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 1-10619
PAMIDA HOLDINGS CORPORATION
-------------------------------
(Exact name of registrant as specified in its charter)
Delaware 47-0696125
------------ --------------
(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 5,004,942 Shares
---------------- --------------------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
PAMIDA HOLDINGS CORPORATION AND SUBSIDIARY
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 12,927 11,816
Merchandise inventories 141,702 150,837
Property held for sale 2,571 0
Prepaid expenses 4,634 2,953
-------- --------
Total current assets 170,073 172,904
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 3,642 3,809
Other assets 5,284 4,464
-------- --------
$252,186 $258,525
======== ========
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 2,926 6,992
Store closing reserve 5,815 7,818
Other accrued expenses 10,073 10,823
Income taxes payable 8,851 8,861
Current maturities of long-term debt 1,294 1,334
Current obligations under capital leases 1,606 1,847
-------- --------
Total current liabilities 135,782 138,273
Long-term debt, less current maturities 164,748 163,746
Obligations under capital leases, less
current obligations 36,399 36,559
Other long-term liabilities 4,289 4,237
Commitments and contingencies 0 0
Preferred stock subject to mandatory
redemption and reserve for
dividends payable 1,919 1,826
Common stockholders' equity:
Common stock, $.01 par value; 10,000,000
shares authorized; 5,004,942 shares
issued and outstanding, 50 50
Additional paid-in capital 968 968
Retained earnings (91,969) (87,134)
-------- --------
Total common stockholders' equity (90,951) (86,116)
-------- --------
$252,186 $258,525
======== ========
See notes to consolidated financial statements.
<PAGE1>
PAMIDA HOLDINGS CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Amounts)
(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 29,211 34,421
Interest 7,106 7,236
-------- --------
36,317 41,657
-------- --------
Loss before income tax benefit (4,742) (4,844)
Income tax benefit 0 (2,665)
-------- --------
Net loss (4,742) (2,179)
Less provision for preferred dividends and
discount amortization 93 91
-------- --------
Net loss available for common stock $ (4,835) $ (2,270)
======== ========
Loss per common share $ (.97) $ (.45)
======== ========
See notes to consolidated financial statements.
<PAGE2>
PAMIDA HOLDINGS CORPORATION AND SUBSIDIARY
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 $(4,742) $(2,179)
Adjustments to reconcile net loss to net
cash provided by (used in) operations:
Depreciation and amortization of fixed
assets and intangibles 2,618 3,799
Provision for LIFO inventory valuation 150 250
Noncash interest expense 987 898
Gain on disposal of assets (26) (541)
Other 39 50
Decrease in store closing reserve (2,003) 0
(Increase) decrease in merchandise
inventories 8,985 (13,581)
Increase in other operating assets (3,051) (3,519)
Increase in accounts payable 5,675 14,409
Decrease in other operating liabilities (8,456) (14,862)
------- -------
Total adjustments 4,918 (13,097)
Net cash provided by (used in) ------- -------
operating activities 176 (15,276)
------- -------
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)
Dividends paid 0 (79)
------- -------
Net cash provided by financing activities 2,161 19,285
------- -------
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:
(1) Cash paid (received) during the period for:
Interest $10,158 $10,124
Income taxes:
Payments to taxing authorities 180 3,025
Refunds received from taxing authorities (170) 0
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITY:
(1) Capital lease obligations incurred when the
Company entered into lease agreements for
new store facilities $ 0 $ 1,600
(2) Amortization of discount on junior
cumulative preferred stock recorded as
a direct charge to retained earnings 12 12
(3) Provision for dividends payable 81 0
(4) In-kind payment of accrued interest on
promissory notes:
Promissory notes 975 878
Accrued interest (975) (878)
See notes to consolidated financial statements.
<PAGE3>
PAMIDA HOLDINGS CORPORATION AND SUBSIDIARY
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
Holdings Corporation (the Company) and additional footnotes are reflected
in the consolidated financial statements included in the Company's annual
report to stockholders for the fiscal year ended January 28, 1996. Those
consolidated financial statements were incorporated by reference in the
Company's Form 10-K Annual Report 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 received $79 from Pamida, Inc. (Pamida) to
enable the Company to make dividend payments to preferred stockholders.
No such payments have been made by Pamida during fiscal 1997.
4. Loss Per Common Share
Loss per common share was calculated using the weighted average common
shares and dilutive common share equivalents outstanding during the period
using the treasury stock method.
