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 January 10, 1998.
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
4860 Cox Road
Suite 300
Glen Allen, Virginia 23060
(804)915-6000
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 February
13, 1998, was as follows:
Common Stock, without par value: 47,582,626 shares.
<PAGE>
<TABLE>
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)
- -----------------------------------------------------------------------------------------------------
<CAPTION>
(Unaudited)
Third Quarter Ended
-----------------------------------------------------------
January 10, January 4,
1998 Percent 1997 Percent
(12 weeks) of sales (12 weeks) of sales
- -----------------------------------------------------------------------------------------------------
<S> <C>
Sales $ 743,951 100.00% $ 807,272 100.00%
Costs and expenses:
Cost of goods sold 661,828 88.96 721,779 89.41
Operating and adminis-
trative expenses 53,789 7.23 59,432 7.36
Interest expense 778 0.10 1,913 0.24
Interest income (867) (0.11) (776) (0.10)
---------- ------ ---------- ------
Earnings before income taxes 28,423 3.82 24,924 3.09
Income taxes 10,843 1.46 9,924 1.23
---------- ------ ---------- ------
Net earnings $ 17,580 2.36% $ 15,000 1.86%
========== ====== ========== ======
Net earnings per
common share $ .37 $ .32
========== ==========
Net earnings per
common share-
assuming dilution $ .37 $ .31
========== ==========
Cash dividends declared
per common share $ .04 $ .03
========== ==========
Average common shares
outstanding 47,536,579 47,325,705
========== ==========
Average common shares
outstanding-assuming
dilution 47,800,746 47,664,011
========== ==========
See accompanying Notes to the Consolidated Financial Statements.
2
<PAGE>
RICHFOOD HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Dollar amounts in thousands, except per share data)
- -----------------------------------------------------------------------------------------------------
<CAPTION>
(Unaudited)
Year-to-Date
----------------------------------------------------------
January 10, January 4,
1998 Percent 1997 Percent
(36 weeks) of sales (36 weeks) of sales
- -----------------------------------------------------------------------------------------------------
Sales $ 2,202,550 100.00% $ 2,300,295 100.00%
Costs and expenses:
Cost of goods sold 1,962,538 89.10 2,059,283 89.52
Operating and adminis-
trative expenses 163,484 7.42 171,492 7.46
Interest expense 2,559 0.12 5,172 0.22
Interest income (2,723) (0.12) (2,372) (0.10)
----------- ------ ------------ ------
Earnings before income taxes 76,692 3.48 66,720 2.90
Income taxes 29,596 1.34 26,703 1.16
----------- ------ ------------ ------
Net earnings $ 47,096 2.14% $ 40,017 1.74%
=========== ====== ============ ======
Net earnings per
common share $ .99 $ .85
=========== ============
Net earnings per
common share-
assuming dilution $ .99 $ .84
=========== ============
Cash dividends declared
per common share $ .12 $ .09
=========== ============
Average common shares
outstanding 47,492,269 47,257,605
=========== ============
Average common shares
outstanding-assuming
dilution 47,720,127 47,616,866
=========== ============
See accompanying Notes to the Consolidated Financial Statements.
3
<PAGE>
RICHFOOD HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)
<CAPTION>
- -----------------------------------------------------------------------------------------------------
January 10, May 3,
1998 1997
(Unaudited)
- -----------------------------------------------------------------------------------------------------
Assets
Current assets:
Cash and cash equivalents $ 36,010 $ 10,416
Receivables, less allowance for doubtful
accounts of $3,586 and $3,445 109,926 104,739
Inventories 164,277 163,510
Other current assets 13,132 14,426
------------ ------------
Total current assets 323,345 293,091
------------ -----------
Notes receivable, less allowance for
doubtful accounts of $1,736 and $1,886 33,072 34,639
Property and equipment, net 123,256 121,594
Goodwill, net 85,094 87,520
Other assets 47,954 44,636
------------ ------------
Total assets $ 612,721 $ 581,480
============ ============
Liabilities and Shareholders' Equity
Current liabilities:
Current installments of long-term debt $ 10,259 $ 10,656
Accounts payable 197,734 209,207
Accrued expenses and other current liabilities 59,619 51,360
------------ ------------
Total current liabilities 267,612 271,223
------------ ------------
Long-term debt 21,849 32,069
Deferred credits and other 19,339 19,538
Shareholders' equity:
Preferred stock, without par value:
Authorized shares - 5,000,000;
none issued or outstanding - -
Common stock, without par value:
Authorized shares - 90,000,000;
issued and outstanding shares
47,553,011 and 47,401,770 74,235 72,258
Retained earnings 229,686 186,392
------------ ------------
Total shareholders' equity 303,921 258,650
----------- -----------
Total liabilities and shareholders' equity $ 612,721 $ 581,480
============ ============
See accompanying Notes to the Consolidated Financial Statements.
