SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 28, 1996
Commission File Number 33-57990
PAMIDA, INC
-----------------
(Exact name of registrant as specified in its charter)
Delaware 47-0626426
-------------- ----------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
8800 "F" Street, Omaha, Nebraska 68127
------------------------------------ ---------
(Address of principal executive offices) (Zip Code)
(402) 339-2400
-------------------
(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:
Class of Common Stock Outstanding at June 12, 1996
Common Stock 1,000 Shares
---------------- ----------------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
PAMIDA INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)
ASSETS: April 28, January 28,
1996 1996
Current assets: -------- ----------
Cash $ 8,239 $ 7,298
Accounts receivable, less allowance for
doubtful accounts of $50 12,943 11,824
Merchandise inventories 141,702 150,837
Property held for sale 2,571 0
Prepaid expenses 4,628 2,953
-------- --------
Total current assets 170,083 172,912
Property, buildings and equipment, less
accumulated depreciation and amortization
of $55,599 and $55,464 42,914 46,371
Leased property under capital leases, less
accumulated amortization of $14,572
and $13,496 30,273 30,977
Deferred financing costs 3,582 3,746
Other assets 5,284 4,464
-------- --------
$252,136 $258,470
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 68,762 $ 63,087
Loan and security agreement 34,202 31,588
Accrued compensation 2,253 5,923
Accrued interest 2,275 6,353
Store closing reserve 5,815 7,818
Other accrued expenses 10,073 10,823
Income taxes payable 9,706 9,716
Current maturities of long-term debt 1,294 1,334
Current obligations under capital leases 1,606 1,847
-------- --------
Total current liabilities 135,986 138,489
Long-term debt, less current maturities 140,399 140,411
Obligations under capital leases,
less current obligations 36,399 36,559
Other long-term liabilities 4,289 4,237
Commitments and contingencies 0 0
Common stockholders' equity:
Common stock, $.01 par value; 10,000
shares authorized; 1,000 shares
issued and outstanding, 0 0
Additional paid-in capital 17,000 17,000
Retained earnings (81,937) (78,226)
-------- --------
Total common stockholders' equity (64,937) (61,226)
-------- --------
$252,136 $258,470
======== ========
See notes to consolidated financial statements.
<PAGE1>
PAMIDA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands)
(Unaudited)
Three Months Ended
------------------
April 28, April 30,
1996 1995
-------- --------
Sales $131,786 $153,961
Cost of goods sold 100,211 117,148
-------- --------
Gross profit 31,575 36,813
-------- --------
Expenses:
Selling, general and administrative 29,206 34,416
Interest 6,080 6,300
-------- --------
35,286 40,716
-------- --------
Loss before income tax benefit (3,711) (3,903)
Income tax benefit 0 (1,866)
-------- --------
Net loss $ (3,711) $ (2,037)
======== ========
See notes to consolidated financial statements.
<PAGE2>
PAMIDA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited) Three Months Ended
------------------
April 28, April 30,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES: -------- --------
Net loss $ (3,711) $ (2,037)
Adjustments to reconcile net loss to net
cash provided by(used in)operations:
Depreciation and amortization of fixed
assets and intangibles 2,615 3,797
Provision for LIFO inventory valuation 150 250
Deferred retirement benefits 0 12
Gain on disposal of assets (26) (541)
Decrease in store closing reserve (2,003) 0
(Increase) decrease in merchandise
inventories 8,985 (13,581)
Increase in other operating assets (3,053) (3,521)
Increase in accounts payable 5,675 14,409
Decrease in other operating liabilities (8,456) (14,143)
-------- --------
Total adjustments 3,887 (13,318)
Net cash provided by(used in) -------- --------
operating activities 176 (15,355)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Construction notes receivable (565) 0
Capital expenditures (508) (2,303)
Assets acquired for sale (353) 0
Proceeds from disposal of assets and other 30 580
-------- --------
Net cash used in investing activities (1,396) (1,723)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under loan and security
agreement, net 2,614 19,941
Principal payments on capital lease obligations (401) (518)
Principal payments on long-term debt (52) (46)
Payments for deferred finance costs 0 (13)
Net cash provided by financing activities 2,161 19,364
-------- --------
Net increase in cash 941 2,286
Cash at beginning of year 7,298 7,059
-------- --------
Cash at end of period $ 8,239 $ 9,345
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest $ 10,158 $ 10,214
Income taxes:
Payments to taxing authorities 180 3,025
Payments to Pamida Holdings Corporation
for benefit of loss from operations 0 79
Refunds received from taxing authorities (170) 0
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITY:
Capital lease obligations incurred when
the Company entered into lease agreements
for new store facilities $ 0 $ 1,600
See notes to consolidated financial statements.
