<PAGE>
UNITED STATES
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 11, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from N/A
Commission File No. 1-9914
RISER FOODS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 34-1570363
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
5300 Richmond Road, Bedford Heights, Ohio 44146
(Address of principal executive offices)
Registrant's telephone number, including area code: (216)292-7000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Sections 12, 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.
Outstanding at
February 17, 1997
Class A Common Stock, $.01 Par Value 8,818,618
Class B Common Stock, $.01 Par Value 901,912<PAGE>
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
RISER FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands of dollars)
<TABLE>
<CAPTION>
1/11/97 6/29/96
--------- ---------
ASSETS (unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 3,699 $ 3,541
Trade accounts receivable, net 32,741 36,903
Inventories 73,744 72,406
Deferred income taxes 9,066 9,066
Prepaid expenses 5,345 4,613
--------- ---------
Total current assets 124,595 126,529
PROPERTY, EQUIPMENT AND
CAPITAL LEASES: 224,205 203,762
Less-Allowances for
depreciation, amortization
and loss on disposal of
fixed assets 87,645 79,762
--------- ---------
136,560 124,000
OTHER ASSETS:
Deferred income taxes 4,947 4,947
Notes receivable 4,559 4,784
Other 1,938 2,088
--------- ---------
Total other assets 11,444 11,819
--------- ---------
TOTAL ASSETS $ 272,599 $ 262,348
========= =========
</TABLE>
The accompanying Notes to Consolidated Condensed Financial
Statements are an integral part of these statements.<PAGE>
<PAGE>
<TABLE>
<CAPTION>
1/11/97 6/29/96
---------- ----------
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 58,692 $ 59,433
Accrued expenses 44,084 41,790
Current portion of long-term liabilities 8,427 10,352
---------- ---------
Total current liabilities 111,203 111,575
LONG-TERM LIABILITIES:
Debt 37,120 32,514
Capital lease obligations 4,985 5,531
Self insurance reserves 13,302 12,595
---------- ----------
Total long-term liabilities 55,407 50,640
OTHER LIABILITIES 6,771 10,191
STOCKHOLDERS' EQUITY:
Class A Common Stock--7,257,288 and
7,174,787 shares outstanding at
1/11/97 and 6/29/96, respectively 73 72
Class B Common Stock--901,912 and
955,613 shares outstanding at
1/11/97 and 6/29/96, respectively 9 10
Paid-in capital 36,386 36,138
Retained earnings 62,750 53,722
---------- ----------
Total stockholders' equity 99,218 89,942
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 272,599 $ 262,348
========== ==========
</TABLE>
The accompanying Notes to Consolidated Condensed Financial
Statements are an integral part of these statements.<PAGE>
<PAGE>
RISER FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(In thousands of dollars, except share and per share data)
(unaudited)
<TABLE>
<CAPTION>
28 Weeks Ended: 12 Weeks Ended:
1/11/97 1/13/96 1/11/97 1/13/96
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
NET SALES $ 726,377 $ 679,099 $ 321,774 $ 301,712
COST OF GOODS SOLD 584,832 545,517 258,719 242,890
---------- ---------- ---------- ----------
Gross profit 141,545 133,582 63,055 58,822
SELLING, GENERAL &
ADMINISTRATIVE EXPENSE 122,649 117,471 53,726 49,729
---------- ---------- ---------- ----------
Operating income 18,896 16,111 9,329 9,093
INTEREST EXPENSE (2,465) (3,761) (1,014) (1,633)
INTEREST INCOME 246 684 92 282
---------- ---------- ---------- ----------
INCOME BEFORE INCOME 16,677 13,034 8,407 7,742
TAXES
PROVISION FOR INCOME 6,672 5,360 3,364 3,190
TAXES ---------- ---------- ---------- ----------
NET INCOME 10,005 7,674 5,043 4,552
LESS PREFERRED STOCK
DIVIDENDS - 11 - -
---------- ---------- ---------- ----------
NET INCOME FOR COMMON
STOCKHOLDERS $ 10,005 $ 7,663 $ 5,043 $ 4,552
========== ========== ========== ==========
NET INCOME PER COMMON $ 1.23 $ .95 $ .62 $ .56
SHARE ========== ========== ========== ==========
DIVIDENDS PER COMMON $ .12 $ .10 $ .06 $ .05
SHARE ========== ========== ========== ==========