4
<PAGE>
RICHFOOD HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
- -----------------------------------------------------------------------------------------------------------
<CAPTION>
(Unaudited)
-----------
January 10, January 4,
1998 1997
(36 weeks) (36 weeks)
- -----------------------------------------------------------------------------------------------------------
Operating activities:
Net earnings $ 47,096 $ 40,017
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 21,807 20,384
Provision for doubtful accounts 2,919 2,846
Other, net 13 (421)
Changes in operating assets and liabilities,
net of effects of acquisitions:
Receivables (4,654) (1,117)
Inventories (767) (15,803)
Other current assets 2,097 (230)
Accounts payable, accrued expenses
and other liabilities (1,628) 18,939
----------- ----------
Net cash provided by operating activities 66,883 64,615
----------- ----------
Investing activities:
Acquisition, net of cash acquired -- (26,098)
Purchases of property and equipment (15,082) (12,687)
Issuance of notes receivable (8,440) (18,097)
Collections on notes receivable 4,614 7,222
Other, net (7,714) (6,940)
----------- ----------
Net cash used for investing activities (26,622) (56,600)
----------- ----------
Financing activities:
Net repayments on long-term debt (10,617) (10,189)
Proceeds from issuance of common stock
under employee stock incentive plans 1,174 834
Cash dividends paid on common stock (5,224) (3,773)
----------- ----------
Net cash used for financing activities (14,667) (13,128)
----------- ----------
Net increase (decrease) in cash and cash equivalents 25,594 (5,113)
Cash and cash equivalents at beginning of period 10,416 17,415
----------- ----------
Cash and cash equivalents at end of period $ 36,010 $ 12,302
=========== ==========
See accompanying Notes to the Consolidated Financial Statements.
5
</TABLE>
<PAGE>
RICHFOOD HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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 May 3, 1997, 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 Company's Annual Report on Form 10-K for the fiscal year ended
May 3, 1997 ("fiscal 1997"). 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
1997. The results of operations for the twelve and thirty-six week
periods ended January 10, 1998, may not be indicative of the results
that may be expected for the fiscal year ending May 2, 1998 ("fiscal
1998").
Note 2. As of November 26, 1997, the Company entered into a definitive
agreement to acquire substantially all of the assets and assume
certain liabilities of Farm Fresh, Inc. ("Farm Fresh"), a
privately-held supermarket chain based in Norfolk, Virginia (the
"Farm Fresh Acquisition"). The transaction will be effected through a
"prepackaged" Chapter 11 bankruptcy proceeding, which was commenced
by Farm Fresh in the U.S. Bankruptcy Court for the District of
Delaware on January 7, 1998. The Bankruptcy Court confirmed Farm
Fresh's plan of reorganization, and approved the transaction between
Farm Fresh and the Company, on February 20, 1998. Under the terms of
the agreement, the Company will not assume Farm Fresh's indebtedness
for money borrowed or, with one exception, Farm Fresh's lease
obligations for previously-closed stores or three currently-operated
stores that will be closed in connection with the proposed sale. The
anticipated purchase price is expected to consist of approximately
$220 million cash, plus the value of certain assumed capital leases,
plus 1.5 million warrants for the purchase of shares of the Company's
common stock at an exercise price of $25 per share with a term of
five years following issuance. The exact amount of the cash portion
of the purchase price will vary depending on the amount of Farm
Fresh's working capital at the time of closing and the capital lease
obligations assumed by the Company. The Company expects to pay the
cash portion of the purchase price for the Farm Fresh Acquisition
with cash on hand and through borrowings under new revolving credit
facilities. Upon closing of the transaction, which is subject to
customary conditions and is expected to occur during the first week
of March 1998, Farm Fresh will operate as a separate, wholly-owned
subsidiary of the Company.
