SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
DATE OF REPORT (Date of earliest event reported): August 25, 1997
DELCHAMPS, INC.
(Exact name of registrant as specified in its charter.)
ALABAMA 0-12923 63-0245434
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation) Number)
305 DELCHAMPS DR., MOBILE, AL 36602
(Address of Principal Executive Offices - Zip Code)
Registrant's telephone number, including area code: (334)433-0431
N/A
(Former name or former address, if changed since last report.)
Item 5. Other Events.
Delchamps, Inc. (the "Company") has prepared audited consolidated financial
statements as of and for the fiscal year ending June 28, 1997 and the related
Management's Discussion and Analysis of Financial Condition and Results of
Operation for inclusion in an offering memorandum to be used by Jitney-Jungle in
connection with its efforts to secure permanent financing for its pending
acquisition of the Company. The Company is filing such financial statements and
MD&A herewith for the information of its shareholders. Accordingly, the
following are filed as Exhibit 99 and incorporated by reference herein:
Management's Discussion and Analysis of Financial Condition and Results of
Operation;
Reports of Independent Auditors and Management;
Consolidated Balance Sheets as of June 28, 1997 and June 29, 1996;
Consolidated Statements of Earnings for the fiscal years ended June 28,
1997, June 29, 1996 and July 1, 1995;
Consolidated Statements of Stockholders' Equity for the fiscal years ended
June 28, 1997, June 29, 1996 and July 1, 1995;
Consolidated Statements of Cash Flows for the fiscal years ended June 28,
1997, June 29, 1996 and July 1, 1995;
Five Year Financial Highlights for the fiscal years ended June 28, 1997,
June 29, 1996, July 1, 1995, July 2, 1994 and July 3, 1993; and
Notes to Consolidated Financial Statements.
Item 7. Financial Statements and Exhibits.
(a) Not Applicable.
(b) Not Applicable.
(c) Exhibits.
Exhibit No. Description
99 Audited consolidated financial statements of Delchamps, Inc.
as of and for the fiscal year ended June 28, 1997 and the
related Management's Discussion and Analysis of Financial
Condition and Results of Operations
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.
By: /s/ Timothy E. Kullman
----------------------
Timothy E. Kullman
Senior Vice President,
Chief Financial Officer,
Treasurer and Secretary
Date: August 25, 1997
EXHIBIT 99
DELCHAMPS, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
The following discussion should be read in conjunction with the
financial statements and notes thereto contained herein.
ACQUISITION BY JITNEY-JUNGLE STORES OF AMERICA, INC.
On July 8, 1997, the Company announced that it had entered into an
agreement to be acquired by Jitney-Jungle Stores of America, Inc. The
terms of the agreement are described in the Company's Schedule 14D-9, as
amended, and in Jitney-Jungle's 14D-1, as amended, both of which have
been filed with the Securities and Exchange Commission. Pursuant to the
agreement, a wholly-owned subsidiary of Jitney-Jungle (the "Offeror")
has commenced a tender offer (the "Offer") for all outstanding shares of
the Company's common stock at a price of $30 per share. The agreement
provides, generally, that as soon as practicable after the consummation
of the Offer and satisfaction or waiver of the other conditions set forth
in the agreement, the Offeror will be merged with and into the Company
(the "Merger"), and the Company will continue as the surviving
corporation, and the remaining shareholders of the Company will receive
$30 per share.
The Company's Board of Directors has unanimously approved the Offer,
the Merger and the agreement, and has determined that the consideration
to be paid for the shares of the Company's common stock in the Offer and
the Merger is fair to the Company's shareholders and that the Offer and
the Merger are otherwise in the best interests of the Company and its
shareholders. The Company's Board of Directors has unanimously
recommended that the Company's shareholders accept the Offer and tender
their shares pursuant to the Offer and, if a shareholder vote on the
Merger is required by Alabama law, vote in favor of the Merger.
RESULTS OF OPERATIONS
At the end of the 1997 fiscal year the Company operated 118
supermarkets in Alabama, Florida, Mississippi and Louisiana, compared
with 117 at the end of the 1996 fiscal year and 118 at the end of the
1995 fiscal year. The Company also operated ten liquor stores in
Florida at the end of fiscal years 1997 and 1996 and twelve liquor
stores at the end of fiscal year 1995. Results of operations set
forth in the following tables and narrative are for 52-week periods in
fiscal years 1997, 1996, and 1995. The Company's fiscal year ends on
the Saturday closest to June 30.
During the past three years, increasingly competitive markets have
made it difficult for the Company to achieve comparable store sales
gains and improve profitability. During the Company's last three
fiscal years, competitors have opened approximately 82 new
supermarkets in the Company's operating regions, approximately 21 of
which were opened in fiscal 1997. In fiscal 1997, the Company
experienced a 2.1% decline in net sales and a 3.5% decline in same
store sales. Although net sales and same store sales declined, gross
margin improved, primarily as a result of selective retail price
increases. The Company can give no assurances that improvements in
profitability can be achieved if net sales and same store sales
continue to decline as a result of competitive pressures.