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING 8,138,713 8,083,612 8,146,886 8,086,229
========== ========== ========== ==========
</TABLE>
The accompanying Notes to Consolidated Condensed Financial
Statements are an integral part of these statements.<PAGE>
<PAGE>
RISER FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands of dollars)
(unaudited)
<TABLE>
<CAPTION> 28 Weeks Ended: 12 Weeks Ended:
1/11/97 1/13/96 1/11/97 1/13/96
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net income $ 10,005 $ 7,674 $ 5,043 $ 4,552
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation & amort. 9,962 9,198 4,357 3,709
Changes in assets
and liabilities 3,027 16,104 3,097 24,253
--------- --------- --------- ---------
Net cash provided by
operating activities 22,994 32,976 12,497 32,514
--------- --------- --------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of fixed (24,244) (16,729) (15,872) (6,707)
assets
Proceeds from sales
of fixed assets 111 102 22 71
--------- --------- --------- ---------
Net cash used for
investing activities (24,133) (16,627) (15,850) (6,636)
--------- --------- --------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Borrowings under revolving
lines of credit 83,436 425,866 53,276 168,083
Repayments of revolving
lines of credit (70,889) (442,095) (40,729) (193,750)
Additional borrowings - 5,093 - 3,520
Debt repayments (9,774) (4,148) (8,361) (2,957)
Repayments of capital
lease obligations (747) (743) (301) (300)
Exercise of stock 248 111 185 98
options
Common stock dividends (977) (809) (489) (405)
Preferred stock - (11) - -
--------- --------- --------- ---------
Net cash provided by
(used for) financing
activities 1,297 (16,736) 3,581 (25,711)
--------- --------- --------- ---------
/TABLE
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
28 Weeks Ended: 12 Weeks Ended:
1/11/97 1/13/96 1/11/97 1/13/96
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 158 (387) 228 167
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 3,541 4,075 3,471 3,521
--------- --------- --------- ---------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 3,699 $ 3,688 $ 3,699 $ 3,688
========= ========= ========= =========
SUPPLEMENTAL DATA:
Interest Paid $ 2,414 $ 3,900 $ 1,747 $ 2,374
========= ========= ========= =========
Income Taxes Paid $ 3,125 $ 5,718 $ 2,415 $ 1,439
========= ========= ========= =========
</TABLE>
The accompanying Notes to Consolidated Condensed Financial
Statements are an integral part of these statements.
<PAGE>
<PAGE>
RISER FOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JANUARY 11, 1997
(1) Basis of Presentation:
The accompanying unaudited consolidated condensed financial
statements have been prepared in accordance with the instructions
to Form 10-Q and therefore do not include all information and
footnotes necessary for a fair presentation of financial position,
results of operations and cash flows in conformity with generally
accepted accounting principles. The results of operations for the
twelve and twenty-eight weeks ended January 11, 1997 are not
necessarily indicative of the results for the fiscal year ending
June 28, 1997. In the opinion of management, the accompanying
unaudited consolidated condensed financial statements contain all
adjustments necessary for a fair presentation of the financial
position at the dates indicated and of the results of operations
for the interim periods presented.
(2) Debt:
The Company amended its bank credit facilities (the
Facilities) during the second quarter of fiscal 1997. These
amended Facilities provide for revolving lines of credit and
letters of credit up to an aggregate of $85.0 million and terminate
on October 31, 2001. Interest under the Facilities now accrues at
either the bank's prime lending rate or LIBOR plus a margin that
ranges from .30% to .75% depending upon the Company's consolidated
leverage ratio. Among other covenants, the Facilities require that
the Company maintain minimum levels of consolidated net worth and
consolidated leverage and interest coverage ratios, all as defined.