6
<PAGE>
The above discussion is qualified in its entirety by reference to the
Asset Purchase Agreement, dated as of November 26, 1997, between
Richfood Holdings, Inc., FF Acquisition, L.L.C., and Farm Fresh,
which was filed as an Exhibit to the Company's Quarterly Report on
Form 10-Q for the quarter ended October 18, 1997, and which is
incorporated by reference herein.
Note 3. On September 30, 1996, a wholly-owned subsidiary of the Company
acquired substantially all of the assets and assumed certain
liabilities of Norristown Wholesale, Inc. ("Norristown"), a wholesale
distributor of produce and other perishable items headquartered in
Norristown, Pennsylvania. Assets acquired primarily consisted of
inventory, accounts receivable, warehouse and transportation
equipment and a customer list. The Company also assumed the lease for
Norristown's transportation fleet. The Company accounted for the
acquisition under the purchase method of accounting and, accordingly,
the results of operations of the acquired business have been included
in the Company's Consolidated Statements of Earnings since the date
of acquisition.
Note 4. In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128 (SFAS No. 128),
"Earnings Per Share." This Statement established new standards for
computing and presenting earnings per share and requires reporting of
both basic and diluted earnings per share. The Company's earnings per
share for the twelve and thirty-six week periods ended January 10,
1998 and January 4, 1997 reflect the adoption of SFAS No. 128. All
prior period earnings per share data has been recomputed in
accordance with this new Statement, and the effect of adopting SFAS
No. 128 on earnings per share calculations for prior periods is not
material.
The following table sets forth the computation of basic and diluted
earnings per share for the twelve and thirty-six week periods ended
January 10, 1998 and January 4, 1997, respectively:
<TABLE>
<CAPTION>
(dollar amounts in thousands,
except per share data) Twelve weeks ended
-------------------------------
January 10, January 4,
1998 1997
---------- ----------
<S> <C>
NUMERATOR:
Net earnings $ 17,580 $ 15,000
========== ==========
DENOMINATOR:
Denominator for basic earnings per share-
weighted average common shares 47,536,579 47,325,705
Effect of dilutive securities:
Stock options 264,167 338,306
---------- ----------
Denominator for diluted earnings per share-
adjusted weighted average shares 47,800,746 47,664,011
========== ==========
Net earnings per common share-basic $ 0.37 $ 0.32
========== ==========
Net earnings per common share-diluted $ 0.37 $ 0.31
========== ==========
7
<PAGE>
Note 4. continued
<CAPTION>
Thirty-six weeks ended
-------------------------------
January 10, January 4,
1998 1997
---------- ----------
NUMERATOR:
Net earnings $ 47,096 $ 40,017
========== ==========
DENOMINATOR:
Denominator for basic earnings per share-
weighted average common shares 47,492,269 47,257,605
Effect of dilutive securities:
Stock options 227,858 359,261
---------- ----------
Denominator for diluted earnings per share-
adjusted weighted average shares 47,720,127 47,616,866
========== ==========
Net earnings per common share-basic $ 0.99 $ 0.85
========== ==========
Net earnings per common share-diluted $ 0.99 $ 0.84
========== ==========
</TABLE>
Options to purchase 20,000 and 35,250 shares of common stock at a
weighted-average exercise price of $26.56 and $26.04 per share were
outstanding during the twelve and thirty-six week periods ended
January 10, 1998, respectively, but were not included in the
computation of diluted earnings per share because the options'
exercise price was greater than the average market price of the
common shares and, therefore, would be antidilutive.
Under the Company's Amended Omnibus Stock Incentive Plan, dated July
29, 1997, based on the awards and criteria established by the
Company's Executive Compensation Committee with respect to Incentive
Awards for the three fiscal year performance cycle that commenced on
May 4, 1997, certain employees would be entitled to receive 24,713
shares of common stock at January 10, 1998. These contingently
issuable shares are not included in the computation of diluted
earnings per share because certain performance goals and other
necessary conditions to vesting had not been satisfied as of January
10, 1998.
Note 5. 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.