<PAGE3>
PAMIDA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED APRIL 28, 1996 AND APRIL 30, 1995
(Dollars in Thousands)
(Unaudited)
1. Management Representation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information. In the opinion of management, all
adjustments necessary for a fair presentation of the results of
operations for the interim periods have been included. All such
adjustments are of a normal recurring nature. Because of the seasonal
nature of the business, results for interim periods are not necessarily
indicative of a full year's operations. The accounting policies
followed by Pamida Inc. (the Company) and additional footnotes are
reflected in the consolidated financial statements contained in the
Form 10-K Annual Report of the Company for the fiscal year ended
January 28, 1996.
2. Inventories
Substantially all inventories are stated at the lower of cost (last-in,
first-out) or market. Total inventories would have been higher at April
28, 1996 and January 28, 1996 by $5,850 and $5,700, respectively, had the
FIFO (first-in, first-out) method been used to determine the cost of all
inventories. Quarterly LIFO inventory determinations reflect assumptions
regarding fiscal year-end inventory levels and the estimated impact of
annual inflation.
3. Related Party Transactions
In March 1995 the Company paid $79 to Pamida Holdings Corporation
(Holdings) to enable Holdings to make dividend payments to preferred
stockholders. No such payments have been made during fiscal 1997.
4. Reclassifications
Certain reclassifications have been made to the prior year's financial
statements to conform to the current year's presentation.
<PAGE4>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(Dollars in Thousands)
The following is management's discussion and analysis of certain significant
factors which have affected the Company's results of operations and financial
condition for the periods included in the accompanying consolidated financial
statements.
RESULTS OF OPERATIONS
The following table sets forth an analysis of various components of the
Consolidated Statements of Operations as a percentage of retail sales for the
three months ended April 28, 1996 and April 30, 1995:
Three Months Ended
------------------
April 28, April 30,
1996 1995
-------- --------
Sales 100.0% 100.0%
Cost of goods sold 76.0 76.1
----- -----
Gross profit 24.0 23.9
Selling, general and administrative expenses 22.2 22.3
----- -----
Operating income 1.8 1.6
Interest expense 4.6 4.1
----- -----
Loss before income tax benefit (2.8) (2.5)
Income tax benefit 0 (1.2)
----- -----
Net loss (2.8) (1.3)
===== =====
Sales for the first quarter of fiscal 1997 decreased by $22,175 or 14.4% from
sales for the first quarter of fiscal 1996. The decrease in total sales was
primarily attributable to the closing of forty stores as of the beginning of
fiscal 1997 in unprofitable or highly competitive markets which did not fit the
Company's niche market strategy. The Company operated 144 stores during
the first quarter of fiscal 1997 as compared with 183 stores as of the end
of the first quarter of fiscal 1996. Since April 30, 1995 the Company opened
six stores in new markets, relocated three stores and closed forty-five
stores. Comparable store sales for the first quarter were essentially flat
compared to last year, having been held back by the cannibalization caused
by the closing stores' inventory liquidation and a planned warehouse
management system installation which has temporarily slowed distribution of
inventory to stores.
The Company experienced sales increases in several merchandise categories,
especially pharmacy prescriptions and junior apparel areas. Sales gains were
also generated in the paper, cleaning, ready-to-wear, candy, housewares and
grocery areas. The Company experienced sales declines in several softlines
categories, primarily women's apparel, as well as in sporting goods.
Gross profit decreased $5,238 or 14.2% for the first quarter of fiscal 1997
compared to the first quarter of fiscal 1996, primarily as a result of the
forty closed stores. As a percentage of sales, gross profit increased to
24.0% for the first quarter of fiscal 1997 as compared to 23.9% for the
first quarter last year. Gross margins were positively impacted during the
fiscal 1997 first quarter by an increase in promotional allowances. This
positive effect on gross margin percentage was partially offset by a slight
increase in markdowns as a percentage of sales and increased warehousing
expenses associated with the warehouse management system installation
mentioned above.
Selling, general and administrative expense decreased $5,210 or 15.1% for the
three months ended April 28, 1996, compared to the three months ended April
30, 1995. As a percentage of sales, selling, general and administrative
<PAGE5>
(SG&A) expense decreased to 22.2% for the first quarter of fiscal 1997 as
compared to 22.3% for the first quarter last year. Approximately 37.9% and
22.2%, respectively, of the total decrease in SG&A expense was attributable
to store payroll costs, which decreased 14.5%, and store occupancy costs,
which decreased 16.4%. In addition, store controllable and advertising
costs decreased 13.9% and 17.4% respectively, amounting to 13.2% and 10.8%,
respectively, of the total decrease in SG&A costs. These areas of expense
were impacted by the decreased costs related to the forty stores which were
closed as of the beginning of fiscal 1997. Such decreased costs were offset
by the expense of the new stores that were opened after April 30, 1995. SG&A
costs were also positively impacted by reduced accruals for management
bonuses and the elimination of amortization of goodwill and favorable
leasehold interests resulting from the write-off of the latter items in the
fourth quarter of fiscal 1996. The decreases in SG&A costs were offset by
a 50% reduction in other income which was attributable primarily to one-time
gains realized in fiscal 1996 related primarily to the sale of idle
transportation company assets.