Available unused borrowing capacity under the Facilities was
approximately $66.4 million at January 11, 1997.
(3) Changes in Equity:
The Company's Board of Directors unanimously approved the
redemption of the Company's Series A Preferred Stock on June 9,
1995. The outstanding shares of preferred stock were redeemed on
July 28, 1995 at a redemption price of $105 per share plus
accumulated dividends. The Company redeemed 18,044 shares at a
total redemption price of $1,894,620 plus accumulated dividends of
$11,007.
The declaration and payment of dividends is subject to the
discretion of the Company's Board of Directors and there can be no
assurance that dividends will be paid in the future. Year-to-date,
the Company has paid dividends on its Common Stock totalling
$1,163,829 (of which $186,436 was paid to a wholly owned subsidiary
of the Company) and $964,042 (of which $155,323 was paid to a
wholly owned subsidiary of the Company) in fiscal 1997 and 1996,
respectively.<PAGE>
<PAGE>
The Company has a Stock Incentive Plan (the Plan) which
provides for both qualified and non-qualified stock options, as
well as stock appreciation rights and restricted stock grants for
employees, officers and directors of Riser. Stock options must be
issued at not less than the fair value of the Class A Common Stock
at the date of grant and are exercisable for up to ten years from
the date of grant. The options outstanding under the plan are
exercisable at option prices ranging from $7.25 to $23.63 per
share. Options for 28,800 and 12,000 shares of Class A Common
Stock were exercised at prices ranging from $7.31 to $10.31 per
share during the first twenty-eight weeks of fiscal 1997 and 1996,
respectively.
On August 19, 1996, the Company granted options to several key
employees to purchase 52,100 shares of Class A Common Stock (the
1997 Options) under the Plan. The exercise price of the 1997
options is $23.63 per share which approximated their fair market
value at the date of grant. The 1997 Options are not exercisable
until August 19, 1998 (except in certain limited instances) and
will expire on August 19, 2006 if not exercised. The 1997 Options
are non-qualified options for Federal Income Tax purposes and the
Company recorded no expense associated with this grant.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
The following table sets forth items from the Company's
Consolidated Condensed Statements of Income as a percentage of net
sales:
<TABLE>
<CAPTION>
28 Weeks Ended: 12 Weeks Ended:
1/11/97 1/13/96 1/11/97 1/13/96
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales 100.00 100.00 100.00 100.00
Cost of goods sold 80.51 80.33 80.40 80.50
--------- --------- -------- ---------
Gross profit 19.49 19.67 19.60 19.50
SG&A expense 16.89 17.30 16.70 16.48
--------- --------- -------- ---------
Operating income 2.60 2.37 2.90 3.02
Interest expense (.34) (.55) (.32) (.54)
Interest income .04 .10 .03 .09
--------- --------- --------- ---------
Income before income taxes 2.30 1.92 2.61 2.57
Provision for income taxes .92 .79 1.04 1.06
--------- --------- --------- ---------
Net income 1.38 1.13 1.57 1.51
========= ========= ========= =========
/TABLE
<PAGE>
<PAGE>
The results of operations for the twelve and twenty-eight
weeks ended January 11, 1997 continue to reflect successful
implementation of strategic initiatives designed to improve
operating performance and counter competitive and economic
pressures. The food distribution industry has encountered little
or no top line price inflation between years while operating costs,
particularly labor and occupancy, have contractually risen.
Overall industry sales and operating margins have been challenged
by continued competition from non-traditional sources, such as
convenience stores and national mass merchandising chains.
Net Sales
In the second quarter of fiscal 1997, net sales increased
6.65% to $321.8 million from $301.7 million in fiscal 1996.