8
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Recent Developments
- -------------------
Farm Fresh Acquisition
On February 20, 1998, the United States Bankruptcy Court for the
District of Delaware confirmed Farm Fresh's plan of reorganization, including
the acquisition of substantially all of Farm Fresh's assets and certain of its
liabilities by a wholly-owned subsidiary of the Company. Closing for the Farm
Fresh Acquisition is expected to occur during the first week of March 1998. See
Note 2 to the Consolidated Financial Statements included herein for further
information regarding this transaction.
West Point, Pennsylvania Distribution Center
The Company is a party to a four year collective bargaining agreement
with Teamsters Local No. 929 ("Local 929") that expires in July 1998 covering
warehouse employees at the West Point, Pennsylvania, frozen food distribution
center (the "West Point Facility"). Intermittently since 1996, the Company has
engaged in discussions with Local 929 regarding modification and extension of
the collective bargaining agreement. In September, 1997, the Company issued a
plant closing notice under the Worker Adjustment and Retraining Notification
("WARN") Act with respect to the West Point Facility. Thereafter, the Company
and Local 929 renewed their discussions regarding modification and extension of
the current collective bargaining agreement. The Company extended the plant
closing notice on January 8, 1998, at the union's request, pending the outcome
of the discussions. Discussions with Local 929 have subsequently been
discontinued.
The Company is currently considering its options with regards to its
frozen food logistics and distribution network. Such options include closing the
West Point Facility and transferring the West Point distribution activities to
other locations. In the event the Company determines to close the West Point
Facility, the facility will be offered for sale to third parties, and the
Company will record a restructuring charge relating to the cessation of
operations at the facility, the sale of the facility and the relocation of the
business currently conducted at the facility. The amount of such potential
charge is not presently determinable. The Company believes that any relocation
of the West Point business to other facilities will not result in a disruption
of service to its customers.
Shoppers Supply Agreement
The Company's supply agreement with Shoppers Food Warehouse Corp.
("Shoppers"), the Company's second largest customer in fiscal 1997, expired in
December 1997. The Company and Shoppers continue to operate under the terms of
the old supply agreement.
9
<PAGE>
Results of Operations
- ---------------------
Sales of $744.0 million for the twelve week period ended January 10,
1998, consisted of $712.9 million of wholesale grocery sales and $77.9 million
of retail grocery sales. Wholesale grocery sales included $46.8 million of sales
to the Company's retail grocery division. Wholesale grocery sales for the twelve
week period ended January 10, 1998, decreased $65.4 million, or 8.4%, as
compared to sales of $778.3 million for the same period last fiscal year. This
decrease was primarily attributable to the expiration in June 1997 of the
Company's frozen food supply agreement with Acme Markets, Inc. ("Acme") (the
"Acme Supply Agreement"). Excluding sales to Acme during the twelve week period
ended January 4, 1997, wholesale grocery sales for the twelve week period ended
January 10, 1998, would have represented a decrease of $25.9 million, or 3.5%.
This decrease was primarily attributable to competitive store openings that
affected certain of the Company's customers.
Sales of $2,202.6 million for the thirty-six week period ended January
10, 1998, consisted of $2,110.3 million of wholesale grocery sales and $223.2
million of retail grocery sales. Wholesale grocery sales included $130.9 million
of sales to the Company's retail grocery division. Wholesale grocery sales for
the thirty-six week period ended January 10, 1998, decreased $101.2 million, or
4.6%, as compared to sales of $2,211.5 million for the same period last fiscal
year. Excluding sales to Acme during the thirty-six week period ended January 4,
1997, and during the first twelve weeks of fiscal 1998, prior to expiration of
the Acme Supply Agreement, wholesale grocery sales for the thirty-six week
period ended January 10, 1998, would have represented a decrease of $8.0
million, or 0.4%. This decrease was primarily attributable to competitive store
openings that affected certain of the Company's customers, offset in part by
sales from the Norristown produce business, which was acquired by the Company on
September 30, 1996.
Retail grocery sales of $77.9 million for the twelve week period ended
January 10, 1998, increased $0.6 million, or 0.8%, compared to the same period
last fiscal year. Same store sales increased 3.0% for the twelve week period
ended January 10, 1998, compared to the same period during fiscal 1997,
primarily as a result of the completion of the conversion of a former BASICS
store to the METRO format in November 1997. Retail grocery sales of $223.2
million for the thirty-six week period ended January 10, 1998, decreased $7.0
million, or 3.0%, compared to the same period last fiscal year. In accordance
with the Company's strategy of focusing on the METRO format, during the fourth
quarter of fiscal 1997 the number of BASICS stores was reduced from five to two
as a result of closing one, selling another and temporarily closing a third
store until its conversion to the METRO format was completed in November 1997.