Interest expense deceased $220 or 3.5% for the first quarter of fiscal 1997
compared to the same period of fiscal 1996. The decrease was due to the
reduction in interest expense related to capital leases, primarily as a result
of the forty stores closed as of the beginning of fiscal 1997.
Income tax benefit - The Company has certain unutilized tax loss carry
forwards derived primarily from prior period store closing charges. No
additional tax benefit could be recorded during the first quarter of fiscal
1997. Consequently, the net loss before taxes for the first quarter of
fiscal 1997 was not reduced by a tax benefit. In the prior year, no such
tax credits existed and a tax benefit was recorded commensurate with the
Company's expected effective tax rate. Due to the amount of unutilized tax
credits available, the Company does not expect to tax-effect quarterly
income or losses during the foreseeable future.
LIQUIDITY AND CAPITAL RESOURCES
The Company's business is seasonal with first quarter sales (February through
April) being lower than sales during the other three quarters. Fourth quarter
sales (November through January) have represented approximately 29% of the
full year's retail sales in recent years and normally involve a greater
proportion of higher margin sales.
Funds provided by operating activities were $176 compared to a usage of funds
of $15,355 in the first quarter of fiscal 1996. This $15,531 improvement
in net cash generated by operating activities during the first quarter of
fiscal 1997 resulted primarily from changes in inventories, accounts payable
and other operating liabilities.
The Company satisfies its seasonal liquidity requirements primarily through a
combination of funds provided from operations and from a revolving credit
facility which provides for borrowings of up to $70,000. Effective January 19,
1996, the term of the Company's committed Loan and Security Agreement (the
Agreement) was extended by one year to March 1998. The maximum borrowing limit
of the facility was reduced at that time to $70,000 from $80,000 in line with
lower expected borrowings during the remainder of the term of the Agreement.
<PAGE6>
Borrowings thereunder bear interest at a rate which is .75% per annum greater
than the applicable prime rate. The amounts the Company is permitted to borrow
are determined by a formula based upon the amount of the Company's eligible
inventory from time to time. Such borrowings are secured by security interests
in all of the current assets (including inventory) of the Company and by liens
on certain real estate interests and other property of the Company. Pamida
Holdings Corporation (Holdings) and two subsidiaries of the Company have
guaranteed the payment and performance of the Company's obligations under the
Agreement and have pledged some or all of their respective assets, including
the stock of the Company owned by Holdings, to secure such guarantees.
The Agreement contains provisions imposing operating and financial restrictions
on the Company. Certain provisions of the Agreement require the maintenance
of specified amounts of tangible net worth (as defined) and working capital
and the achievement of specified minimum amounts of cash flow. Other
restrictions in the Agreement and those provided under the Indenture relating
to the Senior Subordinated Notes will affect, among other things, the ability
of the Company to incur additional indebtedness, pay dividends, repay
indebtedness prior to its stated maturity, create liens, enter into leases,
sell assets or engage in mergers or acquisitions, make capital expenditures
and make investments. These covenants currently have not had an impact on
the Company's ability to fully utilize the revolving credit facility.
However, certain of the covenants, such as those which restrict the ability
of the Company to incur indebtedness or encumber its property or which
impose restrictions on or otherwise limit the Company's ability to engage
in sale-leaseback transactions, may at some future time prevent the Company
from pursuing its store expansion program at the rate that the Company
desires.
Obligations under the Agreement were $34,202 at April 28, 1996 and $40,544 at
April 30, 1995. In previous years' financial statements, revolving borrowings
under the Agreement were included in long-term debt. At January 28, 1996, the
Company was required to adopt new guidance provided by the FASB's Emerging
Issues Task Force in Abstract 95-22. This Abstract requires classification
of the outstanding borrowings under the Company's committed revolving credit
facility as a current liability on the Company's balance sheets. As noted
above, this facility expires in March of 1998, and the Company intends to
refinance any outstanding balance by such date. These borrowings are senior
to the Senior Subordinated Notes of the Company.
The Company had long-term debt and obligations under capital leases of
$176,798 as of April 28, 1996 and $185,837 at April 30, 1995. The Company's
ability to satisfy scheduled principal and interest payments under such
obligations in the ordinary course of business is dependent primarily upon
the sufficiency of the Company's operating cash flow. At April 28, 1996,
the Company was in compliance with all covenants contained in its various
financing agreements.