Year-to-date, fiscal 1997 net sales have increased 6.96% to $726.4
million from $679.1 million last year. This trend of increased
sales over those of the prior year is the result of strategic
initiatives to remodel, reposition and enlarge Company-operated
retail stores, aggressive merchandising in Company-operated stores,
the expansion of product lines sold to the Company's
independently-operated retail customers and a continued favorable
economic climate in the Company's primary market area. The
Company's strategic initiatives to remodel and reposition Company-
operated retail stores have resulted in the consolidation and
enlargement of certain Company-operated retail stores. The
following table details the number, format and square footage of
Company-operated retail stores between years:
1997 1996
--------- ---------
Number of Company-operated
retail stores:
Beginning of year 37 38
Opened 2 --
Closed (3) --
--------- ---------
End of second quarter 36 38
========= =========
Store Formats:
Rini-Rego Stop-N-Shop 29 33
Rini-Rego Marketplace 7 5
Square footage:
Total - end of quarter 1,810,400 1,838,300
Average store size 50,289 48,376
Sales in Company-operated retail stores increased over those
of the prior year 3.17% in the second quarter and 3.13%
year-to-date. Same store sales increases of 1.79% in the second
quarter and 2.47% year-to-date and the opening of two larger
replacement stores more than offset sales losses resulting from two<PAGE>
<PAGE>
less Company-operated retail stores between years. Including
the sales of the two replacement stores in fiscal 1997 and the
stores they replaced in fiscal 1996, sales for the 36 stores
servicing the same communities between years increased 4.62% in the
second quarter and 4.57% year-to-date. This continues a trend of
same store sales increases which began in the fourth quarter of
fiscal 1994. The increase in same store sales is attributed to the
Company's retail remodeling and repositioning programs, aggressive
merchandising including the Company's Preferred Shoppers Club card
and a favorable economic climate. The rate of same store sales
increases has slowed during the last three quarters as
Company-operated retail stores have cycled against prior year
remodeling projects and the timing of new store expansion projects
fell late in the first quarter of fiscal 1997.
The Company's retail remodeling and repositioning initiatives,
where certain non-core stores were closed and certain core stores
were remodeled, expanded or consolidated into larger retail
facilities, has proven successful, yielding continued sales growth
and improved operating leverage. Since the first quarter of 1994,
the Company has constructed or converted seven former Rini-Rego
Stop-N-Shop stores to its Marketplace format. The Marketplace
stores are larger, averaging approximately 65,000 square feet, and
meet the consumer's basic grocery needs while offering an expanded
product line, with emphasis on high quality perishable departments
and a variety of full service, consumer-oriented departments. The
Company expects to open one more Marketplace store in fiscal 1997.
Through the Association of Stop-N-Shop Supermarkets, a
northeast Ohio advertising cooperative which includes all
Company-operated retail stores, as well as other
independently-operated retail customers serviced by the Company,
the Company offers its customers the Preferred Shoppers Club.
Participating shoppers receive a Preferred Shoppers Club card which
entitles them to extra discounts below normal sales prices and
other incentives. This program was the first of its kind in
northeast Ohio and allows the Company to offer its customers
greater value and will ultimately enhance the Company's ability to
meet customer purchasing requirements and preferences. The success
of this program has increased sales in Company-operated retail
stores and other independently-operated retail customers serviced
by the Company and proven a valuable merchandising tool to combat
competitive pressures from both traditional and non-traditional
grocery retailers. The Company's primary competitor introduced a
frequent shoppers card in March 1996. The introduction of the
competitor's card lessened the effect of the Company's Preferred
Shoppers card somewhat but has not had a significant negative
impact on sales in Company-operated retail stores.
The Company expects its trend of same store sales increases to
continue at levels realized during the fourth quarter of fiscal
1996 and the first twenty-eight weeks of fiscal 1997. The Company<PAGE>
<PAGE>
expects to continue its plans to remodel core stores by focusing on
its Marketplace store format where demographics so dictate or its
traditional Neighborhood store format and continue to aggressively
merchandise through its Preferred Shoppers Club to augment existing
store sales.