Same store sales increased 1.4% for the thirty-six week period ended January 10,
1998, compared to the same period during fiscal 1997.
Gross margin was 11.04% and 10.90% of sales for the twelve and
thirty-six week periods ended January 10, 1998, respectively, compared to 10.59%
and 10.48%, respectively, of sales for the same periods last fiscal year. The
increase in gross margin was primarily attributable to the effects of the
Company taking advantage of certain buying opportunities during the fiscal 1998
periods, increased gross margins in the Company's retail grocery operations
(resulting from a greater emphasis on perishables and other higher-margin
categories), and the inclusion of the higher gross margin Norristown produce
business for the full thirty-six week period of fiscal 1998.
10
<PAGE>
Operating and administrative expenses were $53.8 million, or 7.23% of
sales, for the twelve week period ended January 10, 1998, compared to $59.4
million, or 7.36% of sales, for the same period last fiscal year. Operating and
administrative expenses were $163.5 million, or 7.42% of sales, for the
thirty-six week period ended January 10, 1998, compared to $171.5 million, or
7.46% of sales, for the same period last fiscal year. The decrease in operating
and administrative expenses as a percent of sales was primarily attributable to
the Company's continued focus on controlling costs and the effects of certain
productivity and efficiency initiatives in the Company's retail grocery
operations. This decrease was offset in part by the inclusion of Norristown's
higher operating expense ratio produce business for the full thirty-six week
period of fiscal 1998.
Interest expense for the twelve and thirty-six week periods ended
January 10, 1998, was $0.8 million and $2.6 million, respectively, compared to
$1.9 million and $5.2 million, respectively, for the same periods last fiscal
year. The decrease was primarily due to lower average debt levels for the fiscal
1998 periods, compared to the same periods last fiscal year. On April 1, 1997,
the Company redeemed the remaining $47.5 million outstanding principal amount of
its 10 5/8% Senior Subordinated Notes and in July 1997 repaid $9.0 million on
the Company's 6.15% Senior Notes.
The Company's effective income tax rate was 38.2% and 38.6% for the
twelve and thirty-six week periods ended January 10, 1998, respectively, as
compared to 39.8% and 40.0%, respectively, for the same periods last fiscal
year.
Net earnings for the twelve week period ended January 10, 1998, were
$17.6 million, or $0.37 per share, assuming dilution, a 17.2% increase over net
earnings of $15.0 million, or $0.31 per share, assuming dilution, for the same
period last fiscal year. Net earnings for the thirty-six week period ended
January 10, 1998, were $47.1 million, or $0.99 per share, assuming dilution, a
17.7% increase over net earnings of $40.0 million, or $0.84 per share, assuming
dilution, for the same period last fiscal year.
Liquidity and Capital Resources
- -------------------------------
Working capital was $55.7 million at January 10, 1998, and $21.9
million at May 3, 1997. The increase in working capital was primarily
attributable to an increase in cash and cash equivalents from $10.4 million at
May 3, 1997, to $36.0 million at January 10, 1998.
Net cash provided by operating activities for the thirty-six week
period ended January 10, 1998, was $66.9 million. This amount primarily
consisted of net earnings of $47.1 million and depreciation and amortization of
$21.8 million, offset in part by changes in certain working capital accounts.
Net cash used for investing activities of $26.6 million for the
thirty-six week period ended January 10, 1998, primarily consisted of $15.1
million of capital expenditures. The Company continued to invest in its
wholesale distribution centers and equipment to maintain the efficiency of its
operations and also employed capital in connection with the conversion of an
existing BASICS store to the METRO format. Net cash used for investing
activities of $56.6 million for the thirty-six week period ended January 4,
1997, included $26.1 million for the acquisition of the Norristown produce
business, which was acquired by the Company on September 30, 1996.
Net cash used for financing activities of $14.7 million and $13.1
million for the thirty-six week periods ended January 10, 1998, and January 4,
1997, respectively, consisted primarily of the $9.0 million of annual principal
payments on the Company's 6.15% Senior Notes.
