SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended July 20, 1996.
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period_______________________ to ___________________.
Commission file number: 0-16900
RICHFOOD HOLDINGS, INC.
Incorporated under the laws I.R.S. Employer Identification
of Virginia No. 54-1438602
8258 Richfood Road
Mechanicsville, Virginia 23116
Telephone Number (804) 746-6000
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 .
The number of shares outstanding of the Registrant's common stock as of August
27, 1996, was as follows:
Common Stock, without par value: 31,522,896 shares.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements.
RICHFOOD HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Dollar amounts in thousands, except per share data)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
(Unaudited)
First Quarter Ended
July 20, July 22,
1996 % 1995 %
- ----------------------------------------------------------------------------------------------
<S> <C>
Sales $ 753,383 100.00 $ 766,967 100.00
Costs and expenses, net:
Cost of goods sold 675,484 89.66 689,968 89.96
Operating and adminis-
trative expenses 56,162 7.45 56,726 7.40
Interest expense 1,674 0.22 3,764 0.49
Interest income (758) (0.09) (745) (0.10)
-------- ------ --------- ------
Earnings before income taxes 20,821 2.76 17,254 2.25
Income taxes 8,376 1.11 7,089 0.92
----------- ---- ------------ ----
Net earnings $ 12,445 1.65 $ 10,165 1.33
========== ==== ========== ====
Net earnings per common
share $ .40 $ .33
========== ==========
Cash dividends declared
per common share $ .045 $ .025
========== ==========
Average common shares
outstanding 31,442,057 31,205,091
========== ==========
</TABLE>
See accompanying Notes to the Consolidated Financial Statements.
<PAGE>
RICHFOOD HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)
- --------------------------------------------------------------------------------
July 20, April 27,
1996 1996
(Unaudited)
- --------------------------------------------------------------------------------
[S] [C]
Assets
Current assets:
Cash and cash equivalents $ 22,237 $ 17,415
Receivables, less allowance for doubtful
accounts of $3,971 and $3,994 108,251 100,385
Inventories 161,481 162,461
Other current assets 19,575 19,987
------------- ------------
Total current assets 311,544 300,248
------------ -----------
Notes receivable, less allowance for
doubtful accounts of $1,732 and $1,579 29,677 27,179
Property and equipment, net 121,007 122,659
Goodwill, net 73,892 74,455
Other assets 40,289 39,720
------------- -----------
Total assets $ 576,409 $ 564,261
=========== ==========
Liabilities and Shareholders' Equity
Current liabilities:
Current installments of long-term debt
and capital lease obligations $ 10,447 $ 10,712
Accounts payable 196,075 187,010
Accrued expenses and other current liabilities 60,807 61,698
----------- -----------
Total current liabilities 267,329 259,420
---------- ----------
Long-term debt and capital lease obligations 77,773 87,031
Deferred credits and other 18,764 18,248
Shareholders' equity:
Preferred stock, without par value; authorized
5,000,000 shares; none issued or outstanding - -
Common stock, without par value; authorized
60,000,000 shares; issued and outstanding
31,518,390 and 31,325,068 67,503 66,964
Retained earnings 145,040 132,598
----------- -----------
Total shareholders' equity 212,543 199,562
----------- -----------
Total liabilities and shareholders' equity $ 576,409 $ 564,261
=========== ==========
See accompanying Notes to the Consolidated Financial Statements.
<PAGE>
RICHFOOD HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
(Unaudited)
Year-to-Date
July 20, July 22,
1996 1995
- ------------------------------------------------------------------------------
<S> <C>
Operating activities:
Net earnings $ 12,445 $ 10,165
Adjustments to conform fiscal year of
pooled company: net earnings -- 2,548
non-cash components -- 1,959
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 6,709 6,894
Provision for doubtful accounts 785 587
Other, net (85) (1,491)
Changes in operating assets and liabilities:
Receivables (6,306) (10,589)
Inventories 980 (4,705)
Other current assets 412 286
Accounts payable, accrued expenses
and other liabilities 10,096 (4,465)
------------ ------------
Net cash provided by operating activities 25,036 1,189
---------- -----------
Investing activities:
Purchases of property and equipment (3,684) (4,836)
Issuance of notes receivable (6,493) (3,849)
Collections on notes receivable 2,079 4,233
Other, net (2,409) (812)
------------ -----------
Net cash used for investing activities (10,507) (5,264)
----------- ------------
Financing activities:
Net repayments on long-term debt and capital
lease obligations (9,523) (20,322)
Proceeds from issuance of common stock
under employee stock incentive plans 759 127
Cash dividends paid on common stock (943) (536)
-------------- -------------
Net cash used for financing activities (9,707) (20,731)
------------- ------------
Net increase/(decrease) in cash and cash equivalents 4,822 (24,806)
Cash and cash equivalents at beginning of period 17,415 29,381
------------ -----------
Cash and cash equivalents at end of period $ 22,237 $ 4,575
============ ============
See accompanying Notes to the Consolidated Financial Statements.