Net sales to independently-operated retail customers through
Company distribution facilities increased 10.46% in the second
quarter of fiscal 1997 and 11.26% year-to-date. Sales to
independently-operated retail customers have benefited from
strategic initiatives targeting the expansion of the Company's
primary wholesale distribution territory and expansion of the
Company's product lines. Sales to independently-operated retail
customers increased principally because of expanded product
offerings to the 102 PharMor and 163 Hills stores serviced by the
Company which are primarily located in the eastern third of the
United States.
As a percentage of net sales, year-to-date gross profit
decreased from 19.67% in fiscal 1996 to 19.49% in fiscal 1997.
This decline in the gross profit as a percentage of net sales is
principally a function of shifting sales mix between years. Sales
to independently-operated retail customers carry a lower gross
profit percentage than sales in Company-operated retail stores.
As such, a shift in the mix of these sales impacts overall gross
profit percentages. Sales generated in Company-operated retail
stores as a percentage of total Company sales decreased from 51.4%
in the first twenty-eight weeks of fiscal 1996 to 49.6% in the
first twenty-eight weeks of fiscal 1997. This decline mirrors the
shift in the gross profit percentage.
In the second quarter, gross profit as a percentage of net
sales increased from 19.50% in fiscal 1996 to 19.60% in fiscal
1997. This was despite a similar shift in sales mix as sales in
Company-operated retail stores declined as a percentage of total
Company sales from 51.5% in fiscal 1996 to 49.8% in fiscal 1997.
In the second quarter of fiscal 1997, the shift in sales mix was
more than offset by increases in the gross profit percentage
achieved in Company-operated retail stores. The gross profit
percentage achieved in the second quarter of fiscal 1996 was
negatively impacted by the closing of the Company's in-store
pharmacies and higher than normal discounting of health and beauty
care and general merchandise inventory in Company-operated retail
stores. During the second quarter of fiscal 1997, the Company did
not incur any substantial write-downs or discounting of retail
inventories.<PAGE>
<PAGE>
In general, the Company has been able to maintain gross profit
percentages on sales to independently-operated retail customers and
in Company-operated retail stores through improved procurement
systems, merchandising and effective inventory management.
Selling, general and administrative (SG&A) expense also
decreased as a percentage of net sales from 17.30% in the first
twenty-eight weeks of fiscal 1996 to 16.89% in fiscal 1997. The
major reasons for this decline are the shift in mix of business
toward sales to independently-operated retail customers,
productivity gains and better expense leverage. In the second
quarter of fiscal 1997, SG&A expense as a percentage of net sales
rose from 16.48% in fiscal 1996 to 16.70% in fiscal 1997. The
timing of expense recognition related to the Company's annual
incentive compensation program more than offset the aforementioned
benefits to SG&A expense.
Consistent with prior years, the Company has provided expense
under its annual incentive compensation program in the quarter in
which the incentive compensation was earned. During the second
quarter of fiscal 1997, the Company provided its remaining annual
incentive compensation expense for fiscal 1997. In fiscal 1996,
100% of this expense was recognized during the first quarter. The
difference in annual incentive compensation expense during the
second quarter was approximately $1.6 million between years.
Year-to-date, the Company has provided substantially the same
amount of annual incentive compensation expense in both years.
The SG&A shift also reflects the above mentioned change in the
sales mix between years. Sales in Company-operated retail stores
require higher SG&A costs than sales to independently-operated
retail customers. Accordingly, the SG&A percentage decreases with
a change in mix. The Company has also been able to improve
productivity through the implementation of Total Quality Management
initiatives and improve the leverage of certain fixed SG&A expenses
over higher sales volume.