Sales (Dollars in thousands)
1997 1996 1995
---- ---- ----
Sales.......................... $ 1,102,947 1,126,629 1,054,088
(Decrease) increase
from prior year.......... (23,682) 72,541 (13,103)
Percentage (decrease)
increase from
prior year................. (2.1%) 6.9% (1.2%)
Percentage (decrease)
increase in same
store sales................. (3.5%) 7.1% (3.7%)
In 1997, total sales declined 2.1% and same store sales declined
3.5%. Same store sales increase (decrease) by quarter follows: .1%
in the first quarter, (3.3%) in the second quarter, (3.5%) in the
third quarter, and (7.2%) in the fourth quarter. The Company believes
the declines in same store sales were because a significant number of
new supermarkets were opened by competitors (approximately 21 new
supermarkets were opened by competitors during fiscal 1997), and
competitors increased levels of promotional activity (which included a
competitor introducing a frequent shopper card). In addition, the
Company was competing against strong sales levels from fiscal year
1996 (explanations for the strong 1996 sales levels are discussed
below).
Although sales and same store sales declined, the Company's gross
margin improved during fiscal year 1997, primarily as a result of
selective retail price increases (as discussed below). The Company
can give no assurances that improvements in gross margins can be
sustained if sales and same store sales continue to decline.
Sales increased in 1996 because a new merchandising program was
implemented during the fourth quarter of fiscal year 1995, a new
supermarket renovation program was implemented, and new programs were
implemented in supermarket operations which improved customer
service. The new merchandising program included: 1) reduced retail
prices on thousands of items, 2) the amount of which coupons are
doubled was increased from $.49 to $.50, and 3) a new advertising
campaign was implemented to promote these changes. The new
supermarket renovation program affected 48 supermarkets and included,
for the most part, new decor packages, new in-store signage, and
painting, and for some stores, new fixtures, cases, and shelving.
The new programs related to supermarket operations included: 1)
implementation of new training programs for all levels of store
personnel and 2) enhancement of a field specialist program in which
field specialists (who have expertise in certain perishable
departments) visit perishable departments in all supermarkets to
improve quality and freshness of product, signage, and displays.
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
opening new supermarkets and expanding existing supermarkets.
Gross Profit (Dollars in thousands)
1997 1996 1995
---- ---- ----
Gross profit.................. $ 272,069 263,240 255,551
Gross profit percentage.... 24.7% 23.4% 24.2%
Increase (decrease) from
prior year................ 1.3% (.8%) (1.2%)
Gross profit percentage increased in 1997 primarily because of
selective retail price increases (the Company believes its retail
prices remain competitive and has continued the advertising campaign
of "Low Price Leader, Overall") and increased levels of promotional
and buying allowances from vendors (which resulted in a lower cost of
merchandise).
Gross profit percentage decreased in 1996 because a merchandising
program, in which retail prices were reduced on thousands of items,
was in place for all of 1996 (and was only in place for the last
quarter of 1995).
Gross profit percentage decreased in 1995 because a merchandising
program, in which retail prices were reduced on thousands of items,
was in place for the last quarter of 1995 and was not in place during
the 1994 fiscal year.
Selling, General and
Administrative Expenses (Dollars in thousands)
1997 1996 1995
---- ---- ----
Selling, general and
administrative
("S G & A").............$ 254,282 250,121 290,542
Increase (decrease)
from prior year......... 4,161 (40,421) 41,734
S G & A as a
percentage of sales..... 23.1% 22.2% 27.6%
Increase (decrease) in
percentage from
prior year................ .9% (5.4%) 4.3%
S G & A expenses increased in 1997 as compared to 1996 because
legal expenses increased $5.3 million (which resulted primarily from
the settlement of five related lawsuits which alleged racially
discriminatory practices in promoting and terminating) and incentive
expense increased $1.7 million (which resulted from improved pretax
earnings). S G & A was favorably impacted by a $2.1 million gain on
the sale of real property (a former warehouse in Mobile, Alabama and
land near Birmingham, Alabama).
S G & A expense decreased in 1996 because the 1995 fiscal
year included restructuring charges of $28.8 million which resulted
primarily from closed stores that could not be subleased in whole or
in part. The 1995 year also included a goodwill write-off of $5.1
million which resulted from acquired assets which were consistently
producing negative results, and supermarket salaries and wages
decreased $5.4 million which resulted from the implementation of a
labor scheduling program.
S G & A expense increased in 1995 because restructuring charges of
$28.8 million were recorded (as described above), a goodwill write-
off of $5.1 million was recorded (as described above), and the
Company implemented a 401 (k) program in fiscal 1995 which required
Company contributions of $1.4 million.
Other Income and Expense (In thousands)
1997 1996 1995
---- ---- ----
Interest expense.................. $ 5,215 7,169 5,375
(Decrease) increase
from prior year............ (1,954) 1,794 1,077
Interest income............... 233 349 100
(Decrease) increase
from prior year ............ (116) 249 (37)
Interest expense decreased in 1997 as compared to 1996 because of
lower levels of indebtedness under the Company's revolving credit
line (which resulted in part from increased earnings and reduced
levels of capital expenditures) and lower levels of long-term
indebtedness.
