Securities And Exchange Commission
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the 13-Week Period Ended September 30, 1995
Commission File Number 0-12923
Delchamps, Inc.
-----------------------------------------
(Exact name of registrant as
specified in its charter)
Alabama 63-0245434
------------------------------ ----------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
305 Delchamps Drive, Mobile, AL 36602
- ------------------------------- ----------------------
(Address of principal executive (Zip code)
offices)
(334) 433-0431
- -------------------------------
(Registrant's telephone number,
including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes x No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of the latest practicable date. 7,108,781 shares at
October 31, 1995.
<PAGE>
DELCHAMPS, INC. AND SUBSIDIARY
Index
Page No.
--------
Part 1. Financial Information
Item 1. Financial Statements
Condensed Balance Sheets -
September 30, 1995 and July 1, 1995 1
Condensed Statements of Earnings -
Thirteen Weeks Ended September 30, 1995
and October 1, 1994 2
Condensed Statements of Cash Flows -
Thirteen Weeks Ended September 30, 1995
and October 1, 1994 3
Notes to Condensed Financial Statements 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 5
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security
Holders 7
Item 6. Exhibits and Reports on Form 8-K 7
Signatures 8
<PAGE>
Part I. Financial Information
DELCHAMPS, INC. AND SUBSIDIARY
Condensed Balance Sheets - (In thousands)
(Unaudited)
<TABLE>
<CAPTION>
September 30, 1995 July 1, 1995*
--------------------- -------------------
Amount %Assets Amount %Assets
---------- --------- -------- ---------
<S> <C> <C> <C> <C>
ASSETS
------
Current assets:
Cash and cash equivalents $ 7,487 2.88 15,906 5.90
Trade accounts receivable 10,952 4.21 9,214 3.42
Merchandise inventories 91,739 35.25 93,808 34.82
Prepaid expenses 2,509 .96 1,420 .53
Income taxes receivable 5,598 2.15 6,549 2.43
Deferred income taxes 2,045 .78 2,045 .76
-------- ------- ------- -------
Total current assets 120,330 46.23 128,942 47.86
Property and equipment:
Land 13,334 5.12 13,312 4.94
Buildings and improvements 56,935 21.87 56,632 21.02
Fixtures and equipment 220,102 84.56 220,903 81.99
Construction in progress 4,920 1.90 2,649 .99
-------- ------- ------- -------
295,291 113.45 293,496 108.94
Less accumulated depreciation and amortization (157,672) (60.58) (155,411) (57.69)
-------- ------- ------- -------
Net property and equipment 137,619 52.87 138,085 51.25
Other assets 2,339 .90 2,385 .89
-------- ------- ------- -------
Total assets $ 260,288 100.00 296,412 100.00
======== ======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Notes payable $ 30,000 11.53 30,000 11.14
Current portion of obligations under capital 665 .26 665 .25
leases
Current portion of long-term debt 3,760 1.44 3,760 1.40
Current portion of guaranteed ESOP debt 2,000 .77 2,000 .74
Current portion of restructure obligation 6,364 2.44 6,364 2.36
Accounts payable 37,536 14.42 45,063 16.73
Accrued expenses 20,133 7.73 18,170 6.73
-------- ------- ------- -------
Total current liabilities 100,458 38.59 106,022 39.35
Obligations under capital leases, excluding current 10,988 4.22 11,147 4.14
portion
Long-term debt, excluding current portion 13,659 5.25 14,598 5.42
Restructure obligation, excluding current portion 18,057 6.94 19,219 7.13
Deferred income taxes 5,847 2.25 5,464 2.03
Other liabilities 2,756 1.06 2,920 1.08
-------- ------- ------- -------
Total liabilities 151,765 58.31 159,370 59.15
Stockholders' equity:
Junior participating preferred stock of no par
value- authorized 5,000,000 shares; no shares
issued - - - -
Common stock of $.01 par value - authorized
25,000,000 shares; issued 7,108,781 shares 71 .03 71 .03
Additional paid-in capital 19,603 7.53 19,603 7.28
Retained earnings 91,098 35.00 92,637 34.38
-------- ------- ------- -------
110,772 42.56 112,311 41.69
Less: Guaranteed ESOP debt (2,000) (.77) (2,000) (.74)
Unamortized restricted stock awards (249) (.10) (269) (.10)
-------- ------- ------- -------
Total stockholders' equity 108,523 41.69 110,042 40.85
Total liabilities and stockholders' equity $ 260,288 100.00 269,412 100.00
======== ======= ======= =======
</TABLE>
See accompanying notes to condensed financial statements.
* Condensed from Balance Sheet included in the 1995
Annual Report.