Interest expense declined $.6 million in the second quarter of
fiscal 1997 and $1.3 million year-to-date. These decreases are a
function of overall lower borrowing levels and lower effective
interest rates under the Company's bank credit facilities. Lower
borrowing levels were the result of programs to reduce the
investment in distribution inventories by increasing inventory
turns and the Company's increased cash flow from operations. The
effective interest rate recognized under the Company's bank credit
facilities was 7.26% and 8.44% in the second quarters of fiscal
1997 and 1996, respectively. Year-to-date, the effective interest
rate recognized under the Company's bank credit facilities was
7.38% in fiscal 1997 and 8.57% in fiscal 1996. The decrease in
these rates was the result of negotiated interest rate reductions
and the Company's utilization of LIBOR pricing. <PAGE>
<PAGE>
The Company provided for income taxes at an effective tax rate
of 40.0% in fiscal 1997 compared to 41.0% in fiscal 1996. Taxes
were provided at the various statutory rates to which the Company
is subject and there were no significant differences between
financial reporting and taxable income. The primary reason for the
decrease in the Company's effective tax rate is a lower state and
local tax provision reflecting the Company's present filing status.
The Company provides for the franchise tax portion of its state
income tax provision as an operating expense.
CAPITAL RESOURCES AND LIQUIDITY
At the end of the second quarter of 1997, debt levels
increased as a result of increased capital expenditures and higher
working capital requirements associated with the Company's
distribution facilities.
Operating activities generated $23.0 million of cash in fiscal
1997 compared to $33.0 million in fiscal 1996. In adjusting net
income to net cash provided by operating activities for fiscal
1997, the major changes in assets and liabilities include decreases
of accounts and notes receivable of $4.4 million (decrease of $7.1
million in fiscal 1996) and accounts payable of $.7 million
(increase of $3.5 million in fiscal 1996) and increases in
inventories of $1.3 million (decrease of $5.8 million in fiscal
1996), prepaid expenses of $.7 million (increase of $1.4 million in
fiscal 1996) and accrued expenses and other liabilities of $.6
million (increase of $.4 million in fiscal 1996).
The decrease in accounts and notes receivable and the increase
in prepaid and accrued expenses during the second quarter of fiscal
1997 are normal seasonal fluctuations. During the second quarter
of fiscal 1997, the Company increased seasonal inventory levels and
turn inventory levels to meet anticipated sales requirements.
Historically, the Company has reduced inventory levels following
the holiday season. However, increased sales to
independently-operated retail customers and the impact of
construction underway in the Company's primary distribution
facility caused an increase in inventory levels at the end of the
second quarter of fiscal 1997. Trade accounts payable, as a
percentage of FIFO inventories, decreased from 74.6% at
the end of fiscal 1996 to 71.5% at the end of the second quarter of
fiscal 1997.
As a result of the foregoing, working capital decreased to
$13.4 million from $15.0 million at the end of fiscal 1996. At the
same time, the Company's current ratio decreased from 1.13:1 at the
end of fiscal 1996 to 1.12:1 at the end of the second quarter of
fiscal 1997. Increased working capital requirements, principally
inventory, were offset by a reduction in the current portion of
long-term liabilities, primarily debt associated with the amending
of the Company's bank credit facilities. Increased borrowings<PAGE>
<PAGE>
under the Company's bank credit facilities offset by net income
left the Company's long-term liabilities to equity ratio virtually
unchanged at .56:1 at the end of both fiscal 1996 and the second
quarter of fiscal 1997. The Company's ratio of total liabilities
to equity decreased to 1.75:1 at the end of the second quarter of
fiscal 1997 from 1.92:1 at the end of fiscal 1996.
The Company utilized $24.2 million of cash flow for capital
expenditures. This amount is approximately $7.5 million higher than
last year's level and reflects the Company's investment of $18.5
million ($8.7 million last year) in two new retail locations and
other retail remodeling projects, $3.3 million ($7.1 million last
year) for distribution facilities and equipment and $2.4
million ($1.0 million last year) on data processing systems
upgrades. Fiscal 1996 capital expenditures for distribution
facilities included the acquisition of the Company's Aurora Road
and Cash-N-Carry distribution facilities which had previously been
leased. The Aurora Road facility was subsequently sold prior to
the end of fiscal 1996.