<PAGE>
RICHFOOD HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands)
Note 1. The consolidated financial statements of Richfood Holdings, Inc. and
subsidiaries (the "Company") presented herein are unaudited (except for
the consolidated balance sheet as of April 27, 1996, which has been
derived from the audited consolidated balance sheet as of that date)
and have been prepared by the Company pursuant to the rules and
regulations of the Securities and Exchange Commission. The accounting
policies and principles used to prepare these interim consolidated
financial statements are consistent in all material respects with those
reflected in the consolidated financial statements included in the
Annual Report on Form 10-K for the fiscal year ended April 27, 1996
("fiscal 1996"). In the opinion of management, such consolidated
financial statements include all adjustments, consisting of normal
recurring adjustments and the use of estimates, necessary to summarize
fairly the Company's financial position and results of operations.
Certain information and note disclosures normally included in
consolidated financial statements prepared in accordance with generally
accepted accounting principles have been omitted pursuant to such rules
and regulations. These consolidated financial statements should be
read in conjunction with the consolidated financial statements and
notes thereto of Richfood Holdings, Inc., and subsidiaries included in
its Annual Report on Form 10-K for fiscal 1996. The results of
operations for the twelve week period ended July 20, 1996, may not be
indicative of the results that may be expected for the fiscal year
ending May 3, 1997 ("fiscal 1997").
Note 2. Effective October 15, 1995, Super Rite Corporation ("Super Rite"),
a full service wholesale and retail grocery distributor headquartered
in Harrisburg, Pennsylvania, became a wholly-owned subsidiary of
Richfood Holdings, Inc. (the "Super Rite Acquisition"). The
Super Rite Acquisition has been accounted for as a
pooling-of-interests, which requires that the historical
consolidated financial statements of the Company and Super Rite as
of and for the periods ended prior to the effective time of the Super
Rite Acquisition be combined as if the transaction had occurred as
of the beginning of the earliest period presented. The historical
consolidated financial statements presented herein for the twelve
weeks ended July 22, 1995, included thirteen weeks of Super Rite's
financial information. The Company has conformed certain of Super
Rite's accounting practices and methods to its own in conjunction
with the restatement of the prior historical consolidated financial
statements in accordance with the pooling-of-interests method.
Super Rite previously used the fiscal year ending on the Saturday
closest to February 29th or March 1st for its financial reporting
purposes. In order to conform to the Company's fiscal year, Super
Rite's net earnings of $2,548, on sales of $228,113, for the eight week
period from March 5, 1995, to April 29, 1995, have been reflected as a
direct adjustment to retained earnings.
<PAGE>
RICHFOOD HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, continued
(Amounts in thousands)
Sales and net earnings of the separate companies, and their respective
subsidiaries, for the quarter ended July 22, 1995, were as follows:
(Unaudited)
July 22, 1995
(12 Weeks)
Sales:
Richfood Holdings, Inc. $ 395,776
Super Rite Corporation 372,333(a)
Adjustments to conform certain of Super
Rite's accounting practices and methods (1,142)
Combined $ 766,967
Net earnings:
Richfood Holdings, Inc. $ 6,366
Super Rite Corporation 2,971(a)
Adjustments to conform certain of Super
Rite's accounting practices and methods 828
------------
Combined $ 10,165
=============
(a) Reflects operating results of Super Rite Corporation and
subsidiaries for the thirteen week period from April 30,
1995, to July 29, 1995.
Note 3. On August 29, 1996, the Board of Directors of the Company declared a
three-for-two split of the Company's Common Stock. The additional
shares issuable in the split will be distributed on or about
September 30, 1996, to shareholders of record on September 16, 1996.