Interest expense increased in 1996 because the Company's
restructure obligation was outstanding for all of 1996 and only
outstanding during the fourth quarter of 1995.
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
$17.7 million in 1994) and because of interest related to the
restructure obligation incurred in the fourth quarter of 1995.
Interest income decreased in 1997, increased in 1996, and decreased
in 1995. These changes in interest income are a function of invested
cash.
Income Taxes (Dollars in thousands)
1997 1996 1995
Income tax expense ---- ---- ----
(benefit)...................$ 4,851 2,447 (14,600)
Income tax effective rate... 37.9% 38.8% 36.3%
(Decrease) increase in rate
from prior year.......... (.9%) 2.5% 1.5%
The income tax effective rate in 1997 approximates the combined
Federal and state statutory rates.
The income tax effective rate increased in 1996 as compared to 1995
because of the expiration of the targeted jobs tax credit.
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 $5.1
million (goodwill expense was not deductible for income tax purposes)
and positively affected by targeted jobs tax credits.
Net Earnings (Dollars in thousands)
1997 1996 1995
---- ---- ----
Net earnings (loss)................$ 7,954 3,852 (25,666)
Increase (decrease) from
prior year........................ 4,102 29,518 (36,617)
Net earnings (loss)
percentage of sales............. .7% .3% (2.4%)
Net earnings increased in 1997 as compared to 1996 because of
improved gross profit margins which resulted from selective retail
price adjustments and increased levels of promotional and buying
allowances.
Net earnings increased in 1996 because of increased sales levels
which resulted from positive customer response to merchandising
programs and reduced expense levels which included decreased labor
expense. In addition, the 1995 fiscal year included expenses
resulting from a restructuring charge and goodwill write-off.
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.
Other (Dollars in thousands)
1997 1996 1995
---- ---- ----
Provision for LIFO
expense (benefit)............... $ 391 422 536
Inflation index.................... 1.00425 1.00473 1.00375
In fiscal years 1997, 1996, and 1995, the rate of inflation was
less than one-half of 1%. The effect of inflation on the Company's
operating earnings is considered to be minimal. Management 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 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.
1997 1996 1995
---- ---- ----
Inventory turnover
(annual) 9.2 times 9.4 times 8.0 times
(Decrease) increase
from prior year (.2) 1.4 .1
Inventory turnover decreased in 1997 as compared to 1996 because of
decreased sales levels (same store sales decreased 3.5%). The effect
of decreased sales was partially offset by reductions in merchandise
inventory levels which decreased to $89.7 million in 1997 compared to
$90.8 million in 1996. The reduction in merchandise inventory
resulted from reduced inventory levels at the Company's warehouses.
Inventory turnover increased in 1996 because of increased sales
levels (same store sales increased 7.1%) combined with reductions in
inventory levels. For fiscal year 1996 merchandise inventory was
$90.8 million compared to $93.8 million for fiscal year 1995. The
reduction in merchandise inventory was due to management's directive
to reduce inventory levels in the Company's warehouses and
supermarkets.
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 compared to
$105.7 million for fiscal year 1994. The reduction in merchandise
inventory was due to management implementing a plan to reduce
inventory levels at the Company's warehouses.
(Dollars in thousands)
1997 1996 1995
---- ---- ----
Dividends paid......................$ 3,131 3,130 3,131
Dividends per share................. 0.44 0.44 0.44
Dividends as a percentage
of net earnings.................... 39.4% 81.3% (12.2%)
For fiscal years 1997, 1996 and 1995, the Company paid
annual dividends totaling $.44 per share.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows generated by operating activities were $23.3 million in
1997 compared to $39.1 million in 1996 and $25.2 million in 1995.
Cash flows from operating activities decreased in 1997 as compared to
1996 primarily because of lower levels of accounts payable. 1996
increased over 1995 primarily because of improved earnings.
Historically, the Company has funded working capital requirements,
capital requirements, and other cash requirements primarily through
cash flows from operations. However, if an insufficient amount of
cash flows are generated, the Company may borrow up to $75 million
under the revolving loan of which, as of June 28, 1997, $70.4 million
was available for future use. The revolving loan expires in June,
1998.
Cash used in investing activities was $11.2 million in 1997
compared to $21.0 million in 1996 and $34.6 million in 1995. During
1997, the Company opened 2 new supermarkets and remodeled 5
supermarkets. During 1996, the Company opened 1 supermarket,
remodeled 1 supermarket, renovated 42 super-markets, purchased
technology to enhance debit and credit transactions, and purchased
security systems for substantially all locations. During 1995, the
Company purchased 7 supermarkets from the Kroger Co., opened 3
supermarkets, remodeled 5 supermarkets, and purchased equipment which
had been previously leased at the Company's distribution facilities.
Cash (used in) provided by financing activities was ($17.0) million
in 1997 compared to ($23.5) million in 1996 and $10.0 million in
1995. The changes for all periods were the result of activity under
the Company's revolving loan agreement. At June 28, 1997, the
Company was in compliance with all financial covenants under the
revolving loan agreement and its long-term debt agreement.
