting Standards No. 112,
"Employers' Accounting for Postemployment Benefits,"
("SFAS No. 112") which the Company implemented in fiscal
year 1994. SFAS No. 112 requires that postemployment
longevity bonus, be recognized on an accrual basis.
The cumulative effect of adopting SFAS No. 112 was
to decrease earnings $1,600,000.
<TABLE>
<CAPTION>
Net Earnings
(dollars in thousands)
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Net (loss) earnings $(25,666) 10,951 14,373
(Decrease) increase from
prior year (36,617) (3,422) 8,574
Percentage (decrease) increase
from prior year (334.4%) (23.8%) 147.9%
Net (loss) earnings percentage
of sales (2.4%) 1.0% 1.4%
</TABLE>
Net earnings decreased in 1995 because of the decline
in same store sales, a lower gross profit margin, and increased
S G & A expenses resulting from a restructuring charge,
a goodwill write-off, and costs for the implementation of a
401(k) benefit program.
Net earnings decreased in 1994 from 1993 because
same store sales growth decreased (to 1.2% in 1994 from
3.2% in 1993) and the Company experienced an increased
rate of growth in S G & A expenses (to 23.3% of sales in
<PAGE>
1994 from 22.8% of sales in 1993.)
Net earnings for 1993 increased because of improved
sales, an increase in gross profit margin, and ongoing
monitoring of S G & A expenses through a cost control
program.
<TABLE>
<CAPTION>
Other
(dollars in thousands)
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Provision for LIFO
expense (benefit) $ 536 (38) 210
Inflation index 1.00375 .99960 1.00222
</TABLE>
In fiscal years 1995 and 1993, the rate of inflation was less than
one-half of 1%. In fiscal year 1994, there was slight deflation.
The effect of inflation on the Company's operating earnings
is considered to be minimal. Mangaement does not expect the
Company to be adversely affected by future inflation because a
large number of its stores are leased at fixed rents for up to twenty-
five year periods and because increases in the cost of merchandise
can be generally passed on through retail price increases.
While inflation has not had a material impact
on past operating results, there is no assurance that the
Company will not be affected by inflation in the future.
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Inventory turnover (annual) 8.0 times 7.9 times 8.0 times
Increase (decrease) from
prior year 0.1 (0.1) 0.4
</TABLE>
Inventory turnover increased slightly in 1995 compared to 1994
because of decreases in the Company's merchandise inventories.
For fiscal year 1995 merchandise inventory was $93.8 million com-
pared to $105.7 million for fiscal year 1994. The reduction in merchan-
dise inventory was due to management implementing a plan to reduce
inventory levels at the Company's warehouses.
Inventory turnover decreased slightly in 1994 compared to 1993
because the 1994 period was a 52-week fiscal year compared to the
1993 period which was a 53-week fiscal year.
In 1993, inventory turnover increased because the 1993 period
was a 53-week fiscal year compared to the 1992 period which was a
52-week fiscal year.
<TABLE>
<CAPTION>
(dollars in thousands)
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Dividends paid $ 3,131 3,128 3,130
Dividends per share 0.44 0.44 0.44
Dividends as a percentage of
net (loss) earnings (12.2%) 28.6% 21.8%
</TABLE>
For fiscal years 1995, 1994 and 1993, the Company paid
annual dividends totaling $.44 per share.
LIQUIDITY AND CAPITAL RESOURCES
Capital Spending
The following table shows capital expenditures
during the last three fiscal years and planned capital expen-
ditures during the 1996 fiscal year.
<TABLE>
<CAPTION>
Plan Actual
---- ------------------------
Fiscal Year 1996 1995 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Capital expenditures (millions) $ 25.0 35.2 17.7 20.8
Supermarkets opened 2 10 3 4
Supermarkets closed 0 12 1 1
Remodels:
Expansions completed 1 5 4 7
Renovations completed 40 - - -
</TABLE>
The Company's plans with respect to store construction,
acquisition, remodeling and expansion are frequently
reviewed and revised in light of changing conditions. In
addition, the Company's ability to proceed with projects, or
to complete projects during a particular period, is subject to
successful negotiation of satisfactory contractual arrangements,
and the timing of projects is subject to normal construction
Financing and Liquidity
Although the Company's supermarket locations are
leased, the Company makes substantial expenditures to
equip new and expanded supermarkets. The cost to equip a
new supermarket is approximately $2.3 million while the
cost to equip an expanded supermarket is approximately
$1.7 million. In addition, the Company makes substantial
expenditures for distribution center facilities and equipment.
The Company plans to finance its capital expenditures
with funds provided by operations. However, if an insuffi-
cient amount of funds is generated, the Company may
obtain long-term financing or draw on a revolving loan.
The Company may borrow up to $75.0 million under the
revolving loan and has currently borrowed $30.0 million
under this loan agreement. The revolving loan is committed
to the Company through June 1998.
Working capital decreased $32,006,000 to $22,920,000
to July 3, 1994 to July 1, 1995. Additions to property and
equipment were $35,239,000 during fiscal 1995 and
consisted primarily of purchases of fixtures and equipment
for new and remodeled stores and equipment for distribution
center facilities.