5. 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 5.4 4.7
----- -----
Loss before income tax benefit (3.6) (3.1)
Income tax benefit 0 (1.7)
----- -----
Net loss (3.6) (1.4)
===== =====
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 the 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 (SG&A)
<PAGE5>
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
somewhat offset by the expenses 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 $130 or 1.8% for the first quarter of fiscal 1997
compared to the same period of fiscal 1996. The decrease was due to the
reduction in interest related to capital leases, primarily as a result of the
forty stores closed as of the beginning of fiscal 1997, offset somewhat by a
slight increase in interest attributable to the promissory notes which require
quarterly interest payments to be paid in kind.
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 $15,276 in the first quarter of fiscal 1996. This $15,452 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 Pamida, Inc.'s (Pamida) 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 Pamida is permitted to borrow are
determined by a formula based upon the amount of Pamida's eligible inventory
from time to time. Such borrowings are secured by security interests in all of
the current assets (including inventory) of Pamida and by liens on certain real
estate interests and other property of Pamida. The Company and two
subsidiaries of Pamida have guaranteed the payment and performance of
Pamida's obligations under the Agreement and have pledged some or all of
their respective assets, including the stock of Pamida owned by the Company,
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 $201,147
as of April 28, 1996 and $207,513 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.
Pamida paid the Company $79 during the first quarter of fiscal 1996 under a
tax-sharing agreement to enable the Company to pay quarterly dividends to its
preferred stockholders. Since the Company conducts no operations of its own,
the only cash requirement of the Company relates to preferred stock dividends
in the aggregate annual amount of approximately $316; and Pamida is expressly
permitted under its existing credit facilities to pay dividends to the
Company to fund such preferred stock dividends. However, the General
Corporation Law of the State of Delaware, under which the Company and Pamida
are incorporated, allows a corporation to declare or pay a dividend only
from its surplus or from the current or the prior year's earnings. Due to
the retained deficit resulting primarily from the store closings and the
write-off of goodwill and other long-lived assets recognized in the fourth
quarter of fiscal 1996, the Company and Pamida may pay dividends in fiscal
1997 and in ensuing years only to the extent that the Company and Pamida
<PAGE7>
satisfy the applicable statutory standards which includes the Company'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 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 1-2: None
Item 3:
The General Corporation Law of Delaware, under which the registrant is
incorporated, allows a corporation to declare or pay a dividend only from its
surplus or from the current or the prior year's earnings. Due to the retained
deficit resulting primarily from the store closings and the write-off of
goodwill and other long-lived assets in the fourth quarter of fiscal 1996,
the registrant may pay dividends in fiscal 1997 and in ensuing years only to
the extent that the registrant satisfies the applicable statutory standards,
which includes the registrant's having a net worth equal to at least the
aggregate par value of the preferred stock which amounts to $2,141.
Accordingly, the registrant was restricted from declaring or paying the
quarterly dividends payable on February 29, 1996, and May 31, 1996, with
respect to the outstanding 16.25% Senior Cumulative Preferred Stock and
14.25% Junior Cumulative Preferred Stock of the registrant and does not
anticipate paying dividends on the preferred stock in the foreseeable future.
As of the date of this report, the total preferred stock dividend arrearage was
$166,000. Pursuant to the Certificate of Incorporation of the registrant, the
cumulative dividend rate on the registrant's 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 of the preferred stock until paid in cash. Such nonpayment
of preferred stock dividends does not accelerate the redemption rights of
the preferred stockholders.
Items 4-6: 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 HOLDINGS CORPORATION
-------------------------------
(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 HOLDINGS CORPORATION AND SUBSIDIARY 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> 12,977
<ALLOWANCES> 50
<INVENTORY> 141,702
<CURRENT-ASSETS> 170,073
<PP&E> 98,513
<DEPRECIATION> 55,599
<TOTAL-ASSETS> 252,186
<CURRENT-LIABILITIES> 135,782
<BONDS> 238,249
1,919
0
<COMMON> 50
<OTHER-SE> (91,001)
<TOTAL-LIABILITY-AND-EQUITY> 252,186
<SALES> 131,786
<TOTAL-REVENUES> 131,786
<CGS> 100,211
<TOTAL-COSTS> 129,422
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,106
<INCOME-PRETAX> (4,742)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,742)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,742)
<EPS-PRIMARY> (.97)
<EPS-DILUTED> (.97)
</TABLE>