<PAGE>
DELCHAMPS, INC. AND SUBSIDIARY
Condensed Statements of Earnings - (In thousands except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
------------------------------------------
September 30, 1995 October 1, 1994
--------------------- ------------------
Amount % Sales Amount % Sales
--------- -------- ------- --------
<S> <C> <C> <C> <C>
Sales $ 284,689 100.00 266,205 100.00
Cost of sales 220,219 77.35 200,403 75.28
--------- -------- ------- --------
Gross profit 64,470 22.65 65,802 24.72
Selling, general and
administrative expenses 63,810 22.41 62,454 23.46
--------- -------- ------- --------
Operating income 660 .24 3,348 1.26
Interest expense, net 1,784 .63 1,119 .43
--------- -------- ------- --------
(Loss) earnings before income taxes (1,124) (.39) 2,229 .83
Income tax (benefit) expense (368) (.12) 754 .28
--------- -------- ------- --------
Net (loss) earnings $ (756) (.27) 1,475 .55
========= ======== ======= ========
Net (loss) earnings per common share $ (.11) .21
========= =======
Weighted average number of
common shares 7,109 7,114
========= =======
Dividends declared per common share $ .11 .11
========= =======
</TABLE>
See accompanying notes to condensed financial statements.
<PAGE>
DELCHAMPS, INC. AND SUBSIDIARY
Condensed Statements of Cash Flows - (In thousands)
Increase (Decrease) In Cash and Cash Equivalents
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
--------------------
9/30/95 10/01/94
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net (loss) earnings $ (756) 1,475
Adjustments to reconcile net (loss) earnings to net
cash provided by operating activities:
Depreciation and amortization 5,189 4,827
Loss reserve on closed stores (164) (28)
Restricted stock award compensation expense 20 56
Restructure obligation (1,162) -
Decrease (increase) in merchandise inventories 2,069 (38)
Decrease in accounts payable and accrued expenses (5,563) (1,862)
Decrease in income taxes receivable, net 951 1,969
Other, net (2,656) (1,872)
-------- --------
Net cash flows (used in) provided by operating (2,072) 4,527
activities
Cash flows from investing activities:
Additions to property and equipment (4,569) (11,319)
Proceeds from sale of property and equipment 103 180
-------- --------
Net cash used in investing activities (4,466) (11,139)
Cash flows from financing activities:
Proceeds from notes payable 8,030
Principal payments on obligations under capital (159) (459)
leases
Principal payments on long-term debt (940) (941)
Dividends paid (782) (782)
-------- --------
Net cash (used in ) provided by financing (1,881) 5,848
activities
Net decrease in cash and cash equivalents (8,419) (764)
Beginning of period cash and cash equivalents 15,906 15,378
-------- --------
End of period cash and cash equivalents $ 7,487 14,614
======== ========
Supplemental Disclosures of Cash Flow Information:
-------------------------------------------------
Cash paid for:
Interest expenses $ 1,880 1,195
======== ========
Income taxes $ - 6
======== ========
</TABLE>
See accompanying notes to condensed financial statements.
<PAGE>
DELCHAMPS, INC. AND SUBSIDIARY
Notes to Condensed Financial Statements
(Unaudited)
(A) Basis of Presentation
---------------------
The accompanying unaudited consolidated financial statements
include the results of operations, account balances and cash flows
of the Company and its wholly-owned subsidiary. All material
intercompany balances have been eliminated.
In the opinion of management, the accompanying unaudited
consolidated financial statements include all adjustments
necessary to present fairly, in all material respects,
the results of operations of the Company for the periods
presented. The statements have been prepared by the Company
pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote
disclosures included in annual financial statements prepared
in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and
regulations. It is suggested that these consolidated financial
statements be read in conjunction with the consolidated financial
statements and the accompanying notes included in the Company's
1995 Annual Report.
The balance sheet at July 1, 1995 has been taken from the
audited financial statements at that date.
<PAGE>
Management's Discussion And Analysis Of Financial
Condition And Results Of Operations
RESULTS OF OPERATIONS
Sales:
-----
Sales increased 6.94% for the thirteen-week period
compared with the corresponding period last year. Sales of
stores open during both the current and prior year periods
("same store sales") increased 7.02%. This increase in same
store sales reflects the second consecutive quarter in which
positive same store sales were reported. The improved
same store sales resulted primarily from positive customer
response to the Company's "Strategy 2000" program implemented
in March, 1995. The "Strategy 2000" program included retail
price reductions on thousands of items, an increase in the
amount in which coupons are doubled (from $.49 to $.50), and
a new advertising campaign to promote these changes.
At September 30, 1995, the Company operated 116
supermarkets and ten liquor stores compared with 120
supermarkets and twelve liquor stores at October 1, 1994.
During the thirteen-week period, the Company closed two under
performing supermarkets, closed two liquor stores, and
renovated fifteen supermarkets.
Gross Profit:
------------
Gross profit as a percentage of sales decreased from 24.72%
to 22.65% for the current thirteen-week period. The decrease was
primarily the result of retail price reductions on thousands of
items as part of the "Strategy 2000" program noted above.