The Company paid Holdings $79 during the first quarter of fiscal 1996 under a
tax-sharing agreement to enable Holdings to pay quarterly dividends to its
preferred stockholders. Since Holdings conducts no operations of its own, the
only cash requirement of Holdings relates to preferred stock dividends in the
aggregate annual amount of approximately $316; and the Company is expressly
permitted under its existing credit facilities to pay dividends to Holdings to
fund such preferred stock dividends. However, the General Corporation Law
of the State of Delaware, under which Holdings and the Company are
incorporated, allows a corporation to pay a dividend only from its surplus
or from the current or the prior year's earnings. Due to the retained
deficit resulting from the store closings and the write-off of goodwill and
other long-lived assets recognized in the fourth quarter of fiscal 1996,
Holdings and the Company may pay dividends in fiscal 1997 and in ensuing
<PAGE7>
years only to the extent that Holdings and the Company satisfy the applicable
statutory standards, which includes Holding's having a net worth equal to
at least the aggregate par value of the preferred stock, which amounts to
$2,141. The Company did not declare or pay any dividends to Holdings during
the first quarter of fiscal 1997, and Holdings did not pay the preferred
stock dividends payable on February 29, 1996 or May 31, 1996. The
cumulative dividend rate on the preferred stock increases by 0.5% per
quarter (with a maximum aggregate increase of 5%) on each quarterly dividend
payment date on which the preferred stock dividends are not paid currently
on a cumulative basis. Any unpaid dividends are added to the liquidation
value until paid in cash. Such nonpayment of preferred stock dividends
does not accelerate the redemption rights of the preferred stockholders.
The Company made capital expenditures of $508 during the first quarter of
fiscal 1997 compared to $2,303 during the first quarter of fiscal 1996. The
Company plans to open a total of eight new stores in fiscal 1997 and will
consider additional opportunities for new store locations as they arise.
Total capital expenditures are expected to be approximately $5,300 in fiscal
1997. The Company expects to fund these expenditures from cash flow from
its operations. The costs of buildings and land for new store locations
are expected to be financed by operating or capital leases with unaffiliated
landlords. The Company's expansion program will require inventory of
approximately $1,000 to $1,200 for each store in a new market, which the
Company expects to finance through trade credit, borrowings under the
Agreement and cash flow from operations.
On a long-term basis, the Company's expansion will require continued
investments in store locations, working capital and distribution and
infrastructure enhancements. The Company expects to continue to finance
some of these investments through leases from unaffiliated landlords, trade
credit, borrowings under the Agreement and cash flow from operations but
ultimately will need to explore additional sources of funds which may
include both debt (mid-term to long-term) and equity capital. Currently,
it is not possible for the Company to predict with any certainty either the
timing or the availability of any such additional financing.
INFLATION
The Company uses the LIFO method of inventory valuation in its financial
statements; as a result, the cost of merchandise sold approximates current
costs. Due to the revaluation of property, buildings and equipment in
connection with the purchase transaction in 1986, as well as the recent
opening of new stores, depreciation expense closely approximates current
costs. The Company's rental expense is generally fixed and, except for
small amounts of percentage rentals, has not been affected by inflation.
<PAGE8>
PART II - OTHER INFORMATION
Items 1-6: None
Item 7:
(a) None
(b) None
(c) Exhibits
Exhibit 27. Financial Data Schedule
- ---------
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.
PAMIDA, INC.
------------------
(Registrant)
Date: July 31, 1996 By: /s/ Steven S. Fishman
------------------- -----------------------------
Steven S. Fishman,
Chairman of the Board, President
and Chief Executive Officer
Date: July 31, 1996 By: /s/ Todd D. Weyhrich
------------------- -----------------------------
Todd D. Weyhrich, Chief
Accounting Officer
<PAGE9>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET OF PAMIDA INC. AND SUBSIDIARIES AS OF APRIL 28,
1996 AND THE RELATED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE
MONTHS THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-02-1997
<PERIOD-END> APR-28-1996
<CASH> 8,239
<SECURITIES> 0
<RECEIVABLES> 12,993
<ALLOWANCES> 50
<INVENTORY> 141,702
<CURRENT-ASSETS> 170,083
<PP&E> 98,513
<DEPRECIATION> 55,599
<TOTAL-ASSETS> 252,136
<CURRENT-LIABILITIES> 135,986
<BONDS> 213,900
0
0
<COMMON> 0
<OTHER-SE> (64,937)
<TOTAL-LIABILITY-AND-EQUITY> 252,136
<SALES> 131,786
<TOTAL-REVENUES> 131,786
<CGS> 100,211
<TOTAL-COSTS> 129,417
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,080
<INCOME-PRETAX> (3,711)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,711)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,711)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