The Board of Directors also declared a quarterly cash dividend of
$0.045 per share before giving effect to the three-for-two split
(equivalent to $0.03 per share after the split) payable on or about
September 30, 1996, to shareholders of record on September 16, 1996.
Note 4. The Company is party to various legal actions that are incidental to
its business. While the outcome of such legal actions cannot be
predicted with certainty, the Company believes that the outcome of any
of these proceedings, or all of them combined, will not have a material
adverse effect on its consolidated financial position or operations.
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results of Operations
Sales of $753.4 million for the twelve week period ended July 20, 1996,
consisted of $722.1 million of wholesale grocery sales and $77.0 million of
retail grocery sales. Wholesale grocery sales included $45.7 million of
intersegment sales to the Company's retail grocery division. Wholesale grocery
sales of $722.1 million decreased $4.5 million, or 0.6%, as compared to sales of
$726.6 million for the same period last fiscal year. The Company's results of
operations for the first quarter of fiscal 1996 included thirteen weeks of
operations for Super Rite, compared to twelve weeks in the first quarter of
fiscal 1997. Excluding the additional week in the fiscal 1996 first quarter for
Super Rite, wholesale grocery sales would have increased $21.0 million, or 3.0%.
This increase was primarily attributable to sales to customers who expanded
their retail operations and increased sales to existing customers. Retail
grocery sales of $77.0 million decreased $1.6 million, or 2.0%, compared to
sales of $78.6 million for the same period last fiscal year. Sales for the
METRO/BASICS Retail Division were flat on a comparable store basis for the first
quarter of fiscal 1997, compared to the first quarter of fiscal 1996, and
excluding the effect of the additional week in the fiscal 1996 first quarter for
Super Rite, increased 6.0% on a total store basis. This increase was primarily
attributable to increased sales from two new BASICS stores purchased in January
1996 and one new METRO store opened in April 1996.
Gross margin was 10.34% of sales for the twelve week period ended July
20, 1996, compared to 10.04% of sales for the same period last fiscal year. The
increase in gross margin was primarily attributable to increased gross margins
in the Company's retail operations, resulting from an emphasis on sales of goods
in categories with higher margins such as meat, perishables and private label
items.
Operating and administrative expenses for the twelve week period ended
July 20, 1996, were $56.2 million, or 7.45% of sales, compared to $56.7 million,
or 7.40% of sales, for the same period last fiscal year.
Interest expense for the twelve week period ended July 20, 1996, was
$1.7 million, compared to $3.8 million for the same period last fiscal year. The
decrease is primarily due to the Company's ability to generate cash flow from
operations, some of which was used: to reduce average borrowings under revolving
credit facilities; for the early extinguishment of $27.5 million of Super Rite
Senior Notes during the third and fourth quarters of fiscal 1996; for the
repayment of borrowings under a $25.0 million Super Rite term loan facility in
the third quarter of fiscal 1996; and for the payment in July 1996, of $9.0
million on the Company's $45.0 million 6.15% Senior Notes.
The Company's effective income tax rate was 40.2% and 41.1% for the
twelve week periods ended July 20, 1996, and July 22, 1995, respectively. The
lower effective tax rate for the twelve week period ended July 20, 1996, is
attributable to certain state tax planning initiatives.
Net earnings for the twelve week period ended July 20, 1996, were $12.4
million, or $0.40 per share, a 22.4% increase over net earnings of $10.2
million, or $0.33 per share for the same period last fiscal year.
<PAGE>
Liquidity and Capital Resources
Cash and cash equivalents were $22.2 million at July 20, 1996,
compared to $17.4 million at April 27, 1996.
Net cash provided by operating activities for the twelve week period
ended July 20, 1996 was $25.0 million. This amount primarily included net
earnings of $12.4 million and depreciation and amortization of $6.7 million.
Working capital increased from $40.8 million at April 27, 1996 to $44.2
million at July 20, 1996. The ratio of current assets to current liabilities was
1.17 at July 20, 1996, compared to 1.16 at April 27, 1996.
Net cash used for investing activities of $10.5 million for the twelve
week period ended July 20, 1996 included $3.7 million of capital expenditures.