Selling, General and Administrative Expenses ("SG & A"):
-------------------------------------------------------
Selling, general and administrative expenses as a percentage
of sales decreased from 23.46% to 22.41% for the current
thirteen-week period. The decrease resulted from higher sales
in the current thirteen-week period as noted above. SG and A
dollars increased by $1.36 million over last year's quarter
since stores wages increased $.23 million on increased sales,
advertising increased $.44 million primarily because of the
promotion of the "Strategy 2000" campaign, store depreciation
expense increased $.37 million due to equipment additions
from new stores and remodeled stores, and legal expenses
increased $.15 million primarily for costs related to
union matters.
Interest Expense, Net
---------------------
Interest expense, net increased by $.67 million over last
year's quarter because of interest expense related to
restructuring charges and increased interest rates on the
Company's short-term indebtedness.
<PAGE>
Management's Discussion And Analysis Of Financial
Condition And Results Of Operations
Income Taxes:
------------
The effective rate for the income tax benefit was 32.74%
in the current quarter compared to an effective rate of 33.82%
for income tax expense in last year's quarter. The income tax
benefit in the current quarter was a result of the loss in
earnings before taxes.
LIQUIDITY AND CAPITAL RESOURCES
The Company leases its store locations, but makes
substantial expenditures to equip new and expanded supermarkets.
In addition, the Company makes substantial expenditures for
distribution facilities and equipment. The Company plans to
finance its capital expenditures with funds provided by
operations. However, if an insufficient amount of funds are
generated, the Company may draw on a short-term revolving
loan. The Company may borrow up to $75 million under the
revolving loan of which $40 million is available for future
use. The revolving loan expires in June, 1998.
Working capital decreased from $22,920,000 at July 1, 1995
to $19,872,000 as of September 30, 1995. Additions to property
and equipment were $4,569,000 during the same period and
consisted primarily of purchases of store equipment.
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
The Company held its annual meeting of shareholders on
October 24, 1995. At the meeting, James M. Cain, William W.
Crawford, and Richard W. La Trace were elected as directors
for three-yearterms expiring at the 1998 annual meeting, and
Timothy E. Kullman was elected as director for a termexpiring
at the 1996 annual meeting. Other board members continuing
to serve are Carl F. Bailey andJohn A. Caddell whose terms
expire at the 1996 annual meeting, and J. Thomas Arendall, Jr.,
E. E. Bishop, and David W. Morrow whose terms expire at the
1997 annual meeting.
The shareholders also ratified the appointment of KPMG
Peat Marwick LLP as the Company'sindependent auditors
for the fiscal year ending June 29, 1996.
A summary of voting results follows (in thousands):
<TABLE>
<CAPTION>
For Against/Abstain Total Votes
----------- --------------- ------------
Amount % Amount % Amount %
------ --- -------- ----- ------ ----
<S> <C> <C> <C> <C> <C> <C>
Directors:
James M. Cain 4,688 92.2 398 7.8 5,086 100.0
William W. Crawford 4,729 93.0 357 7.0 5,086 100.0
Richard W. La Trace 4,725 92.9 361 7.1 5,086 100.0
Timothy E. Kullman 4,750 93.4 336 6.6 5,086 100.0
Appointment of KPMG
Peat Marwick LLP 5,056 98.5 79 1.5 5,135 100.0
</TABLE>
Item 6. Exhibits and Reports on Form 8-K.
Reports on Form 8-K:
There were no reports on Form 8-K filed during the thirteen-weeks
ended September 30, 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
Delchamps, Inc.
----------------
Registrant
Date: November 10, 1995 /s/David W. Morrow
-----------------------------
David W. Morrow, Chairman of
the Board and Chief Executive
Officer
Date: November 10, 1995 /s/Richard W. La Trace
------------------------------
Richard W. La Trace, President
Date: November 10, 1995 /s/ Timothy E. Kullman
-------------------------------
Timothy E. Kullman, Senior Vice
President and Chief Financial
Officer, Treasurer and
Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 5,370,000
<SECURITIES> 2,117,000
<RECEIVABLES> 6,952,000
<ALLOWANCES> 0
<INVENTORY> 91,739,000
<CURRENT-ASSETS> 120,333,000
<PP&E> 295,291,000
<DEPRECIATION> (157,672,000)
<TOTAL-ASSETS> 260,288,000
<CURRENT-LIABILITIES> 100,458,000
<BONDS> 24,647,000
<COMMON> 71,000
0
0
<OTHER-SE> (2,249,000)
<TOTAL-LIABILITY-AND-EQUITY> 260,288,000
<SALES> 284,687,000
<TOTAL-REVENUES> 284,687,000
<CGS> 220,067,000
<TOTAL-COSTS> 63,960,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,784,000
<INCOME-PRETAX> (1,124,000)
<INCOME-TAX> (367,000)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (757,000)
<EPS-PRIMARY> (.11)
<EPS-DILUTED> 0
</TABLE>