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 June 28, 1997 and June 29, 1996,
and the related consolidated statements of earnings, stockholders'
equity, and cash flows for each of the years in the three-year period
ended June 28, 1997. 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 June 28, 1997 and June 29, 1996
and the results of their operations and their cash flows for each of
the years in the three-year period ended June 28, 1997, in conformity
with generally accepted accounting principles.
KMPG Peat Marwick, L.L.P.
August 8, 1997
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. 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.
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
Initial 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 June 28, 1997 High Low
First Quarter 25 1/4 18 1/4
Second Quarter 21 3/4 18 3/4
Third Quarter 25 1/8 18 7/8
Fourth Quarter 32 3/8 23
Fiscal Year Ended June 29, 1996 High Low
First Quarter 21 3/4 17 1/4
Second Quarter 20 3/4 16 3/4
Third Quarter 25 1/8 20 1/4
Fourth Quarter 24 1/2 20 1/2
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 11, 1997, there were approximately 1,485 shareholders
of record.
DELCHAMPS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
June 28, 1997 and June 29, 1996
(In thousands except share data)
- --------------------------------------------------------------------------
Assets 1997 1996
- --------------------------------------------------------------------------
Current assets:
Cash and cash equivalents (note 2) $ 5,670 10,503
Trade and other accounts receivable 7,961 8,422
Merchandise inventories (notes 3 and 6) 89,726 90,797
Prepaid expenses 2,094 1,376
Income taxes receivable (note 10) - 764
Deferred income taxes (note 10) 6,525 3,878
------- -------
Total current assets 111,976 115,740
------- -------
Property and equipment (note 4):
Land 13,744 15,210
Buildings and improvements 59,079 58,111
Fixtures and equipment 233,542 221,090
Construction in progress 2,626 9,771
------- -------
308,991 304,182
Less accumulated depreciation and amortization 179,672 166,931
------- -------
Net property and equipment 129,319 137,251
------- -------
Other assets 2,166 2,192
------- -------
Total assets $ 243,461 255,183
======= =======
- ---------------------------------------------------------------------------
Liabilities and Stockholders' Equity 1997 1996
- ---------------------------------------------------------------------------
Current liabilities:
Current installments of obligations under
capital leases (note 4) $ 844 749
Current installments of long-term debt (note 5) 3,697 3,760
Notes payable (note 6) 4,600 14,000
Restructure obligation (note 12) 2,273 3,996
Accounts payable 41,571 48,308
Accrued expenses:
Salaries and wages 7,026 4,603
Licenses and other taxes 7,778 8,017
Other 14,192 10,240
------- -------
Total accrued expenses 28,996 22,860
------- -------
Income taxes (note 10) 855 -
Total current liabilities 82,836 93,673
------- -------
Obligations under capital leases, excluding current
installments (note 4) 9,556 10,398
Long-term debt, excluding current installments
(note 5) 7,142 10,839
Restructure obligation (note 12) 13,453 15,668
Deferred income taxes (note 10) 10,211 9,225
Other liabilities 2,244 2,455
------- -------
Total liabilities 125,442 142,258
------- -------
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 7,121,749 shares
in 1997 and 7,112,320 shares in 1996 71 71
Additional paid-in capital 19,856 19,657
Retained earnings 98,182 93,359
------- -------
118,109 113,087
Less:
Unamortized restricted stock award
compensation (note 8) 90 162
------- -------
Total stockholders' equity 118,019 112,925
------- -------
Commitments and contingencies (notes 4, 8, 9, and 13)
Total liabilities and stockholders' equity $ 243,461 255,183
======= =======
See accompanying notes to consolidated financial statements.
<TABLE>
<CAPTION>
DELCHAMPS, INC. AND SUBSIDIARY
Consolidated Statements of Earnings
Years ended June 28, 1997, June 29, 1996, and July 1, 1995 (In thousands except per share data)
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
1997 1996 1995
- ---------------------------------------------------------------------------------------------
Sales $ 1,102,947 1,126,629 1,054,088
Cost of sales (note 3) 830,878 863,389 798,537
--------- --------- ---------
Gross profit 272,069 263,240 255,551
Selling, general and administrative expenses ("S G & A"):
Restructuring charge (note 12) - - 28,779
Other S G & A 254,282 250,121 261,763
--------- --------- ---------
Total S G & A 254,282 250,121 290,542
--------- --------- ---------
Operating income (loss) 17,787 13,119 (34,991)
--------- --------- ---------
Other (expense) income:
Interest expense (5,215) (7,169) (5,375)
Interest income 233 349 100
--------- --------- ---------
Total other (expense) income (4,982) (6,820) (5,275)
--------- --------- ---------
Earnings (loss) before income taxes 12,805 6,299 (40,266)
Income tax expense (benefit) (note 10) 4,851 2,447 (14,600)
--------- --------- ---------
Net earnings (loss) $ 7,954 3,852 (25,666)
========= ========= =========
Net earnings (loss) per common share $ 1.12 0.54 (3.61)
========= ========= =========
Weighted average number of common shares 7,116 7,110 7,113
========= ========= =========
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
DELCHAMPS, INC. AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity Years ended June 28, 1997, June 29, 1996, and July 1, 1995 (In thousands)
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 July 2, 1994 7,114 $ 71 19,731 121,434 (4,000) (936) 136,300
Amortization of restricted stock awards - - - - - 539 539
Retirement 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
Amortization of restricted stock awards - - - - - 21 21
Retirement of restricted stock awards (3) - (86) - - 86 -
Reduction of guaranteed ESOP debt - - - - 2,000 - 2,000
Issuance of shares for director compensation 4 - 108 - - - 108
Stock options exercised (note 14) 2 - 32 - - - 32
Net earnings - - - 3,852 - - 3,852
Dividends declared of $.44 per share - - - (3,130) - - (3,130)
------ ------ ------ ------ ------ ------ ------
Balances at June 29, 1996 7,112 71 19,657 93,359 - (162) 112,925
Amortization of restricted stock awards - - - - - (162) 72
Issuance of shares for director compensatio 8 - 167 - - 72 167
Stock options exercised (note 14) 2 - 32 - - - 32
Net earnings - - - 7,954 - - 7,954
Dividends declared of $.44 per share - - - (3,131) - - (3,131)
------ ------ ------ ------ ------ ------ ------
Balances at June 28, 1997 7,122 $ 71 19,856 98,182 - (90) 118,019
====== ====== ====== ====== ====== ====== ======
See accompanying notes to consolidated financial statements.