11
<PAGE>
The Company's total debt was $32.1 million at January 10, 1998,
compared to $42.7 million at May 3, 1997. Shareholders' equity increased to
$303.9 million at January 10, 1998, from $258.7 million at May 3, 1997. The
ratio of total debt to equity was 0.11 to 1 at January 10, 1998, and 0.17 to 1
at May 3, 1997.
As of November 26, 1997, the Company entered into a definitive
agreement to acquire substantially all of the assets and to assume certain
liabilities of Farm Fresh. See note 2 to the Consolidated Financial statements
for further information regarding this transaction. The Company expects to pay
the cash portion of the purchase price for the Farm Fresh Acquisition with cash
on hand and borrowings under new revolving credit facilities (the "Credit
Facilities") with First Union National Bank, as administrative agent and lender,
and a syndicate of banks. The new Credit Facilities permit borrowings of up to
an aggregate $350 million at interest rates that generally will not exceed the
LIBOR rate plus 0.35% on an all-in drawn basis. The Credit Facilities, which the
Company expects to close during the last week of February 1998, will replace the
Company's existing committed revolving lines of credit.
The Company believes that it has the ability to continue to generate
adequate funds from its operations and through borrowings under long-term debt
facilities to maintain its competitive position and expand its business.
Year 2000 Compliance
- --------------------
During 1997, the Company developed, and began implementing, a
strategic, long-term information technology plan to upgrade its core application
systems. Concurrently, it has developed, and is implementing, a plan to ensure
that its information systems are year 2000 compliant. The Company believes that
with the currently planned system conversions and upgrades, as well as certain
additional modifications to existing software, the Company will achieve year
2000 compliance without any significant operational problems related to the
Company's information systems. Amounts expended, or to be expended, exclusively
to ensure year 2000 compliance are not expected to be material to the Company's
consolidated results of operations or financial position. The Company is also
communicating with significant suppliers, customers, financial institutions and
others with which it does business to coordinate year 2000 compliance.
12
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 2.1 - Asset Purchase Agreement, dated as of November 26, 1997,
by and among Farm Fresh, Inc., Richfood Holdings, Inc.
and FF Acquisition, L.L.C. (incorporated by reference to
the Company's Quarterly Report on Form 10-Q for the
quarter ended October 18, 1997)
Exhibit 27.1 - Financial Data Schedule
(b) Reports on Form 8-K
None
13
<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: February 24, 1998 By /s/ John C. Belknap
------------------------
John C. Belknap
Executive Vice President
and Chief Financial Officer
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE COMPANY'S
CONSOLIDATED FINANCIAL STATEMENTS FOR THE THIRTY-SIX WEEK PERIOD ENDED JANUARY
10, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAY-02-1998
<PERIOD-END> JAN-10-1998
<CASH> 36,010
<SECURITIES> 0
<RECEIVABLES> 113,512
<ALLOWANCES> 3,586
<INVENTORY> 164,277
<CURRENT-ASSETS> 323,345
<PP&E> 242,219
<DEPRECIATION> 118,963
<TOTAL-ASSETS> 612,721
<CURRENT-LIABILITIES> 267,612
<BONDS> 0
<COMMON> 74,235
0
0
<OTHER-SE> 229,686
<TOTAL-LIABILITY-AND-EQUITY> 612,721
<SALES> 2,202,550
<TOTAL-REVENUES> 2,202,550
<CGS> 1,962,538
<TOTAL-COSTS> 1,962,538
<OTHER-EXPENSES> 163,484
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,559
<INCOME-PRETAX> 76,692
<INCOME-TAX> 29,596
<INCOME-CONTINUING> 47,096
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 47,096
<EPS-PRIMARY> 0.99
<EPS-DILUTED> 0.99
<FN>
Note: The Company's earnings per share for the thirty-six week period ended
January 10, 1998 reflects the adoption of Statement of Financial Accounting
Standards No. 128 (SFAS No. 128), "Earnings Per Share." EPS-Primary and
EPS-Diluted above refers to EPS-basic and EPS-assuming dilution, respectively,
under the new SFAS 128 earnings per share disclosure rules.
</FN>
</TABLE>