The Company anticipates that the level of capital expenditures
for fiscal 1997 will be higher than the previous three fiscal years
principally because of the acceleration of the Company's remodeling
programs and the expansion of its distribution facilities. After
fiscal 1997, capital expenditure levels are expected to be
maintained in the $30-$35 million range over the next three fiscal
years until the Company has completed the remodeling or expansion
of its core stores. The Company believes that cash flow from
operations and the unused portion of its bank credit facilities
will adequately fund planned capital expenditures of approximately
$45 million in fiscal 1997, normal ongoing business activities and
scheduled debt repayments.
IMPACT OF INFLATION
Inflation increases the Company's major costs, inventory and
labor. Because of the high velocity of inventory turnover in the
food distribution industry and the Company's use of the LIFO
valuation method for a majority of its inventory, the impact of
inflation is normally reflected very quickly in the results of
operations. The food distribution industry has experienced little
or no food inflation over the last three years. Experience
indicates that highly competitive market conditions may prevent the
Company from fully recovering inflation-driven costs through retail
pricing alone. The Company's provision for LIFO inventories was
the same in both years: $462,000 for the second quarter and
$1,078,000 year-to-date. <PAGE>
<PAGE>
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS
OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 (the Reform
Act)
Certain information included in this report and other Company
filings under the Securities Act of 1933 and the Securities and
Exchange Act of 1934, as well as other information which may be
provided by the Company including written and oral statements made
by its representatives, may contain forward-looking statements as
defined in the Reform Act. All statements, other than those
containing historical facts, which include words or phrases such as
"will likely result", "are expected to be", "will continue", "is
anticipated", "estimate", "project", "believe" or words of similar
import are intended to identify forward-looking statements within
the meaning of the Reform Act. In reviewing such information it
should be noted that actual results may differ materially from
those projected or suggested in such forward-looking statements.
Forward-looking statements are conditioned upon a number of factors
and were derived utilizing numerous assumptions. Many of these
factors have previously been identified in other Company filings or
statements made by or on behalf of the Company.<PAGE>
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.23 Form of Amendment No. 3 to Amended and Restated
Credit Agreement by and among American Seaway
Foods, Inc., Key Bank National Association
("KeyBank") and the Banks (executed as of
January 8, 1997)
10.24 Form of Amendment No. 4 to Amended and Restated
Credit Agreement by and among Rini-Rego
Supermarkets, Inc., KeyBank and the Banks
(executed as of January 8, 1997)
10.25 Form of Amendment No. 5 to Amended and Restated
Guaranty Agreement by Riser Foods, Inc.
(executed as of January 8, 1997)
10.26 Form of Amendment No. 1 to Amended and Restated
Security Agreement by and among American Seaway
Foods, Inc., KeyBank and the Banks (executed as
of January 8, 1997)
10.27 Form of Amendment No. 1 to Amended and Restated
Security Agreement by and among Rini-Rego
Supermarkets, Inc., KeyBank and the Banks
(executed as of January 8, 1997)
10.28 Form of Amendment No. 1 to Amended and Restated
Security Agreement by and among Riser Foods,
Inc., KeyBank and the Banks (executed as of
January 8, 1997)
10.29 Form of Amendment No. 1 to Amended and Restated
Security Agreement by and among Fisher
Properties, Inc., KeyBank and the Banks
(executed as of January 8, 1997)
(b) Reports on Form 8-K
The Company filed a Current Report on Form 8-K under
Item 5 - Other Events on February 19, 1997.
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
RISER FOODS, INC.
(Registrant)
February 24, 1997 /s/ Anthony C. Rego
By: Anthony C. Rego
Chairman of the Board and
Chief Executive Officer
February 24, 1997 /s/ Ronald W. Ocasek
By: Ronald W. Ocasek
Senior Vice President,
Chief Financial Officer
and Treasurer