</TABLE>
DELCHAMPS, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
Years ended June 28, 1997, June 29, 1996, and July 1, 1995 (In thousands)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
1997 1996 1995
- -------------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net earnings (loss) $ 7,954 3,852 (25,666)
Adjustments to reconcile net earnings to net cash (loss)
provided by operating activities:
Depreciation and amortization 23,719 21,771 19,472
Write-off of cost in excess of fair value of assets a - - 5,050
(Gain) loss on sale of property and equipment (2,054) (420) 231
Restricted stock award amortization 72 21 667
Non cash director compensation expense 167 108 -
Deferred income tax (benefit) expense (1,661) 1,928 (9,206)
Decrease in merchandise inventories 1,071 3,011 11,855
(Decrease) increase in accounts payable, accrued expenses,
and current portion of restructure obligation (2,324) 5,567 10,887
Increase (decrease) in income taxes, net 1,619 5,785 (6,491)
(Decrease) increase in other liabilities and restructure
obligation (2,023) (1,653) 19,113
Increase in other assets (3,203) (890) (716)
------- ------- -------
Net cash flows provided by operating activities 23,337 39,080 25,196
Cash flows from investing activities:
Additions to property and equipment (15,551) (21,671) (35,239)
Proceeds from sale of property and equipment, net 4,387 710 611
------- ------- -------
Net cash used in investing activities (11,164) (20,961) (34,628)
Cash flows from financing activities:
Principal payments on obligations under capital leases (747) (665) (1,576)
Principal payments on long-term debt and notes payable (26,760) (25,239) (15,333)
Proceeds from issuance of long-term debt and notes payable 13,600 5,480 30,000
Issuance of stock options 32 32 -
Dividends paid (3,131) (3,130) (3,131)
------- ------- -------
Net cash (used in) provided by financing activities (17,006) (23,522) 9,960
Net (decrease) increase in cash and cash equivalents (4,833) (5,403) 528
Cash and cash equivalents at beginning of year 10,503 15,906 15,378
------- ------- -------
Cash and cash equivalents at end of year $ 5,670 10,503 15,906
======= ======= =======
See accompanying notes to consolidated financial statements.
</TABLE>
FIVE YEAR FINANCIAL HIGHLIGHTS
(In thousands except per share amounts)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
June 28, June 29, July 1, July 2, July 3,
1997 1996 1995 1994 1993
STATEMENT OF EARNINGS DATA: (52 Weeks) (52 Weeks) (52 Weeks) (52 Weeks) (53 Weeks)
----------------------------------------------------------------------------------------------------------
Sales $1,102,947 $1,126,629 $1,054,088 $1,067,191 $1,034,531
Operating income (loss) 17,787 13,119 (34,991) 22,019 27,907
Earnings (loss) before income taxes
and cumulative effect of changes
in accounting principles 12,805 6,299 (40,266) 17,858 22,738
Net earnings (loss) 7,984 3,852 (25,666) 10,951 14,373
Net earnings (loss) per common share 1.12 0.54 (3.61) 1.54 2.02
Dividends per common share 0.44 0.44 0.44 0.44 0.44
Weighted average shares outstanding 7,116 7,110 7,113 7,114 7,114
BALANCE SHEET DATA:
----------------------------------------------------------------------------------------------------------
Working capital $ 29,140 $ 22,067 $ 22,920 $ 54,926 $ 49,511
Total assets 243,461 255,183 269,412 263,269 252,052
Long-term debt and obligations under
capital leases, excluding current
installments 16,698 21,237 25,745 32,169 39,503
Stockholders' equity 118,019 112,925 110,042 136,300 126,262
Delchamps, Inc. founded in 1921, operates 118 grocery stores in Alabama, Florida, Louisiana and Mississippi. The
Company also operates 10 liquor stores in Florida. A distribution center is located in Hammond, Louisiana. Delchamps
employs 8,000 people. The Company's stock is traded on the Nasdaq National Market, under the symbol DLCH.