<PAGE>
<TABLE>
<CAPTION>
OFFICERS, BOARD AND CORPORATE INFORMATION
<C> <C>
OFFICERS CORPORATE INFORMATION
- -------- ---------------------
DAVID W. MORROW
CHAIRMAN OF THE BOARD & CHIEF EXECUTIVE OFFICER CORPORATE ADDRESS
-----------------
RICHARD W. LA TRACE
PRESIDENT DELCHAMPS, INC.
305 DELCHAMPS DRIVE
FRANK L. BENNEN POST OFFICE BOX 1668
SENIOR VICE PRESIDENT, OPERATIONS MOBILE, ALABAMA 36633
TELEPHONE (334) 433-0431
PATRICK J. CURRAN
SENIOR VICE PRESIDENT, SALES & MERCHANDISING
TRANSFER AGENT, REGISTRAR AND
TIMOTHY E. KULLMAN -----------------------------
SENIOR VICE PRESIDENT, CHIEF FINANCIAL OFFICER DIVIDEND DISBURSEMENT AGENT
TREASURER & SECRETARY ---------------------------
V. LAWRENCE ABREO FIRST ALABAMA BANK
VICE PRESIDENT, MANAGEMENT INFORMATION SYSTEMS POST OFFICE BOX 5260
MONTGOMERY, ALABAMA 36103
HEIDI E. FINCHEM
VICE PRESIDENT, PUBLIC RELATIONS AND STOCK LISTING
ASSISTANT SECRETARY -------------
LARRY S. GRIFFIN NASDAQ NATIONAL MARKET SYSTEM
VICE PRESIDENT, REAL ESTATE SYMBOL: DLCH
WILLIAM D. KRUSE FORM 10-K
VICE PRESIDENT AND ZONE MANAGER ---------
THOMAS R. TREBESH A COPY OF THE COMPANY'S ANNUAL REPORT TO THE
VICE PRESIDENT, HUMAN RESOURCES SECURITIES AND EXCHANGE COMMISSION IS
AVAILABLE TO STOCKHOLDERS WITHOUT CHARGE UPON
SARAH F. WATSON WRITTEN REQUEST TO THE SENIOR VICE PRESIDENT,
ASSISTANT SECRETARY CHIEF FINANCIAL OFFICER, TREASURER AND
SECRETARY AT THE CORPORATE OFFICES.
BOARD OF DIRECTORS
- ------------------ ANNUAL MEETING
J. THOMAS ARENDALL, JR. --------------
PRESIDENT
ARENDALL AND ASSOCIATES, INC. THE ANNUAL MEETING OF STOCKHOLDERS OF
DELCHAMPS, INC. WILL BE HELD IN THE
CARL F. BAILEY ADAM'S MARK RIVERVIEW PLAZA HOTEL,
RETIRED PRESIDENT AND CHIEF EXECUTIVE OFFICER 64 SOUTH WATER STREET
SOUTH CENTRAL BELL MOBILE, ALABAMA AT 10 A.M.
ON OCTOBER 24, 1995.
E. EUGENE BISHOP
RETIRED CHAIRMAN OF THE BOARD AUDITORS
MORRISON RESTAURANTS, INC. --------
JOHN A. CADDELL KPMG Peat Marwick LLP
PRESIDENT AND CHIEF EXECUTIVE OFFICER 303 PEACHTREE STREET N.E.
CADDELL CONSTRUCTION COMPANY ATLANTA, GEORGIA 30308
JAMES M. CAIN MARKET MAKERS FOR
RETIRED VICE CHAIRMAN -----------------
ENTERGY CORPORATION DELCHAMPS STOCK
---------------
WILLIAM W. CRAWFORD
RETIRED SENIOR VICE PRESIDENT AND SECRETARY J.C. BRADFORD & COMPANY
KRAFT, INC. MORGAN, KEEGAN & COMPANY
STERNE, AGEE & LEACH
RICHARD W. LA TRACE TROSTER SINGER CORPORATION
PRESIDENT MAYER & SCHWEITZER, INC.
DELCHAMPS, INC. HERZOG, HEINE, GEDULD, INC.
GOLDMAN, SACHS & COMPANY
DAVID W. MORROW GABELLI & COMPANY, INC.
CHAIRMAN OF THE BOARD, CHIEF EXECUTIVE OFFICER
DELCHAMPS, INC.
</TABLE>
Exhibit 22
Percentage
of Voting
Securities
Jurisdiction of Owned By
Name Incorporation Registrant
- --------------------------------- ------------------ ------------
Supermarket Cigarette Sales, Inc. Louisiana 100%
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-01-1995
<PERIOD-END> JUL-01-1995
<CASH> 15,906,000
<SECURITIES> 0
<RECEIVABLES> 9,214,000
<ALLOWANCES> 0
<INVENTORY> 93,808,000
<CURRENT-ASSETS> 128,942,000
<PP&E> 293,496,000
<DEPRECIATION> 155,411,000
<TOTAL-ASSETS> 269,412,000
<CURRENT-LIABILITIES> 106,022,000
<BONDS> 44,964,000
<COMMON> 71,000
0
0
<OTHER-SE> 112,240,000
<TOTAL-LIABILITY-AND-EQUITY> 269,412,000
<SALES> 1,054,088,000
<TOTAL-REVENUES> 1,054,088,000
<CGS> 798,537,000
<TOTAL-COSTS> 290,542,000
<OTHER-EXPENSES> 5,275,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> (14,600,000)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (25,666,000)
<EPS-PRIMARY> (3.61)
<EPS-DILUTED> 0
</TABLE>