Capital expenditures included capital employed for the construction of a new
METRO store, the conversion of an existing BASICS store to the METRO format and
improvements to the fluid dairy and warehouse distribution centers.
The Company remains committed to providing secured financing to retail
customers. Loans issued to retailers were $6.5 million for the twelve week
period ended July 20, 1996, and were offset by $2.1 million of repayments by
retailers.
Net cash used for financing activities of $9.7 million for the twelve
week period ended July 20, 1996, consisted primarily of $9.5 million of net
repayments on long-term debt and capital lease obligations. The $9.5 million of
net repayments primarily related to the initial principal payment of $9.0
million, in July 1996, on the Company's $45.0 million 6.15% Senior Notes. Net
repayments on long-term debt of $20.3 million for the twelve week period ended
July 22, 1995, primarily consisted of $18.0 million of net repayments on a
revolving credit facility and $1.5 million of repayments on a term loan
facility.
The Company's long-term debt, including capital leases and current
maturities, was $88.2 million at July 20, 1996, compared to $97.7 million at
April 27, 1996. The ratio of long-term debt, including capital leases and
current maturities, to equity was 0.42 to 1 at July 20, 1996, and 0.49 to 1 at
April 27, 1996.
The Company believes that it has the ability to continue to generate
adequate funds from its operations and through borrowings under its long-term
debt facilities to maintain its competitive position and expand its business.
<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.
RICHFOOD HOLDINGS, INC.
Date: September 3, 1996 By /s/ J. Stuart Newton
-------------------------
J. Stuart Newton
Senior Vice President
and Chief Financial
Officer
<PAGE>
EXHIBIT INDEX
Exhibit 11.1 Earnings Per Share Calculation
Exhibit 27.1 Financial Data Schedule
</TABLE>
EXHIBIT 11.1
RICHFOOD HOLDINGS, INC.
COMPUTATION OF NET EARNINGS PER COMMON SHARE
(Dollar amounts in thousands, except per share data)
<TABLE>
<CAPTION>
First Quarter Ended
-------------------------------
July 20, July 22,
1996 1995
------------- ------------
<S> <C>
NET EARNINGS:
Net earnings $ 12,445 $ 10,165
============= ============
PRIMARY EARNINGS PER COMMON SHARE:
Weighted average number of
common shares outstanding 31,442,057 31,205,091
Net additional common shares
issuable upon exercise of dilutive
options, determined by
treasury stock method 310,578 451,162
------------- ------------
Common shares and equivalents 31,752,635 31,656,253
============= ============
Net earnings per common share (a) $ 0.39 $ 0.32
============= ============
FULLY DILUTED EARNINGS PER COMMON SHARE:
Common shares and equivalents 31,752,635 31,656,253
Net additional common shares
issuable upon exercise of dilutive
options, determined by
treasury stock method
using quarter-end market price,
if higher than average price 56,376 29,462 --
------------- ------------
Common shares and equivalents (b) 31,809,011 31,685,715
============= ============
Net earnings per common share (a) $ 0.39 $ 0.32
============= ============
</TABLE>
NOTE: (a) Dilution is less than 3%.
(b) The Company does not have any other potentially
dilutive securities.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE COMPANY'S
CONSOLIDATED FINANCIAL STATEMENTS FOR THE TWELVE WEEK PERIOD ENDED JULY
20, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-03-1997
<PERIOD-END> JUL-20-1996
<CASH> 22,237
<SECURITIES> 0
<RECEIVABLES> 112,222
<ALLOWANCES> 3,971
<INVENTORY> 161,481
<CURRENT-ASSETS> 311,544
<PP&E> 224,015
<DEPRECIATION> 103,008
<TOTAL-ASSETS> 576,409
<CURRENT-LIABILITIES> 267,329
<BONDS> 0
0
0
<COMMON> 67,503
<OTHER-SE> 145,040
<TOTAL-LIABILITY-AND-EQUITY> 576,409
<SALES> 753,383
<TOTAL-REVENUES> 753,383
<CGS> 675,484
<TOTAL-COSTS> 675,484
<OTHER-EXPENSES> 56,162
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,674
<INCOME-PRETAX> 20,821
<INCOME-TAX> 8,376
<INCOME-CONTINUING> 12,445
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,445
<EPS-PRIMARY> 0.40
<EPS-DILUTED> 0.40
</TABLE>