</TABLE>
DELCHAMPS, INC. AND SUBSIDIARY
Notes To Consolidated Financial Statements
June 28, 1997, June 29, 1996, and July 1, 1995
(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 1997, 1996 and 1995 all comprised 52 weeks.
(c) Principles of Consolidation
The consolidated financial statements include the accounts of
Delchamps, Inc. and its wholly owned wholesale subsidiary. All
significant intercompany balances and transactions have been
eliminated in consolidation.
(d) Cash Equivalents
For purposes of the consolidated statements of cash flows, the
Company considers all highly liquid debt instruments purchased
with a maturity 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 89% of
inventories in 1997, and 88% in 1996 and 87% in 1995. 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 59% of total inventories in 1997, 58% in 1996, and
55% in 1995.
(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 depreciating
and amortizing property and equipment:
Buildings...............................................10 - 50 years
Leasehold improvement........................................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.
The acquired property did not achieve 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. Accordingly, the
Company wrote-off its remaining balance of 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 tax liabilities or assets are established for temporary
differences between financial and tax reporting bases and are
subsequently adjusted to reflect changes in tax rates expected
to be in effect when the temporary differences reverse. The
major temporary differences and their net effect are shown in
the "Income Taxes" note.
Job credits are recorded as a reduction of the provision for
Federal income taxes in the year realized.
(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) Management Estimates
Management of the Company has made a number of estimates and
assumptions relating to the reporting of assets and
liabilities and the disclosure of contingent assets and
liabilities to prepare these financial statements in
conformity with generally accepted accounting principles.
Actual results could differ from these estimates.
(k) Fair Value of Financial Instruments
The carrying amounts of cash, accounts receivable, accounts
payable, and accrued expenses approximate fair value because of
the short maturity of these items.
(l) Impairment of Long-Lived Assets
Effective June 30, 1996, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of" ("SFAS No. 121"). SFAS No.121
establishes accounting standards for the impairment of long-
lived assets, certain identifiable intangibles and goodwill
related to those assets to be held and used, or to be disposed
of. The implementation did not have a significant impact on the
Company's financial condition or results of operation.
(m) Stock Compensation
During fiscal year 1997, the Company adopted Statement of Financial
Accounting Standards No. 123 ("SFAS 123"), "Accounting for
Stock-Based Compensation," which was effective for fiscal years
beginning after December 15, 1995. The statement encourages the
use of a fair-value-based method of accounting for stock-based
awards under which the fair value of stock options is determined
on the date of grant and expensed over the vesting period.
Companies may, however, continue to measure compensation costs
for those plans using the method prescribed by Accounting
Principles Board Opinion No. 25 ("APB No. 25"), "Accounting for
Stock Issued to Employees." Companies that continue to apply
APB No. 25 are required to include pro forma disclosures of net
earnings and earnings per share as if the fair-value-based
method of accounting had been applied. The Company has elected
to continue to account for such plans under the provisions of
APB No. 25. Compensation expense computed under the fair-value-
based method is not significant to the financial statements as a
whole, therefore pro forma disclosures have not been included.
(2) Cash Equivalents
Cash equivalents are stated at cost which approximates market value.
Cash equivalents at June 28, 1997 and June 29, 1996 consisted of
the following:
(In thousands)
1997 1996
---- ----
Euro Dollar Time Deposits..................... $ 2 1,130
Marketable Unit Investment Fund............ 856 856
Cash Management Tax Exempt Fund........ 77 20
----- -----
$ 935 2,006
===== =====
(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 $14,171,000 at June 28,
1997 and $13,780,000 at June 29, 1996 if all of the Company's
inventories were stated at cost determined by the first-in, first-
out method. Further, net earnings would increase by approximately
$240,000 in fiscal year 1997, $262,000 in fiscal year 1996, and
$322,000 in fiscal year 1995, 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 association from which it
purchases private label merchandise for resale and certain store
equipment. Merchandise inventories purchased from this cooperative
association approximated 19% of total inventory purchases in 1997,
1996, and 1995.
(4) Leases
The Company leases certain store properties under capital leases that
expire over the next 11 years. The Company also leases warehouses,
store properties, and store equipment under noncancellable
operating leases that expire over the next 20 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:
(In thousands)
1997 1996
---- ----
Buildings.................................... $ 13,998 13,998
Fixtures and equipment..................... 19,040 19,040
33,038 33,038
Less accumulated amortization............ 27,578 26,888
------ ------
$ 5,460 6,150
====== ======
Future minimum lease payments under noncancellable operating leases
and the present value of future minimum capital lease payments as
of June 28, 1997 are as follows:
(In thousands)
Capital Operating
Leases Leases
Fiscal Year ------ ------
1998........................... $ 2,081 38,292
1999........................... 2,081 37,702
2000........................... 2,081 37,081
2001........................... 2,081 34,989
2002........................... 1,961 33,766
Later years.................... 6,968 241,182
----- -------
Total minimum lease payments......... 17,253 423,012
=======
Less amount representing interest 6,853
-----
Present value of net minimum
capital lease payments.......... 10,400
Less current installments of obligations
under capital leases.................. 844
-----
Long-term obligations under capital
leases ................................. $ 9,556
=====
Rental expense and contingent rentals for operating
leases are as follows:
(In thousands)
1997 1996 1995
---- ---- ----
Minimum rentals............... $ 45,329 45,514 43,552
Contingent rentals.............. 129 66 99
------ ------ ------
$ 45,458 45,580 43,651
====== ====== ======
Most of the Company's leases stipulate that the Company
pay taxes, maintenance, insurance, and certain other
operating expenses applicable to the leased property.
(5) Long-term Debt
Long-term debt as of June 28, 1997 and June 29, 1996 consisted of the
following:
(In thousands)
1997 1996
---- ----
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.......... $ 10,714 14,286
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 ... 125 313
------ ------
Total long-term debt............... 10,839 14,599
Less current installments............ 3,697 3,760
------ ------
Long-term debt, excluding
current installments.............. $ 7,142 10,839
====== ======
Agreements underlying the notes payable contain restrictive covenants
which limit the payment of dividends, additional debt, lease
rentals, and transactions with affiliates, and require maintenance
of certain working capital and equity levels. At June 28, 1997,
the Company was in compliance with all covenants. At June 28,
1997, approximately $4,950,000 of the Company's retained earnings
was available for the payment of dividends under such restrictive
provisions.
Cash payments for interest were approximately $5,268,000, $7,129,000,
and $5,368,000 in 1997, 1996 and 1995, respectively.
Aggregate annual maturities of long-term debt for fiscal years after
June 28, 1997 are approximately as follows:
(In thousands)
Fiscal year Annual maturities
----------- -----------------
1998 $ 3,697
1999 3,571
2000 3,571
--------
$ 10,839
========
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 June 28, 1997 approximates the
carrying value, with the exception of the 5.51% note payable which
the fair value approximates $10.0 million at June 28, 1997 and
$13.7 million at June 29, 1996. The fair value was estimated using
a discounted cash flow analysis based on the Company's borrowing
rate for similar liabilities.
(6) Notes Payable
Short-term borrowings as of June 28, 1997 and June 29, 1996 consisted
of the following:
(In thousands)
1997 1996
---- ----
Revolving loan commitments, due on
various dates throughout fiscal 1998
and fiscal 1997, respectively,
with interest rates based on LIBOR +
1.25%, secured by all of the
Company's inventory ............ $ 4,600 14,000
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 an annual commitment fee of .25 of 1%
on the unused portion. At the Company's option, interest under the
agreement may be based on LIBOR or the prime rate. As of June 28,
1997, the Company is committed to LIBOR contracts which expire no
later than July 28, 1997 and have a weighted average interest rate
of 6.9375%.
The credit agreement requires the Company to maintain minimum levels
of earnings and to comply with stated debt covenants. At June 28,
1997, 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 approximately 1,097,000 shares of the Company's common
stock. The common stock was held by the ESOP trustee in a suspense
account and these shares served as collateral for the loan. Each
year through fiscal year 1996, the Company made a contribution to
the ESOP which the trustee used to make principal payments. With
each loan payment a portion of the common stock was released from
the suspense account and allocated to participating employees. The
Company was 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. On June 26,
1996, the ESOP loan was repaid in full. Therefore, as of June 28,
1997 and June 29, 1996, all shares have been allocated to
participants and no shares remain in the "suspense account."
(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 Internal Revenue
Code. The plan provides for a matching contribution by the
Company. The total annual contributions to these plans by the
Company for fiscal years 1997, 1996, and 1995 were as follows:
(In thousands)
1997 1996 1995
---- ---- ----
Employee stock ownership plan $ - 2,000 2,000
Profit sharing plan 1,055 1,157 1,421
----- ----- -----
$ 1,055 3,157 3,421
===== ===== =====
The Company has an incentive compensation plan for certain management
personnel tied to the Company's overall performance. Incentive
compensation expense was $2,943,000 in 1997 and $1,252,000 in 1996.
Incentive compensation was not paid in 1995.
In fiscal 1988, the Company adopted, with stockholder 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 option 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 $72,000 in 1997, $21,000 in 1996, and
$293,000 in 1995.
(9) Postemployment Benefits Other Than Pensions
The Company provides a postemployment longevity bonus to associates
that leave employment after either attaining age 55 or completing
25 years of service. The amount of longevity bonus is based on
length of service and is recognized on an accrual basis as
employees perform services to earn the benefits.. Longevity bonus
expense was $304,000 in 1997 and 1996, and $276,000 in 1995.
(10) Income Taxes
The components of income tax expense (benefit) are as follows:
(In thousands)
Current Deferred Total
------- -------- -----
1997:
Federal $ 5,750 (1,467) 4,283
State 762 (194) 568
----- ----- -----
$ 6,512 (1,661) 4,851
===== ===== =====
1996:
Federal $ 461 1,711 2,172
State 58 217 275
----- ----- -----
$ 519 1,928 2,447
===== ===== =====
1995:
Federal $ (4,746) (8,101) (12,847)
State (648) (1,105) (1,753)
----- ----- ------
$ (5,394) (9,206) (14,600)
===== ===== ======
The actual income tax expense (benefit) differs from the statutory
tax rate for all years (computed by applying the U.S. Federal
corporate rate to earnings (loss) before income taxes) as follows:
(In thousands)
1997 1996 1995
---- ---- ----
Statutory tax rate $ 4,354 2,142 (13,690)
Increase (reduction) in
income taxes
resulting from:
State income taxes,
net of Federal
income tax benefit 570 270 (2,219)
Targeted jobs tax credits - (25) (385)
Cost in excess of fair value
of assets acquired - - 1,771
Other, net (73) 60 (77)
Actual tax expense ----- ----- ------
(benefit) $ 4,851 2,447 (14,600)
===== ===== ======
Effective tax rate 37.9% 38.8% 36.3%
===== ===== =====
The tax effects of temporary differences that give rise to the
deferred tax assets and deferred tax liabilities are as follows:
(In thousands)
1997 1996
---- ----
Deferred tax assets:
Restructure obligation.................. $ 6,054 7,531
Capital lease obligation................ 1,901 1,914
Accrued self-insurance.................. 4,515 2,879
Accrued postemployment
benefits............................. 847 888
Other accrued liabilities............... 2,099 1,585
------ ------
Net deferred tax assets................. 15,416 14,797
------ ------
Deferred tax liabilities:
Accelerated depreciation................ 18,942 19,985
Other................................... 160 159
Total gross deferred ------ ------
liabilities........................... 19,102 20,144
------ ------
Net deferred tax liabilities.............. $ 3,686 5,347
====== ======
No valuation allowance was recorded against the deferred tax assets
at June 28, 1997. The Company's management 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.
Cash payments for income taxes were approximately $5,454,000,
$67,000, and $1,437,000 in 1997, 1996, and 1995, 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
Participating 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% position 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 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, $3.9 million, $5.9 million, and $3.2 million of costs and
payments have been charged against the reserve for fiscal years
1997, 1996, and 1995, respectively. A detail of charges against
the restructure obligation follows:
(In thousands)
1997 1996 1995
---- ---- ----
Lease payments...........................$ 3,045 3,691 1,421
Fixture and equipment write-offs....... 138 1,828 24
Severance payments...................... 755 400 1,752
----- ----- -----
$ 3,938 5,919 3,197
===== ===== =====
(13) Commitments and Contingencies
The Company is a defendant in various claims and legal actions
considered to be in the normal course of business. Management
intends to vigorously defend 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 management. 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 his employment. The
agreements also provide 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 $12,100,000.
(14) Stock Incentive Plan
Key employees of the Company (including officers and directors who
are also full-time employees of the Company) are eligible to
receive one or more of the following: incentive stock options and
non-qualified stock options, stock awards, restricted stock,
performance shares, and cash awards. Approximately 460,800 stock
options have been granted of which approximately 351,550 shares are
exercisable as of June 28, 1997. The stock options expire from
December 2000 through October 2006. Approximately 2,000 options
were exercised in each of fiscal years 1997 and 1996. Exercise
prices range from $17.88 to $23.00 which was market value at date
of grant.
(15) Selected Quarterly Financial Data (Unaudited)
Selected quarterly financial data for the years ended June 28, 1997,
and June 29, 1996 is summarized as follows:
(In thousands except per share amounts)
Fiscal quarters
____________________________________________
1997 Fourth Third Second First
---- ------- ------- ------- -------
Sales................$ 266,893 273,753 272,602 289,699
Gross profit ......... 72,404 69,182 65,116 65,367
Earnings before tax.. 7,713 4,428 321 343
Net earnings.......... 4,854 2,720 176 204
Net earnings per
common share..$ .68 .38 .03 .03
Dividends declared
per common
share............$ 0.11 0.11 0.11 0.11
(In thousands except per share amounts)
Fiscal quarters
____________________________________________
1996 Fourth Third Second First
---- ------- ------- ------- -------
Sales.................$ 284,662 280,225 277,053 284,689
Gross profit ......... 68,171 65,684 64,915 64,470
Earnings (loss)
before tax........ 4,236 1,897 1,290 (1,124)
Net earnings (loss). 2,653 1,147 808 (756)
Net earnings (loss)
per common
share.............$ 0.37 0.16 0.12 (0.11)
Dividends declared
per common
share.............$ 0.11 0.11 0.11 0.11
(16) Subsequent Event
On July 8, 1997, the Company announced that it had entered into an
agreement to be acquired by Jitney-Jungle Stores of America, Inc.
The terms of the agreement are described in the Company's 14D-9 and
in Jitney-Jungle's 14D-1, both of which have been filed with the
Securities and Exchange Commission. Pursuant to the agreement,
Jitney-Jungle has begun an all-cash tender offer for all of the
Company's outstanding common stock at a price of $30 per share.
Following successful completion of the tender offer, Jitney-Jungle
will acquire for the same cash price any shares that are not
tendered by means of a merger of Delchamps with a wholly owned
subsidiary of Jitney-Jungle.
The Company's Board of Directors has approved the transaction
unanimously and has recommended approval by the Delchamps'
stockholders.
